An Overview of Environmental Issues Affecting the Energy Industry December 13, 2010 Thomas W. Easterly, P.E., BCEE, QEP Commissioner IN Department of Environmental Management

Proposed Transport Rule IDEM believes that we will meet the Statewide caps for 2012 without additional controls. IDEM believes that we will need one current project completed and another source controlled to meet the 2014 caps. The wording of the proposed rule does not appear to match U.S. EPA’s description of how the rule will be implemented. 2

Proposed Transport Rule As proposed, the State has no role in the Transport Rule unless we modify our SIP. This rule will allow U.S. EPA to approve our requests to redesignate the State of Indiana to attainment for PM 2.5. This rule will also allow U.S. EPA to approve our BART SIP submission. 3

NAAQS Revisions At the end of 2009, all of Indiana met every currently effective NAAQS for the first time since NAAQS were established in the 1970’s. – New 75 ppb 1 hour SO 2 Air Quality Standard. – New 100 ppb short term NO x Air Quality Standard. – U.S. EPA reconsideration of ppm ozone Air Quality Standard. – U.S. EPA review of the 15 microgram/cubic meter annual PM 2.5 Air Quality Standard. 4

June 6, 2010: U.S. EPA Announced a New SO 2 Standard set at 75 ppb SO 2 Design Values Based on Monitoring Data Standard at 75 ppb

Counties Where Current AQ May Meet the New SO 2 NAAQS Fountain Gibson Marion Warrick Wayne 6

Counties Where Current AQ May Not Meet the New SO 2 NAAQS Daviess Floyd Vigo Morgan Air Quality Modeling versus Monitoring Issue. 7

January 22, 2010: U.S. EPA Announced a New NO 2 Standard set at 100 ppb NO 2 Design Values Based on Monitoring Data

NO x Modeling Issues Indiana Air Quality Modeling indicates that many point sources, including natural gas peaking plants, model over the new one-hour standard. One source has modeled: – Over 1,000 times the standard at the fence line. – Above the standard at least 38 kilometers downwind. 9

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 15 µg/m 3

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 14 µg/m 3

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 11 µg/m 3

Mercury / HAPS The Attorney General has determined that the remand of the Clean Air Mercury Rule made Indiana’s mercury rule unenforceable. IDEM has no inside knowledge concerning U.S. EPA’s future EGU MACT proposal. U.S. EPA’s recent boiler MACT proposal may indicate future plans for the EGU MACT. 14

GHG Air Permits All permits issued after 1/1/2011 requiring PSD review that also increase GHG emissions by at least 75,000 tpy need GHG BACT. All permits issued after 6/30/2011 that increase GHG emissions by 75,000 tpy need GHG BACT and all sources with GHG emissions of at least 100,000 tpy need operating permits 15

GHG Air Permits IDEM is using the expedited rulemaking process and emergency rulemaking to obtain the legal authority to issue the federally required GHG permits by 1/2/2011. We can use the same process to adjust the rule for any changes due to congressional or court action. 16

Antidegradation Rule –Federal Requirement that allows new or increased point source discharges to waters under specific circumstances. –Indiana law defines how we make the allowances and rules address the implementation of the law. –The current rule applies only to the Great Lakes Basin. Indiana Clean Water Act Issues 17

Indiana Clean Water Act Issues Antidegradation (Cont.) The proposed rule will apply state-wide and: –Increases public opportunities for input, –Protects swimmable/fishable uses of waters, –Allows for the issuance of legal permits for discharges to waters, and –Does not allow for the violation of water quality standards. 18

Indiana Clean Water Act Issues Environmental Group Petition for Withdrawal of Approval of the NPDES Program. –Antidegradation –General Permits –Coal Mines Intake Structures (316(b)) – Currently, there are no applicable nationwide standards implementing Section 316(b) for existing power plants. As a result, BTA determinations must be made on a case-by- case basis, using best professional judgment. 19

Coal Combustion Residuals IDEM data indicates that CCR do not exhibit hazardous characteristics, therefore, they should not be regulated under Subtitle C. IDEM believes that U.S. EPA should develop reasonable minimum national management standards for surface impoundments and landfills under Subtitle D. 20

Thank You Tom Easterly Commissioner Indiana Department of Environmental Management