Appeals court vetoes permit for 600-MW Avenal Power project

A three-judge panel at the U.S. Ninth Circuit Court of Appeals on Aug. 12 vacated an air permit that the U.S. Environmental Protection Agency had issued for the 600-MW Avenal Power Center LLC project in Avenal, Calif.

The panel had granted a petition for review brought by environmental groups like the Sierra Club, and it vacated EPA’s decision to issue a Prevention of Significant Deterioration permit allowing Avenal Power Center LLC to build and operate the Avenal Energy Project, a 600-MW natural gas-fired power plant, under old air quality standards.

The panel held that the EPA exceeded its authority under the Clean Air Act by grandfathering the in-process permitting for this project from new air regulations put into place during that permitting process. The panel ruled that the Clean Air Act unambiguously required Avenal Power to demonstrate that its project complied with the regulations in effect at the time the permit was issued. The panel further held that because Congress had directly spoken on the issue, the EPA could not waive this requirement. The panel remanded to EPA for further proceedings.

Avenal Power Center had filed its own suit in 2010, charging that EPA failed to meet a one-year mandate from the point of 2008 application for the air permit to act on the permit. If EPA had met the one-year deadline, those new rules that were issued after that point would not have been an issue.

“After the deadline passed but before taking any final action, EPA tightened the applicable air quality standards,” the appeals court noted. “Avenal Power filed suit and sought to compel EPA to issue the Permit under the old standards that would have applied had EPA acted within the statutory deadline. Initially, EPA responded that it could not legally do so, because the Clean Air Act explicitly requires any newly constructed facility to employ the best available control technology (‘BACT’) for regulated pollutants and meet air quality standards in effect at the time a permit is issued. Months later, however, EPA reversed course and granted Avenal Power the Permit without regard to the new regulations, which by then had gone into effect. EPA contends that, under narrow circumstances, it has the authority to grandfather certain permit applications like Avenal Power’s, and that its decision is entitled to deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984).”

The Sierra Club and other groups then challenged EPA’s action, leading to the Aug. 12 appeals court decision to revoke the permit and remand the matter.

“Applying Chevron, we hold that the Clean Air Act unambiguously requires Avenal Power to demonstrate that the Avenal Energy Project complies with the regulations in effect at the time the Permit is issued,” said the appeals court. “Because ‘Congress has directly spoken to the precise question at issue,’ EPA cannot waive this requirement. We therefore GRANT the Petition for review, VACATE the decision to issue the Permit, and REMAND for proceedings consistent with this opinion.”

This matter goes all the way back to 2008

The Avenal Power facility would generate electricity from two 180-MW natural gas combustion turbine generators, and a 300-MW steam turbine generator that utilizes heat from the combustion turbines. In February 2008, Avenal Power submitted an application to EPA for a permit. As of that date, EPA had not yet promulgated national ambient air quality standards (NAAQS) for NO2 or SO2 emissions, or BACT requirements for greenhouse gases, including CO2.

In late August 2010, after the new NO2 and SO2 NAAQS had gone into effect, Avenal Power requested an expedited judgment on the pleadings from the D.C. District Court in an effort to compel EPA to issue the permit without consideration of the newly effective regulations.

In May 2011, as the administrative process continued to drag on, the District Court granted in part Avenal Power’s motion for judgment on the pleadings and ordered the EPA Administrator to render a decision by May 2011, and a final, non-appealable, agency action ripe for judicial review by August 2011. The next day, the Assistant Administrator for the Office and Air and Radiation published EPA’s responses to the public comments, and issued the permit.

The environmental groups initially appealed to the EPA’s Environmental Appeals Board, which declined to exercise jurisdiction to review EPA’s asserted grandfathering authority, given the time constraint imposed by the D.C. District Court for a final administrative action, but otherwise upheld issuance of the permit.

“The issue here is distinct. EPA now claims the authority to waive the law’s requirements at will, without regard to the regulations it has passed, and without any precedential value one way or another for future parties,” said the appeals court. “That unbounded discretion exceeds the agency’s authority. We cannot discern any ambiguity or conflict between the Clean Air Act’s enforcement requirements, and the statutory decision making deadline. And the statute does not permit EPA to waive current NAAQS and BACT requirements whenever it finds it convenient to do so. The foregoing conclusion ends the inquiry.”

EPA relies heavily on the argument that the equities weigh in favor of Avenal Power and the appeals court panel said it agrees that the power producer has been hurt in this process. “Avenal Power filed its application over six years ago, and endeavored to work with EPA for years, even after filing suit, to obtain a final decision. But however regrettable EPA’s treatment of Avenal Power has been, we simply cannot disregard the plain language of the Clean Air Act, or overlook the reason why an applicant must comply with revised and newly stringent standards —that is, ‘to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the productive capacity of its population.’ Honoring the statute’s plain language and overriding purpose, we must send EPA and Avenal Power back to the drawing board.”

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.