UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

___________________________________ ) Natural Resources Defense Council ) and State of New Jersey, ) ) Petitioners, ) ) v. ) No. 09 - 1198 ) United States Environmental ) Protection Agency, ) ) Respondent. ) )

----------------------------- ) ) State of New York et al. , ) ) Intervenors . )

___________________________________ )

**RESPONDENT EPA’S REPLY IN FURTHER**  **SUPPORT OF**  **MOTION FOR VOLUNTARY REMAND**

**AND PARTIAL VACATUR** On June 6, 2013, Respondent the United States Environmental Protection A gency (“EPA”) mo ved for an order that would resolve this case by remanding the CAIR - RACT 1 “d etermination” challenged by Petitioners, and by vacating and remanding the CAIR- RACT “presumption.” See generally Doc. No. 1440010

1 “C AIR ” refers to the Clean Air Interstate Rule, 70 Fed. Reg. 25,162 (May 12, 2005). “RACT” refers to the Clean Air Act’s requirements for “reasonably available control technology.”2

(“ EPA Mot.”). Relevant background concerning the determin ation and presum ption are prov ided in EPA’s motion . Id. at 1 - 1 2. Petitioners the Natural Resources Defense Council (“NRDC”) and Intervenor - Petitioners New York and Connecticut (collectively, “Petitioners”) filed a joint response to EPA’s motion, and Intervenor - Respondent Utility Air Regulatory Group (“UARG”) also respon ded. UARG does not object to EPA’s request to remand the CAIR - RACT determination, and also would not object to a remand of the presumption, but contends that the presumption should not be vacated. See Response of [UARG] to Respondent’s Motion for Voluntary Remand and Partial Vacatur (“UARG Resp.”) at 2 - 5 (filed June 20, 2013). Petitioners, conversely, support EPA’s request to vacate the presumption, but ask the Court to im pose a deadline in conjunction with remand of the determination by instructing EPA “t o com

plete a remand rulem aking within six months of the Court’s order.” See Response By [Petitioners] to EPA’s Motion for Voluntary Remand and Partial Vacatur (“Petitioners’ Resp.”) at 1, 10 (filed June 20, 2013). Notwithstanding these objections

– whic h are addressed below

– the relief EPA requests is appropriate in light of, and consi stent with, the Court’s decision in the related case NRDC v. EPA , 571 F.3d 124 5 (D.C. Cir. 2009) . Therefore , the Court shoul d grant EPA’s motion without altering the r equested relief.3

**I. THE CAIR** **- RACT PRESUMPTION INDISPUTABLY CONFLICTS**  **WITH THE COURT’S 2009 HOLDING IN NRDC v. EPA**  **AND THEREFORE SHOULD BE VACATED.**  As summarized in EPA’s opening memorandum, in NRDC the Court held, based on a plain reading of the statutory text, that the Clean Air Act’s RACT requirement “calls for reductions in emissions from sources in the area ; reductions from sources outside the nonattainment area do not satisfy the requirement.” 571 F.3d at 1256 (empha sis added). The Court thus invalid at ed EPA’s “determination” that sources’ participation in the NO X SIP Call regional emissions - trading program constituted compliance with RACT, because EPA had “not shown that NO X SIP Call com plian ce will result in at least RACT - level reductions in emissions from sources within each nonattainment area .” Id. (em phasis added). The Court further explained that, on remand, EPA could reinstate this determination for a particular area only if its techni cal analysis showed that sources in that area would achieve RACT - level emissions reductions. See id. ; see also EPA Mot. at 9 - 10. UARG does not dispute this summary of the Court’s essential holding in NRDC . Nor does UARG dispute that EPA based the CAIR - RACT presumption on a statutory interpretation that is no longer valid after the Court’s 2009 decision

– i.e. , the premise that participation in a regional trading program satisfies RACT as long as the overall emissions reductions obtain ed throughout the region are greater4

than what could be obtained through source - by - source application of RACT controls. See , e.g. , EPA Mot. at 18 (quoting the justification for the CAIR - RACT presum ption that EPA asserted in its merits brief in NRDC ). The Court squarely rejected this interpretation in NRDC . See 571 F.3d at 1256 (holding that EPA could not validly determine RACT compliance on the basis that the “NO X SIP Call [was] estimated to achieve a beyond - RACT degree of control regionally ”) (em phasis added); EPA Mot. at 10. UARG’s primary argument is that the presumption need not be vacated because EPA’s final rule preamble establi shing the presumption makes clear that the presumption is rebuttable and that States “will have to respond to any comments received during the comment period that address the presumption.” UARG Resp. at 3 - 4. However, the final rule preamble also made clear that the presum ption does not require States, in the first instance, to affirmatively develop a technical ana lysis supporting their reliance on the CAIR - RACT presum ption. Rather, “the State may choose to provide supporting analyses.” 72 Fed. Reg. 31,727, 31,734 (June 8, 2007) 2 ( em phasis added) (quoted in UARG Resp. at 3). This approach is no longer valid after the NRDC decision. See 571 F.3d at 1257 (EPA may only reinstate its determination of NO X SIP Call - RACT equivalency in

2 “Phase 2 of the Final Rule to Implement the 8 - Hour Ozone National Ambient Air Quality Standard

– Notice of Reconsideration.”5

those nonattainment areas where technical analysis shows that sufficient emissions reductions will be achieved from sources in the area); EPA Mot. at 17 - 19. UARG also contends that EPA has failed to explain why other factors it originally cited in its merits brief defending the CAIR - RACT presumption fail to establish a legally valid basis for it. See EPA Mot. at 18 - 19 n.9; UARG Resp . at 5. These factors included: (1) “the special attributes of EGUs, including the unique interrelated nature of the power supply network”; (2) the likelihood that CAIR com pliance “will achieve a more effective and economically efficient air quality im pr ovem ent in nonattainment areas than application of source - by - source RACT”; and (3) the fact that the 2009 CAIR emissions cap “reflects the maximum total capacity of controls that EGUs feasibly could install by that date.” Revised Final Brief of EPA at 80 - 81 (quoting 72 Fed. Reg. at 31,730 - 31). However, none of these factors , considered alone or collectively, supports any reasonable inference that compliance with the CAIR emissions trading program will result in RACT level emissions reductions from sources “within each nonattainment area,” 571 F.3d at 1256, because the trading program (like the NO X SIP Call trading program at issue in the Court’s 2009 decision) allows sources to comply with CAIR by purchasing emissions allowances from sources located outsid e of the area. Therefore, the above - quoted factors fail to establish a basis for presuming, in any6

particular nonattainment area, that sources’ compliance with CAIR will meet the legal standard for RACT equivalency established by the Court’s 2009 decision . Finally, UARG has made no showing that utilities or States submitting SIP revisions for EPA approval will be prejudiced if the Court vacates the CAIR RACT presumption. EPA’s practice since the 2009 decision has been not to rely on the presumption (or the C AIR - RACT or NO X SIP Call - RACT determination s ) i n deciding whether to approve SIPs , but in stead to evaluate RACT compliance by considering , inter alia , the controls that will be installed at sources in ea ch pertinent nonattainment area and the emi ssion s reductions obtained or expected from such sources . See , e.g. , 78 Fed. Reg. 15,895, 15,901 (Mar. 13, 2013) (in reviewing SIP revisions for North Carolina, EPA proposed “to not approve the presumption or determination that CAIR or the NO X SIP Call constit utes RACT . . . . However, after evaluating controls at individual point sources, EPA has determined that the point sources in the area have implemented RACT.”) 3 ; 78 Fed. Reg. 10,583, 10,587 - 88 (Feb. 14, 2013) (similar analysis supports EPA’s proposal to approve SIP revisions for Massachusetts); see also 78 Fed. Reg. 34,178, 34, 193 (June 6, 2013) (under proposed implementation rule for the 2008 ozone NAAQS, States likewise mu st “ demonstrat[e] that compliance with a regional trading program by

3 See also id. at 15,901 - 02 (discussing RACT analysis); 78 Fed. Reg. 27,065 (May 9, 2013) (final action approving the North Carolina SIP revisions).7

certain s ources within a nonattainment area, will achieve RACT - level reductions for those sources within the nonattainment area”). Thus, vacatur of the presum ption would leave affected parties subject to the same regulatory status quo that has been in place since the Court’s 2009 decision. **II. VOLUNTARY REMAND OF THE CAIR** **- RACT DETERMINATION**  **IS CONSISTENT WITH THE COURT’S 2009 DECISION AND DOES NOT REQUIRE IMPOSITION OF A DEADLINE.**  EPA seeks the same form of relief regarding the CAIR - RACT determination as that previously granted by the Court with respect to the NO X Sip Call - RACT determination, i.e. , remand without vacatur. See NRDC , 571 F.3d at 1257. As EPA ’s initial motion explained, such relief is appropriate for the same reason the Court gave i n its 2009 op inion concerning the NO X SIP Call - RACT issue

– that is, EPA may find the CAIR- RACT determination is still justified for particular nonattainment areas based upon area - specific analysis. EPA Mot. at 16. Petitioners ask , however, that the Court condition its order by requiring EPA “t o com plete a remand rulem aking within six months.” Petitioners’ Resp. at 10. Th is is a wholly unjustified request. Under the Clean Air Act, the Court has authority only to “reverse” challenged agency act ion found to be flawed on judicial review. 42 U.S.C. § 7607(d)(9). General claims of “unreasonable delay” must be brought in district court. Id. § 7604(a). While this Court has authority to establish8

deadlines for unreasonably delayed compliance with i ts own remand orders in the context of a mandamus petition, no such petition has been filed here, nor could such extraordinary relief possibly be justified on the present record, where the requested remand has not even been granted yet. See , e.g. , NRDC v. EPA , 489 F.3d 1364, 1375 (D.C. Cir. 2007) (“We decline to set a two year limit on EPA’s proceedings on remand as the NRDC requests; mandamus affords a remedy for undue delay.”); North Carolina v. EPA , 550 F.3d 1176, 1178 (D.C. Cir. 2008) (per curiam); NRDC v . EPA , 706 F.3d 428, 437 n.10 (D.C. Cir. 2013) . 4 Obviously, it is impossible to say that EPA has unreasonably delayed com pliance with an order that has not been issued yet. And because no actionable “unreasonable delay” has occurred

– that is, be cause the Court does not have before it a proper petition for mandamus relief

– the course of proceedings in this case to date is irrelevant to the question of what prospective relief the Court

4 Environm ental Def. Fund v. EPA , 852 F.2d 1316 (D.C. Cir. 1988) is not a relevant precedent. There, EPA had missed by nearly five years a deadline in the Resource Conservation and Recovery Act (“RCRA”) to complete certain studies and submit them

to Congress , and the Court found that EPA a lso was in violatio n of a court - order ed deadline . Id. at 1 331. Petitioners further cite EPA’s January 2013 promulgation of the final revised national am bient air quality standards (“ NAAQS ”) f

or particulate matter, which also is inapposite; that rulemaking was subject to a consent decree deadline agreed to after EPA missed the Clean Air Act’s five - year re view deadline for the particulate matter NAAQS and was sued in district court under 42 U.S.C. § 7604(a).9

should grant. But even if it was appropriate to consider the history of this matter, a fair reading of it would support EPA’s position, not Petitioners’. First, it is inaccurate to say that EPA’s preamble statement setting forth the CAIR - RACT determination poses a “threat to public health.” Petitioners’ Res p. at 8. The preamble statement is not self - im plem enting. R ather, CAIR RACT can only be implemented if and when a State submits SIP revisions relying on that determination, and EPA approves such a submission. Petitioners , however, have not identified even a s ingle SIP approval that relied on the CAIR - RACT determination. Indeed, as shown above, EPA’s practice since the Court’s 2009 decision is not to rely on either the NO X SIP Call - RACT determination or the CAIR - RACT determination (or presump tion) , but instead to evaluate RACT com pliance by considering, inter alia , the controls that will be installed at sources in each pertinent nonattainment area and the emissions reductions obtained or expected from such sources. Supra at 6 - 7 (citing recent proposed and final SIP approval actions). Second, there has been no previous “track record of delay” that would justify im posing an arbitrary six - mo nth deadline on remand. Petitioners’ Resp. at 8. With respect to the NO X SIP Call - RACT determination, EPA has responded appropriately to the Court’s 2009 remand by adopting precisely the approach the10

Court indicated would be necessary to comply with the statutory mandate. Com pare , e.g. , NRDC , 571 F.3d at 1258, with 78 Fed. Reg. at 15,901 - 02. With re spect to the CAIR - RACT determination, all parties in this case either joined in requesting, or did not oppose, abeyance of further judicial proceedings until this year pending the outcome of the North Carolina and EME Homer City litigation. See EPA Mot. at 9 n.4 & 10 - 12. 5 In the m eantim e, as noted above, EPA’s practice is not to rely on the CAIR - RACT determination as a basis f or approving SIPs but, instead, to conduct the type of area - specific analysis that the NRDC Court held is necessary to com

ply with the statute’s RACT requirements. Supra at 6 - 7. Because EPA is already taking this area - specific approach for evaluating RACT com pliance when reviewing SIP submissions, even if NRDC’s request for a deadline may properly be considered here, it should still be denied as unwarranted. **CONCLUSION** For the foregoing reasons and those given in EPA’s initial motion, the Court should grant EPA’s motion and issue an order containing the relief EPA specified .

5 This Court on its own motion restored this case to active st atus following the denial of rehearing petitions in EME Homer City . See Clerk’s Order dated Feb. 22, 2013. Subsequently, EPA and other parties filed petitions for certiorari requesting the Supreme Court’s review of this Court’s decision in EME Homer City . 81 U.S.L.W. 3567 (Nos. 12 - 1182 & 12 - 1183). On June 24, 2013, the Suprem e Court granted certiorari with respect to the questions presented by petition number 12 - 1182. EPA v. EME Homer City Generation, L.P. , 2013 WL 1283839 (U.S.), 81 U.S.L.W. 3567.11 Respectfully submitted, ROBERT G. DREHER Acting Assistant Attorney General Environm ent and Natural Resources Division DATED: July 1 , 2013 /s / Brian H. Lynk BRIAN H. LYNK U.S. Department of Justice Environm ental Defense Section P.O. Box 7611 Washington, DC 200 44 (202) 514 - 6187 Counsel for Respondent EPA OF COUNSEL: SONJA L. RODMAN Office of General Counsel U.S. Environmental Protection Agency 1200 Pennsylvania Ave., NW Washington, DC 2046012 **CERTIFICATE OF SERVICE** I, the undersign ed, hereby certify that on July 1 , 2013, I caused a true and correct copy of the foregoing to be served by electronic transmission to each of the following counsel: David Samuel Baron Earthjustice Legal Defense Fund 1625 Massachusetts Ave., NW, Suite 702 Washington, D.C. 20036 dbaron@earthjustice.org Counsel for Petitioner Natural Resources Defense Council Jon C. Martin Attorney General’s Office of the State of New Jersey Division of Law 25 Market Street P.O. Box 093, Richard J. Hughes Justice Complex Trenton, NJ 08625 - 0093 jon.martin @dol.lps.state.nj.us Counsel for Petitioner the State of New Je rsey Charles Howland Knauss Shannon S. Broome Katten Muchin Rosenman LLP 2900 K Street, NW, North Tower - Suite 200 Washington, DC 20007 - 5118 chuck.knauss@kattenlaw.com shannon.broome@kattenlaw.com Counsel for Intervenors American Fuel & Petrochemical Manufacturers and American Petroleum Institute13

Norm an William

Fichthorn Hunton & Williams LLP 1900 K Street, NW, Suite 1200 Washington, D.C. 20006 nfichthorn@hunton.com clangworthy@hunton.com awood@hunton.com Counsel for Intervenor Utility Air Regulatory Group Morgan Coste llo Attorney General’s Office of the State of New York The Capitol New York State Department of Law Albany, NY 12224 - 0341 mo rgan.costello@ag.ny.gov Counsel for Intervenor the State of New York Kim berly P. Massicotte Scott N. Koschwitz Attorney General’s Office of the State of Connecticut 55 Elm Street P.O. Box 120 Hartford, CT 06141 - 0120 kim berly.massicotte@ct.gov scott.koschwitz@ct.gov Counsel for Intervenor the State of Connecticut Dated: July 1 , 2013 /s/ Brian H. Lynk Brian H. Lynk