111(d), NSR AND NAAQS

//111(d), NSR AND NAAQS

111(d), NSR AND NAAQS

Abstracts of Presentations made in Track A and E at EUEC 2015, San Diego, CA

jordenE4.1 Small Utility Planning for EPA’s 111(d) Rule
Eric Hiser, Partner, Jorden Bischoff & Hiser, PLC

EPA’s proposed Clean Power Plan, which establishes carbon pollution standards for existing electric
generating units (EGUs), promises to up end U.S. power markets and disrupt years of resource planning.
This paper outlines the impact of the proposed Clean Power Plan’s goal calculations on Arizona and
demonstrates that despite EPA’s claims of substantial flexibility, little flexibility is apparent for small
utilities at least in Arizona. The paper examines the likely impact of the proposal on Arizona Electric
Power Cooperative, a small rural electric generation and transmission (G&T) cooperative. The paper
evaluates a multiple layer strategy to ameliorate the impacts of the proposed Clean Power Plan,
together with the pros and cons of each layer, and ends with a description of a proposed innovative
subcategory for small public and cooperative utilities as an alternative to the primary state Interim
Goal and Final Goal approach advocated by EPA.

erm-logoE4.2 The MATS Conundrum – How does Section 111(d) impact Old Smokey Power
Peter Belmonte, Partner, ERM
On June 2, 2014, EPA published new CO2 emimssion limits under the New Source Performance
Standards (“NSPS”) provisions of the Clean Air Act for existing units under Sedction 111(d). EPA
proposed guidelines outlining individualized CO2 emissions goals for each state. EPA is leaving it to
the states to determine how each state will demonstrate compliance. This includes going “beyond
the fence” by joining or creating new cap–and–trade programs, forcing retirements of certain higher–
emitting generation sources, deploying more renewable energy or ramping up energy–efficiency
technologies, and other options. States will apparently also be allowed to differentiate between
individual power plants, and therefore how significantly plants are impacted, depending on numerous
other factors including ownership structure, market conditions, and other criteria. This presentation will
take a closer look at how this proposed rule impacts Old Smokey Power’s operations by evaluating all
4 building blocks proposed in the ruleas BSER to their operations going forward. It was decided at the
last board meeting that OId Smokey power would co-fire natural gas with coal based on a montecarlo
simulation taking into account a number of intangibles and uncertainties. What are the technical
challenges and legal ramifications associated with the rule and Old Smokey Power? Will Old Smokey
Power have to completely repower to natural gas fired combustion turbines? Or will the rule cause the
plant to shut down.

trc_logoE4.3 Compliance Strategies for Proposed Greenhouse Gas Rules in Existing Power Plants
Edward Malley, Vice President, TRC Companies, Inc.; Ryan Bliss, Greg Coleman & Samantha Motley
This paper discusses strategies for compliance with President Obama’s Climate Action Plan, which was
introduced in June 2013 & proposed greenhouse gas (“GHG”) emission standards for new generators.
Once standards have been proposed for new sources, Section 111(d) of the Clean Air Act requires
standards for existing sources. Standards for existing generators would be proposed by June 2014,
& finalized by June 2015. These proposed rules would limit GHG emissions to 17% below their 2005
levels. Once these standards have been set, each state will be required to develop implementation
plans. This presentation will present strategies for compliance with proposed GHG emission standards
in existing plants, which may include emission controls, fuel switches, carbon sequestration, demand
side management & transmission efficiency improvements. These strategies could result in permanent
reductions of GHG emissions, without the use of expensive pollution control devices. Specific examples
of each strategy will be presented, along with quantifiable GHG emission reductions.

cadmusE4.4 The EPA Clean Power Plan & Emission Quantification Approaches
David Sumi, Principal, The Cadmus Group, Inc.; Kate Swayne Wilson & Kimberlee Rankin
On June 2, 2014 the Environmental Protection Agency (EPA) issued draft regulations for states to meet
emissions reduction targets under Section 111(d) of the Clean Air Act. Known as the Clean Power Plan,
111(d) allows states flexibility in compliance mechanisms to meet these targets. Regardless of how
111(d) will be regulated, energy efficiency is likely to be an important component of state compliance
plans. However, there is uncertainty about how to successfully comply with 111(d), especially in
the consistent use of implementation methods and energy and carbon reduction calculations and
assumptions. The EPA and World Resources Institute (WRI) have established best-practice methods for
calculating emissions reductions from energy-efficiency programs. Following these methods, the state
of Wisconsin applies carbon values to cost-effectiveness analyses of the state’s DSM programs using
time-differentiated periods of utility electric generation. These periods reflect the carbon intensity of
the units operating at the margin at that time. The approach more effectively reflects the timing of
DSM savings and power plant emissions, and also informs current and innovative rate designs. The
state’s evaluators have aligned methods for estimating emission rates with best practices from WRI’s
Greenhouse Gas Protocol (GHG Protocols), as well as EPA’s AVoided Emissions and geneRation Tool
(AVERT).This presentation describes the approaches and provides recent results.

erm-logoE4.5 Clean Power Plan: Critical Issues Facing Power Generation Companies & States
Robert Fraser, Partner, ERM, INC; Julie Ross & David Shotts
In June 2014, EPA proposed the Clean Power Plan under Section 111(d) which regulates greenhouse
gases (GHG) from existing fossil fuel-fired electrical generating units (EGUs). The proposed plan
specifies rate-based, state-specific emission rates for carbon dioxide (CO2) emissions from affected
EGUs. The proposed rule requires reductions in states’ GHG emissions from baseline 2012 emissions
levels. The proposed rule would achieve reductions of more than 30 percent in GHG emissions from
2005 levels. As part of the rule, EPA has proposed several “building blocks” for achieving the statelevel
targets including heat rate improvements, shifting generation from coal to natural gas, increased
use of renewable energy, and energy efficiency measures. EPA intends the rule to provide states with
the flexibility to develop state-specific plans that will help them meet the targets; however, the level
of GHG reductions required makes it extremely difficult for many states to meet their targets. Some of
the proposed building blocks are dependent on market conditions (i.e., dispatch of generating units),
which might be difficult to plan for or regulate by state environmental regulatory agencies. There are
several potentially challenging issues associated with the proposed rule that could impact EGUs and
states. In this paper, some of the critical issues associated with the proposed rule based on feedback
received from state entities and power generation companies will be explored.

pepperA3.1 The State of the NAAQS in 2015
Kurt Kissling, Attorney, Pepper Hamilton LLP
U.S. EPA’s review, revision, and reinvention of the National Ambient Air Quality Standards (“NAAQS”)
continue to create complex challenges for complying with the Clean Air Act. Given the push for
increasingly lower primary standards and exotic secondary standards, there is no shortage of moving
targets in this influential intersection of law, policy, and science. Some problems are already apparent
while others are quickly developing, including the: (1) delay (or absence) of important implementation
rules; (2) inability for state and local agencies to both keep pace, let alone “fix” the nonattainment;
(3) impact of one-hour NAAQS on both modeling and permit limits; (4) delays and reversals caused
by the courts; and (5) increasing possibility of widespread and chronic nonattainment status. This
presentation will discuss recent and upcoming changes to the NAAQS, how the NAAQS are altering air
permitting/compliance, and why reform is necessary.

TrinityLogoA3.2 Practical Implementation of EPA’s SO2 & PM2.5 Modeling Guidance
George Schewe, Meteorologist/Principal Consultant, Trinity Consultants
The EPA has published numerous clarification & modeling guidance documents for atmospheric
dispersion modeling with regard to nonattainment areas & permitting in the late 2013 & early 2014
time period. This myriad of guidance can be confusing & difficult to follow with regard to the various
options, programs, & overlaps between guidance. Using the guidance within the context of the
actual dispersion models can be even more challenging as the models themselves are evolving &
guidance on their use changing. This presentation provides a summary overview of recent SO2 &
PM2.5 guidance & gives practical applications examples of guidance in the power sector. Guidance
flexibility is described such as the newly acceptable longer time periods for emissions averaging
within the context of demonstrated compliance, but also described & shown are examples of where
guidance can be incongruous or lead to dichotomous solutions. Updates to guidance over the course
of 2014 & expectations for use in the course of meeting NAAQS compliance deadlines will be discussed.

erm-logoA3.3 The SO2 Data Requirements Rule: Challenges, Options, & Opportunities
Richard Hamel, Senior Project Manager, ERM
The proposed SO2 data requirements rule outlines the methodology to be used by state and tribal
agencies to characterize air sulfur dioxide air quality in their regions for the purpose of implementing
the 1-hour SO2 National Ambient Air Quality Standard. The proposed rule provides several options
for characterizing air quality and establishes a schedule for preparing proposed 1-hour SO2 NAAQS
attainment/ nonattainment area. The United States Environmental Protection Agency (EPA) and
the states have historically relied on ambient monitoring data to determine the attainment status of
areas throughout the U.S. each time a NAAQS is established or revised. EPA noted in the preamble to
the final 1-hour SO2 NAAQS, however, that the existing ambient monitoring data are inadequate for
accurate designations to be made in many locations. The proposed data requirements rule offers state
and tribal regulatory agencies the flexibility to more fully characterize the ambient air quality prior to
proposing attainment designations by allowing the use of modeling and/or monitoring to determine
attainment status in those areas without existing monitors that are properly sited to characterize peak
impacts. This presentation will discuss the SO2 Data Requirements Rule, the various choices provided to
the agencies and the sources identified as being above the inclusion thresholds and therefore subject
to the rule, and the implications of the various methods of demonstrating attainment.

aecomA3.4 Dealing with the SO2 NAAQS Data Requirements Rule: Challenges & Options
Robert Paine, Associate Vice President, AECOM; David Heinold & Robert Iwanchuk
EPA’s “Data Requirements Rule”requires states to conduct either a dispersion modeling or monitoring
program for “priority” SO2 sources, where no current monitoring exists, to determine whether the
NAAQS for SO2 is attained. While the rule is directed at states, affected sources will need to take
an active part in deciding whether to proceed with a modeling versus a monitoring approach. EPA
prefers a threshold source-selection approach to determine the affected facilities, which could involve
sources with emissions of 1,000 TPY in urban areas & 2,000 TPY in rural areas. The threshold could be
even lower for sources near larger sources or in areas for which the combined emissions from multiple
facilities exceeds EPA’s thresholds. The timetable for implementation focuses upon 2016 when major
decisions & submissions are due. This presentation will provide affected sources with an overview of
strategic planning for the modeling or monitoring options. For modeling, advanced techniques involve
specific AERMOD options (e.g., the “low wind” options) & possible use of site-specific meteorological
data. A successful modeling outcome can avoid a costly monitoring program. However, in some cases,
monitoring may provide more realistic results. For monitoring, the key issues are how many & where.
Since the operation of monitors is expensive, up-front planning in this regard is critical to success.

TrinityLogoA3.5 PM2.5 Modeling Guidance Overview and Case Studies for Secondary Formation of PM2.5 from Precursors
Anna Henolson, Managing Consultant, Trinity Consultants; Justin Fickas
The US EPA issued draft guidance in March 2013 and final guidance in May 2014 describing the
recommended methods for demonstrating compliance with the NAAQS for primary and secondary
PM2.5. Under the guidance, states are now requiring assessment of formation of nitrates and sulfates
from NOX and SO2 emissions (“secondary PM”) if NOX or SO2 are greater than the SERs (40 tpy for
NOX / SO2). The EPA guidance prescribes different methods for PM2.5 NAAQS demonstrations: Case
1: PM2.5 < 10 tpy and NOX / SO2 < 40 tpy, no demonstration is required; Case 2: PM2.5 > 10 tpy
and NOX / SO2 < 40 tpy, traditional primary/direct PM2.5 modeling demonstration is required; Case 3:
PM2.5 > 10 tpy and NOX / SO2 > 40 tpy, primary/direct PM2.5 and must account for secondary PM2.5
formation; Case 4: PM2.5 < 10 tpy and NOX / SO2 > 40 tpy, only account for secondary PM2.5 formation
(primary/direct PM2.5 demonstration not required). For cases 3 and 4, the secondary PM2.5 formation
assessment takes the form of three complexity levels: Qualitative, Hybrid Qualitative/Quantitative, and
Quantitative. An overview of recent demonstrations under Case 3 and Case 4 requiring secondary
PM2.5 assessments provides perspective on the quantity and variety of recent assessment methods.
Several case studies are summarized in more detail to compare the various secondary PM2.5 assessment
methods, evaluating the tradeoff between prediction accuracy and model resource requirements.

aecomA3.6 Challenges with Resolution of Designated 1-hour SO2 Non-Attainment Areas
Mary Kaplan, Senior Staff Specialist, AECOM; Robert J. Paine
U.S. EPA’s implementation of the 1-hour SO2 standard considers monitoring and modeling approaches,
and the agency plans to address large SO2 sources with a hybrid approach. Existing monitor data,
potential contributors, meteorology, and topography were reviewed and initial designations of 29
nonattainment areas were issued in 2013. Some nonattainment areas implicate a single source, other
areas have several sources upwind of the monitor with a primary contributor and other sources are
“pulled in”. With the modeling-based designation deadline of April 2015, stakeholders are developing
a compliance scenario for each area. A variety of approaches are being pursued, including sitespecific
alternative modeling, targeted emission controls and/or limits, as well as shutting down
sources. In some cases the application of AERMOD results in poor model performance, and alternative
approaches are considered. In other cases, it is not clear which emission sources are culpable for
the monitored violations due to incomplete emission records and meteorological data. To mitigate
these challenges, we have recommendations for sources that intend to pursue a 3-year monitoring
program in their implementation of the SO2 Data Requirements Rule that may result in new monitored
nonattainment areas by 2020. These monitoring programs will increase the understanding of the cause
of high monitored concentrations will be important for the success of the resolution of any such new
nonattainment areas.

RTPA4.1 Recent Developments in NSR
Lynn Hutchinson, General Counsel & Senior Project Manager, RTP Envinronmental Associates, Inc.; Gary McCutcheon
This presentation will discuss significant NSR rule & policy developments over the past year & explain
how those developments affect applicants & agencies. Of particular interest are the role of NSR in
(1) greenhouse gas regulation & EPA’s response to the biofuels vacatur, (2) implementation of the
2012 PM2.5 NAAQS & 2008 ozone NAAQS (3) EPA’s response to the SIL remand; (4) reconsideration of
the PM2.5 baseline area & inclusion of PM2.5 precursor emissions in the significant impact analysis, (5)
implementation of the Federal minor NSR program in Indian country; (6) potential changes to EPA’s
Confidential Business Information regulations, & (6) recent court decisions & policy memos.

HuntonA4.2 The Utility New Source Review Enforcement Initiative – more than a decade old & it keeps going, & going, & going.
Makram B. Jaber, Partner, Hunton & Williams LLP
Nov. 3, 1999, then EPA Administrator Carol Browner and Attorney General Janet Reno held a press
conference to announce the start of the NSR enforcement initiative against the utility industry. Lawsuits
were filed against 7 utilities in the South and Midwest, and an administrative consent order was issued
to the Tenn. Valley Authority. Over a decade later, this “initiative” grinds on, with some of the original
lawsuits still unresolved, a few more filed along the way, and several settlements reached. Some states
and environmental groups have intervened in some of EPA’s lawsuits, and filed a few on their own. The
results in court have generally not been in EPA’s favor. While EPA has had a couple of wins, a majority
of the courts to date have rejected EPA’s “routine at the unit” standard for the “routine maintenance,
repair and replacement exclusion,” and EPA has lost three cases because it could not show emissions
increases. This year has been active on the NSR front, with several cases potentially going to trial, and
district court judgments in favor of utilities headed to the Courts of Appeals. Like my presentation on
this subject last year, this presentation will review the results of NSR litigation to date and discuss the
cases to watch in 2015.

SutherlandA4.3 Recent Developments in New Source Review Settlement & Consent Decree Implementation
Liz Williamson, Partner, Sutherland Asbill & Brennan LLP
This presentation features an update of the year’s New Source Review settlements between utilities and
EPA and/or environmental organizations. Review of strategies for risk avoidance are also important.
We will discuss utility environmental strategies for examining outage projects for compliance with NSR.
Once entered, NSR settlements include more than ten years of emissions limitations, control device
installation requirements, reporting and record-keeping requirements. This presentation will cover the
recent trends and pitfalls in CD implementation.

erm-logoA4.4 Dominant Air Quality Issues Driving Decision Making on Plant Siting, Configuration, & Capital Expenditures
Michael Zebell, Senior Consultant, ERM; Mark Thimke, Foley & Lardner, LLP
Over the course of the legislative and administrative history of air pollution control in the United
States there have been many advances and changes that have affected business decision making.
Programs such as New Source Review (NSR), Regional Haze, and others have progressively informed
and molded the facility siting and business decision making process, and air quality has inched its way
into the minds of utility planners and power developers. In attainment areas, decisions such as whether
to repower an existing generating station or choose a greenfield site were made based on obtaining
a preconstruction monitoring waiver and modeling for increment consumption. Although meeting the
increment my still be challenging, a transition is underway – the new driver is the short-term National
Ambient Air Quality Standards (NAAQS). This paper covers the reasons behind the transition; presents
a case study of how the decision making process on a site dragged to a stop based on the inability to
meet the NAAQS at any cost; and speculates on what the future might look like.

solarturbinesA4.5 Air Permitting Strategy for Small Gas Turbine Project Before, During, and After the Tailoring Rule
Leslie Witherspoon, Manager – Environmental Programs, Solar Turbines Incorporated
The presentation will address the air permitting “norm” for small gas turbine projects (1-50MW, 1500-
60,000 hp) before the Tailoring Rule, during the Tailoring Rule’s reign, and after its demise. Before the
tailoring rule permitting small cogeneration and pipeline compressor projects had its challenges, just
like all federal air permitting. For smaller gas turbine projects PSD was rarely triggered, NA NSR was
avoided as much as possible and state level NSR permitting prevailed. The Tailoring Rule created
arbitrary thresholds forcing historically minor NSR projects into PSD and NA NSR major source reviews
for 5x smaller projects. The result: uncertainly, longer permitting timeframes, meaningless GHG BACT
analyses, poorly written permits, increased permitting costs, and no net benefit to air quality. As the
dust settles from the Supreme Court decision to strike the Tailoring Rule small combustion turbine
permitting is back to the pre-2011 methods…or is it? The presentation will discuss how gas turbine users
are permitting now, what happened to those “in process” when the decision came down, what those
with permitting issued are doing, and other impacts.

troutmanA5.1 EPA’s Disapproval of State Regional Haze Plans
Mack McGuffey, Partner, Troutman Sanders LLP
The Clean Air Act clearly places the States in charge of improving visibility at national parks. Even
so, EPA has disapproved over a dozen State regional haze plans and replaced them with its own
preferred policy choices, even though those policy choices appear to have drifted over time. Due
to the state-by-state nature of the program, the battles over regional haze have often received less
attention at the national level, but that is exactly why they are relevant to EPA’s newly proposed Clean
Power Plan and proposed SSM SIP Call—all three programs require state plan development followed
by EPA approval. As such, the lessons learned in the regional haze context, and the federal courts’
attitude toward the legal challenges raised, may foreshadow the fights to come over both excess
emissions and greenhouse gases. Mack McGuffey has represented several utility companies struggling
to make sense of the tug of war between the States and EPA over regional haze plans, and is currently
representing the State of Arizona in its regional haze litigation.

troutmanA5.2 EPA’s Startup, Shutdown & Malfunction SIP Call to States
Randy Brogdon, Partner, Troutman Sanders LLP
In 2013, EPA issued a proposed rule that would force 36 states to revoke or substantially revise regulatory
provisions governing excess emissions during startup/shutdown/malfunction (SSM) events. EPA’s
proposal would establish that all excess emissions during SSM events must be considered “violations”
of the Clean Air Act. Following a 2014 court decision invalidating EPA’s new SSM policy, EPA issued
a supplemental proposal to make the policy even more rigid than before. In accordance with that
supplemental proposal, EPA is expected to effectively eliminate any defense to SSM emissions in May
2015, placing power-generating facilities at a substantially increased risk of enforcement. EPA is also
in the process of applying that same inflexible policy to other federal SSM rules and permit provisions.
Randy Brogdon, a partner at Troutman Sanders, has represented power companies across the nation
in defending lawsuits and enforcement actions based on SSM events and will address the broad liability
impacts of EPA’s proposal.

Southern CoA5.3 EPA’s Proposed Clean Power Plan
Brian Toth, Climate & Renewable Strategy Manager, The Southern Company
On June 18, 2014, EPA published a proposed rule designed to regulate greenhouse gas emissions
from existing electric utility units. In its proposal, EPA seeks to reduce carbon dioxide (CO2) emissions
through establishing state-wide and state-specific CO2 emission rates—specifically, an interim emission
rate that will apply beginning in 2020, and a final rate for 2030 and beyond. The full breadth of the rule
is unprecedented. As proposed, the Clean Power Plan would require a transformation of the electric
power system from its current form, which dispatches least-cost generating resources first, to a system
that focuses primarily on reducing the use of the fossil fuels that currently satisfy the bulk of the nation’s
electricity needs. Brian Toth, Climate and Renewable Strategies Manager for Southern Company,
will discuss the company’s position and expectations regarding the practical implications of EPA’s
proposed Clean Power Plan.

HuntonA5.4 EPA’s Clean Power Plan: Can It Survive the Courts?
Allison Wood, Partner, Hunton & Williams LLP
EPA’s Clean Power Plan to regulate existing electric generating units under section 111(d) of the Clean
Air Act is one of the most controversial rules EPA has ever released. If implemented, the Clean Power
Plan will transform the electricity sector in this country, but first it will have to clear the hurdle of the
courts as litigation over the final plan is all but guaranteed. This presentation will explore the legal issues
surrounding the Clean Power Plan and the timing of the litigation process.

epriA5.5 Dynamic Implications of the BSER
Victor Niemeyer, Program Manger, EPRI; David Young
EPA’s definition and use of the BSER to set state goals under the proposed Clean Power Plan (june
2014), while granting flexibility in implementation, proposes a system of compliance that is intrinsically
inflexible. The dynamics of compliance, under circumstances of any unplanned shortfall in the nonemitting
resources required for compliance, force an additional curtailment of covered fossil output,
creating a further reduction in supply and forcing states to increase imports or reduce exports. This
creates the risk of multi-state compliance failures that could disrupt interstate power flows.”

icfA5.6 111(d) – Pivot to the States – 
Steven Fine, Vice President, ICF International
The federal and state governments need to work together under the concept of “cooperative
federalism” upon which the Clean Air Act is built. Under this construct, EPA determines the emissions
rate standards, while it is up to the states to determine how the affected sources in their geographic
jurisdiction will meet them. While the state-specific standards under the final NSPS rule for existing
sources, expected to be issued by EPA this coming summer, will no doubt be different from the
proposed rule, and there are continuing discussions about the glide path and crediting early actions,
much of the activity going forward will concentrate on state program design. This presentation will
concentrate on the differences between the three main options available to the states (some of which
are not mutually exclusive) – a rate-based trading system, a mass-based cap, and a clean portfolio
standard. The differences in market dynamics, allowance/credit prices, and electricity prices will be
highlighted, along with state considerations of whether to join regional trading regimes.

 

By |2018-06-22T21:40:52+00:00October 8th, 2015|Categories: Uncategorized|Comments Off on 111(d), NSR AND NAAQS