IN RE MAUI ELECTRIC COMPANY PSD Appeal No. 98-2 ORDER DENYING REVIEW Decided September 10, 1998 Syllabus Before the Board is a petition seeking review of certain conditions of a prevention of significant deterioration (“PSD”) permit, Permit No. 0067-01-C (the “Permit”), issued by the State of Hawaii's Department of Health (“DOH”). The Permit was issued to Maui Electric Company, Ltd. (“MECO”). The petitioner is Waimana Enterprises, Inc. (“Waimana”). The Permit would authorize MECO to expand its Maalaea Generating Station located in Maalaea, Maui (the "Station"). The proposed expansion consists of constructing and operating two 20 megawatt ("MW") combustion turbine generators, identified as M17 and M19 ("Units M17 and M19"). MECO had initially applied for a permit to expand the Station to include three new generators, including Units M17 and M19 and a steam powered generator, to be operated in so-called combined cycle mode. However, MECO subsequently amended its application, requesting that the construction and permitting be considered in two phases, with Phase 1 being the construction and operation of Units M17 and M19 in "simple cycle" mode. The Permit, as issued by DOH, would authorize operation of Units M1 and M19 in simple cycle mode and specifies that fuel oil no. 2 shall be Best Available Control Technology (“BACT”) for control of sulfur dioxide (“SO,”) and water injection shall be BACT for control of nitrogen oxides (“NO,”). Waimana argues that the Permit should require naphtha fuel as BACT for control of SO, and selective catalytic reduction (“SCR”) as BACT for control of NO. Both DOH and U.S. EPA Region IX filed responses in opposition to Waimana's Petition. Held: (1) Review of DOH's SO, BACT determination is denied because (a) Waimana's arguments based on an alleged inconsistency between this Permit and a PSD permit previously issued to Kawaihae Cogeneration Partners (“KCP”) and Waimana's arguments based on an alleged inconsistency with the Region's prior statements regarding the availability of naphtha were not raised during the public comment period and, therefore, will not be considered as a basis for review of DOH's SO, BACT decision, and (b) Waimana's argument based on DOH's own statements regarding the availability of naphtha fail to show any clear error in DOH's responses to comments. (2) Review of DOH's BACT determination for control of NO is denied because Waimana's arguments fail to show clear error in DOH's determination that SCR is not demonstrated for use in single cycle operation of Units M17 and M19, and Waimana's arguments fail to show that it was clear error for DOH to require re-evaluation of BACT upon conversion to combined cycle operation in Phase 2 of MECO's project, rather than specifying now that SCR will be required as BACT upon conversion. Before Environmental Appeals Judges Ronald L. McCallum, Edward E. Reich and Kathie A. Stein. Opinion of the Board by Judge Stein: Before the Board is a petition seeking review of certain conditions of a prevention of significant deterioration ("PSD") permit, Permit No. 0067-01-C (the “Permit”), issued by the State of Hawaii's Department of Health ("DOH").' The Permit was issued to Maui Electric Company, Ltd. ("MECO"). The petitioner is Waimana Enterprises, Inc. (“Waimana").2 Waimana contends that the Permit should be reviewed by the Board because certain of the Permit's conditions are clearly erroneous and/or involve an improper exercise of discretion. I. BACKGROUND The Permit was issued by DOH on January 6, 1998, and would authorize MECO to expand its Maalaea Generating Station located in Maalaea, Maui (the “Station”). The proposed expansion consists of constructing and operating two 20 megawatt ("MW") simple cycle combustion turbine generators, identified as M17 and M19 (the "Project" or "Units M17 and M19"). The Station currently has five 2.5 MW diesel engine generators, six 5.6 MW diesel generators, four 12.5 MW diesel generators, two 20 MW combustion turbines with a heat recovery steam generator, one 18 MW steam turbine generator, and one 600 kilowatt (“KW”) emergency black start diesel engine unit. DOH Response to Petition for Review ("DOH Response") at 1. 'DOH administers the PSD program in Hawaii pursuant to a delegation of authority from U.S. EPA Region IX (the “Region”). Because DOH acts as EPA's delegate in implementing the federal PSD program within the State of Hawaii, the Permit is considered an EPA-issued permit for purposes of federal law, and is subject to review by the Board pursuant to 40 C.F.R. § 124.19. In re Kawaihae Cogeneration Project, 7 E.A.D. 107, 109 n. 1 (EAB 1997). In re Commonwealth Chesapeake Corp., 6 E.A.D. 764, 765 n.1 (EAB 1997); In re West Suburban Recycling and Energy Center, L.P., 6 E.A.D. 692, 695 n.4 (EAB 1996) ("For purposes of Part 124, a delegate State stands in the shoes of the Regional Administrator [and must] follow the procedural requirements of Part 124. A permit issued by a delegate is still an 'EPA-issued permit;' .") (quoting 45 Fed. Reg. 33,413 (May 19, 1980)). 2 The original petition for review was filed under the name of Kawaihae Cogeneration Partners. After DOH filed a motion to dismiss the petition and after full briefing by all parties, the Board entered an order directing counsel for Kawaihae Cogeneration Partners and Waimana to amend the petition to name Waimana as the petitioner. In re Maui Electric Co., PSD Appeal No. 98-2 (EAB, Apr. 3, 1998) (Order on Motion to Dismiss). That amendment was filed on April 10, 1998. The public was given notice and an opportunity to comment on the draft permit (the "Draft Permit”) between May 16, 1997, and June 21, 1997. DOH Response at 2. In addition, a public hearing was held on June 19, 1997. Id. Waimana submitted comments regarding the Draft Permit to DOH during the public comment period. See Letter from Rodney Kaulupali to Dr. Lawrence Miike of DOH (June 20, 1997) (the “Comment Letter”). DOH prepared a summary of the comments received during the comment period and provided written responses to the comments. See Summary of Comments and Department of Health Responses Draft Permit for Maui Electric Company, Ltd. (Oct. 22, 1997) (“Response to Comments"). DOH made four changes to the Draft Permit in response to comments received during the public comment period, and it made one "in-house" change unrelated to the public comments and testimony received. DOH Response at 2. In October 1997, DOH submitted the Permit to U.S. EPA Region IX, and the Region determined that the permit was "eligible for issuance" in December 1997.* 3 In January 1998, DOH issued its decision to grant the Permit and on February 9, 1998, the petition for review of the Permit was filed. See Petition for Review of PSD/CSP Permit (the "Petition”). In the Petition as amended, Waimana objects to the Permit on the grounds that, according to Waimana, the conditions of the Permit specifying the best available control technology ("BACT") for sulfur dioxide ("SO,") and nitrogen oxides (“NO,”) are less stringent than the conditions specified in a PSD permit issued to Kawaihae Cogeneration Partners (“KCP")," and that such conditions "are clearly erroneous and result from an improper exercise of discretion on an important policy." Petition at 2. Waimana objects that the * Pursuant to the Region's delegation agreement with Hawaii, the Region retains the authority to concur on DOH's determinations of what constitutes “best available control technology" for the control of regulated pollutants in PSD permits issued by DOH, and to concur on DOH's evaluation of air impact modeling analyses. Amended Delegation Agreement, 54 Fed. Reg. 23,978 (June 5, 1989). The Certified Index to the Administrative Record (“Certified Index") prepared by DOH states that the Region confirmed that the Region's review period under the delegation agreement had expired and stated that “EPA was unable to review [the] permit, however, [the] permit is eligible for issuance." Certified Index at 7. In its response to the Petition, the Region, however, states that it "has reviewed DOH's response to the petition for review and continues to concur with the permit issued by DOH to Maui Electric Company." EPA Region 9's Response to the Petition for Review at 1. *For a description of the amendment, see supra note 2. *KCP is a limited partnership, comprised of four partners. Two of Waimana's wholly owned subsidiaries are partners in KCP. Order on Motion to Dismiss at 6. Permit should require burning of naphtha fuel as BACT for control of SO, emissions and should require use of selective catalytic reduction (“SCR") as BACT for control of NOx emissions. Both DOH and the Region have filed responses in opposition to Waimana's petition for review of the Permit. DOH argues that Waimana's petition must be denied because: "(1) the petition fail[s] to establish that [DOH]'s decision to grant the permit was based on clear error of fact or law; (2) the petition fail[s] to establish the existence of an important policy matter or exercise of discretion warranting review by this Board; or (3) the issues raised in the petition were not raised during the public comment period, and therefore were not preserved for review." DOH's Response at 4. The Region filed a response to supplement the DOH's Response "and to clarify Region 9's position with respect to certain issues raised on appeal." EPA Region 9's Response to the Petition for Review (the "Region's Response") at 1. For the reasons stated below, we conclude that Waimana has failed to sustain its burden of showing that review by this Board of the Permit's BACT conditions for SO, and NO、 is warranted. II. DISCUSSION A. Statutory, Regulatory and EPA Guidance Background and Standard of Review 1. Statutory and Regulatory Requirements The Clean Air Act (“CAA”) established the PSD program to regulate air pollution in certain areas, known as “attainment” areas, where air quality meets or is cleaner than the national ambient air quality standards (“NAAQS”), as well as areas that cannot be classified as “attainment” or "non-attainment" ("unclassifiable" areas). CAA $ 160-169, 42 U.S.C. $$ 7470-7479; see In re EcoEléctrica, L.P., 7 E.A.D. 56, 59 (EAB 1997); In re Commonwealth Chesapeake Corp., 6 E.A.D. 764, 766-767 (EAB, Feb. 19, 1997). The NAAQS are "maximum concentration 'ceilings' measured in terms of the total concentration of a pollutant in the atmosphere.” U.S. EPA, New Source Review Workshop Manual (Draft, Oct. 1990) (“Draft Manual") at C.3. NAAQS have been set for six criteria pollutants: SO2, particulate matter, NO, carbon monoxide, ozone, and lead. See 40 C.F.R. §§ 50.4–50.12. The pollutants at issue in this case are SO, and NOx. The CAA and the PSD regulations require, among other things, that new major stationary sources and major modifications of such sources employ the "best available control technology," or BACT, to minimize emissions of regulated pollutants. CAA § 165(a)(4), 42 U.S.C. § 7475(a)(4); 40 C.F.R. § 52.21(j)(2). The PSD regulations define BACT in part as follows: [BACT] means an emissions limitation (including a visible 40 C.F.R. § 52.21(b)(12). 2. EPA Guidance Regarding BACT EPA's Office of Air Quality Planning and Standards issued the New Source Review Workshop Manual (Draft, Oct. 1990), also known as the Draft Manual, as a guidance document for use in conjunction with new source review workshops and training, and to guide permitting officials with respect to PSD requirements and policy. Although it is not accorded the same weight as a binding Agency regulation, the Draft Manual has been looked to by this Board as a statement of the Agency's thinking on certain PSD issues. See, e.g., EcoEléctrica, 7 E.A.D. at 59 n.3; In re Masonite Corp., 5 E.A.D. 551, 558 n.8 (EAB 1994). Under the guidance of the Draft Manual, permit issuers use a "topdown" method for determining BACT: The top-down process provides that all available control |