A double defeat for EPA on regional haze regulations

by Jackson Walker
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On Friday, July 15, 2016, the U.S. Court of Appeals for the Fifth Circuit handed the United States Environmental Protection Agency (“EPA”) a stinging double defeat on its partial disapproval of Texas’ regional haze rule (the “Rule” or the “Texas Regional Haze Rule”). First, the court found, contrary to EPA’s contentions, that it had jurisdiction to hear the challenge. Second, it stayed the Rule’s effectiveness during the litigation over its merits. With respect to the latter, the court held that the petitioners and supporting intervenors had demonstrated a likelihood of success on the merits of four of the five separate grounds they asserted for setting the Rule aside.

Jackson Walker represents Balanced Energy for Texas and the Texas Mining and Reclamation Association, which have intervened on the side of the petitioner-challengers.

Background:

Under section 169A of the Clean Air Act (“CAA”), EPA is to promulgate regulations to ensure “reasonable progress” to prevent and remedy any existing visibility impairments in federal “Class I areas,” essentially national parks and federal wilderness areas. EPA promulgated regulations requiring states to submit State Implementation Plans (“SIPs”) to meet the national visibility goals.

EPA published the Texas Regional Haze Rule on January 5, 2016. In it, EPA partially disapproved Texas’ and Oklahoma’s SIPs and imposed Federal Implementation Plans (“FIPs”). Although the Rule concerns both Texas’ and Oklahoma’s regional haze plans, its substantive requirements fall almost entirely within Texas, rather than Oklahoma. If upheld, the Rule will require seven Texas coal-fired electric generating units (“unit” or “EGU”) to install new scrubbers, seven units to upgrade their existing scrubbers, and one unit (San Miguel) to be subject to a revised SO2 emissions limit.

The regional haze provisions of the CAA require certain listed major stationary sources of air pollution to install the “best available retrofit technology” (BART) for “any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility in any”1 federal Class I areas. The SO2 emission limits in the Texas FIP, however, are not based on the BART requirements of the regional haze provision, but rather on EPA’s finding of deficiencies in Texas’ plan for “reasonable progress goals and long term strategy.”

The Challenge to the Texas Regional Haze Rule:

The State of Texas and numerous other parties filed petitions for review challenging Texas’ regional haze FIP in multiple federal jurisdictions, including the Fifth Circuit. Numerous parties also sought a stay of the Rule while the challenges were pending.

On July 15, 2016, the Fifth Circuit issued a decision on an important pre-merits venue/jurisdictional issue that potentially has ramifications far beyond this litigation and the Texas Regional Haze Rule.2 The court’s detailed opinion also signals that the court has serious concerns about the Rule’s ability to survive the challenges to its merits.

In the published Rule, EPA claimed that it is of “nationwide scope or effect,” even though it concerns the SIPs of only two states—Texas and Oklahoma—and has effects only in one state—Texas. Under CAA § 307(b), if a rule is “locally or regionally applicable,” any challenge must be filed in the United States Court of Appeals “for the appropriate circuit”—i.e., the circuit that includes the locality or region. If, however, the rule is “based on a determination of nationwide scope and effect” by EPA and that determination is published, then review can be had only in the D.C. Circuit in Washington D.C.

EPA took the position that its published determination that the rule is of nationwide scope and effect is unreviewable and requires all challenges to be heard in the D.C. Circuit. The challengers contended that EPA’s decision is reviewable, and, notwithstanding EPA’s statements to the contrary, its decision is not based on a determination of nationwide scope and effect.

The Fifth Circuit denied EPA’s motion to dismiss or, in the alternative, to transfer the case to the D.C. Circuit, finding that jurisdiction and venue are both proper in the Fifth Circuit. The court also granted the motion to stay the Rule pending review.

With respect to the jurisdiction/venue issue, the court held that the CAA grants jurisdiction to all the courts of appeal, but divides venue between the D.C. Circuit and the regional courts of appeal depending on whether the action in question is national or regional/local.

The court summarily rejected EPA’s claim that EPA’s determination was unreviewable, concluding that the court, not EPA, had the authority to determine questions of jurisdiction and venue.

Likewise, the court had no trouble concluding that, notwithstanding EPA’s assertions to the contrary, the Rule was not based on a determination of “nationwide scope and effect.” Instead, EPA’s decisions were all based “on a number of intensely factual determinations . . . . related to the particularities of the emissions sources in Texas and the confluence of factors impacting visibility at two locations in Texas and one in southwest Oklahoma.”3 Therefore, the court concluded, the Rule was of local or regional applicability, and venue was proper in the Fifth Circuit, not the D.C. Circuit.

Finally, in granting the petitioners’ motion for stay, the court found that petitioners had a likelihood of success on the merits with respect to four of the five separate and independent grounds they asserted: (1) requiring source-specific analysis when it is not supported by the CAA or Regional Haze Rule; (2) disapproving Texas’ consultation with Oklahoma because Oklahoma failed to insist on source-specific analysis; (3) imposing emissions controls that go into effect after the end of the ten-year period covered by EPA’s regulation under which it disapproved Texas’ and Oklahoma’s plans; and (4) failing to adequately consider the effect of the Rule on grid reliability in Texas. The court did not rule on petitioners’ claim that EPA failed to adequately consider the costs of the Rule.

Shortly after its order was issued, the Fifth Circuit entered a second order setting the deadline for the petitioners’ opening brief for Monday, August 29, 2016. By rule, the opening briefs of the intervenors are due one week later.


1CAA § 169A(b)(2)(A) & (g)(7); 42 U.S.C. § 7491(b)(2)(A) & (g)(7).

2State of Texas v. EPA, No. 16-6-118 (5th Cir. July 15, 2016).

3Id. slip op. at 19-20.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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