Appeals court upholds EPA decisions on Arizona’s regional haze plan

A three-judge panel at the U.S. Ninth Circuit Court of Appeals on March 31 upheld several U.S. Environmental Protection Agency decisions under the regional haze program related to one formerly coal-fired power unit and several industrial facilities.

The state of Arizona, the Arizona Mining Association and Phoenix Cement Co. had petitioned for review of EPA‘s final “Phase 2″ rule, which approved Arizona’s regional haze State Implementation Plan (SIP) in part and disapproved it in part. “We deny the petitions in all respects,” said the March 31 court ruling.

EPA’s conclusion that coal-fired Sundt Unit 4 is Best Available Retrofit Technology (BART)-eligible was not arbitrary and capricious, said the ruling. Section 169A provides that “each major stationary source which is in existence on August 7, 1977, but which has not been in operation for more than fifteen years” is subject to BART controls. Sundt Unit 4 was in existence in 1977.

One part of EPA’s BART Guidelines can be read to exempt sources reconstructed after 1977 from BART. But Sundt Unit 4 is not covered by the Guidelines, the court said.

Said the ruling: “Given the statutory and regulatory language and the limited usefulness of the Guidelines as applied here, we defer to EPA’s reasonable construction of the statute and its own regulations as exempting only those sources reconstructed after 1977 and subject to PSD permitting. Under this interpretation of Section 169A and the Regional Haze Rule, EPA permissibly determined that Sundt Unit 4, which did not undergo PSD permitting when it was reconstructed, remains BART-eligible.”

The court also ruled that EPA’s determination that the Nelson Lime Plant is subject to BART was similarly not arbitrary and capricious.

EPA’s conclusion that a BART determination was required for NOX at both the Miami and Hayden copper smelters was also not arbitrary and capricious. EPA interprets the Regional Haze Rule to require a BART determination for any pollutant at a source that exceeds the de minimis threshold, once that source has been determined subject to BART. That interpretation is entitled to deference, said the court, because it is not “plainly erroneous or inconsistent with the regulation.”

Also, EPA’s disapproval of Arizona’s reasonable progress goals was not arbitrary and capricious, the court ruled. As EPA noted in its final rule, after the state identified the categories of sources that contributed most to NOX and SO2 emissions in the state, the state deliberately chose not to conduct the four-factor analysis required by federal regulations with respect to those sources.

“It was not arbitrary and capricious for EPA to conclude that this reasonable progress analysis was inadequate,” the court said.

Finally, it was not arbitrary and capricious for EPA to determine that the state’s four-factor reasonable progress analysis for the Phoenix Cement Plant was unacceptable. EPA’s explanation for its disapproval of this analysis—i.e., that the analysis incorporated flawed data that caused the state to overestimate the cost of installing and operating additional pollution controls at the Phoenix plant—was adequate to support its action, said the court ruling.

Incidentally, Tucson Electric Power (TEP) announced in August 2015 that it is ending the use of coal at its largest local power plant, the Sundt facility, as part of a plan to diversify the resources it relies on for generating capacity. Unit 4 at the plant is a multi-fuel unit that now relies primarily on natural gas, supplemented by renewable landfill gas and a unique “solar boost” system.

The Sundt plant has been a focus of changing federal energy and environmental policy. In 1982, the U.S. Department of Energy (DOE) ordered that all four units at the natural gas-fired plant be converted to coal under the Power Plant and Industrial Fuel Use Act of 1978, which sought to preserve domestic supplies of natural gas during the energy crisis. That law was repealed in 1987, and the DOE later rescinded its order after TEP had completed the conversion of Unit 4.

Now the plant is subject to new federal requirements that require reductions in coal-fired emissions. The U.S. EPA accepted TEP’s proposal to end the use of coal at the plant as an alternative to the installation of costly emission controls to limit regional haze.

One of the judges in the March 31 appeals court ruling actually dissented with the majority decision on just the issue of Sundt Unit 4. Judge Jay Bybee wrote in part: “The problem with EPA’s argument is that Sundt Unit 4 was exempted from PSD permitting by a separate act of Congress—the Power Plant and Industrial Fuel Use Act of 1978—that operated independently from the Clean Air Act.

The Fuel Use Act gave the Department of Energy the authority to require utilities to convert oil- or natural gas-powered generating stations to burn coal as a means of reducing America’s dependence on imported oil. The Fuel Use Act exempted units that were ordered to be converted from PSD permitting in order to facilitate their speedy conversion. Sundt Unit 4 was reconstructed in 1987 pursuant to the Fuel Use Act—in fact, it appears to have been the only power plant in the country that was ordered to be reconstructed under the FUA.”

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Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy's Coal Report. He was formerly with Coal Outlook for 15 years as the publication's editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor's degree from Central Michigan University.

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