In a famous statement made in his 1933 inaugural address, President Franklin Delano Roosevelt declared: "In the field of world policy, I would dedicate this nation to the policy of the good neighbor, the neighbor who resolutely respects himself and, because he does so, respects the rights of others." This declaration, which became popularly known as the "good-neighbor policy," described the United States' declared approach to Central and South America during the Roosevelt presidency.

The principle that one country should avoid conflict by acting as a "good neighbor" to other countries located nearby has direct application to states within our federal system, all of which serve as sovereigns within their respective state boundaries. When utilizing shared resources such as surface or ground water or air that crosses state boundaries, fair and equitable use of those resources is important to preserve interstate comity. In the modern era, the various branches of the federal government establish and enforce good-neighbor principles, sometimes balancing the need for national standards against states' rights to regulate their citizens' activities.

In keeping with these principles, the Clean Air Act embodies congressional intent to establish national standards for air quality while preserving the authority of states to manage activities within their borders. Section 109 of the act requires the U.S. Environmental Protection Agency (EPA) to promulgate National Ambient Air Quality Standards (NAAQS), a series of health-based standards that are applicable nationwide. Section 110 of the act requires each state to adopt and submit to the EPA a state implementation plan (SIP) that provides for the implementation, maintenance and enforcement of the NAAQS. This SIP must provide a path for states to attain NAAQS when they are in violation of the standard and to prevent significant deterioration of air quality when they are in compliance. Thus, the federal government adopts standards and the states implement them subject to EPA review. When the EPA concludes that a SIP is deficient, the EPA may issue a federal implementation plan that is binding on the state.

The SIP requirements also address congressional intent to prevent air emissions of pollutants from sources in one state from adversely affecting air quality and human health in a downwind state. Pursuant to Section 110(a)(2)(D)(i)(I), the SIP must contain adequate provisions prohibiting emission sources within the state from emitting any air pollutant in amounts that will "contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to any such" NAAQS. Likewise, the SIP must prevent sources within the state from interfering with the downwind state's measures to prevent significant deterioration of air quality or to protect visibility, according to Section 110(a)(2)(D)(i)(II). These subsections are known as the "good neighbor" or "interstate transport" provision.

In GenOn REMA LLC v. EPA, No. 12-1022 (3d Cir. July 12, 2013), New Jersey alleged that Pennsylvania violated the good-neighbor provision by failing to limit sulfur dioxide (SO2) emissions from the Portland Generating Station that prevented New Jersey from attaining the one-hour SO2 NAAQS. The station is a coal-fired electric generating facility located in Upper Mount Bethel Township, Pa. The station is situated near the Delaware River within 500 feet of Knowlton Township, N.J. The prevailing winds blow air pollutants from the Pennsylvania side of the river to the New Jersey side. The rotten egg smell from the station's emissions, the creation of acid rain, and the potential adverse health effects were of concern to the Knowlton Township community and the state.

The New Jersey Department of Environmental Protection (NJDEP) seized upon EPA's new one-hour SO2 standard effective August 23, 2010, as an opportunity to compel GenOn to implement stringent emission controls. On September 17, 2010, the NJDEP filed a petition with the EPA under Section 126 of the act seeking an order limiting GenOn's sulfur dioxide emissions. Section 126(b) provides a mechanism for a downwind state to seek a finding by the EPA that a source in an upwind state is emitting an air pollutant in violation of the good-neighbor provision.

The petition alleged that GenOn was in violation of the good-neighbor provision because sulfur dioxide emissions from its facility significantly contribute to the nonattainment of or interfere with the maintenance of the one-hour SO2 NAAQS in New Jersey. In support of its petition, the NJDEP submitted air quality and aerial dispersion modeling analyses showing that concentrations of sulfur dioxide in several downwind counties in New Jersey exceeded the new NAAQS on account of emissions from the station. The modeling traced changes in the concentration of sulfur dioxide as it moved downwind from the station and supported the conclusion that the station was a substantial contributor to NAAQS violations in New Jersey.

In response to the petition, the EPA reviewed NJDEP's modeling and performed its own dispersion modeling using the American Meteorological Society/EPA Regulatory Model (AERMOD) identified in EPA's "Guideline on Air Quality Models." The EPA placed thousands of receptors in New Jersey to quantify the station's contribution to New Jersey's nonattainment of the SO2 NAAQS. As a result of its data collection and modeling efforts, the EPA concluded that the station's emissions were sufficient on their own to cause downwind NAAQS violations.

To eliminate the station's significant contribution to nonattainment and its interference with maintenance of the NAAQS, the EPA published a proposed rule finding that the station violated the good-neighbor provision. The EPA proposed emissions limitations and compliance schedules that require an approximately 81 percent reduction in sulfur dioxide emissions from the station over three years with interim reduction limits during the three-year period. Although the EPA did not mandate use of a particular control technology to achieve the emissions reductions, it noted the options of switching to low sulfur coal with or without additional technologies, and continuing to use high sulfur coal in combination with scrubbing. Upon finalization of the rule, GenOn promptly petitioned for review in the U.S. Court of Appeals for the Third Circuit.

GenOn's challenge to EPA's rule was principally based on its contention that the EPA had improperly usurped Pennsylvania's authority under the act. Section 110 of the act provides three years for states to modify their SIPs to implement newly promulgated standards such as the new one-hour SO2 NAAQS. This distribution of responsibility under the act between the EPA, which establishes the NAAQS, and the states, which implement the NAAQS through SIPs approved by the EPA, is a form of cooperative federalism. In GenOn's view, this structure afforded the EPA the authority to establish NAAQS but conferred upon Pennsylvania the authority to decide how to implement them. Consequently, in GenOn's view, the act precluded the EPA from entertaining a petition under Section 126(b) until Pennsylvania adopted emissions limitations in its SIP or failed to do so within the three-year statutory time period.

The Third Circuit rejected GenOn's interpretation, instead concluding that Section 126 provides an independent enforcement mechanism that does not require the downwind state to await the results of the upwind state's SIP process. Acknowledging that EPA's review of a state SIP revision was one route by which emission controls might be established, the court found the Section 126 process to offer an alternative route. Citing to a decision by the D.C. Circuit in Appalachian Power v. EPA, 249 F. 3d 1031 (D.C. Cir. 2001), the GenOn court noted that awaiting a SIP revision would eliminate Section 126's requirement that a source that the EPA finds to be in violation of the good-neighbor provision may not operate for more than three years following the EPA's finding. In addition, unlike a SIP revision, Section 126 relief does not require any action by the upwind state. Finally, Section 126's language demonstrates congressional intent for prompt action by mandating the EPA to respond to a petition within 60 days, a timeframe inconsistent with a three-year SIP revision schedule.

Because the Third Circuit found the act to unambiguously support the EPA's position, under the rationale of Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), it could have ended its analysis. The GenOn court nonetheless chose to examine whether the EPA's interpretation was reasonable. The court noted that the legislative history of Section 126 evidenced congressional intent to create an alternative method to prevent and abate interstate pollution. Congress was concerned that, absent this abatement provision, states with more stringent control requirements would be placed at a disadvantage. Thus, the EPA's treatment of Section 126 as distinct from the SIP process was reasonable.

The GenOn court also rejected GenOn's contention that EPA's action was arbitrary and capricious. The EPA's focus on a single source and its imposition of a compliance schedule for reducing emissions were consistent with statutory language and a proper exercise of the EPA's discretion. In addition, the modeling conducted by New Jersey and the EPA's own modeling results showed the effects that limitations on the station's emissions would have on New Jersey's ability to attain the one-hour SO2 NAAQS. The EPA's calculation of emissions reductions, the technical and economic feasibility of achieving the emission limits and the imposition of interim limits were all found to be well-supported.

EPA's victory in the GenOn case contrasts with its unsuccessful efforts to date to sustain a nationwide program to protect downwind states from emissions from power plants located at significant distances from the affected states. In EME Homer City Generation v. EPA, 596 F. 3d 7 (D.C. Cir. 2012), cert. granted (U.S. June 24, 2013) (No. 12-1182), the D.C. Circuit invalidated EPA's Transport Rule (also known as the Cross-State Air Pollution Rule) on the basis that the EPA may not issue federal implementation plans before the EPA quantifies the state's emission reduction under the good-neighbor provision and affords the state time to amend its SIP to meet this requirement. The EME Homer City court also held that the EPA may not mandate reductions of emissions by upwind states in excess of their contributions to nonattainment in downwind states.

Because the EPA based its decisions on different provisions of the act, the rulings in GenOn and EME Homer City are not necessarily inconsistent. Indeed, the EME Homer City court expressly distinguished its holding from the decision in Appalachian Power on the basis that a federal implementation plan can be issued only after the state issues a SIP or the SIP deadline passes, while a finding under Section 126 of the act can be made at any time.

Both cases, however, relate to whether the EPA may force sources in an upwind state to reduce their emissions to protect downwind states without first affording the upwind state the opportunity to modify its SIP. GenOn was a particularly strong case for immediate imposition of restrictions because it involved a single source in close proximity to the downwind state that was shown through modeling to alone cause substantial interference with attainment and maintenance of NAAQS in the downwind state. GenOn may embolden downwind states and municipalities to file more petitions asking the EPA to control power plant emissions located in neighboring states. The decision may also give the EPA greater confidence that its AERMOD dispersion modeling will withstand judicial scrutiny.

In contrast, EME Homer City involved many distant sources, some of which contributed only 1 percent of the total interference with the downwind state's compliance. Under these complex circumstances, the court was sympathetic to the argument that the EPA should establish emission targets for the upwind states before imposing its own implementation plan. On review, the Supreme Court may clarify whether an upwind state's obligation under Section 110's SIP requirements to be a good neighbor allows the EPA to take prompt action even when a Section 126 petition has not been filed. •

KENNETH J. WARREN is a founding partner of Warren Glass and has been practicing environmental law for more than 30 years. He is a former chair of the American Bar Association Section of Environment , Energy and Resources, where he led the section's 10,000 memers. He can be reached at