Appalachian Voices, Chesapeake Climate Action Network, Sierra Club, and Southern Appalachian Mountain Stewards (collectively "the Coalition") appeal a circuit court decision affirming the State Air Pollution Control Board's issuance of a Prevention of Significant Deterioration (PSD) permit to Virginia Electric and Power Company (Dominion) for the construction of a coal-fired electric generating plant in Wise County, Virginia. The Coalition argues that the circuit court erred by determining that carbon dioxide (CO2) is not a pollutant regulated by the Board or under the federal Clean Air Act (CAA), and by allowing the Board to use coarse particulate matter (PM10) as a surrogate for fine particulate matter (PM2.5) without demonstrating the reasonableness of this approach. The Court of Appeals of Virginia affirms the circuit court's decision.
The CAA mandates that major air pollution sources in attainment areas, like Dominion's facility, undergo New Source Review (NSR) and obtain a PSD permit before construction. This permit sets emissions limitations to ensure compliance with National Ambient Air Quality Standards (NAAQS) and to maintain local air quality. Virginia's Department of Environmental Quality (DEQ) and the Board are authorized to issue these permits under an EPA-approved State Implementation Plan (SIP). The DEQ is responsible for conducting an air quality analysis and evaluating control technology as part of the permitting process, which includes limits based on the best available control technology (BACT). Dominion applied for the PSD permit in July 2006, and after public comments and reviews, the final permit was issued.
On June 25, 2008, the Board approved a PSD permit, which was issued shortly after. The Coalition appealed this decision in August 2008, claiming the permit lacked necessary CO2 emission limits and that the Board incorrectly avoided a BACT analysis for CO2, asserting there was no legal requirement to regulate CO2 at that time. The circuit court sided with DEQ and Dominion, concluding that CO2 was not regulated under state or federal law, thus no BACT analysis was necessary.
Additionally, the Coalition challenged the Board's reliance on outdated EPA guidance for using PM10 as a surrogate for PM2.5, arguing that the PM2.5 limit was unlawful without a proper BACT analysis. DEQ and Dominion countered that they adhered to EPA procedures and demonstrated compliance with PM2.5 standards through modeling. The permit included a review clause for PM2.5 limits upon the release of new EPA guidance and required monitoring of PM2.5 emissions post-commercial startup. The circuit court found substantial evidence supporting the Board's PM2.5 control measures and affirmed the Board's decision on September 2, 2009.
The Coalition subsequently appealed, with the standard of review governed by Virginia law, which requires the Coalition to prove an error of law. Legal questions are reviewed de novo, with minimal deference to agency decisions unless they pertain to areas of agency expertise. The review considers the agency's role and relevant public policies, with the degree of deference varying based on the nature of the issue.
The General Assembly has empowered the Board and the Department of Environmental Quality (DEQ) to issue and enforce permits for major air pollution sources in Virginia, aiming to safeguard the environment. The matter of carbon dioxide (CO2) emissions is identified as a legal issue within the Board's expertise, particularly concerning Prevention of Significant Deterioration (PSD) permits. Under the Clean Air Act (CAA), permitting agencies must conduct a Best Available Control Technology (BACT) analysis for regulated pollutants; however, "subject to regulation" is not defined in the CAA. The Environmental Protection Agency (EPA) has only implemented monitoring and reporting for CO2 since 1993, without establishing federal or state emission standards.
The Coalition argues that CO2 should be considered a regulated pollutant under the CAA due to the EPA's monitoring requirements, insisting that the PSD permit should have included CO2 emission limits and that the Board erred by not conducting a BACT analysis for CO2. They also contend that CO2 offset provisions in the permit indicate regulation by the Board. Conversely, the DEQ maintains that CO2 is not a regulated pollutant in Virginia, lacking ambient air quality standards or criteria for evaluating its emissions, which hampers their ability to impose standards or develop necessary analyses.
The Coalition cites *Massachusetts v. EPA* as support for their position, noting that the Supreme Court recognized the EPA’s authority to regulate greenhouse gases as air pollutants. However, the Court did not determine that CO2 was currently subject to regulation under the CAA, nor did it address whether CO2 is a regulated pollutant in the context of stationary sources. Additionally, the Coalition references *In re Deseret Power Electric Cooperative*, where the EPA’s Environmental Appeals Board acknowledged ambiguity in the term "subject to regulation," allowing discretion for the permitting agency in interpretation. The Board in *Deseret* did not conclude that the CAA mandates a CO2 BACT limit but remanded the case for further consideration on the matter, indicating that the reasons for not imposing such limits were inadequately supported.
Deseret established that CO2 may be regulated, but left the decision regarding regulation to the appropriate authorities. At the time the VCHEC PSD permit was issued, CO2 was only subject to monitoring and reporting under the Clean Air Act (CAA). The Coalition argues that these requirements constitute regulation, but both the Deseret ruling and the EPA disagree. On December 18, 2008, the EPA clarified that "any pollutant that otherwise is subject to regulation" excludes those only requiring monitoring or reporting, including pollutants subject to actual emission control regulations. An additional memorandum issued on December 31, 2008, further defined "regulated NSR pollutant" to exclude pollutants that are not regulated under the CAA. A Georgia Court of Appeals case similarly found that CO2 is not regulated under the CAA, supporting the notion that CO2 is not a "regulated NSR pollutant," thus not requiring Best Available Control Technology (BACT). The EPA's interpretation aligns with its longstanding position on CO2. The PSD permit included voluntary CO2 mitigation measures from Dominion, which involves repowering a coal-fired plant with natural gas and using biomass as fuel. However, the permit does not explicitly regulate CO2, quantify expected reductions, or set emission limits for CO2.
DEQ and the Board assert there is no regulatory framework under the Clean Air Act (CAA) for carbon dioxide (CO2), leading to the conclusion that CO2 is not a "regulated NSR pollutant" and that no Best Available Control Technology (BACT) analysis was needed for the VCHEC PSD permit. This position was reinforced by Vice Chairman Vivian Thompson’s statement during a Board meeting, emphasizing that while CO2 is considered a pollutant under Virginia law, it is not subject to regulation under the CAA. The circuit court's decision on this matter was upheld.
The Coalition challenges the circuit court's approval of the Board’s use of PM10 as a surrogate for PM2.5 regulation, arguing that a surrogacy analysis was necessary to ensure this approach was reasonable, as established in National Lime Ass’n v. EPA. The circuit court applied a substantial evidence standard, concluding that the Board's decision was well-supported by the record. This standard allows agency factual findings to stand if substantial evidence exists. The court recognized the agency's expertise and discretion, affirming the Board's methodology for controlling PM2.5 emissions in the PSD permit despite the Coalition's claims of reliance on outdated guidance and the need for compliance with a three-part test for surrogate pollutants.
Substantial evidence supported the Board's decision to utilize PM10 as a surrogate for PM2.5 when establishing the PM2.5 permit limit, in accordance with the law and policy at the time of the permit approval. An October 23, 1997, EPA memorandum highlighted significant technical challenges in PM2.5 monitoring, which justified the use of PM10 as a surrogate. This policy was reaffirmed in a subsequent EPA memorandum in 2005 and adopted by the DEQ in 2006, permitting PM10 as a surrogate for PM2.5 until a better methodology or revised regulations were established.
The Coalition's assertion that a three-part surrogate test from National Lime is applicable was found to be irrelevant, as that case pertained to hazardous air pollutants under MACT permits, not PSD permits as in the current matter. The Board and DEQ evaluated the appropriateness of using PM10 as a surrogate, incorporating a condition in the PSD permit to review PM2.5 limits upon the release of final implementation guidance. Additionally, VCHEC was required to conduct an ambient air quality analysis of PM2.5 emissions under the new guidance.
During the permitting process, a modeling study by Dominion demonstrated compliance with the PM2.5 NAAQS. Although a final EPA regulation issued a month before the PSD permit took effect stated that PM10 should no longer be used as a surrogate, it allowed states with approved SIPs, including Virginia, to continue this practice for a three-year transition. Consequently, the DEQ and Board's decision to use PM10 as a surrogate for PM2.5 adhered to the applicable federal and state regulations at the time of the permit's issuance. The circuit court's decision was affirmed based on the presumption of official regularity and the agency's expertise, despite subsequent changes in EPA guidance not affecting the original permit decision.
