Petition for Writ of Certiorari — Appalachian Power Co. v. Environmental Protection Agency
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_. Supreme Court, U.S.
( | riLEpD
90 632 oct 20200
‘ QFEICE Q& THE CLERK
No.
In the Supreme Court of the United States
STATE OF MICHIGAN, et al.,
Petitioners,
Vv.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the District of Columbia Circuit
PETITION FOR A WRIT OF CERTIORARI
STATE OF ALABAMA, — JENNIFER M. GRANHOLM
ex rel. BILL PRYOR Attorney General
Attorney General
Thomas L. Casey
Tommy E. Bryan Solicitor General
Assistant Attorney General Counsel of Record
The State of Alabama and _P. O. Box 30212
Associate General Counsel Lansing, Michigan 48909
Alabama Department of (517) 373-1124
Environmental Management
P. O. Box 301463 Alan F. Hoffman
Montgomery, Alabama Assistant Attorney General
36130-1463 Attorneys for State of Michigan
(334) 271-7855
[additional counsel listed on inside cover]
b4 Yop
Thomas H. Zerbe Commonwealth of Virginia
Senior Counsel
Office of Legal Services By Counsel
Division of Environmental Mark L. Earley
Services Attorney General
1356 Hansford Street
Charleston, West Virginia _Roger L. Chaffe
25301 Senior Assistant Attorney
(304) 558-9160 General
Counsel for West Virginia
Stewart T. Leeth*
Assistant Attorney General
900 East Main Street
Richmond, Virginia 23219
(804) 786-6957
*Counsel of Record
CHARLES M. CONDON
Attorney General of South
Carolina
KENNETH P. WOODINGTON
Senior Assistant Attorney General
CHRISTIE NEWMAN BARRETT
Assistant Attorney General
South Carolina Office of the
Attorney General
P. O. Box 11549
. Columbia, South Carolina 29211
(803) 734-3736
Samuel L. Finklea, III
South Carolina Department of
Health and Environmental Control
2600 Bull Street
Columbia, South Carolina 29201
(803) 898-3349
os
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‘ Pa
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QUESTION PRESENTED
Whether, under § 110 of the Clean Air Act, 42 U.S.C. §
7410, the cost of reducing air pollutant emissions is a relevant
and proper factor for the United States Environmental
Protection Agency ("EPA") to use in determining whether a
state is significantly contributing to another state's failure to
attain a national ambient air quality standard.
ee
PARTIES TO THE PROCEEDING
1. Petitioners Michigan, West Virginia, Virginia,
Alabama, and South Carolina were petitioners in the court of
appeals along with:
In No. 98-1497, State of Michigan, Michigan
Department of Environmental Quality, and State of
West Virginia, Division of Environmental Protection
In No. 98-1588, State of Ohio
In No. 98-1596, Commonwealth of Virginia
In No. 98-1615, State of Alabama, ex re! Bill
Pryor, Attorney General
In No. 98-1617, State of Indiana and Indiana
Department of Environmental Management
In No. 98-1619, State of North Carolina
In No. 98-1621, State of South Carolina
In No. 98-1499, United Mine Workers of .
America
In No. 98-1500, Appalachian Power Company, .
et al., consisting of: :
Appalachian Power Company;
Baltimore Gas and Electric Company (now
referred to as Constellation Power Source
Generation, Inc.);
Carolina Power & Light Company;
Central and South West Services, Inc.
Central Power and Light Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
West Texas Utilities Company
Central Illinois Light Company
Central Illinois Public Service Company
ClNergy
Columbus Southern Power Company;
Commonwealth Edison Company
Consumers Energy Company
Dayton Power and Light Company, The
Detroit Edison Company, The
Duke Energy Company
Florida Power Corporation
Illinois Power Company
Indiana Michigan Power Company
Jacksonville Electric Authority
Kell
ee AI I eh a ay el AE C0 A
he A Ae I) an hd, he ote hal ee.
Power Canpeny d/b/a
ioererenn
Northern Indiana Public Service Company
aoe Power Corporation
io Power Compan
Ohio Valley Electric Senpension
Oklahoma Gas & Electric Company
Otter Trail Power Company
PacifiCorp Electric Operations
Plains Electric Generation & Transmission
Cooperative, Inc.
Potomac Edison Company, The
d/b/a Allegheny Power System, Inc.
Potomac Electric Power Company
Public Service Company of New Mexico
Salt River Project
South Carolina Electric & Gas Company
Southern y
Alabama Power Company
ia Power Company
Gulf Power C
ississippi Power Company
Savannah Electric and Power Company
Tampa Electric Power Company
Tucson Electric Company
Union Electric Company
Virginia Power
West Penn Power Company
d/b/a Allegheny Power System, Inc.
Edison Electric Institute
National Rural Electric Cooperative
Association
American Public Power Association
In No. 98-1500, Duquesne Light Company
In No. 98-1501, Midwest Ozone Group
In No. 98-1502, West Virginia Chamber of
Commerce
In No. 98-1504, National Mining Association
-iv-
In No. 98-1518, West Virginia Manufacturers
Association
In No. 98-1556, City of Springfield, Missouri
through the Board of Utilities, d/b/a City Utilities of
Mi |
In No. 98-1567, Kansas City Power & Light
Company
St. Joseph Light & Power Company
The Empire District Electric Company
Utilicorp United, Inc.
City of Independence, Missouri
Associated Electric Cooperative, Inc.
In No. 98-1573, Indianapolis Power & Light
C
in No. 98-1585, The Alabama Forestry
Association, Inc. by and through its section The
Alabama Pulp and Paper Counsel
In No. 98-1590, Dairyland Power Cooperative
In No. 98-1598, South Carolina Public Service
Authority doing business as Santee Cooper
In No. 98-1601, American Municipal Power-
Ohio :
In No. 98-1602, Fort James Operating Company
Gilman Paper Company
Rayonier Inc.
Savannah Electric & Power Company
Southeast Paper Manufacturing
Company
International Paper Company
In No. 98-1608, PP&L, Inc.
In No. 98-1609, Council of Industrial Boiler
Owners
In No. 98-1611, Network for Workable Air
Policies
In No. 98-1616, Georgia Coalition for Sound
Environmental Policy, Inc.
In No. 98-1618, Interstate Natural Gas |
Association of America
In No. 99-1070, Appalachian Power Company,
et all.
In No. 99-1093, Wisconsin Paper Council
Madison Gas and Electric Company
Northern States Power Company
-Ve-
Wisconsin Public Service tion
Wisconsin Manufacturers & e
The following Party was a Respondent in the
consolidated proceeding, the judgment in which review is
sought.
US. Environmental Protection Agency
The following Parties were Intervenors in the
consolidated proceeding, the judgment in which review is
sought.
Appalachian Power Company, et al.
Dairyland Power Cooperative
Virginia Manufacturers Association
South Carolina Public Service Authority d/b/a
Santee Cooper
Detroit Public Lighting
Grand Haven Board of Light and Power
Holland Board of Public Works
Lansing Board of Water & Light
Marquette Board of Light and Power
Michigan South Central Power Agency; and
City of Wyandotte Department of
Municipal Service
GPU Generation, Inc.
American Gas Association
Interstate Natural Gas Association of America
Network for Workable Air Policies
Business Council of Alabama
Michigan Manufacturers Association
State of Wisconsin
State of New York
State of Maryland
Generation LLC
Public Service Electric and Gas Company
Rochester Gas & Electric Corporation; and
PG&E Generating
Natural Gas Supply Association; and
Sempra Energy
Associated Industries of Massachusetts
New England Council; and
New Jersey State Chamber of Commerce
PP&L, Inc.
Atlantic City Electric C y; and
Delmarva Power & Light y
Natural Resources Defense Council
- Vii -
tae Send ic ‘
National Environmental Trust
N IR C 4] of Mai
New York Public Interest Research Group
Ohio Environmental Council
US. Public Interest Research Group; and
Wisconsin's Environmental Decade Institute
Province of Ontario, Canada
Norman W. Sterling,-Minister of the
Environment, Province of Ontario
Charles A. Harnick, Attorney General of the
Province of Ontario; and
Christopher Carl Haromy
The following were Amici in the consolidated
suasteting, Gebiamanetemiamiaerinadtene
Toledo Metropolitan Area Council of
Governments
North Carolina Citizens for Business and
Industry
South Carolina Chamber of Commerce
Environmental Management Association of
South Carolina; and
South Carolina Manufacturers Alliance
Government of Canada
- viii -
TABLE OF CONTENTS
Page
I i tala ial ba eel eea ls i
Parties to the Proceeding. .............cesssessssereseseserenenseseceees ii-vii
Table of Authorities............ icsabendeunadabie Ramee X-Xii
CEES DORR UE cccccceseccnssesccassnnssssssanscscsnenanscsnenessonesnssanscaseases 1
aD ssiinisessitincicesacsacsnsioinianiciniiiiaitaiisaiaatitsdiiiiestpiniaid 1
Constitutional, Statutory and Regulatory
I I ieciiitcieeniaideasniinstetieaeiintiianiletentindic 1
OI ctemnnssiennsennsartensennsnnisantennesennatinnntabanennnmniantansagenss 3
1 FO CN EE Bi vcceietetnsnctetsicininsnanintnannenainin +
2. Ozone Transport Problem..................sss0+es00- 3
3. Bee POR GI eR ecccscscncssnsnsccsnintscnssanininjennnns 4
4. The Decision of the Court of Appeals.......... 7
Reasons for Granting the Petition..................csccsssssssesseeeeees 7
1. Under the plain language of
§ 110(a)(2)(D)(i)(1), the cost of reducing
air emission is neither a relevant nor
Caen factor for the EPA to consider
the "amount" of a state's
emissions rm “contribute significantly”
to another state's failure to attain a
national air quality standard....................... 11
2. The decision below allowing EPA's
consideration of costs conflicts with this
Court's decision in Union Electric that, in the
absence of congressional intent, economic
-ix-
TABLE OF CONTENTS (cont'd.)
and technological infeasibility shall
not be considered by the EPA under
Fi vientcccsetvnecnsedacsstaccsteeapmnsnnncsnnansncns 14
3. The court of appeals’ decision directly
conflicts with its own precedents in ATA
OG Fd DAMIER onrccccceccsccsscsscsesscsessscssessees 19
4. The EPA's calculation of state emission
budgets based on costs, as ap eee by the
court of appeals, conflicts with principles of
state sovereignty found in the Clean Air Act's
statutory framework of cooperative
federalism, as found in Train v. NRDC, 421
U.S. 60, 79 (1976), by intruding upon each
state's obligation and_right to revise its plan
“as necessary” to adequately mitigate
interstate pollutant transpott................:0+ 22
5. The court of appeals erred in allowing the
EPA's “overall notions of economic fairness”
to change the substantive obligations of the
states as fixed by Comgress.............s:sseseeee: 25
a ibsieemniinodnioeicieien 28
-~X-
TABLE OF AUTHORITIES
Page
CASES
American Trucking Ass’ns v. EPA, 175 F.3d 1027,
modified on reh’g, 195 F.3d 4 (D.C. Cir. 1999)
("ATA"), cert. granted, 120 S.Ct. 2003
NS Ae | REE passim
Lead Industries Ass'n v. EPA, 647 F.2d 1130
(D.C. Cir.), cert. denied, 449 U.S. 1042
COTE Piiceninnetinannsetsttaniintiibiauieanceseinnnitianaes 8, 9, 19, 20
Marsh v. Oregon Natural Resources Council,
ID is. Fe BOO Ge icettcnninthncicaneinstnnrnsatinsnniens 13
Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000),
BS Bh I. TI, Fi sreccsetsscsctanssceninnmncniens passim
Motor Vehicle Manufacturers Ass'n v. State Farm
Mutual Automobile Ins. Co.,
SF PG ae Se Cee iritcsteniiniinnncnsindibinastinsstmnaneti 23
Natural Resources Defense Council v. EPA,
824 F.2d 1146, 1163 (D.C. Cir. 1987) (en banc)....... 7
Train v. NRDC, 421 U.S. 60 (1976)..........cccccsseseeeeceees passim
Union Electric Co. v. EPA, 427 U.S. 246 (1976)............ passim
STATUTES
ae CK. & Te iieccencensieacetnstmnttinsininaesntiisiciniihineeusiatiintinstanin 1
The Clean Air Act, 42 U.S.C. § 7401 et $éq............cccceceseseees 1
CR Be See es Pe icitntesttiiiesntintpntiiianns 4
CAA § 107(b)(1), 42 U.S.C. § 7407(b)(1).............. 19
CAA § 109, 42 U.S.C. § 7409............... 4, 8, 9, 20, 21
se
TABLE OF AUTHORITIES (cont'd.)
Page
CAA § 110, 42 US.C. § 7410 ecccccccssessssscccesee passim
CAA § 110(a)(2)(A)(i),
42 U.S.C. § 7410(a)(2)(A)(i)eoccseecesscccessssesescssseeeenn 9
CAA § 110(a)(2)(B), 42 U.S.C. § 7410(a)(2)(B).....24
CAA § 110(a)(2)(D), 42 U.S.C.
Be iieiiiniicasssninabininbiiniitiondinnaiineniinicicinnnnesinl passim
CAA § 110(a)(2)(D)(i)(1),
42 U.S.C. § 7410(a)(2)(D)(i)(D)................ee enone passim
CAA § 110(a)(2)(E), 42 U.S.C.
CS ATC 9, 14, 15, 17
CAA § 110(k)(5), 42 U.S.C. § 7410(k)(5)...... 2, 5, 24
CAA § 110(a)(2), 42 U.S.C. § 7410(a)(2)............. 4,9
CAA § 110(k)(3), 42. U.S.C. § 7410(k)(3).......... 4,15
CAA § 307(b), 42 U.S.C. § 7607(b)................ceceeeeee 3
Clean Air Act Amendments of 1970,
Pub. L. No. 91-604, § 110(a)(2),
Be cs Be Ct i iatiiatictichinsesinacinncninnnnsicsadadasanen 14, 15
Clean Air Act Amendments of 1977,
Pub .L. No. 95-95, § 108(a)(4),
ee cy ; a ne 15, 17
Clean Air Act Amendments, Pub. L. No. 101-549,
§ 101(b), 104 Stat. 2399, 2404 (1990)............... 15, 18
FEDERAL REGISTER
GE Te, RE FE I aciicintsccienitiniesnntnnninnensinsedonitt A
- Xii -
TABLE OF AUTHORITIES (cont'd.)
Page
62 Fed. Reg. at 60,320 (1998)...ssscsscssssssssssssssssssseseesssseee a4
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GD FOG. Tee, SFO Cane sssicrscncnssnisncsnncsisaimiicianasansnaiai 4, 28
BD TG. Tit, OE TT GS CI erent snccenssccniensoranecnpaninnecintamioanen 4
GS TE. TO, G0 BF BPG sascc esse sncesnesnasisanannassannipiannsnatacuneiiia 6, 26
GS FOUL FO. O07 BIT occcscccessnsvsnsassanssnsstnenedinsaacattianiiiananmts 3, 23
Go FG, Tame, 00 FT Bais istsscesuvinssnsssrascsnsncshaitancienbiannns 3, 7,40
GD RT BT PP aineccsnsntnnsasnsnicesiacnarsssinanibsnniiaeiieninciensinioaaiie 26
OF RR, FR, BF asain tnecaessnseninsssnmminsiigisatenanbaissiicdaccabnassiens 23
GD FO, Tin FF FOS CITI ans eisersssnsencnsnetincsimiissniinntinntin 22, 23
SF FR. BU FF I sees certs viensesssonnessiansanntghintionnlierinlaseasensania 22
OTHER
S. Rep. No. 228, 101st Cong., 1st Sess. 21 (1989),
as reported in 1990 U.S.C.C.A.N. 3385, 3407... 13, 18
H.R. Rep. No. 294, 95th Cong., 1st Sess., at 56 (1977),
reprinted in 1977 U.S.C.C.A.N. 1077, 1134............ 17
PETITION FOR WRIT OF CERTIORARI
The states of Michigan, Virginia, West Virginia, South
Carolina, and Alabama ("Petitioners"), respectfully petition
for a writ of certiorari to review the judgment of the United
States Court of Appeals for the District of Columbia Circuit.
Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).
OPINIONS BELOW
The majority opinion of the court of appeals and
Circuit Judge Sentelle's dissenting opinion (App. la-54a) are
reported at 213 F.3d 663 (D.C. Cir. 2000), 341 U.S. App.
D.C. 306. The orders on the petition for panel and en banc
rehearing and the court of appeals’ mandate are included in
the Appendix (App. 55a-60a).
JURISDICTION
The decision of the court of appeals was entered on
March 3, 2000. The petitions for rehearing and rehearing en
banc were denied June 22, 2000. The Court's mandate issued
on September 13, 2000. Petitions for writ of certiorari were
originally due on September 20, 2000. Upon motion of these
Petitioners, this Court, on September 8, 2000, granted an
extension until October 20, 2000 (App. 61a). The jurisdiction
of this Court is invoked under 28 U.S.C. § 1254(1).
CONSTITUTIONAL, STATUTORY AND REGULATORY
PROVISIONS INVOLVED
The relevant sections of the Clean Air Act, 42 U.S.C.
§ 7401 et seq., are set forth below:
Clean Air Act § 110(a)(2)(D), 42 U.S.C.
§ 7410(a)(2)(D):
-(a) Adoption of plan by State; submission
to Administrator; content of plan; revision; new
sources; indirect source review program;
supplemental or intermittent control systems-—
‘oe
(2) Each implementation plan submitted by
a State under this chapter shall be adopted by
the State after reasonable notice and public
hearing. Each such plan shall -
(D) contain adequate provisions—
(i) prohibiting, consistent with
the provisions of this subchapter, any source or
other type of emissions activity within the State
from emitting any air pollutant in amounts
which will -
(I) contribute significantly to
nonattainment in, or interfere with maintenance
by, any other State with respect to any such
national primary or secondary ambient air
quality standard, or
(II) interfere with measures
required to be included in the applicable
implementation plan for any other State under
part C of this subchapter to prevent significant
deterioration of air quality or to protect
visibility,
(ii) insuring compliance with the
applicable requirements of sections 7426 and
7415 of this title (relating to interstate and
international pollution abatement).
Clean Air Act § 110(k)(5), 42 U.S.C. § 7410(k)(5):
(k) Environmental Protection Agency action
on plan submissions
(5) Calls for plan revisions
Whenever the Administrator finds that the
applicable implementation plan for any area is
substantially inadequate to attain or maintain
the relevant national ambient air quality
standard, to mitigate adequately the interstate
pollutant transport described in section 7506a
of this title or section 7511c of this title, or to
otherwise comply with any requirement of this
chapter, the Adeiaiauadee shall require the
State to revise the plan as necessary to correct
such inadequacies. The Administrator shall
notify the State of the inadequacies, and may
establish reasonable deadlines (not to exceed
18 months after the date of such notice) for the
submission of such plan revisions. Such findings
and notice shall be public. Any finding under
this paragraph shall, to the extent the
Administrator deems appropriate, subject the
State to the requirements of this chapter to
which the State was subject when it developed
and submitted the plan for which such finding
was made, except that the Administrator may
adjust any dates applicable under such
requirements as appropriate (except that the
Administrator may not adjust any attainment
date prescribed under part D of this
subchapter, unless such date has elapsed).
Due to its length, only pertinent portions of the EPA
tule at issue in this case, 63 Fed. Reg. 57,356 et seq., are set
forth in the Appendix at App. 62a-98a. With the Clerk of the
Court's permission, complete copies of the rule have been
lodged with the Clerk simultaneously with the filing of the
petition for writ of certiorari filed by Appalachian Power
Company dated September 20, 2000 and captioned
Appalachian Power Company, et al. v. U.S. E.P.A, No. 00-445.
STATEMENT
Petitioners were among many who petitioned the
United States Court of Appeals for the District of Columbia
Circuit under § 307(b) of the federal Clean Air Act ("CAA" or
“the Act"), 42 U.S.C. § 7607(b), for review of a final EPA rule
calling for 22 states and the District of Columbia ("23 States”)
to revise their state implementation plans ("SIPs") to mitigate
the interstate transport of ozone pursuant to § 110 of the
CAA, 42 U.S.C. § 7410.1
1 Henceforth, citations to the Act are to sections of the statute; Table of
Authorities includes parallel citations to the United States Code.
~
as The Clean Air Act
The CAA created a statutory framework of
“cooperative federalism" by defining separate roles for the
states and the federal government, acting through the EPA.
The EPA is responsible for promulgating NAAQS for air
pollutants, while the states are responsible for designing SIPs
to achieve those NAAQS. See §§ 107, 109, and 110. Each
State is required to submit its plan to the EPA which, in turn,
"shall approve such submittal as a whole if it meets all of the
applicable requirements" of the CAA. See §§ 110(a)(2) and
110(k)(3).
2. Ozone Transport Problem
Although the EPA's final rule is intended to reduce the
interstate transport of ozone, the rule targets emissions of
nitrogen oxides ("NOx"), which are precursors to the formation
of ozone. As the EPA explained:
Ground-level ozone, the main harmful
ingredient in smog, is produced in complex
chemical reactions when its precursors, volatile
organic compounds (VOC) and NOx react in
the presence of sunlight. The chemical reactions
that create ozone take place while the
pollutants are being blown through the air by
the wind, which means that ozone can be more
severe many miles away from the source of
emissions than it is at the source.
63 Fed. Reg. 57,359 (1998) (App. 66a).2
3. The NOx SIP Call
One of the statutory requirements for a SIP is that it
“contain adequate provisions . . . prohibiting . . . any source or
other type of emissions activity within the state from emitting
2 Volatile organic compounds (VOC) reductions are not addressed in the
NOx SIP ol Saunaie e EPA has ado other national measures for
reducing VOC, see 63 Fed. Reg. at 57,363 (1998) (App. 70a-73a), and the EPA
believes VOC controls are most effective locally, while NOx controls are
reek as in addressing regional ozone problems. See 62 Fed. Reg. at
2
any air pollutant in amounts which will ... contribute
significantly to nonattainment in . . . any other state with
respect to any such” NAAQS. § 110(a)(2)(D). If, after
approving a SIP, the EPA "finds the applicable
implementation plan for any area is substantially
inadequate . . . to mitigate adequately . . . interstate pollutant
rt... or to otherwise comply with any requirement” of
the CAA, "the Administrator shall require the State to revise
the plan as necessary to correct such inadequacies.”
§ 110(k)(5). Using this authority as its justification, the EPA
issued its final rule calling for the 23 States to revise their SIPs
to mitigate their interstate transport of ozone in order to
comply with § 110(a)(2)(D)'s prohibition of significant
pollutant contributions. See Finding of Significant Contribution
and Rulemaking for Certain States in the Ozone Transport
Assessment Group Region for Purposes of Reducing Regional
Transport of Ozone; Rule, 63 Fed. Reg. 57,356, et seq. ("NOx SIP
Call") (1998).
To address NOx emissions, the EPA's final rule
establishes a "NOx budget” for each of the 23 States found to
be contributing significantly to the failure of a downwind state
to attain the NAAOS for ozone. See 63 Fed. Reg. at 57,377-78
(1998) (App. 76a-83a). The NOx budgets set the level of
NOx emissions each state is allowed to emit. See id.
The first step in the EPA's process was to determine
whether the amounts of NOx emitted by each state “contribute
significantly” to downwind nonattainment. To do so, the EPA
adopted a multi-factor test that considered:
1) the overall nature of the ozone problem
(ie., “collective contribution”);
2) the extent of the downwind attainment
problems to which the upwind State's emissions
are linked, including the ambient impact of
controls required er the CAA or otherwise
implemented in the downwind areas;
3)° the ambient impact of the emissions
from the upwind State's sources on the
downwind nonattainment problems; and
4) the availability of highly cost effective
control measures for upwind emissions.
a e -
63 Fed. Reg. at 57,376 (emphasis added) (1998) (App. 73a).
"These factors were the primary components in EPA's
consideration." Id. “The first three of these factors are related
to air quality; the fourth is related to costs." Id. In actuality,
the EPA used the first three factors to determine which states
were to be subject to the rule. The fourth factor was used
exclusively by EPA to determine each state's significant
contribution of NOx to the downwind states nonattainment of
the NAAQS for ozone.
Under the fourth cost-related factor, the EPA
calculated NOx budgets for each state by determining the
amounts of NOx emissions that may be eliminated by each
state through controls that are considered to be "highly cost
effective." See id. “The EPA determined that an average of
approximately $2,000 per ton removed is highly cost
effective." Id. In the final rule, the EPA explained that:
Because EPA had . . . determined that the NOx
emissions from the affected upwind States have
a large and/or frequent impact on downwind
nonattainment or maintenance problems, EPA
concludes that the amount of NOx emissions
from those States that can be eliminated
through application of highly cost-effective
control measures contributes significantly to
nonattainment or maintenance problems
downwind.
Under Section 110(a)(2)(D)(i)(1), the SIP must
include “adequate provisions prohibiting”
sources from emitting these "amounts." Because
no highly cost-effective controls are available to
eliminate the remaining amounts of NOx
emissions, EPA concludes that those emissions do
not contribute significantly to downwind
nonattainment or maintenance problems.
< oe
63 Fed. Reg. at 57,378 (emphasis added) (1998) (App. 79a).
Accordingly, the remaining amounts of NOx emissions would
constitute a state's NOx budget of allowable emissions.
4. The Decision of the Court of Appeals
In approving the EPA's cost-based determination of
significant interstate pollutant contributions, the majority of
the court of appeals panel stated:
In sum, there is nothing in the text, structure, or
history of § 110(a)(2)(D) that bars EPA from
considering cost in its application.
Michigan, 213 F.3d 663, 679. The majority found that "the
fundamental dispute is over the clarity of the phrase
“contribute significantly.” Id., 213 F.3d at 677. The court went
_on to conclude that the statute's use of the word "significantly"
allowed the EPA to consider the costs of emission reductions.
See id., 213 F.3d at 677-79. The court also found that the
petitioners had failed to point to evidence in the text,
Statutory structure or legislative history of the CAA
“suggesting that cost considerations should be barred,” id., 213
F.3d at 679, or showing "the requisite ‘clear congressional
intent to preclude consideration of cost." Id. (quoting Natural
Resources Defense Council v. EPA, 824 F.2d 1146, 1163 (D.C.
Cir. 1987) (en banc)).
Petitioners filed a joint petition for rehearing and
rehearing en banc with the court of appeals. On June 22, 2000,
the court denied both requests with Judge Sentelle voting in
favor of the petitioner's requests.
REASONS FOR GRANTING THE PETITION
The court of appeals has decided an important
question of federal law under the CAA ina way that conflicts
with the relevant decisions of this Court in Union Electric Co. v.
EPA, 427 U.S. 246 (1976) ("Union Electric") and Train v.
NRDC, 421 US. 60 (1976) ("Train"). In doing so, the court of
appeals ignores the clear intent of Congress underlying the
CAA's interstate pollutant transport provision. The court's
decision also conflicts with its previous interpretations of the
.
CAA in American Trucking Ass’ns v. EPA, 175 F.3d 1027,
modified on reh’g, 195 F.3d 4 (D.C. Cir. 1999) ("ATA"), cert.
granted, 120 S.Ct. 2003 (No. 1257, 1999 Term) and Lead
Industries Ass'n v. EPA, 647 F.2d 1130, 1148-51 (D.C. Cir.),
cert. denied, 449 U.S. 1042 (1980) “Lead Industries"). This Court
should grant this petition to resolve these serious conflicts and
to remand an EPA rule that exceeds the EPA's statutory
authority.
In crafting the CAA, Congress was acutely aware of
the Act's potential economic ramifications. The of
agp public health, however, was intended
to override considerations of costs and technology. This Court
even went so far as to say at one point in Union Electric that
where Congress intended cost and techno considerations,
it expressly provided for them. See Union ic, 427 US. at
257, n. 5. Although, as discussed later, that statement was
appropriately ified in other parts of the opinion, there is
no room for consideration of costs under the transport
provision of § 110(a)(2)(D). By allowing the EPA to insert
cost considerations into § 110(a)(2)(D)(i)(I), the court of
appeals defeats a clear con ional intent to create
“technology-forcing” legislation that places public health above
the wpe at “highly cost effective” arent the EPA now
wrongly elevates to supreme status.
The EPA's consideration of costs under § 110(a)(2)(D)
is wholly inconsistent with the position the EPA ad
before this Court in the EPA's petition for a writ of certiorari
in ATA.3 In that case, the EPA stated that it “cannot consider
the economic or technological feasibility ity of attaining NAAQS”
under § 109. See EPA's petition for a writ of certiorari at 15
(citing Lead Industries at 1148-51: "the statute and its
legislative history make clear that economic considerations
play no part in the promulgation of ambient air quality
standards under Section 109"). The EPA's reliance on Lead
Industries is signi t because that decision is ostensibly
based upon this 's precedents in Train and Union Electric,
Act “are expressly designed to force ted sources to
develop pollution control devices that might at the time
3 The EPA's petition was granted by this Court on May 22, 2000. The States
of Michigan, and West Virginia are also parties to that proceeding.
Ye
appear to be economically or technologically infeasible.” See
Union Electric, 427 U.S. at 257; Train, 421 U.S. at 90-91; Lead
Industries, 647 F.2d 1149. Union Electric, moreover, found that
none of the original requirements of § 110(a)(2) appear to
permit the EPA to consider technological and economic
infeasibility. See Union Electric, 427 U.S. at 257;4 see also Lead
Industries, 647 F.2d at 1149, n. 37 (“if Congress had wanted
the economics of pollution control considered it would have so
provided in § 110"). Yet, the EPA proceeded to consider the
“economics of pollution control” under the interstate pollution
provision while relying on Linion Electric's progeny,
in ATA, to avoid the consideration of costs under § 109.
Clearly, the court of appeals decision in Michigan is
inconsistent with its decision in ATA. See Michigan, 213 F.3d
at 679; ATA, 175 F.3d at 1038. In ATA, the court a with
the EPA that the agency is barred from the consideration of
costs, even though those costs are logically relevant to the
absence of express congressional intent, economic and technological
Se Se nt be considered by EPA in evaluating state implementation
plans ' US. at 257. Nevertheless, the Court did
Suggest that in evaluating whether a state's SIP included provisions for
ine the ori _— cor stamdiende “en 1it ly as ticable,”
as required under 110¢a\2 A)(i), the EPA “may ider whether it is
other standards under § 110(a)(2). In addition, the Linion Electric Court held:
In short, the [1970] Amendments offer le rtuni
for consideration of claims of technological and economic
infeasibility. Always, however, care is taken that
consideration | of such claims will not interfere
with the pri f ttainment
ea ee
Id., 427 US. at 268. For example, § 110(a)(2)(A)'s ancillary consideration of
costs the EPA, if = to force
2 110(a)(2XE), contained no language that explicitly or imp
ity. And the amendments leading to § 110(a)(2)(D) did not change this
transport
i with the downwind states’ attainment of the
national standards by undermining the statute's ibition of significant
contributions by the upwind states.
-10-
decision of where to “draw the line” for the ozone NAAQS.5
In Michigan, the court approved the EPA's claim that the
agency is free to consider costs, even though those costs are
irrelevant to determining the "amounts which . . . will contribute
significantly” to the nonattainment of NAAQS by downwind
states. This petition should be granted to fully resolve these
inconsistent decisions and to remand a rule based on wholly
irrelevant factors.
The decision in Michigan also dismantles the CAA's
statutory framework of "cooperative federalism" by approving
the EPA's disguised intrusion on the states’ primary obligation
and right to develop SIPs to bring the states into compliance
with the requirements of the CAA. As a result, the significant
pollutant contributions that Congress expressly prohibited in
§ 110(a)(2)(D) will continue by some states while other states
have their emissions limited to an extent that is grossly out of
proportion to their contributions. By pursuing its own "overall
notions of economic fairness," the EPA charts a new and
unauthorized course for the CAA that falls short of
prohibiting the emission of air pollutants “in amounts which
will ... contribute significantly" to the nonattainment of
NAAQS by downwind States.
It is clear that Congress required each state to eliminate
its own significant contributions, — of the costs. The
EPA, as affirmed by the court o als, now seeks to
legislate a different policy for pos half of the nation.
Regardless of what one ne might think of the choices Congress
has made to address air quality problems, this Court has
repeatedly held that it is not for an administrative agency or
the courts to second-guess that choice. oot se tion should be
granted to correct the executive and judicial branches’ trespass
upon the exclusive province of Congress.
5 Ozone is a “non-threshold” pollutant: There is no threshold amount for
ozone above which deleterious effects are certain and below which no
health effects are known. bay be. me ozone definitely . . . as [a] non-
threshold [pollutant], i.e., [one that has] some possibility of some adverse
health i (however )
F.3d at 1034, citing Ozone Fi
at any level above zero.” ATA, 175
Rule, 62 Fed. Reg. at 38,863 (1997).
a
1. Under the plain language of
§ 110(a)(2)(D)(i)(1), the cost of reducing air
emissions is neither a relevant nor proper
factor for the EPA to consider in determining
the “amount” of a state's emissions that
“contribute significantly" to another state's
failure to attain a national air quality
standard.
In the CAA, Congress expressly called for the EPA and
the states to prohibit "any source or other type of emissions
activity within [a] State . . . from emitting any air pollutant in
amounts which will . . . contribute significantly" to another state's
failure to attain national ambient air quality standards.
§ 110(a)(2)(D)(i)(1) (emphasis added). The court of appeals
confirmed that "the fundamental dispute is over the clarity of
the phrase ‘contribute significantly."" Id., 213 F.3d at 677. The
court went on to conclude that the statute's use of the word
"significantly" allowed the EPA -to consider the costs of
emission reductions. See id., 213 F.3d at 677-79.
As Judge Sentelle points out in his dissent, the meaning
of the statute is plain:
Given § 7410(a)(2)(D)(i)(1)'s mandate as a
whole, it becomes clear that EPA and the
majority have to contort the statute's language
by isolating the term "significantly" and ignoring
the terms “air pollutant,” “amounts,” and
“contribute” in order to work cost
considerations into the statute. I just cannot
agree with such an unusual exercise in statutory
construction.
Michigan, 213 F.3d at 696-97 (quotation marks added). He
also explained that:
Unlike the majority's journey through this
regulatory scheme, mine is neither lengthy nor
complex, because I get off at the first stop.
«32.
Michigan, 213 F.3d at 695. “The first stop" Judge Sentelle
referred to was a rational reading of the plain language of the
statute's text:
It would appear to me that Congress clearly
empowered the EPA to base its actions on
amounts of pollutants, those amounts to be
measured in terms of significance of
contribution to downwind attainment. Instead,
EPA has chosen, doubtless in the pursuit of
beneficent ends, to assert authority to require
the SIPs to contain provisions based not on the
amounts of pollutants, nor even on the relative
significance of the contributions of such
pollutants to downwind nonattainment, but on
the relative cost effectiveness of alleviation. I
agree with the State petitioners that it is
undeniable that EPA has exceeded its statuto
authority.
sees
I marvel at an interpretation that permits cost
effectiveness to find a place in a statutory
provision addressing amounts of air pollutant
contribution. While the contribution must affect
nonattainment significantly, no reasonable
reading of the statutory provision in its entirety
allows the term significantly to springboard
costs of alleviation into EPA's statutorily-
defined authority.
- Michigan, 213 F.3d at 695-97 (Sentelle, J., dissenting)
(quotation marks added) (App. 51a-54a).
Congress instructed the EPA to look at pollutant
amounts, not dollar amounts. Based on its own misguided
notion of economic fairness, EPA, contrary to the plain
language of the Act, chose to determine each state's required
NOx reduction based solely on costs. Because the cost of
alleviation is wholly irrelevant to determining the pollutant
amounts that are causing the problem in need of uieciation,
the rule is not "founded on a reasoned evaluation ‘of the
relevant factors” and, therefore, is arbitrary and capricious.
=~ 2
See Marsh v. Oregon Natural Resources Council, 490 U.S. 360,
378 (1989).
The plain language of § 110(a)(2)(D)(i)(1) should have
resolved this matter at "the first stop." If it is necessary to
look beyond the language of the statute itself, the legislative
history of the term "contribute significantly" confirms the error
of the statutory interpretation by EPA and the court of
appeals. In the 1990 amendments, Congress explained its
change from the term “prevent attainment” to "contribute
significantly to nonattainment”:
For interstate pollution to violate current law, it
must "prevent attainment.” Since it may be
impossible to say that any single source or
group of sources is the one which actually
prevents attainment, the bill changes "prevent
attainment or maintenance" to "contribute
significantly to nonattainment or interfere with
maintenance by,” thus clarifying when a
violation occurs.
S. Rep. No. 228, 101st Cong., 1st Sess. 21 (1989), as reported in
1990 U.S.C.C.A.N. 3385, 3407. The term "contribute
significantly" was intended by Congress to strengthen the
prohibition on contributions to interstate pollution, not to
allow some states to escape the Act's reach because their
required emission reductions will cost more than $2,000/ton.
There is no evidence of any congressional intent to inject cost
considerations into § 110(a)(2)(D)(i)(1). This provision lacks
any language that explicitly or implicitly authorizes economic
considerations. The word “significantly” goes to the level of
the impact and cannot reasonably be interpreted to allow the
consideration of economic efficiency.
Despite the plain language of the statute, the rule
provides that a state's significant contribution is not
determined by the “amounts” of pollutants in its emissions as
required by Congress. Instead, EPA declares that a state's
Significant contribution is the total amount of the state's
emissions that can be eliminated for $2,000/ton or less. As a
result, a state which is contributing a large amount of
pollutants to another state's failure to attain air quality
ii.
standards will not have to reduce its emissions one iota if
doing so will cost more than $2,000/ton. On the flip side, a
state which is barely making any contribution is required to
eliminate an amount of emissions that equals the total of all
the emissions that would cost $2,000 or less to eliminate.
Under EPA's view, it does not matter whether that amount is
grossly out of proportion to a state's contribution. In effect,
the EPA shifts the burden of cleaning the air from states with
large pollutant contributions to states with small contributions
simply because the latter happen to have cost-efficient
reductions available in excess of what they need to eliminate
their small contributions. In doing so, EPA greatly exceeds its
statutory authority.
2. The decision below allowing EPA's
consideration of costs conflicts with this
Court's decision in Union Electric that, in the
absence of congressional intent, economic
and technological infeasibility shall not be
considered by the EPA under § 110(a)(2).
In Union Electric, this Court reviewed the Clean Air Act
Amendments of 1970 including the interstate pollution
transport provision, § 110(a)(2)(E), from which the current
§ 110(a)(2)(D) evolved. See Union Electric, 427 U.S. at 250, n.
1. This Court expressly addressed the EPA's consideration of
economic and technological feasibility under § 110(a)(2). See
id., 427 U.S. at 257. This Court examined all the requirements
of § 110(a)(2) and held:
After surveying the relevant provisions of the
Clean Air Amendments of 1970 and their
legislative history, we agree that Congress
intended claims of economic and technological
infeasibility to be wholly foreign to the
Administrator's consideration of a state
implementation plan.
sR.
Union Electric, 427 U.S. at 256.6 As mentioned above, the
original 1970 interstate pollution provision was
§ 110(a)(2)(E).7 It was amended in 19778 and again, in 1990,
when it was moved to § 110(a)(2)(D).9 The history of this
provision, as discussed in more detail below, is material, for in
Michigan, the majority of the court of appeals panel stated:
In sum, there is nothing in the text, structure, or
history of § 110(a)(2)(D) that bars EPA from
considering cost in its application.
Michigan, 213 F.3d at 679. In Union Electric, however, this
Court reviewed § 110(a)(2)'s eight gene criteria against
which the EPA would evaluate SIPs for approval. See id. At
that time, § 110(a)(2) provided that the Administrator "shall
ns ag the proposed plan if it has been adopted after
public notice and hearing and if it meets the eight specified
criteria. See id. 427 U.S. at 250. Today, the same "shall
approve” language is now found in § 110(k)(3). ("[T]Jhe
Administrator shall approve such submittal as a whole if it
meets all of the applicable requirements of this chapter.")
This Court held that the "mandatory ‘shall’ makes it quite clear
that the Administrator is not to be concerned with factors
other than than those specified, [cite omitted] .. . and none of
the eight factors appears to permit consideration of technological or
economic infeasibility. [Footnote omitted.]" Union Electric, 427
U.S. at 257 (emphasis added).
One of the eight criteria reviewed in Union Electric was
§ 110(a)(2)(E), which required that a SIP contain:
6 This statement by the Court holds true for the CAA's interstate pollutant
transport provision (then § 110(a)(2)(E), now } 110(a)(2)(D)). As discussed
in footnote 4, supra, the Union Electric Court did it the EPA to consider
economic and ype mp infeasibility, under § 110(a)(2)(A), in the EPA's
determination of w er a SIP included provisions to achieve NAAQS as
" itiously as practicable.” Linion Electric, 427 U.S. at 265. The interstate
me: utant transport provision, ee gag — — found in § 110(a)(2)(E)
contained no language icitly or implicitly permitting even i
consideration of economic feastbility by the EPA. . .
7 See Clean Air Act Amendments of 1970, Pub. L. No. 91-604, § 110(a)(2), 84
Stat. 1676 (1970).
8 See Clean Air Act Amendments of 1977, Pub. .L. No. 95-95, § 108(a)(4), 91
Stat. 685, 693 (1977).
9 See Clean Air Act Amendments, Pub. L. No. 101-549, § 101(b), 104 Stat.
2399, 2404 (1990).
-16-
. .. adequate provisions for intergovernmental
cooperation, including measures necessary to
insure that emissions of air pollutants from
sources located in any air quality control region
will not interfere with the attainment or
maintenance of such primary or secondary
standard in any portion of such region outside
of such State or in any other air quality control
region.
Id., 427 U.S. at 250, n. 1 (emphasis added). Upon reviewing
the eight criteria, this Court found that:
These requirements are of a "technology-forcing
character," Train v. NRDC, supra, at 91, [cite
omitted] and are expressly designed to force
regulated sources to develop pollution control
devices that might at the time appear to be
economically or technologically infeasible.
Id., 427 U.S. at 257. In direct contravention of the statute's
design, the EPA's new rule fails to force emission reduction
measures that are not “highly cost effective." As discussed
below, if the EPA was barred from reading cost considerations
into the original § 110(a)(2)(E) when approving SIPs, it also
must be barred from injecting cost considerations into today's
§ 110(a)(2)(D).
In adopting the 1977 Amendments, Congress affirmed
Union Electric's resolution of what Congress considered to be a
“fundamental dispute under the act”:
This . . dispute relates to two questions. The
first is whether or not the Administrator is
authorized (or required) to disapprove a State
plan, because it is “economically or
technologically infeasible" or because "it does
not reflect the most cost-effective system" for
attaining and maintaining the national ambient
air quality standards. That question has now
been settled by the Supreme Court in Union
x
Electric Co. v. EPA, 427 U.S. 246 (1976), and
the committee takes no issue with the holding of
that case.
H.R. Rep. No. 294, 95th Cong., Ist Sess., at 56 (1977),
reprinted in 1977 U.S.C.C.A.N. 1077, 1134. Under its new rule
defining “significant contribution" in terms of "highly cost
effective” emission reduction measures, the EPA ignores
congressional intent. The EPA's rule rests upon cost factors
Congress did not intend the agency to consider.
Since Congress affirmed the Union Electric decision, no
amendments to the interstate pollutant transport provision
have occurred that undercut the premise of Union Electric.
“Enacted more than a quarter of a century ago, § 110 has gone
through many changes, but its basic structure has survived."
Commonwealth of ‘Virginia v. EPA, 108 F.3d 1397, 1406 (D.C.
Cir. 1997). "The 1990 amendments were the most
comprehensive since 1970, but the changes to § 110, at least as
they concern EPA's approval of State Plans, were
predominantly of syntax, not substance.” Id., 108 F.3d at
1409. A careful review of the CAA's subsequent amendments
and legislative history is vital to understanding how Union
Electric is dispositive of this appeal.
In the 1977 amendments, § 110(a)(2)(E) was amended
to require, in relevant part, that a SIP contain:
. adequate provisions (i) prohibiting any
Stationary source within the State from emitting
any air pollutant in amounts which will (I)
prevent attainment or maintenance by any other
State of any such national primary or
secondary ambient air quality standard ....
Clean Air Act Amendments of 1977, Pub. L. 95-95,
§ 108(a)(4), 91 Stat. 685, 693 (1977) (emphasis added). In
essence, the prohibited impact level of pollutant emissions
was changed from amounts that will "interfere with
attainment” to amounts that will "prevent attainment."
Clearly, no congressional intent to inject cost considerations
can be inferred here. In the 1990 amendments, § 110(a)(2)
was amended again and re-ordered to now include thirteen
ee
criteria, including § 110(a)(2)(D), which requires, in relevant
part, that a SIP:
(D) contain adequate provisions-
(i) prohibiting, consistent with
the provisions of this title, any
source or other type of emissions
activity within the State from
emitting any air pollutant in
amounts which will-
(I) contribute significantly
to nonattainment in, or interfere
with maintenance by, any other
State with respect to any such
national primary or secondary
ambient air quality
standard....
Clean Air Act Amendments, Pub. L. No. 101-549, § 101(b),
104 Stat. 2399, 2404 (1990) (emphasis added). As mentioned
above, in adopting the amendment, Congress explained its
change from the term "prevent attainment” to “contribute
significantly to nonattainment”:
For interstate pollution to violate current law, it
must "prevent attainment." Since it may be
impossible to say that any — source or
group of sources is the one which actually
prevents attainment, the bill changes "prevent
attainment or maintenance” to “contribute
significantly to nonattainment or interfere with
maintenance by," thus clarifying when a
violation occurs.
S. Rep. No. 228, 101st Cong., 1st Sess. 21 (1989), as reported in
1990 U.S.C.C.A.N. 3385, 3407. The term "contribute
significantly" was intended by Congress to reach more sources
and not to allow some sources to escape the provision's
prohibition just because their required emission reductions are
not "highly cost effective." The same Senate Report quoted
above stated:
.
In summary, the nonattainment provisions of
the bill are designed to bring about emission
reductions from all the major sources that
contribute to ozone . . . pollution... .
Id., at 13, 1990 U.S.C.C.A.N. at 3399 (original emphasis).
The EPA's rule allows some major contributing sources to
escape reductions because their available reduction measures
are not "highly cost effective.”
The changes in the 1977 and 1990 amendments, from
“interfere with the attainment” to “prevent attainment” to
“contribute significantly to nonattainment,” do not undermine
the premise of Union Electric. They only refer to the level of
pollution impact that will result in a violation of the CAA.
Considerations of costs remain “wholly foreign” to the EPA's
administration of § 110(a)(2)(D)(i)(1). Union Electric is still the
controlling decision of this Court. Thus, the court of appeals’
decision is in direct conflict with this Court's precedent and
warrants reversal.
3. The court of appeals' decision directly
conflicts with its own precedents in ATA and
Lead Industries.
The NOx SIP Call rule is of nationwide effect, directly
impacting the eastern half of the nation. The rule also
implicates statutory interpretation issues regarding the CAA's
interstate pollution transport provision that will have
ramifications for the entire nation. Any EPA actions, under
§ 110, that are of nationwide scope or effect can only be
reviewed by the D.C. Circuit. See § 107(b)(1). Accordingly,
conflicts between the CAA decisions of the D.C. Circuit are on
par with conflicts between the different circuits and, when the
D.C. Circuit fails to reconcile serious conflicts between its
decisions, this Court should do so. This Court should resolve
the clear conflicts between Michigan, Lead Industries and ATA.
In ATA, the court of appeals held:
Cost-benefit analysis, mentioned as a
possibility in Lockout/Tagout I, 938 F.2d at
1319-21, is not available under decisions of this
- 20 -
court. Our cases read 109(b)(1) as barring
EPA from considering any factor other than
“health effects relating to pollutants in the air.”
NRDC, 902 F.2d at 973; see also Lead Industries,
647 F.2d at 1148; American Lung Ass'n v. EPA,
134 F.3d 388, 389 (D.C.Cir.1998); American
Petroleum Inst., 665 F.2d at 1185 (echoing the
same themes).
In seeking a writ of certiorari in ATA, the EPA specifically
relied upon Lead Industries when EPA states that it "cannot
consider the economic or technological feasibility of attaining
NAAQS" under § 109. See Petition for a writ of certiorari, at
15. The Lead Industries court held that "the statute and its
legislative history make clear that economic considerations
play no part in the promulgation of ambient air quality
standards under Section 109." Lead Industries, 647 F.2d at
1148. In reaching this conclusion, the Lead Industries court
reviewed § 110 also, stating:
[Section] 110, 42 U.S.C. § 7410, provides that
once ambient air quality standards have been
promulgated, each state must prepare and
submit an implementation plan outlining the
measures to be taken to ensure that the
Standards are met. It is these state
implementation plans which actually impose
pollution control requirements and,
consequently, if Congress had wanted the
economics of pollution control considered it would
have so provided in § 110.
Id., 647 F.2d at 1149, n. 37 (emphasis added).
The holdings in Lead Industries are ostensibly based
upon, and cite, this Court's precedents in Train and Union
Electric, which held that the "technology-forcing" requirements
of the Act "are expressly designed to force regulated sources to
develop pollution control devices that might at the time
appear to be economically or technologically infeasible.” See
Union Electric, 427 U.S. at 257; Train, 421 U.S. at 90-91; Lead
-Industries, 647 F.2d at 1149.
=.
In addition to the conflict between the D.C. Circuit's
decisions on CAA rules of nationwide effect, there are issues
common to ATA and Michigan that warrant the granting of
this petition for certiorari. EPA's statutory authority to
consider economic feasibility is implicated in both cases. EPA
argues in ATA that costs cannot be considered under § 109,
but in Michigan, EPA did consider costs under § 110. Two of
the state petitioners herein, Michigan and West Virginia, argue
as respondents in ATA that costs can be considered under §
109, but argue herein that costs cannot be considered under §
110.10 In ATA, the court agreed with the EPA that the agency
was barred from the consideration of costs, even though § 109
impliedly, if not expressly, allows for such and even though
those costs are logically relevant to the decision of where to
“draw the line” for the ozone NAAQS.11 In Michigan, on the
other hand, the court approved the EPA's claim that the
agency was free to consider costs, even though § 110(a)(2)(D)
neither expressly nor oo allows for such and even
though those costs are wholly irrelevant to determining the
“amounts which . . . will contribute significantly" to the
nonattainment of NAAQS by downwind states. This petition
should be granted to fully resolve these inconsistent decisions.
In ATA this Court is asked to consider if the prohibition of the
EPA's consideration of costs, in the absence of express
statutory authorization under the CAA, is absolute. If it is not
absolute, guidance from this Court is needed as to whether an
exception exists for those situations, like in ATA, where no
other relevant factors except economic or technological
feasibility are available for establishing a reasoned basis for
delineating a standard, either for air quality or for SIPs.
Petitioners believe that such an exception may be made if
economic and technological feasibility are relevant to a
decision and indispensable in providing a reasoned basis for
the agency's action. In Michigan, these prerequisites are
completely lacking and this Court should set the decision
aside.
10 The states of Alabama, South Carolina and Virginia are not petitioners in
ATA and therefore, have not taken any position regarding the applicability
of costs under §109.
11 See Brief of states of Ohio, Michigan and West Virginia in Support of
Petitioners in ATA.
--
4. The EPA's calculation of state
emission budgets based on costs, as
approved by the court of appeals, conflicts
with principles of state sovereignty found in
the Clean Air Act's statutory ework of
tive federalism, as found in Train v.
NRDC, 421 U.S. 60, 79 (1976), by intruding
upon each state's obligation and right to
revise its plan "as necessary" to adequately
mitigate interstate pollutant transport.
This Court should consider how EPA's rule affects
Indiana, Pennsylvania and New York City. Indiana and
Pennsylvania both contribute air pollutants which interfere
with New York City's attainment of the national air quality
standard for ozone. Indiana is estimated to contribute a
maximum of 6 per billion ("ppb") of ozone to New York
City. See 63 Fed. Reg. 57,393 (1998) (App. 92a).
cee een tan Ee ae
of ozone to New York City. See 63 Fed. Reg. 57,392 (1998)
(App. 89a). EPA considers both contributions significant
enough to bring both Indiana and Pennsylvania under the
EPA's new rule to eliminate significant contributions. At first
blush, EPA's construction seems to function.!2 In application,
however, EPA's rule delivers a result that is at odds with the
intent of Congress. Under the new rule challenged here, both
states will be required to eliminate all emissions that can be
12 Here Petitioners assume arguendo that the EPA established an
amount threshold in determining whether a state significantly to
nonattainment by downwind states. This threshold appears to be a
contribution of b ozone and/or a four episode average percent
contribution of less one percent ozone due to manmade emissions. See
EPA Brief at 43, n. 32; see also 63 Fed. Reg. 57,393-94 (App. 92a-98a) (Group
3 states all contribute “less than 2 to 1- daily maamum exceedances
in New York City” and are not among the twelve states contributing
pe me rope New York City nonattainment area). The EPA, however,
2.
eliminated for $2,000/ton or less.13 As a result, modeling
shows that Pennsylvania's projected contribution to New York
City’s problems will be reduced only to 19 ppb, Joint
ao in D.C. Cir. Case No. 98-1497 at 02036a,14 but it
ill no longer be considered "significant" by the EPA because
the remaining contributions cannot be eliminated in a “highly
cost effective" manner. Indiana, on the other hand, may be
required to eliminate emissions far in excess of what may be
“necessary” to eliminate its smaller contribution to New York
City. While a contribution of 6 ppb is considered significant
enough to require Indiana to drastically reduce its emissions, a
contribution of 19 ppb will no longer be considered significant
to require Pennsylvania to further reduce its emissions.
In this way, the least offending state is burdened with the
most offending state's responsibility to reduce its significant
contribution to a common neighbor's pollution woes.15
Moreover, nowhere in the rule does the agency show that its
plan will accomplish the congressional goal of prohibiting all
truly significant contributions by the upwind states. And
13 The EPA failed to provide a reasoned basis for its selection of
$2,000/ton as the upper limit for defining highly cost effective” emission
reduction measures. The EPA merely states that “[b]y examining the cost
eness of recently promulgated or NOx controls, EPA
determined that an of ton removed is hi
cost effective.” 63 Fed. Reg $7377.78 (1998) (App. 762-83a). Even if the
EPA's cost considerations were permissible, because the agency's path in
selecting $2,000/ton cannot be reasonably discerned, it is arbatr oy and
degree of “cost-effectiveness” (i.e, why “hig ly
fective”
Michigan, 213 F.3d at 680. Here, the court of a also errs by failing to
find the EPA's reliance on the figure of $2,000 ton to be arbitrary and
capricious.
14 This modeting we potermet for the Southeast Michigan Council of
Governments
15 This anomaly is especially disturbing in light of the EPA's
acknowled t that ozone benefits from reducing upwind emissions
decrease with distance. See 63 Fed. Reg. 57,381 (1998) (App. 86a).
+. e
nowhere in the CAA or its legislative history does Congress
contemplate or authorize such a drastic shifting of burdens
from one state to another. The EPA's rule exceeds its
statutory authority, defeats the "technology-forcing” intent of
Congress and deeply offends principles of state sovereignty
The court of appeals clearly failed to substantively
review the EPA's application of the requirements and
limitations of § 110(k)(5), which the EPA relied upon for its
authority to issue the NOx SIP Call. Section 110(k)(5)
provides that:
Whenever the Administrator finds that the
—— implementation plan for any area is
substantially inadequate.:!.to mitigate
adequately ... interstate pollutant transport
...0r to otherwise comply with any
requirement of this chapter, the Administrator
shall require the State to revise the plan as
necessary to correct such inadequacies.
Section 110(k)(5) (emphasis added). In Union Electric, when
reviewing the 1970 version of § 110(a)(2)(B), this Court held
that “the most natural reading of the ‘as may be necessary’
phrase in context is simply that the Administrator must assure
that the minimal, or ‘necessary,’ requirements are met.” Union
Electric, 427 U.S. at 263. In the scenarios of Indiana and
Pennsylvania, supra, the EPA's new rule may require Indiana
to revise its plan more than is “necessary” to correct Indiana's
inad cies. By contrast, Pennsylvania will not be required
to fully revise its plan “as necessary” to correct all of its
inadequacies. Instead, the EPA has, in effect, determined that
some revisions necessary to correct Pennsylvania's
inadequacies are not “highly cost effective” and, therefore,
those remaining inadequacies will not be considered
“substantially inadequate."16 The illogical result is that an
original implementation plan which allows a state to
16 Petitioners acknowled F oom > hy 9 substantially etendler to its
revious a i)(1), but thi t logi
fo fom the EPA'S determination of what constitutes a cete's state's si “Theat
contr:bution. Moreover, § 110(k)(5)'s clear language confirms the EPA's
flawed approach to significant contributions illustrates this rule's
ianpenmdesiide iapact on the slatutory teamnaweedhe of “coopenativs fedendlioas
« 2%. -_
contribute 6 ppb is "substantially inadequate," but a revised
plan which allows a state to contribute 19 ppb is not
considered by the EPA to be "substantially inadequate.” By
requiring some states to do more than Con intended while
allowing other states to do less, the EPA impermissibly
undermines the statutory framework of "cooperative
federalism" that is the centerpiece of the CAA. In Train, this
Court held that:
The Agency is plainly charged by the Act with
the responsibility for setting the national
ambient air standards. Just as plainly,
however, it is relegated by the Act to a
secondary role in the process of determining
and enforcing the specific, source-by-source
emission limitations which are necessary if the
national standards it has set are to be met....
The Act gives the Agency no authority to
question the wisdom of a State's choices of
emission limitations if they are part of a plan
which satisfies the standards of § 110(a)(2)....
Thus, so long as the ultimate effect of a State's
choice of emission limitations is compliance
with the national standards for ambient air, the
State is at liberty to adopt whatever mix of
emission limitations it deems best suited to its
particular situation.
Train, 421 U.S. at 79 (emphasis added). EPA has no
authority to simultaneously require a state to do more than is
“necessary” to eliminate its significant contribution to the
nonattainment of downwind states. Nor may the EPA allow
some states to do less than is “necessary” to "satisfy" the
prohibition in § 110(a)(2)(D).
5. The court of appeals erred in allowing
the EPA's "overall notions of economic
fairness" to change the substantive
obligations of the states as fixed by Congress.
EPA states that its rule is based on EPA's notion of
economic fairness. The "secondary aspects of EPA's analysis”
included:
~
* The overall fairness of the control regimes
required of the downwind and upwind areas,
including the extent of the controls required or
implemented by the downwind and upwind
areas.
* General cost considerations, including the
relative cost-effectiveness of additional
downwind controls compared to upwind
controls.
63 Fed. Reg. 57,376 (1998) (App. 73a). Together with EPA's
primary consideration of "the availability of highly cost
effective control measures for upwind emissions," id., the EPA
charters a new and unauthorized course for the CAA by
establishing a "fairness" policy that Congress neither
contemplated nor authorized. The agency states in its rule
that:
EPA believes that overall notions of fairness
suggest that upwind sources which contribute
significant amounts to the nonattainment
problem should implement cost-effective
reductions. When upwind emitters exacerbate
their downwind neighbors’ ozone
nonattainment problems, and thereby visit
upon their downwind neighbors additional
health risks and potential clean-up costs, EPA
considers it fair to require the upwind neighbors
to reduce at least the portion of their emissions
for which highly cost-effective controls are
available.
63 Fed. Reg. 57,379 (1998) (emphasis added) (App. 83a).
Remarkably, by merely restating, in a spam tone, the
interstate pollution problem Congress already recognized, the
EPA then attempts to usurp the role of the legislature by
devising its own corrective action instead of pursuing the
remedy Congress expressly prescribed. The EPA also
presumes Congress did not consider “overall notions of
fairness" when it enacted the CAA. This is not the case. The
Union Electric Court found that:
~W -
Technology forcing is a concept somewhat new
to our national experience and it necessarily
entails certain risks. But Congress considered
those risks in passing the 1970 Amendments
and decided the dangers posed by uncontrolled
air pollution made them worth taking.
Petitioner's theory [of allowing claims of
economic and technological infeasibility] would
render that considered legislative judgment a
nullity, and that is a result we refuse to reach.
Union Electric, 427 U.S. at 269. Here, too, in Michigan, the
court of appeals decision threatens to render Congress’
legislative judgment a nullity by allowing cost considerations
to undermine the statutory prohibition on significant pollutant
contributions. The EPA's "fairness" policy exceeds its
statutory authority and the court of appeals decision is
tantamount to a grant of unbridled discretion to the EPA to
do as it sees fit. This Court should not allow such a precedent
to stand.
The court of appeals also failed to adequately consider
the greater pres health benefits of the full statutory
prohibition of truly significant contributions as compared to
the more limited benefits of the EPA's rule. By using cost
considerations to limit required emission reductions, the EPA
falls short of minimizing the adverse effects of ground level
ozone as Congress intended. As the EPA found:
At ground level, ozone can cause a variety of ill
effects to human health, crops and trees.
Specifically, ground-level ozone has been shown
in clinical and/or epidemiological studies to
have the following health effects:
* Decreased lung function,
primarily in children active
outdoors.
* Increased respiratory
symptoms, particularly in highly
sensitive individuals.
* Hospital admissions and
emergency room visits for
- B-
respiratory causes. among
children and adults with pre-
existing respiratory disease such
as asthma.
* Inflammation of the lung.
* Possible long-term damage to
the lungs or even premature
death.
63 Fed. Reg. 57,359 (1998) (67a-68a). It was these serious
health effects from pollutants like ozone that led Congress to
resort to the "technology-forcing" design of § 110(a)(2)(D).
Congress was aware of the extent of this problem, and acted
to address it. An EPA rule affecting nearly half the nation
cannot be allowed to fall short of the goal established by
Congress, especially in the portion of the country where ozone
problems are most severe. Accordingly, this Court should
grant this petition and quickly return the EPA to the path
Congress has chosen, as difficult or unwise as the EPA may
believe that path to be. In the long run, the nation’s air quality
and the public health should realize greater protection and
improvement.
CONCLUSION
For the reasons stated above, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
STATE OF ALABAMA, JENNIFER M. GRANHOLM
ex rel. BILL PRYOR Attorney General
Attorney General
Thomas L. Casey
Tommy E. Bryan Solicitor General
Assistant Attorney General Counsel of Record
The State of Alabama and P.O. Box 30212
Associate General Counsel Lansing, Michigan 48909
Alabama Department of (517) 373-1124
Environmental Management
P. O. Box 301463 Alan F. Hoffman
Montgomery, Alabama Assistant Attorney General
36130-1463 Attorneys for State of Michigan
(334) 271-7855
Thomas H. Zerbe Commonwealth of Virginia
Senior Counsel
Office of Legal Services By Counsel
Division of Environmental Mark L. Earley
Services Attorney General
1356 Hansford Street
Charleston, West Virginia _ Roger L. Chaffe
25301 Senior Assistant
(304) 558-9160 Attorney General
Counsel for West Virginia
Stewart T. Leeth*
Assistant Attorney General
900 East Main Street
Richmond, Virginia 23219
(804) 786-6957
*Counsel of Record
CHARLES M. CONDON
Attorney General of South
Carolina
KENNETH P. WOODINGTON
Senior Assistant Attorney General
CHRISTIE NEWMAN BARRETT
Assistant Attorney General
South Carolina Office of the
Attorney General
P. O. Box 11549
Columbia, South Carolina 29211
(803) 734-3736
Samuel L. Finklea, I
South Carolina Department of
Health and Environmental Control
2600 Bull Street
Columbia, South Carolina 29201
(803) 898-3349
October, 2000
APPENDIX
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
TABLE OF CONTENTS
Opinion of the United States Court of
Appeals dated March 3, 2000 (and
dissenting opinion of Judge Sentelle)...... la
Order of court of appeals denying
rehearing en banc (June 22, 2000)........... 55a
Order of court of appeals denying
rehearing (Jume 22, 2000).......-ccce.secceesee. 57a
Mandate issued September 13, 2000
denying petitions for review................. 59a
Order granting application
for extension of time
(September 8, 2000).........:.cccscessesecsecsee, 6la
Excerpts of the EPA rules
published at 63 Fed.
Reg. 57,356 (199B)......ccccecscescsescecssseces 62a
-la-
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 9, 1999 Decided March 3, 2000
No. 98-1497
State of Michigan,
Michigan Department of Environmental Quality and
State of West Virginia, Division of
Environmental Protection,
Petitioners
V.
U.S. Environmental Protection Agency,
Respondent
New England Council, Inc., et al., Intervenors
Consolidated with
98-1499, 98-1500, 98-1501, 98-1502, 98-1504, 98-1518,
98-1556, 98-1567, 98-1573, 98-1585, 98-1588, 98-1590,
98-1596, 98-1598, 98-1601, 98-1602, 98-1608, 98-1609,
98-1611, 98-1615, 98-1616, 98-1617, 98-1618, 98-1619,
98-1621, 99-1070, 99-1093
On Petitions for Review of an Order of the Environmental
Protection Agency
James E. Doyle, Attorney General, State of Wisconsin,
and Philip Peterson and Thomas L. Dosch, Assistant
Attorneys General, were on the brief for intervenor State of
Wisconsin.
Louis E. Tosi and William L. Patberg were on the brief
for amicus curiae Toledo Metropolitan Area Council of
Governments.
oe
Susan E. Ashbrook, Assistant Attorney General, State
of Ohio, James C. Gulick, Special Deputy Attorney, State of
North Carolina, Andrea B. Field, Theodore L. Garrett, Todd
Palmer, Jonathan S. Martel, William F. Pedersen and Scott H.
Segal argued the causes for petitioners. With them on the briefs
were Betty D. Montgomery, Attorney General, State of Ohio,
Andrew S. Bergman, Assistant Attorney General, Michael F.
Easley, Attorney General, State of North Carolina, J. Allen
Jernigan, Special Deputy Attorney General, James P. Longest,
Jr., and Amy R. Gillespie, Assistant Attorneys General, Bill
Pryor, Attorney General, State of Alabama, Tommy E. Bryan,
Assistant Attorney General, Jeffrey Modisett, Attorney
General, State of Indiana, Daniel B. Dovenbarger, Chief
Counsel, Jennifer M. Granholm, Attorney General, State of
Michigan, Thomas Casey, Solicitor General, Alan F. Hoffman,
Assistant Attorney General, Charles M. Condon, Attorney
General, State of South Carolina, Mark E. Earley, Attorney
General, State of Virginia, Roger L. Chaffe, Senior Assistant
Attorney General, Stewart T. Leeth, Assistant Attorney
General, Thomas H. Zerbe, Senior Counsel, State of West
Virginia, Samuel L. Finklea, II, Grant Crandall, Eugene M.
Trisko, Norman W. Fichthorn, Mel S. Schulze, David M.
Flannery, Kathy Beckett, Harold P. Quinn, Jr., Michael D.
Hockley, J. Lister Hubbard, R. Brooke Lawson, III, Robert E.
Lannan, II, Terry J. Satterlee, Alok Ahuja, Mark E. Shere,
Bryan G. Tabler, Jeffrey L. Landsman, Jennifer S. McGinnity,
Howard E. Shapiro, Margaret Claiborne Campbell, Thomas E.
Knauer, David R. Straus, Deborah E. Jennings, Julie R. Domike,
Patricia T. Barmeyer, Lisa G. Dowden, Brian J. Renaud,
Rhonda L. Ross, Jeffrey F. Cherry, Katherine L. Rhyne, John M.
Koeppl, Henry J. Handzel, Jeffrey A. Knight, Joan Dreskin,
Kevin B. Belford, Pamela A. Lacey, Gene E. Godley, Michael
H. Levin and Edmund B. Frost. Earle D. Getchell, Jr., Neal J.
Cabral, Christopher D. Man, Jacqueline H. Fine, Jon S. Faletto
and John P. Proctor entered appearances.
Charles S. Carter and Deborah Ann Hottel were on the
brief of amici curiae South Carolina Chamber of Commerce,
Environmental Management Association of South Carolina,
South Carolina Manufacturers Alliance, and South Carolina
Farm Bureau Federation.
Jon M. Lipshultz and Patricia R. McCubbin, Attorneys,
U.S. Department of Justice, argued the causes for respondent.
Se
With them on the brief were Lois J. Schiffer, Assistant
Attorney General, and Jan Tierney, Howard Hoffman, Amey
W. Marrella and Dwight C. Alpern, Attorneys, U.S.
Environmental Protection Agency.
J. Jared Snyder, Assistant Attorney General, State of
New York, argued the cause for state intervenors. With him on
the brief were Elliot Spitzer, Attorney General, Peter H. Schiff,
Deputy Attorney General, Thomas F. Reilly, Attorney General,
State of Massachusetts, William L. Pardee, Assistant
Attorney General, M. Dukes Pepper, Jr., Assistant Counsel,
State of Pennsylvania, Sheldon Whitehouse, Attorney General,
State of Rhode Island, Michael Rubin, Environmental
Advocate, William H. Sorrell, Attorney General, State of
Vermont, Ronald A. Shems, Assistant Attorney General,
Jennifer L. Wurzbacher, Assistant Attorney General, State of
Maryland, Richard Blumenthal, Attorney General, State of
Connecticut, Richard F. Webb, Assistant Attorney General,
Andrew Ketterer, Attorney General, State of Maine, Paul
Stern, Deputy Attorney General, Philip McLaughlin, Attorney
General, State of New Hampshire, and Maureen D. Smith,
Assistant Attorney General.
Kathleen L. Millian argued the cause for intervenor Her
Majesty the Queen in Right of Ontario (Province of Ontario,
Canada). With her on the brief was Bruce J. Terris.
David Hawkins and Raissa Griffin were on the brief
for intervenor Natural Resources Defense Council, et al. An-
drew P. Caputo entered an appearance.
Patrick M. Raher, John G. Roberts, Jr., Catherine E.
Stetson, Michael R. Barr, Michael A. Conley, Theresa Fenelon
Falk, John H. Sharp, Paul G. Wallach and Kenneth R. Meade
were on the brief for industry intervenors. ©
Richard A. Wegman was on the brief for intervenor the
Government of Canada.
Before: Williams, Sentelle and Rogers, Circuit Judges.
Opinion Per Curiam.*
Dissenting opinion filed by Circuit Judge Sentelle.
Introduction
Under the Clean Air Act the Environmental Protection
Agency promulgates national ambient air quality standards
(“NAAQS”) for air pollutants, and states must then adopt
state implementation plans (‘SIPs’) providing for the imple-
such plans are then submitted to EPA for approval. See Clean
Air Act (“CAA”) § 110(a)(1), 42 U.S.C. § 7410(a)(1) (1994).
Even after a SIP is approved, EPA may at a later time call for
SIP revisions if the Administrator finds a SIP inadequate to
attain or maintain the NAAQS, to meet the dictates of
llutant transport commissions, or “to otherwise c ly
evith any i t of this chapter.” CAA § 110(k)(5), 42
U.S.C. § 7410(k)(5).
In October 1998 EPA issued a final rule mandati
that 22 states and the District of Columbia revise their SIPs to
mitigate the interstate transport of ozone.’ See Finding of
Significant Contribution and Rekesshien for Coser ns
the Ozone Transport Assessment Group Region for Purposes
of Reduci Regional Transport of Ozone (“Final Rule”), 63
Fed. , 37.356 (1998). The statutory hook for EPA’s action
was a 1 amendment to the Clean Air Act which requires
that SIPs contain “adequate provisions” prohibiting
any source or other type of emissions activity
within the State from emitting any air pollutant
in amounts which will . . . contribute
ignifi to nonattainment in, or interfere
fe wrote Tec and IB; Judge Sentelle wrote Parts L.A,
IA, ILC, and 111A; Judge Rogers wrote Parts ITI.B and IV.
__The states are Alabama, Connecticut, Delaware, Georgia, Illinois, Indiana,
Pennsylvania, Rhode Island, South Carolina.
Tennessee, Virginia, West Virginia, and Wisconsin.
ain
with maintenance by, any other State with
respect to any such national primary or
secondary ambient air quality sndeal.
CAA § 110(a)(2)(D)(i)(), 42 U.S.C. § 7410(a)(2)(D)(i)(1)
(1994). EPA uniformly required that each state reduce nitrogen
oxides (NOx-an ozone precursor) by the amount accom-
plishable by what EPA dubbed “highly cost-effective con-
trols,” namely, those controls EPA found capable of removing
NOX at a cost of $2000 or less per ton. Numerous petitions
for review challenge various aspects of EPA’s decision.
In Part I we reject the following claims: that EPA could
not call for the SIP revisions without convening a transport
commission; that EPA failed to undertake a sufficiently state-
specific determination of ozone contribution; that EPA
unlawfully overrode past precedent arding “significant”
contribution; that EPA’s consideration of the cost of NOx
reduction violated the statute; that EPA’s scheme of uniform
controls is arbitrary and capricious; that CAA §
110(a)(2)(D)(i)(1) as construed by EPA violates the nondele-
gation doctrine.
In Part II we hold that the record does not support
including Wisconsin in the SIP call, nor does it support
creating NOx budgets based on the entire emissions of Mis-
souri or Georgia. We reject the claim that South Carolina was
improperly included in the SIP call.
In Part Ill we reject the claim that EPA impermissibly
intruded on the statutory rights of states to fashion their SIPs.
We also reject the claim that EPA violated the Regulatory
Flexibility Act.
In Part IV we reject the claim that EPA arbitrarily
revised the definition of a “NOx budget unit.” We reject all of
the claims raised by the Council of Industrial Boilers cave one
we hold that EPA failed to provide adequate notice of a
change in the definition of an electric generating unit. We also
hold that EPA did not provide adequate notice of a change in
the control level assumed for large, stationary internal
combustion engines, but we reject the claim that EPA failed to
follow its own standards in defining such engines. Finally, we
ye
uphold EPA’s limits on early reduction credits, and EPA’s use
of a 15% multiplier for calculating emissions from low mass
emission units.
We note at the outset that one challenge has been
stayed. In 1979, EPA set the acceptable level for ozone in the
ambient air at 0.12 parts per million (“ppm”), averaged over
intervals of one hour. This standard is commonly known as
the “1-hour standard.” By 1997, EPA had concluded that the
1-hour standard no longer adequately protected public health.
See National Ambient Air Quality Standards ey Ozone, 62
Fed. Reg. 38,856 (1997). Pursuant to the agency‘s statutory
mandate to review and revise NAAQS as appropriate, 42
U.S.C. § 7409(d)(1), EPA promulgated a new, more stringent
“8-hour standard” which limits ozone levels to 0.08 pm,
averaged over an 8-hour period. See 62 Fed. Reg. 38,856
(codified at 40 C.F.R. § 50.10).
EPA has undertaken the phasing out of the 1-hour
standard on an area-by-area basis, mandating that the
standard would no longer apply to an area once it is
“determine[d] that the area has air quality meeting the 1-hour
standard.” 40 C.F.R. § 50.9(b). The call for SIP revisions in
question here requires the covered upwind states to submit SIP
revisions pursuant to the 8-hour standard even though EPA
was not designating any 8-hour nonattainment areas prior to
July 1999. See 63 Fed. Reg. at 57,370; Transportation Equity
Act for the 21st Century, Pub. L. No. 105-178, § 6103, 112
Stat. 107, 465 (1998) (providing that states submit suggested
designations no later than July 1999 and EPA finalize those
ry cap no later than July 2000). EPA maintains that it
has the authority to include the 8-hour standard in the current
§ 110(a)(2)(D)-specific SIP call pursuant to its authority under
§ 110(a)(1). Section 110(a)(1) provides that
[eJach State shall ... adopt and submit to
[EPA], within 3 years (or such shorter peri as
[EPA] may prescribe) after the promulgation of
a national primary ambient air quality standard
(or any revision thereof)..., a plan which
provides for implementation, maintenance, and
B
on]
a
4
Pt
7
¥
cs
&
ay
- 7a-
enforcement of such primary standard in each
air quality control region (or portion thereof)
within such State.
42 U.S.C. § 7410(a)(1).
State and Industry /Labor petitioners initially attacked
the challenged SIP call on the basis that EPA exceeded its
statutory authority and acted arbitrarily in basing the SIP call
on the 8-hour standard when the agency had not yet
designated any areas as being in nonattainment under the new
standard. After petitioners’ final briefs were submitted, we
held in American Trucking Ass'n, Inc. v. EPA, 175 F.3d 1027,
reh’g granted in part, den’d in part 195 F.3d 4 (D.C. Cir.
1999), that the new NAAQS based on the 8-hour standard
was derived from a construction of the Clean Air Act that
rendered the relevant provision an unconstitutional delegation
of legislative power and remanded the case to the agency. See
id. at 10 . Seizing on this holding, petitioners added in
their reply briefs that if this court does not accept the
contention in their original briefs as to why EPA impermissibly
relied on the 8-hour standard, then we should hold that
American Trucking means that EPA cannot rely on the 8-hour
standard because it was promulgated in violation of the non-
delegation doctrine.
Regardless, EPA moved to stay consideration of the
issues involving the 8-hour standard because the agency has
stayed the 8-hour findings contained in the challenged SIP call.
= the motion. Because EPA’s stay removes the 8-hour
indings as a basis for the SIP call, we will resolve only the
issues involving the 1-hour standard.
I. General Claims
A. Transport Commission
States have the primary responsibility to attain and
maintain NAAQS within their borders. See CAA § 107(a), 42
U.S.C. § 7407(a). When EPA concludes that an “implemen-
tation plan for any area is substantially inadequate to attain
or maintain the relevant [NAAQS], to mitigate adequately the
interstate pollutant transport described in section [176A] or
«fm
[184], or to otherwise comply with any requirement of this
chapter,” the CAA requires EPA to order a state to revise and
correct its SIP “as necessary” (“SIP call”). CAA § 110(k)(5),
42 U.S.C. § 7410(k)(5). One such “requirement of this
chapter,” is the “good neighbor provision” of section
110(a)(2)(D). As amended, section 110(a)(2)(D) requires that
a SIP “contain adequate provisions”
(i) prohibiting, consistent with the
provisions of this subchapter, any source or
other type of emissions activity within the State
from emitting any air pollutant in amounts
which will . . . contribute significantly to nonat-
tainment in, or interfere with maintenance by,
any other State with respect to any such
national primary or secondary ambient air
quality standard . . . [and]
(ii) insuring compliance with the applicable
requirements of sections [126] and [115]...
(relating to interstate and international
pollution abatement).
42 U.S.C. § 7410(a)(2)(D) (emphasis added). Section 126(b)
enables an individual state or a political subdivision of a state
to petition EPA to make a “finding that any major source or
group of stationary sources emits or would emit any air
pollutant in violation of the prohibition of [§
110(a)(2)(D)(ii)].” 42 U.S.C. § 7426(b). EPA may make or
deny such a finding. See id. Section 115 pertains to petitions
made by oe countries. See 42 U.S.C. § 7415. Title I, the
subchapter referenced in section 110(a)(2)(D), also includes
sections 176A and 184, the provisions referenced in section
110(k)(5). In 1990, Congress added a provision to section
176A stating that EPA “may” establish an interstate air
. transport region whenever EPA “has reason to
lieve that the interstate transport of air pollutants from one
or more States contributes significantly to a violation of a
national ambient air quality standard in one or more other
States.” 42 U.S.C. § 7506a(a). The section also provides that
whenever EPA “establishes a transport har [EPA] shall
establish a transport commission.” 42 U.S.C. § 7506a(b)(1).
Among other things, a section 176A commission is to assess
- 9a -
the interstate transport situation in the relevant transport
region, assess interstate pollution mitigation strategies, and
recommend to EPA measures necessary “to ensure that the
plans for the relevant States meet the requirements of [section
110(a)(2)(D)}.” 42 U.S.C. § 7506a(b)(2). In addition, section
176A permits a transport commission to request that EPA
“issue a finding under [section 110(k)(5)] . . . that the
implementation pian for one or more of the States in the
transport region is substantially inadequate to meet [section
110(a)(2)(D) requirements].” 42 U.S.C. § 7506a(c). After
public comment, EPA has the authority to approve, approve
in part, or disapprove such a request. See id.
In part, section 184, an ozone-specific provision,
establishes an ozone transport region in the northeast
(“NOTR”) and sets the deadline for convening the transport
commission required as a result of NOTR’s establishment. See
42 U.S.C. § 7511c(a). The section also requires that “[i]n
accordance with [section 110] . . . each State included [or
subsequently included] within a transport region established
for ozone shall submit a State implementation plan or
revision” regarding vehicle i ion programs and volatile
organic compounds control ology. 42 U.S.C. § 7511¢(b).
In addition, section 184 contains provisions giving states
within an established transport region the opportunity to use
their section 176A-established transport commission to —
develop additional ozone control measures. See 42 U.S.C.
§ 7511c(c).
Efforts to control states’ upwind contributions to
ozone pollution continued to fall short during the early 1990s.
In 1995, upon the recommendation of the Environmental
Council of the States, thirty-seven states and representatives
from EPA, industry, and environmental groups formed a
national work-group culled the Ozone Transport Assessment
Group (“OTAG”) to study and devise solutions to the
interstate ozone transport problem. See 62 Fed. Reg. 60,318,
at 60,319; EPA, Ozone Transport Assessment Group
Executive Report, EPA Document No. A p 95-56, Doc. No. 1I-
G-05 (“Executive Report”) at ii. More specifically, OTAG’s
purpose was to “identify and recommend a strategy to reduce
transported ozone and its precursors, which, in combination
with other measures will enable attainment and maintenance
- = 10a -
of the Ozone standard in the OTAG region.” Executive a
at ii. OTAG concluded that upwind states needed to reduce
NOx emissions in order to address the transport problem.
However, the OTAG members could not a on specific
control measure recommendations. See 62 Fed. Reg. at 60,320.
In response to OTAG’s efforts, EPA engaged in further
analysis and devised the SIP call challenged here.
Industry/Labor petitioners argue that the CAA
required EPA to convene a transport commission pursuant to
sections 176A/184 prior to issuing the challenged sip call.
EPA concedes that OTAG was not a statutorily-mandated
176A /184 transport commission as defined in the CAA. If a
transport commission is required, EPA would be bound by
statute to follow certain procedures in establishing and
executing its commission obligation. However, we hold that
the CAA does not require EPA to establish such a
commission.
Industry /Labor petitioners contend that the reference
to the transport commission provisions in section 110(k)(5)
and the mandate of section 110(a)(2)(D) that SIP requirements
be consistent with Title I provisions obligated EPA, prior to
issuing the SIP call, to create a transport commission guided
by the terms in sections 176A and 184 of the statute.
Industry / Labor petitioners also note that sections 176A and
184 reference both sections 110(a)(2)(D) and 110(k)(5) See 42
U.S.C. §§ 7S06a(b)(2)(c), 7511¢(c)(5). From this hodgepodge
of largely unrelated cross-references Industry /Labor peti-
tioners argue that EPA can only issue a section 110(k)(5) SIP
call to enforce section 110(a)(2)(D)’s requirement after forming
a 176A/184 transport commission we disagree.
As a threshold matter, subsections 176A(a) and (b)(1)
make clear that EPA must establish a transport commission if
the agency exercises its discretion to create a rt region
pursuant to section 176A(a). See 42 U.S.C. 7506a(a),
(b)(1). However, EPA can address interstate transport apart
from convening a 176A/184 transport commission as
subsection (a) provides that EPA “may” establish a transport
region and subsection (b)(1) only requires a transport
commission upon the establishment of a transport region
because “[wJhenever the Administrator establishes a transport
- lla-
region under subsection (a) . . ., the Administrator shall
establish a transport commission.” Moreover, the relevant
section 184 requirements apply to states within established
transport regions. See 42 U.S.C. § 7511c(a)-(c). Thus,
Industry/Labor petitioners cannot reason around the
determinative statutory language contained in section 176A.
Statutory construction is not an exercise in os apart a
complex statute and piecing the — back together in a
manner to effect a particular end. Ideally, a statute’s directive
concerning a certain issue will be plain and clear. Just so here.
B. State-Specific Analysis
Section 110(a)(2)(D)(I)(i) requires that the relevant
offending emissions be “emissions activity within the State.”
Several petitioners charge that EPA did not sufficiently
analyze each particular state in determining which states
contributed unduly to ozone downwind.
In issuing its Notice of Proposed Rulemaking
(“NPRM”), EPA relied on data collected from OTAG. The
data were multi-state and regional in nature and were framed
as a model of how ozone was transported downwind from 12
different regions that covered the eastern half of the United
States. See Final Rule, 63 Fed. Reg. at 57,382. The OTAG
— do not track state boundaries, so several states are
split between regions. EPA also relied upon the NOx emis-
sions of the individual states. See id. at 57,383-84. A potential
shortcoming of the NPRM’s approach was that it was too
multi-state in nature. EPA knew how much NOx each state
was emitting, but a state’s emissions as a share of total
emissions do not necessarily correspond proportionately to its
share in the creation of ozone in downwind states. OTAG’s
multi-state modeling of such downwind transportation
painted with a rather broad brush.
We need not pass judgment on whether the evidence
and approach of the NPRM would have supported the final
rule. After receiving comments regarding the insufficiently
State- specific analysis of the NPRM, EPA performed state-
specific modeling. Id. at 57,384. According to EPA, this
confirmed the results of the regional modeling. Id.
« 12 -
The two types of state-specific modeling go by the
names UAM-V and CAMx. In the UAM-V approach, the
researchers model an affected downwind area to establish a
base case, and then “zero-out” a particular source state. Thus
with UAM-V it can be estimated what ozone concentrations
would be like if a particular state contributed no ozone or -
ozone precursors. The CAMx modeling, on the other hand, is a
source apportionment analysis which tracks modeled ozone
from its precursors (NOx and volatile organic compounds
(VOCs)) through the formation of ozone and subsequent
migration. Whereas UAM-V tells modelers how much ozone is
missing when one state is zeroed out, CAMx models an ozone
concentration and provides apportionment, i.e., who sent
what. An advantage of the CAMx model used by EPA was
that, unlike the UAM-V modeling, with CAMx EPA could
isolate man-made emissions, or ozone creation based on
reactions between man-made and biogenic emissions. UAM-V
modeling was less discriminating.
Petitioners really do nothing more than quibble with the
state-specific modeling. For example, Industry /Labor peti-
tioners argue that zero-out modeling is inappropriate because
it models an impossible scenario—the elimination of all man-
made NOx emissions; but they do not suggest how much this
characteristic is likely to distort the results. State petitioners
charge that sometimes the results of the two models were
inconsistent, with, for example, the CAMx showing a ——
migration of ozone from a state than the UAM-V showed for
all man-made NOx in that state. EPA itself noted this
infrequent inconsistency. See id. at 57,385. Neither criticism
affords ground for non-expert judges to find a material
ikelihood of serious error. See Appalachian Power Co. v. PA,
135 F.3d 791, 802 (D.C. Cir. 1998).
Petitioners complain that EPA did not provide the
data sooner. EPA made the new modeling available on the
Internet six weeks prior to the final rule, published its
availability in the Federal Register a month before the final
rule, and during that time received and ed to questions
and comments regarding the modeling. Other than what we
have already mentioned, petitioners have evidently not been
able to identify further flaws in the modeling used, and thus
have failed to show any prejudice from EPA’s timetable.
RE ENS
neteeta abe Pate, te
- 13a -
Personal Watercraft Indus. Ass'n v. Department of Commerce, 48
F.3d 540, 544 (D.C. Cir. 1995).
«. Determining “Significant” Contribution
Section 110(a)(2)(D)(i)(1) applies only to states that
“contribute significantly” to nonattainment in a downwind
State. Petitioners make essentially four arguments challenging
EPA’s determination of “significance”: (1) EPA acted contrary
to precedent; (2) EPA considered forbidden factors, namely,
costs of reduction; (3) EPA irrationally imposed uniform NOx
controls on the states; (4) EPA’s determination was so devoid
of intelligible principles as to violate the nondelegation
doctrine.
i. Past Precedent
Before the 1990 amendments to the Clean Air Act,
§ 110(a)(2)(E)() directed the EPA to insist on SIP provisions
adequate to prevent sources within a state from emitting air
pollution that would “prevent attainment or maintenance [of
primary or secondary standards] by any other State.” 42
U.S.C. § 7410(a)(2)(E) (1982) (emphasis added). In a number
of decisions EPA found, with approval of the courts, that
various emissions of a particular state, having a proportionate
impact on some downwind state greater than the impacts
involved here, did not meet that standard. See New York v.
EPA, 852 F.2d 574 (D.C. Cir. 1988); Air Pollution Control Dist.
of Jefferson County v. EPA, 739 F.2d 1071 (6th Cir. 1984); New
York v. EPA, 716 F.2d 440 (7th Cir. 1983); New York v. EPA,
710 F.2d 1200 (6th Cir. 1983); Connecticut v. EPA, 696 F.2d
147 (2d Cir. 1982). According to the states, these decisions,
and what they claim to be Congress’s implicit endorsement in
the 1990 amendments, bar EPA from regarding the ozone
emissions here as “significant” within the meaning of §
110(a)(2)(D)(i)(I) Thus the states would equate the old
Standard-"prevent attainment"--with the new standard:
“contribute significantly to nonattainment”
Nothing in the text of the new section or any other
provision of the statute spells out a criterion for classifying
“emissions activity” as “significant.” Nor did EPA, under the
then-existing provision, bind itself to any criterion. Further,
« Sie «
given EPA’s finding as to the cumulative effects of the
pollutants that generate ozone, EPA might well be able to
distinguish this case from the sulfur dioxide cases that the
States have cited. See 63 Fed. Reg. at 57,359 (“The chemical
- Feactions that create ozone take place while the pollutants are
being blown through the air by the wind, which means that
ozone can be more severe many miles away from the source of
emissions than it is at the source.”). But the states point
nothing —— any prior adoption by EPA of any binding
concept of how much was too much, so the claim falls short at
the threshold.
2. Consideration of costs
Petitioners claim § 110(a)(2)(D)(i)(I) does not permit
EPA to take into consideration the cost of reducing ozone. The
full section provides that SIPs must contain provisions ade-
quately prohibiting any source or other type of emissions
activity within the State from emitting any air pollutant in
amounts which will . . . contribute Significantly to
nonattainment in, or interfere with maintenance by, any other
State with respect to any such national primary or secondary
ambient air quality standard.
42 U.S.C. § 7410(a)(2)(D)(i)(1) (emphasis added).
Before reviewing the petitioners’ attacks we must first
describe how EPA went about the business at hand. It first
determined that 23 jurisdictions are “significant” contributors
to downwind nonattainment. 63 Fed. Reg. 57,398. In making
this listing EPA drew lines based on the magnitude, frequency,
and relative amount of each state’s ozone contribution to a
nonattainment area. For example, in one calculation it looked
at the number of NOx parts per billion (“ppb”) that
candidate state’s emissions made to exceedances in specific
downwind locations (examined as a proportion of those
exceedances). Indiana was found to contribute at least 2 ppb
to 4% of the 1-hour ozone exceedances in New York City, and
was deemed a “significant contributor” to nonattainment
there. On the other hand, Alabama, Georgia, Massachusetts,
Missouri, South Carolina, Tennessee, and Wisconsin were not
deemed “significant contributors” to New York City nonat-
tainment because none of these states ever contributed more
- 15a -
than 2 ppb to a 1-hour exceedance in that area. Although
EPA looked at other measures, e.g., the percentage contribu-
tion of a state’s emissions to total concentrations in a
specified area, no one quarrels either with its use of multiple
measures, or with the way it drew the line at this stage.
Although the dividing line was a very low threshold of
contribution, in the end EPA’s rule called for termination of
only a subset of each state’s contribution. EPA decided that
the 23 “significant contributors” need only reduce their ozone
by the amount achievable with “highly cost-effective controls.”
63 Fed. Reg. at 57,403. Thus, once a state had been nominally
marked a “significant contributor,” it could satisfy the statute,
i.e., reduce its contribution to a point where it would not be
“significant” within the meaning of § 110(a)(2)(D)(i)(1), by
culling beck he amount tat could be clnunatod wih “highly
cost-effective controls.” EPA’s design was to have a lot of
states make what it considered modest NOx reductions,
uniformly limited to ones that could be achieved (in EPA’s
estimate) for less than $2000 a ton. As a result, naturally, the
ultimate line of “significance,” whether measured in volume of
NOx emitted or arriving in nonattainment areas, would vary
from state to state depending on variations in cutback costs.
State and Industry /Labor petitioners argue that this
evidently that if EPA were barred from considering costs, it
would never have included such states. Because the attacks
from the states and Industry /Labor are somewhat dissimilar
and have shifted back-and-forth between the opening briefs,
reply briefs, and oral argument, a summary of the relevant
differences and vacillations is in order. We note that no party
makes any claim that EPA was either confined to adopting
rules whose benefits exceeded their costs, or permitted to use
- léa -
that criterion in selecting its final rule.* Nor has it been argued
that the term “significant” required consideration of costs.
State petitioners initially argued that it was “arbi
and unlawful” for EPA to make cost effectiveness a
“controlling factor” or “linchpin” in the determination of
significant contribution under § 110(a)(2)(D). Thus EPA’s
error, as the states would have it, was in considering costs too
much: “Petitioning States do not claim that there is no role for
cost considerations; Petitioning States simply stress that EPA
must establish a definition of significance that is dominated by
air quality factors, as air quality is the sole factor mentioned in
the statute.” Reply Br. of Petitioning States at 4. In support of
this position, State petitioners cited our en banc decision in
Natural Resources Defense Council v. EPA, 824 F.2d 1146, 1163
(D.C. Cir. 1987) (en banc), where we held that a statutory
mandate for EPA to set a standard with an “ample margin of
safety to protect the public health” did not preclude the
consideration of costs and technological feasibility, but that
these concerns could not be the “primary consideration.”
At oral argument, counsel for the states abandoned
this position and decided that the statute flatly prohibits EPA
from considering costs at all. Transcript of Oral Argument at
14-17. Indeed, counsel eventually went so far as to claim that
if faced with two states, one of which could eliminate all
relevant emissions at a trivial cost, while the other could
eliminate none at a cost of less than $5000 a ton, EPA must
mandate the same cutback for each. Id. at 16-17.
* Indeed, accepting EPA’s belief that ozone cannot be held ible for
ity effects, see Proposed Rule, 62 Fed. Reg. at 60,321 (not listing death
asa effect of groundlevel ozone); compare Final Rule, 63 Fed. Reg. at
57,359 pore My se aps long-term to the lungs or even premature
death” as ), and mainly using EPA data, some outside observers
have calculated the benefit per ton of NOx reduction as ing from a high of
$750 per ton (for mobile sources in certain areas) to a low of negative per
a tr irginia McConnell, “Cost-
Effective NOx control in the Eastern U.S.” (Draft haly 1999) (Table 4); see
Krupnick & Anderson, A Dilemma Downwind, 137 Resources for the Future
5, 7 (1999) (“If ne sea ee ozone does og he cause « praveder ding
is much too restrictive, incurring costs out of proportion wi
Eins banat is would beine 7 ' 4
- 17a -
We should note here that the consequence of this
position is not so extreme as it sounds. EPA’s rule allows ton-
for-ton emissions trading between firms based on allowances
determined by each state. See 63 Fed. Reg. 57,456. Obviously
the firms with the highest emission reduction costs will, if
permitted by their states, buy up pollution allowances from
firms that are granted allowances because they have over-
controlled for NOx--firms, obviously, with low reduction
costs. If transaction costs were zero, the only effect of the
initial assignment of cutbacks would be distributional: firms
would make only the cheaper cutbacks, but firms with high
emission-reduction costs would buy allowances from those
with low costs and thereby transfer wealth to them. See
Ronald H. Coase, The Problem of Social Cost, 3 J. L. & Econ. 1
(1960). But transaction costs notoriously are not zero; so the
likely effect of the proposed statutory interpretation would be
that any aggregate cutback would be achieved at considerably
higher cost than under EPA’s reading of § 110(a)(2)(D)(i)(1),
with absolutely no offsetting environmental benefit to the
public. Of course we are able to assume the existence of EPA’s
allowance trading program only because no one has challenged
its adoption. As the program seems to have no rationale other
than cost reduction, see 63 Fed. Reg. at 57,457, it would
presumably be invalid under petitioners proposed reading of
§ 110(a)(2)(D)(i)@), in which case the states’ position really is
as extreme as it sounds.
Returning to the positions of the parties, we find Indus-
try/Labor engaging in a migration comparable to that of the
states, though in the opposite direction. In its opening and
reply brief Industry /Labor argued that Ҥ 110(a)(2)(D) re-
quires consideration of only air quality impacts in determining
the significance of any contribution.” However, at oral
argument Industry /Labor offered a construction of the statute
that seemed to restore to EPA via § 110(k)(5) what it would
take away via § 110(a)(2)(D). Industry /Labor claimed that
costs could be considered when EPA determines if a SIP is
“adequate” under § 110(k)(5). Transcript of Oral Argument at
28. The states actually offered this same reading of §
110(k)(5) in their reply brief (back when they thought EPA
could consider costs) but appeared to abandon it at oral
* A glance at EPA’s regulations for allowance trading will convince an
doubter that transaction costs can safely be expected to be substantial. See 6S
Fed. Reg. at 57,457-75.
- 18a -
argument in favor of a flat prohibition on EPA cost consider-
ations. The argument that costs may be considered under §
110(k)(5) seems to concede that the structure of the statutory
scheme manifests no intention to bar the consideration of
costs.
And so we are indeed presented with the question
whether § 110(a)(2)(D) bars consideration of costs, but it is
ted to us with the caveat that costs can be considered
ter on in the process, and ied by a false start by
the states, who initially said that EPA could consider costs,
just not too much. Against this backdrop, it would be at the
very least ironic for us to say there is “clear con i
intent to preclude consideration of cost” under § 110(a)(2)(D).
See Natural Resources Defense Council v. EPA, 824 F.2d 1146,
1163 (D.C. Cir. 1987) (en banc).
For convenience we repeat the statutory language.
Section 110(a)(2)(D){i)() provides that SIPs must contain
provisions prohibiting
any source or other type of emissions activity
within the State from emitting any air pollutant
in amounts which will . . . contribute
significantly to nonattainment in, or interfere
with maintenance by, any other State with
respect to any such national gad or
secondary ambient air quality >
42 U.S.C. § 7410(a)(2)(D)(i\() (emphasis added). By its terms
the statute is focused on “amounts” of “emissions activi
that “contribute significantly to nonattainment.” e
fundamental dispute is over the clarity of the phrase
“contribute signi tly.” Must EPA simply pick some flat
“amount” of contribution, based exclusively on health con-
cerns, such that any excess would put a state in the forbidden
zone of “signi “?* Or was it permissible for EPA to
consider di in cutback costs, so that, after reduction
* We deal below with a related ion: Di irrati in setti
A tp a
- 19a -
of all that could be cost-effectively eliminated, any remaining
“contribution” would not be considered “significant”? In
deciding on the permissible ceiling, EPA used “significant” in
the second way.
Indeed, “significant” is a very odd choice to express
unidimensionality; consider the phrase “significant other.” In
Y”
some contexts, “signi begs a consideration of costs. In
finding a at eee t risk” in § 3(8)
of the Occupational Health and ty Act, 29 U.S.C. §
652(8), a plurality of the Supreme Court understood a
“signi t” risk as something more than a “mathematical
straitjacket,” and held that “[s]ome risks are plainly
acceptable and others are plainly unacceptable.” Industrial
Union Dept., AFL-CIO v. American Petroleum Institute
(“Benzene”), 448 US. pant 655 (1980) ay opinion). The
plurality withheld judgment on wh e Act required a
“reasonable correlation between costs and benefits,” id. at
615, but the upshot of inserting the adjective “significant” was
a consideration of which risks are worth the cost of
elimination. OSHA has since interpreted § 3(8) and regulation
of “significant risk” to require “cost-effective protective
measures” and set standards with an eye toward “the costs of
safety standards [being] reasonably related to their benefits.”
See International Union v. OSHA (Lockout/Tagout II), 37 F.3d
665, 668- 69 (D.C. Cir. 1994) (quoting OSHA’s final rule).
OSHA’s reaction to the term “significant” seems to confirm
what some commentators have asked rhetorically: “[C]an an
a sensibly decide whether a risk is ‘significant’ without
examining the cost of eliminating it?” hen G. Breyer,
Richard B. Stewart, Cass R. Sunstein & om ms L. Sehine,
Administrative Law and Regulatory Policy 65 (4th ed. 1999).
Petitioners conspicuously fail to describe the
intellectual process by which EPA would determine
“significance” if it may consider only health. EPA has
determined that ozone has some adverse health effects—
however slight—at every level. See National Ambient Air Quality
Standards for Ozone, 62 Fed. Reg. 38,856 (1997). Without
consideration of cost it is hard to see why any ozone-creating
- 2a -
emissions should not be regarded as fatally “significant”
under § 110(a)(2)(D)(i)(@). Perhaps EPA might (under such a
rule) let the upwind states off at the stringency level of the
programs imposed on non-attainment areas, but petitioners do
not explain how “significance” can exclude cost but admit
equity.
Although the ambiguity of the word “significant” and
the implications of a health-only reading are potentially fatal
flaws in petitioners’ theory (aside from their own inability to
discern the “plain language” consistently), the most formida-
ble obstacle is the settled law of this circuit. It is only where
there is “clear congressional intent to preclude consideration of
cost” that we find agencies barred from considering costs.
NRDC, 824 F.2d at 1163; see also George E. Warren Corp. 0.
EPA, 159 F.3d 616, 622-24 (D.C. Cir. 1998), reh’g granted, 164
F.3d 676 (D.C. Cir. 1999); Grand Canyon Air Tour Coalition v.
FAA, 154 F.3d 455, 475 (D.C. Cir. 1998), cert. denied, 119 5.
Ct. 2046 (1999); NRDC ov. EPA, 937 F.2d 641, 643-46 (D.C.
Cir. 1991); cf. International Bhd. of Teamsters v. United States,
735 F.2d 1525, 1528-29 (D.C. Cir. 1984) (construing mandate
to adopt “reasonable requirements” for safety as allowing
consideration of cost).
In NRDC we considered § 112 of the Clean Air Act,
requiring EPA to set an air quality standard for hazardous
pollutants with an “ample margin of safety” to protect the
public health. We held that this phrase did not preclude a
consideration of costs. 824 F.2d at 1155, 1163. In George E.
Warren Corp. we acknowledged that the statutory scheme for
the reformulated gasoline program had the “overall goal” of
improving air ity and “reducing air pollution.” 159 F.3d at
622. But because there was nothing “in the text or structure of
the statute to indicate that the Congress intended to preclude
the EPA from considering the effects a proposed rule might
have upon the price and supply of ap ge ” id. at 623, we
found no such preclusion even though rovision at issue
contained no allusion whatever to age e . Similarly, in
Grand Canyon Air Tour the statute required the FAA to
devise a plan for “substantial restoration of the natural quiet”
in the Grand Canyon area, but we found nothing impermissible
in the FAA’s consideration of costs to the air tourism industry
in deciding how “substantial” that restoration must be. 154
- 21a -
F.3d at 475. In NRDC v. EPA we considered whether EPA
issibly used cost-benefit analysis in refusing to classify a
particular polluting source as “major.” The petitioners argued
that cost considerations were precluded, and we stated:
“{While the statutory language and legislative history do not
bar petitioners’ construction, they provide little support and
no necessity for it.” 937 F.2d at 645. We affirmed EPA’s use
of cost-benefit analysis.
These cases are unexceptional in their general view that
preclusion of cost consideration requires a rather express
congressional direction. See Edward W. Warren & Gary E.
Marchant, “More Good Than Harm”: A First Principle for
Environmental Agencies and Reviewing Courts, 20 Ecology
L.Q. 379, 421 (1993) (“The need to compare benefits and
costs has long played a role in judicial review of agency
actions regulating health and safety risks.”); Cass R. Sunstein,
Interpreting Statutes in the Regulatory State, 103 Harv. L. Rev.
405, 487 (1989) (suggesting an “interpretive principle” drawn
from case law, including NRDC v. EPA, 824 F.2d 1146, that
reviewing courts will read statutes as authorizing regulations
with benefits at least “roughly commensurate with their costs,
unless there is a clear legislative statement to the contrary”).
Three of the cases, moreover—the two NRDC cases and Grand
Canyon--, involve statutory language with just the same
structure as here. A mandate directed to some environmental
benefit is phrased in general quantitative terms (“ample
margin of safety,” “substantial restoration,” and “major”),
and contains not a word alluding to non-health trade-offs; in
each case we found that in making its judgments of degree the
agency was free to consider the costs of demanding higher
levels of environmental benefit. So too here.
Petitioners point to no evidence of the requisite “clear
congressional intent to preclude consideration of cost.” NRDC,
824 F.2d at 1163. The text, we have already seen, works no
such preclusion. As for the statutory structure, petitioners
willingly concede that costs may be considered under
110(k)(5) in determining the adequacy of a state plan. Why
would a Congress intent on precluding cost considerations
allow such an escape hatch? The petitioners cite no legislative
history suggesting that cost considerations should be barred.
- 22a -
In sum, there is nothing in the text, structure, or history
of § 110(a)(2)(D) that bars EPA from considering cost in its
application.
ro Uniform Controls
As we have seen, EPA required that all of the covered
jurisdictions, regardless of amount of contribution, reduce their
NOx by an amount achievable with “highly cost-effective
controls.” Petitioners claim that EPA’s uniform control
strategy is irrational in two distinct ways. First, they observe
that where two states differ considerably in the amount of
their respective NOx contributions to downwind nonattain-
ment, under the EPA rule even the small contributors must
make reductions equivalent to those achievable by highly cost-
effective measures. This of course flows ineluctably from the
EPA’s decision to draw the “significant contribution” line on a
basis of cost differentials. Our upholding of that decision
logically entails upholding this consequence.
The second objection is that because of distance and
the vagaries of pollutant migration and ozone formation, a
molecule of NOx emitted in Indiana (for example) may cause
far less adverse health impact than a molecule emitted in
eastern Pennsylvania. EPA acknowledges that “[s]ources that
are closer to the nonattainment area tend to have much larger
effects on air quality than sources that are far away.” 63 Fed.
Reg. at 25,919. While EPA’s cost-effectiveness standard and
emissions trading seem to mean that EPA will secure the
resulting aggregate NOx reduction at roughly the lowest
possible cost, they do not necessarily mean that it will have
secured the resulting aggregate health benefits at the lowest
cost. Petitioners ask, in effect, why EPA did not, by one
means or another (e.g., in the emissions trading system), make
reductions from sources near the nonattainment areas (or
otherwise more damaging, molecule for molecule) more
valuable than ones from distant sources?
EPA considered this approach, modeling the efficacy
of regional alternatives compared to its uniform strategy. See
Final Rule, 63 Fed. Reg. at 57,423. Its researchers found that
non-uniform regional approaches by comparison did not
“provide either a significant improvement in air quality or a
- 23a -
substantial reduction in cost.” Id. The complaining states offer
no material critique of EPA’s methodology in reaching this
answer, which in fact some independent investigators have
confirmed. See Krupnick & Anderson, A Dilemma Downwind,
137 Resources for the Future 5, 6 (1999) (“[Even with] spatial
differences, when viewed across the entire study region, RFF
concluded that there was no clear benefit to an exposure-
based trading system, compared with simple ton- for-ton NOx
trading. Public health benefits would be approximately the
same, and there would be no significant difference in costs to
the utilities.”). We have no basis to upset EPA’s judgment.
4. Nondelegation
In their opening brief and more prominently in their
reply brief, state petitioners argue that EPA has not
determined “significant contribution” based on any intelligible
principles. Petitioners rely heavily on our decision in American
Trucking Ass’n, Inc. v. EPA, 175 F.3d 1027, reh’g granted in
part, den’d in part 195 F.3d 4 (D.C. Cir. 1999), essentially
arguing that nothing about EPA’s analysis explains how much
of a NOx contribution was too much (i.e., worthy of a SIP
call).
We must recognize here that EPA’s cost-effectiveness
criterion is a radically incomplete line-drawing device. EPA
has effectively ruled that each affected state must get down to
the NOx emissions levels that would prevail if it removed all
NOx emissions costing $2000/ton or less to remove. This
satisfies its “cost-effectiveness” criterion because (if states
also seek to minimize costs subject to the EPA’s constraint)
only these relatively low-cost tons will be removed. But while
EPA indicates that it rested the $2000/ton figure on “NOx
emissions controls that are available and of comparable cost
to other recently undertaken or planned NOx measures,” Final
Rule, 63 Fed. Reg. at 57,400, it neither rests that benchmark on
anything in the language or function of § 110(a)(2)(D)(i)(1), nor
otherwise explains why the resulting cut-off point represents
the right degree of “cost-effectiveness” (i.e., why “highly cost-
effective” should be at that “height”). Accordingly, we must
read EPA as having understood that its selection of the cut-off
point was essentially unbounded.
- Pha -
But petitioners have ignored a limit to the
nondelegation doctrine that we relied on in American Trucking
and even more emphatically in its immediate precursor,
International Union, UAW v. OSHA (“Lockout/Tagout I”), 938
F.2d 1310 (D.C. Cir. 1991). There we noted that the scope of
the agency’s “claimed power to roam” was “immense,
encompassing all American enterprise.” Id. at 1317 Quoting
verbatim from Synar v. United States, 626 F. Supp. 1374, 1383
(D.D.C. 1986) (three-judge panel), aff'd sub nom. Bowsher v.
Synar, 478 U.S. 714 (1986), we said, “When the scope
increases to immense proportions, as in [A.L.A. Schecter
Poultry Corp. v United States, 295 U.S. 495 (1935)], the
standards must be correspondingly more precise.
Lockout/Tagout I, 938 F.2d at 1317. We noted that a mass of
cases in courts had upheld delegations of effectively
standardiess discretion, and distinguished them precisely on
the ground of the narrower scope within which the agencies
could deploy that discretion. Id. American Trucking, perhaps
too succinctly for petitioners to notice, incorporated the
Lockout/Tagout I discussion of the point. American Trucking,
175 F.3d at 1037.
Nominally, of course, § 110(a)(2)(D)(i)(I) encompasses
“all American enterprise.” But as a practical matter EPA must
make a number of threshold determinations that in practice
appear to have confined the statute to a modest role. Before
assessing “significance,” EPA must find (1) emissions activity
within a state; (2) show with modeling or other evidence that
such emissions are migrating into other states; and (3) show
that the emissions are con ting to nonattainment. We do
not mean to minimize the scope of EPA’s action in the present
case. Nearly half of the nation is affected and control costs
will be substantial. And it may ultimately prove that the dam
constituted by these criteria will burst, subjecting “all
American industry” to EPA’s § 110(a)(2)(D)(i)(I) discretion.
But in practice, so far, these threshold criteria appear to have
so limited EPA’s activity under the section as to make the rule
in question here the sole example »f 110(a)(2)(D)(i)(I)
rulemaking. Accordingly, the grounds on which we remanded
in Lockout-Tagout I and American Trucking for confining agency
constructions are absent here.
”
- 25a -
II. Inclusion of Specific States
A. Wisconsin
Wisconsin industry petitioners separately challenge
Wisconsin’s inclusion in the SIP call. The Wisconsin petitioners
e that the emissions from the state do not contribute
significantly to nonattainment in any other state. Section
110(a)(2)(D)(i)() requires that a state “contribute significantly
to nonattainment in . . . any other State” in order to be
included in the challenged SIP call. 42 U.S.C. §
7410(a)(2)(D)(i)(I) (emphasis added). As explained below,
EPA erroneously included Wisconsin in the SIP call because
EPA failed to explain how Wisconsin contributes to
nonattainment in any other state.
EPA contends that Wisconsin contributes significantly
to other states’ nonattainment because the state significantly
contributes ozone over the Lake Michigan region. Despite
EPA’s Lake Michigan concerns, the agency does not show on
the record that Wisconsin’s ozone contribution affects any
onshore state nonattainment. At oral argument, counsel for
EPA conceded that “[t]he part that’s missing [from the
record] is a thorough explanation to support our modeling
data and things of that nature between the Lake Michigan
receptor area and the onshore states.” Oral Arg. Tr. at 107.
When asked for more, counsel could only respond that “the
best evidence . . . is simply the narrative statements in the
[final rule’s] preambles . . . . There’s nothing else there.” Id.
Because EPA conceded at oral argument that it has no record
evidence directly linking Wisconsin’s ozone contribution over
Lake Michigan to nonattainment in any state and because
EPA must “demonstrate[] a reasonable connection between
the facts on the record and its decision” made pursuant to its
statutory authority, Ethyl Corp. v. EPA, 51 F.3d 1053, 1064
(D.C. Cir. 1995), we hold that EPA acted unlawfully by
including Wisconsin in a SIP call limited by statute to states
contributing significantly to nonattainment in any other state
and therefore set aside Wisconsin’s inclusion in the SIP call.
See 5 U.S.C. § 706(2)(A), (C)(1994) (“The reviewing court
shall . . . hold unlawful and set aside agency action . . . found
to be . . . arbitrary, capricious, an abuse of discretion, or
otherwise not accordance with law [or] in excess of statutory
~ 2%a -
jurisdiction, authority, or limitations, or short of statutory
right.”).
B. Missouri and Georgia
Missouri and Georgia were on the geographical
perimeter of EPA’s SIP call. No state west of Missouri was
included, nor were the two states directly to its north (lowa
and Minnesota) and south (Arkansas). Georgia was a bit more
in the thick of things, surrounded on three sides by included
states—Alabama, Tennessee, North Carolina, and South Car-
olina; but the southern portion of Georgia borders the excluded
state of Florida. Industrial petitioners within Missouri and
Georgia challenge EPA’s decision to calculate NOx budgets for
these two states based on the entirety of NOx emissions in
each state. Petitioners argue that there is record support only
for the proposition that emissions from, roughly speaking, the
eastern half of Missouri and the northern two-thirds of
Georgia “contribute” to downwind concentrations;
accordingly, they say, the NOx budgets for Missouri and
Georgia should be based solely on those emissions.
We must here explain how EPA calculated NOx
budgets. It projected the total amount of NOx emissions that
sources in a state would emit in the year 2007, in light of
expected growth and other controls required by the CAA.
EPA then projected total NOx emissions if “highly cost-
effective controls” were implemented. The resulting calculation
became the state’s NOx budget, with the difference between
the base case and the controlled case being the “significant”
contribution discussed above, Obviously a state’s NOx budget
will vary depending on whether EPA considers all of the NOx
emissions in the state, or instead considers only emissions
located in a smaller portion of the state (assuming emissions
are dispersed throughout the state, which is the case here and
without which the issue would be immaterial, as nonexistent
emissions need not be controlled). For Missouri and Georgia,
as for all other included states, NOx budgets were calculated
using all NOx emissions in the state.
The challenge basically stems from the character of
OTAG’s modeling, and its resulting recommendations to EPA.
OTAG’s ozone transport model used grids drawn across most
- 27a -
of the eastern half of the United States. The first grid was the
most precise, with grid cells of 12 kilometers squared (244
square kilometers)-the “fine grid.” A second grid extended
beyond the perimeter of the fine grid and had cells of 36
kilometers squared resoiution—the “coarse grid.” For a variety
of reasons to be discussed shortly, the fine grid did not track
state boundaries, and Missouri and Georgia were among
several states that were split between the fine and coarse
grids. OTAG then ran modeling for both grids, but in the final
analysis did not find emissions from the coarse grid worthy of
special concern. OTAG’s executive summary stated: “[The
focus on ozone air quality impacts in the fine grid raised
questions about the need for controls in the coarse grid. The
recommendations adopted by the Policy Group recognize that
the OTAG analyses demonstrated that transport impacts of
the coarse grid areas on the fine grid are minimal and
therefore, do not include the coarse grid areas for
recommended control measures other than those that would be
applied nationally.” Petitioners argue that EPA should base
NOx budgets for Missouri and Georgia only on portions of
these states within the fine grid.
EPA offers three reasons for including the entire states
of Missouri and Georgia:
(1) The division of individual States by
OTAG was based, in part, on computational
limitations in OTAG’s modeling analyses; (2)
the additional upwind emissions from full, as
opposed to partial, States would provide
additional benefit to downwind nonattainment
areas; and, (3) Statewide emissions budgets
create fewer administrative difficulties than a
partial-State budget.
Final Rule, 63 Fed. Reg. at 57,424. We review deferentially,
searching for the reasonableness of EPA’s action, Appalachian
Power, 135 F.3d at 802, whether that be EPA’s interpretation
of the statute, see Chevron, 467 U.S. at 842-43, or EPA’s
explanation for its policy choice, see Motor Vehicle Mfrs. Ass’n
v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43 (1983).
- 28a -
The two inquiries can and do overlap. See Animal Legal Defense
Fund v. Glickman, No. 97-5009, slip op. at 9 (D.C. Cir. Feb. 1,
2000).
On its face the statute neither mandates nor prohibits
an all-or-nothing statewide perspective. It directs EPA to
make sure that SIPs (which of course are state plans)
adequately prohibit “any source or other type of emissions
activity within the State from emitting” in excess of the
substantive limit. The critical issue is whether the targeted
“source” or “emissions activity” “contribute[s] significantly to
nonattainment” in another state.
EPA’s first argument is that the fine grid split Missouri
and Georgia in _ because of computer limitations—every
extension of the fine grid modeling was costly in terms of both
c ter memory and data collection. Document No. I-A-14,
OTAG Final Report Regional and Urban Scale Modeling-
-Chapter 2, 2-7 (undated). But the OTAG modelers allocated
their scarce resources purposefully, by reference to known air
quality data, explicitly taking into consideration the “locale of
various problem areas (as represented by urban-area modeling
domains), and emissions density.” Id. Thus it was no mere
techno-fortuity that the fine grid included enough of Missouri
to include the city of St. Louis and enough of Georgia to
include Atlanta: both cities are designated nonattainment
areas for ozone under the 1-hour NAAQS. See Final Rule, 63
Fed. Reg. at 57,359. Moreover, the fine grid portions of both
states are the closest to other nonattainment areas, such as
Chicago and Birmingham, and generally higher ozone density.
Of course the fine grid modeling of parts of Missouri
and Georgia showed emissions in the a te meeting the
EPA’s threshold “contribution” criteria. Thus fine grid mod-
eling of each in its entirety would presumably also have done
so. But that is a simple arithmetic necessity (a state is
necessarily a of its parts) and provides no reason for
EPA to ignore the very air quality factors that influenced the
design of the modeling that did occur. OTAG itself clearly did
not think those factors magically lost their force, for it
recommended against controlling the rump areas. And EPA
itself acknowledged part of the reason this should be so when
it observed, “Sources that are closer to the nonattainment area
- 29a -
tend to have much larger effects on air quality than sources
that are far away.” 63 Fed. Reg. at 25,919. Indeed, even if the
line between areas for which there was evidence and ones for
which there was none were explained solely by fortuity, EPA
would still be required to act upon the evidence that was
ted. See Chemical Manufacturers Ass'n v. EPA, 859 F.2d
989 (D.C. Cir. 1988) (holding that EPA must consider
“all the evidence—including the industry evidence”).
This leads us to EPA defenses other than modeling
design. The first is that “the larger the geographic area that is
controlled, the greater the downwind benefits.” Final Rule»63
Fed. Reg. at 57,424. This reason can only stand if the
emissions at issue contribute significantly to nonattainment in
another state. OTAG concluded they did not. Id. EPA claims
that its sta modeling, which supplemented OTAG’s
more regi modeling, supports including the coarse grid
areas. See id. Yet EPA’s explanation and technique make clear
that emissions from the fine areas may have been the sole
source of the finding. Indeed, EPA says as much: “[I}f
emissions from part of a State contribute significantly to
downwind nonattainment or maintenance problems, emissions
from the entire State contribute significantly to downwind
nonattainment or maintenance problems.” Id. This of course is
also true as a matter of logic (a state is the sum of its parts).
But it is completely consistent with the rump portion being
innocent of downwind effect, and thus is ely a reason for
ruling that significant contributions from a border city should
rope in the entire state.
Aware of this problem, EPA simply throws the burden
of persuasion onto the states. “[T]here is no peculiar meteoro-
logical phenomenon that would indicate that emissions from
some portion of [each of the affected states] would not impact
downwind nonattainment or maintenance problems.” Id. In
addition, “the atmosphere is constantly in motion and has no
limitations at geo-political boundaries.” Id. If this is “evi-
dence” of contribution, it proves too much. If the simple
proposition that the prevailing westerlies carry pollutants
eastward were enough, EPA could, on the basis of a plant in
Pennsylvania, use § 110(a)(2)(D)(i)(1) to control all NOx emis-
sions east of the Rocky Mountains. While we uphold EPA’s
determination that a “significant” contribution is a cost-
«90s -
effectively controllable contribution, EPA must first establish
that there is a measurable contribution. Interstate contribu-
tions cannot be assumed out of thin air.
In the end administrative convenience is EPA’s only
real defense for basing NOx budgets on the entirety of a
state’s emissions. There seem to be two species of this
argument. First, EPA seems to claim that it is just easier to
calculate a NOx budget based on all the emissions in the state
instead of only a portion of such emissions. EPA provides no
explanation of why this is so, and it seems dubious. Within a
state are counties, air quality control regions, and for some
unfortunate states, nonattainment areas. EPA also has
emissions data on specific sources, some of which may be
susceptible of “highly cost-effective controls,” and others of
which may not be. See, e.g., Emissions Data For Power Plants,
<www.epa.gov/acidrain/ emissions> (visited January 26,
2000). Without data from such state subdivisions and ifi
sources, EPA could never have performed modeling or even set
a statewide budget. EPA has not explained how calculation of
a budget for sources in only half of the state would be any
more onerous than for all sources in the state. Unless it is
relying on data that exist only for the state as a whole,
calculation seems on its face easier for a half than for a whole.
EPA offers a second administrative problem. If the
concern for not allowing § 110(a)(2)(D)(i)(1) to encompass un-
proven areas compels an insistence on proof of contribution
from ever smaller geographic subdivisions, any area’s specific
contribution may appear insubstantial, even though collective-
ly there are significant contributions. In other words, unlike
bologna, which remains bologna no matter how thin you slice
it, significant contribution may disappear if emissions activity
is sliced too thinly.
While this argument was stressed on appeal, it is
nowhere to be found in the proposed or final rule, except
insofar as it may have lurked behind the vague invocation of
“administrative difficulties.” See Final Rule, 63 Fed. Reg. at
57,424; Proposed Rule, 62 Fed. Reg. at 60,342. As a result it is
quite undeveloped. But it appears to be based on a distortion
of the claims of Missouri and Georgia. They are not asserting a
right to bologna tactics, to slice down the unit of measurement
- 3la -
to a point of insignificance. All they are claiming is that where
the data-calculated under EPA’s supervision—inculpate part
of a state and not another, EPA should honor the resulting
findings.
Such a proposition would of course leave EPA free to
select states as the unit of measurement. In turn, states (or the
areas of states that believed themselves innocent of material
contributions, or sources located therein), might respond by
offering finer-grained computations. Such a process seems
more like a healthy search for truth than the collapse into
infinite regress that EPA claims to fear.
EPA also points to state flexibility: “Since each State
has the flexibility to determine which sources to control in
order to meet the budget, a State can structure its control
strategy to require fewer reductions in certain portions of the
State and greater controls in other areas.” Final Rule, 63 Fed.
Reg. at 57,424. This theory presents at least two difficulties.
First, it overlooks the fact that state budgets not only encom-
pass the whole state but are calculated on the basis of
hypothesized cutbacks from areas that have not been shown
to have made significant contributions. Thus the “flexibility”
comes at the cost of a burden that is heavier in the aggregate,
where the added weight accomplishes no purpose relevant to
§ 110(a)(2)(D)(i)(1). Second, a state’s use of flexibility to
pursue a purely in-state set of tradeoffs between cost and
benefit (and thus unrelated to the goals of § 110(a)(2)(D)(i)(D)
may actually diminish the cutbacks in areas that are making a
contribution to other states’ nonattainment
Thus nowhere has EPA reasonably explained why
NOx budgets based on every state source are the best
stopping point with respect to states on the perimeter of the
ozone problem.
Therefore we vacate EPA’s final rule with respect to
Missouri and Georgia and remand to the agency for reconsid-
eration in light of this opinion.
é.. South Carolina
Petitioner Santee Cooper challenges South Carolina’s
- 32a -
inclusion in the SIP call by alleging that the state’s downwind
ozone nonattainment imy is “minuscule” and therefore not
significant. We will hold unlawful EPA’s decision to include
South Carolina in the SIP call if we find EPA’s decision
“arbitrary, capricious, an abuse of discretion, or otherwise not
accordance with law.” 5 U.S.C. § 706(2)(A). In order for
EPA’s decision to include South Carolina in the SIP call to
survive review, the agency must “demonstrate[ ] a reasonable
connection between the facts on the record and its decision,”
Ethyl Corp., 51 F.3d at 1064. We conclude that the
record supports EPA’s decision to include the state as a
significant contributor to downwind nonattainment. See
Proposed Rule, 62 Fed. Reg. at 60,337-339. EPA considered
the analyses submitted by the objecting petitioner but
quad’ with the petitioner's conclusions as drawn from the
and interpreted the data in context and found that
South Carolina significantly contributed to ozone
nonattainment. See id.; Final Rule, 63 Fed. Reg. at 57,394-396.
For example, under the 1-hour standard, the UAM-V
zero- out modeling results indicated that South Carolina had a
high maximum contribution (16 ppb) and a high frequency of
contribution (at least 2 ppb to 15% of the exceedances and at
least 10 to 5% of the exceedances) to Atlanta. See Office
of Air Radiation, U.S. Environmental Protection Agency,
Doc. No. VI-B-11, Air Quality Modeling Technical
Document for the NOx SIP Call C-5, H-2 (1998). The
modeling results were comparable (25 ppb maximum
contribution and a frequency of at least 2 ppb to 30% ofthe
exceedances). See id. at C-5, G-6. Among the upwind states,
only Alabama had a higher maximum contribution. See id. at
Apps. G & H. Moreover, South Carolina's contribution to 1-
hour nonattainment in Atlanta was no more “insignificant”
than many of the other linkages that were found to be
significant (e.g., Indiana’s contribution to New York City). See
id. at C-13, H-16.
In contrast, the petitioner seeks to show that the data,
when viewed in isolation, makes South Carolina’s contribution
appear insigni t. In the end, we reject the challenge made
on behalf of South Carolina because the petitioner attacks, not
o Sa -
so much the accuracy of EPA’s data, but rather EPA’s
reasonable analysis and application of the data.
Ill. Federalism and Regulatory Flexibility Act
A. NOx Budgets
on OTAG’s work, EPA ordered the challenged
SIP call under the authority of section 110(k)(5) in order to
address significant contribution to 1-hour ozone nonattain-
ment as described under section 110(a)(2)(D).’ In fashioning
the SIP call, EPA focused on OTAG’s determination that
“[rjegional NOx emissions reductions are effective in produc-
ing ozone benefits.” Proposed Rule, 62 Fed. Reg. 60,318, at
60,320. EPA also took into consideration OTAG’s conclusion
that while NOx controls are effective in addressing regional
ozone problems, VOC controls are most effective locally and
are most advantageous to urban nonattainment areas. See id.
Because OTAG concluded that NOx reductions provide the
key to addressing regional ozone problems, EPA’s SIP call
addresses regional ozone nonattainment through NOx emis-
sions “budgets” established by the agency for each covered
state. The budgets represent the amount of allowable NOx
emissions remaining after a covered state prohibits the NOx
amount contributing significantly to downwind nonattainment.
See Final Rule, 63 Fed. Reg. 57,356, at 57,368. While EPA
calculated the budgets using highly cost-effective emission
controls, the agency allows the states to choose the control
measures necessary to bring their emissions within the budget
i ts. See id. at 57,377; id. at 57,400. Under EPA’s
budget plan, a state “may choose from a broader menu of
cost-effective, reasonable alternatives” including alternatives
that “may even be more advanta in light of local
concerns.” Id. at 57,369-370. In fact, EPA has stated that the
states have “fuil discretion in og the controls, so that
[the states] may choose any set of controls that would assure
achievement of the budget.” Id. at 57,378. In addition, each
state has the of an interstate trading
ep cy oye Ope ny po
that have elected to over-control. Id. at 57,430. The SIP call
* As noted above, we will not address the 8-hour portion of the SIP call.
- 34a -
also gives the states the option in some circumstances to use
“banked” allowances (i.e. allowances from prior years) to
comply with emissions limits. See id. .
Petitioners assert that EPA’s NOx budget program
impermissibly intrudes on the statutory right of the states to
fashion their SIP submissions in the first instance. In support
of this position, the petitioners primarily rely on our decision
in Virginia v. EPA, 108 F.3d 1397 (D.C. Cir.), modified on
other grounds, 116 F.3d 499 (D.C. Cir. 1997), where we held
that EPA may not use a section 110(k)(5) SIP call to order
States to adopt a particular approach to achieving the SIP
requirements listed in section 110. Under the rule at issue in
Virginia, EPA required states to adopt California’s vehicle
emission program and in effect set the numerical emissions
limitations and mandated the means for the states to achieve
the necessary emissions reductions. That case involved an
EPA rule that required several states to reduce ozone
precursors by a particular program and only allowed states to
implement a more stringent program as an alternative or
substitute. We held that EPA’s approach exceeded its
authority under section 110 because each state retains the
authority to determine in the first instance the necessary and
appropriate control measures needed to satisfy section 110’s
standards. See id. at 1407-09 (citing Train v. NRDC, 421 U.S.
60, 78-79 (1975)).
Our holding in Virginia was mandated by the
Court's decision in Train v. NRDC, 421 USS. 60 (1975). Train
involved a challenge to Georgia’s procedures for revising
source-specific emission limits adopted in a SIP. See id. at 68-
71. The Train Court held that states have the authority under
the CAA to initially propose specific emission limitations. See
id. at 79. The Court defined “emission limitations” as
“regulations of the co ition of substances emitted into the
ambient air from such sources as power plants, service
stations, and the like. They are the specific rules to which
operators of pollution sources are subject, and which if
enforced should result in ambient air which meets the national
standards.” Id. at 78 (emphasis added). The Court further
held that EPA has only “a secondary role in the process of
determining and enforcing the specific, source-by-source
emission limitations.” Id. at 79 (emphasis added). The Train
- 35a -
_ decision and subsequent precedent make clear that section 110
left to the states “the power to [initially] determine which
sources would be burdened by regulation and to what extent.”
Union Elec. Co. v. EPA, 427 U.S. 246, 269 (1976) (emphasis
added); cf. Virginia, 108 F.3d at 1399, 1401, 1408 (involving a
source-specific program); Riverside Cement Co. v. Thomas, 843
F.2d 1246, 1247-48 (9th Cir. 1988) (citing Train and noting
EPA’s secondary role in enforcing source-by-source emissions
limitations). As we elaborated in Virginia, “the Supreme Court
decided . . . that [section 110] did not confer upon EPA the
authority to condition approval of [a state’s] implementation
plan . . . on the state’s adoption of a specific control
measure.” Virginia, 108 F.3d at 1408. For the reasons set forth
below, we conclude that the NOx budgets do not fall within
the realm of impermissible SIP call regulation as defined in
Virginia and Train.
Given the Train and Virginia precedent, the validity of the
NOx budget program underlying the SIP call depends in part
on whether the program in effect constitutes an EPA-i
control measure or emission limitation triggering the Train-
Virginia federalism bar: in other words, on whether the
program constitutes an impermissible sourc ific means
rather than a permissible end goal. However, the program’s
validity also depends on whether EPA’s budgets allow the
covered states real choice with regard to the control measure
options available to them to meet the budget requirements.
Section 110(a)(2)(D) requires SIPs to contain adequate
provisions prohibiting emissions from “any source or other
type of emissions activity within the State” that “contribute
significantly” to NAAQS nonattainment in another state.
Here, EPA mandates that 22 states and the District of
Columbia implement section 110(a)(2)(D) using its NOx bud-
get system. In essence, the NOx budget in question is an EPA
mandate prohibiting NOx emissions in the 23 jurisdictions
from exceeding a tonnage specific to that jurisdiction. See 63
Fed. Reg. 57,356 at 57,491493 (1998). Of concern to
petitioners, the budget rule prohibits states from seeking
compliance, in whole or part, by controlling VOC emissions
even though VOCs as well as NOx emissions contribute to
ozone problems. See, e.g., id. at 57,359; see also 40 C.F.R. §
52.31(b)(7) (1998) (defining ozone precursors).
- 3a -
Yet, the budget plan’s defining aspects do xot
necessarily cause the program to conflict with the mg
— ciples contained in Train and Virginia. Analyzin
dget rule together with the relevant precedent, we ho
based on ns 110’s silence, EPA reasonably anne
section 110 as providing it with the authority to determine a
state’s NOx significant contribution level and agree with EPA
that the NOx budget plan does no more than project whether
states have reduced emissions sufficiently to mitigate
interstate transport. See 63 Fed. Reg. at 57,368.
Under section 110, EPA must “approve a [SIP]
submittal as a whole if it meets all of the applicable
requirements of [the Act].” 42 U.S.C. § 7410(k)(3). While the
states have considerable latitude in fashioning SIPs, the CAA
“nonetheless subject[s] the States to strict minimum
compliance requirements” and gives EPA the authority to
determine a state’s compliance with the requirements. Union
Elec. Co., 427 U.S. at 256-57 (referring to the requirements
contained in the statute). Given EPA’s authority to ensure that
submitted SIPs adequately prohibit significantly contributing
emissions, EPA permissibly relied on its general rulemaking
authority to prospectively inform the states of EPA’s signifi-
cance determinations.
Moreover, EPA does not tell the states how to achieve
SIP compliance. Rather, EPA looks to section 110(a)(2)(D)
and merely provides the levels to be achieved by state-
determined compliance mechanisms. Specifically, EPA set
NOx reduction levels based, in part, on assumptions about
reductions obtainable through highly cost-effective controls.
See Final Rule, 63 Fed. Reg. at 57,426. However, EPA made
clear that states do not have to adopt the control scheme that
EPA assumed for budget-setting purposes. See id. at 57,369-
370. States can choose from a myriad of reasonably cost-
effective options to achieve the assigned reduction levels. See,
e.g., id. at 57,438 (noting possibilities with regard to mobile
sources); id. at 57,378 (noting possibilities with regard to
stationary sources); id. at 57,416. While EPA bases the
budgets here on ‘highly cost-effective” control measures, the
states remain free to implement other “cost-effective” or
“reasonably cost-effective” measures in place of the ones
- 37a -
identified by EPA. See id. at 57,378; 63 Fed. Reg. 60,318 at
60,328 (1997) (noting that “one State may choose to primarily
achieve emissions reductions from stationary sources while
another State may focus on emissions reductions from the
mobile source sector”). More importantly, EPA went so far as
to give the states “full discretion in seiecting . . . controls,” 63
Fed. Reg. at 57,378, thereby allowing states to attain their
budgets by imposing even quite unreasonable, very cost-
ine ive controls. In Virginia, we did not bar EPA from
permitting more costly alternatives but rather alternatives
States would consider “unreasonable or impracticable.” Here,
EPA accommodates Virginia's mandate by allowing
reasonable control alternatives and allowing states to focus
reduction efforts based on local needs or preferences. See 63
Fed. Reg. at 57,369; id. at 57,399-405; 62 Fed. Reg. at 60,328.
Thus, real choice exists for the covered states.
Regarding EPA’s decision not to rely on VOC
reductions, EPA reasonably concluded that long-range ozone
transport can only be addressed adequately through NOx
reductions. Petitioners’ reliance and emphasis on VOC
reductions in lieu of NOx reductions ignores the scientific basis
for EPA’s rule. OTAG and EPA concluded that VOC controls
would not effectively address interstate ozone transport.
Furthermore, states can cure any NOx reduction “disbenefits”
with corresponding optional VOC controls. See 62 Fed Reg. at
60,344-345; 63 Fed. Reg. at 57,425. Thus, the SIP call cannot
be invalidated merely because EPA reasonably chose not to
regulate VOCs.
In sum, we conclude that EPA’s NOx budget program
reasonably establishes reduction levels and leaves the control
measure selection decision to the states. In addition, unlike the
rule invalidated in Virginia, states implementing alternative
control measures will not be penalized with more stringent
emissions targets. Since the challenged budget program does
not mandate a “specific, source-by-source emission limitation[
],” the NOx budget plan does not run afoul of Train or
Virginia.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (“RFA”), 5 U.S.C. §§
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601-612, as amended in 1996 by the Small Business
Regulatory Enforcement Fairness Act (“SBREFA”), Pub. L.
No. 114-121, Title II, 110 Stat. 847, 857-74, §§ 201-253
(codified at 5 U.S.C. §§ 601-612 (1994 & Supp. 111996)),
requires an agency, when proposing a rule for notice and
comment, to prepare and make available for public comment
an initial regulatory flexibility analysis . . . . [that] describe[s]
the impact of the proposed rule on small entities,” 5 U.S.C. §
603(a), including small businesses, small organizations, and
small governmental jurisdictions. See id. § 601(6). In addition,
when promulgating a final rule, an agency must “prepare a
final regulatory flexibility analysis” that describes, among
other things, “a summary of the significant issues raised by the
public comments in to the initial regulatory flexibility
analysis, a summary of the assessment of the agency of such
issues,” and “the steps the agency has taken to minimize the
significant economic impact on small entities.” Id. § 604(a).
However, these analyses are not required if the agency
“certifies that the rule will noi, if promulgated, have a signifi-
cant economic impact on a substantial number of small enti-
ties.” Id. § 605(b). In the instant case, EPA certified that the
proposed and final rule will not have a significant economic
impact on a substantial number of small entities and,
accordingly, did not perform any regulatory flexibility analy-
sis. See Final Rule, 63 Fed. Reg. at Sars heopeid aie 62
Fed. Reg. at 60,375. RFA petitioners contend that EPA’s
certification was improper and in violation of the RFA. We
disagree.
The court has consistently held that the RFA i
“no obligation to conduct a small entity impact analysis of
effects on entities which it does not regulate.” Motor & Equip.
Mfrs. Ass’n. v. Nichols, 142 F.3d 449, 467 (D.C. Cir. 1998)
(quoting United Distribution Cos. v. FERC, 88 F.3d 1105, 1170
(D.C. Cir. 1996)); see also American Trucking, 175 F.3d at 1044.
Therefore, the key issue in evaluating EPA’s § 605(b)
certification is whether the NOx SIP call “regulates” small
entities.
EPA based its certification on its view that the NOx
SIP call “would not establish requirements applicable to small
entities” because “it would require States to develop, adopt,
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and submit SIP revisions that would achieve the necessary
NOx reductions and would leave to the States the task of
determining how to obtain those reductions, including which
entities to regulate.” Final Rule, 63 Fed. Reg. at 57,478. We
agree with EPA’s statement that the SIP call does not directly
regulate individual sources of emissions. The instant case is
thus analogous to American Trucking, which upheld EPA’s
certification under § 605(b) because the revised NAAQS at
issue “regulate small entities only indirectly—that is, insofar as
they affect the planning decision of the States.” American
Trucking, 175 F.3d at 1044. Therefore, we conclude that EPA’s
certification under § 605(b) is justified.
IV. Remaining Claims
A. Definition of “NOx Budget Unit”
RFA petitioners also contend that EPA arbitraril
revised the definition of a “NOx budget unit” to bring certain
small sources within the scope of the core group of emission-
producing sources to which the NOx Budget Trading Rule
(“model trading rule”) applies.‘ This contention is meritless.
The core group definition is used to set the minimum
requirements that a State would have to include in its trading
rule in order to participate in the EPA-managed multi-state
trading program. See id. at 57,461. EPA viewed that setting
such requirements was necessary for controlling the
administrative costs of managing the trading program. See id.
In the proposed rule, a “NOx budget unit” was defined
as a boiler that either serves electricity generators with a
capacity greater than 25 megawatts (“MW”) or does not serve
generators but has a design heat capacity of greater than 250
million Btu/hr (“mmBTu/hr”). See Supplemental Notice for
the Finding of Significant Coittribution and Rulemaking for
Certain States in the Ozone Transport Assessment Group
ion for Purposes of Reducing Regional Transport of Ozone
“Supplemental Notice of Proposed Rule”), 63 Fed. Reg.
© assist states in ing their bud and to facilitate the most cost-
effective reductions, the call established a model rule for interstate
ing of NOx “allowances.” Each state can choose whether to adopt the
tule, which will be administered by EPA, to adopt its own trading
Se ateet to have no tending program at al. See Final Rule, 63 Fed. Reg. at
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25,902, 25,978 (1998). EPA sought comment on “the
appropriateness of including [such] categories ..., whether the
size cut-offs should be higher or lower for these source
categories, and the appropriateness of including other source
categories in the core group.” Id. at 25,923. In the final rule,
EPA discussed and revised the definition to expand the core
group by including large boilers—-those with design heat
capacity of greater than 250 mmBtu/hr-even if they served
tors with a capacity less than 25 MW. See Final Rule, 63
Fed. Reg. at 57,518. EPA explained that it was making this
change in order to address the concern raised in the comments
about excluding large boilers with-high levels of emission just
because they happen to serve small generators. See id. at
57,461.
EPA’s revision is reasonable. The only argument that
RFA petitioners seem to have against the change is that it
contradicts EPA’s statement elsewhere that “small electrical
generators less than 25 MW .. . will be exempt under the final
model rule.” Id. at 57,463. It is unclear why this statement
renders EPA’s final action arbitrary. EPA’s definition of a
NOx budget unit and the reasons for its change are set forth in
the preamble to the final rule, and the most that the RFA
petitioners have demonstrated is that EPA made at least one
statement that was, as EPA concedes in its brief, “incomplete
in that it did not address the case of large boilers with small
generators.” Such a minor oversight in the drafting of the
preamble to the final rule does not render the substantive
decision by EPA arbitrary.
B. Council of Industrial Boiler Owners
z; Introduction
: In the rulemaking, EPA distinguished between
electricity generating units (“EGUs”) and non-electricity
generating units (“non-EGUs”). Council of Industrial Boiler
Owners (“CIBO”), a trade association whose membership
consists of companies and universities operating industrial
boilers and turbines (“industrial boilers”), which constitute
one category of non-EGUs, challenges the NOx SIP call for
being based on the following arbitrary and capricious actions
by EPA: EPA’s failure to determine whether non-EGUs are
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significant contributors, EPA’s flawed cost assumptions in its
determination of cost-effective control measures for non-
EGUs, EPA’s erroneous calculation of non-EGU budgets, and
EPA’s arbitrary redefinition of the term “EGU.” We agree only
that EPA's redefinition of EGUs was arbitrary and capricious.
y Significant Contribution of Industrial
Boilers.
CIBO challenges EPA’s decision to include non-EGU
boilers in the rule without having isolated non-EGU emissions
to determine whether they “significantly contribute” to the in-
terstate ozone transport problem and whether implementing
highly cost-effective emissions reduction measures on indus-
trial boilers would ameliorate nonattainment in downwind
states. CIBO maintains that non-EGU boilers typically have
significantly shorter stacks than EGUs and that their
emissions, as a result, fall below the "mixing layer” that
promotes long-range NOx transport. Therefore, CIBO
contends, industrial boilers as a group can have no impact on
long-range ozone However, this factual claim fails
in view of contrary evidence in the record. OTAG's Executive
Report states as one of its major conclusions that "[bJoth
elevated (from tali stacks) and low-level
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