Appendix — Michigan v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-46)
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STATE OF MICHIGAN, ET AL., PETITIONERS
V.
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 APPENDIX
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
{additional counsel listed inside the Petition booklet]
1a
PETITION APPENDIX TABLE OF CONTENTS
United States Court of Appeals
for the District of Columbia Circuit
Opinion in 12-1100
I I TI carictreeercecccssacescunrecconsccustes la—105a
Section 112 of the Clean Air Act
Title 42 U.S.C. § 7412
Selected portions only
§ 7412(a)(1); (c)(1)}{2); (m)(1)(A) .....0 0... 106a—108a
Federal Register
Volume 77, No. 32
February 16, 2012
4 ipetenate arte heresies at layer eae na ele 109a—11lla
Federal Register
Volume 76, No. 85
May 3, 2011
aaa aetlioas 112a—115a
Federal Register
Volume 70, No. 59
March 29, 2005
I iris la catmasdnnounsanacnilendl 116a—120a
la
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 10, 2013 Decided April 15, 2014
No. 12-1100
WHITE STALLION ENERGY CENTER, LLC,
PETITIONER
V.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
AMERICAN ACADEMY OF PEDIATRICS, ET AL.,
INTERVENORS
Consolidated with 12-1101, 12-1102, 12-1147, 12-
1172, 12-1173, 12-1174, 12-1175, 12-1176, 12-1177,
12-1178, 12-1180, 12-1181, 12-1182, 12-1183, 12-
1184, 12-1185, 12-1186, 12-1187, 12-1188, 12-1189,
12-1190, 12-1191, 12-1192, 12-1193, 12-1194, 12-
1195, 12-1196
On Petitions for Review of Final Rule of the
United States Environmental Protection Agency
Lee B. Zeugin and Neil D. Gordon, Assistant
Attorney General, Office of the Attorney General for
the State of Michigan, argued the causes for State,
Industry, and Labor Petitioners. With them on the
2a
joint briefs were F. William Brownell, Lauren E.
Freeman, Elizabeth L. Horner, Bill Schuette,
Attorney General, Office of the Attorney General for
the State of Michigan, John J. Bursch, Solicitor
General, S. Peter Manning, Assistant Attorney
General, Luther Strange, Attorney General, Office of
the Attorney General for the State of Alabama,
Michael C. Geraghty, Attorney General, Office of the
Attorney General for the State of Alaska, Steven E.
Mulder, Attorney, Peter S. Glaser, George Y.
Sugiyama, Michael H. Higgins, David B. Rifkin, Jr.,
Lee A. Casey, Mark W. DeLaquil, Andrew M.
Grossman, David Flannery, Gale Lea Rubrecht,
Kathy G. Beckett, Edward L. Kropp, Leslie Sue Ritts,
Thomas Horne, Attorney General, Office of the
Attorney General for the State of Arizona, Joseph P.
Mikitish and James T. Skardon, Assistant Attorneys
General, Dustin McDaniel, Attorney General, Office
of the Attorney General for the State of Arkansas,
Kendra Akin Jones, Assistant Attorney General,
Charles L. Moulton, Senior Assistant Attorney
General, Pamela Jo Bondi, Attorney General, Office
of the Attorney General for the State of Florida,
Jonathan A. Glogau, Attorney, Lawrence G. Wasden,
Attorney General, Office of the Attorney General for
the State of Idaho, Grant Crandall, Arthur Traynor,
HT, Eugene M. Trisko, Gregory F. Zoeller, Attorney
General, Office of the Attorney General for the State
of Indiana, Valerie Tachtiris, Deputy Attorney
General, Dennis Lane, Derek Schmidt, Attorney
General, Office of the Attorney General for the State
of Kansas, Jeffrey A. Chanay, Deputy Attorney
General, Henry V. Nickel, George P. Sibley II, Eric
A. Groten, Jeremy C. Marwell, John A. Riley,
Christopher C. Thiele, Harold E. Pizzetta UI,
3a
Assistant Attorney General, Office of the Attorney
General for the State of Mississippi, Chris Koster,
Attorney General, Office of the Attorney General for
the State of Missouri, James R. Layton and John J.
McManus, Attorneys, Paul D. Clement, Nathan A.
Sales, Lisa Marie Jaeger, Jon Bruning, Attorney
General, Office of the Attorney General for the State
of Nebraska, Katherine J. Spohn, Special Counsel to
the Attorney General, Wayne Stenehjem, Attorney
General, Office of the Attorney General for the State
of North Dakota, Margaret I. Olson, Steven C. Kohl,
Eugene E. Smary, Sarah C. Lindsey, E. Scott Pruitt,
Attorney General, Office of the Attorney General for
the State of Oklahoma, P. Clayton Eubanks,
Assistant Attorney General, Michael DeWine,
Attorney General, Office of the Attorney General for
the State of Ohio, Dale T. Vitale and Gregg H.
Bachmann, Assistant Attorneys General, Robert M.
Wolff, Special Counsel, Alan Wilson, Attorney
General, Office of the Attorney General for the State
of South Carolina, James Emory Smith, Jdr.,
Assistant Deputy Attorney General, Mark UL.
Shurtleff, Attorney General, Office of the Attorney
General for the State of Utah, Greg Abbott, Attorney
General, Office of the Attorney General for the State
of Texas, Jon Niermann, Chief, Mark Walters and
Mary E. Smith, Assistant Attorneys General,
Kenneth T. Cuccinelli, I, Attorney General, Office of
the Attorney General for the Commonwealth of
Virginia, Patrick Morrisey, Attorney General, Office
of the Attorney General for the State of West
Virginia, Silas B. Taylor, Senior Deputy Attorney
General, Jeffrey R. Holmstead, Sandra Y. Snyder,
Gregory A. Phillips, Attorney General, Office of the
Attorney General for the State of Wyoming, Jay A.
4a
Jerde, Deputy Attorney General, Jack Conway,
Attorney General, Office of the Attorney General for
the State of Kentucky, Bart E. Cassidy, and
Katherine L. Vaccaro.
Bill Cobb argued the cause for Industry
Petitioners’ Specific Issues. With him on the briefs
were Michael Nasi, Leslie Sue Ritts, Jeffrey R.
Holmstead, Sandra Y. Snyder, Paul D. Clement,
Nathan A. Sales, Steven C. Kohl, Eugene E. Smary,
Sarah C. Lindsay, Bart E. Cassidy, Katherine L.
Vaccaro, John C. Hayes, Jr., Dennis Lane, John A.
Riley, Christopher C. Thiele, C. Grady Moore, III, P.
Stephen Gidiere, III, and Thomas Lee Casey, III.
Sanjay Narayan and Eric Schaeffer argued the
causes for Environmental Petitioners. With them on
the briefs were Whitney Farrell, James S. Pew, Neil
Gormley, Ann Brewster Weeks, and Darin Schroeder.
David Bookbinder argued the cause and filed the
briefs for petitioner Julander Energy Company.
Michael B. Wigmore, Sandra P Franco, Robin S.
Conrad, Rachel Brand, and Sheldon Gilbert were on
the brief for amicus curiae The Chamber of
Commerce of the United States of America in
support of Industry Petitioners.
Eric G. Hostetler, Matthew R. Oakes, and
Amanda S. Berman, Attorneys, U.S. Department of
Justice, argued the causes for respondent. With them
on the brief was Wendy L. Blake, Attorney, U.S.
Environmental Protection Agency.
5a
Melissa Hoffer, Assistant Attorney General,
Office of the Attorney General for the
Commonwealth of Massachusetts, argued the cause
for State and Local Government Intervenors in
support of Respondent. With her on the brief were
Martha Coakley, Attorney General, Office of the
Attorney General for the State of Massachusetts,
Tracy Triplett and Carol A. Jancu, Assistant
Attorneys General, Kamala D. Harris, Attorney
General, Office of the Attorney General for the State
of California, Janill L. Richards, Supervising Deputy
Attorney General, Susan L. Durbin, Deputy Attorney
General, Joseph R. Biden, II, Attorney General,
Office of the Attorney General for the State of
Delaware, Valerie M. Satterfield, Deputy Attorney
General, Thomas L. Miller, Attorney General, Office
of the Attorney General for the State of Iowa, David
R. Sheridan, Assistant Attorney General, George
Jepsen, Attorney General, Office of the Attorney
General for the State of Connecticut, Kimberly P.
Massicotte and Matthew I Levine, Assistant
Attorneys General, Lisa Madigan, Attorney General,
Office of the Attorney General for the State of
Illinois, Matthew J. Dunn and Gerald T. Karr,
Assistant Attorneys General, Douglas F. Gansler,
Attorney General, Office of the Attorney General for
the State of Maryland, Roberta R. James, Assistant
Attorney General, Michael A. Delaney, Attorney
General, Office of the Attorney General for the State
of New Hampshire, K. Allen Brooks, Senior Assistant
Attorney General, Janet T. Mills, Attorney General,
Office of the Attorney General for the State of Maine,
Gerald D. Reid, Assistant Attorney General, Lori
Swanson, Attorney General, Office of the Attorney
General for the State of Minnesota, Max Kieley,
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Assistant Attorney General, Eric T. Schneiderman,
Attorney General, Office of the Attorney General for
the State of New York, Michael J. Myers and Kevin
P. Donovan, Assistant Attorneys General, Ellen F.
Rosenbaum, Attorney General, Office of the Attorney
General for the State of Oregon, Paul A. Garrahan,
Assistarc Attorney-in-Charge, Gary K. King,
Attorney General, Office of the Attorney General for
the State of New Mexico, Stephen R. Farris,
Assistant Attorney General, Roy Cooper, Attorney
General, Office of the Attorney General for the State
of North Carolina, James C. Gulick, Senior Deputy
Attorney General, J. Allen Jernigan, Marc Bernstein,
and Amy L. Bircher, Special Deputy Attorneys
General, William H. Sorrell, Attorney General, Office
of the Attorney General for the State of Vermont,
Thea J. Schwartz, Assistant Attorney General,
George A. Nilson, William R. Phelan, Jr., Peter F.
Kilmartin, Attorney General, Office of the Attorney
General for the State of Rhode Island, George S.
Schultz, Special Assistant Attorney General, Jrvin B.
Nathan, Attorney General, Office of the Attorney
General for the District of Columbia, Amy E.
McDonnell, Deputy General Counsel, Christopher
King, Benna Ruth Solomon, and Jeremy Toth.
Sean H. Donahue argued the cause for Public
Health, Environmental, and Environmental Justice
Group Respondent Intervenors. With him on the
brief were Pamela A. Campos, Tomas Carbonell, Ann
Brewster Weeks, Darin T. Schroeder, James S. Pew,
Neil E. Gormley, Sanjay Narayan, John D. Walke,
and John Suttles. Vickie L. Patton entered an
appearance.
7a
Brendan K. Collins argued the cause for Industry
Respondent Intervenors. With him on the brief were
Robert B. McKinstry Jr., Lorene L. Boudreau, and
Erik S. Jaffe.
Peter S. Glaser, George Y. Sugiyama, F. William
Brownell, Lauren E. Freeman, Lee B. Zeugin,
Elizabeth L. Horner, David B. Rivkin Jr., Lee A.
Casey, Mark W. DeLaquil, Andrew M. Grossman,
Jeremy C. Marwell, Eric A. Groton, Jeffrey R.
Holmstead, and Sandra Y. Snyder were on the brief
for Industry Intervenors in_ response’ to
Environmental Petitioners. Henry V. Nickel entered
an appearance.
Peter S. Glaser, George Y. Sugiyama, Hahnah
Williams, F. William Brownell, Lauren B. Freeman,
Lee B. Zeugin, Elizabeth L. Horner, Jeremy C.
Marwell, Eric A. Groton, Jeffrey R. Holmstead,
Sandra Y. Snyder, Bill Cobb, Michael Nasi, David B.
Rivkin Jr., Lee A. Casey, Mark W. DeLaquil, and
Andrew M. Grossman were on the brief for
Intervenor Respondents in Opposition to Brief of
Petitioner Julander Energy Company.
Wendy B. Jacobs, Adam Babich, and Michael A.
Livermore were on the brief for amici curiae Institute
for Policy Integrity, et al. in support of respondent.
Before: GARLAND, Chief Judge, and ROGERS
and KAVANAUGH, Circuit Judges.
8a
PER CURIAM: In 2012, the Environmental
Protection Agency promulgated emission standards
for a number of listed hazardous air pollutants
emitted by coal- and oil-fired electric utility steam
generating units. See National Emission Standards
for Hazardous Air Pollutants From Coal- and Oil-
Fired Electric Utility Steam Generating Units and
Standards of Performance for Fossil-Fuel-Fired
Electric Utility, Industrial-Commercial- Institutional,
and Small Industrial-Commercial-Institutional
Steam Generating Units, Final Rule, 77 Fed. Reg.
9304 (Feb. 16, 2012). In this complex case, we
address the challenges to the Final Rule by State,
Industry, and Lebor petitioners, by Industry
petitioners to specific aspects of the Final Rule, by
Environmental petitioners, and by Julander Energy
Company. For the following reasons, we deny the
petitions challenging the Final Rule.
I.
In 1970, Congress enacted § 112 of the Clean Air
Act, Pub. L. No. 91-604, § 4(a), 84 Stat. 1676, 1685
(1970), to reduce hazardous air pollutants (“HAPs”).
See Sierra Club v. EPA, 353 F.3d 976, 979 (D.C. Cir.
2004); H. R. REP.NO. 101-490, at 150 (1990). The
statute defined HAPs as “air pollutant(s] which
in the judgment of the Administrator [of the
Environmental Protection Agency (“EPA”)] cause, or
contribute to, air pollution which may reasonably be
anticipated to result in an increase in mortality or an
* Parts I, Il, and IV are written by Judge Rogers. Part III is
written by Judge Kavanaugh, as are his dissenting opinion in
Part I1.B.2 and his concurring opinion in Part IV.
9a
increase in serious irreversible, or incapacitating
reversible, illmess.” § 112(a)(1), 84 Stat. at 1685. In
its original form, § 112 required EPA to publish a list
containing “each hazardous air pollutant for which
[it] intends to establish an emission standard.” §
112(b)(1)(A), 84 Stat. at 685. EPA then was to
promulgate, within 360 days, emission standards
“provid[ing] an ample margin of safety to protect the
public health” for each listed HAP, unless EPA found
that a particular listed substance was in fact not
hazardous. § 112(b)(1)(B), 84 Stat. at 1685. Over the
next eighteen years, EPA listed only eight HAPs,
established standards for only seven, and as to these
seven addressed only a limited selection of possible
pollution sources. See New Jersey v. EPA, 517 F.3d
574, 578 (D.C. Cir. 2008); S. REP. NO. 101-228, at
131 (1989).
To remedy the slow pace of EPA’s regulation of
HAPs, Congress amended the Clean Air Act in 1990,
see Pub. L. No. 101-549, 104 Stat. 2531 (1990)
(“CAA”), by eliminating much of EPA’s discretion in
the process. See New Jersey, 517 F.3d at 578. In the
amended § 112, Congress itself listed 189 HAPs that
were to be regulated, see CAA § 112(b), 42 U.S.C. §
7412(b), and directed EPA to publish a list of
“categories and subcategories” of “major sources” and
certain “area sources” that emit these pollutants,
CAA § 112(c), 42 U.S.C. § 7412(c). Once listed, a
source category may only be delisted (with one
exception not relevant here) if EPA determines that
“no source” in that category emits HAPs in
quantities exceeding specified thresholds. CAA §
112(c)(9)(B), 42 U.S.C. § 7412(c)(9)(B). For each
listed “category or subcategory of major sources and
10a
area sources” of HAPs, EFA must promulgate
emission standards. CAA § 112(d)(1), 42 U.S.C. §
7412(d)(1). Section 112(d) provides, as relevant, that
emission standards
shall require the maximum degree of
reduction in emissions of the hazardous air
pollutants subject to this section (including a
prohibition on such emissions, where
achievable) that the Administrator, taking
into consideration the cost of achieving such
emission reduction, and any non-air quality
health and environmental impacts and
energy requirements, determines iT
achievable{.]
CAA § 112(d)(2), 42 U.S.C. § 7412(d)(2) (emphasis
added). For existing sources, these “maximum
achievable control technology” (“MACT”) standards
may not be less stringent — regardless of cost or
other considerations — “than [] the average emission
limitation achieved by the best performing [] sources”
in the relevant category or subcategory. CAA §
112(d)(3)(AH{B), 42 U.S.C. § 7412(d)(3)(A-(B); see
Nat Lime Ass’n v. EPA, 233 F.3d 625, 629 (D.C. Cir.
2000). EPA refers to minimum-stringency MACT
standards as “floors.” Standards more stringent than
the floors, determined pursuant to § 112(d)(2), are
called “beyond-the-floor” limits.
For electric utility steam generating units
(“EGUs”), however, Congress directed that prior to
any listing EPA conduct a study of “the hazards to
public health reasonably anticipated to occur as a
result of [EGU HAP emissions] after imposition of
the requirements of this Chapter f[ie., Chapter 85
lla
Air Pollution Prevention and Control].” CAA §
112(n)(1)(A), 42 U.S.C. § 7412(m)(1)(A) (emphasis
added). The results of this “Utility Study” were to be
reported to Congress within three years. Jd. Further,
Congress directed that:
The Administrator shall regulate [EGUs]
under this section, if the Administrator finds
such regulation is appropriate and necessary
after considering the results of the study
required by this subparagraph.
Id. (emphasis added). Congress also directed EPA to
conduct two other studies on mercury emissions: the
“Mercury Study” on “the rate and mass of such
emissions, the health and environmental effects of
such emissions, technologies which are available to
control such emissions, and the costs of such
technologies,” to be reported to Congress in four
years, and the National Institute of Environmental
Health Sciences “study to determine the threshold
level of mercury exposure below which adverse
human health effects are not expected to occur,” to be
reported to Congress in three years. See CAA §
112(n)(1)(A)HC), 42 U.S.C. § 7412(n)(1)(AH{C).
In December 2000, on the basis of the Utility
Study and other data subsequently gathered, EPA
issued a notice of regulatory finding “that regulation
of HAP emissions from coaland oil-fired electric
utility steam generating units under section 112 of
the CAA is appropriate and necessary.” Regulatory
Finding on the Emissions of Hazardous Air
Pollutants From Electric Utility Steam Generating
Units, 65 Fed. Reg. 79,825, 79,826 (Dec. 20, 2000)
(“2000 Finding”). EPA found that EGUs “are the
12a
largest source of mercury emissions in the U.S.” and
that “[m]Jercury is highly toxic, persistent, and
bioaccumulates in food chains.” 65 Fed. Reg. at
79,827. Specifically, “[mJjercury emitted from [EGUs]
is transported through the atmosphere and
eventually deposits onto land or water bodies” where
it then changes into “a highly toxic” substance called
methylmercury. Jd. Methylmercury “biomagnifies in
the aquatic food chain,” id., meaning that it becomes
concentrated in the bodies of predatory fish which
absorb the methylmercury their food sources
contained. When humans eat these contaminated
fish, they also are exposed; the methylmercury from
the fish is absorbed into the bloodstream and
“distributed to all tissues including the brain.” Jd. at
79,829. The risks are greatest for women of
childbearing age, EPA explained, because
methylmercury “readily passes to the fetus and
fetal brain,” id., and “the developing fetus is most
sensitive to the effects of methylmercury,” id. at
79,827. Children born to women who were exposed to
methylmercury during pregnancy have exhibited
neurological abnormalities and developmental
delays. Id. at 79,829.
EPA concluded that “the available information
indicate[d] that mercury emissions from [EGUs]
are a threat to public health and the environment,”
notwithstanding “uncertainties regarding the extent
of the risks due to electric utility mercury emissions.”
Id. (emphasis added). EPA also identified several!
other metal and acid gas emissions from EGUs that
were “of potential concern,” namely arsenic,
chromium, nickel, cadmium, dioxins, hydrogen
chloride, and hydrogen fluoride. Jd. EPA therefore
13a
determined that it was “appropriate” to regulate
coaland oil-fired EGUs under § 112 because of the
health and environmental hazards posed by mercury
emissions from EGUs, and the availability of a
number of control options to effectively reduce such
emissions. Jd. at 79,830. EPA further determined
that it was “necessary” to regulate EGUs under § 112
because implementation of other provisions of the
CAA would “not adequately address” the public
health and environmental hazards found. Id.
Therefore, EPA added “coal- and oil-fired electric
utility steam generating units to the list of source
categories under section 112(c) of the CAA.” Jd.
In 2005, EPA reversed its 2000 Finding and
removed coaland oil-fired EGUs from the list of
source categories under § 112(c). See Revision of
December 2000 Regulatory Finding on the Emissions
of Hazardous Air Pollutants From Electric Utility
Steam Generating Units and the Removal of Coal-
and Oil-Fired Electric Utility Steam Generating
Units From the Section 112(c) List, 70 Fed. Reg.
15,994, 15,994 (Mar. 29, 2005) (“2005 Delisting
Decision”). This change was based on EPA’s revised
interpretation of § 112(n)(1)(A) and, to some extent,
on a revised assessment of the results of the Utility
Study. EPA concluded that it lacked authority under
§ 112(n)(1)(A) to regulate on the basis of non-health
hazards (e.g., environmental harms), and should
“focus solely” on the health effects directly
attributable to EGU emissions, rather than on
EGUs’ contribution to overall pollutant levels. Jd. at
15,998. Further, EPA decided it could consider other
relevant, “situation-specific factors, including cost”
that may affect whether regulation under § 112 is
l4a
“appropriate.” Jd. at 16,000—-01. Critically, EPA
determined that it must make its “appropriate and
necessary” finding by reference to health hazards
that will remain “after imposition of the
requirements of” the CAA. Id. at 15,998 (emphasis
added) (quoting CAA § 112(n)(1)(A), 42 U.S.C. §
7412(n)(1)(A)). EPA interpreted these other
“requirements” to include “not only’ those
requirements already imposed and in effect, but also
those requirements that EPA reasonably anticipates
will be implemented” and which “could either
directly or indirectly result in reductions of utility
HAP emissions.” Jd. at 15,999. Concluding that
regulation under other provisions of the CAA would
adequately address EGU emissions of mercury and
other HAPs, EPA determined that regulation under
§ 112 was neither “appropriate” nor “necessary.” Jd.
at 16,002—08. In responding to comments, EPA
stated that if it were to regulate EGU emissions,
then it would regulate only those substances for
which it had made a specific “appropriate and
necessary” determination. States and other groups
petitioned for review and this court vacated the 2005
Listing Decision, New Jersey, 517 F.3d at 583,
holding that EPA’s attempt to reverse its December
2000 listing decision was unlawful because Congress
had “unambiguously limit[ed] EPA’s discretion to
remove sources, including EGUs, from the section
112(c)(1) list once they have been added to it.”
In 2012, after notice and comment, EPA
“confirm[ed]” its 2000 Finding that regulation of
EGU emissions under § 112 is “appropriate and
necessary.” Final Rule, 77 Fed. Reg. 9304, 9310—11.
In the proposed rule, EPA stated that “the December
15a
2000 Finding was valid at the time it was made
based on the information available to the Agency at
that time.” Proposed Rule, 76 Fed. Reg. 24,976,
24,986, 24,994—-97 (May 3, 2011) (“NPRM”). Although
of the view that no further evidence was required to
affirm the 2000 Finding, EPA had conducted
additional quantitative and qualitative analyses
“confirm[ing] that it remains appropriate and
necessary today to regulate EGUs under CAA section
112.” Id. at 24,986; see id. at 24,999-25,020. With
respect to the term “appropriate,” EPA explained
that it was “chang[ing} the position taken in 2005
that the appropriate finding could not be based on
environmental effects alone”; “revisiting the 2005
interpretation that required the Agency to consider
HAP emissions from EGUs without considering the
cumulative impacts of all sources of HAP emissions”;
“revising the 2005 interpretation that required the
Agency to evaluate the hazards to public health after
imposition of the requirements of the CAA”; and
“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).”
Id, at 24,989. With respect to the term “necessary,”
EPA rejected as “unreasonable” its interpretation in
2005 that regulation under § 112 was “necessary”
only if no other provision in the CAA — whether
implemented or only anticipated — could “directly or
indirectly” reduce HAP emissions to acceptable
levels. Id. at 24,992.
16a
EPA explained that it interpreted § 112(n)(1)(A)
to require the Agency to find it appropriate to
regulate EGUs under CAA section 112 if the
Agency determines that the emissions of one
or more HAP emitted from EGUs pose an
identified or potential hazard to public health
or the environment at the time the finding is
made. If the Agency finds that it is
appropriate to regulate, it must find it
necessary to regulate EGUs under section
112 if the identified or potential hazards to
public health or the environment will not be
adequately addressed by the imposition of
the requirements of the CAA. Moreover, it
may be necessary to regulate utilities under
section 112 for a number of other reasons,
including, for example, that section 112
standards will assure permanent reductions
in EGU HAP emissions, which cannot be
assured based on other requirements of the
CAA.
Id. at 24,987—88. EPA also affirmed that coal- and
oil-fired EGUs were properly listed as a source
category under § 112(c). See id. at 24,986. EPA
adhered to these interpretations in the Final Rule,
77 Fed. Reg. at 9311. Accordingly, on February 16,
2012, EPA promulgated emission standards for a
number of listed HAPs emitted by coal- and oil-fired
EGUs. See id. at 9487-93.
Several petitions for review challenge the Final
Rule. We first address, in Part II, the challenges of
the State, Industry, and Labor petitioners. In Part
III, we address Industry petitioners’ specific issues.
17a
In Part IV.A, we address the challenges by the
Environmental petitioners, and in Part IV.B,
Julander Energy Company’s standing. In addressing
the substantive challenges to the Final Rule, this
court must determine under the CAA whether the
Final Rule was promulgated in a manner that was
arbitrary or capricious, an abuse of discretion, or
otherwise not in accordance with law. See CAA §
307(d)(9)(A), 42 U.S.C. § 7607(d)(9)(A). “The
‘arbitrary and capricious’ standard deems the agency
action presumptively valid provided the action meets
a minimum rationality standard.” Sierra Club, 353
F.3d at 978—79 (quoting Natural Res. Def. Council v.
EPA, 194 F.3d 130, 136 (D.C. Cir. 1999)). That is,
“lf EPA acted within its delegated statutory
authority, considered all of the relevant factors, and
demonstrated a reasonable connection between the
facts on the record and its decision, we will uphold
its determination.” Ethyl Corp. v. EPA, 51 F.3d 1053,
1064 (D.C. Cir. 1995). The court will show particular
deference “where the agency’s decision rests on an
evaluation of complex scientific data within the
agency’s technical expertise.” Troy Corp. v. Browner,
120 F.3d 277, 283 (D.C. Cir. 1997); see also Marsh v.
Or. Natural Res. Council, 490 U.S. 360, 377 (1989).
i.
State, Industry, and Labor petitioners challenge
EPA’s interpretation and application of the
“appropriate and necessary” requirement in §
112(n)(1){A).
18a
A.
As a threshold matter, petitioners contend that
the 2000 Finding was unlawful because EPA did not
allow notice and comment on the finding, did not
quantify the relevant mercury emissions and
associated health risks, and did not describe
“alternative control strategies” as required under §
112(n)(1)(A). Because the December 2000 notice was
“fundamentally flawed,” they contend it “could have
no legal consequences” and “could not provide the
basis for a § 112(c) listing decision.” State, Industry
& Labor Pet’rs’ Br. (hereinafter “SIL Br.”) 27-28.
Without a proper listing under § 112(c), they
contend, EPA has no authority to regulate EGUs
under § 112(d).
The court need not decide whether EPA’s
December 2000 “appropriate and necessary” finding
was procedurally or substantively valid because EPA
reconsidered and “confirm[ed]” that determination in
the Final Rule. See NPRM, 76 Fed. Reg. at 24,977;
Final Rule, 77 Fed. Reg. at 9310-11, 9320. For the
reasons we will discuss, we hold that EPA’s finding
in the Final Rule was substantively and procedurally
valid, and consequently any purported defects in the
2000 Finding have been cured, rendering petitioners’
challenge to December 2000 “appropriate and
necessary” finding moot. Cf. Fund for Animals, Inc.
v. Hogan, 428 F.3d 1059, 1063—64 (D.C. Cir. 2005).
B.
The crux of petitioners challenge to the Final
Rule focuses on EPA’s interpretation of the phrase
“appropriate and necessary” in § 112(n)(1)(A), 42
19a
U.S.C. § 7412(n)(1)(A). The context of this phrase is
as follows. In a _ special subsection on EGUs,
Congress first directed: “The Administrator shall
perform a study of the hazards to public health
reasonably anticipated to occur as a result of
emissions by electric utility steam generating units
of pollutants listed under subsection (f) after
imposition of the requirements of this Act.” CAA §
112(m)(1M(A), 42 U.S.C. § 7412(n)(1)(A) (emphasis
added). Congress then directed: “The Administrator
shall regulate electric utility steam generating units
under this section, if the Administrator finds such
regulation is appropriate and necessary after
considering the results of the study required by this
subparagraph.” Jd. (emphasis added). Apart from the
instruction to “consider{] the results of the [Utility
Study]” on public health hazards from EGU
emissions, the statute offers no express guidance
regarding what factors EPA is required or permitted
to consider in deciding whether regulation under §
112 is “appropriate and necessary.” Neither does it
define the words “appropriate” or “necessary.” See
NPRM, 76 Fed. Reg. at 24,986; 2005 Listing
Decision, 70 Fed. Reg. at 15,997. Petitioners object to
how EPA chose to fill these gaps.
In matters of statutory interpretation, the court
applies the familiar two part test under Chevron
U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842—43 (1984). First, the court
employs traditional tools of statutory construction to
determine de novo “whether Congress has directly
spoken to the precise question at issue.” Jd. at 842,
843 n.9. If the court “ascertains that Congress had
an intention on the precise question at issue,” id. at
20a
843 n.9, “that is the end of the matter” and the court
“must give effect to the unambiguously expressed
intent of Congress,” id. at 842-43. If, however, “the
statute is silent or ambiguous with respect to the
specific issue,” the court will uphold the agency’s
interpretation so long as it constitutes “a permissible
construction of the statute.” Jd. at 843. “In such case,
a court may not substitute its own construction of a
statutory provision for a reasonable interpretation
made by the administrator of an agency.” Id. at 844.
To the extent petitioners’ challenge concerns
EPA’s change in interpretation from that in 2005,
our approach is the same because “[ajgency
inconsistency is not a basis for declining to analyze
the agency’s interpretation under the Chevron
framework.” Nat? Cable & Telecomms. Ass'n v.
Brand X Internet Serus., 545 U.S. 967, 981 (2005).
That is, “if the agency adequately explains the
reasons for a reversal of policy, change is not
invalidating, since the whole point of Chevron is to
leave the discretion provided by the ambiguities of a
statute with the implementing agency.” Jd. (internal
quotation marks omitted). And while “[u]nexplained
inconsistency” may be “a reason for holding an
interpretation to be an arbitrary and capricious
change from agency practice,” id., our review of a
change in agency policy is no stricter than our review
of an initial agency action, see FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 514-16 (2009). Thus,
although an agency may not “depart from a prior
policy sub silentio or simply disregard rules that are
still on the books,” the agency “need not demonstrate
to a court’s satisfaction that the reasons for the new
policy are better than the reasons for the old one.” Jd.
21a
at 515. Rather, “it suffices that the new policy is
permissible under the statute, that there are good
reasons for it, and that the agency believes it to be
better.” Id.
1. Reliance on delisting criteria. In the Final
Rule, EPA concluded that it is “appropriate and
necessary” to regulate HAP emissions on the basis,
inter alia, that EGU emissions of certain HAPs pose
a cancer risk higher than the standard set forth in
the § 112(c)(9) delisting criteria (i.e., greater than
one in a million for the most exposed individual). See
Final Rule, 77 Fed. Reg. at 9311; NPRM, 76 Fed.
Reg. at 24,998. Petitioners contend that by so doing
EPA wrongly conflated the delisting criteria with the
“appropriate and necessary” determination. “By
applying the delisting provisions of § 112(c)(9) in
making the initial, pre-listing determination whether
it is ‘appropriate and necessary’ to regulate EGUs,
EPA has unlawfully imposed requirements on itself
the Congress chose not to impose at the listing
stage.” SIL Br. 35. They maintain that EPA’s
approach “would treat EGUs the same as all other
major source categories — as a category that must be
listed unless the delisting criteria are met.” Jd.
EPA explained that it was relying upon the
delisting criteria to interpret an ambiguous term in §
112(n)(1)(A), namely, “hazards to public health,” see
Final Rule, 77 Fed. Reg. at 9333-34; NPRM, 76 Fed.
Reg. at 24,992—-93, because the phrase “hazards to
public health” is nowhere defined in the CAA. EPA
looked to the delisting criteria, which specify the risk
thresholds below which a source category need not be
regulated, as evidence of congressional judgment as
22a
to what degree of risk constitutes a health hazard.
See id. EPA explained:
Although Congress provided no definition of
hazard to public health, section 112(c)(9)(B)
is instructive. In that section, Congress set
forth a test for removing source categories
from the section 112(c) source category list.
That test is relevant because it reflects
Congress’ view as to the level of health
effects associated with HAP emissions that
Congress thought warranted continued
regulation under section 112.
NPRM, 76 Fed. Reg. at 24,993 (emphasis added); see
Final Rule, 77 Fed. Reg. at 9333-34. EPA concluded
that it had discretion also to consider various other
factors in evaluating hazards to public health,
including
the nature and severity of the health effects
associated with exposure to HAP emissions;
the degree of confidence in our knowledge of
those health effects; the size and
characteristics of the populations affected by
exposures to HAP emissions; [and] the
magnitude and breadth of the exposures and
risks posed by HAP emissions from a
particular source category, including how
those exposures contribute to risk in
populations with additional exposures to
HAP from other sources[.|
NPRM, 76 Fed. Reg. at 24,992; see Final Rule, 77
Fed. Reg. at 9334.
23a
EPA reasonably relied on the § 112(c)(9) delisting
criteria to inform its interpretation of the undefined
statutory term “hazard to public health.” Congress
did not specify what types or levels of public health
risks should be deemed a “hazard” for purposes of §
112(n)(1)(A). By leaving this gap in the statute,
Congress delegated to EPA the authority to give
reasonable meaning to the term. Cf. Chevron, 467
U.S. at 843-44. EPA’s approach does not, as
petitioners contend, “treat EGUs the same as all
other major source categories.” SIL Br. 35. Other
major source categories must be listed unless the
delisting criteria are satisfied; EPA’s approach treats
EGUs quite differently. For EGUs, EPA reasonably
determined that it may look at a broad range of
factors — only one of which concerned the § 112(c)(9)
benchmark levels — in assessing the health hazards
posed by EGU HAPs. Nowhere does EPA state or
imply that the delisting criteria provide the sole
basis for determining whether it is “appropriate and
necessary” to regulate EGUs under § 112. Because
EPA’s approach is based on a_ permissible
construction of § 112(n)(1)(A), it is entitled to
deference and must be upheld.
2. Costs of regulation. Noting that in 2005 EPA
construed § 112(n)(1)(A) to allow consideration of
costs in determining whether regulation of EGU
HAP emissions is “appropriate,” petitioners contend
that EPA’s new interpretation to “preclude
consideration of costs,” SIL Br. 42, “unreasonably
constrains the language of § 112(n)(1)(A),” SIL Br.
39. They point to the dictionary definition of
“appropriate” and to the differences between
regulation of EGUs under § 112(n)(1)(A) and
24a
regulating other sources under § 112(c), and to this
court’s precedent that “only where there is ‘clear
congressional intent to preclude consideration of cost’
[do] we find agencies barred from considering costs.”
SIL Br. 40 (quoting Michigan v. EPA, 213 F.3d 663,
678 (D.C. Cir. 2000), cert. denied, 532 U.S. 904
(2001)). They contend that EPA’s new interpretation
“is also unlawful because it eliminates the discretion
that Congress intended EPA to exercise after
completing the Utility Study.” SIL Br. 41. As they
see it, if the statutory term “appropriate” imposes
any limit whatsoever, it must at least limit
regulation to “risks [that] are worth the cost of
elimination.” SIL Reply Br. 14 (quoting Michigan v.
EPA, 213 F.3d at 667 (addressing the term
“significant”)).
In the Final Rule, EPA stated that “it is
reasonable to make the listing decision, including the
appropriate determination, without considering
costs.” Final Rule, 77 Fed. Reg. at 9327. EPA
reasoned that § 112(n)(1)(A) would have included an
“express statutory requirement that the Agency
consider costs in making the appropriate
determination” if Congress wanted to require EPA to
do so. Id. EPA also noted that “[t]o the extent [its]
interpretation differs from the one set forth in 2005,”
it had “fully explained the basis for such changes.”
Id. at 9323 (citing NPRM, 76 Fed. Reg. at 24,986—
93). (Even in 2005, EPA noted only that “[njothing
precludes EPA from considering costs in assessing
whether regulation of [EGUs] under section 112 is
appropriate in light of all the facts and
circumstances presented.” 2005 Delisting Decision,
70 Fed. Reg. at 16,001 n.19.) In responding to
25a
comments reacting to its position that “the better
reading of the term ‘appropriate’ is that it does not
allow for the consideration of costs in assessing
whether hazards to public health or the environment
are reasonably anticipated to occur based on EGU
emissions,” NPRM, 76 Fed. Reg. at 24,989, EPA
observed that the dictionary definition of
“appropriate” does not require consideration of costs
and that commenters had failed to identify an
express statutory requirement to that effect. EPA
also stated that it was reasonable to decline to
consider costs in the absence of an express statutory
requirement to do so because Congress, in enacting §
112, was principally concerned vith mitigating
hazards to public health and the environment from
HAP emissions. See Final Rule, 77 Fed. Reg. at 9327.
Inasmuch as Congress had treated the regulation of
HAP emissions differently in the 1990 Amendments
because EPA was not acting quickly enough, EPA
concluded it was reasonable to make a listing
decision without considering costs. See id.
On its face, § 112(n)(1)(A) neither requires EPA
to consider costs nor prohibits EPA from doing so.
Indeed, the word “costs” appears nowhere in
subparagraph A. In the absence of any express
statutory instruction regarding costs, petitioners rely
on the dictionary definition of “appropriate” —
meaning “especially suitable or compatible” or
“suitable or proper in the circumstances” -—— to argue
that EPA was required “to take into account costs to
the nation’s electricity generators when deciding
whether to regulate EGUs.” SIL Br. 39 (citing
MERRIAM-WEBSTER’S ONLANE DICTIONARY;
NEW OXFORD AMERICAN DICTIONARY (2d ed.
26a
2005)). Yet these definitions, which do not mention
costs, merely underscore that the term “appropriate”
is “open-ended,” “ambiguous,” and “inherently
context-dependent.” Sossamon v. Texas, 131 S. Ct.
1651, 1659 (2011); cf. Natl Ass’n of Clean Air
Agencies v. EPA, 489 F.3d 1221, 1229 (D.C. Cir.
2007).
Even if the word “appropriate” might require cost
consideration in some contexts, such a reading of
“appropriate” is unwarranted here, where Congress
directed EPA’s attention to the conclusions of the
study regarding public health hazards from EGU
emissions. Throughout § 112, Congress mentioned
costs explicitly where it intended EPA to consider
them. Cf. CAA §_ 112(d)(2), 112(d)(8)(A)G),
112()(1)(B), 112(f(2)(A), 112(m)(1)(B), 112(s)(2), 42
U.S.C. § 7412(d)(2), 7412(d)(8)(A)(i), 7412(f(1)(B),
7412(f)(2)(A), 7412(n)(1)(B), 7412(s)(2). Indeed, in the
immediately following subparagraph of § 112(n),
Congress expressly required costs to be considered.
CAA § 112(n)(1)(B), 42 U.S.C. § 7412(n)(1)(B). The
contrast with subparagraph A could not be more
stark. “Where Congress includes particular language
in one section of a statute but omits it in another
section of the same Act, it is generally presumed that
Congress acts intentionally in the disparate
inclusion or exclusion.” Russello v. United States, 464
U.S. 16, 23 (1983) (alterations omitted); cf. Catawba
Cnty., N.C. v. EPA, 571 F.3d 20, 36 (D.C. Cir. 2009).
Petitioners offer no compelling reason why Congress,
by using only the broad term “appropriate,” would
have intended the same result — that costs be
considered — in § 112(n)(1)(A). The legislative
history the dissent claims “establishes” the point,
27a
Dissent at 13, consists of a Floor statement by a
single Congressman that at best is ambiguous.’ For
these reasons, we conclude that the statute does not
evince unambiguous congressional intent on the
specific issue of whether EPA was required to
consider costs in making its “appropriate and
necessary” determination under § 112(n)(1)(A).
Turning to EPA’s approach, its position that
“nothing about the definition of [‘appropriate’}
compels a consideration of costs,” Final Rule, 77 Fed.
Reg. at 9327, is clearly permissible. In Whitman v.
American Trucking Ass’ns, 531 U.S. 457 (2001),
Justice Scalia, writing for a unanimous Court, noted
that the Supreme Court has “refused to find implicit
in ambiguous sections of the CAA an authorization to
consider costs that has elsewhere, and so often, been
expressly granted.” Id. at 467; see also Natural Res.
Def. Council v. U.S. EPA, 824 F.2d 1146, 1163—65
(D.C. Cir. 1987) (en banc). EPA’s interpretation is
consistent with that instruction. Just as in Whitman,
EPA declines to find in an ambiguous section what in
so many other CAA sections Congress has mentioned
expressly. And even assuming Whitman might be
distinguished on grounds it concerned a different
provision of the CAA, the question remains only
whether EPA’s interpretation is permissible.
1 See 1 A LEGISLATIVE HISTORY OF THE CLEAN AIR
ACT AMENDMENTS OF 1990, at 1416-17 (1993) (statement
by Rep. Oxley) (indicating that the provision authorizing
regulation of EGUs would “avoid[} the imposition of excessive
and unnecessary costs” by ensuring that EPA can regulate “only
if the studies described in section 112(n) clearly establish that
emissions .. . from such units cause a significant risk of serious
adverse effects on public health”).
28a
Petitioners cannot point to a single case in which this
court has required EPA to consider costs where the
CAA does not expressly so instruct. In Michigan v.
EPA, this court merely held that “the agency was free
to consider costs” under CAA § 110(a)(2)(D), 42
U.S.C. § 7410(a)(2)(D), as EPA had urged in that
case. 213 F.3d at 679 (emphasis added).
EPA’s interpretation is also consistent with the
purpose of the 1990 Amendments, which were aimed
at remedying “the slow pace of EPA’s regulation of
HAPs” following the initial passage of the CAA. New
Jersey, 517 F.3d at 578. To ensure that HAP
emissions would be reduced to at least minimally
acceptable levels, Congress, among other things,
listed 189 HAP substances for regulation and
“restrict[ed] the opportunities for EPA and others to
intervene in the regulation of HAP sources.” Id. The
overall purpose of the 1990 Amendments was to spur
EPA to action. Although Congress gave EGUs a
three-year pass when it instructed EPA to conduct a
further study before regulating EGUs, see CAA §
112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A), there is no
indication that Congress did not intend EPA to
regulate EGUs if and when their public health
hazards were confirmed by the study, as they were
here.
Petitioners, and our dissenting colleague, suggest
that EPA’s interpretation is unreasonable because
the notion that Congress would have authorized EPA
to regulate without any consideration of regulatory
costs is implausible. But this argument rests on a
false premise. Here, as in Whitman, interpreting one
isolated provision not to require cost consideration
29a
does not indicate that Congress was unconcerned
with costs altogether, because Congress accounted
for costs elsewhere in the statute. Section 112(d)(2)
expressly requires EPA to “tak[e] into consideration
the cost of achieving emission reduction[s]” when
setting the level of regulation under § 112. CAA §
112(d)(2), 42 U.S.C. § 7412(d)(2). It is true that this
cost consideration requirement does not apply with
respect to MACT floors. Yet even for MACT floors,
costs are reflected to some extent because the floors
correspond (by definition) to standards that better-
performing EGUs have already achieved, presumably
in a cost efficient manner. See CAA § 112(d)(3)(A), 42
U.S.C. § 7412(d)(3)(A). Moreover, Industry
respondent intervenors point out that petitioners’
proposed approach would lead to an improbable “all-
or-nothing” scheme in which EPA could “choose not
to regulate EGUs at all under Section 112 based on
cost, even though EPA could not consider cost to
justify a less stringent emission standard than the
MACT floor.” Indus. Resp’t Intvn’rs’ Br. 8.
Contrary to petitioners’ claims, the word
“appropriate” is not rendered meaningless unless
interpreted to include cost consideration. Petitioners
contend that § 112(n)(1)(A) mandates a two-step
inquiry: EPA must “first identify ‘a health hazard’
from HAPs emitted from EGUs, and then determine
whether regulation of that health hazard is
‘appropriate and necessary.” SIL Br. 41 (emphasis
added). If the existence of a health hazard
automatically means regulation is appropriate, they
contend, then EPA has unlawfully abdicated the
exercise of discretion Congress delegated to it. This
argument, too, is unpersuasive. First, the
30a
rulemaking record reflects that EPA did not focus
exclusively on health hazards in considering whether
regulation would be “appropriate”; EPA also
considered “the availability of controls to address
HAP emissions from EGUs.” NPRM, 76 Fed. Reg. at
24,989; see id. at 24,997; see also Final] Rule, 77 Fed.
Reg. at 9311. The factual premise of petitioners’
argument is therefore incorrect. Second, even if EPA
had focused exclusively on health hazards, the word
“appropriate” would still have meaning in §
112(n)(1)(A) because the provision does not assume,
as petitioners seem to suggest, that EPA would in
fact “identify ‘a health hazard” from EGUs. SIL Br.
41. Rather, the statute directs EPA to “perform a
study of the hazards to public health reasonably
anticipated to occur” and then to “regulate [EGUs]
if the Administrator finds such regulation is
appropriate and necessary after considering the
results of the study.” CAA § 112(n)(1)(A), 42 U.S.C. §
7412(n)(1)(A) (emphasis added). At 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. (Indeed, petitioners argue that it did fail
to do so. See SIL Br. 13, 48—54.) Therefore, 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. The
term “appropriate” plainly plays a role: it requires
EPA to apply its judgment in evaluating the results
of the study.
Basically, petitioners and our _ dissenting
colleague seek to impose a requirement that
3la
Congress did not. What they ignore is that Congress
sought, as a threshold matter, to have EPA confirm
the nature of public health hazards from EGU
emissions. That is the clear focus of § 112(m)(1){A).
After that, Congress left it to the expertise and
judgment of EPA whether or not to regulate. For
EPA to focus its “appropriate and necessary”
determination on factors relating to public health
hazards, and not industry’s objections that emission
controls are costly, properly puts the horse before the
cart, and not the other way around as petitioners
and our dissenting colleague urge. Given Congress’s
efforts in the 1990 Amendments to promote
regulation of hazardous_ pollutants, EPA’s
interpretation of § 112(n)(1)(A) appears consistent
with Congress’s intent. Recall that only EGUs’
hazardous emissions were relieved of regulation
until completion of a study, and once the study
confirmed the serious public health effects of
hazardous pollutants from EGUs, Congress gave no
signal that the matter should end if remediation
would be costly.
Our dissenting colleague has written a powerful-
sounding dissent. It sounds powerful, however, only
because it elides the distinction between EPA's
initial decision regarding whether to list EGUs as
sources of hazardous air pollutants, and its
subsequent decision regarding whether to issue
stringent beyond-the-floor standards for such
sources. The dissent refers to both together as the
MACT “program.” Dissent at 3. But the “program” in
fact proceeds in two stages, as the dissent
acknowledges. It is only as to the first, listing stage
that EPA has determined it should not consider
32a
costs. That stage leads only to the setting of the
statutory MACT floor which, as the dissent notes, is
a “minimum stringency level.” Jd. The second stage
leads to beyond-the-floor standards, which are more
restrictive. When setting those, EPA does consider
costs.
The dissent contends that “[mJeeting that
[{MACT] floor will be prohibitively expensive,
particularly for many coal-fired utilities,” forcing
them “out of business.” Dissent at 10—11. But in the
Final Rule EPA rejected this contention, concluding
that “the estimated number of early retirements,” of
EGUs “that may result from this rule is less than
2 percent of all U.S. coalfired capacity” in 2015. Final
Rule, 77 Fed. Reg. at 9416; see also id. at 9408
(rejecting the claim that the Final Rule “will result in
substantial power plant retirements”). Petitioners
have not challenged that conclusion. Industry
respondent intervenors further observe’ that
continuing to exempt EGUs from HAP regulation
penalizes those plants that have made investments
in clean air technology, and that “[t]he Rule merely
requires owners of uncontrolled plants to install and
operate control technology already operating at their
competitors’ plants, both leveling the playing field
and improving health and the environment.” Indus.
Resp’t Intv’nrs’ Br. 7. The Final Rule, which, as the
dissent notes, EPA has calculated will cost $9.6
billion a year, includes the cost of both stages. EPA
also has concluded under Executive Order 13563
that the annualized benefits are $37 to $90 billion.
See Final Rule, 77 Fed. Reg. at 9306. (The dissent
questions this conclusion, notwithstanding its
promise that agency cost-benefit analyses should be
33a
reviewed deferentially.) That’s “billion with a b,” in
the dissent’s catchy phrase. Dissent at 1. In short,
“the benefits of this rule outweigh its costs by
between 3 to 1 or 9 to 1.” Final Rule, 77 Fed. Reg. at
9306.
As the agency noted, “[ujmder section
112(n)(1)(A), EPA is evaluating whether to regulate
HAP emissions from EGUs at all.” NPRM, 76 Fed.
Reg. at 24,989 (emphasis added). And there was
nothing unreasonable about its conclusion that costs
should not be considered in determining “whether
HAP emissions from EGUs pose a hazard to public
health or the environment.” Jd. at 24,988; see id. at
24,990. That is especially so when “Congress did not
authorize the consideration of costs in listing any
[other] source categories for regulation under section
112 [and] did not permit the consideration of
costs in evaluating whether a source category could
be delisted pursuant to the provisions of section
112(c)(9).” Id. at 24,989. And while the dissent
insists on “the centrality of cost consideration to
proper regulatory decisionmaking,” Dissent at 6,
Whitman makes clear the Supreme Court believes
that Congress does not necessarily agree. Nor is
Whitman the only case in which courts have found
that Congress legislated in a way the dissent would
find irrational.”
2 See Am. Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 511-—
12 (1981) (holding that OSHA is not required to conduct a cost-
benefit analysis in promulgating a standard under section
6(b)(5) of the Occupational Safety and Health Act because
“Congress uses specific language when intending that an
agency engage in cost-benefit analysis”); Tenn. Valley Auth. v.
34a
Academic generalities, see Dissent at 6—8, do not
demonstrate that EPA could not reasonably proceed
as it did in interpreting congressional intent —
especially not generalities by academics who are
criticizing the Supreme Court for failing to read
congressional statutes as they do.° The same is true
of utterances by single Justices — especially a
separate statement by one Justice concurring in
Whitman and a question by another during oral
argument about a different statutory section. See
Dissent at 6-7. Nor do the different approaches of
the Bush and Obama Administrations on the role of
costs in implementing the CAA do more than
demonstrate that administrations may differ and can
change positions without legal jeopardy, so long as
Hill, 437 U.S. 153, 184 (1978) (‘The plain intent of Congress in
enacting [the Endangered Species Act] was to halt and reverse
the trend towards species extinction, whatever the cost.”);
Union Elec. Co. v. EPA, 427 U.S. 246, 257-58 (1976) (holding
that EPA may not consider claims of economic infeasibility in
evaluating a state requirement that primary ambient air
quality standards be met by a certain deadline); Lead Indus.
Ass'n v. EPA, 647 F.2d 1130, 1150 (D.C. Cir. 1980) (“We are
unable to discern here any congressional intent to require, or
even permit, [EPA] to consider economic .. . factors in
promulgating air quality standards funder the CAA].”).
3 See Cass R. Sunstein, Interpreting Statutes in the
Regulatory State, 103 HARV. L. REV. 405, 492-93 (1989)
(criticizing American Textile Manufacturers Institute, 452 U.S.
490, for “contributing to the irrationality of the Occupational!
Safety and Health Act” by “refusing to read the statute” as the
author would); Cass R. Sunstein, Cost- Benefit Default
Principles, 99 MICH. L. REV. 1651, 1671 (2001) (same);
Richard J. Pierce, Jr., The Appropriate Role of Costs in
Environmental Regulation, 54 ADMIN L. REV. 1237, 1253
(2002) (criticizing the Whitman Court for relying on an “anti-
cost canon”).
35a
an adequate explanation is provided as was done
here. See Chevron, 467 U.S. at 865-66. The question
before the court is not “Should EPA have considered
costs in making its threshold determination under §
112(n)(1)(A)?”” but rather “Was EPA required to do so
at that point in its regulatory evaluation?” EPA has
explained why it concluded costs were not part of the
“appropriate and necessary” determination, and
given Congress’s choice to leave the factors entering
into that determination to EPA, petitioners, and our
dissenting colleague, fail to demonstrate that EPA's
considered judgment about the factors to be
considered was unlawful as an impermissible and
unreasonable interpretation of § 112(n)(1)(A).
Congress left to EPA “the accommodation of
manifestly competing interests,” id. at 865, and EPA
did all that Congress required of it. Exactly how and
when EGU emissions are to be regulated is a
different question.
For these reasons, we hold that EPA reasonably
concluded it need not consider costs in making its
“appropriate and necessary” determination under §
112(n)(1)(A).
3. Environmental harms. Petitioners also
contend that EPA was constrained to consider only
public health hazards, not environmental or other
harms, in making its “appropriate and necessary”
determination. In their view, § 112(n)(1)(A)
unambiguously forecloses the consideration of non-
health effects because the statute requires EPA to
make its “appropriate and necessary” determination
after considering the results of the Utility Study,
which is focused exclusively on identifying “hazards
36a
to public health” caused by EGU HAP emissions. See
SIL Br. 44. Petitioners insist that in 2005 EPA
followed the health-only approach.
EPA reasoned that “nothing in the statute
suggests that the [EPA] should ignore adverse
environmental effects in determining whether to
regulate EGUs under section 112.” NPRM, 76 Fed.
Reg. at 24,988; see Final Rule, 77 Fed. Reg. at 9325.
To the contrary, EPA concluded that the purpose of
the CAA and the statute’s express instruction to
assess environmental effects in the Mercury Study
suggest “it is reasonable to consider environmental
effects in evaluating the hazards posed by HAP
emitted from EGUs.” NPRM, 76 Fed. Reg. at 24,988;
see Final Rule, 77 Fed. Reg. at 9325. EPA explained
in response to comments that restricting it from
considering environmental harms would “incorrectly
conflate[] the requirements for the Utility Study with
the requirement to regulate EGUs under CAA
section 112 if EPA determines it is appropriate and
necessary to do so.” Final Rule, 77 Fed. Reg. at 9325.
EPA did not err in considering environmental
effects alongside health effects for purposes of the
“appropriate and necessary” determination.
Although petitioners’ interpretation of § 112(n)(1)(A)
is plausible, the statute could also be read to treat
consideration of the Utility Study as a mere
condition precedent to the “appropriate and
necessary’ determination. EPA has consistently
adopted this latter interpretation, including in 2005.
See 2005 Delisting Decision, 70 Fed. Reg. at 16,002.
In the absence of any limiting text, and considering
the context (including § 112(n)(1)(B)) and purpose of
37a
the CAA, EPA reasonably concluded that it could
consider environmental harms in making its
“appropriate and necessary” determination. The
court need not decide whether environmental! effects
alone would allow EPA to regulate EGUs under §
112, because EPA did not base its determination
solely on environmental effects. As we explain, infra
Part 1I.B.5, EPA’s decision to list EGUs can be
sustained on the basis of its findings regarding
health hazards posed by EGU HAP emissions.
4. Cumulative impacts of HAP emissions. On the
grounds that § 112(n)(1)(A) directs EPA to study
hazards reasonably anticipated to occur “as a result
of EGU HAP emissions, petitioners contend that
EPA was required to base its “appropriate and
necessary’ determination on public health hazards
that occur exclusively due to EGU HAPs. Thus, they
contend, EPA erred in considering EGU HAP
emissions that merely “contribute to” or exacerbate
otherwise-occurring health hazards. Petitioners point
out that EPA’s interpretation conflicts with its
approach in 2005, when it read § 112(m)(1)(A) to
authorize regulation only upon a showing that EGU
emissions alone would cause harm.
EPA explained that it could reasonably consider
the cumulative impacts of HAP emissions because
focusing on HAP emissions from EGUs alone
when making the appropriate finding ignores
the manner in which public health and the
environment are affected by air pollution. An
individual that suffers adverse health effects
as the result of the combined HAP emissions
from EGUs and other sources is harmed,
38a
irrespective of whether HAP emissions from
EGUs alone would cause the harm.
NPRM, 76 Fed. Reg. at 24,988; see Final Rule, 77
Fed. Reg. at 9325. EPA acknowledged it was
departing from its 2005 approach, see NPRM, 76 Fed.
Reg. at 24,989, but justified the departure on
grounds that the 2005 approach had been “flawed”
and “non-scientific” to the extent that “EPA [had]
incorrectly determined that U.S. EGU emissions of
[mercury] did not constitute a hazard to public
health,” id. at 25,019; cf. Final Rule, 77 Fed. Reg. at
9322-23.
EPA’s interpretation in the Final Rule is entitled
to deference. Section 112(n)(1)(A)’s reference to
hazards occurring “as a result of’ EGU HAP
emissions could connote hazards caused solely by
EGU emissions, but it could also connote hazards
exacerbated by EGU emissions. EPA’s commonsense
approach to this statutory ambiguity was well within
the bounds of its discretion, and it adequately
explained its reversal from 2005. Petitioners’
contention that EPA erred in considering the effects
of HAPs emitted by non-EGU sources is therefore
unavailing. In any event, EPA concluded in the
Mercury Study that “even if there were no other
sources of [mercury] exposure, exposures associated
with deposition attributable to U.S. EGUs” would
place the most susceptible populations above the
methylmercury reference dose. NPRM, 76 Fed. Reg.
at 25,010. Thus, EPA did find, as petitioners contend
it was required to do, that EGU emissions alone
would cause health hazards.
39a
5. Regulation under § 112(d). Petitioners contend
that even if it is “appropriate and necessary” to
regulate EGU HAP emissions, such regulation
should be effected under § 112(n)(1)(A) to the degree
appropriate and necessary — not under § 112(d)
through the imposition of MACT standards. They
maintain that regulation of EGU HAPs that do not
pose health hazards, or reguiation at a level higher
than needed to eliminate such hazards, is not
regulation that is “appropriate and necessary.”
Petitioners contend that § 112(n)(1)(A)’s instruction
to “regulate electric steam generating units under
this section” (emphasis added) — rather than “under
§ 112(dy’ — evinces congressional intent that EGU
HAPs should be regulated differently than other
sources. SIL Br. 36.
EPA expressly considered and _ dismissed
petitioners’ proposed interpretation. EPA concluded
that the phrase “under this section” presumptively
refers to regulation under section 112, not to
regulation under subparagraph 112(n)(1)(A). See
Final Rule, 77 Fed. Reg. at 9330; NPRM, 76 Fed.
Reg. at 24,993. Thus, the plain statutory language
suggests “EGUs should be regulated in the same
manner as other categories for which the statute
requires regulation.” Final Rule, 77 Fed. Reg. at
9330. EPA explained:
CAA section 112 establishes a mechanism to
list and regulate stationary sources of HAP
emissions. Regulation under CAA section 112
generally -equires listing under CAA section
112(c)[} [and] regulation under CAA section
112(d)[.] A determination that EGUs
40a
should be listed once the prerequisite
appropriate and necessary finding is made is
wholly consistent with the language of
section 112(n)(1)(A), and listed sources must
be regulated under CAA section 112(d).
Id.; see also id. at 9326.
EPA acted properly in regulating EGUs under §
112(d). Section 112(m)(1)(A) directs the
Administrator to “regulate electric steam generating
units under this section, if the Administrator finds
such regulation is appropriate and necessary.” CAA §
112(m)(1)(A), 42 U.S.C. § 7412(n)(1)(A). EPA
reasonably interprets the phrase “under this section”
to refer to the entirety of section 112. See Desert
Citizens Against Pollution v. EPA, 66 F.3d 524, 527
(D.C. Cir. 2012). Under section 112, the statutory
framework for regulating HAP sources appears in §
112(c), which covers listing, and § 112(d), which
covers standard-setting. See CAA § 112(c), 112(d), 42
U.S.C. § 7412(c), 7412(d). This court has previously
noted that “where Congress wished to exempt EGUs
from specific requirements of section 112, it said so
explicitly.” New Jersey, 517 F.3d at 583. EPA
reasonably concluded that the framework set forth in
§ 112(c) and § 112(d) — rather than another,
hypothetical framework not elaborated in the statute
— provided the appropriate mechanism for
regulating EGUs under § 112 after the “appropriate
and necessary” determination was made. Therefore,
EPA’s interpretation is entitled to deference and
must be upheld.
6. Regulation of all HAP emissions. In the Final
Rule, EPA claimed authority to promulgate
4la
standards for all listed HAPs emitted by EGUs, not
merely for those HAPs it has expressly determined to
cause health or environmental hazards. See, e.g., 77
Fed. Reg. at 9325-26. Petitioners challenge this
approach, maintaining that § 112(n)(1)(A) limits
regulation to those individual HAPs that are
“appropriate and necessary” to regulate. Petitioners
also object that EPA’s interpretation contradicts its
2005 rulemaking when it supported a substance-by-
substance approach to regulation.
EPA explained its disagreement with petitioners’
proposed approach. First, EPA reiterated its view
that once an “appropriate and _ necessary”
determination is properly made, “EGUs should be
regulated under section 112 in the same manner as
other categories for which the statute requires
regulation.” Final Rule, 77 Fed. Reg. at 9326. EPA
then reasoned that this court’s decision in National
Lime, 233 F.3d at 633, “requires [EPA] to regulate
all HAP from major sources of HAP emissions once a
source category is added to the list of categories
under CAA section 112(c).” Id. (emphasis added). In
other words, EPA concluded that if EGUs are to be
regulated in the same manner as other source
categories, then all HAPs emitted by EGUs should
be subject to regulation. See id.
EPA did not err by concluding that it may
regulate all HAP substances emitted by EGUs. In
National Lime, 233 F.3d at 633, this court considered
whether § 112(d)(1) permitted EPA “to set emission
levels only for those listed HAPs” that could be
controlled with existing technology. Concluding that
EPA had a “clear statutory obligation to set emission
42a
standards for each listed HAP,” the court held that
“the absence of technology-based pollution control
devices for HCl, mercury, and total hydrocarbons did
not excuse EPA from setting emission standards for
those pollutants.” Jd. at 634. Although petitioners
attempt to distinguish National Lime on grounds
that it concerned “major sources” rather than EGUs,
they have not provided any compelling reason why
EGUs should not be regulated the same way as other
sources once EPA has determined that regulation
under § 112 is “appropriate and necessary.” It also
bears emphasis that the plain text of § 112(n)(1)(A)
directs the Administrator to “regulate electric utility
steam generating units’—not to regulate their
emissions, as petitioners suggest. This source-based
approach to regulating EGU HAPs was affirmed in
New Jersey, 517 F.3d at 582, which held that EGUs
could not be delisted without demonstrating that
EGUs, as a category, satisfied the delisting criteria
set forth in § 112(c)(9). The notion that EPA must
“pick and choose” among HAPs in order to regulate
only those substances it deems most harmful is at
odds with the court’s precedent.
To the extent EPA’s interpretation differs from
its 2005 approach, it adequately explained its
decision. See Final Rule, 77 Fed. Reg. at 9325~26.
Although petitioners suggest otherwise, the 2005
Delisting Decision did not address whether EPA
could regulate all listed EGU HAPs following an
“appropriate and necessary” determination. Here,
EPA offered a reasoned explanation for its approach;
no more is required. See Fox Television Stations, 556
U.S. at 515; Nat? Cable & Telecomms. Ass’n, 545
U.S. at 981.
43a
In view of the above, EPA’s conclusion that it
may regulate all HAP emissions from EGUs must be
upheld.
Iil.
A.
Petitioners assert that even if EPA has correctly
interpreted § 112(n)(1)(A), the emission standards
that EPA promulgated in the Final Rule are flawed
in several respects.
1. Appropriate and necessary determination.
Petitioners first contend that the agency's
determination that it was “appropriate and
necessary’ to regulate EGUs is arbitrary and
capricious. Consistent with their position on the
proper interpretation of § 112(n)(1)(A), petitioners
take a HAP-by-HAP approach to criticizing EPA’s
Finding. But, as we explained above, EPA reasonably
interprets the CAA as allowing it to regulate alli
EGU HAP emissions pursuant to the usual MACT
program once it makes the threshold “appropriate
and necessary” determination. The question then is
whether EPA reasonably found it appropriate and
necessary to regulate EGUs based on all the record
evidence before it.
EPA’s “appropriate and necessary”
determination in 2000, and its reaffirmation of that
determination in 2012, are amply supported by
EPA’s findings regarding the health effects of
mercury exposure. Mercury exposure has adverse
effects on human health, primarily through
consumption of fish in which mercury has
44a
bioaccumulated. See Final Rule, 77 Fed. Reg. at
9310. And EGUs are the largest domestic source of
mercury emissions. /d. Petitioners do not dispute
these basic facts, but instead take issue with
whether EPA has sufficiently quantified the
contribution of EGU mercury emissions to overall
mercury exposure. Our case law makes clear,
however, that EPA is not obligated to conclusively
resolve every scientific uncertainty before it issues
regulation. See Coal. for Responsible Regulation v.
EPA, 684 F.3d 102, 121 (D.C. Cir. 2012) (“If a statute
is precautionary in nature and designed to protect
the public health, and the relevant evidence is
difficult to come by, uncertain, or conflicting because
it is on the frontiers of scientific knowledge, EPA
need not provide rigorous step-by-step proof of cause
and effect to support an endangerment finding.”)
(internal quotation marks omitted). Instead, “[w]hen
EPA evaluates scientific evidence in its bailiwick, we
ask only that it take the scientific record into account
in a rational manner.” Jd. at 122 (internal quotation
marks omitted).
EPA did so here. As explained in the technical
support document (TSD) accompanying the Final
Rule, EPA determined that mercury emissions posed
a significant threat to public health based on an
analysis of women of child-bearing age who
consumed large amounts of freshwater fish. See
Mercury TSD; NPRM, 76 Fed. Reg. at 25,007; Final
Rule, 77 Fed. Reg. at 9311-17. The design of EPA’s
TSD was neither arbitrary nor capricious; the study
was reviewed by EPA’s independent Science
Advisory Board, which stated that it “support[ed] the
overall design of and approach to the risk
45a
assessment” and found “that it should provide an
objective, reasonable, and credible determination of
the potential for a public health hazard from
mercury emitted from U.S. EGUs.” SAB Letter to
EPA Administrator Jackson at 2 (Sept. 29, 2011),
EPA-SAB-11-017. In addition, EPA revised the final
TSD to address SAB’s remaining concerns regarding
EPA’s data collection practices. See Final Rule, 77
Fed. Reg. at 9313-16.
Petitioners’ remaining objections center on the
change in EPA’s position between 2005 and 2012.
Although petitioners are correct that EPA weighed
certain pieces of evidence differently at different
times, the agency reasonably and adequately
explained its basis for changing its position on
whether mercury emissions posed a sufficient risk to
constitute a public health hazard. See EPA Br. 40;
NPRM, 76 Fed. Reg. at 25,019~-20. EPA identified
and analyzed what it viewed as technical flaws in the
scientific analysis supporting the 2005 Delisting
Decision, including a failure to evaluate the
cumulative health hazard from EGU emissions when
4 For the reasons explained in UARC v. EPA, Nos. 12-1166,
12-1366, 12-1420, 2014 WL 928230 (D.C. Cir. Mar. 11, 2014),
we do not address petitioners’ claims that SAB’s final report on
the Mercury TSD was submitted too late to allow public
comment and that EPA unreasonably refused SAB's request. to
review the final TSD. Petitioners did not raise those isswes in
comments, and reconsideration is still pending before the
agency. Even if these arguinents had been properly presented
to the agency, petitioners would have forfeited them by raising
them only in a cursory footnote in their opening brief before this
court. See Hutchins v. Dist. of Columbia, 188 ¥.3d 531, 539 n.3
(D.C. Cir. 1999) (en banc) (“We need not consider cursory
arguments made only in a footnote”).
46a
combined with other sources of mercury, NPRM, 76
Fed. Reg. at 25,019, and health hazards from
methylmercury exposure above the reference dose,
id. at 25,020. Those explanations are sufficient to
meet the agencys burden. See Fox Television
Stations, 556 U.S. at 514-16.
2. Major source classification. Petitioners
contend that in setting emission standards for EGUs,
EPA was required to distinguish between “major
sources” and “area sources.” As relevant here, major
sources are automatically subject to MACT controls,
while area sources may, in EPA’s discretion, be
regulated under alternative standards. See CAA §
112(a)(1), 112(a)(2), 112(d)(5), 42 U.S.C. § 7412(a)(1),
7412(a)(2), 7412(d)(5). Petitioners assert that EPA's
failure to segregate the different types of sources
fatally compromises the Final Rule because the EGU
emission standards should have been based
exclusively on data from major source EGUs. But §
112(d) does not require EPA to regulate EGUs as
“major sources” and “area sources”; it merely says
that, if EPA lists major and area sources, it must
then regulate them according to the separate
provisions. See CAA § 112(d)(1), 42 USC. §
7412(d)(1).
EPA’s decision not to draw such a distinction
here is a reasonable one. As EPA emphasizes,
distinguishing between major source and area source
EGUs runs counter to the separate statutory
provisions governing EGUs. While other sources are
classified as major or area sources depending on the
quantity of emissions they emit, § 112 specifically
defines EGUs in terms of their electrical output.
47a
Compare CAA § 112(a)(8), with CAA § 112(a)(1)}+2).
Consistent with ordinary rules of statutory
construction, EPA reasonably relied on the more
specific definition in § 112(a)(8) rather than the
general definitions applicable to all other sources.
See RadLAX Gateway Hotel, LLC v. Amalgamated
Bank, 132 S. Ct. 2065, 2070—72 (2012). Requiring
EPA to classify EGUs as major or area sources would
also create redundancy in the source-category listing
criteria. Section 112(c)(3) of the CAA requires EPA to
list area sources for regulation if EPA determines
that they “warrant[] regulation.” CAA § 112(c)(3), 42
U.S.C. § 7412(c)(3). That finding is arguably
unnecessary as applied to EGUs_ given the
requirement in § 112(n)(1)(A) that EPA make a
finding that regulation of all EGUs is “appropriate
and necessary.”
EPA also did not err in declining to exercise its
discretionary authority to require less stringent
“generally available control technology,” or GACT,
standards, rather than MACT standards. Id. §
112(d)(5), 42 U.S.C. § 7412(d)(5). In the Final Rule,
EPA expressly and reasonably determined that
setting separate GACT standards for area source
EGUs was unnecessary. See Final Rule, 77 Fed. Reg.
at 9404, 9438 (“[S]imilar HAP emissions and control
technologies are found on both major and area
sources” such that “there is no essential difference
between area source and major source EGUs with
respect to emissions of HAP.”).
For these reasons, EPA reasonably declined to
interpret § 112 as mandating classification of EGUs
as major sources and area sources.
48a
3. Mercury MACT floor. Petitioners next
challenge EPA’s standards for mercury emissions
from existing coal-fired EGUs. Petitioners maintain
that in calculating the MACT floor for those units,
EPA collected emissions data from only those EGUs
that were best-performing for mercury emissions.
Consequently, petitioners insist, the mercury MACT
standard reflects the results achieved by the “best of
the best” EGUs, and not the results of the best 12%
of all EGUs, as required by statute.
Petitioners’ assertions of a biased or irrational
data collection process are not supported by a review
of the record. “EPA typically has wide latitude in
determining the extent of data-gathering necessary
to solve a problem.” Sierra Club v. EPA, 167 F.3d
658, 662 (D.C. Cir. 1999). Here, EPA determined
that a three-pronged approach was appropriate for
developing the mercury MACT standard. First, EPA
asked all EGUs for all of their data from 2005-10; it
received data from 168 units. Information Collection
Request (“ICR”) Supporting Statement Part A at 9;
see generally MACT Floor Analysis Spreadsheets.
Second, EPA requested and received data from 50
randomly selected EGUs. ICR Supporting Statement
Part B at 2, 7-8. Finally, EPA requested and
received data from 170 of the best performing units
for non-mercury emissions. fd. EPA initially thought
that third group would also be the best-performing
for mercury emissions, but it discovered that was not
the case after examining the data. See Responses to
Comments, Dec. 2011, v.1, at 573~-76 (“RTC’).
Based on the results of its ICR, covering a total
of 388 EGUs, EPA chose “the average emission
49a
limitation achieved by the best performing 12
percent” of all existing sources “for which [it] ha[d]
emissions information,” as authorized by CAA §
112(d)(3)(A). See NPRM, 76 Fed. Reg. at 25,022-23.
Although, as EPA acknowledges, it would be
arbitrary and capricious for EPA to set a MACT floor
based on intentionally skewed data, the facts
indicate that EPA did not do so here. Nor does the
record suggest that EPA’s data collection efforts
resulted in unintentional bias. As previously noted,
EPA collected data from a wide range of EGUs
because the agency concluded that it could not
identify units representing the best performing 12
percent of mercury emitters. That conclusion is borne
out by the data in the record, which showed that
some of the best-performing units for particulate
matter control were among the worst performing
units for mercury control. See generally MACT Floor
Analysis Spreadsheets. Similarly, many of the
mercury best performers (32 of the best performing
126 units) were not drawn from the pool of units that
EPA targeted as best performers for particulate
matter. See RTC v. 1 at 575. In short, EPA’s data-
collection process was reasonable, even if it may not
have resulted in a perfect dataset.
4. Acid gas HAP. EPA did not conclusively
determine that emissions of acid gases such as
hydrogen chloride from EGUs pose a health hazard.
See NPRM, 76 Fed. Reg. at 25,016 (“our case studies
did not identify significant chronic non-cancer risks
from acid gas emissions”). Petitioners say that given
that conclusion, EPA should have established a less
stringent, health-based emission standard for acid
gases under § 112(d)(4). That provision states: “With
50a
respect to pollutants for which a health threshold
has been established, the Administrator may
consider such threshold level, with an ample margin
of safety, when establishing emission standards
under this subsection.” CAA § 112(d)(4), 42 U.S.C. §
7412(d)(4). Section 112(d)(4) makes clear, however,
that EPA’s authority to set alternate standards is
discretionary. See id. (“the Administrator may
consider such threshold level”) (emphasis added).
Here, EPA concluded that it lacked enough evidence
to determine whether an alternative standard would
protect health “with an ample margin of safety.” See
Final Rule, 77 Fed. Reg. at 9405-06. Petitioners
dispute EPA’s weighing of the evidence, but
petitioners offer no compelling basis for second-
guessing EPA’s analysis.
Petitioners also suggest that regulation of EGU
acid gas emissions to address ecosystem acidification
conflicts with Congress’s decision in the 1990 CAA
amendments to address such acidification in Title 1V
of the CAA. See SIL Reply Br. 5. But petitioners
failed to raise that argument before the agency, and
did not raise it in this court until their reply brief.
We therefore deem the argument forfeited. See Bd. of
Regents of Univ. of Washington v. EPA, 86 F.3d 1214,
1221 (D.C. Cir. 1996).
5. UARG delisting petition. The Utility Air
Regulatory Group (UARG) filed a petition with EPA
seeking to remove coal-fired EGUs from the list of
sources regulated under § 112. EPA denied the
petition. Petitioners now argue that that denial was
arbitrary and capricious for the same reasons they
assert that the agency's determination that it is
5la
“appropriate and necessary” to regulate EGUs was
incorrect. Assuming, without deciding, that EPA can
delist only a subset of the EGU source category, we
reject petitioners’ argument on this point. As EPA
explained in the Final Rule, UARG’s delisting
petition did not demonstrate that EPA could make
either of the two predicate findings required for
delisting under § 112(c)(9)(B): (1) that no source in
the category emits HAP “in quantities which may
cause a lifetime risk of cancer greater than one in
one million to the individual in the population who is
most exposed” and (2) that emissions from no source
in the category “exceed a level which is adequate to
protect public health with an ample margin of
safety.” CAA § 112(c)(9)(B), 42 U.S.C. § 7412(c)(9)(B);
see also Final Rule, 77 Fed. Reg. at 936465
(discussing technical flaws in UARG’s risk analysis).
6. Chromium emissions data. Finally, petitioners
question the validity of EPA’s case study regarding
risks from non-mercury EGU emissions. As relevant
here, that study found that at 6 of 16 tested facilities,
emissions of HAP posed a lifetime cancer risk of
more than one in a million to the most exposed
individuals. See Final Rule, 77 Fed. Reg. at 9319.
Petitioners contend that EPA’s cancer-risk finding
was the product of contaminated emissions samples,
and that EPA has refused to correct the emissions
data it used. In making this argument, they rely on
their own independent “subsequent resampling” of
the facilities that EPA examined in conducting its
inhalation risk assessment. SIL Br. 52 n.58; UARG,
Petition for Reconsideration of MATS Rule at 6-7
(Apr. 16, 2012), EPAHQ- OAR-2009-0234-20179 (J.A.
2493-94).
52a
EPA did not act arbitrarily or capriciously in
relying on the chromium emissions data to which
petitioners object. As EPA explained in its responses
to comments, the data came from _ source
representatives themselves. RTC v.1 at 187. EPA
reasonably believed that these representatives —
given their “concern[] about data accuracy” — would
review “all data before certifying their accuracy and
submitting them to the EPA.” Jd. EPA did not err in
relying on this certified data. We cannot consider the
data from petitioners’ independent resampling,
which was conducted after the Final Rule issued and
was not part of the administrative record. See CAA §
307(d)(7)(A), 42 U.S.C. § 7607(d)(7)(A).
B.
A group of electric utilities and industry groups
have filed a separate petition raising issues specific
to industry. Many of industry petitioners’ arguments
concern circulating fluidized bed EGUs, or CFBs. As
relevant here, CFBs differ from conventional
pulverized coal units in that CFBs inject air and
additional materials, such as limestone, into the
combustion zone in order to achieve lower-
temperature combustion. At that lower temperature,
fuel breaks down to a lesser degree, thus enabling
CFBs to control emissions without using add-on
controls.
Industry petitioners argue that these design
differences required EPA to create a separately
regulated subcategory for CFBs. They emphasize
that EPA recognized the need for a CFB subcategory
in a different rulemaking proceeding, the “Boiler
MACT” Rule.
53a
Industry petitioners’ CFB-related arguments are
unavailing. Contrary to industry petitioners’
assertions, nothing in the Clean Air Act “requires”
EPA to create a CFB subcategory. Rather, the
statute gives EPA _ substantial discretion in
determining whether subcategorization is
appropriate. See CAA § 112(d)(1), 42 U.S.C. §
7412(d)(1) (EPA “may distinguish among classes,
types, and sizes of sources”) (emphasis aaded); see
also Nat’? Ass’n of Clean Water Agencies v. EPA, 734
F.3d 1115, 1159 (D.C. Cir. 2013) (“EPA’s
subcategorization authority under § 112 involves an
expert determination, placing a heavy burden on a
challenger to overcome deference to EPA’s
articulated rational connection »vetween the facts
found and the choice made.”) (internal quotation
marks omitted). EPA’s decision not to create a CFB
subcategory in the Final Rule is reasonable and well-
supported by the record. Among other things, EPA
noted that CFBs were among the best and worst
performers for various pollutants, indicating that
CFBs have emissions profiles similar to other coal-
fired units despite their operational differences. See
Final Rule, 77 Fed. Reg. at 9397.
The record similarly supports EPA's
determination that the 0.002 lb/MMBtu hydrogen
chloride limit for CFBs is achievable. As noted above,
some CFB units were among the top performers for
each of the regulated pollutants, including hydrogen
chloride. See id. The record thus demonstrates that
at least some CFB units are in fact able to achieve
the hydrogen chloride limit. In any event, the fact
that the Final Rule may not be cost effective for all
CFBs does not necessarily mean EPA erred in
54a
declining to create a CFB subcategory or in setting
emission standards applicable to those units.
EPA’s decision to subcategorize CFBs in the
Boiler MACT Rule is not to the contrary. There, EPA
concluded that CFBs presented relevant differences
with respect to carbon monoxide — not mercury, acid
gases, or particulates (the pollutants at issue in this
rulemaking). See National Emission Standards for
Hazardous Air Pollutants for Major Sources:
Industrial, Commercial, and Institutional Boilers
and Process Heaters, 76 Fed. Reg. 15,608, 15,617-—18
(Mar. 21, 2011).
Industry petitioners further argue that at a
minimum, EPA should have set separate acid gas
standards for coal-refuse-fired CFBs. Those units
burn waste coal from other coal-mining operations
and use the resulting ashes in mine reclamation
projects. Industry petitioners maintain that these
fuel-ash reuse efforts would be imperiled by the
stringency of the acid gas standards in the Final
Rule.
We conclude that EPA reasonably decided that
separate standards for coal-refuse-fired CFBs were
not warranted. Industry petitioners’ assertion that
the hydrogen chloride standards are unattainable for
coal-refuse-fired CFBs is undermined by the fact that
some of those units were among the best performers
for hydrogen chloride. See RTC v.1 at 587. EPA also
suggested alternative compliance methods that it
says would permit coal-refuse-fired CFBs to continue
participating in reclamation efforts. See Final Rule,
77 Fed. Reg. at 9412. Regardless, nothing in the CAA
obligates EPA to set standards in a way that always
55a
allows the re-use of fuel ash, even if doing so might
be a more desirable outcome for some EGU
operators.
C.
In contrast to its decision on CFBs, EPA did
create a subcategory for lignite-fired EGUs. (Lignite
coal is also referred to as “low rank” coal due to its
low heat content.) Industry petitioners argue that
the emission standard for the lignite subcategory is
based on an improperly calculated minimum
stringency level, or MACT floor. Industry petitioners
also contend that the emission standard set by EPA
is not achievable. We consider these arguments in
turn.
1. MACT floor. Industry petitioners insist that
EPA incorrectly calculated the MACT floor for lignite
units, rendering that standard arbitrary and
capricious. They assert that EPA used “cherry
picked” data from the top 6% of units, instead of the
top 12% as required by § 112(d)(3)(A). Finally,
industry petitioners argue that EPA did not properly
account for variability in lignite coal.
Industry petitioners’ data-bias argument is
similar to the argument made by the State, Industry
& Labor petitioners regarding the mercury MACT
floor, supra Part IIJ.A.3. And, as with that argument,
petitioners’ assertions regarding the lignite MACT
floor find no support in the record. EPA has offered a
reasonable, non-biased explanation of its data-
collection and analysis process. See MACT Floor
Memo at 10; RTC v.1 at 559-60.
56a
Industry petitioners’ objections regarding the
variability of lignite coal likewise fail. EPA
accounted for variability due to differing chemical
compositions of coal by applying its Upper Prediction
Limit analysis. See NPRM, 76 Fed. Reg. at 25,041.
Industry petitioners do not challenge that analysis
itself. They do suggest in passing that EPA’s results
are flawed, see Industry Pet’rs’ Br. 10, but offer no
explanation as to why that is so. Such cursory
treatment is inadequate to place their challenge to
EPA’s variability analysis before the court, because
“it is not enough merely to mention a _ possible
argument in the most skeletal way, leaving the court
to do counsel’s work, create the ossature for the
argument, and put flesh on its bones.” Davis v.
Pension Benefit Guar. Corp., 734 F.3d 1161, 1166-67
(D.C. Cir. 2013) (internal quotation marks and
alterations omitted). While EPA acknowledged that
it could not account for all operational variability, it
concluded that its variability analysis “is an
appropriate method of addressing the concern that
these standards must be met at all times.” RTC v.1
at 458. EPA’s explanation is sufficient to withstand
our “extremely deferential” review of this kind of
technical judgment. New York v. Reilly, 969 F.2d
1147, 1152 (D.C. Cir. 1992).
2. Beyond-the-floor limit. EPA is permitted to set
a more restrictive, “beyond-the-floor” emission
standard if the agency determines that such a
standard is “achievable” considering costs, energy
requirements, and applicable control technologies.
CAA § 112(d)(2), 42 U.S.C. § 7412(d)(2). To be
“achievable,” a standard “must be capable of being
met under most adverse conditions which can
57a
reasonably be expected to recur.” Nat7 Lime Ass'n v.
EPA, 627 F.2d 416, 431 n.46 (D.C. Cir. 1980). In this
case, industry petitioners argue that EPA failed to
consider the limitations of applicable control
technologies. As a result, petitioners contend, EPA’s
beyond-the-floor standard for lignite-fired EGUs is
not achievable because the standard mandates
unrealistically high levels of mercury reduction.
We reject petitioners’ challenge to the beyond-
the-floor standard. EPA concluded during the
rulemaking process that the standard for lignite
units is achievable if sources increase their use of a
particular control technology, activated carbon
injection. See Beyond-the-Floor Memo at 1-4.
According to EPA, increased carbon injection can
reduce emissions by up to 90%, well in excess of the
reductions necessary to reach beyond-the-floor levels.
Id. at 1-2. Ultimately, the dispute on this issue
amounts to a factual disagreement between EPA and
petitioners over the effectiveness of activated carbon
injection. Because the record contains no data
inconsistent with EPA’s position on the efficacy of
activated carbon injection, we defer to the agency's
determination that the beyond-the-floor emission
standard for lignite-fired EGUs is achievable.
D.
Public utility companies are subject to certain
state-law contracting requirements that may
lengthen the process of installing upgraded controls.
That added time, industry petitioners argue,
requires EPA to grant a blanket, one-year extension
of the compliance deadline to public power
companies. We disagree. Once again, petitioners’
58a
argument amounts to a claim that a decision the
Clean Air Act leaves to EPA’s discretion should
instead be mandatory. See CAA § 112(i)(3)(B), 42
U.S.C. § 7412(3)(3)(B) (EPA “may issue” an extension
under certain circumstances). EPA explained at
length why such a blanket extension was
inappropriate. See Final Rule, 77 Fed. Reg. at 9407,
9409-11. Most importantly, industry petitioners did
not show — and likely could not show — that an
extension is necessary for the installation of controls
at every public power company. On the contrary,
EPA’s data indicated that “most units will be able to
fully comply” within the three-year period
established by EPA. Final Rule, 77 Fed. Reg. at
9410. EPA’s decision not to issue a blanket extension
therefore was not arbitrary or capricious.®
IV.
We turn to the challenges by Environmental
petitioners and Julander Energy Company.
A.
Environmental petitioners challenge the
provisions of the Final Rule that allow compliance
5 To the extent that petitioners object to EPA’s alleged
failure to respond to comments on this issue made by public
power companies on the ground that this failure violates CAA §
307(d)(6)(B), 42 U.S.C. § 7607(d)(6)(B), we do not address that
objection because it was first raised in a pending petition for
reconsideration. See UARG, 2014 WL 928230, at *4. We also do
not address industry petitioners’ arguments concerning the
standards for petroleum-coke-fired EGUs and liquid oil-fired
non-continental EGUs because those arguments were likewise
first raised in a pending petition for reconsideration.
59a
with emission standards to be demonstrated through
(1) emissions averaging and (2) options for non-
mercury metal HAP emissions monitoring.
Chesapeake Climate Action Network, Conservation
Law Foundation, Environmental Integrity Project,
and Sierra Club object to averaging as unlawful;
Chesapeake Climate Action Network and
Environmental Integrity Project object to the
monitoring options as failing to provide reasonable
assurance of compliance. They presented their
objections (save one) during the comment period and
EPA has responded to them. Although the challenges
to emissions averaging are also pending before EPA
in a petition for reconsideration, and usually would
be incurably premature, see, e.g., Clifton Power Corp.
v. FERC, 294 F.3d 108, 112 (D.C. Cir. 2002), the text
and legislative history of the Clean Air Act make
clear this usual approach is inapplicable, see UARG
uv. EPA, Nos. 12-1166, 12-1366, 12-1420, 2014 WL
928230, at *3 (D.C. Cir. Mar. 11, 2014); CAA §
307(b)(1), 42 U.S.C. § 7607(b)(1); S. REP. NO. 101-
228, at 3755 (1989).
1. Averaging. Under the Final Rule, existing
contiguous, commonly-controlled EGUs in the same
subcategory can demonstrate compliance by
averaging their emissions as an alternative to
meeting certain requirements on an individual basis.
Final Rule, 77 Fed. Reg. at 9384, 9473-76 (codified
at 40 C.F.R. § 63.10009). Averaging is permissible
only between the same types of pollutants, individual
EGUs that are part of the same affected source,
EGUs subject to the same emission standard, and
existing (not new) EGUs. Id. at 9385. Each facility
intending to use emissions averaging must develop
60a
an emissions averaging plan identifying “(1) [ajll
units in the averaging group; (2) the control
technology installed; (3) the process parameter that
will be monitored; (4) the specific contro] technology
or pollution prevention measure to be used; (5) the
test plan for the measurement of the HAP being
averaged; and (6) the operating parameters to be
monitored.” Jd. at 9385—86.
Environmental petitioners contend the averaging
alternative is unlawful because it relaxes the
stringency of the MACT floor standards. With one
exception, EPA set the MACT floor standards based
on a thirty-boiler operating day averaging period. Id.
at 9385, 9479-80. Allowing multiple EGUs to
average their emissions data effectively extends,
petitioners maintain, the standards’ averaging
period to sixty days (for two units), ninety days (for
three units), or more. In their view, a longer
averaging period permits longer and larger pollution
spikes because high measurements can be averaged
over more hours of normal, _lower-pollution
operations.
Section 112(d)(3), 42 U.S.C. § 7412(d)(3),
provides that emission standards for existing sources
“shall not be less stringent” than “the average
emission limitation achieved by the best performing
12 percent” of such sources. The subsection (d)(2)
“beyond-the-floor” requirement provides’ that
emission standards for new or existing sources “shall
require the maximum degree of reduction in
emissions of the hazardous air pollutants subject to
this section that the Administrator
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determines is achievable.” CAA § 112(d)(2), 42 U.S.C.
§ 7412(d)(2).
EPA permissibly interpreted § 112(d) to allow
emissions averaging as provided for in the Final
Rule. See Chevron, 467 U.S. at 843. That section
neither expressly allows nor disallows emissions
averaging among multiple units. In the Final Rule,
EPA stated:
Averaging across affected units is permitted
only if it can be demonstrated that the total
quantity of any particular HAP that may be
emitted by that portion of a contiguous major
source that is subject to the same standards
in the [Final Rule] will not be greater under
the averaging mechanism than it could be if
each individual affected EGU in the
subcategory complied separately with the
applicable standard. Under this test, the
practical outcome of averaging is equivalent
to compliance with the MACT floor limits by
each discrete EGU, and the statutory
requirement that the MACT standard reflect
the maximum achievable emissions
reductions is, therefore, fully effectuated.
77 Fed. Reg. at 9385. Viewing averaging as “an
equivalent, more flexible, and less costly alternative”
to requiring units to demonstrate compliance
individually, EPA explained that permitting
averaging is part of its “general policy of encouraging
the use of flexible compliance approaches where they
can be properly monitored and enforced.” Id.
62a
Environmental petitioners concede the averaging
alternative will not result in an increase in a source's
total emissions beyond the level permitted under the
applicable standard, see Envtl. Pet’rs’ Br. 18, and
while theoretically averaging could allow an
individual unit’s emissions to exceed the standard,
under the Final] Rule that exceedance must be offset
by other, better-performing units to demonstrate
compliance. They have not challenged EPA's
interpretation of the ambiguous term “source,” which
EPA defined as referring to “the collection of coal- or
oil-fired EGUs within a single contiguous area
and under common control,” Fina] Rule, 77 Fed. Reg.
at 9366, rather than a single EGU. Because §
112(d)(3), 42 U.S.C. § 7412(d)(3), requires EPA to
prescribe emissions limitations for “sources,” not
units, EPA could permissibly establish a standard
that allows averaging within a single source. (Cf.
Chevron, 467 U.S. at 866. Although this may allow
individual units to exceed the emissions limitation,
the statute does not require EPA to regulate
emissions on a unit level.
As EPA has observed, Environmental petitioners’
main objection appears to be that the Final Rule does
not include a “discount factor” whereby emission
rates are reduced for sources using an averaging
alternative. Petitioners point, for example, to the
discount factor included in the Hazardous Organic
NESHAP rule, Envtl. Pet’rs’ Br. 9-10, in which EPA
determined that “to carry out the mandate of section
112(d)(2), some portion of these cost savings [from
averaging} should be shared with the environment
63a
by requiring sources using averaging to achieve more
emission reductions than they would otherwise.”®
To the extent petitioners’ objection is that EPA
failed to explain why it did not include a discount
factor, EPA, in fact, offered a reasonable and
adequate explanation. In the Final Rule, EPA
explained that “[gliven the homogeneity of fuels
within the rules subcategories, along with other
emissions averaging criteria, the Agency believes use
of a discount factor to be unwarranted for this rule.”
Final Rule, 77 Fed. Reg. at 9386. Further, in
responding to comments, EPA explained that unlike
the Hazardous Organic rule, “which covers a broad
number of unit types, products, and processes,”
EGUs subject to the Final Rule “differ generally only
in the fuel used to produce electricity,” a difference,
EPA concluded, “accounted for by prohibiting
units from differing subcategories — which are fuel
based — from participating in emissions averaging.”
RTC v.2 at 361-62. EPA noted as well its agreement
that “other safety factors in the rule obviate the need
for a discount factor,” id. at 363, including the
requirement averaging start within three years of
promulgation of the Final Rule.
The suggestion by Environmental petitioners
that EPA improperly relied on its Upper Prediction
Limit (“UPL”) analysis to mitigate the effect of
6 National Emission Standards for Hazardous Air
Pollutants for Source Categories; Organic Hazardous Air
Pollutants from the Synthetic Organic Chemical Manufacturing
Industry and Other Processes Subject to the Negotiated
Regulation for Equipment Leaks, 59 Fed. Reg. 19,402, 19,430
(Apr. 22, 1994).
64a
averaging on the stringency of emission standards
fares no better. The UPL analysis in the MACT floor
calculation is designed to “assess variability of the
best performers.” NPRM, 76 Fed. Reg. at 25,041. To
the extent petitioners point to EPA’s statement in
responding to comments, they ignore its context.
EPA stated that it “disagrees with the suggestion
that another variability component need be
considered for those EGU owners or operators who
choose to engage in emissions averaging; the current
UPL analyses was [sic] developed to take factors
such as those mentioned by the commenter into
account.” RTC v.2 at 363. According to
Environmental petitioners, “the UPL analyses
contain nothing that would eliminate (or even
mitigate) the Averaging Alternative’s additional
relaxation of the standards,” and it was therefore
inappropriate for EPA to rely on this analysis in
support of the Final Rule’s emissions averaging
provisions. Envtl. Pet’rs’ Br. 20. But there is nothing
to indicate this is what EPA did. In its statement,
EPA was responding to industry comments arguing
that because EPA had accounted for individual-unit
variability in the UPL analysis in setting MACT
floors, it was inappropriate to allow a multi-unit
facility to further reduce variability by averaging,
without applying a discount factor. It is far too great
a stretch to read EPA’s response as an admission
that EPA relied on its UPL analysis to support
emissions averaging.
2. Monitoring. The Final Rule provides three
alternatives to continuous emissions monitoring to
demonstrate compliance with the non-mercury metal
HAP standards. They are: (1) use of a continuous
65a
parametric monitoring system (“CPMS”), (2)
quarterly performance testing, and (3) performance
testing once every three years for qualifying low
emitting EGUs. See Final Rule, 77 Fed. Reg. at 9466
(codified at 40 C.F.R. § 63.10000(c)(1)(iii-iv)).
Environmental petitioners first challenged CPMS in
a pending petition for reconsideration, and therefore
that challenge is not properly before the court for
decision now. See UARG, 2014 WL 928230, at *4, *5
n.4.
Any EGU may demonstrate compliance with the
non-mercury metal standards through quarterly
performance tests. Final Rule, 77 Fed. Reg. at 9372,
9384, 9466. If a unit’s emission results for al)
required tests are less than 50 percent of the
applicable emission limit for a three-year period, the
EGU may qualify as a low emitting EGU for non-
mercury metal HAPs and is then required to conduct
performance testing only once every three years, so
long as it maintains compliance. Jd. at 9371, 9466,
9471.
Environmental petitioners maintain that stack
testing conducted quarterly or once every three years
cannot provide reasonable assurance of compliance
with a standard set as a thirty-day emissions rate,
given EPA’s determination that stack test results are
highly variable, and that EPA has failed to explain
how compliance options involving long intervals
between performance tests and lacking any control of
operating conditions between tests can provide
sufficiently timely or reliable information to assure
compliance. EPA has provided a_ reasonable
explanation for its determination that each of these
66a
monitoring options complies with the statutory
requirements of CAA §§ 114 and 504.
Section 504(b), 42 U.S.C. § 7661c(b), provides
that “continuous emissions monitoring need not be
required if alternative methods are available that
provide sufficiently reliable and timely information
for determining compliance.” Although § 114(a)(3),
42 U.S.C. § 7414(a)(3), “require[s}] enhanced
monitoring” for major stationary sources, there is “no
presumption in favor of any particular type of
monitoring.” Sierra Club, 353 F.3d at 991. EPA has
“broad discretion in selecting a monitoring regime
that ensures compliance,” and as long as _ it
“reasonably articulate[s} the basis for its decision,”
id., the court will “defer to the informed discretion of
the Agency,” recognizing that “analysis of this issue
requires a high level of expertise,” id. (quoting Nat7
Lime, 233 F.3d at 635).
EPA explained that, in its judgment, “[t]he
quarterly stack testing period, coupled with
underlying monitoring of control devices or the
additional monitoring for liquid oil-fired units, is
expected to be frequent enough to ensure that a
unit’s emissions control devices and _ processes
continue to operate in the same manner as during
the previous stack test.” RTC v.2 at 93. “If there are
significant changes to the operation of the unit or the
fuel, then a retest is required to reconfirm that the
source remains in compliance under the new
operating circumstances.” Jd. EPA acknowledged,
with respect to the low emitting EGU option, that
the available data “shows an EGU’s potential
variability,” but reasoned that “well-operated EGUs
67a
— such as those qualifying for [low emitting EGU]
status — are expected to have much less variable
emissions’ and that “the requirement to revert to the
original monitoring frequency should subsequent
emissions testing show the EGUs no longer meet
flow emitting EGU] status will keep source owners or
operators interested in maintaining [that] status.”
Id. at 244. EPA has provided a_ reasonable
explanation for its determinations that these two
monitoring options provide sufficient assurance of
compliance with the applicable emission standards.
B.
Julander Energy Company, an oil and natural
gas development, exploration, and _ production
company, challenges EPA’s decision not to adopt
stricter emission standards by requiring “fuel
switching” by EGUs from coal to natural gas. It
contends that EPA unlawfully relied on a non-
statutory factor (prohibition of construction of new
coal-fired EGUs), failed to consider a required
statutory factor (§ 112’s requirement that EPA
consider collateral benefits of contro] options), and
reached arbitrary and capricious conclusions about
natural gas supply and infrastructure and costs.
As a threshold matter, the court must address
Julander’s standing. Industry intervenor-
respondents contend Julander lacks standing under
Article III of the Constitution. In fact, Julander’s
“injury in fact,” causation, and redressability under
Article III, see Lujan v. Defenders of Wildlife, 504
U.S. 555, 560-61 (1992), are self-evident, see Sierra
Club v. EPA, 292 F.3d 895, 899-900 (D.C. Cir. 2002),
insofar as the Final Rule does not require EGUs to
68a
switch to natural gas, to the detriment of Julander’s
stated interests, and on remand EPA could require
fuel switching. EPA, however, contends Julander
lacks “prudential standing” because its interests do
not come within the zone-of-interests test articulated
in Association of Data Processing Service
Organizations, Inc. v. Camp, 397 U.S. 150 (1970).
The Supreme Court recently clarified that
“prudential standing is a misnomer’ as applied to
the zone-of-interests analysis,” Lexmark Int1, Inc. v.
Static Control Components, Inc., No. 12-873, 2014
WL 1168967, at *6 (U.S. Mar. 25, 2014) (quoting
Ass'n of Battery Recyclers, Inc. v. EPA, 716 F.3d 667,
675-76 (D.C. Cir. 2013) (Silberman, J., concurring)).
The question remains whether Julander’s interest is
“arguably within the zone of interests to be protected
or regulated by the statute.” Match-E-Be-Nash-She-
Wish Band of Pottawatomi Indians v. Patchak, 132
S. Ct. 2199, 2210 (2012) (quoting Ass’n of Data
Processing, 397 U.S. at 153).
Although the zone-of-interests test “is not meant
to be especially demanding,” Clarke v. Secs. Indus.
Ass'n, 479 U.S. 388, 399 (1987), we conclude that
Julander falls outside the zone of interests protected
by § 112 of the CAA. Notwithstanding our concurring
colleague’s suggestion, this conclusion is not the
result of a “coin flip” to decide which of our
precedents to follow. Concurring Op. at 17, 29. The
Supreme Court has instructed that “the breadth of
the zone of interests varies according to the
provisions of law at issue.” Lexmark, 2014 WL
1168967, at *8 {citation omitted). Accordingly, this
court must be guided by those of our precedents that
have interpreted § 112, and not those applying other
69a
statutory provisions, including the APA. Those cases
hold in the context of challenges to emission
standards that competitors of regulated parties fall
outside the zone of interests protected by § 112.
In Association of Battery Recyclers, 716 F.3d at
674, the court held that a corporation could not
challenge EPA’s failure to impose more stringent
emission standards on its competitors because that
interest fell outside the zone of interests protected by
§ 112. In Cement Kiln Recycling Coalition v. EPA,
255 F.3d 855, 871 (D.C. Cir. 2001), the court
similarly held that the purely commercial interests
of manufacturers of pollution control equipment
seeking more rigorous regulation of their competitors
under § 112 were not within the zone of interests
that Congress intended to be relied upon to challenge
EPA’s claimed disregard of the CAA. This was so
even though their pecuniary interests in increasing
demand for their products were aligned with the
goals of the CAA. The court explained that
Congress’s evident purpose in enacting the CAA was
not to compel those sources with less-than-best
pollution control to invest in upgraded equipment,
but only to meet the standards, as distinct from
adopting the methods of emission control, of the best
performing sources. Jd. This court has not read the
Supreme Court’s decision in Match-E-Be-Nash-She-
Wish Band of Pottawatomi Indians, 132 S. Ct. 2199,
to change the zone-of-interests standard, and the
court is bound to follow its own precedent. See
Grocery Mfrs. Ass’n v. EPA, 693 F.3d 169, 179 (D.C.
Cir. 2012); id. at 180 (Tatel, J., concurring).
70a
Julander disputes that it is seeking a
competitive advantage by increasing the regulatory
burden on its competitors, pointing out that as an oil
and natural gas development company it is not a
direct competitor of the regulated coal- and oil-fired
EGUs. It maintains that it is properly characterized
as a vendor to, and not a competitor of, the regulated
entities. Nonetheless, the reasoning of our binding
precedent encompasses Julander’s situation. As the
court observed in Hazardous Waste Treatment
Council v. EPA, 861 F.2d 277, 282 (D.C. Cir. 1988),
where the Treatment Council, much like Julander,
claimed its interests, although pecuniary, were “in
sync” with those sought to be served by the Resource
Conservation and Recovery Act, the Supreme Court’s
standard in Clarke “leaves the status of this sort of
incidental benefit somewhat unclear.” In “find[ing]
operational meaning for a test that demands less
than a showing of congressional intent to benefit but
more than a ‘marginal[{] rela[tionship]’ to the
statutory purposes,” id. at 283 (quoting Clarke, 479
U.S. at 399), this court acknowledged that even
absent an apparent congressional intent to benefit
there may still be “some indicator that the plaintiff is
a peculiarly suitable challenger of administrative
neglect [to] support[] an inference that Congress
would have intended eligibility,” id. But the court
rejected the notion that the petitioner’s “in sync”
interests were more than “marginally related” to
Congress’s environmental purposes. Id.
Whenever Congress pursues some goal, it is
inevitable that firms capable of advancing
that goal may benefit. If Congress authorized
bank regulators to mandate physical security
7la
measures for banks, for example, a shoal of
security services firms might enjoy a profit
potential — detective and guard agencies,
manufacturers of safes, detection devices and
small arms, experts on entrance control, etc.
But in the absence of either some explicit
evidence of an intent to benefit such firms, or
some reason to believe that such firms would
be unusually suitable champions of
Congress’s ultimate goals, no one would
suppose them to have standing to attack
regulatory laxity. And of course a rule that
gave any such plaintiff standing merely
because it happened to be disadvantaged by a
particular agency decision would destroy the
requirement of prudential standing; any
party with constitutional standing could sue.
Id. (emphasis added). In Cement Kiln, 255 F.3d at
871, the court embraced this analysis as no less
applicable to the CAA. The court has further
observed that “judicial intervention may defeat
statutory goals if it proceeds at the behest of
interests that coincide only accidentally with those
goals,” Hazardous Waste, 861 F.2d at 283, and that
“open-ended emissions standards” are particularly
susceptible to such “manipulation,” Honeywell Int?
Inc. v. EPA, 374 F.3d 1363, 1371 (D.C. Cir. 2004).
Ethyl Corp. v. EPA, 306 F.3d 1144 (D.C. Cir.
2002), is of no aid to Julander. In that case, the court
held that a manufacturer of fuel additives seeking
information (through an open process for testing
emissions contro] systems) in order to comply with
its own regulatory obligations fell within the zone of
72a
interests protected or regulated by the CAA. See id.
at 1148. Ethyl had an interest that “appear[ed]
congruent with those of the [CAA], i.e, the
development of products that will reduce harmful air
pollutants,” id., without the potential for distortion of
the regulatory process of concern to the court in
Hazardous Waste, 861 F.2d at 285, and Cement Kiln,
255 F.3d at 871. Unlike petitioners seeking to
increase the regulatory burden on others in order to
advance their own commercial interests, Ethyl
sought access to information to “improve its products
with an eye to conformity to emissions needs” and to
“secur[e] EPA approval for its own fuel additive
products under the [Clean Air] Act.” Ethyl Corp., 306
F.3d at 1147-48. The court emphasized “the
interdependence between motor vehicle certification
under the Act (the process at stake here) and fuel
regulations (under which Ethyl is a_ direct
regulatee).” Jd. at 1148. Julander, in contrast, seeks
stricter regulation of coal- and oil-fired EGUs, not
information that would enable it to comply with its
own regulatory obligations.
Julander’s suggestion that its interests are
properly characterized as those of a vendor, not a
competitor, is unavailing. It cannot rely on its
existing relationship with natural gas-fired EGUs
because they are not subject to the Final Rule, 77
Fed. Reg. at 9309. And claiming that it has standing
as a potential vendor to coal- and oil-fired EGUs, in
the event they were forced to switch to natural gas,
is at odds with the reasoning underlying the vendor-
vendee line of cases. A vendor has standing “to assert
the interest of [regulated] vendees.” Nat7 Cottonseed
Products Ass’n v. Brock, 825 F.2d 482, 490 (D.C. Cir.
73a
1987) (citing FAIC Secs., Inc. v. United States, 768
F.2d 352, 360-61 (D.C. Cir. 1985)). Julander is not
standing in for the interests of its potential vendees,
which, in fact, here challenge Julander’s petition.
Consequently, the interests of Julander and the
regulated industry petitioners are not “two sides of
the same coin.” AIC Secs., 768 F.2d at 359.
Julander had the opportunity to submit its views
on fuel switching to EPA during the rulemaking
proceedings. And it did. See Julander Comments
Aug. 4, 2011. It could also hdve sought permission to
appear as amicus in this court, which it did not.
Absent any reason to conclude that it is an
“unusually suitable champion[]” of Congress’ goals in
the CAA, we hold, consistent with this court’s
precedent, that Julander’s interest in increasing the
regulatory burden on others falls outside the zone of
interests protected by the CAA and therefore
Julander may not proceed as a petitioner in this
court.
KAVANAUGH, Circuit Judge, concurring in part
and dissenting in part: Suppose you were the EPA
Administrator. You have to decide whether to go
forward with a proposed air quality regulation. Your
only statutory direction is to decide whether it is
“appropriate” to go forward with the regulation.
Before making that decision, what information would
you want to know? You would certainly want to
understand the benefits from the regulations. And
you would surely ask how much the regulations
would cost. You would no doubt take both of those
considerations — benefits and costs — into account in
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making your decision. That’s just common sense and
sound government practice.
So it comes as a surprise in this case that EPA
excluded any consideration of costs when deciding
whether it is “appropriate” — the key statutory term
— to impose significant new air quality regulations on
the Nation’s electric utilities. In my view, it is
unreasonable for EPA to exclude consideration of
costs in determining whether it is “appropriate” to
impose significant new regulations on electric
utilities. To be sure, EPA could conclude that the
benefits outweigh the costs. But the problem here is
that EPA did not even consider the costs. And the
costs are huge, about $9.6 billion a year — that’s
billion with a b — by EPA’s own calculation.
In Part I of this opinion, I explain my respectful
disagreement with the majority opinion’s decision to
uphold EPA’s’ exclusion of cost from its
decisionmaking under this statutory provision.
In Part Il of this opinion, I write to address this
Court’s case law applying the “zone of interests” test
under the Administrative Procedure Act. I accept the
majority opinion’s conclusion that petitioner
Julander Energy Corporation — a natural gas
company challenging EPA’s allegedly unlawful
under-regulation of Julander’s competitor coal and
oil companies — does not fall within the “zone of
interests” of the Clean Air Act, at least as the zone of
interests test has been applied by some decisions of
this Court. But those decisions are inconsistent with
other decisions of this Court and, more importantly,
are incompatible with a 40-year string of Supreme
Court decisions applying the “zone of interests” test.
75a
Put simply, our case law applying the zone of
interests test is in a state of disorder and needs to be
cleaned up in the near future.
I
These consolidated cases concern 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
(Feb. 16, 2012). The Rule implements provisions of
the Clean Air Act, 42 U.S.C. § 7401 et seq., regarding
emissions of hazardous air pollutants.
As the majority opinion recounts, the Clean Air
Act originally provided EPA substantial discretion to
identify and regulate pollution from sources emitting
hazardous air pollutants. That approach proved to be
time-consuming and largely unworkable, so in 1990
Congress amended the Act to cabin much of EPA’s
discretion. The 1990 amendments required EPA to
identify stationary sources of 189 enumerated
hazardous air pollutants and to adopt standards for
limiting emissions of those pollutants from those
sources. See 42 U.S.C. § 7412.) Those technology-
based standards are commonly referred to as the
1 Six other common pollutants emitted by stationary
sources are regulated under a different section of the Clean Air
Act. The National Ambient Air Quality Standards, or NAAQS,
prescribe the maximum permissible levels of those six
pollutants in the ambient air. See 42 U.S.C. § 7409(a)-(b).
Under that NAAQS program, EPA must choose levels for
emissions of those pollutants which, “allowing an adequate
margin of safety, are requisite to protect the public health.” Jd
§ 7409(b)(1).
76a
“maximum achievable control technology,” or MACT,
standards.
EPA uses a two-step process for setting MACT
standards. It begins by setting a minimum
stringency level, or “floor,” based on the performance
of the best-performing units in a particular source
category. See id. § 7412(d)(3). At that first step, EPA
may not consider costs. Once the agency sets the
statutory floor, it then determines, considering cost
and the other factors listed in Section 112(d)(2),
whether an even more restrictive standard is
“achievable.” Id. § 7412(d)(2). EPA refers to these
stricter requirements as “beyond-the-floor”
standards.
The two-step process outlined in Section 112(d) —
what I will call the MACT program — applies
automatically to most sources of hazardous air
pollutants.
But for one category of sources — electric utilities
— Congress devised an alternative system as set forth
in Section 112(n)(1)(A) of the Act.2 That alternative
system erects two threshold hurdles before EPA may
regulate electric utilities under the MACT program.
First, Congress required EPA to “perform a study of
the hazards to public health reasonably anticipated
to occur as a result of emissions by” electric utilities
and report the results of the study to Congress
within three years of the enactment of the
amendments. Id. § 7412(n)(1)(A). Second, Congress
provided that after the study was completed, EPA
2 The electric utilities included in this alternative system
are coal- and oil-fired electric utility steam generating units.
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could regulate electric utilities under the MACT
program only “if the Administrator finds such
regulation is appropriate and necessary after
considering the results of the study.” Jd. (emphasis
added).
The meaning of Section 112(n)(1MA) —-
particularly the term “appropriate” — is a critical
question in this litigation. Industry petitioners and
EPA dispute whether EPA, when determining
whether regulation of electric utilities under the
MACT program is “appropriate,” must consider the
cost to industry and the public from regulating
electric utilities under that program.‘
3 In full, the relevant section of the statute reads: “The
Administrator shall perform a study of the hazards to public
health reasonably anticipated to occur as a result of emissions
by electric utility steam generating units of pollutants listed
under subsection (b) of this section after imposition of the
requirements of this chapter. The Administrator shal) report
the results of this study to the Congress within 3 years after
November 15, 1990. The Administrator shall develop and
describe in the Administrator’s report to Congress alternative
control strategies for emissions which may warrant regulation
under this section. The Administrator shall regulate electric
utility steam generating units under this section, if the
Administrator finds such regulation is appropriate and
necessary after considering the results of the study required by
this subparagraph.” 42 U.S.C. § 7412(n)(1)(A).
4 The other key statutory term in Section 112(n)(1)(A) —-
“necessary — is not in dispute. EPA states that regulation of
electric utilities is necessary “if the identified or potential
hazards to public health or the environment will not be
adequately addressed by the imposition of the requirements of”
the Clean Air Act. 76 Fed. Reg. 24,976, 24,987 (May 3, 2011).
78a
EPA thinks not. EPA acknowledges that, in the
past, it has interpreted and applied the word
“appropriate” in this statute to provide for the
consideration of costs. See 70 Fed. Reg. 15,994,
16,001 & n.19 (Mar. 29, 2005). But the agency has
changed its interpretation. EPA’s position now is
that EPA may reasonably exclude consideration of
costs in determining whether it is “appropriate” to
regulate electric utilities under the MACT program.
The majority opinion upholds EPA’s interpretation.
I respectfully disagree with the majority opinion.
It is certainly true, as the majority opinion states,
that the word “appropriate” is ambiguous in
isolation, and that an agency’s’ reasonable
interpretation of an ambiguous statutory term is
permissible. See Chevron U.S.A. Inc. v. NRDC, 467
U.S. 837 (1984). But the agency’s answer must be “a
permissible construction of the statute” — or put
another way, the agency’s interpretation of the
ambiguity must be reasonable. Jd. at 843. Moreover,
under the APA, 2n agency must consider the
relevant factors when exercising its discretion under
the governing statute. See Motor Vehicle
Manufacturers Association of the United States, Inc.
v. State Farm Mutual Automobile Insurance Co., 463
U.S. 29, 42-43 (1983).
In this case, whether one calls it an
impermissible interpretation of the term
“appropriate” at Chevron step one, or an
unreasonable interpretation or application of the
term “appropriate” at Chevron step two, or an
unreasonable exercise of agency discretion under
State Farm, the key point is the same: It is entirely
79a
unreasonable for EPA to exclude consideration of
costs in determining whether it is “appropriate” to
regulate electric utilities under the MACT program.
To begin with, consideration of cost is commonly
understood to be a central component of ordinary
regulatory analysis, particularly in the context of
health, safety, and environmental regulation. And
Congress legislated against the backdrop of that
common understanding when it enacted this statute
in 1990. Put simply, as a matter of common sense,
common parlance, and common practice, determining
whether it is “appropriate” to regulate requires
consideration of costs.
Drawing on his extensive administrative law and
regulatory experience, not to mention his experience
as a jurist, Justice Breyer has perhaps best
explained the centrality of cost consideration to
proper regulatory decisionmaking. In order “better to
achieve regulatory goals — for example, to allocate
resources so that they save more lives or produce a
cleaner environment — regulators must often take
account of all of a proposed regulation’s adverse
effects.” Whitman v. American Trucking
Associations, 531 U.S. 457, 490 (2001) (Breyer, J..,
concurring). That is so because “every real choice
requires a decisionmaker to weigh advantages
against disadvantages, and disadvantages can be
seen in terms of (often quantifiable) costs.” Entergy
Corp. v. Riverkeeper, Inc., 556 U.S. 208, 232 (2009)
(opinion of Breyer, J.). Cost is a particularly salient
consideration for administrative agencies today, “in
an age of limited resources available to deal with
grave environmental problems, where too much
80a
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. An “absolute prohibition” on
considering costs “would bring about irrational
results. [I]t would make no sense to require
plants to spend billions to save one more fish or
plankton. That is so even if the industry might
somehow afford those billions.” /d. at 232-33
(internal citation and quotation marks omitted).
In addition to Justice Breyer, many other leading
jurists and scholars on administrative law have
likewise recognized that cost generally has to be a
relevant factor in the overall regulatory mix.
Consider the following:
e Justice Kagan: “[W]hat does it take in a
statute to make us say, look, Congress has
demanded that the regulation here occur
without any attention to costs? In other words,
essentially, Congress has demanded that the
regulation has occurred in a fundamentally
silly way.” Transcript of Oral Argument at 13,
EPA v. EME Homer City Generation, L.P., No.
12-1182 (U.S. Dec. 10, 2013).5
5 To be clear, I do not read the statutory text at issue in the
EME Homer case as encompassing costs, at least not in the way
EPA argued there. But regardless of how that particular case
turns out, the background principle succinctly articulated by
Justice Kagan at oral argument reflects the commonsense and
well-settled understanding that cost is an essential factor in
determining whether it is “appropriate” to regulate.
8la
Professor Sunstein: “Without some sense of
both costs and benefits — both nonmonetized
and monetized — regulators will be making a
stab in the dark.” Cass R. Sunstein, Cost-
Benefit Analysis and the Environment,
ETHICS 351, 354 (2005).
Professor Sunstein: “A rational system of
regulation looks not at the magnitude of the
risk alone, but assesses the risk in comparison
to the costs.” Cass R. Sunstein, /nterpreting
Statutes in the Regulatory State, 103 HARV. L.
REV. 405, 493 (1989).
Professor Sunstein: “[A]ny reasonable
judgment will ordinarily be based on some
kind of weighing of costs and benefits, not on
an inquiry into benefits alone. If the costs
would be high and the benefits low, on what
rationale should the EPA refuse even to
consider the former? There appears to be no
good answer. If there is not, the agency’s
interpretations should be declared
unreasonable.” Cass R. Sunstein, Cost-Benefit
Default Principles, 99 MICH. L. REV. 1651,
1694 (2001).
Professors Revesz and Livermore: “For certain
kinds of governmental programs, the use of
cost-benefit analysis is a requirement of basic
rationality.” RICHARD L. REVESZ &
MICHAEL A. LIVERMORE, RETAKING
RATIONALITY 12 (2008).
Professor Pierce: “All individuals and
institutions naturally and _ instinctively
82a
consider costs in making any important
decision. [I]t is often impossible for a
regulatory agency to make a rational decision
without considering costs in some way.”
Richard J. Pierce, Jr., The Appropriate Role of
Costs in Environmental Regulation, 54
ADMIN. L. REV. 1237, 1247 (2002).
Every presidential administration for more than
three decades has likewise made analysis of costs an
integral part of the internal Executive Branch
regulatory process. See generally Helen G. Boutrous,
Regulatory Review in the Obama Administration:
Cost-Benefit Analysis for Everyone, 62 ADMIN. L.
REV. 243, 246-48 (2010). Most recently, in 2011,
President Obama issued Executive Order 13,563,
which follows an earlier Order issued by President
Clinton and followed by President George W. Bush.
The Order directs each agency “to use the best
available techniques to quantify anticipated present
and future benefits and costs as accurately as
possible.” 76 Fed. Reg. 3821, 3821 (Jan. 21, 2011).
Under President Obama’s Executive Order, agencies
may proceed with proposed regulations only if the
benefits justify the costs. Id.
To be clear, Congress may itself weigh the costs
of a particular kind of reg ulation, or otherwise take
costs out of the equation, when assigning authority
to executive and independent agencies to regulate a
particular industry or in a particular area. See
Whitman v. American Trucking Associations, 531
U.S. 457 (2001) (statutory provision does not include
consideration of costs). And even when an agency has
to take costs into account, it of course may conclude
83a
that the benefits of a proposed regulation outweigh
the costs. Moreover, different agency heads, and
different Presidents, may assess and weigh certain
benefits and costs differently depending on their
overarching philosophies.
But when considering just as a general matter
whether it is “appropriate” to regulate, it is well-
accepted that consideration of costs is a central and
well-established part of the regulatory
decisionmaking process.
But EPA did not consider costs here. And EPA’s
failure to do so is no trivial matter. The estimated
cost of compliance with EPA’s Final Rule is
approximately $9.6 billion per year, by EPA’s own
calculation. 77 Fed. Reg. at 9306, Table 2. To put it
in perspective, that amount would pay the annual
health insurance premiums of about two million
Americans. It would pay the annual salaries of about
200,000 members of the U.S. Military. It would cover
the annual budget of the entire National Park
Service three times over. Put simply, the Rule is
“among the most expensive rules that EPA has ever
promulgated.” JAMES E. MCCARTHY,
CONGRESSIONAL RESEARCH SERVICE, R42144,
EPA’S UTILITY MACT: WILL THE LIGHTS GO
OUT? 1 (2012).
EPA calculated the $9.6 billion cost figure as
part of its Regulatory Impact Analysis accompanying
the Rule. That Regulatory Impact Analysis was
required by President Obama’s Executive Order. Yet
EPA’s official position in this Court is that the costs
identified in the Regulatory Impact Analysis should
84a
have “no bearing on” the determination of whether
regulation is appropriate. EPA Br. 55.
On the other side of the ledger, the benefits of
this Rule are disputed: Industry petitioners focus on
the reduction in hazardous air pollutant emissions
attributable to the regulations, which amount to only
$4 to $6 million dollars each year. See 77 Fed. Reg. at
9428; State, Industry & Labor Br. 21. If those figures
are right, the Rule costs nearly $1,500 for every $1 of
health and environmental benefit produced. For its
part, EPA says it would estimate the benefits at $37
to $90 billion dollars based on what it says are the
indirect benefits of reducing PM2.5, a type of fine
particulate matter that is not itself regulated as a
hazardous air pollutant. See 77 Fed. Reg. at 9428.
To be sure, as I have said, EPA may be able to
conclude that the benefits outweigh the costs in
determining whether it is “appropriate” to regulate
electric utilities under the MACT program. But to
reiterate, that’s not what EPA has done in this Rule.
Rather, according to EPA, it is irrelevant how large
the costs are or whether the benefits outweigh the
costs in determining whether it is “appropriate” to
regulate electric utilities under the MACT program.
In response to petitioners’ claim that the legal
issue here has huge real-world consequences, the
majority opinion suggests that it may not matter all
that much that EPA refused to consider costs in
deciding whether it is “appropriate” to regulate
electric utilities under the MACT program, because
EPA does account for costs in the second step of the
MACT program, when EPA sets “beyond-the-floor”
standards. Maj. Op. at 24. I respectfully find that to
85a
be a red herring. After all, once EPA determines that
it is appropriate to regulate electric utilities under
the MACT program, costs are not relevant at the
first, “setting the floor” stage of the MACT program.
And meeting that floor will be prohibitively
expensive, particularly for many coal-fired electric
utilities, regardless of whether EPA decides to go
further and set a “beyond-the-floor” standard. So in
the real world in which electric utilities operate, the
financial burden of complying with that first “setting
the floor” step of the MACT program — where costs
are not considered — will likely knock a bunch of coal-
fired electric utilities out of business and require
enormous expenditures by other coal and oil-fired
electric utilities. 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. The majority opinion’s attempt
to downplay the effects of its decision thus rings a bit
hollow.
In downplaying the issue here, the majority
opinion also says that the result of this case is that
electric utilities will just be treated like other
sources. In saying that, the majority opinion, in my
respectful view, does not sufficiently account for the
fact that treating electric utilities differently from
standard sources was the intent of Section
112(n)(1)(A), as revealed by the statutory text. If
Congress had intended EPA to consider the costs of
regulating electric utilities only when deciding
whether to adopt beyond-the-floor standards, and not
as a threshold decision in deciding whether to
regulate electric utilities under the MACT program
86a
to begin with, it would have done one of two things:
It would have either automatically regulated electric
utilities under the MACT program, as it did with
other sources, or provided that regulation under the
MACT program would be automatic if the three-year
study found that these sources indeed emitted
hazardous air pollutants. That Congress declined to
choose either of those options, and instead directed
EPA to regulate electric utilities under the MACT
program only if “appropriate,” reinforces the
conclusion that Congress intended EPA to consider
costs in deciding whether to regulate electric utilities
at the threshold, and not simply at the second
beyond-the-floor stage of the MACT program.
Not only does EPA’s approach depart from the
clear statutory scheme, standard agency
decisionmaking, and the common understanding of
the term “appropriate” in this regulatory context, it
also effectively negates the congressional
compromise that was ultimately embodied in the
statutory text of the 1990 Act. Under the initial
Senate proposal, electric utilities would been have
listed as sources under Section 112(c) and therefore
automatically regulated under Section 112(d), the
MACT program. See 3 A LEGISLATIVE HISTORY
OF THE CLEAN AIR ACT AMENDMENTS OF
1990, at 4119, 4418-28 (1993). But the House
subsequently modified the Senate bill to make
regulation of electric utilities under the MACT
program dependent on the results of a study and the
Administrator's subsequent determination § that
regulation was “appropriate” and necessary. See 2 id.
at 2148-49. In the words of the House bill’s
legislative sponsor, Congressman Oxley, the goal of
87a
the counter-proposal was to provide “protection of
the public health while avoiding the imposition of
excessive and unnecessary costs on residential,
industrial, and commercial consumers of electricity.”
See 1 id. at 1417 (emphasis added). The House's
proposal ultimately prevailed with the Conference
Committee “because of the extremely high costs
that electric utilities will face under other provisions
of the new Clean Air Act amendments.” Id. at 1416.
That Conference Committee view — that EPA should
avoid imposing unwarranted financial burdens when
deciding to regulate electric utilities -— is
encapsulated in the textual directive that EPA
regulate electric utilities under the MACT program
only if “appropriate.”
The majority opinion here says that the term
“appropriate” is ambiguous. But the Supreme Court
often looks to legislative history to help inform
interpretation of otherwise ambiguous statutes,
including in Chevron cases. See Chevron 467 U.S. at
843 n.9. And here, the legislative history should
resolve any lingering ambiguity on the key point of
what “appropriate” encompasses. It establishes that
Congress in 1990 chose to impose these threshold
requirements on EPA specifically because it wanted
EPA to consider costs before regulating electric
utilities under the MACT program. EPA's
interpretation of Section 112(n)(1)(A) in this case
upsets Congress’s careful balance and stacks the
deck in favor of regulation of electric utilities under
the MACT program. In effect, EPA’s reading of the
statute replaces its authority to regulate electric
utilities if “appropriate” with a command to regulate
electric utilities under the MACT program regardless
88a
of costs. That is not what Congress intended or
permitted and thus is beyond EPA’s authority. See
Chevron, 467 U.S. at 843 n.9.
In upholding EPA’s cost-blind approach, the
majority opinion points to other statutory provisions
that expressly reference cost and invokes the
familiar interpretive canon that “[w]here Congress
includes particular language in one section of a
statute but omits it in another section of the same
Act, it is generally presumed that Congress acts
intentionally and purposely in the disparate
inclusion or exclusion.” Russello v. United States, 464
U.S. 16, 23 (1983). The majority opinion assigns
particular weight to the Supreme Court’s decision in
Whitman v. American Trucking Associations, 531
U.S. 457 (2001), which referenced that canon when
construing a different section of the Clean Air Act.
See Whitman, 531 U.S. at 467 (“We have therefore
refused to find imipligit in ambiguous sections of the
CAA an authorization to consider costs that has
elsewhere, and so often, been expressly granted.”).
As in Whitman, according to the majority opinion,
Congress’s decision not to explicitly mention cost in
Section 112(n)(1)(A), despite doing so in other parts
of the Act, creates a negative implication that costs
are an unnecessary consideration.
But I respectfully believe the majority opinion is
misreading — or at least over-reading — Whitman.
Whitman was a textualist decision written for a
unanimous Court by Justice Scalia. It stands for the
basic proposition that consideration of costs cannot
be jammed into a statutory factor that, by its terms,
otherwise would not encompass “costs,” particularly
89a
when other provisions of the Act expressly reference
costs. See Entergy, 556 U.S. at 223 (Whitman “stands
for the rather unremarkable proposition that
sometimes statutory silence, when viewed in context,
is best interpreted as limiting agency discretion.”).
In Whitman itself, the statutory factor was a
provision of the Clean Air Act, Section 109(b)(1), that
directed EPA to set ambient air quality standards at
levels “requisite to protect the public health” with
“an adequate margin of safety.” 42 U.S.C. §
7409(b)(1). The dispute concerned whether those
“modest words” granted EPA “the power to
determine whether implementation costs should
moderate national air quality standards.” 531 U.S. at
468. Concluding that EPA had not been granted such
power, the Court speaking through Justice Scalia
observed that cost “is both so indirectly related to
public health and so full of potential for canceling
the conclusions drawn from direct health effects that
it would surely have been expressly mentioned in §§
108 and 109 had Congress meant it to be
considered.” Jd. at 469.
The statutory provision at issue in Whitman
differs significantly from the statute at issue here.
The statutory provision in Whitman tied regulation
solely to “public health,” which is typically a critical
factor on the other side of the balance from costs, not
a factor that includes costs. Here, by contrast, the
key statutory term is “appropriate” — the classic
broad and all-encompassing term that naturally and
traditionally includes consideration of all the
relevant factors, health and safety benefits on the
one hand and costs on the other. To unblinkingly rely
90a
on Whitman here is to overlook the distinct language
of the relevant statutes. Cf. Michigan v. EPA, 213
F.3d 663, 677-79 (D.C. Cir. 2000) (the term
“significant” “does not in itself convey a thought that
significance should be measured in only one
dimension,” and in “some contexts, ‘significant’ begs
a consideration of costs”).
To sum up: All significant regulations involve
tradeoffs, and I am very mindful that Congress has
assigned EPA, not the courts, to make many
discretionary calls to protect both our country’s
environment and its productive capacity. In this
case, if EPA had decided, in an exercise of its
judgment, that it was “appropriate” to regulate
electric utilities under the MACT program because
the benefits outweigh the costs, that decision would
be reviewed under a deferential arbitrary and
capricious standard of review. See American Radio
Relay League, Inc. v. FCC, 524 F.3d 227, 247-48
(D.C. Cir. 2008) (separate opinion of Kavanaugh, J.).
But before we assess the merits of any cost-benefit
balancing, this statutory scheme requires that we
first ensure that EPA has actually considered the
costs. See State Farm, 463 U.S. at 42-43. In my view,
whether we call it a Chevron problem or a State
Farm problem, it is unreasonable for EPA to exclude
consideration of costs when deciding whether it is
“appropriate” to regulate electric utilities under the
MACT program. I respectfully dissent from the
majority opinion’s contrary conclusion.®
6 On the Chevron point, I add one further comment. When
the Government wins a Chevron case, it may prevail at Chevron
step one (because the agency's interpretation of the statute is
9la
I]
This case implicates another important
administrative law issue, the “zone of interests” test
under the Administrative Procedure Act.? The Court
holds that petitioner Julander Energy Company falls
outside the “zone of interests” the Clean Air Act is
designed to protect and thus cannot challenge the
Final Rule. The Court reasons that the concerns
raised by Julander, a natural gas production
company, are merely to seek more stringent
regulation of its coal and oil company competitors.
See Maj. Op. at 57-58.
mandated by the statutory language) or at Chevron step two
(because the agency's interpretation of an ambiguous statute is
at least reasonable). In those cases, the step one or step two
label may have practical significance, as it may determine
whether the agency could try to adopt a contrary interpretation
in the future. On the other hand, when the agency loses a
Chevron case because the agency has adopted an interpretation
outside the permissible bounds of the statute, even after
reading relevant ambiguities in the agency's favor, there is not
much if any practical difference for purposes of future agency
action whether we label our decision as Chevron step one or
Chevron step two. See generally City of Arlington v. FCC, 133 S.
Ct. 1863, 1868, 1874 (2013). So it is here, in my view.
7 This Court has traditionally referred to the zone of
interests test as a component of “prudential standing.” As the
Supreme Court has recently explained, however, the test does
not belong under the “prudential” rubric. Lexmark
International, Inc. v. Static Control Components, Inc., No. 12-
873 (U.S. Mar. 25, 2014). Instead, whether a plaintiff comes
with the “zone of interests” is a statutory question “that
requires us to determine, using traditional tools of statutory
interpretation, whether a legislatively conferred cause of action
encompasses a particular plaintiff's claim.” /d., slip op. at 8.
92a
I reluctantly join that portion of the Court’s
opinion because it is consistent with some of this
Court’s previous decisions applying the zone of
interests test. I hasten to add that the decisions on
which the Court today relies are inconsistent with
other of this Court’s precedents. Given that our case
law makes this issue a de facto coin flip, I cannot
fault an opinion that lands on heads rather than
tails.
I am concerned, however, about the erratic
inconsistency in our case law. I am even more
concerned that our cases holding that competitors
are outside the zone of interests ~ including today’s
decision — are inconsistent with the governing
Supreme Court precedents. I write separately to
explain my concerns.
The Supreme Court first announced the APA
“zone of interests” test in Association of Data
Processing Service Organizations, Inc. v. Camp, 397
U.S. 150 (1970) (Data Processing). In that case,
vendors of data processing services challenged the
Comptroller of the Currency’s decision to allow
competitor national banks to sell the same services.
The data processing vendors alleged that the agency
decision violated a provision of the National Bank
Act. The district court dismissed the case for lack of
standing, and the court of appeals affirmed the
dismissal. The Supreme Court reversed. For
purposes of Article III standing, the Court first said
that there was “no doubt” that the petitioners had
alleged a sufficient “injury in fact.” Jd. at 152. In
reaching that conclusion, the Court rejected the
then-prevailing requirement that plaintiffs show
93a
that a defendant's actions invaded a “legal interest”
belonging to the plaintiff. Jd. at 153. The Court
instead adopted the now-familiar “injury in fact”
test.
For purposes of the APA, the Court added that
the separate question of being able to sue under the
APA “concerns, apart from the ‘case’ or ‘controversy’
test, the question whether the interest sought to be
protected by the complainant is arguably within the
zone of interests to be protected or regulated by the
statute or constitutional guarantee in question.” Jd.
And the Court said that the “zone of interests”
requirement was satisfied by the plaintiffs in Data
Processing, who were competitors of the national
banks. The Court noted with approval the “trend
toward enlargement of the class of people who may
protest administrative action.” Jd. at 154. In keeping
with that trend, the Court refused to take an overly
restrictive view of “the generous review provisions” of
the APA, which the Court noted should be construed
“not grudgingly but as serving a broadly remefial
purpose.” Id. at 156.8
The Supreme Court reaffirmed its broad
understanding of the zone of interests test in Arnold
Tours, Inc. v. Camp, 400 U.S. 45 (1970) and
8 Although Data Processing referenced the Administrative
Procedure Act, the opinion did not explicitly tie the zone of
interests test to the text of the APA. The Court subsequently
clarified that the zone of interests test is a “gloss” on Section
702 of the APA, which grants the right to judicial review of an
agency action to any person “adversely affected or aggrieved” by
that action. See Clarke v. Securities Industry Association, 479
U.S. 388, 395, 400 n.16 (1987).
94a
Investment Company Institute v. Camp, 401 U.S. 617
(1971). The plaintiffs in both cases were competitors
of national banks. Both cases concerned decisions by
the Comptroller of the Currency to authorize
national banks to offer new services to customers:
travel services in Arnold Tours and investment
services in Investment Company Institute. And in
both cases, the Court held that plaintiffs who would
have to compete with the banks under the new
regulations satisfied the zone of interests test and
could challenge the Comptroller’s decision. See
Arnold Tours, 400 U.S. at 46; Investment Company
Institute, 401 U.S. at 620-21.
Notably, Justice Harlan dissented in /nvestment
Company Institute because there was no evidence of
“any congressional concern for the interests of
petitioners and others like them in freedom from
competition.” Investment Company Institute, 401
U.S. at 640 (Harlan, J., dissenting). But that fact, the
Court held, was not fatal to the plaintiffs’ case; it was
enough to satisfy the zone of interests test that
Congress, for its own reasons, “did legislate against
the competition that the petitioners challenge.” Jd. at
621 (majority opinion).
Thus, at the time of its inception, the zone of
interests test was understood to be part of a broader
trend toward expanding the class of persons able to
bring suits under the APA challenging agency
actions. See Copper & Brass Fabricators Council, Inc.
vu. Department of the Treasury, 679 F.2d 951, 953 n.2
(D.C. Cir. 1982) (R.B. Ginsburg, J., concurring) (in
each of the Supreme Court’s first four zone of
interests decisions, the Court “utilized the ‘zone’ test
95a
to reverse lower court decisions which had held that
the respective plaintiffs lacked standing”). Although
the Supreme Court was cognizant of the dangers of
freely permitting judicial review of agency decisions,
it nonetheless “struck the balance in a manner
favoring review,” as the Court later described it,
excluding only “those would-be plaintiffs not even
arguably within the zone of interests to be protected
or regulated by the statute.” Clarke v. Securities
Industry Association, 479 U.S. 388, 397 (1987)
(internal quotation marks omitted).
And importantly for present purposes, the
Supreme Court in those early zone of interest cases
specifically held that the class of persons who could
sue specifically included plaintiffs who were
complaining about what they alleged was unlawfully
lax agency regulation of the plaintiffs’ competitors.
The theory was simple: Competitors, almost by
definition, are among the class of people “arguably”
to be “protected” when Congress limited the
activities of other competitors in the relevant
industry. So absent a discernible congressional
intent to preclude suit by the plaintiffs, the suit could
proceed.
In the years following Data Processing, however,
this Court appeared to resist the Supreme Court's
direction on competitor suits under the zone of
interests test. This Court’s case still said, for
example, that the zone of interests test required
“some indicia ~— however slight — that the litigant
before the court was intended to be protected” by the
statute providing a cause of action. See, e.g., Copper
96a
& Brass Fabricators, 679 F.2d at 952 (majority
opinion).
In Clarke v. Securities Industry Association, 479
U.S. 388 (1987), however, the Supreme Court
reaffirmed that it meant what it said in Data
Processing. And the Court in Clarke explicitly stated
that D.C. Circuit cases had incorrectly departed from
Data Processing. See id. at 400 n.15.
Clarke was another case in which some plaintiffs
argued that the Comptroller of the Currency’s
regulation of the plaintiffs’ competitors was unduly
lax. Specifically, securities brokers challenged the
Comptroller’s decision to exempt certain bank offices
that offered brokerage services from restrictions on
branch banking. The Court began its analysis by
clarifying that although the zone of interests test
was “basically one of interpreting congressional
intent,” the inquiry did not require a congressional
intent to benefit the plaintiff class. Clarke, 479 U.S.
at 394, 399-400. Rather, suits would be allowed
unless a “congressional intent to preclude review” in
suits by the plaintiffs was “fairly discernible.” Id. at
403 (citing Block v. Community Nutrition Institute,
467 U.S. 340, 351 (1984)) (internal quotation marks
omitted). The zone of interests test “is a guide for
deciding whether, in view of Congress’ evident intent
to make agency action presumptively reviewable, a
particular plaintiff should be heard to complain of a
particular agency decision. In cases where the
plaintiff is not itself the subject of the contested
regulatory action, the test denies a right of review if
the plaintiffs interests are so marginally related to
or inconsistent with the purposes implicit in the
97a
statute that it cannot reasonably be assumed that
Congress intended to permit the suit. The test is not
meant to be especially demanding.” Jd. at 399.
In sum, Clarke confirmed the capacious view of
the zone of interests requirement announced in Data
Processing and similar cases. It reaffirmed the
presumption in favor of allowing suit and made clear
that the suit should be allowed unless the statute
evinces discernible congressional intent to preclude
review. See 3 RICHARD J. PIERCE, JR.,
ADMINISTRATIVE LAW TREATISE § 16.9, at 1521
(5th ed. 2010) (“An injured plaintiff has standing
under the APA unless Congress intended to preclude
judicial review at the behest of parties in plaintiff's
class.”).
And most importantly for our purposes, Clarke
confirmed that competitors were presumptively
within the zone of interests under the APA when
challenging allegedly lax regulation of other
competitors in the relevant industry, absent
discernible evidence of contrary congressional intent.
See id. at 403 (“competitors who allege an injury that
implicates the policies of the National Bank Act are
very reasonable candidates to seek review of the
Comptroller's rulings”).
As one respected commentator has summarized
the Supreme Court’s case law: “It is hardly a
caricature to say that the current law is this:
Businesses desiring to complain that the government
is regulating their competitors with insufficient
stringency are invariably and automatically held to
fall within the zone of interests of any allegedly
violated statute ” Jonathan R. Siegel, Zone of
98a
Interests, 92 GEO. L.J. 317, 347 (2004) (emphasis
added).
Despite the apparent clarity of Clarke
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