Earlier this week, the 9th Circuit denied Arizona’s challenge to EPA’s decision to reject Arizona’s SIP addressing regional haze 
requirements and instead promulgate its own federal implementation plan. The decision has a number of interesting elements and is well worth a read, but it’s most notable for its treatment of the deference issue.
We all know that courts defer to reasonable agency decision-making. It’s not that hard to avoid being arbitrary and capricious. However, what happens when the statute delegates decision-making to the states in the first instance? Should the court defer to Arizona’s decision-making regarding what constitutes the best availability retrofit technology or to EPA’s?
It’s the nice little question and I admire Arizona’s ingenuity in coming up with the argument, but they were never going to win. Ultimately, the CAA is a federal statute and EPA gets to interpret it:
From our determination that EPA has a substantive role in deciding whether state SIPs are compliant with the Act and its implementing regulations follows the conclusion that the ordinary APA “arbitrary and capricious” judicial review standard applies, with the requisite deference, to EPA’s determinations.
Congress intended that EPA, not the states alone, ultimately ensure that state determinations as to regional haze comply with the Act.
Once the Court concluded that it owed deference to EPA’s decision, not Arizona’s, the outcome was pretty much inevitable. EPA wasn’t going to lose this one. The biggest issue on the merits was whether the Coronado Generating Station would have to install selective catalytic reduction for NOx control. Is anyone who’s been doing this stuff for a while surprised that EPA concluded that anything short of SCR would be insufficient? Or that the Court found EPA was not arbitrary and capricious in reaching that conclusion?