August 2, 2010

Hon. Lisa Jackson

Administrator

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue, N.W.

Washington, DC 20460

Mail Code: 1l01A

Dr. Alfredo "AI" Armendariz

Regional Administrator

U.S. Environmental Protection Agency, Region 6

1445 Ross Avenue, Suite 1200

Dallas, TX 75202

Mail Code: 6RA

Dear Administrators Jackson and Armendariz:

Byfax (202.501.1450),

email Oackson.lisa@epa.gov),

Us. mail, and hand delivery

Byfax (214.665.7113),

email (armendariz.al@epa.gov).

Us. mail, and hand delivery

In order to deter challenges to your plan for centralized control of industrial

development through the issuance of permits for greenhouse gases, you have called upon

each state to declare its allegiance to the Environmental Protection Agency's recently

enacted greenhouse gas regulations-regulations that are plainly contrary to United

States law. 75 Fed. Reg. 31,514, 31,525 &. 31,582 (June 3, 2010) (hereinafter, the

"Tailoring Rule"). To encourage acquiescence with your unsupported findings you

threaten to usurp state enforcement authority and to federalize the permitting program of

any state that fails to pledge their fealty to the Environmental Protection Agency (EPA).

On behalf ofthe State of Texas, we write to inform you that Texas has neither the

authority nor the intention of interpreting, ignoring, or amending its laws in order to

compel the permitting of greenhouse gas emissions.

You have declared that EPA's decision to enact automobile tailpipe emission

limits for greenhouse gases pursuant to Title II of the federal Clean Air Act renders such

gases immediately "subject to regulation" for all purposes under that Act, including the
Title I Prevention of Significant Deterioration (PSD) preconstruction permitting program

and the Title V operating permit program. Simultaneously, however, you recognize that

permitting greenhouse gases under the Act is "absurd." In the Tailoring Rule, EPA

states: "Here, we have determined, through analysis of burden and emissions data as well

as consideration of extensive public comment, that the costs to sources and administrative

burdens to permitting authorities that would result from application of the PSD and title

V programs for GHG emissions at the statutory levels as of January 2, 2011 should be

considered 'absurd results.'" 75 Fed. Reg. at 31,517. We agree.

In order to avoid the absurd results of EPA's own creation, you have developed a

"tailoring rule" in which you have substituted your own judgment for Congress's as to

how deep and wide to spread the permitting burden. Notably absent from your rules is

any evidence that they would achieve specific results; in fact, you assiduously (and

correctly) avoid ascribing what environmental benefit may be achieved by mandating

permits to emit a uniformly distributed, trace constituent of clean air, vital to all life, that

is emitted by all productive activities on Earth.

Instead of acknowledging that congressionally set emission limits preclude the

regulation of greenhouse gases, you instead re-write those statutorily-established limits

stating, "For our authority to take this action, we rely in part on the 'absurd results'

doctrine, because applying the PSD and title V requirements literally (as previously

interpreted narrowly by EPA) would not only be inconsistent with congressional intent

concerning the applicability of the PSD and title V programs, but in fact would severely

undermine congressional purpose for those programs. We also rely on the 'administrative

necessity' doctrine, which applies because construing the PSD and title V requirements

literally (as previously interpreted narrowly by EPA) would render it impossible for

permitting authorities to administer the PSD provisions." 75 Fed. Reg. at 31,541-42.

Because of your view that greenhouse gases become "subject to regulation" on

the first day it becomes illegal to manufacture a car not meeting the new tailpipe emission

limits for greenhouse gases (on January 2, 2011), you insist that states may not issue

permits after that date without considering greenhouse gas emissions. Your view is not

enough. Applicable law provides to the contrary.

Texas' stationary source permitting program encompasses all "federally regulated

new source review pollutants," inchiding, "any polhital1.t that otherwise is subject to

regulation under the [federal Clean Air Act]." 30 TEX. ADMIN. CODE § 116.12(14)(D).

The rules of the Texas Commission on Environmental Quality (TCEQ), like the EPA's

rules, do not define the phrase "subject to regulation." In its Tailoring Rule, however, the

EPA promulgated-without notice-a definition of the previously undefined term,

"subject to regulation." This new definition (attached hereto) specifically relates to the

regulation of greenhouse gases, spans several Federal Register columns, and is over 600

words in length. Specifically, in the EPA's first phase of greenhouse gas regulation, this

new definition raises the PSD permitting threshold for new and modified "major" sources

of other pollutants from 100 tons per year to 75,000 tons per year (tpy) of C02 equivalent

(C02e) emissions.
In the Tailoring Rule you have asked TCEQ to report to you by August 2, 2010,

whether it would "interpret" the undefined phrase "subject to regulation" in TCEQ Rule

116.12 consistent with the newly promulgated definition in EPA Rule 51.166, in all its

specifics and particulars. That is, you have effectively requested that Texas agree to

regulate greenhouse gases in the exact manner and method proscribed by the EPA.

In other words, you have asked Texas to agree that when it promulgated its air

quality permitting program rules for pollutants "subject to regulation" in 1993, that Texas

really meant to define the term "subject to regulation" as set forth in the dozens of

paragraphs and subparagraphs ofEPA Rule 51.166, first promulgated in 2010.

The State of Texas does not believe that EPA's "suggested" approach comports

with the rule of law. The United States and Texas Constitutions, United States and Texas

statutes, and EPA and TCEQ rules all preclude TCEQ from declaring itself ready to

require permits for greenhouse gas emissions from stationary sources as you request.

We start with constitutional difficulties. As noted, Texas' stationary source

permitting program encompasses all "federally regulated new source review pollutants,"

including "any pollutant that otherwise is subject to regulation under the [federal Clean

Air Act]." 30 TEX. ADMIN. CODE § 116.12(14)(D). This delegation of legislative

authority to the EPA is limited solely to those pollutants regulated when Texas Rule

116.12 was adopted (1993) and last amended (2006). As the Texas Supreme Court has

explained, "The general rule is that when a statute is adopted by a specific descriptive

reference, the adoption takes the statute as it exists at that time, and the subsequent

amendment thereof would not be within the terms of the adopting act." Trimmer v.

Carlton, 296 S.W. 1070 (1927). Thus, in order for Texas Rule 116.12 to pass

constitutional muster, it must be limited to adopting by reference the definition of

"subject to regulation" in existence when Rule 116.12 was last amended in 2006. In

other words, Texas Rule 116.12 cannot delegate authority to the EPA to define "subject

to regulation" in 2010 to include pollutants that were not "subject to regulation" in 2006.

For example, the Texas Solid Waste Disposal Act defines "hazardous waste" as

"solid waste identified or listed as hazardous waste by the administrator of the

Environmental Protection Agency under the federal Solid Waste Disposal Act." When

this delegation of legislatiVe authority Was challenged; it Was upheld by Texas' highest

court, but only because the court found that "the reference to the federal act in section

361.003(15) adopts by reference the act and the regulations promulgated thereunder

which were in effect on July 30, 1991, the date section 361.003(15) of the Texas Solid

Waste Disposal Act was enacted ..." Ex parte Elliott, 973 S.W.2d 737, 741 (Tex.

App.-Austin 1998, pet. refd). As the Elliott court explained, "We acknowledge that

section 361.003(15) may be read to say that the legislature has delegated to the EPA the

power to define hazardous waste under the THSC [Texas Health & Safety Code] and that

definition may change from time to time at the will of EPA without intervention or

guidance from the legislature." The court noted, however, that "[s]uch a construction

would in fact place in doubt the constitutionality of this provision," and therefore, the
court would "not construe, in this case, the adopting statute as attempting to adopt future

laws, rules or regulations of the federal government." The same analysis applies here:

TCEQ Rule 116.12 cannot delegate authority to the EPA to define "subject to regulation"

in 2010 to include pollutants that were not "subject to regulation" in 2006.

In addition to constitutional limitations, the TCEQ is also precluded from

adopting the EPA's newly promulgated definition of "subject to regulation" pursuant to

the express terms ofthe Texas Government Code, which requires public notice of agency

rulemaking. See, e.g., TEX. GOY'T CODE § 2001.023 ("A state agency shall give at least

30 days' notice of its intention to adopt a rule before it adopts the rule."). Likewise,

TCEQ rules mandate notice and an opportunity to be heard when substantive rules are

enacted. See, e.g., 30 TEX. ADMIN. CODE § 20.3. Like Texas law, federal law also

requires notice and hearing before Texas can revise its State Implementation Plan (SIP).

See Clean Air Act § 11 0(1); 42 U.S.C. § 7410(1) ("Each revision to an implementation

plan submitted by a State under this chapter shall be adopted by such State after

reasonable notice and public hearing."). When the TCEQ promulgated Rule 116.12 in

1993, or even when it last amended the rule in 2006, it had no intention of enacting a

permitting program for greenhouse gases. Consequently, TCEQ had no reason to (nor

did it) give public notice of any such intent. Obviously, Texans concerned with

greenhouse gas permitting could not have known to participate and comment on the

decision to require permits for pollutants "subject to regulation" in 2006, when the EPA

first discovered greenhouse gases were "subject to regulation" in 2010. It should go

without saying that the nearly infinite expansion of Texas' permitting programs to

include greenhouse gases with no state-level rulemaking at all would not satisfy Texas or

federal law requiring notice and an opportunity to be heard.

Perhaps more fundamentally, however, the EPA itself has not undertaken a proper

rulemaking to require all SIPs to include the definition of "subject to regulation" it has

just promulgated. This revision to EPA's Part 51 rules-which layout the requirements

for approvable SIPs-were preceded by no proposal whatsoever. Rather, this new

requirement first appeared in the EPA's final notice announcing the "Tailoring Rule,"

and accordingly, has not been properly adopted. See Clean Air Act § 307(d)(l)(J); 42

U.S.C. § 7607(d)(1)(J) (requiring formal rulemaking procedures in order to establish any

requirement under the PSD program).

And even if EPA provided prOpel' notice and the opportunity to comment, EPA

cannot lawfully adopt any rule that directly and immediately changes Texas' permit

program in any respect-much less to expand the reach of the program so far as to be

deemed "absurd." Clean Air Act Section 166(a) sets forth the SIP revision process for

"other pollutants" under the PSD program. The only sensible interpretation ofthe Clean

Air Act is one that requires the EPA to promulgate a National Ambient Air Quality

Standard (NAAQS) for greenhouse gases before the EPA can require PSD permitting of

greenhouse gases. Thereafter, pursuant to the express terms of the Clean Air Act, states

are provided with 21 months after EPA undertakes a proper rulemaking to add that new

pollutant to their SIP. Clean Air Act § l66(b), 42 U.S.C. § 7476(b) ("Within 21 months

after such date of promulgation such plan revision shall be submitted to the
Administrator"). EPA, however, has not developed a NAAQS for greenhouse gases, has

not undertaken a rulemaking to promulgate corresponding regulations, and has not

allowed any time for a state response.

In addition to circumscribing the statutory 21-month review and implementation

process afforded the states, EPA is also circumventing the statutory one-year review and

revision process afforded Congress, which specifically states, "Regulations referred to in

subsection [166](a) of this section shall become effective one year after the date of

promulgation." The purpose of this one-year delay is to allow Congress the opportunity

to review (and approve or revise) new rules for "other pollutants" before states are

required to implement them. 72 Fed. Reg. 54,112, 54,118 (Sept. 21, 2007); citing H.R.

Conf. 95-564, at 151 (1977), 1977 U.S.C.C.A.N. 1502, 1532. The path proposed by EPA

painstakingly avoids such congressional oversight.

Even under normal SIP revision procedures (those not involving new pollutants),

the EPA has failed to provide Texas a reasonable time to submit a plan revision. Clean

Air Act Section 110 sets forth EPA's authority to direct the requirements for approvable

SIPs. Section 1l0(k)(5) allows states up to 18 months after proper adoption of new SIP

expectations before requiring their implementation by the states. See 42 U.S.C. §

741O(k) ("The Administrator shall notify the State ofthe inadequacies, and may establish

reasonable deadlines (not to exceed 18 months after the date of such notice) for the

submission ofsuch plan revisions.").

Instead, EPA has demanded (in the absence of statutory authority) that Texas

submit a schedule for the completion of statutory and rule revisions. But notwithstanding

the above-referenced statutory requirements regarding SIP revisions, EPA has declared

that it will "ensure" all sources of greenhouse gases will be permitted under the final

Tailoring Rule on January 2, 2011, by moving "quickly to impose a Federal

Implementation Plan (FIP) for PSD through 40 CFR 52.21." 75 Fed. Reg. at 31,526.

The federal Clean Air Act, however, clearly does not authorize such bureaucratic

nimbleness. To the contrary, before EPA can implement a FIP, Section ll0(c)(l)

specifically requires the EPA to first make a finding that a state has failed to make a

required submission, such as a revision under Section ll0(k)(5), and even then, a FIP is

not effective until after the state is afforded additional time to correct the deficiency

identified by EPA. EPA has shown no intention of following the Clean Air Act

procedilles or allowing states a reasonable opportunity to change their rules.

Each of these objections to EPA's demand for a loyalty oath from the State of

Texas would suffice to justify our refusal to make one. Indeed, it is an affront to the

congressionally-established judicial review process for EPA to force states to pledge

allegiance to its rules (or forfeit their right to permit) on the final day by which states

must exercise their statutory right to challenge those same rules. Texas will not facilitate

EPA's apparent attempt to thwart these established procedures and ignore the law. In the

event a court concludes EPA's actions comport with the law, Texas specifically reserves

and does not waive any rights under the federal Clean Air Act or other law with respect

to the issues raised herein.
We object to adopting the EPA's definition of "subject to regulation" without

directly raising any of our substantive objections to each of the four EPA rulemakings

that collectively comprise your greenhouse gas control initiative. Those objections will

be resolved in litigation now pending in the D.C. Circuit Court of Appeals. Given that

you are unable to ascribe the benefits of your greenhouse permitting regime, it is difficult

to see why you would refuse to stay the effectiveness of your greenhouse gas rules. We

therefore ask you to stay the effectiveness of your rules until our challenge is resolved.

Sincerely,

Bryan W. Shaw, Ph.D.

Chairman

Texas Commission on Environmental Quality

Greg Abbott

Attorney General of Texas