# Record and brief — Envtl. Prot. Agency v. Eme Homer City Generation, L.P. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0889%3A0 ## Record - **Collection:** Supreme Court brief - **Document type:** Record and brief - **Published:** January 1, 2013 - **Citation:** 571 U.S. 809 ## Text ey SUPREME COURT ‘eee OF THE UNITED STATES No. 12-1182 Vide 12-1183 Title: Environmental Protection Agency, et al., Petitioners v EME Homer City Generation, L.P., et al Docketed: March 29, 2013 Lower Ct United States Court of Appeals for the District of Columbia Circuit Case Nos.: (11-1302, et al.) Decision Date: August 21, 2012 Rehearing Denied: January 24, 2013 Questions Presented ~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~ - mee Mar 29 2013 Petition for a writ of certioran filed. (Response due April 29, 2013) Mar 29 2013 Appendix of Environmental Protection Agency, et al. filed (Volumes 2 - 4) Apr 10 2013 Order extending time to file response to petition to and including May 29, 2013, for all respondents. Apr 18 2013 Brief of Respondent States and Cities in support filed. VIDED. Apr 18 2013 Brief of respondents Calpine Corporation, and Exelon Corporation in support filed. VIDED May 29 2013 Brief of respondents Luminant Generation Company LLC, et al. in opposition filed. VIDED. May 29 2013 Brief of State and Local respondents in opposition filed. VIDED Jun 32013 Reply of petitioners Environmental Protection Agency, et al. filed. (Distributed) Jun 42013 DISTRIBUTED for Conference of June 20, 2013. Jun 24 2013 Petition GRANTED The petition for a writ of certiorari in No. 12-1183 is granted limited to the questions presented by the petition in No. 12-1182. The cases are consolidated and a total of one hour is allotted for oral argument. Jul 16 2013 Order extending time to file the joint appendix and petitioner's brief on the merits to and including September 4, 2013. Jul 16 2013 Order extending time to file respondent's brief on the merits to and including October 31, 2013. Aug 21 2013 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for petitioners American Lung Association, et al. VIDED. Aug 30 2013 Consent to the filing of amicus curiae bnefs, in support of either party or of neither party, received from counsel for the Industry and Labor Respondents. VIDED Aug 30 2013 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the State and Local Respondents (Texas, et al.) VIDED Aug 30 2013 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the respondents Calpine Corporation and Exelon Corporation. VIDED Sep 4 2013 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the Federal Petitioners. VIDED Sep 4 2013 Joint appendix filed. (Statement of costs filed.) VIDED. Sep 42013 Brief of petitioners Environmental Protection Agency, et al. filed. VIDED Sep 4 2013 Motion of the federal parties to deem the Court of Appeals Joint Appendix to be Volumes 2 thru 8 of the Supreme Court Joint Appendix filed by petitioner Environmental Protection Agency, et al. VIDED. Sep 42013 Brief of Respondent States and Cities in support of petitioners filed. VIDED. Sep 42013 Brief of respondents Calpine Corporation and Exelon Corporation in support of petitioners filed. VIDED. Sep 10 2013 Consent to the filing of amicus curiae briefs, in support of either party or of neither party, received from counsel for the State and City respondents (New York, et al.) VIDED Sep 10 2013 Bnef amici curiae of Law Professors on |ssue Exhaustion filed. VIDED (Distributed) Sep 10 2013 Brief amicus curiae of American Thoracic Society filed. VIDED. Sep 11 2013 Brief amici curiae of Atmospheric Scientists and Air Quality Modeling Experts filed. VIDED. Sep 11 2013 Brief amicus curiae of APA Watch in support of neither party filed. VIDED Sep 11 2013 Brief amicus curiae of Institute for Policy Integnty at New York University School of '.aw filed. VIDED. Sep 11 2013 Brief amicus curiae of Constitutional Accountability Center filed. VIDED Sep 11 2013 Brief amici curiae of Benjamin F. Hobbs, et al. filed. VIDED. Sep 17 2013 SET FOR ARGUMENT ON Tuesday December 10, 2013. Sep 17 2013 CIRCULATED Sep 30 2013 Records received from USCA for the DC Circuit electronically filed. Oct 7 2013 Motion to deem the Court of Appeals Joint Appendix to be Volumes 2 thru 8 of the Supreme Court Joint Appendix GRANTED. Justice Alito took no part in the consideration or decision of this motion. Oct 31 2013 Brief of respondents Utility Air Regulatory Group, et al. filed. VIDED. (Distributed) Oct 31 2013 Brief of respondents State and Local respondents filed. VIDED. (Distributed) Oct 31 2013 Brief of respondents Luminant Generation Company LLC, et al. filed. VIDED (Distributed) Nov 4 2013 Motion for divided argument filed by respondents. VIDED Nov 72013 Brief amicus curiae of Chamber of Commerce of the United States of America filed. VIDED. (Distributed) Nov 7 2013 Brief amici curiae of West Virginia and 8 Other States filed. VIDED. (Distnbuted) Nov 26 2013 Motion for divided argument filed by respondents GRANTED. Justice Alito took no part in the consideration or decision of this motion. Dec 22013 Reply of petitioners Environmental Protection Agency, et al. filed. VIDED. (Distnbuted) Dec 32013 Reply of respondents Calpine Corporation and Exelon Corporation in support of petitioners filed. VIDED. (Distributed) Dec 32013 Reply of Respondent States and Cities in support of petitioners filed. VIDED (Distributed) PETITION FOR WRIT OF CERTIORARI 7 $3 = 7 © ¢ 4 é — ‘ ‘ 4 if ond me nga = © . \- ad = ¢ No. In the Supreme Court of the Anited States UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ET AL., PETITIONERS 1 EME HomMe™ERr CITY GENERATION, L.P., ET AL. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT PETITION FOR A WRIT OF CERTIORARI DONALD B. VERRILLI, JR. Solicitor General Connusel of Record IGNACIAS. MORENO Assistant Attorney General MALCOLM L. STEWART Deputy Solicitor General JOSEPH R. PALMORE Assistant tothe Solicitor General BRENDA MALLORY JON M. LIPSHULTZ Acting General Connusel NORMAN L. RAVE, JR. SONJA RODMAN Altorneys Attorney Departinent of Justice Kuvironmental Protection Washington, D.C. 20520-0001 Aqeney SupremeCt Briefs usdojy.qor Washington, D.C. 20460 (22) 514-2217 QUESTIONS PRESENTED The Clean Air Act, 42 U.S.C. 7401 et seg. (Act or CAA), requires the Environmental Protection Agency (EPA) to establish Nationa! Ambient Air Quality Stand- ards (NAAQS) for particular pollutants at levels that will protect the public health and welfare. 42 U.S.C. 7408, 7409. “[W]Jithin 3 years” of “promulgation of a [NAAQS],” each State must adopt a state implementa- tion plan (SIP) with “adequate provisions” that will, inter alia, “prohibit|]” pollution that will “contribute significantly” to other States’ inability to meet, or main- tain compliance with, the NAAQS. 42 U.S.C. 7410(a)(1), (2)(D)(i)(1). If a State fails to submit a SIP or submits an inadequate one, the EPA must enter an order so finding. 42 U.S.C 7410(k). After the EPA does so, it “shall promulgate a [f]ederal implementation plan” for that State within two years. 42 U.S.C. 7410(c¢)(1). The questions presented are as follows: 1. Whether the court of appeals lacked jurisdiction to consider the challenges on which it granted relief. 2. Whether States are excused from adopting SIPs prohibiting emissions that “contribute significantly” to air pollution problems in other States until after the EPA has adopted a rule quantifying each State’s inter- state pollution obligations. 3. Whether the EPA permissibly interpreted the statutory term “contribute significantly” so as to define each upwind State's “significant” interstate air pollution contributions in light of the cost-effective emission re- ductions it can make to improve air quality in polluted downwind areas, or whether the Act instead unambigu- ously requires the EPA to consider only each upwind State’s physically proportionate responsibility for each downwind air quality problem. (I) PARTIES TO THE PROCEEDINGS Petitioners are the United States Environmental Protection Agency and Acting EPA Administrator Rob- ert Perciasepe. Respondents who were petitioners in the court of ap- peals are: City of Ames, Iowa; City of Springfield, I1li- nois, Office of Public Utilities, doing business as City Water, Light & Power; Louisiana Department of Envi- ronmental Quality; Louisiana Public Service Commis- sion; Mississippi Public Service Commission; Public Utility Commission of Texas; Railroad Commission of Texas; State of Alabama; State of Florida; State of Georgia; State of Indiana; State of Kansas; State of Louisiana; State of Michigan; State of Nebraska; State of Ohio; State of Oklahoma; State of South Carolina; State of Texas; State of Virginia; State of Wisconsin; Texas Commission on Environmental Quality; Texas General Land Office; AEP Texas North Co; Alabama Power Co.; American Coal Co.; American Energy Corp.; Appalachian Power Co.; ARIPPA; Big Brown Lignite Company LLC; Big Brown Power Company LLC; Co- lumbus Southern Power Co.; Consolidated Edison Com- pany of New York, Inc.; CPI USA North Carolina LLC; Dairyland Power Cooperative; DTE Stoneman, LLC; East Kentucky Power Cooperative, Inc.; EME Homer City Generation, LP.; Entergy Corp.; Environmental Committee of the Florida Electric Power Coordinating Group, Inc.; Environmental Energy Alliance of New York, LLC; GenOn Energy, Inc.; Georgia Power Co.; Gulf Power Co.; Indiana Michigan Power Co.; Interna- tional Brotherhood of Electrical Workers, AFL-CIO; Kansas City Board of Public Utilities, Unified Govern- ment of Wyandotte County, Kansas City, Kansas; Kan- sas Gas and Electric Co.; Kenamerican Resources, Inc.; Kentucky Power Co.; Lafayette Utilities System; Loui- (11) Ill siana Chemical Association; Luminant Big Brown Min- ing Company LLC; Luminant Energy Company LLC; Luminant Generation Company LLC; Luminant Hold- ing Company LLC; Luminant Mining Company LLC; Midwest Food Processors Association; Midwest Ozone Group; Mississippi Power Co.; Municipal Electric Au- thority of Georgia; Murray Energy Corp.; National Mining Association; National Rural Electric Cooperative Association; Northern States Power Co. (a Minnesota corporation); Oak Grove Management Company LLC; Ohio Power Co.; Ohio Valley Coal Co.; Ohio American Energy, Inc.; Peabody Energy Corp.; Public Service Company of Oklahoma; Sandow Power Company LLC; South Mississippi Electric Power Ass’n; Southern Com- pany Services, Inc.; Southern Power Co.; Southwestern Electric Power Co.; Southwestern Public Service Co.; Sunbury Generation LP; Sunflower Electric Power Corp.; Utility Air Regulatory Group; United Mine Workers of America; Utah American Energy, Inc.; Westar Energy, Inc.; Western Farmers Electric Coop- erative; Wisconsin Cast Metals Association; Wisconsin Electric Power Co.; Wisconsin Paper Council, Inc.; Wis- consin Manufacturers and Commerce; Wisconsin Public Service Corp. Respondents who were intervenors in support of the court of appeals petitioners are: San Miguel Electric Cooperative; City of New York (Nos. 11-1388 and 11- 1395 only); State of New York (Nos. 11-1388 and 11-1395 only). Respondents who were intervenors in support of the court of appeals respondents are: American Lung Asso- ciation; Calpine Corporation; Clean Air Council; Envi- ronmental Defense Fund; Exelon Corporation; Natural Resources Defense Council; Public Service Enterprise Group, Inc.; Sierra Club; City of Bridgeport, Connecti- IV cut; City of Chicago; City of New York (all but Nos. 11- 1388 and 11-1395); City of Philadelphia; Mayor and City Council of Baltimore; State of Connecticut; State of Delaware; District of Columbia; State of Illinois; State of Maryland; Commonwealth of Massachusetts; State of New York (all but Nos. 11-1388 and 11-1395); State of North Carolina; State of Rhode Island; State of Ver- mont. TABLE OF CONTENTS Page diligence 1 TTT chiuiiscanitni bina hleenhiaaaibeaningsnpeimiinaieuisieiaiandeatieia l Statutory provisions involved ..............:.s.sccsscssessssesssseesssesecenssess 2 iii ect ba tla eiancialdaidaatiianinaennetiah 2 Reasons for granting the petition. .................cccccceeeseeeceeeeeeeeeeee 11 A. The court of appeals both exceeded its jurisdiction and erred on the merits by effectively invalidating prior SIP orders......................... 12 B. The court of appeals erred in adjudicating unpreserved challenges to the EPA’s “significant contribution” analysis, and in failing to defer to the agency’s reasonable interpretation of ambiguous statutory terms ....................cscccsescsssessecseneeeees 18 C. The court of appeals’ decision will seriously disrupt the EPA’s implementation of the CAA, and it threatens serious harm to the public health ........ 28 TARE IN DRT ET ROTTEN OTE OOT DET OPO 32 TABLE OF AUTHORITIES Cases: Barnhart v. Sigmon Coal Co., 534 U.S. 438 (2002)............. 16 Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 alata cll 21, 24 DOT v. Public Citizen, 541 U.S. 752 (2004) ....00 ee 19 Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 ESSENSE everers eneeevenee ee oy ree NOT CN EOE aE EOI 25 McCarthy v. Madigan, 503 U.S. 140 (1992)... eee 19 Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), cert. denied, 532 U.S. 903, and 532 U.S. 904 li cceistcehiithitiilasanieainsiinsiblineaadgainnibinnpeainasiceiininameend 4, 9,21, 24 National Cable & Telecomms. Ass’n v. Gulf Power eh, LI UT URI iicsessicireniinianiteneniipaanananniniadiniaieteié: 24 Vi Cases—Continued: Page North Carolina v. EPA (D.C. Cir.): I I lcci 5, 10, 21 I aie iia lilaamanlicia bial 5 Vermont Yankee Nuclear Power Corp. v. NRDC, Sc I iat tiateiiait datas 19 Whitman v. American Trucking Ass’ns, 531 U.S. 457 STITUTE eivinduiniehimpniesinbiaitithaaatiaasieapinsiimtaipaneaiansineindiigsiasiabnedieimmnbiddtditeisin: 25 Statutes: Clean Air Act, 42 U.S.C. 7401 et seq. .......:ccccceceeeeeeesees passim | RE a nN eT OREN 2 NN initiated ale tciaaeee taitalcadi iain 2 ete MT sisiccsncoiiiteieniciaineniciheininaeisiniesiihiitiatiagiibaiaias 31 I al 15, 16 I iii aia 15, 16 Rs 4 42 U.S.C. T410(a2)(D) GD) «0. ccccecceeesesseeeeeenees passim 42 U.S.C. 7410(a)(2)(E) (Supp. IT 1977) ........ ee eceesceseeeeee 3 Ss I oiccietscensiennnceinesensninciiieiidililias 18 I lial tial adel 15 meme 2,6 ae iacciina incinerate 15 Oe ee ene REN 27 i I canines identi 27 SCT TTT 17 KEN Onn ae 14 4B U B.C. TRIE TB) aceccccvccosesescccsesecccsccssccsscesess 18, 19, 20 Rs el 27 42 U.S.C. 18B7e-Bla MBE) (1G7D) .......ccccccccccccecececsccccccecccosscoes 2 Vil Miscellaneous: 136 Cong. Rec. 6420 (1990), reprinted in 1S. Comm. on Environment & Public Works, A Legislative History of the Clean Air Act Amend- I icininniiccsnianiieqieiicniutiicinnetbiniaiiieaibiaindniin EPA: Air Quality Modeling Final Rule Technical Support Document, Appendices D, E, and F (2011), http://www.epa.gov/airtransport/pdfs/ ED ecestssinsennininninnisinienniunscniemaninimeniecns Clean Air Markets (2010), http:/Awww.epa.gov/ airmarkets/progsregs/index.html ..................ce000+« 63 Fed. Reg. 57,356 (Oct. 27, 1998) 69 Fed. Reg. (Jan. 30, 2004): 70 Fed. Reg. 25,162 (May 12, 2005).......ccc:.-csssssssssssesseeneee 76 Fed. Reg. (July 20, 2011): 78 Fed. Reg. 3086 (Jan. 15, 2013) ......ccssscscssssssssessssececessees H.R. Rep. No. 294, 95th Cong., Ist Sess. (1977), re- printed in 4S. Comm. on Environment & Public Works, A gislative History of the Clean Air Amend ments Of 1977 (1978) .......sccesecersseresesssessccssscesseeees S. Rep. No. 127, 95th Cong., Ist Sess. (1977), reprint- ed in 3S. Comm. on Environment & Public Works, A Legislative History of the Clean Air Amend- I re ee ieieeciciccninntnicnnitainadianiciivisinananinatiinininnnineeis vial Vill Miscellaneous—Continued: Page S. Rep. No. 228, 101st Cong., lst Sess. (1989), reprinted in 5S. Comm. on Environment & Public Works, A Legislative History of the Clean Air Act Amendments of 1990 (1998) .........:c.000cee00- 3 In the Supreme Court of the Gnited States No. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, ET AL., PETITIONERS v. EME HOMER CITY GENERATION, L.P., ET AL. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT PETITION FOR A WRIT OF CERTIORARI The Solicitor General, on behalf of the United States Environmental Protection Agency (EPA) and the Acting Administrator of the EPA, respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit in this case. OPINIONS BELOW The opinion of the court of appeals (App., infra, la- 116a) is reported at 696 F.3d 7. The final rule of the EPA (App. 117a-1458a) is reported at 76 Fed. Reg. 48,208. JURISDICTION The judgment of the court of appeals was entered on August 21, 2012. Petitions for rehearing were denied on January 24, 2013 (App. 1459a-1462a). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). (1) 2 STATUTORY PROVISIONS INVOLVED Pertinent statutory provisions are set forth in the appendix to this petition. App. 1463a-1498a. STATEMENT 1. a. The Clean Air Act (CAA, or the Act), 42 U.S.C. 7401 et seq., creates a federal-state partnership to control air pollution in the United States. The Act re- quires the EPA to establish National Ambient Air Quality Standards (NAAQS) for particular pollutants at levels that will protect the public health and welfare. 42 U.S.C. 7408, 7409. The Act then obligates States to adopt state implementation plans (SIPs) that, inter alia, assure both that States will meet the NAAQS within their own borders and that they will not emit pollutants in amounts that “contribute significantly” to other States’ NAAQS nonattainment or inability to maintain compliance with NAAQS. 42 U.S.C. 7410(a)(2)(D)(i)(1). If the EPA finds that a State has failed to adopt a SIP meeting these or other CAA requirements, the EPA “shall” issue a federal implementation plan (FIP) for that State within two years of that finding. 42 U.S.C. 7410(0)(1). This case involves the interstate component of these SIP requirements, commonly referred to as the “good neighbor” provision. 42 U.S.C. 7410(a)(2)(D)(D(1). The original version of that provision required only that SIPs include provisions for “intergovernmenta! coopera- tion” to assure that emissions would not interfere with attainment or maintenance of the NAAQS in other States. 42 U.S.C. 1857¢-5(a)(2)(E) (1970). Because this “cooperation” approach proved ineffectual, Congress amended the CAA in 1977 to require, more directly, that all SIPs contain provisions prohibiting emissions from particular stationary sources that “will * * * prevent” 3 attainment or maintenance of the NAAQS in downwind States. 42 U.S.C. 7410(a)(2)(E) (Supp. II 1977). In adding these (and related) new provisions in 1977, Con- gress recognized that upwind States had little incentive to control pollution whose effects would be felt principal- ly in other States, and Congress made clear its intent that the burdens of air pollution control be shared more equitably among upwind and downwind States.’ In 1990, Congress decided that even the strength- ened interstate-pollution provision in the CAA had been inadequate.” In particular, the EPA had found in sever- ' For example, a House report concluded that existing law was “an inadequate answer to the problem of interstate air pollution.” H.R. Rep. No, 294, 95th Cong., Ist Sess. 330 (1977), reprinted in 4 A Legislative History of the Clean Atr Amendments of 1977 (1YT7 Legis. Hist.), at 2797 (1978). The report stressed that one of the problems under the existing law was that its effectiveness depended largely on “prevention or abatement” by upwind States that in reality had little “incentive and need to act.” /bid. Similarly, a Senate report criticized the lack of effective “interstate abatement proce- dures” and “interstate enforcement actions” under existing law, which it viewed as “resulting in serious inequities among several States, where one State may have more stringent implementation plan requirements than another State.” S. Rep. No. 127, 95th Cong.., Ist Sess. 41-42 (1977), reprinted ix 3 1977 Legis. Hist., at 1415. Accordingly, the new provisions were “intended to equalize the positions of the States with respect to interstate pollution by making a source at least as responsible for polluting another State as it would be for polluting its own State.” /d. at 1416. * See S. Rep. No. 228, 101st Cong., Ist Sess. 48 (1989), reprinted in 5 A Legislative History of the Clean Air Act Amendments of 1990 (1990 Legis. Hist.), at 8388 (1998); see also 136 Cong. Rec. 6420 (1990), reprinted in | 1990 Legis. Hist., at 1106 (statement of Sen. Lautenberg) (“In New Jersey, the Department of Environmental Protection says that on some days even if we shut down the entire State, we would be in violation of some health standards because of pollution coming over from other States.”); S. Rep. No. 228, 101st 4 al decisions that pollution contributions by particular upwind sources could not be shown to have “pre- venti[ed]” NAAQS attainment downwind. See Michigan v. EPA, 213 F.3d 6638, 674 (D.C. Cir. 2000) (per curiam) (discussing this history), cert. denied, 582 U.S. 908, 904 (2001). for these reasons, Congress in 1990 revised a num- ber of provisions relating to interstate pollution transport, including (as relevant here) 42 U.S.C. 7410(a)(2)(D). That amendment made the good neighbor provision stronger and more flexible by extending its reach beyond a single stationary source to cover multi ple sources, and by requiring States to prohibit emis- sions that “contribute significantly” to downwind nonat- tainment or maintenance problems, whether or not those emissions could be shown, on their own, to “pre- vent” attainment. See App., infra, 25a n.14; 42 U.S.C. 7410(a)(2)(D)()C1). The good neighbor provision now requires SIPs to contain measures “(i) prohibiting * * * any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will—(1) contribute significantly to non- attainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary | NAAQS]}.” 42 U.S.C. 7410(a)(2)(D)(i)(1); see App., infra, 8a (“To put it colloquially, the good neigh- bor provision requires upwind States to bear responsi- bility for their fair share of the mess in downwind States.”). b. Following enactment of the 1990 amendments, the EPA began a series of rulemakings to address the re- vised interstate pollution transport requirements. The Cong., Ist Sess. 49 (1989), reprinted in 5 1990 Legis. Hist., at 8389 (similar statement regarding New York City). 5 first was the “NO, SIP Call,” which in 1998 established a cap-and-trade program* for nitrogen oxide (NO,) emis- sions to address ozone nonattainment. 63 Fed. Reg. 57,356 (Oct. 27, 1998). The NO, SIP Call was upheld by the D.C. Circuit in most significant respects in Michi- gan. In 2005, the EPA issued the Clean Air Interstate Rule (CAIR), which extended the basic approach of the NO, SIP Call to “reduce or eliminate the impact of up- wind sources on out-of-state downwind nonattainment of NAAQS for fine particulate matter (‘PM, ,’)” and ozone. North Carolina v. EPA, 531 F.3d 896, 9038 (D.C. Cir. 2008) (North Carolina) (per curiam); see 70 Fed. Reg. 25,162 (May 12, 2005). CAIR was initially vacated by the D.C. Circuit in North Carolina. In a later decision on rehearing, however, the court modified the remedy to remand without vacatur, thus allowing the EPA to con- tinue to administer CAIR pending further rulemaking. North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) (per curiam). c. The EPA rule at issue in this case is the Cross- State Air Pollution Rule, commonly referred to as the Transport Rule. App. 117a-1458a. The Transport Rule * In simple terms, a cap-and-trade program establishes an aggre gate emission “cap” for each set of covered sources and provides regulated entities significant flexibility to determine how the cap is met. Sources comply by holding allowances equal to their emissions, and they can purchase allowances from other sources that are able to reduce their emissions less expensively. Allowances are traded much like other commodities. This gives sources the flexibility to secure required emission reductions in the most feasible and least expensive manner, while still assuring that the overall pollution-control targets are met. General information about the EPA’s clean air markets programs can be found at EPA, Clean Air Markets (2010), http:// www.epa.gov/airmarkets/progsregs/index.html. 6 responded to the remand in North Carolina and ad- dressed the emission of pollutants in 28 upwind States that significantly contribute to downwind States’ prob- lems attaining or maintaining the NAAQS for ozone and fine particulate matter (PM.,).' For each State subject to the Transport Rule, the EPA had previously made a finding (in separate administrative proceedings) that the State either had failed to submit a SIP addressing the good neighbor requirement, or had submitted an inade- quate one, thus triggering the statutory requirement for the EPA to promulgate a FIP within two years. 42 U.S.C. 7410(¢)(1); see App. 17la-172a. In the Transport Rule, the FPA therefore promulgated F IPs for those States. d. While the NO. SIP Call, CAIR, and the Transport Rule varied somewhat in their details, all three rules were premised on the same basic framework, using a two-part analysis that considered both air quality and cost factors. The first step was the Screening Analysis, in which the EPA identified those States potentially subject to the rule (pending further analysis). The Screening Analysis used air quality modeling to deter- mine whether each State’s emissions increased ambient ew ' The Transport Rule actually addressed three distinct NAAQS: (1) the 1997 PM, annual NAAQS, (2) the 2006 PM, daily NAAQS; and (3) the 1997 hour ozone NAAQS, App. 168a. Because the differences in the EPA’s analysis for the two PM,.,, NAAQS are largely irrelevant lo the issues addressed in this petition, the petition refers simply to the PM,,, NAAQS except as specifically noted. In 2008, the &-hour ozone NAAQS was revised to be somewhat more stringent, a. at 1694, and in January 2013, the FPA revised its suite of PM NAAQS, making the annual PM, , more stringent but retain- ing the same standard for daily PM... 78 Fed. Reg. 3086 (Jan. 15, 2013). The Transport Rule does not address either of these recently revised NAAQS. 7 concentrations of pollutants by greater than a defined threshold level in at least one downwind area with a NAAQS nonattainment or maintenance problem. App. 255a. In the second part of the analysis (the Control Analy- sis), the EPA established the emission-control obliga- tions for each upwind State that had been made subject to the rule by the Screening Analysis. The obligations of each such State were defined by reference to the amount of emission reductions that can be achieved in that State at a specific cost threshold. The cost thresholds were selected by evaluating how much emission control is necessary to address the upwind component of down- wind nonattainment and maintenance problems. In this way, the agency considered both the air quality impacts and the cost to the regulated community of increasingly stringent levels of emission control. App. 316a-323a. EPA's rationale for using this two-part approach is largely based on the nature and technical complexity of the interstate pollution problem. For decades, air quali- ty modeling has shown that ozone and PM, , nonattain- ment and maintenance problems are caused by the col- lective contribution of NO, and sulfur dioxide (SO,) from numerous upwind States to particular downwind areas, combined with local emissions from the affected down- wind areas themselves.” Further complicating matters —— ws ——_—— | * The underlying chemical mechanisms are complex but can be summarized in general terms as follows. In the case of ozone pollu- tion, emissions of NO, and volatile organic compounds (VOCs) mix in the atmosphere in the presence of sunlight to form ozone. According- ly, ozone nonatlainment is primarily a seasonal, warm-weather prob- lem. Because VOC emissions generally are local in nature, the inter- state component of ozone pollution is due primarily to NO, emissions that can be transported in the atmosphere over very long distances (hundreds of miles or more). App. 185a-187a. Fine particulate mat- 8 is the fact that many States that are upwind contribu- tors to pollution problems in other States also have NAAQS nonattainment and maintenance problems of their own (7.e., they are both “upwind” and “downwind”), and most upwind States contribute, in varying degrees, to nonattainment and maintenance problems in many downwind areas. In short, at least in the eastern half of the United States (which for demographic and meteoro- logical reasons is the portion of the country most affect- ed), the interstate pollution problem is best understood as a dense, spaghetti-like matrix of overlapping up- wind/downwind “linkages” among many States, rather than a neater and more limited set of linkages among just a few. To illustrate these points more concretely, the EPA’s air quality modeling for the Transport Rule evaluated 2479 potential contribution linkages among 37 upwind States and 67 ozone and PM, .. downwind nonattainment and maintenance areas. Of these linkages, 565 were above the one-percent threshold for the rule’s Screening Analysis (88 for ozone and 477 for PM,.). For each downwind nonattainment and maintenance area, be- tween 25 and 32 upwind States contribute some amount of pollution, with between five and 12 (and a mean of eight) being substantial enough to exceed the screening threshold. For ozone, four out of 25 contributing States are both upwind contributors and downwind receptors, ter (1.e., PM...) can be emitted directly or formed secondarily in the atmosphere. The interstate air pollution component of PM. pollu- tion is primarily attributable to the formation of sulfates from SO, emissions from power plants and industrial facilities and nitrates from NO, emissions from power plants, automobiles, and other com- bustion sources. These precursors, as well as the fine particles themselves, also can be transported long distances in the atmosphere. 69 Fed. Reg. 4566, 4575 (Jan. 30, 2004). 9 while for PM, ., this figure is nine out of 23. Many up- wind States, especially those located in the industrial Midwest, make downwind contributions exceeding the screening threshold to a large number of downwind areas. For example, Kentucky contributes above the threshold to 40 out of 41 downwind receptor areas for the daily PM,, NAAQS, and to all 16 downwind recep- tors for the annual PM,, NAAQS.° 2. a. In Michigan, the D.C. Circuit reviewed the NO, SIP Call and upheld the EPA’s two-step analytical approach. 213 F.3d at 677-680. The court held that the term “significant” (as used in the good neighbor provi- sion) is ambiguous, and that the EPA can permissibly determine the amount of a State’s “significant” contribu- tion by reference to the amount of emissions reductions achievable through application of “highly cost-effective” controls. Jd. at 677-679. The court observed that “{t|he term ‘significant’ does not in itself convey a thought that significance should be measured in only one dimension— here, in the petitioners’ view, health alone.” /d. at 677. The EPA used the same basic analytical approach for CAIR, which was the subject of the D.C. Circuit’s deci- sion in North Carolina. Although the court of appeals ultimately remanded CAIR on other grounds, the court reaffirmed Michigan’s general acceptance of a cost- effectiveness analysis to help determine the amount of each State’s “significant” contribution, and it expressly " The figures discussed in this paragraph are derived from data in the EPA’s air quality modeling technical support document (Air Quality TSD) for the Transport Rule, which was part of the adminis- trative record for the Rule. See EPA, Air Quality Modeling Final Rule Technical Support Document, Appendices D, E, and F (2011), http://www.epa.gov/airtransport/pdfs/ AQ Modeling. pdf. 10 declined to disturb the agency’s basic two-step analyti- cal approach. North Carolina, 531 F.3d at 916-917. b. Inthe order at issue here, the EPA again used the same basic analytical approach, but a divided pane] of the court of appeals rejected it. App., infra, 1a-116a.' The court of appeals concluded for three reasons that the Transport Rule was unambiguously foreclosed by the good neighbor provision. First, the court found that the rule could theoretically result in a State being com- pelled to reduce emissions below the threshold level for determining whether that State was subject to the Transport Rule. Second, the court believed that, where multiple upwind States contribute to a common down- wind nonattainment problem, the rule did not sufficient- ly assure that upwind States’ emission reduction obliga- tions were proportional to their share of modeled down- wind contribution. Third, the court concluded that the rule did not sufficiently assure that cumulative upwind- State obligations would be no more than the minimum amount necessary to enable affected downwind areas to meet the NAAQS. App., infra, 3la-4la. The court of appeals also held that the EPA lacked statutory authority to promulgate F1Ps under the cir- cumstances presented here. The EPA is required to " To the extent that the EPA's two-step regulatory approach for the Transport Rule differed in any significant way from that used in the NO, SIP Call and CAIR, it was to place greater emphasis on air quality factors. Most notable in this respect was the agency's deci- sion to create two different cost thresholds for SO, controls to apply to different groups of States depending on the severity of the associ- ated downwind PM,,, nonattainment problems. See App. 314a, 316a- 323a. Where the downwind problems were less severe, upwind States were required only to make reductions available at $500 per ton, a relatively low cost threshold compared to the $2000 per ton threshold used in the NO, SIP Call and CAIR. i] promulgate a FIP only when it has made a finding thata State has breached its obligation to submit an adequate SIP in a timely fashion. In the court’s view, no such state non-compliance had been demonstrated because no State was obligated to submit a SIP addressing inter- state transport until the EPA had defined that State’s significant contribution to nonattainment or interference with maintenance in other States. App., infra, 42a-61a. Judge Rogers dissented. She concluded that the court did not have jurisdiction to decide either the significant-contribution or FIP question. On the merits, she would have held that the Transport Rule was a per- missible exercise of the EPA’s authority under the CAA. App., infra, 65a-116a; see id. at 114a (“The court ignores Congress’s limitations on the court’s jurisdiction and decades of precedent strictly enforcing those limitations and proceeds to do violence to the plain text of the CAA and EPA’s permissible interpretations of the CAA.”). “The result,” Judge Rogers concluded, “is the endorse- ment of a ‘maximum delay’ strategy for regulated enti ties.” /bid. REASONS FOR GRANTING THE PETITION The court of appeals committed a series of fundamen- tal errors that, if left undisturbed, will gravely under- mine the EPA’s enforcement of the Clean Air Act. As Judge Rogers explained in dissent, the court should not even have decided either question presented. The court of appeals’ determination that the EPA could not pass judgment on SIPs until it had quantified States’ good neighbor obligations was, in substance, a collateral in- validation of separate orders not before the court. Those challenging the Transport Rule likewise had waived any statutory objection to the agency’s approach to “signifi- 12 cant contribution” by failing to raise it in the adminis- trative proceedings. The court of appeals’ merits holdings were likewise erroneous. The court disregarded mandatory statutory deadlines for States to adopt SIPs with good neighbor provisions and for the EPA to issue FIPs when it finds that a State has failed to do so (or has done so inade- quately). The court then read several statutory com- mands of its own invention into the ambiguous term “significant contribution” and faulted the EPA for not complying with those directives. If not corrected, the decision below will have serious adverse consequences. Its imposition of non-textual barriers to implementation of the good neighbor provi- sion could delay by years the ability of downwind States to comply with NAAQS, and could in some cases make it impossible for those States to meet statutory deadlines for doing so. Because the EPA had planned to use the Transport Rule as a mode! for enforcement of additional NAAQS, the court’s decision also creates serious uncer- tainty about implementation of other CAA require- ments. Most fundamentally, the court of appeals’ errors will seriously impede the EPA’s ability to deal with a grave public health problem. The petition for a writ of certiorari should be granted. A. The Court Of Appeals Both Exceeded Its Jurisdiction And Erred On The Merits By Effectively Invalidating Prior SIP Orders 1. In June 2010 and July 2011 (before the Transport Rule had calculated any State’s good neighbor obliga- tions), EPA issued final orders finding that 29 States and territories had failed to satisfy their statutory obli- gation to submit SIPs with good neighbor provisions for the 2006 24-hour PM,, NAAQS. App., infra, 7la-73a & 13 n.2 (Rogers, J., dissenting). No party sought judicial review of those orders. /d. at 73a (Rogers, J., dissent- ing). Also in July 2011, EPA issued separate final or- ders disapproving as inadequate the good neighbor provisions of SIPs submitted by ten other States. See id. at 73a & n.3 (Rogers, J., dissenting). Only three of those States sought judicial review (two in the D.C. Circuit and one in the Sixth Circuit), and those petitions were not consolidated with the case below. See id. at 73a-74a & n.3 (Rogers, J., dissenting). The court of appeals in this case held that “EPA’s many SIP disapprovals and findings of failure to submit share one problematic feature: EPA made all of those findings before it told the States what emissions reduc- tions their SIPs were supposed to achieve under the good neighbor provision.” App., infra, 49a. That state- ment starkly demonstrates that the Court’s invalidation of the Transport Rule rested on its conclusion that the EPA’s antecedent June 2010 and July 2011 final orders were premature and therefore erroneous. But the prop- er avenue for challenging the prior orders was via direct petitions for review of those orders, not through a later challenge to the Transport Rule. As Judge Rogers ex- plained, “[iJf a State wished to object that under section [7410(a)] it had no obligation to include ‘good neighbor’ provisions in its SIP until EPA quantified its ‘significant contribution’ in emission reduction budgets, then the CAA required it to do so at the time EPA found it had not met its SIP ‘good neighbor’ obligation.” Jd. at 75a." * Indeed, in the 2011 order disapproving the good neighbor provi- sion of Indiana’s SIP, EPA rejected the very argument on which the court below later relied in invalidating the Transport Rule, ve., that “EPA ‘should provide [the State] the opportunity to revise its [] SIP once the Transport Rule is completed.’” App., infra, 77a (Rogers, J., 14 To obtain judicial review of EPA action under the CAA, a challenger must file a petition for review within 60 days after that action is published in the Federal Register. 42 U.S.C. 7607(b). The court of appeals there- fore exceeded its jurisdiction by permitting those chal- lenging the Transport Rule to colla‘ ally attack sepa- rate final orders for which the time to seek review had passed. See App., infra, 65a-66a, 70a-82a (Rogers, J., dissenting). In determining the propriety of the Transport Rule, the court below therefore was required to accept as valid the antecedent SIP disapprovals and findings of failure to submit. 2. Even if the court of appeals had been authorized to review the June 2010 and July 2011 orders, the court’s determination that the orders were invalid con flicts with the text of the Act. See App., infra, 83a-95a (Rogers, J., dissenting). The CAA’s “plain text and structure establish a clear chronology of federal and State responsibilities” that do not include the extra steps mandated by the court of appeals. /d. at 86a (Rogers, J., dissenting). The CAA provides: Fach State shall, after reasonable notice and pub- lic hearings, adopt and submit to the Administrator, within 3 years (or such shorter period as the Admin- istrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof) under section 7409 of this title for any air pollutant, a plan which provides for im- plementation, maintenance, and enforcement of such dissenting) (quoting 76 Fed. Reg. 43,175, 43,177 (July 20, 2011)). Indiana did not file a petition for review to challenge that conclusion. id. at 78a (Rogers, J., dissenting). 15 primary standard in each air quality control region (or portion thereof) within such State. 42 U.S.C. 7410(a)(1) (emphases added). The Act further provides: Each such [state implementation] plan shall * * * (D) contain adequate provisions— (i) prohibiting, consistent with the provisions of this subchapter, any source or other type of emissions ac- tivity within the State from emitting any air pollutant in amounts which will— (I) contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard. 42 U.S.C 7410(a)(2). If a State fails to submit a SIP, or submits an inade- quate one, the EPA must make a finding of failure to submit or disapprove the submission. 42 U.S.C 7410(k). The EPA is then required to promulgate a FIP within two years of making such a finding or disapproval unless the State has addressed the problem and the EPA has approved the SIP. 42 U.S.C. 7410(c). As noted above, for every State for which the EPA promulgated a Transport Rule FIP, the agency either had found that the State’s submission was overdue or had disapproved a submitted SIP. Under the plain terms of the statute, the EPA therefore had a mandatory duty to promulgate F IPs for those States. /bid. Notwithstanding the clear statutory mandate, the court of appeals held that the EPA lacked authority to promulgate the FIPs because, in that court’s view, States have no obligation under the good neighbor pro- 16 vision to submit SIPs addressing interstate transport until after the EPA has defined their significant contri- bution. App., infra, 42a-61a. The court did not find that the language of Section 7410(a)(1)—.e., that States “shall” submit a SIP within three years after the EPA has promulgated a NAAQS—makes a State’s obligation to act contingent on its receipt of guidance from the EPA. Rather, the court thought that “contextual and structural factors” supported its approach. /d. at 54a. The court of appeals’ analysis violated the core prin- ciple of statutory interpretation that “courts must pre- sume that a legislature says in a statute what it means and means in a statute what it says there.” Barnhart v. Sigmon Coal Co., 534 U.S. 438, 461-462 (2002) (citation omitted). The statutory language here could not be clearer. Under the Act, each State “shall” submit a SIP to the EPA within three years after the promulgation of a new or revised NAAQS, and “[eJach such plan shall” contain adequate provisions to control emissions from the State that significantly contribute to nonattain- ment or interfere with maintenance in another State. 42 U.S.C. 7410(a)(2) (emphases added). Nothing in the CAA makes that obligation contingent on prior action by the EPA to define a particular State’s contribution to downwind nonattainment. “The Act does not require EPA to promulgate a rule or issue guidance regarding the specific requirements of section [7410(a)(2)(D)(i)(1)] in advance of the SIP submittal deadline, much less require EPA to promulgate such a rule a specific amount of time before the SIP submittal deadline.” App. 175a. The court of appeals’ interpretation is also incon- sistent with the statute’s emphasis on timely attainment of the NAAQS. The statute establishes specific dead- 17 lines by which the NAAQS must be achieved, which can be as short as three years after an area is designated as nonattainment. 42 U.S.C. 7511(a)(1). As Congress rec- ognized in enacting and then strengthening the inter- state transport provision of the Act, some States need emission reductions from upwind States (in conjunction with emission reductions within their own borders) in order to achieve attainment. Thus, the timely submis- sion of interstate transport SIPs and the consequent implementation of contro! measures are integral to the ability of all States to achieve the statutory deadlines for attainment. By effectively eliminating the statutory deadline for the submission of transport SIPs, the court of appeals’ decision disrupts this integrated statutory scheme for achieving attainment. By contrast, the EPA’s Transport Rule, which included statutorily- mandated FIPs but stressed that States were free to replace them by later submitting SIPs to the EPA for approval, see App. 669a-682a, was true to the statutory design. Finally, the court of appeals erred in asserting that States are incapable of submitting transport SIPs until the EPA has established their significant contribution. The court cited nothing to support this assumption ex- cept statements by the EPA to the effect that determin- ing interstate contribution is complex. App., infra, 5la- 52a. In implementing the CAA, however, States rou- tinely undertake technically complex air quality deter- minations. SIPs addressing in-state emissions are based on complex modeling to predict how emissions of nu- merous pollutants will interact with atmospheric con- ditions to create, often in areas far from the sources, concentrations of ozone and PM, ,. States are capable of producing the air quality modeling and inform- 18 ation needed to submit transport SIPs. See id. at 89a- 95a (Rogers, J. dissenting); see also 42 U.S.C. 7410(a)(2)(K)(i) (States must “perform|] * * * such air quality modeling as [EPA] may prescribe for the pur- pose of predicting the effect on ambient air quality of any emissions of any air pollutant for which [EPA] has established a |NAAQS].”). In addition, the necessary emissions information from all States is publicly availa- ble, see App., infra, 90a & n.12 (Rogers, J., dissenting), and States not covered by CAIR or the Transport Rule have complied with the requirement to submit transport SIPs. E.g., 77 Fed. Reg. 1027 (Jan. 9, 2012) (EPA ap- proval of Colorado’s interstate transport SIP). B. The Court Of Appeals Erred In Adjudicating Unpre- served Challenges To The EPA’s “Significant Contribu- tion” Analysis, And In Failing To Defer To The Agency’s Reasonable Interpretation Of Ambiguous Statutory Terms The court of appeals also erred in invalidating the Transport Rule based on its conclusion that the EPA’s “significant contribution” analysis was foreclosed by the CAA. No statutory objection to that effect was made in the administrative proceedings. In any event, the EPA’s analysis of that issue reflected a reasonable construction of the CAA’s broad and ambiguous terms. 1. The CAA specifies that “[o|]nly an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment * * * may be raised during judicial review.” 42 U.S.C. 7607(d)(7)(B). That statutory requirement codifies long- recognized exhaustion rules. Enforcement of such rules helps to ensure that an agency will have the opportunity to modify its proposed course of action if it concludes that particular objections have merit; enables the agen- 19 cy to explain why it views particular objections as un- meritorious if it reaches that conclusion; and promotes better-informed judicial review by allowing the court to focus on the agency’s actual responses to actual objec- tions. See, e.g., DOT v. Public Citizen, 541 U.S. 752, 764-765 (2004); Vermont Yankee Nuclear Power Corp. v. NRDC, Inc., 435 U.S. 519, 553-554 (1978). “Exhaustion concerns apply with particular force when,” as here, “the agency proceedings * * * allow the agency to apply its special expertise.” McCarthy v. Madigan, 503 U.S. 140, 145 (1992). The court below failed to honor Section 7607(d)(7)(B)’s requirement that objections to EPA action must be “raised with reasonable specificity” dur- ing the administrative proceedings in order to be pre- served for judicial review. See App., infra, 95a-110a (Rogers, J., dissenting); see also id. at 96a (noting that the waiver “question is not close”). In concluding that the EPA’s methodology was inconsistent with the CAA, the court of appeals expressed concern that the EPA’s Control] Analysis could theoretically require a State to reduce its emissions below the air quality threshold used for the Screening Analysis (7.e., one percent of the appli- cable NAAQS for at least one upwind-to-downwind link- age). Jd. at 3la-38a. Such a result, the court believed, would exceed the EPA’s statutory authority to regulate only “significant” contributions. See ibid. As Judge Rogers’s dissent thoroughly demonstrated, however, this statutory objection was not asserted in any rulemaking comments. App., infra, 98a-10la. Be- cause of that failure, there was no evidence before the court of appeals that the factual scenario the court hy- pothesized would ever actually occur. /d. at 95a & n.15 (Rogers, J., dissenting). Likewise, the court of appeals’ 20 conclusion that the CAA required a strictly proportional approach to upwind States’ emission-reduction obliga- tions was not even advanced in the court of appeals by those challenging the Transport Rule. /d. at 11la(Rog- ers, J., dissenting). The court nevertheless viewed those questions as properly before it because concerns of this sort had been raised in the years-old and separate CA/R rulemaking, and because EPA had discussed (but pro- posed not to pursue) alternative regulatory approaches in the Transport Rule proposal. /d. at 32a n.18. The court therefore believed that the agency was sufficiently “on notice that its disregard of the significance floor was a potential legal infirmity in its approach.” /bid. Under the plain language of the CAA’s judicial re- view provision, however, the relevant question is not whether the EPA was aware of a potential issue or ob- jection, but whether the objection asserted in court was “raised with reasonable specificity during the period for public comment” on the particular agency action that is the subject of the petitioner’s challenge. 42 U.S.C. 7607(d)(7)(B). The court of appeals’ casual approach to waiver and exhaustion issues would require agencies to intuit unstated objections to proposed rules based on any issue of which a court might later find the agency was “on notice.” In particular, the court’s approach would require agencies to guess whether objections raised in one agency proceeding, but never asserted as a ground for judicial review of the resulting agency action, must be addressed again in a subsequent rulemaking even though no commenter has pressed them. The court’s approach also permits courts to adjudicate very complex regulatory issues without the benefit of agency responses to focused rulemaking comments. Indeed, the manner in which the court of appeals proceeded to ana- 21 lyze the significant contribution claims in this case is a striking illustration of this problem. See pp. 21-28, infra. 2. Onthe merits, the court of appeals erred in invali- dating the EPA’s approach to the “significant contribu- tion” question. Agencies are entitled to deference in construing stat- utes they administer. Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 842-845 (1984). If Congress has “di- rectly spoken to the precise question at issue,” that intent must be given effect. /d. at 842-843. However, “if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” /d. at 843. “The court need not conclude that the agency construction was the only one it permis- sibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Id. at 843 n.11. In 2000, the D.C. Circuit held that the term “signifi- cant” is ambiguous as used in the statutory phrase “con- tribute significantly to nonattainment,” 42 U.S.C. 7410(a)(2)(D)(i)C1). Michigan v. EPA, 213 F.3d 663, 677- 680 (D.C. Cir. 2000), cert. denied, 582 U.S. 903, 904 (2001). The court further held that it was reasonable for the EPA to determine the “significan[ce]” of particular state contributions by reference to the amount of highly cost-effective pollution controls available in each upwind State, and without regard to the amount of each State’s downwind contribution. /bid.; see North Carolina v. EPA, 531 F.3d 896, 916-917 (D.C. Cir. 2008) (declining to disturb CAIR’s similar approach to significant contribu- tion). In this case, however, the court below changed 22 course and held that the EPA’s approach violated the CAA’s plain terms. a. In particular, the court of appeals perceived a strict statutory requirement that the emission-reduction obligations for each upwind State be “proportional” to its modeled amount of downwind air quality contribu- tions. App., infra, 3la-4la. The court did not make clear whether it found these to be unambiguous statuto- ry requirements (Chevron step one) or merely a neces- sary component of any “permissible” construction of the statute (Chevron step two). The court of appeals erred in either event because Congress did not address these specific issues, and the EPA’s approach is reasonable. The court of appeals’ proportionality requirement is an unrealistically simplistic response to a highly com- plex problem. To illustrate, first consider a downwind nonattainment area (Area A) that receives relatively egual amounts of pollution contributions from three upwind States, X, Y, and Z. A strict proportionality requirement would compel the EPA to identify the por- tion of the problem attributable to each upwind State and then divide the upwind share among States X, Y, and Z “in proportion to the size of their contributions to the downwind State’s nonattainment.” App., infra, 25a. In reality, however, interstate pollution transport problems are far more complex. In the scenario de- scribed above, for example, assume that States Y and Z also contribute relatively higher amounts to nonattain- ment in other areas (Areas B and C, respectively), while State X contributes a relatively small (but still “signifi- cant”) amount to nonattainment in a fourth area (Area D). These facts may require States Y and Z to make relatively larger emission reductions to address their contributions to Areas B and C. With respect to Area A, 23 however, where States Y and Z constitute two-thirds of the upwind contribution, the likely result of such larger reductions would be some degree of incidental “overcontrol,” as well as a lack of “proportionality” among States X, Y, and Z. Similarly, because State X is a relatively small contributor to nonattainment in Area D, the relatively larger reductions it would have to make to satisfy its share of the upwind contribution to Area A would likely cause some lack of proportionality and some over-control] with respect to Area D. As discussed above, further technical complications and cost implications arise out of other typical real- world circumstances, such as the fact that many down- wind nonattainment areas are also upwind contributors, and that there is often a wide disparity among the States with regard to the pollution-control investments they have already made (and the consequent disparities in expenditures needed to make additional emission reductions). Moreover, in a typical real-world case, a downwind area will have far more than the three upwind contributors used in the above examples; these upwind contributions will vary widely in degree; and each up- wind State will typically contribute in varying amounts to downwind nonattainment and maintenance problems in numerous areas, not just one or two. Especially when viewed against this background, Congress is unlikely to have intended—and it surely did not unambiguously determine—to impose the court of appeals’ simplistic and inflexible quantitative propor- tionality restrictions on the EPA (and the States) in addressing this sprawling and complex problem. Rather than prescribing a specific regulatory solution, Congress instead simply required each State’s SIP to prohibit emissions in amounts that “contribute significantly” to 24 downwind nonattainment or maintenance problems, 42 U.S.C. 7410(a)(2)(D)(i)(1), without specifying any technical or policy factors that the EPA should take into account in enforcing this requirement. This is a classic delegation of gap-filling authority warranting Chevron deference in a highly technical area that demands spe- cialized expertise. Chevron, 467 U.S. at 843; National Cable & Telecomms. Ass’n v. Gulf Power Co., 534 U.S. 327, 339 (2002). b. The EPA’s construction of the CAA to allow its mixed air-quality and cost-effectiveness approach to the “contribute significantly” criterion, unencumbered by the restrictions enunciated by the court of appeals, is a reasonable one. As the D.C. Circuit had previously recognized, see Michigan, 213 F.3d at 677, the term “significant,” in and of itself, does not dictate an exclu- sive or even primary focus on air quality impacts to the exclusion of costs. Nor is such a focus required by the CAA’s references to the “amounts” of emissions that “contribute significantly,” as the court below appeared to believe. See App., infra, 22a-23a; 42 U.S.C. 7410(a)(2)(D)G)(1). To be sure, the statutory reference to “amounts” can be read as an indication that Congress expected SIPs to address the interstate transport requirement through quantitative emission limits; but the Transport Rule did that. It is the term “contribute significantly” that guides the substance of those limits, however, and that key term was not defined by Congress. While the EPA’s approach may not be the only permissible way to define the “significant” amount of upwind emissions, it is (for all the reasons discussed above) one permissible ap- proach, as it achieves the air quality results desired by 20 Congress in a simpler, more feasible, and less costly manner than other alternatives. The EPA’s approach to significant contribution is al- so consistent with applicable guidance from this Court. The Court has recently stressed that, except where consideration of costs is expressly precluded by statute, the EPA and other agencies should be allowed to con- sider costs in construing broad qualitative standards similar to that at issue here, in order to allow the agency to identify the most efficient and least burdensome mechanisms to achieve a statutory goal. See Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218 (2009) (con- sidering a Clean Water Act “best technology available” standard and observing that, while the technology that achieves the maximum environmental benefit could be viewed as the “best,” the term also could be used to describe the technology that is “nvost efficient/{]” from a cost-benefit perspective). And, citing Michigan, this Court has specifically noted the D.C. Circuit’s conclu- sion that Section 7410(a)(2)(D)(iX(I), unlike the Act’s NAAQS provisions, does wot preclude the consideration of costs. Whitman v. American Trucking Ass’ns, 531 U.S. 457, 469 n.1 (2001). c. The court of appeals also erred in opining that its proportionality requirement was necessary to assure that upwind contributors were required to do no more than their “fair share” to address downwind nonattain- ment problems. App., infra, 25a. To begin with, the CAA itself does not specify any single most equitable and appropriate manner to divide emission-control re- sponsibility among multiple upwind and downwind con- tributors. In the absence of any such statutory specifi- cation, the responsibility of balancing the relevant equi- 26 ties is a quintessential policy judgment on which the EPA should be afforded deference. In the D.C. Circuit’s view, each upwind contributor’s “fair share” must be measured exclusively by its mod- eled air quality contribution to a single downwind nonat- tainment area, relative to other upwind contributors to the same area. App., infra, 25a. The court of appeals even specified a proportionality formula (illustrated with a hypothetical example involving three upwind contributors to a single downwind area) that it believed the statute required. /d. at 25a-26a & n.15. The hypo- thetical foundation of this formula bears so little resem- blance to reality that it would be difficult if not impossi- ble to apply even in the single-area context on which it is premised.” More importantly, however, most States subject to the rule are contributors to multiple down- wind nonattainment and maintenance problems, with their relative degree of air quality culpability for each ” For example, the court’s hypothetical was premised on an invent- ed and otherwise-unknown unit of measure—so-called NAAQS “units”—which the court used to describe both the quantity of upwind and downwind emissions and the air quality of the affected downwind area. The court depended on this unrealistic device to create an artificial world in which its mathematical construct could easily be applied. App., infra, 26a (assuming that the NAAQS is “100 units,” the downwind area has air quality of “150 units,” the downwind State contributes “90 units” and three upwind States contribute “20 units” each). In reality, of course, emissions are measured in actual quanti- ties (e.g., tons per year), and the effect of any given quantity of emis- sions on air quality and NAAQS attainment in downwind areas is highly variable and can be accurately estimated only through sophis- ticated computer modeling that takes into account geographic, mete- orological, and a host of other technical factors—not through simple addition and subtraction as the court of appeals suggests. See note 5, supra (discussing formation of ozone and PM, , from precursor NO, and SO, emissions). 27 upwind-to-downwind linkage varying considerably. The court of appeals therefore was hopelessly unrealistic in assuming that each State could be assigned a precise air quality-based “fair share” with respect to all of its “sig- nificant” linkages." d. The court of appeals’ fair-share policy rationale al- so does not take into account a separate but highly rele- vant consideration, namely that different States (both upwind and downwind) had made widely varying pollu- tion-control investments at the time the Transport Rule was promulgated. To illustrate, again consider the sim- ple hypothetical discussed above, where States X, Y, and Z contribute equal amounts to downwind nonattainment in Area A. Under the court of appeals’ proportional approach, each of the three States must be required to make one-third of the total needed “upwind” emission reductions with respect to Area A. However, if States X and Y already have made substantial pollution-control '° The decision below also creates a possible conflict with another CAA interstate transport provision, 42 U.S.C. 7426. Inter alia, that provision allows a downwind State to petition the EPA to make a finding that a specific source (or multiple sources) in upwind States violate the prohibition on significant contribution in Section 7410(aX(2)(D(i)(D) with respect to the downwind State. 42 U.S.C. 7426(b). The statute requires the EPA to respond to any such peti- tion within 60 days, while authorizing the EPA to extend that dead- line for up to six months. /bid.; 42 U.S.C. 7607(d)(10). Under the court of appeals’ view of Section 7410(a)(2)(D)(iX1), however, the EPA would typically be unable to quantify the emissions of upwind sources that contribute significantly to NAAQS nonattainment or maintenance problems unless it first undertook a full-blown, multi- state air quality modeling analysis that addressed the court’s propor- tionality requirements with respect to all other potential contribu- tors. Such an onerous requirement is incompatible with Congress’s express expectation that the EPA could act, and acti relatively quick- ly, on Section 7426 petitions. 28 investments, but State Z’s investments have to date been negligible, the EPA could reasonably take that fact into account in defining each State’s obligations, even if the effect of that approach was to reduce State Z’s emis- sions by somewhat more than one-third of the total upwind contributions to Area A. This is especially true since, in the real world, State Z would likely contribute to NAAQS nonattainment and maintenance problems in other downwind areas as well, and might even have NAAQS nonattainment and maintenance problems of its own. In this respect, the EPA’s cost-effectiveness ap- proach provides a rough but objective means of equita- bly distributing pollution-control burdens among a criss- crossing patchwork of upwind and downwind States. e. Finally, the court of appeals expressed concern that the Transport Rule “could require upwind States to reduce emissions by more than the amount” of pollution that subjected them to the rule in the first place. App., infra, 34a-35a. That concern, however, was entirely hypothetical. The court cited no basis in the record for believing that such a scenario was a realistic possibility, see id. at 95a n.15 (Rogers, J., dissenting), and because no party advanced that argument in the administrative proceedings, the EPA did not address it in the rulemak- ing. If such a scenario ever occurs, it will provide at most a basis for a targeted challenge by the affected State; but it affords no sound justification for facial invalidation of the Transport Rule. C. The Court Of Appeals’ Decision Will Seriously Disrupt The EPA’s Implementation Of The CAA, And It Threat- ens Serious Harm To The Public Health Review of the court of appeals’ decision is warranted because it creates a substantial impediment to the EPA’s ability to implement the CAA. In particular, it 29 hobbles the agency with respect to the aspect of the Act’s administration (regulation of interstate pollution that upwind States often have little incentive to police on their own) where the need for a strong federal role is the most critical. 1. The court of appeals’ decision will substantially delay emission reductions by upwind States that are necessary for downwind States to attain and maintain the NAAQS. Indeed, the compliance dates in the Transport Rule were “aligned with the attainment dead- lines for the relevant NAAQS.” App. 449a. That rule and its compliance dates are now vacated, but the at- tainment deadlines remain. If the decision below is not corrected, the EPA will be required to determine each State’s significant contribu- tion in accordance with the new restrictions announced by the court of appeals. That task would presumably be undertaken through notice and comment rulemaking that would likely take at least two years, and that might itself be subject to judicial review. The EPA would then be required to give each affected State an opportunity, probably again for a period of years, to develop a strate- gy for implementing the requirements in the State through its SIP process. The resulting SIPs would then be submitted to the EPA for review. If a State fails to submit a SIP, or if the EPA disapproves a SIP submis- sion, the EPA would promulgate a FIP, again through notice-and-comment rulemaking. Only then would the EPA be back at the point it had previously reached by promulgating the Transport Rule. Cumulatively, these processes would likely take many years to complete, and would no doubt generate time-consuming legal challeng- es of their own. Under the court of appeals’ decision, the time required for controls to be implemented in 30 upwind States would extend far beyond that contem- plated by the CAA, to the detriment of the public health in downwind States. 2. In addition to establishing extra-textual procedur- al obstacles for the EPA to surmount, the court of ap- peals placed onerous and unwarranted restrictions on the manner in which the agency may permissibly identi- fy “significant” contributions to downwind nonattain- ment. As discussed above, given the multiple, overlap- ping linkages involved in the interstate pollution prob- lem, it may well be nearly impossible to meet the court’s proportionality requirement with respect to all upwind- to-downwind linkages. To be sure, the court of appeals’ opinion acknowledg- es that the EPA has “some discretion” in applying these requirements when it faces “truly unavoidable” tech- nical complications, App., infra, 28a, and that the agency has some additional degree of discretion to consider costs (but, in the court of appeals’ view, only to reduce regulatory burdens), id. at 27a. This may leave the EPA enough latitude to at least attempt to craft a new regula- tory approach that meets the court’s requirements. Because the EPA’s ability to consider cost-effectiveness and the impact of collective contributions in crafting such a rule would be vastly diminished, however, any resulting rule would likely be much more costly and burdensome in its application to certain States. There is no basis in the statute to require such an inflexible and unwise result. 3. The court of appeals’ decision also severely im- pedes the EPA’s efforts to combat the serious health risks posed by fine particles and ozone. Fine particles “are associated with a number of serious health effects including premature mortality, aggravation of respirato- 31 ry and cardiovascular disease, * * * lung disease, * * * asthma attacks, and certain cardiovascular prob- lems.” App. 165a; see id. at 165a-166a (discussing nega- tive impact on environment and agriculture). Short- term exposure to ozone at sufficient concentrations “can irritate the respiratory system” and aggravate asthma, while long-term exposure “can inflame and damage the lining of the lungs, which may lead to permanent chang- es in lung tissue and irreversible reductions in lung function.” /d. at 166a-167a; see id. at 167a (discussing negative impact on environment and agriculture). An EPA analysis on which the agency relied in issu- ing the Transport Rule estimated that “1 in 20 deaths in the U.S. is attributable to PM,, and ozone exposure.” App. 602a; see ibid. (“This same analysis attributed almost 200,000 non-fatal heart attacks, 90,000 hospital admissions due to respiratory or cardiovascular illness, 2.5 million cases of aggravated asthma among children, and many other human health impacts to exposure to these two air pollutants.”). The EPA estimated that the Transport Rule would “annually reduce between 13,000 and 34,000 PM, ,-related premature deaths, 15,000 non- fatal heart attacks, 8,700 incidences of chronic bronchi- tis, 8,500 hospital admissions, and 400,000 cases of ag- gravated asthma,” while the rule’s “annual ozone related health benefits” would include “160,000 fewer days with restricted activity levels, and 51,000 fewer days where children are absent from school due to illnesses.” /d. at 602a-603a. By vacating the Transport Rule, while im- peding any EPA effort to replace it, the court of appeals’ decision will directly and negatively affect the public health. 4. Because the opinion below broadly interprets the requirements of Section 7410(a), it will affect the EPA’s 32 ability to address transported pollution with respect to all NAAQS, not just those directly at issue here. In- deed, when it issued the Transport Rule, the agency described the Rule as “a precedent for quantifying up- wind state emission reduction responsibilities with re- spect to potential future NAAQS.” App. 138a; see id. at 310a, 314a. Because the analysis that produced the Transport Rule was intended to serve as a model for future efforts to limit interstate pollution, its importance transcends the rulemaking at issue here. Review is warranted for that reason as well. CONCLUSION The petition for a writ of certiorari should be grant- ed. Respectfully submitted. DONALD B. VERRILLI, JR. Solicitor General IGNACIA S. MORENO Assistant Attorney General MALCOLM L. STEWART Deputy Solicitor General BRENDA MALLORY JOSEPH R. PALMORE Acting General Counsel Assistant to the Solicitor SONJA RODMAN General Attorney JON M. LIPSHULTZ Environmental Protection NORMAN L. RAVE, JR. Agency Attorneys MARCH 2013 APPENDIX A UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 11-1302 EME HOMER CITY GENERATION, L.P., PETITIONER v. ENVIRONMENTAL PROTECTION AGENCY, ET AL., RESPONDENTS SAN MIGUEL ELECTRIC COOPERATIVE, ET AL., INTERVENORS Consolidated with 11-1315, 11-1323, 11-1329, 11-1338, 11-1340, 11-1350, 11-1357, 11-1358, 11-1359, 11-1360, 11-1361, 11-1362, 11-1363, 11-1364, 11-1365, 11-1366, 11-1367, 11-1368, 11-1369, 11-1371, 11-1372, 11-1373, 11-1374, 11-1375, 11-1376, 11-1377, 11-1378, 11-1379, 11-1380, 11-1381, 11-1382, 11-1383, 11-1384, 11-1385, 11-1386, 11-1387, 11-1388, 11-1389, 11-1390, 11-1391, 11-1392, 11-1398, 11-1394, 11-1395 Argued: Apr. 13, 2012 Decided: Aug. 21, 2012 (la) 2a On Petitions for Review of a Final Rule of the Environmental Protection Agency Before: ROGERS, GRIFFITH, and KAVANAUGH, Cir- cuit Judges. Opinion for the Court filed by Circuit Judge KAv- ANAUGH, with whom Circuit Judge GRIFFITH joins. Dissenting opinion filed by Circuit Judge ROGERS. KAVANAUGH, Circuit Judge: Some emissions of air pollutants affect air quality in the States where the pollutants are emitted. Some emissions of air pollu- tants travel across State boundaries and affect air quality in downwind States. To deal with that complex regulatory challenge, Congress did not au- thorize EPA to simply adopt limits on emissions as EPA deemed reasonable. Rather, Congress set up a federalism-based system of air pollution control. Under this cooperative federalism approach, both the Federal Government and the States play significant roles. The Federal Government sets air quality standards for pollutants. The States have the pri- mary responsibility for determining how to meet those standards and regulating sources within their borders. In addition, and of primary relevance here, upwind States must prevent sources within their borders from emitting federally determined “amounts” of pollution that travel across State lines and “contribute signifi- cantly” to a downwind State’s “nonattainment” of fed- 3a eral air quality standards. That requirement is some- times called the “good neighbor” provision. In August 2011, to implement the statutory good neighbor requirement, EPA promulgated the rule at issue in this case, the Transport Rule, also known as the Cross-State Air Pollution Rule. The Transport Rule defines emissions reduction responsibilities for 28 upwind States based on those States’ contributions to downwind States’ air quality problems. The Rule limits emissions from upwind States’ coal-and natural gas-fired power plants, among other sources. Those power plants generate the majority of electricity used in the United States, but they also emit pollutants that affect air quality. The Transport Rule targets two of those pollutants, sulfur dioxide (SO.) and nitrogen oxides (NQ,). Various States, local governments, industry groups, and labor organizations have petitioned for review of the Transport Rule. Although the facts here are complicated, the legal principles that govern this case are straightforward: Absent a claim of constitutional authority (and there is none here), executive agencies may exercise only the authority conferred by statute, and agencies may not transgress statutory limits on that authority. Here, EPA’s Transport Rule exceeds the agency’s statutory authority in two independent respects. First, the statutory text grants EPA authority to re- quire upwind States to reduce only their own signifi- cant contributions to a downwind State’s nonattain- ment. But under the Transport Rule, upwind States 4a may be required to reduce emissions by more than their own significant contributions to a downwind State’s nonattainment. EPA has used the good neighbor provision to impose massive emissions reduc- tion requirements on upwind States without regard to the limits imposed by the statutory text. Whatever its merits as a policy matter, EPA’s Transport Rule violates the statute. Second, the Clean Air Act af- fords States the initial opportunity to implement re- ductions required by EPA under the good neighbor provision. But here, when EPA quantified States’ good neighbor obligations, it did not allow the States the initial opportunity to implement the required re- ductions with respect to sources within their borders. Instead, EPA quantified States’ good neighbor obliga- tions and simultaneously set forth EPA-designed Federal Implementation Plans, or FIPs, to implement those obligations at the State level. By doing so, EPA departed from its consistent prior approach to implementing the good neighbor provision and violated the Act. For each of those two independent reasons, EPA’s Transport Rule violates federal law. Therefore, the Rule must be vacated. In so ruling, we note that this Court has affirmed numerous EPA clean air decisions in recent years when those agency decisions met relevant statutory requirements and complied with statutory constraints. See, e.g., National Environmental Development Asso- ciation’s Clean Air Project v. EPA, No. 10-1252 (D.C. Cir. July 20, 2012); APJ v. EPA, No. 10-1079 (D.C. Cir. 5a July 17, 2012); ATK Launch Systems, Inc. v. EPA, 669 F.3d 330 (D.C. Cir. 2012); NRDC v. EPA, 661 F.3d 662 (D.C. Cir. 2011); Medical Waste Institute & Energy Recovery Council v. EPA, 645 F.3d 420 (D.C. Cir. 2011); American Trucking Ass’ns v. EPA, 600 F.3d 624 (D.C. Cir. 2010). In this case, however, we con- clude that EPA has transgressed statutory bounda- ries. Congress could well decide to alter the statute to permit or require EPA’s preferred approach to the good neighbor issue. Unless and until Congress does so, we must apply and enforce the statute as it’s now written. Our decision today should not be interpreted as a comment on the wisdom or policy merits of EPA’s Transport Rule. It is not our job to set environmen- tal policy. Our limited but important role is to inde- pendently ensure that the agency stays within the boundaries Congress has set. EPA did not do so here.' The dissent argues that petitioners’ challenge to EPA’s ap- proach to the significant contribution issue is not properly before us because that issue was not sufficiently raised before the agency in the rulemaking proceeding. We fundamentally disagree with the dissent’s reading of the record on that point. The dissent also claims that petitioners’ challenge to EPA’s issu- ance of the FIPs is not properly before us because the affected States should have raised such a challenge earlier in the process. We again disagree. The dissent’s analysis on the FIPs issue con- flates (i) EPA’s rejection of certain States’ SIPs and (ii) EPA’s decision in the Transport Rule to set States’ “good neighbor” obli- gations and emissions budgets and simultaneously issue F IPs. The States here are challenging only the latter issue, and they have done so in a timely fashion. Indeed, they could not have done 6a l A Under the Clean Air Act, the Federal Government sets air quality standards, but States retain the pri- mary responsibility (if the States want it) for choosing how to attain those standards within their borders. See Train v. NRDC, 421 U.S. 60, 63-67 (1975); Virgin- ia v. EPA, 108 F.3d 1397, 1406-10 (D.C. Cir. 1997). The Act thus leaves it to the individual States to de- termine, in the first instance, the particular restric- tions that will be imposed on particular emitters within their borders. (If a State refuses to participate, the Federal Government regulates the sources directly.) To spell this out in more detail: The Clean Air Act charges EPA with setting National Ambient Air Qual- ity Standards, or NAAQS, which prescribe the maxi- mum permissible levels of common pollutants in the ambient air. See 42 U.S.C. § 7409(a)-(b). EPA must choose levels which, “allowing an adequate margin of safety, are requisite to protect the public health.” 42 U.S.C. § 7409(b)(1). After a lengthy process, the details of which are not relevant here, EPA designates “nonattainment” are- as—that is, areas within each State where the level so until EPA, in the Transport Rule, simultaneously set the States’ individual emissions budgets and issued F IPs. We will explain both points more below. Suffice it here to say that, much as we might like to do so, we respectfully do not believe we can avoid the merits of this complex case, as the dissent urges. Ta of the pollutant exceeds the NAAQS. See 42 U.S.C. § 7407(d). Once EPA sets a NAAQS and designates nonat- tainment areas within the States, the lead role shifts to the States. The States implement the NAAQS within their borders through State Implementation Plans, or SIPs. (As the experienced reader knows, there is no shortage of acronyms in EPA-land.) In their SIPs, States choose which individual sources within the State must reduce emissions, and by how much. For exam- ple, a State may decide to impose different emissions limits on individual coal-burning power plants, natural gas burning power plants, and other sources of air pol- lution, such as factories, refineries, incinerators, and agricultural activities. States must submit SIPs to EPA within three years of each new or revised NAAQS. See 42 U.S.C. § 7410(a)(1). Section 110(a)(2) of the Act lists the re- quired elements of a SIP submission. Section 110(a)(2)(D)(G)(1), the “good neighbor” pro- vision at issue in this case, is one of the required ele- ments of a SIP. The good neighbor provision re- quires that SIPs: (D) contain adequate provisions— (i) prohibiting, consistent with the provisions of this subchapter, any source or other type of emis- sions activity within the State from emitting any air pollutant in amounts which will— (1) contribute significantly to nonattainment in, or interfere with maintenance by, any other 8a State with respect to any such national primary or secondary ambient air quality standard. 42 U.S.C. § 7410(a)(2)(D). The good neighbor provision recognizes that emis- sions “from ‘upwind’ regions may pollute ‘downwind’ regions.” Appalachian Power Co. v. EPA, 249 F.3d 1032, 1037 (D.C. Cir. 2001). To put it colloquially, the good neighbor provision requires upwind States to bear responsibility for their fair share of the mess in downwind States. By placing the good neighbor re- quirement in Section 110(a)(2), Congress established the upwind State’s SIP as the vehicle for implementing the upwind State’s good neighbor obligation. Of course, an upwind State will not know what it needs to do to meet its good neighbor obligation until it learns the level of air pollution in downwind States, and fur- ther learns how much it is contributing to the problems in the downwind States. EPA plays the critical role in gathering information about air quality in the down- wind States, calculating each upwind State’s good neighbor obligation, and transmitting that information to the upwind State. With that information, the up- wind State can then determine how to meet its good neighbor obligation in a new SIP or SIP revision. See 42 U.S.C. § 7410(k)(5). After EPA quantifies a State’s good neighbor obli- gation, if a State does not timely submit an adequate SIP (or an adequate SIP revision) to take account of the good neighbor obligation as defined by EPA, re- sponsibility shifts back to the Federal Government. 9a Within two years of disapproving a State’s SIP sub- mission or SIP revision, or determining that a State has failed to submit a SIP, EPA must promulgate a Federal Implementation Plan to implement the NAAQS within that State. See 42 U.S.C. § 7410(c)(1). B The good neighbor provision—and EPA’s attempts to implement it—are familiar to this Court from past cases. In Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000), we considered a challenge to EPA’s 1998 NO, Rule, commonly referred to as the NO, SIP Call, which quantified the good neighbor obligations of 22 States with respect to the 1997 ozone NAAQS. See 63 Fed. Reg. 57,356, 57,358 (Oct. 27, 1998). The 1998 NO, Rule did not define “amounts which will . . . contribute significantly to nonattain- ment” solely on the basis of downwind air quality im- pact, as one might have expected given the statutory text. Rather, EPA also considered how much NO, could be eliminated by sources in each State if those sources installed “highly cost-effective” emissions controls. See Michigan, 213 F.3d at 675. On review, some States argued that the statutory text required EPA to order reductions based on air quality impact alone, not cost of reduction. But the Michigan Court found no “clear congressional intent to preclude con- sideration of cost.” Jd. at 677 (citation omitted). The Court thus held that EPA may “consider differ- ences in cutback costs, so that, after reduction of all that could be cost-effectively eliminated, any remain- 10a ing ‘contribution’ would not be considered ‘signifi- eant.’” Jd. at 677; see also id. at 677-79. In other words, EPA could use cost considerations to lower an upwind State’s obligations under the good neighbor provision.” In North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), we considered a challenge to EPA’s 2005 Clean Air Interstate Rule, or CAIR. See 70 Fed. Reg. 25,162 (May 12, 2005). CAIR built on the 1998 NO, Rule and defined 28 States’ good neighbor obligations with respect to the 1997 ozone NAAQS and the 1997 NAAQS for annual levels of fine particulate matter, or annual PM... See id. CAIR employed two different formulas—both of which incorporated cost considerations—to quantify each State’s obligations for the pollutants covered by CAIR, SO, and NO,. The North Carolina decision held that the formulas went beyond Michigan’s au- thorization to use cost and that the formulas therefore exceeded EPA’s statutory author'y. EPA may use cost to “require termination of only a subset of each state’s contribution,” the Court explained, but “EPA can’t just pick a cost for a region, and deem ‘signifi- * Judge Sentelle dissented. In his view, the statutory text un- ambiguously “set forth one criterion: the emission of an amount of pollutant sufficient to contribute significantly to downwind nonattainment.” Jd. at 696 (Sentelle, J., dissenting); cf; Whitman v. American Trucking Ass'ns, 531 U.S. 457, 467 (2001) (“We have therefore refused to find implicit in armbiguous sections of the CAA an authorization to consider costs that has elsewhere, and so often, been expressly granted.”). lla cant’ any emissions that sources can eliminate more cheaply.” 531 F.3d at 918 (citation, emphasis, and some internal quotation marks omitted). The Court also held that “section 110(a)(2)(D)(i)(1) gives EPA no authority to force an upwind state to share the burden of reducing other upwind states’ emissions. Each state must eliminate its own significant contribution to downwind pollution.” Jd. at 921. The Court empha- sized that EPA “may not require some states to exceed the mark.” /d. North Carolina thus articulated an important cave- at to Michigan’s approval of cost considerations. The statute permits EPA to use cost to lower an upwind State’s obligation under the good neighbor provision. See Michigan, 213 F.3d at 675, 677. But EPA may not use cost to increase an upwind State’s obligation under the good neighbor provision—that is, to force an upwind State to “exceed the mark.” North Carolina, 531 F.3d at 921. Put simply, the statute requires every upwind State to clean up at most its own share of the air pollution in a downwind State—not other States’ shares. C The North Carolina Court remanded CAIR without vacatur, leaving CAIR in place “until it is replaced by a rule consistent with our opinion.” North Carolina v. EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008) (on rehear- ing). The Transport Rule is EPA’s attempt to develop a rule that is consistent with our opinion in North Caro- lina. EPA proposed the Transport Rule in August 12a 2010 and finalized it in August 2011. See 75 Fed. Reg. 45,210 (Aug. 2, 2010) (proposed); 76 Fed. Reg. 48,208 (Aug. 8, 2011) (final). The Transport Rule addresses States’ good neighbor obligations with respect to three NAAQS: the 1997 annual PM,, NAAQS, the 1997 ozone NAAQS, and the 2006 24-hour PM,, NAAQS. See id. at 48,209.’ The Transport Rule contains two basic components. First, the Rule defines each State’s emissions reduc- tion obligations under the good neighbor provision. Second, the Rule prescribes Federal Implementation Plans to implement those obligations at the State level. We describe each component here in some detail. EPA began by quantifying the “amounts” of pollu- tion that each State must prohibit under the good neighbor provision—that is, “amounts which will . . contribute significantly to nonattainment” or “interfere with maintenance” of the three NAAQS in other States. 42 U.S.C. § 7410(a)(2)(D)(i).* ' The 2006 24-hour PM,, NAAQS post-dated and therefore was not covered by CAIR. ' EPA bases different aspects of the Transport Rule on distinct sources of statutory authority. EPA relied on its general rule- making authority under Section 301(a)(1) of the Clean Air Act, 42 U.S.C. § 7601(a)(1), to construe Section 110(a)(2)(D)(iX 1) and to quantify the States’ obligations to reduce emissions. See Trans- port Rule, 76 Fed. Reg. at 48,217; see also Michigan, 213 F.3d at 687. EPA relied on its authority under Section 11((c)(1), 42 U.S.C. § 7410(c)Q1), to issue the Transport Rule FIPs. See Transport Rule, 76 Fed. Reg. at 48,217. 13a EPA used a two-stage approach to quantify each State’s obligations under the good neighbor provision. In the first stage, EPA determined whether a State emits “amounts which will . . . contribute sig- nificantly” to a downwind State’s nonattainment of any of the three NAAQS. EPA identified the significantly contributing upwind States based on “linkages” be- tween each upwind State and specific downwind “non- attainment” or “maintenance” areas—that is, down- wind areas that EPA modeling predicted would not attain, or absent regulation would not maintain, the NAAQS. Transport Rule, 76 Fed. Reg. at 48,236. An upwind State was linked to a downwind nonattain- ment or maintenance area for a given NAAQS if EPA modeling showed that the upwind State’s contribution to that downwind area exceeded a numerical “air qual- ity threshold”—that is, a specific amount of air pollu- tion sent from the upwind State into the downwind State’s air. /d. EPA set the air quality threshold for each pollutant at an amount equal to 1% of the relevant NAAQS. The resulting thresholds were (i) 0.8 ppb for ozone, (ii) 0.15 pg/m* for annual PM.,, and (iii) 0.35 ug/m* for 24-hour PM,,. Jd. If modeling showed that an upwind State would send more than those amounts into a downwind State’s air, as measured at a receptor site in a downwind State, the upwind State was deemed a “significant contributor” to the down- wind State’s air pollution problem. Those numerical air quality thresholds determined which upwind States had to reduce their SO, and NO, emissions and which upwind States did not—that is, l4a the thresholds determined which upwind States’ emis- sions “contribute significantly” to downwind States’ air pollution problems. Upwind States “whose contribu- tions are below these thresholds,” EPA found, “do not significantly contribute to nonattainment or interfere with maintenance of the relevant NAAQS” in down- wind States. Jd. Because their emissions did not “contribute significantly,” those States were not re- quired to cut their emissions for purposes of the good neighbor provision. As one would expect, this “significant contribution” threshold produced some close cases at the margins. For example, Maryland and Texas were covered for annual PM,,, based on downwind contributions of 0.15 and 0.18 pg/m*, respectively—just barely meeting the 0.15 yg/m* threshold. See id. at 48,240. And Texas exceeded the annual PM,, threshold at just a single downwind receptor, in Madison, Illinois. See id. at 48,241.° By contrast, Minnesota and Virginia, with maximum downwind contributions of 0.14 and 0.12 ug/m*, respectively, just missed being covered for annual PM,,. See id. at 48,240. For annual PM.,,, a total of 18 States’ exceeded the threshold and were therefore deemed “significant Texas also narrowly exceeded the 0.35 pg/m* threshold for 24-hour PM,,,; its maximum downwind contribution was 0.37 pg/m*. See Transport Rule, 76 Fed. Reg. at 48,242. " Those States were: Alabama, Georgia, Illinois, Indiana, lowa, Kentucky, Maryland, Michigan, Missouri, New York, North Caro- lina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, West l5a contributors.” For 24-hour PM,,, a total of 22 States’ exceeded the threshold. See id. at 48,241-42. Those States were thus included in the Rule’s reduction pro- grams for SO, and annual NO,, pollutants that con- tribute to PM,, formation. See id. at 48,210. For ozone, a total of 26 States* exceeded the threshold. See id. at 48,245. Those States were thus included in the Rule’s reduction program for ozone-season NO,, which contributes to ozone formation. See id. at 48,210; see also 76 Fed. Reg. 80,760 (Dec. 27, 2011) (finalizing six States’ inclusion in the Transport Rule for ozone-season NO,). At the second stage, however, EPA abandoned the air quality thresholds—that is, the stage one standard for whether an upwind State’s emissions “contribute significantly” to a downwind State’s nonattainment of air quality standards. Instead, at stage two, EPA used a cost-based standard: EPA determined how much pollution each upwind State’s power plants could Virginia, and Wisconsin. See Transport Rule, 76 Fed. Reg. at 48,240. 7 Those States were: Alabama, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsyl- vania, Tennessee, Texas, Virginia, West Virginia, and Wisconsin. See Transport Rule, 76 Fed. Reg. at 48,242. * Those States were: Alabama, Arkansas, Florida, Georgia, I)- linois, Indiana, lowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennes- see, Texas, Virginia, West Virginia, and Wisconsin. See Transport Rule, 76 Fed. Reg. at 48,245. l6a eliminate if the upwind State’s plants applied all con- trols available at or below a given cost per ton of pollu- tion reduced. The cost-per-ton levels applied without regard to the size of each State’s “significant contribu- tion” at stage one. In other words, how much pollu- tion each upwind State was required to eliminate was not tied to how much the upwind State contributed to downwind States’ air pollution problems. EPA predicted how far emissions would fall if pow- er plants throughout the State were required to install controls available at or below various cost levels. The cost levels, or thresholds, were expressed in terms of cost per ton of pollutant reduced, with the idea being that plants would install all controls that cost less than the designated threshold.” EPA then added up the emissions from all of the covered States to yield total regionwide emissions fig- ures for each pollutant, at each cost threshold. See " For example, a technology that cost $1,000 to install and elimin- ated 2 tons of NO, from a power plant’s emissions would cost $500/ton. In effect, EPA predicted how far emissions would fall if plants installed all of the controls from $1/ton to $500/ton. EPA used a computer model to predict the reductions that would occur in each State at various cost thresholds. See EPA, Docu- mentation for EPA Base Case v.4.10, at 2-1 (Aug. 2010), J.A. 2339. For example, for annual NO,., EPA modeled cost levels of $500, $1,000, and $2,500/ton. See Transport Rule, 76 Fed. Reg. at 48,249-50. EPA went as high as $5,000/ton for ozone-season NO,. See id. at 48,250. For SO,, EPA modeled emissions at cost levels of $500, $1,600, $2,300, $2,800, $3,300, and $10,000 per ton. See id. at 48,251. At a later stage in the process, EPA used those predic- tions to decide how much each State would have to cut. 17a Transport Rule, 76 Fed. Reg. at 48,250-53. The high- er the cost level selected, the greater the reduction of emissions, but also the greater the costs and burdens imposed on sources within the States. Next, EPA used cor:, uter modeling to estimate the downwind air quality effects of imposing different cost-per-ton levels on the upwind States. /d. at 48,253. EPA modeled the air quality effects of ap- plying a $500/ton cost level for NO, and ascending cost-per-ton levels for SO,. See id. At 48,255; EPA, Analysis to Quantify Significant Contribution Tech- nical Support Document 15 & n.9 (July 2010), J.A. 2177. Armed with those two sets of modeling data, EPA proceeded to choose which regionwide cost-per-ton threshold to apply for each of the three pollutants— SO,, annual NO,, and ozone-season NO,. EPA con- sulted both its cost-of reduction modeling and its air quality modeling and identified what it termed “signif- icant cost thresholds”—that is, cost-per-ton levels at which steep drops in upwind emissions or jumps in downwind air quality would occur. Transport Rule, 76 Fed. Reg. at 48,255; see also id. at 48,255-56. EPA then weighed both air quality and cost concerns in a “multi-factor assessment” to choose the final cost-per- ton levels. /d. at 48,256. The “multi-factor assess- ment” did not employ any hard formula to weigh those factors. In the end, EPA settled on a single $500/ton thres- hold for ozone-season and annual NO.. See id. at 48,256-57. 18a For SO., instead of using a single cost threshold for all of the SO, States, EPA divided the upwind States into two groups for the 2014 program year (that is, the emissions cuts required in 2014). EPA modeling showed that applying a $500/ton cost threshold re- solved the attainment problems in the downwind areas to which seven upwind States were linked. See id. at 48,257. Those seven upwind States became the Group 2 States, which were subject to a $500/ton threshold for SO,. See id. But $500/ton did not resolve attain- ment problems in the downwind areas to which 16 other upwind States were linked. Those 16 upwind States became the Group 1 States, which were subject to a stricter $2,300/ton cost threshold for SO,. See id. at 48,259. EPA determined the amount of SO., annual NO,, or ozone-season NO, that each covered State could elim- inate if its power plants installed all cost-effective emissions controls—that is, those controls available at or below the applicable cost-per-ton thresholds. See id. at 48,260. EPA then used those figures to gener- ate 2012, 2013, and 2014 emissions “budgets” for each upwind State, for each pollutant for which that State was covered. See id. at 48,259-63. The budget is the maximum amount of each pollutant that a State’s power plants may collectively emit in a given year, beginning in 2012." " States may augment their budgets somewhat by buying out-of- state allowances. See Transport Rule, 76 Fed. Rey. at 48,263-68. 19a EPA did not stop there and leave it to the States to implement the required reductions through new or revised State Implementation Plans, or SIPs. Cf 42 U.S.C. § 7410(k)(5). Instead, EPA simultaneously promulgated Federal Implementation Plans, or FIPs. The FIPs require power plants in covered upwind States to make the SO, and NO, reductions needed to comply with each upwind State’s emissions budget, as defined by EPA. The FIPs also create an interstate trading program to allow covered sources to comply as cost-effectively as possible. See Transport Rule, 76 Fed. Reg. at 48,271. The FIPs convert each State’s emissions budget into “allowances,” which are allocated among power plants in the State. Under the FIPs, it is EPA, and not the States, that decides how to distribute the al- lowances among the power plants in each State. See id. at 48,284-88." il Each power plant is “required to hold one SO, or one NO, allowance, respectively, for every ton of SO, or NO, emitted” during the relevant year. Transport Rule, 76 Fed. Reg. at 48,271; see also id. at 48,296-97 (describing penalties for noncompliance). Sources were required by the Rule to begin complying with the annual SO. and NO, requirements by January 1, 2012 for the 2012-13 budgets and by January 1, 2014 for the post-2014 budgets. See id. at 48.277. (This Court stayed the Rule before it took effect.) The ozone-season NO, requirements would kick in on May 1 of those years. See id EPA chosethose compliance deadlines in light of this Court’s holding in North Carolina that the deadlines must be “consistent with the provisions in Title I man- dating [NAAQS] compliance deadlines for downwind states.” 531 F.3d at 912; see also Transport Rule, 76 Fed. Reg. at 48,277-78. 20a The Rule retains a limited, secondary role for SIPs. States have the option of submitting SIPs that modify some elements of the FIPs. See id. at 48,327-28. The first program year for which States can submit such SIPs is 2014. See id. States may also seek to ieplace the F1Ps wholesale, as long as the SIP prohib- its the amounts of NO, and SO, emissions that EPA specified. See id. at 48,328. EPA says it would “re- view such a SIP on a case-by-case basis.” /d. But, im- portantly, the States do not have a post-Rule oppor- tunity to avoid FIPs by submitting a SIP or SIP revi- sion: The FIPs “remain fully in place in each covered state until a state’s SIP is submitted and approved by EPA to revise or replace a FIP.” /d. Since it issued the final rule in August 2011, EPA has taken several subsequent regulatory actions re- lated to the Transport Rule. See 76 Fed. Reg. 80,760 (Dee. 27, 2011) (finalizing six States’ inclusion in the Rule for ozone-season NO,); 77 Fed. Reg. 10,324 (Feb. 21, 2012) (making technical adjustments to modeling and delaying assurance penalty provisions until 2014); 77 Fed. Reg. 34,830 (June 12, 2012) (revising budgets for 13 States). The F1Ps use allowance trading to enable covered plants within the States to comply as cost-effectively as possible. The program creates four allowance trading markets: one for annual NO,, one for ozone-season NO,, one for Group 1 SO. States, and one for Group 2 SO, States. See Transport Rule, 76 Fed. Reg. at 48,271. Power plants in Group 1 SO. States may not purchase Group 2 SO, allowances, and vice versa. See id. at 48,271-72. Otherwise, in- terstate trading is generally permitted. 2la D An array of power companies, coal companies, labor unions, trade associations, States, and local govern- ments petitioned for review of EPA’s Transport Rule. On December 30, 2011, this Court stayed the Rule pending a decision on the merits. See Order, No. 11-1302, slip op. at 2 (D.C. Cir. Dec. 30, 2011). The Court’s order instructed EPA to “continue adminis- tering the Clean Air Interstate Rule pending the court’s resolution of these petitions for review.” /d. In Part II of this opinion, we address whether the Rule exceeds EPA’s authority to order upwind States to reduce “amounts which will . . . contribute significantly to nonattainment” in downwind States. In Part III, we address whether the statute permits EPA to issue FIPs without giving the States an initial opportunity to implement the required reductions through SIPs or SIP revisions. In Part 1V, we con- sider the remedy. II In this Part, we analyze petitioners’ argument that EPA exceeded its statutory authority under the “good neighbor” provision. Under the statute, EPA is limited to ordering upwind States to reduce “amounts which will . . . contribute significantly to nonattainment” in downwind States. 42 U.S.C. § 7410(a)(2)(D)(i). A 22a The Transport Rule defines States’ obligations un- der Section 110(a)(2)(D)(i)U1) of the Clean Air Act, a provision sometimes described as the “good neighbor” provision. See 42 U.S.C. § 7410(a)(2)(D)()(1); Michi- yan v. EPA, 213 F.3d 663, 671 (D.C. Cir. 2000). The good neighbor provision requires that a State Imple- mentation Plan, or SIP: (D) contain adequate provisions— (i) prohibiting, consistent with the provisions of this subchapter, any source or other type of emis- sions activity within the State from emitting any air pollutant in amounts which will— (1) contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard. 42 U.S.C. § 7410(a)(2)(D). The good neighbor provi- sion recognizes that not all air pollution is locally gen- erated: Some ambient air pollution “is caused or augmented by emissions from other states. Emis- sions from ‘upwind’ regions may pollute ‘downwind’ regions.” Appalachian Power Co. v. EPA, 249 F.3d 1032, 1037 (D.C. Cir. 2001). Although the statute grants EPA significant discre- tion to implement the good neighbor provision, the statute’s text and this Court’s decisions in Michigan and North Carolina establish several red lines that cabin EPA’s authority. Those red lines are central to our resolution of this case. 23a First, and most obviously, the text of Section 110(a)(2)(D)(i)(1) tells us that the “amounts which will , contribute” to a downwind State’s nonattain- ment are at most those amounts that travel beyond an upwind State’s borders and end up in a downwind State’s nonattainment area.” The statute is not a blank check for EPA to address interstate pollution on a regional basis without regard to an individual upwind State’s actual contribution to downwind air quality. Moreover, the statutory text and this Court’s deci- sion in North Carolina v. EPA demonstrate that EPA may not force a State to eliminate more than its own “significant” contribution to a downwind State’s non- attainment area—that is, to “exceed the mark,” as we put it in North Carolina. 531 F.3d 896, 921 (D.C. Cir. 2008). Thus, once EPA reasonably designates some level of contribution as “insignificant” under the stat- ute, it may not force any upwind State to reduce more than its own contribution to that downwind State mi- nus the insignificant amount.” i2 At oral argument, EPA’s counsel refused to concede this point. ‘’ For example, suppose that EPA determined that any upwind State whose contribution to a downwind State was less than 3 units did not “contribute significantly to nonattainment.” That would mean EPA had established 3 units as the significance Moor. Other upwind contributors to that downwind State could not be required to reduce their downwind contributions below that floor. So an upwind State whose contribution to that downwind State is 30 units could be required to reduce its contribution by at most 27 units. Of course, that is not the only constraint on EPA’s authority to force the State to reduce its emissions. The other legal con- 24a Second, under the terms of the statute and as we explained in North Carolina, the portion of an upwind State’s contribution to a downwind State that “con- tribute[s] significantly” to that downwind State’s “non- attainment” necessarily depends on the relative con- tributions of that upwind State, of other upwind State contributors, and of the downwind State itself. Each upwind State may be required to eliminate only its own “amounts which will . . . contribute significant- ly” to a downwind State’s “nonattainment.” As ex- plained in North Carolina, EPA may not require any upwind State to “share the burden of reducing other upwind states’ emissions.” /d. In other words, the statutory text—which refers to “amounts” which will “contribute significantly” to a downwind State’s “non- attainment”—contains not just an absolute component (meaning that an upwind State’s insignificant amounts are not covered) but also a relative component (mean- ing that each State’s relative contribution to the downwind State’s nonattainment must be considered). Moreover, the end goal of the statute is attainment in the downwind State. EPA’s authority to force reductions on upwind States ends at the point where the affected downwind State achieves attainment. Therefore, if the downwind State would attain the NAAQS but for upwind States’ contributions—that is, if the entire above-NAAQS amount is attributable to upwind States’ emissions—then the upwind States’ straints described in this Part can further lower a State’s maximum obligation. 25a combined share is the entire amount by which the downwind State exceeded the NAAQS. And as we said in North Carolina, when EPA allocates that bur- den among the upwind States, EPA may not force any upwind State to “share the burden of reducing other upwind states’ emissions.” /d. Each upwind State must bear its own fair share. Therefore, the “signifi- cance” of each upwind State’s contribution cannot be measured in a vacuum, divorced from the impact of the other upwind States. Rather, the collective burden must be allocated among the upwind States in propor- tion to the size of their contributions to the downwind State’s nonattainment. Otherwise, EPA would violate the statute and our decision in North Carolina." “Before Congress adopted the current text in the Clean Air Act Amendments of 1990, the statutory text targeted amounts from an upwind State that would “prevent attainment” in a downwind State. 42 U.S.C. § 7410(a)(2)(E) (1988) (emphasis added); cf Pub. L. No. 101-549, § 101(b), 104 Stat. 2399, 2404 (1990). Under the “prevent attainment” standard, none of the three upwind States in that hypothetica) would by itself be a but-for cause of the downwind State’s nonattainment. By moving from “prevent attainment” to “contribute significantly to nonattainment,” the 1990 Amendments dropped the requirement that an individual upwind State’s emis- sions on their own prevent downwind attainment or maintenance. See S. REP NO. 101-228, at 21 (1989) (“Since it may be impossible to say that any single source or group of sources is the one which actually prevents attainment, the bill changes ‘prevent attainment or maintenance’ to ‘contribute significantly to nonattainment or in- terfere with maintenance by,’ thus clarifying when a violation oc- curs.”). Instead, it now suffices if EPA identifies upwind emis- sions that, together with emissions from other upwind contribu- tors, push a given downwind maintenance area above the NAAQS. 26a A specific example helps illustrate that point. Suppose the NAAQS is 100 units, but the downwind State’s nonattainment area contains 150 units. Sup- pose further that the downwind State contributes 90 units, and three upwind States contribute 20 units each. Because the upwind States are responsible for the downwind State’s exceeding the NAAQS by 50 units, the downwind State is entitled to at most 50 units of relief from the upwind States so that the downwind State can achieve attainment of the NAAQS. Distributing those obligations in a manner proportion- al to their contributions, each of the three upwind States’ significant contribution would be, at most, 16 % units. Or suppose instead that the three upwind States contribute 10, 20, and 30 units respectively. Distributing those obligations in a manner proportion- al to their contributions, those three States’ significant contributions would be at most 8 %, 16 %, and 25 units, respectively, leading to the combined reduction of 50 units needed for the downwind State to reach attain- ment.” ‘© If the downwind State’s contribution alone would push it above the NAAQS, then the entire above-NAAQS amount cannot be attributed only to upwind States. The downwind State is responsible for its own share of the above-NAAQS amount. In that scenario, upwind States that contribute to the downwind State are collectively on the hook for that share of the above-NAAQS amount that is attributable to upwind States’ contributions. And, again, that collective burden must be allocated among the upwind States in proportion to the size of their contributions to the down- wind State. Otherwise, one upwind State would be forced to 2%a In addition, our decisions in Michigan and North Carolina establish that EPA may consider cost, but only to further lower an individual State’s obligations. See Michigan, 213 F.3d at 675; North Carolina, 531 F.3d at 918. Under Michigan, moreover, EPA may do so in a way that benefits some upwind States more than others. See 213 F.3d at 679. In other words, in order to prevent exorbitant costs from being imposed on certain upwind States, EPA may lower the obliga- tions imposed on those States. Third, to conform to the text of the statute, EPA must also ensure that the combined obligations of the various upwind States, as aggregated, do not produce more than necessary “over-control” in the downwind States—that is, that the obligations do not go beyond what is necessary for the downwind States to achieve the NAAQS. Even when EPA carefully conforms to the above limits on its authority, the possibility of over-control in downwind States still arises because multiple upwind States may affect a single downwind State and, con- “share the burden of reducing other upwind states’ emissions,” in violation of the statute. North Carolina, 531 F.3d at 921. An example helps illustrate that point. Suppose the NAAQS is 100 units, and the downwind State’s air contains 180 units. The downwind State contributes 120 units, and three upwind States contribute 20 units each. The downwind State is 80 units over the NAAQS—but 20 units of that is its own responsibility. The up- wind States must therefore provide at most 60 units of relief. Distributing those obligations proportionally, each of the three upwind States’ significant contribution would be, at most, 20 units. 28a versely, a single upwind State may affect multiple downwind States. The requirement to prevent such over-control comes directly from the text of the stat- ute: The good neighbor provision of the statute tar- gets those emissions from upwind States that “con- tribute significantly to nonattainment” of the NAAQS. EPA may require only those reductions that are nec- essary for downwind States to attain the NAAQS. The good neighbor provision is not a free-standing tool for EPA to seek to achieve air quality levels in down- wind States that are well below the NAAQS. There- fore, if modeling shows that a given slate of upwind reductions would yield more downwind air quality benefits than necessary for downwind areas to attain the NAAQS, EPA must attempt to ratchet back the upwind States’ obligations to the level of reductions necessary and sufficient to produce attainment in the downwind States." To be sure, as even petitioners acknowledge, there may be some truly unavoidable over-control in some downwind States that occurs as a byproduct of the necessity of reducing upwind States’ emissions enough '" For example, suppose that under the proportional approach explained above, State A would have to cut 5,000 tons of NO, to achieve its largest downwind obligation, while State B would have to cut 2,000 tons to achieve its largest downwind obligation. If EPA modeling showed that all downwind nonattainment would be resolved if those two upwind States’ combined reduction obliga- tions were, say, 10% lower, EPA would have to ratchet back the up- wind States’ reduction obligations by a total of 10%. That would ensure that upwind States were only forced to prohibit those emis- sions that “contribute significantly to nonattainment.” 29a to meet the NAAQS in other downwind States. See Industry & Labor Reply Br. 11 n.2. For those rea- sons, EPA must have some discretion about how to reasonably avoid such over-control. Moreover, be- cause multipie upwind States may affect a single downwind State, and because a single upwind State may affect multiple downwind States, it may not be possible to accomplish the ratcheting back in an en- tirely proportional manner among the upwind States. Our cases recognize as much. See Michigan, 213 F.3d at 679; North Carolina, 531 F.3d at 908. But the point remains: EPA must avoid using the good neighbor provision in a manner that would result in unnecessary over-control in the downwind States. Otherwise, EPA would be exceeding its statutory authority, which is expressly tied to achieving attain- ment in the downwind States. B We now apply those principles to the EPA Transport Rule. “It is axiomatic that an administra- tive agency’s power to promulgate legislative regula- tions is limited to the authority delegated by Con- gress.” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988); see also Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001) (“EPA is a federal agency —a creature of statute,” and may exercise “only those authorities conferred upon it by Congress.”). An agency may not exceed a statute’s authorization or violate a statute’s limits. If a statute is ambiguous, an agency that administers the statute may choose a reasonable interpretation of that ambiguity—but the 30a agency’s interpretation must still stay within the boundaries of the statutory text. See Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-44 (1984).” In the Transport Rule, EPA used a two-stage ap- proach to define “amounts which will . . . con- tribute significantly” to downwind attainment prob- lems. The first stage identified those upwind States that were “significant contributors” to downwind at- tainment problems. EPA determined that a State’s contribution to a downwind nonattainment or mainte- nance area was significant if it exceeded a numerical “air quality threshold” of 0.8 ppb for ozone, 0.15 yg/m* for annual PM,,, and 0.35 pg/m* for 24-hour PM,,. Transport Rule, 76 Fed. Reg. 48,208, 48,236 (Aug. 8, 2011). States “whose contributions are below these thresholds,” EPA found, “do not significantly contrib- ute to nonattainment or interfere with maintenance of the relevant NAAQS.” /d. Those upwind States were off the hook altogether. But an upwind State that exceeded the significance threshold at even one downwind State’s receptor was drawn wholesale into the Rule’s second stage—cost- based emissions reductions. [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0889%3A0. Public record. Not legal advice.