AIR REGULATORY UPDATE

Michael G. DowdDirector, Air Division

Virginia Dept. of Environmental QualityVirginia Manufacturers Association

September 11, 2014

TOPICS

• Proposed CO2§111(d) Emission Guidelines for Fossil Fuel EGUs

• GHG Tailoring Rule Update• Startup, Shutdown, Malfunction (SSM) SIP Call Update• Criteria Pollutant Update

– Ozone, SO2 , and PM2.5

• Compliance and Enforcement Update– CMS, HPV, and FRV

• NSPS– Oil, gas, and municipal waste landfills

EPA’S PROPOSED EMISSION GUIDELINES TO REGULATE CO2

FROM FOSSIL FUEL EGUs UNDER §111(d) OF THE CLEAN AIR ACT

2005 2006 2007 2008 2009 2010 2011 2012 20130

5000000

10000000

15000000

20000000

25000000

30000000

35000000

40000000

45000000

Virginia Power Plant CO2 Reductions

-11%

-1%

-11%

-21%-15%

-31%-38%

-21%

40%

20%

35%

4%

1%

1%

Nuclear

Coal

Natural Gas

Others

Hydro

Petroleum

Total Generation71 Million Megawatt Hours

VA Generation in 2012

VA has a good generation mix of emitting & non-emitting sources in 2012

- Improve existing EGU heat rate 6%1.

2.

3.

4.

NGCCBoiler- Increase average NGCC utilization

to 70% and new NGCC

- Achieve average regional renewable growth targets (16%)

- Avoid retirement of 6% nuclear fleet

- Complete new nuclear in construction

- Annual incremental electricity savings rate of 1.5%

+

EPA Reduction Goal “Building Blocks”

Each block presents different challenges

Virginia Goal Computation

Emission Rate (lbs CO2 / MWh)Adjusted to Include Renewables, Efficiency & At-Risk Nuclear

1500 7001100 9001300

2012 Fossil EGU Rate

2012 Fossil + Renewables + 6% Nuclear

1: On-site Efficiency

2: Existing & New NGCC

3: New Renewables and Nuclear

4: Demand-side Energy Efficiency

1,438

1,302

1,258

1,047

894

810

VA has more stringent emission reduction and rate goals than many other states

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200

400

600

800

1000

1200

1400

1600

1800

2000

2030 State Emission Rate Goals

2%

12%

0%

44%16%

17%

9%

The Compliance Mix as Proposed by EPA

Nuclear

Coal

Oil

Existing NGCC Gen

New NGCC Gen/Other

Renewables

Energy Eff

26 Million MHh of nuclear generation is not included in the mix for compliance purposes

AvoidedMWhs

Total Generation60 Million Megawatt Hours

Clean Power Plan Timeline

• October 16, 2014 – comments due on the proposed plan• June 2015 – final plan published by EPA• June 2016 – States submit compliance plans to EPA or

request a one or two year extension to develop a state-only plan or multi-state plan

• June 2017 – States submit final state-only plans to EPA• June 2018 – States submit multi-state plans to EPA• 2020 to 2029 – State plans become effective with an

interim goal in place averaged over a ten year period• 2030 – States must comply with final rate goal averaged

over three years

GHG TAILORING RULE UPDATE

GHG Permitting - Background• EPA Promulgated the Greenhouse Gas (GHG) Tailoring

Rule for PSD and Title V Permitting on June 3, 2010• Step 1 – January 1, 2011

– Sources Major for a Pollutant Other Than GHGs and with GHG Emissions of 100,000 tpy CO2e – Best Available Control Technology (BACT) Applies to GHGs – “Anyway” Sources

• Step 2 – July 1, 2011– Sources Major (100,000 tpy CO2e) for GHGs

Regardless of Other Pollutants Require a PSD/Title V Permit

– Modifications with a Net Emissions Increase of 75,000 tpy CO2e Trigger PSD Modification Requirements

GHG Permitting - Background

• Virginia Adopted EPA Tailoring Rule Effective January 2, 2011

• All GHG Permitting Requirements Placed in a Separate Chapter of the Virginia Regulations – Chapter 85

• Virginia Rules were Adopted into the VA SIP

• Virginia Did Not Include GHGs in Minor NSR

GHG Permitting

• June 23, 2014, Supreme Court Decision on Utility Air Regulators Group (UARG) v. EPA

• Brief Summary of Decision– Sources Could Not Trigger PSD or Title V

Based Only on GHG Emissions– If PSD was Triggered for Another Pollutant

(“Anyway” Source) and GHG Emissions Are Greater than 75,000 tpy CO2e – Then BACT Should be Applied to the GHGs

GHG Permitting

• On July 24, 2014, EPA Issues an Interim Guidance Memo -Next Steps and Preliminary Views on the Application of Clean Air Act Permitting Programs to Greenhouse Gases Following the Supreme Court’s Decision in Utility Air Regulators Group v. Environmental Protection Agency

• Memo Provides Guidance to States on How EPA is Currently Interpreting the Implications of the Supreme Court Decision

• Memo Does Not Address Every Potential Issue but Clarifies EPA Does Not Intend to Require Sources Major for GHGs Only to Obtain a PSD or Title V Permit

GHG Permitting

• Virginia is Following EPA’s Interim Guidance• August 25, 2014 Virginia Issues APG-311 –

Interim Guidance on Prevention of Significant Deterioration (PSD) and Title V Permitting for Greenhouse Gases (GHGs) Following the June 23, 2014, United States Supreme Court Ruling on Utility Air Regulators Group (UARG) v. EPA

• Guidance has been Posted on Town Hall• At the Appropriate Time, Virginia Will Adjust

Rules to Follow EPA’s Rule Changes

GHG Permitting

• Virginia Will Not Evaluate Sources for PSD or Title V that are Major for GHGs Only

• GHGs Are Not Reviewed for Minor NSR• Virginia Had Only Issued 1 Permit to a Source

Major Only for GHGs• Virginia Sources that Submitted Title V permit

Applications Based Only on Being Major For GHGs Have Been Requested to Withdraw the Applications

STARTUP, SHUTDOWN, MALFUNCTION SIP CALL

UPDATE

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SSM SIP CALL• In response to petition from Sierra Club, EPA on 2/22/13

proposed to issue SIP calls to 36 states, including VA, on the grounds that certain provisions of those states’ air pollution control regulations pertaining to startup, shutdown, or malfunction failed to comply with EPA enforcement policy requiring facilities to be in compliance with emissions limitations at all times, 78 Fed. Reg. at 12459

• Regarding VA, EPA challenged 9 VAC §5-20-180.G alleging it excused emissions exceedances during periods of malfunction and did not assure compliance with the NAAQS

19

2020

SSM SIP CALL 9 VAC §5-20-180.G PROVIDES: No violation of applicable emission standards or monitoring

requirements shall be judged to have taken place if the excess emissions or cessation of monitoring activities is due to a malfunction, provided that:

• The procedural requirements of this section were met or the owner has submitted an acceptable application for a variance, which is subsequently granted;

• The owner has taken expeditious and reasonable measures to minimize emissions during the breakdown period;

• The owner has taken expeditious and reasonable measures to correct the malfunction and return the facility to a normal operation; and

• The source is in compliance at least 90% of the operating time over the most recent 12-month period. 20

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SSM SIP CALL CONTINUED

• VDEQ vigorously opposed the SIP Call in an oral presentation to EPA on 3/12/13 and in written comments submitted to EPA on 5/13/13.

• VDEQ argued that EPA inappropriately focused on a single regulatory provision taking it out of context and failed to consider VA’s SIP as a whole.

• EPA never issued the final SIP Call.

21

2222

SSM SIP CALL CONTINUED

• The EPA signed a supplemental notice of proposed rulemaking (SNPR) on 9/5/14 reproposing the 2/13 SSM SIP Call.

• The SNPR was made necessary by the decision earlier this year in NRDC v EPA, 749 F.3d 1055 (D.C. Cir. 201), which held that CAA §§113 and 304 did not allow affirmative defenses because they alter the jurisdiction of federal courts to asses liability and imposes penalties for violations in citizen suits.

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SSM SIP CALL CONTINUED• With respect to Virginia, EPA says in the SNPR it, “interprets

… §5-20-180(G) to create an impermissible affirmative defense for violations of SIP emission limits. The provision would operate to limit the jurisdiction of the federal courts in an enforcement action and to preclude both liability and any form of judicial relief contemplated in CAA sections 113 and 304.”

• EPA also reiterated all of the other reasons it objected to §5-20-180(G) in the February 2013 SIP Call notice.

• EPA will hold a public hearing on 10/7/14 and accept written comments on the SNPR until 11/6/14.

• EPA intends to issue final SIP Call in 3/15 and give Virginia 18 months to amend its SIP.

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CRITERIA POLLUTANT UPDATE

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

10

20

30

40

50

60

70

80

Virginia High Ozone Days

StatewideNOVARichmondTidewaterRural VA

Days

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bill

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PROPOSED SO2 DATA REQUIRENTS RULE

• EPA’s proposal includes 3 options for determining which sources must be evaluated by states: – 1000 tons/yr in CBSA over 1 million population & 2000

tons/yr elsewhere. – 2000 tons/yr in CBSA over 1 million population & 5000

tons/yr elsewhere. – 3000 tons/yr in CBSA over 1 million population & 10,000

tons/yr elsewhere.

• States would have the option of monitoring or modeling and could evaluate additional smaller sources also.

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PROPOSED SO2 DATA REQUIRENTS RULE

TIMELINE• By January 2016 states must submit a list of sources meeting the criteria

in the final rule and indicate whether they will use modeling or monitoring to assess their impacts. If modeling is to be used, states must submit a modeling protocol at the same time. – EPA expects prior discussion between state and source and with EPA regarding

the modeling protocol.• By July 2016 states must include any new monitors in their annual

monitoring plans.• By January 2017 states must provide AQ modeling analysis and begin

monitoring.• By December 2017 EPA will make final designations for modeled areas.• By early 2020 sources/states must complete 3 years of monitoring.• By December 2020 EPA will finalize designations for monitored areas and

the rest of country.

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PROPOSED SO2 DATA REQUIRENTS RULE

• EPA encourages states to prepare for implementation by establishing a list of sources and discussing with them whether monitoring or modeling is preferred. – If monitoring is to be done work should be planned

regarding monitoring sites. If modeling will be used, data sources should be identified as well as costs and roles of the agency vs. the company.

– Have conversations with DEQ to work these questions out in advance.

– DEQ can work with facilities in advance to test whether modeling is sufficient and if not, work out a monitoring plan. In any case, a final decision as to which route will be used is required by January 2016.

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PROPOSED SO2 DATA REQUIRENTS RULE

• EPA expects states will work with sources to establish enforceable permit limits before January 2017 so that sources achieve attainment through modeling if feasible.

• Limits on emissions must be federally enforceable. • The final rule is expected to be complete in summer

2015, but might have to undergo 90 day OMB review.

• Latest update from Rich Damberg (OAQPS) at the MARAMA dispersion modeling workshop.

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PM2.5 REDESIGNATION• On 8/6/14 EPA proposed to redesignate to

attainment the Washington, D.C./Northern Virginia/Suburban Maryland PM2.5 nonattainment area. 79 Fed. Reg. 45735.

• Comment period closed on 9/5/14 with no comments received.

• Final redesigantion pending EPA analysis whether attainment is based on CAIR reductions.– SPOILER ALERT, it isn’t; our redesignation request

is based on actual monitored PM2.5 data and should pass EPA review….

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COMPLIANCE AND ENFORCEMENT UPDATE

Updated EPA PoliciesCompliance Monitoring Strategy (CMS)High Priority Violations (HPV)Federally Reportable Violations (FRV)

Compliance and Enforcement• Compliance Monitoring Strategy (CMS)

– Minimum Inspection Frequency remains the same• Title V Majors – Biennially (2-yr)• Synthetic Minors (SM-80) – Quinquenially (5-

yr)– New language in CMS addresses flexibility in

frequencies and alternatives– DEQ plans for available resources utilizing the

CMS and a Risk Based Inspection Strategy (RBIS)

Compliance and Enforcement• High Priority Violations (HPV) Policy

– 1998 Policy updated 8/25/2014 effective 10/1/2014– Eliminates Matrix Criteria– Utilizes only 6 General Criteria

1. Failure to obtain NSR permit, install BACT/LAER, or obtain offsets.

2. Violation NSR/PSD/SIP (emission limit, emission standard, surrogate parameter)

3. Violation of NSPS (emission limit, emission standard, surrogate parameter)

4. Violation of NESHAP (emission limit, emission standard, surrogate parameter)

5. Violation that substantially interferes with compliance/enforcement

6. Violations as determined by EPA or agreed upon between EPA and DEQ (“Other”)

Compliance and Enforcement• High Priority Violations (HPV) Policy

– Implementation is still under discussion• How will we address/resolve/track current and

ongoing HPVs?• To be HPV, must the source still be major for the

pollutant the violation involves?• How does the new timeline (Day Zero, etc.) affect

the compliance and enforcement process?– DEQ is working with EPA Region 3 for specific

clarification, guidance, and training.– DEQ will still report Criteria, Date of Discovery, Day

Zero, Date of Enforcement Action, Pollutant involved, and Milestones.

Compliance and Enforcement• Federally Reportable Violations (FRV)Policy

– Status: Still in draft and under discussion– Will supersede 2010 FRV Memo and 1986 Guidance

• Federally Reportable Violations (FRV) Policy– What are FRVs?

• Violations of federally enforceable CAA requirements at an applicable source.

– What is an enforceable CAA requirement?• NSPS, NESHAP, MACT, NSR, PSD, EPA-approved SIP, Title V

– What is an applicable source?• Title V Major sources, SM-80 sources, sources included in an

alternative CMS plan, sources at which an HPV has been identified.

– HPVs are a subset of FRVs subject to additional reporting and oversight by EPA

Compliance and Enforcement• Federally Reportable Violations (FRV) Policy

– What type of violations are considered FRVs?• Failure to construct, install or operate facility/equipment in

accordance with permit or regulation• Failure to maintain records as required by permit or regulation• Failure to obtain or maintain a current permit• Failure to report as required by permit or regulation• Failure to test or conduct monitoring as required by permit or

regulation• Violation of Work Practice Standard• Violation of consent decree, court order, or administrative order• Violation of emission limit, emission standard, surrogate parameter

– What needs to be reported to EPA?• Violation Type (see previous slide)• Pollutant for emissions related violations• Date of enforcement action (RCA, WL, NOV)

NSPS UPDATE

Oil and Gas 40 C.F.R. Part 60, Subpart OOOO

ProposedMunicipal Solid Waste Landfills,

Subpart WWW (MSW landfills 5/30/91-7/17/14)

ProposedSubpart XXX (MSW landfills after

7/17/14)ANPR, comments due 9/15/14

NSPS Subpart OOOO Oil and Gas Sector

• Proposed amendment will provide greater clarity concerning well completion requirements

1. Action will identify three distinct stages of well completion operation and identify specific requirements for handling of gases and liquids for each stagea) Initial flowback stageb) Separation flowback stagec) Production Stage

2. Potentially re-define “low pressure gas wells”, as related to the well completion provisions.

Subpart OOOO Oil and Gas Sector

• Proposal also includes provisions to:1. Amend several requirements relating to storage vessels,

including determining Potential to Emit (PTE) for applicability purposes

2. Amend requirements for reciprocating compressors3. Amend equipment leak requirements for natural gas

processing plants4. Amend the definition of “Responsible Official”5. Remove the “affirmative defense” provisions from the start-

up/shutdown provisions• Comments to the proposed amendments were to be

submitted to EPA by August 18, 2014.• To read the proposed amendments in their entirely, see the

7/17/2014 Federal Register at: http://www.gpo.gov

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DEQ CONTACT INFORMATION• Tom Ballou - Air Quality Planning

– 804-698-4406

• Tamera Thompson – Permitting– 804-698-4502

• Yogesh Doshi – Major Source Permitting– 804-698-4017

• Stan Faggert – Minor Source Permitting– 804-698-4424

• Mike Kiss – Air Modeling– 804-698-4460

• Todd Alonzo – Compliance– 804-698-4280

• Patti Higgins – NSPS– 804-698-4065

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QUESTIONS?

Michael G. Dowd804-698-4284

michael.dowd@deq.virginia.gov