State of New York v. EPA

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 28, 2018 Decided April 23, 2019
No. 17-1273
STATE OF NEW YORK, ET AL.,
PETITIONERS
v.
ENVIRONMENTAL PROTECTION AGENCY AND ANDREW
WHEELER, IN HIS OFFICIAL CAPACITY AS ACTING
ADMINISTRATOR OF THE U.S. ENVIRONMENTAL PROTECTION
AGENCY,
RESPONDENTS
COMMONWEALTH OF KENTUCKY ENERGY AND ENVIRONMENT
CABINET, ET AL.,
INTERVENORS
On Petition for Review of Final Action of the
United States Environmental Protection Agency
David S. Frankel, Assistant Solicitor General, Office of the
Attorney General for the State of New York, argued the cause
for petitioners. With him on the briefs were Barbara D.
Underwood, Attorney General, Steven C. Wu, Deputy Solicitor
General, Morgan A. Costello and Claiborne E. Walthall,
Assistant Attorneys General, Matthew P. Denn, Attorney
General, Office of the Attorney General for the State of
Delaware, Valerie S. Edge, Deputy Attorney General, Maura
2
Healey, Attorney General, Office of the Attorney General for
the Commonwealth of Massachusetts, Carol A. Iancu, Assistant
Attorney General, George Jepsen, Attorney General, Office of
the Attorney General for the State of Connecticut, Matthew I.
Levine and Jill Lacedonia, Assistant Attorneys General, Brian
E. Frosh, Attorney General, Office of the Attorney General for
the State of Maryland, Michael F. Strande, Deputy Attorney
General, Peter F. Kilmartin, Attorney General, Office of the
Attorney General for the State of Rhode Island, Gregory S.
Schultz, Special Assistant Attorney General, Joshua Shapiro,
Attorney General, Office of the Attorney General for the
Commonwealth of Pennsylvania, Michael J. Fischer, Chief
Deputy Attorney General, Kristen M. Furlan, Assistant Director,
Thomas J. Donovan, Jr., Attorney General, Office of the
Attorney General for the State of Vermont, and Nicholas F.
Persampieri, Assistant Attorney General. Steven Santarsiero,
Chief Deputy Attorney General, Office of the Attorney General
for the Commonwealth of Pennsylvania, entered an appearance.
Ariel Solaski, Jon A. Mueller, and Joshua A. Berman were
on the brief for amicus curiae Chesapeake Bay Foundation, Inc.
and Sierra Club in support of petitioners’ request for vacature.
Sonya Shea, Attorney, U.S. Department of Justice, argued
the cause for respondents. With her on the brief were Jeffrey H.
Wood, Acting Assistant Attorney General, Jonathan D.
Brightbill, Deputy Assistant Attorney General, and Stephanie L.
Hogan, Attorney, U.S. Environmental Protection Agency.
Michael DeWine, Attorney General, Office of the Attorney
General for the State of Ohio, Eric E. Murphy, State Solicitor,
Samuel C. Peterson, Deputy Solicitor, Aaron S. Farmer,
Assistant Attorney General, Bill Schuette, Attorney General,
Office of the Attorney General for the State of Michigan, Aaron
D. Lindstrom, Solicitor General, Jacquelyn A. Quarles, Deputy
3
General Counsel, Kentucky Energy and Environment Cabinet,
Curtis T. Hill, Jr., Attorney General, Office of the Attorney
General for the State of Indiana, Thomas M. Fisher, Solicitor
General, Patrick Morrisey, Attorney General, Office of the
Attorney General for the State of West Virginia, Lindsay S. See,
Solicitor General, and Paul A. Martin, Chief Deputy Attorney
General, were on the brief for intervenors States of Ohio, et al.
in support of respondent.
Joshua H. Stein, Attorney General, Office of the Attorney
General for the State of North Carolina, Marc Bernstein, Special
Deputy Attorney General, and Asher P. Spiller, Assistant
Attorney General, were on the brief for respondent-intervenor
the State of North Carolina.
Herbery H. Slatery, III, Attorney General, Office of the
Attorney General and Reporter for the State of Tennessee, and
J. Peter Murrey, Assistant Attorney General, were on the brief
for amicus curiae the State of Tennessee in support of
respondents.
Norman W. Fichthorn, E. Carter Chandler Clements, and
Andrew D. Knudsen were on the brief for respondent-intervenor
Utility Air Regulatory Group.
Before: WILKINS and KATSAS, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
RANDOLPH.
RANDOLPH, Senior Circuit Judge: In the Clean Air Act
Amendments of 1990, Congress established the “Northeast
Ozone Transport Region.” The Region consists of Connecticut,
Delaware, Maine, Maryland, Massachusetts, New Hampshire,
4
New Jersey, New York, Pennsylvania, Rhode Island, Vermont,
the District of Columbia, and a portion of Virginia. 42 U.S.C.
§ 7511c(a).
Years later several States in the Region requested the
Environmental Protection Agency to expand the Region to
include the upwind States of Illinois, Indiana, Kentucky,
Michigan, North Carolina, Ohio, Tennessee, West Virginia, and
the remaining portions of Virginia.1 EPA’s refusal is the subject
of this lawsuit.
The issue in this case is whether EPA’s decision was
arbitrary and capricious or otherwise contrary to law.
To appreciate whether EPA should have placed these States
in the Northeast Ozone Transport Region, one must understand
the regulation of ozone (O3). Ozone “is one of the primary
constituents of smog. Ozone’s three-atom arrangement is highly
unstable: the third oxygen atom, in a process called oxidation,
has an aggressive tendency to react with whatever substance is
available. . . . Exactly how ozone is created and transported in
the lower atmosphere,[2] and how it decays, is a matter of
extreme complexity. Ozone is not a direct pollutant. Vehicles
do not emit it, and it does not billow out of smokestacks.
Instead, it is formed mostly from the mixture of two chemical
precursors emitted by automobiles and industry: nitrogen oxides
(NOx) and a large group of hydrocarbon pollutants called
volatile organic compounds (VOCs). . . . These precursors cook
in the sun . . .. The creation of ozone can thus be seen as a
1
Petitioners in this court are Connecticut, Delaware, Maryland,
Massachusetts, New York, Pennsylvania, Rhode Island, and Vermont.
2
Ozone in the upper atmosphere is considered beneficial, indeed
essential, because it absorbs harmful ultraviolet rays.
5
seasonal phenomenon, with concentrations peaking in the
summer, and as a diurnal occurrence, with concentrations
peaking during the afternoon and falling during the night. The
precursor- and ozone-laden air slowly moves downwind, and as
the air mass moves, ozone levels often continue to increase, in
part because the ozone has more time to develop, in part because
the air mass picks up more precursors along the way.
Ultimately, this process can bring high ozone levels to areas
hundreds of miles downwind of the pollution sources.” Virginia
v. EPA, 108 F.3d 1397, 1399–1400 (D.C. Cir.), modified on
other grounds, 116 F.3d 499 (D.C. Cir. 1997).
For these reasons downwind States may be hampered in
their efforts to control their ozone pollution levels. Whatever
control measures these States impose on sources within their
borders, they cannot stop the arrival of pollutants from upwind
States. Id. at 1400.
States who are or who become members of the Northeast
Ozone Transport Region are subject to mandatory ozone
controls. 42 U.S.C. § 7511c(b). The controls include enhanced
vehicle-inspection and maintenance programs in densely
populated areas, reasonably available control technology for
emissions sources, vehicle-refueling controls for vapor recovery,
and heightened permitting and control requirements applicable
to major stationary sources. See id. With few exceptions, these
requirements apply throughout the region; EPA may lack
discretion to tailor the requirements to specific sources. See id.
§ 7511c(b)(1).
EPA may expand the Region pursuant to 42 U.S.C.
§ 7506a(a). This section provides that on receipt of a State’s
petition, EPA “may . . . add any State or portion of a State . . .
whenever the Administrator has reason to believe that the
interstate transport of air pollutants from such State significantly
6
contributes to a violation of the [air-quality] standard in the
transport region.” 42 U.S.C. § 7506a(a)(1). In their EPA
petition, the States here contended that the upwind States
“significantly contribute[d]” to ozone pollution in the Transport
Region. EPA exercised what it believed to be its discretion to
deny the State’s petition.3 In response to the States’ contention,
EPA wrote that it would continue to rely on two other Clean Air
Act sections: the “good-neighbor” provision and “section 126
petitions.” EPA Denial, 82 Fed. Reg. at 51,242.
T h e go o d - n e i gh b o r p r o v i s i o n , 4 2 U . S . C .
§ 7410(a)(2)(D)(i)(I), requires that each State’s implementation
plan prohibit sources within the State from emitting pollutants
that “contribute significantly to nonattainment in, or interfere
with maintenance by, any other State with respect to” the
relevant air-quality standards. If a State plan fails to satisfy the
good-neighbor provision, EPA must impose a federal plan that
does so. See id. § 7410(c)(1), (k).
The other section – section 126 – provides that a State or
political subdivision may submit a petition to EPA identifying
“any major source or group of stationary sources [that] emits or
would emit any air pollutant in violation of” the good-neighbor
3
Several of these States filed suit in the United States District
Court for the Southern District of New York to compel EPA to
respond to their petition. See Complaint at 4, New York v. McCarthy,
No. 16-cv-7827 (KPF) (S.D.N.Y. Oct. 6, 2016). In 2017, the district
court entered a consent decree in which EPA agreed to act on the
petition. Consent Decree at 3, New York v. McCarthy, No. 16-cv-7827
(KPF) (S.D.N.Y. Jan. 19, 2017). EPA then published a notice that it
was proposing to deny the States’ petition. Response to December 9,
2013, Clear Air Act Section 176A Petition, 82 Fed. Reg. 6509, 6510
(Jan. 19, 2017). Its denial became final in November 2017. Response
to December 9, 2013, Clean Air Act Section 176A Petition, 82 Fed.
Reg. 51,238, 51,239 (Nov. 3, 2017) [hereinafter EPA Denial].
7
provision. Id. § 7426(b). If EPA finds such a violation, the
source or sources must come into compliance or cease
operations. Id. § 7426(c).
In refusing to expand the Region in this case,
EPA noted its historical use of these authorities to
address the interstate transport of ozone pollution
and the advantages of those rulemakings for
addressing current ozone nonattainment problems
for the 2008 ozone [air-quality standards]. The
EPA explained that it preferred to use these
authorities to address the remaining interstate
transport problems with respect to the 2008 ozone
[air-quality standards] because it believes these
authorities allow the agency to develop a tailored
remedy that is most effective for addressing any
remaining air quality problems.
EPA Denial, 82 Fed. Reg. at 51,242. EPA thus concluded that,
compared to the blunt impact of expanding the region, these
other tools provided more effective and efficient approaches to
the ozone transport problem in light of limited agency resources.
See id. at 51,239, 51,244, 51,250.4
EPA and the State petitioners agree that we should apply to
EPA’s expansion denial the same standard we would apply to
the denial of a petition for rulemaking under the Administrative
4
EPA also determined that its denial was national in scope, as a
result of which this court has exclusive jurisdiction over any petition
for judicial review. See 42 U.S.C. § 7607(b)(1); EPA Denial, 82 Fed.
Reg. at 51,250.
8
Procedure Act. See 5 U.S.C. § 553(e).5 Judicial review of
EPA’s denial of a rulemaking petition is “‘extremely limited’
and ‘highly deferential.’” Massachusetts v. EPA, 549 U.S. 497,
527–28 (2007) (quoting Nat’l Customs Brokers & Forwarders
Ass’n of Am. v. United States, 883 F.2d 93, 96 (D.C. Cir. 1989)).
To set aside the agency’s judgment, the court must conclude that
EPA had not “adequately explained the facts and policy
concerns it relied on” or that those facts did not “have some
basis in the record.” WildEarth Guardians v. U.S. EPA, 751
F.3d 649, 653 (D.C. Cir. 2014) (quoting WWHT, Inc. v. FCC,
656 F.2d 807, 817 (D.C. Cir. 1981)). Nonetheless, even with
respect to a denial to engage in rulemaking, “[i]n these, as in
more typical reviews . . . , we must consider whether the
agency’s decisionmaking was ‘reasoned.’” Am. Horse Prot.
Ass’n v. Lyng, 812 F.2d 1, 5 (D.C. Cir. 1987) (quoting Prof’l
Drivers Council v. Bureau of Motor Carrier Safety, 706 F.2d
1216, 1220 (D.C. Cir. 1983)); see also Defs. of Wildlife v.
Gutierrez, 532 F.3d 913, 919 (D.C. Cir. 2008) (“[W]e look to
see whether the agency employed reasoned decisionmaking in
rejecting the petition.”). We can overturn EPA’s denial “only
for compelling cause, such as plain error of law or a
fundamental change in the factual premises previously
considered by the agency.” WildEarth, 751 F.3d at 653 (quoting
Nat’l Customs, 883 F.2d at 96–97).
Many of the States’ arguments against EPA’s denial derive
from a fundamental misunderstanding of the scope of EPA’s
discretion. According to the States, EPA’s reason for denying
their petition contravened 42 U.S.C. § 7506a(a), the provision
permitting EPA to expand a transport region. The States do not
5
The Clean Air Act’s judicial-review provision supplants the
Administrative Procedure Act with respect to a range of EPA
rulemaking actions but not a denial under § 7506a(a). See 42 U.S.C.
§ 7607(d)(1), (9).
9
deny that EPA has discretion to deny a petition to expand the
region. They contend, however, that under § 7506a(a), EPA
“may not decline an expansion based solely on a preference to
rely on other provisions absent a reasonable basis to believe that
these other provisions will effectively, on their own, redress
interstate ozone pollution.” Pet’rs’ Br. 31.
The States identify nothing in the text of § 7506a(a) to
support their proposed limitation on EPA’s discretion. In order
to expand a transport region, EPA must have “reason to believe
that the interstate transport of air pollutants . . . significantly
contributes to a violation of the [air-quality] standard in the
transport region.” 42 U.S.C. § 7506a(a)(1). The States describe
this requirement as “Congress’s selected trigger for expansion”
and suggest that EPA must grant a petition when this
requirement is met. Pet’rs’ Br. 34. Not so. The statute requires
this showing to be made, but once it has been made, the statute
provides only that EPA “may” expand the region, not that it
“shall” or “must” do so. 42 U.S.C. § 7506a(a); accord Michigan
v. U.S. EPA, 213 F.3d 663, 672–73 (D.C. Cir. 2000) (per
curiam). In other words, this requirement is a necessary but not
sufficient condition for expansion of the region.
The States attempt to show in a variety of ways that EPA’s
other Clean Air Act tools will not on their own completely solve
the interstate ozone transport problem. They argue that EPA
overlooked data indicating as much. Even if the States are
correct as a factual matter, however, this would not make
enlargement of the transport region mandatory. Nowhere does
the statute require EPA to add States to a region unless EPA’s
other options will eliminate ozone pollution. The States have
given us no reason to question EPA’s judgment that its current
approach to regulating “the interstate transport of ozone is a
proven, efficient, and cost-effective means of addressing
downwind air quality concerns that the agency has employed
10
and refined over nearly two decades.” EPA Denial, 82 Fed.
Reg. at 51,245.
The States also contend that even if their petition was
subject to EPA’s discretion, EPA’s denial was an abuse of that
discretion. In general, EPA “‘has broad discretion to choose
how best to marshal its limited resources and personnel to carry
out its delegated responsibilities,’ which means that EPA has
discretion to determine the timing and priorities of its regulatory
agenda.” WildEarth, 751 F.3d at 651 (quoting Massachusetts,
549 U.S. at 527). Here, EPA “adequately explained the facts
and policy concerns it relied on,” id. at 653 (quoting WWHT,
656 F.2d at 817): EPA recounted its historical use of the good-
neighbor provision and the ongoing downward trend in ozone
pollution, see EPA Denial, 82 Fed. Reg. at 51,243–47.6 In light
of that undisputed trend, EPA had a sufficient “basis in the
record” for predicting that improvement would continue under
the current regulatory regime. WildEarth, 751 F.3d at 653
(quoting WWHT, 656 F.2d at 817). Nothing more is required
under the extremely deferential review we must apply here.
This is not a case like Flyers Rights, in which the agency’s
reasoning was vacuous or based on secret evidence. See Flyers
Rights Educ. Fund, Inc. v. FAA, 864 F.3d 738, 744–47 (D.C.
Cir. 2017).
EPA’s reliance on the good-neighbor provision and section
126 petitions is undercut, according to the States, by EPA’s
delays and improper denials in enforcing those provisions.
6
In reaching its decision, EPA looked only to the 2008 air-quality
standards. Id. at 51,250. This approach followed from the States’
petition, which was also directed at the 2008 standards. See id. As
EPA noted, the States remain free to petition for enlargement of the
transport region in light of the stricter 2015 standards. See id. at
51,246.
11
Unlike the enlargement of a transport region, however, EPA’s
duties under these other provisions are mandatory. See 42
U.S.C. §§ 7410(c)(1), 7426(b). As a result, the States have an
independent remedy for whatever shortcomings they perceive in
how EPA administers these provisions. They have already had
some success on that front. See, e.g., New York v. Pruitt,
No. 18-cv-406 (JGK), 2018 WL 2976018 (S.D.N.Y. June 12,
2018) (requiring EPA to promulgate delayed federal
implementation plans under the good-neighbor provision).
Finally, the States allege that EPA “refused to consider the
inequitable burden that the problem of ozone pollution transport
places on downwind states.” Pet’rs’ Br. 63. To the contrary,
EPA expressly acknowledged the role of equity among the
States in its administration of the Clean Air Act. EPA Denial,
82 Fed. Reg. at 51,249. It determined that its use of the good-
neighbor provision advanced that policy. Id. (citing EPA v.
EME Homer City Generation, L.P., 572 U.S. 489, 519 (2014)).
With respect to the Northeast Region, EPA did not find equity
irrelevant, as the States contend, but rather determined that any
equitable concerns could not alone dictate the disposition of the
petition. See id.7
EPA’s denial of the States’ petition complied with the Clean
Air Act and was a reasonable exercise of the agency’s
7
“Thus, the agency’s approach to implementing the good
neighbor provision explicitly considers the equity concerns raised by
commenters when apportioning emission reduction responsibility
among multiple upwind states. However, the agency does not believe
Congress intended for it to exercise its discretion under [§ 7506a] to
resolve an alleged economic disparity or competitive disadvantage that
is inherent in the creation of the [ozone transport region] under
[§ 7511c] in a manner that is unrelated to the primary purpose of
addressing interstate transport.” Id.
12
discretion. We therefore deny the States’ petition for judicial
review.
So ordered.