BEFORE TIlE ADMlNISTRATOR UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

INTHEMATIEROF:

ISSUED BY THE KENTUCKY DIVISION FOR AIR QUALITY TRIMBLE COUNTY, KENTUCKY TTTLE VIPSD AIRQUALITY PERMIT 

### #V·02·043
REVISIONS 2 AND 3 ) ) ) LOUISVILLE GAS AND ELECTRIC COMPANY ) ) ) ) ) ) ) ) ) ) ) PETITION No. IV·2008·3

ORDER RESPONDING TO ISSUES RAISED IN APRIL 28, 2008 AND MARCH 2, 2006 PETITIONS, AND DENYING IN PART AND GRANTING IN PART REOUESTS FOR OBJECTION TO PERMIT

On April 28, 2008, and March 2. 2006, the United States Environmental Protection Agency (EPA) received petitions from Save the Valley, Sierra Club, and Valley Watch (Petitioners) pursuant to Section 505(b)(2) 

### 01the Clean Air Act ("CAA" or "Act"), 42 United States Code (U.S.C.) 

### § 766Id(b)(2) (the March 2, 2006, petition is referred to as "Petition I" and the April 28,2008, petition is referred to as "Petition 2"). Both Petitions request that EPA object to the merged CAA construction/operating permit issued by the Kentucky Division for Air Quality ("KDAQ" or "Division") on January 4, 2006 (Revision 2), and February 29, 2008 (Revision 3), respectively, to Louisville Gas and Electric Company (LG&E). The permits are for construction ofa new 750 megawatt pulverized coal-fired boiler (and other associated modifications) at the Trimble County Generating Station located in Bedford (Trimble County), Kentucky. Permit #V·02-043 is a merged CAA prevention ofsignificant deterioration (PSD) construction perrnit anda CAA title V operating permit issued pursuant to Kentucky'S Administrative Regulations (KAR) at 401 KAR 52:020 (title V regulations) and 51:017 (PSD regulations).

On September 10, 2008, EPA issued a "Partial Order Responding to March 2, 2006, Petition and Denying in Part and Granting in Part Request for Objection to Permit Revision 2." In the September 2008 Order, EPA explained that some issues raised in Petition 1 were affected by Permit Revision 3 and also discussed in Petition 2. At this time, EPA is addressing all the remaining issues identified by Petitioners in Petitions 1 and 2.

This Order contains EPA's response to Petitioners' request that EPA object to the permit on the basis 

### that (1) public participation procedures were not adequate; (2) the pennit fails toinclude requirements for addressing greenhouse gases; (3) BACT for nitrogen oxides (NOx) and sulfur dioxide (S02) is not adequate; (4) BACT for the auxiliary boiler and emergency diesel generator are not adequate; (5) BACT for support operations is not adequate; (6) BACT for particulate matter (PM) and particulate matter with a diameter less than ten micrometers (PM to)
are not adequate; (7) BACT for sulfuric acid mist (SAM) is not adequate; (8) the permit fails to consider particulate matter with a diameter less than 2.5 micrometers (PMz

### 5); (9) the permit fails
to express limits in an adequate manner; 

### (10) BACT analyses did not include clean fuels; (II) the permit lacks a maximum achievable control technology (MACT) determination for mercury and other hazardous air pollutants (HAP); 

### (12) the SAM limits are not enforceable (compliance

assurance monitoring concerns); and (13) the permit improperly relies on manufacturer specifications that are not included in the permit, does not identify test methods, and additional

concerns regarding netting.

Based on a review ofPetitions 1 and 

### 2 and other relevant materials, including the LG&E pennit and permit record, and relevant statutory and regulatory authorities, I grant in part and deny in part the Petitions requesting that EPA object to the LG&E permit. I grant on issues 4 and 8 above.



### I. STATUTORY AND REGULATORY FRAMEWORK

Section 502(d)(l) ofthe Act, 42 U,S.C. 

### § 766Ia(d)(I), calls upon each state to develop and submit to EPA an operating permit program to meet the requirements oftitle V ofthe CM. The Commonwealth ofKentucky I originally submitted its title V program governing the issuance ofoperating permits in 1993, and**E~A** granted full approval on October 31, 2001. 66 

### Fed. Reg. 54,953. 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 permits that include emission limitations and other conditions as necessary to assure compliance with applicable requirements ofthe CAA, including the requIrements nfthe applicable State Implementation Plan (SIP). CAA 

### §§ 502(a) and 504(a), 42 U.S.C. 

### §§ 766Ia(a) and 766Ic(a).

The title V operating permit program does not generally impose new substantive air quality control requirements (which are referred to as "applicable requirements"), but does require permits to contain monitoring, recordkeeping, reporting, and,other conditions to assure

sources comply with existing applicable requirements. 57 

### Fed. Reg. 32,250, 32,25 I (July 21, 1992) (EPA 

### final action promulgating Part 70 rules). One purpose ofthe title V program is 

### to enable the source, EPA, states, and the public to better understand the applicable requirements to which the source is subject and whether the source is complying with those requirements. Thus, the title V operating pennit program is a vehicle for ensuring that existing 

### air quality control requirements are appropriately applied to facility emission units and that compliance with these requirements is assured.

[ The Commonwealth ofKentucky Environmental and Public Protection Cabinet (Kentucky Cabinet), which submitted the title V program, oversees the Kentucky Division for Air Quality (KDAQ) which is the permitting authority for title V and PSD permits in Kentucky.



### 2

### For amajor modification ofamajor stationary source.' 

### applicable requirements include the requirement toobtain a

### preconstructionpermit that complies withapplicable newsource review requirements (e.g., 

### PSD). Part C ofthe 

### CAAestablishes the PSD program, the 

### preconstruction reviewprogram that applies to areas 

### of the country, such as Trimble County, 

### that

are designated as attainment orunclassifiable for National Ambient AirQuality Standards 

### (NAAQS). CAA §§ 

### 160-169,42 U.S.C. §§ 

### 7470-7479. New Source Review, or "NSR," is the term used todescribe both the PSD program as well as the nonattainment 

### NSR program (applicable to areas that are designated as 

### nonattainmentwiththe NAAQS). Inattainment areas (suchas Trimble County), a major stationary source may not beginconstruction orundertake 

### certain modifications without first obtaining a PSD permit. CAA § 

### 165(a)(I), 42 U.S.c. § 

### 7475(a)(I). The PSD program analysis must address two primary and fundamental elements before the

### permittingauthority may issue a 

### pennit: (1) anevaluation 

### ofthe impact 

### ofthe proposed new ormodified major stationary source on ambient airquality in thearea, and (2) an analysis ensuring that theproposed facility is subject to 

### BACT foreachpollutant subject to 

### regulation under the PSD program. CAA § 

### I65(a)(3),(4),42 U.S.C. § 

### 7475(a)(3), (4); 

### see also 401 KAR 51:017 (Kentucky's PSD program). The BACT analysis is further discussed in SectionIII.B. ofthis Order, below.

EPA haspromulgated two largely identical sets 

### of regulationsto implement the PSD 

### program. One set, found at 40 CodeofFederal Regulations (CFR) § 

### 52.21, contains EPA's own federal PSD program, whichapplies inareas without a SIP-approved PSD program. Theother setofregulations, found at40 CFR § 

### 51.166, contains requirements that statePSD programs must meet to be approved as part ofa SIP. In 1989, EPAapproved Kentucky's PSDrules into 

### the SIP as meeting these requirements. 54 

### Fed. Reg. 36,307 (September I, 1989);

### see also 40 CFR § 

### 52.931.] Thus, the applicable requirements 

### of the Act for major modifications atmajor sources, such as atLG&E, include there,uirement to comply withPSD requirements under the Kentucky SIP. 

### See, e.g.;40 CFR § 

### 70.2. Inthis case,the Commonwealth's rules require a

2 

### Theproposed addition ofa new 750 megawatt coal-fired boiler atLG&E is considered a "major modification," consistent withthe definition 

### of "major modification," in 401 KAR 

### 51 :001 § 

### 1(116). The existing LG&E facility is a major stationary source, as that term is defined in401 KAR5t:001 § 

### 1(120).

:> 

### OnFebruary 10.2006, EPAproposed to 

### approve changes made to 

### Kentucky's New Source 

### Review (NSR) program consistent with EPA's 2002 NSR Reform Rules. 71 

### Fed Reg. 6,988 (February 10,2006). On July II, 2006, EPA took final action approving Kentucky's NSR program incorporating changesmade pursuant to EPA's 2002 NSR 

### Reform Rules. 71 

### Fed. Reg. 38,990 (July 11, 2006). Kentucky's revisions to its NSR programconsistent with NSRreform, became effectiveunder Kentucky law onJuly 14, 2004, and weresubmitted to EPA as a SIP revision forapproval in September 2004. For further 

### informationabout rules incorporated into the Kentucky SIP, see http://www.epa.gov/region4/airlsips/kylkytoc.htm.

4 

### Kentucky defines "federally applicable requirement" in relevant part to include a "federally enforceable requirement orstandard 

### that applies to a source:' 401 KAR52:001 § 

### 1(15). Kentucky further defines "federally enforceable requirement," as "[s]tandards orrequirements in the state implementation plan (SIP) that implement the relevant requirements 

### ofthe Act, 

### includingrevisions to that plan promulgatedat 40 CFR Part 52." 401 KAR 52:001 § 

### 1(34).

3source to apply for a PSD permit which is then incorporated into the existing title V permit as a revision to the title V permit. 401 KAR 52:020.

Under sectinn 505(a), 42 U.S.C. 

### § 766Id(a), nfthe CAA and the relevant implementing regulations (40 CFR § 70.8(a», states are required to submit each proposed title V permit, and certain revisions to such permits, to EPA for review. Upon receipt ofa proposed perrnit, EPA has 4S days to object 

### to final issuance ofthe permit ifit is determined not 

### to be in compliance with applicable requirements or the requirements oftitle V. 40 CFR 

### § 70.8(c). IfEPA does not object to a permit on its own initiative, section 50S(b)(2) ofthe CAA provides that any person may petition the Administrator, within 60 days ofthe expiration ofEPA's**45~day** review period,
to object to the permit. 42 U.S.C. 

### § 766Id(b)(2), 

### see a/sa 40 CFR 

### § 70.8(d). In response to such

a petition, the CAA requires the Administrator to issue an objection ifa petitioner demonstrates that a permit is not in compliance with the requirements ofthe CAA. 42 U.S.C. 

### § 766ld(b)(2); 

### see a/so40 CFR 

### § 70.8(c)(I), 

### New YorkPublicInterest Research Group (NYPIRG) v. Whitman, 321 F.3d 316, 333 n.11 (2" Cir. 2003). Under section 505(b)(2), the burden is on the petitioner
to make the required demonstration to EPA. Sierra Club v. Johnson, 541 F.3d. 1257, 1266-1267 (lIth Cir. 2008); Citizens Against Ruining the Environment v. EPA, 535 F.3d 670, 677-678 (7th Cir. 2008); 

### Sierra Club v. EPA, 557 FJd 401, 406 (6'" Cir. 2009) (discussing the burden ofproof in title V petitions); 

### see alsoNYPIRG, 321 FJd at 333 n.ll. If, in responding to a petition, EPA objects to a permit that has already been issued, EPA or the permitting authority will modify, terminate, or revoke and reissue the permit consistent with the procedures set forth in 40 CFR 

### §§ 70.7(g)(4) and (5)(i)

- (il), and 40 CPR 

### § 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 petitioners to demonstrate that the permitting decision was not in compliance with the requirements ofthe Act, including the requirements ofthe SIP. S Such requirements, as EPA has explained in describing its authority to oversee the implementation of the PSD program in states with approved programs, include the requirements that the permitting 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. 9,892, 9,894-9,895 (March 3, 2003); 63 

### Fed. Reg. 13,795,13,796-13,797 (March 23,1998). EPA has approved the PSD programs into the SIPs of
most states, including the Commonwealth ofKentucky, and as the permitting authority, Kentucky has substantial discretion in issuing 

### PSD permits. Given this, in reviewing a PSD permitting decision, EPA will not substitute its ownjudgment for that ofKentucky. Rather, consistent with the decision in

### Alaska Dep't of 

### Envt'IConservation v. 

### EPA, 540 

## u.s. 461 (2004), in reviewing a petition to object to a title V permit raising concerns regarding a state's PSD

S The appeal offederal. PSD permits issued pursuant to the federal regulations at 40 CFR 

### § 52.21 is governed by the regulations at 40 CFR 

### § 124.19, and authority to review such permits re-sts exclusively with the Environmental Appeals Board (EAB). Because ofthe exclusive authority ofthe EAB in this area, the Administrator has declined to review the merits ofa federal PSD permit in the context ofa petition to review a title V permit. See. 

### e.g., In re Kawaihae Cogeneration Project, Petition No. 000 1**~O** l-C (Order on Petition) (March 10, 1997).



### 4

### permitting decision, EPA generally will look to see 

### whether the Petitioner has shown that the state did not comply with its SIP-approved regulations governing PSD permitting or whether the state's exercise ofdiscretion under such regulations was unreasonable or arbitrary." 

### See, e.g., In

re 

### EastKentucky PowerCooperative, Inc. (Hugh L. Spurlock Generating Station) Petition No, IV-2006-4 (Order on Petition) (August 

### 3D, 2007); 

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

### In re RooseveltRegional LandfillRegional Disposal Company (Order on Petition) (May 4, 1999).'

II. BACKGROUND
Existing Facility
The LG&E facility in Trimble County, Kentucky, began construction on its existing 500 megawatt (MW) pulverized coal-fired boiler in the late 1970s (Unit I). The facility bas undergone a series ofmodifications since then, adding not only the support facilities for the original 500 MW boiler, but also, six 160 MW simple cycle natural gas combustion turbines (Units 25-30) in approximately 2001. The existing facility also includes support structures such as a natural draft cooling tower; coalllimestonelashlgypsum material handling equipment; three auxiliary boilers; an emergency diesel generator; and fuel oil storage tanks. Unit I and Units 25- 30 previously went through PSD permitting prior to construction, A draft title V permit for the facility was first issued in December 1997. 

### followed by several permit changes eventually resulting in Revision 2, Kentucky issued the title V permit Revision 2 on January 4, 2006, and Revision 3 on February 29, 2008. 

### See LG&E Permit Revision 3 Statement ofBasis (SOB Revision 3) (July 26, 2007). Both revisions are at issue in 

### theinstant Petitions.·

6 

### In determining the appropriate standard ofreview to apply to 

### the review offederal PSD permit determinations in a petition to object to a title V permit, the standard ofreview applied by the EAH in reviewing the appeals offederal PSD permits provides a useful analogy, The standard of review applied by the EAB in its 

### review offederal PSD permits is discussed in numerous EAS orders as the "clearly erroneous" standard, 

### See, e.g., In re Prairie State Generation Company, 13 EAD. PSD Appeal No. 05-05, slip op., 2006 EPA App. LEXIS 38 (EAB, August 24, 

### 2006); In re Kawaihae Cogeneration. 7 EAD. 107, 114 (EAR, April 28, 1997). In short, in such appeals, the EAH 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 important matter ofpolicy or exercise ofdiscretion that warrants review.

7 

### Section II ofPetition 2, "Petition Standard ofReview:' describes the Petitioners' view ofthe applicable standard ofreview. This section ofthe Petition raises no requests for objection. EPA's articulation ofits view on the standard ofreview in title V petitions is not intended to either agree or disagree with Petitioners' views.

8 

### In evaluating the remaining issues in both Petitions, EPA considered the terms ofthe current permit for the facility (Revision 3). Permit citations are provided for Revision 3 unless the particular citation at issue was different in Revision 2 than Revision 3. For purposes ofclarity in this Order, the permits are referred to by revision,

5

### Permit History



### In December2004, 

### LG&E submitted a PSD permit application to KDAQ to include into its title V permit, a PSD construction permit to undertake a major modification to construct a

new 750 

### MW net nominal generating unit that would utilize supercritical puiverized coal (Unit 31).9 Ancillary equipment for this new unit includes a new linear mechanical draft cooling tower, a coal blending facility, dust collectors and dust suppression equipment on material handling operations, an ash barge loading system/fly ash silos, an auxiliary steam boiler, a backup diesel generator, and an emergency diesel fire water pump engine. The constructionof new Unit 31 is also expected to 

### increase utilization of the existing natural draft cooling tower on Unit I, various material handling equipment, the three auxiliary boilers, emergency diesel generator, and fuel oil storage tanks.

In late 2004, 

### and separate from the PSD application, LG&E submitted a minor permit revision applicationto 

### KDAQ for a voluntary creditable decrease in emissions for nitrogen oxides (NOx)

### and sulfur dioxide (S02) for Unit L The creditable decreases were requested to net against the anticipated future increases in emissions from the new Unit 31 for PSD purposes. In January 2005, 

### KDAQ approved the minor permit revision to reduce the NOx 

### and S02 emission limits for Unit 1 (Revision 1, minor modification).

The final draft Revision 2 

### combined PSD/titie V permit for constructionofnew Unit 31 was opened for public notice and comment in July 2005. 

### Minor changes were made to the permit following public comment and the final Revision 2 

### Pennit was issued on January 4, 2006. 

### The Petitioners administratively appealed the issuance ofthe Revision2 

### Permit by KDAQ, which resulted in a Final Order by the Secretary ofthe KentuckyEnvirorunental Protection and Public Health Cabinet on September28, 2007, 

### granting certain claims and denying others. On October26, 2007, 

### KDAQ issued a revision entitled, "Revision 2 

### Administrative Amendment," which involved revisions to 

### the permit in response to the Secretary's Final Order. In January 2008, KDAQ further revised the permit (Revision 3).
In issuing Revision

### 2, KDAQ concluded that the proposed major modifications would result in a significant net increase in emissions ofparticulate matter (PM) and particulate matter with a diameterofless than ten micrometers (PMIO), carbon monoxide (CO), volatile organic compounds (VOC), fluorides, and sulfuric acid mist (SAM). Due to the voluntary creditable decreases in emissions ofNOx 

### and SChat Unit I, which were approved in Revision 1, KDAQ concludedthat the new Unit 31 was not subject to major PSD review for NOx 

### and S02. As presented for Revision 2, 

### the design ofVnit 31 involved a suite ofcontrol technology including: selective catalytic reduction (SCR); pulse jet fabric filters (PJFF) and hydrated time injection;
wet 

### flue gas desulfurization (WFGD); wet electrostatic precipitator (WESP). These control technologies, in addition to the construction ofthe new linear mechanical draft cooling tower and other operational limits, were determined by KDAQ as sufficient for the facility to 

### meet BACT requirements that resulted from KDAQ's PSD review ofthe proposed major modification. KDAQ SOB Revision 2.

9 

### In some permitting information,Unit 31 is also.referred to 

### as Unit 2. 

### In this Order, we reference Unit 31 or "the new unit."



### 6On February 13,2007, LG&E submitted an application for a significant revision to amend the permit to account for permitting redesigns. KDAQ SOB Revision 3 at I. As part of this revision, the permit was modified to include additional control technology for Unit 31

- a dry electrostatic precipitator (DESP) and powdered activated carbon (PAC) injection and hydrated lime injection. The DES? is intended to ensure that the saleable fly ash is captured prior to potential contamination due to PAC injection which is for mercury control. KDAQ SOB Revision 3 at 2. In addition to these changes, Revision 3 also included permitting changes for the following other changes to operations and/or design at the facility: (I) Unit 32 (auxiliary boiler) changes including increased hours ofoperation and USe ofultra low sulfur fuel; (2) Unit 33 (emergency generator) changes including use ofultra low sulfur fuel and changes to hours of operation; (3) the elimination ofthree existing auxiliary boilers (Units**7~9)** and the emergency diesel firewater pump; (4) the addition ofmaterial handling silos (waste ash, hydrated lime and PAC); (5) movement ofproposed conveyer transfer points; (6) new conveyer transfer points; (7) an increase in-length ofhaul road; and (8) ash transfer design changes. KDAQ SOB Revision 3 at 2-3. As a result ofthese changes, KDAQ also reviewed the previous PSD analysis done for the facility and made some changes to emission calculations for the netting associated with Unit 31 (for NO" and S02) as well as revised calculations for the PM emissions from the linear mechanical draft cooling tower (Unit 41). Despite the changes, KDAQ concluded that the facility was still able to use netting to avoid PSD review for NO" and S02 associated with the addition ofUnit 31. KDAQ SOB Revision 3 at 3.

At this time, LG&E is engaged in construction ofUnit 31 and the associated design changes necessary at the facility to support the new unit. In addition, in mid-January 2009, KDAQ proposed changes to Revision 3 to the permit to respond to EPA's September 10,2008, Order which granted two petition issues. KDAQ did not receive comments from Petitioners on this revision. On April 21, 2009, KDAQ issued a proposed permit (Revision 4 although it is not identified by KDAQ in that manner). On June 5, 2009, EPA Region 4 objected to the permit on two grounds. First, that KDAQ "must undertake a Section 112(g) analysis for all hazardous air pollutants with respect to Unit 31 in order to comply with all applicable Clean Air Act requirements." Second, that the startup/shutdown limits added to the permit must 

### be rewritten to

more accurately reflect what is presented in the Statement ofBasis. EPA did not object to the substance ofKDAQ's revised analysis for startup and shutdown (which was required as part of the September 10,2008, Order). Consistent with the CAA and applicabJe regulations, KDAQ has ninety days in which to revise the permit pursuant to the June 5, 2009, objection letter.

III. EPA DETERMINATIONS ON PETITIONS 1 AND 2



### A. Petitioners' Claims Regarding Public Participation

Petitioners allege that EPA must object to the permit because KDAQ did not comply with applicable public participation requirements during the Revision 2 process in three primary ways. Petitioners allege that KDAQ 

### (1) did not make the entire pennit application or all supporting materials available to the Petitioners; (2) wasunresponsive to Petitioners' requests for information during the public comment period - thus impacting public participation; and (3) failed to meaningfully extend the public comment period to correct its delays in providing



### 7

### information to Petitioners. Petition 1 at**6~7.** 

### Subsequentto Petition I, a second public comment periodwas

### held for Revision 3 to 

### the permit, Petitionersraised no Dew public participation concerns followingthe Revision 3 public conunent process. For the reasons discussed below, the Petitions'" aredenied with regard to all 

### public participation issues raised although EPA emphasizesthe fundamental importance of public participationand strongly urges KDAQ to reviseits 

### procedures.



### 1. FaUure to make 

### entirepermil.jUe a.vailable andrespondto requests/or in/ormationduringpubliccommentperiod
Petitioners' allegations regarding KDAQ's failure to 

### make the entire permit file available in a timely manner to the public during the public comment period involve three distinct assertions. First, the file viewed by Petitionersduring the public comment period did not include a CD·ROM dated November 7, 2005, describing CO air quality monitoringdata. Second, the minor permit modificationapplications (Revision I), which involved the voluntary creditable decreasesofNOll and**S~** 

### emissions from Unit I, were not included

### inthe Revision2 file. In addition.the file viewed by Petitionersduring the public comment period did not include a startup/shutdown plan or operation and maintenancespecifications. Third, 

### the files were allegedlydisorganized and Petitionerswere not able to obtain in a timely manner copies of the relevant files for review.



### a. CO 

### airquality monitoring data

Petitioners'Claims. During the public comment period in July 2005, Petitioners sought to view the entirety of the permit file. Petition 1 at 7. In February 20M, as part of discovery during the administrative appeal of Permit Revision 2, KDAQ produced a CD-ROMwith CO air qualitymonitoringdata whicb was dated November 7, 2005. Petitionersclaim that the permit record was flawed beeause it did not contain this CD·ROM. 

### Id.



### EPA's Response. During the permitting process for a facility like the LG&E facility, KDAQtypicallyreceives a number of submittal. from the permitteeregarding, among other matters,

### airquality monitoringdata. Petitionerspresented no infonnation explaining what the November7, 2005,**CD~ROM** 

### contained, whether it 

### was related to Pennit Revision 2, or even when 

### it 

### was submittedto 

### KDAQ (i.e., whether it was 

### a partofthe permit application or submitted later). Further, Petitionerspresentedno infonnation indicatingthat KDAQ relied on that CD·ROM to establish the CO limits or to perform any required analyses. The mere existenceofa 

### dataset dated after

### draftpermit issuance and the public comment period, with no informationsupporting its relevance to the decision, is not sufficientto demonstratethat KDAQ failed to comply with a requirementunderthe Act in issuing the permit, Additionally, Petitionerspresentno infonnation suggesting that either KDAQ relied on this infonnation in makinga pennit decision or that review ofthis informationwas

### necessary to meaningfully

10 

### These public participation issues were raised in Petition I, but reiterated in Petition 2. In this section, EPA is addressing all the public participation issues raised (the substance of which is discussedprimarily in Petition 1). EPA uses the term "Petitions" because the issues were also referenced in Petition 2.

8

### review the proposed project or permit. See, e.g., In the matter of Pencor-Masada Oxyno/, LLC, 

### Petition No. 11-2000-07 (Order on Petition) (May 2, 2001) at 5 (denying an issue regarding public availability of certain documents).
In addition, we note that Petitioners have had a second opportunity through the Revision3 changes, to provide KDAQ with any comments concerning the CO data contained in the CDROM to the extent that they believe it is pertinent to the permitting decision. Although Petitionersprovided comments regarding CO to 

### KDAQ during the Revision 3 public comment period, there is no mentionofor reference to 

### the data on the CD-ROM. Petitioners' Exhibit I at 16-17. For these reasons, Petitioners failed to demonstrate that the permit is not in compliance with the Act. As a result, the Petitions are denied as to this issue.

b. Permit jile missing information such 

### asminor revision applications, startup/shutdownplan, andoperation and maintenance information



### Petitioners' Claims. 

### Petitioners sought to view the permit file (for Revision 2) at KDAQ offices in Frankfort, Kentucky and were provided with a box of documents. Petitioners allege that applications submitted by LG&E seeking the minor permit revision (Revision I) involving the voluntary creditable decreases ofNOli" and S02 

### emissions at Unit 1 were not included in the permit file for Revision 2. Petitioners further allege that the box did not include the startup/shutdown plan or operation and maintenance materials. Petition 1 at 8-9. '

EPA's Response. 

### KDAQ's public participation procedures for PSD and title V permits are found at 401 KAR 52:100. Consistent with Kentucky's PSD rules at 401 KAR 51:017 § 

### IS, the federal puhlic participation rules found at 40 CFR § 

### 51.166(q) also apply. Federal title V rules found at 40 CFR § 

### 70.7(h) also describe public participationprocedures although Kentucky's rules are more detailed in their requirements than Section 70.7(h). In pertinent part, 401 KAR 52:100 § 

### 8(1)(a-c), "Public InspectionofDocuments," provides that Kentuckyshall make available the permit application, the draft permit, and supporting materials. The federal rules further explain that the permitting authority shall "[mjake available in at least one location in each region in which the proposed source would be constructed a copy of all materials the applicant submitted, a copy of the preliminary determination, and a copy or summary of other materials, if any, considered in making the preliminary determination." 40 CFR § 

### 51.166(q).
Inclusion of a particular document in the permitting file depends in large part on whether the infonnation at issue was relied uponby KDAQ in the permitting decision, and not available in any other documents provided to the public. The SOB for Revision 2 provides an explanation of the voluntary creditable decreases as well as information associated with that permit modification that was relevant to Revision 2. 11 

### KDAQ SOB Revision 2 at**3~7.** 

### In the Response to Comments (RTC) for Revision 2, KDAQ explained that "[a]ppropriate supporting materials

11 

### The application for Revision 2 includes the netting calculations and provides significantly more infonnation regarding the netting analysis for Unit 31 than did the minor modification application which did not include the netting analysis at Unit 31, but rather,just the decreases in emissions from Unit I.

9

### on reductions were provided to the public through the air permit application document, the Statement of Basis netting discussion, and minor permit revision applications supporting the creditable emission decreases... " KDAQ RTC Revision 2 at 13. Thus, according to KDAQ, the permitting record for Revision 2 included the information from the minor modification that KDAQ relied upon in evaluating Revision 2. Further, the netting issues were open for additional public comment as part ofRevision 3 to the permit, and Petitioners did not raise any concerns regarding insufficient informationat that time. For the reasons discussed above, Petitioners have not demonstrated that any information from the minor permit modificationapplications that was relied upon by KDAQ was not provided in the permitting record. Therefore, the Petitions are denied as to this issue.
With regardto 

### the startup/shutdown plan, we note that in the September 10,2008 EPA Order, we granted the objection in Petition I that the pennit did not adequately address startup and shutdown emissions as 

### partofthe BACT analysis. Thus, the permit record now contains additional information regardingperiods ofstartup and shutdown, and a new public comment period was held specifically on this issue. Petitioners did not submit comments to KDAQ on the most recent permit revisions regarding startup and shutdown. Thus, this issue appears resolved and is now moot.
With regard to the operation and maintenance infonnation, Petitioners make a general assertion that ..the operating and maintenance procedures and manufacturer's recommendations for the proposedunit's equipment" were "absent from the file." Petition 1 at 9. LG&E did include some specific operation and maintenance Information for certain components as part of 

### the2004Application (in Appendix E). Prevention of Significant Deterioration Construction PennitApplication and Title V Operating Pennit Application Trimble County Unit 2, Louisville Gas & 

### Electric(December I, 2004) (hereafter referred to 

### as "2004Application"), 

### Petitioners do not explain what particular information

## was missing from the file. Further, as a general matter, at the time ofissuanceofa PSD permit, construction has not yet occurred. In general, companies may not have contracted for construction at the time the penni! 

### application is pending because many companies are reluctantto 

### enter into binding contracts without a 

### fmal preconstruction permit. Although the application and the pennit specify the design ofthe affected units, there are often many manufacturersofthe control technologies and other components such that inclusion ofall operation and maintenance information in the permit record may not be practical. Petitioners do not demonstratethat the pennit record lacked any required operation and maintenance infonnation, and thus the Petition is denied on this issue.

For the abovereasons, Petitioners fail to 

### demonstrate that the permit is inconsistent with the Act. As a result, Petitions are denied as to 

### the issues identified above.



### c. KDAQ'sflles weredisorganized, inhIbiting amite review; copies were not 

### timely provided to 

### Petitioners

Petitioners' Claims. Petitioners state that the file they received from KDAQ was 

### "jumbled"and "disorganized;" that they had troubleidentifying where the file couldbe 

### viewed (which KDAQ office), which delayed viewing; that the onsite copier was broken; and when

10Petitioners' requested copies ofthe permit file, the copies were provided during the third week of August 2005, two weeks after the close ofthe comment period. Petition 1 at 8.



### EPA 

# sResponse. As a procedural threshold matter, Petitioners failed to raise any ofthese issues during the public comment period. Petitioners' Exhibit A to Petition 1 (Comments (Revised) on the Louisville Gas and Electric Company Proposed Coal-Fired PowerPlant (August 9, 2005) at 3). The comment letter raises three public participation issues 

### -that it was
not clear when the public comment period began, that KDAQ failed to extend the public
comment period, and that some information regarding 

### 802 and NOx was missing from the file at KDAQ's offices. Pursuaot to Section 505(b)(2) ofthe CAA, 42 U.S.C. 

### § 766Id(b)(2), a "petition shall be based only on objections to the permit that were raised with reasonable specificity during the public comment period provided by the permitting agency." Thus, not only must issues be raised during the public comment period, but they must be raised sufficiently
to meet the threshold requirements. The Act does provide for an exception to this threshold requirement ifthe petitioner "demonstrates in the petition to the Administrator that it was impracticable to raise such objections

...or the grounds for such objection arose after such period." 

### Jd. Neither Petition raises these 

### exceptions." As claims regarding the files being disorganized, and unavailability ofcopies were not raised during the public comment period, consistent with Section 505(b)(2) ofthe CAA, such issues may not now be raised in a title V petition. Therefore, these issues are denied for procedural reasons. Nonetheless, in order to promote transparency in government decision-making, below is briefdiscussion on the issues raised by Petitioners.

Public participation requirements found at 40 CFR 

### § 51.166(q) address only the minimum requirements for what must 

### be included in the permit file. Additional requirements are found in Kentucky's SIP-approved rule (401 KAR 52: I00) and specify that certain documents be available for public review. 

### See, e.g., 401 KAR 52: I00 

### § 8(1)(a)(specifying that the permit application, draft permit, and supporting materials be made available to the public); 

### see also 40 CFR 

### § 70.7(h)(2) (describing the types ofinfonnation that must 

### be made available to the public for title V permit review). The permit record indicates that the permit file was available for public review at the required locations. KDAQ SOB Revision 2 12-13. According to the SOB, the documents were also available via the KDAQ Web site which provides instant access for many permitting documents. 

### Jd.

In addition, Petitioners have not demonstrated that their public participation claims regarding file organization and copies prevented a meaningful assessment ofthe issues, or a flaw in the permit. 

### See, e.g., Valero RefiningCompany, at 44; 

### In the 

### matter of Pencor-Masada Oxynol. LLC, Petition No. 11-2000-07 (Order on Petition) (May 2, 2001) at 5-8 (describing

12 With regard to Petitioners' claim that certain requested documents were not received until after the close ofthe comment period, we note that they did not raise this concern to Kentucky in the comments they submitted on the Permit, nor did they raise this concern in the requests for an extension ofthe comment period that they filed with the Kentucky. Petitioners did have access to the file for viewing at the KDAQ office, so the information itselfwas available to Petitioners. Finally, we note that in neither petition requesting EPA to object to the permit do they attempt to identify concerns with specific information they received after the close ofthe conunent period.

II

### standards for reviewing public participation concerns). Further, as was discussed above, Petitioners did have the benefitofa second public comment period (on Revision 3).


### Even though EPA is denying this claim in the Petition because Petitioners have not demonstratedthat KDAQ failed to 

### comply with an 

### applicable public participation requirement, EPA 

### hasconcerns regarding KDAQ's treatment ofthe Petitioners in their efforts to view the permit file and obtain copies ofthe file. Consistent with Section S02(b)(8).42 U.S.C. 

### § 7661a(b)(8),state rules 

### shall provide "reasonableprocedures consistent with the need for expeditious action by the permitting authority on permit applications and related matters, to make availableto 

### the public" certain permitting information. As a result, EPA strongly urges that KDAQ review its procedures regarding public inspectionofits permit files and ensure that such procedures allow for inspectionofthe entire permit file at the beginning ofthe public commentperiod. 

### and that the file is well-orgeniaed. Further, if no copier is provided for use by the public, EPA strongly recommends that KDAQ provide the public with a 

### procedure by which copies may be obtained in 

### a timely 

### manner. Such steps will further open and transparent government. which ultimately helps to support government decisions and actions. In the RTC for Revision 2, 

### KDAQ committed

### to "take 

### under advisement suggestions to improve its public out reach procedures." KDAQ RTC Revision 2 at 

### 13. EPA supports open and transparent governmentdecision-makingand is available to further advise KDAQ about improvements in its procedures for ensuring 

### an adequate public participation for PSD and title V 

### permits.

2. 

### KDAQfaihd In 

### extendtirepublic commentperiod



### Petitioners'Claims. Petitioners state that KDAQ's failure to extend the comment period was unreasonable because of "gross inadequacies" in the public review process. Petition I at 12. Specifically, Petitioners allege that the extension was warranted due to the delays associated with identifyingthe location ofthe permit file 

### (see Petitioners' Exhibit F 

### (Declaration of Joan S. Lindop, Sierra Club memberj), as well as delays associated with obtaining a copy ofthe permit file. Petition I at 12-13. Petitioners cite to 

### a situation in Illinois, which they claim is similar and for which an 

### extension was granted.



### EPA'sResponse. As an 

### initial matter, we believe that this issue is now moot due to the subsequent public comment period on Revision 

### 3. Because Kentucky did not limit the scope of conunents that could be submitted on Revision 3, 

### the Petitioners had a second opportunity to submit comments on any issues for which they believed they had an insufficientopportunity to do 

### soon Revision 2. 

### We note that Petitioners took advantage ofthis opportunity and submitted numerous comments that went beyond the limited scopeofthe revisions that were the focus of Revision 3 - 

### including raising issues that could have been raised during the Revision 2 

### process. Thus, to the extent a new or extended comment period may have been warranted, it has already been provided.
Nonetheless, Petitioners have not demonstrated that Kentucky acted inconsistent with applicable requirements or requirements under title V in denying Petitioners' request for an extension of the comment period on Revision 2. Kentucky's regulations at 401 KAR 52:100 do not explicitly require that extensions to public comment periods be granted. Extensions are also not explicitly discussed by applicable federal rules. 40 CFR § 

### 70.7(h)(2), 40 CFR § 

### SI.166(q).

12As a general matter, permitting authorities have discretion to extend (or not) a public comment period.

Petitioners describe 

### Ms. Lindop's unfortunate experience in attempting to view and obtain a copy ofthe LG&E pennit file. However, in requesting the extension oftime from KDAQ prior to the close ofthe comment period, Petitioners did not raise any ofthe concerns raised in the Petition. 

### See Petitioners Exhibit G (E-mail fromJohnBlair.ValleyWatch.Inc.to 

### 101m Lyons). Instead, Petitioners stated that an extension was necessary because "so many new sources" were being proposed in Kentucky. 

### Id Petitioners' comment letter also included a request for an extension oftime (Petitioners' Exhibit 

### A at 

### 3), but providing little detail in tenns ofwhy 

### an extension (or re-opening ofthe comment period) was warranted. Petitioners have not demonstrated that KDAQ's exercise ofits discretion, based on the facts that were presented to it in this circumstance, was arbitrary, capricious or resulted in a flaw in the permit. 

### See, e.g, Valero Refining Company at 

### 44. In addition, the matter is now moot. Therefore, the Petitions

are denied as to this issue.



### B. Petitioners' PSD Related Issues

Backgroundon PSD and BACTApplicable to AllPSDIBACTRelatedIssues Raisedin Petition

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

### § 165(a)(4), 42 U.S.C. 

### § 7475(a)(4); 40 CFR 

### § 52.210X2); 401 KAR 51:017 

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



### an emission 

### limitation based 

### on the maximumdegree ofreduction [ofpollutants 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 

### andavailable 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).

EPA has developed 

### a "top-down" process that permitting authorities use to ensure that 

### a BACT analysis satisfies the applicable legal criteria. The top-down BACT analysis consists ofa five-step process 

### whichprovides that all available control technologies be ranked 

### in descending order ofcontrol effectiveness, beginning with the most stringent. 

### See Prairie Stale, slip. op. at 17-18. The most stringent control technology is deemed the control necessary to achieve BACTlevel emission limits unless the applicant demonstrates, and the permitting authority determines, that technical considerations, or energy, environmental, or economic impacts

### justify a conclusion that the most stringent technology is not achievable in that case. An incomplete BACT analysis, including failure to consider all potentially applicable control alternatives, constitutes clear error. 

### See, e.g., Prairie State, slip op. at 

### 19; In re Knauf Fiber Glass, GmbH, 

### 8 E.A.D. 

### 121, 142 (EAB,



### 13February 4, 1999); 

### In re Masonite Corp. 5 E.A.D. 551, 568-569 (EAB, November I, 1994). The five steps in the top-down process are summarized below;

a. Identify all available control technologies; b. Eliminate technically infeasible options;

c. 

### Rankremaining control technologies 

### by control effectiveness; d. Evaluate the economic, environmental, and energy impacts ofthe options; and

e. Select BACT.



### Prairie Stale, slip op. at 17-18. Although EPA regulations do not require application ofthis topdown process to meet the BACT requirement, this top-down analysis is frequently used by permitting authorities to ensure that a defensible BACT determination, including consideration ofall requisite statutory and regulatory criteria, is reached. LG&E followed this top-down BACT methodology when 

### it submitted 

### its application for modifications at the Trimble County facility, which KDAQ applied in issuing its permitting decision. KDAQ SOB Revision 

### 2 at 15.



### J. 

### Petitioner's Claim that the Permit Fails to Include BACT for Carbon Dioxide (Section III ofPetition 2)



### Petitioners' Claims. Petitioners claim that EPA must object to the permit because the permit fails to include requirements addressing emissions ofcarbon dioxide (C02) and other harmful greenhouse gases (GHGs) from Unit 31, specifically a BACT analysis for CO2• Petition 

### 2 at 5-16. In this portion ofthe Petition, Petitioners raise the following main concerns: (1) Unit 31 will emit millions oftons ofCO2 and other GHGs; (2) C02 is an air pollutant under Kentucky and 

### federal law; (3) Co, is subject to regulation under the CAA (Sections 202, 821 and 40 CFR Part 75) and Kentucky law (401 KAR 52:060); (4) the permit cannot issue without the required emissions information for C02; and (5) the permit cannot issue without BACT limits for C02 (also stating, among other points, that the PSD significance level for CO2 is "any emissions:' and that a BACT analysis should consider carbon capture and sequestration).



### EPA's Response. In its response to comment on this issue, KDAQ identified the provision ofthe Kentucky SIP that requires it to implement the state PSD program in a manner that is no more stringent than the federal PSD program. KDAQ RTe Revision 3 at 13 (citing Kentucky Revised Statutes (KRS) 224.10-100(26». KDAQ then found that there were no federal PSD requirements to control C02 at stationary 

### sources," and KDAQ explained that the Kentucky PSD regulations did not require a BACT analysis for CO2 emissions in Revision 3. 

### Id. Implicit in KDAQ's conclusion that the permit would not include a CO2 BACT limit was an

Il As Petitioners note, KDAQ did incorrectly state that there "there are no federal regulations establishing requirements for 

### C02 at stationary sources," KDAQ 

### RIC Revision 3 at 13. However, given that this sentence directly follows KDAQ's discussion ofthe SIP requirement to implement their PSD program no more stringently than the federal PSD program and directly precedes their discussion ofstate BACT requirements. we think this sentence is more appropriately interpreted to say that Kentucky found there are no federal regulations establishing PSD requirements for CO 2 at stationary sources.

14understanding that the federal PSD program did not apply to C02 emissions at the time Revision 3 was issued. As discussed below, Petitioners have failed to demonstrate that KDAQ's reliance on the SIP and its assumptions regarding the federal PSD program requirements led to a permit that is deficient under the CAA. I

When KDAQ issued permit Revision 3 in January 2008, at least one EPA Region and the EPA program office that oversees implementation ofthe federal PSD permitting program had taken the position that C02 emissions were not subject to federal PSD requirements because they believed there was a binding, historic interpretation ofthe phrase "subject to regulation" in the federal PSD regulations that required PSD regulations to applied only to those pollutants already subject to actual control ofemissions under other provisions ofthe 

### CAA I5 

### See EPA Region 7'5 Response to Petition for Review, 

### in re: Deseret PowerElectric Cooperative, PSD Appeal No. 07-03 (filed November 2, 2007); Briefofthe EPA Office ofAir and Radiatinn, 

### In re: Chris/ian County Generation. LLC, PSD Appeal No. 07-01 (filed September 24, 2007). Accordingly, these EPA offices argued that the regulations in the CAA Acid Rain program that require monitoring of**C~** at some sources (and which are cited by Petitioners in this matter) did not make CO 2 subject to PSD regulation. 

### Id Thus, it was not implausible for KDAQ to assume that the federal PSD program did not require permits to include limits for CO 2emission because, at the time KDAQ issued Revision 3, two EPA offices that implement and interpret the requirements ofthe federal PSD program bad taken that position. Moreover, at that time, no federal permitting authorities had actually imposed PSD requirements for CO2; in fact, no federal PSD permit has since issued which included CO2 limits.

A decision 

### ofEPA's Environmental Appeals Board ("EAB") subsequently addressed the position that**C~** emissions were not subject to PSD regulation. 

### See In re: DeseretPower Electric Cooperative, 14 EAD.
_, PSD Appeal No. 07-03 (EAB, November 13,2008). The EAB determined that prior EPA actions were insufficient to establish a historic, binding interpretation that "subject to regulation" for PSD purposes included only those pollutants subject to regulations that require actual control ofemissions. However, the EAB did not conclude that such an interpretation was impermissible under the CAA and found "no evidence ofa Congressional intent to compel EPA to apply BACT to pollutants 

### that are subject only to monitoring and reporting requirements." 

### Id at 63. Shortly thereafter, in order to address the ambiguity that existed in the federal PSD regulations following the EAR decision, then Administrator Stephen Johnson issued a memorandum setting forth the official EPA interpretation regarding which pollutants were "subject to regulation" for the purposes ofthe

14 Petitioners also included a request for EPA to reopen the LG&E permit to include PSD BACT limits for C02 emissions. Petition 2 at 10. In light ofthe circumstances discussed below, EPA also declines at this time 

### to undertake a discretionary reopening ofthe LG&E permit to include such limits.

15 Under the federal PSD permitting regulations, only newly constructed or modified major

sources that emit one or more "regulated NSR pollutants" are subject to the requirements ofthe PSD program, including the requirement to install BACT for those regulated NSR pollutants that the facility emits in significant amounts. "Regulated NSR pollutants" include "any pollutant that otherwise is subject to regulation under the Act." 40 CPR 

### § 52.21(b)(SO)(vi); 

### see also401 KAR 51:001 § 1(210).

15federal PSD permitting program. Memorandum from Stephen Johnson, EPA Administrator, to EPA Regional Administrators entitled, 

### "EPA's Interpretation of Regulations thatDetermine Pollutants Coveredby Federal Preventiono/Significant Deterioration (PSD) PermitProgram" (December 18,2008) (Johnson Memo); 

### see a/so 73 

### Fed. Reg. 80,300 (December 31, 2008) (public notice ofDecember 18,2008 memo). The Johnson Memo established an interpretation of"subject to regulation" within the federal PSD regulations that "exclude[d] pollutants for which EPA regulations only require monitoring or reporting but [] include[d] each pollutant subject to either a provision in the Clean Air Act or regulation adopted by EPA under the Clean Air Act that requires actual control ofemissions ofthat pollutant." Johnson Memo at 1; 73 

### Fed. Reg. at 80,301. EPA received a petition for reconsideration ofthe position taken in the Johnson Memo, and on February 17, 2009, the new Administrator granted that petition. Letter from Lisa P. Jackson, EPA Administrator, to David Bookbinder, ChiefClimate Counsel at Sierra Club (February 17,2009). In granting reconsideration, Administrator Jackson announced the intent to conduct a rulemaking to take public comment on the issues raised in the memo, but she did not stay the effectiveness ofthe Johnson memo pending reconsideration. 16

While KDAQ's implicit assumption at the time Revision 3 was issued - that there was an established federal standard that did not require PSD permits to include limits for CO2 emissions - was later overturned by the EAB, it does not mean that Petitioners have demonstrated that KDAQ's reliance on this assumption led to a permit that is deficient under the CAA. Petitioners assert that Revision 3 was issued in error because CO2 "is clearly 'subject to regulation' under the [CAA] and Kentucky law," based on CAA regulations requiring their monitoring and reporting. Petition 2 at 7. Petitioners are essentially arguing that at the time KDAQ issued the permit, the federal PSD program required application ofBACT requirements to CO2 emissions and KDAQ erred by not including such limits. However, this argument fails because the EAB specifically found that there was no established standard regarding whether CO2 was "subject to regulation" under the federal PSD program and that the position urged by Petitioners

- PSD regulation ofCOz was required given existing monitoring and reporting requirements - is not clearly dictated 

### by the language ofthe CAA or EPA regulations. 

### Deseret Powerat 63, Accordingly, Petitioners have not established that KDAQ's failure to require CO2 emissions limits in this permit was incorrect because they did not show that KDAQ implemented the Kentucky PSD program in a manner less stringent than the existing federal PSD program. 17 Because Petitioners have not demonstrated that Revision 3 is inconsistent with the requirements ofthe Act, the Petition 2 is denied with respect 

### to this 

### lssue."

16 The grant ofreconsideration also re-iterated that states must issue PSD permits "under their own State Implementation Plans." February 17,2009 letter granting reconsideration at 1; 

### see alsoJohnson Memo at 3, n. 1 ("'To the extent approved State Implementation Plans contain the

same language as used in [the relevant federal PSD regulations], States 

### may interpret that language in state regulations in the same manner reflected in this memorandum.") (emphasis added).

17 The position taken in KDAQ's permitting decision rests on the interplay ofits SIP and the federal PSD program. and that decision is consistent with the EPA's present position regarding which pollutants are subject to federal PSD permitting requirements.

18 Actions are underway at EPA that could, when finalized, result in the promulgation offinal standards controlling the emission ofgreenhouse gases. In particular, EPA has announced 

### its

16

### 2. 

### Petitioners' Claims that the Permitfails to include air quality monitoringdemonstration during periodsof startup, shutdown, and maintenance (Sections IX and X ofPetition 2)



### Petitioners' Claims. In Section IX ofPetition 2, Petitioners reiterate the issues raised in Section II. E. ofPetition 1 that the permit fails to include BACT for periods ofstartup, shutdown and malfunction. Petition 1 at 24. These issues were already responded to in EPA's September 10,2008, Partial Order. In Section X, Petitioners comment that KDAQ's failure to consider BACT for periods ofstartup, shutdown and malfunction also resulted in a failure to demonstrate that Unit 31 "will not cause or contribute to a violation ofNAAQS or PSD increment." Petition 2 at 51. Petitioners cite to CO, VOCs and NOx as pollutants ofconcern although Petitioners' focus is on.VQCs because the VOC potential to emit was estimated at 97.8 tpy, a level that allowed LG&E not to evaluate air quality impacts for ozone. Petitioners suggest that VOC emissions can be higher during periods ofstartup, shutdown and malfunction, and that such emissions "can 

### be significant in terms oftriggering an ambient air quality analysis to assess compliance with ozone NAAQS and increments." Petition 2 at 52.



### EPA's Response. Pursuant Section 165 ofthe CAA, the PSD preconstruction requirements include, among others, an air quality analysis and PSD increment analysis. 42 U.S.C. 

### § 7475. EPA promulgated rules providing details on the air quality and PSD increment analyses, and Kentucky also adopted rules consistent with the CAA and EPA's regulations, which are incorporated into Kentucky's 

### SIP. 401 

### KAR 51:017 

### §§ 9-14; 

### see a/sa 40 

### CFR §§ 52.21(c)-(P), (r). Kentucky's rules at 401 

### KAR51:017 

### § 11 describe a 

### PSDpermit applicant's obligation to provide to KDAQ an "analysis ofambient air quality in the area that the major stationary source or major modification will affect," 

### Id: at (1)(a). The analysis is specific
to regulated pollutants for which the major modification will result in a significant net increaseand how those increases might affect the area's ability to maintain the current NAAQS attainment status. 401 KAR 

### § 51 :017; 

### see also KDAQ SOB Revision 2 at 31. Ozone is treated differently from other pollutants for which there is an established NAAQS because ozone is not emitted directly from sources. As a result, an ozone air quality analysis cannot be performed on

a source-by-source basis in the same manner as an analysis for PM or the other NAAQS pollutants. Therefore, air quality impact analyses for ozone focus on ozone precursors, primarily VOCs and NQIl' NO/{ is a precursor for ozone although KDAQ's SIP-approved rules have not yet been updated to include NOx as an ozone precursor.

In the Revision 2 SOB, KDAQ explained that LG&E provided the information required by Kentucky rules for the ambient air quality analysis. KDAQ SOB Revision 2 at 31-32. Pursuant to Kentucky rules (which are consistent with federal rules), KDAQ may exempt a project from an ambient air impact analysis ifthe project would result in a net emissions increase ofless than the amounts listed in the table in 401 KAR 51;017 

### § 7(5)(a). Petitioners raise specific concerns regarding VOCs and ozone. For ozone, 401 KAR 51:017 

### § 7(5)(a) explains

intention to propose a rule regulating greenhouse gas emissions from light-duty vehicles; that rule would control the emission ofgreenhouse gases within the meaning ofthe Johnson Memo.

17

### that, "No de minimis air quality level is provided for ozone. However, a net increase of 100 tpy

or more ofVOCs subject to this administrative regulation is required to perform an ambient impactanalysis including the gatheringofambient air quality data." Id 

### LG&E's 2004 Application explains the origin ofLG&E's determination that the net emissions increase for

vacs would 

### be 97.5 tpy (thus allowing KDAQ to exclude the source from ozone related air quality analyses). 2004 Application at 2-11-2-15. Spacifical1y, LG&E evaluated emissions from 9 emissions sources associatedwith 

### the Unit 31 modification. Id. 

### at 2-11. 

### The emissions from these sources were

### based on projected fuel bum rates, engineering design estimates, and EPA AP-42 emissions factors. 19 

### Id 

### In addition, LG&E explained that "combustion calculations were performed to develop representative stack parameters and emission rates

... " Id. 

### For'Unit 31, LG&E explained that "emissions and stackparameters were developed for unit loads of 100,75, and 50 percent ofmaximum capacityover a range ofrepresentative ambient temperatures... as well as for three potential coal fuels," Id 

### These analyses were then used to determine the potential-to-emitresulting from the modifications, and then compared with previous emissions to determine the net emissions increase pursuant to Kentucky's SIP-approved rules at 

### 401 KAR 51:017."

The

### resultofthese analyses was a projected net emissions increaseof97.8 

### tpyfor

### vocs. KDAQ SOB Revision 2 at 3-6. In the Revision 3 analysis, this nwnber was revised to 97.5 tpy for VOCs, but the substance oftbe analysis remained unchanged. KDAQ SOB Revision 3 at 3. Because the projected net emissions increase was below 100 tpy, Kentucky concluded that LG&Ewas

### notrequired to conduct an ambient air analysis for ozone. 401 KAR 51:017 § 7(5)(a); see also 2004 Application at 4-35 (requesting the §7(5)(a) exemption).
Petitioners do not identify any 

### specific flaws in the analysis performed by LG&E or KDAQ with regardto 

### CO, VOCs, or NO.. Rather, Petitioners seem to 

### rely on a presumption that emissions during startup and shutdown periods can 

### be higher than during other operating periods. Petition 2 at 

### 52. With regardto 

### CO 8I1d NO,. Petitioners provide no spacific informationdemonstrating 8I1y flaw in the analyses performed by LG&E and KDAQ. Slightly

19 

### An emissions factor is a representative value that attempts 

### torelate the quantity ofa pollutant releasedto 

### the atmosphere with an activity associated with the release ofthat pollutant. These factors are usually expressed as the weightofpollutant divided by a unit weight, volume, distance, or durationofthe activity emitting the pollutant (e.g., kilograms of particulate emitted per megagramofcoal burned). Such factors facilitate estimation ofemissions from various

sources ofair pollution. In most cases, these factors are simply averages ofall available data of acceptable quality, and are generally assumed to be representative oflong-term averages for all facilities in the source category. For more information on AP-42 and emissions factors, see http://www.epa.gov/ttnichieflap42/index.html.

20 

### In determining the actual emissions for evaluating an increase associated with a modification, the rules require that sources consider emissions that are "representative ofnormal source operations." 401 KAR 51 :001 § 1(2)(a). Neither federal law nor Kentucky rules require that sourcesconsider a malfunction as representative ofnormal source operations. In addition, the nature ofmalfunctions is such that they are not anticipated events. Petitioners fail to demonstrate that malfunctionemissions from this unit will result in an increaseofVOe emissions such that the 100 tpy threshold will be met.

18more detail is provided for VOCs. With regard to VOCs, Petitioners suggest that because 97.5 

### tpy is close to the 100 tpy threshold, and because "any increase in VOCs - such as those from startup, shutdown and maintenance

- can be significant," that LG&E should have conducted an air quality impact analysis for ozone, Petition 2 at 52.21 Petitioners provide no information demonstrating that emissions from startup, shutdown can be "significant," or result in an increase that would push LG&E over the 100 

### tpy threshold. Further, Petitioners fail to identify any specific portion ofLG&E's analyses described in its 2004 or 2007 Applications where LG&E's analysis is not consistent with applicable law. As explained by LG&E, the emissions analyses

were based on several scenarios, including unit loads of 100% (which are significantly greater than unit loads that would exist during a period ofshutdown or startup). 2004 Application at 2- 11. These emissions increases were then compared with previous emissions, consistent with the SIP-approved Kentucky rules, to determine whether such increases were "significant."

The Petitioners rely primarily on the assumption that emissions will increase during periods ofstartup and shutdown, as opposed to specific flaws in the analyses performed by LG&E and KDAQ. See, 

### e.g., KDAQ SOB Revision 2 at 3-5; 2004 Application at 2-11-2-15 and Appendix E; LG&E February 13, 2007, Application (Revision 3) at Appendix D (Emission Calculations); and Kentucky Cabinet Hearing Officer's Report and Recommended Secretary's Order (Hearing Officer's Report), File No. DAQ-27602-042 (June 13, 2007) at 163-164 

### (aff'dby Secretary on September 28, 2007). While it is generally true that not all control technology 

### will be fully operational during periods ofstartup and shutdown (such as SCR which requires a certain temperature for the catalyst to function), this does not necessarily correlate to increased emissions during periods ofstartup and shutdown. As noted above, typically the units are not operating at 

### fuU loads during such periods either. Petitioners cite to no evidence supporting their allegation on this point that emissions would be greater during these periods than they would 

### be during operation at full-load. VOC emissions at LG&E are related to combustion generallyhence the focus ofthe analysis on combustion calculations and unit loads. 2004 Application at 2·11-2-15. As noted in the Hearing Officer's Report, Unit 31 would not be expected to 

### be operating at "full load/full capacity" during periods ofstartup and shutdown; thus, the emissions

are expected to be significantly less than those measured by LG&E which assumed maximum capacity loads 365 days a year, KDAQ RTC Revision 2 at 25; 

### see also Hearing Officer's Report at 163-164; 2004 Application at 2-11-2-15. In addition, facilities such as LG&E will typically try to minimize emissions during startup by using alternative fuels during startup (such as natural gas). KDAQ RTC Revision 2 at 25; Hearing Officer's Report at 163-164

..

Petitioners do not identify any specific step in the analytical process where LG&E's evaluation was not consistent with applicable law. There is no information in the record indicating that the VOC emissions are expected to exceed 100 tpy. Thus, for the reasons described above, Petitioners have not demonstrated that KDAQ's evaluation was unreasonable or resulted in a flaw in the permit. As a result, the Petitions are denied on these issues,



### J. Petitioners' Claims Regarding BACT forNOxandS02 (Section II. B. Petition 1; Section V.b Petition 2)

21 Petitioners also make a vague reference to a failure to evaluate "PSD increment;" however, there is no PSD increment for ozone.

19

### BackgroundonPSD Program andNetting

The PSD program applies to NAAQS pollutants aod precursors for which an area has been designatedattaioment or unclassifiable,

### see CAA §§ 

### 160-169,42 U.S.C. § 

### 7470-7479, as well as aoy other "regulated NSR pollutant" as defined in 40 CFR § 52.21(b)(50). The

### PSD 

### program describes a setofpreconstruction requirements applicable to 

### newmajor emitting facilities (also called major stationary sources), and those undergoing amajor modification 

### that triggers PSD review. 

### See

### 42U.S.C. § 

### 7475. Pursuant tofederal rules, amajor modification

means "any physical change in orchange inthe method ofoperation of amajor stationary source that would result in: asignificant emissions increase...of aregulated NSRpollutant

...and a significant net emissions increase ofthat 

### pollutant from the major stationary source:' 

### 40 CFR § 

### 51.166(b)(2)(i);

### see also Kentucky's SIP·approved rules at 40I KAR 51:017 § 

### I 

### (116). The term "significant" 

### is defined in 40 CPR § 51.I66(b)(23)aod includes specific emission rates for certain pollutants.

### See also, 401 KAR 51:017 § 1(221). With regard to pollutants for which the 

### CAA doesnot setaspecific emission rate,

### "significant" isdefined as"any net emissions increase" associated with a major modification for those pollutants. 40 CFR 51.166{b)(23)."


### Netting is aterm that refers tothe process ofconsidering certain previous 

### and prospective emissions changes 

### atanexisting major source to 

### determine if a "net 

### emissions increase" of a pollutant will resultftom a proposed phyaicalcbaoge or chaoge in method of operation. 

### See 40 CPR § 51.l66(b)(3)(i)(deflnition of"net emissions increase"), 401 KAR 51:017 § 1(146). The PSD definitionofa net emissions increase found in 40 CFR § 51.166(b)(3)(i) (aod 401 KAR 51 :017 § 1(146)(a» consists oftwo components: (a) aoy increases in actual emissioos from a particular physicalchaoge or

### change in method of operation at a stationarysource; 

### aod (b) aoy 

### other increases and decreases in

### actual emissions atthe source that are contemporaneous with the particular

### change aodare otherwise creditable. The 

### first compooent narrowly includesonly the 

### emissions increases associated 

### with aparticular changeat 

### the source. Thesecond component
more broadly includes all contemporaneous, source-wide (occurring anywhere atthe entire source), creditable emission increases and 

### decreases. 

### ld 1be netting analysis is reviewed onthe basis of chaoges in 

### aooual (tons per 

### year) emissions. 

### See 40 CFR § 51.166(b)(23); 

### see also EnvironmentalDefensev. DukeEnergy Corp., 127 S. Ct. 1423 (2007) (upholdingEPA's 

### interpretation 

### ofmodification based upon tons per year ofemissions).

Pursuantto 

### federal rules and 

### Kentucky's SIP-approved rules, an increase ordecrease in actual emissions iscontemporaneous 

### with the 

### increase from the particular change only if it

occurs 

### between the date fiveyears before construction onthe particular change commences and the date 

### that the emissions-increase from the particular change occurs. 40 CFR § 52.21(b)(3)(ii)(a)-(b), 401 KAR 

### 51:017 § 1(146)(b)(2). Applicable rules also describe when an increaseor 

### decrease in actual emissioos is "creditable:' 40 CFR § 52.21 (3)(iii); 

### 40I 

### KAR 51:017 § 

### 1(l46)(c)-(l). Generally, to be

### creditable, a cootemporaneous reduction must be

22 

### The concept of a"net" emissions increase waschallenged following EPA's promulgation of the NSRrules in 1978(43 

### Fed. Reg. 26,380, June 19, 1978) and upheld by the U.S. Court of 

### Appeals for the District 

### ofColumbia Circuit (D.C. Circuit). See, 

### e

### g., Alabama Power 

### Co. 

### v. Costle, 636 F.2d 323 at 402-403 (D.C. Cir. 1979).

20

### enforceable on and after the date construction on the proposed modification begins. The actual reduction must take place before the date that the emissions increase from any ofthe new or modified emissions units occurs. 

### In addition. the permitting agency must ensure that the source has maintained any contemporaneous decrease which the source claims has occurred in the past. The source must either demonstrate that the decrease was enforceable at the time the source claims it occurred, or it must otherwise demonstrate that the decrease was

### maintained until the present time and will continue until it becomes enforceable. Art 

### emissions decrease cannot occur at. and therefore, cannot be credited from an emissions unit which was never constructed or operated, including units that received a PSD permit. 

### In addition, reductions must be ofthe same pollutant as the emissions increase from the proposed modification and must be qualitatively equivalent in their effects on public health and welfare to the effects attributable to the proposed increase. 

### Id., see a/so 45 

### Fed. Reg. 52,676,52,698-52,699 (August 7,1980) (explaining contemporaneous and creditable in the 

### preamble to 

### the rule promulgating EPA's 1980 NSR rule revisions).

For emissions decreases occurring at the same facility, ofthe same pollutant, within the applicable contemporaneous time period, KDAQ adopted an approach explained in the RTC Revision 2. KDAQ RTC Revision 2 at 18. Under this approach, there exists a presumption that the emissions decrease will have approximately the same qualitative significance for public health and welfare as that attributed to the related increase, unless the permitting agency has reason to believe that the reduction in-ambient concentrations from the emissions decrease will not be sufficient to prevent the proposed emissions increase from causing or contributing to a violation ofany NAAQS or PSD increment. The language regarding qualitative significance for public health and welfare stems from the purpose ofthe Act in Section 101(b)(I), 42 U.S.C. 

### § 740 I(b)( I). As in the case ofLG&E. in order to 

### ensure that the emissions reductions are contemporaneous and creditable for netting purposes, a regulated entity may seek a voluntary reduction in emissions not associated with any other change at the facility.

In summary, the netting analysis performed by a permitting authority tends to follow a six-step process: (1) determine emission increases from the proposed project; (2) determine the beginning and ending dates ofthe contemporaneous period as it relates to the proposed modification; (3) 

### determine which emission units at the source have experienced an increase or decrease in emissions during the contemporaneous period; (4) determine which emissions changes are creditable; (5) determine, on a pollutant-by-pollutant basis, the amount ofeach contemporaneous and creditable emissions increase and decrease; and (6) sum all contemporaneous and creditable increases and decreases with the increase from the proposed modification to determine ifa significant net emissions increase will occur. 45 

### Fed. Reg. at 

### 52,698; see also Memorandum entitled, 

### "ProposedNesting for Modifications at Cyprus Northshore MiningCorporation, SilverBay. Minnesota." from JOM Calcagni to David Kee (August 11. 1992) at 3·6. At the conclusion ofthe netting analysis. the permitting authority can then determine the specific pollutants for which there is a significant net increase in emissions, and thus, would 

### be subject to PSD review. 

### See, e.g., In re HawaiiElectric LightCompany, Inc., 8 E.A.D. 66 (EAB. November 25, 1988) (discussing elements ofthe netting analysis).


### Backgroundon KDAQ Nell/ngAnalysisforLG&E

21

### In November and Decemberof2004, 

### LG&E submitted to 

### KDAQ two minor permit revisions for voluntary creditable decreases in emissions of NOx 

### and S02 from the already existing

### andpermitted Unit I, in anticipation offuture constructionofUnit 31. KDAQ SOB Revision 1 Minor Modification(January 20, 2005). KDAQ's review ofthe voluntary decrease io emissions 

### wascompleted consistentwith 

### Kentucky's PSD rules.23 

### As part ofits 

### permit application to 

### reduce emissions, LG&E explained its intention to use the emission decreases of NOx 

### and**S~** 

### in its netting calculations for the forthcoming modification. KDAQ SOB (Revision 1- Minor Modification);

### see a/soKDAQ SOB (Revision 2) 

### at 3, 

### 6. The Revision 2 

### SOB explained that for NOx • 

### LG&E would reduce the emissions through a combination of increased removal efficiency and 

### increased SCR operating time. KDAQ SOB Revision 2 at 5, 6. For**S~,** 

### KDAQ explained that the reductions would be achieved through capital investments to increase overall WFGC removalefficiency. 

### ld In Revision 3, KDAQ noted that there were some adjustments to 

### the emissions for NOx

### and 

## S<h. but concluded that LG&E was still able to net-outofPSD for NO, and SO,. KDAQ SOB Revisioo 3 at 3. 

### 10 the Fehruary 13,2007 Amendmentto 

### Air Construction Permit (Revision 

### 3 Application), LG&E explains the emissions changes associated with the modifications as well as presenting the specific emissions calculations. Revision 3 Application at Section 3.0 and Appendices. Generally, the facts ofthe LG&Enetting involvethe situation contemplated by EPA in promulgating its regulations in 1980- that 

### facilities would upgrade older equipment to 

### reduce emissions and that this may result in creditable emissions decreases. 

### 4S Fed Reg. at 52,700.
These netting issues were raised by Petitioners in their state permit appeal, for which a final order was issued on September28,2007. Kentucky Cabinet Secretary's Final Order File No. DAQ-27602-Q42 (September 28, 2007); 

### see also, Kentucky Cabinet Hearing Officer's Report at 67-105. As part of Revision 3 to the permit, KDAQ revised the netting analysis. althoughthe ultimate result was that KDAQ still concluded that the modification satisfied the netting requirementsand was able to "net-out" ofPSD review for

### NO x 

### and S02. As explained by KDAQ, the edditional control equipmeot required by KDAQ as part ofthe 

### permithad the effect ofreducing the net emissions increase forNo, and S02 by 2.9 tpy and 0.9 tpy, respectively. KDAQ SOB Revision 3 

### at 4. KDAQ also noted that even with some increases from emission units such as the auxiliary boiler, there were "no changes to 

### the project's applicabilityunder the original PSD review process from what was determined for the 2004 

### Application." KDAQ SOB Revision 3 at 3.



### Petitioners' Claims. Petitioners raised a numberofconcerns regarding the netting in Petition 1. Petitioners raised some new concerns in Petition 

### 2. All are outlined in this paragraph and discussed below. In Petition 1. Petitioners state that the netting analysis for

### NOli and S02 was erroneous, and thus, it was incorrect for KDAQ to allow Unit 31 to 

### avoid full PSD review for NO x 

### and 802(i.e., a full BACT analysis). In Petition 1, Petitioners' issues sternfrom two

23 These rules became effective as a matter ofState law on JUly 14, 2004. 

### At the time that these rules were relied upon by KDAQ, they had been submitted to EPA for approval into the SIP. The rules reflected changes made by EPA to the federal NSR rules

- the 2002 NSR Reform Rules. EPA subsequently approved these rules into the Kentucky SIP. 71 Fed. Reg. 38,990 

### (July 11,2006). The delay was associated with litigationon the 2002 NSR Reform Rules that did not impact any issues raised by Petitioners.

22

### basic concerns - that the reductions in NO" and S02 were neither creditable nor contemporaneous. Petition 1 at 

### 1,4-18. Petitioners claim in Petition I that the emission decreases
at 

### Unit I were not "creditable" for use at Unit 31 because KDAQ did not: (1) properly determine that the decreases had the same qualitative significance for public health and welfare as the increase in emissions at Unit 3I; (2) 

### consider that the SCR on Unit 1 was installed as a result of the**NO~** 

### SIP Call or other SIP requirements and thus any decreases in emissions cannot be used for netting; and (3) properly consider the timing ofthe increases per the ozone season. Petitioners claim in Petition I that the emission decreases at Unit I were not "contemporaneous" because KDAQ: (I) used "baseline emissions" instead of"actual emissions" for the netting calculations; (2) 

### only the two prior consecutive years may be used for determining actual emissions; and (3) the S02 reductions at Unit 1 were required by another regulatory program (the CAA title IV program) and thus were not available for netting under the NSR program.

In Petition 2, Petitioners raise two additional concerns. Petition 2 at 28-29. First is the claim that LG&E did not properly document its emissions calculations for**NO~** 

### associated with the increase in size and operation ofthe auxiliary boiler. Second is the claim that LG&E did not properly document its emissions for NOx 

### associated with the emergency diesel generator. Jd.



### EPA's Response to Petition 1 Netting Issues
a. Concerns regarding whetherdecreaseswere creditable
Petitioners allege that the netting analysis fails to apply the requirement that the creditable decreases be ofthe same qualitative significance for public health and welfare as the increases for both NOx 

### and S02, with an emphasis on the NO" emissions. Petition 1 at 14-16. For emissions decreases occurring at the same facility, ofthe same pollutant, within the applicable"Contemporaneous time period, KDAQ adopted an approach explained in the RTC Revision 2. KDAQ RTC Revision 2 at 18. Under this approach, there exists a presumptionthat the emissions decrease will have approximately the same qualitative significance for public health and welfare as that attributed to the related increase, unless the permitting agency has reason to believe that the reduction in ambient concentrations from the emissions decrease will not be 

### sufficient to prevent the proposed emissions increase from causing or contributing to a violation ofany NAAQS or PSD increment Neither the federal rules, nor Kentucky's SIPapproved rules, articulate that the evaluation ofqualitative significance be akin to 

### a formal 'determination' process as Petitioners appear to suggest. Rather, the permitting agency will typically evaluate the emissions decreases and increases per the elements enumerated above, and so long as those elements are met, the netting analysis is sufficient. The 2004 

### Application describes the creditable emissions reductions (at 

### 2-14 - 2-15), as does KDAQ's SOB for Revision 

### 2 at 3-6. 

### See a/so KDAQ RTC Revision 

### 2 at 18. Therefore, the requisite analysis for determining credibility was completed by KDAQ.
As noted by Petitioners, during the public comment period, EPA submitted a comment to KDAQ on the issue ofqualitative significance. EPA's comment to KDAQ underscores the key issue associated with the qualitative significance analysis. Notably, EPA commented that the qualitative significance analysis needs to "take into account the dispersion characteristics ofUnit 1 in comparison with the dispersion characteristics ofthe proposed new NOx 

### and SG,: emissions



### 23units." Petition 1 at IS (quoting EPA comments on draft permit). In this sense, the qualitative analysis may be a simple one. For example, one issue associated with evaluating the qualitative relationship ofemissions may be comparing stack heights ofdifferent units. If, for example, decreases in emissions arc taken through a stack that is 500 feet tall and the increases are emitted by a stack that is only 15 feet tall, these emissions may not have the same qualitative significance becausethe emissions from the lower stack may have a greater impact on ground level pollutants than the emissions from the higher stack. This is not to say that such impact is a certainty, but rather. that it would need to 

### be evaluated as part ofthe netting analysis. EPA's comment to KDAQ was just a reminder that KDAQ conduct this type of analysis if the dispersion characteristics ofthe new unit, as compared with the existing unit, significantly differed. EPA typically includes this reminder in 

### draftpennit comments that include netting, and EPA's
comment is not an indication that KDAQ had not properly undertaken the netting analysis. Petitioners make no allegations regarding any physical characteristic ofUnit 1 versus Unit 31 that implicates concerns regarding the qualitative significance ofthe emissions. They are two similar emission units (Unit 1 is a 500 MW unit and Unit 31 

### will be a 750 MW unit), located at the same facility, with similar technical features such as emission points, and the decreases/increases occurred within the appropriate time period. KDAQ SOB Revision 2 at 3-7. Thus, Petitioners are incorrect in claiming that EPA's comment demonstrates a flaw in KDAQ's qualitative significance analysis.

Petitioners also allege that KDAQ "failed to examine all ofthe reasons for Trimble reducing NOxemissions and assessing whether those reasons preclude use ofthe reductions in a netting calculation." Petition 1 at 16. Petitioners cite to possible use ofthe same reductions to satisfy the NOxSIP Cale" or other ozone SIP obligations. Petition 1 at 15-16. The minor modification sought 

### by LG&E for netting purposes was to achieve greater NOx reductions than already required. 2004 Application at 2-16 (explaining that creditable NOx reductions from Unit 1 were achieved through a combination ofincreased removal efficiency and/or increased SCR operating time); see also, KDAQ SOB Revisinn I (Minor Modificatinn) at I; KDAQ RTC Revision 2 at 17. The creditable emissions decreases for NOxresulted from LG&E voluntarily reducing the annual limit for NO. to 0.45 Ibs/mmBTU from 0.7 Ibs/mmBTU. 

### [d. Petitioners state that as a result ofthe NOx SIP Call. the facility generated reductions ofNOx emissions (Petition 1 

### at 15); however, Petitioners do not explain how those reductions relate to or implicate reductions obtained by LG&E for netting purposes. The Permit Revision 3 includes a section on

24 On October 27,1998, EPA finalized the "Finding ofSignificant Contribution and Rulemaking for Certain States in the Ozone Transport Assessment Group Region for Purposes ofReducing Regional Transport ofOzone"- commonly called the "NO, SIP Call." 63 

### Fed. Reg. 57,356. The NOll SIP Call 

### was designed 

### to mitigate significant transport ofNOll, one ofthe precursors of

ozone. For those states opting to meet the obligations ofthe NOll SIP Call through a cap-andtrade program, EPA included a model NO, Budget Trading Program rule in 40 CFR Part 96. Kentucky 

### is included in the NO, SIP Call and implements the program through 40 I KAR 51:001, 51:160 (for utilities), 51:190, 51 :190, and 51:195. EPA approvad Kentucky's NO, SIP Call rules into the SIP on Aprilll, 2002. 67 

### Fed. Reg. 17,624.

24the**NO~** SIP Call (Section 

### K).2S KDAQ responded to Petitioners' comments on the**NO~** SIP Call, explaining why Petitioners were not correct about the emissions used for the LG&E netting analysis. KDAQ RTC Revision 2 at 17. In Petition l, Petitioners do not address specific

concerns with KDAQ's RTC, or explain why it was not correct. KDAQ's evaluation on this issue is consistent with applicable requirements and Petitioners have not demonstrated that the netting analysis was flawed.

In addition, Petitioners suggest that the NOxreductions associated with LG&E's minor modification were also used as part ofKentucky's plan to achieve compliance with the NAAQS. Petition 1 at 15. Petitioners do not identify any specific attainment demonstration or maintenance plan that included source-specific requirements for LG&E's Trimble County facility. As described in 40 CFR Part 81, Trimble County is designated as attainment for all the NAAQS. Although other areas in Kentucky are designated as nonattainment, there is no information indicating that emission reduction requirements for LG&E's Trimble County facility are relied upon as part ofa SIP for the areas designated as nonattainment in Kentucky. There is nothing in the record that indicates that the reductions that LG&E requested from KDAQ were for any other purpose but netting. KDAQ SOB (Revision 2) at 3-6; KDAQ RTC at 5, 14-15, and 17-18. One result ofthe numerous applicable requirements for NOli. and 

### S02, among other pollutants, is that facilities seeking creditable and contemporaneous emission decreases for netting will have to achieve emission reductions that have 

### some relationship to other reductions required by law. Applicable requirements do not prohibit netting simply because the emissions reductions bear some relationship 

### to a reduction requirement. 

### See, e.g, 40 CFR 

### § 52.21 (b)(3)(iii); 401 KAR 51:100 

### § 1(146Xt). Thus, Petitioners have failed to demonstrate that KDAQ's analysis for LG&E's netting failed 

### to meet any applicable requirement either federal regulations or Kentucky's SIP-approved rules.

Lastly. Petitioners appear to suggest that the "same qualitative significance for public health and welfare" means that the "increases from the project should be offset by decreases that

occur in the same amount and at the same time." Petition I at 15. Petitioners seem 

### to suggest that the creditable decreases will actually result in an increase**ofNO~** emissions during the ozone
season. Petition 1 at 16. In responding to Petitioners' comments on this point, KDAQ explained its position on qualitative significance and applied the LG&E facts to that stated framework. KDAQ RTC Revision 2 at 18. Petitioners fail to explain why the interpretation adopted by KDAQ was inappropriate. Thus, Petitioners failed to demonstrate that KDAQ's analysis was flawed.

Additionally, the applicable requirements do not require that the exact amount of emissions increased must be decreased to qualify for netting (i.e., net zero emissions). Rather, so long as the "net emissions increase" is below the 

### significance thresholdfor listed pollutants (which includes NOll and 

### S02), then the major modification is not subject to PSD review for those pollutants. 40 CFR 

### § 5Ll66(b)(23)(i) (definition oft'signiflcant"): 

### see also 401 KAR

25 As noted by KDAQ in the RTC, the NOx SIP Call program includes a trading component. As a result, the mere existence ofthe NOx SIP Call does not mean that every electric generating facility in a NOx SIP Call state would have to install controls and/or operate the facility to meet certain limits. KDAQ RTC Revision 2 at 17.

2551:100 

### § 1(221). "Therefore, there is no requirement that a facility have a net zero increase of emissions due to creditable decreases. Netting is established by evaluating emissions on a tons per year basis - not simply evaluating emissions during a portion ofthe year (e.g., ozone season

versus non-ozone season). 

### See, e.g., 40 CFR § 52.21(b)(23)(i) (noting significant rates in tpy); 401 KAR 51 :00 1 § 1(221). In order to effectuate the voluntary. creditable decrease in NOx emissions, Permit Revision 3 establishes several different NOx emission limits for Unit 1 including a 0.7 IblmmBTU (3-hour rolling average); 5,559 tpy (12-month rolling total); and 0.45 Ib/mmBTU (annual basis). Permit Revision 3 at 3 (Section 8.2 (d)-(f). These limits ensure that on both a short-term (3-hour average) and a long-term (12-month average) basis, NOxemissions stay below a specific limit. These limits apply at all times - i.e., both during the ozone season as well as outside ofthe ozone season.

While Petitioners appear to disagree with KDAQ's analysis with regard to netting, Petitioners fail to provide any information demonstrating that KDAQ failed to adhere to the federal or Kentucky rules regarding the netting analysis, or that the permit fails to include an applicable requirement with regard to netting. Therefore, the Petitions are denied as to these issues.



### b. Concerns regarding contemporaneous nature of emissions

With regard to the requirement that emissions increases and decreases be "contemporaneous," Petitioners raise three main concerns. First, that KDAQ used baseline emissions instead ofactual emissions. Second, that the S02 reductions were required by title IV ofthe CAA (the acid rain program). And third, that only the two years immediately prior may 

### be used for netting purposes. Petition 1 at 17. In this discussion, Petitioners define "actual emissions" as "those that occur either immediately prior or in the two years prior to" a new limit. Petition I at 17.

Petitioners appear to raise two arguments regarding the applicable emissions calculations for determining contemporaneous emissions

- one regards the Kentucky rules that are currently SIP-approved, and one regards the Kentucky rule that were Sly-approved at the time ofthe permitting action. Consistent with federal rules and Kentucky's current SIP-approved rules regarding contemporaneous emissions for netting purposes, "baseline actual emissions" are used for calculating increases and decreases to evaluate the contemporaneous nature ofthe emissions changes. 401 KAR 51:001 §1(2)(d)(1) (excluding the use of"aetnaIemissions" for calculating a significant emissions increase); 40 CFR § 52.2 1(3)(iXb); 40 I KAR 5 I :001 §1(146).26 These rules explain that facilities like,LG&E may choose any consecutive**24~month** period within the five year look-back period. 401 

### KAR § 5

### I:001 §

### I(20)(a); 40 CFR § 52.21(b)(48)(definitions of "baseline actual emissions"). Applicable requirements explain that the "increase or decrease in actual emissions is contemporaneous with the increase from the particular change only if

... [flor construction that commences on and after January 6, 2002, the change occurs between the date five (5) years before construction on the change commences, and the date that the increase from the change occurs." 401 KAR 51:001 § I (i46)(b); 40 CFR § 52.2l(b)(3)(ii). In Kentncky's

2.6 Petitioners suggest that "actual emissions" should have been used instead; however, the rules specify that "baseline actual emissions" be utilized for this purpose.

26

### current rules, baseline actual emissions for calculating increases and decreases in emissions for netting purposes are be determined consistent with the definition of"baseline actual emissions." 40 CFR 

### § 52.21(b)(48); 401 KAR 51:001 

### § 1(20); see 

### also67 Fed. Reg. 

### at 

### 80,20212-3. Consistent with the definition ofbaseline actual emissions, any consecutive twenty-four month period within the five years preceding a major modification may be 

### used to calculate baseline actual emissions. 

### Id. Further, under existing regulations, different twenty-four month periods (for baseline actual emissions) allowed for different NSR regulated pollutants. 40 CFR § 

### 52.21(b)(48)(ii)(d); 401 KAR 51 :001 § 

### 1(20)(b)(2); see also, 

### Memorandum entitled, "Request for Clarification on Policy Regarding the 'Net Emissions Increase. '" 

### from John Calcagni to William B. Hathaway (September 18,1989) at 3.
KDAQ described its netting analysis in the SOB for Revision 2 (at 4-6). See also, KDAQ RIC Revision 2 at 14-15. In the instant case, in order to complete the netting calculation, one calculation was completed to determine if the emission decreases at Unit 1 were creditable and contemporaneous, and another calculation was completed to determine the emissions increases at Unit 31. 

### Id: These two nwnbers were then added to determine ifthere was a 'net emissions increase' ofthe pollutants at issue. For this calculation, LG&E chose January 2001-December 2002 as the consecutive za-monrh period for S02. and January 2000 to December 2001 as the consecutive 24-month period for NOx• 

### KDAQ SOB Revision 2 at S, The emission decreases were permitted in January 200S (Revision I - Minor Modification). LG&E's 2004 Application was submitted in December 2004, and Revision 2 was issued in January 2006. EPA understands that construction commenced sometime between January 2006 and September 2008. Thus. the chosen consecutive twenty-four month periods were within the contemporaneous time period required by Kentucky's rules (i.e., 

### 5 years as explained above).
Petitioners argue that KDAQ's netting analysis was performed pursuant to NSR rules effective in Kentucky at 

### the time ofthe analysis, but not yet SIP-approved. Petition at 11. Petitioners suggest that had Kentucky followed its SIP-approved rule, the netting analysis would have been different because it would have used "actual emission" as opposed to 

### "baseline actual emissions." Kentucky's 2003 rules define "actual emissions" as "[a]ctual emissions as ofa particular date shall equal the average rate, 

### in tons per year, at which the unit actually emitted the pollutant during the two (2) year period which precedes the particulardate 

### and is representative ofnormal source operation. The cabinet may allow the use ofa different time period upon a detennination that it 

### is more representative ofnonnal source operation,,. 40I KAR 51:017(1 )(b)(2003). Thus, KDAQ had the authority under the SIP-approved rules (or the stateeffective reform rules) to use any two year period so long as it was more representative of normal source operation. Petitioners have not demonstrated that the two years selected by KDAQ were not 'more representative' or that KDAQ's analysis in choosing those two years was flawed.

Petitioners also raise the concern that the 802 reductions used for the netting were required by the CAA title IV Acid Rain Program. Petition I at 11. To support this claim, Petitioners point to data indicating that S02 emissions from Unit I "have consistently declined since 1999... to comply with the Acid Rain Program." Petition 1 at 11. Petitioners overlook, however, that LG&E sought a specificfurther 

### reduction in emissions than was 

### previously required by applicable requirements (as articulated in its title V operating pennit), in order to

27

### utilize the nettingoption for the anticipated constructionof Unit 31. KDAQ SOB Revision I (MinorModification) at 1. 

### LO&E's current title V permit also contains numerous provisions consistentwith title IV, found in Section

### J (Acid Rain) of the permit. Further, consistent with EPA's interpretation ofthe federal PSD netting rules, reductions obtained through either title IV (Acid Rain) requirements or other programs, like the NOx SIP Call, may also be used for PSD netting. See, e.g., 

### 57 Fed. Reg. 

### 55620, 55626 (November25,1992) ("Emissionreductions at title IV boilers which are part of an approved title IV averaging group are creditable for purposes of banking, bubblingor netting under title I only to the extent that the emissions reductions at any boiler, subgroupofboilers or the entire group of boilers are surplus to theirindividual and combined title I emission limitations, enforceable, quantifiableand permanentand take place in a singleattainment or nonattainment area"); see also 

### Letter from Stephen Rothblatt (EPA Region 5) to TimothyJ. 

### Method (Indiana Departmentof Environmental Management)at 2 (March 29, 1994). Thus, Petitionersfailed to demonstratethat the netting performed by LO&E was not consistentwith applicablerequirements.

EPA's Response to Petition 

### 2 Netting Issues"



### In Petition2, Petitioners raise two additional concerns regardingnetting. Petition 2 at 28- 29. First is the claim that LG&Edid not properly document its emissions calculationsassociated with the increase in size and operation of the auxiliary boiler. Second is the claim that LO&£ did not properly document its emissions associated with the emergency diesel generator. Id.



### The 2007 Application explains LO&E's emissionscalculations associated with the changesmade to 

### the auxiliary boiler and the emergency diesel generator. 2007 Applicationat Chapter 3.0 and 4-1. Specifically, LG&E explains:

Some emissionsfromthe

### auxiliary boilerincreaseddue to 

### the 1,000hours of additionaloperation. However, the sulfur dioxide and sulfuric acid mist emissionsdecreased due to the 

### switch to ultra low sulfur diesel fuel oil in the new auxiliaryboiler. The emissions fromthe emergency [diesel] generator also changed as a resultofthe proposed change to ultra low sulfur diesel fuel oil along with the proposed change in the numberafhours of operation on an annual basis. Since the optimizeddesign suggests that the emergencydiesel tire water pump is not required, 

### the

### emissions from this source

### willcause a decrease in the overall [potential-to-emit] summary.
2007 Applicationat 3-1. Additional emissions infonnation is provided in Appendices C and D to the 2007 Application. In reviewingthe

### infonnation provided, KDAQ adopted LG&E's analysisofthe emissions impacts ofthe proposedchanges. Petitioners argue

### thatthe application and the SOB do not includethe 

### specific calculations. Petition 2 at 29. However. when reviewed in conjunctionwiththe 

### 2004 Application and permitting documents (i.e., KDAQ SOB Revision

17 

### In 

### Petition 2, Petitioners note, "their

### continuing concerns with 

### the insufficiencyofthe original nettingdemonstrations" and cite to 

### briefs submitted during the permit appeal through the 

### Kentucky administrative process. Petition 2 at 28. EPA considered Petitioners' netting concerns described in the Petitions and a response to those concerns are included in this Order.

282), all the requisite information is provided. The emissions information provided, and the conclusions reached, are reasonable in light ofthe totality ofthe changes. Petitioners do not claim that the end result was incorrect, but rather, that the application failed to contain the requisite information. When taken together, the 

### 2004 and 2007 Applications provide all the information required by applicable regulations - and do provide specific emissions 

### information for the changes described in Revision 3. 2007 Application at 3-5; 

### see also KDAQ RTC Revision 3 at 14. Thus, Petitioners have failed to demonstrate that the permit is not in compliance with the Act.

For all the reasons discussed above. Petitioners have failed to demonstrate that KDAQ's analysis for LG&E's netting (including determinations regarding the creditable and contemporaneous nature ofthe emissions) did not meet a requirement under the CAA. Therefore, EPA is denying Petitioners' request to object to the permit for the netting concerns raised in both Petitions.

4. 

### Petitioners'ClaimsRegardingBACT fOT

### theAuxiliary Boiler (Section II.F. ofPetition 1 and Sections 

### v.b.I and 

### ii ofPetition 2)



### Petitioners'Claims. In Petition I, Petitioners state that the BACT analysis for the auxiliary boiler should have included consideration oflow-sulfur coal, coal blend, or natural gas. Petition 1 at 26·27. In Petition 2, Petitioners state that a revised BACT analysis was required for the auxiliary boiler, including the consideration ofadd-on controls. Petition 2 at 34-35. Petitioners have two main concerns. First, Petitioners suggest that KDAQ did not undertake a

new BACT determination for the auxiliary boiler, which increased in size and will operate significantly more hours tinder Revision 3, and instead relied on the Revision 2 determination. Petition 2 at 35. Second, Petitioners argue that a proper BACT determination for the auxiliary boiler must at least consider add-on controls, such as an oxidation catalyst. Petition 2 at 36. Petitioners identify a facility in California (the Crockett Cogeneration Facility) where Petitioner's believe an oxidation catalyst was used. 

### Id.



### EPA'sResponse. For the reasons discussed below, EPA is granting the Petition with regard to Petitioners' claims that the BACT analysis for the auxiliary boiler in Revision 3 was
not adequate.

In Revision 2, LG&E planned for the facility to maintain the three existing auxiliary boilers, and as part ofthe construction ofVoit 31, to add a new auxiliary boiler. KDAQ SOB Revision 2 at 1. The new auxiliary boiler was included as part ofLG&E and KDAQ's BACT analyses for the construction ofthe new unit. KDAQ SOB Revision 2 at 23; 

### see also 2004 Application at Appendix I-54 - I-57. KDAQ concluded that '"BACT" for the auxiliary boiler was represented by operational limits on the auxiliary boiler in terms ofboth fuel content and operating time. 

### Id.; Permit Revision 3 at 7. In its response to Petitioners' comments on this issue, KDAQ explained that the construction ofthe new auxiliary boiler was not subject to a major PSD/BACTanalysis for NO, and SO, because ofthe netting for those pollutants. KDAQ RTC Revision 2 at 25. LG&E also articulated this point in the 2004 Application. 2004 Application at 1-54. KDAQ also explained that for this size boiler, there is only a "negligible"

29difference in emissions for natural gas versus low-sulfur oil for the pollutants subject to BACT

- PM, YOC, and CO. KDAQ RTC Revision 2 at 25.

In Revision 3, LG&E determined that the existing three auxiliary boilers were not necessary due to the revised design ofthe new auxiliary boiler. 2007 Application at 2-1. LG&E explained that the size ofthe auxiliary boiler would increase, as would the operating times. 

### ld. Specifically, the changes to the auxiliary boiler in Revision 3 included increasing the size from 40 million British Thermal Units (mmBTU)/hour to 100 mmBTUlhour and the annual operating hours from 1.000 to 2,000 per year. KDAQ SOB Revision 3 at 2 and 13. As a result ofthe changes, LG&E conducted a revised BACT analysis for the auxiliary boiler for PMlPMIO, CO, VOC, and SAM. LG&E did not conduct BACT analyses for NO", or S02 due to its determination that LG&E netted out ofBACT for the major modification project as a whole. As part ofthe Revision 3 changes, the permit was modified to require the use ofultra low-sulfur diesel fuel and low NO", burners (Revision 2 required use oflow-sulfur fuel oil). 

### ld. KDAQ determined that these were "BACTalevel" controls. Permit Revision 3 at 37; KDAQ SOB Revision 3 at 13. With regard to emissions resulting from the Revision 3 changes, KDAQ explained that emissions ofall pollutants with the exception ofCO, lead, and fluorides decreased as a result ofthe proposed changes. KDAQ SOB Revision 3 at 6. The SOB explains that the net emissions increase fur CO for the Revision 3 modifications is 9.4 tpy. KDAQ SOB Revision 3 at 5. As part ofKDAQ's Revision 3 review, "[tjhe Division reevaluated BACT for the project revisions and [sic] determined that the BACT emission limits established in the January 2006 permit remain unchanged." KDAQ SOB Revision 3 at 10. The SOB includes more specific information for the revised BACT analysis for the affected units and pollutants. KDAQ SOB Revision 3 at 11-15.

In Petition 1, Petitioners raise concerns that the BACT analysis for the auxiliary boiler should have included consideration oflow-sulfur coal, coal blend, or natural gas (as opposed to fuel oil). The auxiliary boiler is not burning coal; thus, Petitioners' statements regarding coal are misplaced because coal would typically result in higher emissions than fuel oil (particularly the proposed Grade No. 2-D SIS or equivalent fuel oil). 

### See, e.g., AP-42 Compilation ofAir Pollutant Emission Factors, Stationary Point and Area Sources, Fifth Edition, at Chapter I, Tables 1.1-3 (coal), 1.3-1 (oil), and Appendix A-6 (heating values). Petitioners rail to provide any information supporting why low-sulfur coal should be part ofthe BACT analysis for the auxiliary boiler. 28 Petition 1 at 26-27. As a result, Petitioners have not demonstrated that the BACT analysis for the auxiliary boiler was required to consider coal options. In response to Petitioners' comments regarding natural gas, KDAQ responded that, "[tlhere is a negligible difference in PM, 

## voe, and CO emissions from a 40 mmBTUlhour boiler firing natural gas versus one firing oil." KDAQ RTC Revision 2 at 25. KDAQ explained the basis ofthe "negligible difference" as stemming from AP-42 emissions factors, noting that such factors do
not take into consideration use oflow-sulfur fuel and operational limits (i.e., the 1,000 hour annual operating limit contained in Revision 2). 

### Jd.

In Petition 2, Petitioners claim that the changes made as part ofRevision 3 (increasing the size and hours ofoperation) required a revised BACT analysis for the auxiliary boiler. The only

2B In addition, coal blends for the auxiliary boiler were not a part ofthe LG&E application.



### 30PSD pollutant that was increased as a result ofthe Revision 3 changes was CO. In the response to comments for Revision 3, KDAQ explains, "The prior BACT determination was based on a top down BACT analyses for carbon monoxide (CO). The proposed design and operation ofthe [auxiliary] boiler continues to constitute BACT." KDAQ RTC Revision 3 at 18. However, this
statement is not consistent with KDAQ's response to comments on Revision 2, wherein the BACT analysis for CO emissions from the auxiliary boiler was specifically based on the size and operating hours ofthe auxiliary boiler. KDAQ RTC Revision 2 at 25, While EPA appreciates that a 100 mmBTUlhour boiler is a small industrial boiler, KDAQ's reliance on the 40 mmBTUlhour boiler size and a limit of 1,000 annual operating hours as a basis to support the Revision 2 BACT analysis raises questions concerning KDAQ's reliance on the Revision 2 BACT analysis to support the Revision 3 changes, because those changes included increases to both the boiler size and the operating hours.

Thus, EPA is granting Petitioners' request with regard to the auxiliary boiler and requiring KDAQ to perform a revised BACT analysis for the Revision 3 changes, including the increase in size and operating hours. As noted earlier, KDAQ's Revision 2 BACT analysis indicated a "negligible" difference in the use ofnatural gas for certain pollutants, so whether a "negligible" difference would still exist in light ofthe Revision 3 changes should 

### be addressed as part ofKDAQ's revised BACT analysis. This analysis should be documented in the SOB. Should any changes to permit conditions be necessary following the revised analysis, a permit revision will be necessary to incorporate those changes.



### 5. Petitioners' ClaimsRegarding the BACT AnalysisjorSupport Operations 

### atthe Facility (Section Il.H ofPetition I - Partial Response)



### Petitioners'Claims. Petitioners allege that EPA must object to the permit because the limits set for "various pollutants at various facilities" are not BACT. Petition 1 at 27. For this proposition. Petitioners cite to 401 KAR 51:017 

### § 8 ("Control Technology 

### Review"). This allegation is followed by a bulleted 'list ofthree one-sentence statements alleging that (1) permit limits for various support facilities at the Trimble County facility are not BACT; (2) permit limits for fluorides (HF) are not BACT; and (3) 

### permitlimits for SAM are not BACT, Petition 1
at 27-28. Petition 1 is not clear whether issues 2 and 3 are related to the proposed new unit or the support facilities listed in the first bullet (coal blending. material handling operations. ash barge loading, fly ash silos, backup diesel generator, and the emergency diesel fire water pump). Because the one-sentence introducing the bulleted list refers 

### to "various pollutants at various facilities," coupled with the prior independent sections specific 

### to the proposed new unit, EPA concludes that Petitioners' claims in the bulleted list all regard the support facilities listed in the first bullet. In an Order issued on September 10, 2008, EPA responded to all the issues except those relating to the backup diesel generator and the emergency diesel fire water pump because those support facilities were affected by Revision 3. 

### See Order 1 at 11-12. We respond 

### to these remaining issues below.



### EPA'sResponse. As a threshold procedural matter, these issues were not raised during the public comment process for this permit. Petitioners' Exhibit A. Nor do Petitioners claim that it was impracticable to raise such claims during the public comment period or that the grounds

31

### for the claims arose after the close ofthe comment period. Thus, Petitioners failed to meet threshold requirements described in Section 505(b)(2)of the CAA, for raising these issues for the first time in a Petition to the Administrator.
Although we are not required to respond to these issues in light of the procedural deficiencies,we nevertheless respond briefly to the substance ofthe

### issue. As 

### partofthe permit analysis,KDAQ undertooka BACT analysis for project emission units subject to PSD requirements. KDAQ SOB Revision2 

### at 23-24. 

### KDAQ SOB Revision 2 at 14. In addition, KDAQ's BACT analysis for the new boiler included a BACT analysisfor support facilities that were considered"project emission units" - that is. support facilities that were subject to PSD reviewas a resultofthe new boiler project. KDAQ SOB Revision 2 at 23-24; 

### seealso401 KAR 51 :001 § 

### 1(66) (definition of emissinns unit). KDAQdetennined that support facilities such as limestonehandling,the backup diesel generator (also referredto as the "emergency generator"), and the emergency diesel fire water pump, were subject to BACT review. KDAQ SOB Revision 2 at 

### 23-24. In Revision 3 to the permit, the emergency diesel fire water pump was 

### eliminated. KDAQSOB Revision 3 at 14. Thus, issues associated with this support facility are now moot. With regard to the backup diesel generator, KDAQ did review the BACT analysispreviously done for that support facility

# as part of its Revision 3 review. KDAQ SOB Revision 3 at 14. As part of Revision 3, the

### backupdiesel generator

### will use ultra low sulfur diesel (or equivalent) fuel andthe 

### hours of operation are limited to 

### 52 per year. KDAQ detennined that these limitationsconstituted BACT for this 

### unit. KDAQ SOB Revision 3 at 14.

Petitioners did not raise any additionalconcerns about the BACT analysis for support facilities in Petition 2. In 

### addition, in 

### Petition I, Petitioners providedno basis as to why the BACT analysis performed by KDAQ for the identifiedfacilities was inconsistentwith applicable requirements. Petitioners' conclusory allegations regardingthe permit are insufficient to demonstratethat the permit is inconsistentwith the CAA, including the requirements of the SIP. For the

### reasonsdiscussedabove, the Petition 1 is denied as to this issue.



### 6. Petitione,.' ClaimsR<gtudingBACT for PM (Section**V.~.** 

### of Petition 2 and H.C. of Petition 1)



### Petitioners' Claims. Petitionersraiseconcerns regardingthe PMIPM,o BACT analysis in Petitions 1 and 2 and all of these issues are being addressed in this Order. In Petition 1, Petitionersstate that the pennit fails to require BACT for both PM and PM10at 

### Unit 31 by solely containing a BACT limit for "particulate emissions." Petition I at 

### 18. Further, Petitionersallege that lowerPMlPM,o limits are achievable at the

### facility and were incorrectlyeliminated as BACT by the applicant; Petitionerscite to-limitsallegedlyachieved at otherfacilities to demonstratethis point. Petition 1 at 19. Petitionersstate that the 

### PMlPM10 limits for the

### new and existing cooling towers are also not BACT (includingthe drift elimination rate). Petition 1 at 21. Finally, Petitioners explain specific concernsregardingthe 

### BACT analysis, such as claiming KDAQ perfonned an improper cost analysis.
In Petition 2, Petitioners' issues are primarily related to the installationof the DESP, and whether a facility's decision to include additional controls after a BACT analysis is completed implicates the prior BACT analysis. Petition 2 at 31-33. First, Petitioners suggestthat the

32

### additionof the DESP invalidatesthe prior BACTanalysis. Second, Petitionersexplain that the BACT limit for PMlPMIO should be based on both the PJFF and DESP, whichtogether,would beexpected to result in a decreaseofPMlPMlO emissions. [d. 

### Petitionerscite to LG&E's application materials to support their contentionsthat the combined control efficiencyfor PM will improveand thus, the previous BACT analysis did not represent the "maximum degreeof control that is available." Petition 2 at 32.



### EPA'sResponse 10 Petition J

### Issues

a. Distinction between PM and PM/O



### Petitioners state that it is unclear whether the limits in the permit are set for PM Or 

### PM10. 

### PM and PMIO are regulated as separatepollutants, 29 

### but they are very similar in tenns ofcontrol technology, emission points, and emissionrates. As a result, the BACT analyses for these pollutants is often similar, and there is nothingthat precludes the analysisresulting in the same limit and/or BACT·level controls for each pollutant. 

### See, e.g., Prairie State, 

### slip op. at 3, 106- 107(explaining a PM BACT analysis). Kentucky's SIP-approved rules at 401 KAR51:001 § 

### 1(181) defines particulatematter but does not specify a size diameter. PM10 

### is separately defined in 401 KAR 51:001 § 

### 1(186). In the permit record, KDAQ explained that"Kentucky's regulation is clear that PMIO is a subset of particulate matter." KDAQ RTC Revision2 at 20. The SOB for Revision2 groups PM and PMIO together under the name "particulate matter," which indicates Kentucky's evaluationinvolvedboth pollutants. KDAQ SOB Revision 2 at 18. Further, the permit sets limits for both PM and PM10. 

### althoughthe same limit is used. Permit Revision 3 at 28 (0.OI8Ibs/mmBTU (filterable and condensable) based on the average ofthree 

### one-hourtests). Accordingly, the record indicatesthat KDAQconsideredboth pollutants althoughthey were evaluated together with emissions ofPMIO consideredas a subsetofPM. KDAQRTC Revision2 at 20. The permit includes a BACT limit for PM and PM"

- KDAQ and LG&E undertook therequired analysis and determined that the two limits were the same, whichis notuncommon. KDAQ SOB Revision2 at 18-20; 

### see a/so2004 Applicationat Section 3.0, Appendix I (Part 5.0 - "Particulate EmissionsControl"). Petitioners have thus failed to demonstrate that the analysisperformed by KDAQ was inconsistentwith applicable requirements.

b. Concerns that 

### the 

### PMlPM,olimi!s are notBACT



### Petition 1 also raisesconcerns with the emission limits set for PMlPMIO 

### and suggeststhat they are not BACT. in part because several other facilities noted in Petition 1 were issued permitswith allegedly lower PM and/or PMIO 

### limits. As a general matter, the 2004Application and the SOB explain the BACT analysis done by LG&Eand KDAQ for this permit. 2004 Application at Section 3.0, Appendix I pgs. 14-23; KDAQ SOB Revision2 at 

### 18-20. For Unit 31, Section B.2(a) (Permit Revision 3 at 

### 28) lists the PMlPMIO limitsfor bothfilterable and condensable. Permit Revision3 at 

### 28. These limits also includethose imposed by federal New SourcePerformance Standards (40 CFR Part 60, Subpart Da). ld. 

### In addition, KDAQ

29 

### PM10 is a subset of particulatematter, i.e., 

### it is particulatematter that is less than 10 micrometers in size.

33

### considered the other facilities identified by Petitioners in their comments to Kentucky during the Commonwealth's public comment period, and KDAQ responded to Petitioners' allegations for each ofthe facilities cited by Petitioners. KDAQ RTC Revision 2 at 

### 21; 

### see a/so 2004 Application Appendix 1-14 (for discussion ofother facility control mechanisms). KDAQ's response includes a reasoned basis for distinguishingeach ofthe cited facilities from the LG&E situation. Id 

### Specifically,KDAQ's RTC points out factual differences between LG&E and the facilities noted by Petitioners. In some cases, Petition 1 notes these differences, but Petitioners disagree with KDAQ about their impact on the analysis. Generally, however, Petition 

### 1 raises the exact same claims to EPA that they raised to KDAQ during the permit process but fails to 

### explain or demonstrate how KDAQ's responses were unreasonable or inconsistent with applicablerequirements. Petition 1 

### at 18-22. 

### The permit record demonstrates that KDAQ considered Petitioners' comments and provided a response that supports the 

### PMIPMIO limits in the LG&E permit. Because.Petitioners have made no claim to 

### EPA explaining why KDAQ's reasoned responses to 

### their concerns are insufficient, or how the analysis was otherwise inadequate, they have failed to demonstrate

### thatthe permit is not consistent with applicable requirements, or that there 

### is a flaw in 

### the permit with regard to 

### the PMlPM10 limits.


### c. Concerns regarding the cooling towers, PMlimits. and drift 

### elimination ra/eJO



### The LG&E Trimble facility has 

### one existing natural draft cooling tower (Unit 20) 

### and, as part ofthe 

### construction on Unit 31, LG&E proposed to construct a new linear mechanical draft cooling tower (Unit 41). KDAQ SOB Revision 2 at 1. KDAQ performed a BACT analysis associated with constructionofUnit

### 31 for both the cooling towers because it was anticipated that Unit 20 may 

### beused for Unit 31 until construction on Unit 41 is completed. KDAQ SOB Revision 2 at 23. KDAQ's BACT analysis for the cooling towers resulted in a drift elimination rate but not a specificPMlPM10 limit. With regarding 

### to the cooling towers, Petitioners raise the following concerns: (1) the permit fails to set 

### a PMJPMlo emission limit for Unit 41; (2) 

### the proposeddrift 

### elimination rate for Unit 41 does 

### not represent BACT; and (3) the BACT analysis performed by KDAQ for Unit 41 was not adequate because KDAQ failed to consider a high efficiency drift eliminator and the cost analysis was not correct. Petition I at 21-22.



### There is no PMlPMIQ "limit" for the cooling towers identified in the permit because particulate matter from a cooling tower is typically controlled by drift elimination as opposed to add-on controltechnology. In the RTC, KDAQ explained that "{p]articulate matter from cooling towers is generatedby 

### the presence ofdissolved and suspended solids in the cooling tower circulationwater, which is potentially lost as 'drift' or moisture droplets that are suspended in the air {move] out oftile cooling tower." KDAQ RTC Revision 2 at 27. In its 2004 Application, LG&E

### explained that through controlling drift 

### rate, LG&E would be able to limit PMlPMIO emissions. 2004 Application at Appendix 1-31. Accordingly, the permit does contain a limit on 

### PMIPM10emissions from the cooling towers through the applicationofthe drift rate.

30 

### Petitioners appearto 

### raise several cooling tower related concerns - some ofwhich pertain to Unit 20 

### and some to Unit 41, 

### although Petition 1 

### is not always clear on this point. EPA has made a good faith, reasonable effort to identify Petitioners' issues vis-A-vis the appropriate cooling tower.

34For the two cooling towers, the permit sets a drift elimination rate (0.0005%), a circulating water rate, and references Kentucky rules regarding visible fugitive dust and particulate matter (Permit Revision 3 at 20, 48; 401 KAR 63:010). This appears consistent with what Petitioners requested during the permit process and is the same as the issues they raised to EPA in Petition 1. Petition 1 at 22. The draft permit for Revision 2 had higher 

### drift elimination rates for both Units 20 and 41, set at 0.0008% and 0.001

### %, respectively. Draft Permit Revision 2 at Section B (Emission Units 20 and 41). The current permit has a lower drift elimination rate for both units

- set at 0.0005% (for Unit 20, this rate only aRplies when servicing Unit 31). Permit Revision 3 at 20 (Unit 20); Permit Revision 3 at 48. 1 With regard to that rate, KDAQ stated that the drift rate of0.0005% represents the most stringent level ofdrift elimination proposed as BACT for the type ofcooling tower at LG&E (a linear mechanical draft cooling tower). KDAQ RTC Revision 2 at 27. As the drift elimination rate contained in Revision 3 is consistent with that identified by Petitioners in Petition I, this issue was thus resolved by KDAQ in the permitting process.

Petitioners also raise concerns regarding the BACT analysis which resulted in the drift rate. KDAQ performed a BACT analysis for Unit 4), reviewed LG&E IS analysis, and reached determinations regarding BACT limits for the cooling towers. KDAQ SOB Revision 2 at 23; 2004 Application at Appendix 1-30 - 1-35. As part ofthis analysis, LG&E conducted a review of the RBLC 

### Clearinghouse", and considered drift rates from a variety offacilities in Kentucky, Washington, and West Virginia. 2004 Application at Appendix 1-30. LG&E then evaluated the alternative cooling tower systems and reached the conclusion that the drift rate of0.0008% represented BACT. 

### ld. at [-31. LG&E concluded that this rate could be met with the linear mechanical draft cooling tower for Unit 41, along with a lower drift rate on Unit 20. Ultimately, the permit drift rate limit was set at 0.0005%. Permit Revision 3 at 48. Petitioners suggest that a high efficiency drift eliminator should have been considered. Petition) at 21-22. However, there is no stand-alone device called a "high efficiency drift eliminator." Rather, the cooling
towers provide for the air containing particulate to flow through an area with items such as baffles (also referred to as fill media) essentially trying to dislodge the water droplets from the air and allow the water to recirculate into the water flow. 2004 Application at Appendix C-S. The air flow can be forced with a fan, or it can occur naturally. The use ofa fan seeks to increase the amount ofdislodged droplets. Unit 41 is a linear 

### mechanical draft cooling tower and thus utilizes the fan method to dislodge droplets. Because this method was adopted in the final permit, the final permit reflected a rate of0.0005% rather than the 0.0008% rate in the draft permit The rate adopted in the final permit is the rate which Petitioners identified as appropriate. Petition) at 22. Thus, it appears that this particular issue wasresolved by KDAQ during the permitting process.

31 Following the public commentperiod on the permit, KDAQ added requirements for LG&E to monitor and record monthly total dissolved solids to the permit. KDAQ RTC Revision 2 at 27.
32 The RBLC is the reasonably available control technology (RACT), best available control technology @ACT), Lowest Achievable Emission Rate**(~AER)** Clearinghouse

- commonly referred to as the RBLC Clearinghouse.

35

### Also with regardto 

### the BACT analysis for Unit41, 

### Petitioners raise concerns about the cost analysis. Petitioners suggest that the cost allocation in terms ofthe cooling system as a whole versus just the "control" element was not accurate. Petition I at 22. 

### Petitioners analogize this to 

### considering the cost of a boiler in the BACT analysis forNOll while also considering the addition ofan SCR. Petition I at 22. 

### The cost analysis is summarized in the 2004 

### Application at 1-34**1~35.** 

### Appendix C provides additional specifications on the cooling towers and the associated costs. LG&E did include cost analysis (and PM reductions) as part ofthe review, and identifiedan appropriate BACT limit for Units 41 and 

### 20. Although the LG&E BACT analysis does not specificallyaddress Petitioners' point, LG&E did consider dry cooling among other technologies. When consideringdry 

### cooling, a completely distinct type ofcooling tower is at issue (as opposed to a wet cooling tower). 

### 2004Application at 

### 1-34

- 1-35. Further, the technologyofdrift control is such that even incremental improvementin drift control can involve substantialchanges in the coolingtower design. 

### See. e.g. 

### AP 

### 42 CompilationofAir Pollutant Emission Factors, Stationary Point and Area 

### Sources at Chapter 13.4 (discussing wet cooling towers and fluctuations in drift depending on design). For example, adjusting air velocity may result in the need for a smaller passageway. Such adjustments also trigger other issues, such as a possibleincrease or decrease in the heat transfer coefficientofthe tower. Thus, the relationship between a cooling tower and the drift elimination technique can be distinguished from that ofa boiler and a conventional add-oncontrol device such as an SCR (where the boiler design does not directly implicate the SCR design). The BACT analysis for the cooling towers performed by LG&E and KDAQ considered the cost ofthe cooling tower as whole which Petitioners have not demonstrated is an unreasonable approach in this factual context. Further, as noted earlier, KDAQ revised

### the permit to 

### include the lower drift elimination rate sought by Petitioners. As 

### a result, Petitioners have not identified a flaw in the pennit and the Petition is denied as to this issue.

For the reasons discussedabove, Petitioners failed to demonstrate that the permit is inconsistent

### with. the CAA. or Kentucky's SIP-approved rules. Therefore, Petition I is denied with 

### regard to the matters discussed above.



### EPA's Response toPetition 2

In Petition 2, Petitioners' issues areprimarily related to 

### the

### installationofthe DESP in Permit Revision 3, and whether a decision to include additional controls after the BACT analysis for Permit Revision 2 

### was completed implicates that prior BACT analysis. Petition 2 at 

### 30-33. First, Petitioners suggest that the addition ofthe DESP invalidates the prior BACT analysis. Second, Petitioners explain that the BACT limit for PMlPM" should

### be basedon both 

### the PJFF arid DESP, which together, Petitioners argue, would 

### be expected to resuJtin a decrease of PMlPM10 emisslons. 

### Id An overview ofthe BACT analysis process, as well as the BACT definition. are discussed on page 

### 13 ofthis Order. As partofthe Revision 2 application, LG&E conducted a top-down BACT analysis consistent with applicable requirements for Unit 

### 31. 2004 Applicationat Appendix I at 

### 1-14-1-23. This analysis included the consideration and elimination of a DESP through a top-down BACT methodology. Id., see also 

### KDAQ SOB Revision 2 at 18- 

### 20. Petitionersraised no concerns with the elimination ofthe DESP from the PMlPM\oBACT analysis at that time.

36

### With regard to Petitioners' first argument that the BACT analysis is reopened because ofthe addition ofthe DESP

- Petitioners cite 

### to no support for this conclusion. In fact, there is nothing in the CAA or any other applicable requirement that suggests that merely because a company voluntarily installs a particular control device, that any prior BACT determination is automatically invalidated. The nature ofthe BACT determination is that control technology may in fact be 

### eliminated through the analysis for a number ofreasons including technical or economic infeasibility. 

### See, e.g., 42 U.S.C. 

### § 7479 (3); 40 CFR 

### § 52.21(b)(12). Contrary to 

### Petitioners' assertion, the BACT analysis does not require facilities to add on every possible control technology - but rather, to establish an emission limitation based on the maximum degree ofreduction for each pollutant, taking into account energy, environmental, economic impacts, and other 

### cosrs." [d. In the preamble to 

### EPA's 1974 new source review rulemaking, EPA made specific changes to underscore that in the BACT analysis, the emphasis is on the "emissions rather than the presence ofany particular control equipment." 30 

### Fed. Reg. 42510, 42514 (December 5,1974). Further, in 1979, EPA issued a Memorandum entitled, 

### Guidancefor Determining BACT UnderPSD, addressing this issue. Memorandum from David G. Hawkins to Regional Administrators, I-X, 

### Guidance/or DeterminingBACT Under PSD, January 4,1979. Specifically, in the portion ofthe Memorandum discussing presentation ofalternative systems that could achieve a higher degree ofemission control, the Memorandum explains,

[i}fno better control technology is available for an emission point, then such finding should be stated and supported, and no further analysis is required. Other equipment with similar control capabilities need not 

### be presented (e.g., a baghouse versus an equivalent ESP at a particulate emitter). Unrealistic alternatives need not be presented such as placing in series control equipment which is normally used alone (e.g., an ESP followed by a baghouse).


### [d. at 6 (emphasis in original). Thus, there is no basis in the 

### eAA or its implementing regulations (or Kentucky law) for the proposition that a prior BACT analysis is automatically invalidated by the subsequent addition ofcontrol technology for a non·PSD purpose (and where the addition does not trigger PSD review).

As KDAQ explained, the DESP was added as part ofRevision 3 to "ensure that saleable fly ash is captured prior to potential contamination due to [powdered activated carbon} injection for mercury control." KDAQ SOB Revision 3 at 2. Thus, the addition ofthe DESP has no direct relationship to prior BACT analysis done as part ofRevision 2. 

### See also 42 U.S.C. 

### § 7412(b)(6) 

### (specifically excluding hazardous air pollutants, including mercury, from PSD review). In response to 

### Petitioners' comment, KDAQ stated,

Revision 3 does not involve any modification ofEmission Unit 31. Therefore, Emission Unit 31 BACT limit for PM is not under review in this permitting action. The project revisions have resulted in insignificant changes to the project's original potential-to-emit as specified in the Statement ofBasis Table

33 

### BACT is distinguishable from its more stringent, nonattainment new source review counterpart, "lowest achievable emission rate" or LAER. 

### See, e.g.;42 U.S.C. § 7501(3).

37

### 3.4. Additionally, the PSD applicability on a pollutant-by-pollutant basis and the associated BACT determination for new equipment remain unchanged.

KDAQ RTC Revision 3 at 17. Because the DESP was added to 

### control mercuryemissions, the addition does not affect the Revision 2 BACT analysis. KDAQ noted this point in explaining in 

### theSOB 

### forRevision 3 that, 

### "theinstallation of theDESP does notaffect theBACT emission limits for particulate... or filterable particulate

...establishedin the January 2006 Pennit...for EmissionUnit 31." KDAQ SOB Revision 3 at 12. In this case, Revision 3 was

### not changing a 

### fundamental parameter of theBACTanalysis. Rather, theRevision was

### including an additional controldevice for a purpose unrelatedto 

### BACT (to result in a saleablefly ash per added mercury controls). Further,there is 

### no indicationthat the additionofthe DESP is a "PSD-triggering" event- that is, emissionsare not expectedto 

### increase as a result of the addition of a DESP, nor is the DESP expectedto 

### impact the facility's compliancewith the previously establishedPMlPMIO BACT limit. Notably, both LG&E and KDAQ reviewedthe Revision 2 BACT analysis following LG&E's decision to add the DES? as part 

### of Revision 3. For the reasons discussed below(and in greaterdetail in the 2007 Application),the PMIPMIO limits established through the Revision2 BACT analysis werenot changed. Thus, in this case, Petitionershave not demonstratedthat the BACTanalysis was 

### affected by the addition of the DESP.
Petitionersalso suggest that the PMIPMIO limit should baveboon revised bocausethe additionofthe

### DESP"is likely to result in appreciably lower particulate matter emissions than a fabric filter alone." Petition 2 at 

### 32. 

### To 

### support thisclaim, Petitioners make

### a series 

### of mathematical 

### calculations; however,

### as is 

### explained below. 

### a closer 

### look at their analysis shows that Petitionersfailed to take into account a number of operational characteristicsof fabric filters and DESPs. Further, as was discussed above, the BACT limit is not intended to be the most stringent limit possible (that is, BACT is not the "lowest" achievable emission rate). Thus, even ifthe addition of the DESP is likely to reduce PMlPMIO emissions, Petitionerscite to no authority for the suggestion that the BACT determination must be revisited or the

### PM/PMIO limit must be reduced merely becauseit could be reduced. In the Revision 2 application,LO&E explains its decision regardingPMlPMIO control devices as 

### follows:
While the bag life of a fabric filter baghouse in this application is uncertain, the use of a fabric filter baghouse instead of

### an ESP is selected based on the ability of the fabric filter baghouseto maintain emission levels independentof ash characteristics, to provide additional control of mercury and SO), 

### to allow lower levels ofabsorbent/reagent use for mercury and H2S04 

### while providing greater control, and the fact that fabric filter baghouseshave been the technology of choice in recent permits for similarapplications.
2004 Applicationat Appendix 1-22. As part of the BACT analysis in Revision 2, LG&E considereda 

### baghouse and ESPs, and decided upon the 

### chosen technology based on the appropriate top-down 

### analysis. In Revision 3, LG&E decided to add a DESP for the following

reason:
[tjhe refined design determined the installationof a new dry [ESP] (DESP) for Unit 2 [a1k1a Unit 31] is necessaryto 

### separate fly ash out of the Unit 2 exhaust gas

38stream prior to the potential injection ofPAC. Without the additional dry ESP, fly ash from Unit 2 could never be sellable because ofthe carbon from the control ofmercury emissions

...Also, the dry EP reduces the amount ofpotentially
mercury contaminated fly ash. The dry ESP will 

### he located between [Unit 31's] SCR and fabric filter beghouse, thus allowing for the removal ofsellable/usable fly ash ifthat becomes a potential alternative in the future. The addition ofthe DESP will not affect the permitted particulate emission rate of0.018 IblmmBTU,

as described in Condition 2a for Emission Unit 31 from the Final Qir Quality Pennit issued on January 4,2006. The addition ofthe DESP will also not affect the filterable particulate emission rate ofO.Ot5Ib/mrnBTU, as described in Condition 2b for Emission Unit 31 from the Final Air Quality Permit issued on January 4, 2006. The DESP will not change the flow or temperature as presented in the 2004 Application. 

### Thephysicai structure ofthe DESP and the affect ofthe incorporation ofthe DESP to the air pollution control technologies were reviewed and incorporated into the downwash for the air dispersion modeling.

2007 Application at 2-10. In this context, the DESP is not intended to achieve a greater reduction ofPMlPMiO , although KDAQ estimates an "insignificant coincidental benefit" is possible. KDAQ SOB Revision 3 at 23, The reason for this expectation is 

### based in part on the operation ofthe fabric filter. As explained by LG&E in the 2004 Application, a fabric filter's efficiency for controlling particulate emissions is based upon the buildup ofcake and the pressure associated with this buildup. 2004 Application at Appendix 1-18. "The collected particulate forms a cake on the bag, which can enhance the bag's filtering efficiency," 

### ld. With the addition ofthe dry ESP before the fabric filter, even the small reduction in particulates from the dry ESP may have an impact on the efficiency ofthe fabric filter such that the ultimate particulate emissions may remain unchanged. Petitioners' basic calculations in Petition 2 do not take into consideration the potential decrease in efficiency ofthe fabric filter due to the addition

. ofthe dry ESP. Petition 2 at 32. Nonetheless. as was discussed earlier, the addition ofthe DESP

was not a PSD-triggering event and Petitioners fail to demonstrate that a new BACT limit for PMlPM10wasrequired by applicable law. For the reasons discussed above, Petitioners have not demonstrated that in Revision 3, the permit fails to comply with the applicable requirements. Therefore, Petition 2 is denied as to the issues discussed above.



### 7. Petitioners' Claims Regarding BACT 

### for SAM. PMIPM'fhand Ammonia (Section V.e. Petition 2; Section ILG. Petition 1)



### Petitioners' Claims. Petitioners raise concerns regarding BACT for SAM in both Petitions. In Petition 1, Petitioners suggest that the Revision 1 Minor Modification resulted in an increase ofSAM emissions of7 

### tpy, thus triggering a BACT analysis for SAM (Petitioners also raise similar concerns regarding PMlPM10 at Unit I and ammonia emissions at Units 1 and 31). Petition I at 27. In Petition 2, Petitioners claim that the BACT analysis for SAM was not supported because, according to Petitioners, LG&E reviewed the RBLC and then concluded the BACT limit was based on a WESP; LG&E provided no supporting calculations nor did LG&E explain its assumptions; and that the "lowest emissions level achievable" by this facility was not achieved. Petition 2 at 37-38.



### 39

### EPA's Response to Petition J


### In Petition I, Petitioners suggestthat 

### the minor modificationsundertakenat Unit I to decrease emissions**ofNO~** 

### and 902 for netting purposes triggered major PSDreview becauseof increasesofSAM and PMlPM1o, 

### as well 

### as resulting in increasesof ammonia at Units 

### I and 

### 31. Specifically, Petitionersstate 

### that the decreases of NOx and 

### SChcaused an increase in SAM of 7 tpy and an increasein PMlPMIO of 15 tpy. Petition 1 at 27. Petitionersprovide no data 

### or analysisto supportthese statements." TheSOB 

### for Revision 1 

### (Minor Modification) includesa discussionofthe creditable decreases of NOxand SOl 

### from Unit I, as well as a BACT analysis for the six simple cyclenatural gas-firedcombustion turbines, which did involve significant emissions increases, However,the Revision I (Minor Modification)SOB 

### does not indicate that there will 

### be any increases in PMlPMIO or SAM as a resultofthe Unit 

### 1 decreases in 

### NOxand 80:2. As was

### discussedearlier, new control technologywas not installedfor the reductions - the reductions were achievedthroughincreasedefficiency of the existing control devices. With regardto 

### the anunonia issues. ammonia is not a PSD regulated pollutantand 

### thus, assuming there were increasesin ammoniaemissions, there is no obligation for KDAQ to consider those as part of the PSD reviewprocess." With regardto 

### the new Unit 31, KDAQ did undertakea BACT analysisthat involved SAM and PMlPMIO, among other relevant pollutants. KDAQ SOB Revision2 at 14;see also 

### 2004 Application at Appendix I. 

### Petitiooershave thus failed to 

### present any informationdemonstrating that Units I or 31 

### are not properly permitted for SAM, PMlPMIO, and ammonia. 36



### EPA's Response to Pet/t/on 2


### As part of the 2004 Applicatioo, LG&E conducteda BACT analysis for SAM emissions associatedwith

### the new Unit 31 and othermodifications. 2004 Applicationat Appendix 1-27

- 

### I29. The

### Applicationexplains that LG&E reviewedthe RBLC and considered emission limitsat other sources in Kentucky and 

### WestVirginia. 

### Id. at 1-27. LG&E also conaidered various alternative sulfuricacid emission reduction systems. Id 

### Emission rates 

### associatedwith 

### the modifications 

### are also discussed in the 2004 Applicationin Appendix G, "Potential 

### to Emit

34 

### Section S05(b) of the 

## eAA requiresthat Petitionermake 

### a demonstration that 

### the permit is not in compliancewith the requirements of

### the Act. 42 U.S.C. § 7661d(b). A demonstrationthus requiresmore than mere conclusory allegations. 

### In theMatter

### of Al Turi LancQill, Inc., Petition No. 11-2002-13-A (January 30, 2004); see a/so, In the Maller of'th« New York Organic Fertilizer Company, 

### PetitionNo. 11-2002-12 at pages 

### 7-8 (May 24, 2002); In the Mati" of Sirmos Division a/ Bramante Corp., 

### Petition No. 11-2002-03 at page 7 (May 24, 2002). Broad generic claims "lack. sufficient specificity"to satisfy these criteria 

### andwill 

### be not be reviewed. 

### In re Steel**~amics,** 

### Inc., 

### 9 EAD. 165,239-240 (EAB 

### 2000). ] To the

### extent that Petitionerswere attempting to 

### demonstrate

### thatthe increasein ammonia demonstrated an increase in SAM, this conclusion is not supported

### bythe record, and Petitioners ftrovide no docwnentation for such proposition.

6 

### Unit 1 was permitted for construction prior to September 1978.and as a result, the emission limits applicableto 

### that Unit are not the same as the ones applicable to 

### the proposed new Unit 31. KDAQ SOB Revision I 

### (minor modification) at 2.

40

### Calculations." LG&E supported its decision to evaluate sulfuric acid emission reduction equipment by explaining the relationship between sulfuric acid and SAM. 

### Jd. at 1-27. As part of the BACT analysis, LG&E considered semi-dry scrubber systems; WESP; alkali injection systems; as well as SCRs and baghouses. 

### Id. at 1-27 -1-29. LG&E concluded that the BACT limit for SAM could be 

### achieved with the use ofgood combustion controls and a WESP downstream from the WFGD controls. 

### [d. at 1-29. These controls were chosen in part because oftheir anticipated collateral reductions ofPMlPMlo and mercury. 

### Jd. The permit includes a SAM emissions limit for Unit 31 ofno greater than 26.6Ibs/hr based on a three (3) hour rolling average. Permit Revision 3 at 29 (Section B.2.0)). The permit also includes a Compliance Assurance Monitoring (CAM) Approach for SAM. Penni! Revision 3 at 32 (Section B.4.O)). This analysis was consistent with a top-down BACT analysis because LG&E (1) identified all available control technologies; (2) eliminated technically infeasible options; (3) ranked remaining control technologies by control effectiveness; (4) evaluated the economic, environmental, and energy impacts' ofthe options; and (5) selected BACT. 

### Prairie State, slip op. at 17-18.

In Petition 2, Petitioners make additional statements regarding this BACT analysis. First, Petitioners state that "BACT does not ask what other plants are currently achieving, but what can this plant achieve for the future." Petition 2 at 36. There is nothing in the CAA or federal rules, or in the Kentucky rules, that requires the BACT analysis to 

### assess the control that might be applied in the future. As was discussed earlier in this Order, the BACT analysis compares options available at the time ofthe permitting analysis and takes into account facility-specific factors to detennine what is BACT. 40 CFR 

### § 52.21(b)(12); 401 KAR 51:001 

### § 1(25). Petitioners next state that the SAM limit does not represent the "lowest emissions level achievable by this plant as required by the BACT regulations." Petition 2 at 38. However, the BACT process is not required to result in the development ofthe "lowest emissions level achievable." Petitioners appear to be intertwining the definitions ofBACT and LAER. LAER, which is the standard used in nonattainment areas, is distinct from the BACT methodology and is intended to 

### result in the lowest achievable emissions rate. LAER also does not allow the consideration ofcertain factors that are allowed under the BACT analysis. 

### See, e.g., 40 CFR Part 51, Appendix S, Section II (18); 

### see gen'lIy, 44 

### Fed. Reg. 3,274 (January 16, 1979). LG&E did not evaluate LAER for this facility, nor was it required to by any applicable requirements. LG&E did evaluate BACT, and 'a summary ofthat review is discussed above.

As described above, the 2004 Application contains a BACT analysis following the topdown analytical methodology. This analysis is also described and discussed in the KDAQ SOB for Revision 2. These documents contain far more than a "conclusion" that BACT is a limit of 26.6 Ibs/hr as Petitioners suggest (Petition 2 at 37). In terms ofthe supporting calculations, the 2004 Application describes the specific calculations performed by LG&E to support the BACT conclusion. 

### See, e.g., Appendices I and G. Contrary to 

### Petitioners' suggestion, and as explained above, the BACT analysis performed by 

### LG&E and KDAQ went beyond simply reviewing the RBLC and comparing the LG&E facility to other facilities in Kentucky and West Virginia. Petition 2 at 38. It 

### also considered what could be achieved at the LO&E facility considering facility-specific factors. For the reasons discussed above, Petitioners have failed to demonstrate that the permit is inconsistent with applicable requirements. Therefore, the Petitions are denied as to the issues discussed above.

41

### 8. 

### Petitioners'ClaimsRegard;'lg Consideration 0/ PM1.5 (SectionVI 

### Petition 2)



### Petitioners'Claims. Petitionersraise a numberof concerns regardingPM2,5. Petition2 

### at 38-46. Specifically, Petitioners argue that LG&E may not meet its obligations for PM2.5by usingPMlo as a surrogate; 

### that the LG&E 

### permit cannot lawfully issue withoutquantification of PM2,5 emissions; that the permitfailed to contain an air quality analysisfor PM2.s; andthat the permit 

### failed to containa BACT 

### determination for PM2.S.



### EPA 'sResponse. EPA grants the Petition on this issue to require

### further consideration of PM2.S. Petitioners' concerns regardingPM2.S raisethe 

### thresholdissue of whetherLG&E may use the 

### PM 10 

### surrogate approach to meet the PSDrequirements for**PM2,~.** 

### As discussed below, the permit record does not provide an adequate rationaleto 

### support the use of the PMlo surrogate approach for this permit. As the other concerns raised by Petitioners relate at least in part to whetherKDAQ's useofPMIO as a surrogatewas appropriate, EPA directs 

### KDAQ to address theseclaims as well.

Petitioners make severalargumentsto supporttheirview that KDAQ's useofPM 10 as 

### a surrogate for 

### PM l Swas notappropriate. While EPA does not necessarily agree fully with

### all of Petitioners arguments, two points raised by Petitionersare 

### particularlypersuasive. First, Petitioners essentially argue that KDAQ's permit record does not, 

### as a technical matter, provide support for the use of PM10 

### as a surrogate forPM2.S. 

### See, e.g.•Petition2 at 40. 

### Second. while they disagreewith the use of the surrogate policy 

### as ageneral matter. Petitionersemphasizethat even the surrogatepolicy was 

### only intendedfor 

### useuntil technical difficultiesassociated with analysis of PM,., have been resolved. S••, 

## '.g., Petition2 at 43-45. EPA addresses and elaborates on theseand related difficultieswith KDAQ's 

### record on this issue below.


### BackgroundonPM" NMQS 

### andeM
EPA establishesNAAQS for certain pollutants,pursuanttu Section 109nfthe CAA, 42 U.S.C. § 

### 7409. Once a NAAQS is established, the CAA sets fortha process for designating areas in the

### nation as attainment, nonattainment,orunclassifiable, thustriggeringadditional requirements consistentwiththe 

## eAA and its implementing regulations. Following establishment of a NAAQS, EPA also 

### promulgates implementation rules that provide specific detailsof how states must comply with the NAAQS based on the corresponding designations for



### areas within the state. Generally, the SIP is 

### the primarymeans by which 

### states comply with CAArequirements to attain the NAAQS. 

### S•• CAA Section I100a) ODd 

### Sections 171 • 193,42 U.S.C. § 

### 7410(a)and 

### §§ 

### 7501 ·7515.
On July28,1997, EPA revised the NAAQS for PM to add new standards for "fine" particulates, using PM",,, the indicator. 62 Fed Reg. 

### 39,852 (July 28, 1997). On October 17, . 2006, EPA revised

### theNAAQS for both PM,., and 

### PM". 71 F.d. Reg. 

### 61,236(October 17, 2006). On October23, 1997,EPA issued a memorandum fromJohn S. Seitz regarding implementation ofthe 

### 1997 standardsentitled, 

### "InterimImplemenuuion for the NewSource Review Requirements/orPM,.,' (Seitz Memorandum). The 

### SeitzMemorandum explainedthat

42sources would be allowed to use implementation ofa PM lO program as a surrogate for meeting PM 2,5 NSR requirements until certain technical difficulties were resolved. Seitz Memorandum at 1. On April 5, 2005, EPA issued a second guidance memorandum from Stephen D. Page entitled, 

### "Implementation of New Source ReviewRequirements in PM-2.5 NonattainmemAreas" (Page Memorandum), which re-affirmed the October 23, 1997 Memorandum. Page Memorandum at 1. On May 16,2008, EPA promulgated the final rule entitled "Implementation ofthe New Source Review (NSR) Program for Particulate Matter Less than 

### 2.5 Micrometers (PM,.,) (May 2008 PM2.S NSR Implementation Rule), 96 

### Fed. Reg, 28,321 (May 16,2008), In the preamble to that rule, EPA explained the transition to the 

### PM2.5 NSR requirements beginning on page 28,340. Specifically, EPA concluded that, ifa SIP-approved state is unable to implement a PSD program for the PM 2 ,5 NAAQS based on that rule, the state may continue to implement a PMIO program as a surrogate to meet the PSD program requirements for PM2

.5 under the PMIQ Surrogate Policy in the Seitz Memorandum." 96 

### Fed. Reg. at 28,340-28,341.



### Use ofPMlo as a Surrogatefor PMv

When EPA issued the PMIO Surrogate Policy in 1997, the Agency did not identify criteria to be applied before the policy could be used for satisfying the PM2

.5 requirements. However,
courts have issued a number ofopinions that are properly read as limiting the use ofPMIO as a surrogate for meeting the PSD requirements for PM 2.s. Applicants and state permitting authorities seeking to rely on the PMIO Surrogate Policy should consider these opinions in determining whether PM 

### IO serves as an adequate surrogate for meeting the 

### PM2,5 requirements in the case ofthe specific permit application at issue.

Courts have held that a surrogate may be used only after it has been shown to be reasonable to do so, 

### See, e.g., Sierra Ciub v, 

### EPA, 353 F.3d 976, 982-984 (D,C, CiT, 2004) (stating general principle that EPA may use a surrogate ifit is "reasonable" to do so and applying analysis from 

### NationalLimeAssoc. v. EPA, 233 F.3d 625, 637 (D,C, CiT, 2000) tbat is applicable
to determining whether use ofa surrogate is reasonable in setting emissions limitations for hazardous air pollutants under Section 112 ofthe Act); 

### Mossville Envt'l

### ActionNow v. 

### EPA, 370 F, 3d 1232, 1242-43 (D,C, CiT,2004) (EPA must explain the correlation between the surrogate and the represented pollutant that provides the basis for the surrogacy); 

### BluewaterNetworkv. 

### EPA, 370 F.3d I, 18 (D,C, CiT,2004) ("The Agency reasonably determined that regulating [hydrocarbons] would control PM pollution both because HC itselfcontributes to such pollution, and because HC provides a good proxy for regulating fine PM emissions"). Though these court decisions do not speak. directly to the use ofPM 10as a surrogate for PM2 s, EPA believes that the overarching legal principle from these decisions is that a surrogate may be used only after it has been shown to be reasonable (such as where the surrogate is a reasonable proxy for the pollutant or has a predictable correlation to the pollutant). Further, we believe that this case law governs the use ofEPA's PMIO Surrogate Policy, and thus that the legal principle from the case law applies where a permit applicant or state permitting authority seeks to rely upon the PMIO surrogate policy in lieu ofa PM 2

.5 analysis to obtain a PSD permit.

37 The Seitz Memorandum is commonly referred to as EPA's 1997 Surrogate Policy.

43With respect to PM surrogacy in particular, there are specific issues raised in the case law that bear on whether PM 10 can be considered a reasonable surrogate for PM n The D.C. Circuit has concluded that PMJO was an arbitrary surrogate for a PM pollutant that is one fraction of PMJo where the use ofPM IO as a surrogate for that fraction is "inherently confounded" by the
presence ofthe other fraction ofPM". 

### ATA v. 

### EPA, 175 F.3d 1027, 1054 (D.C. Cir. 1999) (PM1o is an arbitrary indicator for coarse PM (PM I O-2,5) because the amount ofcoarse PM within PMIO will depend arbitrarily on the amount offine PM (PM2.5». In another case, however, the D.C. Circuit held that the facts and circumstances in that instance provided a reasonable rationale for using PMjOas a surrogate for PM2.5. 

### American Farm Bureau v, 

### EPA, 559 F.3d 512, 534-35 (D.C. Cir. 2009) (where record demonstrated that (1) PM2.5 tends to be higher in urban areas then in rural areas, and (2) evidence ofhealth effects from**~arse** PM in urban areas is stronger, EPA reasoned that setting a single PMlO standard for both urban and rural areas would tend to require lower coarse PM concentrations in urban areas. The court considered the reasoning from the 

### ATA case and accepted that the presence ofPM2,5 in PM IO will cause the amount ofcoarse PM in PM lO to vary, but on the specific facts before it held that such variation was not arbitrary). EPA believes that these cases demonstrate the need for permit applicants and permitting authorities to determine whether PMIO is a reasonable surrogate for PM2.5under the facts and circumstances of the specific permit at issue, and not proceed on a general presumption that PM 10is always a reasonable surrogate for PMu

This case law suggests that any person attempting to show that PM IO is a reasonable surrogate for PM2.5 would need to address the differences between PMJO and PM2.5. For example, emission controls used to capture coarse particles in some cases may be less effective in controlling for PM". 72 

### Fed. Reg. 20,586, 20,617 (April 25,2007). Petitioners made this specific point in noting that finer material is not as efficiently removed by baghouse as larger particles. Petition 

### 2 at 40. As a further example, the particles that make up PM2,s may be transported over long distances while coarse particles nonnally travel only short distances. 70 

### Fed. Reg. 65,984, 65,997-98 (November 1,2005). Under the principles in the case law, any
person seeking to use 

### the 

### PM10 Surrogate Policy properly would need to consider these differences between PMlOand PMu and demonstrate that PMIO is nonetheless an adequate surrogate for PM25.

Finally, the PMIO Surrogate Policy contains limits. As stated in the 1997 Seitz Memorandum, the PMIO Surrogate Policy provided that, in view ofsignificant technical difficulties that existed in 1997, EPA believed that 

### PMlo may properly be used as a surrogate for PM2.S in meeting NSR requirements "until these difficulties are resolved." Seitz Memorandum
at 

### 1. In their petition, Petitioners presented their explanation for why these technical difficulties have been resolved. Petition 

### 2 at 45. While Petitioner may have overstated this point, subsequent to the filing ofthe Petition, EPA noted in the May 2008 PM2.5 NSR Implementation Rule that «these difficulties have largely been resolved." 73 

### Fed. Reg. at 

### 28,34012-3.

In this case, the record for the LG&E permit does not provide an adequate rationale to support the use ofPM 10 as a surrogate for PM2.5 under the circumstances for this specific permit. Overall, the record does not show how the use ofthe PM IOSurrogate Policy is consistent with the case law discussed above in light ofthe differences between PMIO and PM25,and does not demonstrate that the use ofthe Policy here falls within the limits ofthe Policy. For these reasons

44

### and basedon the record now before EPA, the Petition is grantedon the claim that the permit recorddoes not support the use ofPMIO as a surrogate for PM 2,s.38
Goingforward and without suggesting that the followingtwo steps are necessaryor sufficientto demonstrate that PMIO is a reasonablesurrogatefor PM2,S, we offer thefollowing as a possibleapproach to makingthatdemonstration:

First, the Source or the permittingauthorityestablishes in the permit record a strong statistical relationshipbetweenPMIOand PM2.5 emissionsfrom the proposed unit, both with and withoutthe proposed controltechnology in operation. Withouta strongcorrelation, there can be little confidencethat the statutoryrequirements will be met forPM2.5 using the controls selected througha PMIO NSR analysis. A strong statisticalrelationship could be establishedin a variety ofways. In the case where the unit in question is a newunit, the applicant could rely on emissionsdata from similar units at the facility or at other facilities to develop a correlation that' demonstrates the relationshipbetween the two species. In the alternative, ifactual emissionstest data are not available for a similar unit, the applicant may be 

### able to access and analyzethe underlying source test data that has been used to develop emission factors for sourcesofthe same type (including the type of controlequipment). In developing suchcorrelation, a simple ratio ofAP-42 emissionsfactors or ofthe results of a single compliance stack test would not appear to be sufficient. Instead, reasonableconsideration would be given to whether and how the PM2,S:PM10 ratio may vary with source operatingconditions, includingvariations in thefuel rate and in control equipmentcondition and operation.This consideration may be basedon engineering analysis ofthe facility includingthe proposedcontroltechnology and/or review of existing or new emissionstest data across a range of conditionsat existing sourcesthat are similar in design to the proposed unit.
Second, the source or the permitting authoritydemonstrates that the degree ofcontrol of PM 2.5 by the control technology selected in the PMIO BACT analysis will be at least as effective as the technology that would have been selectedifa BACT analysisspecific to PMB emissions had been conducted. We present here two possible paths to accomplish this. The first would be to perform a PM2.s·specific BACT analysis, in which case the requirementis met if the control technology selected through the PMIO

### BACT analysis is physicallythe same as what is selected through the PM2.S BACT analysis, in all respects that may affect control efficiencyfor PM 2sThe secondpath would be to perform a PM2,s-specific 

### BACT analysis, and show that while the type and/orphysical designofthe control technologymay be different, the efficiencyforPM2.5 control of the technologyselected through thePM10 BACTanalysis is equal to or betterthanthe efficiencyof the technologyselected through the PM B BACT analysis, across the range of operatingconditions that can be 

### anticipated for the source and the controlequipment. This

3. 

### In 2007, EPA denied a petition requestingthat EPA object to the title V permit for Spurlock for failure to include a BACT limit forPM2,S emissions. In re East Kentucky Power Cooperative, Petition No. IV·2006-4 at 41-42 (Order on Petition) (August 30, 2007). EPA found that, under 

### the circumstancespresented in that matter, KDAQ's use ofPMIO as a surrogate forPM2.S was 

### appropriate. Id. 

### EPA's decision in the present Order reflects the circumstances presentedin this LG&E matter, includinga more comprehensive petition, and an evolvingunderstanding of the technical and legal issues associated with the use of the PM\oSurrogatePolicy.



### 45

## ,

demonstration may be based on engineering review and/or old or new emissions test data from units and control equipment similar to the proposed unit with the proposed control equipment.
Again, these two steps are not intended to 

### be the exclusive listofpossible demonstrations that 

### a source or permitting authority would make to show that PMIO is a reasonable surrogate for PM 2.5. 

### Sources 

### and permitting authorities are encouraged to carefully consider the case law and the limitsofthe SurrogatePolicy to 

### determine what information and analysis would need to be included in the pennit application and record before relying on the Surrogate Policy.



### 9. Petitioners'ClaimsRegardingUnits Used/or ExpressingEmission 

### Limits (Section VII Petition 2; also addressing where raised in Petition 1- Pb, SAM, and VOC)



### Petitioners'Claims. Petitioners claim that the permit must establish enforceable emission rates in 

### both units ofmass per Unit time as well as mass per mmBTU in order to demonstratecontinuouscompliance. Petition 2 at 46. 

### In Petition 1, Petitioners raised this generallywith regard to the 

### enfnrceabilityofthe limits set for lead, SAM, and VOC. Petition 1 at 32, 34, and 35. 

### In Petition 2. Petitioners provide additional discussion in support oftheir claims regardingthe

### units used for articulating the emission limits. In addition, in Petition 2, Petitioners state 

### their position that hourly rates should have been set for PM and VOC (which references CO because CO is the surrogate for VOC).



### EPA's Response. Kentucky's SIP-approvedregulations define"emission standard," as "the numerical expressionofquantity per unit oftime or other parameter that limits the amount ofa regulated air pollutant that a source or emission unit is allowed to emit to 

### the ambient air." 401 KAR 52:001 § 

### 1(30). The IbslmmBTU standard is a limit on the amount ofapollutant that may enter the environment. While a pounds per hour or tons per year limit, as urged by Petitioners, would be a "quantity per unit oftirne" consistent with Kentucky's SIP-approved regulations,Kentucky's rules also allow units to 

### be expressed in IbslmmBTU by authorizing use ofan "other parameter that limits the amount ofa regulated pollutant." 401 KAR 52:001 § 

### 1(30).
With regard to the SAM emissions limit for Unit 31. the permitestablishes a pounds per hour emission rate of26.6 based on a three hour rolling average for Unit 31. Permit Revision 3 at 29 (Section B.20». The pounds per hour unit is a mass per unit time rate, and is thus consistent with Kentucky's Slla-approved regulations.
With regardto the other pollutants, Petitioners have failed to demonstratethat 

### the permit is inconsistentwith a requirement under the Act. While Petitioners recognize that the IbslmmBTU limit can be 

### converted into a pounds per hour limit through a calculation (Petition 1 at 33), Petitioners raise concerns that this calculation involves the use ofadditional infonnation, such as heat input, which is not directly regulated by the permit. Petition 2 at 46. However, this does not impact the ability to calculate a pounds per hour rate should one be

### desired - heat input

46data is generally available from these types offacilities. 39 In support oftheir position, Petitioners cite to a Region 9 title V permit guidance (Petition 

### 2 at 

### 46),40 which Petitioners quote as stating, "[t]he title V permit must clearly include each limit and associated information from the underlying applicable requirement that defines the limit." Petition 

### 2 at 

### 46. While Petitioners
may prefer a pounds per hour limit, the lbs/mmBTIJ standard is consistent 

### with applicable requirements and provides the required information. Petitioners also cite to EPA Region 4's
comments (reprinted in relevant part in KDAQ RTC Revision 

### 2 at 6). In those comments, Region 4 recommended that limits be expressed in pounds per hour, but did not indicate that such representation was required. EPA believes that pounds per hour emission limits present additional benefits for enforcement purposes, and thus, EPA recommends that permitting authorities utilize those types oflimits. However, the applicable requirements for the LG&E facility do not require that such a limit be established, and Petitioners have not demonstrated such limits are necessary to assure compliance. For these reasons, Petitioners have failed to demonstrate that the permit is inconsistent with a requirement under the Act.

For the reasons discussed above, the Petitions are denied as 

### to the above issues.



### 10. Petitwners' ClaimsRegarding BACT and Clean Fuels (Section VIII Petition 2)



### Petitioners' Claims. In Petition 

### 2, Petitioners argue that the BACT analyses for SAM and PM failed to consider the use of"clean" fuels - such as low sulfur coal for Unit 31, Petition 

### 2 at 48-49. Petitioners explain that LG&E identified emissions differences associated with different coal blends, and none were eliminated as technically infeasible. Petitioners thus conclude that BACT for SAM and PM must include the consideration oflow-sulfur coal and/or'

use ofa coal-specific blend. 

### Id.

.


### EPA's Response. As was explained earlier, the BACT analysis requires the consideration offuel alternatives where the source's design is not implicated, and where such fuels have a reasonable expectation to result in lower emissions ofthe pollutants at issue. 

### See, e.g., In re East Kentucky Power Cooperative, Petition No. IV-2006-4 (Order on Petition) (August 30, 2007). Petitioners rely on the 

### EastKentucky Petition Order to support their claims for the LG&E facility. In the 

### EastKentucky matter, the issue oflow-sulfur coal was raised because the facility

was subject to PSD review for S02, which is not the case with LG&E. There is no indication in the record (or in any infonnation provided by Petitioners) that low-sulfur coal would impact SAM and PM emissions. Moreover, LG&E does discuss low-sulfur coal in its PM BACT

39 Petitioners cite to the 

### EastKentucky Power Cooperative title V petition order for support of the idea that a heat input limit is required in the LG&E permit. Petition 

### 2 at 47. The 

### East Kentucky matter, however, involved a pennitting issue where 

### the heat input limit was initially in the permit (as a requirement), and subsequently removed, thus resulting in EPA requiring 

### it to be 'returned' to its place in the permit. No similar situation exists here. 

### 40 As an initial matter, we note that the Region 9 guidance is simply guidance and does not establish a binding requirement. In any event, it provides no support for Petitioners' contention because 

### it does not speak to the specific issue raised by Petitioners

- that these limits should be expressed in pounds per hour.



### 47

### analysis, and Petitioners do not demonstrate any deficiencies with that discussion. 2004 

### Application at 1-15-1-16.
Further, LG&E did include specific information about coal blends as part ofits 2004 Application. 2004 Application at Appendix I (coal blends are 

### discussed for the pollutants identifiedby Petitioners

- 

### PM and SAM). For PMIPMIO • 

### LG&E included coal blends as part 

### of its BACT analysis. [d. 

### at Appendix 1-14. LG&E evaluated other facilities' PMIPMlOrates and coal blends, as well as pointing out differences between the LG&E project and the facilities identified in the application. The PMlPMloBACT analysis then evaluated different coal related options including low-sulfur coal and coal washing, and ultimately concluded that none ofthe different coal options was likely to result in lower PMIPMloemissions. Id. 

### at Appendix 1-16. Thus, contrary to Petitioners' claims, LG&E did consider different coal options, but they were subsequentlyeliminated through the BACT process for PM/PMIO. With regardto 

### SAM. the BACT analysis does not include as detailed a coal discussion as the PM BACT analysis. 

### ld. at Appendix 1-27-29. In that analysis, LG&E concludes that, "[ejffective controls forH2S04 include only post-combustion controls." [d. 

### at 

### 1-28. Petitioners provide no information demonstratingwhy this conclusion is incorrect. Further, while Petitioners generally raise the SAM BACT analysis as 

### a concern, Petitioners' claims regarding SAM appear more related to 

### PM BACT {i.e.,that sulfur levels are related to the formationofthe condensable fraction of total PM) than to the SAM BACT analysis. Petition 2 at 48; [d. 

### Accordingly, Petitionersprovide no informationdemonstratingthat further consideration ofcoal blends as 

### part ofthe SAM BACT analysis is required.
For additional support oftheir claims. Petitioners cite to their Exhibit 15 (attached to Petition 2). 

### a document provided to Petitioners 

### as part ofthe administrative appeal on 

### thepermit, Exhibit ISis a document produced by LG&Ethat includes performance guarantee information from various companies/vendors

### that relate to the anticipated performance of

### the air pollution 

### control train 

### for Unit31, as described in theapplication. See 

### Petition2 Exhibit 15 (Cover Letter). There is nothingthat indicatesthat 

### thiadocumentwas

### a part of the permitrecord before KDAQ at 

### the time ofRevision 2 or 3, or that it was

### everprovided to 

### KDAQ. These documents

areintema1 LG&E engineering documents regarding the construction ofmodifications at LG&E Trimble whichPetlticners obtainedas part of the permitappealprocess. Petitioners interpret Exhibit 15 as demonstrating that 

### CoalTypeB has 

### the lowestsulfur content,and inconjunction with 

### a wet 

### ESP. would result in lower emissions ofSAM than 

### the performance coal or Test Coal 

### A. Petition2 at 

### 28; Petition2 Exhibit 15at0021862. LG&E's BACTanalysisfor SAM explains the 

### basis forchoosing goodcombustion controls, a wet ESP, and a WFGD as the controls necessary to achieve the SAM limit. 2004Application atAppendix 1-29. LG&E explains

### thatthis suite 

### ofcontrols has 

### additional benefits ofreducing PMlPMIO 

### and mercury, as 

### well as SAM. Further, the BACTanalysesdid considercoal blends (even thoughtheyWere not a part of the application). Exhibit15 does notdemonstrate that a particularcoal blend

### iI reasonably likelyto 

### leadto 

### significant additional emissionreduetions for eitherPM or SAM, insteadfocusing on the suggestionthat coal blends mAY. 

### result in lower SAM emissions. Further, Petitionersfail to 

### explain why LG&E's rejection ofcoal blends was inconsistent with the applicable requirements,and thus have failed to 

### demonstrate that 

### the permit is not consistent with applicablerequirements.

48For the reasons discussed above, the Petitions are denied as to the above issues.



### C. Petitioners' Claims Regarding Enforceability ofPermit Terms and Compliance Assurance Monitoring (Section III.A and B ofPetition 1)

In Section III ofthe Petition, Petitioners raise various concerns associated with the enforceability ofspecific permit terms. Petition 

### 1 at Section III (beginning on page 28). In Order I, EPA responded to the vast majority ofthe issues raised in this section, with the exception ofissues pertaining to PMlPM 10, mercury, and SAM because these matters were either affected by Revision 3 or Petitioners raised additional issues in Petition 2. In some circumstances, the nature ofEPA's response in Order 

### 1 did cover an issue regarding PMlPM1o, mercury, or SAM as raised in Section III ofPetition l. In this Order, EPA is responding to any remaining issues raised in Section III that were not addressed in Order I.



### 1. Petitioners' Claims that the Permit Fails to Include Compliance Provisions Contained in the SOB and CAMProvisions are not Enforceable (Section III.A. B. E. F, G. ofPetitinn 1)



### Petitioners' Claims. Petitioners allege that the permit fails to incorporate compliance limitations and testing parameters specified in the SOB for PM/PM 1o, SAM, and mercury. Specifically, Petitioners take issue with the fact that Table 5.4 in the SOB (KDAQ SOB Revision 2 at 26-27) is not included in the permit. Petition 

### 1 at 28_29.41 Petitioners also state that the permit contains SAM monitoring, but includes it in Section BA.j. in Table 

### 1 and appear concerned that this is not sufficient to establish an enforceable requirement. Petition 

### 1 at 29.



### EPA's Response.

a. SOB 

### Concern

Pursuant to federal regulations at 40 CFR 

### § 70.7(8)(5),8 permitting authority is required
to provide "a statement that sets forth the legal and factual basis for the draft permit conditions (including references to the applicable statutory or regulatory provisions)." This document, referred to as the statement ofbasis or "SOB," must 

### be sent to EPA in support ofthe "proposed permit" and to any other person who requests it. The SOB must also be included as part ofthe permit record. However, the SOB is not a part ofthe permit even though it may provide background information, including the rationale for specific permit conditions or background on the permitting authority's interpretation ofan element in the permit.

41 Petitioners do not specify the unit to which this comment applies, instead referring to "PC boiler" which could be either Unit 1 or 31. Because the Permit at issue involves construction of

a new PC boiler (Unit 31) and does not purport to modify or establish new emission limits for Unit 1, EPA interprets the comment as applying to new Unit 31.



### 49

### With regardto 

### Petitioners' specific claims that Table 5.4 of the SOB is not 

### included in the permit, we note

### thatthe permit conditions for each emissions unit list the applicable requirements for 

### PMlPMu), SAM, and mercury, including testing requirements. The permit incorporatesthe applicableemission limitationsand testing parametersspecified in

### the SOB, 

### as well 

### as initial and periodicstack testing, and limits, for 

### PMlPMlo, SAM,and

### mercury. See, e.g.. Revision 3 at 27-36 and 59-60 (Section D, "Source Emission Limitationsand Testing Requirements"). ForUnit3l, in addition to "Table l: CAM Monitoring Approach" (Permit Revision 3 at 32), Parts 5-7 of Section B describe in detail the variousrecordkeeping, reporting, and monitoringrequirements. Revision 3 at 32·36. Table 5.4 (Revision 2 SOB) only provides citationsto 

### applicable regulationsand summarizesthe requirements of those citedregulations. In contrast, the permit includes all the informationfrom Table 5.4, albeit in a narrative form that is brokendown by specificunit. There is no requirement that the SOB be

### incorporatedby reference or otherwise includedin 

### a permit; nor is therea 

### requirement that the pennit containa 

### summarytable (similar to Table 5.4) of

### the applicablerequirements. The permit at issue is much more specificthan 

### the SOB. Petitioners

### have. not identifieda specificparameter included in Table 5.4 

### that is not includedin the permit.

We also note that 

### the same concern raised in the Petition to 

### EPA 

### was raised by Petitionersto 

### KDAQ during 

### the Commonwealth's public commentperiod. While KDAQ did not fully agree with 

### all of the concerns raisedby Petitioners, KDAQ made changes to 

### the permit in responseto Petitioners' comments. 

### See KDAQ RTC Revision 

### 2 at 27-28 (explaining that annual performancetesting for VOC and lead were addedto 

### the permit). Petitionersdo not explain why the changes made by KDAQ do Dot address the concerns they raisedto 

### the Commonwealth. In the Petition,Petitioners simplyrestatethe same claims raised to the Commonwealth and fail to explain why KDAQ's response and subsequent changes were insufficientto 

### address their concerns. The permit contains specific limits and associatedtesting requirements forPMlPMIO, SAM, and mercury and Petitionersdo not specify how the included terms are inadequate."

For the above reasons, the Petitions are denied as to 

### the issues raised above.



### GeneralBackgroundon CAM

On October22, 1997, EPA promulgated finalrule revisions to implementCAM for major stationary sources under title V, consistent with the CAA, as amended in 1990. 62 

### Fed. 

### Reg. 54.900. This rulemakingresulted in changesto federal regulations found at 40 CFRpart 

### 64. These rules were intended to be implementedthrough the title V major source operating permit program. 62 

### Fed. 

### Reg. at 54.90I. One purpose of the rules is to ensure that permits provide a reasonableassurance ofcompliancewith applicable requirements underthe CAA where the underlying standarddoes not do sl? on its own. 

### Id: at 54,900. The CAM rule specifically

42 

### Petitionersalso note the differences in emission limits betweenUnits I and 31. This is due primarily to the fact that PSD review occurred for Unit I in approximately 1978. Thus, even though Unit I is a PC boiler, emission limitationsand control technologyon Unit 1 win not be the same as the new Unit 31. This difference is primarilydue to technological changes from 1978 to present as well as federal and Kentucky rule changes.

50exempts from coverage NSPS and National Emission Standards for Hazardous Air Pollutants proposed after the CAA was amended in 1990 (i.e., after November 15, 1990), as well as units subject to CAA acid rain program requirements. 

### See 62 

### Fed. Reg. at 54,904 (codified at 40 CFR 

### § 64.2(b) ("Exemptions')). Additionally, the CAM rule applies only to a pollutant-specific emissions unit (PSEU), which is defined as a unit that: (1) is subject to an emission limitation or 

### standard" for the applicable regulated air pollutant (or a surrogate thereof); (2) uses a control device to achieve compliance with any such emission limitation or standard; and (3) has potential pre-control device emissions oftile applicable regulated air pollutant that are equal to or greater than 100 percent ofthe amount, in tons per year, required for a source to be classified as a major

source. 40 CFR 

### § 64.2(a).

For PSEUs to which CAM applies, the owner/operator must develop monitoring that
meets specified criteria for selecting appropriate indicators ofcontrol performance, establishing ranges for those indicators, and for responding to any excursionsfrom those ranges. 40 CFR 

### § 64.3; 62 

### Fed. Reg. at 54,902. The CAM rule also establishes numerous recordkeeping and reporting requirements to ensure compliance. 40 CFR 

### §§ 64.4, 64.9. The analysis ofwhether CAM applies at a particular unit is done on a pollutant-by-pollutant basis such that CAM may apply for certain pollutants at a unit but not for others. 62 

### Fed. Reg. at 54,922. The concept of the CAM approach is that compliance with an emission standard is assured through requiring monitoring ofthe operation and maintenance ofthe control equipment and, ifapplicable, operating conditions ofthe PSEU. 62 

### Fed. Reg. at 54,918. The CAM analysis is that "[ojnce an

owner or operator has shown that the installed control equipment can comply with an emission limit, there will be a reasonable assurance ofongoing compliance with the emission limit as long as the emissions unit is operated under the conditions anticipated and the control equipment is operated and maintained properly." 

### ld. More specific information regarding the CAM rule can be found in the preamble to the October 1997 rulemaking, the rules themselves (40 CFR part 64), and in the CAM Technical Guidance Document (August 1998), available on the EPA Web site.

With regard to indicator parameters and the correlation between pollutants, the preamble to the CAM rule provides:

The CAM approach builds on the premise that if an emissions unit is proven to be capable ofachieving compliance as documented by a compliance Orperformance

43 For CAM purposes, the term "emission limitation or standard" is defined as:

any applicable requirement that constitutes an emission limitation, emission standard, standard ofperformance or means ofemission limitation as defined under the Act. An emission limitation or standard may be expressed in terms of the pollutant, expressed either as a specific quantity, rate or concentration of emissions

...or as the relationship ofuncontrolled to controlled emissions

...An emission limitation or standard may also be expressed either as a work practice, process or control device parameter, or other fonn ofspecific design, equipment, operational, or operation and maintenance requirement.

40 CFR 

### § 64.1.

51

### test and is thereafter operated under the conditions anticipated and if the control equipment is properly operated and maintained, then there will be a reasonable assurancethat the emissions unit will remain in compliance. In most cases, this relationshipcan 

### beshown to exist through results from the performancetesting without additional site-specificcorrelation of operational indicators with actual emission values.

62 Fed. Reg. 

### at 54,926. The preamble to the CAM rule further provides that:

The presumptive approach for establishing indicator ranges in part 64 is to establish the ranges in the context of performance testing. To assure that conditionsrepresented by perfonnance testing are also 

### generally representativeof anticipated operating conditions, a performancetest should be conducted under conditions specifiedby the applicablerule or, if

### not specified, generally under conditionsrepresentative of maximum emission potential under anticipated operating conditions. In addition, the rule allows for adjusting

### the baseline values recordedduring a perfonnance test to account for the inappropriateness of requiring that indicatorconditions stay exactly

### the same as during a test. The use of operational data collected during perfonnance testing is a key element in establishingindicator ranges; however,other relevant informationin establishing indicatorranges would be engineeringassessments, historical data and vendor data. 

### Indicatorranges do not need to be correlated across the whole range of potentialemissions.
62 Fed Reg. at 54,927. In addition, EPA has explainedthat established CAMparametersare notenforceablelimits. The CAM rule preambleaddressed this by pointing out that:
The obligationto 

### correct excursions as expeditiously as practicable is the enforceable componentassociatedwith 

### establishing an indicator range under part 

### 64. Part 64 does not 

### establish that an excursion from an indicator range constitutes an independent violation by itself.



### Id. at 54,93I; 

### see also Id at 54,928. Thus, CAM provides' reasonableassuranceof compliance with emission limits and consequently, the adoption of CAM as "enhanced monitoring"meets the requirementofthe 

### CAA but does not convert the CAM parametersto enforceable permit limits.
With regard to the LG&E facility. KDAQ determined that CAM requirements applied to SAM and fluorides at Unit 31. KDAQ SOB Revision 2 at 12-13. SpecificallyKDAQ explained,

Pre-controlemissionsof SCh, NOll. PMIPMIO. [SAM} and fluorides are each greater than 100tpy. CAM requirements under 40 CFR 64.2(b) will be met for S02, 

### NO x, and PMJPM\o, by compliancewith the Acid Rain program and compliancewith a pest-November 15, 1990NSPS standard. In accordance with Part 64, LG&E has submitted additional informationon its CAM plan for [SAM]



### S2and fluorides. Pursuant to 401 KAR 52:020, the plan will receive public notice to

ensure federal enforceability.

KDAQ SOB Revision 2 at 13. This is consistent with the requirements of40 CFR 

### § 64.2(b) which exempts units from·CAM that are regulated by the CAA acid rain program or by a postNovember 15, 1990 NSPS. The terms ofthe CAM Plan for SAM and fluorides are discussed in the SOB (Table 4.1 on page 13) and are also included in Revision 3 at page 32.



### b. CAM Issue in Section Ill.B. of Petition I

Petitioners raise the issue that CAM should also be required for other pollutants such as lead and total PMlPM 1o• Petition 1 at 30. The only support for this statement is a parenthetical "the CEMS [continuous emissions monitoring system] only measures filterable" (Petition 1 

### at 30), which appears to apply specifically to PMlPMJOand not lead. As was noted earlier, CAM requirements do not apply where Acid Rain program requirements apply. 40 CFR 

### § 64.2(b)(l )(iii). KDAQ explained in the SOB for Revision to that "CAM requirements under 40 CFR § 64.2(b) will be met for SO" NO" and PMlPMJO, by compliance with the Acid Rain program and compliance with a post-November 15, 1990 NSPS." KDAQ SOB Revision 

### 2 at 13. There are a number ofcompliance provisions in the permit for PMlPMIO • These are discussed in greater detail below, in response to Petitioners' concerns regarding the enforceability ofthe PMlPM IO limits. Furthermore, the permit requires CEMS, which provides for continuous
measurement ofemissions and thus provides a reasonable assurance ofcompliance. KDAQ SOB Revision 2 at 28. KDAQ also explained that it made some changes to the permit per Petitioners' comments (adding PMIPMIOtesting requirements to the permit), and that KDAQ approved an alternative method for compliance with PMlPMIO. KDAQ RTC Revision 2 at 33. Petitioners have failed to demonstrate that the permit does not comply with a requirement under the Act, and thus, the Petitions are denied for the reasons discussed above, and those enumerated below with regard to PMlPM\o.

EPA addressed the majority ofthe lead issues raised in Order 1 at 20-21. With regard to Petitioners' contention that a CAM plan was required for lead, KDAQ explained that Unit 31 is
not a PSEU for lead. KDAQ RIC Revision 

### 2 at 

### 29. Petitioners provide no infonnation demonstrating that KDAQ erred in reaching this conclusion. Thus, Petition 1 is denied with respect to lead because Petitioners have failed to demonstrate that the permit is not out of compliance with a requirement under the Act.



### 2. Petitioners' Cillims that CAM Compliance Provisions/orSAMare not Adequate to Ensure Compliance with PermitLimits (Section III.E. ofPetition 1)



### Petitioners' Claims. Petitioners raise four issues associated with their claim that the SAM limit in the permit is not enforceable: (1) that the limit should be expressed in mass per unit time instead offiring rates; (2) that a 30-day roIling average cannot be determined from a 3- hour stack test; (3) that CAM cannotbe used to assure compliance with BACT limits such as this one; and (4) S02 is not a good indicator ofSAM because they are related in a complex, nonlinear way. Petition 1 at 34-35.

53

### EPA's Response. 

### With regard tothe first issue about the units for the SAM emissions limit, contrary to Petitioners' claim, the permit

### establishes an emission rate of26.6 pounds per hour (Ibslhr)based on a three hour rolling average for Unit 31. Permit Revision 3 at 29 (Section 

### 8.20». The pounds per hour units are amass per unit time rate. The same rate end

### units were also included in

### Permit Revision 2. For abroader discussion 

### ofPetitioners' concerns regarding how emissions are measured, wereferto our response insection 9,above.

With regard to 

### the remaining issues, the permit

### establishes a 26.6Ibslhr limit based ona three 

### hour rolling average. Permit

### Revision 3 at29 (Section B.20)). Further, inresponse to comments byPetitioners and

### EPA, KDAQ did make some changes to 

### the permitto 

### clarify 

### the 

### monitoring/compliance provisions. See

### KDAQ RTC Revision 2 at

### 7, 32. The 

### permitalso establishes aCAM approach toprovide areasonable assurance ofcompliance. Pennit Revision 3 at32. The CAM approach includes the emission limit, anassociation 

### with the 802 

### CEMS, initial testing to 

### establish the correlation between SAM and 802, 

### continuous monitoring of**S~.** 

### weeklycoal sampling, in additionto 

### other recordkeepingand quality essurance/quelitycontrol 

### requirements. Jd 

### The various compliance asswance mechanisms established for SAM are included in 

### the permit. The issue ofsurrogate pollutants and 

### CAM wasdiscussed inthe September 10, 200SOrder, in Part IV. B. and is relevant here (but not repeated). The SOB provides relevant background infonnation not only to 

### support the CAM approach, but also to 

### support the use of So, 

### as a surrogate for SAM. See 

### KDAQ SOB Revision 2 at 

### 21-22. In 

### the SOB, KDAQ explained

### the relationship

### between SAM and SO,. KDAQ did not claim or suggest that the relationship is linear, but at the same time, KDAQ provided a reasoned explanation for why SO, is an appropriatesurrogate. Specil1cally, 

### the SOB statesthat, "sulfuric acid is present 

### inthe flue gasses generated from combustion ofcoal because afraction ofthe [802] 

### produced is further oxidized tosulfur trioxide (SO)). 

### SO] reacts with water influe gas to form sulfuric acid vapor [i.e., SAM]." 

### /d. 

### at21. Petitioners provide noinfonnation suggesting that applicable requirements dictate that pollutants must be 

### linearly related toserve as surrogates for each other.
Finally, 

### as was

### discussedearlier in this Order, EPA's final CAM rule clearly allows for the use ofappropriate surrogate pollutanlaand SO, is routinely uaedacross the United States

### as a surrogate fordemonstrating compliance with SAM. The applicabilitysection of the CAM rule 

### explains that part 

### 64 applies 

### "to 

### apollutant-specific emissions unit at amajor source,..ifthe 

### unit satisfies all

### of thefollowing criteria," including that

### the "unit issubjectto an emission limitation or standard for the applicable regulated air pollutant (or

### asuuo2Ole thereof).,." 40 CFR § 

### 64.2(a)(I)(emphasis added). 

### EPA's preamble to 

### the CAM rule furtherexplains the use of surrogate pollutants

### as follows:



### The Agency also notes that the applicability provisions inpart 

### 64 include a "surrogate" of aregulated airpollutant to 

### address situations inwhich the emission limitation or standard is expressed 

### in tenns of a pollutant (or other surrogate)that is different from the regulated air pollutant that is being controlled.
62 Fed Reg. at 54,912. Further,CAM can apply to any limit in a pennit. There is nothing in the CAM rule (including40 

### CFR § 64.2, 

### "Applicability") that 

### prevents CAM from applying to a 

### BACT limit, or the SAM limit towhich it is applied inthe**LG&~** 

### pennit. Petitioners fail to



### 54

### explain that KDAQ's analysis was inconsistent with applicable requirements, or unreasonable considering the options available (i.e., no continuous emissions monitors specifically for SAM). For these reasons, the Petitions are denied as to these issues.

3. Petitioners' Claims that the Unit 

### 31 Mercury Limit 

### is not Enforceable 

### (Section llI.F ofPetition I)

Petitioners' Claims. 

### Petitioners allege that the mercury limit set for Unit 31 is not enforceable because (I) the permit does not indicate whetherthe. megawatt hours are gross or net; and (2) the averaging time is ambiguous and excessively tong. Petition at 35,

EPA's Response. 

### The permit sets a limit for mercury at 13 x IO·6lbslmegawatt (MW) hour (Gross output) based on a 12-month rolling average. Permit Revision 3 at 29 (Section B.L). The permit further notes that this limit ensures compliance with the CAA Section III New Source Performance Standard (NSPS) found at 40 CFR § 

### 60.45Da. With regard to the issue of whether the megawatt hours are gross or net, KDAQ revised the permit in light ofPetitioners' concerns and clarified that the megawatt hours are in fact gross output. KDAQ RTC Revision 2 at 32; Permit Revision 3 at 29 (Section B.2.1). With regard to 

### the averaging time. the applicable requirement(40 CFR § 

### 60.45Da) establishes a 12-month rolling average as the acceptable averaging time. This is the averaging time included in the permit. A CEMS 

### will be installed for mercury

- to ensure compliance with the established emission limits. Permit Revision 3 at 29 (Section B.4(a». The averaging times are clearly established in the permit, as is the compliance mechanism, and inspectors will have access to the CEMS data and be 

### able to assure compliance. KDAQ also explained this point in its response to 

### comments. KDAQ RTC Revision 2 at 32. AlthoughPetitioner's claims regarding the enforceability ofthe mercury limit are not supported, we note that the limit is based on the NSPS for mercury that was vacated by the court in New 

### Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008), 

### cert. denied, 77V.S.LW. 3148 (U.S. Feb. 23, 2009) (vacating Clean Air Mercury Rule). Because that rule 

### was vacated by the Court, and as provided in section D, below, ofthis Order, we have objected to the current revision to the permit (Revision 4) on the basis that Kentucky is required to perform a case-by-case Section 112(g) analysis for mercury and other hazardous air pollutants. Because Kentucky is required to consider mercury limits pursuant to 

### the Section I 12(g} analysis, Petitioners' claims are moot.

4. Petitioners' Claims that the PMIPMJO Limits are not Enforceable 

### (Section III.H ofPetition 1)


### BackgroundInformation on Particulate Matterand CEMS

Particulate matter (PM and PMJO) emitted from a coal-fired boiler typically includes both "filterable" and "condensable" PM.44 

### Filterable PM is directly emitted from a stack or other device, and it can be a solid or liquid. This type ofPM can be 

### "caught" on a filter and controlled by, for example, the PJFF included in the permit for LG&E. 

### Condensable PM is formed within the boiler exhaust gas flow as the result ofreactions, cooling, and dilution. This PM can be

44 

### The PMlPMl 0 BACT discussion earlier in this Order also provides some relevant background information relating to the enforceability ofthe PMlPMlO emission limits.

55

### liquid or solid, but tends tohave adiameter of lessthan 10micrometers (therefore, within the
PM10 

### sizerange). Controls for condensable PM emissions include those included inthe LG&E permit lime injection, WFGD, and WESP. EPA has established different reference test methods for evaluating emissions offilterable and condensable PM. The standard reference method for measuring filterable PM is EPA Method 5, described in 40 CPR Part 60, Appendix A. 

### This method is suitable for most industrial sources, and provides ameasure ofthe total amount offilterable solid particulate matter emitted from astack atthe source. EPA Methods 2011201A, described in40 CFR Part 51,Appendix M, are another common method for measuring filterable PMIO. These methods usean in-stack cyclone thatseparates 

### the PM 10 

### from the total PM. Ifcondensable 

### PM\o emissions are also an issue, then EPA Method 202,oran approved variationcan be applied. 

### See 40 CPR Part 51, Appendix M (describing Method202).

, 

### Acontinuous emission monitoring

### system orCEMS isthe total equipment necessary for the detennination ofa gasorparticulate matter concentration oremission rate using pollutant analyzer measurements and aconversion equation, graph, orcomputer program to 

### produce results inunits ofthe applicable emission limitation or standard. 

### Performance Specifications are used for evaluating the acceptability ofthe CEMS atthe time of orsoon

### after installation and whenever specified inthe regulations. Quality assurance procedures infederal rules (and 

### Kentucky's roles) are used tofurther ensure the effectiveness ofquality

### control (QC) and quality

assurance (QA)procedures and the qualityof dataproduced by any CEMS that is 

### usedfor 

### determining compliance with 

### the emission standards onacontinuous basis asspecified inthe applicable regulation. In summary, thePUIJlOse of PM CEMS is to 

### quantifyPM eolissionsas accurately 

### and precisely aspossible to 

### ensure compliance with the applicable PM emission limits. 

### See, e.g., 69 

### Fed. Reg. 1,7g6, 1,789(pS-11 FinalAction).



### To meetthe objectives of the PM CEMS,EPA described 

### performance specification (PS)- 11 for PMlPMIO' Rulesregarding the

### use ofPS-11 and PM CEMS Were 

### firstpublished 

### in the 

### Federal Register on April 19, 1996,as part of the proposed

### Hazardous Waste Combustion Maximum Available ControlTechnologystandard. PS-11 

### was published again on December 30, 

### 1997, for public comment onrevisions made to 

### these procedures. On January 12, 2004.EPA published a fmal ruleregarding PS-ll and PM CEMS (69 

### Fed Reg. 1,786). PS-ll and associated QAlQC 

### procedures ensurethat 

### PM CEMS 

### areproperlyinstalled, operated, and 

### maintained. The final pg-ll rules describe installation, operation. and maintenance procedures, EPAhas also publishedguidance 

### onthe selection and

### useof PM CEMS in the PM CEMS Knowledge Document (availah1e at: http:Uwww,eDA,govlttn!<mc!oem/pmccmslrnowfinaJrep.pdt) 

### which may berevised periodically to 

### incorporate additional guidance, example calculations, and otherinformation that 

### assists withunderstanding 

### and complying with PS-l1 applicable QAlQC 

### procedures.

PMLimits inthe 

### LG&E Permit



### Pennit Revision 3includes twoseparate particulate limits for Unit 31 (both ofwhich were alsoincluded in Pennit Revision 2). Penni! Revision3 at 2g (SectionB.2(a) and (b)), The 

### first limit is specific to PMIO, 

### and setsalimit whereby the unit may not exceed 0.018 IblmmBro 

### (for filterable and condensable) of heat 

### input based onthe average ofthree 

### one-hour tests. Id. 

### Compliance with 

### this limit is determined 

### bya CEMS and specifics regarding reporting and

56maintaining CEMS data are included in the permit. 

### Id at 32-36,59. As is described in the SOB, there are two primary control devices necessary for Unit 31 to comply with this PMIO limit

- a pulse jet fabric filter (PJFF) and a wet electrostatic precipitator (WESP). KDAQ SOB Revision 2 at 18·20. As explained by KDAQ. a PJFF is a type ofbaghouse that uses fabric bags as filters
to collect filterable particulates. 

### /d. at 18. The WESP is another type ofparticulate control whereby particulates are removed by charging fly ash particles. ESPs can be wet or 

### dry; the LG&E facility initially was permitted withjust a wet ESP but added a dry ESP as part of Revision 3. KDAQ SOB Revision 3 at 12. In the SOB for Revision 2, KDAQ evaluated the different options and determined that a WESP represented a control sufficient for LG&E UnitS! to meet the condensable PMlo limit. KDAQ SOB at**19~20.** The PM IO limit described above is consistent with Kentucky rules at 401 KAR 59:016 

### §§ 3 and 6.

In addition to the above-described PMlo limit, the permit also imposes a PMlPMIOlimit specific to filterable particulate emissions that is consistent with federal new source performance standards (NSPS) found at 40 CFR 

### § 60.42a(c). Permit Revision 3 at 28 (Section B.2(b)). The permit further requires that compliance with the PMlPMIO limit be demonstrated by data provided from the PM CEMS. Where the PM CEMS is not sufficient to demonstrate compliance with the applicable limit (i.e., for condensable PM), LG&E is required to use an applicable reference method. Permit Revision 3 at 59 (Section D.4). In summary. the permit sets a limit for both filterable and condensable PMlPMIO, and requires that compliance be demonstrated through

use ofthe PM CEMS and, where CEMS are not sufficient, through applicable reference methods, which includes EPA Method 202 for condensable PM emissions. As a result, Petitioners failed to demonstrate a flaw in the permit.



### Petitioners' Claims. Petitioners allege that the PMlPM IO limits in the permit are not enforceable for the following reasons: (1) the PM CEMS is not a sufficient monitoring system to

ensure "continuous" compliance because 

### it only measures the filterable fraction ofPMlPM\O; annual stack tests are also not sufficient to ensure compliance; (2) the limit is not expressed in units ofmass per unit time; (3) for Unit 1, the concern that opacity is an indicator for PMlPM\o; (4) for Unit 31, the limit for PMlPM\0 is a "sum offilterable and condensable" particles but the permit does not include any monitoring to determine compliance with the limit; (5) permit sets a

. drift rate from the cooling tower but has no supporting monitoring to demonstrate compliance

because the limit does not specify testing frequency, methods, or location. Petition 1 at 36-38. Except for numbers 3 and 5 above. all the issues appear to regard the new Unit 31.



### EPA's Response. With regard 

### to issues 1 and 4 above regarding the demonstration of continuous compliance for both filterable and condensable PMlPM IO emissions, the permit establishes use ofthe PM CEMS as well as applicable reference methods for determining compliance. Petitioners state that "animal stack tests for PMIPMlo are not adequate to.assure continuous compliance," (Petition 1 at 36) but the permit requires more than an annual stack test. As was explained above, the permit establishes compliance mechanisms through the use ofthe PM CEMS and other applicable reference methods (which would include Method 202). Petitioners are simply incorrect in stating that "there are no U.S. EPA approved alternative methods for measuring condensable PMlPMlo." Method 202 is such a method, and it is required by the permit. Thus, Petitioners have not demonstrated that the permit is not in compliance with the Act.

57

### Issue 2 above regards the units used to express the PMlPMIO 

### limit. This issue is discussed previously in this Order and will not be repeated here. Additionally. we note that the 

### Kentucky SIP-approved rules establishPM/PM" limits in terms oflbs/mmBTU. 

### See, e.g., 401 KAR 59:016 § 

### 3; see a/so 

### 401 KAR 52:001 § 

### 1(30). For this reason, as 

### well as 

### those discussed in previous sections, the PM/PMIO 

### limits expressed in the LG&E permit are consistent with applicable requirements.
Issue 3 above regards Unit I, which is the original coal-fired boiler at the facility. As was noted earlier in this Order. that unit was permitted and constructed in the late 19705, and thus, is not necessarily required to include all the same control technology or emission limits as the new Unit 31. The BACT analysis for Unit 1 is not at issue in Revisions 2 and 3 to the permit. At the time ofconstruction ofUnit 1, and even today depending on the circumstances, opacity was an acceptable indicator for PMIPMIO • See, e.g.• 

### 62 Fed. Reg. 

### at 54,912 (CAM Rule). Further, Petitioners did not raise this issue in their comments to KDAQ, and provide no information supporting their statement about opacity and Unit 1. Petition 1 Exhibit A at 21-22. Thus. Petitioners have failed to meet the minimum procedural requirements in CAA section S05(b)for this issue. and have failed to demonstrate that the permit is not in compliance 

### withthe Act.
With regard to issue 5, the permit sets a drift elimination rate for Unit 41

- the new Linear Mechanical Draft Cooling Tower - of0.0005% drift elimination. This is consistent with what the Petitioners identify in Petition 

### 1 as BACT (petition 

### I at 18-22). 

### Permit Revision 

### 3 at 48 (Section 

### B, Emissions Unit 41). The drift rate is related to 

### prevention ofdroplet loss. which in 

### tum. hasa relationship to 

### PMemissions at 

### thefacility. 

### Generally. the lowerthe drift 

### rate, the 

### lowerthe

### PMemissions. 

### Thepermit

### requires an initial

### performance test to 

### verify drift percent 

### achieved by the drifteliminator, which is to 

### be conductedconsistentwiththe

### ''Cooling Technology Institute (CT1) 

### Acceptance TeatCode (ATC)# 

### 140." Id In 

### addition to the initial performance**tes~** 

### thereis additional monitoring ofthe total dissolvedsolids in the circulating wateron a moothlybasis, whichis an indicatoroffuture 

### drift. Id 

### SectionsE (SourceControl EquipmentRequirements) and F (Monitoring, 

### Record Keeping, and Reporting Requirements) of thepermit 

### (pennit Revision3 at 

### 60-61) also 

### apply to Unit 41. Thus, Petitioners are not correct thatthe

### permit has "no supporting monitoring." Petition at 

### 37. KDAQ responded to Petitioners' comments regarding

### the drift rate by 

### adding lome additional monitoring into 

### thepermit for this issue. 

### In 

### their Petition, Petitioners continue 

### toraise concerns with 

### thelevel ofmonitoring for the 

### drift rate, but cite to no authorityto explain that thepennit limitsare inconsistent with applicable requirements. Petition I at 37-28. Nor do 

### Petitionersexplain why KDAQ's response was 

### insufficient.



### For thereasonsdescribed above, Petitionershave not demonstrated thatthepennlt 

### fails to comply with 

### arequirement

### undertheAct. As 

### a result. Petition 1 is denied as to 

### the issues raised 

### regarding thePMlPMIO limitsandenforceability.

S. PetUioners' ClaimsRegarding Other Condl/ionsthai are not En/orceable (Section 1Il.J. of Petition I

- Bullets5-8)

58

### Petitioners' Claims. In Petition 1. Petitioners include a buUeted list ofissues that they believe render the permit unenforceable. These include improper reliance on manufacturer specifications not included in the permit itself; permit does not identify test methods used to determine requirements for pollutants, e.g. PMlPMIO;emissions caps on NOxand S02 are unenforceable due to permit's lack ofexplanation regarding how such emissions are calculated when the 

### CEMS are not measuring NOxand 802; and failure ofthe permit to ensure that the project's net increase in emissions ofNOx and S02 continue to remain below the significance levels by omitting any ongoing requirements to measure emissions ofNOxand SQz,4S Petition I at 39-4 I.



### EPA'sResponse, As a general matter, conclusory allegations regarding a permit or the permitting authority are insufficient and will not raise an objectionable issue under section 505(b) ofthe Act because such allegations generally do not demonstrate a specific flaw in the permit. Petitioners must make some level ofdemonstration and provide EPA with sufficient information to understand how the permit is defective. 

### In the Matter of Al TurtLandfill, Inc., Petition No. II-2002-13-A (Order on Petition) (January 30, 2004); 

### see a/so. In the Malterof the New YorkOrganic Fertilizer Company, Petition No, II-2002-12 at pages 7-8 (Order on Petition) (May 24, 2002); 

### In the Malterof SirmasDivision of Bromante Corp., Petition No. II-2002-03 at page 7 (May 24, 2002), Broad generic claims "lack sufficient specificity" to satisfy these criteria and will be not be reviewed. 

### In re SteelDynamics, Inc .• 9 E,A.D. at 239-240,

With regard to the bulleted list ofitems on pages 3941 ofPetition 1, Petitioners cite only
to 

### CM Section 504(a) but fail to explain how the permit is inconsistent with a requirement under the Act Further, it is not apparent that these individual concerns were raised in comments to KDAQ, thus the procedural requirements in section 505(b) ofthe CAA do not appear to have been satisfied. 

### See Petition 2 Exhibit A. To the extent that some ofthese issues are duplicative with issues raised earlier in the Petitions, we refer to the responses already provided. Below is a briefexplanation ofwhy each ofthe issues raised by Petitioners is denied.

With regard to their claim that the manufacturer specifications for control equipment are not included in the pennit, we note that PSD permits are preconstruction permits issued prior to construction ofa particular unit. As a result, the manufacturers' specifications are not necessarily available at the time the permit is issued by the permitting authority, While the permit directs the permittee to install a particular.type ofcontrol technology, the permittee does
not necessarily have a contract established with a specific provider at the time ofpennit issuance. For this reason, PSD permits typically do not include the specific manufacturers' specifications. There is no EPA-approved regulation that requires inclusion ofthe manufacturers' specifications into the text ofthe 

### permit. The LG&E applications (2004 and 2007) do contain some manufacturers information for certain portions ofthe modification, 

### See, e,g., 2004 Application, Appendices C and D. Petitioners do not identify how this information should be included into the permit, or why that would be required. However, the permit does also require that final design information 

### be provided to KDAQ and be accessible to the public. Permit Revision 3 

### at

4S These issues are issues 5-8 in the referenced section ofPetition J. We responded to issues 14 in the previous Order dated September 10,2008,

S9

### 66 (Section 

### G. 18). Section 

### E of the permit (Permit Revision 

### 3 at 

### 60) also discusses the permittee's 

### obligation to comply with operation and maintenance procedures. With regard to this issue, the Petitioners failed to demonstrate that the permit is not in compliance with the Act.

The issue raised regarding test methods to determine compliance for PM/PMloand other pollutants were raised previously in the Petition and responded to in those sections. This Order has thus already discussed what test methods 

### areapplicable to a variety ofpollutants, including PMIPMIO • 

### Petitioners are simply incorrect in alleging that

..the permit does not identify the test methods that would be 

### used to determine compliance with regulated pollutants and coal quality parameters." Petition 

### 1 at 

### 40. In addition to Section 

### D (Permit Revision 

### 3 at 

### 59), each section of the permit applicable to specific units also contains test method information. Thus, Petitioners failed to demonstrate that the permit is not in compliance with the Act.
Petitioners' claims that the emissions caps for NOll and S02 are unenforceable and that the permit lacks ongoing requirements to measure those pollutants are incorrect. The permit contains numerous testing, reporting. and recordkeeping requirements for NOll and 

### SOz associated with many units, but specifically, Units 

### I and 

### 31

- the two 

### coal-firedboilers. In addition, the permit includes specific requirements for periods when the CEMS associated with certain units are not operational. See. e.g., 

### Permit Revision 

### 3 at 

### 31 (Section B.2.(h) for Unit 31). As was previously discussed in the netting section, one requirement for netting is that 

### the reductions ofNOll and S02 be 

### enforceable. In this 

### case, the reductions were taken 

### as lower permit limits in Revision 

### I (Minor Modification). See 

### KDAQ SOB Revision 

### 1 (Minor Modification). Compliance with the new NOll and S021imits is demonstrated by use of a continuous emissions monitor. See 

### PermitRevision 

### 3 at 

### 3, "Compliance with nitrogen oxide and sulfur dioxide emissions." Thus, Petitioners failed to 

### demonstrate that the 

### permit is not in compliance with the Act. The issues regarding netting were also addressed in detail earlier in this Order.

For the above reasons, Petition 

### 1 is denied as to these issues.



### D. Petitioners' Claims Regarding the Maximum Achievable Control 

### Technology Determination

Petitioners' Claims. 

### Petitioners allege that the permit lacks a maximum achievable control technology (MACT) determination for mercury and other HAP for the Unit 31 construction. Petition 2 at 16-27. Petitioners explain their understanding ofwhy the case-bycase MACT requirements described in CAA Section 112(g) apply to the Unit 31 construction. Petitioners also suggest that to the extent that a 112(g) determination was done, KDAQ did not follow the proper procedures for undertaking a 112(g) determination and that the analysis is 

### procedurally and substantivelyflawed. In general, they claim that KDAQmisapplied the 2-step lI2(g) process by falling to 

### properlyestablish a MACT 1100r and failing to properlyundertake a beyond-the-flooranalysis.

EPA's Response. 

### On June 5, 2009, EPA issued a letter objecting to the most recent permit revision for LG&E on the basis that KDAQ must undertake a Section I12(g) analysis for all hazardous air pollutants with respect to Unit 31 in order to comply with all applicable CAA



### 60requirements. See also 40 CFR 

### § 70.5(a)(1 )(ii). The legal basis ofthe objection is explained briefly in the letter, and is also summarized below. Because ofEPA's objection, EPA is denying the Petition as moot on this issue.

On January 7, 2009, EPA issued a Memorandum entitled, "Application ojCAA Section JJ 2(g) to Coal- and Oil-FiredElectric Utility Steam Generating Units 

### that Began Actual Construction or Reconstruction Between March 

### 29, 2005 andMarch J 

### 4, 2008." 

### In that Memorandum, EPA explained that 

### ccal- and oil-fired electric utility steam generating units (EGU's) remain on the Section 112(c) list and therefore are subject to Section 112(g). 

### In addition, the Memorandum addresses the applicability ofSection 112(g) to EOUs that 

### are major

sources and that began actual construction or reconstruction between the March 29, 2005 promulgation ofthe 112(n) Revision Rule (removing EOUs from the 

### CAA Section 112(c) list) and the March 14,2008 vacatur ofthat rule, and concludes that those EODs are required to comply with Section 112(g). LG&E began actual construction ofUnit 31 between March 29. 2005 and March 14, 2008, and for that reason, EPA objected to the most recent permit revision 

### forLG&E.

V. CONCLUSION

For the reasons set forth above, 

### and pursuant to Section 505(b) ofthe CAA and 40 CFR 

### § 70.8(d), I hereby grant in part and deny in part the issues in the Petitions submitted on March 2, 2006, and April 29, 2008, and which were not previously addressed in the Order dated 

### September 10,2008.

Lisa 

### P. Jackson Administrator

61