Federal appeals court said EPA acted too late on Texas SIP

A federal appeals court on March 26 vacated the U.S. Environmental Protection Agency’s tardy disapproval of a state implementation plan (SIP) revision from the state of Texas and remanded the issue back to EPA to reconsider the SIP and approve or disapprove it “most expeditiously.”

The ruling came from a panel at the U.S. Fifth Circuit Court of Appeals. Texas submitted its first two standard permits for pollution control projects (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 2010, the appeals court noted. 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,” the appeals court found.

“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,” said the court ruling. “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, the court ordered 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 Clean Air Act (CAA) requirements that govern SIP revisions to minor New Source Review matters. If Texas’s regulations satisfy those basic requirements, the EPA must approve them, the court said. “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,” the court held.

This legal case was brought by a long list of parties, including some involved in coal-fired generation, including: Luminant Generation Co. LLC; Oak Grove Management Co. LLC; Big Brown Power Co. LLC; Luminant Mining Co. LLC; Sandow Power Co. LLC; Texas Association of Business; Texas Association of Manufacturers; Texas Oil & Gas Association; Chamber of Commerce of the United States of America; and the state of Texas.

Energy Future pursues various complaints against EPA

Energy Future Holdings, the parent of the Luminant companies, described this case in its Feb. 21 annual Form 10-K report. In September 2010, the EPA disapproved a portion of the SIP under which the Texas Commission on Environmental Quality (TCEQ) implements its program to achieve the requirements of the Clean Air Act. The EPA disapproved the Texas standard permit for pollution control projects.

“We hold several permits issued pursuant to the TCEQ standard permit conditions for pollution control projects,” said the Form 10-K. “We have challenged the EPA’s disapproval by filing a lawsuit in the US Court of Appeals for the Fifth Circuit arguing that the TCEQ’s adoption of the standard permit conditions for pollution control projects was consistent with the Clean Air Act. We have also formally asked the EPA to stay, reconsider or clarify its disapproval. If the EPA declines to stay or reconsider its disapproval, we asked the EPA to clarify whether it intends that entities, including us, who obtained such permits for pollution control projects should stop operating the pollution control equipment permitted under the standard permit conditions. We cannot predict the outcome of the litigation or the EPA’s response to our request.” The company now knows the outcome of the litigation, pending any appeal by EPA of the March 26 ruling.

In November 2010, the EPA also disapproved a different portion of the SIP under which the TCEQ had been phasing out a long-standing exemption for certain emissions that unavoidably occur during startup, shutdown and maintenance activities and replacing that exemption with a more limited affirmative defense that will itself be phased out and replaced by TCEQ-issued generation facility-specific permit conditions.

“We, like many other electricity generation facility operators in Texas, have asserted applicability of the exemption or affirmative defense, and the TCEQ has not objected to that assertion,” the Form 10-k explained. “We have also applied for and received the generation facility-specific permit amendments. We have challenged the EPA’s disapproval by filing a lawsuit in the US Court of Appeals for the Fifth Circuit arguing that the TCEQ’s adoption of the affirmative defense and phase-out of that affirmative defense as permits are issued is consistent with the Clean Air Act. We cannot predict the outcome of, or timing of the court’s ruling in, this litigation.”

In January 2011, the EPA retroactively disapproved a portion of the SIP pursuant to which the TCEQ issued permits for certain formerly non-permitted “grandfathered” facilities approximately 10 years ago. “We hold such permits,” the Energy Future Holdings Form 10-K said. “The EPA took this action despite acknowledging that emissions covered by these standard permits do not threaten attainment or maintenance of the NAAQS under the Clean Air Act. We have challenged the EPA’s disapproval by filing a lawsuit in the US Court of Appeals for the Fifth Circuit arguing that the TCEQ’s adoption of the standard permit is consistent with the Clean Air Act. If the EPA’s action stands, and if it causes us to undertake additional permitting activity and install additional emissions control equipment at our affected generation facilities, we could incur material capital expenditures. We cannot predict the outcome of this litigation.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.