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PA Chamber of Business And Industry DEP Quarterly Meeting September 23, 2010

Topics Covered. Proposed Revisions to the Air Quality Permit Exemption List.Proposed Revisions to GP-5 (relating to natural gas, coal bed methane or gob production and recovery facilities). Implementation of the Greenhouse Gas Tailoring Rule."Update on EPA's National Emission Standards for Hazardous Air Pollutants and New Source Performance Standards.Update on EPA's Proposed Clean Air Transport Rule. Implementation of Revised 1-Hour NO2 and 1-Hour SO2 National Ambient Air Quality Standards..

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PA Chamber of Business And Industry DEP Quarterly Meeting September 23, 2010

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    1. PA Chamber of Business And Industry DEP Quarterly Meeting September 23, 2010 Joyce E. Epps Director Bureau of Air Quality PA Department of Environmental Protection 400 Market Street Harrisburg, PA 17105-8468 jeepps@state.pa.us 717-787-9702

    2. Topics Covered Proposed Revisions to the Air Quality Permit Exemption List. Proposed Revisions to GP-5 (relating to natural gas, coal bed methane or gob production and recovery facilities). Implementation of the Greenhouse Gas “Tailoring Rule.” Update on EPA’s National Emission Standards for Hazardous Air Pollutants and New Source Performance Standards. Update on EPA’s Proposed Clean Air Transport Rule. Implementation of Revised 1-Hour NO2 and 1-Hour SO2 National Ambient Air Quality Standards.

    3. Proposed Changes to the Air Quality Permit Exemption List The Air Quality Exemption List authorized under 25 Pa. Code Section 127.14 includes a listing of sources or classes of sources and physical changes determined by DEP to be of minor significance and exempt from the plan approval and permitting requirements. On May 29, 2010, the Department of Environmental Protection (DEP) published notice in the Pennsylvania Bulletin of substantive revisions to the Air Quality Permit Exemptions Technical Guidance Document or Exemption List (DEP ID. 275-2101-003).  (See 40 Pa.B. 2822).  In response to several requests, the 30-day comment period was extended from June 28, 2010 to July 18, 2010. (See 40 Pa.B. 3716). Comments were received from 57 commentators including private citizens and representatives of industry and environmental groups.

    4. Proposed Changes to the Air Quality Permit Exemption List: Oil & Gas Exploration and Production Facilities and Operations Changes to the Exemption List include the revocation of the “automatic” exemption for oil and gas exploration and production facilities and operations including wells and associated equipment and processes. (Category No. 38).  A conditional exemption would limit emissions of nitrogen oxides (NOx) and volatile organic compounds (VOCs) from a single facility. If the annual and ozone season NOx emissions and annual VOC emission thresholds are exceeded, general plan approval/general operating permits, plan approvals or operating permits, if applicable would be required. The revised Exemption List would allow for the optional submission of requests for determinations.

    5. Proposed Changes to the Air Quality Permit Exemption List: Oil & Gas Exploration and Production Facilities and Operations The majority of the commentators (including 48 private citizens and environmental groups) opposed the conditional exemption. DEP intends to finalize the Exemption List by October 29, 2010; notice of the availability of the revised Exemption List will be published in the Pennsylvania Bulletin. Gas dehydration and compression facilities will continue to be subject to applicable plan approval, operating permit or general plan approval/general operating permit programs.

    6. General Plan Approval/General Operating Permit for Natural Gas, Coal Bed Methane or Gob Production or Recovery Facilities (GP-5) On January 27, 2006, DEP issued GP-5, which applies to the following: natural gas-fired internal combustion engines with a rated capacity between 100 and 1500 brake horsepower (BHP) Glycol dehydrators (construction commenced after March 10, 1997) with uncontrolled potential volatile organic compound (VOC) emissions in excess of 10 tons per year. Minor modifications to GP-5 were published in the Pennsylvania Bulletin on September 18, 2010.

    7. Proposed Minor Modifications to GP-5 The proposed modifications to GP-5 include: Conditions to limit the potential to emit of a source based on the specifications in the Application for Authorization to Use GP-5; compliance with the specifications in application would be required. A revised fee schedule which establishes separate fees for General permits and general plan approvals; and A clarification regarding applicable requirements including new source performance standards and national standards for hazardous air pollutants. The 45-day comment period closes on November 2, 2010.

    8. GP-5: Draft Major Modifications Extend GP-5 applicability to all non-major sources at natural gas production and processing facilities. Extend source coverage to all of the emission units located at natural gas production and processing facilities including the following: Natural Gas Production Wells Spark Ignition IC Engines and Simple Cycle Turbines Condensate Tanks and Storage Vessels Glycol Dehydrators and Re-Boiler De-propanizers/De-ethanizers

    9. GP-5: Draft Major Modifications Modify Best Available Technology requirements. Incorporate federal New Source Performance Standards and National Emissions Standards for Hazardous Air Pollutants (NESHAPs). Add a provision to limit a facility’s potential to emit (PTE) based on the specifications included in the application.

    10. Implementation of EPA’s Greenhouse Gas Tailoring Rule On June 3, 2010, EPA issued the Prevention of Significant Deterioration and Title V Greenhouse Gas “Tailoring Rule” (Tailoring Rule) (75 FR 31514). The federal PSD requirements including the Tailoring Rule are incorporated by reference in 25 Pa. Code § 127.83 and, absent a stay of the rule, will be implemented in the Commonwealth starting January 2011. Step 1 Applicability Thresholds (January 2, 2011 – June 30, 2011) Only sources currently subject to PSD (due to pollutants other than GHG) would also be subject to permitting requirements for GHG emissions. For these projects, only GHG increases of 75,000 tons or more of GHG on a CO2e basis would be subject to BACT requirements No sources would be subject either PSD or Title V permitting requirements solely for GHG emissions.

    11. Implementation of EPA’s Greenhouse Gas “Tailoring” Rule Step 2 Applicability Thresholds (July 1, 2011 – June 30, 2013) PSD: New sources – 100,000 tpy of GHG emissions even if they do not exceed permitting thresholds for any other pollutant. PSD: Major Modifications – 75,000 tpy of GHG emissions. Tile V Operating Permits – 100,000 tpy of GHG emissions. Total GHG emissions are expressed as CO2 equivalent basis. In Step 3, EPA will proposed a rule in 2011 to consider streamlining options. Smaller sources are excluded from GHG and Title V permitting requirements until at least April 30, 2016. Numerous Petitions for Review have been filed before the DC Circuit by petitioners, including industry groups, trade associations, the U.S. Chamber of Commerce and at least eight states.

    12. Permitting Steps

    13. Best Available Control Technology (BACT) for GHG Emissions EPA is developing technical guidance and white papers for key source categories to assist states’ in the implementation of the Tailoring Rule. Power plants, refineries, cement manufacturing, iron and steel making, pulp and paper mills, industrial boilers and nitric acid plants On September 17, 2010, EPA submitted the BACT guidance to the Office of Management and Budget for review. The final BACT guidance is expected this fall.

    14. Update on EPA’s Proposed National Emission Standards for Hazardous Air Pollutants and New Source Performance Standards In June 2007, the U.S. Court of Appeals for the DC Circuit vacated the Industrial, Commercial, and Institutional (ICI) Boiler rules. On June 4, 2010, EPA issued the following proposed rules to reduce hazardous air pollutants (HAPs) from ICI boilers (“Boiler MACT”). NESHAP for Area Sources: ICI Boilers (75 FR 31896) NESHAP for Major Sources: ICI Boilers and Process Heaters (75 FR 32006) EPA also proposed New Source Performance Standards and Emission Guidelines for Commercial and Industrial Solid Waste Incineration (CISWI) Units (75 FR 31938) on June 4, 2010.

    15. Proposed Boiler MACT Standards On June 4, 2010, EPA also proposed a rule to identify which non-hazardous secondary materials would be considered “solid Waste” and which materials would be considered “fuel.” (75 FR 31844) Combustion of a “fuel” would be regulated under the Boiler MACT rule and combustion of a “solid waste” would be regulated under the CISWI rule. There is significant opposition to the stringency of the proposed Boiler MACT standards. EPA is under court order to promulgate the Boiler MACT rule by December 16, 2010. Approximately 102 major sources would be subject to the Boiler MACT Rule in Pennsylvania. IfIf

    16. Status of Proposed MACT Standards for Electric Generating Units (EGUs) On February 8, 2008, the U.S. Court of Appeals for the DC Circuit vacated EPA’s “market-based” Clean Air Mercury Rule, which was promulgated under Section 111 of the Clean Air Act. EPA has been has ordered by the Court to propose the Utility MACT standards under Section 112(d) by March 16, 2011; the final rule must be promulgated by November 16, 2011. Federal MACT rules are adopted and incorporated by reference in the Air Pollution Control Act and 25 Pa. Code Section 127.35. Approximately 34 facilities (including 71 EGUs) would be subject to the final Utility MACT Rule in Pennsylvania.

    17. National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry EPA published the final rule for the Portland Cement Manufacturing Industry on September 9, 2010 (75 FR 54970); the rule is effective on November 8, 2010. The Portland cement NESHAP establishes limits for mercury (Hg), total hydrocarbons (THC), and particulate matter (PM) emissions from new and existing kilns located at major and area sources; hydrochloric acid (HCl) limits were also adopted for new and existing kilns located at major sources. (40 CFR Part 63, Subpart LLL). The final rule also requires continuous emission monitors for Hg, THC, and PM; a CEM for HCL may also be required.

    18. National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry (Continued) The standards for new sources apply to facilities that commenced construction, modification, or reconstruction after May 6, 2009. New sources must comply with the NESHAP upon startup or 60 days after the effective date of the rule, whichever is later. Existing sources must comply with the NESHAP by September 9, 2013. The Subpart LLL provisions are incorporated by reference in the APCA and Pa. Code Section 127.35. There are nine affected Portland cement manufacturing facilities in Pennsylvania.

    19. EPA’s Proposed Transport Rule On August 2, 2010, EPA proposed the Transport Rule which is designed to replace the Clean Air Interstate Rule (CAIR) and CAIR Federal Implementation Plans vacated and remanded to EPA in 2008. (75 FR 45210) The proposed rule would impose NOx and SO2 emission caps in 2012 and 2014 for electric generating units (EGUs) in 31 states and the District of Columbia. The proposed rule includes the following state emission budgets: Annual SO2 reductions (2010, 2014) Group 1 – SO2 cap lowered in 2014 Group 2 – SO2 (2012 cap only) Annual NOx reductions (2012) Ozone-season NOx reductions (2012)

    20. EPA’s Proposed Transport Rule The Transport Rule includes three approaches to address the transport of NOx and SO2 emissions. 1. EPA’s Preferred Approach – intrastate trading and limited interstate trading. 2. First Alternative – trading is allowed among EGUs within a state. 3. Second Alternative – an allowable emission limit is set by EPA for each power plant; some averaging of emission rates would be allowed. No Title IV SO2 allowances would be carried over into the Transport Rule SO2 program. EPA proposed several options for the use of NOx allowances including an approach that would not allow the use of any banked pre-2012 CAIR allowances in the Transport Rule program.

    21. EPA’s Proposed Transport Rule EPA projects that the Transport Rule and other state and federal actions would reduce EGU emissions of SO2 by 71 % below 2005 levels; NOx emissions would decrease by 52 %. DEP expressed general support for the proposed rule during the August 26, 2010 public hearing in Philadelphia. By 2014, SO2 emissions from EGUs would be reduce in Pennsylvania by approximately 84 % from 2005 levels; annual NOx emissions would be reduced by an estimated 40% from 2005 levels. When fully implemented in 2014, EPA projects that 1,400 to 3,600 PM2.5-related premature mortalities would be avoided in Pennsylvania.

    22. EPA’s Proposed Transport Rule As proposed, the rule may result in a relaxation of the SIP-approved CAIR NOx emission budgets, which is contrary to the “anti-backsliding” provisions of the Clean Air Act. In Pennsylvania, annual NOx emissions could increase up to 2% and ozone season NOx emissions could increase as much as 20% from 2009 levels by 2014, depending on the approach EPA selects for the final rule. EPA acknowledged that the proposal does not provide a complete remedy to address transported pollution because the proposal does not “fully quantify all of the significant contribution and interference with maintenance.”

    23. Short-Term 1-Hour NO2 National Ambient Air Quality Standard On January 22, 2010, EPA set a new 1-hour NO2 NAAQS of 100 ppb parts per billion; the standard took effect on April 22, 2010. (75 FR 6474, February 9, 2010) Designation recommendations are due to EPA by January 2011; there are currently no areas in Pennsylvania violating the 1-hour NO2 NAAQS. EPA must complete initial designations by January 2012. New near-road monitors must be installed and operational by January 1, 2013; four near-road monitors will be installed in the Commonwealth.

    24. Short-Term 1-Hour NO2 National Ambient Air Quality Standard On June 30, 2010 , EPA issued guidance on the Implementation of the 1-hour NO2 NAAQS for the Prevention of Significant Deterioration (PSD) Program. The first memo, “General Guidance for Implementing the 1-hour NO2 National Ambient Air Quality Standard in Prevention of Significant Deterioration Permits, Including an Interim 1-hour NO2 Significant Impact Level [SIL],” provides PSD permitting guidance. Pending EPA’s promulgation of the 1-hour NO2 SIL, DEP intends to use EPA’s recommended interim SIL of 4 ppb for air quality analyses under the PSD permitting program. The second memo, “Applicability of Appendix W Modeling Guidance for the 1-hour NO2 National Ambient Air Quality Standard,” provides modeling guidance for estimating ambient NO2 concentrations and determining compliance with the new 1-hour NO2 NAAQS.

    25. Short-Term 1-Hour SO2 National Ambient Air Quality Standard On June 2, 2010, EPA issued a new primary 1-hour SO2 standard of 75 ppb and revoked the 24-hour and annual standards. (75 FR 35520) State designation recommendations are due to EPA by June 2011. By June 2012, EPA will issue initial area designations using existing monitoring data and appropriate modeling, if provided by the states. Additional SO2 monitors must be installed and operational by by January 1, 2013. Maintenance plans for attainment areas are due to EPA in June 2013; attainment demonstrations for nonattainment areas would be due in February 2014.

    26. Short-Term 1-Hour SO2 National Ambient Air Quality Standard On August 23, 2010, EPA issued guidance for implementing the new 1-hour SO2 NAAQS under the PSD permitting program. The first memo, “General Guidance for Implementing the 1-hour SO2 National Ambient Air Quality Standard in Prevention of Significant Deterioration Permits, Including an Interim 1-hour SO2 Significant Impact Level [SIL],” provides PSD permitting guidance. Pending EPA’s promulgation of the 1-hour SO2 SIL, DEP intends to use EPA’s recommended interim SIL of 3 ppb for air quality analyses under the PSD permitting program. The second memo, “Applicability of Appendix W Modeling Guidance for the 1-hour SO2 National Ambient Air Quality Standard,” provides modeling guidance for estimating ambient SO2 concentrations and determining compliance with the new 1-hour SO2 NAAQS.

    27. Thank you! On behalf of the Honorable John Hanger Secretary PA Department of Environmental Protection

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