Texas’ Affirmative Defense SIP Provisions: National Policy or Regional Action

Posted on June 23, 2020 by Paul Seals

Why is the legal challenge of EPA’s approval of the affirmative defense provisions in Texas’ state implementation plan (SIP) the subject of a venue battle?  Why did the Sierra Club and eight other environmental groups (Petitioners) sue EPA in the D.C. Circuit when they filed their lawsuit on April 7, 2020?  Why are EPA, Texas and industry intervenors fighting to dismiss the suit or have it transferred to the 5th Circuit?  The answers depend on the construction of the Clean Air Act (CAA) judicial review provisions.  Did EPA’s decision constitute a policy of national applicability or is the decision of local or regional applicability?

On February 7, 2020, EPA approved the withdrawal of Texas from EPA’s 2015 SIP call, which was related to the affirmative defense provisions in Texas’ SIP applicable to excess emissions that occur during startup, shutdown or malfunction.  EPA determined that affirmative defense provisions made the SIP substantially inadequate to meet the CAA requirements.  Texas was one of 17 states subject to the 2015 SIP call, which was based on EPA’s 2015 interpretation of the a 2014 D.C. Circuit decision in NRDC v. EPA, 749 F.3rd 1055, holding that affirmative defenses are unlawful in emission standards established under CAA Section 112.   

EPA’s approval of the withdrawal reinstates Texas’ affirmative defense provisions of the Texas SIP, which had been approved by EPA in 2010 and upheld by the 5th Circuit in 2013.  See Luminant Generation Co. v.  EPA, 714 F.3d 841.  The Court found that EPA’s interpretation of the Clean Air Act (CAA) to allow affirmative defenses in CAA Section 110 SIPs was a permissible interpretation.

In their lawsuit, the Petitioners claim that EPA is setting national policy regarding affirmative defenses and the EPA’s action regarding Texas’ SIP should be reviewed by the D.C. Circuit.  Texas responds that EPA’s action to withdraw of a single state from a SIP call issued to multiple states is locally or regionally applicable.  Accordingly, the D.C. Circuit should have no jurisdiction to review EPA’s action.

Is the Texas SIP decision nationwide in scope or effect?  Alternatively, does the EPA action reflect Texas-specific circumstances – a prior approval by EPA, which was upheld by the 5th Circuit?  Will the D.C. Circuit dismiss or transfer the litigation to the 5th Circuit?

A Good Defense is an Affirmative Defense

Posted on May 14, 2019 by Paul Seals

Citing cooperative federalism, the Environmental Protection Agency (EPA) Region 6 Regional Administrator has proposed to withdraw the agency’s 2015 determination that the affirmative defense provisions in Texas’ State Implementation Plan (SIP) applicable to excess emissions that occurred during upsets and unplanned events made the SIP substantially inadequate to meet Clean Air Act (CAA) requirements.  84 FR 17986 (April 29, 2019).  The proposal, if finalized, would reinstate Texas’ affirmative defense provisions that had been approved by the EPA in 2010 and upheld by the Fifth Circuit in 2013.  See Luminant Generation Co. v. EPA, 714 F.3d 841 (5th Cir, 2013, cert. denied) holding that the EPA’s interpretation of the CAA to allow certain affirmative defenses as to civil penalties in section 110 SIPs was a permissible interpretation warranting deference.

The proposal was in response to Texas’ petition for the EPA to reconsider the 2015 Texas SIP call and reinstate EPA’s prior interpretation regarding affirmative defenses for malfunctions. 

In 2015, the EPA had reversed its interpretation of the legality of affirmative defense provisions in CAA section 110 SIPs following the decision of the D.C. Circuit in NRDC v. EPA, 749 F.3d 1055 (D.C. Cir. 2014), which addressed the legality of affirmative defense provisions in a certain national emission standard for hazardous air pollutants (NESHAP) established under CAA section 112.  In vacating the affirmative defense provisions, the D.C. Circuit held that the CAA gives district courts sole authority in federal enforcement proceedings to determine whether a penalty for a violation of a section 112 NESHAP is appropriate.  The EPA reconsidered the legal basis for affirmative defense provisions in CAA section 110 SIPs and concluded that the reasoning of the D.C. Circuit in NRDC should extend to state affirmative defense provisions in CAA section 110 SIPs.  Texas and 16 other states were subject to a SIP call to revise their SIPs consistent with the 2015 interpretation.

EPA Region 6 now believes the policy position on affirmative defense SIP provisions for malfunctions as upheld by the Fifth Circuit’s Luminant decision should be maintained and that it is not appropriate to extend the D.C. Circuit’s reasoning in NRDC to the affirmative defense provisions in the Texas SIP.

It is important to note that the EPA Region 6 sought and obtained concurrence from the requisite EPA Headquarters office to propose an action inconsistent with the EPA’s interpretation of affirmative defense provisions contained in the 2015 SIP call.

What should the other 16 states, subject to the SIP call based on EPA’s 2015 interpretation, make of this proposal?  Does it simply reflect the special circumstances surrounding Texas’ affirmative defense provisions – a prior approval by the EPA, which was upheld by the Fifth Circuit?  Or, is it the first step in a new policy with national applicability?