# Amicus Curiae Brief — 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:** Amicus Curiae Brief
- **Published:** January 1, 2014

## Text

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

tS 4 a Bl oc 1. < | ) ae ere 2

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

@)

li

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0332%3A09. Public record. Not legal advice.