The Grand Canyon Trust (Trust) appealed from a district court order granting partial summary judgment on the merits and final summary judgment based on laches to the Tucson Electric Power Company (Tucson Power). Trust had brought an action alleging that Tucson Power violated the Clean Air Act (CAA)[1] by constructing and operating a coal-powered electric plant near Springerville, Arizona. The Ninth Circuit vacated the district court orders for partial and final summary judgment in favor of Tucson Power and remanded with instructions to reconsider Tucson Power's motions based on all properly submitted evidence. The Ninth Circuit also denied Tucson Power's motion to strike the Trust's appeal of the award of partial summary judgment as an unappealable interlocutory order.

In late 1977, Congress amended the CAA to require all new sources of air pollution to implement Best Available Control Technology (BACT) standards.[2] Under regulations issued by the Environmental Protection Agency (EPA), facilities that commenced construction prior to March 19, 1979 were not subject to BACT requirements, provided that construction was not discontinued for longer than eighteen months and construction was completed within a reasonable time.[3] If, however, construction did not meet the requirements of either commencement within eighteen months or completion within a reasonable time, or if construction was suspended for more than eighteen months, a permit would automatically be invalidated, unless the administrator approved an extension.[4]

In 1977, Tucson Power applied for a permit to construct two coal-fired power units. The first of these units was ultimately completed in 1985 and the second was completed in 1990. In 2001, Tucson Power announced a plan to build two additional units at the Springerville Plant. Under the plan, the new units would not be subject to environmental assessment in isolation, but rather would be included within a single net or bubble encompassing the entire facility. This would avoid triggering several CAA requirements, provided that the entire plant did not produce a net increase of emissions once Tuscon Power completed the third and fourth units.

The district court held that Tucson Power had commenced construction prior to the statutory deadline by drilling wells at the Springerville site in 1978 and, therefore, granted partial summary judgment to Tucson Power. The district court also granted Tucson Power's motion for final summary judgment on the entire action based on the doctrine of laches.

On appeal, Tucson Power first argued that the district court had lacked subject matter jurisdiction over the action. Tucson Power argued that the Trust's action was essentially seeking review of an EPA ruling and only a Court of Appeals has jurisdiction over review of EPA's final decisions under the CAA. The Ninth Circuit clarified that the Trust's suit was properly characterized as a citizen enforcement action against a third party for alleged violations of the CAA, not a challenge to an EPA ruling. Because the CAA allows citizen suits to be brought in district court for enforcement of permit requirements, the Ninth Circuit held that the Trust's action was properly brought in district court.[5]

Tucson Power next argued that the Ninth Circuit lacked subject matter jurisdiction to review the award of partial summary judgment pertaining to construction commencement. Tucson Power argued this action was not an "appealable final decision . . . because it did not dispose of [the Trust's] case in its entirety."[6] The Ninth Circuit held that because the Trust had appealed the grant of final summary judgment based on laches, which was an appealable final order, the court had discretion to reconsider related interlocutory orders.[7]

The Ninth Circuit vacated the district court's order of partial summary judgment on the issue of when construction commenced, based in part on an EPA investigation concluding that Tucson Power had not begun construction prior to March 19, 1979. EPA did not publish the results of this investigation until after the district court issued its opinion. Nevertheless, the Ninth Circuit decided EPA's expertise on this issue may have persuaded the district court. The Ninth Circuit noted Tucson Power's argument that EPA had since withdrawn its objection, but stated it could not address that contention based on the record before it. Thus, the Ninth Circuit remanded the issue to the district court.

Finally, the Ninth Circuit addressed the Trust's appeal of the grant of final summary judgment to Tucson Power based on the doctrine of laches. The Trust argued that because laches cannot be invoked against the government, it should not be invoked to bar citizen enforcement actions that are substantially similar to governmental enforcement actions. The Ninth Circuit declined to address this specific issue, but vacated the order that the Trust's enforcement actions were barred by laches.

The Ninth Circuit emphasized that the doctrine of laches requires two components: undue delay and prejudice. The Ninth Circuit stated, "[a] lengthy delay, even if unexcused, that does not result in prejudice does not support a laches defense."[8] The court then noted that either evidentiary or expectation prejudice will support a laches defense. First, the court looked at whether Tucson Power suffered evidentiary prejudice. This type of prejudice is based on the idea that it may be difficult to ensure justice when, due to the passage of time, evidence has been lost or witness recollections have faded.[9] In this case, the Ninth Circuit held that Tucson Power had not suffered evidentiary prejudice because Tucson Power did not present evidence of any inability to defend itself against the Trust's action.

The Ninth Circuit next addressed the question of whether Tucson Power suffered expectation prejudice. The district court found that if the Trust succeeded, Tucson Power would have to replace its original pollution control equipment at the cost of three hundred million dollars. Moreover, because the Trust was seeking civil penalties that accrued daily, the delay in bringing suit served to inflate the potential award of damages. The Ninth Circuit held, however, that in regard to the cost of replacing the equipment, the delay in bringing suit benefited Tucson Power because it recovered a portion of its investment in the plant. The court pointed out that had the Trust "brought this action immediately after construction of each Unit was completed, and had the court held that Tucson [Power] was required to replace the equipment it had just installed, Tucson [Power's] loss would have been total."[10]

Regarding Tucson Power's increased penalty liability, the Ninth Circuit noted that Tucson Power might have a statute of limitations defense. In addition, the court held that if the penalties were inequitable, laches was not the appropriate means of correcting that inequity. The Ninth Circuit noted that if the Trust prevailed on remand, the district court had discretion to "consider whether equity requires it to reduce [Tucson Power's] civil penalties."[11]

Ultimately, the Ninth Circuit denied Tucson Power's motion to strike the Trust's appeal of partial summary judgment as an unappealable interlocutory order. In addition, the Ninth Circuit vacated the district court's orders that awarded partial and final summary judgment to Tucson Power. Finally, the Ninth Circuit remanded with instructions to the district court to reconsider Tucson Power's motion for partial summary judgment on the merits based on all properly submitted evidence.