Grand Canyon Trust v. Tucson Elec. Power Co., 03-15584.

Decision Date02 September 2004
Docket NumberNo. 03-15584.,03-15584.
Citation391 F.3d 979
PartiesGRAND CANYON TRUST, Plaintiff-Appellant, v. TUCSON ELECTRIC POWER COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Reed Zars, Laramie, WY, for the plaintiff-appellant.

Henry V. Nickel, Hunton & Williams, Washington, D.C., for the defendant-appellee.

Appeal from the United States District Court for the District of Arizona; Earl H. Carroll, District Judge, Presiding. D.C. No. CV-01-02189-EHC.

Before: T.G. NELSON, W. FLETCHER, and BERZON, Circuit Judges.

ORDER AND AMENDED OPINION

WILLIAM A. FLETCHER, Circuit Judge.

ORDER

1. On Slip Op. 12691, in between the carryover paragraph (which ends with "relatively lax pollution rules.") and the first full paragraph (which begins with "Tucson Electric was well aware ..."), the following paragraph is inserted:

Specifically, the 1978 Regulations provided:

Approval to construct shall become invalid if construction is not commenced within 18 months after the receipt of such approval, if construction is discontinued for a period of 18 months or more, or if construction is not completed within a reasonable time. The Administrator may extend the 18-month time period upon a satisfactory showing that an extension is justified.

40 C.F.R. § 52.21(s)(2) (1978) (emphasis added).1 Like the district court, we read this language to provide that a permit automatically becomes invalid in the enumerated circumstances unless the administrator exercises discretionary authority to extend the permit. On a natural reading of the language, administrative action is only required to forestall invalidation of a permit. No agency action is required to invalidate a permit if construction is not timely commenced. See Roosevelt Campobello Int'l Park Comm'n v. EPA, 684 F.2d 1034, 1037 (1st Cir.1982) (stating that a permit "automatically expires" under 40 C.F.R. § 52.21(s)(2) if construction does not commence with 18 months of issuance).

1. The 1975 Regulations, which were in effect at the time the permit was issued, are, in all respects relevant to this case, the same as the 1978 Regulations. They provided that "[a]pproval to construct or modify shall become invalid if construction or expansion is not commenced within 18 months after receipt of such approval or if construction is discontinued for a period of 18 months or more. The Administrator may extend such time period upon a satisfactory showing that an extension is justified." 40 C.F.R. § 52.21(e)(3) (1975) (emphasis added).

2. On Slip Op. 12700 at line 2, "the opportunity" is inserted between "allowed Tucson Electric ..." and "to recover some or all...." The full sentence now reads: "Rather, it appears that Grand Canyon's delay worked to the benefit of Tucson Electric because it allowed Tucson Electric the opportunity to recover some or all of its investment in Springerville Units 1 and 2 before this suit was filed."

With these changes, the panel votes to deny the petition for rehearing. Judges W. Fletcher and Berzon vote to deny the petition for rehearing en banc; and Judge T.G. Nelson so recommends.

The full court has been advised of the petition for rehearing en banc and no judge of the court has requested a vote on whether to rehear the matter en banc. Fed. R.App. P. 35.

The petition for rehearing and the petition for rehearing en banc, filed September 23, 2004, are DENIED. No subsequent petitions for panel or en banc rehearing will be entertained.

OPINION

In December 1977, Tucson Electric Power Company received a permit from the Environmental Protection Agency ("EPA") to build a coal-powered electric generating plant near the town of Springerville, Arizona (the "Springerville plant," or "Springerville"). Twenty-four years later, the Grand Canyon Trust ("Grand Canyon") brought this action against Tucson Electric to enforce the federal Clean Air Act. Grand Canyon alleges that Tucson Electric's 1977 construction permit for Springerville was invalid for several related reasons and, therefore, that Tucson Electric has been operating Springerville for many years in violation of the Clean Air Act. The district court granted partial summary judgment to Tucson Electric on the merits of one of Grand Canyon's claims, and subsequently granted summary judgment to Tucson Electric on the entire action based on the equitable defense of laches.

Grand Canyon appeals both orders. Tucson Electric has moved to strike Grand Canyon's appeal of the partial summary judgment order. We deny Tucson Electric's motion to strike, we vacate the order granting partial summary judgment, we reverse the judgment dismissing the entire action based on laches, and we remand for further proceedings.

I. Background

Founded in 1985, Grand Canyon is a non-profit environmental organization dedicated to conserving the natural resources of the "Colorado Plateau." The Colorado Plateau is not actually a plateau, but rather an enormous high basin centered roughly at the "four corners" where Colorado, Utah, Arizona, and New Mexico meet. The Plateau is filled with plateaus, canyons, buttes, mesas, natural arches and other geological features. It contains over twenty National Parks, National Monuments, National Landmarks, and National Recreation Areas. Grand Canyon, Bryce Canyon, and Zion National Parks are all within the Plateau.

Tucson Electric is an electric utility company that serves the Tucson, Arizona area. It is the sole owner and operator of the Springerville plant, located within the Colorado Plateau. Grand Canyon asserts that Springerville is an antiquated power plant that produces a large amount of pollution, thereby harming the air quality in the Colorado Plateau. Grand Canyon also asserts that Springerville's emissions would be significantly reduced if it were upgraded and operated using current technology.

In December 1977, as it was required to do by the Clean Air Act and EPA regulations then in effect, Tucson Electric applied to the EPA for a permit to construct the Springerville plant. The resulting permit (the "1977 Permit") authorized the construction of two 350-megawatt coal-fired steam electric generating units ("Units 1 and 2"). At about this time, Congress amended the Clean Air Act. Among other things, the amendments required that all new sources of air pollution use the most current, state-of-the-art pollution controls. This requirement is known as the "best available control technology" ("BACT") requirement. 40 U.S.C. § 52.21(b)(10) (1978) (now codified at 42 U.S.C. § 7475(a)(4)).

In June 1978, the EPA incorporated the BACT requirement into its regulations (the "1978 Regulations"), but "grandfathered" permits that had already been issued, such as the 1977 Permit for Springerville. The 1978 Regulations provided that already-existing permits would remain valid — and therefore not subject to the BACT requirement — if construction commenced by March 19, 1979. 40 C.F.R. § 52.21(i)(2)(ii) (1978). If, however, construction commenced after that date, the old permit would no longer be valid, and a new one — subject to the BACT requirement — would have to be obtained. Id. §§ 52.21(i)(2), (j)(2). The 1978 Regulations provided that discontinuing construction for a period of more than eighteen months, or failing to complete construction within a "reasonable" amount of time, had the same effect as failing to commence construction by March 19, 1979. Id. § 52.21(i)(2)(iii). The apparent purpose of the regulations was to preserve settled expectations with respect to already-issued permits, while at the same time to prevent anyone from stock-piling construction permits previously granted under the former, relatively lax pollution rules.

Specifically, the 1978 Regulations provided:

Approval to construct shall become invalid if construction is not commenced within 18 months after the receipt of such approval, if construction is discontinued for a period of 18 months or more, or if construction is not completed within a reasonable time. The Administrator may extend the 18-month time period upon a satisfactory showing that an extension is justified.

40 C.F.R. § 52.21(s)(2) (1978) (emphasis added).1 Like the district court, we read this language to provide that a permit automatically becomes invalid in the enumerated circumstances unless the administrator exercises discretionary authority to extend the permit. On a natural reading of the language, administrative action is only required to forestall invalidation of a permit. No agency action is required to invalidate a permit if construction is not timely commenced. See Roosevelt Campobello Int'l Park Comm'n v. EPA, 684 F.2d 1034, 1037 (1st Cir.1982) (stating that a permit "automatically expires" under 40 C.F.R. § 52.21(s)(2) if construction does not commence with 18 months of issuance).

Tucson Electric was well aware of the importance of "commencing construction" on Springerville by March 19, 1979. A February 1978 letter from Tucson Electric to the EPA asserted that it had "commenced construction" on Springerville on January 30, 1978, because it had entered into a contract for construction of the boilers for Springerville Units 1 and 2 on that date. In another letter to the EPA dated March 14, 1979 — just five days before the grandfathering deadline — Tucson Electric listed "the main activities" underway with respect to the construction of Springerville. It is undisputed that Tucson Electric completed construction of Springerville Units 1 and 2 in 1985 and 1990, respectively, and that the Units have operated ever since.

In spring 2001, Tucson Electric publicly announced a plan (the "Netting Plan") to construct two new coal-fired units at Springerville ("Units 3 and 4"). Under the Netting Plan, Tucson Electric sought to avoid the extensive review the EPA applies to new sources and major modifications. Under the plan, the EPA would not analyze...

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