The Environmental Protection Agency recently issued an interim final rule to administratively stay the effectiveness of requirements for all sources covered by the Good Neighbor Plan (GNP) rule as promulgated where an administrative stay was not already in place.
The interim final rule is EPA’s formal response to a stay order issued by the U.S. Supreme Court on June 27, 2024, which stayed the final GNP rule pending judicial review on the case's merits in the U.S. Court of Appeals for the District of Columbia Circuit.
The administrative stay of the GNP for power plants and other industrial facilities in each of the 23 states will remain in place until the court lifts the stay, other courts lift any judicial orders staying the state implementation plan disapproval action as to the state, and EPA takes subsequent rulemaking action consistent with any judicial rulings on the merits.
The interim final rule is effective upon publication in the Federal Register.
The major provisions of the interim final rule include:
Scope of the Administrative Stay
The administrative stay applies to all emissions sources subject to the GNP as promulgated (not just the applicants for a stay before the Supreme Court).
EPA states that electing to stay the effectiveness of the GNP’s requirements for all emissions sources subject to the GNP as promulgated was the only practicable means of complying with the Supreme Court’s stay order.
Additionally, EPA states that it is consistent with the court’s rationale in granting the stay applications since the court did not identify any specific, substantive flaw concerning the GNP’s requirements for any regulated party but rather found that EPA had likely failed to adequately respond to comments concerning the GNP’s application if it were not in effect for one or more upwind states.
Requirements to Meet Existing Good Neighbor Obligations
The interim final rule seeks to ensure that Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and Wisconsin will continue to meet their existing good neighbor obligations regarding the 2008 ozone national ambient air quality standards while the administrative stay is in effect.
The electric generating units within the ten states will participate in the 2021 Revised CASPR Update Group 2 trading program for the 2024 ozone season and future ozone
seasons while the GNP requirements remain on hold and reinstate the state emissions budget and unit-level allowance allocation provisions that would have been in effect under the Groups 2 program.
EPA will record the allocated amounts of newly issued 2024 Group 2 allowances in the sources’ compliance accounts without adjustment. However, a few transactions involving 2024 Group 3 allowances occurred before the stay order was issued. EPA will adjust the quantities of newly issued 2024 Group 2 allowances recorded in the relevant sources’ compliance accounts upward or downward by the amounts of the pre-stay transactions on a 1-for-1 basis to preserve the substantive effect of these pre-stay transactions.
EPA will deduct all 2024 Group 3 allowances from all compliance accounts and general accounts as soon as practicable, on or after 15 days after the date of publication in the Federal Register and record the newly issued 2024 Group 2 allowances with these adjustments in sources’ compliance accounts as soon as practicable, on or after 30 days after the date of publication in the Federal Register.
The Interim Final Rule provides an opportunity for power plants in Illinois, Indiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and Wisconsin to convert their holdings of banked 2021-2023 Group 3 allowances remaining after 2023 compliance under the GNP on a 1-for-1 basis to the types of Group 2 allowances that the power plants will use for compliance in the Group 2 trading program starting in 2024.
The 2024 Group 3 allowances issued to power plants in these ten states before the stay will not be eligible for conversion and instead will be recalled.
Regulatory Revisions
The interim final rule includes specific amendments to the regulatory text to implement the EPA’s response to the stay order.
The administrative stay of the GNP for power plants and other industrial facilities in each of the 23 states will remain in place until the court lifts the stay, other courts lift any judicial orders staying the state implementation plan disapproval action as to the state, and EPA takes subsequent rulemaking action consistent with any judicial rulings on the merits.
Background
In two separate actions, EPA signed interim final rules in June and September 2023, amending the GNP to administratively stay the rule’s implementation for covered facilities in 12 of the 23 states in response to court orders partially staying EPA’s SIP disapprovals.
