William H. Rehnquist: We'll hear argument now in No. 02-658, Alaska Department of Environmental Conservation v. the Environmental Protection Agency. Mr. Franklin.
Jonathan S. Franklin: Mr. Chief Justice, and may it please the Court: The question in this case is whether the Federal Environmental Protection Agency has the legal authority to override by fiat a discretionary determination that Congress expressly directed be made instead by the State of Alaska, which Congress trusted to exercise its own independent judgment according to local priorities and local conditions. We submit that the answer to that question is no. When Congress wanted to give EPA the authority to... under the Clean Air Act to review and approve the substance of individual State determinations of the best available control technology, or BACT, Congress said so expressly. It gave EPA no such role in the circumstances of this case.
Sandra Day O'Connor: Well, do you think that the statute allows EPA to at least say, Alaska, you didn't go through the proper analysis here, you didn't consider, as contemplated by the statute, some of the costs and concerns that would enable a State to say, fine, you go ahead with less than the ultimate equipment? Now, can EPA, under the statute, say, Alaska, you just didn't follow the required procedures?
Jonathan S. Franklin: EPA can say, yes, Alaska, you did not consider the statutory factors, but that is not the contention that's being made in this case, Your Honor.
Sandra Day O'Connor: Well, isn't that an element here in fact? Wasn't that part of EPA's concern? Is it true that the owner of the mine wouldn't even furnish certain financial information to enable the State to make that analysis?
Jonathan S. Franklin: Two points, Your Honor. The contention that's being made here is not that Alaska failed to consider the factors that Congress set forth. The contention is that they didn't do it in the way that... that EPA might have done it if EPA were the permitting authority with regard--
Antonin Scalia: Well, that's a... that's a pretty fine line. I mean, I'm... I'm really surprised by... by your concession. I... I would have thought a much more rational interpretation of the statute is that, yes, the State has certain obligations under the statute to consider the factors, but if they were not considered, the person who would bring them to account for not considering them is initially the State courts and then, on certiorari, to this Court. I thought your position was that this is none of EPA's business--
Jonathan S. Franklin: --It is our--
Antonin Scalia: --that this... that this discretionary determination is given to the States, and when the States are reviewed, they should be reviewed in court.
Jonathan S. Franklin: --That is our... our position, Your Honor.
Antonin Scalia: Well, why isn't it for... for the... for the hypothetical that Justice O'Connor gives as well as for everything else?
Jonathan S. Franklin: I think that the... the line is whether the requirements of the statute were followed or not. In this case, Alaska has done precisely that which it--
Antonin Scalia: Well, assuming they weren't followed, is your position that when they are not followed, EPA can call them to account?
Jonathan S. Franklin: --EPA has the authority to enforce the requirements and prohibitions of the act, but we believe that authority should be narrowly circumscribed to the bounds that Congress set for the EPA.
John Paul Stevens: Well, let... let me intervene and... and suggest this. Could you have answered Justice O'Connor's question this way? Oh, yes, the EPA can... can complain and make its case that the State did not exercise its discretion the right way, but it can't do so by just issuing an order. It has to go through the judicial review process. Would... would that... would that answer your case or--
Jonathan S. Franklin: Yes.
John Paul Stevens: --or am I misstating the theory here?
Jonathan S. Franklin: No, you're not, Your Honor. The... the question in this case is not whether the claims that EPA raises here will be subject to review. The question is how, when, and in what manner, and--
John Paul Stevens: Okay. Now, could... could the EPA have gone to Federal court and say, oh, well, this discretion was exercised in good faith and so forth, but it was... it was wrong? It didn't comply with the statute. Could it go to Federal court?
Jonathan S. Franklin: --if it's contention is it didn't comply with the express terms of the statute--
John Paul Stevens: In... in this case... in this case--
Jonathan S. Franklin: --In this case, no.
John Paul Stevens: --as Justice O'Connor said, it didn't give... oh, it cannot go to Federal court?
Jonathan S. Franklin: Not in this case, Your Honor. It could under the State review procedure, and I think there's an open question as to whether--
Stephen G. Breyer: Well, why couldn't it? Why couldn't it? They simply proceed under 28 U.S.C. 1345.
Jonathan S. Franklin: --Exactly.
Stephen G. Breyer: Now, what they do is they say, we're now in Federal court. There's a State law here. The State law happens to say that you cannot be arbitrary.
Jonathan S. Franklin: Correct.
Stephen G. Breyer: And so now they say, we're making the same claim identically. They were arbitrary, capricious, abuse of discretion. But it's under State law. And now, my goodness, what is this case about?
Jonathan S. Franklin: Exactly.
Stephen G. Breyer: You say that they should have gone into the Ninth Circuit under 1345 arguing it was arbitrary, capricious under State law, and they say that they should be in the Ninth Circuit arguing that it's arbitrary and capricious under Federal law, where I've never heard that there's any difference between arbitrary and capricious under State law or under Federal law. It's just whether it's arbitrary and capricious.
Jonathan S. Franklin: There are two important differences, Your Honor, and... and I think they would have... 1345 is the statute I was just about to cite, and I think they would have the authority to go into Federal court under State law. Two important distinctions. First, Your Honor, the... the... going through the State process would require that they go through, in addition to the State judicial review process, the State administrative review process. In Alaska, that would have allowed Alaska's Department of Environmental Conservation a de novo administrative hearing at which they could have presented a full administrative record, additional witnesses, and they would have had the opportunity to further clarify and defend their decision. The second point, Your Honor, is that under the fiat that they have exercised here by order, it does not accord Alaska's determination the kind of deference that it would have received under the State process. The point that we're making, Your Honor, is that the State review process is adequate to address all the concerns--
Stephen G. Breyer: They do go into Federal court, and I do see your point. What I am curious about is I think there are like maybe a handful of administrative law experts who might have thought there was really some kind of difference between whether you're in Federal court under the State words or in Federal court under the Federal words when the words are identical. And there may be somebody who thinks there's a difference between what you told Justice O'Connor and what you've told Justice Scalia, but I'm not one of them. I don't understand how you reconcile those things. So if we assume Congress is not an expert, why wouldn't they have just meant by this, well, EPA, you stay out of it unless you think what they're doing is unreasonable? If what you think they're doing is unreasonable, you have the authority to come in and go to Federal court if you want. That would be simple. Everybody would understand it.
Jonathan S. Franklin: --If Congress had made that clear in the statute, Your Honor, we would not be here. The reason that Congress did not is that when Congress wanted to give EPA the authority to review and approve the substance of individual State BACT determinations, it said so expressly in section 7475--
Ruth Bader Ginsburg: Mr. Franklin--
Jonathan S. Franklin: --Yes.
Ruth Bader Ginsburg: --perhaps I misunderstood your brief, but I thought that you were making the distinction in your brief between the substance of a decision and the procedural motions. I thought you conceded that if the Alaska agency simply said, well, the company wants Low NOx, so they're going to get it, and we're not going to go through any feasibility analysis. I thought your brief conceded that if that were the case, there would be access to the Federal court on the part of EPA.
Jonathan S. Franklin: Yes, Your Honor, but that is not what we are here about today. What we are here about today is EPA--
Ruth Bader Ginsburg: Well, why isn't it, going back to Justice O'Connor's question, when the EPA is saying, in essence, you didn't really go through the feasibility analysis because you didn't even ask for the relevant information?
Jonathan S. Franklin: --To get back to that, Your Honor, the... what EPA is saying is that we did go through the factors, but we didn't weigh them the way EPA would. And with respect to the economic considerations, Your Honor, Alaska has followed EPA's own guidance on this which says quite clearly that the individual circumstances and finances of a permit... an applicant are not to be considered in the analysis. So it was not relevant whether the technology would have bankrupted this company or not. What Alaska found to be relevant and what it was its statutory prerogative to find relevant and as a matter of its own local priorities was a comparison of the costs between this applicant and other similarly situated applicants in recent decisions.
Antonin Scalia: So you want-- --Mr. Franklin, it's not just a question of coming into Federal court.
Jonathan S. Franklin: No.
Antonin Scalia: It's not just a question of the agency coming into Federal court the way a private citizen would and challenging the State action. It's a matter of the agency issuing an order--
Jonathan S. Franklin: Exactly.
Antonin Scalia: --which order is presumptively valid and which would have to be deferred to by the Federal court presumably unless the order was arbitrary or capricious.
Jonathan S. Franklin: And that is what I was--
Antonin Scalia: So you'd be deciding in Federal court whether it was arbitrary or capricious for EPA to find the State to have been arbitrary or capricious, a very... a very refined determination, to put it mildly.
Jonathan S. Franklin: --Yes, Your Honor, and that is--
Antonin Scalia: But isn't that the problem? It isn't just a matter of getting into Federal court. It's a matter of how you get into Federal court.
Jonathan S. Franklin: --Exactly. As I was saying before, it's not a question of... of whether these things will be reviewed but how, and more specifically, whether these issues which are--
Ruth Bader Ginsburg: But it is. There's a difference because you're... you said that the review... the reviewing authority would be the State court. So you aren't talking about whether there would be Federal court review, and I think in response to Justice Scalia, now you are saying that the route is the State court. You're agreeing with him when he said the route is the State court and this Court on cert. Do you see any role for the Federal courts?
Jonathan S. Franklin: --Well, as Justice Breyer pointed out, it's an open question. We believe that the Federal courts... if EPA were instituting this, the State review procedure, under section... 28 U.S.C., section 1345, there may be Federal jurisdiction because that confers original Federal jurisdiction on any action brought by a Federal agency. But that's a narrow, limited scope.
Antonin Scalia: Well, but the action has to properly lie in order for it to be successful, and when you have... on what basis would the agency be suing?
Jonathan S. Franklin: They would be suing under the State review procedure, Your Honor. It would be their option we think, and it's an open question. It's not one that I think this Court--
Stephen G. Breyer: I don't think they could do it. Suppose that the... a State agency decides the best available control technology is a ceiling fan that they brought up to New Orleans... from New Orleans. They bought it and brought it up to Alaska. Now, EPA looks at that and says, no, no, this is going too far. Now, what in your opinion is supposed to happen?
Jonathan S. Franklin: --Well, in... in our opinion in that situation, Your Honor, it would be subject to the APA-type review and it would be struck down. Again, the question is not whether that kind of review of--
Stephen G. Breyer: What's the role of the Federal court?
Jonathan S. Franklin: --Well, if EPA is the one bringing the action, I... I would accept Your Honor's premise that once it has proceeded through the comment process, once it has proceeded through the administrative review process... and frankly, we think that that particular matter would end there. No State would do that because the States take their responsibilities seriously to implement these statutes. If, however, there were any question that remained at the end of that process, which EPA circumvented in this case by fiat, then and only in that event would EPA be able to seek judicial review, but it would be an APA case. It would not be--
Sandra Day O'Connor: Well, I don't... I don't understand anyway because the statute that we're looking at, section 113(a)(5) says that if EPA finds a State is not acting in compliance with any requirement or prohibition of the PSD program--
Jonathan S. Franklin: --Yes.
Sandra Day O'Connor: --EPA can stop construction and issue orders. It can also bring a civil suit for injunctive or monetary relief. Suppose it just puts out an order and says, look, Alaska, you did not determine what costs would mean to the mine in terms of profitability, employment, or global competitiveness, and therefore you didn't meet the requirements of the PSD statute, and you stop any construction now on the mine expansion. That would put the onus on the mine owner or the State to go to court somewhere, wouldn't it?
Jonathan S. Franklin: It would and... and that's precisely the reversal of the kind of presumption of regularity that the States are entitled to in these kinds of cases.
David H. Souter: Mr. Franklin-- --So under 17... or what is it... 7413(a)(5)(C), which is 14a of your brief toward the bottom, you say that in this case the agency cannot invoke that section to issue an order or to go to court.
Jonathan S. Franklin: That is correct, Your Honor.
David H. Souter: All right. You have to say that to be consistent.
Jonathan S. Franklin: Yes.
David H. Souter: Now, if you want us to write the opinion your way, you would say under 17... 7413(a)(5), the State... the EPA cannot issue an order barring construction unless. Now you fill in the blank.
Jonathan S. Franklin: Unless a State has... if there was a demonstrated violation of an express statutory requirement. For example, a State has not--
David H. Souter: Well--
Jonathan S. Franklin: --issued a permit to begin with or a State has not put a BACT limitation into a permit. Those are the kind--
David H. Souter: --Unless there's a violation of an express statutory requirement, but the Government is going to come up and say, there was a... there was a violation of the statute defining BACT.
Jonathan S. Franklin: --But in this case, Your Honor, that is not with respect to... to the EPA, that's not what they're saying. They're saying that we did go through the various factors that the BACT statute requires us to go through. In their opinion we didn't weigh them the proper way and under the proper policies. We, in fact, disagree strongly with that, but that is a contention that is raised every day of the week under administrative procedure law. It's not a contention that the express requirements of the statute--
David H. Souter: What your formulation is, is that they did not follow a requirement of the statute. And I just don't see how that gets you there. You're making a distinction between the express requirements of the statute and the obviously implicit requirements of the statute? Certainly it... it is implicit in the statute that the State's decision must be made rationally and not arbitrarily. Don't you think that that's a requirement of law?
Jonathan S. Franklin: --It is certainly a requirement of law, Your Honor, but it is a background principle that derives ultimately, we think, from the Due Process Clause not a unstated requirement of the Clean Air Act. And the important thing is what did Congress intend for EPA to be able to--
Stephen G. Breyer: I mean, that isn't going to get... the reason I think we're... I'm having the same trouble Justice Scalia is because the kind of... in my mind anyway, I tend to think of a classical definition of arbitrary and capricious as sometimes involving they didn't follow what the statute told them to do. Sometimes they did what the statute told them not to do. Sometimes they didn't get the weight right. And I put all those things... and I think a lot of people do... in the same box called arbitrary and unreasonable, capricious, and you try to draw some kind of line between those things. I don't know how to do it, and I don't think many judges would.
Jonathan S. Franklin: --Well, I think that judges would, Your Honor. It doesn't usually come up because a court, reviewing such a procedure, could... could find the... the order invalid under either basis, either it didn't comply with the statute or it didn't comply with the APA. Here, though, Congress specifically circumscribed the EPA's authority and it did so for a good reason.
David H. Souter: Where is-- --But the language of 113(a)(5) doesn't really seem to be limiting... I'm over here. [Laughter]
Jonathan S. Franklin: Yes, Your Honor.
John Paul Stevens: It doesn't seem to be limiting the authority of EPA. And I'm just wondering just... I'm not sure I totally follow the argument, but I'm just looking at the... that statutory provision. And are you saying that statutory provision does not apply even if the State acted arbitrarily and capriciously?
Jonathan S. Franklin: The statute governs how the agency's... gives the agency the discretion. How the... the agency exercises that discretion is a separate question and one that is traditionally reviewed on a full administrative record by a court, not by EPA acting on its own fiat.
John Paul Stevens: Well, but this... that provision gives the... the EPA the authority to issue certain orders.
Jonathan S. Franklin: Yes.
John Paul Stevens: And is it your position that they did not have the authority to issue the order here or that the order was wrong?
Jonathan S. Franklin: Our... that they did not have the authority because there was not a... a violation of the requirements of the act, which is the only basis--
John Paul Stevens: Even if there were a violation of the requirements of the act, would you say they... if... if there were a violation of the act, would they have the authority to issue it... issue that order?
Jonathan S. Franklin: --If there... if there were a violation of the express requirements of the act, then... then that's what the statute says. But it has to be read in context. It has to be read in context. Particularly when Congress wanted to give EPA the authority to review and approve the substance of these determinations, it said so expressly in one narrow instance that is not applicable here. When a State has--
Ruth Bader Ginsburg: That's in advance of the permit. The fact that... that Congress specified that for certain pollutions, you must, before you give any permit, go to the EPA doesn't exclude that you could have the review after. But I would... after the permit issues. But I would like to ask you. You seem to be saying, well, this is just a determination. They applied the statutory factors. EPA didn't like the way they did it. There seems to be lurking in this a... a difference on what the statute means to this extent. EPA seems to be taking a single source approach. That is, you want a new generator? That generator has to have BACT for that generator. Never mind if you tell us voluntarily you're going to put Low NOx on all of them and the result would be lowering the emissions. In other words, EPA seems to be taking a no-bubble approach to this. You go at it machine by machine--
Jonathan S. Franklin: --Right.
Ruth Bader Ginsburg: --generator by generator, where you're taking the position or Alaska is taking the position that if you can reduce overall emissions by putting the Low NOx on all six generators and in the end have cleaner air, well, then do that and forget about the SCR on one machine. That seems to be a substantive difference about whether BACT applies to the whole setup or machine... generator by generator.
Jonathan S. Franklin: Yes, it is, and we believe that EPA is... is wrong on that. But they're wrong as a matter of policy, Your Honor. The BACT statute gives the States the discretion to weigh, among other factors, environmental factors. We think that is clearly broad enough for the State to take into consideration the overall environmental effect that this--
Ruth Bader Ginsburg: But that's... it's either that you go at it machine... source by source, new source by new source, modification by modification, or you can have the bubble concept. In Chevron, EPA was... was espousing the bubble concept and the Court... this Court said, EPA, that's a reasonable construction of the statute. Now EPA seems to be saying as to this program there is no bubble. You have to look at that machine, that generator in isolation.
Jonathan S. Franklin: --Right.
Ruth Bader Ginsburg: And that seems to be a basic difference on what the statute means, not on... mix it all up and is it arbitrary and capricious.
Jonathan S. Franklin: We think that it's... in fact, there is a difference on... on how it's to be implemented. Congress was very clear here. They understood that States would have different policies, that one State could choose the approach that EPA might choose, which says we are not going to consider the environmental... overall environmental impact here. Another State might view it differently, but that's what Congress wanted to have happen. When EPA issued its orders in this case--
Stephen G. Breyer: But on the facts here I thought... now, tell me if I'm right about this. When I started reading it, I was quite sympathetic to your view that it makes no sense to have more emissions coming out as a result of trying to control this one generator. Their job is to get fewer emissions not more. But then when I read into the record a little bit, it seemed to me that the facts are that by the time this generator 17 came up, it was perfectly apparent that the company had to put the... whatever, some low technology, NOx technology or something on four of the other generators anyway. So that the bottom line is that this bubble has nothing to do with this case because we're talking about one generator coming in in circumstances where the other generators have to be controlled regardless. Am I right?
Jonathan S. Franklin: --You're almost right, Your Honor, but the... the difference is that there... there were four other generators that were subject to the cap, but there were six other generators total.
Stephen G. Breyer: I know, but then we... I had my law clerk go through and do the extra emissions from those other two, and it didn't really make any difference.
Jonathan S. Franklin: It did... it does make a difference, Your Honor.
Stephen G. Breyer: It does?
Jonathan S. Franklin: Because of the assumption that Alaska made, and that is that if you used SCR on MG-17... and this has never been challenged... that... that MG-17 would be the backup generator. It would not be used. Therefore, any emissions savings that you can get off those other two engines, 2 and 6, no matter how small they might be... and I think that they probably come in the neighborhood of 100 tons or so. Any emissions savings that you can get off 2 and 6 add to the bottom line because the assumption that the State has made, which is a... a reasonable and in my view correct assumption, is that MG-17 is not going to be used if it's SCR because SCR has enormous operating costs associated with it. Again, these were the... the policy determinations--
Ruth Bader Ginsburg: If I go-- --I still don't... I don't... I don't see where Justice Breyer's question fits with... with the issue, does the statute dictate BACT on an individual generator? Never mind the rest. In other words, does the act say, no bubble, and that's how EPA seems to be reading the act, that it's not a matter of discretion, that this calls for a new source, modified source, and you just look at that new source and you don't look at the old generators at all.
Jonathan S. Franklin: --You look at the new source, Your Honor, but you're allowed to consider environmental impact in looking at it. And there EPA is wrong, if that's their contention. Their... for example, they... they do not require States, nor could they, to use their top-down methodology. EPA understands... and that is the nub of this case... that the BACT determination is not supposed to be a uniform Federal standard.
Ruth Bader Ginsburg: What... what other method is there besides the top-down? I know both briefs have said it's... it's the way it was done here. That's what EPA recommends, but it isn't inevitable. What else would they use other than top-down?
Jonathan S. Franklin: It could... it could be bottom-up, Your Honor. They could look at each technology and eliminate the ones going up. There's a number of different ways that a State could do it. The point that's being made here, when EPA issued--
Ruth Bader Ginsburg: Is that in fact the situation, that there are other ways, or is it just in theory, but they all use top-down?
Jonathan S. Franklin: --Your Honor, I don't know what every State uses, but I do know that Congress made clear... and the legislative history at page 31 of the Senate report is crystal clear on this point... that each State was to have the discretion to weigh the factors in its own judgment. And... and Congress made clear that a State... it would be permissible for a State to consider such things as anticipated and desired economic development, as well as the amount of the available increment that the State wished a particular source to consume. When--
David H. Souter: Mr.... Mr. Franklin, the... the difficulty that I'm having with... with your argument about the meaning of the statute goes back to your answer I think to Justice Kennedy's question awhile ago. He asked you, in effect, what's the role of the statute on your theory, and... and you said, well, if they... if they simply ignore one of the stated statutory factors, they say we're not going to consider this, or if there's a technical defect in the order, if the order is incomplete, that would be a... a circumstance in which EPA could exercise this authority. But you also said... and I... I assume you said correctly... that later on that these kinds of obvious violations are going to be rare.
Jonathan S. Franklin: --Yes.
David H. Souter: And that leads me back to... as I said, I guess, to Justice Kennedy's question, and that is this. It seems to me that on your view of the... the two statutory sections, there really isn't very much role for them to play, and I can't imagine why Congress would have enacted separate order sections if all they were meant to do is what you say. So my question is, why... why doesn't your explanation trivialize these two statutes to a point that is implausible?
Jonathan S. Franklin: They don't trivialize it, Your Honor. There are numerous Federal requirements that if a State does not meet those express statutory requirements, then EPA can step in. There are ambient air quality standards--
David H. Souter: And... and EPA could do the same thing by following the State review process, couldn't it?
Jonathan S. Franklin: --It--
David H. Souter: It could go in and say, look, they forgot X. They refused to apply Y.
Jonathan S. Franklin: --But if its contention is one that the statute gives the discretion but it was simply not exercised in the proper way that we would have exercised it, that is not a contention that Congress wanted EPA to be able to resolve by fiat.
David H. Souter: Well, but I mean, that's... that's the question. I mean, the... the difficulty I'm having is that if... if it is unlikely that Congress would have provided this entire separate track simply to deal with the problems that you say the track is meant to deal with, then it is not so implausible at all that Congress would have intended the statute to be applied as it has been applied here.
Jonathan S. Franklin: I think it is implausible because Congress made clear that EPA's authority was circumscribed to enforcing the... the statutory requirements, and those requirements were met in this case. If I might reserve the balance of my time.
William H. Rehnquist: Very well, Mr. Franklin. Mr. Hungar, we'll hear from you.
Thomas G. Hungar: Mr. Chief Justice, and may it please the Court: Petitioner's fundamental contention is that once a State issues a determination of best available control technology so labeled, no matter how arbitrary, factually unsupported, or unreasoned it may be, the Federal Government has no enforcement authority under the act to take actions to stop the invalid permit from taking effect. Nothing in the text, structure, or history of the act supports the implausible contention that Congress intended to immunize arbitrary, unreasoned State decision making from Federal enforcement review.
Stephen G. Breyer: Well, I don't think he is... I mean, my impression of their argument was, yes, you can review that. What you have go is through the State procedure and then after you go through the State procedures, in fact, you can go into a Federal court and have them apply the State review procedure if you want.
Thomas G. Hungar: Yes, but--
Stephen G. Breyer: I think that's what their argument was, or at least one of their arguments.
Thomas G. Hungar: --But, Your Honor, Congress enacted a Federal regulatory scheme and a Federal enforcement scheme.
Stephen G. Breyer: That's a different thing. Maybe yours is better, but you can't say they're leaving it without review. So I just wanted to--
Thomas G. Hungar: Review only under State law, Your Honor, and... and our point is that Congress has enacted a comprehensive Federal regulatory scheme and authorized EPA to serve as a backstop to ensure compliance with all of the requirements of the act, or this... this portion of the act.
Antonin Scalia: --That's begging... I mean, that... that is exactly the point at issue, it seems to me. Why is... why is it irrational to envision a scheme such as... such as the petitioners here propose, which is, look it, Congress set certain, absolute requirements? Ambient air quality, you know, shall be this. But as long as those requirements are met, below that we also want each State... each emission source in a State to be examined to see whether it is using the best available technology. But what constitutes the best available technology under the circumstances is a very difficult question. It involves issues of... of the State economy, as well as scientific issues. We are content so long as each State meets the absolute standards that the statute sets forth. Below that standard, we're going to let each State decide whether the best available technology under all the circumstances is being used. That seems to me a perfectly sensible and rational system.
Thomas G. Hungar: Your Honor, the definition of best available control technology does not simply leave it to the discretion of the decision maker, the unbridled discretion, to... to select whatever it wants--
Stephen G. Breyer: Well, let's see what it says.
Thomas G. Hungar: --It imposes meaningful constraints, Your Honor. Maximum emissions reduction that is achievable taking into account specified factors. A failure, for example--
Antonin Scalia: But you're... you're missing the... the first part of it. It doesn't say which is the best available. It says the best of means and emission limitation, best on the maximum degree of production of each pollutant subject to regulation under this chapter, blah, blah, blah, blah, which the permitting authority on a case-by-case basis, taking into account these various methods, determines to be the BACT. I mean, there it is. Which the permitting authority determines.
Thomas G. Hungar: --Yes, Your Honor. Two responses. Number one, the... the United States Code is filled with examples of instances in which Congress defines that it's the initial decision maker for a particular question, but that is not generally taken to mean that delegation of absolute, unreviewable discretion. Number... particularly when, as here, the statute imposes--
William H. Rehnquist: But they're... they're not saying--
Thomas G. Hungar: --these constraints on the decision maker.
William H. Rehnquist: --They're not saying that the discretion is unreviewable. They're just saying it's reviewable in a different manner than you think it is.
Thomas G. Hungar: They're saying that it's not reviewable as a matter of Federal law, Your Honor, and that is what we're talking about here.
Stephen G. Breyer: Well, Federal... are you aware of any State in the United States that does not have in its law the requirement that its own agencies have to act rationally, that they can't arbitrarily, abuse of discretion?
Thomas G. Hungar: I don't know, Your Honor, but--
Stephen G. Breyer: Well, I don't know of any either.
Thomas G. Hungar: --But I know there--
Stephen G. Breyer: And so that seems to be the same standard that you argue that applies, and since there is no State that doesn't have that standard and no Federal Government that doesn't have it, we all have the same standard. And that's why I think the argument does boil down to which courts will apply it: the Federal court as a matter of Federal law, or the Federal court as a matter of State law.
Thomas G. Hungar: --Well, number one, I believe various States have standing requirements that may be more restrictive than those applicable under... under Federal law. Number two, the question is not merely which court will apply it but whether the... the comprehensive administrative authority confirmed on EPA to issue orders and not just the administrative orders at issue here, but also the possibility of the... of the administrative sanctions proceeding, which is separately provided by Congress in subsection (d) of 7413. Under petitioner's interpretation, none of that would apply as long as there's some element of discretion in the State's decision. And it's simply not correct to say that BACT is the only area in which the States enjoy some range of judgment or... or in which there may be factual disputes--
Antonin Scalia: It's a range of judgment. This is the only provision that reads this categorically. I... I... which the permitting authority on a case-by-case basis determines.
Thomas G. Hungar: --With respect, Your Honor, that's not correct. Under... under 7475(a)(3), which is the... the subparagraph prior to (a)(4) which imposes the BACT requirement... 7475(a)(3) is on... I believe it's on 13a of the appendix to the gray brief. (a)(3) is... is where the... is where the requirement that permittees meet other provisions of the act such as the national ambient air quality standards and the increments.
Antonin Scalia: Tell me again where... where--
Thomas G. Hungar: 7475(a)(3) on... on 13a of the gray brief appendix.
Antonin Scalia: --On 13a.
Thomas G. Hungar: Yes.
Antonin Scalia: (4). Right?
Thomas G. Hungar: (4) is the BACT requirement. (3) is the national ambient air quality standards, other standards of performance, the increments, and so forth. All of the other requirements that... that petitioner concedes EPA should be able to enforce. But if you turn... and that (a)(3), in turn, references 7410--
Antonin Scalia: (j).
Thomas G. Hungar: --(j). 7410(j), which is on page 5a of the appendix, says that the permittee must... the permit applicant must demonstrate to the satisfaction of the permitting agency that all of these requirements have been met. So under petitioner's interpretation, EPA's authority to enforce all of... all of the requirements of the prevention of significant deterioration program would be eviscerated to the extent there is discretion in those determinations and there is necessarily discretion. All of those other determinations require modeling, and to do modeling, you have to determine what the inputs to the model are and you have to determine what the boundaries of the ambient air area are, and if EPA cannot review any of those discretionary decisions, it has essentially no authority to do anything under this act except to require that permitting authorities mouth the words of the statutory definition. And that's it. And if that's all--
Sandra Day O'Connor: Well, could... could we get specific in this case? Looking at the Clean Air Act provision, 169(3), which the permitting authority on a case-by-case basis determines is achievable, after considering economic impacts and other costs. Now, EPA says what's wrong. Alaska did make a determination, did it not?
Thomas G. Hungar: --Alaska made a determination, but it did not determine best available control technology within the constraints of the statute, and the... and the easiest--
Sandra Day O'Connor: Well, how so? Let... looking at the statute, what provision did they fail to comply with?
Thomas G. Hungar: --Well, they... they didn't determine the maximum degree that is achievable, taking into account these factors, because the only basis for their rejection of the best technology selective control... I mean, selective catalytic reduction was their reliance on economic impacts, and specifically what they said was the foremost consideration... the foremost consideration... for their rejection of SCR, according to the State... this is at page 208 of the joint appendix... was impact of the cost of SCR on the competitiveness of the mine. And yet--
Sandra Day O'Connor: What's wrong... what's wrong with that? And--
Thomas G. Hungar: --What's wrong with that, Your Honor, is that on the previous page, on page 207 of the joint appendix, the State admits that because Cominco refused to provide the financial information, they had no basis for making a judgment. That's a... they quote judgment.
Sandra Day O'Connor: --Well, let me just ask you--
Thomas G. Hungar: They couldn't make a judgment about that very issue.
Sandra Day O'Connor: --a technical point. Suppose at the end of the day... and I'm not sure if this is what we would do or that I would favor, but suppose at the end of the day we agree EPA had authority to issue a stop order and that it was proper. Could Alaska then go back and say, well, okay, we're going to run through this drill once more and do consideration of costs, and they're now going to allow Low NOx's instead based on that? Now, can they do that? Is that all right?
Thomas G. Hungar: On... on an appropriate record, absolutely they could do that. And... and EPA made it clear--
Sandra Day O'Connor: So this wouldn't be the end of the day.
Thomas G. Hungar: --That's correct. The State has the... has discretion, but that discretion is not unlimited, and that is the point that--
Anthony M. Kennedy: Can you tell me, Mr. Hungar-- --Speaking of it's appropriate-- --Can you tell me, Mr. Hungar, whether or not as... as a matter of past practice, the EPA has intervened in any State administrative review proceedings in State courts?
Thomas G. Hungar: --In State court, no, I don't believe so, Your Honor.
Anthony M. Kennedy: All right. Has... has it gone to Federal court under... was it... 1345, the United States District?
Thomas G. Hungar: I don't believe so. It's an unsettled question I think whether 1345 would authorize EPA to--
John Paul Stevens: So the EPA has been consistent in saying that it... it is not in any case like this or with parallels to this gone through an administrative process. It's simply issued a stop order?
Thomas G. Hungar: --That's correct. The EPA has consistently maintained and... and has... has announced this interpretation in a variety of administrative documents, including through notice... in the course of notice and comment rulemakings and in the very orders in this case. EPA has consistently taken the position for 20 years, at least, that it has authority under these statutes, 7477 and 7413(a)(5) to do exactly what it did in this case--
Antonin Scalia: That doesn't surprise me. You... you mention on an appropriate record. That is one of the things that makes me uneasy about the... the resolution that you propose. When this thing comes to a Federal court of appeals, which is not a fact-finding court, it comes on the basis of nothing except EPA's order. We... we do not know the record before the administrative agency on the basis of which the EPA acted. Now, if you had gone through the State administrative procedure, that record would have been examined. That would... the action in question would have been the action of the State agency and... and you would examine the record before the State agency. But... but the administrative action we're reviewing here is not the State administrative action. It's your administrative action, and the only relevant record is the record before the EPA. And... and as I said before, the court of appeals ends up determining whether it was arbitrary and capricious for the EPA to determine that the State agency was arbitrary or capricious. You combine those two weird factors and... and I'm just dubious that this is the kind of review that Congress intended.
Thomas G. Hungar: --Taking the last part of your question first, Your Honor, there's nothing particularly strange about an appellate court reviewing a prior determination of whether an agency decision was arbitrary and capricious. Courts do that all the time--
Antonin Scalia: Square.
Thomas G. Hungar: --under the APA when a district court... no. If a... a district court determines whether a... whether the... an agency decision was arbitrary and capricious, the court of appeals, to the extent there are discretionary issues, they would review deferentially, but really as a general matter, it's going to boil down to a question of law, which is I think the case here, which is was it... was it or was it not arbitrary and capricious for the State of Alaska to do what it did here. Fundamentally that is a question of law upon review of the EPA's determination.
Stephen G. Breyer: All right. It's a question of judgment and whose judgment gets some weight. In respect to that, what I'd really suddenly stirred up again here... suppose we reach the second question. Suppose we reach the question of whether Alaska did, in fact, do something that was pretty unreasonable, and suppose I accept your argument that this was totally unreasonable to say that they didn't have to put in this special technology because of cost when Alaska didn't even know what the cost was. That's about like the fan. That's close to the ceiling fan. That's what you're arguing. But then they've made another argument, and the other argument is bothering me a lot more. And that is that the EPA has taken the position that you have to put this extra special converter or whatever on number 17, even if the consequence of that, because of the interaction of the regs and their desires with number 2 and number 6, is more pollution. Now, that does bother me because it seems to me a State agency that's trying to get a result that is less polluting is not acting arbitrarily and capriciously except in rather unusual circumstances. Now, what do I do with that argument? Does that mean if I accept everything you say... but that worries me... I should send it back for another determination of whether this really is arbitrary and capricious? What should I do with that argument?
Thomas G. Hungar: Your Honor, the State agency did not justify its final permit decision on that rationale. The State is now arguing in its brief in this Court--
Stephen G. Breyer: That's a... that's one point. I've got that point. That's a kind of technical point in my mind. In other words, Alaska might really be polluting more, but because of this sort of which paper they wrote which in, we should just accept it. Now, I got that argument. But is there any other?
Thomas G. Hungar: --But it's more than that, Your Honor. The State agency expressly rejected that analysis, refused to conduct that analysis, refused to base its permit decision on that approach because it agreed it was contrary to the requirements of the act. That's at page 199 of the joint appendix. The State agency said we are... we agree that's not an appropriate way in which to analyze the BACT question. That's consistent with EPA's regulations, in answer to Justice Ginsburg--
Ruth Bader Ginsburg: Yes. I asked that question before.
Thomas G. Hungar: --Yes.
Ruth Bader Ginsburg: And... and it is a question of interpretation of the text of this statute. I thought that EPA was taking an anti-bubble approach, that it said, you want to have generator 17. We look at generator 17 and that's what the statute means by new source. I thought you were taking that view, but maybe you're not.
Thomas G. Hungar: Your Honor, and... and Chevron itself actually discusses this, as you... as you suggested, but Chevron recognizes that EPA has... has construed the... has applied the bubble concept or not differently. It... the bubble concept applies at the initial stage in determining whether a modification has to go through prevention of significant deterioration analysis. But once... once that... once it is determined that the total emissions are going to increase so that the... the modification does have to go through that analysis, it is then... the bubble concept no longer applies and the analysis is done on an individual basis. That's set forth in EPA regulations promulgated through a notice and comment rulemaking--
Ruth Bader Ginsburg: That's what I thought. So it isn't a question of just loose, arbitrary, and capricious. EPA is taking the position that you look at generator 17 because you've already made the determination that adding a generator, modifying another one, is going to add to the pollution.
Thomas G. Hungar: --As a matter of law, what EPA has determined in... in exercising in... its rulemaking authority is that the statute requires that once it's determined that the BACT analysis must be made, it must be made on an individual unit basis, which is exactly what the State ultimately did here. The State conceded that is correct as EPA's regulations state. Only in its recent... in this Court is the State now trying to back away from that.
John Paul Stevens: Mr. Hungar, can I ask you, going back to Justice Scalia's question earlier, is there a significant difference in the record before us in this proceeding than what the record would contain if they had followed the route of applying a review of the Alaska order through the State system?
Thomas G. Hungar: We don't believe so, Your Honor. The EPA gave the State ample authority and Cominco ample... I mean, ample opportunity to place in the record whatever materials they wanted--
John Paul Stevens: Because my impression, the record really was the same no matter which way you went.
Thomas G. Hungar: --The Ninth Circuit, when this case was in... in the court of appeals, issued an order directing the preparation of a record and asking the parties what... to... to address whether the record was complete or not. Cominco and the State said the record was sufficiently complete. The only things that... that the State identified--
David H. Souter: Well, did they... did they put in the whole State record--
Thomas G. Hungar: --I don't know that the whole--
David H. Souter: --before the State agency?
Thomas G. Hungar: --The... the administrative fills a box. It contains internal ADEC communications, memoranda, analysis, the Cominco application. It's quite detailed.
David H. Souter: But in any... I take your answer is they can put in the entire State record to go before the court of appeals. Is that the answer?
Thomas G. Hungar: Absolutely. And... and again, under Overton Park and under this case's precedents, if the EPA record is incomplete for some reason, the Court can remand it to the agency for... for further... to complete the record. But that doesn't... that doesn't suggest that EPA doesn't have the authority to act. It merely suggests that EPA needs to exercise that authority in a procedurally correct manner.
Sandra Day O'Connor: It goes back to a question that has now dropped out of the case entirely it seems. In the Ninth Circuit, I think EPA was arguing this is not a final order. You have to wait until we go into court and the court that we would go into is a district court where a full record could be developed. I take it you have now abandoned that argument and seen the error of your ways, and now you accept that this is final. What led you to change?
Thomas G. Hungar: Upon further consideration of this Court's more recent precedents in the... in the area of finality, the... the Whitman case and Bennett against Spear and given the particular circumstances of this case where the agency... where EPA was not simply issuing an order to someone saying you're violating preexisting requirements of the act, but was in fact changing the status quo and stating that a... a permit that had been issued by the State that allowed construction could not take effect, in those circumstances we... we concluded that this Court's precedents regarding final orders are satisfied and that this is indeed a final order because it imposes legal obligations, new legal obligations, on Cominco.
Antonin Scalia: Mr. Hungar, you... you've just told us that the reviewing court can have the full State record before it when it makes its determination. What about EPA when it makes its determination, when it issues its order? What... what does it have in front of it? It doesn't have to have anything, does it?
Thomas G. Hungar: Well, it has to have evidence sufficient to make a finding that the State is not complying with the requirements of the act, Your Honor.
Antonin Scalia: Well, but it doesn't... it doesn't have to do that on the basis of the record presented to the agency, does it?
Thomas G. Hungar: Well, it's difficult--
Antonin Scalia: Did it in this case? Is that... is that what it did? Did it review the agency record here?
Thomas G. Hungar: --Well, in this case it's... although they had extensive record materials before them, the... the flaw in the State's decision making is apparent on the face of the State's own decision. As I said before, pages 207 and 208 of the joint appendix revealed that the State admits it doesn't have factual support for what it views as the foremost consideration justifying its decision. But... but if EPA issued... issued an order under this act without... without the record materials in front of it, and... and had... therefore, had no basis for issuing an order, a court of appeals could set it aside.
Stephen G. Breyer: Can you tell me? I want to be very clear on what I didn't hear in answer to my question. What I was concerned about... and I understand your legal arguments, but I was concerned about their claim. If you win this case, what it means is more expensive technology goes onto number 17. They run number 17 less. They run 2 and 6 more, and the net result in Alaska is more pollution. Now, you haven't said... I haven't heard you say, no, that's wrong. What you have said is we shouldn't reach it. There... there... they didn't make the claim in the right place with the right words. And I want to give you a chance to say, no, that's wrong, if it is wrong.
Thomas G. Hungar: I think it is wrong, Your Honor. It is... it is theoretically possible that if they installed this expensive generator and spent millions of dollars on it and never once turned it on and they ran all of their other... other generators 100 percent of the time without ever stopping them, it is theoretically possible that there could be slightly more pollution. However, that is highly implausible, number one, and number two, there is no finding by the State that that is in fact what would happen. This is merely argument in their appellate briefs. And what is clear on the record is that under... if the State had adopted SCR as BACT, the total cap on emissions allowable by this facility would be hundreds of tons lower than the cap that was imposed by the State. That's undisputed and perfectly clear that SCR would result in a total emissions cap far lower than the one that the State wanted to impose. And so the State's argument, unsupported by any findings, is that... is the sheer speculation that Cominco would spend millions of dollars to install a generator that it would never use. We submit that's highly improbable.
David H. Souter: So, do I... I understand you to say that they would be forced... I take it you're... implicitly you're saying they'd be forced to use this generator because the use of this generator would be the only way that they, in fact, could comply with the cap?
Thomas G. Hungar: No, Your Honor. If... if they installed this generator and if... if selective catalytic reduction were deemed to be required, the total... there's a total emissions cap of 3,878 tons in the State's permit.
David H. Souter: For--
Thomas G. Hungar: For all seven generators.
David H. Souter: --for this... all seven. Okay.
Thomas G. Hungar: And if... and that includes MG-17 under... using the Low NOx. Under Low NOx, MG-17... its output is 531 tons if it's used throughout the year, 531 tons. Under SCR it would output... put out only a tenth of that at full capacity. So the total cap under BACT would be hundreds of tons lower, slightly less than 3,500 tons.
Antonin Scalia: The cap... the cap wouldn't be lower. The total emissions would be lower. The cap would--
Thomas G. Hungar: The... the total emissions cap would be lower. The... the company is free to... to choose how to... how to meet the cap, how to... which machines to operate at what times, as long as it doesn't exceed that cap. But the cap is determined by adding to the preexisting cap total for the other six generators the additional amount that is deemed permissible to--
David H. Souter: --So... so the answer is it would probably... most probably use the new generator.
Thomas G. Hungar: --Absolutely.
David H. Souter: Theoretically it wouldn't have to.
Thomas G. Hungar: Correct. Your Honor, we... Your Honors, we submit that Congress clearly intended EPA to exercise meaningful enforcement authority in the prevention of significant deterioration program. Indeed, it specifically authorized in that very context EPA to issue the types of orders at issue here. We, therefore, ask that the judgment of the court of appeals be affirmed.
William H. Rehnquist: Thank you, Mr. Hungar. Mr. Franklin, you have 3 minutes remaining.
Jonathan S. Franklin: Thank you, Your Honor. Responding to Justice O'Connor's colloquy with counsel as to whether EPA could simply remand the case and then there might be a back and forth that could take--
Sandra Day O'Connor: I didn't ask if it was... could remand it. I asked whether it would be open to the State to go through the drill that EPA said it didn't do before and that the State said it didn't have the information to enable it to do.
Jonathan S. Franklin: --And... and that is precisely the problem in our view because EPA, if the Court upholds its authority in this case, can act by fiat at any time it wants on the basis of any information that it deems relevant, even after a permit has gone through the entire State process, even after it has become final under State law, and even after the source may have invested millions of dollars in the technology. Then EPA could step in. What we are saying here... and, Justice Breyer, we don't care which court--
Ruth Bader Ginsburg: Well, there are courts... there are courts with doctrines that would not allow such inequitable conduct. I mean, you brought up it could be years and years later; anytime, 17 years later, EPA could wake up. The answer to that was that no court would give an ear to EPA having just slept on--
Jonathan S. Franklin: --With respect--
Ruth Bader Ginsburg: --on the situation.
Jonathan S. Franklin: --With respect, Your Honor, EPA's enforcement authority in this case is mandatory. Under section 167, they shall take appropriate measures to stop construction. Therefore, if the Court upholds their authority in this case, they have to exercise it at any point. And, Justice Breyer, we don't care which court conducts the review. We care that a court does and not EPA acting at any time by fiat according to any information that it may have at... at... on the basis of what it thinks may or may not be reasonable or unreasonable. The point of the matter is, is that the State procedures are fully adequate to address any concerns that EPA has raised here, and its injecting itself into the process, disrupting the orderly process... and, Justice Stevens, the record would be different and it would be different because Alaska law allows, when a party has properly objected, for a de novo administrative hearing, at which the agency is allowed to present additional evidence, witnesses, and further refine and clarify its decision. If there was any legitimate concern as to whether the State's decision wasn't clear, as it should have been, that is the manner in which it should have been resolved, through the administrative process. And we are confident that it would have been resolved there, Justice O'Connor. That's where the back and forth would have occurred, not in the manner of here where we're now 4 years later and we still don't have a decision as to what technology this company can use. And finally, Your Honors, the... the point of the matter is there's no legitimate dispute here that the result of Alaska's decision is cleaner air and that cannot be unreasonable.
William H. Rehnquist: Thank you, Mr. Franklin. The case is submitted.