# TRANSCRIPT OF PROCEEDINGS

**HERITAGE REPORTING CORPORATION** Official Reporters 1220 L Street, N.W., Suite 600 Washington, D.C. 20005-4018 (202) 628-4888 contracts@hrccourtreporters.com IN THE MATTER OF: PUBLIC HEARING ON ENVIRONMENTAL PROTECTION AGENCY (EPA) PROPOSED RULE: “IMPLEMENTATION OF THE NEW SOURCE REVIEW (NSR)PROGRAM FOR PARTICULATE MATTER LESS THAN 2.5 MICROMETERS (PM 2.5 ); NOTICE OF PROPOSED RULEMAKING TO REPEAL GRANDFATHERING PROVISION AND END THE PM 10 SURROGATE POLICY” (75 FR 6827, FEBRUARY 11, 2010)

Pages: 1 through 43 Place: Washington, D.C. Hearing Date: February 26, 20101

Heritage Reporting Corporation (202) 628-4888 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

IN THE MATTER OF:

PUBLIC HEARING ON ENVIRONMENTAL PROTECTION AGENCY (EPA) PROPOSED RULE: “IMPLEMENTATION OF THE NEW SOURCE REVIEW (NSR) PROGRAM FOR PARTICULATE MATTER LESS THAN 2.5 MICROMETERS (PM 2.5 ); NOTICE OF PROPOSED RULEMAKING TO REPEAL GRANDFATHERING PROVISION AND END THE PM 10 SURROGATE POLICY” (75 FR 6827, FEBRUARY 11, 2010)

East Room 1153 1201 Constitution Avenue, N.W. Washington, D.C. Friday, February 26, 2010 The parties met, pursuant to the notice, at 1:07 p.m. BEFORE: ANNA MARIE WOOD, Policy Analyst Office of Air & Radiation, EPA

ATTENDEES : ANNA MARIE WOOD, EPA SCOTT JORDAN, EPA DAN deROECK, EPA (via telephone) TED STEICHENT, American Petroleum Institute AARON FLYNN, Hunton & Williams LLP CRAIG SEGALL, Sierra Club KATE POLLARD, Sierra Club BARBARA GOTTLIEB, Physicians for Social Responsibility MOLLY NEEL, Southern Utah Wilderness Alliance DAVID BARON, Earthjustice2

Heritage Reporting Corporation (202) 628-4888 P R O C E E D I N G S 1 (1:07 p.m.) 2 MS. WOOD: Good afternoon. My name is Anna 3 Wood, and I'm with the Office of Air & Radiation here 4 in Washington, D.C. I would like to welcome you to 5 this public hearing on the proposal to repeal the 6 grandfather provision for the PM 2.5 and to end the PM 10 7 surrogate policy. We look forward to hearing your 8 comments and thoughts. 9 I'm joined by my colleague, Scott Monrow, 10 from our Office of General -- excuse me, I'm thinking 11 of another Scott. I apologize, Scott. Scott Jordan 12 from our Office of General Counsel, and unfortunately, 13 due to bad weather in our North Carolina office, our 14 folks from RTP were not able to get to Washington, but 15 we do have them on the phone, and on the phone we have 16 Dan deRoeck, who is a senior engineer working on this 17 rulemaking in our Office of Air Quality Planning and 18 Standards. 19 I believe we have seven speakers scheduled 20 to speak, and so what we're going to do is turn the 21 proceeding over to Dan to make an opening statement, 22 and then he will also talk about how the hearing will 23 proceed, and then we'll proceed to have the speakers 24 make their comments. Does that sound fine? Any 253

Heritage Reporting Corporation (202) 628-4888 questions? Okay, great. Dan, can you hear us okay? 1 MR. deROECK: Yes, I hear you fine. 2 MS. WOOD: And hopefully folks can hear you. 3 If not, we'll make some adjustments, but why don't you 4 go ahead and get started. 5 MR. deROECK: Okay, thank you. Again I 6 apologize for not being there this morning. Our pilot 7 decided to cancel the flight, but I appreciate Anna 8 sitting in, and Scott Jordan is our legal assistant, 9 our attorney on this project, and between us we are 10 here to listen to your comments on this proposed rule. 11 We may answer questions that seek to clarify what we 12 proposed if you have any. But the general purpose of 13 this hearing is to listen to your comments, not to 14 discuss or debate the proposal. 15 Before we move into the actual comment 16 period I'd like to briefly describe the proposed rule 17 that is the subject of today's hearing. 18 Our proposal was published in the Federal 19 Register on February 11. The proposal would revise 20 the regulations concerning the prevention of 21 significant deterioration or PSD program mandated by 22 Part C of Title 1 of the act. 23 Revisions involve two separate actions, one, 24 to end the use of the PM 10 surrogate policy. The first 254

Heritage Reporting Corporation (202) 628-4888 action would repeal the grandfathering provision that 1 is contained only in the federal PSD regulations under 2 Part 40, C.F.R. Part 52. This is a grandfathering 3 provision that is currently under a stay to June 22 of 4 this year. 5 The second proposed action would discontinue 6 the use of the PM 10 surrogate policy currently allowed 7 in state PSD programs that are part of an EPA approved 8 implementation plan. I'll describe both the 9 grandfathering provision and the PM 10 surrogate policy 10 in more detail in just a moment. 11 These actions are being taken in response to 12 a petition to the administrator which sought 13 reconsideration of four provisions of our May 16, 14 2008, final rule implemented on new PM 2.5 requirements 15 under EPA’s various New Source Review regulations. 16 The two actions being addressed today are two of the 17 four challenged provisions. 18 Following EPA's promulgation of National 19 Ambient Air Quality Standards for PM 2.5 in 1997, we 20 issued guidance outlining our interim policy that 21 major stationary sources applying for permits under 22 the PSD program satisfy the requirement to show that 23 the proposed source of emissions would not cause or 24 contribute to a violation of the new National Air 255

Heritage Reporting Corporation (202) 628-4888 Ambient Quality Standards for PM 2.5 by demonstrating 1 compliance with the National Ambient Air Quality 2 Standards and PM 10 increments for PM 10 . This policy has 3 become known as the PM 10 surrogate policy, and that has 4 been in place in some form since 1997. 5 It offers the surrogate approach for 6 complying with the new PM 2.5 standards until various 7 technical issues involving monitoring, modeling and 8 estimating PM 2.5 emissions can be resolved by EPA. 9 Now, in the May 16, 2008, rule that I 10 referenced just a moment ago, we issued a final rule 11 to revise various regulations to facilitate the 12 implementation of the National Ambient Air Quality 13 Standards for PM 2.5 . In that final rule, we ended the 14 use of the PM 10 surrogate policy under the federal PSD 15 regulation. One exception, and that exception was the 16 exception that I mentioned earlier, the grandfathering 17 provision for any permit applied for but not yet 18 received prior to the July 15, 2008, effective date of 19 the final rule. It basically said that they could 20 continue to be evaluated and issued on the basis of 21 satisfying the PM 10 requirements and therefore being 22 grandfathered from the new requirements for PM 2.5 . 23 I would note, however, that EPA did not 24 propose for comment this grandfathering provision in 256

Heritage Reporting Corporation (202) 628-4888 the final regulation that we included in the final 1 rule. 2 The final rule also allowed sources applying 3 for permits under state PSD programs to continue using 4 the PM 10 surrogate policy during the three-year 5 transition period until they submitted a revised 6 implementation plan containing the new requirements 7 for PM 2.5 and received EPA's approval for that plan. 8 On July 15, 2008, the National Resources 9 Defense Council and the Sierra Club jointly petitioned 10 the administrator to reconsider four provisions of the 11 May 16, 2008 final rule. Two of those challenged 12 provisions were the grandfathering provision and the 13 continued use of the PM 10 surrogate policy in state 14

programs. 15 In a letter dated January 5, 2009, EPA 16 denied this petition. However, on February 10, 2009, 17 the petitioner submitted a second petition similar to 18 the first to the new Administrator. In response to 19 the second petition, EPA issued a letter on April 24, 20 2009, granting the second petition, agreeing to 21 reconsider all four of the challenged provisions. 22 EPA indicated in the letter that it intended 23 to propose repealing the grandfathering provision, and 24 I quote, "on the grounds that it was adopted without 257

Heritage Reporting Corporation (202) 628-4888 prior public notice and is no longer substantially 1 justified in light of the resolution of the technical 2 issues with respect to PM 2.5 monitoring, emissions 3 estimation and air quality modeling that led to the 4

PM 10 surrogate policy in 1997." 5 And secondly, it was administratively 6 staying the grandfathering provision for three months7 - the maximum period allowed for an administrative 8 stay. 9 The administrative stay on the 10 grandfathering provision became effective on June 1, 11 2009, the date it was announced in the Federal 12 Register . It ended on September 1, 2009. In order to 13 allow additional time to analyze this rulemaking, EPA 14 proposed and promulgated a second stay, this one a 15 nine-month stay, separate from the administrative stay 16 and lasting until June 22, 2010. 17 They agreed to reconsider the grandfathering 18 provision primarily on the grounds they failed to 19 propose the provision for public comment prior to 20 taking final action. However, we are proceeding on 21 our proposal to repeal the grandfathering provision in 22 the federal PSD regulations to discontinue the use of 23 the PM 10 surrogate policy in state PSD programs based 24 on our current belief that the PM 2.5 issues that led to 258

Heritage Reporting Corporation (202) 628-4888 the adoption of the PM 10 surrogate policy has now been 1 largely resolved. Hence, we believe that permitting 2 authorities and the regulated community now have 3 sufficient tools to conduct a meaningful permit4 related PM 2.5 analysis. 5 It's important to note that the two proposed 6 actions are separate and independent. In proposing to 7 end the use of the PM 10 surrogate policy in state PSD 8 programs before the end of the three-year transition 9 period for revising these programs, we solicited 10 comment on what legal authority issues for 11 implementing the new PM 2.5 requirement could result for 12 states with approved PSD programs. 13 We also sought comments on what 14 implementation difficulties for state permitting 15 authorities or PSD applicants could result from 16 discontinuation of the PM 10 surrogate policy. 17 Finally, we invited comment on any other 18 points that interested parties believe are relevant, 19 and whether the PM 10 surrogate policy continues to be 20 necessary for implementing the Clean Air Act's 21 requirements for PM 2.5 . 22 Now let me outline the way we'll run this 23 forum. Scott or Anna, I'm not sure which one, I guess 24 Anna, will call the speakers to the microphone in the 259

Heritage Reporting Corporation (202) 628-4888 order that they have registered, and due to the small 1 number of registered speakers, I believe we have six 2 or so right now, we will not restrict speaker 3 testimony to five minutes as is our normal practice. 4 We do however ask that the speakers limit their 5 testimony to 10 minutes or less, and once a speaker 6 completes his or her oral statement, Anna may ask the 7 speaker clarifying questions. 8 Each speaker's oral testimony will become 9 part of the official record of the rulemaking. Please 10 be sure to give a copy of any written comments that 11 you have to our staff at the registration table. We 12 will continue until up to one hour after the 13 registered speaker has spoken. If there is anyone in 14 the audience who would like to testify but has not yet 15 registered, please sign up at the registration table. 16 We will prepare a written transcript of 17 today's hearing. Transcripts will be available as 18 part of the official record for this rulemaking 19 process, and in conjunction with this hearing, we are 20 accepting written comments related to this hearing 21 until March 29, 2010. You have a handout available on 22 the registration table with detailed information to 23 submit any written comment on this proposed rule and 24 this hearing. 2510

Heritage Reporting Corporation (202) 628-4888 Again, I'd like to thank you for your 1 participation. I'm sorry I cannot be there. We 2 appreciate your attendance and participation, and I'll 3 turn it over to Anna to start the process for 4 presenting the speakers. Thank you. 5 MS. WOOD: Thank you, Dan. 6 The first speaker is Ted Steichent from 7 American Petroleum Institute. Mr. Steichent. 8 Can you hear, Dan? 9 MR. deROECK: I heard something. 10 MS. WOOD: Okay, we're making an adjustment 11 on the microphone so the reporter can hear. 12 (Pause.) 13 MR. STEICHENT: Does this work? 14

MS. WOOD: Yes. 15 MR. STEICHENT: Okay. All right, very good. 16 I left copies of my testimony on the 17 counter. Do you want me to get them for you? 18 MS. WOOD: No, just go ahead and proceed. 19 We'll be able to get it afterwards. 20 MR. STEICHENT: Okay, very good. 21 MS. WOOD: Thank you. 22 MR. STEICHENT: Good afternoon. My name is 23 Ted Steichent. I'm a policy advisor at the American 24 Petroleum Institute, which is a trade association that 2511

Heritage Reporting Corporation (202) 628-4888 represents about 400 members of companies involved in 1 all aspects of the oil and gas industry. 2 I'm here to testify on the proposed repeal 3 of the grandfathering provisions and termination of 4 the PM 10 surrogacy policy for implementation of the new 5 Source Review Program for PM 2.5 . Today I will address 6 the major points that we intend to include in our 7 written comments, which will be more detailed and 8 filed before the comment record closes. 9 EPA states in their proposed rule that it 10 will affect two categories of entities. First, it 11 will affect sources that have submitted and have 12 completed applications for PSD permits before the July 13 deadline but have not yet received the final PSD 14 permit, and second, it will affect sources that are 15 located in approved states that are implementing the 16

PM 10 surrogate policy. 17 EPA has stated that there is a very limited 18 number of facilities that fall into the first 19 category. However, given the number of SIP-approved 20 states and EPA backlog on approving the PSD revisions, 21 however, the potential reach of this action in those 22 areas is considerable and is likely to adversely 23 affect API member companies. 24 Moreover, the precedent that EPA would be 2512

Heritage Reporting Corporation (202) 628-4888 suggesting that it has such limited authority in this 1 circumstance to create reasonable transition policies 2 when a new NAAQS is developed could have significant 3 future adverse effects on our members. Today I will 4 focus on three key points: 5 One, the legal authority and appropriateness 6 of providing reasonable transition provisions when an 7 ambient air quality standard is issued or revised; 8 two, the effects the termination of that particular 9 transition policy on sources in SIP-approved states; 10 and three, the need for EPA to issue an approved test 11 method. 12 First, EPA states in their proposal that 13 recent case law suggests its authority to provide a 14 transition policy when new or revised ambient air 15 quality standards are issued is more limited than is 16 in fact the case. The proposal cites in large part to 17 cases that relate to using one pollutant as a 18 surrogate for another on a permanent basis under the 19 Section 112 provisions. However, these decisions are 20 not applicable to the temporary transition rule, such 21 as the PM 10 surrogacy policy. Congress's provision of 22 a three-year period to adopt SIPs under the Act 23 provides clear indication that the transition policies 24 are permissible in these circumstances. 2513

Heritage Reporting Corporation (202) 628-4888 From a policy perspective, it is critical 1 for both sources and states to be provided with a 2 transition period before the entirety of the PSD 3 requirements become applicable following the issuance 4 of a new NAAQS. EPA has always maintained such a 5 policy and for good reasons. For example, 6 significance levels, increment levels, significant 7 monitoring concentrations and test methods must be 8 established so that the regulated entities can ensure 9 compliance with the requirements. 10 Second, EPA recognizes in the proposal that 11 if the agency terminates the PM 10 surrogacy policy 12 before it approves significance levels and SIPs, 13 sources in those states could be subject to a zero-ton 14 significance level as compared to the 10-ton limit 15 that is applicable in the designated states now. A 16 zero significance level would create a massive burden 17 on state agencies and businesses. 18 This transition policy has been in effect in 19 state-approved states for PM 10 and has been used as a 20 surrogate for PM 2.5 in determining the applicability of 21 PSD. While many states have adopted a separate PM 2.5 22 significance level since the issuance of the 23 implementation rule, EPA has not acted on all of those 24 submittals. If EPA elects to terminate the transition 2514

Heritage Reporting Corporation (202) 628-4888 policy in SIP-approved states, it is important that 1 the agency first act on the significance levels in any 2 SIP submitted that has been received. 3 To shed light on the scope of this concern, 4 we request that EPA provide to the docket before the 5 close of comment period a list of states that have 6 submitted SIPs before approval that includes a PM 2.5 7 significance level but which EPA has yet to act. 8 And third, it is important that EPA complete 9 development of a commercial test method and issue a 10 final test method for fine particulates. Such a 11 method does not exist for all sources; in particular, 12 there is no commercial test method for measuring 13 condensables in wet stack such as refinery FCC use 14 with wet gas scrubber pollution-control devices. The 15 delay in issuing revised methods creates uncertainty 16 and instability in the process, and we urge EPA to 17 move quickly to issue one in a final form. 18 Additionally, we support EPA's proposal that 19 the repeal would not apply retroactively to permits 20 that have already been issued. It is critical to 21 provide certainty to the existing permit appeal 22 process and it is consistent with the requirements of 23 both state and federal rules that appeals be brought 24 by specified statutory deadlines, and I thank you for 2515

Heritage Reporting Corporation (202) 628-4888 your attention with my comments. 1 MS. WOOD: Thank you, Mr. Steichent, for 2 your comments. 3 MR. STEICHENT: Okay, there are no 4 questions? 5 MS. WOOD: Oh, are there any clarifying 6 questions? Yes, we don't have any I don't believe. 7 MR. STEICHENT: Okay. Thank you. 8 MS. WOOD: Dan, pipe in? Do you? 9 MR. deROECK: I just want to clarify that 10 the significance level he's talking about is the 11 significant emissions rate. 12 MS. WOOD: Okay. 13 MR. deROECK: I'm asking if -- 14 MS. WOOD: That's a question, Mr. Steichent. 15 Do you want to restate your question, Dan, please? 16 MR. deROECK: Is the significance level that 17 he's referring to the significant emissions rate in 18

PM 2.5 ? 19 MR. STEICHENT: In tons per year, yes. 20 MS. WOOD: Any other clarifying questions? 21 Okay, thank you, Mr. Steichent. 22 Our next speaker is Aaron Flynn from Hunton 23 & Williams, and let's try that mic, and if it's not 24 working properly, then we'll go to this, but maybe 2516

Heritage Reporting Corporation (202) 628-4888 we'll turn it around so it's a bit less awkward for 1 you. Let's see what that does. I don't know if they 2 turned it down or what. 3 Hey, Crystal, Crystal, can we turn this 4 around so it's a little bit less awkward? 5 MR. JORDAN: The podium here with the mic on 6 it? 7 (Pause.) 8 MS. WOOD: Okay. Thank you. 9 MR. FLYNN: Good afternoon. My name is 10 Aaron Flynn and I am -- 11 MS. WOOD: You might want to get closer yet 12 so we can hear you better. Thank you. 13 MR. FLYNN: Does that work better? 14 MS. WOOD: I think so. 15 MR. FLYNN: Okay, great. My name is Aaron 16 Flynn and I am an attorney with the law firm of Hunton 17 & Williams LLP, and I appreciate the opportunity to 18 speak with you today on behalf of my client, the 19 Utility Air Regulatory Group or UARG. 20 UARG is an ad hoc voluntary, not-for-profit 21 group of electric-generating companies and 22 organizations and national trade associations. UARG's 23 purpose is to participate collectively on behalf of 24 its members in EPA's rulemakings and other proceedings 2517

Heritage Reporting Corporation (202) 628-4888 under the Clean Air Act that affect the interests of 1 electric utilities and generators and to participate 2 in litigation arising from those proceedings. 3 UARG has participated extensively in EPA 4 rulemakings and litigation concerning implementation 5 of the National Ambient Air Quality Standards under 6 the Clean Air Act, including implementation of New 7 Source Review requirements for EPA's particulate 8 matters standards, which is the subject of today's 9 hearing. 10 For example, UARG participated in EPA's 11 rulemaking that resulted in the establishment in 2008 12 of new Source Review implementation rules for the fine 13 PM standards. UARG is also an intervenor in support 14 of EPA in pending litigation brought against the 15 agency by two environmental organizations that are 16 challenging certain provisions of those rules. 17 In addition, UARG submitted detailed 18 comments on EPA's rulemaking last year on a revision 19 to the 2008 rules to stay the effectiveness of the so20 called PM 2.5 permit grandfathering provision. That 21 rulemaking culminated in the issuance in September 22 2009 of a final rule staying the grandfathering 23 provision for nine months, an action designed to give 24 EPA time to conduct the present rulemaking to repeal 2518

Heritage Reporting Corporation (202) 628-4888 the provision all together. 1 Unfortunately, in adopting the final stay 2 rule in September, EPA overlooked comments, including 3 comments submitted by UARG that opposed the proposed 4 stay. In litigation filed in the U.S. Court of 5 Appeals for the D.C. Circuit by UARG and others 6 challenging the final stay rule, EPA has acknowledged 7 that those comments were timely submitted and that it 8 failed to meet its obligation to respond to them, and 9 although EPA has known of the comments for several 10 months, it still has issued no response and its motion 11 for a remand of the record is now pending before the 12

Court. 13 UARG's August 2009 comments on the proposed 14 stay show, among other things, that EPA lacks any 15 valid basis for concluding at this time that the 16 technical impediments to measuring and modeling PM 2.5 17 emissions that gave rise to the PM 10 surrogate policy 18 have in fact been resolved. Thus, in UARG's view, EPA 19 has no grounds for staying or repealing the 20 grandfathering provision or for terminating the PM 10 21 surrogate policy. 22 Nonetheless, EPA earlier this month signed 23 and on February 11 published its proposed rule to 24 repeal the grandfathering provision and to end early 2519

Heritage Reporting Corporation (202) 628-4888 the PM 10 surrogate policy. This proposed rule includes 1 no response to or acknowledgement of UARG's earlier 2 comments or other comments that opposed the stay. It 3 remains unclear at this point when EPA will respond to 4 those comments. 5 UARG wants today to take this opportunity to 6 urge EPA to respond to those earlier comments as soon 7 as possible and to allow UARG and other commentors 8 enough time to consider EPA's response to those 9 comments in developing our comments on the February 11 10 proposed rule revisions. Those earlier comments are 11 plainly relevant to EPA's proposal to revoke the PM 10 12 surrogate policy by repealing the grandfathering 13 provision and ending prematurely SIP-approved states' 14 longstanding authority to use the surrogate policy. 15 In its recent court filings, EPA has 16 suggested it believes the result of its 2009 17 rulemaking on the stay would not have been different 18 if EPA had considered and responded to those comments. 19 Thus EPA has already indicated that it has in effect 20 rejected those comments while conceding that it has 21 unlawfully failed to state its reasons for doing so. 22 This denies UARG information necessary for preparation 23 of full and meaningful comments on the February 11 24 proposed rule. 2520

Heritage Reporting Corporation (202) 628-4888 In light of the information that is 1 available at the time when written comments must be 2 submitted, however, UARG's comments on the February 11 3 proposal will in any event address the impediments to 4 removal of the PM 10 surrogate policy. 5 I would also like to note briefly a related 6 point that UARG's written comments may address in more 7 detail. The background section of EPA's February 11 8 proposal describes the reinterpretation of the PM 10 9 surrogate policy in light of certain caselaw that EPA 10 cites as reflecting a judicial policy on the use of 11 surrogates. In fact, EPA has relied on this new view 12 of the PM 10 surrogate policy recently in acting on 13 certain petitions to object to Title 5 permits. 14 This new view is that, as EPA puts it in the 15 preamble, permit applicants and permitting authorities 16 seeking to apply the 1997 PM 10 surrogate policy must 17 ensure that the record for each permit supports using 18

PM 10 as a surrogate for PM 2.5 under the circumstances. 19 Even if this novel view were reconcilable 20 with the PM 10 surrogate policy itself, which is a 21 debatable proposition at best, we do not see how that 22 view could be squared with the 2008 rules. Those 23 rules impose no requirement to justify use of PM 10 as a 24 surrogate under the circumstances of a particular case 2521

Heritage Reporting Corporation (202) 628-4888 either for permit applications subject to the 1 grandfathering provision or for permit applications in 2 SIP-approved states during the rule's three-year 3 transition period. 4 The 2008 rule's authorization for SIP5 approved states to use the PM 10 surrogate policy is 6 without qualification and without any obligation to 7 make or require case-by-case justifications, and that 8 remains in effect at this time, and EPA of course 9 remains legally bound to follow its own rules unless 10 and until it changes them through proper and lawful 11 procedures in a way that complies with the 12 requirements of the Clean Air Act. 13 Thank you for your attention and thank you 14 in advance for considering these comments, and I'm 15 happy to respond to any questions. 16 MS. WOOD: Thank you, Mr. Flynn. 17 Do you have any clarifying questions? Dan, 18 anything? 19 MR. deROECK: No, I have none. 20 MS. WOOD: Okay, thank you so much. 21 MR. FLYNN: Thank you. 22 MS. WOOD: Our next speaker is Craig Segall 23 from the Sierra Club. 24 MR. SEGALL: Hi. Thanks for having us. My 2522

Heritage Reporting Corporation (202) 628-4888 name is Craig Segall. I'm an attorney with the Sierra 1 Club Law Program. We work a lot with our Big Picture 2 Campaign, which is dedicated to working with EPA on 3 rulemakings affecting clean air and climate. 4 On behalf of the Sierra Club's 1.3 million 5 members and supporters we are very glad to see you 6 taking this step today. It's long overdue and 7 desperately needed. On behalf of the many of our 8 members who suffer from respiratory ailments and heart 9 problems associated with PM 2.5 pollution, we're deeply 10 appreciative. 11 I have a few points to make regarding the 12 surrogate policy generally and grandfathering and 13 EPA's obligations here. 14 I think the first thing to say is that in 15 many ways this is long overdue. Under the Clean Air 16 Act, the states had three years after the initial 17 promulgation of the PM 2.5 policies in 1997 to submit 18 compliance steps, so at minimum this should have been 19 done by 2000. When the new NAAQS came out in 2005, it 20 should have been done by 2008, and it was in fact 21 required to have been done then. It's also true under 22 the act that EPA has no discretion to waive or 23 grandfather any permits at all under the federal 24 program. So it's about time to see that change. 2523

Heritage Reporting Corporation (202) 628-4888 As to the particular surrogate policy 1 itself, it's illegal for several reasons, and I think 2 it's time to see it go. The first core issue here is 3 under a long established D.C. Circuit law, National 4 Lime Association , among other cases, surrogates can 5 only be used if they can reasonably be used. This 6 surrogate policy can't reasonably be used, in fact it 7 never could be for both technical and straight legal 8

reasons. 9 On the technical side, it's been clear 10 really since 1997 that PM 2.5 and PM 10 are not surrogates 11 for each other. PM 2.5 behaves differently both with 12 regard to health impacts and emission impacts and with 13 regard to control technologies used to control it. 14 Moreover, if there was any excuse ever on 15 measurement grounds as was raised in the 1997 NAAQS 16 and the SIP's memo, that's long passed and EPA 17 acknowledges it's long passed, so that also doesn't 18 justify it, but more fundamentally the PM 2.5 NAAQS were 19 adopted specifically because the PM 10 NAAQS weren't 20 getting the job done. They can't substitute for each 21 other because they serve different purposes, address 22 different pollutants and as a legal matter therefore 23 can't be interchangeable. 24 Moreover, and I think this is just core 2524

Heritage Reporting Corporation (202) 628-4888 intuition, there is no annual NAAQS for PM 10 . It's 1 baffling that compliance with the PM 10 , you know, the 2 24-hour NAAQS could possibly be a surrogate for an 3 annual PM 2.5 NAAQS. 4 So we just see no justification for this 5 policy to continue, and moreover, no legal possibility 6 of allowing states to continue with this policy, so 7 the portion of the notice that suggests that there may 8 be implementation issues here, we think, is really 9 misplaced. To the extent that states do have problems 10 in funding this, EPA's remedy is clear, which is to 11 take over the program and administer it federally. 12 I want to speak a bit in part because UARG's 13 comments raised this as to EPA's more recent efforts 14 to implement the surrogate policy and deal with 15 whether or not this is a reasonable approach. We're 16 most familiar with this through the Title 5 objection 17 to the LG Trimble plant, which issued last year, where 18 EPA objected on those grounds, and I think it's worth 19 saying that, even in the wake of that objection, the 20 states still for the most part aren't getting the job 21 done. There really is a core need for EPA leadership 22 on this issue. 23 I've brought with me a series of comment 24 documents and permit documents to demonstrate this, 2525

Heritage Reporting Corporation (202) 628-4888 and I'll just briefly note what they are and then hand 1 them over for the record. 2 In Medicine Bow, which is a coal-liquid 3 plant in Wyoming, the Wyoming Environmental Council 4 continues to insist that it simply does not have to 5 demonstrate any sort of reasonableness compliance 6 under the PM 10 surrogate policy. It just refuses to go 7 forward with it. 8 The same is true in Mississippi for the 9 Kenford plant, which is I believe an IGCC coal plant. 10 Again, we are arguing with them over whether or not 11

PM 10 can be a surrogate for PM 2.5 . They again ignore 12 Trimble, discount it as irrelevant, and discount the 13 National Lime case as irrelevant. 14 The same thing is true, fairly remarkably, 15 in the Trimble case. A revised permit has come out. 16 We submitted comments, and in response to comments, 17 the Kentucky Division of Air Quality at great length 18 explains that it simply is not bound, any 19 reasonableness determination can carry on using PM 10 as 20 fact analysis for these plants. 21 So even were the surrogate policy ever 22 acceptable, it's clearly not been implemented in any 23 way that even bears an item of resemblance to the core 24 reasonableness dictates that EPA has tried to 2526

Heritage Reporting Corporation (202) 628-4888 implement through the Title 5 program. We think it 1 needs to end immediately. We think it's a core public 2 health imperative, and we want to see you do it. 3 And frankly, it's past time. So thank you. 4 I'll pass these over. Appreciate the time. 5 MS. WOOD: Thank you, Mr. Segall. Any 6 clarifying questions? 7 Next we have Barbara Gottlieb from 8 Physicians for Social Responsibility. 9 MS. GOTTLIEB: Hello. Good afternoon. I'm 10 Barbara Gottlieb, Deputy Director for Environment and 11 Health at Physicians for Social Responsibility. 12 We're a national organization representing 13 50,000 health professionals, concerned citizens and 14 activists, with 31 chapters and over 60 medical 15 student chapters across the United States. We 16 appreciate the opportunity to present our comments on 17 the health impacts of particulate matter, especially 18 the distinction between PM 2.5 and PM 10 . I'm also 19 delighted to be able to represent the health 20 profession here today. I think I may be the only non21 lawyer speaking, so thank you again. 22 Particulate matter refers to extremely small 23 airborne particles whose major sources are from coal 24 combustion, traffic, and residual oil combustion. 2527

Heritage Reporting Corporation (202) 628-4888 Particulates were categorized as coarse particulate or 1

PM 10 with a diameter of more than 2.5 up to 10 microns, 2 and as fine particulate, or PM 2.5 with a diameter less 3 than 2.5 microns. By comparison, the human hair is 4 about 70 microns in diameter. 5 EPA issued National Ambient Air Quality 6 Standards for PM 2.5 in 1997 and strengthened them in 7 2006. Unfortunately, from PSR's perspective, EPA 8 undermined its own rules by permitting the use of 9 coarse particulate matter, or PM 10 , as a surrogate for 10

PM 2.5 . We would submit that that substitution is 11 entirely inappropriate for protecting human health. 12 Fine particulate matter--not coarse 13 particulates--must be the form that is monitored due 14 to the differences in the ways and the extent to which 15 the smaller 2.5 particulates enter the human body. 16 We know already that PM 2.5 impacts all the 17 major body organ systems, the respiratory, the 18 cardiovascular and the neurological, and is associated 19 with illnesses and premature death. In fact, the 20 association between daily concentrations of airborne 21

PM 2.5 particles and daily deaths has been long known and 22 long scientifically documented. As far back as 1996, 23 Schwartz et al. published findings showing that daily 24 mortality was associated specifically with fine 2528

Heritage Reporting Corporation (202) 628-4888 particles, with 2.5 and not with coarse particulate 1

matter. 2 In order to understand why it's urgent to 3 monitor and regulate PM 2.5, we need to appreciate the 4 mechanism by which it does so much more harm than PM 10 . 5 Small particles of particulate matter, specifically 6 those that are 2.5 microns or less in diameter, travel 7 deep into the lungs, reaching the alveoli. I think we 8 all know from our familiarity with lung cancer that as 9 toxic particles lodge in the lungs they can cause 10 cancer, and that is in fact the case with PM 2.5 . 11 However, the threat from PM 2.5 goes well 12 beyond that. These particles, the 2.5 particles, are 13 so tiny that once in the alveoli they can enter 14 directly into the vascular compartment and travel 15 through the bloodstream to other body organs. As a 16 result, not only the respiratory system but also the 17 cardiovascular system and the neurological system can 18 be subject to direct damage. 19 I would like to mention just briefly some of 20

PM 2.5 's impact on the human body. In the respiratory 21 system, PM 2.5 adversely affects lung development. It 22 can stunt lung development, leading to reduced lung 23 function as measured by forced expiatory volume. This 24 reduction in FEV, which is a major indicator of lung 2529

Heritage Reporting Corporation (202) 628-4888 function, often precedes the subsequent development of 1 other pulmonary diseases. 2

PM 2.5 is associated with chronic obstructive 3 pulmonary disease. In fact, in a study of 4 hospitalization rates among Medicare enrollees, a 10 5 micrograms per cubic meter increase in the 6 concentration of PM 2.5 particles was associated with a 7 same day increase of 2.5 percent in hospital 8 admissions for COPD. Exposure to PM is also 9 correlated with the development of and mortality from 10 lung cancer, as I mentioned earlier. It's the leading 11 cancer killer in men and women. 12 In the neurological system, fine particles 13 are associated with cerebrovascular disease or stroke. 14 Again, in a study of Medicare patients, ambient levels 15 of PM 2.5 have been correlated with hospital admission 16 rates for cerebrovascular disease. PM 2.5 has also been 17 associated with an increase in the risk of and death 18 from cerebrovascular events among postmenopausal 19

women. 20 In the cardiovascular system, the 21 concentration of PM 2.5 in ambient air increases the 22 probability of hospital admission for acute myocardial 23 infarction, known to most of us as heart attack, 24 ischemic heart disease and congestive heart failure. 2530

Heritage Reporting Corporation (202) 628-4888 Recent research suggests that PM 2.5 , along with other 1 pollutants, is associated with hospital admissions for 2 potentially fatal cardiac rhythm disturbances. 3 The increases of rate in these concerns may 4 appear small, they're often on the order of about 1 5 percent, however it's the large number of cases, 6 especially of heart disease, that translates these 7 results into a very large effect when measured in 8 terms of total hospital admissions, patient morbidity, 9 patient mortality and in addition the cost of health 10 care and lost opportunities. 11 In short, the danger to health that is posed 12 specifically by PM 2.5 is widespread, severe and costly. 13 Ambient concentrations of PM 2.5 must be monitored and 14 the exposure to these dangerous airborne pollutants 15 must be reduced. We have seen in the past that 16 reductions in PM 2.5 concentration, as has been witnessed 17 in 51 metropolitan areas, were correlated with 18 significant increases in life expectancy. 19 Additional air quality improvements in 20 regard to fine particulate pollution are an important 21 aspect of improving respiratory, cardiovascular and 22 neurological health for the population at large. 23 Given the EPA's responsibility to protect human health 24 and well-being, we respectfully request that the EPA 2531

Heritage Reporting Corporation (202) 628-4888 repeal the grandfathering provision for PM 2.5 contained 1 in the federal program and the PM 10 surrogate policy in 2 the relevant states. 3 Thank you very much. 4 MS. WOOD: Thank you, Ms. Gottlieb. Are 5 there any clarifying questions? Thank you so much for 6 your comments. 7 Our next speaker is Molly Neel with Southern 8 Utah Wilderness Alliance. 9 MS. NEEL: Hello. I'm Molly Neel here on 10 behalf of the Southern Utah Wilderness Alliance, and 11 we are a conservation group focused on protecting the 12 canyon lands at the heart of the Colorado Plateau 13 there. So, I'm going to discuss why we think that the 14 surrogate policy needs to be rescinded and the effects 15 that is having on the environment there and a little 16 case study. 17 We believe that the EPA should rescind its 18 surrogate policy. This policy has led to 19 misunderstanding on the part of another federal 20 agency, the Bureau of Land Management or the BLM. 21 Unfortunately, the BLM has relied on the surrogate 22 policy to authorize pollution-generating activities on 23 public lands that ignore the impacts of PM 2.5 --even 24 where monitored data have shown levels of concern to 2532

Heritage Reporting Corporation (202) 628-4888 human health and the environment. 1 This practical outcome demonstrates that 2 EPA's surrogate policy needs to be rescinded. The BLM 3 manages significant portions of public land in the 4 western United States. BLM lands are managed for 5 multiple uses, which means that the BLM often approves 6 large-scale gas and oil development on public lands, 7 as well as extensive networks of dirt roads open to 8 vehicular traffic. 9 As part of this approval process, the BLM 10 must evaluate the impacts of these projects on air 11 quality in relation to the federal air quality 12 standards such as the National Ambient Air Quality 13 Standards or NAAQS and increment limits for the 14 prevention of significant deterioration. 15 Oil and gas projects on BLM lands can 16 produce significant amounts of pollution, including 17 particulate matter. Despite this fact, the BLM has 18 prepared analyses of large oil and gas development 19 projects that have only evaluated PM 2.5 through the 20 proxy of PM 10 . This justification for this sort of 21 modeling is apparently derived from or encouraged by 22 the surrogate policy. The BLM seems to feel that 23 because EPA does not require the direct consideration 24 of PM 2.5 under its New Source Review requirements that 2533

Heritage Reporting Corporation (202) 628-4888 the BLM is excused from modeling this pollutant when 1 evaluating various welling projects on public lands. 2 An example from the Uintah Basin of Utah 3 demonstrates why such proxy modeling can be 4 inappropriate and harmful. The Uintah Basin is a high 5 elevation basin surrounded by a higher elevation 6 plateau to the south and Utah's highest mountain range 7 to the north. It is also the primary oil and gas8 producing region of the state. The Uintah Basin is 9 subject to wintertime temperature inversions, which 10 allow unhealthy levels of PM 2.5 to build. 11 In fact, during the last three winters 12 monitors have recorded significant exceedances of 13 NAAQS 24-hour average maximum value for PM 2.5 . Between 14 January and February of 2007, a monitor from the Utah 15 Division of Air Quality recorded five different values 16 exceeding the NAAQS 24-hour average maximum of 35 17 micrograms per cubic meter for PM 2.5 . In 2008, 18 monitoring was conducted in the Uintah Basin only 19 during February and March, yet one exceedance was 20 still observed. In 2009, the Utah Division of Air 21 Quality operated two monitors from January 21, 2009, 22 through March 5, 2009, that observed four exceedances 23 in one location of the Uintah Basin and three 24 exceedances in another location. 2534

Heritage Reporting Corporation (202) 628-4888 Clearly, the Uintah Basin is a place where 1

PM 2.5 pollution should be a significant concern, likely 2 because of secondary particulate formation. However, 3 it is not so clear that the Uintah Basin is also 4 experiencing unhealthy levels of PM 10 pollution in 5 relation to NAAQS. For this reason, the BLM should 6 model PM 2.5 independently while accounting for secondary 7 formation and not simply express this pollution as a 8 ratio of PM 10 . 9 These sorts of efforts should be replicated 10 on BLM Lands in other regions, too. If the EPA were 11 to rescind its surrogate policy, the BLM would 12 probably shy away from these inappropriate practices 13 throughout all of the West. In addition to the other 14 rationales people have expressed for rescinding the 15 surrogate policy, the BLM's misguided reliance on this 16 policy for inadequate modeling should also spur the 17 EPA to action. Please rescind the surrogate policy. 18 Thank you. 19 MS. WOOD: Thank you, Ms. Neel. Any 20 clarifying questions? 21 Our next speaker is David Baron with 22 Earthjustice. 23 MR. BARON: Thank you. My name is David 24 Baron. I'm managing attorney of the Washington, D.C. 2535

Heritage Reporting Corporation (202) 628-4888 office of Earthjustice. We are counsel to Natural 1 Resources Defense Council and Sierra Club in the 2 petition for administrative reconsideration that led 3 to this rulemaking. 4 We strongly support EPA's proposal to put an 5 immediate end to the surrogate policy. That policy is 6 illegal and irrational and, by eliminating it, EPA 7 will not only give a breath of fresh air to all of us 8 but correct a huge injustice that's been allowed to 9 continue for far too long. 10 Almost 13 years ago EPA found that the PM 10 11 standard was not sufficient to protect the health and 12 welfare of our citizens and that an additional 13 standard to limit fine particles was necessary to 14 prevent tens of thousands of premature deaths and 15 other health effects every year. And, since then, the 16 evidence has become even stronger. 17 In 2006, EPA based on that evidence 18 strengthened the PM 2.5 standard even further, and even 19 then the D.C. Circuit, in a challenge brought by the 20 American Lung Association and others, determined that 21 the Agency may well not have gone far enough in 22 strengthening the PM 2.5 standard. 23 Yet, under the surrogate policy the states 24 and EPA have allowed huge new factories and power 2536

Heritage Reporting Corporation (202) 628-4888 plants to belch out tons of fine particle pollution 1 without applying the best available control technology 2 to limit that pollution and without even looking at 3 the impacts of that pollution on compliance with fine 4 particle health standards. 5 It is nothing less than a travesty that 6 today, 13 years after it was determined that the PM 10 7 standard was not sufficient to protect our lungs and 8 our health, we are still allowing huge new factories 9 and power plants to be built without even limiting the 10 impact of that pollution to ensure compliance with 11 those standards. 12 And, in response to the earlier comment from 13 the American Petroleum Institute that we need a 14 transition period, we have had 13 years, 13 years to 15 transition to this standard. It should not be a 16 surprise to anyone anywhere that the time has long 17 since passed for us to be requiring all of these 18 industries to comply with standards that we all know 19 are necessary to protect human health. 20 So EPA is absolutely right to propose 21 getting rid of this surrogate policy, and it's legally 22 required to do so. The Clean Air Act requires each 23 new major PSD source to show that it will not cause or 24 contribute to violation of any National Ambient Air 2537

Heritage Reporting Corporation (202) 628-4888 Quality Standard, and that it will apply the Best 1 Available Control Technology to each, "each" pollutant 2 subject to regulation under the act. 3 Furthermore, there is no technical support 4 or rational basis for treating PM 10 as a surrogate for 5

PM 2.5 . There isn't now, and there never has been; it 6 was never presented in the record and our industry 7 friends act as though it should be a given when in 8 fact it was never justified, and it is not justified 9 today. 10 It's particularly outlandish to suggest that 11 a 24-hour PM 10 standard should somehow be a surrogate 12 for compliance with an annual PM 2.5 standard. The 13 controls aren't the same, the pollutants aren't 14 identical, the nonattainment areas, the areas that 15 violate these standards are not even congruent. 16 They're areas that violate one but not the other. The 17 only rationale that EPA ever gave for this policy had 18 to do with technical issues on monitoring and 19 modeling, both of which have been resolved. We now 20 have hundreds of PM fine monitors all over the 21 country, we know how to model for PM 10 impacts or PM 2.5 22 impacts, so there is no excuse to continue this policy 23 and it needs to be put to an end immediately. 24 Now, EPA has asked for comment on the 2538

Heritage Reporting Corporation (202) 628-4888 potential implementation difficulties of immediately 1 revoking the surrogate policy in SIP-approved states. 2 With all due respect, that simply isn't a relevant 3 inquiry. There is no legal authority to apply this 4 policy anywhere and EPA doesn't have the option of 5 allowing its continued use based on implementation 6 concerns. If SIP-approved states don't feel they can 7 implement this PSD program legally, they can let EPA 8 do it until they are ready to do so. 9 The surrogate policy allows people to be 10 exposed to dangerous and sometimes life-threatening 11 levels of pollution from new factories and power 12 plants. It needs to be put to an end. We applaud 13 EPA's proposal to do so. 14 Thank you for the opportunity to speak. 15 MS. WOOD: Thank you, Mr. Baron, for your 16 comments. Any clarifying questions? 17 Our last registered speaker is Kate Pollard 18 from the Sierra Club. 19 Mr. Segall, do you know if she is going to 20

come? 21 Okay. Ms. Pollard isn't here. I know we 22 remain here for an hour after, so if she shows up 23 late, we'll be able to take her statement. 24 Well, that concludes the list of registered 2539

Heritage Reporting Corporation (202) 628-4888 speakers that we have, and let me just ask Scott and 1 Dan if there are any remaining clarifying questions. 2 Otherwise, we can adjourn for now and see if anybody 3 else shows up within the next hour. 4 Well, I thank you all very much for taking 5 the time to come to us today and share your thoughts 6 about this action that we are considering taking. The 7 comments were very thoughtful. We're very 8 appreciative of your time and effort in presenting 9 those to us. So thank you. 10 (Whereupon, a short recess was taken.) 11 MS. WOOD: We are reconvening our public 12 hearing on the PM 2.5 grandfathering provisions, and our 13 next speaker is Kate Pollard from Sierra Club. Thank 14

you. 15 MS. POLLARD: Thank you very much. 16 I know you have heard from a couple of my 17 colleagues today, but I wanted to make sure and come 18 in. I am the associate regional representative for 19 the Beyond Coal Campaign with the Sierra Club, and I 20 work specifically with the State of Virginia, and I 21 work on a daily basis with many area residents and 22 citizens who are very concerned about these issues but 23 weren't able to be here today, so I just wanted to 24 come and contribute. 2540

Heritage Reporting Corporation (202) 628-4888 We have approximately 40,000 Sierra Club 1 members in the State of Virginia and numerous partners 2 and allied groups we work with around the state who 3 again just couldn't be here to speak for themselves so 4 I wanted to pass along our concerns and thoughts. 5 Basically, allowing big polluters to use the 6 larger particles or PM 10 as a surrogate for PM 2.5 we just 7 feel does not necessarily effectively control the tiny 8

PM 2.5 particles, and PM 2.5 can behave very differently 9 from PM 10 , and controls for the larger material may not 10 always control the small particles. I know you all 11 have done a lot of research on this and so I won't go 12 into any of the details, but area residents are aware 13 of the distinctions and concerned about the health 14 effects. So, as such, we feel it's really crucial 15 that use of PM 10 as a surrogate be evaluated on a case16 by-case basis and determined if appropriate for each 17 situation. 18 The fine particles produced from burning 19 fossil fuels and other industrial processes can make 20 their way deep into our bodies, causing major 21 illnesses. Even short-term exposure can trigger heart 22 attacks, cardiovascular disease and lung problems. 23 Many of our members have experienced health issues and 24 feel that there is a relationship. You know, 2541

Heritage Reporting Corporation (202) 628-4888 obviously it's of significant concern since even a 1 short exposure can have lasting effects. 2 Long-term exposure is linked to premature 3 deaths and chronic respiratory disease in children, 4 and coal-fired power plants, in particular, we 5 understand are a major source of PM 2.5 and we'd like to 6 continue to look into that and manage and control it 7 as much as possible. We agree that cleaning up PM 2.5 8 could certainly save tens of billions, if not more, in 9 health costs. 10 It's already been 13 years since the first 11

PM 2.5 standards went into force, and so we strongly 12 support EPA's decision to finally end the antiquated 13 policies and protect our public health to the fullest 14

extent. 15 MS. WOOD: Thank you, Ms. Pollard. Any 16 clarifying questions? 17 MS. POLLARD: Thank you. 18 MS. WOOD: Thanks so much for your time 19 today. We appreciate it. 20 MS. POLLARD: Very much appreciate it. 21 MS. WOOD: Okay. We are now going to go 22 back into recess and remain here until I guess 3 p.m., 23 and at that point we will adjourn if there are no 24 speakers here. Thank you. 2542

Heritage Reporting Corporation (202) 628-4888 (Whereupon, a short recess was taken.) 1 MS. WOOD: This is Anna Marie Wood of EPA. 2 It is now 3 p.m. and we have not heard from any 3 additional speakers on the proposal to repeal the 4 grandfather provision for PM 2.5 and end the PM 10 5 surrogate policy. So, with that, we are concluding 6 the public hearing for today. Thank you very much. 7 (Whereupon, at 3:00 p.m., the hearing for 8 the above-entitled matter was concluded.) 9 // 10 // 11 // 12 // 13 // 14 // 15 // 16 // 17 // 18 // 19 // 20 // 21 // 22 // 23 // 24 // 2543

Heritage Reporting Corporation (202) 628-4888 43

REPORTER'S CERTIFICATE

DOCKET NO.: (None.) CASE TITLE: Public Hearing HEARING DATE: February 26, 2010 LOCATION: Washington, D.C.

I hereby certify that the proceedings and evidence are contained fully and accurately on the tapes and notes reported by me at the hearing in the above case before the Environmental Protection Agency.

Date: February 26, 2010

Christina Chesley Official Reporter Heritage Reporting Corporation Suite 600 1220 L Street, N.W. Washington, D.C. 20005-4018