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CITIZEN SUIT WATCH: Court Invalidates Arizona Legislation That Eliminated Funding Mechanism For A Clean Air Act State Implementation Plan

September 28, 2011

On September 2, 2011, a federal district judge held that the State of Arizona's state implementation plan ("SIP") under the Clean Air Act precluded the Arizona Legislature from repealing funding provisions of that SIP without EPA's approval. In addition, the Court held that the Acting Director of the Arizona Department of Environmental Quality and the Treasurer of the State of Arizona were proper defendants to the suit, Paisley v. Darwin, No. cv-10-1253 (D. Ariz.), and the court rejected both of those defendants' claims for Eleventh Amendment immunity. As a result of these holdings, the Court entered a declaratory judgment that the funding provisions of the SIP that the legislature eliminated remain in full force and effect, and the Court will next craft the injunctive relief that will reinstate the deposit and disbursement of lottery funds as required under the SIP.


Plaintiffs, two residents of Maricopa County, Arizona, sued the Acting Director of the Arizona Department of Environmental Quality ("ADEQ"), Henry Darwin, and the Treasurer of the State of Arizona, Doug Ducey,1 seeking to compel compliance with the Clean Air Act and the State of Arizona's SIP. Under the Act, states must develop SIPs providing for the attainment, maintenance, and enforcement of the national ambient air quality standards that the U.S. Environmental Protection Agency ("EPA") has established for certain pollutants. The State of Arizona has an EPA-approved SIP.

Among other things, the SIP incorporated provisions of House Bill 2001, passed by the Arizona Legislature in 1993, which provided for the payment of lottery funds for transit improvements designed to reduce carbon monoxide and ozone. At least 31.5 percent of lottery revenues, not to exceed $18 million, would be deposited into a local transportation assistance fund ("LTAF"). The $18 million would, in turn, be apportioned to counties based on their citizens' participation in the lottery. This funding provision would apply only if $45 million of the total lottery proceeds would otherwise be available to the state general fund.

In 2010, the Arizona Legislature passed legislation repealing the portions of the House Bill 2001 that allocated lottery proceeds to the LTAF.2 The 2010 legislation also repealed the statutory provisions that established the LTAF itself.3 As a result of the legislation, the plaintiffs filed suit seeking an order declaring that the Clean Air Act preempts the repeal of H.B. 2001 and that the lottery funding provision remains in full force and effect. The plaintiffs also sought injunctive relief ordering Defendant Ducey to comply with the requirement to deposit lottery proceeds in the LTAF.

The District Court's Grant Of Summary Judgment

The Court rejected the defendants' arguments under the Eleventh Amendment, which generally bars suits against state officials where the state is the real party in interest. Where a judgment would "tap the state's treasury or restrain or compel government action," state officials are immune from suit. But, if a plaintiff seeks prospective injunctive relief against state officials for a violation of federal law, the Supreme Court's Ex Parte Young decision4 establishes an exception to Eleventh Amendment immunity. For that exception to apply, the state officials must have a "special relation" with the challenged statute. That is, the official must have some connection with enforcing the act.

As applied to this case, the Court first held that ADEQ's Acting Director Darwin is the state official responsible for enforcing the SIP and thus, he bears a "special relation" to the SIP. Even though the plaintiffs sought injunctive relief compelling the Treasurer to deposit lottery funds into the LTAF, the Court nevertheless held that Acting Director Darwin is not immune from suit because the plaintiffs were also seeking a declaratory judgment that repeal of the lottery funding provision is preempted by the Clean Air Act and that the funding provision remains in full force and effect. The plaintiffs' amended complaint thus alleged a continuing violation of federal law, and the Court found that Acting Director Darwin is the correct official "to receive the Court's declaratory judgment that the SIP remains the controlling law and must be complied with."

Similarly, the Court also held that Treasurer Ducey is not immune from suit under the Eleventh Amendment. It was not persuaded by the defendants' claims that the plaintiffs were not seeking relief with respect to repeal of the LTAF itself. In the Court's view, the plaintiffs' claim would "ring hollow absent a challenge to the repeal of the LTAF itself," and it declined to read the plaintiffs complaint as narrowly as the defendants did.

In addition to rejecting the defendants' Eleventh Amendment defenses, the Court determined that the Clean Air Act prohibits the revision of a SIP without approval from EPA. The Court emphasized that the Supremacy Clause makes federal law the supreme law of the land. It then cited to numerous Ninth Circuit decisions clarifying that provisions of an EPA-approved SIP are enforceable through the Clean Air Act's citizen suit provision.5 Because the lottery funding provisions of House Bill 2001 were incorporated into the EPA-approved SIP, the Arizona Legislature lacked authority to repeal those provisions without EPA approval. Indeed, the defendants even admitted this. Ultimately, the Court held that the lottery funding requirement incorporated into the Arizona SIP remains in full force and effect.

Finally, the Court declined to resolve the defendants' policy argument that the lawsuit has no significance to air quality or transit services in the Phoenix area. It noted that policy questions, e.g.¸ whether requiring lottery funding for transit is advisable, are not appropriate for the Court to decide. As such, to the extent the defendants disagree with the SIP's provisions, they are bound by the appropriate federal procedures governing revisions to an approved SIP.

This decision provides an interesting illustration of the interplay between federal and state law. Although matters such as transit improvements and use of state lottery revenues are normally left for states to decide, the incorporation of state statutory provisions into federally mandated programs, such as SIPs under the Clean Air Act, can make such provisions enforceable by citizen plaintiffs as a matter of federal law, and limits a state's ability to change such provisions outside the federal regulatory scheme.

1The plaintiffs had initially sued the State of Arizona, the Governor, the ADEQ itself, and the ADEQ Director at the time, Benjamin Grumbles. Following dismissal of the State, the Governor, and ADEQ on Eleventh Amendment grounds in November 2010, the plaintiffs filed an amended complaint against Defendants Darwin and Ducey.

2See House Bill 2012, 49th Leg., 7th Sp. Sess. (Ariz. 2010).

3See A.R.S. §§ 28-8101 through 28-8104.

4See 209 U.S. 123 (1908).

5See 42 U.S.C. § 7604(a)(1).

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