Last week, two wood/agricultural waste biomass plants in California were hit with one of the largest air pollution fines in State history. As part of a negotiated consent order with the U.S. Environmental Protection Agency (“EPA”) and the San Joaquin Valley Air Pollution Control District (the “District”), the plants were fined $835,000 for alleged violations of the Clean Air Act and various District rules.

The consent decrees require the plants, Ampersand Chowchilla Biomass, LLC (ACB) and Merced Power (MP), to pay $328,000 and $492,000 respectively. As part of the settlement, the plants must install continuous monitors to improve tracking and reporting of emissions, enhance automation of the control systems for nitrogen oxide emissions, and prepare more stringent emission control plans.

According to press releases regarding the settlement, Global Ampersand purchased and refurbished the two plants in 2007 and 2008. Shortly afterwards, the District initiated inspections to determine compliance with “authority to construct” permits (“ATC permits”) issued to MP and ACB in 2005 and 2007. As part of the inspections, the District measured stack emissions, evaluated visible emissions (opacity) from the plants fuel-handling systems, and assessed compliance with ATC permits for boilers, biomass handling, and fly ash handling.

The inspections prompted the District and EPA to issue several notices of violations (“NOVs”), and triggered a more extensive joint investigation of the plants. EPA and the District concluded that the plants violated ATC permits by: 

  • Emitting nitrogen oxide, sulfur dioxide, ammonia, and carbon monoxide in excess of permit limits;
  • Exceeding applicable opacity standards;
  • Failing to perform timely source testing to measure emissions of various air pollutants;
  • Failing to properly install and operate emissions control systems for nitrogen oxides;
  • Failing to certify the continuous emissions monitoring systems; and
  • Failing to comply with various District rules including requirements for emissions control plans.

As part of the press release regarding the settlement, EPA noted that it “could not presume” whether the alleged violations were indicative of “the biomass power industry in general,” but we would recommend that biomass plant operators prepare for similar air quality inspections at their facilities in the near future – EPA tends to expand enforcement investigation efforts into industries where recent inspections have yielded significant penalties.
These alleged violations also highlight the importance of post-construction air permit compliance for biomass plants. Often, biomass developers do not have a strong background in environmental compliance and the potential liabilities associated with post-construction operating permit requirements. Without such experience, development companies may agree to permit terms during the pre-project phase that are difficult to comply with after the project is complete. As such, companies who are acquiring recently-permitted, but not yet constructed, biomass facilities should carefully consider and plan for post-construction compliance obligations as part of due diligence.