IN THE UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

EME HOMER CITY GENERATION, L.P., ) 

 ) 

 Petitioner, ) 

 ) 

 v. ) No. 11-1302 (and 

 ) consolidated cases) 

UNITED STATES ENVIRONMENTAL ) 

 PROTECTION AGENCY, et al., ) 

 ) 

 Respondents. ) 

_________________________________________) 

EPA’S CONSOLIDATED OPPOSITION TO REMAINING 

MOTIONS FOR STAY PENDING JUDICIAL REVIEW 

OF EPA’S TRANSPORT RULE 

IGNACIA S. MORENO 

Assistant Attorney General 

DAVID S. GUALTIERI 

JON M. LIPSHULTZ 

JESSICA O’DONNELL 

NORMAN L. RAVE 

Environmental Defense Section 

Environment and Natural Resources Div. 

 United States Department of Justice 

 P.O. Box 23986 

Washington, DC 20026-3986 

(202) 514-4767 

OF COUNSEL

SONJA RODMAN 

BYRON BROWN 

STEPHANIE HOGAN 

United States Environmental Protection Agency 

1200 Pennsylvania Ave., N.W. 

Washington, DC 20460 

 DATED: December 1, 2011

USCA Case #11-1302 Document #1345210 Filed: 12/01/2011 Page 1 of 84
ii 

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................................................................... iii 

INTRODUCTION ....................................................................................................... 2 

BACKGROUND ......................................................................................................... 3 

STANDARD OF REVIEW ......................................................................................... 10 

SUMMARY OF ARGUMENT ................................................................................... 11 

ARGUMENT ............................................................................................................... 19 

I. PETITIONERS HAVE NO LIKELIHOOD OF SUCCESS 

 ON THE MERITS ............................................................................................. 19 

 A. EPA Has Statutory Authority to Promulgate the 

 Transport Rule FIPs. ............................................................................... 19 

B. EPA Used an Appropriate Approach For Defining 

 the Amount of Each State’s Significant Contribution. ............................ 24 

 C. EPA Gave Adequate Notice of the Final Budgets... ............................... 32 

D. EPA Properly Based Its Identification of Downwind 

 Nonattainment and Maintenance Areas on Air 

 Quality Modeling. ................................................................................... 38 

E. EPA Adequately Considered Transmission 

 Constraints and Localized Grid Reliability Issues. ................................ 42 

 F. The Budgets for the State of Wisconsin Are Not in 

 Error ......................................................................................................... 47 

 

 G. The Transport Rule Reasonably Applies to Emissions 

 in 2012...................................................................................................... 48 

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II. THE PETITIONERS WILL NOT BE IRREPARABLY 

 HARMED ABSENT A STAY OF THE RULE ............................................... 52 

A. No Petitioner Has Shown a Realistic, Let Alone 

 Imminent, Threat to Reliable Electricity Generation. ............................. 53 

B. Incurring Additional Economic Costs to Comply 

 With the Rule Does Not Constitute Irreparable Injury. .......................... 66 

III. A STAY WOULD HARM THIRD PARTIES AND IS 

 CONTRARY TO THE PUBLIC INTEREST ................................................... 69 

A. Staying the Rule and Leaving CAIR in Place Pending 

Judicial Review Would Deprive the Public of 

Substantial Air Quality and Health Benefits. .......................................... 70 

B. EPA’s Revisions Proposal Has No Bearing on Whether 

 a Stay is in the Public Interest. ................................................................ 74 

CONCLUSION ............................................................................................................ 75 

ATTACHMENTS Attach. No. 

 Declaration of Sam Napolitano (Dec. 1, 2011) 1 

Status of CAA 110(a)(2)(D)(i)(I) SIPs Final Rule 

 TSD (July 2011), EPA-HQ-OAR-2009-0491-4527 2 

 Declaration of Brian S. Timin (Dec. 1, 2011) 3 

Comment by Entergy Servs., Inc. (Oct. 1, 2010), 

 EPA-HQ-OAR-2009-0491-2847 (excerpts) 4 

Resource Adequacy and Reliability in the IPM 

Projections for the Transport Rule TSD (June 2011), 

 EPA-HQ-OAR-2009-0491-4455.1 5 

Transport Rule Primary Response to Comments (June 2011), EPA-HQOAR-2009-0491-4513 (excerpts) 6 

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iv 

TABLE OF AUTHORITIES

CASES:

A.O. Smith Corp. v. FTC, 

530 F.2d 515 (3d Cir. 1976) ............................................................................... 11, 66 

American Coke & Coal Chems. Inst. v. EPA, 

452 F.3d 930 (D.C. Cir. 2006) ........................................................................... 32, 35 

American Hospital Ass’n v. Harris, 

625 F.2d 1328 (7th Cir. 1980) ........................................................................... 11, 66 

Appalachian Power Co. v. EPA, 

249 F.3d 1032 (D.C. Cir. 2001) ............................................................................... 44 

Auer v. Robbins, 

519 U.S. 452 (1997) ................................................................................................. 10 

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

467 U.S. 837 (1984) ................................................................................................. 10 

Center for Biological Diversity v. DOI, 

563 F.3d 466 (D.C. Cir. 2009) ................................................................................. 68 

Cuomo v. NRC, 

772 F.2d 972 (D.C. Cir. 1985) ..................................................................... 10, 11, 63 

*Michigan v. EPA, 

213 F.3d 663 (D.C. Cir. 2000) ............................................ 6, 7, 8, 22, 28, 29, 30, 39 

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 

463 U.S. 29 (1983) ................................................................................................... 10 

Northeast Md. Waste Disposal Auth. v. EPA, 

358 F.3d 936 (D.C. Cir. 2004) ................................................................................. 36 

_______________

*Authorities upon which we chiefly rely. 

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Nken v. Holder, 

129 S. Ct. 1749 (2009) ....................................................................................... 10, 11 

*North Carolina v. EPA, 

531 F.3d 896 (D.C. Cir.), on reh’g in part, 550 F.3d 1176 

(D.C. Cir. 2008) .................................................... 8, 9, 13, 28, 30, 39, 40, 49, 62, 73 

*North Carolina v. EPA, 

550 F.3d 1176 (D.C. Cir. 2008) ....................................................................... 8, 9, 49 

Small Refiner Lead Phase-Down Task Force v. EPA, 

705 F.2d 506 (D.C. Cir. 1983) ................................................................................. 35 

United States v. Michigan, 

940 F.2d 143, 164-66 (6th Cir. 1991) ...................................................................... 55 

Virginia v. EPA, 

108 F.3d 1397 (D.C. Cir.), modified on other grounds, 

116 F.3d 499 (D.C. Cir. 1997) ................................................................................. 22 

Winter v. NRDC, 

555 U.S. 7 (2008) ..................................................................................................... 11 

*Wisconsin Gas Co. v. FERC, 

758 F.2d 669 (D.C. Cir. 1985) .........................................................11, 65, 66, 67, 68 

STATUTES: 

Clean Air Act, 42 U.S.C. §§ 7401-7671q: 

42 U.S.C. § 1857c-5(a)(2)(E) (1970) ......................................................................... 5 

Sections 108-109, 42 U.S.C. §§ 7408, 7409 .............................................................. 4 

Section 110(a), 42 U.S.C. § 7410(a) ........................................................................ 4 

Section 110(a)(1), (k)(2), (3), 42 U.S.C. § 7410(a)(1), (k)(2), (3) .......................... 21 

Section 110(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D) ..................................................... 6 

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Section 110(a)(2)(D)(i)(I), 42 U.S.C. § 7410(a)(2)(D)(i)(I) .................................... 28 

Section 110(a)(2)(D)(i)(I), 42 U.S.C. § 7410(a)(2)(D)(i)(I) (1990) .......................... 6 

Section 110(a)(2)(E), 42 U.S.C. § 7410(a)(2)(E) (1977) ...................................... 5, 6 

Section 110(c)(1), 42 U.S.C. § 7410(c)(1) .................................................... 4, 20, 21 

Section 110(k)(5), 42 U.S.C. § 7410(k)(5) .............................................................. 20 

Section 307(d)(8), 42 U.S.C. § 7607(d)(8) ........................................................ 11, 15 

Section 307(d)(9)(A), 42 U.S.C. § 7607(d)(9)(A) ................................................... 10 

FEDERAL REGISTERS: 

62 Fed. Reg. 60,318 (Nov. 7, 1997)........................................................................... 7 

63 Fed. Reg. 57,356 (Oct. 27, 1998) .......................................................................... 7 

70 Fed. Reg. 21,147 (Apr. 25, 2005) ....................................................................... 21 

70 Fed. Reg. 25,162 (May 12, 2005) ......................................................................... 8 

71 Fed. Reg. 25,328 (Apr. 28, 2006) ....................................................................... 21 

75 Fed. Reg. 53,613 (Sept. 1, 2010) ............................................................ 33, 34, 43 

75 Fed. Reg. 66,055 (Oct. 27, 2010) ........................................................................ 33 

76 Fed. Reg. 1109 (Jan. 7, 2011) ....................................................................... 33, 34 

76 Fed. Reg. 40,662 (July 11, 2011) ........................................................................ 38 

76 Fed. Reg. 48,208 (Aug. 8, 2011)............ 2, 9, 10, 23-26, 28, 30, 31, 33, 37-41, 45 

 49-51, 55, 60, 63,67, 68, 70 

76 Fed. Reg. 63,860 (Oct. 14, 2011) .................................................................. 55, 75 

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LEGISLATIVE MATERIALS: 

H.R. Rep. No. 95-294 (1977), reprinted in 4 A Legislative History of the 

Clean Air Act Amendments of 1977 (Comm. Print 1978) 

(“1977 Legis. Hist.”) .................................................................................................. 5 

S. Rep. No. 95-127, reprinted in 3 1977 Legis. Hist. 1415 ....................................... 5 

S. Rep. No. 101-228 (1989), reprinted in 5 Legislative History of the Clean 

Air Act Amendments of 1990 (“1990 Legis. Hist.”) ................................................. 6 

S. Debate on H.R. Conf. Rep. No. 101-952 (1990), reprinted in 1 1990 

Legis. Hist. at 1106 .................................................................................................... 6 

USCA Case #11-1302 Document #1345210 Filed: 12/01/2011 Page 7 of 84
 Pursuant to the Court’s Orders of November 14 and 28, 2011, Respondent 

United States Environmental Protection Agency (“EPA”) hereby opposes the ten 

motions for a stay pending judicial review filed in Nos. 11-1360, 11-1363, 11-

1372, 11-1373, 11-1374, 11-1378, 11-1379, 11-1392, 11-1393, and 11-1394,1

 and 

responds to the seven responses in support of motions for a stay pending judicial 

review filed in Nos. 11-1329 and 11-1364.2

 For the reasons discussed herein, as 

well as in EPA’s prior responses, all the stay motions should be denied. 

 

1

 The referenced stay motions are: (1) No. 11-1373, Environmental 

Committee of the Florida Electric Power Coordinating Group (document 1335573) 

(filed Oct. 14, 2011) (“FL Utils. Mot.”); (2) No. 11-1379, Municipal Electric 

Authority of Georgia (document 1335586) (filed Oct. 14, 2011) (“GA Utils. 

Mot.”); (3) No. 11-1374, Kansas City Board of Public Utilities (document 

1337158) (filed Oct. 21, 2011) (“KS Utils. Mot.”); (4) No. 11-1378, Ames, Iowa 

(document 1337266) (filed Oct. 24, 2011) (“Ames Mot.”); (5) No. 11-1393, 

Wisconsin (document 1337415) (filed Oct. 24, 2011) (“WI Mot.”); (6) No. 11-

1394, Dairyland Power Coop. (document 1337439) (filed Oct. 24, 2011) 

(“Dairyland Mot.”); (7) No. 11-1360, Entergy Corp. (document 1338085) (filed 

Oct. 26, 2011) (“Entergy Mot.”); (8) No. 11-1363, Wisconsin Elec. Power Corp. 

(document 1339374) (filed Nov. 1, 2011) (“We Energies Mot.”), (9) No. 11-1392, 

Ohio (document 1342027) (as re-filed Nov. 15, 2011) (“OH Mot.”); (10) No. 11-

1372, Indiana (document 1341729 (filed Nov. 14, 2011) (“IN Mot.”). 

2

 The referenced responses are: (1) Michigan (document 1337338) (filed Oct. 

24, 2011) (“MI Resp.”); (2) Georgia (document 1339038) (filed Oct. 31, 2011) 

(“GA Resp.”); (3) Southern Company, et al. (document 1339073) (filed Oct. 31, 

2011) (“Southern Co. Resp.”); (4) Alabama, Mississippi, et al. (document 

1339054) (filed Oct. 31, 2011) (“AL/MS Resp.”); (5) the Utility Air Regulatory 

Group (document 1338754) (filed Oct. 31, 2011) (“UARG Resp.”); (6) Putnam 

County Georgia (Amicus) (document 1339074) (filed Oct. 31, 2011) (“Putnam 

Amicus Resp.”); and (7) American Electric Power (document 1340481) (filed Nov. 

7, 2011) (“AEP Resp.”). 

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INTRODUCTION

 These consolidated petitions for review challenge EPA’s Cross-State Air 

Pollution Rule, informally referred to herein as the “Transport Rule.”3

 The 

Transport Rule builds on the success of prior actions EPA has taken since the 

1990s to address the interstate transport of air pollutants, a very serious -- and 

previously somewhat intractable -- public health and welfare issue. The rule 

focuses on control of emissions of nitrogen oxides (“NOx”) and sulfur dioxide 

(“SO2”) to address interstate contributions to nonattainment of (and difficulties 

maintaining) the national ambient air quality standards (“NAAQS”) for ozone and 

fine particulate matter (“PM2.5”

4

), two widespread air pollution problems that cause 

a variety of serious health effects (such as bronchitis, asthma, heart attacks, and 

death). The Transport Rule will achieve dramatic health benefits for over 240 

million people living in the eastern half of the United States.5

 

3

 The final rule was publicly released in July 2011 and published in August 

2011. See 76 Fed. Reg. 48,208 (Aug. 8, 2011); see generally

http://www.epa.gov/airtransport/actions.html. 

4

 The “2.5” in this acronym refers to the size of fine particulate matter, i.e., 2.5 

microns or less. Other EPA regulations, not at issue here, address relatively more 

coarse particulate matter up to 10 microns (“PM10”). 

5

 See 76 Fed. Reg. at 48,308-10 (1 in 20 deaths in the U.S. is attributable to 

PM2.5 and ozone exposure). The PM2.5 aspects of the Transport Rule will, based on 

2014 modeling, annually reduce between 13,000 and 34,000 deaths, 15,000 nonfatal heart attacks, 8,700 incidences of chronic bronchitis, 8,500 hospital 

admissions, and 400,000 cases of aggravated asthma; ozone aspects of the 

Transport Rule will reduce, during the summer ozone season, 27-120 premature 

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 States and utilities whose “upwind” emissions of NOx and SO2 have been 

documented by EPA to contribute to “downwind” ozone and PM2.5 pollution 

problems in other States have now filed nineteen motions6

 to stay the Transport 

Rule pending judicial review on the merits, claiming, among other things, that if 

not stayed, the rule will cause them imminent and irreparable harm that they could 

not possibly have anticipated or planned for.7

 As EPA has explained in the nine 

responses it has filed to date, and as will be further explained herein, these 

allegations are meritless and, as a whole, represent little more than an unjustified 

attempt by these States and utilities to evade their long-overdue obligations under 

the Clean Air Act (“CAA” or “Act”). 

BACKGROUND 

 One of the most important components of the Act is the establishment of 

NAAQS by EPA. These are science-based standards that set limits on certain 

 

deaths, 240 hospital admissions for respiratory problems, 86 emergency room 

admissions for asthma, 160,000 days of restricted activity for individuals, and 

51,000 days of school absences for children). 

6

 We generally refer herein to the nine stay motions to which EPA previously 

responded simply as the “[Name of Party] Motion.” 

7

 Of course, the terms “upwind” and “downwind” are somewhat imprecise, 

since most “upwind” contributors to pollution problems in downwind States are 

themselves affected by emissions transported from other States, and many have 

nonattainment or maintenance problems of their own. In fact, as explained herein, 

the overlapping and criss-crossing nature of pollution contribution linkages is part 

of the reason why the determination of each State’s “significant contribution” is 

best made using a mixed air quality and cost approach. 

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pollutants in the ambient air that EPA determines are requisite to protect public 

health and welfare. See 42 U.S.C. §§ 7408, 7409. States then have the 

responsibility to adopt state implementation plans -- “SIPs” -- to maintain good air 

quality in “attainment” areas and to bring “nonattainment” areas into compliance 

with the NAAQS. Id. § 7410(a). If States do not, EPA must adopt a federal 

implementation plan -- or “FIP” -- to address these deficiencies. Id. § 7410(c)(1). 

 A significant confounding factor in this regulatory process is that NAAQS 

nonattainment and maintenance problems in many States are in part caused by 

emissions transported from other States, often over vast distances. This is 

particularly true for ozone and PM2.5, which are the two NAAQS pollutants central 

to the Transport Rule. When a State’s pollution problems are caused in part by 

unchecked emissions from neighboring States, it means that the “downwind” State 

must regulate its own emissions sources much more stringently to compensate, and 

in some cases, there is no feasible action the downwind State can take on its own to 

attain and maintain the NAAQS. Absent effective federal control, individual 

States often have little economic or political incentive to impose regulatory 

controls (and attendant costs) on pollution sources within their States solely to 

address air quality problems in downwind States. 

 Congress recognized and expressly addressed these issues from the outset. 

In the 1970 version of the Act, Congress required all SIPs to have provisions for 

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“intergovernmental cooperation” to assure their emissions would not interfere with 

attainment or maintenance of the NAAQS in other States. 42 U.S.C. § 1857c5(a)(2)(E) (1970). When this “cooperation” approach proved ineffective, Congress 

amended the statute in 1977 to require, more directly, that all SIPs contain 

provisions prohibiting emissions from particular stationary sources that “will 

prevent” attainment or maintenance of the NAAQS in downwind States. 42 U.S.C. 

§ 7410(a)(2)(E) (1977). In adding these (and related) new provisions in 1977, 

Congress recognized the scant incentive that upwind States had to control their 

interstate pollution contributions and made clear its intent that the burdens of air 

pollution control be shared more equitably among the States.8

 

 By 1990, there was an even greater awareness that certain air pollution 

problems, particularly in the eastern United States, were unlikely to be successfully 

 

8

 For example, the House Committee viewed existing law as “an inadequate 

answer to the problem of interstate air pollution.” H.R. Rep. No. 95-294, at 330 

(1977), reprinted in 4 A Legislative History of the Clean Air Act Amendments of 

1977 (“1977 Legis. Hist.”), at 2797 (Comm. Print 1978). The House Report 

stressed that one of the problems under the existing law was that its effectiveness 

depended largely on “prevention or abatement” by upwind States that in reality had 

little “incentive and need to act.” Id. Similarly, the Senate Committee Report 

criticized the lack of effective “interstate abatement procedures” and “interstate 

enforcement actions” under existing law, which the Committee viewed as 

“resulting in serious inequities among several States, where one State may have 

more stringent implementation plan requirements than another State.” S. Rep. No. 

95-127, at 41, reprinted in 3 1977 Legis. Hist. 1415. Accordingly, the new 

provisions were “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.” Id. at 1416. 

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addressed without enhanced control of interstate pollution transport.9

 Further, the 

statutory criterion established in 1977 proved difficult to meet. In a number of 

decisions EPA had found that it could not be demonstrated that upwind pollution 

contributions by particular sources were “prevent[ing]” NAAQS attainment 

downwind. See Michigan v. EPA, 213 F.3d 663, 674 (D.C. Cir. 2000) (discussing 

this history). For these reasons, in the 1990 CAA amendments, Congress added 

and strengthened a number of provisions relating to interstate pollution transport, 

including (as pertinent here) a significant change to section 110(a)(2)(D), 42 

U.S.C. § 7410(a)(2)(D), which extended the reach of that provision beyond a 

single stationary source to cover multiple sources and other emissions activities 

that “contribute significantly” to downwind nonattainment or maintenance 

problems (as opposed to the former standard of “will prevent” attainment).10

 

9

 See S. Comm. on Env’t & Public Works, Clean Air Act Amendments of 

1989, S. Rep. No. 101-228, at 48 (1989), reprinted in 5 Legislative History of the 

Clean Air Act Amendments of 1990, at 8388 (“1990 Legis. Hist.”). See also

Lautenberg, S. Debate on H.R. Conf. Rep. No. 101-952 (1990), reprinted in 1 1990 

Legis. Hist. at 1106 (“In New Jersey, the Department of Environmental Protection 

says that on some days even if we shut down the entire State, we would be in 

violation of some health standards because of pollution coming over from other 

states.”); S. Rep. No.101-228, at 49 (1989), reprinted in 5 1990 Legis. Hist. at 8389 

(similar statement regarding New York City). 

10 Compare 42 U.S.C. § 7410(a)(2)(E) (1977) (“prohibiting [emissions from] 

any stationary source within the State . . . which will . . . prevent attainment or 

maintenance by any other State”) (emphasis added), with 42 U.S.C. § 

7410(a)(2)(D)(i)(I)(1990) (“prohibiting, consistent with the provisions of this title, 

any source or other type of emissions activity within the State . . . which will . . . 

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 Following enactment of the 1990 CAA amendments, States and EPA began 

an effort to address interstate contributions to ozone nonattainment in a cooperative 

and comprehensive fashion.11 Although this process ultimately did not yield a 

consensus among EPA and all the States involved, the air quality modeling and 

other technical work of the group provided much of the foundation for EPA’s 1998 

“NOx SIP Call.” That rule required 22 States and the District of Columbia to 

adopt additional restrictions on the emissions of nitrogen oxides (“NOx”) to 

address their interstate contributions to ozone nonattainment and established a 

mechanism to address such contributions -- the NOx Budget Trading Program. 

See 63 Fed. Reg. 57,356 (Oct. 27, 1998). This Court upheld the NOx SIP Call in 

most significant respects in Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000). The 

Court found that EPA acted permissibly in utilizing “a very low threshold of 

contribution,” based on emissions data and air quality modeling, to determine 

which upwind/downwind linkages were sufficient to warrant inclusion of particular 

 

contribute significantly to nonattainment in, or interfere with maintenance by, any 

other State”) (emphasis added). 

11 In 1995, 37 States east of the Rockies, along with representatives from EPA, 

industry and environmental groups, formed the Ozone Transport Assessment 

Group (“OTAG”) to study interstate ozone pollution and develop solutions to the 

problem. 63 Fed. Reg. 57,356, 57,361 (Oct. 27, 1998). OTAG conducted 

comprehensive studies of interstate ozone formation and transport, and considered 

means to mitigate the problem. OTAG concluded that reductions in emissions of 

oxides of nitrogen were necessary to address interstate ozone transport, but its 

members could not reach consensus on specific control recommendations. 62 Fed. 

Reg. 60,318, 60,320 (Nov. 7, 1997). 

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States in the SIP Call. 213 F.3d at 675. Once the universe of such “contributing” 

States was determined, the Court also upheld EPA’s decision to base each State’s 

NOx emissions “budget” primarily on an analysis of the amount of emissions that 

could be controlled in a highly cost-effective manner, which was intended, among 

other things, to ensure that States would have to make the same minimum degree 

of investment in addressing pollution problems to which they collectively 

contribute. Id. at 675-79. 

 In 2005, EPA largely replaced the NOx SIP Call with the Clean Air 

Interstate Rule, or “CAIR.” See 70 Fed. Reg. 25,162 (May 12, 2005).12 While 

similar in many respects to the NOx SIP Call, CAIR also addressed interstate 

contributions to PM2.5 pollution problems through annual NOx and SO2 emission 

limitations. The Court invalidated CAIR in North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008).13 North Carolina re-affirmed Michigan’s general acceptance of a 

cost-effectiveness analysis, but it held that, due to CAIR’s relatively broad trading 

provisions and other features, the rule did not adequately assure that each upwind 

State would, in fact, eliminate those emissions that contribute significantly to 

downwind nonattainment in other States. Id. at 907-08. The Court also held that 

 

12 While the NOx SIP Call requirements remained in place, the NOx Budget 

Trading Program established in the NOx SIP Call was sunsetted and replaced with 

the CAIR NOx ozone season trading program. 

13 The Court initially vacated CAIR, id. at 930, but on rehearing remanded the 

rule without vacatur. North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008). 

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EPA did not adequately coordinate CAIR’s regulatory deadlines with the NAAQS 

attainment deadlines facing the “downwind” States whose NAAQS attainment and 

maintenance problems the rule was designed to address. Id. at 911-12. Finally, 

although the Court ultimately agreed to leave CAIR in place as an interim measure 

to avoid undue regulatory disruption and adverse environmental effects, it also 

stressed, in unequivocal terms, that the Court’s forbearance would not be 

“indefinite” and that EPA must act expeditiously to remedy the “fundamental 

flaws” the Court had identified in CAIR. 550 F.3d at 1178. 

 The Transport Rule represents EPA’s response to the remand of CAIR. See

76 Fed. Reg. 48,208 (Aug. 8, 2011). In brief, the Transport Rule identifies those 

States with emissions that significantly contribute to nonattainment or interfere 

with maintenance of the ozone or PM2.5 standards in other States, establishes 

emissions budgets for covered electric generating units (“EGUs”) in each such 

State,14 and promulgates FIPs to achieve the necessary reductions in each State. 

See 76 Fed. Reg. at 48,209-16. Phase I of the rule addresses emissions beginning 

in 2012. Phase II applies more stringent SO2 standards in some States for 2014 and 

beyond. Id. at 48,211. EPA also substantially revised the trading program so that, 

 

14 To address significant contribution to downwind ozone problems, the 

Transport Rule establishes a budget for NOx, an ozone precursor, during the ozone 

season. To address significant contribution to downwind PM2.5 problems, the 

Transport Rule establishes annual budgets for NOx and SO2, which are PM2.5

precursors. 

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while it is still flexible enough to allow sources to adjust to variability in the 

electricity sector, it also contains certain state-specific limits (referred to as 

“assurance provisions”) “to ensure that the necessary emission reductions occur 

within each covered state.” Id. at 48,271. 

STANDARD OF REVIEW 

 “On a motion for stay, it is the movant’s obligation to justify the court’s 

exercise of such an extraordinary remedy.” Cuomo v. NRC, 772 F.2d 972, 978 

(D.C. Cir. 1985). A movant must demonstrate: (1) a likelihood of success on the 

merits; (2) irreparable injury if relief is withheld; (3) lack of harm to other parties 

from a stay; and (4) that a stay would serve the public interest. Nken v. Holder, 

129 S. Ct. 1749, 1761 (2009); see also D.C. Cir. R. 18(a)(1). 

 On the first factor, Petitioners must show that EPA’s action is likely to be 

found “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance 

with law.” 42 U.S.C. § 7607(d)(9)(A). This deferential standard prohibits a court 

from substituting its judgment for the agency’s and presumes the validity of 

agency actions. Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 

U.S. 29, 43-44 (1983). Courts defer to agency constructions of statutes they 

administer, Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 842-45 (1984), and of 

their own regulations. Auer v. Robbins, 519 U.S. 452, 457 (1997). “In reviewing 

alleged procedural errors, the court may invalidate the rule only if the errors were 

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11 

so serious and related to matters of such central relevance to the rule that there is a 

substantial likelihood that the rule would have been significantly changed if such 

errors had not been made.” 42 U.S.C. § 7607(d)(8). 

 To establish irreparable harm, Petitioners must demonstrate an injury that is 

“both certain and great; it must be actual and not theoretical.” Wisconsin Gas Co. 

v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985). A mere possibility of such harm is 

insufficient. Winter v. NRDC, 555 U.S. 7, 20-24 (2008). Alleged economic losses 

do not constitute irreparable injury except in the most extreme circumstances, i.e., 

where the “very existence” of a company is threatened. Wisconsin Gas, 758 F.2d 

at 674. Further, regulatory compliance costs generally do not constitute irreparable 

injury. See, e.g., American Hosp. Ass’n v. Harris, 625 F.2d 1328, 1331 (7th Cir. 

1980); A.O. Smith Corp. v. FTC, 530 F.2d 515, 527–28 (3d Cir. 1976). 

SUMMARY OF ARGUMENT

 “A stay is an ‘intrusion into the ordinary processes of administration and 

judicial review,’ and accordingly ‘is not a matter of right, even if irreparable injury 

might otherwise result to the appellant.’” Nken, 129 S. Ct. at 1757 (citations 

omitted). Stated another way, a stay is “extraordinary” relief, Cuomo, 772 F.2d at 

978, which should only be sought in similarly extraordinary situations. Here, 

however, out of the forty-five petitions for review that have been filed, nineteen 

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12 

have been accompanied by a stay motion, and numerous other Petitioners have 

filed “responses” in support of stay motions that effectively seek the same relief. 

 While the number of stay motions and responses are certainly not 

determinative of the substance of Petitioners’ claims, the sheer number of issues 

presented at this stage does reinforce the conclusion that Petitioners have, 

collectively, made little or no effort to present to the Court only those claims they 

truly believe are “extraordinary.” Instead, they seem to have bundled into their 

stay motions just about every conceivable merits challenge and every possible 

“injury” they can think of, hoping that something in this mountain of paper may 

resonate with the Court. This approach is wholly inconsistent with the stringent 

standards for a stay pending judicial review, and it is especially inappropriate in 

light of the sweeping relief sought by Petitioners here. 

 As discussed above, the Transport Rule represents the culmination of 

decades of Congressional, administrative, and judicial efforts to fashion a 

workable, comprehensive regulatory approach to interstate air pollution issues that 

have huge public health implications. The legislative history of the Act clearly 

reflects a Congressional frustration with the historical failure of upwind States to 

take effective action on their own to curtail their contributions to pollution 

problems in downwind States. The Transport Rule addresses and effectuates this 

Congressional intent, and many, if not most, of the specific features of the rule 

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13 

challenged by Petitioners (e.g., restrictions on interstate trading; the timing of the 

rule to address CAA compliance deadlines; the mix of air quality and cost 

considerations used to define “significant contribution”) are, in fact, direct 

responses to guidance from this Court in North Carolina and Michigan. In sum, 

the stay motions are little more than unjustified attempts by certain upwind States 

and utilities to block an exceptionally well-documented, lawful, and important rule 

solely to serve their own parochial and economic interests. 

1. Petitioners have no likelihood of success on the merits. 

 One of the Petitioners’ most prominent merits contentions is that EPA 

should not have issued federal implementation plans, but instead should have 

delayed the relevant compliance dates to give States additional time to submit their 

own implementation plans. However, as discussed above, the Act has obligated 

States to adopt SIP provisions to address interstate air pollution since the 1970s, 

and it has been clear since this Court’s 2008 decision in North Carolina that neither 

the provisions of the CAIR FIPs, which remain in place in several States, nor SIP 

provisions that merely implemented the requirements of CAIR, were sufficient to 

satisfy this obligation. Further, the Court in North Carolina stressed EPA’s 

obligation to help States meet their CAA compliance deadlines. North Carolina, 

531 F.3d at 911-12. 

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14 

 Where implementation plan deficiencies continue to exist, the statute 

obligates EPA to step in with a FIP. Further, States that truly were interested in 

adopting their own interstate transport SIP provisions have had years to do so – 

interstate transport SIPs for the 1997 NAAQS were due in 2000 and those for the 

2006 NAAQS were due in 2009. However, the States raising these claims either 

did not develop any such SIP revisions at all following North Carolina, decided to 

remain subject to the CAIR FIPs, and/or submitted proposed revisions to EPA that 

were clearly inadequate. Against this background, EPA not only had the authority 

under the Act to promulgate FIPs for the covered States but, indeed, had an 

obligation to do so. Such EPA action is precisely what the Act mandates and is not 

an improper intrusion on state sovereignty. Consistent with the state/federal 

partnership created by the Act, however, the Transport Rule provides that any State 

that truly wishes to take over its transport obligations under a SIP may do so, as 

long as its plan achieves at least the same emission reductions as EPA’s. 

 Petitioners also make a hodgepodge of arguments contending, in one way or 

another, that EPA incorrectly gauged the “significant contribution” of particular 

States. Many Petitioners argue, more specifically, that significant contribution 

should be defined solely with respect to air quality analyses, apparently because 

they believe such an approach would result in less stringent controls in their 

particular State. EPA’s task here, however, was to develop a regulatory approach 

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15 

that addressed the entirety of this complex, multi-State pollution issue, where 

contributions from numerous upwind States typically are linked to particular 

downwind nonattainment problems. From a technical perspective, EPA explained 

why an air quality-only approach would not be an effective or efficient overall 

response to the complex collective-contribution problem presented here, and this 

analysis stands essentially undisputed. And from a legal perspective, the mixed 

air-quality and cost-effectiveness approach the Agency instead adopted was 

previously upheld in both Michigan and North Carolina.

 A number of Petitioners also claim they did not have sufficient opportunity 

to comment on aspects of the rule of concern to them. However, the proposed rule, 

combined with three separate supplemental notices, provided Petitioners (and all 

members of the public) with more than ample notice and opportunity to comment 

on EPA’s methodology, data, and general approach, and nothing in the Clean Air 

Act or the Administrative Procedure Act required more. Petitioners thus cannot 

show any legal defect in the notice or opportunity to comment provided by EPA, 

and they certainly cannot satisfy the stringent standard for alleged procedural 

errors established by CAA Section 307(d)(8), 42 U.S.C. § 7607(d)(8). 

2. Petitioners have not demonstrated irreparable injury.

 Petitioners fare no better in their attempts to show that they will suffer 

irreparable injury before their claims can be heard on the merits. While covered 

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sources must hold allowances sufficient to cover emissions that occur during 2012, 

the State budgets set forth in the initial stage of the Transport Rule (i.e., for 2012 

and 2013) are based primarily on the capabilities of existing and previouslyplanned emission controls. When reductions that are expected or required to be in 

place by 2012 are taken into account, it becomes clear that Petitioners’ claims that 

drastic reductions will be required by 2012 are (to varying degrees) grossly 

exaggerated. The flexibility of the rule gives individual sources multiple 

compliance options. The rule does not set emission limits for individual sources, 

and sources with emissions above their initial allowance allocations will have more 

than ample opportunity to purchase enough allowances to cover any shortfall (in 

fact, there already is solid evidence of the development of a robust market for such 

allowances). Furthermore, parties are not required to demonstrate their compliance 

with the allowance holding requirements rule until the end of 2012 (for ozone 

season NOx budgets) or the Spring of 2013 (for annual SO2 and NOx budgets), so 

the merits of this case could be heard in the normal course before either of these 

certifications have to be made. 

 It is true that the Transport Rule, like any significant regulation, will impose 

some compliance costs on regulated entities. However, such compliance costs do 

not constitute irreparable injury; if this were not the case, then this Court would be 

asked to stay nearly every regulation for which judicial review was sought by a 

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regulated entity. Simply put, a stay is extraordinary relief, only granted in 

extraordinary circumstances, and none of the cost allegations posited by Petitioners 

(e.g., temporarily reduced profits) rises anywhere close to this level. 

 Nor is there merit to Petitioners’ reckless and unjustified claims that the 

Transport Rule will threaten electric reliability. Although the specifics of 

Petitioners’ allegations vary somewhat from State to State, they all are generally 

based on a host of demonstrably incorrect and extreme assumptions about the lack 

of compliance options and the unavailability of allowances. In reality, however, 

the rule provides all utilities with a host of compliance options that will easily 

allow them to meet all established reliability protocols. In order to ensure the rule 

was compatible with reliable grid operation, EPA’s modeling took into account 

regional constraints informed by the planning studies conducted by the North 

American Electric Reliability Corporation (“NERC”). Declaration of Sam 

Napolitano ¶ 53, Attachment 1. In addition, EPA’s own analysis confirmed that all 

regions covered by the rule would have sufficient capacity to meet foreseeable 

peak electricity demand with an adequate reserve margin. Id. ¶¶ 55-57. 

Indeed, a November 2011 report by NERC, looking at the potential impact 

of four separate EPA rules (the other three of which are not yet final), confirms 

that the Transport Rule will not threaten electric reliability, and especially not the 

requirements of the rule’s relatively less stringent first phase that will be in place 

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while the merits of this case are likely to be briefed and argued.15 Generally 

speaking, NERC’s assessment is a stress test (applying many worst case 

assumptions) that projects no significant change in resource adequacy and ample 

reserve margins in all scenarios for the year 2013. See Napolitano Decl. ¶ 57.16

3. The balance of harms favors denying a stay.

 The harm to the public of the stay sought by Petitioners vastly outweighs 

any conceivable economic benefit Petitioners might gain by being relieved of some 

compliance costs during 2012. EPA’s analysis -- which is not seriously disputed 

here -- documents the tremendous public health benefits (e.g., far fewer deaths, 

hospitalizations, and missed work and school days resulting from respiratory and 

cardiovascular problems) that will result from Transport Rule. 

 It is no answer to say, as some Petitioners do, that the Court could simply 

stay the Transport Rule as it applies to some or all States, with CAIR resurrected in 

 

15 See 2011 Long-Term Reliability Assessment, NERC (November 2011) 

(available at http://www.nerc.com/files/2011LTRA_Final.pdf) (“NERC 2011 

LTRA”). 

16 Compare NERC 2011 LTRA at 152,Table 37: 2013 Reference Case 

(showing reserve margins in the absence of any EPA rules) with id. at 153,Table 

38: 2013 Moderate Case Results (showing reserve margins in 2013 with EPA 

rules). The 2013 scenario presented is the most relevant because the NERC study 

analyzes at the potential impact of four separate EPA rules (three of which have 

not yet been finalized). The Transport Rule is the only one of the four where 

compliance in 2013 is required, and thus the 2013 results largely isolate the impact 

of the Transport Rule, demonstrating that this rule alone has little, if any, impact on 

anticipated or potential reserve margins. 

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whole or in part in the interim. As explained in EPA’s prior responses, and as is 

also discussed herein, even a stay “limited” to particular States would greatly 

undermine effective emissions control because the CAIR requirements would 

cease to constrain emissions due to disruptions to the normal trading of allowances, 

and would also result in substantial confusion in the regulated community. 

Moreover, it is difficult to see how such a course could possibly be said to serve 

the public interest, since this Court in North Carolina found CAIR to be legally 

deficient in a number of critical respects, and the primary purpose of the Transport 

Rule is to replace CAIR in a manner that addressed the Court’s concerns. 

ARGUMENT 

I. PETITIONERS HAVE NO LIKELIHOOD OF SUCCESS ON THE 

 MERITS 

A. EPA Has Statutory Authority to Promulgate the Transport Rule 

FIPs. 

Most of the Petitioners assert that EPA lacked authority to implement the 

Transport Rule by promulgation of FIPs. Although they base their arguments on 

such concepts as “cooperative federalism,” “state sovereignty,” or the supposed 

structure of the Act, they assiduously avoid addressing the actual language of the 

statute. As described in detail in our previous responses (see, e.g., EPA Opp. to 

EME Homer Mot., document 1328647, at 6-12; EPA Opp to NE Mot., document 

1335231, at 9-12), CAA section 110(c)(1) states that “The Administrator shall

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promulgate a Federal implementation plan at any time within 2 years” after EPA 

either finds that a State has failed to make a required SIP submission or 

disapproves a submitted SIP in whole or in part. 42 U.S.C. § 7410(c)(1) (emphasis 

added). For every State subject to the Transport Rule, EPA has made a 

determination of either failure to submit a SIP or has disapproved a SIP with 

regard to the 1997 ozone NAAQS, the 1997 PM2.5 NAAQS, and/or the 2006 PM2.5 

NAAQS. U.S. EPA, Status of CAA 110(a)(2)(D)(i)(I) SIPs Final Rule TSD (July 

2011) (Attachment 2). Thus, the States have had their opportunities to address 

their significant contribution to nonattainment or interference with maintenance in 

other States and have failed to do so. In such circumstances, the CAA not only 

authorizes, but requires, EPA to promulgate one or more FIPs for each State to 

address its significant contribution. 

To the extent Petitioners do address the statute, they erroneously focus on 

section 110(k)(5), 42 U.S.C. § 7410(k)(5). See, e.g., WI Mot. at 6; FL Utils. Mot. 

at 2; GA Resp. at 2. Section 110(k)(5) authorizes EPA to issue a “SIP Call” when 

it determines that a State’s existing SIP does not meet CAA requirements. It is not 

applicable to a situation, such as exists here, where the States have failed to 

comply with their obligations under the Act, and EPA has made a finding of failure 

to submit or has disapproved a State’s SIP. The NOx SIP Call (upheld in 

Michigan) and CAIR (reviewed in North Carolina) illustrate the difference. 

USCA Case #11-1302 Document #1345210 Filed: 12/01/2011 Page 27 of 84
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The NOx SIP Call was a SIP Call issued in the absence of any findings of 

failure to submit or SIP disapprovals. It required certain States to modify their 

SIPs to eliminate their significant contributions to nonattainment or interference 

with maintenance in other States. While the NOx SIP Call established NOx 

budgets for each covered State and required sources to participate in the allowance 

programs established, it did not allocate allowances to individual sources. CAIR, 

however, was not a SIP Call and EPA did not issue a SIP Call before promulgating 

CAIR. For all of the States covered by CAIR, EPA had made a finding of failure 

to submit, see 70 Fed. Reg. 21,147 (Apr. 25, 2005), and EPA promulgated a CAIR 

FIP for each covered State, 71 Fed. Reg. 25,328 (Apr. 28, 2006), which required 

covered sources to participate in the CAIR allowance programs and allocated 

allowances to individual units. 

There is nothing in section 110(c)(1), which is the basis for EPA’s 

promulgation of both the Transport Rule and CAIR FIPs, that requires EPA to 

issue a SIP Call before promulgating a FIP. 42 U.S.C. § 7410(c)(1). When EPA 

promulgates a new NAAQS or revises an existing NAAQS, as it did with the 1997 

ozone and PM2.5 NAAQS and the 2006 PM2.5 NAAQS, States are obligated to 

submit SIP revisions to address the new or revised NAAQS. 42 U.S.C. § 

7410(a)(1), (k)(2),(3). This includes the obligation to address their significant 

contribution to nonattainment or maintenance problems in other States. Nothing in 

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this provision makes the State’s obligation contingent on a determination by EPA 

as to what constitutes significant contribution. Rather the Act imposes an 

affirmative obligation on the States to address emissions from the State that 

significantly contribute to nonattainment or interfere with maintenance in other 

States. The States have not met that obligation with respect to the pollutants 

covered by the Transport Rule. Thus, for each of the States subject to the 

Transport Rule, EPA either found that the State had failed to make one of these 

required submissions or disapproved a submission. Under those circumstances, 

section 110(c)(1) explicitly requires EPA to promulgate a FIP for each such State, 

whether or not it has issued a SIP Call. 

Virginia v. EPA, 108 F.3d 1397 (D.C. Cir.), modified on other grounds, 116 

F.3d 499 (D.C. Cir. 1997), is inapplicable here for the same reason. In Virginia, 

EPA had issued a SIP Call and the Court held that EPA had improperly required 

the States to adopt California’s motor vehicle regulations as a condition of SIP 

approval. Id. at 1403-04. The Transport Rule is not a SIP Call and does not 

require the States to do anything. Rather, it is a federal regulation that directly 

regulates individual sources. Thus, Virginia is inapposite.17 The CAA 

 

17 Moreover, even in the context of a SIP Call, the Court has held that EPA’s 

specification of State budgets based in part on cost-effectiveness was not 

inconsistent with Virginia because States could choose how to achieve those 

budgets, just as EPA does in the FIP context. Michigan, 213 F.3d at 685-88. 

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contemplates, and, in fact, requires that EPA act when the States have failed to do 

so. The States subject to the Transport Rule have failed to address their significant 

contributions to ozone and PM2.5 pollution problems in other States, and thus EPA 

has done so. 76 Fed. Reg. at 48,219-20. 

Finally, Ohio’s claim that EPA improperly disapproved its proposed SIP to 

address the 2006 PM2.5 NAAQS, OH Mot. at 15-17, is inapposite. First, EPA’s 

disapproval of that submission is a separate EPA action not under review here. In 

fact, Ohio has filed a separate petition in the Sixth Circuit seeking review of that 

decision. Ohio v. EPA, No. 11-3988 (6th Cir. filed Sept. 19, 2011). Thus, that 

issue is not before this Court. Second, Ohio is subject to the annual NOx and SO2

programs of the Transport Rule regardless of the validity of EPA’s disapproval of 

Ohio’s SIP regarding the 2006 standard because EPA found that Ohio had failed to 

submit a SIP addressing interstate transport requirements for the 1997 PM2.5

NAAQS; Ohio did not challenge this finding. Attachment 2 at 9; see EPA Opp. to 

EME Homer Mot., document 1328647, at 8-10 (demonstrating that EPA’s 

approval of CAIR SIPs does not eliminate EPA’s authority to promulgate a FIP 

because this Court’s decision in North Carolina demonstrates that those SIPs do 

not correct the deficiency.) Finally, the guidance cited by Ohio (at 16) was 

applicable only to SIPs addressing the 1997 NAAQS revisions and said that States 

could rely on CAIR for addressing those revisions. Because CAIR did not address 

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the 2006 NAAQS revisions, the guidance was completely inapplicable to SIP 

requirements arising out of those revisions. 

 B. EPA Used an Appropriate Approach For Defining the Amount 

 of Each State’s Significant Contribution. 

 A number of Petitioners challenge the manner in which EPA calculated each 

State’s “significant contribution,” which, as discussed above, was based on a 

mixed air quality and cost approach.18 Most of these Petitioners argue that 

significant contribution should instead be defined exclusively by air quality 

considerations. None of these arguments has merit. 

 By way of background, as discussed above, EPA used air quality modeling 

initially to determine which upwind States made emissions contributions that were 

significant enough to link them with particular downwind nonattainment or 

maintenance problems. See generally 76 Fed. Reg. at 48,238-46.19 Typically, the 

modeling showed that for each such downwind receptor with an ozone or PM2.5

 

18 See WI Mot. at 8-9; Dairyland Mot. at 12-13; FL Utils. Mot. at 14; GA 

Utils. Mot. at 11-14; AL/MS Resp. at 3-9. 

19 Specifically, at this stage of its analysis, EPA used “CAMx” 

(Comprehensive Air Quality Model with Extensions) source apportionment 

modeling to “quantify the contribution of emissions from various sources . . . to 

quantify the downwind contributions of ozone and PM2.5 from upwind states.” 76 

Fed. Reg. at 48,229. An emissions and economic model -- the Integrated Planning 

Model, or “IPM” – was used to develop the EGU emission inventories which are 

one of many inputs into the CAMx model. In addition, in later stages of its 

analysis, EPA used IPM modeling to help determine appropriate emission budgets 

for each State by predicting NOx and SO2 emissions from EGUs in each State after 

implementing controls at defined cost thresholds. 76 Fed. Reg. at 48,259-61. 

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25 

nonattainment problem, there are numerous (sometimes as many as two dozen or 

more) upwind States whose emissions make some contribution greater than zero to 

the problem.20 EPA then used numerical thresholds (generally based on one 

percent of the applicable NAAQS) to determine, out of these groups, which 

upwind State contributions to downwind problems are so small as to warrant 

exclusion, while a combination of air quality and cost-effectiveness analyses were 

conducted to determine whether, and if so how much, States above the threshold 

are “significantly contributing” to downwind nonattainment problems. The 

upwind States identified in this analysis became the universe of States subject to 

the Transport Rule. See 76 Fed. Reg. at 48,222-46. 

 EPA then calculated the emission “budgets” for each State based on average 

yearly electric generating unit (“EGU”) emissions after all significant contribution 

has been eliminated. For PM2.5, EPA set annual budgets for NOx and SO2, both of 

which are PM2.5 precursors. For the SO2 budgets, EPA separated upwind States 

into two groups. Id. at 48,264. In “Group 1” States, which are required to make 

more stringent reductions, the final SO2 budgets are based on the amount of SO2

 

20 See generally Air Quality Monitoring Final Rule Technical Support 

Document, Appendix D (June 2011) (available at: 

http://www.epa.gov/airtransport/pdfs/AQModeling.pdf) (showing contributions 

from each upwind State to each downwind receptor). 

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that will be emitted if controls costing up to $2,300 per ton are implemented.21 In 

“Group 2” States, all SO2 budgets are based on less stringent controls costing up to 

$500 per ton. Overall, EPA’s analysis indicated that these reductions would fully 

and cost-effectively address significant interstate contributions to PM2.5

nonattainment and maintenance problems. 76 Fed. Reg. at 48,209-12, 48,252-55. 

 Although Petitioners’ motions are not entirely clear (or uniform) on this 

point, their main argument appears to be that EPA must identify the specific level 

at which a State’s emissions would meet but not exceed the one percent threshold 

used in the air quality portion of EPA’s analysis, and that EPA may not define 

particular States’ “significant contribution” to be any more than that amount. See, 

e.g., Dairyland Mot. at 12-13; WI Mot. at 8-9; AL/MS Resp. at 5. Some of these 

Petitioners make the related suggestion that the percentage of emission reductions 

required from each upwind contributor to a particular downwind pollution problem 

must be proportional to each of the upwind States’ relative degree of modeled air 

quality contributions. See, e.g., WI Mot. at 10; FL Utils. Mot. at 14. 

 

21 The 2012-13 budgets for “Group 1” States are based on the amount of SO2

that will be emitted if controls up to $500 ton are implemented, and the budgets for 

2014 and beyond are based on the amount of SO2 that will be emitted if controls 

costing up to $2,300 per ton are implemented. 

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 While the more specific of these claims are grossly exaggerated and 

meritless on their own terms,22 the fundamental problem is that all of these 

arguments are focused entirely on the narrow desired result of minimizing the 

emissions reductions of a single upwind State, as measured by its contributions to a 

single downwind receptor. But EPA’s task in the Transport Rule was to address 

the much broader and more complex web of interstate transport issues affecting 

more than half the States in the country. In reality, most upwind States contribute 

to nonattainment in multiple downwind States, and all downwind nonattainment 

problems are caused by the combined contributions of local emissions and 

transported emissions from multiple upwind States. Thus, as EPA explained at the 

time of proposal, air quality-only approaches to this “collective contribution” 

problem generally require each upwind State to reduce its emissions to address the 

maximum contribution that the State makes to any downwind nonattainment 

problem, resulting in much larger required emission reductions in upwind States 

than would be necessary, collectively, to address the identified downwind 

nonattainment issues.23 The mere fact that certain Petitioners believe their narrow 

 

22 See Part I.D, infra; see also Declaration of Brian S. Timin ¶¶ 5-16 

(Attachment 3). 

23 U.S. EPA, Alternative Significant Contribution Approaches Evaluated TSD 

(July 2010), at 3-7 (available at 

http://www.epa.gov/airtransport/pdfs/TSD_alternative_significant_contribution_ap

proaches.pdf). 

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interests would have been better served in this particular case by an air-quality only 

approach does not rebut EPA’s well-reasoned choice of a different approach for 

the rule that better serves the goals of the statute and this Court’s guidance. 

 Michigan and North Carolina support EPA’s approach of using both air 

quality and cost considerations to inform its analysis of whether, and how much, 

particular States “contribute significantly to nonattainment,” as that term is used in 

CAA section 110(a)(2)(D)(i)(I), 42 U.S.C. § 7410(a)(2)(D)(i)(I). As discussed 

above, in Michigan this Court held that the term “significant” as used in this phrase 

is not limited exclusively to air quality and health issues, but instead is properly 

read to include economic considerations. Michigan, 213 F.3d at 674-79. The 

Court re-affirmed this aspect of Michigan in North Carolina. North Carolina, 531 

F.3d at 917. It is true that in North Carolina, the Court found that CAIR utilized a 

flexible emission-trading system and other features that undermined EPA’s 

obligation to assure that state-specific nonattainment problems would be 

addressed. Nothing in North Carolina, however, precludes use of a more statespecific and refined analysis, as EPA did here, which assures that the rule will be 

cost-effective and meet the State-specific air quality requirements of the statute.24

 

24 The Transport Rule adopted a number of important revisions from the 

approach taken in CAIR to address the Court’s concerns on these issues, including 

a much more restricted emissions trading program, “variability” limits on the 

amount by which each contributing State can exceed its yearly emissions budgets, 

an air-quality-based approach to identifying cost thresholds, and a two-part 

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 Nor is there any basis for the suggestion that Michigan only allowed the use 

of costs to reduce the stringency of required emission reductions that would 

otherwise be required by air quality modeling. See AL/MS Resp. at 8-9. In fact, 

Michigan rejected an almost identical set of arguments. In that case, one of the 

Petitioners’ critiques of the NOx SIP Call was that it used a relatively “uniform” 

analysis to determine each State’s required emission reductions. Michigan, 213 

F.3d at 679. Petitioners argued, much like Petitioners here, that EPA instead 

should have made “reductions from sources near the nonattainment areas (or 

otherwise more damaging, molecule for molecule) more valuable than ones from 

distant sources . . . .” Id. Petitioners also criticized EPA’s approach on the basis 

that “where two states differ considerably in the amount of their respective NOx 

contributions to downwind nonattainment, under the EPA rule even the small 

contributors must make reductions equivalent to those achievable by highly costeffective measures.” Id. In response, the Court simply explained that EPA had 

articulated a reasonable basis in the record for its decision to use a costeffectiveness approach to “significant contribution,” that the effects objected to by 

Petitioners naturally flowed from EPA’s decision, and that “[o]ur upholding of that 

 

approach to SO2 contributions which, as discussed in the text, applies relatively 

less stringent cost-effectiveness criteria to some States. See generally 76 Fed. Reg. 

at 48,209-16. In the final step of its analysis, EPA conducted modeling to assure 

that the program would achieve appropriate state-specific air quality results, 76 

Fed. Reg. 48,253-55, and Petitioners do not directly contest that modeling here. 

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decision logically entails upholding this consequence.” Id.; see also North

Carolina, 531 F.3d at 908, 917 (re-affirming this aspect of Michigan).25

 It bears emphasis that under the Transport Rule, a State’s “significant 

contribution” to downwind NAAQS nonattainment is not equivalent to the abovedescribed thresholds that EPA used to help identify States whose contributions 

were large enough to warrant further consideration, as some Petitioners claim. 

See, e.g., Dairyland Mot. at 12. Instead, as EPA clearly explained, the cited 

thresholds were merely an analytical tool used by EPA in the first step of a multifactor analysis to help determine which States should be included in the rule.26 

Once those States were identified, their “significant contribution” was defined not 

in relation to the thresholds, but instead with respect to the amount of emissions 

within the State that could be reduced at a specific cost threshold identified for 

 

25 Some Petitioners also suggest that in North Carolina, the Court prohibited 

EPA from requiring States to reduce more than their amount of modeled air quality 

contributions to downwind nonattainment and maintenance problems. See, e.g., 

WI Mot. at 9 (citing North Carolina, 531 F.3d at 917-21). This is incorrect. In 

fact, as noted in the text, the cited portion of North Carolina re-affirmed 

Michigan’s general acceptance of a cost-effectiveness approach to “significant 

contribution,” but determined that two specific features of CAIR -- the rule’s use 

of acid rain allowances in the trading program and of “fuel factors” as part of the 

budget-setting process -- were inadequately justified and explained. As noted 

above, however, EPA made a number of changes in response to North Carolina, 

and neither of these features of CAIR was utilized in the Transport Rule. 

26 76 Fed. Reg. at 48,246-48; see also North Carolina, 531 F.3d at 916-17 

(recognizing that similar thresholds used in CAIR were used only to help 

determine the inclusion or exclusion of particular States in the rule, not the amount 

of each State’s “significant contribution”). 

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31 

each State by utilizing the combined cost-effectiveness and air quality analysis 

described above. 76 Fed. Reg. at 48,248-65. Thus, the Petitioners’ suggestion that 

the rule creates a mismatch between the amount of a State’s “significant 

contribution” and the amount of its required emission reductions is, in this respect, 

little more than a mischaracterization of the record.27

 Finally, there also is no merit to Georgia Utilities’ argument that EPA’s 

significant contribution analysis was flawed, with respect to Georgia, because it 

supposedly will require specific sources in Georgia to make SO2 emission 

reductions costing more than $500 per ton. GA Utils. Mot. at 12-14. This 

argument reflects a misunderstanding of the rule and is premised on an 

exaggerated estimate of compliance costs. See Napolitano Decl. ¶¶ 77-79. The 

$500 per ton SO2 threshold is neither a binding cap on the cost of potential 

compliance costs, nor is it used to define unit or utility-specific compliance 

requirements. Id. Instead, it was used to estimate the point at which air quality 

impacts in downwind States noticeably changed; when reductions available at 

$500/ton were implemented the relevant downwind receptors came into attainment 

and resolved maintenance problems. See 76 Fed. Reg. at 48,257. Notwithstanding 

this analytical approach, the Transport Rule provides flexibility in compliance 

 

27 See also, e.g., EPA’s Opp. to Wisconsin Public Service Corp.’s Mot., 

document no. 1337434, at 7-13 (filed Oct. 24, 2011) (discussing issues in detail). 

USCA Case #11-1302 Document #1345210 Filed: 12/01/2011 Page 38 of 84
32 

options, and covered EGUs may choose to comply using a method that costs less 

or more than $500 per ton. In short, the cost threshold was an analytical tool used 

by EPA, not a compliance requirement. 

 For all the foregoing reasons, EPA’s approach to “significant contribution” 

issues was reasonable, is consistent with the statute, and likely will be upheld. 

C. EPA Gave Adequate Notice of the Final Budgets. 

Many of the stay motions assert that EPA failed to give adequate notice of 

the emission budgets in the final rule because those budgets changed from the 

proposal. As we have explained in our responses to other stay motions, EPA 

provided adequate notice because it identified in the proposal the methodology it 

would use to establish the budgets and provided opportunities to comment on the 

changes to the model and data being used. See, e.g., EPA Opp. to NE Mot., 

document 1335231, at 7-9. The changes in budgets from the proposal to the final 

rule are in large part the result of information provided in comments, and thus the 

final rule is a logical outgrowth of the proposal. As this Court has held, a final rule 

may permissibly differ from the proposal if it is a “logical outgrowth” of the 

proposal “where the agency gave adequate notice of the procedures it intended to 

use, the criteria by which it intended to select data, and the range of alternative 

sources of data it was considering.” Am. Coke & Coal Chems.Inst. v. EPA, 452 

F.3d 930, 939 (D.C. Cir. 2006). 

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33 

The budgets under the rule represent each State’s emissions in an average 

year after implementation of reductions needed to eliminate emissions that 

significantly contribute to nonattainment or interfere with maintenance in other 

States. 76 Fed. Reg. at 48,260. To identify the necessary reductions, EPA used an 

air-quality-based analysis to identify appropriate cost thresholds and the Integrated 

Planning Model (“IPM”)28 to predict NOx and SO2 emissions from electric 

generating units in each State after implementing controls at those cost thresholds. 

76 Fed. Reg. at 48,255-61. The change in the budgets between the proposed and 

final rules is due primarily to modifications EPA made to the IPM to make it more 

accurate, including addressing public input suggesting that certain IPM updates 

were needed. Id. at 48,260. 

EPA provided an opportunity to comment on the revisions to the model 

through a Notice of Data Availability (“NODA”) that stated that EPA had made 

changes in the IPM, that detailed documentation of the changes was available in 

the docket (and on-line), and that requested comment on the changes. 75 Fed. Reg. 

53,613, 53,614 (Sept. 1, 2010).29 The NODA also stated that updated information 

 

28 IPM is an economic model, used to determine the least-cost method of 

generating electricity. In other words, it forecasts how the power sector produces 

electricity at least cost while meeting energy demand, reliability constraints, and 

environmental requirements 

29 This was one of three NODAs published by EPA to provide an opportunity 

for comment on revised data used in its analyses for the Transport Rule. The 

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34 

concerning the generating units included in the IPM was available for comment in 

the docket, and that, in running the IPM, EPA would use data from 2009, rather 

than the 2007 data used in the proposal, and EPA identified the data that would be 

used. Id. at 53,614-15. EPA explained that these changes would “more accurately 

portray the unit level control installations that have occurred at power plants during 

the past several years.” Id. The NODA also explained that these changes to the 

IPM could impact the final rule by “[c]hanging cost and emission projections used 

in the multi-factor test to determine the amount of emissions that represent 

significant contribution,” id. at 53,614, which determines the State budgets.30

Thus, through the NODAs, EPA gave notice that the final rule budgets 

would differ from those in the proposal and provided an opportunity to comment 

on the methodology and data used in developing the final budgets. Furthermore, 

based on publicly available data, Petitioners should have known that the final 

budgets would be significantly lower than those in proposal because actual 

emissions had become lower. For example, SO2 emissions in Wisconsin (where 

movant Dairlyand is located) decreased from 129,695 tons in 2008 to 109,476 tons 

 

others are at 75 Fed. Reg. 66,055 (Oct. 27, 2010) and 76 Fed. Reg. 1109 (Jan. 7, 

2011). 

30 In the January 2011 NODA, EPA also emphasized that: “It is important to 

note that final State budgets may differ from the proposed budgets because EPA is 

still in the process of updating its emissions inventories and modeling in response 

to public comments, including comments on the . . . IPM.” 76 Fed. Reg. at 1111. 

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35 

in 2010, while NOx emissions decreased from 47,805 to 33,466 tons in the same 

period. See www.camddataandmaps.epa.gov/gdm. Thus, Dairyland and other 

Petitioners should have been aware that the data EPA intended to use in 

promulgating the final rule reflected lower emission levels than the data used to 

develop the proposed budgets, and should not have been surprised that the final 

budgets were lower. The final rule is a logical outgrowth of the proposal and 

Petitioners had adequate opportunity to comment. Am. Coke, 452 F.3d at 938-39 

(“If interested parties ‘should have anticipated’ that the change was possible, and 

thus reasonably should have filed their comments on the subject during the noticeand-comment period, then the rule is deemed to constitute a logical outgrowth of 

the proposed rule.”). 

Petitioners’ reliance on Small Refiner Lead Phase-Down Task Force v. EPA, 

705 F.2d 506 (D.C. Cir. 1983), is misplaced because the primary factor on which 

the Court relied in Small Refiner, i.e., a “promise” that EPA had made in the 

proposal that small refiners “could safely delay capital investments pending EPA’s 

issuance of the final rule,” id. at 542, is not present here. In Small Refiner the 

Court held that EPA had not complied with notice requirements because EPA had 

made a specific commitment in the proposal and then abandoned that commitment 

in the final rule. Id. at 543 (issue was not whether proposal gave adequate notice 

of the final standard, but whether it gave adequate notice of the interim standard in 

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light of EPA’s commitment). It did not hold that EPA had failed to give adequate 

notice simply because the final rule was more stringent than the proposal. 

EPA made no analogous commitment in the Transport Rule proposal. 

Rather, the proposal and the NODAs made clear that EPA was seeking updated 

data to make the budgets more accurately reflect actual conditions. This Court has 

recognized that one of the purposes of notice and comment is to allow an agency to 

refine its proposal in light of the information provided in comments and that 

requiring the agency to go through a new round of comments each time it made 

such a refinement would lead to endless cycles of notice and comment. Ne. Md.

Waste Disposal Auth. v. EPA, 358 F.3d 936, 951 (D.C. Cir. 2004). In this case, 

EPA made clear that it intended to update the budgets in light of new information 

and gave interested parties the opportunity to comment on the data and the model. 

Such action is entirely consistent with notice and comment requirements. As this 

Court has stated, “Agencies are free – indeed they are encouraged – to modify 

proposed rules as a result of the comments they receive.” Id. 

The arguments raised by individual Petitioners are similarly without merit. 

For example, Florida Utilities’ claim that EPA failed to provide an opportunity to 

comment on the use of IPM in developing State budgets, FL Utils. Mot. at 9, is 

simply wrong. While the proposal preamble states that EPA would utilize a 

variety of sources of information in developing budgets, it does not state that EPA 

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37 

would not use IPM modeling. In fact, the proposal used IPM to develop 2012 and 

2014 budgets. Napolitano Decl. ¶ 73. Moreover, EPA received numerous 

comments directly addressing, and largely supporting, the use of IPM modeling in 

developing the budgets. Id. ¶ 47. Thus, the regulated community had ample notice 

that EPA intended to utilize the IPM in developing the budgets. 

Entergy’s claim that EPA changed its methodology for determining the level 

of emission reductions as applied to Louisiana, Mississippi, and Arkansas between 

the proposed and final rules, Entergy Mot. at 10-12, is also factually incorrect. 

EPA applied the same methodology to these States as it did to the rest, i.e., it 

determined what emission reductions were available within each State at specific 

cost thresholds. For these States, after IPM modeling showed that emissions after 

implementing emission reductions available at the $500 per ton level would equal 

the base case emissions, EPA conducted a further analysis to determine, based on 

an examination of what would happen in these States if they were excluded from 

the program, whether emission reductions were available in these States at $500 

per ton and it determined that there were. 76 Fed. Reg. at 48,263. EPA’s analysis 

focused on identifying reductions available within these States and determining 

“whether emission limits are necessary to prohibit these states from significantly 

contributing to downwind nonattainment or interfering with maintenance.” Id.

(emphasis added). As such, Entergy’s claim that EPA decided to include these 

USCA Case #11-1302 Document #1345210 Filed: 12/01/2011 Page 44 of 84
38 

States “so that other states will achieve their projected emission reductions” 

(Entergy Mot. at 12 (emphasis added)) is false. EPA did not apply a different 

methodology to these States, and Entergy had ample notice of the method that EPA 

would use to determine the necessary emission reductions. 

 The City of Ames’ argument that EPA failed to provide notice of changes to 

the allocations to units owned by Ames is similarly without merit because EPA 

explicitly provided an opportunity to comment on the revised methodology to be 

used for unit-level allocations in the January 2011 NODA. Further, the City’s 

argument that EPA failed to provide notice of the ozone-season budget for the 

State of Iowa is inapposite because Iowa is not included in the final rule for ozone 

and therefore does not have an ozone-season budget. 76 Fed. Reg. at 48,213, 

Table III-1. (EPA has proposed, but not yet taken final action, to include Iowa in 

the ozone season program, 76 Fed. Reg. 40,662 (July 11, 2011)).

 D. EPA Properly Based Its Identification of Downwind

 Nonattainment and Maintenance Areas on Air Quality Modeling. 

 A number of Petitioners challenge EPA’s use of air quality modeling -- as 

opposed to current air quality monitoring data -- to identify which downwind areas 

will experience PM2.5 and ozone NAAQS nonattainment and maintenance 

problems in the absence of upwind controls.31 By way of background, it was 

 

31 See WI Mot. at 12; Dairyland Mot. at 14; Indiana Mot. at 8-9; FL Utils. Mot. 

at 10-12; Southern Co. Resp. at 3, 5-11; GA Utils. Mot. at 18-19. 

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39 

necessary for EPA to use air quality modeling, as opposed to current air quality 

monitoring data, because in North Carolina this Court unequivocally directed EPA 

to replace CAIR, not merely to supplement it. See 76 Fed. Reg. at 48,223; see also

North Carolina, 531 F.3d at 929-30 (describing EPA’s approach in CAIR as 

“fundamentally flawed,” directing EPA to “redo its analysis from the ground up,” 

and stating that “[n]o amount of tinkering with the rule or revising of the 

explanations will transform CAIR, as written, into an acceptable rule.”).32 Thus, to 

appropriately analyze “from the ground up” what controls are needed for the 

Transport Rule, it was essential for EPA to begin by modeling what air quality 

would be like in downwind areas without the CAIR regulatory regime in place. 

Only with that “base case” established could EPA then analyze what downwind air 

quality problems would exist without CAIR due to upwind contributions and, 

accordingly, what upwind controls were needed in the Transport Rule to address 

significant contributions to NAAQS nonattainment and maintenance problems. 

See 76 Fed. Reg. at 48,223-24.33 

 

32 It is also worth noting that in North Carolina and Michigan, this Court 

upheld EPA’s use of modeling data to help determine which upwind States should 

be included in CAIR and the NOx SIP Call. See North Carolina, 531 F.3d at 913-

14; Michigan, 213 F.3d at 673-74. 

33 However, any suggestion that EPA’s “base case” or modeling does not 

accurately reflect the real-world operating conditions and projected future 

emissions is incorrect. For example, EPA’s modeling projections include 

information about announced unit retirements and controls that are planned to 

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 Generally speaking, Petitioners argue that EPA’s modeling analysis (and, by 

extension, much of the Transport Rule) was unnecessary, since they believe, based 

on recent monitoring data, that a number of downwind areas that are the focus of 

the rule presently are attaining the relevant NAAQS or are at least on a path to do 

so. However, all of these arguments ignore the fact that the cited air quality 

monitoring data necessarily reflect, inter alia, the air quality improvements 

resulting from CAIR. See 76 Fed. Reg. 48,260-61. Therefore, these data, which 

necessarily reflect the control requirements of CAIR, simply are irrelevant to the 

question of what controls are needed as a replacement for CAIR. 

 Similarly meritless is the related suggestion by some Petitioners that the 

Transport Rule is also unnecessary (at least in part) because some downwind areas 

might reach attainment by 2014, even if they can’t do so by 2012. See, e.g., WI 

Mot. at 14; FL Utils. Mot. at 11. Pursuant to North Carolina, 531 F.2d at 911-12, 

930, part of EPA’s charge here was to ensure that reductions occurred in a 

timeframe that is as “expeditious as practicable,” providing the statutorilymandated assistance to downwind States in advance of their deadlines for attaining 

the NAAQS. Therefore, EPA properly focused its identification of downwind 

 

come online and will be required to run, either due to plant design, consent 

decrees, agreements, or state regulations that would affect future emissions 

upwards or downwards. See Napolitano Decl. ¶ 45. 

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41 

receptor States on the 2012 “base case” scenario. See 76 Fed. Reg. at 48,214, 

48,227-38, 48,277-79; see also infra Part I.G. 

In short, two of the clear directives of North Carolina were that EPA needed 

to re-do its interstate transport analysis “from the ground up” and that EPA needed 

to come up with a new regulatory approach that would, among other things, allow 

downwind areas to achieve their statutory NAAQS attainment and maintenance 

obligations as “expeditiously as possible.” The Transport Rule indisputably 

addresses the Court’s guidance on these points and, at the very least, reflects a 

reasonable policy choice by EPA. The mere fact that certain Petitioners believe 

that similar (albeit slower) air quality benefits could have been secured at a lower 

cost to themselves by a different policy choice -- i.e., a decision to leave CAIR in 

place with only the sort of “tinkering” EPA was expressly admonished to avoid in 

North Carolina -- simply is irrelevant. 

Finally, Petitioners’ arguments concerning alleged modeling errors on these 

points are, in any event, wrong on their merits. For example, Florida Utilities’ 

suggestion that Florida’s linkage to Harris County, Texas, must be unreasonable 

because changes in EGU emissions were not linearly related to changes in 

maximum modeled impacts at downwind receptors (FL Utils. Mot. at 5-6) is 

simplistic and demonstrably incorrect. As explained in the attached EPA 

declarations, Petitioners’ arguments on these points misunderstand or ignore the 

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42 

complexity of the air quality models developed to take into consideration myriad 

complex factors that influence pollution transport. See Timin Decl. ¶ 5-16; see 

also Napolitano Decl. ¶¶ 44-52. Properly understood, this modeling demonstrates 

that Florida’s ozone contributions to receptors in Harris County, Texas, 

substantially exceeds the threshold used in the significant contribution analysis for 

the final Transport Rule. Timin Decl. ¶ 16. For all the foregoing reasons, 

Petitioners’ arguments concerning modeling vs. monitoring data are meritless. 

E. EPA Adequately Considered Transmission Constraints and 

 Localized Grid Reliability Issues. 

 Entergy, We Energies, and the Kansas Utilities raise various arguments that 

EPA’s modeling failed to consider transmission constraints and did not adequately 

analyze localized grid reliability issues. None of the Petitioners’ arguments shows 

any likelihood of success on the merits. 

 Entergy argues that the IPM34 that EPA used to establish State emissions 

budgets is flawed and should not be used to establish budgets because it does not 

take into account transmission constraints. Entergy Mot. 8-9. This is a particularly 

odd argument for Entergy to make, as Entergy affirmatively supported EPA’s use 

of IPM to establish State emissions budgets in its comments to the agency. 

 

34 IPM is an economic model, used to determine the least-cost method of 

generating electricity. In other words, it forecasts how the power sector produces 

electricity at least cost while meeting energy demand, reliability constraints, and 

environmental requirements. 

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Comment by Entergy Servs., Inc., EPA-HQ-OAR-2009-0491-2847, at 2 (“Entergy 

Cmt.”) (Attachment 4). Although some aspects of IPM were updated as identified 

in a NODA (75 Fed. Reg. 53,613), aspects of IPM that Entergy now claims are 

flawed, including the manner in which the model considers transmission 

constraints, voltage support requirements, load pockets and other reliability rules 

imposed on the transmission system (Entergy Mot. at 8), 35 are aspects of the model 

that Entergy was well aware of and were not altered in any way between the 

version of IPM used for the proposal modeling and the version used for the final 

rule modeling. Napolitano Decl. ¶ 48. Notwithstanding, Entergy commented that 

“with the right assumptions, IPM adequately depicts future demand needs at 

regional and state levels.” Id. (emphasis added).36 Thus, Entergy’s argument that 

EPA relies on a flawed application of IPM was not presented to EPA -- indeed, 

directly contradicts its comments to EPA -- and fails to show that EPA’s reliance 

 

35 The terms “transmission constraints” and “bottle necks” generally refer to 

limits on the ability of the transmission grid to move power from where it is 

generated to where it is consumed. The extent to which these limits are 

constraining may depend on numerous factors, including demand (they are most 

likely to be constraining when demand is high). “Voltage requirements” are 

requirements to maintain grid voltage at prescribed levels. “Load pocket” 

generally refers to an area with units that must run during periods of peak demand, 

generally because there are limits on importing power to meet peak load. 

36 The only changes Entergy suggested with regard to IPM’s assumptions 

pertained to certain natural gas assumptions, id., which were addressed by changes 

EPA made in the final rule, see Transport Rule Primary Response to Comments 

(June 2011), EPA-HQ-OAR-2009-0491-4513, at 2141-42 (Attachment 6). 

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on IPM for establishing State budgets was arbitrary. Moreover, this Court has 

previously upheld the use of IPM for these purposes. Appalachian Power Co. v. 

EPA, 249 F.3d 1032, 1053-54 (D.C. Cir. 2001). 

 Furthermore, contrary to the assertions of Entergy and other Petitioners (We 

Energies Mot. at 15, KS Utils. Mot. at 19), EPA did take into account transmission 

constraints both in establishing State emissions budgets using IPM and in 

allocating emissions allowances to individual units. EPA’s IPM projections for the 

Transport Rule explicitly take into account regional constraints on electricity 

transmission, informed by planning studies conducted by the North American 

Electric Reliability Corporation (“NERC”), an entity that is federally mandated to 

ensure electric system reliability. Napolitano Decl. ¶¶ 52-53. IPM’s thirty-two 

modeling regions are constructed to capture, directly within the model, significant 

limitations of the existing grid to deliver least-cost electricity under various 

scenarios. Id. ¶ 54. 

 Additionally, EPA modified its method of allocating emissions allowances 

to individual units between the proposed and final rule, in part, to respond to 

comments regarding localized transmission constraints. Entergy and others raised 

concerns that IPM did not take into account localized transmission constraints and 

therefore it was a poor tool on which to base unit-specific emissions allocations. 

E.g., Entergy Cmt. at 2-3; We Energies Cmt., EPA-HQ-OAR-2009-0491-2629, at 

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45 

6-7; New Orleans City Council Cmt., EPA-HQ-OAR-2009-0491-2719, at 2; 

Louisiana Energy and Power Auth. Cmt., EPA-HQ-OAR-2009-0491-3738, at 7-

10. Entergy commented that the limitations in the way IPM addresses transmission 

constraints and other related issues would have “limited impact for state-level 

modeling results,” but might become problematic at the individual unit level. 

Entergy Cmt. at 3. Entergy’s comments suggested that these transmission issues 

could be addressed by changing the basis for unit-specific emissions allocations to 

historic heat input, which is exactly what EPA did in the final rule. Id. 

 In the final rule, EPA based unit-level allowance allocations not on IPM 

projections, but instead on a combination of historic heat input and historic 

emissions data. 76 Fed. Reg. at 48,288; Napolitano Decl. ¶ 55. These historic data 

necessarily reflect specific unit-level behavior that may be driven by local 

transmission constraints and other operational needs of the grid, meaning that unitlevel allowance allocations under the final Transport Rule acknowledge and 

account for the historic response of these units to maintain electric reliability. Id. 

In short, the contention (Entergy Mot. at 8; We Energies Mot. at 15) that EPA 

ignored an important aspect of the problem or failed to consider real-world data is 

simply wrong. 

 That EPA’s Revisions Proposal, 76 Fed. Reg. 63,860 (Oct. 14, 2011), 

proposes to adjust a handful of State budgets (Louisiana, Mississippi, Texas, New 

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46 

Jersey, and New York) to address localized issues such as transmission constraints 

affecting unit dispatch based on unit-specific information provided to EPA after

the Transport Rule was final does not show that the model was flawed or that the 

emissions budgets are arbitrary, as Entergy and others suggests. See Entergy Mot. 

at 8. Rather, the Revisions Proposal demonstrates that unit-specific assumptions in 

IPM can be adjusted to address more localized transmission constraints when EPA 

is provided sufficient information to make the adjustments. However, such 

localized, unit-specific transmission constraints are rarely publicly available, 

Napolitano Decl. ¶ 54; thus, EPA could not have considered them as part of the 

rule unless utilities provided this information. The generalized comments by We 

Energies and the Kansas Utilities as to localized constraints did not provide EPA 

with sufficient information to incorporate them into the model. Likewise, despite 

Entergy’s clear understanding of IPM and its treatment of transmission constraints, 

Entergy provided EPA with the information it needed only after the rule was 

finalized. Napolitano Decl. ¶ 131; see, e.g., Entergy Mot. Ex. 3. 

 Moreover, the unit-level adjustments that EPA proposes affect only 3% of 

the 3,632 units covered by the final rule. Napolitano Decl. ¶ 135. While Entergy 

claims the model made incorrect predictions with regard to 26 units in Louisiana, 

Mississippi, and Arkansas, EPA is proposing to adjust the assumptions for only 17 

units in Louisiana and Mississippi. Id. ¶ 136. Overall, the proposed revisions 

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would increase total seasonal NOx budgets by only 2%, which contradicts 

Entergy’s suggestion of some sort of “fundamental” flaw in the model. Id. ¶ 136. 

 Finally, Petitioners’ claim that EPA’s assumptions and modeling will lead to 

reliability problems (Entergy Mot. at 10, 13-18; KS Utils. Mot. at 19; We Energies 

Mot. at 15) fails because it ignores the inherent flexibility in an emissions trading 

program and relies on the erroneous assumption that units that were allocated zero 

or a small number of allowances will be unavailable to meet electricity demands in 

constrained areas. The Transport Rule does not set emissions limits for individual 

units, but rather allows EGUs flexibility to choose among a combination of 

compliance options, including trading allowances, to stay within established State 

budgets. See Napolitano Decl. ¶¶ 11, 18. Thus, EPA reasonably found that the 

rule provides enough flexibility for coordination among regional transmission 

entities and utilities to address local grid issues. Napolitano Decl. ¶ 57.

F. The Budgets for the State of Wisconsin Are Not in Error. 

The Dairyland and Wisconsin Motions contend that EPA made erroneous 

assumptions as to whether seven coal-fired EGUs in Wisconsin currently have or 

will have environmental controls (flue gas desulfurization or “scrubbers” for SO2

and selective catalytic reduction, “SCR,” for NOx). Dairyland Mot. at 10-12; WI 

Mot. at 7. Both motions, like WPSC’s before them, argue that these alleged 

technical errors lowered the final 2012 NOx and SO2 budgets for the State of 

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Wisconsin by “tens of thousands of tons.” Dairyland Mot. at 12. As EPA already 

explained in its response to the WPSC Motion, document 1337434, at 13-14, these 

claims are substantially false and are greatly exaggerated. In fact, EPA made only 

one incorrect assumption about controls that would be in place in 2012, as to just 

one of the seven units in question. Id. As to this lone error affecting Wisconsin’s 

2012 budgets, EPA has proposed to increase Wisconsin’s annual NOx budget by 

2,437 tons (less than 8%), hardly the “tens of thousands” of tons that the movants 

posit. The factual errors that the movants allege simply did not occur (save the 

exception noted above), Wisconsin’s 2012 budgets are not materially lower as a 

result, and, obviously, no irreparable harm can result from non-existent errors.

 G. The Transport Rule Reasonably Applies to Emissions in 2012. 

A recurring assertion in these motions is that the Transport Rule’s 

compliance time frame is unreasonably short because the rule sets emissions 

budgets that will require emissions reductions in 2012. The Petitioners assert that 

EPA’s decision to establish requirements for 2012 was arbitrary and capricious 

(see, e.g., OH Mot. at 11-14) or that the compliance time frame will lead to 

irreparable harm (see, e.g., We Energies Mot. at 15-16; UARG Resp. at 11). 

Regardless of how framed, these complaints about the compliance schedule 

disregard the applicable law and essential facts about the Transport Rule. While 

the Petitioners may desire longer compliance deadlines, EPA reasonably reads this 

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Court’s holding in North Carolina as foreclosing a later compliance deadline, as 

the Court rejected the CAIR Phase II compliance date of 2015 and directed EPA to 

harmonize the requirements of any rule governing interstate transport with the 

deadlines for attainment of the NAAQS in downwind States. 531 F.3d at 911-12. 

As a result, the Transport Rule deadlines are coordinated, as they must be, with the 

attainment dates for the relevant NAAQS. 76 Fed. Reg. at 48,214, 48,277-79. 

Moreover, this Court admonished EPA to replace CAIR expeditiously. North 

Carolina, 550 F.3d at 1178. Thus, CAIR itself and this Court’s decisions 

addressing CAIR put States and sources fully on notice that requirements to reduce 

NOx and SO2 were right around the corner. 

The Petitioners’ expressions of surprise and consternation about the rule’s 

2012 compliance deadline thus ring hollow three years after this Court remanded 

CAIR. The Petitioners are equally aware of the Act’s express requirement that 

SIPs “contain adequate provisions prohibiting . . . any source or other type of 

emissions activity within the State from emitting any air pollutant in amounts 

which will contribute significantly to nonattainment in, or interfere with 

maintenance by, any other State with respect to [a National Ambient Air Quality 

Standard (“NAAQS”)].” 42 U.S.C. § 7410(a)(2)(D)(i)(I). This provision imposes 

an affirmative, self-executing obligation on the States to address emissions from 

the State significantly contributing to nonattainment or interfering with 

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maintenance in other States, irrespective of EPA action and irrespective of whether 

a State was originally included in CAIR. Thus when EPA promulgated the 

NAAQS addressed by the Transport Rule – in 1997 and 2006 – States were 

required to submit to EPA revisions to their SIPs to address implementation of the 

revised NAAQS, including the requirement of section 110(a)(2)(D)(i)(I). 42 U.S.C. 

§ 7410(a)(1). Thus, States claiming now to be faced with an untenable deadline 

have already had either six or fourteen years to address significant contribution in a 

SIP, not months. And even those States that believed they had addressed their 

downwind issues through SIP revisions pursuant to the NOx SIP Call or CAIR 

have been on notice of the need to do more since North Carolina issued. 

Additionally, EPA’s approach to the 2012 emissions budgets makes a long 

transition period unnecessary. The rule includes an initial phase of emission 

reductions starting in 2012 that, as directed by this Court, addresses downwind 

problems as expeditiously as practicable and helps States to meet 2013 NAAQS 

attainment deadlines. 76 Fed. Reg. at 48,278. These reductions are not as 

stringent as those in the Transport Rule’s second phase (starting in 2014) because, 

given the shorter lead time, EPA recognized that the installation of postcombustion controls (which requires a longer lead time) would not be a feasible 

compliance option. Rather, EPA explained that the first phase reductions could be 

achieved through an array of strategies such as optimizing or increasing the use of 

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existing controls, fuel-switching, dispatching lower emitting units more often, or 

installing simpler control technologies. Id. at 48,279. Individual sources could 

also choose to comply by purchasing additional allowances through the Transport 

Rule’s trading program that is already operating. Id. at 48,280; Napolitano Decl. 

¶¶ 13-16. EPA carefully analyzed the practical implications of achieving these 

reductions in 2012 and 2013 and reasonably concluded that States and sources 

could comply with the 2012 assurance levels by employing a combination of the 

available compliance options. 76 Fed. Reg. at 48,279-81; EPA-HQ-OAR-2009-

0491-4529, Transport Rule Engineering Feasibility Response to Comments. 

 Finally, it is inaccurate and overblown to suggest, like some Petitioners, that 

drastic emissions reductions must be achieved by January 2012. In the first 

instance, as is demonstrated throughout this brief and in our other filings, the 

degree of emissions reductions actually required to meet the 2012 assurance levels 

have largely been exaggerated and are far more manageable than the motions 

portray. Napolitano Decl. ¶¶ 17-43, 91-92, 108, 111-12. Nor is time as short as 

the Petitioners claim, as the rule’s first compliance deadlines (depending on the 

part of the rule to which a State is subject) are December 2012 and March 2013, by 

which date sources must demonstrate that they hold sufficient allowances to cover 

their 2012 emissions of NOx and SO2. 76 Fed. Reg. at 48,277 & n.57. The merits 

of this case could be heard within this time frame. Moreover, controls or other 

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means to reduce emissions do not have to be implemented by January 1. Rather, 

sources can implement measures during the course of 2012 that will contribute to 

their ability to demonstrate by December 2012 or March 2013 that they have 

sufficient allowances to comply with the 2012 emission requirements. 

 In sum, the Petitioners are not likely to prevail on any of these merits issues. 

II. THE PETITIONERS WILL NOT BE IRREPARABLY HARMED 

 ABSENT A STAY OF THE RULE

 Although the details vary, the Petitioners consistently allege two forms of 

irreparable injury. First, they contend that to comply with the rule’s 2012 

emissions requirements, utilities will have no option other than reducing generation 

in a fashion that will undermine system reliability and lead to blackouts. As we set 

forth in detail below, these claims all fail because they ignore the rule’s flexible 

compliance options (such as the purchase of allowances), grossly exaggerate the 

degree of reductions that will be required in 2012, rely on faulty or pre-cooked 

assumptions and analyses, or otherwise bypass reasonable, real-world approaches 

to complying with the rule in order to portray doomsday scenarios. The simple 

fact is that EPA’s analysis in support of the rule shows that there is no reason to 

believe that reliability will be threatened or that lights will go out as a result of the 

rule. Significantly, as discussed above (at 17-18) and below, EPA’s conclusion is 

confirmed by NERC’s 2011 Long-Term Reliability Assessment, which found that 

even with the Transport Rule and three other proposed EPA regulations in effect, 

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there will be no significant change in resource adequacy and ample reserve 

margins in all scenarios for the year 2013. NERC 2011 LTRA (available at 

http://www.nerc.com/files/2011LTRA_Final.pdf); Napolitano Decl. ¶ 57. 

 Second, the Petitioners claim that complying with the Transport Rule’s 2012 

requirements will be prohibitively expensive. Beyond the fact that these claims are 

highly speculative and the amounts plainly inflated, see Napolitano Decl. ¶¶ 17-43, 

91-97, 102, they also constitute precisely the type of temporary and recoverable 

economic loss that this Court has found does not constitute irreparable injury. 

Even if taken at face value, the Petitioners’ claims do not even approach the type 

of extraordinary, bet-the-company-type of economic loss that could support the 

extraordinary relief of a stay. Simply put, the Petitioners’ claims that they will 

suffer irreparable injury without a stay are at variance with the facts, the law, and 

common sense. 

A. No Petitioner Has Shown a Realistic, Let Alone Imminent, Threat 

 to Reliable Electricity Generation. 

Given the State- and utility-specific nature of the allegations concerning 

reliability problems that supposedly will result from the Transport Rule, the below 

discussion is organized according to the motion or response raising the issue. As 

we show, none of the reliability claims has merit.37

 

37 The Florida Utilities Motion (at 17-18) makes a cursory, speculative, and 

unsupported assertion that, during summer hurricane season, “if some units go 

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 We Energies Motion and Michigan Response. The We Energies Motion 

and Michigan Response both portend a “threat” to electric power grid reliability in 

Michigan if a stay is not granted. We Energies Mot. at 10; MI Resp. at 3. Both 

filings greatly exaggerate the supposed threat and are premised on demonstrably 

false assumptions. We Energies’s Motion is limited to anticipated 2012 compliance 

problems at its Presque Isle facility in Michigan’s Upper Peninsula and power grid 

reliability issues that We Energies alleges as a result. To begin, like so many other 

Petitioners, We Energies claims that it has been allocated insufficient allowances 

to cover anticipated 2012 NOx emissions and will be forced to curtail operations at 

this facility as the “only way to comply” with the Transport Rule, compromising 

reliability of the power grid in Michigan’s Upper Peninsula as a result. We 

Energies Mot. at 17. We Energies further asserts that it is “very likely” that 

Michigan “will significantly exceed EPA’s annual NOx assurance levels for 2012,” 

and that We Energies will incur assurance penalties as a result. Id. at 12, 19. 

 This is rank speculation that contrasts sharply with the data and ignores We 

Energies’s other compliance options. All of these allegations fail because they are 

premised on the mistaken assumption that Michigan will exceed its NOx assurance 

 

offline because they cannot meet reductions required by [the Transport Rule], the 

availability of reliable electricity may become a concern.” (emphasis added). 

Seeing as the Petitioners have not even alleged, let alone shown, a likely and 

imminent injury as to grid reliability, a detailed response here is not warranted. 

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levels in 2012. However, the most recent four quarters of available data show that 

Michigan’s actual NOx emissions were 75,462 tons, continuing a consistent 

downward trend. Napolitano Decl. ¶ 38. This is only approximately 4,000 tons 

(6%) more than Michigan’s 2012 NOx assurance level.38 Additionally, EPA has 

already proposed to increase Michigan’s 2012 NOx budget by 5,228 tons, 76 Fed 

Reg. at 63,863; therefore, if the Revisions Proposal is finalized, it is very unlikely 

that emissions from Michigan sources will exceed Michigan’s NOx assurance 

level. Indeed, We Energies concedes that its complaints will be addressed by the 

proposed revisions, stating that its motion is merely a “protective measure” in case 

EPA does not finalize the Revisions Proposal. We Energies Mot. at 4. 

 We Energies ignores, among other things, that the Transport Rule includes a 

flexible trading program under which it (and other utilities) can purchase 

allowances.39 EPA has already shown that the market for such allowances is up 

and running and that allowance purchases will be a viable compliance option for 

sources in 2012. See supra at 51. In short, We Energies has failed to show that the 

 

38 We Energies further overstates its supposed dilemma by inexplicably doing 

its own (predictably lower) calculation of Michigan’s 2012 NOx assurance level 

(the compliance benchmark) as 69,606 tons per year, We Energies Mot. at 9, even 

though the rule specifies that Michigan’s actual 2012 NOx assurance level is 

71,028 tons per year. 76 Fed. Reg. at 48,269. 

39 While We Energies fails even to acknowledge that it could buy allowances 

to comply with its 2012 NOx allocation, it concedes that a market exists when it 

asserts that it will be able to “trade for new allowances to replace the ones 

surrendered” if it is subjected to assurance penalties. We Energies Mot. at 19. 

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state-wide allowance shortfall it foresees is likely and, further, that We Energies 

will be unable to purchase allowances needed to comply with the rule. 

The identical claims in the Michigan Response (at 3) fail for the same 

reasons. And the State of Michigan fares no better with its allegation (in a single 

paragraph at 4) about unit shutdowns leading to reliability problems in 2012 in 

Michigan’s Lower Peninsula. Michigan offers no basis whatsoever for this 

assumption, and EPA has already addressed why Michigan is unlikely to have 

difficulties meeting its NOx assurance levels for 2012. Michigan’s SO2 situation is 

even more favorable, as Michigan’s assurance level for 2012 (270,578 tons) far 

exceeds both its 2010 SO2 emissions (243,417 tons) and its emissions in the last 

four quarters (233,132 tons). Napolitano Decl. ¶ 38. Michigan does not even 

attempt to address its compliance options, beyond retiring facilities, if SO2

emissions reductions beyond current levels are needed. In short, there is no 

plausible basis, let alone a likely and imminent one, for Michigan and We 

Energies’s dire reliability predictions. 

Kansas Utilities Motion. Although wrapped in slightly different packaging, 

the reliability and other irreparable harm arguments in the Kansas Utilities Motion 

are the same as those that EPA rebutted in its opposition to the Kansas Motion 

(document 1339022 at 14-16), and they fail for the same reasons. The Kansas 

Utilities pile one speculative assumption atop another to conjure a situation of 

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reduced generation leading to strained grid reliability in the Southwest Power Pool 

(“SPP”) and, eventually, rolling blackouts. These reliability claims strain credulity 

in their own right, but are nevertheless completely undone by the recent NERC 

assessment which estimates that the SPP region, of which Kansas is a part, will 

have very healthy electricity generation reserve margins in 2013. NERC found 

that the SPP will have an “anticipated reserve margin of 23.6-25.5% in 2013,” well 

above their required reference reserve margin of 13.6%. NERC 2011 LTRA at 

153, Table 38-39; see also Napolitano Decl. ¶ 66. NERC also found that the SPP 

reserve margin is not threatened by the combined impact of the Transport Rule 

(and three other proposed EPA regulations included in the analysis) in any of the 

years it studied. NERC 2011 LTRA at 152-60. 

EPA is acutely aware of the importance of grid reliability, and EPA’s 

analysis supports its conclusion that the Transport Rule can be implemented both 

nationally and in the SPP region without causing reliability problems. Napolitano 

Decl. ¶ 57; EPA-HQ-OAR-2009-0491-4455, Resource Adequacy and Reliability 

in the IPM Projections for the Transport Rule TSD (June 2011), Attachment 5. 

The Kansas Utilities’ reliability arguments are further undermined by the fact that 

the SPP analysis they rely on to claim that service shutdowns are “highly 

probable,” KS Utils. Mot. at 9, is fraught with technical errors and unjustified 

assumptions. Napolitano Decl. ¶¶ 58-61, 66. 

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Additionally, and as we have shown elsewhere, the notion that Kansas 

Utilities “have no option but to reduce generation to meet the 2012 emissions 

limits,” KS Utils. Mot. at 8, flies in the face of the reality of Kansas’s likely statewide emissions in 2012 and the rule’s available compliance options. After making 

adjustments for emissions reductions that will occur before 2012, EPA expects 

that, state-wide, Kansas sources will emit below Kansas’s annual NOx assurance 

level and that Kansas sources will need to make NOx emissions reductions of only 

approximately 5,000 tons to meet the 2012 annual NOx budget, a manageable gap 

that could be closed by purchasing allowances costing around $4.5 million. 

Napolitano Decl. ¶ 96. There is already evidence that a robust allowance market is 

developing, and the Kansas Utilities offer no credible reason why they will be 

unable to purchase sufficient allowances. Id. ¶¶ 13-16.40 The Kansas Utilities also 

rule out purchasing power as too expensive (at 7-8), but not infeasible. However, 

in the unlikely event of needing to reduce generation overall, the recoverable cost 

of purchasing power does not constitute irreparable harm, to say nothing of the fact 

that such costs are reasonable and to be expected as a result of an emission 

reduction program such as this. 

 

40 The state-wide situation for SO2 is even more favorable, as Kansas’s 

emissions in the last four quarters (41,671 tons) are a mere 150 tons greater than its 

2012 budget (41,528 tons) and are well below its SO2 assurance level (49,003 

tons). Napolitano Decl. ¶ 21. 

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 The motion’s utility-specific arguments (at 11-14) also lack merit. For 

instance, the Kansas City Board of Public Utilities’s allegations are predicated on 

the false assumption that there will be no market for SO2 allowances. Sunflower’s 

claims of having to reduce operations at one of its facilities are undone by its own 

declaration, which concedes that Sunflower has expedited the installation of lowNOx burners at the facility in question so that it will occur in January 2012. KS 

Utils. Mot., Ex. D ¶ 29. Moreover, Sunflower’s own permit application for this 

project estimates that it will reduce NOx emissions by 2,000 tons in 2012, leaving 

Sunflower very close to operating within its 2012 NOx allocation. Napolitano 

Decl. ¶ 100. As for Westar, its purported “modeling” that forecasts rolling 

blackouts offers nothing more than pre-cooked conclusions, as Westar’s 

“modeling” began with the assumption that it could not purchase allowances or 

power from other utilities. By ruling out significant compliance options in 

advance, it is no surprise that the model “predicted” blackouts and reliability 

problems. KS Utils. Mot., Ex. E at 8. Westar otherwise makes no effort to show 

to what degree its allowance allocation is insufficient, let alone explain why it 

assumes it cannot purchase such allowances. In sum, the Kansas Utilities’ claims 

of reliability problems and summer blackouts are simply not credible and do not 

support a stay. 

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Entergy Motion. Entergy’s contention that, absent a stay, it has no 

“realistic” options for complying with the Transport Rule other than to curtail 

power at “must run” units is similarly flawed and recycles the arguments raised in 

the Louisiana Motion. Like Louisiana’s, Entergy’s claims exaggerate the facts, are 

unsupported, and fail to take into account the flexibility under the rule to adopt a 

multi-pronged compliance strategy. See EPA Opp. to LA Mot., document 

1340488, at 11-16, 17-18. 

Entergy’s assertion that no single compliance strategy will allow it to meet 

its predicted generation demand and meet the rule’s 2012 compliance deadlines 

(see Entergy Mot. at 12) completely sidesteps the central question of whether 

Entergy can comply through a combination of compliance strategies. In 

promulgating the rule, EPA found that several compliance options, short of 

installing post-combustion controls or reducing generation, are available to reduce 

emissions in the short-term. See, e.g., 76 Fed. Reg. at 48,279. Entergy offers only 

unsupported assertions (see Glover Decl.¶ 17-18) and fails to offer any specifics 

about the measures it considered beyond reduced generation to comply with the 

rule and, more importantly, why it could not undertake those measures or a 

combination of them. 

Entergy’s motion is unclear as to why it assumes that it cannot make 

changes to its generating fleet to redispatch power and thus must rely solely on 

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purchasing allowances. Entergy claims to have done modeling that indicates that 

system redispatch will be insufficient to address the predicted shortfall in 

allowances, Entergy Mot. at 16, however, the referenced declaration indicates that 

the “modeling” pre-determined a compliance strategy of only system dispatch and 

did not analyze complementary measures such as purchasing allowances. Glover 

Decl. ¶ 22. EPA has already shown that Entergy’s assumption that allowance 

markets will not develop is erroneous. See supra at 51; Napolitano Decl. ¶¶ 13-16. 

Further, Entergy’s assumptions regarding adverse consequences to grid 

reliability are, like those of the Kansas Utilities and the State of Kansas, premised 

on faulty analysis by the Southwest Power Pool. See supra at 57; Napolitano Decl. 

¶¶ 58-61. As noted, SPP flawed analysis is soundly rebutted by the recent NERC 

assessment and EPA’s reliability analysis in support of the Transport Rule. See 

supra at 17-18; Napolitano Decl. ¶¶ 57, 66. 

 At bottom, Entergy’s argument is that the Transport Rule does not allow it to 

continue doing what it has been doing – i.e., operating its units at historic levels 

and postponing reducing its emissions through the purchase of unlimited 

allowances to pollute. This argument fundamentally ignores the requirements of 

section 110(a) of the Clean Air Act and the point of the Transport Rule -- reducing 

emissions that cause downwind attainment problems. Moreover, Entergy 

overstates its supposed compliance dilemma by exaggerating the reductions 

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required in Arkansas, Louisiana, and Mississippi by comparing the 2012 emissions 

budgets with actual 2010 emissions. In fact, 2011 ozone-season emissions were 

lower than 2010 ozone-season emissions in all three States, bringing actual 

emissions closer to the 2012 emissions budgets. Napolitano Decl. ¶ 29. 

 Moreover, that Louisiana must reduce its emissions more than some 

Transport Rule States, which translates into a smaller number of allowances 

allocated to Entergy units there, is a harm that can be traced directly to Entergy’s 

own actions. Utilities in Louisiana, including Entergy, opted to meet their 

compliance obligations under CAIR primarily by purchasing allowances, as 

opposed to installing technological controls. EPA Opp. to LA Mot, document 

1340488, at 18; Napolitano Decl. ¶ 90. In the past two years, Entergy has 

purchased almost half of the total number of allowances that it used to comply with 

CAIR in the three States in which it operates. Napolitano Decl. ¶ 90. Indeed, 

since the CAIR ozone-season NOx trading program began in 2009, total ozoneseason NOx emissions from covered facilities owned by Entergy in these States 

actually have increased slightly. Id.

 In view of the Court’s holding in North Carolina that unrestricted interstate 

trading does not comply with CAA 110(a)(2)(D)(i)(I), 531 F.3d at 906-08, 921-22, 

Entergy acted at its own peril when it chose to defer installing controls to reduce 

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emissions. Having done so, it cannot now argue that it is irreparably harmed by 

the Transport Rule’s emissions reduction requirements. 

 City of Ames Motion.

41 Like the others, Ames makes the unsupported 

allegation that it has “no choice” but to reduce generation to comply with the Rule 

and predicts dire reliability scenarios. Ames also follows suit by exaggerating the 

potential impact of the rule and relying on incorrect and unsupported assumptions. 

Ames contends that it will be “impossible” to install controls to meet the 2012 

compliance deadlines and also asserts that the market for allowances will be 

insufficient. Ames Mot. at 9. Ames’s alleged predicament appears to be based on 

its own choice not to go forward with construction of previously-planned controls 

– a business decision based on its apparent miscalculation that the Transport Rule 

would be less stringent than CAIR. Ames Mot. at 7-8, 16. Such self-inflicted 

harm is insufficient to support a stay of the rule. Cuomo, 772 F.2d at 977. 

Even if Ames could not install emissions-reducing controls, Ames fails to 

show that it could not comply with the rule and still generate sufficient electricity. 

As an initial matter, Ames exaggerates the emissions reductions it would have to 

achieve to operate within its emissions allocation. Actual emissions for the last 

 

41 Ames seeks a stay of both the annual and ozone-season NOx requirements 

as they apply to Ames. However, Iowa is not in the Transport Rule for the ozoneseason program, 76 Fed. Reg. at 48,212, Table III-1, although EPA has proposed 

(but not finalized) adding Iowa to the ozone-season program. Id. at 40,662. 

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four quarters at Ames’s units are only 184 tons (or 24%) more than Ames’s 

allocation, Napolitano Decl. ¶¶ 33-34, much less than the 46% difference Ames 

alleges. Ames Mot. at 14. In addition, Ames’s contention that it can import very 

little power is greatly exaggerated. The Trower declaration suggests that the city 

can import between 54% and 72% of the combined megawatt capacity of Ames’s 

two-boiler EGU plant, which Ames says is 98 mega watts. See Trower Decl. ¶ 9. 

Thus, while Ames claims that the summer demand peaks as high as 128 MW, id. ¶ 

11, it fails to explain why it cannot comply with the rule and meet this demand by 

a combination of importing power and purchasing allowances. Ames also fails to 

consider that it operates two additional plants with capacities of 18 and 27 

megawatts, respectively. Napolitano Decl. ¶ 64. In short, Ames’s allegations 

simply do not withstand scrutiny. 

 Ohio Motion. Ohio takes only a slightly different approach to the general 

reliability claims offered by other Petitioners and argues that the Transport Rule 

will lead to “early retirement” of coal-fired EGUs and that these unexpected 

retirements will create “uncertain power service reliability” in the PJM regional 

transmission organization region of which Ohio is a part. OH Mot. at 18-19.42 

 

42 The PJM region covers all or most of Delaware, the District of Columbia, 

Maryland, New Jersey, Ohio, Pennsylvania, Virginia and West Virginia, and parts 

of Indiana, Illinois, Kentucky, Michigan, North Carolina and Tennessee. See

http://www.ferc.gov/market-oversight/mkt-electric/pjm.asp#geo. 

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Ohio’s claims are not only unsupported, but are contradicted by the NERC 

assessment, which concluded that the PJM region will continue to have significant 

excess capacity in 2013 even assuming that the Transport Rule and three other 

proposed EPA regulations would be in effect. NERC 2011 LTRA at 153, Tables 

38-39 (2013 projections), 156, Tables 41-42 (2015 projections). In the light of this 

comprehensive reliability study, combined with EPA’s own well-supported 

conclusions as to the minimal reliability and capacity effects of the rule, Ohio’s 

claim of likely and imminent reliability problems is far-fetched. 

 Moreover, Ohio’s reliability allegations are based on speculation that some 

150 units in the PJM region are at risk of decommissioning by 2015. OH Mot. at 

18. Ohio makes no showing that any of these decommissionings (if they were to 

occur at all) are imminent or would be related to the Transport Rule. See

Wisconsin Gas, 758 F.2d at 674 (movant must “show that the alleged harm will 

directly result from the action with the movant seeks to enjoin”) (emphasis 

added).43 In sharp contrast to EPA’s and NERC’s detailed analyses, Ohio fails to 

support its dire predictions of decommissionings and reliability problems with a 

declaration or other evidence and thus fails to meet its heavy burden to prove 

 

43 That some older, less efficient, and dirtier plants may be shut down to comply 

with the Transport Rule does not, by itself, establish a threat to reliability, 

especially since Ohio does not even address whether excess capacity already exists 

within the State or whether new, more efficient plants could take the place of those 

that are shut down. 

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irreparable harm justifying a stay. “Bare allegations of what is likely to occur are 

of no value since the court must decide whether the harm will in fact occur.” 

Wisconsin Gas, 758 F.2d at 674. Like the other allegations that the Transport Rule 

will cause retirements and reduced generation that undermines grid reliability and 

the supply of electricity, Ohio’s claims should be rejected. 

B. Incurring Additional Economic Costs to Comply With the Rule 

 Does Not Constitute Irreparable Injury. 

 Several Petitioners claim that they will be irreparably harmed as a result of 

alleged substantial compliance costs associated with adopting emissions reductions 

strategies or purchasing allowances and by the alleged resulting increases in 

electric rates. However, alleged economic losses do not constitute irreparable 

injury except in the most extreme circumstances, i.e., where the “very existence” 

of a company is threatened. Wis. Gas, 758 F.2d at 674. Further, regulatory 

compliance costs generally do not constitute irreparable injury. See, e.g., Am. 

Hosp. Ass’n v. Harris, 625 F.2d 1328, 1331 (7th Cir. 1980); A.O. Smith Corp. v. 

FTC, 530 F.2d 515, 527–28 (3d Cir. 1976). Although some Petitioners suggest 

(but do not demonstrate) that these costs are unrecoverable, most acknowledge that 

these costs may be passed on to their rate paying customers. See, e.g., FL Utils. 

Mot. at 16 (compliance options “will force . . . ultimately the Floridians who use 

electricity[] to incur substantial costs”). As such, any compliance costs the utilities 

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might incur appear to be recoverable and do not come close to the extreme 

circumstances that would warrant a stay. Wis. Gas, 758 F.2d at 674.44

 Likewise, those States alleging economic harm as a result of having to pay 

increased rates that allegedly will result from the Transport Rule (see, e.g., WI 

Mot. at 14), fail to make a sufficient showing to justify a stay. The States make no 

attempt to demonstrate such costs are unrecoverable. Regardless, Petitioners bear 

a heavy burden to show that the alleged costs are “both certain and great” and “of 

 

44 Amicus Putnam County, Georgia improperly attempts to add to the more 

than ample briefing on these stay motions by filing a response to Georgia’s 

response in support of Kansas’s stay motion that alleges economic harm from the 

Rule. As this Court has found, “[n]either the Federal nor the D.C. Circuit Rules 

provide for amici to file or respond to motions.” Texas v. EPA, No. 10-1425 (D.C. 

Cir. Jan. 12, 2011) (Order) (document 1287586) (citing United States v. Michigan, 

940 F.2d 143, 164-66 (6th Cir. 1991) (amici “consistently precluded from . . . 

filing pleadings, or otherwise participating . . . in a totally adversarial fashion”). If 

the Court considers the filing, it lacks merit. First, the alleged harm is remarkably 

speculative, as it is based on unsubstantiated predictions that the county may lose 

speculative amounts of tax revenue if the Georgia Power facility in the county cuts 

back generation as a result of the Transport Rule. Second, even if such alleged 

economic losses came to pass, Amicus has not shown them to be unrecoverable 

such that they could support a stay as a matter of law. Finally, the claim that EPA 

conducted “no analysis of the effect of the final rule on local governments” (at 3) is 

simply in error, and Amicus identifies no applicable legal requirement with which 

EPA failed to comply. EPA thoroughly and carefully considered the Transport 

Rule’s impacts on affected municipalities and local governments, evaluated such 

impacts on local governments consistent with the Unfunded Mandates Reform Act 

of 1995 (notwithstanding EPA’s determination that the Act does not apply to the 

Transport Rule), and specifically determined (in a passage cited by Amicus) that 

transfer payments, such as the potential loss of tax revenue that Amicus posits, are 

not among the “social costs” that are appropriate to consider in cost/benefit 

analysis. See 76 Fed. Reg. at 48,313, 48,345. 

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such imminence that there is a ‘clear and present’ need for equitable relief to 

prevent irreparable harm.” Wis. Gas, 758 F.2d at 674 (citations and internal 

quotation marks omitted). The States’ bare allegations that their electric rates 

likely will increase do not satisfy this burden. Moreover, the States’ argument is 

undercut by EPA’s thorough analysis of compliance costs, which predicted only a 

small increase in average retail electricity prices in the contiguous U.S. (1.7 

percent in 2012 and 0.8 percent in 2014). 76 Fed. Reg. 48,346-47. 

 To the extent the States argue that the rule will result in higher electric rates 

for their citizens, the States lack standing to raise such injuries. In claims against 

the United States premised on federal law, a State must base its standing on alleged 

injuries to itself as a State, not as parens patriae for the interests of its citizens or 

businesses. See Ctr. for Biological Diversity v. DOI, 563 F.3d 466, 476-77 (D.C. 

Cir. 2009).45 In sum, none of the Petitioners has shown the type of economic 

injury that rises to the level of irreparable harm. 

 

45 Another injury alleged by the States of Wisconsin, Ohio, and Indiana (and 

others) is that EPA’s decision to promulgate FIPs somehow usurps State 

sovereignty. This purported injury argument is merely a re-packaging of the 

Petitioners’ merits argument, to which we responded supra at 19-24 by 

demonstrating the legality of EPA’s approach in the rule. The Petitioners can 

hardly be irreparably injured by EPA’s correct and lawful implementation of the 

Clean Air Act. If the Court nonetheless reaches this issue, EPA incorporates its 

response in opposition to the Kansas Motion. Document 1339022 at 17. 

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III. A STAY WOULD HARM THIRD PARTIES AND IS CONTRARY TO 

 THE PUBLIC INTEREST 

 The Petitioners are no more rigorous or persuasive in their attempts to 

balance, on the one hand, their alleged irreparable harm if a stay is denied and, on 

the other, the harm to the public if the Transport Rule is stayed pending judicial 

review. In claiming that the public will not be negatively affected if the rule is 

stayed, the Petitioners present variations on the same two flawed arguments that 

we have rebutted in prior filings, namely that maintaining CAIR (in whole or in 

part) during a stay is functionally the same as implementing the Transport Rule and 

that, by proposing in the Revisions Proposal to delay the effective date of the 

assurance provisions until 2014, EPA has somehow conceded that a stay is in the 

public interest. Neither of these arguments has merit. 

Before addressing these specific arguments, it bears emphasis that the 

Petitioners have advanced two completely contradictory propositions. First, they 

ask this Court to find that the Transport Rule will be so onerous that it imminently 

threatens forced unit retirements, grid reliability, system blackouts, and the 

Petitioners’ financial viability. Yet in the very next breath, they claim that the 

Court needn’t worry about the effects of a stay because the Transport Rule is really 

no different than maintaining the status quo (i.e., operating under the requirements 

of CAIR, State laws, and consent decrees) and that the Transport Rule could be 

stayed without affecting air quality, harming the public health, or otherwise 

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affecting the public interest. The Petitioners simply cannot have it both ways. In 

any case, we have already shown that they have not established irreparable injury 

and below we show that the balance of harms favors denying their stay requests. 

A. Staying the Rule and Leaving CAIR in Place Pending Judicial 

 Review Would Deprive the Public of Substantial Air Quality and 

 Health Benefits. 

 The Petitioners do not seriously dispute the enormous air quality and health 

benefits that will result from the Transport Rule. The lost benefits to the public 

overwhelmingly outweigh the rule’s costs, including the specious harms that the 

Petitioners assert. Each year, the rule will prevent between 13,000 and 34,000 

premature deaths; 15,000 non-fatal heart attacks; 19,000 hospital visits; 19,000 

cases of acute bronchitis; 400,000 incidences of aggravated asthma; and 1.8 

million missed school or work days. 76 Fed. Reg. at 48,310. The monetized value 

of these health and welfare benefits is immense, between $120 billion and $280 

billion annually, id. at 48,313, amounts that dwarf the $1.4 billion the Florida 

Utilities Motion (at 19) claims the rule will cost to implement in 2012. 

 While the Southern Company Response purports to analyze how emissions 

reductions required by the Transport Rule would compare to reductions in 2012 if 

CAIR were to remain in effect, its analysis fails because it uses the wrong metrics, 

faulty methods, and invalid assumptions. Napolitano Decl. ¶¶ 82-85. To take just 

one example, when Southern Company purports to show how “CAIR and CSAPR 

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[the Transport Rule] achieve similar total EGU emission reductions” in 2012 (at 

11), it doesn’t compare projected emissions at all. Rather, Southern Company 

compares emissions budgets under the two regimes, meaning that the analysis fails 

to account for the enormous quantity of banked (i.e., already allocated) SO2 and 

NOx allowances that, if CAIR were to remain in effect for 2012, would allow 

States to emit well in excess of their CAIR budgets. Due to these abundant 

allowances that Southern Company ignores, CAIR, unlike the Transport Rule, 

would not effectively constrain source emissions in 2012. Napolitano Decl. ¶ 83. 

Worse still, Southern Company’s analysis used an outdated EPA analytical tool 

from the proposed, not the final, Transport Rule, Southern Co. Resp. at 12, even 

though EPA greatly improved the accuracy of this tool between the proposed and 

final rules. Napolitano Decl. ¶ 84. 

The emissions projections tell a much simpler and more compelling story. 

Emissions will be reduced far more in 2012 under the Transport Rule than if CAIR 

remains in effect. By 2012, power plants in States common to both the Transport 

Rule and CAIR will reduce their annual SO2 and NOx emissions by approximately 

1.5 million and 116,000 tons more, respectively, than they would have under 

CAIR. Id. ¶ 121. In 2014, SO2 and NOx emissions under the Transport Rule will 

continue to be reduced to a greater degree than if CAIR were to remain in effect 

(by 1.8 million and 76,000 tons, respectively). Id. Thus, delaying the 

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implementation of the Transport Rule and reducing the emissions of these 

pollutants above and beyond CAIR will also delay the accompanying reduction in 

health impacts, including asthma and other pulmonary and cardiac diseases. Id.

The claims that the first two years of the Transport Rule “will not result in 

meaningful environmental benefits beyond those mandated by CAIR” (Dairyland 

Mot. at 20) or that the marginal benefits are “negligible” (IN Mot. at 10) simply do 

not withstand scrutiny. 

A stay would also negatively affect the regulated community and the States 

in their regulatory capacity. As we discussed above, the emissions market has 

already transitioned from CAIR to the Transport Rule, and a market for Transport 

Rule allowances is already established and trading. A sudden shift back to CAIR 

as a result of a stay would disrupt those markets. Companies have also already 

begun to develop compliance plans for 2012 that anticipate the Transport Rule 

being in effect. States, too, will be negatively affected because shifting back to 

CAIR would engender uncertainty in their development of NAAQS attainment 

plans. This confusion would be compounded by the fact that there is not a 

complete overlap of States covered by CAIR and the Transport Rule. Napolitano 

Decl. ¶ 128. 

 The argument that a partial stay, i.e., only as to one or a few States, would be 

benign is equally fallacious. See KS Utils. Mot. at 19-20; We Energies Mot. at 2; 

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GA Utils. Mot. at 20. Having just one or a handful of States be covered by CAIR 

pending judicial review would distort CAIR trading rules and essentially give those 

States a free pass to pollute because they would have unfettered access to 

artificially cheap NOx and SO2 allowances. Napolitano Decl. ¶¶ 122-27. The data 

show that when allowances are available at very low cost, sources tend to increase 

their emissions, id., meaning that populations in States downwind of the State(s) 

operating under CAIR instead of the Transport Rule would be affected by 

disproportionately larger emissions from such States. Moreover, a partial stay for 

a State like Kansas that is not subject to CAIR would result in Kansas not being 

subject to either rule and being able to emit more NOx and SO2 than if it were 

subject to the Transport Rule. These greater emissions will have the same 

predictable deleterious health impacts on residents of Kansas and the seven States 

downwind of Kansas. See EPA Opp. to KS Mot., document 1339022, at 18. Such 

a result would also clearly conflict with this Court’s reasoning invalidating CAIR’s 

trading program in North Carolina. See 531 F.3d at 907 (criticizing theoretical 

possibility under CAIR that sources contributing to downwind problems “would 

not need to reduce their emissions at all” if they “could purchase enough . . . 

allowances to cover all their current emissions”). 

 

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B. EPA’s Revisions Proposal Has No Bearing on Whether a Stay Is in the 

 Public Interest.

 The Court should reject Petitioners’ attempt to use EPA’s Revisions 

Proposal to bootstrap a basis for a stay pending judicial review. Contrary to their 

arguments (see, e.g., OH Mot. at 20; UARG Resp. at 11, FL Utils. Mot. at 13-14), 

EPA’s Revisions Proposal does not concede major errors. Rather, the Revisions 

Proposal reflects relatively minor adjustments to a handful of State emissions 

budgets and assurance provisions, based on information brought to EPA’s attention 

after issuance of the final rule. See, e.g., supra at 45-47; Napolitano Decl. ¶¶ 130-

31. If anything, the possibility that EPA may adopt revisions that increase some 

State budgets and assurance levels and defer the rule’s assurance provisions until 

2014 makes any harm allegations that much more speculative. Indeed, at least one 

Petitioner (We Energies Mot. at 4) argues that the irreparable harm it alleges would 

occur only if EPA does not adopt the Revisions Proposal, and no Petitioner 

covered by the Revisions Proposal goes so far as to say that it would be insufficient 

to remedy the harm they allege. See, e.g., Entergy Mot. at 10. 

 Nor does EPA’s Revisions Proposal suggest that EPA believes a stay of the 

rule pending judicial review is appropriate. See GA Resp. at 5; AL/MS Resp. at 

10. It is misleading to suggest that EPA’s proposal to suspend the assurance 

provisions of the Transport Rule temporarily is tantamount to staying the rule 

pending judicial review. If adopted, EPA’s proposal to suspend the assurance 

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provisions until 2014 merely suspends the requirement that the total emissions 

from within a State not exceed the State’s assurance level. 76 Fed. Reg. 63,861. 

In other words, suspending the assurance provisions means that EPA would not 

enforce the assurance levels prior to 2014. Nevertheless, other provisions of the 

rule would still apply and the rule’s enormous benefits would begin to accrue. For 

instance, even if EPA finalizes the Revisions Proposal, the rule would still achieve 

region-wide reductions in emissions starting in 2012. See 76 Fed. Reg. at 63,871. 

Additionally, States and utilities would be responsible for taking steps now to 

ensure that they could demonstrate compliance in 2014. 

 In contrast, if a stay is granted, the status quo would be maintained and these 

parties would be relieved of complying with any Transport Rule requirements 

pending judicial review, including making preparations to comply with 

requirements that do not take effect until 2014. In such circumstances, the 

enormous benefits of the rule needlessly would be deferred until long after the 

Court rules on the merits.

CONCLUSION

 For all the foregoing reasons, the pending stay motions should be denied.

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 Respectfully submitted, 

IGNACIA S. MORENO 

Assistant Attorney General 

 /s/David S. Gualtieri 

DAVID S. GUALTIERI 

JON M. LIPSHULTZ 

JESSICA O’DONNELL 

NORMAN L. RAVE 

Environmental Defense Section 

Environment and Natural Resources 

 Division 

United States Department of Justice 

 P.O. Box 23986 

Washington, D.C. 20026-3986 

(202) 514-4767 

OF COUNSEL

SONJA RODMAN 

BYRON BROWN 

KAYTRUE TING 

United States Environmental Protection Agency 

1200 Pennsylvania Ave., N.W. 

Washington, D.C. 20460 

DATED: December 1, 2011

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CERTIFICATE OF SERVICE

 I hereby certify that copies of the foregoing consolidated opposition to 

motions for stay pending judicial review were served, this 1st day of December, 

2011, on all registered counsel, through the Court’s CM/ECF system. 

 /s/David S. Gualtieri 

 David S. Gualtieri 

 United States Department of Justice/ENRD 

 Counsel for Respondent EPA 

 

 

 

 

 

 

 

 

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