Emergency Application — Nacco Natural Resources Corporation, Applicant v. Environmental Protection Agency, et al.

Supreme Court briefJul 24, 2024

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No. ______

In the Supreme Court of the United States

NACCO NATURAL RESOURCES CORPORATION,

Applicant,

ENVIRONMENTAL PROTECTION AGENCY AND MICHAEL S. REGAN,

ADMINISTRATOR,

Respondents.

To the Honorable John G. Roberts, Jr.,

Chief Justice of the United States and

Circuit Justice for the District of Columbia Circuit

EMERGENCY APPLICATION

FOR IMMEDIATE STAY OF FINAL AGENCY ACTION

PENDING DISPOSITION OF A PETITION FOR REVIEW

Charles T. Wehland

JONES DAY

110 N. Wacker Dr., Ste 4800

Chicago, IL 60601

Jeffery D. Ubersax

KUSHNER & HAMED CO., LPA

1375 E. Ninth St., Ste 1930

Cleveland, OH 44114

Yaakov M. Roth

Counsel of Record

Brinton Lucas

S. Matthew Krsacok

JONES DAY

51 Louisiana Ave., N.W.

Washington, D.C. 20001

(202) 879-7658

yroth@jonesday.com

Counsel for Applicant NACCO Natural Resources Corporation

PARTIES TO THE PROCEEDINGS AND RELATED PROCEEDINGS

The parties to the proceeding below are as follows:

Applicant is NACCO Natural Resources Corporation (NACCO).

Respondents are the United States Environmental Protection Agency (EPA)

and Michael Regan, in his official capacity as Administrator of the EPA.

The other parties to the consolidated proceedings below are:

Petitioners: State of West Virginia; State of Alabama; State of Alaska; State

of Arkansas; State of Florida; 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 New

Hampshire; State of North Dakota; State of Ohio; State of Oklahoma; State of South

Carolina; State of South Dakota; State of Tennessee; State of Texas; State of Utah;

Commonwealth of Virginia; State of Wyoming; America’s Power; Appalachian Region

Independent Power Producers Association; Edison Electric Institute (also an

Intervenor); Electric Generators for a Sensible Transition; Idaho Power Company;

International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers

and Helpers, AFL-CIO; International Brotherhood of Electrical Workers, AFL-CIO;

Midwest Ozone Group; Montana-Dakota Utilities Co.; National Mining Association;

National Rural Electric Cooperative Association; Oklahoma Gas and Electric

Company; Rainbow Energy Center, LLC; United Mine Workers of America, AFL-CIO;

Westmoreland

Mining

Holdings

LLC;

Westmoreland Rosebud Mining LLC.

Westmoreland

Mining

LLC;

and

Intervenors: State of New York; State of Arizona; State of Colorado; State of

Connecticut; State of Delaware; State of Hawaii; State of Illinois; State of Maine;

State of Maryland; Commonwealth of Massachusetts; State of Michigan; State of

Minnesota; State of New Jersey; State of New Mexico; State of North Carolina; State

of Oregon; Commonwealth of Pennsylvania; State of Rhode Island; State of Vermont;

State of Washington; State of Wisconsin; District of Columbia; City and County of

Denver; City of Boulder; City of Chicago; City of New York; California Air Resources

Board; American Lung Association; American Public Health Association; Clean Air

Council; Clean Wisconsin; Consolidated Edison, Inc.; Edison Electric Institute (also

a Petitioner); Louisiana Public Service Commission; Natural Resources Defense

Council; New York Power Authority; Pacific Gas and Electric Company; Power

Companies Climate Coalition; Sacramento Municipal Utility District; and Tennessee

Valley Public Power Association, Inc.

Amici Curiae: The Chamber of Commerce of the United States of America;

Environmental Defense Fund; Professor Rachel Rothschild; and Sierra Club.

The related proceedings are:

West Virginia v. EPA, No. 24-1120 (D.C. Cir. July 19, 2024) (lead case) (order

denying motions for stay), consolidated with: Ohio v. EPA, No. 24-1121 (D.C. Cir. July

19, 2024); National Rural Electric Cooperative Association v. EPA, No. 24-1122 (D.C.

Cir. July 19, 2024); National Mining Association v. EPA, No. 24-1124 (D.C. Cir. July

19, 2024); Oklahoma Gas and Electric Company v. EPA, No. 24-1126 (D.C. Cir. July

19, 2024); Electric Generators for a Sensible Transition v. EPA, No. 24-1128 (D.C. Cir.

July 19, 2024); United Mine Workers of America v. EPA, No. 24-1142 (D.C. Cir. July

19, 2024); International Brotherhood of Electrical Workers v. EPA, No. 24-1143 (D.C.

Cir. July 19, 2024); International Brotherhood of Boilermakers v. EPA, No. 24-1144

(D.C. Cir. July 19, 2024); Midwest Ozone Group v. EPA, No. 24-1146 (D.C. Cir. July

19, 2024); Edison Electric Institute v. EPA, No. 24-1152 (D.C. Cir. July 19, 2024);

NACCO Natural Resources Corporation v. EPA, No. 24-1153 (D.C. Cir. July 19, 2024);

Idaho Power Company v. EPA, No. 24-1155 (D.C. Cir. July 19, 2024); Appalachian

Region Independent Power Producers Association v. EPA, No. 24-1222 (D.C. Cir. July

19, 2024); Rainbow Energy Center, LLC v. EPA, No. 24-1226 (D.C. Cir. July 19, 2024);

Montana-Dakota Utilities Co. v. EPA, No. 24-1227 (D.C. Cir. July 19, 2024); and

Westmoreland Mining Holdings LLC v. EPA, No. 24-1233 (D.C. Cir. July 19, 2024).

iii

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, NACCO submits the following

corporate-disclosure statement: NACCO is a wholly owned subsidiary of NACCO

Industries, Inc. NACCO is not publicly held, but NACCO Industries, Inc., its parent,

is a publicly traded corporation that owns more than 10% of the stock of NACCO. No

other publicly held corporation owns more than 10% of the stock of NACCO.

TABLE OF CONTENTS

Page

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

OPINIONS BELOW ..................................................................................................... 5

JURISDICTIONAL STATEMENT .............................................................................. 5

STATUTORY PROVISIONS INVOLVED ................................................................... 5

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

Statutory Background ............................................................................. 5

The Clean Power Plan ............................................................................. 7

The Affordable Clean Energy Rule ......................................................... 8

The Carbon Capture and Sequestration Rule ...................................... 10

Procedural History ................................................................................ 12

REASONS FOR GRANTING THE APPLICATION ................................................. 12

II.

III.

EPA’S TARGETS ARE NOT ACHIEVABLE USING EXISTING TECHNOLOGY............ 14

EPA has not shown existing sources can achieve a 90%

reduction of their emissions using carbon capture and

sequestration. ........................................................................................ 14

The statute does not allow EPA to base its “best system” on

future predictions, projections, or speculation. .................................... 18

EPA FAILED TO ACCOUNT FOR THE FULL COST OF ITS CHOSEN SYSTEM. ........ 24

As EPA has long admitted, carbon capture and sequestration is

prohibitively costly. ............................................................................... 25

EPA obscured the Rule’s true costs through an accounting trick. ...... 27

THE EQUITIES FAVOR A STAY. ........................................................................... 33

CONCLUSION............................................................................................................ 36

INDEX OF APPENDICES

Appendix A

Order of the United States Court of Appeals for the District

of Columbia Circuit Denying Motions for Stay (July 19, 2024)

Appendix B

42 U.S.C. § 7411

Appendix C

New Source Performance Standards for GHG Emissions

From New, Modified, and Reconstructed Fossil Fuel-Fired

EGUs; Emission Guidelines for GHG Emissions From

Existing Fossil Fuel-Fired EGUs; and Repeal of the ACE Rule,

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

Appendix D

Declaration of Christoper D. Friez (May 24, 2024)

TABLE OF AUTHORITIES

Page(s)

CASES

Advoc. Health Care Network v. Stapleton,

581 U.S. 468 (2017) ................................................................................................ 32

Alabama Ass’n of Realtors v. HHS,

594 U.S. 758 (2021) .......................................................................................... 13, 34

Am. Elec. Power Co. v. Connecticut,

564 U.S. 410 (2011) ................................................................................................ 20

Am. Lung Ass’n v. EPA,

985 F.3d 914 (D.C. Cir. 2021) .................................................................................. 9

Biden v. Nebraska,

143 S. Ct. 477 (2022) .............................................................................................. 34

Bob Jones Univ. v. United States,

461 U.S. 574 (1983) ................................................................................................ 28

Carr v. United States,

560 U.S. 438 (2010) ................................................................................................ 20

DaimlerChrysler Corp. v. Cuno,

547 U.S. 332 (2006) ................................................................................................ 28

Epic Sys. Corp. v. Lewis,

584 U.S. 497 (2018) ................................................................................................ 31

Gundy v. United States,

588 U.S. 128 (2019) ................................................................................................ 19

Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc.,

484 U.S. 49 (1987) .................................................................................................. 20

King v. Burwell,

576 U.S. 473 (2015) ................................................................................................ 28

Labrador v. Poe,

144 S. Ct. 921 (2024) ........................................................................................ 13, 34

vii

TABLE OF AUTHORITIES

Page(s)

Loper Bright Enters. v. Raimondo,

144 S. Ct. 2244 (2024) ............................................................................................ 23

Massachusetts v. EPA

549 U.S. 497 (2007) .................................................................................................. 7

Michigan v. EPA,

576 U.S. 743 (2015) ................................................................................ 5, 25, 26, 28

Moyle v. United States,

144 S. Ct. 2015 (2024) ............................................................................................ 35

Nken v. Holder,

556 U.S. 418 (2009) ................................................................................................ 33

NLRB v. SW Gen., Inc.,

580 U.S. 288 (2017) ................................................................................................ 31

NRDC v. Thomas,

805 F.2d 410 (D.C. Cir. 1986) ................................................................................ 23

Ohio v. EPA,

144 S. Ct. 2040 (2024) .......................................................................... 12, 28, 33, 34

Portland Cement Ass’n v. Train,

513 F.2d 506 (D.C. Cir. 1975) ................................................................................ 25

Potomac Elec. Power Co. v. ICC,

702 F.2d 1026 (D.C. Cir. 1983)............................................................................... 33

Sierra Club v. Costle,

657 F.2d 298 (D.C. Cir. 1981) ................................................................................ 23

United States v. Texas,

143 S. Ct. 51 (2022) ................................................................................................ 34

West Virginia v. EPA,

577 U.S. 1126 (2016) ................................................................................................ 8

viii

TABLE OF AUTHORITIES

Page(s)

West Virginia v. EPA,

597 U.S. 697 (2022) ..................................... 1, 2, 3, 6, 8-10, 14, 21-23, 25-27, 30, 31

Whitman v. Am. Trucking Ass’ns,

531 U.S. 457 (2001) .......................................................................................... 25, 29

STATUTES

2 U.S.C. § 632 ............................................................................................................... 28

5 U.S.C. § 705 ............................................................................................................. 1, 5

28 U.S.C. § 1254 ............................................................................................................. 5

28 U.S.C. § 1651 ......................................................................................................... 1, 5

28 U.S.C. § 2101 ................................................................................................... 1, 5, 34

31 U.S.C. § 1105 ........................................................................................................... 28

42 U.S.C. § 7411 ............................................ 1-3, 5, 6, 8-11, 13-16, 19-21, 24, 27-30, 32

42 U.S.C. § 7425 ........................................................................................................... 29

42 U.S.C. § 7521 ........................................................................................................... 21

42 U.S.C. § 7607 ............................................................................................................. 5

OTHER AUTHORITIES

40 C.F.R. § 60.22 ............................................................................................................ 6

168 Cong. Rec. E879 (Aug. 26, 2022) .......................................................................... 32

41 Fed. Reg. 48706 (Nov. 4, 1976) ............................................................................... 22

42 Fed. Reg. 12022 (Mar. 1, 1977)............................................................................... 22

44 Fed. Reg. 29828 (May 22, 1979) ............................................................................. 22

45 Fed. Reg. 26294 (Apr. 17, 1980) ............................................................................. 23

TABLE OF AUTHORITIES

Page(s)

56 Fed. Reg. 24468 (May 30, 1991) ............................................................................. 23

74 Fed. Reg. 66496 (Dec. 15, 2009) ............................................................................... 7

80 Fed. Reg. 64510 (Oct. 23, 2015) ................................................... 6-10, 22, 25, 26, 31

84 Fed. Reg. 32520 (July 8, 2019) ........................................................... 8, 9, 22, 27, 30

89 Fed. Reg. 39798 (May 9, 2024) ..................... 1, 2, 5, 10-12, 14-18, 23, 25, 28, 31, 34

CBO, Carbon Capture and Storage in the United States (Dec. 13, 2023).................. 28

Comment from J. Jickling, SaskPower (Aug. 4, 2023) ............................................... 15

EPA, Biden-Harris Administration Finalizes Suite of Standards to

Reduce Pollution from Fossil Fuel-Fired Power Plants (Apr. 25,

2024)........................................................................................................................ 10

EPA, Response to Comments (Apr. 2024) .................................................................... 29

M. Friedman, There’s No Such Thing as a Free Lunch (1975) .................................. 24

Heritage Foundation Comment (Aug. 5, 2023) .......................................................... 30

Webster’s Seventh New Collegiate Dictionary (1970).................................................. 19

White House, Fact Sheet: President Biden to Catalyze Global Climate

Action Through the Major Economies Forum on Energy and Climate

(Apr. 20, 2023) ........................................................................................................ 10

To the Honorable John G. Roberts, Jr., Chief Justice of the United States

and Circuit Justice for the District of Columbia Circuit:

Pursuant to Rule 23 of this Court, 5 U.S.C. § 705, and 28 U.S.C. §§ 1651 and

2101(f), NACCO respectfully requests an immediate stay of a final rule of EPA titled

New Source Performance Standards for GHG Emissions From New, Modified, and

Reconstructed Fossil Fuel-Fired EGUs; Emission Guidelines for GHG Emissions

From Existing Fossil Fuel-Fired EGUs; and Repeal of the ACE Rule, 89 Fed. Reg.

39798 (May 9, 2024) (Rule). NACCO filed a petition for review of the Rule in the D.C.

Circuit and sought a stay of the Rule during litigation. On July 19, 2024, the D.C.

Circuit denied that and other stay motions.

INTRODUCTION

Just two years ago, this Court confirmed that EPA could not hijack 42 U.S.C.

§ 7411 to effectively compel “coal plants” to “cease to exist.” West Virginia v. EPA, 597

U.S. 697, 728 & n.3 (2022). Instead, that provision merely allows the agency to require

existing sources to “reduce pollution”—while continuing to function as coal plants—

by taking measures that would cause them “to operate more cleanly.” Id. at 706.

Specifically, EPA can set emission limits that are “achievable” via the use of a

technology that “has been adequately demonstrated” to be effective in the real world

(while accounting for “cost”). § 7411(a). 1 In other words, EPA’s task is simply to

ensure that sources are using the most up-to-date tools that are available and

affordable.

1 Unless otherwise noted, all statutory citations refer to Title 42 of the U.S. Code.

Unable to tell “coal plants to ‘shift’ away virtually all of their generation—i.e.,

to cease making power altogether,” West Virginia, 597 U.S. at 728—EPA scrapped its

unlawful Clean Power Plan (CPP) and went back to the drawing board. This year, it

came back with a new ultimatum for the Nation’s coal plants: either use carbon

capture and storage (CCS) to cut 90% of your CO2 emissions, or shut down.

To EPA’s credit, this mandate at least appeared to revert to the agency’s

“‘traditional’” use of § 7411 to “improv[e] the emissions performance of individual

sources” rather than transform the grid as a whole. Id. at 727. But that just swapped

one statutory violation with another, because using CCS to eliminate 90% of CO2

emissions never “has been adequately demonstrated” to work—let alone in a “cost”efficient manner—meaning the resulting limits are not “achievable.” § 7411(a).

Indeed, that is why the agency had previously (and repeatedly) determined that CCS

was not a permissible solution. And nothing material has changed since EPA told this

Court two years ago that CCS was not an available option. To the contrary, the agency

acknowledged just last month that “no commercial power plant is consistently

achieving 90% capture.” C.A. Stay Opp. 44.

Imagining what can be, unburdened by what has been, EPA decided that the

time to mandate this technology had come. Relying on a handful of D.C. Circuit cases

largely dating from the 1970s, the agency insisted that § 7411 was a “forward-looking”

provision that authorized it to “project the development” of a technology “at a future

time,” and thereby “set a standard more stringent than has regularly been achieved.”

89 Fed. Reg. 39798, 39801, 39830 (May 9, 2024) (Rule).

EPA further reasoned that the unsustainable costs of CCS were no longer a

barrier because the Inflation Reduction Act (IRA) had provided for offsetting tax

credits (at least in the short term). The agency treated that as if it means no one will

bear these exorbitant expenses, which could exceed $100 billion by the early 2030s.

By demanding unachievable reductions using an unavailable and unaffordable

technology, the Rule drives a different route to the same destination as the CPP: mass

“retirement” of “coal-fired plants.” West Virginia, 597 U.S. at 714. Of course, that is

precisely the objective. The only difference is that instead of directly achieving that

result through generation shifting, the new Rule causes it indirectly by imposing

impossible targets. As yesterday’s dissenters presciently explained, “a rule requiring

the use of carbon-capture technology would have shifted far more electricity

production from coal-fired plants than the Clean Power Plan,” because “the

‘exorbitant’ costs” of that tool “‘would almost certainly force the closure’ of all affected

‘coal-fired power plants.’” Id. at 773 n.5, 775-76 (Kagan, J., dissenting). Yet even those

dissenters agreed that traditional “statutory constraints” of adequate demonstration

and cost consideration prevent EPA from “forc[ing] the elimination of coal plants,”

including “through technological controls” such as “carbon capture” or switching fuels.

Id. at 776 n.7 (contending that there was no need to read § 7411 to foreclose

generation shifting, because the “cost” and “adequately demonstrated” limitations

would preclude attempts to eradicate coal plants). Thus, the statutory violation here

is no less egregious than the one this Court confronted two years ago; it is simply

more devious.

As in the original CPP litigation, the D.C. Circuit denied a stay of the Rule. In

a cursory order, it stated that applicants were unlikely to succeed on the merits, the

only conceivable explanation being that its 1970s-era precedents gave EPA a free pass.

App. 2a. And while the court effectively conceded applicants would suffer irreparable

injury “due to the need for long-term planning,” it claimed “a stay will not help”

because the Rule might spring back into effect “at the end of the case.” Id.

This Court should not repeat the same errors. As to the merits, the only way

to sustain this Rule is to rewrite the statute. Given the undisputed reality of the stillnascent CCS technology, EPA is forced to replace the phrase “has been adequately

demonstrated” with “may be adequately demonstrated sometime in the future,” and

thereby substitute speculation for science. And given the conceded costs of this novel

regime, EPA is forced to replace the phrase “taking into account the cost” with “taking

into account the net cost to the source,” and thereby enable cheap accounting tricks.

As to the equities, it is always the case that an ultimate loss in a regulatory challenge

means the “rule will come back into force,” but that truism does not obviate the need

for a stay. In any event, this Court can eliminate this inherent uncertainty by treating

this application as a petition for a writ of certiorari before judgment, granting the

petition, and reviewing this exceptionally important Rule during the upcoming Term.

If this Court does not stay the Rule outright, it should at least free applicants from

having to spend years litigating this challenge in the shadow of outdated lower-court

precedents that lack any anchor in statutory text, all the while incurring substantial

compliance costs that can never be recouped on the back end.

OPINIONS BELOW

The D.C. Circuit’s order denying applicant’s motion for a stay is not reported

but is reproduced at App. 1a-3a. The Rule is published at 89 Fed. Reg. 39798 (May 9,

2024) and reproduced at App. 13a-279a.

JURISDICTIONAL STATEMENT

The Court of Appeals has jurisdiction under 42 U.S.C. § 7607(b)(1). This Court

has jurisdiction under 28 U.S.C. §§ 1254(1) and 1651, and it may grant the requested

relief under 5 U.S.C. § 705 and 28 U.S.C. §§ 1651(a) and 2101(f).

STATUTORY PROVISIONS INVOLVED

The core statutory provisions at issue are reproduced at App. 4a-12a.

STATEMENT OF THE CASE

Statutory Background

“The Clean Air Act establishes a series of regulatory programs to control air

pollution from stationary sources (such as refineries and factories).” Michigan v. EPA,

576 U.S. 743, 747 (2015). The program here is set forth in § 7411. Titled “Standards

of performance for new stationary sources,” this provision “directs EPA to list

“categories of stationary sources” it determines “cause[ ], or contribute[ ] significantly

to, air pollution which may reasonably be anticipated to endanger public health or

welfare.” § 7411(b)(1). After listing such a category, EPA must set rules establishing

emissions limits from new sources in that category. § 7411(b)(1)(B). “[N]ew source[s]”

are those built after the relevant regulation is proposed. § 7411(a)(2).

Although § 7411 is focused (as its title suggests) on new sources, subsection (d)

addresses existing sources. In parallel to the definition of a “new” source, an “existing”

source is any “building, structure, facility, or installation which emits or may emit

any air pollutant” built before the regulation is proposed. § 7411(a)(3), (6). This

“ancillary” subsection “operates as a gap-filler,” authorizing EPA to “regulate harmful

emissions not already controlled under the Agency’s other authorities.” West Virginia,

597 U.S. at 710.

After EPA publishes “standards of performance” for new sources—and

assuming the pollutant at issue is one of the rare few not already subject to regulation

under certain other programs in the Act—it must “prescribe regulations” calling for

States to establish “standards of performance for any existing source” of that type.

§ 7411(d). A “standard of performance” is one that “reflects the degree of emission

limitation achievable through the application of the best system of emission reduction”

that “has been adequately demonstrated,” “taking into account the cost of achieving

such reduction,” health and environmental impact, and energy needs. § 7411(a)(1).

This is a multi-step process. EPA first issues an “emission guideline that

reflects the application of the best system of emission reduction (considering the cost

of such reduction) that has been adequately demonstrated for designated facilities.”

40 C.F.R. § 60.22(b)(5). States then develop and impose a “standard of performance”

based on the achievable emission reductions identified by EPA “for any existing

source” in the category. § 7411(d)(1). If a State fails to impose a plan, EPA can do so

directly. § 7411(d)(2).

The Clean Power Plan

In Massachusetts v. EPA, this Court held that CO2 and other greenhouse gases

could fit within the Clean Air Act’s general definition of air pollutants. 549 U.S. 497,

511 (2007). In 2009, EPA issued an “endangerment finding,” concluding that a mix of

six greenhouse gases emitted by motor vehicles may “reasonably be anticipated both

to endanger public health and to endanger public welfare.” 74 Fed. Reg. 66496, 66497

(Dec. 15, 2009). Largely on the basis of that finding, EPA in 2015 published a rule,

known as CPP, regulating the emission of CO2 from existing power plants under

§ 7411(d). 80 Fed. Reg. 64510 (Oct. 23, 2015).

In the CPP, EPA set “final emission guidelines” for States to use in establishing

performance standards for those plants. Id. at 64512. The performance rates and

targets in those guidelines were derived from what EPA had then identified as the

“best system of emission reduction” for existing fossil-fuel-fired plants. Id.

At that time, EPA considered CCS as a potential system of emission reduction,

but found that “the scale of infrastructure required to directly mitigate CO2 emissions

from existing [sources] through CCS can be quite large and difficult to integrate into

the existing fossil fuel infrastructure.” Id. at 64690. EPA therefore rejected CCS as

the “best system of emission reduction,” as the “costs were too high when considered

on a sector-wide basis.” Id. at 64751; see id. at 64756 (concluding “full or partial CCS

technology should not be part of the” best system for existing sources “because it

would be more expensive”).

Instead, EPA resorted to what it viewed as a less expensive “system” comprised

of three “building blocks.” Id. at 64667. The first building block—“‘heat rate

improvements’ at coal-fired plants”—was unobjectionable; these were “source-specific,

efficiency-improving” measures “plants could undertake to burn coal more cleanly …

similar in kind to those” the agency had adopted in the past. West Virginia, 597 U.S.

at 697. But the other building blocks were not technologies or systems that could be

adopted or applied by any given plant. Rather, they were methods of “generation

shifting” across the grid, meaning a reduction in electricity generated by the source

in favor of more supply from other energy sources, such as gas-fired plants or

renewable sources like solar or wind. 80 Fed. Reg. at 64728.

The CPP unsurprisingly sparked immediate challenge. Consistent with the

Clean Air Act’s judicial-review provision, § 7607(b)(1), a group of states and private

parties filed petitions for review in the D.C. Circuit. After they unsuccessfully sought

a stay of the CPP pending review in that court, this Court stayed the rule. West

Virginia v. EPA, 577 U.S. 1126 (2016).

The Affordable Clean Energy Rule

Following the stay, EPA reassessed its position; the litigation was held in

abeyance and ultimately dismissed. Rather than defend the CPP, the agency took the

hint and replaced it. See West Virginia, 597 U.S. at 715. In its 2019 Affordable Clean

Energy (ACE) Rule, EPA explained that the CPP’s generation-shifting scheme had

exceeded the agency’s “statutory authority” under § 7411 by attempting to regulate

the power sector “‘at the grid level.’” 84 Fed. Reg. 32520, 32523 (July 8, 2019).

In its place, the agency promulgated standards and limits that could be applied

at and achieved by a source itself, through a mix of equipment upgrades and practices

that would improve the heat rates of existing plants. Id. at 32522, 32537. In settling

on this approach, EPA again rejected CCS as an option. Id. at 32547-49. The agency

determined that “[t]he high cost of CCS, including the high capital costs of purchasing

and installing CCS technology and the high costs of operating it” meant that CCS

could not be the “best system of emissions reduction.” Id. at 32548. Instead, the

“exorbitant” costs of CCS technologies “would almost certainly force the closure of the

coal-fired power plants that would be required to install them.” Id.

The ACE Rule was immediately challenged in the D.C. Circuit, which vacated

it 18 months later. Am. Lung Ass’n v. EPA, 985 F.3d 914 (D.C. Cir. 2021). This Court

reversed. West Virginia, 597 U.S. at 735. As this Court explained, under the agency’s

“‘traditional’” view of § 7411(d), EPA could adopt “technology-based standard[s]”

aimed at “improving the emissions performance of individual sources.” Id. at 726-27.

In the CPP, however, the agency had “adopted what it called a ‘broader, forward

thinking approach’” to § 7411 that would allow it to “forc[e] a shift throughout the

power grid from one type of energy source to another.” Id. at 727-28. This Court

rejected that “unprecedented” reading, observing that § 7411(d) “empowers EPA to

guide States in ‘establishing standards of performance’ for ‘existing sources,’ not to

direct existing sources to effectively cease to exist.” Id. at 728 & n.3 (cleaned up). So

the Court agreed that the CPP had been properly repealed three years earlier.

While the dissenters agreed EPA could not use § 7411(d) to “force[] the

elimination of coal plants”—including through “technological controls”—they did not

derive this limit from a statutory bar on “generation shifting.” Id. at 776 n.7 (Kagan,

J., dissenting). Rather, they thought “the statutory constraints” dealing with cost and

adequate demonstration would “prevent [EPA] from doing so.” Id.; see id. at 758-59.

The Carbon Capture and Sequestration Rule

Consistent with the Administration’s repeated commitment to “achieving a

carbon pollution-free power sector by 2035,” EPA released a “suite of standards” in

April 2024 to accomplish “the transition to a clean energy economy.” 2 The centerpiece

of this regulatory package was the Rule here, which requires existing coal plants to

reduce their CO2 emissions by 88.4% by 2032. Rule 39840. In setting this limit, EPA

determined that “CCS with 90 percent capture of CO2” was the “best system of

emission reduction” for purposes of § 7411, “including being adequately demonstrated

and achieving significant emission reductions at reasonable cost.” Id.

In concluding that this limit was “achievable” using a system that “has been

adequately demonstrated,” EPA did not identify any power plant that had ever

consistently captured 90% of its CO2 emissions. Rule 39847; see Rule 39847-55. It also

acknowledged that when it came to the storage of captured CO2, no relevant

“commercial sequestration facilities” are currently operational. Rule 39871. And the

2 The White House, Fact Sheet: President Biden to Catalyze Global Climate Action

Through the Major Economies Forum on Energy and Climate (Apr. 20, 2023); EPA,

Biden-Harris Administration Finalizes Suite of Standards to Reduce Pollution from

Fossil Fuel-Fired Power Plants (Apr. 25, 2024).

agency conceded further that to even access “potential” CO2 “sequestration sites” in

the future, coal plants and others would need to essentially double the Nation’s CO2

pipelines by 2032—a likely impossible task for the nearly 20% of plants that would

need to build these carbon highways across state lines. Rule 39855-56, 39860.

EPA nevertheless concluded it was enough that it “expected” or “anticipate[d]”

that, in the future, coal plants would consistently be able to capture 90% of their

carbon emissions, “more commercial [sequestration] sites will be developed,” and

approximately 5,000 miles of CO2 pipeline “would be constructed.” Rule 39856, 39871,

39889. Drawing on “case law” from “the D.C. Circuit” since “the early 1970s,” the

agency claimed § 7411(a) was a “forward-looking” provision that let it “project the

development of a control system at a future time” and rely on “anticipated

improvements in control technologies.” Rule 39801. EPA therefore thought it could

set a “standard at levels more stringent than has regularly been achieved,” and

thereby “spur the development” of green technology. Rule 39830.

Turning to its new system’s price tag, EPA acknowledged that it had twice

determined (in “the CPP and ACE Rule”) that “CCS did not qualify” as the best

system “due to cost.” Rule 39882. It decided “to reevaluate this conclusion,” however,

in light of the 2022 “extension and increase in the IRC section 45Q tax credit” in the

IRA. Id. Specifically, Congress had made an existing tax credit for the sequestration

of CO2 “more generous” in “the Bipartisan Budget Act of 2018 and … the IRA.” Rule

39800. In EPA’s view, these credits would “provide a significant stream of revenue”

and thus “significantly improve[] the cost reasonableness of CCS.” Rule 39882.

In a telling signal of EPA’s true objective, the Rule exempted from its carboncapture mandate coal plants that pledged to close their doors. Rule 39801. If a plant

promised to shutter by 2032, it could spend its twilight years undisturbed. Id. And if

a plant swore to retire by 2039, it could putter along for the seven extra years if it

merely adopted “co-firing with natural gas, at a level of 40 percent of the unit’s annual

heat input.” Id. Any plant that wanted to live into the 2040s, however, had to slash

its CO2 emissions by nearly 90% before 2032. Id.

Procedural History

Numerous states and industry participants, including NACCO, challenged the

Rule in the D.C. Circuit and sought a stay pending review. In a short, unsigned order,

the D.C. Circuit denied the stay. App. 1a-3a. The court asserted that applicants were

unlikely to succeed on the merits. App. 2a. And while the court did not deny that

applicants faced irreparable harm now “due to the need for long-term planning,” it

concluded that a “stay will not help because the risk remains” that the Rule’s 2032

deadline could “come back into force at the end of the case” if their challenge proved

ultimately unsuccessful. Id.

REASONS FOR GRANTING THE APPLICATION

When faced with a request to stay a regulation, this Court asks “(1) whether

the applicant is likely to succeed on the merits, (2) whether it will suffer irreparable

injury without a stay, (3) whether the stay will substantially injure the other parties

interested in the proceedings, and (4) where the public interest lies.” Ohio v. EPA,

144 S. Ct. 2040, 2052 (2024). All factors weigh in a favor of a stay here.

On the merits, “applicants not only have a substantial likelihood of success,”

but “it is difficult to imagine them losing.” Alabama Ass’n of Realtors v. HHS, 594

U.S. 758, 763 (2021). In its latest bid to cancel coal, EPA blew past its statutory

guardrails by setting “[un]achievable” emissions targets based on technology that

never “has been adequately demonstrated.” § 7411. And to avoid having to account

for that system’s unsustainable “cost[s],” id., the agency cooked the books, pretending

that the (short-term) availability of tax credits somehow means that no one will have

to pay the piper. In essence, § 7411 limits EPA to available and affordable measures;

the agency has cast off both constraints. If the D.C. Circuit misreads the statute to

permit those evasions, its decision would plainly be certworthy, as this Court’s prior

interactions with EPA’s efforts in this area confirm. See supra at 7-10; see also

Labrador v. Poe, 144 S. Ct. 921, 929 (2024) (Kavanaugh, J., concurring in grant of

stay) (explaining that whether “businesses have to restructure their operations or

build new facilities to comply with” “major new environmental regulations” during

the pendency of litigation is “itself” a “question of extraordinary significance”).

As for the equities, the D.C. Circuit did not deny that applicants would suffer

“irreparable harm” in light of “the need for long-term planning”; it merely raised the

specter of the Rule’s mandate springing “back into force” later if their challenge

ultimately fails. App. 2a. But that risk is always present when a party seeks a stay

of a regulation, and here, applicants’ strength on the merits reduce the odds of such

harm to nil. In all events, this Court can solve that “problem” by granting certiorari

before judgment and addressing the Rule during the upcoming Term.

EPA’S TARGETS ARE NOT ACHIEVABLE USING EXISTING TECHNOLOGY.

CCS may turn out to be the technology of the future. But for now it remains a

pipe(line) dream. No commercial plant has successfully used it to consistently capture

90% of carbon emissions. No sequestration sites are currently available to store the

carbon even if it could be captured. And getting from Point A to Point B is yet another

hurdle; that transportation infrastructure does not exist today. EPA thought none of

that mattered. It read old D.C. Circuit caselaw to permit it to treat § 7411 as a tool to

force development of new technology. That is legally wrong. Since the Rule hinges on

that misinterpretation, applicants are likely to succeed in vacating it.

EPA has not shown existing sources can achieve a 90% reduction

of their emissions using carbon capture and sequestration.

In setting emission standards for existing sources, the “‘central determination’”

EPA must make is to identify “the ‘best system of emission reduction.’” West Virginia,

597 U.S. at 720. As part of that decision, the agency must confirm its chosen system

“has been adequately demonstrated.” Id. (quoting § 7411(a)). In other words, EPA

must “make sure” its choice “has a proven track record.” Id. at 759 (Kagan, J.,

dissenting). That follows from the text. Section 7411 requires emission standards that

are actually “achievable” by each “existing source,” § 7411(a), (d)(1)—meaning the

agency cannot establish unachievable standards that would cause “existing sources

to effectively cease to exist.” West Virginia, 597 U.S. at 728 n.3. And to ensure an

emission limit is in fact achievable, EPA must prove that the system it thinks can

accomplish that feat actually works.

The Rule’s chosen system of using CCS to consistently capture and store 90%

of a power plant’s CO2 emissions, however, has never “been adequately demonstrated”

to work in practice, rendering its emission limit not “achievable.” § 7411(a). The

agency has effectively admitted as much—as to each of the three key phases of CCS

technology.

First, EPA openly acknowledged below that “no commercial power plant is

consistently achieving 90% capture” of its CO2 emissions. C.A. Stay Opp. 44. It could

hardly have denied it, since the Rule’s examples only prove the point. The Rule’s best

example comes from the SaskPower Boundary Dam Project in Canada, and even it

shows that EPA’s goal here remains far more dream than reality. See Rule 39847-48.

During “a 72-hour test” in 2015, a single unit at the Boundary Dam facility was able

to achieve “approximately 89.7 percent capture.” Rule 39848. But that was the peak,

and a short-lived one at that. Ever since, “technical challenges” have prevented this

plant from “consistently operat[ing] at this total capture efficiency,” and subsequent

improvements have only enabled “capture rates of 83 percent when the capture plant

is online.” Id. (emphasis added). Even this portrayal may be too rosy, as this plant’s

owner and operator felt compelled to file a “correction” in response to EPA’s proposed

rule relying on the project. Comment from J. Jickling, SaskPower (Aug. 4, 2023),

https://perma.cc/VQ97-7DA7. As the owner explained, its “first of its kind” Boundary

Dam project “is not capturing 90 per cent,” and it has currently “optimized” the

project’s capture rate at only “65 to 70 per cent” of the unit’s “total … emissions.” Id.

EPA’s other examples of 90% carbon capture are even farther afield. Some of

these projects are funded through the Energy Policy Act of 2005, which says that the

fact a technology is used or an emission reduction is achieved by a facility “receiving

assistance under this Act” is not enough for it to “be considered to be … adequately

demonstrated” under § 7411. § 15962(i)(1); see Rule 39849-51. And even the agency’s

best example among these facilities—the Petra Nova project—suffered repeated

“[o]utages attributable to the CO2 capture facility” and was forced to close down for

three years due to the “poor economics of utilizing captured CO2.” Rule 39850.

Second, even if the capture of 90% of CO2 emissions from existing plants had

been adequately demonstrated, EPA failed to prove that all of this captured carbon

can be stored. Again, EPA conceded that no “commercial sequestration facilities”

(apart from ones “funded under” the Energy Policy Act of 2005) are currently in

operation. Rule 39871; see Rule 39864 (“[O]nly sequestration facilities with Federal

funding are currently operational in the United States”). That means the massive

amount of CO2 to be captured will—as of now—have no place to go, making EPA’s

emission limit definitionally not “achievable” for yet another reason.

Third, even if all this captured carbon could find a new home, it would need

to be transported there. Here too, EPA came up short. And here too, EPA conceded as

much. The agency acknowledged that coal plants complying with its new mandate

“will need to construct new CO2 pipelines to access CO2 storage sites, or make

arrangements with pipeline owners and operators who can do so,” in order to access

the “potential” carbon “sequestration sites” EPA identified. Rule 39855.

Indeed, even if all these potential sites became actual sequestration facilities,

coal plants would have to create approximately “5,000 miles” of CO2 pipeline “by 2032”

to reach them. Rule 39856. To put that into perspective, only “5,385 miles” of CO2

pipeline existed in the United States as of 2022, despite these pipelines being used

“across the country for nearly 60 years.” Rule 39855. EPA is thus counting on the

Nation’s coal industry to virtually double the total miles of pipeline available over the

next seven-and-a-half years. Id.

Moreover, as EPA concedes, this breakneck expansion in CO2 infrastructure

may not be possible for the 20% of long-term coal plants that reside over 62 miles (or

100 kilometers) from “the nearest potential deep saline sequestration site.” Rule

39860. That is because 98% of those plants’ closest potential “sequestration site is

located outside state boundaries,” meaning the Rule “would require building an

interstate pipeline and coordinating with multiple state authorities for permitting

purposes” for those plants to survive. Id. And, as EPA admits, “permitting hurdles,

difficulties in obtaining the necessary rights of way over such a distance, or other

considerations … may make it unreasonable” for those plants to satisfy the Rule’s

aggressive “compliance schedule.” Id. In other words, the agency concedes that

roughly one fifth of the Nation’s long-term coal plants will unlikely be able to achieve

the Rule’s limit. By definition, that is not an “achievable” standard.

Whatever the future may bring, there is thus no serious doubt in the record

that current CCS technology and infrastructure does not allow coal-fired plants to

capture, transport, or store carbon at the scale required by the Rule.

The statute does not allow EPA to base its “best system” on

future predictions, projections, or speculation.

Given all these admissions, EPA did not—and could not—maintain that the

use of CCS to eliminate 90% of CO2 emissions was currently achievable. Instead, it

premised its emission target on a chain of “prediction[s].” Rule 39878 n.610. First, the

agency “extrapolate[d]” from the “testing” at Boundary Dam to “make projections”

that plants would be able to consistently capture at least “90 percent” of their carbon

emissions in the future. Rule 39889. Second, EPA “anticipate[d]” that “commerical

carbon sequestration capacity” would be sufficient to house this massive influx of CO2,

as “[m]ultiple” projects “are in construction or advanced development,” and “more

commercial sites will be developed” as “the demand for commercial sequestration

grows.” Rule 39871. Third, the agency concluded it would be “feasible” for existing

sources to construct approximately 5,000 miles of CO2 pipeline “over a several year

period” in order to transport this captured carbon to locations “that have the potential

to be used as long-term CO2 storage sites.” Rule 39855-56.

Based on these expectations, EPA concluded that “CCS has been adequately

demonstrated at a capture efficiency of 90 percent, is technically feasible, and is

achievable.” Rule 39847. And to justify the predictive nature of this enterprise, the

agency claimed that “case law” from the D.C. Circuit dating back to “the early 1970s”

has treated § 7411 as a “forward-looking” and “technology forcing” provision that

“authorizes the EPA to set an emissions standard at levels more stringent than has

regularly been achieved.” Rule 39801, 39830; see Rule 39829-32, 39888-89.

The problem for EPA, however, is that the statute does not say that. To the

contrary, § 7411’s text, structure, and history confirm that while EPA can demand

that all existing sources use the latest technology available, it cannot mandate they

accomplish something no existing source has yet been able to achieve.

Text. To start, EPA’s crystal-ball construction is at war with § 7411’s text.

Again, the agency must show that a technology “has been adequately demonstrated”

for it to qualify as “the best system of emission reduction.” § 7411(a). When § 7411

was enacted, “demonstrate” meant what it does today—namely, “to prove or make

clear by reasoning or evidence” or “to illustrate or explain esp. with many examples.”

Webster’s Seventh New Collegiate Dictionary 220 (1970). And for a demonstration to

be “adequate,” it must be “sufficient for a specific requirement.” Id. at 11. By

definition, then, a system “has been adequately demonstrated” only when it “has been”

“prove[n]” or “ma[d]e clear”—by virtue of “evidence” or “many examples”—that the

system would be “sufficient for the specific requirement.” Id. That necessarily means

a system must have been actually used for its intended purpose. Otherwise, it cannot

be said that “many examples” have “prove[n]” the system to be “sufficient.”

The verb tense drives this home. “This Court has often looked to Congress’

choice of verb tense to ascertain a statute’s temporal reach.” Gundy v. United States,

588 U.S. 128, 142 (2019) (plurality). Had Congress wanted to prescribe a forwardlooking inquiry into technology that could be developed in the future, it could have

said as much. Instead, Congress used the present perfect tense, requiring EPA to

select a system of emissions reduction that “has been” demonstrated. “Congress use[s]

the present perfect tense to denote an act that has been completed.” Carr v. United

States, 560 U.S. 438, 448 (2010) (cleaned up). Congress therefore expected that the

“adequate demonstration” would have already occurred by the time EPA selected the

system, and its choice of verb tense prescribes a backward-looking inquiry into what

“has been” demonstrated in the past. Cf. Gwaltney of Smithfield, Ltd. v. Chesapeake

Bay Found., Inc., 484 U.S. 49, 57 (1987) (“the prospective orientation of that phrase

could not have escaped Congress’ attention”).

Confirming the point, a “forward-looking” interpretation of “has been

adequately demonstrated” would put that term on a collision course with the rest of

§ 7411. Recall that this provision allows EPA to establish only emission standards

that are “achievable” by “existing source[s].” § 7411(a), (d) (emphasis added); see supra

at 14. Mandating an emission limit based on a system that is “not … ‘in actual,

routine use somewhere,’” creates the distinct risk that existing sources will no longer

be able to exist, such as the roughly 20% of long-term coal plants that will unlikely be

able to construct an interstate CO2 pipeline in time. Rule 39831; see supra at 17.

Structure. Statutory structure points in the same direction. If Congress had

wanted to enact a forward-looking requirement in § 7411(a), it knew how to do so. A

neighboring subsection, for example, expressly authorizes EPA to “waive compliance

with emission limits to permit a facility to test drive an ‘innovative technological

system’ that has ‘not [yet] been adequately demonstrated.’” Am. Elec. Power Co. v.

Connecticut, 564 U.S. 410, 428 (2011) (quoting § 7411(j)(1)(A)). Section 7411(a),

however, uses precisely the opposite formulation.

Moving beyond § 7411 to other provisions of the Clean Air Act, § 7521 expressly

permits EPA to set “standards” for non-stationary sources (such as cars) “which

reflect the greatest degree of emission reduction achievable through the application

of technology which the Administrator determines will be available for the model year

to which such standards apply, giving appropriate consideration to cost, energy, and

safety factors associated with the application of such technology.” § 7521(a)(3)(A)(i)

(emphasis added). That language, by its terms, requires EPA to make a projection

about the future. By contrast, in § 7411(a)—an otherwise similar provision—

Congress used the backwards-facing language of “has been adequately demonstrated.”

EPA’s construction would ignore that deliberate choice, conflating an empirical

inquiry into the present with a speculative projection about the future.

EPA’s reading would also remove one of the most “meaningful constraints” on

its authority to define the “best system” of emission reduction—namely, the duty to

establish a “proven track record.” West Virginia, 597 U.S. at 758-59 (Kagan, J.,

dissenting). Had Congress wanted the agency to simply select the “best” system of

emissions reduction, period, it could have omitted any such limiting language. Yet as

even EPA has acknowledged, Congress instead added the “adequately demonstrated”

requirement as an “express constraint[]” that “guard[s] against the possibility of

emissions guidelines that have transformative consequences.” US Br. at 42, 49, West

Virginia, 597 U.S. 697 (Nos. 20-1530 et al.) (2022 US Br.). Congress required EPA to

show its work and prove the viability of its “best system” before wrangling the States

to adopt conforming plans. EPA’s interpretation circumvents that restriction.

Finally, EPA’s interpretation is also irreconcilable with § 7411(d)’s recognized

role as an “ancillary” “gap-filler” provision that allows EPA only to regulate emissions

for existing sources “not already controlled under the Agency’s other authorities.”

West Virginia, 597 U.S. at 709-10. Section 7411(d) is a “little-used backwater” and

“[t]he last place” one would expect Congress to put industry-transforming power. Id.

at 730. A futuristic construction of “adequately demonstrated,” however, would

arrogate to EPA the power to forcibly modernize an entire industry—or bury it with

unsustainable compliance costs. “Extraordinary grants of regulatory authority” such

as these, this Court explained, “are rarely accomplished through ‘modest words,’

‘vague terms,’ or ‘subtle device[s]’” found in § 7411(d). Id. at 723. The phrase

“adequately demonstrated” is no exception.

History. The history of § 7411(d) standards underscores that EPA must

ground these emission limits in science rather than science fiction. In the ACE Rule,

the agency identified six pre-CPP rulemakings under § 7411(d), most of which date

from the Carter administration. 84 Fed. Reg. at 32526 n.63. In those early regulations,

EPA at least pointed to some technology then in commercial use and capable of

achieving the emissions guidelines set by the agency. See 42 Fed. Reg. 12022, 12022

(Mar. 1, 1977) (describing “the plants having SCPB scrubbers that underwent

emission tests to obtain background data”); 41 Fed. Reg. 48706, 48706 (Nov. 4, 1976)

(proposed rule noting that “[m]any sulfur burning plants presently have horizontal

dual pad or vertical panel type mist eliminators installed”); 44 Fed. Reg. 29828 (May

22, 1979) (noting that emissions limitations were based on “control systems which

meet this [emissions] level” and that timelines were “based on actual retrofit

experience”); 45 Fed. Reg. 26294, 26294 (Apr. 17, 1980) (explaining that “[f]our …

plants [had] achieved secondary scrubbing efficiencies of at least 75 percent”); see also

56 Fed. Reg. 24468, 24482 (May 30, 1991) (proposed rule noting that technology had

been “adequately demonstrated” because “[c]ollection systems and control systems

with 98 percent efficiency are demonstrated at about 25 landfills”).

The absence of futuristic regulations from the get-go is telling, for “‘the want

of assertion of power by those who presumably would be alert to exercise it[] is …

significant in determining whether such power was actually conferred.’” West

Virginia, 597 U.S. at 725; see Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2258

(2024) (explaining that “respect” for “an Executive Branch interpretation” “was

thought especially warranted when [it] was issued roughly contemporaneously with

enactment of the statute and remained consistent over time”).

Even the counter-textual D.C. Circuit precedents invoked in the Rule do not go

as far as the agency claims. 89 Fed. Reg. at 39831-32. In fact, that court eventually

noted the “inherent tension” between the concept of “adequately demonstrated

technology” and “emerging technology.” Sierra Club v. Costle, 657 F.2d 298, 341 n.157

(D.C. Cir. 1981); see also NRDC v. Thomas, 805 F.2d 410, 428 n.30 (D.C. Cir. 1986)

(“[A] standard cannot both require adequately demonstrated technology and also be

technology-forcing.”). And it has never permitted the agency to project technological

developments three presidential administrations into the future and then mandate

that projection as the standard binding for the entire industry, as it has done here.

At bottom, § 7411’s text, structure, and history all confirm that the statute is

“technology forcing” only in the sense that it can force the adoption of technology that

already exists. It is not a tool to allow EPA to force the development of new technology

entirely. The Rule is thus premised on (yet another) fundamental misreading of the

limited power Congress conferred on this agency. That makes this challenge likely to

succeed, and it makes certiorari likely if the D.C. Circuit goes astray again.

II.

EPA FAILED TO ACCOUNT FOR THE FULL COST OF ITS CHOSEN SYSTEM.

Even if EPA’s chosen system had “been adequately demonstrated” and

“achievable” as a technological matter, the prohibitive “cost” of CCS would still doom

the Rule. § 7411(a). To get around this problem, the agency resorted to fudging the

numbers. It contended that the massive subsidies Congress recently provided in the

form of CCS tax credits have substantially cut that technology’s exorbitant costs. But

that is a glaring example of economic illiteracy. Far from reducing the costs of the

Rule, such legislative largesse merely shifts them onto taxpayers. See generally M.

Friedman, There’s No Such Thing as a Free Lunch (1975). And the statute requires

EPA to “account” for the true “cost of achieving” a carbon-free energy sector; it cannot

simply blind itself to tens or hundreds of billions in costs just because they will be

borne by other parties. § 7411(a). On this front too, the massively consequential Rule

therefore hinges on a legally flawed construction of the statute—an error that makes

vacatur likely, if not in the D.C. Circuit, then on certiorari review thereafter.

As EPA has long admitted, carbon capture and sequestration is

prohibitively costly.

In determining whether its preferred system of emission reduction “has been

adequately demonstrated,” EPA must “tak[e] into account the cost of achieving such

reduction.” § 7411(a). As the agency has long understood, this means it cannot require

measures that come at an “‘excessive’ or ‘unreasonable’ cost.” Rule 39832; see, e.g.,

West Virginia, 597 U.S. at 729 (discussing EPA’s understanding that it cannot require

“‘exorbitantly costly’” steps); Portland Cement Ass’n v. Train, 513 F.2d 506, 508 (D.C.

Cir. 1975) (approving EPA’s view that there cannot be “a gross disproportion between

achievable reduction in emission and cost of the control technique”). Instead, EPA

must ask whether “the costs” of a technology “are considered to be reasonable as a

general matter across the fleet of existing sources.” 80 Fed. Reg. at 32541.

Even in the absence of a specific statutory mandate to consider cost, the default

rule is that an agency “must consider cost,” for “reasonable regulation ordinarily

requires paying attention to the advantages and the disadvantages of agency

decisions.” Michigan, 576 U.S. at 753, 759. Indeed, unless Congress has taken cost

off the table, it would not be “‘reasoned decisionmaking’” to ignore such a critical

factor. Id. at 751; cf. Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 465 (2001)

(addressing provision that “does not permit the EPA to consider costs”).

Section 7411’s explicit directive to account for “the cost” of cutting emissions

therefore only underscores the seriousness of that endeavor. And it means that some

emission reductions are off limits, as it would not be “rational” for EPA “to impose

billions of dollars in economic costs,” for instance, “in return for a few dollars in …

environmental benefits.” Michigan, 576 U.S. at 752. Instead, as the agency told this

Court two years ago, it can only mandate measures “of reasonable ‘cost.’” 2022 US Br.

44. That is why EPA acknowledged it could not use § 7411(d) to, for example, reduce

the operations of disfavored plants to “‘two hours per day,’” “‘cancel coal entirely,’” or

require “the installation of solar panels on tens of millions of homes.” Id. at 41-44; see

West Virginia, 597 U.S. at 759 n.1 (Kagan, J., dissenting) (claiming the cost constraint,

among others, has “had real effect” at the agency, causing “EPA in prior rulemakings

to exclude a number of pollution-control measures” from the options available).

Applying that principle, EPA consistently rejected CCS as too costly. In the

CPP, for instance, it rejected “carbon capture and storage” on the ground that it would

be “substantially more expensive” than even its multibillion-dollar generationshifting scheme. 80 Fed. Reg. at 64769. As EPA explained, “the scale of infrastructure

required to directly mitigate CO2 emissions from existing [plants] through CCS can

be quite large and difficult to integrate into the existing fossil fuel infrastructure.” Id.

at 64690. Moreover, requiring “CCS (or even partial CCS)” for existing plants “could

affect the reliability of the supply of electricity,” meaning the agency could “not find

the cost to implement” this system “to be reasonable.” 3 In short, the “costs” of

mandating “CCS retrofits” were simply “too high.” 80 Fed. Reg. at 64751.

3 EPA,

Technical Support Document (TSD) for Carbon Pollution Guidelines for

Existing Power Plants: Emission Guidelines for Greenhouse Gas Emissions from

Existing Stationary Sources: Electric Utility Generating Units at 7-5, Dkt. ID No.

EPA-HQ-OAR-2013-0602 (June 10, 2014).

Four years later, the agency’s assessment remained unchanged. In the ACE

Rule, EPA confirmed that “the high cost of CCS, including the high capital costs of

purchasing and installing CCS technology and the high costs of operating it, …

prevent CCS or partial CCS from qualifying” as a permissible system under the Clean

Air Act. 84 Fed. Reg. at 32548. Indeed, the “exorbitant” costs of CCS technologies

“would almost certainly force the closure of the coal-fired power plants that would be

required to install them.” Id. Thus, “a rule requiring the use of carbon-capture

technology would have shifted far more electricity production from coal-fired plants

than the Clean Power Plan would have”—by shutting coal plants across the board.

West Virginia, 597 U.S. at 773 n.5 (Kagan, J., dissenting).

EPA obscured the Rule’s true costs through an accounting trick.

Faced with this difficulty, EPA decided to fix the books. While acknowledging

that it had concluded “[i]n the CPP and ACE Rule” that “CCS did not qualify” as a

permissible system “due to cost considerations,” the agency insisted that the

introduction of “higher tax credits” under the IRA in 2022 “significantly improves the

cost reasonableness of CCS for purposes” of § 7411. Rule 39882. Specifically, the IRA

had “extended and significantly increased the tax credit” for CO2 captured and stored

“from $50/metric ton to $85/metric ton,” thereby providing “a significant stream of

revenue for sequestered CO2 emissions.” Rule 39800, 39882. While the total amount

of these credits will depend on how much CCS is used in the future, estimates

collected by the Congressional Budget Office (CBO) range from “about $5 billion over

the 2023-2027 period” to “anywhere from $30 billion to well over $100 billion” “by the

early 2030s.” CBO, Carbon Capture and Storage in the United States 17 (Dec. 13,

2023) (CBO Study), https://perma.cc/ME3K-TUWC. In EPA’s view, these massive

sums qualify as “significant reductions in the cost of implementing CCS.” Rule 39814.

But as a matter of basic economics, these billions of dollars in tax credits do

not cut the costs of EPA’s carbon-capture mandate; they transfer them—namely, from

power-plant owners to the taxpayers. “When the Government grants exemptions or

allows deductions all taxpayers are affected,” as conferring such benefits force the

non-exempt to become “indirect and vicarious ‘donors’” of the favored class. Bob Jones

Univ. v. United States, 461 U.S. 574, 591 (1983). That is why “tax credits” are treated

as “‘tax-expenditures’”—costs the President must include in his annual budget to

Congress—because they “reduce amounts available to the treasury.” DaimlerChrysler

Corp. v. Cuno, 547 U.S. 332, 343 (2006); see 2 U.S.C. § 632(e)(2)(E); 31 U.S.C.

§ 1105(a)(16). And that is why the CBO measures the effect of the IRA’s tax credits

as a “loss” or “reduc[tion]” to the public fisc. CBO Study 17.

EPA thus transparently erred by treating “billions of dollars in spending each

year” as an unalloyed benefit. King v. Burwell, 576 U.S. 473, 485 (2015). It is plainly

not “taking into account the cost of achieving” an emission reduction to write off

billions from that expense on the theory that the American taxpayer will eventually

foot the bill. § 7411(a). Indeed, by “‘fail[ing] to consider an important aspect of the

problem’” before it, EPA did not even satisfy the bedrock requirement of “‘reasoned

decisionmaking.’” Michigan, 576 U.S. at 750-52; see Ohio, 144 S. Ct. at 2054 (staying

EPA action because the agency “ignored” an important consideration).

EPA never directly responded to this problem in the Rule itself. Instead, its

analysis of this critical issue consisted of a terse paragraph in a separate “Response

to Comments” document posted on the rulemaking docket. EPA, Response to

Comments 2.15.2.2 (Apr. 2024) (Response), https://perma.cc/EUN4-LT8J. None of the

agency’s defenses of this accounting chicanery holds up to scrutiny.

First, EPA suggested that it had to consider only “the cost to the source” in

mandating CCS, such that the burdens on “the taxpayer” were irrelevant. Id.

(emphasis added); see Rule 39889 (“It is reasonable to account for the IRC section 45Q

tax credit because the costs that should be accounted for are the costs to the source.”).

But one will search § 7411(a) in vain for any such qualification. Congress required

EPA to “tak[e] into account the cost of achieving” the chosen emission “reduction”—

period—with no limit based on who bears that cost. § 7411(a) (emphasis added).

By contrast, when Congress wishes to limit the types of costs EPA must

consider, it knows how to do so, as other provisions in the Clean Air Act show. In one

provision, for example, Congress directed the relevant official to “take into account[]

the final cost to the consumer” of prohibiting certain “major fuel burning stationary

source[s] … from using fuels other than locally or regionally available coal.” § 7425

(emphasis added). In another, Congress called for “consideration” of the “capital cost

of the technological system or systems being used.” § 7411(j)(D)(i) (emphasis added).

Section 7411(a)’s “cost” requirement contains no such restriction, and this Court does

not “infer in certain provisions” of the Clean Air Act “limitations that ha[ve] been

expressly imposed elsewhere.” Whitman, 531 U.S. at 468.

Even EPA itself does not really believe § 7411(a) permits such a blinkered cost

analysis. The Rule elsewhere asserts that “the costs to the regulated facility” are “the

most relevant costs,” not the only ones. Rule 39801 (emphasis added). And the agency

told this Court just two years ago that in light of § 7411(a)’s “‘cost’” requirement, it

could not adopt emission limits that “would be exorbitantly costly for ratepayers,” who

are distinct from the sources themselves. 2022 US Br. 42; see West Virginia, 597 U.S.

at 729 (understanding EPA to claim the power to decide “how high energy prices can

go as a result before they become unreasonably ‘exorbitant’”).

Meanwhile, limiting § 7411(a)’s cost analysis to the burdens borne by sources

would neuter that statutory requirement. Under that approach, “Congress could pass

a law subsidizing” the achievement of an emission limit that “cost more than $2

trillion every year,” thereby “increasing the overall federal budget by half,” yet EPA

could “say that the costs of such a standard are ‘zero.’” Heritage Foundation Comment

15 (Aug. 5, 2023), https://perma.cc/YT8A-TE58. That cannot be right.

In all events, EPA did not even fully account for the cost of the Rule to the

sources themselves. Taxes may be as certain as death, but tax credits are not. As the

agency thus acknowledged, these massive tax credits will “expir[e]” after 12 years,

which could “significantly affect the costs to” coal plants, and “lead to reductions in

the amount of their generation.” Rule 39902. Indeed, that is why the ACE Rule

declined to rely on the pre-IRA tax credits for CCS: because they were “limited in

time,” the credits “would not be available to offset much of the capital costs of the

CCS systems that are recovered over a 30-year period.” 84 Fed. Reg. at 32549.

Faced with this problem, EPA speculated that these power plants “may well

be able to replace” the wealth transfers from the tax credits through “the sale of CO2”

they capture, and that in any event, it would consider “revis[ing]” the Rule by the

early 2040s. Rule 39902. But that just gives the game away: If the Rule’s costs are so

burdensome that they cannot be maintained in the future in the absence of federal

subsidies (or a speculative carbon market), it is unreasonable to impose them now.

Put differently, once these tax accounting tricks fade away, it becomes quite clear

that the costs of CCS remain exorbitant. All of this underscores that EPA’s reliance

on the tax credits is no more than budgetary prestidigitation designed to obscure the

Rule’s true objective—use “the ‘exorbitant’ costs” of “carbon-capture equipment” to

“‘force the closure’ of all affected ‘coal-fired power plants.’” West Virginia, 597 U.S. at

776 (Kagan, J., dissenting).

Second, EPA invoked a “Floor Statement” from a single legislator—Rep.

Pallone—as justification for using the tax credits to reduce the Rule’s costs. Response

2.15.2.2. According to EPA, this “legislative history … makes clear that Congress was

well aware” that the agency could base a § 7411(d) rulemaking on “utility of the tax

credit in reducing the costs of … CCS.” Rule 39881. “But legislative history is not the

law,” Epic Sys. Corp. v. Lewis, 584 U.S. 497, 523 (2018), and even those who are

willing to consider it agree that “floor statements by individual legislators rank

among [its] least illuminating forms,” NLRB v. SW Gen., Inc., 580 U.S. 288, 307

(2017). Accordingly, the stray statement EPA sifted from the legislative record cannot

cabin § 7411(a)’s mandate to consider the entire “cost” of an emissions control.

Plus, “even those lowly sources speak at best indirectly to the precise question

here.” Advoc. Health Care Network v. Stapleton, 581 U.S. 468, 481 (2017). While Rep.

Pallone opined that “EPA may consider the impact of the … tax credits in lowering

the costs of [CCS]” to the sources, 168 Cong. Rec. E879 (Aug. 26, 2022), that assertion

does not explain how the agency is to account for the concomitant increase in costs to

the taxpayer (or for the fact that the credits will expire). So even if one treats this

legislator’s statement as authoritative, EPA is still the same position as it was before.

Finally, and perhaps most incredibly, EPA suggested that “the taxpayer” may

ultimately not have “to pay the cost” of the tax credits because the federal government

could “fund” these massive subsidies through “borrowing.” Response 2.15.2.2. But just

as costs do not disappear when they are shifted to taxpayers, they do not disappear

when they are shifted to future taxpayers. Increasing the national debt by potentially

over $100 billion is not a cost-free proposition, even if its effects are not borne by

taxpayers (and others) in the immediate future. That massive addition to the federal

deficit will have to be paid for eventually, making it very much a “cost of achieving”

the agency’s desired emission “reduction.” § 7411(a). The fact that the agency believes

such borrowing comes at no cost only highlights its deficient analysis. While EPA can

take certain steps to protect the trees, it cannot pretend money grows on them.

EPA engaged in speculation to bypass the adequately demonstrated constraint,

and it engaged in a shell game to bypass the cost constraint. But the statute allows

neither. For this reason too, applicants are likely to prevail in setting aside the Rule—

and to secure certiorari if the D.C. Circuit holds otherwise.

III.

THE EQUITIES FAVOR A STAY.

The equitable factors likewise warrant a stay. Applicants plainly have “strong

arguments about the harms they face” during the pendency of litigation, including

the impairment of the “sovereign interests” of the States, the “‘nonrecoverable’” costs

to industry of “complying with” the Rule, and the need to alter business operations to

account for EPA’s latest attempt to rejigger the energy sector. Ohio, 144 S. Ct. at 2053;

see West Virginia Appl. 26-40; NRECA Appl. 35-40; NMA Appl. 16-30; App. 280a-82a,

284a-88a; see also Potomac Elec. Power Co. v. ICC, 702 F.2d 1026, 1034-35 (D.C. Cir.

1983) (injury to business’s “ability to make future plans” from regulatory “uncertainty”

qualifies as “irreparable harm”).

The D.C. Circuit effectively conceded as much by asserting that “irreparable

harm” stemming from “the need for long-term planning” would resurface if applicants

obtained a stay but then ultimately lost this litigation. App. 2a. But that possibility

is always lurking when it comes to staying a rule pending the resolution of a

regulatory challenge. That is in part why this Court considers the merits in its stay

calculus—the more likely a challenger is to ultimately prevail, the more likely the

stay will be effective in protecting against irreparable harm. And given the strength

of applicants’ case on the merits, there should be little concern about a stay being

dissolved at the end of litigation.

The remaining equitable factors—which “merge” here given that “the

Government is the opposing party,” Nken v. Holder, 556 U.S. 418, 435 (2009)—do not

counsel against this interim relief. It does not serve “the public interest” to “permit

agencies to act unlawfully even in pursuit of desirable ends.” Alabama Ass’n of

Realtors, 594 U.S. at 766. In any event, a stay should not have an appreciable effect

on the environment given that any emissions reductions resulting from the Rule will

not begin until 2028. Rule 39863. And even if EPA could point to any “air-quality

benefits” from denying a stay, that would just make the equities a wash, causing the

stay inquiry here to “ultimately turn[] on” on which side “is likely to prevail at the

end of this litigation.” Ohio, 144 S. Ct. at 2053.

If this Court declines to issue a stay, however, it should treat this application

as a petition for a writ of certiorari before judgment under 28 U.S.C. § 2101(e), grant

the petition, and set the case for briefing and argument during the upcoming Term.

This Court has repeatedly taken this approach to cases on its emergency docket, as

the benefit of full briefing and argument provided by certiorari before judgment can

“help [it] better decide important emergency applications.” Labrador, 144 S. Ct. at

934 (Kavanaugh, J., concurring in grant of stay); see, e.g., Biden v. Nebraska, 143

S. Ct. 477 (2022); United States v. Texas, 143 S. Ct. 51 (2022). If this Court declines

to stay the Rule immediately, it should follow that path here. This “case is of such

imperative public importance as to justify deviation from normal appellate practice,”

Sup. Ct. R. 11, as confirmed by the fact that this Court entered a stay of the

predecessor CPP before the D.C. Circuit could review it on the merits. See supra at 8;

Labrador, 144 S. Ct. at 933 (Kavanaugh, J., concurring in grant of stay) (describing

that stay as an “important decision[] for the Nation”). The current Rule, colloquially

known as CPP 2.0, is no less consequential.

Granting review now would also come with two benefits for the parties and the

Judiciary. First, if this Court shares the D.C. Circuit’s concern that a stay could

subject applicants to a regulatory whipsaw, a definitive decision from this Court

during October Term 2024 would definitely resolve—one way or the other—whether

the States and industry members need to comply with EPA’s latest energy mandate.

Second, the D.C. Circuit’s counter-textual precedents on which the agency and the

panel below relied are likely to infect any further proceedings in that court, making

“further proceedings below … unnecessary to the Court’s resolution of the question

presented.” Moyle v. United States, 144 S. Ct. 2015, 2021 (2024) (Barrett, J.,

concurring); see supra at 18-19. In the absence of a stay, there is no good reason to

allow these proceedings to languish for years in a forum governed by a line of cases

that long ago cast statutory text aside.

CONCLUSION

This Court should grant an immediate stay of the Rule. In the alternative, it

should treat this application as a petition for a writ of a certiorari before judgment,

grant review, and set the case for briefing and argument during the upcoming Term.

July 24, 2024

Charles T. Wehland

JONES DAY

110 N. Wacker Dr., Ste 4800

Chicago, IL 60601

(312) 269-4388

ctwehland@jonesday.com

Jeffery D. Ubersax

KUSHNER & HAMED CO., LPA

1375 E. Ninth St., Ste 1930

Cleveland, OH 44114

(216) 696-6700

jdubersax@kushnerhamed.com

Respectfully submitted,

/s/ Yaakov M. Roth

Yaakov M. Roth

Counsel of Record

Brinton Lucas

S. Matthew Krsacok

JONES DAY

51 Louisiana Ave., N.W.

Washington, DC 20001

(202) 879-7658

yroth@jonesday.com

blucas@jonesday.com

mkrsacok@jonesday.com

Counsel for Applicant NACCO Natural Resources Corporation

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.