Update from EPA’s Office of Air Quality Planning and Standards

1. Update from EPA’s Office of Air Quality Planning and Standards WESTAR Fall Meeting November 10,2009

2. Regional Modeling in the West:Western U.S. Photochemical Modeling Background PM2.5 Sulfate Ion • State of the science 3 dimensional photochemical grid models simulate the formation and transport of many secondarily formed pollutants such as ozone and particulate matter • Currently using both CMAQ v4.7 and CAMx v5.01 • Most recent modeling platform for western United States applications based on 2005 U.S. emissions; 2006 Canada and 1999 Mexico • The 2005 emissions platform has been augmented with the WRAP Phase II oil and gas emission inventory • Model performance for PM2.5 not ideal; sulfate ion estimates compare well to STN and IMPROVE but most other species do not • Peak ozone tends to be underestimated in many urban areas; not currently capturing high winter ozone episodes PM2.5 Total Mass

3. Regional Modeling in the West: Ozone Designations • Photochemical model source apportionment tracks the formation and transport of ozone and PM2.5 from specific emissions sources and allows the calculation of contribution to specific receptors • Photochemical model source apportionment is an ideal tool to estimate the combined impact of multiple factors of the 9 factor ozone designation analysis • Source apportionment photochemical modeling for ozone designations tracks all anthropogenic NOX and VOC emissions from specific counties for contribution to ozone estimated at nonattainment monitor locations (does not include fires for contribution analysis) • Annual 2005 and 2006 source apportionment modeling for Western U.S. at 12 km grid resolution • Counties were selected if they comprised part of a CSA or CBSA that had a violating monitor for the new 8-hr ozone NAAQS; EPA Regional offices added additional counties for tracking in the model Model tends to underestimate the higher ozone concentrations (ozone observation/10 on X axis)

4. WildEarth Petition • Petition filed on 12/29/08, under APA by WildEarth Guardians (WE). • Requests that EPA: • Issue SIP call for 16 western states due to failure to attain and maintain the 2008 revised ozone standard and failure to mitigate adequately the interstate transport of ozone under CAA § 110. • Establish interstate transport commission encompassing all or portions of the 16 western states in accordance with CAA § 176A. • As technical support, references 7/15/08 draft white paper prepared for WRAP. • Current Status • On 1/28/09, EPA sent an letter to WE acknowledging receipt of petition. • WRAP removed the draft white paper from their website.

5. Photochemical model source apportionment is a useful tool to assess interstate pollution transport Ozone and PM2.5 source apportionment used to track all anthropogenic emissions from western States to key receptor locations The sources selected for tracking with ozone source apportionment include all anthropogenic emissions from 17 selected States, Canada, Mexico, and boundary conditions Texas, Oklahoma, and Kansas are partial States due to domain configuration Annual 12 km source apportionment simulations for 2005 and 2006 tracking State specific anthropogenic emissions to ozone and PM2.5 estimated at key receptor locations Issues with PM2.5 model performance may delay PM2.5 transport assessment in the western U.S. Need to continue to work with the western States to improve our western US modeling platform Western Transport Assessment

6. Ongoing NAAQS Reviews: Current Schedule NOTE: Underlined dates indicate court-ordered or settlement agreement deadlines. Currently negotiating 17 month extension of NO2/SO2 secondary schedule.

7. Anticipated NAAQS Implementation Milestones

8. Response to WESTAR letters • Ozone Monitoring • Currently reviewing comments from all parties • Working toward a final ozone monitoring rule • Exceptional Events • Working on how best to respond to issues raised in the letter

9. National View on BART • EPA regions have identified that BART determinations appear to be holding up RH SIP submittals in many cases • EPA regions and OAQPS are taking a national look at BART determinations • Goals: • Identify similarities and differences in BART units and states’ proposed BART determinations • Promote consistency in decision making • Provide direction where needed to states to help them complete BART/RH SIPs • HQ is not making BART determinations; final SIP approvals remain an EPA regional decision

10. Status of Regional Haze SIPs As of November 4, 2009: • 20 (out of 53) final Regional Haze SIPs: • 13 from CAIR States (AL, DE, IA, KY, LA, MS, MO, NC, NJ, SC, TN, WV) • 7 from non-CAIR States (AR, CA, OR, RI, UT, VT; NM COUNTY) • Projected SIP submission dates*: (*Estimates – likely to change) • For remaining 33 States/Territories/County (“States”): • 19 SIPs - by end of 2009 • 11 SIPs + 1 MT FIP - by end of 2010 • 1 SIP (CO) - by July 2011 • 1 HI FIP - sometime after 2009 • Draft/Proposed SIP Status for Remaining States: • 7 Proposed SIPs for public comment submitted – waiting for final SIP • 8 States submitted EPA/FLM Draft SIPs – waiting for Proposed SIP • 37 States received findings of failure to submit Regional Haze SIPs • 6 submitted final SIPs (CA, NJ, OR, RI, TX, VT) • CAA requires EPA to take final action to approve these SIPs and any others submitted after findings by FIP deadline of January 15, 2011 • WildEarth Litigation for transport FIPs • Negotiating a consent decree which could impact RH SIP/FIP schedules for the 7 named states (CA, CO, ID, NM, ND, OK, OR) • CD has been cleared by OMB; FR Notice for public comment within the next few weeks

11. OAQPS Multipollutant Pilots • Final multipollutant plans expected from New York, North Carolina, St. Louis area (IL/MO) in February 2010. • Pilot plans do not replace the SIPs but many of the measures in them are or will be in the SIP. • Each plan is unique, focusing on priorities and obstacles of the particular area. • North Carolina focus is on ozone, PM2.5, mercury, GHGs and regional haze. With many state programs in place, this pilot is focusing on utilizing their regional offices for outreach in order to get local government and stakeholder buy-in and involvement in developing new control strategies to generate further reductions. • New York focus is on reducing GHG and on Environmental Justice since these are the NY Commissioner’s top two goals. • The St. Louis area focus is on ozone, PM2.5, lead, with other criteria pollutants coming; along with five priority toxics. As an urban community pilot, the plan must involve two states and several local governments, East West Gateway Council of Governments represents the local community input.

12. OAQPS Multipollutant Pilots (2) • Challenges that have led to delays: • Start up on mulitpollutant planning takes more up-front time and resources. We expect that once plans are completed, these issues will be resolved with implementation and future iterations of the plans: • Same person(s) doing SIP work is coordinating the multipollutant plan. • Multipollutant planning requires significant cross-office coordination. • Multipollutant planning may require more extensive modeling and outreach. • Detroit study investigated the application of technical tools/methods/data in a multi-pollutant, risk-based approach to control strategy development. • Demonstrated the benefits of a multipollutant, risk-based control strategy: can achieve same or greater reductions regionally and locally; more cost effective than a SIP-based (single pollutant) approach.

13. Impact of Proposed GHG Tailoring Rule on States • Basis for proposed threshold is to avoid extensive disruption and undermining of permitting functions that would result from huge influx of new permits due to GHG emissions. • Proposed 25,000 tpy GHG applicability threshold relieves significant permitting burden related to small sources but retains permitting for largest GHG emitters: • Millions of Title V permits avoided • Tens of thousands of PSD permits avoided • About 14,000 sources, responsible for nearly 70% of national stationary source GHG emissions, would classify as ‘major’ for GHG at 25,000 tpy threshold • At proposed levels, GHG regulation would add workload to permitting authorities, but we estimate it would not overwhelm them: • About 3,000 sources to Title V’s current universe of 15,000 sources. • Fewer than 100 sources and modifications per year to PSD’s current universe of 300 permits per year. • Most of the newly permitted sources would be large municipal solid waste landfills. • A large share of existing major source population will also be major for GHG.

14. Implementation of proposed GHG Tailoring Rule • Streamlined approach to get rule in place in States for federally approved programs: • Will require somewhat novel approach of “narrowing” our existing approvals of permit programs to clarify that our approval does not include sources below 25,000 tons/year CO2e or modifications below [10,000 – 25,000] tons/year CO2e. • States can provide SIP revision for EPA approval should they seek to establish lower thresholds. • Some states, based on how their state permitting laws/regulations are written, may also have to change their laws/regulations to be consistent with the tailoring rule

15. Effect of the Startup, Shutdown, Malfuction (SSM) Vacatur • Court issued mandate 10/16/09 effecting vacatur of General Provisions (GP) exemptions • In EPA’s view, the vacatur would immediately and directly affect only those standards that refer to the GP SSM exemptions and do not themselves contain other regulatory text exempting or excusing SSM events. • About 35 MACT standards refer only to the GP for the SSM exemptions and would be affected immediately; the other standards include their own provisions addressing SSM events and are not immediately affected. • EPA plans to revisit the SSM issues for rules when we reopen rules, such as to review and revise as part of the Risk and Technology (RTR) review of the MACT standards and for rules we must re-issue as a result of remand or vacatur. • Chemical Manufacturing Area Source Rule Promulgation – signed 10/16/09 • “…we are establishing a separate emission standard for periods of startup and shutdown for continuous process vents…” • “EPA does not view malfunctions as a distinct operating mode and, therefore, any emissions that occur at such times do not need to be factored into development of CAA section 112(d) standards, which, once promulgated, apply at all times. “

16. Goal of Sector Strategy • To group activities that are under common control and typically fall within a facility fenceline, and are used to make a product or group of products. • Activities comprise various equipment, control devices and air pollution sources • To use these groupings to align elements of the federal stationary source emissions standards programs and set priorities • Synchronize rules, assign resources, maximize environmental benefits, etc. • Types of activities • Boilers • Heaters • Storage tanks • Vents • Wastewater • Engines • Furnaces

17. SHORT TERM Synchronize timelines Multipollutant analysis Highlight interaction of emission limits and control technologies One control may have significant co-benefits May help inform tough decisions on individual rules and EPA priorities Leverage resources (human and financial) more effectively Sector Opportunities • LONG TERM • Collect better data • Lower costs • Deter lawsuits • Foster innovation • Integrate limits on criteria air pollutants, toxic air pollutants and greenhouse gas emissions • Provide greater regulatory stability

18. Carper Bill Analytical Scenarios The analysis focuses on six different power sector cap & trade scenarios for SO2 and NOx. Control Scenario 1: Annual Emissions Caps Control Scenario 2: SO2 cap same as #1 in 2012, then 1.5 million tons in 2015; NOx caps same as #1 Control Scenario 3: SO2 same as #2; NOx caps same as #1 in 2012, then 1 million ton NOx cap for Eastern (CAIR) and 0.25 million ton NOx cap for Western (non-CAIR) region in 2015 Control Scenario 4: SO2 cap same as #1 in 2012, then 1 million ton cap in 2015; NOx caps same as #1 Control Scenario 5: SO2 caps same as #2; national NOx caps equal to sum of regional NOx caps in #1; no regional NOx caps Control Scenario 6: SO2 caps same as #2; existing NOx requirements until 2015 (no new 2012 caps), then same as #2 for 2015 and beyond Eastern region for this analysis includes ME, VT and NH in addition to the original 28 CAIR states and DC. Currently, power sector NOx emissions are more than 3 million tons annually, of which 2.4 million tons are in the Eastern region and 0.67 million tons are in the Western region. Power sector SO2 emissions are approximately 7.6 million tons nationally.

19. Generation Mix

20. Retail Electricity Prices Electricity prices rise slightly relative to the reference case– 1.5 to 2.5%. Prices are highest in Scenario #3 with the tightest NOx cap. Historical price from AEO2009.

21. New Capacity Additions and Retirements • Natural gas new capacity additions in 2025 in all scenarios are a function of electricity demand, low gas prices, and its cost competitiveness relative to other technologies when allowances are factored in. • The mix of new renewables capacity is roughly 75% wind, over 15% biomass, and less than 10% other (landfill gas, geothermal, solar). • In reality, uneconomic units may be “mothballed,” retired, or kept running to ensure generation reliability. The model is unable to distinguish among these potential outcomes. • Most uneconomic units are part of larger plants that are expected to continue generating. Currently, there are roughly 120 GW of oil/gas steam capacity and 320 GW of coal capacity.

22. Annual Incremental Costs Although the incremental cost in 2025 appears a little higher under a national cap (#5) than under the regional caps (#2), the incremental cost over the entire time period is, in fact, lower. IPM has found the cheapest operation of the grid under each scenario, which leads to different compliance patterns for installing controls and fuel switching between options.

23. Incremental Human Health Benefits • PM2.5 Results • For each assessment year, the range of health benefits estimated for each policy scenario is defined by Control Scenario 1 (minimum) and Control Scenario 4 (maximum). • In 2015 and beyond, there is very little difference between Control Scenarios 2, 5, and 6. Scenario 3 achieves additional benefits due to additional NOx reductions. Note: Different levels of emission reductions may yield equivalent incidences of premature mortality avoided and different levels of incidences of premature mortality avoided may yield equivalent total value due to rounding.

24. Incremental Human Health Benefits • Ozone Results • The metric illustrated here is the annual value of all quantified ozone mortality and morbidity endpoints including incidences of premature mortality, school loss days, worker productivity, and emergency room and hospital admissions for respiratory conditions. • For each assessment year, the maximum ozone health benefits are achieved by Control Scenario 3. • In 2015 and beyond, there is very little difference between the remaining Control Scenarios. Annual value of all quantified ozone mortality and morbidity endpoints (billions, 2006$) Note: Ozone benefits do not use a discount rate because there is no time lag for benefits.

25. Examples of Unquantified Benefits • Improvements in visibility in national parks and recreational areas • Improvements in visibility in residential areas • Decreases in sulfur deposition (resulting in reduced acidification of surface waters and damage to forest ecosystems and soils) • Decreases in nitrogen deposition (resulting in reduced acidification of surface waters, damage to forest ecosystems and soils, and coastal eutrophication) • Decreases in mercury deposition, leading to reduced exposure to mercury through fish consumption • Decreases in ozone-related damage to agricultural and forest production