Peabody loses appeal of Kayenta coal mine air permit

The U.S. Environmental Protection Agency’s independent Environmental Appeals Board on March 13 rejected an attempt Peabody Energy (NYSE:BTU) to appeal an air permit for the Kayenta mine, the sole coal supplier to the Navajo power plant.

The Navajo Nation Environmental Protection Agency (NNEPA), acting with authority from the U.S. EPA, issued a federal Clean Air Act Title V operating permit to Peabody Western Coal governing air emissions from the Kayenta mine, operating within the Black Mesa Complex in Arizona. Peabody petitioned the board for a ruling that NNEPA exceeded its authority by: including in the part 71 permit citations to tribal regulations, the Navajo Nation Air Quality Control Program Operating Permit Regulations (NNOPR); and using NNOPR procedures to process the permit.

The NNOPR establishes permitting requirements under the Navajo Nation Air Pollution Prevention and Control Act. NNEPA also applies these regulations to permits that contain federal program requirements implemented by NNEPA, including the part 71 permits that NNEPA administers with delegated authority from EPA. The part 71 permit at issue in this case contains parallel citations to requirements of both part 71 and the NNOPR.

Peabody argued that an air pollution control agency acting with delegated federal authority under part 71 is limited to using solely the part 71 requirements and procedures to administer the federal permit program, and that it is a clear error of law for NNEPA to cite in the part 71 permit the parallel tribal requirements and procedures of the NNOPR. Peabody also argued that NNEPA was not required to have its own tribal regulations (the NNOPR) in order to obtain part 71 delegation authority from EPA, and that NNEPA therefore has no authority to apply the NNOPR to Peabody’s part 71 permit.

The board on March 13 denied the petition for review. “Peabody has failed to demonstrate that NNEPA made a clear error of law by including citations to the tribal regulations in the part 71 permit or using tribal procedures to issue and administer the permit,” the board ruled.

The board said it has previously recognized, without objection, that state agencies acting with delegated federal permitting authority for the Clean Air Act Prevention of Significant Deterioration (PSD) program often include conditions based on state law in federal permits. This common practice of including federal and state requirements in a single permit is no more inherently objectionable under a Title V permitting program than under the PSD permitting program, the board noted.

The board said it has recognized some limitations on this practice when conflicts arise between federal and state requirements. NNEPA’s approach to using the NNOPR in conjunction with its administration of the delegated part 71 program is consistent with EPA’s expressed intent in establishing the part 71 delegation program, the board added.

The Kayenta strip job sold 7.9 million tons of coal last year. The reserves for this mine in recent years have been administratively combined with those of the neighboring Black Mesa strip job, which Peabody had to close several years ago when the customer Mohave power plant in Nevada was shut down.

The Kayenta customer, the 2,250-MW Navajo power plant in Arizona, is operated by the Salt River Project on behalf of several co-owners. Kayenta is about 78 miles to the southeast of the plant.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.