In The Supreme Court of the United States

No. 13-940 ================================================================ In The Supreme Court of the United States --------------------------------- --------------------------------- STATE OF NORTH DAKOTA, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al., Respondents. --------------------------------- --------------------------------- On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Eighth Circuit --------------------------------- --------------------------------- REPLY IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI --------------------------------- --------------------------------- WAYNE STENEHJEM Attorney General STATE OF NORTH DAKOTA PAUL M. SEBY Special Assistant Attorney General Counsel of Record MARIAN C. LARSEN Special Assistant Attorney General HOLLAND & HART LLP 555 17th Street, Suite 3200 Denver, CO 80202 pmseby@hollandhart.com (303) 295-8430 Counsel for Petitioner ================================================================ COCKLE LEGAL BRIEFS (800) 225-6964 WWW.COCKLELEGALBRIEFS.COM

i TABLE OF CONTENTS Page REPLY IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI... 1 CONCLUSION... 13

ii TABLE OF AUTHORITIES Page CASES Alaska Dep t of Envtl. Conserv. v. EPA, 540 U.S. 461 (2004)... passim American Corn Growers Ass n, 291 F.3d 1(D.C. Cir. 2002)... 3, 4, 7, 8 Bell v. Cheswick Generating Station, 734 F.3d 188 (3d Cir. 2013)... 2 Florida Power & Light Co. v. Costle, 650 F.2d 579 (5th Cir. 1981)... 9 Luminant Generation Co. v. EPA, 675 F.3d 917 (5th Cir. 2012)... 8, 9 Marsh v. Oregon Natural Res. Council, 490 U.S. 360 (1989)... 5 Oklahoma v. EPA, 723 F.3d 1201 (10th Cir. 2013)... 5 Train v. Natural Res. Defense Council, 421 U.S. 60 (1975)... 7 Union Electric Co. v. EPA, 427 U.S. 246 (1976)... 3, 4 United States v. Minnkota Power Coop., 831 F. Supp. 2d 1109 (D. N.D. 2011)... 5 Virginia v. EPA, 108 F.3d 1397 (D.C. Cir. 1997)... 4 Wyoming v. EPA, No. 14-9529 (10th Cir., filed Mar. 28, 2014)... 7

iii TABLE OF AUTHORITIES Continued Page STATUTES 42 U.S.C. 7401(a)(3)... 1 42 U.S.C. 7491(g)(1)... 1, 4 42 U.S.C. 7491(b)(2)... 3 42 U.S.C. 7491(b)(2)(A)... 3 Clean Air Act... passim

1 REPLY IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI The Solicitor General acknowledges that the Clean Air Act ( CAA ) gives States the primary role of determining the appropriate pollution controls within their borders. Opp. 14-15, quoting App. at 16-17; see also 42 U.S.C. 7401(a)(3). The Solicitor General further acknowledges that the EPA cannot disapprove a SIP that does not interfere with the Act, even if the SIP reflects choices that the EPA would not have made if the decision were entrusted to [EPA] in the first instance. Opp. 16. Exercising authority granted to it under the CAA, North Dakota made a reasonable progress determination in accordance with the statutory factors and its own refined air quality model for evaluating the degree of visibility improvement associated with potential controls, 42 U.S.C. 7491(g)(1), before selecting cost effective emission controls. App. at 26, 30. North Dakota s use of a refined visibility model was warranted to reflect specific meteorological circumstances and in light of the influence of international sources of visibility impairing emissions adversely affecting visual air quality in North Dakota. Nothing North Dakota did in designing and applying its refined visibility assessment of real world conditions violated the CAA or EPA s regulations. In overriding North Dakota s reasonable progress determination, the Solicitor General plainly usurped the State s authority under the CAA, upsetting the delicate balance of power between the States and the federal government i.e. cooperative federalism

2 that Congress created under the CAA. See Bell v. Cheswick Generating Station, 734 F.3d 188, 190 (3d Cir. 2013) (CAA employs a cooperative federalism structure under which the federal government develops baseline standards that the states individually implement and enforce ). In sanctioning EPA s overreach, the Eighth Circuit compounded EPA s error by applying the wrong standard of review and placing the burden on North Dakota to prove EPA s arbitrariness, rather than deferring to the State. As evidenced by the sixteen State and state agency amici who urge this Court to grant review, 1 the questions presented here are of both national importance and a recurring nature. The Eighth Circuit s decision disrupts the allocation of authority between state and federal agencies tasked to work together and establishes an incorrect standard of review for cases where EPA disapproves State SIP determinations. The Solicitor General asks this Court to ignore the significance of this case, as well as the conflicts between the decision below and those of this Court and other federal courts of appeals, but to do so would eviscerate the cooperative federalism framework of the CAA. The Eighth Circuit decision conflicts with other federal courts, including this Court, on the basic 1 See Brief of Amici Curiae States of Arizona and Nebraska and Fourteen Other States and State Agencies in Support of Petitioner.

3 question of how federal-state authority is allocated under the CAA, specifically with respect to the Visibility Protection Program. See Pet. 25-32. The decision defers to EPA s subsequently asserted technical expertise when it should defer to the State s in the first instance. The Solicitor General responds to the petition with a litany of issues not raised by North Dakota, stressing among other things that EPA has authority to review State reasonable progress determinations (Opp. 11-13, 15, 17-18) and to interpret federal law (Opp. 17). But such pettifoggery cannot obscure the fundamental conflict between the Eighth Circuit s decision and the decisions of this Court and others. 1.a. States are sovereign governments with administrative agencies whose decisions regarding regional haze are entitled to deference. EPA plays a limited but vital role with respect to regional haze, consistent with a scheme that places primary responsibilities and authority with the States, backed by the Federal Government. Alaska Dep t of Envtl. Conserv. v. EPA, 540 U.S. 461, 491 (2004) (punctuation and citation omitted). EPA previously acknowledged the need to accord appropriate deference to State actions and assured this Court that it would not second guess State decisions. Alaska at 490-91 (citation omitted). Such deference to the States is compelled by the CAA itself and case law. 42 U.S.C. 7491(b)(2) and (b)(2)(a); Union Electric Co. v. EPA, 427 U.S. 246, 256 (1976) (CAA place[s] the primary responsibility on the States); American Corn Growers

4 Ass n, 291 F.3d 1, 2 (D.C. Cir. 2002) (States play the lead role in designing and implementing regional haze programs); Alaska at 485 (States are empowered to make determinations that are reasonably moored to the Act s provisions. ); id. at 491 (the CAA places primary responsibilities and authority with the States, backed by the Federal Government ) (quoting S. Rep. No. 95-127, p. 29). Here, EPA usurped North Dakota s authority in the very ways prohibited by Alaska and Corn Growers. Rather than uphold the basic structure of the cooperative relationship between EPA and the States, the Eighth Circuit supplanted the State s determinations on visibility modeling with EPA s. App. 29. The Eighth Circuit s decision conflicts with Congress intent that the States retain a significant degree of control over the manner in which they attain and maintain national standards. Virginia v. EPA, 108 F.3d 1397, 1407 (D.C. Cir. 1997). Deference to the States is particularly appropriate with respect to reasonable progress determinations, since it is the States that decide where and how to obtain emission reductions based on four statutory factors. 42 U.S.C. 7491(g)(1); see also Union Electric at 269 (States exercise the power to determine which sources would be burdened by regulation and to what extent ). While the Solicitor General concurs that States are the primary decision makers (Opp. 8), he nonetheless asserts that EPA s interpretation of how to implement the Visibility Program must trump the States reasonable determinations despite the CAA s specific

5 language to the contrary. Opp. 17-18. This improperly treats State agencies as junior varsity counterparts to EPA. b. Instead of upholding North Dakota s reasonable progress determinations pursuant to Alaska, the Eighth Circuit deferred to EPA s asserted technical difference of opinion, upholding EPA s partial rejection of the SIP without evaluating whether the SIP itself was reasonable. App. 29-30. This impermissibly destroys the State s role. The Eighth Circuit should have deferred to North Dakota and its administrative agency s technical expertise, because doing so is consistent with State primacy and the principle that expert administrative agencies enjoy. See Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 378 (1989) ( an agency must have discretion to rely on the reasonable opinions of its own qualified experts ); United States v. Minnkota Power Coop., 831 F. Supp. 2d 1109, 1126 (D. N.D. 2011) (deferring to North Dakota s technical expertise in a dispute with EPA involving a dispute over what is BACT for an electric generating unit). Instead, the Eighth Circuit deferred to EPA s asserted technical expertise and upheld the partial SIP disapproval without further analysis. App. 29; see also Oklahoma v. EPA, 723 F.3d 1201, 1216 (10th Cir. 2013). Such a result negates North Dakota s primacy set forth under 169A. Here, where the statutory factors entrusted to North Dakota for making reasonable progress decisions involve the application of the State s technical judgment, EPA must give meaningful

6 deference to the State s determination. The statefederal balance is undermined if a court defers to EPA s views as to what is reasonable, as opposed to the State s, otherwise Alaska s recognition of State primacy becomes a hollow shell. 2.a. This Court in Alaska gave meaning to State primacy by reviewing the State s decision for reasonableness, without deferring to EPA. Alaska at 497-500. As the Court explained, the underlying question a reviewing court resolves... [is] whether the state agency s BACT determination was reasonable, in light of the statutory guides and the state administrative record. Alaska at 494. Our own analysis similarly hinges on the question whether ADEC s BACT determination was a reasonable one, with the burden on EPA to prove it was not. Id. (citation omitted). Only after a significant factual review of the State s decision did the Court conclude that ADEC s BACT designation simply did not qualify as reasonable in light of the statutory guides, and therefore EPA s disapproval was not arbitrary. Alaska at 500. The Solicitor General avoids this fundamental issue, stating simply that Alaska authorizes EPA to review State determinations. Opp. 20-21. North Dakota does not dispute that EPA has such review authority. Rather, the pertinent issue is not EPA s authority to review a SIP, but how the lower courts should resolve claims that EPA s SIP disapproval was flawed. Such claims are common with respect to regional haze SIPs and can also arise from SIPs involving BACT or other CAA programs. At least nine

7 regional haze cases involving SIP disapproval are pending in the circuit courts. Pet. 34-35; States Amici Br. 17 n.9. 2 b. By deferring to EPA without considering whether North Dakota made a reasonable determination that complied with the CAA, the Eighth Circuit stripped North Dakota of any remedy against EPA s infringement on the State s primacy. This is contrary to this Court s holding that the State is at liberty to adopt whatever mix of emission limitations it deems best, so long as the ultimate effect is compliance with the CAA. Train v. Natural Res. Defense Council, 421 U.S. 60, 79 (1975). The Eighth Circuit decision allows EPA to revise regional haze and other SIPs to suit its own preferences and removes any legal significance from SIPs, rendering them mere rough drafts for EPA to rewrite. States should not be left to guess how EPA will act. c. The Eighth Circuit s decision also conflicts with Corn Growers. Like Corn Growers, the issue before the Eighth Circuit involved the extent of EPA s authority to direct states to make BART or reasonable progress determinations in a certain prescribed manner. The Eighth Circuit deviated from Corn Growers by failing to give appropriate deference to North Dakota s reasonable progress determination 2 Wyoming appealed EPA s partial disapproval of its SIP subsequent to the Petition. Wyoming v. EPA, No. 14-9529 (10th Cir., filed Mar. 28, 2014).

8 and its choice of air quality modeling, instead allowing EPA to infringe on the State s authority. Compare App. 29 (deferring to EPA) with Corn Growers at 8 ( the states not EPA make BART determinations). Such deference to EPA impermissibly deprives the States of their statutory authority. See Corn Growers at 8. d. The Solicitor General admits that courts may set aside EPA actions if EPA abuses its review authority, but asserts there was no such abuse here because EPA reasonably interpreted the CAA. Opp. 26-27. The Solicitor General merely parrots the Eighth Circuit s unsound reasoning. Both treat the State s determination as a mere precursor that must yield to any EPA asserted technical difference of opinion. This approach violates Corn Growers principles of State primacy and relegat[es] States to the role of mere provinces or political corporations, instead of coequal sovereigns. Alaska at 518 (Kennedy, J., dissenting). e. The decision below further conflicts with established precedent by allowing EPA to assert a CAA violation without any textual support. For example, in Luminant, EPA claimed that certain State regulations did not comply with the CAA but could point only to violations of guidance documents and a Federal Register preamble, not the statute or binding regulations. Luminant Generation Co. v. EPA, 675 F.3d 917, 924, 927 & 931 (5th Cir. 2012). The court granted appropriate deference to EPA s interpretation of the CAA, but separately evaluated the merits of EPA s position. Id. at 928. Finding that EPA

9 had not demonstrated that the State regulations would interfere with any applicable CAA requirement, the Fifth Circuit vacated EPA s disapproval. Id. at 928, 930-32. For the same reason, the decision below conflicts with Florida Power & Light Co. v. Costle, where the court held that EPA is surely overstepping the bounds of its discretion; EPA can point to no provision of... the Act to justify EPA s attempt to require a SIP revision. 650 F.2d 579, 588 (5th Cir. 1981). 3. Given the several decades remaining for States to develop and submit specific regional haze SIPs, the national importance of this case is undeniable. The question presented affects all States, EPA, untold (and diverse) numbers of sources of air emissions nationwide, and the courts. While the Solicitor General maintains that the Eighth Circuit decision reflects the proper allocation of interlocking and complementary state and federal authority, (Opp. 16), those amici States in support of certiorari see things differently, arguing that the Eighth Circuit opinion would allow EPA to intrude into areas the statute reserves for the States. States Amici Br. 15. 4. The Solicitor General re-characterizes the dispute as a challenge to EPA s authority to interpret federal law, Opp. 17-18, and further asserts that EPA has a responsibility to ensure that [State] authority is reasonably exercised. Opp. at 8, 14 (citation and punctuation omitted). In reality, North Dakota seeks to preserve the balance between State and Federal Governments (Alaska at 511-12, Kennedy, J., dissenting) and the ability of injured States to obtain

10 relief from the courts when EPA misinterprets the law or wrongly disapproves State action. a. In order to exercise their primary responsibility over reasonable progress determinations States must interpret the CAA, applying it to the specific circumstances. The Solicitor General s argument that the CAA assigns the EPA, not the States, the primary role in interpreting and applying federal law (Opp. 17) negates State primacy. To preserve meaningful judicial review, the Eighth Circuit should have inquired for itself whether the State complied with the law (as this Court did in Alaska) and not defer to EPA s technical expertise, but to North Dakota s. b. While EPA enjoys a supervisory role over reasonable progress determinations, that role does not allow EPA to substitute its judgment for that of the States. EPA may only disapprove State action if it is not reasonably moored to the CAA. Alaska at 485; id. at 504 (Kennedy, J., dissenting) ( To be sure, 113(a)(5) and 167 authorize EPA to enforce requirements of the Act. These provisions, however, do not limit the States latitude and responsibility to balance all the statutory factors in making their discretionary judgments. ). To disapprove a State determination, EPA must demonstrate it is unreasonable. Merely citing a non-binding guidance document or Federal Register preamble does not fulfill this burden.

11 d. The issue here is not that North Dakota is indifferen[t] to federal law (Opp. 18), but the converse: EPA unilaterally elevated its nonbinding guidance to the status of law, despite the fact that the CAA and regulations say nothing about the use of actual atmospheric conditions or natural background concentrations. App. 118-20. EPA s disapproval amounts to a mere preference for a different result. This is not a sufficient basis for EPA to disapprove the State s determination. 6. Despite the nationwide significance of the issues raised in this case, EPA sidesteps the central issue of what is the proper standard of review for SIP disapproval cases, and says nothing about deference to State agencies. This omission is striking given that North Dakota and Oklahoma both deferred to EPA s technical expertise, and the amici s focus on the issue. The Solicitor General s avoidance of the issue should be read as an admission that the questions surrounding the standard of review are significant and deserving of certiorari. Further, contrary to the Opposition, North Dakota s petition does not challenge EPA s authority to conduct a substantive rather than ministerial review. (Opp. at 11-13, 15, 17-18). Neither does North Dakota ask this Court to determine whether EPA s conclusions were reasonable. Opp. at 30. Instead, North Dakota respectfully asks the Court to resolve the allocation of authority between state and federal agencies in cooperative federalism, the standard of review for SIP disapprovals, and the unequivocal

12 conflict between the Eighth Circuit decision and decisions of this Court and courts of appeals. 7. Alaska left unanswered questions about the standard of review for cases where, as here, a federal agency passes judgment on State action pursuant to a statutory scheme of cooperative federalism. The Administrative Procedure Act s familiar default arbitrary and capricious standard applies. Alaska at 496-97. However, the EPA action under review is not the only administrative decision at issue, nor is it an original, free-standing decision by the agency. The dissent noted that judicial review of a SIP disapproval presents the convoluted question whether EPA acted arbitrarily in finding the State acted arbitrarily. Id. at 510. a. This Court in Alaska evaluated EPA s action by first examining the underlying State action, Alaska at 497-500, but did not expound the standard for doing so. Ignoring this Court s example, the Eighth Circuit deferred to EPA without considering whether the State acted reasonably. App. 29-30. The Solicitor General contends that [t]he court of appeals applied ordinary principles of judicial review of agency action to uphold the EPA s application of federal law, (Opp. 14) but this merely begs the question yet to be answered by this Court of how the lower courts should review a federal agency s ruling that a State agency s exercise of discretion violates the statute. b. State action passes muster if it is reasonably moored to the Clean Air Act. The reasonably

13 moored standard does not mandate a single, objectively correct result, but instead allows States to select from a range of reasonable choices. Alaska at 488. EPA should therefore be required to approve a reasonable progress determination unless it shows that the ultimate determination fails to comply with the CAA. --------------------------------- --------------------------------- CONCLUSION For the foregoing reasons, and those in the petition and the amici curiae briefs, the petition for a writ of certiorari should be granted, and the judgment below reversed. Respectfully submitted, WAYNE STENEHJEM Attorney General STATE OF NORTH DAKOTA PAUL M. SEBY Special Assistant Attorney General Counsel of Record MARIAN C. LARSEN Special Assistant Attorney General HOLLAND & HART LLP 555 17th Street, Suite 3200 Denver, CO 80202 pmseby@hollandhart.com (303) 295-8430 Counsel for Petitioner