# Reply Brief — Appalachian Power Co. v. Environmental Protection Agency

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1603%3A6

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 2001
- **Citation:** 532 U.S. 903

## Text

No. 00-445

IN THE
Supreme Court of the Anited States

APPALACHIAN POWER COMPANY, ef ai.,
Petitioners,
Vv.
U.S. ENVIRONMENTAL PROTECTION AGENCY,
Respondent.

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the District of Columbia Circuit r

REPLY BRIEF FOR PETITIONERS

DAVID M. FLANNERY ANDREA BEAR FIELD
KATHY G. BECKETT (Counsel of Record)
JACKSON & KELLY NORMAN W. FICHTHORN
1600 Laidley Tower HUNTON & WILLIAMS
500 Lee Street East 1900 K Street, N.W.
P. O. Box 553 Washington, D.C. 20006
Charleston, WV 25301 (202) 955-1500
(304) 340-1017 MEL S. SCHULZE
Counsel for Petitioner HUNTON & WILLIAMS
Midwest Ozone Group 600 Peachtree Street, N.E.

Atlanta, GA 30308

(404) 888-4000

Counsel for Petitioners

Appalachian Power

DISCLOSURE STATEMENT

Pursuant to Rule 29.6, Petitioners hereby amend the
corporate disclosure statement filed with this petition for a
writ of certiorari. (Case No. 00-445). For convenience,
provided below are the page numbers of the petition for a
writ of certiorari listing petitioners as to which an amended
statement is provided.

Carolina Power & Light (p. x)

(parent: Progress Energy, Inc.)
(State Street Bank & Trust Company Boston is no longer
a 10% or greater owner)

Central and South West Services, Inc. (p. x) (now merged
with American Electric Power Co., Inc.)

Central Illinois Public Service Company (p. x) (now known
as AmerenCIPS)

Central Power and Light Company (p. x)
(parent: American Electric Power Co., Inc.)

Florida Power Corp. (p. x)
(parent: Florida Progress Corporation, which is a
subsidiary of Progress Energy, Inc.)

Illinois Power Company (p. xi) (now known as Dynegy
Marketing aiid Trade)

Otter Tail Power Co. (p. xi)
(Otter Tail Power Co. ESOP is no longer a 10% or
greater owner)

, ii
PacifiCorp Electric Operations (p. xi) (now known as

PacifiCorp)
(parent: Scottish Power plc)

Public Service Company of Oklahoma (p. xii)
(parent: American Electric Power Company, Inc.)

Southwestern Electric Power Company (p. xii)
(parent: American Electric Power Company, Inc.)

Union Electric Co. (p. xii) (now known as AmerenUE)

West Texas Utilities Co. (p. xii)
(parent: American Electric Power Company, Inc.)

Il.

TABLE OF CONTENTS

BY UPHOLDING EPA’S SUBSTITUTION OF
COST FOR AIR QUALITY IN DETERMINING
WHETHER AN AIR QUALITY
CONTRIBUTION IS SIGNIFICANT, THE
COURT OF APPEALS’ DECISION
CONFLICTS WITH BASIC PRINCIPLES OF
ADMINISTRATIVE LAW ESTABLISHED BY

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BECAUSE THE LOWER COURT’S
REASONING FOR REJECTING
APPLICATION OF THE NON-DELEGATION
DOCTRINE WOULD UNDERMINE THAT
DOCTRINE, THIS COURT SHOULD HEAR

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TABLE OF AUTHORITIES

CASES

American Trucking Ass’ns v. EPA, 175 F.3d 1027,
modified on reh’g, 195 F.3d 4 (D.C. Cir. 1999), cert.
granted, 120 S. Ct. 2003 and 2193 (2000) (Nos. 99-
1257, 99-1426, argued Nov. 7, 2000).............::cseeeees

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204
CT IIIOD snicscnrsssinsnsesssnnnpnensnisieencaidienianaaiiaduaiiaaaiied

Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984)
Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995)...

Grand Canyon Air Tour Coalition v. FAA, 154 F.3d
455 (D.C. Cir. 1998), cert. denied, 526 U.S. 1158

Industrial Union Dep’t v. American Petroleum Inst.,

pee eC. SORRRsaaintd ed haemlaatiinta eet:

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

STATUTES
SWI SI iii scciireckacineensnins

The Clean Air Act, 42 U.S.C. §§ 7401-7671q (1994
& Supp. III 1997)

CAA § 110(a)(2)(D)(i), 42 U.S.C. §
| RENE ae aenet es
CAA § 110(k)(5), 42 U.S.C. § 7410(k)(5) ...e..s-

Page

FEDERAL REGISTER
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ARGUMENT

In its response, EPA argues that Petitioners are mistaken
in asserting that EPA relied on cost to the exclusion of air
quality considerations in making its findings of “significant
contribution” under § 110(a)(2)(D\i) of the Clean Air Act,
42 U.S.C. § 7410(a)(2)(D)(i). EPA Br. 10. Based on this
argument, EPA now asserts that the issue is not whether a
§ 110(a)(2)(D)(i) significant contribution finding can be
based exclusively (or primarily) on cost rather than air
quality effects, but whether EPA may use cost analyses to
develop the regulatory remedy in response to supposedly air-
quality-based significant contribution findings. /d. at 12.

EPA’s post-hoc attempt to re-frame the issue must fail.
EPA did not make significant contribution findings based on
air quality considerations. The record makes clear that (1)
EPA considered air quality effects in deciding whether one
state’s emissions make any contribution to nonattainment air
quality in another state, but (2) once EPA found .».y
contribution, EPA determined whether that contribution was
significant based solely on the cost of emission controls.
This approach ignores the Clean Air Act’s decisional
criterion — i.e., air quality effects — for assessing whether a
contribution to nonattainment is significant, and therefore
conflicts with cases in this Court and in the D.C. Circuit
establishing that, where a statutory provision confines an
agency’s authority to consideration of a specific criterion, the
agency is not at liberty to base regulatory actions on other
criteria that it prefers to use.

With regard to the conflict between the decision below
and the constitutional non-delegation doctrine, EPA does not
even attempt to rely on or support the court of appeals’
reasoning — i.e., that, despite the lack of an intelligible

2

principle guiding EPA’s action, the non-delegation doctrine
is not applicable where that action affects less than “all
American enterprise” or no more than “half of the nation.”
Pet. App. 28a. Instead, EPA contends that the statute
provides an intelligible principle and that EPA acted
consistent with that principle. EPA Br. 20. But the issue
presented here is not whether some rationale rejected by the
court might sustain EPA’s action; the issue is whether the
court’s decision is consistent with the fundamental principle
that lawful agency actions must always be bounded by an
intelligible principle in statutory law. Because the court’s
basis for finding the non-delegation doctrine inapplicable
cannot be reconciled with that principle, this Court should
grant the petition and review that decision.

I. BY UPHOLDING EPA’S SUBSTITUTION OF
COST FOR AIR QUALITY IN DETERMINING
WHETHER AN AIR QUALITY CONTRIBU-
TION IS SIGNIFICANT, THE COURT OF
APPEALS’ DECISION CONFLICTS WITH
BASIC PRINCIPLES OF ADMINISTRATIVE
LAW ESTABLISHED BY THIS COURT’S
CASES.

EPA asserts that this case need not be reviewed because
the Agency in its rulemaking examined whether one state’s
emissions significantly contribute to another state’s ozone
nonattainment based on air quality considerations, rather than
cost. EPA Br. 10 (the petitions “rest largely on the mistaken
assertion that the NO, SIP Call ‘rel[ies] on cost-effectiveness,
to the exclusion of air quality effects, in assessing whether
one state’s emissions contribute “significantly” to another
state’s ozone nonattainment air quality.’”). The rulemaking

3

record contradicts EPA’s assertion and shows that EPA is
now attempting to avoid review based on a rationale that
EPA did not use to support its significant contribution
findings. EPA’s characterization is revisionist history.

EPA used a two-step process to make its significant
contribution findings. The first step was to determine
whether a state made any contribution to another state’s
ozone nonattainment area. In this first step, which did
involve evaluation of air quality effects, EPA modeled air
quality effects in downwind ozone nonattainment areas
resulting from all man-made nitrogen oxide (“NO,”) and
volatile organic compound emissions from each upwind
state. 63 Fed. Reg. 57,391 (1998). If EPA found no air
quality effects above a very low air quality effects threshold,
EPA declared that there was no contribution (or “linkage”’)
by the upwind state to the downwind state’s nonattainment
air quality. Jd. (“The first step in evaluating this [modeling]
information was to screen out linkages for which the
contributions were very low....”). However, if an upwind
state’s effects exceeded EPA’s very low threshold, EPA
declared an air quality contribution “linkage” - not a
“significant” contribution — between that state and the
downwind state’s nonattainment area, and then proceeded to
the second step. In other words, EPA used its air quality
threshold only as a screening tool to determine whether or
not a state “contribute[s]” to downwind nonattainment, not to
determine whether or not a state contributes “significantly.””

' EPA appears to claim now that it used the air quality threshold to decide
whether a contribution was or was not “significant.” EPA Br. 10-11 n.6.
This claim is wrong and misleading. EPA was careful to explain in the
preamble to the final rule that, only “for ease of discussion,” it used the
term “significant” to describe the contribution “linkages” identified in the
first step of its analysis. 63 Fed. Reg. 57,381 (1998). However, EPA

4

In the second step, EPA ignored air quality considerations
entirely and evaluated whether a state’s air quality
contribution was “significant” within the meaning of
§ 110(a)(2)(D)(i) by calculating the amount of that state’s
NO, emissions that, in its view, could be controlled cost-
effectively. 63 Fed. Reg. 57,381 (1998). EPA established a
cost-effectiveness “cutoff” of $2000 per ton of NO, removed.

Thus, EPA’s “actual finding of significant contribution”
(id.) was that amount of NO, emissions in each
“contributing” state that EPA estimated could be eliminated
at a cost of $2000 per ton or less. Whether and to what
extent that amount of NO, emissions had any effect on air
quality in any downwind nonattainment area was never
determined by EPA and therefore played no role whatsoever
in EPA’s significant contribution findings.’

As Judge Sentelle recognized below, EPA’s approach
reads out of the Clean Air Act the word “significantly.” See
Pet. App. 59a-60a (Sentelle, J., dissenting). If a state is
identified as “contributing,” i.e., is shown to cause air quality

made clear that its “actual finding of significant contribution” — i.e., its
determination of whether a given contribution rises to the level of
“significance” demanded by the statutory text — was based on its cost-
effectiveness cutoff, not on any air quality evaluation. /d.

? EPA indicates that, after its second step, it went on to a third step that
involved additional air quality modeling using the “cost-effective” NO,
emission reductions. EPA Br. 11. However, because that modeling was
done on a regional, not state-specific, basis, it revealed nothing about
whether any one state’s emissions were having any, let alone a
“significant,” air quality impact in another state’s ozone nonattainment
area. Section 110(a)2)(D)i)’s plain language allows EPA to make a
finding of “significant contribution” based only on emissions from
“within ... [a] State”; it prohibits EPA from making such findings based
on multi-state aggregations of emissions.

5

effects above the very low air quality threshold level chosen
by EPA for distinguishing between any contribution and no
contribution, the statute makes clear that EPA’s second step
should have been to evaluate whether that contribution to
nonattainment air quality is “significant” based on air quality
considerations. By contrast, EPA _ evaluated the
“significance” of the contributions it found only by
examining whether and how much NO, emissions can be
eliminated at $2000 per ton. Thus, under EPA’s approach,
each state with any contribution was automatically found to
“contribute significantly” in violation of § 110(a)(2)(D)(i), in
an amount equivalent to the amount of NO, emissions that
can be removed for $2000 per ton — irrespective of whether
that amount of emissions has any effects on air quality in a
downwind nonattainment area.

If EPA in the rulemaking had proposed, justified, and
used its air-quality-contribution threshold as the point at
which a contribution becomes “significant” under
§ 110(aX(2)(D){i), then the characterization of its action in its
Brief would be accurate. However, EPA did not propose its
air quality threshold as a significance test, EPA did not
justify that threshold for that purpose, and, most important,
EPA did not use that threshold — or any air quality test — as
its test for “significance” of contribution. Instead, EPA used
that threshold only to determine whether any contribution
existed at all, and then applied its $2000-per-ton cost-
effectiveness cutoff to determine what contribution was
“significant” within the purview of § 110(a)(2)(D)(i).

EPA’s substitution of cost for air quality effects to deter-
mine the significance of an air quality contribution violates
the fundamental administrative-law and separation-of-powers
principle requiring Executive Branch agencies to base their

6

actions on the decisional criterion imposed by Congress in
the governing statute — here, the amount of air quality contri-
bution to another state’s nonattainment of air quality stan-
dards that is “significant.” Bowen v. Georgetown Univ.
Hosp., 488 U.S. 204, 208 (1988). If left unreviewed, the
majority’s decision upholding EPA’s approach will
undermine that fundamental principle and established case
law reflected in numerous decisions applying that principle.
See, e.g., Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995).
Like the majority below, EPA here relies on NRDC vy.
EPA, 824 F.2d 1146 (D.C. Cir. 1987) (en banc), to support its
argument that it can consider cost in determining “significant
contribution.” In fact, however, that case supports Peti-
tioners’ position and confirms the unlawfulness of EPA’s SIP
call rule. The court in NRDC v. EPA unanimously rejected
EPA’s attempt to replace the Clean Air Act’s decisional
criterion for establishing hazardous air pollutant standards —
i.e., safety in terms of public health — with EPA’s own cost
criterion. The court found that, “in the face of uncertainty
about risks to health, [EPA] has simply substituted [cost and]
technological feasibility for health as the primary considera-
tion under [Clean Air Act] Section 112.” /d. at 1163. The
court held that EPA must make “an initial determination of
what is ‘safe’ ... based exclusively upon the Administrator’s
determination of the risk to health at a particular emission
level.” Jd. at 1164 (emphasis added). Only after EPA
determined, based on that statutory criterion, that the Act’s
standard of public health “safety” was assured could cost and
technological feasibility play any role in EPA’s choice
among a range of margins of safety. Id. at 1165. 7

> But cf. American Trucking Ass'ns v. EPA, 175 F.3d 1027, 1040-
41(construing other Clean Air Act provisions, and holding that EPA may

7

The other cases cited by EPA (and the majority below)
also support, rather than contradict, Petitioners’ position here.
See EPA Br. 16 n.13; Pet. App. 23a. For example, in Grand
Canyon Air Tour Coalition v. FAA, 154 F.3d 455 (D.C. Cir.
1998), cert. denied, 526 U.S. 1158 (1999), the FAA, in
determining whether overflight regulations satisfied the
statutory criterion of “substantial restoration of natural
quiet,” relied solely on a measure of quiet to define
“substantial restoration.” Jd. at 461-62. Only after it had
established the meaning of: “substantial restoration”
consistent with the statute’s decisional criterion (based on a
measure of “quiet”) was the agency allowed to consider cost
in adopting a specific program to satisfy the statute. /d. at
475.4 Here, in contrast, EPA ignored air quality in
determining whether the governing statutory criterion of
significant contribution to nonattainment air quality was met.

not consider cost in establishing national ambient air quality standards),
modified on reh’g on other grounds, 195 F.3d 4 (D.C. Cir. 1999), cert.
granted, 120 S. Ct. 2003 and 2193 (2000) (Nos. 99-1257, 99-1426,
argued Nov. 7, 2000). In the present case, the court below neither cited
its then-recent decision in that case nor tried to explain how it could be
reconciled with NRDC v. EPA.

‘ The majority below, but not EPA here, also relied on this Court’s
plurality decision in Industrial Union Dep't v. American Petroleum Inst.,
448 U.S. 607 (1980). Pet. App. 2la-22a. However, that decision made
clear that the Secretary of Labor, in assessing “significant” risk of harm,
could not substitute cost considerations for the statute’s decisional
criterion, risk of harm to health. See Industrial Union Dep't, 448 U.S. at
639-46. A plurality of this Court held that, because the benzene standard
at issue there was based on the lowest economically and technologically
feasible level, rather than on consideration of the statute’s decisional
criterion, promulgation of the standard was unlawful. See id. at 659; see
also Pet. App. 60a n.1 (Sentelle, J., dissenting) (discussing /ndustrial
Union Dep't).

8

Consistent with this case law, Petitioners do not argue
that EPA is prohibited from considering cost in fashioning a
remedy to address a violation of § 110(a)(2)(D)(i)’s
prohibition on significant contribution. See Pet. 13, 18
(discussing Clean Air Act §110(k)(5), 42 U.S.C.
§ 7410(k)(5) (authorizing SIP calls to “mitigate adequately”
interstate transport that has been found to “contribute
significantly”)). However, requiring a state to fashion any
remedy — whether or not based on cost — is lawful only after
a determination has been made, based on the statute’s
decisional criterion, that that state creates a significant air
quality contribution to nonattainment air quality in another
state. Cost-effectiveness of controls cannot, consistent with
Congress’ choice of language in § 110(a)(2)(D){i), be
substituted for air quality in making that significant
contribution determination.

The language and structure of § 110(a)(2)(D)(i) leave no
doubt that the scope and nature of air quality effects must
govern any determination of whether a contribution to
nonattainment air quality is “significant.” See Pet. App. 57a,
59a-60a (Sentelle, J., dissenting).° Because the majority
below departed from Supreme Court precedent establishing
that an agency’s decision must be based on the decisional
criterion provided by Congress, this Court should grant the
petition for a writ of certiorari.

* For this reason, there can be no basis for reaching step two of Chevron,
U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984), and deferring to EPA’s
interpretation. That Congress did not expressly define “contribute
significantly to nonattainment” is not determinative of whether Chevron
step two can be reached; it is clear from the language of the Clean Air
Act that the significance of an air quality contribution to a nonattainment
air quality area must be judged based on air quality considerations. No
other reading is possible given the statutory language.

9

II. BECAUSE THE LOWER COURT’S REASON-
ING FOR REJECTING APPLICATION OF THE
NON-DELEGATION DOCTRINE WOULD
UNDERMINE THAT DOCTRINE, THIS
COURT SHOULD HEAR THIS CASE.

The court below agreed that EPA’s $2000-per-ton cost-
effectiveness cutoff was not based on any intelligible prin-
ciple found in the Clean Air Act, i.e., EPA’s “selection of the
cut-off point was essentially unbounded.” Pet. App. 27a; id.
(EPA “neither rests that [cost-effectiveness] benchmark on
anything in the language or function of § 110(a)(2)(D)((D,
nor otherwise explains why the resulting cut-off point
represents the right degree of ‘cost-effectiveness’ (i.e., why
‘highly cost-effective’ should be at that ‘height’).”).

The court nonetheless rejected the argument that EPA’s
choice of $2000 per ton violated the Constitution’s non-
delegation doctrine, on the grounds that EPA’s action
currently affects only “[nJearly half of the nation” and not
“all American enterprise.” Jd. 28a. Contrary to established
law, the court invoked a putative rule that, where agency
action affects less than the entire nation, delegation-limiting
intelligible principles may permissibly be less “precise” (id.
27a) as the basis for judicial affirmation of Executive Branch
action that is wholly unconstrained — “unbounded,” in the
court’s words — by any intelligible principle, precise or not.

In its response, EPA does not even try to argue that the
court’s “nationwide effect” prerequisite to application of the
Constitution’s protection against excessive delegation of
legislative authority is correct or defensible. See EPA Br. 20.
Rather, EPA asserts that its action was constitutional under
this Court’s precedents addressing the non-delegation
doctrine. Jd. (“The Court need not rely on ... [the court’s test]

10

because Section 110(a)(2)(D) is constitutional under any
reasonable view of the nondelegation doctrine.”’).

Petitioners ask this Court to review the court of appeals’
decision, not the reasoning presented in EPA’s response.
EPA’s reasoning contradicts the decision below; unlike the
D.C. Circuit, EPA claims that there was an intelligible
principle that guided its selection of the $2000-per-ton cutoff.
Review of the lower court’s decision should not be denied on
the basis of an argument that that court rejected.

EPA also argues that this Court should not accept Peti-
tioners’ invitation to review the issue of the consistency of
EPA’:, $2000-per-ton cutoff with the Administrative Proce-
dure Act’s (“APA”) prohibition on “arbitrary and capricious”
agency action, 5 U.S.C. § 706(2)(A). EPA Br. 21. Yet, if,
as the court below held, EPA’s selection of the cutoff “was
essentially unbounded,” Pet. App. 27a, and if, as both the
court’s opinion and EPA assert, EPA’s action did not violate
the non-delegation doctrine, then EPA’s action must have
been arbitrary and capricious under the APA. Thus, even if
EPA’s action did not violate the non-delegation doctrine, this
Court should grant certiorari to review why EPA’s action was
not found deficient under the APA. To let the decision below
stand would serve as precedent for agencies to exercise
unfettered discretion in violation of the APA so long as they
can avoid a finding of violation of the non-delegation
doctrine — a result that would vitiate the APA’s safeguard
against arbitrary and capricious Executive Branch action.

CONCLUSION

Petitioners respectfully request that the petition for a writ
of certiorari be granted.

DAVID M. FLANNERY
KATHY G. BECKETT
JACKSON & KELLY
1600 Laidley Tower
500 Lee Street East

P. O. Box 553
Charleston, WV 25301
(304) 340-1017

Counsel for Petitioner
Midwest Ozone Group

January 16, 2001

Respectfully submitted,

ANDREA BEAR FIELD

(Counsel of Record)
NORMAN W. FICHTHORN
HUNTON & WILLIAMS
1900 K Street, N.W.
Washington, D.C. 20006
(202) 955-1500

MEL S. SCHULZE
HUNTON & WILLIAMS
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
(404) 888-4000

Counsel for Petitioners
Appalachian Power Co., et al.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_1603%3A6. Public record. Not legal advice.