UNITED STATES COURT OF APPEALS FOR THE TWELFTH CIRCUIT · ! i! Team No. 42 C.A. Nos. 14-000123 and...
Transcript of UNITED STATES COURT OF APPEALS FOR THE TWELFTH CIRCUIT · ! i! Team No. 42 C.A. Nos. 14-000123 and...
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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).
28
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.
29
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
30
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,
31
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
32
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
33
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
34
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.
35
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
A
ADDENDUM
A
B
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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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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
Q
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.