A Critical Review of the Environmental Protection Agency's Standards for "Best Available Control Technology" Under the Clean Air Act

Michael L. Wilson, Lisa Marie Martin, and David M. Friedland

Editors' Summary: One of Congress' goals in enacting the Clean Air Act was to prevent clean air from becoming dirty. Accordingly, the Clean Air Act established a "prevention of significant deterioration" (PSD) program, requiring that specified new facilities use the "best available control technology" (BACT). However, Congress left the task of defining BACT to EPA.

Over time, EPA has fleshed out the parameters of BACT in guidance documents and administrative appeals of PSD permits. Currently, EPA applies a "top-down" analysis to the BACT determination, placing the burden on a permit application to show substantial or unique technical, environmental, or economic objections why the most stringent control available should not be used. This policy has proven controversial and has been challenged in court. In this Article, the authors explore the history of BACT analysis and the current substantive and procedural issues raised by EPA's current BACT policies.

Michael L. Wilson is the technical manager for environmental licensing with RUST International, an environmental and engineering firm. David M. Friedland is an attorney associated withBeveridge & Diamond, P.C. Lisa Martin, an attorney formerly associated with Beveridge & Diamond, P.C., practices with the law offices of Neil Vincent Wake in Phoenix, Arizona.

[20 ELR 10067]

Glossary of Terms

BACT — best available control technology

de-NO_x — nitrogen oxides control technology

LAER — lowest achievable emission rate

NAAQS — national ambient air quality standard

NSPS — new source performance standard

OAQPS — Office of Air Quality Planning and Standards

PM — particulate matter

PSD — prevention of significant deterioration

SO₂ — sulfur dioxide

[20 ELR 10068]

Congress enacted the Clean Air Act¹ in the face of two separate problems: how to clean the air in regions where it is dirty, and how to keep the air clean in regions where it is already clean. The Clean Air Act addresses the latter problem by providing a "prevention of significant deterioration" (PSD) program, intended to prevent clean air from significantly deteriorating into dirty air.² New facilities constructed in areas covered by PSD classifications must incorporate the "best available control technology" (BACT).³ What BACT means, however, is not immediately obvious.

The Environmental Protection Agency (EPA) has, over time, elaborated on what BACT means in practical terms. Through regulations, opinions of the Administrator in PSD appeals, and guidance documents, BACT analysis has evolved into a substantial body of administrative law. This Article analyzes EPA guidelines on BACT, how they differ from earlier EPA interpretations, and the practical implications of BACT as now implemented by EPA.

Background: Origins of PSD and BACT Regulation

In 1972, the district court for the District of Columbia issued an injunction ordering EPA to require the prevention of significant deterioration of air quality in "clean air" or attainment areas and to promulgate the necessary regulations to achieve such a goal.⁴ In 1974, EPA first promulgated regulations to prevent the significant deterioration of air quality in attainment areas from emissions of sulfur dioxide (SO₂) and particulate matter (PM).⁵ Specifically, each state implementation plan (SIP) was required to prohibit the construction of sources in any of 19 specified source categories unless the state or other reviewing authority verified that the source would meet an emission limit evidencing application of the BACT for SO₂ and PM emissions. These regulations were ultimately upheld by the District of Columbia Circuit Court of Appeals.⁶

The 1977 Amendments to the Clean Air Act added Part C, significantly expanding the requirements for PSD and BACT for attainment and unclassifiable areas.⁷ The requirements of BACT were extended to all pollutants subject to regulation under the Act. The 1977 Amendments further established threshold emission levels for "major emitting facilities," including 28 stationary source categories that emit at least 100 tons per year of any air pollutant subject to regulation and any other sources with the potential to emit 250 tons per year or more of any air pollutant.⁸ PSD review requirements were also triggered by a "major modification" to an existing facility, defined in subsequent EPA regulations as all changes causing emission increases above specified "significant" levels.⁹

On June 19, 1978, EPA amended its regulations to implement the additional PSD statutory requirements. The Agency promulgated two substantially similar sets of regulations: Part 51, laying out the requirements for state PSD programs,¹⁰ and Part 52, the federal PSD regulations that apply in the absence of an approved state program.¹¹ A subsequent petition for review of the 1978 PSD regulations was brought in the D.C. Circuit in Alabama Power Co. v. Costle,¹² which challenged EPA's application of PSD and BACT requirements for pollutants other than SO₂ and PM. The court affirmed EPA's requirement for the application of PSD and BACT review to all pollutants regulated under the Clean Air Act.¹³ In response to other parts of the Alabama Power challenge not relevant here, EPA once again amended the PSD regulations in 1980.¹⁴

The current regulatory definition of BACT closely tracks the statutory definition found in § 169(3)¹⁵ of the Clean Air Act. BACT means

an emissions limitation . . . based on the maximum degree of reduction for each pollutant subject to regulation under [the] Act which would be emitted from any proposed major stationary source or major modification which the Administrator, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such source or modification through application of production processes or available methods, systems, and techniques, including fuel cleaning or treatment or innovative fuel combustion techniques for control of such pollutant. . . .¹⁶

The Clean Air Act and implementing regulations specify broad parameters for a reviewing agency to follow in exercising its discretion to determine BACT. For example, the Act states that BACT shall be no less stringent than the uniform standards applicable to new sources under § 111 or § 112 of the Act.¹⁷ BACT is often more stringent in practice. A reviewing agency may impose a design, work practice, or operational standard instead of a numerical emission limitation as BACT but "only when technological or economic limitations on the application of measurement methodology to a particular class of sources would make the imposition of an emission standard infeasible."¹⁸

By definition, the Act limits the consideration to available control technologies. "Available," however, does not [20 ELR 10069] necessarily mean that the technology must have been previously applied to the type of emissions unit undergoing review. The reviewing agency is not precluded from considering the "transfer" of a technology demonstrated for another source. However, the 1978 PSD regulations make clear that due consideration of factors, such as economic costs and energy, must also be given before requiring such technology transfer in order to comply with the BACT requirement.¹⁹

EPA published guidelines in December 1978 designed to provide a consistent approach to BACT and provided further BACT guidance as part of its PSD Workshop Manual published in 1980.²⁰ These documents generally required a new source applicant to propose an emission limitation as BACT for each pollutant subject to regulation under the Clean Air Act that the source had the potential to emit in significant amounts. The applicant was also required to evaluate available control alternatives that would provide a greater level of emission control than that proposed as BACT.²¹ As part of this evaluation, the applicant was required to defend its selection of a less stringent alternative in terms of adverse economic, energy, or environmental impacts for the particular facility in question.²²

The guidelines recommended that each state decide the relative importance to be given to energy, environmental, economic, and other factors in the BACT decision. For instance, where the environmental benefits of more stringent controls did not make economic sense in terms of the costs per unit of pollution removed, the 1978 Guidelines and 1980 PSD Workshop Manual did not require application of the most stringent control systems available. These guidance documents cautioned that the BACT determination should not force new projects to the brink of cancellation, but must be based on sound judgment and balancing environmental benefits with energy, economic, and other impacts.²³

Substantive Issues

Recent PSD permit appeals and EPA guidelines have substantially altered how EPA and state or local permitting agencies must evaluate and analyze the impacts of control technology options. In particular, the standards for evaluating control alternatives have been altered to reflect a strong bias in favor of applying the most stringent control technology available unless the applicant can demonstrate "unique" and "substantial" environmental or cost impacts.

Some limitations on EPA's interpretation of BACT still remain. For instance, a technology's availability, at least in the form of actual operating data, must be shown. In addition, BACT requirements cannot redefine the source.

EPA's "Top Down" Review Process

In re Honolulu Resource Recovery Facility (H-Power),²⁴ a 1987 PSD appeal out of Hawaii, demonstrates how EPA interprets its scope of authority to consider new information in reviewing an applicant's BACT choice. In H-Power, a final decision to issue a PSD permit had been made by the Hawaii Department of Health (HDOH). EPA Region IX, pursuant to a delegation agreement with the state of Hawaii, concurred in the issuance of the permit at that time. On appeal, petitioners argued that the applicant had not applied BACT for SO₂. The Administrator agreed that the BACT analysis for SO₂ was inadequate based on a reevaluation of the record and new information submitted by Region IX on the use of scrubbers to control emissions of SO₂. The new information cited by Region IX included presentations at three conferences, two of which occurred after the issuance of the permit. HDOH argued that new information not part of the administrative record could not be considered in evaluating the adequacy of the BACT review. The Administrator did not analyze whether the new information, or some part of it, was actually "available" for the applicant to evaluate, but rather decided that the Region and the Administrator could consider the new information once an appeal of the permit had been filed.²⁵

The Administrator held that the permitting agency or the Region, which by the terms of its delegation agreement with Hawaii had to concur with the permitting agency, had the authority to consider the new information. In the H-Power remand, the Administrator specifically directed Region IX to reconsider ". . . whether the applicant has met its burden of demonstrating that significant technical defects, or substantial local economic, energy, or environmental factors or other costs warrant a control technology less efficient than scrubbers. . . ."²⁶ The initial PSD permit incorporated "up-front" removal of high sulfur bearing materials rather than "back-end" scrubbers, which would have provided for greater SO₂ removal as well as more efficient control of unregulated pollutants.

The Administrator found that most of the resource recovery facilities in the region would employ scrubbers.²⁷ While this did not, as a matter of law, compel the conclusion that H-Power had to use scrubbers, it did demonstrate that the technology was available. Accordingly, the Administrator found that H-Power had to demonstrate "substantial and unique local factors" to justify a less efficient control technology and that H-Power failed to make such a showing.²⁸

The H-Power remand redefined the standards for evaluating when an applicant for a PSD permit may use anything other than the most stringent control technology available. Prior to H-Power, EPA adopted a more flexible approach to the determination of BACT. In the 1978 Guidelines, EPA noted that the relative weight to be assigned to energy, environmental, and economic impacts was a critical element in the review process, and an element [20 ELR 10070] to be evaluated by the state, "thus allowing some flexibility in emission control requirements depending on local energy, environmental, and economic conditions and local preferences."²⁹

The 1978 Guidelines illustrated how this type of discretion might be exercised:

For example, in an area with unusually high unemployment, the economic impacts may be weighted more heavily if the application of a strict BACT emission requirement would reduce production or jobs. On the other hand, if visibility protection is a major value of the area, then environmental impacts could be weighted more heavily.³⁰

The 1978 Guidelines required the applicant to start with a "base-line case" control system as BACT and to present control alternatives that were more stringent than the system proposed. The applicant would have to defend the system selected as BACT by demonstrating that control alternatives representing a more stringent level of control "would cause unreasonably adverse energy, environmental or economic impacts."³¹

In the recent appeal In re Spokane Regional Waste-to-Energy Facility,³² the Administrator characterized this pre-H-Power BACT analysis as the "bottom-up" approach in which an applicant could select virtually any technology it deemed appropriate (baseline case) and then the applicant would be required to present a full and fair analysis of alternative technologies, including alternatives potentially more stringent.³³

The Administrator argued that this approach presented too many opportunities for abuse, since it provided little incentive for the applicant to select the most effective technology, especially where that technology was also the most expensive.³⁴ H-Power, by contrast, imposed a significantly greater burden on the applicant by mandating that the applicant choose the most stringent control technology unless it could demonstrate that unique local factors justified a less efficient control technology.

EPa subsequently confirmed the top-down approach of H-Power in guidance issued in December 1987.³⁵ EPA described the top-down approach as follows:

The first step in this approach is to determine, for the emission source in question, the most stringent control available for a similar or identical source or source category. If it can be shown that this level of control is technically or economically infeasible for the source in question, then the next most stringent level of control is determined and similarly evaluated. This process continues until the BACT level under consideration cannot be eliminated by any substantial or unique technical, environmental, or economic objections. Thus, the "top down" approach shifts the burden of proof to the applicant to justify why the proposed source is unable to apply the best technology available. It also differs from other processes in that it requires the applicant to analyze a control technology only if the applicant opposes that level of control. . . .³⁶

There is significant disagreement in the regulated community concerning the legality of the top-down policy. The paper and forest products industries recently challenged the policy in court on both procedural and substantive grounds, arguing that the policy is inconsistent with the Clean Air Act because it illegally equates BACT with the lowest achievable emission rate (LAER). In addition, the industry petitioners argue that the policy represents such a change from EPA's 1978 Guidelines and 1980 PSD Workshop Manual that it should be subject to notice and comment rulemaking.³⁷ EPA has responded by issuing a background statement discussing the origins of and rationale for the top-down approach. In its statement, the Agency argues that the policy is consistent with current statutory and regulatory requirements.³⁸ EPA is also currently preparing a new top-down guidance document, drafts of which have been circulated to the regions and to industry.³⁹

Environmental Impacts of the Technology Chosen as BACT

As noted above, the BACT analysis must take into account the environmental impacts of the choice of a particular technology.⁴⁰ The new guidelines emphasize that this analysis should not be confused with the air quality impact analysis that is conducted to determine whether the source will violate any applicable national ambient air quality standards (NAAQS) or PSD increments, in which case the facility may not be constructed as proposed.⁴¹ Indeed, the Administrator recently held that the relative air quality impacts for the regulated pollutant cannot be considered in the BACT decision.⁴² The Administrator rejected as clearly erroneous the permitting authority's use of negligible air quality impacts for the regulated pollutant as justification for not imposing the most stringent control technology available as BACT.⁴³

According to EPA's new guidance, the environmental impacts analysis must concentrate on "impacts other than impacts on air quality (i.e., ambient concentrations) due to emissions of the regulated pollutant in question, such [20 ELR 10071] as solid or hazardous waste generation or discharges of polluted water from a control device, visibility impacts or emissions of unregulated pollutants."⁴⁴ An example of a secondary environmental impact referred to in the draft guidance is the disposal of scrubber effluent and other hazardous waste discharges, such as spent catalysts or contaminated carbon.⁴⁵ The guidance warns, however, that the fact that a control technology creates liquid or solid waste does not necessarily justify rejection of that technology as BACT "if the control device has been applied to similar facilities elsewhere and the solid or liquid waste problem under review is not significantly greater than in those other applications."⁴⁶

EPA has also found that consideration of environmental impacts may justify the imposition of a more stringent BACT alternative even though there is no direct reduction in emissions of the regulated pollutant. In In re North County Resource Recovery Associates,⁴⁷ petitioners challenged Region IX's granting of a PSD permit because the Region failed to consider the effect of the control technology on pollutants not currently regulated under the Clean Air Act, that is, "unregulated pollutants." Region IX asserted that it lacked authority under the PSD regulations to consider impacts of unregulated pollutants in the selection of BACT.

The Administrator disagreed and found the Region's interpretation "overly broad . . . if it is meant as a limitation on EPA's authority to evaluate, for example, the environmental impact of unregulated pollutants in the course of making a BACT determination for the regulated pollutants."⁴⁸ In fact, such consideration may result in an even more stringent BACT determination than would have otherwise been imposed if only the impact on the regulated pollutant were considered. The Administrator held that if EPA finds that setting a more stringent emission limit on regulated pollutants would incidentally restrict a hazardous but not yet regulated pollutant, it may do so.⁴⁹ The effect of the North County remand is to regulate indirectly all pollutants from PSD sources through BACT determinations. North County does not, however, permit EPA to prescribe an emission limit for unregulated pollutants.

Economic Impacts and Other Costs

The Clean Air Act provides that the permitting authority must take into account the "economic impacts and other costs" of a particular control technology on a case-by-case basis.⁵⁰ H-Power and the Dec. 1, 1987 Memorandum make it clear, however, that the economic impacts must be "unique" and "substantial" to make imposition of the most stringent control technology available "infeasible" for a particular facility. In the Huntsville Memorandum, EPA indicated that economic impacts were "substantial" if the BACT determination so greatly exceeded normal cost estimates as to preclude a typical facility from being built.⁵¹

Similarly, in another PSD appeal, In re Pennsauken County; New Jersey Resource Recovery Facility,⁵² the Administrator rejected the applicant's claim that "thermal de-NO_x" technology was not an available technology. The Administrator claimed that the applicant failed to show that thermal de-NO_x technology was technically or economically unachievable for the source and failed to present any evidence that the costs for thermal de-NO_x were unusually high.⁵³ However, the Administrator did not clarify what might constitute "unusually high" costs.

An applicant in Pasco County, Florida, argued that the costs for de-NO_x technology were unacceptable because they were greater than the cost/benefit ratio that EPA used in setting applicable new source performance standards (NSPS). EPA Region IV rejected these arguments as irrelevant.⁵⁴

EPA Region II recently confirmed this approach when it demanded that de-NO_x technology be imposed as BACT on a facility similar to the Pennsauken and Pasco County facilities. Region II found that an emission limit based on de-NO_x is BACT unless the applicant demonstrates overwhelming reasons why it should not be applied in a particular case.⁵⁵

Finally, in its Draft May 1989 Guidance, EPA described yet again how costs should be factored into the BACT analysis. Cost factors may make a technically feasible BACT alternative economically infeasible only when the applicant demonstrates that the control costs of the most stringent option are "disproportionately high when compared to the cost of control for the pollutant in recent acceptable BACT determinations."⁵⁶

It is not clear what "costs significantly beyond the range of costs normally associated with BACT," or any of the other formulations of the standard set forth in other guidance documents and PSD permit appeals, mean. However, it is clear that it will be very difficult for a source to establish that economic impacts dictate imposition of less than the most stringent control technology.

[20 ELR 10072]

LAER Determinations as the Starting Point for BACT

As the foregoing discussion illustrates, EPA has interpreted BACT as the most stringent available control option unless the applicant demonstrates that some unique economic or environmental impact precludes its application. This interpretation means BACT will, in many instances, be equivalent to the lowest achievable emission rate (LAER). The Clean Air Act requires LAER for new sources locating in nonattainment areas.⁵⁷ LAER determinations force the most stringent technologically feasible control option on a new source regardless of the cost or other environmental impacts.

Both EPA Region IX and the Northeast States for Coordinated Air Use Management (NESCAUM) have published guidelines that require LAER to be the starting point in all BACT analyses. Under these guidelines, BACT is presumed equal to LAER absent an adequate showing that circumstances unique to a proposed project are provided for and justified.⁵⁸

In their suit challenging the top-down policy, the paper and forest products industries argue that equating BACT with LAER is inconsistent with the Clean Air Act, which makes a clear distinction between standards applicable in attainment areas (BACT) and standards applicable in nonattainment areas (LAER).⁵⁹ In its June 1989 Background Statement, EPA responded by arguing that the top-down approach maintains the statutory distinctions between BACT and LAER.

The LAER requirement provides that all affected sources must comply with either the most stringent limit contained in a State implementation plan, or the most stringent emission limitation achieved in practice, whichever is more stringent. In contrast, under BACT, consideration of energy, environmental, or economic impacts may justify a lesser degree of control in the particular case. The EPA's policy regarding the top-down process does not alter this sharp statutory distinction.⁶⁰

Whether the courts uphold the Agency's view that the distinction between BACT and LAER is maintained by the top-down approach remains to be seen.

A Technology Must Be Available to Be BACT

A control technology must be available to be considered BACT for a particular source. EPA has construed "availability" to mean "technically feasible." In the Pennsauken Appeal, for example, the Administrator concluded that the permit applicant need not consider technology that is not available in BACT analysis. Availability, in BACT analysis, is a "practical, factual determination, using conventional notions of whether the technology can be put into use."⁶¹ The Administrator in the Pennsauken Appeal found that a nearly identical source was "in existence and operating" with a more stringent NO_x control technology [de-NO]x[] than initially proposed as BACT by the Pennsauken facility. The applicant failed to show that this technology was technically infeasible for application to the Pennsauken facility. It was therefore an available technology within the meaning of BACT.⁶²

The Administrator further interpreted what it means for a technology to be available in the Spokane Appeal. Two environmental groups challenged the granting of a permit to the Spokane facility on the grounds that the permitting authority had failed to consider recycling and source separation as BACT for the facility. The Administrator rejected this claim, finding that petitioners had not established that recycling and source separation, when used in conjunction with conventional, state-of-the-artpollution control equipment, were "available" control technologies for control of regulated pollutants.⁶³

The Administrator also clarified the degree to which an applicant must do research to determine whether a technology is available. If knowledge about a technology's effect on emissions is not unusable in the particular configuration planned, that technology is not available.⁶⁴ After the Spokane decision, a BACT alternative must not only be available in the sense that it "can be put into use" on a given application, but its "effect on emissions" must also be quantifiable and there must be a data base sufficient to establish the environmental, energy, and cost impacts of the technology.

BACT Requirements Cannot Redefine the Source

BACT alternatives cannot include a material redefinition of the type of facility proposed by the applicant. In the Pennsauken Appeal, one of the petitioners objected not to the control technology, but to the resource recovery facility itself. The petitioner urged rejection of the facility in favor of burning a mixture of 20 percent refuse-derived fuel (RDF) and 80 percent coal at existing power plants.⁶⁵ EPA rejected the petitioner's attempt to redefine the source, concluding that permit conditions ensure that the proposed source of pollutant emissions uses emission control systems that represent BACT, resulting in reduced emissions to the maximum degree possible.⁶⁶

[20 ELR 10073]

Similarly, in the Spokane Appeal, petitioners argued that the resource recovery facility should use RDF. The Administrator rejected this argument because "RDF facilities are usually associated with a different combustor design and feed mechanism than the designs employed in mass-burn incinerators such as the one proposed for Spokane."⁶⁷ The Administrator noted thatthe change from a mass-burn to an RDF facility would constitute a redefinition of the project beyond the scope of the BACT program.⁶⁸ Therefore, BACT review cannot properly include alternatives to the source proposed by the applicant even though there may be less polluting alternatives. For example, an applicant proposing a coal-fired boiler will not be ordered to build a gas-fired turbine, although the latter is inherently less polluting.⁶⁹

EPA's Authority to Prescribe Design or Work Practice Standards as BACT in Lieu of Emission Limitations

EPA's PSD regulations provide that BACT must consist of a numerical emission standard unless such an emission limitation is infeasible.⁷⁰ Although the language of the regulatory definition of BACT appears to prohibit production and process requirements in the absence of a finding that imposition of an emission limitation is infeasible, EPA found to the contrary.⁷¹ CertainTeed Corporation (CertainTeed) requested review of certain terms of a PSD permit issued to it by Region IX for its fiberglass insulation manufacturing plant. In addition to prescribing an emission level as BACT for NO_x, the Region also prescribed production and process requirements that CertainTeed would have to adopt and follow to meet the emission level.⁷²

CertainTeed argued that EPA lacked the authority to prescribe process and production requirements where it was feasible to measure emissions and therefore to set an emission level. Congress wanted EPA to set emission levels, CertainTeed argued, but not to tell industry how to meet those levels, at least where, as here, emissions could be monitored. EPA disagreed and found that it had the authority to prescribe production and process requirements. Accordingly, the Agency upheld the Region's BACT determination.

The Agency reasoned that the very language "best available control technology" emphasizes the predominant role of control technologies in the PSD process.⁷³ Moreover, BACT is "an emission limitation . . . which the permitting authority . . . determines is achievable for such facility through application of production processes and available methods, systems, and techniques" for control of the pollutants in question.⁷⁴ "Emission limitation," in turn, is "a requirement . . . which limits the quantity, rate, or concentration of emissions of air pollutants . . . including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction."⁷⁵ Therefore, EPA argued that "emission limitation" embraces operational controls such as those required by Region IX.⁷⁶

EPA also noted that because the BACT determination is "inextricably tied to a specific set of assumptions" regarding the type of control technology in use at each facility, any change in technology will require a reevaluation of associated environmental, economic, and energy impacts. Therefore, the control technology must be specified for a BACT determination to make any sense.⁷⁷

EPA's interpretation of BACT in this case raises significant questions. First, as noted earlier, EPA's own PSD regulations provide that BACT must consist of a numerical emission standard unless such an emission limitation is infeasible.⁷⁸ The Agency confirmed this interpretation of its regulations in its 1978 preamble to the PSD regulations. The preamble provided that the Administrator will prescribe work practice standards only when technological or economic limitations on the use of a particular measurement method makes the imposition of an emission standard infeasible.⁷⁹

The BACT regulations are also consistent with §§ 111 and 112 of the Act, which provide that EPA may require specific work practices or operational standards when it is "not feasible" to prescribe specific numerical limitations.⁸⁰ In both instances, "not feasible" is "any situation . . . [where the pollutant] cannot be emitted through a conveyance designed and constructed to emit or capture such pollutant . . . [or] the application of measurement methodology . . . is not practicable due to technological or economic limitations."⁸¹ Also, under both §§ 111 and 112, work practice standards must be promulgated as specific numerical limits "whenever it becomes feasible to promulgate and enforce such standard in such terms."⁸²

The rationale for the limitation on the promulgation of operational standards is that Congress wanted to encourage the development of innovative pollution control technologies and recognized that such new technologies would not be developed if EPA imposed existing technologies. Congress' strong preference for emission limitations (which industry [20 ELR 10074] can meet by any combination of technologies it desires) over work practice or operational standards (which specify particular technologies) reflects its desire to encourage such technological innovation.⁸³

One reason that EPA may have reached the conclusion it did in the CertainTeed Appeal is that the company did not claim that it knew of anypresently available techniques, other than the prescribed production and process requirements, to meet the NO_x emission level. CertainTeed claimed only that it was developing alternative control techniques.⁸⁴ It remains to be seen whether EPA will offer the same interpretation where an applicant can demonstrate that there are several available technologies to meet an emission limitation.

Procedural Issues

The advent of top down review has created disagreements over what exactly constitutes BACT. These uncertainties have in turn resulted in various attempts by EPA to impose its interpretation of BACT on applicants and local permitting authorities, not only in PSD appeals where an Agency decision is affirmatively sought, but also in connection with delegate, and even approved, state programs. Applicants therefore need to be aware of the types of challenges to which their BACT choices may be subject depending on certain procedural issues, such as the nature of the reviewing authority as a delegate or approved state, and the availability of an appeal or other potential avenue for EPA intervention in the permit proceedings.

Other critical procedural issues concern the temporal scope of PSD review. These issues include when an applicant may permissibly terminate his search for an available technology, the Agency's obligation to grant or deny a permit within one year of application, and the Agency's claimed authority to extend the temporal scope of BACT review once a PSD appeal has been filed by considering new information not available during initial permit review. Although these and other procedural issues raise questions yet to be definitively answered, recent EPA guidance memoranda, PSD appeals orders, and case law provide guidance for permit applicants.

Appeal Procedures for Permits Issued by EPA and Delegate States

PSD permit decisions may be made by one of three reviewing authorities: (1) an EPA Regional Administrator;⁸⁵ (2) a state or local permitting authority that has been delegated by EPA to administer a PSD program;⁸⁶ or (3) a state or local permitting agency that has exclusive authority to administer a PSD program by virtue of a PSD implementation plan approved by EPA.⁸⁷

The distinctions among permits issued by EPA, a delegate authority, or an approved authority can be critical. Depending on the scope of local permit appeal procedures, permits issued by an approved authority are the least vulnerable to EPA intervention. These permits are not subject to appeals to the EPA Administrator.⁸⁸ In delegate states, on the other hand, the Agency may have an opportunity to intervene at various stages of the permit process and, in certain cases, EPA interprets its authority to extend to revocation of the delegation.⁸⁹

Recently, in United States v. Solar Turbines, Inc.,⁹⁰ a Pennsylvania district court decided the first case to consider the issue of whether EPA can permissibly bring an enforcement action under §§ 113 and 167 of the Clean Air Act when a source has properly obtained a final PSD permit from an approved state.

In Solar Turbines, EPA brought an action against the Solar Turbines Company under both §§ 113 and 167 of the Clean Air Act because the final permit issued by Pennsylvania did not require water or steam technology as BACT for nitrogen oxides.⁹¹ In granting summary judgment for Solar Turbines, the court found that EPA could not bring an enforcement action against an owner/operator who was in compliance with a permit issued by an authorized permit-issuing authority.⁹² The court reasoned that Congress could not have intended such a result:

It is unreasonable to take the position that Congress would have so nonchalantly and vaguely provided for a drastic expansion of EPA enforcement action without explicitly setting forth this expansion and defining its scope. It is furthermore unreasonable to take the position that a source can be held directly liable for a decision which was not in its control to make.⁹³

The Solar Turbines court concluded that an enforcement action against the owner/operator is not authorized by the Clean Air Act in situations where an approved state has not, in EPA's view, complied with the Clean Air Act. However, the court held that EPA does have the option of proceeding against the state under § 167 and possibly § 113 as well. EPA had not pursued that option in the Solar Turbines case based on an expressed "need to maintain harmonious state-federal relations."⁹⁴

Permits issued directly by EPA under 40 C.F.R. § 52.21 and those issued by delegate state or local authorities may be appealed to the Administrator within 30 days of issuance.⁹⁵ Petitions to the Administrator to review any condition of a PSD permit decision must demonstrate that the decision involved either: (1) a finding of fact or conclusion of law which is clearly erroneous or (2) an exercise of discretion or an important policy consideration which the Administrator in his discretion should review.⁹⁶ The Administrator may also review any condition of the permit [20 ELR 10075] on his own initiative, provided he acts within 30 days of service of the reviewing authority's action.⁹⁷ The preamble to the regulations provides that the power of review should be sparingly exercised and that final determination of most permit conditions should be made at the regional level.⁹⁸

The Part 124 regulations state that within a reasonable time following the filing of a petition for review, the Administrator shall issue an order granting or denying the petition for review. If denied, the preexisting conditions of the permit become final agency action. If the petitionis granted, final agency action occurs either when a decision on the merits is reached without remand or upon completion of the remand proceedings if the Administrator's remand order allows for a further appeal from the remand proceedings.⁹⁹

EPA regions can initiate the PSD appeal process from decisions made by delegate agencies, as long as the region satisfies the prerequisite of participation in the public comment and/or public hearing process.¹⁰⁰ In practice, even when a party other than an EPA region initiates a petition for review, the Administrator consults the appropriate region for its input on the appeal.

EPA has also tentatively interpreted its jurisdiction to extend to revoking a reviewing body's delegation agreement in appropriate circumstances, if the appeal procedures of Part 124 are unavailable.¹⁰¹

The court in Greater Detroit Resource Recovery Authority v. Adamus,¹⁰² however, has held that depending on the scope of the particular delegation agreement, revocation may not be an available option for the Agency. In Greater Detroit, the court granted the Authority's motion for summary judgment on the issue of EPA's revocation of Michigan's PSD delegation with respect to the Authority's permit. The court held that there was no basis for revoking Michigan's PSD delegation where: (1) the delegation agreement itself provided that revocation could only be accomplished if the state enforced its provisions in a manner inconsistent with the terms of the delegation;¹⁰³ (2) the Authority's permit itself had been issued without any adverse comments or other steps taken by EPA to prevent its issuance;¹⁰⁴ and (3) EPA had previously audited five permits, including the one at issue, and found no problems.¹⁰⁵

Thus, despite EPA's belief that revocation of a permitting authority's delegation remains an enforcement tool to challenge an individual permit, unless the delegation agreement leaves room for individual permits to be challenged in this manner, such a revocation may not withstand legal challenge. Indeed, EPA has recently expressed some doubt about the ability of EPA regions to challenge PSD permits issued by delegate states in ways other than submitting comments during the public comment period and subsequently participating in a PSD appeal.¹⁰⁶

Timing Issues

Since the "available" component of BACT review is to be determined during permit review, BACT determinations are by definition temporal in scope.¹⁰⁷ That is, available technologies for a current new source may differ from those technologies deemed to be available at a prior date. The Act imposes a further temporal limitation on BACT review by mandating that any completed PSD permit application be granted or denied not later than one year after the date of the filing of a completed application.¹⁰⁸ These limits on the temporal scope of BACT review serve both to build some finality into the permit process and to implement PSD provisions so that economic growth will occur in a manner consistent with the preservation of existing clean air resources.¹⁰⁹

In several previously mentioned orders issued as part of PSD Part 124 appeals, the Administrator has considered both the issue of when the applicant's search for relevant BACT information can legitimately come to an end and the issue of whether a permitting authority and the Administrator, on appeal, may consider new information in determining the adequacy of the applicant's BACT evaluation. The Administrator, as noted earlier in the Pennsauken Appeal, remanded a BACT evaluation for reconsideration because the permitting authority had not considered in detail a control option that had been treated as available to sources of the applicant's type in EPA guidance predating the issuance of the permit. The Administrator found that previously issued Agency guidance, coupled with the fact that one facility was actually in operation using the particular pollution control technology, raised a strong presumption that the technology was available for the purposes of BACT review.¹¹⁰

More recently, in reaching his decision in the Spokane Appeal that there were no studies or actual operating data [20 ELR 10076] that supported source separation or recycling in combination with a conventional pollution control technology as BACT, the Administrator¹¹¹ made specific reference to the Clean Air Act's one-year deadline to grant or deny PSD permits as an indication that an applicant's burden to identify the best available control technology must be terminated at some point.¹¹²

The Pennsauken and Spokane decisions, taken together, indicate that if operating data, studies, or Agency guidance demonstrate actual use of a particular technology on the source type (or on a similar source that can be appropriately transferred to the source type under review) any time prior to permit issuance, that technology must be investigated as part of the BACT review.

In the H-Power Appeal, the Administrator held that the permitting agency or the region, which by the terms of its delegation agreement with Hawaii had to concur with the permitting agency, had the authority to consider new information. In addition, the Administrator found that his own broad discretionary review powers¹¹³ gave him the authority to direct the Regional Administrator or the local permitting authority on remand to consider new information and seek further evidence on relevant points.¹¹⁴ Thus, H-Power stands for the proposition that the Administrator or the permitting agency has broad authority to consider new information in a Part 124 appeal proceeding.

This is precisely the administrative precedent that EPA Region IX cited in an appeal of a delegate agency's issuance of a PSD Permit for Signal Energy System's Cottonwood Power Plant. In this Part 124 remand proceeding, the delegate agency (in this case, the Shasta County Air Pollution Control District) assumed that BACT review should be limited to information on control technology alternatives available prior to the reviewing agency's decision to issue the PSD permit. The Control District argued that the Administrator could not find the initial BACT determination defective on the ground that the applicant failed to consider new data that had not even been available prior to the initial permit decision. If the Administrator has the authority under Part 124 to consider new data, the BACT review on remand would be de novo and not simply a reconsideration of the initial BACT determination, as the Part 124 regulations seem to require. Region IX rejected these arguments, citing H-Power for the proposition that the Administrator has full authority on remand to review all information relevant to the matter, including new or additional information.¹¹⁵

Thus, under the administrative precedent of H-Power, it is EPA's position that if an administrative appeal under Part 124 is filed, information regarding BACT alternatives outside the administrative record and data that may not have been available to an applicant during the permit review can be used to decide the adequacy of the reviewing agency's initial BACT decision. Read literally, it appears that the Administrator, under H-Power, could hold that an applicant must consider new information all the way through remand proceedings if the applicant's permit is appealed and review is granted or a remand ordered.

The H-Power doctrine has never been subjected to judicial review. Until it has, applicants in states without approved PSD programs need to be aware of the possibility that new information could be taken into account in a Part 124 appeal proceeding.

Conclusion

BACT determinations are key discretionary findings of the PSD preconstruction review process and the primary mechanism for incorporating the most current technologically feasible and cost-effective air pollution control techniques. EPA has interpreted the scope of what constitutes BACT primarily through guidance documents and administrative appeals of PSD permits. Facilities that propose to locate in attainment areas must become intimately familiar with these documents as well as the PSD requirements of the applicable local permitting authority, if any. The Agency's top-down analysis of BACT alternatives will undoubtedly continue to remain controversial. Whether the courts will ultimately hold that the top-down procedure is consistent with the Clean Air Act is unclear. Until then, the practical impact of the approach will likely continue to be the requirement of the most stringent technologically feasible control alternative in the absence of some very significant and substantial environmental or cost impacts.

1. See Clean Air Act §§ 101-403, 42 U.S.C. §§ 7401-7642, ELR STAT. CAA 004-052.

2. Id. at §§ 160-169, 42 U.S.C. §§ 7470-7479, ELR STAT. CAA 0240-028.

3. Id. at § 165(a)(4), 42 U.S.C. § 7475(a)(4), ELR STAT. CAA 026.

4. Sierra Club v. Ruckelshaus, 344 F. Supp. 253, 2 ELR 20262 (D.D.C.), aff'd, 2 ELR 20656 (D.C. Cir. 1972), aff'd sub nom. Fri v. Sierra Club, 412 U.S. 541, 3 ELR 20684 (1973).

5. 39 Fed. Reg. 42510 (1974); 40 C.F.R. pt. 52 (1974).

6. Sierra Club v. EPA, 540 F.2d 1114, 6 ELR 20669 (D.C. Cir. 1976).

7. Pub. L. No. 95-95, 91 Stat. 685 (1977) (codified at 42 U.S.C. §§ 7470-7479 (Part C), ELR STAT. CAA 024-28).

8. 42 U.S.C. §§ 7475(a)(1), 7479(1), ELR STAT. CAA 026,028.

9. 40 C.F.R. § 52.21(b)(2), 21(j)(3).

10. 40 C.F.R. § 51.166 (1978).

11. 40 C.F.R. § 52.21 (1978).

12. 636 F.2d 323, 10 ELR 20001 (D.C. Cir. 1979).

13. Id.

14. 45 Fed. Reg. 52676 (1980) (codified at 40 C.F.R. pts. 51, 52, 124).

15. 42 U.S.C. § 7479(3), ELR STAT. CAA 028.

16. 40 C.F.R. §§ 52.21(b)(12), 51.166(b)(12).

17. 42 U.S.C. §§ 7411, 7412, ELR STAT. CAA 011, 013.

18. 43 Fed. Reg. 26397 (1978); see 40 C.F.R. §§ 52.21(b)(12), 51.166(b)(12).

19. 43 Fed. Reg. 26397 (1978).

20. EPA, OFFICE OF AIR QUALITY PLANNING AND STANDARDS (OAQPS), Guidelines for Determining Best Available Control Technology (BACT) (1978)[hereinafter 1978 Guidelines]; EPA, OAQPS, Prevention of Significant Deterioration Workshop Manual (1980) [hereinafter PSD Workshop Manual].

21. 1978 Guidelines, supra note 20, at 5.

22. Id. at 6.

23. Id. at 15.

24. PSD Appeal No. 86-8 (June 22, 1987) [hereinafter H-Power Appeal].

25. Id. at 8-9 n.12.

26. H-Power Appeal at 7.

27. Id. at 6 n.9.

28. Id.

29. 1978 Guidelines, supra note 20, at 4.

30. Id.

31. Id. at 6.

32. PSD Appeal No. 88-12 (June 9, 1989) [hereinafter Spokane Appeal].

33. Id. at 9-10 n.13.

34. Id.

35. Memorandum from Craig Potter, Assistant Administrator, Office of Air and Radiation, to Regional Administrators (Regions I-X) (Dec. 1, 1987) [hereinafter Dec. 1, 1987 Memorandum]; see also Memorandum from Gerald Emison, Director, OAQPS, to EPA Regional Air Office Directors (June 26, 1987) (enclosing Operational Guidance on Control Technology for New and Modified Municipal Waste Combustors).

36. Dec. 1, 1987 Memorandum, supra note 35, at 3-4.

37. American Paper Institute v. EPA, No. 89-2030 (D.D.C. filed July 18, 1989); American Paper Institute v. EPA, No. 89-1428 (D.C. Cir. filed July 10, 1989).

38. Memorandum from John Calcagni, Director, Air Quality Management Division, OAQPS, to regional air offices (June 13, 1989) (transmittal of Background Statement on "Top-Down" Best Available Control Technology (BACT)) [hereinafter June 1989 Background Statement].

39. OAQPS, "Top-Down" Best Available Control Technology: A Summary (Draft, May 25, 1989) [hereinafter Draft May 1989 Guidance].

40. 42 U.S.C. § 7479(3), ELR STAT. CAA 028.

41. See Draft May 1989 Guidance, supra note 39, at 7; Memorandum from Gary McCutchen, Chief, New Source Review Section, OAPQS, to Bruce P. Miller, Chief, Air Programs Branch, Region IV at 3 (Apr. 22, 1987) (Hunstville Incinerator-Determining Best Available Control Technology (BACT)) [hereinafter Huntsville Memorandum] (BACT determination made independent of amount of increment or air resources available).

42. In re Columbia Gulf Transmission Co., PSD Appeal No. 88-11 (June 21, 1989).

43. Id.

44. Draft May 1989 Guidance, supra note 39, at 7.

45. Id. at 8.

46. Id.

47. PSD Appeal No. 85-2 (Sept. 4, 1986) [hereinafter North County Appeal].

48. Id. at 2.

49. Id. at 3-4.

50. 42 U.S.C. § 7479(3), ELR STAT. CAA 028.

51. Huntsville Memorandum, supra note 41, at 4. Examples might include requirements for a series of two or more baghouses or a control system whose cost greatly exceeds that of the base facility.

52. PSD Appeal No. 88-8 (Nov. 10, 1988) [hereinafter Pennsauken Appeal].

53. Id. at 9.

54. Letter from Bruce P. Miller, Air Program Branch, Air, Pesticides, and Toxic Management Division, EPA Region IV, to C. H. Fancy, Bureau of Air Quality Management, Florida Department of Environmental Regulation (Nov. 4, 1988).

55. Letter from Conrad Simon, Director, Air and Waste Management Division, U.S. EPA Region II, to T. M. Allen, Acting Director, Division of Air Resources, New York State Department of Environmental Conservation (Apr. 4, 1989). ("This argument should be based on significant technical defects in the system, or substantial local, economic, energy or environmental factors or other costs that warrant a control technology less efficient than the most stringent available technology." Id.))

56. Draft May 1989 Guidance, supra note 39, at 10-11. The Agency also discussed the type of "unusual circumstances" that might justify rejection of a particular technology on economic grounds:

Specifically the applicant must document that the cost to the applicant of the control alternative is significantly beyond the range of costs normally associated with BACT for the type of facility (or BACT control costs in general) for the pollutant.

An example of an unusual circumstance might be the unavailability in an arid region of the large amounts of water needed for a scrubbing system. Shipping water from a distant location might add unreasonable costs to the alternative, thereby justifying its rejection on economic grounds.

Id. at 10.

57. 42 U.S.C. § 7501(3), ELR STAT. CAA 028. The Act defines LAER as:

(A) the most stringent emission limitation which is contained in the implementation plan of any state for such class or category of source, unless the owner or operator of the proposed source demonstrates that such limitations are not achievable, or

(B) the most stringent emission limitation which is achieved in practice by such class or category of source, whichever is more stringent.

58. EPA Region IX, Guidelines for Determining Best Available Control Technology (BACT) at 15 (Apr. 1987); see NESCAUM BACT Guidelines at 3-4 (Oct. 1988). NESCAUM is comprised of the air offices of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

59. Compare 42 U.S.C. § 7475(a)(4), ELR STAT. CAA 026, with 42 U.S.C. § 7503(2), ELR STAT. CAA 030.

60. June 1989 Background Statement, supra note 38, at 6 (emphasis in original).

61. Pennsauken Appeal, supra note 52, at 7-8.

62. Id.

63. Spokane Appeal, supra note 32, at 6 n.9.

64. Id. at 17-18 ("Perhaps more importantly, without the requisite knowledge about the technology's effects on emissions, the technology also cannot be regarded as the 'best' technology."). The PSD regulations do provide that an applicant may propose an "innovative technology" for emissions reduction in lieu of BACT. 40 C.F.R. § 52.21(v). Innovative technology is technology that "has not been adequately demonstrated in practice, but would have a substantial likelihood of achieving greater continuous emission reductions." Id.

65. Pennsauken Appeal, supra note 52, at 10.

66. Id. at 10-11. These control systems, as stated in the definition of BACT, may require application of production processes and available methods, systems, and techniques, including fuel cleaning as treatment or innovative fuel combustion techniques to control the emissions. 42 U.S.C. § 7479(3). The permit conditions that define these systems are imposed on the source as the applicant has defined it. Although imposition of the conditions may, among other things, have a profound effect on the viability of the proposed facility as conceived by the applicant, the conditions themselves are not intended to redefine the source. . . . In other words, the source itself is not a condition of the permit.

Id.

67. Spokane Appeal, supra note 32, at 20 n.25.

68. Id.; see also Spokane Appeal at 5 n.7.

69. Id., at 20 n.25.

70. 40 C.F.R. § 52.21(b)(12).

71. In re CertainTeed Corp., PSD Appeal No. 81-2 (Dec. 22, 1982) [hereinafter CertainTeed Appeal].

72. Id. at 2 n.3. The production requirement limited glass production to no more than 220 metric tons per day. The process requirement was installation of excess oxygen control equipment and "electric boosting" at certain production levels.

73. Id. at 3-4.

74. Id. at 4 (citing 42 U.S.C. § 7479(3), ELR STAT. CAA 028)).

75. Id. at 4-5 (citing 42 U.S.C. § 7602(k), ELR STAT. CAA 043)).

76. Id. at 5.

77. Id. at 5.

78. 40 C.F.R. § 52.21(b)(12).

79. 43 Fed. Reg. 26397 (1978).

80. See 42 U.S.C. §§ 7411(h)(1), 7412(e)(1), ELR STAT. CAA 012, 013.

81. 42 U.S.C. §§ 7411(h)(2), 7412(e)(2), ELR STAT. CAA 012, 013.

82. 42 U.S.C. §§ 7411(h)(4), 7412(e)(4), ELR STAT. CAA 012, 013.

83. S. REP. NO. 1196, 91st Cong., 2d Sess. 17 (1970) (The Administrator "should not make a technical judgment as to how [standards of performance] should be implemented. He should determine the achievable limits and let the owner or operator determine the most economic, acceptable technique to apply.").

84. CertainTeed Appeal, supra note 71, at 3.

85. Under EPA's own 40 C.F.R. § 52.21 regulations.

86. 40 C.F.R. § 52.21(u).

87. 40 C.F.R. § 51.166.

88. 40 C.F.R. § 124.1(e).

89. Memorandum from Gerald A. Emison, Director, OAQPS, to EPA Regional Air Office Directors (Sept. 22, 1987) at 5 [hereinafter Sept. 22, 1987 Memorandum] (implementation of North County Resource Recovery PSD Remand).

90. No. 88-0924 (M.D. Pa. Nov. 28, 1989).

91. Id., slip op. at 6-7.

92. Id. at 7.

93. Id. at 9-10.

94. Id. at 11.

95. Under the procedures outlined in 40 C.F.R. § 124.19.

96. 40 C.F.R. § 124.19(a)(1)-(2).

97. 40 C.F.R. § 124.19(b).

98. 45 Fed. Reg. 33412 (1980).

99. 40 C.F.R. § 124.19(c), (f).

100. 40 C.F.R. § 124.19, 124.41.

101. Sept. 22, 1987, memorandum, supra note 89.

EPA has the authority, depending upon the facts of the case, to withdraw the delegation with respect to an individual permit that is being or has been issued inconsistently with the terms of that delegation. . . . This withdrawal of delegation is not the preferred course of action but it may be available if needed.

Id.

102. No. 86-CV-72910-DT, slip op. (E.D. Mich. Oct. 21, 1986).

103. Id. at 3.

104. Id. at 5.

105. Id. at 7.

106. Memorandum from J. Craig Potter, Assistant Administrator, EPA Office of Air and Radiation to all Regional Administrators (Dec. 1, 1987) at 3 (Improving New Source Review (NSR) Implementation).

By uniformly reviewing all major source permit actions during the comment period, EPA is able to address deficientreviews or permits before the final permit is issued. This not only promotes more consistency in the permitting process among the states, but also provides the highest degree of certainty to the applicant that the permit will not be challenged by EPA at a later date. Moreover, if the permit is not reviewed and commented on prior to issuance, the possibility of successfully challenging the action is greatly diminished.

Id.

107. "As a practical matter, BACT determinations will ordinarily be made at some time prior to actual issuance of the permit, for there is always a lag between closure of the administrative record (usually the close of the public comment period) and the time when the permit determination is announced." Pennsauken Appeal at 7, n.11.

108. 42 U.S.C. § 7475(c), ELR STAT. CAA 026.

109. 42 U.S.C. § 7470(3), ELR STAT. CAA 024.

110. Pennsauken Appeal supra note 52, at 7-8.

111. Spokane Appeal supra note 32, at 2, 17.

112. Id. at 17-18.

Given the Clean Air Act's emphasis on granting or denying completed PSD permit applications within one year of filing, it would be unreasonable to read the term "available" as imposing a duty on the permit applicant to conduct time-consuming original research by generating new data for the purpose of discovering whether a potential, but unproven, technology might possibly prove successful.

Id. (footnote omitted).

113. Under 40 C.F.R. § 124.19.

114. H-Power Appeal at 8 n.12.

115. Memorandum from David P. Howekamp, Director, Air Management Division, Region IX to, Ronald L. McCallum, Chief Judicial Officer, U.S. EPA (Oct. 9, 1987) at 2 (PSD Appeal No. 87-6) (Signal Energy Systems Cottonwood Power Plant).