     Case: 17-60088      Document: 00514131834         Page: 1    Date Filed: 08/25/2017




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                                                 Fifth Circuit

                                  ___________________                           FILED
                                                                            August 25, 2017
                                     No. 17-60088                            Lyle W. Cayce
                                  ___________________                             Clerk

STATE OF TEXAS; TEXAS COMMISSION ON ENVIRONMENTAL
QUALITY; LUMINANT GENERATION COMPANY, L.L.C.; BIG BROWN
POWER COMPANY, L.L.C.; SANDOW POWER COMPANY, L.L.C.;
LUMINANT MINING COMPANY, L.L.C.,

              Petitioners

v.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; SCOTT
PRUITT, in his official capacity as Administrator of the United States
Environmental Protection Agency,

              Respondents

                               _______________________

                       Petitions for Review of an Order of the
                         Environmental Protection Agency
                            EPA No. 81 Fed. Reg. 89,870
                              _______________________

Before OWEN, ELROD, and COSTA, Circuit Judges.
PER CURIAM:*
       Petitioners     challenge     the     Environmental        Protection     Agency’s
designation that three areas in Texas did not attain air quality standards for


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 17-60088
sulfur dioxide. The EPA contends this challenge must be litigated in the
United States Court of Appeals for the District of Columbia Circuit. But the
EPA has not shown Petitioners are seeking review of an agency action that is
either nationally applicable or based on a determination of nationwide scope
or effect.    The EPA’s motion therefore is denied without prejudice to
reconsideration by the merits panel.
                                        I.
       The Clean Air Act directs the EPA to establish national ambient air
quality standards by setting maximum permissible concentrations of various
harmful air pollutants.     42 U.S.C. §§ 7408–7409.          Within three years of
establishing or revising a national ambient air quality standard for a pollutant,
the EPA must evaluate compliance with the standard and designate regions of
the    United    States   as   either   “attainment,”        “non-attainment,”    or
“unclassifiable.”   42 U.S.C. § 7407(d)(1)(A), (d)(1)(B)(i).     The EPA solicits
recommendations from each state on what to designate regions within the
state. Id. § 7407(d)(1)(A). If the EPA disagrees with the state’s designations,
it notifies the state but “may make such modifications [to the designations] as
the Administrator deems necessary.”          Id. § 7407(d)(1)(B)(ii).   If the EPA
ultimately designates a particular region as “non-attainment,” the state must
submit a state implementation plan that includes measures to meet the new
standard. Id. § 7514.
       The EPA revised the national ambient air quality standard for sulfur
dioxide in 2010. See Primary National Ambient Air Quality Standard for
Sulfur Dioxide, 75 Fed. Reg. 35,520, 35,525 (June 22, 2010) (“Sulfur Dioxide
Standard”) (as codified at 40 C.F.R. pts. 50, 53, 58). In August 2013, the EPA
issued “Round 1” of designations under the revised standard, designating some
regions in 16 states. See Air Quality Designations for the 2010 Sulfur Dioxide
(SO2) Primary National Ambient Air Quality Standard, 78 Fed. Reg. 47,191
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                                  No. 17-60088
(Aug. 5, 2013) (“Round 1 Designations”) (as codified at 40 C.F.R. pt. 81).
Although the rule announcing the revised standard stated that the EPA
“expect[ed] to use a hybrid analytic approach that combines the use of
monitoring and modeling to assess compliance” with the new standard, the
Round 1 designations only relied on available air quality monitoring data.
Sulfur Dioxide Standard, 75 Fed. Reg. at 35,573; Round 1 Designations, 78
Fed. Reg. at 47,191. Because EPA did not have sufficient data to designate
additional areas, it stated that it would continue to make designations “in
separate future actions.” Round 1 Designations, 78 Fed. Reg. at 47,191.
      The Sierra Club and the National Resources Defense Council sued to
compel the EPA to complete designations for the rest of the country, arguing
that the EPA had failed to fulfil a nondiscretionary duty under the Clean Air
Act. A consent decree resolving the case required the EPA to issue final
designations for regions with the largest sources of sulfur dioxide by July 2,
2016. Sierra Club v. McCarthy, No. 3:13-cv-3953, Consent Decree, ECF No.
163 (N.D. Cal. Mar. 2, 2015). The EPA proposed these “Round 2” designations
in March 2016, covering 66 areas in 24 states, including the four Texas regions
at issue in this case.    See EPA Responses to Certain State Designation
Recommendations for the 2010 Sulfur Dioxide National Ambient Air Quality
Standard, 81 Fed. Reg. 10,563 (Mar. 1, 2016) (as codified at 40 C.F.R. pt. 81).
In July 2016, after accepting public comment on its proposed designations, the
EPA issued a final rule making designations for only 61 of those areas. See Air
Quality Designations for the 2010 Sulfur Dioxide (SO2) Primary National
Ambient Air Quality Standard—Round 2, 81 Fed. Reg. 45,039 (July 12, 2016)
(“Initial Round 2 Designations”) (as codified at 40 C.F.R. pt. 81). The final rule
included designations for eight regions in Texas, but not the four at issue here.
See Air Quality Designations for the 2010 Sulfur Dioxide (SO2) Primary
National Ambient Air Quality Standard—Supplement to Round 2 for Four
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Areas in Texas, 81 Fed. Reg. 89,870, 89,871 (Dec. 13, 2016) (“Round 2
Supplement”) (as codified at 40 C.F.R. pt. 81).
      Pursuant to an agreed modification to the consent decree, the EPA
delayed issuing the Round 2 designations for the four regions at issue—areas
in Texas surrounding the Big Brown, Martin Lake, Monticello, and Sandow
power plants. Joint Notice of Stipulated Extension, Sierra Club v. McCarthy,
No. 3:13-cv-3953, ECF No. 180 (N.D. Cal. Oct. 28, 2016). Approximately five
months later, the EPA issued a “Supplement to Round 2 for Four Areas in
Texas” making those designations. Round 2 Supplement, 81 Fed. Reg. at
89,870. Contrary to Texas’s recommendations and after providing the required
notice to Texas, the EPA designated three of the regions “nonattainment” and
thus triggered an obligation for Texas to develop and submit revised state
implementation plans. Id.
      The Round 2 designations, whether published in July 2016 or December
2016, rely on all available information, including monitoring and modeling
data. See Initial Round 2 Designations, 81 Fed. Reg. at 45,041; Round 2
Supplement, 81 Fed. Reg. at 89, 871. They also all involve the same five-factor
test to determine the boundaries for each air quality region.
      Petitioners 1 challenged the Supplement in this court. They filed the
same challenge to the Supplement in the D.C. Circuit, which they have told
that court was done as a “protective matter.” Masias v. EPA, 17–1053 & 17–
1055 (D.C. Cir.). Their D.C. Circuit suit has been consolidated with a case the
Sierra Club filed challenging the Supplement as overly lax in enforcing the
new sulfur dioxide standard, and the challenges to the Supplement have been
consolidated with a number of challenges to the July 2016 Initial Round 2


      Petitioners are the State of Texas, the Texas Commission on Environmental Quality,
      1

Luminant Generation Company LLC, Big Brown Power Company LLC, Sandow Power
Company LLC, and Luminant Mining Company LLC.
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                                       No. 17-60088
Designations. See Masias v. EPA, Nos. 16–1314, 16–1318, 16–1384, 16–1424,
17–1173 & 17–1174 (D.C. Cir.). No party has moved to dismiss or transfer the
D.C. Circuit actions. Petitioners recently, however, asked the D.C. Circuit to
sever the petitions challenging the Supplement and hold them in abeyance
pending the outcome of the procedural motion we are considering.
                                             II.
       In that motion, the EPA argues we must dismiss or transfer the petition
under 42 U.S.C. § 7607(b)(1), which establishes venue rules for judicial review
of EPA actions under the Clean Air Act. 2 The venue provision separates
petitions for review into three categories:
                 (1) A petition for review of . . . any . . . nationally
           applicable regulations promulgated, or final action taken, by
           the Administrator under this chapter may be filed only in the
           United States Court of Appeals for the District of Columbia.
                 (2) A petition for review of . . . any . . . final action of the
           Administrator under this chapter . . . which is locally or
           regionally applicable may be filed only in the United States
           Court of Appeals for the appropriate circuit.
                 (3) Notwithstanding the preceding sentence a petition
           for review of any action referred to in such sentence may be
           filed only in the United States Court of Appeals for the
           District of Columbia if such action is based on a determination
           of nationwide scope or effect and if in taking such action the
           Administrator finds and publishes that such action is based
           on such a determination.
42 U.S.C. § 7607(b)(1) (emphasis added).
       In other words, venue depends on the nature of the agency’s action. The
D.C. Circuit is the exclusive venue for review of all “nationally applicable” final
EPA actions. Regional circuits are the proper venue for review of “locally or


       2  Because no party has cited 28 U.S.C. § 2112, or briefed its applicability, we do not
consider it in ruling on the motion to transfer. If applicable, 28 U.S.C. § 2112 would pertain
to whether this court or the D.C. Circuit should decide the threshold question of where venue
lies as a petition for review of the Supplement was first filed in that court.
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                                  No. 17-60088
regionally applicable” final EPA actions, unless such an action is based on a
determination of “nationwide scope or effect,” in which case venue lies in the
D.C. Circuit.      As a result, the venue provision “facilitat[es] the orderly
development of the basic law” under the Clean Air Act: it ensures the D.C.
Circuit reviews “matters on which national uniformity is desirable,” thus
avoiding “piecemeal review of national issues in the regional circuits, which
risks potentially inconsistent results.” Texas v. EPA, 2011 WL 710598, at *4
(5th Cir. 2011).
      The EPA’s Administrator stated that the Supplement was nationally
applicable and based on a determination of nationwide scope or effect. Round
2 Supplement, 81 Fed. Reg. at 89,875. But we must independently determine
venue without deference to the EPA. See Texas v. EPA, 829 F.3d 405, 417–18
(5th Cir. 2016). Our review boils down to two questions: (1) is the Supplement
nationally applicable; and (2) if not, is it based on a determination of
nationwide scope or effect?
                                       A.
      Applicability turns on “the legal impact of the action as a whole.” Id. at
419. To determine whether a final action is nationally applicable, “this Court
need look only to the face of the rulemaking, rather than to its practical
effects.” Dalton Trucking, Inc. v. EPA, 808 F.3d 875, 881 (D.C. Cir. 2015)
(citation omitted). The analysis focuses on the “location of the persons or
enterprises that the action regulates rather than on where the effects of the
action are felt.” Texas, 2011 WL 710598, at *3. Thus, when a final rule, by its
terms, regulates only people or entities in a single judicial district, the action
is not nationally applicable. See Dalton Trucking, 808 F.3d at 881 (finding
agency rules that, on their face, “regulate only nonroad engines and vehicles
that are owned or operated in California” were not nationally applicable). On
its face, the Supplement establishes designations for only areas in Texas and
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                                  No. 17-60088
its direct legal impacts are limited to Texas. We are not aware of any case
holding that a rule that on its face regulates entities and conduct in a single
state is nationally applicable.
      Perhaps in recognition of this, the EPA urges us to consider the
Supplement together with the July 2016 initial Round 2 designations. If we
were to consider the Round 2 designations and Supplement as comprising a
single “action,” transfer might well be appropriate.       Indeed, the Seventh
Circuit recently transferred a challenge to the July 2016 Round 2 designations
to the D.C. Circuit, finding the rule nationally applicable. S. Ill. Power Coop.
v. EPA, 863 F.3d 666 (7th Cir. 2017). The court relied on the rule’s “broad
geographic scope” and that it was “promulgated pursuant to a common,
nationwide analytical method.” Id. at 671; see also Texas, 2011 WL 710598, at
*3 (holding an action disapproving state implementation plans from thirteen
states and issuing a call requiring states to submit new state implementation
plans was nationally applicable).
      But the “action” we consider in determining venue is the final rule “that
the petitioner seeks to prevent or overturn.” Texas, 829 F.3d at 419. The EPA
made the unusual choice to publish four Texas designations in a separate final
rule, and that rule is the only one Petitioners challenge. The EPA cites no
caselaw supporting the view that a supplement published as a separate final
rule should be viewed as the same action as the rule it supplemented. It points
to one prior instance when it issued designations under a national ambient air
quality standard through two separate final rules—the rule and supplemental
rule—which were reviewed together in the D.C. Circuit. Miss. Comm’n on
Envtl. Quality v. EPA, 790 F.3d 138 (D.C. Cir. 2015). In that case, the D.C.
Circuit assessed challenges to both an initial action assigning designations for
numerous regions and a supplement designating twelve additional areas
located in the Seventh Circuit. Id. at 149. But no party moved to dismiss or
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                                   No. 17-60088
transfer the challenge to the supplement, so that case does not directly speak
to the issue we confront.
      By contrast, in Western Oil & Gas Association v. EPA, 633 F.2d 803, 807
(9th Cir. 1980), the Ninth Circuit considered a challenge to nonattainment
designations for regions in California. See ATK Launch Sys., Inc. v. EPA, 651
F.3d 1194, 1198 (10th Cir. 2011) (discussing Western Oil & Gas). “Because of
unique circumstances surrounding EPA’s very first designations process, the
final designations at issue there were promulgated in a rule that applied to a
single EPA region, consisting of Arizona, California, Nevada, Hawaii, and
Guam” and addressed “issues which are specific to th[ose] states.” Id.; Air
Quality Control Regions, Criteria, and Control Techniques, 44 Fed. Reg. 16,388
(March 19, 1979). Thus, the Ninth Circuit concluded that they “appl[ied]
locally, not nationally.” W. Oil & Gas, 633 F.2d at 807. In short, to the extent
cases address the issue, they focus on the final action being challenged. We
will not depart from that approach.
      Nor does it matter that, as the EPA points out, the substance of the
Petitioners’ challenge may be applicable to all of the Round 2 designations.
Courts applying the Clean Air Act’s venue provision focus on the nature of the
regulation, not the challenge. See Texas, 829 F.3d at 419; S. Ill. Power Coop.,
863 F.3d at 670 (“The scope of the petitioner’s challenge has no role to play in
determining venue.”).       We therefore conclude that the Supplement is not
“nationally applicable.”
                                       B.
      As the challenged rule is only “locally or regionally” applicable, the
“default” venue is in this regional circuit. Texas, 829 F.3d at 419. The D.C.
Circuit has venue only if the EPA establishes that the local rule is “based on a
determination of nationwide scope or effect.” Id. (citing 42 U.S.C. § 7607(b)(1)).
Determinations are “the justifications the agency gives for the action and . . .
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                                  No. 17-60088
can be found in the agency’s explanation of its action.” Id. “Because the statute
speaks of the determinations the action ‘is based on,’ the relevant
determinations are those that lie at the core of the agency action,” not
determinations that are “peripheral or extraneous.” Id. Determinations are
not of nationwide scope or effect if they are “intensely factual determinations”
such as those “related to the particularities of the emissions sources in Texas.”
Id. at 421. The context-specific question is not an easy one in this case.
      The parties contend that different aspects of the Supplement lie at its
core. The rule itself says “at the core of . . . this supplemental final action is
the EPA’s interpretation of the definitions of nonattainment, attainment and
unclassifiable under section 107(d)(1) of the CAA, and its application of that
interpretation to areas across the country.” Round 2 Supplement, 81 Fed. Reg.
at 89,875. Petitioners maintain the court should instead look at the final rule’s
statement that “[t]he designations are based on the weight of evidence for each
area, including available air quality monitoring data and air quality modeling,”
an inquiry Petitioners maintain is highly fact specific and particularized. Id.
at 89,870.    They thus contend that the Supplement depended on core
determinations that are different from those in the initial July 2016 Round 2
designations so that review of the former in this court would not conflict with
the D.C. Circuit’s review of the latter.
      The EPA responds that its decision to rely on “the weight of the evidence”
especially including “air quality modeling” is itself a determination of
nationwide scope or effect. But beyond these generalizations, the EPA has not
provided adequate detail on how the Supplement rests on determinations of
larger importance instead of particularized factual findings about air quality
in certain regions in Texas.
      At this time we are not convinced that the Supplement is based on
determinations of nationwide scope or effect. It is possible, however, that the
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                                 No. 17-60088
merits briefing will provide greater clarity on what determinations lie at the
Supplement’s core, by, for example, illuminating that the key determinations
in the rule are determinations that specific methodologies are appropriate or
preferable for assessing sulfur dioxide levels nationwide, as opposed to fact-
specific assessments of sulfur dioxide levels in the four Texas regions. In that
case, the merits panel should not be constrained from revisiting the issue.
                                     ***
      IT IS ORDERED that Respondents Scott Pruitt and the EPA’s opposed
motion to dismiss the petitions for review or transfer the petitions to the
United States Court of Appeals for the District of Columbia Circuit is DENIED
without prejudice to the merits panel reconsidering whether the “Supplement
to Round 2 for Four Areas in Texas” is based on a determination of nationwide
scope or effect.
      IT IS FURTHER ORDERED that Respondents Scott Pruitt and the
EPA’s unopposed motion to file a corrected reply to responses to the motion is
GRANTED.




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