The 5th Circuit Court of Appeals recently denied Texas’s appeal in Texas v. EPA in which the state denied that its emissions significantly contributed to downwind pollution in other states.

The battle between Texas and the EPA began in 2012 when Texas submitted its state implementation plan (SIP) as regulated under the “Good Neighbor” requirement of the Clean Air Act (CAA), which requires upwind states to prevent interference with downwind states’ ability to attain regulatory compliance with air quality standards set by the EPA.

The SIP submitted by Texas asserted that no additional action was necessary by the state to prevent downwind air pollution.

“In support, Texas submitted (1) two charts showing declining ozone statistics in nine metro areas, (2) one paragraph summarizing general wind patterns in Dallas and Houston, and (3) a map of 2010 ozone levels at monitors in Texas and adjacent states,” according to the 5th Circuit ruling. “Texas attached (4) several pages of ozone measurement data without any analysis.”

The SIP focused on areas that were located close to Texas’s borders “and did not address whether its emissions might interfere with maintenance of air quality standards in other states,” notes legal database Justia.

“After notice and comment, EPA reviewed this submission and rejected it on the grounds that the SIP did not adequately address the full set of statutory requirements and that the SIP’s conclusions were unsupported by sufficient analysis in any case,” the 5th Circuit ruling continues. “As additional support, EPA noted that data developed in a concurrent rulemaking showed that emissions in Texas did in fact contribute to violation of the federal ozone standards in other states.”

Although the EPA didn’t approve Texas’s initial SIP, the state made no revisions.

“So in 2016, the EPA formally disapproved the SIP ‘finding it failed to address statutory requirements, particularly by not evaluating impacts on maintenance areas and by relying on outdated control measures,’” energy news site Oklahoma Energy Today explains.

Texas, joined by several industry groups, petitioned the federal court to review the EPA’s decision on the grounds that it was entitled to additional response and that the Agency’s decision was arbitrary.

“The Federal Appeals Court denied the petition and held that EPA’s review complied with statutory and procedural requirements and the agency acted within its authority in disapproving the SIP,” adds Oklahoma Energy Today.

EPA SIP process

The CAA requires the EPA to regulate specific air pollutants called “criteria pollutants,” one of which is ozone. It also requires the EPA to set National Ambient Air Quality Standards (NAAQS) to set acceptable limits for these criteria pollutants. Periodic revisions to the NAAQS are required.

States are required to submit SIPs within 3 years of an NAAQS revision to address their plan for compliance with the new limits. The Good Neighbor provision of the CAA “requires that a plan ‘contain adequate provisions’ ‘prohibiting’ emissions of ‘any air pollutant in amounts which will’ ‘contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any’ NAAQS,” notes the 5th Circuit ruling. “To review SIPs, EPA promulgates ‘minimum criteria’ ‘limited’ to ensuring that a SIP submission contains ‘the information necessary to enable the Administrator to determine whether the plan submission complies with the provisions of this chapter.’

“EPA first conducts a technical review within 60 days to determine whether the submission contains this information. EPA then has 12 months to conduct a substantive review to determine whether the SIP meets the requirements of the CAA, and to approve or disapprove the SIP accordingly. If EPA disapproves a SIP (or finds a submission technically incomplete) it must promulgate a Federal Implementation Plan (FIP) within two years.”

Texas didn’t take advantage of updated modeling provided by the EPA in 2015.

In December 2015, the EPA advised that it would finalize FIPs for states either that “failed to submit a complete good neighbor SIP” or for which the EPA “issue[d] a final rule disapproving [the states’] good neighbor SIP.” In April 2016, the EPA finally published a formal notice of proposed rulemaking in which the Agency proposed to disapprove the portion of Texas’s SIP submission pertaining to its Good Neighbor obligations. The Agency, according to the 5th Circuit, identified several problems that required it to disapprove the submission:

Texas didn’t “give the ‘interfere with maintenance’ clause independent significance” “because its analysis did not attempt to evaluate the potential impact of Texas emissions on areas that are currently measuring clean data, but that may have issues maintaining that air quality.”

Additionally, “Texas did not fully evaluate whether emissions from the state significantly contribute to nonattainment in other states” because “Texas limit[ed] its discussion of data only to areas designated nonattainment in states that are geographically closest to Texas.”

Finally, Texas’s “[a]nalysis of wind patterns, emissions data, and ambient monitoring data … d[id] not quantify the magnitude of impact from Texas emissions to downwind states.”

The EPA added that its own modeling of 2017 ozone levels provided “the most up-to-date information for assessing interstate transport of air pollution for the 2008 ozone NAAQS” and “show[ed] that Texas emissions significantly contribute to ozone concentrations in areas of nonattainment and interfere with maintenance of the 2008 ozone NAAQS in other states.”

The Agency explained that it modeled air quality in 2017 because it was the last full year of data relevant to the attainment schedule for the 2008 ozone standard.

Loper Bright application

“The Fifth Circuit denied Texas’s petition and upheld the EPA’s federal implementation plan,” states an analysis on the decision by the Americans for Prosperity (AFP) Foundation. “In terms of how it relied on Loper Bright, the Texas court acknowledged that the end of Chevron deference marked a paradigmatic shift in judicial methodology.”

“Under [Section] 706, ‘agency interpretations of statutes’ are reviewed without deference. [Yet sometimes] a statutory delegation of authority ‘leaves [the] agency with flexibility,’” the 5th Circuit’s ruling says.

“In those instances, a court’s job is to recognize a delegation of regulatory authority, fix the boundaries of the delegation, and ‘ensure[] the agency has engaged in reasoned decision making,’” the AFP Foundation explains. “One of the open questions, after Loper Bright, is what it means for an agency interpretation of law to ‘rest on factual premises within’ an agency’s ‘expertise.’”

In Loper Bright, the U.S. Supreme Court“suggested that such expertise would have the ‘power to persuade,’ if not the ‘power to control,’ a court’s judgment about the meaning of a statute.”

In the Texas v. EPA case, the court’s ruling stated, “A reviewing court must be ‘most deferential’ to the agency where … its decision is based upon its evaluation of complex scientific data within its technical expertise.”

Loper Bright makes clear that courts have an obligation to provide an independent review of statutory law even when the matter is complicated.

“Whether or how the Supreme Court might provide further guidance on this front is further complicated by dicta in Seven County v. Eagle County that Baltimore Gas & Electric v. NRDC remains ‘black-letter administrative law,’” the AFP Foundation adds. “Under the Baltimore Gas doctrine, ‘when an agency makes … speculative assessments or predictive or scientific judgments … a reviewing court must be at its most deferential.’ Only time will tell whether that approach can coexist with a robust reading of Loper Bright.”