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

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MAR 4- 206

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

Ju The Supreme Court of the United States

STATE OF MICHIGAN, ET AL.,

Petitioners,

Vv.

ENVIRONMENTAL PROTECTION AGENCY, ET AL.,

Respondents.

On Writ of Certiorari to the United States Court of

Appeals for the District of Columbia Circuit

BRIEF OF EMISSION CONTROL COMPANIES AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

AND IN SUPPORT OF AFFIRMANCE

ERIK S. JAFFE

(Counsel of Record)

ERIK S. JAFFE, P.C.

5101 34% Street, N.W.

Washington, V.C. 20008

(202) 237-8165

jaffe@esjpc.com

Counsel for Amici Curiae

|

Table of Contents

Il.

TABLE OF CONTENTS

EPA Properly Considered Cost at the

Standard-Setting Stage, Consistent with

the Language of the Statute. .......................00.

A. EPA's Interpretation of “Appropriate”

Best Fits the Language and Structure

ee ee Oe Oe II chev tncknbapentctennestnensdenes

B. Section 7412(n)(1)(A), Even Read

Alone, Does Not Support a

Regulation-Specific Consideration of Costs

Is the Only Economically Sensible Means of

IIE cisccectnsanbvnnctatiscdaantincwseudes

A. The Future Cost of Market-Driven

Solutions Cannot Reliably Be

Measured at an Early or Abstract

REET A a Es hr EE

B. Compliance Costs Rapidly Decline

Once the Market Responds with

Innovative Solutions to Anticipated

SCC EEE EEE RR EEE REE EET EHH EH OO He ee eee

Oe et ee ee i ee ee ee

See Ree CCE Pee He eee eee eee eee eee ee eee

6

.7

11

12

ll

Ill. The Market’s Response to the Impending

MATS Rule and EPA’s 2012 Regulatory

Findings Make the Narrow Question

Presented of Little Prospective Value and

of Considerable Present Economic Risk........... 19

Conclusion

lil

TABLE OF AUTHORITIES

Statutes

Ae io ye

RE Te; ree

42 U.S.C. § 7412(€)(4) ..0...c.000ececsceceseeseee.

42 U.S.C. § 7412(nX(1)(A).................-......

Regulations

Final Rule, 77 FED. REG. 9304 (Feb.

Oe i ccidahinisiaicounsanssdulopasisensooumebacioce

Other Authorities

Electric Sales, Revenue, and Average

Price, Table 5a

Illinois EPA Mercury and Clean Air

Interstate Rule (CAIR) Rulemaking

(http://www.epa.illinois.gov/topics/fo

Petition of Otter Tail Power Company,

Aug. 1, 2014 (available at

// v/ issi ts

/electric/2014/EL14-070/petition.pdf)

INTEREST OF AMICI CURIAE !

Amici curiae Emission Control Companies are

businesses that research and manufacture technology

for reducing mercury and other hazardous substances

from power-plant emissions. They each have invest-

ed tremendous amounts of research and capital into

developing effective and economically efficient means

of helping their customers — power-generating com-

panies — comply with the MATS Rule and other

clean-air requirements. Precisely due to such re-

search and investment, the methods for mercury re-

moval have become better and less expensive than

ever, and will continue to improve with experience.

Amici are interested in this case because they are

direct participants in the expanding market for mer-

cury control and can offer expertise on the issue of

cost and how the market adapts to new regulations

with effective innovation. They also are interested in

this case because of their substantial investments in

preparing themselves and their customers for the im-

pending effective date of the MATS Rule. Such in-

vestments would be severely damaged or lost should

the MATS Rule once again be delayed.

Amicus curiae ADA Carbon Solutions, LLC was

originally formed in 2008 in anticipation of the need

for mercury removal. From 2008 to 2010 ADA Car-

bon Solutions designed and built the largest, most

1 No counsel for a party authored this brief in whole or in

part, nor did any person or entity, other than amici or their

counsel, make a monetary contribution intended to fund the

preparation or submission of this brief. This brief is submitted

pursuant to the blanket consent letters from all parties, on file

with this Court.

2

automated, and most environmentally friendly acti-

vated carbon plant focused on products that are op-

timized for mercury capture in North America. ADA

Carbon Solutions is a market-leading supplier of ac-

tivated carbon for mercury control, supplying over 30

GW of current North American power plants with

their PowerPAC® and FastPAC™ activated carbons.

They have a number of long-term contracts for the

supply of activated carbons for mercury control.

Some sites have been utilizing their products since

2009-2010 to maintain mercury compliance with

state rules ard consent decrees.

Amicus curiae Cabot Corporation is a leading glob-

al producer of specialty chemicals and performance

materials for use in multiple industries. Cabot Norit

Americas, Inc. is a subsidiary of Cabot Corporation

and is a global leader in the research, development,

manufacturing, and sale of high-grade activated car-

bons and equipment systems. Its products are used

in a growing range of environmental, health, safety,

and industrial applications to remove pollutants, con-

taminants, and other impurities from air, water, and

other liquids and gases in an efficient and cost-

effective manner. Cabot has been supplying its

DARCO®-brand activated carbon to over 80 North

American coal-fired power plants, some for over 6

years, specifically for the removal of mercury from

flue gas, as contemplated by the MATS Rule. All of

those plants have been meeting stringent emissions

limits, including many with limits even more strin-

gent than the MATS Rule.

Amicus curiae Calgon Carbon Corporation is a

global leader in the manufacture, reactivation, and

3

application of activated carbon and other advanced

environmental technologies. Calgon Carbon has 20

years of experience in the removal of mercury from

flue gas, and has supplied Fluepac® branded activat-

ed carbon to coal-fired utilities for over 7 years.

Calgon Carbon developed a first generation of ad-

vanced carbon products that typically require less

than half the usage rate when compared to a stand-

ard carbon. More recently, second and third genera-

tions of advanced products have been commercialized

allowing further use-rate reductions of up to an addi-

tional 40%.

Amicus curtae ICL-IP America Inc. is a manufac-

turer of bromine-based mercury-emission-reduction

materials, among other specialty chemicals based

primarily on the rich mineral resources found in the

Dead Sea. Bromine-containing compounds like those

supplied by ICL-IP America, added to coal, injected

into the boiler, or impregnated on sorbents can be

used to oxidize mercury effluent, thereby enhancing

the overall removal of mercury in downstream pollu-

tion contro] equipment.

SUMMARY OF ARGUMENT

1. Amici agree with Respondents that nothing in

42 U.S.C. § 7412(n)(1)(A) reouires EPA to balance

cost at the initial stage of its regulatory analysis of

hazardous air pollutant (“HAP”) emissions rather

than at the later stages of setting and analyzing spe-

cific HAP control standards. Indeed, given Con-

gress’s careful inclusion and exclusion of cost as a

consideration at other stages of the rulemaking pro-

cess, EPA’s view is not merely permissible, it is a bet-

4

ter reading of the statute. Petitioners’ position that

costs can be used to block regulation of power-plant

HAP emissions in its entirety — rather than merely

shape the standards adopted — would allow an end

run around the minimum “floor” standards in

§ 7412(d)(3), which Congress made mandatory re-

gardless of direct cost considerations.

While EPA’s statutory interpretation best harmo-

nizes the structure and language of § 7412 as a

whole, even a narrower focus on the language of

§ 7412(n)(1)(A) alone supports what EPA actually did

in this case, notwithstanding that it may have ap-

plied different statutory labels to its analysis. If, as

Petitioners suggest, § 7412(n)(1)(A) was meant as a

substantive change of standards for power plants ra-

ther than simply a delayed trigger for § 7412’s tradi-

tional two-step listing and standard-setting proce-

dures, then the substance of § 7412(n)(1)(A) still does

not support Petitioners’ approach. Rather, the re-

quirement that the Administrator find “regulation”

under this section to be appropriate more naturally

refers to the final standards or rules being appropri-

ate, not the initial and non-final act of “listing” a

source. If cost analysis is indeed a required part of

an “appropriateness” finding, then the statute cer-

tainly permits such analysis at the end of the regula-

tory development process, as EPA functionally did,

and does not require it to be a preemptive hurdle to

starting that process at all.

Regardless how EPA parsed its obligations under

the statute, it certainly satisfied this alternate con-

struction of any obligation to find the MATS Rule ap-

propriate, even with costs considered. EPA conduct-

5

ed a cost/benefit analysis and concluded that the reg-

ulation was highly net-beneficial. That it labeled

such finding a Regulatory Impact Analysis rather

than an appropriateness analysis, or reached its con-

clusion at the end of the regulatory process rather

than at the beginning, is irrelevant even under a nar-

rower reading of § 7412(n)(1)(A) alone.

2. Considering cost at the later standard-setting

stage, rather than at a preliminary listing stage, also

makes economic and regulatory sense. Cost calcula-

tions at such earlier stage would be more speculative

and likely overstated. The market needs time to re-

spond to anticipated regulations and to research and

invest in potential solutions. Cost estimates before

such market response would be based on underdevel-

oped technologies and strategies directed at unknown

or uncertain emission standards. Deferring cost

analysis to later in the regulatory process allows EPA

to base its estimates on better-developed market da-

ta. And even then, costs likely will continue to de-

cline as the regulations become more imminent. In-

deed, that is precisely what has happened with mer-

cury control, with the costs of mercury removal drop-

ping rapidly as the efficiency of activated carbon and

related products has increased.

3. Given the continued market adaptation to the

impending rule, the limited scope of the statutory

provision at issue, the narrow question presented,

and the substantive findings by EPA, further review

offers little prospect of benefit and considerable risk

of wasted resources and harm.

First, whatever perceived economic significance of

this case that may have supported a grant of certio-

6

rari, circumstances have largely passed that consid-

eration by. The MATS Rule will go into effect on

April 16, 2015, before this Court renders a decision in

this case, and most companies have already taken

any necessary steps to comply. A decision halting or

further delaying implementation of the MATS Rule

would render such compliance efforts wasted. Re-

versing course now threatens tremendous economic

disruption and losses, while the economic costs of im-

plementing the Rule have either been expended in

many cases or are declining rapidly as the market

continues to adapt to the impending Rule.

Second, this case is a poor vehicle for any broad

precedential pronouncements that might have legal

benefit given the narrowness of the question present-

ed and the limited future applicability of

§ 7412(n)(1)(A). In addition, this case offers little

prospect of any substantive benefit vis-a-vis the

MATS Rule given that the substance of EPA’s cost

analysis is not part of the question presented, and

will not change if EPA is instructed to conduct such

analysis under a different label.

This Court should either affirm on the narrow and

fact-bound particulars of this case or perhaps consid-

er dismissing the writ as improvidently granted.

ARGUMENT

I. EPA Properly Considered Cost at the

Standard-Setting Stage, Consistent with

the Language of the Statute.

Amici agree with the court of appeals and Re-

spondents that EPA properly considered cost in con-

7

nection with its specific proposed regulations, and

was not required to speculate regarding cost when

making preliminary findings whether to initiate the

regulatory process in the first place. See National

Mining Ass’n. (“NMA”) Pet. App. 22a-33a; Federal

Resp. Br. at 17-19, 24-28; Industry Resp. Br. at 14,

24-27; State & Local Resp. Br. at 13-14, 28-32; Amer.

Acad. Pediatrics (“AAP”) Resp. Br. at 14-15.

A. EPA’s Interpretation of “Appropriate”

Best Fits the Language and Structure

of § 7412 as a Whole.

As Respondents have noted, Congress's express in-

clusion and exclusion of costs in the statutory provi-

sions for setting HAP emission standards, and the

absence of any reference to cost in connection with

the “appropriate and necessary’ language at issue

here, provides ample textual support for EPA's de-

ferred consideration of cost. See Federal Resp. Br. at

35-36; Industry Resp. Br. at 19-21; State & Local

Resp. Br. at 20-21; AAP Resp. Br. at 24-28; compare

42 U.S.C. § 7412(d)(2) and 42 U.S.C. § 7412(d)(3)

with 42 U.S.C. § 7412(n)(1)(A).

Indeed, to consider cost at the preliminary stage

would allow an end run around the minimum floor

standards methodology, § 7412(d)(3), which conspicu-

ously supersedes and excludes the direct considera-

tion of cost otherwise required in (d)(2). NMA Pet.

App. 27a.2 The only thing that importing cost consid-

2 Because minimum floor standards are based on contro! lev-

els actually being achieved in the market, they indirectly take

cost into account. NMA Pet. App. 27a; Industry Resp. Br. at 3,

8

erations into a preliminary “appropriate and neces-

sary” analysis would actually impose on EPA would

be an up-front cost analysis of prospective minimum

floor standards, since beyond-the-floor standards car-

ry their own cost element anyway. That would be a

very peculiar result and an odd way for Congress to

exempt power plants from the minimum floor re-

quirements. Had Congress actually meant to do that,

it simply could have said as much and allowed the

cost-inclusive “achievable” standard to govern all

standards applicable to power plants.

Read in context and giving meaning to all parts of

the interrelated statutory language, EPA’s view that

cost considerations are to be deferred to the regula-

tion-setting stage is not merely a permissible reading

of the statutory language, it is a better reading of the

statute. Under EPA’s approach costs are still consid-

ered, but they are considered in the “appropriate”

context of concrete regulatory standards and only to

the extent Congress allowed.

B. Section 7412(n)(1)(A), Even Read

Alone, Does Not Support a Preliminary

and Preemptive Cost Analysis.

Petitioners’ view of § 7412(n)(1)(A) as requiring a

preliminary cost analysis stems largely from isolating

the provision and its “appropriate and necessary”

language from the rest of § 7412. But focusing on the

language of § 7412(n)(1)(A) alone, and even assuming

that the phrase “appropriate” requires a cost analy-

sis, still does not support Petitioners’ claim that costs

25-26. Floor standards have a de facto limit of commercial via-

bility.

9

must be considered at the front end of any regulatory

analysis rather than at the back end in support of the

final proposed and implemented regulations. Noth-

ing in § 7412(n)(1)(A) — or elsewhere — requires that

power-plant source categories or subcategories be

listed and standards set in temporally discrete stag-

es. Rather, the only two stages mentioned in that

section are reporting and regulating.

The section first requires only that the “Adminis-

trator shall develop and describe in the Administra-

tor’s report to Congress alternative control strategies

for emissions which may warrant regulation under

this section.” 42 U.S.C. § 7412(n)(1)(A) (emphasis

added). The statute next requires that the Adminis-

trator “shall regulate electric utility steam generating

units under this section, if the Administrator finds

such regulation is appropriate and necessary after

considering the results of the study required by this

subparagraph.” Jd. (emphasis added). Nothing in

the first step involves considering costs, and nothing

in the second step requires listing power-plant source

categories prior to proposing regulations for any

emissions.

EPA, of course, reads this provision against the

backdrop of the rest of § 7412 and quite permissibly

incorporates the two-step process — and the separa-

tion of health and cost considerations — reflected in

§ 7412 as applied to other source categories. But

viewed as Petitioners would have it — as creating a

different procedure and requirement for power-plant

regulation — there is no reason to read the language

as setting a condition for the initial listing when, in

setting a required finding for the command “shall

10

regulate,” it more naturally describes the full and fi-

nal outcome of the regulatory process, not merely the

gateway stage. It-is then “such regulation,” i.e., the

proposed and eventually adopted rules, that EPA

would need to find “appropriate and necessary.” To

the extent § 7412(n)(1)(A) provides an alternative

gateway to regulation than the previous listing pro-

cess for other sources, the “appropriate and neces-

sary” finding need not temporally precede proposed

regulations. Rather, it is merely one of many re-

quirements for such eventual regulations.

Under this alternative approach, the entire “ap-

propriate and necessary” finding would be made con-

current with the final rule, as EPA eventually did

when reaffirming its earlier finding in light of the

updated record. Final Rule, 77 FED. REG. 9304, 9310-

11 (Feb. 16, 2012); NMA Pet. App. 14a. And this

construction would provide better guidance regarding

what was indeed “appropriate” based on the various

rules for setting standards as well as Executive re-

quirements for cost-benefit analysis.

By focusing on the purported mandatory content of

the word “appropriate,” Petitioners overlook what the

text of § 7412(n)(1)(A) suggests regarding timing.

EPA’s actual conduct in this case is fully consistent

with this alternative reading calling for a preliminary

* Under this approach, EPA’s 2000 finding was unnecessary,

as was any initial decision to “list” power plants before propos-

ing regulations. EPA could have identified its proposed source

category concurrent with its proposed regulations and deemed

the entire result appropriate and necessary in the final rule.

EPA eventually did just that, and the court of appeals recog-

nized that it made any objections to earlier procedures moot.

NMA Pet. App. 17a.

ll

report about HAP emissions that “may warrant regu-

lation” — i.e., pose a potential health threat — followed

by an “appropriate and necessary” finding at the time

such actual regulations are approved. And while

EPA housed its cost consideration under the rubrics

of both its § 7412(d) standard setting and its Regula-

tory Impact Analysis, rather than its “appropriate-

ness” finding, the substance of what it did fully com-

plies with what Petitioners read into the word “ap-

propriate” even if the labels it used to describe why it

did such analysis were different. Having eventually

combined its “appropriateness” finding and its cost

analyses into its final regulatory decision, EPA fully

satisfied any supposed cost-consideration obligation

under § 7412(n)(1)(A), notwithstanding that it gave

separate names to those analyses.

Even assuming a requirement to consider costs,

there is no call for a further remand to have EPA do

under a different regulatory label what it has already

done.

Il. Regulation-Specific Consideration of

Costs Is the Only Economically Sensible

Means of Applying the Statute.

EPA’s approach to costs not only is a better read-

ing of the statute as a whole (and fully consistent

with a narrower’ alternative reading of

§ 7412(n)(1)(A) alone), it also is more sensible from an

economic and regulatory perspective. Attempting to

estimate costs prior to doing the floor-standards

analysis of what is actually being achieved in the

market simply invites speculation and is not condu-

cive to reasoned decision-making.

12

A. The Future Cost of Market-Driven So-

lutions Cannot Reliably Be Measured

at an Early or Abstract Stage.

While Petitioners would have EPA consider the

costs of hypothetical regulations at the beginning of

the regulatory process, EPA’s decision to address

costs at a later stage in connection with actual pro-

posed rules makes far more economic sense. See In-

dustry Resp. Br. at 24-27. From a purely practical

perspective, cost information is highly variable and

depends to a great degree on the targets being set

and the technologies and methods that will be used.

Some cost information regarding existing technol-

ogies and methods will, of course, exist even at the

outset of the regulatory process. But such infor-

mation is necessarily speculative if there is little or

no guidance regarding what level of emissions reduc-

tion must be achieved. Certainly a market just be-

ginning to consider how to achieve reductions in par-

ticular pollutants will not have had time to innovate,

become more efficient, or plan strategies to meet mul-

tiple clean-air goals. And even where similar goals

are being met and technology deployed on a small

scale, the market needs time to assess the feasibility,

costs, or economies of scale of ramping up to meet a

nationwide requirement for greater emission controls.

By contrast, once EPA has signaled, by listing or

otherwise, its intent to regulate a particular source

and particular pollutants, existing participants and

new entrants into the market have strong incentives

to research new and improved control strategies and

to develop more accurate plans and cost estimates in

order to attract investment. It is the very fact of

13

EPA’s intent to regulate that generates the market

demand for such technologies and subsequently al-

lows EPA to -obtain more accurate information re-

garding cost and effectiveness.

Mercury control provides a useful example of this

market response. At the outset of the regulatory pro-

cess, scrubbers previously installed at some plants to

comply with SOz and particulate matter require-

ments also provided a degree of mercury control and

thus some baseline cost data. But § 7412(n)(1)(A) ap-

plies precisely where such incidental HAP control is

insufficient and further controls are needed; just as

EPA determined was the case with mercury emis-

sions. While mercury control technology such as ac-

tivated carbon injection existed when EPA conducted

its utility study, it existed on a much smaller scale.

The cost and availability of such technology in vol-

ume for full-scale use would have been uncertain, and

a premature cost analysis, as sought by Petitioners,

would have been based on older data and not have

had the benefit of market innovation and develop-

ment. EPA’s initial listing of coal- and oil-fired power

plants, however, created a prospective demand for

less expensive and more efficient mercury control and

the market responded.

Amici Emission Control Companies were part of

that response. They produce activated carbon or

bromine-based additives that help control mercury

emissions and they have invested considerable scien-

tific and financial resources in improving those prod-

ucts.

One such mercury control method involves inject-

ing brominated powdered activated carbon directly

14

into the ductwork of a coal-fired power plant after the

point of combustion but before an existing particulate

collection device such as an electrostatic precipitator

or a fabric filter baghouse. The bromine oxidizes any

elemental mercury in the combustion emissions

stream, the activated carbon efficiently captures the

oxidized mercury, and then the mercury-imbedded

activated carbon is removed from the system (along

with other particulate matter) by the existing partic-

ulate collection device. Cost and feasibility data for

this type of approach was far better developed at the

time of the final rulemaking than it was in 2000

when the initial “appropriate and necessary” deter-

mination was made. Final Rule, 77 FED. REG. at

9425-26. Indeed, any attempt to estimate the costs of

such an innovative approach at that earlier time

would have involved considerable speculation. After

the market had an opportunity to respond, however,

credible cost estimates became much more reasonable

and feasible.‘

The point is that any cost analysis done at the pre-

liminary stage sought by Petitioners will inevitably

be inaccurate and almost certainly overstated. Such

estimates would take the field as it exists — underde-

veloped and with little incentive for investment or

innovation — rather than how it will be at the time

the regulation goes into effect. The EPA’s approach

4 While this amicus brief contemplates the use of activated

carbon and/or bromine to capture mercury emissions, other

technologies continue to be developed as a result of the MATS

Rule. Those technologies include non-carbon-based sorbents,

advanced particulate control systems, and other multi-pollutant

contro] platforms.

15

at least gives the market a head start so it can inno-

vate and provide improved strategies and reasonable

cost estimates for subsequent specific proposals for

HAP reduction.

B. Compliance Costs Rapidly Decline

Once the Market Responds with Inno-

vative Solutions to Anticipated Regu-

lation.

No matter when a cost estimate is made, however,

the market for emission control products will contin-

ue to innovate and develop, rendering any cost esti-

mates quickly outdated. In short, any gloom-and-

doom cost scenarios suggested by Petitioners, NMA

Pet. Br. at 1, 14-15, 18-19, will quickly be overrun by

events. Such a market response to anticipated regu-

lations is not merely conjecture — it is precisely what

has happened in connection with the MATS Rule.

Although EPA estimated $9.6 billion in annual

compliance costs, 77 FED. REG. at 9424, technology

and innovation are demonstrating that the costs of

complying with the MATS Rule are in fact much low-

er. For example, many power plants are already

compliant with the MATS Rule and will not have to

spend any additional money for mercury removal.

Such plants either use fuels with lower mercury

emissions, already employ control strategies for other

pollutants that also reduce mercury emissions, or

must already comply with mercury emissions stand-

ards adopted in 14 States, Industry Resp. Br. at 9.

Based on amici’s own market research, we project

that of the 271 Gigawatts (GW) of coal-fired power

generation capacity expected to be in service as of

16

2017 and subject to the MATS Rule (“covered capaci-

ty”), 36% will bear no direct costs for mercury compli-

ance given their existing infrastructure or fuel

source. An additional 66 GW (24%) of covered capaci-

ty has already installed such controls pursuant to

state regulations or consent decrees independent of

the MATS Rule.

Of the remaining 108 GW (40%) of covered capaci-

ty that will need to install mercury controls specifi-

cally as a result of the MATS rule, 90 GW of covered

capacity has already installed or is in the final stages

of installing mercury controls and the remaining 18

GW (7% of covered capacity or 17% of capacity need-

ing to add controls specifically for the MATS Rule)

will install such controls in 2015.

For plants using activated carbon control methods,

their costs involve initial construction of an injection

silo and installing injection equipment, and then an-

nually purchasing activated carbon. For the vast ma-

jority of covered capacity, the up-front costs of in-

stalling the needed equipment have already been or

will be expended and will not change regardless how

this case turns out.

As for the annual costs for activated carbon control

methods, developments in the market have dramati-

cally reduced those expenses. While the annual mar-

ket for activated carbon initially was projected to

reach 800 million to 1.2 billion lbs., improvements in

the efficiency of activated carbon and procedures for

injecting it have significantly reduced projected an-

nual consumption to less than half the previous pro-

17

jections — down to 350 million to 500 million |bs.5 Not

only has the quantity of activated carbon required for

effective mercury control declined, the price per Ib.

also has declined by about 30% since 2010. As a re-

sult of such efficiencies, the projected annual cost of

this approach to mercury control has likewise de-

clined. In short, whatever estimates were used to de-

termine costs even as late as 2010, those estimates

likely overstate the current reality as the market con-

tinues to respond and innovate.

Similarly, while EPA estimated that the MATS

Rule would cause a 3.1% increase in energy prices,

empirical results suggest that such estimate may

have been overly pessimistic. For example, in a utili-

ty rate filing seeking to recover the costs of MATS

compliance in South Dakota, Petition of Otter Tail

Power Company, Aug. 1, 2014 (available at

http://puc. ov/ issi ic/2014/EL

14-070/petition.pdf), the Otter Tail Power Company

disclosed that three of its coal-fired power stations

will make use of powdered activated carbon (of the

type sold by one of the amici) to comply with the mer-

5 In Illinois, for example, state requirements announced in

2006 required the use of activated carbon to significantly reduce

mercury emissions by 2009. See Illinois EPA Mercury and

Croan Air mnteretate Rule tna Me Rutomahing

poe en mar mary The experience of some » of amict's eustomers under

the Illinois rule shows that compliance with rules even stricter

than the MATS standard can be achieved with far less activated

carbon than originally projected and in some case with as little

as 20% of what was initially required. Similarly, some of amici’s

Canadian customers of activated carbon have seen as much as

50% or greater reductions in their activated carbon usage as

they have migrated to 2™ and 3 generation products.

18

cury portion of the MATS Rule. Jd. at 9. The compa-

ny anticipates that the South Dakota share of its an-

nual compliance costs will be approximately $314,000

spread over annual consumption of 424,651,653

kWhs of power. Id. at 9-10, 13.

Based on those figures, the price per kWh for an

average residential customer in South Dakota would

increase by $0.00074, or less than 1% of the average

2013 residential price in South Dakota of $0.1026 per

kWh. See Electric Sales, Revenue, and Average Price,

Table 5a (http://www.e1a.gov/electricitv/sales-

_revenue price/pdf/table5 a.pdf). Given the average

residential consumption in South Dakota in 2013 of

1055 kWhs per month, this represents a mere $0.78

per month increase in the price of electricity. Jd.

Similarly at the national level, the average residen-

tial monthly customer uses 909 kWh per month and

pays $0.1212 per kWh for an average monthly cost of

power of $110.20. Jd. While costs can obviously vary

depending on plant configuration, fuel type, and oth-

er factors, assuming, arguendo, a similar average ac-

tivated carbon usage rate, an average residential cus-

tomer would see an increase in his or her monthly bill

of only 0.6% ($0.67). While secondary effects of the

MATS Rule also factor into the Rule’s impact on elec-

tricity prices, the direct costs of MATS compliance on

electricity bills will be minimal.

In short, whatever compliance costs and other im-

pacts were estimated for the MATS Rule in 2011 and

2012, those costs and impacts have continued to de-

cline. That result both supports having EPA wait as

long as possible before analyzing the costs of pro-

19

posed regulations and also undermines Petitioners’

claims regarding the impact of the MATS Rule.

Ill. The Market’s Response to the Impending

MATS Rule and EPA’s 2012 Regulatory

Findings Make the Narrow Question Pre-

sented of Little Prospective Value and of

Considerable Present Economic Risk.

When this Court granted certiorari on the narrow

question presented, it presumably did so because of

the perceived economic importance of this case and

some concern for the broader role of costs in regulato-

ry analysis. As the briefing and evolving events re-

veal, however, the MATS Rule does not pose the eco-

nomic threat suggested by Petitioners. Remanding,

vacating, or otherwise delaying the Rule now poses

its own significant economic consequences and the le-

gal or practical value of resolving the question pre-

sented is limited at best and may not warrant this

Court’s extended attention.

First, because the MATS Rule goes into effect on

April 16, 2015, well before any expected decision in

this case, the market has already begun — and has in

fact nearly completed — preparing to comply with the

Rule. See supra at 15-16. Of the 174 GW of covered

capacity that needs some sort of mercury control, 66

GW of capacity already has mercury controls because

it is covered by state regulations or consent decrees.

An additional 90 GW of covered capacity has already

installed or is in the final stages of installing mercury

controls to comply with the MATS Rule. Only 18 GW

of covered capacity thus lacks installed equipment

and that capacity will install such equipment in 2015.

20

In short, 93% of the 271 GW of total covered capacity

either requires no additional mercury controls or has

already installed the technology required.

The market having already adapted to the impend-

ing Rule, any action by this Court unwinding or de-

laying the MATS Rule would cause substantial losses

to those power companies and others who have in-

vested in compliance. Industry has already spent bil-

lions on updated pollution controls, Industry Resp.

Br. at 10, and many of those sunk costs will be wast-

ed in the absence of the MATS Rule.

Additionally, various supporting industries have

made huge investments to develop and manufacture

the technology and products that will enable covered

power plants to comply with the Rule. Amici, for ex-

ample, collectively have spent over $750 million on

activated carbon production capability. In fact, pro-

duction capacity for activated carbon was accelerated

in response to earlier attempts at a mercury rule and

has been sitting idle as the Rule waxed and waned

over the years. Those investments would be further

damaged or lost should the Rule again be delayed for

years.®

Insofar as this case was taken for its perceived

economic importance, therefore, events have outpaced

such claims by Petitioners. The vast majority of up-

front costs imposed by the Rule have already been

expended and future costs are declining rapidly. See

supra at 15-18. The economic costs of delaying or va-

6 Similarly, smaller companies developing other innovative

technologies not yet widely adopted likely will go out of busi-

ness, and investments in them will be lost, if the MATS Rule is

further delayed.

21

cating the Rule, however, have continuously grown.

It is now difficult to predict the mixed economic con-

sequences of a decision in either direction and hence

that factor should play little or no role in this Court’s

decision whether this case remains worthy of its at-

tention or how it should be resolved.

Second, given the narrow question presented,

there is little prospect this case will set meaningful

precedent or resolve any pressing legal issues. In

many ways this case is a one-off situation involving a

limited legal issue and unusual and fact-bound pro-

cedural history and findings.

The question presented in this case is limited to

whether EPA “unreasonably refused to consider costs

in determining whether it is appropriate to regulate

hazardous air pollutants emitted by electric utilities.”

If that question implies that FPA never considered

the cost of the MATS Rule before regulating, the an-

swer is obvious: EPA did consider costs in setting

emission standards and in the Regulatory Impact

Analysis, and found the Rule to be cost-beneficial.

If the question instead asks whether EPA’s cost

analysis should have occurred earlier or had a differ-

ent label — i.e., should have been part of its “appro-

priateness” analysis — it adds little practical or legal

value. Due to the convoluted procedural history of

these regulations and the long delay between the ini-

tial “appropriate and necessary” finding in 2000 and

the renewed finding in 2012, the question whether

EPA should have considered costs at the early or lat-

er stages of the process or under a different analytic

label is now largely besides the point.

22

In 2011 and 2012, EPA considered costs in the

Regulatory Impact Analysis and found they were

outweighed by the anticipated benefits of the MATS

Rule. That substantive finding is not at issue here

given the limited question on which this Court grant-

ed certiorari. EPA simultaneously reaffirmed its

2000 finding that regulation was appropriate and

necessary and made a new finding “ ‘confirm[ing] that

it remains appropriate and necessary today to regu-

late’” certain power plants. Pet. App. 14a (quoting

EPA; citation omitted). But for not having discussed

costs, the substance of that finding is likewise no

longer at issue in this Court.

Given such simultaneous findings that regulation

remained appropriate and necessary and that the

benefits outweighed costs, arguing over which statu-

tory or regulatory language required such findings, or

when in the regulatory process they should have been

made, is splitting hairs and an academic formality of

doubtful value to either the country or this Court.’

The timing issue — whether costs should have been

considered pre-listing — is particularly pointless given

that any listing decision is not even reviewable until

after the final regulations are issued, 42 U.S.C.

§ 7412(e)(4), and hence review of the cost analysis

will necessarily occur at the same time as review of

the substantive regulations and the final Regulatory

Impact Analysis. And, as Respondents have noted,

nothing meaningful would change if EPA is required

to rename its cost/benefit analysis an “appropriate-

7 Had EPA concluded that the costs outweighed the benefits

and proceeded anyway, then the question presented might have

some practical relevance.

23

ness” finding. Federal Resp. Br. at 20, 55; Industry

Resp. Br. at 39-41; State & Local Resp. Br. at 43.

As further briefing and the passage of time now re-

flect, events effectively have passed by the continued

relevance of the question presented. Trying to un-

wind or restart the process now would impose its own

tremendous costs and will not change the eventual

outcome.

Because nothing in the statute plainly commands

the reading offered by Petitioners, EPA has the lin-

guistically better and more practical interpretation

regarding the role of costs in the process, and EPA

has already found that benefits outweigh the costs of

the regulations in this case, there is very little to rec-

ommend upsetting the apple cart now. In fact, con-

stantly starting and stopping the mercury rules may

impose such high transaction costs and losses that

even an economically imperfect rule to which the

market could adapt would be better than the shifting

winds and uncertainties that would result from a fur-

ther remand.

Whether such considerations favor succinctly af-

firming the decision below on narrow grounds or,

perhaps, dismissing the writ as improvidently grant-

ed, the alternative sought by Petitioners makes the

least sense of all and would impose serious costs on

the economy with little offsetting benefit. Indeed, it

would penalize those who responsibly sought to com-

ply with the impending Rule and might be unable to

recover their expenses for doing so, and would reward

those who dragged their heels at the expense of pub-

lic health. Such considerations should at least inform

this Court’s continuing discretion as to whether this

24

case is a valuable and productive use of its limited re-

sources and certiorari jurisdiction.

CONCLUSION

For the foregoing reasons, this Court should affirm

the decision below.

Respectfully submitted,

ERIK S. JAFFE

(Counsel of Record)

ERIK S. JAFFE, P.C.

5101 34* Street, N.W.

Washington, D.C. 20008

(202) 237-8165

jaffe@esjpc.com

Counsel for Amici Curiae

Dated: March 4, 2015