Emergency Application — Talen Montana, LLC, et al., Applicants v. Environmental Protection Agency, et al.

Supreme Court briefAug 20, 2024

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No. _______

In the Supreme Court of the United States

Talen Montana, LLC and NorthWestern Corporation,

Applicants,

U.S. Environmental Protection Agency and

Michael S. Regan, Administrator, U.S. Environmental Protection Agency,

Respondents.

ON EMERGENCY APPLICATION FOR STAY TO THE HONORABLE JOHN G. ROBERTS, JR.,

CHIEF JUSTICE OF THE UNITED STATES

AND CIRCUIT JUSTICE FOR THE U.S. COURT OF APPEALS FOR THE D.C. CIRCUIT

APPLICATION FOR AN IMMEDIATE STAY OF FINAL AGENCY ACTION

PENDING DISPOSITION OF PETITION FOR REVIEW

Michael Drysdale

DORSEY & WHITNEY LLP

50 South Sixth Street, Suite 1500

Minneapolis, MN 55402

Creighton R. Magid

DORSEY & WHITNEY LLP

1401 New York Avenue NW, Suite 900

Washington, DC 20005

Counsel for NorthWestern Corporation

d/b/a NorthWestern Energy

Joshua B. Frank

Counsel of Record

C. Joshua Lee

BAKER BOTTS L.L.P.

700 K Street NW

Washington, DC 20001

(202) 639-7748

joshua.frank@bakerbotts.com

Counsel for Talen Montana, LLC

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, Applicants submit the following statement.

Talen Montana, LLC (“Talen Montana”) is a power generation company, which

operates and partially owns Colstrip Unit 3 (and has an economic interest in Colstrip Unit

4), which are power plant units affected by EPA’s final action subject to this Application

for an Immediate Stay of Final Agency Action. Talen Montana, LLC is an indirect,

wholly owned subsidiary of Talen Energy Corporation. Talen Energy Corporation is a

publicly traded corporation. No publicly held company owns more than 10% of Talen

Energy Corporation’s stock.

NorthWestern Corporation d/b/a NorthWestern Energy (“NorthWestern”) is a

wholly owned subsidiary of NorthWestern Energy Group, a publicly traded company

(Nasdaq: NWE) that is incorporated in Delaware. Based on an August 15, 2024, review

of the most recent statements filed with the Securities and Exchange Commission

pursuant to Sections 13(d), 13(f), and 13(g) of the Securities Exchange Act of 1934, two

publicly held companies own 10% or more of NorthWestern Energy Group’s stock:

BlackRock Inc. and Vanguard Group Inc.

PARTIES TO THE PROCEEDING AND RELATED PROCEEDINGS

Applicants are Talen Montana, LLC and NorthWestern Corporation d/b/a

NorthWestern Energy. Respondents in this Court and Respondents below are the U.S.

Environmental Protection Agency and Michael S. Regan, as Administrator of the U.S.

Environmental Protection Agency.

The other parties to the consolidated proceedings below are, by Court of Appeals

case number, as follows.

24-1119. Petitioners: State of North Dakota, State of West Virginia, State of

Alaska, State of Arkansas, State of Georgia, State of Idaho, State of Indiana, State of

Iowa, State of Kansas, Commonwealth of Kentucky, State of Louisiana, State of

Mississippi, State of Missouri, State of Montana, State of Nebraska, State of Oklahoma,

State of South Carolina, State of South Dakota, State of Tennessee, State of Texas, State

of Utah, Commonwealth of Virginia, and State of Wyoming.

Respondent: U.S.

Environmental Protection Agency. Intervenor in Support of Petitioners: San Miguel

Electric Cooperative, Inc. Intervenors in Support of Respondents: (1) Air Alliance

Houston, Alliance of Nurses for Healthy Environments, American Academy of

Pediatrics, American Lung Association, American Public Health Association,

Chesapeake Climate Action Network, Citizens for Pennsylvania’s Future, Clean Air

Council, Clean Wisconsin, Downwinders at Risk, Environmental Defense Fund,

Environmental Integrity Project, Montana Environmental Information Center, Natural

Resources Council of Maine, Natural Resources Defense Council, the Ohio

Environmental Council, Physicians for Social Responsibility, and Sierra Club; (2)

Commonwealth of Massachusetts, State of Minnesota, State of Connecticut, State of

Illinois, State of Maine, State of Maryland, State of Michigan, State of New Jersey, State

of New York, State of Oregon, Commonwealth of Pennsylvania, State of Rhode Island,

State of Vermont, State of Wisconsin, District of Columbia, City of Baltimore, City of

Chicago, City of New York.

24-1154. Petitioner: NACCO Natural Resources Corporation. Respondents: U.S.

Environmental Protection Agency and Michael S. Regan, as Administrator of the U.S.

Environmental Protection Agency.

24-1179. Petitioners: National Rural Electric Cooperative Association, Lignite

Energy Council, National Mining Association, Minnkota Power Cooperative, Inc., East

Kentucky Power Cooperative, Inc., Associated Electric Cooperative Inc., Basin Electric

Power Cooperative, and Rainbow Energy Center, LLC.

Respondents: U.S.

Environmental Protection Agency and Michael S. Regan, in his official capacity as

Administrator of the U.S. Environmental Protection Agency.

24-1184. Petitioners: Oak Grove Management Company LLC and Luminant

Generation Company, LLC. Respondents: U.S. Environmental Protection Agency and

Michael S. Regan, as Administrator of the U.S. Environmental Protection Agency.

24-1194. Petitioner: Westmoreland

Mining

Holdings

LLC,

Westmoreland

Mining, and Westmoreland Rosebud Mining LLC. Respondents: U.S. Environmental

Protection Agency and Michael S. Regan, as Administrator of the U.S. Environmental

Protection Agency.

iii

24-1201. Petitioners: America’s Power and Electric Generators MATS Coalition.

Respondent: U.S. Environmental Protection Agency.

24-1223. Petitioner: Midwest Ozone Group. Respondents: U.S. Environmental

Protection Agency and Michael S. Regan, as Administrator of the U.S. Environmental

Protection Agency.

The related proceedings are as follows.



North Dakota v. EPA, No. 24-1119 (D.C. Cir.) (lead case)



NACCO Natural Resources Corporation v. EPA, No. 24-1154 (D.C. Cir.)



National Rural Electric Cooperative Association v. EPA, No. 24-1179 (D.C. Cir.)



Oak Grove Management Company LLC v. EPA, No. 24-1184 (D.C. Cir.)



Talen Montana, LLC v. EPA, No. 24-1190 (D.C. Cir.)



Westmoreland Mining Holdings LLC v. EPA, No. 24-1194 (D.C. Cir.)



America’s Power v. EPA, No. 24-1201 (D.C. Cir.)



NorthWestern Corp. v. EPA, No. 24-1217 (D.C. Cir.)



Midwest Ozone Group v. EPA, No. 24-1223 (D.C. Cir.)

TABLE OF CONTENTS

INTRODUCTION ....................................................................................................................... 1

DECISION BELOW .................................................................................................................. 4

JURISDICTION ......................................................................................................................... 4

STATUTORY PROVISIONS INVOLVED ........................................................................... 4

STATEMENT OF THE CASE ................................................................................................ 5

II.

Legal Background and Regulatory History ................................................................ 5

Clean Air Act Section 112’s Statutory Framework........................................ 5

Michigan v. EPA and the Aftermath ............................................................... 7

Factual and Procedural Background ............................................................................ 9

The Colstrip Power Plant ................................................................................. 10

The New Power Plant Air Emissions Regulations....................................... 11

Procedural History ............................................................................................ 17

REASONS TO GRANT THE APPLICATION................................................................... 18

II.

III.

Applicants Will Likely Prevail..................................................................................... 19

EPA Violated the Directives of Section 112 and Michigan v. EPA

to Consider “Costs” in the Proper Context. .................................................. 19

EPA’s Final Rule Never Grappled with How the Two Power Plant

Rules Would Interact with Each Other.......................................................... 23

Applicants Will Likely Suffer Irreparable Harm Without a Stay. ........................ 32

Ongoing Expenses of Compliance Costs ........................................................ 33

Business and Regulatory Decisions That Cannot Be Undone .................... 34

Montana’s Grid Reliability................................................................................ 35

The Equities and Relative Harms Favor a Stay....................................................... 36

CONCLUSION .......................................................................................................................... 37

TABLE OF AUTHORITIES

Page(s)

CASES

Alabama Association of Realtors v. Department of Health & Human

Services.,

594 U.S. 758 (2021) ..........................................................................................................33, 37

Association of Battery Recyclers, Inc. v. EPA,

716 F.3d 667 (D.C. Cir. 2013) ...............................................................................................19

AT&T Wireless Services, Inc. v. FCC,

270 F.3d 959 (D.C. Cir. 2001) ...............................................................................................28

Encino Motorcars, LLC v. Navarro,

579 U.S. 211 (2016) ................................................................................................................26

Entergy Corp. v. Riverkeeper, Inc.,

556 U.S. 208 (2009) ................................................................................................................37

In re EPA,

803 F.3d 804 (6th Cir. 2015) .................................................................................................34

In re NTE Connecticut, LLC,

26 F.4th 980 (D.C. Cir. 2022) ...............................................................................................33

International Union, United Mine Workers of America v. Mine Safety &

Health Admininstration,

626 F.3d 84 (D.C. Cir. 2010) .................................................................................................29

Mexichem Specialty Resins, Inc. v. EPA,

787 F.3d 544 (D.C. Cir. 2015) ...............................................................................................33

Michigan v. EPA,

576 U.S. 743 (2015) ........................................................................1, 3, 7, 8, 18–20, 22, 23, 32

Motor Vehicle Manufacturers Association, Inc. v. State Farm Mutual

Automobile Insurance Co.,

463 U.S. 29 (1983) ............................................................................................................25, 32

Nken v. Holder,

556 U.S. 418 (2009) ................................................................................................................18

NRDC v. EPA,

529 F.3d 1077 (D.C. Cir. 2008) ...............................................................................................6

Ohio v. EPA,

144 S. Ct. 2040 (2024) ....................................................................................24, 25, 27–29, 33

Portland Cement Association v. EPA,

665 F.3d 177 (D.C. Cir. 2011) .........................................................................................26, 27

SEC v. Chenery Corp.,

332 U.S. 194 (1947) ................................................................................................................30

Starbucks Corp. v. McKinney,

144 S. Ct. 1570 (2024) ............................................................................................................35

Thunder Basin Coal Co. v. Reich,

510 U.S. 200 (1994) ................................................................................................................33

STATUTES AND RULES

5 U.S.C. § 702 ...............................................................................................................................33

5 U.S.C. § 705 .................................................................................................................................4

28 U.S.C. § 1254 .............................................................................................................................4

28 U.S.C. § 1651 .............................................................................................................................4

28 U.S.C. § 2101(f) .........................................................................................................................4

42 U.S.C. § 7412 .......................................................................................2, 4–7, 14, 15, 18, 20, 22

U.S. Supreme Court Rule 23 .......................................................................................................4

U.S. Supreme Court Rule 29.6 .................................................................................................... i

FEDERAL REGISTER

42 Fed. Reg. 10412 (Feb. 22, 1977) .............................................................................................7

54 Fed. Reg. 38044 (Sept. 14, 1989) ............................................................................................6

65 Fed. Reg. 79825 (Dec. 20, 2000)..............................................................................................7

77 Fed. Reg. 9304 (Feb. 16, 2012) ...........................................................................................7, 8

81 Fed. Reg. 24420 (Apr. 25, 2016) .............................................................................................8

85 Fed. Reg. 31286 (May 22, 2020)..................................................................................9, 20–22

88 Fed. Reg. 13956 (Mar. 6, 2023) ...............................................................................................9

vii

88 Fed. Reg. 24854 (April 24, 2023) ..............................................................................11, 12, 16

88 Fed. Reg. 33240 (May 23, 2023)......................................................................................12, 13

89 Fed. Reg. 38508 (May 7, 2024)..............................................1–4, 9–11, 13–31, 33, 34, 36, 37

89 Fed. Reg. 39798 (May 9, 2024)....................................................................................2, 14, 31

OTHER AUTHORITIES

Fiscal Year 2025 Request for EPA: Hearing Before the H. Comm. on

Appropriations, 118th Cong. (Apr. 30, 2024) ....................................................................24

John D. Graham, The Legacy of One in a Million, 1 Risk in Perspective

(1993) .........................................................................................................................................7

Nicholas Rescher, Risk: A Philosophical Introduction to the Theory of

Risk Evaluation and Management (1983)........................................................................22

Timothy Cama & Lydia Wheeler, Supreme Court Overturns Landmark

EPA Air Pollution Rule, The Hill (June 29, 2015) ..........................................................19

Transcript of Oral Argument, Michigan v. EPA,

576 U.S. 743 (No. 14-46) .......................................................................................................23

viii

GLOSSARY

Applicants

Talen Montana, LLC and NorthWestern

Corporation d/b/a NorthWestern Energy

Colstrip

Colstrip Power Plant

EPA (or Agency)

U.S. Environmental Protection Agency

Final Rule

National Emission Standards for Hazardous Air

Pollutants: Coal- and Oil-Fired Electric Utility

Steam Generating Units Review of the Residual

Risk and Technology Review, 89 Fed. Reg. 38508

(May 7, 2024)

FIP

Federal Implementation Plan

fPM

Filterable particulate matter

Greenhouse Gas Rule

New Source Performance Standards for

Greenhouse Gas Emissions From New, Modified,

and Reconstructed Fossil Fuel-Fired Electric

Generating Units; Emission Guidelines for

Greenhouse Gas Emissions From Existing Fossil

Fuel-Fired Electric Generating Units; and

Repeal of the Affordable Clean Energy Rule, 89

Fed. Reg. 39798 (May 9, 2024)

HAP

Hazardous Air Pollutant

NorthWestern

NorthWestern Corporation d/b/a NorthWestern

Energy

SIP

State Implementation Plan

Talen Montana

Talen Montana, LLC

TO THE HONORABLE JOHN G. ROBERTS, JR., CHIEF JUSTICE OF THE UNITED STATES AND

CIRCUIT JUSTICE FOR THE DISTRICT OF COLUMBIA CIRCUIT:

Applicants Talen Montana, LLC (“Talen Montana”) and NorthWestern

Corporation d/b/a NorthWestern Energy (“NorthWestern”) (collectively, “Applicants”)

respectfully request an immediate stay of the U.S. Environmental Protection Agency’s

(“EPA” or “Agency”) final rule entitled National Emission Standards for Hazardous

Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units Review of

the Residual Risk and Technology Review, 89 Fed. Reg. 38508 (May 7, 2024) (“Final

Rule”).

INTRODUCTION

The Final Rule imposes enormous costs without any meaningful benefits, and

therefore seeks to drive down emissions without any statutory basis. In so doing, EPA

contravened not only the Clean Air Act, but also this Court’s admonitions to not prioritize

emissions reductions as the end-all-be-all without accounting for the impacts from those

reductions. See Michigan v. EPA, 576 U.S. 743 (2015).

The Final Rule will have broad industry-wide impacts, but the Colstrip Power

Plant (“Colstrip”) in Montana is uniquely impacted. Almost half of the Final Rule’s

regulatory costs are imposed on Colstrip, even though EPA failed to show that additional

emission reductions are necessary to achieve any measurable health benefits. Indeed,

EPA has determined that there is no meaningful risk from Colstrip’s current emissions,

meaning that any “public health” benefits from additional reductions amount to statistical

noise. The current cancer risk from Colstrip is 0.147- in-1 million, which is almost seven

times lower than the 1-in-1 million risk threshold that EPA itself has deemed

scientifically insignificant. Indeed, Congress specified that such performance in the

sector would exempt the entire source category from Clean Air Act Section 112’s

regulation altogether. See 42 U.S.C. § 7412(c)(9).

In addition to benefit-cost irrationality, EPA also failed to account for the

interaction of the Final Rule with contemporaneous major rulemakings.

Despite

imposing half of the Final Rule’s regulatory costs on Colstrip, EPA turned a blind eye to

the impacts the Final Rule would have on Colstrip when combined with the Agency’s

contemporaneous Greenhouse Gas Rule.

89 Fed. Reg. 39798 (May 9, 2024).

The

Greenhouse Gas Rule, if upheld, will force the plant’s retirement by the end of 2031

because Colstrip cannot implement carbon capture and sequestration or co-fire natural

gas. These two rules—taken together—put an untenable burden on Colstrip. First, the

Final Rule imposes $350 million worth of unnecessary costs. Second, the Greenhouse Gas

Rule limits Colstrip’s remaining life to just a few years, providing insufficient time to

recoup the investment.

During the comment period, Applicants Talen Montana and NorthWestern urged

EPA to consider the negative interactions of the two rules on Colstrip and the

corresponding devastating risks to the Montana economy and electric reliability. Talen

Montana and NorthWestern further urged EPA at least to coordinate the potential

retirement dates under the two rules and provide a subcategory that would allow Colstrip

the option to operate until a date certain without additional controls, followed by an

orderly retirement. Despite these requests, and despite EPA’s own acknowledgement

that the Final Rule imposes a huge burden on Colstrip, EPA failed to critically consider

the negative interaction of these two rules on Colstrip. Given the Final Rule’s unique

and targeted impacts on Colstrip, it was incumbent on EPA to do so. Instead, by

undertaking contemporaneous rulemakings, and ignoring Applicants’ comments, EPA

sidestepped any attempt to meaningfully analyze the interactions of the two rules on

Colstrip.

Because compliance with the Final Rule would require engineering and

construction to begin immediately, Colstrip faces a stark choice during the pendency of

the appeal of the Final Rule—(1) decide now to retire by the Final Rule’s compliance date

(July 8, 2027) to avoid any expenditures, or (2) decide now to spend $350 million on new

pollution control equipment until the Greenhouse Gas Rule, if upheld, forces a retirement

four and a half years after. Either choice is both irreversible and highly consequential

for Colstrip, its owners, and Montana, as described further herein. Without a stay of the

Final Rule, Colstrip’s owners are forced to make this decision without knowledge of the

playing field: will the Final Rule survive review and necessitate the expenditure or, will

the expenditure be wasted? Will the Greenhouse Gas Rule survive review and shorten

Colstrip’s life, or will it be struck down and allow a longer timeframe to recoup Final Rule

compliance costs?

With a stay, Colstrip’s fate can be decided based on a full

understanding of the regulatory constraints it faces.

This Court previously admonished EPA not to prioritize emission reductions

without accounting for the impacts of those reductions: “Consideration of cost reflects the

understanding that reasonable regulation ordinarily requires paying attention to the

advantages and the disadvantages of agency decisions.” Michigan, 576 U.S. at 752–753.

In Michigan, the Court’s admonition came too late because the litigation took three years

and companies were, in the interim, forced to install control technology to comply with

the invalid rule. Whether or not EPA is consciously running the same playbook with the

Final Rule, Applicants here seek to avoid the same result. Applicants request that the

Final Rule be stayed so that once this Court (or the D.C. Circuit) decides on the rule’s

validity, irreversible choices have not been made in the interim. Colstrip’s future should

not depend on a rushed decision-making process while this case is pending. Potentially

catastrophic outcomes can be avoided through a stay.

DECISION BELOW

The D.C. Circuit’s order denying Applicants’ motion for a stay pending review is

unpublished. The order is reproduced at App. 88a. EPA’s Final Rule is published at 89

Fed. Reg. 38508 (May 7, 2024) and reproduced at App. 5a.

JURISDICTION

This Court has jurisdiction over the Application under 28 U.S.C. § 1254(1) and

§ 2101(f). This Court has the authority to grant the Applicants’ requested relief under

the Administrative Procedure Act, 5 U.S.C. § 705, the All Writs Act, 28 U.S.C. § 1651,

and Supreme Court Rule 23.

STATUTORY PROVISIONS INVOLVED

The core statutory provision at issue is 42 U.S.C. § 7412. It is reproduced at App.

91a.

STATEMENT OF THE CASE

Legal Background and Regulatory History

Clean Air Act Section 112’s Statutory Framework

1. Clean Air Act Section 112 governs hazardous air pollutants (“HAPs”) such as

mercury, or non-mercury HAP metals including lead, arsenic, and cadmium. 42 U.S.C.

§ 7412. It directs EPA to set nationally applicable HAP emission standards for source

categories that emit above a certain HAP threshold. For most of these source categories,

once they are listed under Section 112 based on the amount of HAPs they emit, the

Section imposes a two-step process.

First, EPA sets an emission standard that is technology-based and formulaic. For

example, the emission standard “shall not be less stringent” than “the average emission

limitation achieved by the best performing 12 percent of the existing sources” (or best

five if the number of sources is fewer than thirty). Id. § 7412(d)(3). Cost is not a

consideration. See ibid.

Second, EPA promulgates “the maximum degree of reduction in emissions of

[HAPs]” that is “achievable.” Id. § 7412(d)(2). Here, EPA must “consider[ ] the cost of

achieving such emission reduction, and any non-air quality health and environmental

impacts and energy requirements.” Ibid.

By contrast, Congress required an additional threshold requirement for

“electric utility steam generating units,” i.e., power plants that support the electrical

grid. Id. § 7412(n)(1). EPA may regulate such plants under Section 112 only if the Agency

finds such regulation “appropriate and necessary.” Id. § 7412(n)(1)(A). Under this

framework, the Agency must consider costs, even under the first step of Section 112

regulation.

3. Eight years after establishing an emission standard for a source category, EPA

must conduct a one-time assessment of the remaining residual risk. Id. § 7412(f)(2). If

“necessary,” EPA must tighten the standard to “provide an ample margin of safety to

protect public health in accordance with this section (as in effect before November 15,

1990),” and “taking into consideration costs, energy, safety, and other relevant factors,

[to prevent] an adverse environmental effect.” Id. § 7412(f)(2)(A). This legislative

directive embodies two benchmarks.

First, the clause “as in effect before November 15, 1990” codifies EPA’s pre-1990

“Benzene standard” safety interpretation. See NRDC v. EPA, 529 F.3d 1077, 1082 (D.C.

Cir. 2008).

This 1989 EPA rule, which set the emission standard for benzene (a

carcinogenic HAP), determined that “a maximum excess [cancer] risk of 100-in-one

million” provided an ample margin of safety. See id. at 1081–1083. Importantly, the

Benzene standard, now written in statute, has demanded considering cost. See id. at 1083

(“including costs and economic impacts” (emphasis omitted); see also 54 Fed. Reg. 38044,

38045 (Sept. 14, 1989).

Second, the aspiration is to reduce cancer risks from HAP emissions to negligible

thresholds, i.e., “to less than one in one million.” 42 U.S.C. § 7412(f)(2)(A). Once that

threshold is achieved, Congress provided that the entire source category may be

removed from regulation under Section 112 if all sources in that category present a risk

of less than 1-in-1-million.1 Id. § 7412(c)(9).

4. Lastly, at least on an eight-year recurring schedule, EPA must undertake a

technology review. Id. § 7412(d)(6). The Agency “shall review, and revise as necessary

(taking into account developments in practices, processes, and control technologies)” the

emission standards. Ibid. EPA has typically combined the first set of eight-year reviews,

commonly referred to as a “Risk and Technology Review.”

Michigan v. EPA and the Aftermath

Regulation of coal-fired power plants under Clean Air Act Section 112 holds a long,

tortured past. EPA first determined over two decades ago that it was “appropriate and

necessary” under Section 112(n)(1)(A) to regulate HAP emissions from fossil fuel-fired

power plants. 65 Fed. Reg. 79825 (Dec. 20, 2000).

In 2012, the Agency reaffirmed that determination and, for the first time, issued

emission standards for coal- and oil-fired power plants pursuant to Section 112(d).

77 Fed. Reg. 9304 (Feb. 16, 2012). For this rule, EPA calculated $4 to $6 million of

benefits from reducing HAPs and $9.6 billion a year in costs. Id. at 9425, 9428. EPA

concluded “costs should not be considered” when deciding whether coal- and oil-fired

power plants should be regulated under Section 112. This was so because, according to

The origins of the “1-in-1 million” standard is a U.S. Food & Drug Administration

rulemaking where the agency determined that such standard “can properly be considered

of insignificant public health concern.” 42 Fed. Reg. 10412, 10421 (Feb. 22, 1977).

Congress and agencies have since extensively used that metric as the gold standard for

risk evaluation. See generally John D. Graham, The Legacy of One in a Million, 1 Risk

in Perspective (1993), https://www.hsph.harvard.edu/hcra/wp-content/uploads/sites/

1273/2013/06/The-Legacy-of-One-in-a-Million-March-1993.pdf.

EPA, decisions on whether to regulate other source categories under Section 112 (i.e.,

the initial listing decision and the first step in setting emission standards) do not consider

costs. Id. at 9326–9327.

This Court invalidated EPA’s rule. Michigan, 576 U.S. at 760. The Court stated:

“One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of

dollars in economic costs in return for a few dollars in health or environmental benefits.”

Id. at 752. It also rejected EPA’s reasoning—i.e., that reducing the “volume of pollution

emitted” is Clean Air Act Section 112’s overarching purpose. See id. at 756–757. Indeed,

the Court commented that such “reasoning overlooks the whole point of having a separate

provision about power plants.” Id. at 756.

But by then, it was too late. Given the rule’s regulatory timeline, and without any

stay while the merits were heard, power plants had already been forced to make

compliance and retirement decisions in the interim. Power plants expended billions of

dollars to meet the standards. Alternatively, many of them shut down permanently. In

turn, EPA’s 2012 HAP emission standards stayed intact; on remand, the Agency merely

concluded that its consideration of costs did not change the Agency’s determination that

regulating HAP emissions from coal- and oil-fired power plants is appropriate and

necessary.

81 Fed. Reg. 24420 (Apr. 25, 2016).

No one challenged the Agency’s

reaffirmation that the regulation was appropriate and necessary. After all, there was no

point in litigating an issue that was rendered moot due to the irrevocable compliance

decisions.

In 2020, EPA conducted the first Risk and Technology Review of the 2012

emission standards. 85 Fed. Reg. 31286 (May 22, 2020). EPA determined that existing

emission standards “provide[d] an ample margin of safety to protect public health and

prevent an adverse environmental effect.” Id. at 31314. Consistent with the Court’s

decision in Michigan, EPA also determined there was no cost-effective control

technology that would further reduce emissions. Ibid. Lastly, EPA changed its position

and found it was not “appropriate and necessary” to regulate HAP emissions from coaland oil-fired power plants (albeit keeping the emission standard intact because EPA did

not delist the coal- and oil-fired power plant source category). Id. at 31313.

A new Administration arrived, and EPA flipped again, but only partially. The

Agency first redetermined that it was appropriate and necessary under Clean Air Act

Section 112 to regulate HAP emissions from coal- and oil-fired power plants. 88 Fed.

Reg. 13956 (Mar. 6, 2023). But EPA did not disturb the finding that existing controls

provide an ample margin of safety. EPA’s view is that, notwithstanding such degree of

safety, Section 112 reflects a congressional directive that “[l]ess is better.” See App. 636a

(EPA Stay Opp’n at 1). And so it marched ahead, promulgating the Final Rule at issue.

II.

Factual and Procedural Background

Other parties and emergency stay applicants discuss the legal issues with the

Final Rule at large. Applicants in this challenge focus on the Colstrip Power Plant in

Montana as an exemplar of the deficiencies of the Final Rule and its immediate, severe

effects.

The Colstrip Power Plant

Among the entities affected by EPA’s Final Rule, Colstrip stands out. No party

to this lawsuit denies that Colstrip is the primary and deliberate target of the Final Rule.

The Final Rule acknowledges that “42 percent” of the regulatory costs of the entire rule

will fall on Colstrip. See 89 Fed. Reg. at 38533. The preamble even calls out the facility

by name: “[O]nly two [electric generating units] at one facility (Colstrip)” must install

“the costliest” control technology. Id. at 38522.

Colstrip is the largest coal-fired power plant west of the Mississippi River. It

supplies power throughout Montana and the Pacific Northwest.

It is critical to

maintaining the stability of the electrical grid in Montana. App. 831a, 838a–839a, 844a–

846a, 848a (Hines Decl. ¶¶ 27, 41–52, 61–65, 72). Additionally, it drives the region’s

economy. Approximately 3,000 jobs, $200 million in disposable, after-tax income, and

over a billion dollars in economic output to Montana hinge on Colstrip. App. 754a, 792a

(Lebsack Decl. ¶ 58 and Attachment C); App. 124a–125a (Talen Mont. Cmts. 6–7). The

lower court record reflects that even the declarants supporting various environmental

and public health organizations intervening in the case “do not advocate for the closure

of the Colstrip plant.” App. 851a, 854a (Wetherelt Decl. ¶¶ 4, 12).

Colstrip has complied with all currently applicable environmental standards.

Other than a fully-resolved compliance issue in 2018, Colstrip has conformed with the

current standards for the past decade.

In response to the 2018 incident, Colstrip

improved its emission controls and has been over-complying since then by a significant

margin. The current emission limits are 0.030 lb/MMBTU for filterable particulate

matter (“fPM”), the HAP at issue in this Application. Colstrip achieves an emission limit

of approximately 0.022 lb/MMBTU. App. 750a (Lebsack Decl. ¶ 48 n.12).

Colstrip’s emissions are slightly higher than some other plants due to the

differences in control technology. To meet the Final Rule’s emission limit of 0.010

lb/MMBTU, Colstrip would need to add additional emissions control technology (a new

baghouse) on top of its already dedicated control technology, at a capital cost estimated

at $350 million. Colstrip already achieves 99.6 percent reduction in fPM with its current

control technology (as opposed to the 99.8 percent demanded by the Final Rule). The

health risks from Colstrip’s current fPM emissions are an order of magnitude below levels

which EPA has deemed to provide an ample margin of safety to protect public health and

not inflict any adverse environmental effect. App. 750a (Lebsack Decl. ¶ 48).

So long as investments continue to be made for maintenance, Colstrip could

operate for at least another twenty years. But despite Colstrip’s continued operability

and its importance to Montana and the surrounding region, the plant’s future is now in

jeopardy due to EPA’s new power plant emissions regulations.

The New Power Plant Air Emissions Regulations

1. With the last incoming Administration, the Agency reviewed the 2020 Risk and

Technology Review and proposed to revise the HAP emission standards for coal- and oilfired power plants. 88 Fed. Reg. 24854 (April 24, 2023).2 EPA endorsed the 2020 Risk

To be precise, EPA’s proposal consisted of three independent regulatory actions. First,

EPA proposed to amend the surrogate standard for non-mercury metal HAP emissions

for existing coal-fired power plants. Id. at 24857. Second, EPA proposed to amend the

mercury emissions for certain coal-fired power plants (the ones firing lignite coal). Ibid.

and Technology Review’s finding that residual risks from the coal-fired power plant’s

HAP emissions were “low” (as in “below 100-in-1 million” cancer risk and “low likelihood

of adverse noncancer effects”) and “acceptable.”

Id. at 24865.

Current emission

standards “provided an ample margin of safety to protect public health,” and “more

stringent standards were not necessary to prevent an adverse environmental effect.”

Ibid.

Nonetheless, EPA concluded that certain existing control technologies “are more

widely used, more effective, and cheaper” and proposed to lower the emission limit for

filterable particulate matter (“fPM”), which is the surrogate air pollutant for nonmercury metal HAP emissions. Id. at 24866–24872.

Meanwhile, EPA contemporaneously proposed to regulate greenhouse gas

emissions from fossil fuel-fired power plants pursuant to Clean Air Act Section 111.

88 Fed. Reg. 33240 (May 23, 2023). In general, this proposed rule subcategorized coalfired power plants based on their operating horizon and set emission standards

accordingly, with the purported aim of such plants either installing carbon capture and

sequestration or co-firing natural gas. As proposed, the Greenhouse Gas Rule provided:



Units planning to cease operation before 2032 need not take extra measures.



Units planning to operate beyond 2031 but cease operation before 2035 and

operating on a low load basis (“annual capacity factor limit of 20 percent”) also

need not take extra measures.

Third, EPA proposed to amend what would constitute the “startup” period for the plants

affected by the rule. Ibid. At issue in this Application is the first action.



Units planning to operate beyond 2031 but also to cease operation before 2040 and

producing greater power loads must co-fire natural gas starting 2030.



Units planning to operate beyond 2040 must install carbon capture and

sequestration starting 2030.

See id. at 33359 (Table 5). Thus, under the Greenhouse Gas Rule, it would be possible for

an operator to choose its operation horizon, i.e., not install any controls but commit before

2030 to retirement instead. See id. at 33341.

Applicants opposed both proposed rules for many reasons.3 Additionally, Talen

Montana commented that the combination of the rules targeting coal-fired power plants

further complicates Colstrip’s future. App. 124a–125a (Talen Mont. Cmts. 6–7). As such,

Applicants requested that if EPA believes that the Greenhouse Gas Rule is lawful (it is

not), EPA should then establish in the Final Rule a subcategory with units making an

enforceable commitment to retire, “in line with how EPA is providing lead time for older

sources in other rulemakings,” including the Greenhouse Gas Rule. App. 139a–140a

(Talen Mont. Cmts. 21–22 & n.68); see App. 162a, 182a–183a (NorthWestern Cmts. 4, 24–

25).

EPA issued both rules on the same day (and published them in the Federal

Applicants both submitted adverse comments on the two proposals. See App. 119a

(Talen Mont. Greenhouse Gas Rule Cmts.); App. 159a (NorthWestern Greenhouse Gas

Rule Cmts.). Further discussed infra note 6, Applicants are also members of entities that

have challenged the Greenhouse Gas Rule. Applicants’ comments and arguments that

EPA acted arbitrarily and capriciously by failing to account for the combined effect of

both the Greenhouse Gas Rule and this Final Rule is in no way a suggestion that either

rule is valid. Both are unlawful.

power plants by 67 percent, from 0.030 lb/MMBtu to 0.010 lb/MMBtu. 89 Fed. Reg. at

38518–38519. Plants must meet this limit by July 8, 2027. Id. at 38519. A one-year

extension may be available, in accordance with Clean Air Act Section 112(i)(3)(B),

42 U.S.C. § 7412(i)(3)(B). 89 Fed. Reg. at 38519.

EPA also finalized the Greenhouse Gas Rule. 89 Fed. Reg. 39798. Now, if that

rule survives judicial review, units must either install carbon capture and sequestration

or co-fire natural gas if they choose to operate past 2031. EPA eliminated the near-term

subcategory that would have permitted operation without additional controls until 2035.

As described in more detail in the challenges to the Greenhouse Gas Rule, the control

“choices” that the Greenhouse Gas Rule provides are illusory for the vast majority (if not

all) coal-fired power plants. Putting aside the feasibility, cost, and energy consequences

of these two “choices,” there is simply not enough time to do either. In Colstrip’s case, it

cannot co-fire natural gas or install carbon capture and sequestration. App. 748a, 779a

(Lebsack Decl. ¶ 43 and Attachment B). Therefore, under the final Greenhouse Gas Rule,

Colstrip has no choice but to cease operation before 2032. 89 Fed. Reg. at 39801, 40057.

4. Combining the two finalized EPA rules together, Colstrip faces the following

pending death-spiral:



Under the Final Rule, Colstrip must install new control technology costing an

estimated $350 million by mid-2027. This requirement by itself—while still flawed

in its own right—might be more financially feasible if those installation costs could

be recovered (presumably, from customers and ratepayers) during a period of two

decades, which is the remaining operating timeframe that was expected for the

facility prior to these rules.



The proposed version of the Greenhouse Gas Rule shortened that cost-recovery

period. Because Colstrip cannot install carbon capture and sequestration or cofire natural gas, at minimum Colstrip would have had to retire before 2035 and

curtail its operations by 80 percent after 2032 under the proposed version of the

rule. Thus, the cost-recovery period would have been less than seven years (2027

to 2034), with the output of the plant severely restricted for half of them.



The final version of the Greenhouse Gas Rule shortened that period further. The

Greenhouse Gas Rule forces Colstrip to retire before 2032. The cost-recovery

window is now a little more than four years.



The possibility of a one-year compliance extension under the Clean Air Act, see

42 U.S.C. § 7412(i)(3)(B), does not lessen the blow. In fact, it would exacerbate it

by further shortening the cost-recovery period from four and a half years to three

and a half years (i.e., the cost-recovery timeframe would become mid-2028 to 2032).



Because the finalized rules force Colstrip to incur a $350 million expense with at

most four and a half years for the plant to recover those costs by selling power, the

capital costs of controls are economically irrational for the facility (over and above

the inherent irrationality of the Final Rule). This poses a high risk of Colstrip

prematurely retiring before the 2027 compliance deadline of the Final Rule to

avoid the expenditures. For NorthWestern, as a regulated utility, premature

closure of Colstrip would bring devastating effects on grid reliability and its ability

to meet load.

In sum, the cumulative effect of the two rules dramatically compounds the harm.

Colstrip must install fPM control technology by 2027 to comply with one rule, only to close

four and a half years later due to another rule. Notwithstanding these concerns raised

during the comment period by Applicants, EPA failed at every turn to meaningfully

consider this interaction.

5. The ratcheting down of emissions under the Final Rule, and the risks that poses

to Colstrip, is all the more irrational and unnecessary when put in context of EPA’s

determination of the relative risks of coal-fired power plants’ HAP emissions and the

Final Rule’s costs. Starting with risk, no source in the fossil fuel-fired power plant

category presently poses a cancer risk that exceeds 100-in-1-million, the “ample margin

of safety” under Clean Air Act Section 112(f)(2)(A) (which codified the Benzene standard,

discussed supra, p. 6). 88 Fed. Reg. at 24865. More importantly, the highest risk is driven

by nickel emissions from a handful of oil-fired power plants. Id. at 24863. Indeed, all

coal-fired power plants including Colstrip demonstrated a lifetime cancer risk of less than

1-in-1-million and a non-carcinogen hazard index/quotient of less than 1. See ibid.4 As a

result, EPA would have been justified in delisting the entire source category from further

regulation under Clean Air Act Section 112, but for the fact that not all oil-fired facilities

See also EPA’s Residual Risk Assessment at Tables 1 and 2a of Appendix 10,

https://www.regulations.gov/document/EPA-HQ-OAR-2018-0794-4553 (select excerpts

of the 990-page document also reproduced at App. 400a).

yet meet the 1-in-1 million threshold. Continuing regulatory jurisdiction over coal-fired

power plants thus hangs by the barest, most indirect of threads.

Moreover, the cost of the Final Rule’s tightened emissions standard is hundreds

of millions of dollars, 89 Fed. Reg. at 38555, and highly concentrated on Colstrip. EPA

did not even attempt to estimate any quantifiable benefits from HAP reductions from the

revised standards.5 In fact, on a national scale, “EPA estimates negative net monetized

benefits of this rule.” 89 Fed. Reg. at 38511. No assessment of Colstrip-specific benefits

exists in the record. EPA instead reasoned that the costs of the rule, spread over the

entire industry, are small with respect to the industry’s revenues and similar metrics;

therefore, EPA concluded that tightening the standard is “worthwhile” due to the

unquantifiable benefits to HAP reductions. Id. at 38553.

Procedural History

Applicants filed petitions for review in the D.C. Circuit, which have been

consolidated under the lead case, North Dakota v. EPA, No. 24-1119 (D.C. Cir. filed May

8, 2024).6 After filing the petitions, Applicants moved to stay the Final Rule. Talen

Montana and NorthWestern filed their joint motion for stay on June 27, 2024. The D.C.

Circuit denied Applicants’ motions on August 6, 2024. App. 88a–89a.

At best, EPA attempted to calculate co-benefits unrelated to the reduction of HAP

emissions, such as benefits from reducing other non-HAP emissions such as carbon

dioxide. Such calculation is statutorily barred as discussed infra, pp. 20–23.

Applicants are also part of an ad hoc coalition of electric generating companies that

challenged the Greenhouse Gas Rule. The consolidated case, West Virginia v. EPA, No.

24-1120 (D.C. Cir. filed May 9, 2024), is pending with a similar stay application filed in this

Court, Electric Generators for a Sensible Transition v. EPA, No. 24A106 (U.S. filed July

26, 2024).

REASONS TO GRANT THE APPLICATION

The Court considers four factors when resolving a stay request: (1) likelihood of

success on the merits; (2) irreparable injury to the applicant absent a stay; (3) injury to

other parties from a stay; and (4) the public interest. Nken v. Holder, 556 U.S. 418, 434

(2009). The first two factors “are the most critical.” Ibid.

All four factors favor a stay. Applicants are likely to succeed on the merits for at

least two, independent reasons. The Final Rule flouts this Court’s direction in Michigan

v. EPA and the statute’s directive to consider costs in the proper context. That context

includes Clean Air Act Section 112(d)(6)’s directive to revise emission standards only if

“necessary,” accounting for technological “developments.” 42 U.S.C. § 7412(d)(6). Here,

EPA decided that a rule costing hundreds of million dollars with no statistically

meaningful improvements to human health was “worthwhile.” 89 Fed. Reg. at 38553.7

The rule is also arbitrary and capricious, as EPA brushed off Colstrip’s concern that the

Final Rule and the Greenhouse Gas Rule combined create a unique death spiral.

In Michigan the merits did not matter at all, for EPA ran out the clock.

Notwithstanding a Supreme Court decision, EPA achieved its goals prior to judicial

review. The then-Administrator proudly admitted: “But even if we [lose], it was three

years ago. Most of them are already in compliance, investments have been made, and

In the D.C. Circuit, Applicants also argued that EPA exceeded its statutory authority

granted under Clean Air Act Section 112(d)(6), for EPA revised the fPM emission

standard even though it could not identify any “developments” in emission-reducing

control technology. Other emergency stay applicants address the same issue. In the

interest of minimizing redundancies, Applicants incorporate the arguments submitted

therein. Applicants’ original argument in the D.C. Circuit are also included in App. 530a.

we’ll catch up. And we’re still going to get at the toxic pollution from these facilities.”8 A

stay here would ensure that at least a decision on the merits would matter for Colstrip.

Applicants Will Likely Prevail.

EPA Violated the Directives of Section 112 and Michigan v. EPA to

Consider “Costs” in the Proper Context.

Administrative law and common sense dictate it is irrational to promulgate a rule

costing hundreds of millions of dollars when infinitesimal benefits result from reducing

the targeted pollutants. As the Court admonished EPA in Michigan, “[c]onsideration of

cost reflects the understanding that reasonable regulation ordinarily requires paying

attention to the advantages and the disadvantages of agency decisions.” 576 U.S. at 753.

The Court plainly rejected EPA’s refusal to “consider whether the costs of its decision

outweighed the benefits.” Id. at 750.

It is well-established that cost is a major consideration in technology review

rulemakings like the Final Rule, in which courts have identified a “clear statement” in

Section 112(d) to consider costs. See, e.g., Ass’n of Battery Recyclers, Inc. v. EPA, 716

F.3d 667, 673–674 (D.C. Cir. 2013) (per curiam). Accordingly, the fact that the Final Rule

was based on EPA’s isolated identification of supposed technological developments

cannot escape Michigan’s maxim that the Agency must still weigh the costs of the

regulation in comparison to the benefits intended by Congress when it set Section 112 the

way it did: protecting public health from HAPs. See 576 U.S. at 751.

Timothy Cama & Lydia Wheeler, Supreme Court Overturns Landmark EPA Air

Pollution Rule, The Hill (June 29, 2015), https://thehill.com/policy/energyenvironment/246423-supreme-court-overturns-epa-air-pollution-rule/.

After all, the source category implicated in this Final Rule is not just any source

category (such as certain manufacturing sectors). It is the same category Michigan

examined and Congress singled out for additional regulatory protection requiring that

EPA must make an “appropriate and necessary” finding to regulate. Id. at 748; see

42 U.S.C. § 7412(n)(1)(A).

Put differently: a Section 112(n)(1)(A) “appropriate and

necessary” finding is a prerequisite to regulating coal-fired power plants under Section

112(d). That finding requires a consideration of costs and benefits per Michigan. Adding

those two necessary conditions together, any regulation of coal-fired power plants under

Section 112(d), by virtue of extending Section 112(n)(1)(A) and Michigan, likewise

require a consideration of costs and benefits.

And to be clear, the “benefits” does not mean reduction of HAP emissions for

reduction’s sake, as EPA claims. See, e.g., 89 Fed. Reg. at 38525 (“wherever feasible”);

App. 636a (EPA Stay Opp’n 1) (“Congress’s view on toxic air pollution is simple: Less is

better.”). This Court already rejected that approach to Section 112. Michigan, 576 U.S.

at 756–757 (rejecting EPA’s focus on the “volume of pollution emitted”). Moreover, such

claim is belied by the statute itself and the provisions’ demand to protect “public health,”9

reflected in at least three different iterations spread throughout Section 112 (also

discussed supra, pp. 6–7):

Nor could EPA shoehorn its myopic focus on emissions reduction in the name of

preventing “adverse environmental effects.” See 42 U.S.C. § 7412(b)(2). At best, Clean

Air Act Section 112 makes clear that such is a factor EPA must account for in parallel

with public health, see, e.g., ibid., and on many occasions, with costs, id. § 7412(f)(2)(A).

Regardless, EPA has already found that the existing emission standards prevent an

adverse environmental effect. 85 Fed. Reg. at 31314. Thus, the Final Rule would still be

irrational.



Section 112(f)(2)’s express adoption of the Benzene standard of 100-in-1 million as

the risk metric for what would constitute “ample margin of safety,” which by

reference requires the Agency to consider costs.



Section 112(f)(2)’s directive to “reduce lifetime excess cancer risks to the

individual most exposed to emissions from a source,” in which the target is set at

a maximum individual risk of 1-in-1 million.10



Section 112(c)(9) setting that same threshold of 1-in-1 million in which an entire

source category could be delisted and not regulated under Section 112 at all.

To be sure, “public health” is not limited to cancer risks. For non-carcinogen

effects of all HAPs (including HAPs, such as mercury, that are not carcinogens), EPA

has not changed its practice of assessing the “hazard index” or a “hazard quotient.” A

hazard quotient seeks to quantify the estimated non-cancer health risks from a pollutant’s

exposure, and a hazard index seeks to quantify the “aggregate effect” of a pollutant by

summing up the “hazard quotients for substances that affect the same target organ or

organ system.” App. 433a (EPA’s Residual Risk Assessment, supra note 4, at 34). A

hazard quotient and/or index of less than 1 indicates negligible risk. See ibid.

Applying the above framework to the Final Rule, EPA did not find any coal-fired

power plant that exceeded the 1-in-1 million cancer threshold. It only found four “oilfired” units in Puerto Rico that exceeded such standard.

85 Fed. Reg. at 31319.

“The MIR [maximum individual risk] is defined as the cancer risk associated with a

lifetime [(70 years)] of [continuous] exposure at the highest concentration of HAP where

people are likely to live.” App. 409a, 414a (EPA’s Residual Risk Assessment, supra note

4, at 10, 15).

Additionally, EPA found no power plant with a hazard index/quotient that exceeded 1.

Id. at 31315 (Table 2 and accompanying text); App. 468a–469a (EPA’s Residual Risk

Assessment, supra note 4, at Tables 1 and 2a of Appendix 10).

Notwithstanding such public health findings, EPA still decided to tighten emission

standards by 67 percent for coal-fired power plants. Strikingly, the standards for oilfired plants (i.e., the power plants that did have cancer risks greater than 1-in-1 million)

were not reduced at all. The Final Rule targets “coal-fired” plants only, all with cancer

risks one to several orders of magnitude less than 1-in-1-million and hazard

quotients/indices likewise less than 1.

Reducing cancer risk that is already less than 1-in-1-million or non-cancer hazard

indices already less than 1 yields negligible public health benefits, if any.11 Indeed,

Congress provided a mechanism to delist source categories if their emissions’ cancer risk

falls below 1-in-1-million and their non-cancer hazard indices are less 1. 42 U.S.C.

§ 7412(c)(9)(B). And requiring hundreds of millions of dollars to be expended for such

infinitesimal benefits is not a rational result from reasoned decision-making.

irrational regulation cannot stand. Michigan, 576 U.S. at 750.

Finally, EPA cannot sidestep the benefits issue by paying odes to “unquantifiable

benefits” of reducing HAPs or claiming it “considered” costs by comparing them to the

industry’s revenues and other similar financial data.

The former was rejected by

See generally Nicholas Rescher, Risk: A Philosophical Introduction to the Theory of

Risk Evaluation and Management 37–38 (1983) (discussing the “chance of death by

natural disasters (or ‘acts of God’), roughly 1/1,000,000 per annum in the U.S.A * * * as

something akin to the ‘noise level’ of a physical system and fatality probabilities

significantly smaller than this would thus be seen as negligible”).

Michigan as well, both in the decision itself and the oral argument leading up to it. See

576 U.S. at 749 (noting EPA “could not fully quantify the benefits of reducing power

plants’ emissions of hazardous air pollutants”); cf. Transcript of Oral Argument at 59–63,

Michigan, 576 U.S. 743 (No. 14-46) (Chief Justice Roberts noting EPA’s reference to cobenefits as “an end run” that “raises the red flag” because the co-benefits concern a

different criteria pollutant subject to Clean Air Act Section 109). The latter involves no

consideration of benefits at all, much less “whether the costs of its decision outweighed

the benefits.” Id., 576 U.S. at 750. At its core, both approaches are still dodging the

statutory directive to put costs in context of public health benefits from reducing HAP

emissions.

EPA’s Final Rule Never Grappled with How the Two Power Plant Rules

Would Interact with Each Other.

The Final Rule failed to meaningfully consider how it would interact with

EPA’s flagship Greenhouse Gas Rule issued that same day, in at least four different

contexts:



The collective impact of these two rules that could risk Colstrip retiring by 2027.



The failure to assess the cost-effectiveness (i.e., dollars per ton of pollutant

removed) implications of Colstrip installing controls but then retiring shortly

thereafter at the end of 2031 under the Greenhouse Gas Rule.



The failure to assess the grid reliability impacts from Colstrip’s retirement forced

by the interaction among the two rules.



The failure to address Applicants’ request for a retirement subcategory to

ameliorate all the effects discussed above.

Applicants raised all of these issues in comments on the proposed rule, which EPA

effectively ignored, notwithstanding that Colstrip is the facility most impacted by the

Final Rule, and one that EPA has admitted to targeting both publicly,12 and on the

administrative record.13

Applicants made clear in comments on the proposed rule that the “one-two

punch” of the two regulations would hasten Colstrip’s retirement. The combination of

huge compliance costs under the Final Rule by mid-2027 (meaning immediate efforts

would be necessary to comply) and a limited cost-recovery timeframe prior to forced

retirement before 2032 by the Greenhouse Gas Rule puts Colstrip in an impossible

situation with the likely result that Colstrip would be forced to avoid the expenditures

and retire by the Final Rule’s 2027 compliance deadline. Despite substantial comments

on this interaction, EPA did not meaningfully respond; rather, EPA avoided the issue by

finalizing the rules contemporaneously and ignoring their interactions on Colstrip.

3. Just two months ago, this Court stayed an EPA air regulation because it was

“likely” that the rule (1) was “not ‘reasonably explained,’” (2) lacked “a satisfactory

explanation,” and (3) “ignored ‘an important aspect of the problem’ before it.” Ohio v.

E.g., Fiscal Year 2025 Request for EPA: Hearing Before the H. Comm. on

Appropriations, 118th Cong., at 31:59, (Apr. 30, 2024) (statement of Hon. Michael S.

Regan, Administrator, EPA) (accusing Colstrip of “cheating the system” even though

Colstrip

meets

all

currently

applicable

emission

standards),

https://

appropriations.house.gov/events/hearings/budget-hearing-fiscal-year-2025-requestenvironmental-protection-agency.

E.g., 89 Fed. Reg. at 38531 (“Colstrip is * * * the only facility where the EPA estimates

the current controls would be unable to meet a lower fPM limit.”); App. 222a (EPA’s

Response to Comments 39) (acknowledging that “compliance costs will fall

disproportionately on * * * Colstrip in particular”).

EPA, 144 S. Ct. 2040, 2053 (2024) (citations omitted); see also Motor Vehicle Mfrs. Ass’n,

Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (requiring an agency to

“articulate a satisfactory explanation for its action including a ‘rational connection

between the facts found and the choice made.’” (citation omitted)).

Specifically, EPA in Ohio finalized a nationwide emission standard (a “Federal

Implementation Plan” or “FIP”) and “determined which emissions-control measures

were cost effective * * * based on an assumption that the FIP would apply to all covered

States.”

144 S. Ct. at 2050.

That assumption was “inextricably linked” to EPA

disapproving various state emission standards (a “State Implementation Plan” or “SIP”)

so that the FIP could replace the state plans. Ibid.

Put differently, one agency action (EPA’s cost-effectiveness analysis on the FIP)

was largely tied to another (EPA’s SIP disapproval). Thus, when commenters flagged

that legal defects over EPA’s SIP disapproval poisons EPA’s cost-effectiveness analysis

on the nationwide standard, and when EPA “offered no reasoned response” on the two

Agency actions’ interplay, this Court stayed the rule. See id. at 2051, 2053–2054.

If anything, Colstrip’s situation is a more egregious example of the same problem.

Here too EPA assessed the technology upgrade costs to be spread out for fifteen to

eighteen years because EPA assumed that Colstrip is not retiring. 89 Fed. Reg. at 38526.

Applicants provided EPA with a separate analysis that explained how, under the real

risk that Colstrip’s remaining life might be closer to four years (if EPA’s companion

Greenhouse Gas Rule is upheld), Colstrip’s annualized control costs would skyrocket.

App. 134a–139a, 146a, 149a (Talen Mont. Cmts., 16–21 and Attachments B, C). EPA

simply ignored the altered cost-effectiveness calculation that Applicants presented,

which the Agency cannot do. See Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 221

(2016) (“One of the basic procedural requirements of administrative rulemaking is that

an agency must give adequate reasons for its decisions. The agency ‘must examine the

relevant data and articulate a satisfactory explanation for its action * * * *’”).

EPA has nevertheless been adamant that it “considered” the interaction

between the Greenhouse Gas Rule and the Final Rule. See, e.g., App. 670a, 675a (EPA

Stay Opp’n 35 n.13, 40). EPA’s record speaks otherwise. Rather than identifying how

such consideration occurred, EPA’s Response to Comments blithely contended that

(1) the two rules have “no impact” on the other because the rules are authorized from

different sections of the Clean Air Act, App. 221a, 248a (EPA’s Response to Comments

38, 65), and (2) EPA “generally considers finalized, rather than proposed, rules” for its

analyses, App. 310a (EPA’s Response to Comments 127).

With respect to the reasons EPA gave on the record for not considering the two

rules together, no part of the Act, let alone general administrative law principles, allows

EPA’s regulations to be so partitioned. Rather, EPA must “acknowledge and account

for a changed regulatory posture the agency creates—especially when the change

impacts a contemporaneous and closely related rulemaking.” Portland Cement Ass’n v.

EPA, 665 F.3d 177, 187 (D.C. Cir. 2011) (per curiam). This is true especially because an

“impending [regulation] of an undeniably related source category is clearly a ‘relevant

factor[]’ or an ‘important aspect of the problem’ that must be considered.” Ibid. (second

alteration in original) (citation omitted). Otherwise, “newly acquired evidence” and

“significant factual predicate[s]” could be brushed aside, just like EPA did so here. See

ibid. (citations omitted); see also Ohio, 144 S. Ct. at 2053–2054.

5. In fact, the record (or lack thereof) shows how little EPA considered the two

rules’ combined effect on Colstrip. In its fifty-plus page briefing paper for the D.C.

Circuit, EPA made two passing references to argue that the Agency considered the issue.

App. 670a, 675a (EPA Stay Opp’n 35 n.13, 40). EPA’s contentions largely boil down to

two points: (1) an insistence that coal-fired power plant retirements will be orderly; and

(2) a bare, unprincipled rejection of Applicants’ request to harmonize the Final Rule with

the Greenhouse Gas Rule.

6. Starting with EPA’s assertion that an orderly plant retirement is still possible

(and thus resolves any reliability concerns), the Agency cites to the Resource Adequacy

Analysis that EPA prepared in developing the Final Rule, which makes generalized

observations about the nation’s grid reliability. See App. 670a (EPA Stay Opp’n 35 n.13);

App. 368a–370a, 373a, 377a (EPA’s Resource Adequacy Analysis 7–9, 12, 16). Similar

sentiments are sprinkled in the Final Rule, where EPA declared that commenters offered

“no credible information” that the Final Rule would lead to premature retirements and

further “disagree[d] that this rule would threaten resource adequacy or otherwise

degrade electric system reliability.” 89 Fed. Reg. at 38526. But as Applicants such as

NorthWestern have raised in their comments, there is no nationwide grid, only a

patchwork of regional grids. App. 171a (NorthWestern Cmts. 13). The proper question

EPA should have been answering is whether any regional grid would be threatened by

the Final Rule, and if so, engaging in a careful assessment in conjunction with the relevant

energy authorities to ensure grid stability. This did not happen.

And when Montana (or at least Colstrip’s service area) is the proper unit of

inquiry, EPA’s broad assertions turn indefensible.

For example, NorthWestern

commented that no matter how orderly that process may be, (1) closing Colstrip before

the mid-2030s, and (2) the diversion of funds alone, each independently trigger a grid

crisis.

App. 160a–161a, 171a–177a, (NorthWestern Cmts. 2–3, 13–19).

EPA’s

“[c]onclusory explanations” notwithstanding “considerable evidence” alone constitutes

arbitrary and capricious agency action. AT&T Wireless Servs., Inc. v. FCC, 270 F.3d 959,

968 (D.C. Cir. 2001).

EPA’s posture is especially concerning because the Agency is aware that the

facility most affected by this rule will be Colstrip. Thus, when the Final Rule dismisses

reliability issues because the plants implicated only “generate less than 1.5 percent of

total generation in 2028,” 89 Fed. Reg. at 38526, it omits a key detail, which is that such

generation is concentrated in Montana. At any given time, Colstrip supplies up to 1,480

MW of net generating capacity. App. 733a (Lebsack Decl. ¶ 8). Much of that capacity

supplies Montana customers, through NorthWestern’s owned share and market

purchases when needed. App. 830a (Hines Decl. ¶ 21). That increment is especially

important because much of the remainder of Montana’s demand (and regional demand) is

supplied by renewable sources that are vulnerable to seasonal and weather variability.

As this Court stated recently, “awareness is not itself an explanation.” Ohio, 144

S. Ct. at 2054. And to the extent “EPA’s response did not address the applicant’s concern

so much as sidestep it,” such measures would be arbitrary and capricious. See id. at 2055.

This Court’s instruction to EPA follows bedrock administrative law. See, e.g., Int’l

Union, United Mine Workers of Am. v. Mine Safety & Health Admin., 626 F.3d 84, 94

(D.C. Cir. 2010) (discussing how “[agency’]s failure to address these comments, or at best

its attempt to address them in a conclusory manner, is fatal to its defense of the training

provision”).

7. Finally, EPA’s refusal to consider retirement subcategories as suggested by

the Applicants further shows EPA’s contortions to avoid considering the two regulations

together. As mentioned supra, p. 13, Applicants requested an alternative form of relief

which was that, if EPA were to finalize the fPM emission standards as proposed, EPA

should create a subcategory of sources for coal-fired plants that could choose to retire

instead by a date certain, as the Agency had for the Greenhouse Gas Rule. Applicants

made clear that such request was to harmonize the compliance timeframe that coal-fired

power plants like Colstrip would be facing. App. 139a (Talen Mont. Cmts. 21). It was an

offramp strategy aligned with the Greenhouse Gas Rule that would permit the orderly

retirement EPA so wishes, see 89 Fed. Reg. at 38526; App. 369a–370a (EPA’s Resource

Adequacy Analysis 8–9), with more time for replacement resources, App. 139a (Talen

Mont. Cmts. 21).

EPA ignored Applicants’ request by presenting two strawmen and then erring

further. First, EPA assumed that subcategorization should be relevant only to facilities

that have already announced retirement. And according to EPA, since all but three of

those could comply with the Final Rule, the retirement subcategory “would not change

the costs of the rule in a meaningful way.” 89 Fed. Reg. at 38527. Yet the point of

Applicants’ request was that more facilities could decide to retire if given the opportunity.

Critically, if EPA established the retirement subcategory that Applicants requested and

Colstrip could choose to retire by 2032 instead of 2027, EPA would slash nearly half

(“42 percent”) of the Final Rule’s costs. See id. at 38533. Thus, EPA’s assertion that the

subcategory “would not change the costs of the rule in a meaningful way,” id. at 38527,

lacks any rational foundation.

Second, in briefing EPA raised for the first time in the D.C. Circuit that, had EPA

done that, “then every coal-fired unit would be exempted, for they will all retire at some

point.” App. 676a (EPA Stay Opp’n 41). Post hoc reasoning aside, see SEC v. Chenery

Corp., 332 U.S. 194 (1947), EPA’s position is not the one Applicants ever argued. The

comments requested a date certain deadline by which to commit to retirement, consistent

with the timelines set in the (proposed) Greenhouse Gas Rule. App. 139a (Talen Mont.

Cmts. 21).

The closest thing that EPA came to address an actual downside of allowing

Colstrip to retire by 2032 instead of 2027 was its one-sentence assertion that letting units

operate longer without additional controls would lead to “continued exposure to those

emissions in the communities around these units during that timeframe.” 89 Fed. Reg.

38527. That one-sentence assertion was then backed by a one-paragraph reference to the

Northern Cheyenne Tribe with no discussions on how exactly the tribal members have

been, or could be, harmed. Id. at 38531. As discussed throughout this Application, those

“continued exposures to those emissions” impose no meaningful health risks. See

discussion supra, pp. 9–12, and infra, pp. 36–37. If anything, EPA ignored the benefits

of early retirement, i.e., the benefit of a coal-fired power plant retiring early rather than

just decreasing emissions over a longer period of time.

EPA’s rejection of this approach is the only instance where the Final Rule

expressly references the Greenhouse Gas Rule. 89 Fed. Reg. at 38527, 38533. As such,

the Final Rule’s flagrant dismissal of this compliance path shows a visible commitment

that EPA would not consider the two rules together. Setting aside the illogical nature of

EPA’s responses, the Agency’s refusal is particularly ironic because EPA is effectively

belittling the same relief advanced by EPA in the Greenhouse Gas Rule. 89 Fed. Reg. at

39841–39842 (wholly exempting units retiring before 2032 regardless of whether the units

had already announced plans to retire).

8. In closing, EPA has failed to account for the different interactions between the

two rules. First, EPA ignored that the rules together allow just four and a half years to

recoup costs of compliance with the Final Rule before Colstrip’s retirement would be

forced by the Greenhouse Gas Rule (and the concomitant risk that Colstrip would thus

retire by mid-2027 without installing any additional controls under the Final Rule).

Second, as a result, if Colstrip does install the controls, EPA’s cost-effectiveness

calculation is off by at least 400 percent, because the amortization period for any

installation cost would be four and a half years, not fifteen to eighteen years as assumed

by EPA. Third, the probability of an even more accelerated retirement in 2027 presents

serious grid reliability impacts in the region that Colstrip services. Fourth, Applicants’

request for a retirement subcategory would have mitigated all of the concerns raised

above, which EPA dismissed with no serious answers as to the merits. Any one of these

failures is a breach of EPA’s duty to “consider an important aspect of the problem” and

“articulate a satisfactory explanation for its action including a ‘rational connection

between the facts found and the choices made.’” State Farm, 463 U.S. at 43 (citation

omitted).

II.

Applicants Will Likely Suffer Irreparable Harm Without a Stay.

Absent a stay, Colstrip’s fate will already be sealed by the time that this litigation

runs its ordinary course. Opponents trivialize the three-year compliance timeframe by

saying that technology installment will be swift and doable after the D.C. Circuit reaches

its merits decision. Such characterization is naïve at best, blatantly false at worst—

consultants have already briefed Colstrip’s leadership that “this project will take 36-42

months.” App. 746a, 761a (Lebsack Decl. ¶ 35 and Attachment A at 1-3). According to

EPA, Colstrip is the only facility that must install a new baghouse, which intrinsically

takes longer than the other control technology opponents assume would be sufficient.

App. 746a (Lebsack Decl. ¶ 35). If this Court so wishes, it need not even review Colstripspecific declarations and materials; Michigan v. EPA took more than three years

(February 2012 to June 2015), the same timeframe EPA demands Colstrip to install its

controls.

Either Applicants must commit to install controls costing over $350M and begin

that process immediately, or set a course for Colstrip’s (premature) retirement. See, e.g.,

App. 829a–831a (Hines Decl. ¶ 18–24).

Either path poses irreversible and severe

consequences to Applicants and Montana as a whole. App. 751a–755a (Lebsack Decl.

¶¶ 51–62) (explaining financial, consumer, and reliability impacts).

Worse, these

immediate and highly consequential decisions on Colstrip’s future must be made in

consultation with four other Colstrip owners with divergent interests and regulatory

mandates.

See, e.g., App. 736a–744a (Lebsack Decl. ¶¶ 13–31).

These harms are

particularly stark for Colstrip.14

Ongoing Expenses of Compliance Costs

The Final Rule imposes significant costs on Colstrip over a concentrated period.

As this Court has recently recognized, these harms are irreparable because the

expenditures occur “during the pendency of this litigation” and are “nonrecoverable.”

See Ohio, 144 S. Ct. at 2053.

Compelling Colstrip to install control technology that would otherwise be

unnecessary is a prime example of irreparable financial injury.

“[N]o ‘adequate

compensatory or other corrective relief will be available at a later date, in the ordinary

course of litigation.’” In re NTE Connecticut, LLC, 26 F.4th 980, 990 (D.C. Cir. 2022)

(quoting Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544, 555 (D.C. Cir. 2015)).

After all, the Administrative Procedure Act bars recovery of money damages against an

offending agency. 5 U.S.C. § 702. Therefore, there is “no guarantee of eventual recovery”

of losses resulting from EPA’s Final Rule. See Ala. Ass’n of Realtors v. Dep’t of Health

& Human Servs., 594 U.S. 758, 765 (2021) (per curiam); Thunder Basin Coal Co. v. Reich,

510 U.S. 200, 220–221 (1994) (Scalia J., concurring) (“[C]omplying with a regulation later

EPA recognizes that Colstrip’s situation is unique among regulated parties. See App.

685a (EPA Stay Opp’n 50).

held invalid almost always produces the irreparable harm of nonrecoverable compliance

costs.”).

The costs associated with the irreversible decision to attempt to install controls

will be steep and immediate. See App. 746a (Lebsack Decl. ¶ 36). It will cost “over $350

million” over the course of the project, and an additional $15 million in annual operating

cost. App. 745a–746a (Lebsack Decl. ¶¶ 34–36). Colstrip can only comply with the Final

Rule’s tight compliance schedule if it starts engineering and construction activities

“immediately.” See App. 746a–747a (Lebsack Decl. ¶¶ 35–38). In fact, Applicants have

already expended significant funds to “study the compliance options and timelines, and

millions of dollars will be required to continue engineering and design efforts later this

year.” App. 735a–736a (Lebsack Decl. ¶ 8.h). Also, “major construction activities begin[]

by Spring of 2025.” App. 751a (Lebsack Decl. ¶ 51). Material purchasing will begin on a

$350 million dollar project by the first quarter of 2025. App. 746a (Lebsack Decl. ¶ 36).

Even if NorthWestern could successfully recover those rates after an

unpredictable rate recovery hearing, those costs will then fall on Montana’s electricity

customers. Opponents may trivialize $350 million as miniscule for a national rule. But

these costs impose real consequences when concentrated on a sparsely populated state.

Business and Regulatory Decisions That Cannot Be Undone

Beyond financial harm, the Final Rule, compounded with the Greenhouse Gas

Rule, forces Colstrip’s diverse owners to make key irreversible business and regulatory

decisions imminently.

App. 751a–754a (Lebsack Decl. ¶¶ 51–54).

This decisional

uncertainty counsels in favor of a stay. See In re EPA, 803 F.3d 804, 808 (6th Cir. 2015)

(staying EPA water rule to “temporarily silence[] the whirlwind of confusion that springs

from uncertainty about the requirements of the new Rule and whether they will survive

legal testing”).

The whole point of a stay is to preserve the parties’ “relative positions.” See

Starbucks Corp. v. McKinney, 144 S. Ct. 1570, 1576 (2024) (citation omitted). Such

balance is ever more precarious for Colstrip, where divergent ownership interests

(driven by the respective jurisdictions’ call to decarbonize at varying paces) magnify the

gravity of business decisions and disagreements. And just like how some of these interowner disputes led to lawsuits before, the possibility that Colstrip’s commitment to a

compliance path one way or another consumes further time and resources is real.

Montana’s Grid Reliability

Should Colstrip choose the accelerated retirement path, it would surely destabilize

Montana’s grid and drive major rate hikes. App. 839a–840a (Hines Decl. ¶¶ 44–47, 52);

App. 842a (Lebsack Decl. ¶¶ 56–57) (discussing higher electricity prices and “reliability

at risk”). Colstrip currently plays an essential role in providing baseload capacity for

NorthWestern. See App. 831a, 838a, 846a (Hines Decl. ¶¶ 27, 41–42, 64). There are no

near-term feasible means to replace Colstrip’s capacity with other existing

NorthWestern capacity or market purchases from other sources. App. 840a–841a, 847a

(Hines Decl. ¶¶ 45–53, 69) (discussing insufficient transmission capacity, especially due

to multiple EGU closures, and the length it would take to build new generation).

Imported power is further constrained by transmission limitations. App. 840a (Hines

Decl. ¶¶ 45–47). The Final Rule’s mandatory closures will also force consumers to pay

more for power—particularly during extreme weather events—and as skyrocketing

electricity demand strains an already-vulnerable system transition. App. 842a, 843a–

845a, 846a (Hines Decl. ¶¶ 55, 59–62, 64–66).

Also, grid reliability remains an irreparable harm even if Colstrip does not retire.

That is because Colstrip must incur costs in 2024 and early 2025, and there is no guarantee

that NorthWestern, the regulated utility that must service its customers, could recover

its costs in time. During the time NorthWestern must go through its rate recovery

hearing in front of its public service commission, it must fill the financial gap by pulling

from elsewhere. That diversion of funds alone complicates meeting generation demand.

For example, NorthWestern commented that expending the resources needed to comply

with the Final Rule would create competing demand with other essential capital projects

with clear environmental benefits, such as upgrading existing renewables and mitigating

wildfire risks. App. 179a (NorthWestern Cmts. 21).

III.

The Equities and Relative Harms Favor a Stay.

A stay preserves the status quo during judicial review. The status quo here

provides more than an “ample margin of safety to protect public health” from power plant

HAP emissions across the nation—a record admission by EPA. 89 Fed. Reg. at 38518.

It is an infinitesimally small level of risk: a cancer risk of 0.147-in-1 million, almost seven

times lower than the 1-in-1 million risk that EPA itself has considered scientifically

insignificant. App. 468a–469a (EPA’s Residual Risk Assessment, supra note 4, at Tables

1 and 2a of Appendix 10); see also App. 717a–721a (America’s Power and Electric

Generators MATS Coalition Stay Mot. 5–9). A stay truly causes no measurable harm to

anyone.

There is no public interest in an acontextual “[l]ess is better,” see App. 636a (EPA

Opp’n 1), especially for a rule that EPA admits there is a “negative net monetized

benefit[]” tacked with amorphous, unquantified benefits, see 89 Fed. Reg. at 38511. See

generally Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 233 (2009) (Breyer, J.,

concurring in part and dissenting in part) (“[T]oo much wasteful expenditure devoted to

one problem may well mean considerably fewer resources available to deal effectively

with other (perhaps more serious) problems.”). Here, devoting resources to comply with

the Final Rule for no discernible benefit means fewer resources to spend on both power

sector rules and other emission reducing projects.

The Final Rule actively harms the public interest by (1) raising electricity prices

(itself an essential public good), (2) threatening grid reliability, and (3) disrupting the

local economy dependent on Colstrip’s operations, Montana’s economy, and beyond. To

top it all off—even if one concedes that EPA’s policy goals trump all other values (it

should not), “our system does not permit agencies to act unlawfully even in pursuit of

desirable ends.” Ala. Ass’n of Realtors, 594 U.S. at 766.

CONCLUSION

This Court should stay the Final Rule pending judicial review.

Dated: August 20, 2024

Respectfully submitted,

Michael Drysdale

DORSEY & WHITNEY LLP

50 South Sixth Street, Suite 1500

Minneapolis, MN 55402

Joshua B. Frank

Counsel of Record

C. Joshua Lee

BAKER BOTTS L.L.P.

700 K Street NW

Washington, DC 20001

(202) 639-7748

joshua.frank@bakerbotts.com

Creighton R. Magid

DORSEY & WHITNEY LLP

1401 New York Avenue NW, Suite 900

Washington, DC 20005

Counsel for Talen Montana, LLC

Counsel for NorthWestern Corporation

d/b/a NorthWestern Energy

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.