The United States Court of Appeals for the D.C. Circuit today refused to rehear a decision of a three-judge panel of the court that overturned EPA’s Cross-State Air Pollution Rule (CSAPR). CSAPR addressed the interstate transport of pollutants emitted by electric generating units located in the eastern two-thirds of the country. The panel decision in the EME Homer City v. EPA case, issued on August 21, 2012, found that EPA had misinterpreted underlying statutory requirements. One of the panelists, Judge Judith Rogers, issued a lengthy and sharp dissent. EPA and state and environmental supporters then asked the panel to reconsider its decision and also asked the full court to rehear the decision on banc. The three judge panel today refused to reconsider its decision, with Judge Rogers again dissenting, and the full court refused to rehear the case en banc, with no judge dissenting.

EPA and its supporters may now petition the Supreme Court to accept review of the case. The chances of success of such a petition seem small.

EPA adopted CSAPR as a replacement to its Clean Air Interstate Rule (CAIR) program, which had also been overturned by the D.C. Circuit. CAIR had remained in place on remand and while CSAPR was being formulated, went out of effect once CSAPR was adopted, and then was temporarily reinstated when the D.C. Circuit overturned CSAPR last August. But CAIR, having been declared to be legally invalidated, still must be replaced. EPA thus must formulate a new transport rule that conforms to the court decisions overturning CAIR and CSAPR.

In the meantime, considerable uncertainty will prevail. For instance, some states had relied on emissions reductions under CAIR to meet state implementation plan (SIP) requirements for the ozone and fine particle matter (PM2.5) National Ambient Air Quality Standards (NAAQS) program. EPA recently approved these SIPs, but environmental groups this week appealed this EPA action on the ground that CAIR is legally invalid.

Similarly, before CAIR was overturned in court, EPA had ruled that states within the CAIR region were not required to subject EGUs to best available retrofit technology (BART) requirements under EPA’s regional haze program. When CSAPR was adopted, EPA repealed this “CAIR=EGU BART” determination and replaced it with a determination that states within the CSAPR region are not required to subject EGUs to BART requirements. When CSAPR was overturned in August, EPA said it would not address its “CASPR=EGU BART” determination until after the court acted on its petition for rehearing en banc. Now that such petition is denied, EPA must determine whether it will return to “CAIR=EGU BART” or whether EGUs in the East must now comply with regional haze BART requirements. Environmental parties had already filed an appeal of EPA’s “CSAPR=EGU BART” determination and are sure to oppose a return to “CAIR=EGU BART.”

Further complicating the matter is that CAIR and CSAPR addressed the impact of transported pollutants on the ability of downwind states to attain and maintain attainment with the 1997 NAAQS for ozone and PM2.5 and the more stringent 2006 PM2.5 NAAQS. EPA just recently adopted yet more stringent PM2.5 NAAQS and is planning on proposing more stringent ozone NAAQS this year. How these new NAAQS will affect EPA’s plans for a new transport rule is uncertain.