Face Challenges Confidently

628 Texas v. United States Envtl. Prot. Agency, 829 F.3d 405 (5th Cir. 2016)

Monday, June 19th, 2017

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Texas v. United States Envtl. Prot. Agency, 829 F.3d 405 (5th Cir. 2016) (Clean Air Act and coal-fired electrical generating plants) granted a stay, pending appeal, of the Environmental Protection Agency’s (“EPA”) final rule rejecting the State’s implementation plan (“SIP”) and imposing a federal implementation plan (“FIP”) under the Clean Air Act (“CAA”) and Regional Haze Rule controlling regional haze in two national parks and one federal wildlife refuge. A provision of the CAA requires the EPA and the states to work together to improve visibility in protected federal lands. Texas submitted its SIP on March 31, 2009. Three years later, the EPA issued a limited disapproval of the SIP. In 2014 (five years after Texas initially submitted its plan), the EPA drafted a FIP to replace provisions in the Texas SIP that the EPA deemed insufficient. The 2016 final rule (with only two years remaining in the ten-year term of the plan) rejected Texas’s plan for controlling regional haze and replaced portions of the Texas plan with a FIP that required additional emission controls at fifteen specific electricity generating plants in Texas.

Texas and various power plants, energy companies, and consumers (“Petitioners”) sued and argued that EPA’s FIP, “under the guise of requiring imperceptible haze reductions,” actually targeted coal-fired power plants and required changes that would cost $2 billion dollars in unrecoverable costs. Implementing the changes would be uneconomical and lead to power plant closings, which in turn, would remove 3,000 to 8,400 MW of generating capacity in Texas, resulting in brown outs and a threat to grid reliability. Electricity rates would rise and jobs would be lost because of the increased costs of power. Further, the Petitioners alleged that the EPA’s plan would produce no benefits to the public through the end of the term in 2018, because the reduction in haze goal had already been achieved. Accordingly, the Petitioners requested a stay of the final rule pending resolution of the petition for review to avoid the irreparable damage the FIP would impose. The EPA moved to have the case transferred to the U.S. Court of Appeals for the District of Columbia.

The principal issues were: (1) whether venue was appropriate in the Fifth Circuit, (2) whether the EPA had exceeded its authority under the CAA and Regional Haze Rule when it enacted the FIP, and (3) whether the Petitioners would sustain irreparable injury absent the stay.

The Court held that venue was appropriate in the Fifth Circuit because the “challenge addresses a ‘locally or regionally applicable’ action, which is not based on a determination that has nationwide scope or effect.” The Court reasoned that the EPA’s decision not to approve parts of the Texas plan was based on particular facts about emissions sources in Texas and how that will affect visibility in two national parks and one wildlife refuge located in Texas and southwest Oklahoma; therefore, it was not of national scope.

Additionally, the Fifth Circuit determined that the Petitioners demonstrated a strong likelihood of success in establishing that EPA acted arbitrarily, capriciously, and in excess of its statutory authority when it disapproved the Texas plan and drafted a FIP. Specifically, the Court found the EPA’s requirement for Texas to conduct a source-specific analysis was supported neither by the CAA, nor the Regional Haze Rule. Moreover, EPA’s reasonable progress goals were less than 1% lower than the Texas goals that EPA found inadequate. The Court stated that the CAA “limits the EPA to a deferential role” and that the “EPA must defer to Texas’s goals so long as the Texas goals comply with the Act.”

Regarding the stay, the Fifth Circuit determined that the Petitioners demonstrated several irreparable injuries such as large unrecoverable monetary costs, unemployment due to the permanent closure of plants, grid instability, and potential brownouts that would occur should a stay not be granted. Further, the Court determined that “the public’s interest in ready access to affordable electricity outweighs the inconsequential visibility differences that the federal implementation plan would achieve in the near future.” Thus, the Fifth Circuit granted the stay.

The significance of the case is that it shows that in “locally or regionally applicable” actions relating to the CAA, venue is in the federal circuit court of appeals for the appropriate circuit. Further, this case confirms that the EPA is to have a deferential role to the state, and that the EPA should defer to state goals so long as they comply with the CAA.