developments under the clean air act implications and ramifications
TRANSCRIPT
Chicago | Indianapolis | Madison | Milwaukee | Naples | Phoenix | Tampa | Tucson | Washington, D.C.
Developments Under the Clean Air Act
Implications and Ramifications
Cynthia A. Faur
Quarles & Brady LLP
(312) 715-5228
October 30, 2014
Environment 14 – Sessions #8A
© 2014 Quarles & Brady LLP
2
Hot Topics
• Industrial Boiler MACT, CISWI, NHSM Rules
• Start Up/Shutdown/Malfunction Exemption
• NAAQS Revision and Implementation• GHG Permitting and Regulation• Title V Permit Renewals –
Incorporation of Plans• Air Quality Related Values in Tribal
Class I Areas
3
Industrial /Commercial/Institutional Boiler MACT
4
Revised Boiler MACT & CISWI Rules
• Standards for new and existing major ICI boilers (IB MACT) – 78 Fed. Reg. 7186 (Jan. 31, 2013) (revision to a rule issued in March 2011)
• Standards for new and existing minor ICI boilers (i.e., area sources) (MACT/GACT) – 78 Fed. Reg. 7812 (Feb. 1, 2013)
• Section 129 Standards for Commercial/Industrial Solid Waste Incinerators (CISWIs) – 78 Fed. Reg. 9112 (Feb. 7, 2013)
• Non-hazardous Secondary Materials (NHSM) Rule – 78 Fed. Reg. 9112 (Feb. 7, 2013)
5
Final Major Source Boiler MACT Rule
• On January 31, 2013, EPA finalized rules for Major Sources – 78 Fed. Reg. 7186 (Jan. 31, 2013).
• Compliance date - Jan. 31, 2016 • Natural Gas Boilers
– Boiler/Process heater tune ups – Annual if >10 mmBTU/hour
– One-Time Energy Assessment by a Qualified Assessor– Operate consistent with safety and good air pollution control
practices to minimize emissions– Annual Compliance Reports
6
Revised Boiler MACT (Major)
• Coal/Oil and Biomass boilers >10 mmBTU/hr– Numeric limits for mercury, PM (surrogate for non-Hg
metals), HCl (surrogate for acid gases), and CO (surrogate for non-dioxin organic air toxics)
– In lieu of the PM limit, a limit for selected metals can be met– Work practice standards for dioxin– Annual boiler tune-ups - (5 years if continuous oxygen trim
system used)– One time energy assessment
• CO limits revised to address variability (CEMS-based limits for most subcategories: limits for several subcategories revised to reflect a threshold level (130 ppm@ 3%O2)
7
Reconsideration
• August 2013: EPA announced reconsideration on following issues:– Startup and shutdown definitions and applicable
work practice standards– Applicable carbon monoxide (CO) limits– Parametric monitoring requirements and
implications of exceeding required parameter
• Reconsideration of these issues still pending!
8
Litigation Status
• Challenge the IB MACT rule is still pending - United States Sugar v. EPA, Case No. 11-108 (consolidated)– Briefing delayed to address Upper Prediction
Limit (UPL) statistical method– Remanded certain standards to EPA for
review but the standards remain effective– Briefing to conclude in January 2015– No hearing scheduled
• Decision unlikely until late 2015!
9
MACT Extensions
• Up to a one year extension of the compliance deadline available – CAA §112(i)(3)(B) – Minimum state requirements found at NR 460.05(7)
• WDNR Guidance on Applying for a One-Year Extension to a MACT Requirement, revised October 4, 2013– Deadline to file a request is October 3, 2015, but …– WDNR recommends requests be submitted by August 5,
2015
• Title V permit revision required to incorporate the extension
10
Area Source Boiler MACT
• On February 1, 2013, EPA finalized Boiler MACT rules for Area Sources - 78 Fed. Reg. 7812 (Feb. 1, 2013).– Covers boilers that burn coal, oil, other liquid fuel,
biomass and other non-wastes– Established standards addressing Hg, PM
(surrogate for non-mercury metals), and CO (surrogate for organic air toxics)
• Existing area source compliance date - March 21, 2014
11
Area Source MACT
• Issues under Reconsideration:– Definition of startup and shutdown – Establishing a limited use boiler subcategory
– Eliminating certain PM performance testing • All Numerical Standards Remanded to EPA
– Remanded to address use the Upper Prediction Limit (UPL)
– Standards remain in effect
12
Non-Hazardous Secondary Material (NHSM)
Rule• 78 Fed. Reg. 9112 (Feb. 7, 2013)• Defines which materials would be considered
solid wastes when combusted for purposes of triggering the CISWI Rule (CAA§129) – If materials considered fuel,§112 boiler MACT
governs– If materials are waste,§129 standards apply
13
What Materials Are Fuels?
• Materials determined to be treated as a fuel:– Traditional fuels - 40 CFR§242.1
• Historically managed as fuel (fossil fuels, pet coke, refinery gas, virgin wood)
• Alternate fuels developed from virgin materials (used oil meeting specs of 40 CFR§279.11, coal waste, clean cellulosic biomass)
– Categorically determined non-waste • Scrap tires (not discarded)• Resinated Wood• Coal refuse from legacy piles• Dewatered pulp and paper sludges (not discarded;
generated and burned on site)
14
Other Materials as Fuel
Materials “within control of the generator”
– Generated and combusted at facilities under common control
– Must meet Legitimacy Criteria - 40 CFR§241.3 (d)(1)(i-iii)
• Managed as a “valuable commodity”
• Meaningful heating value (5,000 Btu/lb guideline)
• Contains contaminants at comparable level to traditional fuels that the facility is capable of combusting
15
Other Materials as Fuel
• Materials not “within the control of the generator”– Must meet the Legitimacy Criteria– Must undergo sufficient “processing”
• Processing includes operations necessary to: – Remove or destroy contaminants – Significantly improve the fuel characteristics of the material, – Chemically improve the as-fired energy content – Improve the ingredient characteristics
• Minimal operations that result only in modifying the size of the material by shredding do not constitute processing
16
Demonstration of Non-Waste Status
• Site- Specific Petitions may be submitted to Regional Administrator- Determination of non-waste status based on legitimacy
criteria and other factors, including market conditions
• Comfort Letters issued for various materials– http://www.epa.gov/epawaste/nonhaz/define/index.htm
• National Rulemaking Petitions for general non-waste determinations
• Maintain Records demonstrating non-waste status• CISWI units can be reclassified 6 months after
cessation of waste combustion
17
Start-Up, Shut Down and Malfunction Exemptions
18
Startup, Shutdown and Malfunction • EPA has historically recognized that certain emission limitations
may not be met during startup, shutdown and malfunction (“SSM”) events– New Source Performance Standards – Generally exempted
sources from meeting emission limits during SSM events, but required operation consistent with good air pollution control practice for minimizing emissions at all times
– National Hazardous Emissions Standards for Hazardous Air Pollutants (aka MACT standards) – Exempted sources from meeting numerical emission limitations, but required development of and compliance with a SSM Plan - RESCINDED
– State Implementation Plans –Allowed states to adopt SIP provisions that allowed excess emissions during SSM events in certain circumstances - SUBJECT OF A SIP CALL
19
History of the MACT SSM Exemption • SSM requirements adopted in 1994,but not challenged• From 2002- 2006, EPA watered down the SSM plan
requirements: – 2002 - Rules revised so that SSM plans no longer had to
be incorporated in Title V permits • To address Sierra Club challenge, EPA proposed to require
sources to submit the SSM plans to the permitting authority.
– 2003 – Rules required a “specific and reasonable” request that the permitting authority request a copy of the SSM plan from the source.
– 2006 - EPA retracted the requirement that sources implement their SSM plans, because the plans were not “applicable requirements under Title V.
20
Sierra Club v. EPA • Sierra Club challenged revisions to the SSM requirements• The D.C. Circuit found that EPA’s modifications to the SSM
provisions essentially reopened the SSM exemption in the General Provisions for review - Sierra Club v. EPA, 551 F.3d 1019 (D.C. Cir. 2008)
• Court found that EPA did not have the authority under the CAA to exempt SSM events from compliance with the emission limitations of a MACT standard– CAA required promulgation of emission standards for certain
source under §112 and that emission standard must limit emissions on a “continuous” basis per CAA§302(k)
– NSPS standards distinguished because EPA has discretion to issue NSPS standards
21
Sierra Club v. EPA --- Aftermath• For new MACT standards, EPA is:
– Establishing emission limitations or work practices that apply during startup and shutdown
• If subject an existing MACT standard that has not been updated, the emission limitations apply at all times
– Providing for a potential affirmative defense for excess emissions due to unavoidable malfunctions
• Places the burden of proof on the source• Extensive reporting requirements to use the affirmative defense
• Future of the affirmative defense is uncertain – D.C. Circuit held that EPA did not have the authority to provide sources with
an affirmative defense under the CAA - NRDC v. EPA, 749 F.3d 1055 (D.C. Cir. 2014)
– Fifth Circuit Court of Appeals upheld EPA’s approval of an affirmative defense in a state implementation plan - Luminant Generation Co. v. EPA, 714 F.3d 841 (5th Cir. 2013)
22
SSM and State Implementation Plans (“SIPs”)
• EPA’s historic policy regarding startup, shutdowns and malfunctions
– MALFUNCTIONS: Penalties were not appropriate for sudden, unavoidable malfunctions that were caused by circumstances entirely beyond the control of the owner/operator
– STARTUP/SHUTDOWNS: Generally, part of the normal operation of the source so careful planning, unit design and implementation of operating procedures should eliminate excess emissions during these periods, BUT bypass of control equipment and excess emissions may be excused if:
• Source can show excess emissions could not be avoided through careful and prudent planning and design
• Bypassing was unavoidable to prevent loss of life, personal injury or severe property damage
• Enforcement discretion approach allowed in State Implementation Plans
– Required a demonstration that excess emissions were unavoidable
23
SSM SIP Call
• In February 2013, EPA proposed to call the SIPS of 36 states that included an exemption for excess emissions during SSM events– The Wisconsin SIP does not contain SSM exemptions and is not
part of the SIP call – Illinois, Michigan and Minnesota are• Under the proposed SIP call, states could include an affirmative
defense for excess emissions during malfunctions, but not startup and shutdown - That is no longer allowed…..
• In September 2014, EPA issued a supplemental proposal that called the SIPS of 17 more states because those SIP included affirmative defense provisions
• States will have 18 months to revise their SIPS after EPA issues a final rule
24
What’s Next?• Challenge to the SIP Call?
– Fifth Circuit upheld EPA approval of an affirmative defense for malfunctions
• Increased citizen litigation?– States and EPA still retain discretion to enforce against sources that exceed
emission limits during a malfunction– Absent exemptions or affirmative defenses, citizens groups are more likely
to sue.• Focus on large sources with multiple exceedances
• Revisions to Emission Limitations in SIP and Existing MACT standards
– Where standards cannot be met during SSM events, seeking revisions of underlying rules may be prudent
– Anti-backsliding requirements may pose issues
• Review Processes– Can improvements be made to decrease excess emissions during SSM
events
25
NAAQS Update
26
Current NAAQS Implementation Timeline
Pollutant Final NAAQS Date
Infrastructure SIP Due
Designations Effective
Attainment Plans Due
Attainment Date
PM2.5 (2006) 10/06 10/09 12/09 12/14 12/15 (Mod)12/19 (Ser)
Lead (2008) 10/08 10/11 12/1012/11
06/1206/13
12/1512/16
NO2 (2010)Primary
1/08 1/13 2/12 NA NA
SO2 (2010)primary
1/10 6/13 10/13*(plus 2 rounds)
4/15 10/18
Ozone (2008) 3/08 3/11 7/12 Mid 15/16 2015/2032
PM2.5 (2012) 12/12 12/15 Early 2015 Mid 2016 Dec. 2021 (Mod)Dec. 2025 (Ser)
Credit EPA, April 2014, updated March 2014
* Subject to on-going litigation over the SO2 designation dates. Attainment plans and attainment dates for unclassified areas to be determined.
27
Final Revised PM2.5 Standards
• D.C. Circuit remanded 2006 PM2.5 standard to EPA in American Farm Bureau Federation v. EPA, 559 F. 3d 512. (D.C. Cir. 2009)
• EPA revised the standard to address this remand on January 15, 2013 - 78 Fed. Reg. 3086– Annual – 12 ug/m3
– 24-hour – 35 ug/m3
• Most areas attain new annual standard
28
2006 PM2.5 Implementation
• June 2, 2014 - EPA issued revised implementation rule (79 Fed. Reg. 31566)– Classifies all areas as moderate nonattainment to be
bumped up to serious if do not meet attainment by the specified date
– Provides 4 years to implement reasonably available control measures
• All counties in Wisconsin currently attain the standard
29
PM2.5 Implementation• December 9, 2013 - EPA issued a final rule to address
the remand of the PM2.5 Significant Impact Levels (SILs) and Significant Monitoring Concentrations (SMC) - 78 Fed. Reg. 73698
• EPA vacated the SILs, but will undertake a future rulemaking– Per EPA guidance, SILs may still be used but care must be
taken and the permitting record must support that the source will not cause or contribute to a NAAQS violation
• Required PM2.5 monitoring data to be submitted with PSD applications – Data from existing monitors may be acceptable
30
SO2 1-Hour Standard
• June 3, 2010 – 1-hr SO2 NAAQS set at 75 ppb on a 1-hour average
• Compliance determined through a 3-year average of the 99th percentile of daily maximum 1-hour average concentrations at each monitor
• First round of nonattainment designations effective October 4, 2013 - 78 Fed. Reg. 47191 (August 5, 2013)
• For “unclassifiable” areas, modeling or air quality monitoring can be used to determine the attainment status– Modeling - Final designations - 12/17; Attainment Demonstrations
- 8/19– Monitoring – Final designations – 12/20; Attainment Demonstration
– 8/22
31
SO2 1-Hour Standard
• Sierra Club et. al v. McCarthy, Civil Action No. 3:13-cv-3953 (Northern District of California)– Challenges EPA’s failure to timely designate certain areas for the
SO2 NAAQS
• Proposed Consent Decree– Maintains designation timeframe for most unclassifiable areas– Within 16 months of entry of the Decree, EPA to promulgate
designations for remaining undesignated areas which:• Have monitored violations of the NAAQS, based on 3-years
monitoring data• Contain any stationary sources (not slated for retirement) that
either emitted more than 16,000 tons of SO2 in 2012 or emitted more than 2,600 tons of SO2 and had an emission rate of 0.45 lbs/mmBTU or higher in 2012
32
Ozone NAAQS Review
• Court Ordered Deadline for Revised Ozone Standard – Proposal – December 1, 2014– Final Rule – October 1, 2015
• EPA likely to propose a tighter standard.– CASAC advised setting the standard less than 70
ppb within a range to 60 ppb
33
What Does this Mean?
• Only Sheboygan County and the eastern portion of Kenosha County are designated as nonattainment for the current 8-hour standard
• Based on recent monitoring data, Ozaukee, Racine, Milwaukee, Manitowoc, also do not meet the current standard, but EPA is not currently planning to redesignate
• At 70 ppb, 12 counties will be able to meet the standard* – Ashland, Eau Claire, Vilas, Taylor, LaCross, Marathon, Forest,
Sauk, Waukesha, Columbia, Dane, Brown
• At 65 ppb, that number drops to 6 counties* – Ashland, Eau Claire, Vilas, Taylor, LaCross, Marathon
• At 60 ppb, only Ashland County attains*
* Based on recent data and existing monitors
34
GHG Regulation
35
PSD and Title V Permitting Requirements
• UARG v. EPA, No. 12–1146 (June 23, 2014) – Supreme Court held that the CAA “neither compels nor permits EPA to adopt an interpretation of the Act requiring a source to obtain a PSD or Title V permit on the sole basis of its potential greenhouse-gas emissions.”– The term “air pollutant” meant to encompass the substances that
can be regulated under the Act but can be narrowed as appropriate – EPA did not have the authority to “tailor” the unambiguous PSD
and Title V permitting thresholds– If a source is subject to PSD for conventional pollutants, sources
can be required to comply with BACT for GHG emissions
• Wisconsin will need to revise its state rules to remove the Tailoring Rule requirements
36
GHG Emission Standards for Power Plants
• EPA has proposed 3 rules to regulate GHG emissions from power plants under CAA§111– Proposed NSPS for new power plants – 79 Fed. Reg. 1430
(January 8, 2014)• Proposed rule required partial CCS technology for new coal
fired EGUs and modern natural gas combined cycle technology for new natural gas turbine EGUs
– Proposed NSPS for modified power plants – 79 Fed. Reg. 34906 (June 18, 2014)
– Proposed Existing Source Guidelines – 79 Fed. Reg. 34830 (June 18, 2014)
37
Potential Implications of the GHG Regulations for Industry
• Impact on electric rates– Under the proposed ESPS, natural gas and
nuclear units may operate more, and there will be more renewable energy dispatched
• Increase in natural gas prices• Increased push for demand side energy
efficiencies– May present opportunities for sources that can
make their operations more efficient
38
Title V Permit Renewals
39
Incorporation of Plans into Title V Permits
• Plans and other “off permit” information relied on or referenced in Part I of Title V permit shall be addressed using one of the following: – Approach 1: Include key elements of the plan and other
“off-permit” information as applicable requirements, compliance demonstration, and/or monitoring requirements in the permit
– Approach 2: Include the requirements to have a plan in the Table ZZZ (plant-wide conditions) where requirement to have a plan is not a compliance demonstration requirement for an emission limitation
– Approach 3: Include the entire plan in a separate section of the permit
40
Incorporation of Plans
• “The overall question that should be asked when drafting a permit is whether all information is contained in the permit for determining applicable requirements, compliance demonstration methods, and/or monitoring requirements; or would someone have to look for an additional piece of paper. If someone has to look for an additional piece of paper to determine compliance, then the additional information from that piece of paper should be specifically added to the permit.”
Guidance on Handling Plans in Permits, September 28, 2010.
41
Incorporation of Plans
• Anticipate the incorporation of the plan when preparing the permit renewal application– Streamline plan where appropriate
• Create a table that includes only key elements of a plan that are unlikely to change
• Carefully review permit conditions for which a plan is the basis to evaluate whether they are necessary to demonstrate compliance with applicable emission limitations
42
Air Quality Related Values
43
Class I Air Quality Regions
• Tribes and states can request redesignation to Class I status, under CAA§164
• In addition to compliance with the NAAQS and visibility, Class I areas protected from impacts to "air quality-related values" (AQRVs)
• AQRVs are resources that the Class I area manager wishes to protect and that may be impacted by air emissions– Can include limits designed to protect visibility,
standards for acid deposition or airborne concentrations, protection of vegetation, or other standards determined by a land manager to be protective of an area
44
Air Quality Related Values
• New Source Review Workshop Manual page E.12, “When a proposed major source's or major modification's modeled emissions may affect a Class I area, the applicant analyzes the source's anticipated impact on visibility and provides the information needed to determine its effect on the area's other AQRVs.”
• Where AQRVs are impacted, the land manager can recommend denial of the permit
• Permitting agency makes the final decision on the permit
45
FCPC Class I Area
• Forest County Potawatomi Community (FCPC) entered into agreements with WDNR in 1999 and 2010– In 1999, FCPC adopted Water Quality and Aquatic Systems
as AQRVs– In 2010, FCPC and WDNR agreed that FCPC could update
the 1999 AQRVs– In 2012, developed Threshold Effect Levels (TELs) for the
1999 AQRVs, and two new AQRVs – Vegetation and Visibility
• Bad River Community and the Fond du Lac Band of Lake
Superior Chippewa are currently seeking Class I authority
46
Memorandum of Understanding
• On October 7, 2010, the FCPC and Wisconsin entered into an memorandum of understanding concerning the rights and opportunities of the FCPC regarding the Class I designation – This memorandum has been amended three times to
add AQRVs and revise various review periods and certain threshold effect levels
• Establishes a scientific review panel to resolve scientific and technical disputes related to the AQRVs
47
Memorandum of Understanding
• MOU established a 62 mile radius from the Class I area where WDNR would provide FCPC specified opportunities for review of PSD permit applications and applications may be subject to a AQRV evaluation by the FCPC– Given the location of the Class I area, the radius is
approximately 74 miles
• Class I increment analysis and consumption is limited to sources in the 10 mile radius– Actually, a 22.25 mile radius from the geographic
center of the Class I area
48
Permit Review for the Class I Area
Credit: WDNR
49
FCPC AQRV
• The new AQRVs and TELs became effective at the end of the review period, without need for DNR or EPA approval
• While the AQRV/TEL development documentation does not describe the practical impacts of the standards, development documents suggest that current deposition levels for sulfur, nitrogen and mercury may exceed TELs
• Reach of review unclear under NR 405.19(1) – Provides FCPC with an opportunity to review an evaluate
the impact of any major new source or major modification on AQRV without regard to the radius in the MOU
50
Thank you!
Cynthia A. FaurQuarles & Brady LLP300 N. LaSalle Street, Suite 4000Chicago, Illinois 60654-3422 (312) [email protected]
©2014 Quarles & Brady LLP. This document provides information of a general nature. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and information or future developments may affect the subjects addressed in this document. You should consult with a lawyer about your particular circumstances before acting on any of this information because it may not be applicable to you or your situation.