# Amicus Curiae Brief — Massachusetts v. EPA

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0245%3A26

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2007
- **Citation:** 549 U.S. 497

## Text

\o5

No. 05-1120

IN THE

Supreme Court of the United States

COMMONWEALTH OF MASSACHUSETTS, ET AL.,
Petitioners,
v.

U.S. ENVIRONMENTAL PROTECTION AGENCY,
Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE DISTRICT OF
COLUMBIA CIRCUIT

BRIEF OF AMICUS CURIAE CALPINE
CORPORATION IN SUPPORT OF PETITIONERS

RICHARD E. AYRES

Of counsel Counsel of Record

GREGORY L. DooDy AYRES LAW GROUP

General Counsel 1615 L Street, N.W., Suite 1350
Washington, D.C. 20036

SARAH G. NOVOSEL (202) 452-9200

Managing Counsel

Attorneys for Amicus Curiae
Calpine Corporation Calpine Corporation

TABLE OF CONTENTS

Sy Ge ED OP CRUD vcndcsoceccrccescchonpensccsnscosmesoiion l

bi IIE cndesusesccineuiduscnscnseevensecseveneneiesnnmaning 2
Se AT tenn dbiicuisinnientititdncdnmsncnentioidieiptntatnade 3
1. The CAA Provides EPA with Authority to

6.

Regulate Air Pollutants Associated with Climate
Change, and EPA Has Arbitrarily Refused to
I See PIII osc ccsiceniccibscescesassnnnentes 3

A Significant Portion of the Electric Generating
Industry Supports a Mandatory National Program
to Reduce Emissions of the Air Pollutants
Associated with Climate Change.................06 5

Regulation of the Air Pollutants Associated with
Climate Change Is Not a Threat to the
PE iccrduidsdsenscnssdeccebenneiteiibasabnmineinn 7

Environmental Regulation Has Stimulated
Innovation and Lowered the Cost of New
I ics tuisintesh onuntd-sicdildasncimedtabainnaeunbies 12

National Regulation Is Needed Now to Cive the
Marketplace Clear Signals for How to Provide
I Ns dis tintenaccdaccustitbersievcesaven 14

Patchwork Regulations Will Increase Costs .....16

ere SAG di uicidentiebeedieieesuntdlak ceuaagibinide 18

IIE Ui iletisiebtivdcundetenultitiaacehspadiincontincunaeeesni l

TABLE OF AUTHORITIES

Page(s)

CASES
Alabama Power v. Costle,

ae UE ea a HP incce cascccosdenccsectian 12
Coke Oven Environmental Task Force v. EPA,

i ne re Cars iho cies sbcccknndnesssxicimncsemelD
Husqvarna v. EPA,

254 F.3d 195 (D.C. Cir. 2001)............ccccescccceees 12
International Harvester Co. v. Ruckelshcus,

opr fo a Be 7
Natural Resources Defense Council v. EPA,

if § he 2 Se Epeeeremnre 12
Natural Resources Defense Council v. Thomas,

805 F.2d 410 (D.C. Cir. 1986)...........cccceseeeeeeees 12
Portland Cement Ass'n v. Ruckelshaus,

te FF ee Ge Fei id vi ctevcsecccvesdeseseds 12

State of New York, et al., v. United States Environmental
Protection Agency,
443 F.3d 880 (D.C. Cir. 2006)............cccscceccccceees 14

Union Electric v. Environmental Protection Agency,
Se a HEIL ninseabnibiacndntsitindteiennnscnees cee 12

Whitman v. American Trucking Ass'n, et al.,
PE Ses GPF Ce iccncversivecosueieserscossssuvesed 4,12

Wisconsin Electric Power Co. v. Reilly,
Be GUE OF Ce, CII onic ssn cesisiccccceccccicces 12

ll

STATUTES

re Ue Pisses ronsindsdcdcnsntcacdintprecenessecnsanietec 11
is te ida ccdnnsctuisadinccsuideaspasaapeennoned 11
Oe iis Oe POD inccvcesoncoscsnescnssdsoscneeéensccnme 2
ee AE PIED cccnesecocecsespecssnsancpnessssvsennn 2
ee I concrsendccasssecsndspeunbsidersepoeenese ll
es ae PR sicker dcincccosseccsenpecgascsnsasoncntes 11
ee a IN icc octnescpdeccsscndenpennesaiessens 11
ae Fe cas cdainivdtatarvosniendcneieereunsses 1, 2,3
ee te I eds inscviins dn boiisdcnubbucéniaestedanestonondes 3
— , | 8 ESP EER Rcee paren ae osunnennoe nen ar mer 4
Fe ne Ht PE PUD sc nsivrcccvescdscnndevesestnnebnctedasees 14
ee IN cs dcsveninchbavssdupesisonsisaunespidaenseuel 11
Fe I BPR inccccscncensconessndiseimanenieninoncinatninneeniaias 14
CALIFORNIA HEALTH SAFETY CODE § 43018.5 (2006)....... 16
LEGISLATIVE MATERIALS

Climate Change: Conference Before the Senate Comm. on
Energy and Natural Resources, 109" Cong. 420 (2006) ......5

S. Rep. No. 95-127 (1977), reprinted in 1977 CRS

NS BOT Binds ciscccsccctcssccenstscossccusescesenes lI
H.R. Rep. No. 95-294 (1977), reprinted in 1977 CRS
EN CPD in ssiicn doncsincsonasccvensudddbenhessiesies 11
California A.B. 32, “Global Warming

SR INNO SITE ctulicidawadnnsssess csmmicosasconess 16
ADMINISTRATIVE MATERIALS
TE, CORI cic avecdresesoiupasindsdaacopeseens 13
ET TE itaiidsdciinaidknenddeiabadgtninbaniainatiiinebedls 13
ET UN dnisshinisceumeedsiasnenas andslelaemestaciin ied 13
ETI AS CMRP re ReOe Nae Roe Rom eR Re 13
71 Fed. Reg. 9866 (Feb. 27, 2006)...........scscsccccsccessceses 3

tii

MEMORANDA
Memorandum of Robert E. Fabricant, EPA General Counsel
CURE, is Sis 000s sn ccccenssesnsndwinscscmeniamiaiennaenaae 7

BOOKS

STEPHEN ANDERSON AND M’.DHAVA SARMA, PROTECTING
THE OZONE LAYER: THE UNITED NATIONS HISTORY (United
Nations Environmenta! Programme 2002)...............0.006 13

R. BENEDICK, OZONE DIPLOMACY: NEW DIRECTIONS IN
SAFEGUARDING THE PLANET (enlarged ed., Harvard
SOI POND To esis idncssstinsavcputeseiiusscmensseal 14

D. ELLERMAN, P. JoSkKow, R. SCHMALENSEE, J-P. MONTERO,
E. BAILEY, MARKETS FOR CLEAN AIR: THE U.S. ACID RAIN
PROGRAM (Cambridge U. Press 2000)..................... 000 14

JAMES K. HAMMITT, CHOOSING ENVIRONMENTAL POLICY:
COMPARING INSTRUMENTS AND OUTCOMES IN THE UNITED
STATES AND Europe (R. Harrington, R. Morgenstern, T.
Sterner, eds., Resources for the Future Press

RENE KEMP, ENVIRONMENTAL POLICY AND TECHNICAL
CHANGE (UNU-MERIT 1997).............ccecceceseeeeeeees 13, 15

R. MORGENSTERN, ED., ECONOMIC ANALYSIS AT EPA
(Resources for the Future Press 1997).................cc0eeeee cree

INSTITUTIONAL PUBLICATIONS

CERES, INVESTOR RESPONSIBILITY RESEARCH CENTER, INC.,
CORPORATE GOVERNANCE AND CLIMATE CHANGE: MAKING
FOR CC TUE Cis cc cnt bo ccccconsccscesescntiessusanie 6, 15

ENERGY INFORMATION ADMINISTRATION, U.S. DOE,
IMPACTS OF MODELED RECOMMENDATIONS OF THE
NATIONAL COMMISSION ON ENERGY POLICY (2005)............9

iv

NATIONAL COMMISSION ON ENERGY POLICY, ENDING THE
- ENERGY STALEMATE: A BI-PARTISAN STRATEGY TO MEET
AMERICA’S ENERGY CHALLENGES (2004).............:0008-7, 11

NATIONAL COMMISSION ON ENERGY POLICY, ENDING THE
ENERGY STALEMATE, ECONOMIC ANALYSIS (2004)........8,16

NATIONAL ENERGY TECHNOLOGY LABORATORY, DOE,
TRACKING NEW COAL-FIRED POWER PLANTS: COAL’S
RESURGENCE IN ELECTRIC POWER GENERATION (2006)......15
NATIONAL RESEARCH COUNCIL OF THE NATIONAL
ACADEMIES, INTERIM REPORT OF THE COMMITTEE ON
CHANGES IN NEW SOURCE REVIEW PROGRAMS FOR
STATIONARY SOURCES OF AIR POLLUTANTS

U.K. SECRETARY OF STATE FOR TRADE AND INDUSTRY, OUR
ENERGY FUTURE — CREATING THE Low CARBON ECONOMY

U.S. NATIONAL ENERGY POLICY: REPORT OF THE NATIONAL
ENERGY POLICY DEVELOPMENT GROUP TO PRESIDENT

ITE ARE ae Teo 10
MEDIA SOURCES
Zachary Coile, /ndustry Starts to Back Rules on Greenhouse
Gas, SAN FRANCISCO CHRONICLE, Aug. 24, 2006............. 6
PRESENTATIONS

Arthur Rosenfeld, Commissioner, California Energy
Commission, Presentation to the Energy Symposium (April

J

7 seo gs oh 2, caer
SOR SAAS ae eo

*

I. CALPINE’S INTEREST

Calpine Corporation! (“Calpine”) is a U.S. company
that owns, leases and operates power generation facilities and
sells electricity to wholesale and industrial customers in the
United States and Canada. Calpine is one of the preeminent
power producers in the United States, with more than 26,500
megawatts of generating capacity. Over the last decade,
Calpine completed one of the largest development and
construction programs in recent United States history,
investing billions of dollars to construct highly efficient, low-
emitting power facilities. Today, the company operates one
of the cleanest, most efficient fleets of power generation in
the United States. Calpine’s economic interests will be
directly affected by the ruling of the Court in this case.

Amicus Calpine submits this brief for two purposes.
First, Calpine agrees with the petitioners that the clear and
straightforward language of the Clean Air Act (“CAA”)
provides the U.S. Environmental Protection Agency (“EPA”)
with the necessary authority to adopt regulations to curtail
emissions of air pollutants associated with climate change,
and that the reasons EPA gave for refusing to make an
endangerment finding were arbitrary and capricious. Second,
Calpine wishes to bring to the Court’s attention that a
significant portion of the electric generating industry
supports a mandatory, national program to reduce emissions
of air pollutants associated with climate change, and that
such a-program does not have to be harmful to the economy.
We also believe that such a program initiative should be

| Letters of consent from the parties are being filed in conjunction with
this brief. Pursuant to this Court’s Rule 37.6, counsel] states that this brief
was not authored in whole or in part by counsel for a party and that no
one other than amicus and its counsel made a monetary contribution to
the preparation or submission of this brief.

adopted now, while there remains time for an economically
efficient transition to a lower-emitting future.

Il. STATEMENT

On its face, this case is about authority under Section
202(a1) of the CAA, 42 U.S.C. § 7521 (a)(1), which
regulates motor vehicle emissions. But the Court’s ruling
will also effectively determine the EPA’s authority to
regulate air pollution associated with climate change from all
sources, whether from motor vehicles or industrial facilities.
There are two reasons for this.

First, the language of § 202(a)(1), 42 US.C. §
7521(a)(1), that triggers the process of regulating motor
vehicle emissions is identical to language elsewhere in the
CAA that initiates various processes for regulating emissions
from industrial sources. Section 202(a)(1) instructs EPA to
regulate each air pollutant that may “cause, or contribute to
air pollution which may reasonably be anticipated to
endanger public health or welfare.” Similarly, the processes
of adopting regulations to control emissions from categories
of new industrial sources, including electric generation, and
that for developing regulations to control emissions of
hazardous pollutants, are triggered by virtually identical
statutory language. CAA § 111(b)(1)(A), 42 USC. §
7411(b)(1)(A); and CAA §112(b)(3)(B), 42 USC. §
7412(b)(3)(B).

Second, the Court’s ruling will determine the
outcome of a case challenging EPA’s recent New Source
Performance Standards (“NSPS”’) regulations for small steam
generating boilers. 71 Fed. Reg. 9866 (Feb. 27, 2006). In
explaining its decision not to regulate the -air pollutants
associated with climate change from such boilers, EPA took
the position that “it does not presently have the authority to

set NSPS to regulate CO, or other greenhouse gases that
contribute to global climate change.” 71 Fed. Reg. 9866,
9869 (Feb. 27, 2006). Thus the EPA has put in issue its
authority to regulate industrial sources of the air pollutants
associated with climate change in the review of its small
boiler regulation. This case is currently suspended pending a
decision on joint motions of the parties to hold the case in
abeyance while awaiting this Court’s definitive ruling on the
issue of EPA’s authority to regulate air pollutants associated
with climate change. Coke Oven Environmental Task Force
v. EPA, No. 06-1131 and consolidated cases (D.C. Cir.,
2006) .

iil. ARGUMENT

1. The CAA Provides EPA with Authority to Regulate
Air Pollutants Associated with Climate Change, and EPA
Has Arbitrarily Refused to Exercise Its Authority.

The petitioners in this case present a straightforward
question of statutory interpretation: Does the plain language
of the CAA provide the EPA with the authority to regulate
air pollutants associated with climate change? Calpine
agrees with petitioners that the language of the CAA clearly
authorizes such regulation.

This authority is apparent in the language of CAA §
202(a)(1), 42 U.S.C. § 7521(a)(1), which directs the EPA
Administrator to determine whether “any air pollutant” from
new motor vehicles or engines “cause[s], or contribute[s] to
air pollution which may reasonably be anticipated to
endanger human health or welfare.” In turn, the “air
pollutants” subject to regulation are defined in the broadest
terms. CAA § 302(g), 42 U.S.C. § 7602(g). The statute also
defines “welfare” in very broad terms, specifically listing
impacts on climate, as well as a host of other climate-related

consequences, as welfare effects. CAA § 302(h), 42 U.S.C.
§ 7602(h). This language, like that in Whitman v. American
Trucking Ass'n, et al. (“Whitman”), 531 U.S. 457 (2001) is
clear and “absolute,” id. at 465, an “elephant” that cannot be
hidden in a “mousehole[].” Id. at 468.

EPA’s attempt to justify its refusal to find the
pollutants associated with climate change “endanger public
health and welfare” is entirely arbitrary, invoking
considerations that have nothing to do with the statutory
standard, and ignoring (or misusing) those that do. Had the
EPA applied the statutory endangerment test, and engaged
the relevant questions under that test, it could not have
rationally avoided a determination that regulation is
necessary under § 202(a)(1) of the CAA.

Like petitioners in this case, Calpine does not ask the
Court to decide either the content or timing of a program to
reduce emissions of these air pollutants. As with other CAA
programs, the initial judgment that a pollutant causes or
contributes to adverse effects on public health or welfare is
separate from subsequent policy decisions about what sort of
program will be efficacious, and when such a program should
go into effect. Whitman, 531 U.S. at 470. We have no doubt
that crafting such a program will be a complex task, but not
beyond the capability of the EPA, which has had notable
success at stimulating technological innovation and reducing
costs as a result of intelligent program design. See, e.g., R.
MORGENSTERN, ED., ECONOMIC ANALYSIS AT EPA
(RESOURCES FOR THE FUTURE PRESS 1997). In any case,
these complex issues are not before the Court, which need
only interpret the plain language of the statute. =

2. A Significant Portion of the Electric Generating
Industry Supports a Mandatory National Program to
Reduce Emissions of the Air Pollutants Associated with
Climate Change.

A significant portion of the electric generating
industry believes that mandatory national regulation of the air
pollutants associated with climate change is inevitable and
desirable, and finds the current stasis in federal policymaking
counterproductive and potentially economically wasteful. To
date, companies operating 20 percent of all U.S. generating
capacity have publicly endorsed mandatory, national
regulation to reduce emissions of air pollutants associated
with climate change.

In recent testimony before the U.S. Senate, many
investor-owned electric generating companies endorsed, in
unequivocal language, mandatory, economy-wide policies to
regulate emissions of the air pollutants associated with
climate change. Climate Change: Conference Before the
Senate Comm. on Energy and Natural Resources, 109"
Cong. 420 (2006) (“Climate Change Hearings”). Companies
endorsing mandatory national emission regulations include
Duke Energy Corporation,2 Exelon Corporation,’ General

2 Statement of Ruth Shaw, Group Executive for Public Policy and
President for Duke Nuclear, Duke Energy Corporation: “Duke Energy
favors U.S. policy on climate change that, first, is mandatory, not
voluntary; second, is economy-wide in its scope, sending consistent
signals to all sectors in all regions. . . .” Climate Change Hearings at 4.

3 Statement of Elizabeth Moler, Executive Vice President, Government
and Environmental Affairs and Public Policy, Exelon Corporation. “I
want to stress the need for a mandatory, comprehensive, and balanced
national greenhouse gas program.” Id.

Electric Energy,4 PNM Resources,> Sempra Energy, Entergy
Corporation, FPL Group (parent company of Florida Power
& Light), Pacific Gas and Electric Company, Public Service
Enterprise Group, and Calpine Corporation.®

“{I]t is only a matter of time before Congress enacts
federal carbon constraints,” says Ceres, a _ national
organization that speaks for a group of more than 50
institutional investors from the U.S. and Europe managing
nearly $3 trillion in assets. CERES, INVESTOR
RESPONSIBILITY RESEARCH CENTER, INC., CORPORATE
GOVERNANCE AND CLIMATE CHANGE: MAKING THE
CONNECTION 12 (2006) available at www.ceres.org.

The association representing publicly-owned electric
generation, whose members supply 15 percent of the nation’s
power, also recognizes that there is "an emerging public
consensus and a building political directive that inaction is
not a viable strategy." Zachary Coile, /ndustry Starts to
Back Rules on Greenhouse Gas, SAN FRANCISCO
CHRONICLE, Aug. 24, 2006, at Al (quoting Alan Richardson,

4 Statement of David Slump, General Manager, Global Marketing, GE
Energy, General Electric Company: “GE supports congressional action
now to start reducing greenhouse gas emissions.” Id. at 5.

5 Statement of Jeff Sterba, Chairman, President, and CEO, PNM
Resources (an energy holding company that provides electric and gas
service throughout the western United States): “[W]e . . . support the
move to a mandatory program . . . that is economy-wide.” Id. at 6.

6 Statement of Michael Bradley, Executive Director, Clean Energy
Group, representing Calpine, Entergy, Exelon, Florida Power & Light
Company, Pacific Gas and Electric, and Public Service Enterprise Group:
“Our members support the adoption of a mandatory greenhouse gas
regulatory program. ...“ Id. at 40.

President and CEO of the American Public Power
Association).

3. Regulation of the Air Pollutants Associated with
Climate Change Is Not a Threat to the Economy.

With intelligent policy design, the effect on the
American economy of regulating the air pollutants associated
with climate change will be modest. While a transition to
less-emitting technologies in the energy and other sectors of
the economy will not be without cost, the impact on
economic growth will most likely be measured in fractions of
one percent of Gross Domestic Product. This reality stands
in stark contrast to the alarmist view expressed by EPA.
Memorandum of Robert E. Fabricant, EPA General Counsel
(Aug. 28, 2003), at 10.

The National Commission on Energy Policy
(“National Commission”), a private, bi-partisan organization
(see List of Members in Appendix A), analyzed the economic
effects of a program to reduce emissions of air pollutants
associated with climate change that would slow and then
effectively halt increases in emissions growth from U.S.
sources by 2025. NATIONAL COMMISSION ON ENERGY
POLICY, ENDING THE ENERGY STALEMATE: A BI-PARTISAN
STRATEGY TO MEET AMERICA’S ENERGY CHALLENGES
(2004) (“NCEP Report”).

The National Commission developed an extremely
comprehensive program to reduce emissions of the air
pollutants associated with climate change that includes major
changes in important segments of the economy, including
energy and motor vehicles. Its proposal includes an emission
trading program for industrial sources of the air pollutants
associated with climate change, accelerated development and
deployment of advanced energy technologies, and

strengthened fuel economy standards for cars, small trucks,
and heavy duty tractor-trailer trucks.’ In order to understand
the effects of such a comprehensive emission reduction
program on the American economy, the National
Commission conducted economy-wide modeling of its
proposals. The National Commission concluded that, despite
the sweeping measures included in its proposal, the impact
on the American economy would be small. “The
accumulated loss in GDP relative to the Reference Case,” the
Commission said, -——— -

increases from 0.08 percent in 2010 to 0.18 percent in
2020. That is, total growth from 2005 to 2020 is 63.2
percent rather than 63.5 percent . . . a real dollar loss
of $13 billion out of a total GDP of $16.5 trillion in
2010. . . and $42 billion out of a total GDP of $22.6
trillion in 2020. . .

NCEP Report Economic Analysis at 15-16.
The Energy Information Administration (“EIA”), the

independent statistical and analytical agency of the
Department of Energy (“DOE”), analyzed the energy supply,

7? More specifically, the National Commission’s strategy included an
emissions cap-and-trade mechanism for energy-related CO, methane
from coal mines, nitrous oxide emissions from nitric and adipic acid
production, and emissions of global warming gases such as
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride; a 36
percent increase in the Corporate Average Fuel Economy (“CAFE”)
standards for cars and light trucks; federal assistance to encourage
accelerated development and deployment of advanced energy
technologies; new building codes and appliance efficiency standards; and
federally-subsidized programs to stimulate deployment of Integrated
Gasification Combined Cycle, carbon capture and sequestration
technologies, and tax credits for power generations that do not emit air
pollutants associated with climate change.

demand, and fuel import impacts of the National
Commission’s recommended pollution control program. The
findings of EIA’s report show similarly small effects on the
national economy:

By 2025, potential and actual real GDP are,
respectively, about 0.26 percent and 0.4 percent
below their reference case levels. These changes do
not materially affect average economic growth rates
for the 2003 to 2025 period.

ENERGY INFORMATION ADMINISTRATION, U.S. DOE,
IMPACTS OF MODELED RECOMMENDATIONS OF THE
NATIONAL COMMISSION ON ENERGY POLICY xi (2005).

The findings of the U.S. EIA are entirely consistent
with those of other governments. In the United Kingdom,
the government has committed itself to a 60 percent
reduction in carbon dioxide emissions by 2050. Its plan to
achieve such steep reductions in emissions estimates that the
cost would be “very small — equivalent in 2050 to just a
small fraction (0.5 to 2 percent) of the nation’s wealth, as
measured by GDP, which by then will have tripled as
compared to now.” U.K. SECRETARY OF STATE FOR TRADE
AND INDUSTRY, OUR ENERGY FUTURE — CREATING THE LOW
CARBON ECONOMY 9 (2003).

The findings presented above are a function of the
many options available for reducing emissions of air
pollutants associated with climate change. For those in the
electric generation sector and its customers, there are a wide
variety of options available to reduce emissions.

a. Build new plants to meet future demand using
fuels with lower emissions. An electric generating company
has many options with regard to fuel when it invests in a new

10

unit. Units powered by renewable sources such as wind,
water, solar or geothermal heat, and nuclear units, produce no
emissions of the air pollutants associated with climate
change. §Biomass-powered facilities produce no net
emissions. Among fossil fuels, a new natural gas-fired plant
produces approximately 60 percent less carbon dioxide
emissions than a typical coal-fired plant per unit of energy
generated. Choices among these options will be critical,
given that the DOE has estimated that to meet future demand
for electricity, “the United States will have to build . . . more
than 60 to 90 plants a year, or more than one a week.” U.S.
NATIONAL ENERGY POLICY: REPORT OF THE NATIONAL
ENERGY POLICY DEVELOPMENT GROUP TO PRESIDENT
GEORGE W. BUSH 5-10 (2001).

b. Replace old, high emitting capacity with new
cleaner units. Currently 74 percent of U.S. coal-fired
generating capacity is more than 26 years old. NATIONAL
RESEARCH COUNCIL OF THE NATIONAL ACADEMIES, INTERIM
REPORT OF THE COMMITTEE ON CHANGES IN NEW SOURCE
REVIEW PROGRAMS FOR STATIONARY SOURCES OF AIR
POLLUTANTS 54, tbl.3-3 (2005). In many cases generating
companies face the question whether to continue investing in
these outdated coal-fired units or invest in new, cleaner
technologies. A variety of technologies are available that
offer the opportunity to generate electricity, even when using
coal as a fuel, whiie limiting, or even eliminating, emissions
of the air pollutants associated with climate change.
Advanced, less polluting technologies for using coal include
integrated gasification combined cycle (“IGCC”) which
reduces emissions of the air pollutants associated with
climate change by about seven to ten percent compared with
traditional coal technologies. IGCC also offers a lower cost
potential to capture and sequester carbon rather than emitting
it into the atmosphere.

11

c. Improve operational efficiency of existing
plants. Significant reductions in emissions can be
accomplished by simply improving the efficiency of
operations. Calpine has committed to EPA that it will reduce
emissions of carbon dioxide from its generating plants by
four percent per unit of electricity generated over a five year
period. Calpine’s program includes more than a dozen
initiatives targeted to improve the thermal performance of the
company’s already efficient combined cycle gas-fired turbine
units. The company is making physical modifications and
optimizing operating practices as well as improving the
management of its fleet’s recoverable performance
degradation.

d. Increase energy efficiency in the economy.
Increasing the energy efficiency of industrial processes,
consumer products, and motor vehicles reduces emissions of
the air pollutants associated with climate change and costs
simultaneously. The potential for increased efficiency has
been demonstrated over the past 30 years in California,
where peak demand for electricity has been reduced by 54
percent by aggressive energy efficiency measures. Arthur
Rosenfeld, Commissioner, California Energy Commission,
Presentation to the Energy Symposium 12 (April 28, 2006).8
As a result of this program, California electricity
consumpticn per person, which was the same in 1960 as the
U.S. average, is now more than one-third lower than the U.S.
average. Id. at 13. For the future, the National Commission
concluded that “it is possible to cost-effectively reduce the
nation’s annual energy consumption by at least 16 quads per
year in 2025 in these three sectors [industrial, commercial,

8 Available at http://www.energy.ca.gov/commission/commis-
sioners/rosenfeld/html.

12

transportation] using known efficiency technologies.”” NCEP
Report at 32.

4. Environmental Regulation Has Stimulated Innovation
and Lowered the Cost of New Technology.

Stimulating technological innovation to provide
higher levels of environmental quality and economic
productivity is a fundamental objective of the CAA, evident
throughout the statute. See 4? U.S.C. §§ 7408(h),
7411(a)(1), 7412(d)(2), 7475(a)(4), 7491(b)(2)(A), 7651(b);
see also, Whitman, 531 U.S. at 490-492; Union Electric v.
Environmental Protection Agency, 427 U.S. 246, 257 (1976).
Congress first adopted the policy of “technology forcing” in
the Clean Air Amendments of 1970, Alabama Power v.
Costle, 636 F.2d 323, 372 (D.C. Cir. 1979).9 In 1977
amendments to the CAA, Congress explicitly stated its intent
that the law would provide “incentives for improved
technology,” that those improvements would “become
widespread far more rapidly,” and that vendors of cleaner

9 The federal courts have consistently upheld the CAA’s goal of
stimulating technological innovation as a way to achieve ambitious
environmental standards. In 1973, the U.S. Court of Appeals for the
District of Columbia Circuit rejected the argument that EPA was limited
to standards requiring “technology in being as of the time of the
application.” /nternational Harvester Co. v. Ruckelshaus, 478 F.2d 615,
629 (D.C. Cir. 1973); see also Natural Resources Defense Council v.
Thomas, 805 F.2d 410, 429 (D.C. Cir. 1986); Portland Cement Ass'n v.
Ruckelshaus, 486 F.2d 375, 391 (D.C. Cir. 1973); Natural Resources
Defense Council v. EPA, 655 F.2d 318, 328 (D.C. Cir. 1981) (“EPA was
‘expected to press for the development and application of improved
technology rather than be limited by that which exists today.’” [citations
omitted]); Wisconsin Electric Power Co. v. Reilly, 893 F.2d 901, 909-10
(7" Cir. 1990) (“{Ijn passing the Clean Air Act Amendments, Congress
intended to stimulate the advancement of pollution control technology.”);
Husqvarna v. EPA, 254 F.3d 195 (D.C. Cir. 2001) (“Congress intended
the agency to project future advances in pollution control capability.)
(citing NRDC, 805 F.2d at 410).

13

technologies would have a “guaranteed market.” See S. Rep.
No. 95-127, at 31 (1977), reprinted in 1977 CRS Legislative
History 1371, 1405; See also H.R. Rep. No. 95-294, at 186
(1977), reprinted in 1977 CRS Legislative History 2465,
2653.

Regulation under the CAA has provided powerful and
effective market signals that have stimulated new emission
control technologies, product substitution, and alternative
manufacturing methods. Section 202(a), the subject of this
litigation, is responsible for the development of motor
vehicle catalytic contro! and electronic engine management
technologies that have reduced new vehicle emissions of the
regulated pollutants by well over 95 percent, while allowing
higher fuel economy and performance. 40 CFR Part 86.
Sulfur oxide “scrubbers” and selective catalytic reduction
technologies to cut emissions of sulfur oxides and nitrogen
oxides, now being deployed on electric generating facilities
across the U.S., were developed in response to CAA
regulations. 40 CFR Part 60, Subpart Da; and 40 CFR Part
73 (scrubbers); 40 CFR Part 76 (nitrogen oxides).
Regulations adopted under Title VI of the CAA, §§ 767lc .
and 767id, implementing the Montreal Protocol, were
responsible for the development of entirely new substitute
chemicals for widely-used compounds that were associated
with reductions in the earth’s protective stratospheric ozone
layer. 40 CFR Part 82. Without the ban on future use of
ozone-depleting CFCs, “users would not have switched to
substitutes - even when they were more cost-efficient.”
RENE KEMP, ENVIRONMENTAL POLICY AND TECHNICAL
CHANGE 316 (UNU-MERIT 1997).!°

10 Regarding the success of the program in reducing emissions of
pollutants associated with depletion of the stratospheric ozone layer, see
also Stephen Anderson and Madhava Sarma, PROTECTING THE OZONE
LAYER: THE UNITED NATIONS HISTORY, United Nations Environmental

14

Finally, CAA regulation has stimulated development
of increasingly efficient gas turbine electric generating
technology. The efficiency of new state-of-the-art generating
facilities today is approximately 33-40 percent higher than
was standard in the 1970’s. Declaration of Donald P.
Walters, Vice President, Calpine Corporation, before the
United States Court of Appeals for the District of Columbia
Circuit (Nov. 11, 2004) in State of New York, et al., v. United
States Environmental Protection Agency, 443 F.3d 880 (D.C.
Cir. 2006).

Studies of the influence of regulation — particularly
market-based regulation such as the acid rain program -
show that market-based programs will reduce the cost of
meeting environmental standards. The acid rain program,
CAA Subchapter [V-A, 42 U.S.C. §§ 7642-765lo, has
produced large reductions in emissions of sulfur oxides for a
cost about one-half that of a traditional command and control
program.!!

5. National Regulation Is Needed Now to Give the
Marketplace Clear Signals for How to Provide Value in
the Future.

If electric generating companies are to choose the
options that minimize emissions of the pollutants associated

Programme (2002) at 345 ef seg.; See also, R. BENEDICK, OZONE
DIPLOMACY: NEW DIRECTIONS IN SAFEGUARDING THE PLANET, (enlarged
ed., Harvard University Press 1998), and JAMES K. HAMMITT, CHOOSING
ENVIRONMENTAL POLICY: COMPARING INSTRUMENTS AND OUTCOMES IN
THE UNITED STATES AND Europe 158-174 (R. Harrington, R.
Morgenstern, T. Sterner, eds., Resources for the Future Press 2004).

'! PD. ELLERMAN, P. JoskKow, R. SCHMALENSEE, J-P MONTERO, E.
BAILEY, MARKETS FOR CLEAN AIR: THE U.S. ACID RAIN PROGRAM 293-

296 (Cambridge U. Press 2000).

15

with climate change, they must receive market signals that
can only be provided by national regulation. Fundamental
economic principles tell us that when a price is attached to a
good that has been considered free, or the supply limited by
regulation, there will be innovation to reduce the use of the
good.

Because low- and non-emitting technologies are
generally more expensive than traditional pulverized coal
boilers, they will not be broadly deployed by the market until
regulations are adopted that limit emissions of pollutants
associated with climate change, raise the cost of emitting
such pollutants, or both. So long as emissions of these
pollutants remain an unregulated economic externality, the
market will not value technologies that emit less of them.

Market demand seems to be the crucial factor for the
successful exploitation of technological opportunities.
In the case of cleaner technologies, market demand
depends strongly on government policy.

Kemp, supra at 240.

Currently, 153 new coal-fired power plants are under
development or construction, according to the DOE.
NATIONAL ENERGY TECHNOLOGY LABORATORY, DOE,
TRACKING NEW COAL-FIRED POWER PLANTS: COAL’S
RESURGENCE IN ELECTRIC POWER GENERATION (2006).
Nearly all of the companies developing these units are
planning to use the same basic technology that has been used
since the early Twentieth Century — burning pulverized coal
in a boiler and exhausting the waste products into the
atmosphere.

Investments in such outdated facilities will preclude
investments in advanced, less polluting technologies. As in

16

any sector, financial capital is limited within the power
industry. If built, these boilers will represent a massive
investment of capital that commits our nation to 50-75 years
of high emissions of air pollutants associated with climate
change. To prevent such misallocations of capital, a market
signal from federal regulators is needed.

Market signals are also needed to increase the
development of renewable energy sources, such as wind,
tides, geothermal heat, solar and biomass. Although some of
these sources are already making inroads in the market,
regulation of emissions will allow renewables to compete
more effectively with fossil fuels. The National Commission
estimates that, under the strategy it analyzed, wind and
biomass capacity would be nearly four times as great as
under the status quo. NCEP Report Economic Analysis at
14.

6. Patchwork Regulations Will Increase Costs.

In the absence of national regulation, states and
localities are adopting a variety of control programs of their
own. Companies that operate nationally, such as Calpine,
face a serious risk of having to comply with a patchwork of
multiple overlapping regulatory programs. A proliferation of
such programs could have significant negative effects on the
cost and effectiveness of Calpine’s actions to reduce
emissions.

California has adopted legislation and regulations to
limit emissions of air pollutants associated with climate
change from motor vehicles. CAL. HEALTH & SAFETY CODE

17

§ 43018.5 (2006). Ten other states!? are moving to adopt the
same program, which would affect at least a third of all new
cars and light trucks sold in the United States. Four states?
already regulate emissions from electric generating facilities,
and others are considering such regulations.'4 Seven
northeastern states!5 recently agreed to a “Regional
Greenhouse Gas Initiative” establishing a “cap and trade”
system to reduce emissions of air pollutants associated with
climate change from industrial sources, including electric
generation. The participating states have agreed to adopt
regulations to implement the program by December 31, 2008.

In the absence of federal regulation, state and even
local regulatory programs can be expected to proliferate.
Based on its erroneous reading of the clear language of the
CAA, EPA has refused to advance a unifying national
program. We urge this Court to declare the law clearly so
that EPA may move forward with the regulatory process.

12 Connecticut, Maine, Massachusetts, New York, New Jersey,
Pennsylvania, Rhode Island, Oregon, Vermont, and Washington. Ceres
Report, supra at 12.

'3 Massachusetts, New Hampshire, Oregon and Washington. Id.

14 For example, California A.B. 32, “Global Warming Solutions Act of
2006.”

'5 Connecticut, Delaware, Maine, New Hampshire, New Jersey, New
York, and Vermont. Maryland, is expected to be added to the list. The
District of Columbia, Massachusetts, Pennsylvania, Rhode Island, the
Eastern Provinces of Canada, and New Brunswick are observers in the
process. The model rule for the cap and trade system, together with
additional information on the RGGI, is available at www.rggi.org.

18

IV. CONCLUSION

For the reasons presented herein, the Court should
reverse the judgment of the Court of Appeals.

Respectfully submitted,

Richard E. Ayres

Of counsel Counsel of Record
Gregory Doody Ayres Law Group
General Counsel 1615 L Street, N.W. Suite 1350

4 Washington, D.C. 20036
Sarah Novosel (202) 452-9200
Managing Counsel

Counsel for Amicus Curiae

Calpine Corporation Calpine Corporation
Washington Office
1401 H Street, N.W.
Suite 510
Washington, D.C.
20005

AUGUST 31, 2006

APPENDIX

APPENDIX A

COMMISSIONERS OF THE
NATIONAL COMMISSION ON ENERGY POLICY

John P. Holdren, Co-Chair. Teresa and John Heinz
Professor of Environmental Policy, Harvard University;
Director of the Woods Hole Research Center.

William K. Reilly, Co-Chair. Founding Partner, Aqua
International Partners; former Administrator, U.S. -
Environmental Protection Agency.

John W. Rowe, Co-Chair. Chairman and CEO, Exelon
Corporation.

Phillip R. Sharp, Congressional Chair. President,
Resources for the Future; former U.S. Representative,
Indiana.

Marilyn Brown. Interim Director, Oak Ridge National
Laboratory’s Engineering Science and Technology
Division.

Ralph Cavanagh. Senior Attorney and Co-Director,
Natural Resources Defense Council Energy Program.

Errol B. Davis, Jr. Chancellor, University System of the
State of Georgia.

Senator Rodney Ellis. State Senator, Texas.

Leo W. Gerard. International President, United
Steelworkers of America.

Robert E. Grady. Managing Partner, Carlyle Venture
Partners, the Carlyle Group; former Executive Associate
Director, U.S. Office of Management and Budget.

F. Henry Habicht. CEO, Global Environment and 3
Technology Foundation; former Deputy Administrator of
the U.S. Environmental Protection Agency.

Frank Keating. CEO, American Council of Life Insurers;
former Governor of Oklahoma.

Richard A. Meserve. President, Carnegie Institution;
former Chairman, U.S. Nuclear Regulatory Commission.

Mario Molina. Professor, University of San Diego; co-
recipient of the 1995 Nobel Prize in Chemistry for
pioneering work in the atmospheric chemistry of
stratospheric ozone depletion.

Sharon L. Nelson. Chief,Consumer Protection Division,
Office of the Attorney General, State of Washington;
Chair, Board of Directors, Consumers Union.

Richard L. Schmalensee. Professor of Economics and
Management, Massachusetts Institute of Technology;
John C. Head III Dean, Sloane School of Management;
former member, President’s Council of Economic
Advisors.

Susan Tiemey. Managing Principal, the Analysis Group;
former Assistant Secretary, U.S. Department of Energy.

R. James Woolsey. Vice President, Booz Allen,
Hamilton; former Director, U.S. Central Intelligence
Agency. —_

Martin B. Zimmerman. Clinical Professor of Business,
Ross School of Business, University of Michigan; former
Group Vice President, Ford Motor Company.

e 4 *

a

ee ee
A

ah “rat ‘

Sas
ae

a

a

& vere,

age ee
ard nq -
y be >

A Aig) ou

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0245%3A26. Public record. Not legal advice.