Update on New Source Review (NSR) Activities and Priorities for Information Transfer and Program Integration Division

1. Update on New Source Review (NSR) Activities and Priorities for Information Transfer and Program Integration Division April 7, 2004

2. Overview – Informational Briefing • Upcoming NSR Actions • Litigation • Reconsideration and Remand • Debottlenecking, Aggregation and Allowable PALs • Ozone and PM2.5 Implementation • Thoroughbred Power Plant Permit in Kentucky

3. NSR Reform – June 2002 Recommendations • Debottlenecking • “When calculating actual emissions associated with a physical change or change in the method of operation, sources generally should look only at the unit undergoing the change. Emissions from units “upstream” or “downstream” of the unit being changed should be considered only when the permitted emissions limit of the upstream or downstream unit would be exceeded or increased as a result of the change.”

4. NSR Reform – June 2002 Recommendations • Aggregation • “For purposes of determining NSR applicability, a project would be considered separate and independent from any other project at a major stationary source unless (1) the project is dependent upon another project to be economically or technically viable or (2) the project is intentionally split from other projects to avoid NSR.” • “EPA generally would defer to the States to implement the Agency’s aggregation rule.”

5. NSR Reform – June 2002 Recommendations • Allowable PALs • PALs provide certainty and operational flexibility so source owners can make any change to their facilities without obtaining a major NSR permit, provided their emissions do not exceed the plantwide cap. • PALs also ensures environmental protection because of the cap on total plant emissions and source owners that use PALs will have the incentive to install good controls to maximize their flexibility and certainty. • We need to identify when a source could get a PAL based on allowable emissions.

6. Litigation – December 2002 NSR Rule • D.C. Court denied request for stay on December 2002 rules (Actual PALs, Clean Units, Pollution Control Projects, Emission Test) • D.C. Court has named same panel for both cases (Judges Roger, Tatel and Edwards) • Briefing schedule for December 2002 changes • Litigants briefs – May 2004 • EPA briefs – August 2004 • Final Briefs – October 2004

7. Litigation – Equipment Replacement Rule • D.C. Court granted request for stay on Equipment Replacement Provision. • Proposed Briefing Schedule for ERP • Litigants Briefs – the later of November 2004 or 90 days after publication of EPA Response on Reconsideration • EPA Brief – 90 days after Litigants Briefs • Final Briefs – 77 days after EPA Briefs

8. Litigation • Reconsideration of treatment of fugitive emissions under December 2002 rule • Reconsideration of ERP • Legal Basis • 20 percent cutoff • Court remand of NO2 increments (Section 166) • Proposal – September 2004 • Promulgation – September 2005

9. Ozone/PM2.5 Implementation • Guidance and rules on how new 8-hour ozone and PM2.5 standards should be implemented in nonattainment areas • NSR Rulemakings • Appendix S – “bridge” NSR rule that is in effect until State adopts its rules • Transition from 1-hour ozone standard to 8-hour ozone standard • Requirements for PM2.5 • Increment levels • Precursor pollutants

10. Thoroughbred Power Plant Permit in Kentucky • New “mine mouth” 1500 MW power plant in eastern Kentucky • Installing Scrubber, Baghouse, ESP and SCR • NOx – 0.09lb/MMBTU • SO2 – 0.167lb/MMBTU • PM – 0.018lb/MMBTU • Must circulating fluidized bed (CFB) and integrated gasification combined cycle (IGCC) technologies be considered in the BACT analysis? • Must low sulfur coal be considered in the BACT analysis?

11. ITPID Priorities • Greater outreach on AQI/AirNow Air Quality Forecasting • Expand coverage of cities • Email alert system • Involvement of medical community • Improved Customer Service • Data Warehouse • Benchmarking on training efforts • Continued improvements to AQS

12. ITPID Priorities • Title V • Decision on coverage of MACT area sources under Title V • Umbrella monitoring rule • Innovative and Voluntary Programs • Incentives for emission reductions (e.g., woodstoves) • Integrating air quality issues into overall growth planning for urban areas

13. Umbrella Monitoring Rule • Due to lawsuit, EPA in Sept 2002 proposed an interpretation of its P-70 monitoring rules • EPA said: sufficiency monitoring (70.6 (c)(1)) and periodic monitoring (70.6 (a)(3)) were separate requirements • SM applied only when PM did not • Proposed to delete a confusing phrase in 70.6(c)(1) that reads “consistent with paragraph a(3) of this section”

14. Why Called Umbrella Monitoring Rule? • 70.6(c)(1) refers to the more specific monitoring provisions of 70.6(a)(3) • 70.6(a)(3) requires permits to include monitoring in underlying rules; CAM, where applicable; and periodic monitoring - thus the “umbrella” nature • CAM and PM would have to be sufficient to assure compliance

15. What Does Final Rule Say? • On Jan 22, 2004, EPA published its Umbrella Monitoring rule • UM rule said we are not finalizing the interpretation in the proposal • UM rule says 70.6(c)(1) does not establish a separate basis for monitoring different from periodic monitoring • Preamble says both proposal and final rules are consistent with Act and for policy reasons it would be more efficient to improve monitoring thru rulemaking than case-by-case permits

16. Additional Rulemakings • In the UM rule, EPA announced several related rulemaking actions • An ANPR requesting comment to identify deficient monitoring in existing Federal and SIP rules • A rule where EPA will propose periodic monitoring guidance • Guidance on improving particulate matter monitoring in SIPs via the upcoming PM 2.5 implementation rule