MPCA Citizens Board. Michael Sandusky Director Environment Analysis and Outcomes Division

Transcription

1 DEPARTMENT : POLLUTION CONTROL AGENCY DATE : September 17, 2010 SF (4/86) STATE OF MINNESOTA Office Memorandum TO : FROM : MPCA Citizens Board Michael Sandusky Director Environment Analysis and Outcomes Division PHONE : SUBJECT : Air Quality Update New EPA Rules for Criteria Pollutants and Greenhouse Gases This briefing memorandum is being provided by Minnesota Pollution Control Agency (MPCA) staff, to update the MPCA Citizens Board on a range of new air pollution policies being proposed and promulgated by the Environmental Protection Agency (EPA). These policies will have substantial impacts on the MPCA s air programs over the next one to five years, particularly in terms of modeling, monitoring, permitting, and policy development. This briefing memo begins with background information on regulation under the Clean Air Act. It then coves three specific areas of Clean Air Act Regulation: greenhouse gases in facility permitting, new ambient air quality standards, and the proposed clean air transport rule. Background: The Clean Air Act The Clean Air Act (CAA) divides responsibility for ensuring clean air between the federal and state and local governments. The federal government, through EPA, sets forth rules and standards to control air pollution. State, and sometimes local, governments are then responsible for implementation. The main components of the CAA that the MPCA deals with are emission standards, ambient air quality standards, and permitting. Modeling, monitoring, and policy development are all needed to support these areas. Emission standards limit the amount of pollution that can be emitted by mobile sources such as cars and trucks, by large stationary sources such as power plants, and by smaller area sources such as generators. MPCA primarily deals with standards for large stationary sources; mobile source emission standards can only be set by the federal government. Emission standards include National Emission Standards for Hazardous Air Pollutants (NESHAPs), which regulate air toxics, and New Source Performance Standards (NSPS), which regulate other pollutants. EPA also sets standards for allowable levels of some pollutants in the general air, to protect human health and welfare from problems caused by air pollution. These are known as the National Ambient Air Quality Standards (NAAQS). There are NAAQS set for six pollutants: carbon monoxide, lead, sulfur dioxide, nitrogen oxides, ozone, and particulate matter. States must develop and submit to EPA a plan, known as a State Implementation Plan (SIP), to ensure that they are meeting the NAAQS. Once approved by EPA, the components of the SIP become federally enforceable. MPCA also implements an air permitting program for stationary sources, both under EPA rules and under our own state authority. EPA rules set forth requirements for the permitting of large stationary sources, generally divided into two parts: operating permits for existing sources and permits for sources that are either new or expanding. The operating permit program is known as the Title V or Part 70 program. The permit program for new or expanding sources is known as New Source Review (NSR), and is also divided into two parts: nonattainment new source review, which is used in areas that do not attain the NAAQS, TDD (for hearing and speech impaired only): Printed on recycled paper containing at least 10% fibers from paper recycled by consumers

2 Page 2 and prevention of significant deterioration (PSD), which applies in all other areas. Sources that are subject to NSR permitting must go through detailed review and apply control equipment of certain stringency. (Note that Minnesota runs a combined permitting program, where operating and NSR requirements are housed in one permit. Many states issue construction permits under NSR and then separate operating permits under Part 70). Greenhouse Gases (GHGs) in Facility Permitting As the result of a lawsuit in 2007, the United States Supreme Court found that GHGs, including carbon dioxide (CO 2 ), are air pollutants covered by the Clean Air Act. This ruling allows EPA to develop rules and standards to control greenhouse gases, just as they do for other air pollutants. The ruling also started a series of events which included EPA s finding that greenhouse gases endanger public health and welfare. Eventually, this led to EPA s determination that GHGs must be regulated in facility permitting under the PSD and Part 70 programs. A major issue in Part 70 and PSD permitting is the threshold, that is, the level of emissions at which these permitting programs and their requirements apply. These thresholds were implemented so that only large stationary sources would be subject to the permitting programs. The current Part 70 permit threshold for defining a major source is 100 tons per year (tpy); for PSD, the threshold is either 100 tpy or 250 tpy, depending on the source type. Because GHGs are different than pollutants traditionally regulated under the CAA, a permit threshold of either 100 or 250 tpy for GHGs would affect thousands of sources that are not currently regulated. EPA acknowledges that regulating GHGs at the current thresholds is not practical. Therefore, EPA has promulgated a rule, called the Tailoring Rule, which tailors the federal permit programs for GHGs by establishing a different permit threshold. The new permit threshold for GHGs is 100,000 tpy, CO 2 -equivalent (CO 2 e) for a new source under both Part 70 and PSD. Modifications at existing sources under PSD have a significance threshold of 75,000 tpy, CO 2 e. PSD modifications or new sources with emissions above the significance threshold are required to conduct additional analyses, such as a Best Available Control Technology (BACT) analysis. EPA s rule changes will take effect on January 2, For the first six months, only modifications that were already subject to PSD or Part 70 due to their emissions of other pollutants will be affected. Starting on July 1, 2011, any facility with GHG emissions above the new thresholds will have to include GHGs in their permits or take enforceable permit limits to remain a non-major source by limiting their emissions to levels below the threshold. Minnesota is delegated by the EPA to run the PSD program within the state, meaning that the MPCA implements the PSD programs using the federal rules. Minnesota can therefore implement the new GHG permit threshold for PSD on the effective date of the new federal regulation. The Part 70 program is implemented in Minnesota s rules by referring to the Clean Air Act, which defines the major source permit threshold as 100 tpy. Therefore, permits for GHGs would still be required if a facility s potential emissions are 100 tpy or more. The Agency will revise Minnesota s rules to avoid regulating GHG sources below the new federal thresholds. To meet EPA s effective date of January 2, 2011, the Agency is conducting expedited rulemaking under Minn. Stat This process allows agencies to quickly adopt changes to meet federal requirements. However, rules adopted in this way are only valid for two years. The Agency will conduct normal rulemaking to make the changes permanent.

3 Page 3 Greenhouse Gas Reporting In addition, facilities with certain levels of GHG emissions will soon be subject to requirements to report their emissions. In 2009, the MPCA was directed by the Minnesota Legislature under Minnesota Statutes 216H.021 to establish a system for reporting and maintaining an inventory of greenhouse gas emissions. The specifics of the statute (Minnesota Statutes 216H.021, subdivision 2(b)(1) and (2)) require the Commissioner to design the greenhouse gas reporting system to include all Part 70 permit holders and all facilities whose annual carbon dioxide equivalent emissions exceed a limit between 10,000 and 25,000 tons as set by the Commissioner. Shortly after the Legislative direction to create a state-level greenhouse gas emission reporting system, the EPA published a final federal rule requiring the reporting of greenhouse gas emissions from specifically identified sources and sources emitting more than 25,000 metric tons of carbon dioxide equivalent. The federal reporting rule requires 2010 GHG emissions to be reported directly to EPA by March 31, In light of the EPA reporting rule, the MPCA is developing an emission inventory system that will avoid potential double-reporting by coordinating the data reported to EPA within the state greenhouse gas emission inventory. The MPCA will develop the state greenhouse gas emission inventory system through several phases, beginning with the development of a reporting rule. New National Ambient Air Quality Standards As noted above, the NAAQS are implemented to protect human health from the adverse impacts of air pollution. EPA is required to review each NAAQS every five years, to take into account any new scientific information and ensure that the NAAQS continues to provide an appropriate level of protection for human health and the environment. Between 2008 and 2012, EPA will review the NAAQS for each pollutant. In most cases, additional scientific knowledge is indicating that the standards should become more stringent. When EPA revises a NAAQS, it kicks off a state level implementation process. The setting of a new standard can have an immediate impact on facility permitting. Sources must demonstrate that they do not cause or contribute to a violation of a NAAQS and additional modeling tools may be needed to conduct this analysis. A change in the standard also often requires a change in how or where states monitor for a particular pollutant, impacting the state s overall monitoring program. In the year following a standard s being finalized, each state must analyze the available data and determine if it attains the standard, and make a recommendation to EPA to designate the state as either attainment or nonattainment with the standard. This is known as a designation recommendation. EPA reviews the recommendation and data submitted by the state and then makes an official attainment or nonattainment designation, which is published in the Federal Register. If a state is in nonattainment with a NAAQS, it must submit a State Implementation Plan (SIP) that contains control measures, such as emission limits on large sources of the relevant pollutant, which allow the state to come into attainment. Modeling must be used to demonstrate that implementing the included control measures will result in attainment. Over the past two years, EPA has revised the standards for lead, nitrogen dioxide (NO 2 ) and sulfur dioxide (SO 2 ), and announced upcoming revisions to the NAAQS for ozone and fine particulate matter (PM 2.5 ).

4 Page 4 Lead Exposure to lead is linked to a broad range of health effects, including impacts on the cardiovascular and central nervous systems. In October 2008, EPA dramatically lowered the ambient standard, from 1.5 µg/m 3 to 0.15 µg/m 3. High ambient lead concentrations are generally due to specific stationary sources. In Minnesota, one area is currently exceeding the standard. This is the area around Gopher Resources in Eagan. This area previously was in nonattainment for the old standard, but was redesignated to attainment and has been attaining the old standard. However, the area does not attain the new standard, and EPA s nonattainment designation is expected to be published in the Federal Register in November Gopher Resources has already begun to undertake controls to meet the new standard. A SIP demonstrating attainment will be due to EPA in June In addition, new ambient monitors will be required around certain sources of lead emissions, in order to determine if those areas are in attainment. NO 2 Exposure to nitrogen dioxide (NO 2 ) and nitrogen oxides (NO X ) is linked to adverse respiratory effects, such as airway inflammation. In addition, these pollutants are involved in the formation of ozone and fine particulate matter, two pollutants that are also linked to adverse respiratory effects. NO 2 is primarily produced by on road vehicles, non road engines, and fossil fuel combustion including electricity generation. Earlier this year, EPA set a new NAAQS for NO 2. The new standard became effective on April 12. Previously, the only standard for NO 2 was an annual standard of 53 parts per billion (ppb), set in Generally, standards with longer averaging times, such as annual, prevent long term exposure to detrimental levels of pollution. In the recent review and revision, EPA retained the annual standard and added a one-hour standard at a level of 100 ppb. EPA added the one-hour standard due to evidence indicating that short term exposure to peak concentrations of NO 2 can have adverse respiratory effects. EPA is particularly concerned about concentrations of NO 2 near major roadways, as studies show that pollution levels can be much higher near roadways than in other areas. To better understand patterns of NO 2 concentration, EPA is requiring additional monitoring to be conducted by the states, including near roadways. Minnesota does not have any monitors that meet the new near-roadway siting requirements established in the 2010 revision. In addition, the transition to the shorter term standard requires new modeling tools to evaluate the impact of sources and compare those impacts to the NAAQS. EPA s promulgation of implementation tools, such as those for modeling, often lags the promulgation of a new NAAQS. Therefore, an MPCA staff team has been developing interim implementation tools. By January 2012, EPA will designate areas as attaining or not attaining the standard based on data from monitors that were already in place when the standard was set. Areas where new monitors are being added will be designated as unclassifiable, meaning that not enough data exists to determine if the area is meeting the standard. This will likely be the case in Minnesota, where two near roadway monitors must be added. States must have all new required monitors in place by January Once those monitors have been operating for three years, EPA will look at the data and revise the designations for areas that were considered unclassifiable. If an area is designated nonattainment, a state will then have eighteen months to prepare a SIP that lays out how it will attain the standard. SO 2 Like NO 2, exposure to sulfur dioxide (SO 2 ) is linked to adverse respiratory effects and is involved in the formation of fine particulate matter; SO 2 is also a contributing factor to acid rain. SO 2 is primarily produced from coal combustion for electricity generation.

5 Page 5 EPA recently set a new NAAQS for SO 2, which became effective August 23, Previously, there were SO 2 NAAQS for annual average and 24-hour average concentrations, set in However, due to increased evidence that exposure to short term spikes of SO 2 could impair breathing function, especially for asthmatics, EPA set a new one-hour standard. The new one-hour standard is set at 75 ppb. Minnesota has long had a state-only one hour standard, but that standard is set at 500 ppb. Therefore, the new standard represents an 85 percent decrease. In general, EPA relies on monitoring data to determine if a state is in attainment with the NAAQS. Minnesota has two monitors for SO 2, located in the Twin Cities. These monitors show attainment with the new standard. However, high levels of SO 2 are often due to the impact of single large sources, while monitors are most appropriate for determining the impact of multiple sources on an area. In addition, the area where a large source has the highest impact (and therefore the most chance of contributing to the exceedence of a NAAQS) may not be the place where a monitor is located. Therefore, for the SO 2 NAAQS, EPA is requiring that states use both monitoring and modeling data to demonstrate that they comply with the NAAQS. States are being directed to model any sources that could cause or contribute to nonattainment with the revised NAAQS, which EPA has indicated includes any sources that emits over 100 tpy of SO 2. If such modeling shows an exceedance of the standard, the state must place enforceable conditions on the facility to ensure that the NAAQS are attained. The hybrid modeling and monitoring approach is likely to require significant resources from the MPCA s modeling group and compete for modeling resources dedicated to individual facility analyses for permitting or environmental review purposes. In addition, sources that are large emitters of SO 2 that are applying for permits will need to demonstrate that they do not cause or contribute to nonattainment of the NAAQS. At this time, the MPCA is waiting for EPA s modeling guidance (expected in early 2011), and encouraging facilities that emit over 100 tpy of SO 2 to do modeling to understand their situation with regards to the new standard. Ozone and Fine Particulate Matter Both ground level ozone and fine particulate matter (PM 2.5 ) are linked to adverse cardiovascular effects. These pollutants have also been the subject of most emerging research concerning their health effects, and hence have been reviewed and revised most frequently. In 1997, EPA set an ozone standard of 80 ppb over an eight hour averaging time. EPA conducted a review of the ozone standard in 2008, which resulted in a revised standard of 75 ppb. Immediately after the 2008 revision, concerns were raised that EPA did not properly evaluate the available information, leading EPA to promulgate a standard that was less stringent than necessary to protect public health. The new standard was challenged in court and EPA decided to reconsider the standard. EPA is expected to release the results of the reconsideration at the end of October. When EPA proposed the reconsidered standard, it offered three possible values for the new standard: 60 ppb, 65 ppb, or 70 ppb. In determining whether it meets the standard, the state must look at the three year average of the annual fourth highest daily maximum 8-hour concentration. This is known as the design value. Based on data from 2008 through August 2010, the highest design value at any monitoring site in Minnesota is 64 ppb. EPA established the nation s first PM 2.5 standard in The standard was reviewed and lowered in There are two components to the PM 2.5 standard, an annual standard and a daily or 24-hour standard. The annual standard is currently set at 15 micrograms per cubic meter (µg/m 3 ), while the daily standard is set at 35 µg/m 3. EPA is currently conducting the five year review of the 2006 PM 2.5 standard and plans to issue the final standard in the fall of 2011.

6 Page 6 Based on the documents EPA is developing during their review, it appears likely that the standard will be lowered. The most likely range is µg/m 3 for the annual standard and µg/m 3 for the daily standard. Over the past few years, annual average concentrations in the Twin Cities have been trending downward. The current highest design value in Minnesota for the annual average, using data from , is 10.9 µg/m 3. However, there have been exceedances of the daily PM 2.5 standard at two monitoring sites in St. Paul. The current highest design value in Minnesota for the 24-hour standard, using data from 2008 through March 2010, is 36.5 µg/m 3. Based on current data and the ranges EPA is considering for the revised 2011 standard, it is quite likely that at least the Twin Cities area will be in nonattainment with the 24-hour standard. Ozone and PM 2.5 are often referred to as regional air pollutants, since their formation relies on the transport of precursor emissions, often over long distances. Because of the similarities in the technical work needed to understand these pollutants, and the control strategies needed to reduce them, the MPCA has formed the Regional Air Pollutant Strategy Team. The primary focus of this team is to ensure that Minnesota attains the NAAQS for ozone and PM 2.5, and to satisfy federal requirements. This team will be looking at air quality monitoring and modeling data to understand and characterize the nature of this pollution in Minnesota. This will include providing information to support the MPCA s recommendation to EPA concerning whether Minnesota should be designated as being in nonattainment or attainment with the revised standards. The team will then go on to develop and implement control strategies, as necessary, to reduce both ozone and PM 2.5. Ultimately, this team will complete the SIP that will demonstrate to EPA how Minnesota will achieve and maintain the standards. Clean Air Transport Rule Because formation of ozone and PM 2.5 can result from distant emissions, attainment of the NAAQS for these two pollutants is highly impacted by the interstate transport of pollutants. Under Section 110(a)(2)(d) of the Clean Air Act, also sometimes referred to as the good neighbor provision, states must ensure that their SIP contains adequate provisions to prevent emissions from within their state from significantly contributing to nonattainment or interfering with the maintenance of the NAAQS in any other state. As ambient air standards become more stringent, the impact of out of state emissions becomes more critical for states struggling to attain the standards. To assist states in meeting the NAAQS, EPA has been working on a national rule to prevent transport of pollutants that contribute to nonattainment of the standards for ozone and PM 2.5. This attempt focuses on reducing emissions from each state that has a significant contribution to another state s nonattainment of or problems maintaining a NAAQS. EPA s first attempt at such a national rule was the Clean Air Interstate Rule (CAIR), promulgated in May CAIR applied only to power plants, and capped emissions of sulfur dioxide (SO 2 ) and nitrogen oxides (NO X ) in 28 eastern states, including Minnesota. It also set up a trading structure that included a new NO X allowance trading program and changes to the Title IV SO 2 Acid Rain trading program. 1 In 2008, the U.S. Court of Appeals for the District of Columbia Circuit found several flaws in CAIR, particularly stating that it did not ensure that the good neighbor provision was implemented in each state. In addition, the court ruled that EPA did not adequately respond to concerns about whether it was appropriate to include Minnesota in the rule. In December 2008 the Court remanded the rule to EPA for 1 The Acid Rain trading program began under the Clean Air Act of 1990, and is one of the oldest and most successful examples of using a cap-and-trade system in environmental regulation.

7 Page 7 reconsideration. In November 2009, application of CAIR was stayed in Minnesota. The proposed transport rule is EPA s response to the remand of CAIR. As proposed, the transport rule would cover power plants in 31 states in the Eastern U.S., including Minnesota. The goal of the transport rule is to address the interstate transport of pollutants that prevent attainment of the ozone standards set in 1997 and the PM 2.5 standards set in It also sets up a structure designed to be used to address interstate transport of pollution on an ongoing basis, as EPA continues to review and revise the NAAQS. To determine which states should be included in the rule, EPA looked at what areas of the country were projected to be in nonattainment with the NAAQS or have a problem maintaining the NAAQS in They then looked at what states had emissions that would contribute more than 1 percent of the NAAQS at the locations with the attainment problems. Minnesota is included in the rule due to our impact on the nonattainment of the PM 2.5 standards in Chicago and areas of Wisconsin and Iowa, as shown below. NAAQS EPA Threshold (1% of NAAQS) Largest MN Contribution Receptors Impacted by MN Annual PM2.5 Nonattainment 0.15 µg/m µg/m 3 Cook County, IL Annual PM2.5 Maintenance 0.15 µg/m µg/m 3 Cook County, IL Daily PM2.5 Nonattainment 0.35 µg/m µg/m 3 Milwaukee, WI (4 locations) Daily PM2.5 Maintenance 0.35 µg/m µg/m 3 Muscatine, IA Dane, WI Milwaukee, WI Waukesha, WI EPA then evaluated the types of pollution control available to sources in the contributing states at various cost levels and the resulting air quality impact of implementing all controls at a specific cost level. These two factors were used to develop an emission budget for each state and for each power plant covered by the rule, for both NO X and SO 2. Power plants will receive NO X and SO 2 allowances from EPA, equivalent to the level of emissions specified in their budgets. At the end of each year, each power plant will need to have one allowance for each ton of emissions. Power plants that reduce their emissions below the level in their budget can sell their extra allowances; power plants that cannot costeffectively reduce their emissions to the level of their budget can choose to buy extra allowances. However, trading is somewhat limited annual emissions from a state cannot exceed the state s budget plus a 10 percent buffer or variability limit. If this limit is exceeded, sources that have exceeded their budget may have to forfeit future emission allowances. In addition, states are divided into two groups based on the level of reduction needed in their SO 2 emissions. Power plants can only trade SO 2 allowances with plants located in other states of the same group. EPA plans to implement the rule through a Federal Implementation Plan (FIP), which does not require action from the states. EPA will also administer the trading program. States should have few implementation requirements; most impact is likely to be in permitting programs, as states are asked to add the requirements of the transport rule as an applicable requirement to facility permits or to permit construction of pollution control equipment to help power plants meet their budgets. EPA is expected to finalize the rule in the first half of MJS:cmbg