Opposition Brief — Appalachian Power Co. v. Environmental Protection Agency

7 be” ol)

Nos. 00-445, 00-632 and 00-633

Jn the Supreme Court of the Gnited States

APPALACHIAN POWER COMPANY, ET AL., PETITIONERS

"

ENVIRONMENTAL PROTECTION AGENCY

STATE OF MICHIGAN, ET AL., PETITIONERS

a.

ENVIRONMENTAL PROTECTION AGENCY

STATES OF OHIO AND INDIANA, PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

SETH P. WAXMAN

Solicitor General

GARY S. Guzy Counsel of Record

TAN W. 1 4

General Counsel Lots J. SCHIFFER

JAN TIERNEY Assistant Attorney General

HOWARD HOFFMAN JON M. LIPSHULTZ

Attorneys Attorney

Environmental Protection Denartment of Justice

Agency '

Washington, D.C. 20520-0001

Washington, DC. 20500 (202) 51 h—2?] ’

QUESTIONS PRESENTED

a

1. Whether the Environmental Protection Agency,

in promulgating a final rule respecting implementation

of a National Ambient Air Quality Standard under the

Clean Air Act, 42 U.S.C. 7401 et seq., reasonably deter-

mined that it may consider the cost-effectiveness of

available pollution controls as a factor in identifying

“upwind” State air pollution emissions that “contribute

significantly” to nonattainment of the standard in

“downwind” States.

2. Whether the court of appeals properly deter-

mined that the Environmental Protection Agency’s

authority under the relevant provisions of the Clean

Air Act is sufficiently defined to satisfy the nondelega-

tion doctrine.

(I)

TABLE OF CONTENTS

Jurisdiction

Statement

Argument

Conclusion

Page

Opinions below 1

2

2

8

22

TABLE OF AUTHORITIES

Cases:

American Petroleum Inst. v. EPA, 52 F.3d 1113

(D.C. Cir. 1995) 14

American Trucking Assn's v. EPA, 175 F.3d 1027,

reh’g granted in part and denied in part, 195 F.3d 4

(D.C. Cir. 1999), cert. granted, 120 S. Ct. 2003

(2000) 5, 8, 20

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204

(1988) 14

Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837

(1984) 12, 21

Citizens to Preserve Overton Park, Inc. v. Volpe, 401

USS. 402 (1971) 21

Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir.

1995) 14

General Motors Corp. v. United States, 496 US.

530 (1990) 3

George E. Warren Corp. v. EPA, 159 F.3d 616

(1998), amended on other grounds, 164 F.3d 676

(D.C. Cir. 1999) 16

Grand Canyon Air Tour Coalition v. FAA, 154

F.3d 455 (D.C. Cir. 1998), cert. denied, 526 U.S.

1158 (1999) 16

Marsh v. Oregon Natural Res. Council, 490

US. 360 (1989) 18

Mistretita v. United States, 488 U.S. 361 (1989) ............... 20

NRDC v. EPA, 824 F.2d 1146 (D.C. Cir. 1987) «2.2... 15, 16

(IIT)

IV

Cases—Continued: Page

Train v. NRDC, 421 US. 60 (1975) . asin _ 19

Union Elec. Co. vo. EPA, 427 U.S. 246 (1976) «0.0.0.0... 18, 19

Statute and regulations:

Clean Air Act, 42 U.S.C. 7401 ef 809. .........ccccccccssscesesssssernceses 2

© BOD, GE UTR, TOD ccececsnesscinencetatinicnitiaticinenninarenssnnmatnine 3

PE fis leh) | ee - 2

§ £206e), 42 U B.C. TARR a) cecececeecercceccsrecesscrscscccsscscscssnoneessees 3

$ 110(a)(2), 42 U.S.C. TAL O(aN2) .......cccccccscccsessscsesseseeseecenes 18

§$ 110(a)(2)( A), 42 U.S.C, T41 O(a 2A) caeeecccceseseneeenees 19

§ 110(aX2)D), 42 U.S.C. T410(a(2)(D) .....cccceesesereneeese 3, 9, 12, i

14, 15, 16, 19, 20, 21

$ 110(K)(5), 42 U.S.C. TALO(K)(S) ....cccccecssseceneeeseenenencnnes 3, 10, 16

§$ 112, 42 U.S.C. 7412 (1994 & Supp. TV 1998) ........csesee 15

40 C.F.R.:

Section 50.9 .... 3

Section 50.10 ..... ; 3

Section 51.121(e)()) ......... . 4

Miscellaneous:

62 Fed. Reg. (1977):

9 EE 4

p. 60,320 . cane 4

63 Fed. Reg. (1998):

p. 57,356 2,3,4

p. 57,359 eave 3

pp. 57,369-57,370 ......0.. 6

pp. 57,377-57,378 6, 11, 21, 22

p. 57,378 6

p. 57,379 6,7

p. 57,384 5, 10

pp. 57,387-57,398 10

pp. 57,392-57,394 11

ee. ST GT TD ccctestennecevesnenssesteninetannseansntintinnnnnitchenciteantiinins 18

pp. 57,396-57,398 18

pp. 57,399-57,403 6, 21, 22

Miscellaneous—Continued:

p. 57,400

p. 57,403

p. 57,404 .......

p. 57,423

p. 57,428

pp. 57,446-57,447 ......

p. 57,447

S. Rep. No. 95-127, 95th Cong.

, Ist Sess. (1977)

ee eeererereoreses

In the Supreme Court of the Gnited States

No. 00-445

APPALACHIAN POWER COMPANY, ET AL., PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY

No. 00-632

STATE OF MICHIGAN, ET AL., PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY

No. 00-633

STATES OF OHIO AND INDIANA, PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-61a)'

is reported at 213 F.3d 463.

! This brief responds to three petitions for certiorari filed in

this case: (1) Appalachian Power Co. v. EPA, No. 00-445 (filed

Sept. 20, 2000) (APC Pet.); Michigan v. EPA, No. 00-632 (filed Oct.

(1)

2

JURISDICTION

The judgment of the court of appeals was entered on

March 3, 2000. Petitions for rehearing were denied on

June 22, 2000 (Pet. App. 62a-65a). The petition in No.

00-445 was filed on September 20, 2000. The Chief

Justice extended the time for the States to file their

petitions for a writ of certiorari to and including

October 20, 2000, and the petitions in Nos. 00-632 and

00-633 were filed on that date. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

Petitioners seek review of a decision of the court

of appeals arising from an Environmental Protection

Agency (EPA) rulemaking under the Clean Air Act

(CAA), 42 U.S.C. 7401 et seg. The CAA, among other

things, directs EPA to develop National Ambient Air

Quality Standards (NAAQS) and encourages States to

implement the NAAQS through State Implementation

Plans (SIPs). 42 U.S.C. 7410. EPA promulgated a rule,

known as the “NOx SIP Call,” that required the SIPs of

22 States and the District of Columbia to be revised to

mitigate the interstate transportation of ozone. See 63

Fed. Reg. 57,356 (1998). Numerous petitioners chal-

lenged EPA’s rule through consolidated petitions for

review, and the court of appeals granted the petition in

part, but largely rejected petitioners’ pa to the

rule. See Pet. App. la-61a.

1. The NOx SIP Call requires certain States (in

order for their SIPs to remain acceptable under the

Act) to develop plans to reduce emissions of ozone

20, 2000) (Michigan Pet.); and Ohio & Indiana v. EPA, No. 00-633

(filed Oct. 20, 2000) (Ohio Pet.). For convenience, all citations to

“Pet. App.” refer to APC’s petition appendix.

3

precursor air pollutants that contribute significantly to

nonattainment of the NAAQS for ozone in “downwind”

States. See generally 63 Fed. Reg. at 57,356. Ground-

level ozone, which causes adverse health effects, is

created from the chemical reactions of precursor

pollutants in sunlight. Jd. at 57,359. For nearly two

decades, scientists have accumulated evidence that the

wind-borne movement of nitrogen oxides (NOx) and

other ozone precursors, often over long distances,

contributes to serious downwind ozone problems, most

notably in many of the major eastern urban centers.

Ibid. The NOx SIP Call represents the culmination of a

multi-year effort by Congress, EPA, and the States to

develop solutions to that chronic interstate ozone

pollution problem. See Pet. App. 8a-12a.

2. The CAA makes “the States and the Federal

Government partners in the struggle against air pollu-

tion.” General Motors Corp. v. United States, 496 U.S.

530, 532 (1990). EPA is authorized to set NAAQS for

air pollutants at levels requisite to protect public health

and welfare. 42 U.S.C. 7409. EPA has established

NAAQS for several pollutants, including ozone. 40

C.F.R. 50.9, 50.10. Once EPA promulgates a NAAQS,

each State’s SIP must provide for its implementation,

maintenance and enforcement. 42 U.S.C. 7410(a). If

the Administrator of EPA finds that an approved SIP

is “substantially inadequate” to attain or maintain the

NAAQS, mitigate adequately “interstate pollutant

transport,” or otherwise comply with the CAA, she is

authorized to “require the State to revise the plan as

necessary to correct such inadequacies” (i.¢., issue a

“SIP Call”). 42 U.S.C. 7410(k)(5). Section 110(a)(2)(D)

of the CAA, 42 U.S.C. 7410(a)(2)(D), sometimes refer-

red to as the “good neighbor” provision, requires that

all SIPs, inter alia, prohibit emissions of air pollutants

d

in amounts that would “contribute significantly to

nonattainment in, or interfere with maintenance by,

any other State with respect to any * * * [NAAQS].”

3. On November 7, 1997, EPA issued a notice of

proposed rulemaking for the NOx SIP Call, finding that |

22 States and the District of Columbia (for convenience,

the “23 States”) significantly contribute to nonattain-

ment of the ozone standard in downwind areas within

the meaning of the CAA’s good neighbor provision. 62

Fed. Reg. 60,318, 60,320 (1997).° At the same time,

EPA proposed to require each of the 23 States to revise

its SIP to demonstrate that total emissions, within each

State, of NOx—the most significant ozone precursor

responsible for ozone transported to other States—

would be reduced by the amounts determined to be

significant and, therefore, would not exceed an assigned

NOx emissions “budget” established by EPA. Ibid.

EPA published the final rule on October 27, 1998. 63

Fed. Reg. at 57,356. Like the proposal, the final rule

determined that the 23 States contribute significantly

to downwind ozone nonattainment and required each of

those States to submit SIP revisions containing control

measures sufficient to meet the State’s NOx budget. 40

C.F.R. 51.121(e)(1).

4. The final rule was premised, first and foremost, on

state-of-the-art computer modeling of air quality, show-

ing which upwind States were, in fact, substantial

enough contributors to nonattainment of the “1-hour”

»

~ The 23 States were Alabama, Connecticut, Delaware, the

District of Columbia, Georgia, Illinois, Indiana, Kentucky, Massa-

chusetts, Maryland, Michigan, Missouri, North Carolina, New

Jersey, New York, Ohio, Pennsylvania, Rhode Island, South

Carolina, Tennessee, Virginia, West Virginia, and Wisconsin. 62

Fed. Reg. at 60,320.

iain

5

ozone standard in downwind areas to warrant inclusion

in the SIP Call.’ For the proposal, EPA relied heavily

on modeling performed between 1995 and 1997 by the

Ozone Transport Assessment Group (OTAG), a work-

group with representatives from States, industry,

environmental organizations, and EPA. See Pet. App.

12a-13a. In response to comments arguing that the

OTAG modeling utilized for the proposal was not speci-

fic enough, EPA conducted additional, state-specific air-

quality modeling using two different modeling tech-

niques. Jd. at 13a. From that modeling, EPA compiled

detailed data summaries showing the magnitude, fre-

quency, and relative amount of each upwind State’s

emissions contributions to each downwind nonattain-

ment problem being studied. Jd. at 16a. That addi-

tional air quality analysis, fully documented in the

record for the final rule, confirmed EPA’s proposed

“significant contribution” finding as to the 23 States.

Id. at 13a; 63 Fed. Reg. at 57,384. As the court of

appeals correctly noted, in the course of the present

litigation, “no one quarrel[ed] either with [EPA’s] use

of multiple measures, or with the way it drew the line

at this stage.” Pet. App. 16a.

5. EPA then examined the cost-effectiveness of

available emissions controls in each of the 23 upwind

3 In the final rule, EPA also independently analyzed the need

for the SIP Call under an “8-hour” ozone standard that EPA issued

in 1997. See generally Pet. App. 6a-7a. However, in light of the

ongoing challenge to the 8-hour ozone standard in American

Trucking Ass’ns v. EPA, 175 F.3d 1027, reh’g granted in part and

denied in part, 195 F.3d 4 (D.C. Cir. 1999), cert. granted, 120 S. Ct.

2003, 2193 (2000) (ATA), EPA stayed the findings for the SIP Call

under the 8-hour standard, and the court of appeals accordingly

limited its review to the support for the SIP Call under the 1-hour

standard. Pet. App. 7a-8a.

6

States as part of its analysis in determining the amount

of the State’s emissions that were considered to

“contribute significantly” to downwind nonattainment,

as well as the corresponding emission reductions that

were needed to eliminate the significant contribution.

The remaining emissions became each of those States’

“NOx budgets,” i.e., the maximum amount of NOx

emissions expected after the States implement controls

necessary to eliminate the “significantly contributing”

emissions. Pet. App. 16a-17a. In effect, EPA set each

State’s NOx budget to reflect the amount of “highly

cost-effective” NOx emissions reductions EPA believed

would be available in that State. Jd. at 17a; 68 Fed.

Reg. at 57,377-57,378, 57,399-57,403. For purposes of

that analysis, which included review of extensive

emissions control data, EPA determined that “highly

cost-effective’ NOx emissions reductions are those that

cost no more than $2,000 per ton of NOx reduced. Pet.

App. 17a. EPA emphasized, however, that, in

developing SIP revisions to meet the NOx budgets,

States would be free to rely on any NOx emission

control measures they deemed appropriate, whether or

not they were the same controls assumed by EPA in

developing the budgets. Jd. at 42a; 63 Fed. Reg. at

57,369-57,370, 57,378.

EPA tested the efficacy of the proposed NOx emis-

sions budgets through further rounds of air quality

modeling. First, it conducted additional computer

modeling to ensure that the budgets would produce

appropriate downwind air quality improvements. See

63 Fed. Reg. at 57,379. That modeling confirmed that

the required reductions would, in fact, allow downwind

ozone nonattainment areas to make “appreciable pro-

gress towards attainment” and would not result in any

instances of “overkill,” i.e., upwind emissions reductions

7

that “are more than necessary to ameliorate downwind

nonattainment in every downwind area affected by that

upwind State.” Jbid. EPA also compared the air

quality and cost impacts of its proposed approach to

alternative approaches premised, for example, on

“varying levels of controls in different parts of the 23

jurisdictions.” Jd. at 57,423. EPA concluded, however,

that none of those alternatives would “provide either a

significant improvement in air quality or a substantial

reduction in cost.” Pet. App. 26a (quoting 63 Fed. Reg.

at 57,423). The court of appeals noted that petitioners

“offer[ed] no material critique of EPA’s methodology in

reaching this answer.” Pet. App. 26a.

6. Various States and industry groups challenged

the NOx SIP Call through consolidated petitions for re-

view in the court of appeals. Other States, industry

groups, and environmental groups intervened in sup-

port of the rule. The petitions raised myriad issues,

including the two issues that provide the basis for the

petitions for writ of certiorari: (1) whether cost-effec-

tiveness of emissions controls may be considered in

determining what level of emissions contributions are

“significant”; and (2) whether the CAA or EPA’s

interpretations of its provisions are so undefined as to

violate the nondelegation doctrine. The court denied all

of the petitions for review on those and other major

issues. Pet. App. la-56a. It vacated, however, certain

relatively minor aspects of the rule, which are not at

issue here.’ Judge Sentelle dissented. He concluded

4 On the basis of certain discrete record issues, the court of

appeals vacated the SIP Call as it applied to Wisconsin, Missouri,

and Georgia. The court also remanded the rule for EPA to recon-

sider issues respecting the definition of an electric generating unit

and a change in the control level assumed for large stationary

internal combustion engines. Pet. App. 56a.

8

that the relevant provisions of the CAA do not allow

EPA to consider cost of controls at all, and he would

have vacated the entire rule on that basis. /d. at 57a-

Gla. Petitioners sought rehearing and rehearing en

banc, primarily on the grounds articulated in the dis-

sent, but the court of appeals denied those petitions.

Id. at 62a-65a. Judge Sentelle would have granted the

petitions. bid.

ARGUMENT

The court of appeals correctly ruled that EPA may

consider the cost-effectiveness of pollution controls in

determining which emissions contribute significantly

to nonattainment of the ozone standard in downwind

areas. That statutory ruling is correct, does not conflict

with any decision of this Court or any other court of

appeals, and accordingly does not warrant review by

this Court. The court of appeals also was correct in

holding that neither the relevant provisions of the CAA —

nor EPA’s actions violate the nondelegation doctrine.

While the court of appeals’ analysis was premised, in

part, on a decision of that court that the federal govern-

ment has challenged in Browner v. American Trucking

Associations (ATA), No. 99-1257 (argued Nov. 7, 2000),

the judgment reached by the court of appeals is correct

and does not warrant further review, regardless of this

Court’s decision in ATA.’

° APC and Ohio suggest that the Court may wish to defer

action on their petitions pending a decision in ATA. APC Pet. i

n.*; Ohio Pet. 16 n.8. That action is not warranted as to either the

nondelegation issue or the cost issue in this case. The court of

appeals adopted a novel nondelegation standard in ATA, supra, at

1027, and the federal government has challenged that ruling

in Browner v. ATA, No. 99-1257. The court of appeals in this case,

however, has rejected petitioners’ nondelegation argument, even

9

1. The NOx SIP Call is EPA’s effort to implement

the CAA provisions that address an interstate problem

—the accumulation of ozone, which, for example,

blankets the northeastern United States on warm

summer days as a result of air pollution emitted by

numerous sources in nearly two dozen States east of

the Mississippi River. EPA identified, through

sophisticated air quality modeling, those States that

contribute to that problem, and it then identified as

“significant contributions” those emissions in excess of

what the emission levels would be if all of the

contributing States imposed the same level of highly

cost-effective emission controls on their sources.

As we have explained in ATA v. Browner, No. 99-

1426, the Clean Air Act prohibits consideration of the

projected cost of pollution controls when establishing

NAAQS, but generally allows those costs to be

considered at the implementation stage. See Br. for

Fed. Resp’ts at 5-7, 17-31, 45-47, ATA v. Browner,

supra. In accordance with that overall statutory

structure, EPA has reasonably construed the relevant

provisions of the Act—Section 110(a)(2)(D) and

under its A7‘A ruling. Pet. App. 26a-28a. The relevant provisions

of the CAA would satisfy nondelegation requirements under any

plausible standard. See pp. 20-22, infra. The cross-petitioners in

ATA v. Browner, No. 99-1426, contend that the CAA requires

EPA to consider the costs of pollution control when setting

NAAQS. Petitioners in this case contend, however, that the CAA

precludes EPA from considering those costs when determining

how to implement the CAA’s trans-boundary pollution provisions

set out in Section 110(a)(2)(D), 42 U.S.C. 7410(a)(2)(D). If the

cross-petitioners in ATA prevail on their cost issue, that result

would weaken, rather than bolster, petitioners’ cost argument in

this case. And if the ATA cross-petitioners do not prevail on their

cost issue, that result would preserve the state of the law that

provided the basis for the court of appeals’ decision in this case.

10

(k)(5)—to allow consideration of cost-effectiveness of

controls in determining which contributions to the

interstate ozone problem are “significant[]” for pur-

poses of the NOx SIP Call. See 42 U.S.C. 7410(a)(2)(D)

and (k)(5). The court of appeals properly upheld EPA’s

determination. Petitioners’ challenges rely heavily on

mistaken characterizations of the manner in which EPA

considered costs in the rulemaking. Because the court

of appeals’ decision is correct and does not conflict with

any decision of this Court or another court of appeals,

petitioners’ challenge to EPA’s construction of the

relevant provisions of the CAA presents no issue war-

ranting this Court’s review.

a. The petitions for writ of certiorari rest largely on

the mistaken assertion that the NOx SIP Call “relfies]

on cost-effectiveness, to the exclusion of air quality

effects, in assessing whether one state’s emissions con-

tribute ‘significantly’ to another state’s ozone non-

attainment air quality.” APC Pet. 14; see also, e.g.,

Michigan Pet. 12; Ohio Pet. 5-6. To the contrary, EPA

focused on air quality—not cost—as the principal basis

for determining which States have total emissions with

sufficient impacts on downwind ozone nonattainment to

warrant inclusion in the SIP Call. EPA’s determina-

tions were premised on state-specific, multi-dimen-

sional, air-quality modeling analyses that were fully

documented in the administrative record and mostly

unchallenged in this case. See pp. 4-7, supra; Pet. App.

12a-14a, 16a; 63 Fed. Reg. at 57,384, 57,387-57,398.°

6 That modeling allowed EPA to make careful, air-quality-

based distinctions among all upwind States whose emissions could

potentially impact a particular downwind area. In many instances,

EPA determined that the ambient impacts downwind from a parti-

cular upwind State’s emissions were so small as to not be “signifi-

cant” with regard to particular downwind nonattainment pro-

ial. |

11

As the court of appeals correctly recognized, only

after those determinations were made did EPA exa-

mine the amount of highly cost-effective NOx emissions

reductions available to develop the NOx budgets. Pet.

App. 16a-17a; see also 63 Fed. Reg. at 57,377-57,378.

That analysis was the principal factor only in deter-

mining the swbset of each relevant upwind State’s total

NOx emissions that should be eliminated as the “signi-

ficant contribution” to downwind nonattainment. See

Pet. App. 16a-17a. Furthermore, after EPA derived

the proposed NOx budgets, EPA conducted additional

air quality modeling, again fully documented in the

record and mostly unchallenged in this case. The

modeling showed that the required emissions reduc-

tions, as a whole, would have an “appreciable impact”

on downwind nonattainment and that there is no

instance where a required upwind emission reduction is

“more than necessary to ameliorate downwind non-

attainment.” 63 Fed. Reg. at 57,403, 57,446-57,447."

blems. See, e.g., 63 Fed. Reg. at 57,392-57,394 (comparing model-

ing data for upwind States that were, and were not, found to

contribute “significantly” to New York City’s nonattainment pro-

blem). The court of appeals pointed out that petitioners “really

[did] nothing more than quibble” with EPA’s modeling, and “no

one quarrel{ed]” with the overall analytical approach used by EPA

to interpret the data and determine significant contributions of

upwind States. Pet. App. 13a, 16a. One South Carolina utility

company did object to EPA’s findings respecting air quality

modeling for the State of South Carolina, but the court’s specific

rejection of the utility’s arguments illustrates the soundness of the

air quality modeling that EPA performed at that stage of its

analysis. See id. at 36a-37a.

7 EPA determined that, even after implementation of the SIP

Call, some “residual nonattainment” would likely persist for at

least one downwind area linked to each upwind State. See 63 Fed.

Reg. at 57,404, 57,447. Thus, if anything, EPA erred on the side of

12

Accordingly, and contrary to petitioners’ suggestions,

the question presented in this case is not whether EPA

may base a SIP Call exclusively (or primarily) on cost,

rather than air quality, considerations. Rather, the

question is whether EPA may use cost analyses to help

develop a fair, practical, and effective regulatory

approach supported—and bounded—by extensive and

mostly undisputed air quality modeling. The court of

appeals correctly answered that question.

_ b. The court of appeals ruled, on the basis of the

CAA and its legislative history, that EPA reasonably

construed Section 110(a)(2)(D). See Pet. App. 15a-25a.

EPA concluded that, when determining the amount of

each upwind State’s emissions that “contribute signifi-

cantly to nonattainment” in downwind States (42 U.S.C.

7410(aX(2)(D)), EPA could consider the level of emission

reduction that could be achieved in the upwind States

through cost-effective control measures. The CAA

_ neither requires nor prohibits EPA’s consideration of

that sensible benchmark as part of the process for

solving a complex, and highly fact intensive, interstate

pollution problem. As the court of appeals properly

recognized, EPA’s approach represents a reasonable

construction of its obligations under the relevant pro-

visions of the CAA. See Chevron, U.S.A., Inc. v.

NRDC, 467 U.S. 837, 842-844 (1984).*

In upholding EPA’s construction of the statute, the

court of appeals correctly observed that “[t]he term

under-control rather than over-control. EPA stated that it would

continue to monitor the progress made on ozone nonattainment

and, if necessary, “may establish new budget levels and allocation

mechanisms for the post-2007 timeframe.” 63 Fed. Reg. at 57,428.

8 The court of appeals correctly noted that no party argued

(and the court did not hold) that EPA was required to consider

costs under Section 110(aX2)(D). Pet. App. 17a-18a, 22a.

13

‘significant’ does not in itself convey a thought that

significance should be measured in only one dimension.”

Pet. App. 21a.’ The court explained that EPA is justi-

fied in construing the term “significant” to allow for

consideration of emission control costs when making

regulatory decisions in the context presented here. See

id. at 2la-25a. Furthermore, the CAA’s legislative

history indicates that, at least since 1977, Congress has

anticipated the need to take account of pollution control

costs and the economic incentives of the States that

contribute to, or are affected by, interstate pollution.”

EPA’s approach fulfills Congress’s objective to amelio-

rate the impact of interstate pollutant transport and to

do so in a way that equitably distributes the burdens

borne by all the States that are contributors to this

complex, regional problem.

c. Petitioners are mistaken in suggesting that

EPA’s approach conflicts with other decisions of the

courts of appeals. See APC Pet. 17-19; Michigan Pet.

11-12. They essentially argue, based on Judge

Sentelle’s dissent, that Congress clearly intended to

% At least one of the petitioners appears to agree with this

statement. See Ohio Pet. 10 (“It is true, as the court of appeals

noted, that the term ‘significant’ is inherently open-ended and is

susceptible of an interpretation that would consider costs of reduc-

tion as one of several factors in measuring ‘contributions’ that

require a regulatory response.”).

10 See S. Rep. No. 95-127, 95th Cong., Ist Sess. 41-42 (1977)

(noting the need to address the “serious inequities among several

States, where one State may have more stringent [SIP] require-

ments than another State,” and to “equalize the positions of the

States with respect to interstate pollution by making a source at

least as responsible for polluting another State as it would be for

polluting its own State”); see also id. at 42 (noting that “plants in

States with more stringent control requirements” are subject to a

“distinct economic and competitive disadvantage”).

14

preclude consideration of costs under Section

110(aX2)(D). See Pet. App. 59a-60a. The court of ap-

peals correctly rejected petitioners’ contention. Judge

Sentelle relied on cases such as American Petroleum

Institute v. EPA, 52 F.3d 1113 (D.C. Cir. 1995), and

Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995),

which recognize that, where a statutory provision

unambiguously confines an agency’s authority to the

satisfaction of a specified goal, or to the consideration of

a specified factor, the agency is not at liberty to take

regulatory action under that provision to effectuate

other goals, or to base its decision on other factors."

EPA did not violate that principle. EPA properly

focused the NOx SIP Call on the precise air quality

issue that is the subject of Section 110(a)(2)(D)—the

elimination of emissions that “contribute significantly”

to nonattainment of the NAAQS in downwind States.

EPA merely considered emission control costs as part

of its analysis. This case therefore does not pose the

question whether EPA can take regulatory action pre-

mised on a goal or factor different from that set forth in

the relevant statutory provision, nor whether EPA has

taken action exceeding its statutory authority. See

APC Pet. 16 (citing Bowen v. Georgetown Univ. Hosp.,

488 U.S. 204, 208 (1988)). Rather, the question here is

simply whether EPA may consider costs as part of an

effort to give meaningful effect to an undefined term in

the relevant provision—in this case, the phrase “contri-

'! See American Petroleum Inst., 52 F.3d at 1119 (finding that

the relevant statutory provisions unambiguously required that

regulation be “directed toward the reduction of VOCs and toxics

emissions”); Ethyl Corp., 51 F.3d at 1058 (finding that the relevant

statutory provisions unambiguously confined fuel additive waiver

determination to effects of additive on emission control devices).

15

bute significantly to nonattainment.” See Pet. App. 2la

(“The fundamental dispute is over the clarity of the

phrase ‘contribute significantly.’”). As the court of

appeals correctly recognized, that court’s previous de-

cisions support EPA’s determination. See id. at

21a-24a.

The court of appeals appropriately focused on cases

such as NRDC v. EPA, 824 F.2d 1146 (D.C. Cir. 1987)

(en banc). See Pet. App. 23a-24a. In NRDC, the court

considered challenges to EPA’s use of emission control

costs in setting an emission standard for viny] chloride,

which the CAA regulates as a “hazardous” air pollut-

ant. See CAA § 112, 42 U.S.C. 7412 (1994 & Supp. IV

1998). Section 112 provided, at that time, that hazard-

ous pollutant emission standards were to be set “at the

level which in [the Administrator’s] judgment provides

an ample margin of safety to protect the public health.”

824 F.2d at 1148. The court of appeals ruled that EPA

may consider emission control costs in making that

determination, explaining that “the phrase ‘to protect

the public health’ evinces an intent to make health the

primary consideration,” but that nothing in the statute

or its legislative history indicated any congressional

intent to preclude consideration of costs. Jd. at 1155."

The court of appeals in this case noted that it has

routinely applied its approach in NRDC to determine

when an agency may consider costs when making regu-

The court of appeals ultimately remanded EPA’s vinyl

chloride rule because the court found that EPA had “substituted

technological feasibility for health as the primary consideration.”

824 F.2d at 1164 (emphasis added); see also APC Pet. 7 (discussing

that aspect of the court’s decision). That concern, however, is not

present in this case. EPA’s consideration of costs was only one

component of its overall effort to implement Section 110(a)(2)(D)’s

air quality goals.

16

latory decisions. See Pet. App. 22a-23a.” Petitioners

have failed to identify, either here or in the proceedings

below, any persuasive evidence that Congress intended

to preclude EPA from considering costs under Section

110(a)(2)(D). See id. at 24a-25a."

d. There is no merit to the contentions of Michigan

and Ohio that EPA’s regulatory approach represents an

improper intrusion on state sovereignty. See Ohio Pet.

9-16; Michigan Pet. 14-19, 22-28. While the States’ argu-

ments are somewhat ambiguous, they seem to focus on

Section 110(k)(5)’s direction that EPA shall call for

revision of a State’s SIP “as necessary to correct * * *

inadequacies.” Ohio Pet. 11; Michigan Pet. 24-25. In

petitioners’ view, EPA’s analytical approach was so

blunt that it required some States to reduce emissions

3 See, e.g., George E. Warren Corp. v. EPA, 159 F.3d 616, 622-

624 (1998) (although improvement in air quality is the “overall

goal” of the CAA gasoline anti-dumping provisions, EPA per-

missibly considered economic factors since nothing “in the text or

structure” of the statute precluded such consideration), amended

on other grounds, 164 F.3d 676 (D.C. Cir. 1999); Grand Canyon Air

Tour Coalition v. FAA, 154 F.3d 455, 475 (D.C. Cir. 1998) (FAA

properly considered economic impacts on air tour industry as fac-

tor in developing regulation under statute providing for “sub-

stantial restoration of natural quiet” in Grand Canyon National

Park), cert. denied, 526 U.S. 1158 (1999).

4 In the court of appeals proceedings, petitioners advanced

conflicting theories of the extent to which Section 110(a)(2)(D)

allows consideration of costs. See Pet. App. 17a-20a. That diver-

gence continues here. Compare APC Pet. 16 (consideration of

costs precluded), and Michigan Pet. 8 (same), with Ohio Pet. 15

(costs may be considered, but only as a “secondary consideration”).

As the court of appeals aptly observed, “[algainst this backdrop, it

would be at the very least ironic for us to say there is ‘clear con-

gressional intent to preclude consideration of cost’ under 110(a)

(2)(D).” Pet. App. 20a (quoting NRDC v. EPA, 824 F.2d 1146 (D.C.

Cir. 1987) (en banc)).

17

more than “necessary,” while other States are tasked

with reducing emissions less than “necessary.” Ohio

Pet. 11-14; Michigan Pet. 25. Petitioners essentially

contend that EPA erred by not tailoring state NOx

budgets more precisely to the modeled impact of each

State’s emissions on downwind nonattainment areas.”

The court of appeals properly rejected the gist of that

argument on the basis of the rulemaking record. See

Pet. App. 25a-26a. The court observed that, before

selecting a relatively uniform analytical approach to

calculate each State’s NOx budget, EPA also modeled

approaches that introduced more regional variations,

similar to the approaches that petitioners now suggest.

Ibid. EPA found that the non-uniform approaches

provided no significant advantages over the uniform

approach, in terms of either air quality or cost, and that

“(t]he complaining states offer[ed] no material critique

of EPA’s methodology in reaching this answer.” Id. at

26a. The court correctly recognized that any regulatory

approach to an exceedingly complex interstate air pol-

lution problem could be attacked as having some

imprecision, particularly when viewed from a parochial

perspective. EPA considered various approaches

and reasonably selected one that struck an appropriate

balance among the relevant technical considerations.

15 While petitioners presented similar factual arguments to the

court of appeals, they were not presented in federalism terms. The

States’ federalism arguments below rested on a more sweeping

assertion that EPA’s decision to establish NOx budgets, in and of

itself, inappropriately restricted the States’ prerogatives to choose

emission control strategies. Pet. App. 37a-43a. The court of ap-

peals rejected that argument, and the States do not directly

challenge that aspect of the court decision here.

18

See ibid.; see also, e.g., Marsh v. Oregon Natural Res.

Council, 490 U.S. 360, 376-377 (1989)."°

e. There also is no merit to Michigan’s argument

that EPA’s consideration of cost-effectiveness of emis-

sion controls in the NOx SIP Call conflicts with this

Court’s decision in Union Electric Co. v. EPA, 427 U.S.

246 (1976). See Michigan Pet. 14-19. Michigan contends

that in Union Electric, the Court held that a SIP re-

vision submitted under Section 110(a)(2), 42 U.S.C.

7410(a)(2), may be evaluated only on the basis of

whether it meets the minimum conditions identified in

subparagraphs (A) to (H) of that provision and that

none of those minimum conditions includes considera-

tion of economic or technological feasibility. See Michi-

gan Pet. 15 (citing Union Elec., 427 U.S. at 257).

16 The complexity of developing a more “variable” type of

approach is apparent from the record. Each of the States subject

to the SIP Call was found to contribute “significantly” to 1-hour

ozone nonattainment in numerous (in some cases, as many as a

dozen or more) downwind States, and many “upwind” States are

themselves “downwind” receivers of pollution contributions from

other States. See 63 Fed. Reg. at 57,394-57,395. Overall, EPA

found that there were more than 150 significant upwind-to-

downwind state pollution contribution linkages under the 1-hour

ozone standard. See ibid. (Table II-5). Furthermore, the magni-

tude, frequency, and relative amount of the air pollution contri-

butions underlying each of those linkages varies considerably. See,

e.g., id. at 57,396-57,398 (examples of modeling data for linkages).

Petitioners do not identify any alternative approach from the

administrative record that would adequately address all the com-

plex dimensions of this regional problem. Instead, petitioners

suggest that EPA’s approach is imprecise based on selective

comparisons that fail to grapple with the larger and more complex

problems that EPA needed to address. See, e.g., Ohio Pet. 12-13

(comparing Indiana/New York and Pennsylvania/New York

linkages); Michigan Pet. 22-23 (same).

19

Michigan’s understanding of Union Electric is incor-

rect.

The Court’s Union Electric decision addressed a

sulfur dioxide SIP submitted under the requirement of

Section 110(a)(2)(A)(i), which provided, at that time,

that each State must formulate a SIP to achieve the

primary NAAQS “as expeditiously as practicable but

. .. in no case later than three years from the date of

approval of such plan.” 427 U.S. at 249-251. The Court

stated in broad terms that “Congress intended claims of

economic and technological infeasibility to be wholly

foreign to the Administrator’s consideration of a [SIP].”

Id. at 256. But the Court also made clear that its

holding concerning economic and technological feasi-

bility was focused on the type of SIP revision at issue.

Id. at 265 (“In sum, we have concluded that claims of

economic or technological infeasibility may not be

considered by the Administrator in evaluating a state

requirement that primary ambient air quality

standards be met in the mandatory three years.”)

(emphasis added). Union Electric expressly recognized

that consideration of “[e]eonomic and technological

factors” may be appropriate in circumstances other

than those directly at issue in that case. Jd. at 264-265

n.13. Michigan is accordingly mistaken in suggesting

that Union Electric precludes EPA from considering

economic and technological factors when taking actions

under Section 110(a)(2)(D).”

17 Michigan’s reliance on Train v. NRDC, 421 U.S. 60, 79

(1975), is similarly misplaced. See Michigan Pet. 25. The Train

decision—which held that certain amendments to SIPs should be

treated as “revisions” and not as “postponement(s]” and, therefore,

should be subject to more relaxed statutory requirements under

the version of the CAA then in effect, 421 U.S. at 98-99—has no

direct bearing on the issues presented here.

20

2. APc alone objects to the court of appeals’

decision on nondelegation grounds. See APC Pet. 19-

21. As APC recognizes, the court of appeals recently

relied on the nondelegation doctrine to invalidate

EPA’s promulgation of revised ozone and particulate

matter NAAQS. See ATA, supra. This Court has

granted the federal government’s petition for a writ of

certiorari challenging the court of appeals’ ATA

decision. See Browner v. ATA, No. 00-1297. Regard-

less of the outcome of that case, the court of appeals

was correct in ruling that Section 110(a)(2)(D) does not

violate the nondelegation doctrine.

The court of appeals concluded that its ATA ruling,

which requires agencies to identify an “intelligible

principle” when exercising discretion under broad

statutory grants, applies only to agency action that has

nationwide effect. See Pet. App. 26a-27a. The court

rejected petitioners’ nondelegation challenge primarily

on the ground that EPA’s interpretation of Section

110(a)(2)(D) has “confined the statute to a modest role.”

Id. at 28a. The Court need not rely on that particular

distinction, however, because Section 110(a)(2)(D) is

constitutional under any reasonable view of the non-

delegation doctrine. This Court’s decisions recognize

that the nondelegation doctrine is satisfied if a statu-

tory grant of authority itself sets forth an “intelligible

principle” that “clearly delineates the general policy,

the public agency which is to apply it, and the bounda-

ries of this delegated authority.” See Mistretta v.

United States, 488 U.S. 361, 372-373 (1989) (citation

omitted). Section 110(a)(2)(D) plainly satisfies that

standard. It quite specifically directs EPA to ensure

that each SIP contains adequate provisions to prevent

emission of air pollutants in amounts that, inter alia,

“contribute significantly to nonattainment in, or inter-

21

fere with maintenance by, any other State with respect

to any [NAAQS).” 42 U.S.C. 7410(a)(2)(D). Section

110(a)(2)(D) simply confers the normal quantum of dis-

cretion that agencies routinely exercise in administer-

ing statutory programs. See, e.g., Chevron U.S.A., 467

U.S. at 843-845.

APC’s further suggestion that the Court should

alternatively find “EPA’s selection of its $2000-per-ton

cut-off point” to be “arbitrary and capricious” is also

without merit. APC Pet. 20-21. APC did not make that

argument in the court of appeals and has not even

identified it as a question presented in its petition for a

writ of certiorari. See APC Pet. i. APC’s argument

rests on an out-of-context partial quotation from the

court of appeals’ nondelegation ruling. The court stated

that the $2000-per-ton threshold, viewed from the per-

spective of AT'A’s nondelegation ruling, is a “radically

incomplete line-drawing device.” Pet. App. 26a; APC

Pet. 20. The court nevertheless expressly acknow]l-

edged the extensive factual support for the $2000-per-

ton threshold in the administrative record. Pet. App.

27a.

Whatever the merits of the court of appeals’ non-

delegation ruling in A7'A, that decision does not alter

the established standard for determining whether an

agency’s action is arbitrary or capricious. See, ¢.g.,

Citizens to Preserve Overton Park, Inc. v. Volpe, 401

U.S. 402, 416 (1971) (a court is limited to examining

8 See Pet. App. 27a (“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”’) (quoting 63 Fed. Reg. at 57,400). EPA’s determination

was based on extensive analysis of emission control data that was

fully documented in the rulemaking record. See 63 Fed. Reg. at

57,377-57,378, 57,399-57,403.

22

whether the agency’s action “was based on a considera-

tion of the relevant factors and whether there has been

a clear error of judgment”). EPA amply justified its

choice of the $2000-per-ton threshold in the rulemaking

proceeding. 63 Fed. Reg. at 57,377-57,378, 57,399-

57,403. Hence, even if APC had raised a challenge to

EPA’s selection of that threshold under the arbitrary

or capricious standard in the court of appeals, the

challenge would have failed. There is no reason for this

Court to address, for the first time in this case, that

‘entirely factbound question.

CONCLUSION

The petitions for writ of certiorari should be denied.

Respectfully submitted.

SETH P. WAXMAN

GARY S. Guzy Solicitor General

General Counsel LOIS J. SCHIFFER

JAN TIERNEY Assistant Attorney General

HOWARD HOFFMAN JON M. LIPSHULTZ

Attorneys Attorney

Environmental Protection

Agency

JANUARY 2001