ELR Citation: ELR 20678
No(s). 91-70731 (9th Cir. Mar 25, 1993)

The court holds that although an Arizona water conservation district and irrigation districts have standing to challenge the Environmental Protection Agency's (EPA's or the Agency's) final rule requiring sulfur dioxide (SO₂) emission reductions of 90 percent at the Navajo Generating Station (NGS) near the Grand Canyon, EPA properly promulgated the rule under the Clean Air Act (CAA's) Phase I regulations directed at addressing "reasonably attributable" visibility impairment and was not arbitrary and capricious. In 1980, EPA promulgated visibility regulations under CAA §169A that adopted a phased approach to visibility protection. Phase I was directed at controlling visibility impairment traceable to a single existing stationary facility or small group of existing stationary facilities, and Phase II, which was deferred due to the complexity and scientific and technical limitations in identifying broad-scale visibility impairment, would address other types of impairment, such as "regional haze." After Arizona and 34 other states containing class I federal areas, including the Grand Canyon, failed to submit revised visibility state implementation plans (SIPs) by the regulatory deadline, environmental organizations sued EPA challenging the Agency's failure to promulgate visibility federal implementation plans (FIPs). Subsequent studies revealed that the NGS was a probable source of visual impairment at the Grand Canyon, and after Arizona further failed to remedy its visibility SIP deficiencies, EPA promulgated a visibility FIP for Arizona requiring a 90 percent reduction in SO₂ emissions at the NGS. EPA projected that the reduction would result in an estimated 7 percent improvement in winter-average visibility in the Grand Canyon. The water and irrigation districts, which obtain electricity to pump their water primarily from the NGS, petitioned the court to review EPA's FIP claiming that it regulates "regional haze" when the Agency has yet to promulgate Phase II implementing regulations addressing regional haze, and that the final rule constitutes arbitrary and capricious agency action.

The court first holds that the water and irrigation districts have standing to challenge EPA's final rule. First, the districts are suffering an economic injury sufficiently concrete and imminent to support its standing to sue. Although the districts are not owners of the NGS, their contractual obligation to repay the U.S. Bureau of Reclamation (BOR) for much of that agency's 24.3 percent share of the costs of installing and maintaining emission controls at the NGS, as required by EPA's final rule. The districts' alleged economic injury flows directly from EPA's final rule. While the contractual obligations may be the basis for economic liability for the increased costs imposed by the final rule, the final rule still may be the direct cause of that liability. Second, the districts' economic injury is likely to be redressed by a favorable decision, because elimination of the final rule would necessarily eliminate the increased financial burden the rule causes. Third, the districts' economic injury falls within the "zone of interests" protected by the visibility provisions of the CAA, because the entities required to pay "costs of compliance" with the CAA cannot reasonably be described as marginally related to or inconsistent with the purposes of the CAA. The court next holds that the appropriate standard for reviewing EPA's actions under CAA §307(b) is the deferential two-part standard enunciated by the U.S. Supreme Court in Chevron U.S.A., Inc. v. National Resources Defense Council, Inc., 14 ELR 20507.

Turning to the merits, the court holds that the final rule was legitimately promulgated under Phase I regulations directed at "reasonably attributable" visibility impairment. Petitioner's water and irrigation districts' reliance on Vermont v. Thomas, 18 ELR 21207, in which the court reaffirmed that EPA was without authority to regulate "regional haze," is misplaced, because that case involved a direct and explicit attempt to regulate "regional haze." In this case, EPA has acknowledged that the NGS is not the only source of visibility impairment at the Grand Canyon and that regional haze also adversely affects visibility there. The court, however, holds that these facts hardly mean that EPA is without statutory authority to remedy the impairment reasonably attributable to the NGS.

The court holds that the technical, scientific record adequately supports EPA's conclusion that visibility impairment in the Grand Canyon is reasonably attributable to the NGS, and the court defers to the Agency's interpretation of its own regulations and statutory mandate. Although studies on the expected benefits to visibility in the Grand Canyon from the emissions reduction vary, the final rule makes reasonable progress toward the national goal of remedying visibility impairment at the Grand Canyon. Moreover, EPA's failure to implement best available retrofit technology (BART) in determining which emission control limits to impose does not make EPA's action arbitrary and capricious. Congress' use of the term "including" prior to listing BART in the CAA as a method of attaining "reasonable progress" in the CAA supports EPA's position that it has the discretion to adopt implementation plan provisions other than those provided by BART analysis.

Counsel for Petitioners
Marvin S. Cohen
Sacks, Tierney & Kasen
Citibank Tower
3300 N. Central Ave., 20th Fl., Phoenix AZ 85012
(602) 279-4900

Counsel for Respondent
Scott A. Schachter
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Respondents-Intervenors
Patrick M. Raher
Hogan & Hartson
Columbia Sq., 555 13th St. NW, Washington DC 20004
(202) 637-5600

Counsel for Amicus Curiae
Beryl I. Dulsky, Ass't Attorney General
Attorney General's Office
1275 W. Washington St., Phoenix AZ 85007
(602) 542-5025