Respondents Brief — West Virginia, et al., Petitioners v. Environmental Protection Agency, et al.

No. 20-1530

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In The

Supreme Court of the United States

---------------------------------♦--------------------------------STATE OF WEST VIRGINIA, ET AL.,

Petitioners,

v.

U.S. ENVIRONMENTAL PROTECTION AGENCY

AND MICHAEL REGAN, ADMINISTRATOR OF THE

U.S. ENVIRONMENTAL PROTECTION AGENCY,

Respondents.

---------------------------------♦--------------------------------On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

---------------------------------♦--------------------------------BRIEF OF RESPONDENT BASIN ELECTRIC

POWER COOPERATIVE IN SUPPORT OF THE

PETITION FOR WRIT OF CERTIORARI

---------------------------------♦--------------------------------EMILY C. SCHILLING

Counsel of Record

HOLLAND & HART LLP

901 K Street NW, Suite 850

Washington, DC 20001

ECSchilling@hollandhart.com

Tel: (202) 393-6500

Fax: (202) 747-6574

TINA R. VAN BOCKERN

HOLLAND & HART LLP

555 17th Street, Suite 3200

Denver, CO 80202

TRVanBockern@hollandhart.com

Tel: (303) 295-8107

Fax: (720) 545-9952

Counsel for Respondent

Basin Electric Power Cooperative

================================================================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

i

QUESTION PRESENTED

In 42 U.S.C. § 7411(d), an ancillary provision of the

Clean Air Act, did Congress constitutionally authorize

the Environmental Protection Agency to issue significant rules—including those capable of reshaping the

Nation’s electricity grids and unilaterally decarbonizing virtually any sector of the economy—without any

limits on what the agency can require so long as it considers cost, nonair impacts, and energy requirements?

ii

CORPORATE DISCLOSURE STATEMENT

Basin Electric Power Cooperative (“Basin Electric”) is a not-for-profit regional wholesale electric generation and transmission cooperative owned by over

100 member cooperatives. Basin Electric has no parent

companies. There are no publicly held corporations

that have a 10% or greater ownership interest in Basin

Electric.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED...................................

i

CORPORATE DISCLOSURE STATEMENT ......

ii

TABLE OF AUTHORITIES .................................

iv

INTRODUCTION ................................................

1

INTERESTS OF BASIN ELECTRIC ...................

2

ARGUMENT IN SUPPORT OF THE STATES’

PETITION ........................................................

4

I. The States’ Petition Raises Important And

Timely Questions .......................................

5

II.

The Consequences Of The D.C. Circuit’s

Ruling Are Significant ...............................

9

CONCLUSION..................................................... 12

iv

TABLE OF AUTHORITIES

Page

CASES

Am. Lung Ass’n v. EPA, 985 F.3d 914 (D.C. Cir.

2021) ..........................................................................1

Ctr. for Biological Diversity v. EPA, 722 F.3d 401

(D.C. Cir. 2013) ..........................................................6

Essex Chem. Corp. v. Ruckelshaus, 486 F.2d 427

(D.C. Cir. 1973) ..........................................................9

La. Pub. Serv. Comm’n v. Fed. Commc’ns Comm’n,

476 U.S. 355 (1986) ...................................................6

Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190 (1983) ......... 8, 9

Thomas v. Union Carbide Agr. Prod. Co., 473

U.S. 568 (1985) ..........................................................7

West Virginia v. EPA, 136 S. Ct. 1000 (2016) ...............5

STATUTES AND RULES

42 U.S.C. § 7411(a)(1) ...................................................9

42 U.S.C. § 7411(a)(3) ...................................................7

42 U.S.C. § 7411(a)(6) ...................................................7

42 U.S.C. § 7411(d) .............................................. passim

42 U.S.C. § 7411(d)(1) ............................................... 6, 7

Supreme Court Rule 12.6 .............................................1

v

TABLE OF AUTHORITIES—Continued

Page

OTHER AUTHORITIES

2018 Integrated Resource Plan (2019–2028), available at https://www.wapa.gov/EnergyServices/

Documents/BasinElectric2018.pdf ....................... 3, 4

Basin Electric Power Cooperative 2020 Annual

Report, available at https://www.basinelectric.

com/_files/pdf/financials/Annual-Report-2020WEB.pdf ................................................ 2, 3, 4, 10, 11

Basin Electric Power Cooperative’s Comments

on Emissions Guidelines for Greenhouse Gas

Emissions from Existing Electric Utility Generating Units; Revisions to Emissions Guideline Implementing Regulations; Revisions to

New Source Review Program (October 31,

2018), EPA Docket No. EPA-HQ-OAR-2017-035524401, available at https://www.regulations.

gov/comment/EPA-HQ-OAR-2017-0355-24401 ... 10, 11

U.S. ENERGY INFORMATION ADMINISTRATION,

ELECTRIC POWER ANNUAL 2019 (Feb. 2021).............10

1

INTRODUCTION

Pursuant to Supreme Court Rule 12.6, Basin

Electric Power Cooperative (“Basin Electric”), an intervenor-respondent below, respectfully submits this

response in support of the petition for a writ of certiorari of the States of West Virginia, Alabama, Alaska,

Arkansas, Georgia, Indiana, Kansas, Louisiana, Missouri, Montana, Nebraska, Ohio, Oklahoma, South

Carolina, South Dakota, Texas, Utah, and Wyoming;

and Mississippi Governor Tate Reeves (collectively, the

“States”). On May 24, 2021, Basin Electric gave timely

notice to all parties of its intention to file this brief in

support of the petition for a writ of certiorari. This response is being submitted within 30 days of the States’

petition having been docketed on May 4, 2021.

The States seek review of the decision of the U.S.

Court of Appeals for the District of Columbia Circuit

in American Lung Association v. Environmental Protection Agency, 985 F.3d 914 (D.C. Cir. 2021), which

held that a rarely used provision of the Clean Air Act,

42 U.S.C. § 7411(d) (“Section 111(d)”), grants the U.S.

Environmental Protection Agency (“EPA”) unlimited

power to impose measures to reduce greenhouse gas

emissions that apply outside the fence line of regulated source facilities. As the States point out, the decision has significant consequences, particularly for

owners and operators of coal- and natural gas-fired

facilities subject to the regulation. States’ Pet. at 14–

15. Through the decision, the D.C. Circuit upended

decades of regulatory precedent limiting emission

standards to those achievable by the facility itself and

2

“EPA now has a judicial edict not to limit itself to

measures that can be successfully implemented at

and for individual facilities.” Id. at 2. Based on this

decision, EPA “can set standards on a regional or even

national level, forcing dramatic changes in how and

where electricity is produced[.]” Id. at 2–3.

---------------------------------♦---------------------------------

INTERESTS OF BASIN ELECTRIC

This decision is of particular import to Basin Electric, which is a not-for-profit generation and transmission cooperative owned by 141-member cooperative

systems. Basin Electric provides wholesale power to

its members in nine States, with electric generation

facilities in North Dakota, South Dakota, Wyoming,

Montana, and Iowa serving approximately 3 million

customers. It has a diverse energy portfolio consisting

of coal, gas, oil, distributed, and renewable energy. Basin Electric knows that an all-of-the-above energy

strategy, which takes advantage of the benefits of renewable energy development while maintaining a fleet

of natural gas- and coal-fired baseload generation, is

required to provide responsible, affordable, and reliable energy.

In the last decade, Basin Electric’s load has grown

almost 50%, and 80% of that load growth has been met

with wind, natural gas, and market purchases.1 Basin

1

See Basin Electric Power Cooperative 2020 Annual Report

(“2020 Annual Report”), at 5, available at https://www.basinelectric.

com/_files/pdf/financials/Annual-Report-2020-WEB.pdf.

3

Electric’s current energy supply includes 2,835.7 megawatts (“MW”) of coal, 1,776.4 MW of wind, and 1,353.7

MW of natural gas.2 It also owns 2,513 miles and maintains 2,536 miles of high-voltage transmission.3 By

2028, Basin Electric expects peak demand on its system to grow by 660 MW and energy consumption to

grow by approximately 4.3 million MW hours.4

Even as Basin Electric drives towards a more diversified portfolio and the market continues to shift towards renewables, coal and gas remain a critical piece

of Basin Electric’s generation puzzle. The majority of

its generation is currently fossil-fuel based (2,835.7

MW of coal or 40.4% of total supply and 1,353.7 MW of

natural gas or 19.3% of total supply).5 To provide the

most economical means of supplying power to a load

that varies every hour on an electric power system, Basin Electric relies upon three different types of generating capacity: (1) baseload units (such as coal-fired

steam-cycle power plants, nuclear, and hydroelectric

plants) that are capable of running at full-capacity continuously, (2) intermediate capacity units (such as oil

and gas-fired steam cycle plants and some hydroelectric plants) designed to be cycled, and (3) peaking capacity units (such as combustion turbines or internal

combustion engine plants) only operated during peak

2

Id. at 19.

Id. at 25.

4

See 2018 Integrated Resource Plan (2019–2028) (“IRP”),

at 1, available at https://www.wapa.gov/EnergyServices/Documents/

BasinElectric2018.pdf.

5

2020 Annual Report, at 19.

3

4

load periods and emergencies.6 While wind and solar

are increasingly available energy sources, they are too

unreliable to be considered sources of baseload generating capacity.7

---------------------------------♦---------------------------------

ARGUMENT IN SUPPORT

OF THE STATES’ PETITION

Noting the virtually unlimited regulatory authority conferred on EPA by the D.C. Circuit, the States’

petition argues persuasively that the Court’s review is

of paramount importance. See States’ Pet. at 13–25.

Basin Electric also agrees with the States’ articulation

of the numerous legal errors in the court’s decision. Id.

at 25–34. Basin Electric adds that EPA’s unbridled authority under the decision—to regulate beyond the

fence line of existing stationary sources as a means of

imposing electricity generation shifting mandates to

decarbonize the Nation’s energy fleet—would severely

undermine Basin Electric’s (and other electric generation utilities’) ability to continue transitioning to more

diverse energy portfolios while meeting the Nation’s

energy demands.

6

7

IRP, at 100.

See Annual Report, at 5–6.

5

I.

The States’ Petition Raises Important And

Timely Questions.

As the States correctly note, despite over five years

of litigating these same issues, the States, regulated

utilities, and the American people still lack resolution

from this Court concerning the proper scope of EPA’s

authority under Section 111(d). In February 2016, this

Court took the unprecedented step of staying EPA’s

Clean Power Plan (“CPP”) before it took effect and before the lower court considered the many pending petitions for review. West Virginia v. EPA, 136 S. Ct. 1000

(2016). The stay signaled that the scope of EPA’s authority under Section 111(d) is an important federal

question and that EPA’s attempt to reshape the energy

sector by imposing standards and obligations outside

the fence line of regulated source facilities exceeded

the scope of EPA’s statutory authority. Now, despite

EPA’s sound decision to heed this Court’s message by

repealing the CPP and adopting the Affordable Clean

Energy Rule (“ACE”), the court of appeals nonetheless

found that EPA’s repeal was invalid and there are “no

limits” on EPA’s authority under Section 111(d). See

States’ Pet. App. at 56a; see also States’ Pet. at 2.

In its February 12, 2021 Motion for a Partial Stay

of Issuance of the Mandate filed below, EPA notified

the court and parties that “EPA is obligated under Section 7411(d) to establish new emissions guidelines for

existing coal-fired power plants” and it is considering

the question of its authority under Section 111(d)

“afresh” in “a new rulemaking action.” Resps.’ Mot. for

Partial Stay of Issuance of the Mandate, at 3–4, Am.

6

Lung Ass’n v. EPA, No. 19-1140, Doc.1885168 (D.C. Cir.

Feb. 12, 2021); see also Status Report, at 3, No. 19-1140,

Doc.1899829 (D.C. Cir. May 24, 2021) (EPA indicating

that “administrative proceedings to respond to the

[court of appeals’] remand in a new rulemaking action

are ongoing.”); 42 U.S.C. § 7411(d)(1) (establishing

that EPA “shall prescribe regulations” under which the

States must submit a plan to EPA establishing “standards of performance for any existing source” (emphasis

added)). Indeed, as the States point out, President

Biden has already committed to reducing the Nation’s

greenhouse gas emissions by 50–52% of 2005 levels by

2030. See States’ Pet. at 15. Thus, a third round of Section 111(d) rulemaking is imminent.

But any new EPA rule that relies on the court

of appeals’ decision to establish the bounds of the

agency’s authority—rather than the bounds clearly established by Congress—will inevitably go too far. See

id. at 25–34. Agencies only have the powers granted

to them by Congress. La. Pub. Serv. Comm’n v. Fed.

Commc’ns Comm’n, 476 U.S. 355, 374 (1986) (“[A]n

agency literally has no power to act . . . unless and until Congress confers power upon it[.]”); Ctr. for Biological Diversity v. EPA, 722 F.3d 401, 413 (D.C. Cir. 2013)

(Kavanaugh, J., concurring) (“EPA has discretion to act

only within the statutory limits set by Congress[.]”).

Here, Congress authorized EPA to direct States to

set “standards of performance for any existing source.”

42 U.S.C. § 7411(d)(1) (emphasis added). An “existing

source” is defined as a “stationary source other than a

new source” and a “stationary source” in turn is clearly

7

defined as “any building, structure, facility, or installation which emits or may emit any air pollutant.” Id.

§ 7411(a)(3), (6). Nowhere does Congress grant EPA

authority to regulate directly or indirectly wholesale

energy markets, or impose requirements outside the

fence line of an existing source’s facility. See States’

Pet. at 29–32. And the Clean Air Act is silent regarding

EPA’s authority to intentionally shift the Nation’s energy portfolio from fossil-fuel based sources to renewables.

Granting review now—rather than awaiting petitions for review of EPA’s third rule—will allow the

Court to decide important legal issues that will necessarily control how EPA exercises its statutory authority in future Section 111(d) proceedings. The issues

have been thoroughly developed over the last five

years, and the remaining issues before the Court are

legal in nature. See States’ Pet. at 24–25. “Nothing

would be gained by postponing a decision, and the public interest would be well served by a prompt resolution[.]” Thomas v. Union Carbide Agr. Prod. Co., 473

U.S. 568, 581–82 (1985) (finding issues concerning statutory interpretation were ripe for review where “[t]he

issue presented . . . is purely legal, and will not be clarified by further factual development”).

Further, a decision resolving EPA’s Section 111(d)

authority is necessary to ensure Basin Electric and

other utilities know whether they will soon face an

EPA-driven upheaval in the Nation’s energy sector.

Basin Electric and other energy producers across the

country require regulatory certainty to develop and

8

manage a diversified fleet to meet customer demands.

But “[i]nfrastructure cannot change on a dime.” States’

Pet. at 23. Basin Electric and other electric generation

utilities must plan ahead and make resource commitments years in advance. See Pac. Gas & Elec. Co. v.

State Energy Res. Conservation & Dev. Comm’n, 461

U.S. 190, 201 (1983) (recognizing utilities’ development

of new facilities “requires considerable advance planning”). For example, Basin Electric’s latest planning

document, developed and submitted in 2018 to the U.S.

Department of Energy’s Western Area Power Administration, analyzes long-term system needs and provides justification for new energy resources that may

be needed through 2028.8 Basin Electric must engage

in advanced planning to identify member load forecasts, review power supply needs, assess various power

supply regions’ needs (including neighboring utilities

and whether excess power is available for purchase),

and compare the market power costs to the costs of

building new resources.9

Integrated resource planning is, in part, an exercise of predicting short- and long-term trends in federal regulations, and choosing options that are most

likely to be (a) permitted under the regulations, and

(b) built in a timely way to meet changing generation

and transmission resource needs. Massive uncertainty

in the regulatory landscape imposes countless hurdles

to overcome in the planning process. See Pac. Gas &

8

9

IRP, at 1.

Id. at 4.

9

Elec. Co., 461 U.S. at 203 (finding that because the

Court resolved the legal question governing utilities,

“there is little likelihood that industry behavior would

be uniquely affected by whatever uncertainty surrounds the [statute’s] provisions”). The Court can resolve that uncertainty by granting the States’ Petition.

II.

The Consequences Of The D.C. Circuit’s Ruling Are Significant.

The D.C. Circuit’s decision would leave EPA’s discretion untethered to any limiting standards and open

the door for rules aimed at further limiting operation

of and investment in existing coal- and natural gasfired plants. Section 111(d) regulations, however, were

not intended to render existing energy sources obsolete. Section 111(d)’s application to “existing sources”

presumes that those sources will continue to operate

economically. See 42 U.S.C. § 7411(a)(1) (directing EPA

to “tak[e] into account the cost of achieving” emission

reductions in determining the best system of emission

reduction); see also Essex Chem. Corp. v. Ruckelshaus,

486 F.2d 427, 433 (D.C. Cir. 1973) (“An adequately

demonstrated system is one which has been shown to

be reasonably reliable, reasonably efficient, and which

can reasonably be expected to serve the interests of

pollution control without becoming exorbitantly costly

in an economic or environmental way.” (emphasis

added)). Any regulation that artificially drives down

demand for reliable power from coal- and natural

gas-fired plants is unwise and introduces a level of

uncertainty that endangers Basin Electric’s and other

10

electric generation utilities’ ability to meet the Nation’s energy demands.

As the States explain, “[T]he ruling threatens the

existence of over 200 gigawatts of coal plants and over

500 gigawatts of natural gas plants, or roughly twothirds of the nation’s total electricity-generation capacity.” States’ Pet. at 14 (citing U.S. ENERGY INFORMATION

ADMINISTRATION, ELECTRIC POWER ANNUAL 2019, tbl.

4.3 (Feb. 2021)). But forced generation shifting from

existing sources to other sources poses significant burdens on the owners and operators of coal and natural

gas plants, forcing the premature retirement of existing units and the stranding of those assets (many of

which have not been fully depreciated).10

While Basin Electric continues to diversify its energy portfolio and the market continues to shift towards renewables, coal and gas remain critical to

Basin Electric’s ability to supply reliable and affordable energy to its members. It relies on 2,835.7 MW of

coal and 1,353.7 MW of natural gas generation.11 But,

due to increased availability of wind energy, Basin

Electric’s coal-fired baseload units are operating at

lower loads than they did historically, cycling from

10

See Basin Electric’s Comments on Emissions Guidelines

for Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emissions Guideline Implementing

Regulations; Revisions to New Source Review Program (October

31, 2018), EPA Docket No. EPA-HQ-OAR-2017-0355-24401 (“ACE

Comment Letter”), at 11, available at https://www.regulations.

gov/comment/EPA-HQ-OAR-2017-0355-24401.

11

2020 Annual Report, at 19.

11

minimum to maximum load.12 Any regulation that

drives further cycling of baseload units—or extends

the anticipated length of time that these units will be

cycled—not only will have costly long-term impacts on

the equipment but will reduce overall efficiency of the

units. And lower efficiencies result in higher emissions

of greenhouse gases.13

Additionally, reliability cannot be ignored.14 Wind

and solar only generate power when the weather permits. Until economical and proven battery storage

technology is commercially available, wind and solar

cannot be considered reliable sources of baseload generating capacity.15 Coal generation may be less flexible—because it cannot be quickly cycled to follow wind

in meeting market demand—but it is reliable and cost

efficient, especially because most of Basin Electric’s

power plants are located adjacent to coal mines, which

eliminates the costs to transport the fuel.16 Each type

of power generation performs an important function

within Basin Electric’s portfolio and driving generation away from a particular resource will have myriad

short- and long-term impacts on costs of generating

power and reliability.

In short, Basin Electric—and many other energy producers—depends on an all-of-the-above energy strategy

12

See ACE Comment Letter, at 21.

Id. at 22–23.

14

2020 Annual Report, at 6.

15

Id.

16

Id.

13

12

that recognizes flexibility and reliability. By utilizing

diversified resources, Basin Electric is able to meet

its members’ energy needs through reliable sources,

and also better manage its carbon footprint by incorporating resources into its portfolio that have either

low or no carbon emissions.17 But imposing another

round of regulation that artificially increases demand

for renewables without considering the importance of

maintaining baseload generation will upend Basin

Electric’s strategic planning towards greater investment in renewables. The D.C. Circuit’s decision granting EPA the authority that even Congress did not

grant it to eliminate whole swaths of the Nation’s energy supply is erroneous and should be reversed.

---------------------------------♦---------------------------------

CONCLUSION

Basin Electric respectfully requests that this

Court grant the States’ petition for writ of certiorari.

Respectfully submitted,

EMILY C. SCHILLING

Counsel of Record

HOLLAND & HART LLP

901 K Street NW, Suite 850

Washington, DC 20001

ECSchilling@hollandhart.com

Tel: (202) 393-6500

Fax: (202) 747-6574

TINA R. VAN BOCKERN

HOLLAND & HART LLP

555 17th Street, Suite 3200

Denver, CO 80202

TRVanBockern@hollandhart.com

Tel: (303) 295-8107

Fax: (720) 545-9952

Counsel for Respondent

Basin Electric Power Cooperative

17

IRP, at 101.