Obama’s EPA overturns South Dakota’s approval of Big Stone II

The Environmental Protection Agency overturned South Dakota’s permit for the Big Stone II coal-fired power plant on the last day of the application review process. The decision comes the week after the Big Stone II project cleared a major hurdle in gaining a Certificate of Need from the State of Minnesota Public Utilities Commission and only three days after the Obama administration took control of the federal government.

The decision sites lack of compliance with several permitting conditions and failure “to have monitoring to assure compliance with the terms and conditions of the permit.”

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION 8

Steven M. Pimer, P.E. Secretary
Department of Environment & Natural Resources
Joe Foss Building
523 East Capitol
Pierre, SO 5750 1-3182

Dear Mr. Pimer :

By this letter and enclosure, the U.S. Environmental Protection Agency (EPA) objects to the proposed Title V operating permit renewal for the Big Stone power plant (perm it #28.0801-29, dated November 20, 2008), located in Big Stone City, South Dakota. The plant is owned and operated jointly by Montana-Dakota Utilities Company, Northwestern Energy, and Otter Tail Power Company. This permit is proposed by South Dakota’s Board of Minerals and the Environment to be issued by the South Dakota Department of Environment and Natural Resources (DENR). Our office received the proposed permit package for review on December 8, 2008. The 45-day period for EPA review expires on January 22, 2009. This formal objection, based on our review of the proposed perm it and supporting information, is issued under the authority of Title V of the Clean Air Act (Act), specifically under section 505(b) of the Act, 42 U.S.c. § 766 Id(b), and 40 CFR 70.8(c) .

Pursuant to 40 CFR 70.8(c)(I), the EPA will object to the issuance of any proposed Title V operating permit that EPA determines does not comply with applicable requirements of the Act or the operating permit program requirements of 40 CFR part 70. In accordance with 40 CFR 70.8(c)( 1) and (4), and South Dakota rules at ARSD 74:36:05:21, when the EPA objects in
writing to the issuance of a perm it within 45 days of receipt of the proposed permit and all necessary supporting information, the State shall not issue the perm it. If the State fails, within 90 days after the date of an objection by the EPA, to revise and submit a proposed permit in response to the objection, the EPA will issue or deny the permit in accordance with the
requirements of the Federal program promulgated under Title V of the Act, 40 CFR part 71.

Pursuant to 40 CFR 70.8(c)(2), any EPA objection to a proposed permit shall include a statement of the EPA’ s reasons for objection and a description of the terms and conditions that the permit must include to respond to the objection. The EPA is objecting to this proposed perm it for the following reasons:

Object ion #1: Failure to include applicable requirements from PSD and NSPS: The proposed Title V renewal permit fails to comply with requirements of 40 eFR 70.6(a)(I ) to include emission limitations and standards, including those operational requirements and
limitations that assure compliance with all applicable requirements at the time of permit issuance, specifically:
• Applicable requirements of the final PSD permit for the Big Stone II project, issued on November 20, 2008.
• The PSO permit, in addition to setting BACT emission limits, also incorporates requirements from 40 CFR part 60, subpart Da, Clean Air Act Section 111. The proposed Title V renewal perm it does not adequately incorporate the se part 60
requirements (New Source Performance Standards) .

Objection #2: Lack of proper PSO applicability analysis for S02 and N O~: The proposed Title V renewal permit fails to comply with applicable Prevention of Significant Deterioration (PSO) State Implementation Plan requirements, specifically with regard to avo idance of PSD major modification review for sulfur dioxide (S0 2) and nitrogen oxide (NO, ) emissions associated with the Big Stone II project (Units #13, #14, #15, #25 and #33).

Objection #3: Inadequate compliance provisions: The proposed Title V renewal permit fails to comply with 40 CFR 70.6(c)(I ), which requires Title V permits to include compliance certification, testing, monitoring, reporting and record keeping requirements sufficient to assure compliance with the terms and conditions of the permit. (Clean Air Act, Section 504(c» . The proposed Title V renewal perm it a lso fails to comply with 40 CFR 70.6(a)(3)(i)(B), which requires Title V permits to include periodic monitoring sufficient to yield reliable data from the relevant time period that are representative of the source’s compliance with the permit.
Specific permit conditions that fail to comply with §70.6(c)(I ) are the following:
• Conditions 9.2 and 9.4, specifying plantwide emission limits for S0 2 and NO~ respectively, identified in the permit as a “PSD exemption,” to enable the Big Stone II project to avoid PSD major mod ification review for SOl and N O~. The conditions
fail to specify adequate emission monitoring (e .g., monitoring locations and emission calculation methodologies) to assure compliance with the se limits.
• Conditions 11 .3, 11 .4 and 11.5, specifying hazardous air pollutant (HAP) emission limits, identified in the permit as a “case-by-case MACT exemption,” to enable the Big Stone project to avoid MACT requirements of 40 CFR 63.40-6 3.44 for new
major sources of HAPs. The conditions fail to specify test methods and test frequency to assure ongoing compliance.

Additionally, as explained in the enclosure, Condition 11.5 overall fails to specify how the permittee must demonstrate compliance with the emission limit for any single HAP and compliance with the emission limit for total HAPs. Therefore, as proposed, Condition 11.5 fails to have monitoring to assure compliance with the terms and conditions of the permit.

Specific permit conditions that fail to comply with §70.6(a)(3) (i)(B) are the following:

• Condition 7. 12 only proposes an initial performance test at Unit # 13 for HF and HCI, within 180 days after initial startup of Unit # 13. The condition fails to propose a test frequency or any other form of periodic monitoring for demonstrating ongoing
compliance with the hydrogen fluoride (H F) and hydrogen chloride (HCI) emission limits in the permit.

• Condition 11.5 fails to propose a monitoring frequency, or any other form of periodic monitoring, for emissions of any HAPs or HAP surrogates (other than mercury, for which the condition specifies a Continuous Emission Monitoring System), for
demonstrating ongoing compliance with the HAP emission limits in the permit condition.

The enclosure provides a detailed explanation of the reasons for each objection, followed by a description of the terms and conditions that the perm it must include to respond to each objection. Please note that under 40 CFR 70.7(g), Reopenings f or cause by EPA, after final issuance this permit shall be re-opened by the EPA, if the EPA determines that cause exists to terminate, modify, or revoke and reissue a permit pursuant to §70.7(f)( I )(iv), to assure compliance with applicable requirements. This objection letter does not constitute a waiver of authority provided by §70.7(g). Furthermore, under the Clean Air Act, our opportunity for review and comment on this permit does not prevent the EPA from taking enforcement action for
any non-compliance, including non-compliance related to issues that have not been specifically raised in those comments.

We regret that we are unable resolve these issues with your office prior to expiration of our 45-day review period. We are committed to working with you to resolve these objections and are fully confident that South Dakota will act to respond in a timely manner.

Sincerely,

Carol Rushin
Acting Regional Administrator

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