Petition for Writ of Certiorari — Michigan v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-46)

JUL 14 2014

14-46 [==

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3n the Supreme Court of the Hnited States

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STATE OF MICHIGAN, ET AL., PETITIONERS

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

Bill Schuette

Michigan Attorney Genera!

Aaron D. Lindstrom

Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

indstromA@michigan.gov

17) 373-1124

Neil D. Gordon

Assistant Attorney General

Environment, Natural

Resources, and Agriculture

Division

Attorneys for Petitioners

[additional counsel listed inside}

QUESTION PRESENTED

The Clean Air Act treats electric utilities

differently from other sources of hazardous air

pollutants. Other sources are required to limit their

emissions if they exceed quantitative thresholds. 42

U.S.C. § 7412(c)(1) & (d)(1). By contrast, before EPA

regulates hazardous air pollutants from electric

utilities, it must first conduct a study of the hazards

to public health resulting from those emissions even

after imposition of all the other requirements of the

Clean Air Act, and then decide whether it is

“appropriate and necessary” to regulate such

residual emissions under § 7412 after considering

the results of the study. 42 U.S.C. § 7412(m)(1)(A).

The question for the Court is:

Whether EPA's interpretation of “appropriate” in

42 U.S.C. § 7412(n)(1)(A) is unreasonable because it

refused to consider a key factor (costs) when

determining whether it is appropriate to regulate

hazardous air pollutants emitted by electric utilities.

PARTIES TO THE PROCEEDING

Petitioners are the States of Michigan, Alabama,

Alaska, Arizona, Arkansas (ex rel. Dustin McDaniel,

Attorney General), Idaho, Indiana, lowa (Terry E.

Branstad, Governor of the State of lowa on behalf of

the People of Iowa), Kansas, Kentucky, Mississippi,

Missouri, Nebraska, North Dakota, Ohio, Oklahoma,

South Carolina, Texas, Utah, West Virginia, and

Wyoming, and the Texas Commission on

Environmental Quality, the Texas Public Utility

Commission, and the Railroad Commission of Texas.

Each petitioner was also a petitioner in the court of

appeals, in court of appeals Nos. 12-1185, 12-1190, or

12-1196.

Respondents who were petitioners in the courts

of appeals are (by court of appeals case number):

No. 12-1100: White Stallion Energy Center,

LLC

No. 12-1101: National Mining Association

No. 12-1102: National Black Chamber of

Commerce and Institute for Liberty

No. 12-1147: Utility Air Regulatory Group

No. 12-1170: Eco Power Solutions (USA)

Corporation (voluntarily dismissed on

December 6, 2012)

No. 12-1172: Midwest Ozone Group

No. 12-1173: American Public Power

Association

No. 12-1174: Julander Energy Company

No. 12-1175: Peabody Energy Corporation

No. 12-1176: Deseret Power Electric

Cooperative

No. 12-1177: Sunflower Electric Power

Corporation

No. 12-1178: Tri-State Generation and

Transmission Association, Inc.

No. 12-1180: Tenaska Trailblazer Partners,

LLC

No. 12-1181: ARIPPA

No. 12-1182: West Virginia Chamber of

Commerce Incorporated; Georgia Association

of Manufacturers, Inc.; Indiana Chamber of

Commerce, Inc.; Indiana Coal Council, Inc.:

Kentucky Chamber of Commerce, Inc:;

Kentucky Coal Association, Inc.; North

Carolina Chamber; Ohio Chamber of

Commerce; Pennsylvania Coal Association;

South Carolina Chamber of Commerce; The

Virginia Chamber of Commerce; The Virginia

Coal Association, Incorporated; West

Virginia Coal Association, Inc.; and

Wisconsin Industrial Energy Group, Inc.

No. 12-1183: United Mine Workers of

America

No. 12-1184: Power4Georgians, LLC

iv

No. 12-1186: The Kansas City Board of

Public Utilities — Unified Government of

Wyandotte County/Kansas City, Kansas

No. 12-1187: Oak Grove Management

Company LLC

No. 12-1188: Gulf Coast Lignite Coalition

No. 12-1189: Puerto Rico Electric Power

Authority

No. 12-1191: Chase Power Development, LLC

No. 12-1192: FirstEnergy Generation Corp.

No. 12-1193: Edgecombe Genco, LLC;

Spruance Genco, LLC

No. 12-1194: Chesapeake Climate Action

Network, Conservation Law Foundation,

Environmental Integrity Project, and Sierra

Club

No. 12-1195: Wolverine Power Supply

Cooperative, Inc.

No. 12-1196: State of Florida,

Commonwealths of Pennsylvania and

Virginia.

Respondents who were respondents in the courts

of appeals are: the Environmental Protection Agency

(the respondent in all of the cases that were

consolidated below), and Lisa P Jackson,

Administrator, EPA (who was named as a

respondent in Nos. 12-1174, 12-1189, and 12-1191).

Respondents who were intervenors in support of

the courts of appeals respondents are:

No. 12-1100: the Commonwealth of

Massachusetts, the States of Connecticut,

Delaware, Illinois, lowa, Maine, Maryland,

New Hampshire, New Mexico, New York,

Rhode Island, and Vermont, the District of

Columbia, the City of New York, the

American Academy of Pediatrics, American

Lung Association, American Nurses

Association, American Public Health

Association, Chesapeake Bay Foundation,

Citizens for Pennsylvania’s Future, Clean Air

Council, Conservation Law Foundation,

Environment America, Environmental

Defense Fund, Izaak Walton League of

America, Natural Resources Council of

Maine, Natural Resources Defense Council,

Ohio Environmental Council, Physicians for

Social Responsibility, Sierra Club,

Waterkeeper Alliance, Calpine Corporation,

Exelon Corporation, Public Service

Enterprise Group, Inc., the States of

California, Minnesota and Oregon, the

County of Erie in the State of New York, the

City of Baltimore in the State of Maryland,

the City of Chicago in the State of Illinois,

and the National Association for the

Advancement of Colored People

No. 12-1147: the State of North Carolina,

National Grid Generation LLC

No. 12-1170: Utility Air Regulatory Group

and Oak Grove Management Company LLC

(both also in Nos. 12-1174, and 12-1194)

No. 12-1174: White Stallion Energy Center,

LLC; Deseret Power Electric Cooperative;

Sunflower Electric Power Corporation; Tri-

State Generation and Transmission

Association, Inc.; Tenaska Trailblazer

Partners, LLC; Power4Georgians, LLC;

Peabody Energy Corporation (also in No.

1194), National Mining Association (also in

No. 1194)

No. 12-1194: Eco Power Solutions (USA)

Corporation, National Black Chamber of

Commerce, and Institute for Liberty,

Sunflower Electric Power Corporation, Gulf

Coast Lignite Coalition, Lignite Energy

Council, White Stallion Energy Center, LLC,

Chase Power Development, LLC

TABLE OF CONTENTS

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| RREREEES REERE CER? AML een Ss REE REHEAT: Noe Ce Mee NNaE 1

Statutory and Regulatory Provisions Involved ......... 1

REESE ROE NRTA nee Meo ems MNES eh 2

nS OT i 3

A. The Clean Air Act framework ....................... 3

B. EPA’s 2000, 2005, and 2012 findings............ 5

C. Proceedings in the D.C. Circuit.......0......0...... 8

Reasons for Granting the Petition ......................0.... 10

I. This case presents a question of great

importance to the States and to consumers of

III: ccs cnucic oageauccsedauascsaaciammnsemaeeaneanvamaaeulios 10

Il. EPA’s interpretation of “appropriate”

conflicts with the Clean Air Act.....................0... 13

A. EPA’s interpretation is unreasonable

because it fails to give the term

“appropriate” any meaning..................60...06 13

B. EPA’s interpretation of “appropriate” is

unreasonable because it refused to

consider a critical factor: costs. ................... 15

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Additional] Counsel

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PETITION APPENDIX TABLE OF CONTENTS

[Petition Appendix bound in separate volume]

United States Court of Appeals

for the District of Columbia Circuit

Opinion in 12-1100 :

Is Be Bs SIE atcnnicichecsonsendacslaitxecseiaes la—105a

Section 112 of the Clean Air Act

Title 42 U.S.C. § 7412

Selected portions only

§ 7412(a)(1); (c)(1){2); (n)(1)(A) .......... 106a—108a

Federal Register

Volume 77, No. 32

February 16, 2012

IT celictikec tcnsekiabsieoticienninvntanienmpnetetiees 109a—11lla

Federal Register

Volume 76, No. 85

May 3, 2011

I biarecnticintscccoctacecsnestateoninsetaa 112a—115a

Federal Register

Volume 70, No. 59

March 29, 2005

EE NIT os csistaonssdpskinapuisnacncneaseqnevennnda 116a—120a

TABLE OF AUTHORITIES

Cases

Alaska Dep't of Envtl. Conservation v. EPA,

Se EN SE IEE sac snciciesinnccstnecesnccugenisanniabedawncui 11

Barnhart v. Walton,

RG Se IIE sak crincsnpnnccsasiccscanceosesecceds MM 12

Chevron, U.S.A., Inc. v. Natural Res. Def.

Council, Inc.,

re ee, Ie ID ecintcrdetepasvednensacnantoladicnaeseiabines 11

Entergy Corp. v. Riverkeeper, Inc.,

ey re I enhenientthitnctonitisecciumscaninnesove 16, 17

EPA v. EME Homer City Generation, L.P.,

I a Ss re CO hriedietinticenscnsssecscecastein 10, 11

Fid. Fed. Bank & Trust v. Kehoe,

a ee IE ws veictaictrecreninssnicinicinnsanadenvncenes 12

Gen. Motors Corp. v. United States,

Pe Fee i I I Siaiicires nei cesttoeadrunsaneaonniaiasiiien 11

Massachusetts v. EPA, :

Gs GE ITED dcindcnesnccnsenaveisvansingrebiocaine 10, 11

Mossville Envtl. Action Now v. EPA,

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Nat Fed’n of Indep. Bus. v. Sebelius,

Se i ee CN iicicbiesincidcevavasnsrnecacocancanccss 11

Natural Res. Def. Council v. EPA,

Bs Pry hii toe M.A nnn 3

New Jersey v. EPA,

ee ee ee Cs es IE vvccecncdesneccecnccsesnszases 7

Ragsdale v. Wolverine World Wide, Inc.,

I ks MN I wii aa i eke oa a 11

Whitman v. Am. Trucking Ass’ns,

ER SP Ie SID hiccimirsccnencencdveienecustacns 10, 11, 18

Statutes

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ee es Oe ih cicdosh tide socevicesnciecsasdctalasien: 11, 18

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Do aE cde & oR eerae ence passim

A rs te Oe BO viicccseveccdesssncuccunsccnteceses passim

Other Authorities

65 Fed. Reg. 79,825 (Dec. 20, 2000) .................. ads 5

70 Fed. Reg. 15,994 (March 29, 2005)................ 4,5,6

77 Fed. Reg. 9304 (Feb. 16, 2012) .............. 1, 7, 12, 15

JAMES E. MCCARTHY,

CONGRESSIONAL RESEARCH SERVICE, R42144,

EPA’s UTILITY MACT: WILL THE LIGHTS GO

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OPINIONS BELOW

The opinion of the U.S. Court of Appeals for the

District of Columbia Circuit, App. la—105a, is

reported at 748 F.3d 1222.

JURISDICTION

The judgment of the court of appeals was entered

on April 15, 2014. This Court has jurisdiction under

28 U.S.C. § 1254(1).

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

The pertinent provisions of the Clean Air Act, 42

U.S.C. §§ 7401—76714q, are set forth in the Appendix,

infra, at App. 106a—108a. The pertinent provisions of

EPA’s final rule, National Emission Standards for

Hazardous Air Pollutants from Coal- and Oil-Fired

Electric Utility Steam Generating Units, 77 Fed.

Reg. 9304—9513 (Feb. 16, 2012), are set forth in the

Appendix at App. 109a—111a.

INTRODUCTION

This case, brought by 23 states and one governor

and defended by EPA, 16 other states, and the

District of Columbia, ‘concerns the interpretation of

an important federal statute (the Clean Air Act), and

involves an EPA regulation that will cost, by EPA’s

own estimates, $9.6 billion each year. As dissenting

Judge Kavanaugh emphasized, that is “billion with a

b.” App. 74a. And EPA’s interpretation of the Clean

Air Act is wrong: it rests on the premise that its

decision to regulate certain electric utility emissions

can be based solely on health or environmental risks,

with absolutely no consideration of costs, even

though the statute requires both a study to evaluate

health risks (not environmental ones) and separate

consideration of whether the regulation would be

“appropriate and necessary.” EPA’s reading would

make the second step largely superfluous by failing

to give the term “appropriate” any meaning.

Maybe it would be appropriate to spend $9.6

billion every year to achieve an annual health benefit

worth $4 to $6 million by reducing mercury in fish.

But EPA will not even weigh the costs in its analysis.

The extraordinary costs of EPA’s rule will be borne

by consumers of electricity—i.e., everyone in the

nation—causing a significant nationwide economic

impact in exchange for relatively little public health

benefit.

Because of the importance of this case to 39

states, the District of Columbia, and EPA and of the

clear legal errors committed by EPA, this Court

should grant the petition for writ of certiorari.

STATEMENT OF THE CASE

A. The Clean Air Act framework

Congress has chosen to treat certain sources of

hazardous air pollutants differently than others.

Under the Clean Air Act, the regulation of the

particular source at issue here—electric utility steam

generating units (EGUs) that emit hazardous air

pollutants (HAPs)—is fundamentally different than

regulation of other sources of HAPs.

For sources other than EGUs, the Act requires

EPA to establish emission standards for “major

sources” of the specific hazardous air pollutants that

are identified in the statute. 42 U.S.C. § 7412(d)(1).

A “major source” is defined as any stationary source

that emits a specific quantity of pollutant: 10 tons

per year or more of any single hazardous air

pollutant or 25 tons per year or more of any

combination of hazardous air pollutants HAPs.

§ 7412(a)(1). EPA is required to publish a list of

categories of major sources, § 7412(c)(1), and to

promulgate emission standards for each listed

category. § 7412(d)(1); Natural Res. Def. Council v.

EPA, 529 F.3d 1077, 1079 (D.C. Cir. 2008).

For these listed major sources, EPA sets

emission standards (commonly referred to as

“maximum achievable control technology” or “MACT”

standards) using a two-step process. In step one, it

sets a floor for bazardous-air-pollutant emissions,

that is, a minimum degree of emissions reduction

based on what the best controlled sources in that

category are achieving. § 7412(d)(3). In step two,

EPA determines whether a more restrictive standard

(a “beyond-the-floor” standard) is achievable based

on costs, energy requirements, and other factors.

§ 7412(d)(2); Mossville Envtl. Action Now v. EPA, 370

F.3d 1232, 1235-36 (D.C. Cir. 2004).

Congress has chosen to treat EGUs very

differently from other major sources. When it passed

the 1990 Amendments to the Clean Air Act,

Congress imposed substantial new requirements on

EGUs. Those requirements include an Acid Rain

Program contained in Title IV of the Act. To meet the

conditions that program imposed on EGUs (but not

on other major sources), many EGUs installed flue

gas scrubbers, a type of pollution control equipment

that reduces hazardous air pollutants as well as the

sulfur dioxide emissions that contribute to acid rain.

70 Fed. Reg. 15,994, 15,999, 16,003 (March 29, 2005).

In light of these strict new emissions reduction

requirements for EGUs, Congress did not direct EPA

to automatically list EGUs as a major source

category and to set emission standards if they meet

the 10- or 25-ton thresholds. Instead, Congress

established two prerequisites in § 7412(n)(1)(A)

before hazardous-air-pollutant emissions from EGUs

can be regulated under § 7412. First, Congress

directed EPA to conduct a study of “the hazards to

public health reasonably anticipated to occur as a

result of emissions” of HAPs from EGUs “after

imposition of the requirements” of the Act. 42 U:S.C.

§ 7412(n)(1)(A). The results of this “Utility Study”

were to be reported to Congress within three years.

Second, Congress provided that EPA shall regulate

EGUs under § 7412, but only if the Administrator

finds, after considering the results of the study, that

such regulation is “appropriate and necessary.” Jd.

B. EPA’s 2000, 2005, and 2012 findings

EPA’s decision-making under § 7412(n)(1)(A)

about whether to regulate HAP emissions from

EGUs has been a long and winding road, stretching

from December 2000 through February 2012. EPA’s

journey included opposing positions by the agency

during three different administrations, court

challenges, and a reversal by the U.S. Court of

Appeals for the District of Columbia Circuit.

In December 2000, EPA issued a finding under

§ 7412(n)(1)(A) that it was appropriate and necessary

to regulate coal-and oil-fired EGUs under § 7412. 65

Fed. Reg. 79,825 (Dec. 20, 2000). EPA did not

interpret the term “appropriate.” Instead, it

concluded it was appropriate to regulate EGUs based

on particular facts and circumstances, including its

determination that EGUs “are the largest domestic

source of mercury emissions, and mercury in the

environment presents significant hazards to public

health and the environment.” Jd. at 79,830. Based on

its finding, EPA added coal- and oil-fired EGUs to

the list of major source categories under § 7412(c).

Id.

In March 2005, EPA reversed course. It revised

its December 2000 finding and concluded it is neither

appropriate nor necessary to regulate coal- and oil-

fired EGUs after imposition of the requirements of

the Act. 70 Fed. Reg. 15,994 (March 29, 2005). Based

on that revision, EPA removed coal- and oil-fired

EGUs from the § 7412(c) source category list. Jd.

At that time, EPA interpreted § 7412(n)(1)(A)’s

phrase “after imposition of the requirements” of the

Act to include both requirements already in effect

and those that EPA “reasonably anticipates will be

implemented and will result in reductions of utility

HAP emissions.” 70 Fed. Reg. at 15,999. Because

EPA announced it was regulating mercury and other

hazardous-air-pollutant emissions from coal-fired

EGUs under a different provision—§ 7411—it

determined that regulation under § 7412 was neither

appropriate nor necessary. Jd. at 16,002—08.

Additionally, in 2005 EPA for the first time

interpreted the term “appropriate.” It noted that

Webster’s dictionary defines “appropriate” to mean

“especially suitable or compatible” and _ that

evaluating whether something is appropriate in a

specific situation requires consideration of different

factors. App. 117a. In the context of whether to

regulate EGUs under § 7412, the “paramount factor”

is “whether the level of utility HAP emissions

remaining ‘after imposition of the requirements of

th{e] Act’ would result in hazards to public health.”

App. 118a (quoting § 7412(n)(1)(A)).

EPA also determined that, even if the remaining

hazardous-air-pollutant emissions cause hazards to

public health, it may not be appropriate to regulate

EGUs because of other relevant factors. For example,

“it might not be appropriate to regulate the

remaining utility HAP emissions under [§ 7412] if

the health benefits expected as the result of such

regulation are marginal and the cost of such

regulation is significant and therefore substantially

outweighs the benefits.” App. 118a—119a (emphasis

added).

In 2008, the D.C. Circuit ruled that EPA's

attempt to remove coal- and oil-fired EGUs from the

list of source categories under §7412(c) was

unlawful. New Jersey v. EPA, 517 F.3d 574 (D.C. Cir.

2008), cert. denied 555 U.S. 1169 (2009), and cert.

dismissed 555 U.S. 1162 (2009). The court of appeals

concluded that Congress required EPA to make

specific determinations about the health effects of

HAP emissions from EGUs before deleting them

from the list, and EPA had not satisfied those

requirements. Jd. at 581—82.

In 2012, EPA revisited the issue once more and

decided that it was not authorized to consider the

costs of regulation when deciding whether it would

be “appropriate” to regulate under § 7412. It

“confirm[ed]” its finding in December 2000 that

regulation of EGU HAP emissions under § 7412 is

“appropriate and necessary.” 77 Fed. Reg. 9304,

9310-11 (Feb. 16, 2012). EPA explained that, with

regard to the term “appropriate,” it was “rejecting

the 2005 interpretation that authorizes the Agency

to consider other factors (e.g., cost), even if the

Agency determines that HAP emitted by EGUs pose

a hazard to public health (or the environment).” 7d.

at 24,990. In addition, EPA stated it “must find that

it is appropriate to regulate EGUs if it determines

that any single HAP emitted by utilities poses a

hazard to public heaith or the environment.” App.

114a (emphasis added).

C. Proceedings in the D.C. Circuit

Michigan, 22 other States, and one governor filed

petitions for review in the D.C. Circuit challenging

the rule. Sixteen States and the District of Columbia

intervened as respondents to join EPA in defending

its regulation.

A divided panel of the court of appeals denied the

petitions. With respect to the term “appropriate,” the

majority determined it is ambiguous and that EPA

reasonably interpreted it to mean the agency was not

required to consider costs and could analyze only

public health hazards and environmental risks when

deciding whether regulating EGUs was appropriate.

App. 23a—35a.

The majority also noted that § 7412(d)(2)

identifies costs as a factor for EPA to consider when

setting “beyond-the-floor” emission standards for

major sources of HAPs that are subject to regulation.

By contrast, § 7412(n)(1)(A) does not expressly

require that EPA take costs into account when

deciding whether it is appropriate to regulate EGUs.

According to the majority, the inclusion of costs in

§ 7412(d)(2) and its omission in § 7412(n)(1)(A)

creates a presumption that Congress intended that

EPA not consider costs when determining whether

regulation of EGUs is appropriate. App. 26a—27a.

Judge Kavanaugh dissented. He concluded it was

“entirely unreasonable for EPA to exclude

consideration of costs[.]” App. 78a—79a. Cost, he

explained, is an “essentia! factor” in determining

whether it is “appropriate” to impose significant new

regulations on EGUs, and considering cost is a

“central and well-established part of the regulatory

decisionmaking process.” App. 80a, n. 5, 83a.

Judge Kavanaugh noted the cost to comply with

the final rule is, by EPA’s own estimates, $9.6 billion

each year, and the rule is “‘among the most

expensive EPA has ever promulgated.’” App. 83a

(quoting JAMES E. MCCARTHY, CONGRESSIONAL

RESEARCH SERVICE, R42144, EPA’s UTILITY MACT:

WILL THE LIGHTS GO OUT? 1 (2012)). Those costs will

be borne by residential, industrial, and commercial

consumers of electricity across the country. App.

86a—87a. The benefits attributable to reducing these

hazardous-air-pollutant emissions are, by contrast,

only $4 to $6 million annually. But Judge

Kavanaugh emphasized that, under EPA's

unreasonable interpretation of “appropriate,” it is

“irrelevant how large the costs are or whether the

benefits outweigh the costs.” App. 84a (emphasis in

original).

Further, Judge Kavanaugh explained that the

majority’s reliance on the fact that Congress required

costs to be considered when setting beyond-the-floor

emission standards was “a red herring.” App. 85a.

He noted that costs are not relevant when EPA

initially sets the minimum MACT floor standards,

and that “meeting that floor will be prohibitively

expensive” for many electric utilities. Jd. “Telling

someone that costs will be considered in a regulatory

step that occurs after they have already had to pay

an exorbitant amount and may already have been

put out of business is not especially reassuring.” Jd.

(emphasis in original).

10

Finally, Judge Kavanaugh relied on _ the

legislative history of § 7412. In particular, he noted

that electric utilities will face “extremely high costs

. . under other provision of the new Clean Air Act

amendments” and that Congress, by directing EPA

to further regulate electric utilities under § 7412 only

if “appropriate,” intended “that EPA should avoid

imposing unwarranted financial burdens when

deciding to regulate” them. App. 87a (quoting

Congressman Oxley).

REASONS FOR GRANTING THE PETITION

I. This case presents a question of great

importance to the States and to consumers

of electricity.

It is not every day that a single lawsuit pits 23

States against 16 other States and the District of

Columbia, with officials from still another State on

both sides of the case. That fact alone—that this

petition arises from a suit involving 39 States and

the District—suggests the importance of this case to

the Nation as a whole. By comparison, last Term’s

case about EPA’s Transport Rule, which regulated

air pollution that crosses state lines, involved only 24

States. EPA v. EME Homer City Generation, L.P.,

134 S. Ct. 1584, 1598, 1590—92 (2014). Similarly, the

2006 Term challenge to EPA’s authority to regulate

greenhouse gas emissions under the Clean Air Act

involved only 22 States. Massachusetts v. EPA, 549

U.S. 497, 505 & nn.2 & 5 (2007); see also Whitman v.

Am. Trucking Ass’ns, 531 U.S. 457, 463 (2001)

(challenge by three States to EPA rule on issue of the

costs of regulation). In fact, even the challenge to the

Affordable Care Act was brought by only 26 States.

1]

Nat? Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct.

2566, 2575 (2012).

On top of that, this case also involves the proper

interpretation of an important federal statute (the

Clean Air Act), an issue that this Court has

consistently considered worthy of review. See, e.g.,

EME Homer, 134 S. Ct. at 1598 (addressing an EPA

rule promulgated under the Clean Air Act);

Massachusetts v. EPA, 549 U.S. at 528 (2007)

(addressing whether “the Clean Air Act authorizes

EPA to regulate greenhouse gas emissions from new

motor vehicles”); Alaska Dep’t of Envtl. Conservation

v. EPA, 540 U.S. 461, 468 (2004) (addressing EPA’s

authority to enforce provisions of the Clean Air Act’s

Prevention of Significant Deterioration program);

Whitman, 531 U.S. at 462 (addressing whether EPA

could consider costs when setting national ambient

air quality standards under § 7409(b)(1) of the Clean

Air Act); Gen. Motors Corp. v. United States, 496 U.S.

530, 532 (1990) (addressing time limits on EPA

review of Clean Air Act state implementation plans);

Chevron, U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 840 (1984) (addressing EPA’s

interpretation of the Clean Air Act’s term “stationary

source”). And a number of these cases have examined

whether EPA is implementing the Act consistent

with Congress’s direction. See also Ragsdale v.

Wolverine World Wide, Inc., 535 U.S. 81, 85 (2002)

(granting certiorari to resolve whether a regulation

conflicted with a federal statute).

This case also involves a significant amount of

money—by EPA’s own estimates, the regulation at

issue threatens to impose $9.6 billion on U.S.

12

consumers annually. 77 Fed. Reg. at 9306, Table 2.

That fact also weighs in favor of review. See e.g., Fid.

Fed. Bank & Trust v. Kehoe, 547 U.S. 1051 (2006)

(Scalia, J., concurring in denial of certiorari) (“[T]he

total amount at stake may reach $40 billion. This

enormous potential liability, which turns on a

question of federal statutory interpretation, is a

strong factor in deciding whether to grant

certiorari.”); Barnhart v. Walton, 535 U.S. 212, 217

(2002) (granting certiorari where the lower court’s

decision “would create additional Social Security

costs of $80 billion over 10 years”—i.e., only $8

billion a year). And given that electricity usage is a

staple of American life, these costs will be borne by

citizens everywhere in the country.

Moreover, EPA’s refusal to weigh the cost of the

regulation against its benefits suggests that a

significant part of this $9.6 billion annual cost is

being wasted. According to EPA, the “aggregate

nationwide benefits” resulting from this regulation of

hazardous air pollutants “are estimated to range

between $4 million and $6 million.” 77 Fed. Reg. at

9428. As Judge Kavanaugh explained, “{i]f those

figures are right, the Rule costs nearly $1,500 for

every $1 of health and environmental benefit

produced.” App. 84a. And since almost everything

has an opportunity cost, both national health and the

environment would be much better served by an

approach to regulation that at least considers the

regulation’s costs against its benefits.

Taken together, these factors strongly suggest

this Court should review the D.C. Circuit’s decision.

13

But the last straw is that the decision below conflicts

with Congress’s intent.

Il. EPA’s interpretation of “appropriate”

conflicts with the Clean Air Act.

A. EPA’s interpretation is unreasonable

because it fails to give the term

“appropriate” any meaning.

In its view, EPA is required to make a finding

that regulation of electric utility steam generating

units is “appropriate” if it determines that a single

hazardous air pollutant emitted by EGUs poses a

hazard to public health or the environment. When

EPA proposed the rule in 2011, it stated it “must find

it is appropriate to regulate EGUs if it determines

that any single HAP emitted by utilities poses a

hazard to public health or the environment.” App.

114a. Similarly, when EPA published the final rule

in 2012, it stated “[i]t is appropriate to regulate

EGUs under [§ 7412] because EPA has determined

that HAP emissions from EGUs pose hazards to

public health and the environment/.]” App. 110a.

EPA’s interpretation of “appropriate” is

unreasonable because it fails to give any meaning to

that term. Under § 7412(mn)(1)(A), identifying a

hazard to public health is an initial step that EPA

must take before regulating EGUs; it is not sufficient

for regulation. Congress directed EPA to perform a

study of hazards to public health from EGU HAP

emissions that remained even after imposition of all

the other requirements in the Clean Air Act that

already regulate emissions from EGUs (the Utility

Study). It then directed EPA to consider the results

14

of the study and to regulate EGUs under § 7412 if it

also determined that such further regulation is both

“appropriate” and “necessary.” Identifying a hazard

to public health is not enough.

If Congress had wanted to require EPA to

regulate EGUs solely on the basis of the Utility

Study identifying a single hazard to public health

from the emission of a single hazardous air

pollutant, it would have said so. Instead, Congress

demanded more. It directed EPA to make an

additional determination, that, in light of all the

other emission reduction requirements imposed on

electric utilities under the Act, further regulation of

emissions posing a health hazard under § 7412 is

“appropriate.” As discussed below, Congress intended

that EPA exercise its judgment and consider various

important factors, including costs, in assessing

whether regulation is “appropriate.”

The court of appeals erred in concluding that

EPA gave some meaning to the word “appropriate”

when it assumed that EPA actually exercised

judgment when it evaluated the results of the Utility

Study. According to the majority, “[a]t the time

Congress enacted the 1990 Amendments, it was

possible that the Utility Study would fail to identify

significant health hazards from EGU HAP

emissions.” App. 30a. The majority therefore

concluded that “EPA had to ‘consider[] the results of

the study’ in order to determine whether regulation

would be ‘appropriate’ based on its assessment of the

existence and severity of such health hazards.” Jd.

(emphasis added).

15

In fact, EPA did not find it “appropriate” to

regulate EGUs in the final rule based on an

assessment of the severity of hazards to public

health. Instead, EPA simply concluded it “must” find

it is appropriate to regulate once it identified “a

hazard to public health or the environment” from

“any single HAP.” App. 114a. EPA misinterpreted

§ 7412(n)(1)(A) to “require” that the agency find it is

appropriate to regulate once it determines “that the

emissions of one or more HAP emitted from EGUs

pose a hazard or potential hazard to public health or

the environment[.]” App. 113a. EPA did not exercise

its judgment on the severity of the health threat, as

the majority suggests; it merely identified a hazard

to public health and a risk to the environment,

without regard to their severity, and incorrectly

concluded it was therefore required to regulate all

EGU HAP emissions. EPA’s interpretation fails to

give any meaning to the term “appropriate.” The

agencys interpretation is wrong, will have a

substantial national economic impact, and should be

reversed.

B. EPA’s interpretation of “appropriate” is

unreasonable because it refused to

consider a critical factor: costs.

EPA unreasonably refused to consider costs in

making its finding that it is “appropriate” to regulate

EGUs. The agency’s flawed reasoning is set forth in

the final rule. EPA noted that major sources other

than EGUs are automatically listed as source

categories under § 7412(c)(1) based on the quantity

of their emissions alone, and “nothing in the statute

require[s}] us to consider costs in those listing

decision[s.]” 77 Fed. Reg. at 9327. The agency then

16

concluded, “[t]hus, it is reasonable to make the

listing decision [for EGUs], including the appropriate

determination, without considering costs.” /d.

EPA’s refusal to consider costs results from its

misplaced reliance on § 7412(c)(1) to interpret a

fundamentally different provision, § 7412(n)({1)(A).

As noted previously, the statutory requirements for

listing major source categories other than EGUs are

quantitative emission thresholds, not whether it is

“appropriate” to regulate. For sources other than

EGUs, Congress limited the criteria for adding them

to the list of major sources (for which emission

standards must be promulgated) to a_ specific

quantity of HAPs: 10 tons per year or more of any

single HAP or 25 tons per year or more of any

combination of HAPs. 42 U.S.C. § 7412(a)(1). By

choosing this approach, Congress’ expressly

precluded EPA from considering any other factors

when deciding whether to list them. By contrast, the

criteria in § 7412(n)(1)(A) that EPA must use in

deciding whether to regulate EGUs are vastly

different: perform the Utility Study and then decide

whether it is “appropriate and necessary” to regulate

after considering the results of the study. EPA’s

reliance on the quantitative thresholds for listing

other sources unlawfully conflates those listing

decisions with the statutory mandate that EPA must

find it is “appropriate” to regulate EGUs.

Further, nothing in § 7412(n)(1)(A) precludes

EPA from considering costs when evaluating

whether regulating EGUs is appropriate. As this

Court made clear in Entergy Corp. v. Riverkeeper,

Inc., 556 U.S. 208, 222—23 (2009), EPA is not barred

17

from considering costs unless there is clear and

unambiguous statutory language that precludes the

agency from doing so.

Here, there is no clear statutory provision that

precludes consideration of costs. To the contrary, by

directing EPA to regulate EGUs only if it finds that

regulation is “appropriate,” Congress directed EPA to

consider important, relevant factors. Given that costs

are commonly recognized to be a key factor, there is

no reason to think Congress meant to exclude

consideration of that particular important factor. As

Justice Breyer explained in his concurring opinion in

Entergy (and as Judge Kavanaugh noted below),

consideration of costs and benefits is central to

regulatory decisionmaking because “every real choice

requires a decision to weigh advantages against

disadvantages, and disadvantages can be seen in

terms of (often quantifiable) costs.” Entergy, 556 U.S.

at 232 (opinion of Breyer, J.).

In addition, Justice Breyer also observed that

weighing costs and benefits is particularly important

“in an age of limited resources available to deal with

grave environmental problems, where too much

wasteful expenditure devoted to one problem may

well mean considerably fewer resources available to

deal effectively with other (perhaps more serious)

problems.” Jd. at 233. That point is directly relevant

here, where the limited public health benefits of

regulating EGU HAP emissions are _ grossly

outweighed by the costs. Maybe EPA could

demonstrate it is somehow appropriate to spend $9.6

billion every year to achieve an annual health

benefit of $4 to $6 million from reducing HAP

18

emissions. But due to EPA’s’ unreasonable

interpretation of “appropriate,” it did not even

perform that analysis.

Finally, this case is distinguishable from the

statutory provision at issue in Whitman v. American

Trucking Associations, Inc., 531 U.S. 457 (2001). In

that case, this Court held that EPA could not

consider costs when setting national primary

ambient air quality standards under § 7409(b)(1).

Section 7409(b)(1) states the standards are to be

“based on” information about health effects

contained in technical documents and shall be

“requisite to protect the public health” with “an

adequate margin of safety.” Jd. This Court

determined that these “modest words” do not “leave

room” for EPA to consider costs when setting the

standards. 531 U.S. at 468.

By contrast, the statutory language in

§ 7412(n)(1)(A) directs EPA to exercise its judgment

when evaluating whether it is “appropriate” to

regulate hazardous air pollutants from EGUs. A

central factor in deciding whether regulation is

appropriate is assessing both the benefits and costs

of regulation. Here, EPA refused to consider costs

based on its unreasonable interpretation of

“appropriate,” and the agency’s refusal to consider

those costs will have a substantial economic impact

on electricity consumers across the Nation. The final

rule should be reversed.

19

CONCLUSION

For these reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

Bill Schuette

Michigan Attorney General

Aaron D. Lindstrom

Solicitor General

Counsel of Record

P.O. Box 30212

Lansing, Michigan 48909

LindstromA@michigan.gov

(517) 373-1124

Neil D. Gordon

Assistant Attorney General

Environment, Natural

Resources and Agriculture

Division

Attorneys for Petitioners

Dated: JULY 14, 2014

20

ADDITIONAL COUNSEL

Luther Strange

Attorney General

State of Alabama

Office of the Attorney General

501 Washington Avenue

Montgomery, AL 36130

(334) 242-7445

Counsel for the State of Alabama

Michael C. Geraghty

Attorney General

State of Alaska

Steven E. Mulder

Assistant Attorney General

1031 W. 4th Avenue, Suite 200

Anchorage, AK 99501-1994

Counsel for the State of Alaska

Tom Horne

Attorney General

State of Arizona

James T. Skardon

Assistant Attorney General

Environmental Enforcement Section

1275 West Washington

Phoenix, AZ 85007

(602) 542-8553

James.Skardon@azag.gov

Counsel for the State of Arizona

21

Dustin McDaniel

Attorney General

State of Arkansas

Kendra Akin Jones

Senior Assistant Attorney General]

Arkansas Attorney General

323 Center Street, Suite 400

Little Rock, AR 72201

(501) 682-2007

kendra.jones@arkansasag.gov

Counsel for the State of Arkansas, ex rel.

Dustin McDaniel, Attorney General

Lawrence G. Wasden

Attorney General

State of Idaho

P.O. Box 83720

Boise, ID 83720-0010

Counsel for the State of Idaho

Gregory F. Zoeller

Attorney General

State of Indiana

Valerie Tachtiris

Deputy Attorney General

Office of the Attorney General!

IGC-South, Fifth Floor

302 West Washington Street

Indianapolis, IN 46204

(317) 232-6290

Valerie.Tachtiris@atg.in.gov

Counsel for the State of Indiana

22

Brenna Findley

1007 East Grand Avenue

Des Moines, IA 50319

brenna.findley@iowa.gov

Counsel for Terry E. Branstad, Governor

of the State of Iowa on behalf of the

People of Iowa

Derek Schmidt

Attorney General

State of Kansas

Jeffrey A. Chanay

Deputy Attorney General

Office of the Attorney General of Kansas

120 SW 10th Avenue, 3rd Floor

Topeka, KS 66612-1597

(785) 368-8435

jeff.chanay@ag.js.gov

Counsel for the State of Kansas

John William Conway

Attorney General

Commonwealth of Kentucky

700 Capital Avenue, Suite 188

Frankfort, KY 40601

Counsel for Jack Conway,

General of Kentucky

Attorney

23

Jim Hood

Attorney General

State of Mississippi

Harold E. Pizzetta III

Assistant Attorney General

Director, Civil Litigation Division

550 High Street, Suite 1100, P.O. Box 220

Jackson, MS 39205-0220

(601) 359-3816

hpizz@ago.state.ms.us

Counsel for the State of Mississippi

Chris Koster

Attorney General

State of Missouri

James R. Layton

John K. McManus

P.O. Box 899

Jefferson City, MO 65102

(573) 751-1800

James.Layton@ago.mo.gov

Counsel for the State of Missouri

Jon C. Bruning

Attorney General

State of Nebraska

David D. Cookson

Chief Deputy Attorney Genera!

Katherine J. Spohn

Deputy Attorney General

2115 State Capitol

Lincoln, NE 68509

(402) 471-2682

Katie.spohn@nebraska.gov

Counsel for the State of Nebraska

24

Wayne Stenehjem

Attorney General

State of North Dakota

Margaret I. Olson

Assistant Attorney General

Office of Attorney General

500 North 9th Street

Bismarck, ND 58501-4509

(701) 328-3640

maiolson@nd.gov

Counsel for the State of North Dakota

Michael DeWine

Attorney General

State of Ohio

30 E. Broad Street, 17th Floor

Columbus, OH 43215

Counsel for the State of Ohio

E. Scott Pruitt

Attorney General

State of Oklahoma

Patrick Wyrick

Solicitor General

P. Clayton Eubanks

Deputy Solicitor General

Office of the Attorney General of Oklahoma

313 N.E. 21st Street

Oklahoma City, OK 73105

(405) 522-8992

clayton.eubanks@oag.ok.gov

Patrick.wyrick@oag.ok.gov

Counsel for the State of Oklahoma

25

Alan Wilson

Attorney General

State of South Carolina

Robert D. Cook

Solicitor General

James Emory Smith, Jr.

Deputy Attorney General

Office of the Attorney General

P.O. Box 11549

Columbia, SC 29211

Counsel for the State of South Carolina

Greg Abbott

Attorney General

State of Texas

Daniel T. Hodge

First Assistant Attorney General

John B. Scott

Deputy Attorney General for Civil Litigation

Jon Niermann

Chief, Environmental Protection Division

Mark Walters, Assistant Attorney General

Mary E. Smith, Assistant Attorney Genera!

Office of the Attorney General of Texas

Environmental! Protection Division

P.O. Box 12548, Capitol Station

Austin, TX 78711-2548

(512) 463-2012

mark.walters@texasattorneygeneral.gov

mary.smith@texasattorneygeneral.gov

Counsel for the State of Texas, Texas

Commission on Environmental Quality,

Texas Public Utility Commission, and

Railroad Commission of Texas

26

Sean D. Reyes

Attorney General

State of Utah

350 North State Street, #230

Salt Lake City, UT 84114-2320

(801) 538-1191

Counsel for the State of Utah

Patrick Morrisey

Attorney General

State of West Virginia

State Capitol

Building 1, Room E-26

Charleston, WV 25305

(304) 558-2021

Counsel for the State of West Virginia

Peter K. Michael

Attorney General

State of Wyoming

123 State Capitol

Cheyenne, WY 82002

Counsel for the State of Wyoming