ATTORNEY GENERAL OF TEXAS



### August 19, 2010 GREG ABBOTT

Hon. Lisa Jackson Administrator U.S. Environmental ProtectionAgency 1200 Pennsylvania Avenue, ' .V.W . VJashington, DC20460 

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; Applicationfor a Stay oftheTailoring Rule, 75 Fed. Reg. 31,514 (June 3, 2010) Dear Administrator Jackson: The State of Texas hereby requests that you stay the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31,514 (June 3, 2010) ("Tailoring Rule") pending resolution of the State of Texas' petition for reviewof the Rule, which is currently, pending in the United States Court of Appeals for the District of Columbia Circuit . Perry v. EPA, No. 10-1222 (D.C. Cir. filed Aug. 2, 2010) . Texas' request that EPA stay the Tailoring Rule is independent of any other request that EPA reconsider or stay the Tailoring Rule, and the grounds set forth in this letter are in addition to those set forth in General Abbott and Chairman Shaw's letter to you ofAugust 2, 2010. Texas has an undisputed right to address air quality management resources issues, including newly-regulated pollutants, on a prospective basis. EPA may not step in unless and until the states have been given full and fair opportunity, to do so. In contravention of these fundamental principles, the Tailoring Rule requires that Texas and other states reinterpret or revise their state implementation plans (`'SIP") on or before January 2, 2011 . If Texas does not do so, EPA has indicated that it will limit its approval of the Texas SIP and impose a federal implementation plan ("FIP") . Texas strongly disputes the legal and policy basis for the Tailoring Rule and EPA's assertion that it may adopt a FIP if Texas fails to revise immediately its SIP. In any event, it would not be possible for Texas to comply with EPA's unlawful and unprecedented deadline. Texas' and the public's interests would be best served ifthe D.C. Circuit had the opportunity to reviewthe Tailoring Rule before it went into effect. Texas should not be forced to choose between forfeiting the authority to operate its PSD programand spending significant resources, administrative and otherwise, to meet EPA's unlawful deadline. Moreover, EPA assiduously and correctly avoided ascribing any environmental benefit fromthe Tailoring Rule, so staying the Tailoring Rule until after Texas has had a full and fair opportunity to litigate its petition for reviewwould likewise not adversely impact public health orwelfare.

POST OFFICE BOX 12548, ALSTIN, TEXAS 'P871 1-2549 TEL :(SII) 463-2100 WEB WWW .TEXASATTORNEYGEkERAL-GOV An F_qua! F

.mplayme.nt OpporturtuyEerPoyer Prin1ed on Retycfed Poprr1. EPA's Requirement That Texas Reinterpret Or Revise Its SIP By January 2, 2011, Is Impracticable And Unlawful The Tailoring Rule revises EPA's Part 51 Regulations, which set forth the requirements for approvable SIPs, despite EPA's failure to propose this change in its Notice of Proposed Rulemaking, Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule ("Tailoring Rule Proposal"), 74 Fed. Reg. 55,292 (Oct. 27, 2009) . In its haste to surreptitiously rewrite the Clean Air Act, EPA violated its own regulations: 40 C.F.R. § 51 .166(a)(6) gives states, including Texas, three years to submit revised SIPs following EPA changes to the minimumstandards for approvable S1Ps:



### Amendments. (i) Any State required to revise its implementation plan by reason of an amendment to this section, including any amendment adopted simultaneously with this paragraph (a)(6)(i), shall adopt and submit such plan revision to the Administrator for approval no later than three years after such amendment is published in the Federal Register. 

### (iii) Any revision to an implementation plan that an amendment to this section required shall take effect no later than the date of its approval and may operate prospectively. 

### EPA even purported to bypass Clean Air Act § 110(k)(5), 42 U.S.C. § 7410(1c)(5), which unambiguously provides states with a minimum of 18 monthsto revise their SIPs following SIP call authorized by the CleanAir Act. See 75 Fed. Reg. at 31,583. EPA's regulation allowing states three (3) years to revise their SIPs serves several purposes. First, it helps enforce the states' undisputed right to the first opportunity to address air quality management resources issues, including newly-regulated pollutants under the PSD and Title V programs, on a prospective basis. The CleanAir Act recognizes that "air pollution prevention . .

. and air pollution control at its sources is the primary responsibility of States and local governments," not of EPA. Clean Air Act § 101(a)(3), 42 U.S.C. § 7401(a)(3) . The Clean Air act "places primary responsibility on the states for [SIP] revision." Concerned Citizens of Bridesburg v. EP

.4, 836 F.2d 777, 781 (3d Cir. 1987) . EPA's role is limited. The Agency is not "a roving commission to achieve pure air or any other laudable goal," Michigan v. EPA, 268 F.3d 1075, 1084 (D.C. Cir. 2001), and its powers to revise SIPs are limited to those expressly enumerated in Clean Air Act § l 10, see Concerned Citizens ofBridesburg, 836 F.2d at 797 n.12 Finally, 40 C.F.R. § 51 .166(a)(6) reflects EPA's long-standing recognition that SIP revisions take significant resources, and that states (and EPA) have the responsibility to ensure ample opportunity for the public to participate in the SIP revision process.

### EPA's threat to impose a FIPon Texas as ofJanuary 2, 2011, is similarly unlawful . See 75 Fed.



### Reg. at 31,526 (announcing EPA's intention to "ensure" all sources ofgreenhouse gases will be permitted under the final Tailoring Rule on January 2, 2011, by moving "quickly to impose a 

### [FIP] for PSDthrough 40CFR52.21"). Clean Air Act § 110(c)(l) specifically requires that EPA first make a finding that a state has failed to make a required submission, such as a SIP revision, and then to allowthe state additional time to correct any of EPA's perceived deficiencies. As described above, EPA may not consider a FIP until after the three-year period for SIP revisions 

### described above and then only ifTexas defaults insubmitting a revision at the end ofthat threeyear period. Beyond being unlawful, EPA's deadline ofJanuary 2, 2011 for states to reinterpret or revise their SIPs is impracticable. As we explained at length in our letter ofAugust 2, 2010, Texas would be unable to reinterpret its SIP to effect the Tailoring Rule. Instead, Texas would need to revise its SIP, a process that it would be difficult, if not impossible, to complete in the approximately five (5) months remaining before EPA's January 2, 2011 deadline. 2. A Stay Is Necessary To Preserve Texas' Ability To Operate Its PSD Program During The Pendency OfThe Petition For Review By imposing the unlawful five-month timetable for Texas to revise its SIP, the Tailoring Rule threatens Texas' ability to maintain its PSDprogramand issue permits to sources in its state. If EPAfollows through on its threat to issue a FIPfor Texas on January 2, 2011, Texas will lose its ability to operate its PSD program . EPA's attempt to use this deadline to allowthe Agency to promulgate a FIP long before Texas could reasonably be determined to have defaulted on its obligations is contrary to EPA's past practice and state primacy. If EPAwere not to implement a FIPon January 2, 2011, the Tailoring Rulewould create a cloud on any permits issued byTexas between that time and the time at which EPA chose to act because of EPA's suggestion that any later adoption of the Tailoring Rule through a FIP or SIP revision would apply retroactively. In either case, the Tailoring Rule will adversely affect Texas' ability to manage its air quality resources and to ensure "that economic growth will occur in a manner consistent with the preservation of existing clean air resources." Clean Air Act § 160(3), 42 U.S.C 3 7470(3) . Texas is confident that the D .C. Circuit will ultimately vacate the Tailoring Rule, but during the pendency of this suit, the Tailoring Rule's vitiation of Texas' statutory right to operate its permitting programwill cause the State irreparable harm . 3. A Stay Will Serve The Public Interest By Allowing Meaningful Judicial ReviewOf The Tailoring Rule Before It Enters Into Force Texas has petitioned the D.C. Circuit for reviewof the Tailoring Rule, as have numerous other petitioners. Texas and the other Petitioners will raise significant challenges to the Tailoring Rule's lawfulness as to the emission rate thresholds it sets for PSD and Title V applicability, EPA's plans to require SIP revisions or reinterpretations by January 2, 2011, and whether the Tailoring Rule is a logical outgrowth of EPA's Notice of Proposed Rulemaking. A stay is particularly apt given EPA's decision to predicate an economy-wide rule on the rarely-

### appropriate "absurd results" doctrine, which EPA has invoked because, unlike every other

regulated pollutant, EPAhas purported to find that regulation of greenhouse gases under the PSD programwould produce results plainly inconsistent with congressional intent. See 75 Fed. Reg. at 31,542 (quoting United States v Ron Pair Enters., 489U.S. 235, 242 (1989)). While Texas and other States would be harmed if the Tailoring Rule were not stayed, no party would be harmed by staying the Rule. EPA has appropriately not represented that the Tailoring Rule would have any positive effects on public health or welfare. Staying the Tailoring Rule will not harm Texas' sister states. If another state is lawfully able to reinterpret its SIP to conformto the Tailoring Rule's requirements, it can do so without the Tailoring Rule's revisions to the Part 51 Regulations. In the event one ofTexas' sister states revises its SIP to incorporate the Tailoring Rule, it can submit the revision for EPA's approval, subject tojudicial reviewin the Court ofAppeals where the state is located.

Texas strongly disputes the legal and policy basis of each of EPA's actions regulating greenhouse gases under the Clean Air Act, including the Tailoring Rule, Texas' objections will be resolved in litigation now pending in the United States Court of Appeals for the District of Columbia Circuit. In order to maintain the status quo regarding the proper allocation of powers between the States and EPA, and in light of EPA's inability to ascribe any public health or welfare benefits to the Tailoring Rule, EPA is obligated to stay the Tailoring Rule until Texas' challenge is resolved. Texas may seek immediate relieffromthe D .C. Circuit if EPA denies or fails to respond to this request on or before August 24, 2010 . Sincerely,

Jon Niermann 

### Assistant Attorney General

cc: J . Reed Clay, Jr., Office ofthe Solicitor General ofTexas David B. Rivkin, Jr., Baker & Hostetler LLP