Texas Wins Clean Air Act Fight with EPA

The U.S. Court of Appeals for the Fifth Circuit sternly rebuked the U.S. Environmental Protection Agency for overstepping its statutory authority in rejecting three air pollution control regulations adopted by the state of Texas for their alleged non-conformity with applicable Clean Air Act requirements.  In Luminant Generation Company, LLC v. EPA, the Fifth Circuit the EPA had “no legal basis” for its decision and remanded the decision back to the agency.

At issue in the case were three Texas regulations governing permit requirements that were a part of Texas’ State Implementation Plan (SIP) under the federal Clean Air Act.  According to the statute, the EPA is to decide whether or not relevant state regulations comply with SIP requirements within 18 months of their submission.  In this case, however, the EPA waited years before claiming the three regulatory provisions were insufficient.  More significantly, the EPA “did not identify any provision of the CAA or its implementing regulations that Texas’s program violated.”

Before the Fifth Circuit, the EPA confessed error and conceded that it had been arbitrary and capricious with regard to two of the contested regulations, but it still sought to defend its decision with respect to the third. No dice.  The Fifth Circuit found the EPA had filed to identify any basis for rejecting the regulation under federal law.  The Fifth Circuit’s decision concludes:

This chapter in regulatory history has lasted almost two decades. Texas submitted its first two standard permits for PCPs to the EPA for approval in 1994. Texas made various amendments to these permits over the years, and promptly submitted each amendment to the EPA. The most recently amended version is the PCP Standard Permit at issue in this case. Despite an eighteen month statutory deadline, the EPA did not take action on any of these submissions until September 15, 2010. At that late date, the EPA disapproved the PCP Standard Permit—submitted four and a half years earlier—based on its purported nonconformity with three extra-statutory standards that the EPA created out of whole cloth. Moreover, the EPA did this in the context of a cooperative federalism regime that affords sweeping discretion to the states to develop implementation plans and assigns to the EPA the narrow task of ensuring that a state plan meets the minimum requirements of the Act. The EPA applied these unauthorized standards to disapprove of a state program for projects that reduce air pollution and that, under the Act’s plain terms, is subject to only the most minimal regulation.

Because the EPA waited until more than three years after the statutory deadline to act on Texas’s submission, we order the EPA to reconsider it expeditiously. On remand, the EPA must limit its review of Texas’s regulations to ensuring that they meet the minimal CAA requirements that govern SIP revisions to minor NSR, as set forth in 42 U.S.C. § 7410(a)(2)(C) and § 7410(l). If Texas’s regulations satisfy those basic requirements, the EPA must approve them, as § 7410(k)(3) requires. That is the full extent of the EPA’s authority in the SIP-approval process because that is all the authority that the CAA confers. See La. Pub. Serv. Comm’n v. FCC, 476 U.S. 355, 374 (1986) (“[A]n agency literally has no power to act . . . unless and until Congress confers power upon it.”).

The opinion was written by Judge Elrod and joined by Judge Barksdale.  Judge Garza concurredin the judgment only without opinion.