Court Upholds DNR’s Approval of New Air Emissions Permits for City of Holland’s Installation of New Coal-Fired Power Generating Units

In this published decision, Natural Resources Defense Council, et al. v. Dep’t of Natural Resources, et al., ___ Mich. App. ___ (2013), released March 21, 2013 (Docket No. 310036), the Michigan Court of Appeals upheld the approval by the Michigan Department of Natural Resources (DNR) for the City of Holland (the City) to install a new coal-fired power generating unit in an existing power generating station.

The Natural Resources Defense Council (NRDC) and the Sierra Club challenged the issuance of the permit on the basis that DNR was in violation of the Federal Clean Air Act, 42 U.S.C. § 7401 et seq. (the CAA) requirement that applicants (and governmental entities considering such applications) demonstrate consideration of Best Available Control Technology (BACT).

The City sought to install a new boiler in one of three units at a coal-fired power generating station.  It applied for a permit from DNR.  Its application consisted of an analysis that assessed the impact of various technologies on particulate matter emissions.  It demonstrated that if the boiler used a fabric filter, its particulate emissions would not exceed federal Environmental Protection Agency guidelines.

During public comment on the City’s application, NRDC and the Sierra Club submitted comments claiming that, contrary to federal law, the City failed to conduct a BACT analysis using proposed emissions models based on “clean fuels” such as wood and biomass.  The City provided additional analysis on several different fuel sources, including the costs of obtaining and using such fuels.  It also included additional information and analysis on emissions variants based on the proposed use of these other fuels.  The analysis also included data on combinations of technologies and their effects on emissions.  The analysis concluded that the fabric filter, limestone injection, and use of the original fuel would result in the BACT.

The Court of Appeals ruled the DNR’s decision was “authorized by law”, which was the proper standard of review.  Interpreting the CAA, the Court noted NRDC and the Sierra Club’s argument that the DNR and the City use and analyze the BACT criteria from a “top down” approach was not mandatory according to the EPA guidelines. The “top down” approach required a listing, in order of best to worse, of all available control technologies and fuel sources.  The analysis then considers what of those in the priority are technically feasible, or if energy, environmental or economic impacts justify a conclusion it is not achievable.  Thus, whether the DNR and the City utilized this method was not dispositive to whether the DNR’s permitting of the new unit was “authorized by law”.

The proper standard according to United States Supreme Court precedent was only whether the state agency based its BACT determination on a “reasoned analysis”.  The Court stated: “[t]his implies – and we conclude – that a reasoned analysis that does take into account the considerations the statute enumerates is statutorily sufficient.”  Slip Op. at 7-8 (emphasis supplied).  The Court continued:

“We conclude that [DNR] complied with the requirements of the federal Clean Air Act because the analysis provided a reasoned analysis of each type of fuel that the facility could utilize without major modifications.  Though ‘clean fuels’ is one of the control methods the Department must consider under the Act, the Act does not generally require a facility to redesign itself to use the cleanest fuels.  Here, the analysis considered every type of fuel the proposed boiler could utilize, including wood and biomass, which the Sierra Club specifically recommended be analyzed as ‘clean fuels.’  Combined, the analysis considered how this variety of fuels, in combination with other processes, systems, and techniques, affected regulated emissions like particulate matter and carbon monoxide.  Because [DNR] considered an analysis that included those ‘clean fuels’ that [the City’s] plant could utilize, we conclude that the analysis adequately analyzed clean fuels under the federal Clean Air Act.”  Id. at 8 (emphasis in original).

As further noted in the opinion, DNR’s and the City’s consideration of the economic feasibility of utilizing certain “clean” or “cleaner” fuels was also appropriately considered in arriving at the conclusion of what constituted the best available control technology.  For example, the City’s study “indicated that western sub-bituminous coal has a lower sulfur and mercury content than eastern coal, but that the supply of this coal [was] limited by long-term contracts.”  Slip Op. at 2.

Read the recent opinion here:  NRDC v. DNR

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