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

Workshop W

Kentucky:

Major Air Permitting, Regulatory & Compliance Developments

Tuesday, March 26, 2019 3:30 p.m. to 4:45 p.m.

Biographical Information

Sean Alteri, Deputy Commissioner, Kentucky Department for Environmental Protection 300 Sower Boulevard, Frankfort KY 40601 Sean.Alteri@ky.gov (502)782-6541 Sean Alteri was appointed to serve as the Deputy Commissioner of the Department for Environmental Protection in August 2018. Prior to his appointment, Mr. Alteri held various positions in the Division for Air Quality for more than 20 years of service. During his 20-year career with the Division, Sean worked as a Permit Engineer Assistant, Regulation Development Supervisor, Technical Services Branch Manager, and the Assistant

• Director. Most recently, Sean served as the Director since October 2013.

Sean is a graduate of the University of Kentucky, College of Engineering (BS Chemical, 1997). Rebecca T. Cash, P.E. , Manager Air Section | Environmental Affairs, LG&E and KU 220 W. Main St, Louisville, KY 40202 502-627-4633 FAX: 502-217-2471 rebecca.cash@lge-ku.com Rebecca Cash started her career at the Kentucky Division for Air Quality as a permit reviewer and as a Supervisor in the Hazardous Waste Branch in the Kentucky Division of Waste

• Management. Rebecca then worked in environmental consulting for a number of years. In 2006,

she joined the Kentucky Pollution Prevention Center (KPPC) at the University of Louisville as a sustainability engineer. At KPPC she worked with various commercial and industrial facilities on waste minimization and energy efficiency projects. In 2010, Rebecca joined LG&E and KU Energy (LKE) as an Environmental Engineer in the Air

• section. She transitioned to the Environmental Compliance Manager where she performed

internal compliance audits and worked with personnel throughout the fleet to standardize environmental processes and develop compliance tools and resources. In March of 2019, Rebecca transitioned to Manager Environmental Air to manage the team responsible for the company’s regulatory compliance and strategy for Air Programs. Rebecca received a bachelor’s degree in chemical engineering from the University of Kentucky and has a PE in Environmental Engineering. Rebecca resides in Shepherdsville, KY with her spouse (Brian) and three children – Karena (19, currently attending Xavier University), Warner (17), and Lilah (13). Rebecca is active in volunteer activities at church and children and infant loss support groups. 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 is the immediate past chair of 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 Board of Regents. Carolyn is resident in the firm’s Lexington office.

Kentucky Major Air Permitting, Regulatory and Compliance Developments

Sean Alteri March 26, 2019

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

Division for Air Quality

• New Website
• Organizational Update
• NAAQS in Kentucky
• Ozone Transport Rules
• State Implementation Plan (SIP) Revisions
• Division Regulatory Actions
• Fee Change Statute
• Permitting Updates

3

New Cabinet Website

Energy and Environment Cabinet

https://eec.ky.gov/Pages/index.aspx

Department for Environmental Protection

https://eec.ky.gov/Environmental‐Protection/Pages/default.aspx

Division for Air Quality

https://eec.ky.gov/Environmental‐Protection/Air/Pages/default.aspx

DAQ Forms – DEP Forms Library

https://eec.ky.gov/Environmental‐Protection/resources/Pages/Forms‐ Library.aspx

4

Director’s Office

Name Position Direct Extension Melissa Duff Director (502) 782‐6597 Rick Shewekah Assistant Director (502) 782‐6768 Vacant Environmental Scientist Consultant Sr. Roberta Burnes Education/Outreach Coordinator (502) 782‐6571 Elly Hixon Director’s Office Administrative Specialist III (502) 782‐7230

5

Field Operations Branch

Name Position Phone

Jarrod Bell Branch Manager (502) 782‐6687 Shelly Graves Branch Administrative Specialist III (502) 782‐6628 Jonathan Barker Branch Environmental Scientist V (606) 929‐5285 Jennifer Spradlin Field Support Section Supervisor (502) 782‐6780 Karen Deskins Ashland Regional Office Supervisor (606) 929‐5285 Troy Tabor Bowling Green Regional Office Supervisor (270) 746‐7475 Clay Redmond Florence Regional Office Supervisor (859) 525‐4923 Natasha Parker Frankfort Regional Office Supervisor (502) 782‐6430 Steven Hall Hazard Regional Office Supervisor (606) 435‐6022 Pete Rayburn London Regional Office Supervisor (606) 330‐2080 Mac Cann Owensboro Regional Office Supervisor (270) 687‐7304 Elizabeth “Beth” Lents Paducah Regional Office Supervisor (270) 898‐8468 6

Permit Review Branch

Name Position Direct Extension Vacant Branch Manager Benita Stephens Branch Administrative Specialist III (502) 782‐6781 Michael Kennedy Environmental Engineer Consultant (502) 782‐6997 James Morse Environmental Scientist V (502) 782‐6718 Durga Patil Chemical Section Supervisor (502) 782‐6730 Zach Bittner Combustion Section Supervisor (502) 782‐6555 Amy Tempus‐Doom Metallurgy Section Supervisor (502) 782‐6566 Julian Breckenridge Minerals Section Supervisor (502) 782‐6700 Shawn Hokanson Permit Support Section Supervisor (502) 782‐6977 Shufang Yang Surface Coating Section Supervisor (502) 782‐6809

7

Program Planning and Administration Branch

Name Position Direct Extension Kelly Lewis Branch Manager (502) 782‐6687 Leslie Poff Branch Environmental Scientist V (502) 782‐6735 Jim Gilreath Administrative Section Supervisor (502) 782‐6620 Jake Lewis Emissions Inventory Section Supervisor (502) 782‐6686 Ben Cordes Evaluation Section Supervisor (502) 782‐6586 Cassandra Jobe Regulation Development Section Supervisor (502) 782‐6670

8

Technical Services Branch

Name Position Direct Extension Jennifer Miller Branch Manager (502) 782‐6708 Rebecca Waddle Branch Administrative Specialist III (502) 782‐6798 Shauna Switzer Branch Environmental Scientist V (502) 782‐6783 Vacant Quality Assurance Section Supervisor Jessica Dixon Source Sampling Section Supervisor (502) 782‐6596 Wayne Bray Technical Support Section Supervisor (502) 782‐6565

9

NAAQS in Kentucky

10

State Implementation Plan (SIP) Revisions

• Transport SIP Obligations (“Good Neighbor”

SIPs)

• 2015 Ozone NAAQS
• Regulatory SIPs

11

Transport SIP Obligations

Infrastructure Requirements ‐ Section 110(a)(2)(D)(i)

• Prong 1: Interstate transport ‐ significant contribution
• Prong 2: Interstate transport ‐ interfere with maintenance
• Prong 3: Interstate transport ‐ prevention of significant

deterioration

• Prong 4: Interstate transport ‐ protect visibility

12

Completed Transport SIP Obligations

• 2008 Ozone NAAQS – CAA section 110(a)(2)(D)(i)(I)
• “Good Neighbor” SIP
• Submitted to EPA on 5/10/2018
• Court Ordered deadline of 6/30/2018 for EPA to issue Final

Rule

• Approval signed 6/28/2018; published in the Federal Register

7/17/2018 (83 FR 33730)

• 2015 Ozone NAAQS – CAA section 110(a)(2)(D)(i)(I)
• Submitted to EPA 1/9/2019 as part of the Infrastructure SIP

13

Completed Transport SIP Obligations

• Prong 4: Interstate transport ‐ protect visibility
• Regional Haze Plan designed to protect visibility; relied on CAIR
• Infrastructure Requirement Section 110(a)(2)(D)(i) , Prong 4 relied on Regional Haze Plan

(CAIR) to address visibility

• EPA Determination for “CSAPR Better Than BART”
• Change KY Regional Haze Plan reliance on CAIR to CSAPR
• Addresses “Prong 4” deficiencies for Infrastructure SIPs (1997 Ozone, 2010 NO2, 2010 SO2,

2012 PM2.5 NAAQS)

• Addresses deficiencies in Regional Haze Plan
• Both submitted to EPA for approval on 11/16/2018
• Proposed approval by EPA on 2/15/2019 (84 FR

4407)

14

Remaining Transport SIP Obligations

15

SIP Requirement 1997 Ozone; 1997 & 2006 PM2.5 NAAQS 2010 NO2 NAAQS 2010 SO2 NAAQS Section 110(a)(2)(D)(i) ‐ I Prong 1: significant contribution Submitted to EPA 12/18/2018 Submitted to EPA 11/16/2018 DAQ Internal Review Section 110(a)(2)(D)(i) ‐ I Prong 2: interfere with maintenance Submitted to EPA 12/18/2018 Submitted to EPA 11/16/2018 DAQ Internal Review

2015 Ozone NAAQS SIP Revisions

• Nonattainment designations effective 8/3/2018 (83 FR

25776)

• Cincinnati, OH‐KY: Northern portions of Boone, Kenton, and

Campbell Counties (same as 2008 Ozone NAA) – result of 6 violating monitors in Ohio

• Louisville, KY‐IN: Jefferson, Bullitt, and Oldham Counties – result
• f a single violating monitor in Jefferson County, KY
• All other areas Attainment/Unclassifiable, effective

1/16/2018 (82 FR 54232)

• Attainment date: 8/3/2021

16

2015 Ozone NAAQS SIP Revisions

• Ozone has additional requirements for SIP

submittals

• Base Year Emissions Inventory for Nonattainment

Areas – due 8/3/2020

• Emissions Statement – due 8/3/2020
• Nonattainment NSR – due 8/3/2021

17

Regulatory SIP Revisions

• Submitted CSAPR Regulations to EPA 9/13/2018
• 401 KAR 51:240. Cross State Air Pollution Rule (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
• Submitted revision to 401 KAR 51:010 Attainment

designations to EPA on 12/13/2016

• Partial approval 12/19/2018 (83 FR 65088); additional

amendment to regulation in process

18

Completed Regulatory Actions

• Effective 7/5/2018
• 401 KAR 51:240. Cross State Air Pollution Rule (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
• Effective 2/1/2019
• 401 KAR 52:050. Permit application forms
• 401 KAR 52:070. Registration of designated sources

19

Upcoming Regulatory Actions

• 401 KAR 51:010. Attainment designations
• 401 KAR 60:005. Standards of performance for

new stationary sources

• 401 KAR 63:002. National emissions standards

for hazardous air pollutants

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

EPA review

• 401 KAR 58:005. Accreditation of asbestos

professionals

20

HB‐165: AN Act relating to fees for air quality

• HB 165 (Rep. Jim Gooch); Introduced in House 1/11/2019
• Amend KRS 224.20‐050 Fee for administration of air quality program.
• Passed House 2/12/2019
• Received by Senate; Natural Resources & Energy Committee
• Modification of Cabinet’s existing authority to establish permit fees

in conjunction with emissions fees (Title V fees)

• Continue operating as it historically has, or, draft regulations to

implement an alternative, but financially equivalent approach (revenue neutral)

• More sustainable and equitable budget; likely reduction in ‘per ton’

fee on emissions

21

New Statement of Basis

• Implemented fall 2017; consistency across the branch
• A record of permitting actions for the facility, emissions
• r operating limitations, control equipment, testing

requirements

• 6 main sections:
• Section 1 – Source Description
• Section 2 – Current Application
• Section 3 – Emissions, Limitations and Basis
• Section 4 – Source Information and Requirements
• Section 5 – Permitting History
• Section 6 – Permit Application History

22

Permitting Data & Trends

23

Permitting Data & Trends

24

Contact Information

Sean Alteri, Deputy Commissioner

Kentucky Department for Environmental Protection 300 Sower Boulevard, 2nd Floor Frankfort, KY 40601‐1403 Sean.Alteri@ky.gov (502) 782‐6541

25

Kentucky: Major Air Permitting, Regulatory & Compliance Development

MEC – March 26, 2019 Rebecca T. Cash, P .E.

Presentation Outline

• Status of LG&E and KU (LKE) Generation
• Outlook on Coal Fired Generation
• Sustainability
• Air Regulation Impacts
• Affordable Clean Energy (ACE) Rule
• Greenhouse Gas (GHG) New Source Performance Standards

(NSPS) for Electric Generating Units (EGUs)

• State & Local Issues

27

LGE-KU’s Contribution to Improved Air Quality

1998-2018: reduced rates of SO2 by 93% and NOx by 80%. 2000-2018: reduced Particulate Matter by ~90% and Mercury by >80%.

History Forecast

29

LGE-KU’s Electric Generation

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

Summary of Coal Status

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

— natural gas — Renewables

Attrition of LKE coal in the 2050’s?

30

Generation Mix

10,000,000 20,000,000 30,000,000 40,000,000 2014 2015 2016 2017 2018

Energy Mix

Coal Natural Gas Renewables

31

EW Brown Solar Facility

33

• E. W. Brown Solar Generation Hours at Capacity, 2017

Parasitic 51.6% of Hours At 10 MW 1.1% of Hours

Sustainability (Greenhouse Gas)

• Increasing shareholder/stakeholder 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

34

Affordable Clean Energy (ACE) Rule

States develop a Best System of Emission Reduction (BSER) for existing Electric Generating Units (EGUs) for Heat Rate Improvement (HRI).

• Neural Network/Intelligent

Sootblower

• Boiler Feed Pumps
• Air Heater and Duct leakage

Control

• Variable Frequency Drives (VFDs)
• Blade Path Upgrade (Steam

Turbine)

• Redesign/Replace Economizer
• Improved O&M Practices

35

HRI Road Blocks – New Source Review (NSR) Reform

36

ACE rule included NSR reform. Allows BSER Give

• wners/operators of EGUs more

latitude to make the efficiency improvements that are consistent with EPA’s proposed BSER without triggering onerous and costly NSR permit requirements

Proposed NSR Changes

• Proposed 4-Step Applicability Process

—a physical change or change in the method of

• peration

—an hourly emissions increase test —a significant emissions increase —a significant net emissions increase

37

GHG NSPS for EGUs

—Proposed Rule published 12/20/18 in Federal Register (83 Fed.

• Reg. 65,424)

—“Review of Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources: Electric Generating Units,”

• Revised emission standards for new, modified, and reconstructed fossil

fuel-fired EGUs

• Based on Best System of Emission Reduction (“BSER”)
• No changes to standards of performance for newly constructed or

reconstructed stationary combustion turbines.

—Public hearing held on February 14, 2019 . —Comment period extended until March 18, 2019. —LKE provided feedback in comments from industry groups.

38

NAAQS “Potential Impacts”

• Ozone

—2015 NAAQS Ozone Standard (70 ppb)

• Jefferson County non-attainment (marginal)
• Commencing stakeholder engagement began 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

39

Current Politics of EGUs

• Political Support for Coal based EGU

— Executive Orders — EPA Agenda

• ACE Rule
• New Source Review Reform
• National Ambient Air Quality Standards Litigation
• GHG NSPS for EGUs
• Mercury and Air Toxics Reform

— Supplemental Findings

— Cross State Air Pollution Rule = Best Available Retrofit Technology

Challenge to maintain existing generation fleet through viable economic life. Will EPA finalize rules during this administration?

40

Federal, State, & Local Observations

• Active Public Service Commission
• Inspectors are staying engaged
• KDAQ and LMAPCD Title V Renewals are pending

— Operating facilities under permit shields

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

— Permit Fee structure changes currently in HB165. Bill has passed House and assigned to Senate Natural Resources and Energy Committee. — Quantity of emissions are down for LKE

• Federal pace for change has been slow

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

41

Rebecca T. Cash, P .E.

Manager Air Section | Environmental Affairs | LG&E and KU Energy LLC 220 West Main Street, Louisville, KY 40202 M: 502-216-1581 | O: 502-627-4633 | F: 502-627-2550 E-mail: Rebecca.cash@lge-ku.com lge-ku.com

42

Carolyn M. Brown Dinsmore & Shohl LLP Lexington, Kentucky

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

2019 Sustainability & EHS Symposium March 26, 2019

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

Overview

 Latest “Good Neighbor” Litigation  Enforcement Activity

44

Good Neighbor Litigation  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

45

The Good Neighbor Provision  Clean Air Act (CAA) Section 110 requires each state to submit for EPA approval a plan for implementing, maintaining and enforcing the NAAQS within the state. The State Implementation Plan is commonly known as the SIP.  Section 110(a)(2)(D)(i) requires that each SIP contain adequate provisions to prohibit in-state emissions activities from having certain adverse air quality effects

• n downwind states due to interstate transport. This is

the so-call “Good Neighbor” provision. EPA considers this a component of infrastructure SIP submittals.

46

The 2008 Ozone Standard and the Kentucky SIP  Following promulgation of the 2008 ozone standard, Kentucky submitted revisions to its SIP.  EPA disapproved a portion of the submittal which at the time relied, consistent with prior EPA guidance, on CAIR to address interstate transport. (78 FR 14681, March 7, 2013).  EPA subsequently issued a FIP for 22 states, including Kentucky, imposing the CSAPR Update Rule to address interstate transport. (81 FR 74504, Oct. 26, 2016).

 At the time, EPA found that the update might not fully address the good neighbor requirements. Further analysis would be required.

47

The 2008 Ozone Standard and the Kentucky SIP  In October 2017, EPA issued the so-called Transport Memo to provide assistance to states in evaluating if any remaining actions were necessary. Based on updated modeling information, EPA concluded no monitoring sites, outside of California, were projected to have nonattainment or maintenance issues in 2023.  In May 2018, Kentucky submitted a revised SIP and EPA issued a final rule on July 17, 2018 approving the SIP

• revision. (83 FR 33730)

 No additional emission reductions beyond those required by the CSAPR Update Rule are required.

 No challenge to EPA’s final action was filed.

48

The Other States  In December 2018, EPA published a final rule finding that the existing CSAPR Update Rule fully addresses the Good Neighbor obligations for 20 states with respect to the 2008 Ozone NAAQS. (83 FR 65878, Dec. 21, 2018).  New York and other states filed suit in the D.C. Circuit on January 30, 2019, to challenge EPA’s determination. New York, et al. v. EPA, Case No. 19-1019.

 The petitioners disagree with EPA’s projection that they will meet the 2008 standard of 75 ppb by 2023 without further action and the use of 2023 as the target compliance year.

 Environmental groups filed suit over the rule the same day, Downwinders At Risk, et al. v. EPA, Case No. 19- 1020.

49

But what about those state petitions?  Maryland’s challenge to EPA’s denial of its petition targeting electric generating units at power plants in Kentucky and other states is pending in the D.C. Circuit, State of Maryland v. EPA, Case No. 18-1285.  New York filed a Section 126 petition in March 2018 to have EPA directly limit air emissions from sources in Illinois, Indiana, Kentucky, Maryland, Michigan, Ohio, Pennsylvania, Virginia and West Virginia that it claims are interfering with New York’s ability attain the ozone NAAQS.

 EPA has not responded and New York filed a 60-day notice

• f intent to sue under the CAA in November so the state

could file suit at any time.

50

ENFORCEMENT ACTIVITIES

51

Division of Enforcement Activities  According to the Division of Enforcement Annual Report for Fiscal Year 2018, the Division received a total of 266 new cases during that period.

 Of this total, 23 new case referrals were from DAQ, including 2 asbestos cases.  To put this figure in perspective, the highest number of referrals were from the Division of Water at 175, of which 150 related to wastewater.

 A total of 31 air cases were closed by the Division in Fiscal Year 2018, including 1 asbestos case.

52

Division of Enforcement Activities  New DAQ Cases by Regional Office in Fiscal Year 2018:

 Florence – 9 (+ 5) (Change from FY 2017)  London - 4 (- 1)  Bowling Green – 3 (- 3)  Frankfort – 3 (- 3)  Paducah – 3 (- 1)  Hazard – 1 (same)  Ashland – 0 (- 1)  Owensboro – 0 (- 1)

53

Division of Enforcement Activities  During fiscal year 2018, the Division held 35 administrative conferences in air cases.  DAQ issued 314 notices of violation.  Civil penalties totaling $2,496,217 were collected during fiscal year 2018, of which penalties of $948,546 were in air cases.

 During fiscal year 2017, civil penalties totaling $1,816,766 were collected of which air cases comprised $298,200.

54

Thank you

Carolyn M. Brown

Lexington, Kentucky Carolyn.Brown@dinsmore.com

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