Arizona Public Service Co. v. U.S. E.P.A.

• Decision Date: 14 April 2009
• Docket Number: No. 07-9546.,No. 07-9547.,07-9546.,07-9547.
• Citation: 562 F.3d 1116
• Parties: ARIZONA PUBLIC SERVICE COMPANY, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent. Sierra Club, Diné Care, Diné for the C-Aquifer, and San Juan Citizens Alliance, Intervenors. Sierra Club, Diné Care, Diné for the C-Aquifer, and San Juan Citizens Alliance, Petitioners, v. United States Environmental Protection Agency, Respondent. Arizona Public Service Company, Intevenor.
• Court: U.S. Court of Appeals — Tenth Circuit

562 F.3d 1116

ARIZONA PUBLIC SERVICE COMPANY, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.

Sierra Club, Diné Care, Diné for the C-Aquifer, and San Juan Citizens Alliance, Intervenors.

Sierra Club, Diné Care, Diné for the C-Aquifer, and San Juan Citizens Alliance, Petitioners, v. United States Environmental Protection Agency, Respondent.

Arizona Public Service Company, Intevenor.

No. 07-9546.

No. 07-9547.

United States Court of Appeals, Tenth Circuit.

April 14, 2009.

Thomas Sayre Llewellyn of Washington, D.C., for Petitioner/Intevenor Arizona Public Service Company.

David A. Carson (Ronald J. Tenpas, Assistant Attorney General; John C. Cruden, Deputy Assistant Attorney General, with him on the consolidated brief), United States Department of Justice, Environment and Natural Resources Division, Denver, CO, for Respondent Environmental Protection Agency.

Matt Kenna, Western Environmental Law Center, Durango, CO, for Intervenors/Petitioners Sierra Club, Diné Care, Diné for the C-Aquifer, and San Juan Citizens Alliance.

Before McCONNELL, SEYMOUR and HOLMES, Circuit Judges.

SEYMOUR, Circuit Judge.

Arizona Public Service Company ("APS"), operator and majority owner of the Four Corners Power Plant ("Plant"), and Sierra Club, Diné CARE, Diné for the C-Aquifer, and San Juan Citizens Alliance (collectively "Environmentalists") challenge a regulation promulgated by the U.S. Environmental Protection Agency ("EPA"). The regulation at issue is known as a source-specific, federal implementation plan ("federal plan") and was enacted pursuant to sections 301(a) and (d)(4) of the Clean Air Act, 42 U.S.C. §§ 7601(a) and (d)(4). The federal plan limits particular air emissions from the Plant. We have jurisdiction pursuant to section 307(b)(1) of the Act, 42 U.S.C. § 7607(b)(1). Because all parties agree that the federal plan provision pertaining to fugitive dust should be remanded, see infra Part II, we do not address this emissions limit in our discussion of the facts. We grant the EPA's motion for voluntary remand and grant in part and deny in part the petitions for review.

I.

The purpose of the Clean Air Act is to control and improve the nation's air quality through a combination of state and federal regulation. The Clean Air Act charges the EPA with implementing and overseeing national ambient air quality standards ("national air standards") for air pollutants that "cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. § 7408(a)(1)(A); see id. § 7409.

The Plant, a coal-fired power facility located on the Navajo reservation in northwest New Mexico, emits regulated or "criteria" pollutants. These criteria pollutants include sulfur dioxide ("SO₂"), particulate matter ("PM"), and nitrogen oxides ("NO_x"). To control emissions of these pollutants, the Plant's five steam generating units employ air pollution control equipment. The Plant also uses federally-mandated continuous opacity monitoring systems ("COMS"), which monitor the opacity levels of emissions. Opacity, i.e., the opaqueness or cloudiness of emissions, is not a criteria pollutant but, according to the EPA, can indicate whether pollution control equipment is properly functioning and whether an emissions limit is being maintained. Data shows that air quality in the area of the Plant is better than the national air standards.

Under section 110 of the Act, states must enact state implementation plans ("state plan") "as may be necessary or appropriate to meet the applicable" national air standards, subject to EPA approval. 42 U.S.C. § 7410(a)(2)(A). State plans approved by the EPA are federally enforceable. If a state fails to submit an adequate plan within the applicable time frame, the EPA must promulgate a federal plan for the state within two years of the failure. The EPA had previously approved New Mexico's state plan, which limits emissions of criteria pollutants from coal-burning power plants. The EPA determined the New Mexico plan does not apply to the Plant because of its location on Navajo land. The Plant nonetheless has complied, continuously and voluntarily, with the New Mexico plan. The New Mexico plan does not limit opacity and exempts excess emissions during startup, shutdown, and malfunction.

Section 301(d) of the Act addresses the role of Native-American tribes and authorizes the EPA to "specify[] those provisions of [the Act] for which it is appropriate to treat Indian tribes as States." 42 U.S.C. § 7601(d)(2). Where the EPA "determines that the treatment of Indian tribes as ... States is inappropriate or administratively infeasible, the [EPA] may provide, by regulation, other means by which the [EPA] will directly administer such provisions so as to achieve the appropriate purpose." Id. § 7604(d)(4). In 1998, the EPA adopted what is known as the tribal authority rule ("TAR") to implement its section 301 authority under the Act. The TAR treats tribes as states for most provisions of the Clean Air Act and implementing regulations. The TAR does not treat tribes as states, however, for the mandatory plan submission deadlines, funding restrictions, and related federal oversight mechanisms triggered by a state's failure to submit an adequate plan. Tribes may choose, but are not required, to adopt tribal implementation plans ("tribal plan") for their reservations. Because tribes are not required to adopt tribal plans, the TAR authorizes the EPA to promulgate federal plans to fill any regulatory gaps. The TAR provides that the EPA, pursuant to its explicit "discretionary authority" under sections 301(a) and (d)(4) of the Act,

[s]hall promulgate without unreasonable delay such Federal implementation plan provisions as are necessary or appropriate to protect air quality, consistent with the provisions of sections 304(a)[¹] and 301(d)(4), if a tribe does not submit a tribal implementation plan meeting the completeness criteria of 40 CFR part 51, Appendix V, or does not receive EPA approval of a submitted tribal implementation plan.

40 C.F.R. § 49.11(a).

Here, the Navajo Nation did not submit a tribal plan, and the Plant's emissions remained officially unregulated, although the Plant voluntarily complied with the New Mexico plan. To remedy the regulatory gap, the EPA proposed a source-specific federal plan for the Plant. The EPA initially consulted with the Navajo Nation, APS, and the State of New Mexico. The EPA planned to adopt a federal plan that essentially would federalize the requirements of the New Mexico plan historically followed by the Plant and, in some instances, modify the state plan to ensure comprehensive emissions control and federal consistency. The EPA published the proposed federal plan in 1999 and solicited public comment.

In 2006, the EPA published a revised proposed plan and again solicited public comment. The EPA believed regional air quality would "be positively impacted" by the proposed action, as the proposal was "more stringent than, or at least as stringent as, the emissions limitations with which [the Plant] ha[d] historically complied." Source-Specific Federal Implementation Plan for Four Corners Plant; Navajo Nation, 71 Fed.Reg. 53,631, at 53,631 (Sept. 12, 2006) (to be codified at 40 C.F.R. pt. 49). The proposal limited the Plant's emissions of particular criteria pollutants and, relevant to the instant matter, included a 20% opacity limit for two of the Plant's steam generating units, Units 4 and 5. The opacity limit allowed "for one six-minute period per hour of not more than 27 percent opacity, excluding water vapor." Id. at 53,633. The opacity and other emissions limits generally did not apply during startup, shutdown, or saturated stack conditions, but did apply during periods of malfunction. The proposal gave APS a limited affirmative defense to claims for penalties brought for excess emissions caused by malfunctions.

APS filed comments on the proposed federal plan, two of which are relevant. First, APS commented that the Plant's emissions during malfunctions should be exempt rather than subject to an affirmative defense. APS argued the law does not require limiting emissions during malfunctions, particularly when no specific justification for the limits existed. APS claimed the definition of malfunction was unfair and irrational, and the affirmative defense improperly shifted the burden of proof. Second, APS objected to the 20% opacity limit as written. It claimed the limit was not achievable, even during periods of best operating practices and proper equipment operation. Based on APS's statistical analysis of data from its monitoring systems, APS contended the opacity limit had to include a .2% allowance for "periodic exceedances." J.A. at 292. The Plant, APS asserted, could meet the proposed limit only 99.8% of the time. APS noted the EPA had approved an exceedance of up to .8% in a revision to a North Carolina state plan. APS added, "[t]here is no air quality analysis establishing that [] a [20% opacity] limit is necessary to attainment and maintenance of any air quality standard, nor is there any other legal basis for such a requirement." Id.

The Environmentalists also commented on the proposal. They contended, inter alia, that the proposed federal plan must satisfy the state plan completeness criteria. The proposal was "unacceptable" because the EPA did not justify its chosen emissions limits with "state-of-the-art dispersion modeling to guarantee, at a minimum, the maintenance and attainment of national and state ambient air quality standards and the prevention of significant deterioration increments." Id. at 201-02. According to the Environmentalists, the EPA could not rely on the New Mexico plan alone in formulating a new federal plan for the Plant. More stringent emissions limits were required.

The EPA promulgated the finalized federal plan in May 2007. The plan limits the Plant's emissions of...