IDEM Update & Air Quality Overview NIRPC EMPC January 4, 2007

1. IDEM Update & Air Quality OverviewNIRPC EMPCJanuary 4, 2007 Thomas W. Easterly, P.E., DEE, QEP Commissioner IN Department of Environmental Management

2. New State Laws impacting IDEM from the 2006 Legislative Session • HB1110—Removal of Mercury Convenience Switches from End of Life Motor Vehicles. • SB 234—Improving the rulemaking process for wet weather discharges and authorizing the Environmental Stewardship Program. • HB1117—Simplifying the solid waste statutes and eliminating the groundwater task force. • SB 146—Removing the Property Transfer Disclosure Form from Statute.

3. IDEM’s Environmental Goal Increase the personal income of all Hoosiers from the current $0.88/$1.00 of the national average to at least $1.00/$1.00 of the national average while maintaining and improving Indiana’s Environmental Quality.

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

6. How Will IDEM Help Increase Personal Income? • 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 • Written Standard Operating Procedures • Improved staff training and development

7. How Does IDEM Protect the Environment? • Measure the air, water and land to determine the existing state of the environment • Compare the measured values to levels that protect human health and the environment • Ambient Air Quality Standards • Water Quality Standards • Safe soil and ground water clean up levels • Use modeling to determine how much of a substance can be added to the environment

8. How Does IDEM Protect the Environment? • 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

9. IDEM Makes Environmental Decisions, Not Land Use Decisions • When an entity applies for an IDEM permit, the decision to approve or deny the permit is based upon the question: “Does this project meet the requirements designed to protect the environment?” • This is different than deciding: • Is this the best use of this land? or • Is this the best location for this project? • In Indiana, these are local land use decisions, not State decisions

10. Types of Facilities IDEM Regulates • Livestock farms (CFO & CAFO) • Manufacturing facilities • Solid waste management facilities including landfills and transfer stations • Sewage treatment plants • Dredging projects including disposal sites • Clean-up of contaminated property • Many projects are exempted from IDEM review due to size, etc.

11. IDEM’s Decisions Often Impact Land Use Decisions • IDEM regulates both public water supplies and sewer districts—the provision of public water and sewer service influences the future potential use of certain land • IDEM regulates the preservation and mitigation of wetlands which have land use impacts • IDEM permits major facilities that may impact future land use decisions—e.g. Honda

12. IDEM’s Decisions Often Impact Land Use Decisions • IDEM will permit “Locally Undesirable Land Uses” if they meet the regulations required to protect the environment • IDEM requires certain solid waste management facilities to have proper local land use approval prior to permitting • Removing obstacles to new development (like air non-attainment designations) impacts local development

13. IDEM’s Decisions Often Impact Land Use Decisions • IDEM’s permits require that the applicant also comply with all local requirements, including land use restrictions—applicants sometimes use IDEM’s permit to apply leverage in obtaining local approval • IDEM does not consider: • Compatibility with adjacent land uses • Potential impacts on property values • Esthetic issues

14. Local Land Use Decisions Impact IDEM’s Responsibilities • Land use patterns impact: • Transportation related air emissions from • Commuting • Commercial activities • Quantity and quality of water runoff from impervious and developed areas • Generation of waste that must be properly managed • Public acceptance of or opposition to new commercial facilities

15. Local Land Use Decisions Impact IDEM’s Responsibilities • IDEM’s programs to address previously contaminated properties impact future development of the site: • Voluntary Remediation Program—covenant not to sue • Comfort Letters • RCRA Corrective Action • Superfund (CERCLA) • State clean-up program

16. Performance Metrics

17. January 10, 2005 Allen--Ozone Boone--Ozone Clark—PM & Ozone Dubois--PM Elkhart--Ozone Hamilton--Ozone Hancock--Ozone Madison--Ozone Marion—PM & Ozone Shelby--Ozone St. Joseph--Ozone October 1, 2006 Clark--PM Dubois--PM Marion--PM Vanderburgh--PM Counties above AQ Standards

18. Ozone Attainment Status

19. PM2.5 AttainmentStatus

20. PM 2.5 Status • New 24 hour standard issued in September—Annual standard retained • Designations will initially be based upon 2004-2006 air quality, but the process will allow the use of data up to 2009 • New nonattainment designations April 2010, SIPS due 2013 • SIPS for current nonattainment areas due April, 2008—we may try redesignations

27. IDEM is still meeting the statutory deadlines for permit issuance, as reported in past years IDEM now tracks the total calendar days a permit is in house and is applying a deadline to permits that traditionally do not have a statutory deadline; as a new interpretation to the intent of statutes Permitting

28. Total Permit Calendar Days

29. Air Permits for New Facilities • New Toyota Production at Lafayette Subaru Facility • Louis Dreyfus Soy Biodiesel Plant—Largest in the US • A dozen new Ethanol Production Facilities with ten pending • Honda Greensburg NSR permit issued in 94 days

30. Percent of Activities Meeting Regulations

31. Office of Enforcement2002-2006

32. Major Regulatory Initiatives • Regulations to facilitate the proper management of e-Scrap • Rulemaking to require the removal of mercury convenience switches from automobiles prior to crushing or shredding • Rulemaking to allow Performance Track (Indiana Environmental Stewardship Program)—Will be accepting applications in September

33. Major Regulatory Initiatives • Outdoor Wood Fueled Boilers—EQSC Report recommended waiting to proceed until EPA issues its model rule—now late January • Utility NOx, SO2 and Mercury emission rules: • CAIR, which regulates NOx and SO2, was adopted by the Air Pollution Control Board in November. • CAMR, regulating mercury, was due to EPA on November 17, but Indiana does not have a Final Rule because there has been no resolution of issues between Utilities which favor the federal program and the Hoosier Environmental Council which favors a 90% reduction—Second Notice

34. Advantages of Outdoor Wood Fueled Boilers • Reducing or eliminating heating bills • Improving indoor air quality • Reducing the incidence of asthma or allergies • Benefiting the environment by reducing the greenhouse emissions • Increasing safety of heating by removing the heating unit from the building • Requiring less time to operate than other wood burning devices • Reducing dependence on fossil fuels

37. Environmental Concerns With Outdoor Wood Fueled Boilers • High air pollution emissions per unit of fuel due to incomplete combustion because of: • Starved air operation to extend the time before refueling (not enough oxygen) • Cool temperatures due to water wall design and need to avoid dangerous high temperature steam • Higher exposure of people to concentrated emissions (smoke) due to low stack heights • Emissions all year for water, hot tub and pool heating, rather than just the heating season

39. Why is IDEM Concerned About Incomplete Combustion? • The goal of complete combustion is to convert every constituent to its oxidized state—typically to carbon dioxide and water • Incomplete combustion generates: • Carbon Monoxide—colorless, odorless, often deadly • Complex organics that are often carcinogens including benzene, dioxins, furans

40. Why is IDEM Concerned About OWB Particulate Matter Emissions? • PM2.5 monitoring indicates that Marion, Dubois, Clark and Vanderburgh Counties exceed the current annual PM2.5 Air Quality Standard. • PM2.5 monitoring indicates that these counties plus Allen, Lake, Tippecanoe and Vigo Counties currently exceed the new 24-hour PM2.5 Air Quality Standard. • Modeling and measurements indicate that people living within a few hundred feet of an OWB are exposed to air above the new 24-hour PM2.5 Air Quality Standard.

41. Regulation of Outdoor Wood Fueled Boilers • Outdoor wood fueled Boilers are not currently regulated by U.S. EPA: • On August 11, 2005 seven states (Connecticut, Maryland, Massachusetts, Michigan, New Jersey, New York and Vermont) petitioned EPA to regulate OWBs • EPA plans to release a “model state rule” and a “voluntary labeling program” for OWBs in January 2007 • The “voluntary labeling program” is expected to be implemented in April 2007 and will give EPA recognition to OWBs meeting 0.6 lbs/mmbtu—this is about a 50% reduction • The “model state rule” would require units to meet 0.44 lbs/mmbtu by 2008 and some lower value in 2010 • The “model state rule” may also address stack height and distance to neighboring residences

42. Regulation of Outdoor Wood Fueled Boilers • Local ordinances have been adopted in some areas of Indiana to ban new units: • Batesville • Evansville • Indianapolis (Marion County) • Loogootee • Petersburg • Many other local governments are considering banning new units

43. Regulation of Outdoor Wood Fueled Boilers • Some States have adopted their own regulations focusing on stack heights and distances to the nearest neighbor • These States report that these regulations have not satisfactorily addressed the air quality issues from these units in their States

44. Status of IDEM’s Outdoor Wood Fueled Boiler Rulemaking • First Notice of Rulemaking Published in the Indiana Register December 15, 2005 • Comment period closed March 3, 2006 • 1,600 Comments with 3,300 signatures opposing • Wood Smoke is no more harmful than other emissions • Regulating OWBs will result in regulation of other forms of wood burning • The new rulemaking is for the benefit of gas companies • Regulation of wood burning will cause economic hardship for people unable to afford other heat • Rulemaking process was suspended until IDEM made a presentation to the EQSC

45. Some Options for Consideration Rules or Regulations: • Define and limit smoke opacity. • Define minimum stack height. • Define performance specifications. • Define and require dried wood fuel. • Restrict use up to a certain distance from a neighbor’s house. • Phase out the use of wood furnaces. • Ban sale of outdoor wood furnaces completely. • Consider a “grandfather clause” for existing units • Wait for possible federal regulation Outreach: • Create an education/outreach campaign to promote regulation at the local level.

46. Recommendation to EQSC • IDEM proceed with regulations focused on keeping the problem from getting worse • Focus on ensuring that any new units are “clean” and adequately spaced from neighbors • IDEM explore options to deal with problems caused by some existing OWBs • These options would not require the forced removal of existing units without compensation • The options may require clean dry wood and adequate stack heights

47. Major Regulatory Initiatives • Rulemaking to establish presumptive 8-1-6 VOC BACT controls to streamline permitting: • Acid Scrubbers for foundry core making amines—Withdrawn at Request of INCMA • Compliance with certain NESHAPs--Continuing • Ethanol Plant BACT—Final Adoption 12/6/2006 • Possible statewide regulations on the formulation of consumer products (i.e. air fresheners, deodorants, etc.) and paint products to ensure continued compliance with the Ozone standard and reduce our impact on neighboring States—First Notice Soon • Adjustments to the Title V fees to fully fund the program—Air Board Adoption 12/6/2006

48. IDEM Fees & Fund Balances Title V Example • Significant Communication Challenge: • Auditor reports the “check book balance” for each fund on June 30 • IDEM collects almost all of its Title V fees in the 2nd Quarter of each year. • IDEM’s June 30 fee balance is similar to a person’s check book balance right after depositing their paycheck • IDEM must pay all of its bills until the next pay day (next June 30) without overdrawing

49. IDEM Fees & Fund Balances Title V Example • For the last five years (FY 02-FY 06), Title V fund expenditures have exceed revenues by $5,771,277, yet the June 30, 2006 check book balance was $10,039,779 which many people believe is a healthy fund balance. • This fund balance is insufficient to cover the estimated $10,587,184 in expenditures up to the date of receipt of new funds in the 2nd Quarter of 2007.

50. IDEM Fees & Fund Balances Title V Example • The “payday checkbook balance” minus the expenditures before the next pay day gives the “minimum cash in the check book” which is projected to be negative by $547,405 during FY 06. • The actuarial fund balance (assets less contracted liabilities) is much worse because the fund has $6,131,187 in contractual obligations and its projected lowest net worth is actually a debt of $6,678,592.