UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION

III 1650 Arch Street Philadelphia, Pennsylvania 19103-2029 JAN03 2011 The Honorable Robert M. Summers, Ph.D. Acting Secretary Maryland Department
of the Environment Montgomery Park Business Center 1800 Washington Boulevard Baltimore, Maryland 21230 Dear Secretary Summers: The U.S. Environmental Protection Agency Region III (EPA) has been working with the Maryland Department
of the Environment (MDE) and the Maryland Public Service Commision (PSC) to include the Maryland permitting process for electric generating units(EGUs)

in the Maryland State Implementation Plan (SIP) pursuant
to Section 110 of the Clean Air Act (CAA). EPA is seeking

a resolution

to the outstanding issues affecting the permitting of EGUs. Representatives from EPA will participate

in a meeting with the PSC and MDE in Baltimore, Maryland on January
7, 2011 to discuss the PSC regulatory provisions

to resolve issues related to permitting
of EGUs in Maryland, which must be included
in the SIP. Details regarding these regulatory provisions are enclosed. On April 9, 2010, MDE submitted statutory and regulatory provisions related to the Maryland EGU permitting program for EPA’s evaluation for inclusion into the SIP. During our review of the SIP revision, EPA identified two regulatory provisions, COMAR 20.79.02 and 20.79.03, which were not submitted for approval into the SIP. These provisions relate to Certificates
of Public Convenience and Necessity (CPCNs) application requirements including environmental requirements and timeframes for taking action on such applications. These provisions should be included
in the SIP to ensure CPCNs comply with CAA New Source Review requirements. Since these regulatory provisions were not included
in the April 9, 2010 SIP submittal, EPA does not believe that the submission can be approved. EPA suggests MDE withdraw
its April 9, 2010 submission and resubmit

a SIP revision for approval that includes those provisions previously submitted on April 9, 2010, and the additional PSC regulations

at COMAR 20.79.02 and 20.79.03.The SIP is presently deficient with respect to permitting the largest emitting sources in the state. EPA requests MDE resubmit the SIP revision for EGU permitting

to EPA within 90 days of its receipt of this letter. Since COMAR 20.79.02 and COMAR 20.79.03 are existing regulations
of the PSC, 90 days is a reasonable timeframe for MDE to withdraw and resubmit the SIP with the new provisions included. In a letter dated January
3, 2011, EPA advised the PSC of the above SIP deficiency and other implementation issues related to CPCNs. EPA urged the PSC not to issue CPCNs for the construction

or modification
of any emissions units located
at facilities regulated by the PSC sources until MDE resubmits the SIP provisions for permitting EGUs and EPA formally approves the submittal. If you have any questions, please do not hesitate to contact me or have your staff contact Mrs. Linda Miller, EPA’s Maryland Liaison,
at (215) 814-2068. Sincerely, Shawn M. Garvin Regional Administrator Enclosure cc: Honorable Douglas R. M. Nazarian, Chairman Maryland Public Service CommissionIssues for the January

7, 2011 Meeting between the U.S. Environmental Protection Agency (EPA), the Maryland Department
of the Environment (MDE) and the Maryland Public Service Commission (PSC) Issue: Ensuring that all Clean Air Act (CAA) requirements are included
in Certificates
of Public Convenience and Necessity (CPCNs) by providing adequate public participation. EPA received

a draft CPCN for Energy Answers
to construct

a 120-megawatt generating facility in Baltimore City, Maryland. The draft Energy Answers’ CPCN was submitted
to EPA for review in accordance with CAA New Source Review requirements. The PSC’s CPCNs are proposed
to be the PSC’s equivalent of a New Source Review permit required by the CAA prior to modification

or construction
of major sources such as Electric Generating Units (EGUs). On June 28, 2010, EPA submitted substantive cOmments during the public comment period outlining concerns that Energy Answers’ CPCN did not meet CAA requirements. On July 8, 2010, the PSC entered

a proposed order granting

a CPCN to Energy Aaswers before comments from MDE, EPA and other interested parties had been addressed. As noted in a letter to EPA from the PSC on October 28, 2010, the Maryland Public Utility Code does contain requirements
for the PSC to include applicable federal and state environmental laws and standards
in a CPCN and for the PSC to consider applicable air pollution requirements prior to issuance of a CPCN. ç Maryland Public Utility Code at § 7-207(e)(2) and 7-208(f).
In addition, the Maryland Public Utility Code

§

7- 207 requires public notice and comment prior to issuance of a CPCN. It is EPA’s position that adequate public participation and comment requires air permitting agencies
to address and respond
to public comment. çç

In the Matter of Onyx Environmental Services, Petition
V -2005-1
at 7 (February

1, 2006) (citing Home Box Office v. FCC, 567 F.2d 9, 35 (D.C. Cir. 1977) (stating “the opportunity

to comment is meaningless unless the agency responds
to significant points raised by the public”). See also In the Matter of Citgo Refining and chemicals co. L.P., Petition VI-2007-01

at 7 (May 28, 2009) (stating permitting authorities have
a responsibility

to respond
to significant comments);
In the Matter of Kerr-McGee Gathering, LLC, Petition VIII-2007 at 4; In the Matter of Wheelabrator, Baltimore L.P., Permit 24-510-01- 886 at 7 (April 14, 2010). Issue: The State Implementation

Plan (SIP) revision submitted

to EPA for approval on April 9, 2010 is missing.CAA regulatory requirements. While reviewing the provisions MDE submitted for approval into the SIP, EPA identified two regulatory provisions, COMAR 20.79.02 and 20.79.03, which were not submitted for approval. COMAR 20.79.02 and 20.79.03 relate to CPCN application requirements including environmental requirements
for applications and timeframes for action on applications. These provisions

in COMAR 20.79.02 and 20.79.03 are necessary requirements

to ensure CPCNs comply with CAA New Source Review requirements. Including these COMAR provisions into the SIP will ensure future CPCNs meet all requirements
of the New Source Review program.