Indiana Steel Environmental Group June 30, 2009

1. Indiana Steel Environmental GroupJune 30, 2009 Thomas W. Easterly, P.E., BCEE, QEP Commissioner IN Department of Environmental Management

2. State Budget Balances

3. Response to Reduced State Income • Eliminated 2009 raises. • Strategic Hiring Review—Using attrition to reduce spending. • Reduce/eliminate grants, contracts, etc. • Restrictions on travel and purchasing. • Will maintain essential State services.

4. IDEM Staffing Levels

5. We Protect Hoosiers and Our Environment Local Agency Contracts • Continuation of IDEM’s goal to use efficiency gains to reduce contracting out of core environmental protection functions. • $3.5 Million/year in Air Permit Contracts with $1.1 Million in IDEM Resources while improving service. • $1.5 Million/year in Leaking Underground Storage Tank Clean ups with $0.7 Million in IDEM resources while improving service.

6. We Protect Hoosiers and Our Environment Local Agency Contracts • IDEM spends just over $2 Million per year on Local Agency Contracts: • Anderson $66,642 • Evansville $177,498 • Gary $24,000 • Hammond $375,100 • Indianapolis $1,124,139 • Vigo County $266,662

7. We Protect Hoosiers and Our Environment Local Agency Contracts • IDEM believes that it can provide the same or better level of environmental protection for about $0.5 Million/year freeing up resources to address remaining air quality issues in Indiana. • Local Agency Air Quality Services include: • Permitting • Inspections • Complaint Response • Air Quality Monitoring

8. We Protect Hoosiers and Our Environment Grant and Loan Suspension • All Grants and Loans from the following non-reverting funds to entities that had not returned award paperwork by December 19 have been suspended: • 2580 Recycling Promotion Assistance Fund • 2530 Solid Waste Recycling Fund • 2640 Waste Tire Fund

9. IDEM’s Mission and Environmental Goal IDEM is responsible for protecting human health and the environment while providing for safe industrial, agricultural, commercial and governmental operation vital to a prosperous economy. Our goal is to increase the personal income of all Hoosiers to the national average while maintaining and improving Indiana’s Environmental Quality.

10. Pilot 2006 Environmental Performance Index • Yale Center for Environmental Law & Policy Yale University • Center For International Earth Science Information Network (CFIESIN) Columbia University • http://www.yale.edu/epi/

12. How Is IDEM Protecting Hoosiers and Our Environment? Clear, consistent and speedy decisions Clear regulations Assistance first, enforcement second Timely resolution of enforcement actions Every regulated entity will have current valid permits without unnecessary requirements

13. Develop regulations and issue permits to restrict discharges to the environment to safe levels. Inspect and monitor permitted facilities to ensure compliance with the permits. Enforce against people who exceed their permit levels or violate regulations. Educate people on their environmental responsibilities. How Does IDEM Protect the Environment?

14. We Protect Hoosiers and Our Environment Performance Metrics Mar 2009

15. We Protect Hoosiers and Our Environment Performance Metrics June 2005

16. We Protect Hoosiers and Our Environment New Drinking Water Metric • Percent of Hoosiers Drinking Safe Water: • Percentage of Indiana population that receives drinking water from facilities that are in full compliance with safe drinking water regulations. • Federal (EPA) Goal is 95%. • Indiana Goal is 99%. • Indiana Current Actual is 98.2%.

17. Agency Accomplishments • All 1,269 tons of VX Agent stored at the Newport Chemical Agent Facility since 1969 has been safely destroyed. VX destruction started in May of 2005 and was completed in August 2008. • Digital Inspector Tool is in use for solid waste inspections including CAFOs, Auto Salvage Yards and Landfills.

18. We Protect Hoosiers and Our Environment Agency Accomplishments • Entire State met the 0.08 ppm Ozone air quality standard for the period 2006-2008, and we are working with USEPA to have Lake and Porter Counties designated attainment. • Entire State also met the 0.075 Ozone air quality standard for the year 2008. • All but Clark County met the PM2.5 Air Quality Standards for the period 2006-2008.

19. We Protect Hoosiers and Our Environment Total Permit Calendar Days

20. Air Permits Branch Rapid Improvement Activities Lean/Kaizen Methodology to improve efficiency: Significant Source Modifications (Construction Approvals) 9/07 Event. Process time reduced from 220 days to 121 days avg. Permit Renewals 12/07 Event. Process time reduced from 678 day avg. to all those issued in ’08 within 270 days allowed (calendar days). Eliminate backlog of administratively extended permits: 1/1/08 - 156 permits. Currently no backlogged air permits. We Protect Hoosiers and Our Environment

21. Permit Backlog Reduction In 2005, there were 263 administratively extended NPDES permits. Six of those 263 remain to be issued: US Steel Gary Works. US Steel Midwest Division. Arcelor Mittal Indiana Harbor East. Arcelor Mittal Indiana Harbor West. Arcelor Mittal Burns Harbor. Hoosier Energy Merom Plant.

22. Impact of NPDES Extensions • These companies are not required to meet the Great Lakes Initiative discharge limits—e.g. mercury. • These companies are not required to meet other more stringent discharge limitations, testing and reporting requirements.

23. Impact of NPDES Extensions • Many of the objections to the USX permit related to the time allowed by the permit for the Company to meet the new standards. • Without a renewed permit, USX has no deadline for meeting the new standards. • The other four steel plants with extended permits also have no deadline for meeting the new standards.

24. Antidegradation Rule Status • Stakeholder kickoff Meeting on March 7, 2008. • Discussed concepts and schedule at two large stakeholder meetings on 4/29 and 6/25. • Working group of twelve members from the environmental, business and municipal segments formed to come up with draft rule language and/or identify areas for IDEM to resolve.

25. Antidegradation Status • Working group has met on 7/15, 8/12, 9/16 , 10/30, 12/11/08, 1/6/09, and 1/26/09. • Working group agenda items: • Applicability (7/15) & (10/30). • Exemptions (8/12) & (10/30). • DeMinimis (9/16) & (10/30). • Water Quality Improvement Projects (1/26/09). • Antidegradation Demonstrations (12/11/08). • Public Notice/Public Comment (1/6/09).

26. Antidegradation Status • IDEM shared a draft with the working group on 4/22/09 reflecting both areas of agreement during the workgroup process and IDEM decisions on issues where no consensus was reached. • A revised draft will be presented to the larger stakeholder group in July. • That draft will also be Second Noticed in the formal rulemaking process.

27. Office of Enforcement

29. IDEM Enforcement Changes • Returned enforcement function to the air, water and land programs and eliminated the separate office of enforcement. • Publishing our Compliance and Enforcement Response Policy as a Non-rule Policy Document to facilitate understanding of the enforcement process.

30. Reasons for Enforcement Change • No improvement in compliance rates in 4 years. • EPA HQ told me both enforcement models (separate office or in program) are used effectively. • Enforcement was regularly “waiting on program staff” under the control of other managers. • Unpublished enforcement policies resulted in unexpected actions—too timid and too aggressive.

31. Compliance and Enforcement Response Policy (CERP) • CERP was last revised in 2003 and was an internal IDEM document. • In order to meet our goal of transparency we decided to update the CERP and publish it as a Non Rule Policy Document under IC 13-14-1-11.5. Draft signed for 45 day public comment period on 10/31/08.

32. Criminal Convictions • Wabash Environmental Technologies and Derrik Hagerman—Clean Water Act felonies. Sixty months of imprisonment and $237,000 in restitution (Terre Haute). • Miller Environmental and Anthony MuCullough—Clean Water Act felonies. Four months imprisonment and $510,000 in penalties (Shelbyville and Rushville).

33. Criminal Convictions • Richard Reece—RCRA felonies. Six months in half way house, six months home detention and $60,000 restitution (Muncie). • Hassan Barrel and Alan Hersh—RCRA felonies. Fifteen months of imprisonment plus $2.7 million in restitution (Fort Wayne).

34. Criminal Convictions • Erler Industries—Clean Air Act Criminal Pleas for false reporting (North Vernon). • $1,000,000 Criminal Fine. • $100,000 to IDEM for Hybrid Vehicles. • $25,000 to the Midwest Environmental. Enforcement Association for training. • Individual Operators and Laboratories—False reporting cases.

35. Electronic Permits and Reporting Virtual File Cabinet—electronic filing system with over 42,500,000 pages now online. TEMPO—Enterprise wide electronic integration of all IDEM information—part of the insfrstructure to receive and process electronic permit applications and reports Two programs accepting electronic submittals, 401 Certifications and Community Right to Know Agency Initiatives

36. Agency Initiatives • EDMR—Electronic reporting of waste water discharge monitoring reports. • Currently being piloted by about 100 facilities. • Expect to be available for all facilities in June of 2009. • Active assistance to facilities that announce layoffs and closing to prevent environmental Incidents.

37. Challenges--2009 • New Administration—Possible new directions: • Greenhouse Gasses. • Great Lakes Protections. • Wise Stewardship of Economic Stimulus Funds. • Final Resolution of Unresolved Issues Including:

38. US Courts Overturning Rules • 2007—Industrial, Commercial and Institutional (ICI) Boiler MACT—directly impacted about 10 sources with coal fired boilers • May 2008—Clean Air Mercury Rule (CAMR) impacted all Power Plants • July 2008—Clean Air Interstate Rule (CAIR) impacted all Power Plants and most Indiana air pollution strategies

39. BP Air Permit—Indiana • 38 day public comment period, 342 written comments received • Public meeting and hearing – 1,200 attended, 44 commented • Construction permit issued May 1 and operation permit issued June 16 • Multiple appeals of these permit decisions to OEA, Federal Court and the EPA Administrator

40. NRDC Statement on Tar Sands • “BP’s decision to tap into the Canadian wilderness is ‘based on addiction, not reality,’ says Ann Alexander, senior attorney at the Natural Resource Defense Council (NRDC), a nonprofit environmental group. ‘Tar sands crude oil is dirty from start to finish. It’s bad enough that [BP is] fouling our natural resources here in the Midwest, but it’s completely destroying them up in Canada. There are good sources of energy we can turn to that don’t involve turning entire forests into a moonscape.’”

41. Duke-Edwardsport Power Plant • First commercial Integrated Gasification Combined Cycle (IGCC) plant in the U.S. • 44 day public comment period • Public meeting and hearing – over 600 citizens attended • Construction permit issued January 25 and operation permit issued in March • Permit decision appealed

42. 2009 Environmental Legislation 1162 • Water Issues including: • Anti-degradation and • TMDL’s • Remediation issues including: • Environmentally Restrictive Covenants, • conditions subsequent and • giving consideration to measures to eliminate exposure pathways

43. Questions? Tom Easterly Commissioner Indiana Department of Environmental Management 317-232-8611 teasterly@idem.in.gov