PA Chamber of Business and Industry DEP Quarterly Meeting December 1, 2011

1. PA Chamber of Business and IndustryDEP Quarterly MeetingDecember 1, 2011 Joyce E. Epps Director, Bureau of Air Quality PA Department of Environmental Protection 400 Market Street Harrisburg, PA 17105-8468 717-787-9702 jeepps@pa.gov

2. Topics Covered Implementation of the 1-hour sulfur dioxide and ozone national ambient air quality standards. An update on the development of emission inventories and other air quality issues relating to Marcellus Shale activities.

3. Implementation of the 1-Hour Sulfur Dioxide National Ambient Air Quality Standard On June 22, 2010, the U.S. Environmental Protection Agency (EPA) promulgated a 1-hour sulfur dioxide (SO2) national ambient air quality standard (NAAQS) of 75 parts per billion (75 FR 35520). The standard became effective on August 23, 2010. In March 2010, EPA issued guidance concerning area designations for the revised 1-hour SO2 NAAQS. EPA anticipated that most areas of the country would be designated as �unclassifiable� areas because of �limited� SO2 monitoring networks and the need to model significant SO2 sources. On June 23, 2011, DEP recommended that EPA designate Allegheny, Beaver, Indiana and Warren counties as nonattainment areas based on 2008-2010 monitoring data. The DEP recommended that the remaining counties in the Commonwealth be designated as �unclassifiable� areas.

4. Implementation of the 1-Hour Sulfur Dioxide National Ambient Air Quality Standard EPA will provide its response to designation recommendations in February 2012; final designations are expected in June 2012. In Pennsylvania, dispersion modeling may be performed in Berks, York and Clearfield counties; �high quality� meteorological data is available for those areas. The Allegheny County Health Department may also be conducting modeling for certain facilities in the county. SIP revisions for attainment and �unclassifiable� areas would be due to EPA in June 2013. Attainment demonstrations for nonattainment areas would be submitted to EPA in February 2014. In nonattainment areas, the standard must be attained as expeditiously as practicable, but no later than August 2017.

5. Implementation of the 1-Hour Sulfur Dioxide National Ambient Air Quality Standard On October 3, 2011, EPA proposed Guidance for the 1-hour SO2 NAAQS State Implementation Plan (SIP) Submission (76 FR 61098). The comment period closes on December 2, 2011. This guidance will supplement the New Source Review and Prevention of Significant Deterioration guidance issued in August 2010. The Department believes that EPA�s �hybrid� modeling and monitoring approach to demonstrate compliance with the standard is contrary to the Clean Air Act (CAA). EPA intends to require modeling and enforceable emission limits in SIP revisions submitted for unclassifiable and nonattainment areas; this burdensome approach can not be implemented by June 2013. EPA�s hybrid approach could lead to additional nonattainment areas based solely on conservative dispersion modeling; additional control measures may also be required. DEP intends to submit comments to EPA�s docket by December 2, 2011; the comments will be posted on DEP�s website.

6. Ozone National Ambient Air Quality Standards EPA is currently implementing the 2008 ozone standard of 75 parts per billion (ppb). In March 2009, DEP recommended that EPA designate 29 counties as nonattainment areas based on 2006-2008 monitoring data. On November 22, 2011, the DEP voluntarily submitted revised designation recommendations to EPA based on 2009-2011 ambient monitoring data. The following counties contain monitors that are violating the 2008 standard: Armstrong, Allegheny, Lehigh, Berks, Lancaster, Bucks, Montgomery and Philadelphia counties.

7. Eight-Hour Ozone National Ambient Air Quality Standards EPA�s proposed modifications to the recommendations are expected by December 15, 2011; final designations would be promulgated by April 30, 2012. EPA anticipates ~ 41 nonattainment areas across the country and one �unclassifiable� area; most areas will be classified as �marginal� nonattainment areas. The requirements for �severe� ozone nonattainment areas will continue in effect in the five-county Philadelphia Area. The remaining counties in Pennsylvania would be considered �moderate� nonattainment areas because the entire Commonwealth is included in the Ozone Transport Region established under Section 184 of the CAA. In 2012, EPA will propose and finalize an implementation rule.

8. Marcellus Shale Emission Inventory Activities DEP intends to require the owners and operators of natural gas operations to submit emissions data and source reports to DEP by March 1, 2012, pursuant to Section 4 of the Air Pollution Control Act and 25 Pa. Code Chapter 135. In December 2011, DEP intends to notify approximately 100 owners and operators of the emissions data and source reporting requirements. Source reports will be required for air contamination sources including stationary engines, drilling rigs, tanks/impoundments and pneumatic pumps. DEP will include the data in the complete emission inventories due to EPA by December 31, 2012.

9. Marcellus Shale Permitting Issues On October 22, 2011, DEP published an interim final guidance for Performing Single Stationary Source Determinations for Oil and Gas Industries (DEP ID: 270-0810-006) (41 Pa.B. 5719). The public comment period ended on November 21, 2011. DEP received comments from 364 commentators including Senator Mary Jo White, Diana Esher (EPA Region 3), Marcellus Shale Coalition, Range Resources, Anadarko Petroleum Corporation, Associated Petroleum Industries of Pa, MarkWest, Chesapeake Energy, PennFuture, Clean Air Council, Sierra Club and Group against Smog and Pollution. A Comment and Response document will be prepared prior to finalizing the guidance document.

10. Marcellus Shale Permitting Issues The Department regulates certain natural gas activities under General Permit-5 (�GP-5�) for Natural Gas, Coal Bed Methane or Gob Gas Production or Recovery Facilities. In January 2012, DEP will propose substantive revisions to GP-5 to cover additional sources and update the best available technology requirements. At a minimum, a 45-day comment period will be provided for public review and comment of the proposed modifications to the general permit.

11. Marcellus Shale Permitting Issues On February 26, 2011, separate notices were published to reopen the public comment period for the Air Quality Permit Exemptions (DEP ID: 275-2101-003) and the proposed revisions to the general permit for Nonroad Engines (GP-11) (41 Pa.B. 1066). Comments were submitted by 1225 commentators concerning Exemption 38 (relating to oil and gas exploration and production facilities and operations). The DEP received comments from 1122 commentators regarding General Permit 11; a comment and response document will be developed Recommendations concerning the Exemption List and GP-11 are being developed for consideration by DEP�s Executive Staff.

12. EPA Proposed Rules on Oil and Natural Gas Sector On August 23, 2011, EPA published proposed �Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews� in the Federal Register (76 Fed. Reg. 52738). The final rules, expected by February 28, 2012, will apply to new and existing source categories including crude petroleum and natural gas extraction, natural gas liquid extraction, pipeline distribution of crude oil, and the pipeline transportation of natural gas. On November 28, 2011, DEP submitted comments to the docket; the comments will be available on DEP�s website. The final rules will automatically be adopted and incorporated by reference in their entirety in the Pennsylvania Code.

13. Thank you! On behalf of the Honorable Michael L. Krancer Secretary PA Department of Environmental Protection