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Eighth Circuit Finds Fugitive Emissions from Certain Coal Storage Deemed Outside the Reach of the Clean Air Act New Source Performance Standards

Eighth Circuit Finds Fugitive Emissions from Certain Coal Storage Deemed Outside the Reach of the Clean Air Act New Source Performance Standards
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By Allison Smith

The Eighth Circuit Court of Appeals has affirmed the lower court decision in Voight v. Coyote Creek Mining Company, LLC, holding that a coal storage pile at the Coyote Creek lignite mining operation in North Dakota was not part of Coyote Creek’s coal processing plant regulated under the federal Clean Air Act (CAA) New Source Performance Standards (NSPS). As a result, the fugitive emissions from the coal pile were excluded from the calculations determining whether the coal processing plant, and by extension the coal mine, was a major source under the CAA Prevention of Significant Deterioration (PSD) regulations. The Court of Appeals decision upheld the state’s permitting of the plant as a minor source, rather than a major source. [Voight v. Coyote Creek Mining Company, LLC, 999 F.3d 555 (8th Cir. 2021).]

Factual and Procedural Background

Coyote Creek Mining Company (Coyote Creek) mines lignite, a low-grade coal, at the Coyote Creek Mine (the mine) in rural North Dakota. After the coal is extracted, it is transported several miles from the surface mine to Coyote Creek’s coal processing plant, where it is unloaded onto an open storage pile that covers an area of roughly eight acres. The coal pile abuts a retaining wall that separates the pile from the crushing equipment of the coal processing plant. Coal from the pile is fed into the crushing equipment by an apron feeder, situated at the top of the coal pile. Plaintiffs-Appellants Julie and Casey Voight own a large ranch adjacent to the mine.

Under CAA PSD regulations, a surface coal mine or a coal processing plant is subject to federal major source review and permitting if it has the potential to emit (PTE) at least 250 tons per year of any criteria pollutant regulated under the CAA. When determining the applicability of PSD, fugitive emissions, like coal dust, are not included in the calculation of PTE for a surface mine, but are included in calculating PTE for a coal processing plant. Where a coal processing plant qualifies as a major source, an adjacent surface coal mine would be regulated as part of the major source, though the mine itself does not trigger major source review. Under Subpart Y of the NSPS, coal processing plants that process more than 200 tons of coal per day are subject to additional requirements, including implementing a fugitive dust control plan for open storage coal piles.

Coyote Creek applied for a minor source air permit from the North Dakota Department of Health (Department), describing the mining operation, including coal extraction from the mine face, transport and storage of the coal, the coal processing facility, and transfer of the coal to a nearby electricity generating plant. The application identified the apron feeder, but not the coal pile, as part of the coal processing plant. In conducting its analysis of the mining operation, and the Department did not treat the coal pile as part of the coal processing plant. Accordingly, the coal dust fugitive emissions from the coal pile were excluded from the PTE calculation for the coal processing plant and it was permitted as a minor source under state air quality laws, rather than as a federal major source. The Department also concluded that the NSPS requirements for fugitive dust control of open storage coal piles was inapplicable to the Coyote Creek coal pile because it was not part of the coal processing plant.

After construction of the mining operation in 2015, the Voights filed suit against Coyote Creek, seeking declaratory and injunctive relief and civil penalties for violations of the CAA. The Voights allege that the mine required a major source PSD permit and that a dust control plan was required under the NSPS for the coal processing plant. Both parties moved for summary judgment on whether the NSPS applied to the coal pile. If the coal pile was found to be part of the coal processing plant, the plant and the mine would be regulated as a major source, requiring a major source permit. Coyote Creek would also be required to implement a fugitive dust control plan for the coal pile under the NSPS.

At the District Court

The U.S. District Court granted summary judgment in Coyote Creek’s favor. The District Court found that the language of the NSPS regarding applicability to coal storage piles was ambiguous, but relying on guidance on the NSPS from the U.S. Environmental Protection Agency (EPA) and the Department’s permitting decision on the Coyote Creek facilities, District Court concluded that that the NSPS did not apply to the coal pile as part of the coal processing plant. As a result, Coyote Creek’s facilities required only a minor source permit from the Department.

New Source Performance Standards

The NSPS applies to coal processing plants, defined as:

. . .any facility (excluding underground mining operations) which prepares coal by one or more of the following processes: breaking, crushing, screening, wet or dry cleaning, and thermal drying.

The performance standards for coal processing plants, including fugitive dust control, under the NSPS apply to “affected facilities in coal preparation and processing plants that process more than … (200 tons) of coal per day.” Affected facilities is defined to include:

. . .[t]hermal dryings, pneumatic coal-cleaning equipment (air tables), coal processing and conveying equipment (including breakers and crushers), coal storage systems, transfer and loading systems, and open storage piles.

Thus, an open storage pile is only subject to the NSPS where it is in the coal processing plant. The regulations do not define what it means for an affected facility to be “in” a coal processing plant, however.

The Eighth Circuit’s Decision

The Voights asserted that the NSPS unambiguously applied to the coal pile as part of Coyote Creek’s coal processing plant. The Voights argued that the definitions of “coal processing plant” and “open storage pile” clearly demonstrate that the NSPS broadly applies to open storage piles, regardless of their location before or after the coal crushing equipment.

Conversely, Coyote Creek argued that the regulations, along with EPA’s guidance on the NSPS conclusively demonstrate that the coal pile is not part of the coal processing plant.

‘Ambiguous’ Regulations

The Court of Appeals agreed with the District Court that the text of the regulations do not unambiguously answer the question raised in this case: whether a coal pile that is adjacent to the coal processing equipment, and is used for both storage and loading coal into the coal processing equipment, is “in” the coal processing plant itself. The Court of Appeals noted that the regulations clearly contemplate the inclusion of coal piles that are within coal processing plants, but do not provide unambiguous direction as to when exactly a coal pile is “in” a coal processing plant so as to be considered an affected facility subject to the NSPS requirements.

Making Sense of the Regulatons

With its finding that the regulations are ambiguous, the Court of Appeals looked to interpretive guidance. Quoting Kisor v. Wilkie, 139 S. Ct. 2400 (2019), the opinion provided that deference to EPA guidance is appropriate where: 1) the regulation is genuinely ambiguous, 2) the agency’s interpretation of the regulation is reasonable, 3) the interpretation is the agency’s authoritative or official position, 4) the interpretation in some way implicates the agency’s substantive expertise, and 5) the interpretation reflects fair and considered judgment.

The Court took EPA’s NSPS Applicability of Standards of Performance for Coal Preparation Plants to Coal Unloading Operations as offering clarification on when a coal pile is considered to be “in” a coal processing plant, specifically:

. . .if the coal is unloaded for the purpose of storage, then the unloading activity is not an affected facility under NSPS Subpart Y. The coal must be directly unloaded into receiving equipment, such as a hopper, to be subject to the provisions of NSPS Subpart Y.

The court also looked at EPA’s responses to comments on proposed amendments to the NSPS, where it stated that it “interprets coal unloading into the first hopper ‘downstream’ from any form of transportation to be the beginning of the ‘coal preparation plant.’” Based on the purpose and use of the Coyote Creek coal pile, the court determined that it is a hybrid between a storage and unloading pile, with coal unloaded for storage, which would not be subject to the NSPS, and coal unloaded onto receiving equipment, an activity subject to the NSPS. The court felt that either could be plausible, but that the more reasonable interpretation was that the NSPS applies only to open storage piles where the piles occur past the first hopper. Coyote Creek’s coal pile occurs before the first hopper, so was found to not be subject to the NSPS.

The Dissenting Opinion

The dissent in the case praised the majority for overturning the prior decision, which gave deference to a state agency’s interpretation, but nevertheless disagreed with the majority’s conclusion. The dissenting opinion stated that the majority misread the regulation and that a better interpretation was that the coal pile was “in” the coal processing plant.

Conclusion and Implications

With its decision in Voight v. Coyote Creek Mining Company, the Eight Circuit has followed established precedent from the U.S. Supreme Court on deference to agency guidance when the court if faced with interpreting ambiguous regulatory language. EPA’s adopted guidance on the coal processing plant NSPS, Applicability of Standards of Performance for Coal Preparation Plants to Coal Unloading Operations, and the agency’s formal responses to comments during rulemaking to amend the NSPS were deemed by the court to be appropriate interpretive guidance on the meaning of regulatory language concerning open coal storage piles associated with coal processing plants. Even with this guidance, however, the court felt that the two differing interpretations offered by the parties were both plausible. Specific to the question before this court on a coal storage pile being “in” a coal processing plant, unfortunately the court did not offer much explanation on why Defendant-Appellee Coyote Creek’s interpretation was found to be ‘more reasonable’ than that advanced by Plaintiffs-Appellants Casey and Julie Voight. Such explanation would be useful to permittees and regulatory agencies, as well as courts, facing analogous fact patterns in interpreting or applying the NSPS for coal processing plants.

In the end, perhaps the Eighth Circuit’s more impactful action was to limit the deference due to a state agency’s interpretation of federal regulations when permitting a facility, from the court’s prior decision in the Voight case. While the Eighth Circuit’s statements on such deference were dicta, the majority opinion was clear that a state agency’s permitting decision can provide a useful guide for a court’s interpretative exercise, but is not due deference by the court and does not act as a dispositive factor in the court’s interpretation of federal regulations.