# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Ar gued February 25, 2015 Decided July 28, 2015

No. 11

- 1302

EME H OMER C ITY G ENERATION , L.P., P ETITIONER

v.

E NVIRONMENTAL P ROTECTION A GENCY , R ESPONDENT

S AN M IGUEL E LECTRIC C OOPERATIVE , ET AL ., I NTERVENORS

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- 1395

On Petitions for Review of a Final Rule Promulgated by the United States Envi ronmental Protection Agency

Bill Davis , Assistant Solicitor General, Office of the Attorney General for the State of Texas, argued the cause for USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 1 of 362

State and Local Petitioners. With him on the briefs on remand were Ken Paxton , Attorney General, Jon Niermann
, Chief, Envi ronmental Protection Division, Mark Walters

, Assistant Attorney General, Derek Schmidt , Attorney General, Office of the Attorney General for the State of Kansas, Jeffrey A. Chanay , Chief Deputy Attorney General, Pamela Jo Bondi , Attorn ey General, Office of the Attorney General for the State of Florida, Jonathan A. Glogau , Chief, Complex Litigation, Henry V. Nickel

, George P. Sibley III
, Luther Strange , Attorney General, Office of the Attorney General for the State of Alabama, Robert D. Tambling

, Assistant Attorney General, Greg Zoeller , Attorney General, Office of the Attorney General for the State of Indiana, Thomas M. Fisher , Solicitor General, David R. Taggart

, Samuel S. Olens , Attorney General, Office of the Attorney of the State of Georgia, John E. Hennelly and James D. Coots , Senior Assistant Attorneys General, James D. A Buddy @ Caldwell , Attorney General, Office of the Attorney General for the State of Louisiana, Megan K. Terrell , Assistant Attorney General, Herman Robinson

, Jackie M. Marve
, Elliott Vega

, Donald Trahan

, Deidra Johnson

, Kathy M. Wright

, Aaron D. Lindstrom , Solicitor General, Office of the Attorney General for the State of Michigan, Neil David Gordon , Assistant Attorney General, Sean Peter Manning

, Chief, Environmental , Natural Resources, and Agriculture Division, Blake Johnson , Assistant Attorney General, Doug Peterson , Attorney General, Office of the Attorney General for the State of Nebraska, Harold E. Pizzetta III , Assistant Attorney General, Office of the Attorney General for the State of Mississippi, E. Scott Pruitt , Attorney General, Office of the Attorney General for the State of Oklahoma, Patrick Wyrick

, Solicitor General, P. Clayton Eubanks , Deputy Solicitor General, J.B. Van Hollen , Attorney General at the time the brief was filed, Office of the Attorney General for the State of Wisconsin, Thomas J. Dawson , Assistant Attorney General, USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 2 of 363

Michael DeWine , Attorney General, Office of the Attorney General for the State of Ohio, Dale T. Vit ale

, Gregg H. Bachmann and Elizabeth Ewing , Assistant Attorneys General, Alan Wilson

, Attorney General, Office of the Attorney General for the State of South Carolina

, James Emory Smith

, Jr. , Deputy Solicitor General, and Leslie Sue Ritts

. William J. Cobb for the State of South Carolina entered an appearance.

Peter D. Keisler argued the cause for Industry and Labor Petitioners. With him on the briefs on remand were C. Frederick Beckner III
, Roger R. Martella

, Jr.
, Eric D. McArthur

, Benjamin Beaton
, F. Wi lliam Brownell

, P. Stephen Gidiere III
, Grant Crandall

, Arthur Traynor III
, Eugene M. Trisko

, Ann M. Seha

, Daniel J. Kelly

, William M. Bumpers

, Joshua B. Frank

, Megan H. Berge
, Kelly M. McQueen

, Janet J. Henry
, Robert A . Manning
, Joseph A. Brown

, Mohammad O. Jazil

, Bart E. Cassidy

, Katherine L. Vaccaro

, Todd E. Palmer

, Jordan J. Hemaidan

, Valerie L. Green

, Jeffrey L. Landsman

, Vincent M. Mele

, Richard G. Stoll

, Brian H. Potts
, Steven G. McKinney

, C. Grady Moore III

, Ben H. Stone

, Terese T. Wyly

, Karl R. Moor
, William L. Wehrum

, Jr.
, Margaret Claiborne Campbell

, Bryon W. Kirkpatrick

, Hahnah Williams Gaines

, James S. Alves

, Gary V. Perko

, David M. Flannery

, Kathy G. Beckett

, Laura M. Goldfarb

, Peter S. Glaser

, Andrea Bear Field

, Norman W. Fichthorn

, E. Cart er Chandler Clements

, David R. Tripp

, Dennis Lane
, William F. Lane , and Maureen Harbourt

. Shannon L. Goessling and Michael J. Nasi were on the brief for intervenor San Miguel Electric Cooperative, Inc. and Amicus Southeastern Legal Foundation, Inc. in su pport of petitioners on remand. Robert M. Cohan entered an
appearance. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 3 of 364

Norman L. Rave
, Jr. and Jessica O = Donnell , Attorneys, U.S. Department of Justice, argued the causes for respondents. With them on the brief were John C. Cruden

, Assistant Attorney Ge neral, and Stephanie Hogan , Attorney, U.S. Environmental Protection Agency.

Andrew G. Frank , Assistant Attorney General, Office of the Attorney General for the State of New York, argued the cause for State and Local Intervenors in support of respondent. With him on the brief on remand were Eric T. Schneiderman , Attorney General, Barbara D. Underwood

, Solicitor General, Steven C. Wu , Deputy Solicitor General, Michael J. Myers , Assistant Attorney General, Brian E. Fros h , Attorney General, Office of the Attorney General for the State of Maryland, Mar y E. Raivel , Assistant Attorney General, Roy Cooper , Attorney General, Office of the Attorney General for the State of North Carolina, Marc Bernstein , Special Deputy Attorney General, Peter F. Kilmartin , Attorney General, Office of the Attorney General for the State of Rhode Island, Gregory S. Schultz , Assistant Attorney General, George Jepsen , Attorney General, Office of the Attorney General for the State of Connecticut, Kimb erly P. M assi cotte and Scott N. Koschwitz , Assistant Attorneys General, Matthew Denn , Attorney General, Office of the Attorney General for the State of Delaware, Valerie M. Edge , Deputy Attorney General, Lisa Madigan , Attorney General, Office of the Attorn ey General for the State of Illinois, Matthew J. Dunn and Gerald T. Karr , Assistant Attorneys General, William J. Moore III

, Benna Ruth Solomon

, Carrie Noteboom

, William H. Sorrell , Attorney General, Office of the Attorney General for the State of Vermont, Thea Schwartz , Assistant Attorney General, Maura Healey , Attorney General, Office of the Attorney General for the Commonwealth of Massachusetts, Frederick D. A uge nstern , Assistant Attorney General, Karl Racine

, USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 4 of 365
Attorney General, Office of the Attorney Gen eral for the District of Columbia, Todd Kim , Solicitor General, Scott J. Schwarz , and William R. Phelan

, Jr.

Graham G. McCahan argued the cause for Public Health Respondent Intervenors. With him on the brief on remand

were Howard I. Fox

, David S. Baron

, Josh Stebbins

, Vickie L. Patton
, Sean H. Donahue

, David Marshall

, John Walke , and Emily Davis

. Ann B. Weeks entered an appearance.

Brendan K

. Collins argued the cause for Industry Respondent Intervenors. With him on the brief on remand

were Robert B. McKinstry
, Jr.
, Lorene L. Boudreau , and James W. Rubin

.

Before: R OGERS , G RIFFITH , and K AVANAUGH , Circuit Judges

. Opinion for the Court filed by Circuit Judge K AVANAUGH

.

K AVANAUGH , Circuit Judge : The Clean Air Act requires EPA to set national ambient ai r quality standards

, or NAAQS. Tho se standards limit the levels of common pollutants in the ambient air. See 42 U.S.C. § 7409(a). Under the Act, individual States are responsible for ensuring attainment within their States of federal air quality standards. But air pollution is “heedless of s tate boundaries

. ” EPA v. EME Homer City Generation, L.P

. , 134 S. Ct. 1584, 159 3 , slip op. at 2 (2014)

. Emissions in upwind States therefore may affect air quality in downwind States. The Clean Air Act’s “good neighbor” provision speaks to th at problem by proscribing upwind States from “emitting any air pollutant in amounts ” that will “contribute significantly to nonattainment ” of a NAAQS in a downwind State . 42 U.S.C. § 7410(a)(2)(D)(i)

. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 5 of 366
This case concerns EPA’s effort to regulate interstate air pollution pursuant to the good neighbor provision.

In 2011, EPA promulgated its latest good neighbor regulation, the Transport Rule

, also known as the Cross

- State Air Pollution Rule. A number of States , localities, and industry groups promptly challenged the Rule. They argued, among other things , that the Rule’s methodology for computing the upwind State s’ emission s reduction obligations under the good neighbor provision exceeded EPA’s statuto ry authority. As relevant here, t hey contended that the Rule imposed uniform pollution reductions on upwind States regardless of the actual amounts of pollution that individual upwind States contributed to downwind State s

. According to petitioners, this methodology led to over

- control of upwind States’ emissions. Applying our precedents in North Carolina v. EPA , 531 F.3d 896 ( D.C. Cir. 2008)

, and Michigan v. EPA , 213 F.3d 663 ( D.C. Cir. 2000), t his Court issued a 2

- 1 decision , with Judge Rogers dissentin g, that agreed with petitioners and vacated the Rule. See EME Homer City Generation, L.P. v. EPA , 696 F.3d 7, 38 (D.C. Cir. 2012)

.

On review , the Supreme Court reversed in a 6

- 2 decision

. The Court ruled that the over

- control problem did not require invalidation of the Rule “on its face.” EME Homer , 134 S. Ct. at 1609, slip op. at 31. I n doing so, however, the Court stated that it “agree[d] with the Court of Appeals to this extent”: T he Transport Rule require s “unnecessary ” emission s reductions when EPA “ requires an upwind State to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked

. ” Id. at 1608

- 09, slip op. at 29

- 31

. The Court stated that over

- control of individual upwind States could be USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 6 of 367

contested through “particular ized, as

- applied challenge[s]

. ” Id. at 1609, slip op. at 31.

Now on remand, w e consider several as

- applied over

control challenges to EPA’s 2014 emissions budgets

. Petitioners challenge the 2014 SO 2 emissions budgets for Texas, Alabama, Georgia, and South Carolina. P etitioners also challenge the 2014 ozone

- season NO X emission s budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia. On this record, petitioners ’ as

applied challenges are meritorious

, and those 2014 emissions budgets are invalid . W e therefore grant the petitions to that limited extent , and w e remand without vacatur to EPA for it to reconsider those 2014 emissions budgets.
In this opinion, w e also must address a number of petitioners’ broader challenges to the Transport Rule that we did not have occasion to address in the prior case

. We reject all of those claims a nd deny the petitions with respect to those issues.

I

The Transport Rule has been described in exhaustive detail in earlier phases of this litigation. See EPA v. EME Homer City Generation, L.P. , 134 S. Ct. 1584, 15 93

- 95, slip op. at 2

- 6 (2014)

. We summarize the main points here

. The Clean Air Act regulates air quality through a federal

state collaboration. First, EPA establishes air quality standards known as NAAQS

. See 42 U.S.C. § 7409(a). Then

, EPA identifies areas within the S tates that have not attained those NAAQS. See i d

. § 7407(d). Tho se are call ed “nonattainment” areas. I d. Next, the baton is passed to the States, wh ich have the first opportunity to enact plans that USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 7 of 368
provide for the “implementation, maintenance, and enforcement” of th e NAAQS

. Id. § 7410(a)(1). States typically must enact and submit their plans

– called State Implementation Plans or SIPs

– within three years of any new

or revised NAAQS. Id. If a State decl ines to submit a SIP, or if EPA finds that the S tate’s SIP fails to satisfy the minimum criteria of the Clean Air Act

, EPA must promulgate a Federal Implementation Plan

, or FIP
, in its stead

. See id. § 7410(c)(1).

P ollution emitted in upwind State s can travel to downwind States . As a result, some “downwind States to which the pollution travels are unable to achieve clean air because of the influx of out

- of

- s tate pollution.” EME Homer
, 134 S. Ct. at 1593, slip op. at 1

.

T he Clean Air Act’s good neighbor provision address es the issue of interstate air pollut ion. That provision , as currently phrased, requires State SIPs to:
contain adequate provisions

– (i) prohibiting, consistent with the provisions of this subchapter, any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will

– (I) contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard . . . .

42 U.S.C. § 7410(a)(2 ) (D)

. 1

1 The Rule imposes good neighbor oblig ations based on emissions that “ contribute significantly to nonattainment ” of USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 8 of 369
The Transport Rule at issue here represents EPA’s latest effort to implement the requirements of the good neighbor provision. The Rule focuses on three NAAQS. ( NAAQS regulate individual pollutant s measured over a specified time period. ) The NAAQS covered by the Transport Rule are the 8

- hour ozone NAAQS, the annual particulate matter (or PM 2.5 ) NAAQS, and the 24

- hour PM 2.5 NAAQS. See Transport Rule, 76 Fed. Reg. 48,208, 48,209 (Aug. 8, 2011)

.

T he Transport Rule does not directly regulate ozone and PM 2.5
. A s gases are “carried downwind, they are transformed, through various chemical processes, into altogether different pollutants.” EME Homer , 134 S . Ct. at 1594, slip op. at 3. T he pollutants that become ozone in downwind States start out in upwind S tates as emissions of nitrogen oxide (NO X ). See Transport Rule, 76 Fed. Reg. at 48,209

- 10

. The pollutants that become PM 2.5 in downwind States start out in upwind States as emissions of NO X and sulfur dioxide (SO 2 )

. Id

. Therefore, the Transport Rule promotes downwind attainment of ozone and PM 2.5 NAAQS by limiting NO X and SO 2 emissions in upwind States

. The Transport Rule employed a “two

- step approach” to determine whether and to what extent a State must reduce its NO X and SO 2 emissions pursuant to the good neighbor provision. EME Homer , 134 S. Ct. at 1596, slip op. at 7.
In the first step, EPA identified the upwind States that “contribute significantly” to nonattainment of NAAQS in one

NAAQS in downwind States and emissions that “ interfere with maintenance ” of NAAQS in downwind States. For ease of discussion, we focus on the “ contribute significantly to nonatta inment ” prong

. But our analysis of over

- control applies to both prongs. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 9 of 3610

or more downwind State s

. See i d

. If a downwind State’s receptor site is not in attainment and if an upwind State

cause d more than 1% of the pollution at that site, then that upwind State was deemed to have “contribute d significantly.” See i d. ( Receptor sites are locations in downwind States where EPA measures ambient air quality for pollutants regulated by the Clean Air Act. See id. )

When a n upwind State was found to contribute 1% or more of the relevant pollution at a downwind receptor , that upwind State was deemed to have a “linkage” to that downwind location

. See Transport Rule, 76 Fed. Reg. at 48,236. Any State with no such linkages was “screened out and exempted from regulation under the rule.” EME Homer
, 134 S. Ct. at 1596, slip op. at 7. Any Sta te that had at least one linkage was subject to the Transport Rule. See i d

. EPA found 27 upwind States to have one or more linkages in downwind States

. See i d. Those 27 States were then subject to the second step of the Transport Rule.
In the second step, EPA calculated the pollution reductions necessary for those 27 upwind States to comply with their good neighbor obligations. Recall that the good neighbor provision of the Act prohibits upwind States from emitting “amounts” of pollutio n that “contribute significantly” to nonattainment in downwind State s

. 42 U.S.C. § 7410(a)(2)(D) . E PA’s task at this second step was to decide wh at “amounts” of pollutio n each upwind State needed to reduce

. But g iven what it described as the complexity of trying to

assess the relative amount that each upwind State contributes
to nonattainment in each downwind State

, EPA decided to impose uniform emissions reductions on the upwind States covered by the Rule. See EME Homer , 134 S. Ct. at 1607

, slip op. at 26

- 2 7

. In other words, once a State was deemed USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 10 of 3611
subject to the Transport Rule , its obligation to reduce emissions would no longer depend on the actual amounts it emitted into individual downwind State s

. Using its uniform approach, EPA calculated how much pollution each upwind State could eliminate if all of its

sources applied pollution control technologies available at particular cost thresholds

. See id. at 1596, slip op. at 7

- 8. Tho se cost thresholds were expressed in terms of cost per ton of emissions reduced.

In the end, EPA adopted four cost thresholds for the 27 upwind S tates subject to the Transport Rule

. For all States subject to the R ule for annual NO X , EPA set a $500/ton cost threshold

. See Transport Rule, 76 Fed. Reg. at 48, 250. For States subject to the Rule for ozone

- season NO X , EPA also set a $500/ton cost threshold. See i d. For S tates subject to the R ule for SO 2

, EPA divided the States into two groups. For Group 1 States , EPA set a $2,300 /ton cost threshold

. See id.
at 48,25 9

. 2 For Group 2 States , EPA set a $500/ton cost threshold

. See i d. 3

In the prior round of litigation , petitioners disputed EPA’s method of calculating emissions budgets for upwind States , and t his Court found three main problems with EPA’s approach. First, the Rule could lead to over

- control of upwind States

– that is, emissions reductions beyond those

2 Group 1 S tates are Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin. See Transport Rule, 76 Fed. Reg. at 48,257.
3 Group 2 S tates are Alabama, Georgia, Kansas, Minnesota, Nebraska, South Carolina, and Texas. See Transport Rule, 76 Fed. Reg. at 48,257. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 11 of 3612
necessary to achieve attainment in downwind States. Second, the Rule could require States to reduce even insignificant contributions to pollution in downwind States . Third, the Rule did not purport to try to assess each upwind State ’s relative contribution to nonattainment in downwind Sta tes

. We therefore concluded that EPA’s meth odology violated the Clean Air A ct, and vacated the Transport Rule.
The Supreme Court largely agreed with this Court on the first two issues but not on the third. The Court concluded, moreover, that those first two issues did not support

“ wholesale invalidation ” of the Transport Rule. EME Homer
, 134 S. Ct. at 1608, slip op. at 29.
Most important for present purposes is the first issue,

over

- control . The Suprem e Court “ agree [d] with the Court of Appeals to this extent”: The Transport Rule violates the
statute when it “ requires an upwind State to reduce emissions by more than the amount necessary to achieve attainment in
every downwind State to which it is linked

. ” Id.
But the Supreme Court concluded that the potential

“ over

- control ” did not “justif[y] wholesale inv alidation of the Transport Rule

. ” Id. at 1608, slip op. at 28

- 29

. Rather, as relevant here, if “ any upwind State concludes it has been forced to regulate emissions

. . . beyond the point necessary to bring all downwind States into attainment, that State may bring a particularized, as

- applied challenge to the Transport Rule. ” Id. at 1609, slip op. at 31.

That ’ s where we are now.

II We start by addressing petitioners’ as

- applied challenges to the Transport Rule. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 12 of 3613

A As the Supreme Court stated in EME Homer
, the Clean Air Act authorizes EPA t o “prohibit[] only upwind emissions that contribute significantly to downwind nonattainment .” EPA v. EME Homer City Generation, L.P. , 134 S. Ct. 1584, 1604 , slip op. at 2 1 (2014) ; see also id. at 1607, slip op. at 27 (EPA may “require the elimination of only those ‘amounts ’ of pollutants that contribute to the nonattainment of NAAQS in downwind States.”); id. at 1603

- 04 , slip op. at 21 (“EPA’s task is to reduce upwind pollution, but only in ‘amounts’ that push a downwind State’s pollution concentrations above the relevant NAAQS.” )

. 4

In EME Homer , the Supreme Court rejected a facial challenge to EPA’s uniform approach and recognized that EPA must have some leeway to balance the possibilities of

over

- control and under

- control of interstate emissions

. The Court stated , howe ver, that a n upwind State may bring an as

applied challenge to EPA’s Transport Rule emissions budgets when EPA ’s uniform approach has gone too far in proscribing emissions by upwind States

. Id. at 160 8

- 0 9, slip op. at 29

- 31

. In such an as

- applied challenge, h ow do we determine whether EPA has gone too far ?

4 The Supreme Court held that the same was true for upwind States t hat “interfere with maintenance” at downwind locations. See EME Homer , 134 S. Ct. at 1604 n.18, slip op. at 22 n.18 (“ Just as EPA is constrained, under the first part of the Good Neighbor Provision, to eliminate only those amounts that ‘contribute . . . t o nonattainment
, ’ EPA is limited, by the second part of th e provision, to reduce only by ‘amounts’ that ‘ interfere with maintenance
, ’ i.e.

, by just enough to permit an already

- attaining State to maintain satisfactory air quality. ”). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 13 of 3614
The Supreme Court answered that question in EME Homer

. As relevant here, i t stated that EPA may not require

“ an upwind State to reduce emissions by more than the

amoun t necessary to achieve attainment in every downwind State to which it is linked.” Id. at 1608, slip op. at 29. If EPA does so, “the Agency will have overstepped its authority, under the Good Neighbor Provision, to eliminate those amounts that contribute to nonattainment.” Id

. (alterations and internal quotation marks omitted).
When can we say that an upwind State has been required

, in the Supreme Court’s words, “ to reduce emissions by more than the amount necessary to achieve attainment in every downwi n d State to which it is linked ” ? The answer again is clear from the Supreme Court’s EME Homer opinion : when those downwind locations would achieve attainment even if less stringent emissions limits were imposed on the upwind States linked to th ose locations

. Id. at 16 0 9, slip op. at 30

- 31.
For example, a ssume that a downwind location would meet its NAAQS if the upwind States to which it is linked implemented emissions reduction technologies available at a cost of $100/ton. Once those technologies are in place, the downwind location will be in attainment. If the upwind States also implement e d emissions reduction technologies available at a cost of $200/ton, the emissions reductions that flow from those technologie s would not help the downwind location reach attainment because it already reached attainment when technologies available at a cos t of $100/ton were implemented.

I n evaluating petitioners’ as

- applied challenges, we thus must determine whether a downwind location would still attain its NAAQS if linked upwind States were subject to less stringent emissions limits

. If we answer in the affirmative, EPA has overstepped its authority

. Important ly , that does not USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 14 of 3615

mean that every such upwind State would then be entitled to less stringent emissions limits. Some of those upwind States may still be subject to the more stringent emissions limits so
as not to cause other downwind locations to which those S tates are linked t o fall into nonattainment

. Otherwise

, however, upwind States in th o se circumstances should prevail in their as

- applied challenges

. 5

B

1 Invoking EME Homer ’s explicit authorization of as

applied challenges , petitioners challenge the 2014 SO 2 emissions budgets for Texas, Alabama, Georgia, and South Carolina

. Recall that SO 2 emissions transform (along with annual NO X ) into PM 2.5 in downwind States.
We begin with Texas. At step one of its process for computing emissions budgets under the Transport Rule, EPA found Texas to be linked to PM 2.5 non attainment at only one downwind location , Madison, Illinois (171191007). Ai r Quality Modeling Final Rule Technical Support Document (Jun e 2011)

, J

. A

. 2716

. At step two, EPA grouped Texas with six other States and found that collectively tho se States must reduce emissions at the $500 /ton level in 2014. Transport Rule, 76 Fed. Reg. 48,208, 48,257 (Aug. 8, 2011)

.

5 What if the downwin d location would still reach attainment if

one upwind State’s emissions limits were relaxed, but only so long as the other upwind States’ emissions limits were kept the same? We are not certain how the Supreme Court in EME Homer meant to resolve that question, but that issue is not presented in this case. Here, as we will explain, we know from EPA’s own data that the relevant downwind locations could reach attainment even if all of the relevant upwind States’ emissions limits we re relaxed in a uniform manner

. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 15 of 3616
However, EPA’s Technical Support Document for the Transport Rule

– a document that EPA prepared when it proposed the Transport Rule

– reveals that Madison, Illinois

, would attain its annual PM 2.5 NAAQS even if all of the upwind States linked to it implemen ted emissions reductions available at the $100/ton cost threshold. See Technical Support Document, Analysis to Quantify Significant Contribution (July 2010), J

. A

. 2231. 6

W ithout any good neighbor reductions, Madison’s maximum pollution level for PM 2.5 would be 16.8 5 μg/m 3 in 2012

. J

. A

. 2231

. The NAAQS for annual PM 2.5 is 15 μg/m 3

. See Transport Rule, 76 Fed. Reg. at 48,218. Madison therefore ne eded to reduce its pollution by 1.8 5 μg/m 3

. According to EPA’s projections , if every State connected to Madison implemented pollution controls at a cost of $100/ton, Madison would reduce its PM 2.5 by at least that
amount in 2014

. See J.A. 2231.
Yet EPA required every State connected to Madison to implement pollution controls available at a cost of $500/ton

or greater

. 7 But EPA’s projections showed that if every S tate

6 At oral argument, EPA stated that it “changed the inputs into the mode ls between proposal and final [R ule], so we don’t know if” the analysis in the Technical Support Document “still is true.” Tr. of Oral Arg. 58

- 59. But in the final Rule, EPA did not provide any updated analysis regarding cost thresholds below $500/ton. Therefore, for the purposes of these proceedings, we may and must rely on EPA’s initial analysis of those lower thresholds. On remand, EPA may of cou rse update its analysis, but it must consider cost thresholds below $500/ton and it must justify its final calculation consistent with the directions set forth by the Supreme Court and this Court.
7 Some S tates connected to Madison are in Group 1 for SO 2 , which must implement pollution controls at $2,300 /ton

. See USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 16 of 3617
connected to Madison implemented pollution controls available at $500/ton, Madison’s PM 2.5 would go down by 2.61 μg/m 3

. J.A. 2231. That is 0.7 6 μg/m 3 more than Madison needed to reduce in order to comply with its NAAQS.
Put another way, by requiring reductions of $500/ton or greater for the upwind States linked to Madison, EPA required those States to help Madison overachieve its NAAQS by at least 0.7 6 μg/m 3

.
Texas is li nked only to Madison , Illinois. Therefore, by requiring Texas to implement pollution controls available at $500/ton when controls in all contributing upwind States at $100/ton would bring Madison into attainment, EPA has required Texas “to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked

, ” in clear violation of the Supreme Court’s directive. EME Homer , 134 S. Ct. at 1608, slip op. a t 29.

EPA similarly required Alabama , Georgia, and South Carolina to implement unnecessary emissions controls in their 2014 SO 2 emissions budgets.

Alabama is linked to four downwind locations : Fulton, Georgia (131210039), Hamilton, Ohio (390610014), Hamilton, Ohio (390610042), and Hamilton, Ohio (390618001). See J.A. 2715. Note that some counties contain multiple receptor locations where EPA measures air quality ; each location is demarcated w ith a unique identification number. EPA’s projections show that Fulton, Georgia

, will come into attainment even if all S tates linked to

Transport Rule, 76 Fed. Reg. at 48,259. Texas is in Group 2 for SO 2 , which requires pollution controls at $500/ton. Id. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 17 of 3618
it implement no good neighbor reductions in 2014

. Moreover, all three locations in Hamilton, Ohio

, will come into attainment even if all upwind S tates linked to them implement cost controls at $ 1 00/ton. See J.A. 2231. EPA is requiring Alabama to implement cost controls at $500/ton, when cost controls at $ 1 00/ton would bring every downwind location to which it is linked into attainment.
Georgia is connected to two downwind locations: Jefferson, Alabama (10730023) and Jefferson, Alabama (10732003). See J.A. 2715. EPA’s projections show that Jefferson, Alabama (10730023) will come into attainment if al l States linked to it implement cost controls at $400/ton and Jefferson, Alabama (10732003) will come into attainment if all upwind States linked to it implement cost controls at $ 2 00/ton. See J.A. 2231. EPA is requiring Georgia to implement cost control s at $500/ton, when cost controls at $400/ton would bring every downwind location to which it is linked into attainment.

South Carolina is linked to one location , Fulton, Georgia (131210039). See J.A. 2716. EPA’s projections showed that that location would come into attainment if all upwind S tates linked to it implemented no cost controls . J.A. 2231. Yet EPA is requiring South Carolina to implement pollution controls at $500/ton.

In short, EPA’s 2014 SO 2 emissions budgets for Texas, Alabama, Georg ia, and South C arolina require each of those States “to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked .” EME Homer , 134 S. Ct. at 1608, slip op. at 29

. The reductions on those four States are “unnecessary to downwind attainment anywhere

. ” Id. at 1609 , slip op. at 30. Those emissions budgets are therefore invalid. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 18 of 3619

2

Next, we consider as

- applied challenges to the Transport Rule’s 2014 ozone

- season NO X emissions budgets related to the 1997 8

- hour ozone NAAQS. Petitioners bring as

- applied challenges to those 2014 budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia.

For ozone

- season NO X , the only record data showed that the downwind locations to which 10 of those 11 upwind States (all but Texas) were linked would comply with their NAAQS in 2014 even with no good neighbor obligation on the upwind States. See Transport Rule, 76 Fed. Reg. at 48,246 (linkages); J.A. 2550

- 76 (2014 Base Case Maximum Values). The conclusion is therefore simple. The 2014

ozone

- season NO X emissions budgets for those upwind States are invalid

. For Texas, petitioners acknowledge tha t some good neighbor obligation for ozone

- season NO X may be appropriate

, but they say that it must be far lower than $500/ton

. The record supports their argument. The evidence indicates that the two downwind locations to which Texas is linked for ozone

– East Baton Rouge, Louisiana and Allegan, Michigan

– could comply with their NAAQS even if the upwind States to which those two locations were linked were subject to cost thresholds far lower than $500/ton. The 2014

ozone

- season NO X emissions budget for Texas is therefore invalid.

C

Despite t hose rather clear transgressions of the statutory boundaries as set forth by the Supreme Court in EME Homer
, E PA argues that petitioners ’ over

- control challenges should USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 19 of 3620

fail. EPA advance s two main arguments, neither of which is persuasive in light of the Supreme Court’s opinion

.

First , EPA contends that over

- attainment in downwind locations does not mean that there is impermissible over

control of upwind States. Regarding Texas, for instance, EPA says that Madison’s over

- attainment “reflects incidental benefits flowing from emission reductions by other upwind States that are necessary to ” achieve attainment at other downwind locations . EPA Br. at 53

- 54.

EPA’s argument directly contravenes the Supreme Cou rt’s analysis in EME Homer

. According to the Supreme Court, o ver

- attainment in downwind locations is permissible when it is “ incidental to reductions necessary to ensure attainment elsewhere.” EME Homer , 134 S. Ct. at 1608, slip op. at 29. That happens, for instance, when “the emissions reduction required to bring one linked downwind State into attainment” is “large enough to push other linked downwind States over the attainment line.” Id

.

T he Supreme Court made crystal clear in EME Homer that o ver

- attainment in downwind locations is impermissible when that excess attainment is “unnecessary

. ” Id. at 1 60 9

, slip op. at 29

- 30. “ If EPA requires an upwind State to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked, the Agency will have overstepped its authority .” Id. at 160 8 , slip op. at 29

. That is precisely what we have here.

Two examples of upwind States’ linkages to Madison, Illinois

, illustrate the differen ce between per missible and impermissible over

- attainment at downwind locations

. The upwind State of Indiana is linked to Madison , Illinois

, as well as to 11 other downwind locations for annual PM 2.5
. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 20 of 3621

See J.A. 2715. To reach attainment, o ne of those downwind locations in Allegheny, Pennsylvania

, needs all upwind States to which it is linked to implement cost controls at $ 2,3 00/ton or higher

. See J.A. 2715

- 16 ; Transport Rule, 76 Fed. Reg. at 4 8,257

. Therefore, regardless of the cost threshold that is necessary to bring Madison into attainment, Indiana must implement controls available at $ 2,3 00/ton in order to satisfy its good neighbor obligation to Allegheny. As a result, the benefits that M adison , Illinois, receives from tho se higher controls on Ind iana are merely incidental to the reductions on Indiana that are necessary to bring other locations into attainment.

The upwind State of Texas, by contrast, is linked only to Madison , Illinois for annual PM 2.5 . Madison will come into attainment for annual PM 2.5 if all States linked to it implement cost controls at $100/ton. If EPA requires Texas to implement cost controls at $500/ton, the over

- attainment that Madison would achieve because of Texas’s incremental cost controls would not be an “incide ntal” benefit of other necessary good neighbor reductions imposed on Texas

. Texas does not contribute significantly to nonattai nment for PM 2.5 at any other downwind location . Therefore, tho se $500/ton reductions from Texas cannot be necessary to

– or

eve n aid in

– the achievement of attainment at any other downwind location . Requiring Texas to implement higher cost controls does not produce benefits that are “incid e ntal” to attainment elsewhere; i t produces benefits that are

“ unnecessary to downwind attainment anywhere

. ” EME Homer , 134 S. Ct. at 1609 , slip op. at 29

- 30.

Second , EPA argues that “imposing less stringent emission budgets” on those upwind States “would be inequitable and contrary to the rationale underlying uniform cost thresholds.” EPA Br. at 55. Specifically, EPA says that USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 21 of 3622
uniform cost thresholds are important because they subject “to stricter regulation those States that have done relatively less in the past to control their pollution” and prevent those States from “free riding on their neighbors’ efforts to reduce pollutio n.” Id. ( quoting EME Homer , 134 S. Ct. at 1607, slip op. at 27).

But EPA’s argument again flatly contradicts the crystalline holding of the Supreme Court in EME Homer

. The Supreme Court could not have said it more clearly: “ If EPA requires an upwind St ate to reduce emissions by more than the amount necessary to achieve attainment in every downwind State to which it is linked, the Agency will have overstepped its authority .” EME Homer , 134 S. Ct. at 1608, slip op. at 29

. The Court therefore explicitly authorized as

applied challenges that , when successful under the principles outlined by the Court, will necessarily mean a lack of uniformity in certain circumstances.

It bears mention, moreover, that the Supreme Court’s conclusion on this point tracked the affirmative representation made by the Deputy Solicitor General to the Supreme Court that as

- applied over

- control challenges by upwind States would be permissible

– even though such challenges

, when successful, would necessarily mean the cost thresholds would not be uniform. 8 EPA is now saying something to this Court

8 The Supreme Court’s language allowing such as

- applied

over

- control challenges was no accident, as examination of the oral argument transcript in that case reveals: Justice Sotomayor : . . . [B]elow, the government conceded that there was a theoretical possibility that some States could be overcontrolled, that they would be implementing measures that would reduce their contributions to pollution below the 1 USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 22 of 3623

that is tension with, if not in contravention of, what the Deputy Solicitor General told the Supreme Court.

In sum , EPA ’s uniform cost thresholds have required States to reduce pollutants beyond the point necessary to

percent. Assume that

– I think there’s a theoretical possibility of that

– but that your approach was basically fine. What would we do about that? First of all, ar e there measures States can take to get out of the FIP if it’s inappropriate to them because of overcontrol? And if not

– and how do they do it? I mean, what’s the process? If we think there’s a flaw, do we vacate the rule? . . .

. Mr. Stewart [Deputy Solicitor General] : . . . [E]ven if we win everything that’s at issue in this Court, the case is not over. There are a variety of more specific challenges to the details of the rule that the D.C. Circuit found it unnecessary to address. And so if we won on the issues that are before the Court, the case would be remanded and there would be an opportunity for the court below to consider those. And to the extent

– Chief Justice Roberts : Including

– including the overcontrol argument, or would that have be en done?
Mr. Stewart : Well, to

– to the extent that any State had

– and I don’t know the

– the pending as

- applied challenges at this level of detail. But to the extent that any State has a properly preserved challenge to the effect that it is actually li kely to be subject to overcontrol, then that could be heard by the court of appeals. The court of appeals could determine both whether that is, in fact, likely to happen and whether, if it does happen, that would rend er the rule arbitrary an d capricious a s to that State. Transcript of Oral Argument at 26:24

- 28:18, EPA v. EME Homer City Generation, L.P. , 134 S. Ct. 1584 (2014) (Nos. 12

– 1182, 12

– 1183) (italics added). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 23 of 3624

achieve downwind attainment. That violates the Supreme Court’s clear mandate in EME Homer

.
D

The next question is the remedy for the invalid 2014 emissions budgets. We will remand without vacatur the 2 014 emissions budgets that we have found invalid

. Although there have been some critiques of the practice of remanding without vac a tur , this Court’s precedents authorize remand without vacatur in certain limited circumstances. See , e.g. , North Carolina v. EPA , 550 F.3d 1176 , 1178 (D.C. Cir. 2008) ; Advocates for Highway and Auto Safety v. Federal Motor Carrier Safety Administration , 429 F.3d 1136, 1151 (D.C. Cir. 2005) . Here, as petitioners themselves note, vacatur could cause substantial disruption to t he trading markets that have developed around the 2014 emissions budgets

. Cf. NACS v. Board of Governors of Federal Reserve System , 746 F.3d 474, 493 (D.C. Cir. 2014) ( remanding without vacating where “ disruptive effect of vacatur [wa] s high”) (internal quotation marks omitted ). Moreover, as petitioners have acknowledged, some good neighbor obligations may be appropriate for some of the relevant upwind States

. In these circumstances, remand without vacatur is appropriate.

On remand, E PA, petitioners, or other parties as appropriate may provide new e vidence, data, or calculations. To be sure, r emand without vacatur creates a risk that an agency may drag its feet and keep in place an unlawful agency rule. With that in mind, we expect a nd urge EPA to move promptly on remand. If not, petitioners may promptly bring suit against the Administrator for “failure . . . to perform

, ” in addition to other appropriate remedies petitioners may choose to pursue. 42 U.S.C. § 7604(a)(2). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 24 of 3625

III

We now address petitioners’ other challenges to the Transport Rule that we did not have occasion to reach during petitioners’ last trip to this Court.

A
To begin with

, the State and local petitioners contend that EPA lacked authority to promulgate the Tr ansport Rule FIPs for 22 of the 27 covered States

. Starting in 2007

, EPA approved SIPs for those 22 States. See Transport Rule, 76 Fed. Reg. 48,208, 48,220

- 21 (Aug. 8, 2011)

. 9 Those SIPs sought to fulfill the States’ good neighbor obligations by complyi ng with the regulatory framework laid out in the 2005 Clean Air Interstate Rule or CAIR.

But in North Carolina v. EPA in 2008 , this Court found CAIR to be “fundamentally flawed,” and instructed EPA to build a replacement for CAIR “from the ground up.” North Carolina v. EPA , 531 F.3d 896, 929 (D.C. Cir. 2008). The Court did not vacate CAIR. See North Carolina v. EPA , 550 F.3d 1176, 1178 (D.C. Cir. 2008). Our decision in North Carolina prompted EPA to develop the Transport Rule.

EPA may promulgate a F IP only if a State declines to submit a SIP or if EPA finds that the State’s SIP does not meet all of the applicable requirements of the Clean Air Act. See 42 U.S.C. § 7410(c)(1). 10 EPA, in other words, may not

9 Those S tates are: Alabama, Arkansas, Connecticut, Florida, Georgia, Illinois, Indian a, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and West Virginia. See Transport Rule, 76 Fed. Reg. at 48,220

- 21.
10 The full provision provid es that: USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 25 of 3626
promulgate a FIP for a State if it has previ ously approved a SIP for that State. Here, EPA had approved SIPs for 22 of the 27 States covered by the Transport Rule. Therefore, in order to promulgate the Transport Rule FIPs, EPA first needed to revise its approval for the CAIR SIPs.

The Clean Air A ct allows EPA to “ revise ” a prior SIP approval if that approval “was in error.” Id. § 7410(k)(6). In particular, t he Clean Air Act provides that whenever “the Administrator determines that the Administrator’s action approving, disapproving, or promulgating any plan or plan revision (or part thereof) . . . was in error, the Administrator may . . . revise such action as appropriate without requiring any further submission from the State.” Id. Here, EPA invoked its correction powers under Subsection 7410(k)(6) to “rescind any statements that the [CAIR] SIP submissions either satisfy or relieve the state of the obligatio n to submit a SIP to satisfy the requirements of” the good neighbor provision. See Transport Rule, 76 Fed. Reg. at 48,220.

The Administrator shall promulgate a Federal implementation plan at any time within 2 years after th e Administrator

– (A) finds that a State has failed to make a required submission or finds that the plan or plan revision submitted by the State d oes not satisfy the minimum criteria established under subsection (k)(1)(A) of this section , or (B) disapproves a State implementation plan submission in whole or in part, unless the State corrects the deficiency, and the Administrator approves the plan or plan revision, before the Administrator promulgates such Federal implementation plan.

42 U.S.C. § 7410 (c)(1). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 26 of 3627

Petitioners argue that EPA’s use of its S ubs ection 7410(k)(6) correction power was invalid. They advance three distinct contenti ons.
First, petitioners argue that EPA’s initial approval of the CAIR SIPs was not “in error,” and therefore could not be corrected pursuant to Subsection 7410(k)(6). But w hen our decision in North Carolina deemed CAIR to be an invalid effort to implem ent the requirements of the good neighbor provision, that ruling meant that the initial approval of the CAIR SIPs was in error at the time it was done. As the Supreme Court stated: “ A judicial construction of a statute is an authoritative statement of wha t the statute meant before as well as after the decision of the case giving rise to that construction. ” Rivers v. Roadway Express, Inc. , 511 U.S. 298, 312

- 13 (1994)

. Second, petitioners argue that because we remanded CAIR without vacatur in North Carolina , we cannot now conclude that EPA’s SIP approvals under CAIR were “in error.” But petitioners misunderstand why w e declined to vacate CAIR in North Carolina . We le ft CAIR in effect temporarily because doing so was necessary to “at least temporari ly preserve the environmental values covered by CAIR” until it could be “replaced by a rule consistent with our opinion.” North Carolina , 550 F.3d at 1178.
But critically, the decision to remand without vacatur did not alter the core holding of North Car olina : CAIR contained “fatal flaws” and needed to be replaced. North Carolina , 531 F.3d at 901. Our decision to remand without vacating, therefore, does not change the conclusion that EPA’s original approvals of the CAIR SIPs were “in error” given our d ecision in North Carolina

. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 27 of 3628
Third, petitioners say that EPA ran afoul of the Clean Air Act’s requirement that EPA correct SIP approval errors “in the same manner as the approval.” 42 U.S.C. § 7410(k)( 6). We reject that argument because EPA did correct the SIP approvals “in the same manner” as it originally issued them. Both the original SIP approvals and the correction s were effectuated through rulemaking pursuant to the requirements of the Clean Air Act.
It is true that, as petitioners note, EPA approved the original CAIR SIPs through rulemaking with notice and comment, but revised them through rulemaking without notice and comment. See Transport Rule, 76 Fed. Reg. at 48,221. But both actions complied with the Clean Air Act’s framework for rulemaking.
Under the Clean Air Act, rulemaking can be accomplished without notice and comment when EPA has “good cause” to forgo that extra procedure. See 42 U.S.C. § 7607(d)(1)

. Specifically, the Clean Air Act permits EPA to conduct rulemaking without notice and comment when doing so would be appropriate under S ubs ection 553(b) of the Administrative Procedure Act, which sets forth a “good cause” exception. 11

11 The Clean Air Act exempts from its notice and comment requirements “any rule or circumstance referred to in subparagraphs (A) or (B) of subsection 553(b) of t it le 5.” 42 U.S.C. § 7607(d)(1) ; cf. General Motors Corp. v. Ruckelshaus , 742 F.2d 1561, 15 65 n.6 (D.C. Cir. 1984)

. Those subparagraphs, in turn, provide two except ions to the notice and comment requirement: (A) when the agency enacts interpretative rules, and (B) when the agency has good cause to forgo notice and comment. See 5 U.S.C. § 553(b) (A)

- (B). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 28 of 3629
Subsection 553(b)(B) provides that an agency has “good cause” to conduct rulemaking without notice and comment when proceeding through notice and comment would be “impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. § 553(b)(B)

. This Court has previously affirmed the use of the “good cause” exception when rulemaking without notice and comment is “a reasonable and perhaps inevitable response to” a “court order.” American Federation of Government Employees, AFL

- CIO v. Block

, 655 F. 2d 1153, 1157 (D.C. Cir. 1981).
EPA explained here that it invoked the “good cause” exception because this Court’s decision in North Carolina invalidated the CAIR SIPs and c ommentators could not have said anything during a notice and comment period that would have changed that fact. See Transport Rule, 76 Fed. Reg. at 48,222 (“EPA must accept the Court’s conclusion that compliance with CAIR does not satisfy the requirements of [the good neighbor provision] and lacks discretion to reach a different concl usion

. ”). EPA is correct that it would have been utterly “unnecessary” and wasteful to go through notice and comment given our decision in North Carolina

. See 5 U.S.C. § 553(b)(B)

. In sum, EPA’s initial approval of the CAIR SIPs was “in error.” And EPA corrected that approval “in the same manner” as it approved the SIPs

– that i s, through a valid rulemaking. 12

12 Our conclusion on Subsection 7410(k)(6) is limited to the

unu sual circumstances here, in which a federal court says that EPA lacked statutory authority at the time to approve a SIP . We do not take a position on use of Subsection 7410(k)(6) in any other circumstances. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 29 of 3630

B
Next, petitioners challenge two models used by EPA to create the Transport Rule. This Court’s review of EPA’s modeling choices is deferential. It is “only when the model bears no rational relationship to the characteristics of the data to which it is app lied that we will hold that the use of the model was arbitrary and capricious.” Appalachian Power Co. v. EPA , 135 F.3d 791, 802 (D.C. Cir. 1998).

First, petitioners argue that EPA’s model for creating air quality projections was arbitrary and capricious because it used insufficient real

- world data. In order to project downwind air quality, EPA used real

- world data from 2003 to 2007. See Transport Rule, 76 Fed. Reg. at 48,23 3

- 36. Petitioners argue that EPA should have verified its findings against air q uality measured after 2007 as well.
EPA’s decision not to use post

- 2007 air quality data in the model was reasonable. As already discussed, in 2008, this Court invalidated CAIR, but we left that Rule in place until the Agency came up with a replacement. See North Carolina

, 550 F.3d at 1178. As a result, air quality data after 2007 reflected “large emission reductions from CAIR” that would ultimately be displaced by the Transport Rule. See Transport Rule, 76 Fed. Reg. at 48,230.

Moreover, given our narrow holding here, EPA’s use of its correction power under Subsection 7410(k)(6) should not be read to diminish the scope or force of Subsection 7410(k)(5), which provides that whenever “the Administrator finds that the applicable implementation plan for any area is substantially inadequate . . . the Administrator shall require the State to revise the plan as necessary to correct such inadequacies.” 42 U.S.C. § 7410(k)(5). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 30 of 3631

As EPA reasonably explained

, b ecause “the Transport Rule will replace CAIR

, we must model a future year base case which does not a ssume that CAIR is in place (a ‘no

CAIR’ case).” Id.
Second, petitioners object to the model EPA used to set State emissions budgets. That model predicted the generat ion and emissions produced at electric generating unit s within the States covered by the Transport Rule. Petitioners say that those predictions were arbitrary because EPA knew that there were “discrepancies” between the predicti ons and the actual generation and emissions at those units. EPA contends that the model’s “discrepancies are small and random and thus do not result in biases.” Transport Rule Primary Response to Comments ( June 2011), J.A. 2089.

We will not invalidate E PA’s predictions solely because there might be discrepancies between those predictions and the real world. That possibility is inherent in the enterprise of prediction. The best model might predict that the Nationals will win the World Series in 2015 . I f that does not happen, you can’t necessarily fault the model. As we have said previously, the fact that a “model does not fit every application perfectly is no criticism; a model is meant to simplify reality in order to make it tractable.” Chemical Manu facturers Association v. EPA , 28 F.3d 1259, 1264 (D.C. Cir. 1994).

C
Next, petitioners argue that EPA failed to properly regulate pursuant to the “interfere with maintenance” prong of the good neighbor provision. T he Transport Rule regulates two differ ent kinds of interstate air pollution. As we have discussed, the Rule regulates upwind emissions that “contribute significantly to nonattainment” of NAAQS in USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 31 of 3632
downwind States. 42 U.S.C. § 7410(a)(2)(D)(i). The Rule also regulates upwind emissions that “interfere with maintenance” of NAAQS in downwind States that have achieved attainment

. Id.

In North Carolina , we held that EPA must give “independent significance” to those prongs. North Carolina

, 531 F.3d at 910. W e found that CAIR failed to do tha t. CAIR applied the interfer e nce with maintenance provision “ in conjunction with the significan t contribution to nonattainment provision and so did not use the maintenance pron g to separately identify upwind States subject to CAIR .” Id. (quoting 71 Fed. Reg. 25, 328, 25,337 (Apr. 28, 2006)). Put another way, areas that found “ themselves barely meeting attainment

. . . due in part to upwind sources interfering with that attainment ha [d] no recourse under EPA’s interpret ation of the interference prong ” in CAIR. Id.
Petitioners argue that the Transport Rule repeats the same error. We disagree.
The Transport Rule’s methodology affords independent effect to the “interfere with maintenance” prong of the good neighbor provision. In formulating the Trans port Rule, EPA “evaluat[ed] contributions to identified maintenance receptors as well as contributions to identified nonattainment receptors.” Transport Rule, 76 Fed. Reg. at 48,227; see also id. at 48,212 (“EPA thus identified specific emission reduction responsibilities for each upwind state found to significantly contribute to nonattainment or interfere with maintenance in other states.”) (emphasis added).

With the Transport Rule , EPA created a distinct category of maintenance receptors that could in dependently trigger an upwind State’s good neighbor obligations. See id. at 48,228. Therefore, the Transport Rule complied with North USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 32 of 3633

Carolina ’s requirement that EPA give the nonattainment and maintenance prongs “independent significance.”

D
Petitioners also raise several objections to EPA’s methodology for identifying upwind States that “interfere with maintenance” at downwind locations

. First, petitioners argue that EPA’s methodology for identifying upwind emissions that “interfere with

ma intenance” failed to “identify and analyze only those upwind emissions that might actually threaten continued attainment.” State and Local Br. at 20. Second, they argue that the methodology improperly required emissions reductions in upwind States withou t accounting for maintenance secured by the downwind States’ own maintenance plans. 13 As a result, it risked requiring emissions reductions that would be duplicative or unnecessary. Third, they say that EPA erred by focusing “exclusively on the utility se ctor for emissions reductions,” when that sector may not produce the emissions that interfere with maintenance at downwind locations. Id. at 21.

At bottom, each of th o se claims is an argument that EPA’s methodology could lead to over

- control of upwind St ates that are found to interfere with maintenance at a downwind location

. That c ould prove to be correct in certain

13 When a S tate believes that an area within its borders has reached a national air quality standard , that State may seek a “redesignation” of that area from “nonat tainment” to attainment. See 42 U.S.C. § 7505a(a). That request must be accompanied by a revision to the State’s SIP

, which “provide[s] for the maintenance of the” NAAQS “for at least 10 years afte r the redesignation.” Id. That revision is called a “maintenance plan.” USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 33 of 3634

locations. But the Supreme Court made clear in EME Homer that the way to contest instances of over

- control is not through generalized claims that EPA’s methodology w ould lead to over

- control , but rather th rough a “particularized, as

applied challenge .” EME Homer , 134 S. Ct. at 1609, slip op. at 31. And petitioners do not point to any actual such instances of ove r

- control at downwind locations

. As the Supreme Court stated, under the “interfere with maintenance” prong, EPA may only limit emissions “by just enough to permit an already

- attaining State to maintain satisfactory air quality.” Id. at 1604 n.18, slip op . at 22 n.18. If States have been forced to reduce emissions beyond that point, affected parties will have meritorious as

- applied challenges.

E
Finally, petitioners advance three new arguments on remand that we may not entertain at this time.
We may hear objections to EPA rules or procedures only if the objections were “raised with reasonable specificity during the period for public comment.” 42 U.S.C. § 7607(d)(7)(B). If it was “ impracticable to raise a particular objection ” or if “ the groun ds for the objection arose after that period ,” parties still must petition EPA for administrative reconsideration before raising the issue before this Court. See Utility Air Regulatory Group v. EPA , 744 F.3d 741, 74 6 (D.C. Cir. 2014). This may sometimes seem a roundabout procedure , but that is what the statu t e requires and what we therefore must insist upon

. If EPA fails to conduct a reconsideration hearing, the party may seek review of that decision in this Court. See 42 U.S.C. § 7607(d)( 7)(B) (“If the Administrator refuses to convene such a proceeding, such USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 34 of 3635
person may seek review of such refusal in the United States court of appeals for the appropriate circuit.”).
First, petitioners argue that EPA viol ated the Clean Air Act’s notice an d comment requirements by significantly amending the R ule between the proposed and final versions without providing additional opportunity for notice and
comment. Because th at argument is an objection to the notice and comment process itself, petitioners obviously did not and could not have raised it during the period for public comment. Under S ub s ection 7607(d)(7)(B), however, t he only appropriate path for petitioners to raise this issue is through an initial petition for reconsideration to EPA . At least one party to the present suit has done just that. See Br. of Intervenor San Miguel Electric Cooperative, Inc. and Amicus Southeastern Legal Foundation , Inc. at 27. EPA has not ruled on that request

, and the parties have not asked for judicial review of EPA ’s delay in acting

. Id

. We are without authority at this time to reach this question.
Second, petitioners argue that EPA did not have authority to promulgate certain Transport Rule FIPs because those FIPs were signed by the EPA A dministra tor before EPA published its disapproval of the CAIR SIPs in the Federal Register. Petitioners did not raise this issue before the Agency during notice and comment , and EPA has not denied any petition for reconsideration raising this objection . We theref ore may not entertain it now.
Third, petitioners argue that EPA exceeded its authority by finding linkages based on upwind contributions to downwind locations that were designated in “attainment” or “unclassifiable.” See 42 U.S.C. § 7407(d). Petitioners again did not raise this argument during the notice and comment period or otherwise comp ly with 42 U.S.C. § 7607(d)(7)(B). USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 35 of 3636
This question is therefore not properly before this Court

, and

we may not reach it now.

* * *

To sum up: W e hold inva lid the 2014 SO 2 emissions budgets for Alabama, Georgia, South Carolina , and Texas, as well as the 2014 ozone

- season NO X budgets for Florida, Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virg inia. We remand without vacatur to EPA for it to reconsider those emissions budgets. We reject all of petitioners’ other challenges to the Transport Rule , including all of their facial challenges to the Rule. The petition s for review a re therefore granted in part and denied in part.

So ordered. USCA Case #11-1302 Document #1564814 Filed: 07/28/2015 Page 36 of 36