Reply Brief — Alaska Dept. of Environmental Conservation v. EPA

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No. 02-658

IN THE |

OFFICE

Supreme Court of the United States—

STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL

CONSERVATION,

Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

REPLY BRIEF FOR PETITIONER

GREGG D. RENKES JOHN G. ROBERTS, JR.*

Attorney General LORANE F. HEBERT

STATE OF ALASKA HOGAN & HARTSON L.L.P.

Department of Law 555 Thirteenth Street, N.W.

P.O. Box 110300 Washington, D.C. 20004

Juneau, Alaska 99811 (202) 637-5810

(907) 465-3600

CAMERON M. LEONARD

Assistant Attorney General

STATE OF ALASKA

Department of Law

100 Cushman Street, Suite 400

Fairbanks, Alaska 99701

(907) 451-2811

* Counsel of Record Counsel for Petitioner

WiLSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WasHiNGTON, D. C. 20001

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TABLE OF AUTHORITIES

Page

CASES:

Alabama Power Co. v. Costle, 636 F.2d 323

EER 1,4,5

American Corn Growers Ass'n v. EPA, 291

8 ke EE rc 3

Bethlehem Steel Corp. v. Gorsuch, 742 F.2d

EL 4

Chevron U.S.A. Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984)........... 6

Public Service Co. v. EPA, 225 F.3d 1144

(10th Cir. 2000) ............... GE SERS se 5

Train v. Natural Resources Defense Council,

in ED GE PITTED dstchnissennctinmisatieensentenssconsecs 2, 3,4

United States v. AM General Corp., 34 F.3d

EN 4

United States v. Mead Corp., 533 U.S. 218

AE 7

STATUTES:

I I I TI a rcsedcentaenitpnenapeneensanneteds l

SE IT icicnrninesipsentinecpnateneenionenstenesnces - l

A re 5

a nine sates anlentintremnenteseanness 6

iii isalianerrinmnsntenentncns 7

ia iericcatnpneamnnnnemnnnncnens 6

CR &

ES passim

I I icicctensccectencenpessonsccnnssennssscsonse 3

TABLE OF AUTHORITIES—Continued

LEGISLATIVE MATERIAL:

S. Rep. No. 95-127 (1977)

SORE HEHEHE HERR E HEHE

Page

IN THE

Supreme Court of the Anited States

No. 02-658

STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL

CONSERVATION,

Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

REPLY BRIEF FOR PETITIONER

The Solicitor General acknowledges (Opp. 5) that the

Clean Air Act (“CAA”), 42 U.S.C. §§ 7401 ef seq., gives

each State “primary responsibility” for assuring air quality

within its borders. /d. at § 7407(a) (emphasis added). A

“key” tool in “manag{ing] * * * allowed internal growth”

under the Act, Alabama Power Co. v. Costle, 636 F.2d 323,

364 (D.C. Cir. 1980), is the ability to determine BACT for

particular sources, and the CAA squarely “places this respon-

sibility with the State, to be determined in a case-by-case

judgment.” S. Rep. No. 95-127, at 31 (1977) (emphasis

added). Exercising its authority in this case, the State of

Alaska considered the requisite statutory factors and made a

permitting decision that would not only result in cleaner air

than if the EPA’s choice of technology had been selected, but

that recognized “the importance of the [Red Dog] mine to the

regional economy of the Northwest Arctic Borough.” PER

387. In overriding Alaska’s BACT determination, the EPA

plainly usurped the State’s authority under the CAA, upset-

ting the delicate balance of power between the States and the

federal government that Congress carefully sought to create

under the Act and numerous similar statutory schemes

embodying the principle of “cooperative federalism.”

As evidenced by the numerous amici who urge this Court

to grant review in this case,' the question presented here is

one of undeniable national importance. The United States

asks this Court to ignore the significance of this case, as well

as the multiple conflicts between the Ninth Circuit’s decision

below and those of this Court and other federal courts of

appeals. But a decision with such troubling and far-reaching

implications should not be permitted to stand unreviewed.

1. The Ninth Circuit’s decision conflicts with decisions

of this Court and those of other federal courts of appeals on

the basic jurisdictional question of how federal-state author-

ity is allocated under the CAA. See Pet. 14-19. In response,

the Solicitor General goes for the capillaries, stressing that

the decisions cited in the petition actually involved different

subsections of the CAA than those involved here. See Opp.

12-16. But such pettifoggery cannot obscure the fundamen-

tal conflict between the Ninth Circuit’s decision and the

decisions of this Court and other federal courts of appeals.

Whereas other courts have recognized and respected the

basic “division of responsibilities” between the States and the

federal government under the CAA, Train v. Natural Re-

' See Brief of Amici Curiae States of North Dakota, Wyoming,

Alabama, Delaware, lowa, Montana, Nebraska, Nevada, South

Dakota, and Utah in Support of Petitioner; Brief Amicus Curiae of

the Center for Energy and Economic Development in Support of

the Petition for Writ of Certiorari; Brief Amicus Curiae of Pacific

Legal Foundation in Support of Petition for a Wnt of Certiorari.

sources Defense Council, Inc., 421 U.S. 60, 79 (1975), and

have refused to allow the EPA to infringe upon the States’

authority by acting as the primary regulator in those areas

where that responsibility has been given to the States, the

Ninth Circuit disregarded Congress’s careful allocation of

power under the Act, and permitted the EPA to usurp author-

ity clearly reserved to the States.

a. In its green eyeshade zeal to distinguish the cases

cited in the petition, the federal government glosses over

American Corn Growers Ass'n v. EPA, 291 F.3d 1 (D.C. Cir.

2002), a case involving a provision of the CAA strikingly

similar to the one at issue here. Section 169A of the CAA

requires the States to determine the best available retrofit

technology (“BART”) for particular sources by taking into

consideration certain enumerated statutory factors. See 42

U.S.C. § 7491(g)(2). Section 169(3) likewise requires the

States to determine BACT by taking into account certain

enumerated statutory factors. See 42 U.S.C. § 7479(3) (“best

available control technology” means an emission limitation.

*** which the permitting authority [i.e., the State], on a

case-by-case basis, taking into account energy, environ-

mental, and economic impacts and other costs, determines is

achievable for such facility”). In American Corn Growers,

the D.C. Circuit refused to allow the EPA to dictate to the

States the manner in which they were to make BART deter-

minations, holding that the EPA’s S attempt to do so was

“inconsistent with the Act’s provisions giving the states

broad authority over BART determinations.” /d. at 8. In

sharp contrast, the Ninth Circuit in this case permitted the

EPA to dictate Alaska’s BACT determination, notwithstand-

ing the Aci’s provisions giving the States broad authority

over BACT determinations. This irreconcilable conflict

slone provides a compelling basis for review.

b. Attempting to dismiss the conflict between the deci-

sion below and this Court’s decision in Train, supra, the

United States notes that in T7rain this Court “expressly

recognized EPA’s oversight_role.” Opp. 13-14. That obser-

vation, however, was in the context of considering a provi-

sion of the CAA that expressly required the EPA’s approval

of a SIP variance. See 421 U.S. at 75 (quoting since-repealed

Section 110(a3)(A) of the CAA). Here, by contrast, no

provision of the CAA gives the EPA the authority to invali-

date a State’s BACT determination. To the contrary, the

CAA expressly provides the States with broad discretion to

make case-by-case BACT determinations. See 42 U.S.C.

§ 7479(3). Moreover, the Court’s observation in Train that

“the CAA ‘imposes a duty of enforcement on the Agency’ to

enforce a SIP’s emission limitations,” Opp. 14 (quoting

Train, 421 U.S. at 92-93 n.27) (emphasis omitted), is of no

significance here, where it is undisputed that Alaska’s

permitting decision did not violate its SIP emission limita-

tions. The Solicitor General’s observation that the court in

Alabama Power, supra, “recognized EPA’s authority to

‘prevent or correct a violation of the increments,’ ” Opp. 16,

is likewise besides the point, because all agree that this case

does not involve an increment violation.

c. The Solicitor General also attempts to dismiss the

conflict with Seventh Circuit’s decisions in Bethlehem St.

Corp. v. Gorsuch, 742 F.2d 1028 (7th Cir. 1984), and United

States v. AM General Corp., 34 F.3d 472, 474-475 (7th Cir.

1994), by noting that the EPA in this case took action before

Cominco’s permit was issued. See Opp. 16 & n.9. But the

United States does not—and cannot—deny that the Ninth

Circuit’s decision grants the EPA unfettered discretion to

invalidate a State’s BACT determination at any time, even

years after a permit has been issued and a source has invested

in technology approved by the State. The Ninth Circuit’s

decision thus casts a cloud of uncertainty over state PSD

permitting decisions, and threatens to subject regulated

entities to increased bureaucratic delay. See States Amicus

Br. 11.

—

d. The Solicitor General’s reliance (Opp. 17) on Public

Service Co. v. EPA, 225 F.3d 1144 (10th Cir. 2000), is

misplaced. That case involved the quite different question

whether a particular source was required under the CAA to

obtain a PSD permit in the first place. If the source were in

fact required to do so, the EPA could take steps to enforce

that requirement. See 42 U.S.C. § 7413(a)(5). That accounts

for the court’s passing statement that the EPA could ulti-

mately overturn the State’s decision in that regard. See 225

F.3d at 1147. The court by no means suggested that the EPA

would be free to override a determination—such as BACT—

that the CAA plainly commits to the State’s discretion

through the case-by-case weighing of a variety of factors.

2. The national importance of this case is undeniable.

The question presented affects thousands of entities across

the nation. Indeed, the federal government itself acknowl-

edges “the national importance of the BACT requirement.”

Opp. 18. Congress gave the States broad discretion to make

BACT determinations that specifically take into account

“considerations as anticipated and desired economic ~grawth _

for the area.” S. Rep. No. 95-127, at 31. The Ninth Circuit’s

decision strips the States of their authority to make “flexible”

BACT determinations, id., in “managfing] their allowed

internal growth” under the CAA. Alabama Power, 636 F.2d

at 364. If Alaska is not allowed the flexibility to make a

BACT determination that actually results in cleaner air while

taking into account particular local conditions in a commu-

nity above the Arctic Circle, it is difficult to imagine what

Congress had in mind in the CAA. And the Ninth Circuit’s

decision is even more far-reaching, threatening the balance of

power struck by Congress and the States under numerous

other “cooperative federalism” statutory schemes. See Pet. at

21-22.

The United States maintains that the Ninth Circuit’s deci-

sion will not “disrupt[] * * * federal-state relations under the

CAA.” Opp. 21. The States that have filed a brief in support

of certiorari see things differently, arguing that the decision

below “skews the federal-state partnership envisioned by

Congress” under the CAA, and that it will have “an enor-

mous effect” on the implementation of all state permitting

programs. States Amicus Br. 1, 11. As the States explain, as

a result of the Ninth Circuit’s decision, regulated entities are

“left with uncertainty whether and when EPA will choose to

inject itself into the state permitting process,” and thus will

have little incentive to work with the States on BACT and

other permitting issues. Jd. at 11. Moreover, because the

EPA can override a State’s BACT determination at any time,

the decision below will inevitably lead to a “waste of state

resources.” Jd. at 3. The States urge this Court to grant

review in this case and “correct the imbalance wrought by the

Ninth Circuit’s decision.” /d. at 1.

3.a. The Ninth Circuit’s decision not only has precipitated

conflicts on a question of national importance, but it is also

wrong. Nothing in the CAA gives the EPA unilateral author-

ity to overturn a State’s case-by-case BACT determination.”

The fact that a State weighs the statutory factors differently

than the EPA in any particular case does not mean that the

State has in any sense violated a requirement of the Act,

authorizing the EPA to overturn the State’s judgment. There

is simply no support in the CAA for the federal government’s

conclusion—and that of the Ninth Circuit—that the States

have only “ ‘initial responsibility’ ” for determining BACT.

See Opp. 19 (quoting Pet. App. 11a).

2 A Siate’s BACT determination, however, may not permit a

facility’s emissions to exceed the NAAQS, PSD allowable incre-

ments, or other standards established under the Act. See 42 U.S.C.

§§ 7475(a)(3), 7479(3). Moreover, in one narrow circumstance—

an exception that proves the rule—the CAA specifically requires

the EPA’s approval of a particular BACT determination. See id.

§ 7475(a\8).

3 Invoking Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984), the Solicitor General argues

Nor is there any support in the Act’s legislative history.

The United States relies on excerpts stating, for example, that

the EPA could take action “ ‘to stop a permit * * * which

*** did not comply with the requirements of [the PSD

program], including the use of [BACT].’” Opp. 19 n.10

(quoting S. Rep. No. 95-127, at 12). But apart from the

requirement that no major emitting facility may be con-

structed or modified in a clean air area unless “the proposed

facility is subject to [BACT],” 42 U.S.C. § 7475(a)(4), the

only BACT “requirement” imposed by the Act is that a State

take into account “energy, environmental, and economic

impacts and other costs” in determining BACT. /d.

§ 7479(3). As discussed, nothing in the CAA authorizes the

EPA to overturn a State’s particular BACT determination

based on the consideration of the pertinent statutory factors.

Like the Ninth Circuit below, the Opposition completely

ignores the most pertinent legislative history—that making

clear that “(t]he decision regarding the actual implementation

of best available technology is a key one, and the committee

places this responsibility with the State, to be determined in a

case-by-case judgment.” §S. Rep. No. 95-127, at 31 (empha-

sis added). See also id. (“It is recognized that the phrase has

broad flexibility in how it should and can be interpreted,

for deference to certain EPA guidance documents and an EPA

legal opinion “{i)nsofar as any ambiguity exists in the statutory

provisions” at issue. Opp. 21-23 & n.14. Those provisions,

however, do not admit of any ambiguity. Moreover, the federal

government has already lost the argument that such documents—

not promulgated in the exercise of congressionally delegated

authority to make rules carrying the force of law—are entitled to

Chevron deference. See United States v. Mead Corp., 533 U.S.

218, 226-227 (2001). The Solicitor General also cites EPA

responses to comments in various rulemakings, see Opp. 22, but

none of those responses express the view here that the EPA may

overturn a BACT determination because it disagrees with the

State’s analysis of the statutory factors in a particular case.

depending on site.”) (emphasis added); id. (“The weight

assigned to such factors is to be determined by the State.”’);

id. (BACT is “strictly a State and local decision’’).

b. Importantly, this is not to say that the EPA is without

recourse when it believes a State has made an unreasonable

BACT determination. The CAA provides that each State

must—as Alaska did here—‘“transmit to the [EPA] a copy of

each [PSD] permit application relating to a major emitting

facility received by such State and provide notice to the

[EPA] of every action related to the consideration of such

permit.” 42 U.S.C. § 7475(d). In this case, the EPA was free

to participate in the public comment process on Cominco’s

draft permit, and then, if it still disagreed with the State’s

action, challenge Alaska’s BACT determination through the

administrative review process, which includes a right of

judicial review. See Pet. 18-19. The Solicitor General does

not dispute that the EPA could have pursued this remedy.

What the EPA may not do, however, is unilaterally substi-

tute its judgment for what constitutes BACT whenever it

disagrees with a State’s determination. That is precisely

what the EPA did here. Long before Alaska issued

Cominco’s PSD permit and a final TAR explaining the basis

for its determination that Low NOx was BACT for the MG-

17 generator, the EPA informed the State of its view that

SCR was BACT for the generator. See PER 385. Through-

out the negotiations that followed, the EPA never budged

from that position. Indeed, in its order blocking the issuance

of Cominco’s permit, the EPA did not admonish Alaska to

provide “a reasoned justification of the basis of its decision,”

Opp. 20 (emphasis and quotation omitted), but rather de-

manded that the State “satisfactorily document[] why SCR is

not BACT for the [MG-17] generator.” Pet. App. 36a.

c. Moreover, Alaska did provide a reasoned justification

for its BACT determination in this case. The State spent

nearly ten pages explaining the basis of its decision, specifi-

cally taking into account “energy, environmental, and

economic impacts and other costs.” 42 U.S.C. § 7479(3).

After initially rejecting Cominco’s contention that requiring

SCR would have adverse environmental and energy impacts,

the State concluded that SCR was not economically feasible

because of its “excessive economic cost”—$2.9 million in

capital costs and annual operating costs approaching

$635,000. PER 051. Indeed, the United States does not

dispute that SCR has never been required as BACT for a

similar type of generator. Recognizing the Red Dog Mine’s

importance to the particularly vulnerable and isolated local

community, the State decided not to impose a prohibitively

expensive technology that might affect the mine’s “world

competitiveness.” Jd. Alaska’s BACT determination in this

case was precisely the sort of determination Congress in-

tended States to make under the CAA, which specifically

directs the States to consider “economic impacts” in deter-

mining BACT on a case-by-case basis. 42 U.S.C. § 7479(3).

See also S. Rep. No. 95-127, at 31 (States to take. into

account such considerations as “anticipated and desired

economic growth for the area.”) (emphasis added). The

4 The Opposition incorrectly states that the petition does not

challenge the Ninth Circuit’s determination that the EPA correctly

concluded that Alaska had not provided a reasoned justification for

its BACT determination. See Opp. 20. That issue is squarely

embraced by the question presented—“[w]hether the Ninth Circuit

erred in upholding the EPA’s assertion of authority to second-

guess a permitting decision made by the State of Alaska.” Pet. i.

Moreover, the petition specifically demonstrates that Alaska made

a “carefully considered determination that Low NOx was BACT

for the MG-17 generator.” Pet. 8. See also id. at 20-21.

5 The concern that “States might be tempted to engage in a

destructive competition to attract industry through lax implementa-

tion of the environmental laws,” Opp. 23 (citing Pet. App. 16a), is

State’s permitting decision, moreover, resulted in cleaner air

than would be the case under the EPA’s preferred approach,°

while allowing the creation of more jobs for the precarious

economy of the Northwest Arctic Borough. That is how

“cooperative federalism” is supposed to work.

7 * *

For the foregoing reasons, and those in the petition and the

briefs amicus curiae, the petition for a writ of certiorari

should be granted, and the judgment below reversed.

( Respectfully submitted,