Arizona Public Service Co. v. United States Environmental Protection Agency

FILED
United States Court of Appeals
Tenth Circuit

April 14, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

ARIZONA PUBLIC SERVICE
COMPANY,

Petitioner,

v. No. 07-9546

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. No. 07-9547

UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,

Respondent.
 _____________

ARIZONA PUBLIC SERVICE
COMPANY,

Intevenor.

On Petitions For Review of a Final Action of the
United States Environmental Protection Agency

07-9546:

Thomas Sayre Llewellyn of Washington, D.C., for Petitioner 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, Colorado, for Respondent Environmental Protection Agency.

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

07-9547:

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

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, Colorado, for Respondent Environmental Protection Agency.

Thomas Sayre Llewellyn of Washington, D.C., for Intervenor Arizona Public
Service Company.

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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

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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 (“SO ² ”), particulate matter (“PM”), and nitrogen

oxides (“NO × ”). 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

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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

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“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

1
Section 49.11(a) mistakenly refers to section 304(a), instead of 301(a).

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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

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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 specific criteria pollutants, as well as opacity. The

EPA’s basis for the plan is: (i) to make federally enforceable the emissions limits

the Plant has historically followed, (ii) to ensure the Plant continues to reduce its

emissions of criteria pollutants, (iii) to guarantee continued maintenance of air

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quality standards and protection of visibility in the area, and (iv) to maintain

consistent standards between the Navajo Nation and its neighboring states.

Opacity for Units 4 and 5 is limited to 20%, averaged over any six-minute period,

excluding uncombined water droplets and one six-minute period per hour of not

more than 27% opacity. However, if pollution control equipment is operating

normally and not fully closed and a high opacity reading occurs, the EPA

presumes saturated stack conditions caused the occurrence and will not consider it

a violation. Although the EPA did not explicitly address APS’s .2% requested

allowance, it did explain that “[o]pacity limits are generally applied to ensure a

source is meeting its [criteria pollutant] emissions limit.” Source-Specific

Federal Implementation Plan for Four Corners Power Plant; Navajo Nation, 72

Fed. Reg. 25,698, at 25,701 (May 7, 2007) (to be codified at 40 C.F.R. pt. 49).

The EPA added, “The opacity limit for this facility is set to assure proper

operation of [pollution control equipment].” Id. As in the 2006 proposal, the

emissions limits generally do not apply during startup, shut down, or saturated

stack conditions, but do apply during periods of malfunction. 2 The EPA contends

its treatment of malfunction events is consistent with its “longstanding position,

2
“Malfunction means any sudden and unavoidable failure of air pollution
control equipment or process equipment or of a process to operate in a normal or
usual manner. Failures that are caused entirely or in part by poor maintenance,
careless operation, or any other preventable upset condition or preventable
equipment breakdown shall not be considered malfunctions.” Id. at 25,705.

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as reflected in numerous policy documents and rulemakings.” Id. at 25,702. The

plan also includes the affirmative defense to claims for penalties brought for

excess emissions caused by malfunctions.

In these consolidated appeals, APS contends that the federal plan is overly

restrictive, and the Environmentalists contend it is not sufficiently stringent. APS

argues the plan is arbitrary and capricious because, among other things, the EPA

did not explain why it chose the particular opacity limit that it did. According to

APS, the Plant cannot meet the 20% opacity limit with its existing pollution

control equipment, and the EPA has identified no exigency or logical reason to

justify its rejection of APS’s proposed modifications to the limit. The

Environmentalists argue, by contrast, that the plan is arbitrary and capricious

because the EPA did not conduct modeling and air quality analysis as required by

the Clean Air Act. The Environmentalists want the EPA to enact a new plan on

remand that places greater restrictions on the pollution emitted by the Plant. 3

II.

Before turning to the parties’ arguments, we first address the EPA’s motion

for voluntary remand of the fugitive dust limit, 40 C.F.R. § 49.23(d)(3). The EPA

and APS ask us to remand and vacate this provision, which does not affect the

3
APS questions our jurisdiction over the Environmentalists’ challenge
because of the wording of the relief they requested. We reject this argument: the
Environmentalists’ challenge necessarily includes a remand request for
reconsideration of the rulemaking, which is within our jurisdiction.

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validity of the remainder of the federal plan, because the EPA did not adequately

explain its rationale for imposing the limit. The Environmentalists appear to

support remand and do not appear to oppose vacation of the provision. They ask

only that we order the EPA to reconsider the fugitive dust limit “within a time

certain” following remand. Environmentalists’ Response to EPA’s Motion for

Voluntary Remand at 3.

We may partially set aside a regulation if the invalid portion is severable.

A regulation is severable if the severed parts “operate entirely independently of

one another,” and the circumstances indicate the agency would have adopted the

regulation even without the faulty provision. Davis County Solid Waste Mgmt. v.

EPA, 108 F.3d 1454, 1459 (D.C. Cir. 1997). Here, the fugitive dust limit and the

remaining provisions of the plan operate independently of one another; the

functionality of the plan does not depend on enforcement of the fugitive dust

limit. The plan went into effect on November 13, 2008, but enforcement of the

fugitive dust limit has been stayed pending our decision. That the EPA requested

voluntary remand of the limit, as well as implemented the stay, suggests the

agency would have promulgated the plan even without the limit. We conclude the

fugitive dust limit is severable and should be remanded and vacated, as no party

opposes the narrow scope of this remedy.

We decline to set a time limit on the EPA’s course of action on remand.

The Environmentalists point to no authority permitting entry of such an order, and

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we cannot ignore the general principle that “[t]he function of the reviewing court

ends when an error of law is laid bare.” Fed. Power Comm’n v. Idaho Power Co.,

344 U.S. 17, 20 (1952). To the extent concern exists about the EPA’s diligence

on remand, mandamus may afford a remedy for undue delay. See Natural Res.

Def. Council v. EPA, 489 F.3d 1364, 1375 (D.C. Cir. 2007); see 5 U.S.C. § 706(1)

(“The reviewing court shall . . . compel agency action unlawfully withheld or

unreasonably delayed . . . .”).

III.

Our review of the federal plan is governed by the Administrative Procedure

Act, 5 U.S.C. § 706. 4 We will not set aside agency action unless it is

“procedurally defective, arbitrary or capricious in substance, or manifestly

contrary to the statute.” United States v. Mead Corp., 533 U.S. 218, 227 (2001);

see Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1574 (10th Cir. 1994).

4
APS claims we should review the federal plan under section 307(d)(9) of
the Clean Air Act, 42 U.S.C. § 7607(d)(9). APS is incorrect. Section 307(d)
applies only to certain EPA rulemakings, and does not include the EPA’s
promulgation of the plan here. See 42 U.S.C. § 7607(d) (listing the
promulgations to which section 307(d) applies); see also Alaska Dep’t of Envtl.
Conservation v. EPA, 540 U.S. 461, 497 n.18 (2004); Am. Forest & Paper Ass’n
Inc. v. EPA, 294 F.3d 113, 116 n.3 (D.C. Cir. 2002). This is not a case,
moreover, where the EPA has determined section 307(d) applies. Cf. North
Carolina v. EPA, 531 F.3d 896, 906 (D.C. Cir. 2008) (reviewing the EPA’s action
under the Clean Air Act instead of the Administrative Procedure Act, because the
EPA specified section 307(d) applied to “all components” of its rulemaking). In
any event, APS concedes the two standards are “essentially the same.” Aplt. Br.
at 23.

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Under the arbitrary or capricious standard, we must determine whether the agency

considered the relevant data and rationally explained its decision. Olenhouse, 42

F.3d at 1574. Agency action is arbitrary or capricious “if the agency has relied on

factors which Congress has not intended it to consider, entirely failed to consider

an important aspect of the problem, offered an explanation for its decision that

runs counter to the evidence before the agency, or is so implausible that it could

not be ascribed to a difference in view or the product of agency expertise.” Motor

Vehicle Mfrs. Ass’n v. State Farm Mut., 463 U.S. 29, 43 (1983). While our

inquiry into the basis of the agency’s action is “searching and careful, our review

is ultimately a narrow one.” Maier v. EPA, 114 F.3d 1032, 1039 (10th Cir. 1997).

We will not set aside agency action on account of a less-than-ideal explanation as

long as the agency’s decisionmaking process may reasonably be discerned.

Alaska Dep’t of Envtl. Conservation, 540 U.S. at 497.

We review the EPA’s interpretation of the Clean Air Act, a statute it

administers, under the standard set forth in Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984). “If the statute is clear, we

apply its plain meaning” and the inquiry ends. Qwest Corp. v. FCC, 258 F.3d

1191, 1199 (10th Cir. 2001) (citing Chevron, 467 U.S. at 843). If the statute is

silent or ambiguous about the question at issue, as here, we defer to the

authorized agency and “apply the agency’s construction so long as it is a

reasonable interpretation of the statute.” Id. (citing Chevron, 467 U.S. at 843-44).

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An agency is entitled to substantial deference when it acts pursuant to an

interpretation of its own regulation. Culbertson v. U.S. Dep’t of Agric., 69 F.3d

465, 467 (10th Cir. 1995); see Gonzales v. Oregon, 546 U.S. 243, 255 (2006)

(“An administrative rule may receive substantial deference if it interprets the

issuing agency’s own ambiguous regulation.”). The agency’s interpretation is

“controlling unless plainly erroneous or inconsistent with the regulation.”

Gonzales, 546 U.S. at 256 (quoting Auer v. Robbins, 519 U.S. 452, 461 (1997));

see Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (applying

“plainly erroneous or inconsistent with the regulation” standard); Bowles v.

Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945) (same); Excel Corp. v. U.S.

Dep’t of Agric., 397 F.3d 1285, 1295 (10th Cir. 2005) (same). 5

Congress delegated to the EPA the authority to promulgate regulations as

5
We note some of our decisions apply a slightly different standard, asking
whether the agency’s interpretation is “unreasonable, plainly erroneous, or
inconsistent with the regulation’s plain meaning.” See, e.g., Via Christi Reg.
Med. Ctr., Inc. v. Leavitt, 509 F.3d 1259, 1272-73 (10th Cir. 2007) (emphasis
added); Utah Envtl. Congress v. Richmond, 483 F.3d 1127, 1134 (10th Cir. 2007);
Utah Envtl. Congress v. Bosworth, 443 F.3d 732, 739 (10th Cir. 2006). It appears
this standard is a combination of the plainly erroneous and reasonableness
inquiries. See Bar MK Ranches v. Yuetter, 994 F.2d 735, 738 (10th Cir. 1993)
(citing Downtown Med. Ctr. v. Bowen, 944 F.2d 756, 768 (10th Cir. 1991) (“Such
an administrative interpretation is ordinarily entitled to considerable deference
unless it is plainly inconsistent with the clear meaning of the statute and
regulations or unreasonable.”). The “reasonableness” standard is applicable to an
agency’s interpretation of a statute. See Chevron, 467 U.S. at 843-44. Here, we
apply the more concise “plainly erroneous or inconsistent with the regulation”
standard in light of the Supreme Court’s pronouncement in Gonzales.

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necessary to carry out the objectives of the Clean Air Act. See 42 U.S.C. §

7601(a). Congress also granted the EPA discretion to treat Native American

tribes as states and provide, by regulation, other means of protecting air quality in

the absence of approved tribal plans. Id. § 7601(d). The EPA exercised this

authority in promulgating the TAR, which led to the source-specific federal plan

at issue. Thus, the EPA’s actions are entitled to Chevron deference, and the

EPA’s interpretation of the TAR, its own regulation, is controlling unless plainly

erroneous or inconsistent with the plain meaning of the regulation.

The EPA argues we should affirm the federal plan. The TAR, the EPA

asserts, allows a federal plan to be a codification of a previously-approved state

plan. Contrary to the Environmentalists, the EPA interprets the TAR as

permitting the agency to take limited action to fill a regulatory gap without

having to conduct extensive, area-wide modeling and analysis. The EPA also

maintains that it provided a reasoned explanation for its decision to apply the 20%

opacity limit to Units 4 and 5. The opacity limit ensures that pollution control

equipment is properly functioning and that the Units continuously comply with

emissions limits. The EPA further claims it reasonably rejected APS’s

recommendations for a .2% allowance and exemption for malfunction

exceedances.

We address first the EPA’s gap-filling authority under the Clean Air Act

and TAR. We then turn to the 20% opacity limit and the EPA’s rejection of

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APS’s proposed modifications.

A.

The underlying theme in the Environmentalists’ challenge is that the

federal plan is unlawful because it fails to improve sufficiently the air quality in

the area surrounding the Plant. The Environmentalists note the Clean Air Act

requires the EPA “to protect public health and welfare from any actual or

potential adverse effect which in the [EPA]’s judgment may reasonably be

anticipate[d] to occur from air pollution . . ., notwithstanding attainment and

maintenance of all [national air standards],” 42 U.S.C. § 7470. The

Environmentalists argue the “whole point” of an implementation plan is to

analyze air quality problems, identify their sources, and minimize those problems.

According to the Environmentalists, (i) the TAR’s preamble, (ii) its plain

language and use of the conjunctive phrase “necessary or appropriate,” and (iii) a

similar provision of the Clean Air Act regarding state plans make clear that the

TAR does not allow the EPA simply to codify the status quo with no new

assessment of air quality. They also contend that because almost all of the

substantive requirements of state plans apply to tribal plans, any gap-filling

federal plan must also have the “same substantive requirements applicable to

[state plans], which require monitoring, modeling and air quality assessments

necessary to determine the emissions limitations needed to protect regional air

quality.” Reply Br. at 2.

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 At bottom, the Environmentalists argue the TAR requires the EPA to

implement a more stringent federal plan in order to address adequately all of the

current air problems in the area of the Plant. Accordingly, they assert, the EPA

must satisfy the same criteria, i.e., conduct the same modeling and analysis, as

required for states and tribes. The EPA’s only discretion is in choosing the

measures to protect air quality. Because the EPA failed to address the area’s air

problems and did not examine the relevant data or articulate a rational basis for

its decision, the federal plan is arbitrary and capricious and fails to comply with

the TAR.

We disagree. The TAR treats tribes as states for most provisions of the

Clean Air Act and implementing regulations. See 40 C.F.R. § 49.3. But it does

not treat tribes as states for the mandatory plan submission deadlines, funding

restrictions, and related federal oversight mechanisms triggered by a state’s

failure to submit an adequate plan. See 40 C.F.R. § 49.4(a), (d) and (q). Tribes

may choose, but are not required, to adopt plans for their reservations. The TAR

provides that the EPA, pursuant to its explicit “discretionary authority” under

sections 301(a) and (d)(4) of the Clean Air Act, 6

6
Section 301(a)(1) of the Clean Air Act, 42 U.S.C. § 7601(a)(1), authorizes
the EPA to prescribe such regulations as are necessary to carry out the Act, and
section 301(d)(4), 42 U.S.C. § 7601(d)(4), authorizes the EPA to administer
directly the Act’s provisions for which the agency has determined it is
inappropriate or infeasible to treat tribes as states.

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 [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)
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, [7]
or does not receive EPA approval of a submitted tribal
implementation plan.

40 C.F.R. § 49.11(a).

This language does not impose upon the EPA the duty the

Environmentalists propose. It provides the EPA discretion to determine what

rulemaking is necessary or appropriate to protect air quality and requires the EPA

to promulgate such rulemaking. Nothing in section 49.11(a) requires the EPA –

as opposed to a tribe – to submit a plan meeting the completeness criteria of

Appendix V. Similarly, section 49.11(a) does not prevent the EPA from relying,

at it has here, on current air quality monitoring data which shows the region is

well within national air standards.

The Environmentalists’ construction is contrary to the plain language of

section 49.11(a). Their construction would prevent the EPA from implementing

any plan “as necessary or appropriate” to protect air quality, absent a

comprehensive analysis of all air quality problems in an area. Moreover, such a

7
Appendix V requires, inter alia, that state plans submitted to the EPA
include “[m]odeling information required to support the proposed revision,
including input data, output data, models used, justification of model selections,
ambient monitoring data used, meteorological data used, . . . assumptions, and
other information relevant to the determination of adequacy of the modeling
analysis.” 40 C.F.R. pt. 51, app. V.

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construction would conflict with the Act’s definition of a federal plan: “The term

‘Federal implementation plan’ means a plan (or portion thereof) promulgated by

the [EPA] to fill all or a portion of a gap or otherwise correct all or a portion of

an inadequacy in a State implementation plan, and which includes enforceable

emission limitations or other control measures, . . . and provides for attainment of

the relevant national ambient air quality standard.” 42 U.S.C. § 7602(y). In this

instance, some regulation of the Plant is better than none at all. 8

That another section of the Act requires states to regulate emissions “as

may be necessary or appropriate” to meet national air standards does not negate

the EPA’s explicit intent in promulgating the TAR. 42 U.S.C. § 7410(a). As

stated in the preamble of the TAR, the EPA recognizes that, as compared to

states, tribes are generally in the early stages of developing air planning expertise

and need sufficient time to develop air quality programs. The EPA’s strategy for

implementing the Clean Air Act on Native American reservations is a “multi-

pronged approach.” 63 Fed. Reg. at 7,264. In some cases the EPA takes a

“grass-roots” approach and works with tribes to assess air quality problems and to

develop “either tribal or federal strategies for addressing the problems.” Id. In

other cases, the EPA gap-fills by adopting “an average” federal plan based on

8
In fact, the Navajo Nation advised the EPA that “it continues to support
EPA’s efforts to impose such controls on [the Plant] as are necessary to ensure
continued compliance with the substantive requirements of the New Mexico [state
plan] . . . .” 64 Fed. Reg. at 48,732-33.

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existing state plan rules. 9 Id. The preamble emphasizes that federal plans “will

be analogous to, but not the same in all respects, as the types of rules generally

approved into [state plans]. For example, EPA’s [federal plans] are likely to

represent an average program, potentially more stringent than some [state plan]

rules and less stringent than others.” Id. at 7,263-64 (emphasis added). The EPA

hoped “any additional regulations c[ould] be promulgated and implemented

relatively quickly” under the “very broad statutory authority” granted by the Act.

Id. at 7,263. The EPA did not intend to self-impose a duty to implement all

measures otherwise required for states and tribes.

In sum, the key criterion in determining the adequacy of any plan is

attainment and maintenance of the national air standards. See 42 U.S.C. §§

7410(a) and 7602(y); see also Union Elec. Co. v. EPA, 427 U.S. 246, 265 (1976)

(“States may submit implementation plans more stringent than federal law

requires and [] the [EPA] must approve such plans if they meet the minimum

[Clean Air Act] requirements of § 110(a)(2).”); Train v. Natural Res. Def.

Council, 421 U.S. 60, 79 (1975) (explaining that EPA’s primary responsibility in

9
An earlier proposed version of the TAR includes a similar edict: “Today’s
action also does not require Tribes to develop [Clean Air Act] programs wholly
from scratch. For example, a Tribe may adopt or incorporate standards from an
adjacent or similarly situated State, with appropriate revisions that would adapt
the State standards to reservation conditions or Tribal policies.” Indian Tribes:
Air Quality Planning and Management, 59 Fed. Reg. 43,956, at 43,961 (Aug. 25,
1994) (to be codified at 40 C.F.R. pts. 35, 49, 50, and 81) (emphasis added).

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approving plans is to determine whether “the ultimate effect of a State’s choice of

emission limitations is compliance with the national standards for ambient air”).

The federal plan at issue codifies in part the New Mexico plan – previously

studied, analyzed, approved, and in place – and relies on current data

demonstrating that the air quality in the area of the Plant is better than the

national air standards for criteria pollutants. Therefore, the EPA had no need to

conduct additional modeling and analysis to demonstrate the adequacy of the

plan, a fact the EPA already knew. The federal plan, by necessity, is adequate

because the plan is but a stricter version of the satisfactory emissions limits

already applied by the Plant and implemented throughout the State of New

Mexico. Because the EPA’s interpretation of its own regulation is not “plainly

erroneous or inconsistent with the regulation,” we must defer to the EPA.

Gonzales v. Oregon, 546 U.S. at 256. We conclude the Environmentalists’

petition should be denied.

B.

The remaining issue is whether the EPA’s decision to enact a 20% opacity

limit and to reject APS’s proposed modifications was arbitrary and capricious.

APS claims the EPA did not provide a reasoned basis for the 20% opacity limit,

arguing that it did not establish why it chose that particular limit or how this 20%

figure ensures compliance with national air standards. APS claims the EPA did

not, moreover, adequately explain its use of or basis for the underlying PM

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emissions limit that justifies the opacity limit. 10 APS acknowledges it originally

agreed to a 20% opacity limit, albeit with an exemption for periods of

malfunction. Nevertheless, APS claims that, without an allowance for periodic

exceedances, the opacity limit is unattainable with current control equipment,

contrary to APS’s statistical analysis of the historical COMS data, and

unnecessary to maintain national air standards.

APS further contends the EPA’s refusal to exempt excess emissions caused

by malfunctions is inconsistent with its position on excess emissions during other

periods and is not supported by any analysis showing this policy is necessary for

maintenance of the national air standards. It notes the EPA altogether failed to

respond to APS’s proposed .2% allowance. APS adds that the affirmative defense

to civil penalties does not cure the EPA’s error and does not preclude a finding of

violation or the granting of injunctive relief. Similarly, according to APS, the

affirmative defense is not justified by any underlying factual basis.

We note first that APS may not challenge the PM limit as arbitrary or

capricious. APS did not contest the rationality of the underlying PM limit during

the comment period and, therefore, cannot raise the issue on appeal. See

Silverton Snowmobile Club v. U.S. Forest Serv., 433 F.3d 772, 783 (10th Cir.

10
PM is a criteria pollutant and stands for “particulate matter.” See supra
Part I. PM “refers to all ‘solid particles and liquid droplets found in air.’” Am.
Trucking Assoc., Inc. v. EPA, 283 F.3d 355, 359 (D.C. Cir. 2002).

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2006) (refusing to consider argument because, inter alia, it was not raised with

agency); Excel Corp., 397 F.3d at 1296-97 (deeming arguments waived if record

does not show presentation to agency); N.M. Envtl. Improvement Div. v. Thomas,

789 F.2d 825, 836 (10th Cir. 1986) (“The court will not entertain arguments

which should have properly been made before the agency in the first instance.”).

APS implicitly defends its failure to challenge the PM limit by noting that it

requested notice of, and the opportunity to comment on, any rationale the EPA

might ultimately develop for the various emissions limits. We acknowledge the

2006 proposal did not state that the opacity limit ensures compliance with the PM

limit. See J.A. at 12, 15. However, the EPA did provide this justification in the

1999 proposed plan and in the technical document supporting the 1999 proposal.

See id. at 3, 54, 153. APS clearly cannot claim it did not have notice of the

EPA’s basis for the opacity limit. APS knew of the EPA’s justification since at

least 1999 and likely as early as 1994. 11 Yet APS never challenged the opacity

limit by attacking the rationality of the underlying PM limit. See id. at 100-01,

171-84, 291-93, 296-300, 304. APS cannot rely on general or vague commentary

now to avoid the established principles of waiver. See Appalachian Power Co. v.

EPA, 251 F.3d 1026, 1036 (D.C. Cir. 2001) (“Generalized objections to agency

11
In a 1994 letter to the EPA, APS stated “since there is no quantifiable
relationship between opacity and [PM] emissions or ambient concentrations of
[PM], an opacity requirement is not necessary for [national air standards]
attainment purposes.” J.A. at 100.

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action . . . will not do. An objection must be made with sufficient specificity

reasonably to alert the agency.”) (internal quotations omitted). Thus, APS has

waived any challenge to the PM limit.

APS’s remaining arguments lack merit. The EPA provided a reasoned basis

for the 20% opacity limit. As the EPA has repeatedly explained, the opacity limit

is necessary to ensure Units 4 and 5 are in continuous compliance with the PM

limit and are properly operated and maintained. See J.A. at 3, 22. APS must

perform annual testing to ensure direct compliance with the PM limit. 40 C.F.R.

§ 49.23(e). The opacity limit helps to make certain that the Units continuously

comply with the PM limit during the periods between annual tests.

The EPA did not need to explain or demonstrate why it selected 20% as the

opacity limit. APS initially agreed to the 20% figure, fully understood the EPA’s

justification for the limit, and never suggested that another number was necessary.

Prior to 2006, APS never claimed it could not achieve the 20% limit, except

during startup, shutdown, malfunction, and saturated stack conditions. See J.A. at

110, 127, 130, 174-76, 291-93, 297-300. In fact, in 1996, APS informed the EPA

that normal opacity levels “typically [were] less than 5 percent.” Id. at 115.

Moreover, the opacity limit is not counter to any evidence in the record.

APS did not submit data or analysis to support its .2% proposal, although it

claimed to have such documentation. APS waited twelve years before even

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mentioning the matter. 12 APS did not explain then – and does not elucidate now –

what actually caused the exceedances allegedly recorded in the withheld COMS

data. 13 We agree with our sister circuit that an agency must respond only to

relevant comments, which “cast doubt on the reasonableness of a position taken

by the agency.” Nat’l Mining Assoc. v. Mine Safety & Health Admin., 116 F.3d

520, 549 (D.C. Cir. 1997) (internal quotation marks omitted); see Pub. Citizen,

Inc. v. FAA, 988 F.2d 186, 197 (D.C. Cir. 1993) (“We reiterate that to require

response by the agency, comments must do more than simply state that the

agency’s premises or conclusions are wrong; they must explain why and on what

basis the agency assertedly has erred.”); see also Kennecott Copper Corp. v. EPA,

612 F.2d 1232, 1236 (10th Cir. 1979) (“[A]gencies need not supply

comprehensive explanations and record citations for each and every conclusion.

12
APS appears to justify this delay by explaining, “By the time EPA
published the 2006 proposed [federal plan], APS noticed that in other contexts,
EPA appeared to be willing to deal reasonably with the issue of excess opacity
emissions. APS had also come to recognize that the definition of malfunction
would not always be easy to apply.” Reply at 23. These justifications do not
suffice. The EPA’s treatment of opacity in separate rulemakings, with completely
distinguishable facts and law, has nothing to do with the reasonableness of the
opacity limit at hand. Similarly, APS knew of the malfunction definition since at
least 1994, see J.A. at 87, and yet did not seek the additional allowance until
2006.
13
Moreover, we know now that APS was not completely candid in
requesting the .2% allowance. APS admits the .2% figure “include[s] a margin of
safety so that if adopted, [the Plant] could be reasonably certain of full
compliance.” Aplt. Br. at 19 n.6. APS has yet to explain the percentage of or
basis for the margin of error surreptitiously added to arrive at the .2% figure.

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These rules are to ensure satisfaction of due process requirements and meaningful

public participation in rulemaking, not to straitjacket agency proceedings.”

(citation omitted)).

While we agree the EPA did not address explicitly APS’s request for a .2%

allowance, we note the EPA did address the substance of APS’s proposal. Only

five logical explanations exist for periodic exceedances: saturated stack

conditions, startup, shutdown, unavoidable malfunctions, and operator error or

neglect. The federal plan addresses each of these possibilities. Regarding

saturated stack conditions, the federal plan provides that “[i]f the [pollution

control equipment] is operating within its normal operating parameters . . . [and]

not fully closed, and a high opacity reading occurs, it will be presumed that the

occurrence was caused by saturated stack conditions and shall not be considered a

violation.” 40 C.F.R. § 49.23(e). Regarding startup and shutdown, “the

otherwise applicable emission limits . . . for opacity and [PM] shall not apply”

provided that the Plant (i) operates to minimize emissions and uses best efforts to

meet the otherwise applicable emission limit, (ii) minimizes to the extent

practicable the frequency and duration of startups and shutdowns, and (iii)

properly documents startups and shutdowns. Id. § 49.23(h)(2). Regarding

unavoidable malfunction events, the federal plan states that “[e]missions in excess

of the level of the applicable emission limit . . . that occur due to a malfunction

shall constitute a violation of the applicable emission limit.” Id. § 49.23(h)(3).

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APS has an affirmative defense to claims for penalties if it can show, inter alia,

that a malfunction resulted from a sudden and unavoidable failure of process or

equipment. Id. The plan does not excuse excess emissions resulting from

operator error or neglect. Id. § 49.23(h)(3)(ii). That APS does not agree with the

EPA’s rejection of the substance of its proposed .2% allowance is irrelevant; as

long as the EPA’s decisionmaking process may reasonably be discerned, we will

not set aside the federal plan on account of a less-than-ideal explanation. Alaska

Dep’t of Envtl. Conservation, 540 U.S. at 497.

Nor are we persuaded by APS’s disagreement with the EPA’s rejection of

its proposed malfunction exemption. As the EPA explained during the

rulemaking process, its treatment of excess emissions resulting from malfunctions

is consistent with longstanding EPA policy set forth in various memoranda in the

record. The longstanding policy makes clear that excess emissions resulting from

malfunctions are violations of the Clean Air Act, for such emissions can interfere

with attainment of the national air standards. See 72 Fed. Reg. at 25,702, 25,705;

State Implementation Plans: Policy Regarding Excessive Emissions During

Malfunctions, Startup, and Shutdown (Sept. 20, 1999) (hereinafter Herman

Memorandum); Policy on Excess Emissions During Startup, Shutdown,

Maintenance, and Malfunctions (Feb. 15, 1983) (hereinafter Bennett

Memorandum). The longstanding policy grants a limited affirmative defense

where interference with national air standards will not occur and injunctive relief

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is still available as an enforcement mechanism.

Contrary to APS’s assertion, the EPA’s treatment of malfunction events is

not inconsistent with its treatment of startup and shutdown episodes. The EPA’s

longstanding policy applies “alternate limits” to excess emissions resulting from

these infrequent, reasonably foreseeable episodes, where a source’s pollution

control equipment is technically incapable of meeting the emissions limits for a

defined period of time. 72 Fed. Reg. at 25,702; Herman Memorandum at 3,

attach. at 4-5; Bennett Memorandum at 17-5. The EPA has reiterated that

bypassing the pollution control equipment during startup and shutdown episodes

may be necessary to avoid “loss of life, personal injury, or severe property

damage.” Bennett Memorandum at 17-5; see Herman Memorandum at 3

(recognizing that for some sources even the best available pollution control

equipment cannot be effective during every startup and shutdown). We defer to

the EPA’s longstanding policy, for the policy is a reasonable interpretation of the

Clean Air Act.

We acknowledge APS is correct that exemption of the Plant’s excess

emissions from malfunction events logically would not lead to interference with

attainment of the national air standards. Neither the New Mexico state plan nor

the Plant’s historical operations deem excess emissions from malfunctions as

violations. APS’s point carries no weight, however. The EPA’s longstanding

policy explicitly states that a limited affirmative defense to penalties for

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malfunctions may be available where interference with the national air standards

will not occur. Thus, the EPA interprets the Act as allowing a limited affirmative

defense only in situations where attainment will not be detrimentally affected, and

this is exactly what the federal plan provides. Moreover, in response to APS’s

argument that the policy justification lacks a “limiting standard against which to

measure [] reasonableness,” Reply Br. at 22, we note there is no requirement that

a gap-filling federal plan can be only as strict as necessary to meet national air

standards. The Clean Air Act and the TAR certainly do not include such a

mandate. States, and presumably tribes, may surpass national air standards as

long as their plans satisfy all of the minimal Clean Air Act requirements. See

Union Elec. Co., 427 U.S. at 263-65 (holding that the EPA cannot disapprove a

state plan solely because it imposes stricter limits than the national air standards

or is economically or technologically infeasible). We have found no authority

saying that we can prevent the agency to which we owe substantial deference

from implementing the same type of superior plan.

Finally, we reject APS’s challenge to the justification for the affirmative

defense. APS argues, without citation to any authority, that the EPA must justify

inclusion of the affirmative defense with “a factual basis for presuming that

excess emissions are the fault of APS, and requiring APS to prove otherwise.”

Reply at 28. We need not address unsupported, conclusory arguments. See

Pignanelli v. Pueblo Sch. Dist. No. 60, 540 F.3d 1213, 1217 (10th Cir. 2008)

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(deeming argument waived for failure to cite any supporting legal authority or

record evidence). APS adds that the EPA offered no defense to this “burden-

shifting” affirmative defense. See Reply at 27-28. We disagree. The EPA did

explain its inclusion of the affirmative defense:

[E]ach party bears the appropriate burden in any enforcement case.
The party seeking to enforce a claim bears that burden of proving
that excess emissions occurred to establish a violation. [APS] may
raise as a defense to penalties that the violation was unavoidable and
[the Plant] took appropriate preventive and corrective action. The
court retains its function of determining whether each party has met
its burden.

72 Fed. Reg. at 25,702. We hold the EPA has established “an adequate rationale”

for the affirmative defense. National Tank Truck v. EPA, 907 F.2d 177, 184

(D.C. Cir. 1990). This is all that Chevron requires.

We conclude the EPA has not acted arbitrarily or capriciously. The EPA

identified a regulatory need and enacted a source-specific federal plan to fill this

gap. The EPA has neither relied on factors which Congress did not intend it to

consider nor failed to consider any important aspect of the problem. See Motor

Vehicle Mfrs. Ass’n, 463 U.S. at 43. The EPA addressed all substantive aspects

of APS’s comments: startup, shutdown, malfunction, and saturated stack

conditions. The EPA based its decision on the evidence before it, i.e., current air

quality data for the area surrounding the Plant, and incorporated its negotiations

with APS, the Navajo Nation, and the State of New Mexico into its plan. We can

ascribe APS’s disagreement with the EPA’s final action to a difference in view.

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See id. Accordingly, APS’s petition is denied.

IV.

For the reasons set forth above, we GRANT the motion for voluntary

remand and VACATE and REMAND the federal implementation plan insofar as

it pertains to the fugitive dust limit. We DENY APS’s petition for review, DENY

the Environmentalists’ petition for review, and AFFIRM the remainder of the

federal implementation plan.

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