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

Workshop Q

Kentucky: Major Air Permitting, Regulatory & Compliance Developments

Tuesday, March 27, 2018 2 p.m. to 3:15 p.m.

Biographical Information Sean Alteri, Director, Kentucky Division for Air Quality 200 Fair Oaks Lane, 1st Floor, Frankfort, KY 40601 502.564.3999 Fax 502.564.4666 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 has worked as a permit

engineering assistant, Regulation Development Supervisor, Technical Services Branch Manager, and the Assistant Director. Currently, he is also serving as a board member of the Association of Air Pollution Control Agencies (AAPCA) and the Southeastern States Air Resources Managers (SESARM). Mr. Alteri is a graduate of the University of Kentucky College

• f Engineering (BS Chemical, 1997) and resides on a family farm in Anderson County.

Carolyn M. Brown, Partner, Dinsmore & Shohl LLP 250 West Main Street, Suite 1400, Lexington, KY 40507 859.425.1092 Fax 859.425.1099 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 currently chairs the Kentucky Chamber of Commerce 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

• ffice.

Philip A. Imber, Manager Air Section, Environmental Affairs, LG&E and KU 220 W. Main Street, Louisville, KY 40202 M: 502-552-6070 O: 502-627-4144 F: 502-217-2809 philip.imber@lge-ku.com Philip Imber spent the first his career in the chemical process industry as a chemical engineer. In 2001, he transitioned into the electric utility sector, joining LG&E and KU (LKE) as a chemical

• engineer. He 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 to add generation capacity and improve the environmental performance of the fleet. 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 received a bachelor’s degree in chemical engineering from the University

• f Michigan and a master’s degree of business from Bellarmine University. Philip is married

(Allison) with three children – Louise (12), Beatrice (11), and Henry (8). Philip is active in volunteer and athletic endeavors.

Kentucky: Major Air Permitting, Regulatory & Compliance Developments 27th Annual Business and Industry’s Sustainability and Environmental Health and Safety Symposium

March 27, 2018

Sean Alteri, Director Kentucky Division for Air Quality

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.

2

Emission Trends

3

Emission Trends

4

Emission Trends

5

Emission Trends

6

Emission Trends

Emission Trends

• July 5, 2017 ‐ EPA finalized rule

redesignating the Kentucky portion

• f the Cincinnati, OH‐KY‐IN area to

attainment.

• All areas within Kentucky are

attaining the 2008 Ozone Standard.

2008 Ozone NAAQS

9

February 28, 2018 – SIP Submittal to EPA

• The Division for Air Quality demonstrates that

criteria pollutants that contribute to the formation

• f ozone in the state of Kentucky:
• Do not contribute significantly to nonattainment of the

NAAQS in any other state; and

• Do not interfere with maintenance of the NAAQS in any
• ther state.
• Parallel Processing
• Public comment period began March 1, 2018
• Public hearing scheduled for March 30, 2018

2008 Ozone NAAQS

10

Reformulated Gasoline September 13, 2017 – SIP Revision to EPA

• The Division for Air Quality demonstrates that the

removal of the federal reformulated gasoline (RFG) requirements in Boone, Campbell, and Kenton Counties:

• Does not interfere with any applicable requirement

concerning attainment and reasonable further progress in nonattainment or maintenance areas.

• Includes updated on‐road and non‐road source emissions

inventories reflecting the removal of RFG as a control measure for the Northern Kentucky area, and replaced those emissions inventories previously submitted with the redesignation request for the 2008 8‐hour Ozone NAAQS.

2008 Ozone NAAQS

11

Reformulated Gasoline February 14, 2018 – EPA Proposed Approval

• “EPA is proposing to approve this SIP revision and

the corresponding non‐interference demonstration because EPA has preliminarily determined that the revision is consistent with the applicable provisions

• f the CAA.”

2008 Ozone NAAQS

12

November 16, 2017 – Initial Designations

• Designated 101 of the 120 Kentucky counties.
• All areas in this round were designated

Attainment/Unclassifiable.

• Counties not designated in this round:
• Louisville, KY‐IN: Bullitt, Hardin, Henry, Jefferson, Larue,

Meade, Nelson, Oldham, Shelby, Spencer, Trimble.

• Cincinnati, OH‐KY‐IN: Boone, Bracken, Campbell, Gallatin,

Grant, Kenton, Mason, Pendleton.

2015 Ozone NAAQS

13

2015 Ozone NAAQS

December 20, 2017 – “120 Day” letter notifies states of EPA’s proposed designations for remaining areas.

• Counties will be designated as nonattainment if

there is monitoring data showing a violation or if the EPA determines that the area is contributing to a violation of the standards in a nearby area.

• Louisville, KY‐IN: Bullitt, Jefferson, Oldham.
• Cincinnati, OH‐KY‐IN: Portions of Boone, Campbell, Kenton.
• All remaining counties will be designated

Attainment/Unclassifiable.

14

2015 Ozone NAAQS

Louisville, KY‐IN Monitoring Data (ppm)

15

State

County/Site Name AQS Site ID 2014 2015 2016

Design Value 2014‐2016

KY Bullitt – Shepherdsville 21‐029‐0006 0.065 0.067 0.067 0.066 KY Hardin – Elizabethtown 21‐093‐0006 0.062 0.066 0.068 0.065 KY Jefferson – Bates 21‐111‐0027 0.065 0.071 0.073 0.069 KY Jefferson – Watson 21‐111‐0051 0.069 0.069 0.070 0.069 KY Jefferson – Cannons 21‐111‐0067 0.070 0.076 0.076 0.074 KY Oldham – Buckner 21‐185‐0004 0.068 0.073 0.069 0.070 IN Clark – Charlestown 18‐019‐0008 0.066 0.074 0.072 0.070 IN Floyd – New Albany 18‐043‐1004 0.068 0.067 0.073 0.069

2015 Ozone NAAQS

Cincinnati, OH‐KY‐IN Monitoring Data (ppm)

16

State County/Site Name AQS Site ID 2014 2015 2016 Design Value 2014‐2016

KY Boone – East Bend 21‐015‐0003 0.062 0.062 0.065 0.063 KY Campbell – NKY 21‐037‐3002 0.071 0.071 0.069 0.070 OH Butler – Hamilton 39‐017‐0004 0.070 0.070 0.076 0.072 OH Butler – Middletown 39‐017‐0018 0.069 0.070 0.074 0.071 OH Butler – Oxford 39‐017‐9991 0.069 0.068 0.072 0.069 OH Clermont – Batavia 39‐025‐0022 0.068 0.070 0.073 0.070 OH Clinton – Laurel Oaks 39‐027‐1002 0.070 0.070 0.071 0.070 OH Hamilton – Sycamore 39‐061‐0006 0.071 0.072 0.075 0.072 OH Hamilton – Colerain 39‐061‐0010 0.073 0.070 0.073 0.072 OH Hamilton – Taft 39‐061‐0040 0.069 0.071 0.073 0.071 OH Warren ‐ Lebanon 39‐165‐0007 0.071 0.071 0.074 0.072

2010 SO2 NAAQS

• Round 1: Designations based on monitoring

data.

• Campbell County – Redesignated to Attainment,

March 10, 2017.

• Jefferson County – Currently nonattainment.

*1‐hour standard is 75 parts per billion (ppb) calculated as the 3‐

year average of the 99th percentile of the annual distribution of daily maximum 1‐hour average concentrations.

17

2014 2015 2016 2014‐2016 DV Jefferson ‐ Watson Ln 148.6 54.2 26.1 76

2010 SO2 NAAQS

18

2010 SO2 NAAQS

• Round 2: Designated areas with 1) Newly violating

monitors; or 2) areas with stationary sources emitting more than 16,000 tons of SO2 in 2012 or more than 2,600 tons of SO2 with an emissions rate of at least 0.45 lbs SO2/mmbtu in 2012.

• Ohio County – D.B. Wilson Generating Station
• Pulaski County – John S. Cooper Power Station

June 20, 2016 – Both counties designated as unclassifiable.

19

2010 SO2 NAAQS

• Round 3: Designations based on characterization
• f facilities that emit 2,000 TPY or more of SO2 in

2014.

• 9 Sources Modeled
• 1 Monitor was established to collect ambient air

data for 2 sources.

• EPA will use 2017‐2019 data to make final designations

no later than December 31, 2020.

• 3 Sources had coal‐fired EGU’s shut down.
• 2 Sources established federally‐enforceable

limitations through Title V permit revisions.

20

2010 SO2 NAAQS

• Round 3 Continued:
• August 22, 2018 ‐ EPA sent “120 day” letter notifying states
• f their intended designations.
• Proposed to designate northern portion Henderson County unclassifiable.
• Based on Sierra Club modeling focused on facility in Southeastern Indiana
• The Division and Indiana Department of Environmental Management

provided additional information and analysis of the Sierra Club modeling.

• January 9, 2018 ‐ EPA finalized designations for the 3rd

round.

• All areas characterized during 3rd round were designated

attainment/unclassifiable.

• All remaining areas will be designated by December 31,

2020.

21

22

401 KAR 59:015. New Indirect Heat Exchangers 401 KAR 61:015. Existing Indirect Heat Exchangers

• Amendments and Technical corrections
• Inclusion of work practice standards
• File date: September 14, 2017
• Amended and SOC filed with LRC – December

15, 2017

• Anticipated Effective Date ‐ March 9, 2018

Regulation Update

23

Cross‐State Air Pollution Rule

• 401 KAR 51:240, CSAPR NOx Annual Trading

Program

• 401 KAR 51:250, CSAPR NOx Ozone Season Group 2

Trading Program

• 401 KAR 51:260, CSAPR SO2 Group 1 Trading

Program

• Expected file date: March 2018

Regulation Update

24

401 KAR 52:050, Permit application forms

• Permit applications forms will be updated
• Excel format
• Stakeholder group formed
• New instruction sheets have been drafted
• Estimated file date: April 2018

Regulation Update

25

401 KAR 52:070, Registration of Designated Sources

• Exemptions for registered sources will be revised for

clarity

• Registration form part of permit application form
• Will be filed along with permit application forms

update

• Estimated file date: April 2018

Regulation Update

26

Other Projects

• 401 KAR 52:100 – Public, affected state, and US EPA

review

• 401 KAR 58:005 – Accreditation of asbestos

professionals

• 401 KAR 60:005 – 40 CFR Part 60 NSPS
• 401 KAR 63:002 – 40 CFR Part 63 NESHAPs
• 401 KAR 63:031 – Leaks from gasoline tank trucks

Regulation Update

27

Future Projects

• MSW landfills – existing sources
• CISWI – existing sources
• 401 KAR 51:017/51:052 – PSD and NSR updates
• HB 50 implementation
• CPP replacement rule

Regulation Update

Federal Policy Updates

28

• Clean Power Plan Repeal
• Proposal published in Federal Register on Oct. 27, 2017
• Cabinet submitted comments of support dated Jan. 12,

2018

• Clean Power Plan Replacement
• Advance Notice of Proposed Rulemaking published
• Dec. 28, 2017
• Sue and Settle Policy
• EPA Memo from Administrator Pruitt dated Oct. 16,

2017

Federal Policy Updates

29

• NSR Reform
• Memo from Administrator Pruitt dated
• Dec. 7, 2017
• “Once In, Always In”
• “Reclassification of Major Sources as Area

Sources Under Section 112 of the Clean Air Act” – dated Jan. 15, 2018

Contact Information

Sean Alteri, Director Kentucky Division for Air Quality 300 Sower Blvd, 2nd Floor Frankfort, KY 40601‐1403 Sean.Alteri@ky.gov (502) 782‐6541

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

MEC Mar MEC March h 27, , 20 2018 Philip A Philip A. Imber Imber

Present Presentation Outline tion Outline

• Status of LG&E and KU (LKE) Generation
• Sustainability
• Outlook on Coal Fired Generation
• Air Regulation Impacts
• Clean Power Plan Repeal & Replace
• State & Local Issues

32 32

LGE-KU’s Contribution t LGE-KU’s Contribution to Impr Improved Air Quality

• ved Air Quality

1998-2017: reduced rates of SO2 by 93% and NOx by 80%. 2000-2017: reduced Particulate by ~90% and Mercury by >80%.

Histor

• ry

Forecas Forecast

34 34

LGE-KU’s Electric Gener LGE-KU’s Electric Generation ation

Almost 2% annual growth (1995-2008) Basically Flat (2011+)

Sus Sustainability (Greenhouse Gas) ainability (Greenhouse Gas)

• Increasing shareholder/s

shareholder/stakeholder akeholder influence to reduce GHG —Resulting in increasing public disclosures

• CDP Carbon Disclosure Project
• GRI Global Reporting Initiative
• EEI Edison Electric Institute
• Company Sustainability Report

—Goal Setting

• “50% GHG reductions from 2010 to 2050” for PPL
• Local government initiatives

35 35

Coal - Coal -New Sour ew Source P ce Performance St

• rmance Standar

andard d

(NSPS) (NSPS)

• New coal generation –requires Carbon Capture & Storage
• Under litigation
• Eliminate the likelihood of new coal based generation

— Recent CCS projects were not technically nor economically successful

36 36

Coal - Coal -New Sour ew Source P ce Performance St

• rmance Standar

andard d

(NSPS) (NSPS)

• New coal generation –requires Carbon Capture & Storage
• Under litigation
• Eliminate the likelihood of new coal based generation

— Recent CCS projects were not technically nor economically successful

Sustainability + NSPS = Pressure To End Coal Fired Generation

37 37

Current Politics of Current Politics of Exis Existing Gener ting Generating Units ting Units (EGU) (EGU)

• Political Support for Coal based EGU

— Executive Orders — EPA Agenda

• Clean Power Plan Repeal & Replace
• New Source Review Reform
• National Ambient Air Quality Standards Litigation
• Mercury and Air Toxics Reform

— Supplemental Findings

— Cross State Air Pollution Rule = Best Available Retrofit Technology

38 38

Current Politics of Current Politics of Exis Existing Gener ting Generating Units ting Units (EGU) (EGU)

• Political Support for Coal based EGU

— Executive Orders — EPA Agenda

• Clean Power Plan Repeal & Replace
• New Source Review Reform
• National Ambient Air Quality Standards Litigation
• Mercury and Air Toxics Reform

— Supplemental Findings

— Cross State Air Pollution Rule = Best Available Retrofit Technology

Stars aligning to maintain existing generation fleet through viable economic life. Can the EPA deliver during this administration?

39 39

Summar Summary of Coal St y of Coal Status atus

• EGU survive their economic useful life (to retirement)
• Generation will be replaced with

— natural gas — Renewables

40 40

Summar Summary of Coal St y of Coal Status atus

• EGU survive their economic useful life (to retirement)
• Generation will be replaced with

— natural gas — Renewables

Attrition of LKE coal in the 2050’s?

41 41

NAAQS “Pot S “Potential Impacts” ential Impacts”

• Ozone

— 2015 NAAQS Ozone Standard (70 ppb)

• Jefferson County non-attainment (marginal)
• Commencing stakeholder engagement in 2018
• State Implementation Plan required March ‘19 –Nov ’20

— CSAPR Update Rule (transport rule for 2008 standard)

• 2017 goals met (low demand year)
• Continue to set stringent SCR operating targets

— PM/SO2/NOx all in attainment

42 42

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

— LKE supports the Repeal and Replacement of the Clean Power Plan — February 26, 2018 –LKE submitted comments to the ANPR — LKE will engage in rulemaking process where possible

43 43

Feder Federal, St l, Stat ate, & e, & Local Obser Local Observations ations

• Active Public Service Commission
• Inspectors are staying engaged
• KDAQ is Responsive to Title V Revision Applications
• KDAQ and LMAPCD Title V Renewals are pending

— Operating facilities under permit shields

• Turnover/attrition of KDAQ staff
• Continuing to track Emissions Fees

— Quantity of emissions are down for LKE

• Federal pace for change has been slow

— Broad agenda and goals –can multiple significant accomplishments be made?

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

2018 Sustainability & EHS Symposium March 27, 2018

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

Overview

 Litigation Potentially Impacting Kentucky Sources  Enforcement Trends

Litigation Update  Brown-Forman Corp. v. Miller, 528 S.W.3d 886 (Ky 2017)

 Property owners sued neighboring distilleries in state court alleging that fugitive emissions of ethanol from bourbon barrels in storage promote growth of “whiskey fungus” on

• utdoor surfaces.

 The distilleries had air permits issued by the Louisville Metro Air Pollution Control District.  Plaintiffs sought damages under state tort law theories of nuisance, negligence and trespass. Defendants argued the claims were preempted by the Clean Air Act.

Brown-Forman v. Miller continued  In a decision issued on September 28, 2017, the Kentucky Supreme Court made the following key rulings:

 Relying on the 2015 decision by the Sixth Circuit in Merrick

• v. Diageo Americas Supply, the Kentucky Supreme Court

held that the Clean Air Act did not preempt state common law claims like those asserted by the plaintiffs.  The Act does not preempt the trial court from awarding monetary damages on state tort claims.  The Act does not preempt injunctive relief. However, such relief was not appropriate here.

Brown-Forman v. Miller continued  The court emphasized the following in determining injunctive relief was not appropriate:

 The facilities held air permits issued by the relevant regulatory authority.  The permits were issued after careful balancing of environmental and economic factors and citizens had an

• pportunity for input.

 The demand for particular control technology would lead the trial court to second-guess decisions entrusted by the Act to the agency. Also, although the Act allows more stringent state regulation, KRS 224.10-100(26) does not.

Litigation Update  February 22, 2018 Notice of Intent to Sue EPA by the Center for Biological Diversity over EPA’s failure to act

• n the plan for limiting PM2.5 in the Louisville area.

 The notice states that Kentucky submitted a revision to the Jefferson County portion of the Kentucky SIP on December 21, 2016, which included LMAPCD Regulation 2.05.  EPA determined the submittal was administratively complete but has yet to take final action on the submittals.  The Center asserts that EPA was required to take final action by December 21, 2017.

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 completed and oral argument was set for May 8, 2017.  On April 24, 2017, case was stayed. EPA providing status reports every 90 days regarding its review of the SIP Call.

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 completed and case was set for oral argument on April 19, 2017.  On April 11, 2017, oral argument was postponed, and the court stayed the case since EPA was in the process of reviewing the NAAQS.

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.  The court ruled in favor of plaintiffs and ordered EPA to promulgate the FIP for Kentucky by June 30, 2018.

Litigation Update  Interstate transport continues to be a difficult issue with northeastern states pointing the finger at Kentucky and Midwest power producers as the reason for their attainment issues.

 Section 126 Petitions  Section 176A Petition to expand Ozone Transport Region

 Connecticut and Sierra Club both have gone after the Brunner Island plant in Pennsylvania.  Litigation over the CSAPR update rule continues. State

• f Wisconsin, et al v. EPA, et al.

DAQ Inspections and NOVs  According to the information provided by DAQ at the latest CAA Task Force meeting, 3560 inspections were conducted in 2017 of which 2043 were major source inspections.

 In 2016, a total of 3946 inspections were conducted.  In 2015, at total of 3559 inspections were conducted.

 The compliance rate was 89 percent. NOVs were issued to 4 percent of the sources. Letters of Warning were issued to less than 1 percent. Where the deficiency noted by the inspector was minor or quickly corrected, no enforcement response was pursued.

Complaints  DAQ received over 1,100 complaints during 2017.  The most frequent types of complaints were:

 Open burning  Fugitive dust  Odor

 Based on DAQ’s 2017 Annual Report, the Ashland Regional Office received the most complaints, followed by the Frankfort Regional Office.

Division of Enforcement Activities  According to the 2017 Annual Report issued by the Division of Enforcement, the Division received 29 new case referrals from KDAQ, including 2 asbestos cases. To put this figure in perspective, the Division received 120 new referrals from KDOW and 126 from KDWM.  Civil penalties totaling $1,816,766 were collected during state fiscal year 2017 of which $298,200 were for air cases.

Division of Enforcement Activities  Referrals by Regional Office in Fiscal Year 2017:

 Frankfort - 7  Bowling Green – 6  London - 5  Florence - 4  Paducah – 4  Ashland - 1  Hazard – 1  Owensboro - 1

Enforcement Trends  No significant change in state inspection or enforcement activity is anticipated.  At the federal level, a reduction in federal enforcement actions is anticipated.  An increase in citizen suit enforcement was anticipated following President Trump’s election. However, the major environmental groups have in many instances been fighting new policy and other initiatives in the courts, rather than focusing on particular sources.

Thank you

Carolyn M. Brown

Lexington, Kentucky Carolyn.Brown@dinsmore.com

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