CARL E. STEWART, Chief Judge:
IT IS ORDERED that the opinion previously filed in this case, Luminant Generation Co. L.L.C. v. U.S. E.P.A., No. 10-60934, 699 F.3d 427 (5th Cir. Oct. 12, 2012), is WITHDRAWN. The following opinion is substituted therefor:
Two sets of petitioners, hereinafter referred to as "Industry Petitioners"
The CAA "establishes a comprehensive program for controlling and improving the nation's air quality through state and federal regulation." BCCA Appeal Grp. v. EPA, 355 F.3d 817, 821-22 (5th Cir.2003). Under the CAA, the EPA is responsible for identifying air pollutants and establishing National Ambient Air Quality Standards ("NAAQS") which specify maximum allowable levels of certain types of pollutants in the air. Id. at 822; 42 U.S.C. §§ 7408-7409. The states are then permitted, "within limits established by [the NAAQS], to enact and administer their own regulatory programs, structured to meet their own particular needs." Hodel v. Virginia Surface Mining and Reclamation Ass'n, 452 U.S. 264, 289, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981). This federal-state partnership is often described as "cooperative federalism." Id.
To comply with its responsibilities under the Act, each state must create and administer a SIP which provides for the "implementation, maintenance, and enforcement" of NAAQS by setting "emission limitations and other control measures." 42 U.S.C. § 7410(a)(1)-(2). The states have "wide discretion" in formulating their SIPs, Union Elec. Co. v. EPA, 427 U.S. 246, 250, 96 S.Ct. 2518, 49 L.Ed.2d 474 (1976), including the "broad authority to determine the methods and particular control strategies they will use to achieve the statutory requirements." BCCA Appeal Grp., 355 F.3d at 822 (citing Union Elec. Co., 427 U.S. at 266, 96 S.Ct. 2518 ("So long as national standards are met, the state may select whatever mix of control devices it desires.")). Once a state creates or revises a SIP, it is submitted to the EPA for review. 42 U.S.C. § 7410(a)(1),(k)(1)-(2).
States must periodically revise their SIPs as necessary to ensure continuing compliance with current NAAQS. Id. at § 7410(a)(2)(H). The EPA must review and approve or disapprove a SIP revision within 18 months of submission. Id. at §§ 7410(k)(1)(B),(2)-(3). The EPA shall disapprove a SIP revision only if "the revision would interfere with any applicable requirement concerning attainment" of the NAAQS "or any other applicable requirement" of the Act. Id. at § 7410(l). If the revision meets all of the applicable CAA requirements, the EPA "shall approve such submittal as a whole." Id. at § 7410(k)(3). Once approved by the EPA as meeting the requirements of the Act, the SIP, or the approved portion thereof, is incorporated by reference into the Code of Federal Regulations. See 40 C.F.R. § 52.02 (2011).
The CAA provides for shared enforcement of SIPs. A state must include in its SIP, a "program to provide for the enforcement" of the plan. 42 U.S.C. § 7410(a)(2)(C). The program must provide the state permitting authority power to "recover civil penalties in a maximum amount of not less than $10,000 per day for each violation." Id. at § 7661a(b)(5)(E). Additionally, the EPA has the power to enforce a SIP by commencing "a civil action for a permanent or temporary injunction, or to assess and recover a civil penalty of not more than $25,000 per day for each violation, or both[.]" Id. at § 7413(b). Such suit may be brought in district court, "and such court shall have jurisdiction to restrain such violation, to require compliance, to assess such civil penalty, to collect any fees owed to the United States ... and to award any other appropriate relief." Id. Finally, any person may commence a civil action on his own behalf against any person who is alleged to have violated an emission standard or limitation in a SIP. Id. at § 7604(a). A citizen suit may be brought in district court, which shall have jurisdiction to enforce such an emission standard or limitation and to apply any appropriate civil penalties. Id.
In assessing the amount of a civil penalty in either an EPA enforcement action or a citizen suit, the court must consider the penalty assessment criteria outlined in section 7413(e), i.e., the size of the business, the economic impact of the penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration of the violation as established by any credible evidence (including evidence other than the applicable test method), payment by the violator of penalties previously assessed for the same violation, the economic benefit of noncompliance, the seriousness of the violation, and "other factors as justice may require." Id. at § 7413(e).
Since the creation of its first SIP in 1972, Texas has provided for special treatment of SSM activity. See Tex. SIP § XIV, Rule 12 (Jan. 26, 1972) (providing emissions during "upsets" and "start-up or shutdown ... may not be required to meet the allowable emission levels"). The revised SIP submitted by Texas in 2000 provided that emissions from SSM activity were "exempt from compliance with air emission limitations established in permits, rules, and orders of the commission" so long as the owner or operator complied with certain reporting, record keeping, and operational requirements. See General Air Quality Rules, 25 Tex. Reg. 6727, at § 101.11(b) (July 14, 2000). Further, the exceptions were limited to SSM emissions that "could not have been prevented through planning and design," that "were not part of a recurring pattern," and that did "not cause or contribute to a condition of air pollution." See id.
The EPA approved the 2000 SIP revision, determining that the exemptions for emissions during SSM activity contained in the plan met the requirements of the CAA. See Approval and Promulgation of Implementation Plans; Texas; Excess Emissions During Startup, Shutdown, Malfunction and Maintenance, 65 Fed.Reg. 70,792 (Nov. 28, 2000). In its approval, the EPA noted that "under the [CAA], all excess emissions during SSM episodes are violations of applicable emission limitations [however,] we believe it would be inequitable to penalize a source for occurrences beyond the company's control. A source has the burden of proving that the excess emissions were due to circumstances beyond the control of the operator or the owner." Id. at 70,793. Additionally, the EPA found that the 2000 SIP revision comported with past EPA guidance contained in its policy statements regarding emissions from SSM activity. Id. at 70,792-93. These policy statements can be found in a collection of memos that we will refer to as the "Bennett Memos" (1982
The EPA ultimately gave Texas's 2004 SIP revision "limited approval." See Limited Approval and Promulgation of Implementation Plans; Texas; Excess Emissions During Startup, Shutdown and Malfunction Activities, 70 Fed.Reg. 16,129 (Mar. 30, 2005). The EPA explained that "the rule improves the SIP and is largely consistent with the relevant requirements of the [CAA]" but noted that the provisions allowing for an affirmative defense for scheduled SSM activity were "ambiguous, at best, and inconsistent with the [CAA], at worst, and could create problems with enforcing the underlying applicable emission limits." 70 Fed.Reg. at 16,130. The EPA stated as follows:
Id. at 16,131. Nevertheless, the EPA approved the 2004 provision, noting section 101.222's expiration date of June 30, 2005, but in doing so, the agency clarified that "if Texas revises its rules to include an affirmative defense for excess emissions in the Texas SIP in the future, the State should ensure ... that the affirmative defense does not apply to excess emissions from scheduled maintenance activities...." Id. The EPA then granted a request from Texas to extend the affirmative defense's expiration date to June 30, 2006. See Limited Approval and Promulgation of Implementation Plans; Texas; Excess Emissions During Startup, Shutdown and Malfunction Activities, 70 Fed. Reg. 50,205, 50,206 (Aug. 26, 2005).
Thereafter, as mentioned above, the EPA partially approved and partially disapproved the revisions. 75 Fed.Reg. at 68,991. In finalizing its approval of the portion of the SIP revision containing an affirmative defense for unplanned SSM activity, the EPA stated that section 101.222(a)-(g) "provides an affirmative defense for certain emission events that is consistent with the interpretation of the Act as set forth in our guidance documents." Id. at 68,990. The EPA explained that it has "recognized that sources may, despite good practices, be unable to meet emission limitations during periods of startup and shutdown and, that despite good operating practices, sources may suffer a malfunction due to events beyond the control of the owner or operator." Id. at 68,992.
The EPA then finalized its disapproval of section 101.222(h)-(j), which contained an affirmative defense for planned SSM activity, 75 Fed.Reg. at 68,991, relying on its past reasoning that "[b]ecause these events are planned, we believe that sources should be able to comply with applicable emission limits during these periods of time." 75 Fed.Reg. 26,892, 26,896 (May 13, 2010). The EPA further stated that it disapproved of the affirmative defense for planned startup and shutdown activity contained in the SIP revision because it found the provisions for such activity to be nonseverable from those for planned maintenance. 75 Fed.Reg. at 68,991.
Environmental Petitioners seek review of the EPA's final rule approving the portion of the SIP revision providing an affirmative defense against civil penalties for
Pursuant to 42 U.S.C. § 7607(b), this court has jurisdiction to hear a petition for review of the EPA's approval of a SIP under 42 U.S.C. § 7410. A petition to review the EPA's approval or disapproval of a SIP is governed by the Administrative Procedure Act. See 5 U.S.C. § 706; BCCA Appeal Grp., 355 F.3d at 824. The EPA's decision is valid unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Agency action that is in excess of statutory authority will also be set aside. Id. at § 706(2)(C).
"An agency rule is arbitrary and capricious `if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.'" Tex. Oil & Gas Ass'n v. U.S. E.P.A., 161 F.3d 923, 933 (5th Cir.1998) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). "If the agency's reasons and policy choices conform to minimal standards of rationality, then its actions are reasonable and must be upheld." Tex. Oil & Gas Ass'n, 161 F.3d at 934. Nonetheless, the reviewing court "may not supply a reasoned basis for the agency's action that the agency itself has not given." Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. 2856. "[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973).
"The court applies the two-step Chevron analysis to questions involving the EPA's interpretation of the statutes it administers," including the CAA. Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). "If Congress `has directly spoken to the precise question at issue,' the agency and the court `must give effect to the unambiguously expressed intent of Congress.'" Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. In performing this analysis, the court "employ[s] traditional tools of statutory construction." Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. 2778. "[A] statutory provision cannot be read in isolation, but necessarily derives its meaning from the context provided by the surrounding provisions, as well as the broader context of the statute as a whole." Khalid v. Holder, 655 F.3d 363, 367 (5th Cir.2011).
"If the statute, however, is `silent or ambiguous with respect to the specific issue,' the court must first assess the administrative decision-making process to determine whether the agency's action is entitled to Chevron deference." United States v. Mead Corp., 533 U.S. 218, 226-31, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (quoting Chevron, 467 U.S. at 843, 104 S.Ct. 2778). "Under Mead, Congress must have `delegated authority to the agency generally to make rules carrying the force of law,' and that agency interpretation claiming deference must have been promulgated in the exercise of that authority." BCCA Appeal Grp., 355 F.3d at 825 (quoting Mead, 533 U.S. at 226-27, 121 S.Ct. 2164). "If the agency's decision is a
Where an issue presented is a challenge to an agency's interpretation of its own regulation, the agency's interpretation is controlling unless it is "plainly erroneous or inconsistent with the regulation." Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)).
Environmental Petitioners argue that the EPA's approval of the affirmative defense for unplanned SSM events is in excess of the agency's statutory authority and is not in accordance with the Act. Specifically, petitioners argue that the final rule conflicts with the plain language of the Act authorizing civil penalties in EPA and citizen suit enforcement actions, as well as the Act's requirement that the state permitting authority be able to assess civil penalties. Environmental Petitioners further argue that, even if the affirmative defense against civil penalties for excess emissions resulting from unplanned SSM activity is not contrary to the CAA, the EPA's approval was arbitrary and capricious. Finally, Environmental Petitioners argue that, in approving the affirmative defense for unplanned SSM activity, the EPA altered the meaning of the SIP as submitted by Texas. We address each of these arguments in turn.
The EPA's decision partially approving the SIP revision containing an affirmative defense for unplanned SSM activity is invalid if it found by this court to be, inter alia, "not in accordance with law" or in excess of the agency's statutory authority. 5 U.S.C. § 706(2)(A),(C). As stated above, the Act confines the EPA to reviewing SIPs for consistency with the Act's requirements. 42 U.S.C. §§ 7410(k)(3); 7410(a)(1). The EPA "shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment" or "or any other applicable requirement" of the Act. Id. at § 7410(l). Further, as pointed out by petitioners, the CAA provides that, in the case of EPA enforcement and citizen suits, a federal district court "shall have jurisdiction" to assess a "civil penalty." Id. at §§ 7413(b); 7604(a). In assessing the amount of a civil penalty in either an EPA enforcement action or a citizen suit, the court must consider the penalty assessment criteria outlined in section 7413(e). Id. at § 7413(e). Additionally, the CAA mandates that the state permitting authority have the power to recover civil penalties for violations under the Act. 42 U.S.C. § 7661a(b)(5)(E).
The EPA construes section 7413 of the Act as authorizing affirmative defenses against civil penalties if the defense is "narrowly tailored" to address unavoidable, excess emissions and consistent with the penalty assessment criteria set forth in
As an initial matter, we note that the EPA's procedure of "notice-and-comment rulemaking" and "adjudication" is generally a sufficiently formal and deliberative process. Mead Corp., 533 U.S. at 229-30, 121 S.Ct. 2164. Therefore, "[t]he court applies the two-step Chevron analysis to questions involving the EPA's interpretation of the statutes it administers." Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. "If Congress `has directly spoken to the precise question at issue,' the agency and the court `must give effect to the unambiguously expressed intent of Congress.'" Id. If the statute, however, is "silent or ambiguous with respect to the specific issue," the court must assess whether the agency's interpretation of the Act is "based on a permissible construction of the statute" and, therefore, entitled to Chevron deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
Thus, under Chevron step one, we begin by looking at whether the statute is silent or ambiguous with regard to the specific issue in dispute. Here, section 7413 does not discuss whether a state may include in its SIP the availability of an affirmative defense against civil penalties for unplanned SSM activity. 42 U.S.C. § 7413. Accordingly, we turn to step two of Chevron and ask whether the EPA's interpretation of section 7413, as authorizing an affirmative defense for unplanned SSM activity, is entitled to deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
The EPA submits that its "interpretation of the CAA is that it is not appropriate for SIPs to exempt periods of startup, shutdown, maintenance or malfunction from compliance with applicable emission limits." 75 Fed.Reg. at 68,991-92. To support this interpretation, the agency relies on section 302(k) of the Act which defines "emission limitation" and includes a requirement that emissions be limited on a continuous basis. Id. at 68,992; 42 U.S.C. § 7602(k).
Further, noting its authority to assess civil penalties under section 7413 of the Act, the agency reasons that an effective enforcement program must be able to collect penalties to deter avoidable violations. 42 U.S.C. § 7413. The EPA recognizes, however, that "sources may, despite good practices, be unable to meet emission limitations during periods of startup and shutdown and, that despite good operating practices, sources may suffer a malfunction due to events beyond the control of the owner or operator." Id. at 68,992. For this reason, the agency submits that a SIP "should only provide [an affirmative defense against civil penalties] for circumstances where it is infeasible to meet the applicable limit and the criteria that the source must prove should ensure that the source has made all reasonable efforts to comply." Id. at 68,992-93; 42 U.S.C. § 7413(e).
As a result, the EPA states that it has adopted an interpretation of section 7413 that would allow sources to assert an affirmative defense for periods of unavoidable, excess emissions during certain SSM activity in an enforcement action for penalties, though not in an action for injunctive relief. Id. at 68,992. The agency concludes that this interpretation is consistent with the Act because the criteria a source must prove when asserting the affirmative defense are consistent with the penalty assessment criteria identified in section 7413(e), which are considered by the courts and the EPA in determining whether or not to assess a civil penalty for violations and, if so, the amount. Id. at
The approved portion of Texas's SIP that contains an affirmative defense for unplanned SSM activity provides, as an initial matter, that sources are generally subject to enforcement actions for any "upset" events, i.e., an unplanned and unavoidable malfunction that results in unauthorized emissions. 30 Tex. Admin. Code § 101.1(109). If an "upset" event is considered an "excessive" emission event based on a number of factors including frequency, duration, impact on human health, and other measures, no affirmative defense is available. Id. at § 101.222(a)(b). If the violation is not deemed "excessive," and it occurred during unplanned SSM activity, and nine additional criteria are met, including a demonstration that the unauthorized emissions "did not cause or contribute to an exceedance of the NAAQS, PSD increments, or a condition of air pollution," and that the unauthorized emissions "could not have been prevented through planning and design," then the affirmative defense is available. Id. at § 101.222(b),(c). Regardless, even if all nine required criteria are met and the violator establishes the applicability of the approved affirmative defense, injunctive relief is still available. 75 Fed.Reg. at 68,991 n.4.
The EPA submits that the above-mentioned affirmative defense for unplanned SSM events is narrowly tailored to address unavoidable, excess emissions and consistent with the penalty assessment criteria in section 7413(e). Thus, it approved this portion of Texas's SIP revision as being consistent with section 7413 of the Act. 42 U.S.C. §§ 7413, 7410(l). We hold this to be a permissible interpretation of section 7413, warranting deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778. Accordingly, the EPA acted neither contrary to law nor in excess of its statutory authority when it based its partial approval of the plan on this construction. 5 U.S.C. § 706(2)(A), (C).
Environmental Petitioners argue that, even if the affirmative defense for unplanned SSM activity is not contrary to the CAA, the EPA's approval was nonetheless arbitrary and capricious. They argue that the EPA failed to explain why it approved the affirmative defense in light of (1) the EPA's position that affirmative defenses should not be available where a small group of sources could cause exceedance of the NAAQS; (2) precedent indicating that civil penalties serve to encourage compliance with the Act; and (3) the burden an affirmative defense would place on citizen suits.
The EPA's decision is not valid if found by this court to be arbitrary or capricious. 5 U.S.C. § 706(2)(A). "An agency rule is arbitrary and capricious `if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem,
With respect to their first argument, Environmental Petitioners are correct that the EPA has stated in its past policy guidance that "[w]here a single source or small group of sources has the potential to cause an exceedance of the NAAQS or PSD increments... an affirmative defense approach will not be adequate to protect public health and the environment...."
Environmental Petitioners' remaining two arguments as to why the EPA's approval of the affirmative defense was arbitrary and capricious are also unavailing. Environmental Petitioners are correct that the EPA has recognized that the availability of civil penalties serves as an incentive for companies to take actions to avoid excess emissions. 75 Fed.Reg. at 68,999. In its partial approval of the SIP revision, however, the EPA further recognized that while "the availability of civil penalties serves as an incentive for companies to be more cautious, to take more preventative actions, and to seek to develop technologies and management practices to avoid excess emissions[,] ... the criteria a source would need to prove in order to successfully assert an affirmative defense will encourage companies to take such caution." Id. at 68,999.
The EPA's reasoning relies on the fact that the narrowly tailored affirmative defense presents a high burden for any company seeking entitlement to it. Assuming the violation is not deemed "excessive," and it occurred during unplanned SSM activity, nine additional criteria must be met, including a demonstration that the unauthorized emissions "did not cause or contribute to an exceedance of the NAAQS, PSD increments, or a condition of air pollution," and that the unauthorized emissions "could not have been prevented through planning and design." 30 Tex. Admin. Code § 101.222(c). This reasoning supports the EPA's position that its approval of the affirmative defense for unplanned SSM activity will not serve as a disincentive for companies to avoid excess emissions. Thus, there is no conflict with the agency's previous statements that civil penalties encourage compliance with the Act.
Environmental Petitioners' second argument that the affirmative defense places an unreasonable burden on plaintiffs is also without merit. Environmental Petitioners contend that the affirmative defense only requires a "prima facie showing"
Consequently, we hold that the EPA did not act arbitrarily or capriciously in its partial approval of the SIP revision. The above-mentioned reasons and policy choices provided by the EPA for approving the affirmative defense for unplanned SSM activity "conform to minimal standards of rationality"; therefore, they are reasonable and will be upheld by this court. Tex. Oil & Gas Ass'n, 161 F.3d at 934.
Environmental Petitioners' final argument is that, by approving the affirmative defense for unplanned SSM activity, the EPA impermissibly altered the meaning of the SIP by making the defense potentially applicable to citizen and EPA enforcement actions, thereby limiting injunctive relief available under the Act and delaying the enforcement of excess emission violations. Environmental Petitioners identify a statement by the TCEQ that "its rules are not intended to nor do they impact citizens' legal rights under the [CAA]." 30 Tex. Reg. at 8922.
Environmental Petitioners are correct that, in partially approving a SIP, the EPA may not "overid[e] state policy," Bethlehem, 742 F.2d at 1036-37, and alter the meaning of the SIP. In its partial approval of the SIP revision, however, the EPA reasoned as follows: "[A]pproval of the provisions in sections 101.222(b), (c), (d), and (e) into the Texas SIP does not preclude citizen suits under the Act. Rather, the affirmative defense may be raised in defense of a claim brought by EPA, the State or a private citizen." 75 Fed.Reg. at 68,999. The EPA went on to state that "even where an affirmative defense is successfully raised in defense to an action for penalties, it does not preclude other judicial relief that may be available, such as injunctive relief or a requirement to mitigate past harm or to correct the non-compliance at issue." Id.
The above-mentioned reasoning provided by the EPA supports its position that it did not alter the meaning of the SIP or broaden its application beyond what Texas intended in its partial approval of the plan. We therefore reject Environmental Petitioners' argument.
Industry Petitioners argue that the portion of the SIP revision containing the affirmative defense for planned SSM activity fully complies with the CAA and should have been approved by the EPA and that the EPA's disapproval was contrary to law. They further argue that the EPA's decision was arbitrary and capricious. In the alternative, Industry Petitioners argue that the EPA should have severed and approved the affirmative defense for planned startup and shutdown activity, even if it disapproved the affirmative defense
The EPA's decision partially disapproving the SIP revision containing an affirmative defense for planned SSM activity is invalid if it is found by this court to be, inter alia, "not in accordance with law." 5 U.S.C. § 706(2)(A). The Act provides that the EPA "shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment" of NAAQS or "or any other applicable requirement" of the Act. See 42 U.S.C. § 7410(l).
The EPA interprets section 7413 of the Act as only authorizing affirmative defenses that are narrowly tailored to address periods of unavoidable, excess emissions during certain SSM activity, "where it is infeasible to meet the applicable limit." Consequently, the agency concludes that section 7413 does not authorize an affirmative defense for planned SSM activity. Accordingly, this court must determine if the EPA's interpretation of section 7413 is entitled to Chevron deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778. We hold that it is.
As stated, the EPA's procedure of "notice-and-comment rulemaking" and "adjudication" is generally a sufficiently formal and deliberative process. Mead Corp., 533 U.S. at 229-30, 121 S.Ct. 2164. Therefore, "[t]he court applies the two-step Chevron analysis to questions involving the EPA's interpretation of the statutes it administers." Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778. "If Congress `has directly spoken to the precise question at issue,' the agency and the court `must give effect to the unambiguously expressed intent of Congress.'" Id. If the statute, however, is "silent or ambiguous with respect to the specific issue," the court must assess whether the agency's interpretation of the Act is "based on a permissible construction of the statute" and, therefore, entitled to Chevron deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
Thus, under Chevron step one, we begin by looking at whether the statute is silent or ambiguous with regard to the specific issue in dispute. Here, section 7413 does not discuss whether a state may include in its SIP the availability of an affirmative defense against civil penalties for planned SSM activity. 42 U.S.C. § 7413. Accordingly, we turn to step two of Chevron and ask whether the EPA's interpretation of section 7413, as not authorizing an affirmative defense against civil penalties for planned SSM activity, is entitled to deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778.
As stated, relying on the definition of "emission limitation" found in section 302(k) of the Act, the EPA submits that its "interpretation of the CAA is that it is not appropriate for SIPs to exempt periods of startup, shutdown, maintenance or malfunction from compliance with applicable emission limits." 75 Fed.Reg. at 68,991-92; 42 U.S.C. § 7602(k).
Citing its authority to assess civil penalties under section 7413 of the Act, the agency reasons that an effective enforcement program must be able to collect penalties to deter avoidable violations. 42 U.S.C. § 7413. Further, while the EPA acknowledges that "sources may, despite good practices, be unable to meet emission limitations" during certain SSM activity, the EPA's interpretation of section 7413 only allows sources to assert an affirmative defense for periods of unavoidable, excess
The EPA submits that the portion of the SIP revision providing an affirmative defense for planned SSM activity is inconsistent with section 7413 of the Act because it is not narrowly tailored to address unavoidable, excess emissions. Id. at 68,992. The agency supports this position by submitting that it does not "believe that it is infeasible for sources to meet applicable limits during planned maintenance" activities. Id. at 68,993. The agency reasons that because planned maintenance activities are predictable, a source can avoid excess emissions from these activities by scheduling maintenance during shutdown periods. Id. at 68,992. Consequently, the agency concludes that the affirmative defense for planned SSM activity is inconsistent with section 7413 of the Act. We hold this to be a permissible interpretation of section 7413 of the Act, warranting deference. Chevron, 467 U.S. at 843, 104 S.Ct. 2778; 42 U.S.C. § 7413. Accordingly, the EPA did not act contrary to law when its based its partial disapproval of the plan on this construction. 5 U.S.C. § 706(2)(A).
Industry Petitioners submit several arguments in support of their assertion that the EPA's partial disapproval of the SIP revision was arbitrary and capricious. We address each of these in turn.
As previously stated, the EPA's decision is not valid if found by this court to be arbitrary or capricious. 5 U.S.C. § 706(2)(A). On the other hand, "[i]f the agency's reasons and policy choices conform to minimal standards of rationality, then its actions are reasonable and must be upheld." Tex. Oil & Gas Ass'n, 161 F.3d at 934.
Citing GHASP v. U.S. E.P.A., 289 Fed. Appx. 745 (5th Cir.2008), Industry Petitioners argue that the EPA must approve any SIP revision that is more stringent than the preexisting SIP. In 2000, the EPA approved a Texas excess emissions rule that included an exemption for emissions from planned maintenance. See 65 Fed.Reg. 70,792 (Nov. 28, 2000); 25 Tex. Reg. 6727-6751 (July 14, 2000). In its brief, however, the EPA points out that it has publicly conceded that its approval of the Texas 2000 rule was erroneous.
An agency is not bound to follow a prior, incorrect interpretation of its own policy. Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414, 65 S.Ct. 1215, 89 L.Ed. 1700 (1945). Moreover, an agency is permitted to change its policy interpretations. FCC v. Fox Tele. Stations, Inc., 556 U.S. 502, 514-15, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009); National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967, 981, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). Consequently, we hold that the EPA's previous, admittedly erroneous, approval of a prior Texas SIP provision, does not mandate
Industry Petitioners next argue that the EPA, in partially disapproving the SIP revision, impermissibly made the SIP more stringent than what Texas had intended, i.e., a SIP without any accommodation for planned SSM emissions. We disagree.
The EPA may approve or disapprove a provision in a SIP, but may not require a state to add any provision to its proposal. See Fla. Power & Light Co., 650 F.2d at 587-89. Further, the EPA may not exercise its power to partially approve and disapprove portions of a SIP to make it more stringent than intended by the state. See Bethlehem Steel, 742 F.2d at 1034-35.
In its partial disapproval of the SIP, the EPA noted the following:
75 Fed.Reg. at 68,993. This reasoning supports the EPA's position that its partial disapproval of the SIP did not make the remaining approved portions more stringent than what Texas had intended.
Industry Petitioners next argue that the EPA's partial disapproval of the SIP revision was in error because the agency never established that the affirmative defense for planned SSM activity "would interfere" with NAAQS attainment. 42 U.S.C. § 7410(l).
With respect to this issue, the EPA stated that it does not interpret the Act as requiring it to demonstrate that there will be a violation of NAAQS if it disapproves a SIP revision. 75 Fed.Reg. at 68,994. The agency further noted that "the language in section 110(l) provides that EPA must disapprove a SIP revision if it `would interfere with any applicable requirement concerning attainment.' This is quite distinct from an obligation to prove that a violation will occur." Id.
We agree with the EPA's position that it is not required by the Act to prove that a violation will occur as a prerequisite to disapproving the plan. However, in disapproving a plan, the agency is required to provide reasoning supporting its conclusion that the disapproved provision would interfere with an applicable requirement of the Act. 42 U.S.C. § 7410(l). As stated, the agency has provided sufficient reasoning supporting its conclusion that the affirmative defense for planned SSM activity was inconsistent with section 7413 of the Act because it was not narrowly tailored to address unavoidable, excess emissions because it provided a defense for SSM activities during which excess emissions could be avoided. Consistent with our previous holding that this conclusion is a permissible construction of the statute that is not contrary to law, we hold the same conclusion to be a sufficient basis for the agency's partial disapproval of the plan pursuant to sections 7413 and 7410(l). 42 U.S.C. §§ 7413, 7410(l)
Industry Petitioners also argue that the EPA was required to approve the affirmative defense scheme as a necessary step to Texas's transition to a permitting scheme. In support of their argument, Industry
75 Fed.Reg. at 69,899-900. This reasoning supports the EPA's position that it was not required to approve the provision containing an affirmative defense for planned SSM activity in light of Texas's transition to a permitting scheme.
Consequently, we hold that the EPA did not act arbitrarily or capriciously in its disapproval of the portion of the SIP revision containing an affirmative defense for planned SSM activity. The above-mentioned reasons provided by the EPA for disapproving the provision "conform to minimal standards of rationality"; therefore, they are reasonable and will be upheld by this court. Tex. Oil & Gas Ass'n, 161 F.3d at 934.
The EPA has determined that the provisions relating to planned startup and shutdown activities are not severable from the planned maintenance provisions. 75 Fed. Reg. 68,991, 68,997. Industry Petitioners argue that the EPA should have severed and approved the affirmative defense for planned startup and shutdown activity, even if it had determined that there should be no affirmative defense for planned maintenance activity. We disagree.
We decline to address the issue of whether the EPA was correct in concluding that the provisions relating to planned startup and shutdown activities are not severable from the planned maintenance provisions because, even if severed, the provisions would not have been consistent with the agency's interpretation of section 7413 of the Act. For the same reasons provided in our discussion above upholding the EPA's disapproval of the affirmative defense for planned maintenance activity contained in 101.222(h), we uphold the EPA's disapproval of the affirmative defense as it applies to planned startup and shutdown activity. The portion of the SIP revision providing an affirmative defense for planned SSM activity is inconsistent with section 7413 of the Act because it is not narrowly tailored to address unavoidable, excess emissions because it provided a defense for SSM activities during which excess emissions could be avoided. Id. at 68,992. Consequently, we hold that the EPA was not arbitrary or capricious, or contrary to law, in disapproving the provision as a whole.
In their final argument, Industry Petitioners request that approval of the SIP be backdated to June 30, 2006. In light of our conclusion that the EPA was not arbitrary,
For these foregoing reasons, we conclude that the EPA did not act arbitrarily or capriciously, contrary to law, or in excess of its statutory authority, in its partial approval and partial disapproval of Texas's SIP revision. We therefore deny the petitions for review submitted by both Environmental Petitioners and Industry Petitioners.
