Chapter 14. Are Coal Mines Now Stationary Sources Under the Clean Air Act?

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1 Chapter 14 CITE AS 33 Energy & Min. L. Inst. 14 (2012) Are Coal Mines Now Stationary Sources Under the Clean Air Act? Anne C. Blankenship David L. Yaussy Robinson & McElwee PLLC Charleston, West Virginia Synopsis Regulation of Coal Mines Under the Clean Air Act (CAA) Regulation of Greenhouse Gases Under the CAA [1] Massachusetts v. EPA [2] Johnson Memorandum [3] Endangerment Finding [4] EPA Finalizes Light Duty Vehicle Rule [5] Tailoring Rule Greenhouse Gas (GHG) Reporting Rule and Underground Coal Mines Clean Air Act Permitting Program [1] The New Source Review Permitting Program [a] Emissions Control Standards [b] Major Sources [2] Title V Permitting How Could the Tailoring Rule Affect Coal Mines? [1] Applicability [2] Possible Implications [a] Defining Stationary Source [b] Best Available Control Technology (BACT) [c] Fugitive Emissions [d] What Constitutes a Major Modification? How Are State Permitting Authorities Applying the Tailoring Rule to Coal Mines? Conclusion Regulation of Coal Mines Under the Clean Air Act (CAA). Under the Clean Air Act (CAA), the United States Environmental Protection Agency (EPA) regulates emissions of regulated air pollutants from stationary sources. Historically, coal mines have not been considered

2 14.01 ENERGY & MINERAL LAW INSTITUTE stationary sources under the Clean Air Act as they have not emitted a regulated pollutant. Although the combustion of coal is highly regulated by EPA under the CAA, the production of coal has generally only been subject to the Clean Air Act at coal preparation and processing plants, and mines have not been required to obtain construction and operating permits under the CAA. Coal preparation and processing plants are defined to include any facility (excluding underground mining operations) which prepares coal by one or more of the following processes: breaking, crushing, screening, wet or dry cleaning, and thermal drying. 1 These sources are subject to EPA s standards of performance, which describe coal processing and conveying equipment as any machinery used to reduce the size of coal or to separate coal from refuse, and the equipment used to convey coal to or remove coal and refuse from the machinery. This includes, but is not limited to, breakers, crushers, screens, and conveyor belts. 2 Importantly, the regulations specifically exclude equipment located at the mine face as part of the coal preparation and processing plant. 3 On June 30, 2010, EPA issued the Prevention of Significant Deterioration and the Title V Greenhouse Gas Tailoring Rule (the Tailoring Rule ) 4 which, for the first time, required certain stationary sources to obtain permits for emissions of greenhouse gases (GHGs). Under a strict reading of the Tailoring Rule, coal mines could be considered a stationary source subject to permitting requirements under the Clean Air Act. This chapter will give a history of the regulation of greenhouse gases (GHGs), the CAA permit program and the Tailoring Rule, and discuss the rule s possible implications for coal mines C.F.R (e) 2 40 C.F.R (f) 3 Id Fed. Reg (June 30, 2010). 486

3 COAL MINES STATIONARY SOURCES? Regulation of Greenhouse Gases Under the CAA. [1] Massachusetts v. EPA. On October 20, 1999, a group of 19 private organizations filed a petition for rulemaking requesting that EPA regulate greenhouse gases from new motor vehicles. EPA denied the petition after requesting public comment on the issue. The United States Court of Appeals for the D.C. Circuit upheld EPA s decision to deny the rulemaking petition. However, on April 2, 2007, in a 5-4 decision, the United States Supreme Court issued an opinion in Massachusetts v. Environmental Protection Agency, 5 overruling the lower court s decision and holding that greenhouse gases fit well within the Clean Air Act definition of air pollutant and that EPA has the statutory authority to regulate the emission of greenhouse gases from new motor vehicles. The Court also held that EPA s policy judgment not to regulate greenhouse gases is not justified and that EPA cannot avoid its statutory obligation by noting the uncertainty surrounding various features of climate change and concluding that it would therefore be better not to regulate at this time. 6 Although this case was limited to new motor vehicles, the Court s holding has had far-reaching implications for the entire regulated community. EPA could no longer rely upon its policy considerations for refusing to regulate greenhouse gases. The Court did not order EPA to regulate greenhouse gases, but the decision clearly states that EPA has the authority to do so. Further, although the Court did not require EPA to make a finding of whether greenhouse gases cause or contribute to air pollution which may endanger public health, the Court stated that on remand, EPA must explain its reasons for action or inaction on the request for rulemaking. 7 5 Massachusetts v. Envtl. Prot. Agency, 549 U.S. 497 (2007). 6 Id. at 528, Id. at

4 14.02 ENERGY & MINERAL LAW INSTITUTE [2] Johnson Memorandum. Subsequent to the decision in Massachusetts v. EPA, EPA Administrator Stephen L. Johnson issued a memorandum on December 18, 2008, which clarified the scope of the EPA regulation that determines the pollutants subject to the federal Prevention of Significant Deterioration (PSD) program under the Clean Air Act. 8 The memorandum explained how the PSD program requires permits for any new major stationary source or modified existing major stationary source of regulated air pollutants in an area that is either attaining National Ambient Air Quality Standards (NAAQS) or is unclassifiable. Under the federal Prevention of Significant Deterioration permitting regulations, only newly constructed or modified major sources that emit one or more regulated NSR pollutants, as defined under 40 C.F.R (b) (50), are subject to the PSD permitting requirements, including the requirement to install best available control technology (BACT) for those regulated NSR pollutants emitted in significant amounts. In the memorandum, EPA interpreted the definition of regulated NSR pollutant to exclude pollutants for which EPA regulations only require monitoring or reporting, but to include each pollutant subject to either a provision in the CAA or regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant. 9 This means that any pollutant subject to any one Clean Air Act provision or regulation is considered a regulated NSR pollutant under any other CAA provision or regulation. As described more below, this memorandum began to set the framework for regulation of GHGs once they became regulated under the light duty vehicle rule. 8 Memorandum from Stephen L. Johnson, EPA Administrator, to EPA Regional Administrators, EPA s Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program (Dec. 18, 2008), available at interpretive_memo_ pdf. 9 Id. 488

5 COAL MINES STATIONARY SOURCES? [3] Endangerment Finding. In keeping with the Court s holding in Massachusetts v. EPA, on December 7, 2009, the EPA Administrator issued the following findings regarding greenhouse gases: Endangerment Finding: The Administrator finds that the current and projected concentrations of the six key wellmixed greenhouse gases carbon dioxide (CO 2 ), methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF 6 ) in the atmosphere threaten the public health and welfare of current and future generations. 2. Cause or Contribute Finding: The Administrator finds that the combined emissions of these well-mixed greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas pollution which threatens public health and welfare. EPA stated that these findings did not themselves impose any requirements on industry or other entities. 11 However, the action was a prerequisite for implementing greenhouse gas emissions standards for vehicles. [4] Light Duty Vehicle Rule. On May 7, 2010, EPA issued the final light duty vehicle rules, which formally established EPA s first-ever national regulation of GHGs. 12 This rulemaking, along with the Johnson memorandum, confirmed the agency s determination that GHGs would become subject to PSD permitting requirements only after a national emissions rule is finalized that requires actual control of GHG emissions. By promulgating regulations for GHGs for light duty vehicles, EPA triggered GHG regulation under the Clean Air Act that would set the path for regulating other carbon-intensive industries and potentially subjecting them to PSD and Title V permitting requirements Fed. Reg , 97 (December 7, 2009). 11 Id. at Fed. Reg (May 7, 2010). 489

6 14.02 ENERGY & MINERAL LAW INSTITUTE Further, this rulemaking set the effective date for any future PSD permit program requirements as January 2, 2011, the date upon which the light duty vehicle rules took effect. 13 [5] Tailoring Rule. On May 13, 2010, EPA issued a final rule regulating greenhouse gases from stationary sources under the Clean Air Act. 14 The Tailoring Rule sets thresholds for GHG emissions that define when permits under the Prevention of Significant Deterioration and Title V permit programs are required for new and existing industrial facilities. 15 The rule tailors the requirements of these Clean Air Act permitting programs to limit which facilities are required to obtain PSD and Title V permits for emissions of GHGs. The CAA permitting program emissions thresholds for criteria pollutants are 100 and 250 tons per year (tpy). EPA determined that these thresholds were not feasible for greenhouse gases because they are emitted at higher volumes. Therefore, EPA raised the threshold levels for GHG emissions in the Tailoring Rule and a two-step phase-in approach under the rulemaking. Under Step 1, which was in effect between January 2, 2011 and June 30, 2011, only new stationary sources subject to the PSD permitting program were subject to permitting requirements for their GHG emissions under PSD. For such projects, only GHG increases of 75,000 tpy or more of total GHG, on a CO 2 e 16 basis, were subject to the PSD permit requirements for GHGs. Similarly, for the Title V operating permit program, only those projects currently subject to Title V were subject to those requirements for GHG. 13 Id Fed. Reg (May 13, 2010). 15 The Tailoring Rule, light duty vehicle rule and other regulatory actions leading up to the Tailoring Rule were challenged in federal court. On June 26, 2012, the U.S. District Court for the District of Columbia upheld all of the EPA actions and dismissed the petitions challenging them. Coalition for Responsible Regulation, Inc. v. E.P.A., 2012 WL (D.C. Cir. 2012). 16 EPA adopted the international standard practice to express GHGs in carbon dioxide equivalents (CO 2 e). Emissions of gases other than CO 2 are translated into CO 2 e by using the gases global warming potentials. Total GHG emissions are calculated by summing the CO 2 e emissions of all of the six constituent GHGs (CO 2, CH 4, N 2 0, HFCs, PFCs, and SF 6 ). 490

7 COAL MINES STATIONARY SOURCES? During Step 1 no sources were subject to PSD or Title V permit requirements due solely to GHG emissions. Step 2 of the Tailoring Rule, in effect from July 1, 2011 to June 30, 2013, builds upon Step 1 and covers new construction projects that emit GHG emissions of at least 100,000 tpy even if they do not exceed the permitting thresholds for any other pollutant. Step 2 also covers modifications at existing facilities that increase GHG emissions by at least 75,000 tpy, even if they do not significantly increase emissions of any other pollutant. Title V permits now apply to sources that emit at least 100,000 tpy CO 2 e and are based on GHG emissions even if they would not have applied based on emissions of any other pollutant. EPA published its final Step 3 of the Tailoring Rule on July 12, For Step 3, EPA has decided to keep GHG permitting thresholds at current levels set forth in Step 2. EPA stated that after evaluating the progress of the GHG permitting so far, it did not believe that state permitting agencies had had enough time to properly develop the permitting programs for GHG emissions or enough experience to be able to apply PSD and Title V permitting requirements to smaller emitters of GHGs Greenhouse Gas Reporting Rule and Underground Coal Mines. Along with the Tailoring Rule, EPA has also promulgated a regulatory program that requires certain sources to report emissions of GHGs (the Reporting Rule ). 19 The Reporting Rule does not regulate emissions of GHGs, as does the Tailoring Rule, but requires owners and operators of applicable sources to collect emissions data, calculate GHG emissions, and follow the specified procedures for quality assurance, missing data, recordkeeping and reporting. One of those applicable sources is underground coal mines. Under Subpart FF of the Reporting Rule, owners and operators of facilities that liberate 36,500,000 actual cubic feet (acf) of methane or Fed. Reg (July 12, 2012). 18 Id C.F.R

8 14.04 ENERGY & MINERAL LAW INSTITUTE more per year must report emissions from underground coal mines and other source categories located at the mine for which methods are defined in the rule. 20 The emission points for this source category consist of each ventilation well or shaft and each degasification system well or shaft, including degasification systems deployed before, during or after mining operations. Methane liberation, including both emitted methane and methane that is not combusted, from each ventilation shaft and each degasification well must be included. However, monitoring for each system type may take place at one or more centralized monitoring points that cover all emissions points within that system. 21 Facilities subject to Subpart FF were required to begin monitoring of GHG emissions on January 1, For 2012, the reporting of emissions was to be submitted to EPA by September 28, For subsequent years, reports must be submitted to EPA by March 31 of each year Clean Air Act Permitting Program. [1] The New Source Review Permitting Program. Major stationary sources of air pollutants are required to be evaluated before being constructed or modified, to guarantee that the proper air pollution controls are in place. This is referred to as New Source Review, or NSR. 22 NSR is divided into two parts PSD for areas where air quality meets existing standards, and nonattainment NSR which, as the name suggests, applies to areas that are not meeting air quality standards C.F.R. 98, Subpart FF. In addition to the requirements under Subpart FF, those mines that do not liberate 36.5 million acf/yr or more of methane would still be subject to the Reporting Rule under Subpart C if they have stationary combustion emissions exceeding 25,000 mtco 2 e/year. 21 See U.S. EPA Information Sheet for Underground Coal Mines, Greenhouse Gas Reporting Program, available at: infosheets/undergroundcoalmines.pdf. 22 Minor sources of air pollutants are not regulated under the federal NSR program, but are regulated under state minor source programs that are approved in each state s State Implementation Plan U.S.C requires permits for all major stationary sources; additional requirements are mandated for nonattainment areas. See 42 U.S.C. 7502(c) (5) and

9 COAL MINES STATIONARY SOURCES? Stationary sources being constructed or modified in attainment areas principally must show that any of the regulated air pollutants will not increase air pollutant levels more than a certain amount, called an increment, above a baseline and demonstrate that the facility is in compliance with BACT. 24 The goal of the PSD program is to protect good air quality, where it is better than the NAAQs, and to guarantee that all new or modified major stationary sources across the nation are subject to similar control technology. The PSD requirements are imposed in permits that are issued by state permitting agencies, in accordance with EPA-approved regulations, or by EPA, where a state or Indian tribe does not have an approved State Implementation Plan, or SIP. 25 Nonattainment NSR results in much more stringent permitting. In order to construct or modify, stationary sources must offset their own anticipated emissions with emissions reductions from other stationary sources in the area. 26 In addition, the pollution controls on the stationary source are more stringent, and must meet the lowest achievable emissions rate (LAER). 27 [a] Emissions Control Standards. Best Available Control Technology is based on the maximum degree of control that can be achieved, taking into account energy, environmental and economic effects. 28 BACT can be equipment that is installed on the air emissions source to reduce emissions, or it can be a modification of the production process or methods, such as new fuel combustion techniques. Where an emissions limitation is impractical, BACT may be a management control or work practice. LAER is the lowest emission rate that can be achieved. 29 Lowest Achievable Emissions Rate is the most stringent emission limitation achieved U.S.C See 42 U.S.C for SIP requirements U.S.C. 7503(c) U.S.C. 7501(3) C.F.R (b)(12) C.F.R (a)(1)(xiii). 493

10 14.04 ENERGY & MINERAL LAW INSTITUTE in practice by a class or category of stationary sources, except in certain very narrowly defined situations. In order to determine the lowest emission rates that can be achieved by a given source category (or, for that matter, BACT), one would consult the RACT/BACT/LAER Clearinghouse, 30 which keeps track of emissions limitation determinations made by permitting agencies. [b] Major Sources. Only major stationary sources are subject to New Source Review. 31 Certain sources are major if their emissions of any air pollutant exceed 100 tons. 32 All other stationary sources are major if their emissions of an air pollutant exceed 250 tons. 33 The only coal-related source that is on the 100 ton list of specified stationary sources is a coal cleaning plant (thermal dryer). 34 Major modifications of stationary sources are also subject to Prevention of Significant Deterioration permitting, 35 and the circumstances under which modifications are deemed to have occurred are complex and have been the subject of frequent litigation. The emission level thresholds for triggering permitting of major modifications are lower than those for qualifying as a major stationary source. 36 [2] Title V Permitting. As noted above, stationary sources of air pollutants are generally required to get a permit before construction or modification. Those permits may establish emission limits and operating parameters for each emissions unit at the stationary source. As a facility is modified over time, with some emissions sources eliminated and others added, and as production changes occur that change the type and amount of emissions, there can be dozens 30 U.S. E.P.A., RACT/BACTY/LAER Cleainghouse, available at: RBLC U.S.C U.S.C. 7479(1). 33 Id. 34 Id U.S.C. 7479(2)(C) and 7411(a)(4). 36 See 40 C.F.R (b)(2)(i) and (b)(23) for major modification thresholds. 494

11 COAL MINES STATIONARY SOURCES? ofminor and major source permits in effect. Facilities may also be subject to consent orders or other administrative controls that govern operations and emissions. Title V of the Clean Air Act 37 is the means of bringing together all the air pollution control requirements that apply to a facility in one document, often referred to as an operating permit. The operating permit contains emission limitations and standards, monitoring and recordkeeping requirements, identification of federally enforceable conditions, compliance certification obligations, and other requirements. In addition, the permits can contain optional conditions such as alternative operating scenarios, emissions caps, and a permit shield that offers protection to the source from enforcement while it is complying with its permit. 38 In general, Title V permits are required for any major source 39 under the general definitions of the Clean Air Act (this is a broader category than New Source Review major sources); sources subject to New Source Performance Standards under CAA 111; sources of hazardous air pollutants regulated under 112 of the CAA; affected sources under the Title IV acid rain program; and any source specifically designated by EPA. 40 The permits generally issue for five years, at which time they must be renewed. 41 Some permitting situations recur frequently, where there are similar operating conditions and equipment. In those situations, the state can issue general permits with standard conditions that apply to all qualifying sources. 42 The state can also offer permits for temporary sources that will move at least once during the permit term U.S.C f. Title V regulations are found at 40 C.F.R. Part See generally 40 C.F.R through for the rules governing Title V implementation. 39 See 40 C.F.R for the major source definition C.F.R. 70.3(a) C.F.R. 70.6(a)(2) C.F.R. 70.6(d) C.F.R. 70.6(e). 495

12 14.05 ENERGY & MINERAL LAW INSTITUTE Operating permits are subject to review by EPA and by the public. 44 If EPA wishes, it can veto an operating permit that it believes does not comply with the Title V requirements. 45 EPA also retains enforcement authority if sources are not complying with their operating permits How Could the Tailoring Rule Affect Coal Mines? [1] Applicability. As set forth above, stationary sources which emit or have the potential to emit any air pollutant subject to regulation under the Clean Air Act in certain amounts are subject to PSD and Title V permitting requirements. Historically, coal mines have not been treated as stationary sources of air pollutants under the CAA. This is because they have not emitted any air pollutant subject to regulation. However, under the Tailoring Rule, greenhouse gases are now subject to regulation under the Clean Air Act and are defined to include carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. 47 Activities at coal mines can result in emissions of one or more of these compounds, leading to the question of whether coal mines are now considered a stationary source under the Tailoring Rule if they emit GHGs at levels that trigger applicability under the rule. The Tailoring Rule requires: [Step 1] Beginning January 2, 2011, the pollutant GHGs is subject to regulation if: (a) The stationary source is a new major stationary source for a regulated NSR pollutant that is not GHGs, and also will emit or will have the potential to emit 75,000 tpy CO 2 e or more; or (b) The stationary source is an existing major stationary source for a regulated NSR pollutant that is not a GHG, and also will have an C.F.R. 70.4(d)(3)(iv) and 70.7(h) C.F.R. 70.8(c) C.F.R C.F.R (b)(48)(i). 496

13 COAL MINES STATIONARY SOURCES? emissions increase of a regulated NSR pollutant, and an emissions increase of 75,000 tpy CO 2 e or more; and [Step 2] Beginning July 1, 2011, in addition to the provisions in paragraph (b) (48) (iv) of this section, the pollutant GHGs shall also be subject to regulation: (a) At a new stationary source that will emit or have the potential to emit 100,000 tpy CO 2 e; or (b) At an existing stationary source that emits or has the potential to emit 100,000 tpy CO 2 e, when such stationary source undertakes a physical change or change in the method of operation that will result in an emissions increase of 75,000 tpy CO 2 e or more. 48 Under Step 1, only stationary sources already considered major sources for a regulated NSR pollutant that is not a GHG were subject to the rule. However, Step 2 brought in all sources, including those which are not already considered a major stationary source for other pollutants. Therefore, under Step 2, any new coal mine that emits or has the potential to emit 100,000 tpy of CO 2 e or any existing coal mine that undertakes a physical change or change in the method of operation that will result in an emissions increase of 75,000 tpy CO 2 e or more (i.e., a major modification) may have to obtain a PSD and/or Title V permit from the applicable permitting authority. Did EPA intend to include coal mines as applicable sources under the Tailoring Rule? Neither the final Tailoring Rule nor the proposed rule 49 specifically mentions coal mines as an applicable source subject to the rule. However, in its Regulatory Impact Analysis for the Proposed Greenhouse Gas Tailoring Rule, EPA included underground coal mines as a sector covered by the rule in its cost analysis. 50 In the Technical Support Document for Greenhouse Gas Emissions Thresholds Evaluation (Attachment B to the C.F.R (b) (48)(iv)-(v). 49 The proposed Tailoring Rule was published on October 27, Fed. Reg (October 27, 2009). 50 See U.S. EPA Regulatory Impact Analysis for the Proposed Greenhouse Gas Tailoring Rule (September 2009), available at: riaghgtailoring pdf. 497

14 14.05 ENERGY & MINERAL LAW INSTITUTE Regulatory Impact Analysis), EPA included underground coal mines. 51 The purpose of the document was to provide background information on what was used to support EPA s decision process in evaluating and selecting proposed GHG major source applicability thresholds in its proposed Tailoring Rule. 52 In this document, EPA stated that greenhouse gas emissions from underground coal mining include methane fugitive emissions released from the coal seam and surrounding rock during mining and post-mining activities, and fuel combustion emissions of carbon dioxide and methane. 53 Captured and vented methane emissions from active mines were considered in EPA s potential to emit analysis. 54 Fugitive emissions from post-mining operating, surface mines, and inactive mines were not included in EPA s permit threshold analysis for the Tailoring Rule. 55 Based on data from the U.S. GHG Inventory from 2008 and the Technical Support Document for Underground Coal Mines: Proposed Rule for Mandatory Reporting of Greenhouse Gases, EPA estimated emissions of methane and carbon dioxide from underground coal mines and concluded that for vented fugitive methane emissions and combustion carbon dioxide emissions, there are 55 existing underground coal mines that emit 100,000 tons per year or more of CO 2 e. 56 For this analysis, EPA assumed that no new underground coal mines would be built. 57 In addition, EPA has stated in a presentation document that newly subject sources in Step 2 are expected to include the largest coal mines. 58 Therefore, it appears that EPA expects certain coal mine emissions to be regulated, but provides no clarification or guidance on how to do so leaving many 51 Id., Attachment B at Id. 53 Id. at Id. 55 Id. 56 Id. at 61, Table Id. at U.S. EPA Presentation on Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule (June 2010), available at: webinars/tailoring.pdf, at

15 COAL MINES STATIONARY SOURCES? questions for the regulated community. As explained above, under the PSD and Title V permitting programs, application of the Tailoring Rule is left up to authorized states. At this date, there are no available written state policies or regulatory actions on whether emissions from coal mines are to be permitted under the Tailoring Rule. [2] Possible Implications. Coal mines have never been considered a stationary source under the CAA and required to obtain permits for their emissions. Nor has EPA exercised its authority to create performance standards for coal mine GHG emissions controls, although litigation currently is pending to force them to do so. In June 2010, a group of environmental organizations petitioned EPA to list coal mines as a category of stationary sources subject to performance standards for methane. 59 EPA has not acted on the petition. As a result, the environmental groups sued EPA to compel them to grant or deny it. 60 Whether through litigation or through the implementation of the Tailoring Rule on coal mines, many questions must be addressed, such as: How would coal mines be regulated? What pollution controls would be required? How would emissions be calculated? When would a permit be required and a modification necessary for existing coal mines? Many of these questions remain unanswered and have not yet been addressed by individual states authorized to issue air permits. [a] Defining Stationary Source. A key aspect of permitting under the Clean Air Act is to determine what constitutes a stationary source. The CAA defines a stationary source as 59 See Petition for Rulemaking Under the Clean Air Act to List Coal Mines as a Source Category and to Regulate Methane and Other Harmful Air Emissions from Coal Mining Facilities under Section 111 (June 16, 2010), available at: org/programs/climate_law_institute/global_warming_litigation/clean_air_act/pdfs/ Coal_Mine_Petition pdf. 60 See WildEarth Guardians v. Envtl. Prot. Agency, No. 1:11-cv RJL (D.D.C.) (filed Nov. 17, 2011). 499

16 14.05 ENERGY & MINERAL LAW INSTITUTE any building, structure, facility, or installation which emits or may emit any air pollutant. 61 Arguably, a coal mine does not fit squarely into any of those categories. Further, there is much controversy over when emissions must be aggregated from multiple activities to constitute a single source for permitting purposes. EPA has clarified that when determining whether all pollutant-emitting activities are part of the same source, the permitting authorities must consider the following factors: 1. Whether the activities are under the control of the same person (or person under common control); 2. Whether the activities are located on one or more contiguous or adjacent properties; and 3. Whether the activities belong to the same industrial grouping. 62 Aggregation is appropriate only if all three of these questions are answered affirmatively after conducting a highly fact-specific analysis. 63 Determining whether to aggregate emissions can make the difference in whether a source requires a major or minor permit, or any permit at all. If a major PSD permit is required instead of a minor permit, the permitting process is much more lengthy and involved for both the permittee and the permitting agency. A major PSD permit requires a determination and implementation of BACT, an air quality analysis, an impact analysis and public involvement. An aggregation analysis is a critical component of determining whether a source requires a major PSD permit. [b] Best Available Control Technology (BACT). As set forth above, Prevention of Significant Deterioration permits require the installation and use of Best Available Control Technology for those regulated pollutants that the facility emits in significant amounts. BACT determines the emissions limitation that will achieve the maximum degree U.S.C. 7411(a)(3) Fed. Reg. at 52676, (Aug. 7, 1980). 63 Id. at

17 COAL MINES STATIONARY SOURCES? of emissions reductions through application of production processes and available methods, systems, and techniques, taking into consideration energy, environmental and economic impacts. 64 Although EPA sets the framework for the Prevention of Significant Deterioration program, state permitting agencies must determine and apply Best Available Control Technology on a case-by-case basis. Each new or modified major stationary source subject to PSD is required to undergo a BACT review. The permitting agency must evaluate the amount of emissions reductions that each available emissions-reducing technology or technique would achieve, as well as the energy, environmental, economic and other costs associated with each technology or technique. Based on this assessment, the permitting agency must establish a numeric emissions limitation that reflects the maximum degree of reduction achievable for each pollutant subject to BACT through the application of the selected technology or technique. However, if the permitting agency determines that technical or economic limitations on the application of a measurement methodology would make a numerical emissions standard infeasible for one or more pollutants, it may establish design, equipment, work practices or operational standards to satisfy the BACT requirement. 65 To assist state permitting agencies in determining Best Available Control Activity, EPA has provided a recommended procedure and guidance of acceptable methodologies and requirements in making a BACT determination. 66 EPA also reviews state determinations for BACT and hears appeals of the state determinations. EPA has recommended that permitting agencies use a top down process in making a BACT determination, so that 64 See 42 U.S.C 7479(3). 65 See 40 C.F.R (b) (12); 40 C.F.R (b) (12). 66 See EPA New Source Review Workshop Manual: Prevention of Significant Deterioration and Nonattainment Area Permitting (draft, October 1990), available at: gov/region07/air/nsr/nsrmemos/bactupsd.pdf. Currently at gen/wkshpman.pdf. 501

18 14.05 ENERGY & MINERAL LAW INSTITUTE all available control technologies are ranked in descending order of control effectiveness. 67 The following five steps are part of the top down process: Step 1: Identify all control technologies. This step is to identify, for all emissions units in question, all available control options. This list is comprehensive and includes technologies required under lowest achievable emission rate (LAER). Step 2: Eliminate technically infeasible options. In this step, the technical feasibility of the control options identified in step one is evaluated with respect to source-specific factors. A demonstration of technical infeasibility should be clearly documented in this step and should show, based on physical, chemical, and engineering principles, that technical difficulties would preclude the successful use of the control option on the emissions unit under review. Step 3: Rank Remaining Control Technologies By Control Effectiveness. In step 3, all remaining control alternatives not eliminated in step 2 are ranked and then listed in order of overall control effectiveness for the pollutant under review, with the most effective control alternative at the top. This should include the following: control effectiveness (percent pollutant removed); expected emission rate (tons per year); expected emission reduction (tons per year); energy impacts (BTU, kwh); environmental impacts (other media and the emissions of toxic and hazardous air emissions); and economic impacts (total cost effectiveness, incremental cost effectiveness). Step 4: Evaluate Most Effective Controls and Document Results. This step is a case-by-case consideration of energy, 67 Id. 502

19 COAL MINES STATIONARY SOURCES? environmental, and economic impacts after the identification of available and technically feasible control technology options. If top option is not selected as BACT, then the next option is evaluated. Step 5: Select BACT. The most effective control option not eliminated in step 4 is proposed as BACT for the pollutant and emission unit under review. 68 EPA has developed guidance documents for a number of industrial sectors for Best Available Control Technology for greenhouse gas emissions, 69 but none pertaining specifically to coal mines. In its PSD and Title V Permit Guidance for Greenhouse Gases, EPA does not recommend specific Best Available Control Technology for GHG, but rather stresses the importance of energy efficiency as an appropriate Best Available Control Technology. 70 It retains the basic five-step top-down process discussed above that it has recommended to state and local authorities for 20 years for determining BACT. The documents provide little guidance to states on specific GHG Best Available Control Technology options, other than energy efficiency. It also provides no cost thresholds for permitting authorities to consider in determining the economic impacts of alternatives or propose a new approach to selecting BACT for GHG emissions. 71 EPA also has developed a compilation of Best Available Control Technology determinations on its website, the RACT/BACT/LAER Clearinghouse, 72 to assist permit agencies in their own determinations Id. at Available at: 70 PSD and Title V Permit Guidance for Greenhouse Gases (March 2011), available at 71 Id. 72 Available at: 73 The terms RACT and LAER are acronyms for different program requirements under the NSR program. RACT, or Reasonably Available Control Technology, is required on existing sources in areas that are not meeting national ambient air quality standards (i.e., non-attainment areas). LAER, or Lowest Achievable Emission Rate, is required on major new or modified sources in non-attainment areas. 503

20 14.05 ENERGY & MINERAL LAW INSTITUTE EPA established the RACT/BACT/LAER Clearinghouse, or RBLC, to provide a central data base of air pollution technology information (including past RACT, BACT, and LAER decisions contained in New Source Review permits) to promote the sharing of information among permitting agencies and to aid in future case-by-case determinations. The database contains casespecific information provided by state and local permitting agencies on the Best Available air pollution technologies that have been required to reduce the emission of air pollutants from stationary sources. The Clearinghouse includes a few Best Available Control Technology determinations made for GHGs, but none for coal mines. Therefore, what pollution controls would be required for coal mines if they were required to obtain PSD permits is not clear. [c] Fugitive Emissions. One major consideration with regard to the applicability of the Tailoring Rule to coal mines are fugitive emissions. Fugitive emissions are unintended emissions that arise during the production of coal, including carbon dioxide and methane. 74 Fugitive emissions are released from the coal and surrounding rock strata when previously trapped methane and carbon dioxide gas are released into the atmosphere as coal seams are mined. 75 The amount of fugitive emissions varies from mine to mine and is influenced by facts such as geology, depth and type of mine, amount and type of gas contained in the coal and whether all the gas is released or a portion is retained within the coal. 76 Methane is highly combustible and is considered a safety risk, hence fugitive emissions are already carefully managed and closely regulated. Fugitive emissions are also regulated under the CAA. Coal mines are not a listed source category under section 302(j) of the CAA. Therefore, under the NSR program, their fugitive emissions may not be counted in determining major source status. However, EPA is currently considering a 74 See International Council of Mining and Metals, Fugitive Methane Emissions in Coal Mining, August 2011, available at: 75 See id. 76 See id. 504

21 COAL MINES STATIONARY SOURCES? rule which would require fugitive emissions to be counted in determining whether a major modification occurs for major sources within categories that are not a listed source category set forth in section 302(j), such as coal mines. On December 19, 2008, EPA finalized revisions to the major NSR programs regarding the treatment of fugitive emissions. 77 Prior to those revisions, quantifiable fugitive emissions were included in a stationary source s potential to emit when determining whether the source is a major source only if they are emitted from one of the source categories specifically listed in the major NSR regulations. But, when determining whether a physical or operational change is a major modification, fugitive emissions were included regardless of the source category. The December 19, 2008 rule made the two approaches consistent and provided that in determining whether a change is a major modification, fugitive emissions are included only for sources in the source categories that have been designated through rulemaking pursuant to section 302(j) of the Act. 78 However, since the 2008 revisions, EPA has granted a petition for reconsideration of the rule and a number of stays of the rule have been issued pending EPA s reconsideration. As a result, EPA is presently applying the text in the rule that existed prior to the fugitive emissions rule amendments. 79 EPA intends to complete its reconsideration of the rule and issue a final rule by October 4, If EPA determines that fugitive emissions must be counted in determining a significant emissions increase for major sources of unlisted sources, then existing underground coal mines that are major sources of CO 2 e would have to count fugitive emissions in determining whether a modification is a major modification for purposes of PSD permitting. This would result in the possible regulation of existing coal mines under the Tailoring Rule if their fugitive emissions were included to determine whether a major modification has occurred requiring a PSD permit Fed. Reg (December 19, 2008). 78 See id. 79 See 74 Fed. Reg (September 30, 2009); 76 Fed. Reg (March 30, 2011) Fed. Reg (March 30, 2011). 505

22 14.05 ENERGY & MINERAL LAW INSTITUTE Fugitive emissions cannot accurately be measured and would be very difficult to control. Such emissions are inherently difficult to calculate accurately and estimates remain subject to large uncertainty. 81 Further, reducing fugitive emissions can also be problematic. There are a number of potential options for reducing fugitive emissions from underground mines, such as pre-draining coal seams prior to mining and using the methane for other commercial purposes. However, there can be site-specific physical limitations on the amount of fugitive emissions that can be captured, such as low pressure and low permeability of the gas. 82 EPA currently has a voluntary program, the Coalbed Methane Outreach Program (CMOP), the goal of which is to reduce methane emissions, including fugitive emissions, from coal mining activities. [d] What Constitutes a Major Modification? If coal mines are subject to the Tailoring Rule, what would constitute a major modification to a coal mine, requiring a PSD permit for existing coal mines? Under the PSD rules a major modification occurs: (1) when there is a physical change in, or change in the method of operation, of a major stationary source, (2) the change results in a significant emission increase of a pollutant subject to regulation, and (3) there is a significant net emissions increase of a pollutant subject to regulation that is equal to or above the significance level. When EPA does not set a significance level for a regulated NSR pollutant, PSD applies to an increase of the pollutant in any regulated amount, so that the significance level is treated as zero. Under Step 2 of the Tailoring Rule, any physical change or change in the method of operation at a major source (including one that is only major due to GHGs) resulting in a net GHG emissions increase of 75,000 tpy or more will be subject to PSD review and requirements with respect to GHGs (provided that it also results in an increase of GHG emissions on a mass basis). 83 The 81 See International Council of Mining and Metals, Fugitive Methane Emissions in Coal Mining, August 2011, available at: 82 See id Fed. Reg ,

23 COAL MINES STATIONARY SOURCES? preamble to the Tailoring Rule explains that for purposes of determining whether a GHG emission source, resulting from either new construction or a physical or operational change at an existing source, is considered a major source under PSD, both of the following must be met: (1) the GHG emission source, which is not major for another pollutant, emits or has the potential to emit GHG in amounts that equal or exceed the following, calculated as the sum-ofsix well-mixed GHGs on a mass basis (no global warming potential ( GWP applied)): 100 tpy for sources in any of the 28 major emitting facility source categories listed under PSD, or 250 tpy for any other stationary source. (2) the GHG emission source emits or has the potential to emit GHGs in amounts that equal or exceed 100,000 tpy CO 2 e. For determining whether a modification project at a major stationary source is subject to PSD review, both of the following conditions must be met: (1) the net GHG emissions increase resulting from the project, calculated as the sum-of-six well-mixed GHGs on a mass basis (no GWPs applied), equals or exceeds 0 tpy. (2) the net GHG emissions increase resulting from the project, calculated as the sum-of-six well-mixed GHGs on a CO 2 e basis (GWPs applied), equals or exceeds 75,000 tpy CO 2 e. The purpose of the first condition in both of these determinations is to confirm whether the GHG emissions or emissions increase have exceeded, on a mass-basis, the statutory major source thresholds (where the source is not otherwise major) and massbased statutory significance level for GHGs, which is 0 tpy Id. at

24 14.06 ENERGY & MINERAL LAW INSTITUTE There are no cases or regulations which define what constitutes a major modification for an existing coal mine under the Clean Air Act. If certain common activities at coal mines constitute a major modification, such as beginning work on a new section of a coal seam within an existing mine, these mines would be obligated to obtain a PSD permit for the first time How Are State Permitting Authorities Applying the Tailoring Rule to Coal Mines? As discussed above, the Clean Air Act permitting programs are administrated by authorized state agencies. It is the responsibility of those states to implement the permitting requirements under the Tailoring Rule. Many coal producing states have taken the position that for purposes of Title V applicability, coal mines will not be required to submit permit applications, as their emissions are fugitive and not required to be considered in determining major source status. On June 5, 2012, the chief of Ohio EPA s Division of Air Pollution control sent a letter on behalf of Ohio, Illinois, Indiana, Kentucky, Virginia, and West Virginia, explaining their determination that methane emissions from active underground mines are fugitive emissions. These states relied upon EPA s GHG reporting rule preamble that discussed the calculation of GHGs and characterized the emissions from ventilation air systems and degasification systems as fugitive. Second, the states argued that emissions of methane from mines cannot reasonably be captured due to the nature of the safety reasons for the purpose of the ventilation system. The letter also stated that the coal mine industry does not have a national standard for collection or control of methane emissions. Further, the states noted, any Title V permit would be hollow or an empty permit because the would not contain substantive requirements, since none exist for coal mines. The consensus of these states is that coal mining facilities should not be required to obtain Title V permits and that they would not require facilities in their state to submit a permit application. The letter also included a sample letter that the states intend to send to facilities that request whether a permit is necessary. It also addressed a May 22, from EPA to the National Association of Clean Air Administrators, wherein EPA stated 508

25 COAL MINES STATIONARY SOURCES? that methane emissions from underground coal mines should be considered point source emissions. Finally, the states requested that EPA reconsider its position and offer a prompt response, since the deadline for filing Title V permit applications was July 1, As of June 26, 2012, EPA had not responded to the letter, nor issued a formal written position Conclusion. It is not clear whether EPA will take the position that coal mines will be subject to the Tailoring Rule. Nor is it clear how coal mines would be able to comply with permitting requirements and how their emissions would be determined. What is clear are the many remaining questions regarding the applicability of the Tailoring Rule and the uncertainty surrounding the notion of coal mines becoming subject to the Clean Air Act permitting programs as a stationary source. 509

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