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Helping Hand Tools v. U.S. Environmental Protection Agency

United States Court of Appeals, Ninth Circuit

September 2, 2016

Helping Hand Tools; Rob Simpson, Petitioners,
v.
U.S. Environmental Protection Agency; Gina McCarthy, in her capacity as Administrator of the U.S. Environmental Protection Agency; Deborah Jordan, in her capacity as Director of the Air Division of U.S. Environmental Protection Agency Region IX, Respondents, Sierra Pacific Industries, Inc., Respondent-Intervenor. Center for Biological Diversity, Petitioner,
v.
U.S. Environmental Protection Agency; Gina McCarthy, in her official capacity as Administrator of the United States Environmental Protection Agency; Jared Blumenfeld, in his official capacity as Regional Administrator of Region 9 of the United States Environmental Protection Agency; Deborah Jordan, in her official capacity as Director of the Air Division of Region 9 of the United States Environmental Protection Agency, Respondents, Sierra Pacific Industries, Inc., Respondent-Intervenor.

          Argued and Submitted July 19, 2016 San Francisco, California

         On Petitions for Review of an Order of the United States Environmental Protection Agency No. EPA-R09-OAR-2012-0634

          Kevin P. Bundy (argued), San Francisco, California; Brendan R. Cummings, Joshua Tree, California; as and for Petitioner Center for Biological Diversity.

          Andrew S. Kingdale (argued), Law Office of Andrew S. Kingdale, San Francisco, California, for Petitioners Helping Hand Tools and Robert Simpson.

          Dustin J. Maghamfar (argued); John C. Cruden, Assistant Attorney General; Environmental Defense Section, Environment & Natural Resources Division, Washington, D.C.; Brian Doster and Mark Kataoka, United States EPA, Office of General Counsel, Washington, D.C.; Kara Christenson, United States EPA, Region IX, Office of Regional Counsel, San Francisco, California; for Respondents.

          Joseph R. Palmore (argued) and Marc A. Hearron, Morrison & Foerster LLP, Washington, D.C.; William M. Sloan, Morrison & Foerster LLP, San Francisco, California; for Respondent-Intervenor.

          Roger R. Martella, Jr., Joel F. Visser, and James R. Wedeking, Sidley Austin LLP, Washington, D.C., for Amici Curiae American Wood Counsel and National Alliance of Forest Owners.

          Before: Susan P. Graber and Richard C. Tallman, Circuit Judges, and Nancy G. Edmunds, [*] Senior District Judge.

         SUMMARY[**]

         Environmental Law

         The panel denied a petition for review of a decision of the United States Environmental Protection Agency granting Sierra Pacific Industries, Inc. a prevention of significant deterioration permit for construction of a new biomass-burning power plant at its lumber mill in California.

         The panel held that the EPA did not act arbitrarily or capriciously in granting a prevention of significant deterioration permit to Sierra Pacific.

         Addressing petitioner Helping Hands Tools' claims that the EPA was required to consider solar power and a greater natural gas mix as clean fuel control technologies in the best available control technology ("BACT") analysis for pollutants subject to Clean Air Act regulation, the panel held that because the EPA properly took the requisite hard look at Sierra Pacific's proposed design and the key purpose of burning its own biomass waste, the EPA reasonably concluded that consideration of solar or increased natural gas would disrupt that purpose and redefine the source.

         Addressing petitioner Center for Biological Diversity's claims raised in response to the supplemental greenhouse gas BACT analysis, the panel deferred to the agency's determination because EPA was largely relying on its own guidance, acting at the frontiers of science.

          OPINION

          TALLMAN, CIRCUIT JUDGE.

         Helping Hand Tools ("Helping Hand") and Center for Biological Diversity ("Center") petition for review of a final decision of the United States Environmental Protection Agency ("EPA") granting Sierra Pacific Industries ("Sierra Pacific") a prevention of significant deterioration ("PSD") permit for construction of a new biomass-burning power plant at its lumber mill in California. Plaintiffs contend that EPA issued the PSD permit in violation of the Clean Air Act, 42 U.S.C. §§ 7401-7671q. This is the first time we have reviewed EPA's doctrine of "redefining the source." It also appears to be the first time that EPA's framework for evaluating the best available control technology for greenhouse gas emissions from facilities burning biomass fuels is considered by any circuit in the United States. We hold that EPA did not act arbitrarily or capriciously in granting a PSD permit to Sierra Pacific pursuant to that framework.

         I

         Sierra Pacific owns and operates a lumber manufacturing facility in Anderson, California, situated at the northern end of the Central Valley in Shasta County. On March 29, 2010, Sierra Pacific filed an application for a PSD permit with EPA in order to construct a new cogeneration[1] unit at its mill. The new unit was designed to burn biomass fuels[2] in a boiler to produce steam used to turn turbine blades to generate 31 megawatts of electricity and to heat existing lumber dry kilns. Fuel for the unit would come primarily from wood wastes from Sierra Pacific's own lumber mills, as well as other readily available sources of agricultural and urban wood wastes. The new boiler replaces a smaller existing boiler at the Anderson Facility. The smaller boiler could burn only 60, 000 bone-dry tons ("BDT")[3] of the 160, 000 BDT of wood waste the Anderson Facility annually produces. The new boiler has the increased capacity to burn up to 219, 000 BDT of wood waste. Additionally, the boiler will utilize natural gas for the limited purpose of startup, shutdown, and flame stabilization.[4]

         To understand the process by which Sierra Pacific sought approval by EPA to build the new boiler and the resulting litigation that ensued first requires an examination of the statutory and regulatory framework underlying the permitting process and then an examination of how EPA employed that process with Sierra Pacific's particular permit application.

         A

         The Clean Air Act establishes a comprehensive program for controlling and improving air quality. As part of this program, 42 U.S.C. §§ 7470-7479 require new and modified major emitting facilities, like Sierra Pacific's new boiler, to seek a PSD permit prior to construction. Id. § 7475(a). These permits are required in geographical regions designated to meet particular national ambient air quality standards. Id. § 7471. Critically, in order to obtain a PSD permit, the applicant must demonstrate that the proposed facility utilizes the best available control technology ("BACT") for every pollutant subject to regulation by the Clean Air Act. Id. § 7475(a)(4). BACT is defined as

an emission limitation based on the maximum degree of reduction of each pollutant subject to regulation . . . from any major emitting facility, which [EPA], on a case-by-case basis, . . . determines is achievable for such facility through application of production processes and available methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control of each such pollutant.

Id. § 7479(3). In every case-by-case analysis, EPA will consider "energy, environmental, and economic impacts and other costs." Id.

         In 1990, in the absence of any clear guidance from Congress on how to evaluate BACT for a particular pollutant, EPA developed a five-step, "top-down" approach. See Environmental Protection Agency, New Source Review Workshop Manual, Chapter B (1990) (hereinafter "NSR Manual"). PSD permit applicants must engage in this analysis for every regulated pollutant with a significant emissions increase. Id. at B.4.

         Briefly, the top-down analysis begins at Step 1 when the applicant lists all available control technologies. Id. at B.5. Control technologies are those technologies that have "a practical potential for application to the emissions unit and the regulated pollutant under evaluation." Id. This list is meant to be comprehensive and include all options applicable to the particular pollutant even though the option may be eliminated in later steps. Id. at B.5-7. At Step 2, the applicant eliminates any technically infeasible options and must clearly document why the particular control option cannot be used. Id. at B.7. At Step 3, the applicant ranks the remaining control options against each other in order of overall effectiveness. Id. at B.7-8. Then, based on this ranking, at Step 4, the applicant evaluates each control option to consider the energy, environmental, and economic impacts. Id. at B.8. If the top candidate is unfavorable for any of these reasons then the applicant evaluates the impacts of the next available control option. Id. at B.8-9. The most effective control option that is not eliminated at Step 4 is then chosen as BACT at step 5. Id. at B.9.

         EPA supplemented the top-down approach as it applied to greenhouse gases[5] in March 2011 when it issued new guidance.[6] See Environmental Protection Agency, PSD and Title V Permitting Guidance for Greenhouse Gases (2011) (hereinafter "GHG Permitting Guidance"). At the same time, EPA issued more specific BACT guidance for carbon dioxide emissions from facilities that use biomass as a primary fuel source. See Environmental Protection Agency, Guidance for Determining Best Available Control Technology for Reducing Carbon Dioxide Emissions from Bioenergy Production (2011) (hereinafter "Bioenergy BACT Guidance"). The Bioenergy BACT Guidance describes how each step of the five-step BACT analysis should be approached when a facility proposes to use mostly biomass as a fuel. Id. at 10-11. It does not supersede prior guidance, id. at 4, and agencies must still consider each PSD application on a case-by-case basis, id. at 5.

         EPA promulgated a more particular BACT framework because carbon dioxide emissions from biomass fuels participate in the carbon cycle differently than other fuels, and biomass fuel stocks replenish more quickly than fossil fuel stocks. Id. at 6. Trees are a classic example of this phenomenon in nature. The short regenerative time means that new growing plant matter, biomass carbon stocks, can absorb excess carbon dioxide from the atmosphere more quickly than fossil fuel carbon stocks. Id. Additionally, photosynthesis from a well-managed biomass carbon stock, such as a well-managed forest, can act as a carbon sink, thereby decreasing the net carbon dioxide released from burning biomass as fuels. Id. "Biogenic [carbon dioxide] emissions are distinct from other regulated pollutants at bioenergy facilities because, unlike other pollutants and other [greenhouse gases], [carbon dioxide] emissions can participate directly in the global carbon cycle through photosynthesis." Id. at 7. Therefore, EPA modified the steps of the traditional BACT analysis in particular ways to account for the unique properties of biomass.

         Of particular relevance, at Step 1, EPA notes that "it will be important to address the extent to which the BACT analysis for [greenhouse gases] should include" an evaluation of other fuel types. Id. at 15. However, if utilization of biomass is the primary purpose of the project, then the agency can rely on that purpose to determine that another fuel would redefine the project. Id. If a facility relies primarily on biomass as fuel, the options at Step 1 "may be limited to (1) utilization of biomass fuel alone, (2) energy efficiency improvements, and (3) carbon capture and sequestration." Id.

         Skipping to Step 4, [7] the Bioenergy BACT Guidance notes that the traditional Step 4 analysis is "an environmental, economic, and energy impacts analysis that includes both direct and indirect (i.e., collateral) considerations." Id. at 18. EPA emphasizes that indirect environmental impacts and benefits are better suited to analysis in Step 4, id. at 21, and burning different biomass fuel stocks will not have a differential ...


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