NSR Regulations Update

1. NSR Regulations Update November 14, 2012 Atlanta, GA Katy R. Forney Energy Sector Technical AuthorityEPA – Region 4 Atlanta, Georgia

2. Recently Finalized Rules • Tailoring Rule – Step 3 • Published 7/12/12 • Does not lower Subject to Regulation Thresholds in current rules • Extends PALs for use on a CO2e-basis • PM and Condensables Rule • Published 10/25/12 • Removes the term “particulate matter emissions” from the requirement to include condensable PM fraction

3. Rules in Final Stage • PM2.5 NAAQS Implementation • Proposed on 6/29/12 • Under court order to be finalized by 12/14/12 • EPA has proposed 2 provisions: • Grandfathering of certain in-process PSD permit applications (draft permits out to public comment before the affective date of revised rule in 2013) • Surrogate approach for conducting air quality analysis associated with proposed secondary visibility index

4. Rules in Proposal Stage • Supplemental Tribal Rule • Revisions to the Tribal Minor NSR Rule promulgated July 1, 2011 • Scheduled for proposal in March 2013 • 2 planned Revisions: • Increase the number of sources/activities for exemption. Currently 7 activities are exempted. • Define “commence construction” which is used in rule applicability

5. NSR Permitting Guidance • Permit Processing Guidance • Memo Signed 10/15/2012 • Intended for use by Regional and Delegated permitting authorities • May be helpful for SIP-Approved permitting programs (optional) • Includes among other things… • Checklist for Complete PSD Applications • Template letters for notifications • Encourages permitting authorities to ensure applications are deemed “complete” appropriately

6. NSR Permitting in Region 4 • Typical year ~ 30 draft PSD permits • More than 50% trigger for NO2 and/or SO2 • Modeling of 1-hour NAAQS still remain the biggest challenge for PSD permit issuance

7. GHG Regulations Update November 14, 2012 Atlanta, GA Katy R. Forney Energy Sector Technical AuthorityEPA – Region 4 Atlanta, Georgia

8. D.C. Circuit – Climate Change Litigation • On June 26, 2012, the U.S. Court of Appeals-D.C. Circuit upheld EPA's Endangerment Finding and Greenhouse Gas regulations issued under the Clean Air Act for passenger vehicles (i.e., CAFE standards) and permitting for stationary sources (i.e., Tailoring Rule)

9. Stationary Sources - The Tailoring Rule • Final Rule issued May 13, 2010 • Establishes thresholds for GHG emissions and defines when permits under the New Source Review Prevention of Significant Deterioration (PSD) and Title V Operating Permit programs are required for new and existing industrial facilities • “Tailors" the requirements of these CAA permitting programs to limit which facilities will be required to obtain PSD and Title V permits • Includes the nation's largest GHG emitters -power plants, refineries, and cement production facilities • Emissions from small farms, restaurants, and all but the largest commercial facilities are not covered by these programs at this time IMPORTANT! Florida has not taken delegation of the GHG permitting program. GHG permits for FL industry are currently issued by EPA Region 4 in Atlanta. Contact: Katy Forneyforney.kathleen@epa.gov 404-562-9130 http://www.epa.gov/nsr/ghgpermitting.html

10. Permitting Timeline Under the Tailoring Rule The Tailoring Rule 2011 2012 2013 2014 2015 2016 Step 1: Source already subject to PSD “anyway” (tpy CO2e) New source: N/A Modification: 75,000 Step 2: All Stationary Sources (tpy CO2e) New source: 100,000Modification: 75,000 Step 3: Implementation of potential additional phase-in and streamlining options 5-year study: To examine GHG permitting for smaller sources Implementation of rule based on 5-year study July 1, 2011 new thresholds subject to regulation began Step 3 Rule was issued July 3, 2012. Proposed no changes to thresholds. Study Complete One public hearing was held on March 20, 2012, in Arlington, VA.

11. Biomass GHG Permitting Biomass Permitting • EPA temporary defers certain CO2 emissions from PSD and Title V permitting • July 1, 2011, final rule deferred for 3 years GHG permitting requirements for CO2 emissions from biomass-fired and other biogenic sources • Interim guidance was issued to assist facilities and permitting authorities with permitting decisions until the Proposed Rule was finalized • A scientific analysis will be conducted during the 3 year deferral to consider issues that the Agency must resolve in order to account for biogenic CO2emissions in ways that are scientifically sound and also manageable in practice • Accounting Framework for Biogenic CO2 Emissionsfrom Stationary Sources (September 2011) http://www.epa.gov/NSR/actions.html#2011

12. GHG New Source Performance Standard GHG NSPS for Utilities and Refineries • On 12/23/10, EPA entered into two proposed settlement agreements to issue rules that will address greenhouse gas emissions from fossil fuel-fired power plants and refineries • These two industrial sectors make up nearly 40% of U.S. GHG emissions • On April 13, 2012, EPA published its carbon pollution standard for new fossil fuel-fired power plants (comments accepted until June 25) Contact: Keith Goffgoff.keith@epa.gov 404-562-9137 http://epa.gov/carbonpollutionstandard/

13. GHG NSPS for New Fossil Fuel-Fired Power Plants • Only applies to new generating units that will be built in the future • Does not apply to existing units already operating or units that will start construction over the next 12 months • The proposed rule is flexible and would help minimize carbon pollution through deployment of the same types of modern technologies and steps that power companies are already taking to build the next generation of power plants • Even without the proposed rule, the power plants that are currently projected to be built going forward would already comply with the proposed standard; as a result, EPA does not project additional cost for industry to comply with the standard http://epa.gov/carbonpollutionstandard/

14. GHG NSPS for New Fossil Fuel-Fired Power Plants • Output-based standard of 1,000 pounds of CO2 per MW-hr • New natural gas combined cycle (NGCC) power plant units should be able to meet the proposed standard without add-on controls • New power plants that are designed to use coal or petroleum coke would be able to incorporate technology to reduce CO2 emissions to meet the standard, such as carbon capture and storage (CCS) • EPA will accept comments on the proposed rule until June 25 • EPA held two public hearings on May 24

15. GHG Reporting Program • Purpose is to collect accurate and timely GHG data to inform future policy decisions • EPA issued Mandatory Reporting of Greenhouse Gases Rule (74 FR 5620) • Requires reporting of GHG emission data from specific entities in the U.S. • GHG suppliers • Direct emitting source categories • Facilities that inject CO2 underground • For 2011 emissions, reports were due to EPA due March 31, 2012 • 2010 Data now available • on EPA’s website! • Highlights for 2010 Direct Emitters • Power plantswere the largest stationary sources of direct emissions - 2,324 million metric tons of carbon dioxide equivalent (mmtCO2e); petroleum refineries second - 183 mmtCO2e • CO2 accounted for 95% of emissions; methane second at 4%; NO2 and fluorinated gases remaining 1% • 100 facilitieswith emissions over 7 mmtCO2e (96 power plants, two iron and steel mills, two refineries) Contact: Jason McDonald Mcdonald.jason@epa.gov 404-562-9203

16. Questions? Katy R. Forney U.S. EPA – Region 4 Atlanta, GA 404-562-9130 www.epa.gov/nsr/ www.epa.gov/nsr/ghgpermitting.html