1. Regulatory Update New Source Review Permitting Case Studies & Regulatory Updates August 26, 2009 ARIPPA Technical Symposium trinityconsultants.com

2. Agenda  PM 2.5 NSR  Review of PM2.5 NAAQS and key elements of the Final PM 2.5 NSR Rule  Update on Condensables Measurement  Three Case Studies in Permitting PM 2.5 Projects  CAIR Update  Proposed NO 2 NAAQS Revision © 2009, Trinity Consultants, All rights reserved.

3. PM 2.5 Particles  “Primary” particles:  Emitted directly into the air as a solid or liquid particle  Examples: elemental carbon from diesel engines or fire activities, condensable organic particles from gasoline engines  “Secondary” particles:  Form in the atmosphere as a result various chemical reactions involving gas phase precursors  PM 2.5 Precursors: SO 2, NO x, VOCs and ammonia. © 2009, Trinity Consultants, All rights reserved.

4. PM 2.5 NAAQS  Annual average: 15 μ g/m 3  3-yr average of annual mean, averaged spatially  Remand issued by U.S. Court of Appeals in Feb. 2009  24-hour average: 35 μ g/m 3 *  3-yr average of 98 th percentile at each monitor * 24-Hours Standard was originally 65 u g/m 3 (in 1997) – revised standard promulgated on 12/18/06. © 2009, Trinity Consultants, All rights reserved.

5. PM 2.5 Nonattainment in Pennsylvania (1997 Standard) © 2009, Trinity Consultants, All rights reserved.

6. Region 3 Final 24-Hour PM 2.5 Nonattainment Areas (2006 Standard)  Counties previously considered attainment:  Lehigh  Northampton © 2009, Trinity Consultants, All rights reserved. http://www.epa.gov/pmdesignations/2006standards/final/region3.htm

7. PM 2.5 Nonattainment Timeline © 2009, Trinity Consultants, All rights reserved. Table in part from http://www.epa.gov/oar/particlepollution/naaqsrev2006.html

8. New Source Review 101  Federal pre-construction air permitting program designed to:  Ensure ambient air quality standards continue to be met in “clean air” (attainment) areas  Prevention of Significant Deterioration (PSD)  Ensure state-of-the-art pollution controls are installed on new or existing facilities undergoing major modifications  Nonattainment New Source Review (NA NSR) © 2009, Trinity Consultants, All rights reserved.

9. PM 2.5 Implementation Rule  Federal Register Notice May 16, 2008 (effective July 15, 2008)  Finalized NSR Provisions  Applicability of NSR to PM 2.5 Precursors  Major Source Thresholds  Significant Emission Rates  Offset Ratios for PM 2.5  Interpollutant Trading for Offsets  Note: Rule did not address PSD modeling requirements. © 2009, Trinity Consultants, All rights reserved.

10. PM 2.5 Implementation Rule Treatment of PM 2.5 Precursors  SO 2 – “Mandatory Precursor”  NO x – “Presumptive Precursor”  Unless a state can demonstrate that NO x is not a significant contributor to PM 2.5 formation  VOCs and NH 3 – “Candidate Precursors”  Not precursors, unless a state demonstrates that they are a significant contributor to PM 2.5 formation © 2009, Trinity Consultants, All rights reserved.

11. Implementation Timing in PA  PSD  PM 2.5 Implementation went into effect July 15, 2008 since delegated program  Complete (“in the pipeline”) PSD permit applications can continue to rely on 1997 transitional guidance  However, EPA has currently stayed this provision (until 9/1/09 or longer). Recent EPA Orders necessitate case-by-case application of surrogate policy. © 2009, Trinity Consultants, All rights reserved.

12. Implementation Timing in PA  NA NSR  According to PA DEP, NA NSR SIP (Chapter 127) does not apply to PM 2.5 nonattainment (follow Appendix S)  NO x is not treated as precursor for time being  Provides for 10 year lookback in determining past actual emissions for netting  Draft PM 2.5 implementation proposal in review process  DEP does not have plans to add VOC or NH 3 as PM 2.5 precursor. Nor do they expect to rebut NO x as a PM 2.5 precursor © 2009, Trinity Consultants, All rights reserved.

13. Status of PM 2.5 Rule Implementation in PA  Once Chapter 127 is updated for PM 2.5....  5 year baseline actual emissions period (except with DEP approval) will apply (vs. 10 year baseline period in Federal rules)  De minimis increase calculation (10-yr contemporaneous period computation) in § 127.203 may apply © 2009, Trinity Consultants, All rights reserved.

14. What about Condensables?  As per the 05/16/08 final rule, condensables (CPM) need not be considered in setting emission limits and determining NSR applicability for PM, PM 10, and PM 2.5 until the earlier of  Date EPA comes up with an acceptable test method  January 1, 2011  States have discretion/primacy on CPM inclusion (EPA Region 3 strongly encouraging states to include CPM limits during transition period)  PA DEP has issued permits with CPM limits © 2009, Trinity Consultants, All rights reserved.

15. Status of PM 2.5 Test Methods  March 25, 2009 EPA proposed new test methods for filterable PM 10 and PM 2.5, as well as condensable PM (74 FR 12970)  Proposed Method 201A  OTM 27 – Cascade Impactor (Gravimetric) Method  Proposed Method 202  OTM 28 – Dry Impinger Method  http://earth1.epa.gov/ttn/emc/proposed.html http://earth1.epa.gov/ttn/emc/proposed.html  Major concern with EPA’s proposal to shorten/abandon the original transition period (January 1, 2011) © 2009, Trinity Consultants, All rights reserved.

16. Case Studies  Case Study 1: Major New Source in PM 2.5 Attainment County  Case Study 2: Major New Source in PM 2.5 Nonattainment County  Case Study 3: Major Modification to Existing Major Source in PM 2.5 Nonattainment County © 2009, Trinity Consultants, All rights reserved.

17.  Is the facility a new or existing major source?  Attainment areas  100 tpy for PSD “listed” source categories  250 tpy for all other source categories  Nonattainment areas  100 tpy direct PM 2.5 emissions for NA NSR  If new source is major (PTE>MST) PSD and/or NA NSR apply.  If new source is not major (PTE<MST) NSR does not apply.  If existing major source... Major Source Thresholds © 2009, Trinity Consultants, All rights reserved.

18. Modifications to Existing Source  Step 1 – Does project result in a project increase greater than the significant emission rates (SERs)?  Step 2 – Is net emissions change greater than the SERs?  SERs triggering PSD for PM 2.5 at existing major sources  Net change includes contemporaneous changes (5 years prior to start of construction and ending with start of operation)  According to EPA, if the PSD significance level is exceeded for a precursor, but not for direct PM 2.5, then PSD review is triggered for the precursor but not for PM 2.5. © 2009, Trinity Consultants, All rights reserved. TPY PM 2.5 10 SO 2 40 VOCs, NO x 40* *if state IDs as precursor

19.  Condensables  PA DEP has not been requiring inclusion of condensables into netting equations at this time (other states may ask for CPM emissions to be quantified).  Be prepared to quantify PM 2.5 filterable and condensable (consider proactive testing)  Fugitive emissions  For now, all sources must include fugitives in netting  Awaiting EPA reconsideration on whether fugitives are to be excluded from non “listed” sources  Ensure data is available to accurately quantify fugitive emissions (i.e., vehicle mileage for fugitive road emissions) Are Condensables and Fugitives Considered? © 2009, Trinity Consultants, All rights reserved.

20. Case Study Example 1  A new “listed” source is to be located in a PM 2.5 attainment area and has the potential to emit 300 tpy PM 2.5, 300 tpy of NO x and 50 tpy of SO 2. Would this project be subject to NA NSR and PSD? © 2009, Trinity Consultants, All rights reserved.

21. Case Study Example 1  Step 1: Is the planned source a new “major source”? © 2009, Trinity Consultants, All rights reserved. Potential Emissions (tpy) Threshold (tpy) Major? PM 2.5 300100Yes SO 2 50100No NO x 300100Yes

22. Case Study Example 1  Applicability Determination:  PSD applies for both PM 2.5 and NO x since the project will be a new major source.  PSD does not apply for SO 2 since the project is not major for that pollutant  NA NSR does not apply to PM 2.5 or SO 2 since located in an attainment area.  Note that since the project is in PA, and thus the OTR, NO x would also be subject to NA NSR as an ozone precursor. NA NSR requirements discussed later. © 2009, Trinity Consultants, All rights reserved.

23.  Best Available Control Technology Analysis (BACT)  Class I Areas  Additional Impacts Analysis  Preconstruction Monitoring Requirement  Air Quality Analysis (NAAQS, PSD Increment) Requirements Under PSD © 2009, Trinity Consultants, All rights reserved.

24.  Background data  For NAAQS analysis, background added to modeled concentration; typically one value for the entire year  States set background concentrations for modeling based on local monitoring data or will require sites to install and operate onsite monitor  Actual “background monitor” concentrations are well over half the standard in many cases  Example, Centre County annual avg. PM 2.5 for 2008 is 11.7 ug/m 3 versus NAAQS of 15 ug/m 3  Results in limited margin for expansions involving plant PM 2.5 emissions in attainment areas  Secondary transformations  EPA not requiring modeling at this time (models not available)  Fugitive sources (i.e., roads, piles, material transfers)  Modeling fugitives can be extremely time and resource consuming  Regional Inventory modeling Concerns Regarding PSD Modeling © 2009, Trinity Consultants, All rights reserved.

25. Case Study Example 2  The same source as in Example 1 (potential to emit 300 tpy PM 2.5, 300 tpy of NO x and 50 tpy of SO 2 ) is to be built in a nonattainment area for PM 2.5.  Would this project be subject to NA NSR and PSD? © 2009, Trinity Consultants, All rights reserved.

26. Case Study Example 2  Step 1: Is the planned source a new “major source”?  Same as before... © 2009, Trinity Consultants, All rights reserved. Potential Emissions (tpy) Threshold (tpy) Major? PM 2.5 300100Yes SO 2 50100No NO x 300100Yes

27. Case Study Example 2  Applicability Determination:  NA NSR applies for PM 2.5 since the project is major in a nonattainment area.  NA NSR (and PSD) does not apply to SO 2 since the source is not major for SO 2 (precursors are treated independently similar to ozone nonattainment).  PSD applies for NO x since the project is major and since NO x is not a PM 2.5 precursor under Appendix S (current applicable NA NSR regulation).  Note that since the project is in the OTR, NO x would be subject to NA NSR as an ozone precursor.  Once PA adopts its PM 2.5 NA NSR SIP revisions, NO x would also be regulated as PM 2.5 precursor (offset locale would be most notable difference) © 2009, Trinity Consultants, All rights reserved.

28.  Lowest Achievable Emission Rate  Lowest achievable emission rate of a similar source anywhere in the country.  Difficult to determine and potentially expensive to meet LAER  Alternative Sites Analysis  Obtain Offsets  Generally, offsets must be obtained from same nonattainment area (unless study proves emissions contribute to another nonattainment area)  Offset availability can be substantial permitting hurdle. Requirements Under NA NSR © 2009, Trinity Consultants, All rights reserved.

29. Nonattainment Areas: Interpollutant Trading  EPA allows regional or statewide interpollutant trading of PM 2.5 and its precursors  Permit-by-permit trading prohibited  Suggested trading ratios – states may use or develop their own:  200 tons NO X per ton of primary PM 2.5, and vice versa (Eastern US)  40 tons SO 2 per ton of primary PM 2.5, and vice versa  First example of interpollutant trading (SO 2 for PM 2.5 ) approved in PA in May 2009 © 2009, Trinity Consultants, All rights reserved.

30. Case Study Example 3  An existing major source of PM 2.5, NO x and SO x in a PM 2.5 nonattainment area proposes to modify one of its boilers. The largest amount of emissions (24-month average) reported in the past 10 year period and the new potential to emit for the boiler as are follows:  Is the project subject to PSD and/or NA NSR? © 2009, Trinity Consultants, All rights reserved. Pollutant Historical (tpy) Potential Emissions (tpy) PM 2.5 1021 SO 2 75200 NO x 125200

31. Case Study Example 3  Step 1: Is the project significant? © 2009, Trinity Consultants, All rights reserved. Pollutant Historical (tpy) Potential Emission s (tpy) Project Increase (tpy) SER (tpy)Above SER/ Trigger Netting? PM 2.5 10211110Yes SO 2 7520012540Yes NO x 1252007540Yes

32. Case Study Example 3  In the past year, the facility also decommissioned a small emergency generator with actual emissions decreases of 2 tpy of PM 2.5, 5 tpy of SO 2 and 10 tpy of NO x. This is the only project in the past 5 years. Does the project trigger PSD and/or NA NSR requirements? © 2009, Trinity Consultants, All rights reserved.

33. Case Study Example 3  Step 2 – Is there a net emission increase?  The decommissioning of the emergency generator falls within the contemporaneous period (i.e., it occurred less than 5 years from the start of construction on the project) and as such it is a contemporaneous change. © 2009, Trinity Consultants, All rights reserved. Pollutant Project Increase (tpy) SER (tpy) Trigger Netting? Contemp. Changes (tpy) Net Emissions Change (tpy) Above SER? PM 2.5 1110Yes-29No SO 2 12540Yes-5120Yes NO x 7540Yes-1065Yes

34. Case Study Example 3  Applicability Determination:  Not subject to NA NSR for PM 2.5 since the project is not a major modification in a nonattainment area (PSD does not apply either).  Since PA DEP is following Appendix S for PM 2.5, de minimis netting under Chapter 127 is not required.  NA NSR (LAER, offsets) does apply to SO 2 since the source is a major modification for SO 2 and SO 2 is a precursor. The project is also subject to PSD for SO 2.  PSD applies for NO x since it is a significant emissions increase but NA NSR does not apply since NO x is not a PM 2.5 precursor under Appendix S.  In PA, NO x would trigger NA NSR review as an ozone precursor. © 2009, Trinity Consultants, All rights reserved.

35. PM 2.5 Strategy – Thinking Ahead  Gain a better understanding of PM 2.5 emissions, including condensables, for inventory purposes  Consider proactive stack testing (OTM 28)  Ensure inventories are complete as they are relied upon in netting analyses  File ERC applications for PM 2.5, SO 2, and NO x (trading is more stringent than OTR)  Make sure that any PM 2.5 limits are clearly specified as excluding condensables or condensables are properly accounted for in the limitation  Stay tuned for other rulings that may impact state- level implementation of PM 2.5 (CAIR, Revised NAAQS, etc.) © 2009, Trinity Consultants, All rights reserved.

36. CAIR

37. Clean Air Interstate Rule (CAIR)  January 2004 – EPA proposes the Interstate Air Quality Rule (IAQR)  May 12, 2005 – EPA issues CAIR  Covers 28 eastern states and the District of Columbia  Requires states to submit SIPs for significant SO 2 and NO x reductions from electric generating units  April 28, 2006 – EPA publishes CAIR FIPs with federal requirements to be followed until replaced by an approved SIP  40 CFR 75 Acid Rain Program and NO x SIP Call monitoring requirements © 2009, Trinity Consultants, All rights reserved.

38. CAIR Vacatur (1 of 2)  July 11, 2008 – after numerous legal challenges, the CAIR Rule vacated and remanded to EPA  “Because we find more than several fatal flaws in the rule and the Environmental Protection Agency (“EPA”) adopted the rule as one, integral action, we vacate the rule in its entirety and remand to EPA to promulgate a rule that is consistent with this opinion.”  December 23, 2008 – D.C. Court decides to remand, rather than vacate CAIR, thus leaving CAIR (as well as CAIR FIPs) in place until EPA issues a new rule to address the concerns in the July 2008 decision  EPA expects development of new rule could take approximately 2 years © 2009, Trinity Consultants, All rights reserved.

39. CAIR Vacatur ( 2 of 2 )  May 6, 2009 – EPA proposes stay of CAIR and CAIR FIP for the state of Minnesota  MN argued that EPA overstated its emissions and incorrectly included MN in the CAIR rule when it should not have  CAIR remains in place in its final form (no provisions were modified by the court) until EPA develops the replacement rule  The original CAIR deadlines are still in effect  EPA has converted NO x budget allowances into CAIR ozone season accounts (NO x budget accounts are “inactive”) © 2009, Trinity Consultants, All rights reserved.

40. Revised NO 2 NAAQS

41. Sources of NO x Pollution Source: EPA Office of Air Quality Planning and Standards (http://www.epa.gov/air/nitrogenoxides/actions.html )http://www.epa.gov/air/nitrogenoxides/actions.html

42.  Current Annual Average Standard = 53 ppb (100 µg/m 3 )  Proposed revisions published in Federal Register on July 15, 2009  Proposed New 1-Hour Standard = 80 – 100 ppb  EPA seeking comment on alternative levels of the standard - from levels down to 65 ppb and up to 150 ppb  EPA seeking comment on an alternative approach to supplement the current annual standard with a community- wide 1-hr standard of 50 – 75 ppb  EPA is proposing to retain the current annual standard  EPA is proposing no changes to the secondary standard under this review  Comments due by September 15, 2009  Public hearings in Arlington, VA and LA in August Proposed Revisions to NO 2 NAAQS Sources with a modeled impact > ~5 µg/m 3 will likely have trouble meeting the 1-hr standard as proposed. © 2009, Trinity Consultants, All rights reserved.

43. 1-Hour NO 2 Standard Implementation  January 2010 – EPA issues final standard  January 2011 – States submit designation recommendations to EPA  January 2012 – EPA designates most areas “unclassifiable” (because near-road monitors not in place)  January 2013 – New near-road monitors in place  January 2015 – Next NO 2 NAAQS review  January 2017 – Non-attainment redesignations  January 2022 – Attainment date © 2009, Trinity Consultants, All rights reserved.

44. Questions? Ian Donaldson (idonalds@TrinityConsultants.com)idonalds@TrinityConsultants.com MD Office: 240-379-7490 x106 Wendy Merz (wmerz@TrinityConsultants.com)wmerz@TrinityConsultants.com PA Office: 610-777-0350