New Source Review Reform

1. Presented By: New Source Review Reform Vera S. Kornylak, Associate Regional Counsel EPA Region 4 Office of Regional Counsel and Gregg Worley, Chief, Air Permits Section, EPA Region 4 Air, Pesticides & Toxics Management Division

2. Overview of NSR Reform: Major EPA Rulemakings • 67 FR 80186, December 31, 2002 (“2002 NSR Reform Rules”): EPA finalized its new source review reform rules which included revisions to five major areas of the rules. • States must submit revisions implementing the minimum program requirements outlined in the Rule by January 2, 2006. • 68 FR 61248, October 27, 2003: EPA finalized additional rules, called the “Equipment Replacement Rule,” pertaining to routine maintenance, repair, and replacement.

3. Overview of NSR Reform: Major EPA Rulemakings • 70 FR 61081, October 20, 2005: EPA published proposed rules to modify the emissions test for NSR purposes for existing electric generating units (EGUs). • This proposal does not apply to new EGUs. • Comments are due by December 19, 2005.

4. Summary of EGU Emissions Test Proposal (October 20, 2005) • The proposed emissions test is the same as the New Source Performance Standards (NSPS) test in CAA Section 111(a)(4). This compares maximum hourly emissions achievable at a unit during the past five years to the maximum hourly emissions achievable at that unit after the change. • Alternatively, the proposal seeks comment on a test that would compare maximum hourly emissions achieved before and after the change.

5. Summary of EGU Emissions Test Proposal (Continued) • The proposal further seeks comment on an applicability test based on mass of emissions per unit of energy output. • With regards to the NSPS rules, the proposal seeks comment on whether to revise the NSPS regulations to include a maximum achieved emissions test or output test in lieu of or in addition to the maximum achievable hourly emissions test.

6. NSR Related Litigation • New York et al. v. United States, 413 F. 3d 3 (DC Cir. 2005) - Challenge to NSR Reform Rules • Decision published on June 24, 2005: • vacated provisions for pollution control projects and clean units; • remanded provisions regarding recordkeeping (40 CFR 52.21(r)(6)) and “reasonable possibility;” • upheld the NSR applicability test generally;

7. NSR Related Litigation • New York et al. v. United States (continued): • EPA filed a petition for rehearing en banc re: applicability test for clean units and motion for clarification on the retroactivity of the PCP vacatur; • Other petitioners filed motions for reconsideration on other issues, including the baseline applicability test.

8. NSR Related Litigation • ERP Litigation (New York et al. v. U.S., filed in D.C. Circuit) • 69 FR 40274 (July 1, 2004) – ERP Rule stayed. • 70 FR 33838 (June 10, 2005) – EPA final reconsideration on the ERP rule (no changes); Challenges filed to reconsideration.

9. NSR Related Litigation • ERP Litigation (Continued) • Issue is EPA’s authority to exempt RMRR from regulation in general, as well as within the parameters of the ERP. • EPA brief due 11/17/05. • Oral argument likely in early, 2006.

10. NSR Related Litigation • U.S. v. Duke Energy Corp., 411 F.3d 539 (4th Cir. 2005). • Complaint filed by EPA alleging NSR violations for modification at plants owned by Duke Energy. • Congress mandated that the PSD definition of “modification” be identical to the NSPS definition of “modification.”

11. NSR Related Litigation • U.S. v. Duke Energy Corp. (Continued): • RMRR issue re: routine at a unit versus routine in the industry was not reached as part of decision. • Technically applies only to states within the 4th Circuit Court of Appeals – which includes North and South Carolina.

12. Region 4 Status Update on State Submittals of NSR Reform Rules • EPA Region 4 States are farthest along in the nation towards meeting the January, 2006 deadline. • State rules may be different, but must be equivalent to federal requirements. State rules may be more stringent. • EPA Region 4 staff working to provide draft/prehearing comments whenever possible, along with formal comments.

13. Region 4 Status Update on State Submittals of NSR Reform Rules

14. Region 4 Status Update on State Submittals of NSR Reform Rules

15. Region 4 Status Update on State Submittals of NSR Reform Rules • Areas not listed have not provided any submittals to EPA. • General SIP Review Process: • Regional review and evaluation • Presentation to EPA HQ (particularly focus on differences from federal rule) • Proposal in Federal Register • Public Comment • Final approval

16. Upcoming Developments • Reconsideration in D.C. Circuit. • ERP Litigation. • Congressional amendments to CAA requiring more NSR Reform. • Ongoing utilities litigation in Region 4.

17. Gregg Worley, Chief Air Permits Section EPA Region 4 404-562-9141 Worley.gregg@epa.gov Kelly Fortin Air Permits Section 404-562-9117 Fortin.kelly@epa.gov Sean Lakeman Regulatory Planning Section (SIPs) 404-562-9043 Lakeman.sean@epa.gov Vera S. Kornylak Office of Regional Counsel 404-562-9589 Kornylak.vera@epa.gov EPA Region 4 Contacts