and Submitted July 19, 2016 San Francisco, California
Petitions for Review of an Order of the United States
Environmental Protection Agency No. EPA-R09-OAR-2012-0634
P. Bundy (argued), San Francisco, California; Brendan R.
Cummings, Joshua Tree, California; as and for Petitioner
Center for Biological Diversity.
S. Kingdale (argued), Law Office of Andrew S. Kingdale, San
Francisco, California, for Petitioners Helping Hand Tools and
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.
R. Palmore (argued) and Marc A. Hearron, Morrison &
Foerster LLP, Washington, D.C.; William M. Sloan, Morrison
& Foerster LLP, San Francisco, California; for
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.
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.
panel held that the EPA did not act arbitrarily or
capriciously in granting a prevention of significant
deterioration permit to Sierra Pacific.
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.
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.
TALLMAN, CIRCUIT JUDGE.
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.
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 unit at its mill. The new
unit was designed to burn biomass fuels 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") 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
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
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.
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.
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.
supplemented the top-down approach as it applied to
greenhouse gases in March 2011 when it issued new
guidance. 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.
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
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.
to Step 4,  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