Respondents Brief — Environmental Protection Agency v. New York, 127 S. Ct. 2127 (2007) (No. 06-736)

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No. 06-736

IN THE

Supreme Court of the United States

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

Vv.

STATE OF NEW YORK, ET AL.,

Respondents.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the District of Columbia Circuit

THE ALLIANCE OF AUTOMOBILE

MANUFACTURERS AND CLEAN AIR

IMPLEMENTATION PROJECT RESPONSE

IN SUPPORT OF PETITION FOR

A WRIT OF CERTIORARI

WILLIAM H. LEwis, JR.

MORGAN, LEWIS & BocKIUSs LLP

L111 Pennsylvania Avenue, NW

Washington, DC 20004

(202) 739-3001

Clean Air Implementation Project

CHARLES H. KNAUSS

(Counsel of Record)

ROBERT V. ZENER

SHANNON S. BROOME

BINGHAM MCCUTCHEN LLP

3000 K Street, NW

Washington, DC 20007

(202) 424-7500

Alliance of Automobile Manufacturers

DISCLOSURE STATEMENT

The Alliance of Automobile Manufacturers (“the

Alliance”) is a non-profit, unincorporated organization of

individual automobile manufacturers operating facilities in

the United States. The Alliance has no outstanding shares or

debt securities in the hands of the public and does not have

any parent, subsidiary or affiliate that has issued shares or

debt securities to the public.

The Clean Air Implementation Project (““CAIP”) is a non-

profit trade association whose member companies represent

a broad cross-section of Amcrican industry. CAIP has no

outstanding shares or debt securities in the hands of the

public and does not have any parent, subsidiary, or affiliate

that has issued shares or debt securities to the public.

TABLE OF CONTENTS

Page

DISCLOSURE STA LENEING cocccscesccseserpsceccersconersese i

Fe Sar PURE CORE REI crenncnirevectvessencipiniinbteninctinnn ili

RESPONSE IN SUPPORT OF PETITION FOR A

ES Ce Gee FMRI settee reo setetencstivinnnictvichenennde l

REASONS FOR SUPPORTING EPA’S AND

MING OF 0 ee TEE seccancissescvincib eaceeenisiasepiitceincesannhetites l

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APPENDIX

LETTER FROM KENNETH ENG, USEPA TO DALE

CHOATE, MOBIL OIL CORPORATION (9/7/88)

MEM. FROM REICH, USEPA TO REGION VI

ENFORCEMENT DIVISION DIRECTOR

(10/3/78)

i

TABLE OF AUTHORITIES

FEDERAL CASES

BP America Production Co. v. Burton, No. 05-669,

Fs Bg BD escent dortenevnedieccvenniiosnies 7,8

Bragdon v. Abbott, 524 U.S. 624 (1998) 0.0... ..cccecccesseececeeeee 4

Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)......... 6

Hall v. EPA, 273 F.3d 1146 (9th Cir. 2001)... eee 4

Lorillard v. Pons, 434 U.S. 575 (1978)... ccessesecsereeseeeeees 4

New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006)........... 1,8

TWA v. Hardison, 432 U.S. 63 (1977) .........-.sscesecesseeeecesers 7

Young v. Community Nutrition Institute, 476 U.S.

974 (1986) .......... ade ait cictalhenadbhsnitdaisabtaestaidalictaseibsihinsbents 7

FEDERAL STATUTES

42 U.S.C. § 7401(b)(1)........0.. einleiabbdibia ceticdsiailinaneisanetot 6

42 U.S.C. § 7411 (a)(4) .......... ine ciledelsdpbieiih lial iach bicadian tase 5

A ia A PN icc tientbicp conntnsiansebalothagdeienviptceianciainantatiaia 6

ee Se ei A Fitri taeiainccseitctavinacsbaeatindcesiaidicensinitions 5

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ADMINISTRATIVE MATERIALS

CF Ae 5B sciersintsinintdanhinaeanas 7

36 FOG. MOG. 24875 CLOG. 29) TIT i eckcindcscttcssmecpicneeosssneed 6

39 Fed. Reg. 36,995 (Oct. 15, ISTE) cccscocsssisecscssssensesseseosvecs 6

- MISCELLANEOUS

Letter From Kenneth Eng, USEPA to Dale Choate, Mobil

GO COPRORMEID CII TIRED oesseisiccasnesosscinvidcepecactiniacctertion 4

Mem. from Reich, USEPA to Region VI Enforcement

Division Director (10/3/78) available at

http://www.epa.gov/Region7/programs/artd/air/

nsr/nsrmemos/m 100378.pdf

Cite WERIOIE TOG... F235 BD i) vaharocristiiestiessestictatecareel 4

EPA-450/2-77-017a, Standards Support and Environmental

Impact Statement Volume 1: Proposed Standards of

Performance for Stationary Gas Turbines (Sept. 1977)

available at http://nepis,epa.gov/pubtitle.htm (last

NE CII. FF RD cca cdc cose potnsalasecdoceriincastnediads 2

EPA-450/2-78-006a, Electric Utility Steam Generating

Background Information for Proposed Particulate

Emission Standards (July 1978) available at

http://nepis.epa.gov/pubtitle.htm (last updated

2 ae | SERRATE on TEMG seks: SRT prea MOEA Mito nlp Fe 4

EPA-450/3-85-025a, Caleiners and Dryers in Mineral

Industries: Background Information for Proposed

Standards (Oct. 1985) available at

http://nepis.epa.gov/pubtitle.htm (last updated

Be ig ER i icicic ddckncedaasivtciion ke vdsaodsesecaasencaaancin areiads 4

iV

RESPONSE IN SUPPORT OF

PETITION FOR A WRIT OF CERTIORARI

Pursuant to Supreme Court Rule 12.6, the Alliance of

Automobile Manufacturers (“the Alliance”) and the Clean

Air Implementation Project (“CAIP’’), intervenors below,

respectfully submit this response in support of the petitions

for a writ of certiorari of the United States Environmental

Protection Agency (“EPA”) and the Utility Air Regulatory

Group (“UARG”) in EPA v. State of New York, No. 06-736,

and UARG v. State of New York, No. 06-750, in which EPA

and UARG seek review of the decision of the United States

Court of Appeals for the District of Columbia Circuit in New

York v. EPA, 443 F.3d 880 (D.C. Cir. 2006) (“New York

IT’).' This response is being submitted within 20 days of

EPA’s petition having been docketed on November 27, 2006

and UARG’s petition having been docketed on November

29, 2006.

REASONS FOR SUPPORTING EPA’s AND

UARG’s PETITIONS

Both EPA and UARG have filed petitions for a writ of

certiorari seeking review of New York II. See EPA v. State of

New York, No. 06-736 (U.S. filed Nov. 27, 2006) and UARG

v. State of New York, No. 06-750 (U.S. filed Nov. 27, 2006).

The Alliance and CAIP were intervenors in New York IP

and support both of these petitions for the reasons stated

' EPA’s petition seeks review of the second of two decisions rendered

by the D.C. Circuit, both of which involved challenges to legislative rules

promulgated by EPA and were styled New York v. EPA.

? Counsel has been authorized to state that this brief also represents

the views of the American Chemistry Council, American Petroleum

Institute, American Forest & Paper Association, National Petrochemical

& Refiners Association, Corn Refiners Association, and the Portland

therein as well as due to the pervasive and negative effect

that the ruling of the D.C. Circuit will have and is having on

U.S. industry generally.

The Alliance and CAIP are concerned with the far-

reaching implicz:ions of the Court of Appeals decision,

which effectively would invalidate EPA’s long-standing

implementation of the modification element of the NSR

program. Members of the Alliance and CAIP have extensive

experience in the design, construction, and operation of

industrial facilities and with the types of activities necessary

for the safe, efficient and reliable operation of those

facilities, as well as the historical application of the NSR

program.

The petitions should be granted because the D.C. Circuit

opinion, in failing to give deference to EPA's long-standing

interpretation of the Clean Air Act and substituting its own

analysis which conflicts with this Court's recent teaching on

how similar language should be interpreted, threatens to play

havoc with the normal, efficient operation of Americar.

industry. The D.C. Circuit’s view could transform NSR

from what is primarily an expensive, one time new source

program ~ currently involving about 200 applications each

year — into a program under which most of America’s 22,000

existing major industrial plants repeatedly could trigger NSR

analyses. Existing industrial facilities must undertake

thousands of repair and replacement projects every year. If

those activities allow the facility to operate more than in the

recent past, the D.C. Circuit would conclude that they are

“any physical changes” that could trigger NSR.

Cement Association, which participated in the proceedings below as

members of the Equipment Replacement Rule Cvalition, an intervenor in

the proceedings.

This holding is contrary to how EPA has implemented its

NSR program and how industrial plants operate on a daily

basis. Industrial facilities are comprised of multiple pieces

of equipment that work together in a variety of ways to

produce usable goods, like cars. When investment is made

in an industrial plant, it is anticipated that further investment

and work will be required for it to serve the intended

purposes of bringing particular goods to market.

As equipment is used, it is subject to wear and tear, just

like a car or a house. As with cars and houses, it is expected

that certain activities must occur to keep the plant operating

safely, reliably and efficiently, while maintaining its

existing, permitted capacity. It is just this type of activity

that the D.C. Circuit decision could sweep into the concept

of “change” with its newly-announced rule of statutory

construction.

An example of the type of maintenance that the D.C.

Circuit’s opinion would classify as a “change” is the

replacement of components of gas turbines used in industrial

plants for power generation or natural gas pipelines. During

the turbine’s life, components like stator blades, turbine

nozzles, buckets, fuel nozzles, seals, and packings are

expected to be replaced. The D.C. Circuit’s opinion would

require an emissions de minimis analysis for each of these

activities for them to be excluded as routine replacement

even though EPA has recognized in issuing the New Source

Performance Standards (“NSPS”) for gas turbines that such

activities are not changes that could trigger modification

requirements.’ Based on the D.C. Circuit’s new rule of

statutory construction, arguably all of these activities would

> See EPA-450/2-77-017a, Standards Support and Environmental

Impact Statement Volume |: Proposed Standards of Performance for

Stationary Gas Turbines, 5-6 (Sept. 1977) available at

http://nepis.epa.gov/pubtitle.htm (last updated Dec. | 1, 2006).

tea

be considered “any” changes that must be evaluated for

purposes of NSR, notwithstanding EPA’s _ prior

determination (in 1977) that such activities are not changes.

EPA has reached similar conclusions regarding major

component replacements at other industrial facilities,

including refineries.’ Yet, the D.C. Circuit would effectively

undo these determinations, of which Congress was clearly

aware when it amended the Clean Air Act. See Hall v. EPA,

273 F.3d 1146, 1158 (9th Cir. 2001) (citing Bragdon v.

Abbott, 524 U.S. 624, 631 (1998); Lorillard v. Pons, 434

U.S. 575, 580 (1978)).

As another example, the replacement of worn out bearings

with new, improved versions may reduce the frequency of

breakdowns in heavy equipment and _ corresponding

unscheduled maintenance/repair. This, in turn, would enable

a company to lengthen the periods between scheduled

maintenance outages. Improved bearings do not change the

capability of the equipment — actual hourly emissions

capability remains the same. But they allow the process to

Operate more reliably (ie, with fewer equipment

breakdowns) such that annual emissions could increase

* See, e.g., Letter From Kenneth Eng, USEPA to Dale Choate, Mobil

Oil Corporation (9/7/88) (“[T]he replacement of the regenerator cyclone

does constitute routine maintenance.”); Mem. from Reich, USEPA to

Region VI Enforcement Division Director (10/3/78) available at

http://www.epa.gov/Region7/programs/artd/air/nst/nsrmemos/

m100378.pdf (last visited Dec. 15, 2006). (“Routine replacement means

the routine replacement of parts, within the limitations of

reconstruction.”); see also EPA-450/2-78-006a, Electric Utility Steam

Generating Background Information for Proposed Particulate Emission

Standards, 5-4 (July 1978) available at http://nepis.epa.gov/pubtitle.htm

(last updated Dec. 11, 2006), (Replacement of coal pulverizer does not

trigger modification rule.); EPA-450/3-85-025a, Calciners and Dryers in

Mineral Industries: Background Information for Proposed Standards, 5-2

(Oct. 1985) available at http://nepis.epa.gov/pubtitle.htm (last updated

Dec. 11, 2006); (Examples of RMRR include the “replacement or

refurbishing of components subject to high abrasion and impact.”).

because the equipment can operate for longer periods

between maintenance. If the equipment breaks down less

often, it may be able to operate a few more hours, days or

even a week a year depending on the equipment.

In the foregoing example, production would increase by

increasing hours of operation, but without increasing the

hourly emission rate or the actual hourly emissions capacity

of a unit. On large equipment, emissions increases on an

annual basis may well exceed a de minimis threshold and yet

the D.C. Circuit opinion would consider such replacements

to be “any” changes — after all the bearings are being

changed - subjecting the project to a detailed analysis of

whether such replacement is a modification of the equipment

that could trigger NSR.

NSR is reserved for brand new facilities and existing

facilities that undertake “physical changes” or “changes in

the method of operation” that increase emissions. 42 U.S.C.

§§ 7411(a)(4), 7501(4). In promulgating the rule at issue

here, EPA answered a key question: What is a change?

Implicit in this question is that there is a starting point

against which to evaluate an activity. For without a starting

point, it is impossible to know if a change will occur.

In the context of manufacturing plants, the relevant

starting point can only be the existing plant as designed to

operate over its lifetime. Plants are in a constant state of flux

in response to market demand, changing consumer tastes for

their goods, and wear and tear on production equipment.

They are designed to operate in a flexible manner. The D.C.

Circuit’s opinion ignores this fact and puts manufacturing

industry in a straightjacket of the most recent operations,

ignoring the investment made in equipment and emissions

controls when the plant was built. Such an approach is

wholly arbitrary and unrelated to the goals of the NSR

program to balance economic growth with environmental

reductions from new emitting capacity. 42 U.S.C.

§ 7401(b)(1).

That Congress could not intend the broad construction the

D.C. Circuit ascribes to the modification definition is also

clear based on its practical consequences. If an activity

triggers NSR permitting, the facility must apply for a permit

and retrofit mew source control technologies before

implementing the activity. It may also need to conduct air

quality modeling and purchase emission credits from another

plant. The permitting process can take a year or more. If the

activity is a necessary repair or replacement project, the

result could be an extended shutdown of the facility until the

project could be undertaken. Such an approach would

represent a fundamental, drastic change in how industry

operates, and would frustrate Congress’ purposes of

encouraging (not halting) economic growth.

Beginning in 1971, EPA issued regulations and guidance

clarifying that a “change” does not include activities

consistent with facility design.° Thus, “routine maintenance,

* The purposes of PSD inetude balancing environmental progress and

economic growth. 42 U.S.C. § 7470(3); see also Chevron, U.S.A., Inc. v.

NRDC, 467 U.S. 837, 866 (1984) (“We hold that the EPA’s definition of

the term ‘source’ is a permissible construction of the statute which seeks

to accommodate progress in reducing air pollution with economic

growth.”).

° From the beginning of the NSPS program, EPA explained that, “in

keeping with the intent of section 111 of controlling facilities only when

they constitute a new source of emissioris,” the modification regulations

were “limited to increases in actual emissions,” which EPA defined in

terms of “increased production capacity’ (not increased hours of

operation). 39 Fed. Reg. 36,945, 36,946-47 (Oct. 15, 1974); see also 36

Fed. Reg. 24,875, 24,876 (Dec. 23, 1971) (“Increases in production rates

up to design capacity will not be considered a modification.”); 39 Fed.

Reg. at 36,947 (The modification rule is “sensitive to increased

production capacity and ... automatically allow([s] increases in operating

hours.”).

79 66°

repair, and replacement,” “increase in the production rate, if

such increase does nct exceed the operating design capacity

of the affected facility,” “increase in the hours of operation,”

and “use of an alternative fuel or raw material if ... the

affected facility is designed to accommodate such alternative

use” are not “changes.” 40 C.F.R. § 60.2(h); 36 Fed. Reg. at

24,877. The common denominator among these provisions is

they reflect the contemplated normal operation consistent

with how that unit was designed, constructed and permitted

to operate.

Many of these activities increase emissions. For

example, moving from one fuel to another would arguably

constitute “any change” under the D.C. Circuit’s

construction and would clearly have the possibility of

increasing emissions by more than a de minimis amount, e.g.,

if a plant moves from gas to oil. Yet, all of these exclusions

were in place when Congress amended the Clean Air Act,

and Congress must be presumed to have known this fact.

The D.C. Circuit opinion simply fails to explain how its view

of the statute can be squared with these long-standing.

congressionally-endorsed exclusions.’

Finally, the D.C. Circuit opinion is also contrary to this

Court’s recent opinion in BP America Production Co. v.

Burton, No. 05-669, slip op. (U.S.. Dec. 11, 2006). which

stated:

Petitioners contend that their broader interpretation

of the statutory term “action” is supported by the

reference to “every action for money damages”

founded upon “any contract.” 28 U.S.C. § 2415(a)

(emphasis added). But the broad terms “every” and

” See EPA Pet. at 16 (citing TWA v. Hardison, 432 U.S. 63, 76 0.11

(1977); Young v. Cmty. Nutrition Inst., 476 U.S. 974, 983 (1986)).

“any” do not assist petitioners, as they do not

broaden the ordinary meaning of the key term

“action.”

Id. at 7. This Court found that although the term “action”

sometimes includes administrative actions, its ordinary

usage is limited to judicial proceedings. In contrast, the D.C.

Circuit held in this case that “when Congress places the

word ‘any’ before a phrase with several common meanings,

the statutory phrase encompasses each of those meanings”

and the agency cannot pick among them, i.e., cannot pick a

narrow one over a broad one. New York II, 443 F.3d at 888.

In BP America, this Court found the opposite, in fact, that

notwithstanding the use of the word “any,” the statute at

issue compelled a more limited definition of the word action

consistent with the statutory context, structure and purpose.

Contrary to this Court’s holding in BP America, the D.C.

Circuit holds that the term “any” does in fact broaden the

meaning of the word “change” and take it out of context

from the normal manufacturing operations of a plant.

The Alliance and CAIP, therefore, agree with EPA and

UARG that granting certiorari in this case is important to the

proper administration of the Clean Air Act and the continued

efficient and reliable operation of industry. Not only does

the D.C. Circuit’s erroneous new approach to statutory

construction in New York I/ threaten “to put EPA into a

regulatory straightjacket that Congress did not intena, with

few if any options to tailor the program to changing

conditions and policies,” EPA Pet. at 21, it also threatens to

hamstring American industry and prevent it from

maintaining and repairing existing facilities. The

“environmental benefits” the D.C. Circuit opinion would

legislate are clearly outweighed by the msks of poorly

operating facilities and the environmental costs of equipment

that is not maintained and replaced as needed.

~ CONCLUSION

The petition for writ of certiorari should be granted.

December 18, 2006

od

Respectfully submitted,

CHARLES H. KNAUSS

(Counsel of Record)

ROBERT V. ZENER

SHANNON S. BROOME

BINGHAM MCCUTCHEN LLP

3000 K Street, NW

Washington, DC 20007

(202) 424-7500

Alliance of Automobile Manufacturers

WILLIAM H. LEwiIs, JR.

MORGAN, LEwis & BOCKIUS LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

(202) 739-3001

Clean Air Implementation Project

APPENDIX

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY

Region I]

26 Federal Plaza

New York, New York 10278

Sep 7, 1988

Mobil Oil Corporation

Paulsboro Refinery

Paulsboro, New Jersey 08066

Attention: Mr. Dale E. Choate, Refinery Manager

Dear Mr. Choate:

This memorandum is written in response to your request

dated February 26, 1988 concerning EPA’s concurrence on

the scheduled replacement of the regenerator cyclones in the

Fluid Catalytic Cracking Unit (FCC), at the Paulsboro

refinery. Additional information concerning this project was

submitted to Mr. William J. O’Sullivan, Assistant Director of

the New Jersey Department of Environmental Protection

(“NJDEP”), on May 23, 1988.

EPA, Region II, has reviewed this information, together

with the information provided in your February 26, 1988

submittal and has determined that the replacement of the

regenerator cyclones does constitute routine maintenance.

During this turnaround, repairs and replacement ci FCC

components at the Paulsboro refinery, are not considered

modifications under §60.14(e)(1), therefore, this unit is not

subject to New Source Performance Standards (“NSPS”) for

sulfur oxides (“SO,”).

If you have any further questions, please contact Jose A.

Rodriguez at (212)-264-6686.

Sincerely,

/s/

Kenneth Eng, Chief

Air Compliance Branch

cc: W.O’Sullivan, Assistant Director

New Jersey Department of

Environmental Protection

ENVIRONMENTAL PROTECTION AGENCY

OCT 3, 1978

MEMORANDUM

Subject: PSD - Routine Maintenance Repair and

Replacement

From: Director

Division of Stationary Source Enforcement

To: Howard G. Bergman, Director

Enforcement Division (6AE)

Region VI

This is in response to your memo of September 15, 1978,

requesting an interpretation of the term “routine

maintenance, repair and replacement” as it is used in

§52.21(b)(2)(i). In particular you request guidance on what

should be considered routine replacement. Routine

replacement means the routine replacement of parts, within

the limitations of reconstruction, and would not include the

replacement of an entire facility (i.e., an old heater at a

petrochemical plant which has ended its normal useful life.

If you have any further questions, please contact Libby

Scopino at FTS 755-2564.

/s/

Edward E. Reich

cc: Mike Trutna

Peter Wyckoff