AIR POLLUTION:

EPA to spare Calif. power plant from new emissions rules

After a series of legal twists that led to a stinging rebuke from a federal judge last week, U.S. EPA has decided to exempt a planned natural gas power plant in California's San Joaquin Valley from new air pollution rules, including limits on greenhouse gas emissions.

The agency announced the approval late Friday of the 600-megawatt Avenal Power Center, a project just north of the towns of Avenal and Kettleman City, which requested an air pollution permit in 2008. The final permit will spare the plant from new limits on sulfur dioxide, nitrogen oxides and greenhouse gases, all of which were put in place after the project was proposed.

EPA was pushed by a harshly worded decision from the U.S. District Court for the District of Columbia, which ruled Thursday that the permit review had already dragged on too long. Judge Richard Leon ordered EPA to make an up-or-down decision by Aug. 27.

The company behind the project, a subsidiary of Houston-based Macquarie Energy LLC, sued last year to force the agency's hand. Under the Clean Air Act, a decision is due one year from when an application is submitted, and the company argued in court that it would be unfair to make the plant follow new rules that had not even been proposed when the permit was requested.

EPA used to disagree, but in a court filing earlier this year, EPA air chief Gina McCarthy said the agency had changed its mind. The Avenal plant would be "grandfathered" into the new rules for Prevention of Significant Deterioration (PSD) permits, she wrote, because the permit had been stalled for so long (Greenwire, Feb. 2).

"EPA has previously grandfathered pending PSD permit applications where imposing new PSD requirements could delay construction and frustrate economic development," the agency wrote in its Friday decision. "Our judgment was that the grandfathered projects would have a relatively minor effect on air quality."

That turnaround, as well as the final Avenal permit, will be challenged by the advocacy group Earthjustice.

The group argues that the San Joaquin Valley is the wrong place for a new power plant because it already has the worst smog and particle pollution in the United States. Even if the Avenal power plant uses the best available technology to cut down on smog-forming emissions, it will still make the air dirtier, attorney Paul Cort said.

Cort said companies should have to follow the law as it stands when a permit is issued. EPA has estimated that 10 or 20 projects could be "grandfathered" under the same provision as the Avenal plant, and environmentalists worry that more businesses will be exempted from new pollution limits in the future if permit talks take longer than they are supposed to.

"There's a lot of permitting that takes more than a year," Cort said.

Earthjustice will appeal to the Environmental Appeals Board, which now has a tight window to review the project. The court deadline gives the panel of administrative law judges about three months to hear challenges to the permit.

'Horsefeathers!'

EPA argued that the one-year deadline in the Clean Air Act was unclear, but Leon rejected that argument.

"Horsefeathers!" he wrote in a footnote. "The EPA's self-serving misinterpretation of Congress's mandate is too clever by half and an obvious effort to protect its regulatory process at the expense of Congress's clear intention. Put simply, that dog won't hunt."

Leon ruled that EPA can continue using the Environmental Appeals Board, which was created by the agency to review permits, but that is not an excuse for a permit application to be under review for more than a year.

The board has recently been targeted by House Republicans, who blame it for delaying Royal Dutch Shell PLC's plan to start drilling for oil and gas in the Arctic Ocean this summer (Greenwire, May 13).

Last week's decision reflects frustration with the pace of permit reviews under the Clean Air Act, which has prompted complaints from industry groups that say it takes too long to get approval for construction of a large industrial plant. Administrative review can take more than a year on its own, even after a permit has been approved by EPA officials, Leon wrote.

"The EPA put in place a review process that can and has, in this case, rendered meaningless this congressional one-year mandate," he wrote.

Click here to read EPA's final permit decision.

Click here to read the court ruling.