IN THE MATTER OF
:
NOx TRADING PROGRAM :
AMENDMENTS TO 35 ILL
.
ADM. CODE PART 217
TO:
Dorothy Gunn, Clerk
Illinois Pollution Control Board
State of Illinois Center
100 West Randolph, Suite 11-500
Chicago, Illinois 60601
Gale W. Newton
Hodge Dwyer and Zeman
3150 Roland Ave
.
P.O. Box 5776
Springfield, IL 62703-5776
RECEIVED
CLERK'S OFFICE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
FEB 21 2006
Pollution
STATE OF
Control
ILLINOISBoard
R06-22
(Rulemaking - Air)
DATED:
P.O. Box 19276
Springfield, Illinois 62794-9276
NOTICE
John Knittle, Hearing Officer
Illinois Pollution Control Board
State of Illinois Center
100 West Randolph, Suite 11-500
Chicago, Illinois 60601
Ladonna Driver
Illinois Environmental Regulatory Group
3150 Roland Ave
.
Springfield, IL 62703
Kathleen C . Bassi
Schiff Hardin, LLP
6600 Sears Tower
233 S . Wacker Drive
Chicago, IL 60606-6473
PLEASE TAKE NOTICE that I have today filed with the Office of the Pollution Control
Board a
MOTION TO SUPPLEMENT THE RULEMAKING PROPOSAL
of the Illinois
.
Environmental Protection Agency a copy of which is herewith served upon you
.
ILLINOIS ENVIRONMENTAL PROTECTION
AGENCY
By:
R
Doctors
Assistant Counsel
Division of Legal Counsel
RECEIVED
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
CLERK'S OFFICE
IN THE MATTER OF
:
)
THE NOx TRADING PROGRAM
:
)
R06-22
AMENDMENTS TO 35 ILL
.
)
(Rulemaking - Air)
ADM . CODE PART 217
)
MOTION TO SUPPLEMENT RULEMAKING PROPOSAL
NOW COMES Proponent, the ILLINOIS ENVIRONMENTAL PROTECTION
AGENCY (Illinois EPA), by its attorney, Rachel L
. Doctors, pursuant to 35 Ill
. Adm .
Code 102 .110, 102 .402, and 101
.500, and moves that the Illinois Pollution Control Board
(Board) allow the Illinois EPA to supplement its rulemaking proposal
. In support of its
Motion, the Illinois EPA states as follows
:
1
.
The Illinois EPA filed the above entitled rulemaking proposal with the
Board on January 17, 2006
.
2 .
The Illinois EPA also filed a Motion for Waiver of Requirements asking
the Board to waive the filing requirements pertaining to documents the Agency relied
upon that were readily accessible
.
3 .
In an Order dated February 2, 2006, the Board states that the two
documents referenced in paragraph 3 (h) and (m) are not readily accessible and asks that
the Illinois EPA provide 5 copies of the documents
. The items referenced in paragraph 3
(h) and (m) are citations to dockets before the United States Court of Appeals in the D
. C .
Circuit.
FEB 21 2006
STATE OF ILLINOIS
Pollution Control Board
4.
The Illinois EPA is supplementing the rulemaking proposal by providing
the Petition for Review that was filed in State of North Carolina v
. EPA,
No
. 05-1244
(D .C . Cir.) on July 8, 2005 as a document in which the Illinois EPA relied upon .
5.
The Illinois EPA is providing the Board with the Decision entered in State
of West Virginia v. EPA,
362 F
. 3d 861 (D .C. Cir. 2004) as a document relied upon .
WHEREFORE, for the reasons set forth above, the Illinois EPA moves that the
Board accept the above mentioned documents relied upon as part of the rulemaking
proposal .
Respectfully submitted,
ILLINOIS ENVIRONMENTAL
PROTECTION AGENCY
By:
L"4-~~
Rachel L . Doctors
Assistant Counsel
Division of Legal Counsel
DATED: February 17, 2006
1021 North Grand Ave . East
P.O. Box 19276
Springfield, IL 62794-9276
217/782-5544
UNITED STATES COURT OF APPEALS
FOR
DISTRICT OF COLUMBIA CIRCUIT
JUL -
8 2005
L
k€_CERlVED
FOR
STATE OF NORTH CAROLINA,
Petitioner,
V.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent .
PETITION FOR REVIEW
Pursuant to Rule 15 of the Federal Rules of Appellate Procedure and section 307(b) of the
Clean Air Act, 42 U .S.C. § 7607(b), the State ofNorth Carolina hereby petitions the Court to review
the final rule of the United States Environmental Protection Agency entitled "Rule to Reduce
Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule) ; Revisions to
Acid Rain Program ; Revisions to the NOx SIP Call" which was published at 70 Fed . Reg . 25,162
(May 12, 2005) and is to be codified at 40 C.F.R. §§ 51, 72, 73, 74, 77, 78, and 96 .
Dated July
q
, 2005.
ILED
NITED STATES COURT OF APPE LS
THE DISTRICT OF COLUMBIA C RCUIT
No .
05-1244
FOR
UNITEL
I
DISTRICT
SIATES
OFCOURTCOLUMBIA
OF
APPEALSCIRCUIT
JUL
-8 2005
I
CLERK
By:
Respectfully submitted,
ROY COOPER
Attorney General
s C . Gulick
ial Deputy Attom
J. Allen Jernigan
Senior Deputy Attorney General
Marc Bernstein
Assistant Attorney General
Jill Weese
Assistant Attorney General
N.C
. Department of Justice
9001 Mail Service Center
Raleigh, North Carolina 27699-9001
(919) 716-6600
CERTIFICATE OF SERVICE
I hereby certify that on the U
day of July 2005, a copy of the foregoing Petition for
Review was sent by U .S
. mail, first class postage prepaid, to the following
:
Hon . Alberto R . Gonzales
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
y
Hon . Stephen L . Johnson, Administrator
United States Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Hon. Ann R. Klee
U.S. Environmental Protection Agency
Office of General Counsel
1200 Pennsylvania Avenue, N .W. (2310A)
Washington D
.C. 20460
Westlaw
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U.S.App.D.C . 419
(Cite as : 362 F.3d 861, 360 U .S .App.D .C . 419)
H
Briefs and Other Related Documents
United States Court of Appeals,
District of Columbia Circuit.
State of WEST VIRGINIA, Petitioner,
V .
ENVIRONMENTAL PROTECTION AGENCY,
Respondent .
State of New York, et al ., Intervenors.
Nos . 02-1181, 02-1185, 02-1188,02-1193, 02-1200,
02-1204 and 02-1205
.
Argued Sept. 15, 2003 .
Decided April 9, 2004
.
Background
: Two states and several business and
energy policy entities petitioned for review of
Environmental Protection Agency (EPA) rules
requiring
various
states
to
revise
state
implementation plans (SIPs) as to nitrogen
oxide (NOx) emissions and establishing emission
limits for major NOx sources
. The Court of Appeals,
249 F.3d 1032 and 251 F.3d 1026, remanded EPA's
electric generating unit (EGU)
growth-factor
determinations . EPA issued response to remand, and
petitioners sought review
.
Holdings : The Court of Appeals,
Sentelle, Circuit
Judge, held that :
f 1,) states had standing to challenge EPA's actions ;
(2) although EPA should have provided formal
notice-and-comment opportunity after adding data to
docket in second Notice of Data Availability
(NODA) on remand, such error did not require
invalidation
(3) EPA reasonably
of EPA actionexplained
;
its decision to use
data related to time period that overlapped, but did
not equate to, period for which it was projecting EGU
growth rates ; and
(4) petitioners could not raise claims that were not
raised in the initial litigation or the original
rulemaking.
Petitions denied .
West Headnotes
IL Administrative Law and Procedure €759
15Ak759 Most Cited Cases
© 2006 Thomson/West . No Claim to Orig . U .S
. Govt. Works .
Page 1
While courts routinely defer to agency modeling of
complex phenomena, model assumptions must have a
rational relationship to the real world .
121 Environmental Law X633
149Ek633 Most Cited Cases
121 Environmental Law €642
149Ek642
Most Cited Cases
Nitrogen oxide (NOx) State Implementation Plans
(SIPS) Call issued by Environmental Protection
Agency (EPA), based on national work group's
findings regarding interstate ozone transport problem,
was not subject to review under Clean Air Act
(CAA), but would be reviewed under arbitrary and
capricious standard of the Administrative Procedure
Act (APA) . 5 U.S .C .A
. § 706(2)(A) ; Clean Air Act,
§ 307(d)(9), as amended, 42 U.S.C .A .,7607(d)(9) .
M Environmental Law 0'683
149Ek683 Most Cited Cases
Under arbitrary and capricious standard of review set
forth by Clean Air Act (CAA) and Administrative
Procedure Act (APA), agency determinations based
upon highly complex and technical matters are
entitled to great deference, particularly when court
reviews the use of computer models, because their
scientific nature does not easily lend itself to judicial
review . 5 U.S.C.A . § 706(2)(A) ; Clean Air Act, §
307(d)(9), as amended, 42 U .S
.C-A. $ 7607(d)(9) .
141 Environmental Law X678
149Ek678 Most Cited Cases
Environmental Protection Agency (EPA) has
undoubted power to use predictive models as long as
it explains the assumptions and methodology used,
and court will defer to the agency's decision on how
to balance the cost and complexity of a more
elaborate model against the oversimplification of a
simpler model, though court will vacate if agency's
conclusions drawn from this model are unreasonable.
j5_j Environmental Law €654
149Ek654
Most Cited Cases
States had standing to
challenge action of
Environmental Protection Agency (EPA) in requiring
states to revise their state implementation plans
(SIPs) as to nitrogen oxide (NOx) emissions and
establishing emicsion
limits for major NOx sources ;
states were not merely suing as parens patriae on
behalf of electric generators inside their respective
362 F
.3d 861
362 F
.3d 861, 58 ERC 1333, 360 U.S.App .D .C. 419
(Cite as : 362 F .3d 861, 360 U.S.App.D.C . 419)
borders, since EPA's lower emissions "budgets"
caused injury to states as states
.
ll States X190
360k190 Most Cited Cases
A state does not have standing as patens patriae to
bring an action against the federal government
.
171 Environmental Law ~292
149Ek292 Most Cited Cases
Environmental Protection
. Agency (EPA) should
have provided formal
notice-and-comment
opportunity after adding data to the docket in second
Notice of Data Availability (NODA) on remand of its
electric generating
unit (EGU) growth-factor
determinations from
Court of Appeals, after
publishing its initial NODA and inviting comments,
as comment period was required for any action taken
under section relating to
interstate pollution
abatement.
Clean Air Act, § § 110(c), 126,
307(d)(1)(B, N), (d)(3), as amended,
42 U.S.C.A . § &
7410(c), 7426,
7607(d)(1)(B, N),(d)(3)
.
[81 Environmental Law €690
149Ek690 Most Cited Cases
Failure of Environmental Protection Agency (EPA)
to provide formal notice-and-comment opportunity
after adding data to the docket in second Notice of
Data Availability (NODA) on remand of its electric
generating unit (EGU) growth-factor determinations
from Court of Appeals, after publishing its initial
NODA and inviting comments, did not require
invalidation of EPA's action on judicial review,
absent any substantial likelihood that resulting rule
would have been significantly changed in absence of
procedural error
. Clean Air Act, § § 110(c), 126,
307(d)(1)(B, N), (d)(3),
as amended, 42 U.S.C.A . S §
7410(c), 7426,
7607(d)(1)(B, N), (d)(31.
L91 Environmental Law x^'293
149Ek293 Most Cited Cases
Environmental Protection Agency (EPA) reasonably
explained its decision to use data related to time
period that overlapped, but did not equate to, period
for
which it was projecting electric generating unit
(EGU) growth rates in connection with establishing
emission limits for nitrogen oxide (NOx) pursuant to
the Clean Air Act (CAA)
; EPA
published historical
data showing periods of multi-year heat-input decline
in accord with its projections, and EPA explained
that increasing complexity of its model would not
have been worth the increased cost
. Clean Air Act, §
126(b), as amended, 42 U.S.C.A
. S 7426(b) .
© 2006 Thomson/West
. No Claim to Orig . U.S . Govt . Works
.
Page 2
[101
Environmental Law X666
149Ek666 Most Cited Cases
Petitioners challenging Environmental Protection
Agency (EPA) rules requiring various states to revise
state implementation plans (SIPs) as to nitrogen
oxide (NOx) emissions, and establishing emission
limits for major NOx sources, could not raise on
appeal, following appellate court's initial remand of
rules, claims that were not raised in initial litigation
or original rulemaking, as EPA did not explicitly or
implicitly reopen issues underlying such new claims
in remand proceedings .
[111 Administrative Law and Procedure
X392.1
I5Ak392 .I Most Cited Cases
Whether an agency has explicitly or implicitly
reopened an issue after an initial determination
depends on the entire context of the rulemaking
including all relevant proposals and reactions of the
agency .
*863 **421 On Petitions for Review of an Order of
the Environmental Protection Agency
.
Mary E
. Welsh, Assistant Attorney General, Illinois
Attorney General's Office, argued the cause for
petitioners State of Illinois and West Virginia
; With
her on *864 **422 the briefs were Lisa Madigan,
Attorney General, Gary S
. Feinerman, Solicitor
General, and Thomas H . Zerbe, Senior Counsel ,
West Virginia Attorney General's Office
.
Norman W. Fichthorn
argued the cause for
petitioners Utility Air Regulatory Group, et al
. on
Common Issues. With him on the briefs were
David
M
. Flannery, Gale R . Lea, Kathy G
. Beckett, Mel S .
Schulze, Steven G. McKinney,
C. Grady Moore, III,
Philip S . Gidiere, III,
Daniel S . Reinhardt, Margaret
C. Campbell, and Gary R. Sheehan, Jr
. Andrea B .
Field entered an appearance
.
C. Grady Moore, III,
argued the cause for petitioners
Alabama Power Company, et al
. on State-Specific
Issues With him on the briefs were Steven G .
McKinney, P. Stephen
Gidiere, III, Daniel S .
Reinhardt,
Margaret Claiborne Campbell, Gary R .
Sheehan, Jr., David M . Flannery,
Gale R . Lea, and
Kathy G . Beckett .
Norman L. Rave, Jr.,
Attorney, U .S. Department of
Justice, argued the cause for respondent. With him
on the brief were Howard J
. Hoffman and Dwight C .
Alpern, Attorneys, Environmental Protection
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U .S.App.D.C
. 419
(Cite as : 362 F.3d 861, 360 U .S.App.D,C. 419)
Agency.
William L. Pardee, Assistant Attorney General,
Commonwealth of Massachusetts Attorney General's
Office, argued the cause for intervenors States of
Massachusetts, et al . With him on the brief were
Thomas F. Reilly, Attorney General, Richard
Blumenthal, Attorney General , Connecticut Attorney
General's Office, Eliot Spitzer, Attorney General,
New York State Attorney General's Office, J. Jared
Snyder, Assistant Attorney General, G . Steven Rowe,
Attorney General, Maine Attorney General's Office,
Gerald D . Reid, Assistant Attorney General, J. Joseph
Curran, Jr ., Attorney General, Maryland Attorney
General's Office, Kathy M.
Kinsey, Assistant
Attorney General, Peter C. Harvey, Attorney
General, New Jersey Attorney General's Office,
Howard Geduldig, Deputy Attorney General, Patrick
C. Lynch, Attorney General, Rhode Island Attorney
General's Office, Tricia Jedele, Special Assistant
Attorney General, Peter W . Heed, Attorney General,
New Hampshire Attorney General's Office,
Maureen
D. Smith, Senior Assistant Attorney General, Kristen
Campfield, William H
. Sorrell, Attorney General,
Vermont Attorney General's Office, Eric Titrud,
Assistant Attorney General,
and Kevin Leske,
Special Assistant Attorney General . John M
.
Looney, Jr
., Assistant Attorney General, Connecticut
Attorney General's Office, entered an appearance .
Before : GINSBURG, Chief Judge, and SENTELLE
and ROGERS,
Circuit Judges.
Opinion for the Court filed by Circuit Judge
SENTELLE.
SENTELLE, Circuit Judge :
This is a petition for review of the Environmental
Protection Agency's ("EPA" or "Agency") response
to this Court's remands in Appalachian Power Co . v
.
EPA,249 F .3d 1032 (D.C.Cir.2001) ("Appalachian
I"), and Appalachian Power Co . v. EPA,251 F.3d
1026 (D.C.Cir.2001) ("Appalachian
II"). In those
cases, we remanded the EPA's electric generating
unit ("EGU") growth-factor determinations, which
are used to develop Nitrogen Oxide ("NOx")
emission limits for regulated states and EGUs
.
Petitioners--two states and several business and
energy policy entities--raise multiple challenges to
the Agency's Order on remand .
Several states
intervene in support of the EPA .
We hold that the EPA satisfied its obligation on
© 2006 Thomson/West . No Claim to Orig. U.S. Govt
. Works.
Page 3
remand to engage in reasoned decisionmaking and
explain its choice of methodology. The remaining
claims are *865 **423 not properly before this Court,
as they were not raised at the time of the rulemaking
or in the initial proceedings, and the EPA did not
reopen these issues on remand . For these reasons, we
deny the petitions .
I. Background
A. Regulatory Background
The Clean Air Act, 42 U.S.C. $ 7401et seq .(1994)
("CAA"), requires the EPA to identify air pollutants
that endanger the public health, and to formulate
National Ambient Air Quality Standards ("NAAQS")
that specify the maximum permissible concentrations
of those pollutants in the ambient air . Once the EPA
has established NAAQS, each state must adopt a
"state implementation plan" ("SIP") "providing for
the implementation, maintenance, and enforcement of
the NAAQS ." Michigan v. EPA,213 F.3d 663, 669
(D.C.Cir.2000). Pursuant to the statute, the EPA has
promulgated NAAQS for ozone, which is linked to
multiple adverse health effects . See 40 C.F.R. pt. 50
(2003) . Ozone, itself, is not emitted directly into the
air ; rather, it is formed from chemical reactions
between NOx and volatile organic compounds in the
presence of sunlight. NOx is, therefore, a "precursor"
of ozone . NOx is emitted primarily from fossil fuel
combustion sources, including motor vehicles and
power plants . Owing to the ability of NOx to move
through the atmosphere, emissions of NOx in one
area can result in ozone non-attainment in a distant
area. Evidence in the record demonstrates that states
in the eastern United States have difficulty attaining
ozone standards because
of ozone, or ozone
precursor, emissions in upwind states . 64 Fed.Reg.
28,253 (May 25, 1999) . The two rules at issue in this
petition deal with NOx exhaust limitations on upwind
states and EGUs within their borders .
The first rule was based on the work of the Ozone
Transport Assessment Group
("OTAG") . The
OTAG was a national work group comprising 37
states, along with representatives of EPA, industry,
and environmental groups, formed "to study and
devise solutions to the interstate ozone transport
problem." Michigan v. EPA,213
F.3d at 672 ;
see
also 62 Fed.Reg
. 60,318 at 60,319 . Based on
OTAG's findings, EPA determined that NOx
emissions from 23 jurisdictions were "contribut[ing]
significantly" to non-attainment in downwind states
in violation of the CAA.
42 U.S.C.
k
7410(a)(2)(D)(i)(I) . Accordingly, in October 1998,
the EPA issued the NOx State Implementation Plans
Call, which required 22 states and the District of
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U .S.App.D.C. 419
(Cite as : 362 F .3d 861, 360 U.S.App.D.C. 419)
Columbia to revise their SIPs to impose controls on
NOx emissions . 63 Fed Rep . 57,356 (Oct. 27, 1998)
("NOx SIP Call") . Under the NOx SIP Call, each
upwind state must limit its summertime NOx
emissions to a statewide emissions "budget ." "The
budgets represent the amount of allowable NOx
emissions remaining after a covered state prohibits
the NOx amount contributing significantly to
downwind non-attainment." Michigan v. EPA,213
F.3d 663, 686 (D .C.Cir.2000) .
Specifically, the NOx
state budgets represent the EPA's projection for NOx
emissions in 2007 for each state if highly cost-
effective controls were implemented . "Highly cost-
effective" is defined as those controls capable of
removing NOx at a cost of $2,000 or less per ton
.
See Appalachian Poiver Co. v. EPA.251 F.3d 1026,
1030 (D .C .Cir.2001).
The EPA adopted the second rule in response to
petitions from eight states requesting a finding,
pursuant to CAA section 126(b),
42 U.S.C. $
7426(b), that stationary sources in upwind states were
contributing to ozone non-attainment in the
petitioning states in violation of the *866 **424
CAA. 42 U.S.C. § 74 10(a)(2)(D). Each petitioning
state further sought direct federal regulation of
stationary sources in upwind states . Because the
Section 126 petitions raised many of the same issues
as the NOx SIP Call, the EPA coordinated its
response to the section 126 petitions with the NOx
SIP Call rulemaking
. Based on the analysis
underlying the NOx SIP Call, the EPA determined
that sources in all or parts of 12 states contributed to
non-attainment in the petitioning states
; therefore,
the Agency established emission limits for major
NOx sources in those
states
.
65 Fed.Rez. 2674 (Jan .
18, 2000) ("Section 126 Rule"). As with the NOx
SIP call, the EPA considered both NOx emissions
and the cost of controlling them in determining which
sources contributed significantly to downwind ozone
non-attainment
. The EPA also established a "cap and
trade" program for the Section 126 Rule, which
allows sources with emissions that exceed their
budget to purchase allowances from other facilities
.
NOx emissions budgets for both the Section 126
Rule and the NOx SIP Call are calculated for the year
2007, although states and EGUs must begin meeting
their budgets on May 31, 2004 . See
67Fed.Reg.
21,522-21,525 (April 30, 2002)
. Additionally, both
rules rely on the same underlying determinations
. In
setting the NOx budgets, the EPA divided each
state's NOx emissions according to five source types
or "sectors" :
EGUs, non-EGU stationary sources
(such as industrial boilers), area sources (smaller
(D 2006 Thomson/West
. No Claim to Orig- U .S. Govt . Works.
Page 4
stationary sources), highway mobile sources, and
nonroad mobile sources
. The EPA calculated budget
allocations for each sector. See Appalachian II,251
F.3d at 1030 . At issue in this petition is the EPA's
method for determining the EGU budgets .
To calculate the EGU budgets, the EPA started with
a baseline utilization measured as heat input, in
million British thermal units ("mmBtu"), from fossil
fuels for each EGU's actual heat input from 1995 or
1996, whichever was higher . To that baseline, the
EPA added a heat input growth factor . To determine
the growth factor, the EPA used the Integrated
Planning Model ("IPM")
. Several assumptions went
into the IPM, one of the most critical of which was
projected electricity demand for the states. The EPA
utilized inputs derived from the model for 2001-
2010. The EPA then applied the projected heat input
growth for the 2001-2010 period to the 1995 or 1996
baseline to determine projected heat inputs for the
year 2007 . Under the NOx SIP Call, each state can
allocate its NOx allowances to individual sources as
it deems appropriate
. Under the Section 126 Rule,
EPA distributed the allowances to specific EGUs
based on historical heat input levels .
B. This Court's Remands
jil We have previously considered petitions for
review of both the NOx SIP Call and the Section 126
Rule. In both cases we remanded the rules and
instructed the EPA to "fulfill its obligation to engage
in reasoned decisionmaking on how to set EGU
growth factors and explain why results that appear
arbitrary on their face are, in fact, reasonable
determinations ."
Appalachian 1,249 F.3d at 1055 ;
Appalachian II,251F.3d at 1035
. This decision was
based, at least in part, on the fact that in two states
"actual utilization in 1998 already exceeded the
EPA's projected level for 2007 ."Appalachian
1,249
F.3d at 1053. Additionally, the EPA's implied
prediction of
"negative growth in electricity
generation over the course of a decade appear[ed]
arbitrary," as it was left completely unexplained . Id.
"While courts routinely defer to agency modeling of
complex phenomena, model assumptions must have a
'rational relationship' to the real *867 **425 world ."
Id. (citing Chemical Mfrs
. Assn v . EPA,28 F.3d
1259, 1265 (D .C.Cir.1994)) . In sum, although we
noted that EPA's choice may have been reasonable,
its failure to explain why it made that choice was
error, particularly in the face of contrary real-world
data.
C
. EPA's Response on Remand
EPA published its response to this Court's remands
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U .S.App .D.C. 419
(Cite as : 362 F .3d 861, 360 U.S.App.D.C. 419)
in the Federal Register on May 1, 2002 . 67 Fed
.Reg.
21,868 ("Remand Response")
. There, the EPA
explained that it decided to retain the previously
determined growth rates and provide a fuller
explanation .
The EPA first pointed out that the
2001-2010 modeled period utilized a consistent set of
assumptions.
While many commenters suggested
using predicted annual growth rates in energy
demand from 1995 or 1996 to 2007, the agency was
"not aware of any projected heat input growth rates
for that period for each State . ..
that were developed
using a consistent set of assumptions ." Id.
at 21,875 .
According to the EPA, this Court had already held
that the EPA's decision to rely upon the IPM instead
of inconsistent projections offered by individual
states was not arbitrary and capricious
. Appalachian
1, 249 F .3d at 1052-53 . The EPA also noted that the
two time periods at issue overlap substantially and
run a similar length of time . 67 Fed.Reg
. 21,875 .
Furthermore, the EPA explained that the increased
costs in man-hours and dollars associated with adding
extra years to the model would require "simplifying
other assumptions within the model," thus decreasing
its accuracy . Id.at 21,876 . In addition, by utilizing
the years 2001-2010, the IPM results could be used in
a variety of EPA programs,
including
implementation of the recently revised NAAQS for
ozone. Id.at 21,875 .
The EPA also addressed this Court's concerns
regarding the difference between EPA's predictions
and actual heat input levels at the time of the earlier
Appalachian cases .
Using data for the two years
following those decisions, the EPA points out that
heat input in the two states cited as inconsistent with
EPA's predictions--Michigan and West Virginia--
had significantly dropped . Id.at 21,882-90. The
Remand Response explained that most of the
regulated states' actual heat input values are now
consistent with EPA's predictions, and none are so
far above EPA's predictions as to indicate that its
assumptions are incorrect
. The Agency also
conducted a historical analysis of heat input, which
showed that it is quite variable and subject to both up
and down swings. Thus, heat input can decline over
multi-year periods. Id .at 21,884-85
.
Following EPA's publication
of its Remand
Response, two states and several business entities
petitioned this Court for review
. They claim, inter
alia,
that the EPA's projections remain arbitrary, that
EPA's use of the 2001- 2010 modeling years is
unsupportable, and that EPA's predictions regarding
future electricity demand were unreasonable
.
2006 Thomson/West
. No Claim to Orig . U.S. Govt . Works.
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II. Analysis
[21131141
This Court sets aside EPA final action
under the CAA if that action is arbitrary, capricious,
an abuse of discretion, or otherwise not in accordance
with law . 42 U.S.C. 6 7607(d)(9) . The standard of
review is the same for the NOx SIP Call, which is not
subject to
& 7607(d)(9),
but is subject to the
Administrative
Procedure Act.
5 U.S
.C.
Q
706(2)(A) . Under this familiar standard, "[a]gency
determinations based upon highly complex and
technical matters are 'entitled to great deference .' "
Appalachian I, 249 F.3d at 1051-52 (quoting
*868**426Public Citizen
Health Research Group v.
Brock,823 F.2d 626, 628 (D .C.Cir.1987))
.
See also
Huls Am., Inc. v. Browner, 83 F.3d 445, 452
(D.C.Cir.1996) ("[W]e
will give an extreme degree of
deference to the agency when it 'is evaluating
scientific data within its technical expertise .' ")
(citation omitted) . This is particularly true when we
review the use of computer models because "their
scientific nature does not easily lend itself to judicial
review." Appalachian Power Co . v. EPA,135 F.3d
791, 802 (D .C.Cir.1998)
. The EPA has "undoubted
power to use predictive models" as long as it
"explain[s] the assumptions and methodology used ."
SmallRefiner Lead Phase-Down Task Force v
. EPA
.
705 F
.2d 506, 535 (D .C.Cir.1983). We will "defer to
the agency's decision on how to balance the cost and
complexity of a more elaborate model against the
oversimplification of a simpler model
."
Id . We will
vacate if the agency's conclusions drawn from this
model are unreasonable.
A
. Standing
151161
We first address the standing of petitioner
States
. The EPA contends that West Virginia and
Illinois do not have standing to challenge the
Agency's action, arguing that these States are suing as
parens patriae on behalf of electric generators inside
their respective borders . While it is true that. "[a]
State does not have standing as parens
patriae
to
bring an action against the Federal Government," that
is not the case before us.
Maeland People's Counsel
v. FERC.760 F.2d 318, 320 (D .C.Cir.1985) (internal
citations omitted) .
Here, the states are suing as
states.
The NOx SIP Call directs each state to revise its SIP
in accordance with EPA's NOx emissions budget for
the state
. The lower the emissions budget, the more
difficult and onerous is the states' task of devising an
adequate SIP
. Thus, lower growth factors leading to
lower emissions budgets causes injury to the states as
states . EPA's own brief belies its argument, as it
states that "[u]nder the NOx SIP Call, states have the
362 F.3d 861
362 F .3d 861, 58 ERC 1333, 360 U
.S.App.D.C
. 419
(Cite as : 362 F .3d 861, 360 U.S.App.D.C. 419)
option of participating in [a] cap and trade program
or obtaining the reductions through other
mechanisms ." This injury is sufficient to confer
standing . Cf. City of Olmsted Falls v . FAA,292 F.3d
261, 268 (D .C.Cir.2002) (declining to decide whether
a city may sue as parens patriae because injury to the
city itself suffices for standing) .
B. EPA's Failure to Provide an Opportunity for
Comment
j?] Petitioner States challenge EPA's failure to
provide formal notice-and-comment after adding data
to the docket on remand . According to petitioner
States, the CAA requires EPA to engage in formal
notice-and-comment procedures when promulgating
or revising a SIP (under
42 U.S.C
. &
7410(c)) or
taking action under Section 126 . 42 U.S.C. &
7607(d)(1)(B),(N) . During the remand proceedings,
the EPA published a Notice of Data Availability
("NODA") that stated that the growth rates could "be
supported with a more robust explanation, based on
the existing record ." 66 Fed.Reg. 40,609 (Aug . 3,
2001)
.
In addition, the EPA stated it was
"considering new data" that "appear [ed] to confirm
the reasonableness of the growth calculations ." Id .
EPA invited comment and gave thirty days to
respond.
On March 11, 2002, EPA released its second NODA
("NODA II") . 67 Fed.Reg. 10,844 . After listing 15
documents, the EPA offered no invitation to
comment. Id. Despite the lack of an invitation,
Illinois responded and asked for clarification of what
had been added to the record and also requested the
opportunity to have "meaningful
review and
comment." Illinois *869 **427 also reasserted the
concerns it had raised in the first NODA and
reattached them for EPA's consideration. Id.
The EPA contends that no notice-and-comment was
required, because our earlier Appalachian I & II
cases merely remanded for a fuller explanation . As
such, on remand no notice-and-comment was
required because EPA was only providing a better
explanation, not engaging in rulemaking . The EPA
also claims that even if notice-and-comment were
required it complied because, although it did not
expressly request comment in NODA II, it did
receive comments .
Petitioner States have the better argument . The EPA
erred in not providing an opportunity to comment
when it added new material to the record subsequent
to its publication of the first NODA . The CAA
specifically requires that EPA shall specify a
© 2006 Thomson/West . No Claim to Orig . U.S. Govt . Works .
Page 6
comment period for any "action of the Administrator
under [Section 126] ." 42 U.S.C. $ 7607(d)(I)(N),
(d)(3) .
[s] This Court, however, will invalidate agency
action because of procedural error only if the error is
"so serious and related to matters of such central
relevance to the rule that there is a substantial
likelihood that the rule would have been significantly
changed if such error[ ] had not been made."
National Petrochemical & Refiners Assn v
. EPA,
287 F .3d 1130, 1148 (D .C.Cir.2002) (quoting CAA §
307(d)(8), 42 U.S.C. ¢ 7607(d)(8)) . Petitioner States
argue that EPA's refusal to conduct full notice-and-
comment rulemaking fails under this standard . The
only support petitioner States
offer
for this
proposition, however, is their contention that had the
states been given . meaningful opportunity for
comment, Illinois would have been able to offer
evidence about its nuclear power and electricity
generation capacity that would have countered EPA's
assumptions. This example is not convincing .
In its response to NODA II, Illinois stated that it had
already "provided detailed support for [Illinois'
position that EPA's projected electrical generation
was too low] to EPA and we have explained our
analyses and supporting facts in detail ." Illinois
pointed out that during the NODA I comment period,
it had commented on the "data and on the broader
underlying growth factor issues which Illinois has
repeatedly raised to EPA ." In Illinois' response to
NODA I, it specifically provided its opinion
regarding its nuclear power generation and capacity.
In sum, the only evidence petitioning States offer to
show that the absence of formal procedures following
NODA II caused EPA to decide differently was, in
fact, before the EPA in responses to NODA I . This
is not sufficient under the applicable standard of
review. While EPA erred in failing to provide
comment following NODA II, petitioners -
have
offered no evidence that there is a "substantial
likelihood" that the rule
would have been
"significantly changed" in the absence of the
procedural error .
C. EPA's Growth Factor Methodology
f9l
This Court previously found that the EPA failed
to explain its method for projecting EGU growth
rates. In Appalachian I and Appalachian II, we
remanded the rules at issue and instructed the EPA to
"fulfill its
obligation to engage in reasoned
decisionmaking on how to set EGU growth factors
and explain why results that appear arbitrary on their
face are,
in fact, reasonable determinations ."
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U .S.App.D.C. 419
(Cite as : 362 F
.3d 861, 360 U.S.App.D.C. 419)
Appalachian L249 F.3d at 1055 ; Appalachian If,251
F.3d at 1035 . In particular, we were concerned about
EPA's decision to apply projected heat input growth
rates from 2001-2010 to the 1996-2007 period .
Appalachian I,249 F.3d at 1053-54 . Fueling those
concerns was our observation that real-world growth
rates were not in line *870 **428 with EPA's
projections . Id.
Petitioners contend that on remand
the agency has failed to satisfy its obligation to
resolve these concerns .
According to petitioners, the overlapping quality of
the time periods is irrelevant, because 2001-2010 is
not representative of 1996-2007 . In particular,
petitioners argue that there is an absence of evidence
regarding heat-input growth for the 1996-2000
period
. If growth rates during that time period were
different, it would set all of the EPA's predictions
askew, because the IPM uses the difference between
two modeled years to determine the growth rate
. In
other words, according to petitioners, the starting
point matters greatly in determining the end result, as
the years build on one another. Furthermore,
petitioners do not accept the agency's explanation that
the high costs in conducting extra IPM runs militate
against adding runs for the additional years 1996-
2001, and they question the EPA's explanation that
by running the IPM for 2001-2010, the EPA will be
able to utilize the information for several other
programs . In sum, petitioners argue that EPA cannot
rely on generalized cost savings as an excuse for
limiting the quality of its work.
We think EPA has reasonably explained why it
chose to rely on the IPM projections for years 2001-
2010 in determining the projected growth rate for
1996-2007
. We pause to note that actual heat inputs
have changed since our prior decisions . The
discrepancies we observed between the actual heat
input values and the projections for various states
during the original Appalachian cases - which
discrepancies made EPA's modeled growth rates
appear arbitrary
-
are no longer so severe
. Both West
Virginia and Michigan, which were cited in our
earlier opinions as having actual heat input in 1998
already exceeding the EPA's 2007 projections, have
both experienced declining heat input from 1998 to
2001 . Appalachian 1,249 F.3d at 1053 . By 2001,
the last year for which data was available for EPA's
Remand Response, Michigan's heat input levels had
dropped significantly and were in line with EPA's
2001 projections and 8
.7% below 2007 projections .
67 Fed.Reg. 21,895 . Furthermore, actual heat-input
values have decreased in several of the regulated
states from 1998 to 2001 . 67 Fed .Reg
.
21,883 .
© 2006 Thomson/West . No Claim to Orig . U.S. Govt. Works.
Page 7
Finally, EPA points out that the NOx SIP Call covers
23 jurisdictions, and the existence of some margin of
error with respect to some of the predictions is not
indicative of an unreasonable approach .
In response to our concern that "[f]uture growth
projectionss that implicitly assume a baseline of
negative growth in electricity generation over the
course of a decade appear arbitrary, and the EPA can
point to nothing in the record to dispel this
appearance," Appalachian 1.249 F.3d at 1053, the
EPA has published historical data that shows there
have been historical periods of multi-year heat-input
decline . 67 Fed.Reg . 21,884-21,885 .
The EPA also points out the significant overlap
between the modeled time period and the regulated
time period . Again, the IPM was run for the years
2001-2010, and then applied to the 1995 or 1996 to
2007 time frame
. Therefore, for the 2001-2007
period, all of the underlying inputs would be the
same as if the model had been conducted on the 1995
or 1996 to 2007 time period
. The resulting projected
demand for those years would also be the same .
Because the growth factor is derived from the
difference in heat input growth between modeled
years, for this entire period the growth rate is directly
correlated .
Finally, the EPA describes its effort to "balance the
cost and complexity of a more elaborate model
against the oversimplification of a simpler **429
model." Id.
at 21,876 *871 (quoting
Small Refiner
Lead Phase-Down Task Forcev. EPA,705 F.2d 506,
535 (D .C.Cir.1983)).
As the EPA explains, "[t]he
complexity of the model - its simulations, inputs, and
variables - means that each additional run year adds
many more calculations to the model, a task that
requires time and resources." Id. Because of the
increased cost, "other ways would have had to be
[sic] found to reduce the number of equations,"
including reduction of variables or constraints which
would have decreased the accuracy of the model . Id.
In addition, by starting the IPM in 2001, "the model
adequately served the needs of several programs ."
Id.
In sum, EPA asserts that any further refinement
in the heat .input growth rate that may have resulted
from adding additional years would not have been
worth the increased cost .
In the Appalachian cases we were faced with a
situation in which
"even in the face of evidence
suggesting the EPA's projections were erroneous, the
EPA never explained why it adopted this particular
methodology." Appalachian I,
249 F.3d at 1053 .
On
362 F.3d 861
362 F.3d 861, 58 ERC 1333, 360 U
.S.App.D.C
. 419
(Cite as : 362 F .3d 861, 360 U.S.App .D.C. 419)
remand, EPA adequately explained why it chose to
apply IPM results from 2001-2010 to determine 2007
heat input requirements, and the evidence suggesting
the projections were erroneous has greatly
diminished . As we stated in the earlier cases, we will
"give an extreme degree of deference to the agency
when it is evaluating scientific data within its
technical expertise ." Id.at 1052 (quoting Huls Am.,
Inc. v. Browner,83 F.3d 445, 452 (D .C.Cir.1996)) .
Furthermore, "we must defer to the agency's decision
on how to balance the cost and complexity of a more
elaborate model against the oversimplification of a
simpler model ." Small Refiner Lead Phase-Down
Task Force v . EPA,705 F.2d at 535 . We will
"reverse only if the model is so oversimplified that
the agency's conclusions from it are unreasonable ."
Id
.
This great degree of deference, coupled with
EPA's explanation and the evidence added to the
record on remand, requires that the petitions be
denied .
D. EPA's Electrical Demand Projections and
Disaggregation
Petitioners raise two other distinct challenges . First,
they claim that the EPA erred in projecting electricity
demand growth. More specifically, petitioners
contend that EPA erred in discounting electricity
demand projections made by the North
. American
Electric Reliability Council ("NERC"), a not-for-
profit corporation made up
of electric utility
generators, sellers, and users . Petitioners also
challenge EPA's reduction of projections made by
the Energy Information Administration ("EIA"), a
department within the United States Department of
Energy. The EPA made these reductions because it
thought the forecasts did not take into account future
reductions in electricity demand caused by energy
conservation programs . Petitioners challenge both
the amount of the reduction EPA applied, and the
premise that these energy conservation programs
were not already accounted for in the projections
.
Second, they challenge EPA's method
of
disaggregating regional data . Because the IPM
"necessarily models electricity generation and sales
on a regional basis in order to reflect the regional
nature of the electricity sector," EPA is required to
take regional results and turn them into state-specific
budgets. 67 Fed .Reg. 21,888 .
Petitioners contend
that EPA failed to
adequately explain its
disaggregation methodology, and that failure to do so
on remand was arbitrary .
10 Both petitioners' disaggregation and electricity
demand reduction claims *872 **430 are forfeit . The
© 2006 Thomson/West . No Claim to Orig
. U.S
. Govt. Works.
Page 8
EPA correctly points out that petitioners never raised
these claims to the agency in the administrative
proceedings when the modeling period was adopted,
or in the earlier challenges in this Court . To the
extent that petitioners challenged the validity of
EPA's use of the IPM, this Court has already rejected
that challenge . Appalachian1 249 F.3d at 1052-53
.
Petitioners, having forgone the ability to attack these
aspects of the model while the rule was being
promulgated and initially challenged in court, cannot
now do so . Appalachian II251 F.3d at 1036 ("It is
black-letter administrative law that 'absent special
circumstances, a party must initially present its
comment to the agency during the rulemaking in
order for the court to consider the issue' ") (quoting
Tex Tin Corp. v. EPA, 935 F .2d 1321, 1323
(D.C.Cir.1991))
.
Because neither of these claims
were raised in the initial litigation or the original
rulemaking, they cannot be raised now .
jl l] Additionally, EPA did not reopen these issues
in the remand proceedings . Petitioners argue
vehemently that EPA did so because it "respond [ed]
on the merits" to virtually all comments . 67 Fed .Reg.
21,901 . That statement in the Federal Register,
however, was made in response to commenters'
request that EPA treat any comments it believed
outside the scope of the remand as a petition to
reconsider. Id. As we have previously held, °"the
reopening rule of Ohio v. EPA is not a license for
bootstrap procedures by which petitioners can
comment on matters other than those actually at
issue, goad an agency into a reply, and then sue on
the grounds that the agency had re-opened [sic] the
issue." American Iron & Steel Inst. v. EPA,886 F.2d
390, 398 (D.C.Cir.1989) (internal citations omitted) .
Petitioners are correct that "[w]hether an agency has
in fact reopened an issue, explicitly or implicitly,"
depends on "the entire context of the rulemaking
including all relevant proposals and reactions of the
agency." PublicCitizen v. NRC901 F.2d 147, 150
(D.C.Cir.1990). However, petitioners have not
shown that the EPA either explicitly or implicitly
reconsidered these issues on remand .
As a threshold matter, EPA expressly stated on
remand that it "is not soliciting comment on IPM
itself or on state-specific approaches for determining
2007 heat input levels ." 66 Fed .Rea. 40,616 (August
3, 2001) . Looking for implicit reconsideration of
these claims, we find none . A reading of EPA's
explanation of its reduction of EIA and NERC
forecasts, contained in its Remand Response, shows
that it did not reconsider that aspect of the rule ;
rather, it responded to commenters' concerns by
362 F .3d 861
362 F .3d 861, 58 ERC 1333, 360 U .S.App.D.C. 419
(Cite as : 362 F .3d 861, 360 U .S.App.D.C. 419)
further explaining its reasoning . See Fed.Reg.
21,867-21,88 1 . This is also true of its disaggregation
methodology .
The EPA's disaggregation
methodology was made public on August 24, 1998 .
63 Fed .Reg. 45,032-45,033 . Petitioners, however,
did not raise any claims about EPA's disaggregation
methodology in the previous litigation . Again, a
reading of the EPA's Remand Response shows that
there was no implicit reconsideration of its
disaggregation
methodology; instead, it simply
reiterated the reasoning it had used from the
beginning. 67 Fed.Reg. 21,881 .
In sum, these claims fall squarely within the ambit of
American Iron & Steel Institute. Here, petitioners
submitted comments, "goad[ed] [EPA] into a reply,
and [now] sue on the grounds that the agency ha[s]
re-opened [sic] the issue ." AmericanIron &Steel
Inst.,886 F.2d at 398 . This, we cannot allow. The
record does not reflect that EPA explicitly or
implicitly reopened the issue. See Public Citizen v.
NRC.901 F .2d at 150 .
*873 **431 III
. Conclusion
The EPA erred in not providing an opportunity to
comment when it added new material to the docket
subsequent to its initial NODA, but because the
petitioners have not shown a substantial likelihood
that the rule would have been significantly changed
in the absence of that procedural error, it will not
serve as the basis for invalidating the agency's action .
Because EPA has now explained its choice of
methodology for projecting EGU growth factors, and
because petitioners' claims regarding : (1) EPA's
reduction of NERC and EIA forecasts, and (2) EPA's
disaggregation methodology have been waived, we
deny the petitions for review
.
362 F.3d 861, 58 ERC 1333, 360 U
.S.App.D.C. 419
Briefs and Other Related Documents
(Back to top)
' 02-1181 (Docket) (Jun . 07, 2002)
END OF DOCUMENT
2006 Thomson/West . No Claim to Orig . U.S. Govt. Works.
Page 9
PROOF OF SERVICE
I, the undersigned, on oath state that I have served the attached
MOTION TO
SUPPLEMENT THE RULEMAKING PROPOSAL
of the Illinois Environmental Protection
Agency upon the person to whom it is directed, by placing it in an envelope addressed to
:
TO:
Dorothy Gunn, Clerk
John Knittle, Hearing Officer
Illinois Pollution Control Board
Illinois Pollution Control Board
State of Illinois Center
State of Illinois Center
100 West Randolph, Suite 11-500
100 West Randolph, Suite 11-500
Chicago, Illinois 60601
Chicago, Illinois 60601
Gale W . Newton
Ladonna Driver
Hodge Dwyer and Zeman
Illinois Environmental Regulatory Group
3150 Roland Ave
.
3150 Roland Ave.
P.O. Box 5776
Springfield, IL 62703
Springfield, IL 62703-5776
Kathleen C . Bassi
Schiff Hardin, LLP
6600 Sears Tower
233 S . Wacker Drive
Chicago, IL 60606-6473
and mailing it by First Class Mail from Springfield, Illinois on February 17, 2006 with sufficient
postage affixed
.
SUBSCRIBED AND SWORN TO BEFORE ME
this 17`h
day of February, 2006
2~
Notary Pub is
BRENDA
OFFICIAL
BOEHNER
SEAL
NOTARY PUBLIC, STATE OF
ILLINOIS
MY COMMISSION EXPIRES 11-3-2009'
