FILED
NOT FOR PUBLICATION MAR 31 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PHOENIX CEMENT COMPANY, an No. 13-73383
enterprise division of the Salt River Pima-
Maricopa Indian Community,
Petitioner, MEMORANDUM*
v.
U.S. ENVIRONMENTAL PROTECTION
AGENCY,
Respondent.
STATE OF ARIZONA, EX REL. HENRY No. 13-73393
R. DARWIN, DIRECTOR, ARIZONA
DEPARTMENT OF ENVIRONMENTAL
QUALITY,
Petitioner,
v.
U.S. ENVIRONMENTAL PROTECTION
AGENCY; GINA MCCARTHY,
Administrator, United States
Environmental Protection Agency,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Respondents.
ARIZONA MINING ASSOCIATION, No. 13-73401
Petitioner,
v.
U.S. ENVIRONMENTAL PROTECTION
AGENCY,
Respondent.
On Petition for Review of a Final Rule of the
Environmental Protection Agency
Argued and Submitted March 9, 2015
San Francisco, California
Before: BERZON, BYBEE, and OWENS, Circuit Judges.
The facts of this case are known to the parties, and we do not repeat them
here. The State of Arizona, the Arizona Mining Association, and Phoenix Cement
Company petition for review of EPA’s final “Phase 2” rule approving Arizona’s
regional haze State Implementation Plan (“SIP”) in part and disapproving it in part.
We deny the petitions in all respects.
EPA’s conclusion that Sundt Unit 4 is Best Available Retrofit Technology
(“BART”)-eligible was not arbitrary and capricious. Section 169A provides that
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“each major stationary source which is in existence on August 7, 1977, but which
has not been in operation for more than fifteen years” is subject to BART controls.
42 U.S.C. § 7491(b)(2)(A). The Regional Haze Rule defines a “BART-eligible
source” as “an existing stationary facility.” 40 C.F.R. § 51.301. “Existing
stationary facility” is, in turn, defined to include “any of [certain enumerated
categories of] stationary sources, including any reconstructed source, which was
not in operation prior to August 7, 1962, and was in existence on August 7, 1977.”
Id. Sundt Unit 4 was in existence in 1977 but not in 1962. The texts of both the
statute and the governing regulation are thus fully consistent with rendering Sundt
Unit 4 BART eligible.
One part of EPA’s BART Guidelines can be read to exempt sources
reconstructed after 1977 from BART. See 40 C.F.R. pt. 51, app. Y, Section II.A.2.
But Sundt Unit 4 is not covered by the Guidelines. And the Guidelines’ preamble
states that “sources reconstructed after 1977, which reconstruction had gone
through [New Source Review ("NSR")/Prevention of Significant Deterioration
("PSD")] permitting, are not BART-eligible,” indicating that EPA interprets
Section 169A and the Regional Haze Rule to exempt only those post-1977
reconstructed sources subject to PSD permitting. See Regional Haze Regulations
3
and Guidelines for Best Available Retrofit Technology (BART) Determinations,
70 Fed. Reg. 39,104, 39,111 n.9 (July 6, 2005).
Given the statutory and regulatory language and the limited usefulness of the
Guidelines as applied here, we defer to EPA’s reasonable construction of the
statute and its own regulations as exempting only those sources reconstructed after
1977 and subject to PSD permitting. See Auer v. Robbins, 519 U.S. 452, 461
(1997); Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 842–44
(1984). Under this interpretation of Section 169A and the Regional Haze Rule,
EPA permissibly determined that Sundt Unit 4, which did not undergo PSD
permitting when it was reconstructed, remains BART-eligible.
EPA’s determination that the Nelson Lime Plant is subject to BART was
similarly not arbitrary and capricious. If an agency gives a “satisfactory
explanation for its action including a rational connection between the facts found
and the choice made,” it has not acted arbitrarily or capriciously, and we will not
“substitute [our] judgment for that of the agency.” Nw. Envtl. Def. Ctr. v.
Bonneville Power Admin., 477 F.3d 668, 687 (9th Cir. 2007) (quoting Motor
Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983) (internal quotation marks omitted)). Here, EPA’s final rule adequately
addressed why the State’s use of a three-year averaging approach to calculating the
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impact of the plant’s emissions on visibility at Grand Canyon National Park was
inappropriate. EPA explained that the “subject-to-BART” inquiry is a screening
inquiry that should logically err on the side of being overinclusive and that using a
three-year average can obscure the fact that data from individual years indicate that
a source’s impact on visibility is problematic. This was a reasonable explanation
for EPA’s action.
EPA’s conclusion that a BART determination was required for NOX at both
the Miami and Hayden smelters was also not arbitrary and capricious. EPA
interprets the Regional Haze Rule to require a BART determination for any
pollutant at a source that exceeds the de minimis threshold, once that source has
been determined subject to BART. That interpretation is entitled to deference,
because it is not “plainly erroneous or inconsistent with the regulation,” Auer, 519
U.S. at 461 (citation and internal quotation marks omitted). The Regional Haze
Rule does not expressly provide for any exemption of specific pollutants from
BART determinations except through the 40-tons-per-year de minimis exception.
See 40 C.F.R. § 51.308(e)(1)(ii). EPA’s conclusion that the State had not shown
that NOX emissions from the two smelters were less than the de minimis threshold
was also not arbitrary and capricious, as EPA adequately explained that it could not
accept the petitioners’ assertions about the smelters’ potential to emit NOX in the
5
absence of evidence of physical or operational limitations that would keep the
smelters’ emissions under the de minimis threshold.
EPA’s conclusion that Arizona’s BART determination for SO2 at the two
copper smelters was inadequate was likewise not arbitrary and capricious. EPA
gave a reasoned explanation for this conclusion by pointing out that the State had
failed to consider whether certain new control technologies for SO2 could be
adapted for use at the smelters.
EPA’s disapproval of Arizona’s reasonable progress goals was not arbitrary
and capricious. As EPA noted in its final rule, after the State identified the
categories of sources that contributed most to NOX and SO2 emissions in the state,
the State deliberately chose not to conduct the four-factor analysis required by 42
U.S.C. § 7491(g)(1) and 40 C.F.R. § 51.308(d)(1)(i)(A) with respect to those
sources. It was not arbitrary and capricious for EPA to conclude that this
reasonable progress analysis was inadequate.
Finally, it was not arbitrary and capricious for EPA to determine that the
State’s four-factor reasonable progress analysis for the Phoenix Cement Plant was
unacceptable. EPA’s explanation for its disapproval of this analysis—i.e., that the
analysis incorporated flawed data that caused the State to overestimate the cost of
6
installing and operating additional pollution controls at the Phoenix plant—was
adequate to support its action.
The petitions for review are DENIED.
7
FILED
13-73383, 13-73393, 13-73401 MAR 31 2016
MOLLY C. DWYER, CLERK
Phoenix Cement Company v. U.S. EPA U.S. COURT OF APPEALS
BYBEE, Circuit Judge, concurring in part and dissenting in part:
I agree with the panel in every respect save one: I would hold that EPA’s
determination that Sundt Unit 4 is BART-eligible was arbitrary and capricious. On
that issue, I must dissent.
Section 169A of the Clean Air Act and the Regional Haze Rule both state
that only sources “in existence on August 7, 1977” are BART-eligible. 42 U.S.C.
§ 7491(b)(2)(A); 40 C.F.R. § 51.301. In the BART Guidelines, EPA explained
that the “‘in existence’ test[] appl[ies] to reconstructed sources,” which “are treated
as new sources as of the time of the reconstruction.” 40 C.F.R. pt. 51, app. Y, §
II.A.2. Thus, a source constructed before 1962 but reconstructed between 1962
and 1977 would be BART-eligible. “Similarly,” EPA explained, “any emissions
unit for which a reconstruction ‘commenced’ after August 7, 1977, is not
BART–eligible.” Id. This is a cogent interpretation of Section 169A and the
Regional Haze Rule, and on this interpretation, Sundt Unit 4—which was
reconstructed after August 7, 1977—is not BART-eligible.
EPA now contends, however, that a source reconstructed after August 7,
1977, is only exempted from BART if it went through Prevention of Significant
1
Deterioration (PSD) permitting, which the Clean Air Act requires for sources
constructed or modified after that date. See 42 U.S.C. § 7475(a). EPA says that
this requirement is necessary in order to give effect to Congress’s intent, in
enacting the Clean Air Act, that all sources be subject either to BART (if
constructed or reconstructed before August 7, 1977) or to PSD (if constructed or
reconstructed after that date).
The problem with EPA’s argument is that Sundt Unit 4 was exempted from
PSD permitting by a separate act of Congress—the Power Plant and Industrial Fuel
Use Act of 1978—that operated independently from the Clean Air Act. The Fuel
Use Act gave the Department of Energy the authority to require utilities to convert
oil- or natural gas-powered generating stations to burn coal as a means of reducing
America’s dependence on imported oil. Arizona Blue Br. 31. The Fuel Use Act
exempted units that were ordered to be converted from PSD permitting in order to
facilitate their speedy conversion. Id. at 32 (citing 42 U.S.C. § 7411(a)(8) and 40
C.F.R. § 60.14(e)(4)). Sundt Unit 4 was reconstructed in 1987 pursuant to the Fuel
Use Act—in fact, it appears to have been the only power plant in the country that
was ordered to be reconstructed under the FUA.
We thus have two statutory schemes in play and must give effect to both.
The Clean Air Act, as interpreted through EPA’s Guidelines, excluded sources
2
constructed or reconstructed after August 7, 1977, from BART, on the expectation
that they would be subject to PSD instead. A separate statute, the Fuel Use Act,
subsequently exempted Sundt Unit 4 from PSD. The unit’s exemption under the
Fuel Use Act is independent of its status under the Clean Air Act: as amicus
Tucson Electric Power Company puts it, “Sundt Unit 4’s exemption from PSD [in
the Fuel Use Act] does not change the fact that, for purposes of the [Clean Air Act]
and its visibility program, Sundt Unit 4 came into existence in 1987.” EPA thus
cannot point to Sundt Unit 4’s exemption from PSD as a reason why Sundt Unit 4
should be considered BART-eligible.
The majority upholds EPA’s determination by pointing out that Section
169A and the Regional Haze Rule are ambiguous on the question whether a source
in Sundt Unit 4’s unique situation is BART-eligible and then adverting to Auer and
Chevron deference. But I cannot go along with that reasoning. EPA’s litigation
position concerning Sundt Unit 4 is not a reasonable interpretation of the Clean Air
Act and the Regional Haze Rule; EPA is simply seeking a sui generis exception to
the general BART-eligibility framework found in the Act and the Rule in order to
prevent Sundt Unit 4 from, as EPA’s brief puts it, “escap[ing] both PSD review
and a BART analysis.” We need not and should not defer to such ad-hoc
reasoning.
3
I respectfully dissent.
4