Setting the Stage: The Clean Air Act’s Opportunities and Challenges NASUCA Annual Meeting November 11, 2012 Bill Becker, National Association of Clean Air Agencies

What I Will Cover  Background on Air Quality and Emissions  EPA Air Rules Affecting the Power Industry  Mercury and Air Toxics Standards (MATS)  Cross State Air Pollution Rule (CSAPR)  CO 2 Emissions Standards for New Power Plants  GHG Permitting  National Ambient Air Quality Standards

The Clean Air Act is Working

The Clean Air Act Has Prevented a Huge Number of Premature Deaths and Other Adverse Health Effects Health Effects Reduction (PM2.5 & Ozone Only) Pollutant (s)Year 2010Year 2020 PM2.5 Adult MortalityPM160,000230,000 PM2.5 Infant MortalityPM Ozone MortalityOzone4,3007,100 Chronic BronchitisPM54,00075,000 Acute BronchitisPM130,000180,000 Acute Myocardial InfarctionPM130,000200,000 Asthma ExacerbationPM1,700,0002,400,000 Hospital AdmissionsPM, Ozone86,000135,000 Emergency Room VisitsPM, Ozone86,000120,000 Restricted Activity DaysPM, Ozone84,000,000110,000,000 School Loss DaysOzone3,200,0005,400,000 Lost Work DaysPM13,000,00017,000,000

Air Quality is Improving at the Same Time Our Economy Has Expanded

However, Millions of People are Still Exposed to Unhealthful Levels of Air Pollution

Location of Coal- and Oil-Fired Power Plants MATS covers approximately1,400 coal- and oil-fired units > 25 MW at about 600 power plants nationwide

Mercury and Air Toxics Standards

Fish Advisories for Mercury are Everywhere

Mercury and Air Toxics Standards  On December 16, 2011, EPA issued final standards to reduce emissions of mercury and other toxic air pollutants from new and existing coal- and oil- fired power plants greater than 25 megawatts  These standards will require facilities to reduce:  Metals, including mercury, arsenic, chromium and nickel  Acid gases, including hydrogen chloride and hydrogen fluoride, and  Particulate matter  New sources will have to install state of the art technology, while existing sources must achieve the average of the top 12% performing facilities  Currently, 40% of EGUs do not have advanced pollution control technology

Mercury and Air Toxics Standards  These sources will need to install technologies that are generally proven and widely available  Expected measures needed to comply include:  Mercury – Selective Catalytic Reduction, Scrubbers, Activated Carbon Injection  Non-Hg Metals – Fabric Filters (FF), Electrostatic Precipitators (ESP)  Acid Gases – Scrubbers, Dry Sorbent Injection, DSI with FF or ESP  Dioxins and Furans – Work Practice Standards  Sulfur Dioxide – Scrubbers, Dry Sorbent Injection  Retirements – EPA expects retirements to be less than 4.7 GW (out of 1000 GW of total EGU capacity) by 2015 – less than ½ of 1%

Compliance Deadlines  The Clean Air Act provides sources three years to comply with the MATS standards  The Act also provides additional flexibilities for sources needing more time  Allows state and local agencies to issue a permit providing one more year, where necessary, for the installation of controls  A source may also be granted an additional (5 th ) year to comply if it qualifies for an Administrative Order under Section 113

New Source Reconsideration  In July 2012 EPA announced a reconsideration of MATS for new sources and stayed the effectiveness of the new source provisions for 3 months  EPA plans to issue a new rule for new sources by March 2013 (the rule has not been proposed but was sent to OMB the day after the election)  New rule will focus on measurement issues related to Hg and data set used for variability calculations for PM and HCl, which will likely have the practical effect of relaxing the standards

Cross State Air Pollution Rule (CSAPR)

Background on CSAPR  EPA issued the Clean Air Interstate Rule (CAIR) on 5/12/05  In 2008, the D.C. Circuit remanded CAIR to EPA, leaving existing programs in place while directing the agency to address certain legal deficiencies  EPA proposed CSAPR on 7/6/10 and finalized the rule on 7/6/11  EPA proposed a supplemental rule on 7/6/11 adding five additional states to the ozone season NO x program; this rule was finalized on 12/15/11  CSAPR was scheduled to replace CAIR on 1/1/2012; however, on 12/30/2011 the D.C. Circuit stayed the CSAPR rule pending judicial review  On August 21, 2012, the D.C. Circuit vacated and remanded CSAPR to EPA and ordered EPA to continue to administer CAIR “pending the promulgation of a valid replacement”

What CSAPR Did and Did Not Do  CSAPR:  Required 23 states to reduce annual SO 2 and NO x emissions to help downwind areas attain the PM 2.5 NAAQS  Required 25 states to reduce ozone season NO x emissions to help downwind areas attain the hour ozone NAAQS (84 parts per billion)  Established emissions reductions to take effect on 1/1/2012 for SO 2 and annual NO x, and 5/1/2012 for ozone season NO x  CSAPR did not:  Address the more stringent 2008 ozone standard (75 ppb)  Address a possible tightening of the ozone standard in 2014 (CASAC has recommended ppb)  Address a potentially more stringent PM 2.5 standard, as proposed by EPA in June and on which EPA must make a final decision by 12/14/12

States That Were Covered By CSAPR

Anticipated Emissions Reductions

Budgets under CSAPR and CAIR Comparison of Combined Emission Budgets for States Covered by Both CSAPR and CAIR* (million tons) Initial Phase CAIR Budgets CSAPR Budgets Annual SO Annual NO X Ozone Season NO X CAIR began covering NO X emissions in 2009 and SO 2 emissions in 2010 CSAPR would have applied to emissions in 2012 and beyond The initial phase for CSAPR compliance was to begin in 2012 for all programs *Sources: CAIR preamble pages 25329, 25320, and ( CSAPR preamble tables VI.F–1, VI.F–2, VI.F–3 ( CSAPR SNPR tables I.C–1 and I.C–2 (

Issues Moving Forward  Among the Court’s findings:  "...the collective burden must be allocated among the upwind States in proportion to the size of their contributions to the downwind State's nonattainment,”  "...once EPA reasonably designates some level of contribution as ‘insignificant’ under the statute, it may not force any upwind State to reduce more than its own contribution to that downwind State minus the insignificant amount”  “EPA's authority to force reductions on upwind States ends at the point where the affected downwind State achieves attainment.“  “When EPA quantifies States’ good neighbor obligations, it must give the States a reasonable opportunity to implement those obligations.”  Some issues that will need to be resolved:  When will EPA come up with a “valid replacement” for CAIR and what will it require?  Absent sufficient guidance from EPA, how should states proceed with transport SIPs (vis-à-vis FIPs)?  In some situations, sources have excess allowances that enable them to avoid any controls during high ozone days in the summertime.  Both CAIR and CSAPR are based on an outdated ozone standard (i.e., 84 ppb). What are EPA’s plans to revise the transport rule to meet the 75 ppb standard, and possibly an even tighter one expected on 2014?

CO 2 Emissions Standards for New Power Plants

Background on EPA’s Proposal  Power plants are the largest source of GHGs  In response to a court settlement, EPA proposed New Source Performance Standards (NSPS) on 4/13/2012 pursuant to authority under Section 111 of the CAA that will cover CO 2 emissions from Electric Generating Units (EGUs)  Section 111(b) requires EPA to regulate new and modified sources  Section 111(d) requires EPA to regulate existing sources for which standards are promulgated under Section 111(b)

What EPA’s NSPS Proposal Does  EPA’s proposal applies to:  Fossil-fuel-fired boilers  Integrated Gasification Combined Cycle (IGCC) units  Natural Gas Combined Cycle (NGCC) units  Simple Cycle turbines  The proposal does not apply to:  Existing sources, including “modifications” and “reconstructions”  New units with permits that start construction within 12 months of EPA’s proposal  “Transitional” units – New units with permits that start construction within 12 months of EPA’s proposal and DOE demonstration projects that start construction within 12 months of the proposal

What EPA’s Proposal Does (con’t)  New fossil-fueled-fired power plants must meet an output-based standard of 1,000 pounds of CO 2 per megawatt-hour  EPA believes that almost all NGCC units built since 1995 will be able to meet the standard without add-on controls  EGUs using coal or petroleum coke that use Carbon Capture and Sequestration have the option of phasing in compliance  For the first 10 years, these sources would be required to meet an annual rate of 1,800 lbs/MWh  For the next 20 years, these sources would need to meet a rate of 600 lbs/MWh

A Word About “Existing” Sources  EPA has not proposed standards for existing sources  EPA is required to establish emissions guidelines for existing sources under Section 111(d) of the CAA  Guidelines include targets based on demonstrated controls, emission reductions, costs and expected timeframes for installation and compliance  Guidelines can be less stringent than the requirements for new sources  States use the emission guidelines to develop plans for reducing emissions from existing sources; states can take into account remaining useful life of source  EPA has the authority to prescribe a plan for a state in cases where the state fails to submit a satisfactory plan and to enforce the provisions of a plan in cases where the state fails to enforce them  Several states are seeking a process by which EPA would deem their GHG- reduction programs “equivalent” to the EPA emissions guidelines

GHG Permitting  GHG permitting requirements took effect January 2, 2011; apply only to the largest stationary sources of GHG emissions  Most state and local agencies have authority to issue permits covering GHGs; for those that do not, EPA is issuing the GHG portion of permits under temporary federal authority  EPA estimates that as of September 10, 2012, 50 construction permits containing GHG requirements had been issued and an additional 110 applications with GHG elements had been received (all industrial sectors)  Energy efficiency has been the standard control technology thus far  Should be expressed using numerical limits for carbon dioxide equivalent (CO 2 e)  Other technologies, such as carbon capture and storage (CCS), need to be considered and evaluated, but may be eliminated as infeasible

GHG Permitting  On June 29, 2012, EPA issued Step 3 of the GHG Tailoring Rule  EPA is retaining the current GHG permitting thresholds of 100,000 / 75,000 tons per year CO 2 e for Step 3, rather than lower it to 50,000 tons; covers only the largest sources of GHG emissions  EPA is also streamlining approaches for GHG permitting  Clean Air Act Advisory Committee GHG Permit Streamlining Workgroup, consisting of representatives from EPA, state and local permitting authorities, tribes, environmental groups, and industry, issued a report on September 14, 2012 identifying potential streamlining approaches

National Ambient Air Quality Standards (NAAQS)

Health-Based National Ambient Air Quality Standards – Ozone  EPA proposed to strengthen the 2008 (75 ppb) ozone NAAQS in January 2010; decided last fall not to finalize a new standard but to wait for the next review (proposal expected late 2013, final decision late 2014)  States are currently working to implement the 2008 ozone NAAQS  46 areas were designated nonattainment (including 2 separate tribal areas), only 3 of which had never before been designated nonattainment for ozone; designations took effect 7/20/12  States must submit SIPs (state strategies) to EPA for approval  Deadlines by which states are required to meet the standard range from 2015 to 2032

Anticipated NAAQS Implementation Milestones (as of September 27, 2012) Pollutant Final NAAQS Date (or Projection) Infrastructure SIP Due Designations Effective Attainment Demonstration Due Attainment Date PM 2.5 (2006)Oct 2006Oct 2009Dec 2009Dec 2012 Dec 2014/2019 PbOct 2008Oct 2011 Dec 2010/2011 June 2012/2013 Dec 2015/2016 NO 2 (primary)Jan 2010Jan 2013Feb 2012none SO 2 (primary)June 2010June 2013TBD Ozone (2008)Mar 2008Mar 2011July /2032 PM (current review) Dec 2012Dec 2015Early /2025 Ozone (current review) /2036

For Further Information  Contact:  Bill Becker, Executive Director, NACAA  