### BEFORE THE ADMINISTRATOR UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

) IN THE MATTER

### OF ) ) CASH CREEK GENERATION, LLC ) 

### ) PETITION No. IV-2010-4 HENDERSON COUNTY, KENTUCKY ) 

### TITLE V/PSD AIR QUALITY PERMIT ) No. V-09-006 ) 

### ) ISSUED BY THE KENTUCKY DIVISION ) 

### FORAIR QUALITY ) )



### ORDERGRANTING IN PART AND DENYING IN PART PETITIONFOR OBJECTION TO PERMIT

On June 18, 2010, the United States Environmental Protection Agency (EPA) received a petition from the Environmental Law & 

### Policy Center onbehalfofSierra Club, Ursuline Sisters ofMount Saint Joseph, and Valley Watch (Petitioners) pursuantto section 505(b)(2) ofthe Clean AirAct ("CAA'' or "Act"), 42 United States Code (U.S.C.) § 766Id(bX2). The Petitionrequests that the EPA objectto Permit No. V-09-006 issued bythe Kentucky Division for Air Quality (KDAQ) on May 5, 2010, to Cash Creek Generation, LLC (Cash Creek) for the proposed Cash Creek Generation Station, Source I.D. No. 21-101-00134. PermitNo. V-09-006 is a merged CAA Prevention ofSignificant Deterioration (PSD) constructionpermit and CAAtitle V operating permit issued pursuant to Kentucky's Administrative Regulations (KAR) at 401 KAR 52:020 (title V regulations) and 51:017 (PSD regulations). Thepermit is for Cash Creek Generating Station, a new coal gasification facility and co-located natural gas combined cycle plant to be located southwest ofOwensboro, Kentucky, in Henderson County.

KDAQ previously issued a permit to Cash Creek Generation, LLC to construct a coal integrated gasification combined cycle (IGCC) electric generation unit at the same location asthe proposed facility addressed by PermitNo. V-09-006. 

### In an Order dated December 15, 2009, EPA granted in part and denied in part two petitions requesting that the EPA object to that previously issued permit (PermitNo. V-07-17). Cash Creek never constructed the facility addressed by PermitNo. V-07-017. Upon KDAQ's issuance of the permit addressed bythis Order (Permit No. V-09-006), Cash Creek's authority to construct under previously issued PermitNo. V-07-17 was deemednull and void and the permit was terminated.

This Order contains EPA's response to Petitioners' request that EPA object to the permit onthe basis that: (1) 

### KDAQ failed to provide an opportunity for meaningful public participation, (2) KDAQ's calculation ofthe proposed facility's potential to emitvolatile organic compounds (VOC), hydrogen

1(H2S) and hazardous air pollutants (HAPs) failed to account for full emissions from active flaring, (3) the permit's source-wide VOC emission limit is not enforceable as a practical matter, (4) the best available control technology (BACT) limits applicable to the flare during startup and steady-state operations are not supported by a proper BACT analysis, (5) the BACT limits applicable to the flare do not cover shutdown and malfunction periods, (6) the applicant incorrectly estimated fugitive emissions from equipment leaks, (7) KDAQ omitted numerous control options and relied on a faulty costeffectiveness analysis in selecting BACT for equipment leaks, (8) KDAQ improperly determined that the source is minor for HAPs, (9) Cash Creek's calculation ofparticulate matter emissions from material handling assumed an unreasonably high control efficiency for wet suppression control methods and used

an unreasonably low silt loading factor, (1 0) permit terms and conditions governing material handling

are unenforceably vague and do not equate to the assumed control efficiencies, and (11) Cash Creek failed to perform an adequate ozone impacts analysis.

Based on a review of the Petition and other relevant materials, including the Cash Creek permit and permit record, and relevant statutory and regulatory authorities, I grant in part and deny in part the Petition requesting that EPA object to the Cash Creek permit. I grant in whole or in part on issues (1), (2), (3), (5), (9) and (10) above.

I. 

### STATUTORY AND REGULATORY FRAMEWORK

Section 502(d)(l) ofthe CAA, 42 U.S.C. § 766la(d)(l), calls upon each state to develop and submit to EPA an operating permit programintended to meetthe requirements oftitleV ofthe CAA. The Commonwealth ofKentucky originally submitted its title V program governing the issuance of operating permits in 1993, and EPA granted full approval on October 31, 2001. 66FedReg. 54953. The program is now incorporated into Kentucky's Administrative Regulations at 401 KAR 52:020. All major stationary sources ofair pollution and certain other sources are required to apply for title V operating permitsthat include emission limitations and other conditions as necessary to assure compliance with applicable requirements ofthe CAA, including the requirements ofthe applicable State Implementation Plan (SIP). CAA §§ 502(a) and 504(a), 42 U.S.C. §§ 766la(a) and 766Ic(a).

The title V operating permit program does not generally impose new substantive air quality control requirements (referred to as "applicable requirements"), but does require permits to contain monitoring, recordkeeping, reporting and other conditions to assure sources' compliance with applicable requirements. 57 Fed. Reg. 32250,32251 (July 21, 1992). One purpose ofthetitle V program is to "enable the source, States, EPA, and the public to understand better the requirements to which the

source is subject, and whether the source is meeting those requirements." 

### !d. Thus, the title V operating permit program is a vehicle for ensuring that air quality control requirements are appropriately applied to facility emission units and for assuring compliance with such requirements.

Applicable requirements for a new major stationary source2 includethe requirementto obtain a preconstruction permit that complies with applicable new source review requirements. Part C ofthe CAA establishes the PSD program, which is the preconstruction review program that applies to areas of

1 The CommonwealthofKentucky Environmental and Public Protection Cabinet submitted the title V program and oversees the Kentucky Division for Air Quality (KDAQ), which isthepermitting authority for title V and PSD permits in Kentucky. 2 The proposed Cash Creek facility is a "major stationary source" consistent with the definition ofthat term in 401 KAR 51:001 

### § 1(118). 

### 2the country, such as Henderson County, that are designated as attainment orunclassifiable for the National Ambient Air Quality Standards (NAAQS). 

### See CAA 

### §§ 160-169, 42 U.S.C. 

### §§ 7470-7479. New Source Review, or "'NSR," is the term used to describe both the PSD program as well as the nonattainmentNSRprogram (applicableto areas that are designated as nonattairunent with the NAAQS). In attainment areas (such as Henderson County), a major stationary source may not begin construction or undertake a modification without first obtaining a PSD permit. CAA 

### § 165(a)(I), 42 U.S.C. 

### § 7475(a)(l). The PSD program analysis must address two primary and fundamental elements (among otherrequirements) before the permitting authority may issue a permit: ( 1) an evaluation ofthe impact ofthe proposed new ormodified major stationary source on ambient air quality in the area, and (2) an analysis ensuring that the proposed facility is subjectto BACT for eachpollutant subject to regulation under the PSD program. CAA 

### § 165(a)(3), (4), 42 U.S.C. § 7475(a)(3), (4); 

### see also 401 KAR 51:017 (Kentucky's PSD program).

EPA has promulgated two largely identical sets ofregulations to implement the PSD program. One set, found at 40 Code ofFederal Regulations (C.F.R.) 

### § 52.21, contains EPA's own federal PSD program, which applies in areas without a SIP-approved PSD program. The other set ofregulations, found at 40 C.F.R. 

### § 51.166, contains requirements that state PSD programs must meet to be approved as part ofa SIP. Kentucky administers a SIP-approved PSD program, whichis governed by 

### its PSD rules at 401 KAR 51:017. 

### See 40 C.F.R. 

### § 52.920.3 Thus, the applicable requirements ofthe Act for newmajor
sources, such asthe Cash Creek, include the requirementto comply with PSD requirements under the Kentucky SIP. 

### See, e.g., 40 C.F.R. 

### § 70.2.4 

### In the case ofCash Creek, the PSD and title V permits were merged into one permit. 401 KAR 51:017 

### § 1 (3).

Under CAA section 505(a), 42 U.S.C. § 766ld(a), and the implementing regulations at 40 C.F.R. 

### § 70.8(a), states are required to submit each proposed title V permitto EPA for review. Uponreceipt ofa proposedpermit, EPAhas 45 days to object to final issuance ofthe permit ifit is determined not to be in compliance with applicable requirements orthe requirements ofPart 70. 40 C.F.R. § 70.8(c). IfEPA does not object to a permit on its own initiative, section 505(b)(2) ofthe Act and 40 C.F.R. 

### § 70.8(d) provide that any person may petitionthe Administrator, within 60 days of the expiration ofEPA's 45

- day reviewperiod, to objectto the permit. Thepetition shall bebased only on objections to the permit that were raised with reasonable specificity during the public commentperiodprovided bythe permitting agency (unless the petitioner demonstrates inthe petition to the Administrator that itwas impracticable to raise such objections within such period orunlessthe grounds for such objection arose after such period). 42 U.S.C. 

### § 7661d(b)(2); 40 C.F.R. 

### § 70.8(d). 

### Inresponse to such a petition, the Act requires the Administratorto issue an objection ifa petitioner demonstrates that a permit is not in

3 Revisions to 401 KAR 51:017 are incorporated into the SIP only ifthey are submitted to and approved by EPA. Prior to approving a SIP revision submitted to EPA by a state, EPA offers an opportunity for public comment. EPA then publishes a 

### FederalRegisternotice announcing its final action onthe SIP submission. A list ofKentucky regulations incorporated into Kentucky's SIP is provided at 40 C.F.R. § 52.920. Further information regarding rules incorporated into Kentucky's SIP is available at http://www.epa.gov/region4/air/sips/ky/kytoc.htm

. Citations to Kentucky regulations in this Order are to the SIP-approved version ofthese regulations. 4 Kentucky defines "federally applicable requirement" in relevant

### partto include a "federally enforceable requirement or standard that applies to a source." 401 KAR 52:001 

### § 1(15). Kentucky further defines "federally enforceable requirement" as "[s]tandards orrequirements 

### in the state implementationplan (SIP) that implement the relevant requirements ofthe Act, including revisions to that plan promulgated at 40 C.F.R. Part 52." 401 KAR 52:001 

### § 1(34). 

### 3

### compliance with the requirements ofthe Act. 42 U.S.C. 

### § 766ld(b)(2); 40 C.F.R. 

### § 70.8(c)(l); see also New YorkPublic Interest Research Group, Inc. (NYPIRG) v. Whitman, 321 F.3d 316, 333 n.ll (2d Cir. 2003). Under section 505(b )(2) of the Act, the burden is onthe petitionerto make the required demonstration to EPA. 5 

### MacC!arence v. EPA, 596 F.3d I 123, 1130-33 (9th Cir. 2010); Sierra Club v. Johnson, 541 F.3d 1257, 1266-1267 (11th Cir. 2008); CitizensAgainstRuining the Environment v. EPA, 535 F.3d 670, 677-78 (7th Cir. 2008); Sierra Club v. EPA. 557 F.3d 401,406 (6th Cir. 2009) (discussing the burden ofproofintitle V petitions); see also NYPIRG, 321 F.3d at 333 n.ll. If, inresponding to a petition, EPA objects to a permitthat has already been issued, EPA orthe permitting authority will modify, terminate, orrevoke and reissue the permit consistent with the procedures set forth 

### in 40 C.F.R. §§ 70.7(g)(4) and (5)(i)- (ii), 

### and 40 C.F.R. § 70.8(d).

Where a petitioner's request that the Administrator object to the issuance ofa title V permit is based in whole, or in part, on a permitting authority's alleged failure to comply with the requirements ofits approved PSD program (as with other allegations ofinconsistency with the Act), the burden is on the petitioner to demonstrate thatthe permitting decision was not in 

### compliance with the requirements ofthe Act, including the requirements ofthe SIP. Such requirements, as EPAhas explained in describing its authority to oversee the implementation ofthe PSD program in states with approved programs, include the requirements that thepermitting authority (1) 

### follow the required procedures in the SIP; (2) make PSD determinations on reasonable grounds properly supported on the record; and (3) describe the determinations in enforceable terms. See, e.g., 68 Fed. Reg. 9892, 9894-95 (March 3, 2003); 63 Fed. Reg. 13795, 13796-97 (March 23, 1998).

As the permitting authority for the Commonwealth ofKentucky's SIP-approved PSD program, KDAQ has substantial discretion in issuing PSDpermits. Given this discretion, in reviewing a PSD permitting decision, EPA will not substitute its ownjudgment for that ofKentucky. Rather, consistentwith the decision inAlaskaDep 't of Envt 'I Conservation v. EPA, 540 U.S. 461 (2004), in reviewing a petitionto objectto a title V permit raising concerns regarding a state's PSD permitting decision, EPA generally will look to see whether thepetitioner has shown that the state didnot comply with its SIP-approved regulations governing PSD permitting orwhetherthe state's exercise ofdiscretionunder such regulations was unreasonable or arbitrary. 6 

### See, e.g., In re Louisville Gas andElectric Company,

5 

### EPA is granting several claims, as discussed in Section III ofthis order. EPA notes generally that KDAQ may respond to these grants by improving orjustifying certain aspects ofthe permit or permitting record, as suggested in the order, or by making other appropriate changesthat comport with Kentucky's SIP, approved title V program, and applicable federal regulations. 6 

### As EPA has previously explained, in reviewing PSDpermit determinations inthe context ofa petition to object to a title V permit, the standard ofreview applied by the Environmental Appeals Board (EAB) in reviewing the appeals offederal PSD permits provides a useful analogy. In re Louisville Gas and Electric Company, Petition No. IV-2008-3, Order on Petition (August 12, 2009) at 5 n.6; see also In re EastKentucky Power Cooperative, Inc. (Hugh L. 

### Spurlock Generating Station), Petition No. IV- 2006

- 4, Order on Petition (August 30, 2007) at 5. The standard ofreview applied bythe EAB 

### inits review of federal PSD permits is discussed in numerous EAB orders as the "clearly erroneous" standard. See, e.g., In re Prairie State Generation Company, 13 E.A.D. 1, 10 (EAB, August 24, 2006); In reKawaihae Cogeneration, 7 E.A.D. 107, 114 (EAB, April28, 1997). In short, in such appeals, the EAB explained that the burden is on a petitioner to demonstrate that review is warranted. Ordinarily, a PSD permit will not be reviewed by the EAB unless the decision ofthe permitting authority was based on either a clearly

erroneous finding offact or conclusion oflaw, or involves an importantmatter ofpolicy or exercise of discretion that warrants review. 4Petition No. IV-2008-3, Order on Petition (August 12, 2009); 

### In re EastKentucky Power Cooperative, Inc., Hugh 

### L. Spurlock GeneratingStation, PetitionNo. IV-2006-4, Order on Petition (August 30, 2007); 

### In re Pacific CoastBuildingProducts, Inc., Order on Petition (December 10, 1999); 

### In re RooseveltRegionalLandfillRegionalDisposal Company, Order on Petition (May 4, 1999).



### II. BACKGROUND

Facility

Theproposed Cash Creek facility would be located southwest ofOwensboro on Kentucky State Highway 1078 in Henderson County, Kentucky. The facility would consist oftwo production units: a gasification-to-substitute-natural-gas process and a combined cyclepower block. The gasification-to

substitute-natural-gas process will use coal and gasifiertechnology to produce synthetic gas (syngas) that will be converted into pipeline-quality natural gas in a methanationprocess. The natural gas that is produced bythe facility either will be injected into an interstate natural gas pipeline orwill be used as fuel for the combined cyclepower block. The combined cyclepowerblock will use two natural-gas

fired combustion turbines incombination withheat recovery steam generating units and a steam turbine to produce electricityto supportthe natural gas plant and for sale. The gasification plantwill use four General Electric 900 cubic foot gasifiers. The plant intends to operatethree gasifiers simultaneously, with each gasifierproducing thirty-threepercent ofthe syngas requiredto operate the methanation process at maximum capacity. The fourth gasifier will be operated in warm stand-by to provide full capacity duringperiods ofgasifiermaintenance and to enhanceplantreliability.



### Permit History

KDAQ released a draft air quality permit for public review on September 9, 2009, and held a public hearing on October 9, 2009. Due to significant changes made to the draft permit afterthe October 9, 2009, public hearing, KDAQ released the revised draft permit for public comment on December 15, 2009, and held a secondpublic hearing on January 15, 2010. Petitioners provided KDAQ with several
sets ofcomments during the two public commentperiods. 7 KDAQ responded to public comments, and

on March 5, 2010, KDAQ submitted a proposedpermitto EPA forthe required 45-day reviewperiod. EPA did not object to the proposedpermit within its reviewperiod, which ended on April 19,2010. KDAQ issuedthe final permit (Permit V-09-006) on May 5, 2010.

Previously, Cash Creek applied for and obtained an air quality permit from KDAQ authorizing itto construct and operate a facility using IGCC technology at the same location. Cash Creeknever builtthe proposed IGCC facility, and the permit (Permit V-07-017) was rendered null and void upon issuance of the permit addressedbythis order (Permit V-09-006).



### Background on PSD and BACT

The CAA and corresponding PSD regulations require that newmajor stationary sources employ BACT to minimize emissions ofregulated pollutants emitted from the facility in significant amounts. CAA 

### §

7 Petitioners' comments on the initial and revised draft permits include: (a) comments dated October 8, 2009, submitted on behalfofSierra Club and Valley Watch; 

### (b) comments dated January 14, 2010, submitted onbehalfofSierra Club, Ursuline Sisters ofMount St. Joseph, and Valley Watch; and (c)
comments dated January 15, 2010, submitted on behalfofSierra Club. 

### 5165(a)(4), 42 U.S.C. 

### § 7475(a)(4); 40 C.F.R. 

### §§ 51.166(j)(2) and 52.2l(j)(2); 401 KAR 51:017 

### § 8(2), (3). BACT is defined to mean:

an emission limitation based onthe maximum degree ofreduction [ofeach regulated pollutant emitted from the facility] which the permitting authority, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such facility through application ofproduction processes and available methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control ofeach such pollutant.

CAA § 169(3), 42 U.S.C. § 7479(3); 

### see also 401 KAR 51:001§ 1(25).

EPA 

### has developed a "top-down" processthat permitting authorities canuse to ensure that a BACT analysis satisfies the applicable legal criteria. Thetop-down BACT analysis consists ofa five-step process which provides that all available control technologies be ranked in descending order ofcontrol effectiveness, beginning with the most stringent. 

### See In rePrairie State Generation Company, 13 E.A.D. I, 13-14 (EAB, August 24, 2006). Under the top-downprocess, themost stringent control technology is deemed the control necessary to achieve BACT-level emission limits unless the applicant demonstrates, and the permitting authority determines, that technical considerations, orenergy, environmental, or economic impactsjustify a conclusion that the most stringent technology is not achievable in that case. As EPApreviously explained, an incomplete BACT analysis, including failure to consider all potentially applicable control alternatives, constitutes clear error. 

### See, e.g., In re Cash Creek Generation, LLC, Petition Nos. IV-2008-1 & IV-2008-2, Order on Petition (Dec. 15, 2009), at 6;



### see also Prairie State, 13 E.A.D. at 15; 

### In re Knauf Fiber Glass, 8 E.A.D. 121, 142 (EAB 1999); 

### In re Masonite Corp. 5 E.A.D. 551, 568-569 (EAB 1994). Cash Creek followed this top-down BACT methodology when it submitted its application for the Cash Creek facility, and KDAQ applied this methodology in evaluating the application and issuing its permitting decision. 

### See Final Permit Statement ofBasis (May 3, 2010) ("SOB") at 20-21.

KDAQ determined that the Cash Creek facility has the potential to emit the following pollutants in significant amounts as defined in 401 KAR 51:001, Section (222)(a): particulate matter (PM); particulate matter with a diameter oftenmicrons or less (PM10), particulate matterwith a diameter of two and a halfmicrons or less (PM25), nitrogen oxides (NOx), sulfur dioxide (SO2)

, and carbon monoxide (CO). SOB at 7. The permit contains emission limits determined as BACT for each of these pollutants. I d. KDAQ determined that a BACT review was not required for volatile organic compounds (VOC), sulfuric acid 

### (H2SO4), orhydrogen sulfide (H2S) because the facility's predicted controlled emissions ofthese pollutants are below the PSD significance rate. 

### !d. at 19. However, the facility's uncontrolled emissions ofVOC, H2SO4, and H2S would exceed the significant emission rate. 

### !d. Therefore, the permit includes source-wideemission limits equal to ninety percent ofthe significant emission rate for each ofthese pollutants. Id



### III. EPA DETERMINATIONS

A. Petitioners' Claims Regarding Public Participation

Petitioners contendthat EPA must objectto the permit because K.DAQ did not provide a meaningful opportunity for public participation during the permittingprocess. Specifically, Petitioners assert that 

### (1) the public notice for the commentperiod failed to include a calendar "end date" as required by 401 KAR

652:100 § 5(6); and (2) the permit record available during the public comment period omitted certain information that KDAQ was required to make publicly available. Petition at 5-8.

1. 

### Petitioners' contention tbat KDAQ failed to specify a calendar "end date" in tbe public notice.

Petitioners' Claim: Petitioners contend that the public commentperiod for the permit was deficient because the public notice for the comment period failed to specify the "end date" ofthepublic comment period. For support, Petitioners cite to 401 KAR 52:100 

### § 5(6) and 

### (7). Petition at 5. Petitioners explain that the notice instead instructed that "written comments must bepostmarked within 30 days following the date ofpublication ofthis notice."

### Id. According to Petitioners, the term "date" means a particular day, month and year. Petitioners state that KDAQ's failure to specify the day, month and year on which public comment endedresulted inconfusionbecause it was unclear whether the day that the notice was published counted towardthe 30-day commentperiod. 

### Id

EPA'sResponse: For the reasons provided below, the Petition is denied withrespect to this issue. Pursuant to CAA § 505(b)(2), a petition "shall be based only on objections to the permitthatwere raised with reasonable specificity during the public comment periodprovided by the permitting agency (unless the petitioner demonstrates inthe petitionto the Administrator that it was impracticable to 

### raise such objections within suchperiod orunless the grounds for such objection arose after suchperiod)." 42 U.S.C. § 766ld(b)(2). None ofthe comments submittedto KDAQ during eitherof the two public
commentperiods on the draftpermit raised an issue regarding KDAQ's alleged failure to identify a public commentperiod "enddate" in its public notices. Nor did Petitioners demonstrate intheirpetition 

### that it was impractical to raise such objection within the public commentperiod. Also, there is no indication that the grounds for the objectionarose afterthe public comment period. Furthermore, regarding the substance ofPetitioners' claim, the term "end date" is not defined in Kentucky's SIP. While Petitioners preferthatthe term "date" be interpreted as "[t]ime stated in terms ofthe day, month, and year," KDAQ is not obligatedto adopt Petitioners' preferred interpretation. Otherpossible interpretations of"date" include "the time at which an event occurs,"8 or "[a] particularpointorperiod oftime at which something happened or existed, or is expectedto happen."9 Under these latter definitions, Petitioners have not demonstrated thatthe language in K.DAQ's public notices providing that public comments are due "30 days following the date of publication ofthis notice" is inconsistent with the applicable requirements, orotherwise inconsistentwithtitle V. Therefore, EPA deniesthe petition with respect tothis issue onprocedural grounds, and, in the alternative, on substantive grounds. 10



### 2. Petitioners' contention tbat key information was unavailable during the public comment period.

Petitioners' Claim: Petitioners state that thepublicwas deprived ofa meaningful opportunity to comment on the draftpermitbecause K.DAQ omitted numerous required analyses and supporting materials from the record available for public review duringthe public commentperiod. 

### See Petition at 7-8. In particular, Petitioners contendthatthe following information should have been available:

8 Merriam-Webster Dictionary
, mw2.Merriam-Webster.com/dictionary/date (last visited Mar. 

### 5, 2012). 9 American Heritage Dictionary of the English Language, Fourth Ed., HoughtonMifflin, 2009. 10 EPA notes that Petitioners submitted comments by the deadline and KDAQ considered them in reaching its permitting decision. 

### 71) supporting information for numerous emissions factors VOC and H2

### SO4 from the combustion turbine, and CO, VOC, NOx, PM and 

### SO2 from the aspirator, and the same pollutants from the emergency generator; 2) estimates offugitive emissions from valves, leaks, and flanges, and other similar sources; 3) the leak detection and repair (LDAR) plan to control fugitive emissions, the estimated controlled emissions under thatplan and supportingmaterials for those emissions estimates, and the associated CO BACT analysis; 4) the basis for the assumed heat content ofthe natural gas burned in the combustion turbines; 5) emissions information and supporting materials pertainingto the BACT analysis; 6) cost-effectivenessanalyses to support rejection oflower sulfur coal and 

### dry cooling in the BACT analysis; and 7) a flare operation planto control flaring emissions.

Id.; see also id. at 19-31 (discussing the unavailability during the public comment period ofthe estimate offugitive emissions from equipment leaks and the associated CO BACT analysis (including the LDAR requirements selected as BACT) and raising substantive issues regarding the informationprovided after the close ofthe commentperiod); id. at 14-15 (further discussion ofconcerns regarding the unavailability ofthe operationplan for public review). Petitioners cite to 40 C.F.R. 

### § 70.5(c) as support for the proposition that the above-listed information isrequired to be included in the permit application and thus should have been available to the public during the public commentperiod. See Petition at 7 (citing In re WE Energies Oak CreekPowerPlant, Order on Petition (June 12, 2009) at 24, and In re RoclcGen Energy Center, 8 E.A.D. 536, 552-55 (EAB 1999)). Petitioners request that EPA direct KDAQ to make the requested information available to the public and to hold an additional public comment period. Id.



### Overview of ApplicableLegalFramework for Certain PublicParticipat ion Claims EPA's regulations at 40 C.F.R. 

### § 70.7(a)(l)provide that a permit may 

### be issued only if, among other things, the permitting authority 

### "has received a complete application" and "has complied with the requirements for public participation under paragraph (h) ofthis section." With regard to a permit application, EPA's regulations provide: "An application may not omit informationneeded to determine the applicability of, orto impose, any applicable requirement

...." 40 C.F.R. 

### § 70.5(c); see also 40 C.F.R. 

### § 70.5(a)(2) (stating, among other things, that "[i]nformation required underparagraph (c) ofthis section must be sufficient to evaluate the subject source and its application and to determine all applicable requirements"). The regulations require each title V permit to include, among otherthings, "[e]mission limits and standards, including those operational requirements and limitations that assure compliance with all applicable requirements at the time ofpermit issuance" and "compliance certification, testing, monitoring, reporting and recordkeeping requirements sufficientto assure compliance with the terms and conditions ofthe permit." 40 C.F.R. § 70.6(a)(l), (c)(l). Regarding public participation, the regulations require that permitproceedings 1 "provide adequate procedures for public notice including offering an opportunity for public comment and a hearing onthe draft permit." 40 C.F.R. § 70.7(h). Finally, the regulations require that public "notice shall identify

... a person from whom interested persons may obtain additional information, including copies ofthe permit draft, the

11 This provision expressly excludes modifications qualifying for minor permit modification procedures and expressly includes initial permit issuance, significant modifications, and renewals. 40 C.F.R. 

### § 70.7(h). 8

### application, all relevant supporting materials

... and all other materials available to the permitting authority that are relevant to the permit decision." 40 C.F.R. § 

### 70.7(h)(2).

When a title V petition seeks an objection based onthe unavailabilit.r ofinformation during the public comment period in violation oftitle V's public participationrequirements, the petitioner must demonstrate that the unavailability deprived the public ofthe opportunityto meaningfully participate during the permitting process. 12 

### See In re Orange RecyclingandEthanol Production Facility, PencorMasada Oxynol, LLC, PetitionNo. 11-2000-07, Order onPetition (May 2, 2001) (applyingthe concepts ofmeaningful public participation and logical outgrowth to title V); 

### cf, e.g., In re Murphy Oil USA, Inc., Meraux Refinery, PetitionNo. 2500

-00001-V5, Order on Petition (Sept. 21, 2011) (discussing a response to significant comments as "aninherent component ofany meaningful notice and opportunity for comment" (citing

### Home Box Office v. FCC, 567 F.2d 9, 35 (D.C. Cir. 1977))). To guide this analysis under title V, EPA generally looks to whetherthe petitionerhas demonstrated "thatthe alleged flaws resulted in, or may have resulted in, a deficiency in the permit's content." 

### See In re Sirmos Division of Bromante Corp., Petition No. II-2002-03, Order on Petition (May 24, 2004). Without such a showing, it may be difficult to conclude that the ability to comment onthe information would have been meaningful. In implementing the requirements for publicparticipation undertitle V, EPA is mindful that the part 70regulations were promulgated in light ofCAA section 502(b)(6)'s pursuit of "[a]dequate, streamlined, and reasonable procedures

... for public notice, including offering an opportunity for public comment and a hearing." 42 U.S.C. § 7661a(b)(6). EPA also notes that where a permitting authority provides an explanation for its decision notto make something available during the public commentperiod, the petitioner bears the burden ofdemonstrating that the permitting authority's explanation is unreasonable.

This analysis about the availability ofinformation during the public commentperiod isrelated to the regulatory standard under 40 C.P.R.§ 70.5(c) governing information that may not be omitted from a permit application. Specifically, under40 C.F.R. 

### § 70.5(c), a permit application may not omit information "neededto determine the applicability of, orto impose, any applicable requirement." So an EPA objectionto a proposedpermit based on a permit application deficiency may be accompanied by an EPA objection based on a resulting flaw 

### inthe public participationprocess because, in many instances, the unavailability during the public comment period ofinformation needed to determine the applicability oforto impose an applicable requirement also may result in a deficiency in the permit's content. 

### See In

re Louisiana Pacific Corporation, PetitionNo. V-2006-3, Order onPetition (Nov. 5, 2007); 

### In re WE Energies Oak CreekPower Plant, Order on Petition (June 12, 2009); 

### In reAlliantEnergy -WPL Edgewater GeneratingStation, PetitionNo. V-2009-02, Order on Petition (Aug. 17, 2010).

However, the question ofwhether a permit application is deficient is distinct from the question of whether the public participation process was deficient. For this reason, it is not always the case that a permit application deficiency necessarily results 

### in a deficient public participationprocess. For example,

even ifcertain required information is omitted from an applicant's permit application, the permitting authority may have added the information to the permit record priorto the start 

### ofthe public comment period. Another example might be where information submitted by the permit applicant after the close ofthe public comment period simply confirms assumptions underlying the draft 

### permit conditions. Under both ofthose circumstances, though the permit application available during the public comment

12 

### Where a petitioner claims that a permit is not in compliance with an unambiguous, express procedural requirement of40 C.F.R. Part 70 (e.g., failure to publishpublic notice as required by 40 C.F.R. 

### § 70.7(h)(l)), EPA will analyze that argument on its ownterms. 

### 9

### period may arguably have lacked required information, the omission ofthat information may not have impacted the public's opportunity to meaningfully participate in the permitting process.
Additionally, under EPA's regulations, correcting a permit application deficiency does not necessarily involve offering an additional opportunity for public comment. Specifically, under 40 C.F.R. § 

### 70.5(b), "[a ]ny applicant who fails to submit any relevant facts orwho has submitted incorrect information in a permit application shall, upon becoming aware ofsuch failure or incorrect submittal, promptly submit such supplementary facts or corrected information." Nothing in thatprovision requires that the supplemental information must beprovided priorto the public comment period orthat an additional public comment period must always be held onthe newly submitted information. Likewise, EPA's regulations at 40 C.F.R. 

### § 70.4(a)(l) state that a permitting authority maynot issue a final permit unless the permitting authority "has received a complete application." Nothing inthat provision indicates that the version ofthe application made available to the public during the public comment periodmust contain all ofthe information required to make the application complete. Thus, even after the close of the public commentperiod, a permit applicant may come into compliance with the permit application requirements of40 C.F.R. 

### § 70.5 by supplementing or correcting the permit application. Assuming that the application has been corrected or supplementedpriorto submission ofthe proposedpermit to EPA, EPA generally would consider whether the correction or supplement cured inadequacies inthe permit application in determining whether to objectto the proposed permit on the basis of§ 70.5. Nonetheless, depending onthe circumstances, EPA may determine that an objection is warranted onthe basis thatthe unavailability of the omitted information during the public commentperiod contravened 40 C.P.R.§ 70.7(h) because the absence ofthat information deprived the public ofthe opportunity to meaningfully participate in the permitting process, especially where the missing information resulted in, 

### or may have resulted in, a deficiency inthe content ofthe permit.



### EPA'sResponse: Forthe reasons provided below, EPApartially grants and partially denies the petition

onthis issue. 13 

### The issues on which EPA is granting the petition onpublic participation grounds are meaningful withrespect to KDAQ's PSD determinations in thatthey pertain to whether the facility's emissions were properly estimated and whether the permit includes appropriate BACT requirements.

Fugitive emissions estimates
Regarding the lack ofa public comment opportunity onthe estimates offugitive emissions from valves, leaks, and flanges, EPA grants the petition on this issue. Because Cash Creek supplemented its permit application witfi this information after the close ofthe public commentperiod on the draft 

### permit, Cash Creek's permit application is no longer deficient. However, Petitioners demonstrated that fugitive emissions calculations were unavailable during the public comment period, and further demonstrated that this information was needed todetermine whether the proposed source is a major emitter ofVOC and HAPs. See Petition at 20. Furthermore, the Petitioners raise numerous concernsregarding the fugitive emissions calculation. Due to the unavailability ofCash Creek's fugitive emissions calculation

13 

### As a practical matter, EPA notes that the petition does not allege that Petitioners contacted the person identified by KDAQ pursuant to 40 C.F.R. 

### § 70.7(h)(2) in orderto request any ofthe listed information. EPA also reiterates that Kentucky operates a merged process for PSD permitting and title V permitting, and, as a general matter, the same requirements for public involvement apply to both types ofpermitting in Kentucky.



### 10during the public commentperiod, Petitioners were unableto raise these concerns with KDAQ, and KDAQ, in turn, did not have an opportunity to respond to these concerns. Any potential errors in Cash Creek's fugitive emissions calculation could have resulted in an incorrect determination that the source is a minor source ofVOC and HAP emissions. Therefore, EPA grants the petition on this issue and directs KDAQ to provide an opportunity for public comment on the fugitive emissions calculation.



### LDAR requirements andassociated COBACTanalysis

EPA also grants the petition with respect to the lack ofa public comment opportunity onthe proposed permit's LDARrequirements, which serve as BACT for control ofthe facility's fugitive CO emissions. As with the fugitive emissions calculation, it is undisputed thatthe BACTanalysis that appeared in the permit application that was made available to the public omittedany discussion ofLDAR requirements serving as BACT for fugitive CO emissions. Because Cash Creek supplemented its application to include this information after the close ofthepublic commentperiod, Cash Creek'spermit application is

no longer deficient. However, Petitioners demonstrated thatthe unavailability of this information during the public commentperiod prevented the public from evaluating and commenting on whetherthe LDAR requirements included in the proposed permit are sufficientto satisfy BACT requirements. Indeed, Petitioners identify various concerns regarding the adequacy of the LDARrequirements thatthey were unable to raise intheir comments to KDAQ onthe draft permit. 

### See Petition at27-31. Petitioners have shownthat the unavailability of this information during the public commentperiod may have resulted in

a permit deficiency. EPA grants the petition on this issue and directs KDAQ to provide an opportunity for public comment on the proposed LDARrequirements and associated CO BACT analysis.



### Flare operationplan

EPA denies the petition with respect to Petitioners' claimthat Cash Creek's flare operationplan should have been available for review during the public commentperiod onthe draft permit. EPA's decision on this issue is based onthe role ofthe operation plan requirement in this particularpermit.

In prior orders, EPAhas determined that a facility operationplanthat mustbe followed by a source must be included in a permitapplication and available for publicreviewwhere the plan's content

### was needed to impose an applicable requirement or ifthe plan was relied upon as a compliance assurance measure. 

### See In re WEEnergies Oak CreekPowerPlant, Order on Petition (June 12, 2009); 

### In re AlliantEnergy -WPLEdgewater GeneratingStation, Order on Petition, (Aug. 17, 2010). Likewise, in

### In re RockGen Energy Ctr, 8 E.A.D. 536, 552-55 (EAB 1999), the EAB heldthat a permit condition exempting the facility from BACT limits during startup and shutdown and requiring the post-constructiondevelopment ofa plan for limiting emissions during startup and shutdown violated the requirementthat BACT limits be established prior to construction. However, in

### In re Power Holdings of Illinois, PSD Appeal No. 09

- 04, slip op. (EAB, Aug. 13, 2010), the EAB rejected a challengeto a permitprovision that required the permittee to submit a flare minimization plan 90 days prior to startup, and to review and revise the plan annually. Inthat case, the EAB found that the flare minimization plan was not being employed as a substitute for BACT limits. 

### See slip op. at 13-14. Furthermore, though the 

### Power Holdings permit identified the flare minimization plan as part ofthe facility's BACT obligations, the permit contained

numerous other requirements designed to ensure adequate control offlaring emissions resulting from startup, shutdown and malfunction events. 

### Id The EAB concluded that nothing inthe record demonstrated that the various permitrequirements would be insufficient to satisfy BACT, even without the flare minimization plan. 

### !d. at 15-16.



### 11In this case, the operation plan required by Cash Creek's permit is not relied upon to impose an applicable requirement or as a compliance assurance measure. 

### See Final Cash Creek Permit at 44-45. Unlike the plan at issue in

### RockGen, the operation planrequired byCash Creek'spermit is not identified

as a substitute for BACT limits; indeed, the permit does not identify the operation planrequirement as relating to Cash Creek's BACT obligations. 

### See id Nor do Petitioners identify any other applicable requirement directing Cash Creek to implement an approved operationplan. Finally, nothing inthe proposed permit or in the accompanying statement ofbasis identifies Cash Creek's implementation of the plan as necessary as a compliance assurance measure. EPA also notesthat KDAQ explained in its Response to Comments document why it was unnecessary for the operation plan to be available during the public commentperiod 

### (see KDAQ Response to Comments (March 2010) ("RTC") at B-58), and Petitioners made no attempt to demonstrate in theirpetition that KDAQ's explanationwas unreasonable.

Thus, EPA concludes that Petitionershave not shown that the alleged omission ofthe operation plan from the permit application and/ortheunavailability ofthis information during the public comment period caused the permitnotto be in compliance with applicable requirements orrequirements of 40 C.F.R. part 70. However, ifin response to EPA objections regarding other issues addressed by this order, KDAQ chooses to rely on implementation ofthe flare operation plan as BACT orto assure compliance with BACT or another applicable requirement, KDAQ would needto amendthe permit to include theparts ofthe plan that are necessary to assure compliance withthe applicable requirement(s), and further, the appropriate plan details would need to bemade available for public review and comment.



### Other information thatPetitioners allege shouldhave been available during thepublic commentperiod

With respect to the alleged unavailability during the public commentperiod of(a) supporting information for emissions factors used to calculate emissions from the combustion turbines, aspirator and emergency generator, (b) the basis for the heat content ofnatural gas, and (c) a cost-effectiveness analysis to support rejection oflower sulfur coal and dry cooling as BACT, EPA concludesthat Petitioners have not mettheirburden ofdemonstrating thatthe alleged omission ofthis information from the permit application and/orthe unavailability ofthis information duringthe public comment period caused or mayhave caused the permitnot to be in compliance with applicable requirements or requirements of40 C.F.R. part 70. Inparticular, Petitioners made no attemptto demonstratethat omission ofthis information from the permit applicationmeantthat the application lacked information "necessaryto determine the applicability of, orto impose, any applicable requirement

... 

### " See40 C.F.R. § 70.5(c). Nordo Petitioners identify how the alleged unavailability ofthis information during the public commentperiodmay have resulted in a permit deficiency or otherwise deprived them of meaningful participation. Moreover, EPAnotes that KDAQ responded to Petitioners' concerns regarding the unavailability ofthis information in its Response to Comments document 

### (see RTC at B-9 to -14), and Petitioners made no attempt in their petitionto demonstrate that KDAQ's explanation was unreasonable. Therefore, EPA denies the petition with respect to the alleged unavailability ofthis particular information.

Finally, EPA denies the petition with respectto the Petitioners' general allegation regarding the omission ofemissions information and supporting materials pertaining to the BACT analysis. 14 The

14 Petitioners' generalized allegation regarding the unavailability ofinformation supporting KDAQ's BACT analysis is distinct from the more specific allegations discussed above regarding the lack ofa 12

### permit application and supporting materials available to the public during the public comment period included extensive discussion regarding the selection ofBACT for theproposed source. Petitioners do not specify what additional emissions information and supporting materials for BACT should have been included 

### in the permit application. Nor do petitioners demonstrate how the alleged lack ofsome information regarding the BACT determination during the public commentperiodmay haveresulted in

a permit deficiency or otherwise deprived them ofmeaningful participation. Moreover, EPAnotes that KDAQ responded to Petitioners' concerns regarding the lack ofsupport for 

### its BACT analysis in its Response to Comments document (see 

### RTC at B-12 to -14), and Petitioners made no attemptto demonstrate intheirpetition that KDAQ's explanationwasunreasonable. Therefore, EPA denies the petition with respect to the alleged unavailability ofthe additional emissions information andsu pporting materials pertaining to the BACT analysis during the public commentperiod.



### B. Petitioners' Claims Regarding Flare Emissions

l. 

### Petitioners' contention that calculation ofthefacility's potential to emit (PTE) for purposes ofdeterminingwhether the proposed facility will be a major source ofVOC, H2

### S, and HAPs failed to account for full emissions from active flaring.

Petitioners' Claim: Petitioners contendthat KDAQ's determination that Cash Creek is a minor source for VOC, H2S, and HAPs was based on anunderestimation ofemissions from the facility's flare. Petition at 8-13. Petitioners contendthat KDAQ's PTE calculation improperly omits flare emissions during shutdowns and malfunctions. Petition at 12.

Petitioners assert that PTE must reflect the source's "maximum capacity to emit a pollutant," citing to the definition ofPTE in Kentucky's SIP. Petition at 9. According to Petitioners, there is no blanket exception from the PTE definition for emissions resulting from startup, shutdown, and malfunction (SSM). Id 

### Petitioners further contend that flare emissions must be included inthe PTE calculation because flares "are emissions units whose purpose is to control release ofgases from process units."

### Id Petitioners point outthat determining whether PSD applies to a particular pollutant involves adding together the "potential to emit" ofeach "emissionsunit," and the Kentucky SIP defines "emissionunit" broadly as "anypart ofa stationary source

... that emits or has 

### the potential to emit a regulated NSR pollutant." Id. 

### As support for their positionthat flares are "emissionunits," Petitioners cite to In re ConocoPhillips Co., 

### 13 E.A.D. 768, 774 (EAB 2008). Petition at 10.
According to Petitioners, "flares emit pollutants while operating undertheir design to control emissions from the larger facility, e.g., during periods ofthe facility's SSM."See 

### Petition at 10. Furthermore, Petitioners contendthat EPA has already determined that SSM emissions must be included in PTE calculations, citing to In re BPProducts, NorthAmerica, Inc., WhitingBusiness Unit, 

### Order on Petition (Oct. 16, 2009), at 5-7. Petition at 10. Petitioners also cite to EPA comments on a draft 

### PSD permit and

a letter from EPA Region 2 to NewJersey. Id 

### Petitioners state that any constraint on emissions that is considered inthe PTE calculation "must be explicitly set forth in the permit as a physical oroperational limit." Id. 

### at 9 (emphasis omitted); see also id 

### at 11-12 (describing requirements relating to the enforceability ofPTE limits).

public comment opportunity on Cash Creek's fugitive emissions calculation as well as the LDAR requirements and associated CO BACT analysis for equipment leaks. 13Petitioners explainthat inresponse to their comments onthe draft permit, KDAQ stated that PTE excludes malfunctions because malfunctions are notrepresentative ofnormal operation. Petition at 12. Petitioners dispute KDAQ's claim. 

### !d. According to Petitioners, KDAQ's position is contrary to Kentucky's SIP-approved regulations as well EPA's statements onthis point, including inthe

### BP Whiting Order. 

### !d. Petitioners reject KDAQ's claim that

### In re Louisville Gas andElectric Company, Petition No. IV-2008-3, Order on Petition (Oct. 17, 2011) supports KDAQ's position, contendingthat the language cited by KDAQ is inapposite. 

### Jd. Petitioners also dispute KDAQ's claim that shutdown (and therefore malfunction) emissions are included in Cash Creek's PTE calculation. 

### !d. at 13. Petitioners explain that "[t]he theory backing KDAQ's claim is thatthe emission reductions from process equipment going offline during SSM will always outweigh increased emissions from the flare during the same events." 

### ld According to Petitioners, "KDAQ fails to back its statements with any quantitative analysis ofdifferent malfunctions that could occur, and underestimates flaring emissions during SSM by citing unsupported emission estimates for only one limited shutdown scenario." 

### Id Petitioners contend that other unplanned shutdowns wouldresult in higher emissions, and also contend that system upsets and malfunctions could cause flaring even without other equipment shutting down, resulting in emissions that could significantly exceedthose reported for what Petitioners describe as "the single scenario ofa planned shutdown." 

### ld

Petitioners contend that these errors 

### in estimating emissions from the flare are significant because KDAQ used the estimates to support its determinationthat theproposed facility is a minor source of VOC, H2S, and HAPs. 

### !d. at 8-9.



### EPA'sResponse: Forthe reasons provided below, EPA grants 

### inpart and denies in part onthis issue. Due to factual differences in the permit record andthe way thatthe permit addresses the three pollutants with respect to which Petitioners raise concerns (VOC, H2S, and HAPs), EPA'sresponse is different for each pollutant.

VOC As Petitioners note, under Kentucky's federally approved SIP, the calculation ofa facility's PTE for purposes ofdetermining whether the facility triggers PSD requirements for a particular pollutant includes consideration of "[a] physical or operational limitation onthe capacity ofthe source to emit [the] pollutant, including air pollution control equipment and restrictions on hours ofoperation or on the type or amount ofmaterial combusted, stored, orprocessed,

... ifthe limitation orthe effect it would have on emissions

... [i]s federally enforceable." 401 KAR 51:001, 

### § 1 (190) (PTE definition in Kentucky's SIP); 

### see also 40 C.F.R. 

### § 52.2l{b)(4) (federal PTE definition for PSD applicability); 40 C.F.R 

### § 

### 632 (providing substantiallythe same PTE definition for determining applicability of maximum achievable control technology standards for HAPs); 

### In re Orange RecyclingandEthanolProduction Facility, Pencor-Masada Oxynol, LLC, PetitionNo. II-2000-07, Order on Petition (May 2, 2001), at 21.



### 14other words, ifa permit applicant agrees to an enforceable 15 limit that is sufficientto restrict PTE, the facility's PTE is calculated based onthat limit. In this case, Cash Creek agreed to accept a source-wide VOC emission limit of36 tons peryear (tpy). 

### See Final Permit at 85. Therefore, an EPA objection regarding Cash Creek's VOC PTE determination is warranted ifthe source-wide VOC limit in the permit is not enforceable.

In their petition, Petitioners identify several concerns regarding the enforceability ofCash Creek's source-wide 36 tpy VOC emission limit. 

### See Petition at 14-16. As explained below, EPA concludes that Petitioners met theirburden ofdemonstrating that the VOC limit is not enforceable as a practical matter. 

### See infra at 16-19 (providing the basis for EPA's conclusion thatthe VOC limit is unenforceable). Among other issues, Petitioners demonstrated that KDAQ failed to provide a reasoned explanation for how the compliance demonstration method associated with the VOC emissions limit, which is used to determine compliance with the source-wide VOC limit, accounts for all actual VOC emissions from the flare.ld An emission limit canbe relied upon to restrict a source's PTE only ifit is legally and practicably enforceable, and KDAQ acknowledges that Cash Creekwould be above the significance level for VOC in the absence ofan enforceable source-wide VOC limit. EPA is granting the petition regarding Petitioners' claim that the source-wide VOC limit is unenforceable, and, accordingly, that limit cannot be relied upon to determine that the source is below the relevant thresholds for VOC. For this reason, EPA grants the petition on Petitioners' challenge to KDAQ's determinationthat Cash Creek is belowthe significance level for VOC. EPA is thus focusing onthe method ofdetermining compliance with the source-wide VOC emissions limit, and, therefore, need notreachthe separate issues raised in this portion ofthe petition regarding howthe VOC PTE was calculated. KDAQ canrespond to this objection by amending the permit to address the enforceability concerns described below. 

### See infra at 16-19. Alternatively, KDAQ canrespond bymaking other changes to the permit as appropriate to ensure that the VOC PTE limit is enforceable, bytaking other actions to ensure that PSD isnottriggered for VOC, orbyrequiring Cash Creek to comply with the PSDrequirements for VOC.

H2SXa Though Petitioners contend intheir petition that KDAQ's alleged incomplete assessment ofemissions from active flaring affected KDAQ's determinationthat the proposed facility is a minor source ofH2S for purposes ofPSD applicability, this claim was not raised with "reasonable specificity" in public comments onthe draft permit as required by section 505(b)(2) ofthe Act and 40 C.F.R. 

### § 70.8(d), and Petitioners did not demonstrate that it was impracticable to raise such objection during the comment period. Further, there isno indicationthatthe grounds for their objection arose afterthe public comment period. The only comment onthe draft permit addressing the calculation ofH2S emissions from the flare questioned whether unaccounted flare emissions would make the proposed facility's PTE exceed the significance level for HAPs, triggering the applicability ofmaximum achievable control technology

15 Although the federal definition ofPTE for PSD also includes the term "federally enforceable," following two court decisions, 

### National MiningAssociation v. 

### EPA, 59 F.3d 1351 (D.C. Cir.l995) and 

### ChemicalManufocturers Ass'n v. 

### EPA, No. 89-1514 (D.C. Cir.1995), EPA clarified thatthe term "federally enforceable" as used in relation to the definition ofPTE for the federal PSD program, should be read to mean "federally enforceable or legally and practicably enforceable by a state or local air pollution control agency." John Seitz and Robert Van Heuvelen, "Release ofInterim Policy on Federal Enforceability ofLimitations on Potential to Emit" (Jan. 

### 22, 1996), at 3. The term "federal enforceability" has also been interpretedto require practical enforceability. 

### See, e.g., In re Shell Offshore, Inc., KullukDrilling Unit andFrontierDiscovererDrilling Unit, atn.54 

### (EAB 2007). 15(MACT) standards promulgated under CAA 

### § 112. 16 The comment did not raise Petitioners' claim that potential H2S emissions from the flare are large enough to trigger PSD requirements. 17 Therefore, EPA denies Petitioners' claims regarding KDAQ's alleged failure to consider full emissions from active flaring in determining thatthe proposed facility is a minor source ofH2S for purposes ofPSD applicability.

HAPs Cash Creek'spermit does not include 

### a limit on its emission oftotal 

### HAPs. See SOB at 

### I8. Therefore, the proposed facility's PTE for total HAPs is calculated based onthe facility's unlimited potential to emit. In response to concerns raised by Petitioners in their comments onthe draft permit regarding KDAQ's alleged failure to fully account for flaring emissions in determiningthatthe proposed facility's PTE is less than the 25 tpy major source threshold for total HAPs, KDAQ pointedto Table 8-1 in Cash Creek's permit application, which, as KDAQ explains, lists the HAPs that the facility will emit during flare standby operation (pilot only) and startup. 

### See RTC at B-97. Based on the information provided in that table, KDAQ concluded that ''total HAPs emitted by the facility will be below 8.56 tons/yr." Jd

Because the table cited by KDAQ in support ofits determinationthatthe proposed facility will be below the major source threshold for total HAPs expressly accounts only for flare emissions during flare standby and startup operations, KDAQ's response did not adequately respond to Petitioners' concern that flaring emissions other

### than those associated with standby and startup operations would cause the facility's PTE for combined HAPs to exceed the major source threshold. Therefore, EPA grants the petition on this issue with respect to HAPs due to KDAQ's failure to provide a reasoned explanation regarding howthe PTE calculation for total HAPs accounts for flaring emissions associated with operations otherthan standby and startup.



### 2. Petitioners' contention that the VOC potential-to-emit limit applicable to the flare is notenforceable as a practical matter.

Petitioners' Clai m: Petitioners contend that the permit lacks enforceable conditions limiting the flare's potential to emit. Petition at 14. Specifically, Petitioners contend that the permit's facility-wide 36tpy VOC limit is unenforceable because the permit lacks flare minimization requirements needed to ensure the facility's compliance withthe limit. 

### Id According to Petitioners, the permit should have required a flare minimizationplan, including 

### a required process and/or standards for KDAQ's approval or disapproval ofsuchplan, provisions for public or U.S. EPAreview ofand comment onthe adequacy of the plan, and a process for revising the plan as factors impacting flaring change. 

### Id. Petitionersstate that the permit should include requirements similarto those in flare minimization rules promulgated bytwo local air quality management districts in California. 

### !d.

Petitioners contend that the compliance determination method associated withthe 36 tpyVOC limit 

### (see Final Cash Creek Permit at 84-85) is "just a formula without a measurement." Petition at 16. According to Petitioners, the demonstration "contains an unenforceable circular equation that assumes without basis what startup emissions will be per hour, then multipl[ies] 1,328 lbslhourtimes the number of hours

16 

### See Comments by Sierra Club and Valley Watch on Cash Creek Generating Station Draft Permit V

09-006, dated October 8, 2009, at 44. 17 EPA notes that because H2S is not a listed HAP under CAA § 112(b ), the proposed facility's H2 

### S emissions are not considered in determining MACT applicability. 16times an assumed high destruction efficiency (99.5 percent), and does not measure shutdown at all." 

### Id Further, Petitioners explain that for flare pilot gases, the permit "also contains a formula without measurement ofhourly emissions times the number ofhours permonth."

### /d Petitioners contendthatthe permit "provides no way to assure thatthe 1,328 lbs/hour is metduring startup, and no way to assure that the 99.5% destruction efficiency is met."

### Id.

EPA'sResponse: For the reasons described below, the EPA partially grants and partially denies the petition on this issue.

Flare Minimization Requirements EPA denies Petitioners' claim that the permit is deficientbecause itallegedly lacks "flareminimization" requirements. Petitioners did not demonstrate that there is any applicable requirement directing Cash Creek to prepare a "flare minimization plan" or "operatingplan" similar to plans required by local California 

### air quality management districts. While the permit must includeterms and conditions sufficientto assure compliance with the VOC PTE limit, KDAQ has discretion regarding the exact nature ofthose compliance assurance requirements.

Lack ofMonitoringto Assure Compliance withthe Source- WideVOC Limit Regarding Petitioners' claim that thepermit is deficient in that it lacks monitoring requirements to

ensure that flare emissions do not causethe facility to exceed the 36 tpy source-wideVOC limit, and the related claim that the VOC limit is lUlenforceable because the associated compliance demonstration

assumes certain values without measurement, EPApartially grants andpartially denies the petition.



### Assumed flare combustion efficiency: EPA grants the petitionregarding Petitioners' argument thatthe VOC PTE limit is not enforceable because it simply assumes that the flare will achieve 99.5% combustion efficiency at all times. EPA recognizes that KDAQ indicated in itsresponse to comments on the draftpermitthat it received confirmation from a flare vendorthatthis type offlare can achieve 99.5% destruction removal efficiency for VOC 

### (see RTC at B-32), and EPA also notes that the petition does not dispute the reasonableness ofKDAQ'sreliance onthe vendor information. Nonetheless, EPA agrees with Petitioners that for the 36 tpy VOC limit to be enforceable, the permit must include conditions that are sufficientto ensure thatthe flare achieves a combustion efficiency of99.5% or greater at 

### all times that gases are ventedto the flare. 

### See Memorandum from Terrell E. Hunt, EPA, "Guidance onLimiting Potential to Emit inNew Source Review Permitting" (June 13, 1989), at 7 ("Whenpermits require add-on controls operated at a specified efficiency level, permitwriters should include, so that the operating efficiency condition is enforceable as a practical matter, those operating parameters and assumptions which the permitting agency depended upon to determine thatthe control equipment would have a given efficiency."); 

### see also id. at 19-20 (explaining that where a permitrelied

on fabric filter to be employed and maintained at 99% efficiency to enable the facility to comply with a PTE limit, the permit would either need to include "parameters that allowed the permitting agency to verify the fabric filter's operating efficiency," orwould need to require the facility to install and operate continuous opacity monitors). As Petitioners correctly point out, there are no enforceable permit conditions that are designed to assure that the VOC combustion efficiency assumed inthe compliance demonstration equation is achieved at all times that gases are vented to the flare. Thoughthis issue was raised inpublic comments on the draftpermit, KDAQ didnot identify any permit conditions ensuring that this efficiency actually is achieved at all times that gases are vented to the flare; rather, KDAQ's response focused onvendor information indicating that the flare will be capable ofachieving 99.5% destruction efficiency. 

### See RTC at B-31 to -33, -36.

17EPA recognizes that the permit does contain permit conditions requiring parametric monitoring ofthe flare for the pur pose ofassuring the facility's compliance with limits onpollutants otherthan VOC. 

### See Final Cash Creek Permit at 42-46. However, the permit expresslyties this monitoring to Cash Creek's demonstration ofcompliance with the BACT limits rather thanthe 36 tpy VOC PTE limit, and the prescribed VOC compliance demonstration equation does not appear to allow consideration ofthe results ofthis monitoring in determining compliance with the VOC PTE limit. Moreover, the parametric monitoring required by the permit largely mirrors the flare requirements set forth in the New Source Performance Standards (NSPS), and EPA has never suggested that the flare requirements laid out in40 C.F.R. 60.18 are sufficient to ensure a continuous combustion efficiency of99.5%. 18 Although Cash Creek'spermit requires development ofand compliance with a flare operation plan and compliance

assurance monitoring plan, neither KDAQ nor CashCreek have identified and explained how its specific operational and monitoring requirements will ensure continuous compliance with a combustion efficiency of99.5% or greater. To address this objection, KDAQ must amendthepermit to include enforceable conditions sufficientto ensure that the flare achieves a continuous combustion efficiency of 99.5% or greater. Alternatively, KDAQ may make other changes inthe permit as appropriate to ensure that the VOC PTE limit is enforceable, take other measures to ensure that PSD is not triggered for VOC,

or require Cash Creek to comply with PSD requirements for VOC.



### Assumeduncontrolled flare emissions duringstartup: EPA denies the petitionwith respect to Petitioners' claimthatthe compliance demonstration equation associated with the VOC PTE limit

assumes without basis that startup emissions from the flare will be 1,328 lbslhr. This emission rate was provided by Cash Creek in its permit application and represents what flare emissions would be during startup ifthey were uncontrolled. 

### See December2009 Cash Creek PermitApplication at 6-20. Petitioners offerno information demonstrating that KDAQ's inclusion ofthis uncontrolled emissionrate in the compliance demonstration equation for the VOC PTE limit was unreasonable.



### AssumedHourly Flare PilotEmissions: EPA denies the petition with respect to Petitioners' claim that the VOC compliance demonstration equation assumes without measurement that the hourly VOC emission rate for the flare pilots will be 0.0109 lb/hr. This numberreflects the flare pilots' uncontrolled hourly emission rate and was obtained from Cash Creek's permit application. 

### See Cash Creek Permit Application at 6-19. In response to Petitioners' comments onthe 

### draft permit, KDAQ explained that the VOC emission factor for the flare pilots came from consultation 

### with a flare vendor and KDAQ appended this informationto its Response to Comments document. Petitioners did not demonstrate that KDAQ's reliance onthis vendor information was unreasonable orresulted in a flaw in KDAQ's approach to assuring compliance with the source-wideVOC limit.



### Exclusion of flare emissions during shutdown malfunction: EPA grants the petition with respect to Petitioners' claim that the equation specified in Section D, paragraph 5 ofthe permit for use in

18 EPA notes that, in responding to Petitioners' comments on the assumption ofa 99.5% combustion efficiency, KDAQ cited tothe flare vendor's statementthat "EPA modified theirrules for flares onheat contentrequirements per40 C.F.R. 60.18 to exclude flares containing> 8% H2." RTC at B-32. EPA's decision to exempt high hydrogen flares from the standard regulatory heat contentrequirement was not intended to suggestthat such flares can be assumed to achieve 99.5% destruction efficiency. To the extent that KDAQ relies on that exemption to support its assumption ofhigh combustion efficiencies for Cash Creek's high hydrogen flare at all times, that reliance isunjustified. 

### See 63 Fed. Reg. 24436 (May 4, 1998).

18demonstrating the facility's compliance with the VOC PTE limit does not appear to account for flare emissions during shutdowns. As noted by Petitioners, the only flare emissions that the equation appears to account for are those that occur while the flare is on standby {pilot emissions) and while gases are vented to the flare during startups. 

### See Final Cash Permit, Section D, at 85. Though KDAQ reports that 

### source-wide VOC emissions will be lower during shutdowns due to certain reductions in emissions compared to "normal operations" ofthe gasifiers and one emission point switching to startupmode 

### (see RTC at B-35), VOC emissions from the flare during shutdowns cannotbe disregarded when calculating the facility's actual emissions to determine compliance withthe 36tpy VOC limit. Rather, all ofthe facility's VOC emissions, including emissions from the flare during shutdowns, shouldbe considered in determining compliance with the facility's 36 tpy VOC PTE limit. Thus, to make the source-wide VOC PTE limit enforceable as a practical matter, KDAQ must either modify the "Compliance Demonstration" equation associated with the VOC limit to require Cash Creekto include all actual flare emissions, including those during shutdowns, in its calculations to determine compliance with this limit, ormust make other appropriate changes to the permit orpermitrecord to ensure that all actual flare emissions count toward Cash Creek's compliance with the VOC limit. Alternatively, KDAQ canrespondto this objection byrequiring Cash Creekto comply with PSD requirements for VOC.

EPA notes that insofar 

### as malfunctions result in additional VOC emissions, these emissions (like all actual Cash CreekVOC emissions) must be accounted for in demonstrating compliance with the sourcewide VOC PTE limit. EPA recognizes that Cash Creek represents that all malfunctions result in shutdown, and, accordingly, inclusion ofshutdown emissions in Cash Creek's VOC emissions calculation should also encompass VOC emissions resulting from malfunctions. However, ifa malfunction could result in flare emissions without an accompanying shutdown, additional revisions must 

### be made to the compliance demonstration equation to assure that it accounts for such emissions. Alternatively, KDAQ could add permit conditions that create an enforceable restriction prohibiting Cash Creek from venting process gas tothe flare unless such venting isassociated with a shutdown event or other event for which emissions are explicitly included in the compliance demonstration methodology. 

### See In re Murphy Oil USA, Inc., Meraux Refinery, PetitionNo. VI-2011-02, Order on Petition (Sept. 21, 2011), at 7.



### 3. Petitioners' contention that the BACT limits 

### applicable to the flare are insufficient.



### a. BACTlimits applicable to the flare duringstartup andsteady-state operations.

Petitioners' Claim: Petitioners contend that the BACT limits for the flare are insufficientbecause: (1) KDAQ should have completed a top-down BACT analysis for the flare, and (2) KDAQ failed to explain what specific design, operation and maintenance measures are required at the flare, and howthese measures ensure the maximum reduction in emissions achievable at the flare consistent with BACT requirement. Petitioners contend that to the extentthat KDAQ is relying onthe flare operation plan 

### as BACT, that requirement is insufficient.



### EPA'sResponse: Regarding Petitioners' contention that the BACT determination for the flares during standby (normal) and startup operations is deficient because it was not based on a top-down analysis (Petition at 16), EPA denies the petition on this issue. Cash Creekprovided a top-down BACT analysis for the flare in its permit application 

### (see December 2009 permit application at4-60 through 4-62) and KDAQ relied on that analysis in selecting BACTfor the flare during standby and startup operations. 

### See

19

### SOB at 20-21, 41-42. Petitioners do not discuss Cash Creek's analysis intheirpetition and do not point to any information suggesting that the resulting BACT emission limits selected for the flare during standby and startup operations are inadequate.

While Petitioners state that in selecting BACT for the flare, KDAQ ignored what they consider to be

more stringent flare operation plan requirements underthe Bay Area Air Quality Management District Regulation (BAAQMD) 12, Rule 12 for Flares at Petroleum Refineries (see 

### Petition at 19), this assertion also does not provide a basis for granting the petition because the possibility that the BAAQMD flare monitoring requirements might be BACT for the flare was not raised in

### public comments and there is no showing that itwas not practicable to raise it orthat the grounds for this claim arose after the public comment period. Moreover, Petitioners do not make any attempt to demonstrate that application ofthe BAAQMD flare monitoringrequirements would achieve a lower BACT emission limit for flare standby and startup operations 

### than is specified inthe permit. 19



### EPA also denies the petition with respect to the contention that KDAQ failed to identify what constitutes proper design, operation and maintenance ofthe flare for purposes ofBACT during standby and startup operations. See 

### Petition at 17. Section B ofthe proposed permit details the design, operation and maintenance requirements applicable 

### to the flare. Specifically, the permitrequires that the flare meetthe design specifications in 40 C.F.R. § 

### 60.18; requires the permittee to install, operate, and maintain a monitoring system for each vent connectedto the flare to measure and record the date and time ofa flaring event and the volume ofwaste gas vented to the flare; and requires the permittee to maintain an array ofrecords demonstrating compliance with the BACT limits. Petitioners do not explain why these permit conditions are insufficient forpurposes ofdefining what constitutes proper design, operation and maintenance ofthe flare for purposes ofBACT during standby and startup operations.



### b. BACTlimits applicable to the flare duringshutdowns andmalfunctions.

Petitioners' Claim: Petitioners assert that KDAQ did not make a BACT determination for flare operation during shutdowns and malfunctions, contrary to the requirement that BACT apply during all periods. Petition at 17. Petitioners contend that those permit conditions that appear to apply during shutdown and malfunction are not supported by a top-down analysis and "nothing in 

### the record suggests that most ofthese limits had any direct connection to BACT." !d. 

### at 17-18. Regarding additional operating limits added in response to comments, Petitioners explain: "KDAQ appeared to pick these numbers at random, as there is no supporting information inthe record." 

### Id at 18. Petitioners further assert that Cash Creek did not demonstrate that complying with an emission limit during shutdown and malfunction is infeasible, so there is nojustification for using a workpractice or operating standard in place ofan emission limitpursuant to 40 C.F.R. 51.166(b)(12). !d. 

### Petitioners add that in any event, KDAQ failed to specify the emission reductions achievable from such work practice or operating standard as required by the Kentucky SIP and federal regulations. !d. 

### at 18-19. Petitioners assert that the provisions inthe to-be-submitted flare operationplan do not qualify as BACT because these provisions

are based on the NSPS for petroleum refineries and NSPS is only the floor for BACT determinations. ld 

### at 19. Finally, Petitioners explained that KDAQ should have considered the more stringent flare operation planrequirements under the BAAQMD regulation in determining what constitutes BACT for the flare. !d.

19 

### Petitioners do not contend thatthe BAAQMD flare operation requirements apply directly to the Cash Creek facility, but that KDAQ should have considered these requirements in determining what constitutes best available control technology for Cash Creek's flare. 20

### EPA'sResponse: EPA grants the petition on this issue due to KDAQ's failure to provide a reasoned response to public commentsregardingthe apparent exclusion offlaring emissions during shutdown and malfunction events from the permit's BACT limits. 

### In particular, though KDAQ'sResponse to Comments docwnent acknowledges Petitioners' commentregarding the absence ofconditions in the permit establishing BACT limits for the flare during shutdown and malfunction events 

### (see RTC at B

54), KDAQ did not respond tothe comment. Instead, KDAQ simplyreferred the commentersto its response to the commentspertaining to the consideration ofshutdownemissions in the calculation ofthe facility's PTE. However, nothing in thatresponse addressed whether any BACT limit appliesto the flare during shutdown andmalfunction events orwhether KDAQ intended to establish a work practice standard to meetthe BACTrequirement during these periods. Furthermore, based on a review ofthe proposedpermit and the accompanying statement ofbasis, it doesnot appearthatthepermitcontains a BACT limit applicable to flare emissions during shutdown andmalfunction events.20

KDAQ has an obligationto adequately respond to significant comments on a draft title V permit. Under section 502(b)(6) ofthe Act, 42 U.S.C. 

### § 766la(b)(6), all title V permitprograms must include adequate procedures forpublic notice regarding the issuance oftitle V operatingpermits, "including offering an opportunity for public comment." 

### See also 40 C.F.R. 

### § 70.7(h). It is a general principle ofadministrative lawthat an inherent component ofany meaningful notice and opportunity for comment is a responseby the regulatory authority to significant comments. 

### Home Box Office v. FCC, 567 F.2d 9, 35 (D.C. Cir. 1977) ("the opportunity to comment is meaningless unless the agency responds to significant points raised by the public."). 

### See also, e.g., In reLouisianaPacific Corporation, Petition V-2006-3, 

### at4-5 (Nov. 5, 2007). Petitioners' commentregarding the apparent lack ofa BACT limit governing flare emissions during shutdown and malfunction emissions was significantbecause it 

### pertains to whetherthe BACT limits applicableto the proposed facility apply continuously.

EPApreviously has interpreted sections 165(a)(4) and 169(3) ofthe Actto require that a PSDpermit

assure 

### that compliance with BACT limits is required at all times and cannotbewaived. 

### See In re Louisville Gas and

### Electric Co., Orderon Petition (Sept. 10, 2008), at 

### 10 ("LG&E Order") (stating that "[a] PSD BACT limit must apply at all times"); 

### In re Prairie State Generating Co., 

### 13 E.A.D. 

### 1, 87-88 & n.93 (EAB 2006) (explaining that a PSD permit cannot exclude emissions from meeting BACT limits, and listing various EPA guidance documents discussing the applicability ofemissions limitations during start-up, shutdown, and malfunction); 

### see also In reIndeck-Elwood, LLC, 13 E.A.D. 126, 174 (EAB 2006) (stating that it is "well establishedthat BACT requirements cannotbewaived or otherwise ignored during periods ofstartup and shutdowns.");

### In re Tallmadge GeneratingStation, PSD Appeal No. 0-12, at 24 (EAB 2003) (stating that "BACTrequirements cannotbe waived or otherwise ignored duringperiods ofstartup and shutdown"); 

### In re RockGenEnergy Center, 8 E.A.D. 536, 553-55 (EAB 1999) (holdingthat PSD permits may not contain blanket exemptions from BACT limits during startup and shutdown). Thus, it is incumbent upon KDAQ to explain howtheproposedpermit assures that BACT limitations apply at all times inresponse to public commentregarding the apparent exclusion of shutdown and malfunction events from the permit's BACT limits.

20 EPA notes that unlike with respect to VOC, the permit does not include limits intended to restrictthe facility's actual emissions ofPM, PM10, PM2

.5, NOx, SO2, and CO belowthe PSD applicability threshold. SOB at 7. KDAQ determined that theproposed facility has the potential to emit PM, PM10, PM2

.5, NOx, SO2
, and CO in significant amounts, and a BACT analysis was performed for these pollutants. 

### ld Thepermit includes one set ofBACT limits for the flare during standby operations (pilot
gas combustion emissions) and a second set ofBACT limits for the flare during startup operations (while the gasifiers are preheated using methanol as fuel). Permit at42.

21Thus, EPA is grantingthe Petition onthis claim because KDAQ did not adequately explain in response to comments whetherthe permit's BACT limits apply to the flare during shutdown andmalfunction events. In response to this objection, KDAQ must explain whetherthe permit'sBACT limits apply to the flare during shutdowns and malfunctions. IfKDAQ concludes upon further consideration that flaring emissions during shutdowns and malfunctions are in fact excluded from the permit's BACT limits, KDAQ must revise the permit to addressthat deficiency. Insofar as KDAQ intends to utilize a work practice standard in lieu ofan emission limit for any operating scenario that is not covered by the permit's emission limits, KDAQ must demonstrate "thattechnological oreconomic limitations on the application ofmeasurement methodology

...would make the imposition ofan emissions standard infeasible" for that operating scenario. 

### See 401 KAR 51 :00l § 1 (25)(c); 40 C.F.R. § 51.166(b )(12); 

### see also LG&E Order at 10. KDAQ must include any such demonstration in the permit record and provide the public with an opportunityto comment. 

### In addition, KDAQ must specif y (and provide a public comment opportunity on) the "design, equipment, work practice, operational standard or combination thereof' required ofthe proposed facility in lieu ofa numeric emissions standard. 

### See 40I KAR 51 :001 Section 1(25Xc); 40 C.F.R. § 51.166(b)(12). Finally, inaccordance with federal regulations and Kentucky's SIP, ifKDAQutilizes a work practice standard in lieu ofan emission limit, KDAQ must, ''to the degree possible, set forth the emissions reduction achievable by implementationofsuch design, equipment, work practice, or operation, and shall provide for compliance bymeans which achieve equivalent results." ld.



### C. Petitioners' Claims Regarding Fugitive Emissions from Equipment Leaks

Petitioners raise numerous issues regarding Cash Creek's estimate offugitive emissions from equipment leaks and the associated CO BACT analysis, which resulted inthe selection ofLDARrequirements as BACT. 

### See Petition at 19-31. Petitioners point outthat Cash Creek's estimate offugitive emissions from equipment leaks and the associated CO BACT analysis was not available to the public during the public comment period, but was instead produced by Cash Creek inresponse topublic comments identifying the omission. 

### See Petition at 20. Petitioners explain thatthe final permit included several new conditions (also not subject to public comment) relating to implementation ofLDARrequirements and inclusion of fugitive VOC and H2S emissions in the equation used to determine Cash Creek's compliance with the source-wide VOC and 

### H2S PTE limits. 

### See Petition at 20. Petitioners' concerns regarding the fugitive emissions calculation and CO BACT analysis are described below, along with EPA'sresponse.

1. 

### Petitioners' contention that KDAQ's determination that the source is minor for VOC and HAPswas based on a flawed estimate offugitive emissions from equipment leaks.

Petitioners' Claim: Petitioners contend that the post-hoc fugitive emissions analysis underestimates the facility's VOC and H2S 

### HAP emissions. In particular, Petitioners 

### claim that Cash Creek relied on inaccurate emission factors in calculating fugitive emissions. In addition, Petitioners contendthat the permit improperly allows Cash Creekto demonstrate compliance with the PTE limit for fugitive emissions using the assumed emission factors without confirmation through source testing. 

### See Petition at 22.

Regarding the selected emission factors, Petitioners take issue with Cash Creek's use ofSynthetic Organic Chemical Manufacturing Industry (SOCMI) emission factors without ethylene. Petitioners contend that Cash Creek should have used EPA's refinery emission factors, instead. Petitioners assert, without providing support, that the refinery emission factors are more appropriate because a coal

22gasification facility's gas streams are more similar to refineries than to chemical manufacturing plants. Petitioners state that KDAQ failed to provide any technical background regarding the percentages or types ofdifferent chemicals in eachprocess stream, and contend 

### that, based on a comparison to another facility's permit application, the process stream likely includes chemicals not identified by Cash Creek. Petitioners further state that KDAQ failed to explain why it is appropriate to use the SOCMI without ethylene factors instead ofthe higher average SOCMI factors. 

### See Petition at 23-25.

Petitioners further contend that the fugitive leak estimates are erroneous because they fail to account for components where control ofleaks is non-existent, limited, or delayed. Petitioners explain that the estimates assume exceedingly high levels ofcontrol associated with the proposed LDAR program, and do not account for any non-accessible, difficult-to-monitor, orunsafe-to-monitor components. Petitioners state that additional fugitive emissions will result from repair delays because the permit provides a process where delay ofleak repair is allowed and sets no limit on mass emissions from delay ofrepair. 

### See Petition at 25-26.

Regarding the permit conditions applicable to fugitive emissions, Petitioners assert thatthe permit is flawed because it does not require monitoring orprocess sampling to confirm the lowpercentages of individual compounds inthe process streams assumed by Cash Creek in selecting its emission factors. Petitioners further contend that the PTE limit for fugitive emissions is ineffective because compliance withthe limit is determined by calculating emissions based onthe same flawed emission factors without requiring monitoring to confirmthe accuracy ofthose factors. 

### See Petition at 26-27.



### EPA'sResponse: EPA denies as premature the petition onthis issue. As explained above, EPA is granting the petition onthe issue ofthe unavailability during the public commentperiod ofCash Creek's calculation offugitive emissions from equipment leaks. To address EPA's objection, KDAQ will need to submit the fugitive emissions calculation for public comment andprovide an adequate response to any public comments received. Because KDAQ has notyet submitted the fugitive emissions calculation for public review, Petitioners' concerns regarding potential errors inthat calculation are not ripe for EPA review. Therefore, EPA denies the petition as premature with respect to Petitioners' substantive

concerns regarding Cash Creek's fugitive emissions calculation.



### 2. Petitioners' allegation that KDAQ omitted numerous control options and relied on a faulty cost-effectiveness analysis in selecting CO BACT for fugitive equipment leaks.

Petitioners' Claim: Petitioners contend that KDAQ's BACT analysis for fugitive equipment leaks should have considered more stringent LDARprograms in use at chemicalplants and refmeries such as the one required by BAAQMDregulations. 

### See Petition at 28-29. Second, Petitioners contend that KDAQ's analysis ofthe cost-effectiveness ofrequiring Cash Creekto utilize leakless components was flawed because KDAQ only considered a facility design employing 

### entirely leakless components. Petitioners point out that EPA has required consideration/use of

### some leakless and/or certified low leak components in consent decrees for similar facilities (providing examples) and contend that the BACT analysis should have considered a control option consisting ofless than allleakless components. 

### See Petition at 30. Third, Petitioners contend that KDAQ's BACT analysis was flawed because KDAQ deemed use ofentirely leakless components not to be cost-effective based solely on incremental cost, and that incremental cost effectiveness is an optional considerationthat must always bepaired with average cost effectiveness. 

### See Petition at 30-31.



### 23

### EPA'sResponse: EPA denies as premature the petition onthis issue. As noted above, EPA is granting thepetition with respectto KDAQ's failure to submit the CO BACT analysis for fugitive emissions from equipment leaks for public comment. Because KDAQ will need to submitthe CO BACT analysis for public comment and respond to any significantpublic comments, it ispremature for EPA to respond to the Petitioners' substantive concerns regarding the CO BACT determination for fugitive emissions.



### D. Petitioners Claim that the Proposed Facility is 

### a Major Source ofHazardous Air Pollutants



### Petitioners' Claim: Petitioners state that the Cash Creek facility will be a major source ofhazardous air pollutants and should be subjectto appropriate case-by-case MACT determinations for HAPs under Clean Air Act 

### § 112. Petition at 31. This claim relates to issues B. I (alleging that the HAP PTE calculation does not fully account for flaring emissions) and C.l (alleging thatthe PTE calculation did not adequately account for fugitive emissions from equipment leaks).



### EPA'sResponse: The EPA denies as premature the Petition on this issue based onthe current record. As explained above, EPA is inthis Order objecting to Cash Creek's permit onthe basisthat KDAQ failed to provide a reasoned explanation in response topublic comments questioningwhether the PTE calculation for HAPs included consideration offlaring emissionsthat will occur at times otherthan during startup and standby (flare pilot) operations, and on the basis that KDAQ did not complywith public comment procedures with respect to the calculation offugitive emissions (including HAPs) from equipment leaks. 

### Inresponse to this objection, KDAQ will need to explainhow (and if) the PTE calculation for HAPs accounts for flaring emissions otherthan during standby and startup operations, and must subject the equipment leak emissions calculation for public comment. Until KDAQ provides the required explanation and additional public process, Petitioners' 

### claim that Cash Creek is a major HAP source that should be subject to a case-by-case MACT standard is not yet ripe for EPA's review.



### E. Petitioners' Claims Regarding Fugitive Particulate MatterEmissions from Material Handling

Petitioners raise numerous issues regarding fugitive particulate matter emissions from material handling. These are summarized as follows and more specifically identified and responded to below. 

### As a general matter, Petitioners contend that KDAQ failed to estimate and modelthe full fugitive PM 10 and PM2

.5 emissions (collectively referred to as "PM emissions") from material handling allowed underthe permit, including fugitive emissions from paved and unpaved haul roads, coal piles, and slag landfills. 

### See Petition at 32. As a result, accordingto Petitioners, Cash Creek hasnot demonstrated thatthe proposed facility will not cause or contribute to a violation ofthe PM10 and PM2

.5NAAQS orthe PSD increments

as required by CAA 

### § 165(a)(3), 42 U.S.C. 

### § 7475(a)(3).Jd

. Petitioners explain that ifCash Creek calculated material handling emissions correctly, projected PM emissions would be high enough to requirethat Cash Creek conduct a full NAAQS and PSD incrementmodeling analysis for PM10 and PM2.5

.Id at 37.



### 1. 

### Petitioners' contention that the permitapplicant utilized unreasonably higb and unsupported control efficiency for methods used to control fugitive PM emissions from baul roads and coal and slagpiles.



### Petitioners' Claim: Petitioners take issue with Cash Creek's assumption in its modeling that the

measures specified in the permit for controlling PMemissions from haul roads and coal and slag piles

24will achieve 90% control efficiency. Petition at 32-35. Petitioners reference their comments on the draft permit (attached to the petition), in which they cite various sources that contradict the assumed 90% control efficiency. 

### !d. at 33. Petitioners further contend

### that thepermit conditions governing control of PM emissions from material handling are vague and unenforceable and therefore do not ensure that Cash Creek's control measures will achieve 90% control efficiency.ld. at 38-39. According to Petitioners, it would 

### be more realistic to assume 75% control efficiency for haul roads, and 60% control efficiency for coal 

### and slag piles.ld

. at 33. Petitioners state that Cash Creek's fugitive PM emissions are significantly higher when recalculated using these more realistic control efficiencies.Jd at 33. Petitioners also contend that Cash Creek erred by calculating 24-hour average PM10 emissions using an equation that includes an emission reduction factor based on the number ofdays ofrain per year. Jd at 34. Citing to AP-42 Chapter 13.2.2 Unpaved Roads,21 Petitioners state that this strategy is not applicable to short-term emission rate calculations. Specifically, Petitioners explainthat it may not rain for many days in a row, and, thus, rainfall will notbe a mitigating factor whencalculating 24-hour PM 10 emission rates during that period. 

### !d. Petitioners state that Cash Creek's daily and hourly emission estimates must 

### be recalculated withoutthe use ofany rainfall correction factor. 

### !d. at 35.



### EPA s

### Response: For the reasons provided below, EPA grantsthe petition onthis issue. The permitting record does not indicate that KDAQ provided a reasonedjustification for its fugitive emissions estimates.

EPA's AP-42 document describes various approaches to emissions estimation and depicts them in a hierarchical format. Where data are lacking and otherpreferred approaches are not available, emissions factors may be used to estimate emissions in permitting and other applications. AP-42, Introduction, at 1-2. An emissions factor is a representative value that attempts to relate the quantity ofa pollutant released to the atmosphere with an activity associated with the release ofthatpollutant. Beforeusing an emission factor compiled inAP-42, EPA advises users to exercise professionaljudgmentto verify 

### that a particular emission factor is sufficiently representative ofemissions from the particular activity or
source to which it is to 

### be applied. For example, AP-42 states the following:

Before simply applying AP-42 emission factors to predict emissions from 

### new orproposed
sources, ortomake other source-specific emission assessments, the user should reviewthe latest literature and technology to be aware ofcircumstances that might cause such sources to exhibit emission characteristics different from those ofother, typical existing sources. Care should be taken to assure that the subject source 

### type and design, controls, and raw material inputare those ofthe source(s) analyzed to produce the emission factor.



### !d. at 4. Inthis case, Petitioners have demonstrated that KDAQ has failed to adequately consider several relevant factors and, thus, KDAQ has not demonstrated that it is appropriate to apply 

### the emissions factors from AP-42 in the manner thatthey were used in this case to estimate fugitive emissions.

21 AP-42, 

### Compilation of AirPollutant Emission Factors, has beenpublished since 1972 as 

### the primary compilation ofEPA's emission factor information. It contains emission factors andprocess information for more than 200 airpollution source categories. A source category is a specific industry sector or group ofsimilar emitting sources. The emission factors have been developed and compiled from source test data, material balance studies, and engineering estimates. The Fifth Edition ofAP-42 waspublished in January 1995. Since then EPAhas published supplements and updates to the fifteen chapters available in 

### Volume I, 

### Stationary Point andAreaSources. AP-42 is available on EPA's website at http://www.epa.gov/ttn/chief/ap42/index.html#toc

. 25Regarding the assumed 90% control efficiency, in response to public comments KDAQ explained that the 90% control efficiency accounts for wet suppression in combination with other control methods. See RTC at B-22 to -23. Specifically, for pavedroads, in addition to wet suppression, the permit requires silt fences, speed restrictions of20miles perhour, and chemical suppression. 

### ld Forunpaved roads, wet suppression is supplemented with silt fences, speed restrictions of20miles 

### per hour, and the use of gravel. See RTC at B-20 to -21. According to KDAQ, AP-42 indicates that it is possible to attain 90% control efficiency with only wet suppression; thus, KDAQ explains that it is reasonable to assume that wet suppression combined with the supplemental measures will achieve 90% control efficiency. See RTC at B-22 to -23.

While AP-42 reports that some sources using wet suppression have achieved 90% control efficiency, this is one ofthe highest achievable control efficiencies for wet suppression methods. See AP-42, Section 13.2.2, Figure 13.2.2-2 (Watering control effectiveness for unpaved travel surfaces). The control efficiency achieved by wet suppression depends heavily on how frequently it is applied. See AP-42, Section 13.2.2.3, at 8 (explaining that watering and chemical suppressants "require frequent reapplication to maintain an acceptable level ofcontrol."); see also Air & Waste Management Association,AirPollution EngineeringManual, 131 (2d 

### ed. 2000) (explaining that "[t]he effectiveness ofcontrols depends onthe specific situations as well as the diligence towhich it is applied"). To attain 90% control efficiency, the wetting agent must be applied frequently and in large amounts. For example, AP-42 reports thatup to 90% control efficiency ofPM emissions from storage piles and associated roadways can be achieved through "[c]ontinuous chemical treating ofmaterial loaded onto piles, coupled with watering ortreatment of roadways." See AP-42, Section 13.2.4.4, at 5. Likewise, the effectiveness ofCash Creek's supplemental control measures depends on howthey are implemented, in combination with other site-specific factors. See Air & Waste Management Association,AirPollution EngineeringManual, 127-131 (2d ed. 2000). 

### As Petitioners point out, other

### than instructing Cash Creek to utilize the specified methods for controlling fugitive PM emissions, Cash Creek'spermitprovides no details regarding Cash Creek's implementation ofthese methods. See Final Cash Creek Permit at 75. For example, the permit lacks any requirement governing how frequently wet suppression must be applied, the atmospheric and operational conditions under whichwet or chemical suppression shouldbe applied, the time ofday that wet or chemical suppression should be applied, orthe amount that should be applied. Rather, the permit simply states that "gravel, silt fences, and wet suppression" shall be used on unpaved roadways, "siltfences, and chemical and/or wet suppression" shall be used onpaved roadways, and "silt fences, compaction, chemical and/or wet suppression, andtelescopic chutes and stacking tubes" shall be used on the coal storage pile and slag landfill. See Final Cash Creek Permit at 75.

To make a reasoned demonstration that a proposed new source will not cause or contribute to a violation ofany NAAQS or applicable PSD increment, the permitapplicant andpermitting authority should considerthe emission rate that reflects the maximum allowable operating conditions allowed under the facility's permit as expressed by the enforceable emissions limit, operating level, and operating factor for each applicable pollutant. See 40 C.F.R. part 51, Appendix W, Table 8-2. Giventhe lack of specificity in the permit regarding Cash Creek's fugitive PM control obligations, EPA finds that Petitioners have demonstrated that KDAQ did not provide a reasonedbasis for assuming that the combined fugitive PM control measures will achieve 90% control efficiency. Tojustify the assumed 90% control efficiency, KDAQ needs to provide a reasoned explanation for the control efficiency expected from the combined measures that reflects the enforceable permit conditions governing implementation ofeach measure (e.g., sufficient permit requirements governing wet suppressionjustif y the assumed control efficiency).



### 26EPA notes that two ofthe control measures identified by KDAQ as supporting the assumed 90% control efficiency-speed limits and the application ofgravel to unpaved roads--do not appearto be relevant to the control efficiency parameter that is used to calculate controlled fugitive PM emissions from roadways. Although vehicle speed is a factor for road emissions, a range ofvehicle speeds was included in the dataused in developing the AP-42 equations for estimating uncontrolled fugitive PM emissions from paved and unpaved roads. 

### See AP-42, Section 13.2.1.3, at 5 (paved roads); 

### id at Section 13.2.2, at 

### 5 (unpaved roads). Likewise, while the application ofgravel to unpaved roads reduces fugitive PM emissions, the impact ofgravel application is capturedby the AP-42 equation inthe variable representing "surface material silt content" (i.e., the application ofgravel lowers silt content). 

### See id at Section 13.2.2.2, at 4 (unpaved roads). Thus, the effect ofspeed limits and gravel should already be accounted for inthe AP-42 equations used to estimate the uncontrolled PM emissions. Afterthe uncontrolled emissions rate is determined using the AP-42 equations, the control efficiency offugitive PM controls is applied to the uncontrolled emissions rate to arrive atthe projected controlled emissions rate. Because the AP-42 equations usedto calculatethe uncontrolled PM emissions rate appearto account for the effect ofvehicle speed and gravel, KDAQ's reliance on these measures to supportthe assumed 90% control efficiency lacks a reasoned basis.

Finally, EPA finds that Petitioners have demonstrated that KDAQ erred in approving Cash Creek's use ofanequation that includes a rainfall correction factor to calculate 24-hour average fugitive PM emissions. As indicated inAP-42, the equation for estimatingparticulate matter emissions from roadways that considers precipitation (i.e., natural mitigation) is appropriate for annual or other longterm applications. To assess compliance with short-term ambient standards, the potential maximum short-term emission factor associated with the project's industrial road conditions should beused. Because ofthe possibility ofhavingno rain during many days in an annual period, the maximum shorttermparticulate emission factor would not include natural mitigation. 

### Inresponse to this petition, KDAQ needs to ensurethat Cash Creek does not include a rainfall correction factor in its 24-hour
average fugitive PM emissions calculation.



### 2. Petitioners' contention that the applicant utilized an unreasonably low silt loading factor for paved roads.

Petitioners' C laim: Petitioners take issue with Cash Creek's use ofa 0.4 grams permeter squared (g/m2) silt loading factor derived from measurements from the iron and steel industry in calculating PM emissions from paved roads. Petition at 35-37. Petitioners explain that this silt loading factor is from the low end ofthe range reported in AP-42 (which ranges from 0.09 to 79 g/m2 for the selected industry category) and should not be considered representative ofworst-case emissions. 

### ld at 36. Petitioners note that AP-42 highly recommends the collection and use ofsite-specific silt loading data, and assertthat Cash Creek should have attempted to obtain site-specific silt data from similar sources ratherthan rely

on AP-42 data. 

### !d. at 35. In addition, Petitioners point to a statement in AP-42 indicating that where a
source cannot obtain site-specific data, an appropriate meanvalue should be selected from a table listing silt loadings that were experimentally determined for a variety ofindustrial roads. 

### ld at 36. They explainthatAP-42's industrial roadwaytable provides a range ofmean silt values from 7.4 to 292 g/m2
• 

### !d. Petitioners also point to an EPA statement that "AP-42 emissions factors

... are not precise enough for regulatory applicability determination" and to an EPA statement recommending that ifAP-42 factors

are relied upon for applicability determinations, the maximum value inthe range ofreported values should be used. Jd at 36 (citing U.S. EPA, Appendix 

### D: Preliminary Emissions Factors Program Improvement Option Paper4 Providing Guidance Regardingthe Use ofEmissions Factors for Purposes Otherthan Emissions Inventories, at 4-3 tbl.4.1 & at 4-11 tb1.4.4). Petitioners state that KDAQ did not

27explain whythe worst-case silt conditions at the Cash Creek facility would be consistent with the low end ofthe AP-42 range, and did not explain why the iron and steel industry is the most analogous industry for the paved roads at the Cash Creek facility. 

### Id at 37. Finally, Petitioners contend that the permit lacks conditions limiting the silt on the paved roads on a continuous basis to the 0.4 g/m2 assumed in the calculations. 

### ld



### EPA'sResponse: Forthe reasons stated below, EPA grants the petition on this issue. Petitioners demonstrated that the permit and permit record lack sufficient support for the assumption ofa 0.4 g/m2 silt loading factor for the facility's paved haul roads, which is one ofthe lowest silt loading factors reported inAP-42 for an industrial facility ofany kind. 

### See AP-42 for Paved Roads, at 13.2.1-10, Table 13.2.1-3 (Jan. 2011). As KDAQ acknowledged in responseto Petitioners' comments onthe draft permit, AP-42 reports a wide range ofsilt loading factors for the iron and steel manufacturing industry: 0.09 

## g

/m2 to 79 g/m2

## .22 RTC at B-23. As Petitioners explain, due to this wide range ofreported silt loading values, AP-42 explains: "the collection and use ofsite specific silt loading data ispreferred and is highly recommended." AP-42 for Paved Roads, at 13.2.1-9 (Jan. 2011).23 Furthermore, Petitioners are correct that where site-specific silt loading data cannot be obtained, AP-42 recommends selecting "an appropriate value for an industrial road

... from the 

### mean values given in Table 13.2.1-3." 

### ld (emphasis added). 24 The mean value reported for the iron and steel manufacturing industry is 9.7 g/m 2-which is significantly higherthan the 0.4 g/m2 value used by CashCreek. Moreover, Petitioners correctlypoint out thatthe mean values for other industrial sectors range from 7.4 g/m2 all the way to 292 g/m

.

Petitioners demonstrated that KDAQ offered no explanation for why the reported values for the iron and steel manufacturing industry are more relevant to silt loading atthe proposed facility 

### than thevalues reported for other industries. Rather, inresponse to comments on the 

### draft permit, KDAQ stated thatthe iron and steel manufacturing industryhadthe largest number ofsites tested and the largest sample set reported in AP-42. 

### See RTC at B-22 to -23. Furthermore, even 

### if

### it is reasonable for KDAQ to rely on the iron and steel manufacturing industry values, KDAQ failed to provide a reasoned explanation in support ofits selection ofa silt loading value that is significantly below the mean for that industry. While there may be some merit to KDAQ's explanationthat silt loading wiii be lowbecause the material being transported will consist ofmoist slag from the gasifiers, a more detailed analysis is needed tojustify use ofone ofthe lowest reported silt loading factors from another industry type.

To address this objection, KDAQ needs to provide a reasonable explanation in the Statement ofBasis and/or Response to Comments document for whythe assumed 0.4 g/m 2 silt loading factor is appropriate for Cash Creek, oruse a different approach based on a reasoned analysis. IfKDAQ concludes that a different silt loading factor shouldbe used, KDAQ needs to explainwhy the alternative factor is appropriate and, ifa higher factor is used, instruct Cash Creek to remodel its PM emissions using that factor.

22 EPA published an update tothe AP-42 chapter on Paved Roads in January 2011. Theupdated chapter reports the same silt loading factor range for the iron and steel manufacturing industry that 

### was reported inthe 2006 version ofAP-42-Paved Roads. 

### See http://www.epa.gov/ttn/chiefi'ap42/ch13/final/c13s0201.pdf 23 This statement also appeared in the 2006 version ofAP-42 for Paved Roads that 

### was in effect atthe time the Cash Creek permit was drafted. 24 This statement also appeared 

### in the 2006 version ofAP-42 for Paved Roads that was in effect at the time the Cash Creek permit was drafted. 

### 28

### 3. Petitioners' contention that remodeled emissions exceed the signif icant impact levels used by KDAQ to determinewhen a full cumulative PM air impact analysis is required.

Petitioners' Claim: Petitioners explain that they remodeled the facility's PM 10 and PM2



### .5 impacts based

on what they consider to be the correct material handling estimates, and that their modeling shows that the facility's PM emissions will exceedthe PM significant impact levels used by KDAQ as a screening threshold. Petition at 37. As such, Cash Creek should undertake a full NAAQS and PSD increment ambient air quality analysis. 

### ld.

EPA'sResponse: EPA denies as premature the petition onthis issue. As explained above, EPA 

### is granting the petition onthe issue ofKDAQ's failure to provide a reasoned explanation based onthe permit record for Cash Creek's assumption of90% control efficiency for fugitive particulate matter control methods to be used onthe facility's haul roads and coal and slag piles, and for 

### its assumption of

a 0.4% silt loading factor for the facility's paved haul roads. Itispossible that inresponse to EPA's objection, KDAQ will provide the additional explanation for why Cash Creek's assumptions were appropriate. Thus, it is premature for EPAto conclude that CashCreek should undertake a full NAAQS and PSD increment ambient air quality analysis for PM 10 and PM2

.5to make the demonstration required under PSD permitting requirements.



### 4. Petitioners' contention thatthe permit contains unenforceablevague terms and conditions for material handlingthat do not equate to control efficiencies.

Petitioners'Claim: Petitioners contend

### that various operating conditions applicable to paved and unpaved roads, as well as coal piles 

### and slag landfills, are too vagueto be enforceable and therefore do not constitute proper limitations onpotential to emit from material handling sources sufficientto support the high control efficiencies assumed in the PM modeling. Petition at 38-39. Petitioners explain thatthe permit fails to specify the frequency withwhichwet suppressionmust be applied to roads, the atmospheric and operational conditions under which wet suppressionmust be applied, how to determine whether to apply water sprays or "othermeasures," etc. 

### Id.

EPA'sResponse: EPA grants the petition onthis issue. As explained above, Petitioners demonstrated that KDAQ did notprovide a reasoned basis for assumingthat the permit requirements.governing control offugitive PM from haul roads, coal piles and slag landfills are sufficiently specific and stringentto equate to the 90% control efficiency assumed 

### inCash Creek's emission calculations. See 

### supra at25-27. Specifically, otherthan generally instructing Cash Creek to utilize the selected control methods, the permit provides no details regarding Cash Creek's implementation ofthesemethods. To justifythe assumed 90% control efficiency, which is atthe high end ofreported fugitive PM control efficiencies, KDAQ needs to provide a reasoned explanation for the control efficiency expected from the combined measures that reflects the enforceable permitconditions governing implementation ofeach

measure (e.g., more specific permit requirements governing wet suppression are needed tojustify a higher assumed control efficiency) or take an alternate approach based on a reasoned analysis and make any necessary changes to the permit record andpermit.

29

### F. Petitioners' Claim thatthatthe Ozone ImpactAnalysiswas Inadequate

Petitioners'

### Claim: Petitioners claim that Cash Creek and KDAQ failed to demonstrate thatthe proposed source will not cause or contribute to violations ofozone air quality standards, as required by CAA 

### § 165(a)(3), 42 U.S.C. 

### § 7475(aX3). Petition at 39-46. First, Petitioners contendthat Cash Creek's

ozone impact analysis was flawed because it did not involve source-specific single-sourcemodeling as required bythe CAA, 42 U.S.C. 

### § 7475(e)(3)(D), Kentucky's regulations, 401 KAR 51:017 § 10, and 40 C.F.R. Part 51, Appendix W, 

### Guidelines onAir Quality Models (2003). 

### Id. at 39-40. Petitioners cite to 42 U.S.C. § 7475(e)(3)(D), arguing forthe proposition that states and applicants are not toundertake their own independent adjustments ofmodeling approaches, but must seek federal approval of deviations from federal regulatory guidelines. Id at 40.

Petitioners acknowledge the language in Subsection 5.2.l.c ofAppendix W titled, "Estimatingthe Impact ofIndividual Sources," which states that for ozone the method used to assess an individual source's impact "depends on the nature ofthe source and its emissions," and that "model users should consult with the [EPA] Regional Office to determine the most suitable approach on a case-by-case basis."

### Id. at 40-41. However, Petitioners contend thatthis language does not exempt a source from the

ozone modeling requirement; rather, "the quoted passage must beread in contextto mean that a case-by

case approach should be taken for individual source modeling methods for ozone impacts."I d. at41.

Petitioners assert thatthere is no evidence inthe record that EPA Region 4 approved Cash Creek's method for assessing ozone impacts. 

### Id. at40-41. Petitioners acknowledgethat Cash Creek'spermit application cites to a December 2000 letter from EPA Region 

### 4 to the Georgia Environmental Protection Division indicating that "ozone impactmodeling is not normallyrequired for single sources," and that "information on current ozone levels in the area should be cited to provide qualitative assurance thatthe increased [emissions] from facility operation will not cause or contribute to" an ozone violation. Id at 41. According to Petitioners, EPA Region4'

### s letterto Georgia does not constitute regional approval of the Cash Creek'smethodologybecause regional approval must be granted ona case-by-case basis. 

### Id. Petitioners further note that EPA's letterto Georgia is nine years old and assertthat it is extremelydated with respectto ozone modeling capabilities. 

### Id. Citing various examples, Petitioners contend that singlesource ozone modeling is bothtechnically and economically feasible, and that there 

### are several sources ofinventory information that KDAQ could use for such modeling. 

### Id. at 45-46.

Petitioners further contendthat even ifa qualitative approachto assessing ozone impacts could 

### be considered "modeling,"the approach utilized by Cash Creekwas inadequate to demonstrate protection ofthe ozoneNAAQS. They argue the approach was unsuitable because it does not "provide[] the most accurate representation ofatmospheric transport, dispersion, and chemical transformations inthe area of interest."

### Id. at 42-43 (quoting Appendix W Subsection I.e). Inparticular, Cash Creek estimated ozone increases associated withthe facility's NOx emissions by scalingthe results from modeling sensitivity studies conducted by Georgia Environmental Protection [Division] (EPD) in support oftheir 8-hr ozone SIP development. 2010 SOB at46. Petitioners statethat Cash Creek and KDAQ made little to no effort to demonstrate that Georgia's ozone sensitivitymodeling is appropriate for Kentucky based on similarities in atmospheric transport, dispersion, and chemical transformations in the region surrounding the proposed facility. Petition at 43. Petitioners identif y various differences between the counties surroundingAtlanta that were the subject ofGeorgia's modeling and the area ofKentucky wherethe Cash Creek facility would 

### be located, including differences interrain, land use, atmospheric conditions and relative source contribution. 

### Id. According to Petitioners, KDAQ failed to adequately address these

concerns in 

### its response to Petitioners' comments on the draft permit.

30Petitioners point to a December 2001 modeling study by KentuckyNatural Resources and Environmental Protection Cabinet indicatingthat new powerplants in Kentucky can generate large

ozone increases, and that Henderson County has the second largest daily 

### total ofNOxemissions from

new powerplants. Petition at 44. Petitioners also note that ozonemonitoring data in Henderson County have exceededthe 2008 ambient air quality standard of0.075 parts per million (ppm), and that in March 2009 KDAQ proposed Henderson County to be designated as in nonattainment with the 0.075 ppm standard. 

### Id. at44-45.



### EPA'sResponse: With respect to Petitioners'·contentionthat Cash Creekwas legally required to perform modeling to assess the proposed new facility's impacts on ambient ozone levels, the petition is denied. While Kentucky's SIP requires that all applications ofair quality modeling used in PSD permitting "shall be based onthe applicable models, databases, and other requirements" specified in Appendix W of40 C.F.R. part 51, Appendix W does not specify a particularmodel for use in analyzing

an individual source's impacts on ambient ozone levels in PSD permitting. Rather, Appendix W Section 5.2.l.c explains: "Choice ofmethods used to assess the impact ofan individual source depends onthe
nature ofthe source and its emissions." It further states that model users "should consult withthe [EPA] Regional Office to determinethe most suitable approach [for analyzing ozone impacts] on a case-by

case basis." Appendix W Section 5.2.l.c. As EPA Region 

### 4 explained in another context, depending on the nature ofthe source, its emissions and background ozone concentrations, "an ozone impactanalysis other

### than modeling may be required." 76

### Fed. Reg. 41100,41108 (July 13, 2011).

EPA also denies the petition with respectto Petitioners' contentionthat Cash Creek's qualitative analysis is insufficient to demonstrate that the proposed facility will not cause or contribute to an ozone NAAQS violation. 

### Inthis case, Cash Creek analyzed (1) current and anticipated background ozone concentrations at the location ofthe proposed facility based on dataobtained from a representative regional monitor and from photochemical modeling conducted for the Visibility Improvement State and Tribal Association ofthe Southeast-Southeastern States

### AirResource Managers (VISTA8-SESARM), and (2) the relationshipbetweenthe proposed facility's emissions ofozone precursors (NOx andVOC) and the emissions ofthose same ozone precursors from other sources in the area. 

### See Cash Creek Permit Application, Appendix A (Nov. 2009). Cash Creekacknowledged that the 2006-2008 average ofthe Henderson County monitoring station datawas 0.076 ppm, slightly above the 8-hour ozone standard of 0.075 ppm. However, Cash Creek explained that the VISTAS-SESARM data showed a range of predicted 2009 8-hour ozone design values in Henderson County of0.065 ppmto 0.074 ppm, and that the average ofthe most recent 2009 data showed an ozone value of0.071 ppm. Furthermore, Cash Creek reported that data show a large decrease in ozone concentration from 2007 to 2009, which, combined with the VIST AS-SESARM modeling data, suggests that Henderson Countywill be below the 0.075 ppm 8-hour ozone NAAQS when the facility commences operation in 2014. Finally, Cash Creek noted that use ofthe Henderson Countymonitoring station data resulted in a conservative assessment ofthe proposed facility's anticipated ozone impacts because the monitor is located in a more urban area (with greater vehicular emissions) than the areawherethe facility would be located. Based on all ofthese considerations, KDAQ concluded that emissions from the facility would not cause or contribute to an

ozoneNAAQS violation. 

### Id.

While the Petitioners are correct that Cash Creek did not attemptto demonstrate that Georgia's ozone sensitivity modeling is representative ofthe Kentucky project location, the analysis based on Georgia's modeling merely supplements Cash Creek's overall analysis ofthe proposed facility's anticipated ozone impacts. Significantly, Cash Creek did not submit the analysis as a definitive demonstration ofthe effect

31that the proposed source will have on ambient ozone levels. Rather, recognizing that there may be differences between Georgia and Kentucky with respect to ozone formation, Cash Creek simply offered the analysis in further support ofits conclusion-made based on consideration ofthe other factors described above-that the proposed facility will not cause or contribute to a violation ofthe ozone NAAQS. KDAQ explained in response to comments on the draftpermit that use ofthe Georgia modeling results to help assess the potential ozone impacts ofthe proposed source likely leads to a conservative ozone impacts analysis given the fact that the Georgiamodeling addressed an urban area whereas the location ofthe proposed source is predominantly rural. RTC at 

### B-1 07. Regardless ofthe relevance ofthe Georgia modeling, however, Petitioners have not demonstrated that the totality ofCash Creek's analysis is insufficient to demonstrate that the proposed facility will not cause orcontribute to

an ozoneNAAQS violation.

Finally, EPA denies the petition with respect to Petitioners' contention that KDAQ failed to consult with EPA Region 4 regarding the method used to assess the proposed facility's ozone impacts. KDAQ's approach was consistentwith general guidance provided by EPA Region 4 to KDAQ in presentations and discussions, and with communications between Region4 andthe KDAQ modeler handlingthe Cash Creek application. The method was selected based on a case-by-case review ofthe magnitude ofthe project's emissions, theprojected ambientbackground ozone levels during operation, the levels of existing emissions ofozone precursors in the region, and the available modeling systems and other approaches to analyzing single source ozone impacts. Petitioners have not demonstrated that section 5.2.l.c ofAppendix W requires explicit written EPA approval ofthe methods used on a case-by-case basis for each individual permit, particularly in a situation like this where a qualitative approach was used for the ozone impacts analysis. Norhave Petitionerspointed to any prior EPA statements adopting such an interpretation. EPA has notpreviously established specific guidelines for documenting for the record a consultation with EPA Regional offices under section 5.2.1.c. Giventhe lack ofspecificity in EPA's guidelines and the fact that KDAQ's approach was consistent withprior Region 4 guidance, Petitioners have not demonstratedthat KDAQ's approach inthis case was unreasonable or inconsistent with the guidelines in section 5.2.l.c ofAppendix W. EPA agreesthat it ispreferable for permitting authorities to provide cleardocumentationthatthey have consulted with an EPA Regional office regarding an ozone impacts analysis section 5.2.1.c., but, underthe circumstances ofthis case, Petitioners have not demonstrated that KDAQ's approach is inconsistent with any relevant applicable requirement.



### IV. CONCLUSION

For the reasons set forth above and pursuant to section 505(b)(2) ofthe CAA and 40 C.F.R. § 70.8( d), I hereby grant inpart and deny in partthe issues in the Petition dated June 18, 2010.

Date

32