Environmental Quality Board Meeting Harrisburg, Pennsylvania February 20, 2007

1. Final Rulemaking Nonattainment Source Review25 Pa. Code, Chapter 121. General ProvisionsChapter 127 Subchapter E. New Source Review Environmental Quality Board Meeting Harrisburg, Pennsylvania February 20, 2007

2. The final-form Nonattainment NSR rulemaking adds new definitions and amends certain definitions in Title 25, Chapters 121 and the existing NSR requirements in Chapter 127, Subchapter E of the Pennsylvania Code • In addition, Section 127.13 pertaining to the extension of plan approvals was amended during the development of the final rulemaking to extend the 18-month period for commencing construction of new or modified sources following the issuance of a plan approval Nonattainment NSR Final Rulemaking

3. The Section 127.13 amendment authorized the Department to extend the 18-month period to commence the construction, modification, or installation of an air contamination source upon a satisfactory showing that an extension is justified • Prior to extending the 18-month timeframe for commencing construction, control technologies for the project must be re-evaluated by the Department • This amendment provides flexibility and ensures consistency between Pennsylvania’s pre-construction permitting program and the federal prevention of significant deterioration. requirements in 40 CFR Part 52 Section 127.13--Plan Approval Extensions

4. NSR: • Is a federally-mandated preconstruction permitting program • Requires state-of-the-art air pollution controls on new major facilities or major modifications to existing major facilities • Applies in an attainment or unclassifiable area if the emissions impact a nonattainment area in excess of significance levels What is New Source Review (NSR)?

5. Why the Revisions to the NSR Regulation? • On December 31, 2002, EPA published the NSR reform rules in the Federal Register (67 Fed. Reg. 80186) • The NSR Reform addressed five major areas: • Baseline actual emissions • Actual-to projected-actual applicability test • Actual plantwide applicability limits (PALs) • Clean Unit Exemption • Pollution Control Project Exclusion • In June 2005, the U.S. Court of Appeals vacated requirements including the Clean Unit and Pollution Control Project exclusions

6. Why the Revisions to the NSR Regulation? • EPA requires states to adopt the December 2002 elements of the Federal NSR regulations or submit an “equivalency demonstration” • Revisions to the SIP were due to EPA by January 2, 2006 • Failure to submit the mandatory SIP revision will trigger an 18-month sanctions clock upon issuance of a “failure to submit” finding by EPA

7. NNSR Public Participation Process • The EQB approved the proposed amendments for publication on December 20, 2005 • The proposed rulemaking was published in the Pennsylvania Bulletin on April 29, 2006 • Three public hearings were held: • Harrisburg, June 6, 2006 • Pittsburgh, June 13, 2006 • Norristown, June 19, 2006 • The public comment period closed on July 31, 2006 • Comments were submitted by 33 commentators

8. Advisory Committee Consultations • The Department made NSR presentations during the AQTAC and Citizens Advisory Council meetings on September 27 and October 17, 2006 • The Department discussed the final-form regulation with AQTAC on December 14, 2006, and January 4 • On January 4, AQTAC recommended several changes to the NSR amendments and concurred with the submittal of the final-form regulation to the EQB for consideration

9. AQTAC Recommendations • AQTAC recommended that the ERC Registry application filing deadline be extended from one year after the emissions reduction is generated to: • Three years after the source ceased emitting; or • Five-years if a maintenance plan for the reactivation of a source has been submitted to the Department • The Department has revised the final rulemaking to extend the deadline to two years if the owner or operator of the source or facility either submits to the Department within one year: • A maintenance plan in accordance with § 127.11a, or • A written request to preserve the emissions in the inventory

10. AQTAC Recommendations • AQTAC recommended that the Department revise the requirements related to de minimis aggregation of emission increases and decreases. • In response to AQTAC’s recommendation, the Department reduced the duration of the de minimis emissions aggregation period from 15 years to 10 years.

11. Section 127.202--Effective date • Revised to specify that the requirements in the final rulemaking apply to a new or modified facility if a plan approval will be issued after the date the final rulemaking is published in the Pennsylvania Bulletin • The proposed PM2.5 requirements were removed from the final-form regulation pending EPA’s promulgation of the Federal PM-2.5 NSR rule

12. Section 127.203a – Applicability Determinations • Clarifications were made to provisions related to net emission increases, baseline actual emissions, and projected actual emissions • The final-form regulation revised the look-back period to allow the use of a different consecutive 24-month period within the last five years, or 10 years upon a written determination that the 10-year period is more representative of normal source operations.

13. Section 127.206 – ERC general requirements • A one-year amnesty period for the submission of ERC Registry applications for emission reductions occurring after January 1, 2002, is provided in the final-form regulation • The ERC Registry applications must be submitted to the Department within one year after the effective date of the final-form NSR amendments • Applies to emission reductions for any criteria pollutant

14. Section 127.207 -- Creditable emissions decrease or ERC generation or creation • Revised the final rulemaking to add the phrase “creditable emissions decrease” to the section heading and certain subsections • The final-form regulation state the following: • “Section 127.207. Creditable Emissions Decrease or ERC Generation and Creation”

15. Section 127.207 -- Creditable emissions decrease or ERC generation or creation Section 127.207 (2) has also been revised to clarify that the time period for filing an ERC Registry Application has been extended from one year to two years. This revised regulatory language has been given to you this morning.

16. Section 127.214a. -- Special Provisions for Clean Coal Technology • At EPA’s request, Section 127.214a (relating to special provisions for advanced clean coal generation technology) pertaining to presumptive LAER requirements has been deleted from the final rulemaking • EPA indicated that the provision is not approvable as an element of the SIP; LAER must be determined on a case-by-case basis

17. Section 127.218 -- PALs • Section 127.218 was revised to address concerns raised by EPA • Owners or operators of new sources or emission units added under an existing PAL must reduce or control emissions from new sources by using the best available technology (BAT) for new sources, as authorized under section 6.6(c) of the APCA • BAT will not be required for sources modified after the PAL is established unless the cost of the modification “… exceeds 50% of the fixed capital costs that would be required to construct a comparable entirely new source.…”

18. Rationale for the Proposed NSR Revisions The amendments to Subchapter E: • Revise the existing NSR regulation to incorporate required elements of EPA’s December 2002 NSR rule • Are reasonably necessary to achieve and maintain the national ambient air quality standards including the eight-hour ozone and fine particulate standards • Are necessary to avoid the imposition of mandatory sanctions under Section 179 of the CAA

19. Recommendation The Department recommends that the nonattainment NSR final rulemaking, as revised, be approved for submission to EPA as an equivalency demonstration and SIP revision.