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

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LOUISVILLE GAS AND ELECTRIC COMPANY )

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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 of a 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 to
include 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 (PMz5);(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 of Petitions 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 of the CM.

The Commonwealth of KentuckyI originally submitted its title V program governing the

issuance of operating 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 of air 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 of Kentucky 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.

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For a major modification of a major stationary source.' applicable requirements include

the requirement to obtain a preconstructionpermit that complies withapplicable new source

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 to describe both the PSD program as well as the nonattainment NSR program

(applicable to areas that are designated as nonattainmentwiththe NAAQS). In attainment 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 permitting authority may issue a pennit: (1) anevaluation ofthe impact ofthe

proposed new ormodified major stationary source on ambient airquality in the area, and (2) an

analysis ensuring that the proposed facility is subject to BACT foreach pollutant 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

Section III.B. of this Order, below.

EPA haspromulgated two largely identical sets of regulationsto implement the PSD

program. One set, found at 40 Code of Federal Regulations (CFR) § 52.21, contains EPA's own

federal PSD program, which applies in areas without a SIP-approved PSD program. The other

set of regulations, found at40 CFR § 51.166, contains requirements that statePSD programs

must meet to be approved as part of a 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 of a new 750 megawatt coal-fired boiler atLG&E is considered a

"major modification," consistent with the 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).

:> On February 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 NSR reform,

became effective under Kentucky law on July 14, 2004, and were submitted 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 or standard that applies to a source:' 401 KAR 52:001 § 1(15).

Kentucky further defines"federally enforceable requirement," as "[s]tandards or requirements in

the state implementation plan (SIP)that implement the relevant requirements ofthe Act,

including revisions to that plan promulgatedat 40 CFR Part 52." 401 KAR 52:001 § 1(34).

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source 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 if it 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 if a petitioner demonstrates

that a permit is not in compliance with the requirements ofthe CAA. 42 U.S.C. § 766ld(b)(2);

see a/so 40 CFR § 70.8(c)(I), New YorkPublic Interest 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 of proof

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 of a 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 of inconsistency 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 of Kentucky, 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 own judgment for that of Kentucky. Rather,

consistent with the decision in Alaska Dep't ofEnvt'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 of federal. 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 of a federal PSD

permit in the context of a 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).

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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 of discretion 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 Roosevelt Regional 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 of modifications 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 of federal PSD permit

determinations in a petition to object to a title V permit, the standard of review applied by the

EAH in reviewing the appeals of federal 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,

13EAD. 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 of policy or exercise of discretion that warrants review.

7 Section II of Petition 2, "Petition Standard ofReview:' describes the Petitioners' view ofthe

applicable standard ofreview. This section ofthe Petition raises no requests for objection.

EPA's articulation of its 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 of clarity in

this Order, the permits are referred to by revision,

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Permit History

In December 2004, 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 construction of

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 application to 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 construction of new 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 Penn it was issued on January 4, 2006.

The Petitioners administratively appealed the issuance ofthe Revision 2 Permit by KDAQ,

which resulted in a Final Order by the Secretary ofthe KentuckyEnvirorunental Protection and

Public Health Cabinet on September 28, 2007, granting certain claims and denying others. On

October26, 2007, KDAQ issued a revision entitled, "Revision 2 Administrative Amendment,"

which involved revisionsto 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 of particulate matter (PM) and particulate matter

with a diameter of less 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 SCh at 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 of control 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."

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On 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 of operation and USe of ultra low sulfur fuel; (2) Unit

33 (emergency generator) changes including use of ultra 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 of proposed conveyer transfer points; (6) new conveyer transfer points; (7)

an increase in-length of haul 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 of Unit 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

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information to Petitioners. Petition 1 at 6~7. Subsequentto Petition I, a second public comment

period washeld 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'" are denied with regard to all public participation issues raised although EPA

emphasizesthe fundamental importance of public participationand strongly urges KDAQ to

revise its procedures.

1. FaUure to make entirepermil.jUe a.vailable and respondto requests/or

in/ormation duringpublic commentperiod

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

decreasesof NOll and S~ emissions from Unit I, were not included in the Revision2 file. In

addition.the file viewed by Petitionersduring the public comment period did not include a

startup/shutdown plan or operation and maintenance specifications. Third, the files were

allegedlydisorganized and Petitionerswere not able to obtain in a timely manner copies of the

relevant files for review.

a. CO air quality 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

quality monitoringdata 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 permittee regarding, among other

matters,air quality monitoring data. Petitionerspresented no infonnation explaining what the

November7, 2005, CD~ROM contained, whether it was related to Pennit Revision 2, or even

when it was submitted to KDAQ (i.e., whether it was a part ofthe permit application or

submitted later). Further, Petitioners presented no infonnation indicatingthat KDAQ relied on

that CD·ROM to establish the CO limits or to perform any required analyses. The mere

existenceof a dataset dated after draftpermit issuance and the public comment period, with no

informationsupporting its relevance to the decision, is not sufficient to demonstratethat KDAQ

failed to comply with a requirement underthe Act in issuing the permit, Additionally,

Petitionerspresent no infonnation suggesting that either KDAQ relied on this infonnation in

makinga pennit decision or that review ofthis informationwasnecessary 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.

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review the proposed project or permit. See, e.g., In the matter ofPencor-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 Revision

3 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 mention of or 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. Permitjile missing information such asminor revision

applications, startup/shutdown plan, and operation 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 of NOli" 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 Inspection of Documents," 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.

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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 regard to 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 part ofthe BACT analysis. Thus, the permit record now contains

additional information regarding periods 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 appearsresolved

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 proposed unit'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

Pennit Application and Title V Operating Pennit Application Trimble County Unit 2, Louisville

Gas& Electric(December I, 2004)(hereafter referred to as "2004 Application"), Petitioners do

not explain what particular information was missing from the file. Further, as a general matter,

at the time ofissuance of a 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 reluctant to 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 manufacturers ofthe control technologies and other components such that inclusion

of all 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 above reasons, 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 were disorganized, inhIbiting amite review; copies

were not timelyprovided to Petitioners

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

"jumbled"and "disorganized;" that they had troubleidentifying where the file could be viewed

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

10
Petitioners' requested copies of the 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 s Response. 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 of copies 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 brief discussion 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 of infonnation 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 ofPencor-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 itself was 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 benefit of a 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 has concerns 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 "reasonable procedures consistent with the need for

expeditious action by the permitting authority on permit applications and related matters, to

make available to the public" certain permitting information. As a result, EPA strongly urges

that KDAQ review its procedures regarding public inspection of its permit files and ensure that

such procedures allow for inspection ofthe entire permit file at the beginning ofthe public

comment period. 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 extend tirepublic 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 of this opportunity and submitted

numerous comments that went beyond the limited scope of the 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).

12
As 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

of why an extension (or re-opening ofthe comment period) was warranted. Petitioners have not

demonstrated that KDAQ's exercise of its 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

Background on PSD and BACTApplicable to All PSDIBACT Related Issues Raised in 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 of reduction [of pollutants

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 of production

processes and available methods, systems, and techniques, including fuel

cleaning, clean fuels, or treatment or innovative fuel combustion techniques for

control of each 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 of a

five-step process which provides that all available control technologies be ranked in descending

order of control 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 impactsjustify 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 KnaufFiber Glass, GmbH, 8 E.A.D. 121, 142 (EAB,

13
February 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. Rank remaining 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

of all 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 BACTfor Carbon

Dioxide

(Section III of Petition 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 CO2 at stationary sources.

14
understanding 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 of emissions under other provisions ofthe CAAI5 See EPA Region 7'5

Response to Petition for Review, in re: Deseret Power Electric Cooperative, PSD Appeal No.

07-03 (filed November 2, 2007); Brief ofthe EPA Office of Air 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 CO2 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 CO2 emission 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 of EPA's Environmental Appeals Board ("EAB") subsequently addressed the

position that C~ emissions were not subject to PSD regulation. See In re: Deseret Power

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 of emissions. However, the EAB did not

conclude that such an interpretation was impermissible under the CAA and found "no evidence

of a 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 of the 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 also 401 KAR

51:001 § 1(210).

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

EPA Regional Administrators entitled, "EPA's Interpretation ofRegulations that Determine

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 of December 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 of emissions 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 of COz was required given existing monitoring and reporting requirements - is not

clearly dictated by the language ofthe CAA or EPA regulations. Deseret Power at 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

also Johnson 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 of greenhouse gases. In particular, EPA has announced its

16
2. Petitioners' Claims that the Permitfails to include air quality

monitoring demonstration during periodsofstartup,shutdown, and

maintenance

(Sections IX and X of Petition 2)

Petitioners' Claims. In Section IX of Petition 2, Petitioners reiterate the issues raised in

Section II. E. of Petition 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 of concern 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 of ambient 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 of greenhouse 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

impact analysisincluding the gatheringof ambient 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 associated with 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 stack parameters were developed for unit loads of 100,75,

and 50 percent ofmaximum capacity over 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."

Theresult ofthese analyses was a projected net emissions increaseof 97.8 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&E wasnot required 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 regard to 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 regard to 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 to relate the quantity of a pollutant

released to the atmosphere with an activity associated with the release ofthat pollutant. These

factors are usually expressed as the weight of pollutant divided by a unit weight, volume,

distance, or duration ofthe activity emitting the pollutant (e.g., kilograms of particulate emitted

per megagram ofcoal burned). Such factors facilitate estimation of emissions from various

sources of air pollution. In most cases, these factors are simply averages of all available data of

acceptable quality, and are generally assumed to be representative of long-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 of normal source

operations." 401 KAR 51 :001 § 1(2)(a). Neither federal law nor Kentucky rules require that

sourcesconsider a malfunction as representative of normal 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.

18
more 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 BACTfor NOxand S02

(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
Background on PSD Program and Netting

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). ThePSD

program describes a setof preconstruction requirements applicable to newmajor emitting

facilities (also called major stationary sources), and those undergoing amajor modification that

triggers PSD review. See 42 U.S.C. § 7475. Pursuant to federal rules, a major modification

means "any physical change in orchange inthe method of operation of a major stationary source

that would result in: a significant emissions increase...of a regulated 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 seta specific emission rate,"significant" is defined as"any net emissions

increase" associated with a major modification for those pollutants. 40 CFR 51.166{b)(23)."

Netting is a term that refers tothe process of considering 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 emissionsincrease"), 401 KAR 51:017 § 1(146). The

PSD definition ofa net emissionsincrease 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 inactual emissions atthe source that are contemporaneous with the

particularchange aodare otherwise creditable. The first compooent narrowly includesonly the

emissions increases associated with a particular 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

Environmental Defensev. DukeEnergy Corp., 127 S. Ct. 1423 (2007) (upholdingEPA's

interpretation of modification based upon tons per year of emissions).

Pursuant to federal rules and Kentucky's SIP-approved rules, an increase ordecrease in

actual emissions is contemporaneous with the increase from the particular change only if it

occurs between the date five years 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); 40 I KAR

51:017 § 1(l46)(c)-(l). Generally, to becreditable, 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 of the 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 wasmaintained 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 of any 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 of LG&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 of each

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 if a significant net emissions increase will occur. 45 Fed. Reg. at

52,698; see also Memorandum entitled, "ProposedNestingfor Modifications at Cyprus

Northshore MiningCorporation, Silver Bay. 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/ngAnalysisfor LG&E

21
In November and December of 2004, LG&E submitted to KDAQ two minor permit

revisions for voluntary creditable decreases in emissions of NOx and S02 from the already

existing and permitted Unit I, in anticipation offuture construction ofUnit 31. KDAQ SOB

Revision 1 Minor Modification(January 20, 2005). KDAQ's review ofthe voluntary decrease io

emissions wascompleted consistent with 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 adjustmentsto the emissions for NOxand S<h. but concluded that LG&E was still able to

net-out of PSD for NO, and SO,. KDAQ SOB Revisioo 3 at 3. 10 the Fehruary 13,2007

Amendment to 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" of PSD review for NOx and S02. As explained

by KDAQ, the edditional control equipmeot required by KDAQ as part ofthe permithad the

effect ofreducing the net emissions increase for No, 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 changesto 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 number ofconcerns 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 NOx and 802(i.e., a full BACT analysis). In Petition 1, Petitioners' issues sternfrom two

23 These rules became effective as a matter of State 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 whether decreaseswere 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 of any 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 of qualitative 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 of Unit

1 in comparison with the dispersion characteristics ofthe proposed new NOx and SG,: emissions

23
units." 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 of emissions may be comparing stack heights of different 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 of Unit 1 versus Unit 31

that implicates concerns regarding the qualitative significance of the 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 NOx emissions 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 NOx SIP 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 NOx resulted 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.

24
the 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 NOx reductions associated with LG&E's minor

modification were also used as part of Kentucky'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 of a 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.

25
51:100 § 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 51:001 § 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 ofemissions

With regard to the requirement that emissions increases and decreases be

"contemporaneous," Petitioners raise three main concerns. First, that KDAQ used baseline

emissions instead of actual 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"aetnaI emissions" for calculating a

significant emissions increase); 40 CFR § 52.2 1(3)(iXb); 40 I KAR 5I :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 § 5I: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 of baseline 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 of a

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 particular date and is representative

of normal source operation. The cabinet may allow the use of a different time period upon a

detennination that it is more representative of nonnal 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 specific further 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) ("Emission reductions 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 their individual 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 Timothy J. Method (Indiana Departmentof Environmental Management)at 2 (March 29,

1994). Thus, Petitionersfailed to demonstratethat the netting performed by LO&E was not

consistentwith applicable requirements.

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 emissionsfrom theauxiliary boiler increased due to the 1,000hours of

additional operation. 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 result ofthe proposed change to ultra low sulfur diesel fuel oil along

with the proposed change in the number afhours of operation on an annual basis.

Since the optimized design suggests that the emergency diesel tire water pump is

not required, theemissions from this source will cause 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 reviewing theinfonnation provided, KDAQ adopted LG&E's

analysisofthe emissions impacts ofthe proposed changes. Petitioners argue thatthe application

and the SOB do not include the specific calculations. Petition 2 at 29. However. when reviewed

in conjunctionwith the 2004 Application and permitting documents (i.e., KDAQ SOB Revision

17 In Petition 2, Petitioners note, "their continuing concerns with the insufficiencyofthe original

netting demonstrations" 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.

28
2), 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' ClaimsRegardingBACTfOT the Auxiliary Boiler

(Section II.F. of Petition 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 of low-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 of add-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's Response. 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/BACT analysis 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"

29
difference 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 of BACT for the major modification project as a whole. As

part ofthe Revision 3 changes, the permit was modified to require the use of ultra low-sulfur

diesel fuel and low NO", burners (Revision 2 required use of low-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 of Air

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 of operation) 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.

30
PSD 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 of natural gas for certain pollutants, so whether a

"negligible" difference would still exist in light ofthe Revision 3 changes should be addressed as

part of KDAQ'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 BACTAnalysisjor Support

Operations at the Facility

(Section Il.H of Petition 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) permit limits 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's Response. 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 of theissue. As part ofthe permit

analysis,KDAQ undertooka BACT analysis for project emission units subject to PSD

requirements. KDAQ SOB Revision 2 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 SOBRevision 2 at 23-24; seealso 401 KAR

51 :001 § 1(66) (definition of emissinns unit). KDAQdetennined that support facilities such as

limestonehandling,the backup diesel generator (also referred to asthe "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 analysis previously

done for that support facility as part of its Revision 3 review. KDAQ SOB Revision 3 at 14. As

part of Revision 3, thebackup diesel generatorwill use ultra low sulfur diesel (or equivalent)

fuel and the 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 thereasonsdiscussed above, the Petition 1 is denied as to this issue.

6. Petitione,.' ClaimsR<gtuding BACTfor PM

(Section V.~. of Petition 2 and H.C. of Petition 1)

Petitioners' Claims. Petitionersraise concerns 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 lower PMlPM,o limits are achievable at thefacility and were incorrectlyeliminated as

BACT by the applicant; Petitionerscite to-limitsallegedlyachieved at other facilitiesto

demonstratethis point. Petition 1 at 19. Petitionersstate that the PMlPM10 limits for thenew

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's Response 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 of control

technology, emission points, and emission rates. 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 of three

one-hourtests). Accordingly, the record indicatesthat KDAQconsideredboth pollutants

althoughthey were evaluated together with emissions of PMIO consideredas a subsetofPM.

KDAQRTC Revision2 at 20. The permit includes a BACT limit for PM and PM" - KDAQ

and LG&E undertook the required analysis and determined that the two limits were the same,

whichis not uncommon. KDAQ SOB Revision2 at 18-20; see a/so 2004 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. Concernsthat the PMlPM,olimi!s are not BACT

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 2004 Application

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 both filterable 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 of other 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 1raises

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

applicable requirements. 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 responsesto 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, PM limits. 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 construction of Unit 31 for both the cooling towers because it was anticipated

that Unit 20 may be used 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 specific PMlPM10 limit. With regarding to the cooling towers, Petitioners raise the

following concerns: (1) the permit failsto set a PMJPMlo emission limit for Unit 41; (2) the

proposed drift 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 control technology. In the RTC, KDAQ explained that "{p]articulate matter from cooling

towers is generatedby the presence of dissolved 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&Eexplained 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 application ofthe 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.

34
For 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 of 0.0005% represents the most stringent level of drift elimination

proposed as BACT for the type of cooling 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 of 0.0008%

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 of a fan seeks to

increase the amount of dislodged 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 of 0.0005% 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 comment period 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 regard to the BACT analysis for Unit 41, 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 for NOll while also considering the

addition of an 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

identified an 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 considering dry cooling, a completely distinct type of cooling tower is at

issue (as opposed to a wet cooling tower). 2004 Application at 1-34 - 1-35. Further, the

technology of drift control is such that even incremental improvementin drift control can involve

substantialchanges in the cooling tower design. See. e.g. AP 42 Compilation ofAir 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 coefficient ofthe tower. Thus, the relationship

between a cooling tower and the drift elimination technique can be distinguished from that of a

boiler and a conventional add-on control 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 discussed above, 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 to Petition 2

In Petition 2, Petitioners' issues are primarily related to theinstallation ofthe 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 based on 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 13ofthis Order. As part ofthe 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 of any particular control equipment." 30 Fed. Reg. 42510,

42514 (December 5,1974). Further, in 1979, EPA issued a Memorandum entitled, Guidance for

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 of alternative 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 of control 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, "the installation of the DESP does not affect 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 unrelated to BACT (to result in a saleable fly ash per added mercury

controls). Further,there is no indicationthat the addition ofthe DESP is a "PSD-triggering"

event- that is, emissions are not expected to increase as a result of the addition of a DESP, nor is

the DESP expectedto impact the facility's compliancewith the previously established PMlPMIO

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 were not 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 bave boon revised bocausethe

additionoftheDESP"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 analysisshows

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 of absorbent/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 similar applications.

2004 Applicationat Appendix1-22. 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 necessary to separate fly ash out of the Unit 2 exhaust gas

38
stream prior to the potential injection of PAC. Without the additional dry ESP,

fly ash from Unit 2 could never be sellable because of the carbon from the control

of mercury emissions...Also, the dry EP reduces the amount of potentially

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 of the

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 of the 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 of PMlPMiO, 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 of cake 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

PMlPM10 wasrequired 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 BACTfor SAM. PMIPM'fh and

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 of SAM 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 suggest that the minor modificationsundertakenat Unit I to

decrease emissions ofNO~ and 902 for netting purposes triggered major PSDreview becauseof

increasesofSAM and PMlPM1o, as well asresulting 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 increase in 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 cycle natural gas-fired combustion turbines, which did involve significant

emissionsincreases, However,the Revision I (Minor Modification)SOB does not indicate that

there will be any increases in PMlPMIO or SAM as a result ofthe Unit 1 decreasesin NOxand

80:2. As wasdiscussedearlier, new control technologywas not installedfor the reductions - the

reductions were achievedthrough increased efficiency of the existing control devices. With

regard to the anunonia issues. ammonia is not a PSD regulated pollutant and thus, assuming

there were increasesin ammoniaemissions, there is no obligation for KDAQ to consider those as

part of the PSD review process." With regard to the new Unit 31, KDAQ did undertake a

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 other modifications. 2004 Applicationat Appendix 1-27 - I29. TheApplicationexplains that LG&E reviewedthe RBLC and considered emission limitsat

othersources in Kentucky and WestVirginia. Id. at 1-27. LG&E also conaidered various

alternative sulfuricacid emission reduction systems. Id Emission rates associated with 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 ofthe Act. 42 U.S.C. § 7661d(b). A demonstrationthus

requiresmore than mere conclusory allegations. In the Matter ofAl 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" ofSirmos Division

a/Bramante Corp., Petition No. 11-2002-03 at page 7 (May 24, 2002). Broad generic claims

"lack. sufficientspecificity" to satisfy these criteria andwill be not be reviewed. In re Steel

~amics, Inc., 9 EAD. 165,239-240 (EAB 2000).

] To theextent that Petitionerswere attempting to demonstrate that the increase in ammonia

demonstrated an increase in SAM, this conclusion is not supported by the 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 applicable to 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 of good 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 of no 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 of certain 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 regarding PM2,5. 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; and that 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 raise the thresholdissue of whetherLG&E may use

the PM10 surrogate approach to meet the PSD requirements 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 use ofPMIO as a surrogatewas appropriate, EPA directs KDAQ to address

theseclaims as well.

Petitioners make severalargumentsto support their view that KDAQ's use ofPM10 as a

surrogate for PMl Swas not appropriate. While EPA does not necessarily agree fully with all of

Petitioners arguments, two points raised by Petitioners are 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 for PM2.S. See, e.g.•Petition2 at 40. Second. while

they disagreewith the use of the surrogate policy as a general matter. Petitionersemphasizethat

even the surrogatepolicy was only intendedfor use until technical difficultiesassociated with

analysis of PM,., have been resolved. S••, '.g., Petition2 at 43-45. EPA addresses and

elaborates on these and related difficultieswith KDAQ's record on this issue below.

Background on PM" NMQS and eM

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 thenation as attainment, nonattainment,or unclassifiable, 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 isthe primarymeans by which states comply with

CAA requirements to attain the NAAQS. S•• CAA Section I100a) ODd Sections 171 • 193,42

U.S.C. § 7410(a)and §§ 7501 ·7515.

On July 28,1997, 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 from John S. Seitz regarding

implementation of the 1997 standards entitled,"Interim Implemenuuionfor the NewSource

Review Requirements/or PM,.,' (Seitz Memorandum). The Seitz Memorandum explainedthat

42
sources would be allowed to use implementation of a PM lO program as a surrogate for meeting

PM2,5 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 ofNew Source Review Requirements 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, if a SIP-approved state is unable to

implement a PSD program for the PM2,5 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 Surrogate for 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 of opinions that are properly read as limiting the use ofPMIO as a

surrogate for meeting the PSD requirements for PM2.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 if it is "reasonable" to do so and applying

analysis from National LimeAssoc. v. EPA, 233 F.3d 625, 637 (D,C, CiT, 2000) tbat is applicable

to determining whether use of a surrogate is reasonable in setting emissions limitations for

hazardous air pollutants under Section 112 ofthe Act); Mossville Envt'l Action Now 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); BluewaterNetwork v.

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 of PM 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 of a PM2.5 analysis to obtain a PSD permit.

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

43
With 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 PMn 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 of PM IOas a surrogate for that fraction is "inherently confounded" by the

presence ofthe other fraction of PM". ATA v. EPA, 175 F.3d 1027, 1054 (D.C. Cir. 1999)

(PM1o is an arbitrary indicator for coarse PM (PM IO-2,5) because the amount of coarse PM within

PMIO will depend arbitrarily on the amount of fine 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 of health effects from ~arse PM in urban areas is stronger, EPA

reasoned that setting a single PM lO 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 PMIO will cause the amount of coarse 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 PM IOis 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 10 is always a

reasonable surrogate for PMu

This case law suggests that any person attempting to show that PMIO 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 PM IO 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 of PM10 as a surrogate for PM2.5 under the circumstances for this specific permit.

Overall, the record does not show how the use of the 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 PM2,s.38

Going forward and withoutsuggesting that the followingtwo steps are necessaryor

sufficientto demonstrate that PMIO is a reasonablesurrogatefor PM2,S, we offer the following as

a possibleapproach to makingthat demonstration:

First, the Source or the permittingauthority establishes in the permit record a strong

statistical relationshipbetween PMIOand PM2.5 emissionsfrom the proposed unit, both with and

withoutthe proposed control technology in operation. Withouta strong correlation, there can be

little confidencethat the statutory requirements will be met for PM2.5 using the controlsselected

througha PMIO NSR analysis. A strong statisticalrelationship could be establishedin a variety

ofways. In the case where the unit in question is a new unit, 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, if actual 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 control equipment). In developing such correlation, a simple

ratio ofAP-42 emissionsfactors or ofthe results of a single compliance stack test would not

appear to be sufficient. Instead, reasonable consideration would be given to whether and how

the PM2,S:PM10 ratio may vary with source operatingconditions, includingvariations in the fuel

rate and in control equipmentcondition and operation.This consideration may be basedon

engineering analysis ofthe facility includingthe proposedcontrol technology 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 of control of

PM2.5 by the control technology selected in the PMIO BACT analysis will be at least as effective

as the technology that would have been selected if a 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 PM2sThe secondpath would be to perform a PM2,s-specific BACT analysis, and show that while the

type and/or physical design ofthe control technologymay be different, the efficiencyfor PM2.5

control of the technologyselected through the PM10 BACTanalysis is equal to or betterthanthe

efficiencyof the technologyselected through the PMB BACT analysis, across the range of

operating conditions that can be anticipated for the source and the control equipment. 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 for PM2,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 for PM2.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 evolving understanding 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 list of possible demonstrations

that a source or permitting authority would make to show that PMIO is a reasonable surrogate for

PM2.5. Sources and permitting authorities are encouraged to carefully consider the case law and

the limits ofthe Surrogate Policy 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 enfnrceability ofthe 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 regarding theunits used for articulating the emission limits. In addition, in Petition 2,

Petitionersstate 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 expression of quantity per unit oftime or other parameter that limits the amount

of a 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 ofa pollutant 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

of an "other parameter that limits the amount of a regulated pollutant." 401 KAR 52:001

§ 1(30).

With regard to the SAM emissions limit for Unit 31. the permit establishes 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 demonstrate that 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 of additional 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 bedesired - heat input

46
data is generally available from these types of facilities. 39 In support of their 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 of limits. 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 of low-sulfur coal and/or'

use of a 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 of low-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 East Kentucky 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 regard to 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 for H2S04

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 formation ofthe 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 the permit,

Exhibit ISis a document produced by LG&Ethat includes performance guarantee information

from various companies/vendorsthat relate to the anticipated performance ofthe air pollution

control train for Unit31, as described in the application. See Petition2 Exhibit 15 (Cover

Letter). There is nothingthat indicatesthat thiadocumentwasa part of the permitrecord before

KDAQ at the time of Revision 2 or 3, or that it wasever provided to KDAQ. These documents

are intema1 LG&E engineering documents regarding the construction of modifications at LG&E

Trimble which Petlticners obtainedas part of the permitappeal process. Petitioners interpret

Exhibit 15 as demonstrating that CoalType B has the lowestsulfur content,and in conjunction

with a wet ESP. would result in lower emissions ofSAM than the performance coal or Test Coal

A. Petition2 at 28; Petition2 Exhibit 15at 0021862. LG&E's BACTanalysisfor SAM

explains the basis for choosing good combustion controls, a wet ESP, and a WFGD as the

controls necessary to achieve the SAM limit. 2004 Application at Appendix 1-29. LG&E

explainsthat this suite of controls has additional benefits of reducing PMlPMIO and mercury, as

well as SAM. Further, the BACTanalysesdid considercoal blends (even thoughthey Were not

a part of the application). Exhibit15 does not demonstrate that a particularcoal blendiI

reasonably likelyto lead to significant additional emissionreduetions for eitherPM or SAM,

insteadfocusing on the suggestion that 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 applicable requirements.

48
For the reasons discussed above, the Petitions are denied as to the above issues.

C. Petitioners' Claims Regarding Enforceability of Permit Terms and

Compliance Assurance Monitoring

(Section III.A and B of Petition 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 PMlPM10, 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 of EPA's response in Order 1 did cover an issue regarding PMlPM1o,

mercury, or SAM as raised in Section III of Petition 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 CAM Provisions are not

Enforceable

(Section III.A. B. E. F, G. of Petitinn 1)

Petitioners' Claims. Petitioners allege that the permit fails to incorporate compliance

limitations and testing parameters specified in the SOB for PM/PM1o, 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 of basis 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 of an 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"). For Unit3l, 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 cited regulations.

In contrast, the permit includes all the informationfrom Table 5.4, albeit in a narrative form that

is brokendown by specific unit. There is no requirement that the SOB beincorporatedby

reference or otherwise included in a permit; nor is there a requirement that the pennit contain a

summarytable (similar to Table 5.4) of the applicable requirements. The permit at issue is much

more specific than the SOB. Petitioners have. not identifieda specificparameter included in

Table 5.4 that is not included in 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 raised by Petitioners, KDAQ made changesto the permit

in responseto Petitioners' comments. See KDAQ RTC Revision 2 at 27-28 (explaining that

annual performancetesting for VOC and lead were added to the permit). Petitionersdo not

explain why the changes made by KDAQ do Dot addressthe concerns they raised to the

Commonwealth. In the Petition,Petitioners simply restate the 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 for PMlPMIO, 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.

GeneralBackground on CAM

On October22, 1997, EPA promulgated final rule 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 of compliancewith 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.

50
exempts 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 of the 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 of control 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 of whether

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, if applicable,

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 of achieving 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 of performance or means of emission 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 of uncontrolled 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 be shown 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 applicable rule or, if not specified, generally under

conditionsrepresentative of maximum emission potential under anticipated

operating conditions. In addition, the rule allows for adjustingthe 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 explained that established CAM parameters are

not enforceable limits. The CAM rule preamble addressed this by pointing out that:

The obligation to correct excursions as expeditiously as practicable is the enforceable

component associated with 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' reasonable assurance of 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, NOx, 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]

S2
and 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 of 40 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. ofPetition I

Petitioners raise the issue that CAM should also be required for other pollutants such as

lead and total PMlPM1o• 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 of compliance provisions in the permit for PMlPMIO• These are discussed in

greater detail below, in response to Petitioners' concerns regarding the enforceability ofthe

PMlPMIO limits. Furthermore, the permit requires CEMS, which provides for continuous

measurement of emissions and thus provides a reasonable assurance of compliance. 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' Cillimsthat CAM Compliance Provisions/or SAM are not

Adequate to Ensure Compliance with Permit Limits

(Section III.E. of Petition 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 cannot be used to assure compliance with BACT limits such as this

one; and (4) S02 is not a good indicator of SAM because they are related in a complex, nonlinear way. Petition 1 at 34-35.

53
EPA's Response. With regard to the 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 inPermit Revision 2. For a broader discussion of Petitioners' concerns regarding

how emissions are measured, we refer to our response insection 9, above.

With regard to the remaining issues, the permit establishes a 26.6 Ibslhr 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. SeeKDAQ RTC Revision 2 at 7, 32. The permitalso

establishes aCAM approach to provide a reasonable assurance of compliance. 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 addition to 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 explainedthe relationshipbetween 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 of coal because a fraction ofthe [802] produced is

further oxidized to sulfur trioxide (SO)). SO] reacts with water influe gas to form sulfuric acid

vapor [i.e., SAM]." /d. at21. Petitioners provide no infonnation suggesting that applicable

requirements dictate that pollutants must be linearly related to serve assurrogates for each other.

Finally, as wasdiscussed earlier in this Order, EPA's final CAM rule clearly allows for

the use of appropriate surrogate pollutanlaand SO, is routinely uaed acrossthe United States as a

surrogate for demonstrating 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 allof the following criteria," including thatthe "unit issubject to 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 further explainsthe use of

surrogate pollutantsasfollows:

The Agency also notes that the applicability provisions inpart 64 include a

"surrogate" of a regulated air pollutant 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 to which 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 of Petition I)

Petitioners' Claims. Petitioners allege that the mercury limit set for Unit 31 is not

enforceable because (I) the permit does not indicate whether the. 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 of Petitioners'

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.

Although Petitioner'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 of Petition 1)

Background Information 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 of PM 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 size range). Controls for condensable PM emissions include those included in the LG&E

permit lime injection, WFGD, and WESP. EPA has established different reference test

methods for evaluating emissions of filterable 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 issuitable for most industrial sources, and provides ameasure of the total

amount of filterable solid particulate matter emitted from a stack 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 thatseparatesthe PM10 from

the total PM. If condensable 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 monitoringsystem orCEMS isthe total equipment necessary for

the detennination ofa gasorparticulate matter concentration oremission rate using pollutant

analyzer measurements and a conversion equation, graph, orcomputer program to produce

results inunits ofthe applicable emission limitation or standard. Performance Specifications are

used for evaluating the acceptability of the CEMS atthe time of orsoon after installation and

whenever specified inthe regulations. Quality assurance procedures in federal rules (and

Kentucky's roles) are used to further ensure the effectiveness ofqualitycontrol (QC) and quality

assurance (QA) procedures and the qualityof data produced by any CEMS that is usedfor

determining compliance with the emission standards ona continuous basis asspecified inthe

applicable regulation. In summary, the PUIJlOse of PM CEMS isto 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 Final Action).

To meetthe objectives of the PM CEMS,EPA described performance specification (PS)-

11 for PMlPMIO' Rulesregarding theuse ofPS-11 and PM CEMS Were first published inthe

Federal Register on April 19, 1996,as part of the proposedHazardous 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 rule regarding PS-ll and PM CEMS (69 Fed Reg. 1,786). PS-ll and

associated QAlQC procedures ensure that PM CEMS areproperlyinstalled, operated, and

maintained. The final pg-ll rules describe installation, operation. and maintenance procedures,

EPAhas also publishedguidance on the 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 with understanding and complying with PS-l1 applicable QAlQC

procedures.

PMLimits inthe LG&E Permit

Pennit Revision 3 includes twoseparate particulate limits for Unit 31 (both of which

were also included in Pennit Revision 2). Penni! Revision3 at 2g (SectionB.2(a) and (b)), The

first limit isspecific toPMIO, and setsa limit whereby the unit may not exceed 0.018IblmmBro

(for filterable and condensable) of heat input based on the average of three one-hour tests. Id.

Compliance with this limit is determined bya CEMS and specifics regarding reporting and

56
maintaining 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 of baghouse that uses fabric bags as filters

to collect filterable particulates. /d. at 18. The WESP is another type of particulate control

whereby particulates are removed by charging fly ash particles. ESPs can be wet or dry; the

LG&E facility initially was permitted with just 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 PMlPMIO 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 of PMlPM\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 PMlPMIO emissions, the permit

establishes use of the 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.

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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 establish PM/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 of construction of Unit 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 with the

Act.

With regard to issue 5, the permit sets a drift elimination rate for Unit 41 - the new

Linear Mechanical Draft Cooling Tower - of 0.0005% drift elimination. This is consistent with

what the Petitioners identify in Petition 1as BACT (petition I at 18-22). Permit Revision 3 at 48

(Section B, Emissions Unit 41). The drift rate is related to prevention of droplet loss. which in

tum. hasa relationship to PMemissions at the facility. Generally. the lower the drift rate, the

lower thePMemissions. Thepermitrequires an initial performance test to verify drift percent

achieved by the drift eliminator, which is to be conductedconsistentwith the''Cooling

Technology Institute (CT1) Acceptance TeatCode (ATC)# 140." Id In addition to the initial

performance tes~ there is additional monitoring ofthe total dissolvedsolidsin the circulating

wateron a moothlybasis, whichis an indicatorof future drift. Id SectionsE (SourceControl

EquipmentRequirements) and F (Monitoring, Record Keeping, and Reporting Requirements) of

the permit (pennit Revision3 at 60-61) also apply to Unit 41. Thus, Petitioners are not correct

thatthepermit 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 to raise concerns with the level of monitoring for the

drift rate, but cite to no authorityto explain that thepennit limits are inconsistent with applicable

requirements. Petition I at 37-28. Nor do Petitionersexplain why KDAQ's response was

insufficient.

For the reasonsdescribed above, Petitionershave not demonstrated that thepennlt fails to

comply with a requirement under the Act. As a result. Petition 1 is denied as to the issues raised

regarding the PMlPMIO limits and enforceability.

S. PetUioners' ClaimsRegarding Other Condl/ionsthai are not

En/orceable

(Section 1Il.J. of Petition I - Bullets5-8)

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Petitioners' Claims. In Petition 1. Petitioners include a buUeted list of issues 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 NOx and S02 are

unenforceable due to permit's lack of explanation 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 of NOx 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's Response, 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 of demonstration and provide EPA with sufficient

information to understand how the permit is defective. In the Matter ofAl TurtLandfill, Inc.,

Petition No. II-2002-13-A (Order on Petition) (January 30, 2004); see a/so. In the Malterofthe

New YorkOrganic Fertilizer Company, Petition No, II-2002-12 at pages 7-8 (Order on Petition)

(May 24, 2002); In the MalterofSirmas Division ofBromante 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 Steel Dynamics, Inc.• 9 E,A.D. at 239-240,

With regard to the bulleted list of items on pages 3941 of Petition 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

brief explanation of why 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 of a 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 of control technology, the permittee does

not necessarily have a contract established with a specific provider at the time of pennit 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 of the 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 of Petition J. We responded to issues 14

in the previous Order dated September 10,2008,

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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 are applicable to a variety of pollutants, 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-fired boilers. 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 of NOll and S02 be enforceable. In this case, the reductions were taken aslower

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 of why 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 MACT1100r 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

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requirements. 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 of EPA's objection, EPA is denying

the Petition as moot on this issue.

On January 7, 2009, EPA issued a Memorandum entitled, "Application ojCAA Section

JJ2(g) to Coal- and Oil-Fired Electric Utility Steam Generating Units that Began Actual

Construction or Reconstruction Between March 29, 2005 and March J4, 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 of Section 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 of Unit 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

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