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In re Deseret Power Electric Cooperative

11/13/2008

Case Number:PSD Appeal No. 07-03
ELR Citation:38 ELR 41327

Sierra Club seeks review of a prevention of significant deterioration (“PSD”) permit that U.S. Environmental Protection Agency, Region 8 (“Region”) issued to Deseret Power Electric Cooperative (“Deseret”) on August 30, 2007. The permit would authorize Deseret to construct a new waste-coal-fired electric generating unit at Deseret’s
existing Bonanza Power Plant, located near Bonanza, Utah. Sierra Club’s petition raises two issues. First, Sierra Club argues that the Region’s permitting decision violates the public participation provisions of Clean Air Act (“CAA” or “Act”) section 165(a)(2), which require the Agency to consider “alternatives” to the proposed facility. Sierra Club contends that the Region erred by failing to consider alternatives to the proposed facility that are similar to alternatives U.S. EPA Region 9 recommended in comments on the draft environmental impact statement for a different facility, the White Pine Energy Station Project in Nevada. Second, Sierra Club argues that the Region violated CAA sections 165(a)(4) and 169(3) by failing to apply “BACT,” or best available control technology, to limit carbon dioxide (“CO2”) emissions from the facility. Sierra Club points to the Supreme Court’s April 2007 decision in Massachusetts v. EPA, 549 U.S. 497 (2007), as establishing that CO2 is an “air pollutant” within the meaning of the Act. Sierra Club contends that because CO2 is an air pollutant, the permit violates the requirement to include a BACT emissions limit for “each pollutant subject to regulation under [the Clean Air] Act.”

Sierra Club relies on Part 75 of Title 40 of the Code of Federal Regulations, which requires monitoring and reporting of CO2 emissions and was adopted in accordance with section 821 of the Clean Air Act Amendments of 1990 (“1990 Public Law”). Sierra Club asserts that the word “regulation” has a “plain and unambiguous” meaning and that, consistent with this plain meaning, CAA sections 165 and 169, section 821 of the 1990 Public Law, and EPA’s Part 75 regulations make CO2 “subject to regulation” under the CAA. The Region disagrees that the statutory text has a plain meaning and argues instead that the Agency had discretion to interpret the term “subject to regulation” and did so by adopting an historical interpretation of the term that was “reasonable” and “permissible.” The Region maintains that “EPA has historically interpreted the term ‘subject to regulation under the Act’ to describe pollutants that are presently subject to a statutory or regulatory provision that requires actual control of emissions of that pollutant.” The Region contends that, notwithstanding the Supreme Court’s decision, it does not have the authority to impose a CO2 BACT limit because the Part 75 regulations only require monitoring and reporting of CO2 emissions, not actual control. The Region argues further that the Part 75 regulations implementing section 821 of the 1990 Public Law are not “under” the CAA within the meaning of CAA sections 165 and 169 because section 821 is not part of the CAA.

By order dated November 21, 2007, the Board granted review of the CO2 BACT issue while holding under advisement the “alternatives” issue. The Board received briefs on this issue from Sierra Club, the Region, and Deseret, and six amici briefs supporting Sierra Club’s petition, and six amici briefs supporting the Region’s decision. The Board held oral argument on May 29, 2008. The Board subsequently requested clarification of certain questions arising at the oral argument, and the parties completed briefing on September 12, 2008.

Held: The Board denies review of the Region’s alleged failure to consider alternatives” to the proposed facility, but remands the permit to the Region for it to reconsider whether to impose a CO2 BACT limit and to develop an adequate record for its decision.

  • CAA section 165(a)(2), on which Sierra Club’s alternatives argument relies, provides that a PSD permit may not be issued unless “a public hearing has been
    held with opportunity for interested persons * * * [to] submit written or oral presentations on the air quality impact of such source, alternatives thereto * * * and other appropriate considerations.” This requirement, which the statute ties to the opportunity to comment on the draft permit, does not oblige the permit issuer to conduct an independent analysis of alternatives not identified by the public during the comment period. Here, Sierra Club does not contend that it or any other person identified during the public comment period the alternatives it raises in its petition. Further, Region 9’s comments, although submitted in the White Pines Energy Center case after the close of the public comment period in the present case, do not, in any event, present grounds for raising this new issue or argument for the first time on appeal in this case.
  • The Board rejects Sierra Club’s contention that the phrase “subject to regulation” has a plain meaning and that this meaning compels the Region to impose a CO2 BACT limit in the permit. On the contrary, the Board finds that the statute is not so clear and unequivocal as to preclude Agency interpretation of the phrase “subject to regulation under this Act,” and therefore the statute does not dictate whether the Agency must impose a BACT limit for CO2 in the permit. It does not appear that, when it enacted CAA sections 165 and 169 in 1977, Congress considered the precise issue before the Board in this case, or more significantly, drafted language sufficiently specific to address it. The Board also finds no evidence that Congress’s use of the term “regulations” in section 821 of the 1990 Public Law was an attempt to interpret or constrain the Agency’s interpretation of the phrase “subject to regulation” as used in sections 165 and 169.
  • The administrative record of the Region’s permitting decision, as defined by 40 C.F.R. section 124.18, does not support the Region’s view that it is bound by an Agency historical interpretation of “subject to regulation” as meaning “subject to a statutory or regulatory provision that requires actual control of emissions of that pollutant.” The Region did not identify in its response to comments any Agency document expressly stating that “subject to regulation under this Act” has this meaning.
  • The Board examines the two authorities the Region relied upon in its response to comments to support its contention that an historical interpretation exists. The Region argues that the constraining historical interpretation may be discerned by inference from the pollutants listed by name or descriptive category in the preamble to a 1978 Federal Register document in which the Agency first established an interpretation of the term “subject to regulation under this Act.” The Region observes that all of these pollutants were subject to emissions control and none of the listed pollutants were subject only to monitoring and reporting requirements. However, the Board finds that this interpretation provides little, if any, support for the contention that the phrase applies only to provisions that require actual control of emissions. Instead, the preamble as a whole augers in favor of a finding that the Agency expressly interpreted “subject to regulation under this Act” to mean “any pollutant regulated in Subchapter C of Title 40 of the Code of Federal Regulations for any source type.” In the 1978 preamble, the Administrator stated he was making “final” an “interpretation” he believed to be correct. While the Region correctly observes that the reference to Subchapter C was not repeated in the preamble to the 1993 rulemaking adding the Part 75 regulations, neither did the preamble expressly clarify or withdraw that earlier interpretation. Thus, whatever the Agency’s intentions were relative to the Subchapter C reference in the 1978 preamble when it adopted the 1993 regulations, it did not express them.
  • The second authority the Region relied upon in its response to comments as allegedly creating an historical interpretation was a 2002 rulemaking that codified the defined term “regulated NSR pollutant” to replace the previous regulatory language that was functionally equivalent to the statutory phrase “pollutant subject to regulation under this Act.” The regulatory definition added in 2002 of “regulated NSR pollutant,” however, is not limited to “actual control of emissions.” The regulatory definition contains, as its fourth part, essentially the same phrase – “that otherwise is subject to regulation under the Act” – that the Region argues is ambiguous as a matter of statutory interpretation. There is no public notice in the 2002 final preamble (or in the 1996 preamble for the proposed rulemaking) of the interpretation the Region now advocates, let alone anything approaching the same level of express notice and clear statement that is found in the preamble for the 1978 rulemaking. The preamble’s list of pollutants, which the Region again argues creates the interpretation by inference, does not indicate that the list was provided as an interpretation of the defined term “regulated NSR pollutant.” Neither the 2002 preamble nor the 1996 preamble for the proposed rulemaking expressly withdrew the 1978 interpretation. Thus, this rulemaking fails to establish or even support any binding historical interpretation.
  • The Board also examines two memoranda not cited in the response to comments but set forth in the Region’s appeal briefs that it contends made the Agency’s interpretation “apparent to the regulated community and other stakeholders.” These are a memorandum from Lydia N. Wegman, Deputy Director, Office of Air Quality Planning and Standards, U.S. EPA, Definition of Regulated Air Pollutant for Purposes of Title V (Apr. 26, 1993) and a memorandum from Jonathan Z. Cannon, General Counsel, U.S. EPA, to Carol M. Browner, Administrator, U.S. EPA, EPA’s Authority to Regulate Pollutants Emitted by Electric Power Generation Sources (Apr. 10, 1998). These memoranda, however, do more to confuse the historical record of the Agency’s interpretation than they do to show that it has been long-standing and consistent. They clearly are not sufficient to form an alternative basis for sustaining the Region’s conclusion that its authority was constrained by an historical Agency interpretation.
  • The Board rejects as not sustainable in this proceeding the Region’s alternative argument – that any regulation arising out of section 821 cannot, in any event,
    constitute regulation “under this Act” because section 821 is not part of the CAA. While the Region now cites textual distinctions and legislative history to argue that the term “regulations” under section 821 does not constitute regulation “under this Act” for purposes of CAA sections 165 and 169, this argument is at odds with the Agency’s prior statements regarding the relationship between section 821 and the CAA, including statements in EPA’s Part 75 regulations, and these inconsistencies preclude the Board’s acceptance of the Region’s argument in this proceeding.
  • Having determined that the Region has discretion under the statute to interpret the term “subject to regulation under this Act” and that the Region wrongly believed that its discretion was limited by an historical Agency interpretation, the Board remands the permit to the Region for it to reconsider whether to impose a CO2 BACT limit and to develop an adequate record for its decision.
  • In remanding this permit to the Region for reconsideration of its conclusions regarding application of BACT to limit CO2 emissions, the Board recognizes that this is an issue of national scope that has implications far beyond this individual permitting proceeding. The Board suggests that the Region consider whether interested persons, as well as the Agency, would be better served by the Agency addressing the interpretation of the phrase “subject to regulation under this Act” in the context of an action of nationwide scope, rather than through this specific permitting proceeding.