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

DW @

“g YY Supreme Court, U.S.

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

IN THE ‘VAN 4 2001

Supreme Court of the Hurithd States ee

APPALACHIAN POWER COMPANY, et ai.,

Petitioners,

-and-

STATE OF MICHIGAN, et ai.,

Petitioners,

-and-

STATES OF OHIO AND INDIANA,

‘ Petitioners,

v.

U.S. ENVIRONMENTAL PROTECTION AGENCY, e¢ al.,

Respondents.

ON PETITIONS FOR WRIT OF CERTIORARI TO THE UNITED STATES

CourT OF APPEALS FOR THE District OF COLUMBIA CIRCUIT

BRIEF OF RESPONDENTS NEW YORK, CONNECTICUT,

MAINE, MARYLAND, MASSACHUSETTS, NEW

HAMPSHIRE, PENNSYLVANIA, RHODE ISLAND AND

VERMONT IN OPPOSITION TO PETITIONS

ELIOT SPITZER J. JARED SNYDER

Attorney General Assistant Attorney General

PrEETA D. BANSAL* Environmental Protection Bureau

Solicitor General The Capitol

DANIEL SMIRLOCK Albany, New York 12224

Deputy Solicitor General (518) 474-8010

PETER H. SCHIFF Counsel for the State of New York

Senior Counsel

* Counsel of Record

(Additional Counsel listed on signature page)

104479 @) Counsel Press LLC

(800) 274-3321 + (800) 359-6859

COUNTERSTATEMENT OF

QUESTIONS PRESENTED

1. Whether the United States Environmental Protection

Agency (EPA), in allocating equitably the burden of emission

reductions among “upwind” States found to contribute

significant!y to “downwind” States’ nonattainment of the

National Ambient Air Quality Standard (NAAQS) for ozone

pursuant to section 110(a)(2)(D) of the Clean Air Act, is

allowed to consider the relative cost to each upwind State of

emission reductions after first determining which States are

significant contributors based solely on air quality factors.

2. Whether the court below correctly held that EPA’s

exercise of its administrative authority to identify the upwind

States with emission levels that contributed significantly to

nonattainment of NAAQS in downwind States and determine

the amount of emission reductions required of upwind States

did not violate the non-delegation doctrine.

it

TABLE OF CONTENTS

Counterstatement of Questions Presented ........

‘Taeee Of Cameett . oT ih aaa we ee

A. Statutory and Regulatory Background:

Establishing and Maintaining the NAAQS

COR. ok ices baw chau rei eee

C. The Decision of the Court of Appeals .....

Reasons for Denying the Writ .................

I.

The Clean Air Act And Decisions Of This

Court Permit EPA’s Consideration Of Cost-

Effectiveness In Identifying The Emission

Reductions Required Of Each State. ......

A. The Court of Appeals’ Decision is Not

Inconsistent with Decisions of this Court

and the D.C. Circuit Prohibiting the

Consideration of Costs in Other

CHR. ho We ee

Page

10

ul

Contents

Page

1. Industry petitioners’ attempt to

create the appearance of an

inconsistency with other D.C.

Circuit cases does not provide a

basis for certiorari. ............. 11

2. Michigan’s argument that the Court

of Appeals’ decision is contrary to

this Court’s holdings in Union

Electric Co. and the holding of the

D.C. Circuit in Lead Industries

Association should be rejected

because it misconstrues those cases

and was not properly preserved for

this Court’s consideration. ....... 13

B. The Upwind States’ Argument that the

NO,, SIP Call Rule Violates Principles of

“Federalism” and “State Sovereignty” is

Meritless and does not Provide a Basis

Ne ear ce 5 tne ib hn ORS 17

II. The Court Below Correctly Rejected

Petitioners’ Nondelegation Arguments. .... 19

a ea wb 23

iv

TABLE OF CITED AUTHORITIES

Page

Cases:

American Petroleum Institute v. United States EPA,

D2 F356 VETS GA, GAR TRS ck cecsieersvecs 12

American Power & Light Co. v. SEC, 329 U.S. 90

CTI kis ora cbs roe ee eds co teehee ees 20, 21

American Trucking Assns. v. EPA, 175 F.3d 1027,

modified on reh’g, 195 F.3d 4 (D.C. Cir. 1999),

cert. granted, 120 S. Ct. 2003, 120 S. Ct. 2193

Fo PE eee ee ee Pe a, 21,22

Browner v. American Trucking Ass ‘ns, U.S. Supreme

Court Nos. 99-1257, 99-1263 and 99-1265 (argued

ee EN rer eer e free 22

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

‘ccs ek bny kp sneie Ake eee ea ate ee es 22

Davis v. United States, 417 U.S. 333 (1974) ...... 11

Delta Air Lines, Inc. v. August, 450 U.S. 346

CHDREE hvac cn cavihecskawees vad earck emis ces 14

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

Vv

Cited Authorities

Page

International Union, UAW v. OSHA, 37 F.3d 665

(D.C. Cir. 1994)... 1. cece e reece ener eee ees 10

Lead Industries Association v. EPA, 647 F.2d 1130

(D.C. Cir.), cert. denied, 449 U.S. 1042 (1980)

er pp Pret yr ee ree 2, 13, 14, 15, 16

Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000)

iil SS ee eek a ee Ree eS 5, 6, 7, 8, 10, 20

National Broadcasting Co. v. United States, 319 U.S.

190 (1943) 0... 2. cece cece ere eee cece eerees 19

Natural Resources Defense Council v. EPA, 824 F.2d

1146 (D.C. Cir. 1987) ....--- esse cece eee eees 7

SEC v. Chenery, 332 U.S. 194 (1947) ...---+-+-- 21

South Terminal Corp. v. EPA, 504 F.2d 646 (ist Cir.

| eee COPE EE EE foe oe te 21, 22

Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.

5E1 C19GO) oo. i eee ee ece sete eeetees. 21

Touby v. United States, 500 U.S. 160 (1991) ...... 19, 20

Union Electric Co. v. EPA, 427 U.S. 246 (1976)

eS aha via Os ta eee 3,9, 11, 13, 14, 15, 16, 17

United States y. Mistretta, 488 U.S. 361 (1988) ... 19

vi

Cited Authorities

Page

United States v. Southwestern Cable Co., 392 U.S.

DST LOE vv oss baneehaee ewes SAE an 19

Yakus v United States, 321 U.S. 414 (1944) ...... 19

Statutes:

Clean Air Act Section 108,

OE Pais 1 Eb cbicw 6h bo eau koe kc kdde dean 2

Clean Air Act Section 109,

CUBA. SD PON os cbs Been ees k eee a tds be

Clean Air Act Sectivn 109(b)(1),

2 UDG. f POC) 66829 he RRA 2

Clean Air Act Section 110,

3 UDA. OS PRUE beh ia les iiass a, &' 43,43, 48, 22

Clean Air Act Section 110(a)(2)(A),

42 U.S.C. © TRUQRD bbc ccvcedcibasessee 3

Clean Air Act Section 110(a)(2)(D),

42 U.S.C. § 7410(aX(2)(D) .. i, 3, 7,9, 10, 11, 12, 13, 19

Clean Air Act Section 110(k)(5),

oop toe | Ree ye 13

Clean Air Act Section 307(b),

Ga CLG, O PEE | cab ee vvbvacsued beesieue 11

Clean Air Act Section 307(d)(7)(B),

42 USC. § TECTED ws nk cvisecucnavses 14

vii

Cited Authorities

Page

Other Authorities:

TLR. 95-294, 330 95" Cong. 1* Sess., reprinted in 4

A Legislative History of the Clean Air Act

Amendments of 1977, 2797 (1978) .--+++++++: 20

S. Rep. No. 95-127, reprinted in A Legislative

History of the Clean Air Act Amendments of 1977

(ADTRAN eat soe see es 3

S. Rep. No. 101-228 (1990), reprinted in 1990

U.S.C.C.A.N. 3389 2... ccc cces sc cccerenence 4

42 Fed. Reg. 8202 ........-seeeeeeeceercerees 2

63 Fed. Reg. 57356, et seq. (1998) ...--.+++++s: 1

63 Fed. Reg. 57363 .....:seeeeeereeereceeeers 14, 17

63 Fed. Reg. 57377 ...---ceeecsereeeeecrseeee 1

63 Fed. Reg. 57379 .....:ceeceeceeeecees os ae 8

63 Fed. Reg. 57386 .....---seeeeeeeeerrcceces 7

63 Fed. Reg. 57387-99 .......eseeeeeeerercees 5

663 Fed. Reg. 57387 .....----seeeeererceeteee 4

63 Fed. Reg. 57389-3911 ....--- ree rereereeee 7

vill

€ited Authorities

3. 8 Rs rr errr er Te

Gt PY 4k Sv eS Ed bho deeesincnanwe

On PO: A SPOOF iae a ee Varxusaawens

Air Quality Modeling Technical Support Document

eee

Breyer, et al., Administrative Law and Regulatory

Pee GS CA GE, TSO ok a so taleek epbe ences

Stern, et al., Supreme Court Practice 176 (7th ed.

PEE 0:0 bls SOO ENOS RES ees ee eee

oF 6 Oe enacr van emu iran wine he et som

10

11

l

The States of New York, Connecticut, Maine, Maryland,

Massachusetts, New Hampshire, Pennsylvania, Rhode Island,

and Vermont (collectively, the “respondent States”) oppose

the petitions for certiorari filed by petitioners Appalachian

Power Company, et al. (hereinafter “Industry petitioners”),

State of Michigan, et al. (hereinafter “Michigan’”’) and State

of Ohio, et al. (hereinafter “Ohio’’). The petitions seek review

of the March 3, 2000 judgment of the United States Court of

Appeals for the District of Columbia Circuit upholding the

bulk of EPA’s NO, SIP Call rule (the “Rule”). See Finding of

Significant Contribution and Rulemaking for Certain States

in the Ozone Transport Assessment Group Region for

Purposes of Reducing Regional Transport of Ozone; Rule,

63 Fed. Reg. 57356, et seq. (1998). For the reasons set forth

below, the petitions should be denied, thereby allowing timely

implementation of the Rule and enabling the downwind

States to meet their statutory obligation to ensure that their

residents breathe clean air.

COUNTERSTATEMENT OF THE CASE

In 1998, EPA promulgated the NO, SIP Call, which

requires that twenty-two States and the District of Columbia

revise their State Implementation Plans (SIPs) to reduce

emissions of nitrogen oxides (NO,). The Rule was based on

overwhelming evidence, undisputed in this case, that

emissions of NO, pollution from numerous sources in many

States in the eastern half of the United States contribute to

harmful levels of ozone, a pollutant that causes respiratory

distress, in many portions of the eastern United States.

See 63 Fed. Reg. at 57377. Recognizing that many States

would have difficulty in achieving the National Ambient Air

Quality Standard (NAAQS) for ozone without reductions in

the incoming pollution levels, EPA exercised its authority

2

under section 110 of the Clean Air Act (the “Act”’) to require

emission reductions in all States that contribute to the

problem of transported ozone pollution. Implementation of

the NO, SIP Call will ensure that residents of much of the

eastern half of the nation, including but not limited to

residents of the respondent States, will obtain the benefits

of clean air within the timetable set by Congress in the 1990

amendments to the Act.

A. Statutory and Regulatory Background: Establishing

and Maintaining the NAAQS

Under sections 108 and 109 of the Act, EPA is

responsible for identifying the pollutants that are harmful to

public health when present in the ambient air and for

establishing the ambient levels of such pollutants that the

States are required to achieve. The Act requires EPA to set

NAAQS for these “criteria pollutants” at levels that are

“requisite to protect the public health” with an “adequate

margin of safety.” 42 U.S.C. § 7409(b)(1). Under long-

standing EPA practice and the holdings of the D.C. Circuit,

EPA is to set the NAAQS without regard to the economic

ramifications of the levels chosen. See American Trucking

Assns. v. EPA, 175 F.3d 1027, 1038, modified on reh'g,

195 F.3d 4 (D.C. Cir. 1999), cert. granted, 120 S. Ct. 2003,

120 S. Ct. 2193 (2000) (ATA); Lead Industries Association

v. EPA, 647 F.2d 1130 (D.C. Cir.), cert. denied, 449 U.S.

1042 (1980).' EPA set the NAAQS for ozone at issue in this

case in 1979. See 44 Fed. Reg. 8202 (1979).

Section 110 of the Act requires each State to submit to

EPA a SIP that provides for the attainment of the NAAQS

1. The continuing validity of this principle is being reviewed

by the Court in ATA.

3

within the State. The SIP must demonstrate how State

regulations wil] result in the emission reductions necessary

to achieve the NAAQS. This Court has held that technical or

economic infeasibility does not excuse a State from its

obligation to achieve acceptable air quality for its citizens.

See Union Electric Co. v. EPA, 427 U.S. 246 (1976).

Congress recognized, however, that a State may be

prevented from attaining the NAAQS, or at least hampered

in its efforts to do so, by pollution transported from other

States. Accordingly, just as section 110(a)(2)(A) requires each

State to submit a plan to attain the NAAQS, section

110(a)(2)(D) requires each State’s plan to ensure that

emissions activities within its borders do not “contribute

significantly” to nonattainment downwind. This obligation

is “intended 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.” S. Rep. No. 95-127, reprinted in A

Legislative History of the Clean Air Act Amendments of 1977

(1978) at 1416 (the “1977 Senate Report”).

B. Transported Ozone Pollution and the NO, SIP Call

In promulgating the Clean Air Act Amendments of 1990,

Congress recognized that regional control strategies were still

needed to address the migration of ozone and its precursors:

The bill reflects an increasing understanding of

how ozone pollution is formed and transported.

Because ozone is not a local phenomenon but is

formed and transported over hundreds of miles

and several days, localized control strategies will

not be effective in reducing ozone levels.

— eee

4

S. Rep. No. 101-228 (1990), reprinted in 1990 U.S.C.C.A.N.

3389, 3399. To develop a regional control strategy for

attaining the NAAQS across the eastern half of the United

States, all States east of the Rocky Mountains (including the

District of Columbia) participated in the working group

known as the Ozone Transport Assessment Group (OTAG),

which tried to craft a solution to the problem of transported

ozone. Although the participating States endorsed OTAG’s

extensive and sophisticated technical analyses and recognized

that region-wide NO, reductions were needed, the divergent

interests of the OTAG States prevented them from agreeing

on the details of a control strategy, including the level of

NO, reductions required. In general, the northeastern States,

which are downwind of the bulk of the NO, emission sources,

advocated more stringent controls than Ohio, Michigan and

the other States joining in the petitions for certiorari, which

are host to many of the large NO, emission sources.

In the absence of a State consensus on all the elements

of a NO, control program, EPA used OTAG’s data and

analyses to develop the NO, SIP Call, the rule at issue here.

In doing so, EPA evaluated the contribution of NO, emissions

in thirty-seven States east of the Rocky Mountains to ozone

noncompliance in a number of eastern, southern and

midwestern locations, including the New York City

metropolitan area and other urban areas along the eastern

seaboard, the Atlanta, Birmingham, Chicago, Cincinnati,

Louisville, Pittsburgh and St. Louis metropolitan areas, and

southwestern Michigan. See 63 Fed. Reg. at 57387. Given

the number of source and receptor regions, EPA had to

consider hundreds of source/receptor combinations. Using

advanced air quality modeling techniques, EPA identified

twenty-two States and the District of Columbia as “significant

5

contributors” to ozone nonattainment in other States, based

on its evaluation of the magnitude, frequency and relative

amount of each State’s contribution to ozone non-attainment

in downwind States. See 213 F.3d at 675. EPA determined

that each of these States was making a significant contribution

to ozone nonattainment in at least two other States and, in

many cases, in numerous downwind States in different

directions and at different distances from the upwind State.

See 63 Fed. Reg. at 57394, Table II-4.? For example, EPA

found that Indiana contributes significantly to ozone

nonattainment in a number of eastern seaboard areas such as

New York City and Baltimore, as well as to the nonattainment

problems in Southwestern Michigan (to the north), Cincinnati

(to the southeast), Louisville (to the south), and Chicago (to

the northwest). Indiana’s contribution ranged from an average

of 17% to Louisville’s ozone levels, 11% to Cincinnati’s,

10% to southwestern Michigan’s and 9% to Chicago’s, to

average contributions in the range of 1-2% to ozone levels

in eastern seaboard locations.’

Once it identified the twenty-three jurisdictions that were

significant contributors to at least two downwind ozone

nonattainment areas, EPA determined the amount by which

each State’s NO, emissions should be reduced to mitigate

its significant contribution to numerous downwind States.

2. With the exception of Tennessee, West Virginia and the

Carolinas, each of the States identified as significant contributors

contains at least a portion of a nonattainment area within its borders.

3. Detailed listing of the contributions to downwind

nonattainment of each of the twenty-three jurisdictions subject to

the Rule are contained in the Air Quality Modeling Technical Support

Document for the Regional NO, SIP Call (September 21, 1998)

(which is part of the record before the court below) and summarized

at 63 Fed. Reg. at 57387-99.

6

In so doing, EPA recognized that each upwind State

contributes in varying degrees to ozone nonattainment in

several downwind States and that each nonattainment area’s

ozone originated in a number of upwind States. Thus, rather

than requiring an upwind State to reduce its emissions by

different amounts for each downwind area affected by its

emissions, EPA determined that a single level of emission

reduction would mitigate the impact of that State’s emissions

on all downwind States. EPA decided to require only the level

of emission reductions that could be obtained in a highly

cost-effective manner — that is, at a cost of $2000 per ton or

less. See 213 F.3d at 675. Rather than requiring each State

that contributed significantly to downwind nonattainment to

eliminate al] its NO, emissions, EPA concluded that it is

fair and consistent with the Act to require upwind States

“to reduce at least the portion of their emissions for which

highly cost-effective controls are available.” 63 Fed. Reg.

at 57379.

EPA based the $2000/ton figure on “NO, emissions

controls that are available and of comparable cost to other

recently undertaken or planned NO, measures,” including

“the types of controls EPA and States have needed to adopt

most recently because their previous planning efforts

have already taken advantage of opportunities for even

cheaper controls.” Jd. at 57400. In other words, the

$2000/ton figure was based on the costs of controls already

being incurred in the downwind States that are burdened by

ozone transport. EPA explained that its selection of the

$2000/ton criterion was a “first approximation” at

determining the level of controls that should be required of

upwind sources to eliminate significant contributions to

downwind nonattainment and that further reductions may be

required in the future if needed to achieve regional ozone

nonattainment. See id. at 57399.

7

On the basis of additional modeling, EPA determined

that the emissions reductions achieved through application

of highly cost-effective measures throughout the region

would allow nonattainment areas to make “appreciable

progress towards attainment,” but would not require more

reductions in upwind States than necessary to achieve

attainment in all downwind areas affected by those States’

emissions. Jd. at 57379, 57386 n.38, 57389-391. Thus,

without requiring any States to implement unduly costly

control requirements, the Rule enables all States in the eastern

half of the United States to obtain the benefits of clean air

for their residents.

C. The Decision of the Court of Appeals

The Rule was challenged by numerous utilities and

businesses and by several midwestern and southern states.

On March 3, 2000, the Court of Appeals issued its decision

upholding the bulk of the NO, SIP Call. See Michigan v.

EPA, 213 F.3d 663 (D.C. Cir. 2000). The court first upheld

EPA’s use of complicated air quality modeling in identifying

States as significant contributors. See id. at 673-74. It then

determined that EPA did not err in using costs in determining

the amount of emission reductions required from each State

that had been found to contribute significantly to downwind

nonattainment. In so doing, the court relied upon its own

longstanding precedent that an agency may consider costs

unless there is a “clear congressional intent to preclude

consideration of cost.” Jd. at 678 (quoting Natural Resources

Defense Council v. EPA, 824 F.2d 1146, 1163 (D.C. Cir.

1987)). The court concluded that the phrase “contribute

significantly” in section 110(a)(2)(D) does not express a clear

congressional intent to exclude consideration of cost.

See id. at 679. Without actually determining that the phrase

8

“contribute significantly” requires consideration of costs or

equitable factors, the court noted that it would be difficult to

draw a line between the level of emissions that are

permissible and those that are not without considering costs

and other equitable factors. See id. at 678. The court below

also rejected several other arguments, including a

nondelegation challenge. See id. at 680-81.‘

Petitions for rehearing and rehearing en banc were denied

on June 22, 2000.

REASONS FOR DENYING THE WRIT

None of the petitioners disputes the public health dangers

associated with high levels of ozone pollution. Nor do

petitioners contest EPA’s conclusion that the ozone

attainment problems throughout the eastern half of the nation

result from emission activity at hundreds of large and small

sources of NO, emissions across the region or its finding

that each source State individually contributes to NAAQS

non-attainment in numerous downwind States in widely

differing amounts. Furthermore, the petitioners agree that

EPA has authority under section 110 to require upwind States

to revise their SIPs to mitigate their contribution to downwind

ozone nonattainment.

4. The D.C. Circuit did vacate certain aspects of the Rule.

It determined that Wisconsin should not have been included in the

Rule and that the emission reductions required of Georgia and

Missouri should be based solely on the emissions from the portions

of those States found to contribute to downwind nonattainment.

See 213 F.3d at 681-85. It also determined that EPA did not provide

sufficient notice of the definition of an electric generating unit and

of the control level assumed for large stationary internal combustion

engines. See id. at 691-94.

9

Instead, the petitioners’ only complaint is with the level

of emission reductions required in Ohio, Michigan and the

other petitioning States. They claim that EPA misconstrued

the term “contribute significantly” in section 110(a)(2)(D)

of the Clean Air Act by including costs of controls among

the factors considered in determining the amount of emission

reduction required of each State that contributes to regional

ozone pollution. Although Ohio tries to inflate the importance

of the issue by suggesting that EPA’s analysis is

not “federalism-sensitive,” this issue involves routine

administrative application of a statutory standard that does

not merit review by this Court. In fact, although the various

petitioners do not agree on the reasons why EPA’s

consideration of costs violated the Act, some of them

recognize that costs can play a role in the analysis and argue

that EPA erred not in considering costs at all, but in the way

it considered costs. Industry Pet. at 12; Ohio Pet. at 10-11.°

5. Michigan adheres to the position that costs should play no

role in the analysis, despite acknowledging that the case on which it

chiefly relies, Union Electric, supra, recognizes a role for

consideration of costs under section 110. Michigan Pet. at 9 n.4.

10

I.

THE CLEAN AIR ACT AND DECISIONS OF THIS

COURT PERMIT EPA’S CONSIDERATION OF COST-

EFFECTIVENESS IN IDENTIFYING THE EMISSION

REDUCTIONS REQUIRED OF EACH STATE.

A. The Court of Appeals’ Decision is Not Inconsistent

with Decisions of this Court and the D.C. Circuit

Prohibiting the Consideration of Costs in Other

Contexts.

Section 110(a)(2)(D) does not specify how EPA should

determine what emissions make a significant contribution

to downwind States. It does not say that cost-effectiveness

of controls or other economic factors are relevant

considerations. Nor does section 110(a)(2)(D) preclude the

consideration of cost-effectiveness of controls in determining

the amount of excess emissions in each State. Accordingly,

the Court of Appeals acted properly in concluding that EPA

may consider the costs of controlling emissions in

determining whether the risk posed by the emissions is

significant. See 213 F.3d at 677-78 (citing International

Union, UAW v. OSHA, 37 F.3d 665, 668-69 (D.C. Cir. 1994),

and Breyer, et al., Administrative Law and Regulatory Policy

65 (4th ed. 1999)).

Both the State petitioners and the Industry petitioners

misconstrue the role of costs in EPA’s analysis. They attempt

unsuccessfully to demonstrate an inconsistency between the

D.C. Circuit’s decision in this case, which upholds EPA’s

consideration of costs for the limited purpose of allocating

the burdens of emission reductions, and decisions of this

Court and the D.C. Circuit addressing EPA’s use of cost

considerations in unrelated contexts.

11

1. Industry petitioners’ attempt to create the

appearance of an inconsistency with other D.C.

Circuit cases does not provide a basis for

certiorari.

The Industry petitioners’ argument that the Court of

Appeals’ decision is inconsistent with prior D.C. Circuit cases

does not support the grant of certiorari in this case.

As an initial matter, an alleged conflict between decisions of

the D.C. Circuit does not provide a basis for certiorari.

Conflicts between decisions of a single court of appeals

should be addressed through petitions for rehearing en banc,

rather than through certiorari. See, e.g., Davis v. United

States, 417 U.S. 333, 340 (1974) (referencing earlier petition

for certiorari that had been denied when conflict was between

decisions of the same Circuit); see also Stern, et al., Supreme

Court Practice 176 (7th ed. 1993). Petitioners’ suggestion

that an inter-circuit conflict over a Clean Air Act issue cannot

possibly arise because the D.C. Circuit has sole jurisdiction

over appeals of actions and administrative proceedings under

the Act (Michigan Pet. at 19) is not only irrelevant but simply

wrong. EPA’s administrative determinations regarding the

compliance of SIPs with the requirements of section

110(a)(2)(D) are generally reviewed in the circuit for the state

whose SIP is being challenged. See 42 U.S.C. § 7607(b). In

fact, the challenge to the Missouri SIP in Union Electric,

upon which Michigan relies, was heard by the Eighth Circuit,

not the D.C. Circuit. See 427 U.S. at 252-53.

Furthermore, the decisions on which Industry petitioners

rely are inapposite to the present case. In Ethyl Corp. v. EPA,

51 F.3d 1053, 1060 (D.C. Cir. 1995), the D.C. Circuit held

that a regulation that allowed EPA to prohibit a fuel additive

only if it “cause[d] or contribute[d] to failure of any emission

12

control device” did not provide EPA with the authority to

bar the additive on the entirely unrelated ground that it may

cause adverse health effects. Likewise, in American

Petroleum Institute v. United States EPA, 52 F.3d 1113, 1120

(D.C. Cir. 1995) (“API”), EPA improperly promulgated fuel

content regulations that were directed at promoting the use

of renewable fuel sources, rather than at reducing emissions

of volatile organic compounds and toxic air pollutants, as

required by Congress. These decisions interpreted statutes

clearly barring the use of factors that had been erroneously

applied by EPA, whereas in this case section 110(a)(2)(D)

does not bar the consideration of costs. In fact, EPA’s

consideration of the relative costs of controlling emissions

is consistent with Congressional intent that the burden of

controlling interstate pollution be shared by all States that

contribute to the problem. See 1977 Senate Report at 1416.

Nor did EPA’s rule subordinate air quality factors to

considerations of cost-effectiveness. Industry petitioners

overstate the role of costs in EPA’s determination when they

contend that EPA “considered as its sole factor the cost-

effectiveness of emission reductions in determining whether

one state’s contribution to another state’s ozone

nonattainment air quality is ‘significant.’ ” Industry Pet. at

13. In fact, as the State petitioners recognize, EPA’s

determination of whether a State contributed significantly

to downwind nonattainment was based solely on air quality

factors, with costs playing a role only in determining the

amount of emissions to be reduced. Michigan Pet. at 5-6;

Ohio Pet. at 4-5.°

6. If Industry petitioners were right that cost of compliance was

the sole factor considered by EPA, the Rule would have encompassed

all thirty-seven States included in OTAG, rather than just the twenty-

(Cont'd)

13

Ultimately, Industry petitioners concede that EPA may

consider the relative costs of controls in determining the NO,,

reductions required of each State, albeit under section

110(k)(5) of the Act rather than section 110(a)(2)(D). Industry

Pet. at 18. This distinction, however, has no basis in the

language of the statute, because, like section 110(a)(2)(D),

section 110(k)(5) contains no specific reference to the

consideration of costs. If such consideration of costs is valid,

it is equally valid under both provisions.

2. Michigan’s argument that the Court of Appeals’

decision is contrary to this Court’s holdings in

Union Electric Co. and the holding of the D.C.

Circuit in Lead Industries Association should be

rejected because it misconstrues those cases and

was not properly preserved for this Court’s

consideration.

Michigan’s primary argument, that prior decisions under

sections 109 and 110 of the Act prohibit EPA from

considering costs in setting the NAAQS and in reviewing

SIPs for compliance with those NAAQS, was not presented

to the court below. The cases upon which Michigan now relies

— Lead Industries Association and Union Electric — are

cited nowhere in the Brief or Reply Brief filed below by

Michigan and other upwind States. The explanation for that

omission is simple: the premise of both Union Electric and

Lead Industries Association — that costs and economic

(Cont'd) :

two States and the District of Columbia that were ultimately included

in the Rule. In fact, those twenty-three jurisdictions were included

because the impact of their emissions on downwind States exceeded

a certain air quality threshold, not because they contained sources

that could be controlled at a cost of less than $2000 per ton.

14

factors cannot be used to weaken the public health protection

provided by the NAAQS — is inconsistent with Michigan’s

position before the Court of Appeals, where it argued that

the emission reductions required by the NO, SIP Call were

more extensive than needed. See, e.g. Reply Brief of

Petitioning States at 11-12. Now, in an effort to take

advantage of the Union Electric and Lead Industries

Association holdings, Michigan shifts gears, suggesting —

without any basis in the record and contrary to the results of

EPA’s modeling — that EPA’s consideration of costs

somehow weakened the public health protections of the Act.’

As an initial matter, this Court should reject Michigan’s

argument as a basis for certiorari because the argument was

neither presented to EPA during the public comment process,

as required by CAA section 307(d)(7)(B),® nor made to the

court below. See, e.g. Delta Air Lines, Inc. v. August,

450 U.S. 346, 362 (1981) (refusing to consider propriety of

award of costs because that issue was not raised in the court

of appeals). In fact, Michigan and its co-petitioners were

participants in OTAG, which recommended that cost-

effectiveness of controls be included as one of the criteria

for selection of a strategy to reduce transported ozone.

See 63 Fed. Reg. at 57363.

In any event, there is no conflict between the decision

below and decisions considering the use of costs to reduce

7. Notably, Ohio (the lead upwind State in the D.C. Circuit

proceedings) and Indiana do not join Michigan in this new argument.

8. Section 307(d)7)(B) provides that “[o]nly an objection to a

rule or procedure which was raised with reasonable specificity during

the period for public comment (including any public hearing) may

be raised during judicial review.”

15

protections against unhealthy air under other provisions of

the Clean Air Act. EPA’s consideration of costs did not reduce

the level of public health protection at all; in fact, the Rule’s

emission reduction requirements are the most stringent of

the range of possible reductions identified by OTAG Instead

of using cost considerations to reduce public health

protection, EPA used relative costs of NO, reductions to

allocate equitably the emission reductions needed to achieve

the preexisting public health goal of attainment of the

NAAQS. Thus, in the present case, unlike the decisions on

which Michigan relies, the consideration of costs is consistent

with, rather than contrary to, Congress’ intent to protect the

public from the adverse health effects of poor air quality.

In Lead Industries Association, the D.C. Circuit held that

EPA could not, in setting the health-based primary NAAQS,

consider the economic feasibility of attaining the NAAQS.

The court held that the language of section 109 evidenced a

clear Congressional intent that the NAAQS should be set

solely on the basis of the need to protect public health.

The court emphasized that the NAAQS are intended to be

“technology-forcing,” meaning that Congress understood and

intended that industry would have to develop new

technologies, at potentially great cost, to achieve the NAAQS.

See 647 F.2d at 1149. Similarly, in Union Electric, this Court

found that EPA need not consider the feasibility of

compliance with a SIP in evaluating the sufficiency of a SIP

under section 110 of the Act. In that case, Union Electric, an

electric utility located in Missouri, challenged EPA’s approval

of the Missouri SIP on the ground that compliance with the

emission limitations contained in the SIP was not

technologically and economically feasible. The Court held

that EPA may not allow claims of economic and technological

16

feasibility to excuse a State from submitting a SIP that

promotes attainment of the health-based NAAQS. See 427

U.S. at 265. Notably, however, the Court recognized that

economic factors may be considered as long as “consideration

of such claims will not substantially interfere with the primary

congressional purpose of prompt attainment of the national

air quality standards.” 427 U.S. at 266.

In the present case, by contrast, EPA’s consideration of

costs does not interfere with the prompt attainment of the

national air quality standards. Congress’ goal, as in Lead

Industries Association and Union Electric, is attainment of

NAAQS by specific dates. EPA set the requisite ozone

NAAQS without regard to economic factors, and EPA’s

consideration of costs does not reduce the protection provided

by the NAAQS to downwind States and their residents. To

the contrary, EPA’s modeling confirmed that the emission

reductions required by the Rule, after consideration of costs,

will enable downwind States, including some of the State

respondents, to make significant progress towards attainment

of the NAAQS.’ See 63 Fed. Reg. at 57379. The costs of

reducing NO, emissions to achieve these NAAQS were

considered only in allocating the burdea of reducing NO,

emissions among the various States that contribute to ozone

9. EPA recognized that the downwind States may have to bear

an additional burden in attaining the NAAQS because the emission

reductions required by the NO, SIP Call are sufficient to put the

NAAQS within reach of all States, but may be insufficient to bring

about attainment of the NAAQS in all locations without any further

reductions from the downwind States. Of course, EPA could have

provided for attainment by raising the cost cut-off from $2000 to a

higher level, perhaps $2500. It is the downwind States that support

the Rule that may have to implement the higher level of controls

themselves, not upwind States like Michigan.

17

nonattainment in the eastern United States, thereby

effectuating Congress’ intent to apportion equitably the

burden of emission reduction efforts. Far from “interfer[ing]}

with the primary congressional purpose of prompt attainment

of the national air quality standards,” the NO, SIP Call rule

makes such attainment possible throughout the eastern

portion of the United States without requiring any unneeded

emission reductions.'° In the absence of this Rule, regions

that are home to millions of Americans will not achieve the

NAAQS within the timetable set by Congress. Jd. at 57363.

B. The Upwind States’ Argument that the NO, SIP Call

Rule Violates Principles of “Federalism” and “State

Sovereignty” is Meritless and does not Provide a Basis

for Certiorari.

The State petitioners contend that EPA misallocated the

burden of emission reductions among the States. Michigan

and Ohio (and their co-petitioners) evidently believe that

EPA’s method of apportioning the burden of compliance in

accordance with the costs of controlling the emissions results

in sources in those States bearing a greater share of emission

reductions than they would like. In an attempt to disguise

their challenge to EPA’s method as a subject that might merit

10. EPA’s use of costs in this case is similar to the waiver

process approved by this Court in Union Electric. The Court

determined that States are free to exempt facilities or industry groups

from control requirements under the SIP on grounds of economic

infeasibility so long as doing so does not interfere with attainment

of the NAAQS. See 427 U.S. at 266-67. Likewise, here EPA is free

to exclude sources that cannot be controlled in a highly cost-effective

manner from its calculation of State budgets, as long as doing so

does not interfere with attainment of the NAAQS.

18 pre

this Court’s review, Ohio contends, without supporting its

position and without citation to case law, that EPA’s

application of section 110 is somehow inconsistent

with unspecified principles of “federalism” or “state

sovereignty.”

Underlying this argument is the State petitioners’ failure

to recognize that each upwind State contributes to varying

degrees to numerous downwind States. For example, State

petitioners note that Indiana and Pennsylvania are being

required to reduce their emissions by approximately the same

amount, even though Pennsylvania’s impact on the downwind

New York City nonattainment area is greater. Ohio Pet. at

12-13; Michigan Pet. at 22-23. The State petitioners ignore,

however, that Indiana emissions have a much greater effect

than Pennsylvania emissions on other nonattainment areas

that are closer to Indiana, such as Louisville (to which Indiana

contributes an average of 17% of the ozone and Pennsylvania

less than 1%), Cincinnati (Indiana 11%; Pennsylvania 1% ),

Southwestern Michigan (Indiana 10%; Pennsylvania less than

1%) and Chicago (Indiana 9%; Pennsylvania less than 1%).

Thus, shifting the focus from New York City to Cincinnati,

Chicago or Louisville as a receptor area would mean that it

is Pennsylvania, rather than Indiana, that is being required

to obtain excess emission reductions under the Rule.

Considering that each upwind State contributes varying

amounts of ozone to numerous downwind States, EPA’s

approach recognizes the impossibility of requiring that a State

reduce its emissions by different amounts for each downwind

State to which it contributes.

Ultimately, EPA’s allocation methodology follows from

its recognition that nonattainment throughout the eastern half

of the United States is the result of the collective contribution

19

of countless sources throughout the area, a finding that is

being challenged by none of the Petitioners. In light of the

regional nature of the ozone nonattainment problem, the Rule

effectuates Congressional intent to allocate the burden of

compliance among the States containing sources that

contribute to the problem. Notwithstanding State petitioners’

attempt to disguise their challenge as a defense of federalism,

their argument that EPA could or should have allocated the

emission reductions differently does not implicate principles

of State sovereignty.

Il.

THE COURT BELOW CORRECTLY REJECTED

PETITIONERS’ NONDELEGATION ARGUMENTS.

The Industry petitioners’ effort to obtain review of the

D.C. Circuit’s nondelegation holding fails for several reasons.

First, and most fundamentally, the delegation at issue in this

case is narrower than the broad delegations that have been

upheld by this Court. See, e.g. Touby v. United States, 500

U.S. 160 (1991); United States v. Mistretta, 488 U.S. 361,

371-72 (1988); United States v. Southwestern Cable Co., 392

U.S. 157, 178 (1968); FPA v. Hope Natural Gas Co., 320

U.S. 591, 600 (1944); Yakus v United States, 321 U.S. 414

(1944); National Broadcasting Co. v. United States, 319 U.S.

190, 225-26 (1943).

Second, the Court of Appeals correctly concluded in this

case that the nondelegation doctrine does not require as

precise a delegation when the agency action is of more limited

scope than a broad legislative rule of nationwide application.

In this case, in exercising its authority under section

110(a)(2)(D), EPA did not issue a quasi-legislative rule, but

20

rather made quintessentially administrative, fact-specific

determinations regarding dozens of state-to-state

comparisons:

[A]s a practical matter EPA must make a number

of threshold determinations that in practice appear

to have confined the statute to a modest role.

Befcre assessing “significance,” EPA must find

(1) emissions activity within a state; (2) show with

modeling or other evidence that such emissions

are migrating into other states; and (3) show that

the emissions are contributing to nonattainment.

213 F.3d at 680. See also H.R. 95-294, 330 95" Cong.

1* Sess., reprinted in 4 A Legislative History of the Clean

Air Act Amendments of 1977, 2797 (1978) (describing the

interstate transport provisions of the Act as “a Federal

mechanism for resolving disputes which cannot be decided

through cooperation and consultation between the States or

persons involved”). Congress’ delegation of authority to make

this type of fact-specific, case-by-case determination does

not implicate the non-delegation doctrine, which bars only

the delegation of legislative power. See Touby, 500 U.S. at

165 (the nondelegation doctrine means “that Congress may

not constitutionally delegate its legislative power to another

branch of government.”).

Recognizing the limitations of the legislative process,

this Court’s precedent establishes that administrative

agencies must have ample leeway to apply Congress’ policy

choices on a case-by-case basis, as EPA did in this case.

In American Power & Light Co. v. SEC, 329 U.S. 90 (1946),

this Court recognized that Congress cannot oversee the

application of its policy choices to all the specific factual

circumstances that may arise:

21

The legislative process would frequently bog

down if Congress were constitutionally required

to appraise beforehand the myriad situations to

which it wishes a particular policy to be applied

and to formulate specific rules for each situation.

Necessity therefore fixes a point beyond which it

is unreasonable to compel Congress to prescribe

detailed rules; it then becomes constitutionally

sufficient if Congress clearly delineates the

general policy, the public agency which is to apply

it, and the boundaries of this delegated authority.

329 U.S. at 105. See also SEC v. Chenery, 332 U.S. 194,

202-03 (1947) (“the problem may be so specialized and

varying in nature as to be impossible of capture within the

boundaries of a general rule. In those situations, the agency

must retain power to deal with the problems on a case-to-

case basis if the administrative process is to be effective”);

Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381,

399-400 (1940) (referring to the need for the agency to use

its expertise in applying the policy expressed in a statute to

particular factual circumstances).

Indeed, the D.C. Circuit understood in ATA that EPA’s

exercise of its authority to review efforts to implement

NAAQS, as in this case, did not implicate the same

non-delegation concerns as the establishment of the NAAQS.

In ATA, the Court of Appeals distinguished the decision of

the First Circuit in South Terminal Corp. v. EPA, 504 F.2d

646 (1st Cir. 1974), which, like the court below, upheld EPA’s

authority to determine the steps necessary to achieve a

NAAQS against a nondelegation challenge:

[T]he action challenged in South Terminal was

EPA’s adoption of a plan for ending or preventing

22

violations in Boston of already-established NAAQS,

not its promulgation of the NAAQS themselves.

Thus, it seems likely that the “means” were the

plan’s provisions ... and the “fairly precise[ly]

defin[ed]” goals were the NAAQS themselves.

ATA, 175 F.3d at 1057. As in South Terminal Corp., the action

challenged here is EPA’s adoption of a plan intended to end

violations of the NAAQS. Thus, both courts of appeals to

consider the issue have concluded that section 110 does not

present a nondelegation problem."!

Finally, notwithstanding petitioners’ claim that EPA’s

action is “unfettered by any obligation to obey Congress’

proscription against arbitrary and capricious action” (Jndustry

Pet. at 20), a reviewing Court is free to evaluate EPA’s

significant contribution determinations under an arbitrary and

capricious standard, after giving due deference to its

interpretation of the statute and its technical determinations.

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

(deferring to agency’s interpretation of statute that it was charged

with administering). The D.C. Circuit did just that when it

rejected EPA’s inclusion of Wisconsin and the “coarse grid”

portions of Georgia and Missouri in the rulemaking.

Accordingly, there is no basis to the petitioners’ non-delegation

challenges.

11. Furthermore, the decision in ATA upon which petitioners rely

was incorrect for the reasons set forth in the briefs filed by the EPA,

the northeastern States and other petitioners in Browner v. American

Trucking Ass’ns, U.S. Supreme Court Nos. 99-1257, 99-1263 and 99-

1265 (argued on November 7, 2000). Respondent Massachusetts seeks

reversal of the D.C. Circuit’s decision in ATA as a party in those cases

and respondents New York, Connecticut, Maine, Maryland, New

Hampshire, Rhode Island, and Vermont have all joined in an amicus

curiae brief in those cases, supporting reversal of ATA.

23

CONCLUSION

For all the foregoing reasons, the Court should deny the

petitions for certiorari.

*Counsel of Record

Respectfully submitted,

ELIoT SPITZzER

Attorney General

PREETA D. BANSAL*

Solicitor General

DANIEL SMIRLOCK

Deputy Solicitor General

PETER H. SCHIFF

Senior Counsel

J. JARED SNYDER

Assistant Attorney General

Environmental Protection Bureau

The Capitol

Albany, New York 12224

(518) 474-8010

Counsel for the State of New York

J. JOSEPH CURRAN, JR.

Attorney General

KATHY KINSEY

Assistant Attorney General

OFFICE OF THE ATTORNEY GENERAL

MARYLAND DEPARTMENT OF THE

ENVIRONMENT

2500 Broening Highway

Baltimore, MD 21224

(410) 631-3954

Counsel for the State of Maryland

24

M. DuKEs PEPPER, JR.

PA Supreme Court I.D. 30140

DEPARTMENT OF ENVIRONMENTAL PROTECTION

9th Floor

RACHEL CARSON STATE OFFICE BUILDING

P.O. Box 8464

Harrisburg, PA 17105-7060

(717) 787-7060

Counsel for the

Commonwealth of Pennsylvania

RICHARD BLUMENTHAL

Attorney General

JUDITH MERRILL

JANET BROOKS

Assistant Attorneys General

P.O. Box 120

55 Elm Street

Hartford, CT 06141-0120

(860) 808-5250

Counsel for the State of Connecticut

ANDREW KETTERER

Attorney General

PAUL STERN

Deputy Attorney General

GERALD REID

_ Assistant Attorney General

Department of the Attorney General

6 State House Station

Augusta, Maine 04333-0006

(207) 626-8800

Counsel for the State of Maine

25

THOMAS F. REILLY

Attorney General

WILLIAM L. PARDEE

Assistant Attorney General

ENVIRONMENTAL PROTECTION DIVISION

200 Portland Street, 3rd Floor

Boston, Massachusetts 02114

(617) 727-2200

Counsel for the

Commonwealth of Massachusetts

PuiLip MCLAUGHLIN

Attorney General

MAurREEN D. SMITH

Assistant Attorney General

33 Capitol Street

Concord, NH 03301-6397

(603) 271-3679

Counsel for the

State of New Hampshire

SHELDON WHITEHOUSE

Attorney General

MICHAEL RUBIN

Environmental Advocate

TriciA O’HARE

JAMES BAUM

Special Assistant Attorneys General

Department of Attorney General

150 South Main Street

Providence, RI 02903

(401) 222-2424

Counsel for the

State of Rhode Island

26

WILLIAM H. SorRELL

Attorney General

RONALD A. SHEMS

Assistant Attorney General

OFFICE OF THE ATTORNEY GENERAL

109 State Street

Montpelier, VT 05609-1001

(802) 828-3171

Counsel for the State of Vermont