FDEP Regulatory Updates

1. FDEP Regulatory Updates Greg DeAngelo Florida DEP, Division of Air Resource Management July 30, 2009

2. Status Updates and Future Projects • Greenhouse gas cap-and-trade • Ozone nonattainment areas • Clean Air Interstate Rule (CAIR) • New Source Review (NSR) rule • Other upcoming regulations

3. Florida's Cap-and-Trade Project • Drivers for the department’s rulemaking • Governor’s Executive Order 07-127 • Florida Climate Protection Act • § 403.44, Florida Statutes • Rulemaking process • Initial notice of rule development, July 2007 • Additional notice, May 2009 • Five workshops to date, one planned for late Aug • FECC interaction, ERC hearing, Legislature http://www.dep.state.fl.us/air/rules/ghg/electric.htm

4. Federal Cap-and-Trade in Development • “Waxman/Markey bill” • Henry Waxman (D-CA) & Edward Markey (D-MA) • “American Clean Energy and Security Act of 2009” • “H.R. 2454” • Economy-wide legislation • Cap-and-trade for utilities (and other industries) • CO2 emission standards for new coal power plants • Renewable energy and energy efficiency mandates • Transportation and fuels provisions • Reports, studies, project funding, etc.

5. H.R. 2454 Design Features Track Florida • Federal legislation mirrors many design elements that have been emerging as a consensus opinion during our rulemaking. • Declining cap to reach goals by 2050 • Phase-in period with free distribution of allowances • Split allocation between emissions and generation • Transition to an auction • Creation of a strategic reserve • Direction of allowance value to energy efficiency, demand side management, and rate payer relief

6. Florida vs. Federal CO2 Caps (proposed)

7. Continuing Our Process • Continue the valuable work • Building consensus • Identifying issues important to Florida • Laying groundwork for influencing federal rules • Develop offset policies • Key to early success of cap-and-trade • Methodologies and verification are critical • Many potential biomass-related projects in Florida

8. EPA's New Ozone Standard (March 2008) • Primary (health) • Secondary (public welfare) • Both standards set at 0.075 ppm over 8-hours • Compliance determined via monitoring network • 3-year average of the annual fourth highest maximum daily 8-hour concentration • If any monitor in a "core based statistical area" shows ozone greater than 75 ppb, then whole CBSA is presumed to be in nonattainment.

9. Ozone Compliance Values, 2006—2008 • Violating CBSA as per the 2006—2008 data • Pensacola • Panama City • Tampa—St. Petersburg—Clearwater • Sarasota—Bradenton—Venice • EPA to make designations by March 2010 • Bay, Sarasota, and Manatee counties on the cusp • Depends on consideration of 2009 data http://www.dep.state.fl.us/air/air_quality/new_ozone_standard.htm

11. Then What? • State plan in place by March 2013 • Adequacy of current regulations • CAIR will reduce NOX emissions at coal-fired power plants; most controls will be added by 2010. • Gasoline vapor emissions rule reduces VOC; it is expanding from 7 counties to statewide by 2010. • Federal emission and efficiency standards for new cars and trucks will also reduce NOX. • Not reinstating vehicle inspections! • Determine which regulations are necessary • Statewide NOX and VOC rules likely

12. Status of CAIR • CAIR trading rule is back…for now • EPA working on CAIR replacement rule • No proposal or schedule yet • DEP going ahead with orders • Allocating CAIR NOX ozone-season and annual allowances according to Rule 62-296.470 • Populating source accounts at Clean Air Markets Division • Final orders will be posted http://www.dep.state.fl.us/air/rules/cair.htm

13. CAIR Replacement Rule • Many issues facing EPA: • How to ensure sufficient upwind emission reductions, without over-control? • How to determine whether one state significantly contributes to nonattainment in another state? • What remedies to apply? (Still a role for trading? Expand to cement kilns and industrial boilers?) • EPA goal: • Adopt legally defensible replacement rule in two years • 2012 is earliest possible year for any resulting benefits • Too late for inclusion in nonattainment SIPs for 1997 standards; may help with 2008 ozone standard

14. CAIR Implementation in Florida • Proposed order allocating new-unit set-aside allowances for 2009 issued mid-July • Proposed order re-allocating baseline-unit allowances for 2009-2012 (August) • Proposed order allocating compliance supplement pool allowances for 2009 (September) • Proposed order allocating baseline-unit allowances for 2013-2015 (October) • Requests for ozone-season/annual new-unit set-aside allowances for 2010 due February/May 2010

15. CAIR Controls in Florida • Controls in place or being added during 2009—2010 to coal-fired EGU • SCR or SNCR systems at 24 of 31 units • 83% of Florida's coal-fired rated generating capacity • FGD or other SO2 control systems at 25 of 31 units • 88% of Florida’s coal-fired rated generating capacity • Large NOX and SO2 reductions expected

16. Other Nonattainment Area Rulemaking • Nonattainment area new source review (NSR) • Need to revise rules • Add NSR reform provisions • Previous NSR reform effort only updated the attainment (PSD) rules • New national ambient air quality standards (NAAQS) • New nonattainment area designations • Update standards and designations to match pending federal ones

17. Other Nonattainment Area Rulemaking • Annual operating report revision • Streamline reporting requirements for minor VOC and NOX sources • Create new emissions statement rule; less burdensome alternate • Revise VOC & NOX RACT rules • Allow transition period for new nonattainment areas • Consider statewide applicability

18. Other Upcoming Regulations • Air general permits and exemptions • Convert Title V to non-Title V • Update rules to account for new federal internal combustion engine (ICE) requirements • Repeal mercury budget (Clean Air Mercury Rule) • Streamline, clean up, remove obsolete material • Stay updated at our new web page! http://www.dep.state.fl.us/air