1. 1 Special Information Session on USEPA’s Carbon Rules & Clean Air Act Section 111 North Carolina Division of Air Quality Special Information Session on USEPA’s Carbon Rules & Clean Air Act Section 111 North Carolina Division of Air Quality September 9, 2015

2. Agenda August 3, 2015 Clean Air Act Section 111 40 CFR Part 60 State Plan requirements Overview of final EPA Clean Power Plan NC’s carbon dioxide emissions –Existing source guidelines Overview of proposed EPA actions –Federal Plan / Model rules DENR Legal Concerns / Principles / Plan State Plan and Rulemaking timeline Mike Abraczinskas, DAQ Deputy Director Sushma Masemore, DAQ Planning Section Chief John Evans, DENR Chief Deputy Secretary Sheila Holman, DAQ Director 2

3. EPA’s latest actions August 3, 2015 - three separate but related actions Section 111(b) of the Clean Air Act - EPA finalized standards to limit carbon dioxide (CO2) emissions from new, modified and reconstructed power plants. Section 111(d) of the Clean Air Act – EPA finalized the “Clean Power Plan” to cut carbon pollution from existing power plants. EPA proposed a federal plan and model rules These actions will be described later… but first… some foundational information about this portion of the Clean Air Act and the resulting Federal regulations. 3

4. Clean Air Act Section 111 basics Section 111 – entitled Standards of Performance for New Stationary Sources. Section 111(b) is the federal program addressing new, modified and reconstructed sources by establishing standards –New Source Performance Standards or NSPS are adopted by reference in 15A NCAC 02D.0524 4

5. Clean Air Act Section 111 basics Section 111(d) is the state-based program for existing sources. There are 3 main steps: 1) EPA establishes guidelines that identify the best system of emission reduction (BSER) for the covered pollutant. The BSER must be adequately demonstrated, considering cost, energy needs, and secondary environmental impacts. 2) States design “plans” that establish a standard of performance and provides for implementation and enforcement. 3) State submits the “plan” to the EPA for approval. 5

6. Clean Air Act Section 111 basics EPA’s Section 111(d) guidelines do not have the purpose or effect of national emission standards. They are not enforceable requirements against any source. They only serve as criteria for judging the adequacy of State plans. It is the State plans that would establish the standards of performance that are directly applicable to sources. 6

7. Clean Air Act Section 111(a) - defines the term “standard of performance” as: – “a standard for emissions of air pollutants which reflects the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.” 7

8. Clean Air Act Section 302(k) defines “emission limitation” or “emission standard” as: –“a requirement established by the State or the Administrator which limits the quantity, rate, or concentration of emissions of air pollutants on a continuous basis, including any requirement relating to the operation or maintenance of a source to assure continuous emission reduction, and any design, equipment, work practice or operational standard promulgated under this Act.” 8

9. Clean Air Act Section 111(d) Procedures specified in 40 CFR Part 60, Subpart B Requires EPA to establish a procedure for states to follow in developing and submitting 111(d) plans. –They have… in 40 CFR Part 60, Subpart B States shall submit a plan which: –Establishes standards of performance for existing sources –Provides for implementation and enforcement of such standards Statute and regulations allow States to consider factors, such as: –Remaining useful life of the existing source to which such standard applies EPA has the authority to prescribe a plan if the State fails to submit a satisfactory plan and to enforce the provisions of a plan in cases where the state fails to enforce them. 9

10. Clean Air Act Section 111(d) Procedures specified in 40 CFR Part 60, Subpart B State plan shall: –Include an inventory of all subject facilities, including relevant data –Provide for monitoring the status of compliance –Provide that information used to determine compliance be correlated with the standard and available to the public –Demonstrate the State’s legal authority to carry out the plan –Include a compliance schedule (or commitment to adopt a compliance schedule after proper public notice/hearing) 10

11. Clean Air Act Section 111(d) EPA has established Section 111(d) guidlines for existing sources for 5 source categories. –Sulfuric acid plants (acid mist) 02D.0517 –Phosphate fertilizer plants (fluorides)02D.0534 –Primary aluminum plants (fluorides)02D.0529 –Kraft pulp plants (total reduced sulfur)02D.0528 –Municipal solid waste landfills (landfill gas as non- methane organic compounds) 02D.1205 11

12. Clean Air Act Section 111(d) In establishing the guideline best system of emission reduction (BSER) for these 5 categories, EPA considered: Costs, source age, size, type, class, degree of emission reduction achievable through application of demonstrated controls or other measures, secondary impacts. 12

13. 13 Questions?

14. NC’s 111(d) Plan Develop 111(d) State Plan consistent with Clean Air Act requirements Information requested from subject facilities –Best System of Emissions Reductions –Candidate measures that will directly reduce CO2 emissions at the facility Heat rate improvement measures Update on information received to date 14

15. NC’s 111(d) Plan 9/9/15Today’s EMC briefing 11/4/15Draft rules 111(d) Plan to AQC 11/5/15Request to EMC to proceed to public hearing 12/1/15Public comment period begins January 2016Public hearings 2/1/15End of comment period 3/10/16Hearing Officer’s report to EMC for consideration ~3/20/16File with RRC ~4/21/16RRC action 5/1/16Effective date (if < 10 objections) ~mid-May through June- potential Legislative review 9/6/16Deadline to submit plan to EPA 15