Abigail M. Dillen

Jenny K. Harbine

Earthjustice

209 South Willson Avenue

Bozeman, MT 59715

(406) 586-9699

Fax: (406) 596-9695

adillen@earthjustice.org

jharbine@earthjustice.org

 

Counsel for Appellants

                                                              

 

BEFORE THE BOARD OF ENVIRONMENTAL REVIEW

OF THE STATE OF MONTANA

______________________________________

IN THE MATTER OF: SOUTHERN MONTANA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE — HIGHWOOD GENERATING STATION AIR QUALITY PERMIT NO. 3423-01

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Case No. ___________________     AFFIDAVIT OF MONTANA ENVIRONMENTAL INFORMATION CENTER, ET AL.

 

         Pursuant to Mont. Code Ann. § 75-2-211(10), Appellants Montana Environmental Information Center (“MEIC”), Citizens for Clean Energy (“CCE”), Sierra Club, and National Parks Conservation Association (“NPCA”) hereby submit an affidavit setting forth the grounds for their request for hearing, which was timely filed with the Board of Environmental Review on November 26, 2008.

On behalf of Appellants, Anne Hedges declares as follows:

         1.      Appellants seek review of Air Quality Permit 3423-01, issued to the Southern Montana Electric Generation and Transmission Cooperative, Inc. (“SME”) for the Highwood Generating Station. To accommodate SME in its rush to move the Highwood project forward without necessary improvements, the Montana Department of Environmental Quality (“DEQ”) issued a permit modification that fails to set any limits on emissions of fine particulate (“PM2.5”) and unlawfully allows SME to circumvent pollution control requirements for hazardous air pollutants. However, SME’s eagerness to proceed with construction does not excuse full compliance with the Clean Air Act and with this Board’s orders. Before SME can build a coal-fired power plant that will be a major source of pollution for many decades to come, DEQ must compel an honest assessment of pollution controls and require the use of technologies that achieve maximum reductions in emissions of PM2.5 and hazardous air pollutants. Further efforts to avoid this fundamental statutory obligation will only continue to prolong the air permitting process.

         2.      This appeal follows on the heels of the Board of Environmental Review’s (“BER”) May 30, 2008 Order requiring DEQ to impose emissions limits based on “a thorough top-down [best available control technology] BACT analysis of PM2.5 of the CFB boiler.” In re: Southern Montana Electric Generation and Transmission Cooperative – Highwood Generating Station, Air Quality Permit No. 3423-00, No. BER 2007-07, slip op. at 44 (May 30, 2008) (“May BER Order”). In that Order, the Board found that “fine particulates less than 2.5 microns in size, are very hazardous to health, causing a broad range of serious health consequences” and that “reducing emissions of PM2.5 is a major public health concern.” Id. at 1, 24. As a matter of law, the Board concluded that DEQ must ensure full compliance with BACT requirements for PM2.5. See id. at 39, 44.

         3.      Following the Board’s ruling, DEQ pushed SME’s consultants to compile the information necessary to conduct a principled BACT analysis. Yet for reasons that are not documented in DEQ’s files, the agency abruptly abandoned its efforts to compel analysis of control technologies that would more effectively control PM2.5 emissions from the Highwood coal plant. DEQ allowed SME to settle on its originally proposed controls as BACT even though it had identified a total of 81 superior control options, several of which could be installed with only moderate cost increases. As a result, the Highwood project is slated to go forward essentially without changes and without any reasoned explanation as to why greater reductions in PM2.5 emissions are not feasible. This is the result that the Board was seeking to avoid when it required a thorough, transparent BACT analysis for PM2.5.
         4.      Even worse, the permit once again fails to include an enforceable emissions limit for PM2.5. The permit directs SME to submit design specifications and an “explanation of how [its] system will achieve PM2.5 emissions control” in the future. Permit No. 3423-01 at 6. SME will be subject to an actual emissions limit only after the Environmental Protection Agency (“EPA”) formally promulgates test methods that are already available and approved for use, and any such limit will be set based on SME’s actual emissions rather than the lowest emissions the Highwood coal plant could feasibly achieve. In short, the permit fails to set any permit standard that SME’s unspecified control system will be required to meet, much less a standard that reflects the maximum degree of reduction required under the Clean Air Act. Because DEQ has yet to impose an enforceable BACT-determined emissions limit for PM2.5, the legal violation identified by the BER remains unremedied.

         5.      Further, the challenged permit modification raises a serious new concern: It licenses SME to construct the Highwood coal plant without first installing the most effective controls to limit its emissions of hazardous air pollutants (“HAPS”), including hydrochloric acid (“HCl”), hydrofluouric acid (“HF”), mercury, and other toxic heavy metals. In an effort to bypass the Clean Air Act’s Maximum Available Control Technology (“MACT”) requirements, SME requested permit limits that would render it a “minor source” of hazardous air pollutants. DEQ granted this request without considering the full extent of Highwood’s potential hazardous air pollutant emissions and without imposing monitoring requirements to verify Highwood’s minor source status. Yet as DEQ concedes, the Highwood coal plant will emit hazardous air pollutants at levels that barely fall below the “major source” thresholds that properly trigger MACT requirements. Absent a principled MACT determination and reliable monitoring requirements, the Highwood coal plant’s HAPs emissions may not only violate the Clean Air Act but also threaten human health and the environment.

ANTICIPATED POLLUTION UNDER THE CHALLENGED PERMIT

         6.     Construction and operation of the Highwood coal plant as it is now permitted would result in substantial emissions of harmful pollutants.

         7.      Even after all proposed control technology is installed, the CFB boiler is anticipated to emit 227 tons of PM2.5 every year.

         8.      As the BER has affirmed, “[m]icroscopic particles in the PM2.5 size range are small enough to lodge deep into the lungs. Even short-term exposure to PM2.5 is known to cause serious respiratory illnesses, including asthma, cardiovascular illness, including heart attacks, as well as premature death. Those particularly sensitive to PM2.5 exposure include children, older adults, and people with heart and lung disease.” May BER Order at 23.

         9.      Decreasing PM2.5 in the ambient air by only 0.5 µg/m³ can prevent as many as 25-50 premature deaths each year according to the EPA. See 70 Fed. Reg. 65,984 66,006 (Nov. 1, 2005); see also May BER Order at 23 (citing same as a factual finding). Thus, reducing PM2.5 emissions to the greatest extent possible is not only a legal requirement but also a major public health priority.

         10.     As permitted, the Highwood coal plant is also anticipated to more than 24 tons and up to 24.9 tons of hazardous air pollutants each year. As discussed below, its actual air toxic emissions may be even higher.

         11.     The Clean Air Act contains a list of hazardous air pollutants that includes, among others, hydrochloric acid, hydrogen fluoride, antimony, arsenic, beryllium, cadmium, chromium, cobalt, lead, manganese, mercury, nickel, selenium, sulfuric acid, benzene, polycyclic organic matter, and radionuclides. See 42 U.S.C. § 7412(b). Importantly, coal-fired power plants “are major sources … of hydrogen chloride and hydrogen fluoride emissions, emit a significant number of the 188 HAP on the section 112(b) list, and are the leading anthropogenic sources of mercury emissions in the U.S.” See Notice of Regulatory Finding, 65 Fed. Reg. 79,825, 79,827-28 (Dec. 20, 2000).

         12.     According to EPA, exposure to these hazardous air pollutants, even in extremely low concentrations, may result in “an increased chance of getting cancer or experiencing other serious health effects. These health effects can include damage to the immune system, as well as neurological, reproductive (e.g., reduced fertility), developmental, respiratory and other health problems.” http://www.epa.gov/ttn/atw/allabout.html (last visited Dec. 3, 2008). In addition, documented impacts of hazardous air pollutants include degrading air, water and soil quality; threatening wildlife; and damaging animal and plant habitat. http://www.nature.nps.gov/air/Studies/

air_toxics/docs/2008FinalReport/WACAP_Report_Volume_I_Main.pdf (last visited Dec. 3, 2008).

ADVERSE IMPACTS TO APPELLANTS

         13.     In issuing a permit modification for the Highwood coal plant that does not adequately address pollution control requirements for PM2.5 and hazardous air pollutants, DEQ has adversely impacted appellants’ interests in maintaining health air quality in Montana.

         14.     MEIC is a member-supported advocacy and public education organization that works to protect and restore Montana’s natural environment. Since its founding in 1973, MEIC has lobbied and litigated in state and federal forums to prevent degradation of air quality in Montana. Recent MEIC advocacy efforts have focused on reducing pollutant emissions from coal-fired power plants. In this regard, MEIC has successfully challenged previous DEQ decisions to issue air permits for new coal plants, including the Highwood plant. In 2005, MEIC petitioned this Board to promulgate rules to control mercury emissions from coal plants in Montana, and in 2007, MEIC successfully lobbied for passage of House Bill 25, which prohibits the state’s default energy supplier, NorthWestern Energy, from building any new coal plant unless it can capture and sequester 50% of CO₂ emissions. MEIC also has led efforts to inform the public, elected officials, and DEQ about less polluting alternatives to building the proposed Highwood plant, including the use of renewable energy sources such as wind and the application of best available pollution controls. At every opportunity in the environmental review and permitting process, MEIC has submitted comments and testimony aimed at reducing emissions that threaten public health.

15.     CCE is a public interest, non-profit organization dedicated to promoting clean, efficient, cost-effective energy alternatives to coal-fired power in Montana. CCE has led a public education campaign to inform Montana citizens and their elected officials about less-polluting alternatives to building a new coal-fired power plant in Great Falls. To this end, CCE has sponsored several public presentations by experts on clean energy alternatives to electricity generated by coal-fired power plants. CCE has organized and publicized a series of meetings in Great Falls, Havre, Fort Benton, and on the Rocky Boy Reservation to provide information about the Highwood coal plant and its potential impacts across northwest Montana. CCE and many of its supporters have also presented testimony and submitted extensive comments at every opportunity in Highwood coal plant environmental review and air permitting process.

         16.     Sierra Club is a nationwide conservation organization with more than 750,000 members, 2,000 of whom belong to the Montana Chapter. The Sierra Club is America’s oldest and largest grassroots environmental organization. The mission of the Sierra Club is: “To explore, enjoy and protect the wild places of the earth; to practice and promote the responsible use of the earth’s ecosystems and resources; and to educate and enlist humanity to protect and restore the quality of the natural and human environments.” To this end, Sierra Club is engaged in a nationwide campaign to champion clean energy in the face of an unprecedented rush to build new coal-fired power plants. Sierra Club is currently litigating to stop construction of new coal plants across the country, leading advocacy efforts to pass legislation to curb greenhouse gas emissions, and collaborating with state and local governments to promote energy efficiency, conservation, and increased reliance on renewable energy. With respect to the Highwood coal plant, the Sierra Club has participated in litigation to require full environmental review by the U.S. Department of Agriculture’s Rural Utilities Service in advance of any decision to provide financing to SME. Sierra Club also commented on the draft permit modification at issue in this appeal.

         17.     NPCA is a nonpartisan, nonprofit organization dedicated to protecting the National Park system and preserving our nation’s natural, historical, and cultural heritage for future generations. NPCA today has approximately 350,000 members nationwide including over 1,600 members who live in Montana. One of NPCA’s priorities is to protect National Parks from the damaging impacts of air pollution and climate change. To this end, NPCA builds public support for policies that reduce both conventional and greenhouse gas emissions from coal-fired power plants – the largest sources of pollution in the Parks. NPCA has published several reports detailing adverse impacts from air pollution to National Parks, and it has challenged new coal plant proposals that threaten further pollution impacts. By working to enforce laws that protect air quality in parks from degradation, NPCA seeks to restore healthy air, thriving ecosystems, and scenic values to the National Park System. With respect to the Highwood coal plant, NPCA is actively engaged in advocacy efforts to the Great Falls Portage National Historic Landmark and Lewis and Clark National Historic Trail, and NPCA submitted comments on the draft air permit modification at issue in this appeal.

         18.     DEQ’s decision to issue an air permit for the Highwood coal plant adversely affects Appellants’ demonstrated organizational interests in curbing emissions from this and other coal-fired power plants. DEQ’s permitting decision also adversely impacts Appellants’ members and their shared interest in clean and healthy air quality. Appellants’ members are landowners that live and farm nearby the proposed Highwood coal plant site. Many more of Appellants’ members live and work in Great Falls and other Montana communities that would be impacted by emissions from the proposed plant. Affected individuals include senior citizens, people with asthma, and others who are particularly susceptible to harm from exposure to hazardous air pollutants and PM2.5.

         19.     Appellants’ members also have aesthetic and conservation interests in Montana’s premier natural and historic resources, including the Great Falls Portage National Historic Landmark and Lewis and Clark National Historic Trail. Pollution authorized by the challenged air permit will degrade the integrity of these special places and the quality of air that Appellants’ members breathe.

POLLUTION CONTROL REQUIREMENTS UNDER FEDERAL AND STATE LAW

         20.     The federal Clean Air Act and its implementing laws in Montana require DEQ to protect appellants’ interests in air quality by imposing case-by-case MACT limits for hazardous air pollutants and imposing BACT-determined emissions limits for PM2.5.

BACT Permitting Requirements for PM2.5

         21.     In 1977, Congress added the Prevention of Significant Deterioration (“PSD”) program to the Clean Air Act in order to maintain air quality in areas that were still relatively unspoiled by air pollution. As articulated by Congress, the program was intended to “protect public health and welfare from any actual or potential adverse effect which … may reasonably be anticipated to occur from air pollution or from exposures to pollutants …, notwithstanding attainment and maintenance of all national ambient air quality standards.” 42 U.S.C. § 7470(1).

         22.     In keeping with this Congressional mandate, PSD provisions not only require compliance with National Ambient Air Quality Standards (“NAAQS”), they also require major emitting facilities to reduce their emissions to the greatest extent possible by installing BACT “for each pollutant subject to regulation under” the federal Clean Air Act. 40 U.S.C. § 7475(a)(4). As defined by the federal Clean Air Act, BACT means:

an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation under this Act 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.

 

Id. § 7479(3).

         23.     This federal BACT requirement has been incorporated into state law via Montana’s PSD State Implementation Plan (“SIP”). See Mont. Admin. R. 17.8.801(6), 17.8.819. Under the federal Clean Air Act’s implementing regulations, states may take responsibility for administering the federal PSD program if they have an EPA-approved SIP that expressly includes the Act’s requirements regarding BACT. See 40 C.F.R. § 51.166. Thus, consistent with the federal Clean Air Act, governing PSD regulations in Montana require that any “new major stationary source shall apply BACT for each pollutant subject to regulation under the FCAA [federal Clean Air Act] that it would have the potential to emit in significant amounts.” Mont. Admin. R. 17.8.819(2); see also id. 17.8.801(6) (adopting Clean Air Act’s definition of BACT). In addition, Montana’s air permitting regulations require more generally that “[t]he owner or operator of a new or modified facility or emitting unit for which a Montana air quality permit is required by this subchapter shall install on the new or modified facility or emitting unit the maximum air pollution control capability that is technically practicable and economically feasible” and that “BACT must be utilized.” Mont. Admin. R. 17.7.752.

         24.     Montana law defines BACT as “an emission limitation (including a visible emission standard) based on the maximum degree of reduction for each pollutant subject to regulation under 42 U.C.C. 7410, et seq. or 75-2-101, et seq., MCA, that would be emitted from any proposed emitting unit…which the department, on a case-by case basis taking into account energy, environmental and economic impacts and other costs, determines is achievable for such emitting unit… .” Mont. Admin. R. 17.8.740. If DEQ determines that the imposition of an emission standard is not feasible, it may instead “prescribe a design, equipment, work practice or operational standard[,] [which] must to the degree possible, set forth the emission reduction achievable by implementation of such design, equipment work practice, or operation and must provide for compliance by means that achieve equivalent results.” Id.

         25.     As the Board made clear in its previous Order, BACT requirements apply to all pollutants “subject to regulation” under the federal Clean Air Act and the Clean Air Act of Montana. Mont. Admin. R. 17.8.819(2); 40 U.S.C. § 7475(a)(4). This includes PM2.5.

         26.     To assure compliance with BACT requirements, EPA and DEQ encourage the use of the “top-down” method of analysis set forth in EPA’s New Source Review Manual and further discussed in relevant case law. As explained by the Board:

The most stringent or top control alternative is the starting point for

the BACT examination of control alternatives. In Alaska Dept. of Envtl.

Conservation v. EPA, 298 F.3d 822, the Court stated, “[t]he most stringent

technology is BACT unless the applicant can show that it is not technically feasible, or if energy, environmental or economic impacts justify a conclusion that it is not achievable, citing Citizens for Clean Air v. United States EPA, 959 F.2d 839, 845-46 (9th Cir. 1992). If the top choice is eliminated, then the next most stringent alternative is considered and so on. The most effective control option not eliminated is BACT. Alaska Dept. of Envtl. Conservation v. EPA, 298 F. 3d at 822.

 

May BER Order at 40. In short, a proper BACT analysis must survey all available control alternatives and identify the best controls that are feasible. The analysis cannot identify inferior controls as BACT without a compelling demonstration that superior controls are not achievable.

MACT Permitting Requirements For Hazardous Air Pollutants

 

27.     In 1990, Congress amended Clean Air Act section 112 to control emissions of “hazardous air pollutants” or air toxics. By statutory definition, hazardous air pollutants “present, or may present, through inhalation or other routes of exposure, a threat of adverse human health effects (including, but not limited to, substances which are known to be, or may reasonably be anticipated to be, carcinogenic, mutagenic, teratogenic, neurotoxic, which cause reproductive dysfunction, or which are acutely or chronically toxic) or adverse environmental effects … .” 42 U.S.C. 7412(b)(2).

         28.     Congress directed EPA first to develop a list of industry source categories responsible for toxic emissions of these hazardous air pollutants. See 43 U.S.C. § 7412(c)(1). Then, for each listed source category, Congress required EPA to establish highly protective MACT emissions standards for each hazardous air pollutant emitted. See id. § 7412(d). For new sources of hazardous air pollutant emissions, Congress dictated that the standards “shall not be less stringent than the emission control that is achieved in practice by the best controlled similar source.” Id. § 7412(d)(3). In the case of power plants, EPA was required to complete a toxic emissions study and make a determination whether regulation under section 112 would be “appropriate and necessary.” Id. § 7412(n)(1)(A).

         29.     In 2000, EPA concluded, on the basis of extensive scientific evidence, that regulation of toxic emissions from power plants under section 112 was appropriate and necessary. See 65 Fed. Reg. 78,925 (Dec. 20, 2000). Given that power plants are the largest domestic source of mercury emissions and a major source of other HAP emissions including HF and HCl emissions, the necessity of section 112 regulation was a foregone conclusion. Accordingly, EPA added coal-fired and oil-fired power plants to the section 112 list of industries responsible for emissions of hazardous air pollutants, triggering a mandatory obligation to develop MACT standards within two years. See id. at 79,830-31; 42 U.S.C. § 7412(c)(5).

         30.     Rather than satisfying its obligation to develop MACT standards, EPA announced in 2005 that it was removing power plants from the section 112 list and promulgating a mercury pollution trading program—the Clean Air Mercury Rule (“CAMR”)—in place of the more protective MACT standards required under section 112 for all hazardous air pollutants. See 70 Fed. Reg. 15,994 (Mar. 29, 2005); 70 Fed. Reg. 28,606 (May 18, 2005). However, the Clean Air Act does not allow EPA to remove a source category from the section 112 list unless it first makes a reasoned determination that such “delisting” will not result in unacceptable health risks or environmental harms. See 42 U.S.C. § 7412(c)(9)(B). Because EPA did not—and could not—make any such determination in the case of toxic emissions from coal-fired power plants, the D.C. Circuit Court of Appeals recently held that EPA violated the Clean Air Act in removing coal-fired power plants from the section 112 list in order to create the CAMR program. New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008), rehearing en banc denied (May 20, 2008).

         31.     As a result of the D.C. Circuit Court’s decision, coal-fired power plants remain on the Clean Air Act section 112 list, and construction of coal-fired power plants that are “major sources” of hazardous air pollutants cannot go forward absent compliance with MACT requirements. Id. § 7412(g)(2)(B). Because EPA has yet to promulgate applicable MACT standards, permitting agencies must impose emissions limits based on a case-by-case MACT analysis for each “major source” of hazardous air pollutants. See id. § 7412(g)(2).

         32.     The Clean Air Act defines “major source” as “any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit, in the aggregate, 10 tons per year or more of any hazardous air pollutant or 25 tons per year or more of any combination of hazardous air pollutants.” Id. § 7412(a)(1) (emphasis added). “Potential to emit” is defined in the section 112 implementing regulations as “the maximum capacity of a stationary source to emit a pollutant under its physical and operational design.” 40 C.F.R. § 63.2 (emphasis added).

         33.     A facility may limit its potential to emit hazardous air pollutants—thereby avoiding “major source” classification—through “physical or operational limitation[s], including air pollution control equipment and restrictions on hours of operation or on the type or amount of material combusted, stored, or processed,” only if such limitations are “federally enforceable.” Id. When a facility that would otherwise exceed major source thresholds accepts enforceable limitations to reduce emissions below those thresholds, it is termed a “synthetic minor” source.

         34.     Because “synthetic minor” status allows a facility to escape otherwise applicable requirements to achieve the maximum possible control for all hazardous air pollutants, the federal courts have stressed that there must be “legally and practicably enforceable mechanisms in place to make certain that the emissions remain below the relevant levels.” See Weiler v. Chatham Forest Products, Inc., 392 F.3d 532, 535 (2d Cir. 2004). This means that a “synthetic minor” determination must rest on thorough, principled analysis that can be verified in practice pursuant to adequate monitoring requirements.

HIGHWOOD’S AIR PERMITTING HISTORY

         35.     SME first obtained an air quality permit for the Highwood Generating Station on May 11, 2007 (Air Quality Permit No. 3423-00). MEIC and CCE appealed the permit to the Board of Environmental Review. The parties moved for summary judgment on the issue of whether DEQ unlawfully failed to perform a BACT analysis for two pollutants: carbon dioxide (“CO₂”) and PM2.5. With respect to CO₂, the Board granted summary judgment in favor of DEQ and SME, finding that CO₂ is not subject to BACT requirements. With respect to PM2.5, the Board held evidentiary hearings and, on May 30, 2008, it issued a final written order granting Petitioners’ requested relief and remanding the permit to DEQ for a thorough PM2.5 BACT analysis. May BER Order at 44.

         36.     As soon as the permit became effective in May, 2007, SME was authorized to construct. MEIC’s appeal did not stay SME’s permit, and SME never requested that its permit deadline for commencement of construction be tolled during the appeals process. Thus, SME had nearly ten months to commence construction before the D.C. Circuit Court of Appeals; February ruling in New Jersey v. EPA confirmed that coal-fired power plants were subject to case-by-case MACT requirements.

         37.     In the wake of the D.C. Circuit’s ruling, DEQ informed SME that it would be required to comply with governing MACT provisions and that it should consider extending its November 30, 2008 construction by providing updated BACT analyses. In the following months, DEQ repeatedly cautioned SME that it should pursue a deadline extension, and in May, 2008, DEQ informed SME that construction of the Highwood coal plant could not legally go forward in the absence of a final MACT determination from DEQ. Notwithstanding DEQ’s warnings, SME did not seek an extension of its air quality permit and began site preparation and preliminary construction at the Highwood site on October 16, 2008.

         38.     The following week, on October 22, 2008, undersigned counsel served SME and DEQ with formal 60-day notification that its construction activities were in violation of the Clean Air Act § 42 U.S.C. § 7604(a)(3), which prohibits construction without a final air permit, and id. § 7412(g)(2)(B), which prohibits construction in the absence of a final MACT determination. Construction activities at the Highwood site continued unabated.

         39.     On November 10, 2008, DEQ issued Air Quality Permit No. 3423-01.

         40.     On November 20, 2008, DEQ took action in response to the 60-day notice letters submitted on behalf of Appellants and informed SME that it had indeed violated the Clean Air Act and implementing Montana regulations in undertaking construction activities prior to the issuance of a final MACT approval and final air quality permit modification.

         41.     Appellants filed a timely request for hearing in this appeal on November 25, 2008, and on November 26, 2008, the challenged air permit modification became final.

THE CHALLENGED PERMIT MODIFICATION

         42.     The air permit modification purports to address the concerns set forth in the Board’s May, 2008 Order. However, the permit contains no emissions limit for PM2.5.

         43.     Specifically, the permit includes a condition that “[t]o control emission of PM2.5, from the CFB Boiler, SME shall install an ED-FGD followed by IC-FFB technology, as they are described in Section III of the attached Permit Analysis and the record, in accordance with manufacturer’s specifications.” Permit No. 3423-01 at 6 (Condition 19); see also id. (Condition 19). The actual design of this control system and the control efficiency it will achieve remain unknown. The permit merely requires that SME “submit ED-FGD and IC-FFB design specifications to the Department along with a detailed explanation of how the system will achieve PM2.5 emissions control” within 90 days. Id. (Condition 18).

         44.     The permit defers imposition of any emissions limitation to an unspecified time in the future: “Not later than 18 months after reference test methods for PM2.5 are promulgated final by EPA, SME shall submit to the Department an application for permit modification to establish a PM2.5 emission limit. PM2.5 limits shall be requested and established based on measured PM2.5 emission rates that correspond with operational practices that are in compliance with the [permit] conditions” discussed above. Id. at 5 (Condition 17).

         45.     The permit also included a determination that case-by-case MACT requirements do not apply to the Highwood coal plant. This determination was made in reliance on new emissions limits for HCl and HF that purportedly render the Highwood Coal plant a “minor” source of hazardous air pollutant. With respect to HCl, the permit provides that “HCl emissions from the CFB Boiler stack shall not exceed 0.00085 lb/MMBtu averaged over any 1-hour time period,” resulting in projected annual emissions of approximately 9.3 tons per year of HCl. Id. at 4 (emphasis added); Permit Analysis at 77. With respect to HF, the permit provides that HF emissions from the CFB Boiler stack shall not exceed 0.00075 lb/MMBtu averaged over any 1-hour time period,” resulting in annual emissions of approximately 8.2 tons per year. Permit No. 3423-01 at 4 (emphasis added); Permit Analysis at 77. If SME proves unable to meet these limits, the permit specifies less stringent limits that will become applicable upon request to DEQ. Emissions under these fall-back limits would contribute to total hazardous air pollutant emissions of 24.9 tons per year.

         46.     While the permit sets hourly emissions limits for HCl and HF, the permit specifies that stack testing to monitor compliance shall be conducted on an annual basis.

         47.     With respect to mercury, another listed hazardous air pollutant, the permit retains the same alternative emissions limits for mercury that were set in the original permit. SME will be required either to limit the CFB boiler’s mercury emissions to 1.5 pounds per trillion Btu or to achieve a 90 percent reduction of mercury in the “as-fired coal.” Id. at 5.

         48.     Like Permit No. 3423-00, Permit Modification No. 3423-01 expired under its own terms on November 30, 2008 if construction did not commence by November 30, 2008.

VIOLATIONS OF THE CLEAN AIR ACT

Violation of BACT Requirements For Particulate Emissions

         48.     In permitting the Highwood coal plant, DEQ failed to comply with the Board’s May 2008 Order and governing BACT requirements applicable to PM2.5. See 42 U.S.C. § 7475(a)(4); Mont. Admin. R. 17.8.819(2).

         49.     SME’s new draft permit provides no guarantees as to the level of PM2.5 control and associated emissions reductions that will be achieved at the Highwood coal plant. The permit directs SME to submit “design specifications to the Department along with a detailed explanation of how the system will achieve PM2.5 emissions control.” Yet there is no standard that this unspecified control system will be required to meet. The permit provides that a numeric emissions limit will be established once conditional test methods are finalized by EPA. This numeric limit will be set based on the level of control that SME’s system happens to be achieving at the time it is tested. In the meantime, the permit fails to set forth any specific operations or work practice conditions that could serve as the basis for a narrative emissions limit.

         50.     This permitting approach is fundamentally flawed. First, the permit directs SME to eventually make the very same plan for PM2.5 control that should have been established during the BACT process. Second, and more fundamentally, the permit fails to provide any assurance that the maximum degree of reduction in PM2.5 emissions will ever be achieved as required under BACT. Third, the permit leaves DEQ and the public without any binding standards to enforce, much less the tools to enforce them. This approach also leaves the public without any meaningful opportunity to comment on the effectiveness of the PM2.5 control technology based on post hoc submission of “design specifications” or on the PM2.5 emissions limits that are eventually established.

         51.     There is no apparent reason why it is necessary for DEQ to defer imposition of enforceable permit limits. The permit provides that final promulgation of test methods is a prerequisite to setting emissions limits. However, the Board already has found that test methods are available and approved for use:

EPA has developed at least three test methods for measuring condensable particulate emissions for filterable PM2.5. There is Conditional Test

Method 40 available since December 3, 2002, and Conditional Test Method 39

available since July 2004 for filterable and condensable together. There are a

number of levels of validation already achieved for these test methods. McCutchen,Vol. III, p. 475, lines 15-19. Mr. McCutchen’s testimony is that test method 202 is usable for determining control efficiencies for condensable emissions. Vol. III, p. 453, lines 1-3, p. 479, lines 9-16. Mr. McCutchen testified that for the individual condensables, there are reference test methods that are acceptable. McCutchen,Vol. III, p. 504, lines 2-3. He also did not object to the testimony being read into the record from his deposition that there is a dilution method out there that is a reliable way of testing for PM2.5 emissions. McCutchen, Vol. III, p. 457, lines 17, 18. A state can use a conditional test method so long as EPA has the power to veto that decision. McCutchen, Vol. III, p. 455, l. 13. Rulemaking is not necessary to approve the use of a Conditional Test Method in a BACT permitting process. McCutchen, Vol. III, p. 455, l. 18.

 

May BER Order at 32-33. As the Board made clear based on the evidentiary record in the prior appeal, including testimony from SME’s own expert, there are available test methods that DEQ could use today. DEQ has failed to offer any justification why it is nevertheless necessary to wait for Federal Register publication of these same test methods in order to set emissions limits for PM2.5.

         52.     Indeed, DEQ has offered no explanation as to why it could not set any binding PM2.5 limits that effectively limit PM2.5 emissions. In May, the Board concluded that “[t]he record … shows that setting BACT emission limits for PM2.5 emissions for the HGS [Highwood] CFB boiler is feasible using existing test methods, by using emissions estimates from boiler manufacturers and by requiring SME pursuant to DEQ/SME Exhibit 1, NSR Manual, p. B.2, to use design alternative equipment, work practices or operational standards to reduce emissions of PM2.5 to the maximum extent.” May BER Order at 27-28. As DEQ has not come forward with any evidence that the Board’s findings were mistaken, its failure to impose BACT-based emissions limits for PM2.5 flatly defies the Board’s order.

         53.     The permit’s underlying BACT analysis also fails to address the central concern previously raised by the Board, that is the need for a thorough PM2.5 BACT analysis. While SME assembled a lengthy list of available control technologies, DEQ failed to provide an adequate justification for allowing SME to reject control alternatives that would significantly reduce PM2.5 emissions from the Highwood coal plant. Indeed, based on SME’s top-down analysis, it appears that it would be economically feasible to install numerous superior PM2.5 control technologies at the Highwood coal plant; yet DEQ failed to provide convincing rationale for why these technologies should not be identified as BACT.

         54.     For example, a straightforward control combination using a wet electrostatic precipitator (“ESP”) could reduce PM2.5 emissions by an additional 61 tons per year (a 27% control improvement over the status quo option that was selected as BACT), at an average cost of $1,156 per ton of PM2.5 controlled. This is only $268 more per ton than the control combination identified as BACT. Similarly, an electrostatic fabric filter baghouse (ES-FFB) could reduce PM2.5 emissions by an additional 18 tons per year at an average cost of $983 per ton of PM2.5 controlled. This would achieve an 8% increase in control efficiency at an added cost of $95 per ton over the option selected is BACT. DEQ never explained why it would be cost-prohibitive or otherwise infeasible to install incrementally more expensive controls in order to achieve significant air quality gains.

         55.     In failing to complete a proper BACT analysis based on a principled ranking and selection of control technologies, DEQ repeated many of the same mistakes that it made in its previous BACT analysis for PM10. As the Board explained in its May Order, “the Department’s top-down BACT analysis of PM10 and resultant emissions limitation were not well reasoned and justified.” May BER Order at 42. Much like the analysis for PM2.5, the PM10 “BACT analysis in the Permit Analysis identifie[d] certain control technologies in lists” but failed to provide a rationale for rejecting the most effective technologies based on a probing analysis of technical feasibility and economic, environmental, and energy impacts. Id. at 43 (further finding “no economic justification as to why certain control technologies were excluded or included”). Based on these inadequacies in the previous BACT analysis, the Board made clear “the Department must take steps to avoid the deficiencies identified in the PM10 analysis when doing a PM2.5 analysis.” Id. at 44. In failing to do so, DEQ has failed not only to ensure maximum reductions of PM2.5 but also PM10.

         56.     In evaluating BACT for PM2.5, DEQ further failed to require SME to consider technologies to achieve maximum reductions in precursor emissions, specifically sulfur dioxide (“SO₂”), nitrogen oxides (“NOx”), and ammonia. While SME maintains that it is already subject to BACT-determined limits for SO₂ and NOx, SME has never assessed whether more efficient controls may be cost-effective in light of their ability to limit emissions PM2.5. Moreover, SME has never sought to address emissions from ammonia, another key precursor to formation of PM2.5 emissions.

         57.     DEQ’s failure to require a proper BACT analysis of PM2.5 and to establish corresponding PM2.5 emissions limits for the Highwood coal plant boiler violates the federal Clean Air Act, 42 U.S.C. § 7475(a)(4) and the Clean Air Act of Montana, Mont. Admin. R. 17.8.819(2).

Violation of MACT Requirements

         58.     DEQ also violated the Clean Air Act in failing to require a case-by-case MACT determination to establish sufficiently stringent emission limits for mercury, HCl, HF, and all other hazardous air pollutants to be emitted by the proposed Highwood facility coal plant. See 42 U.S.C. § 7412(g)(2)(B). This violation flows from DEQ’s erroneous “applicability determination” that the Highwood coal plant will not be a major source of hazardous air pollutants if it complies with permitted emissions limits for HCl and HF. See id. § 7412(a)(1).

         59.     These hourly limits are designed to maintain yearly HCl and HF emissions at approximately 9.3 tons per year for HCl and 8.2 tons per year for HF—just below the 10 tons per year major source threshold for individual HAP emissions—and total hazardous air pollutant emissions to more than 24 tons per year—just below the relevant 25 tons per year major source threshold. However, compliance with these limits is determined by testing to occur once per year. It is not plausible that hourly emissions limits are practically enforceable by an annual testing requirement. Accordingly, the permit conditions limiting Highwood’s HCl and HF emissions are not sufficient to exempt Highwood from the Clean Air Act’s MACT requirements.

         60.     DEQ’s MACT applicability determination is further based on an underestimate of toxic emissions from the facility as a whole, as SME and DEQ failed to account for emissions from numerous emitting units at the facility—including the cooling tower, numerous fabric filter bin vents, the “Coal Thawing Shed” heater, an emergency fire pump, CFB boiler refractory brick curing heaters, and fugitive emissions sources—described in the final Permit Analysis at 2-4. Clean Air Act MACT requirements apply to any “major source,” which is defined as “any stationary source or group of stationary sources located within a contiguous area and under common control that emits or has the potential to emit” HAPs in quantities that exceed threshold levels. See 42 U.S.C. § 7412(a)(1) (emphasis added). DEQ’s failure to consider hazardous emissions from each source at the permitted facility in determining MACT applicability violates the Clean Air Act. See id.

         61.     DEQ’s applicability determination is further based on improper assumptions about the source and content of coal that will be burned in the CFB boiler. First, the analysis improperly assumes that the exclusive source of feed coal will be the Spring Creek Mine, but the permit does not require the use of Spring Creek Mine coal. Second, the analysis fails to make conservative assumptions about the feed coal’s metal content. The analysis relied on a total of four coal samples and improperly assumed average, rather than maximum, values for the metal content of Spring Creek Coal. Given the wide variability in the metal content of coal, it is not safe to assume “average” values, especially from an extremely limited sampling. For this reason too, DEQ’s applicability determination is not based on Highwood’s maximum “potential to emit,” in violation of the Clean Air Act. See id.; 40 C.F.R. § 63.2.

         62.     The applicability determination further underestimates Highwood’s potential to emit mercury. The analysis estimates mercury emissions based on the permit condition limiting the CFB boiler’s mercury emissions to 1.5 pounds per trillion Btu. However, the permit condition is written in the alternative. SME may choose to ignore the 1.5 pounds per trillion Btu limit, and instead comply with a condition requiring a 90 percent reduction of mercury in the coal it chooses to burn. Thus, if SME burns coal with relatively high mercury content, Highwood’s mercury emissions may exceed the alternate 1.5 pounds per trillion Btu limit and trigger the Clean Air Act’s major source threshold for hazardous air pollutants. See 42 U.S.C. § 7412(a)(1).

         63.     DEQ’s MACT applicability determination is also flawed because it assumes that the control system will reduce the final concentration of HCl and HF in the exhaust stream to 1 ppm or lower. This critical assumption about the CFB boiler’s “potential to emit” is not supported by vendor guarantees, engineering estimates, or other sources, and thus cannot justify DEQ’s determination that Highwood is not a major source of hazardous air pollutants — especially in the absence of effective monitoring.

         64.     In addition, DEQ improperly failed to consider the Highwood facility’s potential to emit all hazardous air pollutants including radionuclides from all of its emitting units. See id. (major source threshold is “25 tons per year or more of any combination of hazardous air pollutants”) (emphasis added).

         65.     The applicability determination further relied on the wholly unsupported assumption that 50 percent of Highwood’s emissions of selenium, a hazardous air pollutant, will be controlled.

         66.     Given the miniscule increment between Highwood’s projected toxic emissions and section 112’s major source threshold, Highwood’s projected emissions would meet “major source” thresholds in the absence of any one of these flawed assumptions that underestimate the Highwood coal plant’s potential to emit.

         67.     Because a proper analysis of the Highwood coal plant’s potential to emit hazardous air pollutants would result in a determination that it is a major source, DEQ violated the Clean Air Act, 42 U.S.C. § 7412(g)(2), by failing to perform a case-by-case MACT determination and establish MACT-based limits on the Highwood facility’s emissions of hazardous air pollutants.

REQUEST FOR RELIEF

         Based on the foregoing legal violations, MEIC and CCE request that the Board of

Environmental Review:

 

         1.     Stay the Department’s issuance of Air Permit No. 3423-01 for the Highwood Generating Station pending the Board’s final disposition of this matter;

         2.      Vacate and remand Air Permit No. 3423-01 to the Department of Environmental Quality pending compliance with all applicable laws and regulations;

         3.      Enjoin DEQ from allowing any activities in furtherance of constructing the Highwood Generating Station pending the issuance of a valid air quality permit; and

         4.      Provide any and all other relief that the Board determines to be appropriate.

         Respectfully submitted on this 10th day of December, 2008,

 

______________________________

Anne Hedges

On behalf of Appellants Citizens for Clean Energy, Montana Environmental Information Center, Sierra Club, and National Parks Conservation Association

 

 

         Subscribed and sworn before me this _______ day of ________________, 2008.

 

 

 

______________________________

Notary Public for the State of Montana

Residing at Helena

My commission expires: