Desert Rock Energy Company LLC PSD Permit

Desert Rock Energy Company LLC, PSD Permit No. AZP 044-01; EPA Environmental Appeals Board, PSD Appeal Nos. 08-03, 08-044, 08-05 & 08-06. A major controversy erupted in the Southwest in late April when EPA’s Region 9 asked the agency’s Appeals Board (“EAB”) to remand the Prevention of Significant Deterioration (“PSD”) permit issued on July 31, 2008 for the Desert Rock Energy Company’s proposed coal-fired power plant to be located on the Navajo Reservation near Farmington, New Mexico. The Dine’ Power Authority, a Navajo enterprise, is participating in the project. Navajo Nation President Joe Shirley devoted much of his State of the Nation address to the topic because of the implications to tribal sovereignty and the trust relationship between the Navajo Nation, the largest Native American tribe in the United States. President Shirley described the project as the largest economic, environmental and energy project the Navajo Nation has ever undertaken and one that would help address chronically high unemployment as well as take advantage of the large coal deposits on the reservation. While the Bureau of Indian Affairs (“BIA”), a part of the Department of the Interior, oversees and administers many programs relating to Native Americans, the trust, or fiduciary responsibility applies to all departments and agencies of the Executive Branch, including the EPA. The Navajo Reservation is comprised of about 27,000 square miles in AZ, NM and UT with a population of more than 250,000 people. 

The PSD Permit is the subject of four petitions for review currently before the EAB pursuant to 40 C.F.R. §124.19. The petitioners include some of the nation’s most prominent environmental groups including the Natural Resources Defense Council and the Sierra Club as well as the State of New Mexico. Responses to the Motion are due on June 11. The EAB noted that over 900 pages of legal argument have already been filed, and limited all responses to 50 double-spaced pages. 

The principal issues driving the decision to ask for the remand were: (1) the use of PM 10 as a surrogate to satisfy the PSD requirements for PM 2.5; (2) the consideration of integrated gasification combined cycle (IGCC) in the Best Available Control Technology (“BACT”) analysis; (3) the issuance of the final permit decision before completing the consultation under section 7(a)(2) (16 U.S.C.A. Section 1536(a)(2) of the Endangered Species Act (“ESA”); (4) the issuance of the final PSD permit decision before completing the case-by-case Maximum Achievable Control Technology (“MACT”) for hazardous air pollutants under Clean Air Act Section 112(g); and (5) the sufficiency of the additional impact analysis for the Desert Rock facility. An additional issue is whether the PSD permit must contain an emissions limit for carbon dioxide (CO2). Region 9 withdrew the portion of the PSD permit’s Response to Comments that explained the Region’s basis for not evaluating CO2 emissions in the BACT analysis. Region 9 sought comments on a revised Statement of Basis on this issue, which was published on January 22, 2009, with the comment period closing on March 25, 2009. 

As to PM10/PM2.5 surrogacy, EPA Administrator Sheila Jackson wrote to Earthjustice, counsel for some of the petitioners seeking review of the PSD permit, that EPA intends to publish a Notice of Proposed Rulemaking to repeal the “grandfathering” provision concerning the continued use of the PM10 Surrogacy Policy. (Exhibit A, Motion for Voluntary Remand). 

Concerning to the ESA consultation, the PSD permit was issued prior to the completion of the consultation. The ESA prohibits (Section 7(d)) any irretrievable commitment of resources prior to the completion of the consultation. In this case, the EPA had contended that it had retained authority to amend its permit as might be required depending on the outcome of the consultation. On February 26, 2009 the US Fish and Wildlife Service (“FWS”) advised the EPA of its view that atmospheric deposition of mercury “may be adversely affecting the endangered Colorado pikeminnow, as well as contributing to numerous fish consumption advisories in the Navajo Nation, Arizona, Colorado, Utah and New Mexico” and requested information and assistance from the EPA on issues relating to source-attribution of mercury and selenium. The FWS invited the EPA to review the Biological Assessment (presumably prepared by the BIA, the agency with which the FWS is in consultation, and invited the EPA to provide “any additional input relative to your expertise relative to the sources and deposition of mercury” (Letter, FWS to EPA. 2/26/09), Exhibit B, Motion for Remand). 

    This article was authored by Ronda L. Sandquist, Jackson Kelly PLLC. For more information on the author see here.