State of New Jersey v. EPA
A Case Study in Politics v. Statutory
Language
Mary Ellen Hogan
Holme Roberts & Owen LLP
Los Angeles, California
Road Map for Presentation
• Summary of Case
• Statutory Framework
under Clean Air Act
• Chronology of Events
• Key Issue(s) Before
the Court
• EPA’s Arguments
• Arguments from
Petition for Rehearing
En Banc
Summary of Case
• New Jersey challenges two final EPA Rules:
– Delisting of electric utility steam generating
units (EGUs) from sources regulated as
Hazardous Air Pollutants (HAPs) under CAA
Section 112 (“Delisting Rule”)
– CAA Section 111 performance standards for
new EGUs, total mercury emissions limits for
states and voluntary cap-and-trade program
for new and existing coal-fired EGUs
(“CAMR”)
Key Issue Before the Court
The issue that the D.C. Circuit decided was
whether once EGUs were listed as a HAP
source in December 2000, could EPA “delist”
EGUs as a HAP source without following the
steps required in Section 112(c)(9)?
Answer: Unanimous NO
Statutory Framework
1990 CAA Amendments
• 1990 Clean Air Act Amendments (1990 Amendments)
modified Section 112 of the Clean Air Act that regulated
HAPs
• 1990 Amendments specifically listed mercury as a HAP
• 1990 Amendments required EPA to list and regulate “all
categories and subcategories of major sources and area
sources” of 1 or more HAPs.
• 1990 Amendments required EPA to regulate HAPs using
BACT (best available control technology)
• 1990 Amendments required EPA to perform a study of
public health hazards from ECU’s HAP emissions prior
to regulation as HAP
Statutory Framework
Overview - Listing
To list a source category for HAP from EGUs,
EPA must find that such regulation is
“appropriate and necessary” after considering
the results of a source-specific study.
Focus on Statutory Language
(CAA § 112(n)(1)(A)
Before listing EGUs as a HAP source under
Section 112:
“...the Admin shall perform a study of hazards to
public health... as a result of emissions by
[EGUs] of [listed pollutants including
mercury]...The Admin shall regulate [EGUs]
under this section if the Admin finds such
regulation is appropriate and necessary after
considering the results of the study required by
this subparagraph.”
Statutory Framework
Overview - Delisting
EPA may delete any source category from the HAP
source list only after determining that emissions
do not exceed a level which is adequate to
protect public health with an ample margin of
safety and no adverse environmental effect will
result from emissions from any source.
Focus on Statutory Language
(CAA § 112(c)(9)
“The Admin may delete any source category
from the [section 112(c)(1) list]... whenever
the Admin...[determines] that emissions
from no source in the category or
subcategory concerned...exceed a level
which is adequate to protect public health
with an ample margin of safety and no
adverse environmental effect will result
from emissions from any source.”
Chronology of Events
• 1998 – EPA submits its Public Health Study of HAPs
from EGUs to Congress
• December 20, 2000 (End of Clinton Administration) –
EPA announces that EGUs should be regulated as
sources of HAPs under Section 112 because mercury
emissions from HGUs are the largest domestic source of
mercury emissions and mercury presents significant
hazards to public health and the environment.
• December 20, 2000 – EPA added Coal-and-Oil-Fired
EGUs as a source category for regulation under Section
112 (HAPs)
Chronology of Events
• January 2004 (Bush Administration) – EPA
proposes two alternatives to control HAP
emissions from EGUs.
• Regulate under Section 112 using MACT or
• Remove EGUs from list of HAP sources
and regulate EGUs under Section 111
(Standards of Performance)
• March 2005 – EPA decides to remove EGUs
from listing under Section 112 because
regulation under Section 112 was neither
“appropriate” nor “necessary.”
Chronology of Events
• EPA’s concluded it was not “appropriate” to
regulate ECUs under section 112 because:
• The level of HAP emissions AFTER ECUs regulated under
other CAA programs was not reasonably anticipated to cause
public health hazards and
• Costs of regulation under section 112 were extreme and
health benefits would be nominal
• EPA concluded that it was not “necessary” to
regulate ECUs under section 112 because HAPs
from would be addressed cost-effectively under
other available authorities in CAA.
EPA’s Concessions and the Court’s
Reasoning
• EPA concedes it listed EGUs under Section 112
• Since Section 112(c)(9) applies to the removal of
“any” source category from the section 112(c)(1)
list AND
• Nothing in CAA exempts EGUs from Section
112(c)(9),
• The Court reasons, therefore, the only way to
remove EGUs from the list was to comply with
Section112 (c)(9).
EPA’s Concessions and the Court’s
Reasoning
• EPA conceded that it did not make findings
under Section 112(c)(9).
• By failing to make the findings, EPA
violated the “plain text” of the statute under
Prong 1 of Chevron v. NRDC. Thus Prong
2 was not reached.
• Therefore, the Court vacated both the
Delisting Rule and the CAMR.
EPA’s Arguments
• DC Circuit standard of review of EPA’s
interpretation of the CAA is the two prong test in
Chevron v. NRDC (1984)
• Prong One: If Congress’ intent is clear, the EPA
must give effect to the unambiguous intent of
Congress,
• Prong Two: If Congress has NOT addressed the
issue, then is the agency’s interpretation based
on a permissible construction of the statute?
EPA’s Arguments
• EPA argued that Section 112(c)(9) is ambiguous
by operation of Section 112(n)(1) – If EPA
determines that power plants should not be
regulated at all under Section 112(n), that
determination results in removal of power plants
from the Section 112 list.
• Court said Section 112(n)(1) addressed LISTING
of sources, not DELISTING of sources and
where Congress wished to exempt EGUs from
Section 112, it did so explicitly.
EPA’s Arguments
• EPA argued that it could remove EGUs
from Section 112 based on the
fundamental principle that an agency can
reverse an earlier decision.
• The Court agreed that an agency can
reverse its decision, however, Congress
can, without question, limit the agency’s
discretion to reverse its decision, and that
is what Section 112(c)(9) did.
EPA’s Arguments
• EPA argued that it previously removed
listed sources without satisfying the
requirements of Section 112(c)(9).
• The Court wryly quoted another DC Circuit
opinion that “we do not see how merely
applying an unreasonable statutory
interpretation for several years can
transform it into a reasonable
interpretation.”
The Argument Not Made
• Intervenor Utility Air Regulatory Group
contended that the December 2000 source
listing by EPA was not effective because of
lack of notice and comment.
• The Court did not consider that argument
because EPA did not advance the
argument itself and EPA “steadfastly
refused to join it [the argument of the
Group].
Petition for Rehearing En Banc
• EPA’s action to list power plants under Section
112 is not subject to judicial review under CAA
judicial review provisions until EPA promulgates
Section 112 emission standards for power plants
• In fact, the Utility Air Regulatory Group sued EPA
after the initial December 2000 ECUlisting and
the Court dismissed that action stating that the
action must be brought after EPA promulgates
the emission standards.
Petition for Rehearing En Banc
• If ECUs are erroneously listed and cannot be
corrected except by compliance with section
112(c)(9) prior to judicial review of the emission
standards, EPA argues the following “absurd”
result:
• EPA must undertake an promulgation of
emission standards for a source category that is
unnecessary and inappropriate and THEN be
sued in order to correct a listing it comes to
believe is incorrect.
Petition for Rehearing En Banc
Response: If EPA’s argument is correct, it
renders section 112(c)(9) – which defines
how to delete a source category superflous because EPA could always
delist the source by finding that the listing
criteria (“appropriate” and “necessary”)
were incorrect!
Petition for Rehearing En Banc
• Procedural Argument: Legal question must be
of real significance to the legal process and to
the litigants, recognizing that the standards for
en banc rehearing are “demandingly high.”
• EPA says the exceptional importance is whether
section 112(n)(1)(A)’s language of “appropriate
and necessary” governs EPA’s decision to
remove ECUs when EPA decides its initial
decision was in error.
Outcome of Petition
EPA’s Petition for Rehearing
was DENIED on May 20, 2008