Update on Prevention of Significant Deterioration (PSD) and New Source Review (NSR) Activities

1. Update on Prevention of Significant Deterioration (PSD) and New Source Review (NSR) Activities October 5, 2004

2. Overview – Informational Briefing • WESTAR work on PSD increment tracking and technical issues • Upcoming NSR Actions • Litigation • Reconsideration • NO2 Increments • Debottlenecking, Aggregation and Allowable PALs • Ozone and PM2.5 Implementation • Tribal NSR rule

3. NSR Reform – June 2002 Recommendations • Debottlenecking • Aggregation • Allowable PALs

4. Litigation – December 2002 NSR Rule • D.C. Court denied request for stay on December 2002 rules (Actual PALs, Clean Units, Pollution Control Projects, Emission Test) • Briefing schedule for December 2002 changes • Litigants briefs – May 2004 • EPA briefs – August 2004 • Final Briefs – October 2004 • Oral Arguments – January 2005

5. Litigation – Equipment Replacement Rule • D.C. Court granted request for stay on Equipment Replacement Provision. • Proposed Briefing Schedule for ERP • Litigants Briefs – the later of November 2004 or 90 days after publication of EPA Response on Reconsideration • EPA Brief – 90 days after Litigants Briefs • Final Briefs – 77 days after EPA Briefs

6. Litigation • Reconsideration of treatment of fugitive emissions under December 2002 rule • Reconsideration of ERP • Legal Basis • 20 percent cutoff • Reconsideration proposal published July 1, 2004 • Court remand of NO2 increments

7. Holmstead to Patton Letter – September 29, 2004 • Identified 3 alternatives to using increment approach • Cap-and-trade program • Protection of ecosystems based on critical loads • State planning program for protecting and enhancing air quality in attainment areas • Commitment to propose one or more of alternatives in a balanced way • Proposal – February 14, 2005

8. Ozone/PM2.5 Implementation • Guidance and rules on how new 8-hour ozone and PM2.5 standards should be implemented in nonattainment areas • NSR Rulemakings • Appendix S – “bridge” NSR rule that is in effect until State adopts its rules • Transition from 1-hour ozone standard to 8-hour ozone standard • Requirements for PM2.5 • Increment levels • Precursor pollutants

9. Potential Options

10. Possible Major Source Thresholds • The PM-2.5 program is governed by Subpart 1 of the CAA. • 100/250 tpy for attainment and unclassifiable areas • 100 tpy for nonattainment areas • We may suggest that States consider the effect smaller sources have on their ability to attain or maintain the NAAQS.

11. Possible Significant Emissions Rates Approaches (tpy) • Propose significant emission rate of 10 tpy for PM-2.5 direct emissions • Use methodology comparable to methods used to establish the significant emission rate for TSP and PM10. • Take comment on alternative approaches that support a 4-15 tpy significant emissions rate. • Proposing a 40 tpy significant rate for precursors (if applicable) to harmonize implementation of the PM-2.5 NAAQS with the ozone NAAQS.

12. Increments and Significant Impact Level (SIL) • Still developing approach for increment level for PM-2.5 direct emissions, PM-2.5 precursors, and the baseline trigger date. • Meanwhile, States must continue to implement the PM-10 increments. • We also will be requesting comment on methods for developing SILs for PM-2.5 direct emissions and precursors.