Court Rejects EPA Challenge to State BACT Determination for Coal Power Plant, Schnapf LLC Environmental Law

Air Pollution • By Larry Schnapf

The Clean Air Act imposes an alphabet soup of emission control technologies on owners and operators of stationary sources. Depending on the regulatory program and air pollutants, a facility may have to comply with BACT, BART, BDT, GACT, LAER, MACT and RACT.

While the process of identifying the applicable emission standard is largely a technical exercise, the decision in U.S. v Minnkota Power Cooperative, Inc. and Square Butte Electric, 2011 U.S. Dist. LEXIS 148801(D.N.D. 12/21/11) illustrates the legal issues associated with the selection of air emission control technologies for a particular facility or emission source.

In this case, EPA issued a notice of violation to the Milton R. Young Station owned by Minnkota Power asserting that the company had undertaken major modifications without first undergoing New Source Review (NSR) for Prevention of Significant Deterioration (PSD). Unlike other CAA regulatory programs that impose nationwide emission limitations on particular categories of air pollution, the NSR program is a facility-specific review. NSR/PSD is triggered when an existing source proposes to undertakes a physical change or a change in its method of operation that will result in a significant emissions increase. The facility must obtain a pre-construction permit and be equipped with the “best available control technology” (BACT).

After more than six years of analysis and negotiations, EPA, North Dakota, and Minnkota Power entered into a consent order elected to settle the EPA’s dispute through the Consent Decree where the company agreed to install BACT. In other consent decrees that EPA had entered into as part of its coal power plant NSR enforcement initiative, selective catalytic reduction technology (“SCR”) was selected as BACT for Nitrogen Oxide (NOx) emissions. However, the Minnkota Power plant burned North Dakota lignite whose particular properties posed technical challenges. As a result, the parties agreed that North Dakota would make a NOx BACT determination using applicable EPA guidance. The consent order provided that North Dakota’s BACT Determination would be binding unless the EPA demonstrates that it is not supported by the state administrative record and not reasonable in light of applicable statutory and regulatory provisions

After a four-year effort, the North Dakota Department of Health concluded that SCR was technical infeasible and identified non-selective catalytic reduction (“SNCR”) plus advanced separated overfire air (“ASOFA”) as BACT for the plant. EPA challenged this decision.

The court found that North Dakota had followed the five-step methodology set forth in EPA’s “New Source Review Workshop Manual”(NSR Manual). Step One requires the permitting authority lists all “potentially available” control options.

In Step Two, the permitting authority eliminates “technically infeasible” control options from this list. A control option is “technically feasible” if it has been “demonstrated” or if it is both “available” and “applicable.” A control option is “demonstrated” if it “has been installed and operated successfully on the type of source under review.” A control option is “available” if it “can be obtained by the applicant through commercial channels or is otherwise commercially available. A control option is ‘applicable’ if it can reasonably be installed and operated on the source type under consideration.”

In Step Three, the remaining control options are ranked and then listed in order of control effectiveness.

Under Step Four, the energy, environmental, and economic impacts of the control options are evaluated to support the validity of the top-ranked control option or provide clear evidence why the top-ranked control option does not quality as BACT.

Finally, the most effective, technically feasible control option not eliminated in Step Four is selected as BACT, and the permitting authority sets an emission limitation that is appropriate for the particular control option

After performing this analysis, North Dakota Department of Health made the following findings and conclusions

  • SCR had not been installed at a facility that usedNorth Dakota lignite
  • The lignite coal contained high quantities of soluble sodium and potassium that interfered with the catalyst.
  • The properties of the ash produced from burning North Dakota lignite is the most complex and severe of any coals in the world, and interferes with catalysts used for NOx reduction.
  • A catalyst vendor stated it was unaware of any SCR being used with the level and form of sodium in the ash at the Milton R. Young Station.
  • A vendor also said the impact of the on the back end of  the SCR process was were not well understood, presented significant design risk and would require more investigation to predict its performance to make it a commercially available technology.
  • Vendors said they would not provide a guarantee for the catalyst life without at least a one-year pilot scale testing and indicated they were not aware of any SCR being installed in theUnited Stateswithout a catalyst life guarantee.

North Dakota concluded Minnkota Power was not required under BACT to assume the risk associated with the failure of a technology that has never been used on a North Dakotafired unit or a source with similar flue gas characteristic. As a result, the State concluded that selective non-catalytic reduction (“SNCR”) technology was BACT because of the unique characteristics of North Dakota lignite, the cyclone-fired boilers, and their combined adverse interactions with the SCR catalyst

EPA argued that that because SCR technology has been widely deployed at coal-fired power plants across the country,North Dakota should have selected SCR as the best available control technology (“BACT”). However, the court said the record showed that North Dakota carefully considered the impacts of fuel and boiler types on SCR operability. The Court found that there was no evidence that North Dakota’s decision was arbitrary.