Court Vacates U.S. EPA Texas SIP Disapproval

The Fifth Circuit Court of Appeals (Court) has recently (March 26, 2012 – see document here) vacated U.S. EPA’s disapproval of Texas’ Minor New Source Review (NSR) Pollution Control Project (PCP) Standard Permit (Tex. Admin. Code §116.617) and remanded it to U.S. EPA for reconsideration and expeditious approval or disapproval.  The PCP Standard Permit is part of the Texas broad standard air permit program that dates back to 1993.  In its current form, Tex. Admin. Code §116.617 authorizes the standard permit for PCPs that “reduce or maintain currently authorized emission rates for facilities authorized by a permit.”  Texas adopted the standard permit program in 1994 following notice, comment, and public hearing.  The bulk of the regulations comprising the Texas standard permit program were SIP-approved by U.S. EPA in 2003.  However, the U.S. EPA explicitly declined to act on §116.617 at that time, stating that the provision “would be addressed in a separate action.”  Texas subsequently amended §116.617 in 2006 to limit its applicability to minor NSR projects following the D.C. Circuit Court’s vacatur of the U.S. EPA PCP rule under the major NSR program. Texas re-submitted the revised §116.617 to U.S. EPA for approval into the SIP in February 2006.  The U.S. EPA proposed to disapprove §116.617 in September 23, 2009 (two years following their statutory 18 month deadline). The SIP revision was ultimately disapproved in a final action by U.S. EPA in September 2010. 

The U.S. EPA cited the following three parameters that prompted their disapproval of the PCP Standard Permit:

• Minor NSR “Standard Permits” are required to be applicable to “narrowly defined source categories of emission sources rather than an emission type.”
• The PCP Standard Permit did not include “replicable conditions” to specify how the discretion of TDEQ’s Technical Director is implemented for “individual determinations.”
• The PCP Standard Permit did “…not meet the requirements of the Texas Minor NSR Permits Program.”

The Court reviewed U.S. EPA’s decision in response to the timely petitions filed by petitioners and ultimately ruled in favor of the petitioners in a very candid decision, specifying that each of the petitioner’s arguments were correct.  The overriding theme of the Court’s vacatur and remand was centered on the U.S. EPA’s “narrow task of ensuring that a state plan meets the minimum requirements of the Act (Clean Air Act).”  In fairly blunt language, the Court was very explicit with regard to each point in their decision:  

• “U.S. EPA overstepped the bounds of its narrow statutory role in the SIP approval process” and U.S. EPA’s attempt to enforce state laws was deemed both “in excess of statutory authority” and “arbitrary and capricious.”    
• Since the Clean Air Act (CAA) does not include a similar source requirement and that a “similar source” requirement is also not necessary to prevent interference with the NAAQS, the Court determined that the similar source requirement cited by U.S. EPA was both “arbitrary and capricious” and “in excess of statutory…authority.” 
• Finally, the court determined that U.S. EPA had no legal basis to require replicable conditions regarding use of the TDEQ Technical Director’s discretion and their (U.S. EPA’s) actions were both “arbitrary and capricious” and “in excess of statutory…authority.”

While not specifically mentioned within the text of the decision, the court also added in a footnote that the U.S. EPA could not “have lawfully treated Texas’s SIP-approved standard permits program as a proxy for the CAA’s requirements…”  This footnote could prove to be a key point in the ultimate conclusion of this process and could have much broader implications for minor source permitting for all state and local air pollution control agencies.  Stay tuned.