1. 1 Consideration of Final Rulemaking Clean Air Interstate Rule Environmental Quality Board Meeting Harrisburg, PA December 18, 2007 Joyce E. Epps Director, Bureau of Air Quality Department of Environmental Protection Commonwealth of Pennsylvania

2. 2 Federal Clean Air Interstate Rule The U. S. Environmental Protection Agency (EPA) found that 28 states and the District of Columbia contribute significantly to downwind PM2.5 and 8-hour ozone nonattainment areas. On May 12, 2005, EPA promulgated the final Clean Air Interstate Rule (CAIR) to mitigate the transport of sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from electric generating units (EGUs) of 25 megawatts or greater. EPA required states to submit State Implementation Plan (SIP) revisions for the CAIR by September 11, 2006.

3. 3 CAIR: Federal Implementation Plans On April 28, 2006, EPA promulgated Federal Implementation Plans (FIPs) to implement CAIR. The FIPs were effective on June 28, 2006. The CAIR FIPs established annual NOx and SO 2 emission budgets and a NOx ozone season emission budget for EGUs in each affected state: NOx Phase 1: January 1, 2009 NOx Phase 2: January 1, 2015 SO 2 Phase 1: January 1, 2010 SO 2 Phase 2: January 1, 2015 The CAIR FIPs will continue in effect until EPA approves SIP revisions implementing state CAIR programs.

4. 4 PA CAIR Rulemaking Timeline February 20, 2007— proposed CAIR rulemaking approved by the Environmental Quality Board (EQB). April 28, 2007— proposed CAIR rulemaking published in the Pennsylvania Bulletin with a 60- day public comment period. (32 Pa.B. 5178) May 29-31, 2007 — public hearings held in Pittsburgh, Harrisburg and Norristown, PA. December 18, 2007 — final rulemaking considered by the EQB. March 2008—submission of final–form CAIR, if adopted, to EPA as a revision to the State Implementation Plan.

5. 5 PA CAIR Final Rulemaking Amends 25 Pa. Code Chapters 121, 129 and 145. Establishes additional NO x and emission control requirements for large electric generating units. Includes amendments to transition from the existing NO x SIP Call Program to the CAIR program.  Amends the existing Small Source NOx Program requirements in Chapter 129; Retains the compliance option that allows for the surrender of CAIR NO x allowances in 2009 for exceedances of the allowable emissions.

6. 6 PA CAIR Final Rulemaking  Establishes three CAIR trading programs with declining emission budgets.  Retains the federal compliance dates:  Annual NO x Phase 1, January 1, 2009. Annual NO x Phase 2, January 1, 2015.  Ozone Season NO x Phase 1, January 1, 2009. Ozone Season NO x Phase 2, January 1, 2015.  Annual SO 2 Phase 1, January 1, 2010. Annual SO 2 Phase 2, January 1, 2015.  Adds the CAIR Ozone Season NO x Program to replace the existing NO x Budget Trading Program.

7. 7 PA CAIR Final Rulemaking Transition from the NO x Budget Trading Program to CAIR: Provides that the allocations for the 2009 NO x Ozone Season will be made by EPA under the Federal Implementation Plan. Eliminates any existing Ozone Season NO x Budget allocations which extend beyond 2008.

8. 8 PA CAIR Final Rulemaking Non-EGU NO x Ozone Season Compliance Caps emissions at the Non-EGU Budget level. Establishes and updates allowable Ozone Season emissions for each unit annually. If the emissions from all applicable Non-EGU’s exceed the Non-EGU cap then only units that exceed their allowable emissions would buy CAIR allowances to demonstrate compliance.

9. 9 PA CAIR Final Rulemaking  Provides for the allocation of additional annual NOx allowances to the owners and operators of cogeneration units that were exempted under Title IV of the CAA if operation commenced prior to January 1, 2000. Reserves approximately 1.3% of the Annual CAIR NOx Trading Budget for each annual control period from 2010- 2015. After providing notice in the PA Bulletin, DEP may extend, terminate or modify the allocation of additional NOx allowances for affected units. Terminates the additional NOx allocation process on January 1, 2016.

10. 10 PA CAIR Final Rulemaking Improves air quality by achieving significant cost-effective reductions in NOx and SO2 emissions. Helps the Commonwealth to achieve and maintain the eight-hour ozone and fine particulate health-based standards. Protects public health and the environment without interfering with the flow of affordable energy. Provides incentives for energy efficiency/renewable resources NOx and SO2 reductions achieved under CAIR will also reduce the number of acidic lakes and streams.

11. 11 Air Quality Technical Advisory Committee July 26, 2007—consulted with the AQTAC regarding final- form CAIR Regulation. September 20, 2007– AQTAC voted to forward the final rulemaking to the EQB for consideration; requested minor revisions. AQTAC requested revisions including the following: Changes to certain definitions related to Tier I energy efficiency qualifying resources. Revisions to the formula for allocating supplemental NOx allowances for waste coal units exempted from Clean Air Act Title IV requirements. Contact information for a person at DEP when notice of proposed ozone Season NOx allocations are published in the PA Bulletin. PA CAIR Final Rulemaking: Advisory Committee Review

12. 12 PA CAIR Final Rulemaking: Advisory Committee Review Citizens’ Advisory Council October 15, 2007 – DEP conferred with the Air Subcommittee regarding the final-form CAIR rulemaking. November 13, 2007 – The CAC voted to concur with proceeding to the EQB. The CAC offered the following cautions for future consideration: Emissions trading should be used as an interim measure “...if extended indefinitely trading waters down the overall objective of better controlling emissions from all sources.” While state-and region- wide emission reductions may be achieved, the “proposal may not provide immediate and adequate relief to environmental justice communities already bearing a disproportionate share of the pollution burden.”

13. 13 CAIR Final Rulemaking: Recommendation The Department recommends that you approve Pennsylvania’s CAIR final rulemaking. Your consideration of this final rulemaking is greatly appreciated.

14. 14 Thank you on behalf of: Thomas K. Fidler Deputy Secretary, Office of Waste, Air and Radiation Management Kristen Campfield Office of Chief Counsel James Stoner Bureau of Air Quality Joyce E. Epps Bureau of Air Quality