Amicus Curiae Brief — Util. Air Regulatory Grp. v. Envtl. Prot. Agency, 135 S. Ct. 702 (2014) (No. 14-47)

Nos. 14-46, 14-47, 14-49

IN THE

Supreme Court of the Hnited States

STATE OF MICHIGAN, et al.,

Petitioners,

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

MOTION FOR LEAVE TO FILE

AMICUS CURIAE BRIEF AND BRIEF OF

THE CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA AS AMICUS

CURIAE IN SUPPORT OF PETITIONERS

RACHEL BRAND SANDRA P. FRANCO

SHELDON GILBERT Counsel of Record

U.S. CHAMBER LITIGATION BRYAN M. KILLIAN

CENTER, INC. BINGHAM MCCUTCHEN LLP

1615 H Street, N.W. 2020 K Street, N.W.

Washington, D.C. 20062 Washington, D.C. 20006

(202) 463-5337 (202) 373-6000

s.franco@bingham.com

Counsel for Amicus Curiae Chamber of Commerce

of the United States of America

DATE: August 15, 2014

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Wiso-Eres Prema Co., inc. ~ (202) 789-0006 ~— WaASsHenGTON, D.C. 20002

MOTION FOR LEAVE TO FILE AN

AMICUS CURIAE BRIEF IN SUPPORT OF

PETITIONERS

Pursuant to Supreme Court Rules 21, 33 and 37,

the Chamber of Commerce of the United States of

America (the “Chamber”) respectfully moves this

Court for leave to submit the attached amicus curiae

brief in support of Petitioners in Case Nos. 14-46, 14-

47 and 14-49. This case involves challenges to the

United States Environmental Protection Agency's

National Emissions Standards for Hazardous Air

Pollutants from Coal and Oil-Fired Electric Utility

Steam Generating Units (referred to as the “Utility

MATS Rule”), but has broad implications for

industry and the nation’s economy as a whole. EPA's

decision that regulation of hazardous air pollutant

emissions from these electric generating units under

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

“appropriate” exemplifies regulatory overreach. By

EPA’s own admissions, this rule imposes almost $10

billion a year in costs for little to no benefit for public

health. The Chamber has a significant interest in

ensuring regulatory action is consistent with

Congressional intent and, moreover, is reasonable.

The proceedings before the U.S. Court of Appeals

for the D.C. Circuit below involved numerous

petitioners and intervenors. Counsel for the

Chamber provided notice to all counsel of record

below ten days prior to the filing of this brief. Due to

the number of parties before the lower court,

however, the Chamber was not able to obtain

responses from all parties prior to filing, and, thus,

submits this motion for leave. Petitioners the State

of Michigan, et al. (No. 14-46), and the Utility Air

Regulatory Group (No. 14-47) have filed blanket

consent for amicus curiae briefs. Petitioner National

Mining Association (No. 14-49) also granted consent.

Counsel for the United States Environmental

Protection Agency has provided written consent,

which is being submitted with this motion.

Respondents Calpine Corporation, Exelon

Corporation, National Grid Generation LLC, and

Public Service Enterprise Group, Inc. also submitted

a blanket consent. In addition, counse! for the

following parties have provided consent to the filing

of this brief: American Public Power Association;

Edgecombe Genco, LLC and Spruance Genco, LLC;

FirstEnergy Generation Corp.; State and Local

Governments Respondent-Intervenors; and _ the

Public Health, Environmental and Environmental

Justice Group Respondent-Intervenors. White

Stallion Energy Center expressed no objection. As of

the date of this filing, we have not received

responses from the remaining parties before the D.C.

Circuit.

INTERESTS OF AMICUS CURIAE

The Chamber is the world’s largest business

federation. It represents the interests of its members

in matters before Congress, the Executive Branch,

and the courts. To that end, the Chamber regularly

files amicus curiae briefs in cases, such as this one,

raising issues of vital concern to the nation’s

business community.

The Chamber has participated in numerous

rulemakings, including the Utility MATS Rule at

issue in this case. It also participated as amicus

curiae in the proceedings below before the U.S.

Court of Appeals for the District of Columbia Circuit.

The Utility MATS Rule will have a considerable

impact on the Chamber's members. As one of the

most expensive regulations ever for power plants,

the effects of the rule wiil be felt by power consumers

throughout the economy. Thus, the Chamber has a

substantial interest in ensuring that EPA is

undertaking rational rulemaking.

The Chamber submits this amicus curiae brief in

support of petitioners, which challenge EPA’s claims

that its stringent and costly regulations for the

power sector are “appropriate and necessary.” In

interpreting its authority under Section 112(n)(1)(A)

of the Clean Air Act, 42 U.S.C. § 7412(n)(1)(A), EPA

reversed its prior determination that costs were an

appropriate consideration to finding regulation was

“appropriate.” In so doing, it has issued a rule that

will cause a significant percentage of power plants to

be shut down, which will result in job losses, electric

reliability issues, and price increases for electricity

and consumer goods. At the same time, the

purported “benefits” of the rule derive almost

exclusively from supposed coincidental reductions in

fine particulate matter (PM2.5) that are in no way

related to reductions in mercury or the other

hazardous air pollutants Congress sought to be

regulated and purportedly targeted by the

regulation. Separately under the Clean Air Act,

PM2.5 is regulated by EPA to reduce its presence in

the atmosphere to a level sifficient to protect human

health with an adequate margin of safety.

The Chamber has long promoted reasonable and

common sense decision-making by agencies. In

deferring to EPA here and allowing such excessive

costs for little gain, the D.C. Circuit has thrown

common sense out the window. The virtual

unfettered discretion allowed by the D.C. Circuit in

this case requires this Court’s intervention.

The Chamber believes that it can provide an

additional, valuable viewpoint on the issues

presented by the petitions. Specifically, the Chamber

explains the broader implications of the D.C.

Circuit’s ruling beyond the direct effects on utilities

and supplements the arguments of Petitioners.

CONCLUSION

For the foregoing reasons, the Chamber of

Commerce of the United States of America

respectfully requests that it be granted leave to

appear as amicus curiae in this case and that the

attached brief be submitted for filing with this

Court.

August 15, 2014 Respectfully submitted,

RACHEL BRAND SANDRA P. FRANCO

SHELDON GILBERT Counsel of Record

U.S. CHAMBER BRYAN M. KILLIAN

LITIGATION CENTER, INC. BINGHAM MCCUTCHEN LLP

1615 H Street, N.W. 2020 K Street, N.W.

Washington, D.C. 20062 Washington, D.C. 20006

(202) 463-5337 (202) 373-6000

s.franco@bingham.com

Counsel for Amicus Curiae

Chamber of Commerce of the United States of

America

TABLE OF CONTENTS

Page

po COC Of i, lg Re lil

TET WUE REID ccceccseschcritensicusmnaddneadenssaobacnci 1

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SIE, \ <7: cca saumnishliasapiabanchdioeainilnuaaiaianiieiaubonbiaaise 5

I. CERTIORARI IS WARRANTED BECAUSE THE

D.C. CIRCUIT'S DECISION ALLOWS EPA TO

CRAFT REGULATION BASED ON ITS OWN

POLICY CHOICES RATHER THAN THOSE OF

A. Review is Warranted to Resolve

Inconsistencies the Panel Majority

Decision Creates with Other D.C.

Circuit Decisions Regarding Cost

Considerations Under Other Section

112 Provisions

. Review is Warranted to Rein in EPA's

Authority-Expanding, Inconsistent,

and Opportunistic Approach to Cost

Considerations

1. The panel majority's decision gives

EPA broad discretion to pursue its

own policy, rather than that of

A a eA) BEES SU tert EN

2. This Court has recognized that

consideration of costs may be

required to avoid irrational results .... 11

@)

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3. The panel majority's decision does

not account for recent Supreme

Court decisions addressing EPA's

regulatory authority under the

RN GIR a reiudceincmashcoidser acces eoses 13

C. The Panel Majority Improperly

Dismissed Cost Concerns Based on

Claimed Benefits Not Attributable to

the Control of HAP Emissions of which

Congress was Concerned.......................... 15

II. CERTIORARI IS WARRANTED TO BRING

REGULARITY INTO THE RULEMAKING

PROCESS WHEN AGENCIES SEEK TO

EXERCISE BROAD REGULATORY AUTHORITY

GRANTED BY CONGRESS .............ccccccccececeeeeeeeee 17

Ill. THE LOWER COURT'S FAILURE TO CHECK

EPA’s DISCRETION HAS _ SIGNIFICANT

IMPLICATIONS FOR THIS COUNTRY’S

Risen a Es at ee es hae SEE SOON UE ee SR ERE 19

NIE escttasin Tassel onic aeastsoeagt inet cntalieastatnneaa 24

TABLE OF AUTHORITIES

Page

Federal Cases

Am. Textile Mfrs. Inst., Inc. v. Donovan,

Be i Se EE cictersccniveretenntensiccsssanieniawehs 5, 10

Ass’n of Battery Recyclers, Inc. v. EPA,

716 F.3d G67 (D.C. Cit. 20138) ....ccccccccscccecesees 6, 7, 8

Entergy Corp. v. Riverkeeper, Inc.,

os Bf Ee ao 11, 12

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

BG Te, Ge, Be Ce weccorccecccnccccsesscessonne 13, 14, 18

Lead Indus. Ass’n, Inc. v. EPA,

647 F.2d 1130 (D.C. Cir. 1980) .......................200 11

Natural Res. Def. Council v. EPA,

529 F.3d 1077 (D.C. Cir. 2008) ...............-.ccc2000s 7,8

Sierra Club v. EPA,

Be ce re Oe GP, BIO cnnccciccevvecssvnnscccssescees 6

Sossamon v. Texas,

a We, SE III Wis sane chasnceaereiouwbenscantons 10

Tenn. Valley Auth. v. Hill,

Re GE MI EIIPUIIEN ccciaceicinsectengcesthatutasedencavoniessvese 11

Union Elec. Co. v. EPA,

SE, SE OEY cn ccsinesahostatchctassnacderneamn deetexeaneie 10

(iii)

iv

Utility Air Regulatory Group v. EPA,

BG Th. COR Ge evceisintrecnenncasncsmresecetvenenasates 13

Whitman v. Am. Trucking Ass’ns, Inc.,

BES CE. Grr Gee vettictniecististvtcctonen 7, 10, 11, 14

Federal Statutes

GUE TE.G. 3 FOE eccsevecsivesssveinsticceeneenaenejaaamaaaanan 5

AR UB.G,. © CORD assis ss cece 7

6B U.B.G. © FER etic vcs etenwcsisscsvnenesaiatetel 1, 2, 3, 9

Federal Administrative Materials

65 Fed. Reg. 79,825 (Dec. 20, 2000) ............ eens 16

70 Fed. Reg. 15,994 (Mar. 29, 2005) .........cccccccceseseees 9

Executive Order 13563, 76 Fed. Reg. 3821

Pam BE, BED scccocsccscssencinsconssesniactdtcteeliamaenen 18

77 Fed. Reg. 9304 (Feb. 16, 2012)

pssesicsnpeatnceesesadeicntiabieladaaiaasbiacmaa 3, 10, 16, 18, 19, 21, 22

78 Fed. Reg. 3086 (Jan. 15, 2013) ..............cccceeeeeeeees 15

Miscellaneous

EIA, Today in Energy: AEO2014 projects more

coal-fired power plant retirements by 2016

than have oom press yen. she he

EPA Memorandum, EPA’s Enforcement

Response Policy for Use of Clean Air Act

Section 113(a) Administrative Orders in

Relation to Electric Reliability and the

Mercury and Air Toxcs Standard,

Dec. 16, 201, — at

Jeffrey Jones and Michael Leff, Issues in Focus:

Implications of accelerated power plant

retiremente, Meleased rent 28, 2014,

Letter from Rep. Harris, MD, Chairman, Energy

and Environment Subcommittee and Rep.

Broun, MD, Chairman, Investigations and

Oversight Subcommittee, U.S. House

Committee on Science, Space, and

Technology, to Administrator Sunstein,

Office of Information and Regulatory Affairs,

Office of Management and Budget, Nov. 15,

2011, available at http.//ecience.house,gov/

NDP Consulting, A Critical Review of the

Benefits and Costs of EPA Regulations on the

U.S. Economy (2012), available at

http//www.nam.org/~/media/423A1526BF07

47258F22BB9C68E31F8F.ashx........ 19, 20, 22, 23

Office of Management and Budget, 2013 Report

to Congress on the Benefits and Costs of

Federal Regulations and Unfunded

Mandates on State, Local and Tribal Entities

(2013), available at bttp/Ayww.whitehouse.

gov/sites/default/files/omb/inforeg/2013 cb/20

13 -updated.pdf...................

Prepared Statement of Anne E. Smith, Ph.D. at

a Hearing on The American Energy

Initiative-A Focus on What EPA’s Utility

MACT Rule Will Cost U.S. Consumers-By

the Subcommittee on Energy and Power,

U.S. House Energy and Commerce

Committee, Feb. 8, 2012, available at

Smith Testimony ECC 0212.pdf................. 15,

U.S. Chamber of Commerce and NERA

Economic Consulting, Estimating

Employment Impacts of Regulations: A

Review of EPA’s Methods for Its Air Rules,

Feb. 2013, available at

Written Testimony of FERC Commissioner

Philip D. Moeller Before the House

Committee on Energy and Commerce

Subcommittee on Energy and Power,

Hearing on FERC Perspective: Questions

Concerning EPA’s Proposed Clean Power

Plan and other Grid Reliability Challenges,

July 29, 2014, available at

16

INTEREST OF AMICUS

The Chamber of Commerce of the United States

of America (the “Chamber”) is a _ nonprofit

corporation and the world’s largest business

federation.1 The Chamber represents 300,000 direct

members and indirectly represents an underlying

membership of more than three million companies

and professional organizations of every size, in every

industry sector, and from every region of the

country. Many of the Chamber's members own and

operate electric generating units that are subject to

the regulation at issue in this case (the “Utility

MATS Rule”), and other members are energy

consumers that will be affected by the increased

costs imposed by the rule.

This case exemplifies EPA’s inconsistent use of

cost-benefit analyses to expand its authority and

impose overly stringent requirements on industry.

Here, EPA determined that regulating hazardous air

pollutent emissions from electric generating units

was “appropriate and necessary” under Section 112

of the Clean Air Act, 42 U.S.C. § 7412(n)(1)(A). The

costs of the new regulation are staggering. The

i Pursuant to Supreme Court Rule 37.2(a), counsel of record

for the parties below received notice of amicus curiae's

intention to file this brief at least 10 days prior to the due date.

Petitioners and Respondent EPA have consented to its filing,

but the brief is being submitted on motion. Pursuant to

Supreme Court Rule 37.6, counsel for amicus represent that

the brief was not authored in whole or in part by counsel for a

party and that none of the parties or their counsel, nor any

other person or entity other than amicus, ite members, or its

counsel, made a monetary contribution intended to fund the

preparation or submission of this brief.

2

control] standards will cost the utility industry more

than $9.6 billion annually—making this one of the

most expensive regulations ever for power plants.

And the economic effects are even larger and will be

felt throughout the economy. Against these costs, the

record reflects little-to-no public health benefit from

the reduction in hazardous air pollutant emissions.

The Chamber has a substantial interest in

ensuring that EPA undertakes rational rulemaking

consistent with Congressional intent and its

statutory authority. Under the Clean Air Act,

Congress intended to focus regulation on the most

serious air pollution problems. Moreover, except

where prohibited by Congress, good governance

requires consideration of costs to guard against

irrational regulation and misallocation of resources.

Certiorari is warranted here because EPA has been

allowed to pick and choose when it considers costs to

promote its own policy objectives, rather than the

intent of Congress. The Chamber submits this brief

to underscore the broader implications of the D.C.

Circuit’s decision and to present arguments that

supplement the petitioners’.

SUMMARY OF ARGUMENT

Before EPA can regulate hazardous air pollutants

(HAPs) from electric utility steam generating units

(EGUs), EPA must study “the hazards to public

health reasonably anticipated to occur as a result of

[EGU HAP emissions] after imposition of the

requirements” of the Act. 42 U.S.C. § 7412(n)(1)(A).

EPA then must report the studys results and

alternative control strategies to Congress. Id.

Finally, EPA must determine whether regulation

3

under Section 112 is “appropriate and necessary

after considering the results of the study.” Jd.

EPA’s determination under this provision has

changed many times. See generally State of

Michigan, et al., Pet. for Writ of Cert., No. 14-46, at

5-7 (hereinafter “State Cert. Pet.”). After earlier

decisions finding that EGU emissions of mercury

(Hg) did not warrant Section 112 regulation, EPA in

2012 found “that Hg and non-Hg HAP emissions

from U.S. EGUs pose hazards to public health,” and

concluded that eliminating those hazards would

produce public health benefits of $4 to $6 million

annually. 77 Fed. Reg. 9304, 9311, 9428 (Feb. 16,

2012). EPA further found that regulation under

Section 112 was “appropriate” because of “the

magnitude of Hg and non-Hg_ emissions,

environmental effects of Hg and certain non-Hg

emissions, and the availability of controls to reduce

HAP emissions from EGUs.” Id.

EPA declined to consider costs in its assessment

of whether regulation of EGU HAP emissions under

Section 112 was appropriate. EPA opined that it had

to regulate HAP emissions from EGUs so long as it

“identified a hazard to public health and the

environment.” 77 Fed. Reg. at 9327. The majority

below found “no indication that Congress did not

intend EPA to regulate EGUs if and when their

public health hazards were confirmed by the study,”

and deferred to EPA’s “permissible” construction of

the statute. App. 27a-28a2 In dissent, Judge

3 Appendix citations are to the Petition Appendix filed by

Petitioners in State of Michigan, et al., v. EPA, No. 14-46.

4

Kavanaugh found it “unreasonable for EPA to

exclude consideration of costs in determining

whether it is ‘appropriate’ to impose significant new

regulations on electric utilities.” App. 74a.

The panel majority believed its interpretation

was consistent with other opinions, which it read as

only allowing EPA to consider costs in other

circumstances and as requiring such consideration

only when expressly stated in the statute. Precedent

of this Court, however, requires an agency use its

discretion to avoid a regulation like this one, where

the costs are so out of line with the purported

benefits. More recent decisions also show that an

agency should be guided by weighing costs and

benefits, except where prohibited. As Judge

Kavanaugh noted, “[t]hat’s just common sense and

sound government practice.” App. 74a.

This Court’s intervention is needed to draw clear

lines on defining when an agency must consider

costs when Congress has not expressly prohibited

such consideration.

5

ARGUMENT

I. CERTIORARI IS WARRANTED BECAUSE THE D.C.

CrrculT’s DECISION ALLOWS EPA TO CRAFT

REGULATION BASED ON ITS OWN POLICY

CHOICES RATHER THAN THOSE OF CONGRESS.

A. Review is Warranted to Resolve

Inconsistencies the Panel Majority

Decision Creates with Other D.C. Circuit

Decisioas Regarding Cost Considerations

Under Other Section 112 Provisions.

Congress used the phrase “appropriate and

necessary’ for a reason. See, e.g., State Cert. Pet. at

13-15. In addressing this nation’s air pollution

problems, Congress made clear that regulation

under the Act generally should not be completely

irrespective of costs. Congress sought to promote

public welfare and this country’s productive

capacity. 42 U.S.C. § 7401(b)(1). A “primary goal” of

the Act is to “encourage or otherwise promote

reasonable Federal, State, and local governmental

actions” for pollution prevention. Jd. § 7401(c)

(emphasis added). This Court has previously

recognized that when Congress uses terms such as

“appropriate” and “necessary” to guide regulatory

decision-making, it contemplates consideration of

economic and technological feasibility; that is,

consideration of costs. See Am. Textile Mfrs. Inst.,

Inc. v. Donovan, 452 U.S. 490, 513 n.31 (1981)

(noting “any standard that was not economically or

technologically feasible would a fortiori not be

‘reasonably necessary or appropriate’ under

[OSHA]”’) (citing Industrial Union Dept. v. Hodgson,

49. F.2d 467, 478 (D.C. Cir. 1974) (“Congress does

6

not appear to have intended to protect employees by

putting their employers out of business.”)).

The panel majority, however, erroneously held

that EPA’s interpretation of Section 112(n)(1)(A) as

not requiring (and perhaps not _ allowing)

consideration of costs was “consistent with the

purpose of the 1990 Amendments, which were aimed

at remedying ‘the slow pace of EPA’s regulation of

HAPs.” App. 28a (citation omitted). Congress did

seek to improve regulation of HAPs generally, and

standard setting for non-EGU source categories

under Section 112(d) is relatively formulaic. See

generally Sierra Club v. EPA, 353 F.3d 976, 979-80

(D.C. Cir. 2004). But that does not mean EPA can

regulate under Section 112(n)(1)(A) merely for the

sake of regulating. It simply does not promote public

health or public welfare to impose such high costs

that will permeate throughout the economy and

force shut downs and job losses, while providing

little benefit with respect to HAP emissions.

Unlike other source’ categories, Section

112(n)(1)(A) directs EPA to determine whether it is

“appropriate and necessary’ to regulate EGUs under

Section 112. Section 112 includes provisions to give

EPA flexibility to avoid highly inefficient regulation

and egregiously unnecessary costs. The panel

majority, nonetheless, declined to read “appropriate”

to include consideration of costs, noting Congress did

not expressly reference costs in Section 112(n)(1)(A)

as it had elsewhere in Section 112. App. 26a. But,

EPA has considered costs under other provisions of

Section 112 even though Congress did not expressly

reference costs in those provisions. See Ass'n of

Battery Recyclers, Inc. v. EPA, 716 F.3d 667, 673-74

7

(D.C. Cir. 2013) (affirming consideration of costs in

revising emissions standards under 42 U.S.C.

§ 7412(d)(6)); Natural Res. Def. Council v. EPA, 529

F.3d 1077, 1083 (D.C. Cir. 2008) (affirming

consideration of costs in setting residual risk

standards to protect public health with an ample

margin of safety under 42 U.S.C. § 7412(f)(2)(B)).

Before the opinion below, whether costs were

relevant to a Section 112 regulation did not turn

simply on the mere inclusion or exclusion of the word

“cost.”

In Association of Battery Recyclers, Inc. v. EPA,

716 F.3d 667, the D.C. Circuit reviewed Section

112(d)(6)'s requirement to “review, and revise, as

necessary” emissions standards under Section 112

based on developments in practices, processes and

control technologies. 42 U.S.C. § 7412(d)(6). The

panel agreed that Section 112(d)(6) “itself makes no

reference to cost,” but finding other provisions of

Section 112 expressly authorizes cost consideration

in other aspects of the standard-setting process, “we

believe this clear statement rule is satisfied.” Ass’n

of Battery Recyclers, 716 F.3d at 673-74 (citing

Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457,

467 (2001)). Where Section 112(n)(1)(A) also relates

to regulation under “this section,” the majority below

reached the opposite conclusion. This Court should

review the panel majoritys holding because it

creates inconsistencies with other decisions

upholding EPA’s consideration of costs under other

Section 112 provisions.

8

B. Review is Warranted to Rein in EPA’s

Authority-Expanding, Inconsistent, and

Opportunistic Approach to Cost

Considerations.

As described above, EPA has inconsistently used

consideration of costs in implementing Section 112 of

the Clean Air Act. When EPA does consider costs,

the D.C. Circuit has looked to whether there is a

“clear statement” that costs can be considered. See

Ass'n of Battery Recyclers, Inc., 716 F.3d at 673-74;

Natural Res. Def. Council, 529 F.3d at 1083. Here,

where EPA did not consider costs, the panel majority

simply deferred to EPA, considering only whether

EPA had any reason for regulating, not whether

such reason was justifiable. This gives EPA a

significant amount of discretion in choosing what

factors it can consider in deciding to regulate. But

the discretion implied by the word “appropriate” is

not unfettered; it must at a minimum include one of

the most basic regulatory considerations: cost. Thus,

Supreme Court review is necessary to ensure agency

action is properly cabined.

1. The panel majority's decision gives

EPA broad discretion to pursue its

own policy, rather than that of

Congress.

The panel majority found that, even if the term

“appropriate” required consideration of costs in some

instances, it was not warranted here because Section

112 references the study on public health hazards.

App. 26a. But while EPA must consider the results

of that public health-based study before regulating,

9

it also must determine whether regulation is

“appropriate and necessary.”

While the existence of a public health hazard is a

necessary prerequisite to regulation under Section

112, determining whether regulation is “appropriate

and necessary” under Section 112 includes more

than a consideration of public health hazards. Under

Section 112(n)(1)(A), EPA was also to report to

Congress on alternative control strategies for EGU

HAP emissions “which may warrant” regulation. 42

U.S.C. § 7412(m)(1)(A). Such review must include

considerations of economic and technical feasibility

of available controls.

Legislative history also showed that Congress

was concerned with the efficacy of regulating EGUs.

EPA previously acknowledged that Congress treated

utilities differently, recognizing Congress “imposed

special threshold conditions on any EPA regulation

of power plants under section 112 that it did not

apply to any other source category.” Final Br. of

Respondent EPA, New Jersey v. EPA, No. 05-1097,

at 20 (D.C. Cir. June 23, 2007). EPA aiso previously

found that Congress understood that utilities,

because they are subject to numerous requirements,

“should not be subject to duplicative or otherwise

inefficient regulation.” 70 Fed. Reg. 15,994, 15,999

(Mar. 29, 2005) (citation omitted); see also App. 86a-

87a. As Judge Kavanaugh noted, the legislative

history shows Section 112(n) was a “congressional

compromise” with respect to regulation of EGU

HAPs. App. 86a.

In 2012, however, EPA reversed its prior reading

of the legislative history, and, while now declining to

10

consider costs, EPA also determined that it can

regulate EGUs under Section 112 based on other

factors beyond public health hazards and beyond

harms directly and solely attributable to EGUs. 77

Fed. Reg. at 9325. The about face was unreasonable,

and an attempt to impose the agency's apparently

new policy determination, rather than following

Congress’s guidance. The panel majority again let

EPA off the hook. App. 24a. It dismissed the

legislative history, and thereby the intent of

Congress, finding little relevance to Congress

providing utilities with “a three-year pass.” App.

27a-28a. But, if Congress intended EPA to consider

only whether the study found health hazards, it

would have said so.

The panel majority relied on Whitman and other

cases that held that EPA was prohibited from

considering costs unless Congress’ expressly

instructs EPA to consider costs. In those cases,

however, “congressional silence had an entirely

different implication than it does here.” Sossamon v.

Texas, 131 S. Ct. 1651 (2011). The statutory

provisions at issue in those cases did not grant the

broad, discretionary authority to act only if

“appropriate and necessary.” See Am. Textile Mfrs.

Inst., 452 U.S. at 512-13 (finding cost-benefit

analysis was not required where the statute required

regulation “to the extent feasible”)8; Union Elec. Co.

uv. EPA, 427 U.S. 246 (1976) (addressing Clean Air

3 While finding a cost-benefit analysis, i.e., weighing of

costs against benefits, was not required, the feasibility

language at issue in American Textile Mfrs. Institute included

considerations of economic feasibility. 452 U.S. at 530 n.55.

11

Act provision requiring EPA to approve a state

implementation plan based on set criteria outlined

in statute which did not include economic

feasibility); Lead Indus. Ass’n, Inc. v. EPA, 647 F.2d

1130 (D.C. Cir. 1980) (addressing, as in Whitman,

NAAQS, which must be “requisite to protect the

public health”) (quoting 42 U.S.C. § 7409(b)(1)). Cf.

Tenn. Valley Auth. v. Hill, 437 U.S. 153 (1978)

(addressing applicability of statutory prohibition on

particular activity not an agencys exertion of

regulatory authority). Those cases involved statutory

provisions that expressly limited discretion.

Here, the panel majority has _ interpreted

Congress’ “silence” on what criteria to apply to give

EPA unfettered discretion to choose its own

regulatory criteria. Certiorari is needed to provide

clear rules to avoid such unfettered discretion.

2. This Court has recognized that

consideration of costs may be

required to avoid irrational results.

Finding the word “appropriate” is “open-ended,”

“ambiguous,” and “inherently context-dependent,”

App. 26a (citation omitted), the panel majority

simply deferred to EPA. It placed the burden on

Congress to tell EPA to be reasonable. But this

Court’s precedent requires reasonable regulation,

and reasonable regulation entails consideration of

costs.

When a statute does not expressly state the

criteria to be considered, as is the case here, EPA

routinely has considered costs. For example, in

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

12

(2009), this Court affirmed EPA’s reliance on a cost-

benefit analysis in promulgating regulations under

the Clean Water Act requiring “the best technology

available for minimizing adverse environmental

impact.” Similar to the case here, Congress did not

use the word “cost” in this section, but elsewhere in

the Clean Water Act expressly referenced cost-

benefit analyses. The Court, nonetheless, looked at

“common parlance,” and found that “best technology’

may also describe the technology that most efficiently

produces some good.” Jd. at 218 (emphasis in

original). Similarly here, the word “appropriate”

indicates that Congress wanted EPA to make a

determination, not just whether some hazard may be

identified, but whether regulation of that hazard

was warranted. Such a determination inherently

involves a balancing of costs and benefits.

While the majority below noted no case in which

the D.C. Circuit has required EPA to consider costs,

prior cases do illustrate that consideration of costs is

warranted if “an absolute. prohibition [on

consideration of costs] would bring about irrational

results.” Entergy Corp., 556 U.S. at 232-233 (Breyer

concurring, in part). In Entergy, Justice Breyer, in

concurrence, found EPA should apply the test of

reasonableness “in a way that reflects its ideal

objective,” but basing agency action “solely on the

result of that determination ... would put the agency

in conflict with the test of reasonableness by

threatening to impose massive costs far in excess of

any benefit.” Id. at 234. The test of reasonableness,

then, may require the consideration of costs—

particular where, as here, billions of dollars of costs

will produce negligible benefits.

13

3. The panel majority’s decision does not

account for recent Supreme Court

decisions addressing EPA’s regulatory

authority under the Clean Air Act.

Decisions of this Court that postdate the panel

majority's opinion below also call into question its

conclusions with respect to interpreting the meaning

of the word “appropriate.”

In Utility Air Regulatory Group v. EPA, 134 S. Ct.

2427 (2014), decided two months after the decision

here, this Court affirmed that, “[e]ven under

Chevron’s deferential framework, agencies must

operate ‘within the bounds of reasonable

interpretation,” which must account for “both ‘the

specific context in which ... language is used’ and ‘the

broader context of the statute as a whole.” 7d. at

2442 (citations omitted). This Court reviewed the

agencys interpretation to determine if it was

“incompatible” with “the substance of Congress’

regulatory scheme.” Id. at 2443; see also UARG Pet.

for Writ of Cert., No. 14-47, at 25. EPA’s refusal to

consider costs here is incompatible with the

structure and intent of Congress.

In EPA v. EME Homer City Generation, L.P., 134

S. Ct. 1584 (2014), this Court overturned another

decision by the D.C. Circuit, which had held that the

“Good Neighbor Provision” of the Clean Air Act did

not allow for consideration of costs. This Court's

holding was partly based on the practical

implications of not considering costs under that

provision. Jd. at 1604-1605. The Court there found

the D.C. Circuit’s, and dissenters, reading of the

provision at issue would be difficult to implement “in

14

practice” and would result in “costly overregulation

unnecessary to, indeed in conflict with, the Good

Neighbor Provision’s goal of attainment.” Jd. Indeed,

in its petition for certiorari in EME Homer City, EPA

argued that considering costs was “also consistent

with applicable guidance from this Court”:

The Court has recently stressed that, except

where consideration of costs is expressly

precluded by statute, the EPA and other

agencies should be allowed to consider costs in

construing broad qualitative standards

similar to that at issue here, in order to allow

the agency to identify the most efficient and

least burdensome mechanisms to achieve a

statutory goal.

U.S. Pet. for Cert., No. 12-1182, at 15 (S. Ct. Mar.

29, 2013) (citing Entergy Corp., Inc., 556 U.S. at

218). The Court agreed with EPA that using costs in

the calculus “also makes good sense,” finding it

created “an efficient and equitable solution to the

allocation problem the Good Neighbor Provision

requires the Agency to address.” 134 S. Ct. at 1607.

The Court distinguished Whitman (on which the

panel majority relied in this case) on the grounds

that the provision at issue in Whitman “provides

express criteria by which EPA is to set NAAQS.”

which by implication precluded EPA from

considering cost as an additional criterion. Jd. at

1607 n.21. It is difficult to reconcile EPA’s position in

EME Homer City and its position here.

Certiorari should be granted to bring the decision

below into line with this Court’s intervening

opinions on similar, cost-related issues. At a

15

minimum, this Court should grant certiorari, vacate

the judgment below, and remand for the D.C. Circuit

to reconsider its decision in light of the intervening

decisions.

C. The Panel Majority Improperly

Dismissed Cost Concerns Based on

Claimed Benefits Not Attributable to the

Control of HAP Emissions of which

Congress was Concerned.

The majority below dismissed Judge Kavanaugh’s

concerns about the high costs of the Utility MATS

Rule by referencing EPA’s finding of annualized

benefits of $37 to $90 billion, which “outweigh its

costs by between 3 to 1 or 9 to 1.” App. 32a. Virtually

all of the purported health benefits relate to fine

particular matter (PM2.5) and, at the time, occurred

at PM2.5 concentrations below the PM2.5 National

Ambient Air Quality Standard—the level EPA

determined to be requisite to protect public health

with an adequate margin of safety4 The only

benefits EPA estimated with respect to HAPs, which

is the subject of the Section 112 provision that EPA

4 In 2013, EPA revised the PM2.5 National Ambient Air

Quality Standard, 78 Fed. Reg. 3086 (Jan. 15, 2013), which is

the vehicle Congress gave to EPA to regulate these emissions,

not Section 112. The co-benefits calculated by EPA are at

PM2.5 concentrations below the revised standard. See Prepared

Statement of Anne E. Smith, Ph.D. at a Hearing on The

American Energy Initiative-A Focus on What EPA’s Utility

MACT Rule Will Cost U.S. Consumers-By the Subcommittee on

Energy and Power, U.S. House Energy and Commerce

Committee, Feb. 8, 2012, at 19 (hereinafter “Smith

Testimony”), available at ihttp//www.nera.com/nera-

16

claimed authorized its rule, totaled only $4 to $6

million per year.5 77 Fed. Reg. at 9428. At most, then

the benefits of reducing HAPs represent less than

0.01 percent of the purported benefits of the rule. See

Smith Testimony at 6.

EPA’s regulatory impact analysis was

bootstrapping, pure and simple. Unfortunately, this

has become a habit of EPA’s. See Letter from Rep.

Harris, MD, Chairman, Energy and Environment

Subcommittee and Rep. Broun, MD, Chairman,

Investigations and Oversight Subcommittee, U.S.

House Committee on Science, Space, and

Technology, to Administrator Sunstein, Office of

Information and Regulatory Affairs, Office of

way ane and mye Nov. 15, 2011, Cuanaete ot

pdf. EPA ane ro sm credit for me ma ma of

PM2.5 caused by rules that address harms from

other pollutants. See id.; see also Office of

Management and Budget, 2013 Report to Congress

on the Benefits and Costs of Federal Regulations and

Unfunded Mandates on State, Local and Tribal

Entities, at 15 (2013), available at

Chnaastentie. the +—— ‘collated benefits of EPA

rules issued pursuart to the Clean Air Act are

mostly attributable to the reduction in public

& These benefits relate to mercury emissions, which EPA

identified to be the hazardous air pollutant of “greatest

concern” from electric generating units. 65 Fed. Reg. 79,825,

79,827 (Dec. 20, 2000).

17

exposure to a single air pollutant: fine particulate

matter.”) (emphasis in original). By masking (poorly)

the actual costs and benefits of its rules, EPA reveals

that it is bent on regulation outside the specific

authority under which they are acting. This Court’s

oversight is needed to rein in EPA’s power grab.

Il. Certiorari is Warranted to Bring Regularity

into the Rulemaking Process When

Agencies Seek to Exercise Broad Regulatory

Authority Granted by Congress.

As illustrated above, EPA inconsistently applies

cost considerations when exercising its discretion. In

granting such high deference to EPA, the majority's

decision below allows EPA to pick and choose when

to consider costs, and broaden its authority

whenever it wants. Supreme Court review is

warranted here to draw clearer lines regarding the

exercise of an agency’ discretionary authority.

Otherwise an agency can continue to make virtually

unfettered decisions so long as it provides some

rationale for making that decision. This has resulted

in regulation that imposes a significant cost on

society with no real benefit, and has allowed

agencies to exercise their own policy decisions,

rather than those of Congress.

When Congress grants broad discretion, however,

it does so on the assumption that an agency will act

reasonably. Balancing of costs and benefits has long

been part of the regular administrative process.

Executive Order 13563, reaffirming Executive Order

12866 (1993), recognizes that “[fo]lur regulatory

system must protect public health, welfare, safety,

and our environment while promoting economic

18

growth, innovation, competitiveness, and job

creation.” 76 Fed. Reg. 3821, 3821 (Jan. 21, 2011). In

addition, it “must identify and use the best, most

innovative, and least burdensome tools for achieving

regulatory ends,” and “take into account benefits and

costs, both quantitative and qualitative.” Id. Under

these orders, consistent with the Act, EPA must seek

to lessen regulatory burdens on society.

Other regulatory and statutory requirements, if

not inconsistent with the statutory authority,

require consideration of regulatory options that

reduce burdens. See 77 Fed. Reg. at 9433-9440.

Here, EPA skipped application of these provisions to

inform whether regulation may be “appropriate”

under Section 112, as opposed to other potentially

applicable provisions that would be more cost-

effective. It then struggled to justify the significant

costs by considering other benefits related to

emissions not regulated under Section 112.

Justice Scalia warned in EME Homer City that

“[tloo many important decisions of the Federal

Government are made nowadays by unelected

agency officials exercising broad lawmaking

authority, rather than by the _ people’s

representatives in Congress.” 134 S. Ct. at 1610

(Scalia, dissenting). As such, and as Judge

Kavanaugh noted in his dissent in this case below,

when your “only statutory discretion is to decide

whether it is ‘appropriate’ to go forward with the

regulation ... common sense and sound government

practice” warrant consideration of both costs and

benefits. App. 73a-74a. Supreme Court review is

necessary here to bring common sense back into the

regulatory process, ensuring that Congressional

19

intent is implemented in a manner that is

reasonable and not an extension of administrative

policy rather than a legislative one.

Ill. THE LOWER COURT’S FAILURE TO CHECK EPA’s

DISCRETION HAS SIGNIFICANT IMPLICATIONS

FOR THIS COUNTRY’S ECONOMY.

EPA’s failure to consider costs here “is no trivial

matter.” App. 83a. “Put simply, the Rule is ‘among

the most expensive rules that EPA has ever

promulgated.” Jd. (quoting James E. McCarthy,

Congressional Research Service R42144, EPA's

Utility MACT: Will the Lights Go Out?, at 1 (2012)).

EPA estimated the cost of the Utility MATS Rule

to be $9.6 billion annually, while the estimated

benefits are a mere $4 to $6 million (plus some

unquantifiable set of purported benefits).£ See, e.g.,

State Cert. Pet. at 9. The $9.6 billion is probably an

underestimate. It purports to represent estimated

compliance costs, 77 Fed. Reg. at 9306, 9425, which

industry estimates to be closer to $12 billion a year.

See NDP Consulting, A Critical Review of the

Benefits and Costs of EPA Regulations on the U.S.

Economy (2012), at 12 (hereinafter “NAM Report”),

available _at

22BBOCGSESLFSF ashx. — it is Sinortinnd

over a long period, the annual cost estimate does not

reflect the regulated industry's substantial upfront

capital costs. Jd. at 14-15. It was estimated that the

& This estimate uses a 3 percent discount rate. Using a 7

percent discount rate, these benefits are reduced to $500,000 to

$1 million. 77 Fed. Reg. at 9306.

20

U.S. electricity sector will have to raise about $94.5

billion of additional capital to comply with the

Utility MATS rule alone (compared to EPA’s $35

billion estimate).2 Id. at 19-20.

While the economic costs to the utility sector are

stark, the negative impact of the Utility MATS Rule

will be felt throughout the economy. The high

compliance costs are expected to accelerate

retirements of coal-fired plants, affecting electric

reliability and retail prices, and the economic

burdens imposed by EPA will be spread to

consumers of electricity. Higher energy prices will be

compounded by higher costs for consumer goods and

services.

The Energy Information Administration (EIA)

conducted an analysis of the implications of

accelerated power plant retirements. See Jeffrey

Jones and Michael Leff, Jssues in Focus:

Implications of accelerated power plant retirements,

Released Age. 28, 2014 (reesinetior “EIA a

EIA eenieal that cuncienatel sieemente of coal-

fired plants have “impacts throughout the energy

system and the economy.” Jd. EIA projected that 50

Gigawatts (GW) of capacity will retire by 2020, id.,

with 90 percent of these retirements expected to

occur by 2016—+the first year of enforcement for the

Utility MATS Rule. EIA, Today in Energy: AEO2014

1 These estimates also do not consider incurred costs EPA

attributed to compliance with other rules, including the Croes-

State Air Pollution Rule, or the cumulative impact of the

various rules that will impact the utility industry in the next

few years. See NAM Report at 15-16.

21

projects more coal-fired power plant retirements by

2016 than have been scheduled, Feb. 14, 2014,

Jiwww.eia. / id=

1. These retirements are not just of smaller and less

frequently used plants, but included larger and more

efficient plants—‘“the average size is 50% larger

than recent retirements.”8 Id.

The accelerated retirements of coal-fired plants

will have impacts on energy costs and electric

reliability. Affordable and reliable electricity is

critical to economic growth, and fuel diversity is

critical to affordable and reliable electricity. Given

the differences in energy use across the country, the

impacts of the Utility MATS Rule will have

disproportionate effects in different regions of the

United States.

EPA recognized that the Utility MATS Rule “is

likely to have a significant adverse effect on the

supply, distribution, or use of energy.” 77 Fed. Reg.

at 9441. Commissioner Moeller of the Federal

Energy Regulatory Commission recently expressed

his ongoing concerns with the reliability implications

of the Utility MATS Rule, especially in the Midwest

during the summer of 2016, stating “reliability is as

much a necessity for the EPA as it is for the

American people.”2 Written Testimony of FERC

8 EPA found only 4.7 GW of coal-fired generation would

likely be retired by 2015 as a result of the Utility MATS Rule,

and those units to be retired are “predominantly smaller, less

frequently used, and ... dispersed throughout the country.” 77

Fed. Reg. at 9424.

® Rather than consider these issues upfront, EPA chose to

use enforcement discretion so plants can operate in non-

22

Commissioner Philip D. Moeller Before the House

Committee on Energy and Commerce Subcommittee

on Energy and Power, Hearing on FERC Perspective:

Questions Concerning EPA’s Proposed Clean Power

Plan and other Grid Reliability Challenges, July 29,

2014, at 9, availab at

In the EIA Report, supra, EIA also found

accelerated coal retirements will increase natural

gas and retail electricity prices. EPA estimated that

the rule will increase the average nationwide retail

electricity prices by 3.1 percent in 2015, 77 Fed. Reg.

at 9425, but price impacts will have regional

differences based on the locations of the plants

requiring retrofitting. Other estimates show price

increases to be in the range of 12-24 percent. NAM

Report at 16.

Increased costs will have significant adverse

impacts on jobs. EPA conducted a limit analysis of

job loss and creation, finding a net increase of 8,000

jobs. 77 Fed. Reg. at 9425. However, due to the costs

passed to the rest of the economy, more recent

assessments show job losses in the range of 180,000-

215,000 in 2015 alone and 50,000-85,000 in later

years. See U.S. Chamber of Commerce and NERA

compliance with the Rule to address electric reliability

concerns. See EPA Mem., EPA’s Enforcement Response Policy

for Use of Clean Air Act Section 113(a) Administrative Orders

in Relation to Electric Reliability and the Mercury and Air

Toxica Standard, Dec 16, 2011, available at

.

.

23

Economic Consulting, Estimating Employment

Impacts of Regulations: A Review of EPA’s Methods

for Its Air Rules, Feb. 2013, at 29, available at

http:/Awww.nera.com/67_8015.htm.

The manufacturing sector will bear the brunt of

the costs of EPA’s regulation of power plants. “As

consumers of more than 28 percent of electricity

production, manufacturers in the United States

would see production costs rise.” NAM Report at 3.

Manufacturing heavy states will pay

disproportionately more. Id.; see also id. at 22. This

will also result in increased cost of goods and

services for the economy as a whole.

While energy policy is an important national

issue and key to every American’s qualify of life,

EPA has exceeded its authority to step into the

policy debates over energy sources, rather than

follow the intent of Congress. Providing dependable,

affordable, and environmentally sound energy

requires national policy, and regulations that will

impact those policies require reasoned decision-

making. EPA’s failure to do so here has significant

implications for the entire country.

24

CONCLUSION

The petitions for a writ of certiorari should be

granted.

August 15, 2014 Respectfully submitted,

RACHEL BRAND SANDRA P. FRANCO

SHELDON GILBERT Counsel of Record

U.S. CHAMBER BRYAN M. KILLIAN

LITIGATION CENTER, INC. BINGHAM MCCUTCHEN LLP

1615 H Street, N.W. 2020 K Street, N.W.

Washington, D.C. 20062 Washington, D.C. 20006

(202) 463-5337 (202) 373-6000

s.franco@bingham.com

Counsel for Amicus Curiae

Chamber of Commerce of the United States of

America