1. Air Pollution Control Board October 1, 2008 Thomas W. Easterly, P.E., DEE, QEP Commissioner, Indiana Department of Environmental Management We Protect Hoosiers and Our Environment

2. US Courts Overturning Rules 2007—Industrial, Commercial and Institutional (ICI) Boiler MACT—directly impacted about 10 sources with coal fired boilers May 2008—Clean Air Mercury Rule (CAMR) impacted all power plants July 2008—Clean Air Interstate Rule (CAIR) impacted all power plants and most Indiana air pollution strategies We Protect Hoosiers and Our Environment

3. Boiler MACT IDEM is seeking guidance and direction from U.S. EPA on how to handle Clean Air Act 112g and 112j requirements for these sources U.S. EPA has sent 114 letters to Indiana sources requesting information regarding their combustion sources We Protect Hoosiers and Our Environment

4. CAMR EPA has until October 17 to appeal this decision Indiana’s Attorney General’s Office has issued an opinion that Indiana’s CAMR rule cannot be enforced due to its reliance on the trading program No immediate action is necessary in order to meet federal rule or requirements pertaining to mercury We Protect Hoosiers and Our Environment

5. Clean Air Interstate Rule While the Court has issued an opinion vacating EPA’s regulations, the Court has not issued a “mandate” so EPA’s CAIR rule currently remains in effect As long as EPA’s CAIR rule remains in effect, IDEM’s CAIR regulations can be enforced We Protect Hoosiers and Our Environment

6. Clean Air Interstate Rule On September 24, – EPA, – the Natural Resources Defense Council, – the Environmental Defense Fund, and – the National Mining Association asked the court to reconsider its vacature of CAIR We Protect Hoosiers and Our Environment

7. CAIR Indiana’s CAIR Rule Addressed Four Issues: – Indiana’s impact on out of state ozone and fine particle nonattainment areas, meeting the Clear Air Act SIP requirements of 110(a)(2)(D) for Indiana – It served as the backbone for Indiana’s attainment and maintenance strategy for the ozone and fine particle standards – It met the reasonably available control technology (RACT) requirements for electric generating units (EGUs) located in ozone and fine particle nonattainment areas – Indiana’s contribution to Class 1 areas for regional haze purposes, by serving as best available retrofit technology (BART) for EGUs We Protect Hoosiers and Our Environment

8. CAIR-Continued Why does Indiana need to take action now? – Improve air quality in the interest of public health – Meet past due and upcoming federal requirements. Provide for an approvable 110(a)(2)(D) SIP to address interstate transport and reduce likelihood of Section 126 action against Indiana and sources within Provide for approvable attainment, rate of progress, and RACT SIPs for the annual PM 2.5 standard – SIPs were due on April 5, 2008 and Indiana could be placed on a sanction clock by close of 2008 We Protect Hoosiers and Our Environment

9. CAIR-Continued Why does Indiana need to take action now? Provide for approvable regional haze SIP and address BART requirements for EGUs – SIPs were due December 2007 Assist Indiana in meeting annual and 24-hour PM 2.5 standards, as well as the new ozone standard We Protect Hoosiers and Our Environment

10. CAIR-Continued What does Indiana intend to do? Reinstate the NOx SIP Call – Present an emergency rule to the Air Pollution Control Board to: remove the sunset language from 326 IAC 10-4-16, and repeal the CAIR ozone season program at 326 IAC 24-3 reinstating the NOx SIP Call program for 2009 and beyond – Publish Section 7 notice (a limited policy alternative rulemaking under IC 13-14-9-7) by December 2008 to have rule in place prior emergency rule expiring – Cap and trade program managed by U.S. EPA We Protect Hoosiers and Our Environment

11. CAIR-Continued What does Indiana intend to do? Establish an Emergency Indiana Clean Air Replacement Rule – Present an emergency rule to the Air Pollution Control Board to establish NOx and SO2 annual allowance budgets at the unit level based on what a unit would have received in conjunction with Phase I of the vacated CAIR rule – Repeal annual NOx and SO2 programs at 326 IAC 24-1 and 24-2 (Indiana’s CAIR rule) We Protect Hoosiers and Our Environment

12. CAIR-Continued What does Indiana intend to do? Establish an Emergency Indiana Clean Air Replacement Rule – The emergency rule will have an effective date that coincides with, or is contingent upon, the issuance of the mandate – The emergency rule will provide an array of flexibility options – Allowance budgets established for 2009 and 2010 – Include an “out” clause should a more stringent federal program be established We Protect Hoosiers and Our Environment

13. CAIR-Continued What does Indiana intend to do? Establish a Permanent Indiana Clean Air Replacement Rule – Present a rule to the Air Pollution Control Board to establish NOx and SO2 annual allowance budgets at the unit level into the future Phase I will be defined as years 2009 through 2014 Phase II will be defined as 2015 and beyond – Establish mechanism for retirement of SO2 credits We Protect Hoosiers and Our Environment

14. CAIR-Continued What does Indiana intend to do? Establish a Permanent Indiana Clean Air Replacement Rule – The rule will provide an array of flexibility options – Include an “out” clause should a more stringent federal program be established – Publish first notice by the end of the year (2008) We Protect Hoosiers and Our Environment

15. CAIR-Continued What does Indiana intend to do? Potential Flexibility Options – Source-wide and intrastate system emissions averaging for units operated under common ownership – Multi-year emissions averaging plan or compliance order. Both of these would be in the form of a binding agreement We Protect Hoosiers and Our Environment

16. CAIR-Continued What does Indiana intend to do? Potential Flexibility Options – Intrastate and interstate emission trading program through agreements with sources in Indiana or other states to use their emission credits – An Indiana certification statement would be required to ensure reductions attained elsewhere are: Realized in conjunction with a specified baseline within an eligible state Not used as credits to satisfy a separate legal or regulatory obligation We Protect Hoosiers and Our Environment

17. Closing Remarks and Questions We Protect Hoosiers and Our Environment

18. Preliminary Ozone Season Summary Report Air Pollution Control Board October 1, 2008 Daniel Murray, Assistant Commissioner Indiana Department of Environmental Management We Protect Hoosiers and Our Environment

19. *2008 monitoring data is preliminary and not yet fully quality assured. We Protect Hoosiers and Our Environment

21. Current Status of 8-Hour Ozone Nonattainment Areas through 2008 We Protect Hoosiers and Our Environment

22. New 8-Hour Ozone Standard at 0.075 ppm Designation Status based on 2006-2008 monitoring data We Protect Hoosiers and Our Environment

23. Summary ●Ground-level ozone air quality continues to improve throughout the State of Indiana. ●All air quality monitoring sites were below the current 8-Hour Ozone National Ambient Air Quality Standard (85 parts per billion) during the 2008 ozone monitoring season. ●Only twelve counties possess a three-year design value (2006 – 2008) above the new 8-Hour ozone standard. This is a significant improvement compared to 2005-2007, when twenty-five counties maintained three-year design values above the standard. However, further improvements are necessary. We Protect Hoosiers and Our Environment