From: Harris-Bishop, Rusty To: Lee, Anita Subject: Fw: Media request about EPA, Arizona, and coal Date: Friday, May 31, 2013 10:03:58 AM Attachments: 2013-05-17 - Response to Stay Motions as filed.pdf

Rusty Harris-Bishop Press Officer/Project Manager 415.972.3140 (o) 415.694.8840 (c) Harris-Bishop.Rusty@epa.gov

Sent by Blackberry Apologies for thumb-typing errors

From: Harris-Bishop, Rusty Sent: Thursday, May 30, 2013 4:33:54 PM To: Tom Marcinko Cc: Yogi, David Subject: RE: Media request about EPA, Arizona, and coal

Hi Tom: here is our response to your questions, as well as an attachment that is our response to the Arizona filing. Our staff person is available tomorrow if you have additional questions. Give me a call or let me know by email if you’d like me to set up a call.

1.How will the EPA respond to the court filing by Attorney General Horne re: the Apache, Cholla and Coronado coal plants? We recently filed the attached brief responding to motions by the Attorney General and the owners and operators of the Apache, Cholla and Coronado coal plants to stay our Regional Haze Federal Implementation Plan (FIP) for these plants.

2. Mr. Horne says the administration's real purpose is to do away with coal. Is that correct? No. EPA is implementing a visibility protection program that was required by Congress in the 1990 Clean Air Act Amendments, so this program is over 20 years old. Congress set a goal of preventing and remedying visibility impairment at National Parks and Wilderness Areas caused by man-made air pollution and specifically required major sources of a certain age that emit any air pollutant that is reasonably anticipated to cause or contribute to visibility impairment at National Parks and Wilderness Areas to install the Best Available Retrofit Technology (BART). This requirement applies tomany types of sources, not just coal-fired power plants. BART is determined on a caseby-case consideration of cost, energy and non-air quality environmental impacts, existing pollution controls, remaining useful life of the source, and the degree of visibility improvement reasonably anticipated to result from the technology.

3. The Arizona Republic and others say the benefits to the emission rules on Navajo Generating Station are marginal. The Salt River Project says the NGS contributes only half as much haze as EPA says, and that the remedies EPA proposes will create improvements notvisible to the human eye. Do you have a response to that? We do not agree with these statements. NGS is among the largest sources of NOx in the United States and affects visibility at eight National Parks and three Wilderness Areas. As discussed in our proposed rulemaking, modeling from EPA indicates that reducing emissions from Navajo Generating Station by roughly 80 percent will reduce the visibility impairment caused by NGS at these eleven Class I areas by over 1 deciview at each Class I area, which is perceptible to people who visit the parks. These results are consistent with modeling previously conducted by the National Park Service (and described in the Technical Support Document for our proposed rulemaking). Even if the visibility impact was, as SRP claims, half as much as we anticipate with our modeling, the reduction in visibility impairment caused by NGS at most of the eleven Class I areas would still be over 1 deciview.

4. I've read that the emissions upgrades will cost as much as $1.1 billion. That seems to be what I'm seeing in the pre-publication proposal, and I'm certainly hearing that figure quoted a lot here in Arizona. It is EPA's estimate, is that correct? No, that is not correct. Our proposal clearly states that EPA estimates capital costs of NOx controls at NGS to be $541 million. SRP estimates capital costs of NOx controls to be $589 million (see Table 2 of our proposed rulemaking). It is our understanding that SRP cites $1.1 billion because they are including costs of new baghouses, which are not part of EPA’s BART proposal.

5. Is there any chance that the remedies EPA is asking for could be federally funded? Appropriations have been used before. Scrubbers to reduce SO2 emissions from NGS in the 1990s were funded within the same federal appropriations as for the Central Arizona Project, and were incorporated into CAP’s repayment obligation to the federal government, which is over a 50 year term. The Bureau of Reclamation owns a 24.3 percent share of NGS. The government’s share of the $541 million for new NOx controls would then be $121 million (accounting for the fact that $45 million was already spent on the installation of low-NOx Burners and separated over fire air (combustion controls referred to as LNB/SOFA), that is $541 million minus $45 million = $496 million, and 24.3% of $496 million is $121 million).

6. It looks like EPA has given the SRP a couple of extensions. How long does SRP have to comply with improved emissions standards? The Clean Air Act requires compliance with BART emission limits as expeditiously as practicable, but within five years of the final rule. There is more flexibility under a Better than BART Alternative, and in this case, we are proposing additional flexibility for NGS due to its location on Tribal land, the relationship of NGS to numerous tribes located in Arizona, as well as the early and voluntary installation of LNB/SOFA over 2009-2011. The time period for compliance under the Better than BART alternative will depend on which Alternative is finalized. EPA’s Alternative (Alternative 1), as described in our proposed rulemaking, requires compliance on one unit per year by 2021, 2022, and 2023. We provided a framework for additional time to comply that would require additional emission reductions. We want to clarify that this is our BART proposal and we are seeking comment on the proposed rule until August 5, 2013. The timing of compliance with the BART emission limits will be established in our final rule.7. It also seems that EPA is considering alternatives to Best Available Retrofit Technology. Would it be willing to settle for something less than Selective Catalytic Reduction? What would some of the options be? EPA is willing to consider alternatives to BART as long as the alternative results in greater emissions reductions or visibility benefits to the impacted Class I areas. Our framework for considering alternatives is described in our proposed rulemaking.

8. In the case of the Navajo plant, and the State Implementation Plan for the three plants cited in Attorney General Horne's filing: What would happen if Arizona or SRP fail to comply? EPA has not promulgated a final rule for NGS and we will not know what compliance will be required until we have a final rule. At this point, for NGS, we are seeking comment on the proposed rule. Under the Clean Air Act, requirements contained in State and Federal Implementation Plans are enforceable by the EPA and by members the public. So, if a facility violates any of these requirements, the company could be the subject of an enforcement action by either EPA or citizens.

From: Tom Marcinko [mailto:tmarcinko@gmail.com] Sent: Thursday, May 30, 2013 11:01 AM To: Harris-Bishop, Rusty Subject: Re: Media request about EPA, Arizona, and coal

Rusty, thanks. I did get a call & email from David Yogi this a.m., just so you know. On May 30, 2013 10:31 AM, "Harris-Bishop, Rusty" < Harris-Bishop.Rusty@epa.gov > wrote: Hi Tom:

I'm working on getting a response to you today. I'm in LA but sent your email to our staff working on NGS so will have something for you before the end of the day. Rusty Rusty Harris-Bishop Press Officer/Project Manager 415.972.3140 (o) 415.694.8840 (c) Harris-Bishop.Rusty@epa.gov

Sent by Blackberry Apologies for thumb-typing errors

________________________________________From: Tom Marcinko Sent: Wednesday, May 29, 2013 11:07:24 PM To: Harris-Bishop, Rusty Subject: Media request about EPA, Arizona, and coal Hello, Mr. Harris-Bishop:

I'm a reporter on assignment for the Phoenix Business Journal, working on a story about coal energy in Arizona.

I'm hoping you can help me with some questions, or point me in the right direction.

I'll give a call tomorrow, but if you don't mind I'll lay them out here:

1. How will the EPA respond to the court filing by Attorney General Horne re: the Apache, Cholla and Coronado coal plants?

2. Mr. Horne says the administration's real purpose is to do away with coal. Is that correct?

3. The Arizona Republic and others say the benefits to the emission rules on Navajo Generating Station are marginal. The Salt River Project says the NGS contributes only half as much haze as EPA says, and that the remedies EPA proposes will create improvements not visible to the human eye. Do you have a response to that?

4. I've read that the emissions upgrades will cost as much as $1.1 billion. That seems to be what I'm seeing in the pre-publication proposal, and I'm certainly hearing that figure quoted a lot here in Arizona. It is EPA's estimate, is that correct?

5. Is there any chance that the remedies EPA is asking for could be federally funded?

6. It looks like EPA has given the SRP a couple of extensions. How long does SRP have to comply with improved emissions standards?

7. It also seems that EPA is considering alternatives to Best Available Retrofit Technology. Would it be willing to settle for something less than Selective Catalytic Reduction? What would some of the options be?

8. In the case of the Navajo plant, and the State Implementation Plan for the three plants cited in Attorney General Horne's filing: What would happen if Arizona or SRP fail to comply?

...Grateful for any light you can shed on this. If you don't mind,I'll give a call tomorrow, to see if we can set up a time to talk. Or feel free to contact me any time. Thanks,

Tom Marcinko tmarcinko@gmail.com 480-375-8097 @TMA7 People imagined all sorts of things. In reality, nothing was ever the way people imagined.~Arkady & Boris Strugatsky, ROADSIDE PICNIC- 1 - 

### IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

State of Arizona, et al. Petitioners,

v. United States Environmental Protection Agency, et al. Respondents.

RESPONDENTS’ UNOPPOSED MOTION

FOR ENLARGEMENT OF BRIEF SIZE Pursuant to Fed. R. App. P. 27(d)(2) and the Court’s Order of April 23, 2013, respondents United States Environmental Protection Agency, et al. (collectively “EPA”) in the above-captioned consolidated petitions for review move the Court for leave to file the accompanying 43-page C onsolidated Memorandum In Opposition to Stay Motions (“Consolidated Memorand um”). Counsel for EPA has contacted counsel for all Petitioners and Intervenors, and is informed that no party opposes EPA’s request to file an opposition memorandum of 43 pages. In further support of its motion, and as is set forth in the accompanying Declaration of Angeline Purdy, EPA states as follows: 1. Each of the Petitioners filed a sepa rate petition seeking review of certain aspects of an EPA final action published in the Federal Register at 77 Fed. Reg. ) ) ) ) ) ) ) ) ) ) ) No. 13-70366 (and consolidated cases Nos. 13-70396, 13-70409, 13-70410, 13- 70425) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-1 Page: 1 of 5- 2 - 

### 72,512 (December 5, 2012) and entitled “Appr oval, Disapproval and Promulgation of Air Quality Implementation Plans; Ariz ona; Regional Haze State and Federal Implementation Plans; Final Rule” (“Rule”). Each of the Petitioners has also filed a separate, 20-page motion asking that the Cour t stay relevant provisions of the Rule, and that it toll compliance periods under the Rule, pending completion of judicial

review. See Doc. Nos. 8558683, 8553453, 8562017, 8562019, 8570944.

2. After Petitioners had filed th eir respective stay motions, the five petitions for review were conso lidated by this Court. See Order of April 3, 2013 (Doc. No. 8576398). The Court further granted the parties’ subsequent joint motion to establish a briefing schedule under which EPA’s consolidated response to the stay motions is due on May 17, 2013. See Order of April 23, 20 13 (Doc. No. 8601474). The Court denied that portion of the part ies’ joint proposal that would have established a 90-page limit on EPA’s conso lidated response memorandum, but did so without prejudice to EPA’s filing a renewe d motion for leave to file an overlength memorandum accompanied by the proposed memorandum. See id . at 2. 4. Under Fed. R. App. P. 27(d)(2), a motion or a response to a motion “must not exceed 20 pages . . . unless the co urt permits or directs otherwise.” EPA’s Consolidated Memorandum is 43 pages – 23 more pages than allowed for an opposition to a single motion under the Fede ral Rules, but 57 fewer pages than EPA

would have been entitled to file had it su bmitted a separate 20-page response to each 20-page stay motion. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-1 Page: 2 of 5- 3 - 

### 5. EPA is mindful of the Court’s stat ement that the 90-page limit originally requested significantly exceeds the enlargemen t of size customarily permitted by the Court (see Order of April 23, 2013 at 2), and has made every effort to limit the size of its Consolidated Memorandum accordingly. This case nonetheless arises against a complicated regulatory and factual backgrou nd that requires some explication. In addition, although Petitioners’ arguments in support of their respective stay motions overlap in some respects and have been addressed in a consolidated manner wherever possible, each Petitioner has separately raised unique points and facility-specific arguments that EPA must respon d to individually. Compare , e.g ., Consolidated Memorandum at 14-17, 18-23 (consolidated response to overlapping petitioner arguments) with id . at 25-28, 31-33 (addressing argument s unique to particular facility or petitioner). 6. EPA therefore respectfully requests leave to file the accompanying 43- page Consolidated Memorandum. In the alternative, if the Court denies EPA’s motion, EPA requests that it be granted no le ss than 14 days to revise and re-submit its Memorandum to conform to any page limit established by the Court. This time is required because any revised memorandum must be reviewed and approved by appropriate officials at EPA and at the Depa rtment of Justice. Counsel for EPA has

consulted with counsel for Petitioners and Intervenors, and is informed that no party opposes this alternative request. Respectfully submitted, IGNACIA S. MORENO Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-1 Page: 3 of 5- 4 - 

### Assistant Attorney General /s/ Angeline Purdy

__________________________ ANGELINE PURDY Environmental Defense Section Environment & Natural Resources Division United States Department of Justice P.O. Box 7611 Washington, D.C. 20044 (202) 514-0996 Counsel for Respondents

Of Counsel:

CHARLOTTE WITHEY U.S. Environmental Protection Agency, Region IX Office of Regional Counsel

M. LEA ANDERSON U.S. Environmental Protection Agency Office of General Counsel

May 17, 2013 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-1 Page: 4 of 5- 5 - 

### CERTIFICATE OF SERVICE I hereby certify that on May 17, 2013 , I filed the foregoing Unopposed Motion for Enlargement of Brief Size, together with the accompanying Declaration of Angeline Purdy and Consolidated Memorand um In Opposition To Stay Motions, via the Court’s CM/ECF system, which will el ectronically serve all counsel of record.

/s Angeline Purdy

____________________ Angeline Purdy Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-1 Page: 5 of 5- 1 - 

### IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

State of Arizona, et al. Petitioners,

v. United States Environmental Protection Agency, et al., Respondents.

DECLARATION OF ANGELINE PURDY IN SUPPORT OF RESPONDENTS’ UNOPPOSED MOTION

FOR ENLARGEMENT OF BRIEF SIZE I, Angeline Purdy, declare the fo llowing under penalty of perjury. 1. I am a Senior Trial Attorney with the United States Department of Justice to whom responsibility fo r this case has been assigned.

2. This declaration is submitted in support of Respondents’ United States Environmental Protection Agency, et al.’s (c ollectively “EPA’s”) motion for leave to file a 43-page Consolidated Memorand um In Opposition to Stay Motions (“Consolidated Memorandum”) in the above-captioned consolidated petitions for

review. ) ) ) ) ) ) ) ) ) ) ) No. 13-70366 (and consolidated cases Nos. 13-70396, 13-70409, 13-70410, 13- 70425) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-2 Page: 1 of 4- 2 - 

### 3. Each of the Petitioners filed a sepa rate petition seeking review of certain aspects of an EPA final action published in the Federal Register at 77 Fed. Reg. 72,512 (December 5, 2012) and entitled “Appr oval, Disapproval and Promulgation of Air Quality Implementation Plans; Ariz ona; Regional Haze State and Federal Implementation Plans; Final Rule” (“Rule”). Each of the Petitioners has also filed a separate, 20-page motion asking that the Cour t stay relevant provisions of the Rule, and that it toll compliance periods under the Rule, pending completion of judicial

review. See Doc. Nos. 8558683, 8553453, 8562017, 8562019, 8570944.

4. After Petitioners had filed th eir respective stay motions, the five petitions for review were conso lidated by this Court. See Order of April 3, 2013 (Doc. No. 8576398). The Court further granted the parties’ subsequent joint motion to establish a briefing schedule under which EPA’s consolidated response to the stay motions is due on May 17, 2013. See Order of April 23, 20 13 (Doc. No. 8601474). The Court denied that portion of the part ies’ joint proposal that would have established a 90-page limit on EPA’s conso lidated response memorandum, but did so without prejudice to EPA’s filing a renewe d motion for leave to file an overlength memorandum accompanied by the proposed memorandum. See id . at 2.

5. EPA is mindful of the Court’s stat ement that the 90-page limit originally requested significantly exceeds the enlargemen t of size customarily permitted by the Court (see Order of April 23, 2013 at 2), and has made every effort to limit the size of its Consolidated Memorandum accordingly. This case nonetheless arises against a Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-2 Page: 2 of 4- 3 - 

### complicated regulatory and factual backgrou nd that requires some explication. In addition, although Petitioners’ arguments in support of their respective stay motions overlap in some respects and have been addressed in a consolidated manner wherever possible, each Petitioner has separately raised unique points and facility-specific arguments that EPA must re spond to individually.

6. The Consolidated Memorandum is 23 more pages than allowed for an opposition to a single motion under Fed. R. App. P. 27(d)(2), but 57 fewer pages than

EPA would have been entitled to file had it submitted a separate 20-page response to each 20-page stay motion 7. Should the Court deny EPA’s motion for leave to file its 43-page

Consolidated Memorandum and direct EPA to re-submit a Consolidated Memorandum of some shorter length, any revised memorandum would need to be reviewed and approved by appropriate offi cials at EPA and at the Department of Justice. This process would require a mini mum of 14 days from entry of the Court’s

order. 8. I have contacted counsel for all Petitioners and Intervenors, and am informed that no party opposes either EPA’s re quest for leave to file the Consolidated Memorandum or EPA’s alternative request for a minimum of 14 days to submit a revised Consolidated Memorandum if necessary. I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-2 Page: 3 of 4- 4 - 

### Executed this 17th day of May, 2013, in Washington, D.C.

/s/ Angeline Purdy May 17, 2013 _________________________ Angeline Purdy Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-2 Page: 4 of 4

### IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

State of Arizona, et al., Petitioners,

v. United States Environmental Protection Agency, et al., Respondents.

EPA’S CONSOLIDATED MEMORANDUM IN OPPOSITION TO STAY MOTIONS

IGNACIA S. MORENO Assistant Attorney General ANGELINE PURDY Environmental Defense Section Environment & Natural Resources Division United States Department of Justice Counsel for Respondents

Of Counsel:

CHARLOTTE WITHEY U.S. Environmental Protection Agency, Region IX Office of Regional Counsel

M. LEA ANDERSON U.S. Environmental Protection Agency Office of General Counsel May 17, 2013 ) ) ) ) ) ) ) ) ) ) ) No. 13-70366 and consolidated cases Nos. 13-70396, 13-70409, 13-70410, 13- 70425 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 1 of 54

### i 

## TABLE OF CONTENTS

TABLE OF AUTHORITIES ................................................................................................ iii

GLOSSARY ...................................................................................................................... ...... viii

I. BACKGROUND ............................................................................................................ 3

A. Stat utory and Regulatory Background ............................................................. 3

1. Clean Air Act Overview ............................................................................ 3

2. Visi bility Protection Under the Act ........................................................ 3

B. Factual Background.... ...................................................................................... 6

II. STANDARD GOVERN ING MOTION FOR STAY ........................................ 11

III. ARGUMENT ............................................................................................................. .. 12

A. Petitioners Have Not Shown a Likelihood of Success on the Merits ............................................................................................... ........... 12 1. EPA properly disapproved a SIP that did not conform to the Act ............................................................................................... 14

2. EPA’s determination that the State’s NO x 

### BART determinations for the coal-fired units did not

conform to the Act is reasonable and supported by the Admi nistrative Record .................................................................. 17 a. The record supports EPA’s c onclusion that the State’s cost analysis was inconsistent with governing law .............................................................................. 18 b. The record supports EPA’s conclusion that the State’s visibility analysis was inconsistent with governing law .............................................................................. 21 3. EPA pr operly promulgated a FIP ...................................................... 23 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 2 of 54

### i i a. EPA’s BA RT determinations for Apache Units 1, 2, and 3 are reasonable ........................................................... 2 5

b. EPA’s BART determinations for Cholla Units 2, 3, and 4 are reasonable .......................................................... 28

c. EPA’s BART determinat ions for Coronado Units 1 and 2 are reasonable ............................................................... 31 d. EPA considered the “presumptive” NO x 

### emission limits in the Guidelines, but found they were not appropriate for these sources .................................................. 33 e. The FIP complies with applicable laws.................................. 34

B. Petitioners Have Not Shown Irreparable Harm Absent a Stay ...................................................................................................... ................ 35 C. Neither the Balance of Equities Nor the Public Interest Favors A Stay ................................................................................................... .............. 43

IV. CONCLUSION ............................................................................................................. 43 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 3 of 54

### i ii 

## TABLE OF AUTHORITIES

CASES A.O. Smith Corp. v. FTC , 530 F.2d 515 (3rd Cir. 1976) ....................................................................................... 36, 38 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) ............................................................................... 11, 12, 39 Am. Bioscience Inc. v. Thompson , 243 F.3d 579 (D.C. Cir. 2001) .......................................................................................... 13

Am. Corn Growers Ass'n v. EPA , 291 F.3d 1 (D.C. Cir. 2002) ......................................................................................... 15, 16 Am. Hosp. Ass'n v. Harris , 625 F.2d 1328 (7th Cir. 1980) ........................................................................................... 36 Ariz. Hosp. & Healthcare Ass'n v. Betlach , 865 F. Supp. 2d 984 (D. Ariz. 2012) ................................................................................ 36 Cal. Pharmacists Ass'n v. Maxwell-Jolly , 563 F.3d 847 (9th Cir. 2009) ............................................................................................. 36

Cent. Ariz. Water Conservation Dist. v. EPA , 990 F.2d 1531 (9th Cir. 1993) ..................................................................................... 12, 13 Chevron U.S.A., Inc. v. EPA , 658 F.2d 271 (5th Cir. 1981) ................................................................................................ 3 Coal. for Econ. Equity v. Wilson , 122 F.3d 718 (9th Cir. 1997) ............................................................................................. 40 EME Homer City Generation, L.P. v. EPA , 696 F.3d 7 (D.C. Cir. 2012) ............................................................................................... 24

Envtl. Def. Ctr. v. EPA , 344 F.3d 832 (9th Cir. 2003) ............................................................................................. 30 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 4 of 54

### iv Freedom Holdings, Inc. v. Spitzer , 408 F.3d 112 (2d Cir. 2005) .............................................................................................. 35 Gen. Motors Corp. v. United States , 496 U.S. 530 (1990) .......................................................................................................... ..... 3

Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv. , 378 F.3d 1059 (9th Cir. 2004) ........................................................................................... 26 Graphic Commc'ns Union, Chicago Paper Handlers' & Electrotypers' Local No. 2 v. Chicago Tribune Co. , 779 F.2d 13 (7th Cir. 1985) ............................................................................................... 36

Kansas v. United States , 249 F.3d 1213 (10th Cir. 2001) ......................................................................................... 40

Marathon Oil Co. v. United States , 807 F.2d 759 (9th Cir. 1986) ............................................................................................. 26 Mazurek v. Armstrong , 520 U.S. 968 (1997) .......................................................................................................... .. 11 Mont. Sulphur & Chem. Co. v. EPA , 666 F.3d 1174 (9th Cir. 2012) ........................................................................................... 12 Morongo Band of Mission Indians v. FAA , 161 F.3d 569 (9th Cir. 1998) ............................................................................................. 34 Mountain States Legal Found. v. Costle , 630 F.2d 754 (10th Cir. 1980) ........................................................................................... 14

Munoz v. Ashcroft , 339 F.3d 950 (9th Cir. 2003) ............................................................................................. 37

Nken v. Holder , 556 U.S. 418 (2009) ...................................................................................................... 11, 39

Pac. Coast Fed'n of Fishermen's Ass'ns v. Bureau of Reclamatio n, 426 F.3d 1082 (9th Cir. 2005) ........................................................................................... 13 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 5 of 54

### v Ranchers Cattlement Action Legal Fund United Stockgrowers of Am. v. USDA , 415 F.3d 1078 (9th Cir. 2005) ........................................................................................... 13

W. States Petroleum Ass'n v. EPA , 87 F.3d 280 (9th Cir. 1996) ............................................................................................... 12

Winter v. Natural Re s. Def. Council, Inc. , 555 U.S. 7 (2008) .................................................................................................... 11, 39, 40

STATUTES Regulatory Flexibility Act 5 U.S.C. §§ 601-612 ........................................................................................................... ..... 25 5 U.S.C. § 603 ................................................................................................................ ......... 25 5 U.S.C. § 605(b) ............................................................................................................. ....... 25

Clean Air Act 42 U.S.C. § 7410(a)(1) ........................................................................................................ 3, 14 42 U.S.C. § 7410(c) ......................................................................................................... 3 , 6, 14 42 U.S.C. § 7410(c)(1) ........................................................................................................ .... 23 42 U.S.C. § 7410(k)(3) .................................................................................................... 3, 6, 14 42 U.S.C. § 7410( l ) .................................................................................................................. 14 42 U.S.C. § 7491 .............................................................................................................. .......... 3 42 U.S.C. § 7491(a) ........................................................................................................... .. 4, 19 42 U.S.C. § 7491(a)(1) ........................................................................................................ .... 42 42 U.S.C. § 7491(b) ........................................................................................................... . 5, 19 42 U.S.C. § 7491(b)(2)(A) ....................................................................................... 4, 6, 15, 42 42 U.S.C. § 7491(g)(2) ........................................................................................................ ....... 4 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 6 of 54

### v i 42 U.S.C. § 7491(g)(4) ........................................................................................................ ....... 6 42 U.S.C. § 7492 .............................................................................................................. .......... 4 42 U.S.C. § 7607(b) ........................................................................................................... ..... 12 42 U.S.C. § 7607(d)(7) ........................................................................................................ .... 13 42 U.S.C. § 7607(d)(9) ........................................................................................................ .... 12 42 U.S.C. § 7607(d)(9)(A) ..................................................................................................... . 12 Pub. L. No. 108-99 div. G, title IV , § 425(a), 118 Stat . 417 (2004) .............................. 42

CODE OF FEDERAL REGULATIONS 40 C.F.R. pt. 51, App. Y ...................................................................................................... ..... 5 40 C.F.R. § 51.301 ............................................................................................................ ......... 4 40 C.F.R. § 51.308 ............................................................................................................ ......... 5 40 C.F.R. § 51.308(e)(1)(ii)(A) .................................................................................... 4, 18, 20 40 C.F.R. § 51.308(e)(1)(ii)(B) ............................................................................................... ... 5 40 C.F.R. § 51.308(e)(1)(iv) .................................................................................................. .... 6 40 C.F.R. § 51.308(e)(2) ...................................................................................................... ...... 5 40 C.F.R. § 51.309 ............................................................................................................ ......... 5 40 C.F.R. § 51.309(a) ......................................................................................................... ........ 5 40 C.F.R. § 51.309(b)(1)-(3) .................................................................................................. ... 5 40 C.F.R. § 51.309(d)(4) ...................................................................................................... ...... 6 40 C.F.R. § 51.309(g) ......................................................................................................... ........ 6 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 7 of 54

### v ii FEDERAL REGISTER 64 Fed. Reg. 35,714 (July 1, 1999) ........................................................................................... 4 70 Fed. Reg. 39,104 (July 6, 2005) ................................................................. 4, 18, 20, 32, 33 74 Fed. Reg. 2392 (Jan. 15, 2009) ............................................................................................ 6 77 Fed. Reg. 42,834 (July 20, 2012) .... 4, 5, 8, 9, 10, 18, 20, 21, 20, 21, 37, 40, 41, 42, 43 77 Fed. Reg. 72,512 (Dec.5, 2012) ................................................................................ passim

EXECUTIVE ORDERS Exec. Order No. 12,866, S ec. 10, 58 Fed. Reg. 51,7 35 (Oct. 4, 1993) ........................... 34 Exec. Order No. 13,211, Sec. 5, 66 Fed. Reg. 28,355 (May 22, 2001) ........................... 34 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 8 of 54

### v iii GLOSSARY

Act Clean Air Act BART Best available retrofit technology

CAA Clean Air Act FIP Federal Implementation Plan

LNB Low NO x 

### burners lb/mmBtu Pounds/million British Thermal Units

NO x 

### Nitrogen oxides

OFA Over fire air SCR Selective catalytic reduction SIP State Implementation Plan

SO 2 

### Sulfur dioxide Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 9 of 54- 1 - 

### IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

State of Arizona, et al., Petitioners,

v. United States Environmental Protection Agency, et al., Respondents.

EPA’S CONSOLIDATED MEMORANDUM IN OPPOSITION TO STAY MOTIONS Respondents United States Environmental Protection Agency, et al. (collectively “EPA” or “Agency”) hereby o ppose stay motions filed by Petitioners in the above-captioned consolidated matters. 1 

### Petitioners challenge EPA actions taken to ensure that emissions of air pollutant s from certain power plants in Arizona comply with the requirements of the Clean Air Act (“CAA” or “Act”). See “Approval,

1 

### See Petitioner Arizona Electric Power Cooperative, Inc.’s [“AEPCO’s”] Motion Staying [sic] Final Rule Pending Completion of Judicial And Agency Review (No. 13- 70396, Doc. No. 8553453) (“AEPCO Mot.”); St ate of Arizona (“State” or “Arizona”) Motion for Stay of Final Rule (No. 13- 70366, Doc. No. 8558683) (“State Mot.”); Motion of Petitioner Arizona Public Serv ice Company [“APS”] For Stay of Agency Rule (No. 13-70409, Doc. No. 8562019) (“ APS Mot.”); Motion of Petitioner Salt River Project Agricultural Improvement An d Power District [“SRP”] for Stay of Agency Rule (No. 13-70410, Doc. No. 856 2017) (“SRP Mot.”); Motion of Petitioner PacifiCorp For Stay of Agency Rule (No. 13-70425, Doc. No. 8570944) (“PacifiCorp Mot.”). Multiple petitioners are sometimes referred to collectively herein as “Petitioners.” ) ) ) ) ) ) ) ) ) ) ) No. 13-70366 and consolidated cases Nos. 13-70396, 13-70409, 13-70410, 13- 70425 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 10 of 54- 2 - 

### Disapproval, and Promulgation of Air Quality Implementation Plans; Arizona; Regional Haze State and Federal Implementa tion Plans; Final Rule,” 77 Fed. Reg. 72,512 (Dec. 5, 2012) (“Final Rule”). Peti tioners challenge EPA’s partial disapproval of Arizona’s State Implementation Plan (“SI P”) submitted under the “regional haze” provisions of the Act, as well as EPA’s issuance of a Fe deral Implementation Plan (“FIP”) establishing statutorily-mandate d “best available retrofit technology” (“BART”) emission limits for certa in units at three power plants.

Petitioners have failed to demonstrate a likelihood of success on the merits on their claim that EPA’s disapproval of Ar izona’s SIP for failure to conform to the requirements of the Act and its implementi ng regulations, as well EPA’s concurrent promulgation of a FIP to fill th e gaps left by that disapproval, was arbitrary, capricious, or otherwise contrary to law. Petitioners have also failed to demonstrate that the cost of complying with duly promulgated BART emission standards constitutes irreparable harm – or that a stay of the FIP, most of which Petitioners need not comply with until December 2017 (the maximum time allo wed by law) would alleviate any such harm. Nor have Petitioners demonstrated that staying a federal action that effectuates congressionally-mandated visibility protect ion requirements would serve the public interest. The motions for stay should therefore be denied. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 11 of 54- 3 - 

### I. BACKGROUND A. Statutory and Regulatory Background.

1. Clean Air Act Overview. The Act controls air pollution through a system of shared federal and state responsibility. See Gen. Motors Corp. v. United States , 496 U.S. 530, 532 (1990). In general, EPA establishes standards that protect air quality, and States implement those standards through SIPs. States must submit proposed SIPs or SIP revisions to EPA for approval, and EPA is required to review each such submission to determine if it “meets all of the applicable requirements of [the Act].” See 42 U.S.C. § 7410(a)(1), (k)(3). If a State fails to fulfill its oblig ation to timely submit a SIP that meets the Act’s requirements, the Act provides a back stop of federal controls. Thus, if EPA

finds that a State has failed to submit a required SIP, or that a State’s SIP is incomplete, or if EPA disapproves a SIP in whole or in part, the Act requires EPA to promulgate a FIP to take the place of or fill the gaps in the State’s SIP. 42 U.S.C. § 7410(c). EPA must do so within two years of issuing such a finding or disapproval

unless the State corrects the deficiency and EPA approves the revised SIP before it promulgates a FIP. Id

. 2. Visibility Protection Under The Act. Congress enacted Section 169A of the Act, 42 U.S.C. § 7491, in 1977 “[i]n response to a growing awareness that visibility was rapidly deteriorating in many places . . . set aside for special protection in their natural states . . . .” Chevron U.S.A., Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 12 of 54- 4 - 

### Inc. v. EPA , 658 F.2d 271, 272 (5th Cir. 1981). Congress declared as a national goal “the prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I Federal area s [which include certain national wilderness areas, national memorial parks, and national parks] which impairment results from man-made air pollution.” 42 U.S.C. § 7491 (a)(1). To further this goal, Congress mandated that each SIP address the statutory requirement that certain stationary

sources built between 1962 and 1977 install “best available retrofit technology” to reduce emissions of visibility-impairing poll utants. 42 U.S.C. § 7491(b)(2)(A); see also 40 C.F.R. § 51.301. Congress further required States to consider five statutory factors in determining what constitutes BART: (a) th e costs of compliance; (b) the energy and nonair quality environmental impacts of compliance; (c) any existing pollution controls in use at the source; (d) the remai ning useful life of the source; and (e) the predicted visibility improvements from use of controls. 42 U.S.C. § 7491(g)(2); see

also 40 C.F.R. § 51.308(e)(1)(ii)(A).

In the 1990 Amendments to the Act Congress added Section 169B, 42 U.S.C. § 7492, to focus attention on regional haze – th at is, visibility impairment caused by emissions from multiple sources and activiti es located across a broad geographic area.

See 77 Fed. Reg. 42,834, 42,837 (July 20, 2012). EPA promulgated the Regional Haze Rule to effectuate this provision. See Regional Haze Regulations, 64 Fed. Reg. 35,714 (July 1, 1999); Regional Haze Regulations and Guidelines for [BART], 70 Fed. Reg. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 13 of 54- 5 - 

### 39,104 (July 6, 2005) (the “BAR T Guidelines” or “Guidelines”). 2 

### The determination of what constitutes BART for any fossil-fu eled power plant with a total generating capacity greater than 750 megawatts must be made pursuant to the BART Guidelines. 42 U.S.C. § 7491(b); 40 C.F.R. § 51.308(e)(1)(ii)(B). Under 40 C.F.R. § 51.308 (“Section 308”), each State is required to submit a regional haze SIP that establishes visibilit y-related reasonable progress goals for the State’s mandatory Class I areas and long-ter m strategies for achieving those goals.

SIPs submitted under Section 308 must incl ude source-specific BART emission limits and compliance schedules for each source subject to BART, unless the SIP includes an alternative program that provides grea ter reasonable progress towards improving visibility than BART. See 77 Fed. Reg. at 42,838; 40 C.F.R. § 51.308(e)(2). 3 

### If EPA

determines that a State’s BART determinat ion does not meet the requirements of the Act or its implementing regulations, EPA must disapprove that State’s SIP. If the State does not correct any deficiencies, EPA must ensure BART by promulgating a

2 

### The Guidelines are codified at 40 C.F.R. Pt. 51, App. Y. Because the pagination of the Federal Register makes it easier to loca te specific regulatory text, citations to the Guidelines herein are to th e Federal Register notice. 3 

### 40 C.F.R. § 51.309 (“Section 309”) provides a handful of States including Arizona with an alternative means of addressi ng some of these requirements. See 40 C.F.R. § 51.309(b)(1)-(3). These States may submit a regional haze SIP based on the recommendations of the Grand Canyon Visibi lity Transport Commission. States that submit a SIP under this provision are deem ed “to comply with the requirements for reasonable progress with respect to the 16 Class I areas” that the Transport Commission addressed. 40 C.F.R. § 51.309( a). For any additional mandatory Class I areas within a State, the State must either submit a SIP conforming to Section 308 or establish “reasonable progress goal s” under Section 309(g)(2). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 14 of 54- 6 - 

### FIP for that state. See 42 U.S.C. § 7410(c), (k)(3). Once an implementation plan is in place, the Act requires that sources install and operate BART as “expeditiously as practicable,” which is defined as “in no event later than five years after the date of approval of [a SIP] (or the date of promulgation of [a FIP]).” 42 U.S.C. § 7491(b)(2)(A), (g)(4); 40 C.F.R. § 51.308(e)(1)(iv). B. Factual Background. 4 

### In December 2008, Arizona submitte d regional haze SIPs to EPA under Section 309 (see supra note 3). In doing so, however, the State acknowledged that these submissions did not address the requir ements of Sections 309(d)(4) or 309(g).

See Ex. A (A.R. No. B.19). Accordingly, on January 15, 2009, EPA found that Arizona had failed to submit the regional haze plan elements required by 40 C.F.R. § 51.309(d)(4) and (g). See 74 Fed. Reg. 2392, 2393 (Jan. 15, 2009). This finding triggered a January 15, 2011, deadline for EPA to approve a state-submitted regional haze SIP or, in the absence of an approved SIP, to promulgate a regional haze FIP for

Arizona. See 42 U.S.C. § 7410(c); 74 Fed. Reg. at 2393. When EPA failed to either approve a SIP or promulgate a FIP by the January 2011 deadline, it was sued by a group of conservation organizations. EPA settled that lawsuit, entering into a

4 

### EPA disputes many of the factual statemen ts and legal conclusions contained in the State’s background discussion (State Mo t. at 2-8) and in the accompanying Declaration of Eric C. Massey (“Massey Declaration”); however, most of these disputes are not relevant to the instant mo tion, and therefore will not be addressed at this time. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 15 of 54- 7 - 

### Consent Decree establishing deadlines by which EPA would approve a SIP for Arizona and/or promulgate a FIP to meet the requirements of the Regional Haze

Rule. 5 

### The Consent Decree (as later amended) required in pertinent part that, absent an approved SIP, EPA would take fina l action on BART determinations for the

emission units at issue he re by December 8, 2012. Arizona did not challenge either the January 2009 finding of failure to submit

or EPA’s associated conclusion that this fi nding triggered the two- year FIP clock. On February 28, 2011, after the expiration of the two-year FIP clock, Arizona submitted a new regional haze SIP to EPA for approval under Section 308, which included BART determinations for eight emission units at three power plants (the “facilities”): Apache Generating Station (Units 1, 2, and 3); Ch olla Power Plant (Units 2, 3, and 4); and Coronado Generating Station (Units 1 and 2) (collectively the “coal-fired units”). Arizona had made a proposed SIP public du ring a comment period beginning in October 2010. 77 Fed. Reg. at 72,570. In its comments, EPA expressed concerns about the proposed SIP’s conformance with the Act, the Regional Haze Rules, and the BART guidelines, noting among other things that the SIP did not provide sufficient analysis and information to support the State’s conclusions. Id . For the

5 

### See National Parks Conservation Ass’n v. EPA , No. 11-CV-01548 (D.D.C.), Docket No. 21 (partial Consent Decree); Minute Order of November 13, 2012 (amending deadlines). The District Court entered the Consent Decree over the State’s objections (as an intervenor), and the State has now appealed. See National Parks Conservation Ass’n v. EPA , No. 12-5211 (D.C. Cir.). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 16 of 54- 8 - 

### most part, the State declined to revise it s proposed SIP before submitting it to EPA for approval. Id . at 72,571.

Consistent with its comments on the proposed SIP, EPA’s review of the submitted SIP revealed significant flaws in the State’s BART analyses. Specifically,

EPA found that the State had failed to an alyze the “best system of continuous emission control technology available and a ssociated emission reductions achievable,” to consider the degree of improvement in visibility which may reasonably be anticipated from installation of BART, an d to explain how it had considered and weighed all of the statutory factors in makin g its BART determinations. 77 Fed. Reg. at 42,842-43, 72,513-14, 72,516-21. EPA also found that the State’s BART analyses

were inconsistent with the BART Guidelin es, which constitute binding regulatory requirements for Cholla Power Plant and Corona do Generating Station. 77 Fed. Reg. at 72,566. With respect to the State’s BART determinations for nitrogen oxides (“NO x 

### ”) at the coal-fired units, these analytic al flaws produced results that were not consistent with applicable statutory and regulatory requirements. 77 Fed. Reg. at 72,514. EPA therefore concluded it coul d not approve those determinations. See id .; see also 77 Fed. Reg. at 72,564-67. To fulfill its statutory duty to promulgate a FIP, as well as its duty to meet the Consent Decree deadlines, EPA conduc ted its own BART analyses for NO x 

### at the coal-fired units. In particular, EPA performe d detailed analyses of the costs of each control option, as well as visibility mode ling to estimate the degree of visibility Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 17 of 54- 9 - 

### improvement associated with each option. See generally 77 Fed. Reg. at 42,852-65;

see also 77 Fed. Reg. at 72,526-64. In each case, EPA found that the most stringent available retrofit control option – selective catalytic reduction (SCR) with low-NO x 

### burners (LNB) and over fire air (OFA) – was cost-effective and would result in substantial visibility improvement, as co mpared with less stringent options. See 77 Fed. Reg. at 42,858, 42,861, 42,864. 6 

### On July 20, 2012, EPA proposed to a pprove the State’s BART determinations for sulfur dioxide (“SO 2 

### ”) and particulate matter (“PM 10 

### ”) for all emission units, but to disapprove the State’s BART determinations for NO x 

### at the seven coal-fired units. 77 Fed. Reg. at 42,834. To address deficien cies in the State’s SIP, EPA also proposed a partial FIP. See id . Specifically, based on its own BA RT analyses, EPA proposed to

set NO x 

### emission limits of 0.050 pounds/m illion British Thermal Units (lb/mmBtu) for each unit, except for Coronado Unit 2, for which EPA proposed to set NO x 

### emission limits of 0.080 lb/mmBtu. Id . at 42,869. EPA explained that existing

vendor literature and technical studies indi cated that these emission rates could be achieved by combining SCR with combus tion control technology (i.e., LNB with OFA). Id . at 42,853. EPA proposed to allow each facility to have the statutory maximum of five years to meet these limits. Id . at 42,865. Finally, EPA sought

6 

### Consistent with the statute, EPA also found that the energy and non-air quality impacts of this control option were not suff icient to warrant its elimination as an appropriate control technology. See , e.g ., 77 Fed. Reg. at 42,858. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 18 of 54- 10 - 

### comment on whether it should adopt lower SO 2 

### emissions limits for the coal-fired

units. Id . at 42,836. In the December 2012 Final Rule, EPA modified several aspects of the proposal. In response to comments arguin g that the proposed emission limits were too stringent, EPA modified the limits for each facility. See 77 Fed. Reg. at 72,515

and Table 1. EPA also modified the NO x 

### compliance methodology to provide for plant-wide averaging. See id . EPA retained its proposal to allow the facilities five years from promulgation of th e final rule to meet the NO x 

### emission limits. See id

. Finally, in response to comments from APS explaining that Cholla Units 2, 3 and 4

could not achieve a lower SO 2 

### limit, but could contin uously achieve a removal efficiency of 95% with control equipment APS was already planning to install, EPA promulgated a removal efficiency requirement for SO 2 

### at these units to ensure that the control equipment would be properly oper ated and maintained. 77 Fed. Reg. at 72,514; infra at 30. Five petitions for review of the Final Rule were filed in this Court. In addition, five administrative petitions for reconsiderat ion and requests for stay of the rule were filed with EPA. On April 9, 2013, EPA is sued letters to APS, PacifiCorp, and SRP granting reconsideration as to the compliance methodology for NO x 

### (including the plant-wide averaging provision), but not ac ting on any other portion of the petitions. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 19 of 54- 11 - 

### II. STANDARD GOVERNING MOTION FOR STAY A stay is an “extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing , carries the burden of persuasion.” Mazurek v. Armstrong , 520 U.S. 968, 972 (1997) (citation omitted). Before granting this extraordinary relief, the Court must determine: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issu ance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.

Nken v. Holder , 556 U.S. 418, 434 (2009) (citation omitted); see also Winter v. Natural Res. Def. Council, Inc. , 555 U.S. 7, 20 (2008). The first two factors of this

standard “are the most critical.” Nken , 556 U.S. at 434. Thus, it is not enough that

the chance of success on the merits be merely “better than negligible.” Id . (citation omitted). Nor is it sufficient to show a me re possibility of irreparable harm; instead, the movant must show that irreparable injury is likely in the absence of a stay. Id

. (citing Winter , 555 U.S. at 22); Alliance for the Wild Rockies v. Cottrell , 632 F.3d 1127, 1131 (9 th 

### Cir. 2011). 7 

### This Circuit employs a sliding scale under which – as long

as the other two elements are satisfied – a stay may be grante d if “a plaintiff demonstrates that serious questions going to the merits were raised and the balance of

7 

### AEPCO’s suggestion that a stay may be granted based on the mere possibility of irreparable injury, AEPCO Mot. at 4, is thus inconsistent with this Court’s precedent. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 20 of 54- 12 - 

### hardships tips sharply in the plaintiff’ s favor.” Alliance for the Wild Rockies , 632

F.3d at 1134-35.

III. ARGUMENT

A. Petitioners Have Not Shown A Li kelihood Of Success On The Merits. EPA’s disapproval of portions of Arizona’s regional haze SIP and promulgation of a FIP are subject to judicial review pursuant to Section 307(b) of the Act, 42 U.S.C. § 7607(b). 8 

### In determining whether Petitioners have demonstrated that they are likely to succeed on the merits, the Court should bear in mind the applicable standard of review – i.e., that EPA’s ac tion must be upheld unless Petitioners demonstrate that it was arbitrary, capricious , or otherwise not in accordance with law. 42 U.S.C. § 7607(d)(9)(A); see also W. States Petroleum Ass’n v. EPA , 87 F.3d 280, 283 (9 th 

### Cir. 1996). 9 

### Review under this provision “is guided by the appropriate deference” accorded EPA’s interpretation of both the statute Congress entrusted it to administer and of its own regulations. Ce nt. Ariz. Water Conservation Dist. v. EPA ,

8 

### Those are the only two final actions at issu e in this matter, and the only question for the Court is whether those actions were arbitrary, capricious, or otherwise contrary to law – a question that, as discussed below, must be answered based solely on the administrative record in this matter. PacifiCorp’s claims that EPA has engaged in an improper “pattern” of disapproving SIPs in western States – or, conversely, that EPA acted inconsistently by approving a differ ent SIP in Colorado based on a different administrative record – are therefore irre levant (albeit disputed) and will not be further addressed herein. See PacifiCorp Mot. at 2, 4, 5, 14-15. 9 

### Contrary to AEPCO’s suggestion, see AEPCO Mot. at 2, th ere is no difference in the standard of review for these two actions. See Mont. Sulphur & Chem. Co. v. EPA , 666 F.3d 1174, 1182 (9 th 

### Cir. 2012) (“[w]hen reviewing EPA’s decision regarding a SIP or its promulgation of a FIP,” court app lies standards of 42 U.S.C. § 7607(d)(9)). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 21 of 54- 13 - 

### 990 F.2d 1531, 1539 (9 th 

### Cir. 1993). A court must, moreover “be at its most deferential” when reviewing EPA’s exercise of its technical and scientific expertise.

See id . at 1539-40 (citation and internal quotation omitted). For Petitioners to

demonstrate a likelihood of success on the merits, they thus must show more than that they disagree with EPA’s actions, or that it would have been possible for EPA to have reached a different result. As long as EPA has “articulated a rational connection

between the facts found and the choices made ,” EPA’s decision must be upheld. Pac.

Coast Fed’n of Fishermen’s Ass’ns v. Bureau of Reclamation , 426 F.3d 1082, 1090 (9 th 

### Cir. 2005) (citation omitted). In applying this deferential standard, moreover, the Court may consider only material in the administrative record. See 42 U.S.C. § 7607(d)(7); Cent. Arizona , 990 F.2d at 1544. 10 

### In light of these deferential standards,

Petitioners have failed to demonstrate a likelihood of success on the merits.

10 

### The State relies heavily on the Declaration of Eric C. Massey, the director of the Arizona Department of Environmental Quality (“ADEQ”), to buttress the State’s argument that the SIP submitted by ADEQ conformed to the requirements of the Act and the BART Guidelines, as well as to describe the purported legal and factual context of, and basis for, EPA’s actions. See , e.g ., State Mot. at 7, 8, 11-12. While a non-record declaration might be considered in the context of establishing whether the movant will suffer irreparable harm absent a stay, it is not pertinent to the success-onthe-merits prong of the stay inquiry in a re cord review case, and should therefore be disregarded in determining whether the State has satisfied its burden in that regard. See Ranchers Cattlement Action Legal Fund United Stockgrowers of Am. v. USDA , 415 F.3d 1078, 1100 (9 th 

### Cir. 2005) (where rule was supported by adequate administrative record, district court erred in finding that plaintiff was likely to succeed on merits of record-review claim); see also Am. Bioscience Inc. v. Thompson , 243 F.3d 579, 582 (D.C. Cir. 2001) (assessment of likelihood of success should have been based on administrative record). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 22 of 54- 14 - 

### 1. EPA properly disapproved a SIP that did not conform to the Act. Petitioners emphasize the Act’s cooperati ve federalism structure, arguing that EPA improperly usurped the State’s role by finding that the State’s determination of

what constitutes the “best available retrofit technology” for the units in question did not conform to the Act and its implementi ng regulations in certain respects. See AEPCO Mot. at 4-5, 9-10; State Mot. at 1, 9-11; APS Mot. at 4, 5-7; SRP Mot. at 4-6; PacifiCorp Mot. at 6-7. According to Petitioners, EPA’s role in reviewing SIP revisions is highly limited – if a State’s subm ission is facially adequate, and that State at least appears to have considered the appropriate factors, then EPA need not (indeed, may not) look any further. See , e.g ., State Mot. at 4, 9-10; APS Mot. at 4. As EPA explained, its role in reviewing SIPs is not so severely restricted. See 77 Fed. Reg. at 72,564-65. True, Congress in tended States to be the primary actors in ensuring air quality – but it nonetheless di rected EPA to ensure that each State conforms to applicable requirements, and, if a State does not so conform, to promulgate a FIP to ensure pr otection of air quality. See 42 U.S.C. § 7410(a)(1), (c), (k)(3), ( l ); Mountain States Legal Found. v. Costle , 630 F.2d 754, 757 (10 th 

### Cir. 1980) (“Congress clearly intended the final decision [on implementation plans] to be that of the EPA”). Indeed, EPA may not approve any SIP revision that “would interfere with any applicable requirement” of the Act. 42 U.S.C. § 7410( l ). Contrary to Petitioners’ suggesti ons, EPA’s review of state BART determinations is no less critical, and no mo re constrained, than its review of any Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 23 of 54- 15 - 

### other SIP. See , e.g ., AEPCO Mot. at 4; State Mot. at 1, 3; APS Mot. at 6-7; PacifiCorp Mot. at 4. 11 

### States have the first opportunity to determine what constitutes BART and to otherwise address the regiona l haze provisions of the Act. See 42 U.S.C. § 7491(b)(2)(A); Am. Corn Growers Ass’n v. EPA , 291 F.3d 1, 8 (D.C. Cir. 2002) (“Congress intended the states to decide which sources impair visibility and what BART controls should apply to those so urces.”). The Act clearly contemplates, however, that EPA will step in if a Stat e fails to do so, stating expressly that implementation plans must require that certain sources install BART “as determined by the State ( or the Administrator, in the case of a plan promulgated under section 7410(c) of this title [i.e., a FIP]). . . .” 42 U.S.C. § 7491(b)(2)(A). Petition ers omit or ignore the italicized language when citing this provision. See , e.g ., State Mot. at 3; APS Mot. at 6. Petitioners rely heavily on American Corn Growers , but that case does not

reach as far as Petitioners claim. See , e.g., State Mot. at 3-4, 11; APS Mot. at 6; PacifiCorp Mot. at 7. In American Corn Growers , the D.C. Circuit vacated a portion of EPA’s Regional Haze Rule because that Rule treated one of the five statutory BART factors – visibility improvement – diffe rently from the remai ning four factors.

Am. Corn Growers , 291 F.3d at 2, 6-9. The court concluded that by requiring States to consider visibility improvement result ing from imposing BART on a group of

11 

### PacifiCorp goes so far as to argue that EPA is “statutorily required ” to defer to state BART determinations, PacifiCorp Mot. at 6 (emphasis added), but cites no statute that unambiguously imposes such a requirement. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 24 of 54- 16 - 

### sources, rather than on a source-specific basis, EPA encroached on States’ authority to determine which sources are subject to BART and what BART controls are appropriate for each source. Id . at 7-8. The court, howe ver, did not even address – let alone limit – EPA’s authority to reject BART determinations that do not conform

to the Act. The State also points to the fact that the BART guidelines grant States discretion to weigh and balance various fact ors in making BART determinations. See State Mot. at 14; see also AEPCO Mot. at 9-10. As EPA explained, this discretion is not unlimited, and under the Guidelines a Stat e must still “justif[y] its selection of the ‘best’ level of control and explain[] the CAA factors” that led the State to choose as it did. 77 Fed. Reg. at 72,532; see also 77 Fed. Reg. at 72,517 n.16. EPA did not, as the State suggests, disapprove some BART de terminations merely because EPA might have balanced the BART factors differently than the State did, or because of some “policy preference,” AEPCO Mot. at 10; rath er, it disapproved those determinations because the State failed to analyze the BA RT factors in a manner consistent with applicable requirements and to adequately explain how it had weighed the factors in reaching its determinations. 12 

### See 77 Fed. Reg. at 72,565-66. It is worth noting that

12 

### Nor did EPA disapprove the State’s NO x 

### BART determinations for the coal-fired units merely because it “disagree[d]” with those determinations. AEPCO Mot. at 5; see also APS Mot. at 7; State Mot. at 9-10. As EPA explained, its use of the term “disagree” in some instances was “short hand for our findings that specific elements (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 25 of 54- 17 - 

### EPA did approve those of the State’s BART determinations that EPA determined conformed to the statute, even when EP A expressed concerns with the State’s underlying analysis. See , e.g. , 77 Fed. Reg. at 72,517. EPA thus did not improperly elevate its own preferences or policies over the State’s BART determinations. Instead, EPA exercised its statutory responsibility to disapprove a SIP that did not conform to th e Act and the Regional Haze Rule. For the reasons discussed in the following sect ions, EPA’s disapproval is fully supported by the administrative record.

2. EPA’s determination that the State’s NO x 

### BART determinations for the coal-fired units did not conform to the Act is reasonable and supported by the administrative record.

Petitioners focus on two reasons for EPA’s disapproval of the State’s NO x 

### BART determinations: EPA’s conclusion that the State had not properly calculated the costs of compliance (resulting in an ov erstatement of the cost of controls), and EPA’s conclusion that the State had not properly considered visibility impacts (resulting in an understatement of the be nefit of controls). Neither argument has

merit.

of Arizona’s analysis did not meet the requ irements of the [Act] and the [Regional Haze Rule].” 77 Fed. Reg. at 72,567. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 26 of 54- 18 - 

### a. The record supports EPA’s conc lusion that the State’s cost analysis was inconsistent with governing law.

One factor a State must consider in determining BART is the cost of compliance. See supra at 4; 40 C.F.R. § 51.308(e)(1)(ii)(A). The BART Guidelines provide that a State’s estimate of the cost of potential control technologies must be documented “either with data supplied by an equipment vendor . . . or by a referenced source (such as the OAQPS Control Cost Manual [(“Cost Manual”)], . . . .). In order to maintain and improve consistency, cost estimates should be based on the [Cost Manual] where possible.” 70 Fed. Reg. at 39,166. In this case, EPA found that the State’s control cost calculations were not consistent with the BART guidelines, and that in some cases they included line item s not contemplated by the Cost Manual (the inclusion of which had the effect of unduly inflating the costs of compliance). 13 

### See 77 Fed. Reg. at 42,841, 42,846, 42,849, 42,851. The State argues that its cost analys is properly included certain “real world

costs” that are not accounted for in the Cost Manual, which it attacks as overly

13 

### Petitioners argue that use of the BART guidelines was not mandatory for the Apache units. State Mot. at 10; see also AEPCO Mot. at 6-7; supra at 5. EPA explained that the guidelines may serve as useful guidance even when they are not binding. See 77 Fed. Reg. at 72,565 n.222. EPA’s disapproval of the State’s NO x 

### BART determination for the Apache units was, moreover, based on the State’s failure comply with the Regional Haze Rule (which is binding), not solely on a failure to comply with the BART Guidelines. 77 Fed. Reg. at 72,521, 72,565-67. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 27 of 54- 19 - 

### generic. 14 

### State Mot. at 11-12; see also PacifiCorp Mot. at 8-9. In response to comments raising similar concerns, befo re taking final action EPA performed supplemental cost analyses for each facility using cost data provided by the utilities and accounting for costs not allowed by the Cost Manual’s methodology. 77 Fed. Reg. at 72,521, 72,530-31; see generally 77 Fed. Reg. at 72,536-43, 72,546-48, 72,558-61. This supplemental analysis – which Petition ers do not even mention – did not change

EPA’s conclusion that certain of the State’s BART determinations were inconsistent with applicable regulations, and in particular that the State’s compliance costs were

inflated. See 77 Fed. Reg. at 72,516-17, 72,530. The non-record evidence cited by the State, see State Mot. at 11-12 (citing Massey Decl aration), cannot now be used in this

record review case to attack that conclusion. 15 

### See supra note 10. As to the claim that EPA has improperly elevated consistency over site-specific cost analysis, see State Mot. at 12, Congress direct ed EPA to develop – and States to follow – nationally-applicable regulations to guide state BART determinations. See 42 U.S.C. § 7491(a), (b). As EPA explained, use of a consistent methodology allows

14 

### Petitioners also argue that the Cost Manual is outdated because it was published in 2002. State Mot. at 11; PacifiCorp Mot. at 9. The Cost Manual, however, translates prices used in the 2002 edition when c onducting analyses in later years. Cost estimations using the Cost Manual’s methodol ogy thus will be va lid whenever they are developed. 15 

### Petitioners’ conclusory assertion that the State’s cost assessment was “correct” similarly cannot rebut the ample record evidence supporting EPA’s contrary conclusion. APS Mot. at 7, SRP Mot. at 8. Arguments that EPA’s FIP cost analysis was improper (see APS Mot. at 8, SRP Mot. at 9) are addressed infra at 40-41. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 28 of 54- 20 - 

### EPA to make fair and reasonable “apples to apples” cost comparisons, and thus to “ensure[] equitable BART determinations ac ross states and across sources.” 77 Fed. Reg. at 72,517-18. Consistency with othe r EPA-approved BART determinations may

also serve as one marker of reasonablenes s and compliance with the Regional Haze Rule. By the same token, a BART determination that is inconsistent with approved determinations for similar sources is more likely to be inconsistent with governing

law. 16 

### See 77 Fed. Reg. at 72,567. Finally, Petitioners largely ignore EPA’s finding that, in addition to overestimating the cost of controls, the State underestimated the effectiveness of selective catalytic reduction in reducing NO x 

### emissions. See 77 Fed. Reg. 42,853, 72,565-66. In addition to being inconsistent with the requirement to consider the “best system of continuous emission control technology availa ble and associated emissions reductions available,” 40 C.F.R. § 51.308(e)(1)(ii)(A), th is underestimation of the effectiveness of

SCR further inflated the State’s estimates of cost effectiveness for control options that

included SCR. 17

16 

### AEPCO similarly cites an EPA statemen t in the proposal that the State’s NO x 

### BART determinations for the coal-fired units were not consistent with BART determinations in other States. AEPCO Mo t. at 6. AEPCO misleadlingly cuts the quotation short; what EPA actually said was that the determinations were “ neither consistent with the requirements of the Act nor with BART decisions that other states have made.” 77 Fed. Reg. at 42,836 (emphasis added). 17 

### Cost effectiveness is measured in dollars per ton of pollutant removed. See 70 Fed. Reg. at 39,167. Thus, understating the effe ctiveness of a particular control (i.e., the (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 29 of 54- 21 - 

### b. The record supports EPA’s co nclusion that the State’s visibility analysis was inconsistent with governing law.

Another factor that a State must cons ider in determining what constitutes BART is the predicted visibility improv ement from using emission controls. See

supra at 4. EPA recognized that the State’s use of visibility models was generally consistent with EPA guidance. 77 Fed. Reg. at 42,841. EPA found, however, that the State’s use of modeling results was “problematic” in multiple respects. Id . Among other things, the State considered the visibi lity benefit of controls at only a single Class I area for each facility, even though th ere are multiple other Class I areas nearby.

Id . As EPA explained, by overlooking signific ant visibility benefits at additional areas, the State understated the visibility benefit of controls. Id .; see also id . n. 26. Based in part on the State’s failure to consider signif icant visibility benefits at more than one nearby Class I area, EPA found that the St ate had failed to fulfill its statutory obligation to appropriately consider visibility impacts. 77 Fed. Reg. at 42,841; see also 77 Fed. Reg. at 72,518-20.

The State claims that in fact it cons idered the visibility impact on “all Class I areas within 300 kilometers of each facility.” State Mot. at 13. 18 

### The State attempts to

amount of pollution it can remove) makes th at control appear more expensive on a dollar per ton basis. 18 

### The State also asserts that EPA disappr oved the SIP without considering whether the SIP as a whole would ac hieve “reasonable progress” towards attaining natural visibility levels. State Mot. at 7; see also id . at 19. As EPA explained, although that is the ultimate goal of the regional haze program, States are required to implement (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 30 of 54- 22 - 

### support this with a citation to the Massey D eclaration, which not only is not part of the administrative record, but which says the opposite of what the State claims it says.

See Massey Declaration ¶ 30.b. (“Arizona focu sed on the single most impacted Class I area for each facility. . . .”). The Stat e’s assertions in its brief are, moreover, contradicted by its own SIP submission (which is in the record), which plainly demonstrates that for at least the Cholla and Apache units, Arizona considered only a single nearby Class I area. See Ex. B (Arizona Section 308 SIP, App. D at 65, Tables 10.12 & 10.13 (Apache Units); 77-78, Tables 11.3, 11.4, 11.5 (Cholla Units))(A.R. No. B.2.) Petitioners also argue that the BART Guidelines allow States to focus on maximum visibility impacts at a single area. 19 

### State Mot. at 13-14; AEPCO Mot. at 8; APS Mot. at 8-9; PacifiCorp Mot. at 9; see also SRP Mot. at 10. As EPA explained, the Guideline language Petitioners rely on wa s intended to give States the flexibility to avoid doing needless additional costly mode ling – as where, for example, visibility BART during a specific time frame – and if a State’s SIP does not satisfy BART requirements, EPA must disapprove that SI P. 77 Fed. Reg. at 72,534; see also infra at 23-25. 19 

### Petitioners assert that EPA expected the St ate to calculate the cu mulative visibility impact of emission controls. State Mot. at 13-14; see also APS Mot. at 8-9, SRP Mot. at 10-11. To the extent that this point is distinct from Petitioners’ argument that the State was entitled to consider visibility im pacts on only a single Class I area, it is inaccurate. EPA noted as part of its own visi bility analysis that cumulative visibility improvement may provide a useful supplementa l measure of the value of controls, but the failure to calculate a cumulative impa ct was not the basis for EPA’s conclusion that the State’s visibility analysis did not conform to the Act. See 77 Fed. Reg. at 42,857; compare 77 Fed. At Reg. 72,518-19. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 31 of 54- 23 - 

### benefits at a single impacted Class I area would justify selection of the most stringent technology as BART. 77 Fed. Reg. at 72,519 . EPA does not, however, interpret the Guidelines to allow States to ignore the visibility improvements that controls would produce in multiple Class I areas, particularly where, as here, the benefits of controls

at those areas have in fact been modeled. 77 Fed. Reg. at 72,519. As discussed supra at 12-13, EPA’s interpretation of its own Gu idelines is entitled to deference. 3. EPA properly promulgated a FIP. Section 110 of the Act provides that EPA “ shall ” promulgate a FIP “ at any time ” within two years after (1) finding that a St ate has failed to make a required submission, (2) finding that a SIP is inco mplete, or (3) disapproving a SI P. 42 U.S.C. § 7410(c)(1) (emphasis added). This obligation is lifted only if “the State corrects the deficiency, and [EPA] approves the plan or plan revi sion” before EPA promulgates a FIP. Id

. The two-year “FIP clock” in Section 110 represents the outside time limit for EPA action. There is no corresponding minimum amount of time that EPA must wait before promulgating a FIP, and no “statu tory right,” State Mot. at 15, to a certain

amount of time to correct SIP deficiencies. Petitioners’ argument to the contrary ignores Section 110’s plain statement that EPA shall promulgate a FIP “at any time” after the FIP clock has begun to run (which , as noted above, in this case was in January 2009). See 77 Fed. Reg. at 72,568-69. As noted infra at 39-40, moreover, a State may also submit proposed SIP revi sions at any time, even after EPA has promulgated a FIP. Contrary to the Stat e’s argument, EPA’s promulgation of a FIP Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 32 of 54- 24 - 

### thus does not “eliminate[]” the State’s opportuni ty to address deficiencies in its SIP.

State Mot. at 15. EME Homer City Generation, L.P. v. EPA , 696 F.3d 7 (D.C. Cir. 2012), PacifiCorp Mot. at 10-11, is not to the cont rary. In that case, the D.C. Circuit found that EPA had acted improperly because it si multaneously defined certain obligations

under the Act and issued a FIP to addr ess those obligations. EME Homer City , 696 F.3d at 31. In this case, by contrast, the Regional Haze Rule was promulgated in 1999, and the BART Guidelines were promulgated in 2005. The Guidelines, in turn, provide States with detailed instructions on how to, inter alia, analyze the five statutory factors and set emission limits re presenting BART for individual sources.

See supra at 4-5. The State thus cannot cred ibly argue that it did not know or understand its obligations under the visibi lity protection provisions of the Act, the Regional Haze Rule, or the BART Guidelines – or, for that matter, that it was not

forewarned of EPA’s concerns with the State’s proposed SIP. See supra at 7-8; 77 Fed. Reg. at 72,570-71. The new “par ameters” that PacifiCorp claims EPA introduced in the FIP, PacifiCorp Mot. at 11, are not new legal obligations or standards – they are, instead, simply the re sult of applying longstanding rules and guidelines to the facilities at issue. 20

20 

### If PacifiCorp’s argument is taken to its logical conclusion, EPA would never be able to issue a FIP – any reason for disapproving a SIP wo uld establish a new “parameter,” and EPA would be required to provide an oppor tunity to correct the deficiency. The (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 33 of 54- 25 - 

### Petitioners have thus failed to demons trate that they are likely to succeed on the merits of their claim that EPA prematur ely promulgated a FIP. As discussed in the following sections, moreover, the emi ssion limits in the FIP are reasonable and supported by the administrative record.

a. EPA’s BART determinatio ns for Apache Units 1, 2, and 3 are reasonable.

The FIP includes a NO x 

### emission limit of 0.056 lb/mmBtu for Apache Unit 1 and a limit of 0.070 lb/mmBtu to be aver aged across Apache Units 2 and 3, with a five-year compliance deadline. 77 Fed. Re g. at 72,514. AEPCO’s attacks on these

limits are meritless. AEPCO argues that EPA failed to comply with the Regulatory Flexibility Act, 5 U.S.C. §§ 601-612 (“RFA”), which requires agencies to prepare a “regulatory flexibility analysis” describing the impact cer tain rules will have on small entities. AEPCO Mot. at 9; see 5 U.S.C. § 603. This requiremen t does not apply if the head of the agency certifies “that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entiti es.” 5 U.S.C. § 605(b). EPA found that one of the entities affected by the FIP – AEPCO – is a “small entity.” 77 Fed. Reg. at 72,575. The Administrator thus issued a ce rtification pursuant to 5 U.S.C. § 605(b). 77 Fed. Reg. at 72,575-76. AEPCO does not argue that EPA’s conclusion that the cycle of submission/disapproval/time for correction could go on indefinitely, endlessly frustrating Congress’ express di rective that EPA promulgate a FIP to effectuate the requirements of the Act if a State fails to do so through its SIP. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 34 of 54- 26 - 

### FIP will affect only one sma ll entity was erroneous, nor could it credibly argue that one is a “substantial number;” thus, AEPCO cannot demonstrate that EPA failed to comply with the RFA. 21 

### Even where a formal regulatory flexibilit y analysis is not required, as a matter of policy EPA assesses a rule’s adverse impact on small entities and minimizes that impact to the extent possible. 77 Fed. Re g. at 72,543. AEPCO has not demonstrated that EPA acted inconsistently with this policy. See AEPCO Mot. at 9. EPA asked AEPCO to provide information on “the ec onomics of operating Apache Generating Station and what impact the installation of SCR may have on [those economics].” 77 Fed. Reg. at 72,575. Before finalizin g the FIP, EPA thoroughly considered information provided by AEPCO concerni ng its structure as a cooperative, its operations, and its customer base. See generally 77 Fed. Reg. at 72,538-42. EPA concluded that AEPCO had not demonstrated that installing technology required to

meet the FIP NO x 

### emission limits would affect its cont inued viability. 77 Fed. Reg. at

21 

### AEPCO further claims that by acting on different portions of the State’s SIP at different times, EPA “reduced the small numb er of entities substantially.” AEPCO Mot. at 9. AEPCO cites no record evidence to support this claim, which was not raised in comments and therefore has been waived. See Marathon Oil Co. v. United States , 807 F.2d 759, 767 (9 th 

### Cir. 1986) (court will not consider issues not presented to administrative agency at appropriat e time). The suggestion that EPA deliberately split its actions in order to “deprive AE PCO of the RFA’s protections,” AEPCO Mot. at 9, is equally unsupported, as well as being contrary to the presumption of good faith and regularity that attaches to agency actions. See Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv. , 378 F.3d 1059, 1071-72 (9 th 

### Cir. 2004) (agency is afforded presumption of regularity). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 35 of 54- 27 - 

### 72,540-41. EPA did, however, take AEPCO ’s status as a small entity and a rural electric cooperative into account by setting a 30-day rolling average NO x 

### emission limit of 0.070 lb/mmBtu (which is higher th an the limits set for other units) with a five-year compliance deadline. 77 Fed. Reg. 72,542; see also id . at 72,514. AEPCO asserts that EPA “overstated” AEPCO’s technical and financial ability to comply with the NOx emission limits adopt ed in the FIP, and in particular that EPA improperly assumed that AEPCO could offset the cost of controls through power sales both to AEPCO’s members and to non-members. AEPCO Mot. at 11.

This is not accurate. EPA’s contractor analyzed two scenarios: one under which AEPCO’s members pay 100% of the control cost (as AEPCO argues they will do), and one under which a portion is paid by members and a portion through off-system

sales to non-members. The record demonstr ates that EPA considered both of these scenarios in assessing the economic impa cts of its BART determination for the Apache units:

The contractor’s Incremental Cost Model calculated an increment in revenue requirements for AEPCO’s member cooperatives of 12.7% under the scenario that spreads the incremental SCR cost across all kWh produced at Apache, both Member Co-ops and off-system or nonMember sales

. Under the alternative scenario that the incremental cost for SCR is covered exclusively by member cooperatives, the incremental revenue requirement was 15.4%

. 77 Fed. Reg. at 72,540-41 (italics and underlining added); see generally id . and Table 6. AEPCO quotes the underlined language, but ignores the immediately following Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 36 of 54- 28 - 

### italicized language that demonstrates that EPA considered precisely the scenario that

AEPCO now claims it did not. 22 

### b. EPA’s BART determinations for Cholla Units 2, 3, and 4 are reasonable.

The FIP includes NO x 

### emission limits of 0.055 lb/mmBtu for Cholla Units 2, 3, and 4. APS argues that these limits are unreasonable because EPA purportedly underestimated the costs of installing and operating emission control technology at

Cholla. APS Mot. at 7-8. APS offers virt ually no support for this argument, pointing only to its own comments on the proposed FIP. APS Mot. at 8. In response to these comments, EPA performed a supplemental financial analysis taking into account

additional financial informati on submitted by APS. See 77 Fed. Reg. at 72,546-48. EPA found that the results of this analys is (which also addresses APS’s concern regarding the use of non-site specific infor mation, APS Mot. at 8) still supported its conclusion that the relevant technology is cost -effective. 77 Fed. Reg. at 72,548. APS does not even mention this supplemental analysis, let alone identify any supposed flaws in EPA’s approach. 23

22 

### AEPCO also argued that EPA overstated AEPCO’s generating capacity. AEPCO Mot. at 11. Any such overstatement would, however, be relevant only in considering AEPCO’s capacity to sell to non-members – the very scenario that AEPCO argues EPA should not have considered. 23 

### SRP makes a similar argument that EPA underestimated the costs for SCR at the Coronado facility – which EPA similarly addr essed in a supplemental financial analysis following SRP’s comments. SRP Mot. at 8-9; 77 Fed. Reg. at 72,558-60. Both APS and SRP attack EPA’s use of one component of EPA’s Integrated Planning Model (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 37 of 54- 29 - 

### APS further asserts that the FIP’s NO x 

### emissions limits cannot be achieved at Cholla. See generally APS Mot. at 9-11. EPA’s thorough analysis demonstrated otherwise, and APS’s non-record declaration cannot be used in a record review case to undermine that analysis. See supra note 10; APS Mot. at 11; compare 77 Fed. Reg. at 72,543-46. In a reversal from its earlie r position regarding the impropriety of using non-site specific information, APS points to actions in which EPA accepted the use – at different facilities, in different cont exts, and based on different administrative records – of less stringent NO x 

### limits than 0.055 lb/mmBtu. 24 

### APS Mot. at 10; see

also SRP Mot. at 12. As EPA explained in response to comments, however, BART determinations “are performed on a site-spe cific basis.” 77 Fed. Reg. at 72,544. EPA’s conclusion that less-stringent NO x 

### emission limits represented BART at other facilities does not mean that its determination that a 0.055 lb/mmBtu NO x 

### emission limit represents BART at this facility is irrational. APS al so fails to acknowledge that EPA’s analysis showed that the control efficiency on which the Cholla limit is based is well within the range achieved at other similar units. 77 Fed. Reg. at 72,544-45. (“IPM”) in its cost analysis as improperly relying on generic information. APS Mot. at 8, SRP Mot. at 9. EPA fully explained it s limited use of one component of the IPM, and Petitioners offer nothing to rebut that explanation. See 77 Fed. Reg. at 72,530. 24 

### APS also refers to a statement in EPA ’s Transport Rule Engineering Feasibility Response to Comments stating that current technology can remove NO x 

### “subject to a floor limit of [0.06 lb/mmBtu ].” APS Mot. at 10. As EPA explained in response to comments on the proposed FIP, this limit was “based on assumptions that would be minimally achievable to a broad array of covered sources,” as opposed to a sitespecific analysis of the best available system of continuous emission controls. 77 Fed. Reg. at 72,528-29. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 38 of 54- 30 - 

### The FIP also includes a requirement th at Cholla Units 2 and 3 achieve a 95%

SO 2 

### removal efficiency rate. 77 Fed. Reg. at 72,514-15. Petitioners argue that EPA failed to seek comment on this requirement. APS Mot. at 11-12; see also PacifiCorp Mot. at 12-13. A final regulation that varies from a proposal is valid as long as it is “in character with the original proposal and a logical outgrowth of the notice and

comments.” Envtl. Def. Ctr. v. EPA , 344 F.3d 832, 851 (9 th 

### Cir. 2003) (citation omitted). EPA did not propose a 95% SO 2 

### removal requirement, see APS Mot. at 11; however, APS stated in its own comments that after planned upgrades the Cholla units

could achieve 95% SO 2 

### control. 25 

### See APS Comments (Ex. 2 to APS Mot.) at 27 (describing planned upgrades), 63 (maximum rate of SO 2 

### removal continuously achievable after planned upgrades will be 95%); 77 Fed. Reg. at 72,523 (noting APS comment regarding removal efficiency following upgrade); see also id . at 72,524. The

95% SO 2 

### removal requirement in the FIP is th us the very definition of a “logical outgrowth” of the proposal. See Envtl. Def. Ctr. , 344 F.3d at 851 (court considers “whether the complaining party should have anticipated that a particular requirement might be imposed”).

25 

### APS’s statements in its motion and in th e supporting Gifford Declaration appear to contradict those comments. See APS Br. at 12; Gifford Declaration (Ex. 5 to APS Mot.) ¶ 10. APS’s post hoc change of position cannot render EPA’s action unreasonable, as EPA could consider only the in formation before it at the time that it acted. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 39 of 54- 31 - 

### The requirement that Cholla average plantwide emissions is similarly a logical outgrowth of an APS comment requesting that it be given “the flexibility of averaging

NOx emissions across all three BART-e ligible units at the Plant.” See APS Mot. at 12, PacifiCorp Mot. at 11-12; compare APS comments at 16. Petitioners’ unhappiness with the fact that EPA made averaging manda tory rather than optional does not mean

that this result was unforeseeable. 26



### c. EPA’s BART determinations for Coronado Units 1 and 2 are reasonable.

The FIP includes a NO x 

### emissions limit of 0.065 lb/mmBtu averaged across the two Coronado units, with a five-year comp liance deadline. 77 Fed. Reg. at 72,515 and Table 1. SRP argues that this limit is inappropriate because (1) Coronado Unit 2 is subject to a NO x 

### emission limit of 0.080 lb/mmBtu pursuant to a consent decree, and that this emission limit is allegedly as stringent as BART; and (2) if Unit 2 emits the full 0.080 lb/mmBtu of NO x 

### allowed by this consent d ecree, Unit 1 will have to meet a 0.050 lb/mmBtu emission limit (w hich SRP argues is unachievable) to maintain the plantwide average. SRP Mot. at 5, 6-7, 11-12. As EPA explained, SRP’s claim that the consent decree emissions limit is by definition as stringent as BART is based on SRP’s misunderstanding of EPA’s BART guidelines. See 77 Fed. Reg. at 72,553-54. The BART guidelines state that emission

26 

### In an abundance of caution, EPA has no netheless granted reconsideration on this issue, as well as on similar claims raised by SRP and PacifiCorp. See SRP Mot. at 13- 14; PacifiCorp Mot. at 11-12. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 40 of 54- 32 - 

### limits in settlement agreements or consen t decrees resolving claims under other provisions of the Act often may represent BART, but they do not establish a presumption that this is the case. 77 Fed. Reg. at 72,553; see also 70 Fed. Reg. at 39,164 (standards in “many” PSD determin ations or settlement agreements may be relied on for purposes of BART). In this case, EPA took the consent decree into account in making a NO x 

### BART determination for the Coronado units, but concluded that the decree did not represent BA RT either for Unit 2 or for the facility as a whole. 77 Fed. Reg. at 72,553. SRP offers nothing beyond its mistaken understanding of the BART Guidelines to suggest that that conclusion was flawed.

See SRP Mot. at 7-8. As to SRP’s averaging argument, see SRP Mot. at 11-12, the consent decree

sets a maximum NO x 

### emission level for Coronado Un it 2, not a minimum, and SRP’s own analysis shows it would be technica lly feasible for Unit 2 to achieve NO x 

### emission rates below the level allowed by th e decree (thereby creating more room for emissions at Unit 1). 27 

### See 77 Fed. Reg. at 72,555-56. The purported Unit 1 NO x 

### emissions limit of 0.050 lb/ mmBtu is thus SRP’s own creation, not EPA’s. The fact

that EPA has stated that an emissions limit that it did not impose is not achievable at

27 

### SRP submitted an analysis of various meas ures that could be taken to improve the performance of the current SCR design for Unit 2. 77 Fed. Reg. at 72,555. Based on this analysis, EPA found that installation of a “low-load temperature controller” would allow Coronado Unit 2 to achieve a 30-day rolling average NO x 

### emission rate of 0.072 lb/MMBtu and would be cost-eff ective. 77 Fed. Reg. at 72,555-56. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 41 of 54- 33 - 

### Coronado does not mean that the limit that it did impose is equally unachievable. 28



### See 77 Fed. Reg. at 72,554-55. d. EPA considered the “presumptive” NO x 

### emission limits in the Guidelines, but found they were not appropriate for these sources.

APS’s claim that the NO x 

### emission limit in the FI P is improper because EPA

“did not consider” the Gu idelines’ presumptive NO x 

### emissions limit, APS Mot. at 11 n.3, is demonstrably untrue. EPA did consider this limit, but concluded that in this case, because of the nature of the fuel hi storically used at the Apache, Cholla, and Coronado units, there is no single presumpt ive NOx emission limit that applies to any

of these units. 29 

### 77 Fed. Reg. at 72,529. EPA went on to state that for that reason, rather than relying on the numerical presumptive limits in the BART Guidelines, it had

considered the basis for those limits – including the use of combustion control technology, boiler type, and coal type – in an alyzing the BART factors for each facility.

28 

### SRP’s discussion of other instances in which EPA has found such a limit unachievable, see SRP Mot. at 12-13, is thus be side the point. The distinctions between the other actions identified by SR P and EPA’s BART determination here are fully explained in the record. See 77 Fed. Reg. at 72,528-29. 29 

### Because EPA concluded that the presumptive NO x 

### limit in the guidelines was not applicable to any of the coal-fired units, the State’s assertion that the NO x 

### emission limits in the SIP conformed to those Guidelines , State Mot. at 10, is beside the point. That assertion is in any event not entirely consistent with the administrative record. Compare , e.g., Massey Declaration ¶ 20, Tabl e 1 (stating that presumptive NO x 

### emission limit for Coronado Unit 2 is 0.32 lb/mmBtu because Unit 2 burns bituminous coal) with Ex. D at 3 (SRP comments stating Coronado currently burns subbituminous coal) (A.R. Doc. No. I 20) and 70 Fed. Reg. at 39,172, Table 1 (presumptive NOx emission limit is 0.23 lb/mmBtu where fuel is subbituminous coal). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 42 of 54- 34 - 

### e. The FIP complies with applicable laws. PacifiCorp argues that the FIP is inc onsistent with Executi ve Orders 12866 and 13211, both of which EPA concluded did not apply to this action. See 77 Fed. Reg. at 72,575-76); PacifiCorp Mot. at 13-14. An agency’s alleged noncompliance with these Executive Orders is not subject to judici al review in any event, and thus is not a basis for finding that PacifiCorp is likely to succeed on the merits. See Exec. Order No. 12,866, Sec. 10, 58 Fed. Reg. 51,735 (O ct. 4, 1993) (order “is intended only to improve the internal management of the Federal Government, and does not create any right or benefit, substantive or procedur al, enforceable at law or equity by a party against the United States . . . ”); Exec. Orde r No. 13,211, Sec. 5, 66 Fed. Reg. 28,355 (May 22, 2001) (same); Morongo Band of Mission Indians v. FAA , 161 F.3d 569, 575 (9 th 

### Cir. 1998) (orders with iden tical language “specifically st ate that they do not create any right to judicial review for alleged noncompliance”). PacifiCorp also argues that EPA failed to comply with the Unfunded Mandates Reform Act (“UMRA”), which requires agencies to prepare certain analyses if a rule includes “Federal mandates” that may result in aggregate expenditures of $100 million or more by state, local, or tribal government s or the private sector. PacifiCorp Mot. at 13-14. PacifiCorp’s claim that EPA has not considered whether aggregate costs to the private sector may exceed $100 million, PacifiCo rp Mot. at 13-14, is flatly contradicted by the administrative record. See 77 Fed. Reg. at 72,551 and n. 174 (concluding that aggregate costs will not exceed $65 million) . PacifiCorp’s true complaint appears to Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 43 of 54- 35 - 

### be that EPA did not consider whether this action in combination with other actions will impose aggregate costs of over $100 million. PacifiCorp Mot. at 13-14. PacifiCorp has, however, identified nothing in UMRA or any other law that requires EPA to do so, and offered no rebuttal to EPA’s demonstration that such an analysis is not required. See 77 Fed. Reg. at 72,551. Petitioners have, in sum, failed to dem onstrate that they are likely to succeed on the merits of any of their claims – or even that there is a serious question in that regard – and their stay motions should ther efore be denied. Petitioners have, however,

also failed to meet their burden with regard to the remaining stay factors.

B. Petitioners Have Not Shown I rreparable Harm Absent A Stay. The utility Petitioners argue that they wi ll be irreparably harmed absent a stay because they must spend money to comply with the FIP, and these costs cannot be recovered even if they prevail on the merits. See , e.g. , AEPCO Mot. at 12-14; APS Mot. at 14-16; PacifiCorp Mot. at 15-17. EPA does not dispute that complying with the FIP will impose significant costs on th e affected facilities by the December 2017 compliance date. 30 

### As multiple Courts of Appeals have held, however, the cost of complying with a law or regulation does not constitute irreparable harm for purposes of obtaining a stay. See Freedom Holdings, Inc. v. Spitzer , 408 F.3d 112, 115 (2d Cir.

30 

### EPA does not concede that Petitioners’ speci fic cost claims are necessarily accurate; indeed, some of those claims ap pear to be inflated. Compare , e.g ., APS Mot. at 15 (claiming costs of $1.3 million each for Cholla Units 3 and 4) with Gifford Decl. (Ex. 5 to APS Mot.) ¶ 11 (testifying to cost of $500,000 total for Cholla Units 3 and 4). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 44 of 54- 36 - 

### 2005) (“ordinary compliance costs are typically insufficient to constitute irreparable harm”); Am. Hosp. Ass’n v. Harris , 625 F.2d 1328, 1331 (7 th 

### Cir. 1980) (same); A.O. Smith Corp. v. FTC , 530 F.2d 515, 527 (3 rd 

### Cir. 1976) (same). As the Third Circuit noted in A.O. Smith Corp ., any time a corporation complies with government regulations it spends (unrecoverable) money to do so. A.O. Smith Corp ., 530 F.2d at 527. If the costs of compliance with a ch allenged regulation constituted irreparable harm, that prong of the stay standard wo uld be stripped of all meaning in any challenge to agency regulations. Cf . Graphic Commc’ns Union, Chicago Paper Handlers’ & Electrotypers’ Local No. 2 v. Chicago Tribune Co ., 779 F.2d 13, 15 (7 th 

### Cir. 1985) (costs of engaging in arbitr ation did not constitute irreparable harm warranting stay of arbitration order; “[o]th erwise every order to arbitrate would be deemed to create irreparable harm, and it would be easy to get such orders stayed.”). Cases cited by Petitioners for the proposit ion that unrecoverable monetary loss may constitute irreparable harm did not concer n the cost of complying with laws or regulations, and thus are not helpful. 31 

### It is, moreover, undisputed that a st ay would not relieve Petitioners of the obligation to install and operate BART – the only question is what technology constitutes

31 

### See Cal. Pharmacists Ass’n v. Maxwell-Jolly , 563 F.3d 847, 851-52 (9 th 

### Cir. 2009) (loss of revenues due to reduction in re imbursement rates constituted irreparable harm); see also Ariz. Hosp. & Healthcare Ass’n v. Betlach , 865 F. Supp. 2d 984, 998- 1000 (D. Ariz. 2012) (although loss of reve nue due to reduced reimbursements could constitute irreparable harm, plaintiffs ha d failed to make requisite demonstration of “considerable” loss). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 45 of 54- 37 - 

### BART at each facility. See AEPCO Mot. at 15, APS Mot. at 20, SRP Mot. at 19-20;

see also 77 Fed. Reg. at 42,840 (all facilities agree with State’s determination they are subject to BART). If, as Petitioners c ontend, they must begin incurring compliance costs immediately if they are to meet the Rule’s compliance deadline (see , e.g ., APS Mot. at 13-14; SRP Mot. at 14; PacifiCorp Mot. at 15), then unless they are prepared to gamble on the possibility that they will be able to demonstrate that EPA’s actions were arbitrary or capricious they must begi n spending that money whether the Rule is stayed or not. Petitioners’ solution to this inescapable problem is to request that the Court extend the compliance deadline by the length of any stay. See , e.g ., APS Mot. at 20; SRP Mot. at 20; PacifiCorp Mot. at 20. The bulk of Peti tioners’ claimed harm, however, derives from the FIP’s NO x 

### emission limits, and the December 2017 compliance deadline for those limits is alre ady set at the maximum time allowable by

law. See supra at 5-6. Petitioners cite no authority that even suggests that the Court has jurisdiction to delay the implementati on of BART beyond the deadline mandated by Congress simply to accommodate this litigation. Cf . Munoz v. Ashcroft , 339 F.3d 950, 957 (9 th 

### Cir. 2003) (Court could not to ll deadline where congress created statutory cutoff date for certain applications). The Third Circuit has suggested in dict a that compliance costs may constitute irreparable harm in the rare circumstance in which those costs are “so great vis a vis the corporate budget that significant changes in a company’s operations would be necessitated,” or where compliance wo uld “permanently injure” a company’s Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 46 of 54- 38 - 

### reputation or goodwill. A.O. Smith , 530 F.2d at 528. Petitioners SRP, APS, and PacifiCorp do not even suggest that their co mpliance costs will rise to this level. AEPCO argues that it will be required to spend approximately $192 million to implement what it characterizes as “una ffordable” BART requirements. AEPCO Mot. at 12. EPA already fully considered AEPCO’s cost information, however, and determined that the BART requirements in th e FIP will not affect the viability of the Apache Generating Station operated by AEPCO. See supra at 25-28. AEPCO cites no new evidence to the contrary. AEPCO also points to a “threat” th at its members may purchase power from other sources to avoid the costs of complyin g with the FIP, or may seek to withdraw from AEPCO entirely, which would in turn supposedly cripple AEPCO’s operations. AEPCO Mot. at 13. During the comment period EPA specifically requested that AEPCO provide EPA with information concerning its members’ options for purchasing power outside of AEPCO – and at that time, AEPCO said nothing to suggest that its members might seek to wi thdraw from AEPCO or to otherwise avoid contractual obligations. See Ex. C (AEPCO Response #13) (AR Doc. 18.e). Even now, AEPCO offers nothing more than declar ations stating that its various members are considering their options. See id .; see also Declaration of J. Tyler Carlson (AEPCO Ex. B) ¶ 10 (“Unless relief is gran ted and AEPCO’s forecast capacity and energy charges lowered, ME C will have no choice but to examine all possible options for providing power”) (emphasis added); Decl aration of Creden W. Huber (AEPCO Ex. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 47 of 54- 39 - 

### C) ¶ 10 (same); Declaration of Vincent Ni tido (AEPCO Ex. D) ¶ 8 (same). This speculative testimony is insufficient to establish irreparable harm. See Winter , 555 U.S. at 22 (citation omitted) (plaintiff must “demonstrate that irreparable injury is likely ;” issuing preliminary injunction based onl y on possibility of irreparable harm “is

inconsistent with our characterization of in junctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief”); Alliance for the Wild Rockies , 632 F.3d at 1131.

The State does not claim it will incur any costs itself, point ing instead to the costs that will be incurred by the utility Petitioners, and in turn presumably passed on

to consumers. State Mot. at 16-17. Other Petitioners also point to costs that will be passed on to their retail customers. AEPCO Mo t. at 12; APS Mot. at 16 n.4. Costs borne by third parties do not, however, consti tute irreparable harm to the Petitioners.

See Nken , 556 U.S. at 434 (court must determine whether the applicant will be irreparably injured without a stay). 32 

### Nor did EPA’s action “eliminate[] Ariz ona’s authority over its regional haze program” or otherwise limit Arizona’s sovereignty. State Mot. at 17-18; see also APS Mot. at 18. As discussed supra at 14-17, EPA acted well within its rights when it disapproved SIPs that did not conform to fe deral law, and once it had done so it was obligated to promulgate a FIP unless the Stat e first corrected the deficiencies in its

32 

### To the extent that third-party costs are relevant to the public interest analysis, they are discussed in the next section. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 48 of 54- 40 - 

### SIP. The fact that Arizona disagrees with EPA’s fulfillment of it s obligation to ensure that implementation plans conform to the Ac t does not convert EPA’s action into an improper infringement of state sovereignt y. Arizona could, moreover, submit a further proposed SIP revision to EPA at any time – in fact, EPA explicitly encouraged the State to do precisely that when it proposed to disapprove the original SIP

submission. See 77 Fed. Reg. at 42,834 This case is thus distinguishable from those in which courts found irreparable harm based on some actual limitation on state sovereignty. 33 

### C. Neither The Balance Of Equities No r The Public Interest Favors A Stay

. A party seeking a stay must show “that th e balance of equities tips in his favor, and that a [stay] is in the public interest.” Winter , 555 U.S. at 20. In a failed effort to satisfy this burden, Petitioners re-state their arguments concerning the costs of compliance with the FIP and EPA’s supposed infringement on state sovereignty. See , e.g ., AEPCO Mot. at 14, 16; SRP Mot. at 17 -18; PacifiCorp Mot. at 18. For the reasons discussed supra , those arguments are without merit. Petitioners also argue that the cost of in stalling additional em ission controls will, in turn, lead to higher rates for cons umers and other undesirable economic side

33 

### See Coal. for Econ. Equity v. Wilson , 122 F.3d 718, 719 (9 th 

### Cir. 1997) (declining to enter stay that would prevent implementa tion of state constitutional provision); Kansas v. United States , 249 F.3d 1213, 1227-28 (10 th 

### Cir. 2001) (upholding stay of decision that tract of land constituted “Ind ian lands;” designation as such prevented state from adjudicating applic ability of certain laws). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 49 of 54- 41 - 

### effects. AEPCO Mot. at 12, 14; see also State Mot. at 18, 20; PacifiCorp Mot. at 18. AEPCO is the only petitioner that argues this point with any specificity, pointing to its “small and relatively poor rate base,” an d arguing that these retail customers will be unfairly burdened with higher rates due to the costs of installing control technology. 34 

### AEPCO Mot. at 12. After considering in formation provided by AEPCO, however, EPA found that projected AEPCO rate increa ses, while not trivial, were comparable to average historical rate increases fo r AEPCO ratepayers, and “should not cause greater hardship than a similar increase else where in the country.” 77 Fed. Reg. at 72,541. These increases are, moreover, projected to occur seven years in the future – well beyond the point at which litigation over the FIP should have concluded. Id

. AEPCO has not identified any record evidence that undermines these conclusions, or otherwise identified any flaws in EPA’s analysis. Pointing to the Regional Haze Rule’s goal of achieving natural visibility conditions by 2064, Petitioners argue that a stay will not impair the public interest because there is, in their view, no pa rticular rush to reach that goal. 35 

### AEPCO Mot.

34 

### The State makes the conclusory statemen t that increased costs caused by EPA’s action will “impact[] the overall economy an d labor markets in a time of high unemployment,” State Br. at 18. The same thing could undoubtedly be said of any number of agency actions, and the State offers no evidence that this particular action will have a significant enough impact to warrant the extraordinary remedy of a stay. 35 

### The State asserts that its own analysis – which EPA concluded was significantly flawed, see 77 Fed. Reg. at 72,565-66 – demonstrat es that the FIP will yield only an imperceptible visibility improvement. State Mot. at 8; see also SRP Mot. at 18-19. EPA’s analysis, however, demonstrates otherwise. See 77 Fed. At Reg. 42,858, Table (footnote con’t) Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 50 of 54- 42 - 

### at 14-15; State Mot. at 18-19; APS Mot. at 19; SRP Mot. at 18-19; PacifiCorp Mot. at 19. This argument is without merit. In addition to establishing an overall national goal of preventing and remedying manmade visibility impairment in Class I Federal areas, Congress specifically required th at certain sources install BART “as expeditiously as practicable but in no event later than five year s after [approval or promulgation of a regional haze implementation plan] .” 42 U.S.C. § 7491(a )(1), (b)(2)(A) (emphasis added). Congress also specifically mandated that regional haze SIPs be submitted by December 17, 2007. Pub. L. No. 108-99 di v. G., title IV, § 425(a), 118 Stat. 417 (2004). Pursuant to Section 110(k) of th e Act, EPA would have been required to approve or disapprove such plans by June 17, 2009. Thus, Congress intended that BART be fully implemented by June 17, 20 14 (or in the event of a SIP disapproval and subsequent FIP, by June 17, 2016). Petitioners’ judgment as to the relative importance of Congress’ mandate as opposed to the effort and expense required to comply with the FIP is not relevant. If a stay is granted, and the FIP is ultimately upheld, the statutorily-mandated BART pr ocess will have been delayed for the pendency of this litigation, to the ultimate detriment of the public. Finally, Petitioners argue that the “non- health nature of the FIP” weighs in favor of a stay. AEPCO Mot. at 14; see also State Mot. at 19; APS Mot. at 19-20; SRP Mot. at 19; PacifiCorp Mot. at 18. Al though the FIP effectuates the visibility 17; 77 Fed. Reg. at 42,861, Table 20; 77 Fed. Reg. at 42,863, Table 23; see also 77 Fed. Reg. at 72,533-34 (responding to comme nts on EPA’s visibi lity analysis). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 51 of 54- 43 - 

### protection provisions of the Act, that does not mean that it has no collateral health or environmental benefits. The particulates in the atmosphere that cause regional haze

can also cause serious health effects in humans, and contribute to other environmental damage. 77 Fed. Reg. at 42, 837. This argument is, moreover, merely a variant on Petitioners’ meritless contention that Congress’ visibility protection goals are of no particular importance or urgency. Nor is it significant that the facilities at issue have emission controls in place designed to meet the requirements of other provisions of the Act. See APS Mot. at 19 (arguing that emissions at the Cholla units are already well-controlled); SRP Mot. at 18 (same). Congress did not merely requir e that emissions be “well-controlled” to protect visibility; rather, it expressly requ ired that facilities subject to BART adopt BART controls “as expeditiously as prac ticable.” The FIP ensures that this requirement will be carried out, and the public interest would not be served by delaying implementation of the FIP.

IV. CONCLUSION For all of the foregoing reasons, Petitione rs’ Motions for Stay should be denied.

Respectfully submitted, IGNACIA S. MORENO Assistant Attorney General /s/ Angeline Purdy

__________________________ ANGELINE PURDY Environmental Defense Section Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 52 of 54- 44 - 

### Environment & Natural Resources Division United States Department of Justice P.O. Box 7611 Washington, D.C. 20044 (202) 514-0996 Counsel for Respondents

Of Counsel:

CHARLOTTE WITHEY U.S. Environmental Protection Agency, Region IX Office of Regional Counsel

M. LEA ANDERSON U.S. Environmental Protection Agency Office of General Counsel

May 17, 2013 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 53 of 54- 45 - 

### CERTIFICATE OF SERVICE I hereby certify that on May 17, 2013, I filed the foregoing Opposition to Stay Motions (under cover of the accompanyi ng Unopposed Motion for Enlargement of Brief Size) via the Court’s CM/ECF system, which will electronica lly serve all counsel

of record.

/s Angeline Purdy

____________________ Angeline Purdy Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-3 Page: 54 of 54

### STATE OF ARIZONA, et al.,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al.

No. 13-70366 (and consolidated cases)

EPA’S CONSOLIDATED OPPOSITION TO STAY MOTIONS



# EXHIBIT A Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-4 Page: 1 of 4

# ARIZONA DEPARTMENT

OF 

# ENVIRONMENTAL QUALITY

11 10 West Washington Street Phoenix, Arizona 85007 

# @

"**a

Janet Napolitano (602) 771 -2300 www.azdeq.gov Stephen A. Owens Governor Director



# DEC 2 

## 4m

Mr. Wayne Nastri Regional Administrator U.S. Environmental Protection Agency, Region 

### IX 75 Hawthorne Street, ORA-1 San Francisco, CA 94 105 

# RECEIVED

Air Division, AIR 

### - 

## Lf U.S. WA, REGCON 9

of 

### Arizona Regional Haze State Implementation Plan

Arizona Department of Environmental Quality (ADEQ) hereby submits to the U.S. Environmental Protection Agency (EPA), the 

### Arizona Regional Haze State Implementation Plan and Arizona Regional Haze State Implementation Plan Revision as originally submitted on December 23,2003, and December 3 1,2004, respectively.

Plan submittal is consistent with the provisions of 

### Arizona Revised Statutes (ARS) Title 49, 5549- 104, 49-1 06, 49-404,49-406, 49-414, and 49-4 14.0 1 and the 

### Code of Federal Regulations (CFR) Title 40, 

## 5 55 1.102-5 1.104. The plan also complies with the public process requirements in Section 

### 1 1 O(a)(l) and (a)(2) of the Clean Air Act; 40 CFR 55 1.102 regarding preparation, notice, and submission of state implementation plans; and Arizona Revised Statutes 49-425 regarding notice and pubic review of rules.

The 2003 plan contains all the provisions required by the Federal Regional Haze Rule, 40 CFR 55 1-309 (64 FR 357 14, July 1, 1999) for Arizona's four mandatory Federal Class 1 areas on the Colorado Plateau (see Attachment 1). The 2004 plan revision contains a statutory correction and rule packages related to emissions trading and smoke management, including three Arizona county rules with independent authority to regulate open burning. This plan submittal does not include provisions under §309(d)(4) or §309(g). Due to the new requirements for stationary source control strategies based on the decision rendered in 

### Center for Energy and Economic Development (CEED) v. EPA, 398 F.3d 653 (DC Cir. 2005), Arizona has not been able to complete revisions to §309(d)(4) or complete §309(g) by the deadline of December 17,2007.

Northern Regional Office Southern Regional Office 1801 W. Route 66 Suite 11 7 Flagstaff, AZ 86001 400 West Congress Streete Suite 433 Tucson, AZ 85701 (928) 779-03 1 3 (520) 628-6733 Printed on recycled paper Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-4 Page: 2 of 4

### Mr. Wayne Nastri Page 2

If 

### you have any questions, please contact Nancy Wrona, Director, Air Quality Division, at (602) 77 1-2308 or Diane Arnst, Air Quality Planning Section Manager, at (602) 77 1-2375. Sincerely,

Attachment (1) cc: Nancy Wrona, ADEQ Colleen McKaughan, EPA Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-4 Page: 3 of 4Summary of Requirements for Regional Haze Visibility Impairment Under 40 CFR 51.309

Attachment 1 Nastri-RHaze Submittal 12-08 Requirement of 40 CFR 51.309 (d)(l) Time Period Covered

(d)(2) Projection of Visibility Improvement

(d)(3) Treatment of Clean Air Corridors

(d)(4), (f), and (h) Implementation of Stationary Source Reductions (d)(5) Mobile Sources

(d)(6) Programs Related to Fire (d)(7) Area Sources of Dust Emissions From Paved and Unpaved Roads

(d)(8) Pollution Prevention (d)(9) Additional Recommendations

(d)(10) Periodic Revisions (d)(ll) State Planning and Interstate Coordination

(g) Reasonable Progress for Additional Class I Areas Summary of Approach, Content, or Findings This SIP addresses reasonable progress at the Class I areas on the Colorado Plateau from December 3 1,2003 through December 3 1,201 8. Projected emissions and estimated visibility changes for each of the Class I areas on the Colorado Plateau were performed by the Western Regional Air Partnership (WRAP). The only Clean Air Corridor for the Class I areas on the Colorado Plateau does not include any area within Arizona. Arizona will include the results of future analyses in its periodic plan revisions. General stationary source requirements are contained in Chapter 7. Chapter 8 contains a description of the SO;! Milestone and Backstop Trading Program. Currently Under Revision. Federal programs (such as low sulfur diesel, engine standards, etc.) are identified and describe mobile source emissions throughout the planning period. Arizona revised its open burning and smoke management regulations (A.A.C. R18-2-602 and A.A.C R18-2-1501 

### - 15 15) to address the federal requirements. WRAP'S analysis concluded dust emissions from paved and unpaged roads are currently not a significant regional contributor to visibility impairment within the Colorado Plateau 16 Class I areas. Arizona will continue to support further research on this issue, as it develops its periodic plan revisions under 40 CFR 5 1.309(d)(10). Programs and policies within Arizona related to renewable energy and energy efficiency are described. The status of implementation of other strategies and options in the Grand Canyon Visibility Transport Commission Report are summarized. In addition, an overview of sources in and near each Arizona GCVTC Class I area is included. Arizona will submit periodic plan revisions to this SIP in 2008,2013 and 2018. Arizona has and will continue to participate in the WRAP. As periodic plan revisions are done, consultation will also be made with states and tribes not implementing 40 CFR 5 1.309. A supplement to this plan revision to address regional haze at the Additional 8 Class I areas in Arizona will be developed in accordance with 40 CFR 5 1.309(g)(2-3) and submitted by December 3 1,2008. Revised submittal by December 17, 2007. Currently under development. Chapter in SIP 1.1

Ch. 14

Ch. 6

Ch. 7 (general) Ch. 8 (so21 Ch. 9

Ch. 10

Ch. 11

Ch. 12

Ch. 13

Ch. 16

Ch. 15

Ch. 17 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-4 Page: 4 of 4

### STATE OF ARIZONA, et al.,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al.

No. 13-70366 (and consolidated cases)

EPA’S CONSOLIDATED OPPOSITION TO STAY MOTIONS



# EXHIBIT B Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 1 of 6

## Appendix D Arizona BART – Supplemental Information Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 2 of 6

## Arizona Best Available Retr ofit Technology (BART) Analysis and Determination

Arizona Department of Environmental Quality Technical Support Document Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 3 of 6Technical Support Document for Arizon a BART Analyses and Determinations Page 65 of 115 Step 6: Evaluate Visibility Impacts

Tables 10.12 and 10.13 below show the total deciview reduction for the most impacted Class I area for Units 2 and 3 respectively. For Units 2 and 3, th e most impacted Class I area is the Chiricahua Wilderness Area and National Monument. Table 10.12 – Control Technology and Visibility Impact Reduction for Unit 2

Control Deciview Reduction Total Annualized Cost (Million $) Cost per deciview reduced (Million $/dv) Average Cost ($/ton) Neural Net/Boiler Combustion Control Unknown Unknown Unknown Unknown New LNB with OFA System 0.267 $0.533 $1.996 $408 ROFA 0.359 $1.664 $4.636 $973 ROFA with Rotamix 0.491 $2.225 $4.532 $944 LNB with OFA and SNCR 0.416 $1.738 $4.177 $890 LNB with OFA and SCR 0.676 $6.103 $9.028 $1,878 Table 10.13 – Control Technology and Visibi lity Impact Reduction for Unit 3

Control Deciview Reduction Total Annualized Cost (Million $) Cost per Deciview Reduced (Million $/dv) Average Cost ($/ton) Neural Net/Boiler Combustion Control Unknown Unknown Unknown Unknown New LNB with OFA System 0.206 $0.533 $2.586 $575 ROFA 0.298 $1.634 $5.484 $1,246 ROFA with Rotamix 0.436 $2.182 $5.004 $1,131 LNB with OFA and SNCR 0.356 $1.718 $4.825 $1,113 LNB with OFA and SCR 0.633 $6.062 $9.577 $2,183

Step 7: BART Selection After reviewing the company’s BART analysis, and based upon the information above, ADEQ has determined that, for Units 2 and 3 BART for NO X is new LNBs with the existing OFA system with a NO X emissions limit of 0.31 lb/MMBtu for both Un its 2 and 3 on a 30-day rolling average basis.

E.2 PM 10 BART Analysis Step 1: Identify the Existing Control Technologies in Use at the Source Both Steam Units 2 and 3 are currently equipped with hot-side Electrostatic Precipitators (ESPs). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 4 of 6Technical Support Document for Arizona BART Analyses and DeterminationsPage 77 of 115Table 11.3: Unit 2 Cost and Visibility AnalysisEmission RateNOXRemovalAnnualizedCost1st yr Avg.CostIncrementalControl CostDv Impact for Max. ImpactedArea (Petrified Forest NP)NOXControl Technologieslb/MMBtuTons/yearMillion $$/ton$/ton98th percentiledv reductionmillion $/dvreducedLNB with COFA (Baseline) 0.503 ------LNB with SOFA0.22 3,314 $0.635 $192 $192 0.187 $3.40LNB with SOFA and SNCR 0.17 3,900 $2.175 $558 $2,628 0.218 $9.98ROFA 0.164,017$2.297$572$1,0430.232$9.90ROFA with Rotamix0.12 4,485 $3.384 $755 $2,323 0.261 $12.97LNB with SOFA and SCR 0.07 5,071 $9.625 $1,898 $10,650 0.287 $33.54Table 11.4 – Unit 3 Cost and Visibility AnalysisEmissionRateNOXRemovalAnnualizedCost1st yr Avg.CostIncrementalControl CostDv Impact for Max. Impacted Area(Petrified Forest NP)NOXControl Technologieslb/MMBtuTons/yearMillion $$/ton$/ton98th percentile dvreductionmillion $/dvreducedLNB with COFA (Baseline) 0.41 ------LNB with SOFA0.22 2,096 $0.635 $303 $3030.126$5.04LNB with SOFA and SNCR 0.17 2,648 $2.157 $814 $2,756 0.164$13.15ROFA 0.162,758$2.243$813$7860.169$13.27ROFA with Rotamix0.12 3,200 $3.308 $1,034 $2,409 0.198$16.71LNB with SOFA and SCR 0.07 3,751 $9.569 $2,551 $11,363 0.230$41.61Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 5 of 6Technical Support Document for Arizona BART Analyses and DeterminationsPage 78 of 115Table 11.5 – Unit 4 Cost and Visibility AnalysisEmissionRateNOXRemovalAnnualizedCost1st yr Avg.CostIncrementalControl CostDv Impact for Max. ImpactedArea (Petrified Forest NP)NOXControl Technologieslb/MMBtutons/yearMillion $$/ton$/ton98th percentiledv reductionmillion $/dvreducedLNB with COFA (Baseline) 0.42------LNB with SOFA0.22 3,390 $0.820 $242 $242 0.207 $3.96LNB with SOFA and SNCR 0.17 4,259 $2.852 $670 $2,338 0.265 $10.76ROFA0.16 4,433 $3.179 $717 $1,877 0.281 $11.31ROFA with Rotamix0.12 5,129 $4.537 $885 $1,951 0.336 $13.50LNB with SOFA and SCR 0.07 5,998 $13.23 $2,206 $10,007 0.408 $32.43Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-5 Page: 6 of 6

### STATE OF ARIZONA, et al.,

v.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al.

No. 13 -70366 (and consolidated cases)

EPA'S CONSOLIDATED OPPOSITION TO STAY MOTIONS



## EXHIBIT C Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-6 Page: 1 of 3

## Arizona Electric Power Cooperative, Inc. (AEPCO's) Response

to the EPA's Request for Additional Information

13. Documents regarding demand elasticity of the customer base. In the event of AEPCO rate increases, what are the options for (and limitations on) individual Class A members for purchasing power outside of AEPCO.

RESPONSE: AEPCO is not aware of any demand elasticity studies that have been

performed specifically for the retail customer base of its Class A members.

AEPCO has two types of Class A Member Agreements for which options and limitations differ: (i) partial requirements members (PRMs), consisting of Mohave Electric Cooperative, Inc. (MEC), Sulphur Springs Valley Electric Cooperative, Inc. (SSVEC) and Trico Electric Cooperative, Inc. (Trico); and (ii) All Requirements Members (ABMs), consisting of Anza Electric Cooperative, Inc. (Anna), Duncan Valley Electric Cooperative, Inc. (DVEC), and Graham County Electric Cooperative, Inc. (GCEC).

Each PRM has an AEPCO wholesale power contract (the "Partial Requirements Capacity and Energy Agreement ") that specifies as a percentage (the "Allocated Capacity Percentage" or "ACP ") its undivided interest in AEPCO Resources (including the units at AEPCO's Apache Generating Station, which is AEPCO's only generation station).

Each PRM must pay AEPCO fully for its ACP share of the capacity

- related costs of AEPCO's Resources, (i) the fixed costs (depreciation, interest, property taxes, insurance and margin) and (ii) the fixed operation and maintenance costs (manpower, overhauls, capital replacements, demand charges on purchased power, fixed gas transportation charges, SWTC reserved transmission costs, etc). These costs are billed by AEPCO to the PRMs whether or not the PRMs schedule energy from their ACP share of AEPCO Resources. Only the energy charge components (fuel and fuel handling, energy costs from purchase power agreements) are charged based on use by a PRM. To the extent the PRM load exceeds contract minimums they are free to purchase energy from any external resource.

AEPCO's ARMS each have a wholesale power contract with AEPCO that requires them to purchase power and energy solely from AEPCO. AEPCO is obligated to provide all elements of power supply required to meet the peak demands and energy requirements of the totality of their loads. AEPCO is the ABM's agent for determining the economic dispatch of the collective ACP shares of the ABMs, including Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-6 Page: 2 of 3

## Arizona Electric Power Cooperative, Inc. (AEPCO's) Response

to the EPA's Request for Additional Information

determining when it is reasonable to use market energy rather than energy from the Apache units, taking into account their share of the contractual minimum take from the coal -fired steam Units 2 and 3. The ARMs have no ability to purchase power outside of AEPCO but like the PRM's, the ARM's must pay AEPCO fully for their respective ACP shares of the capacity

- related costs of AEPCO's Resources consisting of: (i) the fixed costs (depreciation, interest, property taxes, insurance and margin ) and (ii) the fixed operation and maintenance costs (manpower, overhauls, capital replacements, demand charges on purchased power, fixed gas transportation charges, SWTC reserved transmission costs, etc). Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-6 Page: 3 of 3

### STATE OF ARIZONA, et al.,

v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, et al.

No. 13-70366 (and consolidated cases)

EPA’S CONSOLIDATED OPPOSITION TO STAY MOTIONS



# EXHIBIT D Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-7 Page: 1 of 5

# ATTACHMENTS ASSOCIATED WITH SRP ’ S COMMENTS ON PROPOSED REGIONAL HAZE RULE

EPA’S PROPOSED RULE RELATED TO APPROVAL, DISAPPROVAL AND PROM ULGATION OF AIR QUALITY IMPLEMENTATI ON PLANS; ARIZONA; REGIONAL HAZE STATE AND FEDERAL IMPLEMENTATION PLANS

DOCKET ID NO : EPA

- R09

- OAR

- 2012

- 0021

FRL

- 9700

- 1

P R E P A R E D B Y : S A L T R I V E R P R O J E C T P . O . B O X 5 2 0 2 5 M A I L S T A T I O N 3 5 2 P H O E N I X , A R I Z O N A 8 5 0 7 2

S E P T E M B E R 2 0 1 2 Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-7 Page: 2 of 5

## RMB Consulting & Research, Inc. 5104 Bur Oak Circle Phone (919) 510-5102 Raleigh, North Carolina 27612 Fax (919) 510-5104



### T E C H N I C A L M E M O R A N D U M

TO : Barbara Sprungl, Salt River Project

FROM : Robert Barton, RMB Steve Norfleet, RMB Bethany White, RMB

DATE : September 4, 2012

SUBJECT : Achievability of the Proposed FIP NO x Limit for CGS Unit 1

At the request of Salt River Project (SRP), RMB Consulting & Research, Inc. (RMB) has prepared the following memo that discusses th e feasibility of dem onstrating continuous compliance with the NO x emission limit specified in the recently proposed Federal Implementation Plan (FIP) for Unit 1 at the Co ronado Generating Station (CGS). Specifically, RMB addresses the following issues:

• Feasibility of the Proposed FIP NO x Limit Based on Historical Operation

• Review of Other Recently Issued Permits Containing Similar NO x Limits

• Comparison of Compliance Require ments for Other Ultra Low NO x Emitters

Summary On July 20, 2012, EPA’s response to the proposed regional haze air quality implementation plan submitted by the State of Arizona (e.g., state im plementation plan (SIP)) was published in the Federal Register. Arizona’s pr oposed SIP contained revisions to address the Best Available Retrofit Technology (BART) requirements of the Regional Haze Rule (RHR) for three electric generating plants, including SRP’s Coronado Genera ting Station (Units 1 and 2), Arizona Public Service’s (APS) Cholla Power Plant (Units 2 – 4), and Arizona Electric Power Cooperative’s (AEPCO) Apache Generating Station (Units 1 – 3). In their response, EPA approved portions of the proposed SIP, including the determination of BART applicability for the above units and the proposed BART determinations and emi ssions limits for sulfur dioxide (SO 2 ) and particulate matter (PM 10 ). However, EPA disapproved of the BART determinations for NO x for virtually all of the units and issued a proposed FIP with alte rnative BART determinations and emission limits that were more stringent than those proposed by the Arizona Department of Environmental Quality (ADEQ) in the proposed SIP. EPA’ s disapproval was primarily based on alleged deficiencies in the cost and modeling com ponents of ADEQ’s BART determinations. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-7 Page: 3 of 52 The BART determination for for CGS for NO x in the proposed FIP is based on the installation of low-NOx burners (LNB) with over-fired air (OFA ) and selective catalytic reduction (SCR). The proposed emission limit for Unit 1 is 0.050 lb/mmBt u. EPA issued an alternative limit of 0.080 lb/mmBtu for Unit 2 because of the significant cost associated with altering the SCR design, which has already been completed. However, EPA is requesting comments on an alternative emission limit of 0.050 lb/mmBtu for Unit 2. Both of the proposed NO x emission limits are based on a rolling 30-day average using data obta ined from the continuous emissions monitoring systems (CEMS) used for Part 75 compliance and are required to include periods of unit startup, shutdown, and malfunction (SSM). These limits ar e similar to those specified by EPA for the Public Service of New Mexico’s San Juan Genera ting Station (SJGS) in the recently finalized FIP for the State of New Mexico. 1 The proposed NO x emission limit is the most stringent emission limit imposed on any new or existing pulverized coal unit. While some un its equipped with LNB, OFA, and SCR have operated at or below 0.050 lb/mmBtu, these em ission levels have not been consistently demonstrated in practice even at steady-state cond itions. Furthermore, the lack of an exemption for SSM events renders this limit impossible to meet for most, if not all, units. RMB performed an analysis to determine whethe r the units at CGS could meet the proposed FIP NO x emission limit based on historical operating data and NO x control vendor guarantees. Our findings suggest that the proposed limit does not represent a consistently achievable level of emissions for the units at CGS despite the proposed use of best available NO x control technologies. The data show that it is lik ely that there will be a significant number of exceedances of the limit during normal operation. Unfortunately, these periods may be mischaracterized as non-compliance in the future rather than evidence that the limit itself is unachievable. We also find that EPA did not adequately a ssess the long-term achievability of the FIP NO x limit with respect to unit startup and shutdown periods. In fact, the data that EPA presented in support of the same limit that was issued for other units in Region 9 actually demonstrates that the limit is not consistently achievable. Finally, our revi ew of the recently issued permits with low-NO x emissions limits also does not support the FIP emission limit because none of these units have an equivalent emissions limit to the FIP limit – i.e., one that applies on a 30-day average including startup, shutdown, and malfunction periods. For t hose units with similar limits, most of them have not yet been constructed, differ signifi cantly in operation and design, and/or have insufficient operating data to fu lly characterize long-term achieva bility of the proposed limits. Based on this analysis, our conclu sion is that the proposed FIP NO x limit of 0.050 lb/MMBtu for the units at CGS is unachievable and inadequately supported.

1 SJGS was issued a NO x emission limit of 0.05 lb/mmBtu (one significant figure) based on a 30-day rolling average. The averaging methodology is based on 30 boile r operating days, which is an alogous to the NSPS Subpart D averaging methodology for existing coal-fired units. Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-7 Page: 4 of 53 Introduction EPA’s proposed BART NO x limit for Unit 1 is significantly lower than the proposed BART emissions limit in the Arizona Regional Haze State Implementation Plan (0.320 lb/mmBtu) and is even lower than the proposed New Source Pe rformance Standards (NSPS) for new coal-fired electric utility units (~0.07 lb/mmBtu). While RM B is aware of other units with permitted limits of 0.05 lb/mmBtu (see discussion below), this is th e most stringent limit that we encountered for any retrofitted unit 2 and has not even been demonstrated achievable at any comparable new unit. Section 169A(b) of the Clean Air Act (CAA) speci fies that any BART emission limits that are established for units at large power plants (> 750 MW) must be determined in accordance with BART Guidelines promulgated by EPA. EPA’s Guidelines for BART Determinations Under the Regional Haze Rule are found in Appendix Y of 40 CFR Part 51. The Guidelines provide a general outline of the procedures that should be used in ma king BART determinations and include not only steps for determining cost effectiveness but also presumptive limits for utility sources. The presumptive NO x emission limits for coal-fired un its are based on boiler types and fuel classification. For dry-bottom tu rbo-fired boilers the presumptive NO x limits are 0.32 lb/mmBtu for bituminous coal and 0.23 lb/mmBtu for sub-bituminous coal. CGS currently burns 100% subbituminous coal from the Power River Ba sin (PRB) in Wyoming. Historically these units have burned blends of PRB with bituminous coal and could burn such blends in the future. Therefore, a presumptive NO x limit in the range of 0.23 to 0.32 lb/mmBtu would be consistent with EPA’s Guidelines. The State of Arizona submitted a BART determination for CGS with NO x emission limits of 0.32 lb/mmBtu for both units based on the use of OFA and LNB. This limit is consistent with EPA’s own presumptive BART limits but was rejected in the proposed FIP. RMB also notes that the proposed emission limit is significantly more stringent than the recently finalized NSPS Subpart Da NO x emission standard for new units. The Subpart Da standard is 0.70 lb/MWh, which corresponds to approximately 0.07 lb/mmBtu on a heat-input basis. BART Guidelines indicate that state regulatory agen cies should consider the NSPS in the evaluation except in cases where the NSPS mi ght be outdated. However, si nce the Subpart Da revisions were finalized in February 2012, it is difficult to see how the new standard could be considered outdated and, thus, excluded from consideration. It is also difficult see how the Subpart Da standard would not represent the most stringent level of available control since it was based on data for units with both combustion controls and SCR. EPA’s justification of the proposed FIP limit reli es solely on previously issued ultra-low NO x limits and vendor guarantees. Unfortunately, this a pproach does not address the achievability of the limits for CGS since all of the other units considered in EPA’s analysis do not have comparable compliance requirements, have not b een constructed and/or do not have sufficient data to assess long-term opera tion. Likewise, limits based on ve ndor guarantees do not provide any long-term assurance of compliance since the guarantee only represents a single test under controlled operating conditions. RMB considers the proposed NO x limit for Unit 1 at CGS to be a clear example of a flawed determination process that does no t adequately account for typical unit operating variability. We

2 Based on 30-day rolling averages includin g startup, shutdown, and malfunction periods Case: 13-70366 05/17/2013 ID: 8633590 DktEntry: 19-7 Page: 5 of 5