Topics:

PRESIDING = JUDGE:

Catherine Gibbs

PARTY REPRESENTATIVES:

IDEM: = ; Justin D. Barrett, Esq.

Petitioner: = ; Colin C. O’Brien, Esq.; Natural Resources Defense Council

Respondent: = ; Terri Czajka, Esq.; Ice Miller LLC

ORDER ISSU= ED:

January 11, 2011

INDEX CATE= GORY:

Air

FURTHER CA= SE ACTIVITY:

[none]

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[2011 OEA 1= , page 2 begins]

STATE OF INDIANA &= nbsp; &nbs= p; ) &= nbsp; &nbs= p; BEFORE THE INDIANA OFFICE OF

&nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; ) &= nbsp; &nbs= p; ENVIRONMENTAL ADJUDICATION

COUN= TY OF MARION &= nbsp; )<= /p>

IN THE MATTER OF: = ; &n= bsp; = ; &n= bsp; = ; )

&nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

OBJECTION TO THE ISSUANCE OF &nb= sp; = )

NEW CONSTRUCTION FESOP PERMIT = &= nbsp; ) &= nbsp;

NO. F133-28725-00003&n= bsp; = ; &n= bsp; = ; &n= bsp; )

PUTN= AM COUNTY ETHANOL LLC<= span style=3D'mso-tab-count:3'> &= nbsp; &nbs= p; &= nbsp; )

CLOVERDALE, PUTNAM COUNTY, INDIANA= &= nbsp; )

_______________________________________________ )&n= bsp; CAUSE NO. 10-A-J-4367

Natural Resources Defense Council, = &nb= sp; = )

&nbs= p; Petitioner, &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

Putn= am County Ethanol LLC,= &= nbsp; &nbs= p; &= nbsp; &nbs= p; )

&nbs= p; Permittee/Respondent, &= nbsp; &nbs= p; &= nbsp; &nbs= p; )

Indiana Department of Environmental Management, &= nbsp; )

&nbs= p; Respondent &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

&nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

OBJECTION TO THE ISSUANCE OF FIRST = )

SIGNIFICANT REVISION TO FESOP PERMIT = ) &= nbsp;

NO. 169-28809-00068&nb= sp; = &nb= sp; = &nb= sp; )

POET BIOREFINING – NORTH MANCHESTER LLC &nbs= p; )

NORTH MANCHESTER, WABASH CO., <= st1:place w:st=3D"on">INDIANA )

_______________________________________________ )&n= bsp; CAUSE NO. 10-A-J-4374

Natural Resources Defense Council, = &nb= sp; = )

&nbs= p; Petitioner, &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

Poet Biorefining – North Manchester LLC, &nb= sp; = &nb= sp; )

&nbs= p; Permittee/Respondent, &= nbsp; &nbs= p; &= nbsp; &nbs= p; )

Indiana Department of Environmental Management, &= nbsp; )

&nbs= p; Respondent &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; )

FINDINGS OF FACT, CONCLUSIONS OF LAW AND FINAL ORDER<= /u>

<= /span>This matter came before the Office of Environmental Adjudication (hereinafter referred to as the “Court” or “OEA”) on the Permitt= ees’ Motion for Summary Judgment, which pleading is a part of the Court’s record; and the Court, being duly advised and having read the motion, respo= nse, reply and evidence, now enters the following findings of fact, conclusions = of law and final order.

[2011 OEA 1= , page 3 begins]

Summary of Decision

<= /span>The issue in this case is whether fuel-grade ethanol plants are “chemical process plants” and are, therefore, “major sources” (as defined by 326 IAC 2-7-1(22)(B)(xx)) or “major stationary sourcesR= 21; (as defined by 326 IAC 2-2-1(gg)), subject to the prevention of significant deterioration (PSD) requirements. If the plants are chemical process plants= [1], they are allowed to emit up to 100 tons per year (tpy) of regulated polluta= nts before being subject to Prevention of Significant Deterioration (PSD)[2] requirements. Further, if the plants are chemical process plants, then fugitive emissions must be conside= red in determining emissions or potential emissions. The presiding ELJ finds that the t= erm “chemical process plants” includes fuel grade ethanol plants and enters judgment in favor of the Petitioner.

Case Summary

1. &n= bsp; On March 26, 2010, the Indiana Department of Environmental Management (the IDEM) issued Federally Enforceable State Operating Permit No. F133-28725-00003 (the “Putnam County Permit”) to Putnam County Ethanol LLC (Putnam County). The Natural Resource Defense Counc= il (the Petitioner) filed its petition for review of this decision on April 13, 2010. This matter was assigned Cause No. 10-A-J-4367.

&nb= sp;

2. &n= bsp; On May 5, 2010, the Indiana Department of Environme= ntal Management (the IDEM) issued Federally Enforceable State Operating Permit N= o. F169-28809-00068 (the “POET Permit”) to Poet Biorefining –= ; North Manchester LLC (POET). The Natural Resource Defense Counc= il (the Petitioner) filed its petition for review of this decision on May 24, 2010. This matter was assigned Cause No. 10-A-J-4374.

3. &n= bsp; These causes were consolidated under Cause No. 10-A-J-4367 with the consent of all parties on June 30, 2010.

4. &n= bsp; The parties moved for summary judgment on or about = July 14, 2010. Briefing was conclu= ded on November 22, 2010.

[2011 OEA 1= , page 4 begins]

FINDINGS OF FACT

1. &n= bsp; India= na’s State Implementation Plan was conditionally approved by the U.S. EPA on Mar= ch 3, 2003. 68 Fed. Reg. 9892 (M= ar. 3, 2003). This approval became effective on April 2, 2003. <= st1:State w:st=3D"on">= Id. As a result of the approval, the s= tate PSD rules at 326 IAC 2-2 et seq= . are federally enforceable under the CAA.

&nb= sp;

2. &n= bsp; Particulate matter (PM) is a “regulated pollutant” for purposes of the PSD program. 42 U.S.C. § 7473; 326 IAC 2-2= -1, 2-2-6.

3. &n= bsp; Fuel grade ethanol plants are classified as “chemical process plants” by the 1987 Standard Industrial Classification Manual.

Putnam Co= unty Ethanol LLC

&nb= sp;

4. &n= bsp; On March 26, 2010, the Indiana Department of Environmental Management (the IDEM) issued Federally Enforceable State Operating Permit No. F133-28725 (the “Putman County Permit”) to Putnam County Ethanol LLC (Putnam County). The Natural Resource Defense Counc= il (the Petitioner) timely filed its petition for review of this decision on A= pril 13, 2010. The Putnam County E= thanol plant will produce fuel-grade ethanol.

&nb= sp;

5. &n= bsp; The Petitioner’s members reside and recreate = in Putnam County. Some of these members have respira= tory conditions that make them sensitive to air pollution. Further, the Petitioner is a membe= rship organization with a core mission that includes protesting air pollution.

&nb= sp;

6. &n= bsp; The Putnam County Permit specifies that the Putnam = County plant is not one of 28 listed source categories in 326 IAC 2-7-1(22)(B)(xx)= ) or 326 IAC 2-2-1(gg).

&nb= sp;

7. &n= bsp; The Putnam County plant is located in Putnam County, which is an attainment area.[3]

8. &n= bsp; The Putnam County Permit limits emissions of partic= ulate matter (PM) and other regulated pollutants to 250 tons per year and does not take into account fugitive emissions in calculating potential to emit for purposes of determining whether the Plant is a major stationary source or m= ajor emitting facility.

9. &n= bsp; Pursuant to its Permit, the = Putnam County plant has the potential to emit 78.48 tpy of PM without fugitive emissions. This plant has the potential to emit 123.25 tpy of PM counting fugitive emissions.

[2011 OEA 1= , page 5 begins]

10. The Putnam County plant was previously operat= ed by ALTRA Indiana LLC from October 4, 2004 until June 9, 2009. The FESOP permit was revoked at the request of ALTRA when the plant ceased operations. This previous FESOP permit specifi= ed that the plant was one of 28 listed source categories, limited the plant’s potential to emit PM to less than 100 tpy, and included fugit= ive emissions in the calculation of the plant’s potential to emit PM.

&nb= sp;

POET Biorefining-North Manchester LLC

11. POET Biorefining-North Manchester LLC (POET) owns and operates an ethanol plant = in North Manchester Indiana. On May 5, 2010, the Indiana Depart= ment of Environmental Management (the IDEM) issued First Significant Revision No. 169-28809-00068 to Federally Enforceable State Operating Permit No. F169-28= 809-00068 (the “POET Permit Revision”) to POET. The Natural Resource Defense Counc= il (the Petitioner) timely filed a petition for review on May 24, 2010. The plant produces fuel-grade etha= nol.

&nb= sp;

12. The Petitioner’s members reside and recreate in Wabash County. Some of these members have respira= tory conditions that make them sensitive to air pollution. Further, the Petitioner is a membe= rship organization with a core mission that includes protesting air pollution.

13. The POET Permit Revision specifies that the POET Plant is not one of the 28 lis= ted source categories.

14. The POET plant is located in = Wabash County, which is an attainment area.

15.&= nbsp; The POET Permit Revision limits emissions of particulate matter (PM) and other regulated pollutants to 250 tons per year and did not consider fugitive emissions in determining whether the Plant is a major stationary source or major emitting facility. Sect= ion D.1.4 of the Permit states “Compliance with these PM limits in conjunction with the PM PTE from all other emission units shall limit the PM emissions from the entire source to less than 250 tons per year and therefo= re, render the requirements of 326 IAC 2-2 (PSD) not applicable. Combined with the PM10 and PM2.5 emissions from other emission units, the PM10 and PM2.5 emissions from the entire source are limited to less than 100 tons/yr. Therefore, the requirem= ents of 326 IAC 2-7 (Part 70 Program) and 326 IAC 2-2 (PSD) are not applicable.”

16. Pursuant to its Permit Revision, the POET Plant has the potential to emit 50.19 tpy = of PM without fugitive emissions and 98.86 tpy of PM including fugitive emissi= ons.

[2011 OEA 1= , page 6 begins]

17. IDEM initially issued New Construction and FESOP No. F169-24515-00068 to POET on August 30, 2007. The August 3= 0, 2007 POET permit stated that this plant does not fall into one of 28 listed source categories [4], lim= ited the plant’s potential to emit particulate matter (PM) to less than 100 tpy, and included fugitive emissions in the calculation of the plant’s potential to emit PM. While t= he permit states that the plant does not fit into one of the source categories, the Technical Support Document states that this type of operation is in one= of the twenty-eight (28) listed source categories under 326 IAC 2-2.[5] Section D.1.4 of this Permit state= s, “Combined with the PM/PM10 emissions from other emission units, the PM/PM10 emissions from the entire source are limited to less than 100 tons/= yr. Therefore, the requirements of 326 IAC 2-7 (Part 70 Program) and 326 IAC 2-2 (PSD) are not applicable.”

Appli= cable Law

<= /span>The Office of Environmental Adjudication (“OEA”) has jurisdiction o= ver the decisions of the Commissioner of the IDEM and the parties to this controversy pursuant to I.C. § 4-21.5-7-3.

<= /span>This office must apply a de novo standard of review to this proceeding wh= en determining the facts at issue. Indiana Dept. of Natural Resources v. Uni= ted Refuse Co., Inc., 615 N.E.2d 100 (Ind.<= /st1:State> 1993). Findings of fact must = be based exclusively on the evidence presented to the ELJ, and deference to the agency’s initial factual determination is not allowed. Id.; I.C. § 4-21.5-3-27(d). Further, OEA is required to base i= ts factual findings on substantial evidence. Huffman v. Office of Envtl. Adjud., 811 N.E.2d 806, 809 (Ind. 2004) (appeal of = OEA review of NPDES permit); see also I.C. § 4-21.5-3-14; I.C. § 4-21.5-3-27(d).

<= /span>The OEA may enter judgment for a party if it finds that “the pleadings, depositions, answers to interrogatories, and admissions on file, together w= ith the affidavits and testimony, if any, show that a genuine issue as to any material fact does not exist and that the moving party is entitled to judgm= ent as a matter of law.” I.= C. § 4-21.5-3-23. The moving party bears the burden = of establishing that summary judgment is appropriate. All facts and inferences must be construed in favor of the non-movant. Gibson v. Evans= ville Vanderburgh Building Commission, et al., 7= 25 N.E.2d 949 (Ind. Ct. App. 2000). When the moving party sets out a p= rima facie case in support of the summary judgment, the burden shifts to the non-movan= t to establish a factual issue. All evidence must be construed in favor of the opposing party, and all doubts a= s to the existence of a material issue must be resolved against the moving party= . City of North Vernon v. Jennings North= west Regional Utilities, 829 N.E= .2d 1, (Ind. 2005), Tibbs v. Huber, Hunt &= amp; Nichols, Inc., 668 N.E.2d 248, 249 (Ind. 1996). “The fact that both parties requested summary

[2011 OEA 1= , page 7 begins]

judgment does not alter o= ur standard of review. Instead, we must separately consider each motion to determine whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law.” Laudig v. Marion= County Bd. of Voters Registration= , 585 N.E.2d 700 (Ind. Ct. App. 1992) at 703-704.

<= /span>The Petitioner asserts that it has standing to file the petition for review in = this cause. The Court of Appeals, = in Save the Valley, Inc. v. Indiana-Kentu= cky Electric Corp., 820 N.E.2d 677 (Ind. Ct. App.<= /st1:address> 2005), aff’d on reh’g, 824 N.E.2d 776 (2005), trans denied= . adopted the test for associational standing as set out in Hunt v. Washington St= ate Apple Advertising Comm'n, 432 U.S. 333, 97 S. Ct. 2434, 2442, 53 L. Ed. 2d = 383 (1977). In that case, the United States Su= preme Court concluded that an association has standing to sue on behalf of its members when: "(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt at 344.

            <= /span>This case requires the ELJ to interpret the term “chemical process plant” as it is used in 326 IAC 2-7-1(22)(B)(xx) and 326 IAC 2-2-1(gg= ) [6]. For purposes of determining whethe= r the Prevention of Significant Deterioration (PSD) requirements apply to a sourc= e, 326 IAC 2-2-1(gg) defines “major stationary source” as either (= 1) one of any listed category of stationary source that emits or has the poten= tial to emit more than 100 tons per year (tpy) of any NSR[7] pollutant or (2) a source that has the potential to emit more than 250 tpy = of any regulated NSR pollutant. = 326 IAC 2-2-1(gg)(1)(U) includes “chemical process plants” as one of the 28 listed source categories to which the PSD requirements apply if the source has the potential to emit more than 100 tpy of any regulated NSR pollutant.

            <= /span>Any “major source” as defined in 326 IAC 2-7-1(22) must obtain a Pa= rt 70 Permit. In pertinent part,= the definition of a “major source” is any stationary source which directly emits or has the potential to emit more than 100 tpy of any regula= ted air pollutant. The pertinent portion of this rule states, “for the purposes of defining major sour= ce in clause (B) or (C), a stationary source or group of stationary sources sh= all be considered part of a single industrial grouping if all of the pollutant emitting activities at the source or group of stationary sources on contigu= ous or adjacent properties belong to the same major group (that is, all have the same two (2) digit code) as described in the Standard Industrial Classifica= tion Manual, 1987.” Fugitive= emissions will not be considered in determining whether a source is a major stationary source unless the source is one of the listed categories of stationary sources. Chemical process plants” is one of the 28 listed source categories under 326 IAC 2-7-1(22)(B)(xx).

[2011 OEA 1= , page 8 begins]

            <= /span>“The cardinal rule of statutory construction is to ascertain the intent of the legislature by giving effect to the ordinary and plain meaning of the langu= age used.” Bourbon Mini-= Mart, Inc. v. Commissioner, Indiana Department of Environmental Management, 806 N.E.2d 14, 20 (Ind.Ct.App. 2004). “If the language of a statute is clear and unambiguous= , it is not subject to judicial interpretation. Id. However, when the language of a statute is reasonably susceptible to more t= han one construction, we must construe the statute to determine the apparent legislative intent. Id. If a statute is subject to different interpretations, the interpretation of the statute by the administrative agency charged with the duty of enforcing the statute is entitled to great weight. Indiana Dep't of Envtl. Mgmt v. Boone County Res. Recovery Sys, Inc., 803 N.E.2d 267, 273 (Ind. Ct. App. 2004), trans. denied. However, an agency's interpretatio= n that is incorrect is entitled to no weight. Noland v. = Indiana Family and Soc. Services Admin= ., Div. of Disability, Aging, and Rehabilitative Services, 743 N.E.2d 1200, 1203 (Ind. Ct. App. 2001).”

        &= nbsp;   The Permittee and the IDEM argue that the ELJ must defer to the IDEM’s interpretation of this term. = The Supreme Court, in Chevron U.S.A., I= nc. v. NRDC, 467 U.S. 837, 104 S. Ct= . 2778, 81 L. Ed. 2d 694 (1984), held that an agency’s reasonable construction of a statute that had been promulgated as a regulation was entitled to deference by a reviewing court. The Court said in Christensen v. Harris County, 529 U.S. 576, 587, 120 S. Ct. 1655, 146 L. Ed. 2d= 621 (2000), “a court must give effect to an agency's regulation containin= g a reasonable interpretation of an ambiguous statute.” The Court held “When a chall= enge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency's policy, rather than whether it= is a reasonable choice within a gap left open by Congress, the challenge must fail. In such a case, federal= judges -- who have no constituency -- have a duty to respect legitimate policy cho= ices made by those who do. The responsibilities for assessing the wisdom of such policy choices and resolv= ing the struggle between competing views of the public interest are not judicial ones: "Our Constitution vests such responsibilities in the political branches." TVA v. Hill, 437 U.S. 153, 195 (1978).”

      = ;      The Court further held, in Christensen<= /i>, that “Interpretations such as those in opinion letters -- like interpretations contained in policy statements, agency manuals, and enforce= ment guidelines, all of which lack the force of law -- do not warrant Chevron= -style deference. Id. at 587. Such interpretations are “en= titled to respect”, but only to the extent that “those interpretations have the power to persuade.” at 587.

            <= /span>Additionally, the Court has determined that deference is appropriate especially where the regulation concerns “a complex and highly technical regulatory program,” in which the identification and classification of relevant “criteria necessarily require significant expertise and entail the exercise of judgment grounded in policy concerns.” Pauley v. BethEnergy Mines, Inc= ., 501 U.S. 680, 697, 111 S.Ct. 2524, 2534, 115 L.Ed.2d 604 (1991).

[2011 OEA 1= , page 9 begins]

            <= /span>However, it is clear that the OEA must conduct a de novo review of all proceedings = before it. Indiana Dep't of Natural Res. V. United Refuse Co., Inc., 615 N.E.2d 1= 00, 104 (Ind. 1993); Ind.-Ky. Elec.Corp. v. Ind. Dep’t. of Envtl. Mgmt., 820 N.E.2d 771 (= Ind. Ct. App. 2005). The Court in Ind.-Ky. specifically = held that the OEA’s conclusion that it must defer to IDEM’s interpretation was an error.

            <= /span>In Ind.-Ky. Elec.Corp. v. Ind. DepR= 17;t. of Envtl. Mgmt., 820 N.E.2d 771 (Ind. Ct. App.= 2005), the parties disagreed on the interpretation of a rule. Indiana-Kentucky Electric Corporat= ion (IKEC) sought a waiver from the IDEM regarding the operation of air monitors near one of IKEC’s plants. The IDEM denied the waiver based on its policy that monitors must be maintained within ten (10) kilometers of the plant. The Court found that the IDEM and = OEA had misconstrued the rule and that the rule did not require monitors within= 10 kilometers of a facility. Fur= ther, the Court found that the policy that IDEM sought to require compliance with= a policy that had not been either properly promulgated as a rule or been published as a non rule policy document under I.C. § 13-14-1-11.5 and = that IDEM was improperly requiring compliance with an invalid rule.

            <= /span>Under the Clean Air Act, each state must develop and implement state implementation plans (SIPs) that allow for the enforcement and achievement of national ambient air quality standards (NAAQ= S) set by the United States Environmental Protection Agency (U.S. EPA) for cer= tain regulated pollutants. 42 U.S.= C. § 7410(a)(1). A SIP is submitted to the EPA, which may approve, conditionally approve, or disappro= ve the SIPs in full or in part. = Sierra Club v. United States EPA, 314 F.3d 735, 737.

      &= nbsp;     Indiana’s = regulations require that modifications to the rules must be incorporated into the SIP.<= span style=3D'mso-spacerun:yes'> 326 IAC 2-2-1(pp). Further, the Court in Sierra Club v. Indiana-Kentucky Elec. = Corp., 716 F.2d 1145, 1152 (7^{th
Cir. 1983) held that “modifications or revisions must be approved by =
the
EPA to become effective.”}

            <= /span>Indiana’s = SIP was conditionally approved by the U.S. EPA on March 3, 2003. 68 Fed. Reg. 9892 (Mar. 3, 2003).<= span style=3D'mso-spacerun:yes'> This approval became effective on = April 2, 2003. Id. As a result of the approval, the s= tate PSD rules at 326 IAC 2-2 et seq= . are federally enforceable under the CAA.

            <= /span>In May 2007, the U.S. EPA revised its rules to exclude “ethanol producti= on facilities that produce ethanol by natural fermentation” from the definition of “chemical process plants”. 72 Fed. Reg. 24077. Prior to this rule, the U.S. EPA distinguished between ethanol production facilities depending on whether the facility produced ethanol fuel or ethanol fit for human consumption. Those facilities which produced et= hanol fuel fell under the definition of “chemical process plants”; th= ose that produced ethanol fit for human consumption did not. The IDEM has not revised its rules= to include this provision.

[2011 OEA 1= , page 10 begins]

            <= /span>The U.S. District Court for the Southern District of Indiana, Indianapolis Division, recently reversed a jury decision against an electric company, in= United States v. Cinergy Corp., Nos. 09-3344, 09-3350, 09-3351, slip op. (7th = Cir. Oct. 12, 2010). The jury foun= d that the company had violated the law when it modified its plant in Wabash, Indiana without first seeking a permit for such modifications. At the time of the modifications, = the standard that was incorporated into Indiana’s SIP would have allowed the modifications without obtaining a permit. However, at the same time, federal= law would have required that the company obtain a permit before making the modifications. The District Court’s ruling hinged on whether amendments made to federal law, but = not yet incorporated into Indiana= ’s SIP at the time of the alleged modifications to the plant, were controlling. The Court ruled = that the provisions of Indiana’s State Implementation Plan (SIP) in effect at the time of the plant modifications were the appropriate provisions to apply in this case. The Court stated, in referring to = U.S. EPA’s approval of the Indiana SIP, “It [U.S. EPA] should have disapproved it; it didn’t; but it can’t impose the good standar= d on a plant that implemented the bad when the bad one was authorized by a state= implementation plant that EPA had approved.” at 8.

=

CONCLUSIONS OF LAW

&n= bsp;

1.      The OEA has subject matter jurisdiction to hear the petitions for review as the petitions for review request review of a decision made by the IDEM Commissioner. Further, the Co= urt concludes that the petitions were timely filed.

2.      This office must apply a de novo standard of review to this proceeding wh= en determining the facts at issue. Indiana Dept. of Natural Resources v. Uni= ted Refuse Co., Inc., 615 N.E.2d 100 (Ind.<= /st1:State> 1993). Findings of fact must = be based exclusively on the evidence presented to the ELJ, and deference to the agency’s initial factual determination is not allowed. Id.; I.C. § 4-21.5-3-27(d). =

3.      The Petitioner argues that it has standing to bring this action. Neither the Permittee nor the IDEM= have questioned this. To the exten= t that the Permittee-Respondent and IDEM have not conceded that the Petitioner has standing to file its petition for review, the Indiana Court of Appeals has recognized associational standing in Save the Valley, Inc. v. Indiana-Kentucky Electric Corp., 820 N.E.2d 677 (In= d. Ct. App. 2005), aff’d on reh’g, 824 N.E.2d 776 (2005), trans denied. The Petitioner has alleged sufficie= nt facts to establish that its members are aggrieved or adversely affected; th= at the Petitioner’s interest in this proceeding are directly related to = its purpose as an association, including combating air pollution; and that the relief requested by the Petitioner does not require the participation by an= y of the individual members. There= fore, the Petitioner has associational standing to file this petition for review.=

[2011 OEA 1= , page 11 begins]

4.      Permittee/Respondent argues that the Petitioner has waived its right to challenge the issuance of the significant revision to the POET permit because the Petitioner did not challenge the issuance of the original permit. However, the ELJ finds no basis fo= r such an argument. There was a significant revision to the original permit and inconsistencies between the Permit and the Technical Support Document about whether IDEM classified the POET plant as one of 28 listed source categories. The revision and inconsistencies a= re sufficient to reopen this issue to review.=

5.      It is clear from the above cited cases that the OEA owes no deference to the IDEM’s interpretations when reviewing the agency’s actions.

6.      The OEA concludes that while it may not defer to the IDEM’s interpretatio= n, that the IDEM’s interpretation is “entitled to respect” to the extent that “those interpretations have the power to persuade.= 221;[8] Therefore, OEA may give greater we= ight to the agency’s interpretation (1) where a statute or rule is ambiguo= us; (2) significant policy concerns are involved; (3) the subject matter concer= ns highly technical matters where the IDEM’s expertise is beneficial; and (4) the OEA concludes that IDEM’s interpretation is consistent with t= he rules of statutory construction.<= o:p>

7.      However, in this case, the ELJ concludes that the agency’s interpretation is n= ot entitled to any weight as the ELJ finds that (1) the rule is unambiguous; (= 2) to the extent that there is any ambiguity, there are no significant policy concerns as demonstrated by the fact that the IDEM changed its policy regar= ding this issue on no basis other than the U.S. EPA rule amendment; (3) this iss= ue can be resolved by applying the plain and ordinary language of the rule and does not require the assistance of expert testimony; and (4) the IDEM improperly relied upon an unpromulgated rule.

8.      Further, the case law relied upon by the IDEM and the Permittee/Respondent is neither persuasive nor relevant. The presiding ELJ issued the decision in In re: Objection to the Issuance of Part 70 Operating Permit No. T-137-6928-00011 for Joseph E. Seagram & Sons, Inc., Ripley County, Ind= iana, 2004 OEA 58, (03-A-J-3003) and found that the OEA should defer to the IDEM. However, since that tim= e, there have been numerous decisions issued in which the OEA has determined t= hat deference is not proper.[9]<= ![endif]> Moreover, the holdings in some of = the cases cited in support of the Respondents’ arguments are misconstrued.

[2011 OEA 1= , page 12 begins]

9.      For the following reasons, the presiding ELJ concludes that fuel grade ethanol plants are “chemical process plants”. The presiding ELJ further conclude= s that deference to IDEM’s interpretation is improper.

10. The rule is clear that fuel grade ethanol plants are “chemical process plants”. The first reas= on for this conclusion is the plain and ordinary language of the rule. Ethanol is a chemical. A plant that processes ethanol is a chemical process plant.

11. Second, 326 IAC 2-7-1(22) is clear that the 1987 Standard Industrial Classification Manual shall be used to define the major group into which the facility falls. While the use of SIC classifications in other areas of the rule may not be binding upon the interpretation of this term, it’s inclusion may be indicative of the Indiana Air Pollution Control Board’s (“APCB”) intent in adopting the rule.

12. Further, IDEM’s current interpretation= of this term is inconsistent with its previous interpretation. The IDEM had initially classified = the Putnam County plant as a chemical process plant. The only reason given by the IDEM for reclassifying this plant was t= he change in the federal rule, which is not binding upon the IDEM.

13. The 7^th Circuit Court, in Ci= nergy Corp., has made it clear that IDEM cannot change its interpretation of = the rule simply because the U.S. EPA changed its rule. In this instance, IDEM’s fai= lure to revise its SIP to include the exception found in the federal rule, exclu= ding fuel grade ethanol plants from the classification of chemical process plant= s, is fatal to its argument that it must or can rely on the U.S. EPA’s interpretation.=

14. The APCB did not promulgate any revisions to the rule nor did IDEM ask U.S. EPA= to approve any revisions to the Indiana SIP.&= nbsp; Further, the IDEM did not publish a non rule policy document in accordance with I.C. § 13-14-1-11.5 in which it determined that fuel g= rade ethanol plants should no longer be considered chemical process plants. IDEM improperly sought to require compliance with a rule that had not been either properly promulgated or been published as a non rule policy document.&n= bsp;

15. There are no genuine issues of material fact in this matter. Summary judgment in the Petitioner’s favor is appropriate.

FINAL ORDER

  &n= bsp;         IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the Natural Resource Defense Council’s Motion for Summary Judgment is GRANTED. Putnam C= ounty Ethanol LLC’s and POET Biorefining-North Manchester LLC’s Motio= n for Summary Judgment is DENIED. Judgment is entered in favor o= f the Petitioner.

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[2011 OEA 1= , page 13 begins]

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IT IS TH= EREFORE ORDERED, as follows:

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1.   &n= bsp; The Federally Enforceable State Operating Permit, Permit No. F133-28725-00003, issued to Permittee-Respondent Putnam County Ethanol, LLC (“Putn= am County”) on M= arch 26, 2010, and the Significant Permit Revision issued to Permittee-Respondent POET Biorefining-North Manchester, LLC (“POET”) on May 5, 2010, Significant Permit Revision NO. 169-28809-00068 are hereby vacated and rema= nded to Respondent, Indiana Department of Environmental Management for review in compliance with the instructions contained in paragraph 2 below.

2.   &n= bsp; The IDEM shall not issue or approve significant revisions or preconstruction or operating permits to either Permittee-Respondent, Put= nam County or Permittee-Respondent, POET unless such permits and supporting analyses comp= ly with the following instructions.

a)      The permits shall establish the potential to emit PM from the Putnam County and POET plants to less than 100 tons per 12 consecutive month period, including fugitive emissions, and list the plants as one of the 28 listed sources und= er 326 IAC 2-7-1(22) and 326 IAC 2-2-1(gg); or

b)      The permits shall reclassify the Putnam County and POET pla= nts as “major emitting facilities” and include appropriate measures and associated numeric emissions limits, and all other requirements associated = with PSD, as applicable.

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3.   &n= bsp; IDEM, Putnam County and POET sha= ll take all other steps necessary to ensure that permits for the plants are is= sued in accordance with applicable law.

            <= /span>You are hereby further notified that pursuant to provisions of I.C. § 4-21.5-7-5, the Office of Environmental Adjudication serves as the Ultimate Authority in the administrative review of decisions of the Commissioner of = the Indiana Department of Environmental Management. This is a Final Order subject to Judicial Review consistent with applicable provisions of I.C. § 4-21.5. Pursuant to I.C. &sec= t; 4-21.5-5-5, a Petition for Judicial Review of this Final Order is timely on= ly if it is filed with a civil court of competent jurisdiction within thirty (= 30) days after the date this notice is served.

IT IS SO ORDERED this 11th day of January 2011= in Indianapolis, IN.

Hon. Catherine Gibbs

Environmental Law Judge

[2011 OEA 1: end of decision]

2011 OEA 1 in .doc format

2011 OEA 1 in .pdf format

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