APS 2011 Annual Report Download - page 45

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lawsuits by the EPA. APS responded to the EPA’s request in August 2009 and is currently unable to
predict the timing or content of the EPA’s response, if any, or any resulting actions.
On October 4, 2011, Earthjustice, on behalf of several environmental organizations, filed a
lawsuit in the United States District Court for the District of New Mexico against APS and the other
Four Corners participants alleging violations of the Prevention of Significant Deterioration (“PSD”)
provisions of the Clean Air Act. Subsequent to filing its original Complaint, on January 6, 2012,
Earthjustice filed a First Amended Complaint adding claims for violations of the Clean Air Act’s
NSPS program. Among other things, the plaintiffs seek to have the court enjoin operations at Four
Corners until APS applies for and obtains any required PSD permits and complies with the NSPS. The
plaintiffs further request the court to order the payment of civil penalties, including a beneficial
mitigation project. APS believes the claims in this matter are without merit and will vigorously defend
against them.
Endangered Species Act. On January 30, 2011, the Center for Biological Diversity, Dine
Citizens Against Ruining Our Environment, and San Juan Citizens Alliance filed a lawsuit against the
Office of Surface Mining Reclamation and Enforcement (“OSM”) and the DOI, alleging that OSM
failed to engage in mandatory Endangered Species Act (“ESA”) consultation with the Fish and
Wildlife Service prior to authorizing the renewal of an operating permit for the mine that serves Four
Corners. The lawsuit alleges that activities at the mine, including mining and the disposal of coal
combustion residue, will adversely affect several endangered species and their critical habitats. The
lawsuit requests the court to vacate and remand the mining permit and enjoin all activities carried out
under the permit until OSM has complied with the ESA. Although we are not a party to the lawsuit,
we continue to evaluate the lawsuit to determine its potential impact on plant operations.
Superfund. The Comprehensive Environmental Response, Compensation and Liability Act
(“Superfund”) establishes liability for the cleanup of hazardous substances found contaminating the
soil, water or air. Those who generated, transported or disposed of hazardous substances at a
contaminated site are among those who are PRPs. PRPs may be strictly, and often are jointly and
severally, liable for clean-up. On September 3, 2003, the EPA advised APS that the EPA considers
APS to be a PRP in the Motorola 52nd Street Superfund Site, Operable Unit 3 (“OU3”) in Phoenix,
Arizona. APS has facilities that are within this Superfund site. APS and Pinnacle West have agreed
with the EPA to perform certain investigative activities of the APS facilities within OU3. In addition,
on September 23, 2009, APS agreed with the EPA and one other PRP to voluntarily assist with the
funding and management of the site-wide groundwater remedial investigation and feasibility study
work plan. APS estimates that its costs related to this investigation and study will be approximately $1
million. We anticipate incurring additional expenditures in the future, but because the overall
investigation is not complete and ultimate remediation requirements are not yet finalized, at the present
time we cannot accurately estimate our total expenditures.
Manufactured Gas Plant Sites. Certain properties which APS now owns or which were
previously owned by it or its corporate predecessors were at one time sites of, or sites associated with,
manufactured gas plants. APS is taking action to voluntarily remediate these sites. APS does not
expect these matters to have a material adverse effect on its financial position, results of operations or
cash flows.