# Record and brief — Am. Lung Ass'n v. Eme Homer City Generation, L.P. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0890%3A0 ## Record - **Collection:** Supreme Court brief - **Document type:** Record and brief - **Published:** January 1, 2013 - **Citation:** 571 U.S. 809 ## Text (4) SUPREME COURT OF THE UNITED STATES Art No. 12-1183 Vide 12-1182 Title: American Lung Association, 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~~~~~~~ Mar 29 2013 Petition for a writ of certioran filed. (Response due April 29, 2013) 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 42013 DISTRIBUTED for Conference of June 20, 2013. Jun 62013 Reply of petitioner American Lung Association, et al. filed. (Distributed) Jun 24 2013 Petition GRANTED limited to the questions presented by the petition in No. 12- 1182. The petition for a writ of certiorari in No. 12-1182 is granted. 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 Amencan Lung Association, 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 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 42013 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 petitioner in No. 12-1182, Environmental Protection Agency, et al., filed. VIDED. Sep 42013 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 respondent 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 filed. VIDED. Sep 42013 Brief of petitioners American Lung Association, et al. filed. 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 Brief amici curiae of Law Professors on Issue 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 Law ‘iled. 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 7 2013 Brief amicus curiae of Chamber of Commerce of the United States of America filed. VIDED. (Distributed) Nov 72013 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 2 2013 Reply of respondents Environmental Protection Agency, et al. filed. VIDED (Distributed) Dec 32013 Reply of petitioners American Lung Association, et al. filed. (Distributed) 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. (Distnbuted) Dec 10 2013 Argued. For petitioners: Malcolm L. Stewart, Deputy Solicitor General, Department of Justice, Washington, D. C. For State and Local respondents: Jonathan F. Mitchell, Solicitor General, Austin, Tex. For Industry and Labor respondents: Peter Keisler, Washington, D. C. PETITION FOR WRIT OF CERTIORARI Supreme Court of the Unite! AMERICAN LUNG ASSOCIATION, et al., Petitioners, v. EME HOMER CITY GENERATION, L.P., e¢ ad, Respondents. On PeTITION For A Writ or CERTIORARI TO THE UniTeD StraTeEs Court OF APPEALS FOR THE District or CoLumsBia Circurr PETITION FOR A WRIT OF CERTIORARI GEORGE E. Hays 236 West Portal Ave. No. 110 San Francisco, CA 94127 (415) 566-5414 Davip MARSHALL CLEAN Arr Task Force 41 Liberty Hill Road Building 2, Suite 205 Henniker, NH 03242 (603) 428-8114 JoHN D. WALKE EMILy Davis NATURAL RESOURCES DEFENSE COUNCIL 1152 15th St., Ste. 300 Washington, DC 20005 (202) 289-6868 SEAN H. DoNAHUE Counsel of Record DoNAHUE & GoLppBerc, LLP 2000 L St. NW, Ste 808 Washington DC 20036 (202) 277-7085 sean@donahuegoldberg.com PAMELA A. CAMPOS GRAHAM G. McCAHAN VICKIE L. PATTON ENVIRONMENTAL DEFENSE FUND 2060 Broadway, Ste 300 Boulder, CO 80302 (303) 440-4901 JOSHUA STEBBINS ZACHARY M. Fasisu THE SIERRA CLUB 50 F Street NW, 8th Floor Washington DC 20001 (202) 675-6273 246829 QUESTIONS PRESENTED The Clean Air Act’s “Good Neighbor” provision requires that state implementation plans contain “adequate” provisions prohibiting emissions that will “contribute significantly” to another _ state’s nonattainment of health-based air quality standards. 42 U.S.C. 7410(a)(2)(D)(i). A divided D.C. Circuit panel invalidated, as contrary to statute, a major EPA regulation, the Transport Rule, that gives effect to the provision and requires 27 states to reduce emissions that contribute to downwind states’ inability to attain or maintain air quality standards. The questions presented are: (1) Whether the statutory challenges to EPA's methodology for defining upwind _ states’ “significant contributions” were properly before the court, given the failure of anyone to raise these objections at all, let alone with the requisite “reasonable specificity,” “during the period for public comment,” 42 U.S.C. 7607(d)(7)(B); (2) Whether the court’s imposition of its own detailed methodology for implementing the Good Neighbor provision violated foundational principics governing judicial review of administrative decision-making; (3) Whether an upwind state that is polluting a downwind state is free of any obligations under the Good Neighbor provision unless and until EPA has quantified the upwind state’s contribution to downwind states’ air pollution problems. PARTIES TO THE PROCEEDING The following were parties in the proceedings in the United States Court of Appeals for the District of Columbia Circuit: American Lung Association, Clean Air Council, Environmental Defense Fund, Natural Resources Defense Council, and Sierra Club, petitioners in this Court, were intervenors in support of the United States Environmental Protection Agency. The United States Environmental Protection Agency (“EPA”), respondent in the D.C. Circuit, has filed a separate petition in this Court. The other named respondent in the court of appeals was EPA Administrator Lisa Perez Jackson. As of February 15, 2013, Ms. Jackson no longer holds that office. Robert Perciasepe is the Acting Administrator. Additional respondent-intervenors below in support of the United States Environmental Protection Agency, who are nominal respondents on review, are Calpine Corporation; City of Bridgeport, Connecticut; City of Chicago; City of New York (in all but D.C. Cir. Nos. 11-1388 & 11-1395); City of Philadelphia; Commonwealth of Massachusetts; District of Columbia; Exelon Corporation; Mayor and City Council of Baltimore; Public Service Enterprise Group, Inc.; State of Connecticut; State of Delaware; State of Illinois; State of Maryland; State of New York (in all but D.C. Cir. Nos. 11-1388 & 11-1395); i State of North Carolina; State of Rhode Island; and State of Vermont. Petitioners below, who are respondents in this Court, were AEP Texas North Company; Alabama Power Company; American Coal Company; American Energy Corporation; Appalachian Power Company; ARRIPA; Big Brown Lignite Company LLC; Big Brown Power Company LLC; City of Ames, Iowa; City of Springfield, Illinois, Office of Public Utilities, d/b/a City Water, Light & Power; Columbus Southern Power Company; Consolidated Edison Company 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 Corporation; Environmental Committee of the Florida Electric Power Coordinating Group, Inc.; Environmental Energy Alliance of New York, LLC; GenOn Energy, Inc.; Georgia Power Company; Gulf Power Company; Indiana Michigan Power Company; International Brotherhood of Electrical Workers, AFL-CIO; Kansas City Board of Public Utilities, Unified Government of Wyandotte County, Kansas City, Kansas; Kansas Gas and Electric Company; Kenamerican Resources, Inc.; Kentucky Power Company; Lafayette Utilities System; Louisiana Chemical Association; Louisiana Department of Environmental Quality; Louisiana Public Service Commission; Luminant Big Brown Mining Company LLC; Luminant Energy Company LLC; Luminant Generation Company LLC; Luminant Holding Company LLC; Luminant Mining Company LLC; Midwest Food Processors; Mississippi Power lil Company; Mississippi Public Service Commission; Municipal Electric Authority of Georgia; Murray Energy Corporation; National Rural _ Electric Cooperative Association; Northern States Power Company (a Minnesota Corporation); Oak Grove Management Company LLC; Ohio Power Company; Ohio Valley Coa] Company; Ohio American Energy Inc.; Peabody Energy Inc.; Public Service Commission of Oklahoma; Public Utility Commission of Texas; Railroad Commission of Texas; Sandow Power Company; South Mississippi Electric Power Association; Southern Company Service, Inc.; Southern Power Company; Southwestern Electric Power Company; Southwestern Public Service Company; 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; Sunbury Generation LP; Sunflower Electric Power Corp.; Texas Commission on Environmental Quality; Texas General Land Office; Utility Air Regulatory Group; United Mine Workers of America; Utah America Energy, Inc.; Westar Energy, Inc.; Western Farmers Electric Cooperative; Wisconsin Case Metals Association; Wisconsin Electric Power Company; Wisconsin Paper Council, Inc.; Wisconsin Manufacturers and Commerce; and Wisconsin Public Service Corp. Intervenors in support of petitioners below, who are respondents or nominal respondents on review, were City of New York (D.C. Cir. Nos. 11-1388 & 11- 1V 1395 only); San Miguel Electric Cooperative, and State of New York (D.C. Cir. Nos. 11-1388 & 11-1395 only). RULE 29.6 DISCLOSURE STATEMENT Petitioners American Lung Association, Clean Air Council, Environmental Defense Fund, Natural Resources Defense Council, and Sierra Club have no parent companies. Nor have any of them issued publicly held stock. TABLE OF CONTENTS QUESTIONS PRESENTED ....................ccccecesssesessevere i PARTIES TO THE PROCEEDINGS ..............00.0...... il RULE 29.6 DISCLOSURE STATEMENT................ Vv yi tisccesccssicincsciciinsesiciecnsieadiiabimnintiiotin vi TABLE OF AUTHORITIES .................cesseeeececeeeeees viii I i nisiscaiicsiainiinitisinsinibiiadienbdiagatlateneansian 1 SANE RSS eee en an KOE 1 STATUTES AND REGULATORY PROVISIONS ... 1 TIT sie nie iisceiiiphieeidipalendiehaieaeiiniins 2 STATEMENT OF THE CASE.............. ccc ceeceeeseseeeees 4 | TD 4 B. Interstate Air Pollution and the Act’s “Good Neighbor” Provision ................:::00eee++0+ 5 C. The D.C. Circuit’s Prior Transport Ns ictal teshiasieedaleed enelbieeamamenichpaiedee 7 D. EPA’s Post-North Carolina I I daasniremnnmiiiioniisil 10 is a tain iniciecieennibatelenaniieeite 11 F. Proceedings on Judicial Review ................... 13 REASONS FOR GRANTING CERTIORARI.......... 16 If. Il. IV. THE PANEL VIOLATED CLEAR STATUTORY LIMITS ON _ JUDICIAL REVIEW BY RESTING ITS DECISION ON THEORIES NO PARTY HAD PRESENTED TO THE AGENCY DURING’ THE TT 16 THE COURT OF APPEALS IMPOSED RIGID REQUIREMENTS ON EPA’S IMPLEMENTATION OF THE GOOD NEIGHBOR PROVISION THAT ARE NOT FOUND IN THE STATUTE AND THAT DISREGARD THE REALITIES OF INTERSTATE AIR POLLUTION. ............... 21 THE D.C. CIRCUITS RULING THAT EPA MUST QUANTIFY THE GOOD NEIGHBOR OBLIGATIONS OF UPWIND- STATES BEFORE THOSE STATES NEED TO REDUCE THEIR EMISSIONS LACKS ANY i Oe 30 THE CASE PRESENTS ISSUES OF VITAL NATIONAL IMPORTANCE THAT WARRANT THIS COURT'S REVIEW. ........ 34 IT 5 air quality standards covered by the Transport Rule, adequate state plans were due in 2000 and 2009, respectively. See 76 Fed. Reg. at 48219. In 2010 and 2011, EPA found that many states had failed to submit state plans with adequate Good Neighbor measures, and determined, in other instances, that submitted state plan provisions on transport were inadequate. F-.g., 75 Fed. Reg. 32673 (June 9, 2010) (finding with respect to the 2006 PMeos standard for 23 states, D.C., and certain territories); 76 Fed. Reg. at 48219 (summarizing these actions). EPA explained that “[t]his finding creates a 2-year deadline for the promulgation of a {federal implementation plan] by EPA for a 10 particular state or territory, unless that state or territory submits a SIP to satisfy these section 110(a)(2)(D)G@)(I) requirements, and EPA approves such submission prior to that deadline.” 75 Fed. Reg. at 32674. E. The Transport Rule EPA promulgated the regulation at issue in direct response to North Carolina. 76 Fed. Reg. at 48211. The Transport Rule identified 27 states whose emissions of NOx and SOs significantly affected the ability of downwind states to attain or maintain compliance with the applicable air quality standards for ozone and PMes5. Jd. at 48208. EPA projected that the Transport Rule would allow a number of downwind states to meet, in accordance with statutory deadlines, their ozone attainment and maintenance obligations, and almost all to meet similar obligations for PMe25. Jd. at 48210. EPA estimated that the reductions in fine particle pollution under the Transport Rule would, starting in 2014, [A]Jnnually reduce between 13,000 and 34,000 PM2.5-related premature deaths, 15,000 non- fatal heart attacks, 8,700 incidences of chronic bronchitis, 8,500 hospital admissions, and 400,000 cases of aggravated asthma while also reducing 10 million days of restricted activity due to respiratory illness and approximately 1.7 million work-loss days. Id. at 48309. EPA calculated that “the annual net benefit (social benefits minus social costs)” of the Transport Rule in 2014 would be $110 to $280 11 billion, with compliance costs totaling $1.85 billion in 2012 and less than $1 billion in 2014. Jd. at 48313-14. In formulating the Transport Rule, EPA performed a two-step analysis to determine which states were subject to the Rule, and for those states, to evaluate their “significant contributions” to downwind nonattainment. First, based on air pollution transport modeling and monitoring data, the agency excluded many states from regulation: if a state’s contributions to air quality monitors in downwind nonattainment and maintenance areas never exceeded one percent of the relevant national ambient air quality standard, it was not subject to the Rule. Jd. at 48211, 48236-37. Second, for the states not excluded, EPA applied cost-effectiveness and air quality factors to determine the amount of each state’s significant contribution and abatement obligation. EPA then established emissions budgets incorporating safeguards (in response to North Carolina) to allow limited interstate’ trading consistent with ensuring timely reductions in interstate pollution. See sd. at 48210-12, 48214, 48246-48. Having previously found that states had not amended their implementation plans to meet their Good Neighbor obligations within the three-year statutory time period, EPA implemented the Rule via federal implementation plans pursuant to Section 110(c)(1) of the Act. Section 110(c)(1) provides that EPA “shall” promulgate a federal plan “within 2 years after’ EPA either (1) finds that a state failed to submit an adequate state implementation plan that complies with statutory requirements; or (2) 12 disapproves a state’s plan. See 76 Fed. Reg. at 48217. Beginning in 2014, the Rule allowed states to submit state implementation plans, for EPA's approval, that would modify or replace the federal implementation plans. See id. at 48327-28. In adopting federal plans, EPA explained that it lacked authority to extend Section 110(a)(1)’s three-year deadline for state plan submissions or alter Section 110(c)(1)’s unambiguous trigger for starting the two- year clock by which EPA must promulgate a federal plan. /d. at 48219-20. EPA also pointed to the North Carolina court’s “emphasis on remedying CAIR’s flaws expeditiously.” /d. at 48210. F. Proceedings on Judicial Review. On August 21, 2012, a divided D.C. Circuit panel granted petitions for review from upwind states and industry and vacated the Transport Rule. The court interpreted the Act, North Carolina and Michigan as creating a set of “red lines” limiting EPA’s authority under the Good Neighbor provision, App. 22a: (1) “once EPA reasonably delegates some level of contribution as ‘insignificant’ under the statute, it may not force any upwind State to reduce more than its own contribution to that downwind state minus the insignificant amount,” App. 23a; (2) the “collective burden” of reducing interstate pollution “must be allocated among the upwind States in proportion to the size of their contributions to the downwind State’s nonattainment,” App. 25a; and (3) the “combined obligations of the various upwind States, as aggregated,” must “not go beyond what is necessary for the downwind states to achieve the NAAQS.” App. 27a. 13 The majority next concluded that the Rule crossed each of these statutory “red lines.” The “most fundamental[}” problem was the possibility the restrictions imposed by the Rule in the second step of its methodology “could require upwind states to reduce emissions by more than the amount” EPA had used to exclude states from program coverage in the first step, App. 3la, 35a, re, to require abatement of contributions that were less than 1% of the NAAQS in the relevant downwind state. App. 3la-36a. In a lengthy footnote, App. 32a-34a n.18, the majority rejected EPA’s contention that this statutory argument was barred by 42 U.S.C. 7607(d)(7)(B) because no one raised it in the rulemaking comment period. The majority next concluded that the Transport Rule violated “the statute’s proportionality requirement,” because, the opinion said, EPA had “made no attempt to calculate upwind States’ required reductions on a proportional basis that took into account contributions of other upwind States to the downwind States’ nonattainment problems.” App. 38a-39a. In addition, the majority concluded that the Rule “failed to ensure that the collective obligations of the various upwind States, when aggregated, did not produce unnecessary over- control in the downwind States.” App. 39a. The majority held that the Rule was invalid for a second, independent reason, namely, that EPA had implemented it “without giving the States an initial opportunity to implement the obligations themselves through State Implementation Plans.” App. 42a. As noted above, after the North Carolina decision, EPA had found that none of the states subject to the 14 Transport Rule had submitted approvable Good Neighbor plans. Supra, pp. 10-11. As part of the Transport Rule, the agency adopted federal implementation plans for these states pursuant to 42 U.S.C. 7410(c)(1), which obligates the agency to “promulgate a [federal plan]” within two years of such findings. The majority nonetheless held that the states had no obligation to submit Good Neighbor plans until EPA “defines or quantifies” their obligations. App. 47a. The majority denied that the challenge was a collateral attack on EPA’s earlier disapproval findings, and _ hence jurisdictionally barred under 42 U.S.C. 7607(b)(1), which limits courts’ jurisdiction to chailenges filed within 60 days of EPA’s action. App. 61a-62a n.34. Judge Rogers filed a comprehensive dissent faulting the majority for “disregard[ing] limits placed on its jurisdiction, the plain text of the Clean Air Act, and the Court’s settled precedent interpreting the same statutory provisions at issue.” App. 65a. She concluded that the majority's invalidation of EPA’s method for determining upwind states’ obligations violated the “clear command” of the Act’s express exhaustion requirement, because “{njo objection was made during the Transport Rule administrative proceedings to EPA’s approach, let alone its statutory authority.” App. 67a. Judge Rogers also concluded that the challengers could not collaterally attack EPA’s prior, unchallenged actions disapproving the state plans for Good Neighbor deficiencies. App. 74a-78a. She rejected as contrary to the plain statutory text the majority’s conclusion that states have no Good Neighbor obligations until the EPA defines them. App. 85a-87a. 15 The dissent insisted that the majority’s reasons for entertaining statutory challenges to EPA’s “significant contribution” methodology were invalid and that it had ignored the administrative record in finding a statutory violation based on possible “over- control.” App. 95a-110a. Judge Rogers (who was on the panels that decided both Michigan and North Carolina) concluded that the majority badly misapplied both cases. App. 112a, 116a. Petitions for rehearing en banc were denied. REASONS FOR GRANTING CERTIORARI Bypassing statutory limits on its own authority, the D.C. Circuit majority imposed a set of detailed requirements not found in the statute and poorly suited to the complex realities of the interstate air pollution problem as documented by the administrative record. The decision, if uncorrected, will deprive downwind states and their residents of badly needed relief from interstate air pollution and will create unjustified obstacles to EPA’s and states’ ability to give effect to the Good Neighbor provision. This Court’s review is warranted. I. THE PANEL VIOLATED CLEAR STATUTORY LIMITS ON JUDICIAL REVIEW BY RESTING ITS DECISION ON THEORIES NO PARTY HAD PRESENTED TO THE AGENCY DURING THE RULEMAKING. As this Court has insisted, “courts should not topple over administrative decisions unless the administrative body not only has erred, but Aas erred against objection made at the time appropriate 16 under its practice,” Woodford v. Ngo, 548 U.S. 81, 90 (2006) (quoting United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952); emphasis added in Woodford), and “[e]xhaustion concerns apply with particular force ... when the agency proceedings in question allow the agency to apply its special expertise.” McCarthy v. Madigan, 503 U.S. 140, 145 (1992) (citing McKart v. United States, 395 U.S. 185, 194 (1969)). In order to facilitate timely and _ orderly implementation of its requirements, the Clean Air Act explicitly limits judicial review to issues properly raised during the administrative proceedings. 42 U.S.C. 7607(d)(7)(B); supra, p. 5. The court of appeals flagrantly disregarded this limitation. The court lacked authority to address what it characterized as the Transport Rule’s “most fundamental|[]” statutory flaw, see App. 31la, because, as the dissent explained, “[nJo objection was made during the ‘Transport Rule administrative proceedings to EPA’s approach, let alone its statutory authority, to use different, unrelated measures of significance for inclusion and budget-setting.” App. 67a. The question “is not close.” App. 96a. The majority never identified anything in the Transport Rule’s docket that satisfies the Act's explicit requirement that objections be raised during the public comment period. None of the grounds offered in the majority’s lengthy footnote, see App. 32a-34a n.18, withstands scrutiny. For example, that the prior interstate transport proceedings involved the question “whether EPA has complied with the basic statutory limits on its authority,” did not excuse parties’ failure to raise particular 17 “objections.” Nor did standard remand language in North Carolina (see App. 32a n.18) suffice to excuse a failure to raise statutory objections to EPA’s two- step methodology, which had not been challenged in, and expressly left “undisturbed” by North Carolina, see 531 F.3d at 916-17. (Judge Rogers, the only member of the North Carolina panel to sit on this case, was of the view that EPA’s approach in the Transport Rule was fully consistent with North Carolina). The court also pointed to comments made years earlier in the CAIR proceeding, but the D.C. Circuit has made clear that comments from prior rulemakings are insufficient under 42 U.S.C. 7607(d)(7)(B), see Appalachian Power Co. v. EPA, 251 F.3d 1026, 1036 (D.C. Cir. 2001)). And the fact that EPA had considered but not adopted “two air quality only approaches” (App. 33a n.18), by no means excused the challengers’ failure to raise their dii.erent, statutory theories “during the period for public comment.” 42 U.S.C. 7607(d)(7)(B). Section 7607(d)(7)(B) contains no futility exemption, and courts may “not read futility or other exceptions into statutory exhaustion requirement where Congress has provided otherwise.” Booth v. Churner, 532 U.S. 731, 741 n.6 (2001).? 2 The Court lastly cited two comments in the Transport rulemaking, one from Wisconsin that urged less reliance on costs to achieve more stringent regulation, and one from Tennessee that urged EPA to “consider” a lower cost threshold for states that can reduce their emissions below the contribution level EPA defined as significant. App. 34a n.18. Neither argued that the statute prohibited EPA’s approach. See App. 98a-101a (dissent). 18 The diverse rationales in the court of appeals’ footnote are far removed from the rule laid down in the statute, which is whether an objection was “raised with reasonable specificity during the period for public comment.” 42 U.S.C. 7607(d)(7)(B). Left uncorrected, this grab-bag of excuses would provide ready means for parties to disrupt’ the administrative and judicial processes by raising on review issues they had failed to raise below. See App. 65a-66a, 115a-116a. The circumstances here illustrate, in an especially vivid way, the hazards of bypassing statutory exhaustion requirements. The panel overturned EPA’s rule not because it found that the agency’s methodology actua//y required even a single upwind state to reduce emissions below the 1% threshold the majority regarded as a statutory “red line,” App. 22a; rather, the majority deemed the mere possibility of such a result to be fatal. See, e.g., App. 35a (EPA’s budgets “cou/d require upwind States to reduce emissions by more than the [initial threshold] amount”) (emphasis added). Precisely because no participant in_ the rulemaking raised the objection, EPA had no reason during the rulemaking to model whether, in fact, the court’s “red line” would be exceeded for any state. Indeed, after the challengers first presented the issue in their opening briefs, EPA analyzed the record evidence on this newly-raised objection and explained that “data in the record suggest that, at the cost thresholds used in the Rule, such a scenario is extremely un/rkely to occur.” EPA CA Br. 33; see also id. 33-34 n.20. It is highly doubtful that any party would have had Article II] standing to press 19 any “over-control” claim had the issue been timely raised during the rulemaking, and had EPA demonstrated then that none of the states subject to the Transport Rule would be required to reduce emissions below the 1% threshold. See Clapper v. Amnesty Int?) USA, 133 §. Ct. 1138, 1147 (2013) (discussing injury in fact requirement). The court’s departures from the _ statutory exhaustion requirements were not limited to the “over-control” issues. As the dissent noted, the challengers never (even in their briefs) raised the argument that the statute required “proportionality,” App. 69a, and not a single commenter proposed the regime later invented by the majority as a supposed statutory requirement. Further, there was no agency record addressing the efficacy or feasibility of the majorit’s approach. For a court to prescribe, sua sponte, a set of untried rules on a highly technical matter lke controlling multistate air pollution inverts the decisional structure created by Congress. Cf Am. Elec. Power Co., Inc. v. Connecticut, 131 S. Ct. 2527, 2539 (2011) (“the first decider under the Act is the expert administrative agency, the second, federal judges”). The D.C. Circuit’s bypassing of the Act’s exhaustion requirement to reach statutory claims that had not been presented to the agency warrants this Court’s correction. 20 il. THE COURT OF APPEALS IMPOSED RIGID REQUIREMENTS ON EPA’S IMPLEMENTATION OF THE GOOD NEIGHBOR PROVISION THAT ARE NOT FOUND IN THE STATUTE AND THAT DISREGARD THE REALITIES OF INTERSTATE AIR POLLUTION. The court of appeals departed sharply from the proper role of a federal court reviewing the actions of an agency to which Congress had granted authority to implement a federal statute. As this Court has repeatedly insisted, the agency’s interpretation “governs if it is a reasonable interpretation of the statute—not necessarily the only _ possible interpretation, nor even the interpretation deemed most reasonable by the courts.” Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 217-18 (2009) (citing Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-844 (1984)). In an uncommonly stark way, however, the court of appeals majority improperly “impose[d] its own construction on the statute,” Chevron, 467 U.S. at 843, in place of the agency’s reasonable construction. Its decision, which will improperly constrain EPA's efforts to give the intended effect to an important provision of the Act, calls for this Court’s review. The regulatory context here is especially ill-suited for such a judicial imposition. As the record in this proceeding shows, mitigating interstate air pollution problems — especially those involving multiple upwind and downwind states, with pollution resulting from dynamic emissions activity that 21 quickly shifts in response to changes in power demand or control costs — is unusually complex and technically demanding. See Regulatory Impact Analysis, JA 3192-98; 76 Fed. Reg. at 48352-61; “Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.” Am. Elec. Power Co., 131 S. Ct. at 2539-40. The statutory text requiring each state to develop “adequate” plan provisions that “prohibit[]” “any” emissions activity that “will . . . contribute significantly to nonattainment in... any other State,” 42 U.S.C. 7410(a)(2)(D)()(D), manifestly calls upon administrative judgment and technical expertise. In Michigan, the D.C. Circuit recognized that the statutory language is ambiguous and provides no “criterion for classifying ‘emissions activity’ as ‘significant,’ 213 F.3d at 674. The court upheld EPA’s two-step approach as a permissible statutory construction, including the agency’s “decision to draw the ‘significant contribution’ line on a basis of cost differentials.” See rd. at 679. In North Carolina, the Court sustained the same two-step approach to defining upwind states’ “significant contributions.” See 531 F.3d at 917 (“Again, we do not disturb this approach”). EPA relied on these holdings and adhered to same basic two-step approach to defining significant contributions. See 76 Fed. Reg. at 48270- 71, 48303-04. In a jarring change of direction, the majority here held that EPA’s_ twice-approved _ two-step methodology violated unambiguous _ statutory Janguage in multiple respects. The decision’s statutory analysis is hampered by a _ repeated 22 inversion of statutory exhaustion rules, in which EPA was repeatedly faulted for failing to rebut objections never made, and by the majority’s complete failure to demonstrate that EPA’s own explanations regarding its “significant contribution” methodology were unlawful or arbitrary. Far from performing the deferential review Chevron prescribes, the majority never even engaged with the agencys explanation of why its methodology appropriately implemented the _ statute and conformed to the D.C. Circuit’s interpretation in Michigan and North Carolina. See 76 Fed. Reg. at 48270-71. “Over-Control” Although the majority declared that EPA “did not try to take steps to avoid . . . over- control,” App. 40a, this conclusion is_ simply “unsupported by the record,” App. 113a (Rogers, J.). In fact, EPA projected that, even when fully implemented, the Rule would not reduce emissions enough in some nonattainment areas. 76 Fed. Reg. at 48210, 48232, 48247-48; App. ll4a (Judge Rogers, concluding that “there is no support for the court’s conclusion that the Transport Rule resulted in collective over-control.”); Technical Support Document, Air Quality Modeling, JA 2466, 2470 (five areas are projected to have 24-hour PM2,>5 issues post-implementation, while ten sites in two areas (Houston, TX and Baton Rouge, LA) will have ozone problems); Technical Support Document, Alternative Significant Contribution Approaches’ Evaluated (“Alternative Approaches TSD”), JA 2311 (criticizing alternative methodology as potentially producing “substantial over-control”). Significantly, neither the court, nor the challengers, identified any 23 instance in which the Rule required greater reductions than necessary to achieve attainment. Nor is there any basis in the statutory text for the court’s singular focus on a hypothetical danger of “over-control.” The Good Neighbor provision is not a “blank check” authorizing EPA to reduce air pollution indiscriminately. App. 22a. But neither is the provision a wooden nickel; it is aimed at actually achieving necessary restrictions on upwind pollution transport that downwind states need to protect their citizens’ health and well-being. The text prescribes that measures to address interstate pollution must be “adequate,” and must “prohibit[]” “any” emissions that will contribute significantly to nonattainment “or” interfere with maintenance of standards in downwind states. See North Carolina, 531 F.3d at 908 (transport rule “must actually require elimination of emissions” that contribute significantly to downwind nonattainment). All this must be done “consistent with the provisions of this [Act],” including the statutory attainment deadlines downwind states must meet. /d. at 911-12. Evaluating the risk that a given methodology will go too far in controlling interstate pollution and the risk it will not go far enough requires a “complex balancing,” Am. Elec. Power Co., 131 S. Ct. at 2539, that is the job of agency policymakers, not judges. Here, EPA considered these problems and resolved them in a reasoned way. The court’s analysis did not demonstrate that the agencys work was unreasonable or arbitrary and capricious, or even seriously engage with the agency’s reasoning. The court’s erection of a series of formidable bulwarks against the merest possibility of over-control — even 24 if undocumented — is altogether out of step with Congress’s repeated amendments to the statute to strengthen controls on transported pollution, and with the history of upwind states’ persistent under- control of interstate air pollution. Proportionality. Addressing another statutory argument that the challengers had not raised, see App. illa (dissent), the court concluded that the statutory text includes a “fair share” requirement, under which abatement obligations “must be allocated among the upwind States in proportion to the size of their contributions to the downwind State’s nonattainment.” App. 25a; see also App. 26a- 27a & n.15 (illustrated majority’s proportionality rule with a numerical example involving how three upwind states contribute to nonattainment in one downwind state). Nothing in the Act’s language imposes any “proportionality” or particularized “fair share” requirement like that contained in the court's discussion.* To be sure, under the arbitrary and capricious standard, a claim of improper disparities among states’ compliance obligations, if duly raised in comments, would demand a reasoned agency response. Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43-44 (1983). But judicial review of such a claim would require examining the legal and policy reasons given by the agency for its choices, its responses to 3 In North Carolina, the D.C. Circuit rejected EPA’s use of fairness as a regulatory rationale because “what is an ‘equitable governmental approach to attainment’ is not among the objectives of [the Good Neighbor provision].” 531 F.3d at 918. 25 objections properly raised in comments, and the feasibility and probable consequences of alternative approaches. The court below, in contrast, looked at none of this, casting its proportionality rule instead as a peremptory statutory requirement. The majority did note that EPA had considered “a proportional approach that reflected many of the essential] principles described above,” but “ultimately chose not to adopt that approach.” App. 40a n. 24 (citing Alternative Approaches TSD, JA 2311-12). Unmentioned by the majority, however, were the facts that (1) no commenter in the rulemaking advocated for that approach, let alone claimed that that such an approach was required by statute, see App. 107a-108a (dissent); (2) EPA rejected this approach for a variety of candidly explained reasons, pointing out, inter a/ia, the risk of overburdening states that had already adopted controls and noting that the proportionality concept breaks down whenever more than one downwind state is involved, JA 2311-12; and (3) EPA’s reasons for rejecting the approach were not challenged by any party. The court’s proportionality rule fares poorly under real-world conditions. Unlike the court’s hypothetical, upwind states frequently contribute to nonattainment in multiple downwind states. £.g., 76 Fed. Reg. at 48242-44, Tables V.D-5, V.D-6. Indeed, in considering a methodology requiring upwind states to reduce their emissions “by an amount that is proportional to their contribution,” EPA explained that “most upwind states contribute to multiple downwind monitors (in multiple states) and would have a different reduction percentage for each one.” Alternative Approaches TSD, JA 2312. 26 The court of appeals did not mention EPA's explanation, let alone show why it was wrong.‘ If the Good Neighbor provision incorporates a “fair share” norm requiring equitable treatment of states, that norm does not preclude EPA from considering how much effort different upwind states have already made to control pollution. Under a standard that required upwind states to reduce emissions by “the same percent reduction of existing emissions,” EPA explained, states that had _ previously implemented stringent contro] programs might not be able to achieve the required reductions using existing control technologies, while others that had previously done little (and presumably have larger absolute contributions) would achieve their required reductions using significantly less than optima] control technologies. Alternative Approaches TSD, JA 2312. Certainly nothing in the concept of “fair share” compelled EPA to adopt the majority’s approach. Indeed, even if the statute had express/y directed EPA to identify upwind states’ “fair share” of emissions reductions, that broad term could not reasonably be interpreted to dictate one particular approach. Cf Verizon Communications, Inc. v. F-C.C., 535 U.S. 467, 501 (2002) (statutory prescription of “just and 4 The majority suggested that some departures from proportionality might be tolerable where necessary to “ratchet back” emissions control reductions to avoid “over-control.” See App. 29a. But there is no textual or logical basis for making only this departure, and the majority’s proportionality rule fails whenever states’ emissions contribute to nonattainment in more than one downwind state. 27 reasonable” rates leaves methodology “largely subject to [agency] discretion”). Reliance on Cost. In Michigan, the D.C. Circuit explicitly approved EPA's reliance on uniform cost levels as a means of fixing states’ “significant contributions” to nonattainment, over objections that doing so resulted in an improper lack of proportionality. 213 F.3d at 679. The majority here recast Michigan as having merely upheld rules “preventf{ing] exorbitant costs from being imposed on certain upwind States.” App. 27a.5 There is no basis in the statute for limiting consideration of control costs to avoiding “exorbitant” costs. In the Transport Rule, EPA did not rely upon cost to weaken the Act’s public health protections, see Whitman v. Am. Trucking Ass‘ns, Inc., 531 U.S. 457, 465 (2001). Instead, the agency used control costs as a tool for assigning abatement obligations among states jointly responsible for downwind pollution, concluding that cost thresholds corresponding to differing levels of pollution-control effort, combined with air quality considerations, achieved the necessary reductions in an effective and efficient manner. See 76 Fed. Reg. at 48256. EPA explained that basing emissions limits in part on control cost thresholds had the advantage of taking account of whether upwind states had already taken steps to reduce their transported pollution. 5 In fact, the NO, SIP Call methodology relied on a uniform cost standard based on what were judged to be “highly cost effective controls” and did not require a particular showing of extreme burdens, as the Michigan court definitely recognized. See 213 F.3d at 675-79. 28 Alternative Approaches TSD, JA 2312. The agency explained that approaches using air quality considerations alone could lead to extreme obligations for a few states while still failing to achieve adequate reductions. See id., JA 2309-10 (evaluating “air quality only” approach and finding that for certain upwind states (Indiana, Kentucky, Ohio, and Pennsylvania) it would require reductions of 90% or more of all SO2 and NO, emissions (not just power plant emissions) using a 1%-of-NAAQS threshold, and of 69% or more even if the threshold were increased more than threefold). Given the dynamic, cost-driven realities of the electric power industry, an interstate transport rule is unlikely to achieve its goal if it is not designed with costs in mind, as EPA discussed extensively. Suppliers of electricity “bid” to supply power to the interstate electric grid based largely on their operating costs, and system operators dispatch power based on those bids. Installation and operation of environmental controls can affect operating costs and can cause emissions to shift to units with fewer controls, causing more pollution. See 76 Fed. Reg. at 48255 (discussing “shifting of emissions between states” due to “interconnected nature of the country’s energy system”). EPA’s mixed cost and air quality approach was based upon extensive consideration of those realities. In developing the Rule, EPA used both an air pollution transport model, CAMx, and a model developed for the electric industry, the Integrated Planning Model (“IPM”), to evaluate how pollution control costs would shift dispatch, and how downwind air quality would be affected. JA 2333. 29 The statute permitted EPA to adopt a methodology attuned to real-world conditions, rather than a static analysis of oversimplified hypotheticals. M1.THE D.C. CIRCUITS RULING THAT EPA MUST QUANTIFY THE GOOD NEIGHBOR OBLIGATIONS OF UPWIND STATES BEFORE THOSE STATES NEED TO REDUCE THEIR EMISSIONS LACKS ANY STATUTORY BASIS. The court of appeals’ ruling that states have no obligation to include Good Neighbor reductions in implementation plans until EPA has quantified their obligations, App. 45a-48a, was _ jurisdictionally barred, strayed far from the text of the Act, and disrupts settled state and EPA practice. First, as the dissent explained, App. 69a-94a, the challenge to EPA’s_ reliance’ on federal implementation plans was barred by the Act’s express limits judicial review. Following the North Carolina decision, EPA disapproved state plans in all of the states covered by the Transport Rule because of the absence of adequate Good Neighbor measures. Those actions triggered an unambiguous statutory obligation to promulgate federal plans. 42 U.S.C. 7410(c)(1) (Administrator “shall promulgate” federal implementation plan “at any time within 2 years” after failure finding or SIP disapproval). States that sought to challenge EPA's conclusion that their plans were inadequate with respect to interstate transport, and that wished to stop the mandatory statutory deadline for federal plans had 60 days to challenge EPA's disapproval. See 42 U.S.C. 7607(b)(1). Only three parties (Georgia, Kansas, and a Kansas-based firm) filed such challenges, and their (still-pending) 30 challenges were not part of the challenge to the Transport Rule. See App. 74a & n.5 (dissent, citing these separate challenges). The majority lacked jurisdiction to entertain these collateral challenges in the instant case. See App. 73a-82a. Second, the language of the Act does not support the court’s ruling that EPA must quantify Good Neighbor obligations before the state planning process can begin. To the contrary, the text of the Good Neighbor provision puts the obligation directly on the state as part of its initial plan submission: “|E]ach [state implementation] plan shall . . . contain adequate provisions .. . prohibiting . . . any source or other type of emissions activity within the State[.]” 42 U.S.C. 7410(a)(2)(D)G)(). The majority noted that the states have no obligation to implement an ambient air quality standard until EPA has set the concentration level of such standard, and then analogized that states have no obligation to address pollution transport in their plans until EPA specifies the quantity that they must abate. App. 53a. But, as Judge Rogers explained, the analogy between states’ interstate transport obligations and their obligations regarding new or amended air quality standards is unmoored from the “plain text.” See App. 84a-86a. States’ obligation to develop amendments to its implementation plan to eliminate “significant contribution” to downwind nonattainment of previously established air quality standards comes directly from the statute. /d. © 6 The majority's argument that Section 126 of the Act, 42 U.S.C. 7426, supports its EPA-first approach, App. 54a-55a, also is unmoored from the text. As the dissent explained, “[t}he 31 As the dissent explained, “[t]he plain text [of 42 U.S.C. 7410(c)(1)] requires that within three years of EPA’s promulgation of [an air quality standard], States shal] submit SIPs, and those SIPS sha// include adequate good neighbor provisions.” App. 85a. Under the statute’s plain language, States have a direct obligation te ensure that their implementation plans contain acequate provisions to prohibit significant contribution. They must submit such provisions for EPA approval or disapproval. 42 U.S.C. 7410(a)(1), (2). That obligation to adopt and submit measures to prevent significant contribution exists whether or not EPA has promulgated regulations quantifying “significant contribution.” The majority's ruling that EPA must first quantify the Good Neighbor obligations of states ignores the Act’s explicit requirement that states “provide for. . . performance of such air quality modeling as |EPA] may prescribe for the purpose of predicting the effect on ambient air quality of any emissions of any air pollutant” covered by an air quality standard. 42 U.S.C. 7410(a)(2)(K). Pursuant to this requirement, states have regularly performed the type of quantification analysis that the majority assumed they cannot do. See, e.g., 76 Fed. Reg. 53638 (Aug. 29, 2011) (approving a Good Neighbor plan from Delaware). States have also formed regional coalitions in order to perform complex air quality modeling. See 77 Fed. Reg. 45992, 46004 (Aug. 2, majority's “comparison of section 110 to section 126... conflates direct federal regulation of sources with EPA's statutory authority to enforce requirements that States comply with their ‘good neighbor’ SIP obiigations[.]” App. 85a, n.9. 32 2012). Like EPA, States analyze power sector emissions using sophisticated computer programs. See, e.. 77 Fed. Reg. 38501, 38506 (June 28, 2012) (southeastern states conducted “air quality modeling” and “generated future-year emissions inventories for the electric generating sector of the contiguous United States using [IPM]”). The majority’s conclusion that upwind states have no Good Neighbor obligations until EPA specifies a numerical standard is contradicted by the statutory text (which says otherwise) and by common sense. The majority managed to abandon a _ statute containing an unambiguous “shall” obligation because it believed language of the Good Neighbor provision, like a traffic sign that says “drive ‘carefully,” does not provide sufficiently “precise guidance” to upwind states, App. 5la; but laws that establish general, but still obligatory, norms are ubiquitous, from common-law negligence and nuisance to statutory prohibitions against “unreasonable restraints of trade.” “Good neighbors” do not have to be told exactly how many decibels they may blast their stereos before becoming a nuisance — even though, if necessary, the police officer will tell them. Neither the fact of interstate pollution nor the means of abating it are impenetrable mysteries; abatement frequently involves well recognized techniques such as requiring high-emitting sources to operate installed pollution controls. See 76 Fed. Reg. at 48250-52. States (including the many states that have never been covered by EPA’s regional transport rules) regularly prepare plans addressing transport. See, e.g., 77 Fed. Reg. 1027 (Jan. 9, 2012) (approval of 33 Colorado interstate transport plan); 72 Fed. Reg. 41629 (July 31, 2007) (approval of Arizona interstate transport plan). The ruling imposes a regulatory hurdle that does not exist in the Act, and places the resulting burden of inertia on the downwind states and their residents, compounding the delays and under-control of interstate pollution the Good Neighbor provision was intended to remedy. This Court’s review is warranted. IV.THE CASE PRESENTS ISSUES OF VITAL NATIONAL IMPORTANCE THAT WARRANT THIS COURTS REVIEW The Transport Rule was crafted to provide downwind states with relief from cross-border pollution that interferes with their ability to meet and maintain health-based air quality standards. The stakes for public health are high. EPA found that the Rule would save tens of thousands of lives annually, and avoid hundreds of thousands of serious illnesses. See supra, p. 11.7 The subject-matter of this case makes this Court's intervention particularly important. States injured by trans-border pollution rightfully expect the federal government to bear “the duty of providing a remedy,” Missouri, 180 U.S. at 241, for harms the downwind states themselves are without power to address. Interstate pollution misdirect the forces of interstate competition; states favored by geography 7 Designed to remedy the predecessor rule’s flaws, the Transport Rule provides greater health benefits than CAIR. See Dec. of David Schoengold, Ex. A to Intervenors’ Dec. 1, 2011, Stay Opp. (D.C. Cir. Doc. 1345215). 34 or wind patterns can export the social costs of their economic activity, securing an advantage over neighboring states (and companies located there). Some downwind states are unable, due to interstate pollution, to meet air quality standards even after imposing abatement obligations upon local sources far more demanding than upwind states have imposed. Downwind states stymied by interstate pollution are not excused from the Act’s attainment deadlines. See Sierra Club vy. EPA, 294 F.3d 155, 160 (D.C. Cir. 2002); Sierra Club v. EPA, 311 F.3d 853, 860 (7th Cir. 2002); Sierra Club v. EPA, 314 ©.3d 735, 741 (5th Cir. 2002). The decision below has left the law governing the pivotal Clean Air Act provision in disarray. The effect of the decision is to restore a prior rule, CAIR, that the D.C. Circuit, in North Carolina, has declared to have “fundamental flaws,” including its failure to provide downwind states with adequate protection within’ the © statutorily mandated deadlines. Both the prior rule, and this one, were crafted (by successive Administrations) in efforts to conform to the D.C. Circuit’s guidance. The D.C. Circuit’s commands to EPA as to how the statute is supposed to work now point in opposite directions: In North Carolina, the court faulted EPA for failing to ensure that emission reductions from upwind states would occur in time for downwind states to meet their statutory nonattainment 8 See Conn. Dept. of Envtl. Prot., Comments (JA 1227-29); Md. Dep’t of the Envt., Comments (JA 586); N.Y.S. Dep’t of Envtl. Cons., Comments (JA 928). 35 deadlines — an interest that EPA strove to satisfy with the timing of its rule. The court here, however, laid out a set of substantive strictures and procedural rules that give no weight to the central statutory goal of providing speedy relief for downwind states. See App. 93a-94a, 114a (dissent). While the majority did not purport to overturn the prior D.C. Circuit decisions approving regional transport programs based in part on_ cost considerations, the court’s various methodological strictures appear to eliminate EPA's ability to do so in practice. The majority’s instructions on proportionality conflict not only with Michigan's explicit rejection of the same argument, 213 F.3d at 679, but, in a large class of cases, with basic arithmetic. See supra, p. 26. Its lack of consideration for the practical and legal concerns that led EPA to support its two-step methodology will unduly complicate the agency’s ability to give effect to the statute going forward. Heightening the importance of the case are the many ways in which EPA's transport rules are interwoven with the air quality planning processes of upwind and downwind states, and with the implementation of other federal and state programs. Moreover, the air quality standards to which the Good Neighbor provision is tied must be periodically reviewed and revised, 42 U.S.C. 7409(d)(1); see Am. Trucking Ass’ns, 531 U.S. at 463, and new nonattainment areas designated. See 77 Fed. Reg. 30088 (May 21, 2012) (designating 45 areas (including 7 multistate areas) as nonattainment for the 2008 ozone NAAQS); see also 77 Fed. Reg. 342.1 (June 11, 2012) (additional designations); 78 Fed. 36 Reg. 3086 (Jan. 15, 2013) (revised standard for PM25). The questions with which the D.C. Circuit has struggled for more than a decade will recur. The court of appeals’ repeated bypass of statutory exhaustion requirements - and its embrace of numerous easily manipulated theories to excuse a failure to present objections — are also of broad public significance. The D.C. Circuit is the sole forum for judicial review of national Clean Air Act rulemakings, 42 U.S.C. 7607(b)(1), and has a singular role reviewing rulemakings under a host of major regulatory statutes with exhaustion requirements.? The decision here is apt to encourage “blindsiding” of agencies, see App. 114a, and the majority's long menu of rationales for bypassing clear limits on judicial review, App. 32a-34a n.18, supra, pp. 17-18, injects costly uncertainty into rules that form the foundation of administrative law. The court of appeals’ violation of bedrock rules of administrative procedure, its disregard of the agency’s own analysis (even as the majority took up objections not presented to the agency), and its willingness to impose detailed methodological requirements on EPA without any examination of their feasibility are ironic given the long and unhappy background of judicia/ efforts to handle the chronic problem of interstate pollution: 8 See, e.g, 47 U.S.C. 405(a)(2) (Communications Act); 15 U.S.C. 77i({a) (Securities Act of 1933); 15 U.S.C. 78y(c)(1) (Securities Exchange Act of 1934); 29 U.S.C. 160(e) (National Labor Relations Act); 29 U.S.C. 210(a) (Fair Labor Standards Act); Nat7 Mining Ass'n v. MSHA, 512 F.3d 696, 700 (D.C. Cir. 2008) (such provisions are “common” in “many regulatory statutes”). 37 History reveals that the course of this Court’s prior efforts to settle disputes regarding interstate air and water pollution has been anything but smooth. In Missouri v. J/linois, 200 U.S. 496, 520—522 (1906), Justice Holmes was at pains to underscore the great difficulty that the Court faced in attempting to pronounce a suitable general rule of law to govern such controversies. Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493, 501 (1971). See also City of Milwaukee v. Illinois, 451 U.S. 304, 325 (1981) (“(Djifficult” “technical problems” associated with water pollution control were “doubtless the reason Congress’ vested authority to administer the Act in administrative agencies possessing the necessary expertise.”). The court of appeals forgot these important lessons, at great cost to downwind states and their millions of residents. 38 CONCLUSION The petition for certiorari should be granted. George E. Hays 236 West Portal Ave. No. 110 San Francisco, CA 94127 (415) 566-5414 Joshua Stebbins Zachary M. Fabish The Sierra Club 50 F Street NW, 8th Floor Washington DC 20001 (202) 675-6273 John D. Walke Emily Davis Natural Resources Defense Council 1152 15% St., Ste. 300 Washington, DC 20005 (202) 289-6868 Respectfully submitted. Sean H. Donahue Counsel of Record Donahue & Goldberg, LLP 2000 L St. NW, Ste 808 Washington DC 20036 (202) 277-7085 sean@donahuegoldberg.com Pamela A. Campos Graham G. McCahan Vickie L. Patton Environmental Defense Fund 2060 Broadway, Ste 300 Boulder, CO 80302 (303) 440-4901 David Marshall Clean Air Task Force 41 Liberty Hill Road Building 2, Suite 205 Henniker, NH 03242 (603) 428-8114 39 OPPOSITION BRIEF ‘> Nos. 12-1182, 12-1188 | ae IN THE a q Pa ” oupreme Gourt of the Matted States ==-2-"~ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al., Petitioners, Vv. EME HoMeEr City GENERATION, L.P. et al., Respondents. AMERICAN LUNG ASSOCIATION, et al., Petitioners, v. EME Homer Cry GENERATION, L.P., et al., Respondents. On Petitions for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit BRIEF IN OPPOSITION OF — INDUSTRY AND LABOR RESPONDENTS F. WILLIAM BROWNELL PETER D. KEISLER HUNTON & WILLIAMS LLP Counsel of Record 2200 Pennsylvania C. FREDERICK BECKNER ITI Avenue, N.W. ROGER R. MARTELLA, JR. Washington, D.C. 20037 TIMOTHY K. WEBSTER (202) 955-1500 ERIC D. MCARTHUR CHRISTOPHER A. BATES P. STEPHEN GIDIERE III SIDLEY AUSTIN LLP BALCH & BINGHAM LLP 1501 K Street, N.W. 1901 Sixth Avenue North Washington, D.C. 20005 Suite 1500 (202) 736-8000 Birmingham, AL 35203 pkeisler@sidley.com (205) 251-8100 Counsel for Luminant Generation Company LiCetal. ....:.. [Additional Counsel Listed on Inside Pages] «-.: - | WILSON-EPES PRINTING Co., INC. — (202) 788-0096 — WASHINGTON, D.C. 20002 JANET J. HENRY AMERICAN ELECTRIC POWER SERVICE CORP. 1 Riverside Plaza Columbus, OH 43215 (614) 716-1612 Counsel for AEP Texas North Company, Appalachian Power Company, Indiana Michigan Power Company, Kentucky Power Company, Ohio Power Company, Public Service Company of Oklahoma, and Southwestern Electric Power Company STEVEN G. MCKINNEY BART E. CASSIDY BALCH & BINGHAM LLP KATHERINE L. VACCARO 1901 Sixth Avenue North DIANAA. 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FLANNERY GALE LEA RUBRECHT JACKSON KELLY PLLC 500 Lee Street East Suite 1600 P.O. Box 553 Charleston, WV 25322- 553 (304) 340-1000 Counsel for the Midwest Ozone Group PETER S. GLASER TROUTMAN SANDERS LLP 401 Ninth Street N.W. Suite 1000 Washington, D.C. 20004 (202) 274-2998 Counsel for National Mining Association and Peabody Energy Corp. WILLIAM L. WEHRUM, JR. HUNTON & WILLIAMS LLP 2200 Pennsylvania Avenue, N.W. Washington, D.C. 20037 (202) 955-1500 Counsel for National Rural Electric Cooperative Association MICHAEL J. NASI JACOB ARECHIGA JACKSON WALKER L.L.P. 100 Congress Avenue Suite 1100 Austin, Texas 78701 (512) 236-2000 Counsel for San Miguel Electric Cooperative, Inc. ANN M. SEHA ASSISTANT GENERAL COUNSEL XCEL ENERGY INC. 414 Nicollet Mall 5th Floor Minneapolis, MN 55401 (612) 215-4619 Counsel for Northern States Power Company — Minnesota and Southwestern Public Service Company KARL R. MOOR JULIA A. BAILEY DULAN SOUTHERN COMPANY SERVICES, INC. 600 North 18th Street Bin 15N-8190 Birmingham, AL 35203 (205) 251-6227 Counsel for Southern Co. Services, Inc. GRANT CRANDALL EUGENE M. TRISKO ARTHUR TRAYNOR, III LAW OFFICES OF EUGENE UNITED MINE WORKERS M. TRISKO OF AMERICA P.O. Box 47 18354 Quantico Gateway Glenwood, MD 21738 Drive (301) 639-5238 Suite 200 Triangle, VA 22172 (703) 291-2457 Counsel for United Mine Workers of America ANDREA BEAR FIELD NORMAN W. FICHTHORN E. CARTER CHANDLER CLEMENTS HUNTON & WILLIAMS LLP 2200 Pennsylvania Avenue, N.W. Washington, D.C. 20037 (202) 955-1500 Counsel for the Utility Air Regulatory Group RICHARD G. STOLL BRIAN H. POTTS FOLEY & LARDNER LLP FOLEY & LARDNER LLP 3000 K Street, N.W. Verex Plaza Suite 600 150 East Gilman Street Washington, D.C. 20007 Madison, WI 53703 (202) 295-4021 (608) 258-4772 Counsel for Wisconsin Public Service Corporation QUESTIONS PRESENTED The Clean Air Act’s “good-neighbor” provision re- quires upwind States to prohibit sources within their borders from “emitting any air pollutant in amounts” that “contribute significantly” to downwind States’ “nonattainment” of national ambient air quality standards (“NAAQS”). 42 U.S.C. §7410(a)(2)(D)(@i)(1). Pursuant to this provision, the Environmental Pro- tection Agency (“EPA”) issued a regulation, known as the Transport Rule, requiring upwind States to make emissions reductions without regard to whether the reductions mandated in a particular State were greater than necessary to eliminate that State’s sig- nificant contribution to downwind States’ nonattain- ment of the NAAQS, and without regard to whether the overall reductions mandated in the upwind States were greater than necessary for the downwind States to achieve attainment. The questions presented are: 1. Whether the court of appeals correctly held that the challenges to the Transport Rule on which the court granted relief were adequately presented to EPA and preserved for judicial review. 2. Whether the court of appeals correctly held that the States must be given the initial opportunity to implement the reductions required by EPA under the good-neighbor provision. 3. Whether the court of appeals correctly held that the Transport Rule exceeded EPA’s statutory author- ity to prohibit only those “amounts” of emissions that “contribute significantly” to downwind States’ “nonat- tainment” of the NAAQS. (1) ll RULE 29.6 STATEMENT AEP Texas North Company is a wholly owned sub- sidiary of AEP Utilities, Inc. AEP Utilities, Inc., Ap- palachian Power Company, Indiana Michigan Power Company, Kentucky Power Company, Ohio Power Company, Public Service Company of Oklahoma, and Southwestern Electric Power Company are wholly owned subsidiaries of American Electric Power Com- pany, Inc. American Electric Power Company, Inc. has no parent, and no publicly held corporation owns ten percent or more of its stock. ARIPPA is a non-profit trade association that rep- resents a membership primarily comprised of electric generating plants using environmentally friendly cir- culating fluidized bed (“CFB”) boiler technology to convert coal refuse and/or other alternative fuels such as biomass into alternative energy and/or steam, with the resultant alkaline ash used to reclaim mine lands. ARIPPA was organized in 1988 for the pur- pose of promoting the professional, legislative and technical interests of its member facilities. ARIPPA has no outstanding shares or debt securities in the hands of the public and does not have any parent, subsidiary, or affiliate that has issued shares or debt securities to the public. Big Brown Lignite Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement ap- pears below. Big Brown Power Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement ap- pears below. Dairyland Power Cooperative is a non-stock, not- for-profit cooperative association organized under the laws of the State of Wisconsin, with its principal of- fice located in La Crosse, Wisconsin. Dairyland is engaged, among other things, in the business of gen- erating and transmitting electric power to its 25 member distribution cooperatives and to other whole- sale customers. Dairyland has no corporate parent. No publicly held corporation owns a 10% or greater ownership interest in Dairyland. EME Homer City Generation, L.P. “(EME Homer City”) is a limited partnership composed of Mission Energy Westside, Inc., a California corporation, as the general partner and Chestnut Ridge Energy Company, a California corporation, as the limited partner. Mission Energy Westside, Inc. and Chestnut Ridge Energy Company are wholly owned subsidiar- ies of Edison Mission Holdings Company, which, in turn, is a wholly owned subsidiary of Edison Mission Energy. Edison Mission Energy is a Delaware Corpo- ration, which is a wholly owned subsidiary of Mission Energy Holdings Company, a Delaware corporation, which, in turn, is a wholly owned subsidiary of Edi- son Mission Group, Inc., a Delaware corporation, which, in turn, is a wholly owned subsidiary of Edi- son International, a California corporation. On May 2, 2013, EME Homer City filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Illinois. EME Homer City has requested that the bankruptcy court jointly administer its case (13-18703) with the lead case, Jn re Edison Mission Energy, Case No. 12-49219 (JPC). When EME Homer City filed its petition in the Court of Appeals, EME Homer City was the lessee iv and operator of the Homer City generating station, a coal-burning electric power facility that is affected by the Transport Rule. Edison Mission Energy is an in- dependent power producer that generates electricity to sell wholesale in the open market. The ultimate parent company, Edison International, is engaged in the business of holding for investment the common stock of its subsidiaries which also include Southern California Edison, a California public utility corpora- tion, and Edison Capital, which has investments in energy and infrastructure projects worldwide. In ad- dition, the following parent companies, or affiliates of EME Homer City have outstanding shares that are in the hands of the public: Edison International and Southern California Edison. Entergy Corporation is a publicly traded company and no publicly held company has a 10 percent or greater ownership interest in Entergy Corporation. Environmental Energy Alliance of New York, LLC has no parent corporations and no publicly held com- pany owns 10% or more of its stock. The Florida Electric Power Coordinating Group, Inc., (“FCG”) is a non-profit, non-governmental corpo- rate entity organized under the laws of Florida. The FCG does not have a parent corporation. No publicly held corporation owns ten percent or more of the FCG’s stock. International Brotherhood of Electrical Workers, AFL-CIO (“IBEW”) is an unincorporated internation- al labor organization with headquarters in Washing- ton, D.C. The IBEW provides collective bargaining representation and other services to its members, and collective bargaining representation to all members of collective bargaining units it exclusively represents. The IBEW represents electrical workers in the Unit- Vv ed States, Canada, and the Republic of Panama, en- gaged in the manufacture, assembling, construction, installation, and erection, repair or maintenance of all materials, equipment, apparatus and appliances required in the production, generation, utilization and control of electricity and its effects, and trans- mission of data, voice, sound, video and other emerg- ing technologies (including fiber optics, high speed data cable, etc.). The IBEW has no parent compa- nies, subsidiaries, or affiliates that have issued shares or debt securities to the public. The Kansas City Board Of Public Utilities-Unified Government Wyandotte County/Kansas City, Kansas is not required to provide a Corporate Disclosure Statement because it is a governmental entity orga- nized under the laws of the state of Kansas. Accord- ingly, no Corporate Disclosure Statement is being provided. The Lafayette Utilities System, a department with- in the Lafayette City-Parish Consolidated Govern- ment, is a local government utility primarily servic- ing the citizens of the City of Lafayette, Louisiana. As a customer-owned municipal utility, the Lafayette Utilities System’s mission is to provide its customers with quality and affordable electric, water, wastewater and fiber optic services. The Lafayette Utilities System does not issue stock; it does not have a parent corporation, and no publicly held corporation holds any Lafayette Utilities System stock. The Louisiana Chemical Association has no parent companies, and no publicly held company has a 10% or greater ownership interest. The Louisiana Chemi- cal Association is a non-profit Louisiana corporation formed in 1959. Its mission is to promote a positive climate for chemical manufacturing that ensures vi long-term economic growth for its members. It is a “trade association.” Luminant Big Brown Mining Company LLC is a wholly owned subsidiary of Luminart Holding Com- pany LLC, whose complete corporate disclosure statement appears below. Luminant Energy Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement ap- pears below. Luminant Generation Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement appears below. Luminant Holding Company LLC is the parent company that wholly owns Luminant Generation Company LLC, Sandow Power Company LLC, Big Brown Power Company LLC, Oak Grove Manage- ment Company LLC, Luminant Mining Company LLC, Big Brown Lignite Company LLC, Luminant Big Brown Mining Company LLC, and Luminant En- ergy Company LLC (collectively, the “Luminant Enti- ties”). Luminant Holding Company LLC is a wholly owned subsidiary of Texas Competitive Electric Hold- ings Company LLC (“TCEH”). TCEH is a wholly owned subsidiary of Energy Future Competitive Holdings Company (“EFCH”). EFCH is a wholly owned subsidiary of Energy Future Holdings Corp. (“EFH Corp.”), formerly TXU Corp. Substantially all of the common stock of EFH Corp is owned by Texas Energy Future Holdings Limited Partnership, which is a privately held hmited partnership. No publicly held entities have a 10% or greater ownership inter- est in EFH Corp. vl Luminant Mining Compary LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement ap- pears above. The Midwest Ozone Group is an unincorporated as- sociation of businesses and organizations formed to assist in the development of scientifically sound and effective air quality strategies. The Midwest Ozone Group has no outstanding shares or debt securities in the hands of the public and has no parent company. No publicly held company has a 10% or greater own- ership interest in the Midwest Ozone Group. National Mining Association (“NMA”) is an incorpo- rated national trade association whose members in- clude the producers of most of America’s coal, metals, and industrial and agricultural minerals; manufac- turers of mining and mineral processing machinery, equipment, and supplies; and engineering and con- sulting firms that serve the mining industry. NMA has no parent companies, subsidiaries or affiliates that have issued shares or debt securities to the pub- lic, although NMA’s individual members have done SO. The National Rural Electric Cooperative Associa- tion (““NRECA”) is the national association of rural electric cooperatives. NRECA does not have a parent corporation, and no publicly held corporation owns 10 percent or more of its stock. Northern States Power Company — Minnesota is a wholly owned subsidiary of Xcel Energy Inc. Xcel Energy Inc. is a registered, public utility holding company that is incorporated under the laws of the State of Minnesota. No other publicly held company holds a 10 percent or greater ownership interest in Northern States Power Company — Minnesota. Vlil Oak Grove Management Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement appears above. Peabody Energy Corporation is a publicly traded company on the New York Stock Exchange (“NYSE”) under the symbol “BTU.” As of March 31, 2013 fil- ings, no holding companies own more than 10% of Peabody Energy Corporation’s outstanding shares. San Miguel Electric Cooperative, Inc. is a 400 MW, mine-mouth, lignite-fired electric generating unit lo- cated in Atascosa County, Texas roughly 45 miles south of San Antonio. San Miguel was created on February 17, 1977, under the Rural Electric Coopera- tive Act of the State of Texas, for the purpose of own- ing and operating the generating plant and associat- ed mining facilities that furnish power and energy to Brazos Electric Power Cooperative, Inc. and South Texas Electric Cooperative, Inc. San Miguel is a not- for-profit electric cooperative incorporated in the State of Texas under the Electric Cooperative Corpo- ration Act, Tex. Util. Code, Chapter 161. San Miguel does not have any outstanding shares or debt securi- ties in the hands of the public nor any parent, subsid- iary, or affiliates that have issued shares or debt se- curities to the public and no publicly owned company has an ownership interest in San Miguel. Sandow Power Company LLC is a wholly owned subsidiary of Luminant Holding Company LLC, whose complete corporate disclosure statement ap- pears above. Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Southern Power Company are all wholly owned subsidiaries of ix Southern Company, which is a publicly held corpora- tion. Other than Southern Company, no publicly held company owns 10% or more of any of these Respond- ents’ stock. No publicly held company holds 10% or more of Southern Company’s stock. Southern Com- pany stock is traded publicly on the New York Stock Exchange under the symbol “SO.” Through its sub- sidiaries, Southe: 2 Company is a leading U.S. pro- ducer of electricity, generating and delivering elec- tricity to over four million customers in the south- eastern United States. Southern Company subsidiar- ies include four vertically integrated electric utili- ties—Alabama Power Company, Georgia Power Compa.uy, Gulf Power Company, and Mississippi Power Company—as well as Southern Power Compa- ny, which owns generation assets and sells electricity at market-based rates in the wholesale market. The- se subsidiaries, each a Respondent here, operate more than 42,000 megawatts of coal, natural gas, oil, nuclear, and hydroelectric generating capacity. Southern Company Services, Inc. is the services com- pany for Southern Company and its operating subsid- iaries. Southern Company Services, Inc. provides, among other things, engineering and other technical support for the operating companies. Southwestern Public Service Company is a wholly owned subsidiary of Xcel Energy Inc. Xcel Energy Inc. is a registered, public utility holding company that is incorporated under the laws of the State of Minnesota. No other publicly held company holds a 10 percent or greater ownership interest in South- western Public Service Company. Sunflower Electric Power Corporation is a Kansas non-profit corporation doing business as a cooperative with its principal place of business in Hays, Kansas. It is not a publicly held corporation; no publicly held xX corporation holds any ownership interest in it and it has no “parent” corporation. It is wned solely by its seven member distribution cooperatives, all of which are located in western Kansas. Sunflower Electric Power Corporation is engaged in the generation, transmission and sale of electric power and energy at wholesale to its member distribution cooperatives and municipalities in the state of Kansas. United Mine Workers of American (““UMWA’") is a non-profit national labor organization with headquar- ters in Triangle, Virginia. UMWA's members are ac- tive and retired miners engaged in the extraction of coal and other minerals in the United States and Canada, and workers in other industries in the Unit- ed States organized by the UMWA. UMWA is affili- ated with the American Federation of Labor-Congress of Industrial Organizations. UMWA has no parent companies, subsidiaries, or affiliates that have issued shares or debt securities to the public. The Utility Air Regulatory Group (“UARG’) is a not-for-profit association of individual electric utili- ties and electric generating companies and national trade associations that participates on behalf of its members collectively in administrative proceedings under the Clean Air Act, and in litigation arising from those proceedings, that affect electric genera- tors. UARG has no outstanding shares or debt secu- rities in the hands of the public and has no parent company. No publicly held company has a 10% or greater ownership interest in UARG. Westar Energy, Inc., a publicly traded Kansas cor- poration with its principal place of business in Tope- ka, Kansas, is the parent corporation of Kansas Gas and Electric Company (“KGE”), a Kansas corporation with its principal place of business in Topeka, Kan- sas. Westar and its wholly owned subsidiary, KGE, xi are electric utilities engaged in the generation, transmission, distribution and sale of electric power and energy at wholesale and retail to approximately 687,000 customers in the state of Kansas. Westar owns all of the stock of KGE. In addition to Westar’s publicly traded stock, both Westar and KGE have is- sued debt and bonds to the public. There is no corpo- ration that owns 10% or more of the stock of Westar Energy, Inc. Western Farmers Electric Cooperative (“WFEC”) hereby certifies that no publicly held company has a 10 percent or greater ownership interest in WFEC. WFEC is a non-profit generation and transmission rural electric cooperative that supplies wholesale electricity to its member owners, which include 19 rural electric distribution cooperatives located in Ok- lahoma and 4 distribution cooperatives located in New Mexico. Wisconsin Public Service Corporation (“WPSC”) is a wholly owned subsidiary of the publicly owned corpo- ration Integrys Energy Group, Inc (NYSE: TEG). WPSC is a regulated electric and natural gas utility operating in northeast and central Wisconsin and an adjacent portion of Upper Michigan. TABLE OF CONTENTS Page QUESTIONS PRESENTED...........00.0.000..0. ee 1 RULE 29.6 STATEMENT .........00.0.0.... cece ceeeeeceees il TABLE OF AUTHORITIES ................0.0...0000..2024. X1V STATEMENT OF THE CASE.....0000...........cceeeeee 1 REASONS FOR DENYING THE PETITIONS... 7 .. EPA DOES NOT DISPUTE AN INDE- PENDENT BASIS UPON WHICH THE COURT OF APPEALS VACATED THE IIIT TINIIIIIEE sntcnssanstesssvescoseinasavececesess 9 Il. THE COURT OF APPEALS’ CORRECT AND FACTBOUND DETERMINATION THAT THE “SIGNIFICANT CONTRIBU- TION” ARGUMENT WAS RAISED BE- FORE EPA DOES NOT WARRANT RE- VIEW, AND ITS HOLDING ON THE UN- DERLYING MERITS OF THE ARGU- MENT WAS CORRECT ........0........0:ccceceeeeeees 14 lil. PETITIONERS ALSO FAIL TO DEMON- STRATE ANY ERROR WITH REGARD TO THE COURT OF APPEALS’ INDE- PENDENT “PROPORTIONALITY” HOLD- Sit Acaslidahihidiiididniahessnaniintntentiniennnerininessteisaceotes 24 IV. EPA’S OWN FINDINGS PRECLUDE RE- . ADOPTION OF THE TRANSPORT RULE. 30 V. THE TRANSPORT RULE IS NOT NEC- ESSARY TO ENSURE THAT DOWN- WIND STATES ATTAIN AND MAINTAIN X1V TABLE OF AUTHORITIES CASES Page Michigan v. EPA, 213 F.3d 663 (D.C. Cir. a da aa a 2, 26, 27 North Carolina v. EPA, 531 F.3d 896 (D.C. Cir.), on reh’g, 550 F.3d 1176 (D.C. Cir. TSAR SIN OD A OT Se LAR if aeD ST 2, 17, 18, 23 North Carolina v. EPA, 550 F.3d 1176 Ss a a i i 2 United States v. Johnston, 268 U.S. 220 SESE ER Sit seein eed otes Rie teers Me are ee 16 STATUTES AND REGULATIONS 4 RSET een enero 1 ESET wena ere 1 REPRISE wer cumene sere werner e © 1, 9, 33 EE IDO ee 1, 7, 10, 11, 28 TORE RIES EE 15, 17 63 FR 57356 (Oct. 27, 1998)..................... 2,11, 14 70 FR 25162 (May 12, 2005).................... 2, 17, 33 75 FR 45210 (Aug. 2, 2010)............... 5, 18, 24, 30 76 FR 48208 (Aug. 8, 2011)....................... passim 70091 (Nov. 10, 2011)......... Guihaiigutans 30 78 FR 3086 (Jan. 15, 2013) ............0.0....0...2.. 31 OTHER AUTHORITIES Comments of West Virginia Department of Environmental Protection (Sept. 30, 2012), available at http://www. regulations.gov/#!documentDetail];D= EPA-HQ-OAR-2009-0491-29811 ................. 23 EPA, Design Values (2012), http://www. epa.gov/airtrends/values.html................... 31 XV TABLE OF AUTHORITIES—continued Page EPA, Progress Report 2011: Environmental and Health Results (2013), available at http://www.epa.gov/airmarkets/progress/ ARPCAIR11_downloads/ARPCAIR11_ environmental_health.pdf .................... 7, 31, 33 Industry and Labor Respondents respectfully sub- mit this brief in opposition to the petitions for certio- rari filed by the Environmental Protection Agency, et al. (“EPA”) and the American Lung Association, et al. (“ALA”). STATEMENT OF THE CASE 1. The Clean Air Act (“CAA”) requires EPA to es- tablish national ambient air quality standards (“NAAQS”) for air pollutants that “cause or contrib- ute to air pollution which may reasonably be antici- pated to endanger public health or welfare.” 42 U.S.C. §7408(a)(1)(A); see also id. §7409. It also re- quires EPA to designate areas of the country as “at- tainment,” “nonattainment,” or “unclassifiable” for each such air pollutant, depending on whether the area meets the NAAQS. Id. §7407(c), (d). Although EPA sets the NAAQS, each State has “the primary responsibility for assuring air quality” within its bor- ders, id. §7407(a), and must develop a state imple- mentation plan (“SIP”) to meet the NAAQS and sub- mit its SIP to EPA for approval, id. §7410. The CAA also contains a “good-neighbor” provision. Section 110(a)(Zj)(D)G@)(1) requires that SIPs “contain adequate provisions” prohibiting “any source ... with- in the State from emitting any air pollutant in amounts which will ... contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any [NAAQS].” Id. §7410(a)(2)(D)(i) (1). As pertinent here, various sources, including power plants, emit sulfur dioxide (“SO”) and nitrogen oxides (“NO,”), which can con- tribute to a downwind State’s nonattainment of the particulate matter (“PM2s5") and ozone NAAQS. 76 FR 48208, 48209-10 (Aug. 8, 2011). 2 In 1998, EPA issued the “NO, SIP Call,” which in- structed upwind States to revise their SIPs to miti- gate downwind ozone formation by imposing NO, emissions limits. 63 FR 57356 (Oct. 27, 1998). The D.C. Circuit largely upheld the NO, SIP Call in Mich- igan v. EPA, 213 F.3d 663 (D.C. Cir. 2000) (per curiam). In 2005, EPA promulgated the Clean Air Interstate Rule (“CAIR”), which addressed interstate transport of NO, and SO». 70 FR 25162 (May 12, 2005). CAIR required upwind States to achieve EPA-specified “emissions budgets” reflecting emissions reductions for each State that EPA determined were cost- effective. In North Carolina v. EPA, the D.C. Circuit invali- dated CAIR because EPA had not tailored its budgets to individual upwind States’ emissions that actually “contribute significantly” to downwind nonattain- ment. 531 F.3d 896, 907-08 (D.C. Cir.) (per curiam), on reh’g, 550 F.3d 1176 (D.C. Cir. 2008) (per curiam). North Carolina rejected EPA’s effort to reallocate emissions-reduction burdens among the States in a way the agency considered “faifr].”". Id. 918-19. It held that §110(a)(2)(D)G)(]) “gives EPA no authority to force an upwind state to share the burden of reduc- ing other upwind states’ emissions”; rather, “[eJach state must eliminate its own significant contribution to downwind pollution,” and EPA “may not require some states to exceed the mark.” Jd. 921. The D.C. Circuit remanded, but allowed CAIR to remain in place while EPA developed a new rule. 550 F.3d at 1178. In response, EPA issued the Transport Rule. EPA initially determined which downwind States would have problems “attaining” or “maintaining” NAAQS in 2012 assuming CAIR would not be in effect. 76 FR 3 at 48211. EPA relied on computer modeling to make this hypothetical future air-quality projection using 2005 base-year data rather than “the most recent ambient data” that showed improvements in actual air quality in the covered States. Jd. 48229-30. After identifying projected downwind “nonattain- ment” and “maintenance” locations, EPA employed a two-stage approach to determine (1) whether to regu- late an upwind State’s emissions and (2) the emis- sions budget for that State. At the first stage, EPA used its air-quality models to predict the amount each upwind State would “contribute” to the “nonat- tainment” and “maintenance” locations it had identi- fied (again, assuming, counterfactually, that CAIR was not in effect). Id. 48233-36. To determine which upwind States to regulate, EPA set air-quality con- tribution thresholds at 1% of each NAAQS. Id. 48236. States whose contributions to a nonattain- ment or maintenance location were predicted to ex- ceed this threshold were deemed “linked” to that loca- tion and subjected to emissions budgets. Jd. Con- versely, EPA determined that “states whose contribu- tions are below these thresholds do not significantly contribute to nonattainment,” id. (emphasis added), and thus were not subject to any emissions budgets, see also id. 48237 (the 1% threshold “identiffies] states whose contributions do not significantly con- tribute to nonattainment or interfere with mainte- nance of the relevant NAAQS”) (emphasis added). For upwind States with predicted contributions ex- ceeding these “insignificance” thresholds, EPA's se- cond stage imposed emissions limits based on the cost of reducing emissions. EPA identified the emissions reductions available at various “cost thresholds” and then set emissions budgets reflecting the “amounts” of emissions EPA projected would remain if emissions 4 were eliminated at a dollar-per-ton cost equal to those cost thresholds. Id. 48248-52, 48258. For 2012 budgets, EPA used a $500/ton threshold for both SO2 and NO,—1.e., EPA calculated the amount of SO2 and NO, emissions each State could reduce for $500 per ton of emissions. Id. 48252, 48257-—59.! Notwithstanding objections raised by commenters, CAJA556, 1293, 1756, EPA did not attempt to deter- mine an individual State’s downwind “contribution” after imposition of emissions controls, let alone de- termine whether the emissions controls would drive a State’s “contribution” below’ the insignificance threshold it had determined in stage-one “d[id] not significantly contribute to nonattainment or interfere with maintenance,” 76 FR at 48236. Instead, EPA set emissions limits based on its view of “reasonable” and “cost-effective” emissions reductions that could be undertaken by upwind States collectively.” Moreover, although §110(a)(2)(D)(i)(7) authorizes reductions only of emissions that contribute signifi- cantly “to nonattainment” or “interfere with mainte- nance” of NAAQS, EPA never considered whether the emissions reductions it directed were greater than necessary to achieve or maintain the relevant NAAQS, 76 FR at 48256-57, even though EPA’s own data showed that the agency was imposing emissions ' For 2014 budgets, EPA split the States into two groups for SO2, using $2,300/ton for Group 1 and $500/ton for Group 2. 76 FR at 48252, 48257. The 2014 NOx budgets used the $500/ton threshold. Id. 48257. 2 See, e.g., 76 FR at 48249 (setting controls at the “point where large upwind emission reductions become available because a certain type of emissions control strategy becomes cost- effective”); id. 48257 (EPA’s controls achieved “significant air quality improvements” with “cost impacts [that] remained rea- sonable”). D reductions far greater than necessary for downwind States to achieve attainment, CAJA2546-637, and de- spi ‘ata demonstrating that less stringent emis- sion: iumits would still result in downwind attain- ment, CAJA1066-68, 1374. Nor did EPA consider the extent to which projected nonattainment resulted from the downwind States’ own in-state pollution. See, e.g., 75 FR 45210, 45226, 45241 (Aug. 2, 2010); 76 FR at 48248, 48259. 2. The D.C. Circuit vacated the Transport Rule, finding that it exceeded EPA’s authority under §110(a)(2)(D)(i)(1) in “at least three independent” re- spects relevant here. EPA.Pet.App. 31a. First, the court found EPA’s approach for setting emissions budgets unlawful because those limits were not based on “amounts’ from upwind States that ‘con- tribute significantly to nonattainment’ in downwind States.” Id. EPA first defined “amounts” of air- quality contribution that were “insignificant,” but then “ignore[d]” that threshold and defined emissions budgets “in such a way that an upwind State’s re- quired reductions could be more than its own signifi- cant contribution to a downwind State.” Id. 36a.3 Second, the court found that the Transport Rule unlawfully imposed reductions greater than neces- sary for downwind States to attain NAAQS. Under §110(a)(2)(D)G@)), EPA may only “targe[t] those 3The court also found EPA’s approach “illogical” and that EPA's justification “rings hollow.” Jd. 36a, 37a n.22. As the court noted, “EPA itself said in the final rule that ‘states whose contributions are below these thresholds do not significantly contribute to nonattainment or interfere with maintenance of the relevant NAAQS,” yet EPA simultaneously adopted an ap- proach that could arbitrarily require a State to reduce emissions below those thresholds. Jd. 36a. 6 emissions from upwind States that ‘contribute signif- icantly to nonattainment.” Id. 28a. Thus, “EPA may not require upwind States to do more than necessary for the downwind States to achieve the NAAQS.” Id. 39a-40a. The court found, however, that “EPA did not try to take steps to avoid such over control.” Id. 40a. Third, the court found the Transport Rule violated North Carolina’s holding that EPA may not force a State to “share the burden” of reducing another State’s emissions. Id. 38a. Here, the court rendered two related, yet distinct, holdings. It first held that EPA violated the good-neighbor provision because it “made no attempt to calculate ... on a proportional basis ... contributions of other upwind States to the downwind States’ nonattainment problems.” /d. 39a. The court also held that EPA “failed to take into ac- count the downwind State’s own fa.r share of the amount by which it exceeds the NAAQS.” Id. In oth- er words, EPA could not require upwind States to re- duce emissions to compensate for downwind State emissions that caused NAAQS to be exceeded. Id. 26a & n.15, 39a. The court recognized, however, that “multiple up- wind States may affect a single downwind State” and “a single upwind State may affect multiple downwind States.” Id. 29a. The court held that EPA had “dis- cretion” to account for these complexities and was not required to “accomplish the ratcheting back in an en- tirely proportional manner” when it was “not ... pos- sible” to do so. Id. The court required EPA to elimi- nate “over-control” only where technically feasible and not where it is “unavoidable.” Jd. 28a-29a. 3. The court vacated the Transport Rule but di- rected EPA to “continue administering CAIR pending the promulgation of a valid replacement.” Id. 64a. 7 Under CAIR, virtually all downwind locations in the eastern United States (the area of concern in the Transport Rule proceedings) have attained the rele- vant NAAQS. EPA, Progress Report 2011: Environ- mental and Health Results 12, 14 (2013) (“2011 Pro- gress Report’), available at http://www.epa.gov/ airmarkets/progress/ARPCAIR11_downloads/ ARPCAIR11_environmental_health.pdf. REASONS FOR DENYING THE PETITIONS‘ Petitioners do not claim the decision below conflicts with any other decision or presents any broadly re- curring legal issue. Instead, petitioners argue that the court of appeals erred and that there will be ad- verse health consequences unless the Transport Rule is reinstated. Petitioners fail to demonstrate any error in the de- cision below, let alone error warranting review. In the Transport Rule, EPA mandated that upwind States make whatever emissions reductions the agency deemed “reasonable” and “cost-effective” without regard to whether those “amounts” “contribut[ed] significantly to nonattainment.” The court of appeals correctly held that this approach had no basis in the statute. While other provisions of the CAA authorize EPA to require further emissions re- ductions, §110(a)(2)(D)G)(1) permits EPA only to re- quire an upwind State’s SIP to “prohibi[t] [emissions] within the State [of] any air pollutant in amounts which will ... contribute significantly to nonattain- ment” of NAAQS in any downwind State. The good- 4 This brief addresses the court of appeals’ holding that the Transport Rule violated the good-neighbor provision’s substan- tive limits. The court also held that the Transport Rule violated the CAA’s “cooperative federalism” structure; that issue is ad- dressed in the State and loca] governments’ brief in opposition. 8 neighbor provision thus has both a State-specific fo- cus—EPA must consider “amounts” from “within” each upwind State that “contribute”—and a focus on air quality—EPA may prohibit only those “amounts” that “contribute significantly to nonattainment” in a downwind State. EPA's assertion of broader authori- ty to order whatever collective upwind reductions it deemed “reasonable” ignored those statutory limits. Moreover, EPA challenges only a subset of the hold- ings below, leaving unchallenged key holdings that led to the Transport Rule’s vacatur. For example, while EPA acknowledges that the court of appeals in- dependently vacated the Transport Rule because EPA imposed emissions reductions greater than necessary for downwind States to attain NAAQS, EPA.Pet. 10, that issue is nowhere addressed in EPA’s petition. Likewise, EPA does not mention, let alone dispute, the court’s holding that EPA failed to account for downwind States’ own contributions to nonattain- ment. Thus, even if EPA’s petition were granted and this Court ruled in EPA's favor, the Transport Rule would remain vacated and would still need to be fun- damentally revised. EPA’s own air-quality findings both confirm the flaws identified by the court of appeals and refute the notion that the Transport Rule is essential to public health. The Transport Rule mandated more strin- gent emissions controls than its predecessor, CAIR. But EPA’s most recent actual air-quality data demonstrate that virtually all downwind areas in the eastern United States have attained the NAAQS un- der CAIR. Significant emissions reductions beyond CAIR are thus unnecessary to eliminate “significant contribution” to “nonattainment.” Indeed, the Transport Rule itself found that be- cause of other independent factors (such as other fed- 9 eral requirements, industry efforts and State- mandated emissions reductions), many downwind ar- eas addressed in the Transport Rule would attain NAAQS in 2014 even in the absence of any good- neighbor emissions controls. Thus, even if this Court upheld EPA’s approach to defining upwind States’ ob- ligations without regard to each State’s actual contri- bution to downwind nonattainment, the Transport Rule would still need to be substantially redone to ac- count for EPA’s own fi: ‘ings that the upwind emis- sions controls it adopted in 2011 will, in many in- stances, be unnecessary in 2014. EPA’s air-quality data also provide the complete answer to petitioners’ unfounded suggestion that thousands of deaths and other massive public health consequences will occur unless the Transport Rule is reinstated. Petitioners rely on analyses comparing the Transport Rule’s benefits to a hypothetical world with no good-neighbor emissions controls. See 76 FR at 48308-19. Those analyses are irrelevant to wheth- er the decision below will adversely affect public health because the court of appeals directed EPA to continue administering CAIR until a replacement rule is adopted. And, as noted, there has been wide- spread attainment of NAAQS under CAIR—a level of ambient air quality that is by definition sufficient “to protect the public health.” 42 U.S.C. §7409(b)(1). I. EPA DOES NOT DISPUTE AN INDEPEND- ENT BASIS UPON WHICH THE COURT OF APPEALS VACATED THE TRANSPORT RULE. 1. EPA does not challenge an independent ground upon which the court of appeals vacated the Transport Rule. Rather, EPA challenges only a sub- set of the holdings below. See EPA.Pet. 10, 21-28; EPA.Pet.App. 3la-4la. The court correctly held that 10 the Transport Rule was flawed because EPA failed to “targe[t] those emissions from upwind States that ‘contribute significantly to nonattainment.” Id. 28a. EPA does not challenge that holding and it is not in- cluded in EPA’s Questions Presented. Even apart from the merits of the legal issues, therefore, this case 1s a particularly inappropriate candidate for cer- tiorari. This holding was an “independent” basis for vacat- ing the Transport Rule, id. 31a, and it is distinct from the court of appeals’ additional holding that the Transport Rule unlawfully used cost to “redefine each State’s ‘significant contribution,” id. 35a-36a. Sec- tion 110(a)(2)(D)G)(1) authorizes EPA to require States to prohibit only those “amounts” of emissions that “contribute significantly to nonattainment” (em- phasis added). EPA was thus separately obligated to ensure that its emissions controls did not “require upwind States to do more than necessary for the downwind States to achieve the NAAQS.” EPA.Pet.App. 39a-40a. Where less costly emissions controls would have achieved downwind attain- ment—which was the case here, see infra pp. 11-12— EPA was required to “ratchet back the upwind States’ obligations to the levels of reductions necessary and sufficient to produce attainment in the downwind States.” EPA.Pet.App. 28a. This independent statu- tory limitation applies even if EPA were otherwise permitted to use its two-stage approach to define “cost-effective” “significant contribution.” 2. EPA’s decision not to challenge the court of ap- peals’ “nonattainment” holding is understandable be- cause that holding is correct. “The good neighbor provision is not a free-standing tool for EPA to seek to achieve air quality levels in downwind States that are well below the NAAQS.” Id. Under 1} §110(a)(2)(D)G@)(D, EPA may require a State to pro- hibit only “amounts” of emissions that “contribute significantly to nonattainment” (emphasis added). Once a downwind location achieves attainment, EPA’s authority to regulate upwind emissions ceases. Indeed, EPA has previously recognized this inde- pendent limitation. In the NO, SIP Call, EPA stressed it had ensured that its “cost-effective” emis- sions controls had not produced any “instance of ‘overkill,’ so that none of the upwind reductions re- quired under [the NO, SIP Call] is more than neces- sary to ameliorate downwind nonattainment.” 63 FR at 57403; see also id. 57379, 57446-47. And in oppos- ing certiorari in Michigan, EPA again stressed that it had not imposed emissions controls greater than nec- essary to eliminate downwind nonattainment. EPA Michigan Cert. Opp. 11. As the NO, SIP Call demonstrates, EPA can pre- vent this type of overcontrol even when it determines “significant contribution” based on “cost- effectiveness.” But EPA in the Transport Rule re- fused even to consider its statutory obligation to do so. As noted, EPA used uniform “cost per ton thresh- olds”—~-i.e., emissions reductions that could be achieved at a certain cost per ton—to determine emissions reductions requirements. See supra pp. 3- 4. EPA, however, refused to consider whether down- wind States could attain NAAQS even if less strin- gent emissions limits were imposed on upwind States. For example, EPA conceded that it selected the uniform $500/ton threshold for NO, without mod- eling whether downwind attainment could be achieved at lower costs. 76 FR at 48256. EPA also refused to consider the impact of SOz controls costing less than $500/ton, despite having gathered data on 12 such controls, see CAJA2192-93. Had EPA consid- ered these data, it would have found, as commenters showed, that less costly controls would still have al- lowed downwind States to attain NAAQS—and thus EPA had no statutory basis for imposing more strin- gent emissions’. controls. See CAJA1066-68; CAJA1374. 3. Although ALA, unlike EPA, does challenge this aspect of the court of appeals’ decision, it does not dispute the substance of the court’s holding that EPA cannot mandate emissions reductions beyond those necessary to achieve downwind attainment, and it does not dispute the court’s holding that EPA failed to consider whether less costly emissions controls would have allowed downwind States to attain NAAQS. Instead, ALA asserts that “challengers [did not] identif[y] any instance in which the Rule re- quired greater reductions than necessary to achieve attainment.” ALA.Pet. 23-24. That is simply false. As shown above, commenters specifically demonstrated that less costly controls would still have enabled downwind States to attain the NAAQS, and EPA has never disputed that show- ing. Moreover, EPA’s own findings further demon- strate that EPA significantly overcontrolled. For ex- ample, for the locations EPA projected to have prob- lems attaining or maintaining the annual PM»; NAAQS, the emissions controls imposed by the Transport Rule were projected to achieve air quality at each of those locations superior to the relevant NAAQS, in many instances by a substantial margin.® 5 See CAJA2964. The difference between the NAAQS and the average air-quality levels EPA imposed in the Transport Rule for these locations was more than 15 times the level of “signifi- 13 EPA likewise imposed reductions far greater than necessary for downwind States to attain NAAQS for 24-hour PMe2>5 and ozone for the substantial majority of the relevant locations. Any doubt on this score is further dispelled by the fact that widespread attain- ment of NAAQS by the downwind States has been achieved under CAIR even though CAIR allows for higher levels of emissions than the Transport Rule. See infra pp. 30-31. Indeed, ALA appears to concede that in numerous instances the Transport Rule mandated emissions reductions that will produce downwind air quality substantially superior to NAAQS, but speculates that such overcontrol is necessary to ensure that all other downwind locations achieve NAAQS. ALA.Pet. 24. cant contribution” that tmggered imposition of emissions con- trols. Industry/Labor DC Cir. Merits Br. 28 n.11. 6 Industry/Labor Merits DC Cir. Br. 28-29 & nn.12-13 (citing EPA data). To the extent ALA suggests the record is unclear as to whether any specific State was overcontrolled, EPA's own da- ta confirm that such overcontrol would occur under the Transport Rule. For example, Texas was “linked” solely to Mad- ison, Illinois with respect to PMes, see 76 FR at 48241 (tbl.V.D- 2), 48243 (tbl.V.D-5), but Madison was projected to achieve air quality significantly superior to the relevant NAAQS, see CAJA2964-65. So too for South Carolina. Compare 76 FR at 48241 (tbl. V.D-2) (linking South Carolina to Fulton, Georgia for annual PMes), with CAJA2964 (projecting post-Rule air quality for Fulton superior to NAAQS). Examples of overcontrol with respect to ozone-related emissions abound as well. Compare, e.g., 76 FR at 48246 (tbl.V.D-9) (linking lowa, Kansas, Oklaho- ma and Wisconsin to Allegan, Michigan), with CAJA2561 (pro- jecting post-Rule air quality for Allegan superior to NAAQS). More broadly, the record demonstrated that downwind attain- ment could have been achieved with much less strict emissions controls, CAJA1066-68; CAJA1374, and, indeed, that current emissions levels have produced widespread attainment of NAAQS by downwind States, see infra pp. 31-32. 14 But EPA never made such a finding and, in fact, de- termined in the NO, SIP Call that it could adjust up- wind emissions obligations to avoid imposing obliga- tions “more than necessary to ameliorate downwind nonattainment.” 63 FR at 57403. Here, as explained, EPA simply refused even to examine the relevant da- ta, see supra pp. 11-12, which directly contradict ALA’s claim. In any event, that one upwind State may need to be “overcontrolled” in the sense posited by ALA to ensure that a downwind State achieves at- tainment is not grounds for overcontrolling other States.’ II. THE COURT OF APPEALS’ CORRECT AND FACTBOUND DETERMINATION THAT THE “SIGNIFICANT CONTRIBUTION” ARGUMENT WAS RAISED BEFORE EPA DOES NOT WARRANT REVIEW, AND ITS HOLDING ON THE UNDERLYING MERITS OF THE ARGUMENT WAS CORRECT. Petitioners’ lead argument for certiorari is that the court of appeals “should not even have decided” what they call the “significant contribution” issue because, petitioners claim, it was not first presented to EPA. See EPA.Pet. 18-21; see also ALA.Pet. 16-20. This 7 Likewise, that some locations may not achieve attainment even ® ter imposition of the Transport Rule’s emissions budgets provides no justification for overcontrolling other upwind States that are not “significantly contributing” to those locations. Cf. ALA.Pet. 23. In any event, EPA found that the Transport Rule would “resolve all projected downwind nonattainment of the an- nual and 24-hour PMzs NAAQS,” except for a single area that “is significantly affected by local emissions from a sizable coke production facility and other nearby sources,” 76 FR at 48259, and this single, unique instance of nonattainment says nothing about whether upwind States linked to other areas were overcontrolled. 15 “waiver” issue does not remotely warrant review. It presents only the context-specific application of set- tled precedent to a single issue that, given the multi- ple statutory violations found by the court of appeals, was not even dispositive. Moreover, petitioners’ focus on waiver only underscore that certiorari is improper because, if petitioners were correct about waiver, the Court would not even reach the merits argument that petitioners contend justifies certiorari. See EPA.Pet. (1), 21-28; ALA.Pet. i, 28-30. In all events, the court of appeals correctly held that the “significant contribution” argument was raised with sufficient “specificity” before EPA. EPA.Pet.App. 34a n.18. And neither EPA nor the dissent below has seriously disputed the merits of the court of appeals’ holding that the Transport Rule was “flawed” because it imposed emissions reductions that were “not based on the ‘amounts’ from upwind States that ‘contribute significantly to nonattain- ment.” Id. 31a. 1. Petitioners make no serious effort to claim that the court of appeals’ “waiver” holding itself presents an issue of exceptional importance justifying certiora- ri. Nor could they, as this holding does not even raise a legal issue. Indeed, there was common ground below on the ap- plicable legal principles. Both the majority and dis- sent agreed that §307(d)(7)(B) of the CAA, 42 U.S.C. §7607(d)(7)(B), supplied the standard for exhaustion. Compare EPA.Pet.App. 32a n.18, with id. 65a, 96a. Both the majority and dissent therefore considered whether “objections” were raised with “reasonable specificity” in the Transport Rule proceeding. Com- pare id. 34a n.18, with id. 96a. They likewise both recognized that §307(d)(7)(B) does not limit parties to the precise formulations made before the agency, but 16 rather permits “leeway” to expand and elaborate on review. Compare id. 34a n.18, with id. 109a-10a. Thus, the only issue is the court of appeals’ applica- tion of these agreed-upon principles to the specific record in this case. Certiorari to review such a factbound question is clearly unwarranted. See, e.g., United States v. Johnston, 268 U.S. 220, 227 (1925). That is particularly so here given EPA’s and ALA’s treatment of the waiver issue below. EPA’s brief be- low did not even mention “waiver” in its jurisdictional statement, statement of issues, or summary of argu- ment. See EPA DC Cir. Merits Br. 1-3, 12-17. And in the body of its brief, EPA only suggested in the most glancing and tentative fashion (amid sections ad- dressed to the merits) that the claim may have been waived. See id. 30 (merely complaining that com- menters did not articulate their views “forcefully” and stating that “[w]hether their failure to do so for- mally rises to the level of waiver, it at the very least bolsters the reasonableness of EPA’s adoption of its proposed approach”). Elsewhere, EPA tersely assert- ed—in a single sentence—that petitioners’ “signifi- cant contribution” argument “likely has_ been waived.” Jd. 32. Nowhere did EPA contend that this argument was actually waived, let alone provide the argument and case citations it now advances. For its part, ALA did not mention waiver of the issue below at all. 2. Nor do petitioners identify any error in the court of appeals’ application of settled law to the facts of this case. EPA wrongly suggests that the court held §307(d)(7) was satisfied solely by comments made in the predecessor CAIR rulemaking. EPA.Pet. 20. As EPA conceded below, and ALA concedes now, com- menters in the Transport Rule proceeding did raise objections to EPA’s “significant contribution” ap- 17 proach. EPA DC Cir. Merits Br. 30 & n.16, 32 & n.18; ALA.Pet. 18 n.2. The court of appeals consid- ered comments made in the prior CAIR proceeding— along with North Carolina’s reasons for invalidating CAIR—as relevant context for assessing whether the arguments made in the Transport Rule proceeding were “reasonabl{y] specifi[c].” See 42 U.S.C. §7607(d)(7)(B); EPA.Pet.App. 34a n.18 (“In light of the indications that EPA was aware of their objection but had no intention to revisit its approach ... the specificity of the commenters such as Wisconsin and Tennessee was ‘reasonable’ under the circumstanc- es.”). The court’s conclusion that the Transport Rule comments were sufficiently specific was correct and in any event does not warrant further review. In particular, the court of appeals evaluated the Transport Rule comments objecting to EPA's “signifi- cant contribution” approach in lght of the fact that EPA “considered—and rejected—precisely this same argument in CAIR.” EPA.Pet.App. 32a n.18. CAIR commenters argued “that the threshold contribution level selected by EPA should be considered a floor, so that upwind States should be obliged to reduce their emissions only to the level at which their contribution to downwind nonattainment does not exceed that threshold level.” 70 FR at 25176-77. In issuing CAIR, EPA acknowledged this argument but rejected it. Id. 25177; see also EPA Reh’g Pet. 11 (acknow!l- edging CAIR rejected commenters’ objection to EPA’s “significant contribution” methodology “for legal and policy reasons’). EPA had another opportunity—and, indeed, an ob- ligation—to revisit this issue after North Carolina. As noted, North Carolina held that once EPA defines each State’s “significant contribution,” it may not “re- quire some states to exceed the mark.” 531 F.3d at 18 921; see also id. 918 (‘EPA can't just pick a cost for a region, and deem ‘significant’ any emissions that sources can eliminate more cheaply.”). North Caroli- na found that CAIR was “fundamentally flawed” be- cause it failed to make “state-specific quantitative contribution determinations or emissions require- ments,” and instructed “EPA [to] redo its analysis from the ground up.” Id. 929 (emphasis added).® In the remand proceeding that led to adoption of the Transport Rule, commenters urged EPA to adopt regulatory approaches consistent with North Caroli- na. 75 FR at 45299; CAJA2308-12. Among the al- ternatives put before EPA was one that reflected the “essential principles” of the statutory construction ul- timately adopted by the court of appeals. EPA.Pet.App. 40a n.24. But EPA refused to recon- sider its fundamental position on significant contri- bution and rejected these alternative approaches. 75 FR at 45299; CAJA2308-12. And notwithstanding EPA's statements that it would not revisit this issue, ’ EPA's suggestion that North Carolina did not “disturb the agency's basic two-step analytical approach” is incorrect. EPA Pet. 10; see also id. 21. The portion of North Carolina EPA cites observed merely that petitioners in that case had not challenged EPA's “two-step analytical approach” and that the court was thus not directly addressing it. See 531 F.3d at 916-17. But, as the court of appeals correctly concluded below, North Carolina's findings that CAIR’s distribution of NOx reduction obligations was unlawful because it could “force an upwind State to ‘exceed the mark,” EPA.Pet.App. 35a (quoting North Carolina, 531 F.3d at 921), clearly called into question EPA's use of the second stage here to require States to reduce emissions to levels below the “insignificance” threshold or beyond those necessary for the downwind State to achieve NAAQS. The same “statutory au- thority” applied in both instances. /d. 35a n.19. In North Caro- lina, as here, EPA could require States only to “prohibit those ‘amounts which will ... [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_0890%3A0. Public record. Not legal advice.