Secretary’s Order No. 2009-A-0032

Re: APPROVAL OF FINAL REGULATION AMENDING 7 DE ADMIN.

CODE 1146 (ELECTRIC GENERATING UNIT (EGU) MULTIPOLLUTANT REGULATION TABLE 5-1)

Date of Issuance: September 1, 2009

Effective Date: October 10, 2009

Under the authority vested in the Secretary of the Department of Natural

Resources and Environmental Control (Department), the following findings, reasons and

conclusions are entered as an Order of the Secretary in the above-referenced matter.

Procedural History

On February 22, 2009, the Department’s issued Start Action Notice #2009-04,

which approved Division of Air and Waste Management, Air Quality ManagementSection’s (AQMS) request to begin the formal regulatory development process to amend

7 DE Admin. Code Regulation 1146 (Regulation). AQMS prepared a proposed

regulation revising Table 5-1 (Annual S02 Mass Emissions Limits) to increase the mass

annual limits for Conectiv Delmarva Generation, Inc.’s (Conectiv) electric generation

station’s unit 5 (Facility) located in Edge Moor, New Castle County (Facility). The

revision would increase the sulfur dioxide (SO2) annual limit from 2,427 tons to 4,600

tons.

The Department had the proposed regulation published in the May 1, 2009

Delaware Register of Regulations and notice was published in newspapers of general

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AQMS explained in detail the operational history and basis for the proposed amendment,

namely, that the proposed amendment should not result in any actual increase in the

Facility’s air emissions of S02 under normal operating conditions. In the HearingOfficer’s Report, dated August 25, 2009, (Report) and attached hereto as Appendix A,

Mr. Haynes recommends the record include AQMS’ TRM, the transcript and the hearing

exhibits. Mr. Haynes reviewed the public comments on the proposed amendment, which

raised certain questions that were answered by the TRM. Mr. Haynes found amplesupport in the recommended record for the proposed amendment. He recommends

approval of the proposed amendment in Appendix B to the Report, which is the same

proposed amendment as published in the May 1, 2009 Delaware Register ofRegulations.

Findings

The Report recommends that the proposed regulation be adopted as reasonable

and adequately supported on the recommended record developed. I agree with the Report

and its recommendations and incorporate it as part of this Order. The reason for the

proposed amendment was the resolution of litigation that challenged Regulation 1146,

which imposed significant emissions limits on Delaware’s largest sources of stationaryair pollutants, namely, large electric generating units. Thus, resolving the challenge to

Regulation 1146 is an important benefit to Delaware because when the Department

approved Regulation 1146 it cited the substantial pollution reductions, including

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supporting the proposed amendment, which were the settlement of litigation between

Conectiv and the Department that resolved Conectiv’s appeal of the Department’s

Regulation 1146, as adopted by Secretary’s Order No. 2006-A-0056 (November 15,2006). Moreover, the Department’s agreed to the settlement because its experts

concluded that the proposed amendment would not result in any more emissions being

released than under the current S02 limit that is subject to the amendment. The experts

based their opinion on an analysis ofthe Facility’s operating history and the economics ofusing low sulfur fuel oil to generate electricity.

I agree with the Department’s experts and find that the proposed regulation is

well-supported and reflects the terms of the reasonable settlement to resolve Conectiv’s

litigation of Regulation 1146. Regulation 1146 was an important action the Department

took to reduce air emissions of harmful pollutants from Delaware’s largest stationary

sources of air pollution, namely, large electric generating units. The settlement with

Conectiv resolved the uncertainty that the Department face in the appeal that could have

resulted in having Regulation 1146 possibly overturned by the court. I also find that the

Department’s experts in AQMS have independently determined that the proposed

revision under normal operating condition will not result in more S02 air emissions to

occur. This forecast in little actual change in air emissions is reasonably based upon the

experts’ analysis of the Facility’s operating history and the economics of burning low

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Regulation 1146 requires the Facility to bum low (.5%) sulfur residual oil, which

will further protect the environment and impose operating restrictions on the Facility’s

use based upon economics versus other fuels used to generate electricity. The record also

has information on the other terms of the settlement that support the amendment as

beneficial to the environment, such as advancing the date for lower mercury emissions

from the Facility. The Department’s failure to approve of the proposed amendment could

constitute possible grounds for Conectiv to claim that the Department was not complying

with the terms of the December 2008 settlement. The Department considers that thesettlement is reasonable to resolve the litigation on mutually acceptable terms that will

result in little risk of S02 emissions occurring more than in the current levels. Thus, I

find that the proposed regulation should be adopted as reasonable and well-supported by

the technical analysis in the record.

Conclusions

For the above-stated reasons, I conclude that the Department should approve as a

final regulation the proposed amendment to Regulation 1146 to reflect the terms of the

settlement ofthe litigation ofRegulation 1146. Consequently, the following is ordered:

1. The Department, acting through this Order of the Secretary, hereby

approves as a final regulation the proposed regulation that amends Table 5-1 and the

record developed to support it, as described in the Report; and

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Collin P. O’Mara,

Secretary

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