ORAL ARGUMENT NOT SCHEDULED 

UNITED STATES COURT OF APPEALS 

FOR THE DISTRICT OF COLUMBIA CIRCUIT 

SOUTHEASTERN LEGAL 

FOUNDATION., ET AL., 

PETITIONERS, 

) 

) 

) 

) 

) 

) 

v. 

UNITED STATES 

ENVIRONMENTAL 

PROTECTION AGENCY, 

RESPONDENT. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

No. 10-1131 (filing in consolidated 

case No. 10-1222) 

(CONSOLIDATED WITH Nos. 10-1131, 

10-1132, 10-1145, 10-1147, 10-1148, 10-

1199, 10-1200, 10-1201, 10-1202, 10-

1203, 10-1205, 10-1206, 10-1207, 10-

1208, 10-1209, 10-1210, 10-1211, 10-

1212, 10-1213, 10-1215, 10-1216, 10-

1218, 10-1219, 10-1220, 10-1221) 

STATE OF TEXAS’ MOTION FOR A STAY 

OF EPA’S GREENHOUSE GAS TAILORING RULE 

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The State of Texas hereby moves this Court, pursuant to Rule 18 of the 

Federal Rules of Appellate Procedure, to stay implementation by the respondent 

United States Environmental Protection Agency (“EPA”) of its “Prevention of 

Significant Deterioration and Title VI Greenhouse Gas Tailoring Rule,” 75 Fed. 

Reg. 31,514, Att. A (June 3, 2010) (“Tailoring Rule”), pending the Court’s review. 

The Tailoring Rule is contrary to the Clean Air Act, and its scheduled 

implementation is unlawful and will cause the State of Texas immediate and 

irreparable harm, without countervailing benefit to third parties or to the public 

interest. 

I. INTRODUCTION

EPA acknowledges that subjecting stationary sources of greenhouse gas 

emissions to permit requirements under the Clean Air Act is “absurd,” and yet it 

has made the decision to do just that. To lessen the purported “absurd results” of 

that act, EPA has decided to abandon the explicit thresholds for regulation that 

Congress set in the Clean Air Act and to limit regulation to sources that emit 

greenhouses gas at rates between 400 and 750 times those thresholds. 

Without any lawful authority to do so, it now seeks to force the State of 

Texas to overhaul its permitting programs to adopt the same approach by January 

2, 2011—an unprecedented and illegal schedule. EPA demands that the State of 

Texas short-circuit the statutory process and ignore its responsibilities to its 

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citizens, its industry, and ultimately to its environment. EPA would have the state 

adopt a new regulatory framework that, even if it ultimately proves to have no 

legal basis, would be difficult or impossible to repeal—effectively stymieing this 

Court’s review of EPA’s action. If Texas is unwilling or proves unable to accede 

to this unlawful demand, the agency has threatened to impose a permit moratorium 

that would halt as many as 167 projects in its first year, costing the State jobs, 

business opportunities, and tax revenues. In effect, due to uncertainty resulting 

from the agency’s actions, a de facto construction ban is already in place. 

To avoid irreparable harm and to afford this Court the opportunity to 

consider the legal basis of both the Tailoring Rule and EPA’s accelerated 

implementation schedule, the State of Texas respectfully requests that this Court 

stay implementation of the Rule pending its review. 

II. BACKGROUND

The Clean Air Act “establishes a partnership between EPA and the states for 

the attainment and maintenance of national air quality goals.” Natural Res. Def. 

Council, Inc. v. Browner, 57 F.3d 1122, 1123 (D.C. Cir. 1995). EPA sets air 

quality and emissions standards which the states, in turn, implement through the 

regulation of sources of emissions. For each state, this partnership is manifest in a 

State Implementation Plan (“SIP”), a compilation of state and local laws, 

regulations, and enforcement standards that comprise a state’s approach to 

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complying with federal requirements, as well as scientific and technical evidence 

in support of that approach. States submit SIPs for approval in response to “calls” 

by EPA and are subject to penalties for failure to meet submission and 

implementation deadlines. If a state fails to submit an approvable SIP to EPA, the 

agency may directly administer air quality regulation, in whole or in part, within 

the state through a Federal Implementation Plan (“FIP”). In effect, a FIP “rescinds 

state authority to make the many sensitive technical and political choices that a 

pollution control regime demands.” Id. at 1124. 

On June 3, 2010, EPA published a final rule “tailoring” the Clean Air Act’s 

applicability to greenhouse gas (“GHG”) emissions under the Prevention of 

Significant Deterioration (“PSD”) preconstruction permitting program and the 

Title V operating permit program. This Tailoring Rule redefines the term “NSR 

regulated pollutant” to reference a new term, “subject to regulation.” That term is 

defined such that pollutants other than GHGs are “subject to regulation” if they are 

“subject to a provision in the Clean Air Act . . . that requires actual control.” 40 

C.F.R § 51.166 (b)(48). GHGs, however, “shall not be subject to regulation except 

as provided” in the definition. § 51.166 (b)(48)(i). 

For GHGs, the definition provides that, beginning on January 2, 2011, PSD 

and Title V requirements will apply to (1) new sources that will emit or have the 

potential to emit in excess of 75,000 tons per year (“tpy”) of GHG and are 

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otherwise classified as “major stationary sources” and (2) existing major stationary 

sources increasing emissions of a non-GHG pollutant while increasing GHG 

emissions by more than 75,000 tpy. On July 1, 2011, coverage will expand to 

include all new sources that have the potential to emit in excess of 100,000 tpy of 

GHG and all existing sources that emit in excess of 100,000 tpy of GHG and that 

undertake changes that increase GHG emissions in excess of 75,000 tpy. These 

tonnages must be calculated using a new formula set forth in the rule for 

determining “CO2 equivalent emissions.” § 51.166(b)(48)(ii). 

Under these new definitions, GHGs emitted below the Tailoring Rule 

thresholds are not a “regulated NSR pollutant” and so not subject to permitting 

requirements. EPA predicates this rule on the “absurd results” that would 

allegedly otherwise result from its determination that the PSD and Title V 

programs apply to GHG emissions.1

The Rule further directs states to either reinterpret or revise their SIPs to 

incorporate this approach on or before January 2, 2011. Otherwise, affected GHGemitting sources “may have to put on hold their plans to construct or modify,” a 

result that “may have adverse consequences for the economy” of those states.2

 

 

1

 Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean 

Air Act Permitting Programs; Final Rule, 75 Fed. Reg. 17,004 (April 2, 2010) (“Timing Rule”). 

That rule is currently pending review in State of Texas, et al. v. Environmental Protection 

Agency, No. 10-1128 (D.C. Cir.). 

2

 75 Fed. Reg. 53,890. On September 2, 2010, EPA published a proposed “SIP call” finding 

thirteen states’ SIPs, including Texas’s, “substantially inadequate” because they do not already 

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EPA also threatens to “move quickly to impose a Federal Implementation Plan” on 

any state that is unable or unwilling to regulate GHG emissions immediately.3

The State of Texas, which disputes the legal basis of the Tailoring Rule, 

commenced this action on August 2, 2010. On August 2, 19, and 30, the State 

asked EPA to stay the Tailoring Rule pending resolution of the State’s petition for 

review of the Rule. See Atts. B-D. EPA refused to render a decision on those 

requests by the deadline EPA itself proposed for stay motions. See Att. E; 

Respondent’s Mot. To Consolidate and To Amend the Schedule for Initial Filings, 

Aug. 20, 2010, at 4. The State now moves this Court for emergency relief. 

III. ARGUMENT

Under D.C. Circuit Rule 18, the movant must demonstrate four factors to 

obtain a stay pending review: “(i) the likelihood that the moving party will prevail 

on the merits; (ii) the prospect of irreparable injury to the moving party if relief is 

withheld; (iii) the possibility of harm to other parties if relief is granted; and (iv) 

the public interest.” See Washington Metropolitan Area Transit Comm’n v. 

Holiday Tours, 559 F.2d 841, 843 (D.C. Cir. 1977). “These factors interrelate on a 

sliding scale and must be balanced against each other.” Serono Laboratories, Inc. 

v. Shalala, 158 F.3d 1313, 1318 (D.C. Cir. 1998). 

 

implement the Tailoring Rule and requiring those states to revise their SIPs accordingly. 75 Fed. 

Reg. 53,892. 

3

 On September 2, 2010, EPA published a proposed FIP that would apply specifically to Texas 

and the other twelve states subject to the SIP call. 75 Fed. Reg. 53,883. 

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All four factors favor a stay. The Tailoring Rule is contrary to law because 

it rewrites unambiguous threshold emission rates Congress specified in statutory 

text to solve a problem of EPA’s own creation. At the same time, the accelerated 

implementation schedule imposed by the Rule is itself contrary to the plain 

language of the Clean Air Act and EPA regulations. Accordingly, the State of 

Texas fully expects to prevail on the merits. 

In the meantime, the State suffers irreparable harm as the Rule casts a cloud 

of uncertainty over the State’s permitting programs that has effectively frozen 

construction for sources, compels the State to expend significant resources to 

fundamentally alter its own regulatory framework, and threatens a construction 

moratorium for both new and existing sources. There is no possibility that a stay 

would injure any party. Finally, the public interest in meaningful judicial review is 

strong, and at no point has EPA represented that implementation of the Rule would 

have any positive effect on public health or welfare. Under these circumstances, 

the Court should act to mitigate the harm caused by EPA’s unlawful actions by 

preserving the status quo pending its review. 

A. The Petitioner Will Prevail on the Merits.

Because the Tailoring Rule is contrary to the Clean Air Act’s explicit 

requirements, the State is likely to prevail on the merits. The Act’s precise 

applicability thresholds were intended to afford EPA no discretion. EPA proffers 

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three theories as to why it can lawfully sidestep the Act’s plain text and the limits 

of its discretion under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), but 

none are availing where a statute is insusceptible to the gloss given it by an agency. 

Further, EPA’s implementation schedule for the Rule is itself contrary to law. 

1. The Tailoring Rule Is Inconsistent with the Plain Text of the 

Clean Air Act.

An agency’s construction of a statute that it administers is due no deference 

where “Congress has directly spoken to the precise question at issue.” Chevron, 

467 U.S. at 842. Here, the Tailoring Rule contravenes “the unambiguously 

expressed intent of Congress.” Id. at 843. 

The Clean Air Act’s applicability thresholds for PSD regulated pollutants 

are defined in precise numerical terms in the text of the Act. “Major emitting 

facilities” in Part C of the Act (the PSD program) are “stationary sources of air 

pollutants which emit, or have the potential to emit, one hundred tons per year or 

more of any air pollutant from [listed] types of stationary sources” and “any other 

source with the potential to emit two hundred and fifty tons per year or more of 

any air pollutant.” 42 U.S.C. § 7479(1) (emphasis added). For Title V of the Act 

(the operating permit program), a “major source” is “any major stationary facility 

or source of air pollutants which directly emits, or has the potential to emit, one 

hundred tons per year or more of any air pollutant.” §§ 7602(j), 7661(2)(B) 

(emphasis added). 

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The Tailoring Rule sidesteps these statutory requirements by increasing the 

PSD applicability thresholds for GHG emissions to 75,000 tpy for some sources 

and 100,000 tpy for others. 75 Fed. Reg. at 31,606. The Tailoring Rule also takes 

the unprecedented step of defining GHG applicability thresholds in terms of “CO2

equivalent,” rather than mass emissions. Id. at 31,606. Thus, according to EPA, 

GHG emissions are not “subject to regulation” under the PSD and Title V 

programs if they amount to less than the Rule’s specified thresholds, even if the 

emissions exceed the limits specified in the statute. 

EPA itself freely acknowledges that the Tailoring Rule is irreconcilable with 

the Clean Air Act’s applicability thresholds, admitting that it has abandoned the 

“literal meaning” of the statutory text that establishes these exact, numerical 

thresholds. 75 Fed. Reg. at 31,564. EPA claims, however, that adhering to “the 

literal statutory levels” would lead to “absurd results”—specifically, that many 

“small sources”4

 would be burdened by the costs of control technology and 

obtaining permits and that permitting agencies would face the burden of reviewing 

those permits. Id. at 31,516-17. Thus, EPA concludes, the statute must somehow 

be construed as being ambiguous as to the thresholds. 

But Congress could not have spoken more clearly: it specified precise, 

numerical emission rate thresholds—i.e., 100 tons/250 tons per year. These figures 

 

4

 Notably, EPA uses the term “small sources” to refer to sources that the Clean Air Act expressly 

considers to be “major emitting facilities.” 42 U.S.C. § 7479(1). 

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admit no ambiguity or vagueness. Indeed, they reflect the considered judgment of 

Congress to confer no discretion on EPA. See Whitman v. American Trucking 

Ass’n, Inc., 531 U.S. 457, 474-76 (2001) (discussing “the degree of agency 

discretion” conferred on EPA to set NAAQS). The interpretive approach adopted 

by EPA in the Tailoring Rule renders a central provision of the Clean Air Act mere 

surplusage. As the Supreme Court has observed, “The EPA may not construe the 

[Clean Air Act] in a way that completely nullifies textually applicable provisions 

meant to limit its discretion.” Whitman, 531 U.S. at 585. 

2. The “Absurd Results” Doctrine Cannot Be Employed to 

Rewrite a Perfectly Unambiguous Statutory Command. 

EPA concedes that the Clean Air Act’s provisions specifying tonnage 

thresholds are not ambiguous. Nonetheless, it claims that applying those 

thresholds “by their terms” to GHG emissions would create “absurd results,” 

because PSD and Title V would then apply “to an extraordinarily large number” of 

“small” sources, that the sources would incur “unduly high compliance costs,” and 

that permitting authorities would face “overwhelming” administrative burdens. 75 

Fed. Reg. at 31,541. Such coverage would, EPA claims, “severely undermine” 

Congress’ intentions. Id. at 31,542. Thus, the agency concludes, several statutory 

terms, though otherwise clear, “may be considered not to have [their] literal 

meaning as applied to GHG sources,” giving the agency the discretion to ignore 

the plain terms of the statute to resolve this conflict. Id. at 31,548. 

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The absurd results doctrine applies where “words of general meaning are 

used in a statute, words broad enough to include an act in question, and yet a 

consideration of the whole legislation, or of the circumstances surrounding its 

enactment, or of the absurd results which follow from giving such broad meaning 

to the words, makes it unreasonable to believe that the legislator intended to 

include the particular act.” Public Citizen v. U.S. Dept. of Justice, 491 U.S. 440, 

454 (1989) (quoting Church of the Holy Trinity v. United States, 143 U.S. 457 

(1892)). For example, in Green v. Bock Laundry Machine Co., 490 U.S. 504, 510 

(1989), the Supreme Court construed the broad term “the defendant” to exclude 

civil defendants, where refusing to draw that distinction would “deny a civil 

plaintiff the same right to impeach an adversary’s testimony that [the law] grants 

[to] a civil defendant.” 

By contrast, the statutory tonnage thresholds are not general terms that are 

being applied to unforeseen factual situations. They are specific, objective 

commands that cannot be expanded or contracted through principles of statutory 

interpretation. As EPA correctly observes, in enacting the PSD program, Congress 

was aware of the burden of compliance and sought to exempt smaller sources 

through explicit tonnage thresholds. As a result, Congress, in drafting what 

became the 1977 Clean Air Act Amendments, actually removed provisions 

granting EPA discretion to establish PSD coverage by regulation, replacing them 

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with the specific numerical thresholds. See 75 Fed. Reg. at 31,550. Aware of the 

costs of compliance versus the benefits of pollution control, Congress struck a 

balance by specifying explicit tonnage thresholds. 

At the same time, there are broad terms in the Act that are relevant to PSD 

and Title V program coverage, particularly the term “pollutant.” The only tension 

that exists in the statute with respect to GHGs is between the specific, objective 

numerical tonnage thresholds and the general term “pollutant.” If EPA seeks to 

avoid what it has characterized as the “absurd results” of regulating GHG 

emissions under PSD and Title V, it is the general term “pollutant,” not the specific 

applicability thresholds, that must give way. 

3. The “Administrative Necessity” Doctrine Does Not Justify the 

Tailoring Rule’s Inconsistency with the Clean Air Act.

EPA’s second justification for its rule, the purported “administrative 

necessity” doctrine, is fundamentally flawed. This doctrine, if it exists at all 

outside of dicta, applies where immediate and complete implementation of 

congressional intent is infeasible, not where an agency has found that regulation 

would produce “absurd results” that are contrary to congressional intent. It is not 

“a revisory power inconsistent with the clear intent of the relevant statute.” 

Alabama Power v. Costle, 636 F.2d 323, 358 (D.C. Cir. 1980) (quoting NRDC v. 

Costle, 568 F.2d 1377 (1977)). And it is entirely unavailable where, as here, 

Congress has “restrain[ed] the agency by mandating standards from which no 

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variance is permitted.” Id. EPA may not rely upon it as license to act contrary to 

the plain language of the Clean Air Act.5

4. The “One-Step-At-A-Time” Doctrine Is Inapplicable and 

Contrary to the Statutory Requirements.

EPA’s third and final justification, the so-called “one-step-at-a-time” 

doctrine, cannot excuse an agency’s failure to comply with governing statutory 

requirements and, in any case, fails even under EPA’s own generous formulation. 

EPA argues that it has inherent discretion to “implement statutory mandates 

one step at a time.” According to EPA, it is enough that the Tailoring Rule puts 

the agency “on track to full compliance with the statutory requirements.” 75 Fed. 

Reg. at 31,578. But the Tailoring Rule does not put EPA on track to compliance. 

Though several provisions of the Rule may commit the agency to future action, 

none require compliance with the Act by 2016 or at any time. Indeed, EPA 

disclaims any intention of eventual compliance with the Act’s textual 

 

5 While citing a number of cases mentioning the doctrine, EPA identifies no agency action that 

has ever been justified by or upheld on the basis of the administrative necessity doctrine. 

Rejecting necessity claims: N. Colo. Water Conservancy Dist. v. FERC, 730 F.2d 1509 (D.C. 

Cir. 1984). Pre-Chevron cases that do not uphold agency action on the basis of 

administrative necessity: Permian Basin Area Rate Cases, 390 U.S. 747 (1968), Morton v. 

Ruiz, 415 U.S. 199 (1973), NRDC v. Train, 510 F.2d 692 (D.C. Cir. 1974), Ala. Power Co. v. 

Costle, 636 F.2d 323 (D.C. Cir. 1980) (per curiam). Merely discussing the doctrine: New York 

v. EPA, 443 F.3d 880 (D.C. Cir. 2006) (per curiam); Ala. Power, 636 F.2d 323. Refusing to 

apply the doctrine: EDF v. EPA, 636 F.2d 1267 (D.C. Cir. 1980), Sierra Club v. EPA, 719 F.2d 

436 (D.C. Cir. 1983); Pub. Citizen v. FTC, 869 F.2d 1541 (D.C. Cir. 1989). Cases unrelated to 

administrative necessity: United States v. Rylander, 460 U.S. 752 (1983), Evans v. Williams, 

206 F.3d 1292 (D.C. Cir. 2000); Tinsley v. Mitchell, 804 F.2d 1254 (D.C. Cir. 1986), Wash. 

Metro. Transit Auth. v. Amalgamated Transit Union, 531 F.2d 617 (D.C. Cir. 1976), Chairs v. 

Burgess, 143 F.3d 1432 (11th Cir. 1998). 

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requirements. See id. at 31,547 n.29 (“EPA may, in future rulemaking, make a 

final determination that under the ‘absurd results’ doctrine, Congress did not intend 

for EPA to apply PSD to very small sources, that is, those, with emissions at or 

near the 100/250 tpy statutory levels.”). 

In essence, the “step-by-step” doctrine is simply an extension of the flawed 

“administrative necessity” doctrine. It would allow the agency to sidestep 

Congress’ unambiguously expressed will in the Clean Air Act, in violation of even 

Chevron’s generous limitations on agency discretion. It must be rejected. 

5. The Tailoring Rule Violates the Clean Air Act by Authorizing 

SIP Revision by “Interpretation,” Requiring Retroactive SIP 

Revisions, and Imposing a Construction Permit Moratorium. 

Apart from the obvious illegality of the Tailoring Rule, the State is likely to 

prevail on the merits because EPA has violated the Clean Air Act and its own 

regulations in its haste to rewrite the PSD and Title V programs. Under the Act, no 

revision to a SIP or FIP may be applied to a source unless EPA or the state has 

revised the plan in accordance with the rulemaking requirements set forth in 42 

U.S.C. § 7410. In particular, § 7410(i) precludes giving legal effect to any 

purported SIP revision that was not approved under § 7410(a) or promulgated 

under § 7410(c). Accordingly, EPA’s command that states simply “interpret” 

existing SIPs to apply to sources runs afoul of the Act. 

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Furthermore, 40 C.F.R. § 51.166(a)(6) gives states three years to submit 

revised SIPs following EPA changes to PSD requirements. This regulation 

enforces the states’ undisputed right to the first opportunity to address air quality 

management issues on a prospective basis. See Concerned Citizens of Bridesburg 

v. EPA, 836 F.2d 777, 781 (3d Cir. 1987). EPA has ignored this rule, instead 

requiring implementation of its new program through SIP interpretation, SIP 

revision, or FIP promulgation beginning January 2, 2011. Texas and other states 

are entitled to rely on the three-year schedule until and unless it is revised by 

appropriate rulemaking. 

Finally, EPA’s decision to impose deadlines for implementation of the 

Tailoring Rule in state-approved PSD programs beginning January 2, 2011 

establishes a de facto moratorium on permitting GHG sources until SIPs can be 

revised to establish retroactive effective dates for GHG coverage. See 75 Fed. 

Reg. at 53,901 (“It must be emphasized that for any State that receives a deadline 

[for SIP revision] after January 2, 2011, the effected GHG-emitting sources in that 

State . . . will be unable to receive a federally approved permit.”). This is 

unprecedented and unlawful. Throughout the history of the PSD program, EPA 

has never imposed a new “minimum requirement” that had an effective date before 

the deadlines for SIP revisions. SIPs and FIPs are legislative rules that must be 

applied prospectively. See Bowen v. Georgetown University Hospital, 488 U.S. 

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204 (1988). PSD is a pre-construction permit program that Congress structured to 

assure no interruption in permitting associated with implementing new 

requirements. Cf. Citizens to Save Spencer County v. EPA, 600 F.2d 844 (D.C. 

Cir. 1979). Nothing in the Clean Air Act authorizes a moratorium on permitting 

pending SIP revisions. Indeed, by construing the 2011 effective dates as 

establishing a PSD permit moratorium, those rules unlawfully revise approved 

PSD SIPs contrary to 42 U.S.C. 7410(i). 

B. The Petitioner Will Suffer Irreparable Harm Without a Stay.

Until such time as this Court vacates the Tailoring Rule, the State will suffer 

irreparable harm. The Rule casts a cloud over the State’s permitting programs, 

causing economic harm; deprives the State of its right to manage its air resources; 

requires fundamental changes to State laws that may prove unnecessary or 

counterproductive; and forces the state to incur significant, unrecoupable expenses. 

First, EPA’s threats to impose a moratorium on permitting has placed the 

State’s permitting programs under a cloud of uncertainty, to the detriment of the 

State’s business environment. EPA is using the threat of a construction permit 

moratorium to intimidate states into immediately revising their SIPs, reinterpreting 

them, or turning over permitting authority to EPA. Absent one of these actions, 

EPA explains, “the affected GHG-emitting sources in that state ... will be unable 

to receive a federally approved permit authorizing construction or modification” 

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after January 2, 2011. 75 Fed. Reg. 53,901 (emphasis added). As a result, EPA 

continues, “States’ affected sources confront the risk that they may have to put on 

hold their plans to construct or modify, a risk that may have adverse consequences 

for the economy” of affected states. Id. at 53,905 (emphasis added). 

The result is significant uncertainty and harm to the State’s business 

environment, with the threat of worse to come. The Texas Commission on 

Environmental Quality (“TCEQ”) estimates that the construction ban could affect 

167 projects within the first year. This would deprive Texans of jobs, deprive 

Texas industry of business opportunities, deprive the State of tax revenues, and 

place Texas at a competitive disadvantage to states that have acceded to EPA’s 

demands. Hagle Decl., Att. F, at 14. When a business chooses to locate its 

facilities outside of Texas, that injury is irreparable. 

Second, the Tailoring Rule will deprive Texas of its right to manage and 

protect its own clean air resources. The Clean Air Act expressly provides that 

states shall have “primary responsibility” for “air pollution prevention . . . and air 

pollution control at its source.” 42 U.S.C. § 7401(a)(3). This includes a state’s 

right to develop its own SIP to meet federal air quality standards. See, e.g., 42 

U.S.C. § 7410 (pertaining to adoption and submission of SIPs). While EPA has a 

right to call for revisions to SIPs it finds inadequate, it must allow the states a 

“reasonable” time in which to comply. 42 U.S.C. § 7410(k)(5). 

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EPA, however, has decided to afford Texas no such opportunity. EPA’s 

recently published proposed SIP call, which it plans to finalize on December 1, 

2010, would allow states up to twelve months to submit SIP revisions following an 

EPA finding of substantial inadequacy. See 75 Fed. Reg. 53,892 (Sept. 2, 2010) 

(the “SIP Call”). Because EPA intends to impose new GHG controls on stationary 

sources beginning January 2, 2011, approximately eleven of those twelve months 

would be after the GHG requirements are to take effect. In Texas, this would 

mean that there would likely be no authority to issue GHG permits for months after 

such permits would be required. EPA proposes to cure this problem by allowing 

states to volunteer for a shorter deadline for submitting their SIP revisions, even as 

short as three weeks. 75 Fed. Reg. at 53,901. This would enable EPA to federalize 

the states’ GHG permitting programs “to ensure that there is no gap in PSD 

permitting.” Id. EPA presents a stark choice: (1) do without preconstruction 

permitting or (2) surrender to a FIP. Whatever Texas’ choice, the result is what 

this court has recognized to be a substantial injury to its interests. Natural Res. 

Def. Council, 57 F.3d at 1124. 

Third, absent a stay, Texas will have to begin to revise its SIP before the 

Court rules on the validity of the Tailoring Rule. Texas cannot simply declare 

itself ready to require permits for greenhouse gas emissions from stationary 

sources, as EPA requests that it do, or adopt EPA’s definition of the term “subject 

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to regulation.” See, e.g., Trimmer v. Carlton, 296 S.W. 1070 (Tex. 1927); Tex. 

Gov’t Code § 2001.023; 30 Tex. Admin. Code § 20.3. 

Rather, Texas will have to rewrite its statutes and regulations. While there is 

uncertainty about what the Texas Legislature might do, TCEQ will have to amend 

numerous rules to conform its SIP to EPA’s requirements. In each instance, TCEQ 

will be required to prepare a regulatory analysis, to draft and publish the proposed 

rules, to allow for public comment, to draft a response to the comments, to draft 

the final rules, and, finally, to adopt the rules. This process typically takes a year. 

Hagle Decl., at 8. 

If this Court ultimately finds the Rule to be invalid after the State has 

adopted EPA’s new legal framework, the State would then face the choice of 

rescinding the new legal framework—a task that may be difficult or impossible—

or keeping it in place, also at considerable expense. Further, if EPA has approved 

the State’s revised SIP by that point, rescinding the new framework would require 

the agency’s approval, as well. In the likely case that EPA refuses, the State would 

have little choice but to enforce regulations that EPA unlawfully forced it to adopt. 

In either scenario, the expense to the state and affront to its rights are great. 

Fourth, Texas will incur significant, non-recoverable expenses if it is forced 

to implement the Tailoring Rule. TCEQ has undertaken a careful sector-by-sector 

and industry-by-industry analysis of regulated sources, examining air permitting 

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information dating back a decade, to determine the increased demand for air 

permits for GHGs under the Tailoring Rule thresholds. Hagle Decl., at 10. TCEQ 

has projected that it would have to hire 91 new full-time employees to handle the 

workload that would result from the additional permitting actions. This would cost 

TCEQ approximately $4.1 million each year. In addition, TCEQ would spend 

$933,750 in startup costs and $1,092,631 each year for benefits costs. Sifuentez 

Decl., Att. G, at 1-2. TCEQ’s efforts to build capacity will become futile if the 

Court later vacates EPA’s GHG scheme; indeed, the State would then face the 

expense of unwinding its GHG permitting operations. 

C. A Stay Will Not Harm Other Parties

While Texas and other states would be harmed if the Tailoring Rule were 

not stayed, no party would be harmed by staying the Rule. A stay would merely 

preserve the status quo and allow states to apply their SIPs according to their 

terms, or to take other action as they see fit. It would not harm Texas’ sister states, 

and indeed would benefit those states by preventing a moratorium on construction 

activities and fundamental restructuring of state air quality programs during the 

pendency of litigation. At the same time, if another state is lawfully able to revise 

its SIP to incorporate the Rule, it can do so without the Rule’s revisions to the Part 

51 Regulations, subject to judicial review in the Court of Appeals where the state is 

located. 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 20
20

D. A Stay Will Serve The Public Interest By Allowing Meaningful 

Judicial Review Of The Tailoring Rule

The public has a substantial interest “in having legal questions decided on 

the merits, as correctly and expeditiously as possible.” Holiday Tours, 559 F.2d at 

843. Absent a stay, EPA will move forward with implementation of the Tailoring 

Rule, forcing the states to adopt burdensome laws and regulations that cannot be 

easily repealed, even if the Rule is ultimately vacated. The public should not have 

to bear that burden. Nor should the public, as citizens of the states, be forced to 

bear the cost of developing new regulatory regimes that are likely to prove 

unnecessary or even detrimental. If the deadline is left in place, the public will 

also be denied the opportunity to participate and offer input into the creation of 

these new regimes. The public has an interest, as well, in the “orderly procedure” 

of important litigation, Virginia Petroleum Jobbers Ass’n v. Federal Power 

Comm’n, 259 F.2d 921, 927 (D.C. Cir. 1958), as opposed to the piling up of cases 

and multiplication of uncertainty. By contrast, at no point has EPA represented 

that implementation of the Tailoring Rule would have any positive effects on public 

health or welfare. EPA cannot now backtrack and argue that a stay would harm 

the public interest. SEC. v. Chenery Corp., 332 U.S. 194, 196 (1947). In effect, 

EPA has conceded that the public interest favors the State of Texas’ position. 

IV. CONCLUSION

For the foregoing reasons, the motion should be granted. 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 21
Dated: September 15, 2010 Respectfully submitted, 

GREG ABBOTT 

Attorney General of Texas 

DANIEL T. HODGE 

First Assistant Attorney General 

BILL COBB 

Deputy Attorney General for Civil 

Litigation 

J. REED CLAY, JR. 

Special Assistant and Senior Counsel 

 to the Attorney General 

Office of the Attorney General of 

Texas 

P. O. Box 12548, Capitol Station 

Austin, Texas 78711-2548 

Telephone: (512) 936-2541 

Facsimile: (512) 936-0545 

Email: reed.clay@oag.state.tx.us 

 /s/ David B. Rivkin, Jr. 

David B. Rivkin, Jr. 

Mark W. DeLaquil 

Andrew M. Grossman 

Baker & Hostetler LLP 

Washington Square, Suite 1100 

1050 Connecticut Avenue, N.W. 

Washington, D.C. 20036-5304 

Phone: 202.861.1500 

Facsimile: 202.861.1783 

Email: mdelaquil@bakerlaw.com 

Counsel to Petitioners State of Texas, 

Rick Perry, Governor of Texas, Greg 

Abbott, Attorney General of Texas, 

Texas Commission on Environmental 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 22
Quality, Texas Department of 

Agriculture, Texas Public Utilities 

Commission, Texas Railroad 

Commission, Texas General Land 

Office 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 23
CERTIFICATE OF SERVICE

I hereby certify that on September 15, 2010, I electronically filed the foregoing 

Motion with the Court by using the CM/ECF system. Participants in the case who 

are registered CM/ECF users will be served by the appellate CM/ECF system. I 

have also caused a copy of the foregoing document to be served on the following 

individuals who are not registered CM/ECF users via First-Class Mail, postageprepaid: 

Gordon R. Alphonso 

McGuire Woods LLP 

1170 Peachtree Street, N.E. Suite 

2100 

Atlanta, GA 30309 

Michael R. Barr 

Pillsbury Winthrop Shaw 

Pittman, LLP 

50 Fremont Street 

San Francisco, CA 94105-2228 

Sam Kazman 

Competitive Enterprise Institute 

1899 L Street, NW, 12th Floor 

Washington, DC 20036 

Patrick D. Traylor 

Hogan Lovells US LLP 

555 13th Street, NW 

Washington, DC 20004-1109 

Jon C. Bruning 

Office of Attorney General 

State of Nebraska 

2115 State Capitol 

P.O. Box 98920 

Lincoln, NE 68509-8920 

Matthew W. Dukes 

Troutman Sanders LLP 

401 9th Street, NW 

Suite 1000 

Washington, DC 20004-2134 

Charles E. James 

Office of the Attorney 

General 

Commonwealth of Virginia 

900 East Main Street 

Richmond, VA 23219 

Stephen P. Mahinka 

Morgan, Lewis & Bockius 

LLP 

1111 Pennsylvania Avenue, 

NW 

Washington, DC 20004-2541 

Gerald D. Reid 

Office of the Attorney 

General, State of Maine 

6 State House Station 

Augusta, ME 04333-0006 

Mr. Douglas Friend Gansler 

Assistant U.S. Attorney 

Office of the Attorney 

General, State of Maryland 

200 St. Paul Place 

20th Floor 

Baltimore, MD 21202-2021 

Harry Moy Nq 

American Petroleum Institute 

1220 L Street, NW 

Washington, DC 20005-4070 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 24
Karen R. Harned 

National Federation of Independent 

Business 

1201 F Street, NW 

Suite 200 

Washington, DC 20004 

Warden (La Tuna Low) 

Federal Correctional Institute 

Federal Satellite Low 

P.O. Box 3000 

Anthony, TX 88021 

Troy King 

Office of the Attorney General 

State of Alabama 

500 Dexter Avenue 

Montgomery, AL 36130 

Robert J. Martineau 

Waller Lansden Dortch & Davis 

PLLC 

511 Union Street 

Suite 2700 

Nashville, TN 37219-9966 

Federal Satellite Low 

P.O. Box 3000 

Anthony, TX 88021 

William Orr 

Federal Correctional Institute 

Thomas J. Ward 

Ward & Associates 

2020 N Street, NW 

Washington, DC 20036-0000 

Quentin Riegel 

National Association of 

Manufacturers 

1331 Pennsylvania Avenue, NW 

North Tower - Suite 1500 

Washington, DC 20004-1790 

Wayne K. Stenehjem 

Office of the Attorney General 

State of North Dakota 

600 East Boulevard Avenue 

Bismark, ND 58505-2210 

Mark J. Bennett 

Office of Attorney General 

State of Hawaii 

Department of Agriculture 

425 Queen Street 

Honolulu, HI 96813-0000 

Mr. Kelvin Allen Brooks 

Office of the Attorney General, State 

of New Hampshire 

33 Capitol Street 

Concord, NH 03301-6397 

Mr. J. Allen Jernigan 

North Carolina Department of Justice 

PO Box 629 

Raleigh, NC 27602-0629 

John E. Milner 

Brunini, Grantham, Grower & Hewes, 

PLLC 

P.O. Box 119 

Jackson, MS 39205 

 By: /s/ Mark W. DeLaquil 

 Mark W. Delaquil 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 25
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 of the 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 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 1
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," including, "any pollutant 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. 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 2
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 of EP A 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 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 3
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 of the 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)(1)(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 proper 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 of the 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 § 166(b), 42 U.S.C. § 7476(b) ("Within 21 months 

after such date of promulgation such plan revision shall be submitted to the 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 4
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 of the inadequacies, and may establish 

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

submission of such 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 110(c)(1) 

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 110(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. EP A has shown no intention of following the Clean Air Act 

procedures 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. 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 5
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 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 6
ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

August 19,2010

Hon. Lisa Jackson

Administrator

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue, N.W.

Washington, DC 20460

RE: Application for a Stay ofthe Tailoring 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 review of 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 if the D.C. Circuit had the opportunity to

review the Tailoring Rule before it went into effect. Texas should not be forced to choose

between forfeiting the authority to operate its PSD program and spending significant resources,

administrative and otherwise, to meet EPA's unlawful deadline. Moreover, EPA assiduously

and correctly avoided ascribing any environmental benefit from the Tailoring Rule, so staying

the Tailoring Rule until after Texas has had a full and fair opportunity to litigate its petition for

review would likewise not adversely impact public health or welfare.

POST OFFICE Box 12548, AUSTIN, TEXAS 78711-2548 TEL:(512) 463-2100 WEB: WWW,TEXASATT6RNEYGENERAL,GOV

An Equal Employment Opportunity Employer' Printed on Recycled Paper

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 1
1. 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 minimum standards for approvable SIPs:

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(k)(5), which

unambiguously provides states with a minimum of 18 months to revise their SIPs following SIP

call authorized by the Clean Air 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 Clean Air 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. EPA, 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 § 110, 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.

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 2
EPA's threat to impose a FIP on Texas as ofJanuary 2,2011, is similarly unlawful. See 75 Fed.

Reg. at 31,526 (announcing EPA's intention to "ensure" all sources of greenhouse gases will be

permitted under the final Tailoring Rule on January 2, 2011, by moving "quickly to impose a

[FIP] for PSD through 40 CFR 52.21 "). Clean Air Act § 11O(c)(1) 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 allow the 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 if Texas defaults in submitting a revision at the end of that 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 of August 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 Of The 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 PSD program and issue permits to sources in its state. If

EPA follows through on its threat to issue a FIP for Texas on January 2, 2011, Texas will lose its

ability to operate its PSD program. EPA's attempt to use this deadline to allow the 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 EPA were not to implement a

FIP on January 2,2011, the Tailoring Rule would create a cloud on any permits issued by Texas

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. § 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 program will cause the State irreparable harm.

3. A Stay Will Serve The Public Interest By Allowing Meaningful Judicial

Review Of The Tailoring Rule Before It Enters Into Force

Texas has petitioned the D.C. Circuit for review of 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 rarelyCase: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 3
appropriate "absurd results" doctrine, which EPA has invoked because, unlike every other

regulated pollutant, EPA has purported to find that regulation of greenhouse gases under the PSD

program would produce results plainly inconsistent with congressional intent. See 75 Fed. Reg.

at 31,542 (quoting United States v. Ron Pair Enters., 489 U.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

conform to the Tailoring Rule's requirements, it can do so without the Tailoring Rule's revisions

to the Part 51 Regulations. In the event one of Texas' sister states revises its SIP to incorporate

the Tailoring Rule, it can submit the revision for EPA's approval, subject to judicial review in

the Court of Appeals 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 relief from the 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

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THE STATE OF TEXAS 

COUNTY OF TRAVIS 

§ 

§ 

§ 

AFFIDAVITIDECLARATION IN SUPPORT OF MOTION TO STAY 

BEFORE ME, the undersigned authority, personally appeared Steve Hagle, and 

being by me duly sworn on his oath states: 

"My name is Steve Hagle. I am over 21 years of age and am fully competent and 

duly authorized to make this Declaration. The facts contained in this Declaration 

are based on personal knowledge and are true and correct. 

I am employed by the Texas Commission on Enviromnental Quality ("TCEQ") as 

Director of the Air Permits Division in the Office of Permitting and Registration. 

TCEQ is the Texas agency charged with implementing and enforcing the State's 

various environmental regulatory programs. This includes the permitting programs 

for stationary sources under Titles I and V of the federal Clean Air Act ("CAA" or 

the "Act"), which are among the responsibilities of the Air Permits Division. 

This Declaration addresses the harm that the Environmental Protection Agency's 

("EPA's") recent rulemaking concerning the regulation of greenhouse gases 

("GHGs") will inflict on the State of Texas and the TCEQ if the various rules are . 

allowed to take effect while the Court hears Texas' appeals of the rules. The 

Declaration presents background information about TCEQ' s stationary source air 

permitting programs and EPA's GHG rulemaking, as well as a discussion of the 

specific harm that will result should EPA's new rules be allowed to take effect. 

The discussion regarding permitting program impacts contains assumptions that· 

are based on currently available information and existing permit requirements. 

I. Background 

A. TCEQ's Title I PSD and Title V Permitting Programs 

Title I of the Act requires preconstruction permits for any new major source of, or 

major modification of an existing sourc·e of, certain air pollutants. This permitting 

program is known as the New Source Review ("NSR") program. In the context of 

areas that have attained the national ambient air quality standard ("NAAQS") for a 

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subject pollutant, or for which there is no standard, the NSR permitting 

requirements are known as the prevention of significant deterioration ("PSD") 

program. Since there is no NAAQS for GHGs, preconstruction permitting for 

GHGs would fall under the PSD program. To obtain a PSD permit, a source must 

comply with the applicable PSD requirements that are set forth in Texas' state 

implementation plan ("SIP"), including employing the "best available control 

technology" ("BACT") for the subject air pollutant. 

Title V of the Act requires that major sources of speCific air pollutants obtain 

operating permits. Unlike Title I, which imposes emission control requirements 

for PSD sources, Title V generally.imposes no additional substantive requirements 

on the permittee. Instead, the Title V operating permits are intended to collectgenerally in a single document-all regulatory requirements relating to air 

emissions at the source. Title V does allow states to issue multiple operating 

permits at a single site, which Texas does in certain cases. TCEQ issues two types 

of Title V permits: site operating pennits ("SOPs"), which are tailored to a 

particular site, and general operating pennits ("Gaps"), which contain uniform 

conditions that cover all sites in a defined class. Processing applications for sOPs 

is far more labor intensive than for Gaps. 

B. Current Capacity and Load 

Currently, the TCEQ Air Permits Division receives approximately 27 PSD permit 

applications per year, and these project assignments are spread among the three 

NSR permit sections. A timely PSD project takes anywhere between 10 and 12 

months frOlll the time a complete application is submitted to issuance of the final 

pennit. Typically, an NSR permit reviewer will complete an average of two PSD 

projects per year (in addition to their other minor NSR workload, which is about 30 

projects). We expect that the incoming GHG PSD permit applications would 

require that GHG permitting staff be strictly dedicated to PSD permitting to 

effectively manage the GHG PSD workload. Therefore, a permit reviewer only 

processing GHG PSD permitting projects should be able to complete about 10 PSD 

projects each year. 

Regarding Title V applications, the TCEQ receives on average 500 Title V SOP 

applications and 200 Title V GOP applications each year. Historical data indicates 

that one permit reviewer completes 15 Title V SOP projects or 65 Title V GOP 

projects, annually. Title V SOPs typically take between 6 to ·12 months to 

complete, and Gaps typically take between 2 and 6 months to complete. These 

time frames represent the time required to process the application and issue the 

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permit. Because any FTEs hired for GHG Title V permitting would work solely on 

GOPs or SOPs, we could expect the same workload outputs, i.e., 15 Title V SOPs 

or 65 Title V GOPs each year. 

TCEQ currently has up to 50 FTEs involved with the processing of PSD and Title 

V permit applications. TCEQ employs additional personnel in field operations, 

enforcement, and legal services in support of the PSD and Title V programs. It is 

important to note that TCEQ's legislative appropriations bill imposes a cap on the 

number of TCEQ's FTEs. TCEQ cannot exceed the cap without further action by 

the Texas Legislature or until TCEQ receives approval from the Governor and the 

Legislative Budget Board and the necessary funding is identified. Without such 

approval, or legislation, TCEQ could not employ the staff required to handle GHG 

permitting unless staffwas redeployed from elsewhere within the agency. 

Texas allows an affected party to challenge a PSD permit before final issuance 

through both an administrative and a judicial review process. Challenges to draft 

PSD permits are contested cases heard by administrative law judges at· the State 

Office of Administrative Hearings ("SOAH"). If a contested case is required, it 

will typically add 12 to 18 months to the times set forth above. After the 

administrative challenge, the public may also request that the Commission review 

its decision to issue the permit through a motion to overturn and may also request 

judicial review of the Commission's decision in state district court Accordingly, it 

is not unusual for a .controversial PSDpermit application to take 30 months or 

more from the time the application is complete to final issuance following a 

contested case hearing, motion to overturn, and judicial review. 

Federal and State law also provide for challenges to Title V permits. The public 

may submit comments and / or request a hearing about a draft Title V pennit, both 

of which require a response by TCEQ's Executive Director. In addition, EPA will 

review the draft Title V permit and may object to it. If EPA does not object to the 

draft Title V permit by its own initiative, the public has the right to petition EPA to 

object to it. Recently, EPA has begun to object with regularity to draft Title V 

permits based on several concerns, both with underlying NSR requirements and 

other Title V program requirements. Finally, the public has a right of judicial 

review of the Commission's decision in state district court. These processes can 

add several months or even years to the time required for final issuance of a Title 

V permit. 

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C. EPA's Greenhouse Gas Regulations 

EP A has promulgated four separate rules, which together result in the regulation of 

greenhouse gases at stationary sources. They are as follows: 

1) Endangerment and Cause or Contribute Findings for Greenhouse Gases Under 

Section 202(a) of the Clean Air Act; Final Rule, 74 Fed. Reg. 66,496 (December 

15,2009) (the "Endangerment Finding"); 

2) Reconsideration of Interpretation of Regulations That Determine Pollutants 

Covered by Clean Air Act Permitting Programs; Final Rule, 75 Fed. Reg. 17,004 

(Apri12, 2010) (the "Timing Rule"); 

3) Light-Duty Vehicle Greenhouse Gas Emission Stapdards and Corporate 

Average Fuel Economy Standards; Final Rule, 75 Fed. Reg. 25,324 (May 7, 2010) 

(the "Tailpipe Rule"); and 

4) Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring 

Rule; Final Rule, 75 Fed. Reg. 31,514 (June 3, 2010) (the "Tailoring Rule" and, 

collectively, the "GHG Rules"). 

In its Endangerment Finding, EPA determined that motor vehicles emISSIOns 

"contribute" to what it has defined as a single air pollutant-the aggregate group of 

"six-well mixed greenhouse gases" (C02, CH4, N20, HFCs, PFCs, and SF6)-and 

that this pollutant endangers public health and welfare. EPA has chosen to issue· 

emission standards for motor vehicles under CAA § 202(a) to control these GHGs. 

EPA's Tailpipe Rule does just that by establishing new fuel economy standards. 

EPA's Timing Rule provides that a pollutant becomes "subject to regulation" for 

purposes of federal PSD and Title V permitting programs when it is subject to 

control under the CAA or its implementing regulations. This includes, for 

example, GHGs regulated under the Tailpipe Rule. The GHG control requirements 

in the Tailpipe Rule take effect on January 2, 2011. Therefore, EPA has concluded 

that stationary sources of GHGs become subject to regulation under the PSD and 

Title V permitting programs on January 2,2011. 

One of the problems presented by EPA's attempt to regulate GHGs under the CAA 

relates to the statutory thresholds for triggering PSD and Title V applicability. 

These thresholds are the same-l00 or 250 tons per year ("tpy")-no matter the 

pollutant. While these thresholds may make sense for sulfur dioxide or nitrogen 

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oxides, EP A has determined that they are so low as to be "absurd" with regard to 

GHGs. EPA concluded that the programs would cover a very large number of very 

small sources of GHGs at a volume that would completely overwhelm the 

regulatory agencies and at a cost that cannot be justified. 

EPA purports to solve this problem with its Tailoring Rule. The Tailoring Rule 

amends EPA's Part 51 regulations, which set setting forth the minimum standards 

for approvable SIPs. The Rule raises the applicability thresholds for GHGs by 

orders of magnitude. Specifically, the Tailoring Rule would raise the PSD and 

Title V applicability thresholds for GHG sources to 100,000 tpy or, for purposes of 

PSD, modifications with net increases of 75,000 tpy. Under the Tailoring Rule, 

sources already subject to the PSD and Title V programs for other pollutants would 

become subject to GHG regulation on January 2, 2011. This would include GHG 

BACT requirements for projects that increase net emissions of GHGs by 75,000 

tpy. All other sources that exceed the GHG thresholds would become regulated on 

July 1,2011. 

Importantly, these thresholds are based on a new term-carbon dioxide equivalent 

("C02e")-that EPA created based on an analysis of the global warming potential 

("GWP") of each of the six identified GHGs. Accordingly, pure carbon dioxide 

would trigger applicability at the nominal thresholds (75,000 or 100,000 tpy), 

while pure methane, which has a much greater GWP (i.e., 21 times that of CO2), 

would trigger the thresholds at levels below 5,000 tpy. For mixed emissions, 

applicability determinations would be based on the sum of the mass emissions of 

each constituent times their GWPs. 

In addition to promulgating these four rules, EP A has recently proposed two rules 

relating to the SIPs for the GHG Rules. They are: 

5) Action to Ensure Authority to Issue Permits under the Prevention of Significant 

Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of 

Substantial Inadequacy and SIP Call, 75 Fed. Reg. 53,892 (September 2, 2010) 

(the "SIP Call"); and 

6) Action to Ensure Authority to Issue Permits under the Prevention of Significant 

Deterioration Program to Sources of Greenhouse Gas Emissions: Federal' 

Implementation Plan, 75 Fed. Reg. 53,883 (September 2,2010) (the "FIP Rule"). 

'The proposed SIP Call identifies thirteen states, including Texas, that apparently 

lack authority to issue PSD permits in ,conformance with the Tailoring Rule's 

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requirements. It proposes to find their respective SIPs "substantially inadequate" 

and to call on such states to submit SIP revisions to correct the inadequacy within 

12 months of the rule becoming final. EPA will impose a federal implementation 

plan ("FIP"), such as the one proposed in the FIP Rule, on states that fail to submit 

a conforming SIP. This would allow EP A to assume permitting authority for 

GHGs in such states. 

Under the proposed SIP Call, a state may elect a deadline for sUbmitting corrective 

SIP revisions that is shorter than the full 12 months. The proposal contemplates 

deadlines as short as three weeks. EPA explains that the purpose of establishing a 

shorter deadline is to ensure that a FIP is available to prevent a gap in PSD 

permitting. For example, rather than waiting a full year before EP A undertakes to 

federalize the GHG permitting program, it may do so in a matter of weeks for 

those states that elect a shorter deadline. 

II. Impact to TCEQ of EPA's GHG Regulatory Scheme 

Under EPA's scheme for GHG regulation, states will-as of January 2, 2011-

necessarily fall into one of three categories: (1) those with EPA-approved SIPs for 

GHG permitting that retain GHG permitting authority; (2) those without approved 

SIPs that have "elected" (e.g., by requesting a short SIP-call deadline) to allow 

EPA to permit GHG permitting under the FIP; and (3) those that lack an approved 

SIP but have not "elected" early federalization of their permitting programs. 

Whatever Texas' category, TCEQ will be significantly impacted if EPA's GHG 

Rules are allowed to take effect. 

If the GHG Rules are allowed to take effect, TCEQ will be compelled to revise its 

SIP and prepare to implement a GHG permitting program. In order to permit 

major GHG sources under the PSD program in Texas, TCEQ would have to: (1) 

amend its regulations to conform to the GHG Rules and any future statutory 

changes enacted by the Texas Legislature; and (2) hire and train additional 

personnel to handle the burden of GHG permitting. Because of the lead times 

required to accomplish these tasks, these activities would necessarily begin while 

Texas' challenges to EPA's GHG Rules are pending. 

While prompt federalization of GHG permitting may provide interim legal 

authority for EPA to issue GHG permits, TCEQ would nevertheless still have to 

. revise its SIP and prepare a workforce to handle the burden of permitting GHGs. 

Moreover, given the significant requirements of implementing a GHG permitting 

program (as detailed in section II.B of this Declaration) it is questionable whether, 

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under a federalized program, EP A would have the resources necessary to issue and 

monitor GHG permits. It is foreseeable that EPA would have the authority but 

lack the staff to run a GHG permitting program for Texas' stationary sources. 

Indeed, in the preamble to the proposed FIP, EPA acknowledges its inability to 

permit GHG sources by inviting states to accept delegation of its authority to 

implement the FIP. 

In short, if the GHG Rules are allowed to take effect, TCEQ will have to 

marshal-at considerable expense-the legal authority and the personnel necessary 

to implement them. But EP A has given TCEQ inadequate time to obtain the 

authority and capacity. This would therefore cause an effective construction banthat is, Texas facilities will be unable to obtain PSD permits for GHGs-until 

Texas could assemble the necessary authority and resources. Finally, in the event 

the Court ultimately finds EPA's GHG scheme to be invalid, TCEQ would bear the 

additional cost of rescinding its SIP revisions and possibly terminating the 

recently-hired personnel. 

Following is a discussion of the harm associated with GHG SIP revisions, staffing 

a GHG permitting program, and the effective construction ban. 

A. Impact to TCEQ of GHG SIP Revisions 

Celiain provisions of the Texas Clean Air Act ("TCAA") present potential 

conflicts with EPA's GHG scheme. For instance, Texas' fee system was not 

designed with GHGs in mind, and it is not clear whether existing law authorizes 

TCEQ to collect fees for GHG emission. Moreover, fees for Title V permits are 

based on annual emission rates without regard to the type of air pollutant. The 

cunent fee is $33.71 per ton per year. In addition, section 382.0621(d) of the 

TCAA prohibits the imposition of fees for emissions above 4,000 tpy-a small 

fraction of the Tailoring Rule thresholds. Accordingly, even if existing law does 

allow TCEQ to impose such fees, the statute would force each source to pay the 

same' amount-currently, $134,840 per year. 

Whether or not the Texas Legislature would have to enact new statutes, TCEQ 

would have to amend its rules to confonn to EPA's GHG Rules. For example, 

TCEQ's definition of "unauthorized emissions," at 30 Tex. Admin. Code § 

101.1(107), expressly excludes two of the six GHGs, namely, carbon dioxide and 

methane. Until TCEQ amends its rules, they will be deficient under EPA's GHG 

scheme. 

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Rule amendments such as these typically will take approximately 12 months to 

cOp1plete. This includes the time necessary for regulatory analysis, drafting and 

publication of the proposed rule, the notice and ~omment period, drafting the 

response to comments, drafting of the final rq.le, and, finally, the Commission's 

adoption of the final rule. Moreover, they represent an additional burden on 

TCEQ. Without a stay of the GHG Rules, TCEQ would have to begin its SIP 

revisions before the Court has determined the validity of EPA's GHG Rules. And 

given the time required for rulemaking, Texas would be unable to conform its SIP 

to the GHG Rules until well after January 2,2011. 

B. Impact to TCEQ of Staffing GHG Permitting Program 

If EPA's GHG Rules were to take effect, the demands on TCEQ's resources would 

be significant. In order to assess the effects of the Tailoring Rule, TCEQ staff 

under my supervision has projected the effect of the GHG Rules by examining the 

effect they would have had if they were in place over the past ten years. We began 

with a detailed examination of the sources that would likely have required permits 

in each of TCEQ's four air permitting sectors: combustion, chemical, mechanical, 

and oil and gas. We determined the number of facilities likely to exceed the 

Tailoring Rule thresholds and the rate at which these facilities undertake projects 

that would require PSD and Title V permitting action. 

1. Additional Air Permitting Actions Resulting from GHG Rules 

1. Combustion Sector 

The Combustion Sector includes power plants, cement kilns, and lime kilns. Of 

these, power plants are the most common source of GHGs, particularly gas turbine 

plants, which represent well over half of the number of sources across all sectors 

that are likely to trigger the Tailoring Rule's PSD and Title V applicability 

thresholds. A significant number of coke or coal-fired power plants are also likely 

to trigger the thresholds. The remainder of the combustion sources includes 

biomass power plants, integrated gasification combined cycle ("IGCC") power 

plants, as well as the cement and lime kilns. 

If EPA's GHG Rules had been in place over the past ten years, TCEQ staff 

estimates that the construction or modification of 110 power plants and 9 cement 

. or lime kilns would have triggered the Tailoring Rule thresholds ·as major GHG 

sources. Stated differently, TCEQ's Combustion Sector would have handled 119 

PSD permitting actions for GHGs over the last 10 years if the GHG Rules had been 

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in effect. Accordingly, we would expect 12 additional PSD permitting actions 

each year from the Combustion Sector if the GHG Rules are allowed to take effect 

and would expect the same number of Title V SOP applications to result from 

these PSD actions. 

ll. Chemical Sector 

The Chemical Sector includes petroleum refineries and chemical manufacturing 

plants. Based on available data relating to combustion processes at these facilities, 

we estimate that 150 of Texas' chemical manufacturing plants and all 27 of its 

refineries would exceed the Tailoring Rule thresholds. Based on an examination of 

data from the past 10 years, we would expect to receive 48.6 PSD GHG permitting 

actions per year for chemical manufacturing plants and 16 PSD GHG actions per 

year for refineries. Combined, the Chemical Sector would likely have 

approximately 65 additional PSD permitting actions each year attributable to the 

GHG Rules and would expect the same number of Title V SOP applications to 

result from these PSD actions. 

iii. Mechanical Sector 

The Mechanical Sector includes the following source categories: glass production, 

iron and steel production, and pulp and paper manufacturing, among others. We 

examined the air permits of approximately 39 facilities within these categories. Of 

these,we determined that 7 iron and steel facilities, 3 pulp and paper mills, and 5 

glass production facilities would exceed the GHG thresholds in the Tailoring Rule. 

Based on the review of the Mechanical Sector air permits and historical data for 

the past 10 years, we predict that 8 additional PSD permitting actions will result 

each year in the Mechanical Sector from the GHG Rules and that the same number· 

of Title V SOP applications will result from these PSD actions. 

IV. Oil & Gas Sector 

The Oil & Gas Sector includes crude oil production sites, gas plants, ,and CO2 

plants. We also include municipal solid waste ("MSW") landfills with this sector 

because they are handled by the same air permitting section. We examined the 

types of sources in this sector that could potentially trigger the GHG thresholds. 

We determined that reboiler and heater units typically found in this sector were 

unlikely to trigger the GHG thresholds in any real-world configuration, but 

determined that crude oil production sites, natural gas sites, CO2 plants, and MSW 

landfills could all trigger applicability. 

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We reviewed a representative sample of facilities in each of these categories, and 

determined the number of sources likely to exceed the GHG thresholds. Further, 

by reviewing permitting actions over the last 1 0 ye~rs, we determined the 

frequency at which these sources undertake projects that would require PSD 

permitting actions under the new GHG Rules. 

Based on our analysis, TCEQ would expect to see 82 additional PSD permitting 

actions and 688 additional Title V permitting actions per year in the Oil & Gas 

Sector as a result of the GHG Rules. Of the Title V actions, we would project 165 

additional SOP applications and 523 additional GOP applications each year. This 

includes 23 additional GOP applications each year for MSW facilities. The 

projected breakdown between SOP and GOP applications is conservative, since it 

is likely that even more of these facilities would require or choose the more laborintensive SOP, which allows for more tailored permitting requirements. 

v. Summary 

To review, TCEQ staff under my supervision have conducted a careful sector-bysector and industry-by-industry analysis, including an examination of air 

permitting information dating back a decade, to determine the additional number of 

permitting actions likely to result from EPA's new GHG Rules at the Tailoring 

Rule thresholds. As summarized in the table below, we expect to receive, across 

all sectors, 167 additional PSD permitting actions, 250 Title V SOP actions, and 

523 Title V GOP permits each year. 

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Additional Additional Additional 

Title V Title V PSD Industries SOP GOP permitting considered permitting permitting actions \ actions actions 

per year per year per year 

Group t- Power Plant's; 

Combustion Cement Kilns; Lime 12 12 0 

Sector Kilns 

Group 2- Refineries; Chemical Chemical Plants 65 65 0 

Sector 

Group 3- Glass Mfg.; 

Iron & Steel Mechanical Production; 8 8 0 

Sector Pulp & Paper Mfg. 

Group 4- Crude Oil Production 

Sites; Gas Plants; Oil & Gas CO2 Plants; MSW 82 165 523 

Sector Landfills 

Total additional PSD and Title V 

permitting actions attributable to 167 250 523 

GHG Rules per year 

2. Additional FTEs Required for Program Expansion for GHGs 

TCEQ would have to significantly expand its capacity across several different 

divisions to handle the workload that would result from EPA's GHG Rules. The 

additional demand from PSD and Title V programs would have the greatest impact 

on the Air Permits Division and the Field Operations Division, but would also 

impact the Enforcement Division, Litigation Division, and Environmental Law 

Division. 

With regard to the Air Permits Division, and as stated above, one FTE is expected 

to process 10 PSD permitting applications or 15 Title V SOP permitting 

applications or 65 Title V GOP applications each year. Accordingly, it would take 

an additional 42 staff FTEs, with the support of an additional 4 supervisory FTEs, 

just to process these additional permit applications anticipated to result from the 

GHGRules. 

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Based on current staffing ratios and the types of inspections and investigations 

expected to be required in the context of GHG permits, the demand on the Field 

Operations Division would increase primarily due to the nu,mber of facilities that 

would require a Title V permit based on the new GHG Rules. Specifically, it 

would take an additional 34 staff FTEs and 3 supervisory FTEs to complete the 

inspections and investigations necessary to monitor compliance with the 

anticipated permits. Of these, only 2 staff FTEs would be dedicated to PSD 

permits. 

The estimated impact on the Enforcement, Litigation, and Enviromnental Law 

Divisions are similarly based on current staffing ratios and the type of work that is 

expected to be generated from the GHG permitting work. TCEQ would likely 

need an additional 5 FTEs in its Enforcement Division to address GHG-related 

permit violations; 1 FTE in its Litigation Division to handle GHG enforcement . 

matters; and 2 FTEs in the Environmental Law Division to handle GHG permitting 

and rulemaking. As summarized in the table below, TCEQ staff has determined 

that it would take approximately 91 new FTEs to handle the workload that would 

result frOln the number of additional PSD and Title V permitting actions estimated 

to result from EPA's GHG Rules. 

Additional Additional Total . Additional TCEQ Division FTEs for FTEs for FTEs by PSD Title V Division 

Staff 17 25 

Air Permits I 46 

Supervisors 2 2 

Staff 2 32 

Field Operations 37 

Supervisors 0 3 

Enforcement 5 5 

Litigation 1 1 

Environmental Law 2 2 

Total 91 

While it is impossible to definitively detennine how many additional FTEs would 

be necessary to administer EPA's proposed GHG regulatory program, the 

projections I have detailed are consistent with TCEQ's course of business in its 

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hiring practice and would serve as the basis for hiring planning. Finally, these 

employees could not be justified if the Court finds EPA's GHG scheme to be 

invalid. 

3. Timing of Hiring 

The demand for additional capacity and therefore any hiring relating to the GHG 

Rules would ramp up over time. TCEQ would normally begin hiring and training 

several months in advance of the new permitting requirements taking effect, and it 

would hire in phases, rather than all 91 at once. If TCEQ were preparing to handle 

GHG permitting beginning on January 2, 2011, it would already be well behind 

schedule for hiring and training. 

To cover the projected demand of a new GHG permitting program as would be 

required under EPA's GHG Rules, TCEQ would plan to hire as follows: 

• On or before the effective date of the newGHG requirements, all Air 

Permits Division FTEs for PSD permitting, numbering 17 staff and 2 

supervIsors; 

• No later than 6 months after the effective date, half of the Air Permits 

Division FTEs for Title V permitting, numbering 12 staff and 1 supervisor, 

and all Field Operations Division FTEs, numbering 34 staff and 3 

supervisors; and 

• No later than 12 months after the effective date, the remaining half of the Air 

Permits Division FTEs for Title V permitting, numbering 13 .staff and 1 

supervisor, and all FTEs for the Enforcement, Litigation, and Environmental 

Law Divisions, numbering a total of 8 FTEs. 

4. TCEQ Will Bear Cost of GHG Permitting 

Sections 1l0(a)(2)(L) and 502(b)(3) of the CAA require the cost ofPSD and Title 

V permitting programs to be covered by fees paid by the regulated entities. 

However, TCEQ would have to amend the regulations that pertain to stationary 

source fees before TCEQ can begin to shift the program costs to industry. 

Accordingly, TCEQ will have to bear the costs of the PSD and Title V permitting 

programs, at least in the near term. TCEQ will be unable to recover those costs 

from EPA or industry if the Court rejects EPA's GHG scheme. 

Page 13 of 15 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 13
C. Construction Ban 

EPA's GHG scheme deprives Texas of the time it would require to assemble the 

appropriate legal authority and the staffing capacity necessary to issue GHG 

permits. Moreover, even if Texas allowed EPA to federalize its air program such 

that there would be interim legal authority for EPA to issue GHG permits in Texas, 

this would not solve the staffing issue. Accordingly, EPA's GHG scheme causes a 

construction ban on any project in Texas that would exceed the Tailoring Rule's 

GHG thresholds until EPA approves Texas' revised SIP or is able to fulfill the 

statutory requirements to impose a FIP and either EP A or TCEQ can assemble the 

staff necessary to review applications and issue permits. 

Based on the information presented above, the construction ban could affect as 

many as 167 projects within the first year-some of which would be built outside 

of Texas and some not at all. This would deprive Texans of jobs constructing or 

operating GHG sources, deprive Texas industry of business opportunities, deprive 

the State of tax revenues associated with projects, and place Texas at a competitive 

disadvantaged to states that have the legal authority to issue GHG permits. 

The threat of an unmanageable backlog of permit applications, questions about the 

legality of the GHG Rules, and uncertainty even about what constitutes GHG 

BACT-all of which flow from EPA's GHG Rules-only exacerbate the problems 

that a functional construction ban would cause. Setting aside the harm to Texas 

industry and Texans who rely on it, EPA's scheme deprives TCEQ of the ability to 

fulfill its obligation to provide regulatory certainty and air permitting services to 

. Texas industry. It will harm the State of Texas and its residents, and frustrate 

TCEQ's mission. 

* * * 

EPA's GHG Rules will undermine TCEQ's mission and operations. If they are not 

stayed during the pendency of Texas' appeals, they will cause TCEQ to expend 

significant resources to revise its SIP and prepare a workforce to meet the demands 

of a new, and potentially short-lived, GHG program. In addition, they will cause a 

construction ban unless or until Texas can marshal the legal authority and staffing 

resources to meet the demand for GHG permits." 

Page 14 of 15 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 14
Steve 

ft~ Hagle 

Director, Air Permits Division 

Office of Permitting and Registration 

Texas Commission on Environmental Quality 

C,lQ,V'- SWORN TO AND SUBSCRIBED before me on the l) -- day of 

September, 2010, to certify which, witness my hand and official seal. 

",~·;~:i~·i/;;.. Jacqueline Frances Duckworth / .. ~.-:::Jb::.to '\ Notary Pub Ii c 

i"'{.~)*i StateofTexas ,/--- . • ............ ",l My Commission Expires 

•.•... ..•.• April 25, 2011 

No~~ 13 ic in and for the State of Texas 

My commission expires: ke~ \ ~ "'5

1 

W \. 1 

Page 15 of15 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 15
THE STATE OF TEXAS 

COUNTY OF TRAVIS 

§ 

§ 

§ 

AFFIDA VITIDECLARA TION IN SUPPORT OF MOTION TO STAY 

BEFORE ME, the undersigned authority, personally appeared Elizabeth 

Sifuentez, and being by me duly sworn on her oath states: 

"My name is Elizabeth Sifuentez. I am over 21 years of age and am fully 

competent and duly authorized to make this Declaration. The facts 

contained in this Declaration are based on personal knowledge and are true 

and correct. 

I am employed by the Texas Commission on Environmental Quality 

("TCEQ") as the Director of the Budget and Planning Division. In this 

capacity, I am knowledgeable about TCEQ's budgets and budget planning 

processes. This Declaration addresses the dollar-cost to TCEQ associated 

with employing, training, and equipping the personnel that would be 

necessary to implement the Environmental Protection Agency's ("EPA's") 

greenhouse gas rules ("GHG Rules"), as well as the current economic 

challenges facing TCEQ and the State. 

I. Costs Associated with Employing, Training, and Equipping 

Personnel Necessary for the GHG Permitting Program 

Mr. Steve Hagle, Director of TCEQ's Air Permits Division, has represented 

to me that EPA's GHG Rules would require the addition of91 new full-time 

employees ("FTEs") across various TCEQ Divisions, as shown in the table 

below. Based on the FTE numbers provided to me, I have calculated the 

dollar-cost to TCEQ of employing, training, and equipping these new 

employees. Using TCEQ's standard costs for employees in each of the 

various positions, I have identified a total cost of $4,116,227 annually, plus 

startup costs totaling $933,750. The ongoing annual figure includes 

employees' salaries and the costs associated with training, travel, and other 

operational overhead. Startup costs, which include computer equipment and 

furniture, are $6,500 per employee, plus $9,250 in vehicle costs for each 

Field Operations employee. 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 1
Additional FTE TCEQ Division FTEs by Total Costs Division 

Air Staff 42 $43,397 

Permits Supervisors 4 $68,597 $2,097,062 

Field Staff 34 $42,497 

Operations , Supervisors 3 $70,097 $1,655,189 

Enforcement 5 $40,997 $204,985 

Litigation 1 $52,997 $52,997 

Environmental Law 2 $52,997 $105,994 

Total Additional Staff 91 $4,116,227 and Cost Per Year 

Start Up Costs, $933,750 

These numbers exclude $1,092,631 each year to cover the cost of employee 

retirement contributions, insurance, and other fringe benefits for the 91 

employees, which is a fund obligation to the agency but does not require 

direct appropriations. The numbers also exclude the cost of office space for 

the new employees. Accordingly, the figures understate the full cost. 

The costs for the new program will accelerate quickly during its first 6 

months. According to the hiring schedule provided by Mr. Hagle, the new 

program would be at no less than 20% capacity by the effective date of the 

GHG requirements, no less than 75% within 6 months of the effective date, 

and fully staffed approximately 12 months after the effective date. If the 

Court finds EPA's GHG program to be invalid, TCEQ may have to 

dismantle the program even more quickly. If TCEQ were forced to 

terminate its recently-hired employees, it would have to pay a portion of the 

unemployment benefits for every former employee who worked at TCEQ 

for 6 months or more. 

II. Texas and TCEQ's Economic Challeges 

The prospect of a costly new air permitting program comes at an 

inopportune time for the State of Texas and for TCEQ. The Texas State 

budget is currently proj ecting a shortfall of approximately $18 billion for the 

upcoming biennium. TCEQ's budget is dependent on appropriations by the 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 2
Texas Legislature. The Governor's Office and Legislative Budget Board has 

requested TCEQ and other state agencies to provide a 5% budget cut for the 

current biennium and an additional recommended 10% cut for the upcoming 

biennium. TCEQ does not have discretionary funds that could be diverted to 

meet the demand of a new GHG permitting program." 

Director, 

~fue~ Budget and Planning Division 

Texas Commission on Environmental Quality 

SWORN TO AND SUBSCRIBED before me on the 9.th. day of 

September, 2010, to certify which, witness my hand and official seal. 

~"'~'-"" "" 

/~~\;MAAGAA!'f 'f JACKSON [ ~{.' )*}. NOTARY PUBLIC 

\. ' ...... _ • .,. ••• ' State of Texas 

~~~ Comm. Exp. 12·21-2013 

~~Quk Notary PubliU in and for the State of Texas 

My commission expires: I d, -3/- '3 

Case: 10-1222 Document: 1266086 Filed: 09/15/2010 Page: 3