In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-1405 & 10-2123
N ATURAL R ESOURCES D EFENSE C OUNCIL and
S IERRA C LUB, INC.,
Petitioners,
v.
L ISA P. JACKSON, Administrator of the
Environmental Protection Agency,
Respondent.
A IR P ERMITTING F ORUM, et al.,
Intervening Respondents.
Petitions for Review of Orders of the
Environmental Protection Agency
A RGUED JUNE 3, 2011—D ECIDED JUNE 16, 2011
Before EASTERBROOK, Chief Judge, and EVANS and
WILLIAMS, Circuit Judges.
E ASTERBROOK, Chief Judge. Two sections of the Clean
Air Act provide that neither national nor state offi-
cials may make any changes that cause air quality to
2 Nos. 09-1405 & 10-2123
deteriorate in parts of the country that have yet to
attain the required standard. See sections 110(l) and 193,
codified at 42 U.S.C. §§ 7410(l), 7515. See also Environ-
mental Defense v. Duke Energy Corp., 549 U.S. 561 (2007),
which discusses the new source review ( NSR ) program
against the background of the prevention-of-significant-
deterioration (PSD or anti-backsliding) requirement. In
2002 the Environmental Protection Agency changed
the rules that determine when polluters need permits in
order to modify existing facilities—and, if they need
permits, what restrictions they carry. 67 Fed. Reg. 80,186
(Dec. 31, 2002). These new rules were challenged as
violations of §§ 7410(l) and 7515, among other statutes,
but the D.C. Circuit concluded that the new rules are
rational and consistent with the Act. New York v. EPA,
413 F.3d 3 (D.C. Cir. 2005). Along the way, the court
deemed unripe an argument that the agency’s new ap-
proach actually would lead to more emissions. 413 F.3d
at 43. The EPA’s models project that the new approach
will have neutral or beneficial effects on aggregate emis-
sions; whether that is true, or instead backsliding
occurs, depends on data rather than lawyers’ arguments,
the court stated.
Businesses have argued that the new approach is
too strict rather than too lax. Our decision in United
States v. Cinergy Corp., 623 F.3d 455 (7th Cir. 2010), illus-
trates how one aspect of the current approach substan-
tially limited the allowable emissions from aging coal-
fired power plants in need of major repairs—so much
so that a district court ordered an entire plant shut
down and emissions from other plants reduced. We
Nos. 09-1405 & 10-2123 3
reversed that decision, holding that the new approach
does not apply to the repair work in question, but our
opinion and the district court’s decision in Cinergy
show how the new approach can limit air pollution.
The Natural Resources Defense Council and the
Sierra Club, however, are convinced that the 2002 revi-
sions will make pollution worse. Wisconsin’s latest im-
plementation plan includes features from the 2002
federal regulations. The EPA approved Wisconsin’s plan.
72 Fed. Reg. 19,829 (Apr. 20, 2007); 73 Fed. Reg. 76,560
(Dec. 17, 2008); 75 Fed. Reg. 10,415 (Mar. 8, 2010) (denying
petition for reconsideration). The NRDC and the Sierra
Club have filed petitions for review, which repeat argu-
ments that failed to persuade the D.C. Circuit in New
York. This proceeding is the first challenge to a specific
state plan that implements the 2002 changes; one other
is pending in the Sixth Circuit, and perhaps more are
in the works.
Three aspects of the 2002 revisions were contested in
New York and again here. First, the 2002 approach deter-
mines whether a modification requires a permit (and, if
so, what controls are necessary) by comparing actual
emissions in the past with projected actual emissions in
the future—rather than by comparing the maximum
potential emissions before the modification against maxi-
mum potential emissions after. The 2002 rules also
change the period in which these are compared, asking
about emissions over the course of a year rather than
emissions per hour. (The old approach favored repairs
that increased the number of hours a plant could operate
4 Nos. 09-1405 & 10-2123
while leaving emissions per hour unchanged; the new
approach treats more hours at the same level per hour
just like it treats holding constant the number of hours
but emitting more per hour.) It was the actual-to-projected-
actual comparison that affected the electric utility in
Cinergy.
Second, the 2002 approach allows polluters to select
two years from a ten-year baseline to measure their past
emissions; the former approach used a shorter baseline.
Third, the 2002 approach allows a plantwide applica-
bility limitations (PAL) calculation, similar to the “bub-
ble” sustained in Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984). Under PAL a
polluter can choose to treat its entire plant as the source
of emissions, which allows it to increase emissions
from one machine or process as long as it makes
offsetting reductions elsewhere in the plant. Under the
PAL program, a polluter needs a permit to make modi-
fications or repairs only when they will increase
emissions from the plant as a whole.
The NRDC and the Sierra Club observe that all three
of these changes could lead to more pollution. Some,
such as the actual-to-projected-actual comparison, could
do this by making new permits so onerous that a firm
will choose to run an old plant into the ground without
repairs, avoiding a need to get a permit for modifica-
tions, even though old plants generally are dirtier
than new ones (or newly repaired ones). Others, such as
the ten-year baseline, could allow firms to choose their
two highest-emissions years from the decade, making it
seem as if their pollution has gone down even though
Nos. 09-1405 & 10-2123 5
today’s emissions are higher than the average from the
decade (or higher than the amount computed under the
shorter baseline under the former rules). Even the
plantwide limit could increase pollution, if emitters can
use reductions they would have made anyway to offset
increases elsewhere in a plant, increases that would have
required their own permits under pre-2002 rules.
These are not new arguments. They were presented
to the D.C. Circuit in New York, and that court sustained
the rules. See New York, 413 F.3d at 21–38. The D.C.
Circuit observed that the EPA was well aware of these
possibilities and took them into account when evaluating
the net effects of the 2002 revisions. The agency’s models
projected that the 2002 changes would either reduce
pollution or have no net effect. As the D.C. Circuit saw
things, scientific estimates, plus the presumption that
an agency’s estimates are rational, see FCC v. National
Citizens Committee for Broadcasting, 436 U.S. 775 (1978),
beat lawyers’ conjectures.
In the current litigation, NRDC and the Sierra Club
observe that the EPA is relying on the same models that
it used in 2002 and has no better reason now than it
did then to think that a concrete plan, such as Wiscon-
sin’s, will curtail emissions. But if the EPA is in the
same position as 2002 (and 2005), so are petitioners. The
lineup is still: models on one side, lawyers’ talk on the
other. As in 2002 and 2005, the models supply sub-
stantial evidence for the EPA’s decision and show that it
is neither arbitrary nor capricious.
At oral argument, counsel for petitioners and the EPA
told us that about half of the states have changed
6 Nos. 09-1405 & 10-2123
their implementation plans to track the 2002 revisions.
We asked what effect these changes have had on aggre-
gate emissions: neither side knew, and we have not
found any published studies on the subject. Counsel did
know, and debated the significance of, how many
permits have been issued in several of the states under
one or another feature of the 2002 approach. But the
statutes concern the quantity of emissions, not the
quantity of permits.
Petitioners rely on a prediction that the staff of Wis-
consin’s Department of Natural Resources made in 2003,
a prediction that the state agency has since repudiated.
They complain that the EPA did not analyze this predic-
tion adequately. But the way to test the EPA’s models is
not to compare them with someone else’s ballpark num-
bers. (The state agency’s staff did not have a model—at
least, did not reveal one—but made what seems to
have been a back-of-the-envelope calculation. The 2003
prediction comprises eight PowerPoint slides that give
conclusions without any supporting rationale, plus two
pages of tables that do not even hint at the method of
their derivation.) The way to test a model is to compare
its projection against real outcomes. Alternatively one
might validate a model by “retrodiction”—using the
model to “predict” past events. The two-in-ten rule, for
example, might allow a business to increase average
emissions, but does it? So far, we have no answer to that
question, either from actual experience in adopting
states or through efforts to test a model by retrodiction.
The experience in the states that have implemented
the 2002 revisions may vindicate the EPA or may refute
Nos. 09-1405 & 10-2123 7
it; as long as the judiciary remains behind the veil of
ignorance, it must accept the EPA’s projections. An
agency that clings to predictions rather than performing
readily available tests may run into trouble. See Bechtel
v. FCC, 10 F.3d 875 (D.C. Cir. 1993). At some point, pre-
ferring predictions over facts is no longer rational.
But challengers who fail to put data in the administra-
tive record—likely because this record was assembled
before data from other states became available—cannot
complain that the agency continues to rely on models.
This conclusion makes it unnecessary to decide
whether §7515 applies to the 2002 regulation and state
plans that rely on it. The D.C. Circuit also ducked this
question. 413 F.3d at 43. Section 7515 says that a state
can’t change any “control requirement” that was “in effect
before November 15, 1990” in a nonattainment area,
unless “the modification insures equivalent or greater
emission reductions”. Intervenors have argued that the
new source review program is not a “control require-
ment”; resolution of that argument can await another day.
A few other subjects require brief attention.
Petitioners say that the EPA should have allowed
another round of comments after responding to their
comments on the Wisconsin plan. That’s not how
rulemaking works. An agency publishes draft rules;
private parties comment; the agency analyzes the com-
ments and adopts a rule, making revisions as needed.
Unless the revisions materially change the text,
adding features that the commentators could not have
anticipated, there’s no need for another round of public
8 Nos. 09-1405 & 10-2123
comments. American Medical Association v. United States,
887 F.2d 760, 767–69 (7th Cir. 1989); Omnipoint Corp. v.
FCC, 78 F.3d 620, 631 (D.C. Cir. 1996). In other words, the
public gets to comment on the proposed rules, not on
the agency’s response to earlier public comments. The
EPA did not make any material change to Wisconsin’s
proposed implementation plan, so there was no need
for another round of comments.
Petitioners contend that Wisconsin’s plan contains a
technical error in its definition of “major modification.”
This was not pointed out to the EPA during the rule-
making and so has not been preserved for judicial re-
view. Complainants must exhaust their administrative
remedies.
A final observation: If Wisconsin’s implementation of
the 2002 revisions turns out to allow more emissions, then
the state must do something else (or something more)
to curtail pollution. The EPA’s decision that Wisconsin
may put its plan into practice and find out what hap-
pens does not relieve the state of that statutory obligation.
The petitions for review are denied.
6-16-11