Luminant Generation Co. v. United States Envtl. Prot. Agency

• Decision Date: 26 March 2012
• Docket Number: No. 10–60891.,10–60891.
• Citation: 675 F.3d 917,74 ERC 1417
• Parties: LUMINANT GENERATION COMPANY, L.L.C.; Oak Grove Management Company, L.L.C.; Big Brown Power Company, L.L.C.; Luminant Mining Company, L.L.C.; Sandow Power Company, L.L.C.; Texas Association of Business; Texas Association of Manufacturers; Texas Oil & Gas Association; Chamber of Commerce of the United States of America; State of Texas, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

675 F.3d 917

74 ERC 1417

LUMINANT GENERATION COMPANY, L.L.C.; Oak Grove Management Company, L.L.C.; Big Brown Power Company, L.L.C.; Luminant Mining Company, L.L.C.; Sandow Power Company, L.L.C.; Texas Association of Business; Texas Association of Manufacturers; Texas Oil & Gas Association; Chamber of Commerce of the United States of America; State of Texas, Petitioners,

v.UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 10–60891.

United States Court of Appeals, Fifth Circuit.

March 26, 2012.

Philip Stephen Gidiere, III, David R. Boyd, Steven G. McKinney, Balch & Bingham, L.L.P., Birmingham, AL, Harry Max Reasoner (argued), Vinson & Elkins, L.L.P., Houston, TX, John Aloysius Riley, Christopher Charles Thiele, Bracewell & Giuliani, L.L.P., Austin, TX, Eric Alan White, Vinson & Elkins, L.L.P., Washington, DC, for Petitioners Luminant Generation Co., L.L.C., Oak Grove Management Co., L.L.C., Big Brown Power Co., L.L.C., Luminant Mining Co., L.L.C., Sandow Power Co., L.L.C.

Samara Lackman Kline, Van Beckwith, Anika Christine Stucky, Baker Botts, L.L.P., Dallas, TX, Matthew G. Paulson, Baker Botts, L.L.P., Austin, TX, for Petitioners Luminant Mining Co., L.L.C., Sandow Power Co., L.L.C., Texas Ass'n of Business, Texas Ass'n of Manufacturers, Texas Oil & Gas Ass'n, Chamber of Commerce of the United States of America.

Jon Niermann (argued), Asst. Atty. Gen., Office of the Atty. Gen. for the State of Texas, John Reed Clay, Jr., Office of the Atty. Gen., Office of the Sol. Gen., Austin, TX, for Petitioner State of Texas.Daniel Pinkston (argued), Sr. Lit. Atty., U.S. Dept. of Justice, Environmental Defense Section, Denver, CO, Scott Fulton, Lisa P. Jackson, EPA, Washington, DC, for Respondent.On Petition for Review of an Order of the United States Environmental Protection Agency.Before BARKSDALE, GARZA and ELROD, Circuit Judges.^*

JENNIFER WALKER ELROD, Circuit Judge:

This case requires us to review the EPA's disapproval, more than three years after the time within which it was statutorily required to act, of three regulations promulgated by the State of Texas. 30 Tex. Admin. Code §§ 116.610(a), 116.610(b), and 116.617. Pursuant to Texas's duty under the Clean Air Act (“CAA” or “the Act”), 42 U.S.C. § 7401 et seq., to adopt and administer a statewide plan for implementing federal air quality standards, those regulations provide for a standardized permit for certain projects that reduce or maintain current emissions rates. Because the EPA had no legal basis on which to disapprove those regulations, we VACATE the agency's disapproval of Texas's regulations and REMAND with instructions.

I. BACKGROUND

A. Statutory Background

An “experiment in cooperative federalism,” Michigan v. EPA, 268 F.3d 1075, 1083 (D.C.Cir.2001), the CAA “establishes a comprehensive program for controlling and improving the nation's air quality through state and federal regulation.” BCCA Appeal Group v. EPA, 355 F.3d 817, 821–22 (5th Cir.2003). The Act assigns responsibility to the EPA for identifying air pollutants and establishing National Ambient Air Quality Standards (NAAQS). 42 U.S.C. §§ 7408–7409. The states, by contrast, bear “the primary responsibility” for implementing those standards. BCCA Appeal Group, 355 F.3d at 822; see also § 7407(a) (“Each State shall have the primary responsibility for assuring air quality within [its] entire geographic area.”); § 7401(a)(3) (“[A]ir pollution prevention ... is the primary responsibility of States and local governments.”).

To implement the NAAQS, the states must adopt and administer State Implementation Plans (SIPs) that meet certain statutory criteria. § 7410. The states have “wide discretion in formulating [their] plan[s].” Union Elec. Co. v. EPA, 427 U.S. 246, 250, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976). “[S]o long as the ultimate effect of a State's choice of emission limitations is compliance with the national standards for ambient air, the State is at liberty to adopt whatever mix of emission limitations it deems best suited to its particular situation.” Train v. Natural Res. Def. Council, Inc. 421 U.S. 60, 79, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975). With regard to implementation, the Act confines the EPA to the ministerial function of reviewing SIPs for consistency with the Act's requirements. § 7410(k)(3) ( “[T]he [EPA] Administrator shall approve [a SIP or SIP revision] as a whole if it meets all of the applicable requirements of this chapter.” (emphasis added)); see also Fla. Power & Light Co. v. Costle, 650 F.2d 579, 587 (5th Cir.1981) (“The great flexibility accorded the states under the Clean Air Act is ... illustrated by the sharply contrasting, narrow role to be played by EPA.”); Michigan, 268 F.3d at 1083 (the EPA's “overarching role is in setting standards, not in implementation”). This division of responsibility between the states and the federal government “reflects the balance of state and federal rights and responsibilities characteristic of our federal system of government.” Fla. Power & Light Co., 650 F.2d at 581.

Under the Act, SIPs are not supposed to be static. States must periodically revise their SIPs as necessary to ensure compliance with current NAAQS. 42 U.S.C. § 7410(a)(2)(H). With a narrow exception not relevant here, the EPA must review and approve or disapprove a SIP revision within 18 months of submission. §§ 7410(k)(1)(B), 7410(k)(2), and 7410(k)(3). The EPA shall disapprove a SIP revision only if “the revision would interfere with any applicable requirement concerning attainment” of the NAAQS “or any other applicable requirement” of the Act. § 7410( l ). As with SIP plans, if the revision meets all of the applicable CAA requirements, the EPA must approve it. § 7410(k)(3) (The EPA “shall approve such submittal as a whole.”).

Among other requirements, SIPs must include permitting programs for the construction or modification of stationary sources. The EPA has termed these required permit programs “New Source Review” (NSR). 74 Fed.Reg. 51,418, 51,421 (Oct. 6, 2009). For “major” NSR, which applies to the construction or modification of stationary sources that meet certain threshold emissions levels, the CAA sets forth the parameters for the permit programs in considerable detail.¹ See 42 U.S.C. §§ 7470– 7503. The implementing regulations for major NSR are similarly extensive and complex, spanning 88 pages in the Code of Federal Regulations. See 40 C.F.R. §§ 51.165– 51.166, pt. 51 appendix S.

In stark contrast, the CAA prescribes only the barest of requirements for “minor” NSR, which governs the construction or modification of stationary sources that do not meet the emissions thresholds for major NSR. For minor NSR, the Act requires simply that each SIP “include ... regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that [NAAQS] are achieved.” 42 U.S.C. § 7410(a)(2)(C). The implementing regulations for minor NSR are likewise sparse, spanning less than two pages in the Code of Federal Regulations. See 40 C.F.R. §§ 51.160–51.164. The EPA has recognized that because “the Act includes no specifics regarding the structure or functioning of minor NSR programs” and because the implementing regulations are “very general [,] ... SIP-approved minor NSR programs can vary quite widely from State to State.” 74 Fed.Reg. 51,418, 51,421 (Oct. 6, 2009).

B. Facts and Proceedings

The Texas standardized permit at issue here applies only to minor NSR, ² and then only to pollution control projects (PCPs). The regulations governing this permit (the PCP Standard Permit) are found at 30 Tex. Admin. Code § 116.617. Those regulations authorize the standard permit for PCPs “that reduce or maintain currently authorized emission rates for facilities authorized by a permit.”³ § 116.617(a)(1). Detailed registration requirements apply. See §§ 116.617(d)(2)(A)-(F), 116.617(b)(1)(D) (incorporating the standard permit registration requirements of § 116.611). The PCP Standard Permit is also subject to Texas's general conditions for standard permits, which impose additional reporting, recordkeeping, and compliance requirements. See § 116.615. The executive director of the Texas Commission on Environmental Quality (TCEQ) has the negative discretion to disallow the use of any PCP standard permit if he “determines there are health effects concerns or the potential to exceed a [NAAQS] ... until those concerns are addressed by the registrant to the satisfaction of the executive director.” § 116.617(a)(3)(B). A “registration must be submitted no later than 30 days after construction or implementation begins” only for replacement PCPs that yield “no increases in authorized emissions of any air contaminant.” § 116.617(d)(1)(A). By contrast, registration for new PCPs and replacement projects that will yield any increase in emissions must be submitted 30 days before construction or implementation. § 116.617(d)(1)(B). Construction or implementation may not begin until 30 days after TCEQ receives the registration or until the executive director issues written acceptance. Id.

Texas's PCP Standard Permit is just one component of Texas's broader standard permits program. That program originated in 1993, when Texas promulgated standard permits for PCPs that reduce emissions of volatile organic compounds (VOCs) and nitrogen oxides (NOx). See 18 Tex. Reg. 8597 (Nov. 19, 1993) (VOC standard permit); 18 Tex. Reg. 3409 (May 28, 1993) (NOx standard permit). The next year, after notice and comment and a public hearing, Texas adopted regulations that set forth the general requirements for Texas's standard permits program. 19 Tex. Reg. 3055 (Apr. 22, 1994). In that same rulemaking, Texas expanded the availability of standard permits to PCPs for any regulated pollutant. Id. at 3064–65. Texas amended its standard permit program several times in the following years and submitted those revisions to the EPA for approval...