Power Holdings of Illinois, LLC (Board decision, August 13, 2010)

Plain-English summary

Power Holdings of Illinois, LLC sought to construct a synthetic natural gas manufacturing plant in Jefferson County, Illinois, under a PSD permit issued by the Illinois Environmental Protection Agency. The Sierra Club challenged the permit's flare minimization plan, the use of synthetic or natural gas in superheaters, and its treatment of greenhouse-gas emissions. The EAB held that the permit's flare-minimization requirements supplemented enforceable BACT limits, that the record did not show unusual collateral impacts requiring a different superheater fuel, and that Illinois had reasonably interpreted its state implementation plan as not applying the cited provision to greenhouse gases. The Board denied the petition in its entirety.

Decision snapshot

• Cited authorities: Clean Air Act sections 161, 165, and 169, and 40 C.F.R. parts 52, 60, and 124, as cited in the official order.
• Outcome: The petition for review was denied in full, and the PSD permit remained in effect.
• Key point: The EAB deferred to Illinois's reasonable interpretation of its own SIP and found no clear error in the permit's flare, fuel, or greenhouse-gas provisions.

Full text (EPA EAB public release)

                    POWER HOLDINGS OF ILLINOIS, LLC                                   723



   IN RE POWER HOLDINGS OF ILLINOIS, LLC
                            PSD Appeal No. 09-04

           ORDER DENYING PETITION FOR REVIEW



                          Decided August 13, 2010



                                      Syllabus

   This case involves a petition for review filed by the Sierra Club challenging certain

conditions of a prevention of significant deterioration (“PSD”) permit issued by the Illinois Environmental Protection Agency (“IEPA”), under delegated federal authority, to Power Holdings of Illinois, LLC (“Power Holdings”) for construction of a synthetic natural gas (“SNG”) manufacturing plant in Jefferson County, Illinois. The Sierra Club raises three issues on which it seeks review by this Board. These are:

   (1) The permit fails to include a flare minimization plan (“FMP”) as part of the final

permit and allows Power Holdings to develop such a plan without full public participation. The Sierra Club asserts that any FMP must be made part of the permit and subject to applicable public participation requirements. In support of this argument, the Sierra Club cites to the Board’s decision in In re RockGen Energy Ctr., 8 E.A.D. 536 (EAB 1999).

   (2) The permit allows SNG or natural gas to be used to fire “superheaters” at the

plant without addressing emissions associated with the manufacture of SNG. The Sierra Club argues that, although IEPA may have correctly identified SNG and natural gas as the top control alternatives for selection as best available control technology (“BACT”), IEPA was still required to consider whether collateral impacts would justify selection of an alter- native control option. The Sierra Club argues that had such collateral emissions been con- sidered, SNG would have been eliminated as a permissible fuel for the superheaters.

   (3) The permit fails to regulate greenhouse gases (CO2 and methane), thus violating

a State emissions limitation at Ill. Admin. Code tit. 35 § 201.141 incorporated into Illinois’ approved state implementation plan (“SIP”). The Sierra Club argues that because IEPA, as a delegated state, stands in the shoes of EPA and administers the federal PSD program, IEPA was required to comply with all applicable regulatory provisions, including 40 C.F.R. § 52.21(j) which requires, in part, that major stationary sources “meet each appli- cable emissions limitation under the State Implementation Plan.”

  Held: The petition for review is denied in its entirety.

   (1) The Board finds nothing erroneous in IEPA’s treatment of the FMP. The permit

contains numerous and detailed requirements for control of emissions from flaring during startup, shutdown, and malfunction events. These requirements are not affected by, and cannot be changed by, the disputed FMP requirement. Rather, the FMP requirements are in addition to the permit’s BACT emissions limitations and to an extensive set of design and

                                                                             VOLUME 14

724 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

operations requirements designed to assure compliance with these limits. Thus, unlike the permit provision this Board rejected in RockGen, the FMP requirement in this case does not operate in lieu of BACT emissions limitations. Rather, the FMP provision supplements these limitations and requires Power Holdings to develop methods to reduce emissions from flaring events based on actual operating experience. In addition, unlike in RockGen, IEPA modeled certain emissions associated with flaring events and determined that the permit is protective of both the National Ambient Air Quality Standards and applicable PSD ambient air quality increments even if flaring events were not reduced as a result of flare minimization planning. Nothing in the record before the Board demonstrates that the startup, shutdown, and malfunction requirements, even without the disputed FMP condi- tion, would be insufficient to satisfy BACT and the Board is satisfied that, unlike RockGen, IEPA gave ample consideration to appropriate measures to minimize or eliminate such emissions.

   (2) The Board concludes that the Sierra Club has failed to demonstrate the presence

of collateral environmental impacts that would justify eliminating SNG as a fuel for the superheaters. Specifically, the Sierra Club has not demonstrated that the use of SNG results in emissions of any unregulated pollutant. Further, the alleged collateral impact in this case, i.e., emissions resulting from the production of SNG for use in the superheaters, is already regulated under the permit and subject to enforceable BACT limitations. Under these circumstances, the Board concludes that this case does not involve significant or unu- sual circumstances justifying the rejection of SNG as BACT.

   (3) The Board concludes that irrespective of whether the Sierra Club is correct that

section 201.141 of the Illinois Administrative Code constitutes an “applicable emissions limitation” within the meaning of 40 C.F.R. § 52.21(j), the Sierra Club has failed to estab- lish that section 201.141 is applicable to greenhouse gases. Because the State of Illinois has interpreted the disputed provision of its state SIP as inapplicable to greenhouse gases, and because this interpretation does not strike the Board as so unreasonable as to not be entitled to the substantial deference afforded state interpretations of their own laws, the Board de- clines to substitute its judgment for that of the IEPA.

 Before Environmental Appeals Judges Edward E. Reich, Kathie A.

Stein, and Anna L. Wolgast.

  Opinion of the Board by Judge Reich:


                         I. STATEMENT OF THE CASE

  The Sierra Club seeks review by the Environmental Appeals Board

(“Board”) of certain conditions of a prevention of significant deterioration (“PSD”) permit issued by the Illinois Environmental Protection Agency (“IEPA”) to Power Holdings of Illinois, LLC (“Power Holdings”) for construction of a synthetic natu- ral gas (“SNG”) manufacturing plant in Jefferson County, Illinois. Both IEPA and Power Holdings have filed responses asserting that the Sierra Club has failed to demonstrate that review is warranted.

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 725

                                 II. ISSUES ON APPEAL

  Resolution of the Sierra Club’s petition requires the Board to address the

following three issues: (1) has the Sierra Club demonstrated that IEPA clearly erred by failing to include in the permit a flare minimization plan and allowing Power Holdings to develop such a plan without full public participation; (2) has the Sierra Club demonstrated that the permit impermissibly allows the permittee to combust SNG or natural gas in the “superheaters” at the plant without address- ing emissions associated with the manufacture of SNG; and (3) has the Sierra Club demonstrated that the permit erroneously fails to ensure that carbon dioxide and methane emissions comply with an emissions limitation in Illinois’ state im- plementation plan.1

                            III. SUMMARY OF DECISION

  The Board concludes that the Sierra Club has not demonstrated that review

is warranted. The Board therefore denies review for the reasons explained below.

                              IV. STANDARD OF REVIEW

  Under the rules governing this proceeding, a PSD permit ordinarily will not

be reviewed unless it is based on a clearly erroneous finding of fact or conclusion of law, or involves an important matter of policy or exercise of discretion that warrants review. See 40 C.F.R. § 124.19(a); Consolidated Permit Regulations, 45 Fed. Reg. 33,290, 33,412 (May 19, 1980). The Board’s analysis of PSD per- mits is guided by the preamble to section 124.19, which states that the Board’s power of review “should be only sparingly exercised” and that “most permit condi- tions should be finally determined at the [permit issuer’s] level.” 45 Fed. Reg. at 33,412; accord In re Cardinal FG Co., 12 E.A.D. 153, 160 (EAB 2005). The burden of demonstrating that review is warranted rests with the petitioner, who must raise objections to the permit and explain why the permit issuer’s previous response to those objections is clearly erroneous or otherwise warrants review.

    1 The Sierra Club also raises a fourth issue in its Petition for Review. In particular, the Sierra

Club asserts that the permit in this case must be remanded because it fails to include BACT limits for greenhouse gases. The Sierra Club argues that the permit must include a BACT limitation for emis- sions of methane and carbon dioxide. See Petition at 17-39. However, in light of the Agency’s recent determination stating that greenhouse gases are not subject to regulation until January 2, 2011, see Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs, 75 Fed. Reg. 17,004 (Apr. 2, 2010), and the Sierra Club’s acknowledgment that “this case is now controlled by” the Agency’s determination in this regard, Petitioner’s Reply at 33, review is denied on this issue.

                                                                                       VOLUME 14

726 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

In re BP Cherry Point, 12 E.A.D. 209, 217 (EAB 2005); In re Steel Dynamics, Inc., 9 E.A.D. 740, 744 (EAB 2001).

             V. PROCEDURAL AND FACTUAL HISTORY

   On October 18, 2007, Power Holdings applied for a PSD permit to con-

struct an SNG plant in Jefferson County, Illinois. The facility is designed to gasify Illinois Basin coal to create pipeline quality gas that would then be sold to natural gas suppliers. See Project Summary for a Construction Permit Application from Power Holdings of Illinois LLC for a Synthetic Natural Gas Plant near Waltonville, Illinois (“Project Summary”) at 2. The coal would be processed in gasifiers to produce a “synthesis gas” or “syngas.” This syngas would then undergo further processing to remove contaminants and then a process of “methanation” to produce the final product: SNG. Id. Heat energy generated during the process of gasification, syngas cleaning, and methanation would be recovered as steam. Two superheaters would then raise the temperature of the recovered steam to power steam turbine-driven electrical generators used to provide electricity for the plant. Id. at 3.

  On January 17, 2009, the IEPA issued a draft permit for the plant and made

it available for public review and comment. Id. at 1, 21-22. IEPA also held a public hearing on the draft permit on March 3, 2009. Numerous parties, including the Sierra Club, participated in the public hearing and/or submitted written com- ments on the draft permit. The IEPA issued its final permit determination on October 26, 2009, (see Construction Permit – PSD Approval NSPS Emissions Units) (Oct. 26, 2009) (“Final Permit”), along with a document responding to comments submitted during the public comment period. See Responsiveness Summary for the Public Comments Period on a Construction Permit Application from Power Holdings of Illinois, LLC for a Proposed Synthetic Natural Gas Plant in Blissville Township, Jefferson County, Illinois (Oct. 2009) (“Response to Comments”).

   The Sierra Club filed its petition for review with this Board on Novem-

ber 25, 2009. Petition for Review (“Petition”). The IEPA filed a response to the Petition on March 4, 2010. Response to Petition for Review (“IEPA Response”). Power Holdings filed a response to the Petition on February 26, 2010. Permittee’s Response to Petition for Review (“Power Holdings Response”). With the Board’s permission, the Sierra Club then filed a reply to the responses and Power Hold- ings and IEPA filed sur-replies. See Petitioner’s Reply (Apr. 5, 2010); Sur-Reply of the State of Illinois (“IEPA Sur-Reply”) (Apr. 20, 2010); Permittee’s Sur-Reply (“Power Holdings Sur-Reply”) (Apr. 19, 2010). Finally, as invited by the Board, the Sierra Club filed a limited response to IEPA’s Sur-Reply. Sierra Club’s Re- sponse to the Sur-Reply of the State of Illinois (“Sierra Club’s Sur-Reply”) (May 5, 2010).

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 727

                                         VI. ANALYSIS

A. Relevant Statutory and Regulatory Provisions

   The Clean Air Act’s PSD program serves to regulate air pollution in areas of

the country deemed to be in “attainment” or “unclassifiable” with respect to federal air quality standards called “national ambient air quality standards” or “NAAQS.” See CAA §§ 161, 165, 42 U.S.C. §§ 7471, 7475. NAAQS are “maximum concen- tration ‘ceilings’ measured in terms of the total concentration of a pollutant in the atmosphere.” Office of Air Quality Planning and Standards, U.S. EPA, New Source Review Workshop Manual at C.3 (draft Oct. 1990) (“NSR Manual”).2 Con- gress charged EPA with developing NAAQS for air pollutants whose presence in the atmosphere above certain concentration levels could “reasonably be antici- pated to endanger public health and welfare.”3 CAA § 108(a)(1)(A), 42 U.S.C.
§ 7408(a)(1)(A); see CAA § 109, 42 U.S.C. § 7409. In geographical areas deemed to be in “attainment” for any of these pollutants, the ambient air quality meets the NAAQS for that pollutant. CAA § 107(d)(1)(A)(ii), 42 U.S.C.
§ 7407(d)(1)(A)(ii). In areas designated as “unclassifiable,” air quality cannot be classified on the basis of available information as meeting or not meeting the NAAQS. CAA § 107(d)(1)(A)(iii), 42 U.S.C. § 7407(d)(1)(A)(iii).4 Parties who wish to construct “major emitting facilities”5 in attainment or unclassifiable areas must obtain preconstruction approval in the form of PSD permits to build such facilities. CAA § 165, 42 U.S.C. § 7475.

  As part of the permit issuance process, the PSD regulations at 40 C.F.R.

§ 52.21 require, among other things, that new major stationary sources of air pol- lution, and major modification of such sources, be carefully reviewed prior to construction to ensure that emissions from such facilities will not cause an ex-

   2 The NSR Manual has been used as a guidance document in conjunction with new source

review workshops and training and as a guide for state and federal permitting officials with respect to PSD requirements and policy. Although it is not a binding Agency regulation, the Board has looked to the NSR Manual as a statement of the Agency’s thinking on certain PSD issues. E.g., In re ConocoPhillips Co., 13 E.A.D. 768, 772 (EAB 2008); In re RockGen Energy Ctr., 8 E.A.D. 536, 542 n.10 (EAB 1999); In re Knauf Fiber Glass, GmbH, 8 E.A.D. 121, 129 n.13 (EAB 1999).
3 NAAQS have been established for six criteria pollutants: sulfur dioxide, particulate matter,

nitrogen dioxide, carbon monoxide, ozone, and lead. See 40 C.F.R. §§ 50.4 – 50.13.
4 Areas may also be designated as “nonattainment,” meaning that the concentration of a pollu-

tant in the ambient air does not meet the NAAQS for that pollutant. CAA § 107(d)(1)(A)(i), 42 U.S.C. § 7407(d)(1)(A)(i). The PSD program is not applicable, however, in non-attainment areas. See CAA § 161, 42 U.S.C. § 7471.
5 A “major emitting facility” is a stationary source in any of certain listed stationary source

categories that emits or has the “potential to emit” 100 tons per year (“tpy”) or more of any air pollu- tant, or any other source that has the potential to emit 250 tpy or more of any air pollutant. See CAA § 169(1), 42 U.S.C. § 7479(1).

                                                                                     VOLUME 14

728 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

ceedance of the NAAQS or applicable PSD ambient air quality “increments.”6 These permits must also require compliance with emissions limits constituting the “best available control technology available” or “BACT” to minimize emissions of regulated pollutants.7 CAA § 165(a)(4), 42 U.S.C. § 7475(a)(4); 40 C.F.R.
§ 52.21(b)(23), (j)(2)-(3).

    When PSD permits are issued by a state pursuant to a delegation of the

federal PSD program, as is the case here, such permits are considered EPA-issued permits and, therefore, are subject to administrative appeal to the Environmental Appeals Board (“Board”) in accordance with 40 C.F.R. § 124.19.8 See, e.g., In re Hillman Power Co., 10 E.A.D. 673, 675 (EAB 2002). In general, the Board’s ju- risdiction to review PSD permits issued by delegated states is limited to those elements of the permit that find their origin in the federal PSD program. In con- trast, the Board lacks authority to review conditions of a state-issued permit, even if issued by a delegated state, that are adopted solely pursuant to state law. See In re Sutter Power Plant, 8 E.A.D. 680, 688, 690 (EAB 1999) (explaining that “[t]he Board has jurisdiction to review issues directly related to permit conditions that implement the federal PSD program,” (citing In re Knauf Fiber Glass, GmbH, 8 E.A.D. 121, 161 (EAB 1999)), and that “[t]he Board may not review, in a PSD appeal, the decisions of a state agency made pursuant to non-PSD portions of the CAA or to state or local initiatives and not otherwise relating to the permit condi- tions implementing the PSD program” (citing Knauf I, 8 E.A.D. at 167-68)).

   6 A PSD “increment” refers to “the maximum allowable increase in concentration that is al-

lowed to occur above a baseline concentration for a pollutant.” NSR Manual at C.3; see also 40 C.F.R.
§ 52.21(c) (setting forth increments for regulated pollutants).
7 BACT is defined, in part, as follows:

            [BACT] means an emissions limitation (including a visible emission
            standard) 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 Ad-
            ministrator, on a case-by-case basis, taking into account energy, environ-
            mental, 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 con-
            trol of such pollutant.

40 C.F.R. § 52.21(b)(12).
8 IEPA administers the PSD program in Illinois pursuant to a delegation of authority from U.S.

EPA Region 5 (“Region”). See Delegation of Authority to State Agencies, 46 Fed. Reg. 9580 (Jan. 29, 1981) (setting forth Delegation Agreement between State of Illinois and U.S. EPA); In re Zion Energy, LLC, 9 E.A.D. 701, 701 n.1 (EAB 2001).

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 729

B. Petition for Review

   1. Flare Minimization Plan

  As stated above, the proposed plant would process coal in gasifiers to pro-

duce a “synthesis gas,” or “syngas,” that would be processed further to produce the end product, SNG. As explained in the permit:

          The gasification block would have six identical gasifiers
          to convert coal into a synthesis gas or “syngas.” The raw
          syngas from the gasifiers would then undergo a series of
          processes to remove contaminants from the gas and pre-
          pare it for conversion into synthetic natural gas (SNG).
          These cleanup processes would remove: 1) particulate
          matter; 2) mercury; and 3) sulfur compounds, primarily
          hydrogen sulfide (H2S) from the raw syngas. The gasifica-
          tion block would also include the methanation units in
          which cleaned syngas would be converted into methane,
          which is the principal constituent of natural gas. * * *
          The gasification block would have two parallel gas
          processing trains, each designed to handle the raw syngas
          output from three gasifiers. During maintenance or other
          outage of one gas processing train, the plant would con-
          tinue to operate at half capacity with the other train. In
          each gas processing train, a carbon bed would remove
          mercury from the raw syngas. Sulfur compounds would
          be removed in Acid Gas Removal (AGR) units.

Final Permit, Condition 4.1.1 (Description of Emission Units). During normal op- eration, the main emissions point would be from the AGR units. Id. However, during startup, shutdown, or malfunction events, “off specification” syngas is pro- duced which cannot be processed into SNG. Project Summary at 9. This gas is vented to a flare system where it is disposed of through combustion. See id. The permit therefore establishes BACT requirements to address emissions occurring during such flaring events.9

  In particular, the permit establishes numeric BACT emissions limitations

that apply to emissions from all flares in the gasification block during startup,

   9 The Board notes that the Permit does not allow flaring during normal operation. See Final

Permit Condition 4.1.2(b)(iii).

                                                                                VOLUME 14

730 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

shutdown, and malfunction events. See Final Permit, Conditions 4.1.2.d, 4.1.6.10 In addition, the permit contains numerous conditions relating to work practices and operating conditions designed to minimize emissions from flaring events and to ensure compliance with these limitations. See id., Condition 4.1 (Unit Specific Conditions for the Gasification Block).11 The permit also requires that the permit- tee engage in flare minimization planning as part of the permit’s BACT work practices requirements. See id., Condition 4.1.5-3.a.; see also id., Condition 4.1.2.c.iii. In particular, the permit requires “the preparation and maintenance of Flare Minimization Plans [(”FMPs“)]for the gasification block.” Id., Condition 4.1.5-3.a. The FMPs must include detailed information, including technical infor- mation for the gasification block (id., Condition 4.1.5-3.a.i), a general description of the permit’s written procedures for operation of the gasification block (id., Con- dition 4.1.5-3.a.ii), a description of the permittee’s procedures for minimizing flar- ing during startup and shutdown (id., Condition 4.1.5-3.a.iv), and an evaluation of preventative measures to reduce the occurrence and magnitude of flaring (id., Condition 4.1.5-3.a.viii). The permit requires that the FMP be submitted to IEPA at least 90 days prior to startup of the gasification block and reviewed and revised on an annual basis. See id., Condition 4.1.5-3.c. The permit also requires that the permittee conduct an “event-specific investigation or ‘Root-Cause Analysis’ into each ‘Flaring Incident’” at the Plant and submit a report to IEPA for each Root-Cause Analysis along with an assessment of any measures available to re- duce the likelihood of a recurrence of a flaring incident. Id. at 4.1.5-3.d, d.ii.

   In its Petition, the Sierra Club asserts that “because the Flare Minimization

Plan is not part of the permit, is not subject to public participation procedures, and will be changed annually outside the PSD permit revisions process, IEPA’s deci- sion [to include this permit condition] is clear legal error.” Petition at 7. The Sierra Club argues that any FMP must be made part of the permit and subject to applica- ble public participation requirements under 40 C.F.R. part 124. In support of this

   10 As noted in Permit Condition 4.1.2.d, “[t]hese conditions set ‘secondary’ BACT limits for

the units in the gasification block to accompany the permit’s equipment and work practice require- ments established as BACT in Condition 4.1.2(a), (b), and (c).”
11 As stated in the Project Summary accompanying the draft permit:

            Work practices requirements and secondary emissions limits are pro-
            posed as BACT to address startup, shutdown and malfunction. The re-
            quired BACT work practices for startup, shutdown and malfunction are
            intended to assure that appropriate measures are taken to minimize emis-
            sions from startup, shutdown and malfunction. For this purpose, the
            * * * permit establishes certain basic measures that must be used to
            minimize emissions. It also establishes a general approach to minimiza-
            tion of emissions through formal operating and maintenance procedures
            * * *.

Project Summary at 9.

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 731

argument, the Sierra Club cites to the Board’s decision in In re RockGen Energy Ctr., 8 E.A.D. 536 (EAB 1999) (holding that a permit exempting a facility from BACT limits during startup and shutdown, and requiring the post-construction development of a plan for limiting emissions during startup and shutdown, vio- lated the requirement that BACT limits be established prior to construction).

 The Sierra Club submitted comments on this issue during the public com-

ment period. In response, IEPA stated, in part:

       The material cited in this comment does not support the
       premise that Flaring Minimization Plans should have been
       developed and submitted as part of the application for the
       proposed plant. 40 CFR 124.10(d)(vi) merely addresses
       the availability of the administrative record relied upon by
       a permitting authority for the processing of a permit appli-
       cation. It does not specify that documents such as Flaring
       Minimization Plans for the proposed plant must be part of
       that record. The circumstances and type of plan addressed
       by the EAB in In re RockGen Energy Center are different
       from the Flaring Minimization Plans that must be periodi-
       cally prepared for the proposed plant. In that case, the
       Plan would have served as an exception to BACT limits
       set in the PSD permit.

       * * *

       Moreover, Flaring Minimization Planning, as addressed
       by this comment, is an activity that cannot be conducted
       at this time. First, the detailed design of the plant, which
       would be necessary for the preparation of the initial Flar-
       ing Minimization Plan, has not yet occurred. In addition,
       the Plan addresses operation and maintenance procedures,
       which while important to the prevention of flaring, cannot
       be prepared until after the plant is designed and equip-
       ment is selected[.] Accordingly, the permit addresses re-
       quirements or specifications that the plant will have to
       meet. Then, as routine flaring is not allowed by the per-
       mit, the focus of Flaring Minimization Planning is to track
       and address flaring events that could not be foreseen and
       addressed during the construction and development of the
       proposed plant. It is inherent that such events will be
       identified by their actual occurrence and must then be ad-
       dressed on an event-specific basis.

Response to Comments at 21-22 (footnotes omitted).

                                                                      VOLUME 14

732 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

  In its Petition, the Sierra Club again argues that any FMP should have been

prepared prior to permit issuance and been subject to notice and comment. Peti- tion at 2-5. According to the Sierra Club, IEPA “misses the point of the [Board’s] RockGen holding and the applicable public process requirement.” Id. at 5 (dis- cussing objections to IEPA’s response to comments). Upon an examination of the record, the Board finds nothing erroneous in IEPA’s determination on this issue and concludes that the facts of this case are clearly distinguishable from those in RockGen.

   In RockGen, the Board remanded a permit condition allowing a facility to

exceed the permit’s BACT emissions limitations during startup and shutdown. 8 E.A.D. at 554. The permit condition in RockGen also provided for the submis- sion of a startup and shutdown plan after permit issuance which, after approval by the permit issuer, would require the permittee to operate in accordance with the “conditions, schedules, reporting, record keeping and all other requirements of the approved plan.” Id. at 551. In rejecting this permit provision, the Board held that a permit condition exempting the facility from BACT limits during startup and shutdown and requiring the post-construction development of a plan for limiting emissions during startup and shutdown violated the requirement that BACT limits be established prior to construction. Id. at 553-55. As the Board stated, “although the permit appears to contemplate that emissions in excess of the limits estab- lished in the permit may well occur during startup and shutdown, it does not ap- pear as if [the permit issuer] gave sufficient consideration to appropriate measures to minimize or eliminate such emissions. As currently drafted, the permit ‘could effectively shield excess emissions from poor operation and maintenance or de- sign, thus precluding attainment.’” Id. at 553-54 (quoting Memorandum from John B. Rasnic, Director, Stationary Source Compliance Division, Office of Air Qual- ity Planning and Standards, U.S. EPA, to Linda M. Murphy, Director, Air, Pesti- cides and Toxics Management Division, U.S. EPA Region I at 2 (Jan. 28, 1993)).

  In contrast, the instant permit contains BACT limits on emissions from flar-

ing events that apply during startup, shutdown, or malfunction. See generally Final Permit, Condition 4.1. As Power Holdings points out in its reply, the permit contains “over 20 pages of requirements pertaining to the design, control and op- eration of the flares and associated gasification block equipment, including both primary and secondary BACT emissions limitations and an extensive set of re- quirements designed to reduce foreseeable causes of startup, shutdown and mal- function events and associated emissions and thereby assure compliance with the normal operating and secondary emissions limitations.” Power Holdings Reply at 11; see Final Permit, Condition 4.1. These requirements are not affected by, and cannot be changed by, the disputed FMP requirement. Rather, the FMP require- ments are in addition to the permit’s BACT emissions limitations and to an exten- sive set of design and operations requirements designed to assure compliance with

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 733

these limits.12 See Final Permit, Conditions 4.1.1 – 4.1.12. Thus, unlike the permit provision this Board rejected in RockGen, the FMP requirement in this case does not operate in lieu of BACT emissions limitations. Rather, the FMP provision supplements these limitations and requires Power Holdings to develop methods to reduce emissions from flaring events based on actual operating experience.

   The disputed FMP condition requires that Power Holdings prepare and

maintain flare minimization plans and, in consultation with IEPA, evaluate and employ appropriate methods to reduce the occurrence and magnitude of flaring events. The condition contemplates that the number of flaring events and emis- sions from such events will diminish over time by allowing for refinements in performance of the equipment based on actual operating experience and, as stated in IEPA’s response to comments, “works to reduce flaring by evaluating the rea- sons for flaring that actually occurs and identifying actions that can and should be taken to reduce or eliminate subsequent flaring due to similar causes.” Response to Comments at 21. The Board finds nothing unreasonable in this condition. See RockGen, 8 E.A.D. at 554 (allowing permit issuer to require that once a facil- ity is operational, “any permit provisions designed to reduce emissions during startup and shutdown be refined over time so as to increase their efficiency and effectiveness”). Further, the condition is consistent with permit conditions al- lowing for permit revisions based on post-construction operating experience which this Board has upheld in other contexts. See, e.g., In re AES Puerto Rico, L.P., 8 E.A.D. 324, 348-50 (EAB 1999) (allowing the use of an adjustable emis- sions limit after obtaining actual stack test data); In re Pennsauken County, 2 E.A.D. 768, 771 (Adm’r 1989) (permit with an optimization clause requiring efforts to minimize emissions based on tests conducted after permit issuance).

  The Board notes further, as stated in the response to comments, that IEPA

modeled certain emissions associated with flaring events and determined that the permit is protective of both the NAAQS and applicable PSD ambient air quality increments even if flaring events were not reduced as a result of flare minimiza- tion planning. See Response to Comments at 17-21. The Sierra Club’s Petition does not dispute this determination or IEPA’s response to comments which rely on this determination. No such analysis was done in RockGen.

    12 Among the conditions designed to reduce emissions from flaring are the following:

(1) Condition 4.1.2.b.v. requiring the use of natural gas to preheat gasifiers prior to the introduction of feedstock, the use of alcohol during start up to bring the gasifier up to normal operating pressure prior to the introduction of coal, and coordination with the startup and operation of the gas processing train. (See also Permit Condition 4.1.1); (2) Condition 4.1.2.b.vi. Requiring that flares operate in compliance with 40 C.F.R. § 60.18 (General control device requirements). Among the requirements of section 60.18 are that flares “be designed for and operated with no visible emissions” (§ 60.18(c)(1)), and that “owners and operators of flares * * * monitor these control devices to ensure that they are operated and maintained in conformance with their designs.” (§ 60.18(d)); and (3) Condition 4.1.2.b.vii mandat- ing that only natural gas or SNG be used as fuel for pilot burners for the flares.

                                                                                        VOLUME 14

734 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

   The Sierra Club’s Petition argues that, because the FMP condition is part of

the permit’s BACT requirements, any change to the FMP must be included in the permit and subject to public review in the same manner as the permit’s other BACT requirements. See Petition at 2-4. As stated above, however, the permit contains numerous and detailed requirements for control of emissions from flaring during startup, shutdown and malfunction events. Nothing in the record before the Board demonstrates that these requirements, even without the disputed FMP con- dition, would be insufficient to satisfy BACT, and the Board is satisfied that, un- like RockGen, IEPA gave ample consideration to appropriate measures to mini- mize or eliminate such emissions. In fact, IEPA characterizes flare minimization as an enhancement to BACT to ensure compliance with secondary BACT limits rather than as an element of BACT itself. See IEPA Sur-Reply at 3. Moreover, as IEPA stated in its response to comments, and which the Sierra Club does not dispute, flare minimization planning is “an activity that occurs after the design and construction of the plant is complete, when the proposed plant begins operation and thereafter * * * [and] is an activity that cannot be conducted [prior to con- struction].” Response to Comments at 22. Under these circumstances, the Board is concerned that unnecessarily making implementation of the FMP unduly burden- some might discourage inclusion of such valuable provisions, or at least delay implementation of the benefits of the analyses contemplated by such provisions, to the ultimate detriment of air quality, and contrary to the purposes of the PSD program.

  For the reasons stated above, the Sierra Club has failed to sustain its burden

of proving that IEPA’s permitting decision was clearly erroneous or otherwise warrants Board review. The Board therefore denies review on this issue.

  2. BACT Analysis for Superheaters

  As stated above, the facility would recover the heat energy generated during

the process of gasification, syngas cleaning and methanation as steam. Two super- heaters would then raise the temperature of the steam to power steam tur- bine-driven electrical generators used to provide electricity for the plant. The draft permit in this case provided that either “syngas,” SNG, or natural gas would be used to fuel the two superheaters. In its comments on the draft permit, the Sierra Club asserted the IEPA’s BACT analysis for the superheaters omitted considera- tion of cleaner fuels. The Sierra Club argued that a proper top-down BACT analy- sis must consider, among other things, the use of only natural gas or “waste bio- mass” in the superheaters. Response to Comments at 29. In responding to the Sierra’s Club’s comments, IEPA appears to have conducted a BACT analysis ad- dressing the fuels to be used in the superheaters. See id. at 30. In the final permit, IEPA restricted the fuel used in the superheaters to either SNG or natural gas. In explaining its rationale for this determination, IEPA stated, in part, as follows:

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 735

          In response to this comment, the issued permit restricts
          the superheaters to use of only natural gas, rather than
          syngas or natural gas as would have been provided by the
          draft permit. (See Condition 4.2.5(a) of the issued permit.)
          Note that use of either “natural” natural gas or product
          synthetic natural gas (SNG) from the plant is allowed.
          This is because the properties of SNG as related to emis-
          sions, i.e., the heat content, sulfur content and ash content
          of SNG, are and must be essentially identical to those of
          natural gas.

          The superheaters have been restricted to use of only natu-
          ral gas because the application does not explicitly address
          the difference in the composition and properties of natural
          gas and syngas and the resulting difference in emissions
          of SO2 and other pollutants. While there should not be a
          significant difference in the composition of syngas and
          natural gas, given the effectiveness of the Acid Gas
          Cleanup System, in the absence of an explicit evaluation,
          it must be assumed that natural gas contains less sulfur
          and ash than syngas, which does not undergo processing
          in a methanation unit. In addition, the application does not
          demonstrate that the use of syngas in the superheaters
          would be accompanied by lower overall emissions from
          the proposed plant.

Response to Comments at 30 (footnotes omitted). Thus, IEPA determined that BACT for the superheaters included the use of SNG or natural gas. IEPA further concluded that the use of either of these would result in virtually identical emis- sions from the superheaters. The Sierra Club objects to IEPA’s BACT analysis as not being consistent with the “top-down” review process set forth in the NSR Manual for determining BACT for a particular regulated pollutant. The issue before this Board is whether IEPA erred by failing to consider collateral emis- sions from the production of SNG in determining BACT for the superheaters.13

    13 Both IEPA and Power Holdings assert that the Sierra Club failed to preserve this issue for

review because the Sierra Club did not raise the issue during the comment period. See IEPA Response at 14; Power Holdings Response at 29-32; 40 C.F.R. § 124.13 (in order for an issue to be preserved for consideration on appeal, a petitioner must demonstrate that “all reasonably ascertainable issues and

• • • all reasonably available arguments” were raised by the close of the public comment period).
      The Board disagrees. As stated above, in commenting on the draft permit, the Sierra Club argued that IEPA failed to conduct a proper BACT analysis regarding the appropriate fuel for use in the superheat- ers. See Response to Comments at 29. In response, IEPA modified its BACT analysis. See id. Only then did IEPA articulate the equivalence of natural gas and SNG as BACT. Thus, in essence, this appeal represents the Sierra Club’s first opportunity to challenge the adequacy of the IEPA’s final
      Continued

                                                                              VOLUME 14
      

      736 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

The Sierra Club argues that had such collateral emissions been considered, SNG would have been eliminated as a permissible fuel for the superheaters. Petition at

9. For the following reasons, the Board finds nothing erroneous in IEPA’s BACT
   analysis.

   The NSR Manual sets forth a “top-down” process for determining BACT for
   a particular regulated pollutant. The process includes five steps, the first four of which are: (1) identifying all available control options for a targeted pollutant; (2) analyzing the control options’ technical feasibility; (3) ranking feasible options in order of effectiveness; and (4) evaluating their energy, environmental, and eco- nomic impacts. NSR Manual at B.5-.9. Step four of the “top-down” process in- cludes an evaluation of whether “collateral impacts” would justify the selection of an alternative control option. NSR Manual at B.26. The purpose of step 4 of the analysis is to validate the suitability of the top control option identified, or provide a clear justification as to why the top control option should not be selected as BACT. Id. If there are no outstanding issues regarding collateral impacts, the analysis ends. Id. Step five concludes the process. In this step, the permit issuer selects as BACT a pollutant emission limit achievable by the most effective con- trol option not eliminated in a preceding step. NSR Manual at B.9, .53-.54; see In re N. Mich. Univ., 14 E.A.D. 283, 294 (EAB 2009) (explaining steps in top-down analysis); accord In re Three Mountain Power, LLC, 10 E.A.D. 39, 42-43 n.3 (EAB 2001); In re Knauf Fiber Glass, GmbH, 8 E.A.D. 121, 129-31 (EAB 1999); In re Haw. Elec. Light Co., Inc., 8 E.A.D. 66, 84 (EAB 1998).

   The Sierra Club argues that IEPA’s selection of SNG or natural gas as
   BACT for the superheaters was flawed because IEPA “failed to account for the additional emissions related to SNG manufacturing when comparing the relative emission profiles of SNG and [natural gas].”14 Petition at 9. The Sierra Club does not dispute that emissions from the superheaters would be identical whether SNG or natural gas were used as fuel. Similarly, the Sierra Club does not dispute IEPA’s determination that use of SNG or natural gas would result in the lowest emissions from the superheaters when compared to other fuels such as biomass.

(continued)
BACT analysis. Under these circumstances, the Board rejects as unpersuasive the assertion that the Sierra Club waived its right to raise alleged deficiencies in the BACT analysis before this Board. See In re ConocoPhillips Co., 13 E.A.D. 768, 787 (EAB 2008).

    14 It is clear that consideration of clean fuels must be part of the BACT analysis. The Board

notes that the statutory BACT definition provides that the emissions limits for a facility are to be based on the maximum emissions reduction achievable “through application of production processes and available methods, systems and techniques, including fuel cleaning, clean fuels, or treatment or inno- vative fuel combustion techniques.” CAA § 169(3), 42 U.S.C. § 7479(3) (emphasis added); see also In re Prairie State Generating Co., 13 E.A.D. 1, 17 (EAB 2006), aff’d sub nom. Sierra Club v. EPA, 499 F.3d 653 (7th Cir. 2007); In re Inter-Power of N.Y., Inc., 5 E.A.D. 130, 145 (EAB 1994) (a proper BACT analysis must consider cleaner forms of fuel).

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 737

See Response to Comments at 30. Rather, the Sierra Club argues that, although IEPA may have correctly identified SNG and natural gas as the top control alter- natives for selection as BACT in step 1 of the analysis, IEPA was “still required to ‘consider whether collateral impacts * * * would justify selection of an alterna- tive control option.’” Petitioner’s Reply at 18 (quoting NSR Manual at B.26). Ac- cording to the Sierra Club, the IEPA’s analysis was incomplete because “there was no comparison between the relative emissions, costs, energy and environmental impacts of SNG and natural gas.” Id. at 19.

  As stated above, under step four of the “top-down” analysis, once a control

option is identified as a top alternative for selection as BACT, the permit appli- cant must, among other things, consider whether collateral environmental im- pacts, such as emission of unregulated air pollutants or impacts in other media, would justify selection of an alternative control option. NSR Manual at B.8, .26. This is because certain control options can potentially have significant collateral impacts. “Scrubber effluent, for example, may affect water quality and land use. Similarly, emissions of water vapor from technologies using cooling towers may effect local visibility.” Id. at B.47. As the NSR Manual makes clear, however, the existence of collateral environmental impacts will not necessarily result in the se- lection of an alternative control option as BACT. Id. Rather, elimination of a top control option will occur only where it is established that “unusual circumstances at the proposed facility create greater problems than experienced elsewhere.” Id. As this Board has stated, the consideration of collateral impacts in step 4 of the BACT analysis will only result in the rejection of the most effective technology in limited and unusual circumstances and acts “primarily as a safety valve whenever unusual circumstances specific to the facility make it appropriate to use less than the most effective technology.” In re Kawaihae Cogeneration Project, 7 E.A.D. 107, 117 (EAB 1997) (quoting In re Columbia Gulf Transmission Co., 2 E.A.D. 824, 827 (Adm’r 1989)); see also In re Hillman Power Co., 10 E.A.D. 673, 688 (EAB 2002) (collateral impacts analysis need only address control alternatives with “significant or unusual” impacts); Kawaihae Cogeneration, 7 E.A.D. at 117 n.12 (noting that the NSR Manual emphasizes the limited circumstances under which a technology that would otherwise be BACT could be rejected on the basis of collateral environmental impacts).

  In the present case, the Sierra Club has failed to demonstrate that collateral

environmental impacts justify the elimination of SNG as a fuel for the superheat- ers. Specifically, the Sierra Club has not demonstrated that the use of SNG results in emissions of any unregulated pollutant. See NSR Manual at B.26 (emissions or unregulated air pollutants may justify rejection on control alternative). Further, the alleged collateral impact in this case, i.e., emissions from the gasification block resulting from the production of SNG for use in the superheaters, is regu- lated under the permit and subject to enforceable BACT limitations. See Final Permit, Section 4. Indeed, the whole purpose of the plant is the production of SNG, and the purpose of the Permit is to control emissions from that process. The

                                                                    VOLUME 14

738 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Sierra Club does not contend that the selected control options for the gasification block do not constitute BACT, nor does the Sierra Club dispute that the use or production of SNG results in emission of pollutants not already regulated under the permit. Further, the Sierra Club does not allege, and the record does not demonstrate, that use of SNG would result in any significant emissions impacts in other media. See NSR Manual at B.8, .26 (collateral impacts includes impacts in other media such as water or solid waste).

   Under these circumstances, the Board concludes that the Sierra Club has

failed to meet its burden15 of showing that this case involves significant or unu- sual circumstances justifying the rejection of SNG as BACT.16 See NSR Manual at B.49-.50 (generally, absent an overriding concern over the formation and im- pact of pollutants other than those the technology was designed to control, a col- lateral impact would not affect the BACT determination); see also Hillman Power, 10 E.A.D. at 688 (denying review of collateral impact analysis where peti- tioner failed to demonstrate significant or unusual impacts); Kawaihae Cogenera- tion, 7 E.A.D. at 117 (declining further consideration of collateral impacts based on a hypothetical catastrophic event where petitioner failed to offer any informa- tion suggesting unusual circumstances predisposing facility to such an event), id.
& n.14 (citing In re Foster Wheeler Passaic, Inc, PSD Appeal No. 89-1, 1989 PSD LEXIS 18 (Adm’r 1989) (unpublished) (rejecting collateral impacts chal- lenge to selective non-catalytic reduction technology where there was no showing that ammonia safety concerns were “unusual or unique” to a facility)).

   Review is therefore denied on this issue.17




   15 See Prairie State, 13 E.A.D. at 10 (the burden of demonstrating that review is warranted

rests with the petitioner).
16 The Board notes the Sierra Club’s argument on this issue is premised on the speculative

assertion that production of SNG (and the resulting emissions) would decrease if SNG were not used as fuel in the superheaters. See Petition at 10-11. However, the Sierra Club has provided no evidence supporting such an assertion, nor does the record before the Board contain evidence supporting this assertion. Indeed, as Power Holdings states, it is just as likely that if natural gas rather than SNG were used in the superheaters, Power Holdings would simply export more SNG to the marketplace rather than reduce production. Power Holdings’ Response at 39.
17 The Board notes that, pursuant to the NSR Manual, in assessing the existence of any collat-

eral energy impacts of a control option in step 4 of the BACT analysis, consideration is generally given only to the direct energy consumption impacts from a particular emissions unit rather that to the indirect energy impacts. NSR Manual at B.30. The NSR Manual makes clear that “indirect energy impacts (such as energy to produce raw materials for construction of control equipment) generally are not considered” unless the impact is unusual or significant. Id (emphasis added). The Sierra Club has not presented evidence demonstrating unusual or significant indirect impacts justifying removal of SNG as a permissible fuel for the superheaters.

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 739

  3. Compliance With Emission Standard Under Illinois State
     Implementation Plan

   The Sierra Club argues that by failing to regulate greenhouse gases (CO2

and methane), the permit violates an emission standard in an approved Illinois state implementation plan (“SIP”). Petition at 11. The emissions standard at issue states as follows:

        No person shall cause or threaten or allow the discharge
        or emission of any contaminant into the environment in
        any State so as, either alone or in combination with con-
        taminants from other sources, to cause or tend to cause air
        pollution in Illinois, or so as to violate the provisions of
        this Chapter, or so as to prevent the attainment or mainte-
        nance of any applicable ambient air quality standard.

Ill. Admin. Code tit 35 § 201.141. According to the Sierra Club, greenhouse gases constitute “contaminants” causing or contributing to “air pollution,” and IEPA is therefore required to assure compliance with this provision when it issues PSD permits in the State. Petition at 11 (citing CAA § 7475(a)(3) (requiring that a facility demonstrate compliance with any applicable emission standard) and 40 C.F.R. § 52.21(j)(1) (requiring that major stationary sources meet “each appli- cable emissions limitations” under the SIP)). The Sierra Club argues that IEPA committed legal error by issuing a PSD permit without including conditions regu- lating emissions of greenhouse gases See id. at 12, 17.

   The CAA contemplates that states may exercise primary responsibility for

creating plans to maintain and improve the Nation’s air quality consistent with the requirements of the CAA. States are required to develop SIPs, which provide a means for attainment of the NAAQS in nonattainment areas or for the prevention of significant deterioration in areas that are already in attainment or unclassifiable. CAA § 110, 42 U.S.C. § 7410. Each state’s SIP must set forth a permitting program that is at least as stringent as the requirements of the CAA. CAA
§ 110(a), 42 U.S.C. § 7410(a). EPA is charged with reviewing each state’s pro- posed SIP and determining whether the SIP complies with the CAA. See CAA
§ 110(k), 42 U.S.C. § 7410(k). EPA is also authorized to enforce the requirements of a state’s SIP. CAA § 113(a), 42 U.S.C. § 7413(a). The State of Illinois submit- ted its SIP in 1972 , see 40 C.F.R. § 52.720(b), and, after review, EPA partially approved the plan. See 40 C.F.R. § 52.722. One notable exception to this ap- proval, however, is the PSD program. See 40 C.F.R. § 52.738(a) (stating that the State’s SIP “does not include approvable procedures for preventing the significant deterioration of air quality”).

 As noted earlier, Illinois does not have an approved PSD program, and

IEPA administers the program in Illinois pursuant to a delegation of authority by

                                                                       VOLUME 14

740 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

EPA.18 See 46 Fed. Reg. 9580 (Jan. 29, 1981) (setting forth delegation agree- ment). As EPA’s delegate, IEPA stands in the shoes of EPA and implements the federal PSD program. See 40 C.F.R. § 52.738(b) (stating that the provisions of 40 C.F.R. section 52.21 “are incorporated and made a part of the applicable State plan for the State of Illinois”).19

   The Sierra Club argues that because IEPA, as a delegated state, stands in the

shoes of EPA and administers the federal PSD program, IEPA was required to comply with all applicable regulatory provisions, including 40 C.F.R. § 52.21(j). That section requires, in part, that major stationary sources “meet each applicable emissions limitation under the State Implementation Plan.” According to the Sierra Club, the above-quoted provision of the Illinois SIP (at Ill. Admin. Code tit. 35 § 201.141) is an applicable emissions standard within the meaning of sec- tion 52.21(j), and this standard requires that the permit include conditions regulat- ing greenhouse gas emissions. See Petition at 12.

  In response, neither IEPA nor Power Holdings dispute that the State emis-

sions limitation in section 210.141 has been incorporated into the IEPA’s ap- proved SIP. Rather, IEPA and Power Holdings make several arguments asserting that IEPA did not err in declining to regulate greenhouse gases and that the Sierra Club has failed to demonstrate that review is warranted. IEPA asserts that it has no obligation to regulate greenhouse gas emissions under state law and that, in any case, this issue has been rendered moot by the Administrator’s recent determi- nation that greenhouse gases are not subject to regulation until January 2, 2011. See IEPA’s Response at 16 (referring to Reconsideration of Interpretation of Reg- ulations That Determine Pollutants Covered by Clean Air Act Permitting Pro- grams, 75 Fed. Reg. 17,004 (Apr. 2, 2010)); IEPA Sur-Reply at 4-7. Power Hold- ings argues that because Illinois does not have an approved SIP for PSD purposes,“IEPA ‘stands only in the shoes’ of U.S. EPA in administering the fed- eral PSD program and cannot require compliance with state law as a PSD require-

   18 Under the CAA and associated regulations, a PSD program, or portions thereof, may be

administered within a state in one of three ways. See In re Milford Power Plant, 8 E.A.D. 670, 673 (EAB 1999). First, EPA may run the program pursuant to a “Federal Implementation Plan” under part

52. See CAA §§ 109-110, 165, 168, 42 U.S.C. §§ 7409-7410, 7475, 7478; 40 C.F.R. pt. 52; Milford,
    8 E.A.D. at 673. Second, EPA can delegate its authority to operate the PSD program to the state. Milford, 8 E.A.D. at 673. In such cases, the state issues PSD permits as federal permits on behalf of the Agency. 40 C.F.R. § 52.21(u). Third, if a state PSD program meets certain applicable (generally minimum) requirements of federal law, EPA can approve the state’s program and such program is incorporated into the state’s SIP. See CAA §§ 110, 116, 161, 42 U.S.C. §§ 7410, 7416, 7471; 40 C.F.R. § 51.166.

    19 The provisions of section 52.21, including 52.21(j), are applicable to any SIP which has
    

been disapproved for purposes of the PSD program. 40 C.F.R. § 52.21(a)(2)(ii) (stating that “the re- quirements of paragraphs (j) through (r) of this section apply to the construction of any new major stationary source”).

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 741

ment.” Power Holdings Reply at 42. According to Power Holdings, although the Illinois SIP incorporates section 201.141, see id. at 41, that section is incorporated only for the purposes of implementing IEPA’s approved nonattainment area and Title V permitting programs and is therefore inapplicable in this case. Id. at 41-42 (citing 40 C.F.R. § 52.720 et. seq.).

  The Board concludes that neither IEPA nor Power Holdings provides this

Board with a reasoned analysis of when a delegated state under the PSD program must incorporate emissions limitations in a state SIP pursuant to 40 C.F.R.
§ 52.21(j). IEPA asserts that the EPA Administrator’s recent determination ad- dressing the regulation of greenhouse gasses resolves this issue. That determina- tion, however, concerned the application of BACT requirements under the PSD program rather than the interpretation of state SIP requirements pursuant to 52.21(j).20 The Administrator’s determination therefore does not speak to the in- terpretation of section 52.21(j) in this context.

  The Board also finds questionable Power Holdings’s assertion that the SIP

provision at issue in this case was incorporated into the SIP only for purposes of nonattainment areas and the Title V permitting program. Power Holdings pro- vides no basis for its argument that an emissions requirement can be part of a state SIP for some purposes but not others.21 It is unclear what role section 52.21(j) would play under Power Holdings’ interpretation since it would not consider any emissions limitation otherwise part of the SIP to be an “applicable emissions limi- tation” for purposes of that section.

  In any event, irrespective or whether Power Holdings’ analysis of the issue

is erroneous and the Sierra Club is correct that section 201.141 of the Illinois Administrative Code constitutes an “applicable emissions limitation” within the

   20 The Board notes that even if the Administrator’s determination were applicable in the pre-

sent context, the determination states as follows:

           To the extent approved SIPs contain the same language as used in 40
           CFR 52.21(b)(50) [defining “regulated NRS pollutant”] * * * , EPA
           will not seek to preclude actions to address GHGs in PSD permitting
           actions prior to January 2, 2011 where a State permitting authority feels
           it has the necessary legal foundation and resources to do so.

75 Fed. Reg. at 17,022.

    21
       The Board notes that the regulations appear to contradict Power Holdings’ assertion in this

regard. See, e.g., 40 C.F.R. § 52.21(a)(1) (“No disapproval with respect to a State’s failure to prevent significant deterioration of air quality shall invalidate or otherwise affect the obligations of States, emission sources, or other persons with respect to all portions of plans approved or promulgated under this part”).

                                                                                       VOLUME 14

742 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

meaning of 40 C.F.R. § 52.21(j), the Sierra Club has failed establish that section 201.141 is applicable to greenhouse gases.

   This Board has traditionally given substantial deference to a state’s interpre-

tation of its own laws and regulations. See, e.g., In re Shell Offshore, Inc. and Frontier Discoverer Drilling Unit, 13 E.A.D. 357, 393-94 (EAB 2007) (deferring to state’s regulatory interpretation in a PSD permit appeal, citing In re Teck Cominco Alaska, Inc.); In re Teck Cominco Alaska, Inc., 11 E.A.D. 457, 489 (EAB 2004) (stating that the Board generally gives substantial deference to a state’s interpretation of its own laws). In the present case, in responding to com- ments on this issue and in a submission before this Board, the IEPA has made clear that it does not interpret section 201.141 as requiring regulation of green- house gas emissions. See Response to Comments at 89 (concluding that CO2 is not a regulated air pollutant under Illinois law); IEPA Sur-Reply at 6-7 (stating that IEPA does not interpret section 201.141 as requiring regulation of greenhouse gases). Although the Sierra Club cites to several cases in which section 201.141 has been enforced in both federal and state enforcement actions, see Petition at 12, the Sierra Club does not cite to a single instance in which this provision has been applied to greenhouse gas emissions. Nor is there any assertion that this provision, which presumably would have been applicable to all PSD permits since the Illinois PSD program was disapproved in 1980, has ever been applied to greenhouse gases in any PSD permit in Illinois.

  Moreover, as IEPA rather belatedly points out in its Sur-Reply, a 1998 Illi-

nois Statute, the Kyoto Protocol Act of 1998, 415 Ill. Comp. Stat. 140/15 (“Kyoto Act”), severely limits the state’s ability to regulate greenhouse gases. While the regulatory effect of this Act was prospective only, the findings and purposes sec- tion of the statute states, in part, that “[t]here is neither federal nor State statutory authority for new regulatory programs or other efforts intended to reduce green- house gas emissions.” Kyoto Act at § 10(16). The reference to “other efforts” sug- gests that, at the time the Act was enacted, there was no statutory authority that would have allowed the regulation of greenhouse gases under section 201.141. This tends to confirm IEPA’s reading of State law as not requiring the control of greenhouse gasses.

   Because the State of Illinois has interpreted the disputed provision of its

state SIP as inapplicable to greenhouse gases, and because this interpretation does not strike the Board as so unreasonable as to not be entitled to the substantial deference afforded state interpretations of their own laws, the Board declines to substitute its judgment for that of the IEPA in this instance. Review is therefore denied on this issue.

VOLUME 14
 POWER HOLDINGS OF ILLINOIS, LLC 743

                                VII. ORDER

   For the reasons stated above, the Sierra Club’s petition for review is denied

in its entirety.

  So ordered.




                                                                    VOLUME 14