July 2014 - ALL4

Data Requirements Rule (DRR): An Update on the 1-Hour SO2 NAAQS

Back in July 2010, the United States Environmental Protection Agency (U.S. EPA) published a final 1-hour sulfur dioxide (SO₂) National Ambient Air Quality Standard (NAAQS). In his blog, Colin McCall outlined the potential implications of the new SO₂ NAAQS, pointing out that while “the final [SO₂] NAAQS as established was extremely stringent to nobody’s surprise, the way U.S. EPA proposed to implement the standard was quite surprising, however.” The surprise at the time was in the proposal to use air dispersion modeling to establish attainment and nonattainment designations for the 1-hour NAAQS. After a winding road that included a pause in the process, stakeholder meetings, and much discussion around how attainment designations should look, the U.S. EPA has recently been providing guidance on how state and local air agencies should characterize air quality. For a detailed look into the SO₂ NAAQS Implementation as of March 2014, check out Colin’s blog, here.

On April 17, 2014, the U.S. EPA proposed the Data Requirements Rule (DRR) that directs air agencies to provide air quality data by using a combination of ambient air quality monitoring and air quality dispersion modeling to characterize current air quality in specific areas. These areas do not have sufficient air quality monitoring data in place right now to identify maximum 1-hour SO₂ concentrations. With the public comment period having come to a close on July 14, 2014, it is time to look closely into the rule itself and reexamine its possible implications. While there is still uncertainty as to how U.S. EPA will address public comments in the final DRR, one (1) thing is for certain: facilities subject to a specific evaluation under the rule will bear the cost of either dispersion modeling or the implementation of an enhanced monitoring network.

In the proposed rule, the U.S. EPA proposed a schedule for state and local air agencies to provide air quality data to the U.S. EPA. The U.S EPA’s proposal provides state and local air agencies with two (2) options to characterize air quality:

Dispersion modeling of actual source emissions, or
Appropriately sited ambient air quality monitors.

The data would then be used by the U.S. EPA in two (2) future rounds of NAAQS area designations in 2017 (for facilities/areas where dispersion modeling is used) and 2020 (for facilities/areas where new ambient monitors are used).

The DRR also includes options for emissions thresholds in order to identify the facilities around which air agencies would need to characterize SO₂ air quality. These options would include lower annual emissions thresholds for facilities located in metropolitan areas greater than 1 million in population and higher emission thresholds for facilities outside of those areas. The options comprise:

Sources greater than 1,000 tons per year of SO₂ in metro areas with a population of greater than 1 million, and sources greater than 2,000 tons everywhere else.
Sources greater than 2,000 tons per year of SO₂ in metro areas with a population of greater than 1 million, and sources greater than 5,000 tons everywhere else.
Sources greater than 3,000 tons per year of SO₂ in metro areas with a population of greater than 1 million, and sources greater than 10,000 tons everywhere else.

The U.S. EPA is proposing Option 1, which would require ambient air quality characterization around sources with emissions greater than 1,000 tons per year that are located within a core based statistical area (CBSA) having 1,000,000 or more persons, and around sources with emissions greater than 2,000 tons per year located outside CBSAs having 1,000,000 or more persons. Based upon 2011 emissions data and 2012 census estimates, Option 1 would identify 443 sources that account for 75% of the total SO₂ emissions inventory located in areas currently not designated. Facilities with annual emissions in excess of the Option 1 thresholds should be gaining an understanding of how the DRR will impact them. However, smaller facilities located nearby facilities defined in the options above may also be included in the evaluation, so understanding your neighbors and their emissions profiles is equally important.

Now is the time for those facilities that will be impacted by the DRR to start considering how to address the ensuing modeling and monitoring costs and what compliance approach is the right fit. The dispersion modeling could result in the establishment of new short-term emission limits that are based on modeled compliance with the 1-hour NAAQS. If dispersion modeling isn’t used, those facilities will be largely responsible for the funding, installation, operation, and maintenance of a new ambient monitor or monitors and the resulting logistical considerations that go with it. Preliminary normalized dispersion modeling can be conducted to determine the locations and number of monitors that could be recommended by the state agency after finalization of the DRR. ALL4 would be happy to assist you in evaluating the recommendations outlined here, so feel free to contact Colin McCall at (678) 460-0324 x206 with questions about this article or about the SO₂ NAAQS in general.

GHG-Only Permitting Changes – Do You Know What Your State is Doing?

On June 23, 2014, the U.S. Supreme Court reversed the course of part of the U.S. Environmental Protection Agency’s (U.S. EPA’s) Greenhouse Gas (GHG) Tailoring Rule, deciding that Prevention of Significant Deterioration (PSD) construction permits or Title V operating permits are not required solely due to emissions of GHGs. In other words, GHGs are only regulated under these programs if a facility triggers permitting due to emissions of other pollutants (e.g., sulfur dioxide, nitrogen oxides, particulate matter). This ruling generally is considered to be a win for industry – in ALL4’s world, we have been involved in several Boiler MACT permitting projects that triggered PSD permitting solely because of GHG emissions. These projects (which occurred in multiple states) are already in various stages of revision or rescission because of the June 2014 ruling.

As the dust continues to settle from this major shakeup, U.S. EPA issued a memorandum on July 24, 2014 in an attempt to provide clarity and direction moving forward with the role of GHG emissions in PSD and Title V permitting. In this memorandum, U.S. EPA states that it will “act consistent with its understanding of the Supreme Court’s decision.” Namely, this confirms that U.S. EPA will no longer require PSD or Title V permits for sources in which GHG emissions are the only pollutant that exceeds the applicable permitting thresholds under those programs. Furthermore, U.S. EPA notes that it believes that sources with final PSD or Title V permits that were obtained due only to GHG emissions can ultimately remove the GHG limitations and obtain a minor source permit.

There are states (such as Georgia) in which their laws automatically modify state permitting requirements based on the Supreme Court’s decision. Georgia already has issued a policy regarding this very aspect of its rules, and it is moving forward with its intent to modify GHG-based only permits. However, in this memorandum, U.S. EPA believes that, despite the Supreme Court ruling, states can retain GHG-only permitting requirements, which can cause major permitting challenges for companies with facilities in multiple states. U.S. EPA has called for its regional offices to work with state and local permitting authorities regarding plans to implement the Supreme Court’s decision. Therefore, if you have been issued a permit solely because of GHG emissions, or are planning projects in which GHG emissions may be the only pollutant to trigger PSD or Title V permitting, please contact your permitting authority for guidance and direction.

This memorandum also addressed the emissions threshold for PSD permitting purposes for projects that require PSD permitting for pollutants other than GHGs. For projects in which pollutants other than GHGs will exceed PSD permitting thresholds, GHGs will be regulated only if the net emissions increase of GHGs is more than 75,000 tons per year of carbon dioxide equivalent (CO₂e). This threshold was not changed due to the Supreme Court ruling, though modifying the threshold is open for consideration according to U.S. EPA.

Of note, the Supreme Court ruling did not directly address the biogenic deferral, which was overturned on July 12, 2013 but has not taken effect due to ongoing litigation. Though the original Tailoring Rule biogenic deferral period expired on July 21, 2014, U.S. EPA again recommends consulting with state and local authorities about their specific implementation of the biogenic deferral for permitting activities.

Pennsylvania Cat 38 Exemption Recordkeeping and Compliance Demonstration Requirements

The Pennsylvania Department of Environmental Protection (PADEP) Categorical 38 (Cat 38) Exemption has allowed certain oil and gas exploration, development, and production facilities and associated equipment and operations to avoid the more rigorous plan approval and air permitting requirements under 25 PA Code Chapter 127. However, did you realize that there are specific and on-going recordkeeping and compliance demonstration requirements that need to be met in order to continue to qualify for the Cat 38 Exemption? Please use the following link for more information on ALL4’s streamlined compliance check-up services for your potentially affected operations.

Year 1 at ALL4

This week marks the completion of my first year at ALL4 (and my first year in the “real world”). So far, I’ve been able to hang out with Oompa Loompas, meet the most important man in Pennsylvania, sample exquisite Tuscan wines, and star in the sequel of Wall-E! Okay, maybe I’m exaggerating a little, but I did have a pretty amazing year…

Almost immediately when I began working at ALL4, I took part in several “Recess Events” ranging from a kickball game (turns out Dan Dix is a much better runner than outfielder…) to a fancy wine tasting, and it didn’t take me long to realize that the people around me were quickly becoming more than just co-workers. I was also given the opportunity to assist in recruiting students from my Alma Mater, Villanova University. Working for ALL4 has exposed me to a variety of responsibilities and opportunities very early in my career.

I’ve been lucky enough to have had more than one of those, “I’ll tell my Grandkids this story” moments. One of my favorite events was attending Pennsylvania’s 2013 Best Places to Work awards dinner. I was having a great time cheering on the company with my colleagues when Kevin Hickey, one of our four (4) principals, leaned over and asked “Would you mind getting that award for us?” I was shocked (and flattered) and before I knew it I was on stage accepting the award for Third Best Company in PA and shaking hands with Pennsylvania Governor Tom Corbett! Soon after, I had the opportunity to tour the facility of one of our clients, Blommer Chocolate Company, with Tom Saylor. Blommer is the largest cocoa processor in North America, and although I got my hopes up (and yours), they didn’t actually have Oompa Loompas running around. However, they do have amazing chocolate and gave us fresh samples right off the line! Another incredible facility I was lucky enough to visit is the Mercedes-Benz plant near Tuscaloosa, AL. As an engineer (read: nerd), I was enthralled by the paint shop which is powered by high-tech processes and adorable robots (and of course I couldn’t help but picture Wall-E)! We were even taken for a trip around the off-road track which is complete with a 70-degree drop (the equivalent of many roller coasters). It was terrifying and completely awesome.

Another opportunity that was presented by ALL4 was the chance to make a bold change and relocate to Atlanta. Having grown up in Allentown, PA and gone to school in Philadelphia, this would be a pretty big (and exciting!) change for me. Despite my nerves, I went for it and the relocation has already provided me with so many career, travel, and growth opportunities. Since moving this past January, I’ve traveled to some incredibly historic cities including New Orleans and Charleston. I’ve met countless new people and branched out of my comfort zone, and I became part of another tight-knit ALL4 family – the Atlanta Office.

I feel so lucky to be surrounded by such amazing people and to have been afforded such incredible opportunities so early in my career, and I can’t wait to see what the next year has in store for me!

U.S. EPA Proposes Additional Standards of Performance for Municipal Solid Waste Landfills

On July 17, 2014, the U.S. Environmental Protection Agency (U.S. EPA) issued the results of its initial review of the existing New Source Performance Standards (NSPS) for municipal solid waste (MSW) landfills (40 CFR Part 60, Subpart WWW). The review was conducted as part of its required process to review an NSPS every eight (8) years, and to revise the standard, if necessary, to reflect improvements in methods for reducing emissions. In addition, this initial review was conducted in response to a lawsuit filed against U.S. EPA for failure to review Subpart WWW by the statutorily required deadline. Based on this review, U.S. EPA has determined that several changes to Subpart WWW were warranted, and as such, U.S. EPA has proposed a new NSPS (40 CFR Part 60, Subpart XXX) for these proposed changes. The proposed Subpart XXX will apply to MSW landfills that are constructed, reconstructed, or modified after July 17, 2014. Subpart WWW-affected landfills that do not meet these criteria will continue to comply with Subpart WWW.

The proposed Subpart XXX includes the following provisions:

Threshold for installing controls:

Under the Subpart WWW, an MSW landfill that has a design capacity of 2.5 million megagrams (Mg) and 2.5 million cubic meters (m³) must install, operate, and maintain a landfill gas collection control system within 30 months after landfill gas emissions reach or exceed a level of 50 Mg of non-methane organic compounds (NMOC) per year. (A megagram is also known as a metric ton, which is equal to 1.1 U.S. short tons or about 2,205 pounds.) Under Subpart XXX, U.S. EPA proposes to lower the NMOC emissions threshold from 50 Mg per year to 40 Mg per year for landfills that have a design capacity of 2.5 million Mg and 2.5 million m³. Once this threshold is met, the landfill will have 30 months to install, operate, and maintain a landfill gas collection control system.

Landfill gas treatment uses:

Proposed Subpart XXX clarifies that treated landfill gas can be used for purposes other than solely as fuel for a stationary combustion device. Under Subpart XXX, landfill gas use options include vehicle fuel, production of high heating value content pipeline gas, and use as a raw material in chemical manufacturing.

Landfill gas treatment definition:

U.S. EPA proposes to clarify the criteria for filtration and dewatering as landfill gas treatment techniques. Subpart XXX will require a landfill gas water dew point of at least 45°F (rather than lowered by at least 20°F) and a temperature measurement device to be located at or immediately after the direct coalescing filter or other direct contact moisture removal device. Monitoring, recordkeeping, and reporting requirements would be updated to be consistent with the proposed definition.

Startup, Shutdown, and Malfunction:

U.S. EPA proposes that the standards set forth in proposed Subpart XXX are applicable at all times, including periods of startup, shutdown, and malfunction. In addition, to evaluate the severity of an emissions exceedance for periods when the gas collection system or a control device is not operating, U.S. EPA is proposing to add a recordkeeping and reporting requirement to estimate emissions during such periods.

Finally, U.S. EPA has proposed other clarifications in Subpart XXX such as criteria for exempting areas from collection and control, adding criteria for when an affected source must update its design plan, and clarifying when owners or operators must submit corrective action timeline requests.

At this time, the existing and proposed MSW Landfills NSPS do not directly regulate methane emissions. The reduction of NMOC emissions will have a co-benefit of reducing methane emissions. However, U.S. EPA is currently reviewing the MSW Landfills NSPS in light of the President’s 2013 Climate Action Plan (including its follow-up Methane Strategy document published in 2014) and is exploring opportunities to achieve additional reductions in emissions, including methane emissions.

Public comments on the proposed subpart will be accepted until September 15, 2014 and a public hearing will be held on August 12, 2014 in Washington, DC.

U.S. EPA Defends Its Major Source Boiler MACT Floor Calculation Methodology

Those of you following the saga of the Major Source Boiler MACT remand (see our March 17, 2014 and May 22, 2014 blogs for a refresher) will be interested to learn that latest milestone in the process occurred on July 14, 2014. Back in May 2014, the U.S. Environmental Protection Agency (U.S. EPA) was granted 60 days to provide further explanation to the U.S. Court of Appeals for the District of Columbia Circuit on the use of the upper prediction limit (UPL) statistical method to set the emission standards for certain subcategories in the Major Source Boiler MACT rule. On July 14, 2014, U.S. EPA submitted its formal response in the form of a 16 page document that provides a qualitative and quantitative justification of the validity of the UPL methodology.

As stated in the U.S. EPA’s response, the UPL is a value, calculated from a dataset, that identifies the average emissions level that a source or group of sources is meeting and would be expected to meet a specified percent of the time that the source is operating (99% in this case of Major Source Boiler MACT). U.S. EPA further states that “the 99% UPL is the level of emissions that we are 99% confident is achieved by the average source represented in a dataset over a long-term period based on its previous, measured performance history as reflected in short-term stack test data.” Furthermore, “the UPL predicts the level of emissions that the sources upon which the floor is based are expected to meet over time, considering both the average emissions level achieved as well as emissions variability and the uncertainty that exists in the determination of emissions variability given the available, short-term data.” U.S. EPA contends that the UPL methodology is preferred and appropriate because it considers variations in material inputs (such as fuels), control device performance, and operating unit performance (changes in process conditions that impact emissions). U.S. EPA states that average emissions performance [Section 112(d)(3) of the Clean Air Act] is not meant to be the average of three (3) stack test run, but rather the average emissions over time (long-term rather than a snap shot stack test).

U.S. EPA’s position is presented in a reasonable and logical matter. I will leave an evaluation of the statistical appropriateness of the UPL from a mathematical perspective to those that are more familiar with the nuances of statistical methods than me. At a minimum, it certainly will be interesting to read the Court’s response to this filing, particularly as we near the start of briefings in mid-August.

Environmental Consulting Firms: Is bigger really better?

We recently warmly welcomed Jennifer Flannery and Renee Cheng as our newest ALL4 members. Both women chose to leave a larger environmental consulting firm for ALL4, a “smaller” (hmm, for now) consulting company; a decision that many consultants may consider throughout the course of their career. It’s easy for people to talk the talk about company culture, and what it’s like to work at an organization, but how many walk the walk? I sat down with Jennifer and Renee to get their candid feedback on working at ALL4… and what it’s really like.

Were you specifically looking to move to a smaller firm? What attracted you to ALL4?

Jennifer: I knew I was ready for a change and a new challenge in life, but was not specifically looking to join a smaller firm. I was thoroughly impressed by the ALL4 business plan including financial, marketing and sales, and growth projections. I was further impressed by the transparent managerial style in sharing all economic elements of the company with the staff. ALL4 is an award-winning, nationally-recognized company, with a great outlook for the future. I ultimately decided to join ALL4 because I was impressed with their culture, entrepreneurial spirit, and variety of opportunities available to me.

Renee: I wasn’t specifically looking for a smaller firm. I was looking for a work environment that would allow me more flexibility and support to take care of my clients, to grow business, and to do challenging work. I have found that at ALL4. I was also attracted to ALL4 because of the scope of consulting services ALL4 provides, its diverse client base, the commitment to quality work, and the entrepreneurial spirit of the company. I did have some concerns initially when considering the possible difference in financial stability between ALL4 and the larger firm where I was working. But, after multiple discussions with ALL4 principals, I believe that ALL4 is already a successful company, and that ALL4 has a strong business plan in place to continue this success and grow the company.

You came to ALL4 from a much larger consulting firm. How is working for ALL4 different?

Jennifer: There are advantages and disadvantages to working at any size firm. Smaller firms, such as ALL4, are more requiring of people to be flexible, take on a number of different responsibilities, and be able to pull their own weight in order for the firm to be successful. The staff here at ALL4 is closer to the decision making process than at a larger firm, and although the company’s leadership may not always agree with what is said, they will provide the time to listen to ideas and give reasonable requests a try. However, the major difference I have seen at ALL4 is the culture. From my short time here, I have seen that the staff (from those fresh out of college to seasoned vets) are very knowledgeable, have a very strong work ethic, are very team oriented, and are willing to share. I have worked elsewhere with individuals with those qualities, but have never worked in an office where that culture is so vehemently apparent and rewarded!

Renee: At my previous company, I was part of a great group of people, but we were one small air consulting group within a larger local office that provided many different services, which was part of a larger regional office that provided even more different services, and so on. At ALL4, I feel like an integral part of the company as a whole.

Were there any surprises after you joined the ALL4 team?

Jennifer: I was pleasantly surprised by the teamwork approach. Although I heard about this approach during the interviewing process, it was not until I actually witnessed not only staff asking other staff if there is anything they can do before they leave, but actually following through and staying to help until the job was done, which galvanized this approach for me. I even witnessed this approach on a senior level when several senior staff members offered to drive an hour and half out of their way to help a junior staff member out with a client deliverable. Quite impressive!

Renee: I was surprised at how quickly I felt like part of the company and how quickly I became actively engaged in managing projects and providing support on internal company initiatives. The onboarding process at my former company took a lot more time. I have also been pleasantly surprised by how much ALL4 invests in providing internal and external training opportunities for all employees.

What’s the culture like and how is it different from your previous consulting firm?

Jennifer: ALL4’s culture is said to be built on accomplishment, respect, accountability, and teamwork. As mentioned above, I truly believe all aspects of this statement to be true. ALL4’s culture prides itself on taking great measures to reinforce these attributes. I found it unique that during our routine Monday morning staff meeting that “high fives” are given to staff members who have really excelled the previous week – this highlights both a sense of accomplishment and teamwork. The Quality Assurance process also promotes accomplishment and teamwork. Client deliverables are not only reviewed by the Project Manager, but are also peer reviewed and reviewed by a RegTech staff member. This multi-faceted approach allows for a better final product for our clients. Accountability and respect are shown through ALL4’s feedback procedure. It is in the culture at ALL4 that everyone wants to grow and learn and what better way than through real-time colleague feedback. This is something I find specific to ALL4’s culture; previous firms I have worked for typically allowed only for yearly feedback.

Renee: At ALL4, I feel like an integral part of the company as a whole. There is a foundation of strong leadership and the principals appreciate and consider input from all members of the organization. ALL4 also provides the flexibility to become engaged in other areas of business operations that may be of personal interest, such as marketing, sales, or mentoring.

What are some misconceptions about who we are, who our clients are, and what we do?

Jennifer: The biggest misconception I had about ALL4 was that their resources to compete with larger firms were limited, with the implication being that a firm like ALL4 was limited to smaller opportunities. I have found this, in fact, to be untrue. ALL4’s proactive, contemporaneous, research-based approach keeps its staff abreast of new regulations, trends, and upcoming impacts to the air industry. As seen on the website, in blog posts, or 4 The Record articles, ALL4 is committed to being ahead of the curve and in the know. This, in addition to the knowledgeable staff, enables ALL4 to be competitive for any size opportunity and, as mentioned above, ALL4 has worked, and continues to work, with companies of all sizes.

Renee: I think a typical misconception about ALL4 is that it can only do simple and routine consulting work for small sized companies. In reality, ALL4 has a diverse client base covering many different manufacturing sectors and provides a wide range of consulting services.

What advice would you give other consultants who are considering moving firms?

Jennifer: My advice would be to make sure you do your own research, thoroughly review ALL4’s website, and do not always believe what you hear. If you are looking for a new challenge and believe you would fit into the culture at ALL4, set up that initial call or meeting and you might be pleasantly surprised.

Renee: I’d recommend that you seriously consider how much ownership you want to take in driving your own career. At larger companies, it can be easy to get lost in the crowd or even end up simply “treading water” and stay in one place for quite awhile. I think a company like ALL4, which is growing and has a strong entrepreneurial culture, can provide a consultant with great opportunities to take their career to wherever they want to go!

We are currently looking for Project Managers at our Corporate Headquarters in Philadelphia, Pennsylvania and also in our Atlanta, Georgia and Houston, Texas offices.

Want to learn more about Jennifer and Renee’s experience and even their hidden talents? Visit their profiles: Jennifer and Renee.

Proposed GHG Standards – Comments on Standards for New Sources

Although the deadline to submit public comments was November 29, 2013, the September 2013 proposed rule for new EGUs continues to receive its fair share of criticism amongst industry, political groups, and environmentalists alike. One argument at play is that a bifurcated approach of assigning standards to separate types emissions sources could limit U.S. EPA’s ability to ever allow cross-category trading for existing sources. For this reason, we may see U.S. EPA return to its original approach of issuing a single standard in the finalized version of the rule. Utilities have commented that the rule is “fatally flawed” in that it does not satisfy a Clean Air Act (CAA) mandate that the rule must ensure emissions will be reduced – the rule mandates carbon capture but it does not actually guarantee cuts in GHGs generated at facilities. Grid reliability is another concern. Non-utility industry groups fear that U.S. EPA’s proposal to require novel CCS technology sets a negative precedent that, if upheld following an expected legal challenge, would allow U.S. EPA to impose similar “stretch” technologies on other industry sectors. The oil and gas sector has even been vocal in pointing out that the CCS provisions of the proposed rule have created hurdles for well operators to accept CO₂ streams from coal-fired power plants, making it less advantageous than using CO₂ from other sources, which could present compliance issues for new power plants with fewer options for compliance.

A major argument concerning the CCS requirement of the proposed rule has been that the Bush-era Energy Policy Act of 2005 (EPAct) undermines key parts of the proposed rule in requiring new coal-fired power plants to install CCS technology. The EPAct specifically prohibits U.S. EPA from citing a technology as being “adequately demonstrated” if the technology has only been used at a facility receiving assistance under the Department of Energy’s Clean Coal Power Initiative (CCPI), or at a facility that is receiving an advanced coal project tax credit. The power plants with CCS that are cited in the proposed NSPS as the justification for CCS being ‘adequately demonstrated’ all received such assistance. Therefore, one of the beliefs of the opponents of the proposed new rule is that U.S. EPA has proposed standards which are beyond its authority. To further complicate the discussion around the CCS requirement, U.S. EPA’s Science Advisory Board (SAB) has voted unanimously not to review the new rule, on the grounds that the CCS requirement falls outside the rule’s scope and that many of the scientific concerns regarding CCS may be policy and legal matters, instead of an element of the proposed rule that would be under the jurisdiction of SAB review. U.S. EPA has formally refuted the claims relating to the EPAct, saying that its basis for requiring CCS was not based “solely” on the few coal utility projects affected by constraints in this energy law.

U.S. EPA has not recently commented on when it intends to finalize the proposed rule for new EGUs, but some believe U.S. EPA is planning to intentionally delay finalizing it until after completion of the 2014 elections. If history repeats itself, and U.S. EPA has not finalized the proposed rule by January 8, 2015, we will likely see U.S. EPA be required to withdrawal the second proposed rule for not finalizing it within one (1) year of its proposal, and U.S. EPA would be required to re-propose, accept comments on, and finalize yet another new version of this rule.

U.S. EPA’s Proposed Greenhouse Gas Standards for the Utility Industry – How Powerful Are They?

A major event in the Climate Change arena occurred on March 27, 2012 when, for the first time, U.S. EPA proposed Standards of Performance for New Stationary Sources (NSPS) for emissions of carbon dioxide (CO2). The proposed standards were specific to new affected fossil fuel-fired electric utility generating units (EGUs) and were the direct result of two (2) settlement agreements proposed concurrently by U.S. EPA on December 30, 2010. The settlement agreements were proposed in order to resolve threatened litigation filed by numerous states concerning February 2006 amendments to 40 CFR Part 60, Subpart Da (Standards of Performance for Electric Utility Steam Generating Units, Industrial-Commercial-Institutional Steam Generating Units, and Small Industrial-Commercial-Institutional Steam Generating Units) and the June 2008 final rule entitled “Standards of Performance for Petroleum Refineries.” U.S. EPA retained the definition of EGUs previously established under Subpart Da that differentiates between EGUs (sources used primarily for generating electricity for sale to the grid) and non-EGUs (sources primarily used to generate steam and/or electricity for on-site use). In their originally filed petitions, the states made the claim that neither of the cited rules established standards of performance for GHG emissions, and further pointed out that U.S. EPA had a statutory obligation to issue NSPS for all pollutants it regulates.

Under the terms of the consent decree, U.S. EPA had committed to proposing standards of performance for GHG for new and modified EGUs subject to Subpart Da by July 26, 2011, with final action no later than May 26, 2012, and also committed to proposing standards of performance for GHG for new and modified petroleum refineries subject to Subparts J and Ja (Petroleum Refineries, and Petroleum Refineries for Which Construction, Reconstruction, or Modification Commenced After May 14, 2007, respectively), Subpart Db (Industrial-Commercial-Institutional Steam Generating Units), Subpart Dc (Small Industrial-Commercial-Institutional Steam Generating Units), Subpart GGG (Equipment Leaks of VOC in Petroleum Refineries for Which Construction, Reconstruction, or Modification Commenced After November 7, 2006), and Subpart QQQ (VOC Emissions from Petroleum Refinery Wastewater Systems) by December 10, 2011, with final action no later than November 10, 2012.

To date, U.S. EPA has limited its focus and fulfillment of the December 2010 settlement agreements for fossil fuel-fired EGUs and natural gas-fired stationary combustion turbines. In this article, we’ll provide an overview of each of the specific CO2 standards that have been proposed for the utility industry thus far and some of the concerns that have been voiced by industry, political groups, and environmentalists alike.

Proposed Standards for New Sources

U.S. EPA’s first proposal, which was proposed on March 27, 2012 and published in the Federal Register on April 13, 2012, specifically applied to new affected fossil fuel-fired EGUs. As presented in U.S. EPA’s Regulatory Impact Analysis for the April 13, 2012 proposed rule, energy industry modeling forecasts uniformly predicted that few, if any, new coal-fired power plants would be built in the near future, due to the increased availability of, and lower cost for, natural gas as compared to other types of fossil fuel. Therefore, U.S. EPA proposed its April 13, 2012 proposed standard specifically based upon the demonstrated performance of natural gas combined cycle (NGCC) units. Since NGCC units were already very prevalent throughout this country and anticipated to be the predominant fossil fuel-fired technology in the future, U.S. EPA anticipated that “the proposed EGU GHG NSPS would result in negligible CO2 emission changes, energy impacts, quantified benefits, costs, and economic impacts by 2020…and did not anticipate this rule would have any impacts on the price of electricity, employment or labor markets, or the U.S. economy.” In drafting the rule, U.S. EPA evaluated a wide range of electricity market conditions and performed multiple sensitivity analyses, which caused them to believe that industry would choose to construct new units that already met these standards, regardless of the proposed rule.

U.S. EPA claimed the first proposed CO2 standard was “practical, flexible, and achievable” which imparted a feeling to many that the first proposed CO2 standard was relatively achievable, with new fossil fuel-fired EGU sources greater than 25 megawatt electric (MWe) being required to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2/MWh), but also being offered alternative compliance options like output-based standards to be averaged over a lengthy 30-year period. The proposed rule served as a model from which we could all speculate what future GHG rules might look like, resolving some of the longstanding mystery that surrounded this category of emissions. However, U.S. EPA failed to issue the final CO2 NSPS for new EGUs within one (1) year of its original groundbreaking proposal. Since U.S. EPA failed to issue the final NSPS for new EGUs within one (1) year of the original proposed version, the rule was required to be “terminated” and U.S. EPA was required to re-propose, accept comments on, and finalize a new version of the rule. President Obama released his Climate Action Plan (Plan) and Presidential Memorandum on June 25, 2013. In the memorandum, Obama formally directed U.S. EPA to re-propose NSPS for emissions of CO2 for new EGUs by September 20, 2013 and directed U.S. EPA to propose a CO2 NSPS for existing EGUs by June 2014.

In response to Obama’s June 2013 directive, U.S. EPA withdrew the March 27, 2012 proposal and released its second proposed NSPS for emissions of CO2 from new power plants on September 20, 2013. While the signed proposal met the Court ordered deadline for action by U.S. EPA, the rule was not officially proposed until publication in the Federal Register on January 8, 2014. In this second proposal, separate standards of performance were proposed for different types of new EGU configurations instead of the single standard proposed on March 27, 2012. Specifically, separate standards of performance would apply to newly constructed affected fossil fuel-fired electric utility steam generating units (utility boilers and integrated gasification combined cycle (IGCC) units) and newly constructed natural gas-fired stationary combustion turbines. The September 20, 2013 rule proposes separate standards of performance for fossil fuel-fired electric utility steam generating units and integrated gasification combined cycle units that burn coal, petroleum coke, and other fossil fuels based on partial implementation of carbon capture and sequestration (CCS) technology as the Best System of Emission Reduction (BSER) adequately demonstrated for those sources, despite criticism that CCS is cost prohibitive and will yet require years of development before it is ready for commercial deployment. The action also proposes standards for natural gas-fired stationary combustion turbines based on combined cycle technology as the BSER. If the rule is finalized as proposed, new large natural gas-fired turbines would need to meet an output-based standard of 1,000 pounds of CO2 per megawatt-hour, while new small natural gas-fired turbines would need to meet an output-based standard of 1,100 pounds of CO2 per megawatt-hour. New coal-fired units would need to meet an output-based standard of 1,100 pounds of CO2 per megawatt-hour, and would have the option to meet a more stringent limit if they chose to average emissions over multiple years. Under U.S. EPA’s definition of affected units, most simple cycle “peaking” stationary combustion turbines, which typically sell significantly less than one-third of their potential electric output to the grid, would not be affected by the latest proposal.

Although the deadline to submit public comments was November 29, 2013, the September 2013 proposed rule for new EGUs continues to receive its fair share of criticism amongst industry, political groups, and environmentalists alike. One argument at play is that a bifurcated approach of assigning standards to separate types emissions sources could limit U.S. EPA’s ability to ever allow cross-category trading for existing sources. For this reason, we may see U.S. EPA return to its original approach of issuing a single standard in the finalized version of the rule. Utilities have commented that the rule is “fatally flawed” in that it does not satisfy a Clean Air Act (CAA) mandate that the rule must ensure emissions will be reduced – the rule mandates carbon capture but it does not actually guarantee cuts in GHGs generated at facilities. Grid reliability is another concern. Non-utility industry groups fear that U.S. EPA’s proposal to require novel CCS technology sets a negative precedent that, if upheld following an expected legal challenge, would allow U.S. EPA to impose similar “stretch” technologies on other industry sectors. The oil and gas sector has even been vocal in pointing out that the CCS provisions of the proposed rule have created hurdles for well operators to accept CO2 streams from coal-fired power plants, making it less advantageous than using CO2 from other sources, which could present compliance issues for new power plants with fewer options for compliance.

Proposed Standards for Existing, Modified, and Reconstructed Sources

Provisions for modified and existing EGUs were not proposed until very recently, in June 2014.

U.S. EPA proposed a “Clean Power Plan” on June 2, 2014 which consists of the following two (2) proposed regulations as well as the proposed January 8, 2014 NSPS for fossil fuel-fired EGUs:

Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units
Carbon Pollution Standards for Modified and Reconstructed Stationary Sources: Electric Utility Generating Units

Each of the proposed new regulations was published in the Federal Register on June 18, 2014.

So you have an existing EGU right now – how are you affected? Short answer is you won’t be affected immediately. Under the proposed Carbon Pollution Emission Guidelines for Existing Stationary Sources, U.S. EPA has proposed emission guidelines for states to follow in developing plans to address GHG from existing fossil fuel-fired electric generating units. In the proposal, U.S. EPA has proposed state-specific rate-based goals for CO2 emissions from the power sector, as well as guidelines for states to follow in developing plans to achieve the state-specific goals, so that by 2030 a nationwide 30% CO2 emission decrease is achieved from the power sector over 2005 baseline levels. To achieve this reduction, the proposal lays out state-specific CO2 goals that each state is required to meet, but it does not prescribe how a state should meet its goal. The proposed rule includes guidelines and recommendations for the development and implementation of state plans, and proposes that BSER for existing sources be based upon existing strategies currently being met by states and companies already to reduce CO2 emissions from EGUs.

U.S. EPA has proposed the following four (4) building blocks of BSER:

Building Block 1: Reductions achievable through improvements in individual EGUs’ emission rates.
Building Block 2: EGU CO2 emissions reductions achievable through re-dispatch from affected steam EGUs to affected NGCC units.
Building Block 3: EGU CO2 emissions reductions achievable by meeting demand for electricity or electricity services through expanded use of low- or zero-carbon generating capacity.
Building Block 4: Expanded use of demand-side energy efficiency.

The propose rule also cites the following as examples of strategies states could implement in order to meet their state-specific targets: market-based emission limits, GHG performance standards, utility planning approaches, renewable portfolio standards, demand-site energy efficiency programs, and energy efficiency resource standards.

Early opposition to the proposed standards request that the rule’s GHG reduction targets to be recalculated to include a “safety valve” that could allow utilities to operate out of compliance if necessary for grid reliability. Given the extreme flexibility that would be given to states to decide how they modify their plans to enforce the rule, we can also expect to see numerous challenges between the power industry and the states.

What if you have an existing EGU right now that you plan to either modify or reconstruct in the future – how would you be affected under that scenario? Under the proposed Carbon Pollution Standards for Modified and Reconstructed Stationary Sources, U.S. EPA has proposed standards that would limit emissions of CO2 from modified or reconstructed fossil fuel-fired electric utility steam generating units and natural gas-fired stationary combustion turbines.

This table summarizes U.S. EPA’s proposed BSER and Standards for:

Modified fossil fuel-fired utility boilers and IGCC units whose non-GHG emissions are regulated under 40 CFR Part 60, Subpart Da.
Modified natural gas-fired stationary combustion turbines whose non-GHG emissions are regulated under 40 CFR Part 60, Subpart KKKK.
Reconstructed fossil fuel-fired utility boilers and IGCC units whose non-GHG emissions are regulated under 40 CFR Part 60, Subpart Da.
Reconstructed natural gas-fired stationary combustion turbines whose non-GHG emissions are regulated under 40 CFR Part 60, Subpart KKKK.

Under the proposed rule, a “modification” means a physical or operational change that increases the source’s maximum achievable hourly rate of emissions, and “reconstruction” means the replacement of components of an existing facility to an extent that (1) the fixed capital cost of the new components exceeds 50 percent of the fixed capital cost that would be required to construct a comparable entirely new facility, and (2) it is technologically and economically feasible to meet the applicable standards.

U.S. EPA is accepting comments on the June 18, 2014 proposals until October 16, 2014 and will hold four (4) public hearings on the proposed Clean Power Plan during the week of July 28 in the following cities: Denver, Atlanta, Washington, DC and Pittsburgh. Based on this input, U.S. EPA has announced its intent to finalize the June 18, 2014 standards for existing, modified, and reconstructed sources next June, which follows the schedule laid out in Obama’s June 2013 Climate Action Plan. We will continue to keep you updated on activity concerning these proposed rules. For more information on the proposed regulation of GHG in the utility industry please contact Megan Uhler at muhler@all4inc.com or 610.933.5246 x132.

Houston: Here I Come!!

Working for a small (and growing) company can provide one with lots of opportunities, unique experiences, responsibilities, etc. For a consultant who thrives on a fast pace and challenges, it can equate to career fulfillment! This is absolutely the case for me at ALL4, and I’m fortunate enough to have recently celebrated 10 years with this company.

While at ALL4, I’ve worked with lots of clients (in numerous industries and in many states) as a project manager focusing on air quality permitting and compliance. I’ve also had the opportunity to lead our technical staff, be part of ALL4’s Executive Council and new business development team, as well as lead ALL4’s marketing group. Speaking of marketing… let me guess, you recognize my name? Perhaps you’ve received an email or two from me: ALL4’s 4 The Record or ALL4 Blog Digest, maybe a webinar or training invite, or even our annual holiday card? I have to smile when someone recognizes me solely from some of the great content that our team compiles and gets sent out on my behalf; it’s probably the closest thing I have to being “famous.” It’s been a great experience sending you, the regulated community, my colleagues’ expert regulatory thoughts and opinions.

As with anything you build, there comes a time to provide opportunity to others and tackle a new challenge. I’ve considered opening a regional ALL4 office for some time. Where? Well that was the biggest question. In my conversations with Bill and Kevin, ALL4’s CEO and CFO, it became apparent that Houston was a natural fit for ALL4’s next office. With the work we’ve been doing in the oil and gas, chemical/petrochemical, and power sectors, it just made sense. I’m fortunate enough to have been able to travel all over the world including most of the U.S., yet hadn’t had the opportunity to visit Houston or even Texas. Visiting Texas was a must!

For a variety of professional and personal reasons, I visited San Antonio, Austin, Fredericksburg, New Braunfels, and Houston in the last few months. I was in San Antonio the night of a Spurs win, went on a wine tour in Fredericksburg, floated the river in New Braunfels, and explored many parts of Houston – from Kemah to Katy, The Woodlands to Pearland, the Energy Corridor, Downtown, Sugar Land, and everywhere in between. In the midst of this travel, I really enjoyed some delicious BBQ, savory southwestern dishes, and tasty sushi. Everyone I encountered was very friendly, reminding me of my Ohio roots. I gotta say, I am very impressed with what Houston (and Texas) has to offer.

So, it’s official, I’m sold on Texas! This Midwest Ohio gal, turned Philly girl, is really excited to get to Houston and embrace what it has to offer (and also help quite a few of you with your environmental challenges)! My fun loving yellow lab Macy and I are headed to Houston! And yes, I’m pretty excited to wear my cowboy boots! ALL4’s Houston office: opening in September 2014.

See y’all there!

Kristin can be reached at kgordon@all4inc.com or 610.933.5246 x133. ALL4’s official press release on the Houston office opening can be found here.