Alaska Dept. of Environmental Conservation v. EPA

The Clean Air Act’s (CAA or Act) Prevention of Significant Deterioration (PSD) program, 42 U. S. C. §7477, was designed to ensure that the air quality in “attainment areas,” i.e., areas that are already “clean,” will not degrade, see §7470(1). The program bars construction of any major air pollutant emitting facility not equipped with “the best available control technology” (BACT). §7475(a)(4). The Act defines BACT as “an emission limitation based on the maximum degree of [pollutant] reduction … which the [state] permitting authority, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for [the] facility.” §7479(3). Two provisions of the Act vest enforcement authority in the Environmental Protection Agency (EPA). Section §113(a)(5) generally authorizes the EPA, when it finds that a State is not complying with a CAA “requirement” governing construction of a pollutant source, to pursue remedial action, including issuance of “an order prohibiting construction.” 42 U. S. C. §7413(a). Directed specifically to the PSD program, CAA §167 instructs EPA to “take such measures, including issuance of an order, … as necessary to prevent the construction” of a major pollutant emitting facility that does not conform to the “requirements” of the program. Because EPA has classified northwest Alaska, the region here at issue, as an attainment area for nitrogen dioxide, the PSD program applies to emissions of that pollutant in the region. No “major emitting facility,” including any source emitting more than 250 tons of nitrogen oxides per year, §7479(1), may be constructed or modified unless a PSD permit has been issued for the facility, §7475(a)(1). A PSD permit may not issue unless the proposed facility is subject to BACT for each CAA-regulated pollutant emitted from the facility. §7475(a)(4).

      In this case, “the permitting authority” under §7479(3) is Alaska, acting through petitioner, the Alaska Department of Environmental Conservation (ADEC). In 1988, Teck Cominco Alaska, Inc. (Cominco), obtained authorization to operate a zinc concentrate mine in northwest Alaska. The mine is a “major emitting facility” under §7475. Its initial PSD permit authorized five diesel electric generators, MG–1 through MG–5, subject to operating restrictions. Under a second PSD permit issued in 1994, Cominco added a sixth generator, MG–6. In 1996, Cominco initiated a project to expand zinc production by 40% and applied to ADEC for a PSD permit to allow, inter alia, increased electricity generation by MG–5. ADEC preliminarily proposed as BACT for MG–5 an emission control technology known as selective catalytic reduction (SCR), which reduces nitrogen oxide emissions by 90%. Amending its application, Cominco added a seventh generator, MG–17, and proposed, as BACT, an alternative control technology—Low NOx—that achieves a 30% reduction in nitrogen oxide pollutants. In May 1999, ADEC issued a first draft PSD permit and preliminary technical analysis report, concluding that Low NOx was BACT for MG–5 and MG–17. ADEC identified SCR as the most stringent technology then technically and economically feasible. ADEC nevertheless endorsed Cominco’s proffered emissions-offsetting alternative of fitting MG–17 and all six existing generators with Low NOx, rather than fitting MG–5 and MG–17 with SCR. This proposal, ADEC submitted, would achieve a maximum NOx reduction similar to the reduction SCR could achieve, and was logistically and economically less onerous for Cominco. In July 1999, EPA objected that ADEC had identified SCR as the best control technology, but failed to require it as BACT. ADEC responded with a second draft PSD permit and technical analysis report in September 1999, again finding Low NOx to be BACT for MG–17. ADEC’s second draft abandoned that agency’s May 1999 emissions-offsetting justification. ADEC further conceded that, lacking data from Cominco, it could make no judgment as to SCR’s impact on the mine’s operation, profitability, and competitiveness. It nonetheless concluded, contradicting its earlier finding that SCR was technically and economically feasible, that SCR imposed “a disproportionate cost” on the mine. In support of this conclusion, ADEC analogized the mine to a rural utility that would have to increase prices were it required to use SCR. Protesting that Cominco had not adequately demonstrated site-specific factors supporting the assertion of SCR’s economical infeasibility, EPA suggested that ADEC include an analysis of SCR’s adverse economic impacts on Cominco. Expressing confidentiality concerns, Cominco declined to submit financial data. In December 1999, ADEC issued a final permit and technical analysis report approving Low NOx as BACT for MG–17. Again conceding that it made no judgment as to SCR’s impact on the mine’s operation, profitability, and competitiveness, ADEC advanced, as cause for its decision, SCR’s adverse effect on the mine’s unique and continuing impact on the region’s economic diversity and the venture’s “world competitiveness.” ADEC reiterated its rural Alaska utility analogy, and compared SCR’s cost to the costs of other, less stringent, control technologies.

      EPA then issued three orders to ADEC under §§113(a)(5) and 167 of the Act. Those orders prohibited ADEC from issuing a PSD permit to Cominco without satisfactorily documenting why SCR was not BACT for MG–17. In addition, EPA prohibited Cominco from beginning construction or modification activities at the mine, with limited exceptions. Ruling on ADEC’s and Cominco’s challenges to these orders, the Ninth Circuit held that EPA had authority under §§113(a)(5) and 167 to determine the reasonableness or adequacy of the State’s justification for its BACT decision. The Court of Appeals emphasized that provision of a reasoned justification for a BACT determination by a permitting authority is undeniably a CAA “requirement.” EPA had properly exercised its discretion in issuing the three orders, the Ninth Circuit held, because (1) Cominco failed to demonstrate SCR’s economical infeasibility, and (2) ADEC failed to provide a reasoned justification for its elimination of SCR as a control option.