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

Supreme Court briefDec 13, 2021

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No. 20-1530 (Consolidated Case

Nos. 20-1531, 20-1780, 20-1778)

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In The

Supreme Court of the United States

---------------------------------♦--------------------------------STATE OF NORTH DAKOTA

Petitioner,

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ET AL.,

Respondents.

---------------------------------♦--------------------------------On Writ Of Certiorari To The

United States Court Of Appeals

For The District Of Columbia Circuit

---------------------------------♦--------------------------------MERITS BRIEF OF PETITIONER

THE STATE OF NORTH DAKOTA, NO. 20-1780

---------------------------------♦--------------------------------WAYNE STENEHJEM

Attorney General

STATE OF NORTH DAKOTA

PAUL M. SEBY*

Special Assistant

Attorney General

MATTHEW SAGSVEEN

Solicitor General

MARGARET OLSON

Assistant Attorney General

NORTH DAKOTA OFFICE OF

ATTORNEY GENERAL

600 E. Boulevard Avenue

#125

Bismarck, ND 58505

Telephone: (701) 328-3640

Email: masagsve@nd.gov

maiolson@nd.gov

MATTHEW K. TIESLAU

GREENBERG TRAURIG, LLP

1144 15th Street, Suite 3300

Denver, CO 80202

Telephone: (303) 572-6500

Facsimile: (303) 572-6540

Email: sebyp@gtlaw.com

*Counsel of Record

Counsel for Petitioner State of North Dakota

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COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

QUESTION PRESENTED

Section 111(d) of the Clean Air Act (“CAA”), 42 U.S.

Code § 7411(d), governs air emissions from stationary

sources of air pollutants. Section 111(d) explicitly requires the U.S. Environmental Protection Agency

(“EPA”) to develop guidelines for the States to create

their own Section 111(d) plans to establish “standards

of performance” for controlling air emissions from any

individual “existing source.” Section 111(d)(1) further

provides that EPA guidelines “shall permit” States, in

developing their plans, to “take into consideration,

among other factors, the remaining useful life of the

existing source to which such standard applies.”

The question presented is: Can EPA promulgate

regulations for existing stationary sources that require

States to apply binding nationwide “performance

standards” at a generation-sector-wide level, instead of

at the individual source level, and can those regulations deprive States of all implementation and decision-making power in creating their Section 111(d)

plans?

PARTIES TO THE PROCEEDING

Petitioner is the State of North Dakota (Petitioned

in Case No. 20-1780). North Dakota was a respondentintervenor below.

Other Petitioners in this consolidated case are: 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 (Petitioned in Case No. 201530, and were respondent-intervenors below); the

North American Coal Corporation (Petitioned in Case

No. 20-1531, and was a petitioner in Case No. 19-1179

below prior to consolidation in Case No. 19-1140); and

Westmoreland Mining Holdings LLC (Petitioned in

Case No. 20-1778, and was a petitioner in Case No. 191176 below prior to consolidation in Case No. 19-1140).

Respondent in 20-1530, 20-1531, 20-1778, 20-1780

who was a petitioner-intervenor below and filed a brief

in opposition to certiorari is the State of Nevada.

Respondents in 20-1530, 20-1531, 20-1778, 201780 who were respondents below are the United

States Environmental Protection Agency and Michael

Regan, in his official capacity as Administrator of the

United States Environmental Protection Agency (substituted for the previous administrator under Supreme

Court Rule 35.3).

iii

PARTIES TO THE PROCEEDING—Continued

Respondents who were petitioners below and did

not file any brief at the certiorari stage are, by court of

appeals case number, as follows:

In Case No. 19-1175: Robinson Enterprises, Inc.,

Nuckles Oil Co., Inc., DBA Merit Oil Co., Construction

Industry Air Quality Coalition, Liberty Packing Co.

LLC, Dalton Trucking, Inc., Norman R. “Skip” Brown,

Joanne Brown, The Competitive Enterprise Institute,

and the Texas Public Policy Foundation.

In Case No. 19-1185: Biogenic CO2 Coalition.

Respondents who were respondent-intervenors

below and did not file any brief at the certiorari stage

are Indiana Michigan Power Co., Kentucky Power Co.,

Public Service Co. of Oklahoma, Southwestern Electric

Power Co., AEP Generating Co., AEP Generation Resources, Inc., Wheeling Power Co., Chamber of Commerce of the United States of America, Indiana Energy

Association and Indiana Utility Group, International

Brotherhood of Boilermakers, Iron Ship Builders,

Blacksmiths, Forgers & Helpers, AFL-CIO, Murray

Energy Corp., National Rural Electric Cooperative

Association, Nevada Gold Mines, Newmont Nevada

Energy Investment, and PowerSouth Energy Cooperative.

TABLE OF CONTENTS

Page

Opinion Below & Jurisdiction .............................

Statutory Provisions Involved .............................

Introduction .........................................................

Statement of the Case ......................................... 11

Statutory and Regulatory Background ..... 11

The Clean Power Plan ............................... 15

The Affordable Clean Energy Rule............ 20

Procedural History .................................... 22

Summary of the Argument .................................. 25

Argument ............................................................. 29

The D.C. Circuit’s Decision Improperly Interpreted the Plain Text of Section 111 of

the Clean Air Act ....................................... 29

A. The Plain Text of the Clean Air Act

Mandates that the States have the

Primary Role in Setting Standards

of Performance Under the Cooperative Federalism Codified in Section

111(d)(1) ............................................... 33

B. The Plain Text of the Clean Air Act

Mandates that the BSER Set by EPA

for Existing Sources be Adequately

Demonstrated and Achievable for

Application “At” and “To” Existing

Sources ................................................ 47

TABLE OF CONTENTS—Continued

Page

i. The BSER Set by EPA Must be “Adequately Demonstrated” for Individual Existing Sources .................. 48

ii. The BSER Set by EPA for Existing

Sources Must be “Adequately

Demonstrated” and Allow States to

Establish Emission Limitations

that are “Achievable” by Existing

Sources .............................................. 51

iii. The States’ Authority to Establish

Standards of Performance “At” and

“To” Individual Existing Sources

Cannot Be Infringed Upon ............. 53

Conclusion............................................................ 56

TABLE OF AUTHORITIES

Page

CASES

Alaska Dept. of Environmental

Conservation v. EPA,

540 U.S. 461 (2004) ......................... 38, 40, 41, 42, 43

American Corn Growers Ass’n v. EPA,

291 F.3d 1 (D.C. Cir. 2002) .......................... 43, 44, 45

American Electric Power Co. v. Connecticut,

564 U.S. 410 (2011) ........................................... 38, 39

American Lung Ass’n v. EPA,

985 F.3d 914 (D.C. Cir. 2021) .............................. 1, 24

BCCA Appeal Group v. EPA,

355 F.3d 817 (5th Cir. 2003) .............................. 11, 12

Chevron, U.S.A., Inc. v. N.R.D.C., Inc.,

467 U.S. 837 (1984) .................................................34

Connecticut Nat. Bank v. Germain,

503 U.S. 249 (1992) .................................................34

Desert Palace, Inc. v. Costa,

539 U.S. 90 (2003) ...................................................33

FCC v. RCA Commc’ns,

346 U.S. 86 (1953) .....................................................5

General Motors Corp. v. United States,

496 U.S. 530 (1990) .................................................11

Guardians Ass’n v. Civil Serv. Comm’n of

the City of New York,

463 U.S. 582 (1983) .................................................30

vii

TABLE OF AUTHORITIES—Continued

Page

Hartford Underwriters Ins. Co. v.

Union Planters Bank, N. A.,

530 U.S. 1 (2000) .....................................................34

King v. St. Vincent’s Hospital,

502 U.S. 215 (1991) ........................................... 28, 51

Louisiana Public Serv. Comm’n v. FCC,

476 U.S. 355 (1986) .................................................30

Michigan v. EPA,

268 F.3d 1075 (D.C. Cir. 2001) ................ 6, 11, 30, 33

Prill v. NLRB,

755 F.2d 941 (D.C. Cir. 1985) ....................................5

State of North Dakota v. EPA,

No. 15A793 (Jan. 29, 2016) .......................................9

State of West Virginia, et al. v. EPA,

No. 15-1363 (and consolidated cases)

(D.C. Cir., Oct. 23, 2015) .................................... 19, 20

Train v. Natural Resources Defense Council, Inc.,

421 U.S. 60 (1975) ............................................. 25, 37

U.S. v. Atlantic Research Corp.,

551 U.S. 128 (2007) ........................................... 28, 51

Union Elec. Co. v. EPA,

427 U.S. 246 (1976) ........................................... 37, 38

West Virginia, et al. v. EPA,

Nos. 15A773, 15A776, 15A778, 15A787,

15A793 (Feb. 9, 2016) .......................................... 9, 20

viii

TABLE OF AUTHORITIES—Continued

Page

STATUTES

5 U.S.C. § 706(2)(C) .....................................................30

28 U.S.C. § 1254(1) ........................................................1

42 U.S.C. § 7401(a)(3) .................................................12

42 U.S.C. § 7407(a) ......................................................12

42 U.S.C. § 7410 ...................................................... 1, 14

42 U.S.C. § 7411 .................................................. passim

42 U.S.C. § 7479(3) ......................................................40

42 U.S.C. § 7602 ............................................................2

42 U.S.C. § 7602(k) .............................................. passim

REGULATIONS

Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64,662 (Oct. 23,

2015) ................................................................ passim

Repeal of the Clean Power Plan; Emissions

Guidelines for Greenhouse Gas Emissions

from Existing Electric Utility Generating

Units; Revisions to Emission Guidelines Implementing Regulations, 84 Fed. Reg. 32,520

(July 8, 2019) ................................................... passim

TABLE OF AUTHORITIES—Continued

Page

OTHER AUTHORITIES

https://www.americanbar.org/groups/litigation/

committees/environmental-energy/practice/

2016/021716-energy-supreme-court-stays-epasclean-power-plan/ ....................................................20

OPINION BELOW & JURISDICTION

The United States Court of Appeals for the D.C.

Circuit entered judgment on January 19, 2021 (JA.53255), which is reported at American Lung Ass’n v. EPA,

985 F.3d 914 (D.C. Cir. 2021). North Dakota’s Petition

for Certiorari was timely filed on June 18, 2021, and

was granted on October 29, 2021. The Court has jurisdiction under 28 U.S.C. § 1254(1).

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

STATUTORY PROVISIONS INVOLVED

Section 111 of the Clean Air Act (“CAA”), 42 U.S.C.

§ 7411 provides in pertinent part:

(a)

(1) The term “standard of performance”

means a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the

application of the best system of emission

reduction which (taking into account the

cost of achieving such reduction and any

nonair quality health and environmental

impact and energy requirements) the

Administrator determines has been adequately demonstrated.

. . . (d) Standards of performance for existing sources; remaining useful life of source

(1) The Administrator shall prescribe

regulations which shall establish a

procedure similar to that provided by

section 7410 of this title under which

each State shall submit to the Administrator a plan which (A) establishes standards of performance for

any existing source for any air pollutant (i) for which air quality criteria

have not been issued or which is not

included on a list published under

section 7408(a) of this title or emitted

from a source category which is regulated under section 7412 of this title

but (ii) to which a standard of performance under this section would apply if such existing source were a new

source, and (B) provides for the implementation and enforcement of

such standards of performance. Regulations of the Administrator under

this paragraph shall permit the

State in applying a standard of performance to any particular source

under a plan submitted under this

paragraph to take into consideration,

among other factors, the remaining

useful life of the existing source to

which such standard applies.

Section 302 of the CAA, 42 U.S.C. § 7602 also provides in pertinent part:

(k)

The terms “emission limitation” and

“emission standard” mean a requirement

established by the State or the Administrator which limits the quantity, rate, or

concentration of emissions of air pollutants

on a continuous basis, including any requirement relating to the operation or

maintenance of a source to assure continuous emission reduction, and any design,

equipment, work practice or operational

standard promulgated under this chapter.

The full relevant provisions of the Clean Air Act

are set forth at No. 20-1780, Pet.App.216-231.

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

INTRODUCTION

The D.C. Circuit’s decision below that is on review

by the Court is that EPA did not act lawfully in repealing the regulations entitled Carbon Pollution Emission

Guidelines for Existing Stationary Sources: Electric

Utility Generating Units, 80 Fed. Reg. 64,662 (Oct. 23,

2015) (the “Clean Power Plan” or “CPP”), JA.867-1669,

and promulgating the Repeal of the Clean Power Plan;

Emissions Guidelines for Greenhouse Gas Emissions

from Existing Electric Utility Generating Units; Revisions to Emission Guidelines Implementing Regulations, 84 Fed. Reg. 32,520 (July 8, 2019) (the “CPP

Repeal/ACE Rule” or “ACE Rule”), JA.1729-2030.

The dispute over the CPP and the CPP Repeal/

ACE Rule goes to the proper and relative roles and authorities of the Federal government (through EPA) and

the States in regulating the emissions of carbon dioxide (“CO2”) from existing fossil-fueled energy generating units (“EGUs,” or more colloquially, power plants).

North Dakota believes that EPA struck the correct and

Congressionally-mandated balance between State and

Federal authority in the CPP Repeal/ACE Rule and

that the D.C. Circuit incorrectly vacated that Rule.

EPA repealed the CPP and promulgated the ACE

Rule because EPA concluded that the CPP exceeded

EPA’s statutory authority under the CAA. EPA found

that the best system of emission reductions (“BSER”)

codified in the CPP, which established national fixed

hard emissions limits applied on a sector-wide basis

(e.g. pounds of carbon dioxide per megawatt-hour or

CO2 lb/MWhr) and mandated that States must achieve

them, was in direct conflict with Section 111(d) of the

CAA, which provides that the States (not EPA) “have

the authority and responsibility to establish and apply

standards of performance for their existing sources,

taking into consideration source-specific factors where

appropriate.” CPP Repeal/ACE Rule, JA.1732. Because

the sector- and nationwide-hard emission limitations

of the CPP usurped the States’ statutorily mandated

role under Section 111(d)(1), EPA’s repeal of the CPP

was compelled. In the same rulemaking and based on

the same reasoning, EPA replaced the CPP with the

ACE Rule, setting national BSER guidelines (not mandatory hard standards) and returning to the States’

their primacy in setting standard of performance for

existing sources.

The D.C. Circuit held that EPA got it wrong with

the CPP Repeal/ACE Rule, opining that Section 111(d)

of the CAA does not “constrain [EPA] to identifying a

[BSER] consisting only of controls ‘that can be applied

at and to a stationary source’,” and therefore EPA

“based its decision” to repeal the CPP and promulgate

the ACE Rule “on an erroneous view of the law.”

JA.104. The D.C. Circuit went on to conclude that because EPA’s interpretation of its authority was not “the

only permissible interpretation of the scope of the

EPA’s authority,” the D.C. Circuit held that the CPP

Repeal/ACE Rule “must be declared invalid, even

though the agency might be able to adopt the regulation in the exercise of its discretion, if it was not based

on the agency’s own judgment but rather on the unjustified assumption that it was Congress’ judgment that

such a regulation is desirable or required.” Id. at 214

(quoting Prill v. NLRB, 755 F.2d 941, 948 (D.C. Cir.

1985) and FCC v. RCA Commc’ns, 346 U.S. 86, 96

(1953) (internal quotation omitted).

However, it is the D.C. Circuit which misinterpreted Section 111(d) by finding that EPA, not the

States, could set binding hard nationwide performance

standards (i.e., emission limitations) and was not required to promulgate BSER guidelines that could be

applied by the States when setting performance standards (i.e., achievable emission limitations), including

taking into account source-specific factors. The D.C.

Circuit ignored the plain text of Section 111(d)(1) by

effectively dismantling the States’ role in establishing

performance standards for existing sources through

State plans created under Section 111(d)(1).

The D.C. Circuit’s decision undermines the cooperative federalism framework carefully crafted by Congress to reach a workable balance between federal and

State authority. Described as an “experiment in federalism,” Michigan v. EPA, 268 F.3d 1075, 1078 (D.C. Cir.

2001) (quotation omitted), the CAA assigns to the

States the primary role in air pollution prevention and

control. One of the States’ principal authorities and responsibilities under the Act is to implement and enforce standards of performance for existing sources of

air pollution under Section 111(d), using the States’ expertise in applying source-specific considerations and

factors to establish achievable emission limitations

controlling air emissions from those sources.

To that end, Section 111(d) directs EPA’s Administrator to “prescribe regulations which shall establish

a procedure . . . under which each State shall submit

to the Administrator a plan which (A) establishes

standards of performance for any existing source for

any air pollutant . . . and (B) provides for the implementation and enforcement of such standards of performance.” 42 U.S.C. § 7411(d)(1). This text reflects the

Federal-State balance of the cooperative federalism

framework created by Congress: EPA is to establish

national guidelines (i.e., BSER) for the States to follow

in creating their Section 111(d) plans, but it is the

States, through the State plans, that establish the specific standards of performance (i.e., achievable emission

limitations) for the existing sources in their States.

The final layer of cooperative federalism is that the

State plans that establish standards of performance

must be reviewed and approved by EPA. In addition,

Congress specifically directed EPA to “permit the

State” in creating its Section 111(d) plan to “apply[ ] a

standard of performance to any particular source” and

“to take into consideration, among other factors, the remaining useful life of the existing source to which such

standard applies.” Id.

The primary “regulatory authority” and decisionmaker in setting standards of performance for

specific individual existing sources under Section

111(d) is therefore the States. That means that Congress granted States the authority (and responsibility)

to establish “emission limitations achievable” through

the application of EPA’s BSER guidelines, with “emission limitation” defined as:

[A] requirement established by the State or

the Administrator which limits the quantity,

rate, or concentration of emissions of air pollutants on a continuous basis, including any

requirement relating to the operation or

maintenance of a source to assure continuous

emission reduction, and any design, equipment, work practice or operational standard

promulgated under this chapter

42 U.S.C. § 7602(k). Congress also granted States considerable discretion in exercising this authority, including requiring that States “take into consideration”

source specific factors such as, inter alia, “the remaining useful life of the source” when creating their Section 111(d) plans. 42 U.S.C. §7411(d)(1). Section 111(d)

did not grant EPA the authority to establish emission

limitations such as binding and fixed nationwide

standards of performance and force the States to

achieve these emission limitations through the State

plans, reducing the States to mere extensions of Federal authority.

The CPP established fixed emission limitations

(and thus standards of performance) measured by

pounds of carbon dioxide per megawatt-hour, or CO2

lb/MWhr for (1) certain EGU subcategories as a whole

(e.g. all fossil fuel-fired EGUs) that were intentionally

not achievable for certain types of EGUs within those

categories (such as coal-fired EGUs) to meet under any

realistic operating scenario; or (2) “rate-based CO2

goals that are the weighted aggregate of the emission

performance rates for the state’s EGUs” as a whole,

which relied on the same hard CO2 lb/MWhr emission

limitations and thus could still not be met by certain

types of EGUs (such as coal-fired EGUs). JA.300. In establishing emission limitations and standards of performance, the CPP displaced and eliminated the

States’ statutorily-mandated primary role under Section 111(d) for creating Section 111(d) plans that set

standards of performance for existing sources while

applying source-specific considerations. The CPP did

not create “procedures” or provide BSER “guidelines”

for the States to use to establish achievable emissions

limitations. Instead, under the guise (and title) of

promulgating BSER “guidelines,” the CPP established

binding national emission limitations, from which EPA

calculated binding emission limitations for each State

that were standards of performance. This infringed

on and severely diminished the State’s primary authority to establish achievable emission limitations

(i.e., standards of performance for existing sources),

reducing the States’ role to establishing controls to

achieve the binding standards of performance and

emission limitations imposed by EPA.

EPA’s hard emission limitations effectively required the States to shut down existing sources that

could not achieve those mandates, or subsidize investment in alternate energy sources that EPA preferred

in order to offset emissions that exceeded EPA’s hard

emission limitations—a regulatory scheme known as

“generation shifting.” See CPP, JA.768 (claiming that

utilities with coal-fired EGUs could reduce their emissions by buying electricity from EPA-preferred generators “through contractual arrangements, investment,

or purchase,” thus shifting generation elsewhere). The

CPP obligated the States to achieve the federallymandated emission limitations by any means possible,

even if that required States to shut down power plants

in their own States and purchase power from other

States. The CPP thus turned Section 111(d) upside

down, with EPA establishing binding emission limitations and standards of performance, the States reduced to becoming EPA’s implementation foot soldiers.

This Court stayed implementation of the CPP before it could even take effect. See Application by the

State of North Dakota for Immediate Stay of Final

Agency Action Pending Appellate Review, State of

North Dakota v. EPA, No. 15A793 (Jan. 29, 2016),

Pet.App.203; Order in Pending Case, West Virginia,

et al. v. EPA, Nos. 15A773, 15A776, 15A778, 15A787,

15A793 (Feb. 9, 2016).

EPA then correctly concluded that the CPP exceeded EPA’s statutory authority, repealed the CPP,

and promulgated the ACE Rule which returned to the

States their rights and authorities provided for under

the CAA. The EPA explained that it was statutorily

compelled to repeal the CPP because “the plain meaning” of Section 7411(d) “unambiguously” limits the

BSER to only those measures “that can be put into operation at a building, structure, facility, or installation,” and does not allow the EPA to “select as the

BSER a system that is premised on application to

the source category as a whole or to entities entirely

outside the regulated source category.” ACE Rule,

JA.1746. EPA also concluded that the CPP usurped the

States’ primary role in regulating existing sources under Section 111(d).

EPA replaced the CPP with the ACE Rule, which,

consistent with the text of Section 111(d), provided the

States with procedures and guidance (i.e., the BSER)

that the States must follow when the States, not EPA,

establish achievable emissions limitations (i.e., standards of performance) for existing sources in their

States, taking source-specific factors into account.

The D.C. Circuit vacated the ACE Rule and the

rule’s repeal of the CPP, holding that the EPA erred in

concluding that it did not have the authority to reach

past the States and directly promulgate hard emission

limitations applicable to existing sources. The D.C.

Circuit relied largely on the reasoning underlying the

CPP, which had been stayed by this Court.

The D.C. Circuit’s decision to vacate the CPP Repeal/ACE Rule resurrects the jurisdictional overreach

of EPA in the CPP that was stayed by this Court, and

usurps the States’ statutory authority under Section

111(d) of the CAA to establish and implement standards of performance for existing sources while taking

into account source specific factors that the Congress

entrusted the States to evaluate.

North Dakota respectfully requests that this

Court confirm the delicate balance of cooperative federalism established by Congress in Section 111 of the

Clean Air Act that gives the States the primary role

establishing standards of performance for existing

sources of air emissions, vacate the D.C. Circuit’s opinion below, and reinstate the ACE Rule. Thus the ACE

Rule, published at 84 Fed. Reg. 32,520 and codified at

40 CFR Part 60, is before the Court.

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

STATEMENT OF THE CASE

A. Statutory and Regulatory Background

The CAA establishes “a comprehensive national

program that ma[kes] the States and the Federal Government partners in the struggle against air pollution.” General Motors Corp. v. United States, 496 U.S.

530, 532 (1990). In this “experiment in cooperative federalism” (Michigan v. EPA, 268 F.3d at 1083), the

CAA establishes that improvement of the nation’s air

quality will be pursued “through state and federal regulation,” where controlling the sources of air pollution

is the primary responsibility of the States (BCCA

Appeal Group v. EPA, 355 F.3d 817, 821-22 (5th Cir.

2003); see also 42 U.S.C. § 7401(a)(3) (“air pollution

prevention . . . and air pollution control at its source is

the primary responsibility of States and local governments”) (emphasis added); and 42 U.S.C. § 7407(a)

(“Each State shall have the primary responsibility for

assuring air quality within the entire geographic area

comprising such State. . . .”)).

Section 111(a)(1) of the CAA, 42 U.S.C. § 7411, defines “standards of performance” for new and existing

stationary sources and the BSER that EPA sets to allow States to promulgate standards of performance.

Section 111(d) implements the CAA’s cooperative

federalism approach as to existing sources by requiring EPA to “establish a procedure” for States to submit

Section 111(d) plans that “establish[ ] standards of performance for [certain] existing source for any air pollutant[s].” 42 U.S.C. § 7411(d)(1).

Under Section 111(d), EPA may not set emission

reduction requirements for States or existing sources.

EPA instead is only authorized to “establish a procedure” for States to submit plans containing State performance standards applying EPA’s BSER guidelines.

42 U.S.C. § 7411(d)(1). EPA then reviews State plans to

determine if the States’ performance standards are

“satisfactory” based on the BSER guidelines (not mandates) established by EPA. Id. at (d)(2)(A). The primacy

of State authority in setting standards of performance

for existing sources under Section 111(d) stands in

sharp contrast to the primary authority granted to

EPA to set such standards for new sources under Section 111(b).

A “standard of performance,” is “a standard for

emissions of air pollutants which reflects the degree of

emission limitation achievable” by applying the “best

system of emission reduction . . . taking into account

the cost of achieving such reduction and any nonair

quality health and environmental impact and energy

requirements [EPA] determines has been adequately

demonstrated.” Id. at (a)(1) (emphasis added). The

BSER set by EPA is not an “emission limitation,” which

is a “requirement established by the State or the [EPA]

which limits the quantity, rate, or concentration of

emissions of air pollutants on a continuous basis, including any requirement relating to the operation or

maintenance of a source to assure continuous emission

reduction, and any design, equipment, work practice or

operational standard promulgated under this chapter.”

42 U.S.C. § 7602(k). As set forth in Section 111(a), the

standard of performance is established by applying

EPA’s BSER to create an “emission limitation” that is

“achievable,” so the BSER is by definition not an “emission limitation.” 42 U.S.C. § 7411(a)(1).

While EPA creates the BSER, the achievable emission limitation may be established by either the State

or EPA, depending on the direction of Congress in Section 111. Under Section 111(b), the standards of performance for new sources are established by EPA. By

contrast, Section 111(d)(1) gives States the primary

authority to establish the standards of performance

(and emission limitation) for existing sources.

Section 111(d)(1) requires EPA to “establish a procedure similar to that provided by section 7410 of this

title under which each State shall submit to [EPA] a

plan which (A) establishes standards of performance

for any existing source for any air pollutant. . . .” 42

U.S.C. § 7411(d)(1). Further, the “[r]egulations of the

Administrator under this paragraph shall permit the

State in applying a standard of performance to any

particular source under a plan submitted under this

paragraph to take into consideration, among other factors, the remaining useful life of the existing source to

which such standard applies.” Id. Thus, for existing

sources, States have the primary authority to establish

the standards of performance (i.e., the achievable

emissions limitations, applying EPA’s BSER guidelines), subject to EPA review and approval. Further,

Congress specifically requires that States be able to

consider source-specific factors when establishing

those achievable emission limitations (i.e., standards

of performance).

Under Section 111(d)(1), EPA does not have the

authority to establish binding emission limitations for

existing sources that States are then required to

implement through local controls. EPA instead is

only authorized to “establish a procedure” (42 U.S.C.

§ 7411(d)(1)) for States to follow when they create their

plans containing performance standards established

by States applying EPA’s BSER. EPA’s BSER are

guidelines, not binding emission limitations on the

States or existing sources, because Section 111(d) is explicit that it is the States, not EPA, that establish the

binding standards of performance for existing sources.

This is reflected in the titles of both the CPP and the

CPP Repeal/ACE Rule, which are both captioned as

“emission guidelines.” EPA then reviews State plans to

determine if the standards of performance set by the

States are “satisfactory.” 42 U.S.C. § 7411(d)(2)(A).

These express statutory limitations on EPA’s authority are reinforced by Section 111(d)(2), which establishes when EPA may step into the shoes of a State

who failed to submit a satisfactory plan for regulating

emissions from existing sources. If a State fails to submit an adequate plan, EPA, in creating an adequate

replacement “plan prescribed under” Section 111(d),

“shall take into consideration, among other factors, remaining useful lives of the sources in the category of

sources.” 42 U.S.C. § 7411(d)(2). Thus, EPA may only

establish standards of performance (i.e., emission limitations) for existing sources for a State that fails to do

so. Even then, standards of performance set by EPA

“shall” consider source-specific factors. Id.

B. The Clean Power Plan

The CPP was promulgated on October 23, 2015, in

which the EPA determined that the BSER would be

comprised of three “building blocks” which included:

(1) Improving heat rate at affected coal-fired steam

EGUs; (2) Substituting increased generation from

lower-emitting existing natural gas combined cycle

units for generation from higher-emitting affected

steam generation units; and (3) substituting increased

generation from new zero-emitting renewable energy

generating capacity for generation from affected fossil

fuel-fired generating units. CPP, JA.299.

The second and third “building blocks” are commonly referred to as “generation shifting” mandates

because they impose emission reductions that are intentionally not achievable by the applicable source category and require emission reductions to occur shifting

power generation from the source category that cannot meet the standard that has been imposed on

that category (i.e., “generation shifting from coalfired steam EGUs to existing” gas EGUs) to loweremission sources of energy. Id. at JA.582.

To effectuate its “generating shifting” mandate,

EPA set binding “CO2 emission performance rates for

two subcategories of affected EGUs—fossil fuel-fired

electric utility steam generating units and stationary

combustion turbines.” Id. at JA.300. For fossil fuelfired-steam generating units (i.e., coal-fired, gas-fired,

and petroleum-fired EGUs), a hard emission performance rate of 1,305 lb CO2/MWh was set, and for

stationary combustion turbines, a hard emission performance rate of 771 lb CO2/MWh. Id. These hard

emission limitations were not achievable for portions

of the fossil fuel-fired EGU subcategory, including virtually all coal-fired steam generating units (including

those in North Dakota).

These state-wide hard emission performance

standards were not a “best system of emission reduction” that reflected any “degree of emission limitation

achievable” by specific sources. 42 U.S.C. § 7411(a)(1).

Rather, they were “emission limitations” as defined in

42 U.S.C. § 7602(k), and thus “standards of performance.” Despite the CPP’s title describing the rule as

establishing “guidelines,” the CPP was anything but: it

established “limits [on] the quantity, rate, or concentration of emissions of air pollutants on a continuous

basis,” and thus was an “emission limitation” that the

States and existing sources were obligated to achieve.

42 U.S.C. § 7602(k). Thus in the CPP, it was EPA, not

the States, that established the basic standard of performance for existing sources.

EPA claimed it was affording States flexibility in

choosing “additional alternatives in meeting their obligations” to meet these hard performance rates by

“promulgating each state’s goal expressed as a CO2

mass goal.” CPP, JA.300-301. In describing the BSER

as having established State “obligations,” EPA admitted that the BSER in the CPP was not a “guideline”

and that it was EPA, not the States, “establishing” the

standards of performance for existing sources. In this

“alternative” EPA went even further, imposing binding

standard of performance “goals” on the States themselves, claiming an authority nowhere found in Section 111(d). Section 111(d)(1) says nothing about

EPA imposing emission reduction obligations on

States. Further, any notion of “flexibility” with regard

to implementing emission limitations or standards of

performance imposed by EPA is irrelevant. Section

111(d)(1) does not give EPA the authority to establish

nationwide or statewide emission limitation mandates

or standards of performance on existing sources. Any

purported flexibility afforded to the States by EPA on

how EPA’s unlawfully established standards of performance and emission limitations might be achieved

does not cure the underlying unlawful action.

EPA stated that using mass goals “paves the way

for states to implement mass-based trading,” admitting that both the hard emission standards and the

mass-based State “goals” could not be achieved by individual existing sources. CPP, JA.301. Not only did

EPA displace the States’ authority to establish standards of performance and emissions limitations in the

first instance, the standards and limitations imposed

by EPA were intentionally not achievable by whole

categories of sources to which the CPP applied. The regional mass-based trading and mandated generationshifting “alternatives” were admissions that the CPP’s

requirements were not even achievable at the individual State level. Thus, EPA’s claimed flexibility in the

CPP was anything but that, as it mandated emission

standards that existing EGUs could not achieve that

forced a generation shifting approach that had to be

applied at a sector-wide level in each State (e.g., shutting down coal-fired power plants regardless of their

remaining useful life), based on EPA imposing a mass

emissions standard on the States. Further, in conceding that mass-based trading is an “implementation”

option, EPA admitted that it had appropriated the

States’ authority to establish standards of performance and the only thing left for the States to do was

achieve the standards set by EPA.

A few examples from North Dakota illustrate how

the CPP transformed Section 111(d)(1) into a set of national mandates on the States that effectively gutted

the States’ authority to “establish” standards of performance. North Dakota, using the EPA’s the Integrated

Planning Model (“IPM”), calculated that the CPP

would have required North Dakota to reduce its carbon

dioxide (CO2) emission rate by 44.9%, Pet.App.246.

The national emission rates mandated by EPA would

have required the closure of the 427 MW Coyote Station, two miles south of Beulah, North Dakota, Unit 1

and Unit 2 at the R.M. Heskett Station near Mandan,

North Dakota, the 250 MW Milton R. Young Station

Unit 1, four miles southeast of Center, North Dakota,

and the 558 MW Coal Creek Station Unit 1, located

between Underwood and Washburn, North Dakota. Id.

at 249-252. All of these facilities would have to have

been shut down by 2018, with no consideration of their

remaining useful lives or other source-specific factors,

as required by Section 111(d)(1). Thus, in the CPP, it

was EPA that imposed fixed national standards of performance and emission limitations on States and existing sources, rather than creating BSER “guidelines”

that would be applied by the States to establish achievable emission limitations for existing sources in their

States.

The CPP was challenged in the U.S. Court of Appeals for the District of Columbia Circuit, by the State

of North Dakota and 158 other petitioners, including

more than half of the States. State of West Virginia, et

al. v. EPA, No. 15-1363 (and consolidated cases) (D.C.

Cir., Oct. 23, 2015). A stay was sought with the D.C.

Circuit, which the Circuit denied. Id., Doc. No.

1594951.

Subsequently, five separate applications were filed

with this Court seeking to stay the CPP, including an

application from the State of North Dakota. See Application by the State of North Dakota for Immediate

Stay of Final Agency Action Pending Appellate Review,

Pet.App.232-267. On February 9, 2016, the full Court

granted the five stay applications without qualification, halting the implementation or enforcement of

the CPP pending disposition of the D.C. Circuit petitions. Order in Pending Case, West Virginia, et al. v.

EPA, Nos. 15A773, 15A776, 15A778, 15A787, 15A793

(Feb. 9, 2016). This purportedly marked the first time

this Court had stayed a federal regulation before initial review by a federal appeals court. See

https://www.americanbar.org/groups/litigation/committees/

environmental-energy/practice/2016/021716-energysupreme-court-stays-epas-clean-power-plan/

C. The Affordable Clean Energy Rule

After this Court stayed implementation of the

CPP, EPA repealed the CPP, conceded that the CPP

exceeded EPA’s statutory authority, and promulgated

the CPP Repeal/ACE Rule on July 8, 2019. ACE Rule,

JA.1725 (“the Agency has determined that the CPP

exceeded the EPA’s statutory authority under the

[CAA]”). Upon promulgation of the CPP Repeal/ACE

Rule the petitions challenging the CPP Rule in the D.C.

Circuit were dismissed. See JA.86.

In promulgating the CPP Repeal/ACE Rule, EPA

corrected the jurisdictional overreach of the CPP by establishing a BSER that acts as guidelines, not binding

national or statewide emission limitations, that the

States apply to establish achievable standards of performance and emission limitations for existing sources.

Further, the BSER guidelines were based on what had

been adequately demonstrated for the relevant emission source categories, recognizing that it was the

States, not EPA, that determine what emission limitations were achievable for existing sources. The CPP Repeal/ACE Rule correctly rejected the notion that EPA

has the authority to establish standards of performance and emission limitations for existing sources

and returned it to the States as explicitly set forth in

Section 111(d)(1).

The CPP Repeal/ACE Rule restored the FederalState relationship required by the CAA, with EPA setting guidelines in BSER tied to specific categories of

sources of emissions, which the States apply to establish emission limitations by setting “rate-based standards of performance . . . generally . . . in the form of

the mass of carbon dioxide emitted per unit of energy

(for example pounds of CO2 per megawatt-hour or

lb/MWh).” JA.1888. Consistent with the text of Section 111(d)(1), States, not EPA, set the rate-based

emission limitations for existing sources.

D. Procedural History

The CPP Repeal/ACE Rule was met with multiple

challenges that were consolidated in the D.C. Circuit.

North Dakota intervened in the D.C. Circuit litigation

below as a respondent-intervenor in support of the

ACE Rule.

In the opinion below, a divided three judge panel

of the D.C. Circuit vacated the CPP Repeal/ACE Rule,

with the per curiam majority holding that EPA erred

in concluding that it did not have the authority to

promulgate the nationwide generation sector mandates under the CPP. The per curiam opinion concluded that EPA’s reading of 111(d) as requiring at-thesource controls was not “the only permissible interpretation of the scope of EPA’s authority” under Section

111(d), holding that EPA’s repeal of the CPP could not

be upheld as “Section 7411 does not, as the EPA claims,

constrain the Agency to identifying a best system of

emission reduction consisting only of controls ‘that can

be applied at and to a stationary source.’ ” JA.103-104.

Further, despite admitting that “the statutory role

of the best system of emission reduction under Section

[111(d)] textually preserves and enforces the States’

independent role in choosing from among the broadest

range of options to set standards of performance appropriate to sources within their jurisdiction,” the D.C.

Circuit concluded that the national and state-wide

mandatory hard CO2 lb/MWhr emission limitations of

the CPP that imposed plant shut downs and generation shifting on the States somehow fit within Section

111(d)’s regulatory structure giving State’s the primary role in setting standards of performance for existing source. JA.149-150.

The D.C. Circuit opinion dismissed cooperative

federalism concerns, asserting that the CPP “in fact,

afforded States considerable flexibility in choosing how

to calculate and meet their emissions targets.” JA.144.

The D.C. Circuit did not identify the statutory basis

giving EPA the authority for setting emission targets

for States (“their emission targets”). Further, the D.C.

Circuit did not explain how “affording” the States “considerable flexibility” to achieve emission targets set by

EPA squared with Section 111(d)(1), which explicitly

provides that it is the States, not EPA, that set the

standards of performance for existing sources. The decision emphasized that “Congress imposed no limits”

on EPA in Section 111(d) other than directives to consider costs, nonair health and environmental impacts,

and energy requirements, conflating the BSER with

“emission limitations” and effectively gutting the text

of Section 111(d)(1) directing that States “establish”

the standards of performance and emission limitations

for existing sources. JA.108.

Judge Walker dissented on the grounds that Section 111(d) did not authorize what EPA had attempted

in the CPP. Judge Walker would have held that EPA

“was required to repeal [the CPP]” under Section

111(d). JA.217 (Walker, J., concurring in part, concurring in the judgment in part, and dissenting in part).

Addressing the plain text of Section 111(d), Judge

Walker wrote that “[h]ardly any party in this case

makes a serious and sustained argument that § 111[d]

includes a clear statement unambiguously authorizing

the EPA to consider offsite solutions like generation

shifting.” JA.217. Judge Walker stated that the CPP

was a “groundbreaking” rule for attempting to reshape

the power sector, noting the CPP aimed to reduce carbon emissions “equal to the annual emissions from

more than 166 million cars,” and it would have exacted

“almost unfathomable costs” to do so. JA.225-226 (citation omitted). Thus, “because the [CPP] implicates ‘decisions of vast economic and political significance,’

Congress’s failure to clearly authorize the [CPP]

means the EPA lacked the authority to promulgate it.”

JA.217.

Finally, Judge Walker explained that even if Section 111(d) fairly showed that Congress “allowed generation shifting” (which he concluded it did not), that

would result in an unconstitutional delegation because

Congress did not “clearly require it.” JA.230. Congress

must decide “what major rules make good sense,” and

cannot shirk that duty by passing off critical questions

to “the impenetrable halls of an administrative

agency.” JA.232.

After the decision, the EPA sought and secured a

stay of the mandate. Order, American Lung Ass’n v.

EPA, No. 19-1140 (Feb. 22, 2021).

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

SUMMARY OF THE ARGUMENT

The relief North Dakota seeks in this case is

(1) the reversal of the Court of Appeals’ decision below

vacating the ACE Rule, (2) the reinstatement of the

ACE Rule improvidently vacated by the decision below,

and (3) the affirmation of EPA’s repeal of the CPP.

The CAA is based on a “division of responsibilities”

between the States and the federal government. Train

v. Natural Resources Defense Council, Inc., 421 U.S. 60,

79 (1975). Under this scheme of “cooperative federalism,” there are different roles for the EPA and the

States in the regulation of existing sources of air emission. EPA is primarily responsible for setting federal

guidelines for reducing air emissions from existing

sources, termed a best system of emission reduction, or

BSER, which takes into account statutory factors such

as the cost of achieving emission reductions, nonair

quality health, environmental impacts, and energy requirements.

The States are then charged with the primary authority and responsibility for establishing standards of

performance for reducing emissions of air pollutants

from existing sources within their borders. States do

this by establishing “emission limitations” that are

achievable, applying the BSER guidelines created by

EPA. In addition to applying EPA’s BSER guidelines

when setting achievable emission limitations, States

take into account source specific factors, including the

remaining life of individual sources. Thus the States

have the authority and responsibility to weigh and apply State and source-specific factors within the bounds

of the BSER guidelines set by EPA.

Section 111 clearly defines the constraints and

limitations of both EPA’s and the States’ authority under this cooperative federalism framework for regulating existing sources. Section 111(a)(1) defines the term

“standard of performance,” and sets forth how the EPA

shall determine its BSER guidelines which then inform the States’ promulgation of standards of performance. Section 111(a)(1) also distinguishes between

emission limitations and the BSER that is applied in

establishing those limitations. Section 111(d)(1) then

clarifies that it is the States, not EPA, that shall establish the standards of performance for existing sources

by setting achievable emission limitations for existing

sources in their States, using the BSER guidelines.

States also have the authority take source-specific

factors into account when setting standards of performance.

For the EPA, the BSER must be “adequately

demonstrated” and take “into account the cost of

achieving [emission reductions through the application of that system] and any nonair quality health and

environmental impact and energy requirements.” 42

U.S.C. § 7411(a)(1). BSER cannot infringe on the

State’s authority under Section 111(d)(1) to take into

account source-specific factors. Further, BSER guidelines should not be confused with binding emission

limitations, which are for the States, not EPA, to establish for existing sources.

In a complementary fashion, the States must apply the BSER guidelines to set achievable “emission

limitations” for existing sources. Id. at (a)(1). In other

words, the BSER must provide an adequately demonstrated and justified framework for the States to apply

to set binding emission limitations that can be

achieved by existing sources. In applying the BSER to

set emission limitations, the States apply EPA’s BSER

to set emission limitations for “any particular source,”

and to “take into consideration” source-specific factors

such as “the remaining useful life of the existing source

to which such standard applies.” Id. at (d)(1). Inherent

in the authority and discretion granted to the States

under Section 111(d)(1) to make source-specific determinations in establishing standards of performance is

that the EPA’s BSER guidelines must be capable of being applied so that State-established emission limitations are achievable by existing sources and can be

applied in a source-specific manner.

The cooperative federalism structure of Sections

111(a)(1) and 111(d)(1) gives EPA the primary responsibility of setting BSER guidelines, and it is the States

who have the primary responsibility for establishing

binding emission limitations that are achievable by existing sources within those States when applying those

BSER guidelines, taking into account source-specific

factors.

Despite the clear complimentary statutory roles

established in Section 111, the D.C. Circuit held that

EPA has essentially unlimited authority in setting the

BSER guidelines, including transforming BSER

“guidelines” into binding hard CO2 lb/MWhr emission

limitations, transferring to EPA the authority to establish standards of performance, thus diminishing the

States’ primacy in setting standards of performance.

Further, the D.C. Circuit held that not only did EPA

have the authority to establish binding emission limitations under Section 111(d)(1), but those emission

limitations did not have to be achievable for categories

of existing sources (e.g. coal-fired power plants) in furtherance of EPA’s generation-shifting mandate. The

D.C. Circuit held that these extreme measures were

allowable, because the discretion afforded to States

under Section 111(d)(1) in setting standards of performance need not be read “upstream” into Section

111(a)(1) defining standards of performance and the

BSER. However, the D.C. Circuit’s interpretation of

Section 111 cannot withstand a clear reading of the

text.

The D.C. Circuit invalidated the ACE Rule and

granted EPA expansive authority not found in Section

111 by refusing to read Section 111 as a whole. Yet, the

Court’s precedent has long established that “[s]tatutes

must ‘be read as a whole.’ ” U.S. v. Atlantic Research

Corp., 551 U.S. 128, 135 (2007) (quoting King v. St.

Vincent’s Hospital, 502 U.S. 215, 221 (1991)). “Standards of performance” are “emission limitations” set

to be achievable by applying the BSER guidelines

established by EPA. 42 U.S.C. § 7411(a)(1). “Emission

limitations,” which are not BSER, are separately defined to include “limits the quantity, rate, or concentration of emissions of air pollutants on a continuous

basis.” 42 U.S.C. § 7602(k). Finally, Section 111(d)(1)

gives the States the authority to “establish” the standards of performance for existing sources. 42 U.S.C.

§ 7411(d)(1). Thus, it is the States, not EPA, that establish the “emission limitations that are achievable

through the application” of the BSER. Id. at (a)(1). By

holding that EPA has largely limitless authority to establish and impose binding national CO2 emission limitations and thus standards of performance on existing

sources, the D.C. Circuit has upended the cooperative

federalism framework of Section 111(d), infringing on

and severely diminishing the States’ authority under

Section 111(d) to regulate CO2 emissions from existing

sources in the States, including eviscerating their authority to tailor such regulations to specific conditions

in their States. This result cannot be squared with the

text of the Clean Air Act and, accordingly, the D.C. Circuit’s decision should be reversed, and the ACE Rule

should be reinstated.

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

ARGUMENT

THE D.C. CIRCUIT’S DECISION IMPROPERLY INTERPRETED THE PLAIN TEXT

OF SECTION 111 OF THE CLEAN AIR ACT

The EPA, like all federal administrative agencies,

is “a creature of statute” and cannot take regulatory

actions counter to “the expressed will of Congress.”

Guardians Ass’n v. Civil Serv. Comm’n of the City of

New York, 463 U.S. 582, 614-615 (1983) (O’Connor, J.,

concurring). It follows that EPA “literally has no power

to act . . . unless and until Congress confers power

upon it.” Louisiana Public Serv. Comm’n v. FCC, 476

U.S. 355, 374 (1986). Therefore, “[i]f EPA lacks authority [to take particular action] under the Clean Air Act,

then its action is plainly contrary to law and cannot

stand.” Michigan v. EPA, 268 F.3d at 1081; see also 5

U.S.C. § 706(2)(C).

Ignoring the plain text of Section 111(d)(1) providing that States, not EPA, shall establish performance

standards for existing sources, the D.C. Circuit held

that “Congress imposed no limits” on EPA in Section

111(d) other than directives to consider costs, nonair

health and environmental impacts, and energy requirements, transforming EPA’s responsibility to establish BSER guidelines into the authority to set

binding emission limitations. JA.108. In so doing, the

D.C. Circuit turned Section 111(d)(1) on its head, with

EPA now having almost limitless power to regulate existing sources, with the States reduced to searching for

whatever crumbs of “flexibility” that EPA deigns to offer. The D.C. Circuit’s view that EPA has limitless

power under Section 111(d)(1) also renders meaningless Section 111(d)(2), which gives EPA the authority

to establish standards of performance only where

States fail to satisfactorily do so, because under the

D.C. Circuit’s interpretation, EPA already effectively

has this authority under Section 111(d)(1).1

Having gutted Section 111(d)(1) by concluding

that “Congress imposed no limits” (JA.108) on EPA’s

authority to regulate existing sources, the D.C. Circuit

went after the last remaining vestige of State authority by asserting that the statute “does not . . . constrain

[EPA] to identifying a [BSER] consisting only of controls ‘that can be applied at and to a stationary source’ ”

(JA.104). This completes the removal of all State authority from Section 111(d)(1), because in addition to

eliminating the State’s primacy in setting performance

standards for existing sources, States are also deprived

of their right under Section 111(d)(1) to apply Stateestablished performance standards on a source-specific basis, taking State and local conditions and factors

into account.

In order to give the cooperative federalism codified in Section 111(d)(1) effect, EPA must establish

BSER guidelines that (1) are not binding, national,

statewide, or sector-wide “emission limitations” that

deprive States of their primacy in setting performance

standards for existing sources, and (2) allow the States,

in setting their emission limitations for existing

sources at the category and individual levels that are

The D.C. Circuit’s decision also largely removes any distinction between new and existing sources. Under Section 111(b),

EPA has the primary authority to establish standards of performance for new sources. Under the D.C. Circuit’s decision, EPA

now has the authority to establish standards of performance and

emission limitations for existing sources as well.

achievable, to use their expertise to consider sourcespecific factors. EPA has no authority to mandate hard

emissions limitations, applied at sector- and nationwide-levels, which deprive the States of their authority

to set standards of performance that take into account

source-specific factors.

Similarly, the D.C. Circuit was wrong to conclude

that “the sole ground on which the EPA defends its

abandonment of the Clean Power Plan in favor of the

ACE Rule is that the text of Section 7411 is clear and

unambiguous in constraining the EPA to use only improvements at and to existing sources in its best system of emission reduction.” JA.103. The EPA’s repeal

of the CPP and its decision to replace it with the ACE

Rule was based on a much broader conclusion that the

BSER in the CPP which “set standards that could only

be achieved by a shift in the energy generation mix at

the grid level, requiring a shift from one type of fossil

fuel-fired generation to another, and from fossil fuelfired generation as a whole towards renewable sources

of energy” was inconsistent with the mandate of Section 111(d)(1) that the States had the authority and

right to make source-specific determinations in setting

standards of performance. ACE Rule, JA.1741. Thus,

EPA’s repeal of the CPP and promulgation of the ACE

Rule was based on the broader determination that the

CPP read the term BSER “so broadly as to encompass

measures the EPA had never before envisioned in

promulgating performance standards under CAA section 111,” including fully excising the States’ role in

establishing achievable emission limitations and

making source-specific determinations under Section

111(d)(1).2 Id.

Therefore, the D.C. Circuit’s erroneous interpretation of Section 111 authorized EPA to establish binding

emission limitations, including limitations that are

not achievable by categories of existing sources. Further, the D.C. Circuit’s interpretation of Section 111

does not require EPA to promulgate BSER guidelines that preserve the States’ primacy in establishing

standards of performance and that leave sourcespecific determinations in setting standards of performance to the States. For these reasons, the D.C.

Circuit’s decision is “plainly contrary to law” and “cannot stand,” and the ACE Rule must be reinstated.

Michigan v. EPA, 268 F.3d at 1081.

A. The Plain Text of the Clean Air Act Mandates that the States have the Primary

Role in Setting Standards of Performance Under the Cooperative Federalism Codified in Section 111(d)(1).

The Court’s precedents make clear “that the starting point for [its] analysis is the statutory text.” Desert

Palace, Inc. v. Costa, 539 U.S. 90, 98 (2003) (citing to

Thus, it is worth noting the status of the CPP. The CPP was

stayed by this Court, never went into effect, and was repealed before any final decision was reached regarding its validity. The

CPP was essentially a legal nullity, with no legal status or effect.

Thus the reasoning underlying the CPP, which was an unprecedented and massive departure from the cooperative federalism

framework created by Congress and long recognized by this

Court, should not be afforded any weight.

Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253254 (1992)). Similarly, it is well established that “when

the statute’s language is plain, the sole function of the

courts—at least where the disposition required by the

text is not absurd—is to enforce it according to its

terms.” Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U. S. 1, 6 (2000). And, where “Congress has directly spoken to the precise question at

issue,” and “the intent of Congress is clear, that is the

end of the matter; for the court.” Chevron, U.S.A., Inc.

v. N.R.D.C., Inc., 467 U.S. 837, 842 (1984).

The statutory text of Sections 111(a) and 111(d),

when read together, set forth a four-step process by

which EPA establishes a BSER guideline: States create plans establishing standards of performance for existing sources based on the States’ application of the

guidelines in the BSER, which plans are then submitted to EPA for review and approval.

First, in accordance with the definition of “standard of performance” under Section 111(a)(1), EPA determines the BSER that is “adequately demonstrated,”

taking into consideration certain enumerated statutory criteria: cost, any nonair quality health and environmental impacts, and energy requirements. 42

U.S.C. § 7411(a)(1). The BSER established by EPA is

not a “standard of performance.” A standard of performance is a “standard for emissions of air pollutants

which reflects the degree of emission limitation achievable through the application” of BSER. Id. EPA’s BSER

is not itself the emissions standard or emission limitation, but rather is a guideline to be “applied” by the

States in the process of setting “emission limitations”

that are “achievable.” Id. While the definition of

“standard of performance” provides that EPA creates

the BSER guidelines, it is silent on who establishes the

standard of performance and emission limitations.

Which takes one to the second step.

Second, for existing sources, EPA “shall prescribe

regulations” under which States shall establish “standards of performance for any existing source for any

air pollutant.” Id. at (d)(1). Since the States “establish”

the standards of performance, that means it is the

States that determine, for existing sources, what

“emissions limitations” are “achievable,” applying

EPA’s BSER guidelines. In promulgating its Section

111(d) procedures, EPA “shall permit the State in applying a standard of performance to any particular

source under a plan submitted under this paragraph

to take into consideration, among other factors, the remaining useful life of the existing source to which such

standard applies.” Id. This language in Section

111(d)(1) explicitly lays out the cooperative federalism framework of the CAA for the regulation of existing sources, mandating that the States have the

primary role in setting standards of performance and

emission limitations, and mandating that States

have the authority to make source-specific determinations in setting those standards of performance

“for any existing source.” Id.

Third, under subsection (d)(1), States create a

plan establishing “standards of performance” for existing sources and “provide[] for the implementation

and enforcement of such standards of performance”

(i.e., of the standards established by the State). Id. It

is at this stage that States establish standards of

performance for existing sources, applying EPA’s

BSER to determine what emission limitations are

achievable by those existing sources. In so doing,

States take into consideration source-specific factors

(including but not limited to the remaining useful life

of the existing source) in setting standards of performance that are “achievable” (Id. at (a)(1)) for “any existing source” (Id. at (d)(1)).

Lastly, these State plans are submitted to EPA for

its review and approval. Id. at (d)(1)-(2).

These provisions, read in concert, clearly mandate

that the States are the ones to set the standards of

performance and emission limitations, and further

mandates that the States have the authority to make

source specific determinations in setting those standards of performance “for any existing source.” Id. at

(d)(1). It therefore follows that any BSER guideline

created by EPA must not infringe on the States’ authority to establish emission limitations and determine what emission limitations are “achievable” by

existing sources, including the States’ authority to

take source-specific factors into account in establishing

the standards of performance. Otherwise the primary

role designated to the States under Section 111(d)(1) is

rendered superfluous if EPA has already assumed primacy in Section 111(d)(1). Therefore, under the plain

language of Section 111(d), EPA exceeds its authority

if it promulgates BSER guidelines which instead create mandatory emission limitations that tie the States’

hands in establishing Section 111(d) plans by infringing on the States’ authority to (1) “establish[ ] standards of performance for any existing source” and (2)

“take into consideration” source specific factors in applying the standards of performance “to any particular

source.” Id.

Five decades ago, this Court recognized the CAA’s

“division of responsibilities” between the States and

the federal government in Train v. Natural Resources

Defense Council, Inc., 421 U.S. at 79. There, the Court

looked at Section 110 of the CAA and acknowledged

that EPA has the “responsibility for setting the national ambient air standards.” But “[j]ust as plainly,”

the Court emphasized, the EPA “is relegated by the

[CAA] to a secondary role in the process of determining

and enforcing the specific, source-by-source emission

limitations which are necessary if the national standards it has set are to be met.” Id. (emphasis added).

As the Court explained, “[t]he Act gives the [EPA] no

authority to question the wisdom of a State’s choices of

emission limitations if they are part of a plan which

satisfies the [CAA’s] standards.” Id. (emphasis added).

“[S]o long as the ultimate effect of a State’s choice of

emission limitations is compliance with the national

standards for ambient air, the State is at liberty to

adopt whatever mix of emission limitations it deems

best suited to its particular situation.” Id.; see also Union Elec. Co. v. EPA, 427 U.S. 246, 269 (1976) (“Congress

plainly left with the States, so long as the national

standards were met, the power to determine which

sources would be burdened by regulation and to what

extent.”).

Just as EPA is limited in enforcing the NAAQS

under Section 110 of the CAA, EPA is limited to

regulating existing sources under Section 111(d) by

“establish[ing] a procedure similar to that provided by

[Section 110] of this title under which each State

shall submit to the Administrator a plan” for establishing standards of performance for existing sources.

42 U.S.C. § 7411(d)(1) (emphasis added). Congress, by

this reference, intended that the States’ authority for

regulating existing sources under Section 111(d) would

mirror State authority under Section 110. And, as the

Court has recognized, “States have ‘wide discretion’ in

formulating their plans.” Alaska Dept. of Environmental Conservation v. EPA, 540 U.S. 461, 470 (2004)

(“Alaska v. EPA”) (quoting Union Elec. Co. v. EPA, 427

U.S. 246, 250 (1976)).

The Court previously confirmed Section 111(d)’s

cooperative federalism structure in American Electric

Power Co. v. Connecticut (“AEP”), where the Court

stated that “for existing sources, EPA issues emissions

guidelines,” and “in compliance with those guidelines

and subject to federal oversight, the States then issue

performance standards for stationary sources within

their jurisdiction.” 564 U.S. 410, 424 (2011) (emphasis

added). The D.C. Circuit’s decision failed to recognize

and adhere to this Court’s direction in AEP that Section 111(d) restricts EPA to creating guidelines that

apply to generation sources “within the same category,” which States then use to “issue performance

standards” that can be applied to individual “stationary sources” within the States’ jurisdiction. Id. Instead the CAA “envisions extensive cooperation

between federal and state authorities, generally

permitting each State to take the first cut at determining how best to achieve EPA emissions standards

within its domain[.]” Id. at 428 (internal citation omitted). The D.C. Circuit reached the opposite conclusion,

holding that EPA had essentially limitless authority

over existing sources under Section 111(d) such that

EPA could impose fixed national and state-wide emission limitations on existing sources.

Further, the D.C. Circuit’s holding mischaracterized what EPA did. EPA justified repealing the CPP

and promulgating the ACE Rule on much broader

grounds than those focused on by the D.C. Circuit, including recognizing that “the CPP read the statutory

term [BSER] so broadly as to encompass measures the

EPA had never before envisioned in promulgating performance standards under CAA section 111” and thus

read the cooperative federalism mandate out of Section

111(d)(1) and could not stand. ACE Rule, JA.1741.

Thus, EPA’s determination that the CPP must be repealed, and its reasons for promulgating the ACE

Rule, were not limited only to its determination that

at the source controls were mandated, but also on the

much broader premise that using the guise of BSER

“guidelines” to establish and impose hard CO2 lb/MWhr

“emissions limitations” that were known to be unachievable by entire source sub-categories (such as coalfired EGUs) in order to force plant shut-downs and

generation shifting was incompatible with the cooperative federalism structure mandated by Section

111.

This Court previously weighed in on “the division

of responsibilities” set out in the CAA, held EPA to the

limits of its congressionally-delegated authority, and

protected the authority reserved to the States. In

Alaska v. EPA, the Court examined whether EPA had

the authority to block a permitting decision that was

clearly left to the State of Alaska’s discretion under the

cooperative federalism of the CAA. 540 U.S. 461. At issue was the prevention of significant deterioration

(“PSD”) program, which sets up a regulatory system by

which States permit new air pollutant emitting facilities prior to construction by requiring in the permit

that each individual facility is equipped with best

available control technology (“BACT”). Id. at 468.

BACT is defined in CAA § 7479(3) as “an emission limitation based on the maximum degree of [pollutant] reduction . . . which the permitting authority, on a caseby-case basis, taking into account energy, environmental, and economic impacts and other costs, determines

is achievable for [the] facility. . . .”. Id.

In analyzing the cooperative federalism required

by the CAA, this Court concluded that § 7479(3) “entrusted state permitting authorities with initial responsibility to make BACT determinations ‘case-bycase.’ ” Id. at 488 (citing to 42 U.S.C. § 7497(3)). “A state

agency,” this Court stated, “is best positioned to adjust

for local differences in raw materials or plant configurations, differences that might make a technology ‘unavailable’ in a particular area.” Id. It is only once a

State has made its BACT determination that EPA can

participate by reviewing the reasonableness of that

determination. Id. at 489 (“EPA claims no prerogative

to designate the correct BACT; the Agency asserts only

the authority to guard against unreasonable designations.”). Ultimately, the Court concluded that “EPA has

supervisory authority over the reasonableness of state

permitting authorities’ BACT determinations,” but

that authority could only be used after the State had

made its initial BACT determination, and could not be

used to designate the correct BACT determination

from the outset. Id. at 502.

Much like the BACT determination at issue in

Alaska v. EPA, the “plan” that each “State shall submit

to the” EPA under Section 111(d) requires that the

States, not EPA, shall in the first instance establish the

standards of performance and determine what are

achievable emission limitations for existing sources in

their States in light of EPA’s BSER guidelines. The

States have the authority, “in applying a standard of

performance to any particular source” to “take into

consideration, among other factors, the remaining useful life of the existing source to which such standard

applies.” 42 U.S.C. § 7411(d)(1). The plain language of

Section 111(d) gives States the authority to use their

expertise, just like in BACT determinations, to apply

source specific factors in a case-by-case manner to set

achievable standards of performance for individual

source categories. Just as in Alaska v. EPA, EPA retains a secondary oversight over State’s 111(d) plans,

including situations where EPA can “prescribe a plan

for a State in cases where the State fails to submit a

satisfactory plan.” Id. at (d)(2).

EPA’s limited oversight authority is just that: it

cannot be read to effectively eliminate the State’s primacy in establishing standards of performance for existing sources. The D.C. Circuit’s opinion reads the

authority granted to the States under Section 111(d)(1)

out of the CAA.

Unlike in Alaska v. EPA, where EPA openly

acknowledged it did not have the authority to mandate

any particular BACT outcome at the initial decision

stage that was reserved to States, under the CPP, EPA

mandated a hard CO2 lb/MWhr standard of performance across the entire generation sector. These mandatory fixed numeric standards were indisputably

“emission limitations” (i.e., a “requirement established

by . . . [EPA] . . . which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis” (42 U.S.C. § 7602(k))), not BSER “guidelines”

to be applied by the States to establish emission limitations. EPA’s decision to transform BSER guidelines

into mandatory “emission limitations” entirely displaced the States from their primary role in setting

standards of performance and foreclosed the States

from making their own determinations as to what was

achievable by existing sources or applying their own

expertise to their Section 111(d) plans. The CPP further violated Section 111(a) in that those unlawfully

set standards were intentionally set at a level that certain entire categories of power plants could not achieve

them. The D.C. Circuit’s decision upholding this jurisdictional overreach thus grants EPA the authority,

through its “guidelines,” to mandate exactly what a

State’s 111(d) standards of performance will be before

the State plan is written—a result that is in conflict

with the Court’s decision in Alaska v. EPA.

This is not to say that States have unfettered authority or discretion. States must apply EPA’s guidelines (i.e., the BSER) in establishing standards of

performance in their Section 111(d) plans, and EPA retains the authority to review the States’ plans. Cf.

Alaska, 540 U.S. at 482. However, the BSER which the

States apply must be one that EPA is statutorily authorized to promulgate under Section 111(d) (i.e.,

guidelines for control measures that States can apply

to determine what emission limitations are achievable

by existing sources in the State). EPA cannot transform BSER guidelines into binding emission limitations that extinguish the States’ authority to establish

performance standards through their Section 111(d)

plans, leaving States only limited “flexibility” to

achieve standards of performance unlawfully set by

EPA.

The D.C. Circuit’s decision below also conflicts

with earlier decisions of that court as well. For example, in American Corn Growers Ass’n v. EPA, 291 F.3d

1 (D.C. Cir. 2002), EPA had promulgated a rule requiring the States to consider best available retrofit technology (“BART”) factors on a group, rather than on an

individual source-by-source, basis. See 291 F.3d at 6.

The D.C. Circuit invalidated the rule, holding that it

was “inconsistent with the CAA’s provisions giving the

states broad authority over BART determinations.”

Id. at 8. By dictating that the States make BART

determinations in a particular manner, the EPA had

impermissibly “constrain[ed] authority Congress conferred on the states.” Id. at 9.

The same is true here. The cooperative federalism

framework codified in Section 111 gives the States the

first crack at establishing standards of performance

and creating their Section 111(d) plans for existing

sources, and mandates that States be able to consider

source-specific factors in setting standards of performance. The D.C. Circuit’s opinion ignores this clear directive in Section 111(d)(1), and instead concludes that

EPA has authority to set the standards of performance

itself, mandating hard CO2 lb/MWhr emission limitations (masquerading as BSER) across the entire generation sector and require States to achieve these hard,

qualitative emission limitations though their Section

111(d) plans. The D.C. Circuit’s interpretation of Section 111 effectively removes from the States their authority to establish standards of performance (i.e., the

determination of what emission limitations are achievable based on the application of BSER) and prevents

States from taking into consideration source-specific

factors in their Section 111(d) plans.

Section 111(d) only allows EPA to step into the

States’ role and “prescribe a plan” establishing

standards of performance for existing sources if a

State “fails to submit a satisfactory plan.” 42 U.S.C.

§ 7411(d)(2)(A)-(B). If EPA does step in to “promulgat[e] a standard of performance” for a State that

failed to submit a satisfactory plan, EPA continues to

be required to “take into consideration, among other

factors, remaining useful lives of the sources in the category of sources to which such standard applies.” Id. at

(d)(2)(B). The D.C. Circuit’s decision below also reads

this cooperative federalism balance out of Section 111,

because if EPA can mandate standards of performance

and national emission limitations binding on all States

in the guise of BSER “guidelines,” including standards

that are unachievable for entire categories of sources

such as coal-fired EGUs under 111(d)(1), that leaves

little for EPA to do under 111(d)(2) for States that do

not submit satisfactory plans under Section 111(d)(1).

There is also now little to differentiate between the

regulation of new sources under Section 111(b), for

which EPA has primary authority, and the D.C. Circuit’s conclusion that EPA can likewise set binding national emission limitations for existing sources.

By mandating an outcome (i.e., setting nationwide

standards of performance and emission limitations) in

the CPP that infringed on and deprived the States of

their full authority to develop standards of performance in their Section 111(d) plans, EPA plainly “infringe[d] on [the State’s] authority under the [CAA].”

American Corn Growers Ass’n, 291 F.3d at 9. Thus,

EPA was right to conclude in the CPP Repeal/ACE

Rule that it had overstepped the bounds of its authority under Section 111 when it set hard, inflexible emission limitation mandates in the CPP, and it was correct

to replace the CPP with the ACE Rule, that returned

that authority to the States.

The D.C. Circuit’s justification that “the States

have flexibility in determining the specifics of the

standards they issue so long as they accomplish the

‘degree of emission limitation’ the EPA calculated

based on its ‘best system’ ” falls short. EPA does not

have the authority to establish “the degree of emission

limitation” for existing sources. 42 U.S.C. § 7411(a)(1).

Section 111(d)(1) explicitly gives the States the authority to establish standards of performance: i.e., determine what the degree of emission limitations existing

sources can achieve based on the application of

BSER guidelines (not mandates) set by EPA. Section

111(d)(1) does not state that EPA has the authority to

set binding national emission limitations, including

limitations that are intentionally set at unachievable

levels for entire categories of EGUs, so long as EPA affords States a modicum of “flexibility” in how those national emission limitations will be achieved at the

State level.

The debate over whether the States have been “afforded flexibility” to implement or achieve EPA’s national emission limitations mandates obscures the real

issue: EPA does not have the authority to establish

fixed national emission limitations mandates under

Section 111(d)(1) (or under Section 111(a)(1)) in the

first instance, rendering implementation discussion irrelevant. Whether EPA may have thrown some crumbs

the States’ way by “affording” them some “flexibility”

in how they might implement EPA’s unlawfully mandated standards of performance does not cure the

fundamental defect in the CPP or the D.C. Circuit’s

flawed reasoning.3 EPA was correct in repealing the

CPP and promulgating the ACE Rule that returned to

the States their statutory authority to establish standards of performance (i.e., determine, for the existing

sources in their States, what emission limitations are

achievable in light of EPA’s BSER guidelines and

source-specific factors such as the remaining life of

power plants).

B. The Plain Text of the Clean Air Act

Mandates that the BSER Set by EPA

for Existing Sources be Adequately

Demonstrated and Achievable for Application “At” and “To” Existing Sources.

The cooperative federalism codified in Section

111(d)(1) squarely places the authority for determining “standards of performance” for existing sources

with the States. It is the States, not EPA, that have the

authority to establish the emission limitations that

are achievable by existing sources. Thus, any BSER

guidelines set by EPA under Section 111(a)(1) which

In any event, that vaunted flexibility was a mirage. Once

EPA established and imposed the hard national emission limitations under the guise of BSER “guidelines,” North Dakota’s flexibility to implement EPA’s standards was limited to shutting down

many of its coal-fired power plants (and thus eliminating North

Dakota’s right to consider the remaining life of power plants under Section 111(d)(1)(B)) and negotiating with sources in other

States to purchase electricity from EPA’s preferred sources. But

these very limited alternatives to implement EPA’s dictat could

hardly be characterized as North Dakota having primacy in establishing standards of performance for existing sources in North

Dakota.

infringe on the States’ authority to establish standards

of performance are contrary to the clear text of the

CAA.

Section 111(a)(1) makes clear that the “standard

of performance” the States develop must “reflect the

degree of emission limitation achievable through the

application of the” BSER that EPA has determined is

“adequately demonstrated.” 42 U.S.C. § 7411(a)(1) (emphasis added). Thus, any BSER that is not “adequately

demonstrated” to be applicable to individual existing

sources, nor “achievable” by those individual existing

sources is unlawful because it infringes on the States’

authority to determine what emission limitations are

achievable. Yet, that is precisely what the D.C. Circuit

affirmed: EPA’s imposition in the CPP of mandatory

hard CO2 lb/MWhr emission standards, essentially establishing the “standards of performance” and thus depriving the States of their authority to make that

determination, was an allowable interpretation of Section 111.

i. The BSER Set by EPA Must be “Adequately Demonstrated” for Individual Existing Sources.

The D.C. Circuit held that there was no basis to

read Section 111(d) “upstream into subsection (a)(1) to

equate the EPA’s ‘application of the best system’ with

the controls States eventually will apply ‘at and to’ an

individual source.” JA.106. This interpretation misreads both Section 111(a) and 111(d).

The definition of “standards of performance” has

three basic components, only one of which is reserved

to EPA for purposes of existing sources. Standards of

performance for existing sources are (1) emission limitations (set by the States) that are (2) achievable (determined by the States) based on the application of (3)

BSER (developed by EPA) that has been “adequately

demonstrated.” 42 U.S.C. § 7411(a)(1). The separately

defined “emission limitations” (see 42 U.S.C. § 7602(k))

and BSER are not the same thing, and the EPA’s authority to develop BSER must not be confused with the

States’ authority to “apply” the BSER to establish

standards of performance.

While Section 111(a)(1) provides that EPA creates

BSER, it does not address who establishes the emission limitations themselves, the real core of the standard of performance (i.e., who applies EPA’s BSER).

The D.C. Circuit was incorrect when it assumed that

Section 111(a)(1) gives EPA the authority to set emission limitations for existing sources.

The definition of “emission limitation” provides

that either States or EPA can establish emission limitations. Section 111 addresses the relative responsibilities of EPA and the States by assigning the authority

for establishing standards of performance, hence the

“degree of emission limitations,” based on the nature of

the source being regulated. Under Section 111(b), EPA

establishes the standards of performance (and thus

emission limitations) for existing sources.

However, under Section 111(d)(1), Congress provided that the States, not EPA, have the authority to

establish standards of performance, hence the “degree

of emission limitations” (applying, of course, EPA’s

BSER). It reads from this statutory structure that the

BSER set by EPA must be capable of “application” to

the existing sources for which the States are setting

standards of performance. 42 U.S.C. § 7411(a)(1). And,

since the BSER set by EPA must be “adequately

demonstrated,” it further follows that EPA must have

demonstrated that the BSER is able to be applied to

the same individual existing sources for which the

States are then tasked with setting standards of performance. Id.

The D.C. Circuit’s interpretation would effectively

negate this distinction, because EPA would be the primary authority for setting the emission limitations for

both new and existing sources, with the States’ authority for existing sources reduced to simply achieving the

performance standard set by EPA. The States would be

left with creating “implementation plans” for an EPA

mandated emission standard, not “standards of performance.”

Thus, EPA was correct in the CPP Repeal/ACE

Rule to return to statutory framework for regulating existing sources, wherein EPA establishes BSER

guidelines (not emission limitations) that are “adequately demonstrated” as applicable to individual existing sources, and the States apply those guidelines to

set the “degrees of emission limitation” that are achievable for those existing sources. 42 U.S.C. § 7411(a)(1).

To do otherwise would render the language of Section

111(d)(1) superfluous, and as the Court has long established “[s]tatutes must ‘be read as a whole.’ ” U.S. v. Atlantic Research Corp., 551 U.S. at 135 (quoting King v.

St. Vincent’s Hospital, 502 at 221).

ii. The BSER Set by EPA for Existing

Sources Must be “Adequately Demonstrated” and Allow States to Establish Emission Limitations that are

“Achievable” by Existing Sources.

Section 111(a)(1) mandates, the “standard of performance” that is set by the States must be based on

the “degree of emission limitation achievable through

the application of the” BSER. 42 U.S.C. § 7411(a)(1)

(emphasis added). Thus, EPA does not have authority

to promulgate elements of a BSER “guideline” that

have not been “adequately demonstrated” for existing

sources, and that will not allow States to exercise their

statutory authority to establish emission limitations

that are “achievable” by those existing sources.

Yet, by EPA’s own admission in the CPP, the hard

CO2 lb/MWhr emission limitations promulgated in the

CPP under the guise of BSER “guidelines,” were neither “adequately demonstrated” nor “achievable” for an

entire category of existing EGUs that generate approximately 20% of the nation’s electricity: coal-fired power

plants. In analyzing whether all EGUs could meet

the BSER in the CPP (itself an admission that it was

unlawfully exercising its authority, since BSER is supposed to be, and is announced as, a “guideline” not a

mandatory emission limitation), EPA stated that “an

owner of a small generation portfolio consisting of a

single coal-fired steam EGU may need to rely more on

cross-investment approaches, possibly including the

purchase of emission credits or allowances, because of

a lack of sufficient scale to diversify its own portfolio to

include NGCC capacity and RE generating capacity in

addition to coal-fired capacity” because that individual

coal-fired EGU could not meet the CO2 lb/MWhr requirements. See CPP, JA.614.

EPA dismissed both the “adequately demonstrated” and “achievability” requirements in Section

111(a) for its selected emission limitations by claiming

that “it is not necessary that each affected EGU be able

to implement the BSER,” because “all affected EGUs

can do so” if they are willing to engage in generation

shifting by investing “in building block measures that

are physically implemented at other locations.” CPP,

JA.614-615.

The anodyne phrase “generation shifting” conceals

the practical effect of the CPP: transforming BSER

“guidelines” into binding national emission limitations

that could not be achieved by the entire coal-fired

power sector in order to force utilities to generate or

obtain power from other categories of sources. Under

the CPP, utilities could only achieve EPA’s BSER

(which unlawfully included binding nationwide emission limitations) if they shut down coal-fired power

plants and purchased power from or invested in EGUs

using different sources of energy.4 Setting aside the

fundamental point that neither Section 111(a)(1) nor

Section 111(d)(1) give EPA the authority to establish

binding emission limitations for existing sources,

EPA’s justification in the CPP was wholly inconsistent

with the mandate that the BSER be “adequately

demonstrated” and capable of being applied to existing

sources to determine what “degree of emission limitation” is actually “achievable.” U.S.C. § 7411(a)(1).

Thus, the D.C. Circuit’s conclusion that Section

111 allows EPA’s BSER “guidelines” to include binding

emission limitations that are admittedly neither “adequately demonstrated” nor “achievable” by an entire

category and sector of EGUs cannot be squared with

the clear language of Section 111.

iii. The States’ Authority to Establish

Standards of Performance “At” and

“To” Individual Existing Sources

Cannot Be Infringed Upon.

The D.C. Circuit’s conclusion that “[e]mission-reduction measures ‘for’ sources may readily be understood to go beyond those that apply physically ‘at’ and

‘to’ the individual source” falls short. JA.107. That

reading would render superfluous the requirement in

Section 111(d)(1) that it is the States who establish the

For example, the hard CO2lb/MWh emission limitations

established by EPA under the guise of the BSER “guidelines” in

the CPP would have forced North Dakota to close six coal-fired

EGUs in the state. See Statement of the Case, at B (citing to

Pet.App.249-252).

standard of performance “for any existing source,” using EPA’s guidelines which “shall permit the State in

applying a standard of performance to any particular

source under a plan submitted under this paragraph to

take into consideration, among other factors, the remaining useful life of the existing source to which such

standard applies.” 42 U.S.C. § 7411(d)(1) (emphasis

added).

Even if EPA could set binding emission limitations

under 111(d) (which it cannot), any such limitations

cannot deprive States of their authority under Section

111(d)(1) to establish standards of performance and

achievable emission limitations that take source-specific factors into account.

At the outset, the D.C. Circuit’s discussion of this

issue is based on its incorrect conclusion that Section

111(d)(1) gives EPA the authority to impose binding

emission limitations on existing sources under the

guise of BSER “guidelines” in the first instance. Then,

with much grammatical maneuvering through a discussion of the preposition “for,” the D.C. Circuit held

that a BSER “for” a source “might entail a broader array of controls that concern but are not immediately

physically proximate to the source—such as, for instance, generation shifting.” JA.117. This reading of

Section 111(d)(1) would obviate the provision that

States have the authority and discretion to make

source-specific determinations when the States set

standards of performance.

The generation shifting requirement (mandated

via the binding emission limitations concealed as

BSER) does not apply at the source-specific level. As

EPA admitted in the CPP, the BSER in the CPP was

focused on the “shifting of emissions from higher-emitting to lower-emitting sources,” which necessarily required “appropriate incentives for affected entities to

achieve the emission reductions encompassed in the

BSER, including through state plans that provide

crediting for lower-emitting generation.” CPP, JA.992.

By EPA’s own admission, the hard CO2 lb/MWhr emission limitations could not be achieved by higher-emitting source categories such as coal-fired EGUs. There

was simply no room under the CPP for States, in “applying a standard of performance to any particular

source” to “take into consideration” source-specific factors. 42 U.S.C. § 7411(d)(1).

The D.C. Circuit’s tortured grammatical analysis

improbably suggests that EPA “erroneously treats a

nominalization of a verb as requiring an indirect object, collapses two separate functions and provisions of

the Act in order to supply a borrowed indirect object,

does so without any evidence that the borrowed indirect object was what Congress necessarily intended,

and narrowly focuses the Agency’s authority on that

indirect object by using a different preposition from the

one that actually appears in the borrowed text.”

JA.118. Nothing in the ACE Rule suggests EPA engaged in or relied on the complex and obscure analysis

suggested by the D.C. Circuit, whose interpretation

unnecessarily and erroneously complicated a textual

and wholistic reading of Section 111(a)(1) and (d)(1).

Instead, EPA cannot promulgate BSER “guidelines”

that impose binding national emission limitations that

deprives States of their authority under Section

111(d)(1) to apply source-specific considerations in

setting standards of performance for any existing

source. 42 U.S.C. § 7411(d)(1). Because generation

shifting does not allow the States any latitude in determining standards of performance for individual existing sources under Section 111(d)(1), it is beyond

EPA’s authority under the CAA. A complicated comparison of verbs, indirect objects, functions, and prepositions is not necessary to understand the clear

cooperative federalism mandate Congress codified in

Section 111(d)(1) that the States be afforded the discretion to make source-specific determinations.

EPA cannot promulgate BSER “guidelines” that

impose binding national emission limitations that deprive States of their authority under Section 111(d)(1)

to apply source-specific considerations in setting standards of performance for any existing source. 42 U.S.C.

§ 7411(d)(1). Because generation shifting infringes on

the States authority to determine standards of performance for existing sources based on source-specific

factors under Section 111(d)(1), it is beyond EPA’s authority under the CAA.

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

CONCLUSION

A State’s authority to create its own Section 111(d)

plan for regulating emissions from existing sources,

including establishing standards of performance and

emission limitations for those existing sources based

on State, local and source-specific factors, is key to the

cooperative federalism enshrined in the CAA. Congress did not grant EPA the authority, under the guise

of BSER “guidelines,” to mandate and impose on the

States and existing sources binding national emission

limitations that infringe on and severely diminish the

States’ authority under Section 111(d)(1) to regulate

emissions from existing sources, taking source-specific

factors into account. Accordingly, the D.C. Circuit’s decision vacating the CPP Repeal/ACE Rule should be

vacated, and the ACE Rule reinstated.

For the foregoing reasons, the judgment below

should be reversed.

Respectfully submitted,

WAYNE STENEHJEM

Attorney General

STATE OF NORTH DAKOTA

PAUL M. SEBY*

Special Assistant

Attorney General

MATTHEW SAGSVEEN

Solicitor General

MARGARET OLSON

Assistant Attorney General

NORTH DAKOTA OFFICE OF

ATTORNEY GENERAL

600 E. Boulevard Avenue

#125

Bismarck, ND 58505

Telephone: (701) 328-3640

Email: ndag@nd.gov

Email: masagsve@nd.gov

Email: maiolson@nd.gov

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*Counsel of Record

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