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

a

APR 25 2003

No. 02-658

ORE GE FEE GBR

IN THE

Supreme Court of the United States

STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL

CONSERVATION,

Petitioner,

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF FOR TECK COMINCO ALASKA

INCORPORATED IN SUPPORT OF PETITIONER

ROBERT T. CONNERY LAWRENCE L. HARTIG

MARCY G. GLENN ROBERT J. MAHONEY*

HOLLAND & HART LLP HARTIG RHODES HOGE

555 Seventeenth Street & LEKISCH

Suite 3200 717 K Street

Denver, Colorado 80202 Anchorage, Alaska 99501

(303) 295-8000 (907) 276-1592

* Counsel of Record Counsel for Teck Cominco

Alaska Incorporated

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

RULE 29.6 STATEMENT

Teck Cominco Alaska Incorporated (“Teck Cominco”) was

a petitioner in the Ninth Circuit below and is a respondent

supporting petitioner in this Court. Teck Cominco is a

wholly-owned subsidiary of Teck Cominco American Incor-

porated, which is wholly owned by Cominco Mining World-

wide Holdings, Ltd., which is wholly owned by Cominco

Mining Partnership, a partnership of Teck Cominco Metals,

Ltd. and Teck Cominco Nova Scotia, Ltd. Teck Cominco

Nova Scotia, Ltd. is wholly owned by Teck Cominco Metals,

Ltd., which is wholly owned by Teck Cominco Limited, a

publicly held company.

TABLE OF CONTENTS

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IN THE

Hupreme Court of the Anited States

No. 02-658

STATE OF ALASKA, DEPARTMENT OF ENVIRONMENTAL

CONSERVATION,

Petitioner,

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ef al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF FOR TECK COMINCO ALASKA

INCORPORATED IN SUPPORT OF PETITIONER

OPINIONS BELOW

The opinion of the Ninth Circuit is reported at 298 F.3d

814 and reproduced at Pet. App. la. The Ninth Circuit's

prior opinion concluding that it had jurisdiction over this case

is reported at 244 F.3d 748 and reproduced at Pet. App. 17a.

The Ninth Circuit’s order requesting supplemental briefing is

reproduced at Pet. App. 24a. The orders of the United States

Environmental Protection Agency (“EPA”) are reproduced at

Pet. App. 26a, 38a, and Sla.

2

JURISDICTION

The judgment of the Ninth Circuit was entered on July 30,

2002. Pet. App. la. The State of Alaska, Department of

Environmental Conservation, filed a petition for certiorari on

October 25, 2002. The petition was granted on February 24,

2003. 123 S. Ct. 1253. The jurisdiction of the Ninth Circuit

was based on 42 U.S.C. § 7607(b)(1). This Court has

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

STATUTORY AND REGULATORY PROVISIONS

Pertinent statutory and regulatory provisions are set forth in

an addendum to the brief of petitioner State of Alaska.

STATEMENT

Under the Clean Air Act (“CAA”), 42 U.S.C. §§ 7401

et seq., no “major emitting facility” may be constructed or

modified in any “clean air” area unless the facility is subject

to the “best available control technology,” or “BACT.” 42

U.S.C. § 7475(a(4). BACT is defined as “an emission

limitation * * * which the permitting authority, on a case-by-

case basis, taking into account energy, environmental, and

economic impacts and other costs, determines is achievable

for such facility * * *.” Jd. § 7479(3) (emphasis added). In

Alaska—as in most States—the “permitting authority” under

the Act is the State.

Teck Cominco operates the Red Dog Mine, the world’s

largest source of zinc concentrate, in Northwest Alaska on

lands owned by the NANA Regional Corporation, a regional

Native corporation established pursuant to the Alaska Native

Claims Settlement Act, 43 U.S.C. §§ 1601 ef seq. When

Teck Cominco decided to modify its facilities to increase

production at the Red Dog Mine, Teck Cominco sought

permission from the State of Alaska, which subsequently

' issued a permit designating a certain technology—“Low

NOx”—as BACT for a new generator that Teck Cominco

planned to build, the MG-17 generator. The EPA disagreed

3 ;

with the State’s BACT determination for the MG-17 genera-

tor, however, and issued a series of enforcement orders

blocking its construction unless Teck Cominco used a

different technology—SCR—that the EPA _ considered

BACT.

Alaska and Teck Cominco sought review of the EPA’s

orders in the Ninth Circuit. That court agreed with the EPA’s

contention that the EPA’s authority to issue orders enforcing

any “requirement” of the Act, see 42 U.S.C. §§ 7413(a)(5),

7477, gave it the authority to issue the orders in this case.

According to the court below, the State is empowered as the

permitting authority to make “the initial BACT decision.”

Pet. App. 9a. The court held, however, that the Act “pro-

vides for EPA enforcement when the state issues a permit

based on an improper determination,” and “the EPA has the

ultimate authority to decide whether the state has complied

with the BACT requirements.” Jd. 10a-lla. The court

rejected the contention of Alaska and Teck Cominco that

what constitutes BACT is determined under the Act by the

permitting authority, and that the requirement that a permit

contain such a limitation did not give the EPA the authority

to substitute its judgment on what constitutes BACT for that

of the permitting authority—the State. Jd. 11a.

Teck Cominco sought but was denied a stay of the Ninth

Circuit’s judgment. As a direct result of the Ninth Circuit’s

decision, Teck Cominco—which had spent over a year

engaged in discussions with ADEC concerning the per-

mit—was compelled to undertake new discussions with the

EPA in an attempt to resolve the BACT issue, at least on an

interim basis, and allow for construction and operation of the

MG-17 generator. When the State of Alaska sought review

of the Ninth Circuit decision in this Court, Teck Cominco

filed a response in support of the petition, stressing the

importance of resolving which entity—the State or the

EPA—was vested with discretion to determine BACT under

the CAA. If the judgment below is reversed and the State’s

4

authority to make the BACT determination is confirmed,

Teck Cominco will adjust its activities under the permit as

appropriate.

SUMMARY OF ARGUMENT

Congress vested the States with the discretion to determine

BACT on a case-by-case basis, after weighing energy,

environmental, economic, and other costs. The BACT

determination can be a complex one, and regulated compa-

nies work diligently with state agencies in the course of the

permitting process, providing background information,

responding to technical inquiries, assessing alternative

proposals, and addressing particular concerns. Allowing the

EPA to overturn a State’s BACT determination and substi-

tute its own view of what constitutes BACT in a particular

case—at the end of the permitting process or perhaps even

years later—is not only contrary to the Act’s text and history,

but would introduce disabling uncertainty into the permitting

process, given the critical role the BACT assessment can play

in determining whether particular development projects may

or may not proceed.

Such a role for the EPA is also contrary to Congress’s

determination that the States are best situated to decide how

to manage permitted growth within nationally established

limits. Here there is no dispute that Alaska’s determination

that Low NOx was BACT resulted in emissions consistent

with national ambient air quality standards and consistent

with the available increments in this clean air area. How to

allocate growth within those limits was for the State to

decide, and the State could decide that avoiding impairment

of the competitiveness of one of the few providers of year-

round employment in a challenging region of the State was

an important consideration in determining BACT “on a case-

by-case basis,” particularly since the State’s approach

resulted in cfemmer air than the approach favored by the EPA.

It is perhaps not surprising that the EPA weighed the factors

5

differently, and gave greater weight to promoting what it

called “the control technology of choice,” J.A. 129, rather

than local employment challenges. What is clear is that

Congress intended such a decision to be made by the States,

not the federal agency.

ARGUMENT

1. The Ninth Circuit’s decision below introduces uncer-

tainty and confusion into one of the most important determi-

nations confronting entities subject to regulation under the

CAA. Congress provided that BACT be determined on a

case-by-case basis by the permitting authority, taking into

account energy, environmental, and economic impacts and

other costs. 42 U.S.C. § 7479(3). As the statutory language

itself makes clear, the BACT determination is highly subjec-

tive and discretionary, depending on site-specific considera-

tions and policy-based judgments about various potentially

competing factors. As the Senate Committee explained with

respect to BACT, “the phrase has broad flexibility in how it

should and can be interpreted, depending on [the] site.”

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

Given this flexibility, and the broad discretion vested in the

permitting authority, regulated entities work closely with the

permitting authority when undertaking a significant project

subject to BACT review. That planning and consultation

process takes on added significance when atypical site-

specific considerations are likely to figure prominently in the

BACT determination, as is often the case, for example, when

considering a project in the uniquely challenging setting of

arctic Alaska. In this case, Teck Cominco spent over a year

working with ADEC in the permitting process, responding to

various issues and inquiries, and altering its planning to

respond to state concerns.

At ‘+> end of that process, and without filing comments on

the proposed Teck Cominco permit, the EPA issued its order

overturning ADEC’s BACT determination. The asserted

6

basis for the EPA’s order was that the ADEC permit violated

a “requirement” of the CAA. The only pertinent “require-

ment,” however, is that the PSD permit subject the source to

a BACT limitation determined by “the permitting authority,

on a case-by-case basis, taking into account energy, envi-

ronmental, and economic impacts and other costs.” 42

U.S.C. § 7479(3). There is no dispute that the permit in this

case contains such a limitation; that it was determined by

ADEC, the permitting authority; that ADEC made this

determination on a case-by-case basis; and that ADEC did so

after expressly considering energy, environmental, and

economic impacts and other costs. See J.A. 157-158, 200-

211. The EPA’s objection, in other words, is with the

underlying merits of ADEC’s determination. The EPA’s

own orders and documents make that abundantly clear. But

nothing in the CAA requires a particular BACT determina-

tion, and therefore nothing in the CAA authorizes the EPA to

block a State’s determination simply because the EPA

disagrees with it.

Authorizing the EPA to do so creates grave uncertainty for

a regulated entity, as Teck Cominco’s case makes clear. If

the EPA—not, as the CAA provides, “the permitting author-

ity’—is to have “the ultimate authority” with respect to a

BACT determination, Pet. App. 10a-lla, then extensive

planning and coordinating with the permitting authority may

all be for naught. It is no answer to suggest that the EPA be

included in such ongoing discussions because the resource

and personnel limitations of the EPA prevent it from devot-

ing sufficient attention to a particular source to achieve the

same level of understanding of relevant site-specific factors

as the permitting authority. This case proves the point; the

EPA did not weigh the site-specific considerations and the

pertinent energy, environmental, economic and other impacts

in reaching its conclusion on BACT.

It is one thing to say that a permitting authority’s BACT

determination may be subject to standard arbitrary and

7

capricious review during the normal review process; regu-

lated entities can live with that limited uncertainty, particu-

larly since they can participate in compiling a thorough

record supporting the permitting authority’s determination. It

is quite another to conclude, as did the Ninth Circuit below,

that a different regulator can simply second-guess the permit-

ting authority’s decision, with the question being whether the

second regulator’s determination is arbitrary and capricious,

based not on the full record of the permitting authority’s

decision, but solely on the record of the second regulator’s

determination.

It is important to recognize that the uncertainty introduced

by the decision below is in no sense limited to the permitting

and planning process. The EPA’s position—accepted by the

Ninth Circuit—would allow the EPA to “enforce” its view of

what BACT should be long after a permit has been issued

and a company has invested heavily in costly technology

required to comply with the permitting »thority’s different

view. This concern has been raised repeatedly throughout

the briefing in this case, see, e.g., Pet. Ct. App. Br. 48, and

the EPA has never suggested that it lacks such authority. Its

reading of the CAA simply does not admit of such a limita-

tion.

And the adverse consequences of the uncertainty and con-

fusion introduced by the Ninth Circuit’s decision are not

visited only on companies striving to comply with the CAA,

but on the permitting authority as well. Companies have

little incentive to coordinate and cooperate with state authori-

ties if determinations made by those authorities are not given

binding effect. See Gwaltney of Smithfield, Ltd. v. Chesa-

peake Bay Foundation, Inc., 484 U.S. 49, 60-61 (1987)

(allowing citizen suits for past Clean Water Act violations

would “curtail{] considerably” discretion of regulator to

enforce Act through agreement with regulated entities).

8

2. Granting the EPA “the ultimate authority” with respect

to BACT determinations, Pet. App. 10a-11a, is inconsistent

with Congress’s recognition that what constitutes BACT in

any particular case turns not only on site-specific considera-

tions more suited to assessment by state authorities, but also

on a policy-based judgment about how best to manage local

growth within national limits. Those judgments cannot be

made on the national level. These considerations are high-

lighted in the present case. ADEC officials—sensitive to the

challenges of operating north of the Arctic Circle—were in

the best position to weigh the “economic impacts” not only

on Teck Cominco, but also on the isolated workforce with

few other viable opportunities for year-round employment,

particularly in the private sector. The EPA officials may well

have wished to balance the costs differently, and favor

promotion of a technology never before imposed as BACT

on this type of source over a more cost-effective approach

that achieves the same environmental result. See J.A. 126

(EPA letter) (“a poor cost effectiveness in and of itself should

not be construed as a measure of adverse economic im-

pacts”). But Congress appreciated that such judgments were

for the States, familiar with local conditions and needs, and

not for the EPA. The EPA in this case sought to justify its

action as promoting “national consistency,” J.A. 148, 303,

but Congress in the CAA quite expressly rejected “national

consistency” with respect to BACT determinations in favor

of state discretion, case-by-case determinations, and site-

specific concerns.

ADEC’s assessment of the economic impacts on Teck

Cominco from requiring SCR as BACT by analogizing to the

situation of a rural Alaska utility is a good example. One of

the challenges of operating 100 miles north of the Arctic

Circle is the inability to plug in to an existing power supply.

The Red Dog Mine has to supply its own. In considering the

economic impact of requiring SCR as BACT on the mine’s

power supply, ADEC considered what the impact would be

9

on a rural Alaska utility in the business of supplying power.

After concluding that the impact in such a case would be

severe, it made perfect sense fot ADEC to regard the impact

on Teck Cominco in similar terms. The Ninth Circuit’s

rejoinder—“Cominco does not, in fact, buy power from an

electric utility,” Pet. App. 14a—highlights Congress’s good

sense in leaving such assessments to be made at the state

rather than federal level.

If there were something wrong about the manner in which

ADEC considered economic costs or any of the other factors

it is directed to weigh in determining BACT, any such

alleged errors could have been raised in the review process

provided in the Alaska SIP. The EPA itself insists that SIPs

include such review provisions. But any such alleged

shortcomings do not mean that the state-issued PSD permit

somehow does not contain a limitation based on BACT,

determined by the State after considering the statutory

factors. That is the only “BACT requirement” in the CAA,

and Teck Cominco’s permit plainly complied with that

requirement. The EPA’s authority to enforce any “require-

ment” in the Act, therefore, does not authorize it to second-

guess the State’s BACT determination.

10

CONCLUSION

For the foregoing reasons, and those in the State of

Alaska’s brief, the Ninth Circuit’s judgment should be

reversed.

Respectfully submitted,

ROBERT T. CONNERY LAWRENCE L. HARTIG

MARrRcy G. GLENN ROBERT J. MAHONEY*

HOLLAND & HART LLP HARTIG RHODES HOGE

555 17th Street & LEKISCH

Suite 3200 717 K Street

Denver, Colorado 80202 Anchorage, Alaska 99501

(907) 276-1592

* Counsel of Record Counsel for Teck Cominco

Alaska Incorporated