Opposition Brief — Michigan v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-46)

Nos. 14-46; 14-47; 14-49

IN THE OCT 15 201

Supreme Court of the United 3E OF THE CLERK

STATE OF MICHIGAN, et al.

Petitioners,

and

UTILITY AIR REGULATORY GROUP

Petitioner,

and

NATIONAL MINING ASSOCIATION,

Petitioner,

v.

ENVIRONMENTAL PROTECTION AGENCY, et al,

Respondents.

On Petitions ror Writs OF CERTIORARI TO THE UNITED STATES

Court oF APPEALS FOR THE Disrrict or CoLUMBIA CIRCUIT

BRIEF IN OPPOSITION OF RESPONDENTS

CALPINE CORPORATION, EXELON CORPORATION,

NATIONAL GRID GENERATION LLC AND PUBLIC

SERVICE ENTERPRISE GROUP, INC.

BRENDAN K. CoLLins

Counsel of Record

Rospert B. McKInstry, JR.

RoNALD M. VARNUM

LoRENE L. BouDREAU

BALLARD SpauR LLP

1735 Market Street, 5lst Floor

Philadelphia, PA 19103-7599

(215) 665-8500

collins@ballardspahr.com

Counsel for Industry Respondents

by

t

COUNTERSTATEMENT OF

THE QUESTION PRESENTED

Whether it was permissible and reasonable for

the Environmental Protection Agency not to consider

cost when determining whether it was “appropriate”

to regulate coal-fired and oil-fired power plants under

Section 112 of the Clean Air Act, 42 U.S.C. § 7412, when

the statute instead provides for consideration of cost at the

time the agency establishes emission standards applicable

to those power plants.

a

RULE 29.6 DISCLOSURE STATEMENT

Respondents Calpine Corporation, Exelon Corporation

and Public Service Enterprise Group, Inc., are publicly

traded corporations and have no parent companies. No

publicly-held company owns 10% or more of their stock.

Respondent National Grid Generation LLC is a wholly-

owned subsidiary of KeySpan Corporation. KeySpan

Corporation is a wholly-owned subsidiary of National Grid

USA. National Grid USA is wholly-owned by National

Grid North America Inc., which is wholly-owned by

National Grid (US) Partner 1 Limited. National Grid (US)

Partner 1 Limited is wholly-owned by National Grid (US)

Investments 4 Limited, which is wholly-owned by National

Grid (US) Holdings Limited, which is wholly-owned by

National Grid ple. National Grid ple is a publicly traded

corporation that has no parent companies, and no publicly-

held company holds 10% or more of its stock.

112

TABLE OF CONTENTS

COUNTERSTATEMENT OF THE QUESTION

PETE cee thee edesinecesns

RULE 29.6 DISCLOSURE STATEMENT ...

po Fe ge a eer er

TABLE OF CITED AUTHORITIES

INTRODUCTION...... Shavedkevesctaunds

STATEMENT OF THE CASE ................

A. The Economics Of Pollution Control

In Electric Generation ........ )— .

a. Bt gh eee

REASONS FOR DENYING THE PETITION ...

A. Petitioners Fail To Articulate A Compelling

Reason For Certiorari....... . « scceces

1. Petitioners present no “important

question of federal law” warranting

ince: 8 8. - Rbachawtauuuee er ees

2. Petitioners’ claims regarding the

cost of the Toxics Rule are based on

a disingenuous mischaracterization

eee, bee) Ne keu es

ca oe

Ww

Table of Con*ents

Page

3. The Toxics Rule does nothing more than

level the playing field, counteracting the

economic disincentive to pollution control,

and does not threaten reliability. ........ 17

B. EPA Faithfully Followed Congress’

Instructions With Respect To Cost ....... .. 21

1. EPA’s approach is consistent with

the statutory structure....... ....... 21

2. Thecost burdens ofthe Toxics Rule are

distributed equitably, and in a manner

consistent with Congressional intent ..... 24

GUEEY canes. Suaxveres kessendees Aeeue 25

Vv

TABLE OF CITED AUTHORITIES

Page

Cases:

Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc.,

ee es Cs” aden cekes oan 13, 14, 18, 25

Entergy Corp. v. Riverkeeper, Inc.,

Se rr rer 22

Nat'l Lime Ass’n v. EPA,

233 F.3d 625 (D.C. Cir. 2000) ......... .13, 23

New Jersey v. EPA,

Be ee re hs GE se. once cecuvcsiveus 12

Union Elec. Co. v. EPA,

Ce RE caiececsesenes -“Ssdwande 22

White Stallion Energy Center, LLC v. EPA,

748 F.3d 1222 (D.C. Cir. 2014)........... .13, 19, 23

Whitman v. American Trucking Ass’ns,

531 U.S. 457 (2001)....... weekenaede ved 22

Statutes:

UNM s ce ustisiccesen? 8 ‘“audeecevacd 1

eR CS 655.cedse~s ccseuds ecuncuws 12

ee eR os on kecs ae tkcdeneeak. ewes 3

v1

Cited Authorities

Page

ee ease We PED = 8 6.6 Seve sade wed dessebwen 12

CE Ts BPN 6 hc cecieside woes 12, 18, 22, 23

ey CA SG PEED Snes sc ekacawnss eee 2, 13, 19, 22

eR BPR i voces. sececeiee Kacescbsteds 3

GE Ce FH Ps ins Senceccce Sescececes 12

CP Ss Ee Pc aak | cenedxes snceunesen 9

Clean Air Act Amendments of 1990, Pub. L.

No. 101-549, 104 Stat. 2399 (1990) ................ 9

Federal Regulations:

ep Reet GP EIU i kkwecse 9 secvinis- Weeces 7

40 C.F-R. §§ 60.42Da-60.44Da.......00 22.2... eee eee 7

Federal Register:

76 Fed. Reg. 24,976 (May 3, 2011)..... ........ 10, 17

77 Fed. Reg. 9,304 (Feb. 16, 2012)............. passim

State Regulations:

Mich. Admin. Code r. 336.2502a (2013). ............ 8

Mich. Admin. Code r. 336.2503 (2009) ............. 8

vir

Cited Authorities

Other Authorities:

Christopher C. DeMuth & Douglas H. Ginsburg,

Rationalism in Regulation, 108 Mich. L. Rev. 877

re ee eae eee ea aed arte eae ks

Dallas Burtraw et al., Ancillary Benefits of Reduced

Air Pollution in the U.S. from Moderate

Greenhouse Gas Mitigation Policies in the

Sector, 45 J. Envtl. Econ. & Mgmt. 650 (2003).

EPA Science Advisory Board, Environmental

Economics Advisory Committee, Advisory on

EPA’s Guidelines for Preparing Economic

Analyses (2008), available at http://yosemite.

epa.gov/sab/sabproduct.nsf/559B838F 18C36

F078525763C0058B32F/$File/EPA-SAB-09-

018-unsigned.pdf. ............-.-

E.J. Mishan & Euston Quah, Cost Benefit Analysis

Te Bere

Energy Information Administration, U.S.

Department of Energy, The Effects of Title

IV of the Clean Air Act Amendments of

1990 on Electric Utilities: An Update,

DOE/EIA-0582(97) (Mar. 1997) ..........--.

Federal Energy Regulatory Commission,

Centralized Capacity Market Design Elements,

Commission Staff Report AD13-7-000 (Aug.

23, 2013), http://;www.ferc.gov/CalendarFiles/

20130826142258-Staff%20Paper.pdf .

ome

viii

Cited Authorities

ISO/RTO Council, The Value of Independent

Regional Grid Operators (Nov. 2005), http://

www.nyiso.com/public/webdocs/media_room/

press_releases/2005/isortowhitepaper_

finall1112005.pdf ....... ......22. 0 weeee-

Michael J. Bradley, Christopher E. Van Atten, Amlan

Saha, & Carrie Jenks (M.J. Bradley & Associates

LLC) & Susan F. Tierney & Paul J. Hibbard

(Analysis Group), Ensuring a Clean, Modern

Electric Generating Fleet while Maintaining

Electric System Reliability (Aug. 2010) ......

National Center for Environmental Economics,

EPA, Guidelines for Preparing Economic

Analyses (Dec. 2010), available at http://

yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-

0568-50.pdf/$file/EE-0568-50.pdf... .......

NY ISO, Blackout August 14, 2008 Final

Report (Feb. 2005), http://www.nyiso.

com/public/webdocs/media_room/press _

releases/2005/blackout_rpt_final.pdf...... ..

PJM, Energy Market, http://pjm.com/markets-and-

operations/energy.aspx .. ........ .........

Richard L. Revesz & Michael A. Livermore,

Retaking Rationality (2008) ........ ....

tx

Cited Authorities

Ross Baldick, Single Clearing Price in

Electricity Markets (Feb. 2009), http://

www.cramton.umd.edu/papers2005-2009/

baldick-single-price-auction.pdf.............

U.S. Environmental Protection Agency, EPA’s

Responses to Public Comments on EPA’s

National Emission Standards for Hazardous

Air Pollutants from Coal- and Oil-Fired Electric

Utility Steam Generating Units Vol. 1 (Dec. 2011)

(Dkt. No. EPA-HQ-OAR-2009-0234-20126).

U.S. Environmental Protection Agency,

EPA’s Responses to Public Comments on

EPA’s National Emission Standards for

Hazardous Air Pollutants from Coal- and

Oil-Fired Electric Utility Steam Generating

Units Vol. 2 (Dec. 2011) (Dkt. No. EPA-HQ-

OAR-2009-0234-20126 (Attachment)) .......

U.S. Environmental Protection Agency, Study

of Hazardous Air Pollutant Emissions

from Electric Utility Steam Generating

Units — Final Report to Congress (Feb. 1998)

(Dkt. No. EPA-HQ-OAR-2009-0234-3052).......

U.S. Energy Information Administration, Today

in Energy, AEO2014 Projects More Coal-

Fired Power Plant Retirements by 2016 Than

Have Been Scheduled (Feb. 14, 2014), available

at http://www.eia.gov/todayinenergy/detail.

cfm7id=15031 ......

+

.11, 18

x

Cited Authorities

Page

U.S. Energy Information Administration, Annual

Energy Outlook 2014, IF-34 (Apr. 2014), available

at http://www.eia.gov/forecasts/aeo/pdf/0383

EOS IS gs lagen ipaile se ek 21

1

Respondents Calpine Corporation, Exelon

Corporation, National Grid Generation LLC and Public

Service Enterprise Group, Inc. (collectively, the “Industry

Respondents”), respectfully submit this brief in opposition

to the petitions for writs of certiorari filed by the State of

Michigan, et al. (No. 14-46), Utility Air Regulatory Group

(“UARG”) (No. 14-47) and the National Mining Association

(“NMA”) (No. 14-49). The Industry Respondents are

engaged in the business of electric generation. Together

they represent 80 gigawatts of generation capacity,

enough to power over 60 million homes, using coal, oil,

gas, nuclear, wind, solar and other generation sources.

INTRODUCTION

Petitioners seek review of a decision upholding the

Mercury and Air Toxics Standards adopted by the

Environmental Protection Agency (“EPA”) on February

16, 2012 (“Toxics Rule” or the “Rule”), 77 Fed. Reg.

9,304. The Toxics Rule requires all coal-fired and oil-

fired “electric utility steam generating units” (“units”

or “power plants”) to achieve emission standards for

“hazardous air pollutants,” a class of pollutants specifically

listed by Congress in Section 112 of the Clean Air Act

(“Act”), 42 U.S.C. § 7412. The Toxics Rule establishes

consistent national limits on emissions of these pernicious

pollutants by power plants. While many power plants are

already capable of achieving these standards, others will

require additional capital investment in order to meet

the standards, and it is expected that some older, less

efficient plants will retire, reducing the demand for coal.

Coal producers, a segment of their power plant customers

and a block of states aligned with those interests comprise

the coalition seeking this Court’s review. Unlike many of

2

their peers among the petitioners, Industry Respondents

made significant investments in their generation fleets to

prepare for the Toxics Rule.

Petitioners labor mightily to articulate a basis for

this Court’s review under its Rule 10, but ultimately their

certiorari and merits arguments merge into a single

contention: that the Clean Air Act required EPA to choose

not to regulate hazardous air pollutants from power

plants because these pollutants are expensive to control.

The statute says nothing of the kind. Petitioners dress

up their contention by grossly distorting EPA’s benefit-

cost analysis, and ask this Court to ignore the enormous

health benefits that the Rule will produce because those

benefits undermine petitioners’ narrative. Of course, that

is not how sound benefit-cost analysis works. Even if EPA

were to have considered costs when deciding whether to

regulate power plants, it could certainly not have ignored

well-accepted principles of economic analysis to reach the

result urged by petitioners.

Beyond these quantitative errors, petitioners’

mischaracterization of the impact of the Toxics Rule is

inconsistent with the qualitative demands of the Rule.

Congress explicitly directs EPA to impose minimum

emission standards based on the performance of existing,

operating power plants, and explicitly deprives EPA of

any discretion to require less. See 42 U.S.C. § 7412(d)(3).

Under Section 112, it is the universe of existing power

plants that sets the bar for the industry, not EPA. The

Toxics Rule ends the free ride for power plant owners

that have avoided the expenditures necessary to reduce

hazardous air pollutants and have profited at the expense

of owners of cleaner generation units, such as the Industry

Respondents.

3

This free ride has been a long one. The electric

generation industry has anticipated the Toxics Rule

since EPA first determined that it was “appropriate

and necessary” to regulate power plants under Section

112 in 2000. Since that time, Industry Respondents and

many other industry members have invested in their

generation fleets, mindful of the “maximum achievable

control technology” standards that EPA has been required

to promulgate since 2002 (see 42 U.S.C. § 7412(c)(5)),

and the short time the Act allows for implementation of

those standards (see id. § 7412(i)(3)). Companies installed

expensive control equipment on plants now capable of

meeting the requirements of the Toxics Rule. Companies

retired uncontrolled plants and replaced them with

natural gas plants, or with increased output at nuclear

plants and other cleaner energy alternatives. Companies

reconfigured their generation fleets in the investment-

backed expectation that EPA would promulgate the

regulations plainly required by the Act.

The ten-year delay in the Rule’s development has

harmed the industry, especially those members who,

like Industry Respondents, participate in competitive

wholesale power markets, where the massive capital

investments necessary to maintain the integrity of the

nation’s power grid are protected only by foresight

dependent on regulatory certainty. Those markets

are disrupted when some generators are permitted to

externalize the costs of their pollution, reaping higher

profits at the expense of other, cleaner generators. Even

as it improves public health, the Toxics Rule finally levels

the playing field for power plant owners. This equity will

be lost if this Court disturbs EPA’s thoroughly-considered,

technically-justified, reasonable application of Section 112.

The petitions for certiorari should be denied.

4

STATEMENT OF THE CASE’

A. The Economics Of Pollution Control In Electric

Generation

The efficacy of pollution control requirements in

the electric power sector is profoundly affected by the

economic structure of the nation’s electric system. All

power plants are connected to the nationwide network

of electric transmission lines commonly referred to as

the “grid.” The grid is capable of transmitting electricity

across state lines and even across entire regions in order

to satisfy demand. The grid is managed by independent

system operators, regional transmission organizations

and local balancing authorities (“grid operators”) who bear

the responsibility for assuring that adequate electricity

is always available. Grid operators must balance the

amount of electricity generated with electricity demand

in real time, as the grid itself has no storage capacity, and

an imbalance between supply and demand can overload

transmission lines or yield voltage drops that can cause

potentially massive blackouts.* This balance must be

struck by taking into account many factors, including the

magnitude, timing and location of demand, the availability

1. Industry Respondents refer the Court to the description of

the case in EPA’s brief in opposition to the petitions, and adopt the

Statements in the briefs in opposition filed by the Commonwealth

of Massachusetts, et al. (“State Resp. Br.”) and American Academy

of Pediatrics, et al. (“AAP Br.”). Industry Respondents also offer

the following additional background information.

2. The New York Blackout of 2003 was caused by just such

an imbalance. NY ISO, Blackout August 14, 2003 Final Report

(Feb. 2005), http://www.nyiso.com/public/webdocs/media_roorm/

press_releases/2005/blackout_rpt_final.pdf.

5

of transmission lines serving those demand areas, the

available capacity of power plants and, in areas served

by competitive energy markets,’ the price at which

generators offer their electricity for sale.‘

Because demand and supply must be balanced at

all times, it is essential that the system include enough

generation capacity to satisfy the largest expected

electricity demand, plus a margin of safety, to assure

an uninterrupted electric supply. The generation fleet,

therefore, is sized according to peak demand. However,

peak demand rarely occurs, typically only during extreme

heat or cold. At all other times, there is a surplus of

generation capacity on the system. Because of the need for

real-time balancing, when there is a surplus of generation

capacity, not all power plants can be allowed to run. The

responsibility for choosing which power plants run and

which sit idle falls to the grid operator.

Grid operators use a market-based mechanism to

determine the order in which to call upon or “dispatch”

3. More than 60% of the electricity supplied to the grid is

delivered through competitive wholesale electricity markets.

See ISO/RTO Council, The Value of Independent Regional Grid

Operators at 9-10 (Nov. 2005), http://www.nyiso.com/public/

webdocs/media_room/press_releases/2005/isortowhitepaper_

finall1112005.pdf. In areas served by local balancing authorities,

cost plays essentially the same role on an intrastate basis as

described below for larger competitive markets, and power can

still be imported from other states.

4. See Federal Energy Regulatory Commission,

Centralized Capacity Market Design Elements, Commission

Staff Report AD13-7-000 (Aug. 23, 2013), http://www.ferc.gov/

CalendarFiles/20130826142258-Staff%20Paper.pdf.

6

power plants to feed electricity to the grid.’ No power

plant can operate unless it is dispatched by the grid

operator. Each owner of a generating unit submits a bid to

the grid operator indicating the price at which it is willing

dispatches power plants by selecting the least expensive

generation units first and calling upon progressively more

expensive units until demand is satisfied.

The price that each generator receives for the power

it produces is not ordinarily established by its own bid.

Wholesale markets operate on the principle of the “single

market clearing price.” All generators are paid the same

price based on the bid of the last unit that “cleared the

market,” that is, the most expensive unit needed to

meet demand.® This pricing scheme creates a powerful

dual incentive to reduce operating costs: units with low

operating costs and low bids are both dispatched more

frequently than units with higher costs and higher bids,

and produce a higher profit margin when they do operate.

This incentive serves to reduce wholesale electricity prices

to their minimum, but has negative implications for air

pollution control.

The operation of pollution control systems can entail

significant operating costs for higher-priced fuels,

5. See PJM, Energy Market, http://pjm.com/markets-and-

operations/energy.aspx (last visited Oct. 10, 2014).

6. See Ross Baldick, Single Clearing Price in Electricity

Markets (Feb. 2009), http://www.cramton.umd.edu/

papers2005-2009/baldick-single-price-auction.pdf.

7

treatment chemicals, waste disposal and power and water

consumption, in addition to any capital costs that may be

involved. Hence, power plants operating pollution controls

tend to have higher operating costs, resulting in higher

bids and less frequent dispatch compared to uncontrolled

units. Every power plant that incurs additional costs to

reduce its emissions is at risk of being undercut by cheaper,

dirtier plants that do not incur these pollution control

costs. Industry Respondents’ cleaner, environmentally-

controlled generation units can be more expensive to own

and operate than uncontrolled units, and so are placed at

a disadvantage in electricity markets where they compete

against higher-emitting units with lower operating costs,

such as uncontrolled coal-fired plants.

If all competing power plants faced identical regulatory

requirements, operating costs for pollution controls might

make little difference, but these requirements vary from

plant to plant. For each generation unit, the applicable

standards for conventional pollutants are determined

by the year of the unit’s construction. See, e.g., 40 C.F.R.

pt. 60 subpt. Da (new source performance standards

for fossil fuel-fired units).’ New units are required to be

equipped with state-of-the-art controls, and must operate

those controls to meet more stringent mandatory permit

limits. Older plants are required to meet only the far

less stringent limits in place at the time they were built.

More than half of the coal-fired units in operation in 2010,

7. New source performance standards contain emission

standards for conventional pollutants sulfur dioxide, oxides of

nitrogen and particulate matter. See, e.g., 40 C.F.R. §§ 60.42Da-

60.44Da. As explained below, it is well understood that emission

controls that reduce these pollutants can also reduce certain

hazardous air pollutants as well.

8

representing more than one-third of coal-fired generation

capacity, were in existence when the Clean Air Act was

enacted in 1970, and the vast majority of those units had

no pollution controls.*

Pollution control requirements also vary from state

to state. Many states impose more stringent pollution

control requirements than their neighbors because these

controls are needed to attain air quality standards or to

serve some other public health goal. In their brief, the

State and Local Respondents identify fourteen states that

have adopted limits on emissions of mercury, one of the

hazardous pollutants limited by the Toxics Rule. State

Resp. Br. at III. Indeed, petitioner Michigan had such a

requirement in place, but suspended it after EPA adopted

the Toxics Rule. See Mich. Admin. Code r. 336.2503 (2009);

Mich. Admin. Code r. 336.2502a (2013). Of course, if at

least fifteen states had mercury limits in place prior to

the Toxics Rule, as many as 35 states did not, and power

plants in those states enjoyed a price advantage over their

more regulated peers.

8. See Comments of Exelon Corporation on U.S.

Environmental Protection Agency’s Proposed 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 at 7 (Aug. 4, 2011) (Dkt. Nos.

EPA-HQ-OAR-2009-0234-17648, -17650, and -17651) (C.A. App.

JA00828) (hereinafter “Exelon Comments on Proposed Toxics

Rule”); Exhibit 2 to Exelon Comments on Proposed Toxics Rule,

Michael J. Bradley, Christopher E. Van Atten, Amlan Saha, &

Carrie Jenks (M.J. Bradley & Associates LLC) & Susan F. Tierney

& Paul J. Hibbard (Analysis Group), Ensuring a Clean, Modern

Electric Generating Fleet while Maintaining Electric System

Reliability at 20, Tbl. 5 (Aug. 2010) (C.A. App. JA00964).

9

Most grid operators cover multiple states, and power

from one region can be sold into another. Therefore,

when it comes to dispatch decisions, power plants do

not compete only against plants in the same state, of

the same age and subject to the same regulations. They

compete against units in other states, including states

where pollution control requirements are less stringent.

They compete against older units with few if any pollution

control requirements. In this price competition, cleaner

power plants are dispatched less frequently and make less

money when they do run, while dirtier power plants run

more often and make more money. The economic calculus

of the wholesale electricity market institutionalizes a

disincentive to incur costs to reduce air pollution.

B. The Role Of Section 112

Section 112 was adopted in its current form in 1990

concurrently with the Title [V Acid Rain Program, which

introduced the first large-scale market-based system for

reducing emissions of sulfur dioxide (“SO,”) from coal-

fired power plants. See Clean Air Act Amendments of

1990, Pub. L. No. 101-549, 104 Stat. 2399 (1990). Title IV

did not impose mandatory emission limits on individual

power plants, but rather established an allowance trading

program to create economic incentives for generators to

install and to operate emission controls, especially flue gas

desulfurization systems, or “scrubbers,” to control SO,.

See 42 U.S.C. §§ 7651-7651o. In allowance programs, once

the total amount of permissible emissions is determined (in

tons per year), an equal number of tradable “allowances”

is auctioned or distributed, and each power plant must

turn in one allowance for every ton of pollution it emits.

The owner of any power plant is free to decide whether to

10

buy the allowances necessary to cover its emissions, or to

reduce its emissions, enabling it to sell surplus allowances

to other plants.

Congress adopted Section 112(n)(1)(A) to give EPA

an opportunity to assess the impact of, among other

things, Title IV on hazardous emissions from power

plants before deciding whether they should be regulated

under Section 112. See 76 Fed. Reg. 24,976, 24,978 (May

3, 2011). Scrubbers installed to reduce SO, also reduce

hazardous acid gas pollutants, including hydrochloric

acid and hydrofluoric acid, and in certain configurations

scrubbers will also reduce mercury and non-mercury

metals, also hazardous pollutants.’ Although Title IV

prompted the installation of some scrubbers, most plants

either switched to low sulfur coal without adding controls,

or took no action at all, using allowances to meet their

obligations. Only 27 of 261 power plants surveyed by EPA

in 1997 installed scrubbers." More than fifteen years later,

less than two-thirds of plants had scrubbers, and fewer

still had configured their scrubbers to remove hazardous

pollutants.”

9. See Exelon Comments on Proposed Toxics Rule, Exhibit

7 at 7, A-14 to A-21, Exhibit 4 at 8, 20-21, 23 (C_A. App. JA01042,

01064-01071, 00992, 01004-01005, 01006); see also 76 Fed. Reg. at

24,990.

10.U.S. Environmental Protection Agency, Study of

Hazardous Air Pollutant Emissions from Electric Utility Steam

Generating Units — Final Report to Congress at 2-31 (Feb. 1998)

(Dkt. No. EPA-HQ-OA R-2009-0234 3062) (C.A. App. JA00537).

11. Exelon Comments on Proposed Toxics Rule at 25 n.47,

50-51, Exhibit 10 at 8-11, Exhibit 2 at 19-20, tbl. 5, Exhibit 4 at 10

(C.A. App. JA00846, 871-872, 1084-1087, 963-964, 994).

11

Furthermore, much of the control equipment that

was installed in response to Title IV and other programs

fails to reduce hazardous pollutant emissions because it

is not operated consistently. Allowance programs such as

Title IV rely on economic incentives to reduce emissions,

rather than mandatory limits. When those economic

incentives are insufficient to cover the cost of operating

pollution controls, even generators who already installed

controls operate those controls only to the minimum extent

necessary to comply with their permits.’ For the past

several years, allowance prices have been so low that it

has been cheaper for many generators to buy allowances

rather than to reduce pollution by operating already-

installed controls. Neither Title [V nor any other provision

of the Act requires or even encourages generators who

have thus far avoided installing hazardous pollutant

controls to install them now, absent the Toxics Rule. As

a result, uncontrolled power plants remain the leading

source of many hazardous pollutants in the air we breathe.

77 Fed. Reg. at 9,310.

Section 112 establishes a regulatory process that

is unique in the Clean Air Act. First, EPA must

determine whether to “list” a category of sources that

emits hazardous air pollutants. For virtually all source

12. Energy Information Administration, U.S. Department of

Energy, The Effects of Title IV of the Clean Air Act Amendments

of 1990 on Electric Utilities: An Update, DOE/EIA-0582(97) at 6-9

(Mar. 1997) (C.A. App. JA03123-3126); see also U.S. Environmental

Protection Agency, EPA’s Responses to Public Comments on EPA’s

National Emission Standards for Hazardous Air Pollutants from

Coal- and Oul-Fired Electric Utility Steam Generating Units Vol.

1 at 13 (Dec. 2011) (Dkt. No. EPA-HQ-OAR-2009-0234-20126)

(C.A. App. JA02021) (“Response to Comments Vol. 1”).

12

categories other than power plants, EPA must list the

category if the sources emit hazardous air pollutants;

Congress did not permit EPA to consider cost or any

other decision criterion. 42 U.S.C. § 7412(c)(1). Under

Section 112(n)(1)(A), EPA must list the power plant source

category if it determines that it is “appropriate and

necessary” to regulate power plants under Section 112.

See id. § 7412(n)(1)(A). Section 112(n)(1)(A) likewise does

not mention cost as a consideration for this determination.

Once a category is listed under Section 112(¢), it may only

be “delisted” if EPA makes a very specific finding that

“no source in the category” emits hazardous pollutants

at levels that threaten public health. Jd. § 7412(c)(9)(B);

New Jersey v. EPA, 517 F.3d 574, 581-82 (D.C. Cir. 2008).

Again, Congress does not mention cost as a consideration

in a delisting decision.

Once EPA lists a source category under Section

112, it must develop emission standards for hazardous

pollutants emitted by those sources. In contrast with

its focus on health-oriented criteria for listing/delisting

decisions, Congress established both explicit and implicit

roles for cost in determining the standards that EPA must

develop for all sources subject to Section 112, including

power plants. Section 112(d)(2) requires EPA to establish

emission standards that assure the “maximum degree

of reduction” that EPA “determines is achievable,”

“taking into consideration the cost” and other factors.

Id. § 7412(d)(2). However, Congress explicitly eliminated

any EPA discretion in 112(d)(8), establishing a hard

floor representing the minimum standards that EPA

could require. Section 112(d)(8) requires that emission

standards adopted by EPA for existing sources “shall not

be less stringent...than...the average emission limitation

13

achieved by the best performing 12 percent of the existing

sources.” Id. § '7412(d)(3); see also White Stallion Energy

Center, LLC v. EPA, 748 F.3d 1222, 1230 (D.C. Cir.

2014), NMA App. 9a-10a. In mandating these minimum

standards, called “Floor Standards,” Congress withheld

from EPA discretion to relax emission standards based on

cost or any other factor that it must consider under 112(d)

(2). See id.; Nat'l Lime Ass’n v. EPA, 233 F.3d 625, 629,

640 (D.C. Cir. 2000). Nevertheless, cost considerations

are necessarily reflected in the Floor Standards, which

are based on the performance of existing sources. By

definition, the “best performing” sources are achieving

the Floor Standards, so the Floor Standards must be cost-

effective. See White Stallion, 748 F.3d at 1238-39, NMA

App. 27a; see also State Resp. Br. at ITI.

REASONS FOR DENYING THE PETITION

A. Petitioners Fail To Articulate A Compelling Reason

For Certiorari.

l. Petitioners present no “important question of

federal law” warranting review.

Properly deconstructed, petitioners’ argument for

certiorari has two components: a single, narrow legal

issue, and the factual background that petitioners

manufacture to imbue that bland, non-precedential legal

issue with illusory significance. The legal issue is routine:

whether the Court of Appeals correctly applied the

standards articulated by this Court in Chevron U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467

U.S. 837 (1984), to EPA’s interpretation of an ambiguous

statutory phrase, here “appropriate and necessary.”

14

Chevron unquestionably remains the controlling authority,

having been reaffirmed and applied by this Court since

the decision below. The Court of Appeals for the District

of Columbia Circuit is the most practiced interpreter of

this precedent. The decision below wil] have no future

legal consequences beyond the very narrow scope of the

Toxics Rule. The Rule merely adds electric generation to

the long list of industries already regulated under Section

112, and so adds hazardous air pollutants to the list of

power plant pollutants already subject to regulation. But

for petitioners’ hyperbolic claims of economic catastrophe,

it is impossible to imagine that this Court could find

the narrow legal issue presented to be worthy of its

consideration. Moreover, the Court of Appeals correctly

applied Chevron, and the petitions should be denied. State

Resp. Br. at I; AAP Br. at IB.

2. Petitioners’ claims regarding the cost of the

Toxics Rule are based on a disingenuous

mischaracterization of EPA’s findings.

Petitioners’ arguments are premised on a

mischaracterization of the economic consequences of

the Rule and EPA's approach to benefit-cost analysis.

The three petitioners’ briefs are intended to create the

misapprehension that EPA found that the Rule would

create only a few million dollars of benefits. The real story

is quite different: EPA determined that the benefits of the

Toxics Rule will be $37 to $90 billion, at least triple the

costs of the Rule. 77 Fed. Reg. at 9,305-9,306, and Table

2. Petitioners’ rhetoric is not based on a comparison of all

benefits to all costs, as proper economic analysis requires.

Instead, petitioners exclude all unquantified benefits,

and all quantified benefits other than the benefits of

15

avoided IQ loss for children exposed to mercury through

recreationally-caught fish. See NMA Pet. at 2 (citing 77

Fed. Reg. at 9,306 Table 2); UARG Pet. at 15-16; Michigan

Pet. at 9; 77 Fed. Reg. at 9,428. Nowhere do petitioners

offer a legal or scientific rationale for ignoring over 99%

of the benefits of the Toxics Rule.

EPA analyzed the costs and benefits of the Toxics Rule

under Executive Orders 12866 and 13563, as it must with

all major rules. See 77 Fed. Reg. at 9,432. The purpose of

these orders is to provide a detached, unblinking look at

the benefits and costs of rulemaking, direct and indirect,

quantified and unquantified. EPA applied best scientific

practices and approved, peer-reviewed guidelines, and

correctly showed that the benefits of the Rule vastly

exceed the costs. See id. An independent peer review of

EPA's methodology submitted with Exelon’s comments on

the proposed Toxics Rule confirmed EPA's methodology

and found that, if anything, EPA underestimated benefits

and overestimated costs."

Petitioners’ criticism of EPA's benefit-cost analysis

appears to be that it is too inclusive, taking into account

all costs and all benefits, but this is exactly the point of the

exercise. It is true that the Toxics Rule will yield reductions

in conventional pollutants (e.g., fine particulates) in

addition to reductions in hazardous pollutants. Congress

would not be surprised at that result. After all, Congress

acknowledged the link between conventional pollutants

and hazardous pollutants in Section 112(n)(1)(A), allowing

13. Exelon Comments on Proposed Toxics Rule at 39-42,

45-46, Exhibit 21 at 4-5, 10-22, 31-33 (C.A. App. JA00860-863,

866-867, 1242-1243, 1248-1260, 1269-1271).

16

EPA to assess the impact of Title IV on hazardeus

pollutant emissions before making its “appropriate and

necessary” finding. The link between reductions in these

categories of pollution is a matter of fact that no party

contests.

Petitioners contend not only that EPA is required

to consider benefits and costs of regulation as part of its

“appropriate and necessary” finding, but that EPA must

exclude from its benefit-cost analysis any benefits that

do not arise directly and exclusively from a reduction in

human exposure to hazardous pollutants. See NMA Pet.

at 14, 25; UARG Pet. at 19. This analytical approach would

be completely contrary to all generally accepted methods

of economic analysis, including EPA’s own, peer-reviewed

guidelines, and would not survive judicial review.”

14. National Center for Environmental Economics, EPA,

Guidelines for Preparing Economic Analyses at 11-1 to 11-2 (Dec.

2010), available at http-//yosemite.epa.gov/ee/epa/eerm.nsf/vwA N/

EE-0568-50.pdf/$file/EE-0568-50.pdf. This methodology for

determining benefit-cost analysis was peer-reviewed and modified

to reflect the comments of the EPA Science Advisory Board. EPA

Science Advisory Board, Environmental] Economics Advisory

Committee, Advisory on EPA's Guidelines for Preparing Economic

Analyses (2008), available at http-//yosemite.epa.gov/sah/sabproduct.

nsf/559B838F 18C36F078525763C0058B32F/$File/EPA-SAB-

09-018-unsigned.pdf. See also, “Combined Brief of (I) Institute

for Policy Integrity, (II) American Thoracic Society, American

College of Preventive Medicine, American College of Occupational!

and Environmental Medicine, National Association for the Medical

Direction of Respiratory Care, and American College of Chest

Physicians, and (III) Environmental Law Professors William W.

Buzbee, Jody Freeman, Oliver A. Houck, Richard J. Lazarus, Robert

V. Percival, and Zygmunt J.B. Plater, as Amici Curiae in Support of

Respondent,” in White Stallion Energy Ctr. LLC v. EPA, DC. Cir.

Dkt. No 12-1100 (Jan. 29, 2013), at 5 (citing E.J. Mishan & Euston

17

Instead, EPA properly calculated the benefits and costs of

the Rule in accordance with universally accepted economic

principles. See AAP Br. at II.B.

3. The Toxics Rule does nothing more than level

the playing field, counteracting the economic

disincentive to pollution control, and does not

threaten reliability.

Petitioners’ unwavering focus on total cost of the Toxics

Rule is intended to imply that the emission standards

established in the Rule are onerous and unreasonable, but

that is not the case. The cost of compliance is a function

of the large number of power plants that have escaped

regulation and remain uncontrolled; if anything it is an

indication of how urgently the Rule is needed. The emission

standards in the Toxics Rule are achievable by all types

of facilities through the application of widely available

and well-understood control technologies already in place

at many plants. In nearly every case, EPA imposed only

Floor Standards, meaning that the Rule requires power

plants to do nothing more than match the performance of

their best performing peers. See 77 Fed. Reg. at 9,439."

Quah, Cost Benefit Analysis 104 (5th ed. 2007), Dallas Burtraw et

al, Ancillary Benefits of Reduced Air Pollution in the U.S. from

Moderate Greenhouse Gas Mitigation Policies in the Electricity

Sector, 45 J. Envtl. Econ. & Mgmt. 650, 651 (2003), Richard L.

Revesz & Michael A. Livermore, Retaking Rationality 55—65 (2008));

Christopher C. DeMuth & Douglas H. Ginsburg, Rationalism in

Regulation, 108 Mich. L. Rev. 877, 888 (2010).

15. These “best performers” have been equipped with

emission controls because they are newer, or because they are in

states that have imposed more stringent standards than EPA has

heretofore required. See 76 Fed. Reg. at 25,022-25,024; see also

State Resp. Br. at ITI.

18

In fact, EPA found that 69 coal-fired units already met all

of the Rule’s standards, without any further investment.

77 Fed. Reg. at 9,387.* Contrary to petitioners’ doomsday

predictions, these cleaner plants have continued in

business, even while suffering a competitive disadvantage

to dirty, uncontrolled plants. The Toxics Rule will go a

long way to eliminating this disadvantage by requiring

those uncontrolled plants to install and operate emission

controls.

EPA's nearly exclusive use of Floor Standards

is significant for another reason: it contradicts

petitioners’ portrait of an agency determined to regulate

as aggressively as possible. Had that been EPA’s

motivation, EPA would certainly have adopted more

aggressive emission standards under the authority of

Section 112(d)(2). 42 U.S.C. § 7412(d\(2). That provision

consigns the stringency of emission standards to a series

of EPA administrative judgments about achievability,

cost, non-air-quality health and environmental impacts

and energy requirements, and even expressly authorizes

a prohibition on hazardous emissions. Jd. All of these

judgments would fall squarely within the protection of

Chevron deference. Instead of exploiting this potent

statutory authority to adopt more stringent standards,

EPA imposed the least stringent standards the statute

allows. See 77 Fed. Reg. at 9,439." The basic process of

16. See also, Response to Comments Vol. 1 at 435 (C.A. App.

JA02102).

17. EPAdid adopt a more stringent limit on mercury emissions

from lignite-fired power plants under Section 112(d)(2). 77 Fed.

Reg. at 9,367 tbl. 3. Some petitioners below challenged EPA’s

application of the decisionmaking criteria in that section, but

19

setting Floor Standards is largely ministerial: collect

emissions data; determine best performing 12%; average

results. See 42 U.S.C. § 7412(d)(3). The Toxics Rule’s Floor

Standards are based on real world performance by rea!

operating power plants. They are not based on the sort

of result-oriented exercise of administrative discretion of

which petitioners accuse EPA. In perfect harmony with

the Congressional mandate animating Section 112, it is

petitioners’ cleaner industry peers that have set the bar

for performance under the Toxics Rule, not EPA.

Petitioner UARG suggests that this case has “great

national importance” because EPA “brushed aside”

“twlith little consideration” a litany of concerns raised

in comments on the proposed rule, including concerns

regarding “electric reliability.” UARG Pet. at 33-34.

It is undeniably true that many concerns were raised

by many parties in the comment process. Most of the

concerns recited in UARGQ’s brief are typical economic

considerations that were evaluated in EPA's benefit-cost

analysis. Jd. (citing “Economic Hardship” discussion, 77

Fed. Reg. at 9,413-9,414, UARG App. 41la-416a). Far

from showing that EPA gave “little consideration” to the

comments, EPA’s responses demonstrate open-minded

consideration of the comments received, some of which

resulted in changes in the final rule. See, e.g., 77 Fed. Reg.

at 9,376-9,386; id. at 9,413 (“The EPA has updated its

analysis to reflect the final MATS.”). In the end, however,

EPA must base its actions on its own well-considered,

thorough analysis, informed but not controlled by the

comments it receives.

the Court of Appeals unanimously rejected their claims. White

Stallion Energy Ctr., 748 F.3d at 1251, NMA App. 53a.

20

EPA gave especially close attention to the issue

of electric reliability. In the final rulemaking, EPA

summarized the many comments it received on this

issue, some suggesting the Rule would compromise

reliability, some suggesting the opposite.’* 77 Fed. Reg.

at 9,406-9,407, UARG App. 379a-383a. EPA painstakingly

addressed each of these concerns, adjusting its own

analysis of plant retirements based on revisions to the

final rule and concluding in the end that the Toxics Rule

would not adversely affect reliability. 77 Fed. Reg. at

9,407-9,411, UARG App. 383a-402a. EPA found more than

adequate evidence in the administrative record to support

its conclusion.”

UARG cites in its brief a one-page 2014 news

bulletin regarding power plant retirements predicted

in a preliminary modeling report by the U.S. Energy

Information Agency. UARG Pet. at 20, 34. This information

does not come from the administrative record, but more

importantly it does not prove any error in judgment on

EPA's part. In fact, the lead line of the article points the

blame for retirements on other causes, with no mention

of the Toxics Rule or any other regulatory burden: “Coal-

fired power plants in the United States have been under

18. See Exelon Comments on Proposed Toxics Rule at 21-38

(C.A. App. JA00842-859).

19. EPA offered even more fulsome analysis of this issue in its

repsonses to comments. See, e.g., U.S. Environmental Protection

Agency, EPA's Responses to Public Comments on EPA's National

Emission Standards for Hazardous Air Pollutants from Coal-

and Oil-Fired Electric Utility Steam Generating Units Vol. 2

at 290-96 (Dec. 2011) (Dkt. No. EPA-HQ-OAR-2009-0234-20126

(Attachment)).

21

significant economic pressure in recent years because

of low natural gas prices and slow electricity demand

growth.” As UARG certainly knows, the decision to

retire a power plant is a complicated one that involves

many factors. Environmental regulatory requirements

are relevant factors, but so are fuel costs, electricity

demand and prices, facility age and many more. At the

present time, the greatest threat to financial viability

of coal-fired plants is not the Toxics Rule or any other

environmental regulation, but low electricity prices due to

increased availability of cheap natural gas.” EPA properly

determined that the Toxics Rule does not pose a threat

to electric reliability.

B. EPA Faithfully Followed Congress’ Instructions

With Respect To Cost.

1. EPA’s approach is consistent with the statutory

structure.

It is important to all businesses that agencies take

cost into account when they regulate, and Industry

Respondents are no different. However, the scope of

agency discretion is delineated by Congress. As this Court

has recognized, Congress does not always expressly forbid

20. U.S. Energy Information Administration, Today in Energy,

AEO2014 Projects More Coal-Fired Power Plant Retirements by

2016 Than Have Been Scheduled (Feb. 14, 2014), available at http://

www.eia.gov/todayinenergy/detail.cfm?id=15031 (last visited Oct.

12, 2014).

21. U.S. Energy Information Administration, Annual Energy

Outlook 2014, IF-34 (Apr. 2014), available at http://www.eia.gov/

forecasts/aeo/pdf/0383(2014).pdf.

22

or require agencies to consider cost. More commonly

Congress says nothing about cost at all, silence that

this Court has taken as a signal that Congress chose

not to “tie the agency’s hands as to whether cost-benefit

analysis should be used.” Entergy Corp. v. Riverkeeper,

Inc., 556 U.S. 208, 222 (2009). EPA’s consideration of cost

in determining emission limits, but not in determining

whether to regulate power plants, is consistent with

the statute and this Court’s precedent. It is petitioners

who argue for a radical departure from that precedent.

Petitioners ask the Court to adopt a new universal

judicial rule that requires all agencies to consider cost in

every stage of a regulatory decision, unless the statute

explicitly forbids consideration of cost. See UARG Pet. at

30. Petitioner UARG argues that the Court “has never

squarely faced” this issue, id. at 30, but it has, and each

time the Court has eschewed a bright line rule such as

the one petitioners urge the Court to adopt here. See, e..,

Whitman v. American Trucking Ass’ns, 531 U.S. 457, 469

(2001); Entergy Corp., 556 U.S. at 221-23; Union Elec. Co.

v. EPA, 427 U.S. 246, 256-58 (1976).

Even in the very narrow context of Section

112(n)(1)(A), the rule that petitioners seek would conflict

with Congress’ carefully constructed scheme. In Section

112, Congress established explicit stages in the standard-

setting process, and prescribed different roles for cost

in each. In Section 112(d)(2), Congress directed EPA to

adopt standards that reflect the “maximum reduction ...

achievable,” but expressly required EPA to consider cost

and other factors. 42 U.S.C. § 7412(d)(2). In contrast, in

Section 112(d)(3), Congress directed EPA to calculate

the Floor Standards without regard to cost or any other

factor, basing those minimum standards only on data from

existing sources. Jd. at § 7412(d)(3). These data-driven

23

Floor Standards consider cost implicitly, but EPA cannot

consider cost as a basis to relax these standards. See

White Stallion, 748 F.3d at 1239, NMA App. 27a; Nat’l

Lime Ass’n., 233 F.3d at 640.

Contrary to this scheme, petitioners argue that EPA

can, and indeed must, consider cost when determining

whether to regulate hazardcus pollutants from power

plants to begin with. This cannot be so. Congress explicitly

withheld from EPA any discretion to use cost as a reason

to relax the Floor Standards. Congress certainly could not

have intended to require that EPA use cost as a reason not

to regulate these sources at all. Otherwise, the constraints

Congress imposed in Section 112(d)(3) would be illusory;

if EPA concluded that the minimum standards were too

costly, EPA could simply decide, as petitioners urge, not

to impose any standards. Congress, not EPA, made cost

irrelevant until all sources meet the minimum standard

dictated by the best performing sources, and only after

this bar is cleared may EPA consider cost. State Resp.

Br. at I; AAP Br. at I.B.

Furthermore, as a practical matter, EPA cannot

reliably assess compliance costs until after listing, when

it develops emission standards. Until EPA determines

the Floor Standards, and considers requiring additional

emission reductions under Section 112(d)(2), EPA cannot

possibly fulfill its statutory mandate to evaluate “the cost

of achieving such emission reduction, and any non-air

quality health and environmental impacts and energy

requirements[.]” See 42 U.S.C. § 7412(d)(2). This analysis

requires a detailed understanding of what emissions

limits are achievable, what equipment will be required to

achieve those limits, and what impacts on health and the

24

environment will result. Under Petitioners’ interpretation,

EPA would be required to formulate emission standards

in order to assess costs, even before determining whether

to regulate power plants at all.

2. The cost burdens of the Toxics Rule are

distributed equitably, and in a manner

consistent with Congressional intent.

Congress’ vision of Section 112 could not be more clear

from its structure. By tethering the minimum emission

standards to the best performing sources, Congress

ensured that the worst polluters in each category would

be forced to upgrade their facilities. In the electric power

sector, this leveling scheme will not only improve human

health and air quality, but will improve the operation of

the electric power markets, eliminating counterproductive

incentives that increase pollution.

Petitioners portray the costs of the Toxics Rule as

monolithic, and invoke an ironically populist theme that al]

electricity consumers will bear the burden of these costs.

Michigan Pet. at 2, 12. The real world is not so simple. As

explained above, uncontrolled power plants have enjoyed

a price advantage in electricity markets that has allowed

them to run more frequently and reap higher profits than

similar plants required to operate emission controls. Air

quality is one casualty of this price advantage, but owners

of cleaner generation units such as Industry Respondents

have also suffered direct economic harm, though their

impacts on the environment have been smaller.

The Toxics Rule will go a long way to eliminate this

inequity. The costs of the Rule will fall primarily on power

25

plant owners that have done the least to control emissions,

and reaped the greatest economic advantage from their

underperformance. At the other end of the spectrum, the

best performing power plants already meet the standards.

Those best performers should expect to run more often,

a boon both to air quality and to their shareholders.

Because there is ordinarily surplus generation capacity

on the system, these changes in cost structure are not

always shifted directly to retail electricity consumers, as

petitioner Michigan suggests. See Michigan Pet. at 2, 12.

Rather, the increased operating costs that the Toxics Rule

will impose on previously uncontrolled power plants wil!

change the order in which power plants are dispatched,

not necessarily the price that will be paid to generators

during off-peak periods. With all power plants operating

under the same emission standards, the electricity market

will still function to minimize cost, but consumers will no

longer pay for that minimized cost with their health. The

economic burden of the Toxics Rule will rest on the worst

performing power plants, in accordance with Congress’

design.

CONCLUSION

Petitioners argue that this Court should discard its

nuanced, contextual! approach to statutory interpretation

and respectful observance of the Separation of Powers

reflected in Chevron and its progeny. They argue that the

Judicial Branch should adopt a bright line rule requiring

the Executive Branch to consider cost absent an explicit

Congressional prohibition. They argue that the Court

shouid redefine the statutory criteria on which the Toxics

Rule is based despite the overwhelming public health

benefits promised by the Rule. And petitioners seek

26

these radical departures from precedent in the service of

the most parochial of interests: to protect the economic

advantage enjoyed by uncontrolled coal-fired power

plants, even at the expense of human health. The decision

of the Court of Appeals was correct on the merits, and the

petitions for writs of certiorari should be denied.

Respectfully submitted,

BRENDAN K. COoLLIns

Counsel of Record

Rosert B. McKinstry, Jr.

RONALD M. VARNUM

LORENE L. BouDREAU

BALLARD SPAHR LLP

1735 Market Street, 5lst Floor

Philadelphia, PA 19103-7599

(215) 665-8500

collins@ballardspahr.com

Counsel for Industry Respondents