EAB remands several issues in Ripley Heating Plant dispute; decision suggests regulation of CO2 under Clean Air Act
On February 18, the Environmental Appeals Board (EAB) issued a decision remanding several issues and denying review of others, in response to a Sierra Club petition regarding a permit authorizing Northern Michigan University to construct a boiler at the Ripley Heating Plant on its Marquette, Michigan Campus. The Michigan Department of Environmental Quality (MDEQ) issued the permit on May 12, 2008, after issuing a draft permit for public review and comment in October 2007. On June 13, 2008, the Sierra Club filed a petition for review which challenged seven aspects of the MDEQ decision and response to comments. In particular, the Sierra Club petition addressed several aspects of MDEQ’s analysis of Best Available Control Technology (BACT), as well as MDEQ’s air quality analysis. The EAB held that MDEQ “clearly erred” in selecting SO2 limits, because it did not follow the EPA New Source Review Manual or other relevant guidelines.
AB also remanded the following for reevaluation: MDEQ’s source impact modeling for SO2, PM2.5 (particulate matter), and carbon monoxide, to base the modeling on “worst-case” emissions; BACT analysis of CO2 and NO2 emissions; calculus of PSD increments; and preconstruction monitoring of the site. The EAB denied review of MDEQ’s BACT analysis of PM2.5 emissions, and of MDEQ’s response to concerns about wilderness and wildlife that may be affected by the emissions.
EAB’s remand regarding the BACT analysis of CO2 and NO2 suggests an end to the EPA’s prior stance, outlined in a December 2008 memorandum by former EPA Administrator Stephen Johnson, that CO2 emissions were not subject to regulation under the Clean Air Act. This memorandum came after EAB’s November 2008 decision in In re Deseret Power Electric Cooperative, in which EAB remanded a permit for a generating unit in Utah, ordering the issuing authority to reconsider whether to impose a BACT limit for CO2 emissions. Significantly, the Michigan decision orders the MDEQ to reconsider BACT analysis of CO2 in light of Deseret, but does not mention the Johnson memorandum. In fact, this February, new EPA Administrator Lisa Jackson announced that the EPA will reconsider Johnson’s memorandum.
In a related development, Michigan Governor Jennifer Granholm issued a clean energy directive in February, which has already resulted in other coal plant permits being put on hold.
EAB ruling in In re Deseret Power Electric Cooperative opens door to a new regulatory era on climate change
The USEPA Environmental Appeals Board (EAB) issued a potentially groundbreaking decision in In re Deseret Power Electric Cooperative (PSD Appeal No. 0703) by ruling that EPA Region 8 was incorrect when it exempted a new coal fired unit at an existing Utah power plant from limiting carbon dioxide emissions and remanded the permit decision to the Region to reopen the record and reconsider its refusal to impose limits on carbon-dioxide emissions. In its November 13 decision the EAB rejected the Region 8 contention that it was not required to regulate carbon dioxide because the greenhouse gas, while a “pollutant” under the Clean Air Act, was not subject to current regulatory standards. (“We hold that this conclusion is clearly erroneous because the region’s permitting authority is not constrained in this matter by authoritative agency interpretation.”)
Under EPA’s existing Prevention of Significant Deterioration (PSD) rules, new and modified projects in areas that have acceptable air quality must install costly best available control technologies or “BACT” if the construction could cause an increase in the emissions of “pollutants.” The decision does not mandate industry to install BACT to meet greenhouse gas emission limits. Relying on the recent U.S. Supreme Court ruling in Massachusetts v. EPA, the ruling only requires the Region to develop and adequate record for its decision that does not rely on the “historical agency interpretations” regarding the regulation of CO2.
The EAB decision prominently recognizes the national importance of the climate change issue. The EAB ruling cautions that EPA “would be better served by the Agency addressing the interpretation [of CO2 regulation] in the context of an action of nationwide scope, rather than through this specific permitting proceeding.” Nevertheless, the decision clears the way for the Obama administration to impose new limits on CO2 emissions through the administrative process and permitting decisions. The Obama administration might use this decision and its administrative authority under the Clean Air Act as leverage to obtain sensible climate change legislation. The enormous cost and delay of applying PSD permitting and BACT with regard to CO2 emissions to existing facilities on construction projects of all sorts involving energy, infrastructure, and general industrial expansion would be disastrous in this sharply down economy. Nearly every large facility construction project would trip the 250 ton per year major source category if CO2 is regulated under the current Clean Air Act, causing years of delay in permitting and huge costs of retrofitting existing facilities. If Congress does not quickly address climate change through legislation, the EAB has shown through the Deseret decision that the EPA will.
