Indiana Steel Environmental Group June 29, 2010 Thomas W. Easterly, P.E., BCEE, QEP Commissioner IN Department of Environmental Management 1

2 IDEM’s Mission We Protect Hoosiers and Our Environment IDEM is responsible for protecting human health and the environment while providing for safe industrial, agricultural, commercial and governmental operation vital to a prosperous economy.

How Does IDEM Protect Hoosiers and Our Environment? Develop regulations and issue permits to restrict discharges to the environment to safe levels. Inspect and monitor permitted facilities to ensure compliance with the permits. Use compliance assistance and/or enforcement when people exceed their permit levels or violate regulations. Educate people on their environmental responsibilities. 3

4 Performance Metrics Mar 2010 Quality of Hoosiers' EnvironmentResultTargetComments % of Hoosiers in counties meeting air quality standards 100% 80% % of CSO Communities with approved programs to prevent the release of untreated sewage 94.4%100%20% 93+9 (102) out of 98+9 (108) % of Hoosiers receiving water from facilities in compliance with safe drinking water standards 99.3%99%95% Permitting Efficiency Total calendar days accumulated in issuing environmental permits, as determined by state statute Land 18,33366,56586,864 Air 40,825207,000385,000 Water 23,56348,000200,000 * Places emphasis on back logged permits Compliance Total percentage of compliance observations from regulated customers within acceptable compliance standards Inspections 97.76%97%75% Self reporting 97.21%99%95% Continuous monitoring (COM) 99.84%99.90%99% * Tracks observations and not just inspections

5 Performance Metrics June 2005 Quality of Hoosiers' EnvironmentResultTargetComments % of Hoosiers in counties meeting air quality standards 61%100%80% 12 counties & 2,408,571 of 6,195,643 above standard % of CSO Communities with approved programs to prevent the release of untreated sewage 4%100%20%75% by 2007 is goal Permitting Efficiency Total calendar days accumulated in issuing environmental permits, as determined by state statute Land 100,01366,56586,864 Air 511,000207,000385,000 Water 301,00048,000200,000 * Places emphasis on back logged permits Compliance Total percentage of compliance observations from regulated customers within acceptable compliance standards Inspections 95.46%97%75% Self reporting 97.11%99%95% Continuous monitoring (COM) 99.19%99.90%98.95% * Tracks observations and not just inspections Organizational Transformation Budgetary agency dollars spent on key outside contracts for core agency functions. Dollars spent on outside services per year $6,179,367$0$3,447,017

Discussion Topics Potential Regulatory Issues NAAQS Air Quality Issues Antidegradation NPDES Permit Issuance Green House Gas Regulations? Budget Issues and Fees. 6

Potential Regulatory Issues--Air New 75 ppb 1 hour SO 2 Air Quality Standard. New 100 ppb short term NO x Air Quality Standard. EPA reconsideration of ozone standard and 15 microgram/cubic meter PM 2.5 Air Quality Standards. EPA inaction on redesignation requests. 7

June 6, 2010: U.S. EPA Announced a New SO 2 Standard set at 75 ppb SO 2 Design Values Based on Monitoring Data Standard at 75 ppb

January 22, 2010: U.S. EPA Announced a New NO 2 Standard set at 100 ppb NO 2 Design Values Based on Monitoring Data

March 12, 2008: U.S. EPA Announced a New Ozone Standard set at ppm Ozone Design Values Based on Monitoring Data Standard at ppm

January 6, 2010: U.S. EPA Announced Reconsideration of Ozone NAAQS (Proposed range of ppm) Ozone Design Values Based on Monitoring Data Standard at ppm

Ozone Design Values Based on Monitoring Data Standard at ppm January 6, 2010: U.S. EPA Announced Reconsideration of Ozone NAAQS (Proposed range of ppm)

Ozone Design Values Based on Monitoring Data Standard at ppm January 6, 2010: U.S. EPA Announced Reconsideration of Ozone NAAQS (Proposed range of ppm)

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 15 µg/m 3

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 14 µg/m 3

March 15, 2010: U.S. EPA Proposed a Revised PM 2.5 Standard with a range of µg/m 3 PM 2.5 Design Values Based on Monitoring Data Standard at 11 µg/m 3

Climate Change & GHG Indiana joined the litigation challenging the endangerment finding. Indiana believes that the tailoring rule is fundamentally legally flawed. The current federal administration firmly believes that the science supports the opinion that the earth is warming due to human GHG emissions. 17

Climate Change & GHG An alternative way to frame the discussion is to compare the costs and benefits of deep reductions in GHG emissions with the projected costs and benefits of not making those reductions. Some strategies (i.e. wasting less energy) make sense without the GHG drive and should be encouraged. 18

GHG Air Permits All permits issued after 1/1/2011 requiring PSD review that also increase GHG emissions by at least 75,000 tpy need GHG BACT. All permits issued after 6/30/2011 that increase GHG emissions by 75,000 tpy need GHG BACT and all sources with GHG emissions of at least 100,000 tpy need operating permits 19

GHG Air Permits IDEM will use the expedited rule making process and emergency rule making to obtain the legal authority to issue the federally required GHG permits 20

Potential Regulatory Issues--Water Antidegradation Regulations. Algae issues and nutrient regulations. – Great Lakes, Gulf of Mexico, Ohio River, Indiana lakes, rivers and reservoirs. Pharmaceuticals and other trace pollutants. IDEM action on the final five extended permits. More attention to the Great Lakes. 21

Antidegradation Second Notice Comment Period closed January 30, 2010—31 different commenters We are still evaluating the comments and preparing a revised draft rule for possible preliminary adoption There will be a third notice on the rule as preliminarily adopted 22

Antidegradation Major Issues Raised – Trigger for Antidegradation Review – What pollutants should be covered (Pollutant of concern) – BADCT – Level of deminimis – Exemptions 23

NPDES Permit Backlog Reduction –2005: 263 backlogged permits –2010: 5 backlogged permits –List includes: US Midwest. Ready for Public Notice. Arcelor Mittal Burns Harbor. Under EPA review—301g Arcelor Mittal Indiana Harbor East. Drafting Arcelor Mittal Indiana Harbor West. Drafting. Hoosier Merom. Compliance Schedule Under EPA Review Office of Water Quality Permits

Potential Regulatory Issues--Land RISC Guidance and Regulations implementing HB1162. Coal combustion waste regulations. EPA to speed up review of pollutant risk evaluations. 25

Potential Regulatory Issues Increased EPA emphasis on enforcement to improve environmental quality. EPA reevaluation of permitting decisions made during the past eight years. IDEM Outdoor Hydronic Heater Rule restart. Increased scrutiny of all coal related activities. Transparency. 26

Indiana State Budget Challenges Indiana’s most recent revenue forecast is $1.88 Billion below the budgeted amount for the FY biennium. – State Agencies reduced by 20+% – Higher Education reduced by 6% – K-12 Education reduced by 3% – Budget surplus will need to be spent 27

Response to Reduced State Income Eliminated 2009 & 2010 raises. Strategic Hiring Review—Using attrition to reduce spending. Reduce/eliminate grants, contracts, etc. Restrictions on travel and purchasing. Will maintain essential State services. 28

New IDEM Budget Actions Returning staffing to January 2005 levels through attrition. Moving most of Shadeland staff to IGCN and renegotiating the lease. Canceling or renegotiating a number of service contracts. Voluntary unpaid leave program. 29

IDEM Staffing Levels YEAR Current2010 Target Actual FTE

Northwest Indiana Region

Carbon Monoxide

Lead

Nitrogen Dioxide

Ozone

Changing Particulate Standards

Particulate Matter

Sulfur Dioxide

Thank You Tom Easterly Commissioner Indiana Department of Environmental Management