Developments Under the Clean Air Act Implications and Ramifications by Cynthia Faur ©2015 Quarles & Brady LLP. This document provides information of a general nature. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and information or future developments may affect the subjects addressed in this document. You should consult with a lawyer about your particular circumstances before acting on any of this information because it may not be applicable to you or your situation.

1. Chicago | Indianapolis | Madison | Milwaukee | Naples | Phoenix | Tampa | Tucson | Washington, D.C.
Developments Under the Clean Air Act
Implications and Ramifications
Cynthia A. Faur
Quarles & Brady LLP
(312) 715-5228
Cynthia.Faur@quarles.com
October 30, 2014
Environment 14 – Sessions #8A
© 2014 Quarles & Brady LLP

2. Hot Topics
• Industrial Boiler MACT, CISWI, NHSM
Rules
• Start Up/Shutdown/Malfunction
Exemption
• NAAQS Revision and Implementation
• GHG Permitting and Regulation
• Title V Permit Renewals –
Incorporation of Plans
• Air Quality Related Values in Tribal
Class I Areas
2

3. Industrial /Commercial/Institutional
Boiler MACT
3

4. Revised Boiler MACT & CISWI Rules
• Standards for new and existing major ICI boilers (IB
MACT) – 78 Fed. Reg. 7186 (Jan. 31, 2013) (revision to a
rule issued in March 2011)
• Standards for new and existing minor ICI boilers (i.e.,
area sources) (MACT/GACT) – 78 Fed. Reg. 7812 (Feb.
1, 2013)
• Section 129 Standards for Commercial/Industrial Solid
Waste Incinerators (CISWIs) – 78 Fed. Reg. 9112 (Feb. 7,
2013)
• Non-hazardous Secondary Materials (NHSM) Rule – 78
Fed. Reg. 9112 (Feb. 7, 2013)
4

5. Final Major Source Boiler MACT Rule
• On January 31, 2013, EPA finalized rules for Major
Sources – 78 Fed. Reg. 7186 (Jan. 31, 2013).
• Compliance date - Jan. 31, 2016
• Natural Gas Boilers
– Boiler/Process heater tune ups – Annual if >10
mmBTU/hour
– One-Time Energy Assessment by a Qualified Assessor
– Operate consistent with safety and good air pollution control
practices to minimize emissions
– Annual Compliance Reports
5

6. Revised Boiler MACT (Major)
• Coal/Oil and Biomass boilers >10 mmBTU/hr
– Numeric limits for mercury, PM (surrogate for non-Hg
metals), HCl (surrogate for acid gases), and CO (surrogate
for non-dioxin organic air toxics)
– In lieu of the PM limit, a limit for selected metals can be met
– Work practice standards for dioxin
– Annual boiler tune-ups - (5 years if continuous oxygen trim
system used)
– One time energy assessment
• CO limits revised to address variability (CEMS-based limits for
most subcategories: limits for several subcategories revised to
reflect a threshold level (130 ppm@ 3%O2)
6

7. Reconsideration
• August 2013: EPA announced
reconsideration on following issues:
– Startup and shutdown definitions and applicable
work practice standards
– Applicable carbon monoxide (CO) limits
– Parametric monitoring requirements and
implications of exceeding required parameter
• Reconsideration of these issues still
pending!
7

8. Litigation Status
• Challenge the IB MACT rule is still
pending - United States Sugar v. EPA,
Case No. 11-108 (consolidated)
– Briefing delayed to address Upper Prediction
Limit (UPL) statistical method
– Remanded certain standards to EPA for
review but the standards remain effective
– Briefing to conclude in January 2015
– No hearing scheduled
• Decision unlikely until late 2015!
8

9. MACT Extensions
• Up to a one year extension of the compliance
deadline available – CAA §112(i)(3)(B)
– Minimum state requirements found at NR 460.05(7)
• WDNR Guidance on Applying for a One-Year
Extension to a MACT Requirement, revised
October 4, 2013
– Deadline to file a request is October 3, 2015, but …
– WDNR recommends requests be submitted by August 5,
2015
• Title V permit revision required to incorporate the
extension
9

10. Area Source Boiler MACT
• On February 1, 2013, EPA finalized Boiler MACT
rules for Area Sources - 78 Fed. Reg. 7812 (Feb.
1, 2013).
– Covers boilers that burn coal, oil, other liquid fuel,
biomass and other non-wastes
– Established standards addressing Hg, PM
(surrogate for non-mercury metals), and CO
(surrogate for organic air toxics)
• Existing area source compliance date - March 21,
2014
10

11. Area Source MACT
• Issues under Reconsideration:
– Definition of startup and shutdown
– Establishing a limited use boiler subcategory
– Eliminating certain PM performance testing
• All Numerical Standards Remanded to EPA
– Remanded to address use the Upper Prediction
Limit (UPL)
– Standards remain in effect
11

12. Non-Hazardous Secondary Material (NHSM)
Rule
• 78 Fed. Reg. 9112 (Feb. 7, 2013)
• Defines which materials would be considered
solid wastes when combusted for purposes
of triggering the CISWI Rule (CAA§129)
– If materials considered fuel,§112 boiler MACT
governs
– If materials are waste,§129 standards apply
12

13. What Materials Are Fuels?
• Materials determined to be treated as a fuel:
– Traditional fuels - 40 CFR§242.1
• Historically managed as fuel (fossil fuels, pet coke,
refinery gas, virgin wood)
• Alternate fuels developed from virgin materials (used oil
meeting specs of 40 CFR§279.11, coal waste, clean
cellulosic biomass)
– Categorically determined non-waste
• Scrap tires (not discarded)
• Resinated Wood
• Coal refuse from legacy piles
• Dewatered pulp and paper sludges (not discarded;
generated and burned on site)
13

14. Other Materials as Fuel
 Materials “within control of the generator”
– Generated and combusted at facilities under
common control
– Must meet Legitimacy Criteria - 40 CFR§241.3
(d)(1)(i-iii)
• Managed as a “valuable commodity”
• Meaningful heating value (5,000 Btu/lb guideline)
• Contains contaminants at comparable level to
traditional fuels that the facility is capable of
combusting
14

15. Other Materials as Fuel
• Materials not “within the control of the
generator”
– Must meet the Legitimacy Criteria
– Must undergo sufficient “processing”
• Processing includes operations necessary to:
– Remove or destroy contaminants
– Significantly improve the fuel characteristics of the material,
– Chemically improve the as-fired energy content
– Improve the ingredient characteristics
• Minimal operations that result only in modifying the size of
the material by shredding do not constitute processing
15

16. Demonstration of Non-Waste Status
• Site- Specific Petitions may be submitted to
Regional Administrator
- Determination of non-waste status based on legitimacy
criteria and other factors, including market conditions
• Comfort Letters issued for various materials
– http://www.epa.gov/epawaste/nonhaz/define/index.htm
• National Rulemaking Petitions for general non-
waste determinations
• Maintain Records demonstrating non-waste status
• CISWI units can be reclassified 6 months after
cessation of waste combustion
16

17. Start-Up, Shut Down and Malfunction
Exemptions
17

18. Startup, Shutdown and Malfunction
• EPA has historically recognized that certain emission limitations
may not be met during startup, shutdown and malfunction
(“SSM”) events
– New Source Performance Standards – Generally exempted
sources from meeting emission limits during SSM events, but
required operation consistent with good air pollution control
practice for minimizing emissions at all times
– National Hazardous Emissions Standards for Hazardous Air
Pollutants (aka MACT standards) – Exempted sources from
meeting numerical emission limitations, but required development
of and compliance with a SSM Plan - RESCINDED
– State Implementation Plans –Allowed states to adopt SIP
provisions that allowed excess emissions during SSM events in
certain circumstances - SUBJECT OF A SIP CALL
18

19. History of the MACT SSM Exemption
• SSM requirements adopted in 1994,but not challenged
• From 2002- 2006, EPA watered down the SSM plan
requirements:
– 2002 - Rules revised so that SSM plans no longer had to be
incorporated in Title V permits
• To address Sierra Club challenge, EPA proposed to require
sources to submit the SSM plans to the permitting authority.
– 2003 – Rules required a “specific and reasonable” request
that the permitting authority request a copy of the SSM plan
from the source.
– 2006 - EPA retracted the requirement that sources
implement their SSM plans, because the plans were not
“applicable requirements under Title V.
19

20. Sierra Club v. EPA
• Sierra Club challenged revisions to the SSM requirements
• The D.C. Circuit found that EPA’s modifications to the SSM
provisions essentially reopened the SSM exemption in the
General Provisions for review - Sierra Club v. EPA, 551 F.3d
1019 (D.C. Cir. 2008)
• Court found that EPA did not have the authority under the CAA
to exempt SSM events from compliance with the emission
limitations of a MACT standard
– CAA required promulgation of emission standards for certain
source under §112 and that emission standard must limit
emissions on a “continuous” basis per CAA§302(k)
– NSPS standards distinguished because EPA has discretion to
issue NSPS standards
20

21. Sierra Club v. EPA --- Aftermath
• For new MACT standards, EPA is:
– Establishing emission limitations or work practices that apply during startup
and shutdown
• If subject an existing MACT standard that has not been updated, the
emission limitations apply at all times
– Providing for a potential affirmative defense for excess emissions due to
unavoidable malfunctions
• Places the burden of proof on the source
• Extensive reporting requirements to use the affirmative defense
• Future of the affirmative defense is uncertain
– D.C. Circuit held that EPA did not have the authority to provide sources with
an affirmative defense under the CAA - NRDC v. EPA, 749 F.3d 1055 (D.C.
Cir. 2014)
– Fifth Circuit Court of Appeals upheld EPA’s approval of an affirmative
defense in a state implementation plan - Luminant Generation Co. v. EPA,
714 F.3d 841 (5th Cir. 2013)
21

22. SSM and State Implementation Plans (“SIPs”)
• EPA’s historic policy regarding startup, shutdowns and
malfunctions
– MALFUNCTIONS: Penalties were not appropriate for sudden, unavoidable
malfunctions that were caused by circumstances entirely beyond the
control of the owner/operator
– STARTUP/SHUTDOWNS: Generally, part of the normal operation of the
source so careful planning, unit design and implementation of operating
procedures should eliminate excess emissions during these periods, BUT
bypass of control equipment and excess emissions may be excused if:
• Source can show excess emissions could not be avoided through careful and
prudent planning and design
• Bypassing was unavoidable to prevent loss of life, personal injury or severe
property damage
• Enforcement discretion approach allowed in State Implementation
Plans
– Required a demonstration that excess emissions were unavoidable
22

23. SSM SIP Call
• In February 2013, EPA proposed to call the SIPS of 36 states that
included an exemption for excess emissions during SSM events
– The Wisconsin SIP does not contain SSM exemptions and is not
part of the SIP call – Illinois, Michigan and Minnesota are
• Under the proposed SIP call, states could include an affirmative
defense for excess emissions during malfunctions, but not startup and
shutdown - That is no longer allowed…..
• In September 2014, EPA issued a supplemental proposal that called
the SIPS of 17 more states because those SIP included affirmative
defense provisions
• States will have 18 months to revise their SIPS after EPA issues a
final rule
23

24. What’s Next?
• Challenge to the SIP Call?
– Fifth Circuit upheld EPA approval of an affirmative defense for malfunctions
• Increased citizen litigation?
– States and EPA still retain discretion to enforce against sources that exceed
emission limits during a malfunction
– Absent exemptions or affirmative defenses, citizens groups are more likely
to sue.
• Focus on large sources with multiple exceedances
• Revisions to Emission Limitations in SIP and Existing MACT
standards
– Where standards cannot be met during SSM events, seeking revisions of
underlying rules may be prudent
– Anti-backsliding requirements may pose issues
• Review Processes
– Can improvements be made to decrease excess emissions during SSM
events
24

25. NAAQS Update
25

26. Current NAAQS Implementation Timeline
Pollutant Final NAAQS
Date
Infrastructure
SIP Due
Designations
Effective
Attainment
Plans Due
Attainment Date
PM2.5 (2006) 10/06 10/09 12/09 12/14 12/15 (Mod)
12/19 (Ser)
Lead (2008) 10/08 10/11 12/10
12/11
06/12
06/13
12/15
12/16
NO2 (2010)
Primary
1/08 1/13 2/12 NA NA
SO2 (2010)
primary
1/10 6/13 10/13*
(plus 2 rounds)
4/15 10/18
Ozone (2008) 3/08 3/11 7/12 Mid 15/16 2015/2032
PM2.5 (2012) 12/12 12/15 Early 2015 Mid 2016 Dec. 2021 (Mod)
Dec. 2025 (Ser)
26
Credit EPA, April 2014, updated March 2014
* Subject to on-going litigation over the SO2 designation dates. Attainment plans and attainment dates for
unclassified areas to be determined.

27. Final Revised PM2.5 Standards
• D.C. Circuit remanded 2006 PM2.5 standard to EPA in
American Farm Bureau Federation v. EPA, 559 F. 3d
512. (D.C. Cir. 2009)
• EPA revised the standard to address this remand on
January 15, 2013 - 78 Fed. Reg. 3086
– Annual – 12 ug/m3
– 24-hour – 35 ug/m3
• Most areas attain new annual standard
27

28. 2006 PM2.5 Implementation
• June 2, 2014 - EPA issued revised implementation
rule (79 Fed. Reg. 31566)
– Classifies all areas as moderate nonattainment to be
bumped up to serious if do not meet attainment by the
specified date
– Provides 4 years to implement reasonably available
control measures
• All counties in Wisconsin currently attain the
standard
28

29. PM2.5 Implementation
• December 9, 2013 - EPA issued a final rule to address
the remand of the PM2.5 Significant Impact Levels (SILs)
and Significant Monitoring Concentrations (SMC) - 78
Fed. Reg. 73698
• EPA vacated the SILs, but will undertake a future
rulemaking
– Per EPA guidance, SILs may still be used but care must be
taken and the permitting record must support that the source
will not cause or contribute to a NAAQS violation
• Required PM2.5 monitoring data to be submitted with PSD
applications
– Data from existing monitors may be acceptable
29

30. SO2 1-Hour Standard
• June 3, 2010 – 1-hr SO2 NAAQS set at 75 ppb on a 1-hour
average
• Compliance determined through a 3-year average of the 99th
percentile of daily maximum 1-hour average concentrations at
each monitor
• First round of nonattainment designations effective October 4,
2013 - 78 Fed. Reg. 47191 (August 5, 2013)
• For “unclassifiable” areas, modeling or air quality monitoring
can be used to determine the attainment status
– Modeling - Final designations - 12/17; Attainment Demonstrations
- 8/19
– Monitoring – Final designations – 12/20; Attainment Demonstration
– 8/22
30

31. SO2 1-Hour Standard
• Sierra Club et. al v. McCarthy, Civil Action No. 3:13-cv-3953
(Northern District of California)
– Challenges EPA’s failure to timely designate certain areas for the
SO2 NAAQS
• Proposed Consent Decree
– Maintains designation timeframe for most unclassifiable areas
– Within 16 months of entry of the Decree, EPA to promulgate
designations for remaining undesignated areas which:
• Have monitored violations of the NAAQS, based on 3-years
monitoring data
• Contain any stationary sources (not slated for retirement) that
either emitted more than 16,000 tons of SO2 in 2012 or emitted
more than 2,600 tons of SO2 and had an emission rate of 0.45
lbs/mmBTU or higher in 2012
31

32. Ozone NAAQS Review
• Court Ordered Deadline for Revised Ozone
Standard
– Proposal – December 1, 2014
– Final Rule – October 1, 2015
• EPA likely to propose a tighter standard.
– CASAC advised setting the standard less than 70
ppb within a range to 60 ppb
32

33. What Does this Mean?
• Only Sheboygan County and the eastern portion of Kenosha
County are designated as nonattainment for the current 8-hour
standard
• Based on recent monitoring data, Ozaukee, Racine, Milwaukee,
Manitowoc, also do not meet the current standard, but EPA is
not currently planning to redesignate
• At 70 ppb, 12 counties will be able to meet the standard*
– Ashland, Eau Claire, Vilas, Taylor, LaCross, Marathon, Forest,
Sauk, Waukesha, Columbia, Dane, Brown
• At 65 ppb, that number drops to 6 counties*
– Ashland, Eau Claire, Vilas, Taylor, LaCross, Marathon
• At 60 ppb, only Ashland County attains*
33
* Based on recent data and existing monitors

34. GHG Regulation
34

35. PSD and Title V Permitting Requirements
• UARG v. EPA, No. 12–1146 (June 23, 2014) – Supreme Court
held that the CAA “neither compels nor permits EPA to adopt an
interpretation of the Act requiring a source to obtain a PSD or
Title V permit on the sole basis of its potential greenhouse-gas
emissions.”
– The term “air pollutant” meant to encompass the substances that
can be regulated under the Act but can be narrowed as appropriate
– EPA did not have the authority to “tailor” the unambiguous PSD
and Title V permitting thresholds
– If a source is subject to PSD for conventional pollutants, sources
can be required to comply with BACT for GHG emissions
• Wisconsin will need to revise its state rules to remove the
Tailoring Rule requirements
35

36. GHG Emission Standards for Power Plants
• EPA has proposed 3 rules to regulate GHG
emissions from power plants under CAA§111
– Proposed NSPS for new power plants – 79 Fed. Reg. 1430
(January 8, 2014)
• Proposed rule required partial CCS technology for new coal
fired EGUs and modern natural gas combined cycle technology
for new natural gas turbine EGUs
– Proposed NSPS for modified power plants – 79 Fed. Reg.
34906 (June 18, 2014)
– Proposed Existing Source Guidelines – 79 Fed. Reg. 34830
(June 18, 2014)
36

37. Potential Implications of the GHG Regulations
for Industry
• Impact on electric rates
– Under the proposed ESPS, natural gas and
nuclear units may operate more, and there will be
more renewable energy dispatched
• Increase in natural gas prices
• Increased push for demand side energy
efficiencies
– May present opportunities for sources that can
make their operations more efficient
37

38. Title V Permit Renewals
38

39. Incorporation of Plans into
Title V Permits
• Plans and other “off permit” information relied on or
referenced in Part I of Title V permit shall be
addressed using one of the following:
– Approach 1: Include key elements of the plan and other
“off-permit” information as applicable requirements,
compliance demonstration, and/or monitoring requirements
in the permit
– Approach 2: Include the requirements to have a plan in the
Table ZZZ (plant-wide conditions) where requirement to
have a plan is not a compliance demonstration requirement
for an emission limitation
– Approach 3: Include the entire plan in a separate section of
the permit
39

40. Incorporation of Plans
• “The overall question that should be asked when
drafting a permit is whether all information is
contained in the permit for determining applicable
requirements, compliance demonstration methods,
and/or monitoring requirements; or would someone
have to look for an additional piece of paper. If
someone has to look for an additional piece of paper
to determine compliance, then the additional
information from that piece of paper should be
specifically added to the permit.”
Guidance on Handling Plans in Permits, September 28, 2010.
40

41. Incorporation of Plans
• Anticipate the incorporation of the plan when
preparing the permit renewal application
– Streamline plan where appropriate
• Create a table that includes only key elements of a
plan that are unlikely to change
• Carefully review permit conditions for which a plan is
the basis to evaluate whether they are necessary to
demonstrate compliance with applicable emission
limitations
41

42. Air Quality Related Values
42

43. Class I Air Quality Regions
• Tribes and states can request redesignation to Class
I status, under CAA§164
• In addition to compliance with the NAAQS and
visibility, Class I areas protected from impacts to "air
quality-related values" (AQRVs)
• AQRVs are resources that the Class I area manager
wishes to protect and that may be impacted by air
emissions
– Can include limits designed to protect visibility,
standards for acid deposition or airborne
concentrations, protection of vegetation, or other
standards determined by a land manager to be
protective of an area
43

44. Air Quality Related Values
• New Source Review Workshop Manual page E.12,
“When a proposed major source's or major
modification's modeled emissions may affect a Class
I area, the applicant analyzes the source's
anticipated impact on visibility and provides the
information needed to determine its effect on the
area's other AQRVs.”
• Where AQRVs are impacted, the land manager can
recommend denial of the permit
• Permitting agency makes the final decision on
the permit
44

45. FCPC Class I Area
• Forest County Potawatomi Community (FCPC) entered into
agreements with WDNR in 1999 and 2010
– In 1999, FCPC adopted Water Quality and Aquatic Systems
as AQRVs
– In 2010, FCPC and WDNR agreed that FCPC could update
the 1999 AQRVs
– In 2012, developed Threshold Effect Levels (TELs) for the
1999 AQRVs, and two new AQRVs – Vegetation and
Visibility
• Bad River Community and the Fond du Lac Band of Lake
Superior Chippewa are currently seeking Class I authority
45

46. Memorandum of Understanding
• On October 7, 2010, the FCPC and Wisconsin
entered into an memorandum of understanding
concerning the rights and opportunities of the FCPC
regarding the Class I designation
– This memorandum has been amended three times to
add AQRVs and revise various review periods and
certain threshold effect levels
• Establishes a scientific review panel to resolve
scientific and technical disputes related to the
AQRVs
46

47. Memorandum of Understanding
• MOU established a 62 mile radius from the Class I
area where WDNR would provide FCPC specified
opportunities for review of PSD permit applications
and applications may be subject to a AQRV
evaluation by the FCPC
– Given the location of the Class I area, the radius is
approximately 74 miles
• Class I increment analysis and consumption is
limited to sources in the 10 mile radius
– Actually, a 22.25 mile radius from the geographic
center of the Class I area
47

48. Permit Review for the Class I Area
48
Credit: WDNR

49. FCPC AQRV
• The new AQRVs and TELs became effective at the end of
the review period, without need for DNR or EPA approval
• While the AQRV/TEL development documentation does
not describe the practical impacts of the standards,
development documents suggest that current deposition
levels for sulfur, nitrogen and mercury may exceed TELs
• Reach of review unclear under NR 405.19(1)
– Provides FCPC with an opportunity to review an evaluate
the impact of any major new source or major modification on
AQRV without regard to the radius in the MOU
49

50. Thank you!
50
Cynthia A. Faur
Quarles & Brady LLP
300 N. LaSalle Street, Suite 4000
Chicago, Illinois 60654-3422
(312) 715-5228
Cynthia.Faur@quarles.com
©2014 Quarles & Brady LLP. This document provides information of a general nature. None of the information contained
herein is intended as legal advice or opinion relative to specific matters, facts, situations or issues. Additional facts and
information or future developments may affect the subjects addressed in this document. You should consult with a lawyer
about your particular circumstances before acting on any of this information because it may not be applicable to you or
your situation.