## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 09

- 1405 & 10

- 2123 N ATURAL R ESO URC ES D EFE NSE C OUN CIL an d S I ERRA C LU B , I NC ., P etitio ners , v. L I S A P. J A CK S ON, Adm i ni st r at o r o fthe En vi ro nm entalPro tect i on Agency, Res pond e nt
. A IR P ERMI T T I NG F ORUM, e tal ., Inte rve ning Respondents

.

Pe titions fo r Review o f O rde rs of the Environmental Protection Agency
A RG UE D J UNE 3, 2011

— D ECI DE D J UNE 16, 2011

Befo reE A STE RB ROOK

,Chie f Judge,andE VANS and W ILLIAMS

, Cir cu i t Judges . E A S T E RB R OO K, Chi e

f Judg e . T w o sect i ons ofthe Clea n A ir A c t p r o v i d e th at n eit h er n at ion al n or st at e o ffici als m ay m ake any changes thatcause ai r quali ty to2 N os. 09

- 1405 & 10

- 2123 deter i or ate i n part s o f the countr y that hav e y et to att ai n the re quir ed sta nd ar d. Se e s ecti ons 110( l ) and 193 , codi fi ed at 42 U
. S. C. §§ 7410 ( l ) , 75 15. S ee al so Envi r onm enta l D efense v. D uk e E nergy C o rp . , 5 49 U
. S. 561 (2007), w h i c h d i s c u s s e s th e n e w s o u r c e r e v i e w ( NSR ) pro gr am aga i nst the bac kgro und o fthe preve nti on- of

- si gni fi cantdet er i o r at i o n ( PSD or a n ti-b ac ks lid in g) re q u ire m en t. In 2002 the En vi ro nm entalPro tect i on Agency chang ed th e ru les th at d et er m i n e w h en p ollu te rs n ee d p er m its in or der t o m odi fy e xi sting f aci l i ti es

— and, i ftheyneed perm i ts, wh at re stri cti ons they car ry . 67Fe d. Reg. 80 , 186 ( Dec. 31 , 20 02)
. These n ew r ule s were chal l enged as vi ol ati ons of§§ 74 10( l ) and 75 15, am ong othe r sta tutes , bu t the D.C . C ir cu it conclu d ed that the n ew rules are ra ti on al an d consi ste nt with the Act. Ne w Yo rkv . EPA , 413 F.3 d 3 ( D .C
. Cir. 2005). A long the w ay, th e cou rt de e med unri pe ana r g ume nttha tthe a g e nc y ’ s n e w a pproa ch actual ly w oul d l ead to m or e e m i ssi ons. 41 3 F
. 3d at 43. The EP A ’ s m odel s p roj ect that the ne w approa ch w i l l have neutr alo r b en efi ci aleffects o n agg re gat e e m i ssi o ns ; whethe r th at i s true , o r i ns te ad ba ck sl i di ng occur s, depend s o n data r atherthan l aw yer s’ ar gum ents, the c o ur ts t a t e d. B u sin es se s h av e a rg u ed th atth e n ew ap p ro ac his too str i ctr athe r tha n t o o l ax . Ourde ci si o n in U nited Sta tes v. C inergy C o rp . , 62 3 F .3d 45 5 ( 7th Ci r. 20 10) , i l l ustr at es ho w on e as pec t o fthe c ur r en t appr o ac h s ubs ta nt i a l l y lim ite d th e a llow ab le e m iss ion s fro m ag in g c oa lfi red pow er plan ts in nee d of m ajor rep airs

— so m uch so tha t a di st r i ctc o ur t o r der ed ane nt i r e pl an t sh ut d o wna n d e mi s s i o n s fr o m o th e r p l a n t s r e d uc e d. WeN os. 09

- 1405 & 10

- 2123 3

re ver sed thatdeci si on, h old i ng tha t the new app ro ach do es no t appl y to th e r epa i r wor k i n que st i o n, bu t o ur op in ion an d th e d ist ric t c o u rt ’s d ec isio n inCi ne rgy sh o w ho w the ne w appr o ac h c anl i m i t ai r po l l ut i o n. The Natur alRe so ur ce s Defen se Co unc i l a nd the Sie rra C lu b , ho w ev er , are co n vin c ed th at th e 2 00 2 re vis i o n s w i l l ma k e p o l l u t i o n w o r s e . Wi s c o n s i n ’ s l a t e s ti mple m entat ion pl an i ncl ud es features fro m the 2002 federa l r egulat i ons. The EP Aa ppr o ve d W i sc o ns i n’ s pl an . 72 Fed. Reg. 19 ,82 9 (A pr. 20 , 20 07) ; 73 Fe d. Reg. 76 , 560 ( Dec
. 17, 20 08 ) ; 7 5 F ed. Re g . 1 0, 41 5 ( M ar . 8 , 2 01 0) ( den y i ng peti ti on f orr eco nsi derat i on)
. The N RDC a nd the Sierra Cl ub ha ve f i l ed pet i ti o ns f o r r ev i ew, whi chr epe ata r g um en ts t h a t fa iled to p er su ad e t h e D .C . C irc u it in New Y o rk . Th is p ro c ee d in g is t h e firs t c h alle n ge to a sp ec ific sta te pla n that i m p lem ents the 2 002 changes ; o ne o ther is pen d ing in the Sixth C ir c u it, and perh ap s m ore are i n the w or ks. T h re e a sp ec ts o ft h e 2 00 2 re vis ion s w er e c on te st ed in New Yo rkand again he re. Fi rst, th e 2002 ap p roach de term in es w h et h er a m od ific a t i on req u ire s a p er m it (a n d , i f so, wh at contr ol s a re nece ssa ry ) b y com pari ng ac tual em iss ion s in t h e p as t w ith p roj ec te d ac tu al e m iss ion s in th e futu re

— r athe r tha n b y c om p ar i ngthe maxi m um p otenti alem i ssi ons bef or e the m odi fi cati on a gainst m ax im um pote nti al em i ssi ons after
. The 20 02 rul es al so ch an g e th e per i o d i n whi chthe se a r e co m p ared , a sk i ng about em i ss ion s over the c ours e o fa yea r ra therthan em issi ons per h ou r. ( T he ol d ap p r o ach f avored repa irs that i ncre ase d the nu m b ero fhour s a pl ant co uld o perat e4 N os. 09

- 1405 & 10

- 2123

w hi l e l eaving em i ssi ons per hour unchanged; the ne w appr o ac h tr ea ts m o r e ho ur s at th e sa m e l ev el p er hour j us t li ke it t reats h olding con stan t the nu m ber of hou rs b ute mi t t i ngmo r e p e r h o ur . ) I t wa s the a c t ua l

- t o - pr oj e c t e dac tu al com p ar iso n th at affe c te d th e elec tr ic ut ilit y in Cin e rgy . Se cond, the 2002 a p proa ch al l ows pol l uter s t o sel ect tw o yea rs fro m a ten- yea r base l i ne to m easure thei r past em i ssi ons; the for m erapproa ch used a shor terbas el i ne. Thir d, the 2 002 approach al l ows a pl antw i de appli cabi l i ty l i m i tat i ons ( PAL ) cal cul ati on, si m i l arto the “bubbl e” s us ta i ne d i n C hev ron U .S.A . Inc. v. Na tura l R esou rces D e f e ns eCounc i l, Inc . , 467 U
. S. 837 (19 8 4 ). U nd er PALa pol l utercan choos e t o tr eati ts enti re pl ant a s the so urce ofe m i ss i o ns , whi cha l l o ws i t to i nc r ea se e m i ss i o ns f ro m o ne m achi ne o r proc es s as l ong as i t m ake s o ff settingr edu ct i o ns e l se wher e i n the pl an t. Underthe PALp ro gr am , a p ollu te r n ee d s a p er m it t o m ak e m od ifi cati ons or repai rs o nl y when they w i l l i ncre ase em i ssi ons f ro m the pla nt as a w hol e. The NRDC and the Si er ra Cl ub obs er ve that al l thr ee ofthes e chang es coul d l ead to m or e pol l uti on. S om e, su c h as th e a c tu al-t o-p roj ec te d -ac tu al c om p ar iso n, cou ld d o this by m aking n ew perm its so onerou s tha t a fi rm wi l l c h o o s e t o r u n a n o l d p l a n ti n t o th e g r o und wi t hout re pai rs , av oid i ng a need to ge t a per m i t form odi fi cati ons, ev en tho ugh ol d plants ge nera l l y a re di rt i er than new ones ( ornewly re pai re d ones)

. Others , s u ch as th e t e n - y ea r b as elin e, co u ld allow firm s t o c h oo se th eir tw o h igh es t-e m iss ion s y ea rs from th e d ec a d e, m ak in g it see m as i fthe i r p o l l ut i o n ha s g o ne do wn e v e n tho ughN os. 09

- 1405 & 10

- 2123 5 to day ’ s emi ss i o ns a r e hi gh er th anthe a ve r ag e f r o m the dec a d e ( o r h i g h e r th a n th e a mo u n t c o mpu t e d u n d e r t he sh o r te r b as el i ne unde r the f o r m err ules )
. Ev enthe pla ntw i de l i m i t co uld incre ase p ol l uti on, i fem i tte rs can use r educti ons they w oul d have m ade anyway t o off set i ncre ases e l sewhere i n a pl ant, i ncre ase s that would have re quir ed thei r own per m i ts und erpre - 2002 r ule s. These ar e not new ar gum ents. They w er e p resente d to th e D .C . C irc u it in New Yo rk, and that cou rt su sta i ned the rule s. S ee New Yo rk, 4 1 3 F
. 3 d a t 2 1

– 3 8. The D. C. Cir cui t obser ved thatthe EP Awas w el l aware ofthes e po ss ibi l i ti es a nd t o o kthe m i nt o a cc o untwhene va l uating th e n et effe c ts of th e 2 00 2 re v i s i o n s . Th e a ge n c y’s m od els proj ecte d that the 20 02 changes would ei therr educe pol l uti on o r have no neteffect. A s the D. C. Cir c uitsa w thi ngs, sci enti fi c es ti m ate s, pl us the presum pti on that an ag en cy’ s e sti m ate s a re r ati onal, se e FCC v. Nat i onal Cit ize ns Com m it t e ef

orBr oadc as t i ng, 436 U
. S. 775 (1978), beatl aw yer s’ co nj ectur es. Inth e c u rre n t litig at ion, NRDC a nd th e S i er r a Cl ub obs er ve that the EP Ais rel yi ng o n the sam e m odel s that it u se d in 2 00 2 a n d h as n o b et te r r ea so n n ow th an it di d then to thi nktha t a co nc r et e pl an, s ucha s W i sc o nsi n’s , wil l curt ai l em i ss ion s. B ut i fthe EP Ai s i n the s a me p o s i t i o n a s 2 0 0 2 ( a n d 2 0 0 5 ) , s o a r e p e t i t i o n e r s . The l i ne up i s st i l l : mode l s o n o ne s i de, l awy er s’ t al ko n the othe r. A s i n 2002 and 2 005, the m odel s su p p ly su bsta nti alev i dence f orthe EP A ’s d ec isio n an d sh ow th at it i s nei therarbi tr ar y no r capri ci ous. A t or alar gum ent, co unself orpeti ti oner s a nd the EP A tol d us that abo ut hal fo fthe sta tes have change d6 N os. 09

- 1405 & 10

- 2123 thei r i m ple m entat i on pl ans t o tr ack the 2 002 re vi si ons. W e a ske d w hat e ffect these change s hav e had o n ag gr egat e e m i ssi ons: nei thersi de knew, an d w e hav e no t fou n d an y p u b lish ed st u d ies on t h e s u bj ec t. C ou n se l d id k no w, a nd de ba te d the s i g ni fi ca nc e o f, ho w m an y perm i ts have b een i ssued i n sev er alo fthe sta tes under o ne o r a no th erfeatu r e o fthe 2 00 2 appr o ac h. Butthe st atut es concern the qua nt i tyo fe m i ss i o ns , no t th e quanti ty ofper m i ts. Peti ti oner s r el y o n a pr edi ction that the s taffo fW i sconsin’s Departm en t o fN atur alReso urces m ade i n 200 3, a p r e di c t i o n tha tthe s t a t e a g e nc y h a s s i nc e r e pudi a t e d. They co m pla i n that the EP Adi d n ot anal yze thi s pre dicti on a dequ ate l y. But the w ay to tes t the EP A ’s m od els is n o tt o c o mp a r e th e m w i th s o me o n e e l s e ’ s b a l l p a r kn u mber s. ( The sta te age ncy’ s s taffdid n ot have a m odel

— at lea st, di d no t r ev ea l o ne

—b ut mad e wha t s e e ms to h av e been a bac k- of

- the- envel ope ca l cul ati on. The 20 03 predi cti on co m pri ses e igh t Po w er Poi nt sl i des thatgi ve c o n c l u s i o n s wi th o u ta n y s u p p o r t i n gr a t i o n al e, p l u s t wo pages oft ables thatdo notev en hi nt atthe m etho d of th eir d erivation.) Th e w ay to test a m od el i s to c o m p a re i ts pr oj ec ti o n a g ains t r ea lo ut co m es . Al te r na ti ve l y o ne m i g htv al i dat e a m o delb y “ r et r o di ct i o n”

— u s i n g t he m odelto “pre dict ” pastev ents. The two- i n-t en r u l e, f or ex am p le, m ightal l ow a busi ness to i nc re as e aver age em i ssi ons, but do es i t? S o f ar, w e hav e no answer t o that que st i o n, ei th er f r o m ac tu al ex per i en ce i n adopt i ng st at es o r thr o ug h e ff o r ts t o t es t a m o delb y r et r o di ct i o n. The experi ence i n the sta tes thathave i m ple m ented the 2002 r evi si ons m ay vi nd i cate the EP Ao r m ay re futeN os. 09

- 1405 & 10

- 2123 7 i t; as l ong as the j ud i ci ar y re m ains b ehi nd the vei l o f i gnor ance, i t m ust a ccept the EP A ’ s p r oj e c t i o n s . An ag en cytha t cli ng s t o pr edi ct i o ns r athe r tha n pe r f o r m i ng re adily a vai l abl e t est s m ay run int o tro ubl e. S ee B ech tel v. F CC, 10 F. 3d 875 ( D.C. Ci r. 19 93)
. A t s om e poin t, prefer rin g p re d ict ion s o ve r fac ts is n o l o n ge r ra tio n al. Bu t chal l enger s who f ai l to put data in the adm i ni str ative record

— l i kel y b ecause thi s r eco rd was assem b l ed b e f o re d at a fro m oth er st at es be c am e a va ilab le

— c a nn ot com pla i n that the a gencyco nti nues to r el y o n m odel s. Th i s c o nc l us i o n mak e s i tu nn eces s a r y t o de c i de w hether§7 515 appli es to the 2 002 re gul at i on a nd st ate p lan s t h at re l y o n it. Th e D .C . C irc u it a lso d u c ke d th is questi on. 41 3 F
. 3d at 43. S ection 75 15 say s that a st ate can’ t cha nge any “contr olrequi re m ent” that w as “i n effect bef or e Novem ber15, 1990” i n a no natta i nm ent a re a, unle ss “the m odi fi cati on insures equiva lent orgr eat er emi ssi o n r edu ct i o ns ”. Int er ve no r s ha ve a r g ue d tha t th e new so u rc e revi ew pro gr am i s no t a “co ntro l r equi re m ent”; r eso l uti on ofthat ar gum ent c an awaitano therday. A f ew o th ers ubj ec ts r equi r e br i efa tt en ti o n. Peti ti oner s s ay that the EPAsho uld have al l owed an ot h er r o u n d of co m m en ts aft er res p on d in g t o th eir com m ents on t h e W i sco nsi n pla n. That’ s no t ho w rul em aking works

. A n age ncy p u b li shes draft r ule s; p r i v a t e p a r t i e s c o mme n t ; th e a g e n c y a n a l y z e s th e c o mme n t s a n d a d o p t s a r u l e , ma k i n gr e v i s i o n s a s n e e de d. U nl e s s the r e v i s i o ns mat e r i a l l y change the text, add i ng features thatthe com m entat or s co uld no t have an tic ip at ed , th er e’s n o n ee d for a n ot h er rou n d of p u b lic8 N os. 09

- 1405 & 10

- 2123

c om m en ts
. A m erica n M edic a l A ssoc ia tio n v . U nited Sta tes , 88 7 F .2d 76 0, 76 7– 69 (7t h C ir. 19 89 ); O m nipoi ntCorp. v. F CC, 7 8 F
. 3d 62 0, 6 31 ( D. C. Ci r . 1996). I n o th erwor ds, the p u b li c g ets to co m m ent o n the propos ed rul es, noto n th e ag en cy ’ s r es po ns e to e ar l i erpub l i c co m m en ts
. The EP Adid not m ake an y m aterial ch an ge to W iscons in’s propos ed im ple m entat i on pl an, so ther e was no need f orano therr ound ofco m m ents. Peti ti oner s co ntend that W i sco nsi n’s pl an co ntai ns a te c h n ica l err or in it s d efin itio n of “m ajor m od ifica tio n .” This w as not poi n te d o u t to the EP Aduri ng the r ule

m aking and so h as notbee n pres er ved f orj ud i ci alr evi ew . Com pla i na n ts m ust e xhaust thei r adm i ni str ati ve re m edi es. A fi nal o bser vati on: I fW i sc onsin’ s i m ple m entat i on o f the 2 002 re vi si ons turns out to al l ow m or e e m i ssi ons, then the s tat e m u st do s om ethi ng el se ( orso m ethi ng m or e) to curta i l pol l ution . Th e EP A ’s d ec isio n th at W isc on sin mayp uti t s pl an i nt o p r a c t i c e a nd fi nd o utwh a th a ppen s do es no t r el i ev e the st at e o ftha t st atut o r y o bl i g at i o n. Th e p e t i t i o ns f o r r e v i e w a r e de ni e d.

6- 16- 11