state of south dakota board of minerals and … · procedural history of contested case ......
TRANSCRIPT
STATE OF SOUTH DAKOTA BOARD OF MINERALS AND ENVIRONMENT
DEPARTMENT OF ENVIRONMENTAL AND NATURAL RESOURCES
IN THE MATTER OF DRAFT TITLE V AIR ) QUALITY PERMIT AND ACID RAIN 1 CONSOLIDATED PERMIT NO. 28-0801-29 FOR THE BIG ) STONE FACILITY AND IN THE MATTER OF ) Permit No. 28.0801-29 DRAFT PSD PERMIT NO. 28-0803-PSD 1 & PERMIT NO. 28-0803-PSD FOR THE BIG ) Permit No. 28.0803-PSD STONE FACILITY )
1 DENR Draft Permits Issued: 01-08 ) DENR Proposed Permits Issued: 04-08 )
BOARD'S AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW
April 2 1, 2009
TABLE OF CONTENTS
... ................................................................................................................................. ACRONYMS 111
AMENDED FINDINGS OF FACT ............................................................................................. 6
I . Overview ............................................................................................................................. 6
A . Parties ........................................................................................................................ 7
B . Existing Big Stone I Facility ..................................................................................... 7
C . Proposed Big Stone I1 Project ................................................................................... 8
I1 . Background on DENR Air Quality Program and Requested Permits ............................... 12
111 . DENR Action on Otter Tail's Permit Applications .......................................................... 13
IV . Procedural History of Contested Case Proceedings .......................................................... 22
A . Petitions, Motions and Pre-Hearing Procedures (2008) .................................... 22
B . Evidentiary Contested Case Hearing Before the Board (2008) .............................. 25
C . Evidentiary Contested Case Hearing Before the Board (2009) .............................. 30
D . General Findings Regarding Contested Case Hearings .......................................... 30
V . Facts Supporting the Issuance of the Proposed PSD Permit ............................................. 31
............................................................................................... A . Applicability of PSD 31
....................................................................................................... B . BACT Analysis 32
1 . The BACT Process and Relevant Definitions .......................................... 32
2 . BACT Analysis of Big Stone I1 Emissions ............................................... 37
a . PMlo ............................................................................................. 37
b . CO ................................................................................................. 39
C . v o c s ............................................................................................. 39
d . SAM .............................................................................................. 39
e . Fluorides ........................................................................................ 40
C . Other Applicable Limits (PSD Permit Section 5) ................................................... 41
D . Performance Tests (PSD Permit Section 6) ............................................................ 41
E . Fugitive Dust Controls (PSD Permit Section 7) ..................................................... 41
F . Air Quality Analysis-Air Dispersion Modeling ................................................... 42
G . Modeling for Class I Areas .................................................................................... 43
H . Additional Impacts Analysis ................................................................................... 44
I . Conclusion Regarding PSD Permit ......................................................................... 44
VI . Facts Supporting the Issuance of the Proposed Title V Permit ......................................... 44
A . General .................................................................................................................... 44
B . Netting and Other Conditions Applicable to NO, and SO2 .................................... 45
C . Adequacy of Compliance Provisions for SO2 and NO, .......................................... 47 . . . D Mercury Limits ........................................................................................................ 48
.................................................. E . Limitation on HAPS to Avoid Triggering MACT 48
F . Addition of PSD Requirements ............................................................................... 49
. G Conclusion Regarding Revised Title V and Acid Rain Permit ............................... 50
VII . Findings Relating to Issues Raised by Petitioners (2008 Contested Case) ....................... 50
.................................................................................... A . Plantwide Caps (Issues 1-4) 50
B . IGCC (Issue 8) ........................................................................................................ 52
C . General Findings Regarding Petitioners' Challenges to the BACT Determinations (Issues 1 0- 1 2) ................................................................................ 55
............................................................................. D . PMlo BACT Analysis (Issue 10) 56
E . SAM BACT Analysis (Issue 1 1) ............................................................................ 59
........................................................................ F . Fluoride BACT Analysis (Issue 12) 61
G . BACT During Periods of Startup and Shutdown (Issue 13) ................................... 62
H . Modeling For Periods of Startup and Shutdown (Issue 14) .................................... 65
............................................................... I . PMlo NAAQS and Increments (Issue 15) 65
.................................................. . J SO2 and NOx NAAQS and Increments (Issue 16) 68
...................................................... K . Case-by-Case MACT Requirements (Issue 18) 71
1 . The Permit Limits Ensure That Big Stone I1 is not a Major Source of ......................................................................................................... HAPS 71
2 . The Evidence Proved That Big Stone I1 Can Meet the HAP Limits ........ 72
3 . The HAP Limits Are Enforceable ............................................................. 74
4 . The Public Was Provided Proper and Sufficient Notice ........................... 75
L . Contents of Title V Permit (Issue 19) ..................................................................... 78
VIII . Findings Relating to Questions and Claims Raised in April 2009 Contested ..................................................................................................................... Case Hearing 79
AMENDED CONCLUSIONS OF LAW ................................................................................... 82
I . General .............................................................................................................................. 82
I1 . The Board Should Issue the PSD Permit .......................................................................... 83
I11 . The Board Should Issue the Revised Proposed Title V Permit for EPA's Review ......... 84
...................................................................................... IV . Petitioners' Claims Are Rejected 85
ACRONYMS
AHPC
BACT
Btu
CAA
CAMR
CEMS
CO
DENR
EAB
HAPS
HF
IGCC
MACT
NAAQS
NO,
NSPS
NWS
PAL
PC
PM
PM2.5
PMl0
PSD
SAM
SCR
SIP
so2 VOC
WESP
WFGD
Advanced Hybrid Particulate Collector
Best Available Control Technology
British thermal units
Clean Air Act
Clean Air Mercury Rule
Continuous Emissions Monitoring Systems
Carbon Monoxide
South Dakota Department of Environment and Natural Resources
EPA's Environmental Appeals Board
Hazardous Air Pollutants
Hydrogen Fluoride
Integrated Gasification Combined Cycle
Maximum Achievable Control Technology
National Ambient Air Quality Standards
Nitrogen Oxides
New Source Performance Standard
National Weather Service
Plantwide Applicability Limit
Pulverized Coal
Particulate Matter
Particulate Matter with an Aerodynamic Diameter of or Less than 2.5 Microns
Particulate Matter of or Less than 10 Microns
Prevention of Significant Deterioration
Sulfuric Acid Mist (also known as H2SO4)
Selective Catalytic Reduction Unit
South Dakota Air Quality Program's State Implementation Plan
Sulfur dioxide
Volatile Organic Compounds
Wet Electrostatic Precipitator
Wet Flue Gas Desulfurization system (also known as a "wet scrubber")
This matter came to the attention of the South Dakota Department of Environment
and Natural Resources ("DENR) Board of Minerals & Environment ("Board") for a
contested case hearing on the renewal of a Title V operating permit and the issuance of a
pre-construction permit for the Big Stone facility near Big Stone City, South Dakota. In
addition to other preliminary hearings in this matter, including a public input hearing, the
Board conducted contested case hearings in this matter on Monday, August 18, 2008
through Thursday, August 20,2008; and Tuesday, August 26,2008; and further contested
case hearings on modeling issues on Wednesday, September 24, 2008, through Friday,
September 26 , 2008. At these hearings, Applicant appeared by and through its attorneys
Harry M. Johnson, 111 (pro hac vice), and Penny Shamblin (pro hac vice) of the firm
Hunton & Williams; and Thomas J. Welk and Christopher W. Madsen of Boyce,
Greenfield, Pashby & Welk, LLP. DENR appeared by and through its attorneys, Deputy
Attorney General Roxanne Giedd and Assistant Attorney General Scott Swier.
Petitioners Sierra Club and Clean Water Action appeared by and through William A.
Moore (pro hac vice) and Aaron Emerson. Following the contested case hearings, the
Board received post-hearing briefs and reply briefs from the parties. On November 20,
2008, the Board heard final oral arguments and presentations from the parties. Based on
the testimony of the witnesses, the evidence submitted to the Board at the contested case
hearings, the administrative record, and the arguments of counsel, the Board entered
Findings of Fact and Conclusions of Law to support its Final Decision dated the same
day that authorized and directed DENR to prepare and issue in the Board's name the
Prevention of Significant Deterioration ("PSD") permit for the Big Stone I1 project, and
to prepare and issue the proposed Title V permit for the Big Stone facility for review by
the United States Environmental Protection Agency ("EPA"). The PSD permit and
proposed Title V permit were issued on November 20, 2008, and the Title V permit and
supporting materials were subsequently submitted to EPA for its 45-day review.
On January 22, 2009, DENR received EPA's objections to the proposed Title V
permit. In accordance with federal and South Dakota regulations, DENR may not issue
the Title V permit and must respond to the objections within 90 days thereafter. In
addition, on February 26, 2009 and in connection with the appeal of the PSD permit, the
Circuit Court of Hughes County directed the Board pursuant to SDCL 1-26-34 to take
additional evidence on the limited issue of whether any revisions to the proposed Title V
permit to meet EPA's objections necessitate any changes to the PSD permit and/or
Findings of Fact and Conclusions of Law dated November 20,2008.
In addition to other preliminary hearings in the continuation of this matter, the
Board conducted a combined contested case and evidentiary hearing on Monday, April
20, 2009 and Tuesday, April 21, 2009. At these hearings, Applicant appeared by and
through its attorneys Harry M. Johnson, 111 (pro hac vice), and Penny A. Shamblin (pro
hac vice) of the firm Hunton & Williams; and Thomas J. Welk and Christopher W.
Madsen of Boyce, Greenfield, Pashby & Welk, LLP. DENR appeared by and through its
attorneys, Deputy Attorney General Roxanne Giedd and Assistant Attorney General Scott
Swier. Petitioners Sierra Club and Clean Water Action appeared by and through George
Hays (pro hac vice) and Aaron Emerson.
Based on the testimony of the witnesses, the evidence submitted to the Board at
all the hearings, the administrative record, and the arguments of counsel, the Board enters
the following Amended Findings of Fact and Conclusions of Law:
AMENDED FINDINGS OF FACT
The Board concludes that it is appropriate and lawful to issue the permits at issue
in this contested case proceeding, as amended and clarified, for the reasons stated herein
and in the prior orders of the Board.
I. Overview
1. The proposed Title V permit has been revised to meet EPA's objections,
and these Amended Findings of Fact and Conclusions of Law support the issuance of the
revised proposed Title V permit. The Board concludes that the revisions to the proposed
Title V permit do not necessitate any changes to the PSD permit issued on November 20,
2008. Likewise, the revisions to the Title V permit do not necessitate any changes to the
Findings of Facts and Conclusions of Law as they relate specifically to the PSD permit,
except to conform the general findings and conclusions to the revisions.
2. The Board finds that the revised proposed Title V permit resolves EPA's
objections.
3. Nothing in these Amended Findings of Fact and Conclusions of Law is
intended or shall be deemed to alter or amend the date that the PSD permit was issued
(November 20,2008).
4. To the extent any of the following findings of fact may be determined to
be conclusions of law or mixed findings of fact and conclusions of law, the same are
incorporated by this reference as a conclusion of law as if set forth in detail.
5 . All of these findings of fact have been established by a preponderance of
the evidence introduced or stipulated to at the contested case hearing.
6 . Citations to specific evidence herein are not intended to be exhaustive;
rather, they are representative of the evidence to support the individual findings.
A. Parties
7. Applicant Otter Tail Corporation d/b/a Otter Tail Power Company ("Otter
Tail"), along with Montana-Dakota Utilities Co. ("MDU"), a Division of MDU
Resources Group, and Northwestern Energy are the co-owners of the existing Big Stone I
facility. Otter Tail is the operator of the existing Big Stone I facility. Otter Tail is also
one of the co-owners of the proposed Big Stone I1 facility, along with Central Minnesota
Municipal Power Agency, Heartland Consumers Power District, MDU, and Western
Minnesota Municipal Power Agency d/b/a Missouri River Energy Services. [Tr. 492-93
(Rolfes, 8120108); Ex. 300-Dl.
8. Petitioner Sierra Club is a national non-profit corporation organized and
existing under the non-profit corporation laws of the state of California.
9. Petitioner Clean Water Action, Inc., is a national non-profit corporation
organized and existing under the non-profit corporation laws of the District of Columbia.
B. Existing Big Stone I Facility
10. Big Stone I is an existing pulverized coal-fired plant near Big Stone City
in Grant County, South Dakota. The Big Stone I power plant converts steam to
electricity by burning subbituminous coal and other approved alternative fuels.
11. Big Stone I began construction on January 18, 1971. [Core Ex. 1981.
Because construction commenced prior to August 7, 1977, Big Stone I was not required
to obtain a Prevention of Significant Deterioration ("PSD") permit.
12. On January 22, 1975, DENR issued Otter Tail an operating permit for the
Big Stone I power plant. [Core Ex. 198 at 61.
13. On February 24, 1997, Otter Tail was issued its initial Title V operating
permit for the Big Stone I power plant. The Title V permit was issued for a period of five
years, with an expiration date of February 24, 2002.
Condition 5.2 of Otter Tail's Title V permit provides that, if a renewal application is
submitted six months prior to the expiration of the Title V permit, Otter Tail may
continue to operate under the terms of the expired permit until DENR takes action on the
renewal application. [Core Ex. 217 at 11. On June 4, 2001, Otter Tail, as operator, timely
submitted an application to renew Big Stone I's Title V permit. [Core Ex. 210Al.
Therefore, Otter Tail is authorized to operate under the terms of the February 24, 1997
Title V permit.
14. On October 23, 2006, Otter Tail submitted notification to DENR of
planned projects during the 2007 Maintenance Outage for Big Stone I, including
replacement of the Advanced Hybrid Particulate Collector ("AHPC") with a pulse-jet
fabric filter. [Core Ex. 21 OG].
15. On March 21, 2007, DEIVR issued an Amended Title V permit for Big
Stone I addressing the removal of the AHPC and other projects described in Otter Tail's
October 23,2006 submittal. [Core Ex. 21 lG].
C. Proposed Big Stone I1 Project
16. Big Stone 11 is a proposed super-critical pulverized coal-fired electric
generating unit and associated facilities intended to provide approximately 600 MW of
baseload energy for the participating owners in a low-cost, environmentally responsible
manner. "Baseload" means the power from the proposed Big Stone 11 plant must be
available to meet customer demand on a 24-hour per day, 7 days per week basis except
for times when the plant is off-line for maintenance. The Big Stone I1 Project co-owners
serve customers in South Dakota, North Dakota, Montana, Iowa and Minnesota. The
energy from the facility is intended to serve its co-owners' retail and wholesale native
load customers. The facility is expected to produce 4.6 million megawatt hours of
electricity per year. [Tr. 502, 526 (Rolfes, 8/20/08)].
17. Big Stone I1 will be constructed near Big Stone City, South Dakota, at the
same site as the existing Big Stone I unit. The two units will share a common stack and
wet flue gas desulfurization system ("WFGD" or "Wet FGD"). South Dakota is in
attainment with the National Ambient Air Quality Standards ("NAAQS") for all the
pollutants regulated under the Clean Air Act ("CAW). [Core Ex. 183 at 1 11.
18. The Big Stone I1 Project must obtain a number of permits in order to
construct the proposed plant and has already been subject to substantial scrutiny from
various agencies, including the South Dakota Public Utilities Commission and the South
Dakota Water Management Board. The Big Stone I1 Project has obtained the following
permits: solid waste permit, surface water permit, siting permit, South Dakota route
permit for transmission facilities, and South Dakota groundwater permit. [Tr. 496-99
(Rolfes, 8/20/08)]. These permits are final.
19. The Big Stone I1 Project considered and investigated several generation
resources for the Big Stone I1 plant, including (1) atmospheric circulating fluidized bed,
which was determined not to provide sufficient efficiency and economic value; (2)
integrated gasification combined cycle ("IGCC"), which was rejected from a business
standpoint because the technology has not been proven to be reliable and is not generally
commercially available; (3) natural gas-powered turbines, which would be a much more
expensive option; and (4) wind power, which is too intermittent to provide the needed
baseload power. The investigation and analysis of these alternatives was conducted by
Burns & McDonnell, a national engineering firm with extensive experience in power
generation. At the conclusion of the investigation, a super-critical pulverized coal plant
was determined to be the best option for the Project. [Tr. 503-06 (Rolfes, 8120108); Ex.
3221.
20. Burns & McDonnell also investigated potential sites for the location of the
proposed plant. Ultimately, the investigation and analysis revealed the best location for
the new unit was the existing Big Stone I site. [Tr. 508-09 (Rolfes, 8/20/08)].
21. The proposed Big Stone I1 plant is estimated to cost approximately $1.4
billion and the related transmission facilities are estimated to cost approximately another
quarter of a billion dollars. The proposed Big Stone I1 Project will have significant
positive economic impact on the Milbank-Big Stone City area. [Tr. 5 1 1, 5 14-16 (Rolfes,
8/20/08)].
22. The Mid-Continent Area Power Pool, an organization composed of
electrical utilities and other electric industry participants, projects a deficit in generation
capacity, even if Big Stone I1 is constructed. [Tr. 519-20 (Rolfes, 8/20/08)]. Without Big
Stone 11, the utilities will need to find additional generation sources - most likely
combustion turbines which are more expensive than coal on a ~ t u ' basis. [Id.]
23. The proposed Big Stone I1 Project will employ a number of pollution
control devices, including the following:
a. Gases leaving Big Stone 11's super-critical boiler will flow
into a selective catalytic reduction unit ("SCR). The SCR uses catalysts
-
' British thermal units.
to convert nitrogen oxides ("NOx") into nitrogen and water vapor. [Tr.
524 (Rolfes, 8/20/08)].
b. The gases then flow into the "baghouse" where the air
flows through fabric filters. [Tr. 525 (Rolfes, 8/20/08)]. The baghouse
has thousands of fabric filter bags which trap ash and other particulate
matter. [Tr. 530 (Rolfes, 8/20/08)]. Pulses of air directed at the bags
periodically knock the solids off of the bags, and the particulate matter
falls into hoppers where it can be collected. [Tr. 530 (Rolfes, 8/20/08)].
c. Gases then flow into a wet FGD. A wet FGD is also
known as a "wet scrubber." The wet scrubber is a device that will be
shared with Big Stone I, meaning that Big Stone 1's exhaust gases will
also flow into the wet scrubber. A wet scrubber, as compared to a dry
scrubber, will provide for greater reduction of emissions of sulfur dioxide
("S02"). [Tr. 53 1-32 (Rolfes, 8/20/08)].
d. The estimated capital cost of the pollution control
equipment for the proposed Big Stone I1 plant is significant. Rough
approximations are as follows: $300 million for a boiler with the SCR
device; $40 million for the fabric filter baghouse; and $1 50 million for the
wet scrubber. [Tr. 538 (Rolfes, 8/20/08)].
24. The pollution control equipment has not been ordered and final design has
not been completed. Once the permits are issued, the Project will select a vendor to build
the boiler and the pollution control equipment. The emission control efficiencies will be
specified and the equipment will be designed to comply with the permits. [Tr. 552
(Rolfes, 8/20/08)].
11. Background on DENR Air Quality Program and Requested Permits
25. The DENR Air Quality Program administers air quality permitting as
required by the Clean Air Act, and state and federal statutes and regulations.
26. A PSD permit is required for any regulated pollutant prior to construction
of new major stationary sources or major modifications to existing sources in areas
designated as in attainment with the NAAQS under section 107 of the CAA.
27. In January 2008, the EPA approved the South Dakota Air Quality
Program's State Implementation Plan ("SIP") for the PSD Program. Prior to that date,
the PSD Program was considered a "delegated program" which meant that DENR
administered PSD permitting on behalf of EPA. [Tr. 44-46 (Gustafson, 811 8/08)].
28. NAAQS mandated by the CAA are set by EPA. EPA has promulgated
NAAQS for specific criteria pollutants including particulate matter ("PMlo"), SO2, NO,,
and carbon monoxide ("CO"). The Air Quality Program maintains ambient air monitors
throughout the state to determine the level of pollutants in the ambient air to assure
compliance with the NAAQS. South Dakota is in attainment with all the NAAQS. [Tr.
47 (Gustafson, 811 8/08)].
29. A Title V permit is an operating permit required for major sources
pursuant to Title V of the CAA. The Title V permit can also serve as construction
authorization when a PSD permit is not required. ARSD 74:36:05:02. All PSD sources,
among others, are required to have a Title V permit. After construction and within
twelve months of commencing operation, a source is required to apply for a Title V
operating permit, which will incorporate the requirements of the PSD permit, among
others. [Tr. 49-50 (Gustafson, 811 8/08)].
111. DENR Action on Otter Tail's Permit Applications
30. On July 20,2005, Otter Tail submitted an application for a PSD Permit for
Big Stone I1 on behalf of the co-owners of Big Stone 11. [Core Exs. 144 and 183 11.
DENR considered the application complete on August 9,2005. [Core Ex. 183 at :I].
31. In April 2006, DENR issued a "Notice of Prevention of Significant
Deterioration Permit Application and Draft Permit" soliciting public comment on the
initial Draft PSD Permit. [Core Exs. 154, 155, 159, 1601.
32. In May and June 2006, DENR received comments on the initial draft PSD
permit. [Core Exs. 187- 1921.
33. In June 2006, Otter Tail submitted an updated application for the PSD
Permit on behalf of the Co-Owners of Big Stone 11. [Core Ex. 1641. DENR extended the
public comment period until June 26, 2006. [Core Ex. 1611. In August 2006, Otter Tail
submitted further updates to the PSD application. [Core Ex. 1671.
34. In Otter Tail's PSD application for Big Stone 11, Otter Tail requested
emission and operational limits that are associated with both Big Stone I and Big Stone I1
to avoid PSD review for SO2 and NOx emissions. During the public notice period on the
initial PSD draft permit, EPA submitted comments suggesting that the PSD Permit was
not the appropriate place for the SO2 and NOx limitations. DENR agreed and concluded
that the Title V permit was a more appropriate place for those limits. [Core Ex. 217 at :I].
From then on, DENR processed the Big Stone I1 PSD permit application and the Big
Stone I Title V renewal concurrently. [Tr. 242 (Rombough, 8/19/08)].
35. On December 21, 2008, EPA published its approval of the South Dakota
SIP for PSD, effective January 22, 2008. Otter Tail resubmitted its PSD application and
supporting materials on January 22, 2008 to ensure processing of the applications under
the SIP. [Core Ex. 1761.
36. DENR prepared a second draft PSD Permit [Core Ex. 1821 and a revised
Statement of Basis ("PSD RSOB") [Core Ex. 1831. The initial PSD Statement of Basis
[Core Ex. 1601, as revised and supplemented by the PSD RSOB, is adopted and
incorporated herein by reference, as further modified and supplemented by these Findings
of Fact and Conclusions of Law.
37. On January 30, 2008, DENR issued a "Notice of Prevention of Significant
Deterioration Permit Application and Draft Permit" soliciting public comment on the
second draft PSD Permit. [Core Ex. 1781. In accordance with ARSD 74:36:09:03, public
notices were properly published on or about January 25, 2008 in the Watertown Public
Opinion and the Grant County Review. [Tr. 154-55 (Rombough, 8/18/08); Core Ex.
18 I].
38. DENR prepared a draft Title V Air Quality Permit ("Draft Title V
Permit") [Core Ex. 21 61 and associated Statement of Basis ("Title V SOB") based on the
June 4, 2001 application as supplemented. DENR's Title V SOB [Core Ex. 2171 is
adopted and incorporated herein by reference, as modified and supplemented by these
Amended Findings of Fact and Conclusions of Law.
39. On January 30, 2008, DENR issued a "Notice of Title V Air Quality
Permit Application and Draft Permit" soliciting public comment on the Draft Title V
Permit. [Core Ex. 2131. In accordance with ARSD 74:36:05: 17, public notices of the
Title V application and draft permit were properly published on or about January 25,
2008 in the Watertown Public Opinion and the Grant County Review. [Tr. 245-46
(Rombough, 811 9/08); Core Ex 2 151.
40. Following .the February 8, 2008 ruling by the United States Court of
Appeals for the District of Columbia Circuit vacating the Clean Air Mercury Rule, the
applicability of case-by-case MACT to Big Stone I1 was uncertain. New Jersey v. EPA,
5 17 F.3d 574 (D.C. Cir. 2008). In light of this uncertainty, Otter Tail submitted to DENR
on February 25, 2008 a request for a case-by-case Maximum Achievable Control
Technology ("MACT") determination solely for mercury. [Core Ex. 1851. On March 18,
2008, Otter Tail withdrew the request for a case-by-case MACT determination after
further analysis indicating that Big Stone I1 will not be a major source of Hazardous Air
Pollutants ("HAPS"), proposing instead HAP emission limits sufficient to ensure Big
Stone 11's potential HAP emissions are below the major source thresholds. [Core Ex.
1861.
41. In February 2008, DENR received public comments on the second draft
PSD and Title V Permits, which are reflected in the core exhibits. [Core Exs. 187, 188,
193, 1941. Sierra Club requested and received an extension until March 15, 2008 to file
its comments on the draft permits. [Core Exs. 184, 1951.
42. On April 15, 2008, DENR published its responses to the comments
received during the 2006 and 2008 public notice periods regarding the initial draft PSD
permit, the second draft PSD Permit and the draft Title V Permit. [Core Ex. 1981.
DENR's responses to comments were in excess of 90 pages - one of the lengthiest
responses to public comments in DENR's history. [Tr. 277 (Rombough, 8/19/08)]. In its
responses, DENR addressed all comments respecting the draft permits received as of that
time.
43. DENR sent the Final Proposed Permits and its Response to Comments to
all persons who had submitted comments on the Draft Permits. [Tr. 247 (Rombough,
811 9/08>].
44. In particular, DENR addressed all EPA comments on the draft permits and
modified those permits where appropriate. Until January 22, 2009, when it objected to
the proposed Title V permit, EPA neither submitted further written comments nor sought
to intervene in these proceedings.
45. On April 15, 2008, DENR issued its final draft proposed Prevention of
Significant Deterioration Air Quality Preconstruction Permit for Big Stone I1 (Core Ex.
197), and its final draft proposed Title V Air Quality Permit and Acid Rain Permit (Core
Ex. 219).
46. DENR spent thousands of hours investigating and researching the permit
applications in this matter and preparing the draft permits, analyzing comments,
responding to comments and preparing the final proposed permits. That time is
significantly longer than time spent on other PSD or Title V permits. [Tr. 277-78
(Rombough, 8/19/08)]. In performing its review of the permits, Mr. Rombough reviewed
applications and similar permits issued by other states and spoke with his counterparts in
other states' agencies. [Tr. 278-83 (Rombough, 8/19/08); Exs. 327-321.
47. On July 17, 2008, the Board conducted a public input hearing in Milbank,
South Dakota, regarding the proposed permits, the transcript of which is incorporated
herein by reference. Seventy-seven persons, excluding lawyers for the parties, signed in
at the hearing. Twenty-six persons from South Dakota and Minnesota presented
comments regarding the proposed permits. Generally, most commenters expressed
positive comments in support of the Big Stone I1 Project, while a minority of commenters
opposed the Project. Specifically:
a. Many commenters spoke in favor of the project noting that
Otter Tail and Big Stone I have been good neighbors and friends for years.
The project will provide safe, reliable and environmentally responsible
low-cost electricity with less emissions than Big Stone I by itself. A
number of commenters noted that they have raised their families in the
community alongside the Otter Tail employees and have observed no ill
effects among those living close to the power plant.
b. Several commenters expressed concern regarding mercury
emissions from the Big Stone facilities. The evidence is that the
construction of Big Stone I1 will not increase mercury emissions over
existing emissions. Combined mercury emissions from Big Stone I and
Big Stone I1 are capped at Big Stone 1's calculated mercury emissions
from 2004 (189 lbslyear). [Core Ex. 219 at 251. Due to controls that are
added to Big Stone I and Big Stone 11, it is anticipated that mercury
emissions will be approximately 50% below the caps. Hence, mercury
emissions from both Big Stone I and I1 are expected to be less than the
current mercury emissions from Big Stone I.
c. Several commenters expressed concern regarding the effect
of Big Stone I1 on ambient air quality. The Board finds DENR has
conducted extensive air quality monitoring and has determined that air
quality is excellent. Due to controls to be installed as part of the Big Stone
I1 project and based on air dispersion modeling that is accepted by the
Board, all legal requirements regarding air quality are satisfied and there is
no reason to believe that air quality will be degraded.
48. The Board finds that the public was able to reasonably and meaningfully
review and comment in writing and in person on the proposed permits.
49. The Board has considered the public comments received during the 2006,
2008, and 2009 public notice periods, as well as all other public comments received since
that time, when deciding whether to issue the permits. DEhTR's responses to comments
[Core Exs. 198, 8531 are adopted and incorporated herein by reference, as supplemented
herein.
50. During the 2008 contested case hearing, Otter Tail proposed several
changes andlor clarifications of the proposed PSD permit. [Ex. 3241. These included:
clarification of Best Available Control Technology ("BACT") requirements during
startup, shutdown, and malfunction; more stringent material handling PMlo emission
limits consistent with EPA's proposed NSPS and Otter Tail's modeling; the addition of
language in Section 1.1 allowing insignificant changes to the design of the plant so long
as modeling still reflects compliance with air quality standards; and correction of a
typographical error in Unit #35's BACT limit. DENR concurred with all the changes
proposed by Otter Tail except for the proposed language in Section 1.1. DENR proposed
revised language regarding insignificant design changes in Section 1.1 A, and Otter Tail
agreed with DENR's revised language. The final proposed language is shown in Ex. 705,
which the Board accepts and will incorporate into the PSD permit. The Board adopts and
will incorporate the remaining proposed changes in Exhibit 324 for the reasons herein.
51. Otter Tail had originally proposed changes to the 2008 draft Title V
permit. Otter Tail later withdrew those proposed changes. The Board adopted and issued
the 2008 proposed Title V permit [Core Ex. 2 191 without modification.
52. The PSD permit and proposed Title V permit were issued on November
20, 2008, and the proposed Title V permit and supporting materials were subsequently
submitted to EPA for its 45-day review.
53. On January 22, 2009, DENR received EPA's objections to the proposed
Title V permit. [Core Exs. 808-8091. In accordance with federal and South Dakota
regulations, DENR could not issue the Title V permit and was required to respond to the
objections within 90 days thereafter.
54. Generally, EPA objected on the following three areas:
a. Failure to include applicable requirements from the PSD
permit and New Source Performance Standards ("NSPS") for the
proposed Big Stone I1 project in the proposed Title V permit;
b. A lack of a proper PSD applicability analysis for SO2 and
NOx; and
c. Inadequate compliance provisions for SO2 and NO,
emissions to avoid a PSD review and for HAP emissions to avoid a Case-
by-Case MACT review for the Big Stone I1 project in the proposed Title V
permit. EPA also recommended that the HAP provisions in Chapter 11 of
the proposed Title V permit be noticed for public comment.
55. After receiving EPA's objections, DENR and EPA communicated
frequently via telephone and e-mail about revisions to the proposed Title V permit and
the supplemental Statement of Basis. [See, e.g., Core Exs. 8 12-8 15, 8 17-825, 828-8301.
DENR sought to ensure that EPA was satisfied with the revisions before publishing the
public notice of the draft revisions to the proposed Title V permit and the Statement of
Basis.
56. DENR drafted revisions to the proposed Title V air quality permit in
response to EPA's objection to ensure compliance with SDCL 34A-1 and the federal
Clean Air Act. DENR took the following specific actions on the permit:
a. Re-noticingpermitconditions11.1,11.2,11.3,11.4,11.6,
11.7, and 11.9;
b. Revising permit conditions 5.5, 5.9, 7.1 1, 7.12, 8.4, 9.2,
9.5,9.8, and 11.5;
c. Adding permit conditions 5.12,9.3, 9.6, 9.9,9.10, and 1 1.8;
and
d. Adding Chapters 12.0, 13.0, 14.0, 15.0, and 16.0.
57. On February 9, 2009, DENR issued a "Notice of Issuance of Draft
Revisions to Proposed Title V Air Quality Permit in Response to EPA Objections."
[Core Exs. 833, 836-840, 8421. Public notices of the draft revised Title V permit were
properly published on or about February 11, 2009, in the Watertown Public Opinion and
the Grant County Review. [Core Ex. 8411. The notices solicited public comment on the
draft revisions to the Title V Permit, solicited public comment on certain other provisions
in accordance with EPAYs objections, and provided notice of the contested case hearing
on or about April 20,2009. [Id]
58. DENR received public comments from approximately 300 individuals and
environmental groups. [See Core Exs. 844-8481. DENR reviewed and considered the
comments, and where appropriate, incorporated changes into the revised proposed Title
V permit. DEhTR issued responses to the comments on March 18, 2009 [Core Ex. 8531,
and submitted them to EPA and the commenters along with notification of the time and
location of the contested case hearing. [Core Exs. 850-851, 8541.
59. DENR issued its final draft revisions to the Title V permit on March 18,
2009. [Core Ex. 8531
60. At the April 2009 contested case hearing, Otter Tail proposed a slight
wording change to Condition 9.5 of DENRYs March 18, 2009 final draft revision of the
Title V permit to clarify that the Unit #1 and Unit #13 annual nitrogen oxide limits go
into effect the month of the initial startup of Unit #13 consistent with Condition 9.2 for
sulfur dioxide. DENR concurred with the change proposed by Otter Tail. The Board
adopts and will incorporate the proposed change. The first paragraph of Condition 9.5
will read as follows:
9.5 Nitrogen oxide limit. In accordance with ARSD 74:36:05:16:01(8), the owner or operator shall not emit into the ambient air nitrogen oxide emissions in excess of the 12-month rolling emission limit specified in Table 9-2. The 12-month rolling emission limits includes periods of startup, shutdown, and malfunction: The first month of the 12-month rolling total shall begin the month of the initial startup of the Unit #13.
IV. Procedural History of Contested Case Proceedings
A. Petitions, Motions and Pre-Hearing Procedures (2008)
61. On February 20, 2008, Otter Tail timely filed petitions with the Board
requesting contested case hearings regarding the PSD and Title V permits.
62. On May 15, 2008, Petitioners Sierra Club and Clean Water Action, Inc.,
timely filed their "Petitions for Contested Case Hearings on the Big Stone Facility's
Proposed Title V Air Quality Permit and Acid Rain Permit No. 28-0801-29 and the Big
Stone I1 Facility's Proposed PSD Permit No. 28-0803-PSD" (the "Petition"). The
Petition raised the following issues with respect to the proposed permits:
a. Issues 1-4: Challenging the use of plantwide caps for SO2
and NO,.
b. Issue 5: Arguing that prior modifications to Big Stone I
should have triggered PSD Review.
c. Issues 6-7: Arguing that the PSD permit was invalid
because it did not impose BACT limitations on emissions of greenhouse
gases, specifically carbon dioxide ('TO2") and methane.
d. Issue 8: Arguing that DENR should have considered IGCC
in its BACT analysis.
e. Issues 9 and 17: Arguing that DENR should have
separately analyzed emissions of particulate matter with an aerodynamic
diameter less than 2.5 microns ("PM2,3") in the BACT analysis and with
respect to whether Big Stone I1 would violate NAAQS.
f. Issue 10: Challenging DENR's BACT analysis with
respect to PMlo.
g. Issue 11: Challenging DENR's BACT analysis with
respect to sulfuric acid mist ("SAM").
h. Issue 12: Challenging DENR's BACT analysis with
respect to fluorides.
1. Issue 13: Arguing that the Proposed PSD Permit is legally
invalid because it does not require compliance with BACT limits during
periods of startup and shutdown.
j. Issue 14: Arguing that the Proposed PSD Permit is legally
invalid because the modeling was insufficient to demonstrate compliance
with NAAQS and PSD increments during periods of startup and
shutdown.
k. Issue 15: Challenging DENR's conclusion that Big Stone
I1 will not cause or contribute to a violation of PMlo NAAQS and PSD
increments.
1. Issue 16: Challenging DENR's conclusion that Big Stone
I1 will not cause or contribute to a violation of SO2 and NOx NAAQS.
m. Issue 18: Arguing that the Proposed Title V Permit is
invalid because it did not properly address case-by-case MACT
requirements.
n. Issue 19: Arguing that the Proposed Title V Permit does
not include all applicable requirements and impermissibly allows
operation of Big Stone 11.
63. The Board consolidated all the pending petitions into one contested case
hearing.
64. On May 23, 2008, Petitioners moved to voluntarily dismiss Issue 5 of their
Petition. The Board granted the motion by order dated June 16, 2008.
65. On June 4, 2008, Otter Tail filed and served a motion and supporting brief
seeking dismissal of Issues 6 and 7 of the Petition.
66. On July 7, 2008, both Otter Tail and the Petitioners moved for partial
summary judgment. In its motion, Otter Tail sought summary judgment on Issues 9 and
17 regarding DENR's use of PMlo as a surrogate for PM2.5 in its BACT and NAAQS
analyses. In Petitioners' motion, Petitioners sought judgment on Issues 1, 2, 4, 6-8, 13-
14, and 18-19. The parties provided the Board with briefs in support of their respective
positions.
67. On July 17, 2008, the Board heard argument on Otter Tail's Motion to
Dismiss and the parties' respective motions for partial summary judgment.
68. On July 22, 2008, the Board entered an order granting Otter Tail's Motion
to Dismiss Issues 6 and 7 because Petitioners failed to state any claim upon which relief
could be granted with regard to these issues. Accepting the arguments of Otter Tail and
DENR, the Board may not consider control of the emissions of C 0 2 and methane,
because they are not regulated at this time by EPA or the State of South Dakota.
69. On July 22, 2008, the Board also entered an order granting Otter Tail's
Motion for Partial Summary Judgment with respect to Issues 9 and 17 finding there was
no genuine dispute of material fact as to these issues and because Otter Tail was entitled
to judgments on these issues as a matter of law. Accepting the arguments of Otter Tail
and DENR, the Board found that DENR had properly used PMlo as a surrogate for a
BACT analysis of PM2,5 and NAAQS modeling, and therefore, as a matter of law, no
separate BACT analysis or modeling for PM2,5 is required.
70. On July 22, 2008, the Board entered an order denying Petitioners' Motion
for Partial Summary Judgment in its entirety.
B. Evidentiary Contested Case Hearing Before the Board (2008)
71. The Contested Case Hearing was bifurcated to allow Petitioners sufficient
time to analyze all of Otter Tail's and DENR's modeling evidence. The Board set aside
dates in August for the first portion of the hearing and dates in September for the second
portion of the hearing. The first portion was designated for all issues other than
modeling, while the second portion was designated for the modeling issues and rebuttal.
The parties were provided ample time to conduct discovery, present their evidence, and
cross examine the witnesses. A quorum of Board members was present at all times
during the hearings. In addition, any Board members who were not present at any
particular time during the hearing have read the hearing transcript and reviewed the
exhibits admitted.
72. Over the course of the contested case hearings, the Board heard the
testimony of ten witnesses, and accepted into evidence 292 exhibits comprising over
18,200 pages. In addition to the evidence presented at the hearing, the parties engaged in
extensive discovery efforts during which five persons were deposed and more than
46,000 pages of documents were exchanged by the parties pursuant to written discovery
requests. [Tr. 1388-89 (stipulation by parties, 9/26/08)].
73. DENR presented the testimony of the following witnesses:
a. Brian Gustafson, Administrator of DENR's Air Quality
Program. Mr. Gustafson has a Bachelor of Science Degree in geological
engineering from the South Dakota School of Mines & Technology. He
has been employed by DENR in the Air Quality Program since 1998. Mr.
Gustafson's responsibilities as the administrator of DENR's Air Quality
Program include management of the program and assuring the program is
meeting all EPA requirements. [Tr. 4 1 (Gustafson, 811 8/08)].
b. Brad Schultz, Team Leader, DENR Air Quality Program.
Mr. Schultz is an Environmental Senior Scientist with the Air Quality
Program of DENR. Mr. Schultz is a graduate of South Dakota State
University and has a degree in agronomy. Mr. Schultz has been employed
by the State of South Dakota in its environmental programs since 1979 (at
that time within the Department of Health and presently with DENR). Mr.
Schultz, as team leader for the Air Monitoring Program, is responsible for
developing and implementing the air monitoring system for the State of
South Dakota. [Tr. 76-77 (Schultz, 811 8/08)].
c. Kyrik Rombough, Team Leader For Permitting, DENR Air
Quality Program. Mr. Rombough received a Bachelor of Science degree
in chemical engineering from the South Dakota School of Mines &
Technology in May 1999. Following graduation, he started work with
DENR's air quality program. In his job duties, Mr. Rombough is
responsible for processing, reviewing, and making decisions regarding the
relevant permit applications, including the preparation of the Statements of
Basis, the draft permits, the final proposed permits, and DENR's
responses to public comments. Mr. Rombough has worked on most of
South Dakota's Title V permits (approximately 90) and PSD permits
(approximately 7 or 8), and has been the primary permit writer on 40-50 of
the Title V permits and 4 of the PSD permits. [Tr. 123 (Rombough,
811 8/08)],
d. Jim Anderson, Natural Resources Project Engineer, DENR
Air Quality Program. Mr. Anderson graduated from the South Dakota
School of Mines & Technology with a bachelor's degree in chemical
engineering. Mr. Anderson performs ambient air quality modeling.
74. Otter Tail presented the testimony of the following witnesses:
a. Mark Rolfes, Project Manager of Big Stone I1 Project. Mr.
Rolfes has the overall responsibility for the development and
implementation of the Big Stone I1 project. [Tr. 489-90 (Rolfes,
8/20/08)]. He is a Professional Engineer licensed in South Dakota and
Minnesota. He is a 1977 graduate of North Dakota State University,
receiving a Bachelor of Science degree in mechanical engineering. Mr.
Rolfes has been employed with Otter Tail for over 3 1 years. He served as
plant manager of the Big Stone I plant for 14 years and has been the
manager of the Big Stone I1 Project since 200 1.
b. Terry Graumann, Manager of Environmental Services,
Otter Tail. Mr. Graumann is responsible for ensuring that the
documentation and permitting activities associated with Otter Tail's
operations are in compliance with various state and federal environmental
regulations. Mr. Graumann acts as the liaison with DENR to ensure that
Otter Tail receives the appropriate information to complete permitting
applications and that applications are properly filed. Mr. Graumann also
coordinates with plant engineers and outside consultants on data-gathering
projects to ensure that Otter Tail meets its obligations outlined in permit
conditions. Mr. Grawnann has been employed with Otter Tail since 1973
and has remained actively involved in its environmental division for 35
years. Mr. Graumann has served as a team member on the Big Stone I1
Project since 2004. [Tr. 560-66 (Graumann, 8/20/08)].
c. David Gaige, P.E., Project Manager, Environmental
Division, Burns & McDonnell. Mr. Gaige is a licensed professional
engineer in the State of Colorado and is employed as a senior project
manager in the environmental studies and permitting division of Bums &
McDonnell. Mr. Gaige has over 32 years of experience in air quality
permitting. Mr. Gaige has an undergraduate degree in mechanical
engineering from Texas Tech University and a master's degree in
mechanical engineering fiom Colorado State University. Mr. Gaige was
previously employed by the Colorado Health Department, working in air
permitting programs. As a consulting engineer, he has worked on permits
for various power plants, including approximately 20 coal-fired plants.
Mr. Gaige has extensive experience in BACT analysis and air dispersion
modeling. [Tr. 686, 687, 1 142 (Gaige, 812 1/08 & 9/25/08); Ex. 3 191.
d. Robynn Andracsek, P.E., Environmental Engineer, Burns
& McDonnell. Ms. Andracsek is a licensed professional engineer in the
State of Kansas and is employed as an environmental engineer with Bums
& McDonnell in Kansas City, Missouri. Ms. Andracsek has an
undergraduate degree in mechanical engineering and a master's degree in
environmental engineering, both from the University of Kansas. Ms.
Andracsek has worked with air dispersion modeling on a daily basis for
the last 11 years and has extensive experience with air dispersion
modeling for power plants and other industrial facilities. Ms. Andracsek
was the primary modeler for the Big Stone I1 project. [Tr. 984-89
(Andracsek, 9/24/08); Ex. 3781.
75. Petitioners presented the testimony of the following persons:
a. Ranajit "Ron" Sahu, Ph.D., consultant. Dr. Sahu works as
an independent environmental consultant with experience in reviewing
coal-fire power plant applications and air quality emissions calculations.
Dr. Sahu has an undergraduate degree in mechanical engineering from the
Indian Institute of Technology and completed his Ph.D. in the
environmental aspects of coal combustion at Cal Tech in 1988. [Tr. 783-
85 (Sahu, 8/26/08)]. Dr. Sahu has never served as a regulator, nor can he
recall ever preparing an air permit application for a coal-fired power plant.
[Id. at 927-281. He has never prepared a BACT analysis for a coal-fired
power plant. [Id. 1.
b. Patrick Hanrahan, P.E., consultant. Mr. Hanrahan works as
an independent air quality consultant and is a registered professional
engineer in chemical and environmental engineering. He received his
undergraduate degree in chemistry from Portland State University in 1970
and master's degree in biochemistry from the University of Illinois in
Urbana in 1972. [Tr. 1309-10, 1320 (Hanrahan, 9/26/08)]. Mr.
Hanrahan's experience with air quality modeling for coal-fired power
plants, including their haul roads, is very limited. [Id. at 1359-611. Mr.
Hanrahan presented his testimony by telephone at the request of
Petitioners.
C. Evidentiary Contested Case Hearing Before the Board (2009)
76. The Board consolidated the continuation of the contested case on the Title
V permit with the evidentiary hearing ordered by the Circuit Court of Hughes County
pursuant to SDCL 1-26-34 in connection with the PSD appeal.
77. Kyrik Rombough was the only witness who testified.
78. A quorum of Board members was present at all times during the April
2009 hearing.
D. General Findings Regarding Contested Case Hearings
79. Throughout the course of the extensive hearings in this matter, the Board
had ample opportunity to observe the witnesses in person (or to hear their testimony live
via telephone in the case of Mr. Hanrahan). The Board has observed the demeanor of the
witnesses and has considered the testimony they provided under direct and cross
examination. Considering all the evidence presented at the hearing, the Board finds the
testimony of Otter Tail's witnesses and DENR staff to be more credible and convincing
than the testimony by Petitioners' witnesses. In further comparison to Petitioners'
witnesses, the Board finds the witnesses of Otter Tail and DENR have more education,
training, and experience in the field, particularly with regard to air permitting for coal-
fired power plants. In addition, the Board finds the witnesses of Otter Tail and DENR
utilized reasonable, prudent methodologies of analysis whereas Petitioners' witnesses
advocated for speculative or unreasonable methodologies. In many instances,
Petitioners' witnesses offered nothing more than criticisms without offering any
alternatives. Petitioners' witnesses had not spent as much time as DENR's and Otter
Tails's witnesses investigating and evaluating this project and did not display nearly as
much familiarity with the project and its supporting information. The testimony of
Petitioners' witnesses revealed various misunderstandings about the project and about the
supporting information.
80. The Board finds that DENR and its staff persons properly exercised their
judgment in this matter in concluding that the permits should be issued. DENR and its
staff members have substantial education, training, and experience in the field of air
permitting (including PSD and Title V permits) and in the enforcement of federal and
state air quality standards and regulations. The DENR staff spent thousands of hours
reviewing and analyzing Otter Tail's permit applications, preparing draft permits,
analyzing and reviewing comments, working with EPA to address and resolve EPA's
objections, and participating in the contested case hearings.
V. Facts support in^ the Issuance of the Proposed PSD Permit
A. Applicability of PSD
81. Grant County is located in an attainment area, and Big Stone I1 is subject
to PSD review for PMlo, PM2.5, CO, VOC, fluorides and sulfuric acid mist. The main
elements of PSD review are BACT, demonstration of compliance with NAAQS and
increment through air quality modeling, and an analysis of additional impacts.
82. PSD review is not required for SO2 and NOx. Under 40 C.F.R. 3 52.21(b),
Big Stone I and I1 are one stationary source. The 2008 Title V permit established
federally enforceable plantwide emission limits for SO2 and NOx. The limits applied to
all emission units at Big Stone I and I1 that emit SO2 and NOx. With these limits
applicable facility-wide, Big Stone I1 would not cause any increase in SO2 or NO,
emissions for the source. [Core Ex. 198 at 15-17]. To respond to EPA's objection that
individual unit limits are necessary, , DENR conducted a netting analysis as described in
the revised Title V Statement of Basis and established SO2 and NOx limits for each
individual emissions unit such that these pollutants are not subject to PSD Review. [Core
EX. 842A 5-1 51.
83. DENR appropriately used PMlo as a surrogate for PM2 5 in the PSD
review. Therefore, the Board finds that a separate PM2 5 PSD review was not required.
B. BACT Analysis
1. The BACT Process and Relevant Definitions
84. The BACT requirement applies to each individual new or modified
affected emissions unit and pollutant emitting activity at which a net emissions increase
would occur. The BACT analysis consists of determining the best available control
technology and establishing an emissions limit based on the maximum degree of
reduction achievable for each pollutant subject to regulation under the federal Clean Air
Act.
85. The BACT analysis is determined
on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, [and] is achievable . . . through application of production processes or available methods, systems, and techniques, including fuel cleaning or treatment or innovative fuel combustion techniques for control of [the] pollutant. In no event shall application of [BACT] result in emissions of any pollutant which would exceed the emissions allowed by any applicable standard under [the New Source Performance Standards]. If the Administrator determines that technological or economic limitations on the application of measurement methodology to a particular emissions unit would make the imposition of an emissions standard infeasible, a design, equipment, work practice, operational standard, or combination thereof, may be prescribed instead to satisfy the requirement for the application of [BACT]. Such standard shall, to the degree possible, set forth the emissions reduction achievable by implementation of such design, equipment, work practice or operation, and shall provide for compliance by means which achieve equivalent results.
40 CFR 5 52.21(b)(12), incorporated by ARSD 74:36:09:02.
86. In determining BACT, a permitting authority should recognize that BACT
must be met at all times under worst case conditions and that overall system performance
degrades over time. Thus, setting an unrealistically low BACT limit in the hope that the
facility will somehow meet it is not good regulatory practice.
87. A high degree of technical judgment also must be exercised in any BACT
analysis for coal-fired plants, because of the wide variety of coals and coal-fired
facilities. The Board agrees with EPAYs Environmental Appeal Board ("EAB") that
BACT decisions are highly site-specific:
We note, however, that PSD permit decisions depend heavily on site-specific analysis, and this kind of case-by- case decision making inevitably results in substantive differences from permit to permit. See, e.g., In re Cardinal FG Co., 12 E.A.D. 154, 16 1 (EAB 2005) (explaining that "BACT is a site-specific determination"); In re Old Dominion Elec. Coop., 3 E.A.D. 779,788-89 (Adm'r 1992)
("PSD permit determinations are made individually under the Act on a case-by-case basis . . . .").
In re BP Cherry Point, 12 E.A.D. 209, 223 n.37 (EAB 2005); see also In re Prairie State
Generating Co., PSD Appeal No. 05-05, slip op. at 71 (EAB August 24,2006), aff'd sub
nom. Sierra Club v. EPA, 499 F.3d 653,655 (7th Cir. 2007).
88. In the context of BACT, "available" and "achievable" are not exact terms
and do not have explicit regulatory definitions. Therefore, they are subject to reasonable
interpretation and judgment.
89. According to the definition of BACT, a control technology must be
"available" and "applicable" to be considered BACT. 40 CFR § 52.21(b)(12),
incorporated by ARSD 74:36:09:02. It is reasonable to interpret "available" as follows:
[A] technology is considered "available" if it can be obtained by the applicant through commercial channels or is otherwise available within the common sense meaning of the term. An available technology is "applicable" if it can reasonably be installed and operated on the source type under consideration.
Prairie State, slip. op. at 45 (citation omitted).
90. Feasible technology means technology that is commercially available and
has been demonstrated (i.e., proven) on the type of source being permitted. This means
that the technology has progressed beyond the conceptual stage and beyond the pilot
testing phase. See Cardinal, 12 E.A.D. at 166 ("Technologies in the testing stage
generally are not considered technically feasible."). The technology must have been
demonstrated successfully on full-scale operations for a sufficient time to be considered
proven. Id. at 166-67 (upholding permitting agency's rationale that 2 to 3 years operating
history of a technology "is insufficient to satisfy the concept of demonstrated
technology").
91. According to the definition of BACT, a BACT limit must also be
"achievable." 40 CFR $ 52.21(b)(12), incorporated by ARSD 74:36:09:02. To
determine whether a limit is achievable, a high degree of technical judgment and
expertise must be used.
92. "Achievable" in the context of BACT means an emission limit that the
source can meet on a continual basis over each averaging period for the lifetime of the
facility. To establish limits based on unproven supposition or on short-term expectations
is to virtually ensure repeated and unavoidable permit violations. BACT limits should be
set at levels the source can meet under all reasonably foreseeable worst-case conditions
because exceeding a BACT limit is a serious violation and the penalties are severe.
BACT limits are therefore not established based on what a source can achieve on its best
possible day or on an average day. BACT is not established based on speculation or what
may theoretically be possible on a short-term basis. Accordingly, a BACT analysis does
not require an applicant or the permitting agency to speculate about what a technology
might be able to achieve in the future. See, e.g., Cardinal, 12 E.A.D. at 166-67.
93. It is appropriate to include "safety factors" or "cushions" to ensure that
BACT limits are achievable at all times. [Tr. 690-91 (Gaige, 08/21/08); see also In re
Masonite Corp., 5 E.A.D. 551, 560-61 (EAB 1994); In re Knauf Fiber Glass, GmbH, 9
E.A.D. 1, 15 (EAB 2000) ("There is nothing inherently wrong with setting an emission
limitation that takes into account a reasonable safety factor."); id. ("The inclusion of a
reasonable safety factor in the emission limitation calculation is a legitimate method of
deriving a specific emission limitation that may not be exceeded."); accord Three
Mountain Power, LLC, 10 E.A.D. 39,53 (EAB 2001)l.
94. This Board agrees that, while BACT is forward looking, "the word
'achievable'. . . constrains the permit issuer's discretion by prohibiting BACT limits that
would require pollution reductions greater than what can be achieved with available
methods." In re Newmont Nev. Energy Investment, LLC, 12 E.A.D. 429, 441 (EAB
2005); accord Prairie State, slip op. at 70. We recognize that "the permit issuer may take
into account the absence of long-term data, or the unproven long-term effectiveness of
the technology, in setting the emissions limitation that is BACT for the facility."
Newmont, 12 E.A.D. at 442; see also Cardinal, 12 E.A.D. at 166-67. The BACT analysis
"must be solidly grounded on what is presently known about the selected technology's
effectiveness" and "emissions limitations achieved by other facilities and corresponding
control technologies used at other facilities are an important source of information in
determining" BACT. Newmont, 12 E.A.D. at 44 1 (emphasis added).
95. To determine BACT, recent permits for similar sources with the selected
technologies are important. See In re New Century Development, 1 1 E.A.D. 40, 52-53
(EAB 2003; see Cardinal, 12 E.A.D. at 170 ("PSD permit limits are not necessarily a
direct translation of the lowest emission rate that has been achieved by a particular
technology at another facility."). Information from vendors based on the source and fuel
characteristics are also an important source of information.
96. The Board will not use BACT to redefine the source. BACT does not
require an applicant to build a fundamentally different type of facility from the one it has
proposed to build. The BACT determination must have as its starting point the
"proposed facility." 42 U.S.C. 5 7475(a)(4); ARSD 74:36:09:02 (incorporating 40
C.F.R. 3 52.21(b) (12), which requires that BACT be applied to a "proposed major
stationary source"). Based on the statutory language requiring application of BACT to
the "proposed facility," EPA has long recognized, in a consistent line of adjudicatory
precedent and guidance, that the BACT process is not "a means to redefine the design of
the source when considering available control alternatives." [Ex. 502 at 88; Ex. 321 at
10-201.~ The Seventh Circuit has upheld EPA's interpretation as consistent with the
statutory text of the CAA. Sierra Club v. EPA, 499 F.3d 653, 655 (7" Cir. 2007).
Accordingly, the Board rejects Petitioners' contention that the PSD permit should be
denied because DENR did not consider IGCC.
2. BACT Analysis of Big Stone I1 Emissions
a. PMIO
97. The baghouses proposed by Otter Tail and approved by DENR for
material handling Units #7a-7d, #17, #20, #21, #23a and b, #24, #22, #26, #27, #29, #30,
#34, and #35 are the top control for those emissions units. [Core Exs. 160 at 16, 183 at
11-21.
98. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the 0.0005% drift eliminator
proposed by Otter Tail and approved by DENR is BACT to control PMlo emissions from
the cooling tower (Unit #16). [Core Ex. 160 at 191.
99. The baghouse proposed by Otter Tail and approved by DENR to limit
emissions from the pulverized coal-fired boiler (Unit #13) is the top control for this type
of operation. [Core Ex. 160 at 201.
2 See, e.g., In re SEI Birchwood Inc., 5 E.A.D. 25,28-29 (EAB 1994); In re Old Dominion Elec. Coop., 3 E.A.D. 779,793-94 (EAB 1992).
100. The catalyzed diesel particulate filter in conjunction with ultra low sulfur
diesel fuel are the top controls for PMlo emissions from the fire pump (Unit #14), the
generator (Unit #15), the boiler booster pump (Unit #25), and the silo booster pump (Unit
#33). Baghouses or electrostatic precipitators are not technically feasible because exit
gas temperatures for these units prohibit the use of a baghouse or electrostatic precipitator
for controlling PMlo emissions. [Core Ex. 160 at 15-1 61.
101. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the work practices in Section 7 of
the PSD permit for fugitive dust sources are BACT. [Core Ex. 160 at 271. The Board
also finds that the requirement to pave all haul roads and parking lots within Big Stone's
boundaries is BACT. [Core Ex. 197 at 131.
102. Since the issuance of DENR's final draft permit, a new NSPS has been
proposed for material handling that applies to PMlo emissions from Units #7a-d, #17,
#22, #26, #27, and #30. In accordance with the new NSPS, it is appropriate to reduce the
limits for those units as reflected in Table 4-1 of Exhibit 324 at 9-10. In addition, there is
a typographical error in the BACT limit for Unit #35, which shall also be amended to
conform to the correct number, as reflected in Exhibit 324.
103. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the PMlo emission limits for Big
Stone I1 set forth in Table 4-1 of the Proposed PSD Permit (Core Ex. 197 at 10-1 I), as
revised downward in Otter Tail's Exhibit 324, are BACT.
104. The Board further concludes that the approach described in the PSD
permit with respect to the total PMlo limit is reasonable in light of the uncertainties about
total PMlo emissions, data, and reliability of approved test methods. The total PMlo limit
is subject to testing once operation has commenced and can be reduced as low as 0.018
pounds per million Btu. [Core Ex. 197 at 111.
b. CO
105. Combustion control, as proposed by Otter Tail and approved by DENR, is
the top technology for controlling CO emissions from Units #13, #14, #15, #25 and #33.
[Core Ex. 1 83 at 1 51.
106. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the CO emission limits for Big
Stone I1 set forth in the Proposed PSD Permit at Table 4-2 are BACT. They are
appropriate and are consistent with limits imposed at similar facilities. [Core Ex. 198 at
67-68].
C. v o c s
107. Combustion control, as proposed by Otter Tail and approved by DENR, is
the top technology for controlling VOC emissions from Units #13, #14, #15, #25 and
#33. [Core Ex. 160 at 23; Core Ex. 183 at 15-16].
108. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the VOC emission limits for Big
Stone I1 set forth in Table 4-3 of the Proposed PSD Permit are BACT. [Core Ex. 197 at
121. They are appropriate and are consistent with limits imposed at similar facilities.
[Core Ex. 198 at 691.
d. SAM
109. The baghouse coupled with WFGD, as proposed by Otter Tail and
approved by DENR, is the best technology for controlling emissions of SAM from Unit
#13. A wet electrostatic precipitator ("WESP") is cost-prohibitive at approximately
$147,000 per ton of sulfuric acid mist reduced. [Core Ex. 160 at 24-25]. Likewise,
sorbent injection (such as injection of hydrated lime) does not represent BACT for Big
Stone 11. Big Stone I1 will burn subbituminous coal that is relatively high in calcium
content. Hence, the fly ash will be alkaline in nature, and the addition of hydrated lime or
other sorbents would not be expected to achieve significant additional removal of SAM.
It has not been used in any Powder River Basin ("PRB") coal plant for SAM control.
[Tr. 7 1 1 - 12 (Gaige, 812 1/08)].
110. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the sulfuric acid mist emission
limit for Big Stone I1 set forth in Table 4-4 of the Proposed PSD Permit is BACT. [Core
Ex. 197 at 131. It is appropriate and consistent with limits imposed at similar facilities.
[Core Ex. 198 at 46-47]. Most of the permits with lower limits are distinguishable due to
different type of boiler, different fuel, or different control technologies for other
pollutants. Many of the plants are not yet operating, so the limits are not yet
demonstrated in practice to be achievable. [Tr. 712-1 3 (Gaige, 8/21/08); Core Ex. 160 at
23; Core Ex. 198 at 46-47].
e. Fluorides
11 1. A baghouse coupled with WFGD, as proposed by Otter Tail and approved
by DENR, is the best technology for reducing emissions of fluorides from Unit #13.
[Core Ex. 160 at 261. As noted above for SAM, WESP is not cost-effective and sorbent
injection would be redundant due to the high alkalinity of the PRB ash.
112. Taking into account all the relevant factors and recognizing the technical
judgment and expertise involved, the Board finds that the total fluoride emission limit for
Big Stone I1 set forth in Table 4-5 of the Proposed PSD Permit is BACT. [Core Ex. 197
at 131. It is appropriate and consistent with limits imposed at similar facilities. [Core Ex.
198 at 68-69]. Most of the permits with lower limits are limits only for hydrogen fluoride
("HF"), not total fluorides. [Tr. 714-17 (Gaige, 8/21/08)]. Thus, they are not directly
applicable to Big Stone 11. Others burn a different fuel, which affects fluoride emissions.
[Core Ex. 198 at 681. In addition, most of the plants with lower limits are not yet
operating, and therefore the limits are not demonstrated. [Tr. 7 13- 1 8 (Gaige, 812 1/08);
Core Ex. 160 at 231.
C. Other Applicable Limits (PSD Permit Section 5)
113. The limits and conditions in Sections 5.1 through 5.8 of the draft PSD
permit are appropriate and in compliance with all applicable laws and requirements.
[Core Ex. 197 at 14-16].
D. Performance Tests (PSD Permit Section 6)
1 14. The testing and conditions in Sections 6.1 through 6.10 of the draft PSD
permit are appropriate and in compliance with all applicable laws and requirements.
[Core Ex. 197 at 16-18]. In conjunction with other conditions, the PSD permit is
enforceable as a practical matter.
E. Fugitive Dust Controls (PSD Permit Section 7)
115. The terms and conditions in Sections 7.1 through 7.5 of the PSD permit
are appropriate and in compliance with all applicable laws and requirements. [Core Ex.
197 at 1 8-20].
F. Air Quality Analysis-Air Dispersion Modeling
116. Otter Tail submitted ambient air quality analyses to demonstrate
compliance with the NAAQS and PSD increments. The Board agrees with DENR that
Otter Tail has submitted an adequate demonstration of compliance with NAAQS and
PSD increments.
117. The Big Stone I1 project triggered ambient air quality analyses for PMlo
and CO.
118. Preconstruction ambient monitoring was required for PMlo to determine
background PMlo concentrations. Preconstruction ambient monitoring was not required
for CO. [Core Ex. 183 at 231.
119. Otter Tail performed preconstruction SOz, NO,, and PMlo monitoring in
2001 and 2002. Data was collected for one year and was determined to be valid by
DENR. That monitoring data was accepted by DENR for use in the Big Stone I1 ambient
air quality analyses to reflect background concentrations. [Tr. 97, 103-04, 107 (Schultz,
81 1 8/08)].
120. Otter Tail consulted with DENR regarding the modeling protocol. [Ex.
3091. Otter Tail also provided a protocol describing the methodology used to calculate
fugitive emissions. [Core Ex. 167 at 1961.
121. In accordance with Appendix W of 40 C.F.R. Part 51, five years of
representative meteorological data from 2001 to 2005 were used to estimate
concentrations with an air quality model. The data were obtained from the National
Weather Service ("NWS") Stations located at Huron, South Dakota (#14936) for surface
air and Aberdeen, South Dakota (#14929) for upper air. [Core Ex. 183 at 201. The
permitting authority has a choice between specifying the use of limited one-year on-site
surface meteorological data or five years of meteorological data from representative
NWS. Long term data from the NWS was ultimately selected by DENR. The more
extensive data from the NWS stations at Huron and Aberdeen are not only representative
of the weather conditions at the proposed Big Stone I1 site, but are also more reliable than
the limited one-year on-site data. [Tr. 1063-64 (Andracsek, 9/24/08); Tr. 1162-63
(Gaige, 9/25/08)]. The Board finds the meteorological data used for the modeling is
reasonable, appropriate, and representative of the proposed Big Stone I1 site.
122. In 2005 as part of the application, Otter Tail submitted modeling
consistent with the protocol. In 2006, Otter Tail updated the modeling to reflect proposed
changes in the design of the facility. Otter Tail performed additional air dispersion
modeling analyses in 2007 using the preferred, current regulatory model.
123. The air dispersion modeling on behalf of Big Stone I1 used appropriate
methodologies and reasonable, reliable, conservative assumptions. It was consistent with
methodologies and assumptions approved by other states and by EPA in other air
permitting proceedings. [Tr. 1 144 (Gaige, 9/25/08)].
124. After considering all the evidence presented, the Board finds that the July
2007 modeling for PMlo and CO, as accepted by and relied upon by DENR, represents an
adequate, reliable, and appropriate demonstration of compliance with NAAQS and PSD
increments. Big Stone I1 will not cause or contribute to a violation of any applicable
NAAQS or PSD increment. [Core Ex. 183 at 241.
G. Modeling for Class I Areas
125. Because the Big Stone I1 project is located near Big Stone City, South
Dakota, which is greater than 300 kilometers away from any Class I area, Class I
modeling was not required. [Core Ex. 183 at 251. Nevertheless, DENR did provide
notice of the applications to the IVational Park Service pursuant to an agreement to keep
the National Park Service informed of certain applications in South Dakota. The
National Park Service agreed that no Class I area analysis was required, but did request a
visibility analysis at the Pipestone National Monument, which analysis Otter Tail agreed
to perform and did perform. [Tr. 130-33 (Rombough, 8/18/08); Core Ex. 1351. The
analysis showed that no adverse visibility impacts will occur. [Core Ex. 160 at 371.
H. Additional Impacts Analysis
126. The evidence established that Big Stone I1 complied in all respects with
the requirement for an additional impacts analysis. [Core Ex. 160 at 37-38]. No adverse
impacts are expected to air quality, visibility, or soils and vegetation as a result of the
facility and associated commercial, residential, and industrial growth.
I. Conclusion Regarding PSD Permit
127. After consideration of the record, the evidence and testimony received at
the contested case hearing and the technical expertise involved, the Board finds that the
proposed PSD permit is appropriate and complies with all applicable laws and
regulations. [Core Ex. 1971.
VI. Facts Supporting the Issuance of the Proposed Title V Permit
A. General
128. For the reasons stated in the Title V Statement of Basis, as revised and
supplemented by the revised Title V Statement of Basis (Core Exs. 217, 842A) and
DENR's Responses to Comments (Core Exs. 198, 853), the revised Title V permit with
Otter Tail's suggested change is appropriate and complies with all applicable laws and
requirements.
B. Netting and Other Conditions Applicable to NO, and SO2
129. Units #13, #14, #15, #25 and #33 emit SO2 and NOx and will be permitted
under the Title V Air Quality Permit for Big Stone I. Existing Units #5 and #6 will be
removed from the Title V permit once the Big Stone I1 project is constructed and begins
operation. [Core Ex. 2 17 at 5-61.
130. Otter Tail requested and DENR has proposed operational and emission
limits that will maintain actual emissions of SO2 and NOx at levels that will allow the Big
Stone I1 project to avoid a PSD review for these two air pollutants. As noted in Otter
Tail's PSD application for the Big Stone I1 project, Otter Tail proposes to install
equipment that will control the SO2 and NOx emissions from Unit #13 and has made an
agreement with Big Stone I owners to reduce Big Stone I's SO2 and NOx emissions. This
will result in a zero emission increase for both air pollutants. [Core Ex. 2 17 at 151.
13 1. In response to EPA's objections on PSD applicability to SO2 and NOx, the
Title V permit has been revised to incorporate EPA's option for PSD netting. [Core Ex.
842A at 51.
132. The revised proposed Title V permit imposes unit-specific limits for SO2
and NO, to resolve EPA's objections. The limits for establishing emission decreases at
Big Stone I are specific to Big Stone I, ensure actual emission decreases at least as great
as .the emission increases expected from the Big Stone I1 project, and ensure the
decreases in actual emissions are enforceable as a practical matter, at and after the
construction date of the Big Stone I1 project. The permit also establishes SO2 and NOx
limits that are specific to the emission units associated with the Big Stone I1 project and
when summed together are no greater than the actual emission decreases required from
Big Stone I .
133. For purposes of setting the baseline for the netting analysis, the period of
January 2003 through December 2004, is appropriate and is selected as representative of
baseline actual emissions in accordance with 40 CFR 5 52.21(b)(48)(i). [See Core Ex.
853 at 6-81. In selecting this baseline period as representative, the Board has considered
the timelines of the permitting process, the projects and uncontrollable plant
circumstances that affected normal operations, and the existing requirements under the
Title V air quality permit.
134. The Board finds the unit-specific SO2 and NO, limits in the revised permit
appropriate, as are the calculations upon which those unit-specific limits are based. [See
Core Ex. 842A at 6- 151.
135. The Board finds that DENR's rationale for deleting sentences in
Conditions 9.2 and 9.4 from the previously-proposed Title V permit is persuasive and the
Board accepts it. [See Core Ex. 842A at 151.
136. SO2 emissions from Unit #13 will be controlled by a WFGD. Unit #13 is
not allowed to operate when the WFGD is not operational. Otter Tail will connect the
baghouse exhaust from Unit #1 to the WFGD being installed on Unit #13 before Unit #13
goes into operation. NOx emissions from Unit #13 will be controlled by a SCR. NOx
emissions from Unit # 1 will be controlled further by implementing operational changes at
Big Stone I before Unit # 1 3 goes operational. [Core Ex. 2 17 at 161.
137. Units #1 and #13 will be required to install, maintain, and operate
Continuous Emissions Monitoring Systems ("CEMS") for SOz and NOx by the
requirements under the Acid Rain Program and the NSPS for electric utility steam
generators. Since the CEMS will be able to provide quantifiable data on an hourly,
monthly, and yearly basis, a short term or hourly emission limit is not warranted for
demonstrating compliance with the SOz and NOx 12-month rolling limitation to forego
PSD. [Core Ex. 217 at 161.
138. The short term SO2 limit for Unit #2, #3, and #4 is based on using low
sulhr distillate oil or biodiesel with a sulfur content less than 0.05 percent by weight
sulfur. The short term limits for Unit #14, #15, #25, and #33 will be based on using ultra
low sulfur distillate oil or biodiesel with a sulfur content less than 0.0015 percent by
weight sulfur. Compliance with the sulfur content limit will be based on fuel supplier
certification and/or grab samples from the liquid fuel storage tanks. [Core Ex. 217 at 171.
139. The short term NOx emission limit for Unit #2, #3, and #4 is 0.17 pounds
per million Btu heat input, 0.14 pounds per million Btu heat input, and 0.024 pounds per
horsepower hour, respectively, derived from emission rates used in the Otter Tail
application for Big Stone 11. The NSPS for stationary compression ignition internal
combustion engines contains a NOx plus non-methane organic compound short term
emission limit for Unit #14, #15, #25 and #33. [Core Ex. 217 at 171.
C. Adequacy of Compliance Provisions for SOt and NOx
140. EPA objected because the proposed Title V permit did not specify where
the CEMS were to be located and how compliance with the SO2 and NOx emission limits 'L.
would be demonstrated. EPA also commented that the data substitution methods should
be identified.
141. The revised Title V Statement of Basis responds to the objection and
comment at paragraph 139. Attachment A thereto identifies the locations of the CEMS.
DENR also proposed revisions to the Title V permit describing the location of the CEMS
and the methodology for determining emissions to assure compliance with unit specific
emission limits. The Board finds the response to be appropriate and hereby adopts it.
D. Mercury Limits
142. On March 3 1, 2006, Otter Tail proposed a voluntary facility-wide cap on
mercury emissions from Big Stone I and Big Stone 11. The cap is reflected in the revised
Title V permit Section 1 1.1. Otter Tail also proposed a specific mercury limit for Unit 13
that is reflected in Section 1 1.2.
143. During the application process, DENR anticipated that Big Stone I1 would
be subject to the NSPS of the Clean Air Mercury Rule ("CAMR). Shortly before DENR
issued its final draft of the proposed Title V permit, the United States Court of Appeals
for the D.C. Circuit vacated CAMR. New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008).
Nevertheless, Otter Tail has agreed to maintain the mercury limits in the Title V permit.
144. The plantwide mercury cap, reflective of estimated mercury emissions
prior to the installation of Big Stone 11, is appropriate. Emissions will be monitored by
CEMS per section 11.6 of the draft Title V permit. Based on the evidence submitted at
the contested case hearing and the technical expertise required, the Board finds that the
mercury limits in Sections 1 1.1 and 1 1.2 should be included in the Title V permit.
E. Limitation on HAPS to Avoid Triggering MACT
145. A case-by-case MACT review is required when an owner or operator
constructs a major source of HAP. A source is "major" if its potential emissions equal or
exceed 10 tons per year of a single HAP or 25 tons per year of total HAPS. 40 C.F.R.
5 63.2. For construction of a new unit at an existing source, only the emissions from the
new unit are compared to the major source thresholds. 40 C.F.R. tj 63.41. Big Stone I1 is
a new unit at an existing source.
146. Big Stone 11's potential HAP emissions do not meet either of the
thresholds. Otter Tail requested and DENR has proposed permit limits in the Title V
permit (Sections 1 1.3-1 1.5, 11.7, and 11.8) that are below the thresholds to ensure that
Big Stone I1 is not a major source by limiting Big Stone 11's potential to emit. [Core Ex.
2 19 at 3 1-32; 40 C.F.R. tj 63.2 (defining "potential to emit")].
147. EPA objected that the compliance provisions were inadequate for the
HAPS limits in the 2008 proposed Title V permit. As explained in the revised Title V
Statement of Basis (Core Ex. 842A) at pages 17-20 and in DENR's 2009 responses to
comments (Core Ex. 853) at pages 13-14, the revised Title V permit has been modified in
several specific respects to respond to EPA's objection and to public comments. The
Board finds that the revisions are proper responses to EPA's objection and to public
comments and hereby adopts the revisions.
148. The HAP limits are enforceable. The evidence proved that the conditions
of the revised Title V permit are sufficient to render the HAP limits enforceable as a
practical matter.
149. Based on the evidence submitted, the record, and the technical expertise
required, the Board finds that a case-by-case MACT review is not required for the
addition of Big Stone 11. [Core Exs. 186; Core Ex. 198 at 71-75; Core Ex. 842A; Core
Ex. 8-53].
F. Addition of PSD Requirements
150. EPA objected on grounds that the Title V permit should include the Big
Stone I1 PSD requirements. Although DENR continues to disagree with EPA's
objection, the specific PSD requirements are being incorporated into the revised Title V
permit to address EPA's objection.
15 1. Pages 3 and 4 of Core Exhibit 842A list the specific conditions from the
PSD permit that are being incorporated into the revised Title V.
152. Additionally, EPA questioned whether the BACT limits in the PSD permit
applied during startup, shutdown and malfunction. As this Board previously found and
concluded, the numeric BACT limits for Big Stone I1 apply at all times, including periods
of startup, shutdown and malfunction.
153. Under all the circumstances, the Board finds that the decision to
incorporate the PSD conditions into the revised Title V permit is reasonable and
appropriate.
G. Conclusion Regarding Revised Title V and Acid Rain Permit
154. After consideration of the record, the evidence and testimony received at
the contested case hearing, and the technical expertise involved, the Board finds that the
revised Title V and Acid Rain permit is appropriate and complies with all applicable laws
and regulations.
VII. Findings Relating to Issues Raised by Petitioners (2008 Contested Case)
A. Plantwide Caps (Issues 1-4)
155. In Issues 1-4, Petitioners attempted to challenge the use of facility-wide
caps restricting SO2 and NOx emissions by questioning the legality and sufficiency of the
annual caps on SO2 and NOx in the Title V permit. The Board found Otter Tail had
satisfied its burden of proof on these claims.
156. The owners of Big Stone I and I1 requested facility-wide emission caps be
imposed on SO2 and NOx so that PSD review would be unnecessary for those pollutants.
PSD is triggered at an existing source if there is a "major modification," which is defined
as "any physical change in or change in the method of operation of a major stationary
source that would result in a significant emissions increase . . . and a significant net
emissions increase of that pollutant from the major stationary source." ARSD
74:36:09:03, incorporating 40 C.F.R. tj 52.21(b)(2)(i). While the construction of Big
Stone I1 is a "physical change" in a "major stationary source," the requested facility-wide
annual emissions caps impose federally enforceable limitations on the potential of Big
Stone I and I1 to emit SO2 and NOx and prevent any increase in emissions.
157. DENR has the authority under ARSD 74:36:05:16 to establish plantwide
caps (i.e., synthetic minor permit limits) in a Title V permit. Such permit limits are
federally enforceable per ARSD 74:3 6:01:0 l(29).
158. DENR included carefully crafted language in the 2008 proposed Title V
permit to impose facility-wide annual emissions caps on SO2 (Section 9.2) and NOx
(Section 9.4). The permit required CEMS for SO2 and NOx for Unit # 1 and #13 and SOz
and NO, emissions verification via emissions tests and fuel data for Unit #14, #15, #25,
and #33. The permit also imposes substantive penalties (including the need for PSD
review) if the SO2 or NOx caps are exceeded.
159. For the 2008 proposed Title V permit, DENR did not rely on the PSD
netting or Plantwide Applicability Limit ("PAL") regulations as the basis for establishing
the plantwide caps for SO2 and NOx. Contrary to Petitioners' claims, the emissions caps
do not and need not rely on the "netting" or PAL provisions of the PSD regulations. See
40 C.F.R. 9 52.21(b)(3)(i) (netting); 40 C.F.R. tj52.21(aa) (PALS). Synthetic minor
limits in Title V permits are an acceptable alternative authorized by both South Dakota
and EPA regulations.
160. Petitioners' expert, Dr. Sahu, offered no testimony regarding the SO2 and
NOx plantwide caps.
161. The Board found the plantwide caps to be federally enforceable synthetic
minor pennit limits. Because the caps prevent any emissions increase of SO2 or NOx,
there is no major modification, and PSD requirements, such as BACT and ambient air
modeling, are not applicable for those pollutants.
162. The Board agreed with DENR and found that the plantwide annual caps
on SO2 and NOx emissions are appropriate and comply with all applicable laws and
requirements. The Board found the evidence presented by Otter Tail and DENR satisfied
the burden of proof on issues 1-4.
163. Notwithstanding the above findings, these claims are now moot based on
EPA's objection to the plantwide caps for SO2 and NOx. To resolve EPA's objection,
DENR performed a PSD netting analysis as described in the revised Statement of Basis
and established limits for SO2 and NOx on the individual emissions units in the revised
Title V permit.
B. IGCC (Issue 8)
164. Petitioners claim that the BACT analysis for Big Stone I1 failed to
consider IGCC, an alternative method of generating electricity, and is therefore defective.
165. Owners are not required to construct a fundamentally different type of
facility from the one proposed. [Tr. 371-72 (Rombough, 8/20/08)]. Under the CAA, a
major emitting facility may not be constructed unless the "proposed facility is subject to
[BACT] for each pollutant [from] such facility." 42 U.S.C. $ 7475(a)(4) (emphasis
added). ARSD 74:36:09:02. As other agencies and courts have agreed, the BACT
determination must have as its starting point the bbproposed facility" as defined by the
applicant. Consequently, the BACT determination cannot be used to "redefine" (i.e.,
change the fundamental characteristics of) the proposed facility. [Tr. 37 1-72
(Rombough, 8/20/08); Core Ex. 198 at 40-431.
166. IGCC is a completely different technology for producing electricity, and
permitting agencies are not required to consider it in the BACT analysis for a pulverized
coal ("PC") plant. [Ex. 318; Tr. 371 (Rombough, 8/20/08); Tr. 694-95 (Gaige, 8/21/08);
Ex. 322; Core Ex. 198 at 421. EPA and the vast majority of permitting agencies have
agreed that IGCC need not be considered. [Ex. 3211.
167. Even though IGCC need not be considered in the BACT analysis, the
evidence demonstrated that it would not represent BACT in any event for Big Stone 11.
IGCC is still a developing technology unsuited for the PRB coal available at Big Stone,
and IGCC is not sufficiently reliable or cost-effective for a baseload plant. [Tr. 698
(Gaige, 8/21/08)]. Burns & McDonnell prepared a report analyzing alternative
generation options for Big Stone 11. [See Ex. 3221. That report concluded: (1) no IGCC
had successfully generated electricity with subbituminous coal (as proposed for Big
Stone 11) and without natural gas back-up (which is not available on the Big Stone I1
site); (2) IGCC has not achieved a high capacity factor required for baseload units; and
(3) IGCC would cost 40 to 50 percent more than the equipment proposed for Big Stone
11. [Tr. 506 (Rolfes, 8/20/08) (IGCC risky, unproven, and not cost effective); Tr. 698,
724, 765-66 (Gaige, 8/21/08) (same)]. The South Dakota PUC determined that IGCC
would cost between 43% and 50% more than the proposed pulverized-coal plant. [See In
re the Application by Otter Tail Power Company on Behalf of Big Stone II Co-Owners
for an Energy Conversion Facility Permit for the Construction of the Big Stone 11
Project, No. EL05-022 (S.D. Public Utilities Comm'n July 21, 2006) at 281. Finally, the
small number of IGCC units in actual operation have not shown any better emissions
performance than PC boilers. [Tr. 728-29 (Gaige, 812 1/08)].
168. Like DENR, the Board "disagrees that IGCC has been proven to be ready
and commercially available to produce approximately 600 megawatts of base load
electricity by burning subbituminous coal." [Core Ex. 198 at 431.
169. Petitioners presented no witnesses regarding IGCC at the evidentiary
hearing, but Otter Tail submitted evidence of Petitioner Sierra Club's position on IGCC
in a separate ongoing permitting proceeding. Sierra Club recently submitted comments
to DENR criticizing the proposed Hyperion oil refinery project in South Dakota that
includes an IGCC unit. In those comments, Sierra Club called IGCC an "experimental
process" that "has only operated at an experimental level, not at a commercial level."
[Ex. 333 at 11. Sierra Club also recognized the exorbitant cost of IGCC, noting "the
financial burdens that would jeopardize the financial viability of this proposed
operation." [Id.; see also Tr. 476 (Rombough, 8/20/08)]. While the Board makes no
finding about the appropriateness of IGCC for that unrelated project, we are persuaded by
the evidence that IGCC is not BACT for Big Stone I1 in light of the unique characteristics
of the Big Stone I1 project.
170. Based on the evidence presented at the contested case hearing, the Board
finds that IGCC would impermissibly redefine the source. Even if IGCC were properly a
consideration in the BACT analysis, the Board finds that IGCC would not represent
BACT for the pollutants at issue in this proceeding. IGCC is not demonstrated to be
sufficiently reliable, cost-effective, or commercially available for Big Stone 11. The
Board finds Otter Tail and DENR have submitted reliable, persuasive evidence on Issue 8
and have satisfied the burden of proof.
C. General Findings Regarding Petitioners' Challenges to the BACT Determinations (Issues 10-12)
17 1. Before addressing Petitioners' specific challenges to the BACT
determinations for the PSD permit, the Board makes the following general findings.
Petitioners presented an expert witness, Dr. Sahu, to criticize DENR's BACT analysis for
PMlo, SAM, and fluorides. Dr. Sahu admitted he did not conduct an independent BACT
analysis for the Big Stone I1 Project. [Tr. 864-65 (Sahu, 8/26/08)]. Dr. Sahu has never
conducted a BACT analysis for any coal-fired power plant and has never submitted an air
quality permit application for a coal-fired power plant. [Tr. 927-28 (Sahu, 8/26/08)].
Although Dr. Sahu criticized DENR's BACT analysis as lacking sufficient
documentation, he admitted that the definition of BACT does not say how much support
or documentation an agency needs to provide for any particular application of its
judgment in conducting a BACT review. [Tr. 946 (Sahu, 8/26/08)].
172. In his capacity as an expert witness, Dr. Sahu regularly criticizes various
agencies' BACT analyses around the country. [Id. at 93 11. He could not identify a single
instance where he agreed that a permitting agency had conducted a proper BACT
analysis in all respects. [Id. at 93 1-32]. There was no evidence that Dr. Sahu's testimony
or opinions in other cases have ever been accepted. [Id. at 935-431.
173. Dr. Sahu's testimony regarding DENR's BACT determination procedure
is mistaken and directly conflicts with DENR's witness Mr. Rombough, who testified
that he did not simply pick his BACT numbers from the range of emissions limits in
other permits. [Tr. 1250-5 1 (Rombough, 9/25/08)].
174. Dr. Sahu questioned and criticized various aspects of the BACT analysis
done by Otter Tail and DENR, yet he never identified any fundamental flaws, errors, or
actual shortcomings in the analysis. By contrast, DENR and Otter Tail presented
compelling evidence in support of the BACT determinations.
D. PMlo BACT Analysis (Issue 10)
175. Petitioners argue that DENR erred in setting the BACT limit for PMlo
emissions by failing to consider the AHPC, a more efficient fabric filter baghouse, a wet
electrostatic precipitator, and more efficient SO2 controls as control devices. Petitioners
suggest that, had these other alternatives been considered, DENR would have set lower
BACT limits for PMlo.
176. Based on the use of a fabric filter and WFGD, the permit contains a limit
of 0.012 1bImmBtu for filterable PMlo and an initial limit of 0.03 lb/mrnBtu on total PMlo
(filterable and condensable combined). [Core Ex. 197 $4.1, Table 4-11. The total PMlo
limit will be lowered if actual operating data demonstrates that a lower limit is
achievable, with a target of lowering it to 0.01 8 lb/mmBtu. [Id. $ 4.1, Table 4-11.
177. The evidence at the hearing proved that these PMlo limits are appropriate
and BACT. DENR established the limits based on a thorough examination of available
technologies, a comparison of emission limits in recent permits, consideration of the ash
and moisture content of the fuel to be burned at Big Stone 11, and recognition of the
uncertainty in the measurement of condensables using current approved test methods.
[Tr. 201-06 (Rombough, 8/19/08); Ex. 198 at 43-46; Ex. 160 at 19-24]. Mr. Rombough
did not restrict himself to EPA's database of recent permit limits (the "RBLC" database);
he identified and used other sources of information during his investigation. [Tr. 394-95
(Rombough, 8/20/08)]. As the BACT regulation contemplates, he then applied his
technical judgment, which the Board accepts as reasonable and appropriate.
178. In carrying out its duties, DENR did not simply "rubber stamp" Otter
Tail's proposed limits. DENR has recommended limits to this Board that are lower than
Otter Tail had proposed in its application. [Tr. 297 (Rombough, 8/19/08); Tr. 393-94
(Rombough, 8/20/08)]. The Board is adopting the lower limits proposed by DENR.
179. The undisputed evidence is that the proposed PMlo filterable limit is the
lowest of any final permit for a coal-fired plant burning subbituminous coal. [Tr. 704
(Gaige, 8/21/08)]. Petitioners point to one final permit (Desert Rock) and to permit
applications with slightly lower limits, but 0.012 lb/mmBtu remains the lowest filterable
PMlo limit of any final permit for PRB coal. BACT is a case-by-case analysis, and the
Board finds that Petitioners' evidence did not provide any reason to believe the PMlo
limits are unreasonable. Otter Tail satisfied its burden of proof.
180. The Board rejects Petitioners' suggestion that the AHPC is the best
available control technology for Big Stone I1 to control PMlo. The evidence established
that the AHPC was a complete failure in its trial at Big Stone I. [See, e.g., Tr. 572-79
(Graurnann, 8/20/08)]. The Big Stone I co-owners invested millions in an attempt to
make this experimental technology work (in addition to millions spent by the Department
of Energy and W.H. Gore & Associates). [Id. at 575-76, 578-791. The Department of
Energy provided funding to the project in an attempt to demonstrate AHPC as a viable
technology. The demonstration project failed. DENR was well-aware that the
experiment did not succeed, and Big Stone I finally was forced to replace the AHPC in
2007. [Id. at 5791. It would make no sense now to require Big Stone I1 to install the
flawed AHPC technology as BACT.
18 1. The Board hrther rejects Petitioners' arguments that "better" bag material
or "differently-designed" baghouses should have been considered. Likewise, the Board
rejects the argument that other control devices should have been given greater
consideration. A baghouse was proven to be the best control device for this application,
as numerous permitting agencies have found. This Board is not required to dictate the
specific design or specific vendor of the baghouse or bag material, especially when this
Board has found that the proposed PMlo emissions limit represents BACT. The evidence
established that all necessary and appropriate factors and control devices have been
considered in establishing the emissions limit. [See Tr. 961-62 (Sahu, 8/26/08) (Dr. Sahu
unable to recall any other permit application where the applicant discusses specific types
of bags or the specific design of the baghouses)].
182. Petitioners' expert, Dr. Sahu, tried to use an estimate of uncontrolled PMlo
emissions and controlled emissions to calculate a "removal efficiency" (i.e., percent
reduction) for the baghouse. Considering all the evidence on this point, the Board finds
the evidence of Otter Tail and DENR to be more persuasive and credible on the proper
approach for evaluating a BACT emissions limit.
183. Petitioners also presented evidence from other facilities' source tests to
suggest that Big Stone I1 can achieve lower emissions. [Exs. 504-5061. These same
source tests have recently been reviewed in detail and rejected by both DENR and EPA
as valid for a PMlo BACT determination, and the Board agrees with the reasons cited by
DENR and EPA. [Tr. 1253-54 (Rombough, 9/25/08) (Mr. Rombough personally
reviewed the source test data and found them inapplicable to the BACT analysis in this
case); Ex. 321 at 79-82].
184. The Board finds that DENR's and Otter Tail's evidence satisfied the
burden of proof on Issue 10 and that the PMlo BACT limit is appropriate.
E. SAM BACT Analysis (Issue 11)
185. Petitioners argued that DENR erred in setting the BACT limit for SAM
emissions by failing to consider various control options, including WESP; a low SO2 to
SO3 conversion SCR catalyst; lowering the temperature across the SCR catalyst using
more frequent soot blowing, a more efficient SO2 scrubber (such as the Chiyoda jet
bubbling reactor), regenerating the SCR catalyst rather than replacing it, and
combinations of control options.
186. The proposed PSD permit contains a SAM limit of 0.005 lb/mmBtu based
on the use of a fabric filter and WFGD system. [Core Ex. 197 at 131.
187. The evidence established that DENR's analysis was thorough and resulted
in a reasonable BACT limit. Mr. Rombough explained his approach in detail. [Tr. 207-
09 (Rombough, 811 9/08)]. Otter Tail's application and DENR's draft Statement of Basis
provide additional justification for the limit. [Core Ex. 144 at 46-48; Core Ex. 160 at 27-
281.
188. The evidence further proved the SAM emission limit is well within the
range in recently-issued permits, and is appropriate for Big Stone 11. [Tr. 712 (Gaige,
8/21/08)]. Mr. Rombough reviewed other permits for plants burning PRB coal, and
"agreed in my judgment that the proposed limit was the maximum reduction achievable."
[Tr. 208 (Rombough, 8/19/08); see also Table 10-12 of Core Ex. 160 at 281. Although
one permit limit (Hastings Utilities) appears to be significantly lower than Big Stone's, it
is based on a typographical error in EPA's database. [Tr. 713 (Gaige, 8/21/08); Tr. 402-
03 (Rombough, 8/20/08)].
189. Other control options do not represent BACT for Big Stone 11. The
evidence established that all necessary and appropriate factors and relevant control
options have been properly considered in establishing the emissions limit. [See, e.g., Tr.
12 56 (Rombough, 9/25/08)].
190. WESP may be able to reduce emissions, but it is not cost-effective for Big
Stone 11. [Tr. 207-08 (Rombough, 8/19/08); Tr. 706, 7 1 1- 12 (Gaige, 812 1/08)]. The cost
estimate was explained in detail, and the supporting documentation was offered into
evidence. [Tr. 707- 1 1 (Gaige, 812 1/08); Exs. 302-3061. Petitioners offered no alternative
estimate of the cost. In addition, Petitioners' expert was unable to identify any power
plant in the country burning low sulfur coal that uses WESP to control SAM. [Tr. 966-67
(Sahu, 8/26/08)].
191. Likewise, the evidence established that "sorbent injection" (i.e., injection
of an alkaline substance such as lime) is not BACT for Big Stone 11. Sorbent injection
would be superfluous. Big Stone will bum PRB coal, whose ash is already high in
calcium. [Tr. 7 12 (Gaige, 812 1/08)]. Adding another alkaline material would have little,
if any, effect on SAM. [Id.; Tr. 1255 (Rombough, 9/25/08)]. Accordingly, no coal-fired
power plant in the nation uses sorbent injection to control SAM when burning PRB coal
[Tr. 712 (Gaige, 8/21/08)], and no permitting agency has found it to be BACT under
those circumstances. [Tr. 967 (Sahu, 8/26/08)]. For these reasons, Otter Tail had ruled
out sorbent injection in its application, and DENR agreed. [Core Ex. 144 at 47; Tr. 207,
1255 (Rombough, 811 9/08 & 9/25/08)].
192. The Board finds that DENR's and Otter Tail's evidence satisfied the
burden of proof on Issue 11 and that the SAM BACT limit is appropriate.
F. Fluoride BACT Analysis (Issue 12)
193. Petitioners argued that DENR erred in setting the BACT limit for fluoride
emissions by failing to consider sorbent injection, a more efficient SO2 scrubber, and
more efficient particulate matter control.
194. The permit contains a limit of 0.0006 Ibs/mrnBtu on total fluoride
emissions (includes HF and other fluoride compounds). [Core Ex. 197 at 131.
195. Mr. Rombough explained his review of Otter Tail's application and the
potential control technologies for fluorides. [Tr. 209- 10 (Rombough, 811 9/08)]. He
agreed that, for Big Stone 11, a combination of WFGD and a baghouse was the best
control for fluorides. [Id. at 209; see also Core Ex. 144 at 48-49]. To confirm this
conclusion, he reviewed permits for other plants burning subbituminous coal. [Tr. 209
(Rombough, 811 9/08)]. Mr. Rombough concluded that 0.0006 lbs/mmBtu is "the
maximum reduction achievable and I proposed or recommended that for the draft
permit." [Id. at 2 10.1 The Board agrees.
196. The evidence established that other controls for fluoride were not BACT
for Big Stone 11. As with SAM, sorbent injection provides little additional control
because Big Stone will bum calcium-rich PRB coal. [Tr. 714 (Gaige, 8/21/08)].
Petitioners offered no testimony at the hearing about other potential controls. The other
suggested options such as a "more efficient" wet FGD ignore the fact that the control
technology has not yet been designed or purchased. [Tr. 600-01, 603 (Graumann,
8/20/08)].
197. Moreover, the evidence contradicted Petitioners7 assertion that the
proposed permit limit for fluorides is unreasonably high. The permit is well within the
range of recently-issued permits. [Tr. 209-10 (Rombough, 8/19/08); Ex. 160 at 29; Tr.
714 (Gaige, 8/21/08)]. Some agencies have imposed slightly lower limits and others
have imposed higher limits. The evidence explained why the lower limits are not
comparable. [Tr. 7 14-1 8 (Gaige, 812 1 /08)]. Many apply only to the HF fraction of total
fluorides, while others are for units burning different coal. [Id.] None of the units with
lower limits has started operating, so it is unproven whether they will be able to meet
those limits. In short, the fluoride limit is BACT for Big Stone 11.
198. The Board finds that DENRYs and Otter Tail's evidence satisfied the
burden of proof on Issue 12 and that the fluoride BACT limit is appropriate.
G. BACT During Periods of Startup and Shutdown (Issue 13)
199. Petitioners assert that the proposed PSD permit is legally invalid because
it does not require continuous compliance with BACT during periods of startup,
shutdown, and malfunction. In addition to Petitioners' claim, Otter Tail has asked that
the Board clarify the meaning of Conditions 4.1-4.5.
200. Contrary to Petitioners' assertions, BACT expressly applies to Big Stone
I1 at all times, including startup, shutdown and malfunction. [Tr. 210 (Rombough,
8/19/08) ("BACT requirements do apply during startup, shutdown, and malfunction")].
The January 2008 draft PSD Permit had stated that BACT applied except during startup,
shutdown, and malfunction. But, after receiving comments on this exception, DENR
deleted it and added references to Section 4.8, which establishes a work practice designed
to minimize emissions during startup, shutdown, or malfunction. [See, e.g., Core Ex. 197
at 10-1 1 ("Compliance with the PMlo BACT emission limits in Table 4.1 ... during
periods of startup, shutdown, and malfunction shall be based on permit condition 4.8.")].
The Board finds that Section 4.8 provides a reasonable process for developing the most
effective plan for minimizing emissions after Big Stone I1 has selected equipment and
vendors. [See Tr. 603 (Graumann, 8/20/08)].
201. DENR's proposed BACT requirements for Big Stone I1 are consistent
with the definition of BACT. BACT is ordinarily a numeric emission limit, but it may be
a work practice if there are "technological or economic limitations on the application of
measurement methodology to a particular emissions unit that would make the imposition
of an emissions standard infeasible." 40 C.F.R. 5 52.2 1 (b)(12) (definition of BACT
incorporated by reference at ARSD 74:36:09:02). Thus, when a measurement
methodology, such as the performance tests required by the PSD permit, is
technologically infeasible, a permitting authority may substitute a work practice as
BACT. [Tr. 199 (Rombough, 81 1 9/08)].
202. Compliance with numeric limits for PMlo, SAM, VOC and fluorides is
determined by periodic performance testing (i.e., stack testing) using EPA approved test
methods. DENR correctly determined that it is technologically infeasible to measure
PMlo, SAM, VOC and fluoride emissions during startup, shutdown and malfunction
using EPA-approved performance test methods. [Core Ex. 198 at 511. As Mr. Gaige
testified, stack testing cannot be performed during startup and shutdown periods because
the conditions are too transient, so stack testing cannot demonstrate compliance with a
numeric limit. [Tr. 72 1 (Gaige, 812 1 /08)].
203. The numeric BACT limit for CO emissions from the Big Stone I1 boiler
apply at all times, including startup, shutdown and malfunction. Compliance with the
numeric BACT limits for CO are determined by a CEMS, which is capable of monitoring
emissions during such periods. [Core Ex. 197 at 1 1 - 131.
204. In weighing and balancing all the evidence presented, the Board finds that
Otter Tail and DENR have presented credible and persuasive evidence on Issue 13, and
the burden of proof has been satisfied.
205. While it is clear that BACT applies at all times, Otter Tail has asked for
clarification from this Board as to whether the new language - "Compliance with the
PMlO BACT emission limits in Table 4. ... during periods of startup, shutdown, and
malfunction shall be based on permit condition 4.8" - requires compliance with the
numeric BACT limits in the Tables during startup and shutdown (to be demonstrated by
compliance with the work practices in Section 4.8) or requires compliance only with the
work practices themselves. Otter Tail believes the language literally requires Big Stone
I1 to meet the numeric limits in the Tables, whereas DENR has stated that only
compliance with the work practices are required. Otter Tail seeks clarification from the
Board to avoid any future misunderstandings when the plant begins to operate. Otter Tail
has no objection to the numeric limits applying during startup and shutdown, provided
that Section 4.8 is the means of demonstrating compliance with those limits.
206. The numeric BACT limits for PMlo, VOC, SAM, and fluorides emissions
from the Big Stone I1 boiler apply at all times including periods of startup, shutdown and
malfunction. Because stack testing is not feasible during startup, shutdown and
malfunction, compliance with the numeric limits during such periods shall be
demonstrated by compliance with the work practice provision in Condition 4.8.
H. Modeling For Periods of Startup and Shutdown (Issue 14)
207. Petitioners argue that Otter Tail's air dispersion modeling is legally invalid
because startup and shutdown emissions from the Big Stone I1 boiler were not included.
After reviewing the evidence, the Board finds Otter Tail and DENR's evidence more
persuasive.
208. As discussed above, the numeric PMlo and CO BACT limits in the permit
apply at all times including during periods of startup and shutdown. The numeric BACT
emissions rates were used in the modeling.
209. Otter Tail used the maximum CO and PMlo emission rates for the Big
Stone I1 boiler in the ambient air modeling. Therefore, the evidence has established that
the CO and the PMlo NAAQS and PSD increment modeling are not flawed.
I. PMlo NAAQS and Increments (Issue 15)
210. Petitioners alleged that the NAAQS and PSD increment modeling for
PMlo was technically and legally invalid for three reasons: (1) the Huron meteorological
data did not reflect worst-case meteorological conditions at Big Stone; (2) the emissions
estimates for the haul roads were based on unjustified assumptions of the silt loading and
control efficiency leading to an underestimation of emissions; and (3) all increment
consuming sources were not included in the increment modeling.
21 1. Otter Tail's July 2007 modeling demonstrates that PMlo emissions from
Big Stone I1 will not cause or contribute to a violation of the NAAQS or PSD increments.
DENR's review of the modeling submitted by Otter Tail in support of its application was
sufficient to conclude that there had been an adequate demonstration.
212. As previously found, the Huron airport surface meteorological data used
in the modeling is representative of meteorology at the Big Stone site. DENR carefully
considered the appropriateness of the data to be used in the Big Stone modeling and
reasonably determined that Huron was representative.
2 13. Petitioner's expert modeling witness, Patrick Hanrahan, expressed various
criticisms of Applicant's air dispersion modeling. The Board finds Mr. Hanrahan's
criticisms are not credible or reliable, because, among other reasons, the criticisms are
based on erroneous interpretations and assumptions as to the modeling performed by
Otter Tail.
214. Mr. Hanrahan has never been to the Big Stone I1 project site and has never
performed haul road calculations for a coal-fired power plant. [Tr. 1353-57 (Hanrahan,
9/26/08)]. Mr. Hanrahan's opinions amounted to little more than speculation.
215. One of Petitioner's chief criticisms of the modeling performed by Otter
Tail involves the methodology and input data for emissions of dust from haul roads. In
comparing and weighing the modeling offered by DENR and Otter Tail compared to the
analysis offered by Petitioners, the Board finds the assumptions as to emission reductions
from fugitive dust controls and the silt loading factor for haul road emission calculations
of DENR and Otter Tail more reliable, reasonable, and persuasive. Otter Tail will be
required to implement fugitive dust controls to minimize emissions from haul roads. An
assumption of a 50% reduction based on those controls was reasonable in estimating
emissions. [Tr. 106 1-63 (Andracsek, 9/24/08); Ex. 3 86 at 1301. Use of a silt loading of
0.6 g/m2 in calculating emissions from paved haul roads was reasonable for a coal-fired
power plant. The assumptions used in the haul road calculations are consistent with those
accepted by EPA and other state agencies in permitting power plants. See, e.g., Ex. 390
at 201. In addition, Otter Tail presented persuasive evidence that the current models
overstate actual impacts of haul road emissions [Tr. 1151-54 (Gaige, 9/25/08); Ex. 3891,
and Petitioners offered no evidence to the contrary. Otter Tail also offered evidence that
some states do not even require emissions from haul roads to be included in power plant
air modeling. [See, e.g., Exs. 387-388; Tr. 1154-58 (Gaige, 9/25/08)].
216. Haul roads at the Big Stone site are currently unpaved. All haul roads will
be paved as part of the construction of Big Stone 11, potentially resulting in a decrease in
haul road emissions as compared to current emissions from just Big Stone I activities.
[Tr. 1 183 (Gaige, 9/25/08)]. This change from unpaved to paved was not considered in
estimating emissions for the modeling.
217. DENR determines the PSD PMlo increment minor source baseline date on
a county-by-county basis. The Big Stone I1 PSD application set the minor source
baseline date for Grant County. Thus, Big Stone I1 was the only source that consumes
the PMlo increment. The July 2007 modeling confirms that emissions from Big Stone I1
will not result in a violation of the increment.
21 8. Petitioners disagree with DENR and argue that the PMlo increment minor
source baseline should be determined on a statewide basis, excluding the Rapid City area.
To address Petitioners' argument, Otter Tail performed additional increment modeling in
July 2008 assuming that the minor source baseline date was set in 1991 by a source
located in the Sioux Falls area. [Exs. 3 1 1-3 141. The purpose of this supplemental
modeling was to show that, even if Petitioners' interpretations of the PSD increment
regulations are adopted, Big Stone I1 still will not cause or contribute to any violation of
the PSD increment regulations. Otter Tail included in the modeling emissions from other
sources that would consume increment if the baseline date was set in 1991. Otter Tail's
July 2008 increment modeling demonstrates that emissions from Big Stone I1 will not
result in a violation of the increment even if the baseline date was set in 1991. The Board
accepts the supplemental modeling for the reasons herein as confirming that air quality
standards are protected regardless of when baseline was triggered.
2 19. After weighing and balancing all the highly technical evidence presented,
the Board finds that Otter Tail and DENR have satisfied the burden of proof on Issue 15
with credible and persuasive evidence. The Board further finds that the modeling
adequately demonstrates that PMlo emissions from Big Stone I1 will not cause or
contribute to a violation of the NAAQS or PSD increment.
J. SO2 and NOx NAAQS and Increments (Issue 16)
220. Petitioners argued that the NAAQS modeling for NOx and SO2 was
technically and legally invalid. Petitioners base their claim on two alleged flaws: (1)
unrepresentative meteorological data; and (2) the modeling did not reflect the allowable
SO2 or NOx emission rates from Big Stone I and Big Stone 11.
221. DENR maintains that SO2 and NO, modeling is not required for the
issuance of either the PSD permit or the Title V permit. The Board agrees with DENR.
222. As previously discussed, PSD requirements are not triggered for SO2 or
NO,. Thus, a demonstration of compliance with the SO2 or NOx NAAQS is not required
for issuance of the PSD permit. [Tr. 1232 (Rombough, 9/25/08)]. DENR performed SOz
and NO, modeling to respond to comments from EPA. [Core Ex. 1501. DENR used the
same meteorological data used by Otter Tail in its modeling. As previously found, the
Huron airport surface meteorological data and the Aberdeen airport upper air
meteorological data used in the modeling is representative of meteorology at the Big
Stone site.
223. The Title V regulations require a showing "that the operation of the new
source or permit modification will not prevent or interfere with the attainment or
maintenance of an applicable ambient air quality standard" before the Title V permit may
be issued. [ARSD 74:36:05:06]. The regulations do not specify that modeling is the only
method available for making the required showing.
224. In this case, modeling is not required to show that Big Stone I1 will not
prevent or interfere with attainment of the SO2 and NOx NAAQS. South Dakota is in
attainment for all pollutants, including SO2 and NOx. [Tr. 47 (Gustafson, 8/18/08)]. Big
Stone I1 construction and operation will not result in an increase in SO2 and NOx
emissions because of the plant-wide caps. Generally, emissions from Big Stone I and I1
will be routed through a common stack, which is the same height as the existing Big
Stone I stack. [Core Ex. 160 at 311. There will be differences in stack characteristics
such as temperature and velocity, but those differences are not sufficient to prevent or
interfere with attainment of the SOz and NOx NAAQS. Monitoring in South Dakota
indicates that current ambient concentrations are approximately 3% of the SO2 NAAQS
and approximately 9% of the NOx NAAQS. [Ex. 700 at 16- 181.
225. Nonetheless, to the extent the Title V regulations (ARSD 74:36:05:06)
require modeling to show that operation of a new or modified source will not prevent or
interfere with attainment of any NAAQS, DENR's modeling satisfies that requirement.
DENR's SO2 and NOx modeling show that operation of Big Stone I1 will not prevent or
interfere with attainment of the NAAQS. DENR's modeling confirms that the
differences in the stack parameters for Big Stone I and Big Stone I1 do not significantly
change the modeled ambient air impacts.
226. Based on the evidence and the technical expertise required, the Board
finds that SO2 and NO, NAAQS modeling is not required for the issuance of the permits.
While not required, the Board further finds that the SO2 and NOx modeling performed by
DENR confirms that operation of Big Stone I1 will not prevent or interfere with
attainment of the NAAQS. On Issue 16, the Board finds the evidence to favor issuance
of the permits by a preponderance of the evidence.
227. Petitioners have also raised collateral issues about prior DENR modeling
for SOz and NO,. DENR had initially performed SO2 and NO, modeling before the first
draft PSD permit was public noticed. The results were reported in the first PSD
Statement of Basis in 2006. Although Sierra Club and Clean Water Action submitted
extensive comments on the modeling, neither they nor any other member of the public
requested the underlying modeling files until this contested case proceeding. At that
time, it was discovered that the SO2 and NOx modeling files had been discarded when
former DENR employee Jason Knapp, who performed the modeling, had left the
employment of DENR. [Tr. 218, 461 (Rombough, 8/19/08 & 8/20/08)]. This occurred
before the second draft PSD permit was public noticed and before any contested case
proceeding was filed. The Board finds that the deletion is not material to its decision
whether to issue the permits in this case. Even assuming modeling is required, no party
suffered any prejudice here. DENR performed new modeling to confirm the results of
the prior modeling, and Petitioners were provided ample time to review and present
evidence and argument and to cross examine witnesses on the new modeling before this
Board's decision. In addition, the deletion of the initial modeling files was not
intentional, and occurred before any contested case proceeding was filed or threatened.
[Tr. 1 192-94 (Anderson, 9/25/08)].
228. In 2008, Mr. Anderson of DENR performed new SOz and NOx modeling
to verify the prior modeling results. [Tr. 21 8 (Rombough, 811 9/08); Tr. 1 186-9 1
(Anderson, 9/25/08)]. The 2008 modeling used appropriate methodologies and
meteorological data representative of the Big Stone site. To the extent that any modeling
was even required, the modeling performed by DENR in 2008 confirms that Big Stone's
SO2 and NOx emissions will not prevent or interfere with attainment of any applicable air
quality standards.
K. Case-by-Case MACT Requirements (Issue 18)
229. Petitioners contend that Section 112(g) of the Clean Air Act (i.e., MACT)
should apply to Big Stone I1 in spite of the HAP limits in the Title V permit that require
Big Stone I1 to remain below the statutory thresholds for triggering MACT. Petitioners
also attack the HAP limits by arguing that Big Stone I1 might not meet those limits and
by asserting that the limits are not enforceable. Finally, Petitioners suggest that the HAP
provisions in the Title V Permit were not subject to public comment.
1. The Permit Limits Ensure That Big Stone I1 is not a Major Source of HAPs.
230. The Board finds that the case-by-case MACT requirements do not apply to
Big Stone I1 because it is not a major source of HAPs.
23 1. Case-by-case MACT applies only to "major sources" of hazardous air
pollutants. CAA 5 112(g)(2)(B). As noted above, a major source of HAPs is defined as
one that emits 10 tons per year of any single HAP or 25 tons per year of any combination
of HAPs. CAA 5 112(a)(l). The limits in the Title V permit ensure that Big Stone I1 will
not exceed the statutory thresholds to be deemed a major source of HAPs. [Tr. 258-60,
272-74 (Rombough, 811 8/08 & 8/19/08)]. DENR has proposed limits (9.5 tons and 23.8
tons, respectively) that are approximately five percent below the MACT thresholds to
provide additional assurance that the thresholds will not be exceeded. [Core Ex. 219 at
3 1 ; Tr. 273-74 (Rombough, 8/19/08)]. The Title V permit also contains short-term HAP
emission limits to provide further assurance that Big Stone I1 will not be a major source
of HAPs.
232. Petitioners do not challenge this Board's legal authority to use permit
limits to keep facilities below regulatory thresholds. In PSD permitting, this is often
called a "synthetic minor." All parties agree that the approach is conceptually valid and
commonly used. See, e.g., Tr. 259-60, 369-70 (Rombough, 8/19/08 & 8/20/08); Tr. 859-
60 (Sahu, 8/26/08) ("[ilt's entirely within the prerogative of the source to say they will
limit [emissions] to a certain level and stay within or out of the certain program")].
Petitioners' expert witness has used this approach on behalf of his own clients. [Tr. 805
(Sahu, 8/26/08)]. The Board agrees with DENR and finds that the HAP limits here are an
effective means to require Big Stone I1 to stay below the MACT threshold.
2. The Evidence Proved That Big Stone I1 Can Meet the HAP Limits.
233. While Petitioners acknowledge that synthetic minor limits are viable in
concept, they argue that Big Stone I1 cannot meet the HAP limits in this case. The Board
disagrees.
234. Big Stone I1 is required by law to meet the HAP limits. There are severe
consequences if Big Stone I1 violates those limits. The Board is not required to speculate
today whether Big Stone I1 will comply with its obligations under the law. If Big Stone
I1 were to violate these limits, DENR and the Board (not to mention EPA and the public)
would have ample enforcement powers. [See, e.g., Tr. 124.1 -42 (Rombough, 9/25/08)].
In addition to enforcement, the permit provides that a case-by-case MACT is required if
Big Stone I1 emissions exceed any of the MACT thresholds. [Id. at 1243; Tr. 433
(Rombough, 8120108); Ex. 219 at 321. In short, speculation about Big Stone 11's future
compliance is not a reason to deny the permit today.
235. The evidence also refuted Petitioners' allegation that Big Stone I1 cannot
meet the limits. Otter Tail estimated HAP emissions using conservative assumptions,
such as operating at full capacity for every hour of the year. [Tr. 591-92 (Graumann,
8/20/08)]. Mr. Rombough himself verified that the estimates were reasonable, based on
his independent research. [Tr. 432-33, 1246-50 (Rombough, 8120108 & 9/25/08)]. In
light of these conservative assumptions, Otter Tail is confident that Big Stone I1 will meet
the HAP limits. [Tr. 591-92 (Graumann, 8120/08)]. If Otter Tail were not confident in its
emissions estimates, it would not have proposed and accepted those limits. [See id. at
590-91 (Mr. Graumann stands by his certification under oath that his calculations are
accurate to the best of his knowledge); Tr. 434 (Rombough, 8120108) (risk is on Big
Stone that it can meet its limits)].
236. Petitioners spent hours at the hearing challenging minute details of Otter
Tail's HAP emissions estimates in Exhibit 187 (e.g., arguing that Otter Tail should have
used maximum fluorine and chlorine content of coal instead of average content). Each of
their criticisms was refuted in turn by either Mr. Graumann, Mr. Gaige, or Mr.
Rombough. [See, e.g., Tr. 591-98 (Graumann, 8120108); Tr. 718-19 (Gaige, 8/21/08); Tr.
435, 1246-50 (Rombough, 8120108 & 9/25/08); Exs. 315-171. In addition, Big Stone I1
has not yet picked a vendor for its control equipment. It will have the ability to specify
equipment to meet the needs of the project, including meeting the HAP limits. [Tr. 55 1-
52 (Rolfes, 8/20/08)]. Even Petitioners' own expert conceded that technology is
currently available in the marketplace that will enable Big Stone to meet the limits. [Tr.
968-69 (Sahu, 8/26/08)].
237. At the 2009 contested case hearing, DENR offered additional evidence
regarding HAP emissions estimates demonstrating that Otter Tail should be able to meet
the HAP limits.
238. Weighing all the evidence, the Board finds Otter Tail's and DENR's HAP
emissions estimates to be reasonable, reliable, and persuasive.
3. The HAP Limits Are Enforceable.
239. Petitioners further argue that the HAP limits are not enforceable (i.e., the
permit does not provide adequate measures for demonstrating that Big Stone is in
compliance with the limits). Petitioners contend that more sampling, testing, and/or
monitoring is necessary. The Board does not agree. As the evidence proved, the Title V
permit contains ample terms and conditions to be enforceable as a practical matter.
240. The Title V permit provides for an initial performance test, quarterly
reporting of HAP emissions, weekly composite coal analysis of fluorine and chlorine
content, and calculations of emissions "based on the most recent stack test, mass balance,
emissions factors, or other approved method." [Core Ex. 2 19 at 16, 25, 3 1 and 32; Tr.
273 (Rombough, 8/19/08) (explaining conditions)]. These are standard conditions for
demonstrating compliance with HF and HC1 limits, and they are consistent with what
other agencies typically insert into their permits. [Tr. 1165 (Gaige, 9/25/08)]. DENR
considers compliance with the HAP limits "an important issue" and "something [it] will
be watching for." [Tr. 1243 (Rombough, 9/25/08)]. DENR also retains the express
authority to demand a stack test at any time. [Id. at 1244; Tr. 437 (Rombough, 8/20/08)].
It is clear, then, that the HAP limits are enforceable.
241. The synthetic minor provisions for the HAPS are not "blanket restrictions
on actual emissions" as that term is used in United States v. Louisiana Pacific Corp., 682
F. Supp. 1122 (D. Colo. 1987). To the extent that the reasoning of that case even applies
here, the proposed Title V permit contains sufficient terms and provisions to render the
caps enforceable as a practical matter. [See 58 Fed. Reg. 37778, 37789 (July 19, 1993)l.
242. While the Board believes that its 2008 findings and conclusions regarding
the enforceability of the HAP provisions were correct, this issue as raised during the 2008
contested case is now moot given EPA's objection. To respond to EPA's objection and
Petitioners' comments, DENR included additional testing and monitoring provisions
along with a more detailed explanation as to how compliance is continuously
demonstrated. The Board agrees with DENR's revisions to the Title V permit and finds
they address EPA's objection and Petitioners' 2009 comments.
4. The Public Was Provided Proper and Sufficient Notice.
243. Petitioners also argued that the HAP provisions in the draft Title V permit
were not subject to public comment. The Board found that a new public notice was not
required for several reasons. First, the HAP limits were added as a direct result of
comments they filed. Consequently, DENR was not legally required to conduct a second
round of public notice and comment on those limits. Second, the public notice provisions
of the MACT program cannot require public notice in this case because Big Stone I1 has
not triggered MACT review. Finally, the public had the opportunity to comment on the
draft Title V permit in contested case proceedings.
244. The evidence established that the HAP limits were a response to public
comments. Petitioner Sierra Club had commented on an earlier draft permit, arguing that
a case-by-case MACT analysis was required for Big Stone I1 pursuant to Section 112 of
the CAA. [Core Ex. 195 at 481. In response to those and other comments, DENR revised
the draft Title V permit to include a condition limiting emission of HAPS from Big Stone
I1 below the threshold that triggers MACT. [Core Ex. 198 at 71-75 (explaining HAP
provisions in DENR's formal responses to comments)]. In making the revisions, DENR
expressly considered and rejected the need to reopen the draft permits for further
comment: "The proposed additional limits will be equivalent to or more stringent than the
requirements already existing in the draft permits. Therefore, these changes do not need
to be public noticed again." [Id. at 75.1
245. The Board agreed with DENR and found that a new public notice was not
required. It is a well settled principle of administrative law that changes may be made to
a permit in response to comments without subjecting those changes to additional public
notice and comment. See Sierra Club v. Costle, 657 F.2d 298, 352 (D.C. Cir. 1981). As
the EPA Administrator concluded in response to a similar claim, neither the CAA nor 40
C.F.R. Part 70 "require permitting authorities to conduct a second round of comments."
In the Matter of NYCDEP North River Water Pollution Control Plant, Petition No.: 11-
2002-1 1, 2004 EPA CAA Title V LEXIS 11 at *9-10 (Sept. 24, 2004). The CAA
requires that there be "[aldequate, streamlined, and reasonable procedures for . . . public
notice, including offering an opportunity for public comment and a hearing . ..." CAA
502(b)(6). Multiple rounds of public comment on provisions revised to address such
comments would not qualify as streamlined or reasonable. South Dakota's regulations
mirror 40 C.F.R. Part 70, and, likewise, did not require DENR to conduct another round
of public notice and comment.
246. Notice and comment for the new provisions also is not required by MACT
(Section 112 of the CAA) or its implementing regulations. As noted above, case-by-case
MACT applies only to major sources of HAPS, and Big Stone I1 is not a major source.
Thus, Section 112 requirements, including the notice and comment requirements, do not
apply to Big Stone 11.
247. Finally, even assuming for the sake of argument that there is a requirement
for a second round of public notice and comment, interested parties have had the
opportunity to comment on the proposed revisions in the contested case proceedings.
Pursuant to ARSD 74:36:05 : 17, DENR "provide[d] to the interested parties a 30-day
notice of any hearing to contest a draft permit." Thus, anyone wishing to comment on the
HAP provisions could have done so in this contested case before the Board will make its
determination. Petitioners themselves elected to "comment" on the HAP provisions with
their extensive challenge in this case. In addition, Petitioners offered no evidence at the
hearing that anyone wishing to comment on the HAP provisions was somehow deprived
of the opportunity to do so.
248. The Board found that the Title V public notice in this matter was
reasonable and sufficient and in compliance with applicable requirements.
249. The Board further found that Otter Tail and DENR satisfied the burden of
proof with credible and persuasive evidence on Issue 18.
250. While the Board believes that its 2008 findings and conclusions were
correct, this issue is moot as a result of EPA's objection. To address EPA's objection,
DENR specifically requested comments on the HAP provisions in its February 2009
public notice.
L. Contents of Title V Permit (Issue 19)
25 1. Petitioners asserted that DENR's proposed final Title V Permit is legally
invalid because it authorizes operation of the Big Stone I1 modification without including
all applicable requirements for Big Stone 11, specifically the requirements contained in
the proposed PSD permit. Petitioners presented no evidence on this issue during the
hearing. The Board accepted DENR's and Otter Tails arguments and found as follows
based on the evidence:
252. The Title V permit contains all the applicable requirements necessary at
this time. PSD permit conditions do not become applicable requirements to be included
in the Title V permit until after the PSD permit has been issued (ARSD 74:36:01:05(2);
Tr. 473 (Rombough, 8/20/08)), the source has been constructed, and operation of the
source begins. ARSD 74:36:05:03.01. Otter Tail would have 12 months after operation
of Big Stone I1 commences to submit a Title V application to incorporate the Big Stone I1
PSD permit conditions into the Title V permit. [Id.]
253. The original inclusion of plantwide caps in the previously-proposed Title
V permit for SO2 and NO,, which are applicable to Big Stone 11, does not change the
regulatory requirements with respect to the incorporation of the Big Stone I1 PSD permit
requirements into the Title V.
254. While the Board believes that its 2008 findings and conclusions were
correct, this claim is now moot as a result of EPA's objection. DEhTR has included the
PSD provisions for Big Stone I1 in the revised Title V permit, and the Board adopts this
revision as satisfying EPA's objection.
VIII. Findings Relating; to Questions and Claims Raised in April 2009 Contested Case Hearing
255. Petitioners commented on the revised Title V permit during the public
comment period. DENR made several revisions to the Title V permit in response to those
comments. [See generally Core Ex. 853.1
256. Although they offered no witnesses, Petitioners raised a number of
questions and claims during the April 2009 contested case hearing concerning the revised
Title V permit. Petitioners' questions and claims were addressed in DENR's responses
to comments and by Mr. Rombough's testimony at the contested case hearing, and the
Board accepts and adopts the reasoning of the responses to comments and Mr.
Rombough's testimony. [See Core Ex. 853.1 The Board finds that Petitioners' claims
have no merit and that Otter Tail met its burden of proof. Selected questions and claims
are discussed in more detail below.
257. Petitioners allege that the Title V operating permit is not the appropriate
place to create the SO2 and NO, emission limits. Further, Petitioners argue that Title V
permits are meant only to consolidate pre-existing requirements into a single,
comprehensive document, and then assure compliance with those requirements. This
claim has no merit here. EPA commented in 2006 that the Title V permit is an
appropriate place for such conditions. Moreover, South Dakota regulations expressly
provide the Title V as the appropriate place for such conditions. [See Core Ex. 853 at 4-
51.
258. Petitioners also allege that the SO2 and NOx limits on Big Stone I must be
in place well before Big Stone I1 is constructed. DENR discussed this issue with EPA,
which agreed with the approach in the revised Title V permit during a verbal
conversation, but refused to indicate agreement with this approach in writing. Permit
conditions 9.2 and 9.5 provide that the 12-month rolling limits begin when the Big Stone
I1 project commences operation. In addition, permit condition 9.8 was revised to require
the emissions from Big Stone I be routed to the wet scrubber prior to commencing
operation of Big Stone 11. These conditions make the emission reductions from the
existing Big Stone I facility occur prior to the operation of the Big Stone I1 facility in
accordance with 40 CFR tj 52.21(b)(3). [See Core Ex. 853 at 5-61.
259. Petitioners further allege that the netting analysis is based on an improper
timeline for baseline actual emissions for the Big Stone I1 project. They indicated the
baseline date should be based on the time period starting in May 2004 through September
2008. As explained by DENR, the appropriate representative baseline time period is
January 2003 through December 2004 due to the timelines of the permitting process, the
projects and uncontrollable plant circumstances that affected normal operations, and the
existing requirements under the revised Title V permit. [See Core Ex. 853 at 6-81. The
record reflects persuasive reasons why periods subsequent to December 2004 are not
representative. [Id.] The Board agrees with DENR's analysis, which is consistent with
the applicable regulations.
260. Petitioners allege that the netting analysis is flawed because there was an
increase of emissions associated with Poet Biorefining's ethanol expansion project. Big
Stone I provides steam to the ethanol plant and, Petitioners allege, the expansion would
have required additional steam production which would generate additional emissions.
Petitioners offered no evidence to support this allegation. In fact, the record reflects that
Poet's expansion did not require any additional steam from Big Stone I above the amount
already permitted. Therefore, Big Stone I did not have to make a physical change or
change its method of operation as defined in 40 CFR 5 52.2 1 (b)(2)(iii)(t) to accommodate
Poet's increase in ethanol production. Thus, the Board finds that the netting analysis is
not flawed. [See Core Ex. 853 at 81.
261. Petitioners further allege that the emission estimates for the HAPs,
excluding HF, HCl, and mercury, are underestimated and that Big Stone I1 should be
deemed a major source of HAPs subject to CAA 112(g). DENR's responses to
comments and the evidence at the contested case hearing demonstrate that Petitioners'
attack on the HAP estimates is not well-founded. Instead, the record as a whole reflects
that Otter Tail's and DENR's estimates of HAP emissions persuasively establish that Big
Stone I1 will not be a major source of HAPs. [See Core Ex. 853 at 10- 121.
262. Petitioners raise a number of arguments about the adequacy of the
compliance demonstrations for HAPs and periodic monitoring for the PSD emission
limits. DENR's responses to comments and the evidence at the contested case hearing
demonstrate conclusively that Petitioners' attack is not well-founded. [See Core Ex. 853
at 14- 181. Otter Tail has met its burden of proof.
263. Petitioners have also argued that the Board should not issue the revised
Title V permit at this time and should revoke or stay the PSD permit as a result of the
Order of the Minnesota Public Utilities Commission ("Minnesota PUC Order") dated
March 17, 2009. For the reasons stated in DENR's and Otter Tail's filings on this issue,
the Board finds that no changes or delays are necessary or appropriate for either the PSD
permit issued on November 20,2008, or the revised Title V permit.
AMENDED CONCLUSIONS OF LAW
Based on the foregoing amended findings of fact, the Board enters the following
amended conclusions of law:
I. General
1. The Board has jurisdiction over the parties to this administrative
proceeding and over the subject matter.
2. To the extent any of the following conclusions of law may be determined
to be findings of fact or mixed findings of fact and conclusions of law, the same are
incorporated by this reference as a finding of fact as if set forth in detail.
3. Administrative rules have the force of law and are presumed valid.
Feltrop v. Department of Social Svcs,. 559 N.W.2d 883, 884 (S.D. 1997). An
administrative agency is bound by its own rules. Mulder v. Department of Social Svcs.,
675 N.W.2d 212,216 (S.D. 2004).
4. The burden of proof as to an issue on which a party bears the burden is the
preponderance of the evidence.
5. The Board concludes that it needs no other information to assess the
proposed permits or to determine if any party has met its burden of proof as to any issue
on which the party bears the burden of proof.
6. The Board concludes that the hearings in this matter have been properly
conducted pursuant to SDCL Ch. 1-26.
7. The Board concludes that the applications, draft permits and all required
filings are in conformity with South Dakota law. All procedural requirements required
under South Dakota law have been met. All data and exhibits have been filed.
8. The Board concludes that the applications, draft permits and notices are
legally and procedurally appropriate and complete. All formatting and timing
requirements have been complied with. All public hearing requirements have been met.
9. A full and fair opportunity to litigate the issues involved in this matter, as
required by law including SDCL Ch. 1-26, was given to all parties and those in privity
with the parties prior to the Board's decision.
10. The Board concludes that the draft permits are supported by the testimony
of the witnesses and documentary evidence, and that DENR and Otter Tail have met their
burden of proof by a preponderance of the evidence to establish that the Board should
issue the permits.
11. Through a combination of periodic testing, monitoring and recordkeeping,
the permits will require Big Stone to demonstrate compliance with the permit conditions
and emissions limitations.
12. The Board concludes that no changes are necessary to the PSD permit
issued on November 20,2008 or the Revised Title V permit as a result of the Minnesota
PUC Order dated March 17, 2009.
11. The Board Should Issue the PSD Permit
13. The Board concludes that the proposed PSD permit, with the changes
proposed by Otter Tail and DENR, complies with all applicable laws and regulations,
including 42 U.S.C. $$ 7470-7479; SDCL Chapter 34A-1; and ARSD 74:36:09
incorporating by reference 40 C.F.R. $ 52.21. Issuance of the PSD permit is consistent
with the policies expressed in SDCL 34A-1-1 "to achieve and maintain reasonable levels
of air quality which will protect human health and safety, prevent injury to plant and
animal life and property, foster the comfort and convenience of its inhabitants, promote
the economic and social development of the state and, to the greatest degree practicable,
facilitate the enjoyment of the natural attractions of the state." The Board will issue the
PSD permit as proposed by DENR with the following changes and clarifications:
a. Lowering certain limits in Table 4.1 of Section 4.1, as
reflected in Exhibit 324; and
b. Adding Section l. lA, as reflected in Exhibit 705.
14. The Board concludes that no changes are necessary to the PSD permit
issued on November 20,2008 as a result of EPA's objection to the 2008 proposed Title V
permit.
111. The Board Should Issue the Revised Proposed Title V Permit for EPA's Review
15. The Board concludes that the revised Title V permit, with the change
proposed by Otter Tail, complies with all applicable laws and regulations, including CAA
Title V (42 U.S.C. $ 5 7661-77661f); Acid Rain (42 U.S.C. $ 5 7651-76510); SDCL
Chapter 34A-1; and ARSD 74:36:05. Issuance of the revised Title V permit is consistent
with the policies expressed in SDCL 34A-1-1 "to achieve and maintain reasonable levels
of air quality which will protect human health and safety, prevent injury to plant and
animal life and property, foster the comfort and convenience of its inhabitants, promote
the economic and social development of the state and, to the greatest degree practicable,
facilitate the enjoyment of the natural attractions of the state." The Board will direct the
issuance of the revised Title V permit for EPA's review. The Board hereby adopts the
draft Statement of Basis for the Title V permit, as supplemented and modified by
DENR's Revised Statement of Basis [Core Ex. 8291, and Responses to Comments dated
April 15,2008, and March 18,2009 [Core Ex. 8-53].
16. The Board concludes that the revised proposed Title V permit responds to
EPA's objections.
IV. Petitioners' Claims Are Rejected
17. After carefully considering the record, the evidence presented at the
contested case hearing, written and oral arguments of counsel, and applicable laws and
requirements, the Board concludes that a preponderance of the evidence favors issuing
the permits and further concludes that all of Petitioners' claims lack merit and should be
rejected.
Dated this 21 st day of April, 2009.
SOUTH DAKOTA BOARD OF MINERALS AND ENVIRONMENT
+---
J
BY Lee M. McCahren
L
Hearing Chairman of the Board of Minerals and Environment