Workshop Q Kentucky: Major Air Permitting, Regulatory & - - PDF document

Workshop Q

Kentucky: Major Air Permitting, Regulatory & Compliance Developments

Tuesday, March 21, 2017 2 p.m. to 3:15 p.m.

Biographical Information Sean Alteri, Director, Kentucky Division for Air Quality 300 Sower Blvd, Frankfort, KY 40601 502.782.6541 Office Sean.Alteri@ky.gov

• Mr. Alteri is currently serving as the Director of the Division for Air Quality. The Division is

comprised of 166 full-time employees divided into 4 technical branches and 20 specialized sections and is responsible for carrying out the Clean Air Act requirements on behalf of the

• Commonwealth. During his 20-year career with the Division, Mr. Alteri worked as a permit

engineering assistant, Regulation Development Supervisor, Technical Services Branch Manager, and the Assistant Director. Currently, Sean is also serving as the President of the Association of Air Pollution Control Agencies (AAPCA) a national, non-partisan, consensus- driven organization focused on improving air quality and is a board member of the Southeastern States Air Resources Managers (SESARM). Mr. Alteri is a graduate of the University of Kentucky College of Engineering (BS Chemical, 1997) and resides on a family farm in Anderson County. Philip A. Imber, Manager Air Section, Environmental Affairs, LG&E and KU 220 W. Main St, Louisville, KY 40202 502-627-4144 Fax: 502-217-2809 philip.imber@lge-ku.com Philip started his career in the chemical process industry with American Synthetic Rubber Company (ASRC), a subsidiary of Michelin North America. Philip spent five years with ASRC in chemical engineering and operations roles. He joined LG&E and KU (LKE) in 2001 as a chemical engineer and was promoted to Manager of Major Capital Projects in 2010. During his first fifteen years at LG&E, Philip developed, permitted, and constructed large capital projects across LKE’s electric generating fleet, including the fleet Flue Gas Desulfurization, Selective Catalytic Reduction, Trimble County Unit 2, the Sulfuric Acid Mist Mitigation, the Cane Run 7 Natural Gas Combined Cycle Unit, and Pulse Jet Fabric Filters. Philip recently managed the construction of the Mill Creek Environmental Air Compliance Project, the largest and most complex air quality control project in the history of the LG&E and Kentucky Utilities. Mill Creek Generation Station's air compliance project was named the 2016 Coal-Fired Project of the Year by Power Engineering and Renewable Energy World magazines. In 2016, Philip transitioned to the Environmental Affairs department at LKE to manage the team responsible for the company’s regulatory compliance and strategy for Air Programs. Philip holds a B.S. in Chemical Engineering from the University of Michigan and a M.S. in Business from Bellarmine University. Carolyn M. Brown, Partner, Dinsmore & Shohl LLP 250 West Main Street, Suite 1400, Lexington, KY 40507 859.425.1092 Office carolyn.brown@dinsmore.com Carolyn Brown is a partner with Dinsmore & Shohl LLP and chairs the firm’s Environmental Practice Group. Her practice focuses on all areas of environmental law and includes counseling

• n regulatory requirements, permitting and transactional issues as well as environmental
• litigation. She received her B.S. from the University of Kentucky in 1979 and her J.D. from the

University of Kentucky in 1982. She has served on the Kentucky Chamber of Commerce Board

• f Directors and currently chairs the Chamber’s Energy and Environment Policy Council. She

previously chaired the Energy, Environment and Resources Law Section of the Kentucky Bar Association and has served on the Commerce Lexington Public Policy Council. She is a fellow in the American College of Environmental Lawyers and serves on the Executive Committee. Carolyn is resident in the firm’s Lexington office.

Sustainability and Environmental, Health & Safety Symposium

Sean Alteri, Director Kentucky Division for Air Quality March 21, 2017

To Protect and Enhance Kentucky’s Environment

Mission

To protect human health and the environment by achieving and maintaining acceptable air quality through:

• Operation of a comprehensive air monitoring network;
• Creating effective partnerships with air pollution sources and

the public;

• Timely dissemination of accurate and useful information and

data;

• Judicious use of program resources; and
• Maintenance of a reasonable and effective compliance

program.

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Kentucky’s Air Quality

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Kentucky’s Air Quality

4 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Emissions (tons) Year DAQ Actual Emissions CY2003‐CY2015 (Criteria Pollutants) CO NO2 SO2 VOC PT

Kentucky Division for Air Quality

• Organizational Changes
• Significant Air Quality Improvements

– SO2 and NOx

• “Good Neighbor” Provision and

Interstate Transport Obligations

• Permitting and Compliance Update

Organizational changes

John Gowins Technical Services Branch Manager 502-782-6625

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Kentucky Division for Air Quality 300 Sower Blvd., 2nd Floor Frankfort, KY 40601

Organizational changes

Organizational changes

Name Position Direct Extension Sean Alteri Director 502-782-6541 Melissa Duff Assistant Director 502-782-6597 Jarrod Bell Environmental Consultant 502-782-6552 Rick Shewekah Environmental Consultant 502-782-6768 John Gowins Technical Services Branch Manager 502-782-6625 Roberta Burnes Education/Outreach Coordinator 502-782-6571 Brandii Allen Administrative Assistant 502-782-7230

Air Quality Improvements Are Projected to Continue

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100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 50 100 150 200 250 300 350 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 tons ppb

Sulfur Dioxide

Statewide Average of 99th Percentile 1-Hour Ambient SO2 Concentrations (ppb) Predicted Statewide Average of 99th Percentile 1-Hour Ambient SO2 Concentrations (ppb) Statewide SO2 Emissions based upon Actual SO2 Emission Averages (tons) Predicted Statewide SO2 Emission Averages (tons)

Air Quality Improvements in Kentucky

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KY SO2 Emissions from EGU’s 2000‐2016

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KY NOx Emissions from EGUs 2000‐2016

• Background
• CSAPR History
• Transport SIP Obligations
• CSAPR Ozone Season Budgets

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Cross-State Air Pollution Rule (CSAPR)

Interstate Air Pollution Transport

Interstate air pollution transport, or air transport, refers to emissions from upwind sources that impacts air quality in a given location downwind. The total pollution in any area forms from the combination of local emissions and emissions from

• upwind. Emissions of sulfur dioxide (SO2) and nitrogen
• xides (NOX) can react in the atmosphere to form fine particle

(soot) pollution. Similarly, NOX emissions can react in the atmosphere to create ground-level ozone (smog) pollution. These pollutants can travel great distances affecting air quality and public health regionally. The transport of these pollutants across state borders makes it difficult for downwind states to meet health-based air quality standards for PM2.5 and ozone.

(https://www.epa.gov/airmarkets/interstate-air-pollution-transport)

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The "Good Neighbor" Provision

The Clean Air Act's "good neighbor" provision requires EPA and states to address interstate transport of air pollution that affects downwind states' ability to attain and maintain National Ambient Air Quality Standards (NAAQS). Specifically, Clean Air Act section 110(a)(2)(D)(i)(I) requires each state in its State Implementation Plan (SIP) to prohibit emissions that will significantly contribute to nonattainment of a NAAQS, or interfere with maintenance of a NAAQS, in a downwind state. The Act requires EPA to backstop state actions by promulgating Federal Implementation Plans (FIPs) in the event that a state fails to submit or EPA disapproves good neighbor SIPs.

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EPA's Actions Under The "Good Neighbor" Provision

• NOX Budget Trading Program (2003-2008)
• Clean Air Interstate Rule (2009-2014)
• Cross-State Air Pollution Rule (2015-present)
• Cross-State Air Pollution Rule Update (2017)

– Updates the CSAPR ozone season NOX program.

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Cross State Air Pollution Rule (CSAPR)

• Originally designed for the 1997 PM2.5

and 1997 Ozone NAAQS

• Proposed update to address transport for

the 2008 Ozone NAAQS

• Determine upwind states and their

contributions to nonattainment areas or interference with maintenance areas

• Only controls emissions from EGUs

January 22, 2015 - EPA memo identifies KY as a significant (>1%) contributor to downwind

• zone under the 2008 ozone NAAQS and the

need for a “Good Neighbor SIP”

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Cross-State Air Pollution Rule (CSAPR)

SIGNIFICANT CONTRIBUTION NONATTAINMENT SIGNIFICANT CONTRIBUTION MAINTENANCE KY Harford MD Camden NJ Gloucester NJ Richmond NY Philadelphia PA

Summary of Memo Information

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SIGNIFICANT CONTRIBUTION NONATTAINMENT SIGNIFICANT CONTRIBUTION MAINTENANCE KY Harford MD Camden NJ Gloucester NJ Richmond NY Philadelphia PA

Transport SIP Obligations

 http://www.epa.gov/air/urbanair/sipstatus/reports/ky_infrabypoll.html

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SIP Requirement Deadline Submittal Date Latest Action Date of Latest Action FR Citation (link to GPO website) Section 110(a)(2)(D)(i) - I Prong 1: Interstate transport - significant contribution 07/18/2000 12/10/2007 Final FIP 10/07/2011 76 FR 48208 Section 110(a)(2)(D)(i) - I Prong 2: Interstate transport - interfere with maintenance 07/18/2000 12/10/2007 Final FIP 10/07/2011 76 FR 48208

Kentucky: 110(a)(2) Ozone (1997) Infrastructure Requirements

Transport SIP Obligations

SIP Requirement Deadline Submittal Date Latest Action Date of Latest Action FR Citation (link to GPO website) Section 110(a)(2)(D)(i) - I Prong 1: Interstate transport - significant contribution 03/12/2011 07/17/2012 Disapproval 04/08/2013 78 FR 14681 Section 110(a)(2)(D)(i) - I Prong 2: Interstate transport - interfere with maintenance 03/12/2011 07/17/2012 Disapproval 04/08/2013 78 FR 14681

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Kentucky: 110(a)(2) Ozone (2008) Infrastructure Requirements

Transport SIP Obligations

SIP Requirement Deadline Submittal Date Latest Action Date of Latest Action FR Citation (link to GPO website) Section 110(a)(2)(D)(i) - I Prong 1: Interstate transport - significant contribution 07/18/2000 08/26/2008 Final FIP 10/07/2011 76 FR 48208 Section 110(a)(2)(D)(i) - I Prong 2: Interstate transport - interfere with maintenance 07/18/2000 08/26/2008 Final FIP 10/07/2011 76 FR 48208

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Kentucky: 110(a)(2) PM-2.5 (1997) Infrastructure Requirements

Transport SIP Obligations

SIP Requirement Deadline Submittal Date Latest Action Date of Latest Action FR Citation (link to GPO website) Section 110(a)(2)(D)(i) - I Prong 1: Interstate transport - significant contribution 09/21/2009 09/08/2009 Final FIP 10/07/2011 76 FR 48208 Section 110(a)(2)(D)(i) - I Prong 2: Interstate transport - interfere with maintenance 09/21/2009 09/08/2009 Final FIP 10/07/2011 76 FR 48208

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Kentucky: 110(a)(2) PM-2.5 (2006) Infrastructure Requirements

Cross-State Air Pollution Rule (CSAPR)

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• On September 7, 2016, the EPA finalized an update to the

Cross-State Air Pollution Rule (CSAPR) ozone season program.

• This rule addresses the summertime (May – September)

transport of ozone pollution in the eastern United States.

• Developed to help downwind states and communities meet and

maintain the 2008 ozone national ambient air quality standard (NAAQS).

• Published in the October 26, 2016 Federal Register

– (81 FR 74504)

Cross-State Air Pollution Rule (CSAPR)

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Final CSAPR Update Region for the 2008 Ozone NAAQS

Permit Status

Permits pending Exceeding regulatory timeframes 2013 147 40 2014 181 48 2015 208 64 2016 232 33 50 100 150 200 250 Number of Permits

Permits Pending vs. Permits Exceeding RTF

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Permit Efficiencies

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100 200 300 400 500 600 700 2013 2014 2015 2016

New Permit Applications vs Final Decisions

New Applications Final Decisions

Major Source Inspections

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100 200 300 400 500 600 Ashland Bowling Green Florence Frankfort Hazard London Owensboro Paducah Number of Inspections Regional Offices

Major Facility Inspections

2010 2011 2012 2013 2014 2015 2016

[CATEGOR Y NAME] [VALUE] [CATEGOR Y NAME] [VALUE] [CATEGOR Y NAME] [VALUE] [CATEGOR Y NAME] [VALUE]

2016 Compliance Rate Stationary Source Inspections

Compliance Rates

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Kentucky Division for Air Quality

Questions? Contact Information:

Sean Alteri, Director Kentucky Division for Air Quality 300 Sower Blvd., 2nd Floor Frankfort, KY 40601 Sean.Alteri@ky.gov (502) 782-6541

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Major Air P Major Air Permitting, R rmitting, Regulator egulatory & Compliance & Compliance Developments Developments

MEC Mar MEC March h 21, , 20 2017 Philip A Philip A. Imber Imber

Present Presentation Outline tion Outline

• Air Quality Control Status of LG&E and KU (LKE)
• NAAQS Impacts to LKE
• Land & Water Issues
• Clean Power Plan / Green House Gas NSPS
• MATS Reporting
• Continuous Emissions Monitoring

32 32

LG&E and KU LG&E and KU Emission R Emission Reduction His duction Histor

• ry

Air Quality Contr Air Quality Control Sy l System St em Status – atus – Pos Post MA MATS

• On a coal fired Generating Capacity Basis:

— 100% WFGD SO2Control — 73% SCR NOxControl (100% Low NOxBurners) — 95% PJFF PM Control — 95% Powdered Activated Carbon Hg Control — 95% Dry Sorbent Injection H2SO4Control

• Notes

— Net Summer Rating — Percentages increase based on actual generation since units with less control tend to be dispatched less

34 34

NAAQS “Pot S “Potential Impacts” ential Impacts”

• 2010 1-hour SO2 Standard

— Non-Attainment in Jefferson County, KY — LMAPCD SIP Plan — Revised Title V –inclusive of a new SO2Operating Limit — EPA review period ends April 6 — Modeling results for areas near the Ghent Generating Station & Trimble County Generating Station submitted to EPA

35 35

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— Cross State Air Pollution Rule Update

• LKE does not support:

— Stationary Source reductions in KY — Credit conversion rate — Aspects of the modeling — Significant Contribution level

36 36

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— Cross State Air Pollution Rule Update

• LKE management plan(s):

— Philosophy is to comply with the allocations received

• Do not rely on the market to purchase credits

— Increased SCR performance is required

• Increased reagent costs (ammonia and dry sorbent injection)
• Increased risk of Ammonia Bisulfate formation (air heater pluggage& corrosion)
• Reduced catalyst life –increased catalyst lifecycle costs

— Adjust unit dispatch

• Run uneconomic units to maintain NOxtargets
• Reduce unit cycling at night to maintain minimum load for SCR operation

— Assess gas co-firing and/or gas conversion of non-SCR units

• Capital and Outage impacts
• The fleet can survive…but there are ‘bumps & bruises’

37 37

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— Cross State Air Pollution Rule Update

• LKE management plan(s) with a Holistic View:

— Other capital intensive regulatory issues:

• Effluent Guidelines
• Pond Closures
• Coal Combustion Residual Transport

— Load Demand [lack of] growth

• Ultimately LKE needs to contemplate the economic vitality of some units

— Resulting quality of life impacts

38 38

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— 2015 NAAQS Ozone Standard (70 ppb)

• Jefferson County potential non-attainment (marginal?/moderate?)
• What does a SIP look like?

— Modeling results for Stationary Source reductions

• Revised Transport Rule?

— Again, Modeling results for Stationary Source reductions

39 39

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— Good Neighbor SIPs

• Significant contribution is a 1% modeled impact?
• KDAQ response to the Maryland petition

40 40

Land & Land & Water R r Regulat egulator

• ry Impacts t

y Impacts to Air Air

— Pond Closure Strategy for Zero Liquid Discharge facility

• Exemption for one time pond draining

vs.

• Air permitting impacts for evaporation
• r
• Possible WFGD make-up water

41 41

Clean Power Plan & Green House Gas NSPS Clean Power Plan & Green House Gas NSPS

— No significant comment right now — LKE does not support Kentucky House Bill 438

42 42

MA MATS R Repor porting ing

• Reporting improvements are welcome

— Unlikely to impact facility operations — LKE complies with Facility Averaging — Working toward Low Emitter Status for HClon one unit

43 43

Continuous Emissions Monit Continuous Emissions Monitoring &

• ring & St

Stac ack T k Testing ing

• CFR Title 40 Part 60 Standards of Performance Revisions

— Appendix B Performance Specification 11 –PM CEMS Test Procedures — Appendix F Procedure 2 –Quality Assurance for PM CEMS

• Isokinetic Sampling (all new monitors?)
• Response Correlation Audits (series of tests ensuring continued validity)
• Relative Response Audits (procedure between RCA to ensure validity)
• Staggered/Paired Runs
• Correlation Curve Changes
• CFR Title 40 Part 75 CEMS/Acid Rain Revisions

— Tighten accuracy requirements of CEM data and performance for calibrations — Relative Accuracy Test Audit (RATA) changes

44 44

Cont Contact Inf act Information rmation Philip A Philip A. Imber Imber

Manager Air Section | Environmental Affairs |LG&E and KU 220 W. Main St, Louisville, KY 40202 M: M: 502-552-6070 |O: 502-627-4144 | F: 502-217-2809 e-mail e-mail: philip.imber@lge-ku.com lge-ku.com

45 45

Carolyn M. Brown Dinsmore & Shohl LLP Lexington, Kentucky

Carolyn.Brown@dinsmore.com (859)425-1092

2017 Sustainability & EHS Symposium March 21, 2017

Workshop Q: Kentucky Major Air Permitting, Regulatory & Compliance Developments

Overview

 Update on Clean Air Act litigation related to Kentucky  Enforcement trends

 Kentucky enforcement  Increased potential for citizen suits under the Clean Air Act

Litigation Update

 State of Florida v. EPA, D.C. Circuit, Case No. 15-1267

 Suit filed in August 2015 by several states including Kentucky. Other challenges filed and cases consolidated with Walter Coke,

• Inc. v. EPA, Case No. 15-1267, being the lead case.

 Challenge to EPA’s SIP Call that required states to amend their rules regarding treatment of excess emissions during SSM events.  Briefing has been completed. Oral argument is set for May 8, 2017.  In a brief that was 171 pages long, the United States argues that EPA properly advanced a new statutory interpretation. The states have asserted that EPA read the provisions in isolation without regard the entire regulatory scheme and that states are entitled to design and implement their own enforcement scheme.

Litigation Update

 State of North Dakota v. EPA, D.C. Circuit, Case No. 15-1381

 Suit filed October 2015 by Kentucky and 24 other states.  Challenge to the Clean Power Plan’s New Source Performance Standard for new, modified and reconstructed power plants.  Briefing has concluded and oral argument is set for April 17, 2017.  Key argument is whether EPA properly determined the Best System of Emission Reduction. If NSPS struck down, no basis under Section 111(d) to adopt an existing plant standard.

 West Virginia v. EPA, D.C. Circuit, Case No. 15-1363

 Consolidated challenge to Clean Power Plan rules for existing power plants.  Oral arguments, en banc, September 27, 2016.

Litigation Update  State of West Virginia v. EPA, D.C. Circuit, Case No. 16- 1264

 Suit filed August 2016 by several states, including Kentucky.  Challenge to EPA’s NSPS for the oil & gas sector. The rule was issued in June 2016 and imposed limits on methane emissions from new, modified and reconstructed

• sources. Multiple arguments raised including the need for

endangerment and significant contribution findings specific to the industry in order to support issuance of the rule.  The court consolidated multiple challenges to the rule by

• rder entered January 4, 2017. The consolidated case is

State of North Dakota v. EPA, Case No. 16-1242.

Litigation Update  State of Arizona v. EPA, D.C. Circuit, Case No. 15-1392

 Suit filed October 2015 by New Mexico, Arizona, Arkansas, North Dakota and Oklahoma. Kentucky, Wisconsin and Utah subsequently intervened in the case.  Challenge to EPA’s October 1, 2015 final rule revising the

• zone NAAQS to lower the standard to 70 ppb.

 Briefing is complete and the case is set for oral argument

• n April 19, 2017.

Litigation Update

 Sierra Club v. McCarthy, 9th Cir., Case No. 15-15894

 Sierra Club sued EPA for failure to timely make designations with respect to the 1-hour SO2 NAAQS. EPA and Sierra Club entered into a consent decree establishing a schedule and process for designations.  Kentucky, Arizona, Louisiana, Nevada, North Dakota and Texas

• intervened. The challenge is now on appeal to the 9th Circuit

and oral argument is scheduled for March 16, 2017.  The underlying Consent Decree led to issuance of the Data Requirements Rule that set a schedule and series of requirements for certain larger SO2 emitters to model impacts for purposes of attainment or nonattainment designations.

Litigation Update  Sierra Club v. McCarthy, continued

 The states argue that the consent decree establishes a procedure for designations that does not comport to the Clean Air Act and thus should not have been approved.  The states’ separate challenge to EPA’s designation process for the 1-hour SO2 NAAQS designation rule has been on hold pending the decision by the 9th Circuit.

Litigation Update  Sierra Club v. McCarthy, N.D. California, Case No. 3:15- cv-04328

 Suit filed September 2015.  Sierra Club claimed EPA failed to timely act on certain SIP submittals for the 2008 ozone NAAQS and, with respect to Kentucky, failed to issue a FIP for certain elements of the

• SIP. New York subsequently intervened in the case

arguing interstate transport from Kentucky sources must be addressed through the FIP. Kentucky is not a party.  There were settlement efforts but agreement could not be reached on the schedule for action - 2018 vs. 2020

• deadline. Summary judgment briefing is complete and oral

argument is set for March 9, 2017.

DAQ Inspections and NOVs  According to the KDAQ 2016 Annual Report, more than 3200 inspections were conducted over the period from July 1, 2015 through June 30, 2016.  The inspections were conducted by each of the 8 regional field offices (Ashland, Bowling Green, Florence, Frankfort, Hazard, London, Owensboro, and Paducah).  Almost 90 percent of the sources that were inspected were in compliance. NOVs were issued to 3 percent and Letters of Warning were issued for an additional 1 percent of the sources. Where the deficiency noted by the inspector was minor or quickly corrected, no enforcement action was taken.

Complaints  DAQ received 1,485 complaints during the annual report

• period. Those complaints resulted in initiation of 1,522

field investigations.  Open burning – 563 complaints were received, resulting in the issuance of NOVs in 49% of the cases.  Fugitive dust – Approximately 275 complaints were received resulting in less than 50 NOVs.  Odor – Approximately 500 complaints were received, most of which concerned the Big Run Landfill in Boyd

• County. An agreement was reached among concerned

parties and corrective action taken to reduce odor issues.

Division of Enforcement Activities  According to the 2016 Annual Report issued by the Division of Enforcement, the Division received 20 case referrals from KDAQ, including 3 related to asbestos. To put this figure in perspective, the Division received 412 referrals regarding wastewater and 159 dealing with USTs.  The highest number of referrals were from the Florence Regional Office (6), followed by the Frankfort Regional Office (4). Paducah and Bowling Green each had 3

• referrals. Owensboro had 2; London and Ashland each

had 1 referral.  Civil penalties totaling $569,882 were collected during state fiscal year 2016.

Trends  No significant change in state inspection or enforcement activity is anticipated.  At the federal level, a reduction in federal enforcement actions is anticipated given President Trump’s views on the role of the USEPA.  An increase in citizen suit enforcement under the Clean Air Act may result as organizations such as Earth Justice, the Sierra Club, Natural Resources Defense Council and other national environmental groups feel the need to fill the void. Reportedly, such groups have seen a significant increase in donations since the presidential election.

Thank you

Carolyn M. Brown

Lexington, Kentucky Carolyn.Brown@dinsmore.com

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