On January 5, 2010, EPA published guidance to the states that allowed them to waive fees under Section 185 of the Clean Air Act relating to compliance with ozone emissions regulations. The guidance assisted states in preparing their own State Implementation Plans. It allowed states to either use the Section 185 fee program or "an equivalent alternative program" that is "consistent with the principles of section 172(e)" of the Clean Air Act.
NRDC sued EPA in March to argue that EPA's action allowing an equivalent, alternative program was arbitrary and capricious, and that allowing fee waivers if an ozone nonattainment area meets an 8-hour testing standard instead of a 1-hour standard was also improper. An 8-hour standard is more protective of the environment than a 1-hour standard.
In April, the NAM and 4 other business groups moved to intervene in this suit in support of EPA. That motion was granted. The case affects fees that were then set at $8,766 per ton of volatile organic compounds and nitrogen oxides emitted above a baseline amount from major stationary sources within areas of the country that are classified as severe or extreme nonattainment areas.
The NAM and other intervenors filed a brief on Jan. 31, 2011, arguing that EPA's interpretation is reasonable and consistent with congressional intent. It is important that states have the flexibility to design equivalent alternative programs that do not unfairly and inappropriately penalize well-controlled major stationary sources of ozone. Companies that have already dramatically reduced ozone emissions are unable to make further reductions without a harmful drop in productivity, and states should be able to develop alternative programs that focus on sources that are better able to achieve further reductions.
On July 1, the court rejected EPA's arguments that the plaintiffs lacked standing, that the Guidance did not qualify as final agency action, and the plaintiffs' claims were unripe for judicial review. It then ruled that the Guidance qualified as a legislative rule that EPA was required to issue through notice-and-comment rulemaking, and that one of its features -- the "attainment alternative" -- violated the plain language of the Clean Air Act. The court vacated the EPA's guidance and ruled that it could not offer an alternative that allows violations of the old 1-hour standard to continue. The law does not allow EPA to retreat from requirements it sets that prove to be too stringent and unnecessary to protect public health, and EPA must go back to Congress if it wants to do so.