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www.hunton. com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio, Texas February 17-18, 2005

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Page 1: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

NEW COAL-BASED POWER PLANT PERMITTING

Kevin J. FintoHunton & Williams

APPANew Generation: Emerging Technologies and Financing

San Antonio, TexasFebruary 17-18, 2005

Page 2: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

1. Why Are We Interested in Permitting Coal-Fired Power Plants?

2. The Permitting Process3. Permitting for a New Unit at an Existing Plant4. Permitting New Facilities5. Key Points6. Procedural

a. Pre-Application Processesb. Coordinating with Federal and State Agenciesc. Endangered Species Act Issuesd. Public Participation Process

OVERVIEWOVERVIEW

Page 3: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

7. Substantive Issues

a. Defining the Sourceb. BACTc. MACTd. Enforceabilitye. Air Quality Modeling Issues

Page 4: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

WHY WE ARE INTERESTED IN WHY WE ARE INTERESTED IN COAL-FIRED GENERATION COAL-FIRED GENERATION Percentage Electrical Generation by Fuel Type*

Gas/Oil 18.8 %Nuclear 19.7 %Renewables 10.7 %Coal 50.8 %

* Statistics from EEI.org

Trends in Fossil Fuel Costs**2002 2005

Gas 2.95 6.04 $/mmBtuOil 24.45 48.25 $/barrelCoal 25.52 36.38 $/ton (Illinois basin)

** www.eia.doe.gov Current as of 2/14/05

Page 5: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PUBLIC POLICY ISSUESPUBLIC POLICY ISSUES

Local: Land use and siting issuesLocal Support

National: CAA and other environmental permitting and regulatory issues

National security

International: Carbon regulation

Sierra Club Legal Defense Fund (9/16/04):“In general, our long-term objective is to make sure that coal-fired plants get closed. Eventually, with enough attacks against coal-fired plants, there will be action to shut them down.”

Page 6: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PUBLIC POLICY ISSUESPUBLIC POLICY ISSUES

Develop public interest support Low cost energy is vital to public health

and welfare especially for low and fixed income citizens ( Klein Keeney report)

Low cost energy from coal is vital to economy and national security (National Coal Council: Opportunity to Expedite the Construction of New Coal-based Power Plants.

Page 7: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

THE PERMITTING PROCESSTHE PERMITTING PROCESS

Pre-permitting activities• Site analysis• Community relations• Preparation of application

The permit proceeding

• Building the record

• Avoiding delays

Permit appeals

Construction

Operation

Page 8: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

SUBSTANTIVE ISSUESSUBSTANTIVE ISSUES

“Traditional” new source permitting issues Air quality analysis BACT/LAER analyses Air quality-related values and the FLM State Air Toxics Rules

“New” issues Defining the source: IGCC/CFB/PC as BACT/LAER? Endangered species review MACT and mercury Anticipating NSR modification analyses Clear Skies, CAIR, NSPS and other new

requirements/regulatory regimes

Page 9: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PERMITTING PROCESSPERMITTING PROCESS

Optimizing a Plant and Permit Given the Constraints Imposed. Constraints

The Law (BACT/MACT/LAER, Air Quality Requirements, Others)

Fuel Characteristics Site Characteristics Economics Public Policy Opposition

Need to Provide Certainty of the Goal and Flexibility in Achieving It. Need to preserve options

Page 10: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Options for Avoiding NSR

Permitting for New Unit at Permitting for New Unit at Existing PlantExisting Plant

Netting Plantwide Applicability Limitations (PALs) These options may be available for some,

but not all regulated pollutants

Page 11: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

NettingNetting

means the amount by which the sum of the following exceeds zero:

(a) Any increase in actual emissions from a particular physical change … at a stationary source; and

(b) Any other increases and decreases in actual emissions at the source that are

“contemporaneous” and “otherwise creditable”

§52.21(b)(3)(i) – Net emissions increase

Page 12: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

NettingNetting

Contemporaneous period: 5 years under federal rules States may adopt different periods

Decreases creditable only to the extent: Ambient impacts are the same Lower of old actual or allowable emissions

exceeds new level of actual emissions Enforceable Quantifiable

Page 13: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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PAL DefinitionPAL Definition

An emission limitation expressed in tons per year, for a pollutant at a major stationary source, that is enforceable as a practical matter and established source-wide in accordance with EPA’s PAL rules.

Page 14: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Effect of a PALEffect of a PAL

If you have a PAL, you can make emission changes (including alterations to existing emissions units and the addition of new emissions units) without triggering new source review.

Page 15: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Establishing a PALEstablishing a PAL

Must apply for a PAL Application must list all emissions units, their

size, all federal and state requirements applicable to each emissions unit, and baseline actual emissions for each emissions unit

PAL must be established in a federally enforceable permit

Reviewing authority must provide opportunity for public participation, including a comment period and the opportunity for a public hearing on the PAL

Page 16: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Determining the PAL LevelDetermining the PAL Level

For each covered pollutant, baseline actual emissions are added to an amount equal to the applicable significance level per PAL pollutant.

Determine baseline actual emissions using the same 24-month period for all units.

Applicant may use allowable emissions for any emissions unit added to the facility after the selected 24-month period, but must subtract emissions from units permanently shutdown.

Page 17: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Determining the PAL LevelDetermining the PAL Level

Baseline actual emissions cannot exceed emission limit allowed by current permits or applicable rules (e.g., NSPS, RACT)

Set pollutant by pollutant Can cover one or more pollutants Expressed as TPY per pollutant

Page 18: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Term of PALTerm of PAL

The term of a PAL is 10 years. Between 6 and 18 months prior to expiration

of a PAL, permit holder must apply either to request renewal or expiration of the PAL

Page 19: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

When a PAL ExpiresWhen a PAL Expires

Once a PAL expires, physical and operational changes are no longer evaluated under the PAL applicability provisions.

Source owner must comply with any applicable federal or requirement for a specific emissions unit (e.g., BACT, RACT, NSPS).

Limits eliminated by a PAL (e.g., 52.21(r) limits) do not return upon PAL expiration.

Page 20: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PAL PAL RenewalRenewal

A source owner applying to renew a PAL must recalculate the maximum PAL level, taking into account newly applicable requirements.

The new PAL level may not exceed the source’s PTE.

Page 21: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PAL RenewalPAL Renewal

The permitting authority may renew a source’s PAL at the original PAL level without consideration of other factors if the sum of the baseline actual emissions for emissions units at the source (plus significance levels) is equal to or greater than 80% of the original PAL level.

“Use it or lose it”

Page 22: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

PAL RenewalPAL Renewal

If the recalculated baseline plus significance level value is less than 80% of the original PAL level, the permitting authority may set the PAL at a level that it believes is appropriate, taking into account air quality needs, advances in control technology, anticipated economic growth in the area, and other factors identified by the authority.

Page 23: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Monitoring in PAL Permits Monitoring in PAL Permits

Each permit must contain enforceable requirements that accurately determine plantwide emissions on a rolling 12-month basis.

Page 24: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

5 years from date most records are made Term of PAL plus 5 years for the PAL

permit application and certifications of compliance

Recordkeeping in PAL Permits Recordkeeping in PAL Permits

Page 25: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Semi-annual reporting is required. Reports are to list all deviations or

monitoring malfunctions. Each such report is to be signed by the

responsible official who certifies the accuracy of the report

Reporting in PAL Permits Reporting in PAL Permits

Page 26: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

The Permitting ProcessThe Permitting Process

Key Points Think Backwards – “What Do I Need on Appeal?” Anticipate Issues and Provide Solutions in the

Record Keep the Momentum Moving Forward Understand What is Required Versus What is

Desired – FLAG and Draft NSR Manual Are Not Law

Join the Network – But Watch Out for the Folklore Use Caution and Maintain Credibility

Page 27: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Preparing For The Permit Preparing For The Permit ChallengeChallenge

Plan Ahead – Build the Record Know the Process and Standard of Review

“Open” or “Closed” Record? When Does the Record Close? De Novo or Deference? Burden of Proof Choose your experts accordingly

Don’t Rely on Agency to Build a Good Record – Be Proactive

Examples

Page 28: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Collecting Necessary InformationCollecting Necessary Information

Much of the Information Needed for a Permit is Available in the Public Domain

Examples Include: Ambient Air Quality Monitoring Meteorological Data Source Inventories Monitoring Information Technology Databases

Think About Why the Information Was Collected Quality Assurance/Quality Control Issues Remember That Many of the Permit Analyses

Are Case-by-Case

Page 29: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Meet With The AgenciesMeet With The Agencies

Pre-Application Meetings Site Visits Determine the Level of Expertise in BACT/MACT,

Modeling and Other Areas Be Prepared to Educate and Supplement

Resources Identify Particular Concerns Establish a Long-Term Working Relationship –

You Can’t Do This in a Vacuum and Neither Can the Agency

Page 30: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Preparing the Permit ApplicationPreparing the Permit Application

Tell Your Story –Why is this project “optimum” and in the public interest

Be Objective Tell What You Did and Why Tell What You Didn’t Do and Why Not Look for Checklists Include the Backup Information Be Prepared for an Iterative Process

Page 31: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Coordinating With Federal and Coordinating With Federal and State AgenciesState Agencies

PSD Does Not Trigger NEPA PSD Regulations Do Require Coordination With

Other Agencies in Their Compliance with NEPA. 40 C.F.R. § 52.21(s)

State Public Service Corporation Review

(economic development and increment) Army Corps of Engineers Review State Regulation (e.g., air toxics, little NEPAs,

State ESA) ESA Issues

Page 32: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

WHY THE ESA MATTERSWHY THE ESA MATTERS

Recent decisions and activities have triggered ESA review in the context of air permitting for power plants

EPA has determined that PSD permitting by delegated state is “federal action” triggering Section 7 of ESA

Sierra Club has filed notices of citizen suits against EPA for failure to consider ESA in Title V permit review

Page 33: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

WHY THE ESA MATTERSWHY THE ESA MATTERS

ESA consultation process = Delay $ Project Design or Operation Changes Uncertainty

FWS Can be Aggressive(especially if they coordinate on visibility and ESA issues)

Environmental Groups Aware of ESA’s Power to Delay and Change a Project

Page 34: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

ESA BASICS–CONSULTATION ESA BASICS–CONSULTATION

Endangered Species / “Critical Habitat”

+ Discretionary Federal Action (permitting or

funding) Affecting Species or Habitat

= Requirement to Consult with Fish &

Wildlife Service

Page 35: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

EXIT RAMPSEXIT RAMPS

No federal action No discretionary authority affecting species or habitat Screening Level Ecological Risk Assessment / ECO

Risk Software No Effect – Convince State (if involved) and Federal

Agencies that Permitting the Plant Will Have No Effect on Endangered Species and “Critical Habitat”

Not Likely to Adversely Affect and FWS Concurrence Informal Consultation (Biological Assessment) Formal Consultation (Biological Opinion/Incidental

Take Statement)

Page 36: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

ESA BASICS-TAKEESA BASICS-TAKE

Prohibition on “Take” “Take” broadly defined to include:

Harm Adverse modification of habitat

Prohibition applies with or without Federal action and consultation

Take requires “Incidental Take Permit” Unpermitted take = liability Examples; Wind energy; air emissions

Page 37: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

ASSESSING ESA CONCERNSASSESSING ESA CONCERNS

Potential causes of impacts Plant site Area of impact

Air emissions Water intake and discharge

Associated facilities Mine site Transmission lines Roads Off-site construction area

Consider Migratory versus Local Species

Page 38: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

OTHER LAWS OF CONCERNOTHER LAWS OF CONCERN

State Endangered Species Laws

Fish and Wildlife Coordination Act

National Historic Preservation Act

Migratory Bird Treaty Act

Bald and Golden Eagle Protection Act

Page 39: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Public Participation ProcessPublic Participation Process

Build a Record So That the Public Can Follow It

Work With the Agency to Ensure Compliance with Public Participation Requirements, Especially Public Notice

File Your Own Responses to Comments Work With Permitting Agency to Ensure

Well Documented Permit Package Commence Construction / Get an

extension (keep the permit alive)

Page 40: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Substantive Issues

Page 41: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Defining the SourceDefining the Source

Case-by-Case Analysis Operational Limits of the “Source”

Tail Wagging the Dog Problem Common ownership Contiguous Same SIC Code

Restrictions on Construction (e.g., Retrofit) Restrictions on Operation (e.g., Type of Fuel) Type of Combustion

Page 42: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

BACT/MACT

Page 43: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Best Available Control Best Available Control TechnologyTechnology

What is BACT? (It’s a limit)Best Available Control Technology means an emissions limitation (including a visible emission standard) based on the maximum degree of reduction for each pollutant subject to regulation under Act which would be emitted from any proposed major stationary source or major modification which the Administrator, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such source or modification through application of production processes or available methods, systems, and techniques, including fuel cleaning or treatment or innovative fuel combustion techniques for control of such pollutant. . . .

Page 44: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Best Available Control Best Available Control TechnologyTechnology

( No, it’s a work practice)If the Administrator determines that technological or economic limitations on the application of measurement methodology to a particular emissions unit would make the imposition of an emissions standard infeasible, a design, equipment, work practice, operational standard, or combination thereof, may be prescribed instead to satisfy the requirement for application of best available control technology. Such standard shall, to the degree possible, set forth the emissions reduction achievable by implementation of such design, equipment, work practice or operation, and shall provide for compliance by means which achieve equivalent results.

40 C.F.R. § 52.21(12)

Page 45: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Best Available Control Best Available Control TechnologyTechnology

BACT is an Emission Limit or Work Practice BACT is a Case-by-Case Analysis What is “Achievable” What is “Available” BACT Does Not Redefine the Source BACT is Done on a Pollutant-by-Pollutant Basis BACT Considers Multi-Pollutant Effects BACT Considers Environmental, Energy and

Economic Costs

Page 46: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Best Available Control Best Available Control TechnologyTechnology

Information That Must Be Considered Other Permits RACT/BACT/LAER Clearinghouse Draft or Proposed Permits Permit Applications NSPS Proposal February 9, 2005

Page 47: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Best Available Control Best Available Control TechnologyTechnology

Other sources CEMs Data Source Tests Foreign Experience Vendor Guarantees Vendor Literature

Page 48: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Best Available Control Best Available Control TechnologyTechnology

BACT is not the lowest level ever recorded Need for a Cushion What Can Be Achieved Under Worst-Case,

Reasonably Foreseeable Circumstances Not the Best Day or the Average Day Long term achievability

Page 49: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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IGCC as BACTIGCC as BACT

“Defining the Source” Greg Foote white paper ED Memorandum to Utah DEQ View of states/EPA HQ NESCAUM briefs in several proceedings We Energy Practical advice

Page 50: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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MACTMACT

NSPS Proposed Rule February 10, 2005 Proposed Rule – January 30, 2004 Supplemental Notice – March 16, 2004 Much Concern Over Feasibility of Proposed

Limits Preambles Offer Some Insights Case-by-Case MACT

What is Demonstrated in Practice MACT Floor

Rule Due on March 15, 2005 Lot’s of possibilities.

Page 51: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Page 52: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Enforceability

Page 53: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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New Source New Source Permitting ScenariosPermitting Scenarios

Preconstruction permitting only Title V permit application within 12 months

after start-up (unless state requires earlier) Parallel processing (state requires

submission of Title V application earlier but processes separately)

Page 54: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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New Source New Source Permitting ScenariosPermitting Scenarios

Combined preconstruction/Title V permitting program If state has adequate authority and NSR

programs uses “enhanced procedures” that are substantially equivalent to Title V

Could result in greater involvement of EPA and public in PSD permitting (because of veto authority and petition process)

Page 55: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Historical View of Historical View of Practical EnforceabilityPractical Enforceability

To be “practically enforceable,” preconstruction permitting requirements must contain A clearly defined emission limit and identify the

portion of source to which it applies A time period, e.g., 24-hours, daily, monthly,

annually Consistent with the substantive requirement Consistent with the compliance method

A clearly defined compliance method, including monitoring recordkeeping and reporting

Page 56: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Title V MonitoringTitle V Monitoring

Title V added “Periodic Monitoring” Applies if underlying requirement imposes

no requirement for ongoing testing (e.g., only startup performance tests)

Must specify a frequency for additional testing

No separate “sufficiency monitoring” requirement (Jan. 2004 EPA rule)

Page 57: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Compliance Assurance Compliance Assurance Monitoring (CAM)Monitoring (CAM) “Enhanced monitoring” implemented through

Title V CAM applies to emission limit if:

An active control device is needed to meet limit There is no “continuous compliance method” (e.g., CEMS)

CAM Plan must include Control device indicators to be monitored Acceptable operating ranges (or process for developing

ranges or trigger levels) Necessary when CAM applies during preconstruction permitting Must include a schedule for testing

Monitor performance criteria

Page 58: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

www.hunton.com

Compliance Assurance Compliance Assurance Monitoring (CAM)Monitoring (CAM)

Permit will include enforceable obligation to investigate and take corrective action

Must submit CAM Plan with Title V permit application

Page 59: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Then and NowThen and Now

Historically, monitoring and testing in preconstruction permits has ranged from AP-42, to startup performance test, to CEMS

Title V adds A minimum frequency of testing after startup CAM as indicator monitoring for some emission

limits Increasingly, citizen groups and agencies

insisting on continuous monitoring at preconstruction stage

Preference for CEMS Enforceable operating parameters where CEMS

not available

Page 60: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Implementation IssuesImplementation Issues

Most issues are with PM and HAPS (SO2, NOx, CO CEMS well proven in coal-fired application)

Particulate matter (PM) PM CEMS

EPA finalized Performance Specification (PS 11) and quality assurance/quality control (Procedure 2) in January 2004

Utility Air Regulatory Group (UARG), Cement Kiln Recycling Coalition, and Portland Cement Association have challenged

Page 61: Www.hunton.com NEW COAL-BASED POWER PLANT PERMITTING Kevin J. Finto Hunton & Williams APPA New Generation: Emerging Technologies and Financing San Antonio,

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Implementation IssuesImplementation Issues

PM CEMS Technical issues

Technology requires “calibration” to Method 5, calibration curves can change

Single point monitoring not account for stratification

EPA statistics allows data with significant error band to pass

Existing BACT/LAER standards not based on PM CEMS data

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Implementation IssuesImplementation Issues

PM CEMS Applications to PSD permits

Region 8 has commented to state that PM CEMS should be required for new source (headquarters says not national policy)

Two states have issued PSD permit with PM CEMS requirement

Anticipate this will be an issue in most new coal-fired source permits

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Implementation IssuesImplementation Issues

PM CEMS Defenses

PS 11 preamble states that PM CEMS apply when required by rulemaking and that additional industry-specific operational requirements may be required (NSPS)

PM CEMS Technical documents acknowledge need to establish limit with PM CEMS data

PM CAM Plan Difficult and complex because stack emissions are

affected by multiple control technologies May need to propose multiple options and collect

test data prior to finalizing

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Implementation IssuesImplementation Issues

Hg Hg CEMS and Method 324 (Sorbent Trap)

No performance standard or QA/QC promulgated Proposed standards never been achieved in practice EPA/EPRI research project to install and test Hg CEMS and

Method 324 ability to meet proposed standards underway Will become issue in permits once EPA issues final utility

mercury rule

Hg CAM Plans CAM exempts standards proposed under § 112 after 1990 EPA position in Utility Hg proposals that CAM not sufficient

for MACT

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Implementation IssuesImplementation Issues

AP-42 EPA initiative questioning use of emission

factors for establishing compliance Condensible Particulate Matter

PM –10 (the regulated pollutant) is defined to include filterable and condensible PM

EPA Method 202 for condensable has positive artifact (overstates PM)

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Implementation IssuesImplementation Issues

Condensable Particulate Matter Establishment of appropriate limit will be

issue Little data exists on achievable PM-10

limits that include condensable Seek higher limit to account for Method

202 results or seek separate limits on individual identifiable condensable (sulfuric acid mist)

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Air Quality Modeling Issues

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Modeling RequiredModeling Required

In all cases, a permit applicant must show that a major new source will not cause, or contribute to, air pollution in excess of— Any applicable PSD increment, or A National Ambient Air Quality Standard

“in any air quality control region” An applicant must also analyze the impact

of the facility and associated growth on visibility, soils and vegetation with commercial or recreational value

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Modeling RequiredModeling Required

For Class I areas, must also address “air quality-related values,” including visibility (AQRVs)

No permit can be issued if a Federal Land Manager (FLM) demonstrates to the permitting state that emissions from a proposed facility will have an adverse impact on AQRVs

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Selected Relevant Regulations Selected Relevant Regulations

40 C.F.R. § 51.166(c), (k), (l), (o), & (p)

40 C.F.R. § 51.307

40 C.F.R. Part 51, App. W

40 C.F.R. § 52.21(b)(29), (c), (k), (l), (o), & (p)

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Selected Relevant GuidanceSelected Relevant Guidance

New Source Review Workshop Manual: Prevention of Significant Deterioration and Nonattainment Area Permitting (Oct. 1990 Draft)

Federal Land Managers’ Air Quality Related Values Workgroup (FLAG) Phase I Report (December 2000)

Guidance on Deposition Analysis Thresholds (2002) (From the National Park Service & the Fish & Wildlife Service)

Interagency Workgroup on Air Quality Modeling (IWAQM) Phase 2 Summary Report and Recommendations for Modeling Long Range Transport Impacts (Dec. 1998)

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Models to UseModels to Use

For NAAQS and increment analyses, generally must follow the Guideline on Air Quality Models (40 C.F.R. Appendix W)

ISC-3 for most applications CALPUFF for distances greater than 50 km General practice has been to use ISC-3 for non-

Class I modeling and to set the SIA at 50 km CALPUFF is also recommended by the Federal

Land Managers for AQRV analyses

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Models to UseModels to Use

If the model specified by the Guideline is “inappropriate,” it can be modified or another model specified On a case-by-case or state-wide basis Requires written approval by the

Administrator Requires an opportunity for notice and

comment

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NAAQS & Increment AnalysesNAAQS & Increment Analyses

Getting Started Protocol

Address all aspects of the modeling Get it approved

Preliminary modeling Determine if exceed thresholds so preconstruction

monitoring and refined modeling is required Determine the SIAs for refined modeling Need to know if a short-term limit (3-hr or 24-hr) for SO2

will be required as it will affect the SIA

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NAAQS & Increment AnalysesNAAQS & Increment Analyses

Preconstruction monitoring If request approval to use existing data

remember to include ozone Refined modeling

Grid should identify highest impacts Annual – maximum annual mean Short-term – high-second-high

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NAAQS & Increment AnalysesNAAQS & Increment Analyses

Adequacy of inventory can be a concern NAAQS and Increment inventories are not the

same NAAQS – all sources modeled using their potential emissions Increment – sources modeled depend on whether minor

source baseline has been triggered and can use actual emissions based on two years of data

Violations may be modeled in attainment areas Culpability analysis required to determine if

causing or contributing to the modeled violation

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NAAQS & Increment AnalysesNAAQS & Increment Analyses

Other issues Methods to model ozone or PM2.5 from a

single source must be selected on a case-by-case basis

Typically single-source ozone modeling not required but look for regional modeling to include in the record

8-hr Ozone and PM2.5 NAAQS have yet to be fully implemented

Currently there are no increments for ozone or PM2.5

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Adverse Impact – Per FLMsAdverse Impact – Per FLMs

“An unacceptable effect, as identified by an FLM, that results from current, or would result from predicted, deterioration of air quality in a Federal Class I or Class II area. A determination of unacceptable effect shall be made on a case-by-case basis for each area taking into account existing air quality conditions. It should be based on a demonstration that the current or predicted deterioration of air quality will cause or contribute to a diminishment of the area’s national significance, impairment of the structure and functioning of the area’s ecosystem, or impairment of the quality of the visitor experience in the area.”

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AQRV Analysis -VisibilityAQRV Analysis -Visibility

Visibility Impairment – “[A]ny humanly perceptible change in visibility (light extinction, visual range, contrast, coloration) from that which would have existed under natural conditions.”

Significant Impairment – “[V]isibility impairment which, in the judgment of the Administrator, interferes with the management, protection, preservation, or enjoyment of the visitor’s visual experience.”

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AQRV Analysis - VisibilityAQRV Analysis - Visibility

Case-by-case analysis, taking into account Geographic extent of impairment Duration of impairment Frequency of impairment Time of impairment Correlation with times of visitor use Frequency and timing of natural conditions

that impair visibility

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Visibility Impairment - FLMsVisibility Impairment - FLMs

Use the CALPUFF model to conduct a single-source contribution analysis MESOPUFF II chemistry option Use hourly relative humidity Use default ammonia background levels Using the maximum predicted 24-hr values

for SO4, NO3, and HNO3, calculate extinction coefficients for each pollutant

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Visibility Impairment - FLMsVisibility Impairment - FLMs

Compare to natural conditions FLMs want a comparison to clean

background visibility Generally compare to the average 24-hour

extinction values for the 20% cleanest conditions from the IMPROVE monitoring network

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Visibility Impairment- FLMsVisibility Impairment- FLMs

If the estimated single-source contribution to impairment is <0.4% each day, the FLM will not object or require further analysis.

If the estimated single-source contribution to impairment is 10% on any day, the FLM is likely to object to the permit

If, as is usually the case, no cumulative impact analysis exists and the source’s contribution to extinction is <5.0% on all days, the FLM will likely not object to the permit

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Visibility Impairment -FLMsVisibility Impairment -FLMs

In other situations, the FLM may ask for a cumulative analysis If cumulative extinction is 10% and the

source contributes at least a 0.4% change in any period, the FLM will likely object to the permit

If the cumulative extinction is always <10%, the FLM is not likely to object to the permit

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Visibility Impairment - IssuesVisibility Impairment - Issues

Limits of human perception Consideration of weather Consideration of time of day Characterization of natural background Elevation effects Time of day Treatment of background ammonia

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Deposition Impacts - FLMsDeposition Impacts - FLMs

Deposition Analysis Thresholds have been established by the National Park Service and the Fish & Wildlife Service In the East - 0.01 kg/ha/yr N or S In the West 0.005 kg/ha/yr N or S

These may not be used by the Forest Service

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Deposition Impacts - FLMsDeposition Impacts - FLMs

A deposition impact analysis may be requested Estimate the current S and N deposition

rates at the Class I area Estimate future deposition rates Compare to screening criteria for the area

Critical loads Concern thresholds Screening level values

Exceedence may trigger a permit objection

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Ozone Impacts - FLMsOzone Impacts - FLMs

Focus is on vegetation All native species are to be protected Most sensitive species may not be known

Focus is on NOx unless an area is shown to be VOC-limited

If current ozone exposure is considered phytotoxic or damage to vegetation is seen, the FLM may seek “stricter than BACT” controls or offsets

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Additional Impact AnalysisAdditional Impact Analysis

Comparison to NAAQS may not be sufficient

Permitting agencies requesting analysis of heavy metals

May need to consider ambient background Guidance is available

A Screening Procedure for the Impacts of Air Pollution Sources on Plants, Soils, and Animals, EPA 450/2-81-078 (Dec. 12, 1980)