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

2

No. 06-736

jn The

Supreme Court of the Gnited States

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UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY,

Petitioner,

Vv.

STATE OF NEW YORK. ET AL..

Respondents.

.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The District Of Columbia Circuit

.

BRIEF OF VIRGINIA, ALABAMA, ALASKA, ARKANSAS,

KANSAS, MISSOURI, NEBRASKA, NORTH DAKOTA,

SOUTH DAKOTA, UTAH, AND WYOMING AS

RESPONDENTS IN SUPPORT OF THE PETITION

o

ROBERT FL. MCDONNELL WILLIAM C. MIMS

Attorney General of Virginia Chief Deputy Attorney

: —_ General

WILLIAM FE. THRO ;

State Solicitor General RICHARD B. CAMPBELL

Counsel of Record Deputy Attorney General

STEPHEN R. MCCULLOUGH ROGER L. CHAFFE

Deputy State Solicitor CARL JOSEPHSON

General Senior Assistant Attorneys

General

OFFICE OF THE ATTORNEY

GFENERAL

900 East Man Sireet

Richmond. Virginia 23219

December 18, 2006 (S04) 786-2436

(S04) 786-1991 (facsimile)

Counsel for the Commonwealth of Virginia

| Additional Counsel Listed On Inside Of Cover |

Cem hE LAW BRIER PRINTING C08 sen

one NPG eon keer. tre | a

TROY KING

Attorney General of Alabama

KEVIN NEWSOM

Solicitor General

ROBERT TAMBLING

Chief, Environmental

Division

State House

11 South Union Street

Montgomery, Alabama 36130

CRAIG J. TILLERY

Acting Attorney General

of Alaska

STEVEN E. MULDER

Chief Assistant Attorney

General

1031 West 4th Avenue,

Suite 200

Anchorage, Alaska 99501

DustTIN MCDANIEL

Attorney General

of Arkansas

TERESA MARKS

Deputy Attorney General

CHARLES MOULTON

Senior Assistant Attorney

General

KENDRA AKIN-JONES

Assistant Attorney General

323 Center Street, Suite 200

Little Rock, Arkansas 72201

PAUL MORRISON

Attorney General of Kansas

Davin W. Davies, I]

120 S.W. 10th Avenue,

2nd Floor

Topeka, Kansas 66612

JEREMIAH W. (JAY) NIXON

Attorney General of Missour!

JAMES R. LAYTON

Missouri State Solicitor

JOSEPH P. BINDBEUTEL

Chief Counsel, Agriculture

and Environment Division

TIMOTHY P. DUGGAN

Assistant Attorney General

227 W. High Street

Post Office Box 899

Jefferson City, Missouri

65102

JON C. BRUNING

Attorney General of Nebraska

DAVID COOKSON

Special Counsel to the

Attorney General

NATALEE J. HART

Assistant Attorney General

2115 State Capitol

Post Office Box 98920

Lincoln, Nebraska 68509

WAYNE STENEHJEM

Attorney General

of North Dakota

LYLE WITHAM

Assistant Attorney General

600 Kast Boulevard Avenue.

Dept. 125

Bismarck, North Dakota

HRDOH

LAWRENCE EE. LONG

Attorney General

of South Dakota

ROXANNE GIEDD

Deputy Attorney General

1302 E. Highway 14, Suite 1

Pierre, South Dakota 57501

MARK L. SHURTLEFF

Utah Attorney General

Fred G. Nelson

Assistant Attorney General

160 East 300 South,

5th Floor

Salt Lake City, Utah 84114

PATRICK J. CRANK

Attorney General

of Wyoming

JAY A. JERDE

Deputy Attorney General

NANCY E. VEHR

Senior Assistant Attorney

General

123 Capitol Building

Cheyenne, Wyoming 82002

QUESTION PRESENTED

Whether the court of appeals erred in invalidating an EPA

rule on the ground that the phrase “any physical change”

in the definition of “modification” in Section 111(a)(4) of

the Clean Air Act, 42 U.S.C. § 7411(a)(4), unambiguously

requires EPA to adopt the broadest meaning of the phrase?

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TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Page

CASES

Chevron, USA v. Natural Resources Defense

Council, Inc.,

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Davis v. Michigan Dep't of Treasury,

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Knudsen v. Liberty Mut. Ins. Co.,

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Middlesex County Sewage Auth. v.

National Sea Clammer’s Ass’n,

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New York v. EPA,

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Nixon v. Missouri Mun. League,

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Small v. United States,

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STATUTES

42 U.S.C. §§ 7401 through 7671q

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TABLE OF AUTHORITIES -— Continued

CODE OF FEDERAL REGULATIONS

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RULES

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FEDERAL REGISTER

Environmental Protection Agency,

Prevention of Significant Deterioration (PSD)

and Non-Attainment New Source Review (NSR);

Equipment Replacement Provision of the Routine

Maintenance Repair and Replacement Exclusion,

68 Fed. Reg. 61248 (Oct. 27, 2003) ..............csssseeercereeeeees 3

OTHER AUTHORITIES

Environmental Protection Agency,

New Source Review: Report to the President (2002)......... 4

BRIEF OF VIRGINIA, ALABAMA, ALASKA, AR-

KANSAS, KANSAS, MISSOURI, NEBRASKA,

NORTH DAKOTA, SOUTH DAKOTA, UTAH,

AND WYOMING AS RESPONDENTS IN

SUPPORT OF THE PETITION

Virginia, Alabama, Alaska, Arkansas, Kansas, Mis-

souri, Nebraska, North Dakota, South Dakota, Utah, and

Wyoming (collectively “Intervening States”) were parties

in the court of appeals and, thus, technically are Respon-

dents in this Court. See Sup. Ct. R. 12.6 (“All parties other

than the petitioner are considered respondents. ...”). The

Intervening States entered this litigation to support the

United States Environmental Protection Agency (“EPA”)

and they continue to believe EPA’s position is correct.

Therefore, the Intervening States ask this Court to grant

the Petition for the reasons stated in EPA’s Petition for

Certiorari. See Sup. Ct. R. 12.6 (“a response supporting the

petition shall be filed within 20 days after the case is

placed on the docket”).

In the event this Court grants certiorari, the Interven-

ing States will file a Brief on the Merits as Respondents

supporting the Petitioner. See Sup. Ct. R. 25.1 (“Any

respondent ... who supports the petitioner ... shall meet

the petitioner’s . . . time schedule for filing documents.”).

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STATEMENT

As explained in more detail in the Petition, this

matter involves a challenge by New York, California,

Connecticut, Delaware, Illinois, Maine, Maryland, Massa-

chusetts, New Hampshire, New Jersey, New Mexico,

Pennsylvania, Rhode Island, Vermont, Wisconsin, and the

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District .of Columbia as well as various local governments

and private entities (collectively “New York”) to the Envi-

ronmental Protection Agency’s regulations for determining

when the Clean Air Act’s New Source Review provisions

apply. Specifically, New York contends that 40 C.FR.

§§ 52.21(b)(2)Gii)(a) and 52.21(cc) which is the Equipment

Replacement Provision of the Routine Maintenance,

Repair, and Replacement Exclusion (“the Rule”), is invalid.

The Clean Air Act, 42 U.S.C. §§ 7401 through 7671q,

provides for a pre-construction permitting program re-

ferred to as New Source Review. See 42 U.S.C. §§ 7475 and

7503. The New Source Review program applies in areas

where air quality does not meet the National Ambient Air

Quality Standard promulgated by EPA for a specified air

pollutant and in areas that do meet the National Ambient

Air Quality Standard or are unclassifiable. Jd.

Activities at existing stationary sources for which a

“pre-construction” permit may be required are those that

constitute a “modification” of the source.’ Routine mainte-

nance, repair, and replacement have been excluded from

New Source Review requirements since the program’s

inception. In the challenged Rule, EPA provided a category

* For New Source Review purposes, as provided by 42 U.S.C.

§ 7479(2\(C) and 42 U.S.C. § 7501(4), the term “modification” is defined

as:

The term “modification” means any physica] change in, or

change in the method of operation of, a stationary source

which increases the amount of any air pollutant emitted by

such source or which results in the emission of any air pol-

lutant not previously emitted.

42 U.S.C. § 7411(a)(4).

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of equipment replacement activities that are not subject to

major New Source Review requirements under the routine

maintenance, repair, and replacement exclusion. Envi-

ronmental Protection Agency, Prevention of Significant

Deterioration (PSD) and Non-Attainment New Source

Review (NSR); Equipment Replacement Provision of the

Routine Maintenance Repair and Replacement Exclusion,

68 Fed. Reg. 61248, 61248-49 (Oct. 27, 2003). As provided

in the challenged Rule, replacement of broken or deterio-

rating equipment at a stationary source is not a modifica-

tion of that source if: (1) the replacement equipment is

identical or functionally equivalent to the equipment being

replaced; (2) the source’s basic design does not change; and

(3) it does not cause emissions in excess of any Clean Air

Act emission limitation to which the source is subject.

Even if the project meets all of these criteria, however, the

permitting authority must still review the project as a

potential modification if the project is very expensive (i.e.,

if the cost of the replacement equipment exceeds twenty

percent of the cost of a comparable new process unit). 40

C.F.R. § 52.21(cc).

In the court below, the Intervening States argued that

the Rule serves two important purposes. First, the Rule

provides a much-needed clarification of the meaning of the

terms “modification” and “physical change” in the Equip-

ment Replacement Provision of the Routine Maintenance,

Repair, and Replacement Exclusion in the New Source

Review Program. The bright-line threshold established by

the Rule will give States and regulated entities the regula-

tory certainty needed to make rational choices about

environmental and energy impacts. See Knudsen v. Liberty

Mut. Ins. Co., 411 F.3d 805, 806 (7" Cir. 2005) (“[T]he first

virtue of any jurisdictional rule is clarity and ease of

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implementation.”). Second, the Rule removes any incentive

for the owners and operators of generating facilities to

delay the routine replacement of equipment. Although

making such replacements improves the reliability, effi-

ciency, and safety of generating facilities, owners and

operators frequently delay such replacement because they

fear that the New Source Review requirements will apply.

See Environmental Protection Agency, New Source Review:

Report to the President 30-31 (2002). The Rule ensures

that replacement decisions are based on reliability, effi-

ciency, and safety considerations.

Ultimately, the District of Columbia Circuit found

that the Rule was invalid, finding it “contrary to the plain

language of” the definition of “modification” in the Clean

Air Act. The court of appeals emphasized that the statu-

tory definition of modification uses the term “any physical

change,” 42 U.S.C. § 7411(a)(4) (emphasis added). “[W)hen

Congress places the word ‘any’ before a phrase with

several common meanings, the statutory phrase encom-

passes each of those meanings. ...” New York v. EPA, 443

F.3d 880, 888 (D.C. Cir. 2006). Thus, “[allthough the

phrase ‘physical change’ is susceptible to multiple mean-

ings, the word ‘any’ makes clear that activities within each

of common meanings of the phrase are subject to [New

Source Review] when the activity results in emission

increase.” Jd. at 890. Moreover, the District of Columbia

Circuit found that the EPA interpretation was contrary to

history and the structure of the Act. Jd. Subsequently, the

court of appeals denied rehearing en banc.

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REASONS FOR GRANTING THE WRIT

Certiorari should be granted for two reasons. First,

the legal effect of the lower court’s ruling is far reaching.

The court of appeals effectively held that when Congress

uses the word “any” in a statute to modify an ambiguous

term, an agency’s discretion to construe statutory terms is

eliminated. The agency must adopt the broadest possible

interpretation of a phrase that is otherwise ambiguous.

Such a result contradicts the principle that a statutory

term must be construed in context, rather than isolation.

See Davis v. Michigan Dep't of Treasury, 489 U.S. 803, 809

(1989). Indeed, this Court repeatedly has recognized that,

in some contexts, the word “any” can have something less

than the broadest possible meaning. See Small v. United

States, 544 U.S. 385, 388 (2005); Nixon v. Missouri Mun.

League, 541 U.S. 125, 132 (2004); Middlesex County

Sewage Auth. v. National Sea Clammer’s Ass’n, 453 U.S. 1,

15 (1981). Thus, it is possible that “any physical modifica-

tion” means something less than all conceivable physical

modifications. Moreover, by requiring the broadest possi-

ble construction whenever the term “any” is used with an

admittedly ambiguous term, the lower court contradicted

the principles of Chevron, USA v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984).

Second, the practical effect of the District of Columbia

Circuit ruling is to invalidate a significant EPA regulatory

initiative that was quite important to utilities with coal

burning power plants and to States that have such plants

and/or produce significant amounts of coal. Prior to the

EPA’s attempt to promulgate the Rule, application of the

routine maintenance exclusion depended upon a multi-

factor case-by-case determination that was uncertain and

inconsistent. The new Rule was an attempt to establish a

bright-line standard that would result in certainty and

consistency.

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CONCLUSION

For the reasons stated above and in the Petition itself,

the Petition for Certiorari should be GRANTED.

Respectfully submitted,

ROBERT F. MCDONNELL WILLIAM C. MIMS

Attorney General of Chief Deputy Attorney

Virginia General

WILLIAM E. THRO RICHARD B. CAMPBELL

State Solicitor General Deputy Attorney General

Counsel of Record Rocrr L. CHAPFE

STEPHEN R. MCCULLOUGH CARL JOSEPHSON

Deputy State Solicitor Senior Assistant Attorneys

General General

OFFICE OF THE ATTORNEY

GENERAL

900 East Main Street

Richmond, Virginia 23219

(804) 786-2436

(804) 786-1991 (facsimile)

December 18, 2006

Counsel for the Commonwealth of Virginia

[Additional Counsel Listed On Inside Of Cover]