Department of Environmental Quality

1. Air Quality Committee Meeting Interstate Transport Analysis for Ozone Sushma Masemore July 13, 2016 Department of Environmental Quality

2. Topics Covered • Infrastructure State Implementation Plans (iSIP) • Good Neighbor Provision • Other Clean Air Act “Good Neighbor” Tools • Ozone Transport SIP History (Rulemaking, Court Decisions) • EPA’s 2008 Ozone Transport Analysis • Linkages to North Carolina • North Carolina’s “Good Neighbor” Demonstration and Findings • Current Status • 20 years of policy changes, rule revisions, and legal challenges covered in 20 minutes! • Process still evolving and expected to change in coming years!

3. What is the “Good Neighbor” Provision in the Clean Air Act? • Section 110(a)(2)(D)(i) requires states to demonstrate to EPA that emissions from one state do not adversely affect another state. Specifically, the act prohibits any source or other type of emissions activity within the state from emitting any air pollutant in amounts which will: (I) contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to any National Ambient Air Quality Standard (NAAQS), or (II) interfere with measures required to be included in the applicable implementation plan for any other state to prevent significant deterioration of air quality or to protect visibility.

4. Other Clean Air Act Tools to Address Transport • Section 126 – Interstate Pollution Abatement • 176A – Interstate Transport Commissions

5. CAA §176A • Interstate Transport Commissions • EPA can establish a transport commission if the Agency creates a CAA §176A transport region. • EPA can address interstate ozone transport apart from convening a CAA §176A transport commission. • December 9, 2013 §176A Petition • Filed by CT, DE, MD, ME, NH, NY, RI, and VT. PA joined a day later. • Petition requested EPA to add the states of Illinois, Indiana, Kentucky, Michigan, North Carolina, Ohio, Tennessee, Virginia, and West Virginia to the Ozone Transport Region (OTR). • These states are claimed to be “significantly contributing” to violations of the ozone standard, not just in the undersigned states, but throughout the OTR. • The OTR is defined in the CAA as the states of CT, DE, ME, MD, MA, NH, NJ, NY, PA, RI, VT and the CMSA that includes DC • EPA has not taken a formal action. NCDEQ filed a Notice of Intent and Complaint for failure to take action on this petition.

6. Ozone Transport SIP Chronology • NOx SIP Call - 1998 • Designed to reduce regional transport of NOx, one of the precursors of ozone from large Electric Generating Units (EGUs) and Non-EGUs. • Clean Air Interstate Rule (CAIR) - 2005 • Designed to achieve NOx and SO2 emission reductions from EGUs in certain states. • Cross State Air Pollution Rule (CSAPR) - 2011 • Designed to reduce power plant emissions that contribute ozone and/or fine particle pollution to other states through NOx and SO2 emission reductions • Assist with attainment of the 1997 ozone and fine particle and 2006 fine particle NAAQS. Each transport rule is an evolving process – incorporation of federal policy and court actions.

7. U.S. Supreme Court: Key Decisions Related to CSAPR • Final ruling on April 29, 2014, EPA v. EME Homer City Generation • There is only one chance for states to develop a SIP, after that deadlines in the CAA for the Federal Implementation Plan (FIP) process is clear. • EPA’s cost effective allocation of emission reductions is permissible under the Good Neighbor Provision. • Over-Control in Non-Attainment Areas • “EPA cannot require a State to reduce its output of pollution by more than is necessary to achieve attainment in every downwind State or at odds with the one-percent threshold the Agency has set.” • Maintenance Areas • “Just as EPA is constrained, under the first part of the Good Neighbor Provision…” EPA is limited, by the second part of the provision, to reduce only by “amounts” that “interfere with maintenance,” i.e., by just enough to permit an already-attaining State to maintain satisfactory air quality.” Source: https://www.epa.gov/airmarkets

8. Transport Analysis for the 2008 Ozone Standard • EPA releases Notice for Data Availability (NODA) on 2017 Ozone Transport Modeling (Aug. 2015) • Implicates North Carolina as contributing significantly to a maintenance monitor in Baltimore, MD • NC submits Good Neighbor SIP (Dec. 2015) • Addressees in detail air quality modeling flaws, emissions inventory inaccuracies, and model performance issues contained in EPA’s analysis. • EPA proposes CSAPR Update Rule (Dec. 2015) • “Where upwind states contribute to downwind attainment and maintenance problems, the rule will propose to focus on near-term EGU NOx reductionsachievable by 2017 in those states.” Today’s discussion

9. Projected 2017 Nonattainment Sites in Eastern U.S. Considered a Nonattainment Site if ≥ 76 ppb NC is not contributing to any nonattainment sites Source: Notice of Availability of the Environmental Protection Agency’s Updated Ozone Transport Modeling Data for the 2008 Ozone National Ambient Air Quality Standard, Table 1 (http://www3.epa.gov/airtransport/ozonetransportNAAQS.html)

10. Projected 2017 Maintenance Problem Sites in Eastern U.S. Maintenance Site Linked to NC Considered a Non-attainment Site if ≥ 76 ppb Source: Notice of Availability of the Environmental Protection Agency’s Updated Ozone Transport Modeling Data for the 2008 Ozone National Ambient Air Quality Standard, Table 2 (http://www3.epa.gov/airtransport/ozonetransportNAAQS.html)

11. How Much is NC Contributing to the MD Maintenance Site? 0.2% over the significance threshold of 1% above NAAQs! 0.18 ppb over the significance threshold of .75 ppb! Source: Notice of Availability of the Environmental Protection Agency’s Updated Ozone Transport Modeling Data for the 2008 Ozone National Ambient Air Quality Standard, Table 2 (http://www3.epa.gov/airtransport/ozonetransportNAAQS.html)

12. Select States’ Largest Contribution to a 2017 Maintenance Site NC is Contributing Contribution Screening Threshold = 0.75 ppb

13. Conclusions Based on EPA Modeling in the NODA • 2017 Modeling • NC is not contributing to ozone nonattainment • NC is significantly contributing to ozone maintenance at the Essex, MD monitor

14. North Carolina’s “Good Neighbor” Demonstration SIP Submittal • EPA’s 2017 linkage to North Carolina at the Essex ozone monitor in Baltimore, Maryland is associated with inaccurate emissions inventories and deficiencies in the performance of the air quality modeling rather than a real contribution. • Key areas of concern • Sensitivity of Future Ozone Design Value Calculations • Trajectory Analyses • Model Performance Evaluation • Insufficient Model Resolution • Impact of Water Grid Cells • Alternative Approaches • Resulting Future DVs and Contributions • Influence of Boundary Contributions • Flaws in EPA’s Power Sector Emissions Modeling

15. 1. Sensitivity of Future Design Value Calculations Conclusion 1: Use of more recent data shows the Essex monitor will be in attainment.

16. 2. Trajectory Analyses • Backward wind trajectories for 4 days in 2010-2012 with the highest ozone concentration were examined (total of 12 days). • Trajectory for only 1 of the 12 days touched the northern portion of NC. Conclusion 2: Trajectory analyses for time periods corresponding to maximum ozone levels do not support significant transport of ozone or its precursors from North Carolina to the Essex monitor.

17. 3. Model Performance Evaluation • Essex monitor has the 3rd greatest bias and mean error. • EPA stated in the TSD: “There are regional differences in model performance, where the model tends to over-predict from the Southeast into the Northeast…” (pg. A-6) May-Sep 2011 Ozone Model Performance Statistics (10 monitors with highest positive bias and mean error shown) Conclusion 3a: Model performance of the Essex monitor was poor compared to other monitors throughout the domain, resulting in modeled over-predictions.

18. Insufficient Model Resolution • Chesapeake Bay Breeze has large impacts on the modeled meteorological and air quality conditions at coastal monitors such as Essex. Conclusion 3b: Model performance is poor due to its inability to handle the complex land-sea boundary interactions; thus calling into question the use of the tool in this situation for precise linkages. Note: The star denotes the location of the monitor. Red cells are land, gray cells are water.

19. 4. Influence of Boundary Contributions • From 2001 through 2017, EPA held Emissions constant, but they should be growing based on historical trends. • NC’s 1.2% contribution to the Essex, MD Monitor is dwarfed by the 20.7% contribution from international sources/stratospheric intrusion and 78.1% from other states/emissions sources within the modeling domain. Contribution to 2017 Maximum DV for the Essex Monitor Conclusion 4: EPA’s approach introduces further uncertainty into the modeling analysis and understates contributions from international transport.

20. 5. Emissions Projections & Power Sector ModelingThree Projections / Three Different Conclusions • EPA did not incorporate NC’s comments regarding unit level errors • Roxboro heat rates accidently entered 43% higher • GG Allen contains inappropriate NOx controls and emission rates • Marshall should not be retired IPM Forecasts of 2017 NOx Emissions for North Carolina EGUs Used in 2018 Preliminary Transport Modeling Used in 2017 Transport Modeling NC is not linked Used in EPA’s Clean Power Plan Modeling NC is linked Conclusion 5: EPA has overestimated NC’s 2017 NOx emissions from power plants. EPA should use the most recent modeling results in its upcoming transport rule, as it is closest to the power company’s projections.

21. North Carolina’s Good Neighbor Conclusions • North Carolina has achieved significant NOx reductions and is meeting the 2008 ozone standard throughout the state. • EPA’s 2017 air quality modeling raises many questions regarding North Carolina’s 1.2% contribution to the Essex, MD maintenance site. • Considering the totality of all the supporting evidence, North Carolina does not contribute significantly to downwind air quality problems. • North Carolina has met its Good Neighbor obligations for the 2008 ozone standard.

22. Current Status • EPA did not provide specific comments on NC’s Good Neighbor SIP submittal. • Instead, they deferred the review as part of its CSAPR Update rulemaking, and will assess whether updates are needed before taking any final action on NC’s submission. • Proposed CSAPR Rule Update Rule (Dec. 2015) • EPA did not incorporate DAQ comments addressed earlier • “Where upwind states contribute to downwind attainment and maintenance problems, the rule will propose to focus on near-term EGU NOx reductions achievable by 2017 in those states.” • Final rule expected later this Fall

23. Questions? Our Team Sushma Masemore 919-707-8700 Sushma.Masemore@ncdenr.gov Randy Strait 919-707-8721 Randy.Strait@ncdenr.gov Air Quality Modeling Nick Witcraft 919-707-8484 Nick.Witcraft@ncdenr.gov Elliot Tardif 919-707-8483 Elliot.Tardif@ncdenr.gov Bradley McLamb 919-707-8485 Bradley.McLamb@ncdenr.gov Sheila Holman 919-707-8430 Sheila.Holman@ncdenr.gov Mike Abraczinskas 919-707-8447 Michael.Abraczinskas@ncdenr.gov Emissions Inventory Paula Hemmer 919-707-8708 Paula.Hemmer@ncdenr.gov Ming Xie 919-707-8716 Ming Xie@ncdenr.gov Andy Bollman 919-707-8485 Andrew.Bollman@ncdenr.gov

24. Additional Reference Slides – Inaccuracies in CSAPR Update Rule

25. Significant Concerns Regarding the Proposed CSAPR Update Rule • Maintenance concerns at the Essex monitor is a non-issue! • Recently observed air quality data show that the monitor currently is and is expected to continue to attain the 2008 ozone standard in 2017. • Model performance issues due to land-water interface complexities and the over-predictions for water grid cells have not been adequately addressed. • Using EPA’s own protocol for eliminating poor model performance results in a contribution of 0.45 ppb, not 0.93 ppb calculated by the EPA to link NC to the Essex monitor  NC should not be linked!

26. Significant Concerns Regarding the Proposed CSAPR Update Rule 3. In-state pollution sources must be controlled before requiring controls from upwind sources • §107(a) requires states to consider local emissions to address nonattainment areas before seeking reductions in upwind states. • MD’s contribution ranges from 1.8% - 9.5% of the NAAQS for 11 monitors located in 4 downwind states. • If MD focused on controlling its own in-state emissions, it would also be able to bring the Essex monitor into attainment. • Unreasonable to expect NC (1.2% contribution level) to impose multi-million dollar controls for on its EGU fleet before MD adopts controls to address local emissions. • Under the $1,300/ton control case • EPA used NOx emission rate of 0.098 lb/MMBTU to calculate MD’s budget, and 0.078 lb/MMBTU to calculate NC’s budget. • Why is EPA using a much higher emission rate for MD than for NC when NC has such a small contribution to one monitor in MD? CREATES AN EQUITY ISSUE! • Proposed $1,300/ton control case

27. Significant Concerns Regarding the Proposed CSAPR Update Rule 4. EPA’s poor analysis of power sector modeling will result in multi-million dollar cost to NC • Many unit level operational data errors not corrected (Roxboro, CPI Southport, GG Allen, Marshall, others) • EPA modeled that 42% of coal capacity in NC (12 units) will retire by next year! • Retirements will result in a 41% reduction in emissions relative to existing 2015 Phase I CSAPR budgets …. A significant drop in just 2 years! • CSAPR Update Rule imposes 30%decrease in ozone season NOx emissions by 2017 at 1,300 $/ton control case relative to 2017 base case. Impact on air quality Impact on Cost • Reduces NC’s contribution to the Essex monitor by a mere 0.025 ppb (0.03% of the standard) • Far less than the 0.30 ppb that EPA calculated for the monitor to achieve attainment. • SCR Optimization = $2.5 million • Coal unit retirements and replacements with NGCC = $3 - 4 billion • Cost of replacing lost capacity not accounted for in the proposed rule • Conclusion: • Proposed rule represents “over-control” of North Carolina’s power sector and grossly understates the cost of the rule.

28. Additional Reference Slides – Flaws in NODA Modeling Analysis

29. EPA’s 2017 Emissions Modeling Overview Identification of Contributing States Identification of Nonattainment & Maintenance Sites Ozone Source Apportionment Modeling Emissions and Photochemical Air Quality Modeling 2011 Emission Inventory & Meteorology 2017 Emissions Inventory If projected 2017 DV is ≥ 76 ppb, Site is projected to be Nonattainment or have Maintenance problem in 2017. If largest contribution is > 1% of NAAQS (0.75 ppb), state is contributing to ozone nonattainment or maintenance problem in a downwind state. Design Value (DV) = 4th highest daily maximum ozone concentration for each year, averaged over a 3 year period.

30. Impact of Water Grid Cells • Use of a 3x3 grid cell array around a monitor captures water cells resulting in elevated ozone values • Water grid cells have lower mixing heights compared to adjacent land cells. • Inflates pollutant concentrations, partially due to shipping traffic • Highest value within any of the 9 grid cells on a given day in the base model run is used to calculate Relative Reduction Factor (RRF) and future DVs. • This results in water cells being used where air quality is not well characterized (i.e., over estimated concentrations) • NODA reported model performance based on statistics for the single grid cell containing the monitor. • Disconnect between model performance evaluation (single cell) and significant contribution assessment (highest value cell). • Alternative model performance metrics are needed. Note: The star denotes the location of the monitor. Red cells are land, gray cells are water.

31. Alternative Approaches for Identifying Nonattainment and Maintenance Sites Near Land-Water Interface Conclusion: Projected DV at the Essex monitor is inflated by water grid cells. Application of statically significant alternative methods show future maximum DV at the Essex, MD monitor below the 76 ppb threshold. • DAQ looked at two alternative approaches to compare model performance statistics • Modified 3x3 grid cell array, removes water cells • Single cell array, focus on the grid cell with the monitor

32. Impact of Water Grid Cells in Identifying Contributing States Conclusion: Removing three days with poor model performance leads to a 0.45 ppb contribution level which is statistically robust and defensible.