Petitioners Brief — Nat'l Mining Ass'n v. Envtl. Prot. Agency, 135 S. Ct. 703 (2014) (No. 14-49)

Supreme Coun US )

FILED

JAN 20 2015

Nos. 14-46, 14-47, 14-49 -SEREOF THE CLERK |

nS LLL aS nS aca

IN THE

Supreme Court of the United States

STATE OF MICHIGAN, ET AL.,

Petitioners,

v.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ET AL.,

Respondents.

On Writs of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF PETITIONER

UTILITY AIR REGULATORY GROUP, ET AL.

F. WILLIAM BROWNELL

(Counsel of Record)

HENRY V. NICKEL

LEE B. ZEUGIN

ELIZABETH L. HORNER

HUNTON & WILLIAMS LLP

2200 PENNSYLVANIA AVENUE, NW

WASHINGTON, D.C. 20037

(202) 965-1500

bbrownell@hunton.com

danuary 20,2015 Counsel for Petitioner

[Counsel for Respondents in Support of Petitioner Joining

in This Brief Are Listed Inside This Cover]

COUNSEL FOR RESPONDENTS IN SUPPORT OF

PETITIONER JOINING IN THIS BRIEF

LESLIE SUE RITTS

RiTTs LAW GROUP, PLLC

THE CARRIAGE HOUSE

620 FORT WILLIAMS

PARKWAY

ALEXANDRIA, VA 22304

(703) 823-2292

LSRitte@rittalawgroup.com

Counsel for American

Public Power Association

BART E. CASSIDY

KATHERINE L. VACCARO

MANKO, GOLD, KATCHER &

Fox, LLP

401 CITY AVENUE

SUITE 901

BALA CYNWYD, PA 19004

(484) 430-5700

bcassidy@mankogold.com

Counsel for ARIPPA

MICHAEL NASI

JACKSON WALKER LLP

100 CONGRESS AVENUE

SUITE 1100

AUSTIN, TX 78701

DENNIS LANE

STINSON LEONARD STREET

LLP

1775 PENNSYLVANIA

AVENUE, NW, SUTTE 800

WASHINGTON, D.C. 20006

(202) 785-9100

dennis. lane@

stinsonleonard.com

PARTHENIA B. EVANS

STINSON LEONARD STREET

SUITE 100

QUESTION PRESENTED

Whether the Environmental Protection Agency

unreasonably refused to consider costs in determin-

ing whether it is appropriate to regulate hazardous

pollutants emitted by electric utilities.

55

PARTIES TO THE PROCEEDING

Petitioners in No. 14-46 are the States of Michi-

gan, Alabama, Alaska, Arizona, Arkansas (ex rel.

Dustin McDaniel, Attorney General), Idaho, Indiana,

Iowa (Terry E. Branstad, Governor of the State of

Iowa on behalf of the People of Iowa), Kansas, Ken-

tucky (Jack Conway, Attorney General of Kentucky),

Mississippi, Missouri, Nebraska, North Dakota,

Ohio, Oklahoma, South Carolina, Texas, Utah, West

Virginia, and Wyoming, and the Texas Commission

on Environmental Quality, the Texas Public Utility

Commission, and the Railroad Commission of Texas.

Petitioner in No. 14-47 is the Utility Air Regulatory

Group. Petitioner in No. 14-49 is the National Min-

ing Association. Each petitioner in these consolidat-

ed cases was also a petitioner in the court of appeals.

Respondents herein, which were the respondents

below, are the United States Environmental Protec-

tion Agency, and Gina McCarthy, Administrator,

United States Environmental Protection.

Respondents who were petitioners in the court of

appeals are: White Stallion Energy Center, LLC;

American Public Power Association; ARIPPA; Chase

Power Development, LLC; Edgecombe Genco, LLC;

FirstEnergy Generation Corporation; Gulf Coast

Lignite Coalition; Institute for Liberty; Julander En-

ergy Company; Kansas City Board of Public Utilities;

Midwest Ozone Group; National Black Chamber of

Commerce; Oak Grove Management Company, LLC;

Peabody Energy Corporation; Puerto Rico Electric

Power Authority; Spruance Genco, LLC; State of

Florida; Commonwealth of Pennsylvania; Common-

wealth of Virginia; Tri-State Generation and Trans-

mission Association, Inc.; United Mine Workers of

America; West Virginia Chamber of Commerce, Inc.;

Georgia Association of Manufacturers, Inc.; Indiana

Chamber of Commerce, Inc.; Indiana Coal Council,

Inc.; Kentucky Chamber of Commerce, Inc.; Ken-

tucky Coal Association, Inc.; North Carolina Cham-

ber; Ohio Chamber of Commerce; Pennsylvania Coal

Association; South Carolina Chamber of Commerce;

The Virginia Chamber of Commerce; The Virginia

Coal Association, Incorporated; West Virginia Coal

Association, Inc.; Wisconsin Industrial Energy

Group, Inc.; Wolverine Power Supply Cooperative,

Inc.; Chesapeake Climate Action Network; Conserva-

tion Law Foundation; Environmental Integrity Pro-

ject; and Sierra Club.

Respondent-intervenors in the court of appeals

(with respect to certain petitions for review) were

Commonwealth of Massachusetts; State of Califor-

nia; State of Connecticut; State of Delaware; State of

Illinois; State of Iowa; State of Maine; State of Mary-

land; State of Minnesota; State of New Hampshire;

State of New Mexico; State of New York; State of

North Carolina; State of Oregon; State of Rhode Is-

land; State of Vermont; City of Baltimore; City of

Chicago; City of New York; District of Columbia;

County of Erie, New York; Calpine Corporation;

Chase Power Development, LLC; Exelon Corpora-

tion; National Grid Generation LLC; Public Service

Enterprise Group, Inc.; Gulf Coast Lignite Coalition;

Institute for Liberty; Lignite Energy Council; Na-

tional Black Chamber of Commerce; National Mining

Association; Oak Grove Management Company,

LLC; Peabody Energy Corporation; Sunflower Elec-

tric Power Corporation; Tri-State Generation and

Transmission Association, Inc.; Utility Air Regulato-

ry Group; White Stallion Energy Center, LLC; Amer-

1V

ican Academy of Pediatrics; American Lung Associa-

tion; American Nurses Association; American Public

Health Association; Chesapeake Bay Foundation;

Citizens for Pennsylvania’s Future; Clean Air Coun-

cil; Conservation Law Foundation; Environment

America; Environmental Defense Fund; Izaak Wal-

ton League of America; National Association for the

Advancement of Colored People; Natural Resources

Council of Maine; Natural Resources Defense Coun-

cil; Ohio Environmental Council; Physicians for So-

cial Responsibility; Sierra Club; and Waterkeeper

Alliance.

A respondent in the court of appeals (with respect

to certain petitions for review) was Lisa Perez Jack-

son, Administrator, United States Environmental

Protection Agency. Ms. Jackson ceased to hold the

office of Administrator, United States Environmental

Protection Agency, on February 15, 2013; that office

is currently held by Gina McCarthy, Administrator,

United States Environmental Protection Agency.

Vv

RULE 29.6 DISCLOSURE STATEMENTS

Petitioner

Utility Air Regulatory Group (UARG’) is an

ad hoc, unincorporated association of individual elec-

tric generating companies and industry trade associ-

ations that participates on behalf of its members col-

lectively in administrative proceedings under the

Clean Air Act, and in litigation arising from those

proceedings, that affect electric generators. UARG

has no outstanding shares or debt securities in the

hands of the public and has no parent company. No

publicly held company has a 10% or greater owner-

ship interest in UARG.

R in ition

American Public Power Association (“APPA”)

is a nonprofit trade association whose members are

units of state and local governments that own and

operate electric generating, distribution and trans-

mission assets. APPA addresses issues of interest to

its members, including those issues related to the

development and implementation of requirements

under federal and state Clean Air Act programs.

APPA does not have any outstanding securities in

the hands of the public, nor does APPA have a pub-

licly owned parent, subsidiary, or affiliate.

ARIPPA is a non-profit trade association that

represents a membership primarily comprised of

electric generating plants using environmentally-

friendly circulating fluidized bed boiler technology to

convert coal refuse and/or other alternative fuels

such as biomass into alternative energy and/or

steam, with the resultant alkaline ash used to re-

claim mine lands. ARIPPA was organized in 1988

vl

for the purpose of promoting the professional, legis-

lative and technical interests of its member facilities.

ARIPPA has no outstanding shares or debt securities

in the hands of the public and does not have any par-

ent, subsidiary, or affiliate that has issued shares or

debt securities to the public.

Gulf Coast Lignite Coalition (“GCLC’) is a

non-profit corporation organized under the laws of

the State of Texas and comprised of individual elec-

tric generating and mining companies. GCLC partic-

ipates on behalf of its members collectively in pro-

ceedings brought under United States environmental

regulations, and in litigation arising from those pro-

ceedings, which affect electric generators and mines.

GCLC has no outstanding shares or debt securities

in the hands of the public and has no parent compa-

ny. No publicly held company has a 10% or greater

ownership interest in GCLC.

Kansas City Board Of Public Utilities-

Unified Government Wyandotte County/Kansas

City, Kansas is not required to provide a Rule 29.6

Disclosure Statement because it is a governmental

entity organized under the laws of the State of Kan-

sas. Accordingly, no Disclosure Statement is being

provided.

White Stallion Energy Center, LLC (“WSEC”)

is a limited liability company organized under the

laws of the State of Texas engaged in the business of

energy development and production. Maris Invest-

ment Company, LLC, and Sky Global Partners, LLC

each hold a 10% or greater ownership interest in it.

Vii

TABLE OF CONTENTS

Page

yg), _,_ «nee mnnnem emer i

PARTIES TO THE PROCEEDING ............................. i

RULE 29.6 DISCLOSURE STATEMENTS ............... v

» Lg Ra een ae vii

po a ee ix

IED MI aici ciiictl abe sachachaabanniabiadsanionenedhe 1

FRR TSR Ne TE eka Be SD BER tel eae eo 1

STATUTORY AND REGULATORY

PROVISIONS INVOLVED .......................000e0000 1

RE eS CIO sen it AS ee TS Ad RIN 2

STATEMENT OF THE CASE ...........ccccccscccscccscsccccsene 3

I. Regulation of EGU HAP Emissions

I nl 1h aa kaiemasonobaeoien 3

A. CAA HAP Regulation Prior to

MIL discnd iaainsuscliainnetaiiienniahaduntasinaneieroit 4

B. Statutory Changes to the CAA in

EN AG RAS tee AE Bhs Mead eae 6

Il. Characteristics of EGU HAP

a eye RE Aa cA Pad ol Dat AEE ee tale tne 11

Ill. Agency Action Under §7412(n) Prior

to the MATS Rulemaking............................ 15

IV Regulation of EGU HAP Emissions

Tene Cie ee BUR. onesie sccccccccsccccccescncees 18

fe ee Ee Seana 19

SUMMARY OF ARGUMENT .................ccccccceseeeseeees 22

I. The “Appropriate and Necessary”

Decisional Standard in §7412(n)(1)(A)

Embraces a Broad Range of Factors

pe Ee ee 25

A. Congress Has Consistently

Required Consideration of Costs

in Making Decisions on CAA

Emission Standards.............. pheoacnneesdes 27

B. Section 7412(n)(1)(A) Is a

Residual Risk Provision....................... 30

C. The Panel Majority’s Reliance on

Whitman Was Misplaced..................... 35

Il. EPA Was Also Required to Consider

Ill. Under §7412(n), Costs Must Be

Considered in the Context of

Emission Standard-Setting Decisions

for the Specific EGU HAP Emissions

That Pose Health Hazards. ...............0000...... 40

a UIE ibdinalinblacecartubidab erin dnahaptlonaiemmietienaaecbocdnn 44

ix

TABLE OF AUTHORITIES

Page

Cases:

Am. Elec. Power Co. v. Connecticut, 131 S. Ct.

ITN III casein sont siete inhouse aminoaenaemeinciimiaiels 18

Am. Textile Mfrs. Inst., Inc. v. Donovan, 452

Br TIT disc hcencnntaduditbenenndaneiiiaioniowenoheialy 28, 38

Ass'n of Battery Recyclers, Inc. v. EPA, 716 F.3d

i I os cnnnssaieiedediianeigiislnantaiornbhe 8, 31

Coal. for Responsible Regulation v. EPA, 684

F.3d 102 (D.C. Cir. 2012), affd in part &

reud in part, Utility Air Regulatory Grp. v.

EPA, 134 S. Ct. 2427 (2014)

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

SI scutsctdstcratudciabhadoonbanonbiaeie 28, 29, 32, 33, 37, 39

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

ee 27, 31

Indus. Union Dep’t, AFL-CIO v. Am. Petroleum

Inst., 448 U.S. 607 (1980) ........................ 26, 28, 32

Motor Vehicle Mfrs. Ass’n v. State Farm Mutual

Auto. Ins. Co., 463 U.S. 29 (1983)........................ 36

Nat? Ass’n of Clean Air Agencies v. EPA, 489

pf & 0 Led. _ , SRR RNGe einaereeoen 39

Nat Lime Ass’n v. EPA, 233 F.3d 625 (D.C. Cir.

Natural Res. Def. Council v. EPA, 529 F.3d 1077

(D.C. Cir. 2008)

x

New Jersey v. EPA, 517 F.3d 574 (D.C. Cir.

IED wencnssocescoscnesenssinsiicsianieuaiaann annie 6, 17, 18

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

GEE ED os cncveccccssesovsenssieeiiatssiotannuanmaidaaeee 27, 35

Statutes:

BB U.B.C. © 1DGOGD) wccccccccesescsssesisistintmciatinee 1

SO UBC. © CII cvcecscivccoacsersiecsuSasanaeeeeee 38

SO U.B.C. § CBOGIID oacsecsesenseisiasksceisesasacscesdalecinnneal 38

42 U.S.C. § 1857¢-7(a)(1) (1970) ..ceccccececsesesseseeeeeeeseees 4

42 U.S.C. § 1857c-7(b)(1)(B) (1970) ............. eee eee eee 4

Clean Air Act, 42 U.S.C. §§ 7401, et seq. (2012)

43 U.B.C. § TOGD ccsicssicsnisuesnistctennesaageeaanae 27

4B U.S.C. F FOIE icssciincisistcctnsoommpaane 27, 35

43 UBC. © FOBIGDD cecccessvesssssssistnsniecobiailaiauae 27

43 U.S.C. § TOROGIIIGDD vsnisisicsstvnsonseceesaccinasamaa 27

GB UBC. © FGGR svccecscisssnsisssaxstiniamaae 17, 18

43 U.B.C. § TORRID oscscssnsiccetcicssssnecnesiticnaana 7

4B UDC. 9 TORI accccscccssssctinsiiisiensimemaaaae 27

43 U.B.C. § TERRI ccc sscsssitviictimenndbintioean 27

OB UBS. © FORD cccccecinsscssiscniectammmnt 18, 27, 42

4B U.G. © FOR RG cesiccsccsinciscsstccnttetaniataane 29

4B UBS. © FOB scticcsctssniecitninieee passim

4B UW B.C. 5 FERED ccicccinisstvisaccemeenecdaanae 6

43 U.B.G. 5 FORGE) ccccccecsssiiinstsanieieremaiaa 9

a RS 6

42 U.S.C. § 7412(C) ...ce.cececceseeseseseeseeees 16, 17, 18, 24

a .sccasecsesseececsesecccsee 6

43 UB.C. & TAIRICND)-.-..-....-n.0.ceccccccescccecescecee- 8,17

42 U.S.C. § 7412(c)(9)(B) (ii) .......-.cccececcecesseeeeeeseees 18

Fe passim

42, U.S.C. § 7412(d)(2) ........e.cecee-seeeeees 7, 27, 33, 34

42 U.S.C. § 7412(A)(B) ......-....scscsssccsssesseees 8, 33, 34

FS 32

GB UB.C. © TAIBIIG) .----.-.n..a.n.ecncccnceccenncs.0e. 8, 31

42 U.S.C. § 7412(d)(8)(A)(i).......ececccccseseeseseseeseeees 34

eo, 6 94ie)........................... 7, 8, 10, 30, 41

EE 33

42 U.S.C. § 7412(£)(2) .........c.cescscesecsceesesseseseees 30, 41

42 U.S.C. § 7412(£)(2)(A) ........cc0ecescsseseseeeeees 8, 9, 33

RR cas caccnccccocccancee 30, 41

Ne, PRI acca cacnscnceccesescccnsee passim

42 U.S.C. § 7412(m)(1)(A) ...cececccseceseeseceeesseees passim

42 U.S.C. § 7412(m)(1)(B) ......-....ecescesececeseeceseeeees 33

Se .sscecsconsseovaccccanseeee 33

Teen ssscenenacasacesves 27

ELL 7

Ne scseeeneannte 27

xii

ee Tae Oy I cenescntntncnincscssssnasetiennniiidss 7

So Es Te PD ccithititinticscnitaniariticnnnininigemnds 7

7 fs TG | eee Fee 27

Oe ee Oe PD cecknicitnivadctticttnnitesiriencipiaciientiaiats 27

fit ey ney ee 27

Ge Fs Oe Pes citclitnsntsiniisinieaicciaiiibbibininisinmiaiematide 27

Legislative History:

136 CONG. REC. 3185 (Mar. 1, 1990)....................0c000e 9

136 CONG. REC. 3392 (Mar. 5, 1990)......................044- 9

136 CONG. REC. 3493 (Mar. 6, 1990)......................20. 9

House Debate on the Clean Air Act Amend-

ments of 1990 Conference Report (Oct. 26,

1990) (statement of Rep. Michael Oxley), re-

printed in 1 A LEGISLATIVE HISTORY OF THE

CLEAN AIR ACT AMENDMENTS OF 1990, at

BEET Cee restecesccccnesnscescessosaicnunantenestisisiqpniecnennes 11

Pub. L. No. 91-604, 84 Stat. 1676 (1970).................... 4

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

S. 1630 as passed by the House, § 301 (1990),

reprinted in 2 A LEGISLATIVE HISTORY OF THE

CLEAN AIR ACT AMENDMENTS OF 1990, at

te cnnnicnacsagsenniesussteetasceasnpiaibicciantmacaeibnasnenil 9

S. 1630, § 301 (1990), reprinted in 3 A LEGISLA-

TIVE HISTORY OF THE CLEAN AIR ACT AMEND-

MENTS OF 1990, at 4119 (1993) ...............0.....eeceee eee q

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

Cee De ccccecicsncsscnnnncstinvessstentcmmiasniossaeeian 6

Regulations:

I sas caes occueencnamannns 6

Federal Register:

40 Fed. Reg. 48,292 (Oct. 14, 1975) .............ccccccceeeeees 5

48 Fed. Reg. 15,076 (Apr. 6, 1983).................ccccceeceeees 5

52 Fed. Reg. 8724 (Mar. 19, 1987) .............cccccceseeeeeeees 5

54 Fed. Reg. 38,044 (Sept. 14, 1989)..........0..0...0..0..00-. 4

54 Fed. Reg. 51,654 (Dec. 15, 1989)..................0.00 5,6

65 Fed. Reg. 79,825 (Dec. 20, 2000)..................-.++ 5, 16

69 Fed. Reg. 4652 (Jan. 30, 2004) .............--cccceeceeees 12

70 Fed. Reg. 15,994 (Mar. 29, 2005)...5, 10, 13, 16, 17

70 Fed. Reg. 28,606 (May 18, 2005)..................2....... 17

71 Fed. Reg. 76,603 (Dec. 21, 2006)..................00.000+. 34

74 Fed. Reg. 30,366 (June 25, 2009).................0:c000+ 31

76 Fed. Reg. 24,976 (May 3, 2011)............... 12, 14, 15,

cpa a el 18, 24, 42

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

Miscellaneous:

BREYER, STEPHEN, BREAKING THE VICIOUS CIR-

CLE: TOWARD EFFECTIVE RISK REGULATION

Breyer, Stephen, Forward: Beyond the Vicious

Circle, 3 NYU ENVTL. L.J. 251 (1994-95)

xiv

Calandrillo, Steve P., Responsible Regulation: A

Sensible Cost-Benefit, Risk Versus Risk Ap-

proach to Federal Health and Safety Regula-

tions, 81 B.U. L. REV. 957 (2001).........--..+-e-+-+00+ 28

Industrial Economics Inc., Direct Cost Esti-

mates for the Clean Air Act Second Section

812 Prospective Analysis (Feb. 2011), avail-

able at

Institute for Energy Research, Impact of EPA's

Regulatory Assault on Power Plants: New

Regulations to Take More than 72 GW of

Electricity Generation Offline and the Plant

Closing Announcements Keep Coming...

(Oct. 2014), available at

Meyers, Sheldon, Office of Radiation Programs,

Office of Air and Radiation, EPA, Applica-

National Acid Precipitation Assessment Pro-

gram, National Acid Precipitation Assess-

ment Program Report to Congress 2011: An

Integrated Assessment (Dec. 2011), available

at

XV

U.S. Energy Information Administration, Today

in Energy, AEO2014 Projects More Coal-

Fired Power Plant Retirements by 2016

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

available at

http://www.eia.gov/todayinenergy/detail.cfm?

“if eV RT LETH RD CONS TIES

U.S. Environmental Protection Agency, Clean

Air Market Programs, Acid Rain Program

Benefits Exceed Expectations (undated),

available at

http:/ /capan /

U.S. Environmental Protection Agency, EPA-

453/R-99-001, Residual Risk Report to Con-

gress (Mar. 1999), available at

http://www.epa.gov/ttn/oarpg/t3/reports/risk _

TELAT TIA Pee ME estas dslee RRC RREN «4, 29, 30

U.S. Environmental Protection Agency, EPA’s

Responses to Public Comments on EPA’s Na-

tional Emission Standards for Hazardous

Air Pollutants from Coal-and Oil-Fired Elec-

tric Utility Steam Generating Units, Vol. 1

(Dec. 2011), Docket No. EPA-HQ-OAR-2009-

ED actindiithisnenensnntnnieovinitnstimbigndcaiiniatciet iis

U.S. Environmental Protection Agency, EPA-

453/R-98-004a, Study of Hazardous Air Pol-

lutant Emissions from Electric Utility Steam

Generating Units—Final Report to Congress,

Vol. 1 (Feb. 1998), Docket No. EPA-HQ-OAR-

SE ITE crtccssisideniacteoneuncbmmeteinenicees.: 5, 12,13

xvi

U.S. Environmental Protection Agency, EPA-

452/R-11-013, Supplement to the Non-Hg

Case Study Chronic Inhalation Risk Assess-

ment in Support of the Appropriate and Nec-

essary Finding for Coal- and Oil-Fired Elec-

tric Generating Units (Nov. 2011), Docket

No. EPA-HQ-OAR-2009-0234-19912.........-.00.-+++. 14

U.S. Environmental Protection Agency, The

Benefits and Costs of the Clean Air Act, 1970

to 1990 (Oct. 1997), available ai

http://www.epa.gov/cleana ractbenefits/retro.

U.S. Environmental Protection Agency, EPA-

410-R-99-001, The Benefits and Costs of the

Clean Air Act 1990 to 2010, EPA Report to

Congress (Nov. 1999), available at

wow VW :

U.S. Environmental Protection Agency, The

Benefits and Costs of the Clean Air Act from

1990 to 2020, Final Report—Rev. A (Apr.

2011), available at

OPINIONS BELOW

The majority opinion of the D.C. Circuit is report-

ed at 748 F.3d 1222 (D.C. Cir. 2014) (per curiam),

and reproduced in the Utility Air Regulatory Group

(“‘UARG”) petitioner’s appendix (“Pet. App.”) at Pet.

App. 3a-72a. The dissent of Judge Brett Kavanaugh

is reproduced at Pet. App. 73a-104a.

JURISDICTION

The D.C. Circuit entered judgment denying (and,

in the case of No. 12-1174, dismissing) the petitions

for review on April 15, 2014. Pet. App. la-2a. This

Court has jurisdiction under 28 U.S.C. §1254(1).

STATUTORY AND REGULATORY PROVI-

SIONS INVOLVED

Section 112(n)(1)(A) of the Clean Air Act (CAA”

or “Act”), 42 U.S.C. §7412(n)(1)(A), provides:

(n) Other provisions

(1) Electric utility steam generating units

(A) The Administrator shall perform a

study of the hazards to public health reasona-

bly anticipated to occur as a result of emis-

sions by electric utility steam generating units

of pollutants listed under subsection (b) of this

section after imposition of the requirements of

this chapter. The Administrator shall report

the results of this study to the Congress with-

in 3 years after November 15, 1990. The Ad-

ministrator shall develop and describe in the

Administrator’s report to Congress alternative

control strategies for emissions which may

warrant regulation under this section. The

Administrator shall regulate electric utility

2

steam generating units under this section, if

the Administrator finds such regulation is ap-

propriate and necessary after considering the

results of the study required by this subpara-

graph.

This provision and additional excerpts from 42

U.S.C. §7412 are reproduced at Pet. App. 477a-505a.

The Mercury and Air Toxics Standards rule at is-

sue, 77 Fed. Reg. 9304 (Feb. 16, 2012) (“MATS

Rule”), is reproduced in excerpted form at Pet. App.

105a-476a and in full in the appendix filed with the

National Mining Association’s (“NMA”) petition for a

writ of certiorari at NMA App. 196a-1160a.

INTRODUCTION

CAA §112(n), 42 U.S.C. §7412(n), provides that

the U.S. Environmental Protection Agency (“EPA” or

“Agency”) Administrator shall regulate electric utili-

ty steam generating unit (“EGU”) hazardous air pol-

lutant (“HAP”) emissions “under this section,” if she

“finds [that] such regulation is appropriate and nec-

essary” to address “hazards to public health” that

remain “after imposition of the requirements of this

[Act].” §7412(m)(1)(A) (emphases added).' Because

1 The §7412(n)(1)(A) study refers to “hazards to public health

reasonably anticipated to occur” as a result of exposure to re-

maining EGU emissions. Generally, the word “hazard” refers to

a potential source of harm and the word “risk” is the likelihood

of harm resulting from exposure to a hazard. Section 7412(n)

provides that the “hazard” at issue is a threat to “public health”

and the “risk” of .hat hazard occurring cannot be remote or

speculative, but must be “reasonably anticipated to occur.” In

managing carcinogenic hazards of the kind referenced in the

§7412(n) study, EPA has found risk estimates as high as one

predicted mortality in ten thousand to be presumptively “safe”

3

residual risk provisions like §7412(n)(1)(A) address

diminishing increments of air pollution, they require

balancing substantial costs to society against shrink-

ing benefits.

In the MATS Rule, the quantified costs of HAP

regulation are more than one-thousand times greater

than the quantified benefits: $9.6 billion versus $4

to $6 million. EPA says that Congress’ direction to

regulate specific HAP emissions posing remaining

“hazards to public health” only if “appropriate and

necessary” authorizes the Agency to regulate, at

enormous cost, HAP emissions that present only en-

vironmental risks or de minimis health hazards.

That interpretation is as curious as it is wrong.

STATEMENT OF THE CASE

I. Regulation of EGU HAP Emissions Under

the CAA.

Numerous times after passage of the CAA in

1970, EPA evaluated the electric utility industry for

potential §7412 regulation. Every time EPA came to

a consistent scientific conclusion: the public health

risks presented by EGU HAP emissions are vanish-

ingly small and are adequately regulated through

other CAA programs. This history informed Con-

gress treatment of EGUs in the 1990 CAA Amend-

ments.

and, at the other end of the spectrum, risks of one-in-one mil-

lion or less to be too remote to require protection. Infra pp. 4-5.

Hereafter, references to “public health risk” and “health haz-

ards” are used interchangeably to refer to “hazards to public

health reasonably anticipated to occur.”

4

A. CAA HAP Regulation Prior to 1990.

Prior to the 1990 Amendments, §7412 required

EPA to develop a list of individual HAPs for regula-

tion, and then to develop emission standards for each

listed HAP as needed to provide an “ample margin of

safety” to protect public health. Pub. L. No. 91-604,

84 Stat. 1676, 1685 (1970); 42 U.S.C. §1857c-7(a)(1),

(b)(1)(B) (1970). In establishing these emission

standards, EPA interpreted the “ample margin of

saiety” language to authorize a risk management de-

cision considering “all health information...as well as

other relevant factors including costs and economic

impacts, technological feasibility, and other factors

relevant to each particular decision.” 54 Fed. Reg.

38,044, 38,045 (Sept. 14, 1989).

Under EPA’s pre-1990 approach to developing

HAP emission standards, EPA first established “a

‘safe’ or ‘acceptable’ risk level...considering all health

information....[with] ‘an MIR (maximum individual

risk) of approximately 1 in 10 thousand...[as] the

upper-end of the range of acceptability.” EPA, EPA-

453/R-99-001, Residual Risk Report to Congress at

ES-11 (Mar. 1999), available at

http://www.epa.gov/ttn/oarpg/t3/reports/risk_rep.pdf

(“EPA Residual Risk Report”). In providing an am-

ple margin of safety considering “other relevant fac-

tors including costs, economic impacts, [and] techno-

logical feasibility,” EPA considered alternative

standards addressing risks between one-in-ten thou-

sand and one-in-one million to determine a protec-

tive level. Id.

Over this same period, the CAA required EGUs to

install controls for a variety of conventional, non-

hazardous pollutants, including flue gas desulfuriza-

5

tion systems (known as “scrubbers”) for sulfur diox-

ide (“SOs”) emissions and fabric filters or electrostat-

ic precipitators for particulate matter (“PM”) emis-

sions. HAPs in EGU combustion gas streams were

also reduced by these controls.? Reflecting the fact

that emissions of HAPs constituted a miniscule per-

centage of all EGU emissions, every EPA evaluation

of EGU HAP emissions prior to the 1990 CAA con-

cluded that those emissions did not pose a significant

public health risk. 40 Fed. Reg. 48,292, 48,297,

48,298 (Oct. 14, 1975) (mercury); 52 Fed. Reg. 8724,

8725 (Mar. 19, 1987) (mercury); see also 48 Fed. Reg.

15,076, 15,085 (Apr. 6, 1983) (radionuclides); 54 Fed.

Reg. 51,654, 51,671-72 (Dec. 15, 1989) (radionu-

clides).

In the case of radionuclides, for example, EPA

found that EGU emission levels were “safe” because

no facility had a risk above one-in-ten thousand (the

highest risk from an EGU was one-in-seventy-five-

thousand). EPA estimated that 130,000 people in

the U.S. were potentially exposed to health risks

greater than one-in-one million, and that the cost of

2 EPA, The Benefits and Costs of the Clean Air Act, 1970 to

1990, at 39 (Oct. 1997), available at

http://www.epa.gov/cleanairactbenefits/retro.html (“Control of

(hazardous air] pollutants resulted...from incidental contro! due

to criteria pollutant programs....”); see also 65 Fed. Reg. 79,825

(Dec. 20, 2000) (“Notice of Finding”), Pet. App. 621a-622a; 70

Fed. Reg. 15,994 (Mar. 29, 2005) (‘2005 Correction Rule”) (cor-

recting certain conclusions drawn in 2000), Pet. App. 5872;

EPA, EPA-453/R-98-004a, Study of Hazardous Air Pollutant

Emissions from Electric Utility Stearn Generating Unite—Final

Report to Congress, Vol. 1 (Feb. 1998), Docket No. EPA-HQ-

OAR-2009-0234-3052 (“Utility Study”) (estimating utility HAP

emissions in 1990), Joint Appendix CJA”) 69.

6

reducing those risks would require $13 billion in cap-

ital costs plus $4.4 billion in annual costs. 54 Fed.

Reg. at 51,671-72. Weighing the public health risks

and costs, EPA concluded that existing radionuclide

emissions were at levels that protected public health

“with an ample margin of safety.” Id. at 51,672.

As for non-EGU HAP sources, the difficulty of

risk characterizations and controversy surrounding a

program that could impose substantial costs on key

industries resulted in limited HAP emissions regula-

tion under §7412 prior to 1990. As of 1990, EPA had

listed only eight HAPs for regulation under §7412,

and had regulated emissions of only seven of those

for a limited number of source categories. 40 C.F.R.

pt. 61; see New Jersey v. EPA, 517 F.3d 574 (D.C.

Cir. 2008).

B. Statutory Changes to the CAA in

1990.

Non-EGU_HAP emissions—Dissatisfied with the

slow progress of regulation under §7412, Congress in

1990 amended that provision to introduce a new,

control technology-driven approach to ensure prompt

regulation of HAPs from the many stationary source

categories that had not yet been regulated. See S.

Rep. No. 101-228, at 131-33 (1989), reprinted in 1990

U.S.C.C.A.N. 3385, 3516-18. Congress listed 189

HAPs for regulation, §7412(b), and defined in objec-

tive terms the source categories whose HAP emis-

sions were to be regulated. A source category would

be listed for regulation if a source within that catego-

ry is located at a facility that emits more than either

10 tons of any one HAP or 25 tons of all HAPs.

§7412(a)(1), (c)(1).

7

For listed categories, Congress, as it had under

other CAA programs, called upon EPA initially to

promulgate “technology-based” emission standards®

under §7412(d), and later to consider more stringent

standards under §7412(f) if unacceptable risks re-

mained after implementation of the technology-based

standards. Cf. Visibility Protection Program, 42

U.S.C. §7491(b)(2)(A) (best available retrofit tech-

nology” (“BART”)) & (B) (“long term...strategy” to re-

duce risk of visibility impairment).

Technology-based emission standards are found

throughout the CAA and have two common elements:

(1) Congress identifies a universe of technologies

(i.e., low emitting measures, processes, systems or

techniques) upon which standards will be based

(thus creating a “floor” on required reductions), and

(2) Congress requires that costs, energy, and other

factors be considered in setting standards based on

the candidate technologies. See, eg., 42 U.S.C.

§§7411(a)(1) (best system of emission reduction”),

7479(3) (“best available control technology”

(“BACT”)), 7491(b)(2)(A) (BART). For source catego-

ries listed under §7412, EPA must establish what

EPA calls MACT (“maximum achievable control

technology”) emission standards, which reflect the

“maximum degree of reduction in emissions” that is

“achievable” for new and existing sources within the

category, “taking into consideration the cost of

achieving such emission reduction” and other factors.

§7412(d)(2).

8 Emission reduction “technology” includes virtually any meas-

ure or technique that limits the emissions of a pollutant, from

process changes to emission control equipment. See, e.z.,

§7412(d\(2).

8

For new sources, the universe of technologies con-

sidered in this MACT standard-setting inquiry is de-

termined in the first instance in reference to the de-

gree of emission limitation “achieved in practice by

the best controlled similar source.” §7412(d)(3). For

existing sources, it is determined in reference to the

“best performing...existing sources.” Id. EPA must

establish MACT for every individual HAP emitted by

major sources in a listed category. Nat? Lime Ass'n

v. EPA, 233 F.3d 625, 633-34 (D.C. Cir. 2000). Final-

ly, EPA must review MACT standards at least every

eight years to account for “developments in practices,

processes, and control technologies” for specific

HAPs, considering costs. §7412(d)(6); Assn of Bat-

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

(D.C. Cir. 2013) (per curiam).

Following implementation of §7412(d) standards,

the Administrator must consider regulation of resid-

ual public health risks posed by individual HAP

emissions if needed to provide an “ample margin of

safety to protect public health in accordance with

this section (as in effect before November 15, 1990),”

§7412(f(2)(A) (emphasis added)—a reference to

EPA’s pre-1990 interpretation of “ample margin of

safety” to encompass consideration of cost and other

factors. Moreover, reflecting EPA’s pre-1990 ap-

proach to “ample margin of safety” regulation, Con-

gress recognized one-in-one million as a negligible

level of public health risk. See §7412(f)(2)(A), (c)(9).

Finally, under §7412(f), the Administrator must also

consider regulation of residual environmental risks

associated with such non-EGU emissions if she de-

termines that a more stringent standard is “neces-

sary to prevent, taking into consideration costs, en-

ergy, safety, and other relevant factors, an adverse

9

environmental effect." §7412(f)(2)(A) (emphasis

added). In this manner, Congress made clear that

costs and other factors are relevant to striking an

appropriate regulatory balance when addressing ei-

ther health or environmental residual risks that

might remain after control technology regulation.

EGU HAP emissions—In the legislative process that

led to the 1990 Amendments, individual legislators

expressed concern that duplicative regulation of

EGUs “would increase power rates, while potentially

providing little or no public health benefit.” 136

Cong. Rec. 3493 (Mar. 6, 1990) (statement of Sen.

Steve Symms); see also 136 Cong. Rec. 3185 (Mar. 1,

1990) (Summary of Bi-Partisan Senate Clean Air Act

Agreement Nonattainment of Health Standards for

Ozone); 136 Cong. Rec. 3392 (Mar. 5, 1990) (same); S.

1630, §301 (1990), reprinted in 3 A Legislative Histo-

ry of the Clean Air Act Amendments of 1990, at

4119, 4407, 4433 (1993) (“1990 Legis. History”).

While the Senate went to conference with a bill that

would have treated EGUs the same as other source

categories, see S. 1630, §301 (1990), reprinted in 3

1990 Legis. History, at 4418-28, the House bill in-

cluded an EGU-specific provision virtually identical

to the current §7412(n)(1)(A). S. 1630 as passed by

the House, §301 (1990), reprinted in 2 1990 Legis.

History at 1809, 2122, 2148-49. Reflecting the wide-

spread concern with duplicative regulation of EGUs,

the Conference Committee adopted the House provi-

sion requiring separate regulatory scrutiny of EGU

HAP emissions. Pub. L. No. 101-549, 104 Stat. Ann.

2399, 2558-59 (1990).

‘ “Adverse environmental effect” is defined in §7412(a)(7) as

“any significant and widespread adverse effect.”

10

In this EGU-specific provision, which became

§7412(n) of the Act, Congress recognized that EGU

emissions are not like HAP emissions from oth-

er source categories.° In addition to earlier CAA

programs that had substantially reduced EGU HAP

emissions, Congress in 1990 imposed massive addi-

tional reduction requirements on EGU emissions of

conventional, non-hazardous pollutants, such as SO:

nitrogen oxides and PM. These programs included a

new regional haze visibility program, new acid rain

title, and stringent, new nonattainment require-

ments—all focused on further EGU reductions in

conventional pollutants. These requirements re-

duced conventional pollutant emissions by many mil-

lions of tons and lowered EGU HAP emissions even

further beyond the already low, pre-1990 levels.é

Congress in §7412(n)(1)(A) therefore focused EPA’s

authority to regulate EGU HAPs on only those HAP

emissions that posed an unacceptable residual

health risk after implementation of other CAA pro-

grams.

* 2005 Correction Rule, Pet. App. 550a; MATS Rule, Pet. App.

242a (acknowledging “disparate treatment” of EGUs under

sufficiently account for the fact that treating electric utilities

differently from standard sources was the intent of Section

[74]12(m\{1)(A), ae revealed by the statutory text....") (Ka-

vanaugh, J., concurring in part and dissenting in part).

11

Congress in §7412(n) instructed EPA to conduct

“a study of the hazards to public health reasonably

anticipated to occur as a result of [the EGU HAP]

emissions” that remain after “imposition of the re-

quirements of this [Act].” §7412(m)(1)(A). As part of

that evaluation, Congress instructed EPA to “develop

and describe...alternative control strategies for [any

HAP] emissions which may warrant regulation un-

der this section.” Jd. Then, for any HAP emission

that might “warrant” regulation, Congress provided

that EPA is to regulate that emission “under this

section [§7412]” if it determines that “such regula-

tion is appropriate and necessary after considering

the results of the study.” Id.

Congress’ §7412(n)(1)(A) program for residual

public health risks from EGU HAP emissions shares

a number of features in common with other pro-

grams addressing residual risk regulation of non-

EGU source categories. In particular, residual risk

regulation under both §7412(f) and §7412(n)(1)(A)

requires a pollutant-specific risk management deci-

sion that considers a broad array of factors and regu-

latory consequences. As Representative Oxley (a

sponsor of the 1990 House Bill) explained, §7412(n)

was written to “protect[]...the public health while

avoiding the imposition of excessive and unnecessary

costs on residential, industrial, and commercial con-

sumers of electricity.” See House Debate on the

Clean Air Act Amendments of 1990 Conference Re-

port (Oct. 26, 1990) (statement of Rep. Michael Ox-

ley), reprinted in 1 1990 Legis. History, at 1417.

II. Characteristics of EGU HAP Emissions.

EGU HAP emissions result from elements natu-

rally present in trace amounts in the fuels combust-

12

ed to generate electricity. Emissions of these ele-

ments are largely removed from EGU gas streams by

control technologies installed to address conventional

pollutants. See supra pp. 4-5 & note 2. The four

general categories of EGU HAPs on which EPA fo-

cused in the MATS rulemaking were mercury, non-

mercury metals (e.g., arsenic, chromium, and nickel),

acid gases (e.g., hydrogen chloride (“HCI”) and hy-

drogen fluoride (“HF”’)), and organics (including diox-

ins).

Mercury: Mercury enters the environment both

through natural processes, such as volcanic erup-

tions and forest fires, and through human activities,

such as gold mining and fossil fuel combustion. In

2004, EPA estimated that total global emissions of

mercury were about 5,000 tons per year: 1,000 tons

from natural sources, 2,000 tons from manmade

sources, and 2,000 tons from reemission of mercury

previously deposited on soil. 69 Fed. Reg. 4652 (Jan.

30, 2004) (“2004 Proposed Correction Rule”), JA 143

EPA’s 1998 Utility Study estimated that U.S. coal-

fired EGUs emitted about 51.5 tons of mercury an-

nually, or about 1% of the 5,000 tons of annual

worldwide mercury emissions. Utility Study, JA

132-134. By 2010, those mercury emissions were re-

duced to 29 tons per year as a result of other CAA

control programs. 76 Fed. Reg. 24,976 (May 3, 2011)

(“Proposed MATS Rule”), NMA App. 1298a.

Humans are primarily exposed to mercury

through consumption of fish containing methylmer-

cury. Id. at 1195a. EGUs do not produce or emit

methylmercury. Methylmercury is formed by mi-

crobes in waterbody sediment and eventually works

its way up the food chain to fish. Only a small frac-

tion of the mercury emitted by EGUs deposits in the

13

United States and only a small fraction of that de-

posited mercury actually enters waterbodies. Only a

very small fraction of that deposition is biologically

transformed into methylmercury, and only a small

fraction of that methylmercury ends up in the fish

that people eat. See Electric Power Research Insti-

tute (“EPRI”) Comments on 2004 Proposed Correc-

tion Rule at 2 (June 16, 2004), Docket No. EPA-HQ-

OAR-2002-0056-2578. As a result, human exposure

to methylmercury resulting from domestic EGU

emissions is exceedingly small. 2005 Correction

Rule, JA 146-1653.

Trace metals: When coal and oil are combusted

in an EGU, non-mercury trace metals (e.g., chromi-

um and arsenic) adhere to ash particles, which are

captured by high efficiency PM control devices re-

quired under other CAA programs. In the 1998 Util-

ity Study, EPA performed a conservative, “high-end”

estimate of the inhalation risks posed by non-

mercury metal emissions from all coal-fired EGUs.

Those analyses of HAP metals showed that out of

426 coal-fired utility boilers, Utility Study, JA 123,

only two had cumulative carcinogenic risks of slight-

ly greater than one-in-one million, with the highest

facility risk at three-in-one million. Jd. at 124-125.

For non-carcinogenic trace metal emissions, EPA

found that inhalation exposure levels were far below

the reference concentration (“RfC”), which defines a

safe level of exposure. Id.

In December 2009, EPRI modeled every coal-fired

facility in the United States and found that none

posed a carcinogenic risk greater than one-in-one

million. EPRI, Comments on Proposed MATS Rule

at 3-22 to 3-24 (Aug. 4, 2011) “EPRI MATS Com-

ments”). In 2010-2011, EPA performed another

14

highly conservative analysis, and concluded that five

coal-fired utility boilers in the United States might

slightly exceed a one-in-one million risk level, with

the highest calculated risk at five-in-one million.

MATS Rule, NMA App. 440a; EPA, EPA-452/R-11-

013, Supplement to the Non-Hg Case Study Chronic

Inhalation Risk Assessment in Support of the Ap-

propriate and Necessary Finding for Coal- and Oil-

Fired Electric Generating Units (Nov. 2011), Docket

No. EPA-HQ-OAR-2009-0234-19912 (“Supplement to

Non-Hg Case Study”), JA 819-820.”

Acid gases: During the combustion process,

trace amounts of chlorine and fluorine combine with

hydrogen to form the acid gases HCl and HF, which

are non-carcinogens. Acid gas emissions are limited

by SOe control devices such as scrubbers required

under other programs. Proposed MATS Rule, NMA

App. 1330a. EPA’s modeling has consistently shown

that the levels of human exposure to EGU acid gas

emissions are an order of magnitude or more below

conservative health-protective levels for those HAPs.

Utility Study, JA 120-121, 131; Proposed MATS

Rule, NMA App. 1485a (“Our case study analyses of

the chronic impacts of EGUs did not indicate any

significant potential for them to cause any exceed-

ances of the chronic RfC for HCl....”); Supplement to

Non-Hg Case Study, JA 818-820. In terms of envi-

7 As explained in UARG’s April 2012 petition for administrative

reconsideration, later re-sampling of these five plants showed

that the emissions data on which EPA relied to claim a greater

than one-in-one million risk level were the result of sampling

contamination. UARG Petition for Reconsideration of MATS

Rule at 6-7 (Apr. 16, 2012), Docket No. EPA-HQ-OAR-2009-

0234-20179. EPA has never responded to that aspect of

UARGQ’s petition.

15

ronmental effects, these acid gases represent less

than one percent of the emissions contributing to

acidification in United States waterbodies. EPRI

MATS Comments, JA 412-418.

Organics: Coal and oil are mostly made up of

“organic” compounds—i.e., molecules comprised

mostly of carbon and hydrogen—which release signif-

icant amounts of energy when combusted. Organic

HAPs are emitted as a result of incomplete fuel com-

bustion. Testing for EGU emissions of organic HAPs

in 2010 reported a large majority of “non-detect” val-

ues, meaning the amount emitted (if any) was so low

that modern measurement methods could not detect

it. Proposed MATS Rule, NMA App. 1441a.

Ill, Agency Action Under §7412(n) Prior to

the MATS Rulemaking.

Administrator Browner’s “notice of regula-

tory finding”—In 1998, EPA published the Utility

Study required by §7412(n)(1)(A). In that study,

EPA evaluated mercury, non-mercury metals, acid

gases, and organics. Consistent with EPA’s pre-1990

evaluations of EGU HAP emissions, EPA did not

identify any “hazards to public health” that would

remain after implementation of other CAA programs.

Therefore, EPA did not make any “appropriate and

necessary’ finding under §7412(n)(1)(A). Utility

Study, JA 62. Instead, EPA identified the need for

further research in 11 areas “to gain a better under-

standing of the risks and impacts of utility mercury

emissions.” Id. at 110, 136-137. EPA also noted “po-

tential concerns and uncertainties that may need

further study” for dioxins, arsenic, and nickel emis-

sions. Jd. at 111. EPA found risks for acid gases and

16

organic HAPs were far below levels that would pose

any health concern. Id. at 124-125.

Without completing most of the mercury research

and any of the arsenic, nickel or chromium research

identified by the Utility Study, and without conduct-

ing any notice-and-comment rulemaking, on Decem-

ber 20, 2000, then-departing Administrator Browner

published a “[n]otice of regulatory finding.” Notice of

Finding, Pet. App. 610a-635a. In conclusory terms,

ehe announced that regulation of mercury emissions

from coa}l-fired EGUs and nickel emissions from oil-

fired EGUs was “appropriate and necessary” under

§7412(n)(1)(A). Jd. at 630a, 633a. In so doing, Ad-

ministrator Browner indicated that this “regulatory

finding” would be the subject of future rulemaking.

Id. at 634a. Based on this regulatory finding, EPA

listed EGUs as a source category under §7412(c),

triggering the §7412(d) regulatory regime applicable

to non-EGU source categories. Id.

Initial §7412(n) rulemaking—In 2004, EPA be-

gan the promised notice-and-comment rulemaking to

examine whether it was “appropriate and necessary”

to regulate EGU HAP emissions. At the end of this

rulemaking, EPA found that the last-minute 2000

notice “lacked foundation” and concluded, based on

“new information,” that it was not appropriate to

regulate mercury emissions from EGUs or nickel

emissions from oil-fired EGUs. 2005 Correction

Rule, Pet. App. 590a, 604a-608a. In addition, EPA

found, coal-fired EGU emissions of other non-

mercury HAPs posed too little risk to warrant regu-

lation. Id. at 598a-604a. As a result, EPA removed

EGUs from the §7412(c) list of source categories for

regulation under §7412(d). Jd. at 545a.

17

In rejecting regulation of EGU emissions under

§7412, the Agency concluded that “[njothing pre-

cludes EPA from considering costs in assessing

whether regulation of Utility Units under section

[74]12 is appropriate in light of all of the facts and

circumstances presented.” Jd. at 576a. Therefore,

“le]ven if the remaining utility HAP emissions cause

hazards to public health, it still may not be appropri-

ate to regulate [EGUs] under section 112 because

there may be other relevant factors [such as

cost]...that would lead the Agency to conclude it is

not...‘appropriate’ to regulate [EGUs] under section

[74]12.” Id. at 575a (emphasis added). In a compan-

ion rule known as the Clean Air Mercury Rule, EPA

promulgated emission standards regulating mercury

emissions from both new and existing EGUs under

§7411. 70 Fed. Reg. 28,606 (May 18, 2005).

New Jersey v. EPA—The D.C. Circuit heard

challenges to the final §7412(n) rule on EGU HAP

emissions and the final §7411 rule regulating EGU

mercury emissions. The court vacated EPA’s deci-

sion to remove coal- and oil-fired EGUs from the

§7412(c) list of regulated source categories, reinstat-

ed the earlier §7412(c) listing, and vacated the §7411

standards. New Jersey v. EPA, 517 F.3d 574 (D.C.

Cir. 2008). In so doing, the court did not review the

factual or statutory basis for the finding that any

“regulation under [§7412]” was not “appropriate and

necessary.” Instead, it found that even if the Brown-

er §7412(n) finding in 2000 and §7412(c) listing were

erroneous, EPA could only remove EGUs from the

list of source categories regulated under §7412(d) if it

followed the delisting requirements of §7412(c)(9).

Id. at 583. Section 7412(c)(9) provides for “de-listing”

of a listed source category only if no source in the

18

category poses a lifetime cancer risk of greater than

one-in-one million, or a noncancer health risk that

“exceed[s] a level which is adequate to protect public

health with an ample margin of safety.”

§7412(c)(9)(B)\(ii). De-listing also requires a finding

that HAP emissions from a source do not create an

“adverse environmental effect.” Jd. With EGUs re-

instated to the §7412(c) list, the court vacated the

§7411 EGU mercury regulations on the ground that

EGUs could not simultaneously be regulated under

those two provisions. New Jersey, 517 F.3d at 583;

see also §7411(d); Am. Elec. Power Co. v. Connecticut,

131 S. Ct. 2527, 2537 n.7 (2011).

IV. Regulation of EGU HAP Emissions Under

the MATS Rule.

In 2011 and 2012, EPA conducted its New Jersey

remand rulemaking, which resulted in the MATS

Rule at issue here. In the MATS Rule, yet another

EPA (i.e., the third Administration to address the is-

sue) concluded that the December 2000 Notice of

Finding was sufficient to list EGUs under §7412(c).

MATS Rule, Pet. App. 179a. Looking to the §7412(d)

regulatory regime that applies to non-EGUs, EPA

then concluded that “such [§7412(d)] regulation” was

“appropriate and necessary” for EGUs under

§7412(n), in order to regulate not just mercury (the

pollutant addressed in Administrator Browner’s reg-

ulatory finding), but every HAP emitted by every

EGU, as long as EPA found that one HAP emitted by

one EGU created a residual “public health” risk or an

“environmental!” risk. Jd. at 365a; see also Proposed

MATS Rule, Pet. App. 523a.

EPA then promulgated the §7412(d) emissions

standards for EGUs, regulating all HAPs emitted by

19

EGUs regardless of the magnitude—or even exist-

ence—of any public health risk, and regardless of the

cost of regulation. Not surprisingly, the costs of

EPA’s final rule dwarfed the HAP emission reduction

benefits that EPA was able to quantify. Compare

MATS Rule, Pet. App. 115a (estimating annual com-

pliance costs of $9.6 billion) with id. at 461a (quanti-

fying HAP health benefits, all associated with mer-

cury reduction, at $4 to $6 million). Regarding acid

gases in particular, EPA never found any threat to

public health but nevertheless imposed MATS com-

pliance obligations that account for about one-half of

the $9.6 billion in annual costs estimated by EPA

(and for about $30 billion in additional capital costa).

See UARG, Comments on Proposed MATS Rule at

258 (Aug. 4, 2011) “UARG Comments on Proposed

MATS Rule”), Pet. App. 512a, JA 807-810.

V. The D.C. Circuit Decision.

A total of 23 States and one governor, as well as

numerous industry parties, filed petitions for review

of various aspects of the MATS Rule, including EPA’s

refusal to consider costs in determining whether it

was “appropriate and necessary” to regulate EGU

HAPs. On April 15, 2014, the D.C. Circuit (Chief

Judge Merrick Garland, Judge Judith Rogers, and

Judge Brett Kavanaugh) denied all petitions for re-

view. Pet. App. 10a.

With regard to whether EPA is required to con-

sider cost in determining if it is “appropriate” to reg-

ulate emissions of EGU HAPs, Judges Garland and

Rogers held that EPA was not required to consider

cost. Id. at 26a (“[S]uch a reading of ‘appropriate’ is

unwarranted here....”). They concluded that Con-

gress’ use of the word “costs” in other provisions of

20

§7412 meant that Congress could not, “by using only

the broad term ‘appropriate’[,]...have intended...that

costs be considered...in §[74]12(n)(1)(A).” Jd. at 27a.

The panel majority also reasoned that Congress had

anticipated that the factors EPA decides to consider

in making an “appropriate and necessary” determi-

nation—and hence whether and how to regulate (or

not) under §7412(n)(1)(A)—can change over time. Jd.

at 35a (“[A]dministrations may differ and can change

positions without legal jeopardy....”).

In a strongly worded dissent on the cost question,

Judge Kavanaugh concluded that the “key statutory

term...‘appropriate’...[is}] the classic broad and all

encompassing term that naturally and traditionally

includes consideration of all the relevant factors,

health and safety benefits on the one hand and costs

on the other.” Jd. at 88a. In fact, the magnitude of

the costs at issue in this rulemaking were so enor-

mous that Judge Kavanaugh found EPA’s neglect

particularly egregious:

The estimated cost of compliance with EPA’s

Final Rule is approximately $9.6 billion per

year, by EPA’s own calculation.... To put it in

perspective, that amount would pay the an-

nual health insurance premiums of about two

million Americans.... Put simply, the Rule is

“among the most expensive rules that EPA

has ever promulgated.”

Id. at 82a (emphasis in original) (citation omitted).

More recent federal government analyses demon-

strate that EPA’s costs estimates were, if anything,

underestimated. While EPA projected that coal-fired

retirements would be 4.7 gigawatts, the U.S. Energy

Information Administration has estimated that the

21

MATS Rule will contribute to the retirement by 2016

of 54 gigawatts of coal-fired generation capacity, or

about 1/6 of total domestic coal-fired capacity.2 The

magnitude of these compliance costs is unprecedent-

ed. In 2011, EPA projected that total CAA compli-

ance costs for EGUs, including the costs associated

with regulation under the NAAQS, visibility, pre-

construction and operating permit programs, and

new source performance standards, would be about

$10.4 billion annually by 2020,° as compared to the

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

AEO2014 Projects More Coal-Fired Power Plant Retirements by

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

http:/Awww.eia.gov/todayinenergy/detail.cfm?id=16031; see also

Institute for Energy Research, Impact of EPA’s Regulatory As-

sault on Power Plants: New Regulations to Take More than 72

GW of Electricity Generation Offline and the Plant Closing An-

nouncements Keep Coming... (Oct. 2014), available at

http:/Ainstituteforenergyresearch.org/topicsa/policy/power-plant-

closures/.

® EPA, The Benefits and Costs of the Clean Air Act from 1990 to

2020, Final Report—Rev. A, at 3-8 (Apr. 2011), available at

http:/Awww.epa.gov/cleanairactbenefite/prospective2.html; see

also Industrial Economics, Inc., Direct Cost Estimates for the

Clean Air Act Second Section 812 Prospective Analysis, at 2-29

& n.77 (Feb. 2011), avatlable at

http://www.epa.gov/air/sect8 1 2/feb 1 L/costfullreport. pdf (explain-

ing inclusion of Clean Air Mercury Rule costs). In 1999, EPA

had estimated that total compliance of HAP regulation, across

all source categories, would total $840 million by 2010. EPA,

EPA-410-R-99-001, The Benefits and Costs of the Clean Air Act

1990 to 2010, EPA Report to Congress at 25 (Nov. 1999), avail-

able at

http://www.epa.gov/cleanairactbenefits/progpective 1 .htm1?_ga=

1.261211470.2101051446.1421202605 (“Benefits and Costs

1990-2010”).

22

compliance costs of the MATS Rule alone of about

$9.6 billion annually.!°

SUMMARY OF ARGUMENT

This case involves a simple question: can EPA re-

fuse to consider costs when determining whether it is

“appropriate and necessary” to regulate EGU HAP

emissions under §7412 of the Clean Air Act? Con-

gressional intent on this question is clear. And the

answer is no. i

The Clean Air Act presents an intricate statutory

regime, requiring EPA to undertake a variety of

tasks, including making health determinations, con-

ducting studies, and setting emission standards.

Every time that the Act calls upon EPA to consider

establishing emission standards, EPA is required to

consider cost in some fashion.

In keeping with this general approach to clean air

regulation, Congress addressed EGU HAP emissions

very differently from non-EGU HAP emissions under

§7412. Non-EGU HAP emissions from source cate-

gories other than EGUs are subject to technology-

based regulation whenever tonnage thresholds are

exceeded. By contrast, in recognition of the numer-

ous other programs that indirectly reduce EGU HAP

emissions, Congress directed that EGU HAP emis-

sions are to be regulated under §7412 only if EPA de-

termines that “such [§7412] regulation” is “appropri-

ate and necessary.” Determining whether regulation

under any of the specific emission standard-setting

10 EPA’s $9.6 billion cost figure focuses only on compliance

costs, not indirect costs that EPA has elsewhere recognized, like

effects on work force and consumers of electricity. Benefits and

Costa 1990 to 2010, at iii.

23

provisions of §7412 is “appropriate and necessary”

requires consideration of a number of factors, as is

the case for emission standard-setting decisions un-

der the Clean Air Act generally, including the public

health impacts of EGU HAP emissions and the costs

of regulation. EPA’s refusal to consider cost under

this broad and encompassing statutory language and

in the context of this specific statutory framework is

impermissible.

When one examines the function of

§7412(n)(1)(A), which is to determine whether §7412

regulation is needed and is suitable to address resid-

ual risks that might remain after regulation of EGU

HAP emissions under other programs, the unreason-

ableness of EPA’s interpretation is underscored. Re-

sidual risk, by definition, presents the prospect of

diminishing benefits for ever increasing regulatory

costs. Disavowing any consideration of cost in this

context caused EPA to act contrary to what is in the

public interest: to regulate EGU HAP emissions only

if “appropriate.” The imposition of $9.6 billion in

costs to achieve $4 to $6 million in benefit should, at

the very least, signal caution. Throwing caution to

the wind, the panel endorsed EPA's refusal to con-

sider cost because the word “cost” is not listed explic-

itly in the provision. But this word (and other rele-

vant factors) also do not appear in statutory provi-

sions calling for “public interest” regulation. When

“appropriate and necessary” is read in a common

sense way and in the context of §7412(n)(1)(A)’s pur-

pose and objectives, those broad and encompassing

terms compel consideration of cost.

In refusing to consider cost, EPA erred. The eco-

nomic consequences of its error are overwhelming.

24

ARGUMENT

In deciding whether it was “appropriate” to regu-

late EGU HAP emissions, EPA refused to consider

the costs that regulation would impose. That much

is not in dispute. Less clear is why EPA chose to be

cost blind.

In the Proposed MATS Rule, EPA “interpretied]

the term ‘appropriate’ to not allow for the considera-

tion of costs.” Pet. App. 523a (emphasis added). This

interpretation of “appropriate,” EPA said, was “con-

sistent with the overall structure of the CAA,” inso-

far as “Congress did not authorize the consideration

of costs” in making decisions on “listing” and “delist-

ing” other source categories under §7412(c). Id. at

527a (emphasis added). In responding to public

comments in the MATS rulemaking, however, EPA

seemed to shift, claiming that, because “[clost does

not have to be read into the definition of ‘appropri-

ate,” MATS Rule, Pet. App. 212a (emphasis added),

it was “reasonable” to make the “appropriate deter-

mination[] without considering costs.” Id. at 210a;

see also EPA’s Responses to Public Comments on

Proposed MATS Rule, Vol. 1 (Dec. 2011), Docket No.

EPA-HQ-OAR-2009-0234-20126, Pet. App. 509a.

The panel majority offered similar, competing ra-

tionales for EPA’s refusal to consider costs. Compare

Pet. App. 26a (§7412(n)(1)(A) “neither requires EPA

to consider costs nor prohibits EPA from doing so.”)

with id. at 27a. (Because Congress used the word

“costs” in certain other provisions of §7412, Congress

could not “by using only the broad term ‘appropri-

ate’...have intended...that costs be considered...in

§[74]12(n)(1)(A).”).

25

Regardless of the Chevron rationale, EPA’s re-

fusal to consider costs in determining whether it was

“appropriate” to regulate EGU HAP emissions under

§7412 was unlawful.

I. The “Appropriate and Necessary” Deci-

sional Standard in §7412(n)(1)(A) Em-

braces a Broad Range of Factors That In-

cludes Costs.

Section 7412(n)(1)(A), like other residual risk

emission reduction provisions, calls upon EPA to

identify risks of a particular kind (“hazards to public

health”) that are found to remain after implementa-

tion of other emission reduction provisions of the

CAA. If no “hazards to public health” are identified

in the §7412(n) study called for by Congress, no

§7412 regulatory response by EPA is contemplated

or authorized. If EPA finds a public health hazard

that is reasonably anticipated to occur, however,

§7412(m) requires EPA to focus on the EGU HAP

emissions that cause that health hazard and to de-

termine the degree to which that hazard would be

reduced through “regulation [of those emissions] un-

der” §7412. Finally, having identified the §7412 reg-

ulatory response, EPA must determine whether

“such regulation” under §7412 is “appropriate and

necessary.”

Both “appropriate” and “necessary” are terms

that call for qualitative judgments influenced by a

broad range of factors. The word “appropriate”

means “suitable or proper in the circumstances.”

The New Oxford American Dictionary 76 (2d ed.

2005). The word “necessary” means “required to be

done, achieved, or present; needed; essential.” Id. at

1135. In the context of §7412(n), the cost of achiev-

26

ing reductions and the size of those reductions are

centrally relevant to determining whether “such reg-

ulation” of EGU emissions under §7412 is “appropri-

ate and necessary” to address a health hazard. The

size and seriousness of a health risk balanced

against costs and other consequences of reducing

that risk will determine whether a new level of con-

trol is “needed,” whether the existing level is “prop-

er,” and whether the proposed §7412 regulatory re-

sponse is “suitable” to address that risk.

As discussed below, the “appropriate and neces-

sary decisional standard contemplates that EPA

make policy judgments regarding imposition of addi-

tional emissions regulation. Like other CAA provi-

sions governing emission standard-setting decisions,

including those based on residual risk, costs will al-

ways be a relevant consideration in making those

policy judgments. See, e.g., Indus. Union Dep’t, AFL-

CIO v. Am. Petroleum Inst., 448 U.S. 607, 708 (1980)

(Marshall, Brennan, White and Blackmun, JJ., dis-

senting) (“[Rjeasonably necessary or appropriate’

clauses are routinely inserted in regulatory legisla-

tion, and...have uniformly been interpreted as gen-

eral provisos that regulatory actions must bear a

reasonable relation to thfe] statutory purposes.”); id.

at 704 (Occupational Safety and Health Act

(“OSHA”) gave “careful consideration’ to...whether

the admittedly substantial costs were justified in

light of the hazards” under the act’s “necessary or

appropriate” standard.); id. at 667 (Powell, J., con-

curring) (A standard “is neither ‘reasonably neces-

sary nor ‘feasible”...if it calls for expenditures wholly

disproportionate to the expected health and safety

benefits.”).

27

A. Congress Has Consistently Re-

quired Consideration of Costs in

Making Decisions on CAA Emission

Standards.

The CAA authorizes a variety of different types of

agency actions under numerous different air pollu-

tion control programs. Certain actions call for a find-

ing that specific emissions contribute to pollution

that endangers health or welfare. E.g., 42 U.S.C.

§§7411(b)(1)(A) (new source performance standards),

7521(a) (vehicle and engine emissions). Others pro-

vide for ambient standards that identify pollutant

concentrations that are protective of public health or

welfare. Cost is irrelevant to these health and wel-

fare effects actions. §7409(b)({1), (d) (NAAQS).

Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 471

(2001) (holding that costs may not be considered in

setting NAAQS under §7409(b)); Coal. for Responsi-

ble Regulation, Inc. v. EPA, 684 F.3d 102, 118 (D.C.

Cir. 2012) (per curiam), affd in part & rev'd in part,

UARG v. EPA, 134 S. Ct. 2427 (2014) (concluding

that cost judgments are not part of “endangerment

finding” in §7521(a)(1)).

By contrast, every provision of the Act that au-

thorizes EPA to address the establishment of emis-

sion standards for specific sources includes costs as a

standard-setting consideration. See, e.g.,

§§7410(a)(2)(D) (‘good neighbor” provision, which

was interpreted in EPA v. EME Homer City Genera-

tion, L.P., 134 S. Ct. 1584, 1607 (2014), to contem-

plate consideration of cost), 7411(b) & (d) (mew and

existing source performance standards), 7412(d)(2)

(MACT), 7475 (BACT), 7491 (BART), 7502 (“reason-

ably available control technology”) & 7651f (nitrogen

oxides “acid rain” emissions standards for EGUs).

28

Consideration of cost in establishing standards

regulating conduct is found across all regulatory

statutes. See, e.g., Entergy Corp. v. Riverkeeper, Inc.,

556 U.S. 208 (2009) (upholding EPA’s use of cost-

benefit analysis in setting “best technology” cooling

water intake requirements under the Clean Water

Act); Am. Textile Mfrs. Inst., Inc. v. Donovan, 452

U.S. 490 (1981) (OSHA). Emission control standards

that are so stringent as to put sources out of business

create their own public health and welfare risks,

through impacts on both communities (e.g., lost tax

base) and individuals (e.g., lost jobs).'! Cf. Pet. App.

78a (“[T]he centrality of cost consideration to proper

regulatory decisionmaking” necessarily establishes

“cost” as being among the “relevant factors” that a

regulatory agency must normally take into account.).

Consideration of cost-benefit relationships is es-

pecially relevant for emission standards that address

residual emissions and risk. Whenever smaller in-

crements of emissions are regulated, the costs to so-

ciety of achieving those reductions increase.'? Resid-

'! See Indus. Union Dep't, 448 U.S. at 669 (Powell, J., concur-

ring) (“[A] standard-setting process that ignored economic con-

siderations would result in a serious misallocation of resources

and a lower effective level of safety than could be achieved un-

der standards set with reference to the comparative benefits

available at a lower cost.”); Steve P. Calandrillo, Responsible

Regulation: A Sensible Cost-Benefit, Risk Versus Risk Approach

to Federal Health and Safety Regulation, 81 B.U. L. REV. 957,

996 (2001) (‘[Wlell-meaning regulations aimed at improving

public safety by reducing certain risks sometimes unintention-

ally increase the probability of other risks.”).

12 See, e.g., Sheldon Meyers, Office of Radiation Programs, Of-

fice of Air and Radiation, EPA, Applications of De Minimis, in

DE MINIMIS RISK 101, 102 (Chris Whipple ed., 1987) (‘We all

know that each decade of risk reduction has generally increased

29

ual risk standard-setting necessarily involves an in-

quiry into both whether the increment of emissions

of a pollutant that remains after earlier reductions of

the pollutant is of continuing regulatory concern (i.e.,

poses a risk that is not de minimis) and, if so, wheth-

er those residual risks are worth regulating (i.e.,

what level of risk and risk reduction is achievable in

light of costs, feasibility, and other factors). See EPA

Residual Risk Report at 127.'5 Without considera-

tion of the consequences of regulating, the increasing

costs of regulating and the declining risks posed by

progressively smaller increments of a pollutant can

lead to a gross misallocation of resources and “ex-

treme disparities” between costs and benefits. See

Entergy Corp., 556 U.S. at 224; VICIOUS CIRCLE at 11

(Ignoring consequences can result in “standards so

stringent...that the regulatory action ultimately im-

poses high costs without achieving significant addi-

tional safety benefits.”).

costs and decreased benefite—it frequently is relatively cheap

to reduce risks from 0 to 90%, more expensive to go from 90 to

99%, and more expensive still to go from 99 to 99.9%.”); see also

STEPHEN BREYER, BREAKING THE VICIOUS CIRCLE: TOWARD EF.

FECTIVE RISK REGULATION 11 (1993) (‘VICIOUS CIRCLE”) (“Re-

moving that last little bit [of riak} can involve limited technolog-

ical choice, high coet...and endless argument.”); Stephen Brey-

er, Forward: Beyond the Vicious Circle, 3 NYU ENVTL. L.J. 251,

252 (1994-95).

‘3 See also Meyers, supra note 12, at 101 (“There are two possi-

bilities for deciding that one eventually reaches a point where

further risk reduction is not warranted: Either (1) the cost of

further risk reduction becomes very great in relation to the

small additional incremental benefits, or (2) the riak...is eo

small that it becomes inconsequential....”).

30

B. Section 7412(n)(1)(A) Is a Residual

Risk Provision.

Congress in §7412 addressed regulation of resid-

ual risk in several places. And in each, Congress in-

structed EPA to consider a broad range of factors,

either by listing a range of relevant factors, see, e.g.,

§7412(f)(2), or by using regulatory terms that require

subjective judgments made after considering myriad

factors relevant to those judgments. See, e.g., id.

§7412(m), (n)(1){A).

For example, in order to regulate residual public

health risk associated with emissions regulated un-

der §7412(f), Congress said the Administrator must

apply the “ample margin of safety” standard “as in

effect before November 15, 1990.” §7412(f)(2)(A).

This formulation ensures consideration of all of the

consequences of residual risk regulation, including

costs. See Natural Res. Def. Council v. EPA, 529

F.3d 1077, 1081-83 (D.C. Cir. 2008) (discussing

§7412(f)(2)); EPA Residual Risk Report at ES-11, 128

(explaining that “relevant factors” under the ample

margin of safety standard “include[] costs, economic

impacts, technological feasibility, and any other rele-

vant factor’).

Where regulation of the emission of specific pollu-

tants under §7412 fails to resolve serious adverse

health or environmental risks to the Great Lakes

and other waters, the Administrator is authorized to

regulate those individual pollutants as “necessary

and appropriate” to address such residual risks.

§7412(m). And where “hazards to public health”

from an EGU HAP emission remain “after imposition

of the requirements of this [Act],” the Administrator

may regulate those emissions “under this section,” if

31

the Administrator finds “such regulation” is “appro-

priate and necessary,” after considering the remain-

ing public health risks and “alternative control strat-

egies for emissions which may warrant regulation

under this section.” §7412(n)(1)(A).

In this statutory context, cost is a factor that

must be considered for EPA to resolve whether its

proposed §7412 regulatory response for residual

health hazard is “appropriate and necessary.” Sec-

tion 112 regulation that addresses minor health risks

at huge costs cannot, in any common understanding

of the term, be “compelled” and “proper.”

The panel majority concedes, as it must, that “the

word ‘appropriate’ might require cost consideration

in some contexts.” Pet. App. 26a. But, according to

the panel, “such a reading of ‘appropriate’ is unwar-

ranted here.” Id. Why “unwarranted”? The panel

majority claims that “[t]hroughout §[74]12, Congress

mentioned costs explicitly where it intended EPA to

consider them,” but failed to explicitly list costs as a

relevant factor in §7412(mn)(1)(A). Jd. at 26a-27a.

But the word “cost” is absent from numerous CAA

provisions under which cost is a relevant factor in

EPA policy decisions regarding further regulation of

emissions. See, e.g., EME Homer City, 134 S. Ct. at

1607 (“The Agency has chosen, sensibly in our view,

to reduce the amount easier, t.e., less costly, to eradi-

cate, and nothing in the text of the Good Neighbor

Provision precludes that choice.”); Ass’n of Battery

Recyclers, 716 F.3d at 673 (the fact that “section

[74]12(d)(6) itself makes no reference to cost” does

not bar consideration of cost); 74 Fed. Reg. 30,366,

30,371 (June 25, 2009) (finding that the legislative

history “clearly provides that EPA may consider

32

costs” under §7412(d)(5) even though the term does

not appear in the provision).

When Congress uses broad terms that call for

subjective policy judgments regarding the regulation

of private conduct, Congress is requiring that agen-

cies consider every factor relevant to making that

judgment. In the context of broad subjective deci-

sional standards (like “appropriate and necessary”),

therefore, congressional silence on factors that must

be considered assures consideration of the broadest

range of relevant factors, see, e.g., Indus. Union

Dep’t., 448 U.S. at 708 (Marshall, Brennan, White,

and Blackmun, JJ., dissenting), whereas listing one

or two factors in such a provision could be interpret-

ed as a congressional intent to limit relevant factors

to those listed. Indeed, the logic of the majority

turns syntax on its head, leading to absurdity.

Construing “silence” as a prohibition would give

rise to the “obvious logical impossibility” that EPA

was permitted to disregard “all potentially relevant

factors.” Entergy Corp. 556 U.S. at 222. In other

words, if the absence of the word “cost” in

§7412(n)(1)(A) permitted (if not required) EPA to dis-

regard cost in determining whether regulation of

EGU HAP emissions was “appropriate and neces-

sary,” then taken to its (il)logical end, no factor

would be relevant in making determinations under

“public interest,” “reasonable,” “public necessity” and

similar broad, qualitative decisional standards. EPA

and the panel’s interpretive approach would trans-

form such standards into factor-blind directives for

which an agency, at best, would have unrestricted

discretion to consider only the factors it wishes to

consider, thereby fashioning a regulatory decisional

standard of the agency’s creation. This is an inter-

33

pretive approach that “surely proves too much.” En-

tergy Corp., 556 U.S. at 222.

The six CAA provisions cited by the panel majori-

ty for the proposition that Congress’ failure to men-

tion “cost” in §7412(n)(1)(A) requires a cost-blind de-

termination, see Pet. App. 26a-27a, are either irrele-

vant (because they do not address the establishment

of emission standards) or actually confirm the im-

portant role that cost considerations must play in

any residual risk evaluation. First, three of the pro-

visions on which the panel majority relied are re-

ports to Congress that have no role in establishing

emission standards under §7412. See §7412(f)(1),

(n)(1)(B) & (s). They say nothing about Congress’ use

of “appropriate and necessary” in the §7412(n)(1)(A)

residual risk evaluation.

Second, the panel majority cites §7412(d)(2) in

support of its cost-blind interpretation of

§7412(n)(1)(A). Pet. App. 26a-27a. This is an emis-

sion standard-setting provision which, as discussed

supra pp. 7-8, explicitly requires the consideration of

cost and other factors in establishing MACT stand-

ards based upon control technologies identified ap-

plying the §7412(d)(3) criteria. This provision simply

underscores the relevance of costs in decisions re-

garding source emission standards.

Next, the panel majority cites §7412(f)(2)(A),

which authorizes public health “residual risk” regu-

lation for pollutants for which control technology

standards have been established under §7412(d).

Congress explicitly stated that §7412(f)(2)(A) did not

disturb the interpretation set forth in a 1989 HAP

rule in which EPA considered costs and a range of

other factors in evaluating whether there was an

34

“ample margin of safety.” §7412(f)(2)(B); see also su-

pra p. 4; 71 Fed. Reg. 76,603, 76,608 (Dec. 21, 2006)

(discussing §7412(f) history). This provision high-

lights the relevance of cost in decisions regarding re-

sidual risk standard-setting.

The final provision cited by the panel majority is

§7412(d)(8)(A)(i), which provides specific MACT

standard-setting instructions for coke ovens. In this

provision, Congress stated that in evaluating the “ef-

fectiveness” of certain controls and practices, and in

determining their “suitability for [their] use on new

and existing coke oven batteries,” “costs” are rele-

vant. §7412(d)(8)(A)(i). If the controls and practices

identified under this provision reduce emissions

more than the coke oven technologies identified un-

der the §7412(d)(3) “floor” criteria, see supra p. 8,

then this provision merely confirms what the

§7412(d)(2) emission standard-setting provision re-

quires: Costs must be considered in setting MACT

standards. If they do not, then this provision simply

authorizes consideration of a broader range of tech-

nologies for coke oven MACT standard-setting than

the (d)(3) “floor” criteria would. In either case, the

provision merely underscores congressional intent

that costs be considered in setting coke oven emis-

sion standards. This is hardly a statement that costs

cannot be considered in deciding to regulate EGU

HAP emissions.

In sum, §7412(n)(1)(A) requires the Administrator

to regulate EGU HAP emissions under §7412 only if

she finds “such [§7412] regulation” is “appropriate

and necessary.” Section 7412(n), read in context,

says what other emission control provisions say:

EPA must consider costs and other consequences of

35

regulation in making decisions regarding standards

that regulate residual risk.

C. The Panel Majority’s Reliance on

Whitman Was Misplaced.

Recognizing that nothing in §7412(n) directs EPA

not to consider costs, the panel majority invokes this

Court’s decision in Whitman v. American Trucking

Ass’ns, 531 U.S. 457 (2001), in order to “create[] a

negative implication that costs are an unnecessary

consideration” under §7412(n)(1)(A). Pet. App. 87a

(Kavanaugh, J., concurring in part and dissenting in

part). In seeking to establish such a negative impli-

cation, the panel majority was not only “over-

reading” Whitman but, more importantly, was ignor-

ing the distinction throughout the Act between

threshold actions premised on public health or wel-

fare effects findings and actions premised on judg-

ments regarding the degree to which stationary

source emissions should be further regulated. ZId.

Whitman addressed the level of air quality for

specific pollutants that would protect public health

or welfare. See §7409(b)(1). As discussed above,

health and welfare effects are the only factors rele-

vant to NAAQS determinations, as well as to “en-

dangerment” findings found throughout the CAA.

By contrast, in making decisions regarding CAA

emission standards that apply to individual sources,

feasibility, availability, cost, and other considera-

tions are always relevant. As a result, Congress has

required, explicitly or implicitly, that costs be consid-

ered in CAA determinations regarding emissions

regulation. See supra p. 7.

If §7412(n) required that EPA regulate EGU HAP

emissions under §7412(d) whenever the Administra-

36

tor found a “health hazard” associated with any EGU

HAP emission, it would be similar to the CAA’s “en-

dangerment” provisions. However, that is not what

§7412(n)(1)(A) says. EPA’s obligations under

§7412(n) do not end with a threshold health finding;

they begin with such a finding. After EPA identifies

an EGU HAP emission creating a remaining “health

hazard,” EPA must (1) determine the degree of EGU

HAP emission regulation that the identified health

hazard triggers “under” §7412, and then (2) decide

whether “such regulation” of EGU emissions under

§7412 is “appropriate and necessary.” In other words,

in deciding whether or not “such [§7412] regulation”

is “appropriate and necessary,” EPA will resolve the

nature and extent of EGU HAP emissions regulation

under §7412. Once EPA has determined the degree

to which EGU HAPs would be regulated, Congress

directed EPA to resolve whether “such [§7412] regu-

lation” is “appropriate and necessary,” a phrase that

contemplates a careful balancing of the costs and

benefits of that further regulation of EGU emissions.

Il. EPA Was Also Required to Consider

Costs as a Matter of Reasoned Deci-

sionmaking.

In Motor Vehicles Manufacturers Ass’n v. State

Farm Mutual Automobile Insurance Co., 463 U.S. 29

(1983), this Court made clear that, while an agency

decision would be upheld provided that, among other

things, the agency had taken into “considera-

tion...the relevant factors,” the agency's decision-

making would be found unreasonable where the

agency had “entirely failed to consider an important

aspect of the problem.” 463 U.S. at 42-43 (emphasis

added). Here, no one disputes that EPA “entirely

failed to consider” costs when it found that it was

37

“appropriate” to regulate all EGU HAP emissions.

That being the case, EPA’s refusal to consider costs

can reflect reasoned decision-making only if.

(1) Congress itself precluded EPA from considering

costs; or (2) costs are not an “important aspect of the

problem” (i.e., a “relevant factor”).

Ultimately, neither EPA nor the pane] majority

was willing to take the position that EPA was pro-

hibited from considering costs. Nor did either EPA

or the panel majority explain how it could ever be the

case that costs were not a relevant factor.

As Judge Kavanaugh noted, the “consideration of

costs” is commonly understood to be “a central and

well-established part of the regulatory decision-

making process.” Pet. App. 82a. This “centrality of

cost consideration to proper regulatory decision-

making,” he further pointed out, necessarily estab-

lishes “cost” as being among the factors for which a

regulatory agency must normally account, a conclu-

sion underscored by the fact that “every real choice

requires a decisionmaker to weigh advantages

against disadvantages, and disadvantages can be

seen in terms of (often quantifiable) costs.” Jd. at

78a-79a (quoting Entergy Corp., 556 U.S. at, 232

(opinion of Breyer, J.)).

The only response that the panel majority could

muster is telling: “[W]hile the dissent insists on ‘the

centrality of cost consideration to proper rmgulatory

decisionmaking,” the panel majority argued, “Whit-

man makes clear the Supreme Court believes that

Congress does not necessarily agree.” Pet. App. 33a.

“Nor,” continued the panel majority, “is Whitman the

only case in which courts have found that Congress

legislated in a way the dissent would find irrational.”

38

Id. at 33a-34a (citing Am. Textile Mfrs., 452 U.S. at

511-12).

This Court’s precedents do not support the panel

majority's assertion. The panel majority asserts that

American Textile Manufacturers stands for the prop-

osition that cost is not a central consideration in reg-

ulatory decision-making. Pet. App. 34a (citing Am.

Textile Mfrs., 452 U.S. at 511-12). The Court in that

case did not say that cost was irrelevant, but rather

only that “specific language” in the OSHA provision

at issue, 29 U.S.C. §655(b)(5), made clear that “cost-

benefit analysis...is not required...because feasibility

analysis is.” 452 U.S. at 609, 511.

OSHA contained another provision that defined

the term “occupational safety and health standard”

as “a standard which requires’ condi-

tions... reasonably necessary or appropriate to provide

safe or healthful employment and places of employ-

ment.” Jd. at 512 (quoting 29 U.S.C. §652(8) (em-

phasis added by Court)). While the Court found that

the provision must be read in concert with the feasi-

bility provision and could not provide an “overriding

requirement of cost-benefit analysis,” id. at 513, the

Court also observed that, “[t]aken alone, the phrase

‘reasonably necessary or appropriate’ might be con-

strued to contemplate some balancing of the costs and

benefits of a standard.” Id. at 512 (emphasis added).

In this case, even if some limitation did exist on

using the cost-benefit method of analysis under

§7412(n) (akin to the “feasibility” section in OSHA),

there is nothing about Am. Textile Manufacturers

that eliminates EPA’s responsibility to consider cost

in some manner. Cf. id. at 513 n.31 (“[A]s the legis-

lative history makes plain...any standard that was

39

not economically or technologically feasible would a

fortiori not be ‘reasonably necessary or appropriate’

under [OSHA].”). Indeed, in American Textile Manu-

facturers, no party disagreed that cost must be con-

sidered; they disagreed merely how and how much.'*

In the final analysis, the panel majority's argu-

ment strikes at a straw man. No one would suggest

that it is “irrational” for Congress, in its legislative

judgment, to preclude a regulatory agency, in a given

setting, from taking costs into account in adopting

regulations defining pollutant concentrations protec-

tive of public health and welfare. Instead, the perti-

nent question here is: where costs are clearly rele-

vant, as is the case with regulatory decisions involv-

ing emission standards, and Congress has not lim-

ited the factors that may be considered to exclude

costs, could it ever be “reasonable” for an agency to

forgo such consideration? This Court’s decision in

State Farm says no."

‘4 The panel majority also cited National Ass'n of Clean Air

Agencies v. EPA, 489 F.3d 1221 (D.C. Cir. 2007) (NACAA”), as

supporting EPA’s decision not to consider cost. Pet. App. 26a.

In fact, in that case, no one disputed the relevance of cost; the

only debate was over the weight to be given that consideration.

See NACAA, 489 F.3d at 1226.

15 See also Entergy Corp., 566 U.S. at 232-33 (Breyer, J., con-

curring in part and dissenting in part) (Noting as to another

provision of the CAA that “every real [regulatory] choice re-

quires a decisionmaker to weigh advantages against disad-

vantages, and disadvantages can be seen in terms of (often

quantifiable) costs....[A]Jn absolute prohibition [on cost-benefit

analysis] would bring about irrational results. As the respond-

ents themselves say, it would make no sense to require [power]

plants to ‘spend billions to save one more fish or plankton.”).

40

In this case, there is no dispute that the MATS

Rule will impose billions of dollars of costs. In the

face of these real-world realities, EPA’s bland asser-

tion that “nothing about the definition [of ‘appropri-

ate’] compels a consideration of costs,” and that it

was “appropriate to regulate EGUs under CAA sec-

tion [74]12” simply “because EPA has determined

that HAP emissions from EGUs pose hazards to pub-

lic health and the environment,” Pet. App. 211a, is

not only unreasonable, it borders on the irrational.

Cost here is an “important aspect of the problem”

that EPA was required to consider in any exercise of

reasoned decision-making.

Ill. Under §7412(n), Costs Must Be Consid-

ered in the Context of Emission Stand-

ard-Setting Decisions for the Specific

EGU HAP Emissions That Pose Health

Hazards.

Whether the term “regulation under this section”

in §7412(n)(1)(A) means regulation under §7412(d),

as EPA and the panel below concluded,!® pollutant-

specific standards under §7412(n) focused on “unac-

ceptable” public health risks, as petitioners below

argued, or some other type of regulation under

16 In the MATS Rule, EPA interpreted §7412(n) to mandate

§7412(d) standards that control all HAPs emitted by EGUs, so

long as one HAP emitted by one EGU is found to pose either a

residual health or environmental risk. The panel below af-

firmed this interpretation of §7412(n). Pet. App. 4la-43a. In

view of the $9.6 billion cost associated with §7412(d) regulation

of all EGU HAPs, a pollutant-specific “risk management” ap-

proach to regulation under §7412(n)}—an option EPA proposed

in the 2004 Proposed Correction Rule—could provide EPA

broader authority to regulate EGU HAP emissions than

§7412(d) regulation.

41

§7412, EPA must identify the specific EGU emission

reductions that “regulation under” §7412 would re-

quire in order to be able to resolve whether “such

regulation” is “appropriate and necessary.”

Residual risk regulation focuses on specific types

of harm caused by specific pollutants. For example,

§7412(f(2) calls for additional regulation of HAP

emissions that pose either an unacceptable residual

“public health” risk or residual “environmental” risk

by establishing standards that “provide...public

health” protection or “prevent...adverse environmen-

tal effect.” Similarly, §7412(m) calls for additional

regulation of residual “health” or “environmental”

risks “as may be necessary and appropriate to pre-

vent such effects [in identified waterbodies].” If con-

trol technology regulation of a HAP leaves no residu-

al health or environmental risk of concern, no resid-

ual risk regulation of that HAP is required or author-

ized under §7412(f) or (m).

Section 7412(n)(1)(A) calls upon EPA to perform a

study of the “hazards to public health” associated

with EGU HAP emissions that remain “after imposi-

tion of the requirements of this [Act].” To address

any residual public health risks identified in that

study, EPA must describe “alternative control strat-

egies for [those] emissions which may warrant regu-

lation under this section.” Thus, like §7412(f) and

(m), the §7412(n)(1)(A) residual risk program focuses

not on all HAPs, but on the specific remaining EGU

HAP emissions that present risks that may warrant

regulation. Unlike §7412(f) and (m), however,

§7412(n)(1)(A) focuses only on residual “hazards to

public health,” and not on residual environmental

risks.

42

In the §7412(n)(1)(A) rulemaking, EPA made

three independent findings. For mercury, EPA found

a health risk associated with EGU emissions across

the entire EGU source category. Supra p. 18; see al-

so supra p. 16. For non-mercury metals, EPA found

a health risk above the one-in-one million level for

only five EGU boilers. Supra pp. 13-14. For acid

gases, EPA found no health hazard, but instead “po-

tential” adverse environmental! effects. Proposed

MATS Rule, NMA App. 1324a.

Reflecting these findings, EPA could estimate

public health benefits ($4-$6 million) only for EGU

mercury emissions. EPA estimated no health bene-

fits associated with reducing other metals. In the

case of acid gas emissions, EPA conceded that they

do not pose any health risk. Proposed MATS Rule,

Pet. App. 542a-543a; see also supra p. 14. Perhaps

reflecting that the EGU acid gas emissions represent

an exceedingly small percentage of the EGU emis-

sions regulated by the CAA’s Acid Deposition Control

Program, see supra pp. 14-15, EPA was unable to

identify any adverse environmental effect in the

United States caused by this small fraction of al-

ready comprehensively regulated EGU emissions.

See EPRI MATS Comments, JA 398-399.

By contrast, EPA estimates that §7412(d) MACT

standards for EGUs would collectively cost the in-

dustry $9.6 billion annually, raising the question

whether such regulation could ever be an “appropri-

ate and necessary” regulatory response. Where

overall costs and benefits are so wildly out of bal-

ance, whether one or more pollutants are driving

that overall imbalance is an important aspect of the

problem. To say that Congress authorized EPA to

regulate EGU HAP emissions posing a residual

43

health risk in order to trigger regulation, and at the

same time required regulation of EGU HAP emis-

sions that pose no residual health risk, would con-

tradict the language of the statute and completely

sever the link articulated in the “appropriate and

necessary” clause between the need to regulate and a

rational regulatory response.

In this rulemaking, the annual control cost for ac-

id gas emissions is approximately one-half of the $9.6

billion total annual MATS compliance cost while

public health benefits are “zero.” See supra p. 19; see

also supra p. 14. For trace metals, control costs are

less, and there are only five EGU boilers that might

pose health risks slightly above the one-in-one mil-

lion negligible risk level. See supra pp. 13-14. Final-

ly, while mercury controls are estimated to produce

small benefits, those benefits would come at a cost of

well over $1 billion annually. See UARG Comments

on Proposed MATS Rule, JA 807.

Because cost of regulation is a relevant considera-

tion under §7412(n), EPA should at the least have to

explain why a §7412 regulatory response that re-

quires regulation of specific EGU HAP emissions

that pose negligible public health risks and no quan-

tifiable adverse environmental effects, at a cost of

billions of dollars annually, could be found to be “ap-

propriate and necessary.”

44

CONCLUSION

The MATS Rule is based on an unlawful interpre-

tation of the CAA and should be declared invalid.

January 20, 2015

Respectfully submitted,

F. WILLIAM BROWNELL

(Counsel of Record)

HENRY V. NICKEL

LEE B. ZEUGIN

ELIZABETH L. HORNER

HUNTON & WILLIAMS LLP

2200 PENNSYLVANIA AVENUE, NW

WASHINGTON, D.C. 20037

(202) 955-1500

bbrownell@hunton.com

Counsel for Petitioner

Utility Air Regulatory Group

RESPONDENTS IN SUPPORT OF

PETITIONER JOINING IN THIS BRIEF

LESLIE SUE RITTS

DENNIS LANE

Ritts LAW GROUP, PLLC STINSON LEONARD STREET

THE CARRIAGE HOUSE LLP

620 FORT WILLIAMS 1775 PENNSYLVANIA

PARKWAY

AVENUE, NW, SUITE 800

ALEXANDRIA, VA 22304 WASHINGTON, D.C. 20006

(703) 823-2292

(202) 785-9100

LSRitts@ dennis.lane@

rittslawgroup.com stinsonleonard.com

Counsel for American

Public Power Associa- GAR HENAN ANS eer

tion

LLP

BART E. CASSIDY

KATHERINE L. VACCARO

MANKO, GOLD, KATCHER

& Fox, LLP

401 Crry AVENUE

SUTTE 901

BALA CYNWYD, PA

19004

(484) 430-5700

bcassidy@

mankogold.com

Counsel for ARIPPA

MICHAEL NASI

JACKSON WALKER LLP

100 CONGRESS AVENUE

SUITE 1100

AUSTIN, TX 78701

(512) 236-2000

mnasi@jw.com

Counsel for Gulf Coast

Lignite Coalition

45

1201 WALNUT STREET

SUITE 2900

KANSAS City, MO 64106

(816) 842-8600

parthy.evans@

stinsonleonard.com

Counsel for Kansas City

Board of Public Utilities

ERIC GROTEN

VINSON & ELKINS LLP

2801 VIA FORTUNA

SUITE 100

AUSTIN, TX 78746-7568

(512) 542-8709

egroten@velaw.com

Counsel for White Stallion

Energy Center, LLC