CHAPTER 10 REGIONAL HAZINESS: AN ANALYSIS OF THE FATE OF THREE WESTERN REGIONAL HAZE STATE IMPLEMENTATION PLANS

• Jurisdiction: United States

Air Quality Issues Affecting Oil, Gas, and Mining Development in the West
(Feb 2013)
CHAPTER 10
REGIONAL HAZINESS: AN ANALYSIS OF THE FATE OF THREE WESTERN REGIONAL HAZE STATE IMPLEMENTATION PLANS
E. Blaine Rawson ¹
Ray Quinney & Nebeker
Salt Lake City, Utah

E. BLAINE RAWSON is a shareholder at Ray Quinney & Nebeker in Salt Lake City, Utah, where he is a member of the firm's Litigation Section and the Natural Resources, Land, Water and Environmental Law practice group. Mr. Rawson has been practicing environmental law, natural resources law, and commercial litigation since 1995. His expertise covers Clean Air Act, CERCLA, RCRA, and Clean Water Act litigation and counseling, as well as related state issues such as groundwater, underground storage tanks, and state air quality law. Mr. Rawson has represented energy and natural resource companies in matters related to the federal and state permitting of, and litigation and enforcement actions related to, crude oil and natural gas pipelines, coal-fired power plants, syn-fuel facilities, hard-rock mines and natural gas processing facilities. He also has handled commercial litigation in both federal and state courts related to electrical generation, regulated utilities, oil and gas production, transportation, and refining. Mr. Rawson has written articles regarding underground storage tank regulation, water rights, injunctive relief in environmental cases and the "overfilling" authority of the EPA. Mr. Rawson has also spoken at several seminars regarding power plant permitting, supplemental environmental projects, Clean Air Act permitting and other environmental topics. Mr. Rawson has been included on the list of The Best Lawyers in America in Litigation-Environmental. He has also been selected for inclusion in Mountain States Super Lawyers (2008, 2011-2012) in the category of Environmental Litigation, and was voted by his peers throughout the state as one of Utah's "Legal Elite" in the category of Environmental Law (as published in Utah Business Magazine).

In the last few years, the United States Environmental Protection Agency ("EPA") has rejected key provisions in the Clean Air Act-mandated regional haze state implementation plans ("RH SIPs") prepared by several Western states, including Wyoming, Utah, New Mexico, North Dakota, Arizona, and Nevada. Affected States and regulated entities have sought judicial review where EPA has rejected RH SEP provisions, while environmental groups have challenged portions of RH SIPs that have been approved by the EPA. As a result, affected industries and state governments are left wondering how to move forward, the future of many coal-fired power plants are in question, and natural gas-powered electrical generation may become even more prevalent as a result.

This paper analyzes the fates of three RH SIPs (Utah, Wyoming, and New Mexico),² addresses some of the major disputes between the EPA and the States regarding these RH SIPs, and also discusses the potential impact of EPA's regional haze actions on the oil, gas, and coal industries. These three states were chosen because they are representative of many of the challenges to western RH SIPs and the related impacts on the coal and natural gas industries.

I. Background of the Regional Haze Program

EPA defines regional haze as "visibility impairment that is produced by a multitude of sources and activities which are located across a broad geographic area and emit fine particles (PM2.5) (e.g., sulfates, nitrates, organic carbon (OC), elemental carbon (EC), and soil dust), and their precursors (e.g., sulfur dioxide (SO2), nitrogen oxides (NOx), and in some cases, ammonia (NH3) and volatile organic compounds (VOC))."³ According to EPA, "[f]ine particle precursors react in the atmosphere to form PM2.5, which impairs visibility by scattering and absorbing light. Visibility impairment reduces the clarity, color, and visible distance that one can see."⁴

The Clean Air Act has addressed "visibility impairment" (including regional haze) in some fashion for decades. In 1977, Congress added § 169A to the Clean Air Act ("CAA"), which "established as a national goal the 'prevention of any future, and the remedying of any existing, impairment in visibility in mandatory Class I areas which impairment results from manmade

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air pollution.'"⁵ In 1990, Congress amended the CAA to add Section 169B, 42 U.S.C. § 7492 "Visibility", which is primarily concerned with regional haze issues. CAA Section 169B requires, "among other things, that EPA undertake research to identify 'sources' and 'source regions' of visibility in Class I areas, consider designating transport commissions to study the interstate movement of pollutants, and establish a transport commission for the Grand Canyon National Park."⁶

The CAA contemplates that the States are to have the primary role in developing plans, known as regional haze state implementation plans, or RH SIPs, to protect visibility in Class I areas (national parks, wilderness areas, etc.). EPA has emphasized that RH SIPs "must assure reasonable progress towards the national goal of achieving natural visibility conditions in Class I areas."⁷ The EPA adopted regional haze regulations, 40 C.F.R. §§ 51.308 and 51.309 ("Regional Haze Rules"), which identify what must be included in a RH SIP. These regulations mandate that States "must," following the criteria and guidelines identified in the Regional Haze Rules, establish "reasonable progress goals," make Best Available Retrofit Technology ("BART") determinations, and create a "long-term strategy" as part of a RH SIP. States develop RH SIPs for ten-year periods.

I.A. BART Requirements and RH SIPs

The BART⁸ regulations apply to certain large stationary sources, such as certain coal-fired power plants and refineries that were in existence on August 7, 1977, but were not in operation before August 7, 1962.⁹ The CAA specifically mandates that BART is to be "determined by the State" and the States are to "take into consideration" the five statutory factors that are included in a BART analysis.¹⁰ The five BART factors that must be analyzed are "the costs of compliance," "the energy and non-air quality environmental impacts of compliance," "any existing pollution control technology in use at the source," "the remaining useful life of the source," and "the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology."¹¹ BART controls and limits are an extremely important

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part of the Regional Haze program, and a BART analysis is required for every BART Eligible Source in every RH SIP.¹² The BART regulations are one of the primary tools to be used to improve, or maintain, visibility in the first round of RH SIPs. Interpretation and application of the five BART factors are at the heart of the disputes between EPA, the states, affected industry, and special-interest groups over the RH SIPs of Utah, Wyoming, and New Mexico.

There is a regulatory option to the five-factor BART analysis. States have the flexibility to adopt an emissions trading program or other alternative program as long as the alternative provides greater reasonable progress towards improving visibility than BART.¹³ This is known as the "Better than BARP' alternative. Some Western states have an option to adopt an SO2 trading program under 40 C.F.R § 51.309, which the three states analyzed herein have done. The interpretation and application of the "Better than BART" alternative, including the SO2 Backstop Trading Program, are at the heart of several appeals over portions of the RH SIPs of Utah, Wyoming, and New Mexico. See Section I.A.4. below.

I.A.I. BART Requirements and Appendix Y

To assist the states in making five-factor BART determinations,¹⁴ EPA published on July 6, 2005, the "Guidelines for BART Determinations Under the Regional Haze Rule at Appendix Y to 40 C.F.R. Part 51" (hereinafter referred to as "Appendix Y"), along with a preamble explaining many of the related issues ("Preamble").¹⁵ Appendix Y was subject to notice and comment rulemaking. The purpose of Appendix Y is to assist states in determining (1) which of their sources should be subject to the BART requirements and (2) the appropriate BART controls and emission limits for each applicable source. For fossil-fuel-fired electric generating units ("EGUs") with a total generating capacity in excess of 750 megawatts (MW), states are required to follow Appendix Y.¹⁶ Appendix Y contains guidance on the application of the five BART factors, as well as "presumptive" BART NOx and PM emissions limits for certain EGUs. "A state is encouraged, but not required, to follow the BART Guidelines in making BART determinations for other types of sources."¹⁷ Disagreements over the interpretation and application of Appendix Y are also a large part of the conflict over the EPA's rejection of parts of the RH SIPs for Utah, Wyoming, and New Mexico.

I.A.2. Appendix Y and Presumptive BART

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As stated above, Appendix Y established specific "presumptive" BART limits for emissions of NOx and SO2 for large fossil-fuel-fired EGUs.¹⁸ EPA set the Presumptive BART limits after years of data gathering and analysis. For NOx emissions, the Presumptive BART analysis permits states to select the appropriate NOx control for "utility boilers" based on the size of boiler, the type of boiler, and type of coal burned.¹⁹ Appendix Y provides that the presumptive limits "are extremely likely to be appropriate" for the EGU and that any departure from the presumptive limit must be explained "based on a careful consideration of the [BART] factors."²⁰ Most of the Presumptive BART limits for NOx emissions were based upon "combustion controls,"²¹ and did not require "post-combustion" controls.²²

I.A.3. BART Controls for EGUs

BART controls vary greatly in size, effectiveness, cost, and complexity. Generally speaking...