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Team No. 42

C.A. Nos. 14-000123 and 14-000124

UNITED STATES COURT OF APPEALS FOR THE TWELFTH CIRCUIT

SYLVANERGY, L.L.C.,

Petitioner,

v.

SHANEY GRANGER, in her official capacity as Regional Administrator for Region XIII of the

United States Environmental Protection Agency,

Respondent,

AND

SAVE OUR CLIMATE, INC.,

Petitioner,

v.

SHANEY GRANGER, in her official capacity as Regional Administrator for Region XIII of the

United States Environmental Protection Agency,

Respondent.

ON CONSOLIDATED PETITIONS FOR REVIEW OF A FINAL ORDER OF THE REGIONAL ADMINISTRATOR

BRIEF OF PETITIONER SYLVANERGY, L.L.C.

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TABLE OF CONTENTS TABLE OF AUTHORITIES…………………………………………………………….. v ISSUES PRESENTED…………………………………………………………………... 1 JURISDICTIONAL STATEMENT……………………………………………………... 1 STATEMENT OF THE CASE………………………………………………………….. 2 SUMMARY OF ARGUMENTS………………………………………………………… 6 ARGUMENT…………………………………………………………………………….. 8 I. Sylvanergy was entitled to a finding that it was not required to obtain a Prevention

of Significant Deterioration preconstruction permit for its Forestdale Biomass Facility. …………………………………………………………………………. 8

A. Scope of PSD review is limited to defined “major stationary sources.” ……. 9

B. NUARB erred in determining that the proposed Sylvanergy biomass-powered

plant is a “major emitting facility” or “major emitting source” subject to PSD review and implementation of BACT. …………………………………….. 11

i. NUARB’s determination that the proposed Sylvanergy plant

constitutes a “major emitting source” or “facility” merits minimal deference from this Court. ………………………………………… 12

ii. The proposed Sylvanergy facility is not a “fossil-fuel fired” source. 13

iii. The proposed Sylvanergy facility does not have the potential to emit 250 tons or more per year of any criteria pollutant. ……………….. 14

C. This Court has jurisdiction to review the NUARB’s decision to deny

Sylvanergy’s petition for a Non-Applicability Determination and instead to classify the proposed Sylvanergy facility as a “major emitting source.” ….. 17

II. A biomass-fueled facility is not subject to PSD review as an emitter of

greenhouse gases because its emissions are biogenic. …………………………. 20

a. The Deferral Rule Should Have Still Applied because the PSD Permit was Issued Before the Rule was Set to Expire. …………………………………. 22

i. The Deferral Rule Originated out of Acknowledgement of the Benefit

of Biogenic Sources and Emissions. ……………………………….. 23

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ii. The Decision of the D.C. Circuit to Vacate the Rule is on Hold. ….. 23

iii. The Deferral Rule Should Have Been Applied by the NUARB. …... 24

b. Renewable Facilities Should be Considered to Have Zero GHG Emissions Because of the Offset Afforded by Carbon Sequestration. ………................ 25

III. The NUARB properly rejected consideration of a wood gasification and partial

carbon capture and storage plant as BACT because such a redesign would impermissibly “redefine the source.” …………………………………………... 27

a. The BACT determination stage does not allow for the redesign of a facility or

the redefining of that facility’s source. …………………………………….. 28 IV. The NUARB impermissibly imposed the Sustainable Forest Plan as BACT for the

Sylvanergy facility because such non-technical, beyond-the fence measures are beyond the scope of EPA’s authority. .…………………………………………. 29

a. The EPA cannot authorize beyond-the-fence measures as BACT, therefore

neither can the NUARB. ………………………………………………….... 29  

b. A plain meaning reading of BACT in the Act precludes the use of beyond-the-fence emission offsetting measures such as the Sustainable Forest Plan as BACT. …………………………………………………………………….... 30    

c. Utility Air Regulatory Group v. EPA makes clear that NUARB’s use of the Sustainable Forest Plan as BACT is clearly beyond its reasonable statutory authority. …………………………………………………………………… 31    

d. The Sustainable Forest Plan is the type of “unreasonable and unanticipated degree of regulation” the Supreme Court warned of in Utility Air Regulatory Group v. EPA. ……………………………………………………………… 33  

CONCLUSION AND RELIEF SOUGHT …………………………………………….. 34 ADDENDUM A (Central Alabama Electric Cooperative, “How Power is Delivered to Your Home”) ……………………………………………………………………………. A ADDENDUM B (EPA Interim Policy on Federal Enforceability of Limitations on Potential to Emit (Jan. 22, 1996)) ………………………………………………………. Q

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TABLE OF AUTHORITIES

CASES

Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir. 1979)……………………………………………….. 9, 10

BP America Production Co. v. Burton,

549 U.S. 84, 91, 127 S. Ct. 638, 166 L. Ed. 2d 494 (2006)…………………….. 30 Center for Biological Diversity v. EPA,

722 F.3d 401 (D.C. Cir. 2013)…………………………………… 6, 22, 23, 24, 27 Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837 (1984)……………………………………………….... 13, 30, 31, 33 Coalition for Responsible Regulation, Inc. v. EPA,

684 F.3d 102 (D.C. Cir. 2012)…………………………………………..……… 21 Harrison v. PPG Industries, Inc.,

446 U.S. 578 (1980)……………………………………………………… 9, 18, 19 In re Old Dominion Electric Cooperative,

3 E.A.D. 779, 793 n. 38 (EPA Adm'r 1992)……………………………………. 28 In re Pennsauken Cty., N. J., Resource Recovery Facility,

2 E. A. D. 667, 673 (EAB 1988)…….………………………………………….. 28 In re Prairie State Generating Co.,

13 E.A.D. 1, 121 (EAB 2006)………….…………………………………… 28, 29 Massachusetts v. E.P.A.,

549 U.S. 497 (2007)…………………………………………………………….. 20 Michigan v. EPA,

135 S. Ct. 2699, 2707 (U.S. 2015)……………………………………………… 32 National Min. Ass’n v. U.S. EPA,

59 F.3d 1351 (D.C. Cir. 1995…....…………………………………………. 15, 16 PPG Industries, Inc. v. Harrison,

660 F.2d 628 (5th Cir. 1981)………………………………………… 9, 11, 13, 14 Puerto Rican Cement Co., Inc. v. U.S. EPA,

889 F.2d 292 (1st Cir. 1989)………………………………………….…….. 19, 20

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Sebelius v. Cloer, 133 S. Ct. 1886, 1893 (U.S. 2013)………………………………………..… 30, 31

Sierra Club v. EPA, 499 F.3d 653 (7th Cir. 2007)……………………………………………….. 28, 29

Sierra Club v. U.S. E.P.A.,

762 F.3d 971 (9th Cir. 2014)…………………………………………………… 24 Town of Brookline v. Gorsuch,

667 F.2d 215 (1st Cir. 1981)………………….………………………………… 13 United Sav. Ass'n of Tex. v. Timbers of Inwood Forest Assocs.,

484 U.S. 365, 371 (U.S. 1988)……………………………………………… 32, 33 Utility Air Regulatory Group v. E.P.A.,

134 S.Ct. 2427 (2014) ….… 8, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33 34 Village of Euclid, Ohio v. Ambler Realty Co.,

272 U.S. 365 (1926)……...………………………………………………………. 4 Wayman v. Southard,

23 U.S. (10 Wheat.) 1, 41 (1825)…………………………………………… 30, 33 Weiler v. Chatham Forest Products, Inc.,

392 F.3d 532 (2nd Cir. 2004)………………………………… 9, 11, 12, 15, 16, 17 Whitman v. American Trucking Associations,

531 U.S. 457 (2001)…………..………………………………………….. 9, 18, 20 Wisconsin Elec. Power Co. v. Reilly,

893 F.2d 901 (7th Cir. 1990)………………………………… 9, 10, 12, 17, 18, 19 Y.D. Dugout, Inc. v. Board of Appeals of Canton,

357 Mass. 25 (1970)…………..…………………………………………………. 4

STATUTES

42 U.S.C. § 7401…………………………………………………………...…………… 25

§ 7408………………………………………………….…………………….. 21 § 7409……………………………………………………….…………… 10, 21 § 7410 ……………………………………………………………………….. 10

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§ 7411 …………………………………………………………………… 13, 14 § 7470……………………….…………………………………………… 21, 22 § 7475………………………………..………………………. 1, 3, 5, 10, 11, 27

§ 7479…………………………………….……………………… 10, 27, 31, 33 § 7602………………………………………………...……………………… 21 § 7607……………………………………………………………. 1, 17, 18, 19

REGULATIONS AND ADMINISTRATIVE MATERIALS

40 C.F.R. § 50.00 ……………………………………………………….…………… 4, 10

§ 50.4-18...............…………………………………………………………… 10

§ 51.166……………………………………………………………… 21, 23, 24 § 52.21 ………………………………………………. 10, 11, 12, 13, 14, 15, 17 § 60.41 ……………………………………………………………….….. 13, 14

§ 86.1818-12……………………………………………………...………….. 21 § 124 …………………………………………………………..…………… 5, 9

Approval and Promulgation of Implementation Plans; Arkansas; Prevention of Significant Deterioration; Greenhouse Gas Plantwide Applicability Limit Permitting Revisions, 80 Fed. Reg. 23,245-01 (April 27, 2015) ………………………………...… 24 Deferral for CO2 Emissions from Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs (“Deferral Rule”), 76 Fed. Reg. 43,490-01 (July 20, 2011)….………………………………… 21, 22, 23, 26 Next Steps and Preliminary Views on the Application of Clean Air Act Permitting Programs to Greenhouse Gases Following the Supreme Court’s Decision in Utility Air Regulatory Group v. Environmental Protection Agency, EPA Guidance Memo, Page 6 (July 24, 2014) …………………………………………………….…………… 23, 24, 27 Framework for Assessing Biogenic CO2 Emissions from Stationary Sources, United States Environmental Protection Agency, Office of Air and Radiation, Office of Atmospheric Programs, Climate Change Division (November 2014)………………………………………………………………………….. 22, 25, 26

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Interim Policy on Federal Enforceability of Limitations on Potential to Emit, United States Environmental Protection Agency (Jan. 22, 1996)………………………….. 15, 16

OTHER AUTHORITIES S. REP. NO. 1196, 91st Cong., 2d Sess. 17 (1970)………………..……………….. 32, 33 James S. Rhodes and David W. Keith, Engineering Economic Analysis of Biomass IGCC with Carbon Capture and Storage, 29 BIOMASS AND BIOENERGY 440 (2005) (“Rhodes and Keith Study”)………………………………………………………………..………………… 29

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ISSUES PRESENTED

1) Whether this Court has jurisdiction to review the New Union Air Resources Board’s determination that Sylvanergy’s proposed facility was subject to Prevention of Significant Deterioration review for greenhouse gases pursuant to Section 165 of the Act.

2) Whether Sylvanergy’s proposed facility was improperly designated as a “major emitting facility,” thus subjecting the facility to Prevention of Significant Deterioration review.

3) Whether a biomass-fueled facility may be subjected to Prevention of Significant

Deterioration review on the basis of greenhouse gas emissions.

4) Whether the New Union Air Resources Board properly refused to consider a wood gasification and partial carbon capture and storage device as Best Available Control Technology for Sylvanergy’s proposed facility.

5) Whether the New Union Air Resources Board permissibly imposed the

Sustainable Forest Plan as Best Available Control Technology for Sylvanergy’s proposed facility.

JURISDICTIONAL STATEMENT

Sylvanergy, L.L.C., appeals pursuant to Section 307(b)(1) of the Clean Air Act,

42 U.S.C. § 7607(b)(1), from an order of the Environmental Appeals Board of the U.S.

Environmental Protection Agency denying Sylvanergy’s petition for review of a federal

Prevention of Significant Deterioration permit granted to Sylvanergy for the construction

and operation of a biomass-fired electricity generation and wood pellet fuel production

facility near Forestdale, New Union.

The Prevention of Significant Deterioration permit issued to Sylvanergy pursuant

to Section 165 of the Act, 42 U.S.C. § 7475, by the New Union Air Resources Board

constitutes a final agency action over which this Court exercises jurisdiction.

Section 307(b)(1) provides for direct review in a federal court of appeals of

certain locally and regionally applicable actions taken by the Administrator of the

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Environmental Protection Agency under specifically enumerated provisions of the Clean

Air Act, as well as providing for review of “any other final action of the Administrator

under the Act… which is locally or regionally applicable.” 42 U.S.C. § 7607(b)(1).

The record in this case consists solely of the decision below, In re Sylvanergy,

L.L.C., PSD Appeal No. 15-0123 (Environmental Appeals Board, June 1, 2015).

STATEMENT OF THE CASE

This is a case which calls to mind several critical questions about the siting and

regulation of power plants in the United States: How are we to balance an increasing

demand for electricity against the economic and environmental costs of generation? How

much environmental harm are we, as a society, willing to tolerate? And – central to the

instant action – to whom do we entrust those decisions?

Specifically, this case arises out of a proposal by Sylvanergy, L.L.C., to construct

an electric generation facility in the village of Forestdale, New Union. The plant would

be powered by a renewable source of fuel – namely, wood byproducts (also known as

biomass) – and would be capable of generating approximately 40 megawatts of

electricity. Record (R) at 4. Sylvanergy’s proposal also provides for the construction of

an on-site wood pellet fuel production plant at the facility. R at 5.

Biomass-fueled facilities constitute a small yet growing share of electrical

generation in the United States.1 Biomass – which encompasses fuels like wood,

municipal solid waste, wood waste, ethanol and biodiesel – has been used as an

                                                                                                               1 See U.S. Energy Information Administration, “Annual Energy Outlook 2015,” available at http://www.eia.gov/forecasts/aeo (April 2015) 2 See U.S. Energy Information Administration, “Biomass Explained: Biomass and the Environment,” available at http://www.eia.gov/energyexplained/index.cfm?page=biomass_environment.

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alternative to fossil fuels like coal, petroleum and natural gas.2 Many states classify

biomass as a renewable fuel source for the purposes of Renewable Portfolio Standard

(RPS) regulations.3 All told, Sylvanergy’s proposed facility would feature a 500 million

Btu/hour generation unit capable of processing and combusting roughly 150,000 tons of

biomass fuel annually via an industrial-scale wood-fired boiler with an advanced stoker

design. R at 5. Electricity is produced when biomass (here, wood pellets) is burned in a

boiler, heating water to make steam; the steam then causes a turbine to rotate, which is

connected to a generator that produces electricity.4

Power plants are complex systems, and therefore require extensive permits and

approvals – often from federal, state, and local authorities – before construction may

commence. Two permits are relevant to the instant action: the first, issued by the Village

of Forestdale, concerns site plan review; and the second, issued by the New Union Air

Resources Board (NUARB), concerns the federal Clean Air Act’s (CAA or Act)

Prevention of Significant Deterioration (PSD) provisions, Section 165 of the Act, 42

U.S.C. § 7475. R at 5-6.

In the first instance, the Village of Forestdale – which was concerned about truck

traffic, given the close proximity (2 kilometers) of the proposed Sylvanergy plant to the

center of town – conditioned its site plan approval of the Sylvanergy plant on a binding

                                                                                                               2 See U.S. Energy Information Administration, “Biomass Explained: Biomass and the Environment,” available at http://www.eia.gov/energyexplained/index.cfm?page=biomass_environment. 3 See North Carolina State University, “Database of State Incentives for Renewables and Efficiency,” available at http://www.dsire.org. 4 See generally Central Alabama Electric Cooperative’s “How Power is Delivered to Your Home” guide for a clear and concise analysis of the power generation and transmission processes, available at http://caec.coop/electric-service/how-power-is-delivered-to-your-home/ and included as Addendum A.

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limitation, which caps the plant’s annual operations at 6,500 hours. R at 5. The

limitation is reflected in the site plan approval granted to the project and filed by the

Village, and it can be enforced by the Village’s building inspector.5 R at 5. The 6,500-

hour cap would confine the plant to operating at 75 percent of its potential annual

capacity. R at 5. Based on such a capacity factor, the facility would not be capable of

emitting more than 190 tons per year of any of the so-called criteria pollutants for which

the EPA has established National Ambient Air Quality Standards (NAAQS), under 40

C.F.R. 50 et seq. R-5. Sylvanergy has agreed to incorporate emissions control devices

which would satisfy the Best Available Control Technology (BACT) provisions of

Section 165(a)(4) of the Clean Air Act, 42 U.S.C. 7475(a)(4). R at 5-6.

The second permit, and the one being challenged by Sylvanergy in the instant

action, is a federal PSD permit that was issued for the proposed plant by the NUARB on

June 12, 2014. R at 6. Prior to NUARB’s issuance of the PSD permit, Sylvanergy had

petitioned NUARB for a finding that its plant was not subject to the PSD provisions of

the Act, arguing (1) that its plant was not a fossil-fuel fired plant which would be subject

to PSD review, and (2) that in light of the Village’s 6,500-hour cap, its plant would not be

capable of emitting the requisite volume of criteria pollutants to trigger PSD review. R at

5-6. NUARB disagreed as to both issues, and the finding sought by Sylvanergy – known

as a Non-Applicability Determination – was denied.

                                                                                                               5 Zoning, which regulates the use of land and structures thereon, is among the police powers reserved to the states. See Village of Euclid, Ohio v. Ambler Realty Co., 272 U.S. 365, 392, 47 S. Ct. 114, 120, 71 L. Ed. 303 (1926). The concepts of site plan review and zoning are closely interrelated. See Y. D. Dugout, Inc. v. Bd. of Appeals of Canton, 357 Mass. 25, 31, 255 N.E.2d 732, 736 (Mass. Supreme Judicial Court, 1970) (holding that site plan review “contemplat[es] primarily the imposition, for the public protection, of reasonable terms and conditions upon the… use of land …”).

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At the outset of the PSD review process, the NUARB found that Sylvanergy’s

proposed emissions controls satisfied the BACT standards of Section 165(a)(4) of the

Act, 42 U.S.C. § 7475(a)(4); that determination is not at issue in these proceedings. R at

6. However, the NUARB – over Sylvanergy’s objections – also determined that the plant

would need to mitigate its greenhouse gas emissions through the implementation of

BACT, despite Sylvanergy’s attempts to show that its plant, as a biomass-fueled

generator, would have zero net greenhouse gas emissions once the carbon sequestration

effects of biofuel production were taken into account. R at 6, 11. The NUARB rejected

calls for the imposition of a wood gasification and partial carbon capture and storage

device as BACT, and ultimately determined that the implementation of a Sustainable

Forest Plan, requiring a dedicated reforestation area, would constitute BACT for the

Sylvanergy plant. R at 7.

Sylvanergy (and Save Our Climate, which is the petitioner in the companion case)

filed a timely petition for review of NUARB’s findings with the Environmental Appeals

Board of the EPA (Board) pursuant to 40 C.F.R. § 124. R at 4. Specifically, Sylvanergy

challenged (1) the denial of its petition for a Non-Applicability Determination, (2)

NUARB’s decision to subject the proposed plant to PSD review for greenhouse gases,

and (3) NUARB’s finding that imposition of the Sustainable Forest Plan would constitute

the appropriate BACT for the plant. R at 7. Separately, Save Our Climate disputed

NUARB’s finding that a wood gasification-carbon capture device was impermissible as

BACT for the plant. R at 7.

In the proceedings below, the Board first found that, while it had jurisdiction to

review a PSD final permit decision under 40 C.F.R. § 124.19(a), it did not have

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jurisdiction to review the NUARB’s denial of Sylvanergy’s petition for a Non-

Applicability Determination. R at 8. The Board also found for the NUARB on the

question of whether the plant should have been subject to PSD review for greenhouse gas

emissions, relying on the District of Columbia Circuit’s decision in Center for Biological

Diversity v. EPA, 772 F.3d 401 (D.C. Cir. 2013). R at 8. Lastly, the Board rejected

Sylvanergy’s argument that the NUARB had, in light of evidence introduced by

Sylvanergy that biofuel combustion is its own best control technology due to the effects

of carbon sequestration, improperly determined that a Sustainable Forest Plan would

constitute BACT for the proposed plant. R at 11.

SUMMARY OF ARGUMENTS

There is no question that the U.S. Environmental Protection Agency (EPA) has

broad discretion to regulate emissions pursuant to the Clean Air Act (CAA or Act).

However, Prevention of Significant Deterioration (PSD) preconstruction review is far

more limited in scope. PSD review and the corresponding requirements – including

implementation of Best Available Control Technology (BACT) to mitigate emissions –

apply only to “major emitting” facilities as defined by Section 169 of the Act and the

corresponding regulations promulgated by the EPA. Moreover, PSD review concerns

only those criteria pollutants for which National Ambient Air Quality Standards, or

NAAQS, have been promulgated by EPA pursuant to the Act.

In light of the foregoing, the New Union Air Resources Board (NUARB) – which

administers the PSD provisions of the Act within the State of New Union on behalf of the

EPA – was wrong to subject Sylvanergy, L.L.C.’s proposed biomass-powered electric

generation facility to PSD review, because it cannot qualify as a “major emitting” facility

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under any construction of the Act and the corresponding regulations. The decision to

subject Sylvanergy’s proposed facility to PSD review, embodied in the NUARB’s denial

of Sylvanergy’s petition for a Non-Applicability Determination, is reviewable as a final

agency action pursuant to Section 307 of the Act.

Even if this Court finds that the NUARB properly subjected the proposed

Sylvanergy facility to PSD review, it should nonetheless find that the NUARB erred

when it included greenhouse gas emissions under the scope of its review of the

Sylvanergy facility. The so-called Deferral Rule, which was issued by the EPA and

which was in effect from July of 2011 through July of 2014, exempted biogenic

emissions sources, like the proposed Sylvanergy facility, from PSD review for

greenhouse gases. Because the PSD review process concerning the proposed Sylvanergy

facility took place during the effective period of the Deferral Rule, NUARB should have

found the Sylvanergy facility to be exempt from PSD review for greenhouse gases.

Moreover, research has shown – and the EPA itself has recognized – that the

burning of biofuels for the purpose of electric generation results in the emission of carbon

dioxide equivalents that are far less harmful to the environment than the types of carbon

dioxide equivalents which are emitted when fossil fuels are burned for power generation.

This is because carbon dioxide equivalents emitted through the burning of biomass, like

wood pellets, are cycled back into the environment much more quickly through natural

photosynthesis.

In the event this Court finds that NUARB properly subjected the proposed

Sylvanergy facility to PSD review for greenhouse gases, and that the Deferral Rule did

not apply to the Sylvanergy facility, this Court should find that the NUARB went too far

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in requiring the implementation of a Sustainable Forest Plan by Sylvanergy as BACT for

its greenhouse gas emissions. Assuming arguendo that the Sylvanergy facility was

subject to PSD review and implementation of BACT for greenhouse gases, the NUARB

appropriately rejected the carbon capture and wood gasification system called for by the

other petitioner in the instant action, Save Our Climate, Inc. To have imposed the system

which Save Our Climate advocated for as BACT would have impermissibly constituted a

redesign of the facility and the facility’s power source. However, the NUARB exceeded

its statutory authority when it imposed beyond-the-fence measures as BACT to mitigate

Sylvanergy’s greenhouse gas emissions. As the Supreme Court made clear in Utility Air

Regulatory Group v. EPA, the EPA lacks authority under the Act to impose beyond-the-

fence, non-technological emissions offsets as BACT for the purposes of PSD review. On

those grounds, the NUARB lacked the authority to impose the Sustainable Forest Plan as

BACT for the proposed Sylvanergy facility. Accordingly, Sylvanergy seeks for the

NUARB’s determinations to be set aside as not being in accordance with its and the

EPA’s jurisdiction under the Act.

ARGUMENT

I. SYLVANERGY WAS ENTITLED TO A FINDING THAT IT WAS NOT

REQUIRED TO OBTAIN A PREVENTION OF SIGNIFICANT DETERIORATION PRECONSTRUCTION PERMIT FOR ITS FORESTDALE BIOMASS FACILITY.

The New Union Air Resources Board (NUARB) erred when it denied

Sylvanergy’s request for a finding, known as a Non-Applicability Determination, which

would have excused Sylvanergy from having to comply with the comprehensive

Prevention of Significant Deterioration (PSD) preconstruction requirements the Clean Air

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Act (CAA, or Act) for its proposed Forestdale biomass-powered facility. See Weiler v.

Chatham Forest Products, Inc., 392 F.3d 532, 534-35 (2nd Cir. 2004); PPG Industries,

Inc. v. Harrison, 660 F.2d 628, 633-34 (5th Cir. 1981). Instead, because the NUARB

erroneously classified the biomass plant as a “major emitting facility,” Sylvanergy’s

facility became subject to PSD review and implementation of Best Available Control

Technology (BACT).

The Environmental Appeals Board (Board) likewise erred in determining that it

lacked jurisdiction under 40 C.F.R. § 124.19(a) to review the Non-Applicability

Determination denial. See Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901, 906 (7th

Cir. 1990); accord Harrison v. PPG Industries, Inc., 446 U.S. 578, 588-89 (1980). The

foregoing issues are nonetheless ripe for review at this juncture. See Whitman v.

American Trucking Associations, 531 U.S. 457, 479-80 (2001). This Court should find

that Sylvanergy was entitled to a Non-Applicability Determination exempting its

proposed plant from the PSD provisions of the Act.

a. Scope of PSD review is limited to defined “major stationary sources.”

The Act’s PSD review provisions, part of the 1977 CAA amendments,

complement the earlier-enacted National Ambient Air Quality Standards, or NAAQS.

See Alabama Power Co. v. Costle, 636 F.2d 323, 346-47 (1979). PSD review was not

contemplated as a broad mechanism for controlling all manner of facilities; rather, the

scope of PSD review is limited to facilities defined by the statute and the corresponding

regulations as “major emitting source[s]”. See Weiler v. Chatham Forest Products, Inc.,

392 F.3d 532, 534-35 (2004); Wisconsin Elec. Power Co. v. Reilly, 893 F.2d 901, 915-16

(1990).

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Section 109 of the Act directed the EPA to issue NAAQS, establishing maximum

acceptable levels of specific, particularly harmful air pollutants, also known as criteria

pollutants, at levels necessary to protect the public health with an adequate margin of

safety. 42 U.S.C. § 7409; 40 C.F.R. § 50.4-18; Costle 636 F.2d at 346. Section 110, in

turn, required each state to adopt and submit for EPA approval a plan for reaching air

quality “attainment,” meaning the point at which air quality measurements would reflect

lower volumes of the criteria pollutants than mandated by the NAAQS regulations. 42

U.S.C. § 7410; Costle, 636 F.2d at 346. However, Section 110 contained nothing to

address instances where new or modified emissions sources caused increases in the levels

of certain criteria pollutants that, while harmful, would not have been so dramatic as to

cause a region or state already in “attainment” to exceed the corresponding NAAQS. 42

U.S.C. § 7410; Costle, 636 F.2d at 346-47.

With the passage of the 1977 CAA amendments, Congress gave the EPA, as well

as states which had successfully adopted an EPA-approved implementation plan under

Section 110, a powerful mechanism for reaching and/or preserving NAAQS attainment:

mandatory PSD preconstruction review for defined “major emitting facilities” in most

areas. 42 U.S.C. §§ 7475 and 7479; see Costle, 636 F.2d at 350. Facilities subject to

PSD review must implement technology-based emission limitations constituting the Best

Available Control Technology (BACT) under CAA Section 165(a)(4) and the

corresponding EPA regulations. 42 U.S.C. § 7475(a)(4); 40 C.F.R. 52.21(b)(12); Costle,

636 F.2d at 350.

Only facilities that qualify as “major” stationary sources are required to undergo

PSD review. See Wisconsin Elec., 893 F.2d at 904. The PSD regulations issued by EPA

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pursuant to CAA Section 165 define “major stationary source[s]” subject to PSD review

as certain types of facilities (e.g., fossil-fuel fired steam electric plants of more than 250

million Btu per hour heat input) which emit or have the potential to emit 100 tons per

year or more of any regulated NSR pollutant, 40 C.F.R. § 52.21(b)(1)(i)(a), as well as any

facility of any type which emits or has the potential to emit 250 tons or more of a

regulated NSR pollutant annually, 40 C.F.R. § 52.21(b)(1)(i)(b). (Emphasis added).

“Regulated NSR pollutant[s]” are confined to pollutants for which a national ambient air

quality standard has been issued, 40 C.F.R. § 52.21(b)(50)(i), plus volatile organic

compounds and nitrogen oxides, 40 C.F.R. § 52.21(b)(50)(i)(a), and sulfur dioxide, 40

C.F.R. § 52.21(b)(50)(i)(b).

The proposed Sylvanergy plant does not qualify as a “major stationary source”

under the list of facilities covered by subparagraph (a) that have the potential to emit 100

tons per year or more of a regulated pollutant, nor does it qualify as a facility covered by

subparagraph (b) that has the potential to emit 250 tons or more of a regulated pollutant.

See 40 C.F.R. § 52.21(b)(1)(i)(a)-(b); Weiler, 392 F.3d at 534-35; PPG Industries, 660

F.2d at 633-34. Therefore, the proposed plant was wrongly subjected to PSD review.

b. NUARB erred in determining that the proposed Sylvanergy biomass-powered plant is a “major emitting facility” or “major emitting source” subject to PSD review and implementation of BACT.

Only proposed new power plants that meet the statutory definition of a “major

emitting facility” (or the definition of a “major emitting source” under the corresponding

regulations) are subject to PSD review and the corresponding preconstruction

requirements, as discussed above. 42 U.S.C. § 7475; 40 C.F.R. § 52.21(b)(1)(i)(a)-(b);

  12  

Weiler v. Chatham Forest Products, Inc., 392 F.3d 532, 534-35 (2004); Wisconsin Elec.

Power Co. v. Reilly, 893 F.2d 901, 915-16 (1990).

In petitioning for a Non-Applicability Determination from NUARB with respect

to its proposed plant, Sylvanergy took the position that it did not qualify as a fossil-fuel

fired steam electric plant, and that it likewise did it qualify under the “any other source”

provision, reasoning that it could not emit more than 250 tons of any regulated pollutant

in light of the Village of Forestdale’s 6,500-hour cap on the plant’s annual operations. R

at 6. The NUARB rejected the first argument on the grounds that Sylvanergy’s use of

ultra-low sulfur diesel start-up burners in its facility design brought the plant under the

definition of a fossil-fuel fired facility, despite the facility’s primary reliance on wood

biomass for energy production. R at 6. The NUARB rejected the second argument on

the grounds that the Village’s annual hours of operation cap did not constitute a

“federally enforceable” limitation, as required by PSD review regulations at 40 C.F.R. §

52.21(b)(4), and that it could therefore not be factored into the plant’s annual projected

emissions. R at 6. Because the NUARB’s findings are contrary to federal law, this Court

should set them aside and remand the proceedings to the NUARB with an order to issue

Sylvanergy a Non-Applicability Determination for its proposed plant. See Weiler, 392

F.3d at 534-35; Wisconsin Elec., 893 F.2d at 915-16.

i. NUARB’s determination that the proposed Sylvanergy plant constitutes a “major emitting source” or “facility” merits minimal deference from this Court.

Because the determination that Sylvanergy’s proposed plant is a “major emitting

source” or “facility” raises a question of statutory and regulatory interpretation involving

commonly understood terms, and not scientific or technical concepts, this Court owes

  13  

minimal deference to the NUARB. See Town of Brookline v. Gorsuch, 667 F.2d 215,

219-20 (1st Cir. 1981). While Courts have generally accorded substantial deference to

the EPA’s interpretation of the CAA and its own regulations, Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984), courts “may rely

more heavily on [their] own judgment when reviewing an administrative decision that

does not require highly specialized expertise.” Id. at 220 (determining that interpretation

and application of the phrase “nonprofit health or educational institution” in the context

of PSD review did not require technical expertise or special competence in environmental

matters; therefore, while Court gave “some weight” to EPA’s factual findings, it

otherwise took a “hard look” at EPA’s decision).

ii. The proposed Sylvanergy facility is not a “fossil-fuel fired” source.

Sylvanergy’s proposed Forestdale biomass facility cannot qualify as a “fossil-fuel

fired source” because it will be entirely fueled by wood pellets, which have never been

considered a form of fossil fuel. See 40 C.F.R. § 60.41; PPG Industries, 660 F.2d at 633-

634. The facility’s proposed use of ultra-low sulfur diesel start-up burners should not

affect its classification as a biomass-fueled facility. See PPG Industries, 660 F.2d at 634.

Under EPA’s regulations at 40 C.F.R. § 52.21, fossil-fuel fired steam electric

plants of more than 250 million Btu per hour heat input are among the “major stationary

source[s]” subject to PSD preconstruction review. 40 C.F.R. § 52.21(b)(1)(i)(a); see

PPG Industries, 660 F.2d at 633-34. The phrase “fossil-fuel fired” is not subsequently

defined in the PSD review regulations. It is, however, defined at Part 60 of the

regulations promulgated by EPA under the Act, which specifically concern standards of

performance for new stationary sources pursuant to CAA Section 111, 42 U.S.C. § 7411.

  14  

Under 40 C.F.R. § 60.41, “fossil-fuel-fired steam generating unit means a furnace or

boiler used in the process of burning fossil fuel for the purpose of producing steam by

heat transfer.” That same provision defines “fossil fuel” as “natural gas, petroleum, coal,

and any form of solid, liquid, or gaseous fuel derived from such materials for the purpose

of creating useful heat.”

Clearly biofuel, such as wood, is not contemplated by EPA as a fossil fuel;

likewise, a biomass-fired plant that utilizes fossil fuel burners solely as an ignition source

should not be considered to fall under the umbrella of “fossil-fuel fired steam generating”

units. See PPG Industries, 660 F.2d at 633-34 (holding that EPA’s decision to classify

appellant’s waste heat boilers, which were fueled by a combination of fossil fuel and

waste heat gases, as fossil-fuel fired steam generating units for the purpose of new

stationary source review under CAA Section 111 was arbitrary and capricious, because

“[n]either the language of the definition nor the intent of the steam generating unit

regulations support[ed] such a narrow reading.”).

iii. The proposed Sylvanergy facility does not have the potential to emit 250 tons or more per year of any criteria pollutant.

Though this is a closer question than the latter, Sylvanergy’s proposed facility is

not capable of emitting 250 tons or more per year of any criteria pollutant because its

facility is capped at 6,500 hours of operation annually by the Village of Forestdale;

therefore, it should not be classified as a “major emitting source” under 40 C.F.R. 52.21

(b)(1)(i)(b) of the PSD regulations.

The NUARB does not question the validity of the Village’s site plan approval

(which was granted contingent on Sylvanergy’s acceptance of the Village’s proposed

6,500-hour cap on the facility’s annual operations). Instead, it decided that the Village’s

  15  

restriction could not be taken into account for the purposes of PSD review because it is

not a “federally enforceable” limitation. However, that determination is at odds with

EPA’s own interpretation of the PSD regulations. See EPA Interim Policy on Federal

Enforceability of Limitations on Potential to Emit (Jan. 22, 1996)6; Weiler, 392 F.3d at

534-45; National Mining Ass’n v. EPA, 59 F.3d 1351, 1363-65 (D.C. Cir. 1995).

A proposed electrical generating facility would be considered a “major stationary

source” if it had the “potential to emit” 250 tons per year or more of a criteria pollutant.

40 C.F.R. § 52.21(b)(1)(i)(b). Subsequently, the regulations define “potential to emit” as

the maximum capacity of a stationary source to emit a pollutant under its physical and

operational design. 40 C.F.R. § 52.21(b)(4) (emphasis added). Significantly, “[a]ny

physical or operational limitation… including… restrictions on hours of operation… shall

be treated as part of [the facility’s] design if the limitation or the effect it would have on

emissions is federally enforceable.” Id. (emphasis added).

The accompanying definition of “federally enforceable” has led to considerable

confusion amongst state agencies like the NUARB.7 See National Mining, 59 F.3d at

1363-65. The resulting confusing culminated in the “federally enforceable” standard

being held to be unreasonable by the District of Columbia Circuit in National Mining; the

                                                                                                               6 Available at http://www.epa.gov/ttn/oarpg/t5/memoranda/pte122.pdf (last visited Nov. 25, 2015) and included at Addendum B. 7 Pursuant to 40 C.F.R. § 52.21(b)(17), “federally enforceable” means “all limitations and conditions which are enforceable by the [EPA] Administrator, including those requirements developed pursuant to 40 C.F.R. parts 60 and 61, requirements within any applicable State implementation plan, any permit requirements established pursuant to 40 C.F.R. 52.21 or under regulations approved pursuant to 40 C.F.R. part 51, subpart I, including operating permits issued under an EPA-approved program that is incorporated into the State implementation plan and expressly requires adherence to any permit issued under such program.”

  16  

court faulted the EPA for not considering practically effective emissions control

mechanisms that didn’t fall under the precise definition of the term. Id.

In response to the National Mining decision, the EPA issued an Interim Policy

broadening the application of the term “federally enforceable” to include measures that

are “federally enforceable or legally and practicably enforceable by a state or local air

pollution control agency.” EPA Interim Policy at 3-48. In Weiler, the Second Circuit

adopted the Interim Policy’s definition of “federally enforceable,” concluding that a

proposed facility which would ordinarily qualify as a major emitting facility is to be

treated as such “unless there are legally and practicably enforceable mechanisms in place

to make certain that the emissions remain below the” levels mandated by federal PSD

regulations. 392 F.3d. at 535 (emphasis added).

While the Village of Forestdale, which imposed the 6,500-hour annual operations

cap on the proposed Sylvanergy facility, is not a state or local air pollution control agency

of the sort envisioned by the EPA’s Interim Policy, nothing precludes the NUARB or

EPA from bringing a court action to enforce the permit’s binding conditions against

Sylvanergy. See Weiler, 392 F.3d at 535-36. There may not be a mechanism built into

the regulations that allows for NUARB or EPA to institute extra-judicial enforcement

against Sylvanergy, but should Sylvanergy waver from the annual operations cap

condition of its site plan permit, the Village could either bring a direct enforcement action

against Sylvanergy or else the NUARB or EPA could seek a court injunction forcing

Sylvanergy to comply with the permit or else cease operations entirely. See Weiler, 392

                                                                                                               8  Though labeled an “Interim Policy,” likely in contemplation of a future rulemaking to formally amend the regulations, there has been no such rule promulgated by EPA and thus the Interim Policy remains in effect. See Weiler, 392 F.3d at 534-35.  

  17  

F.3d at 535-37 (concluding that a group of citizens had standing to challenge New York

State Department of Environmental Conservation’s finding that a proposed factory did

not meet criteria to qualify as a “major emitting source” for purposes of PSD review, and,

similarly, concluding that EPA could file “a civil action to mandate compliance with the

[CAA’s] major source requirements” if the EPA felt that the State had wrongly assessed

the facility’s potential emissions).

Because the cap on the Sylvanergy plant’s annual hours of operation imposed by

the Village’s site plan approval is legally and practicably enforceable, the NUARB was

wrong to ignore the effect of the operations limitation on the plant’s potential to emit

criteria pollutants. See Weiler, 392 F.3d at 534-35; accord Wisconsin Elec., 893 F.2d at

916-18 (holding, in the context of a suit challenging EPA’s determination that a

modification to an existing power plant constituted a “major” physical change pursuant to

40 C.F.R. § 52.21(2), that EPA’s reliance on an assumed continuous operation as a basis

for finding an emissions increase was not properly supported). Accordingly, the

proposed Sylvanergy facility cannot be deemed a major emitting source or facility

because it is not capable, in light of the Village’s legally and practicably enforceable

operations limitation, of emitting more than 250 tons per year of any given criteria

pollutant.

c. This Court has jurisdiction to review the NUARB’s decision to deny Sylvanergy’s petition for a Non-Applicability Determination and instead to classify the proposed Sylvanergy facility as a “major emitting source.”

Pursuant to Section 307(b)(1) of the Act, certain “final agency action[s]” of the

EPA which bear local or regional applicability may be appealed directly to the federal

court of appeals for the region in which the action takes place. 42 U.S.C. § 7607(b)(1).

  18  

The NUARB’s rejection of Sylvanergy’s petition for a Non-Applicability Determination

exempting its facility from PSD review – and the NUARB’s corresponding determination

that Sylvanergy’s proposed facility would in fact constitute a “major emitting source”

subject to the Act’s PSD provisions – is precisely the type of “final agency action”

contemplated for review by a federal court of appeal under Section 307(b)(1). See

Wisconsin Elec., 893 F.2d at 906; accord Harrison v. PPG Industries, Inc., 446 U.S. 578,

588-89 (1980). Even if this Court should find otherwise, when NUARB’s issued a final

PSD permit to Sylvanergy, interlocutory matters like NUARB’s denial of Sylvanergy’s

petition for a Non-Applicability Determination became ripe for judicial review. See

Whitman, 531 U.S. at 479-80 (ripeness doctrine requires court to evaluate both the fitness

of the issues for judicial decision and the hardship to the parties of withholding court

consideration; decision may be ripe for judicial review when review would not

inappropriately interfere with further administrative action and where court’s failure to

grant review could subject petitioner to lengthy and expensive proceedings).

The Harrison case was brought shortly after the 1977 CAA amendments took

effect, and concerned the application of the Act’s new source performance standards –

which are similar in many respects to the Act’s PSD preconstruction requirements – to a

proposed power generating facility. See 446 U.S. at 580-82. The Supreme Court

concluded that EPA’s decision to apply the standards to the proposed facility fell under

the ambit of “any other final action” reviewable in a court of appeals under Section

307(b)(1), 42 U.S.C. § 7607(b)(1). Id. at 590-94. The Court specifically looked to the

1977 CAA amendments, through which Congress inserted the “any other final action”

language into Section 307(b)(1), in concluding that Congress had deliberately intended to

  19  

broaden the scope of actions appealable under that section of the Act. Id. at 584.

Notably, all of the parties agreed that the EPA Administrator’s ruling at issue in Harrison

“represented EPA’s final determination concerning the applicability of the ‘new source’

standards to” the petitioner’s power facility. Id. at 586.

Similarly, NUARB’s denial of Sylvanergy’s petition for a Non-Applicability

Determination represents the agency’s final determination concerning the applicability of

the PSD review provisions to Sylvanergy’s proposed biomass facility. See id.; see also

Wisconsin Elec., 893 F.2d at 906 (determining that EPA memorandum, concluding that

the petitioner’s repair and replacement of a preexisting electric generating facility would

be subject to both new source performance standards and PSD preconstruction

requirements and rejecting petitioner’s argument that repairs were routine and therefore

exempt from NSPS and PSD requirements, constituted a final determination reviewable

pursuant to 42 U.S.C. § 7607(b)).

In declining to review Sylvanergy’s challenge to the denial of its petition for a

Non-Applicability Determination, the Environmental Appeals Board cited Puerto Rican

Cement Co. v. EPA, 889 F.2d 292 (1st Cir. 1989) for the proposition that Sylvanergy had

the option of seeking judicial review of the denial, and failed to avail itself of that option.

R at 8. To the contrary, Puerto Rican Cement stands for the proposition that the

developer or operator of a power generation facility, like Sylvanergy, can only appeal the

EPA’s denial of a Non-Applicability Determination pursuant to Section 307(b)(1) if that

denial is a “final action of the administrator.” See 889 F.2d at 294.

The concerns expressed by the Puerto Rican Cement court – namely, that such an

appeal would not satisfy the finality (a.k.a. ripeness) and exhaustion of administrative

  20  

remedies doctrines – are not applicable here. As discussed above, the NUARB’s denial

of Sylvanergy’s petition for a Non-Applicability Determination is final, particularly given

the subsequent issuance of a PSD permit by NUARB; additionally, by appealing first to

the Environmental Appeals Board, it seems that Sylvanergy has exhausted all of the

available administrative routes for appealing the NUARB’s determination. See Whitman,

531 U.S. at 479-80. Therefore, the Environmental Appeals Board’s reliance on Puerto

Rican Cement is inapposite, and this Court should find that it has jurisdiction to evaluate

the initial determination by NUARB that Sylvanergy’s proposed facility was not eligible

for a Non-Applicability Determination exempting the facility from having to comply with

the Act’s PSD preconstruction review provisions.

II. A BIOMASS-FUELED FACILITY IS NOT SUBJECT TO PSD REVIEW AS AN EMITTER OF GREENHOUSE GASES BECAUSE ITS EMISSIONS ARE BIOGENIC. The Supreme Court has held that greenhouse gases (GHGs) fit well with the Act’s

capacious definition of air pollutant and are may thus be regulated under the Act by the

EPA; however, the Court has also stated that this does not command or permit the EPA to

regulate GHGs under certain narrower provisions of the Clean Air Act. Utility Air

Regulatory Group v. E.P.A., 134 S.Ct. 2427, 2449 (2014); Massachusetts v. E.P.A., 549

U.S. 497, 532 (2007). Significantly, in Utility Air, the Supreme Court held that the Act

does not allow the EPA to interpret its provisions in such a way that would require the

operator of a facility to obtain a PSD permit solely on the basis of the facility’s potential

GHG emissions. 134 S.Ct. at 2431. The Court found that the EPA had gone beyond a

reasonable interpretation of the Act and that it had overstepped its authority without clear

congressional authorization. Id. at 2444. The Court did allow for regulation of a source’s

  21  

GHG emissions, provided that the source was already subject to PSD review for one of

the criteria pollutants (meaning, pollutants for which NAAQS have been promulgated).

Id. at 2449. Additionally, the Court’s stance on the EPA’s regulation of GHG emissions

in the context of PSD review begs the question of whether a generation facility fueled by

biomass should be subject to PSD review for GHG emissions, since those facilities’ GHG

emissions are biogenic and should ultimately result in zero net emissions.

Congress’ intended goal when it amended the Act to incorporate PSD

preconstruction review was “to ensure that economic growth will occur in a manner

consistent with the preservation of existing clean air resources.” 42 U.S.C. § 7470(3).

With respect to GHG emissions, the D.C. Circuit Court of Appeals upheld the EPA’s

finding that GHG contribute to global warming and are a threat to public health in

Coalition for Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 121 (D.C. Cir. 2012).

GHGs, such as carbon dioxide, were not originally regulated as air pollutants per the

discretion afforded the EPA under the Act,9 but they are now subject to regulation. 42

U.S.C. § 7602(g); 40 C.F.R. § 86.1818-12; see Utility Air, 134 S.Ct. at 2436.10 With

respect to GHG emissions from biogenic sources, the EPA issued the “Deferral Rule,”

which delayed regulation of GHG emissions for a period of three years. Deferral for

CO2 Emissions from Bioenergy and Other Biogenic Sources Under the Prevention of

                                                                                                               9 Under the Act EPA sets and revises national ambient air quality standards for several common pollutants. The EPA therefore can also add additional pollutants. 42 U.S.C. §§ 7408, 7409. 10 “Greenhouse gases (GHG), the air pollutant defined in § 86.1818-12(a) of this chapter as the aggregate group of six greenhouse gases: Carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, shall not be subject to regulation except as provided in paragraphs (b)(48)(iv) through (v) of this section.” 40 C.F.R. § 51.166(b)(48)(i).

  22  

Significant Deterioration (PSD) and Title V Programs (“Deferral Rule”), 76 Fed. Reg.

43,490-01 (July 20, 2011).

The Sylvanergy facility should not have been subject to PSD review for

greenhouse gases and the Deferral Rule should have instead been applied to the proposed

facility since the rule had not yet expired when Sylvanergy’s PSD permit was issued.

The D.C. Circuit’s decision vacating the rule was put on hold pending a Supreme Court

decision that was not issued until after the circumstances which gave rise to this case

transpired. See Center for Biological Diversity, 722 F.3d 401 (D.C. Cir. 2013); see also

Utility Air, 134 S.Ct. 2427. Additionally, the offsetting effects of carbon sequestration

should render the proposed Sylvanergy facility as having near-zero GHG emissions; such

facilities are not the intended targets of the CAA. See 42 U.S.C. § 7470. Lastly,

subjecting biomass-fueled facilities to PSD review will discourage environmentally-

conscious projects in the future and will run counter to Congress’ goal of addressing

climate change. See Deferral Rule, 76 Fed.Reg. at 43,496.11 The EPA itself has

acknowledged the profound impact that the use of biomass can have in reducing GHG

and in mitigating global warming. See Framework for Assessing Biogenic CO2

Emissions from Stationary Sources, United States Environmental Protection Agency,

Office of Air and Radiation, Office of Atmospheric Programs, Climate Change Division

(November 2014) (Hereinafter “Framework”).

a. The Deferral Rule Should Have Still Applied because the PSD Permit was Issued Before the Rule was Set to Expire.

                                                                                                               11 The EPA raised this concern as part of its justification for publishing the Deferral Rule. They found it conceivable that ultimately the science would show that some biomass facilities have trivial or positive impacts on the net carbon cycle and therefore they would be unnecessarily burdening these facilities and themselves through regulation.

  23  

i. The Deferral Rule Originated out of Acknowledgement of the Benefit of Biogenic Sources and Emissions.

The EPA issued a rule on July 20, 2011, that deferred for a period of three years

the PSD requirement for biogenic stationary sources that emit biogenic carbon dioxide.

76 Fed. Reg. 43,490-01.12 It did this by specifically amending the regulatory definition

of “greenhouse gases” to exclude biogenic carbon dioxide for this period.13 40 C.F.R.

51.166(b)(48)(ii)(a).14 In 2013, the D.C. Circuit set aside this Deferral Rule in a split

decision. Center for Biological Diversity, 722 F.3d 401. The Court did not judge the

scientific and environmental merits of the rule, but instead held that the EPA’s

administrative approach and regulatory basis for implementing this rule were not

properly justified. Id. at 412.

ii. The Decision of the D.C. Circuit to Vacate the Rule is on Hold.

The D.C. Circuit has exclusive jurisdiction over this issue and the Deferral Rule

has been vacated, but the court’s ruling has yet to take effect. See Next Steps and

Preliminary Views on the Application of Clean Air Act Permitting Programs to

                                                                                                               12 The EPA stated it did this because “the issue of accounting for the net atmospheric impact of biogenic CO2 emissions is complex enough that further consideration…is warranted.” Deferral Rule, 76 Fed.Reg. at 43,492. 13 The EPA argued in Center for Biological Diversity v. E.P.A. that it had authority to exempt biogenic sources of carbon dioxide because these sources have special characteristics that Congress undoubtedly could not have imagined when implementing the PSD program. Center for Biological Diversity, 722 F.3d at 409. 14 “For purposes of this paragraph (b)(48)(ii)(a), prior to July 21, 2014, the mass of the greenhouse gas carbon dioxide shall not include carbon dioxide emissions resulting from the combustion or decomposition of non-fossilized and biodegradable organic material originating from plants, animals, or micro-organisms (including products, by-products, residues and waste from agriculture, forestry and related industries as well as the non-fossilized and biodegradable organic fractions of industrial and municipal wastes, including gases and liquids recovered from the decomposition of non-fossilized and biodegradable organic material).” 40 C.F.R. 51.166(b)(48)(ii)(a).

  24  

Greenhouse Gases Following the Supreme Court’s Decision in Utility Air Regulatory

Group v. Environmental Protection Agency, EPA Guidance Memo, Page 6 (July 24,

2014). The D.C. Circuit, at the time it issued its decision in Center for Biological

Diversity, left open the possibility for the parties to seek rehearing on the Court’s

decision to vacate the Deferral Rule pending the Supreme Court’s (then-anticipated)

decision in the Utility Air case. See Approval and Promulgation of Implementation

Plans; Arkansas; Prevention of Significant Deterioration; Greenhouse Gas Plantwide

Applicability Limit Permitting Revisions, 80 Fed. Reg. 23,245-01 (April 27, 2015).

The Supreme Court has since issued an opinion for that case (on June 23, 2014),

but did not address the Deferral Rule or how to address biogenic emissions. See Utility

Air, 134 S.Ct. 2427. The EPA has yet to issue a new rule pertaining to the treatment of

GHGs in the context of PSD review. See 40 C.F.R. § 51.166. Moreover, the Utility Air

decision was issued after the NUARB had already issued a federal PSD permit to

Sylvanergy for its proposed facility; thus, the NUARB should have approached the PSD

review process for Sylvanergy’s proposed facility as if the Deferral Rule were still in

effect.

iii. The Deferral Rule Should Have Been Applied by the NUARB.

Timing is critical, and as the Ninth Circuit articulated in its decision in Sierra

Club v. U.S. E.P.A., the EPA must apply the air quality standards that are in effect at the

time of a given permitting decision. Sierra Club v. U.S. E.P.A., 762 F.3d 971, 973 (9th

Cir. 2014). At the time the NUARB issued its final decision regarding Sylvanergy’s PSD

permit on June 12, 2014, the Center for Biological Diversity ruling was still on hold and

the Supreme Court had yet to issue a decision in Utility Air. The opposing argument –

  25  

namely, that the Deferral Rule expired on its own terms on July 21, 2014 – therefore

holds no weight in light of the present circumstances.

b. Renewable Facilities Should be Considered to Have Zero GHG Emissions Because of the Offset Afforded by Carbon Sequestration.

Carbon sequestration describes the process by which carbon is naturally removed

from the atmosphere through photosynthesis. Framework at 5. The burning of

biologically based and renewable materials, such as wood by-products, to generate

electricity emits the type of carbon dioxide that can quickly be cycled back into the

environment. Id. at 1. In contrast, emissions resulting from the processing of fossil fuels,

can take millions to be sequestered from the atmosphere via photosynthesis. Id. at 5.

Research suggests electrical generation facilities fueled by biogenic materials would

likely result in zero net emissions. See id. Therefore, Sylvanergy’s proposed biomass

facility would potentially have favorable net greenhouse gas emissions.

Congress explicitly expressed its intent that the CAA serve to enhance and protect

the quality of this country’s air. 42 U.S.C. § 7401(b)(1). The Supreme Court concluded

that the PSD thresholds sought by EPA to be applied to GHG emissions would be

incompatible with the substance of the Act’s regulatory scheme. Utility Air Regulatory

Group, 134 S.Ct. at 2443. Furthermore, nothing in the statute’s declared purposes

suggests that Congress intended for the CAA to regulate GHG emissions from biogenic

sources. With Congress’ intent in mind, a reasonable interpretation of the Act calls for a

finding that a biomass facility should not be subject to the PSD provisions of the Act.

A close reading of the CAA indicates that the PSD provisions are not intended to

regulate all types of emissions, like GHGs, that might satisfy the Act’s definition of “air

pollutant.” Utility Air Regulatory Group, 134 S.Ct. at 2439. The Supreme Court has

  26  

made clear that where a facility is already being regulated for other criteria pollutants –

which are inherently subject to PSD review under the Act – that facility could also

become subject to PSD review for its GHG emissions. However, given the uncertainty

that remains in this area with respect to biogenic sources, it would be improper for the

EPA to assume that biogenic emissions are subject to regulation under the Act’s PSD

provisions, so long as that position has not been formalized through the issuance of a

binding rule by the EPA.

Moreover, sources that emit biogenic carbon dioxide can be likened to those that

emit steam, oxygen, or any other harmless airborne substances. The Supreme Court has

emphatically stated that “[i]t is plain as day that the Act does not envision an elaborate,

burdensome, permitting process” for these harmless emissions. Utility Air Regulatory

Group, 134 S.Ct. at 2440.15 Currently, the EPA is working to complete its accounting

framework which would accomplish that very goal. See Framework. Notably, when the

EPA issued its Deferral Rule, it explicitly recognized how use of biomass will play an

integral role toward reducing dependence on fossil fuels. Deferral Rule at Page 7.

Furthermore, the question of sequestration offsets is not best considered at the

BACT review stage; rather, the potential of a facility to net zero emissions because of

carbon sequestration should exempt it from PSD in the first place. The EPA

acknowledged in an agency guidance memorandum that the very construction of biomass

facilities can constitute de facto best available technology for limiting the volume of

carbon dioxide equivalents allowed into the environment (due to the effects of

                                                                                                               15 The Court went on to say that: “It takes some cheek for EPA to insist that it cannot possibly give “air pollutant” a reasonable, context-appropriate meaning in the PSD and Title V contexts when it has been doing precisely that for decades.” Id.

  27  

sequestration); therefore there would be no need for the imposition of an alternative

control technology. EPA Guidance Memo.

The EPA and Save Our Climate point to the D.C. Circuit’s decision in Center for

Biological Diversity, which, they say, suggested that the question of biological

sequestration offsets for GHG emissions from biogenic facilities was better considered at

the BACT determination stage. See Center for Biological Diversity, 722 F.3d at 411.

However, this reasoning fails to consider the heavy substantive and procedural burdens

imposed by the PSD process on facilities and on the EPA which the Supreme Court

articulated in Utility Air Regulatory Group. 134 S.Ct. at 2443. Sylvanergy is not one of

the few large sources capable of carrying such burdens. The important distinction with

Sylvanergy’s proposed facility is that it is biomass-fueled and therefore should not be

read to fall under the broad holding of the Supreme Court regarding GHG emitting

facilities.

III. THE NUARB PROPERLY REJECTED CONSIDERATION OF A WOOD GASIFICATION AND PARTIAL CARBON CAPTURE AND STORAGE PLANT AS BACT BECAUSE SUCH A REDESIGN WOULD IMPERMISSIBLY “REDEFINE THE SOURCE.” New major emitting facilities constructed in areas covered by Prevention of

Significant Deterioration (PSD) review must obtain a permit under Section 165 of the

Clean Air Act (CAA, or Act) before construction. 42 U.S. Code § 7475(a)(1),

7479(2)(C). To qualify for said permit, the facility must implement the best available

control technology (BACT) for each criteria pollutant subject to regulation under the Act.

42 U.S. Code § 7475(a)(4). BACT is determined on a case-by-case basis, taking into

account energy, environmental, and economic impacts and other costs. 42 U.S. Code §

7479(3).

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a. The BACT determination stage does not allow for the redesign of a facility or the redefining of that facility’s source.

The source of Sylvanergy’s power generation is a wood-fired boiler. R at 5. Save

Our Climate, Inc. (SOC) argues that partial carbon capture and storage using a wood

gasification combined cycle electricity generation device would constitute BACT for the

proposed Sylvanergy facility’s greenhouse gas (GHG) emissions. R at 13. The NUARB

rejected SOC’s suggestion because such a redesign would redefine the Sylvanergy

facility’s power source, which the NUARB does not have the authority to make during

the BACT determination process. R at 7; See In re Pennsauken Cty., N. J., Resource

Recovery Facility, 2 E. A. D. 667, 673 (EAB 1988). BACT has long been interpreted to

not allow for the redesign of facilities, a stance bolstered by the Supreme Court in Utility

Air Regulatory Group. See 134 S. Ct. at 2448, citing Sierra Club v. EPA, 499 F.3d 653,

654-655 (7th Cir. 2007). A redesign of a facility, in this case the redefining of

Sylvanergy’s power source, “would change the fundamental scope of its project” – a

measure not to be taken during the BACT process. See Sierra Club v. EPA, 499 F. 3d at

654-655, citing In re Old Dominion Electric Cooperative, 3 E.A.D. 779, 793 n. 38 (EPA

Adm'r 1992).

In re Prairie State Generating Co. exemplifies when a far more nuanced

distinction was considered redesigning the source. In re Prairie State Generating Co., 13

E.A.D. 1, 121 (EAB 2006), aff’d sub nom. Sierra Club v. EPA, 499 F.3d 653. The

Prairie State decision involves a coal-powered facility, which was designed to use local

coal, strategically located near a source. 13 E.A.D. at 16. Requiring this plant to burn

low-sulfur coal, which was different than the locally sourced coal, was considered

redefining the source, as their design was partially premised on obtaining local coal. Id.

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The Environmental Appeals Board in Prairie State found conceptual redesign of the

power source to impermissibly “redefining the source,” whereas the implementation of a

wood gasification and partial carbon capture and storage plant for the proposed

Sylvanergy facility would literally constitute the redesign of machinery as well as

completely changing the source of power generation. See In re Prairie State Generating

Co., 13 E.A.D. at 20; see generally James S. Rhodes and David W. Keith, Engineering

Economic Analysis of Biomass IGCC with Carbon Capture and Storage, 29 Biomass and

Bioenergy 440 (2005) (“Rhodes and Keith Study”).

Given the breadth and clarity of the case law supporting the NUARB’s rejection

of SOC’s proposed BACT, NUARB properly determined that partial carbon capture and

storage using a wood gasification combined cycle electricity generation as BACT would

have impermissibly “[re]defined the source.” See Utility Air Regulatory Group, 134 S.

Ct. at 2448; Sierra Club v. EPA, 499 F. 3d at 654-655; Prairie State, 13 E.A.D. at 20.

IV. THE NUARB IMPERMISSIBLY IMPOSED THE SUSTAINABLE FOREST PLAN AS BACT FOR THE SYLVANERGY FACILITY BECAUSE SUCH NON-TECHNOLOGICAL, BEYOND-THE-FENCE MEASURES ARE BEYOND THE SCOPE EPA’s AUTHORITY. a. The EPA cannot authorize beyond-the-fence measures as BACT,

therefore neither can the NUARB.

Even if the Sylvanergy facility is subject to PSD review as an emitter of green

house gases, the Sustainable Forest Plan calls for non-technological “beyond-the-fence”

measures to be taken, which is beyond the scope of the EPA’s power. The NUARB has

chosen to require Sylvanergy to purchase and manage $10 million dollars worth of

dedicated reforestation land beyond the facility’s fence line, also known as the

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Sustainable Forest Plan, to offset their GHG emissions in order to satisfy the BACT

requirements of the Act. R at 7.

The NUARB derives its power through the EPA. The EPA cannot require

“beyond-the-fence measures” as best available control technology. See Utility Air

Regulatory Group, 134 S. Ct. at 2447-2448. Because an agency cannot delegate more

power than it has, the NUARB cannot require “beyond-the-fence measures” such as the

Sustainable Forest Plan as best available control technology. See Utility Air Regulatory

Group, 134 S. Ct. at 2447-2448; Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 41 (1825).

b. A plain meaning reading of BACT in the Act precludes the use of beyond-the-fence emission offsetting measures such as the Sustainable Forest Plan as BACT.

As in any statutory construction case, “[w]e start, of course, with the statutory

text,” and proceed from the understanding that “[u]nless otherwise defined, statutory

terms are generally interpreted in accordance with their ordinary meaning.” Sebelius v.

Cloer, 133 S. Ct. 1886, 1893 (U.S. 2013), quoting BP America Production Co. v. Burton,

549 U.S. 84, 91 (2006). If a statute is clear and unambiguous, an agency must act within

the confines of the plain meaning, legislative history, and statutory construction of that

statute. See Chevron, 467 U.S. at 842-843. If a statute is unclear and ambiguous, courts

will defer to the lead agency’s reasonable construction and application of the statute. See

id.

Given the definition of BACT as it plainly appears in the Act, the NUARB,

standing in the shoes of the EPA, should not be permitted to include non-technological

beyond-the-fence measures in their BACT determination; this Court owes NUARB

minimal deference with respect to its finding on the latter question of non-technical,

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beyond-the-fence BACT measures. See 42 U.S. Code § 7479(3); Sebelius, 133 S. Ct. at

1893. Section 169 of the Act defines BACT as follows:

The term “best available control technology” means an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation under this chapter emitted from or which results from any major emitting facility, which the permitting authority, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such facility through application of production processes and available methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control of each such pollutant. (Emphasis added). 42 U.S. Code § 7479(3).

BACT is clearly and unambiguously defined in the Act as “an emission limitation.” Id.

The plain meaning of “emission limitation” is unambiguously different than the meaning

of “emission offsetting,” which is what is proposed through The Sustainable Forest Plan.

42 U.S. Code § 7479(3); R at 11.

Further, the control technologies listed in the statutory definition: “fuel cleaning,

clean fuels, or treatment or innovative fuel combustion,” are all onsite technological

implementations. 42 U.S. Code § 7479(3). The Sustainable Forest Plan calls for

measures to be taken physically independent of the emitting facility and beyond

Sylvanergy’s fence line. R at 7. The definition within the Act and plain meaning of

BACT clearly do not allow for such requirements. 42 U.S. Code § 7479(3).

c. Utility Air Regulatory Group v. EPA makes clear that NUARB’s use of the Sustainable Forest Plan as BACT is clearly beyond its reasonable statutory authority.

Under Chevron, when there is an ambiguity the question for a reviewing court is

whether, within its statutory interpretation, the agency empowered to resolve the

ambiguity has acted reasonably and thus has stayed within the bounds of its statutory

authority. Utility Air Regulatory Group, 134 S. Ct. at 2439, citing Chevron, 467 U.S. at

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842-843. Even if the Act was unclear and ambiguous as to whether something like The

Sustainable Forest Plan could be required as BACT, this court should not defer to the

NUARB’s determination on BACT. The NUARB through the EPA should not be given

deference to include beyond-the-fence measures in BACT determinations because the

Supreme Court has stated beyond-the-fence measures are not within the bounds of

reasonable interpretation of the Act. See Michigan v. EPA, 135 S. Ct. 2699, 2707 (U.S.

2015); Utility Air Regulatory Group, 134 S. Ct. at 2442, 2447-2448.

In Utility Air Regulatory Group, Justice Scalia wrote for the majority that the

“…EPA has long interpreted BACT as required only for pollutants that the source itself

emits…” and further wrote that BACT has “been about end-of-stack controls ‘such as

catalytic converters or particle collectors’…” Utility Air Regulatory Group, 134 S. Ct. at

2447-2448. Requiring pollution control measures that are not directly connected to the

“stacks” (i.e. the facility itself), offsetting pollution in the general area, are not within the

practice of the EPA. See Id. The Supreme Court reasoned that BACT determinations

have the potential “to lead to an unreasonable and unanticipated degree of regulation.”

Utility Air Regulatory Group, 134 S. Ct. at 2449. Beyond-the-fence measures fall under

the kind of unreasonable degree of regulation the Court wishes not to endorse. See Id.

Beyond statutory language and the relevant case law, legislative history shows

BACT was never intended to include non-technological measures; in fact, it was to

encourage technological progression. S. Rep. No. 1196, 91st Cong., 2d Sess. 17 (1970).

A statutory provision, such as BACT, may seem ambiguous in isolation but will gain

clarity when read in conjunction with the whole of the statutory scheme. Utility Air

Regulatory Group, 134 S. Ct. at 2442, citing United Sav. Ass'n of Tex. v. Timbers of

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Inwood Forest Assocs., 484 U.S. 365, 371 (U.S. 1988). Through the Act, Congress

encouraged the development of innovative pollution control technologies by

implementing BACT as the standard. See S. Rep. No. 1196, 91st Cong., 2d Sess. 17

(1970). Because the standard is best available control technology, and not existing

control technology, facilities are forced into technological advancements as it occurs. Id.

Requiring a non-technological system of emission offsetting, such as The Sustainable

Forest Plan, would run counter to Congress’ legislative intent behind BACT in the Act.

Id.

Any non-technological beyond-the-fence BACT application would be

unreasonable by the EPA and should not merit Chevron deference. See Utility Air

Regulatory Group, 134 S. Ct. at 2447-2449; Chevron, 467 U.S. at 842-843; 42 U.S. Code

§ 7479(3). As has been long held, an agency, such as the EPA, may delegate “powers

which [it] may rightfully exercise itself" but not more that it may rightfully exercise

itself. See Wayman, 23 U.S. (10 Wheat.) at 41. Because the NUARB has been delegated

its power by the EPA, the NUARB cannot require non-technological BACT that extends

“beyond-the-fence” of the Sylvanergy facility. See Utility Air Regulatory Group, 134 S.

Ct. at 2447-2449; Wayman, 23 U.S. (10 Wheat.) at 41.

d. The Sustainable Forest Plan is the type of “unreasonable and unanticipated degree of regulation” the Supreme Court warned of in Utility Air Regulatory Group v. EPA

SOC argues that Sylvanergy’s wood production area can be viewed as part of the

energy project itself, so that Sylvanergy’s fence line would include the sustainable forest

production area. R at 12. Even if the forest area in the Sustainable Forest Plan were

considered within the fence line of the Sylvanergy facility, as Justice Scalia implies in his

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Utility Air Regulatory Group decision, planting and sustaining trees are not “end-of-

stack” control technologies like “catalytic converters or particle collectors” are. See

Utility Air Regulatory Group, 134 S. Ct. at 2447. The control technologies which

Sylvanergy planned to incorporate, including a multi-pollutant catalytic reactor, are

categorically among the list of control technologies which Justice Scalia states are among

the acceptable forms of BACT. See Utility Air Regulatory Group, 134 S. Ct. at 2449.

The Sustainable Forest Plan, however, is entirely unlike “traditional end-of-stack

controls” in that they are not traditional, they do not touch the source of emission, and

they are not controls but mitigation measures. See Utility Air Regulatory Group, 134 S.

Ct. at 2449; R at 7. This is the exact type of “unreasonable and unanticipated degree of

regulation” Justice Scalia warned of in Util. Air Regulatory Group. See 134 S. Ct. at

2449.

CONCLUSION AND RELIEF SOUGHT

First and foremost, Sylvanergy’s proposed biomass facility should not have been

designated a major emitting source subject to the PSD review provisions of the Act. The

facility is not fossil-fuel fired, nor is it capable of emitting 250 tons annually of any

criteria pollutant, in light of the Village of Forestdale’s binding and legally enforceable

site plan approval. Therefore, the NUARB erred when it denied Sylvanergy’s petition for

a Non-Applicability Determination, and instead subjected the proposed facility to PSD

review. Sylvanergy, accordingly, urges this Court to remand the proceedings to NUARB

with the instruction that Sylvanergy’s proposed facility cannot be subjected to PSD

review under the Act, given its current design.

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However, if this Court finds otherwise, Sylvanergy would nonetheless urge this

Court to vacate the PSD permit issued by NUARB for the proposed facility on two

grounds. First, the PSD permit should be vacated because NUARB impermissibly

subjected the proposed facility to PSD review for its greenhouse gas emissions, given that

the EPA’s “Deferral Rule” was in effect at the time of the facility’s permitting and should

have exempted the facility from having to undergo PSD review for greenhouse gases.

Second, the PSD permit should be vacated because NUARB’s decision to impose a

Sustainable Forest Plan as BACT in relation to the facility’s greenhouse gas emissions

exceeded the agency’s statutory authority, as derived from the EPA; non-technological,

beyond-the-fence measures may not be imposed as BACT. For those reasons, the PSD

permit issued to the proposed Sylvanergy facility should be set aside.

Respectfully submitted, Sylvanergy, L.L.C. One Biomass Drive Village of Forestdale, New Union

December 1, 2015

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ADDENDUM

A

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CAEC purchases energy from our generation and

transmission co-op, PowerSouth, which generates or

purchases the electricity and transmits it over long

distances on transmission lines to distribution utilities,

like CAEC. Our substations are the point at which

power grid infrastructure becomes distribution.

Distribution substations step down the voltage

coming in from the transmission lines in order to begin the process of sending

power to your home. A lot of work goes into planning new substations or even

substation upgrades. CAEC uses long-term forecasting to plan for new substations,

which has a direct impact on reliability. When you sign up for service, no matter

what your intentions are for that meter, we have to factor in your current and future

needs for power into these forecasts. Siting and building a substation is no simple

process; in fact, from the planning phase to implementation, it takes two to three

years to complete just one, at a cost of approximately $1.5 million.

Power Transformer

The voltage coming to the substation, at 115,000 or 46,000 volts, is too high to go

directly into your neighborhoods. Power transformers are used to step the voltage

down to an acceptable level to bring into your neighborhoods.

Distribution Transformer

We’re not ready to get the power to your house just

yet; the voltage coming from the power transformer,

at 25,000 or 13,200 volts, is still too high to go

directly into your home. From there, power is

distributed across miles (depending on how far your

home is from the substation) of power lines to reach

a distribution transformer, which steps the power

down again to the voltage level required by your home, which is 120/240 Volts. In

the last five years the cost of transformers has risen 50 percent, partly due to

escalating material costs and also to federal regulations requiring higher efficiencies.

Service Drop and Meter

From the distribution transformer, a service wire is connected to your house, which

is called the service drop. If your service is overhead, CAEC connects the service

wire to your weatherhead, which is the point of connection between CAEC’s

facilities and the homeowner’s. If your service wire is underground, CAEC connects

the service wire to your underground meter box. The tie that is made on the source

side of the meter is the point of connection between CAEC and the member. The

meter box in both cases allows CAEC to measure the amount of energy used.

Power to Your Home

From the meter box, a wire usually connects to the home’s breaker box, which

functions as a safety mechanism for your home. At this point your home wiring

comes into play and enables energy to be sent to your plug outlets and light

switches at the touch of a button or flip of a switch.

This only covers a few major pieces of equipment we use to keep your power on

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more than 99.9 percent of the time. Some other vital equipment we use includes

highside and lowside breakers, voltage regulators and lightning arrestors. This

process also does not cover the maintenance we must perform and personnel it

takes to ensure the infrastructure we have put in place stays in top condition. This

includes our vegetation management program, line and substation inspections and

other critical programs.

Transmission System

As we learned above with our detailed look at the distribution system, it takes many

parts working together to make the transmission system possible. It is this grid,

owned and maintained by CAEC’s Generation and Transmission provider,

PowerSouth, as well as transmission lines owned by Southern Company that makes

delivery of electricity possible to our members. And it all starts at the generation

plant:

Generation

The generation of electricity begins at the power plant— where fuel sources such as

coal, natural gas or hydro are used to transform water to steam by a heating

process. For example, in most coal fired power plants, chunks of coal are crushed

into fine powder and are fed into a combustion unit where it is burned. Heat from

the burning coal is used to generate steam which is piped throughout the plant.

Turbines/Generator

Since steam is water in a highly pressurized state, it

is sent to a turbine where the pressure causes the

blades on the turbine to spin at a high rate of

speed. A shaft is connected between the turbine

and a generator. Inside the generator is a magnetic

field which produces voltage—or electricity at

approximately 15,000 volts (V). For the power

needs of CAEC’s members and the consumers of PowerSouth’s other distribution

cooperatives, it takes about 10-12 years and between $700 million and $3 billion to

build just one generation plant.

Transmission Substation

The high voltage power produced by the generator enters a transmission substation

at the power plant. Inside the substation large transformers convert the generator’s

voltage up to extremely high voltages (115,000-500,000 V range) in order for it to

travel more efficiently over the transmission lines to transmission substations and

transmission step-down substations.

Transmission Lines and Poles

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Once stepped up to the appropriate

voltage, the power is then placed on

the transmission system which consists

of lines and poles owned, wholly or

jointly, by PowerSouth. PowerSouth

maintains more than 2,200 miles of

transmission line and more than 300

substations across Alabama and the Florida panhandle. The planning for and siting

of new transmission equipment can be a long and tedious process. It often involves

a number of complex and critical environmental, reliability, economic, social and

technical issues that must be examined before decisions can be made and the

required permits (i.e. environmental impacts, rights of way) are issued. The

investigation and research of each of these key areas, and the action of planning

and forecasting the need and placement of transmission equipment can be a 10-20

year process and take an additional two to five years to actually implement.

Switching Station

Once the power reaches its delivery point, it goes

through a step-down (or reduction of voltage)

process at switching stations. Here the 115,000-

500,000 V is stepped down to approximately

115,000-46,000 V before being sent to the first

component of the distribution system—the

substation – and eventually to your home.

Such a large system can take years or decades to plan and can cost millions of

dollars. For example, one-mile of a 115,000 V line on the transmission grid can cost

approximately $400,000—from planning and development to implementation.

When you think of the time and effort it takes, as well as the investment, to build and

maintain the thousands of miles of line to deliver power to our homes, the value of

electricity becomes much more apparent.

Power Generation: Coal

Do you know how much coal your

home uses every day? Each year, an

average family of four uses 3,375

pounds of coal for their water heater;

560 pounds- stovetop/range; 256

pounds- television; and 37 pounds-

vacuum cleaner. Almost half of the

electricity used in the United States is

coal-generated, and given the vast

resource the U.S. has of this fuel type — there is enough known supply to last almost

300 years —even used at the same rate as today.

Costs associated with using coal include the mining, transportation, power

generation and emissions-control, yet coal-fueled electric power remains one of

the lowest-cost sources of energy for consumers. So how does coal power your

home? Let’s start in the mines.

Mining Coal

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There are two basic ways to mine coal:

surface mining and underground

mining. Miners extract coal from

deposits at or near ground level using

the surface mining method. Surface

crews remove earth covering the coal

and gradually extract this fossil fuel.

Miners are then required by law to

return the land to its original, or an

improved condition – known as reclamation. In areas where coal deposits are deep

underground, miners dig tunnels into the earth and use one of three methods:

conventional, continuous or longwall mining.

With the conventional method the miner uses a long electric chain saw to slice a

strip under the coal deposit and the area is blasted. After the explosion loosens the

coal, miners use a loading machine and conveyor belt to transfer the coal to the

earth’s surface for further processing. In contrast, continuous and longwall mining

do not use drilling or blasting. With these processes the coal is torn or cut out

respectively, then sent on to the preparation plant. At the preparation plant, workers

operate machinery to remove rocks and debris before washing, sorting and

blending the coal before it is shipped.

Coal miners are highly skilled and well trained in the use of complex, state-of-the-

art equipment. On average coal miners work a 40-hour week in cold, noisy, damp

and dark environments, while earning an average hourly wage of $21.57. There are

more than 300,000 people employed in the coal mining industry.

Transporting Coal

Coal is largely transported in the U.S. by

rail and barge. Alternative shipping

methods include truck, conveyors and

vessel. Rail transportation accounts for

70 percent of coal shipments to power

plants, which can lead to market power

abuse (i.e. rate increases, poor quality

and unreliable service) caused by the

absence of competition. Since 2004, a

number of generating and transmission cooperatives have reported that their

railroad carriers are demanding 100 percent rate increases at the expiration of their

existing contracts.

PowerSouth’s (our power supplier) Charles R. Lowman Power Plant, located near

Leroy, Ala., receives golf ball-sized coal by barge on the Tombigbee River and by rail.

As it is unloaded onto a conveyor, the coal is transferred to a large storage pile, big

enough to sustain two months demand.

The Lowman plant can store up to 250,000 tons of coal. Based on high demand,

the plant can burn as much as 5,000 tons on a day when consumers use a lot of

electricity. The next step in the process is converting coal into electricity.

Converting Coal into Electricity

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Coal-fired electricity generation is the process of making electric power from the

energy (carbon) stored in coal. The process of converting coal into electricity has

multiple steps:

1. A machine called a pulverizer (shown below) grinds coal into a fine powder.

2. The coal powder mixes with hot air,

which helps it burn more efficiently.

Primary air fans blow the mixture

through coal pipes into the furnace.

3. The burning coal heats water in a

boiler, creating steam.

4. Steam from the boiler spins the

blades of a turbine, transforming heat energy from the burning coal into mechanical

energy which spins the turbine.

5. The spinning turbine is used to power a generator, a machine that turns

mechanical energy into electrical energy. This happens when magnets spin inside a

copper coil in the generator.

6. A condenser cools the steam after it exits the turbine. As the steam is condensed,

it turns back into water.

7. The water is pumped back into the boiler, and the cycle begins once again.

The generated electricity then begins its journey to your home through the

transmission system, as explained above. While the basic process of converting coal

to electricity has not changed in 60 years, advancements in the technology for

removing emissions have led to cleaner coal.

“Clean Coal” Technology

Clean coal technologies fall into four main categories: coal washing, pollution

controls for existing plants, efficient combustion technologies and experimental

carbon capture and storage. Research and development in the last two decades

have resulted in more than 20 new, lower-cost and environmentally compatible

clean coal technologies. In fact, PowerSouth has invested approximately $400

million in equipment upgrades at the Lowman Plant for the reduction of sulfur

dioxide, nitrogen oxide and mercury emissions. Lowman’s three coal-fired

generating units can produce 556 megawatts (enough to power 300,000 homes

and businesses) by burning approximately 1.5 million tons of coal annually. Through

the integration of scrubber enhancements, sulfur dioxide emissions have been

reduced approximately 92.5 percent (200,000 tons total) and nitrogen oxide

emissions reduced by about 80 percent (18,000 tons), while achieving the co-

benefit of mercury reduction when used in combination with scrubbers.

Although other countries do not monitor their emissions from coal, cleaner coal

technology is helping alleviate the output of pollutants here in the U.S.

Power Generation: Natural Gas

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When you think about electricity, you may not think of natural gas—but this

resource plays a vital role in producing your power. Natural gas is a fuel that requires

very little processing to be usable for industrial procedures. It is high in heating

value, or Btu content, and has few impurities as compared to some other fossil fuels.

In the power industry, natural gas has historically been used for intermediate and

peaking power plants, or plants that come online during “peak” usage times, such as

cold winter mornings or hot summer afternoons when a large population is using a

greater load of electricity. In recent years natural gas has been used more and more

for base-load power generation.

From exploration and discovery to power generation, several steps occur before

natural gas can be converted into electricity—from locating the resource to utilizing

it to its fullest extent, you’ll understand natural gas’ role in supplying power to your

home.

Exploration

Natural gas is found underground in deposits. It takes geologists and geophysicists

and the use of technology to make educated guesses as to the location of these

deposits. This process can take from two to 10 years. Geologists typically begin with

geological surveys at the top of the earth’s surface—looking for characteristics

indicative of natural gas deposits.

Once probable areas are located, geologists then use equipment such as

seismographs (similar to those used to record earthquake fluctuations),

magnetometers (to record magnetic properties) and gravimeters (to measure

gravitational fields) to explore the composition of the earth below and determine if

the environment is favorable for natural gas deposits. If these tests are positive,

exploratory wells are then dug allowing geologists to see firsthand the underground

characteristics and confirm if deposits are present.

Extraction

Once it is confirmed that an area has a

high probability of gas deposits, drillers

begin a three week, 24-hour a day

process of digging down (in some

cases, more than 20,000 feet below the

earth’s surface) to these areas—where it

is still not 100 percent certain if natural

gas deposits exist.

Drillers use two methods: percussion drilling which is the raising and dropping of a

heavy metal bit into the ground, creating a hole; or rotary drilling which uses a

sharp, rotating bit (much like a handheld drill) to dig. The rotary method is, for the

most part, the most common form of drilling today. If natural gas is located, a well is

constructed; if natural gas is not discovered, the site, or “dry hole,” is cleaned up and

the process of trying to locate natural gas begins again. For example, from 1995-

2005, 60 percent of wells drilled for natural gas were deemed dry holes.

If deposits are found, a conduit to the surface is opened and since natural gas is

lighter than air, the pressurized gas will rise to the surface with little or no

interference. In some instances, an electric charge is sent down the well breaking up

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the rock around it. After the charges are set off, a highly-pressurized liquid fracking

solution, composed of 99.51 percent of water and sand, is sent down the well which

further breaks up the rocks, releasing the natural gas. Since the gas is lighter than

the solution, it rises to the top of the well for capture. Once lifted out of the well, the

gas travels through a network of pipelines to be treated and processed.

Processing

Natural gas used in homes is vastly different from the raw form of natural gas that

comes from the ground. The gas is sent to processing plants where excess water,

fluids, sulfur, carbon dioxide and hydrocarbons are extracted, resulting in pure

natural gas.

Arrival to the Power Plant

The processed gas arrives at the power

plant in a mainline transmission pipe.

This pipe connects to the power plant’s

gas yard where filters further remove

impurities and any excess moisture

(such as water or liquid hydrocarbons)

is collected and removed. Gas yards

also condition the gas for equipment

used in power production by adjusting

the pressure to meet combustion turbine (see paragraph below) design

requirements. Natural gas must stay in a “gaseous state,” and not be condensed into

droplets of liquid. If natural gas condenses as hydrocarbons in a more concentrated

form, it could cause internal equipment damage. One method utilized to maintain

the required gaseous state is gas heaters, which help ensure the natural gas remains

above the dew point.

Combustion Turbines/Generator

Once at the proper pressure and temperature, the gas travels to the combustion

turbine, which is very similar to a jet engine. Combined with compressed air

generated in the forward part of the engine (also known as the combustion

chamber), the burning of the natural gas causes the blades of the turbine to spin.

The turbine is connected to a generator via a shaft. This shaft causes the generator

to spin and transforms mechanical energy into electrical energy by using magnets

and copper wire to create an electrical charge. This power is then transferred to the

power plant’s step-up transformer and switch yard before entering the transmission

system.

Combined cycle Natural Gas System

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After the turbine burns the natural gas,

more power can be produced by

utilizing a combined cycle system. This

system takes the exhaust heat from the

turbine (ranging from 900-1,150°F) and

sends it to a Heat Recovery Steam

Generator (HRSG).

The HRSG takes the exhausted hot

gases and uses it to convert water into

steam. This steam is then sent to a

steam turbine that, like the combustion turbine, is connected to a generator to

create electrical energy. The steam is sent to a condenser that cools the steam,

turning it back into water where it is reused in the HRSG and the water/steam

process is repeated.

Power Generation: Hydropower

At an early age we were taught that electricity and water do not mix. True as that

may be, did you know that water is used to generate your electricity? Sounds weird

but one of the oldest sources used to produce energy, that has been around for

hundreds of years, is hydropower – using water to power machinery or make

electricity.

The United States is the fourth largest producer of hydroelectricity in the world after

China, Canada and Brazil. Hydropower is the largest renewable energy source for

electricity generation in the United States. In 2013, hydropower accounted for

approximately six percent of total U.S. electricity generation and 52 percent of

generation from all renewables. The total hydropower capacity in the U.S. is about

100,000 megawatts (MW), providing electricity to more than 28 million American

homes. Additionally, in the U.S., hydropower is produced for an average of 7 cents

per kilowatt-hour (kWh) in comparison to other renewable averages such as wind –

18 cents per kWh, solar – 13 cents per kWh and biomass – 10 cents per kWh.

Hydropower became widely used in the early 1880s when technology to transmit

electricity over long distances was developed.

Dam – Most hydropower plants rely on a dam that holds back water, creating a

large reservoir.

Intake – Gates on the dam open and gravity pulls the water through the

penstock, a pipeline that leads to the turbine. Water builds up pressure as it flows

through this pipe.

Turbine – The water strikes and turns the large blades of a turbine, which is

attached to a generator above it by way of a shaft. Modern hydro turbines can

convert as much as 90 percent of the available energy into electricity.

Generators – As the turbine blades

turn, so do a series of electro-

magnets on the rotating portion of

the generator. The giant magnets

rotate past copper coils, creating

electricity. After the generators

produce electricity, it is transferred to

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an electrical power substation and then transmitted to your home.

Outflow – Used water is discharged from the turbine and is sometimes carried

through pipelines (tailraces) and re-enters the river downstream.

The water in the reservoir is considered stored energy. The level of the reservoir

above the turbine is referred to as “head” and determines the amount of pressure

and volume available to generate electricity. A greater amount of head translates to

more available energy for electrical generation. When the gates are open, the water

flowing through the penstock becomes kinetic energy because it’s in motion. The

rotating turbine in turn drives the generator.

Power Generation: Nuclear

As America looks for clean energy

solutions, there is one form of efficient,

clean power production that our nation

has not explored for the last 57 years—

nuclear. Compared to other countries

using nuclear power production more

readily, the U.S. currently has only 62

commercially operated nuclear power

plants with 100 nuclear reactors in 31 states in operation. Each nuclear power plant

typically employs 400 to 700 people.

Although nuclear power is efficient, it takes many steps to get it into a usable form

of energy for your home. Below we look at what it takes to use a fuel, such as

uranium, and to convert it into power for your home.

Mining

The production of nuclear power begins in the mines—where miners search for

uranium ore which serves as the fuel for nuclear power production. Uranium miners

use several techniques to obtain this chemical element: surface (open pit),

underground and in-situ leach mining. Underground Uranium mining requires the

same basic steps as required for any other type of mining— such as coal.

Milling

After uranium ore is removed from the groun d, it

must be processed by “milling,” which involves a

sequence of physical and chemical treatment steps.

The final product of milling creates yellowcake

(named for its powdery texture and yellowish color).

Conversion and Enrichment

The drums of yellowcake must go through yet

another process to be transformed into a fuel that can

be used by power plants. Natural uranium is

composed of two types: U-235 and U-238. Only U-

235 is capable of being used for energy production,

but it only makes up less than 1 percent of natural uranium. So, for uranium to be

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used for fuel in a nuclear power plant, the range of U-235 must be raised or

“enriched” into a gaseous state.

To understand how enrichment works, picture the gaseous molecules as sand

particles suspended in air. All molecules are blown through thousands of filters or

sieves, one after another. Because the lighter U-235 particles travel faster than the

heavier U-238 particles, more of them penetrate each sieve. As more sieves are

passed, the concentration of U-235 increases. The process continues until the

concentration of U-235 is raised, or enriched, to 3-5 percent.

Fuel Fabrication

Before it can be made into nuclear fuel, however, the enriched uranium fluoride gas

is changed to uranium dioxide—a solid. Then it is pressed into ceramic pellets the

size of the tip of a person’s little finger. The fuel pellets are inserted and stacked end

to end into slender, heat-resistant metallic tubes, or fuel rods which can range in

size from 12-17 feet tall. The fuel rods are combined to form fuel bundles and on

average, 157 fuel bundles (each weighing approximately 1,450 pounds) are loaded

into each reactor core. As the U-235 is exhausted, fission, or the splitting process of

atoms, slows, therefore requiring fuel bundles to be replaced every 18-24 months.

Power Generation

When the fuel bundles are placed in the reactor, it is the process of the uranium

atoms splitting as they are bombarded with free neutrons—also known as fission—

that creates energy which is given off as heat. However, control rods made of the

chemical element boron are placed into the fuel bundles to slow down or

altogether halt the fission of the uranium atoms, giving the power plant the ability to

precisely control the amount of heat given off.

The heat that is produced through fission is sent to a Pressurized Water Reactor

(PWR) where it heats water to 500°F but does not allow it to boil, much like a

pressure cooker. Steam generators then take river water and run it against pipes that

contain the PWR heated water to convert the river water into steam. The steam is

then sent to turbines to begin the electricity power production process. The steam

is then released through cooling towers.

Disposal

In one year a typical nuclear power

plant generates 20 metric tons of used

nuclear fuel. The nuclear industry

generates a total of about 2,000 metric

tons of used fuel per year. During the

past four decades, the entire industry

has produced about 60,000 metric tons

of used nuclear fuel. If used fuel

assemblies were stacked end-to-end and side-by-side, this would cover a football

field about seven yards deep. Most U.S. nuclear plants store waste either through

on-site dry storage or a spent fuel pool. Since water is a natural radiation barrier,

spent fuel is loaded into airtight steel or concrete-and-steel containers, known as

casks, and then carefully delivered to a steel-lined, concrete pool of water for

storage.

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On-site dry storage is done in a similar matter, with the used fuel being placed into

engineered concrete and steel casks that are set on a special pad. Each cask can

weigh 300,000 pounds and is strong enough to take a hit from a fast moving truck

or even a train without any damage.

Other countries, such as Japan, Russia and those in Europe, reprocess used spent

nuclear fuel by separating uranium and plutonium from the waste products of fuel

rods and then re-enrich the recovered uranium to be used again as fuel.

Safety First

U.S. nuclear plants are well-designed, operated by trained personnel, defended

against attack and prepared in the event of an emergency. In addition to backup

systems that monitor and regulate what goes on inside the reactor, U.S. nuclear

power plants also use a series of physical barriers to prevent the escape of

radioactive material. Everything from the fuel pellets to the fuel rods are encased in

materials that limit radiation exposure. All of these items are further contained in a

massive reinforced concrete structure—called the containment—with walls that are

four feet thick. The lack of a containment structure is what helped lead to the failure

of the Chernobyl plant in Russia, something that cannot happen in the United States

since all plants are required to have containment structures and other safety

features.

It takes many steps to generate electricity produced from nuclear power. However,

nuclear power allows us to have a clean, alternative energy source. When you take

into account the planning process which includes meteorological, seismic and

population studies, it can take up to 10-15 years to build a nuclear plant, from

planning to operation. But in doing so, an efficient energy source can deliver power

to your home.

Power Generation: Renewables

Because of modern technologies, new sources of

energy are being used every day. Renewable

energy is also called “clean” or “green” energy

because it has little to no emissions and can be

replenished in a short period of time. The four

renewable sources used most often are wind,

solar photovoltaics, geothermal and biomass.

Hydropower is also a renewable resource and is

highlighted above.

The development of renewables for commercial

use in CAEC’s service area, including wind, solar,

geothermal and biomass, is considered

economically unfeasible when compared with more traditional options.

Nonetheless, let’s look at the generation process of these natural fuel resources.

Wind

Wind machines (also called wind turbines) use blades

to collect the wind’s kinetic energy. When the wind

blows, it flows over the blades creating lift, like the

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effect on airplane wings, which causes them to turn.

The blades are connected to a drive shaft that turns

an electric generator.

The cost of the commercial wind turbines varies from

$1 to $2 million per mega watt (MW) of capacity

installed. Projects can take over seven years to

develop with 2.5 years in the planning phase. A single

1 MW turbine operating at a 45 percent production

rate will generate about 3.9 million kilowatts (KW) of

electricity in a year, meeting the needs of about 500

households annually. However, the average wind

turbine turns at approximately 25 percent. In the U.S.

there are approximately 85,000 people employed in the wind industry.

The major challenge of using wind as a source of power is that the wind is

intermittent and does not always blow when electricity is needed. Wind energy

cannot be stored and not all winds can be harnessed to meet the timing of

electricity demands. The viability of a wind project in our location is further

hampered by higher construction costs for offshore installations and the risk of wind

farm destruction from hurricane-force winds sometimes encountered on our

southern coasts.

Many potential wind farms where wind energy can be produced on a large scale

need to be in locations far removed from the populated areas where the energy is

needed. This puts wind energy at a major disadvantage in terms of costs of new

substations and transmission lines.

Solar

Solar energy is converted to electricity

by utilizing Photovoltaic (PV) devices, or

“solar cells.” The solar energy (heat)

boils water; the steam drives a turbine;

the turbine turns an ordinary generator,

which then generates electric power. A

10 gigawatt (GW) solar power plant

would cost about $100 billion to build

and a 500 megawatt (MW) plant, which

could supply power to 100,000

households, would require 4,000 acres

whereas a 500 MW natural gas plant

would require 40 acres and a coal plant

300 acres. In our area, solar would provide about 15 percent of the needed energy

in a 24-hour period, requiring another fuel source during the remaining time.

Geothermal

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Power plants produce geothermal

energy by utilizing the earth’s dry steam

or hot water accessed by digging wells.

Either the dry steam or hot water is

brought to the surface through pipes

and processed into electricity in the

power plant. Since geothermal plants

use smaller land areas, the cost of land

is usually less expensive than other

power plants.

Geothermal is a baseload resource, available 24 hours per day, every day of the year.

It is independent of weather conditions and has no associated fuel costs. Drilling

geothermal reservoirs and finding them, however, can be an expensive task. The

initial cost for the field and power plant is around $2,500 per installed kW in the U.S.,

and even as high as $3,000 to $5,000 for a small, less than 1 MW power plant. The

drilling of each observation hole can vary greatly depending on geological and other

conditions. Geothermal is very site specific and along with the heat from the earth,

toxic chemicals can also be dispersed in the process.

The United States generates an average of 15 billion kilowatt hours (kWh) of

geothermal power per year and the plants are concentrated primarily in the western

part of the country.

Biomass

Biomass energy includes landfill

methane gas, wood waste, farm by-

products and ethanol. The majority of

biomass electricity today is generated

using a steam cycle. In this process,

biomass is burned in a boiler to make

steam. The steam then turns a turbine,

which is connected to a generator that

produces electricity.

Of these resources, landfill methane gas has the highest potential for providing

renewable electricity generation in the Southeast. To release the methane, gas is

collected from decomposing waste by a series of wells strategically placed

throughout the landfill. The wells are connected by a series of pipes leading to

larger pipes that deliver the gas to a plant that generates electricity from renewable

fuels. The entire piping system is under a vacuum created by blowers at the facility,

causing landfill gas to flow from the wells. Once blowers deliver the gas to the plant,

internal combustion engines use the gas as fuel and spin generators to produce

electricity.

Converting landfill gas (LFG) to electricity reduces emissions of methane, a

greenhouse gas 23 times more potent than carbon dioxide. As of this past July,

approximately 636 LFG energy projects were operational in the U.S., (80 are with

electric co-ops), generating almost 16 billion kilowatt-hours of electricity in 2013. In

Alabama, there are five operational projects: Baldwin, Jackson, Montgomery,

Morgan and St. Clair.

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Copyright © 2015 Central Alabama Electric Cooperative All Rights Reserved Web Development by Infomedia

Contact Us Online

Email Us

Call Us Anytime

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toll free 800.545.5735

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Contact Us by Mail

P.O. Box 681570

Prattville, AL 36068

Visit One Of Our Locations

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Rockford :: 9191 U.S. Hwy. 231, 35136 - Map

CAEC currently offers its members the opportunity to utilize this renewable

alternative with the Green Power Choice program, a partnership between

PowerSouth (our generation and transmission co-op) and Waste Management. With

this project, electricity is generated from the methane gas produced at the Springhill

Regional Landfill in Campbellton, Fla. Buying two blocks of green power per month

for a year is equal to recycling 480 pounds of aluminum (15,322 cans) or recycling

1,766 pounds of newspaper. Blocks consist of 100 kilowatt hours (kWh) of electricity

and can be included on the power bill for $2 per block.

A new energy future will be powered by multiple energy sources. And while

renewables will play a key role in our energy future, they cannot meet the growing

demand for electricity alone. A secure and reliable energy future must include a

blend of advanced clean coal, nuclear, natural gas and renewable generation

sources.

Electric Service Member Benefits Economic Development Community Enrichment Green Energy

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ADDENDUM

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EPA INTERIM POLICY ON FEDERAL ENFORCEABILITY REQUIREMENTFOR LIMITATIONS ON POTENTIAL TO EMIT

January 1996

This document provides guidance clarifying the immediateimpacts of recent court decisions related to federalenforceability of limitations on a source’s potential to emit("PTE"). In brief, most current regulatory requirements andpolicies regarding PTE, including the interim policy recognizingstate-enforceable limits under section 112 and Title V in somecircumstances, remain in effect while EPA conducts expeditedrulemaking to address these issues in detail. However, atpresent, certain netting transactions involving PTE limits undernew source review programs may now take place without federalenforceability. Today's guidance will be superseded uponcompletion of the new rulemaking.

Background

Several important Clean Air Act programs apply to only majorsources, i.e., those that "emit or have the potential to emit"amounts exceeding major source thresholds listed in the Act. TheEPA has promulgated regulations defining the term “potential toemit” for most of these programs. In particular, five sets ofregulations are in place implementing the major source preventionof significant deterioration (PSD) and nonattainment area newsource review (NSR) permitting programs (40 CFR 51.166, 40 CFR52.21, 40 CFR 51.165, Appendix S of 40 CFR Part 51, and 40 CFR52.24). Regulations governing approvability of state operatingpermit programs under Title V of the CAA are contained in 40 CFRPart 70, and EPA has proposed regulations implementing a federaloperating permits program that are to be promulgated at 40 CFRPart 71. Regulations implementing the requirements of section112 of the Act related to major sources of hazardous airpollutants are contained in 40 CFR Part 63, subpart A.

For each of the above Clean Air Act programs, the EPAregulations provide that "controls" (i.e., both pollution controlequipment and operational restrictions) that limit a source’smaximum capacity to emit a pollutant may be considered indetermining its potential to emit. Historically, large numbers ofnew or modified sources that otherwise would be subject to PSDand NSR permitting requirements have limited their PTE in orderto obtain "synthetic minor" status and thereby avoid major sourcerequirements. With the advent of operating permit programs underTitle V and the MACT program under section 112, many sources thatotherwise would be subject to these new requirements under theClean Air Act Amendments of 1990 also have obtained, or plan toobtain, PTE limits to avoid coverage. For each of these

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programs, EPA regulations have required that PTE limits be"federally enforceable" in order to be considered in determiningPTE.

These federal enforceability requirements were the subjectof two recent decisions of the D.C. Circuit Court of Appeals. The first decision, National Mining Association v. EPA, 59 F.3d1351 (D.C. Cir. July 21, 1995), dealt with the potential to emitdefinition under the hazardous air pollutant programs promulgatedpursuant to CAA section 112. In this decision, the Courtimplicitly accepted EPA's argument that only "effective" state-issued controls should be cognizable in limiting potential toemit. In addition, the court did not question the validity ofcurrent federally enforceable mechanisms in limiting PTE. However, the court found that EPA had not adequately explainedwhy only federally enforceable measures should be considered inassessing the effectiveness of state-issued controls. Accordingly, the Court remanded the section 112 GeneralProvisions regulation to EPA for further proceedings. Thus, EPAmust either provide a better explanation as to why federalenforceability promotes the effectiveness of state controls, orremove the exclusive federal enforceability requirement. Thecourt did not vacate the section 112 regulations, and they remainin effect pending completion of EPA rulemaking proceedings inresponse to the court's remand.

The second decision, Chemical Manufacturers Ass'n v. EPA,No. 89-1514 (D.C. Cir. Sept. 15, 1995), dealt with the potentialto emit definition in the PSD and NSR programs. Specifically,this case challenged the June 1989 rulemaking in which the EPAreaffirmed the requirement for federal enforceability of PTElimits taken to avoid major source permitting requirements inthese programs. In a briefly worded judgment, the court, inlight of National Mining, remanded the PSD and NSR regulations toEPA. In addition, in contrast to its disposition of the section112 regulations in National Mining, the court in ChemicalManufacturers vacated the federal enforceability requirement ofthe PTE definitions in the PSD and NSR regulations.

In a third set of cases, industry challenges to the federalenforceability requirements in Part 70 are pending before theD.C. Circuit. The Title V cases have not been briefed. However,since the federal enforceability provisions of these Title Vregulations are closely related to the regulations addressed inthe two decided cases, EPA plans to ask the court to remand theregulations to EPA for further rulemaking, and to leave Part 70in place during the new rulemaking.

Plans for Rulemaking Amendments

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EPA plans to hold discussions with stakeholders and proposerulemaking amendments by spring 1996, and to issue final rules byspring 1997, that would address the court decisions impactingregulations promulgated pursuant to section 112 and the PSD/NSRregulations. At the same time, EPA will propose a parallelapproach to cognizable PTE limits for major sources subject totitle V. EPA currently plans to address the following options,after discussions with stakeholders:

(a) An approach that would recognize "effective" State-enforceable limits as an alternative to federallyenforceable limits on a source's potential to emit. Underthis option, a source whose maximum capacity to emit withoutpollution controls or operational limitations exceedsrelevant major source thresholds may take a State or locallimit on its potential to emit. In such circumstances, thesource must be able to demonstrate that the State-enforceable limits are (1) enforceable as a practicalmatter, and (2) being regularly complied with by thefacility.

(b) An approach under which the EPA would continue to requirefederal enforceability of limits on a source's potential toemit. Under this approach, in response to specific issuesraised by the court in National Mining, EPA would presentfurther explanation regarding why the federal enforceabilityrequirement promotes effective controls. Under thisapproach, EPA would propose simplifying changes to theadministrative provisions of the current federalenforceability regulations.

The remainder of this guidance memorandum addresses theimmediate impacts of the court decisions on each of the threeprograms, in light of the upcoming rulemaking.

Effects on PSD/NSR

EPA interprets the court's decision to vacate the PSD/NSRfederal enforceability requirement in the Chemical Manufacturerscase as causing an immediate change in how EPA regulations shouldbe read, although EPA expects that the effect of this change willbe limited. Specifically, provisions of the definitions of"potential to emit" and related definitions requiring thatphysical or operational changes or limitations be "federallyenforceable" to be taken into account in determining PSD/NSRapplicability, the term "federally enforceable" should now beread to mean "federally enforceable or legally and practicably

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Both National Mining and Chemical Manufacturers directly1

addressed only the definition of potential to emit, and notrelated definitions that also employ the federal enforceabilityrequirement, in particular, those related to netting. (See,e.g., 40 CFR § 52.21(b)(3)(vi)(b) providing that an emissionsdecrease is creditable only if it is "federally enforceable.") The court's concerns regarding the adequacy of EPA's rationale,however, appear to extend to these netting provisions;consequently, EPA interprets the vacatur as extending to them aswell. Conversely, EPA reads the vacatur as not extending toaspects of the PTE definition other than the federalenforceability provision. Such other aspects (e.g., determininga source's "maximum capacity" to emit in the absence of controls)were not at issue in the litigation and not addressed by thecourt decisions. In addition, EPA interprets ChemicalManufacturers as not addressing the regulatory requirements forfederal enforceability of offsets used to comply with NSRrequirements. CAA § 173(a) expressly requires that any emissionsreductions required as a precondition to the issuance of anonattainment NSR permit to be "federally enforceable" before thepermit may be issued. This requirement is not affected by thecourt decisions.

enforceable by a state or local air pollution control agency."1

For the reasons discussed below, however, the practical effectsof the vacatur will be limited during the period prior tocompletion of new EPA rulemaking on this issue. During thisinterim period, federal enforceability is still required tocreate "synthetic minor" new and modified sources in mostcircumstances pending completion of EPA’s rulemaking.

First, EPA interprets the order vacating certain provisionsof EPA regulations as not affecting the provisions of any currentSIP, or of any permit issued under any current SIP. Thus,previously issued federally enforceable permits, such as permitsissued under federally enforceable state operating permitprograms under Title I ("FESOPPs") remain in effect. Likewise,EPA-approved state PSD and NSR SIP rules requiring that allpollution controls or operational restrictions limiting potentialto emit be federally enforceable remain in place, even though

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The situation is somewhat different in the several states2

lacking approved PSD programs, which are governed instead by thefederal PSD program at 40 CFR § 52.21. (In most instances, thesestates have been delegated authority to issue PSD permits underthe federal program pursuant to § 52.21(u).) Since these statesdo not have an EPA-approved PSD program, their SIPs presumablyalso lack state rules containing a blanket requirement that newor modified sources use only federally enforceable limits on PTEwhen seeking synthetic minor status to avoid PSD. Rather,sources in these states have been subject to the federalenforceability requirements of § 52.21. As noted above, ChemicalManufacturers vacated the requirements in § 52.21 that physicalor operational changes be "federally enforceable" to be takeninto account in determining the applicability of PSD to aproposed new source or modification. Accordingly, in statesgoverned by § 52.21, a limit that is either "federallyenforceable or legally and practicably enforceable by a state orlocal air pollution control agency" may now be used indetermining PSD applicability in some circumstances. The effectof the vacatur in these states is limited, however, because asdiscussed below, new and modified sources in these states arestill subject to the requirement to obtain federally enforceableminor source permits.

Consider, for example, an existing source in a moderate3

ozone nonattainment area that plans to add a new emissions unitthat would have the potential to emit 100 tons per year ("TPY")of VOC if uncontrolled, and would therefore be considered a majormodification subject to major NSR requirements, including arequirement to install pollution controls representing LAER thatwould reduce emissions in this instance by 90%. The source mayinstead seek to avoid major NSR by installing cheaper controls

such provisions may have been based on the now-vacated terms ofEPA regulations.2

Second, a new or modified source that seeks to lawfullyavoid compliance with the "major" source requirements of eitherPSD or nonattainment NSR by limiting its potential to emit toachieve synthetic minor status must still obtain a general or"minor" NSR preconstruction permit under section 110(a)(2)(C) ofthe Act and 40 C.F.R. § 51.160-164. Every SIP contains a minorNSR program that applies generally to new or modified sources ofair pollutants, without regard to whether those sources are"major." Permits under such programs are, like all other SIPmeasures, federally enforceable. See CAA section 113(b)(1); 40CFR § 52.23. The requirement under section 110(a)(2)(C) to3

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that reduce emissions by 61% and thereby limit the emissionsincrease to 39 TPY -- just below the "major" modificationthreshold. Such a source would still need to obtain a minor NSRpermit to construct the new unit, and that permit would befederally enforceable.

obtain a federally enforceable minor NSR permit was not at issuein the Chemical Manufacturers case, and is unaffected by thecourt's ruling.

As noted above, the court's action does not affect FESOPPsthat many states have adopted as an additional mechanism foravoiding PSD/NSR or for creating an emissions reduction creditthat may be tradeable to another source. Permits issued undersuch programs continue to be valid for purposes of limiting PTE. States are free to submit SIP revisions to remove such provisionsin light of the vacatur, and to substitute mechanisms that arelegally and practicably enforceable by the state for limitingpotential to emit in some circumstances under the PSD/NSRprogram. However, we expect few states to do so pending theoutcome of new EPA rulemaking on the broader federalenforceability issue.

Likewise, states conceivably might now seek to reduce thescope of SIP-approved minor NSR programs where they are presentlybroader than minimum federal requirements (e.g., to no longercover changes at existing emissions units that reduce emissionsto create a netting credit or tradeable emission reductioncredit), and to substitute state-enforceable mechanisms. Herealso, however, EPA does not expect states to seek such changespending the outcome of EPA rulemaking. In addition, regardingthe minimum scope of minor NSR programs, section 110(a)(2)(C)provides that state minor NSR programs must regulate all new ormodified sources "as necessary" to insure consistency with airquality planning goals. Given the central role of new andmodified synthetic minor sources in the overall PSD/NSRregulatory scheme, and the adverse environmental consequences ifcontrols were not effective in limiting PTE, it is unlikely thatstates would have the legal ability to exclude from such programstransactions that are intrinsic to the avoidance of major NSRpermitting requirements.

The principal immediate impact of the vacatur of the PSD/NSRfederal enforceability regulations likely will occur in casesinvolving "netting" exercises at existing sources, where a sourceseeks to internally offset an emissions increase at a new ormodified emissions unit by installing pollution controls oraccepting operational limitations at another unit within the

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Consider, for example, an existing source like the one4

addressed above in Footnote 3, that also plans to install a newunit that would have the potential to emit 100 tons per year ofVOC per year if uncontrolled. In contrast to the earlierexample, however, this source plans to avoid major NSR not bycontrolling the new unit, but instead by installing controls atanother emissions unit at the plant whose baseline emissions are100 TPY that will reduce actual emissions by 61 TPY. The overallresult of this netting transaction is the same as in the earlierexample: a net emissions increase of 39 TPY at the plant. Thenew unit would still need to obtain a minor NSR permit, and thatpermit would still be federally enforceable. In light of thevacatur in Chemical Manufacturers, however, the existing unitthat is adding controls now may be able to limit its PTE using astate-enforceable permit.

plant. For the reasons discussed above, in such cases the new ormodified unit would still need to obtain a federally enforceableminor NSR permit. In contrast, the vacatur ordered by the courtmay allow the unit that is limiting its emissions to rely in somecircumstances on controls that are legally and practicablyenforceable by the state. Note, however, that under the terms4

of many state minor NSR programs, the unit undergoing anemissions reduction would still need to be included in the minorNSR permit. Also, if the state's SIP has a general requirementthat PTE limits be federally enforceable, the unit reducingemissions would still need a federally enforceable limit. Suchprograms would not be affected by the court's ruling. In sum,the precise impact of the vacatur on PSD/NSR applicability in anystate can be definitively established only by reviewing theprovisions of a particular SIP.

Effects on Section 112 and Title V

The National Mining decision did not vacate the currentdefinition of a major source under section 112 program in theGeneral Provisions to Part 63, and neither of the court decisionsaddressed the definition of a major source for the title Vprogram in 40 CFR part 70. Both of these current definitions,therefore, remain in effect. As discussed above, however, theseregulations will be affected by the rulemaking EPA is conductingin response to the court decisions.

EPA today reiterates that independent from the decision inNational Mining, current EPA policy already recognizes State-enforceable PTE limits under section 112 and Title V in manycircumstances under a transition policy intended to provide fororderly implementation of these new programs under the Clean Air

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Since PSD and nonattainment NSR are mature programs, minor5

NSR permits to limit PTE were available in all states well priorto enactment of the Clean Air Act Amendments of 1990. Hence,EPA's transition policy does not extend to those programs.

Act Amendments of 1990. This policy is set forth in amemorandum, "Options for Limiting the Potential to Emit (PTE) ofa Stationary Source Under Section 112 and Title V of the CleanAir Act" (January 25, 1995). The transition policy is summarizedbelow; as noted, EPA is now making one significant change in thatpolicy in light of National Mining.

In recognition of the absence in some states of suitablefederally enforceable mechanisms to limit PTE applicable tosources that might otherwise be subject to section 112 or TitleV, EPA's policy provides for the consideration of State-enforceable limits as a gap-filling measure during a transitionperiod that extends until January 1997. Under this policy, for5

the 2-year transition period, restrictions contained in Statepermits issued to sources that actually emit more than 50percent, but less than 100 percent, of a relevant major sourcethreshold are treated by EPA as acceptable limits on potential toemit, provided: (a) the permit and the restriction in particularare enforceable as a practical matter; (b) the source ownersubmits a written certification to EPA accepting EPA and citizenenforcement. In light of National Mining, EPA believes that thecertification requirement is no longer appropriate as part ofthis policy. Accordingly, EPA hereby amends the January 1995transition policy by deleting the certification requirement.

In addition, under the transition policy, sources withconsistently low levels of actual emissions relative to majorsource thresholds can avoid major source requirements even absentany permit or other enforceable limit on PTE. Specifically, thepolicy provides that sources which maintain their emissions atlevels that do not exceed 50 percent of any applicable majorsource threshold are not treated as major sources and do not needa permit to limit PTE, so long as they maintain adequate recordsto demonstrate that the 50 percent level is not exceeded.

Under the terms of EPA's transition policy, the transitionperiod is to end in January 1997. In addition, completion ofEPA's rulemaking in response to the recent court decisions, whichEPA anticipates will occur by early 1997, may render thetransition policy unnecessary after that time. However, inconjunction with the rulemaking, EPA will consider whether it isappropriate to extend the transition period beyond January 1997.