ZINTER, Justice.
[¶ 1.] The Board of Minerals and Environment (Board) authorized the Department of Environment and Natural Resources (DENR) to issue an air quality permit to Hyperion Refining, LLC (Hyperion). The permit was necessary for Hyperion to begin construction of a proposed petroleum refinery and power plant. Three citizens groups appealed to circuit court. Hyperion also appealed a permit condition limiting the amount of carbon monoxide that could be emitted from the proposed facility. The circuit court affirmed the Board's decision in all respects. The citizens groups now appeal the issuance of the permit, and Hyperion appeals the permit's carbon monoxide limit. We affirm.
[¶ 2.] This case involves the issuance of a "Prevention of Significant Deterioration Air Quality" permit (PSD permit) to Hyperion. Hyperion proposed to construct a large petroleum refinery and power plant in Union County.
[¶ 3.] In December 2007, Hyperion submitted a PSD permit application containing 613 pages of materials to DENR. Three citizens groups — Save Union County, Citizens Opposed to Oil Pollution, and the Sierra Club (collectively, "Citizens") — intervened and contested issuance of the permit.
[¶ 4.] Citizens also requested that a state environmental impact statement (EIS) be prepared before the permit was issued. DENR, the state agency in charge of preparing EISs and considering PSD permits, denied Citizens' request. On December 15, 2008, after extensive study and responses to public comments, DENR recommended approval of a PSD permit with ninety-six pages of conditions.
[¶ 5.] DENR's recommendation was challenged, and in the summer of 2009, the proposed permit was litigated in ten days of contested case hearings before the Board. Twice during the hearings, Citizens renewed its request for an EIS. The requests were denied.
[¶ 6.] One permit condition imposed a "commence construction" deadline of eighteen months, which was February 20, 2011. The permit provided that, if construction of the facility was not commenced by that date, the permit "[became] invalid." The permit, however, allowed DENR's Secretary to grant an extension of time to commence construction if Hyperion applied for the extension within the eighteen-month time period and demonstrated that the extension was justified.
[¶ 7.] Another permit condition required that carbon monoxide emissions from the proposed facility's twenty large "process heaters" could not exceed certain "Best Available Control Technology" (BACT) limits. BACT limits are designed to require the maximum degree of reduction of pollutant emissions that is achievable. The permit imposed a carbon monoxide BACT limit of 0.007 lb/mmBtu (pounds per million British thermal units) for the process heaters.
[¶ 8.] Citizens appealed the issuance of the permit to circuit court. Hyperion filed a separate appeal challenging the carbon monoxide BACT limit. Hyperion argued that 0.010 lb/mmBtu was the achievable limit.
[¶ 9.] On June 23, 2010, while the appeals were pending, the circuit court granted a Hyperion motion to remand the matter to allow the Board to consider additional evidence on several issues, including a request to extend the commence construction deadline. On the same date, Hyperion filed an application with DENR to extend the commence construction deadline to August 20, 2012.
[¶ 10.] DENR then began the process of investigating, soliciting public comments, and considering new evidence on the new issues and the request to extend the commence construction deadline. Over the next eight months, DENR made numerous requests of Hyperion for additional information to address the new issues and the request for an extension.
[¶ 11.] On March 21, 2011, the Board entered a scheduling order. The order set a July 2011 contested case hearing to consider the proposed amended permit. On March 31, 2011, Hyperion filed its comments on the draft amended permit. In its comments, Hyperion requested that the commence construction deadline be extended to eighteen months after the Board approved the amended permit.
[¶ 12.] After public comments and DENR's response to public comments, a four-day contested case hearing on the amended permit was held in July 2011. Extensive expert testimony and nearly 4,000 pages of exhibits were presented to the Board. Hyperion indicated that it had not commenced construction because of the national economic downturn; the need to address new federal regulations regarding sulfur dioxide and nitrogen dioxide emissions; the identification of a new
[¶ 13.] On September 16, 2011, the Board entered findings and conclusions approving DENR's issuance of the amended permit. The amended permit incorporated Hyperion's request to extend the commence construction deadline to eighteen months after the effective date of the amended permit. The amended permit retained the carbon monoxide 0.007 lb/ mmBtu BACT limit.
[¶ 14.] Citizens then appealed the Board's September 2011 decision. The circuit court consolidated the 2011 appeal with Hyperion's and Citizens' 2009 appeals. In a detailed memorandum decision, the court ultimately affirmed the decisions not to order an EIS, affirmed the determination that Hyperion presented satisfactory justification for the extension of the commence construction deadline, affirmed the issuance of the amended permit, and affirmed the carbon monoxide 0.007 lb/mmBtu BACT limit.
[¶ 15.] We consider the following issues raised by Citizens:
We consider the following issue raised by Hyperion:
[¶ 16.] "We review agency decisions the same as the circuit court...." St. Pierre v. State ex rel. S.D. Real Estate Comm'n, 2012 S.D. 25, ¶ 14, 813 N.W.2d 151, 156. We "give great weight to the findings made and inferences drawn by an agency on questions of fact." SDCL 1-26-36. "[Q]uestions of law are reviewed de novo." Brown v. Douglas Sch. Dist., 2002 S.D. 92, ¶ 9, 650 N.W.2d 264, 267. We may reverse agency decisions when "substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions" are, among other things, in violation of statutes, affected by an error of law, are clearly erroneous, or constitute an abuse of discretion. SDCL 1-26-36.
[¶ 17.] SDCL chapter 34A-9 is South Dakota's Environmental Policy Act. SDCL 34A-9-4 provides: "All agencies may prepare, or have prepared by contract, an environmental impact statement on any major action they propose or approve which may have a significant effect on the environment."
[¶ 18.] Citizens first argue that the Board erroneously determined it had no jurisdiction to order an EIS under SDCL chapter 34A-9. Citizens misconstrue the Board's determination. The Board did not determine that it had no jurisdiction to order an EIS. The Board determined that "an EIS is much broader and encompasses many subject matters over which the Board has no jurisdiction." We agree with the Board's determination.
[¶ 19.] Citizens acknowledge that, in addition to an assessment of air quality, an EIS would assess the proposed project's other environmental effects, such as effects on roads, soils, water resources, noise, waste disposal, etc. But the only "action" proposed to be approved was the issuance of a PSD permit. See SDCL 34A-9-2, -4. Therefore, the Board's jurisdiction in this proceeding did not include regulatory authority over "all the [other environmental] factors which the [Citizens] deem relevant to the [permit] consideration." See In re Solid Waste Disposal Permit Application, 268 N.W.2d 599, 601 (S.D.1978). The Board's jurisdiction was limited to the specific requirements established in the statutes and regulations for issuance of the air quality permit. See id. at 600-01. Thus, the Board correctly recognized that its jurisdiction was limited to the PSD permit issues, and the Board had no jurisdiction to regulate the other environmental effects of the proposed facility in this PSD proceeding.
[¶ 20.] Citizens also argue that the Board and DENR abused their discretion in determining that an EIS was not necessary. Under SDCL 34A-9-4, "an EIS is optional, not mandatory." In re SDDS, Inc., 472 N.W.2d 502, 507 (S.D. 1991). See also In re S.D. Water Mgmt. Bd. Approving Water Permit No. 1791-2, 351 N.W.2d 119, 124 (S.D.1984) (concluding that the EIS statute "evidence[s] a legislative intent not to require an environmental impact statement every time [the] Board rules on a ... permit"). "Since the [decision to order an EIS] is one which lies in the discretion of the agency, we can reverse its decision only if it reflects a clearly unwarranted exercise of discretion." In re SDDS, 472 N.W.2d at 507.
[¶ 22.] DENR first performed an extensive technical review of Hyperion's application. After issuing public notices of the application and DENR's proposed action, DENR then received extensive commentary from the public, other agencies, and environmental groups. Those commenting included the United States Department of Interior, the United States Environmental Protection Agency (EPA), and Plains Justice. DENR then considered the comments, issued responses, and made changes to the proposed permit. In its response to comments, DENR noted that an EIS was unnecessary because "the procedural and substantive requirements for obtaining an air quality permit provide the agency [with] information that is functionally equivalent to the relevant information that would be provided by an environmental impact statement." (Emphasis added.)
[¶ 23.] A public contested hearing was then held before the Board. The Board considered the filed comments and DENR's responses. The Board heard the extensive evidence for and against the project. The Board considered alternatives to Hyperion's proposed equipment. The Board assessed the facility's proposed design and operational limits. The Board reviewed Hyperion's additional impacts analysis and determined that "no adverse impacts are expected to air quality, visibility, or soils and vegetation as a result of [Hyperion's proposed facility] and associated commercial, residential, and industrial growth."
[¶ 24.] The Board also considered expert testimony on the need for an EIS. Kyrik Rombough, DENR's Natural Resources Engineering Director, was the lead permit writer for the PSD permit program. Since beginning work at DENR, he had processed and reviewed hundreds of air quality permits. Rombough testified that DENR's review of Hyperion's permit application indicated an EIS was unnecessary. Colin Campbell, Hyperion's expert, oversaw air permitting projects and worked with state agencies in implementing air permitting programs. He testified that, when he was involved in Arizona's and Utah's air permitting processes, neither state required EISs. He also testified that, based on his experience, EISs were not typically prepared for similar projects, such as refinery expansions.
[¶ 25.] The federal EIS experience is also instructive. Under the National Environmental Policy Act, EISs are generally mandated. 42 U.S.C.A. § 4332(c) (West 2012). Nevertheless, federal air quality permits, including PSD permits, are exempt from the mandate. 15 U.S.C.A. § 793(c)(1) (West 2012); 40 C.F.R. § 124.9(b)(6). See also In re Knauf Fiber Glass, 8 E.A.D. 121, 35 (EAB 1999). We acknowledge that the federal statutory exemption does not control the discretionary decision under SDCL 34A-9-4. But the federal law's exemption does suggest that Congress determined EISs are generally not required to protect the environment in determining entitlement to PSD air quality permits.
[¶ 27.] In sum, the Board's and DENR's decisions to deny the requests for an EIS were supported by DENR's technical review of Hyperion's application and other agency and public comments; DENR's response to those agency and public comments; and the testimony and environmental evidence considered in the administrative process.
[¶ 28.] Citizens point out that original permit condition 2.1 imposed a commence construction deadline of February 20, 2011. Citizens argue that the permit expired because Hyperion did not commence construction or obtain an extension before that initial deadline. Citizens also argue that because the amended deadline ultimately adopted was not requested within the initial eighteen-month period, the Board was without authority to authorize that amended deadline. Citizens rely on the language of original permit condition 2.1, ARSD 74:36:09:02, and 40 C.F.R. section 52.21(r)(2).
[¶ 29.] The interpretation of a permit is analogous to the interpretation of a contract or statute. "Contract and statutory interpretation are questions of law we review de novo." AFSCME Local 1025 v. Sioux Falls Sch. Dist., 2011 S.D. 76, ¶ 11, 809 N.W.2d 349, 352. "Administrative regulations are subject to the same rules of construction as are statutes." WestMed Rehab, Inc. v. Dept. of Soc. Servs., 2004 S.D. 104, ¶ 8, 687 N.W.2d 516, 518.
[¶ 30.] Condition 2.1 imposed a commence construction deadline but allowed extensions. Condition 2.1 provided:
Condition 2.1 is premised upon ARSD 74:36:09:02,
[¶ 31.] There is no dispute that Hyperion did not commence construction by February 20, 2011. Citizens' first argument is that, even though Hyperion's initial extension application was filed within the eighteen-month time to commence construction, the permit became invalid because the Board did not grant the extension until after the initial eighteen-month period expired.
[¶ 32.] The language of 40 C.F.R. section 52.21(r)(2) and condition 2.1 cannot,
[¶ 33.] Indeed, it may be impossible to obtain a final ruling on an extension request within the original deadline. As this case demonstrates, extension requests may be complicated matters that require extensive time to administratively resolve. Because an extension request seeks to amend a condition of a PSD permit, the request must be processed under the same administrative procedure as a permit application, which requires lengthy administrative proceedings. And if the initial permit is on appeal, the administrative process must be preceded by filing a motion with the reviewing court to seek the permit's return to the Board to allow the consideration of additional evidence. See Jundt v. Fuller, 2007 S.D. 62, ¶ 7, 736 N.W.2d 508, 512. If the reviewing court grants the motion, the permit holder must then apply for an extension with the Secretary. Next, the Secretary must recommend an amended permit, publish the proposed permit, and provide time for a contested case hearing. See ARSD 74:36:09:03. Finally, interested parties may litigate the matter before the Board. Considering the many months necessary to complete this administrative process, it would be impossible to obtain a final ruling on many extension requests within the initial eighteen-month period, even requests filed early within the initial eighteen-month period.
[¶ 34.] In this case, Hyperion submitted its initial extension application on June 23, 2010. During its review of the application, DENR requested additional information from Hyperion. DENR's draft amended permit was not made available for public comment until February 14, 2011, six days before the initial deadline was to expire. DENR received over 350 public comments on the draft amended permit, and DENR responded to those comments when issuing its final proposed amended permit. A contested case hearing was requested, and on March 21, 2011, the Board scheduled a contested case proceeding for July 25, 2011, over thirteen months after the initial extension request. The Board heard closing arguments on September 15, 2011, and issued its findings of fact and conclusions of law on September 16, 2011. In total, the administrative process took almost fifteen months to complete, not counting the time necessary to resolve appeals of the Board's decision in the courts.
[¶ 35.] Considering the realities of environmental permitting, Citizens' interpretation of 40 C.F.R. section 52.21(r)(2) and
[¶ 36.] Citizens, however, contend that allowing the Secretary an indefinite timeframe to rule on an extension request thwarts the purposes of the deadline. According to DENR's and Hyperion's experts, there are two reasons for the eighteen-month deadline. First, the deadline ensures that BACT determinations are current. See Ky. Mountain Power, LLC v. Energy & Env't Cabinet, No. DAQ-29109-039, 2009 WL 6214729, at *38 (Ky. Envtl. & Pub. Protection Cabinet Dec. 1, 2009) ("[D]ecisions about pollution control methods and associated emissions limitations are made based on the most current information possible."). Second, the deadline ensures that permit holders do not, by delay or inaction, obtain longer time periods than allowed to build new facilities, thereby unnecessarily tying up a state's air resources and industrial growth rights.
[¶ 37.] The additional time taken by the Secretary did not frustrate these purposes. When preparing the draft amended permit, DENR reevaluated BACT limits and reviewed new regulations, which ensured that the BACT determinations were up to date. DENR also required modeling to ensure the proposed facility would comply with new emission standards. Finally, there was no evidence that Hyperion had tied up the State's air resources or restricted any other competing industrial growth.
[¶ 38.] Citizens also argue that, even if the Board was authorized to grant Hyperion's initial extension application after the eighteen-month period had expired, the finally adopted extension was invalid. Citizens contend that the finally adopted extension was invalid because Hyperion did not make that particular extension request before the initial eighteen-month deadline had expired. This argument overlooks the nature of the finally adopted request in the context of the required administrative proceedings.
[¶ 39.] Hyperion's initial June 2010 request for an August 20, 2012 extended deadline was made within the original eighteen-month period. But the Secretary did not act on Hyperion's request until he issued a proposed draft amended permit and notice of opportunity for public comment on February 14, 2011. At that point, the public notice comment period remained open until April 1, 2011, well after the initial commence construction deadline would expire. On March 31, 2011, Hyperion filed its comments to DENR's draft amended permit. In those comments, Hyperion requested that the deadline be extended to eighteen months after the amended permit was ultimately issued. Hyperion indicated that it amended its request for an extension "in light of the unpredictable timeline associated with the approval of the amended permit." Thus, Hyperion made a timely application for an extension; Hyperion was aware that DENR was recommending that an extension be granted; but the original deadline
[¶ 40.] We conclude that DENR and the Board were not required to render a final decision on the initial timely extension request within the initial eighteen-month period. Further, the subsequent amendment to the request was made during the extension proceedings, and that amendment was not so different as to constitute a new application. Therefore, Hyperion's permit did not become invalid.
[¶ 41.] Citizens argue that Hyperion did not sufficiently justify its request for an extension of the commence construction deadline. Citizens contend that the Board's contrary determination was clearly erroneous. "For an agency finding of fact to be clearly erroneous, a court must be definitely and firmly convinced, after reviewing all the evidence, that the agency made a mistake." McKibben v. Horton Vehicle Components, Inc., 2009 S.D. 47, ¶ 11, 767 N.W.2d 890, 894. "However, we defer to the agency on the credibility of a witness who testified live because the agency `is in a better position... to evaluate the persuasiveness of [witness] testimony.'" Id. (second alteration in original) (quoting Lends His Horse v. Myrl & Roy's Paving, Inc., 2000 S.D. 146, ¶ 15, 619 N.W.2d 516, 520). See also Burke v. Butte Cnty., 2002 S.D. 17, ¶ 16, 640 N.W.2d 473, 478 (stating that "[the agency] is entitled to weigh the credibility of the witnesses and is free to choose between conflicting testimony").
[¶ 42.] In its 2011 findings of fact and conclusions of law, the Board found that Hyperion presented satisfactory justification for the extension.
The record supports this finding.
[¶ 43.] At the 2011 contested hearing, a Hyperion vice-president testified that the recession affected Hyperion's ability to begin constructing the facility. He also indicated that the uncertainty of the permit's status and the need to address two new federal emission requirements justified an extension. The vice-president finally indicated that Hyperion had recently identified a "coker quench" water system as an additional emission source, and therefore, Hyperion needed an extension to obtain an amended permit to include that emission source.
[¶ 45.] Although Citizens cross-examined Hyperion's vice-president regarding the reasons for the extension, the Board was best suited to determine the credibility of the vice-president and the weight to be given to his testimony. Further, Citizens provided no contradicting testimony. Therefore, after reviewing the entire record, we are not definitely and firmly convinced that the Board made a mistake. The Board did not clearly err in finding satisfactory justification for extension of the commence construction deadline.
[¶ 46.] Large process heaters at Hyperion's proposed facility will burn refinery gas to heat equipment used in the refinery process. There is no dispute that a carbon monoxide BACT limit is required for the heaters. The dispute is the achievable BACT limit.
[¶ 47.] ARSD 74:36:09:02 incorporates 40 C.F.R. section 52.21(b)(12), which defines the "best available control technology" for limiting regulated pollutant emissions at the proposed facility:
To establish a proper BACT limit for a permit under this rule, the proposed limit must be shown to be both: 1) the maximum degree of reduction of a pollutant subject to regulation (considering energy, environmental, and economic impacts and other costs), and 2) achievable for such source. A BACT limit is achievable if the facility, when operating, is able to comply with that emission limit.
[¶ 48.] DENR proposed the 0.007 lb/mmBtu BACT limit, which the Board adopted. Hyperion argues that limit is not supported by evidence and is unachievable for its facility. Hyperion argues that a 0.010 lb/mmBtu limit is supported by the evidence. Hyperion contends that the Board clearly erred in adopting DENR's proposed limit. We "give great weight to the findings of the agency and reverse only when those findings are clearly erroneous in light of the entire record." Williams v. S.D. Dept. of Agric., 2010 S.D. 19, ¶ 5, 779 N.W.2d 397, 400.
[¶ 49.] Because a PSD permit must be issued before construction is initiated, the achievable BACT limit is based on agency
[¶ 50.] Hyperion argues that the Board clearly erred in relying on DENR's evidence. Hyperion contends that the other facilities and their carbon monoxide emission limits were not comparable to Hyperion's proposed facility.
[¶ 51.] Kyrik Rombough, DENR's Natural Resources Engineering Director, testified at the 2009 hearing. He testified that he converted emission limit measurements used by the reviewed facilities to the "lb/mmBtu" emission limit measurement imposed in this permit. Rombough indicated that after the conversion, the other facilities' emission limits were equivalent to the 0.007 lb/mmBtu limit. Hyperion challenges the comparison of the emission limit measurements from other facilities.
[¶ 52.] Hyperion first challenges DENR's reliance on the Baytown refinery in Texas. Hyperion points out that Baytown was an ethylene production facility, unlike Hyperion's proposed oil refinery. Hyperion also points out that Baytown's carbon monoxide BACT limit was revised and is currently less stringent than Hyperion's proposed 0.010 lb/mmBtu limit. However, Rombough testified that the fuels burned in Baytown's process heaters were similar to Hyperion's proposed fuels. Rombough further testified he had verified with the Texas permitting agency that Baytown's achievable limit was equivalent to a 0.007 lb/mmBtu limit.
[¶ 53.] Hyperion also challenges DENR's reliance on the CENCO refinery. Hyperion contends that this facility never operated, and therefore, its ability to achieve a limit equivalent to 0.007 lb/ mmBtu was not substantiated through performance tests. Rombough acknowledged that CENCO never operated. Rombough, however, indicated that CENCO's limit — a limit that converted to a 0.007 lb/mmBtu limit — was based on two operational facilities (TOSCO and All Air Products) whose permits required a limit equivalent to 0.007 lb/mmBtu. Rombough also testified that he had analyzed a TOSCO performance test, which indicated that TOSCO had complied with an emission limit equivalent to the 0.007 lb/mmBtu limit. Although Hyperion relies on its expert, who opined that these facilities were not comparable because of differences in the refinery fuel gases, the Board was best suited to adopt the expert's testimony that the Board believed was more persuasive.
[¶ 54.] Hyperion finally contends that the Board erred in relying on the Big West refinery because it was never permitted or built. However, in Big West's application for a PSD permit, the applicant itself asserted that a 0.007 lb/mmBtu limit was achieved by process heaters burning refinery gas in testing conducted by California. Although Big West never operated, the evidence reflects that the limit was determined by performance testing.
[¶ 55.] We also note that Hyperion's permit was reconsidered by the Board in the 2011 contested case proceedings. DENR had reevaluated Hyperion's BACT limit to ensure that it was current. DENR considered updated data, new permits, and new regulations regarding BACT limits. Both DENR and the Board reaffirmed the 0.007 lb/mmBtu limit in light of new developments regarding carbon monoxide BACT limits.
[¶ 56.] Hyperion, however, contends that publication of new EPA regulations before the 2011 hearing substantiated its inability to achieve a 0.007 lb/mmBtu limit.
[¶ 57.] DENR, however, explained that when the new EPA background testing data was converted for comparison purposes, it revealed 423 test results at new facilities with limits less than the EPA average. Therefore, in DENR's view, the new regulations supported a 0.007 lb/ mmBtu BACT limit. Further, Rombough testified that the EPA employed a limits testing method that differed from Hyperion's method. The Board adopted DENR's view, finding that Hyperion's limit "contain[ed] both filterable and condensable particulate matters, whereas EPA's new regulation only include[d] filterable material."
[¶ 58.] We acknowledge that Hyperion presented testimony supporting its proposed limit. We also acknowledge that some of DENR's comparative evidence was subject to different interpretations. But ultimately, the comparability of other facilities involved conflicting evidence. As previously noted, under these circumstances, we "defer to the agency on the credibility of a witness who testified live because the agency `is in a better position... to evaluate the persuasiveness of [witness] testimony.'" McKibben, 2009 S.D. 47, ¶ 11, 767 N.W.2d at 894 (second alteration in original) (quoting Lends His Horse, 2000 S.D. 146, ¶ 15, 619 N.W.2d at 520). The Board did not clearly err in deciding that the 0.007 lb/mmBtu BACT limit was achievable for Hyperion's project.
[¶ 59.] Affirmed.
[¶ 61.] CALDWELL, Retired Circuit Court Judge, sitting for WILBUR, Justice, disqualified.
(Emphasis added.) A permit is a "license" for purposes of this statute. See SDCL 1-26-1(4). However, SDCL 1-26-28 did not apply to Hyperion's application for the extension. Hyperion requested that condition 2.1 be amended to extend the construction deadline. Hyperion did not request a "renewal" or a "new" permit. See id.
Citizens also argue that Hyperion was required to request a temporary extension when it appeared that DENR would be unable to act on the requested extension within the initial eighteen-month deadline. We decline to consider this argument. Citizens presented no authority allowing DENR to grant temporary extensions without determining whether the extension was justified.
