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Environmental Appeals Board Rejects Sierra Club’s PSD Increment Analysis Argument

04.01.2009

By Larry Kane, Attorney, Bingham Greenebaum Doll LLP

A challenge by the Sierra Club to a longstanding U.S. EPA interpretation of the operation of Prevention of Significant Deterioration (PSD) increment analysis for major modifications was soundly rejected by the U.S. Environmental Appeals Board (“EAB”) in a recent decision – In re: Northern Michigan University, Ripley Heating Plant, PSD Appeal No. 08-02 (EAB February 18, 2009).

One of the central issues in this appeal was Sierra Club’s contention that the plain meaning of PSD regulations governing the PSD increment analysis requires that, in the case of a major modification occurring after the major source baseline date to a source that was constructed before the major source baseline date, all actual emissions of the source as modified be excluded from the baseline concentration and used to consume available PSD increment. U.S. EPA’s historical interpretation of the application of increment analysis to this scenario has been that only the increase (or decrease) in emissions resulting from the major modification would be excluded from the baseline concentration and consume (or, conversely, expand) increment.

After finding that the applicable law was not clear and unambiguous, the EAB rejected Sierra Club’s asserted “plain meaning,” opining that it “produces results that confound the very sense and policy undergirding a workable increment consumption scheme.”

Notwithstanding its rejection of Sierra Club’s proffered interpretation, the EAB remanded this issue to the Michigan Department of Environmental Quality (DEQ) to provide a clearer and fuller explanation of the increment analysis performed for the Northern Michigan University power plant project.

Sierra Club’s contentions that BACT was required for CO2 emissions were addressed by the EAB in the same manner as in the earlier Deseret Power Cooperative decision, leading to a remand of that issue as well to Michigan DEQ for a specific decision whether to require BACT or not for that pollutant.

The permit was also remanded on three other issues, including (i) a BACT determination for SO2 that failed to adequately consider clean fuel alternatives; (ii) whether worst-case emissions were used for modeling of air quality impacts; and (iii) whether preconstruction monitoring was adequate. The first two issues are not particularly significant, arising from case-specific alleged inadequacies in the permit application and agency review.

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