1. New Source Review Reform Vera S. Kornylak, Associate Regional Counsel EPA Region 4 Office of Regional Counsel and Gregg Worley, Chief, Air Permits Section, EPA Region 4 Air, Pesticides & Toxics Management Division Vera S. Kornylak, Associate Regional Counsel EPA Region 4 Office of Regional Counsel and Gregg Worley, Chief, Air Permits Section, EPA Region 4 Air, Pesticides & Toxics Management Division Presented By:

2. Overview of NSR Reform: Major EPA Rulemakings 67 FR 80186, December 31, 2002 (“2002 NSR Reform Rules”): EPA finalized its new source review reform rules which included revisions to five major areas of the rules. States must submit revisions implementing the minimum program requirements outlined in the Rule by January 2, 2006. 68 FR 61248, October 27, 2003: EPA finalized additional rules, called the “Equipment Replacement Rule,” pertaining to routine maintenance, repair, and replacement. 67 FR 80186, December 31, 2002 (“2002 NSR Reform Rules”): EPA finalized its new source review reform rules which included revisions to five major areas of the rules. States must submit revisions implementing the minimum program requirements outlined in the Rule by January 2, 2006. 68 FR 61248, October 27, 2003: EPA finalized additional rules, called the “Equipment Replacement Rule,” pertaining to routine maintenance, repair, and replacement.

3. Overview of NSR Reform: Major EPA Rulemakings 70 FR 61081, October 20, 2005: EPA published proposed rules to modify the emissions test for NSR purposes for existing electric generating units (EGUs). This proposal does not apply to new EGUs. Comments are due by December 19, 2005. 70 FR 61081, October 20, 2005: EPA published proposed rules to modify the emissions test for NSR purposes for existing electric generating units (EGUs). This proposal does not apply to new EGUs. Comments are due by December 19, 2005.

4. Summary of EGU Emissions Test Proposal (October 20, 2005) The proposed emissions test is the same as the New Source Performance Standards (NSPS) test in CAA Section 111(a)(4). This compares maximum hourly emissions achievable at a unit during the past five years to the maximum hourly emissions achievable at that unit after the change. Alternatively, the proposal seeks comment on a test that would compare maximum hourly emissions achieved before and after the change. The proposed emissions test is the same as the New Source Performance Standards (NSPS) test in CAA Section 111(a)(4). This compares maximum hourly emissions achievable at a unit during the past five years to the maximum hourly emissions achievable at that unit after the change. Alternatively, the proposal seeks comment on a test that would compare maximum hourly emissions achieved before and after the change.

5. Summary of EGU Emissions Test Proposal (Continued) The proposal further seeks comment on an applicability test based on mass of emissions per unit of energy output. With regards to the NSPS rules, the proposal seeks comment on whether to revise the NSPS regulations to include a maximum achieved emissions test or output test in lieu of or in addition to the maximum achievable hourly emissions test. The proposal further seeks comment on an applicability test based on mass of emissions per unit of energy output. With regards to the NSPS rules, the proposal seeks comment on whether to revise the NSPS regulations to include a maximum achieved emissions test or output test in lieu of or in addition to the maximum achievable hourly emissions test.

6. NSR Related Litigation New York et al. v. United States, 413 F. 3d 3 (DC Cir. 2005) - Challenge to NSR Reform Rules Decision published on June 24, 2005: vacated provisions for pollution control projects and clean units; remanded provisions regarding recordkeeping (40 CFR 52.21(r)(6)) and “reasonable possibility;” upheld the NSR applicability test generally; New York et al. v. United States, 413 F. 3d 3 (DC Cir. 2005) - Challenge to NSR Reform Rules Decision published on June 24, 2005: vacated provisions for pollution control projects and clean units; remanded provisions regarding recordkeeping (40 CFR 52.21(r)(6)) and “reasonable possibility;” upheld the NSR applicability test generally;

7. NSR Related Litigation New York et al. v. United States (continued): EPA filed a petition for rehearing en banc re: applicability test for clean units and motion for clarification on the retroactivity of the PCP vacatur; Other petitioners filed motions for reconsideration on other issues, including the baseline applicability test. New York et al. v. United States (continued): EPA filed a petition for rehearing en banc re: applicability test for clean units and motion for clarification on the retroactivity of the PCP vacatur; Other petitioners filed motions for reconsideration on other issues, including the baseline applicability test.

8. NSR Related Litigation ERP Litigation (New York et al. v. U.S., filed in D.C. Circuit) 69 FR 40274 (July 1, 2004) – ERP Rule stayed. 70 FR 33838 (June 10, 2005) – EPA final reconsideration on the ERP rule (no changes); Challenges filed to reconsideration. ERP Litigation (New York et al. v. U.S., filed in D.C. Circuit) 69 FR 40274 (July 1, 2004) – ERP Rule stayed. 70 FR 33838 (June 10, 2005) – EPA final reconsideration on the ERP rule (no changes); Challenges filed to reconsideration.

9. NSR Related Litigation ERP Litigation (Continued) Issue is EPA’s authority to exempt RMRR from regulation in general, as well as within the parameters of the ERP. EPA brief due 11/17/05. Oral argument likely in early, 2006. ERP Litigation (Continued) Issue is EPA’s authority to exempt RMRR from regulation in general, as well as within the parameters of the ERP. EPA brief due 11/17/05. Oral argument likely in early, 2006.

10. NSR Related Litigation U.S. v. Duke Energy Corp., 411 F.3d 539 (4 th Cir. 2005). Complaint filed by EPA alleging NSR violations for modification at plants owned by Duke Energy. Congress mandated that the PSD definition of “modification” be identical to the NSPS definition of “modification.” U.S. v. Duke Energy Corp., 411 F.3d 539 (4 th Cir. 2005). Complaint filed by EPA alleging NSR violations for modification at plants owned by Duke Energy. Congress mandated that the PSD definition of “modification” be identical to the NSPS definition of “modification.”

11. NSR Related Litigation U.S. v. Duke Energy Corp. (Continued): RMRR issue re: routine at a unit versus routine in the industry was not reached as part of decision. Technically applies only to states within the 4 th Circuit Court of Appeals – which includes North and South Carolina. U.S. v. Duke Energy Corp. (Continued): RMRR issue re: routine at a unit versus routine in the industry was not reached as part of decision. Technically applies only to states within the 4 th Circuit Court of Appeals – which includes North and South Carolina.

12. Region 4 Status Update on State Submittals of NSR Reform Rules EPA Region 4 States are farthest along in the nation towards meeting the January, 2006 deadline. State rules may be different, but must be equivalent to federal requirements. State rules may be more stringent. EPA Region 4 staff working to provide draft/prehearing comments whenever possible, along with formal comments. EPA Region 4 States are farthest along in the nation towards meeting the January, 2006 deadline. State rules may be different, but must be equivalent to federal requirements. State rules may be more stringent. EPA Region 4 staff working to provide draft/prehearing comments whenever possible, along with formal comments.

13. Region 4 Status Update on State Submittals of NSR Reform Rules AlabamaEPA provided prehearing comments FloridaEPA provided prehearing comments GeorgiaEPA reviewing prehearing KentuckySIP submittal received 9/2004; rules are state effective MississippiSIP submittal received 8/2005; rules are state effective North CarolinaNNSR provisions are state effective; EPA provided comments Mecklenburg Co., NCEPA received prehearing submittal

14. Region 4 Status Update on State Submittals of NSR Reform Rules South CarolinaSIP Submittal received 7/2005; rules are state effective TennesseeEPA provided prehearing comments Nashville, TNEPA reviewing prehearing Hamilton Co., TNEPA reviewing draft prehearing. Chattanooga, TNEPA provided prehearing comments

15. Region 4 Status Update on State Submittals of NSR Reform Rules Areas not listed have not provided any submittals to EPA. General SIP Review Process: Regional review and evaluation Presentation to EPA HQ (particularly focus on differences from federal rule) Proposal in Federal Register Public Comment Final approval Areas not listed have not provided any submittals to EPA. General SIP Review Process: Regional review and evaluation Presentation to EPA HQ (particularly focus on differences from federal rule) Proposal in Federal Register Public Comment Final approval

16. Upcoming Developments Reconsideration in D.C. Circuit. ERP Litigation. Congressional amendments to CAA requiring more NSR Reform. Ongoing utilities litigation in Region 4. Reconsideration in D.C. Circuit. ERP Litigation. Congressional amendments to CAA requiring more NSR Reform. Ongoing utilities litigation in Region 4.

17. EPA Region 4 Contacts Gregg Worley, Chief Air Permits Section EPA Region 4 404-562-9141 Worley.gregg@epa.gov Kelly Fortin Air Permits Section 404-562-9117 Fortin.kelly@epa.gov Gregg Worley, Chief Air Permits Section EPA Region 4 404-562-9141 Worley.gregg@epa.gov Kelly Fortin Air Permits Section 404-562-9117 Fortin.kelly@epa.gov Sean Lakeman Regulatory Planning Section (SIPs) 404-562-9043 Lakeman.sean@epa.gov Vera S. Kornylak Office of Regional Counsel 404-562-9589 Kornylak.vera@epa.gov