EPA Puts Hold on South Dakota Coal Plant

A week after the Minnesota Public Utilities Commission (PUC) unanimously approved transmission lines sought for the proposed $1.6 billion Big Stone II coal-fired power plant in South Dakota, the Environmental Protection Agency (EPA) objected to the issuance of a state-granted permit for construction of that project.

In a Jan. 22 letter (part 1, part 2, PDF), the acting regional administrator for the EPA’s Region 8 office told the head of South Dakota’s Department of Environmental and Natural Resources that a proposed Title V operating permit renewal (PDF) for the 500-MW plant failed to include applicable requirements under federal Prevention of Significant Deterioration (PSD) and New Source Performance Standards (NSPS).

The proposed permit did not comply with federal rules, including emission limitations and standards, the EPA said. Acting Regional Administrator Carol Rushin also said in her letter that South Dakota authorities had failed to provide adequate analysis, monitoring, reporting, and recordkeeping requirements to ensure the plant did not violate emissions limits specified for sulfur dioxides and nitrogen oxides.

The EPA made clear in its letter that it had objected to the permit’s issuance in writing within the 45 days allocated to the review by federal rules, and therefore South Dakota was legally obliged not to issue the permit.

The agency’s regional office gave the state 90 days to submit a revised permit. In documents attached to its letter, it provided details about its three main objections, as well as options and conditions the state could include in its revised permit to resolve these objections.

Reuters reported that environmentalists had hailed the EPA’s objection to the permit as indicative of a “new era regarding coal-fired power plants had arrived with the Obama administration.” POWER magazine’s sister publication The Energy Daily, meanwhile, said that the EPA letter was noteworthy because it raised a new PSD issue that the agency under the Bush administration had not previously raised with state officials.

But “EPA Region 8 officials said they were not raising the new issue at the behest of the Obama administration … rather that the issue had not become apparent until South Dakota officials issued their proposed permit in November. Nonetheless, Bush administration officials repeatedly made clear their resistance to enforcing some PSD and NSPS requirements that they viewed as excessive and unnecessary—requirements that EPA Region 8 is now enforcing,” it reported.

In a related story, the EPA’s Environmental Appeal’s Board (EAB) last week granted petitions from environmental groups and agreed to review a permit that the Bush administration had awarded to the proposed 1,500-MW Desert Rock Energy Facility project in July 2008. The Desert Rock Energy Co., which wants to build the plant on the Navajo Nation tribal reservation in New Mexico, cannot begin construction of the facility until this appeal process is completed.

Earlier this month, as if anticipating the EAB’s decision to grant the environmentalists’ petitions, the EPA had notified the EAB (PDF) that it was withdrawing a portion of its permitting decision because “they contain substantially the same reasoning that the Board found inadequate in Deseret Power.”

In that case, decided in November 2008, the EAB blocked a previously granted permit that would have authorized the Deseret Power Electric Cooperative to build a new 110-MW waste-coal-fired facility at its existing 468-MW Bonanza Power Plant in Utah. It instead sent the permit back to the regional EPA office to decide whether or not to impose a carbon dioxide Best Available Control Technology limit, and to develop an adequate record for that decision.

But on Jan. 14, the EPA’s Region 9 offices issued an Addendum to the Statement of Basis (PDF) that concluded that it would not revise the Desert Rock permit to include limitations on carbon dioxide. Among its more prevalent reasons were that the regional office was obligated to follow the agency’s interpretation of the federal PSD regulations—specifically, a Dec. 18, 2008, memorandum (PDF) issued by former EPA Administrator Stephen Johnson, which did not specify carbon dioxide as a “regulated NSR pollutant.” The agency last week began a 30-day public comment solicitation period on that addendum.

Officials from the new administration hinted that a change was in order. “The public notice and proposal concerning the Desert Rock Energy Facility were initiated by the previous administration,” EPA Region 9 Communications Director Darrin Swartz-Larson told POWERnews on Tuesday. “The new EPA Administrator will review this proposal and consider the comments we receive. Any future decision regarding this matter will be made by the new administration.”

But industry experts said that it is unlikely that Region 9 would reverse itself and agree to a remand on the carbon dioxide issue, since the EPA would have to vacate the Dec. 18 memorandum. “The rationale of the EAB in Deseret and the Administrator’s memo is that CO₂ regulation is best done through national regulation or legislation rather than individual permitting, which is a reasonable position,” said Kenneth A. Reich, a partner at WolfBlock LLP, who represents power industry clients in the permitting and construction of new coal-fired power plants.

“Certainly the comments of the new Administration about the need to deal with global warming, whether under the Clean Air Act or through legislation, is consistent with that position,” he said.

Sources: EPA, The Energy Daily, Reuters, POWERnews