# Petition for Writ of Certiorari — Util. Air Regulatory Grp. v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-47)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2014

## Text

IN THE

Supreme Court of the United States

UtTmty AIR REGULATORY GROUP,
Petitioner,

Vv.

UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit

PETITION FOR A WRIT OF CERTIORARI

F. WILLIAM BROWNELL
(Counsel of Record)
HENRY V. NICKEL

LEE B. ZEUGIN

LAUREN E. FREEMAN
ELIZABETH L. HORNER
HUNTON & WILLIAMS LLP
2200 PENNSYLVANIA AVE., NW
WASHINGTON, D.C. 20037
(202) 955-1500
bbrowneli@hunton.com

July 14, 2014 Counsel for Petitioner

a
WALSON-EPES PRINTING Co. INC. — (202) 789-0086 — WasHincTON, D.C. 20002

QUESTION PRESENTED

Emissions from electric utility steam generating
units (EGUs) were extensively regulated before the
Clean Air Act Amendments in 1990. Because these
Amendments required substantial additional reduc-
tions in EGU emissions of conventional pollutants
(e.g., sulfur dioxide and particulate matter) that
would also collaterally reduce emissions of hazardous
air pollutants (HAPs), Congress in 42 U.S.C.
§ 7412(n)(1)(A) called for regulation of only those
EGU HAP emissions found to pose a hazard to public
health after implementation of the other required
control programs. For any remaining HAP emissions
posing a residual health risk, Congress authorized
only “such regulation” as was “appropriate and nec-
essary.” The court below affirmed EPA’s use of this
“appropriate and necessary” standard to expand
EGU regulation to HAP emissions that pose no
health risk and, over Judge Kavanaugh’s dissent, to
exclude cost from any consideration in making regu-
latory decisions. The question presented is:

Whether, under a statutory directive to regulate
residual public health risks from EGU HAP emis-
sions only as “appropriate and necessary,” the Ad-
ministrator (i) may regulate EGU HAP emissions
that pose no hazard to public health, and (ii) may (or
must as a Chevron Step One matter) ignore costs in
determining “appropriate” regulation because more
narrowly drawn decisional standards in the same
statute require (or preclude) the Administrator from
considering costs.

‘i
PARTIES TO THE PROCEEDING

The following were parties to the proceedings in
the U.S. Court of Appeals for the District of Colum-
bia Circuit:

The Utility Air Regulatory Group, the petitioner
on review, was a petitioner and a respondent-
intervenor below.

The respondent herein, which was the respondent
below, is the United States Environmental Protec-

tion Agency.

Additional] petitioners below were White Stallion
Energy Center, LLC; American Public Power Associ-
ation; ARIPPA; Chase Power Development, LLC;
Edgecombe Genco, LLC; FirstEnergy Generation
Corporation; Gulf Coast Lignite Coalition; Institute
for Liberty; Julander Energy Company; Kansas City
Board of Public Utilities; Midwest Ozone Group; Na-
tional Black Chamber of Commerce; National Mining
Association; Oak Grove Management Company,
LLC; Peabody Energy Corporation; Puerto Rico Elec-
tric Power Authority; Spruance Genco, LLC; State of
Alabama; State of Alaska; State of Arizona; State of
Arkansas, ex rel. Dustin McDaniel, Attorney Gen-
eral; State of Florida; State of Idaho; State of Indi-
ana; State of Kansas; State of Michigan; State of
Mississippi; State of Missouri; State of Nebraska;
State of North Dakota; State of Ohio; State of Okla-
homa; Commonwealth of Pennsylvania; State of
South Carolina; State of Texas; Texas Commission
on Environmental Quality; Texas Public Utility
Commission; Railroad Commission of Texas; State of
Utah; Commonwealth of Virginia; State of West Vir-
ginia; State of Wyoming; Terry E. Branstad, Gover-
nor of the State of Iowa on behalf of the People of Io-

wa; Jack Conway, Attorney Genera] of Kentucky;
Tri-State Generation and Transmission Association,
Inc.; United Mine Workers of America; West Virginia
Chamber of Commerce, Inc.; Georgia Association of
Manufacturers, Inc.; Indiana Chamber of Commerce,
Inc.; Indiana Coal Council, Inc.; Kentucky Chamber
of Commerce, Inc.; Kentucky Coal Association, Inc.;
North Carolina Chamber; Ohio Chamber of Com-
merce; Pennsylvania Coal Association; South Caroli-
na Chamber of Commerce; The Virginia Chamber of
Commerce; The Virginia Coal Association, Incorpo-
rated; West Virginia Coal Association, Inc.; Wiscon-
sin Industrial Energy Group, Inc.; Wolverine Power
Supply Cooperative, Inc.; Chesapeake Climate Action
Network; Conservation Law Foundation; Environ-
mental Integrity Project; and Sierra Club.

Respondent-intervenors below (with respect to
certain petitions for review) were Commonwealth of
Massachusetts; State of California; State of Connect-
icut; State of Delaware; State of Illinois; State of Io-
wa; State of Maine; State of Maryland; State of Min-
nesota; State of New Hampshire; State of New Mexi-
co; State of New York; State of North Carolina; State
of Oregon; State of Rhode Island; State of Vermont;
City of Baltimore; City of Chicago; City of New York;
District of Columbia; County of Erie, New York; Cal-
pine Corporation; Chase Power Development, LLC;
Exelon Corporation; National Grid Generation LLC;
Public Service Enterprise Group, Inc.; Gulf Coast
Lignite Coalition; Institute for Liberty; Lignite Ener-
gy Council; National Black Chamber of Commerce;
National Mining Association; Oak Grove Manage-
ment Company, LLC; Peabody Energy Corporation;
Sunflower Electric Power Corporation; Tri-State
Generation and Transmission Association, Inc.; Util-

1V

ity Air Regulatory Group; White Stallion Energy
Center, LLC; American Academy of Pediatrics;
American Lung Association; American Nurses Asso-
ciation; American Public Health Association; Chesa-
peake Bay Foundation; Citizens for Pennsylvania's
Future; Clean Air Council; Conservation Law Foun-
dation; Environment America; Environmental De-
fense Fund; Izaak Walton League of America; Na-
tional Association for the Advancement of Colored
People; Natural Resources Council of Maine; Natural
Resources Defense Council; Ohio Environmental
Council; Physicians for Social Responsibility; Sierra
Club; and Waterkeeper Alliance.

A respondent below (with respect to certain
petitions for review) was Lisa Perez Jackson, Admin-
istrator, United States Environmental Protection
Agency. Ms. Jackson ceased to hold the office of Ad-
ministrator, United States Environmental Protection
Agency, on February 15, 2013; that office is currently
held by Gina McCarthy, Administrator, United
States Environmental Protection Agency.

v

RULE 29.6 DISCLOSURE STATEMENT

Petitioner Utility Air Regulatory Group (UARG)
is a not-for-profit association of individual electric
generating companies and national trade associa-
tions that participates on behalf of its members col-
lectively in administrative proceedings under the
Clean Air Act, and in litigation arising from those
proceedings, that affect electric generators. UARG
has no outstanding shares or debt securities in the
hands of the public and has no parent company. No

publicly held company has a 10% or greater owner-
ship interest in UARG.

vi

TABLE OF CONTENTS

Page
QUESTION PRESENTED .....................ceeccccesssssceeseeees i
PARTIES TO THE PROCEEDING ......................000005. il
RULE 29.6 DISCLOSURE STATEMENT ................. Vv
ee I ieriiniienittestennicmmncnitcianisichtaienincdenas vi
ee ee er i ccincsictecnssinsnssntecusecitinaninmman x
I IIIT vies snincicieiiansvedundadescinisiniuiiibietentiiaids 1
IIIT cnnntdicciesinnncasceiatssnneinssaieateinmneegietendaienieaini 1
er OE EO INO vecenevncstscsncesessescnniniesonsens 1
TTI ic ccniisiciainceicinneninaliniineedeanienidicioloniniiblesin 2
STATEMENT OF THE CASE ...................ccccccccecceeeeees 5

REASONS FOR GRANTING THE PETITION ....... 18

I. Certiorari Is Needed to Address
Whether a Broad Statutory Standard
Governing Regulation of a Specific
Subject Matter Gives an Agency
Authority to Ignore Factors Like Cost
and to Expand Regulation to Cover
Additional Regulatory Subjects ..................... 20

II. Certiorari Is Needed to Address
Whether an Agency That Has Authority
to Consider Costs May, Consistent With
Its Responsibility to Engage in
Reasoned Decisionmaking, Choose to
I OD ceinbiisiscsseniuinttccencisiacisenitmcaitaiiisit 28

vii
III.The Issue Here Is of Great National

VOLUME I

APPENDIX A: Order of the U.S. Court of
Appeals for the District of Columbia Circuit
Denying All Petitions for Review, Except the
Petition for Review in No. 12-1174, and Dis-

I te BR vecnceieavenszinevenisentenencesesonneees

APPENDIX B: Opinion of the U.S. Court of

Appeals for the District of Columbia Circuit .....

APPENDIX C: U.S. Environmental Protec-
tion Agency, National Emission Standards
for Hazardous Air Pollutants From Coal- and
Oil-Fired Electric Utility Steam Generating
Units and Standards of Performance for Fos-
sil-Fuel-Fired Electric Utility, Industrial-
Commercial-Institutional, and Small Indus-
trial-Commercial-Institutional Steam Gen-
erating Units; Final Rule, 77 Fed. Reg. 9304

GS. BE, TPE) GIRTON oc esccecvecevcescncscccesseccsvsnes

VOLUME II

APPENDIX D: Federal Statutes
Clean Air Act § 112, 42 U.S.C. § 7412 (ex-

i certacdsvebcissencontenssisentritecsisennasnnnnaias

APPENDIX E: 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), Docket
No. EPA-HQ-OAR-2009-0234-20126 (ex-

CE ii iecensnienntiticisinseetitdiamininiciniiaien

APPENDIX F: Utility Air Regulatory Group,
Comments on National Emission Standards
for Hazardous Air Pollutants From Coal- and
Oil-Fired Electric Utility Steam Generating
Units: Proposed Rule (Aug. 4, 2011), Docket
No. EPA-HQ-OAR-2009-0234-17775 (ex-

I recdinclotniicctrcisiehiettunsaiitassamidtinebatedemisbapeincdeie

APPENDIX G: U.S. Environmental Protec-
tion Agency, National Emission Standards
for Hazardous Air Pollutants From Coal- and
Oil-Fired Electric Utility Steam Generating
Units and Standards of Performance for Fos-
sil-Fuel-Fired Electric Utility, Industrial-
Commercial-Institutional, and Small Indus-
trial-Commercial-Institutional Steam Gen-
erating Units; Proposed Rule, 76 Fed. Reg.

24,976 (May 3, 2011) (excerpts)...................00..0..

ix
APPENDIX H: U.S. Environmental Protec-
tion Agency, Revision of December 2000
Regulatory Finding on the Emissions of
Hazardous Air Pollutants From Electric Util-
ity Steam Generating Units and the Removal
of Coal- and Oil-Fired Electric Utility Steam
Generating Units From the Section 112(c)
List; Final Rule, 70 Fed. Reg. 15,994 (Mar.

I a a em ctttietons

APPENDIX I: U.S. Environmental Protec-
tion Agency, Regulatory Finding on the
Emissions of Hazardous Air Pollutants From
Electric Utility Steam Generating Units; No-
tice of Regulatory Finding, 65 Fed. Reg.

See Te BE Ritter etcstcnnenseesecetcupenapenannneees

APPENDIX J: U.S. Environmental Protec-
tion Agency, EPA-453/R-98-004a, Study of
Hazardous Air Pollutant Emissions from
Electric Utility Steam Generating Units --
Final Report to Congress, Vol. 1 (Feb. 1998),
Docket No. EPA-HQ-OAR-2009-0234-3052

SUNIIIIITII ciccdcutthsesiatasmameidasidetoeseptutiniaunasdcumuntacnan

x
TABLE OF AUTHORITIES
Page
Cases:

Chevron U.S.A., Inc. v. Natural Res. Def. Coun-
A, Tne, GRE TET, GF Ge cccicceicccsstneniedstnnscciones 4

Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208

FDA v. Brown & Williamson Tobacco Corp., 529
EEE ROS AE EAE 35

Massachusetts v. EPA, 5649 U.S. 497 (2007)............. 24
Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000) .....21

Motor Vehicle Mfrs. Ass'n v. State Farm Mutual
Auto. Inc. Co., 463 U.S. 29 (1983).................. 30, 31

Natural Res. Def. Council, Inc. v. EPA, 824 F.2d
Sis Ss SPE setrannininctnintmntrrscninenmiincnnieniens 7

Natural Res. Def. Council v. EPA, 529 F.3d 1077
REE, I, III sisi soleil ccinchcnanreapianinameateasisiiiateieelcaniicd 14

New Jersey v. EPA, 517 F.3d 574 (D.C. Cir.
EERIE ere acer ameter Abe ee eee ET 12, 13

xi

Utility Air Regulatory Grp. v. EPA, 134 S. Ct.

I TU a classiichesideistsbieaiuscticbaatenaigecaetascailasenl 25, 27, 35
Whitman v. Am. Trucking Ass’ns, 531 U.S. 457
STI csciidsibissidonsaldcaladaiaahiiasiinisapcaniaoeiaaiis 21, 29, 32
Statutes:
Se ls. We I ici iscicassevcicicetcaicacinisiinnibncorsiee acaesaisn 1
Be ie Ie I eeiciastdnnisiinisarcieiienabintindecincnsibeuinaiuspeei 26
I i a 26
42 U.S.C. § 1857c-7(a)(1) (1970) ...... eee ecceeeeeeeeeseeees 6
42 U.S.C. § 1857c-7(b)(1)(B) (1970) -.0.0.. ecco 6
Clean Air Act, 42 U.S.C. §§ 7401, et seg. (2012)
er le Oe I iiiisdacinsscccnnditinasdiichenntieinetin 32
Se Ses Oe PID siiianichesdtcsitninisemniininthsnilonbiiaciuenets 21
A eae OF PN danidiicsnccisia ch ncidaeesabsciarblonieiincelbccanssiamiea 12
Se es Se PIED deriiscddciisnhnabditachdlsinasamdadidaiednubeoiion 12
We Oe 2, 4, 8, 9, 11, 12,
sshlalettitadeoihasasipeiagaisusiitdieibaliociebsasiied 13, 19, 20, 21, 22, 23
Ae Rs Oe PI TD Sitciaip ceed cetcicetciacceltladaabintncaninteas 22
A SR ATEas Oh PUD tip idhic iis thcepecinibinitipicnsititge 6
Oe Eas PD iiss cicinatnapiaittnenciaeeie 7, 12, 13, 22
OD Sie SPD tiirtiiaieceinnisscaiiccestinstniininiansiiiasi 13

Ge UI ais F FORD cxsisctnnicsecscinncesenensies 7, 14, 17, 22

CUSED (NIN... oe 23
i 6 Ne er 7
USC. 6 70meI) «ks. 22
42. U.S.C. § 7412(d)(8)(A) (i) ....ceececccesseesesseceseeoeesee 23
ee all 9
OUI, FI ions vasinivecccecserecctesccosc 23
42. U.S.C. § 741 2(f)(2)(A) «.......ceecoecsecoeeeeseee. 7, 14, 23
il er ee 14
42 U.S.C. § 7412(m)(6) ........--..cesceccescesceeees- 8, 9, 19
Ms OP gion acon acacia. 13
42. U.S.C. § 7412(n)(1)(A).......... 1, 2, 4, 8, 9, 10, 11,
PASC PH 13, 15, 16, 17, 19, 21, 22,
JO ates ho el nC OMY 23, 24, 25, 28, 29, 32, 35
42 U.S.C. § 7412(m)(1)(B) «.......c..cescecceccescecsesoscseee: 23
GG, UPON oss svesihcsecsiceiic cose 23
SURG Oe Me, 8
OO FI irish cesciscchoeseincsesces ek -
42 U.S.C. §§ 7651-765 1(0)......e.ceccescessecsesseeseesecscen #
Hg 1k Seca RGSS, ehhh Nene RNY Es 26
5 ecielative History:

Pub. L. No. 91-604, 84 Stat. 1676 (1970).................... 5

xiii
S. Rep. No. 101-228 (1989), reprinted in 1990

BEN Si cacceiscistenacenntevasurcbacscevesenonduensiboias 6
Regulations:
SERN etnias tenn AR ae es a 6
Federal Register:
40 Fed. Reg. 48,292 (Oct. 14, 1975) .0......ccccccccecsesseeeees 6
48 Fed. Reg. 15,076 (Apr. 6, 1983)..................c0000ce000- 6
52 Fed. Reg. 8724 (Mar. 19, 1987) .............cccccceee ee ceeeee 6
65 Fed. Reg. 79,825 (Dec. 20, 2000) ......-ccccecceessesssees 11
70 Fed. Reg. 15,994 (Mar. 29, 2005)............. 11, 12, 21
70 Fed. Reg. 28,606 (May 18, 2005)......................00. 12
76 Fed. Reg. 24,976 (May 3, 2011)............... 14, 15, 16,

hpideiniiiedtinendidaiiesediuinadeiansiginprnenditasanianninte 19, 21, 22, 32
77 Fed. Reg. 9304 (Feb. 16, 2012)...... 1, 13, 14, 15, 16,

nsapainsgtunideteniiieipinenehneirieriiinande 19, 22, 25, 28, 33, 34
79 Fed. Reg. 34,830 (June 18, 2014)...........0........0 36
Miscellaneous:

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:/Awww.eia.gov/todayinenergy/detail.cfm?
NEI ieadicidendijdiunhimiaitins ii vadgubicratiuiaiecdanaidaisienenosens 20, 34

xiv

U.S. Environmental Protection Agency, EPA's
Responses to Public Comments on EPA’s Na-
tional Emission Standards for Hazardous
Air Pollutants from Coal- and Oil-Fired Elec-
tric Utility Steam Generating Units, Vol. 1
(Dec. 2011), Docket No. EPA-HQ-OAR-2009-
GEG BRI oickhiciDctascenscinisasacscesninnncdabiaee

U.S. Environmental Protection Agency, Sup-
plement to the Non-Hg Case Study Chronic
Inhalation Risk Assessment in Support of
the Appropriate and Necessary Finding for
Coal- and Oil-Fired Electric Generating
Units (Nov. 2011), Docket No. EPA-HQ-
CAR ae i Be vic eccnenciscoccccesccnasiebiniatinmans

U.S. Environmental Protection Agency, EPA-
453/R-98-004a, Study of Hazardous Air Pol-
lutant Emissions from Electric Utility Steam
Generating Units -- Final Report to Con-
gress, Vol. 1 (Feb. 1998), Docket No. EPA-
HQ-OAR-2009-0234-30B2 ..00.0.......ccccccessseseeeeeeenens

PETITION FOR A WRIT OF CERTIORARI

The Utility Air Regulatory Group (UARG) re-
spectfully petitions for a writ of certiorari to review
the judgment of the United States Court of Appeals
for the District of Columbia Circuit dismissing its pe-
tition to review a rule of the United States Environ-
mental Protection Agency (EPA) titled “National
Emission Standards for Hazardous Air Pollutants
from Coal- and Oil-Fired Electric Utility Steam Gen-
erating Units,” 77 Fed. Reg. 9304 (Feb. 16, 2012) (the
Final Rule); Petition Appendix (Pet. App.) 105a-476a.

OPINIONS BELOW

The majority opinion of the D.C. Circuit is report-
ed at 748 F.3d 1222 (D.C. Cir. 2014) (per curiam),
and reproduced at Pet. App. 3a-72a. The dissent of
Judge Brett Kavanaugh is reproduced at Pet. App.
73a-104a. Relevant excerpts of the Final Rule are
reproduced at Pet. App. 105a-476a.

JURISDICTION

The D.C. Circuit entered judgment denying (and,
in the case of No. 12-1174, dismissing) the petitions
for review on April 15, 2014. Pet. App. la-2a. This
Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS

Section 112(n)(1)(A) of the Clean Air Act (CAA),
42 U.S.C. § 7412(n)(1)(A), provides:

2
(n) Other provisions
(1) Electric utility steam generating units

(A) The Administrator shal] perform a
study of the hazards to public health reasona-
bly anticipated to occur as a result of emis-
sions 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 shall report
the results of this study to the Congress with-
in 3 years after November 15, 1990. The Ad-
ministrator 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 ap-
propriate and necessary after considering the
results of the study required by this subpara-
graph.

This provision and additional excerpts from CAA
§ 112, 42 U.S.C. § 7412, are reproduced at Pet. App.
477a-505a.

INTRODUCTION

Imagine a situation in which Congress has in-
structed a regulatory agency to consider adopting a
legislative rule to address “hazards to public health”
that might remain after the implementation of other
emission reduction programs, while further instruct-

3

ing the agency to regulate those residual public
health risks only as “appropriate and necessary.”
Further imagine that, in response to this congres-
sional instruction, the agency adopts a rule that, by
the agency’s own analysis, will impose costs on socie-
ty on the order of $9.6 billion per year while realizing
public health benefits of some $4-6 million a year: a
ratio of $1 of “benefit” for every $1,500 spent. Now
imagine that, in justifying this outcome, the agency
concludes that ignoring costs in making the “appro-
priate and necessary” judgment is consistent with
congressional intent and relieves the Agency of any
obligation to explain why spending $1,500 to realize
each $1 of benefit is “appropriate” regulation. Final-
ly, imagine that the Agency then reverses course and
interprets “appropriate” to give it authority to base
regulation not on the singular “hazards to public
health” criterion specified by Congress but also on an
“environmental effects” criterion of its own making.

Now, step through the Looking-Glass and further
imagine that, on judicial review, the agency action is
affirmed on the basis of the court’s conclusion that,
given the “open-ended,” “ambiguous,” and “inherent-
ly context-dependent” nature of the word “appropri-
ate,” the agency was permitted both to ignore costs
and to expand regulation to cover emissions chat
pose no health risk. In other words, precisely be-
cause the decisional standard “appropriate” is so
broad, the agency may ignore costs or presumably
any other factor encompassed by that broad and
“open-ended” grant of regulatory authority but may
use that same “appropriate” language to override

4

statutory limits on the type of risks that may be reg-
ulated.

That situation is this case. In dissenting from the
panel’s decision on “cost,” Judge Kavanaugh ob-
served that the “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.” Pet.
App. 78a. The panel majority disagreed, holding
that because other provisions in 42 U.S.C. § 7412 ex-
pressly require EPA to take costs into consideration,
EPA is permitted (if not required) to remove costs
from the decisional equation in determining “appro-
priate” regulation of hazardous air pollutant (HAP)
emissions from electric utility steam generating
units (EGUs). If, as Judge Kavanaugh reasoned, the
cost of compliance is normally a relevant factor in
“ordinary regulatory analysis,” the panel majority's
decision leaves one to ponder how EPA's interpreta-
tion of 42 U.S.C. § 7412(m)(1)(A) to exclude costs en-
tirely from consideration could possibly be “based on
a permissible construction of the statute.” Cf. Chev-
ron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 843 (1984).

Can a statutory standard that is “broad and all-
encompassing,” Pet. App. 88a, be construed to ex-
clude a factor normally relevant under that “all-
encompassing” standard (in this case, “costs”), solely
on the ground that the statute in other provisions
contains narrower decisional standards that either
expressly require (or expressly preclude) considera-

5

tion of that same factor? And if consideration of
costs is at least permissible under such a broad stat-
utory standard (as even EPA appears to concede),
does an agency's fundamental obligation to engage in
reasoned decisionmaking require consideration of
that factor? Treating a broad and all-encompassing
statutory standard as a delegation of authority to se-
lect or to ignore decisional criteria as needed to pro-
duce a desired result would give agencies unlimited
discretion to create their own decisional standards,
as EPA has done here.

In this case, EPA’s decision to ignore entirely the
costs of its decision has led to one of the most far-
reaching and costly rules — if not the most costly rule
_ ever imposed under the CAA. Many regulatory
statutes besides the CAA also contain similar deci-
sional standards that, by their breadth, compel con-
sideration of every factor affecting the potential costs
and benefits of a particular type of regulatory action
(here “public health hazards”). Regulatory agencies
cannot be allowed to create their own decisional
standards, picking and choosing relevant factors,
while at the same time expanding the scope of the
regulatory subject matter, whenever Congress calls
upon them to regulate a specific subject only as “ap-
propriate,” or in the “public interest,” or where “rea-
sonable.”

STATEMENT OF THE CASE

1. Section 112 of the CAA, as enacted in 1970,
Pub. L. No. 91-604, 84 Stat. 1676, 1685 (1970), re-
quired EPA to determine whether sources within an

6

industrial category released any HAP in amounts
that were reasonably anticipated to result in “an in-
crease in mortality or an increase in serious ... ill-
ness,” and to regulate those HAPs as necessary to
protect public health with an “ample margin of safe-
ty.” 42 U.S.C. § 1857c-7(a)(1), (b)(1)(B) (1970). Un-
der this provision, EPA regulated HAPs emitted
from source categories other than EGUs. See 40
C.F.R. Part 61.

2. Prior to 1990, in each case where EPA evaluat-
ed EGU HAP emissions for possible regulation under
42 U.S.C. § 7412, EPA found that those HAP emis-
sions did not pose any significant public health risks.
For example, EPA found in 1975 and again in 1987
that “coal-fired power plants ... do not emit mercury
in such quantities that they are likely to cause the
ambient mercury concentration to exceed” a level
needed to “protect the public health with an ample
margin of safety.” 40 Fed. Reg. 48,292, 48,297,
48,298 (Oct. 14, 1975); 52 Fed. Reg. 8724, 8725 (Mar.
19, 1987) (reaffirming mercury conclusion); see also
48 Fed. Reg. 15,076, 15,085 (Apr. 6, 1983) (EGU ra-
dionuclide emissions do not pose a public health haz-
ard).

3. In the 1990 CAA Amendments, Congress con-
cluded that this risk-based approach to HAP regula-
tion was too time-consuming and cumbersome for
most categories emitting HAPs. See S. Rep. No. 101-
228, at 131-33 (1989), reprinted in 1990 U.S.C.C.A.N.
3385, 3516-18. To solve this problem, Congress iden-
tified 189 HAPs in 42 U.S.C. § 7412(b) and instruct-

7

ed EPA in 42 U.S.C. § 7412(c) to list categories of
“major” stationary sources of these HAPs based on
the amounts of HAPs they emit. Such listing then
triggered an obligation for EPA to establish “maxi-
mum achievable control technology” (MACT) emis-
sion standards under 42 U.S.C. § 7412(d), based on
the emission reductions achieved in practice by the
best controlled similar sources. Jd. § 7412(d)(3).
EPA was also authorized to list and regulate smaller,
non-major (i.e., area) sources separately under 42
U.S.C. § 7412(c) and (d) using a less stringent regu-
latory standard.

Although this new MACT technology-based ap-
proach to regulation of HAPs departed from the his-
toric risk-based approach, Congress also retained a
“residual risk” component to the § 7412 regulatory
program for those source categories subject to
MACT. Under 42 U.S.C. § 7412(f)(2)(A), following
the establishment of MACT standards, additional
emission standards are required where necessary to
protect public health or the environment. In setting
such residual risk standards, the Administrator must
consider “cost” as well as other factors.!

‘ In preventing “adverse environmental effectis},” EPA is re-
quired to consider “costs, energy, safety, and other relevant fac-
tors.” 42 U.S.C. § 7412(f)(2)(A); Pet. App. 492a. In addressing
residual health risk, the Administrator is to provide an “ample
margin of safety,” as construed under the 1977 CAA. Id. In
Natural Resources Defense Council, Inc. v. EPA, 824 F.2d 1146
(D.C. Cir. 1987), the court interpreted “ample margin of safety”
to require consideration of costs.

8

4. As part of the 1990 CAA Amendments, Con-
gress imposed substantial additional control re-
quirements on EGU emissions of non-hazardous, or
“conventional,” pollutants.? Because implementation
of these controls for conventional pollutants (e.g., flue
gas desulfurization systems or “scrubbers” for sulfur
dioxide emissions and fabric filters or electrostatic
precipitators for particulate matter emissions) would
also reduce HAP emissions, Congress in 42 U.S.C.
§ 7412(n)(1)(A) required that EPA treat EGUs differ-
ently from every other source category regulated un-
der § 7412.

Largely similar to 42 U.S.C. § 7412(m)(6) (a pro-
vision that calls for “necessary and appropriate” reg-
ulation of residual “health” and “environmental”
risks from HAPs deposited in the Great Lakes,°
§ 7412(n)()(A) calls for “appropriate and necessary”
regulation of any residual public health risks from
EGU HAP emissions that remain after regulation
under the other emission reduction programs of the

2 42 U.S.C. §§ 7491-7492 (Regional Haze), §§ 7501-7515 (Nonat-
tainment), §§ 7651-765 1(0) (Acid Rain).

3 In 42 U.S.C. § 7412(m)(6) (Pet. App. 499a-500a), Congress
called for regulation of residual risks associated with HAPs be-
ing deposited in the Great Lakes and other waters based on a
study and report to Congress, if EPA finds that the “provisions
of ... section [7412] are inadequate to prevent serious adverse
effects to public health” or “serious ... environmental effects.”
Upon making such a health or environmental residual risk find-
ing, EPA must “promulgate ... such further emission standards
or control measures as may be necessary and appropriate” to
protect public health or the environment.

9

1990 Amendments. Specifically, § 7412(n)(1)(A) di-
rected EPA by 1993 to undertake a study and report
to Congress on any “hazards to public health” posed
by EGU HAP emissions. Pet. App. 500a. Based on
that study (known as the Utility Study), public
health hazards that remain “after imposition of the
requirements of this [Act]” would be identified for
possible regulation. Jd. As part of that Utility
Study, EPA was to “develop and_e de-
scribe ... alternative control strategies for [EGU
HAP] emissions which may warrant regulation un-
der this section.” Id.

Section § 7412(n)(1)(A) contrasts to the other re-
sidual risk provisions mentioned above, 42 U.S.C.
§ 7412(f) and (m)(6), which authorize regulation of
residual adverse “public health” and “environmental
effects,” by calling for regulation of only “hazards to
public health” that remain after implementation of
other EGU emission reduction programs. These re-
sidual public health risks from EGU HAP emissions
are to be regulated “under this section” — i.e., under
42 U.S.C. § 7412, as opposed to other CAA regulatory
programs — and then only if EPA found such regula-
tion is “appropriate and necessary after considering
the results of the study” that addressed and identi-
fied only public health risks. 42 U.S.C.
§ 7412(n)(1)(A) (emphasis edded).

10

5. The universe of EGU HAPs evaluated in EPA's
Utility Study* was (i) mercury, (ii) non-mercury met-
al HAPs, (iii) acid gas HAPs (e.g., hydrogen chloride
and hydrogen fluoride), and (iv) organic HAPs and
dioxin. Consistent with its pre-1990 evaluations of
EGU HAP emissions, when EPA completed the Utili-
ty Study in 1998, EPA did not identify any “hazards
to public health” posed by any HAP emissions that
would remain after implementation of other CAA
programs. As a result, the Utility Study did not con-
tain any “appropriate and necessary” determination
under 42 U.S.C. § 7412(n)(1)(A). Utility Study at ES-
1; Pet. App. 636a.

Instead, EPA stated that it “believes that mercu-
ry from coal-fired utilities is the HAP of greatest po-
tential concern” and that “[flurther research and
evaluation are needed to gain a better understanding
of the risks and impacts of utility mercury emis-
sions.” Id. at ES-27; Pet. App. 637a. For three trace
metals (arsenic, nickel, and chromium), EPA noted
“potential concerns and uncertainties that may need
further study.” Jd. EGU acid gas emissions were
found to be at least an order of magnitude below
EPA’s health protective thresholds, and the health
risks for organic HAPs and dioxin were found to be
vanishingly small. Id. at 6-3.

‘ EPA, EPA-453/R-98-004a, Study of Hazardous Air Pollutant
Emissions from Electric Utility Steam Generating Units -- Fi-
nal Report to Congress, Vol. 1 (Feb. 1998), Docket No. EPA-HQ-
OAR-2009-0234-30652.

11

6. On December 20, 2000, well before EPA could
complete the data collection and research on mercury
it had said in the Utility Study was necessary to
make an “appropriate and necessary” determination,
then-departing Administrator Browner published a
“notice of regulatory finding” without any prior pub-
lic notice or opportunity to comment. This notice an-
nounced her conclusion that regulation of mercury
emissions from coal-fired EGUs and nickel emissions
from oil-fired EGUs was “appropriate and necessary”
under 42 U.S.C. § 7412, and that she was therefore
listing EGUs as a source category under 42 U.S.C.
§ 7412(c). 65 Fed. Reg. 79,825, 79,830 (Dec. 20,
2000); Pet. App. 630a. As EPA explained, this notice
of regulatory finding was not a final agency action
and would be the subject of future rulemaking. 7d.
at 79,831; Pet. App. 633a-634a.

7. In 2004, EPA began the promised rulemaking
under § 7412(n)(1)(A) to address whether it was “ap-
propriate and necessary” to regulate HAP emissions
from coal- and oil-fired EGUs under § 7412. On
March 29, 2005, EPA issued a final rule in which it
found that because “new information demonstrates
that the level of Hg [mercury] emissions projected to
remain ‘after imposition of section [74]10(a)(2)(D)
does not cause hazards to public health ... it is not
appropriate to regulate coal-fired Utility Units under
section [74]12 on the basis of Hg emissions.” 70 Fed.
Reg. 15,994, 16,004 (Mar. 29, 2005); Pet. App. 591a-
592a. EPA similarly concluded that (i) regulation of
nickel emissions from oil-fired EGUs was neither
“appropriate” nor “necessary,” id. at 16,007-08; Pet.

12

App. 604a-608a, and (ii) coal-fired EGU emissions of
other non-mercury HAPs were too small to warrant
regulation. Id. at 16,006-07; Pet. App. 598a-604a.

Having found, after notice-and-comment rule-
making, that Administrator Browner's December
2000 notice of regulatory finding “lacked foundation,”
and that regulation under 42 U.S.C. § 7412 was not
“appropriate and necessary, EPA determined that
the predicate for listing EGUs under 42 U.S.C.
§ 7412(c) was not met. Id. at 15,994; Pet. App. 545a.
EPA therefore removed EGUs from the list for § 7412
regulation, id., and at the same time promulgated
control technology regulations for EGU mercury
emissions under CAA § 111, 42 U.S.C. § 7411. 70
Fed. Reg. 28,606 (May 18, 2005). By doing so, EPA
ensured that EGU mercury emissions would contin-
ue to decrease even below the health protective emis-
sion levels that existed in 2005.

8. Numerous parties challenged EPA’s 2005 final
rule finding § 7412 regulation of EGU HAPs was nei-
ther “appropriate” nor “necessary,” as well as the ac-
companying rule setting 42 U.S.C. § 7411 technology-
based standards for mercury. On February 8, 2008,
the court vacated EPA’s decision to remove coal-fired
and oil-fired EGUs from the § 7412 list and, having
reinstated EPA’s earlier § 7412 listing of EGUs,
therefore vacated EPA’s § 7411 technology-based
standards for mercury. New Jersey v. EPA, 517

5 Under the CAA, a source category cannot be simultaneously
regulated under § 7411 and § 7412. 42 U.S.C. § 7411(d).

13

F.3d 574 (D.C. Cir. 2008). The court held that even if
listed erroneously for regulation under § 7412, once
listed, source categories could only be removed from
the 42 U.S.C. § 7412(c) list if the Agency made show-
ings required by 42 U.S.C. § 7412(c)(9) that were not
the same (e.g., requiring “environmental!” risk find-
ings) as the singular “public health” hazard “appro-
priate and necessary” standard in § 7412(n)(1)(A).
Id. at 581-82. Because EPA had not made the 42
U.S.C. § 7412(c)(9) delisting findings, the court found
that EPA’s § 7412(n) rule finding that § 7412 regula-
tion of EGU HAP emissions was neither “appropri-
ate” nor “necessary,” and removing EGUs from the
§ 7412 list, was not valid. Jd. at 583.

9. In 2011 and 2012, EPA conducted a remand
rulemaking, which resulted in the Final Rule at is-
sue here. 77 Fed. Reg. 9304 (excerpts reproduced at
Pet. App. 105a-476a). In that rule, EPA concluded
that its 2000 “appropriate and necessary” notice of
regulatory finding — a finding that only applied to
public health risks from mercury emissions from
coal-fired EGUs and nickel emissions from oil-fired
EGUs — was valid when made, and constituted a suf-
ficient basis for listing EGUs for regulation under
the MACT program. Jd. at 9320; Pet. App. 179a. As
the basis for this reversal of its 2005 rule, EPA cited
more recent information that EPA believed estab-
lished that (i) EGU mercury emissions pose a public
health hazard, (ii) other utility metal emissions (ar-
senic, chromium, and nickel) from a limited number
of EGUs pose health risks even though those risks
are less than risks that EPA had previously found

14

were protective of public health “with an ample mar-
gin of safety,”6 and (iii) acid gas EGU HAP emissions
pose no public health risk, but rather a potential risk
to the environment. Id. at 9361-62; Pet. App. 368a-
371a; 76 Fed. Reg. 24,976, 25,051 (May 3, 2011)
(proposed rule) (“Our case study ... of EGUs did not
indicate any significant potential for them to cause
any exceedances of the chronic RfC fi.e., health pro-
tective concentration] for HCl fhydrogen chlo-
ride}....”); Pet. App. 542a-543a.

Based on this record, EPA issued MACT emission
standards under 42 U.S.C. § 7412(d) not only for
EGU mercury emissions, but also for non-mercury
metal and acid gas emissions, and work practice
standards for organic substance emissions under 42
U.S.C. § 7412(h). In doing so, EPA rejected com-
ments explaining that only those EGU HAP emis-
sions that create a residual “hazard to public health”
after imposition of other CAA programs could be

® For example, EPA found under 42 U.S.C. § 7412(f)(2)(A) that
100-in-one million risk (a risk 20 times greater than the five-in-
one million risk EPA estimated for emissions of these three
HAPs from the EGU with the greatest risk) provides an ample
margin of safety and the D.C. Circuit affirmed that determina-
tion. Natural Res. Def. Council v. EPA, 529 F.3d 1077, 1080,
1082 (D.C. Cir. 2008) (affirming § 7412(f)(2A) EPA determina-
tion); see also EPA, Supplement to the Non-Hg Case Study
Chronic Inhalation Risk Assessment in Support of the Appro-
priate and Necessary Finding for Coal- and Oil-Fired Electric
Generating Units at 12 (Nov. 2011), Docket No. EPA-HQ-OAR-
2009-0234-19912 (noting highest EGU risk for non-Hg HAP
metal emissions).

15

regulated under § 7412, and then only to the extent
“appropriate and necessary.” 77 Fed. Reg. at 9325-
26, 9329-30; Pet. App. 205a-208a, 221a-227a.

EPA responded to this argument by construing 42
U.S.C. § 7412(m)(1)(A) as requiring MACT regulation
of every HAP emitted by every EGU if EPA finds on-
ly one HAP emitted by one or more EGUs creates a
residual “public health” risk or an “environmental”
risk. 77 Fed. Reg. at 9326; Pet. App. 365a; see also
76 Fed. Reg. at 24,988; Pet. App. 523a. Under this
new interpretation, 42 U.S.C. § 7412(n)(1)(A) re-
quires regulation of EGU HAP emissions that pose
no hazard to public health. Rather, according to
EPA, regulation of all EGU HAP emissions is “ap-
propriate and necessary” as long as emissions of a
single HAP by a single EGU present a residual pub-
lic health or environmental risk.

10. According to EPA’s own analyses, regulation
of all EGU HAP emissions from all EGUs would be
extraordinarily expensive — about $9.6 billion per
year. 77 Fed. Reg. at 9306; Pet. App. 115a. By com-
parison, EMA found the health benefits of HAP re-
ductions under its program would be extraordinarily
low (just $4-6 million, all from reducing mercury).
Id. at 9428; Pet. App. 461a.? Yet EPA found this

7 Of the EGU HAPs that it analyzed, EPA found that only mer-
cury reductions resulted in quantifiable health benefits. The
$4-6 million estimate represented EPA's calculation of the ag-
gregate public health benefit of avoided loss of IQ points from
implementation of the Final Rule. According to EPA, the rule
would prevent nationally the loss of a total of 511 IQ points to

16

gross imbalance of costs and benefits irrelevant un-
der the § 7412(n)(1)(A) “appropriate and necessary”
standard, based on its view that the term “appropri-
ate” could be read to preclude any consideration of
costs in making regulatory decisions for EGUs. Id.
at 9327 (“[I]t is reasonable to make the listing deci-
sion, including the appropriate determination, with-
out considering costs.”); Pet. App. 210a. Thus, for
example, even though EPA concluded that acid gas
emissions pose no health risk, and even though it
could not quantify any environmental risk associated
with hydrogen chloride emissions in the United
States, EPA imposed stringent requirements that
make the acid gas standards the most costly part of
the Final Rule® because regulation of these environ-
mental risks was “appropriate.” 76 Fed. Reg. at
25,016; Pet. App. 533a.

the most sensitive individuals (j.e., prenatally-exposed chil-
dren), an increment of two one-thousandths of an IQ point per
individual across the subject population. 77 Fed. Reg. at 9428;
Pet. App. 46la. No benefit from reducing EGU acid gas and
non-mercury metal emissions was quantified.

* About half of the costs of the Final Rule are associated with
acid gas emissions reduction. UARG, Comments on National
Emission Standards for Hazardous Air Pollutants From Coal!-
and Oil-Fired Electric Utility Steam Generating Units: Pro-
posed Rule at 258 (Aug. 4, 2011), Docket No. EPA-HQ-OAR-
2009-0234-17775 CUARG Comments”); Pet. App. 512a, and
UARG Comments, Attachment 15 at 6. The acid gas standards
added about $30 billion in additional capital costs. Jd. at 258;
Pet. App. 512a. See also id., Attachment 15 at 12, 15, and 16.

17

1l. Twenty-four States and numerous industry
and labor petitioners challenged the Final Rule be-
fore the D.C. Circuit. In that proceeding, a principal
argument of State, industry, and labor petitioners
(including UARG) was that EPA had impermissibly
interpreted 42 U.S.C. § 7412(n)(1)(A) to narrow the
“appropriate and necessary” decisional standard to
preclude consideration of “cost” as a relevant factor
while, at the same time, expanding the scope of regu-
lation to include pollutants that pose only residual
“environmental risks” and no “public health” risks.

12. The court below issued its opinion on April
15, 2014, denying (and, in one case, dismiseing) all
petitions for review. In rejecting petitioners’ argu-
ments, the panel held that EPA permissibly con-
strued § 7412(n)()(A) to require regulation of all
HAPs emitted by EGUs under 42 U.S.C. § 7412(d)
based on a finding that regulation of a single HAP is
“appropriate and necessary.” Pet. App. 4la. Moreo-
ver, the court endorsed EPA’s decision to regulate
EGU HAP emissions regardless of the cost of such
regulation. Jd. at 24a-36a. Judge Kavanaugh dis-
sented in part, on the grounds that it was both im-
permissible and unreasonable for EPA to determine
that regulation of EGU HAP emissions was “appro-
priate” without considering the cost of regulation.
Id. at 78a. The “key statutory term .. . ‘appropri-
ate,” Judge Kavanaugh reasoned, is “the classic
broad and all-encompassing term that naturally and
traditionally includes consideration of all the rele-
vant factors, health and safety benefits on the one
hand and costs on the other.” Jd. at 88a.

18
REASONS FOR GRANTING THE PETITION

This Court should grant certiorari to address an
issue of significance to the administration of the CAA
and similar regulatory statutes: whether a broad de-
cisional standard like “appropriate and necessary”
can be read simultaneously (i) to exclude an other-
wise relevant factor simply because Congress specifi-
cally addressed that factor in other, more narrowly
drawn decisional standards in the same statute, and
(u) to expand regulation beyond the targeted pollu-
tion at issue (i.e., residual “public health” risks) by
adding a new criterion for regulation (i.e., “environ-
mental” risk).

Under the panel majority's reasoning, because a
broad decisional standard (e.g., to regulate as “ap-
propriate and necessary,” or to set rates that are
‘Just and reasonable,” or to take action based on
“public interest and necessity”) does not explicitly list
decisional criteria, an agency is free to pick and
choose, without qualification, the criteria it applies
in making regulatory decisions under that standard.
Under this decision, even though broad public inter-
est standards are “commonly” used to ensure consid-
eration of a wide range of factors — all of the costs
and benefits of the targeted regulatory action -— an
agency can choose any one of those factors as the ba-
sis for its decision while ignoring others.

EPA's regulation of “acid gases,” the most costly
element of the Final Rule, illustrates how far EPA
has been permitted to depart from the statute and
how far the court below went to justify that depar-

19

ture. Section 7412(n)(1)(A) only authorizes EPA to
regulate EGU HAPs under § 7412 that present re-
sidual “hazards to public health,” and then only as
“appropriate and necessary.” Because EPA could not
find any residual public health risk associated with
EGU acid gas emissions, it interpreted the term “ap-
propriate” to override the “public health” hazard lim-
its in that provision and to authorize regulation of
“environmental” effects such as acid deposition. See
76 Fed. Reg. at 25,016; Pet. App. 533a. And because
under its companion interpretation of “appropriate”
it was precluded from considering costs, EPA rea-
soned, it could impose on EGUs under § 7412 a re-
quirement to install “scrubbers” and other sulfur di-
oxide control devices at a capital cost of about $30
billion — all to address an environmental effect (‘acid
deposition”) that Congress had already addressed at
length in Title IV of the CAA based on Congress’ own
balancing of costs and benefits.

Considered as a whole, the Final Rule is the most
costly rule ever issued by EPA. It imposes costs on
the utility industry of over $9 billion annually. 77
Fed. Reg. at 9306; Pet. App. 115a. It will contribute

® Compare 42 U.S.C. § 7412(m)(6); Pet. App. 499a-500a (identi-
fying residual “serious adverse ... public health” effects and “se-
rious or widespread environmental effects” in a “report” and
regulating them by applying a “necessary and appropriate” de-
cisional standard) with § 7412(n)(1)(A); Pet. App. 500a (identi-
fying residual “hazards to public health” in a “study” and regu-
lating them by applying an “appropriate and necessary” deci-
sional standard). See also supra note 3 and accompanying text.

20

to the retirement by 2016 of an estimated 1/6 of coal
capacity in the country (54 gigawatts out of total ca-
pacity of about 300 gigawatts). U.S. Energy Infor-
mation 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 (‘EIA Report”). The costs and
other impacts of this rule will ripple through the
economy. UARG Comments, supra note 8, at 257-59;
Pet. App. 511la-513a.

This Court should grant certiorari to address the
panel’s decision given its enormous economic and s0-
cial impacts as well as the importance of the panel’s
decision to the proper administration of the CAA and
other regulatory statutes with broad decisional
standards.

I. Certiorari Is Needed to Address Whether
a Broad Statutory Standard Governing
Regulation of a Specific Subject Matter
Gives an Agency Authority to Ignore Fac-
tors Like Cost and to Expand Regulation
to Cover Additional Regulatory Subjects.

EPA’s interpretation of the § 7412 “appropriate
and necessary” standard fundamentally changed in
2011 when EPA proposed the Final Rule at issue
here. In 2005, EPA interpreted this decisional
standard as encompassing consideration of costs in
determining whether to regulate only those specific
EGU HAP emissions that pose residual “hazards to
public health,” after consideration of emission reduc-

21

tions under other CAA programs. According to EPA,
“{njothing precludes EPA from considering costs in
assessing whether regulation of Utility Units under
section [74]12 is appropriate in light of all the facts
and circumstances presented.” 70 Fed. Reg. at
16,001 n.19; Pet. App. 576a (citing Michigan v. EPA,
213 F.3d 663 (D.C. Cir. 2000) (per curiam)).!°

Distinguishing this Court’s decision in Whitman
v. American Trucking Assn’s, 531 U.S. 457 (2001),
EPA observed that “the modest words ‘adequate
margin’ and ‘requisite’ in” 42 U.S.C. § 7409(b)(1) did
“not ‘leave room’ [for EPA] to consider cost” in estab-
lishing CAA national ambient air quality standards.
70 Fed. Reg. at 16,001 n.19 (quoting 531 U.S. at 466);
Pet. App. 576a. By contrast, the “appropriate and
necessary” language in 42 U.S.C. § 7412(n)(1)(A) is
not “modest” in scope. Rather, these are “broad
terms” that “leave room for consideration of costs in
deciding whether to regulate” under 42 U.S.C. § 7412
specific EGU HAP emissions still posing health haz-
ards, after implementation of EGU controls under
other provisions of the CAA. Id.

Six years later, a different EPA in a different
Administration embraced exactly the opposite con-
clusion: “We ... interpret the term ‘appropriate’ to
not allow for the consideration of costs....”. 76 Fed.

© In Michigan, the D.C. Circuit had found that “only where
there is ‘clear congressional intent to preclude consideration of
cost’ that we find agencies barred from considering cosets.” 213
F.3d at 678 (citations omitted).

22

Reg. at 24,988; Pet. App. 523a. Costs were not rele-
vant under the “appropriate and necessary” deci-
sional standard, EPA reasoned, due to the lack of “an
express statutory requirement that the Agency con-
sider costs in making the appropriate determina-
tion.” 77 Fed. Reg. at 9327 (emphasis added); Pet.
App. 210a.

In support of the conclusion that consideration of
costs is “not allowfed]” under the “appropriate”
standard, EPA cited other provisions of § 7412 with
narrow statutory standards that explicitly preclude
consideration of costs. For example, decisions to
regulate non-EGU source categories under § 7412
are based exclusively on numerical tonnage thresh-
olds, making cost irrelevant. 42 U.S.C. § 7412(a)(1),
(c). For source categories regulated under § 7412(d),
a “MACT floor” must be established based exclusive-
ly on the “best performing 12 percent” of similar
units in the source category. Again, only perfor-
mance, not cost, is relevant. 42 U.S.C.
§ 7412(d)(3)(A). According to EPA, these provisions
are evidence that Congress intended that cost not be
considered under the very different “appropriate and
necessary” regulatory standard of § 7412(n)(1)(A).
Final Br. for Resp’t at 53-54, White Stallion Energy
Ctr., LLC v. EPA, 748 F.3d 1222 (D.C. Cir. 2014) (No.
12-1100). In other words, according to EPA, a regu-
latory decision based on narrow criteria in one provi-
sion evidences a congressional intent to limit the fac-
tors normally relevant under a broad decisional
standard found elsewhere in the statute.

23

On review, the court below affirmed EPA’s new,
cost-blind interpretation of the § 7412(n)(1)(A) deci-
sional standard. Conceding that “the term ‘appro-
priate’ is ‘open-ended,’ ‘ambiguous,’ and ‘inherently
context-dependent,” Pet. App. 26a (quoting Sossa-
mon v. Texas, 131 S. Ct. 1651, 1659 (2011)), the pan-
el nevertheless refused to give effect to this “open-
ended” embrace of a broad range of relevant factors
because “[o]n its face, § [74]12(n)(1)(A) neither re-
quires EPA to consider costs nor prohibits EPA from
doing so.” Id.

According to the panel majority, “[t]hroughout
§ [74]12, Congress mentioned costs explicitly where
it intended EPA to consider them.” Jd. In all, the
panel majority identified six provisions in 42 U.S.C.
§ 7412 where the word “cost” or “costs” appeared (i.e.,
42 U.S.C. § 7412(d)(2), (d)(8)(A)(@), (m)(1)(B), and
(s)(2); Pet. App. 484a-485a, 488a, 500a-501a, and
502a), or for which the D.C. Circuit had found costs
relevant (i.e., 42 U.S.C. § 7412(f)(1)(B) and (f)(2)(A);
Pet. App. 491a and 492a). Pet. App. 26a-27a. Be-
cause Congress in these other provisions explicitly
provided that EPA is to take “cost” into account, the
panel majority reasoned, Congress could not “by us-
ing only the broad term ‘appropriate’ ... have intend-
ed ... that costs be considered ... in § [74]12(m)(1)(A).”
Id. at 27a.

But as Judge Kavanaugh explained, the “broad
term ‘appropriate” normally communicates Con-
gress’s expectation that costs will be taken into con-
sideration. Indeed, as this Court has observed, Con-

24

gress's use of “broad language” in the CAA does not
itself communicate “ambiguity,” see Massachusetts
v. EPA, 549 U.S. 497, 532 (2007), so much as it
“demonstrates breadth.” Id. (quoting Pennsylvania
Dep't of Corr. v. Yeskey, 524 U.S. 206, 212 (1998)); cf.
Sossamon, 131 S. Ct. at 1667 (While “[t]he majority
contends that the use of a ‘context-dependent’ word
like ‘appropriate’ necessarily renders the provision
ambiguous[,] ... the fact that the precise relief af-
forded by a court may vary depending on the particu-
lar injury to be addressed in a given case does not
render [the statutory provision] ambiguous; it simply
means that Congress meant for that provision to be
comprehensive.”) (Sotomayor, J., dissenting)). The
panel acted in a manner contrary to these estab-
lished principles of statutory construction in accept-
ing EPA’s decision that the “appropriate and neces-
sary’ decisional standard does “not allow[ }” any con-
sideration of costs.

The negative implications of EPA’s approach to
broad decisional standards are magnified by EPA’s
use of the “appropriateness” standard to justify regu-
lation of acid gases on the basis of environmental
harms, which the vanel also affirmed. Pet. App. 36a-
37a. Section 7412(n)({1)(A) limits regulation of EGU
HAPs to that which is “appropriate and necessary”
after considering a report that is only to identify re-
sidual “hazards to public health.” According to EPA,
because “appropriate” is a broad term that can in-
clude “environmental impacts,” it is “appropriate” to
regulate acid gases in the absence of any public
health hazard, and despite billions of dollars of costs,

25

because acid gas emissions can contribute to acid
deposition. 77 Fed. Reg. at 9310; Pet. App. 138a.
See supra note 8 and accompanying text.

Based on this reasoning, EPA required the elec-
tric utility industry to retrofit flue gas desulfuriza-
tion systems to limit an environmental effect that
Congress wrote an entire title in the CAA (i.e., Title
IV) to address. Title IV was based on Congress’s own
careful balancing of costs and benefits. Remarkably,
EPA would second-guess Congress’ decision on how
to regulate acid deposition without even weighing
the costs and benefits of that action, because it inter-
prets the broad “appropriate and necessary” deci-
sional standard as a congressional delegation to reg-
ulate acid deposition without any consideration of
costs!

As this Court recently observed, “[w]je expect
Congress to speak clearly if it wishes to assign to an
agency decisions of vast economic and political signif-
icance.” Utility Air Regulatory Grp. v. EPA, 134 S.
Ct. 2427, 2444 (2014) (internal quotation marks
omitted). Here, the Agency claims authority to im-
pose unbridled costs on a critical industry, to address
a matter extensively addressed by Congress under
another Title of the statute, claiming that this is
what Congress meant as “appropriate.” Especially in
this context, interpreting the term “appropriate” to
impose costly regulation to achieve a regulatory end
that Congress did not sanction (i.e., regulation of ad-
verse environmental effects under 42 U.S.C.
§ 7412(n)(1)(A)) is a reach too far.

26

More broadly, if EPA’s reasoning were accepted,
then any administrative agency responsible for ad-
ministering a broad regulatory decisional standard
could write its own decisional criteria to govern a
regulatory program and to expand that program be-
yond the congressional delegation. For example, if a
statute were to authorize only “such regulation of in-
terstate drug sales as is in the public interest,” the
reasoning below would allow the agency to expand
regulation to include drug manufacturing standards
(because the agency believed such regulation would
be in the “public interest”) and then to ignore factors
such as the health benefits of a drug and the cost of
regulation in controlling its manufacture and sale.
Numerous federal statutes contain similar broad de-
cisional standards that are candidates for such exec-
utive branch lawmaking."!

11 See, eg., 47 U.S.C. § 303 (‘the [Federal Communications]
Commission from time to time, as public convenience, interest,
or necessity requires, shall” exercise with respect to various
enumerated regulatory powers); 29 U.S.C. § 1347 (‘the [Pension
Benefit Guaranty Corporation] is authorized in any such case in
which the corporation determines such action to be appropriate
and consistent with its duties under this subchapter, to take
such action as may be necessary....”); 29 U.S.C. § 652(8) (an
“occupational safety and health standard” promulgated by the
Secretary of Labor is “a standard which requires conditions, or
the adoption or use of one or more practices, means, methods,
operations, or processes, reasonably necessary or appropriate to
provide safe or healthful employment and places of employ-
ment.”).

27

“Under our system of government, Congress
makes laws and the President, acting at times
through agencies like EPA, ‘faithfully execute[s]’
them.” Utility Air Regulatory Grp., 134 S. Ct. at
2446. While the power of executing the laws “neces-
sarily includes both authority and responsibility to
resolve some questions left open by Congress ... it
does not include a power to revise clear statutory
terms....” Id. Congressional direction to EPA to
regulate a residual “public health hazard” from spe-
cific EGU HAP emissions as “appropriate and neces-
sary” is not a delegation to an agency to create its
own program for regulating the environmental ef-
fects of acid deposition, much less to define its own
decisional criteria. It is not a direction to ignore fac-
tors commonly encompassed in a broad term such as
“appropriate.” To conclude otherwise would allow
EPA to “transform[ ] ... regulatory authority without
clear congressional authorization.” Jd. at 2444.

Certiorari should be granted to address the pan-
el’s conclusion that a broad statutory standard
should be read as a delegation of authority to the
Agency to craft its own decisional standards, both
(i) picking and choosing from among the broad range
of factors encompassed by such standards and
(ii) using that language to expand regulation beyond
the regulatory target identified by Congress (i.e., be-
yond residual “public health” risks in this case). Be-
cause the D.C. Circuit has exclusive jurisdiction to
review numerous agency decisions made under broad
decisional standards, granting certiorari is especially
important here.

28

fl. Certiorari Is Needed to Address Whether
an Agency That Has Authority to Consid-
er Costs May, Consistent With Its Re-
sponsibility to Engage in Reasoned Deci-
sionmaking, Choose to Disregard Costs.

As a back-stop justification for its cost-blind read-
ing of the statute, EPA argued that even if it could
permissibly consider costs under the “appropriate
and necessary” tandard, interpreting this phrase to
preclude cost considerations was “reasonable.” 77
Fed. Reg. at 9327 (“[I]t is reasonable to make ... the
appropriate determination, without considering
costs.”); Pet. App. 210a. While the panel majority
seemed to accept EPA’s cost-blind interpretation as a
matter of Chevron Step One, see, e.g., Pet. App. 27a
(Congress could not “by using only the broad term
‘appropriate’ ... have intended ... that costs be con-
sidered ... in § [74]12(m)(1)(A).”), 26a (While “the
word ‘appropriate’ might require cost consideration
in some contexts, such a reading ... is unwarranted
here.”) (emphasis in original), it also held that EPA’s
interpretation of “appropriate” to preclude considera-
tion of costs was “clearly permissible” because the
term is “ambiguous.” Id. at 28a.

In response, Judge Kavanaugh explained that
“consideration of cost is commonly understood to be a
central component of ordinary regulatory analysis,
particularly in the context of health, safety, and en-
vironmental regulation.” Id. at 78a. Because “Con-
gress legislated against the backdrop of that common
understanding when it enacted” 42 US.C.

29

§ 7412(n)(1)(A) in 1990, id., “as a matter of common
sense, common parlance, and common practice, de-
termining whether it is ‘appropriate’ to regulate re-
quires consideration of costs.” Jd. (emphasis added).

Even if consideration of cost is not compelled,
Judge Kavanaugh continued, the “centrality of cost
consideration to proper regulatory decisionmaking”
necessarily establishes “cost” as being among the
“relevant factors” that a regulatory agency must
normally take into account, a conclusion underscored
by the fact that “every real choice requires a deci-
sionmaker to weigh advantages against disad-
vantages, and disadvantages can be seen in terms of
(often quantifiable) costs.” Id. at 78a, 79a (quoting
Entergy Corp. v. Riverkeeper, inc., 556 U.S. 208, 232
(2009) (opinion of Breyer, J.)). See also id. at 78a-
79a (‘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 regula-
tion’s adverse effects....”) (quoting Whitman, 531
U.S. at 490 (Breyer, J. concurring)).

As a result, Judge Kavanaugh concluded:

[W]hether one calls it an impermissible inter-
pretation ... at Chevron step one, or an unrea-
sonable interpretation ... at Chevron step two,
or an unreasonable exercise of agency discre-
tion under State Farm, the key point is the
same: It is entirely unreasonable for EPA to
exclude consideration of costs in determining

30

whether it is “appropriate” to regulate electric
utilities under the MACT program.

Pet. App. 78a (citing Motor Vehicle Manufacturers
Ass'n v. State Farm Mutual Automobile Insurance
Co., 463 U.S. 29, 42-43 (1983)).

As Judge Kavanaugh’s dissent makes clear, this
case presents the Court with an opportunity to ad-
dress a related issue of critical importance that the
Court has never squarely faced, much less resolved.
Namely, if an agency is not expressly precluded by
Congress from taking costs into consideration in
adopting rules to implement a regulatory statute,
how far does the agency's discretion extend not to
take costs into consideration in adopting those rules,
given the agency's fundamental obligation, as ex-
plained in State Farm, to engage in reasoned deci-
sionmaking? This may very well be the first time
that a regulatory agency, after conceding that Con-
gress may not have expressly prohibited it from tak-
ing costs into account in the adoption of legislative
rules, has nevertheless chosen itself to interpret the
statute as precluding it from considering costa that
run into the billions of dollars annually.

As to this, Judge Kavanaugh acknowledged that
it was “certainly true, as the majority opinion states,
that the word ‘appropriate’ is ambiguous in isola-
tion.” Pet. App. 77a. And, as he further acknow)-
edged, EPA’s interpretation would have to be af-
firmed under Chevron Step Two if “the agency’s in-
terpretation of the ambiguity” were “reasonable.” Id.
Here, however, EPA's interpretation was “entirely

31

unreasonable” not only as a matter of statutory con-
struction, but as a fundamental matter of adminis-
trative law. Id. at 78a (emphasis added).

In this regard, it is a fundamental principle of
administrative law that “an agency must consider the
relevant fe-tors when exercising its discretion under
the governing statute.” Id. (citing State Farm, 463
U.S. at 42-43) (emphasis added). In State Farm, this
Court made clear that, while an agency decision
would be upheld on review provided that, among
other things, the agency had taken into “considera-
tion ... the relevant factors,” the agency's deci-
sionmaking would be found unreasonable where the
agency had “relied on factors which Congress has not
intended it to consider” or where the agency had “en-
tirely failed to consider an important aspect of the
problem.” State Farm, 463 U.S. at 42-43 (emphasis
added).

The “consideration of costs,” Judge Kavanaugh
pointed out, is a “central and well-established part of
the regulatory decisionmaking process.” Pet. App.
82a. In other words, “cost” is a “relevant factor” —
i.e., an “important aspect of the problem” — as even
EPA appeared to recognize here.'2 Thus, EPA
abused its discretion under Chevron Step Two by in-

12 See EPA, EPA’s Responses to Public Comments on EPA's Na-
tional Emission Standards for Hazardous Air Pollutants from
Coal- and Oil-Fired Electric Utility Steam Generating Units,
Vol. 1 at 29 (Dec. 2011), Doc. No. EPA-HQ-OAR-2009-0234-
20126 (EPA could have interpreted the term ‘appropriate’ to
allow for the consideration of costs....”); Pet. App. 609a.

32

terpreting the term “appropriate” in 42 U.S.C. §
7412(n)(1)(A) as “not allow[ing] for the consideration
of costs.” See 76 Fed. Reg. at 24,988; Pet. App. 523a.

To be sure, as Judge Kavanaugh noted, “Congress
may itself weigh the costs of a particular kind of reg-
ulation” (as it did for acid deposition in Title IV of
the CAA), “or otherwise take costs out of the equa-
tion, when assigning authority to executive and in-
dependent agencies to regulate a particular industry
or in a particular area.” Pet. App. 82a (citing Whit-
man, 531 U.S. 457). That is, Congress may, as a
matter of Chevron Step One, unambiguously express
its intent that costs not be considered in an agency's
implementation of a particular provision of a regula-
tory statute, thereby precluding costs from being a
“relevant factor” that the agency must take into ac-
count. Cf. Whitman, 531 U.S. at 471 (The “text of [42
U.S.C. § 7409(b)], interpreted in its statutory and
historical context and with appreciation for its im-
portance to the CAA as a whole, unambiguously bars
cost considerations from the NAAQS-setting pro-
cess.”).

But as Judge Kavanaugh explained, this case is
nothing like Whitman. “The statutory provision at
issue in Whitman,” he noted, “differs significantly
from the statute at issue here.” Pet. App. 88a. “The
statutory provision in Whitman tied regulation solely
to ‘public health,” which Judge Kavanaugh under-
stood as “typically a critical factor on the other side of
the balance from costs, not a factor that includes
costs.” Jd. (emphasis in original). “Here, by con-

33

trast,” he pointed out, “the key statutory term is ‘ap-
propriate’ — the classic broad and all-encompassing
term that naturally and traditionally includes con-
sideration of all the relevant factors, health and safe-
ty benefits on the one hand and costs on the other.”
Id.

This Court should grant certiorari to address an
issue that has profound and far-reaching implica-
tions for numerous regulatory statutes: If a statute
does not, as a Chevron Step One matter, expressly
preclude consideration of costs in implementing an
expansive program with critical impacts on Ameri-
can industry, does the agency’s fundamental obliga-
tion to engage in reasoned decisionmaking require
consideration of costs? That the Final Rule is one of
the most costly, if not the most costly, environmental
regulations ever imposed on American industry, and
that EPA has imposed these regulatory requirements
only after turning a blind eye to those costs, makes
this case a compelling one for consideration of this
issue.

ll. The Issue Here Is of Great National Im-
portance.

Twenty-four States petitioned for review of the
Final Rule before the D.C. Circuit, emphasizing the
national, economic implications of the rule not only
for industry but also for States. The petitioners’ con-
cern is well-founded. By EPA’s own estimation, the
Final Rule will impose annual costs of over $9 bil-
lion. 77 Fed. Reg. at 9306; Pet. App. 115a.

34

EPA nevertheless brushed aside the severity of
the impacts of the rule on plant retirement, electric
reliability, job loss, and power consumers. Id. at
9407-08, 9413-14; Pet. App. 384a-385a, 411a-416a.
With little consideration, EPA disregarded detailed
studies that explained the pervasive effects of the
rule. Id. at 9413 (“The EPA disagrees with the esti-
mates presented by the commenters.”); Pet. App.
412a. The concerns presented in those studies were
valid and EPA’s refusal to consider them caused the
Agency to grossly underestimate impacts, as subse-
quent events have shown.

For example, in the Final Rule, EPA projected
that coal-fired EGU retirements would be 4.7 giga-
watts, boasting that its estimate was “much fewer
than some have predicted.” Id. at 9407; Pet. App.
385a. Yet, the U.S. Energy Information Administra-
tion now estimates that the Final Rule will contrib-
ute to the retirement by 2016 of an estimated 54 gi-
gawatts of coal-fired electric generating capacity,
more than an order of magnitude higher than EPA’s
prediction. EIA Report, supra p. 20. Reliable and
affordable electricity is of paramount importance to
the maintenance of the public health and welfare,
and widespread retirement threatens the public
health. See Union Electric Co. v. EPA, 427 U.S. 246,
272 (1976) (Powell, J., concurring) (“[T]he shutdown
of an urban area’s electrical service could have an
even more serious impact on the health of the public
than that created by a decline in ambient air quali-

ty.”).

35

As this Court recently exp!s ined in reviewing an-
other EPA action under the CAA, “[w]e expect Con-
gress to speak clearly if it wishes to assign to an
agency decisions of vast ‘economic and political sig-
nificance.” Utility Air Regulatory Grp., 134 S. Ct. at
2444 (quoting FDA v. Brown & Williamson Tobacco
Corp., 529 U.S. 120, 160 (2000)). Congress spoke
clearly in § 7412(n)(1)(A). It did not assign authority
to EPA to act without consideration of costs. Rather,
Congress instructed EPA to conduct a broad deci-
sional analysis that must include consideration of
the impacts of its action. Even if one assumes for
purposes of argument (as EPA contends) that “ap-
propriate and necessary” is ambiguous, that would
still mean that, under Brown & Williamson, EPA’s
cost-blind interpretation is unreasonable and there-
fore unlawful.!8

It is critically important that this Court address
EPA’s contortion of broad statutory decisional stand-
ards to transform the CAA into an expansive and
cost-blind tool to restructure an essential industry.
Without the Court’s intervention, EPA will continue
to view broad CAA standards as an unfettered dele-
gation to fashion its own decisional standards. For
example, in a pending rulemaking, EPA proposes to
establish “standards of performance” for COz emis-
sions from existing fossil-fuel-fired EGUs based on

18 Ag with the Final Rule at issue here, in Utility Air Regulatory
Group v. EPA, the economic impacts presented by EPA’s unau-
thorized interpretation of the statute also totaled billions of dol-
lars. 134 S. Ct. at 2442-43.

36

“building blocks” that have nothing to do with the
“performance” of an individual EGU. According to
EPA, “standards of performance” can encompass re-
quirements to shift generation to less “carbon-
intensive” EGUs (i.e., non-coal-fired EGUs) through
environmentally-based dispatch of electricity; to con-
struct and to expand low- or zero-carbon generating
units (i.e., solar and wind generation); and to reduce
electricity demand. 79 Fed. Reg. 34,830, 34,836
(June 18, 2014). According to EPA, this sweeping
proposal will result in the retirement of another 46-
49 gigawatts of coal-fired capacity (as well as 16 gi-
gawatts of oil/gas steam capacity) by 2020, id. at
34,933, and impose another $5.5 to $7.5 billion in
annual compliance costs on the electric utility indus-
try by 2020, id. at 34,839, on top of the enormous
costs already imposed by the Final Rule at issue
here.

These efforts to restructure a basic industry that
provides an essential public service are being under-
taken by interpreting broad decisional standards to
allow the agency to select (or to ignore) specific crite-
ria for regulation. This context emphasizes the vital
importance of granting certiorari here.

37

CONCLUSION

For the foregoing reasons, the petition for a writ
of certiorari should be granted.

Respectfully submitted,

F. WILLIAM BROWNELL
(Counsel of Record)
HENRY V. NICKEL

LEE B. ZEUGIN

LAUREN E. FREEMAN
ELIZABETH L. HORNER
HUNTON & WILLIAMS LLP
2200 Pennsylvania Ave., NW
Washington, D.C. 20037
(202) 955-1500
bbrownell@hunton.com

July 14, 2014 Counsel for Petitioner

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0332%3A02. Public record. Not legal advice.