572 U.S. 489 (2014)
EPA v. EME Homer City Generation is a landmark Supreme Court decision at the intersection of environmental and administrative law that addresses how the federal government may tackle interstate air pollution.
1) Does the Clean Air Act's Good Neighbor Provision permit EPA to allocate upwind states' emission reduction obligations based on cost-effectiveness rather than strictly proportional contributions to downwind nonattainment or maintenance problems? 2) Did EPA act lawfully in issuing FIPs after finding that state SIPs failed to satisfy Good Neighbor obligations without first quantifying each state's specific reduction requirement and affording states a further opportunity to submit revised SIPs?
Under the Clean Air Act, each state's SIP must include adequate provisions prohibiting emissions that significantly contribute to nonattainment or interfere with maintenance of NAAQS in any other state (42 U.S.C. § 7410(a)(2)(D)(i)(I)). States must submit SIPs within three years of a new or revised NAAQS (42 U.S.C. § 7410(a)(1)); if a state fails to submit a compliant SIP or EPA disapproves it, EPA must promulgate a Federal Implementation Plan (FIP) (42 U.S.C. § 7410(c)(1)). Applying Chevron deference (Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984)), where statutory text is ambiguous and the agency's interpretation is reasonable, the agency's construction controls. The terms "contribute significantly" and "interfere with maintenance" are ambiguous enough to permit EPA to fashion a workable, cost-sensitive allocation method so long as it does not require over-control (i.e., reductions beyond what is necessary to remedy downwind problems).
The Supreme Court reversed the D.C. Circuit and upheld CSAPR. It held that the Good Neighbor Provision does not require strictly proportional, source-apportionment-based allocations and that EPA's cost-effective, region-wide approach is a permissible construction under Chevron. The Court also held that the CAA does not require EPA to quantify state obligations before states submit SIPs; EPA was authorized to issue FIPs after determining that states had failed to submit adequate SIPs by the statutory deadline.
EPA v. EME Homer City is pivotal for understanding cooperative federalism under the CAA and the scope of Chevron deference in technically complex regulatory schemes. It confirms that EPA may use cost-effective, market-based methods to apportion interstate emission reductions under the Good Neighbor Provision, rejects a rigid proportionality requirement, and clarifies that EPA can promulgate FIPs once SIPs fail by the statutory deadline without a further round of state planning. For law students, the case illustrates how statutory ambiguity, administrative expertise, and feasibility considerations drive judicial deference, and it provides a template for analyzing nationwide, multi-source environmental programs addressing transboundary harms.