Under the “Good Neighbor” requirements of the Clean Air At (CAA), a state must manage its pollution so that it does not prevent downwind neighbors from attaining CAA standards. A State Implementation Plan (SIP) must include how the state will meet Good Neighbor requirements. The Environmental Protection Agency (EPA) may approve or reject the Good Neighbor portion of a SIP.

EPA Rejects Good Neighbor SIP
Texas submitted a Good Neighbor SIP to EPA in 2012. For ozone emissions, Texas said no mitigating action was required because its contribution to other states was insignificant.
EPA rejected the Good Neighbor SIP, asserting the SIP did not adequately address CAA requirements and had insufficiently supported conclusions.

Petition for Review Denied
Texas filed a Petition for Review in the Fifth Circuit Court of Appeals, asserting EPA’s rejection was untimely, arbitrary, and based on inadequate review.

The 5th Circuit upheld EPA’s rejection and denied the Petition, holding that EPA “complied with the statutory requirements and its reasoning was sound.”

While acknowledging EPA’s rejection was years past the CAA’s twelve-month requirement to approve or reject a SIP, the 5th Circuit held the delay did not revoke EPA’s power to reject. Failure to act within a statutorily specified time does not render later agency action void, absent specific statutory language.

A rational decision based on valid statutory interpretation is neither arbitrary nor inadequate, according to the 5th Circuit. EPA’s underlying interpretation of the relevant CAA provisions had “no error.” EPA “rationally rejected” the SIP, because Texas could not demonstrate how its emissions would not “interfere with maintenance” of CAA standards in other states.

Dissent: EPA Exceeded CAA Authority
One member of the three-judge panel dissented. EPA was “seriously tardy,” and it relied upon “data created after the deadline.” The dissent argued this was “in excess of statutory constraints” and “arbitrary and capricious.”

To read the opinion, which includes the dissent https://www.ca5.uscourts.gov/opinions/pub/16/16-60670-CV0.pdf