IN THE COURT OF APPEALS OF VIRGINIA RECORD NO

IN THE COURT OF APPEALS OF VIRGINIA RECORD NO. 2199-09-2 APPALACHIAN VOICES, CHESAPEAKE CLIMATE ACTION NETWORK, SIERRA CLUB and SOUTHERN APPALACHIAN MOUNTAIN STEWARDS, Appellants, v. STATE AIR POLLUTION CONTROL BOARD and VIRGINIA ELECTRIC AND POWER COMPANY, Appellees. BRIEF OF APPELLEE STATE AIR POLLUTION CONTROL BOARD KENNETH T. CUCCINELLI, II Attorney General of Virginia ROGER L. CHAFFE (VSB No. 618) Senior Assistant Attorney General KERRI L. NICHOLAS (VSB No. 47230) Assistant Attorney General Counsel for Appellee, State Air Pollution Control Board 900 East Main Street Richmond, Virginia 23219 (804) 786-0098; FAX (804) 786-0034

TABLE OF CONTENTS PAGE TABLE OF CITATIONS...ii STATEMENT OF THE CASE... 2 QUESTIONS PRESENTED... 3 STATEMENT OF FACTS... 3 ARGUMENT... 5 A. STANDARD OF REVIEW... 5 1. The VAPA Standard... 5 2. Deference to the Agency... 6 3. Judicial Review is on the Agency Record... 7 B. THE CIRCUIT COURT PROPERLY HELD THAT NO BACT ANALYSIS OR EMISSION LIMIT WAS REQUIRED FOR CO2 BECAUSE THAT POLLUTANT IS NOT SUBJECT TO REGULATION UNDER THE CLEAN AIR ACT... 9 C. THE CIRCUIT COURT DID NOT ERR IN FINDING THERE WAS SUBSTANTIAL EVIDENCE IN THE RECORD SUPPORTING THE BOARD S DECISION TO USE PM 10 AS A SURROGATE WHEN ESTABLISHING EMISSION LIMITATIONS FOR PM 2.5 IN THE PSD... 12 CONCLUSION... 16 CERTIFICATE OF SERVICE... 17 i

TABLE OF CITATIONS CASES PAGE BP Cherry Point, PSD Appeal No. 05-01, (EAB 2005), 12 E.A.D. 209...13,15 Equal Employment Opportunity Commission v. Otto, 1976 U.S. Dist. LEXIS 16542 (1976)...8 Hilliards v. Jackson, 28 Va. App. 475, 506 S.E.2d 547, 550 (1998)...13 Holtzman Oil Corp. v. Commonwealth, 32 Va. App. 532, 529 S.E.2d 333, 338 (2000)...6 J.P. v. Carter, 24 Va. App. 707, 485 S.E.2d 162 (1997)...8 Johnson v. Capitol Hotel, Inc., 189 Va. 585, 54 S.E.2d 106 (1949)...7 Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 369 S.E.2d 1 (1988)...6,7 Longleaf Energy Associates, LLC v. Friends of the Chattahoochee, Inc. et al, 298 Ga. App. 753, 681 S.E.2d 203 (2009)...11,13,16 Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007)...9,10 Mulkey v. Firth Bros. Iron Works, 188 Va. 451, 50 S.E.2d 404 (1948)...7 National Lime Association v. EPA, 233 F.3d 625 (D.C. Cir. 2000)... 15 Northern Michigan University, PSD Appeal No. 08-02, at 30, (EAB February 18, 2009), 14 E.A.D...13,15 Prarie State Generating Company, PSD Appeal No. 05-05, at 123 et seq., (EAB August 24, 2006), 13 E.A.D....13,15 State Board of Health v. Godfrey, 223 Va. 423, 290 S.E.2d 875 (1982)...6,14 ii

PAGE State Bd. of Health v. Virginia Hospital Ass'n, 1 Va. App. 5, 332 S.E.2d 793, (1985)...8 United States v. Morgan, 313 U.S. 409, 61 S.Ct. 999 (1941)...8 STATUTES United States Code 42 U.S.C. 7401 et seq... 3 42 U.S.C. 7410... 13 42 U.S.C. 7475, 165... 9 42 U.S.C. 7475(a)... 4 42 U.S.C. 7475(a)(4)... 4 Code of Virginia 2.2-4000 et seq.... 2 2.2-4001... 15 2.2-4008... 13 2.2-4025... 2 2.1-4027...5,6,7 10.1-1186... 2 10.1-1322 et seq... 9 iii

REGULATIONS PAGE Code of Federal Regulations 40 CFR 50... 4 40 CFR 52.21... 14 40 CFR 52.21(b)(50)... 4 40 CFR 52.21(i)(1)(xi)... 14 RULES OF THE SUPREME COURT OF VIRGINIA 5A:19... 17 5A:21...3,17 OTHER 72 Fed. Reg. 54112 (September 21, 2007)... 14 73 Fed. Reg. 28321 (May 16, 2008)... 14 74 Fed. Reg. 16098 (June 1, 2009)... 14 74 Fed. Reg. 66496 (December 15, 2009)... 10 iv

IN THE COURT OF APPEALS OF VIRGINIA RECORD NO. 2199-09-2 APPALACHIAN VOICES, CHESAPEAKE CLIMATE ACTION NETWORK SIERRA CLUB and SOUTHERN APPALACHIAN MOUNTAIN STEWARDS, Appellants, v. STATE AIR POLLUTION CONTROL BOARD and VIRGINIA ELECTRIC AND POWER COMPANY, Appellees. BRIEF OF APPELLEE STATE AIR POLLUTION CONTROL BOARD Appellee, the State Air Pollution Control Board ( Board ), by counsel, states as follows in response to the Brief of Appellants filed by Appalachian Voices, Chesapeake Climate Action Network, Sierra Club and Southern Appalachian Mountain Stewards (collectively the Coalition or Appellants ): 1

STATEMENT OF THE CASE This appeal arises pursuant to the Virginia Administrative Process Act (Va. Code 2.2-4000 et seq.; VAPA ) from a ruling of the Circuit Court of the City of Richmond reviewing a prevention of significant deterioration permit ( PSD Permit ) and a maximum achievable control technology permit ( MACT Permit ) issued by the State Air Pollution Control Board ( Board ). The permits were issued to the Virginia Electric and Power Company ( Dominion ) on June 30, 2008, for the Virginia City Hybrid Energy Center ( VCHEC or the facility ), allowing Dominion to construct an electric generating plant in Wise County, Virginia. The Coalition appealed, pursuant to the judicial review provisions of the VAPA, Code 2.2-4025, the case decisions of the Board approving the foregoing air pollution permits which were issued by the Department of Environmental Quality 1 ( DEQ ), on behalf of the Board. (Joint Appendix, herein after J.A., 1-29). The circuit court issued a letter opinion on August 10, 2009, explaining its reasoning in affirming the Board s factual determination that no best available control technology ( BACT ) analysis was required for carbon dioxide ( CO 2 ) prior to issuing the PSD Permit. (J.A. 30-33). In its Final Order dated September 2, 2009, the circuit court dismissed the Coalition s appeal of the PSD permit and set aside the MACT permit case decision for further action by the Board. 2 (J.A. 34-35). Only the circuit court s ruling affirming the Board s PSD Permit decision is the subject of this appeal. 1 DEQ is staff for the Board. Va. Code 10.1-1186. The Board voted to approve the permit on June 25, 2008. DEQ issued the permit on June 30, 2008. 2 The MACT Permit was subsequently revised and reissued by the Board and is not at issue in this appeal. Appellants have limited this appeal to review of the PSD Permit. See Opening Brief of Appellant, page 2. 2

QUESTIONS PRESENTED The Board agrees with the Coalition that this appeal can be narrowed to two main issues, and, pursuant to Rule 5A:21 of the Rules of the Supreme Court of Virginia, restates the questions as follows: 1. Did the circuit court err in concluding that no BACT analysis or emission limit was required for CO 2 because that pollutant is not subject to regulation under the Clean Air Act? (Opening Brief of Petitioners to the Circuit Court, p. 43-44; Transcript of July 31, 2009 Circuit Court Hearing at p. 18, 1. 25 - p. 19, l. 15; J.A. 31-32). 2. Did the circuit court err in finding there was substantial evidence in the record supporting the Board s decision to use PM 10 as a surrogate when establishing emission limitations for PM 2.5 in the PSD Permit? (Opening Brief of Petitioners to the Circuit Court, p. 31, 33, see also Id. p. 8; J.A. at 31; Transcript of July 31, 2009 Circuit Court Hearing at p. 36, l. 3-9, p. 111, l. 8-12). STATEMENT OF FACTS This case arises from Dominion s July 2006 application to the Board for permits required to begin construction of an electric generating facility, VCHEC, in Wise County, Virginia. (J.A. 261-300). The Clean Air Act, 42 U.S.C. 7401, et seq. ( CAA or the Act ) requires applicants seeking to construct major new facilities in attainment areas (such as VCHEC) to undertake New Source Review and receive a PSD permit prior to 3

beginning construction. The PSD program applies to newly constructed or modified major sources that emit one or more regulated pollutants, as defined in 40 C.F.R. 52.21(b)(50). PSD permits must include limitations and conditions to ensure that the emissions from the permitted facility: (1) will not cause or contribute to violations of the National Ambient Air Quality Standards ( NAAQS ) established pursuant to the Act 3 ; and (2) will be controlled sufficiently to maintain existing air quality in the surrounding region. The Act requires the permitting agency to conduct air quality and control technology analyses during the PSD permitting process. 42 U.S.C. 7475(a). PSD permits must also contain emissions limits that represent those obtainable by use of the best available control technology ( BACT ) as determined for the source on a case by case basis, for each emitted pollutant subject to regulation under the Act. 42 U.S.C. 7475(a)(4). After considerable discussion on the record, the Board unanimously approved both the PSD and MACT Permits for VCHEC at its meeting on June 25, 2008. (J.A. 261-300, 335-376). During the two-year period between the application for and the issuance of the permits, DEQ staff and Dominion undertook extensive studies, modeling analyses and technology reviews to assure the facility s compliance with applicable regulatory requirements. (J.A. 68-150; Administrative Record, hereinafter A.R. 01689-02762; A.R. 03741-05069). The Board, DEQ and Dominion also provided extensive opportunities for public comment, holding numerous public hearings and comment periods for the draft permits. (A.R. 21202-21203, 21205, 21218, 21231-34). 3 Pursuant to the CAA, EPA establishes NAAQS for Criteria Pollutants. Current NAAQS are published at 40 C.F.R. Part 50. Particulate Matter is considered a criteria pollutant and NAAQS have been established for both PM 10 and PM 2.5. There are no NAAQS for CO 2. 4

The PSD Permit contained very stringent emissions limits for sulfur dioxide, particulate matter, carbon monoxide and nitrogen oxides. 4 (J.A. 272). In fact, the Board noted that the emission limits were some of the most stringent in the country. (J.A. 368, Tr. Lines 9-12). However, the Board properly concluded that CO 2 was not subject to BACT analysis for the proposed facility and the PSD Permit did not contain limits for CO 2. On appeal, the circuit court agreed and held as a matter of law that the Board was not required to conduct a BACT analysis for CO 2 because CO 2 is not subject to regulation under the Clean Air Act. (J.A. 31). ARGUMENT A. STANDARD OF REVIEW 1. The VAPA Standard Upon judicial review of an agency action under the VAPA, a party challenging the action must designate and demonstrate an error of law subject to review by the court. Virginia Code 2.2-4027. 5 The Coalition has not demonstrated any such error of law in the decision of the circuit court below. Rather than meet its statutory burden, the Coalition simply seeks to reargue its opposition to DEQ s lawful issuance of a PSD 4 The Board further agrees with and adopts by reference Dominion s detailed analysis of the Permit Limits in its brief regarding establishment of fine particulate matter ( PM 2.5 ) limitations and CO 2. 5 The issues of law subject to appeal under the VAPA are: i. constitutionality of the agency's action, ii. compliance [by the agency] with statutory authority, jurisdiction limitations, or right as provided in the basic laws as to subject matter [and] the stated objectives for which regulations may be made, iii. observance by the agency of required procedure, where not harmless error, and iv. substantiality of the evidence supporting findings of fact made by the agency. Va. Code 2.2-4027. 5

Permit for an electric generating plant located within the Commonwealth. As noted, the circuit court ruled against the Coalition on a considerable number of issues, including both they now seek to raise again on appeal to this Court. When reviewing a case pursuant to the VAPA, this Court must decide first, whether the agency decision maker acted within the scope of his authority, and second, whether the decision itself was supported by the evidence. Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1 (1988). Further, [w]here the issue is whether there is substantial evidence to support findings of fact, great deference is to be accorded the agency decision, id.; Holtzman Oil Corp. v. Commonwealth, 32 Va. App. 532, 539, 529 S.E.2d 333, 338 (2000) (quoting Johnston-Willis), and, under the VAPA, the duty of the court with respect to issues of fact shall be limited to ascertaining whether there was substantial evidence in the agency record upon which the agency as the trier of the facts could reasonably find them to be as it did. Va. Code 2.2-4027. See State Board of Health v. Godfrey, 223 Va. 423, 435, 290 S.E.2d 875, 881 (1982) ( whether the agency action is formal or informal, the sole determination by the reviewing court as to issues of fact before the agency is whether there was substantial evidence in the agency record to support the agency decision. ). 2. Deference to the Agency As noted above, an agency s interpretation of legal requirements is also entitled to judicial deference if it is within the specialized competence of the agency: the degree of deference afforded an agency decision depends upon not only the nature of the issue, legal or factual, but also upon whether the issue falls within the area of experience and specialized competence of the agency. Code [2.2-4027]. *** 6

[W]here the question involves an interpretation which is within the specialized competence of the agency and the agency has been entrusted with wide discretion by the General Assembly, the agency s decision is entitled to special weight in the courts. * * * Code [2.2-4027 also] provides that the court shall take due account of the presumption of official regularity, the experience and specialized competence of the agency, and the purposes of the basic law under which the agency has acted. Whether the issue is one of law or fact or substantial evidence, we are directed to take account of the role for which agencies are created and public policy as evidenced by the basic laws under which they operate. Johnston-Willis, 6 Va. App. at 243-44, 369 S.E.2d at 8 (citations omitted). Correspondingly, a reviewing court will not substitute its own judgment for that of the agency as to the weight and credibility of the evidence, and a finding of fact by the agency based on evidence deemed by it to be credible is conclusive and binding on the reviewing court and not subject to review. See Mulkey v. Firth Bros. Iron Works, 188 Va. 451, 455, 50 S.E.2d 404, 406 (1948); Johnson v. Capitol Hotel, Inc., 189 Va. 585, 588, 54 S.E.2d 106, 108 (1949). 3. Judicial Review is on the Agency Record Judicial review of agency case decisions brought pursuant to the VAPA is limited to the agency record. 6 The Coalition nonetheless continues to ignore this Court s specific directive that information not available to the Board at the time of the case decision nor properly before the circuit court when it rendered its decision will not be considered upon appeal. 7 The VAPA specifically states case or case decision means 6 Va. Code 2.2-4027. Where the agency decision is based on a formal hearing, judicial review is on the record of that hearing; where, as here, the decision follows an informal proceeding, the review is on the agency s file, minutes, and records of its proceedings. 7 See letter from Court of Appeals Deputy Clerk Justin Shelton dated January 13, 2010, stating [p]lease note that if the materials included in the addendum were not properly before the trial court, then you are 7

any agency proceeding or determination that, under the laws or regulations at the time, a named party may or may not be (i) in violation of such law or regulation or (ii) in compliance with any existing requirement for obtaining or retaining a license or other right or benefit. Va. Code 2.2-4001, emphasis added. See State Bd. of Health v. Virginia Hospital Ass'n, 1 Va. App. 5, 332 S.E.2d 793, (1985). J.P. v. Carter, 24 Va. App. 707, 485 S.E.2d 162 (1997) in an agency appeal, the circuit court is not free to take additional evidence at the request of one of the parties, but is obliged to defer to the trier of fact. As a result, materials that did not exist at the time of the agency s decision and by definition could not have been included in the administrative record cannot be used by a party to challenge that decision. Likewise, the Coalition further asks the Court to scrutinize various emails and memoranda authored by members of the Board discussing its authority to regulate carbon dioxide emissions. This appeal is limited to the final case decision issued by the Department on behalf of the Board and is not properly a review of drafts and discussions that lead to that decision. The applicable rule of administrative law is that a party is not entitled to probe the deliberations of administrative officials or screen the internal documents and communications they utilize. Just as a judge cannot be subjected to such scrutiny so the integrity of the administrative process must be equally protected. Equal Employment Opportunity Commission v. Otto, 1976 U.S. Dist. LEXIS 16542 (1976), citing United States v. Morgan, 313 U.S. 409, 422, 61 S.Ct. 999, 1004 (1941). precluded from referencing those materials on appeal. This admonishment was reiterated by letter from Deputy Clerk Shelton dated January 28, 2010. Several of the items in the Coalitions addendum are dated after the trial circuit court s Order and therefore could not have been considered by that court in its review of the agency decision. They cannot be considered by this Court on further appeal. 8

B. THE CIRCUIT COURT PROPERLY HELD THAT NO BACT ANALYSIS OR EMISSION LIMIT WAS REQUIRED FOR CO2 BECAUSE THAT POLLUTANT IS NOT SUBJECT TO REGULATION UNDER THE CLEAN AIR ACT. The Virginia General Assembly has vested DEQ and the Board with the authority to grant PSD air quality permits for the construction and operation of major sources of air pollution within the Commonwealth, including electric generating plants. See Va. Code 10.1-1322, et seq. The Coalition argues that the PSD permit issued by the Board for the facility should include emissions limits for CO 2. The Coalition claims that the Board failed to require any BACT analysis for CO 2. However, the Board was under no duty to complete a BACT analysis for CO 2 because it was not subject to regulation pursuant to the CAA or Virginia law at the time the Board approved the permit. Board member Thomson explained: By adopting Dominion s voluntary steps into the Virginia Hybrid Energy Center permit, the Board incorporates the following facts: (a) carbon dioxide is a pollutant under the Clean Air Act; (b) there is no regulatory framework for carbon dioxide or greenhouse gas emissions under the Clean Air Act; and, (c) Governor Kaine has indicated in many contexts his eagerness to reduce greenhouse emissions in Virginia and elsewhere. (J.A. 256, emphasis added). In Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007), the U.S. Supreme Court decided that the United States Environmental Protection Agency ( EPA ) possesses statutory authority under the CAA to regulate emissions of greenhouse gases from new motor vehicles and that EPA had not presented a permissible basis for failing to do so. The case was remanded for further proceedings. In its majority opinion, the Court found: 9

We need not and do not reach the question whether on remand EPA must make an endangerment finding, or whether policy concerns can inform EPA s actions in the event that it makes such a finding We hold only that EPA must ground its reasons for action or inaction in the statute. Id. 549 U.S. at 534-35. Massachusetts did not apply to stationary sources. At the time the Board issued the permit at the center of this appeal and to date, there has not yet been any definitive or legally controlling EPA decision about how to regulate CO 2 pursuant to the CAA. The subject of greenhouse gas regulation is a matter of national importance and efforts are ongoing at the federal level to determine the appropriate mechanism, if any, for control of CO 2 emissions. The Coalition seeks to use the very recent endangerment finding by EPA 8 as a basis for its argument below that greenhouse gases, such as carbon dioxide, are subject to regulation by the Clean Air Act. However, this argument must fail as the EPA published this finding on December 15, 2009, a year and a half after the Board issued the permit which is the subject of this appeal. Id. DEQ explained: Currently, there are no ambient air quality standards under Virginia or federal law that address ambient air concentrations, impact, or emissions of carbon dioxide (or any other greenhouse gases). Because carbon dioxide is not a regulated pollutant in Virginia that is there are no standards by which DEQ can evaluate impacts and impose standards and conditions for carbon dioxide or other greenhouse gas emissions DEQ could not develop emission estimates, engineering analyses, cost estimates, regulatory reviews, and evaluation of less carbon-intensive technology. Likewise, no carbon dioxide controls were evaluated as part of the engineering analysis for the PSD permit. (J.A. 242, emphasis added). DEQ and the Board must apply the law, regulations, guidance and policy in effect at the time the permit is issued and cannot be required to 8 See EPA Final Rule, Endangerment and Cause or Contribution Findings for Greenhouse Gases Under 202(a) of the Clean Air Act, 74 Fed. Reg. 66496 (December 15, 2009). 10

predict how the law may change after the PSD Permit was issued with respect to the regulation of CO 2 under the CAA. The Board s decision was correctly rendered in light of the laws, regulations, policy and guidance applicable at the time of its decision. In a case strikingly similar to the one at bar, the Supreme Court of Georgia upheld the decision of the Georgia Department of Natural Resources to issue a permit where CO 2 regulation was at issue. The Georgia court found, because neither the CAA nor the GAQA [Georgia Air Quality Act] contain regulations controlling CO2 emissions, we reverse this ruling and hold that the permit was not required to include a CO2 emission limitation. Longleaf Energy Associates, LLC v. Friends of the Chattahoochee, Inc. et al, 298 Ga. App. 753, 753, 681 S.E.2d 203, 205 (2009). Appellants gloss over this important judicial decision in the discussion of a PSD permit issued by the Kansas Department of Health and Environment, where the Coalition states that EPA has advised Kansas that a revised proposal for a rejected power plant should now evaluate CO 2 control technology. See Letter from William W. Rice, Acting Regional EPA Administrator, to Roderick L. Bremby, Secretary, Kansas Department of Health and Environment (July 1, 2009), which Appellants improperly attach as Exhibit E to their Opening Brief. The Board considered CO 2 mitigation measures offered voluntarily by Dominion and incorporated them into the PSD Permit. Now, the Coalition seeks to punish Dominion by asking this Court to determine that the inclusion of these provisions in the permit somehow magically make CO 2 subject to regulation. This boot-strap argument cannot succeed. The Board recognized that it did not have authority to place such restrictions in the PSD Permit absent Dominion s voluntary concession. J.A. 361, Tr. Lines 13-17. Board member Thomson correctly notes at the June 25, 2008, Board 11

meeting in which the PSD permit was unanimously approved by the Board that carbon dioxide is a pollutant under the Clean Air Act. However, there is as yet no regulatory framework for carbon dioxide or greenhouse gas emissions under the Clean Air Act (J.A. 359, Tr. Lines 20-25, emphasis added). Because no state or federal regulatory framework was in place at the time the PSD Permit was issued, nor is there currently such a framework, the Board did not err in not requiring a BACT analysis for carbon dioxide. C. THE CIRCUIT COURT DID NOT ERR IN FINDING THERE WAS SUBSTANTIAL EVIDENCE IN THE RECORD SUPPORTING THE BOARD S DECISION TO USE PM 10 AS A SURROGATE WHEN ESTABLISHING EMISSION LIMITATIONS FOR PM 2.5 IN THE PSD. The law and policy applicable at the time of the Board s decision authorized using PM 10 as a surrogate for PM 2.5. 9 The Engineering Analysis for the PSD Permit noted that at the time of the writing of this engineering analysis, DEQ has adopted EPA s policy to use PM 10 as a surrogate for PM 2.5 until further guidance is promulgated on the implementation of the PM 2.5 ambient air quality standards. (J.A. 87). EPA s policy was initially set forth in an October 21, 1997 memorandum Interim Implementation of New Source Review Requirements for PM 2.5 by John S. Seitz, Director Office of Air Quality Planning & Standards. 10 The basis for the policy was the significant technical 9 PM is particulate matter, PM10 is particulate matter measuring less than 10 micrometers or less in diameter, while PM2.5 is particulate matter measuring 2.5 micrometers or less in diameter. 10 Available on LEXIS, Starting at Area of Law By Topic > Environment > Find Administrative Materials & Regulations > Federal Administrative Materials > Environmental Law Institute Guidance and Policy Documents > Continue With Your Search > Search term, AD-3640. 12

difficulties that now exist with respect to PM 2.5 monitoring, emission estimation, and modeling which the memorandum described in some detail. 11 The policy was re-affirmed for PSD purposes in the April 5, 2005 memorandum Implementation of New Source Review Requirements in PM-2.5 Nonattainment Areas by Stephen D. Page, Director Office of Air Quality Planning and Standards. 12 Application of that policy by states like Virginia that have SIP 13 approved PSD programs or other states that have delegated authority from EPA had been consistently upheld by EPA s Environmental Appeals Board. See generally Longleaf, 298 Ga. App. 753, 681 S.E.2d 203; In re Northern Michigan University, PSD Appeal No. 08-02, at 30, (EAB February 18, 2009), 14 E.A.D.; In re Prairie State Generating Company, PSD Appeal No. 05-05, at 123 et seq. (EAB Aug. 24, 2006), 13 E.A.D. ; In re BP Cherry Point, PSD Appeal No. 05-01, (EAB 2005), 12 E.A.D. 209. DEQ issued guidance adopting EPA s policy for Virginia s PSD regulatory program. (J.A. 56-57). This DEQ guidance document is publicly available as provided by Code 2.2-4008. The courts give great deference to an administrative agency s interpretation of the regulations it is responsible for enforcing. Hilliards v. Jackson, 28 Va. App. 475, 479, 506 S.E.2d 547, 550 (1998). EPA s policy was subsequently adopted in a final EPA regulation published in the 11 12 Id. Available on LEXIS, Starting at Area of Law By Topic > Environment > Find Administrative Materials & Regulations > Federal Administrative Materials > Environmental Law Institute Guidance and Policy Documents > Continue With Your Search > Search term, AD-4968. 13 Pursuant to the CAA, states with approved State Implementation Plans ( SIPs ) have authority to issue PSD permits. A SIP provides for the implementation, maintenance, and enforcement of NAAQS for specific air pollutants within a State and must be approved by EPA. 42 U.S.C. 7410. 13

Federal Register prior to the issuance of the PSD Permit. 14 The regulation, which took effect July 15, 2008, in pertinent part, provides: (i). Exemptions. (1). The requirements of paragraphs (j) through (r) of this section shall not apply to a particular major stationary source or major modification, if: (xi) The source or modification was subject to 40 CFR 52.21, with respect to PM[2.5], as in effect before July 15, 2008, and the owner or operator submitted an application for a permit under this section before that date consistent with EPA recommendations to use PM[10] as a surrogate for PM[2.5] as interpreted in the EPA memorandum entitled Interim Implementation of New Source Review Requirements for PM[2.5] (October 23, 2997). 40 C.F.R. 52.21(i)(1)(xi). 15 The Coalition referred to, and attached to its Opening Brief, documents once again concerning events that occurred after the PSD Permit was issued. Those documents Appellants include with the Addendum are not part of the agency record supporting the Board s decision and to which judicial review is limited. State Bd. of Health of Commonwealth v. Godfrey, 223 Va. 423, 435, 290 S.E.2d 875, 881 (1982). Moreover, the events that the Coalition refers to are irrelevant to this Court s review of the PSD Permit. Those post-decision events relate to the possibility that, because of changed circumstance, EPA may now change its position on its policy authorizing the use of PM 10 as a surrogate for PM 2.5. The APA waives sovereign 14 73 Fed. Reg. 28321, 28349-50 (May 16, 2008), Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM[2.5]). EPA stated [t]his final action on the bulk of the major NSR program for PM[2.5] along with our proposed rule on increments, SILs, and SMC, when final, will represent the final elements necessary to implement a PM[2.5] PSD program. When both rules are promulgated and in effect, the PM 2.5 PSD program will no longer use a PM 10 program as a surrogate Id. at 28324. The proposed rule on increments, SILs and SMC (at 72 Fed. Reg. 54112 (Sept. 21, 2007)) was not finalized when the PSD Permit was issued, and has not yet been finalized on the date of this Brief. 15 This so-called grandfather provision has been temporarily stayed, effective June 1, 2009 through September 1, 2009, while EPA reconsiders it in connection with a petition for reconsideration dated February 10, 2009 which EPA granted. 74 Fed. Reg. 26098 (June 1, 2009). 14

immunity to authorize judicial review of agency case decisions. A case decision is temporal in nature. A case decision is rendered in light of the laws and regulations applicable at the time of the decision, and the past and then-present facts. Code 2.2-4001 (definition of case decision ). It would be absurd to require an agency to predict whether and how the law may change in the future. Contrary to the Coalition s contention, there was no requirement to apply the three-part surrogate test set forth in National Lime Assoc. v. EPA in the PSD program with respect to criteria pollutants, nor should there be. 16 Further, EPA s Environmental Appeals Board has rendered three decisions upholding the use of PM 10 as a surrogate for PM 2.5 subsequent to the National Lime decision. In re Northern Michigan University, PSD Appeal No. 08-02, (E.A.D. February 18, 2009), 14 E.A.D. ; In re: Prairie State Generating Company, PSD Appeal No. 05-05, (EAB Aug. 24, 2006), 13 E.A.D. ; In re BP Cherry Point, PSD Appeal No. 05-01, (EAB June 21, 2005), 12 E.A.D. 209. 17 Each air permitting program has its own rules. The court in National Lime defined a three-part test specifically in the context of CAA Title III air toxics program. There is no relation to the PSD permitting program found in Part I of the CAA. The three-part test is designed to identify MACT floor and potential beyond the floor controls which are not part of the PSD analysis. PM 2.5 is a subset of PM 10, not an 16 National Lime Association v. EPA, 233 F.3d 625, 637-639 (D.C. Cir. 2000) established a three-part test for determining whether it is reasonable to use one pollutant to demonstrate CAA requirements for control of another pollutant under the context of MACT. This case includes detailed discussion of the use of PM as a surrogate for other hazardous air pollutant metals (HAPs), and is in no way analogous to EPA s approved surrogacy policy regarding PM 10 as a surrogate for PM 2.5 in PSD permits. The Coalition specifically limits this appeal to the PSD Permit. 17 Some EAB decisions improperly included in the Coalition s Addendum to Opening Brief of Appellants may discuss applying the National Lime test to PSD permits, but these decisions were issued well after the PSD permit was approved. 15

entirely different pollutant. The Georgia Supreme Court also addressed this issue in Longleaf, there were no EPA-issued rules under the CAA and no corresponding rules in the Georgia SIP that required implementation of PM 2.5 modeling to obtain a PSD permit. Longleaf at 763, 681 S.E.2d at 212. The same was true in Virginia as it was when Dominion s PSD Permit was issued. Accordingly, the circuit court did not err in upholding DEQ s decision to issue the permits. CONCLUSION As the record clearly reflects, the Board s decision rests upon a proper interpretation and application of the Clean Air Act and attendant state regulations in effect at the time of the permit decision. The circuit court correctly ruled that the Board was acting within its authority and area of specialized competence and that ample evidence exists in the agency record to uphold the permit. Accordingly, the Commonwealth respectfully prays this Court will uphold the ruling by the circuit court. Respectfully submitted, STATE AIR POLLUTION CONTROL BOARD Kenneth T. Cuccinelli, II Attorney General of Virginia Roger L. Chaffe (Va. Bar No. 618) Senior Assistant Attorney General By: Counsel 16

Kerri L. Nicholas (VSB No. 47230) Assistant Attorney General Office of the Attorney General 900 East Main Street Richmond, Virginia 23219 804-786-4037 (Direct Line) 804-786-0034 (Direct Fax) KNicholas@oag.state.va.us CERTIFICATE OF SERVICE I hereby certify that on February 5, 2010, I complied with Rules 5A:19 and 5A:21 of the Rules of the Supreme Court of Virginia by filing, with the Clerk of the Court of Appeals of Virginia, seven copies of the foregoing Brief of Appellee State Air Pollution Control Board, and by delivering by mail one copy of the foregoing Brief of Appellee State Air Pollution Control Board to Caleb D. Jaffe, Counsel for Appellants, Southern Environmental Law Center, 201 West Main Street, Suite 14, Charlottesville, Virginia 22902-5065 and Timothy G. Hayes, Counsel for Appellee Virginia Electric and Power Company, Hunton & Williams, LLP, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia 23219. Counsel does not waive oral argument. Kerri L. Nicholas 17