WEST VIRGINIA AIR QUALITY BOARD CHARLESTON, WEST VIRGINIA. Appellants, v. Appeal No. NOTICE OF APPEAL

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1 WEST VIRGINIA AIR QUALITY BOARD CHARLESTON, WEST VIRGINIA SIERRA CLUB, OHIO VALLEY ENVIRONMENTAL COALITION, COAL RIVER MOUNTAIN WATCH, WEST VIRGINIA HIGHLANDS CONSERVANCY, Appellants, v. Appeal No. JOHN BENEDICT, DIRECTOR, DIVISION OF AIR QUALITY, WEST VIRGINIA DEPARTMENT OF ENVIRONMENTAL PROTECTION Appellee. NOTICE OF APPEAL The appellants named above respectfully represent that they are aggrieved by appellee s issuance of Permit to Construct Number R issued on February 25, 2010 to TransGas Development LLC for the TransGas Coal to Gasoline Plant (hereinafter Permit ). Pursuant to the provisions of 52 CSR 1 et seq., and West Virginia Code 22B-1-1 et seq., appellants request a hearing to contest the issuance of the Permit. Appellants seek that the Board vacate and remand the Permit, and provide to appellants fees, costs, and expenses associated with this appeal and such other relief as the Board deems proper. Appellants specific objections to the action, including questions of fact and law to be determined by the Board, are set forth in detail below. PARTIES 1. Each of the above-named appellants submitted comments on the draft Permit and is therefore a proper party before the Board pursuant to West Virginia Code Sierra Club is a national nonprofit organization of approximately 1.3 million members and supporters dedicated to the protection and preservation of the natural and human environment. The West Virginia Chapter of the Sierra Club has approximately 2,000 members

2 and more than 50 members live in the county where the proposed facility is located or an adjacent county. Sierra Club also has active Chapters in Virginia and Kentucky. The TransGas facility would be located no more than a few miles from these states borders. Sierra Club and its members have a longstanding interest and expertise in the development and use of natural resources and in air quality issues nationwide. 3. Ohio Valley Environmental Coalition, with approximately 1,500 members, has a mission to organize and maintain a diverse grassroots organization dedicated to the improvement and preservation of the environment through education, grassroots organizing and coalition building, leadership development, and media outreach. 4. West Virginia Highlands Conservancy is a nonprofit membership organization located in West Virginia. Established in 1967, it is one of the state s oldest environmental advocacy organizations and for the past four decades has been a leader in citizen efforts to protect West Virginia s land and water resources. Its headquarters are located in Charleston, West Virginia, and most of its approximately 1,800 members reside in West Virginia. 5. Coal River Mountain Watch, with approximately 500 members, has a mission to establish social, economic and environmental justice in the southern coalfields of West Virginia, to keep communities intact and to improve the quality of life in these communities. 6. Appellee s issuance of the Permit threatens to cause injury to appellants and to members of appellants in the form of increased exposure to air pollution and to water pollution caused by atmospheric deposition, increased risk of illness, restriction of recreational enjoyment, aesthetic impacts, impacts from higher temperatures due to climate change (including, but not limited to, loss of wildlife and habitat that supports the hunting, fishing, and wildlife viewing industries and recreational enjoyment in West Virginia) and deprivation of the right to meaningful participation in the permitting process. PROCEDURAL BACKGROUND 7. TransGas Development, LLC ( TransGas ) submitted an application to construct 2

3 a coal-to-liquids plant to the West Virginia Department of Environmental Protection, Division of Air Quality (hereinafter DAQ ) pursuant to 45 CSR 13 on December 9, 2008 and a revised application on December 26, (All citations to CSR refer to the West Virginia Code of State Rules.) 8. Appellant Sierra Club has been actively involved in the permitting process since its early stages. On February 11, 2009, Sierra Club wrote to DAQ to express concern that the redaction of key portions of the TransGas permit application essential to determining emissions from the plant violated state and federal regulations governing confidential information in air permit applications, and that the redaction would limit public review and comment opportunities. 9. On April 20, 2009, Sierra Club wrote to DAQ expressing concern that TransGas claim that the plant air emissions would fall below the major source thresholds of the Clean Air Act s New Source Review Program (NSR) was incorrect and that in fact the plant is a major source for NSR purposes. Sierra Club also expressed concern that the application did not contain enough information to meaningfully review TransGas claims that the plant s emissions would remain below the major source thresholds. 10. TransGas submitted revised Regulation 13 permit applications on June 17, 2009, and October 5, 2009, still claiming minor source status. 11. On October 27, 2009, DAQ gave public notice of its preliminary determination to issue Permit Number R to TransGas and made the draft permit and Engineering Evaluation/Fact Sheet available to the public for review. The public notice was followed by a public comment period, which was originally scheduled to end on November 30, 2009, but was extended to December 18, On December 18, 2009, appellants submitted extensive written comments detailing numerous technical and legal flaws with the draft permit and urging DAQ to deny the requested permit as contrary to the public interest, health, and welfare, as well as the state s air quality control laws. On January 13, 2010, appellants provided DAQ with a compact disc 3

4 containing electronic copies of each source referenced in appellants comments, excluding those that had accompanied appellants comments. 13. Appellants members and supporters also testified at the public hearing prior to DAQ s final approval of the air permit. 14. On February 25, 2010, DAQ issued Permit Number R authorizing TransGas to begin construction on its proposed coal-to-liquids facility. The DAQ also released supporting documentation for the final permit, including the Response to Comments and Final Determination (hereinafter RTC ). 15. Appellants comments and the sources cited therein, the application, draft permit, final permit, and accompanying support documents, and the testimony and exhibits appellants plan to present to the Board form the factual basis of appellants objections to the Permit. Key legal principles and facts are summarized below. THE PROPOSED PROJECT 16. The TransGas liquid coal plant would process more than 3 million tons of coal each year, and more than 166,000 tons of limestone. The plant plans to produce up to a total of 226,271 tons of liquid sulfur, liquefied petroleum gas (LPG), gasoline and other miscellaneous liquid coal products each year. 17. The proposed TransGas plant would be located near Wharncliffe, West Virginia on 63 acres of what is currently an active mountaintop-removal surface mining site. Surface mining activities at the site would continue for approximately four more years, overlapping construction and possibly operation of the plant. 18. The plant would consist of a coal preparation and handling system, two gasification units, a CO shift unit, an acid gas and mercury removal unit, a sour water stripping unit, an air separation unit, a sulfur recovery unit, a methanol synthesis plant, a pressure swing absorption unit, a methanol-to-gasoline plant, a carbon dioxide purification unit, a start-up steam boiler, and a flare, among many other components. 4

5 19. The plant would employ a gasification method called PRENFLO with Direct Quench, which, to appellants knowledge, has not been implemented previously in the United States. Much of the information in the application relies on experience with the PRENFLO gasification process at a plant in Puertollano, Spain. The Puertollano plant is not a liquid coal facility; it is an integrated gasification combined cycle ( IGCC ) power plant. The application also relies on information from the New Zealand Synfuels Plant, which employs a methanol-togasoline process. The New Zealand plant came on line in The Application states that [v]arious seams [of coal] will be used upon determination that the seams are appropriate for the source s operation. The Director of Development for TransGas publicly stated that the plant will primarily use locally mined coal from West Virginia and elsewhere in Appalachia. 21. Experts have estimated that a reasonably sized indirect coal-liquefaction plant using eastern coal, like that proposed by TransGas, would require 10,500 gallons of water per minute. 22. The estimated cost of constructing the plant is $3 billion. 23. The plant will emit many tons of air pollutants that the United States Environmental Protection Agency ( EPA ) has determined are harmful to human health and the environment including, but not limited to, sulfur dioxide ( SO 2 ), nitrogen oxides ( NO x ), particulate matter ( PM ), carbon monoxide( CO ), and volatile organic compounds ( VOC ). 24. The Permit authorizes the TransGas plant to emit tons of CO, tons of NO x, tons of PM, tons of SO 2 and tons of VOCs per year. 25. The plant will also emit a variety of hazardous air pollutants or HAPs, which EPA has determined are especially toxic. HAPs are those pollutants that are known or suspected to cause cancer or other serious health effects, such as reproductive effects or birth defects. 42 U.S.C. 7412(b)(2). 5

6 26. The Permit authorizes the TransGas plant to emit 4.3 tons of HAPs per year, most of which is methanol. Methanol is highly toxic to humans through ingenstion, inhalation, or absorption through the skin. Exposure can cause headaches, dizziness, nausea, lack of coordination, drowsiness, and with sufficiently large doses, unconsciousness, blindness and death. 27. The TransGas plant will also contribute millions of tons of greenhouse gases to the atmosphere each year, contributing to global warming. EPA has recently confirmed reports from the Intergovernmental Panel on Climate Change and numerous other scientific studies unequivocally declaring that global warming is occurring and humans are contributing to global warming in a significant way. Global warming will have serious environmental, health, economic, and ecological impacts including increased drought and flooding, extreme weather events, spread of infectious disease and pests, and species extinctions. 28. In addition to air pollution, the plant is permitted to produce up to 665,760 tons of waste ash and filter cake each year. Coal ash contains toxic metals, including arsenic, lead, and chromium that can leak into water supplies, causing cancer and other health problems. PERMITTING REQUIREMENTS 29. Appellee s authority to issue an air permit to TransGas stems from the West Virginia Air Pollution Control Act, W.Va. Code , et seq., which states that it is the public policy of this state and the purpose of [the Air Pollution Control Act] to achieve and maintain such levels of air quality as will protect human health and safety, and to the greatest degree practicable, prevent injury to plant and animal life and property, foster the comfort and convenience of the people, promote the economic and social development of this state and facilitate the enjoyment of the natural attractions of this state. The purpose of the Air Pollution Control Act is, among other things, to provide a framework within which all values may be balanced in the public interest. Id. 30. Appellee may not issue a permit for construction if it would be inconsistent with 6

7 the intent and purpose of the Air Pollution Control Act. 45 CSR ; 45 CSR In enacting the federal Clean Air Act, Congress focused EPA s regulatory attention on six common air pollutants known as criteria pollutants : ozone, CO, PM, SO 2, lead and NO x. EPA has identified and set standards that protect human health and welfare from excessive levels of these pollutants. These standards are known as the national ambient air quality standards. 32. In 1977, Congress added the Prevention of Significant Deterioration ( PSD ) program to the Clean Air Act to maintain air quality in areas that were still unspoiled by air pollution. The PSD program prevents polluters from driving air quality down to the level of the national ambient air quality standards (the PSD program). It applies wherever ambient air quality meets those standards, or has not been classified. 42 U.S.C There are no ambient air monitors for criteria air pollutants in Mingo County. As an unclassifiable/attainment area, the PSD program applies there. 40 CFR Under the Clean Air Act s framework of cooperative federalism, states may take responsibility for implementing the Act s PSD provisions by enacting a State Implementation Plan ( SIP ) that effectively incorporates the Act s requirements. 42 U.S.C. 7410(a)(3) & (4). Following approval by the EPA, a state applies the rules of its SIP to proposed new sources of air pollution. In order to secure EPA approval, the State s rules must be at least as stringent as the federal Clean Air Act requirements. 42 U.S.C West Virginia s SIP incorporating the PSD permitting requirements has been approved by EPA and is set forth at 45 CSR 14, also known as Regulation Pursuant to the federal PSD regulations and Regulation 14, no new major stationary source can begin construction without first obtaining a permit that meets the requirements of the PSD program. 40 CFR 52.21(a)(2)(iii), (b); 45 CSR , A fuel conversion plant, such as the proposed TransGas plant, that has a potential-to-emit of 100 tons per year or more of a criteria air pollutant is a major stationary 7

8 source. 45 CSR , An applicant for a Regulation 14 permit must conduct a rigorous analysis, including air modeling, to demonstrate that the source will (a) not cause or contribute to air pollution levels that would be in violation of federal or state ambient air quality standards, (b) not violate any applicable maximum allowable increase over the baseline concentration of air pollution in any area (also known as a PSD increment ); and (c) use the best available control technology ( BACT ) to limit its emissions. The applicant must also consult with federal land managers as to the impact of the source on nearby park areas, among other requirements. See 45 CSR , 9.1, 10, 11, 12, Pursuant to section 8.2 of Regulation 14, any person proposing to construct a new major stationary source shall apply best available control technology for each regulated NSR pollutant that it would have the potential to emit in significant amounts. Significant is defined at 45 CSR At the TransGas plant, CO, NO x, PM, PM 10, SO 2, and VOCs are all emitted at amounts considered significant for a major source. Accordingly, as a major source, TransGas would have to apply BACT to each of these pollutants. See also 45 CSR (defining BACT); 40 CFR 52.21(b)(12). 40. Regulated NSR pollutant is defined, inter alia, as any pollutant that otherwise is subject to regulation under the Act. 40 CFR 52.21(b)(50); 45 CSR d. 41. The Clean Air Act also contains special pre-construction permitting provisions to protect the public from hazardous air pollutants. Accordingly, major sources of HAPs are required to comply with Maximum Achievable Control Technology ( MACT ) regulations that must, where achievable, eliminate such emissions entirely. 42 U.S.C. 7412(d)(3). [N]o person may begin actual construction or reconstruction of a major source without a final and effective case-by-case [MACT] determination. 40 CFR 63.42(c). These regulations have been incorporated into the West Virginia SIP by reference. 45 CSR 34 (adopting 40 CFR Part 63 by reference); see also 40 C.F.R (a)(2) (defining MACT ). 8

9 42. Section 112(b) of the Clean Air Act contains a list of HAPs including, but not limited to, carbonyl sulfide, benzene, and methanol. 42 U.S.C. 7412(b). 43. Major sources of HAPs are those with the potential to emit 10 tons per year or more of any single regulated HAP, or 25 tons per year or more of any combination of HAPs. 42 U.S.C (a)(1); 7412(b); 40 CFR Part 63; 45 CSR 34; 45 CSR New sources subject to MACT must achieve emissions reductions that are at least as stringent as the emission control achieved in practice by the best controlled similar source. 42 U.S.C. 7412(d)(3). 45. A true minor source is one that does not have the physical or operational capacity to produce emissions above the major source thresholds. 46. A synthetic minor source is one that has the physical and operational capability to emit major amounts, but is not considered a major source because the owner or operator has accepted an enforceable limitation on its operations. 47. DAQ has determined that the TransGas plant s potential-to-emit, after operational limitations are considered, is less than 100 tons per year for each criteria pollutant, and less than 10 tons per year of any single regulated HAP or 25 tons per year of any combination of HAPs. It therefore considers the TransGas plant to be a synthetic minor source. As a minor source, the TransGas plant avoids the more stringent requirements of PSD permitting and of Regulation 14 in the Code of State Rules that would apply to a major source, and the MACT regulations. 48. West Virginia s program for permitting sources that are not major stationary sources is set forth at 45 CSR 13, also known as Regulation 13. Under Regulation 13, DAQ issues a permit to construct unless a determination is made that the proposed construction... will violate applicable emission standards, will interfere with the attainment or maintenance of an applicable ambient air quality standard, cause or contribute to a violation of an applicable air quality increment, or be inconsistent with the intent and purpose of [Regulation 13] or the West 9

10 Virginia Air Pollution Control Act. 45 CSR In that case, an order denying such construction... shall be issued. Id. (emphasis added). APPELLANTS OBJECTIONS TO THE ISSUANCE OF THE PERMIT, ITS TERMS, AND CONDITIONS 49. Appellants object to appellee s issuance of the Permit without allowing public review of key information supporting TransGas calculations of its air emissions. Should further information be obtained through discovery in this appeal, appellants reserve the right to amend this notice of appeal to include additional objections revealed by the new information. 50. In permitting the TransGas plant, DAQ failed to comply with West Virginia s PSD and MACT requirements and the Clean Air Act by erroneously designating the plant a minor source. Even if the minor source designation is correct, DAQ failed to comply with West Virginia s minor source permitting requirements by imposing unenforceable permit conditions and ignoring the plant s potential impact on downwind ozone pollution. I. ERRONEOUS MINOR SOURCE DESIGNATION 51. As outlined above, the Clean Air Act and West Virginia state law set out detailed procedures to ensure that any major new source of air pollutants does not contribute to violations of air quality standards and that it will use the most cutting-edge, protective technology available. Appellants will demonstrate to the Board that DAQ s decision allows TransGas to improperly evade these procedures. The Permit issued does not nearly ensure that the plant s emissions will remain below the major source thresholds. A. Potential to Emit 52. Potential to emit is a key concept in this appeal. It refers to the maximum capacity of a stationary source to emit a pollutant under its physical and operational design. 40 CFR 52.21(b)(4); 45 CSR ; 45 CSR It is intended to include all emissions from the plant-- from stack emissions, to fugitive leaks, to dust from handling of material going 10

11 in and out of the plant, and other emission sources. The plant s total potential to emit determines whether it is a major or minor source. 53. DAQ is obligated to include all expected emissions in its potential-to-emit calculations. While a plant may qualify as a synthetic minor by accepting limits on its physical and operational capacity to emit pollution, both EPA and federal courts have determined that a blanket restriction on emissions is not sufficient to turn a major source into a synthetic minor source. Restrictions contained in state permits which limit specific types and amounts of actual emissions ( blanket restrictions on emissions) are not properly considered in the determination of a source's potential to emit. United States v. Louisiana-Pacific Corp., 682 F. Supp. 1141, 1160 (D. Col. 1988). Rather, permit limits are only valid considerations in the potential-to-emit calculus if they express an operational or physical limitation such that the permitting authority can predict with some certainty that emission limits will in fact be met. 54. Permit conditions related to air pollution control equipment, hours of operation, and the type of material combusted, stored, or processed at a plant are considered operational or physical limits. See U.S. Environmental Protection Agency, New Source Review Workshop Manual, Prevention of Significant Deterioration and Nonattainment Area Permitting, October 1990 (hereinafter NSR Manual ), at A While DAQ may rely on certain assumptions about such operational parameters in calculating potential to emit, it may only do so if those assumed parameters are memorialized in permit conditions that are enforceable by the Secretary and U.S. EPA. 45 CSR (defining potential to emit ). See NSR Manual at A The concept of enforceability goes beyond simply placing a limit in a permit. Rather, a limit relied upon in calculating a source s potential to emit must be enforceable as a practical matter. NSR Manual at A.11. As explained more fully in the NSR Manual and other EPA guidance, as well as federal case law, each limitation justifying the plant s characterization 11

12 as a minor source must be supported by permit conditions that allow the permitting authority to actually enforce the limit, including adequate monitoring and reporting. 57. Similarly, DAQ must impose or incorporate, consistent with all applicable rules, enforcement conditions which assure that all emission limitations contained within the permit are quantifiable, permanent and practicably enforceable. 45 CSR (emphasis added). B. Emissions Improperly Excluded From TransGas Potential to Emit 58. The first key error in DAQ s evaluation of the plant s potential to emit is that it excludes whole categories of emissions, such as those from emergency flaring, by pointing to blanket emission limits and stating that an emissions from those source categories will simply be a violation of the permit. Yet, there is no permit condition that either ensures these emissions will be monitored or that a violation will lead to reevaluation of the plant s minor source status. Moreover, as a matter of law, blanket restrictions are not sufficient to justify granting a source minor status. See NSR Manual, and Louisiana-Pacific Corp., 682 F. Supp. at The Permit does not require DAQ to reevaluate TransGas s minor source status in the event that monitoring reveals violations of the Permit limits. 60. Even if such a condition existed in the Permit, all expected emissions under a worst-case scenario must be included in the potential-to-emit calculation before issuing a permit to construct. EPA has clearly advised that a permitting authority cannot simply put expected emissions in the category of violations and omit them from a potential-to-emit calculation. [A] source must estimate its emissions based on the worst case scenario taking into account startups, shutdowns, and malfunctions. EPA Region 2, Letter from Steve C. Riva, Chief to William O Sullivan, Director, New Jersey Dep t of Env. Protection (Feb. 14, 2006). 61. DAQ has acted contrary to law and fact in excluding emissions from the following sources in determining that the plant will emit less than 100 tons per year of each criteria 12

13 pollutant. The following omissions render the minor source designation both legally and factually invalid. 1. Emissions during malfunctions. 62. The TransGas flare is expected to emit NO x, SO 2, CO, VOC, hydrogen sulfide, carbonyl sulfide, nickel carbonyl, hydrochloric acid, hydrogen cyanide, and methanol during normal operations. Permit, Appendix A. The latter five compounds are HAPs. 63. One of the key purposes of a flare is to release off-gases during system upsets and unplanned outages, i.e., malfunctions. 64. DAQ acknowledges that the flare is an emissions source, but nevertheless claims that it need not estimate emissions from the flare during malfunctions because those emissions will be considered a Compliance/Enforcement matter. (RTC at 17.) 65. The Application states that in the event of an emergency or malfunction, a number of components will release emissions directly to the atmosphere. Application, Attachment 1 to Task Order 1, Section 3.15 (p. 27). DAQ omitted any estimate of these emissions in its calculation of the potential to emit. 66. Even if DAQ cannot predict with exactitude what emissions from malfunctions will be, it can certainly predict they will be higher than zero, which is the amount currently assumed for purposes of the minor source designation. The maximum capacity to emit includes both planned and unplanned emission events. Gasifiers such as those planned for the TransGas plant are known to experience upsets. Such problems will be exacerbated when combined with other processes in a new type of plant with which its operators have little experience. When the gasifiers or other processes malfunction, untreated syngas will be sent to the flare, resulting in high levels of emissions not included in the potential to emit. 67. Emissions from refinery flares during malfunctions have consistently proven to be an enormous source of pollution. Other states around the country have included flaring 13

14 emissions during malfunctions in a source s potential-to-emit. There is no justification under law or fact for excluding them here. 68. DAQ claims that operational limits on the total volume of syngas sent to the flare from the gasifiers and acid gas removal system ( AGR ) limit total flare emissions. (See RTC at 15, 17; Permit Conditions e, e.) There are at least two problems with this response. First, there are many other components besides the gasifiers and AGR connected to the flare that could upset and cause emissions. In fact, the Application states that emissions from upsets (i.e., malfunctions) at the CO Shift, Sour Water Stripper, Methanol Synthesis, Sulfur Recovery, CO 2 Purification, Methanol-to-Gasoline units, and a number of other units, will all vent to the flare. The Permit places no limits on the volume flared from these other processes. Second, total emissions from the flare are a product of both the concentration of pollutants in the syngas and the volume of gas sent to the flare. Thus, limiting the volume of gas sent to the flare does not alone determine the level of emissions from the flare. DAQ must also take into account the concentrations of pollutants in the gas sent to the flare. 69. DAQ must make a reasonable estimate of emissions during malfunctions before it can conclude TransGas is a minor source. It has not yet done so, rendering the minor source designation invalid. 2. Sulfur production process. 70. Although the original application stated that TransGas would be converting some of the liquid sulfur it produces into solid sulfur flakes, DAQ prohibited this process in the Permit in response to appellants comments on the Draft Permit. However, DAQ did not calculate what new emissions would occur as a result of this process change. There is no explanation of what will become of the liquid sulfur that would have been converted to solid sulfur. The emissions associated with this process change must be included in the plant s potential to emit. 3. Emergency backup power equipment. 71. DAQ omitted emissions associated with emergency backup equipment from the 14

15 potential to emit because any such emissions will be considered a permit violation. (RTC at 9.) As explained above, merely considering emissions a violation does not suffice as a matter of law to justify minor source status. Moreover, operating a large industrial plant without emergency backup power could be dangerous to workers and the public. If the plant does plan to use such equipment, the associated emissions must be included in the potential to emit prior to permitting. While emergency electrical generators at residential locations are considered de minimis sources and exempted from permitting requirements, there is no similar exemption for generators at industrial locations. See 45 CSR 13 Table 45-13B. 4. Wastewater treatment system. 72. DAQ omitted emissions associated with the planned wastewater treatment system because any such emissions would be considered a permit violation. (RTC at 11.) As explained above, merely considering emissions a violation does not suffice as a matter of law to justify minor source status. Furthermore, DAQ unreasonably accepted TransGas statement that there will be no emissions from the wastewater treatment system. TransGas addressed only wastewater from the gasification process, but other systems will also produce wastewater with contaminants. Wastewater treatment systems generally include open basins and tanks from which volatile compounds are degassed to the atmosphere. DAQ should have included these emissions in its calculation of the plant s potential to emit. 5. CO 2 Purification Unit 73. DAQ omitted potential emissions of PM associated with the CO 2 purification unit from the potential to emit because any such emissions shall be considered a violation. (RTC at 20). As explained above, merely considering emissions a violation does not suffice as a matter of law to justify minor source status. Moreover, DAQ is not requiring monitoring for PM of the emission point of the CO 2 purification unit. Rather, it requires a one-time test on one of the streams sent to the unit for reasonably detectable levels of PM and other pollutants; the test does not ensure that there will be no PM or other pollutants emitted from the unit. 15

16 C. Underestimated Emissions 74. A second category of problems with DAQ s approach is that in some cases DAQ purported to include pollution from an emissions source in the potential to emit, but did not consider all the relevant variables in calculating the total amount, rendering its final calculation of potential to emit, and minor source designation, invalid. DAQ acted contrary to law and fact as follows. 1. Missing sulfur compounds. 75. Sulfur dioxide emissions from the flare are a product of all sulfur compounds in the gas that is combusted by the flare. To determine total SO 2 emitted from the flare, DAQ and the applicant appear to have considered only combustion of hydrogen sulfide (H 2 S). Further, the only sulfur compound in the gas sent to the flare that is continuously monitored is H 2 S. It is expected, however, that other sulfur compounds would be present in the gas sent to flares. Combustion of sulfur compounds in the flare other than H 2 S could result in many tons more SO 2 per year than predicted by DAQ. Total sulfur compounds in the gas sent to the flares must be characterized and included in the emissions calculations. Until then, the minor source determination for SO 2 is unreliable. 76. The one-time test requirements on waste gas streams set forth in Permit Conditions and for after startup do not justify DAQ s unsupported assumptions in calculating SO 2 emissions prior to construction. Moreover, the content of the waste streams will change based on the coal feedstock used and cannot be determined by a one-time test. 2. Flare combustion efficiency for CO. 77. The flare is also intended to destroy CO before it reaches the atmosphere. The higher the flare efficiency, the less CO is emitted. DAQ has assumed a relatively low destruction efficiency for sulfur compounds (98%), but has inexplicably assumed an extremely high efficiency of 99.5% for the destruction of CO. 78. Typically, permitting agencies assume a flare destruction rate of 98% for CO. 16

17 Recent studies show even this lower rate is too high. While a higher level of efficiency might be achieved under perfect conditions, these rarely exist. Liquid droplets, low gas heating value, high cross-winds and too much steam or air added, among other variables, can all reduce flare efficiency resulting in significant emissions. 79. To combat the effects of wind, plant operators generally inject steam into the flare to keep the flame as upright as possible. In response to appellants comments that the flare would not achieve the 99.5% destruction efficiency for CO, DAQ added a provision to the Permit requiring a Flare Monitoring and Compliance Demonstration Report. The Report, which would include a determination of the appropriate steam-to-hydrocarbon ratios, is due 180 days prior to startup of the facility. There is no one appropriate ratio, however; it can depend on numerous factors. The future filing of the Report does not ensure that the flare will achieve 99.5% destruction carbon monoxide. As such, DAQ cannot rely on this extremely high level in calculating TransGas potential to emit. 80. Even if the flare s destruction efficiency for CO is just a small amount less than 99.5%, the plant s emissions of CO would exceed 100 tons per year. As DAQ currently does not know whether TransGas flare can achieve 99.5% destruction efficiency under foreseeable operating conditions, it must assume a lower rate in determining the plant s maximum capacity to emit CO. The potential-to-emit calculation is intended to capture a worst-case scenario, not a best-case scenario. 3. Unsupported calculation of NO x emissions. 81. The applicant and DAQ calculated emissions of nitrogen oxides from the flare by assuming a concentration of nitrogen oxides in the flare gas of 250 parts per million by volume (ppm v ). TransGas states that this figure is based on information from the vendor, although the Application states that a flare vendor has not yet been selected. DAQ did not independently verify this assumption, instead stating that it has found no evidence that the concentration of NO x used in the emissions calculations was not reasonable. (RTC at 18.) Given that record 17

18 lacks any explanation of how the 250 ppm v level was arrived at, DAQ s unquestioning acceptance of this assumption is unreasonable. Because flares do not lend themselves to stack testing, DAQ has not required any monitoring to determine the accuracy of this assumption. Id. Instead of accepting TransGas unsupported number, DAQ should have considered the concentration of nitrogen-containing compounds presents in the gas sent to the flare, and the rate at which those compounds will be converted into NO x upon combustion, to determine NO x emissions from flaring. To ensure that such assumptions are enforceable, DAQ could have required monitoring of the nitrogen compounds in the composition of the gas sent to the flare, and optical remote sensing techniques to measure the flare s combustion efficiency. Because DAQ has relied only on an unsupported, unexplained, and unmonitored assumption for NO x in flare offgases, it has not assured that NO x emissions will remain below the minor source threshold. 82. TransGas calculation also assumes a flow rate within the flare that is not limited or monitored and therefore cannot be relied upon to limit potential to emit. 83. DAQ responds that the assumption regarding NO x is conservative, based on a comparison to calculations employing an emissions factor for industrial flares developed by EPA in AP-42. (RTC at 18.) However, this AP-42 factor has no relevance whatsoever to the TransGas plant. It is based on tests using crude propylene containing 80% propylene and 20% propane. AP 42, Fifth Edition, Compilation of Air Pollutant Emission Factors, Volume 1: Stationary Point and Area Sources, Table (at The waste gas flared at the TransGas plant will have an entirely different composition. 84. This issue is just one example of DAQ s unsupported reliance on industry standards or vendor guarantees, even for equipment for which TransGas has not yet selected a vendor. 4. Inconsistent reliance on experience from petroleum refineries. 85. TransGas and DAQ have in some places indicated that the TransGas plant will 18

19 not be similar to a petroleum refinery. They argue that emissions typical of certain refinery components should not be included in the plant s potential to emit. For instance, DAQ states that it would be inappropriate to estimate cooling tower emissions, wastewater treatment emissions, or malfunction emissions, based on emission rates typical at refineries. (RTC at 10, 11, 17, ) It also states that the plant should not have to comply with refinery monitoring requirements in 40 CFR 61 Subpart Ja. (RTC at 31.) On the other hand, DAQ does use refinery emissions factors for estimating emissions of CO from equipment leaks. (RTC at 19.) Whereas refineries have high levels of VOC emissions from cooling towers, refinery process streams have low amounts of CO compared to liquid coal facilities. Thus, using petroleum refinery emissions factors for leaks, but not for the cooling tower, helps TransGas manipulate its potential to emit to remain below major source thresholds for CO and VOCs. If the facility is not like a petroleum refinery, it should not be permitted to apply petroleum refinery emissions factors when convenient. DAQ must reevaluate VOC emissions from the cooling tower, and emissions of CO from leaks, using a consistent methodology. Without such an evaluation, DAQ cannot assure that total emissions of these pollutants will be less than 100 tons per year. 5. Storage Tank Emissions 86. The EPA TANKS model employed by TransGas to estimate emissions from the plant s storage tanks does not allow for increased emissions from tanks in poor condition. Tank condition degrades over time. For example, tanks settle, so they are no longer round. This causes tank seals, regardless of their condition, to not fit tightly, allowing leaks. The model predicts a beginning-of-life emission factor, which is inappropriate for the life of a tank. Using the model for the life of a tank is like assuming emissions from cars could be calculated assuming all cars on the road are brand new and running to specification. A few poor performing tanks can emit thousands of tons of VOCs. 87. Both the assumptions entered into the TANKS program and DAQ s Engineering Evaluation assume that TransGas will install internal floating roofs to control VOC emissions. 19

20 Yet, there is no enforceable requirement in the permit that requires the company to do so. The Permit includes only the vague requirement that the tanks be operated so as to minimize any fugitive escape of emissions. As a result, DAQ has underestimated the VOC emissions from storage tanks. 88. In addition, tank emission factors calculated by the EPA TANKS model assume that the floating tank roof is always floating and thus does not include landing losses. However, when the floating roof is landed, large amounts of VOCs are expelled. The tank emissions estimated using the EPA TANKS model did not include roof landings. As a result, DAQ has underestimated the VOC emissions from storage tanks. D. Unenforceable Operational Limitations Relied Upon for Minor Source Designation 89. DAQ s third error in granting TransGas synthetic minor status is that it relied upon a number of unenforceable assumptions about TransGas operations in calculating the potential to emit. As explained above, as a matter of law, DAQ must only rely upon practicably enforceable limitations when designating a synthetic minor source. DAQ has acted contrary to this law as follows. 1. Coal moisture content. 90. The moisture content of coal received at the plant is a key variable for determining particulate matter emissions from coal handling. The applicant assumed a relatively high moisture content (5%) compared to data presented by appellants on average coal moisture in the region. Yet, the Permit does not require that coal received at the plant have a moisture content of 5% or higher, nor does it require monitoring of moisture content. As demonstrated in appellants comments on the draft Permit, just a small decrease in moisture level can result in significantly higher particulate matter emissions. As a result, the Permit does not assure that emissions of particulate matter will remain lower than the major source threshold of 100 tons per year. 20

21 2. Baghouse pollution control. 91. DAQ has assumed that particulate matter from materials handling, and roller mills and heaters will be controlled by baghouses (buildings full of fabric bags that catch dust). Yet the Permit does not require adequate monitoring to ensure the baghouses are working properly. Bags are known to leak, and one leak can result in hundreds of tons more particulate matter than expected each year. If a leak goes undetected for even a few months, it could result in total particulate matter emissions well above 100 tons per year. 92. The visibility monitoring for opacity violations required by Permit Condition does not remedy this problem. 93. As a result, the Permit does not assure that emissions of particulate matter will remain lower than the major source threshold of 100 tons per year. 3. Silt on road surfaces. 94. A key variable for estimating PM emissions resulting from hauling materials to and from the plant is silt loading, i.e. the amount of fine dust on road surfaces, expressed as grams in each square meter of road surface. DAQ assumes 8 grams per square meter in calculations, professes not to know what the actual silt loading rate will be, yet does not limit silt loading in the Permit, nor require any monitoring. (This is despite the fact that silt loading is easily measured by marking off a square meter of road surface, sweeping fine dust into a vessel, and weighing the collected dust.) As a result, the Permit does not assure that emissions of PM will remain lower than 100 tons per year. 4. Truck trips. 95. The estimate of haul road emissions is also unreliable because the Permit contains no limits on the number or type of trucks that will travel to and from the plant. For example, although the applicant s emissions calculations assume there will be 15 truck trips per hour for gasoline hauling only, there is nothing in the Permit that limits TransGas to this number. Similarly, although the emission calculations assume that none of the Liquefied Petroleum Gas 21

22 produced by the plant will be removed from the premises by truck, the Permit includes no such limit. An increase in the number of truck trips relative to these assumptions could result in significantly more particulate matter. As a result, the Permit does not assure that emissions of particulate matter will remain lower than 100 tons per year. 5. Flare combustion efficiency for SO The plant s flare will convert sulfur compounds in the gas sent to the flare into the pollutant SO 2. The greater the destruction efficiency of the flare for sulfur compounds, the more SO 2 is produced. It is general practice to assume that flares destroy sulfur compounds at a rate of 100%. 97. The applicant and DAQ appear to assume that the flare would operate with 98% efficiency for sulfur compounds. However, the Permit allows a higher efficiency by requiring only that the flare achieve at a minimum 98% destruction efficiency. (Condition (b).) This means that the flare could operate at 100% efficiency without violating the permit, resulting in much higher sulfur dioxide emissions than assumed in the emission calculations. 98. Because the Permit does not require monitoring of pollution coming out of the flare, DAQ has no way of determining whether its assumption of combustion efficiency is correct. 99. As a result, the Permit does not assure that emissions of SO 2 will remain lower than 100 tons per year, especially considering the applicant s estimates are less than 9 tons short of that threshold. Just a small additional increase in flare efficiency would put SO 2 emissions over 100 tons per year. 6. VOC flaring assumptions TransGas relied upon a number of unenforceable assumptions in calculating VOC emissions from the flares during startup and shutdown, including, but not limited to, the assumption that methane is the only compound in the flared gases that contributes to the heat rate of gases sent to the flare. 22

23 101. DAQ has not required monitoring of total hydrocarbons, and the Permit is ambiguous as to how compliance with the application s VOC calculation will be determined. As a result, the Permit does not assure that TransGas calculation was accurate, or that emissions of VOCs will remain lower than 100 tons per year. 7. Cooling tower emissions DAQ assumed there would be no CO or VOC emissions from the cooling tower because the Permit limits CO and VOCs in the circulating water to below a reasonably detectable level. (Condition ). However, this condition is unenforceable without a specified detection limit. The detection limit is generally determined by the test method. As neither is specified in the Permit, substantial emissions could result from concentration levels that are not reasonably detectable. As a result, the Permit does not assure that the plant s CO or VOC emissions will remain below 100 tons per year. 8. Methanol (HAP) Emissions from Leaks Methanol is a hazardous air pollutant and a key input into the TransGas plants methanol-to-gasoline process. It will be emitted through equipment leaks, among other sources. Appellants commented on the draft Permit that DAQ had improperly calculated methanol emissions from leaking components (valves, connectors, pumps, etc.) by relying on emissions factors representing typical emissions at a petroleum refinery. Leaking petroleum refinery gases do not contain the same components or concentrations as those at a liquid coal plant like TransGas; in particular, they do not contain a significant amount methanol DAQ has relied upon the Leak Detection and Repair ( LDAR ) programs set forth in federal regulations to ensure that fugitive methanol emissions will be less than 10 tons per year. However, the leak detection devices used in such programs grossly underestimate methanol emissions. DAQ s estimate of methanol emissions is thus not supported by a practicably enforceable condition, rendering the minor source designation for HAPs invalid. DAQ must reevaluate potential methanol emissions, taking into consideration 23

24 that the LDAR program will not effectively control such emissions. 9. CO Emissions from Leaks Similarly, there is no reliable methodology for detecting CO emissions from fugitive components. As such, DAQ s reliance on a LDAR program to control CO emissions is unenforceable. DAQ must reevaluate CO emissions taking into consideration that the LDAR program will not effectively control such emissions. D. Conclusion 106. Appellants concern that state regulators get the minor source designation right before the plant is built is based on pragmatic considerations as well a desire to protect the public health and environment. Although DAQ seems to acknowledge that if TransGas emits pollution that exceeds the major source threshold, DAQ could at that point order TransGas to obtain a major source permit before continuing operation, DAQ has not committed to such an approach. Nor would such an approach be an acceptable assurance or permissible by law. It also raises practical concerns. Aside from being highly disruptive to the plant s owners, operators, and employees to shut down a source while it undergoes major source permitting after construction, there are a number of reasons that states must ensure enforceability of emission limits up front rather than taking a wait-and-see approach to major source status. Namely, some improvements to pollution control technology and other plant design issues to reduce emissions can only be implemented cost-effectively prior to the plant s construction. This is one important rationale behind the preconstruction permitting program set forth by the Clean Air Act s PSD program. More importantly, DAQ is not monitoring for all pollutants at all potential emissions points and therefore will not necessarily know if the major source thresholds are exceeded when the plant begins operating Given the size and complexity of this facility, and its use of untested coal liquefaction technology, DAQ is taking a huge risk by permitting this plant as a minor source. Instead of taking a conservative approach to ensure that this new source of air pollution will not 24

25 harm the public health and welfare, DAQ has made a multitude of questionable or unenforceable assumptions to grant TransGas a synthetic minor permit. The Board should require DAQ to instead take the safe, and legally mandated, approach and require TransGas obtain a Regulation 14 major source permit prior to construction. This approach is mandated by the Clean Air Act, the West Virginia Pollution Control Act, and the public interest. II. OTHER UNENFORCEABLE PERMIT CONDITIONS 108. Even if the Board concludes that the Permit was appropriately issued under Regulation 13, the Permit contains unenforceable conditions in violation of 45 CSR ( The Secretary shall impose... enforcement conditions which assure that all emission limitations contained within the permit are quantifiable, permanent and practicably enforceable. ) The following permit conditions are unenforceable as written The limits on emissions from the flare listed in the Permit, Appendix A are not monitored and therefore unenforceable. DAQ s statement that compliance with flare limits will be based in part on acceptance of the calculations made by TransGas demonstrates the lack of enforceability of the limits. (RTC at 33.) The flare should be monitored for SO 2, CO, NO x, and VOCs using readily available remote sensing techniques. Because such techniques provide only a snapshot in time, continuous monitoring of the gas stream prior to combustion in the flare for the concentration of VOCs, total sulfur, and flow rate, at a minimum, should also be required. To calculate flare emissions based on the concentrations in the gas stream, DAQ would also need to verify the flare s combustion efficiency for each compound with optical remote sensing methods The Permit conditions requiring TransGas to monitor gas concentrations are unenforceable because they do not specify whether the concentrations should be measured on a wet or dry basis Permit Condition requires TransGas to utilize a vaccum sweeper truck as needed to reduce potential particulate matter emissions, and to use a water truck for 25