Dow Chemical Co. Louisiana Operations Complex Cellulose & Light Hydrocarbons Plants, Part 70 Air Permit Major Modifications & Emission v. Reduction Credits
Docket: No. 2003 CA 2278
Court: Louisiana Court of Appeal; September 17, 2004; Louisiana; State Appellate Court
Judicial review was sought by the Louisiana Environmental Action Network (LEAN) and Albertha Hasten regarding two final permit modifications granted to Dow Chemical’s Louisiana Operations Complex and a VOC Emission Reduction Credit application approved by the Louisiana Department of Environmental Quality (DEQ). The Nineteenth Judicial District Court upheld the DEQ's decisions on June 24, 2003, which has now been affirmed.
Dow Chemical applied on March 30, 2001, for a permit modification to increase VOC emissions at the Light Hydrocarbons III Plant, proposing to offset these increases by utilizing emission reduction credits from the closure of a wastewater pond (Pond EC-2) in 1992. The closure led to a reduction in VOC emissions due to the replacement of the pond with a floating roof tank for wastewater treatment. Subsequently, on February 8, 2002, Dow sought a major modification for Cellulose Plant Air Permit No. 2227-V1, which involved a project resulting in a net increase of VOC emissions, triggering a nonattainment new source review.
Dow’s applications relied on previously approved VOC Emission Reduction Credits related to the Pond EC-2 closure. Both applications aimed to adjust existing permit limits based on updated emission estimation factors and to authorize facility modifications in light of the expected emission increases. Following public hearings and a comment period, the DEQ approved the applications on October 29, 2002, issuing new permits and granting emission reduction credits. A detailed 'Basis for Decision' and a 'Public Comment Response Summary' were provided to interested parties, including LEAN, outlining the DEQ’s rationale consistent with Louisiana Supreme Court mandates.
Petitioners sought judicial review of two final permit decisions by the DEQ and its approval of Dow's VOC Emission Reduction Credit application through a Petition for Review in the Nineteenth Judicial District Court, as permitted by LSA-R.S. 30:2050.21. On August 7, 2003, the district court upheld the DEQ's actions, affirming the issuance of the Light Hydrocarbons III air permit modification and the Emission Reduction Credit Certificate for VOC-10. However, it remanded the DEQ to revise the provisions of the Cellulose Plant permit modification related to the Modified Salt Project and associated VOC emissions, while affirming the remaining aspects of that permit. LEAN subsequently appealed the district court's judgment.
Under Louisiana law, the DEQ serves as the environmental trustee, with a constitutional obligation to minimize adverse environmental impacts consistent with public welfare, interpreted through a 'rule of reasonableness.' The DEQ must provide basic and ultimate findings supported by evidence, ensuring a rational connection between findings and decisions. Judicial review under LSA-R.S. 30:2050.21 follows Administrative Procedure Act standards, is conducted without a jury, and is limited to the existing record, with the district court acting as an appellate body in such cases.
The Nineteenth Judicial District Court holds exclusive jurisdiction to review final actions by the Department of Environmental Quality (DEQ), including permit actions and enforcement rulings. Aggrieved parties can appeal decisions made by this court. A reviewing court may affirm, reverse, or remand DEQ decisions based on various grounds, including violations of law or arbitrary actions. Amendments to LSA-R.S. 49:964(G) have established that trial courts act as fact finders, weighing evidence to reach conclusions. An appellate court will not overturn DEQ decisions unless they are shown to be arbitrary in terms of balancing environmental costs and benefits or lack proper procedural consideration.
LEAN raises three assignments of error against the DEQ regarding the calculation of emission reduction credits and the approval of emissions increases for Dow. LEAN argues that the DEQ improperly credited reductions that were already legally required and failed to provide a factual basis for increasing allowable VOC emissions without necessary offsets. The essence of LEAN's claims revolves around the assertion that the DEQ’s decisions were based on erroneous calculations and insufficient justifications, particularly concerning air quality standards in a non-compliant community.
LEAN asserts that emission reductions must meet criteria of being surplus, permanent, quantifiable, and enforceable to qualify as credits, as defined in LAC 33:III.607(F)(1). Surplus emission credits, defined in LAC 33:111.605, are those voluntarily created and not mandated by law or regulation. LEAN argues that emission reductions required by state regulations cannot be used to satisfy offset requirements, and that reductions must be surplus at the time of use for permit modifications. LEAN claims Dow improperly relied on emission reductions from the 1992 closure of wastewater Pond EC-2, arguing that no surplus credits remain from this closure.
LEAN cites LAC 33:III.2153(B), which mandates VOC emission control for components with affected wastewater streams, and contends that Dow misapplied LAC 33:III.2153(G)(4), which provides exemptions under specific conditions. LEAN argues that Dow should have either controlled all components containing affected VOC wastewater or obtained an exemption by achieving a 90% reduction in overall VOC emissions from the facility. Dow achieved this reduction by closing Pond EC-2 and replacing it with a closed tank, but LEAN claims this resulted in overdrawn emission credits.
Conversely, Dow does not dispute the factual basis of LEAN’s claims but argues that LEAN employs incorrect figures in calculating reduction credits. Dow acknowledges applying for and receiving an exemption under LAC 33:III.2153(G)(4) for a 90% reduction in wastewater emissions. The central issue is whether Dow was mandated to achieve this reduction or if it was a voluntary overcontrol. Dow asserts that its actions in 1992 represented a voluntary overcontrol, supported by LAC 33:III.2153, and emphasizes that the requirement pertains only to affected wastewater streams, detailing how mixed streams like those in Pond EC-2 must meet specific reduction criteria.
Dow argues that the only wastewater stream impacting Pond EC-2 was the Cellulose stream, and thus, any required reduction in VOC emissions should apply solely to this stream, not to all emissions from Pond EC-2. Dow asserts that LAC 33:III.2153(B) mandates a minimum 90% reduction only for emissions from the affected stream, countering LEAN’s claim of a blanket reduction for all emissions. Dow emphasizes that LEAN's interpretation could deter comprehensive wastewater treatment efforts, advocating instead for focused treatment of affected streams.
Furthermore, Dow contends that LAC 33:III.2153(G)(4) promotes "over compliance" by incentivizing reductions beyond the baseline requirements, while asserting there are no obligations for companies to adopt these exemption standards. Dow maintains that its choice to exceed regulatory minimums should not be penalized.
The DEQ, in its appeal brief, states that the Dow facility is situated in nonattainment areas for ozone standards, and that proposed modifications would lead to significant net increases in VOC emissions. It asserts that it properly reviewed the permit applications in line with LAC 33:111.504, determining the validity of emission reduction credits related to the closure of Pond EC-2. The DEQ agrees with Dow’s interpretation that LAC 33:111.2153 applies only to affected VOC wastewater and supports Dow's view that the closure of Pond EC-2 constituted an "over control" of VOC emissions. Additionally, the DEQ clarifies that permit modifications based on more accurate emission potential assessments do not necessitate offsets, differentiating between general permit modifications and specific facility changes.
The DEQ asserts that offsets are only necessary for a 'major modification' of a facility, referencing LAC 33:111.504. The permits in question authorize both a major modification and required offsets for increased emissions per the Nonattainment New Source Review Program. However, the DEQ argues that the permits also raised emission limits for parts of the facility unaffected by the modification, and since these increases are not tied to the proposed modifications, offsets are not mandated. The DEQ highlights that prior to this, Dow had estimated maximum potential emissions based on the facility's capacity and sought to revise its permitted limits to reflect improved emissions estimations. LAC 33:111.504 applies to new emissions resulting from the construction of a new major source or changes in existing operations that lead to a net emissions increase above a specific threshold.
On September 11, 2002, the DEQ submitted the proposed Cellulose permit and corresponding emission reduction credit (ERC) information to the EPA, which had 45 days to review and object. The EPA did not object to the DEQ’s evaluation of the ERCs. The DEQ contends that the court should defer to its well-reasoned and documented determinations. The district court, upon review, found the DEQ's permit decision was not arbitrary, noting the DEQ had conducted necessary fact-finding and cost-benefit analysis. The court also stated that the withdrawal of the Modified Low Salt Project did not affect the sufficiency of emission reduction credits available to Dow, based on either the DEQ's or LEAN's assessments. Additionally, the district court confirmed the DEQ's decisions followed adequate public discourse and consideration of public interest. The appellate review found no error in the district court’s conclusion, noting petitioners did not provide expert testimony to challenge the DEQ’s calculation of emission reduction credits, thus failing to substantiate their claims.
The DEQ conducted a comprehensive analysis for each application, addressing various factors including background information, public comments, alternative sites and projects, mitigating measures, environmental impact assessments, and social and economic benefits, in compliance with the Louisiana Supreme Court's directives. Key findings included: (1) the avoidance of potential adverse environmental effects, (2) a cost-benefit analysis showing that social and economic benefits outweigh environmental impact costs, and (3) consideration of alternatives that provide greater environmental protection without significantly hindering non-environmental benefits. The DEQ's actions in evaluating Dow's requests were deemed compliant with constitutional mandates, as there was no evidence suggesting arbitrary decision-making or inadequate consideration of environmental concerns. The trial court's judgment was affirmed, with costs of the appeal assigned to the appellants. The record supported the DEQ's conclusions that adverse environmental impacts were minimized in line with public welfare. The parties had previously agreed to withdraw a specific aspect of the permit application, and while an oral argument was held, the transcript was not available for review. The DEQ confirmed that all regions in Louisiana meet criteria pollutant standards except ozone.
Five parishes in the Baton Rouge Metropolitan Statistical Area—Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge—are designated as nonattainment areas for the one-hour ozone standard. Proposed modifications to the Light Hydrocarbons III Plant and Cellulose Plant are expected to cause significant increases in volatile organic compounds (VOCs) emissions, classifying them as 'major modifications' under the Nonattainment New Source Review requirements. Consequently, these modifications necessitate 'offsets' to counterbalance the increased emissions, defined as reductions in existing emissions to match the proposed increases.
Subsection 2153 of LAC 33:111 addresses the limitation of VOC emissions from industrial wastewater. Specifically, LAC 33:111.2153(B) mandates that owners or operators of affected sources comply with control requirements for any components managing VOC wastewater streams. Such control measures must be enacted from the point a VOC wastewater stream is identified until it is either returned to a process unit, disposed of in an underground injection well, incinerated, or treated to achieve a 90% reduction in VOC content, with final VOC levels below 1000 ppm by weight. For combined wastewater streams, the total VOC reduction must equal or exceed the sum of reductions that would have been achieved from treating each stream individually to meet these criteria.
