Opinion ID: 1041679
Heading Depth: 3
Heading Rank: 1

Heading: Disapproval of the State’s BART determination

Text: The State and Great River Energy contend that EPA’s disapproval of the State’s BART determination for the Coal Creek Station was arbitrary, capricious, and an abuse of discretion. They contend that because EPA is required to approve a SIP submission that meets all of the requirements of § 169A, see 42 U.S.C. § 7410(k)(3), and because the State’s SIP contained an analysis of each mandatory BART factor, EPA was without authority to disapprove the SIP, notwithstanding that the cost of compliance factor was based upon admittedly erroneous data. Under the State and Great River Energy’s interpretation of § 169A, EPA’s role in reviewing a state’s BART determination is limited to ensuring that at least minimal consideration is given to each factor and does not permit EPA to examine the rationality or reasonableness of the underlying decision. EPA contends that it possessed the authority to disapprove the State’s BART determination because the State had failed to consider, in any meaningful sense, the cost of compliance, which is a factor that a state must consider under the statute and the applicable guidelines. See 42 U.S.C. § 7491(g)(2); 40 C.F.R. § 51.308(3)(1)(ii)(A). EPA argues that although the BART analysis contained a discussion of the cost of compliance for SNCR, the discussion was based upon grossly erroneous data that skewed the results and prevented the State from properly considering this factor. Moreover, EPA notes that the State acknowledged in its SIP -12- that but for the cost of lost revenue for fly ash, the State would not have found the cost of compliance for SNCR excessive. Although the CAA grants states the primary role of determining the appropriate pollution controls within their borders, EPA is left with more than the ministerial task of routinely approving SIP submissions. The Tenth Circuit recently concluded that EPA acted within its power under § 169A in rejecting a BART determination on the basis that the state “did not properly take into consideration the costs of compliance when it relied on cost estimates that greatly overestimated the costs of dry and wet scrubbing to conclude these controls were not cost effective.” Oklahoma v. EPA, 2013 WL 3766986, at , -6 (internal quotation marks omitted). The court held that because the state’s cost of compliance estimate was based upon fundamental methodological flaws, EPA had a reasonable basis for rejecting the state’s BART determination for failure to comply with the requisite BART guidelines. Id. at . Moreover, in Alaska Department of Environmental Conservation v. EPA, 540 U.S. 461 (2004), the Supreme Court rejected an argument similar to that raised here regarding EPA’s oversight role in the BACT determination process under § 167 of the CAA. The Court held that EPA was not limited simply to verifying that a BACT determination was actually made, concluding instead that EPA could examine the substance of the BACT determination to ensure that it was one that was “reasonably moored to the Act’s provisions” and was based on “reasoned analysis.” See id. at 485, 490. Although the Court’s analysis was one under § 167, we nonetheless find it persuasive in the context of § 169A. We see little difference between the rejection of a factor containing methodological flaws that led to an overestimated cost of compliance, as occurred in Oklahoma v. EPA, and the rejection of a factor containing data flaws that led to an overestimated cost of compliance, as occurred in this case. In both cases, the flaw in the analysis prevented the state from conducting a meaningful consideration of the factor, as required by the BART guidelines. As did the Supreme Court in its § 167 -13- analysis in Alaska Department of Environmental Conservation, we reject the argument that EPA is required under § 169A to approve a BART determination that is based upon an analysis that is neither reasoned nor moored to the CAA’s provisions. At oral argument, the State all but conceded EPA’s ability to review the substantive content of the BART determination when it acknowledged that EPA would have the authority to disapprove a SIP if the state plainly proceeded without a sufficient factual basis. Accordingly, we conclude that EPA’s disapproval of the State’s BART determination for failing to consider the cost of compliance as required under the statute and the BART guidelines was neither arbitrary, capricious, nor an abuse of discretion.2 The State argues in the alternative that EPA’s decision was arbitrary and capricious because it prematurely rejected the State’s SIP based upon the data error in the cost of compliance factor before the State could supplement its SIP and address the data error. The State contends that it notified EPA that it would submit a supplemental BART determination for the Coal Creek Station once it received the projected final revised cost estimates from Great River Energy. The State argues further that EPA prematurely disapproved the State’s original BART determination in its regional haze SIP, knowing that a supplemental BART determination was forthcoming. 2 Nor do we find convincing Great River Energy’s argument that under Friends of the Boundary Waters Wilderness v. Dombeck, 164 F.3d 1115, 1129 (8th Cir. 1999), EPA was first required to prove that the data error was material to the State’s determination before rejecting its BART determination all together. Friends of the Boundary Waters Wilderness is inapplicable because the data error discussed and addressed in that case was one contained in a factor voluntarily considered by the agency under a completely different regulatory act. In this case, the data error was contained in a factor that the State was obligated to properly consider under the CAA; thus, EPA need only demonstrate that the State failed to consider this factor as required by the CAA and accompanying regulations. -14- Under 42 U.S.C. § 7410(k)(2), EPA is required to take action on a SIP submission within twelve months of the date that the submission is deemed complete. EPA may approve the submission as a whole or in part, but whatever action it takes must be done within twelve months of the completed SIP submission. See 42 U.S.C. § 7410(k)(2)-(3). The State’s regional haze SIP submission was deemed complete on April 30, 2011, leaving EPA until April 30, 2012, to take action thereon. Although Great River Energy submitted initial information regarding lost fly ash revenue on June 16, 2011, as of April 2012, it had yet to submit its final revised calculations regarding the projected costs associated with lost fly ash sales. EPA took final action on the State’s SIP addressing the BART determination for the Coal Creek Station on April 6, 2012. Great River Energy did not submit its final revised calculations regarding the projected cost associated with lost fly ash sales until June 2012. The State has identified no provision of the CAA that obligated EPA to wait for its supplemental BART determination before disapproving its original Coal Creek Station BART determination. Nor has the State identified any provision that tolled the twelve-month period within which EPA was required to take final action. The State has thus failed to demonstrate that EPA’s disapproval of the State’s BART determination for the Coal Creek Station was arbitrary, capricious, or an abuse of discretion.