Hawaiian Commercial & Sugar Company

Plain-English summary

James V. Williamson, a private citizen, challenged a Prevention of Significant Deterioration permit issued by the State of Hawaii to Hawaiian Commercial & Sugar Company. The permit covered construction of a 30 MW circulating fluidized bed boiler at the Puunene Mill Facility on Maui, designed to burn coal, fuel oil, and bagasse. He raised six groups of concerns involving ash disposal, coal stockpiles, fuel choice, sulfur dioxide and nitrogen oxide limits, air-quality modeling, and performance-test waivers. The Environmental Appeals Board denied review because the petition did not identify a clear factual or legal error, an important policy issue, or an abuse of discretion under the federal PSD rules.

Decision snapshot

• Cited authorities: 40 C.F.R. §§ 124.19, 52.21, and 261.4(b)(4)
• Outcome: Review of the PSD permit was denied.
• Key point: A petitioner must identify a concrete deficiency in the permit under the federal PSD requirements to obtain EAB review.

Full text (EPA EAB public release)

HAWAIIAN COMMERCIAL & SUGAR COMPANY 95

IN THE MATTER OF HAWAIIAN COMMERCIAL &
SUGAR COMPANY

PSD Appeal No. 92-1

ORDER DENYING REVIEW

Decided July 20, 1992

Syllabus

Petitioner, a private citizen, is appealing the issuance of a Prevention of Signifi-
cant Deterioration (PSD) permit to the Hawaiian Commercial & Sugar Company by
the State of Hawaii. The permit relates to construction of a new 30 MW Circulating
Fluidized Bed Boiler to be located at the Puunene Mill Facility on the island of
Maui.

The petition sets forth six bases for seeking review. These relate to ash disposal,
coal stockpiles, the fuel oil to be burned, SO2 and NOx emission limits, air quality
modeling, and waiver of performance tests.

Held: While Petitioner urges the State to go beyond the applicable Federal PSD
requirements, the petition does not identify any deficiency in the permit relative
to those requirements. The petition for review is therefore denied because it fails
to identify any factual or legal errors or any policy considerations or exercises of
discretion that warrant review.

Before Environmental Appeals Judges Ronald L. McCallum
and Edward E. Reich.

Opinion of the Board by Judge Reich:

Petitioner James V. Williamson, a private citizen, has filed this
appeal of the issuance of a Prevention of Significant Deterioration
(PSD) permit to the Hawaiian Commercial & Sugar Company (HC&S)
by the State of Hawaii. The State, acting pursuant to a delegation
from the U.S. Environmental Protection Agency (EPA) and with its
concurrence, issued the permit, styled “Approval to Construct/Modify
a Stationary Source (HI 89-01).” The permit covers construction of
a 30 MW Circulating Fluidized Bed (CFB) Boiler to be located at
the Puunene Mill Facility, Puunene, Maui. The Boiler is being de-
signed to burn three different types of fuels for maximum flexibility.
These are coal, fuel oil, and bagasse (the part of sugarcane remaining

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96 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

after the sugar is squeezed out). It will provide additional electricity
to the Mill, as well as providing electricity which HC&S is proposing
to sell to Maui Electric Company to meet the island’s demands.

Mr. Williamson’s petition raises six issues. At the request of
this Board, the State of Hawaii Department of Health submitted
a copy of the administrative record for the permit and a response
to the petition. The record shows that the issues raised in this appeal
had previously been raised by Mr. Williamson in his comments on
the draft permit, and thus were preserved for review under 40 CFR
§ 124.19.1

Under the rules that govern this proceeding, a PSD permit ordi-
narily 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 CFR
§ 124.19; 45 Fed. Reg. 33412 (May 19, 1980). The preamble to the
Federal Register notice in which Section 124.19 was promulgated
states that “this power of review should be only sparingly exercised,”
and that “most permit conditions should be finally determined at
the Regional level * * *.” Id. The burden of demonstrating that re-
view is warranted is on the petitioner. For the reasons set forth
below, we conclude that Petitioner has failed to show that review
of the permit is warranted under 40 CFR §124.19, and therefore
review is denied.

Ash Disposal: The first issue raised by Petitioner relates to dis-
posal of the fly ash (and bottom ash) from the operation of the
boiler. Petitioner expresses the view that HC&S has no definite plans
for disposal of the ash and doesn’t even know if it is hazardous.
Petitioner believes the ash should already have been tested and the
disposal problem investigated since HC&S has been using small
quantities of the same coal for some time.

The State, in its response to the petition, identifies several op-
tions HC&S has explored for ash disposal including selling it to
local cement manufacturers for use as a component of cement, using
it as a soil amendment in the sugar cane fields, or using it as
a surfacing material for cane haul roads. All these potential uses
presuppose a determination that the ash is non-hazardous. If it
proves to be hazardous, the ash will be disposed of in a manner

140 CFR § 124.19 provides for appeal of PSD permits by persons who filed com-
ments on the draft permit or participated in the public hearing. Any person who
failed to file comments or failed to participate in the public hearing may petition
for review only to the extent of changes from the draft to final decision.

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HAWAIIAN COMMERCIAL & SUGAR COMPANY 97

consistent with all applicable Federal and State laws.² Based on
the testing of ash resulting from coal combustion at an existing boiler
at the HC&S facility, HC&S does not expect the ash to be hazardous.
However, a disposal method cannot be finally identified until the
ash actually produced by the new boiler is tested once it comes
on line.

The Ambient Air Quality Impact Report which accompanied the
final permit discusses the anticipated impacts of ash handling in
Section IV.F. at page 6. There is no discussion in that Report of
plans for the ultimate disposition of the ash. However, it is apparent
from the record that the Permittee has given considerable thought
to the ash disposal issue although it is not yet in a position to
make a final decision.³ While consideration of the nature of the fly
ash could be relevant to a consideration of collateral environmental
effects as part of an analysis of best available control technology
(BACT),* Petitioner’s concerns here are speculative. There is nothing
in the record to suggest that the BACT determination for any pollut-
ant regulated under the Clean Air Act would be affected by the
absence of a definitive plan for the disposal of the fly ash.5 Petitioner
has not identified any violation of PSD regulations in the lack of
greater specificity on plans for disposal of the fly ash. Thus, Petitioner
has not carried his burden of identifying either a clear factual or
legal error or an important policy consideration or exercise of discre-
tion that should be reviewed. Review of this issue is therefore denied.

2Although not discussed in the State’s response or in the comments of HC&S
in the administrative record, we note that 40 CFR § 261.4(b)(4) excludes fly ash waste
and bottom ash waste resulting from the combustion of fossil fuels from the definition
of solid waste, and thus from Federal regulation as a hazardous waste.

3For example, Sierra Research, on behalf of the Permittee, sent a letter to Mr.
Williamson on September 9, 1991, responding to questions he raised at the public
hearing. Enclosed with this letter is a Summary of Comments and Responses which
discusses alternatives for fly ash disposal on pages 3-4.

4 40 CFR §52.21(j)(3) requires a new major stationary source to apply best avail-
able control technology for each pollutant subject to regulation that it would have
the potential to emit in significant amounts. Best available control technology is de-
fined at 40 CFR §52.21(b)(12).

5“While collateral environmental impacts are relevant to the BACT determination,
their relevance is generally couched in terms of discussing which available technology,
among several, produces less adverse collateral effects, and, if it does, whether that
justifies its utilization even if the technology is otherwise less stringent.” In re Old
Dominion Electric Cooperative, PSD Appeal 91-39 at p. 23 (January 29, 1992). See
also North County Resource Recovery Associates, PSD Appeal No. 85-2 (Remand, June
3, 1986) (environmental impact of pollutants not regulated under the Clean Air Act
may necessitate a more stringent emission limit for regulated pollutants undergoing
BACT review).

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98 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Coal Stockpiles: Petitioner questions what the size of the stock-
pile will be, how HC&S will prevent fugitive dust due to winds,
and how HC&S will get rid of coal dust. The State, in its response
to the petition, describes the stockpiles and indicates that it does
not expect significant air pollution problems from fugitive dust be-
cause the coal will be washed and has an extremely low silt content
(4.23%). The State also cites assurances from HC&S that fugitive
dust will not produce visible emissions beyond the property boundary.

The permit addresses fugitive dust controls in Section IX.D.6.
This provision requires:

Fugitive dust controls, including the use of enclo-
sures and wet suppression to prevent particulate
matter from becoming airborne to the extent prac-
tical, during all material handling operations of coal,
sorbent, and ash. All coal conveyors shall be enclosed
and the coal pulverizer shall be vented to the coal
storage bin to control fugitive emissions. Hawaiian
Commercial & Sugar Company shall design and con-
struct the boiler ash handling and disposal system
in a manner that will minimize particulate emissions
from ash handling and disposal. Ash conveyors shall
be pneumatic or shall handle wet ash and all convey-
ors and transfer points shall be covered or sealed.
In no case shall Hawaiian Commercial & Sugar Com-
pany cause or permit the discharge of visible emis-
sions of fugitive dust beyond the permittee’s property
boundary.

Relative to disposal of coal dust, the State’s response to the petition
indicates that “the disposal of the coal dust will be minimal” and
will be conducted in accordance with all applicable federal and state
regulations. Response at 2.

The Ambient Air Quality Impact Report projects negligible fugi-
tive particulate emissions associated with fuel handling due to the
nature of the coal to be used and the fact that all coal conveyers
will be enclosed. Petitioner has not pointed to any data or other
evidence in the record to challenge this conclusion. In addition, the
permit limitation on visible emissions of fugitive dust beyond the
property line provides an enforceable mechanism to deal with any
problem should one arise. Petitioner has not carried his burden of
identifying either a clear factual or legal error or an important policy

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HAWAIIAN COMMERCIAL & SUGAR COMPANY 99

consideration or exercise of discretion that should be reviewed and
review is accordingly denied.

Petitioner also indicates that he is adamantly opposed to any
additional coal fired boilers on Maui, suggesting that HC&S should
instead install a combined cycle facility fueled with low sulfur dis-
tillate or residual oil and equipped with a selective catalytic reduction
unit for NOx control.6 The State, in its response to the petition,
indicates that it does not have the authority to define the boiler
type to be used.” Instead, it evaluated the anticipated impacts of
the facility with the type of boiler proposed and found them to be
acceptable under the PSD regulations.

EPA’s PSD permit conditions regulations do not mandate that
the permitting authority redefine the source in order to reduce emis-
sions.? The U.S. Environmental Protection Agency’s Air Quality Man-
agement Division discussed the application of this principle in a draft
New Source Review Workshop Manual issued in October 1990. This
document was developed for use in conjunction with new source re-
view workshops and training, and to guide permitting officials. As
such, it has been widely circulated and represents the Office of Air
Program’s current thinking in this regard.

On page B.13 of that Manual, it provides:

Historically, EPA has not considered the BACT re-
quirement as a means to redefine the design of the
source when considering available control alter-
natives. For example, applicants proposing to con-

6The State did evaluate the relative merits of selective catalytic reduction (SCR)
and selective non-catalytic reduction (SNCR) in the context of its best available control
technology analysis for NOx and found selective non-catalytic reduction to be pref-
erable. It cited the lack of experience with SCR systems on CFB boilers, significant
problems with plugging and poisoning of the catalyst by fly ash in crushed coal-
fired boilers, increased costs, and other considerations in rejecting SCR. Ambient Air
Quality Impact Report at pp. 19-20. Petitioner has not shown that the State’s BACT
analysis is deficient, and thus has not met his burden under 40 CFR § 124.19.

7The State indicates that it “does not have authority to require facilities to use
a specific equipment, fuel or air pollution control device.” Response at p. 2. However,
we note that the definition of BACT includes consideration of both clean fuels and
use of air pollution control devices.

8“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 re Pennsauken
County, New Jersey Resource Recovery Facility, PSD Appeal No. 88-8 at p. 11 (Novem-
ber 10, 1988).

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100 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

struct a coal-fired electric generator, have not been
required by EPA as part of a BACT analysis to con-
sider building a natural gas-fired electric turbine al-
though the turbine may be inherently less polluting
per unit product (in this case electricity). However,
this is an aspect of the PSD permitting process in
which states have the discretion to engage in a
broader analysis if they so desire. Thus, a gas tur-
bine normally would not be included in the list of
control alternatives for a coal-fired boiler.®

Petitioner’s preference as to the type of boiler and fuel to be
used in this instance would in effect redefine the source. The cited
draft guidance makes clear that the permitting authority is entitled
to wide latitude in how broad a BACT analysis it wishes to conduct
in this regard. Petitioner has provided no good reason for curtailing
this discretion here nor has he shown that the State abused this
discretion. Thus, review of this issue is also denied.!°

Fuel Oil: Petitioner states that the Hawaii Department of Health
should urge local refineries to install desulfurization equipment or
require the electric company to purchase low sulfur (0.1% S) fuel
oil or (0.05% S) #2 distillate oil from outside the State. Petitioner
further indicates that while this would result in higher fuel costs,
“the majority of Hawaiians would willingly agree to a reasonable
increase in power rates if it means improving the air quality in
these beautiful islands.” Petition at 2. More specifically, Petitioner
would like to see the HC&S permit reflect SO2 and NOx limits
“much more stringent than BACT as defined in the Federal regula-
tions,” following the practice of some Air Quality Management Dis-
tricts in California.

®This situation was presented in In re Old Dominion Electric Cooperative, PSD
Appeal 91-39 (January 29, 1992). In that instance, the State determined that requiring
a coal-fired steam electric generating station to use natural gas as an alternative
fuel would redefine the source. It further concluded that it was not empowered to
do this unless the facility as proposed would not meet all Federal and State air
emission limitations or would result in a violation of a national ambient air quality
standard. While the Administrator of EPA found no clear error in the State’s handling
of the matter, he stated that “EPA construes the 1990 Amendments as conferring
discretion on the permit issuer to consider fuels other than those proposed by the
permit applicant.” Id. at p. 25.

10The State may not view its authority under State law as being extensive enough
to take advantage of the flexibility afforded under the Federal PSD regulations. See
note 7 supra.

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HAWAIIAN COMMERCIAL & SUGAR COMPANY 101

The State, in its response to the petition, confirms the relative
unavailability of very low sulfur fuels in Hawaii due to inadequate
desulfurization capacity at local refineries. Such fuel oil would have
to be imported. Relative to the HC&S permit, the State responds
that BACT was not required for SO2 because the facility’s emissions
(after crediting emissions reductions from three existing boilers) will
not. exceed the significance levels for SO2 which would trigger a
BACT review.¹¹ However, though not compelled by the PSD rules,
the controls to be used at the facility are what the State characterizes
as “BACT pollution controls,” and will reduce SO2 emissions to those
equivalent to 0.1% sulfur fuel oil. The State further indicates that
it did require BACT for any pollutant subject to PSD review, includ-
ing NOx.!2

General issues relative to desulfurization at refineries or require-
ments to purchase low sulfur oil by the electric company are not
cognizable in the challenge to the HC&S permit. The fuel to be
used at the Puunene facility is relevant in the context of a determina-
tion of BACT (where applicable) and in analyzing the air quality
impacts of the project. There is no obligation to adopt a definition
of BACT more stringent than that required by Federal law. Petition-
er’s belief that the State should have adopted a standard more strin-
gent than that required by Federal regulations has no legal relevance.

As previously noted, the Puunene 30 MW CFB Boiler is being
designed to burn coal, fuel oil, and bagasse. In the case of fuel
oil, a sorbent injection system is being installed to allow the use
of number 6 fuel oil with a 2.0% sulfur content with the sorbent
system then reducing emissions by 95%. This would be equivalent
to the use of 0.1% S oil, which the State has determined to be
BACT, even though BACT is not required for SO2 under the PSD
regulations. The State’s determination that this level is equivalent
to BACT is not subject to challenge since, as noted previously, the
BACT requirement does not apply to SO2 since the significance level
will not be exceeded.

In the case of NOx, Petitioner states that use of lower sulfur
fuel will also reduce NOx emissions. We note that this does not

11PSD review is required for SO2 emissions if the net increase in SO2 emissions
is 40 tons per year or greater. See 40 CFR §52.21(b)(23)(i). The calculation of the
“net increase” (actually a decrease) for SO2 is discussed in the Ambient Air Quality
Impact Report at pages 8-14.

12BACT for NOx was determined to be staged combustion and a selective non-
catalytic reduction system using urea injection. Ambient Air Quality Impact Report
at p. 20. See footnote 6 supra.

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102 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

necessarily follow. There is no direct relationship between fuel sulfur
content and NOx emissions. However, in this case, what Petitioner
suggests is the use of a distillate (#2) oil rather than the residual
oil (#6) as proposed by HC&S. “Because residual oils are produced
from the residue after lighter fractions (gasoline, kerosene and dis-
tillate oils) have been removed from the crude oil, they contain signifi-
cant quantities of ash, nitrogen and sulfur.” ¹³ Nitrogen oxides emis-
sions from residual oil combustion in industrial and commercial boil-
ers are strongly related to fuel nitrogen content.14 A switch from
residual to distillate oil, without controls, would result in a lower
emission factor for nitrogen oxide (55 lb/10 gal for residual oil versus
20 1b/103 gal for distillate oil).15 Thus, while unrelated to the sulfur
content of the fuel, the switch Petitioner suggests could have con-
sequences in terms of NOx levels if the fuel were burned uncon-
trolled.

Of course, HC&S is not proposing to burn the fuel without con-
trols for NOx. The facility is required to apply BACT for NOx, and
NOx emissions will be substantially addressed through the use of
combustion modification (staged combustion) and post-combustion
controls (SNCR).26

Petitioner has cited nothing in the administrative record which
would lead us to conclude that the State’s BACT analysis and its
BACT determination in this case are deficient. Petitioner cites no
data in the record about the effect on NOx emissions of the use
of the NOx control technologies in combination with distillate fuel
to suggest that this combination should have been considered in
the BACT analysis.17 Petitioner has not identified any error, policy
consideration or exercise of discretion appropriate for review and
review of this issue is accordingly denied.

SO2 and NOx Emission Limits: Petitioner questions why HC&S
has emission limits of approximately 42 lb/hr each for SO2 and NOx

13Compilation of Air Pollution Emission Factors, Third Edition AP—42 (Updated
1986) at p. 1.3-1. This document is EPA’s basic reference document for air pollution
emission factors and we hereby take official notice of it.

14Id., note J at 1.3-2, and 1.3-3.

15 Id. at 1.3-2.

16 Ambient Air Quality Impact Report at pp. 16-20.

17See In re Spokane Regional Waste-to-Energy, PSD Appeal No. 88-12 at p. 17
(June 9, 1989) (“A technology is obviously not available in any meaningful sense
if knowledge about its effect on emissions, in the particular configuration in which
it would be employed, is so incomplete as to be unusable.”). This decision was upheld
by the Court of Appeals for the Ninth Circuit. 959 F.2d 839 (9th Cir. 1992).

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HAWAIIAN COMMERCIAL & SUGAR COMPANY 103

whereas California has limits of 16 lb/hr for SO2 and 6 lb/hr for
NOx. The State explains the difference as relating to the type of
fuel to be burned. The California limits are possible mainly because
new power plants there burn natural gas. In contrast, natural gas
will not be used at the HC&S facility; HC&S will burn coal, fuel
oil, and bagasse. The limits imposed on HC&S are typical for Califor-
nia power plants burning biomass or solid fuels. In addition, as pre-
viously discussed, the SO2 limit is equivalent to a BACT level of
0.1% S. While the Petitioner acknowledges these distinctions, he
reasserts his position that low sulfur (0.05%) distillate fuel oil is
available and reduced NOx levels can be achieved with new and
better turbines and installation of a selective catalytic reduction unit.

This issue largely overlaps the previous issue. The State has
provided a plausible explanation for the difference in emissions limits
between the HC&S permit and those used in Southern California.
More significantly, Petitioner has failed to identify how the permit
limits are in any way deficient under applicable PSD regulations
and thus review is denied.

Air Quality Modeling: Petitioner asks how well the verification
process has been carried out for the air quality models used in evalu-
ating the HC&S project, asserting that he believes those models to
be flawed. Petitioner further asserts that meteorological data from
Kahului Airport are not representative of the proposed facility. The
State responds that U.S. EPA-approved flat terrain and complex ter-
rain air quality models were used to predict maximum anticipated
ambient air quality. Such models are designed to over-predict worst-
case estimates of impacts to be protective of ambient air quality.
In addition, Kahului Airport was determined to be representative
of the meteorological conditions at Puunene by both State and
U.S.E.P.A. meteorologists since it is in close proximity (2 miles) with
no intervening terrain changes which significantly affect the meteoro-
logical data.

The air quality impacts of this project are discussed at some
length in Section VII of the Ambient Air Quality Impact Report,
beginning at page 26. This section outlines in detail the approach
used and the results obtained in the modeling analysis. Air quality
model selection is discussed in paragraph B (page 29) and data selec-
tion in paragraph A (pages 27~28). The models used were U.S.E.P.A.-
approved UNAMAP-6 series guideline models and data selection were
determined to be acceptable by U.S.E.P.A.’s Regional meteorologist.

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104 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

In his petition, Petitioner merely asserts that modeling is inexact
in Maui’s topographic and climatological environment and that the
modeling procedure was flawed. He points to no technical data in
the record showing that either the model selection or the data utilized
were flawed, only unsubstantiated anecdotal reports and observations
of air circulation patterns by Maui residents. When viewed against
the modeling analysis done to support the permit, this falls far short
of meeting Petitioner’s burden of showing clear error or any other
basis which would justify review, and review is thus denied.

Waivers of Performance Tests: The permit provides for perform-
ance testing on existing Boilers 1, 2 and 3 after installation of air
pollution controls on those boilers but prior to startup of the new
30 MW CFB boiler. Permit at 8. The permit provides for testing
on the new 30 MW CFB boiler after initial startup, and thereafter
on an annual basis or at such other times as may be specified by
the Department of Health. Permit at 9-10. Waiver of performance
testing is provided for in accordance with the following provision:

The Hawaii Department of Health may waive a spe-
cific performance test upon prior written request of
Hawaiian Commercial & Sugar Company. Such a re-
quest would need to be justified on the grounds that
prior tests had shown compliance by a wide margin,
and that adequate alternative means exist to show
continuing compliance.

Permit at 10. The initial performance test cannot be waived, only
the subsequent tests.

Petitioner states that waivers of performance tests for the boiler
and fugitive emissions should not be provided. The State, however,
points out that performance tests were incorporated primarily to dem-
onstrate compliance upon completion of construction, and that contin-
uous emissions monitoring (which the permit requires) is a better
indicator of ongoing performance.

In discussing the waiver provision, the State notes the consider-
able Department of Health staff time which oversight of a perform-
ance test requires and the cost to the permittee. In this context,
the State’s response to the petition indicates at page 4 that “[t]he
Department believes that the provisions for waiving specific source
tests will not compromise source emissions compliance while maxi-
mizing its personnel resources.”

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HAWAIIAN COMMERCIAL & SUGAR COMPANY 105

The State’s position on this issue reflects a perfectly rational
approach given the costs to both the State and the permittee associ-
ated with performance testing and the primary reliance on continuous
emissions monitoring systems. While the Petitioner has stated that
“[t]here is absolutely no reason to allow a waiver of these very impor-
tant tests” (Petition at 4), this is merely a statement of his opinion.
No applicable PSD requirement which would preclude inclusion of
the waiver provision is cited. Petitioner has not carried his burden
of identifying either a clear factual or legal error or an important
policy consideration or exercise of discretion appropriate for review.
Review of this issue is therefore denied.

In summary, none of the bases set forth in the petition for review
meets the threshold level for granting review, and the petition is

accordingly denied.

So ordered.

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