Draft Air Permit for Refinery, Power Plant In South Dakota Includes Greenhouse Limits

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The South Dakota Department of Environment and Natural Resources issued a draft air permit Feb. 17 for a petroleum refinery and power plant that includes greenhouse gas emissions limits based on energy efficiency, as has been recommended by the Environmental Protection Agency.

The draft permit, for the Hyperion Energy Center in Union County, is the second air permit issued with greenhouse gas emissions limits since Jan. 2, when air permits were first required to include the limits. The draft permit is subject to a 30-day comment period.

The first permit was issued in Louisiana Jan. 27 (27 DEN A-11, 2/9/11)

The Hyperion permit follows the issuance of a permit Feb. 11 by the Michigan Department of Natural Resources and Environment for a coal-fired power plant in Holland, Mich., without greenhouse gas emissions limits.

According to Brad Wurfel, spokesman for Michigan DNRE, a state court directed the department to issue the permit backdated to August. Wurfel said that in August, the department under a previous administration denied the permit.

Because of the court order, the permit was not required to include greenhouse gas emissions limits, Wurfel said.

The permits were issued under prevention of significant deterioration (PSD) provisions of the Clean Air Act. PSD requires new and modified sources to control and get permits for emissions of regulated air pollutants. Emissions limits are set using best available control technology (BACT), determined individually for each facility. Under EPA rules, permits issued after Jan. 2 are required to have greenhouse gas emissions limits.

The Hyperion Energy Center would use waste gas produced in the refining process to power the processes at the plant, according to Brian Gustafson, administrator of the air quality program at South Dakota DENR. The power plant would use petroleum coke derived from the refining process, and coal as a backup, Gustafson told BNA Feb. 17.

Carbon Sequestration Not in Hyperion Permit

The power plant would use integrated gasification combined cycle (IGCC) technology, in which the coke or coal would be gasified.

One of the features of IGCC technology is that it produces carbon dioxide in a concentrated emissions stream that is relatively easy to separate and sequester in the ground to prevent global warming.

Gustafson said Hyperion analyzed carbon capture and storage as BACT as part of its permit application process but demonstrated that it would be impractical. Gustafson said Hyperion identified a geologic formation in Kansas that may be suitable for storing the carbon dioxide. However, he said, there is no way to get the carbon dioxide to the Kansas formation because no pipelines exist to transport it.

But Andrea Issod, attorney at the Sierra Club, told BNA Feb. 17 that the permit should include carbon capture and storage. “Hyperion' s CO2 emissions would be massive at 17 million tons/year,” Issod said in an e-mail. “Hyperion originally claimed the project would include capture and storage, and it admitted it is technically feasible in its GHG analysis.”

Holland Permit Criticized

Joanne Spalding, senior attorney at the Sierra Club, told BNA Feb. 17 the permit for the Holland, Mich., plant, issued to the Holland Board of Public Works, should have included greenhouse gas emissions limits.

“The requirements in effect at the time the permit is issued must be applied to the plant, so unless there's a legally binding and unappealable court order that unequivocally establishes the permit issue date before January 2, 2011, they need to comply with greenhouse gas permitting requirements,” Spalding said in an e-mail.

Constantine Blathras, spokesman for EPA Region 5, told BNA Feb. 15 that the permit issuance date for the Holland plant is “a state issue.” The court overturned a permit denial by the governor, Blathras said. Holland went through a public comment period for the permit and “did whatever they were supposed to do,” he said.

'Grandfather' Does Not Apply

EPA issued a declaration Jan. 31 in a court case involving a permit for another proposed power plant, saying that because the permit application was submitted well before the greenhouse gas permitting requirements, and other pollution requirements, became effective, the plant would be “grandfathered” and not have to comply with them (Avenal Power Center LLC v. EPA, D.D.C., No. 10-383, affidavit filed 1/31/11; 23 DEN A-14, 2/3/11).

The Holland permit application was first submitted in 2007, well before the July 15, 2009, date set in the EPA declaration for permit applications to be exempt from new requirements, such as greenhouse gas emissions limits.

The agency said Feb. 17 in a statement, “EPA has issued a statement of intent to adopt a policy to grandfather certain sources whose permit applications were complete or under review prior to July 15, 2009. The details of that policy are under development and it is premature to discuss how it would be applied in this example.”

Spalding told BNA the EPA declaration has no legal effect on the Holland permit.

“It's a declaration in litigation in another case that says EPA plans to undertake regulatory action,” Spalding said. “EPA hasn't done that, and the legal principle that applies to the Holland plant is that the permittee is subject to the requirements in effect at the time the permit is issued.”

Because the Holland permit was issued Feb. 11, the greenhouse gas requirements, which took effect Jan. 2, would apply under Spalding's formulation.

Gustafson said he was not sure if the EPA declaration applied to the Hyperion Energy Center, and that it was not considered in the permitting process.

By Steven D. Cook  

The draft permit for the Hyperion Energy Center is available at http://denr.sd.gov/Hyperion/Air/20110211dp.pdf.

More documentation on the Hyperion permit is available at http://denr.sd.gov/hyperionaqrfe.aspx.

The permit for the Holland, Mich., power plant is available at http://www.deq.state.mi.us/aps/downloads/permits/PubNotice/25-07/25-07.pdf.

More documentation is available at http://www.deq.state.mi.us/aps/cwerp.shtml.