Reply Brief — Westmoreland Mining Holdings LLC, Petitioner v. Environmental Protection Agency, et al.

No. 20-1778

IN THE

Supreme Court of the United States

___________

WESTMORELAND MINING HOLDINGS LLC,

Petitioner,

v.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY AND MICHAEL REGAN, ADMINISTRATOR OF THE

U.S. ENVIRONMENTAL PROTECTION AGENCY,

___________

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

___________

REPLY BRIEF OF PETITIONER

___________

MARTIN T. BOOHER

JOSHUA T. WILSON

BAKER & HOSTETLER LLP

2000 Key Tower

127 Public Square

Cleveland, Ohio 44114

(216) 621-0200

MARK W. DELAQUIL

ANDREW M. GROSSMAN

Counsel of Record

BAKER & HOSTETLER LLP

1050 Connecticut Ave.,

N.W.

Washington, D.C. 20036

(202) 861-1697

agrossman@bakerlaw.com

ii

TABLE OF CONTENTS

REPLY BRIEF FOR PETITIONER .......................... 1

I.

The Court’s Review Is Required Now ............. 2

II.

Review Is Required To Enforce the

Limits on EPA’s Authority the Court

Below Mistakenly Discarded .......................... 6

A. EPA’s Section 112 Regulations

Bar Double-Regulation Under

Section 111(d). ............................................ 6

B. EPA Lacks Authority to

Restructure the Energy Sector .................. 8

III. Respondent NGOs’ Attack on

Westmoreland’s Standing Is Baseless .......... 10

CONCLUSION ......................................................... 13

iii

TABLE OF AUTHORITIES

CASES

Ass’n of Data Processing Serv. Orgs., Inc. v.

Camp,

397 U.S. 150 (1970) ............................................... 10

Clapper v. Amnesty Int’l USA,

568 U.S. 398 (2013) ............................................... 11

Barlow v. Collins,

397 U.S. 159 (1970) ............................................... 10

Lujan v. Defs. of Wildlife

504 U.S. 555 (1992) ............................................... 10

Monsanto Co. v. Geertson Seed Farms,

561 U.S. 139 (2010) ..........................................11-12

Motor & Equip. Mfrs. Ass’n v. Nichols,

142 F.3d 449 (D.C. Cir. 1998) ..........................10-11

Sherley v. Sebelius,

610 F.3d 69 (D.C. Cir. 2010) ................................. 10

U.S. Nat. Bank of Ore.,

508 U.S. 439 (1993) ................................................. 7

U.S. Telecom Ass’n v. FCC,

855 F.3d 381 (D.C. Cir. 2017) ................................. 2

Whitman v. Am. Trucking Assns, Inc.,

531 U.S. 457 (2001) ................................................. 9

iv

STATUTES

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

42 U.S.C. § 7412 ............................................... passim

REGULATIONS

70 Fed. Reg. 15,994 (Mar. 29, 2005) .......................... 7

84 Fed. Reg. 32,520 (July 8, 2019)........................... 11

OTHER AUTHORITIES

Corrected Unopposed Motion to Hold the

Consolidated Cases in Abeyance, Am.

Acad. of Pediatrics, et al v. Regan, No 201221 (D.C. Cir. Feb. 16, 2021) ................................ 5

Declaration of Jeremy Cottrell,

No. 19-1140 (D.C. Cir. Aug. 13, 2020), ECF

No. 1856447.................................................... 11, 12

Lisa Friedman, Biden Sets in Motion Plan to

Ban New Oil and Gas Leases on Federal

Land, N.Y. Times, Jan. 25, 2021 at A16,

https://www.nytimes.com/2021/01/25/clima

te/biden-climate-change.html (accessed

Aug. 23, 2021) ........................................................ 2

Thomas W. Hazlett, Net Neutrality Is Far

From Necessary, Reason, Aug./Sept. 2021,

https://reason.com/2021/08/21/netneutrality-is-far-from-necessary/ (accessed

Aug. 23, 2021) ......................................................... 2

Letter from Institute for Policy Integrity,

“Petition for Rulemakings and Call for

Information under Section 115, Title VI,

v

Section 111, and Title II of the Clean Air

Act to Regulate Greenhouse Gas

Emissions,” Feb. 19, 2013,

https://www.epa.gov/sites/default/files/docu

ments/policy_integrity_omnibus_ghg_petiti

on_under_caa.pdf (accessed Aug. 23, 2021) ........... 4

Sarah Kliff & Margot Sanger-Katz, Biden

Administration Moves to End Work

Requirements in Medicaid, N.Y. Times, Feb.

12, 2021, https://www.nytimes.com/2021/02/12/

upshot/biden-medicaid-reversing-trump.html

(accessed Aug. 23, 2021) ......................................... 2

S. Rep. No. 91-1196 (1970)......................................... 8

David Vetter, Biden Commits U.S. To Halving

Greenhouse Gas Emissions By 2030, Forbes

(Apr. 22, 2021) ......................................................... 3

REPLY BRIEF FOR PETITIONER

The fundamental questions presented in this case

have been opined on by the last four administrations,

litigated before the D.C. Circuit three times (including en banc), and been the subject of a stay by this

Court. That the EPA’s authority in this vital area still

remain so hotly disputed underscores the need for this

Court’s review of the D.C. Circuit’s divided decision.

Rather than identify any credible reason why these

issues do not merit the Court’s review, Respondents

seek to delay the day of reckoning. But delay would

only inflict damaging uncertainty on industry and the

States, frustrate investment, and require yet another

years-long voyage of discovery through administrative proceedings and the courts before the very same

set of issues reaches this Court again.

None of that is necessary. EPA’s representation (at

18) that it is enacting yet another replacement for the

CPP and ACE rules means the questions presented by

the Petition—concerning EPA’s authority to regulate

in this area at all—remain live and important notwithstanding any adjustments EPA may make to the

technical details. Effectively confirming as much, Respondents chiefly engage those questions on the merits. The Court should also proceed to the merits, lest

EPA once again manage to achieve its policy objectives through attrition in the absence of lawfully exercised authority, just as it did with its Section 112

emissions limitations for coal-fired power plants. See

Pet.4-5 n.4.

It should not be lost on the Court that EPA’s brief

announces the third major shift in climate policy for

the energy sector over the past decade, none wrought

2

in legislation. Each respective Administration has reversed course from its predecessor by reinterpreting

existing statutory language to answer a major question never addressed by Congress. The Nation’s energy sector is not alone in that respect. The current

Administration, for example, is currently preparing

the seventh regime over the past 13 years to govern

carriage of Internet traffic; 1 announced a reversal

(the second in three years) on work requirements for

Medicaid recipients; 2 and sought to impose a moratorium on new drilling on federal lands and waters that

its predecessor permitted liberally. 3 The need for the

Court to clarify when agencies may make “decisions

of vast economic and political significance” in the absence of “clear congressional authorization” is acute.

U.S. Telecom Ass’n v. FCC, 855 F.3d 381, 417 (D.C.

Cir. 2017) (Kavanaugh, J., dissenting). This case is

the ideal vehicle.

I.

The Court’s Review Is Required Now

Respondents contend that review of authority EPA

has been attempting to exercise for a decade is prem1 Thomas W. Hazlett, Net Neutrality Is Far From Necessary, Po-

litico (Aug./Sept. 2021) https://reason.com/2021/08/21/net-neutrality-is-far-from-necessary/ (accessed Aug. 23, 2021).

2 Sarah Kliff & Margot Sanger-Katz, Biden Administration

Moves to End Work Requirements in Medicaid, N.Y. Times, Feb.

12, 2021, https://www.nytimes.com/2021/02/12/upshot/bidenmedicaid-reversing-trump.html (accessed Aug. 23, 2021).

3 Lisa Friedman, Biden Sets in Motion Plan to Ban New Oil and

Gas Leases on Federal Land, N.Y. Times, Jan. 25, 2021,

https://www.nytimes.com/2021/01/25/climate/biden-climatechange.html (accessed Aug. 23, 2021).

3

ature because EPA has not yet promulgated a replacement for the ACE Rule. But whether EPA uses the

entirety of the vast discretion conferred by the decision below is wholly irrelevant to the questions raised

by this petition, which ask whether EPA possesses

any discretion in the first place.

Regardless, Respondents’ wait-and-see approach is

particularly irrelevant to Westmoreland’s questions

presented here regarding the “Section 112 Exclusion”—i.e., whether EPA may use Section 111(d) to

impose standards of performance on existing stationary sources that are regulated under Section 112. Although Respondents speculate that EPA could adopt a

rule without addressing the scope of its new-found authority to restructure the energy system, there is no

dispute that EPA will continue to regulate coal fired

power plants under Section 111(d) absent this Court’s

intervention. BIO.18. Rather than even attempt to argue that EPA’s forthcoming action could justify delay

in reviewing the Section 112 Exclusion issue, Respondents focus on the merits, implicitly acknowledging that there is no principled reason to delay this

Court’s review of the merits.

As to the application of the major-questions doctrine, Respondents’ call for delay fails on its own

terms. In addition to being implausible as a matter of

announced EPA policy, 4 any fair reading of the deci-

4 It strains credulity to

believe a Presidential Administration

that has publicly committed to “a carbon pollution-free power

sector by 2035,” see David Vetter, “Biden Commits U.S. To Halving Greenhouse Gas Emissions By 2030,” Forbes (Apr. 22, 2021)

might choose to regulate parsimoniously now that it has been

4

sion below requires new standards to be more stringent than the ACE rule’s at-the-source limits. See

Pet.App.68a, Pet.App.90a (forbidding EPA from concluding that generation-shifting, and even efforts to

offset rather than reduce emissions, exceed its authority); Pet.App.51a (finding that generation-shifting achieves far greater emission reductions than controls physically confined at or to the source). And the

scope of EPA’s Section 111(d) authority implicates not

just power plants, but nearly all U.S. industry, from

landfills to agriculture. 5

EPA’s revolving door on Section 111(d) counsels for

review, not delay. The other side of EPA’s “wait-andsee” approach is uncertainty and deferral of the issues

presented in this petition until the next round of Section 111(d) regulations, all based on the deeply flawed

decision below, followed by the possibility of a new Administration and yet another trip around the merrygo-round, further delaying any potential solutions actually within EPA’s authority. There is no reason to

postpone review until EPA promulgates a third rule

regulating coal-fired power plants under Section

111(d), further pressuring industry investment decisions which must be made many years in advance.

directed to exercise discretion unhinged from any at-the-source

limitation.

5 See, e.g., Letter from Institute for Policy Integrity, “Petition for

Rulemakings and Call for Information under Section 115, Title

VI, Section 111, and Title II of the Clean Air Act to Regulate

Greenhouse

Gas

Emissions,”

Feb.

19,

2013,

https://www.epa.gov/sites/default/files/documents/policy_integrity_omnibus_ghg_petition_under_caa.pdf

(accessed

08/23/2021).

5

EPA’s sole non-merits argument on the Section 112

Exclusion fares no better. EPA suggests (at 32–33)

that the Court defer review until the conclusion of litigation concerning a Trump-era EPA rule that rescinded EPA’s finding that Section 112 regulation of

coal fired power plants was appropriate and necessary, but left intact EPA’s Section 112 regulation of

power plants. EPA did not, of course, make this argument below despite the co-pendency of those cases.

And EPA neglects to inform this Court that it has requested that the D.C. Circuit delay that litigation as

well, pending consideration of a new rule which EPA

represents could replace the appropriate and necessary finding, potentially mooting that litigation. See

Corrected Unopposed Motion to Hold the Consolidated Cases in Abeyance, Am. Acad. of Pediatrics, et

al v. Regan, No 20-1221 (D.C. Cir. Feb. 16, 2021). EPA

seeks to have its cake and eat it too. EPA’s regulations

of coal-fired power plants under Section 112 have

been in place for a decade and speculation that (after

yet another rulemaking, litigation, and potential untold further changes in EPA position) this situation

could change is not reason to avoid review.

Finally, Respondents argue that reduced carbon dioxide emissions from the power sector—partly the result of investment decisions influenced by the potential need to comply with the two prior Section 111(d)

rules—counsel against review. NGO BIO.3–4. Respondents’ calls for delay mirror the Michigan v. EPA

playbook (Pet.4-5 n.4), where EPA’s Fabian tactics ensured implementation of a multi-billion-dollar rule

notwithstanding this Court’s finding that it was arbitrary and capricious. The fact that EPA’s successive

regulations pressured conformity with the past CPP

6

and ACE rules is not a reason EPA should be allowed

to present yet another rule to drive industry investment decisions before this Court can review the statutory scope of EPA’s authority, something that no further factual development could effect.

II. Review Is Required To Enforce the

Limits on EPA’s Authority the Court

Below Mistakenly Discarded

No Respondent argues that the issues in this decade-long “super bowl” of climate litigation lack sufficient importance to merit this Court’s review. Instead, Respondents attempt to defend the decision below on the merits, but their inability to square its

holdings with the statute and this Court’s precedents

only confirm that the court below badly erred in

shrugging off all limits on EPA’s regulatory authority.

A.

EPA’s Section 112 Regulations Bar

Double-Regulation Under Section

111(d)

A. Tellingly, not a single Respondent responds to

Westmoreland’s textual argument that the single instance of the word “pollutant” controls both EPA’s authority under Section 111(d) and the Section 112 Exclusion, such that the provision cannot be read both

to authorize regulation of non-HAPs without also prohibiting regulation of such non-HAPs emitted by Section 112-regulated sources. A single instance of a single word cannot bear two disparate meanings, and the

holding of the court below that it does here is obviously wrong. Rather than defend that novel interpretative move, Respondents recycle the lower court’s

points on statutory history and policy, underscoring

7

the extent to which EPA’s interpretation depends on

overriding the statute’s clear text.

B. EPA falsely denies (at 31) that it previously

acknowledged the House amendment to reflect Congress’s intentions and the Senate amendment to be a

scrivener’s error. EPA conceded precisely that in the

same regulatory proceeding wherein it announced its

current theory that Section 111(d) authorizes regulation of sources already subject to Section 112 regulation. EPA stated: “a literal reading of [the House]

amendment is that a standard of performance under

section 111(d) cannot be established for any air pollutant—HAP and non-HAP—emitted from a source category regulated under section 112”; “we believe that

the House sought to change the focus of section 111(d)

by seeking to preclude regulation of those pollutants

that are emitted from a particular source category

that is actually regulated under section 112”; and “it

appears that the Senate amendment to section 111(d)

is a drafting error and therefore should not be considered.” 70 Fed. Reg. 15,994, 16,031 (Mar. 29, 2005).

Nonetheless, to bolster its regulatory authority, EPA

purported “to give effect to both the House and Senate

amendments.” Id. EPA’s attempt to aggrandize its authority by “giving effect” to a drafting error is inconsistent with this Court’s long-held refusal to do so.

E.g., U.S. Nat. Bank of Ore., 508 U.S. 439, 462 (1993).

Yet, as Judge Walker explained, there is no conflict

between the amendments, and even if there were, the

codified reading would prevail. Pet.App.191a, 197a.

C. Non-EPA Respondents’ argument concerning

Section 112(d)(7) is meritless. Section 112(d)(7) operates as a savings clause for standards that predate a

8

Section 112 rule—of which there were four at the time

of the 1990 Amendments—whereas the Section

111(d)(1) source-category exclusion bars new Section

111(d) standards that postdate Section 112 standards.

Section 112(d)(7) is also substantively inapplicable

because it applies only where “a more stringent emission limitation or other applicable requirement” is

“established pursuant to Section 7411” or several

other programs. But ACE (as well as the replacement

rule EPA has committed to issuing) is not a “more

stringent emission standard,” because it does not establish standards for Section 112-listed pollutants.

D. Finally, Respondents repeat the D.C. Circuit’s

mistaken view that Congress created Section 111 to

ensure that there are “no gaps in control activities

pertaining to stationary source emissions that pose

any significant danger to public health or welfare.”

States BIO.26; EPA BIO.4; Pet.App.124(a) (quoting S.

Rep. No. 91-1196, at 20 (1970)). This “no gap” quote

did not concern Section 111(d), but only former Sections 114 and 115 of the 1970 Clean Air Act. By contrast, during the 1990 Clean Air Act Amendments,

Section 111(d) was considered “some obscure, neverused section of the law.” Pet.8–9.

B.

EPA Lacks Authority To Restructure

the Energy Sector

It speaks volumes that EPA does not attempt to defend the rationale of the court below granting it unprecedented discretion to implement emissions reductions based on factors other than on-site controls. The

court held that, so long as EPA considers “cost, nonair

quality health and environmental impact, and energy

requirements,” the Clean Air Act imposed “no limits”

9

on EPA’s authority to reorganize the energy sector

under Section 111(d). Pet.App.68a. It held that even

regulations mandating demand-side activities or

emission-offset measures like planting trees are

within EPA authority and thus must be considered.

See Pet.App.90a (claiming EPA “tied its own hands”

by considering only measures to “reduce emissions”).

Respondents’ contention that the decision below

“establishes no new agency powers” (Power Company

BIO.20) is indefensible. Never before has a court held

that EPA has discretion to set a best system of emission controls unmoored from at-the-source controls. If

anything, this Court’s stay counseled that EPA lacks

such discretion. Pet.26. EPA’s hollow assurance (at

19–20) that its newly recognized power or even obligation to reorder the energy sector is somehow limited

by the requirement to consider costs ignores history.

The Clean Power Plan itself demonstrates that requirements to consider factors like cost do not meaningfully restrict EPA’s wide-ranging discretion to restructure entire sectors of the economy in “arguably

one of the most consequential rules ever proposed by

an administrative agency.” Pet.App.172–77a. And if

the only limits on EPA’s authority are self-imposed,

then there are no meaningful limits. Cf. Whitman v.

Am. Trucking Assns., Inc., 531 U.S. 457, 472–73

(2001) (rejecting argument that EPA may self-impose

limits on its authority to avoid non-delegation concerns). The court below’s carte blanche interpretation

of the Clean Air Act demonstrates that clarification of

the major questions doctrine is sorely needed.

10

III. Respondent NGOs’ Attack on

Westmoreland’s Standing Is Baseless

There is no merit to Respondent NGOs’ contention

that Westmoreland lacks Article III Standing because

it is not itself a regulated power plant. This last-ditch

attempt to avoid review of the Section 112 Exclusion

issue was not raised below and is joined by no other

Respondent, both reflecting its error. Any Section

111(d) emission guidelines for coal-fired power plants

directly regulates, and disadvantages, use of the coal

that Westmoreland is engaged to provide to power

plants. There is no serious question that Westmoreland has standing to challenge a rule that targets its product and business.

The Court has regularly recognized the standing of

parties in Westmoreland’s position. Its seminal decision in Lujan v. Defenders of Wildlife understood that

“standing is not precluded” when “the plaintiff is not

himself the object of the government action or inaction he challenges.” 504 U.S. 555, 562 (1992). It is

enough that a party suffer an injury directly traceable

to the action being challenged, even if the injury

“hinge[s] on the response of the regulated…and the

response of others as well.” Id. at 562; see also, e.g.,

Ass’n of Data Processing Serv. Orgs., Inc. v. Camp,

397 U.S. 150, 152 (1970) (standing where changed

competitive field); Barlow v. Collins, 397 U.S. 159,

162–63 (1970) (standing based on “opportunity” for

acts of others); Sherley v. Sebelius, 610 F.3d 69, 72

(D.C. Cir. 2010) (standing based on benefit to economic rivals); Motor & Equip. Mfrs. Ass’n v. Nichols,

142 F.3d 449, 457 (D.C. Cir. 1998) (standing where

decreased purchases of petitioner’s products by “third

11

party not before the court…is fairly traceable to EPA’s

rulemaking”).

Here, Westmoreland faces an economic injury to its

marketing of coal that is fairly traceable to EPA’s regulation discouraging and disadvantaging the use of

that precise resource. Decl. of Jeremy Cottrell at

ADD6, No. 19-1140 (D.C. Cir. Aug. 13, 2020), ECF No.

1856447, ¶8. Moreover, although Westmoreland itself

is not a power-plant operator, its business is directly

integrated with those who are. In particular, Westmoreland is a mine-mouth owner, operating captive

mines used to feed particular power plants, such that

any reduction in energy generation by those plants directly harms Westmoreland. Id. at ¶4.

In addition, Respondent NGOs mischaracterize

Westmoreland’s evidence as identifying only an “illustrative scenario” of injury. Instead, it noted the ACE

rule itself stated that it would cause a decrease in coal

production for power sector use in every future time

period modeled in the ACE rule over the next 15

years. 84 Fed. Reg. 32,520, 32,562 (July 8, 2019). And

while all modeled impacts in the ACE rule were based

on an “illustrative policy scenario,” that scenario was

“designed to reflect, to the extent possible, the scope

and nature of the final guidelines.” Id. The question

is not whether the CPP, ACE, or its successor will injure Westmoreland, but how much. And, of course, the

Court does not “require plaintiffs to demonstrate that

it is literally certain that the harms they identify will

come about.” Clapper v. Amnesty Int'l USA, 568 U.S.

398, 414 n.5 (2013). Indeed, “in some instances, [the

Court has] found standing based on a ‘substantial

risk’ that the harm will occur.” Id. (citing Monsanto

12

Co. v. Geertson Seed Farms, 561 U.S. 139, 153 (2010)).

Regardless, harm is certain here.

Respondent NGOs’ claim (at 14) that it is “impossible to assess any claimed impacts” until a final rule is

implemented is both wrong and irrelevant. Wrong, because the “uncertainty” itself “has contributed to customer decisions not to make significant investments

with a corresponding reduction in the coal demand.”

Cottrell Decl. at ADD6 ¶7. Irrelevant, because an injury need only be “imminent,” and EPA’s own modeling demonstrates the imminence of the harm. E.g., 84

Fed. Reg. at 32,562. Once again, Respondents are attempting to repeat their Michigan v. EPA strategy of

leveraging uncertainty and investor pressure to meet

regulations before they become enforceable or survive

judicial review. See Pet.5. Nor is there a redressability

problem. In addition to the benefit to Westmoreland

of a decision holding that EPA lacks authority to regulate the principal use of its product, clarification of

the scope of EPA’s authority under Section 111(d)

would erase this uncertainty—detrimental to Westmoreland’s business—under which coal-fired plants

currently operate.

13

CONCLUSION

The Court should grant the petition.

Respectfully Submitted,

MARTIN T. BOOHER

JOSHUA T. WILSON

BAKERHOSTETLER LLP

2000 Key Tower

127 Public Square

Cleveland, Ohio 44114

(216) 621-0200

MARK W. DELAQUIL

ANDREW M. GROSSMAN

Counsel of Record

BAKERHOSTETLER LLP

1050 Connecticut Ave., NW

Washington, D.C. 20036

(202) 861-1697

agrossman@bakerlaw.com

Counsel for Petitioner

AUGUST 2021