PUBLIC PARTICIPATION DOCUMENTS For Holland Board of Public Works Holland, Michigan

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1 STATE OF MICHIGAN Rick Snyder, Governor DEPARTMENT OF ENVIRONMENTAL QUALITY AIR QUALITY DIVISION CONSTITUTION HALL 525 WEST ALLEGAN STREET P.O. BOX LANSING, MICHIGAN PUBLIC PARTICIPATION DOCUMENTS For Holland Board of Public Works Holland, Michigan PERMIT APPLICATION NUMBER October 28, 2013

2 Holland Board of Public Works Page 1 Purpose and Summary FACT SHEET October 28, 2013 The Michigan Department of Environmental Quality (MDEQ), Air Quality Division (AQD), is proposing to act on Permit to Install (PTI) application No from Holland Board of Public Works (BPW). The permit application is for a proposed installation and operation of a new Combined Heat and Power (CHP) plant consisting of two natural gas-fired combustion turbine generators (CTGs), two heat recovery steam generators (HRSGs) equipped with natural gas-fired duct burners, one steam generator (STG), two natural gas-fired auxiliary boilers, one natural gasfired fuel heater, one natural gas-fired emergency reciprocating engine, one plume-abated wet mechanical draft cooling tower, one emergency diesel-fueled fire pump, four water and condensate storage tanks, one diesel tank, and one aqueous ammonia storage tank. The proposed project is subject to permitting requirements of the Department s Rules for Air Pollution Control and state and federal Prevention of Significant Deterioration (PSD) regulations. Prior to acting on this application, the AQD is holding a public comment period and a public hearing, if requested in writing, to allow all interested parties the opportunity to comment on the proposed PTI. All relevant information received during the comment period and hearing if held, will be considered by the decision maker prior to taking final action on the application. Background Information Holland BPW was established as a community-owned utility in They provide electricity, snowmelt, fiber broad band, and water and wastewater treatment services to the Holland community. This permit application is for a new combined heat and power plant with two natural gas-fired, combined cycle turbines/heat recovery steam generators and one steam turbine generator for a two-by-one (2x1) configuration. The proposed plant will be installed to provide electric generation, snowmelt services, and potentially hot water district heating. The proposed facility is a new stationary source, located at an existing industrial site. This project covers all equipment at the proposed facility. Proposed Facility The proposed new CHP plant will consist of the following equipment: Two natural gas-fired CTGs, rated at 554 million British thermal units per hour (MMBtu/hr) each, two HRSGs equipped with natural gas-fired duct burners, rated at 93 MMBtu/hr each, and one STG. The proposed 2x1 configuration, comprised of the two CTG/HRSG trains and the STG, will have a total nominal electric generating capacity of approximately 115 megawatts. Two natural gas-fired auxiliary boilers. One rated at 55 MMBtu/hr for station steam requirements, and one rated at 95 MMBtu/hr for a backup for snowmelt and district heating at times in which the combined cycle configuration cannot supply district energy needs. One natural gas-fired fuel heater rated at 3.7 MMBtu/hr to superheat the natural gas fuel. One natural gas-fired emergency reciprocating engine, rated at 1,000 kilowatts (kw), to charge the batteries in the uninterruptible power supply batteries. One plume-abated wet mechanical draft cooling tower with three cells to serve as the heat sink for the station. One emergency diesel-fueled fire pump, rated at 165 horsepower (hp).

3 Holland Board of Public Works Page 2 Six tanks: four water and condensate storage tanks, one diesel tank, and one aqueous ammonia storage tank. The CTG and duct burners will be permitted to operate on natural gas only. The equipment was evaluated with the duct burners continuously firing. The specific make and model for the equipment has not yet been chosen, but Holland BPW has designated that the CTG will be an aeroderivative-type turbine. The review was performed on the emissions profile of the aeroderivative design. The equipment chosen by Holland BPW will be constrained by the permit conditions, should the application be approved. The application is PSD for nitrogen oxides (NOx), carbon monoxide (CO), particulate matter (PM), particulate matter that has an aerodynamic diameter less than or equal to a nominal 10 microns (PM10), particulate matter that has an aerodynamic diameter less than or equal to a nominal 2.5 microns (PM2.5), volatile organic compounds (VOCs), and greenhouse gases (GHGs). Present Air Quality The proposed Holland BPW facility is located in Ottawa County, which is currently in attainment with the National Ambient Air Quality Standards (NAAQS) for nitrogen dioxide (NO 2 ), CO, PM10, PM2.5, ozone, sulfur dioxide (SO 2 ), and lead. There is no NAAQS for GHGs. Pollutant Emissions PSD permitting requirements are triggered if any one regulated pollutant is greater than 100 tons per year (tpy) at a fossil fuel-fired steam electric plant of more than 250 MMBtu/hr heat input. A single CTG alone has a rating of 554 MMBtu/hr, and, as seen in Table 1 below, multiple pollutants exceed 100 tpy. Once PSD permitting requirements are triggered, any regulated pollutant with emissions greater than its PSD significant emission rate, must undergo PSD review. This application is subject to PSD for NOx, CO, PM, PM10, PM2.5, VOCs, and GHGs. The proposed new CHP plant will be a new major stationary source, and, therefore, subject to the PSD Regulations in Part 18 of the Michigan Air Pollution Control Rules and 40 CFR

4 Holland Board of Public Works Page 3 The following table provides the estimated emissions for each regulated pollutant: Table 1: Project Potential Emissions Summary Pollutant Estimated PSD Significant Emissions (tpy) Emission Rate (tpy) Subject to PSD? NOx Yes CO Yes PM Yes PM Yes PM Yes VOCs Yes SO No Lead 7.29E No Fluorides Negligible 3 No Sulfuric Acid Mist Negligible 7 No Hydrogen Sulfide (H 2 S) Negligible 10 No GHGs as CO 2 e* 787,641 75,000 Yes * Carbon dioxide equivalent Key Permit Review Issues The AQD staff evaluated the proposed project to identify all state rules and federal regulations which are, or may be, applicable. The tables in Appendix 1 summarize these rules and regulations. Prevention of Significant Deterioration (PSD) Regulations The project was reviewed under the PSD rules which require Best Available Control Technology (BACT), as summarized in Appendix 2, and an air quality impact analysis for each regulated air pollutant for which the project will result in significant emissions. The pollutants subject to PSD review are NOx, CO, PM, PM10, PM2.5, VOCs, and GHGs. Federal NSPS Regulations New Source Performance Standards (NSPS) were established under Title 40 of the Code of Federal Regulations (40 CFR) Part 60. The CTG/HRSG trains are subject to the NSPS Subpart KKKK for Stationary Combustion Turbines. Auxiliary Boilers A and B are subject to the NSPS Subpart Dc for Small Industrial- Commercial-Institutional Steam Generating Units. The natural gas-fired emergency engine is subject to the NSPS Subpart JJJJ for Stationary Spark Ignition Internal Combustion Engines. The emergency, diesel-fueled fire pump is subject to the NSPS Subpart IIII for Stationary Compression Ignition Internal Combustion Engines.

5 Holland Board of Public Works Page 4 The fuel heater has a heat input capacity of 3.7 MMBtu/hr, which makes it too small to be subject to 40 CFR Part 60 Subpart D, Da, Db, and Dc. The cooling tower is not a regulated piece of equipment by itself under any NSPS. Federal NESHAP Regulations National Emission Standards for Hazardous Air Pollutants (NESHAP) were established under 40 CFR Part 63. A major source under the NESHAP is defined as potential emissions of 10 tpy for a single hazardous air pollutant (HAP) or 25 tpy for all HAPs combined. An area source has potential HAP emissions below the major source values. The total potential HAP emissions from the proposed facility will be less than 10 tpy for any single HAP and less than 25 tpy for all HAPs combined, and therefore the source is considered an area source of HAP emissions. The emergency diesel-fueled fire pump and emergency natural gas-fired engine are subject to 40 CFR Part 63 Subpart ZZZZ for reciprocating internal combustion engines at major or area sources. The only requirement for the engines is to comply with their applicable NSPS. The boilers are not subject to 40 CFR Part 63 Supart JJJJJJ because they are exclusively gas-fired. The facility is an area source and therefore 40 CFR Part 63 Subpart DDDDD (boilers), YYYY (combustion turbines), and Q (industrial cooling towers) do not apply. Rule 224 TBACT Analysis The MDEQ Rules for Air Pollution Control require that new or modified equipment that emits toxic air contaminants (TACs) must utilize the Best Available Control Technology for Toxics (T-BACT), unless the emission unit emits toxic air contaminants that are particulates or VOC and are in compliance with BACT or Lowest Achievable Emission Rate requirements. Per Rule 224(2), the engines and the boilers are excluded from the T-BACT analysis because they are subject to Part 63 NESHAPs ZZZZ and JJJJJJ, respectively. This is consistent with T-BACT for other permits. Other pieces of equipment underwent a top-down BACT analysis for VOC and PM for each emitting piece of equipment to comply with PSD regulations. The only TAC that was not covered through the PSD BACT review was ammonia, which is released during potential ammonia slip from the selective catalytic reduction (SCR) process utilized for NOx control on the CTG/HRSG units. Holland BPW stated that BACT for reduction of ammonia slip is an efficiently designed and managed SCR system, and the AQD concurred with their determination. Rule 225 Toxics Analysis The MDEQ Rules for Air Pollution Control require the ambient air concentration of TACs be compared against health-based screening levels. Holland BPW performed TAC analyses with the allowable emission rates (AER) table and with generic modeling. Most TACs were below their screening level utilizing the AER table, which is considered a conservative approach. Generic modeling takes into account more site specific parameters. The TAC with the highest predicted ambient impact from this project was formaldehyde. The modeled impact was approximately 28 percent of the initial threshold screening level (ITSL). The AQD review found that all TACs show impacts less than the established health-based screening levels and will comply with the requirements of Rule 225.

6 Holland Board of Public Works Page 5 Rule 702 VOC Emissions VOC is a PSD pollutant for this project. A top down BACT was performed for all VOC sources and was thoroughly reviewed. VOC BACT will be met and all VOC emission limits in any applicable NSPS will be met. A demonstration of compliance with PSD BACT (summarized in Appendix 2) satisfies the Rule 702 BACT requirement. Criteria Pollutants Modeling Analysis An air quality impact analysis, as required by Rules through , using computer dispersion modeling to predict the ambient air impacts was performed for NOx, CO, PM10, and PM2.5 emissions. NOx refers specifically to nitrogen monoxide and NO 2 with the larger portion being that of NO 2, a highly reactive gas, which is what the United States Environmental Protection Agency (USEPA) established air quality standards for under the CAA. Additionally, Holland BPW was granted a waiver for preconstruction ambient monitoring. Two operating scenarios were utilized in the dispersion modeling for the project and the worst case impact for each criteria pollutant, for each averaging time, was used in comparison to the maximum levels allowed. The two operating scenarios were for baseload operation and startup operation. The two emergency engines have operational restrictions of 500 hours per year each. They were modeled as intermittent sources during the baseload operation and were not included in the startup modeling. The proposed conditions contain these restrictions. The CTG/HRSG units also utilized annualized emission rates for the startup modeling. In the proposed draft there is a condition restricting the total number of startup and shutdown hours. The Significant Impact Level (SIL) analysis considers the potential emission increases from the proposed project for NO 2, CO, PM10, and PM2.5 and compares them to the SIL, as shown in Table 2, below. The impacts of CO for all averaging periods and PM10 on an annual average were determined to all be below their respective SIL. There is no SIL for PM, VOC, or GHGs, and also no NAAQS or PSD Increment. Table 2: Significant Impact Levels (SIL) Pollutant Averaging Period SIL Total Below (ug/m 3 ) Maximum SIL? Impact NO 2 1-Hour No Annual No CO 1-Hour 2, Yes 8-Hour Yes PM10 24-Hour No Annual Yes PM Hour No Annual No

7 Pollutant Holland Board of Public Works Page 6 If the results determine that the modeled ambient air impacts for each pollutant are less than their respective SIL, then no further modeling is required. If the results determine the modeled impacts exceed the SIL, then a facility-wide NAAQS and PSD Increment modeling analysis is required. The NAAQS are intended to protect public health. The analysis added the background impacts to the total facility impact, which includes additional nearby facilities (offsite sources). This summed impact is compared to the NAAQS. There are no NAAQS for PM, VOC, or GHG. Holland BPW was required to do this analysis for all pollutants above their respective SIL: NO 2, 24-hour PM10, and PM2.5. This analysis also included secondary PM2.5 from precursors of NOx and SO 2, therefore the cumulative PM2.5 primary and secondary impacts were examined for comparison with the NAAQS. The results of the NAAQS analysis are below in Table 3. Averaging Period NAAQS (ug/m 3 ) Table 3: NAAQS Analysis Secondary (ug/m 3 ) (ug/m 3 ) Facility + Offisite Sources Maximum Concentration Background Concentration Total Concentration ** (ug/m 3 ) (ug/m 3 ) 1-Hour Yes NO 2 Annual Yes PM10 24-Hour Yes 24-Hour Yes PM2.5* Annual Yes * Includes secondary PM2.5 formation. ** This is the total impact from the facility plus background. Below NAAQS?

8 Holland Board of Public Works Page 7 The PSD increments are intended to allow industrial growth in an area, while ensuring that the area will continue to meet the NAAQS. The analysis compares the total facility impact plus other increment consuming facilities nearby. There are no PSD Increments for CO, PM, VOCs, or GHGs. Holland BPW was required to do PSD Increment modeling for all pollutants above their respective SIL: NO 2 and PM2.5 for all averaging periods, and PM10 on a 24-hour averaging period. This analysis also included secondary PM2.5 from precursors of NOx and SO 2, therefore the cumulative PM2.5 primary and secondary impacts were examined for comparison with the increment. Additionally, there were no increment consuming sources relative to this source. The results of the PSD increment analysis are below in Table 4. Pollutant Averaging Period Table 4: PSD Increment Analysis PSD Facility + Secondary Increme Offisite (ug/m 3 ) nt Sources (ug/m 3 ) Maximum Concentration (ug/m 3 ) Total (ug/m 3 ) NO 2 Annual Yes PM10 24-Hour Yes PM2.5* 24-Hour Yes Annual Yes * Includes secondary PM2.5 formation. Below PSD Increment? While the facility will not directly emit ozone, the facility will emit both NOx and VOC at levels greater than 100 tpy, thus triggering the ozone ambient impact analysis requirements of 40 CFR Ground-level ozone concentrations are the result of photochemical reactions among various chemical species. The chemical species that contribute to ozone formation, referred to as ozone precursors, include NOx and VOC emissions from both anthropogenic (e.g., mobile and stationary sources) and natural sources (e.g., vegetation). The USEPA has not approved an ozone model for single source applications, nor have they provided specific guidance for completing an ambient impact analysis for ozone as it relates to PSD. Therefore, Holland BPW quantified the regional ozone formation impacts from the proposed project using a similar approach to quantifying secondary PM2.5 formation impacts and determined that the highest source impact for ozone would not be significant. Additional Impact Analysis An additional impact analysis is required for major sources or major modifications pursuant to 40 CFR Part 52.21(o) and Rule This analysis is necessary to evaluate the impacts from the proposed project for soils, vegetation, visibility and growth. The proposed project emissions are not anticipated to have a negative impact on soils, vegetation, visibility, and to have no impact on growth once construction is completed.

9 Holland Board of Public Works Page 8 Key Aspects of Draft Permit Conditions The draft permit conditions contain emission limits, material limits, process/operational restrictions, monitoring, recordkeeping, and reporting requirements necessary for an enforceable permit that meets all applicable state and federal requirements. The following is a brief discussion of the key aspects of the draft permit conditions: Emission Limits The draft permit includes emission limits for NOx, CO, PM, PM10, PM2.5, VOC, and GHGs as CO 2 e to make the permit enforceable per the rules, and to protect the air quality standards. Material Limits The draft permit only allows the combustion of pipeline quality natural gas in the CTG, HRSG duct burners, auxiliary boilers, fuel heater, and natural gas-fired engine to assure fuel quality and consistency. Pipeline quality natural gas is required to have a minimum heat input (Btu) content and maximum sulfur content which affects combustion and air emissions. For the same reasons, the draft permit limits the emergency diesel-fueled fire pump fuel to only ultra-low sulfur diesel fuel with the maximum sulfur content of 15 ppm ( percent) by weight. Process/Operational Restrictions The draft permit requires a Malfunction Abatement Plan (MAP) for the CTG/HRSG trains. Holland BPW is required to develop the plan to include a preventative maintenance program and corrective procedures in the event of an equipment malfunction or failure. Also, the draft permit requires a plan that describes how emissions will be minimized during startup and shutdown for both the auxiliary boilers and the CTG/HRSG trains. The plan shall incorporate procedures recommended by the equipment manufacturer as well as incorporate standard industry practices. For the CTG/HRSG trains, startup is defined as the period of time from synchronization to the grid (generator breaker closed) until the combustion turbine reaches steady state operation (i.e. minimum of 50% of the maximum design capacity). Shutdown is defined as that period of time from the initial lowering of the CTG output (i.e. 50% of the maximum design capacity), with the intent to shutdown, until the point at which the combustion process has stopped (generator breaker open). The CTG/HRSG units have a combined limit of 635 hours total of startup and shutdown. The draft permit includes two operating restrictions on the emergency generators. The permittee shall not operate either emergency generator for more than 500 hours each per year on a 12-month rolling time period basis as determined at the end of each calendar month. Additionally, the permittee shall install, maintain, and operate the emergency generators according to the manufacturer s written instructions, or procedures developed by the owner/operator and approved by the engine manufacturer, over the entire life of the engines.

10 Holland Board of Public Works Page 9 Emission Control Device Requirements The draft permit includes emission control device requirements for certain emission units. Emissions are controlled using both low emitting process equipment and add-on emission controls. Control technology is described in detail in the BACT discussion found in Appendix 2, and is summarized in Table 5, below. Table 5: Control Technology Summary Emission Unit Control Technology Pollutant(s) Controlled EUCOOLTWR Mist/drift eliminators Particulates EUNGENGINE Oxidation catalyst CO and VOC EUFUELTANK Conservation vent valves VOC EUCTGHRSG1, Dry low NO x burners NOx EUCTGHRSG2 Selective catalytic reduction EUCTGHRSG1, Oxidation catalyst CO and VOC EUCTGHRSG2 EUAUXBOILERA Dry low NO x burners NOx EUAUXBOILERB Dry low NO x burners, Flue gas recirculation NOx Testing and Monitoring Requirements The draft permit includes emissions testing, monitoring, and recordkeeping requirements for all emission units. Also, the sizes or capacities of the emission units are specified in the permit conditions. Fuel Heater The maximum design heat input capacity for the fuel heater shall not exceed 3.7 MMBtu/hr on a fuel heat input basis. A device to monitor and record the fuel usage rate is required. A record of the fuel usage rate is required. Records on a monthly and 12-month rolling basis of total CO 2 e mass emissions are required. Three Cell Cooling Tower The mist/drift eliminators must be maintained at a vendor-certified maximum drift rate of percent or less. Associated records must be kept. Records of PM10 and PM2.5 emission rate calculations must be kept on a monthly and 12-month rolling basis. Records of any maintenance conducted must be maintained. Emergency Natural Gas-Fired Engine A non-resettable hours meters to track the operating hours is required. The nameplate capacity shall not exceed 1000 kw. A device to monitor and record the fuel usage rate is required. Emissions testing or manufacturer certification documentation is required for NOx, CO, and VOC emission rates. Monthly and 12-month rolling calculations of emissions must be kept. A record of the fuel usage rate is required. Monitor and record the total hours of operation and the hours of operation during non-emergencies on a monthly and12-month rolling time period basis.

11 Holland Board of Public Works Page 10 Emergency Diesel-Fueled Fire Pump A non-resettable hours meters to track the operating hours is required. The nameplate capacity shall not exceed 165 hp. Emissions testing or manufacturer certification documentation is required for NOx, CO, and PM emission rates. Monthly and 12-month rolling calculations of emissions must be kept. The company shall monitor and record the total hours of operation and the hours of operation during non-emergencies on a monthly and12-month rolling time period basis. A record of the fuel usage rate is required. CTG/HRSG Trains The maximum design heat input capacity, on a fuel heat input basis, for each CTG/HRSG train shall not exceed 647 MMBtu/hr. Continuous Emission Monitoring System (CEMS) devices to monitor and record NOx and CO emissions from each CTG/HRSG, along with either oxygen or CO 2, are required. Devices to monitor and record the fuel usage rate are required. The net heat rate for both CTG/HRSGs together shall not exceed 8,361 Btu/kW-hr. A device to monitor and record the gross energy output from each CTG/HRSG is required. Testing for PM, PM10, PM2.5 and VOC emission rates from each CTG/HRSG at maximum routine operating conditions, once every five years, is required. Testing to demonstrate compliance with the net heat rate restriction for the CTG/HRSG trains together once every five years, is required. Records on an hourly and 24-hour rolling average basis of the NOx and CO concentration and mass emissions for each CTG/HRSG are required. Records on a monthly 12-month rolling total basis for CO 2 e mass emissions for each CTG/HRSG are required. Records of the hours for startup and shutdown events are required. Two Auxiliary Boilers The maximum design heat input capacity, on a fuel heat input basis, shall not exceed 55 MMBtu/hr for AUXBOILERA and shall not exceed 95 MMBtu/hr for AUXBOILERB. A device to monitor and record the fuel usage rate is required. Emissions testing is required for NOx, CO, PM, PM10, PM2.5, and VOC emission rates from each boiler at maximum routine operating conditions, once every five years and initial operation. A record of the fuel usage rate is required. Records on a monthly and 12-month rolling basis of total CO 2 e mass emissions are required.

12 Holland Board of Public Works Page 11 Federal Regulations Each of the two proposed CTG/HRSG trains will be subject to the NSPS for Stationary Combustion Turbines, 40 CFR Part 60 Subpart KKKK. Also, each auxiliary boiler will be subject to the NSPS for Small Industrial-Commercial-Institutional Steam Generating Units, 40 CFR Part 60 Subpart Dc. The emergency natural gas-fired engine will be subject to the NSPS for Stationary Spark Ignition Internal Combustion Engines, 40 CFR Part 60 Subpart JJJJ. The emergency diesel-fueled fire pump will be subject to the NSPS for Stationary Compression Ignition Internal Combustion Engines, 40 CFR Part 60 Subpart IIII. The draft permit specifies that compliance with certain permit conditions will constitute compliance with the respective NSPS for each emission unit through required emission limits, process/operational restrictions, testing or certification, monitoring/recordkeeping, and reporting. The proposed emergency engines will also be subject to the NESHAP for Stationary Reciprocating Internal Combustion Engines, 40 CFR Part 63 Subpart ZZZZ. Compliance with the requirements of NSPS JJJJ and NSPS IIII constitutes compliance with the NESHAP as the emergency generators subject to the NSPS Subparts JJJJ and IIII have no additional emission limit requirements under the NESHAP. Conclusion Based on the analyses conducted to date, the AQD staff concludes that the proposed project would comply with all applicable state and federal air quality requirements. The AQD staff also concludes that this project, as proposed, would not violate the federal NAAQS or the state and federal PSD increments. Based on these conclusions, the AQD staff has developed draft permit terms and conditions which would ensure that the proposed facility design and operation are enforceable and that sufficient monitoring, recordkeeping, and reporting would be performed by the applicant to determine compliance with these terms and conditions. If the permit application is deemed approvable, the delegated decision maker may determine a need for additional or revised conditions to address issues raised during the public participation process. If you would like additional information about this proposal, please contact Ms. Catherine Asselin, AQD, at

13 Holland Board of Public Works Page 12 State Rule R R R R to R R to R R (2)(b) R R R R and R R to R R R R Appendix 1 STATE AIR REGULATIONS Description of State Air Regulations Requires an Air Use Permit for new or modified equipment that emits, or could emit, an air pollutant or contaminant. However, there are other rules that allow smaller emission sources to be installed without a permit (see Rules through below). Rule also states that the Department can add conditions to a permit to assure the air laws are met. Outlines the permit conditions that are required by the federal Prevention of Significant Deterioration (PSD) Regulations and/or Section 112 of the Clean Air Act. Also, the same types of conditions are added to their permit when a plant is limiting their air emissions to legally avoid these federal requirements. (See the Federal Regulations table for more details on PSD.) New or modified equipment that emits toxic air contaminants must use the Best Available Control Technology for Toxics (T-BACT). The T-BACT review determines what control technology must be applied to the equipment. A T-BACT review considers energy needs, environmental and economic impacts, and other costs. T-BACT may include a change in the raw materials used, the design of the process, or add-on air pollution control equipment. This rule also includes a list of instances where other regulations apply and T-BACT is not required. The ambient air concentration of each toxic air contaminant emitted from the project must not exceed health-based screening levels. Initial Risk Screening Levels (IRSL) apply to cancer-causing effects of air contaminants and Initial Threshold Screening Levels (ITSL) apply to non-cancer effects of air contaminants. These screening levels, designed to protect public health and the environment, are developed by Air Quality Division toxicologists following methods in the rules and U.S. EPA risk assessment guidance. These rules list equipment to processes that have very low emissions and do not need to get an Air Use permit. However, these sources must meet all requirements identified in the specific rule and other rules that apply. Adopts by reference the provisions of 40 CFR to (2002) and 40 CFR to (2002), the federal hazardous air pollutant regulations governing constructed or reconstructed major sources. Limits how air emissions are allowed to look at the end of a stack. The color and intensity of the color of the emissions is called opacity. The particulate emission limits for certain sources are listed. These limits apply to both new and existing equipment. Material collected by air pollution control equipment, such as dust, must be disposed of in a manner, which does not cause more air emissions. Limit the sulfur dioxide emissions from power plants and other fuel burning equipment. Volatile organic compounds (VOCs) are a group of chemicals found in such things as paint solvents, degreasing materials, and gasoline. VOCs contribute to the formation of smog. The rules set VOC limits or work practice standards for existing equipment. The limits are based upon Reasonably Available Control Technology (RACT). RACT is required for all equipment listed in Rules through New equipment that emits VOCs is required to install the Best Available Control Technology (BACT). The technology is reviewed on a case-by-case basis. The VOC limits and/or work practice standards set for a particular piece of new equipment cannot be less restrictive than the Reasonably Available Control Technology limits for existing equipment outlined in Rules through Nitrogen oxide emission limits for larger boilers and stationary internal combustion engines are listed. Prohibits the emission of an air contaminant in quantities that cause injurious effects to human health and welfare, or prevent the comfortable enjoyment of life and property. As an example, a violation may be cited if excessive amounts of odor emissions were found to be preventing residents from enjoying outdoor activities.

14 Holland Board of Public Works Page 13 State Rule R R R R to R R to R Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) R to R and R STATE AIR REGULATIONS Description of State Air Regulations Air pollution control equipment must be installed, maintained, and operated properly. When requested by the Department, a facility must develop and submit a malfunction abatement plan (MAP). This plan is to prevent, detect, and correct malfunctions and equipment failures. A facility is required to notify the Department if a condition arises which causes emissions that exceed the allowable emission rate in a rule and/or permit. Allow the Department to request that a facility test its emissions and to approve the protocol used for these tests. The PSD rules allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the National Ambient Air Quality Standards (NAAQS). The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing the BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation. Applies to new major stationary sources and major modifications as defined in R These rules contain the permitting requirements for sources located in nonattainment areas that have the potential to emit large amounts of air pollutants. To help the area meet the NAAQS, the applicant must install equipment that achieves the Lowest Achievable Emission Rate (LAER). LAER is the lowest emission rate required by a federal rule, state rule, or by a previously issued construction permit. The applicant must also provide emission offsets, which means the applicant must remove more pollutants from the air than the proposed equipment will emit. This can be done by reducing emissions at other existing facilities. As part of its evaluation, the AQD verifies that no other similar equipment throughout the nation is required to meet a lower emission rate and verifies that proposed emission offsets are permanent and enforceable. Citation Section 109 of the Clean Air Act National Ambient Air Quality Standards (NAAQS) FEDERAL AIR REGULATIONS Description of Federal Air Regulations or Requirements The United States Environmental Protection Agency has set maximum permissible levels for seven pollutants. These NAAQS are designed to protect the public health of everyone, including the most susceptible individuals, children, the elderly, and those with chronic respiratory ailments. The seven pollutants, called the criteria pollutants, are carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter less than 10 microns (PM10), particulate matter less than 2.5 microns (PM2.5), and sulfur dioxide. Portions of Michigan are currently non-attainment for either ozone or PM2.5. Further, in Michigan, State Rules to are used to ensure the public health is protected from other compounds.

15 Holland Board of Public Works Page 14 Citation 40 CFR Prevention of Significant Deterioration (PSD) Regulations Best Available Control Technology (BACT) 40 CFR 60 New Source Performance Standards (NSPS) 40 CFR 63 National Emissions Standards for Hazardous Air Pollutants (NESHAP) Section 112 of the Clean Air Act Maximum Achievable Control Technology (MACT) Section 112g FEDERAL AIR REGULATIONS Description of Federal Air Regulations or Requirements The PSD regulations allow the installation and operation of large, new sources and the modification of existing large sources in areas that are meeting the NAAQS. The regulations define what is considered a large or significant source, or modification. In order to assure that the area will continue to meet the NAAQS, the permit applicant must demonstrate that it is installing BACT. By law, BACT must consider the economic, environmental, and energy impacts of each installation on a case-by-case basis. As a result, BACT can be different for similar facilities. In its permit application, the applicant identifies all air pollution control options available, the feasibility of these options, the effectiveness of each option, and why the option proposed represents BACT. As part of its evaluation, the Air Quality Division verifies the applicant s determination and reviews BACT determinations made for similar facilities in Michigan and throughout the nation. The United States Environmental Protection Agency has set national standards for specific sources of pollutants. These New Source Performance Standards (NSPS) apply to new or modified equipment in a particular industrial category. These NSPS set emission limits or work practice standards for over 60 categories of sources. The United States Environmental Protection Agency has set national standards for specific sources of pollutants. The National Emissions Standards for Hazardous Air Pollutants (NESHAP) (a.k.a. Maximum Achievable Control Technology (MACT) standards) apply to new or modified equipment in a particular industrial category. These NESHAPs set emission limits or work practice standards for over 100 categories of sources. In the Clean Air Act, Congress listed 189 compounds as Hazardous Air Pollutants (HAPS). For facilities which emit, or could emit, HAPS above a certain level, one of the following two requirements must be met: 1) The United States Environmental Protection Agency has established standards for specific types of sources. These Maximum Achievable Control Technology (MACT) standards are based upon the best-demonstrated control technology or practices found in similar sources. 2) For sources where a MACT standard has not been established, the level of control technology required is determined on a case-by-case basis. Notes: An Air Use Permit, sometimes called a Permit to Install, provides permission to emit air contaminants up to certain specified levels. These levels are set by state and federal law, and are set to protect health and welfare. By staying within the levels set by the permit, a facility is operating lawfully, and public health and air quality are protected. The Air Quality Division does not have the authority to regulate noise, local zoning, property values, offsite truck traffic, or lighting. These tables list the most frequently applied state and federal regulations. Not all regulations listed may be applicable in each case. Please refer to the draft permit conditions provided to determine which regulations apply.

16 Holland Board of Public Works Page 15 Appendix 2 Best Available Control Technology Analysis (Michigan Rule and 40 CFR 52.21(j)) A requirement of PSD New Source Review is a Best Available Control Technology (BACT) analysis. The topdown BACT approach per the EPA DRAFT New Source Review Workshop Manual (October 1990) was utilized. The top-down approach considers all available emission reduction options and proceeds in a five-step process as follows: 1. Identify all control technologies; 2. Eliminate technically infeasible options; 3. Rank the remaining control technologies by control effectiveness; 4. Evaluate the most effective controls and document the results; 5. Select BACT (e.g., the most effective option not rejected is BACT). Two (2) Combined Cycle Natural Gas-fired Combustion Turbine Generators (CTG) with Heat Recovery Steam Generators (HRSG) equipped with duct burners for supplemental firing Combined Cycle Combustion Turbine Generators (CTG) The CTG design proposed is an aeroderivative-type turbine. These are smaller units in comparison to the frame-type combustion turbines and have different emission profiles than the frame-type turbines. Typically, the uncontrolled emissions will be higher from an aeroderivate-type turbine. This was taken into account when BACT limits were proposed. The two (2) CTG/HRSG trains are subject to a BACT analysis for the following regulated pollutants: NOx, CO, PM, PM10, PM2.5, VOC, and GHGs (as CO 2 e). The following is a summary of the BACT analysis. BACT for NO x NOx is generated thermally when nitrogen reacts with oxygen in the combustion air in a high temperature environment, and from oxidation of organic nitrogen compounds in the fuel (fuel NO x ). Fuel properties have a significant impact on NO x formation. Pipeline quality natural gas contains free nitrogen, but no fuel bound nitrogen. Holland BPW identified several combustion and post combustion control technologies for the control of NO x emissions from each CTG/HRSG train. The following technologies were identified and evaluated: Combustion and Post Combustion Controls Dry Low-NOx Burners (DLNB) Water or steam injection Selective Catalytic Reduction (SCR) Non-Selective Catalytic Reduction (NSCR) Selective Non-Catalytic Reduction (SNCR) EMx TM (Formerly SCONOx TM ) Xonon Cool Combustion The review of each of these technologies is summarized below. Dry low-nox burners (LNB) are commonly combined with post combustion controls to achieve the lowest NOx emission rates. LNB control fuel and air mixing ratios in the burner of the turbine in order to reduce flame temperature and reduce thermal NOx formation. This technology is considered a technically feasible control alternative and will be the baseline scenario since the proposed turbines will be designed with LNB.

17 Holland Board of Public Works Page 16 Water or steam is injected into the combustion air of the turbine to increase the thermal mass of the combustion flame by dilution. Heat is dissipated and the thermal NOx produced is reduced. Water or steam injection is not compatible with dry low-nox burners, which are considered for this project; however, the technology was carried forward for further evaluation. SCR is a post combustion system that consists of an ammonia injection system and a catalytic reactor. Ammonia is injected into the flue gas where it reacts with NOx in the presence of the catalyst to form molecular nitrogen (N 2 ) and water. This reaction occurs at flue gas temperatures of 400 F to 800 F. The efficiency of the SCR system operation depends on catalyst reactivity, routine replacement of the catalyst, and maintaining a proper ammonia injection rate. This technology is considered a technically feasible control alternative. NSCR is a post combustion system that utilizes a three-way catalytic converter to reduce emissions of NOx, CO, and VOC from the flue gas. No chemical injection is necessary; unburned hydrocarbons are the NOx reducing agent. The reactions occur at flue gas temperatures of 800 F to 1,200 F and minimal oxygen content. This technology can be used in conjunction with an oxidation catalyst for further CO and VOC control. The exhaust gases from the CTG/HRSG trains will be too high in oxygen content for this control technology to be effective. This technology is not considered a technically feasible control alternative. SNCR is a post combustion system that injects ammonia or urea into combustion flue gases to form molecular nitrogen (N 2 ) and water. This reaction occurs at flue gas temperatures of 1,600 F to 2,100 F as the technology does not utilize a catalyst to promote the reaction. The NOx reduction reactions are driven by the thermal decomposition of urea or ammonia and the subsequent chemical reaction reduction of NOx. The technology is less effective at lower levels of uncontrolled NOx. The exhaust gases from the CTG typically range from 800 F to 1,100 F. This technology is not considered a technically feasible control alternative because there is not an appropriate temperature window for ammonia injection and adequate reduction of NOx in the exhaust gases. EMx TM is similar to SCR, except that NOx in the exhaust stream reacts with potassium carbonate (K 2 CO 3 ) to form potassium nitrate (KNO 3 ). This compound is reacted with hydrogen to form gaseous nitrogen (N 2 ), and regenerate the K 2 CO 3. The lower exhaust temperature required for the reactions in the EMx TM to take place is less than that of SCR (300 F verses 600 F to 800 F). The EMx TM system also provides reductions in CO emissions and to a lesser degree, reductions in VOC emissions by oxidation. This technology has not been demonstrated in practice on a larger utility CTG. Therefore, EMx TM is not considered a technically feasible control alternative for this project. Xonon Cool Combustion uses a catalyst instead of a flame in the combustion process, enabling combustion at temperatures below the threshold at which thermal NOx forms. This technology has not been demonstrated in practice on a larger utility CTG. Therefore, Xonon Cool Combustion is not considered a technically feasible control alternative for this project. NSCR, SNCR, EMx TM, and Xonon Cool Combustion were considered not technically feasible for this application. The technically feasible control technologies were ranked by control effectiveness as follows: Control System Expected Effectiveness/Control Efficiency (%) SCR with DLNB SCR with water-steam injection 97 SCR 90 DLNB Water-steam injection 75

18 Holland Board of Public Works Page 17 It is proposed that BACT for NOx is the use of SCR technology and DLNB, together with emission limits at different operating scenarios. It is necessary to include a BACT limit during steady state (normal) operation as well as during startup and shutdown, where combustion is inefficient and emission rates per unit of fuel combusted are significantly elevated compared to normal operation. At low loads, the combustors are not yet operating in lean pre-mix mode which contributes to higher NOx emission rates. During normal operation (loads greater than 50 percent of capacity), BACT is represented by an emission limit of 3 ppmv dry at 15% oxygen based on a 24-hour rolling average and 8.18 pounds per hour based on a 24-hour rolling average for each CTG/HRSG train. During SU/SD operations (loads less than 50 percent of capacity), both CTG/HRSG trains are limited to a total of 635 hours per 12-month rolling time period. BACT is represented by an emission limit of 43.7 pounds per hour during startup and 43.1 pounds per hour during shutdown, both limits are based on an operating hour. All mass emission limits are protective of NAAQS and PSD increment. Compliance with these limits will be monitored using a NOx CEMS and the exhaust gas flow rate. BACT for CO and VOCs CO and VOC emissions result from the incomplete combustion of carbonaceous fuels, such as natural gas. The primary influencing factors for CO and VOC formation are the combustion temperature, turbulence (mixing of fuel and oxygen) and the residence time in the combustion zone. Holland BPW identified combustion and post combustion control technologies for the control of CO and VOC emissions from each CTG/HRSG train. The following technologies were identified for both CO and VOC and were evaluated: Combustion and Post Combustion Controls Oxidation Catalyst Thermal Oxidation NSCR Efficient Combustion NSCR was described above in the NOx BACT discussion. The review of the rest of these technologies is summarized below. Oxidation Catalysts have been applied to combustion turbines and have demonstrated their ability to effectively reduce CO and VOC emissions. They are also commercially available from numerous vendors. A catalyst bed is utilized to oxidize CO and hydrocarbons to CO 2. This reaction can occur over a temperature range of 450 F to 1,200 F. The operating temperature, gas composition, and pressure drop across the catalyst bed are all factors that will affect the efficiency of the oxidation catalyst. This technology is considered a feasible control alternative for this project. Thermal oxidation increases the temperature of the flue gas above the auto-ignition temperature of CO and other hydrocarbons, which is 1,300 F, to induce combustion of flue gas contaminants (CO and VOC). This technology is typically designed for process streams that have high concentrations of VOC. This allows the contaminants to provide a significant portion of the fuel requirements. Relative to the entire exhaust flow, the CTG/HRSG trains will have relatively low concentrations of CO and VOCs. This technology is not considered a technically feasible control alternative for this project. Efficient combustion revolves around operating the equipment properly and must be balanced with the potential increase of NOx emissions that could occur when combustion efficiency is associated with high chamber temperatures. Modern combustion controls are able to reasonably balance this counter-acting relationship.

19 Holland Board of Public Works Page 18 Thermal oxidation and NSCR were considered not technically feasible for this application. The technically feasible control technologies were proposed as BACT and were therefore not ranked. It is proposed that BACT for CO and VOC emissions is oxidation catalyst technology and the use of good combustion control practices together with emission limits. It is necessary to include a BACT limit during steady state (normal) operation and an alternative BACT limit during startup and shutdown, where combustion is inefficient and emission rates per unit of fuel combusted are elevated compared to normal operation. At the very early stages of the startup cycle, the oxidation catalyst is technology limited and it is difficult to accurately measure CO because of specific stack O 2 conditions. During SU/SD events, the add-on oxidation catalyst control technology is not fully functional due to the exhaust gas temperature through the HRSG being less than the temperature necessary for optimal catalyst operation. However, the startup cycle for combustion equipment of this nature requires far less time than other types of combustion processes used to generate electricity. During normal operation (loads greater than 50 percent of capacity), BACT for CO is represented by an emission limit of 4 ppmv dry at 15% oxygen based on a 24-hour rolling average and 5.31 pph based on a 24-hour rolling average for each CTG/HRSG train. During SU/SD operations (loads less than 50 percent of capacity), both CTG/HRSG trains are limited to 635 hours per 12-month rolling time period. BACT, for each CTG/HRSG train, is represented by an emission limit of pph during startup and pph during shutdown, both limits are based on an operating hour. Compliance with the CO limits will be monitored using a CO and diluent CEMS, and the exhaust gas flow rate. For purposes of facilitating emissions measurements during periods of startup and shutdown, the diluent capping procedures of Section of 40 CFR Part 75, Appendix F, may be utilized. During normal operation, BACT for VOC is represented by an emission limit of 4 ppmv dry at 15% oxygen for each CTG/HRSG train. During SU/SD operations, both CTG/HRSG trains are limited to 635 hours per 12- month rolling time period. BACT, for each CTG/HRSG train, is represented by an emission limit of pph during startup and pph during shutdown, both limits are based on an operating hour. Compliance with the VOC limits will be determined through stack testing, and record keeping. Averaging times for the normal operation emission limit will be based on testing protocols. Michigan Air Pollution Control Rule (5) requires that Minimum sample time shall be 60 minutes, which may be continuous or a combination of shorter sampling periods for sources that operate in a cyclic manner. Compliance with the VOC emission limit will be based on a short-term average. BACT for PM, PM10, and PM2.5 Particulate matter emissions from the combustion of natural gas depends on suspended particles in the combustion air, sulfates formed due to sulfur in the fuel, the products of incomplete combustion such as unburned carbon, and metallic oxides from degradation of internal turbine components. PM exists as a solid or liquid at temperatures of approximately 250 F and is considered the filterable or front half of particulate matter. PM10 and PM2.5 each includes both the filterable and condensable fraction of particulate matter and both were evaluated simultaneously. The condensable portion of PM10 and PM2.5 is particulate matter that exists as a solid or liquid at temperatures less than 32 F. It includes substances such as nitrogen compounds and sulfur compounds, which are in a vapor state at high temperatures, acid gases, VOCs, etc., but does not include condensed water vapor. Holland BPW identified several combustion and post combustion control technologies for the control of PM, PM10, and PM2.5 emissions. The following technologies were identified and evaluated: