Texas v. U.S. Envtl. Prot. Agency

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation690 F.3d 670
Decision Date13 August 2012
Docket NumberNo. 10–60614.,10–60614.
PartiesState of TEXAS; Texas Oil & Gas Association; Texas Association of Manufacturers; BCCA Appeal Group; American Chemistry Council; American Petroleum Institute; National Association of Manufacturers; National Petrochemical and Refiners Association; Texas Association of Business; Texas Chemical Council; Chamber of Commerce of the United States of America, Petitioners, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

OPINION TEXT STARTS HERE

Jon Niermann, Asst. Atty. Gen., John Reed Clay, Jr., Austin, TX, Samara Lackman Kline, Anika Christine Stucky, Van Beckwith, Baker Botts, L.L.P., Dallas, TX, Matthew Lynn Kuryla, Baker Botts, L.L.P., Houston, TX, Peter H. Wyckoff, Pillsbury Winthrop Shaw Pittman, L.L.P., Washington, DC, for Petitioners.

David Aiken Carson, Sr. Counsel (argued), U.S. Dept. of Justice, Environment & Natural Resource Div., Denver, CO, Scott Fulton, E.P.A., Washington, DC, for Respondent.

James B. Blackburn, Jr., Kristi J. Denney, Charles William Irvine (argued), Blackburn Carter, P.C., Houston, TX, for Intervenors.

Petitions for Review of an Order of the Environmental Protection Agency.

Before JOLLY, HIGGINBOTHAM and SOUTHWICK, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

Sixteen years tardy, the Environmental Protection Agency (EPA) disapproved a revision to Texas's plan for implementing the requirements of the Clean Air Act. The untimely disapproval unraveled approximately 140 permits issued by Texas under the revision's terms, and now requires regulated entities to qualify for pre-revision permits or risk federal sanctions. Petitioners—the State of Texas; the Chamber of Commerce of the United States; and representatives of nationwide manufacturing, chemical and petroleum industries—petition for review of the EPA's action under the Administrative Procedure Act. See5 U.S.C. § 706.

We hold that the EPA's disapproval of Texas's plan fails Administrative Procedure Act review. Although the EPA acknowledges the distinct role of the states, which is congressionally called for in the design and enforcement of State Implementation Plans, the EPA based its disapproval on demands for language and program features of the EPA's choosing, without basis in the Clean Air Act or its implementing regulations. For the foregoing reasons, we GRANT the petition for review, VACATE the EPA's disapproval of Texas's plan, and REMAND.

I.
A.

In 1963, Congress passed the Clean Air Act (CAA), 42 U.S.C. §§ 7401–7671q, which was the first federal attempt at pollution control. Amendments to the CAA in 1970 significantly expanded its scope and complexity. The 1970 Amendments introduced National Ambient Air Quality Standards (NAAQS), which require concentrations of common air pollutants at levels safe to human health. Proximate to the 1970 Amendments, Congress created the Environmental Protection Agency, which was charged with setting NAAQS and other regulatory standards in order to ensure increased public health and overall air quality. Congress amended the CAA again in 1977, creating New Source Review, a preconstruction permitting program for all new, stationary pollution sources. Another round of amendments in 1990 brought significant changes to the CAA, but those changes, “at least as they concern EPA's approval of State Plans were predominately of syntax, not substance.” Virginia v. EPA, 108 F.3d 1397, 1409 (D.C.Cir.1997).

1.

As designed by Congress, states play a central role in the CAA regulatory structure. Every state must formulate and administer a State Implementation Plan (SIP), which outlines the state's pollution control strategy for achieving NAAQS. 42 U.S.C. § 7410(a)(1). SIPs must “include enforceable emission limitations and other control measures, means, or techniques ... as well as schedules and timetables for compliance, as may be necessary or appropriate to meet” the applicable NAAQS. Id. § 7410(a)(2)(A). SIPs must also provide for the establishment and operation of “appropriate devices, methods, systems, and procedures necessary to monitor, compile, and analyze data on ambient air quality,” and include an enforcement program. Id. § 7410(a)(2)(B)(C).

Every state must include in its SIP a New Source Review (NSR) scheme for pre-construction permits. 40 C.F.R. § 51.160. All new or modified pollution sources must receive a pre-construction permit under an approved SIP. If a source does not receive a permit, then it violates the CAA, regardless of the amount of pollution the source emits.

An important background fact to keep in mind as we decide this petition is that the CAA's NSR requirements distinguish between major and minor pollution sources. Major sources are facilities that emit more than a pre-identified amount, usually 100 tons per year, of a regulated contaminant. 1 Because major sources have the potential to make a greater impact on NAAQS, Congress and the EPA have focused the vast majority of their regulatory efforts on Major NSR.

The type of Major NSR program in place in a given geographic area depends on how well the air quality conforms to NAAQS. In areas that have already achieved NAAQS, a state must implement a Prevention of Significant Deterioration (PSD) program. Because the air in the area is already safe for the public, the main purpose of this program is to ensure that the air quality is not affected by the new source. In areas that have not yet achieved NAAQS, the state must implement a stricter Major NSR program: the Non–Attainment NSR (NA NSR). Whereas PSD programs seek to prevent interference with the existing air quality, NA NSR programs are designed to improve air quality to achieve NAAQS.

Minor sources are facilities that emit less than a pre-identified amount, usually 100 tons per year, of a regulated contaminant after construction or modification. All SIPs must contain a Minor NSR program, regardless of whether the area has achieved NAAQS. Understandably, Congress and the EPA have devoted much less attention to Minor NSR. The EPA's regulations of Minor NSR span only two pages of the Code of Federal Regulations.

2.

Beyond these basic requirements, states enjoy a measure of discretion. “So long as the national standards are met, the State may select whatever mix of control devices it desires.” Union Elec. Co. v. EPA, 427 U.S. 246, 266, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976) (citing Train v. Natural Res. Def. Council, Inc., 421 U.S. 60, 79, 95 S.Ct. 1470, 43 L.Ed.2d 731 (1975)).

The EPA is charged with assuring that a state SIP complies with federal law. 42 U.S.C. § 7410(k). That power, however, is limited:

[T]he Clean Air Act creates a partnership between the states and the federal government. The state proposes, though the EPA disposes. The federal government through the EPA determines the ends—the standards of air quality—but Congress has given the states the initiative and a broad responsibility regarding the means to achieve those ends through state implementation plans and timetables for compliance .... The Clean Air Act is an experiment in federalism, and the EPA may not run roughshod over the procedural prerogatives that the Act has reserved to the states ....

Bethlehem Steel Corp. v. Gorsuch, 742 F.2d 1028, 1036 (7th Cir.1984) (internal citation omitted).

The Clean Air Act and the EPA supply “the goals and basic requirements of state implementation plans, but the states have broad authority to determine the methods and particular control strategies they will use to achieve the statutory requirements.” BCCA Appeal Grp. v. EPA, 355 F.3d 817, 822 (5th Cir.2003) (citing Union Elec. Co., 427 U.S. at 266, 96 S.Ct. 2518). The prevention and control of air pollution are “the primary responsibility of States and local governments.” 42 U.S.C. § 7401(a)(3); see also American Cyanamid Co. v. EPA, 810 F.2d 493, 500–01 (5th Cir.1987). Thus, if a SIP or a revised SIP meets the statutory criteria of the CAA, then the EPA must approve it. 42 U.S.C. § 7410(k)(3); BCCA Appeal Grp., 355 F.3d at 822.

States regularly revise and reevaluate pollution control strategies, and revisions to a SIP must satisfy the CAA section 110( l ) requirements. Under that section, the EPA cannot approve a SIP revision “if the revision would interfere with any applicable requirement concerning attainment” of NAAQS “or any other applicable requirement” of the CAA. 42 U.S.C. § 7410( l ). Moreover, the CAA requires that the EPA review and either approve or disapprove of any SIP or SIP revision within eighteen months of its submission. Id. § 7410(k).

B.

In November 1994, Texas Governor Ann Richards submitted a Flexible Permit Program to the EPA as a revision to Texas's SIP and as a new feature of the state's Minor NSR regime. Under this Program, a facility could obtain a permit that would set an ex ante emissions cap, that is, modifications to facilities could be made without additional regulatory review as long as the emissions increase would not exceed an aggregate limit specified in the permit. The Texas Commission on Environmental Quality (TCEQ) had adopted the Program earlier that year.2 Later, the Texas Legislature incorporated the Program into the Texas Clean Air Act. SeeTex. Health & Safety Code § 382.003(9)(F). In her 1994 submission letter, the Governor expressed hope for an “expeditious approval of these revisions to the Texas SIP.”

Despite the CAA's mandate that the EPA approve or disapprove a SIP revision within eighteen months of its submission, the EPA delayed formal consideration of the Texas Flexible Permit Program for more than a decade. In response to the Agency's inaction, some of the industry petitioners asserted their rights under 42 U.S.C. § 7604(a)(2) and brought a mandatory duty suit compelling the EPA to “approve or disapprove, in whole or in part” the Program. The suit resulted in a settlement, with the EPA agreeing to make a final decision on the Program within a specified timeline.

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