Topics:

Objection to Issuance of First Minor Revision Permit No. 053-30294-00062 to

New Source FESOP Operating Permit No. F053-29180-00062

Central Indiana Ethanol LLC

Marion, Grant County, India= na, (11-A-J-4477)

           &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;            = ;            &n= bsp;            = ;

[2011 OEA 160, page 160 begins]

OFFICIAL S= HORT CITATION NAME: When referring to 2011 OEA 160 cite this case

   &nbs= p;        Central Indiana Ethanol, LLC, 2011 OEA= 160.

TOPICS= :

summary judgment

moot

ethanol

SEA 433

326 IAC 2-2

NAICS

chemical process plant

Putnam County Ethanol, LLC

PRESIDING = JUDGE:

Catherine Gibbs

PARTY REPRESENTATIVES:

IDEM:   = ;           Valerie Tachtiris, Esq.

Petitioner:  = ;       Kim Ferraro, Esq.; Legal Environmental Aid Foundation

   &nbs= p;            &= nbsp;       Benjamin H. Longstreth, Esq.; Andres Restrepo, Esq.;

   &nbs= p;            &= nbsp;       Natural Resources Defense Council

Permittee:        Antho= ny Sullivan, Esq.; Timothy Haley, Esq.; Barnes & Thornburg, LLP

ORDER ISSU= ED:

November 21, 2011

INDEX CATE= GORY:

Air

FURTHER CA= SE ACTIVITY:

[none]

[2011 OEA 160, page 161 begins]

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

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

COUNTY OF MARION        &= nbsp;           )<= /p>
&nbs= p;

IN THE MA= TTER OF:        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp; )

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

OBJECTION= TO THE ISSUANCE OF FIRST MINOR   &n= bsp;    )

REVISION = PERMIT NO. 053-30294-00062 TO NEW   = ;      )        &= nbsp;

SOURCE FE= SOP OPERATING PERMIT     &n= bsp;            = ;            = )

NO. F053-29180-00062    &nb= sp;            =             &nb= sp;            =             &nb= sp; )

CENTRAL INDIANA ETHANOL, LLC &nbs= p;            &= nbsp;             &= nbsp;   )

MARION, GRANT COUNTY, INDIANA        &= nbsp;           &nbs= p;        )

_________= _____________________________________    )           CAUSE NO. 11-A-J-4477

Natural R= esource Defense Council,    &nb= sp;            =             &nb= sp;            = )

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

Central Indiana Ethanol, LLC, &nb= sp;            =             &nb= sp;            =             )=

      Permittee/R= espondent,        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;          )

Indiana Department of Environmental Management,&nbs= p;            &= nbsp;     )

      Respondent<= span style=3D'mso-tab-count:6'>        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p; )

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

            <= /span>This matter came before the Office of Environmental Adjudication (the OEA or Cou= rt) on Central Indiana Ethanol LLC’s Motion for Summary Judgment; and the Court, being duly advised and having read the record, evidence motion, response, reply and supporting briefs now enters the following findings of fact, conclusions of law and final order:

Summary of Decision

            <= /span>The Natural Resource Defense Council (the NRDC) has appealed the issuance of an= air permit to Central Indiana Ethanol LLC (CIE). The NRDC contends that the CIE fac= ility is a chemical process plant and is, therefore, a “major source”= (as defined by 326 IAC 2-7-1(22)(B)(xx)) or “major stationary source̶= 1; (as defined by 326 IAC 2-2-1(gg)), subject to the prevention of significant deterioration (PSD) requirements. CIE has filed a Motion for Summary Judgment on the basis that this matter has been rendered moot by the passage of Senate Bill 433 which exclu= des ethanol plants from the definition of “chemical process plants”. The ELJ conclu= des that the passage of SB 433 renders this matter moot and summary judgment sh= ould be entered in favor of CIE. <= /p>

FINDINGS OF FACT

1.   &n= bsp; On April 13, 2011, the Indiana Department of Environmental Management (the IDEM) issued Minor Permit Revision No. 053-30294-00062 to Federally Enforceable State Operating Permit No. F053-29180-00062 to Central Indiana Etha= nol LLC (CIE).

[2011 OEA 160, page 162 begins]

2.   &n= bsp; On May 2, 2011, the Natural Resources Defense Counc= il (NRDC) filed a Petition for Administrative Review and Stay of Effectiveness= .

3.   &n= bsp; CIE is an ethanol production facility that is curre= ntly engaged in the business of producing ethanol by natural fermentation.

4.   &n= bsp; CIE uses the same natural fermentation procedure described by the United States Environmental Protection Agency in the pream= ble to the federal ethanol rule found at 72 Fed. Reg. 24059, 24065 (May 1, 2007).

5.   &n= bsp; CIE is included in the North American Industry Classification System (NAICS) code number 325193.

6.   &n= bsp; On May 10, 2011, the Indiana General Assembly passed Senate Enrolled Act 433. An emergency was declared for this act making it effective immediately. This act provides that facilities = that produce ethanol by natural fermentation and is included in NAICS code 32519= 3 or 312140 shall not considered “chemical process plants”.

7.   &n= bsp; The Air Pollution Control Board promulgated revisio= ns to 326 IAC 2-2, effective August 20, 2011, which encompassed the changes ma= de by SEA 433.

8.   &n= bsp; CIE filed its Motion for Summary Judgment on July 2= 8, 2011. On August 18, 2011, the= IDEM filed its Response to Central Indiana Ethanol, LLC’s Motion for Summa= ry Judgment and the NRDC filed its Opposition to Central Indiana’s Motion for Summary Judgment. CIE filed its reply on September 1= 3, 2011.

Applicable 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. 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).

[2011 OEA 160, page 163 begins]

            <= /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., 725 N.E.2d 949 (Ind. Ct. A= pp. 2000). When the moving party = sets out a prima facie case in support of the summary judgment, the burden shift= s to the non-movant to establish a factual issue. All evidence must be construed in = favor of the opposing party, and all doubts as to the existence of a material iss= ue must be resolved against the moving party. City of North Vernon v. Jennings Northwest Regional Utilities, 829 N.E.2d 1, (Ind. 2005), Tibbs v. Huber, Hunt & Nichols, In= c., 668 N.E.2d 248, 249 (Ind. 1996).

            <= /span>“When a dispositive issue in a case has been resolved in such as way as to render= it unnecessary to decide the question involved, the case will be dismissed.” Travelers Indem. Co. v. P.R. Mallory &= amp; Co., 772 NE.2d 479, 484 (= Ind. App. 2002). A case is deemed = moot when there is no effective relief that can be rendered to the parties by the Court. A.D. v. State, 736   N.E.2d 1274, 1276 (Ind= . App. 2000). However, this Cou= rt “may decide an arguably moot case on its merits if it involves questi= ons of great public interest.” = Id. “Cases that fit within this exception typically are those containing issues that are likely to recur.” Id. =

     &nbs= p;      The OEA has previously ruled, in Putnam County Ethanol LLC, 2011 OEA 1, that fuel grade ethanol plants, such as= the one operated by CIE, were “chemical process plants”. However, at the time that decision= was issued, Indiana had not amended its rules or statutes to mirror federal law which explicitly exempted fuel grade ethanol plants from the definition of “chemical process plants”. The EL= J based her decision on principles of statutory construction, concluding that Indiana law and regulations were clear that fuel gr= ade ethanol plants were chemical process plants and that IDEM could not merely = rely on changes made to federal law when those changes had not been made in Indiana law.

I.C. § 13-7-3-4(e) (as ame= nded by Senate Enrolled Act 433) states:

(e)&= nbsp;        For purposes of rules adopted by the board, a refer= ence to "chemical process plants" does not include an ethanol producti= on operation that:

(= 1)   produces ethanol by natural fermentation after July 2, 2007; and

(= 2)   is included in the North American Industry Classification System    (NAICS) code:

(A) 325193 (Ethyl Alcohol Manufacturing); or

(B) 312140 (Distilleries); as described in 72 FR 24059 et seq. (May 1, 2007). This subsection expires April 1, 2012.

=

[2011 OEA 160, page 164 begins]

      &= nbsp;     326 IAC 2-2, 326 IAC 2-3 and 326 IAC 2-7 were amended to exclude ethanol produc= tion facilities that produce ethanol by natural fermentation from the definition= of “chemical process plants.”&nbs= p;

CONCLUSIONS OF LAW

            <= /span>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.

1.      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:place> 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).

2.      NRDC argues that until the changes are incorporated into the SIP, they are not effective. This might be pers= uasive if Indiana law differed from the federal law. This was the case in both United States v. Cinergy Corp., Nos. 09-3344, 09-3350, 09-3351, slip op. (7th Cir. Oct. 12, 2010) and Kentucky Resources Council, Inc. v. EP= A, 304 F. Supp. 2d 920 (W.D.Ky. 2004= ), in which regulators tried to enforce state laws that, not only had not been incorporated into the state’s respective SIP but were in direct confl= ict with federal law. That is not= the case in this matter. Indiana has chan= ged its law and regulations to mirror the federal law.    While it is true that = the changes have not been incorporated in the SIP and approved by U.S. EPA, it = is only a matter of time before this happens.= No logical argument can be made that this is not inevitable consider= ing that the Indiana<= /st1:place> law now duplicates federal law. <= o:p>

3.      Putnam County Ethanol can be distinguished from this case because the law that the OEA interpreted is no longer the law in Indiana. To say that this proceeding must r= emain open until such time as these formalities are completed would not a good us= e of judicial resources. This Court cannot ignore Indiana law. This Court cannot grant = NRCD the relief it seeks as to do so would be contrary to Indiana law and regulations.

4.      There is no genuine issue of material fact. Summary judgment in favor of CIE is appropriate.

FINAL ORDER

            <= /span>IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Central Indiana Ethanol LLC’s Motion for Summary Judgment is GRANTED.

            <= /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.

[2011 OEA 160, page 165 begins]

Pursuant to I.C. § 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.

        &= nbsp;   IT IS SO ORDERED this 22nd day of November, 2011 in Indianapolis, IN.

Hon. Catherine Gibbs
Environmental Law Judg= e

           &nb= sp;            =             &nb= sp;            =             &nb= sp;            =        [2011 OEA 160: end of decision]

=

2011 OEA 160 in .doc format

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