Affirmative Defense Lawsuit Filed in Wrong Court: EPA

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By Patrick Ambrosio

July 20 — A consolidated challenge to a rule requiring Texas to remove affirmative defense language from a state air pollution plan should be dismissed because petitioners filed their lawsuits in the incorrect court, according to the Environmental Protection Agency.

The agency, in a motion to dismiss filed July 17, argued that Texas and other petitioners filed lawsuits in the U.S. Court of Appeals for the Fifth Circuit challenging a “nationally applicable” final action. The Clean Air Act's judicial review provision gives the U.S. Court of Appeals for the District of Columbia Circuit exclusive jurisdiction over such lawsuits, the agency argued.

At issue is a final rule (RIN 2060-AR68) issued in May that requires 36 states to remove affirmative defense language from their state implementation plans for addressing excess emissions during startup, shutdown and malfunction. The affirmative defense provisions shielded coal-fired power plants, petroleum refineries and other industrial facilities from being subjected to civil penalties for regulatory violations resulting from unavoidable equipment malfunction.

Court Lacks Jurisdiction 

The EPA asked the Fifth Circuit to dismiss the lawsuits for lack of jurisdiction, which would allow the petitioners to file timely petitions with the D.C. Circuit. The lawsuits, which were consolidated by the Fifth Circuit, were filed by Luminant Generation Co., the Texas government, and the BCCA Appeal Group, a nonprofit organization consisting of industrial facility operators in the Houston area.

If the Fifth Circuit will not dismiss the lawsuits, at minimum, the court should transfer the petitions to the D.C. Circuit, the EPA contends. The Southeastern Legal Foundation has already challenged the affirmative defense rule in that court (Se. Legal Found. v. EPA, D.C. Cir., No. 15-1166, 6/12/15).

The EPA noted in its motion that counsel for the petitioners have indicated that they will oppose the motion to dismiss.

Lawsuits Only Challenge Texas Requirement 

Stephen Gidiere, a partner at Balch & Bingham LLC who is representing Luminant, told Bloomberg BNA in an e-mail after the lawsuit was filed that the Fifth Circuit is the appropriate venue because it is a “narrow challenge” to the overall EPA rule. The Luminant petition, as well as the lawsuits filed by Texas and the BCAA Appeal Group, only challenge the portions of the rule that apply to Texas and regulated entities in Texas.

The EPA said that argument is an “attempt to circumvent” the Clean Air Act's judicial review provisions.

“National rulemakings always have local impacts, and petitioners here are similar to others that challenge nationwide regulations — they are concerned with how those regulations apply to their facilities and situation,” the agency said. “Framing concerns narrowly, however, cannot defeat the statutory requirement that all challenges to nationwide CAA [Clean Air Act] regulations be filed in the D.C. Circuit.”

Court Previously Upheld SIP 

Gidiere also said Luminant's lawsuit was filed in the Fifth Circuit “in deference” to a 2013 decision by that court that upheld the EPA's approval of Texas' state implementation plan.

The court upheld the affirmative defense provision in Texas' plan, finding that the EPA did not act arbitrarily or capriciously when it approved the plan (Luminant Generation Co. v. EPA, 714 F.3d 841, 76 ERC 1575, 2013 BL 79999 (5th Cir. 2013).

Luminant argued in its latest petition for review that the Fifth Circuit's 2013 decision in Luminant Generation Co. v. EPA remains “binding precedent.”

The EPA originally held that affirmative defense language was permissible, but the agency has changed its view in response to a 2014 D.C. Circuit decision that found the agency did not have the authority under the Clean Air Act to include affirmative defense language in hazardous air pollutant standards covering cement kilns (NRDC v. EPA, 749 F.3d 1055, 78 ERC 1369, 2014 BL 108218 (D.C. Cir. 2014)).

Since that 2014 decision, the EPA has been removing similar affirmative defense language from its other regulations.

To contact the reporter on this story: Patrick Ambrosio in Washington at pambrosio@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

The motion to dismiss in Luminant Generation Co. v. EPA is available at http://www.bloomberglaw.com/public/document/Luminant_Generation_Co_LLC_et_al_v_EPA_et_al_Docket_No_1560424_5t/1.