On March 26, 2012, in Luminant, et al. v. Environmental Protection Agency, the United States Court of Appeals for the 5th Circuit issued its first opinion in a trilogy of cases reviewing EPA's delayed disapprovals of revisions to the Minor New Source Review rules in Texas' State Implementation Plan. Marking a significant victory for the State of Texas and the regulated community, and a severe blow to EPA's effort to micro-manage Texas' air program, the Court reversed EPA's Disapproval of the Texas Commission on Environmental Quality's standardized permit as it relates to Pollution Control Projects, finding "EPA overstepped the bounds of its narrow statutory role in the SIP approval process."
In Luminant, the 5th Circuit held that EPA's disapproval of Texas' PCP Standard Permit was arbitrary, capricious, and exceeded EPA's statutory authority because EPA "created out of whole cloth" three different and incorrect legal theories to justify its Disapproval. Specifically, the 5th Circuit concluded that EPA improperly reviewed the PCP Standard Permit for compliance with Texas law, because "it is beyond cavil that the EPA may consider only the requirements of the CAA when reviewing SIP submissions"; that EPA's "similar source" requirement was not "warranted by any applicable provision of the Act"; and that EPA's "replicability" requirement was "not a legal standard the Act authorized EPA to enforce."
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