(click to enlarge)

This recent Google Earth image shows the site of the proposed Two Elk power plant, which Wyoming DEQ has deemed as under construction for some 15 years, maintaining a pollution emissions permit. (click to enlarge)

Citizens ask state to revoke Two Elk power plant permit

By Dustin Bleizeffer 
— April 25, 2014

After nearly 15 years of successive extensions granted by the Wyoming Department of Environmental Quality (DEQ), a Colorado developer still holds a permit to build the Two Elk coal-fired power plant in northeast Wyoming, despite the fact that no power plant has been built, and there’s been minimal progress in construction, financing or a contract to connect it to the grid.

Dustin Bleizeffer

Dustin Bleizeffer

On Thursday, the Sierra Club and the Sheridan-based landowner advocacy organization Powder River Basin Resource Council formally petitioned Wyoming DEQ’s governing body, the Wyoming Environmental Quality Council, to review the status of that air quality permit.

While Wyoming DEQ does not permit the construction of such facilities, it does have authority to grant air quality permits in Wyoming, which set the parameters for how much pollution can be emitted from a stationary facility.

The petitioners state that the Greenwood Village, Colo.-based North American Power Group, “has not carried out any physical on-site construction activities … since it poured (a) stack foundation in 2005, but certainly not since it entered into the settlement agreement with the Department in November 2007, over six years ago.”

The permit in question sets parameters for the power plant’s emissions. Such permits are valid for two years, during which time the permittee must begin construction. The idea behind the two-year limit is that emissions technology continuously advances, and an emissions control plan that is two years old should undergo a new assessment of Best Available Control Technology if construction hasn’t commenced.

“It is high time for our environmental agencies to take another look at the Two Elk permit and recognize that it is invalid,” Shannon Anderson of the Powder River Basin Resource Council (PRBRC) said in a press release. “Without adequate enforcement, permit conditions are rendered meaningless, and unfortunately, DEQ’s enforcement of the Two Elk permit has been dismal. It’s time for citizens to step in and for our environmental agencies to step it up.”

The petition requests the Environmental Quality Council (EQC) — a seven-member board of three Democratic and four Republican Wyoming citizens — to hold a public hearing on the matter, and ask Wyoming DEQ and Two Elk to prove the validity of the permit.

In an interview with WyoFile, Wyoming DEQ Air Quality Division administrator Steven Dietrich said the Two Elk developer still holds what he considers to be a valid air quality permit. The permit in question today was issued in 2003.

Dietrich said he has the authority to determine the validity of air quality permits, and he considers the 2003 Two Elk air quality permit as valid based on proof of construction activity. That proof comes in the form of quarterly reports from Two Elk and DEQ’s own regular field inspections of the power plant site, which is located next to Arch Coal’s Black Thunder mine southeast of Wright.

Dietrich indicated to WyoFile that since 2003, “There has been active construction. … It hasn’t been continuous.”

Locals in southern Campbell County say there’s been little to no construction activity at the Two Elk site in 18 years, except for a metal storage building, a concrete slab and some earth work to level out a site for construction.

“Locally, we call the plant ‘No Elk,’” local landowner and PRBRC member L.J. Turner said in a press statement. “It’s been a running joke out here for many years, but unfortunately because of the lax enforcement, our environmental agencies are turning into the real joke. Citizens of Wyoming deserve better than that.”

Neighbors adjoining the site, including rancher Dan Tracy, told WyoFile there hasn’t been any active construction at the site in the past few years.

A recent story by the Gillette News-Record about boom times in Wright, Wyo., owes recent growth in the community to a surge in uranium and oil development, but makes no mention of the Two Elk power plant project, which was supposed to inundate the town with hundreds of workers during construction, and create many permanent jobs in the area.

(click to enlarge)

This historic photo, reportedly taken by a Black Thunder mine employee, shows two bull elk from the Rochelle Hills herd. The facilities in the background are Black Thunder mine’s plant, and do not include any facilities related to North American Power Group’s proposed “Two Elk” power plant. (click to enlarge)

In 2007, North American Power Group worked out a settlement agreement with Wyoming DEQ that would temporarily hold the 2003 air quality permit as valid, with the agreement that — among other stipulations — the company would submit an application to modify the permit. The new information was supposed to enable Wyoming DEQ to apply a new Best Available Control Technology review, and possibly modify the parameters of allowable emissions from the power plant.

Dietrich said Two Elk submitted the application to modify the permit in July of 2010, but the application was considered incomplete. Wyoming DEQ requested the necessary missing information in August 2010, but so far Two Elk hasn’t supplied the requested information, according to Dietrich.

“So we are not able to call the application complete,” Dietrich said, adding that Wyoming DEQ still considers the 2003 air quality permit to be valid based on the terms of the 2007 settlement agreement and ongoing construction reports.

North American Power Group did not respond to multiple requests by WyoFile on Thursday to discuss Two Elk and permitting matters.

North American Power Group first proposed the 320-megawatt Two Elk power plant 18 years ago with little financing but for two issuances of tax-exempt industrial development bonds — totaling $445 million — approved by Campbell County commissioners and two successive Wyoming governors; Jim Geringer (R) and Dave Freudenthal (D). After California was plagued by “rolling brown-outs” in a supposed electrical generation and transmission capacity crisis in 2001, North American Power Group quickly proposed six more major power plants in Wyoming’s Powder River Basin. But so far, the company hasn’t secured financing, nor has it secured an agreement with electrical transmission carriers to connect any of the proposed power plants to the grid.

It was a loose interpretation of Internal Revenue Service code that granted Two Elk the status of a waste disposal facility in order to qualify for the tax-exempt industrial development bonds. North American Power Group convinced the IRS that because the plant would burn “waste coal” — coal from nearby Powder River Basin coal mines that is exposed in the mining process but not sold to customers because it doesn’t meet quality specifications — that the plant qualified as a waste disposal facility.

In 2011, WyoFile reported that the IRS had conducted an audit of the waste disposal facility classification and revoked the tax-exempt status due to lack of construction on the power plant. North American Power Group officials say that the $445 million remains in escrow. Dietrich said that North American Power Group has asked Wyoming DEQ if it can switch the Two Elk design to burn biomass (wood) instead of coal.

Shannon Anderson, of the PRBRC, said her organization wants the Wyoming EQC to review the validity of the Two Elk air quality permit now because that permit exempts the facility from complying with pending new greenhouse gas emission limits for coal-fired power plants and other major GHG-emitting facilities under consideration at the U.S. Environmental Protection Agency.

“They (the proposed Two Elk power plant) have actually been grandfathered as an existing facility, because there’s an existing permit and it’s (supposedly) under construction,” said Anderson, adding that if the Two Elk power plant is built, it should be forced to comply with the EPA’s pending greenhouse gas emission standards.

For more WyoFile reporting on Two Elk and North American Power Group, read these past stories:
Two Elk stimulus grant suspended; under review by U.S. Attorney, April 2013
‘Stimulus’ for Two Elk; Big checks but no new jobs, September 2011

For the complete catalogue of WyoFile stories on Two Elk, check out our Two Elk archive.

 — Dustin Bleizeffer is WyoFile editor-in-chief. You can reach him at (307) 267-3327 or email dustin@wyofile.com. Follow Dustin on Twitter @DBleizeffer

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Published on April 25, 2014

{ 11 comments }

rbd April 30, 2014 at 8:09 pm

I am sorry Connie, but I do not see anything in the article below that remotely indicates that the Sierra Club supports responsible use of energy. If anything, it is another radical environmental position to end the use of energy in this country at all costs – economy be damned.

http://wyofile.com/dustin/sierra-club-leave-wyomings-coal-oil-shale-ground/

Again, I believe we do need to move to cleaner energy sources, responsible energy use, responsible energy development. But the radical movement to kill coal in this country at all costs is not responsible in my opinion. Kill coal because natural gas is “clean” energy. Ban fracing, everybody wants heat and lights, but no fracing? No nuclear, because it is dangerous. Great, let’s use the wind (we certainly have had enough of it the last few days) and ignore the mass of birds/bats killed by wind energy. Solar?

What we really need in this country is leadership willing to make the investment in cleaner coal technologies, continued development of fracing and drilling techniques, wind energy, solar…..in a responsible and environmentally more friendly manner. Not drill baby drill, but utilizing the technology to drill and produce safely. Same with wind and other “green” energy sources. We will either regulate ourselves into the dark ages or build an energy plan with both the environment and responsible energy incorporated.

lousewort rodgers April 30, 2014 at 2:29 pm

Connie; No one is promoting a Head in the Sand approach. The Two Elk project looks to be toast. Didn’t this project start out with the carbon-capture sierra club euphoria. Sadly the sierra club co2 Sky is Falling approach is dysfunctional and might actually over-politicize the situation.

Connie Wilbert April 29, 2014 at 9:16 am

Hi, RBD and other commenters. I’ll just add a couple of thoughts to this interesting string of messages. Just like PRBRC, the Sierra Club in Wyoming is made up of Wyoming citizens, and we do have a good-sized Wyoming membership roster. Our board members and our small staff are all Wyoming citizens. (I myself am a Wyoming native.) Most of our members smile at the notion of being radicals: we are Wyoming folks just like you, and we share the same values as most Wyomingites. We hunt, fish, hike, and camp just like everyone else here who loves our wide open spaces, wildlife, clean air, and clean water.

We do think we need to move away from fossil fuels, which does not even remotely mean we are “anti-energy at all costs”. In fact, we support responsible energy development and use, recognizing that we all use energy every day. We do think it’s time for Wyoming to begin planning for a future that will not include such heavy reliance on coal and other fossil fuels. This future is coming, and we can either plan and prepare for it, or we can poke our heads in the sand and stay in denial until it happens to us. Planning is a better choice for Wyoming citizens.

We joined with PRBRC on this Two Elk petition because the Wyoming DEQ, by maintaining that a nearly 20-year-old pollution permit on a project that has never been built (or even meaningfully started) is still valid, is not doing its job to enforce the terms of the permit.

Connie Wilbert, Organizer, Wyoming Chapter Sierra Club

Bob LeResche April 28, 2014 at 12:11 pm

Thanks, Dustin. That explains it. There really is no $445 million. NAPG probably returned any bond proceeds they had managed to collect initially rather than trying to remarket the bonds at the higher interest rates brought on by the IRS decision, I guess. Holding securities “in escrow” on one’s books and pretending to pay oneself interest is a tried & true smoke and mirrors move often used by grift— er, rather, financial engineers.

rbd April 27, 2014 at 7:54 am

Thank you for the response Shannon.

Claiming that “citizens” are behind the revocation of the Two Elk permits implies there is a significant populist movement leading the charge. In reality, you have one radical environmental group with very little support or members in this State and your organization chasing the Two Elk issue. The Sierra Club is anti-energy at all costs, thus have very little credibility with the mainstream.

If you had claimed citizens of the state where behind the unconstitutionality of the Hill Bill, I could go along with the use of “citizens.” I do not believe your organizations various positions on environmental matters represent anything close to a populist movement or for that matter represent what most citizens in this state support at the moment. It is a nice play on words.

Shannon, please do not get me wrong, I appreciate what the PRBRC does in the State and often support you positions on various matters. While the Sierra Club has spent too much time in the paint shed, I appreciate the PRBRC’s more common sense approach to environmental matters in our great State. Simply put, why not just state the obvious, the Sierra Club and PRBRC are asking the state to revoke the permits?

lousewort rodgers April 26, 2014 at 8:45 pm

Shannon: The PRBRC should demand better than second billing to the sierra club. Neither the sierra club nor alec has the best interest of Wyoming’s young people or citizens in mind.

DeweyV April 26, 2014 at 9:15 am

rbd—if corporations can be ‘people’, why can’t NGO’s be ‘citizens’ ?

Shannon Anderson April 26, 2014 at 7:24 am

Hi RBD, thanks for the comment. This effort was led by my group, the Powder River Basin Resource Council. Sierra Club asked to join in, and because of their great work on Two Elk over the years, we had no problem with them joining the petition. Regardless, our organization is made up of citizens. Our members are Wyoming citizens, our board members (who approve our legal actions) are Wyoming citizens, our staff members are Wyoming citizens, and a large number of our donors are Wyoming citizens. So, yes, it is accurate to say Wyoming citizens are asking the state to revoke the Two Elk permit. Thanks, Shannon Anderson, Organizer & Staff Attorney, Powder River Basin Resource Council

rbd April 25, 2014 at 9:42 pm

I think the title of the story is a bit misleading. Unless my definition of “citizen” is wrong, when did the Sierra Club and PRBRC become “citizens?”

Don’t get me wrong, I think the Two Elk project has been nothing but smoke and mirrors for years, but a more appropriate title might have been “Environmental Groups Challenge Extension of Two Elk Permits.” It is more accurate. Maybe we elected to make it look like ordinary citizens stepped up to challenge DEQ/State of Wyoming, but in reality, the radical Sierra Club is pushing this issue – just look at last weeks article about leaving coal in the ground.

Dustin, I have a lot of respect for your reporting – whether I agree with your positions or not – but I think you stepped over the line this time. My opinion. I agree with your position in the article, but not with your attempt to sensationalize it.

Dustin Bleizeffer April 25, 2014 at 3:01 pm

Hi Bob,
It’s my understanding that NAPG put the bonds up for sale to the public in 2007 (I don’t know if they all sold) but was forced to buy them back as a “purchase in lieu of remarketing” in November 2008. The company claims to be still holding them in escrow on its books, and paying interest to itself.
— Dustin Bleizeffer

Bob LeResche April 25, 2014 at 11:12 am

The “$445 million remains in escrow.” WHAT $445 million? The way I understood it was that Campbell Co. authorized the issuance of that principle amount of tax-exempt bonds under the State’s private activity bond cap, and the State allocated them that much cap. But were the bonds actually issued? If they were, I’d sure be curious to know how NAPG has serviced that debt all these years when re-investment interest rates have been so low?

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