United States Court of Appeals, District of Columbia Circuit
Argued: December 10, 2013.
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On Petitions for Review of Final Rule of the United States Environmental Protection Agency.
Lee B. Zeugin and Neil D. Gordon, Assistant Attorney General, Office of the Attorney General for the State of Michigan, argued the causes for State, Industry, and Labor Petitioners. With them on the joint briefs were F. William Brownell, Lauren E. Freeman, Elizabeth L. Horner, Bill Schuette, Attorney General, Office of the Attorney General for the State of Michigan, John J. Bursch, Solicitor General, S. Peter Manning, Assistant Attorney General, Luther Strange, Attorney General, Office of the Attorney General for the State of Alabama, Michael C. Geraghty, Attorney General, Office of the Attorney General for the State of Alaska, Steven E. Mulder, Attorney, Peter S. Glaser, George Y. Sugiyama, Michael H. Higgins, David B. Rifkin, Jr., Lee A. Casey, Mark W. DeLaquil, Andrew M. Grossman, David Flannery, Gale Lea Rubrecht, Kathy G. Beckett, Edward L. Kropp, Leslie Sue Ritts, Thomas Horne, Attorney General, Office of the Attorney General for the State of Arizona, Joseph P. Mikitish and James T. Skardon, Assistant Attorneys General, Dustin McDaniel, Attorney General, Office of the Attorney General for the State of Arkansas, Kendra Akin Jones, Assistant Attorney General, Charles L. Moulton, Senior Assistant Attorney General, Pamela Jo Bondi, Attorney General, Office of the Attorney General for the State of Florida, Jonathan A. Glogau, Attorney, Lawrence G. Wasden, Attorney General, Office of the Attorney General for the State of Idaho, Grant Crandall, Arthur Traynor, III, Eugene M. Trisko, Gregory F. Zoeller, Attorney General, Office of the Attorney General for the State of Indiana, Valerie Tachtiris, Deputy Attorney General, Dennis Lane, Derek Schmidt, Attorney General, Office of the Attorney General for the State of Kansas, Jeffrey A. Chanay, Deputy Attorney General, Henry V. Nickel, George P. Sibley III, Eric A. Groten, Jeremy C. Marwell, John A. Riley, Christopher C. Thiele, Harold E. Pizzetta III, Assistant Attorney General, Office of the Attorney General for the State of Mississippi, Chris Koster, Attorney General, Office of the Attorney General for the State of Missouri, James R. Layton and John J. McManus, Attorneys, Paul D. Clement, Nathan A. Sales, Lisa Marie Jaeger, Jon Bruning, Attorney General, Office of the Attorney General for the State of Nebraska, Katherine J. Spohn, Special Counsel to the Attorney General, Wayne Stenehjem, Attorney General, Office of the Attorney General for the State of North Dakota, Margaret I. Olson, Steven C. Kohl, Eugene E. Smary, Sarah C. Lindsey, E. Scott Pruitt, Attorney General, Office of the Attorney General for the State of Oklahoma, P. Clayton Eubanks, Assistant Attorney General, Michael DeWine, Attorney General, Office of the Attorney General for the State of Ohio, Dale T. Vitale and Gregg H. Bachmann, Assistant Attorneys General, Robert M. Wolff, Special Counsel, Alan Wilson, Attorney General, Office of the Attorney General for the State of South Carolina, James Emory Smith, Jr., Assistant Deputy Attorney General, Mark L. Shurtleff, Attorney General, Office of the Attorney General for the State of Utah, Greg Abbott, Attorney General, Office of the Attorney General for the State of Texas, Jon Niermann, Chief, Mark Walters and Mary E. Smith, Assistant Attorneys General, Kenneth T. Cuccinelli, II, Attorney General, Office of the Attorney General for the Commonwealth of Virginia, Patrick Morrisey, Attorney General, Office of the Attorney General for the State of West Virginia, Silas B. Taylor, Senior Deputy Attorney General, Jeffrey R. Holmstead, Sandra Y. Snyder, Gregory A. Phillips, Attorney General, Office of the Attorney General for the State of Wyoming, Jay A. Jerde, Deputy Attorney General, Jack Conway, Attorney General, Office of the Attorney General for the State of Kentucky, Bart E. Cassidy, and Katherine L. Vaccaro.
Bill Cobb argued the cause for Industry Petitioners' Specific Issues. With him on the briefs were Michael Nasi, Leslie Sue Ritts, Jeffrey R. Holmstead, Sandra Y. Snyder, Paul D. Clement, Nathan A. Sales, Steven C. Kohl, Eugene E. Smary, Sarah C. Lindsay, Bart E. Cassidy, Katherine L. Vaccaro, John C. Hayes, Jr., Dennis Lane, John A. Riley, Christopher C. Thiele, C. Grady Moore, III, P. Stephen Gidiere, III, and Thomas Lee Casey, III.
Sanjay Narayan and Eric Schaeffer argued the causes for Environmental Petitioners. With them on the briefs were Whitney Farrell, James S. Pew, Neil Gormley, Ann Brewster Weeks, and Darin Schroeder.
David Bookbinder argued the cause and filed the briefs for petitioner Julander Energy Company.
Michael B. Wigmore, Sandra P. Franco, Robin S. Conrad, Rachel Brand, and Sheldon Gilbert were on the brief for amicus curiae The Chamber of Commerce of the United States of America in support of Industry Petitioners.
Eric G. Hostetler, Matthew R. Oakes, and Amanda S. Berman, Attorneys, U.S. Department of Justice, argued the causes for respondent. With them on the brief was Wendy L. Blake, Attorney, U.S. Environmental Protection Agency.
Melissa Hoffer, Assistant Attorney General, Office of the Attorney General for the Commonwealth of Massachusetts, argued the cause for State and Local Government Intervenors in support of Respondent. With her on the brief were Martha Coakley, Attorney General, Office of the Attorney General for the State of Massachusetts, Tracy Triplett and Carol A. Iancu, Assistant Attorneys General, Kamala D. Harris, Attorney General, Office of the Attorney General for the State of California, Janill L. Richards, Supervising Deputy Attorney General, Susan L. Durbin, Deputy Attorney General, Joseph R. Biden, III, Attorney General, Office of the Attorney General for the State of Delaware, Valerie M. Satterfield, Deputy Attorney General, Thomas L. Miller, Attorney General, Office of the Attorney General for the State of Iowa, David R. Sheridan, Assistant Attorney General, George Jepsen, Attorney General, Office of the Attorney General for the State of Connecticut, Kimberly P. Massicotte and Matthew I. Levine, Assistant Attorneys General, Lisa Madigan, Attorney General, Office of the Attorney General for the State of Illinois, Matthew J. Dunn and Gerald T. Karr, Assistant Attorneys General, Douglas F. Gansler, Attorney General, Office of the Attorney General for the State of Maryland, Roberta R. James, Assistant Attorney General, Michael A. Delaney, Attorney General, Office of the Attorney General for the State of New Hampshire, K. Allen Brooks, Senior Assistant Attorney General, Janet T. Mills, Attorney General, Office of the Attorney General for the State of Maine, Gerald D. Reid, Assistant Attorney General, Lori Swanson, Attorney General, Office of the Attorney General for the State of Minnesota, Max Kieley, Assistant Attorney General, Eric T. Schneiderman, Attorney General, Office of the Attorney General for the State of New York, Michael J. Myers and Kevin P. Donovan, Assistant Attorneys General, Ellen F. Rosenbaum, Attorney General, Office of the Attorney General for the State of Oregon, Paul A. Garrahan, Assistant Attorney-in-Charge, Gary K. King, Attorney General, Office of the Attorney General for the State of New Mexico, Stephen R. Farris, Assistant Attorney General, Roy Cooper, Attorney General, Office of the Attorney General for the State of North Carolina, James C. Gulick, Senior Deputy Attorney General, J. Allen Jernigan, Marc Bernstein, and Amy L. Bircher, Special Deputy Attorneys General, William H. Sorrell, Attorney General, Office of the Attorney General for the State of Vermont, Thea J. Schwartz, Assistant Attorney General, George A. Nilson, William R. Phelan, Jr., Peter F. Kilmartin, Attorney General, Office of the Attorney General for the State of Rhode Island, George S. Schultz, Special Assistant Attorney General, Irvin B. Nathan, Attorney General, Office of the Attorney General for the District of Columbia, Amy E. McDonnell, Deputy General Counsel, Christopher King, Benna Ruth Solomon, and Jeremy Toth.
Sean H. Donahue argued the cause for Public Health, Environmental, and Environmental Justice Group Respondent Intervenors. With him on the brief were Pamela A. Campos, Tomá s Carbonell, Ann Brewster Weeks, Darin T. Schroeder, James S. Pew, Neil E. Gormley, Sanjay Narayan, John D. Walke, and John Suttles. Vickie L. Patton entered an appearance.
Brendan K. Collins argued the cause for Industry Respondent Intervenors. With him on the brief were Robert B. McKinstry Jr., Lorene L. Boudreau, and Erik S. Jaffe.
Peter S. Glaser, George Y. Sugiyama, F. William Brownell, Lauren E. Freeman, Lee B. Zeugin, Elizabeth L. Horner, David B. Rivkin Jr., Lee A. Casey, Mark W. DeLaquil, Andrew M. Grossman, Jeremy C. Marwell, Eric A. Groton, Jeffrey R. Holmstead, and Sandra Y. Snyder were on the brief for Industry Intervenors in response to Environmental Petitioners. Henry V. Nickel entered an appearance.
Peter S. Glaser, George Y. Sugiyama, Hahnah Williams, F. William Brownell, Lauren E. Freeman, Lee B. Zeugin, Elizabeth L. Horner, Jeremy C. Marwell, Eric A. Groton, Jeffrey R. Holmstead, Sandra Y. Snyder, Bill Cobb, Michael Nasi, David B. Rivkin Jr., Lee A. Casey, Mark W. DeLaquil, and Andrew M. Grossman were on the brief for Intervenor Respondents in Opposition to Brief of Petitioner Julander Energy Company.
Wendy B. Jacobs, Adam Babich, and Michael A. Livermore were on the brief for amici curiae Institute for Policy Integrity, et al. in support of respondent.
Before: GARLAND, Chief Judge, and ROGERS and KAVANAUGH, Circuit Judges.
In 2012, the Environmental Protection Agency promulgated emission standards for a number of listed hazardous air pollutants emitted by coal- and oil-fired electric utility steam generating units. See National Emission Standards for Hazardous Air Pollutants From Coal- and Oil-Fired Electric Utility Steam Generating Units and Standards of Performance for Fossil-Fuel-Fired Electric Utility, Industrial-Commercial-Institutional, and Small Industrial-Commercial-Institutional Steam Generating Units, Final Rule, 77 Fed. Reg. 9304 (Feb. 16, 2012). In this complex case, we address the challenges to the Final Rule by State, Industry, and Labor petitioners, by Industry petitioners to specific aspects of the Final Rule, by Environmental petitioners, and by Julander Energy Company. For the following reasons, we deny the petitions challenging the Final Rule.
In 1970, Congress enacted § 112 of the Clean Air Act, Pub. L. No. 91-604, § 4(a), 84 Stat. 1676, 1685 (1970), to reduce hazardous air pollutants (" HAPs" ). See Sierra Club v. EPA, 353 F.3d 976, 979, 359 U.S.App. D.C. 251 (D.C. Cir. 2004); H. R. Rep. No. 101-490,
at 150 (1990). The statute defined HAPs as " air pollutant[s] . . . which in the judgment of the Administrator [of the Environmental Protection Agency (" EPA" )] cause, or contribute to, air pollution which may reasonably be anticipated to result in an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness." § 112(a)(1), 84 Stat. at 1685. In its original form, § 112 required EPA to publish a list containing " each hazardous air pollutant for which [it] intends to establish an emission standard." § 112(b)(1)(A), 84 Stat. at 1685. EPA then was to promulgate, within 360 days, emission standards " provid[ing] an ample margin of safety to protect the public health" for each listed HAP, unless EPA found that a particular listed substance was in fact not hazardous. § 112(b)(1)(B), 84 Stat. at 1685. Over the next eighteen years, EPA listed only eight HAPs, established standards for only seven, and as to these seven addressed only a limited selection of possible pollution sources. See New Jersey v. EPA, 517 F.3d 574, 578, 380 U.S.App. D.C. 134 (D.C. Cir. 2008); S. REP. NO. 101-228, at 131 (1989).
To remedy the slow pace of EPA's regulation of HAPs, Congress amended the Clean Air Act in 1990, see Pub. L. No. 101-549, 104 Stat. 2531 (1990) (" CAA" ), by eliminating much of EPA's discretion in the process. See New Jersey, 517 F.3d at 578. In the amended § 112, Congress itself listed 189 HAPs that were to be regulated, see CAA § 112(b), 42 U.S.C. § 7412(b), and directed EPA to publish a list of " categories and subcategories" of " major sources" and certain " area sources" that emit these pollutants, CAA § 112(c), 42 U.S.C. § 7412(c). Once listed, a source category may only be delisted (with one exception not relevant here) if EPA determines that " no source" in that category emits HAPs in quantities exceeding specified thresholds. CAA § 112(c)(9)(B), 42 U.S.C. § 7412(c)(9)(B). For each listed " category or subcategory of major sources and area sources" of HAPs, EPA must promulgate emission standards. CAA § 112(d)(1), 42 U.S.C. § 7412(d)(1). Section 112(d) provides, as relevant, that emission standards
shall require the maximum degree of reduction in emissions of the hazardous air pollutants subject to this section (including a prohibition on such emissions, where achievable) that the Administrator, taking into consideration the cost of achieving such emission reduction, and any non-air quality health and environmental impacts and energy requirements, determines is achievable[.]
CAA § 112(d)(2), 42 U.S.C. § 7412(d)(2) (emphasis added). For existing sources, these " maximum achievable control technology" (" MACT" ) standards may not be less stringent -- regardless of cost or other considerations -- " than  the average emission limitation achieved by the best performing  sources" in the relevant category or subcategory. CAA § 112(d)(3)(A)-(B), 42 U.S.C. § 7412(d)(3)(A)-(B); see Nat'l Lime Ass'n v. EPA, 233 F.3d 625, 629, 344 U.S.App. D.C. 97 (D.C. Cir. 2000). EPA refers to minimum-stringency MACT standards as " floors." Standards more stringent than the floors, determined pursuant to § 112(d)(2), are called " beyond-the-floor" limits.
For electric utility steam generating units (" EGUs" ), however, Congress directed that prior to any listing EPA conduct a study of " the hazards to public health reasonably anticipated to occur as a result of [EGU HAP emissions] after imposition of the requirements of this Chapter [i.e., Chapter 85 Air Pollution Prevention and Control]." CAA § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A) (emphasis added). The results of this " Utility Study" were to be
reported to Congress within three years. Id. Further, Congress directed that:
The Administrator shall regulate [EGUs] under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph.
Id. (emphasis added). Congress also directed EPA to conduct two other studies on mercury emissions: the " Mercury Study" on " the rate and mass of such emissions, the health and environmental effects of such emissions, technologies which are available to control such emissions, and the costs of such technologies," to be reported to Congress in four years, and the National Institute of Environmental Health Sciences " study to determine the threshold level of mercury exposure below which adverse human health effects are not expected to occur," to be reported to Congress in three years. See CAA § 112(n)(1)(A)-(C), 42 U.S.C. § 7412(n)(1)(A)-(C).
In December 2000, on the basis of the Utility Study and other data subsequently gathered, EPA issued a notice of regulatory finding " that regulation of HAP emissions from coal-and oil-fired electric utility steam generating units under section 112 of the CAA is appropriate and necessary." Regulatory Finding on the Emissions of Hazardous Air Pollutants From Electric Utility Steam Generating Units, 65 Fed. Reg. 79,825, 79,826 (Dec. 20, 2000) (" 2000 Finding" ). EPA found that EGUs " are the largest source of mercury emissions in the U.S." and that " [m]ercury is highly toxic, persistent, and bioaccumulates in food chains." 65 Fed. Reg. at 79,827. Specifically, " [m]ercury emitted from [EGUs] . . . is transported through the atmosphere and eventually deposits onto land or water bodies" where it then changes into " a highly toxic" substance called methylmercury. Id. Methylmercury " biomagnifies in the aquatic food chain," id., meaning that it becomes concentrated in the bodies of predatory fish which absorb the methylmercury their food sources contained. When humans eat these contaminated fish, they also are exposed; the methylmercury from the fish is absorbed into the bloodstream and " distributed to all tissues including the brain." Id. at 79,829. The risks are greatest for women of childbearing age, EPA explained, because methylmercury " readily passes . . . to the fetus and fetal brain," id., and " the developing fetus is most sensitive to the effects of methylmercury," id. at 79,827. Children born to women who were exposed to methylmercury during pregnancy have exhibited neurological abnormalities and developmental delays. Id. at 79,829.
EPA concluded that " the available information indicate[d] that mercury emissions from [EGUs] . . . are a threat to public health and the environment," notwithstanding " uncertainties regarding the extent of the risks due to electric utility mercury emissions." Id. (emphasis added). EPA also identified several other metal and acid gas emissions from EGUs that were " of potential concern," namely arsenic, chromium, nickel, cadmium, dioxins, hydrogen chloride, and hydrogen fluoride. Id. EPA therefore determined that it was " appropriate" to regulate coal-and oil-fired EGUs under § 112 because of the health and environmental hazards posed by mercury emissions from EGUs, and the availability of a number of control options to effectively reduce such emissions. Id. at 79,830. EPA further determined that it was " necessary" to regulate EGUs under § 112 because implementation of other provisions of the CAA would " not adequately address" the public health and environmental hazards found. Id. Therefore, EPA added " coal- and oil-fired electric utility steam generating units to
the list of source categories under section 112(c) of the CAA." Id.
In 2005, EPA reversed its 2000 Finding and removed coal-and oil-fired EGUs from the list of source categories under § 112(c). See Revision of December 2000 Regulatory Finding on the Emissions of Hazardous Air Pollutants From Electric Utility Steam Generating Units and the Removal of Coal- and Oil-Fired Electric Utility Steam Generating Units From the Section 112(c) List, 70 Fed. Reg. 15,994, 15,994 (Mar. 29, 2005) (" 2005 Delisting Decision" ). This change was based on EPA's revised interpretation of § 112(n)(1)(A) and, to some extent, on a revised assessment of the results of the Utility Study. EPA concluded that it lacked authority under § 112(n)(1)(A) to regulate on the basis of non-health hazards (e.g., environmental harms), and should " focus solely" on the health effects directly attributable to EGU emissions, rather than on EGUs' contribution to overall pollutant levels. Id. at 15,998. Further, EPA decided it could consider other relevant, " situation-specific factors, including cost" that may affect whether regulation under § 112 is " appropriate." Id. at 16,000-01. Critically, EPA determined that it must make its " appropriate and necessary" finding by reference to health hazards that will remain " after imposition of the requirements of" the CAA. Id. at 15,998 (emphasis added) (quoting CAA § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A)). EPA interpreted these other " requirements" to include " not only those requirements already imposed and in effect, but also those requirements that EPA reasonably anticipates will be implemented" and which " could either directly or indirectly result in reductions of utility HAP emissions." Id. at 15,999. Concluding that regulation under other provisions of the CAA would adequately address EGU emissions of mercury and other HAPs, EPA determined that regulation under § 112 was neither " appropriate" nor " necessary." Id. at 16,002-08. In responding to comments, EPA stated that if it were to regulate EGU emissions, then it would regulate only those substances for which it had made a specific " appropriate and necessary" determination. States and other groups petitioned for review and this court vacated the 2005 Listing Decision, New Jersey, 517 F.3d at 583, holding that EPA's attempt to reverse its December 2000 listing decision was unlawful because Congress had " unambiguously limit[ed] EPA's discretion to remove sources, including EGUs, from the section 112(c)(1) list once they have been added to it."
In 2012, after notice and comment, EPA " confirm[ed]" its 2000 Finding that regulation of EGU emissions under § 112 is " appropriate and necessary." Final Rule, 77 Fed. Reg. 9304, 9310-11. In the proposed rule, EPA stated that " the December 2000 Finding was valid at the time it was made based on the information available to the Agency at that time." Proposed Rule, 76 Fed. Reg. 24,976, 24,986, 24,994-97 (May 3, 2011) (" NPRM" ). Although of the view that no further evidence was required to affirm the 2000 Finding, EPA had conducted additional quantitative and qualitative analyses " confirm[ing] that it remains appropriate and necessary today to regulate EGUs under CAA section 112." Id. at 24,986; see id. at 24,999-25,020. With respect to the term " appropriate," EPA explained that it was " chang[ing] the position taken in 2005 that the appropriate finding could not be based on environmental effects alone" ; " revisiting the 2005 interpretation that required the Agency to consider HAP emissions from EGUs without considering the cumulative impacts of all sources of HAP emissions" ; " revising the 2005 interpretation that required the Agency to evaluate the hazards to public health after imposition of the requirements
of the CAA" ; and " rejecting the 2005 interpretation that authorizes the Agency to consider other factors ( e.g., cost), even if the agency determines that HAP emitted by EGUs pose a hazard to public health (or the environment)." Id. at 24,989. With respect to the term " necessary," EPA rejected as " unreasonable" its interpretation in 2005 that regulation under § 112 was " necessary" only if no other provision in the CAA -- whether implemented or only anticipated -- could " directly or indirectly" reduce HAP emissions to acceptable levels. Id. at 24,992.
EPA explained that it interpreted § 112(n)(1)(A)
to require the Agency to find it appropriate to regulate EGUs under CAA section 112 if the Agency determines that the emissions of one or more HAP emitted from EGUs pose an identified or potential hazard to public health or the environment at the time the finding is made. If the Agency finds that it is appropriate to regulate, it must find it necessary to regulate EGUs under section 112 if the identified or potential hazards to public health or the environment will not be adequately addressed by the imposition of the requirements of the CAA. Moreover, it may be necessary to regulate utilities under section 112 for a number of other reasons, including, for example, that section 112 standards will assure permanent reductions in EGU HAP emissions, which cannot be assured based on other requirements of the CAA.
Id. at 24,987-88. EPA also affirmed that coal- and oil-fired EGUs were properly listed as a source category under § 112(c). See id. at 24,986. EPA adhered to these interpretations in the Final Rule, 77 Fed. Reg. at 9311. Accordingly, on February 16, 2012, EPA promulgated emission standards for a number of listed HAPs emitted by coal- and oil-fired EGUs. See id. at 9487-93.
Several petitions for review challenge the Final Rule. We first address, in Part II, the challenges of the State, Industry, and Labor petitioners. In Part III, we address Industry petitioners' specific issues. In Part IV.A, we address the challenges by the Environmental petitioners, and in Part IV.B, Julander Energy Company's standing. In addressing the substantive challenges to the Final Rule, this court must determine under the CAA whether the Final Rule was promulgated in a manner that was arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with law. See CAA § 307(d)(9)(A), 42 U.S.C. § 7607(d)(9)(A). " The 'arbitrary and capricious' standard deems the agency action presumptively valid provided the action meets a minimum rationality standard." Sierra Club, 353 F.3d at 978-79 (quoting Natural Res. Def. Council v. EPA, 194 F.3d 130, 136, 338 U.S.App. D.C. 340 (D.C. Cir. 1999)). That is, " [i]f EPA acted within its delegated statutory authority, considered all of the relevant factors, and demonstrated a reasonable connection between the facts on the record and its decision, we will uphold its determination." Ethyl Corp. v. EPA, 51 F.3d 1053, 1064, 311 U.S.App. D.C. 163 (D.C. Cir. 1995). The court will show particular deference " where the agency's decision rests on an evaluation of complex scientific data within the agency's technical expertise." Troy Corp. v. Browner, 120 F.3d 277, 283, 326 U.S.App. D.C. 249 (D.C. Cir. 1997); see also Marsh v. Or. Natural Res. Council, 490 U.S. 360, 377, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989).
State, Industry, and Labor petitioners challenge EPA's interpretation and application of the " appropriate and necessary" requirement in § 112(n)(1)(A).
As a threshold matter, petitioners contend that the 2000 Finding was unlawful because EPA did not allow notice and comment on the finding, did not quantify the relevant mercury emissions and associated health risks, and did not describe " alternative control strategies" as required under § 112(n)(1)(A). Because the December 2000 notice was " fundamentally flawed," they contend it " could have no legal consequences" and " could not provide the basis for a § 112(c) listing decision." State, Industry & Labor Pet'rs' Br. (hereinafter " SIL Br." ) 27-28. Without a proper listing under § 112(c), they contend, EPA has no authority to regulate EGUs under § 112(d).
The court need not decide whether EPA's December 2000 " appropriate and necessary" finding was procedurally or substantively valid because EPA reconsidered and " confirm[ed]" that determination in the Final Rule. See NPRM, 76 Fed. Reg. at 24,977; Final Rule, 77 Fed. Reg. at 9310-11, 9320. For the reasons we will discuss, we hold that EPA's finding in the Final Rule was substantively and procedurally valid, and consequently any purported defects in the 2000 Finding have been cured, rendering petitioners' challenge to December 2000 " appropriate and necessary" finding moot. Cf. Fund for Animals, Inc. v. Hogan, 428 F.3d 1059, 1063-64, 368 U.S.App. D.C. 238 (D.C. Cir. 2005).
The crux of petitioners' challenge to the Final Rule focuses on EPA's interpretation of the phrase " appropriate and necessary" in § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A). The context of this phrase is as follows. In a special subsection on EGUs, Congress first directed: " The Administrator shall perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by electric utility steam generating units of pollutants listed under subsection (f) after imposition of the requirements of this Act." CAA § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A) (emphasis added). Congress then directed: " The Administrator shall regulate electric utility steam generating units under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph." Id. (emphasis added). Apart from the instruction to " consider the results of the [Utility Study]" on public health hazards from EGU emissions, the statute offers no express guidance regarding what factors EPA is required or permitted to consider in deciding whether regulation under § 112 is " appropriate and necessary." Neither does it define the words " appropriate" or " necessary." See NPRM, 76 Fed. Reg. at 24,986; 2005 Listing Decision, 70 Fed. Reg. at 15,997. Petitioners object to how EPA chose to fill these gaps.
In matters of statutory interpretation, the court applies the familiar two part test under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). First, the court employs traditional tools of statutory construction to determine de novo " whether Congress has directly spoken to the precise question at issue." Id. at 842, 843 n.9. If the court " ascertains that Congress had an intention on the precise question at issue," id. at 843 n.9, " that is the end of the matter" and the court " must give effect to the unambiguously expressed intent of Congress," id. at 842-43. If, however, " the statute is silent or ambiguous with respect to the specific issue," the court will uphold the agency's interpretation so long as it
constitutes " a permissible construction of the statute." Id. at 843. " In such case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 844.
To the extent petitioners' challenge concerns EPA's change in interpretation from that in 2005, our approach is the same because " [a]gency inconsistency is not a basis for declining to analyze the agency's interpretation under the Chevron framework." Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 981, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). That is, " if the agency adequately explains the reasons for a reversal of policy, change is not invalidating, since the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency." Id. (internal quotation marks omitted). And while " [u]nexplained inconsistency" may be " a reason for holding an interpretation to be an arbitrary and capricious change from agency practice," id., our review of a change in agency policy is no stricter than our review of an initial agency action, see FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514-16, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). Thus, although an agency may not " depart from a prior policy sub silentio or simply disregard rules that are still on the books," the agency " need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one." Id. at 515. Rather, " it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better." Id.
1. Reliance on delisting criteria.
In the Final Rule, EPA concluded that it is " appropriate and necessary" to regulate HAP emissions on the basis, inter alia, that EGU emissions of certain HAPs pose a cancer risk higher than the standard set forth in the § 112(c)(9) delisting criteria (i.e., greater than one in a million for the most exposed individual). See Final Rule, 77 Fed. Reg. at 9311; NPRM, 76 Fed. Reg. at 24,998. Petitioners contend that by so doing EPA wrongly conflated the delisting criteria with the " appropriate and necessary" determination. " By applying the delisting provisions of § 112(c)(9) in making the initial, pre-listing determination whether it is 'appropriate and necessary' to regulate EGUs, EPA has unlawfully imposed requirements on itself the Congress chose not to impose at the listing stage." SIL Br. 35. They maintain that EPA's approach " would treat EGUs the same as all other major source categories -- as a category that must be listed unless the delisting criteria are met." Id.
EPA explained that it was relying upon the delisting criteria to interpret an ambiguous term in § 112(n)(1)(A), namely, " hazards to public health," see Final Rule, 77 Fed. Reg. at 9333-34; NPRM, 76 Fed. Reg. at 24,992-93, because the phrase " hazards to public health" is nowhere defined in the CAA. EPA looked to the delisting criteria, which specify the risk thresholds below which a source category need not be regulated, as evidence of congressional judgment as to what degree of risk constitutes a health hazard. See id . EPA explained:
Although Congress provided no definition of hazard to public health, section 112(c)(9)(B) is instructive. In that section, Congress set forth a test for removing source categories from the section 112(c) source category list. That test is relevant because it reflects Congress' view as to the level of health effects associated with HAP emissions that Congress thought warranted continued regulation under section 112.
NPRM, 76 Fed. Reg. at 24,993 (emphasis added); see Final Rule, 77 Fed. Reg. at 9333-34. EPA concluded that it had discretion also to consider various other factors in evaluating hazards to public health, including
the nature and severity of the health effects associated with exposure to HAP emissions; the degree of confidence in our knowledge of those health effects; the size and characteristics of the populations affected by exposures to HAP emissions; [and] the magnitude and breadth of the exposures and risks posed by HAP emissions from a particular source category, including how those exposures contribute to risk in populations with additional exposures to HAP from other sources[.]
NPRM, 76 Fed. Reg. at 24,992; see Final Rule, 77 Fed. Reg. at 9334.
EPA reasonably relied on the § 112(c)(9) delisting criteria to inform its interpretation of the undefined statutory term " hazard to public health." Congress did not specify what types or levels of public health risks should be deemed a " hazard" for purposes of § 112(n)(1)(A). By leaving this gap in the statute, Congress delegated to EPA the authority to give reasonable meaning to the term. Cf. Chevron, 467 U.S. at 843-44. EPA's approach does not, as petitioners contend, " treat EGUs the same as all other major source categories." SIL Br. 35. Other major source categories must be listed unless the delisting criteria are satisfied; EPA's approach treats EGUs quite differently. For EGUs, EPA reasonably determined that it may look at a broad range of factors -- only one of which concerned the § 112(c)(9) benchmark levels -- in assessing the health hazards posed by EGU HAPs. Nowhere does EPA state or imply that the delisting criteria provide the sole basis for determining whether it is " appropriate and necessary" to regulate EGUs under § 112. Because EPA's approach is based on a permissible construction of § 112(n)(1)(A), it is entitled to deference and must be upheld.
2.Costs of regulation.
Noting that in 2005 EPA construed § 112(n)(1)(A) to allow consideration of costs in determining whether regulation of EGU HAP emissions is " appropriate," petitioners contend that EPA's new interpretation to " preclude consideration of costs," SIL Br. 42, " unreasonably constrains the language of § 112(n)(1)(A)," SIL Br. 39. They point to the dictionary definition of " appropriate" and to the differences between regulation of EGUs under § 112(n)(1)(A) and regulating other sources under § 112(c), and to this court's precedent that " only where there is 'clear congressional intent to preclude consideration of cost' [do] we find agencies barred from considering costs." SIL Br. 40 (quoting Michigan v. EPA, 213 F.3d 663, 678, 341 U.S.App. D.C. 306 (D.C. Cir. 2000), cert. denied, 532 U.S. 904, 121 S.Ct. 1225, 149 L.Ed.2d 135 (2001)). They contend that EPA's new interpretation " is also unlawful because it eliminates the discretion that Congress intended EPA to exercise after completing the Utility Study." SIL Br. 41. As they see it, if the statutory term " appropriate" imposes any limit whatsoever, it must at least limit regulation to " risks [that] are worth the cost of elimination." SIL Reply Br. 14 (quoting Michigan v. EPA, 213 F.3d at 667 (addressing the term " significant" )).
In the Final Rule, EPA stated that " it is reasonable to make the listing decision, including the appropriate determination, without considering costs." Final Rule, 77 Fed. Reg. at 9327. EPA reasoned that § 112(n)(1)(A) would have included an " express statutory requirement that the Agency consider costs in making the appropriate determination" if Congress
wanted to require EPA to do so. Id. EPA also noted that " [t]o the extent [its] interpretation differs from the one set forth in 2005," it had " fully explained the basis for such changes." Id. at 9323 (citing NPRM, 76 Fed. Reg. at 24,986-93). (Even in 2005, EPA noted only that " [n]othing precludes EPA from considering costs in assessing whether regulation of [EGUs] under section 112 is appropriate in light of all the facts and circumstances presented." 2005 Delisting Decision, 70 Fed. Reg. at 16,001 n.19.) In responding to comments reacting to its position that " the better reading of the term 'appropriate' is that it does not allow for the consideration of costs in assessing whether hazards to public health or the environment are reasonably anticipated to occur based on EGU emissions," NPRM, 76 Fed. Reg. at 24,989, EPA observed that the dictionary definition of " appropriate" does not require consideration of costs and that commenters had failed to identify an express statutory requirement to that effect. EPA also stated that it was reasonable to decline to consider costs in the absence of an express statutory requirement to do so because Congress, in enacting § 112, was principally concerned with mitigating hazards to public health and the environment from HAP emissions. See Final Rule, 77 Fed. Reg. at 9327. Inasmuch as Congress had treated the regulation of HAP emissions differently in the 1990 Amendments because EPA was not acting quickly enough, EPA concluded it was reasonable to make a listing decision without considering costs. See id .
On its face, § 112(n)(1)(A) neither requires EPA to consider costs nor prohibits EPA from doing so. Indeed, the word " costs" appears nowhere in subparagraph A. In the absence of any express statutory instruction regarding costs, petitioners rely on the dictionary definition of " appropriate" -- meaning " especially suitable or compatible" or " suitable or proper in the circumstances" -- to argue that EPA was required " to take into account costs to the nation's electricity generators when deciding whether to regulate EGUs." SIL Br. 39 (citing Merriam-Webster's Online Dictionary; New Oxford American Dictionary (2d ed. 2005)). Yet these definitions, which do not mention costs, merely underscore that the term " appropriate" is " open-ended," " ambiguous," and " inherently context-dependent." Sossamon v. Texas, 131 S.Ct. 1651, 1659, 179 L.Ed.2d 700 (2011); cf. Nat'l Ass'n of Clean Air Agencies v. EPA, 489 F.3d 1221, 1229, 376 U.S.App. D.C. 385 (D.C. Cir. 2007).
Even if the word " appropriate" might require cost consideration in some contexts, such a reading of " appropriate" is unwarranted here, where Congress directed EPA's attention to the conclusions of the study regarding public health hazards from EGU emissions. Throughout § 112, Congress mentioned costs explicitly where it intended EPA to consider them. Cf . CAA § 112(d)(2), 112(d)(8)(A)(i), 112(f)(1)(B), 112(f)(2)(A), 112(n)(1)(B), 112(s)(2), 42 U.S.C. § 7412(d)(2), 7412(d)(8)(A)(i), 7412(f)(1)(B), 7412(f)(2)(A), 7412(n)(1)(B), 7412(s)(2). Indeed, in the immediately following subparagraph of § 112(n), Congress expressly required costs to be considered. CAA § 112(n)(1)(B), 42 U.S.C. § 7412(n)(1)(B). The contrast with subparagraph A could not be more stark. " Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally . . . in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (alterations omitted); cf. Catawba Cnty., N.C. v. EPA, 571 F.3d 20, 36, 387 U.S.App. D.C. 20 (D.C. Cir. 2009). Petitioners offer no compelling reason why Congress, by using only the broad term " appropriate,"
would have intended the same result -- that costs be considered -- in § 112(n)(1)(A). The legislative history the dissent claims " establishes" the point, Dissent at 13, consists of a Floor statement by a single Congressman that at best is ambiguous. For these reasons, we conclude that the statute does not evince unambiguous congressional intent on the specific issue of whether EPA was required to consider costs in making its " appropriate and necessary" determination under § 112(n)(1)(A).
Turning to EPA's approach, its position that " nothing about the definition of ['appropriate'] compels a consideration of costs," Final Rule, 77 Fed. Reg. at 9327, is clearly permissible. In Whitman v. American Trucking Ass'ns, 531 U.S. 457, 121 S.Ct. 903, 149 L.Ed.2d 1 (2001), Justice Scalia, writing for a unanimous Court, noted that the Supreme Court has " refused to find implicit in ambiguous sections of the CAA an authorization to consider costs that has elsewhere, and so often, been expressly granted." Id. at 467; see also Natural Res. Def. Council v. U.S. EPA, 824 F.2d 1146, 1163-65, 263 U.S.App. D.C. 166 (D.C. Cir. 1987) (en banc). EPA's interpretation is consistent with that instruction. Just as in Whitman, EPA declines to find in an ambiguous section what in so many other CAA sections Congress has mentioned expressly. And even assuming Whitman might be distinguished on grounds it concerned a different provision of the CAA, the question remains only whether EPA's interpretation is permissible . Petitioners cannot point to a single case in which this court has required EPA to consider costs where the CAA does not expressly so instruct. In Michigan v. EPA, this court merely held that " the agency was free to consider . . . costs" under CAA § 110(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D), as EPA had urged in that case. 213 F.3d at 679 (emphasis added).
EPA's interpretation is also consistent with the purpose of the 1990 Amendments, which were aimed at remedying " the slow pace of EPA's regulation of HAPs" following the initial passage of the CAA. New Jersey, 517 F.3d at 578. To ensure that HAP emissions would be reduced to at least minimally-acceptable levels, Congress, among other things, listed 189 HAP substances for regulation and " restrict[ed] the opportunities for EPA and others to intervene in the regulation of HAP sources." Id. The overall purpose of the 1990 Amendments was to spur EPA to action. Although Congress gave EGUs a three-year pass when it instructed EPA to conduct a further study before regulating EGUs, see CAA § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A), there is no indication that Congress did not intend EPA to regulate EGUs if and when their public health hazards were confirmed by the study, as they were here.
Petitioners, and our dissenting colleague, suggest that EPA's interpretation is unreasonable because the notion that Congress would have authorized EPA to regulate without any consideration of regulatory costs is implausible. But this argument rests on a false premise. Here, as in Whitman, interpreting one isolated provision not to require cost consideration does not indicate that Congress was unconcerned with costs altogether, because Congress accounted for costs elsewhere in the statute. Section 112(d)(2) expressly requires EPA to " tak[e] into consideration
the cost of achieving . . . emission reduction[s]" when setting the level of regulation under § 112. CAA § 112(d)(2), 42 U.S.C. § 7412(d)(2). It is true that this cost consideration requirement does not apply with respect to MACT floors. Yet even for MACT floors, costs are reflected to some extent because the floors correspond (by definition) to standards that better-performing EGUs have already achieved, presumably in a cost efficient manner. See CAA § 112(d)(3)(A), 42 U.S.C. § 7412(d)(3)(A). Moreover, Industry respondent intervenors point out that petitioners' proposed approach would lead to an improbable " all-or-nothing" scheme in which EPA could " choose not to regulate EGUs at all under Section 112 based on cost, even though EPA could not consider cost to justify a less stringent emission standard than the MACT floor." Indus. Resp't Intvn'rs' Br. 8.
Contrary to petitioners' claims, the word " appropriate" is not rendered meaningless unless interpreted to include cost consideration. Petitioners contend that § 112(n)(1)(A) mandates a two-step inquiry: EPA must " first identify 'a health hazard' from HAPs emitted from EGUs, and then determine whether regulation of that health hazard is 'appropriate and necessary.'" SIL Br. 41 (emphasis added). If the existence of a health hazard automatically means regulation is appropriate, they contend, then EPA has unlawfully abdicated the exercise of discretion Congress delegated to it. This argument, too, is unpersuasive. First, the rulemaking record reflects that EPA did not focus exclusively on health hazards in considering whether regulation would be " appropriate" ; EPA also considered " the availability of controls to address HAP emissions from EGUs." NPRM, 76 Fed. Reg. at 24,989; see id. at 24,997; see also Final Rule, 77 Fed. Reg. at 9311. The factual premise of petitioners' argument is therefore incorrect. Second, even if EPA had focused exclusively on health hazards, the word " appropriate" would still have meaning in § 112(n)(1)(A) because the provision does not assume, as petitioners seem to suggest, that EPA would in fact " identify 'a health hazard'" from EGUs. SIL Br. 41. Rather, the statute directs EPA to " perform a study of the hazards to public health reasonably anticipated to occur" and then to " regulate [EGUs] . . . if the Administrator finds such regulation is appropriate and necessary after considering the results of the study ." CAA § 112(n)(1)(A), 42 U.S.C. § 7412(n)(1)(A) (emphasis added). At the time Congress enacted the 1990 Amendments, it was possible that the Utility Study would fail to identify significant health hazards from EGU HAP emissions. (Indeed, petitioners argue that it did fail to do so. See SIL Br. 13, 48-54.) Therefore, EPA had to " consider the results of the study" in order to determine whether regulation would be " appropriate" based on its assessment of the existence and severity of such health hazards. The term " appropriate" plainly plays a role: it requires EPA to apply its judgment in evaluating the results of the study.
Basically, petitioners and our dissenting colleague seek to impose a requirement that Congress did not. What they ignore is that Congress sought, as a threshold matter, to have EPA confirm the nature of public health hazards from EGU emissions. That is the clear focus of § 112(n)(1)(A). After that, Congress left it to the expertise and judgment of EPA whether or not to regulate. For EPA to focus its " appropriate and necessary" determination on factors relating to public health hazards, and not industry's objections that emission controls are costly, properly puts the horse before the cart, and not the other way around as petitioners and our dissenting colleague urge.
Given Congress's efforts in the 1990 Amendments to promote regulation of hazardous pollutants, EPA's interpretation of § 112(n)(1)(A) appears consistent with Congress's intent. Recall that only EGUs' hazardous emissions were relieved of regulation until completion of a study, and once the study confirmed the serious public health effects of hazardous pollutants from EGUs, Congress gave no signal that the matter should end if remediation would be costly.
Our dissenting colleague has written a powerful-sounding dissent. It sounds powerful, however, only because it elides the distinction between EPA's initial decision regarding whether to list EGUs as sources of hazardous air pollutants, and its subsequent decision regarding whether to issue stringent beyond-the-floor standards for such sources. The dissent refers to both together as the MACT " program." Dissent at 3. But the " program" in fact proceeds in two stages, as the dissent acknowledges. It is only as to the first, listing stage that EPA has determined it should not consider costs. That stage leads only to the setting of the statutory MACT floor which, as the dissent notes, is a " minimum stringency level." Id. The second stage leads to beyond-the-floor standards, which are more restrictive. When setting those, EPA does consider costs.
The dissent contends that " [m]eeting that [MACT] floor will be prohibitively expensive, particularly for many coal-fired utilities," forcing them " out of business." Dissent at 10-11. But in the Final Rule EPA rejected this contention, concluding that " the estimated number of early retirements," of EGUs " that may result from this rule is . . . less than 2 percent of all U.S. coal-fired capacity" in 2015. Final Rule, 77 Fed. Reg. at 9416; see also id. at 9408 (rejecting the claim that the Final Rule " will result in substantial power plant retirements" ). Petitioners have not challenged that conclusion. Industry respondent intervenors further observe that continuing to exempt EGUs from HAP regulation penalizes those plants that have made investments in clean air technology, and that " [t]he Rule merely requires owners of uncontrolled plants to install and operate control technology already operating at their competitors' plants, both leveling the playing field and improving health and the environment." Indus. Resp't Intv'nrs' Br. 7. The Final Rule, which, as the dissent notes, EPA has calculated will cost $9.6 billion a year, includes the cost of both stages. EPA also has concluded under Executive Order 13563 that the annualized benefits are $37 to $90 billion. See Final Rule, 77 Fed. Reg. at 9306. (The dissent questions this conclusion, notwithstanding its promise that agency cost-benefit analyses should be reviewed deferentially.) That's " billion with a b," in the dissent's catchy phrase. Dissent at 1. In short, " the benefits of this rule outweigh its costs by between 3 to 1 or 9 to 1." Final Rule, 77 Fed. Reg. at 9306.
As the agency noted, " [u]nder section 112(n)(1)(A), EPA is evaluating whether to regulate HAP emissions from EGUs at all ." NPRM, 76 Fed. Reg. at 24,989 (emphasis added). And there was nothing unreasonable about its conclusion that costs should not be considered in determining " whether HAP emissions from EGUs pose a hazard to public health or the environment." Id. at 24,988; see id. at 24,990. That is especially so when " Congress did not authorize the consideration of costs in listing any [other] source categories for regulation under section 112 . . . [and] did not permit the consideration of costs in evaluating whether a source category could be delisted pursuant to the provisions of section 112(c)(9)." Id. at 24,989. And while the dissent insists on " the
centrality of cost consideration to proper regulatory decisionmaking," Dissent at 6, Whitman makes clear the Supreme Court believes that Congress does not necessarily agree. Nor is Whitman the only case in which courts have found that Congress legislated in a way the dissent would find irrational.
Academic generalities, see Dissent at 6-8, do not demonstrate that EPA could not reasonably proceed as it did in interpreting congressional intent -- especially not generalities by academics who are criticizing the Supreme Court for failing to read congressional statutes as they do. The same is true of utterances by single Justices -- especially a separate statement by one Justice concurring in Whitman and a question by another during oral argument about a different statutory section. See Dissent at 6-7. Nor do the different approaches of the Bush and Obama Administrations on the role of costs in implementing the CAA do more than demonstrate that administrations may differ and can change positions without legal jeopardy, so long as an adequate explanation is provided as was done here. See Chevron, 467 U.S. at 865-66. The question before the court is not " Should EPA have considered costs in making its threshold determination under § 112(n)(1)(A)?" but rather " Was EPA required to do so at that point in its regulatory evaluation?" EPA has explained why it concluded costs were not part of the " appropriate and necessary" determination, and given Congress's choice to leave the factors entering into that determination to EPA, petitioners, and our dissenting colleague, fail to demonstrate that EPA's considered judgment about the factors to be considered was unlawful as an impermissible and unreasonable interpretation of § 112(n)(1)(A). Congress left to EPA " the accommodation of manifestly competing interests," id. at 865, and EPA did all that Congress required of it. Exactly how and when EGU emissions are to be regulated is a different question.
For these reasons, we hold that EPA reasonably concluded it need not consider costs in making its " appropriate and necessary" ...