OAR Box 1781 

Prepped by Ollie Stewart 

Document Number: 

50) ll-K-7 

Docket Number: 

A-90-37 

Printed 10/29/2008 10:46:20 AM Sheet SO of 142 

P.1 
*•*••- * 

P.2 

BEFORE THE ADMINISTRATOR 

U.S. ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 

In the Matter of 

Hibbing Taconite Company, 

Petitioner 

A.10'51 

PSD APPEAL NO. 87-3",' 

m^ 

ORDER ON PETITION FOR REVIEW 

In a petition dated July 30, 1987, U.S. EPA Region V seeks 

review of a Prevention of Significant Deterioration (PSD) permit 

determination that authorizes the Hibbing Taconite Company 

(Hibbing) to modify its furnaces to burn petroleum coke as a 

fuel. A final decision to issue the permit was made on July 2, 

1987, by the Minnesota Pollution Control Agency (MPCA) ," pursuant 

to a delegation of authority from Region V. -' MPCA's action in 

issuing the permit is subject to the review provisions of 40 CFR 

§124.19 because the permit is deemed to be an EPA-issued permit 

under EPA rules. 40 CFR §124.41; 45 Fed. Reg. 33,413 (May 19, 

1980). 

In its petition for review, Region V raises seven issues: 

(1) whether Hibbing's analysis of Best Available Control Technology (BACT) for sulfur dioxide (S02) is erroneous; (2) whether 

in:--—'- -_r*».^.v 

1/ The PSD program was delegated to the State of Minnesota on 

October 15, 1980, under the authority of 40 CFR §52.21(u). * See 

Letter from John McGuire, Regional Administrator, EPA Region V, 

to Terry Hoffman, Executive Director, MPCA (October 15, 1980). 
P.3 

* '*' 

Hibbing failed to perform a collateral impacts analysis on 

unregulated pollutants as required by North County Resource 

Recovery Associates. PSD Appeal No. 85-2 (June 3, 1986); (3) 

whether the permit violates section 165 of the Clean Air Act (CAA 

or Act) by allowing Hibbing to modify its facility and operate 

for nine months without a prescribed emission limit for SO-; (4) 

whether the permit limit of 0.024 grains per dry standard cubic 

foot (gr/dscf) represents BACT for particulate matter (PM); (5) 

whether Hibbing improperly excluded its property from the ambient 

air quality modeling; (6) whether analysis of alternative control 

technologies is required for carbon monoxide (CO) emissions and 

whether the permit must contain operating requirements for 

combustion of CO; and (7) whether Hibbing improperly relied on 

existing data from distant monitors to meet the preconstruction 

monitoring requirements under 40 CFR §52.21(m)(1).

 y 

For the reasons set forth below and pursuant to 40 CFR 

§124.19, review of issues (2), (6), and (7) is denied. Issues 

(1), (3), (4), and (5) are remanded to MPCA to conduct additional 

BACT analyses and to determine the portion of the Hibbing pro-

-

l

 Both Hibbing and MPCA have filed responses to the Region's 

Petition for Review. See Comments of Hibbing Taconite Company on 

the EPA Region V Petition for Review of Minnesota Permit No. 541-

87-OT-l (PSD Appeal No. 87-3)(December 30,1987); Minnesota 

Pollution Control Agency, Division of Air Quality, Response to 

U.S. EPA Region V s Petition for Review of Permit No. 541-87-OT-l 

Issued to Hibbing Taconite Co. (September 28, 1987). Hibbing's 

attorney sent a letter dated January 5, 1988, concerning a 

curtailment of natural gas to the Hibbing plant. For purposes of 

deciding the issues on appeal, there is no need to consider the 

matters raised in that letter. 
P.4 

3 

perty (if any) that should be excluded from the ambient air 

determination, consistent with this opinion. 

Background 

Hibbing*s plant crushes taconite ore, concentrates the iron 

in the resulting powder, and forms it into pellets for shipment 

to a primary steel plant. The taconite plant equipment includes 

ore crushers, concentrating process lines, and pelletizing 

furnaces. The plant currently uses venturi rod scrubbers as a 

pollution control technology. Until recently the furnaces burned 

only natural gas and fuel oil. Now Hibbing plans to switch to 

petroleum coke as a fuel, thus requiring a physical modification 

of the plant. The modification will bring Hibbing under the 

purview of the CAA's PSD requirements for the first time. ^ 

Hibbing has submitted a PSD applicability analysia that 

shows the proposed modification is subject to PSD requirements 

for emissions of S02, CO, and PM. ^ 

-

; The Hibbing facility was constructed between 1973 and 1977. 

The PSD requirements of the CAA apply only to facilities on which 

construction was commenced after August 7, 1977. 42 U.S.C. 

§7475. 

-

1

 Before an existing major emitting facility located in an area 

that is meeting the National Ambient Air Quality Standards 

(NAAQS) can undertake a major modification, i.e., one which would 

result in a significant net emissions increase of a regulated 

pollutant, the owner must obtain a PSD permit. 40 CFR 

§52.21(b)(2)(i). Hibbing is located in an area designated as 

being in attainment of the NAAQS for S02, CO, and TSP — all 

regulated pollutants. 40 CFR §81.324. Hibbing's analysis shows 

that there would be a significant net emissions increase for each 

of these pollutants. 
P.5 

4 

Discussion 

Administrative review of PSD permit decisions is not usually 

granted unless the permit decision is clearly erroneous or 

involves an exercise of discretion or policy that is important 

and therefore should be reviewed by the Administrator as a 

discretionary matter. 40 CFR §124.19. "This power of review 

should be only sparingly exercised * * *." 45 Fed. Reg. 33,412 

(May 19, 1980). The regulations envision that disputed permit 

conditions will be resolved for the most part at the regional 

level. Id,. The burden of demonstrating that review should be 

granted is therefore on the petitioner. 

Issue m : BACT for SO: 

The CAA makes permit issuance contingent on a showing that 

the proposed facility will employ the Best Available Control 

Technology (BACT) for each regulated pollutant emitted from it in 

significant amounts. 42 U.S.C. §7475. Section 169(3) of the CAA 

defines BACT as an "emission limitation" reflecting the "maximum 

degree of reduction" that is "achievable" on a "case-by-case 

basis, taking into account energy, environmental, and economic 

impacts and other costs." 42 U.S.C. §7479(3). This case-by-case 

approach provides a mechanism for determining and applying the 

appropriate technology in each situation. 

The Region argues that the BACT analysis for S02 is erroneous because Hibbing failed to use the burning of natural gas as 
P.6 

5 

its "base" case; ^ it did not factor in the cost savings from 

the fuel switch; it did not justify rejecting the burning of 

natural gas as a viable control strategy; and it did not present 

an engineering analysis demonstrating how the proposed 1.2 

lbs/MMBTU limitation for S02 emissions would be achieved or 

explaining why this limitation represents BACT. ^ According to 

the Region, the first two arguments present the following question: "When economic problems face a facility, to what degree 

must that facility use cost savings to minimize environmental 

degradation if the facility switches to a more polluting fuel 

that reduces operating costs?" ^ Because PSD guidance for BACT 

does not directly address this issue, the Region asserts that it 

is appropriate for review by the Administrator. 

Neither the PSD regulations nor the PSD guidance differentiate between BACT analyses for plant modifications and BACT 

analyses for the construction of new plants. Nevertheless, the 

Region contends that, because Hibbing has been able to continue 

57 Use of the base case in performing a BACT analysis is described in the EPA Prevention of Significant Deterioration Workshop Manual at I-B-7 (October 1980). For a definition of the 

base case, see text infra at 6-7. Cf. note 10 infra. 

^ The Region also argues that Hibbing failed to consider other 

technologies commonly used to control S02 gas streams. Although 

this argument may have been true with regard to the original BACT 

analysis, Hibbing remedied this deficiency with its supplemental 

BACT analysis and its 9/24/87 BACT support study, conducted by 

Black and Veatch. See Letter from Charles B. Hoffman to David 

Beil, MPCA Staff Engineer (June 17, 1987); MPCA Response at 9-11 

and Attachment l. 

-' See Response of U.S. EPA, Region V, to Comments of Hibbing 

Taconite Company at 4 (March 14, 1988). 
P.7 

6 

to operate burning natural gas, it must use natural gas as the 

base case. I disagree. Hibbing's use of the coke burning plant 

with existing pollution controls as the base case clearly complied with the criteria for choosing a base case in EPA's guidance document. EPA's Prevention of Significant Deterioration 

Workshop Manual (October 1980) defines the base case as: 

[T]he control strategy that, in the absence of BACT 

decisionmaking, would normally have been applied. 

The choice of the base case may be dictated by other 

existing regulations and/or by company practice standards or choices, if they provide a greater degree of 

emission reduction than that required by existing regulations (such as new source performance standards, 

national emission standards for hazardous air pollutants , etc.). v 

Id. at p. I-B-7. The base case chosen here meets the requirements of Minnesota's state permitting regulations, ^ and thus is 

consistent with this definition. Moreover, Hibbing's choice of 

the base case is consistent with the practices of other taconite 

plants in Minnesota. ^ Nothing in the definition requires the 

^ Minnesota taconite plants operate under permits specifying 

the SO, emission limits based on Minnesota Rules part 7005.2770. 

These limits are 2.0 lbs/MMBTU when burning a liquid fuel and 4.C 

lbs/MMBTU when burning a solid fuel. See MPCA Response at 7. 

The limit in the base case chosen by Hibbing is 4.0 lbs/MMBTU 

when burning petroleum coke. But see note 15 infra. 

-' Of the three taconite plants in Minnesota that are equipped 

and permitted to burn a combination of solid fuel, fuel oil and 

natural gas in the pellet production process, two plants produce 

a substantial portion of their production using a solid fuel. 

See MPCA Response at 6. Hibbing is the first taconite plant in 

the United States to become subject to PSD review either for 

original construction or for modification. Id. at 7. 
P.8 

7 

base case to be the unmodified plant. ^ The Region has not 

shown any compelling reason why a permit applicant seeking to 

modify an existing plant should be subject to a different set of 

criteria for choosing a base case than a new permit applicant. 

Furthermore, I disagree with the Region's argument that 

Hibbing failed to take into account the cost savings froa the 

fuel switch. An important purpose of any BACT analysis is to 

provide a comparison of the costs associated with each alternative control technology. This comparison necessarily takes 

into account the cost-savings associated with less expensive 

control technologies, as well as the increased costs associated 

with the more expensive alternatives. Once a proper base case is 

chosen and alternatives are compared, no additional cost savings 

analysis is necessary. The Region has not met its burden of 

showing that the BACT analysis was clearly erroneous or otherwise 

warrants review with respect to the first two issues. TKus, 

review is denied on this aspect of the S02 BACT issue. 

The Region's third argument is that Hibbing failed to justify its rejection of burning natural gas as a viable control 

—

; Recognizing the need for a more consistent BACT process, EPA 

recently began developing specific guidelines on the use of the 

"top-down" approach, which requires an applicant to justify why 

it cannot use the most effective pollutant control available. 

See Memorandum from J. Craig Potter, Assistant Administrator for 

Air and Radiation, to EPA Regional Administrator' s (December 1, 

1987) . The top-down approach, however, was not applicable here 

because the permit determination was made prior to the issuance 

of this memorandum. See In the Matter of Pennsauken County, New 

Jers_y Resource Recovery Facility, PSD Appeal No. 88-8 at 6-7 

(November 10, 1988). 
P.9 

8 

strategy. I agree. Hibbing contends that although natural gas 

was once a financially viable alternative, due to the depressed 

economic situation in the steel industry, natural gas is now too 

costly. Nevertheless, Hibbing has been able to continue to 

operate using natural gas. In my view, Hibbing's ability to 

continue to operate using natural gas creates a presumption that 

natural gas is a financially achievable alternative. Of course 

this presumption can be rebutted, but to do so, Hibbing must 

provide a detailed consideration of objective economic data. 

Mere generalizations about the economic woes of the steel industry are not enough. Hibbing's BACT analysis does not contain 

the level of detail and analysis necessary to overcome the presumption that the natural gas alternative is economically achievable. The BACT analysis shows the cost of burning natural gas is 

$1310/ton of SO- removed, however, there is no serious discussion 

of cost effectiveness. Greater efforts must be made by the 

applicant to show that the natural gas alternative is not economically feasible. This might be done, for example, by comparing 

the costs of burning natural gas with the costs associated with 

S02 controls used in other similar types of facilities that have 

gone through PSD review. ^ Thus, on remand, MPCA must ensure 

that the BACT analysis contains a more detailed economic justification for rejecting the natural gas alternative. 

^ In its petition, the Region states that a control cost of 

$1300 per ton is within the cost range found for BACT determinations, and therefore, is reasonable. 
P.10 

9 

Although the parties have not raised it, one argument that 

could be made is that the Region, by requiring the burning of 

natural gas to be an alternative to be considered in the BACT 

analysis, is seeking to "redefine the source." Traditionally, 

EPA has not required a PSD applicant to redefine the fundamental 

scope of its project. ^ However, this argument has not been 

made, and in any event, the argument has no merit in this case. 

EPA regulations define major stationary sources by their 

product or purpose (e.g., "steel mill," "municipal incinerator," 

"taconite ore processing plant," etc.), not by fuel choice. ^S 

Here, Hibbing will continue to manufacture the same product 

(i.e., taconite pellets) regardless of whether it burns natural 

gas or petroleum coke. Likewise, the PSD guidelines state that 

in choosing alternatives to be considered in a BACT analysis, the 

—' See In the Matter of Pennsauken County, New Jersey Resource 

Recovery Facility, PSD Appeal No. 88-8 at 11 (November 10, 

1988)(BACT permit conditions "are not intended to redefine the 

source"). Several important distinctions, however, can be drawn 

between Pennsauken and the facts here. In Pennsauken. the 

petitioner was urging EPA to reject the proposed source (a 

municipal waste combustor) in favor of using existing power 

plants to co-fire a mixture of 20% refuse derived fuel and 80% 

coal. In other words, the petitioner was seeking to substitute 

power plants (having as a fundamental purpose the generation of 

electricity) for a municipal waste combustor (having as a 

fundamental purpose the disposal of municipal waste). Moreover, 

the petitioner was not merely seeking to "condition" the permit; 

instead, it was urging EPA, in effect, to deny the permit for 

construction of the proposed source in favor of using existing 

power plants. The Hibbing situation, however, is quite distinct. 

Here, the petitioner (the Region) is merely urging the continued 

burning of natural gas at the same source — an alternative that 

will not require any fundamental change to Hibbing's product, 

purpose, or equipment. 

11/ See 40 CFR 52.21(b)(1). 
P.11 

10 

applicant must look to what types of pollution controls other 

facilities in the industry are using. The record here indicates 

that there are other taconite plants that burn natural gas, or a 

combination of natural gas and other fuels. Thus, it is reasonable for Hibbing to consider natural gas as an alternative in its 

BACT analysis. Moreover, because Hibbing is already equipped to 

burn natural gas, this alternative would not require a fundamental change to the facility. 

The Region's last argument with respect to the BACT analysis 

for SO- is that Hibbing failed to present an engineering analysis 

demonstrating how the 1.2 lbs/MMBTU limitation for SO- emissions 

would be achieved or explaining why this level represents BACT. 

I agree. Although BACT is defined as an "emission limitation," 

it is also, as its name implies, keyed to a specific control 

technology. In a previous PSD permit decision involving the 

issue of whether EPA has the authority to prescribe technological 

process and production requirements, the Administrator stated: 

PSD permits and BACT determinations are tailormade for each pollutant emitting facility. Consequently, the "case-by-case" evaluation of economic 

costs and energy and environmental impacts that has to 

be performed as part of a BACT determination is inextricably tied to a specific set of assumptions regarding the type of pollution control technology that will 

be in place at each facility. Any change in the control technology would require a reevaluation of those 

impacts and costs, which, in turn, might necessitate a 

change in the emission level (lower or higher than the 

previous one). Therefore, unless the type of control 

technology that will be used to achieve a particular 

emission limitation is identified and adhered to by the 

Applicant, the BACT determination is meaningless. Accordingly, an emission limitation in a PSD permit 

cannot be established without also relating it to the 
P.12 

11 

specific type of control technology that will be used 

to achieve the limitation. & 

Moreover, EPA regulations require PSD permit applicants to submit 

"a detailed description as to what system of continuous emission 

reduction is planned . . . , emission estimates, and any other 

information necessary to determine that best available control 

technology would be applied." 40 CFR §52.21(n)(1)(iii)(emphasis 

added). 

Here, the record before me fails to clearly identify the 

control technology that represents BACT and to explain how MPCA 

arrived at the 1.2 lbs/MMBTU ^ figure or whether Hibbing will be 

& '• In the Matter of CertainTeed Corp., PSD Appeal No. 81-2 at 5-

6 (December 21, 1982)(footnote omitted). 

a> 

^ The entire process by which the emission limitation of 1.2 

lbs/MMBTU was chosen is confusing. In its initial BACT analysis, 

Hibbing proposed burning petroleum coke as BACT, using its 

existing control technology (venturi rod scrubbers). See Letter 

from Charles B. Hoffman,to David Beil, MPCA Staff Engineer (May 

20, 1987). In a technical document based on Hibbing's BACT 

analysis, MPCA concurred with Hibbing. See Request for Authorization to Issue Air Emission Facility Permit No. 541-87-OT-l for 

a Taconite Ore Processing Plant and Air Pollution Control Equipment to Hibbing Taconite Company, MPCA, Division of Air Quality, 

Regulatory Compliance Section at 4-5 (June 23, 1987). However, 

MPCA did not specify an emission limitation for S02 in that 

document. In the draft permit subject to public notice, MPCA set 

the BACT emission limit for S02 at 2.0 lbs/MMBTU. Subsequently, 

in response to EPA comments on the permit, MPCA issued the permit 

with an emission limitation of 1.2 lbs/MMBTU for SO-. In its 

brief, MPCA summarily stated that the 1.2 lbs/MMBTU limit "is 

economically justified." The Black & Veatch support study, which 

was completed after MPCA issued the permit with the 1.2 limit, 

also found the existing technology and petroleum coke to be BACT. 

Based on this study MPCA determined that 1.8 lbs/MMBTU was BACT. 

The Black & Veatch study indicates that the only control technology that would lower emissions to 1.2 lbs/MMBTU is the addition of a wet limestone scrubber. However, MPCA never determined that wet limestone scrubbers represent BACT. 
P.13 

12 

able to meet the limit using the existing control technology. ^ 

MPCA's failure to require Hibbing to provide a detailed description of the control technology that represents BACT, including 

data quantifying its removal efficiency, is clear legal error. 

Accordingly, on remand, MPCA must ensure that the record identifies the control technology that represents BACT and MPCA must 

propose an emission limit based on the BACT analysis. If MPCA 

determines that 1.2 lbs/MMBTU is BACT, the record must specify 

the control technology upon which the limitation is based and 

show that such technology will enable Hibbing to meet the 1.2 

lbs/MMBTU limit. 

Issue (2): Unregulated Pollutants 

Region V argues that MPCA's permit review is deficient 

because there was no consideration of unregulated pollutants as 

required by North County Resource Recovery Associates, PSD Appeal 

No. 85-2 (June 3, 1986). In response, MPCA incorrectly argues 

that North County only applies to PSD permit proceedings for 

municipal waste combustors. North County interprets an express 

statutory requirement applicable to all PSD permits, and thus 

requires the permitting authority to take into account the control technology's impact on unregulated pollutants in every 

permit proceeding. However, MPCA also responds that it did 

require Hibbing to analyze petroleum coke for unregulated trace 

^ Hibbing contends that it "cannot meet the 1.2 lb. limit in 

any financially viable way." See Hibbing's Comments (December 

30, 1987). 
P.14 

13 

elements of concern. ^ In its response, Region V did not dispute the adequacy of the trace element analysis. Thus, the 

Region has not met its burden of showing that Hibbing's analysis 

of unregulated pollutants is clearly erroneous or otherwise 

warrants review. 

Issue (3): CAA's requirement for prescribed emission limits 

Region V argues that MPCA erred in issuing a PSD permit that 

does not prescribe an emission limitation for SO- for the first 

nine months of operation under the permit. The permit must set 

forth emission limitations for each regulated pollutant that the 

facility will emit in significant amounts. Section 165(a)(1), 42 

U.S.C. §7475(a)(l). Although Hibbing's permit establishes a 1.2 

lbs/MMBTU emission limitation for S02, Part V.D. of the permit 

allows Hibbing to operate its facility for nine months after 

modification while it designs a plan to achieve and comply with 

this limit. If after nine months Hibbing cannot achieve the 1.2 

lbs/MMBTU limit, it must submit an application for a revised 

emission limit. As a result, the permit has no emission limit 

prescribed for S02 for at least the first nine months. 

Last year in another PSD permit decision (involving the 

threshold question of whether the Administrator should review the 

permit), the Administrator stated: 

[T]he permit contains a provision allowing a reopening 

of the BACT determination after construction of the 

^ Hibbing analyzed a large number of trace elements in its 

Applicability Analysis. See MPCA Response at 18-19 and Attachment 6 (September 28, 1987). 
P.15 

14 

facility has commenced. This provision appears to 

contravene §165(a)(1) of the Clean Air Act (CAA), which 

forbids construction of a facility before the emission 

limitations in the permit have been established. (CAA 

§169(3) defines BACT as an "emission limitation.") & 

Similarly, in the instant case, Part V.D. of the permit contravenes section 165(a)(1) of the CAA. Thus, Region V has made a 

showing of clear error and, on remand, MPCA must ensure that the 

permit contains an emission limitation for S02, based on BACT, 

for the entire life of the permit. 

Issue (41: BACT for (PM, 

Region V contends that MPCA erred in setting 0.024 gr/dscf 

as BACT for PM because the technical document supporting the 

permit states that the existing scrubbers used by Hibbing "have 

consistently shown an outlet dust loading of 0.01 gr/dscf when 

tested by EPA Methods 1-5." ^ Nowhere in this document is the 

0.024 gr/dscf limit mentioned. 

MPCA's response to the Region is that many BACT and .Lowest 

Achievable Emission Rate (LAER) determinations have been made in 

the range of 0.02 to 0.05 gr/dscf. Since 0.024 is at the low end 

of this range, MPCA considered it acceptable. MPCA's argument is 

unresponsive to the information contained in the technical doc-

^ In the Matter of Virginia Power (Chesterfield Generating 

Station), PSD Appeal No. 88-2 at 2-3 (February 1, 1988)(footnote 

omitted). 

—

f

 See Request for Authorization to Issue Air Emission Facility 

Permit No. 541-87-OT-l for a Taconite Ore Processing Plant and 

Air Pollution Control Equipment to Hibbing Taconite Company, 

Minnesota Pollution Control Agency, Division of Air Quality, 

Regulatory Compliance Section at 5 (June 23, 1987). 
P.16 

15 

ument and it ignores the site-specific nature of BACT determinations. The argument that many BACT and LAER determinations have 

been made in the range of 0.02 to 0.05 gr/dscf should not, by 

itself, be used to justify a less stringent PM limit than is 

otherwise achievable, taking into account the necessary energy, 

economic, and environmental impacts. ^ Therefore, on remand, 

MPCA must provide a detailed justification for not adopting the 

0.01 gr/dscf limitation if another less stringent limitation is 

chosen. 

Issue 4: Ambient Air 

The Region argues that Hibbing improperly excluded approximately 14,000 acres of its property from ambient air quality 

monitoring. An EPA screening analysis conducted with receptors 

located inside the excluded area indicates that the PM and S02 

PSD increments and the S02 NAAQS will be exceeded. ^ To obtain 

—

; As MPCA pointed out in its response, EPA guidelines on BACT 

state that the analysis of alternative strategies is not required 

in a BACT analysis if the applicant demonstrates that the chosen 

base case provides the highest degree of emission reduction 

available. Thus, MPCA may use the 0.01 gr/dscf limit in the 

permit without considering alternatives if it can show, as it 

represented in its technical document, that 0.01 gr/dscf represents the highest degree of emission reduction available.-See id. 

MPCA also cites EPA's BACT guidelines, which state that the 

analysis should only be as extensive as the quantity of pollutants emitted and the ambient air impact. MPCA is correct 

that, under this guideline, it need not necessarily expand the 

scope of control technology alternatives beyond those previously 

considered. Nevertheless, MPCA must still explain its reasons 

for rejecting the 0.01 gr/dscf limit. 

11/ 

an 

the requirement for pre-construction monitoring data for TSP. 

— Furthermore, the analyse.. suggests PM concentrations in this 

area may exceed the de minimis level of 10 /xg/m3, thus triggering 
P.17 

16 

a PSD permit, an applicant must demonstrate that emission increases from the proposed source or modification will not exceed 

primary or secondary NAAQS or PSD increments. ^ 

In ambient air quality monitoring, mathematical models are 

used to predict pollutant concentrations at specific locations. 

To obtain a permit, the models need show only that the NAAQS and 

PSD increments will not be exceeded in the "ambient air." ^ The 

rules define ambient air as "that portion of the atmosphere, 

external to buildings, to which the general public has access." 

40 CFR §50.1(e). Thus, emissions that exceed the NAAQS or PSD 

increments on company property to which the public does.not have 

access are not an impediment to permit issuance. EPA policy has 

allowed exclusion if public access is barred by fence or other 

physical barrier. ^ A Memorandum of Law issued by the- EPA 

Office of General Counsel interprets the definition of "ambient" 

in section 50.1(e) as follows: 

That definition, in our view, limits the standards' 

applicability to the atmosphere outside the fence line, 

since "access" is the ability to enter. In other 

words, areas of private property to which the owner or 

^ See 40 CFR §52.21(c)(increases in pollutant concentrations 

over baseline limited to specific PSD increments); id. 

§52.21(d)(no pollutant concentration shall exceed the primary or 

secondary NAAQS); see also 40 CFR §52.21(k)(2) (the applicant 

must demonstrate the proposed source or modification will not 

cause or contribute to air pollution in violation of any PSD. 

increment or NAAQS). 

^ Both the PSD increments and the NAAQS only apply in areas 

meeting the definition of ambient air. See 42 U.S.C. §§7409 & 

7470-7473. 

& See, e.g.. Letter from Douglas M. Costle, EPA Administrator, 

to Senator Jennings Randolph (December 19, 1980). 
P.18 

17 

lessee has not restricted access by physical means such 

as a fence, wall, or other barrier can be trespassed 

upon by members of the community at large. Such persons, whether they are knowing or innocent trespassers, 

will be exposed to and breathe the air above the property. -' 

MPCA argues that it inspected the area and found that effective physical barriers preclude public access. ^ In support of 

this argument, MPCA has submitted photographs that show access 

roads blocked by gates and other physical barriers. Hibbing 

correctly argues that the test for ambient air exclusion does not 

require a continuous fence around the perimeter of the property. 

Other types of physical barriers can effectively preclude access. 

However, based on photographs submitted by EPA, there appears to 

be at least three, ^ possibly four, ^ locations where physical 

—' Memorandum from Michael A. James, EPA Air Quality and 

Radiation Division, to Jack R. Farmer, EPA Plans Management 

Branch (September 28, 1972)(citation omitted)(emphasis added). 

—' MPCA cites a Federal Register notice in which EPA found the 

operator of the Kennecott smelter in Magma, Utah had effectively 

precluded public access from its property by a series of no 

trespassing signs, rugged terrain, and security patrols. See 50 

Fed. Reg. 7057 (February 20, 1985). As Region V points out in 

its response, however, the two situations are not analogous. The 

Kennecott property was extremely rugged and mountainous. Thus, 

the physical terrain itself helped to create an effective barrier. Iel. Hibbing's property, as described by Hibbing itself, 

consists of "flat lowland with occasional rolling hills." See 

Hibbing's Comments at 16. Furthermore, Kennecott apparently did 

not involve the same type of rights of way as does the Hibbing 

property. 

—

; The three locations not having any apparent physical barriers 

are the main plant entrance, the rail line into the plant, and 

the power line into the plant. 

^ It is difficult to ascertain whether the berm around the 

tailings pond is an effective physical barrier from the photographs submitted. 
P.19 

18 

barriers, natural or otherwise, do not exist along the perimeter 

of the 14,000 acres. I am remanding this issue to MPCA to reconsider whether public access is effectively precluded at the four 

locations in question. If MPCA does not find effective barriers 

to public access at the four identified (or any other) locations, 

MPCA must impose requirements in the permit that would force 

Hibbing to erect appropriate barriers or to take other measures 

that would effectively preclude public access. Alternatively, 

MPCA may identify a different portion (presumably smaller) of 

Hibbing's property, from which access is effectively barred. ^ 

The factual issue of the exact area to which public access is 

precluded may be ripe for a negotiated settlement. 

Issue 6: BACT for CO 

Region V argues that the BACT analysis for CO is erroneous 

because it did not contain an analysis of alternative controls 

and did not include any operational requirements for combustion 

of CO. I disagree. The Region acknowledges that alternative 

controls for CO are limited to combustion with excess air and 

temperature control. Nevertheless, the Region argues that the 

BACT analysis must include consideration of alternative combinations of these two variables. Both Hibbing and MPCA have pro-

—

; Region V has indicated that there may be a smaller area that 

would properly be excluded from the ambient air. 
P.20 

19 

vided reasons why the chosen combination of temperature and 

excess air was the only acceptable one. ^ 

The Region also asserts, without citation, that once the 

combination of temperature and excess air that represents BACT is 

established, it should be specified in the permit. Neither the 

CAA nor EPA regulations absolutely reguire the permit to specify 

operational requirements in addition to a numerical emission 

limitation. ^ Both the CAA and EPA regulations define BACT as 

an "emission limitation." ^ Hibbing's permit contains this 

required emission limitation and therefore omission of operational requirements was not clear error. ^ Nevertheless, Hibbing 

must adhere to the control technology identified as representing 

BACT in its BACT analysis. ^-/ Review is denied on this issue. 

—

; To produce a high strength abrasion resistant taconite 

pellet, the pellets must be heated to, and maintained at, a 

temperature of 2450° F.. , The amount of excess air that can be 

used is limited by the need to achieve a high enough temperature 

in the combustion gases to raise the temperature of the pellet to 

the required level. Although increasing the temperature would 

result in a reduction of CO emissions, it would also result in 

pellets of unacceptable quality. Thus, the chosen combination of 

temperature and excess air appears to be the only acceptable 

combination. The Region has not shown that Hibbing's justification of this combination is clearly erroneous. 

^ Furthermore, MPCA represents that combustion control is 

automatic and not dependent on operator attention. 

W

 42 U.S.C. §7479(3); 40 CFR §52.21(b)(12). 

^ Moreover, there is nothing in the record to indicate that 

specifying the combination of temperature and excess air is 

essential to monitor compliance with the emission limitation. 

& See In the Matter of CertainTeed Corp., PSD Appeal No. 81-2 

at 5 (December 21, 1982). 
P.21 

20 

Issue 7: Preconstruction Monitoring 

Region V argues that the data used by Hibbing do not meet 

the preconstruction monitoring requirements of 40 CFR §52.2l(m) 

and EPA's Guidelines on Ambient Monitoring. ^ Section 

52.21(m)(1)(iii) of the rules requires applicants to submit 

continuous air quality monitoring data to determine if emissions 

of a pollutant would cause or contribute to a violation of a 

NAAQS or an increment. The data must be gathered over a period 

of at least a year and must represent at least the year preceding 

receipt of the application. EPA allows substitution of existing 

representative air quality data in lieu of having the source 

generate its own preconstruction monitoring data, provided these 

data meet the criteria in the "Ambient Monitoring Guidelines for 

Prevention of significant Deterioration" (July, 1980). ^ 

The guidelines require existing monitoring data to be representative of areas of (1) maximum existing pollutant 

concentrations, (2) maximum concentration increases from the 

proposed source or modification, and (3) maximum combined impact 

from existing and proposed sources. If there are no existing 

monitors in such areas the guidelines allow monitors located 

elsewhere to be used on a case-by-case basis. The guidelines 

provide examples of cases in which it would be appropriate to use 

5^ Based on Hibbing's modeling results, preconstruction monitoring data is required only for S02. However, in light of the 

remand on the ambient air issue, preconstruction monitoring may 

also be required for PM. See supra note 17 & accompanying text. 

36/ See 45 Fed. Reg. 52676 (August 7, 1980). 
P.22 

21 

existing monitors that are located outside the three areas listed 

above. Id. at 6-8. In one example, the proposed source is in an 

area that is generally free from the impact of other point sources. Id. at 6. The guideline states that representative data 

may be obtained from a "regional" site, a site that is characteristic of air quality across a broad region. Id,. The use of 

regional sites should be limited to relatively remote areas and 

should not be used in areas of multisource emissions or areas of 

complex terrain. Id. 

Hibbing maintains that it properly used representative data 

from a monitoring site that fits the description in this example. 

Both Hibbing and the monitoring site are located in an area that 

is generally flat, sparsely populated, and contains one plant 

(the Clay Boswell plant) that accounts for 70% to 81% of* the 

total S02 emissions. Hibbing contends that because this monitoring site is closer to the Clay Boswell plant than is the 

Hibbing property, it probably has higher pollutant concentrations 

than the Hibbing property. Nevertheless, the Region asserts that 

it is "not convinced that Hibbing qualifies for the use of regional monitoring data." The Region maintains that there are 

eleven SO sources within 65 kilometers of Hibbing, and thus it is 

a "multisource" area. The Region also contends that because the 

Clay Boswell plant has two very tall stacks, it is not expected 

to cause high ground-level concentrations, and thus the monitoring data may not reflect pollutant levels as high as thCse in 

the area closer to the Hibbing plant. 
P.23 

22 

In my view, the Region has not met its burden of showing 

that MPCA committed clear legal error in interpreting or applying 

example number one of the guidelines. The guidelines are very 

broad and leave much to the discretion of the permitting authority. Moreover, the examples provided in the guidelines are not 

intended to be an exhaustive listing of every conceivable situation in which the use of representative data is appropriate. ^ 

The Region is not able to point to any specific misinterpretation 

or misapplication of the guidelines. The mere existence of some 

other sources in the area and the Clay Boswell plant's tall 

stacks, without more, is not sufficient to show that MPCA's 

characterization of the area as non-multisource was clearly 

erroneous. 

Moreover, the Region has not shown that MPCA committed a 

factual error in evaluating the conditions in the vicinity of the 

^ The guidelines state "some examples are included to demonstrate overall intent." Ambient Monitoring Guidelines for Prevention of Significant Deterioration at 6 (July, 1980). The Region 

also argues that the guidelines require existing representative 

data to be collected in the three year period preceding the 

permit application. Hibbing used data from 1980-1983, which 

clearly was not within three years of the 1987 permit application. The guidelines merely state, however, that "generally" 

preconstruction data must have been collected within three years 

prior to the date of permit application. Here, it appears that 

it would be impossible to do this because MPCA had already 

permitted Hibbing to do a test burn of petroleum coke during 1985 

and 1986. See Citizens Against the Refinery's Effects, Inc. v. 

United State Environmental Protection Agency, 643 F.2d 173, 181 

(4th Cir. 1981)(PSD permit applicant may properly use one year of 

weather data in its air dispersion model instead of the five 

years recommended by EPA guidelines because the gtiidelines were 

only recommendations and only one year of data was locally 

obtainable and compatible with the model used). 
P.24 

23 

Hibbing site and monitoring site. Region V has not contested 

Hibbing's factual assertions that the Clay Boswell plant accounts 

for the majority of S02 emissions in the area or that the other 

plants in the area account for very small percentages (no source 

accounting for more than 3.6%) of overall emissions. In sum, far 

from demonstrating that MPCA committed clear error by allowing 

Hibbing to use the regional data, Region V has shown nothing more 

than it is "not convinced" that Hibbing's use of the regional 

monitoring data was appropriate. ^ Review is denied on this 

issue. 

Conclusion 

: The deficiencies in the BACT analysis leave two courses of 

action open at this juncture of the proceedings. One is to grant 

review of the permit and enter into the briefing phase contemplated by 40 CFR §124.19(c). However, the deficiencies in the 

record cannot be rectified through the submission of briefs, and 

any ensuing decision would likely conclude that the permit should 

be denied (because of the deficiencies) or that it should be 

remanded to the permit-issuing authority to allow the applicant 

to supplement the BACT analysis. Considerations of time favor 

remanding the permit in the first instance. Therefore, rather 

than receiving additional briefs on appeal, I am remanding the 

case to MPCA to: include in the permit an emission limitation for 

—

/ Moreover, MPCA has included in the permit a requirement that 

Hibbing design, install, and operate an ambient air monitoring 

system for S02. 
24 

SO- based on BACT, for the life of the permit; to provide a 

detailed economic analysis sufficient to justify rejection of the 

natural gas alternative; to identify the control technology that 

the S02 limitation is based on and demonstrate that such technology will enable Hibbing to meet the prescribed permit limitation; and to either set the BACT limitation for PM at 0.01 

gr/dscf or explain why it rejected this limitation. On remand, 

MPCA must also determine whether public access is effectively 

precluded from the four locations identified in this order, and 

if not, MPCA must either impose conditions in the permit that 

would require Hibbing to erect appropriate barriers at these 

locations or identify a smaller area of its property from which 

public access is effectively precluded. 

MPCA's determination on remand will be subject to "review 

under 40 CFR §124.19, ^ and appeal of its decision on remand 

^ The Region maintains that MPCA should be required to obtain 

the Region's concurrence on the permit before issuing the permit. 

I find no basis for this argument. Regarding the procedures for 

issuance of PSD permits, the delegation agreement between EPA and 

MPCA requires MPCA only to forward preliminary determinations to 

grant or deny a PSD permit to EPA for comment and to send copies 

of its final action on PSD permits to EPA. In contrast, In the 

Matter of Honolulu Resource Recovery Facility, PSD Appeal No. 86-

8 (June 22, 1987), the delegation agreement required EPA Region 

IX and the Hawaii Department of Health (HDOH) concurrence on BACT 

determinations on the first five permits issued by HDOH. 

Nevertheless, MPCA and the Region should communicate during 

the course of PSD permit proceedings and attempt to reach a 

consensus on matters of disagreement. Moreover, as previously 

noted, MPCA's action in issuing the permit is subject to review 

provisions of 40 CFR §124.19 because the permit is deemed to be 

an EPA-issued permit under EPA rules. 40 CFR 5124.41; 45 Fed. 

Reg. 33,413 (May 19, 1980). 
P.26 

25 

will be required to exhaust administrative remedies under section 

124.19(f)(1)(iii). 

So Ordered. 

Dated: JUL I 9 1589 

William K. Reiri^y 

Administrator 
P.27 

">.-»-.• 

CERTIFICATE OF SERVICE 

I hereby certify that copies of the foregoing Order on 

Petition for Review in the matter of Hibbing Taconite Company, 

PSD Appeal No. 87-3, were sent by First Class Mail to the following persons: 

David Kee 

Director, Air & Radiation 

Services Division 

U.S. EPA, Region V 

230 South Dearborn Street 

Chicago, IL 60604 

Sebastian Patti 

U.S. EPA, Region V 

230 South Dearborn Street 

Chicago, IL 60604 

Gerald L. Willet, Commissioner 

Minnesota Pollution Control Agency 

520 Lafayette Road 

St., Paul, MN 55155 

Thomas J. Kalitowski, Executive Director 

Minnesota Pollution Control Agency 

520 Lafayette Road. 

St. Paul, MN 55155 

Charles B. Hoffman, Esq. 

Pickands Mather & Co. 

200 W. Superior St. - Suite 811 

Duluth, MN 55803 

William Pedersen, Jr., Esq. 

Perkins Coie 

1110 Vermont Ave, NW 

Washington, DC 20005 

Dated: JJ_ 20 1989 \T&JLkAi\ I -'^uSiM^ 

Brenda H. Selden, Secretary 

to the Chief Judicia l Officer