The Nickel Report

As we have noted previously (An Opportunity for a New Federal-State Relationship Under the Regional Haze Program, July 17, 2017; A New Perspective on Regional Haze Regulation?, February 14, 2017), the US Environmental Protection Agency (EPA) recently signaled a new openness to recognizing state prerogatives and flexibility in implementing the regional haze program under the Clean Air Act (CAA). That program addresses impairment of visibility in the skies over protected national parks and wilderness areas that is attributed to widespread haze resulting from emissions to the air from varied sources.

During the Obama administration, a number of states complained that EPA often was unwilling to give a fair hearing to efforts to implement the regional haze program in a less costly way through state plans. One state that objected was Texas, which challenged a January 2016 EPA federal plan that imposed so-called reasonable-progress regional haze control requirements on Texas facilities. Texas brought that challenge in the US Court of Appeals for the Fifth Circuit, which issued a stay of the effectiveness of the EPA plan. Texas v. EPA, 829 F.3d 405 (5th Cir. 2006). Then, in the waning days of the Obama administration, EPA proposed another federal plan for Texas—this one intended to require so-called best available retrofit technology (BART) controls of potentially visibility-impairing emissions from electricity-generating plants. EPA, Promulgation of Air Quality Implementation Plans; State of Texas; Regional Haze and Interstate Visibility Transport Federal Implementation Plan, 82 Fed. Reg. 912 (Jan. 4, 2017). That proposed rule’s stringent emission-control requirements resembled in many respects those in the January 2016 plan that the Fifth Circuit had stayed.

In October 2017, EPA published a final rule that, instead of adopting the stringent plant-by-plant controls proposed in January 2017, established a flexible, market-based, intra-state emission-allowance trading program for Texas that could allow electricity generators in that state to meet BART visibility-protection requirements at lower cost. Although this is a federal plan rather than a state plan submitted by Texas, earlier court filings suggest it likely reflects much more closely the state’s regulatory policy preferences than did EPA’s January 2017 proposed plan.

Environmental groups oppose the October 2017 rule. In December, the National Parks Conservation Association, Sierra Club and Environmental Defense Fund initiated a challenge to the rule in the Fifth Circuit. At the same time, those groups formally petitioned EPA to reopen the rulemaking proceeding to reconsider the rule. These groups argue, among other things, that the rule’s market-based trading approach differs too greatly from the Obama administration’s January 2017 proposal to satisfy legal requirements for adequate public notice and public-comment opportunity. They claim the final rule is not, in administrative-law parlance, a “logical outgrowth” of EPA’s proposal.

On March 2, EPA and the environmental organizations jointly filed a motion in the Fifth Circuit to put litigation on the October 2017 rule on hold until EPA decides, in response to those organizations’ petition for reconsideration, whether to reopen the issue for further rulemaking proceedings. The court promptly granted that motion. The court’s order suspends litigation until EPA takes final action in response to the reconsideration petition—either denial of that petition or, if the Agency grants the petition, completion of a new rulemaking proceeding. The court’s suspension of litigation allows EPA an opportunity to consider whether to re-publish the Texas intra-state trading program for public review and comment, thereby addressing the environmental groups’ procedural—if not necessarily their substantive—objections.

Although the Texas BART case may not be fully resolved for some time, it is one prominent example of recent EPA efforts to turn a page and put in place more flexible—and often more state-friendly—policies for implementing the CAA visibility-protection program. And the ensuing litigation illustrates environmental groups’ efforts to resist adoption of such policies. The coming months may provide more clarity on how the ongoing policy—and litigation—battles on visibility protection may ultimately be resolved.