Court Of Appeals Vacates EPA's Disapproval Of Texas's Pollution Control Project Standard Permit

On March 26, 2012, the United States Court of Appeals for the Fifth Circuit issued an opinion in Luminant Generation Co., L.L.C. v. EPA, vacating the United States Environmental Protection Agency's (EPA) September 15, 2010 disapproval of three provisions of Texas's State Implementation Plan (SIP), including Texas's Standard Permit for Pollution Control Projects (PCP) promulgated at 30 T.A.C. § 116.617, and two general standard permit provisions, 30 T.A.C. §§ 116.610(a) and (b). Texas adopted the PCP Standard Permit because of the inclusiveness of the Texas Clean Air Act, which otherwise would require case-by-case permit reviews for many kinds of beneficial emission reduction projects. The court concluded that EPA did not disapprove the PCP Standard Permit based on the exclusive, applicable factors for approving or denying proposed SIP revisions expressly set forth in the Clean Air Act (the "Act"). Instead, the agency improperly disapproved the PCP Standard Permit "based on its purported nonconformity with three non-statutory standards that EPA created out of whole cloth." Slip op. at 21. The court remanded the disapproval decision to EPA for expeditious reconsideration, but further noted that it is "difficult to conceive . . . how [EPA] could disapprove the PCP Standard Permit under the appropriate statutory factors." Slip op. at 21-22 & n.13.

Vinson & Elkins participated in the case, with Harry Reasoner arguing on behalf of Luminant.

Background

Pursuant to its significant discretion under the Act to develop its own "minor" new source review (NSR) program1 as part of its SIP,2 Texas first promulgated PCP standard permits in 1993. See 18 Tex. Reg. 8597 (Nov. 19, 1993); 18 Tex. Reg. 3409 (May 28, 1993). As the Texas Commission on Environmental Quality (TCEQ), the Texas agency tasked with administering the Act, recently explained, PCP standard permits "provide a method to expedite the authorization process for certain [PCPs] that do not necessitate a full case-by-case NSR permit review." TCEQ, Air Quality Standard Permit for Pollution Control Projects Summary Document (Feb. 9, 2011).3 These first PCP standard permits applied only to projects that reduced emissions of volatile organic compounds and nitrogen oxides. Id. In 1994, however, Texas adopted general requirements for its standard permit program and expanded its PCP standard permits to apply to projects that reduced emissions of any regulated pollutants. 19 Tex. Reg. 3055, 3064-65 (Apr. 22, 1994). Texas made several additional changes to its standard permit program over the following years, each time submitting its revisions to EPA for approval into Texas's SIP. EPA failed to act on Texas's SIP revisions related to the state's standard permit program until 2003, when EPA approved most of the standard permit program, but explicitly declined to approve or disapprove the PCP Standard Permit, which was promulgated in Texas's...