# Federal Environmental Issues

Driving the Electricity 

# and Gas Industries David B. Conroy Air Programs Branch EPA Region 1 Energy in the Northeast Conference

September 9, 2014

# Overview of Presentation


#  CPP 

#  MATS  NAAQS Implementation  

# O 3  

# PM 2.5  

# SO 2 

#  CAIR/CSAPR
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### On June 2, 2014, as part of the President’s Climate Action Plan, EPA proposed a commonsense plan to cut carbon pollution from power plants. The proposed plan will:  By 2030, reduce nationwide carbon dioxide (CO 2

### ) emissions, from the power sector by approximately 30% from 2005 levels.  

### Require a reasonable emission reduction glidepath starting in 2020.  Cut hundreds of thousands of tons of harmful particulate 

### matter, sulfur dioxide and nitrogen oxides as a co - benefit.  Lead to health and climate benefits worth an estimated $55 billion to $93 billion in 2030.  Proposal will avoid an estimated 2,700 to 6,600 premature 

### deaths and 140,000 to 150,000 asthma attacks in 2030. 

# Proposed Clean Power Plan (CPP)

3

## This Proposal Deals With the Largest

Source of GHG Emissions in the U.S.

4

# Reducing Carbon Pollution



# from Power Plants President’s Directive to EPA: 

# Develop carbon pollution standards, regulations or guidelines, as appropriate, for: 1. New power plants  Proposed: January 8, 2014 

## 2. Modified and reconstructed power plants  Proposal: June 2014  Final : June 2015 

## 3. Existing power plants  Proposed Guidelines: June 2014  Final Guidelines: June 2015  State Plans due: June 2016 5

###  Section 111 establishes a mechanism for controlling air pollution from stationary sources  

### Applies to sources for which the Administrator finds “causes, or contributes significantly to, air pollution which may 

### reasonably be anticipated to endanger public health or welfare”  

### Can apply to new, existing, modified and reconstructed sources.


###  New sources under section 111(b)  

### Federal standards for new, modified and reconstructed sources


###  Existing sources under section 111(d)  

### State programs for existing sources that are equivalent to 

### federal guidelines



## EPA’s Regulatory Approach Clean Air Act Section 111

6

### CAA S ection 111(d) requires EPA to develop guidelines for states to address existing sources not addressed elsewhere in the CAA
 

### Section 111(d) – Federal Guidelines for States  The Administrator shall “prescribe regulations . . . under which each State shall submit to the 

### Administrator a plan which establishes standards of performance for any existing source for any air pollutant for which air quality criteria have not been issued . . . but to which a standard of performance 

### under this section would apply if such existing source were a new source, and provides for the implementation and enforcement of such standards of performance.” 

## Clean Air Act Section 111(d) – Existing Sources

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# EPA Establishes a Goal



# for Every State

 EPA analyzed the practical and affordable strategies that states and utilities are already using to lower carbon pollution from the power sector.  Proposed goals are based on a consistent national formula, calculated with state and regional specific information.  The result of the equation is the state goal.  Each state goal is a rate – a statewide number for the future carbon intensity of covered existing fossil -fuel -fired power plants in a state expressed in lbs/MWhr . 

###  The state goal rate is calculated to account for the mix of power sources in each state and the application of the “building blocks” that make up the best system of emission reduction. 

###  States will need to meet an interim goal and a final goal. 8

### Building Block Value Allocated in Goal -Setting Formula 1. Make fossil fuel -fired power plants more efficient Average heat rate improvement of 6% for coal steam electric generation units (EGUs)
2. Use lower- emitting power sources more Dispatch to existing and under- construction natural gas combined cycle (NGCC) units to up to 70% capacity factor 3. Use more zero/lowemitting energy sources Dispatch to new clean generation, including new nuclear generation under construction, moderate deployment of new renewable generation, and continued use of existing nuclear generation 4. Use electricity more efficiently Increase demand -side energy efficiency to 1.5% annually 9

# State performance goals

( lbs/MWh ) State 2012 Fossil

Emission Rate 1 Interim Goal (2020 - 2029 average)2 Final Goal (2030

and thereafter)2 Connecticut 844 597 540 Maine 873 393 378 Massachusetts 1,001 655 576 New Hampshire 1,119 546 486 Rhode Island 918 822 782
10 1 From Goal Computation Technical Support Document, Appendix 5 – 2012 Emissions Rate and Building Block Application, 2 From Table 1 to Subpart UUUU of Part 60 – State Rate-Based CO2 Emission Performance Goals, Proposed

# Flexibilities Available To States

 Timing:  Up to 15 -year window in which to plan for and achieve reductions in carbon pollution.  U p to two or three years to submit final plans.  Form of goal: States can use either a rate - based or mass based goal.  Single or multi -state plans: States can collaborate and develop plans on a multi -state basis.  Selection of measures :  States will choose how to meet the goal through whatever collection of measures reflects its particular circumstances and policy objectives.  State measures may impact and, in fact may be explicitly designed to reduce, CO 2 emissions from utilities on a regional basis.  EPA would support building off existing reduction programs. 11

# Next Steps

 The proposed rule, as well as information about how to comment and supporting technical information, are available online at: www.epa.gov/cleanpowerplan

 EPA held 4 public hearings the week of July 28 th 

## in Denver , Atlanta , Pittsburgh and Washington, D.C.

 There will be a 120 -day public comment period on the proposal, closing October 16, 2014.

 Comments on the proposal should be identified by Docket ID No. EPA- HQ -OAR -2013-0602 . 120

20000 40000 60000 80000 100000 120000 140000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total Generation (GWh)

Year

ISO New England Electricity Generation Mix by Fuel Type, 2000- 2012

Coal & Oil Natural Gas Nuclear Renewables & Hydro Total Generation (GWh) 

# New England Generation Mix

13 Data Sources: ISO New England Energy Sources, 2000-2013

http://www.iso-ne.com/nwsiss/grid_mkts/enrgy_srcs/22% 12%

-20%

-71%

-93% -100% -80% -60% -40% -20% 0% 20% 40%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

New England Economic Growth and ISO New England System

Emissions, 1999-2012

New England GDP Total Generation CO2 Emissions NOx Emissions SO2 Emissions 

### Emissions, Generation and Economic Growth

14 Data Sources: 2012 ISO New England Electric Generator Air Emissions Report, US Department of Commerce, Bureau of Economic Analysishttp://www.rggi.org/market/tracking/allowance -allocation Northeast states implement RGGI :  2014 emissions cap: 91 million short tons  2015 – 2020 emissions caps: annual 2.5% reductions  2020 emissions cap: 78 million short tons  Auction proceeds invested in the region (EE, RE, direct bill assistance, GHG abatement, etc .) Working with the RGGI states:  EPA’s 111(d) proposal allows for states to demonstrate mass - based equivalency to the proposed rate - based goals and solicits comment on conversion methods  EPA’s 111(d) proposal allows states to submit multi -state plans 

# Regional Greenhouse Gas Initiative

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# Mercury and Air Toxics

Standards (MATS)

• On Feb 16, 2012, EPA promulgated the Mercury and Air Toxics Standards (MATS), the first national standards to reduce emissions of mercury and other toxic air pollutants from new and existing coal - and oil -fired power plants

• Standards will reduce emissions of:
• Metals, including mercury (Hg), arsenic, chromium, and nickel
• Acid gases, including hydrogen chloride ( HCl ) and hydrogen fluoride (HF)
• Particulate matter

• Compliance required by April 14, 2015, with opportunity for 1 -year extension • On April 15, 2014, U.S. Court of Appeals for the District of Columbia Circuit upheld the rule against challenges from industry groups
• July 14 – Coalition of states file Petition for a Writ of Certiorari asking Supreme Court to review D.C. Court decision More information at www.epa.gov/mats 16

# NAAQS Reviews: Status Update

Ozone Lead Primary NO2 Primary

SO2 Secondary NO2 and SO2 PM CO Last Review Completed (final rule signed) Mar 2008 Oct 2008 Jan 2010 Jun 2010 Mar 2012 Dec 2012 Aug 2011 

##  The Clean Air Act requires EPA to review National Ambient Air Quality Standards (NAAQS) every 5 years to determine whether they should be retained or revised.

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# 2008 Ozone NAAQS

Implementation

 Revised primary 8 - hr Ozone standard in 2008 (75 ppb)

 EPA designations for the 2008 Ozone NAAQS effective on July 20, 2012

 2008 Ozone NAAQS SIP Requirements Rule  Proposed May 29, 2013 (78 FR 34178)  Anticipate final rule in late 2014  RACT plans due July 20, 2014  Applies in moderate and above NA’s, and throughout OTR  Attainment demonstrations due July 2015 (Moderate) or July 2016 (Serious and above) 18Morongo Tribe Pechanga Tribe

Final designation Classifications and Area Counts

- EPA has not designated as nonattainment any areas outside the Continental U.S.

- Map reflects classifications following requests for voluntary bump -up. 

### Nonattainment Areas for 2008 Ozone NAAQS by Classification (Effective July 20, 2012)

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# Final 2013 Ozone Design Values 3-Year average of the 4th 

### high concentration for 2011, 2012, 2013

Created by ME DEP

Unclassified /Attainment Nonattainment 76 - 84 ppb > 84 ppb 71 - 75 ppb

< 66 ppb 66 - 70 ppb

# New England Exceedance Day



# Trend for 2008 O 3 

# NAAQS 2014 (# Exceedance Days)* (As of Sept 3) 2013 (# Exceedance Days) 2012 (# Exceedance Days) CT 8 17 27 ME 0 5 4 MA 0 6 17 NH 1 3 4 RI 0 7 12 VT 0 0 0 NE 9 20 29 *2014 Data are Preliminary

# Current Ozone NAAQS Review

 Received court ruling on April 29, 2014  

### Propose December 1, 2014  

### Final October 1, 2015


##  CASAC letter of June 26, 2014  

### Primary standard “there is adequate scientific evidence to recommend a range of levels for a revised primary ozone standard from 70 ppb to 60 ppb. . . our policy advice is to set the level of the standard lower than 70 ppb within a range down to 60 ppb, taking into account your judgment regarding the desired margin of safety to protect public health, and taking into account that lower levels will provide incrementally greater margins of safety.”
 

### Secondary standard: W126 within the range of 7 ppm - hrs to 15 ppm - hrs 22

# Current Ozone NAAQS Review (con’t)

 August 29, 2014 – Final Policy Assessment for the Review of the Ozone National Ambient Air Quality Standards released  For the primary standard, EPA staff “ concludes that it is 

### appropriate in this review to consider a revised primary O3 standard level within the range of 70 ppb to 60 ppb. A standard set within this range would result in important improvements in public protection, compared to the current 

### standard, and could reasonably be judged to provide an appropriate degree of public health protection, including for at-risk populations and lifestages.”  For the secondary standard, EPA staff concludes that it is 

### “ appropriate to give consideration to a range of levels from 17 to 7 parts per million-hours (ppm-hrs ), expressed in terms of the W126 index.”  The W126 index is a method for measuring cumulative, seasonal exposures of ozone. 23

# PM 2.5 

# NAAQS Implementation

 EPA revised the annual primary PM 2.5 NAAQS to 12 μ g/m 3 from the previous level of 15 μ g/m 3 on Dec 14, 2012.  EPA retained daily PM 2.5 standard of 35 μg/m 3 set in 2006. 

###  Status of Designations  Aug 19, 2014 - EPA sent letters to all states (and certain tribes) outlining its intended area designations for annual standards.
 EPA intends to designate 14 areas (in six states (CA, ID, KY/IN, OH, PA) ) as “ nonattainment .”  EPA intends to designate certain areas as “unclassifiable”  EPA is deferring designations for 1 year for certain GA areas  All other areas of the country will be designated as “ unclassifiable/attainment” 

###  Next Steps  States/tribes have until Oct 29 to submit additional information for EPA to consider  Final designations expected in December 2014 24

# 2010 SO2 

# NAAQS

Implementation

 Revised primary SO2 

### standard: June 2010 (75 ppb/1 - hr)

 Initial nonattainment area designations, based on violating 

### monitors, were effective October 4, 2013  29 areas in 16 states designated (In New England, only NH area)  Attainment plans due April 2015

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# 2010 SO2 

# NAAQS

Implementation

 1 - hr SO 2 

### NAAQS Nonattainment SIP Elements Guidance  

### Objective is to provide assistance to areas developing their nonattainment area plans  

### Issued guidance on April 24, 2014



###  SO 2 

### Data Requirements Rule  

### Objective is to provide information to EPA in an orderly fashion to inform initial area designations for areas not 

### designated in 2013  

### Proposal published in FR on May 13, 2014  

### Comment period closed on July 14, 2014  

### Final scheduled for early 2015 26

# Expected Implementation Timeline:

SO 2 

# DRR Proposal

 Early 2015: EPA issues final rule  Jan. 2016: Air agency: (1) identifies sources to be characterized with monitoring data; and (2) provides modeling protocol for other sources  July 2016: Air agency updates annual air quality monitoring plan  Jan. 2017:

 Air agency submits modeling analyses for “modeling” areas (i.e., areas above threshold for which they are not installing new monitors)  Air agency can submit boundary recommendations for all areas except those relying on new monitoring data  New monitoring sites operational for “monitoring” areas  Dec . 2017: EPA intends to designate areas not installing new monitors

 Designations based on: modeling data, properly sited pre -existing monitors, areas having no sources  Early 2020: New monitoring sites have 3 years of data; air agency submits monitoring data  Air agency can submit boundary recommendations for monitored areas  Dec. 2020: EPA intends to designate areas for rest of country

# Source Threshold Options

Option TPY Threshold

For SO 2 Sources
Number of Sources** Percent of

National Emissions† Plus Sources

In Designated Nonattainment Areas‡ Total Annual

Emissions Coverage Inside CBSAs Greater than 1M Outside

CBSAs Greater than 1M 1* 1,000 2,000 443 75% 53 90% 2 2,000 5,000 270 66% 53 82% 3 3,000 10,000 158 54% 53 69% * Preferred option. ** These do not include sources located in nonattainment areas designated in 2013. † Total SO 2 emissions in 2011 were 5.8 million tons. ‡ There are 53 sources with annual emissions greater than 1,000 tpy in nonattainment areas designated in 2013.

# Location of Source

Above Threshold Options

# Proposed Consent Decree

 Deadline Suit: Sierra Club et al. v. McCarthy, Civil Action No. 3:13–cv–3953–SI (N.D. Cal.) filed o n August 26, 2013  EPA lodged the proposed consent decree in May 2014  Published for comment on June 2, with comment period closing July 2  EPA received 133 comments, most supporting the decree . 

##  On August 8, EPA filed a motion to enter the SO2 

## designations CD

## Proposed Consent Decree Requirements

 16 months from the date of the consent decree, EPA will designate the following undesignated areas:  

### Areas with air quality monitoring in the three full calendar years preceding such deadline that have monitored violations of the 2010 SO 2 

### NAAQS;  

### Areas containing any stationary source that has not been ‘‘announced for retirement’’ and that, according to the data in 

### EPA’s Air Markets Database, either 1. emitted more than 16,000 tons of SO 2 

### in 2012, or 2. emitted more than 2,600 tons of SO 2 

### and had an annual average emission rate of 0.45 lbs SO 2

### /MMBtu or higher in 

### 2012  By Dec 31, 2017, EPA will designate the remaining undesignated areas in which, by January 1, 2017, states have not installed and begun operating a new SO2 

### monitoring network  By Dec 31, 2020, EPA will designate the remaining undesignated 

### areas.

## Status of Proposed Consent Decree for SO 2 

## Designations

 Seven states that have intervened and objected to the proposed consent decree ( ND , AZ, KY, LA, NV, TX, and NC)  EPA filed its response to these objections on Aug 29  EPA stated:  Nationwide unclassifiable designations are not compelled by the Clean Air Act.  The proposed Consent Decree does not interfere with EPA’s discretion to promulgate designations, nor does it impose requirements on states.  The proposed Consent Decree does not “avoid” “unclassifiable” designations. 

###  Hearing before the judge is likely to be Oct. 17  If judge enters the CD right away after the hearing, that would 

### put the down payment round of designations due in mid February 2016.

# Clean Air Interstate Rule (CAIR)

 Clean Air Act requires states to address emissions that “contribute significantly” to nonattainment or “interfere with maintenance” of NAAQS in downwind states.

 March 2005 - EPA issued Clean Air Interstate Rule (CAIR) covering 27 eastern states and DC. CAIR uses cap & trade program to reduce SO2 and NOx emissions from power plants to meet 1997 annual and 24- hour fine particle (PM 2.5) and 1997 8 - hour ozone NAAQS.  CAIR was projected, at full implementation, to reduce power plant SO 2 emissions in affected states to just 2.5 million tons, 73 % below 2003 emissions levels .  For NOx, CAIR will reduce power plant NOx emissions by 2 million tons, achieving a regional emissions level of 1.3 million tons, a 61% reduction from 2003 levels .  States were required to submit State Implementation Plans (SIPs) to EPA demonstrating compliance with their applicable SO 2 and NOx EGU budgets. 33

# States Covered by CAIR

34

# CAIR Challenged in US Court of

Appeals for the DC Circuit

 July 11, 2008 – Court issues decision to vacate CAIR  Fall 2008 – Parties to the litigation submit requests for rehearing and other information including expected effects of a vacatur  Dec 23, 2008 – Court amends decision and remands CAIR without vacatur  

### Requires EPA to promulgate replacement rules to 

### CAIR, consistent with the Court's July 11, 2008 ruling  

### Leaves CAIR in effect until replacement rules are promulgated 35

# Cross State Air Pollution Rule

(CSAPR)

 July 2011 - EPA finalized CAIR replacement rule, the Cross- State Air Pollution Rule (CSAPR).  CSAPR focused on attainment and maintenance of the 1997 Ozone NAAQS, 1997 PM 2.5 NAAQS and 2006 PM 2.5 NAAQS  CSAPR was intended to cover emissions in 2012 and beyond.  CSAPR implemented through a federal rule.  CSAPR established new allowances for all programs.  There is no carryover of Acid Rain Program, NOx SIP Call/NOx Budget Trading Program (NBP), or CAIR allowances .  By 2014, combined with other final state and EPA actions, the Cross - State Air Pollution Rule was projected to reduce power plant SO2 emissions by 73 percent and NOx emissions by 54 percent from 2005 levels in the CSAPR region. 36

# States Covered by CSAPR

*This map includes states covered in the supplemental notice of proposed rulemaking. • Cross - State Air Pollution Rule includes separate requirements for: • Annual SO 2 reductions • Annual NOx reductions • Ozone -season NOx reductions

37

# Litigation on CSAPR

 December 2011 - D.C. Circuit issued ruling to stay CSAPR pending judicial review.  March 2012 - EPA filed brief defending 

## CSAPR and reasons rule should be upheld.  August 2012 - D.C. Circuit issued decision to vacate CSAPR .  

### Orders EPA to “continue administering CAIR pending the promulgation of a valid replacement.” 

##  April 2014 - U.S. Supreme Court (by 6-2 vote) 

## reversed D.C. Circuit opinion vacating CSAPR . More information at www.epa.gov/airtransport/CSAPR 38

# Efforts to Implement CSAPR

 June 26, 2014 – EPA filed motion with D.C. Circuit to lift stay of CSAPR and to allow it to go into effect beginning Jan 1, 2015  If the court adopts EPA’s suggestion, phase 1 of the rule would begin in 2015 and phase 2 would go into effect two years later, in 2017.  While Court considers motion, CAIR remains in place . 

###  July 11 – Environmental and public health groups said EPA's schedule is too slow. Think EPA should move directly to implement the second phase of the program.  July 31 - Utility industry groups and several states file motions fighting EPA's request to lift its stay on implementation of CSAPR.  Aug 22 - EPA again asks court to reinstate CSAPR while 

### delaying the rule's compliance deadlines by three years.  New filing focuses on rejecting industry's and certain states ' opposition on lifting the stay 39

# CAIR and CSAPR

in New England

 Connecticut and Massachusetts were included in ozone season CAIR program, but are not in CSAPR, because air quality modeling shows they 

## no longer contribute significantly to nonattainment of the 1997 and 2006 PM NAAQS or the 1997 ozone NAAQS in other states. 

##  CAIR is in each of these state’s SIPs and relied on to meet various Clean Air Act obligations for programs such as Regional Haze and ozone.  If CSAPR is implemented, EPA will work with these 

## states to develop a replacement program to retain emission reductions achieved under CAIR . 40

# QUESTIONS OR COMMENTS

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