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

i Ti ont Oi

iA ie |

| -PRBS-ap |

OFFICE oF THE CLE}

a eid | wLEHK

SUPREME COURT, U.S.

In the Supreme Court of the Gnited States

PA ey

oreo

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, PETITIONER

Vv.

STATE OF NEW YORK, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REPLY BRIEF FOR THE PETITIONER

PAUL D. CLEMENT

Solicitor General

Counsel of Record

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

TABLE OF CONTENTS

A. The common term “any” does not, by itself,

dispel ambiguity in the terms it modifies ........... 2

B. The Clean Air Act’s definition of “modification”

does not unambiguously require the broadest

meaning of “physical change” ...............-+65- 5

C. The question presented warrants review ........... 8

TABLE OF AUTHORITIES

Cases:

Alabama Power Co. v. Costle, 636 F.2d 323 (1979) ....... 2

BP Am. Prod. Co. v. Burton, 127 S. Ct. 638 (2006) .... 3,4

Brown v. Gardner, 513 U.S. 115 (1994)... 0.2.0.2... 2 0 ee 6

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

CAR voc ores orien ese 3, 4, 10

Engine Mfrs. Ass’n v. South Coast Air Quality

Momt. Diat., 641 U.S. 246 (D000)... cc ccccccccscsscece 4

Flora v. United States, 362 U.S. 145 (1960) .......... 2,4

National Cable & Telecomms. Ass’n v. Brand X

Internet Servs., 1258S. Ct. 2688 (2005) .............. 3

New York v. EPA, 413 F.3d 3 (D.C. Cir. 2005) .......... 2

Nixon v. Missouri Mun. League, 541 U.S. 125 (2004) .... 2

South Fla. Water Mgmt. Dist. v. Miccosukee Tribe of

Fadia, BES US. TEGO) cncetacineiewaveias 5

Statutes and regulation:

TO UA, DO oo ocicctncacscuvhevekeseavans em 3

CURL. FEL sc ccabacvaccursscerscnieiieee 4

II

Statutes and regulation—Continued: Page

os ow os a abo une eimes 60.49 Ko 2,7

ai is we dn entus ves vessecneesesasiue 6

NOE) Vos nvvesscccvecccesscwesecencs 10

Miscellaneous:

67 Fed. Reg. 80,292-80,293 (2002) .............0.ee eee 7

a 7

In the Supreme Court of the Gnited States

No. 06-736

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, PETITIONER

v.

STATE OF NEW YORK, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REPLY BRIEF FOR THE PETITIONER

By holding that “any physical change” is unambigu-

ous even though “physical change” is ambiguous (Pet.

App. 5a-7a), the court of appeals contravened settled

principles of statutory construction and this Court’s

cases construing the term “any.” Under ordinary inter-

pretive principles, “any physical change” is subject to

multiple meanings—a point underscored by regulations

that the Environmental Protection Agency (EPA) pro-

mulgated before Congress adopted the statutory New

Source Performance Standards (NSPS) definition of

“modification” for the New Source Review (NSR) pro-

gram. The court of appeals’ contrary holding would not

only invalidate this important rulemaking, it would also

hamstring EPA’s ability to implement the NSR program

in the future and call into question numerous longstand-

ing aspects of that program. The decision would also

pose a substantial threat to the interpretive discretion

of all agencies charged with administering statutes that

use the common term “any.”

(1)

A. The Common Term “Any” Does Not, By Itself, Dispel

Ambiguity In The Terms It Modifies

The court of appeals fundamentally erred by holding

that “any physical change” is unambiguous even though

“physical change” is ambiguous. See Pet. App. 5a-7a.

Although respondents argue (Br. in Opp. 8) that the

court of appeals did not rely solely on the word “any,”

that court, in fact, held that “[b]ecause Congress used

the word ‘any,’ EPA must apply NSR whenever a source

conducts an emission-increasing activity that fits within

one of the ordinary meanings of ‘physical change.’” Pet.

App. 7a. And again: “[W]hen Congress places the word

‘any’ before a phrase with several common meanings,

the statutory phrase encompasses each of those mean-

ings; the agency may not pick and choose among them.”

Id. at 12a; see id. at 6a, 17a.”

As this Court has explained, however, “‘any’ can and

does mean different things depending upon the setting.”

Nixon v. Missouri Mun. League, 541 U.S. 125, 132

(2004). Even when “any” is used as a catchall, it does

not “define what it catches.” Flora v. United States, 362

y Although the court of appeals noted that Congress limited the

definition of “modification” to physical changes that “increase{| the

amount of any air pollutant” (42 U.S.C. 7411(a)(4)), the court discussed

the latter clause only after deeming the statute unambiguous because

it uses the word “any.” See Pet. App. 1la-12a. Moreover, the require-

ment that a physical change increase air pollution in order to be con-

sidered a “modification” has no bearing on the meaning of “any physical

change.” Instead, increasing air pollution is a separate aspect of the

definition of “modification.” That separate aspect was the subject of the

D.C. Circuit's decisions in New York v. EPA, 413 F.3d 3 (2005), and

Alabama Power Co. v. Costle, 636 F.2d 323, 399-400 (1979), and is now

before this Court in Environmental Defense v. Duke Energy Corp.. No.

05-848 (argued Nov. 1, 2006).

3

U.S. 145, 149 (1960). Just this Term, this Court held

that a statute’s “reference to ‘every action for money

damages’ founded upon ‘any contract’” did not include

administrative (as opposed to judicial) actions, because

the terms “‘every’ and ‘any’ * * * donot broaden the

ordinary meaning of the key term ‘action.’” BP Am.

Prod. Co. v. Burton, 127 8. Ct. 638, 644-645 (2006) (quot-

ing 28 U.S.C. 2415(a)). So too here, “any” does not un-

ambiguously require the broadest reading of the term

“physical change.”

The court of appeals’ contrary holding appears to be

unprecedented. While this Court has occasionally read

statutes broadly based in part on their use of the term

“any,” the Court has never rejected an agency’s inter-

pretation on that ground. Rather, in those cases the

Court was generally making its own determination of

the best reading of a statute outside of the framework

proscribed by Chevron U.S.A. Inc. v. NRDC, 467 U.S.

837 (1984). Pet. 12-13. Respondents’ retort (Br. in Opp.

7) that “Chevron step one * * * entails judicial deter-

mination of a statute’s meaning” misses the point: under

the first step of Chevron, the judicial determination con-

cerns not what a statute means, but rather whether the

statute is ambiguous. And, of course, when a court con-

strues an ambiguous statute in the absence of an author-

itative agency interpretation, its selection of the best

reading of the statute does not foreclose the administer-

ing agency’s ability to select another permissible inter-

pretation instead. National Cable & Telecomms. Ass’n

v. Brand X Internet Servs., 1258S. Ct. 2688, 2700 (2005).

Moreover, this Court has narrowly construed statu-

tory phrases including the word “any” at least as often

as it has broadly construed them. See Pet. 12, 13. While

respondents (Br. in Opp. 10) discount some of those

4

cases on the ground that a broader reading of “any”

would have contravened a strict-construction canon, that

does not account for all of the cases. See Flora, 362 U.S.

at 150-151 (resorting to “other materials,” including re-

lationship with other statutes, only after determining

the text was ambiguous); BP Am., 127 S. Ct. at 644-645

(concluding that the terms “any” and “every” “do not

assist petitioners” because they do not broaden the

terms they modify).

The most analogous example is perhaps Chevron it-

self. There, this Court held that the Clean Air Act’s def-

inition of “stationary source,” which included “any build-

ing,” was ambiguous. 467 U.S. at 859-862 (quoting 42

U.S.C. 7411(a)(3)). While respondents argue (Br. in

Opp. 11) that the definition of “stationary source” was

not implicated by the specific question in that case—viz.,

whether individual buildings in a complex were separate

stationary sources—this Court specifically recognized

that “the definition * * * could be read to impose the

[NSR] permit conditions on an individual building that

is a part of a plant.” Chevron, 467 U.S. at 860. The

Court nonetheless concluded that the definition was am-

biguous on that point. /d. at 861-862. Under the court

of appeals’ holding in this case, however, the statute

would not be ambiguous, because “any building” would

take its broadest meaning, including a building that is

part of a larger plant.

There is no basis for respondents’ assertion (Br. in

Opp. 11-12 & n.8) that the United States has taken a

contrary position. One of the government briefs cited by

respondents did not rely on the term “any,” but instead

relied on the meaning of the term that followed it. Gov’t

Br. at 13-15, Engine Mfrs. Ass’n v. South Coast Air

Quality Mgmt. Dist., 541 U.S. 246 (2004) (No. 02-1343).

5

The other brief argued that Congress’s use of the term

“any” in one but not another portion of a statute sup-

ported the Government’s interpretation; the Govern-

ment did not argue that “any,” standing alone, had spe-

cial significance divorced from context, much less that it

rendered an otherwise ambiguous term unambiguous.

Gov’t Br. at 19, South Fla. Water Mgmt. Dist. v. Micco-

sukee Tribe of Indians, 541 U.S. 95 (2004) (No. 02-626).

B. The Clean Air Act’s Definition Of “Modification” Does

Not Unambiguously Require The Broadest Meaning Of

“Physical Change”

The court of appeals’ error was critical in this case

because, under traditional canons of statutory construc-

tion, the definition of “modification” does not unambigu-

ously require the broadest meaning of “physical

change.” Not only is the phrase “physical change” “sus-

ceptible to multiple meanings,” as the court of appeals

recognized, Pet. App. 5a, the statutory context also de-

mands that the agency distinguish between routine ef-

forts to maintain a facility and efforts to change the fa-

cility. When Congress crafted the statutory NSR pro-

gram in 1977, it adopted the statutory definition of

“modification” already used in the NSPS program. See

Pet. 3-4. Respondents do not dispute that from the ear-

liest days of the NSPS program, EPA interpreted that

definition to exclude routine maintenance, repair, and

replacement, as well as a number of other activities that

could increase emissions by more than de minimis

amounts. See Pet. 4-5, 16-17. Congress’s decision to

adopt the pre-existing statutory definition without modi-

fication strongly suggests that it viewed the agency’s

existing approach as a permissible interpretation of the

statutory definition.

6

None of respondents’ contentions detracts from that

conclusion. While respondents argue that the Govern-

ment is now advancing a ratification argument it previ-

ously disclaimed, the Government’s position has always

been the same: that while Congress did not set in stone

the agency’s previous interpretation, 7.e., ratify it, such

that the agency would lack authority to modify it, Con-

gress’s adoption of the statutory NSPS definition of

“modification” confirms that the agency’s pre-existing

interpretation of that definition is reasonable. See Pet.

20 n.9. Respondents misleadingly quote the Govern-

ment’s court of appeals brief as stating that “EPA does

not contend that . . . Congress ‘ratified’ [the routine

maintenance] exclusion; in fact, EPA has explicitly dis-

claimed any such argument.” Br. in Opp. 12 (quoting

Gov’t C.A. Br. 19). But respondents omit the very next

sentence of that brief, which explains that “Congress’s

action does, however, suggest that Congress did not con-

sider EPA’s interpretation of ‘modification’ (and more

particularly ‘physical change’) to exclude routine main-

tenance, repairs and replacements to be unreasonable or

outside of EPA’s discretion.” Gov’t C.A. Br. 19-20.

Respondents’ contention (Br. in Opp. 13) that to

prove ratification, the Government must demonstrate

“that Congress was aware of, and intended to incorpo-

rate, the preexisting regulatory exemptions,” is thus

directed toward an argument EPA has not made. (In

any event, Congress was clearly aware of EPA’s regula-

tions, because it explicitly rejected some of them while

directing that the others remain in place, at least for an

initial period. 42 U.S.C. 7478.) With respect to the ar-

gument the Government is making, respondents argue

only that “[w]Jhere the law is plain, subsequent reenact-

ment” is not relevant. Br. in Opp. 14 (quoting Brown v.

7

Gardner, 513 U.S. 115, 121 (1994)). As discussed, how-

ever, the statutory text is not plain, because the term

“any” is not dispositive.

Respondents also misperceive the relevance of EPA’s

longstanding regulations. They note that EPA “gener-

ally had interpreted the [routine maintenance] exclusion

as being limited to de minimis circumstances.” Br. in

Opp. 15 (quoting 70 Fed. Reg. 33,841 (2005)). But re-

spondents erroneously conflate de minimis circum-

stances with de minimis emissions increases. Id. at 2,

15. The routine maintenance, repair, or replacement

exclusion has, since its inception, turned on a “case-by-

case determination * * * weighing the nature, extent,

purpose, frequency, and cost of the work as well as other

relevant factors to arrive at a common sense finding.”

Pet. App. 3a-4a (quoting 67 Fed. Reg. 80,292-80,293

(2002)) (emphasis added). Thus, the inquiry has turned

on the nature of the work, not on the extent of any re-

sulting emissions increases. Pet. 16-17.

Respondents also err (Br. in Opp. 15) in attempting

to dismiss the significance of other longstanding regula-

tory exclusions from the definition of “modifica-

tion”—including exclusions for increases in the produc-

tion rate or hours of operation, and for changes in fuel or

raw materials—on the theory that those exclusions

“construed statutory language not at issue here.” The

statutory definition of “modification” refers in part to

“any physical change in, or change in the method of op-

eration of, a stationary source.” 42 U.S.C. 7411(a)(4).

Even assuming that the other longstanding exclusions

are “change[s] in the method of operation,” rather than

“physical change|s|,” ibzd., both clauses are part of the

definition of “modification,” and both use the term

“change” modified by “any.” Thus, at the time Congress

8

adopted the statutory NSPS definition of “modification,”

EPA’s regulations made clear that the statutory phrase

“any * * * change” did not include all activities caus-

ing non-de minimis emissions increases.

C. The Question Presented Warrants Review

This case warrants this Court’s review for a number

of reasons. The term “any” is commonly used in stat-

utes—as seen by the number of times this Court has

considered that term. If “any” dispelled ambiguity in

_.« the’terms that follow, and thereby required agencies to

“give those terms their broadest meanings, agencies

‘could lose discretion to give reasonable interpretations

to numerous administrative-law statutes. The impor-

tance of the D.C. Circuit’s decision is magnified by that

court’s prominence in administrative law.

Even apart from its broader significance, the deci-

sign below would warrant review in light of its impact on

NSR. As petitioners.in Utility Air Regulatory Group v.

New York, No. 06-750 (filed Nov. 27, 2006), explain, and

respondents do not dispute, this Court has granted re-

view in several cases concerning NSR and the related

Prevention of Significant Deterioration program. 06-750

Pet. at 19-20. This NSR case has particular importance

because the court of appeals’ decision invalidates a vi-

tally important rulemaking, puts EPA in a straight-

jacket going forward, and even jeopardizes exclusions

that EPA has recognized since the very inception of the

NSR program. Those exclusions include not only the

routine maintenance, repair, and replacement exclusion,

but also exclusions for increased hours of operation, in-

creased production rate, and changes in fuels or raw

materials—all of which can cause non-de minimis in-

creases in emissions. See Pet. 16-19, 24; pp. 5-7, supra.

9

By contending (Br. in Opp. 16-17) that only changes

that cause more than de minimis emissions increases

will trigger NSR requirements under the court of ap-

peals’ decision, respondents only underscore the prob-

lems posed by that decision. As discussed, EPA has

never limited the routine maintenance exclusion to de

minimis emissions increases. Nor has it limited the

other exclusions to de minimis increases. Thus, the

court of appeals’ decision not only invalidates this impor-

tant rulemaking, but also suggests that EPA must alter

its longstanding approach.

Moreover, much of the point of the exclusions is to

eliminate the need to engage in a burdensome and un-

certain process of determining, on a case-by-case basis,

whether particular activities are subject to NSR. Pet.

22. That EPA has some flexibility to determine how to

calculate an emissions increase (Br. in Opp. 16-17) does

little if anything to address the burdens caused by re-

quiring EPA to determine in every case whether an ac-

tivity would cause a non-de minimis increase, and to ap-

ply NSR to every activity that would do so.

Respondents also argue incorrectly (Br. in Opp. 18-

19) that EPA’s regulation would harm the environment.

At the outset, that contention is beside the point, be-

cause the court of appeals determined at the first Chev-

ron stage that EPA has no relevant discretion. Even if

EPA’s line-drawing were in some way flawed (it is not),

that would be relevant only to respondents’ Chevron

step-two and arbitrary-and-capricious challenges, which

the court of appeals did not reach; it would not be a rea-

son to deprive the agency of all discretion going for-

ward. Moreover, the statute does not direct EPA to con-

sider only maximizing protection for the environment; as

the court of appeals acknowledged, the statute strikes a

10

“balance * * * between ‘the economic interest in per-

mitting capital improvements to continue and the envi-

ronmental interest in improving air quality.’” Pet. App.

lla (quoting Chevron, 467 U.S. at 851); see id. at 8a.

In any event, EPA’s rule has environmental benefits.

Respondents contend (Br. in Opp. 2-3, 15, 19) that the

rule’s 20% cost threshold could allow costly replace-

ments that could, in turn, substantially increase a plant’s

annual emissions. But EPA’s rule applies only to func-

tionally equivalent replacements that are consistent with

a source’s basic design parameters and do not cause the

source “to exceed any emission limitation, or operational

limitation * * * that is legally enforceable.” 40 C.F.R.

52.21(cc)(3). The rule thus does not serve as a license to

engage in any and ail emissions-increasing changes be-

low a 20% cost threshold.

Most important, respondents do not dispute that the

uncertainties inherent in EPA’s former case-by-case

approach deterred companies from making repairs that

would make their plants cleaner and more efficient. Nor

do respondents appear to deny that encouraging such

repairs would benefit the environment, in part by reduc-

ing high-emission restarts, shut-downs, and malfunc-

tions. In any event, EPA’s expert judgment on that

point is certainly reasonable. See Pet. 21-23.

* *£ KF K *

For the reasons stated above and in the petition for

a writ of certiorari, the petition should be granted.

Respectfully submitted.

PAUL D. CLEMENT

Solicitor General

FEBRUARY 2007