EPA: "permitted" means "achievable" for BACT

On August 31, 2022, the EPA issued “EPA Comments Concerning BACT Evaluations” in TCEQ Docket 2021-0942-AIR and SOAH Docket 582-22-0201 on the Port Arthur LNG natural gas liquefaction plant and export terminal. In those comments, the EPA opposed in a pending administrate hearing the TCEQ Executive Director’s argument that technology be “demonstrated” to be considered “achievable,” stating that in EPA’s view, the grant of a permit requiring a technology is “sufficient” to demonstrate it will be available “soon” and hence is “available” for purposes of BACT. EPA has uploaded these comments on to its NSR Policy and Guidance page.

BACKGROUND

In the administrative law case challenging TCEQ staff’s issuance of the permit, the Texas administrative law judge (ALJ) found that Port Arthur LNG did not meet its burden of proof on its proposed BACT for refrigeration turbines (ALJ said should be 5 and 15 ppm for NOx and CO and not 9 and 25 ppm, all at 15% O2). The EPA states that the decision was based on a decision for the Rio Grande LNG or Golden Path LNG decisions that had the lower limits. The TCEQ Executive Director (ED) filed exceptions and recommended that the Commission override the ALJ’s decision and issue the permit as issued using the higher limits because the lower limits were not “demonstrated in practice.” EPA Region VI filed comments to specifically oppose the ED’s request.

ANALYSIS

The EPA took exception to the following statements by the ED:

• A key aspect of the EPA top-down method is that to be considered BACT, the technology must be ‘demonstrated and potentially available’ [citing NSR Workshop Manual at B.11]. The EPA NSR manual states, ‘[t]echnologies which have not yet been applied to (or permitted for) full scale operations need not be considered available; an applicant should be able to purchase or construct a process or control device that has already been demonstrated in practice’ (emphasis added) [citing NSR Workshop Manual at B.11]. In its guidance, EPA also states, ‘[t]o satisfy legislative requirements of BACT, EPA believes that the applicant must focus on technologies with a demonstrated potential to achieve the highest levels of control’ (emphasis added) [citing NSR Workshop Manual at B.12].

And

• As discussed, a key component of a BACT determination is that the technology must be demonstrated [citing NSR Workshop Manual and APDG 6110]. Neither Golden Pass LNG [citing Pre-filed testimony of Benjamin Hansen] nor Rio Grande LNG [citing Hearing on the Merits, at 0029:24-26] are operational; therefore, the controls proposed in their permits have not been demonstrated to achieve the limits in their permits and are actually ‘beyond BACT.’

The EPA responded with the following:

With respect to the top-down BACT approach that was utilized for the refrigeration and compression turbines, the passages that the ED cites from the NSR Workshop Manual in its June 9, 2022, exception filing do not support the ED’s suggestion that a BACT limitation must be operational to be considered technically feasible and achievable, and mischaracterizes EPA’s recommendation for evaluating technical feasibility of a control technology and/or alternative as expressed in the NSR Workshop Manual.

Instead, EPA states that if a technology has been “installed or operated successfully on the type of emission unit under review” is only the “first question” in EPA’s two-step process. The EPA states that the next question is whether the technology is both “available” and “applicable” to the type of source for which the permit is sought. EPA characterized “available” as one that is available through commercial channels. With respect to applicable, EPA states that “in general, a commercially available control option will be presumed applicable if it has been or is soon to be deployed (e.g., is specified in a permit) on the same or a similar source type,” quoting the 1990 NSR Workshop Manual at B.18 (emphasis in EPA). EPA then want on to quote the 1990 NSR Workshop Manual for the proposition that “a permit requiring the application of a certain technology or emission limit to be achieved for such technology usually is sufficient justification to assume the technical feasibility of that technology or emission limit,” citing 1990 NSR Workshop Manual at B.7 (emphases in EPA).

The EPA then gave the following succinct summary of its position:

EPA has long recognized that a control technology and associated limit is not always required to be operational or actually demonstrated in practice to be considered technically feasible and BACT, as suggested by the ED. In the absence of clear supporting documentation showing why a control technology is technically infeasible or a limit based on that technology is otherwise unachievable for a particular source taking into consideration energy, environmental, or economic impacts, a permitted BACT limit at a similar source (especially one that is supported by a vendor guarantee), can still be considered “achievable” consistent with 40 CFR 52.21(b)(12), even if a facility subject to such a limit is not yet operational.

Accordingly, in the EPA’s view, if a technology is commercially available the only remaining question is whether it is applicable to the proposed source equipment. If the technology or limit has been applied or is in a permit, it may be presumed to be applicable both as to the technology and the limit. Any variation must be fully documented in the administrative record.

COMMENTARY

The EPA’s comments in the Port Arthur LNG export terminal case show a renewed commitment to technology forcing and seeks to make BACT move more rapidly after the “first permit” that applies a new technology—or more stringent emission limitation—to subsequent sources. The EPA’s comments are consistent with the 1990 NSR Workshop Manual albeit a very aggressive view of what the Manual states.

A permit applicant or permitting authority presented with a demand to impose the most stringent limit found in another permit should consider the facts and circumstances behind the permit limit and whether it is really “achievable” by the source. While the EPA attempts to create a “presumption” that such limits are “applicable” and hence “achievable,” the Seventh Circuit in Wisconsin Electric Power Co. clearly held that EPA cannot, by regulation or guidance, “assume what it seeks to prove.” In this case, the Clean Air Act requires the permitting authority to make a “case-by-case” determination of BACT. The statute thus precludes reliance on EPA’s “presumption” unless the applicant has chosen to accept it. Instead, the permitting authority must undertake the harder work of reviewing the proposed equipment, the proposed BACT, the most-stringent permit BACT, and evaluating whether, in light of the information on the record before the agency, the most-stringent limit is achievable. If it is, it is BACT. If it isn’t, it is not BACT and the next most stringent limit should be considered for adoption as BACT and so on until BACT is established.

Given EPA’s interest in this issue, both permit applicants and permitting authorities need to conduct thorough reviews of potentially applicable technologies and ensure that all reasonably available and applicable technologies that are potentially more stringent than the one ultimately selected are adequately addressed. A strong administrative record is a necessity.

The case is also an example of the limits of any Administration’s control over the regulatory process. The President has declared an “all of government” effort to decarbonize, that both “infrastructure development” and LNG exports to Europe are American priorities due to the war in Ukraine, yet in practice many such projects remain stalled or slow-tracked even by agencies under the Administration’s direct control.