1. 1 Year in Review: Clean Air Act Presented by: Tom Wood Stoel Rives LLP October 8, 2010 Things Are Getting Really Complicated

2. 2 Clean Air Act & GHGs That was this morning

3. 3 Boiler MACT & CISWI NESHAPs (aka MACT) = hazardous air pollutant (HAP) standards –Typically apply to major sources of HAP (10/25) Section 129 incinerator standards –Apply to sources regardless of emission rate –Regulate much more than just HAP By statute, same unit cannot be subject to both 129 standard and NESHAP Boiler MACT issued in 2005

4. 4 Boiler MACT & CISWI Boiler MACT issued in 2005 CISWI definitions rule also issued in 2005 Sierra Club challenged both rules –Claimed that EPA exceeded authority when it defined solid waste as material combusted at a facility that does not recover thermal energy for a useful purpose DC Circuit agreed that solid waste definition too narrow –Vacated both rules in 2007

5. 5 Boiler MACT & CISWI June 4, 2010 EPA proposed new CISWI and Boiler MACT rules –Proposed boiler standards for area and major sources Area source standards referred to as GACT –Sources burning any solid waste subject to CISWI EPA also proposed definition of solid waste rule –Subcategorized by fuel/boiler type –MACT regulates five different pollutants –CISWI regulates nine pollutants –Some (e.g., CO) serve as surrogates

6. 6 Boiler MACT & CISWI Bottom line: –Standards are extraordinarily strict Will be very expensive to comply with –Particularly brutal to biomass industry Many manufacturers cannot produce a unit that complies with standards Makes small units cost-prohibitive –Huge amount of testing required Sad Irony: Biomass boilers savaged by standards and yet biomass boilers emit low levels of HAPs

7. 7 Boiler MACT & CISWI Lisa Jackson stated in September 28, 2010 letter to U.S. Senators concerned about impact on biomass: –“the final standards will most assuredly differ from the proposed ones” EPA must sign final rules by January 16, 2011 Typically published 3 to 6 weeks later MACT/GACT compliance date: 3 years later CISWI compliance date: Up to 5 years later

8. 8 Other NESHAPs Portland Cement MACT –Issued September 9, 2010 –EPA anticipated that Hg standards in rule could close Durkee, OR plant even though it is acknowledged as the best controlled plant in world –Litigation to start in early November Utility MACT –EPA had issued mercury trading program (CAMR) –D.C. Circuit struck down –EPA now developing HAP standard for utility boilers Separate and distinct from Boiler MACT

9. 9 Other NESHAPs Area Source NESHAPs –Huge proliferation over past 18 months –Very poorly written –Very confusing as to applicability DEQ declining to adopt RICE NESHAP and returning RICE NSPS to EPA –Unprecedented move by DEQ –Will do nothing to help Oregon sources determine applicability SSM provisions

10. 10 New NAAQS NO 2 –Issued February 9, 2010 –New standard: 1 hour: 100 ppb –3 year average of annual 98 th percentile of 1-hour daily maximum concentrations –EPA retaining annual NO 2 standard 53 ppb PM 2.5

11. 11 New NAAQS SO 2 –Issued June 22, 2010 –New standard: 1 hour: 75 ppb –3 year average of annual 99 th percentile of 1-hour daily maximum concentrations –EPA revoking: 24 hour SO 2 standard Annual SO 2 standard

12. 12 New NAAQS PM 2.5 –1997: EPA established annual and 24-hour NAAQS for PM 2.5 for the first time –2006: EPA revised the 24-hour NAAQS for PM 2.5 –Very difficult to implement –EPA issued PM 10 surrogate policy Allowed states to regulate PM 2.5 by regulating PM 10 –EPA now indicating that it will withdraw surrogate policy Will require formal evaluation of PM 2.5 Problematic due to lack of data and difficulty testing EQC adopted temporary rules regulating PM 2.5 at August meeting

13. 13 Regional Haze Statutory mandate to decrease visibility impacts to natural conditions by 2064 First phase: BART –Applies to sources that pre-dated PSD Only source in state subject to BART is Boardman –Initial BART requirements established by rule on June 19, 2009 –Comment period just closed on DEQ rework of Boardman BART requirements

14. 14 Regional Haze After BART Reasonable Progress Goals –Visibility conditions expected to be achieved at the required milestone dates –First key milestone date is 2018 –BART gets State to 2018 –More controls may be required beyond that EPA guidance: control requirements extend beyond BART sources

15. 15 Hell’s Canyon Trend Analysis