Ninth Circuit Approves EPA’s Approach to Greenhouse Gas Emissions from Biomass-Fired Cogenerators

On September 2, the U.S. Court of Appeals for the Ninth Circuit upheld the U.S. Environmental Protection Agency’s approach to regulating greenhouse gas emissions from cogeneration facilities fueled by biomass, the first such decision by any circuit court.  The case is an important milestone for the bioenergy industry because it upholds EPA’s special treatment of biomass, which recognizes that biomass fuel is fundamentally different than fossil fuels because forests are part of the carbon cycle, absorbing carbon dioxide as they grow.  This helps mitigate the carbon dioxide emissions produced by burning forest wastes.  By contrast, burning fossil fuels, which have been sequestered from the atmosphere by geological forces, only adds greenhouse gases to the atmosphere without any offsetting biological absorption.  While the Ninth Circuit’s opinion generally upholds EPA’s approach, it must be recognized that EPA has struggled with the scientific uncertainty concerning the release of greenhouse gases from biofuels, and the EPA’s approach is therefore very much a work in progress.

The Ninth Circuit’s opinion involves a cogeneration facility installed by Sierra Pacific Industries at a northern California lumber mill.  Following its general policy for implementing the Best Available Control Technology (“BACT”) requirement of the Clean Air Act, as modified by its policy guidance regarding greenhouse gas emissions from biomass plants, EPA issued an air permit to Sierra Pacific requiring the use of add-on control technologies to limit pollutants emitted by the cogeneration facility.  The permit also limited Sierra Pacific to using natural gas for no more than 10% of cogenerator’s fuel and required it to use specific types of mill waste and unmarketable wood waste rather than cutting living trees to fire the cogenerator.

Environmental groups challenged the EPA decision, arguing that the EPA was required to consider solar power as an alternative fuel and that EPA should have required a higher percentage of natural gas to be burned as an alternative to “dirtier” biomass fuel.   The Ninth Circuit agreed that EPA properly declined to consider solar power as an alternative to burning biomass because solar power would “redefine the source.”  The “redefine the source” principle arises from the idea that BACT should not be used to fundamentally alter the purpose of a project by, for example, requiring a coal plant to convert to nuclear power.  In this case, the Court agreed with EPA that the cogenerator’s fundamental purpose was to use biomass wastes associated with Sierra Pacific’s operations, and use of  solar power would necessarily depart from this purpose, and therefore need not be considered as part of the BACT permitting process.  Similarly, the Ninth Circuit agreed that requiring the cogenerator to use a larger percentage of natural gas as fuel would be inconsistent with the basic purpose of the project to use locally-available biomass wastes, and therefore would “redefine the source.”

Finally, and perhaps most important, the Ninth Circuit upheld EPA’s use of its BACT guidance for greenhouse gas emissions from biomass facilities in the permitting process.  Rejecting the argument that EPA is presently equipped to conduct a quantitative analysis of greenhouse gas emissions produced by different types of biomass fuel stocks, the Court upheld EPA’s more generalized approach, recognizing that EPA is operating both at the frontiers of science and in an area of the Clean Air Act where Congress has provided little specific statutory guidance.