Fifth Circuit Limits EPA's Authority Under Clean Air Act Good Neighbor Provision in Multi-State SIP Disapproval Challenge
Texas, Louisiana, and Mississippi, joined by numerous oil and gas industry associations including the Texas Oil & Gas Association and Mid-Continent Oil and Gas Association, challenged EPA's disapproval of their state implementation plans under the Good Neighbor Provision for 2015 ozone NAAQS. The Fifth Circuit granted the petitions in part, holding that EPA would overstep its authority if it required upwind states to reduce emissions by more than the amount necessary to achieve attainment in every downwind state to which they are linked.
Background and Parties
The State of Texas, together with the Texas Commission on Environmental Quality, Railroad Commission of Texas, and Public Utility Commission of Texas, filed petitions for review alongside Louisiana and Mississippi and their respective environmental agencies. They were joined by a coalition of energy industry petitioners including Luminant Generation Company, multiple power companies, the Texas Oil & Gas Association, the Mid-Continent Oil and Gas Association, the Louisiana Chemical Association, and the Association of Electric Companies of Texas. The petitioners challenged EPA's final rule disapproving their state implementation plans (SIPs) submitted under the Good Neighbor Provision of the Clean Air Act for the 2015 ozone National Ambient Air Quality Standards (NAAQS).
Jurisdictional and Procedural Issues
The Fifth Circuit first addressed venue, holding that the EPA's disapproval of the Louisiana, Mississippi, and Texas SIPs constituted locally or regionally applicable actions reviewable in the Fifth Circuit rather than requiring transfer to the D.C. Circuit. The court also granted good cause for abeyance after EPA filed a motion to stay proceedings while new agency leadership reviewed the underlying final rule, with EPA advising that it was possible that after its review, EPA could take further action that may obviate the need for judicial resolution of some or all of the disputed issues.
The Court's Holdings on EPA Authority
The court held that EPA's task under the Good Neighbor Provision was to reduce upwind pollution, but only in amounts that pushed a downwind state's pollution concentrations above the relevant NAAQS. The Fifth Circuit established clear boundaries on EPA's regulatory authority, holding that EPA would overstep its authority under the Good Neighbor Provision if it required an upwind state to reduce emissions by more than the amount necessary to achieve attainment in every downwind state to which it was linked to eliminate those amounts that contribute to non-attainment.
Balancing Under-Control and Over-Control
While establishing limits on EPA's authority, the court also recognized the agency's need for regulatory flexibility. The court concluded that EPA had to have leeway in fulfilling its statutory mandate to balance the possibilities of under-control and over-control. The petitions were granted in part and denied in part.