04.29.16

Newsletters, Publication,

Air Quality Updates in EPA Region 10 (Pacific Northwest)

Washington

Revisions to Startup, Shutdown, and Malfunction Regulations

On July 22, 2015, the Washington Department of Ecology (Ecology) announced that it would amend its General Regulations for Air Pollution Sources, chapter 173-400 of the Washington Administrative Code (WAC), to comply with EPA’s SIP call related to treatment of excess emissions during start-up, shutdown, and malfunction (SSM) periods, 80 Fed. Reg. 33,839. See rulemaking proposal here. The SIP call is based on EPA’s SSM policy applicable to SIPs, which was revised after the D.C. Circuit vacated an affirmative defense for unavoidable malfunctions in the Portland Cement NESHAP. Natural Res. Def. Council v. Envtl. Prot. Agency, 749 F.3d 1055 (D.C. Cir. 2014). Ecology expects to propose a rule in the late summer and to finalize amendments in the fall to meet EPA’s November 22, 2016, deadline. In the SIP call, EPA deemed the affirmative defense provisions in WAC 173-400-107 for excess emissions during SSM events inadequate to meet Clean Air Act (CAA) requirements. EPA identified similar deficiencies in rules related to the Energy Facility Site Evaluation Council, specifically WAC 463-39-005, which has been recodified as WAC 463-78-005. 80 Fed. Reg. at 33,973–74. In addition, EPA identified deficiencies in rules administered by the Southwest Clean Air Agency/formerly the Southwest Air Pollution Control Authority (SWAPCA), SWAPCA 400-107. Id.

Greenhouse Gas Regulations

Clean Air Rule—On February 26, 2016, Ecology withdrew its proposed Clean Air Rule. See withdrawal notice here. According to the withdrawal notice, Ecology “intends to continue working with stakeholders and updating the proposed rule language.” Ecology expects to issue a new proposed rule later this month and a final rule late this summer.

By way of background, on January 5, Ecology proposed a Clean Air Rule that would regulate greenhouse gas emissions from specific listed stationary sources, as well as those emissions attributed to petroleum fuel producers and importers, and to natural gas distributors. See rulemaking proposal here. The agency intended to finalize the rule on June 1. Ecology’s rulemaking also included proposed amendments to the state’s greenhouse gas reporting regulations. Beginning in 2017, covered parties with at least 100,000 metric tons of annual CO2 equivalent (CO2e) emissions would have had to demonstrate compliance with an emissions reduction pathway.

As measured from baseline emissions, this would have required a 5 percent decrease in emissions every three-year compliance period. The individual emissions threshold for covered parties would drop incrementally until it reached 70,000 metric tons of CO2e in 2035. If a covered party’s emissions dropped below the 70,000 metric ton/CO2e threshold for three consecutive years, that party could exit the program.

A covered party could achieve compliance by reducing its own emissions or obtaining emission reduction units (credits) from qualifying emission reduction projects or with instruments from external, specified greenhouse gas regulatory programs in the United States and Canada.

Emissions credits could be traded and/or banked for future use.

In recent public comments, Ecology stated that the new proposed rule would be similar to the original proposal but with several key differences.  These differences address issues raised during a stakeholder engagement period following withdrawal of the proposed rule.

The changes would include tailored, rate-based compliance options for energy-intense and trade-exposed facilities, measures to encourage economic growth by establishing a reserve of emission credits that may be released based on specified allocation priorities, a registry for tracking emission credits, 3rd-party verifiers to ensure compliance with emission reduction obligations, and limitations on use of out-of-state emissions reductions to demonstrate compliance.

Clean Power Plan—As required by EPA’s Clean Power Plan, 80 Fed. Reg. 64,662, Ecology, the Department of Commerce, and the Utilities and Transportation Commission are working on a state implementation plan that would regulate CO2 emissions from 11 existing power plants. All but one of the plants are natural gas combined cycle electric generating units. See Ecology website here. Like other states, Washington may choose statewide rate-based or mass-based emissions goals, develop emissions trading schemes and emissions reduction credit programs, and explore collaborative compliance methods with other jurisdictions. Meeting EPA’s CO2 emissions goals in Washington will be aided by the planned retirement of the state’s only coal-fired power plant. The state announced that it would complete a draft implementation plan by June in order to respond to comments by August and submit an initial plan to EPA by September of this year. To date, however, the state has provided limited public information about the plan’s probable content. The original proposed Clean Air Rule, discussed above, states that power plant CO2 emission reductions under the Clean Power Plan would count toward compliance with the Clean Air Rule. The new proposed Clean Air Rule will clarify the relationship between the two programs.

The state has confirmed that it intends to continue working to implement the Clean Power Plan despite the stay granted by the U.S. Supreme Court on February 9, 2016.  See stay here.

EPA SIP Approvals

In December 2015, EPA approved Washington’s SIP submittal from May 11, 2015, concluding that Washington does not significantly contribute to nonattainment or interfere with the maintenance of the 2008 ozone NAAQS in neighboring states. 80 Fed. Reg. 77,578. Similarly, in July 2015, EPA agreed that Washington does not significantly contribute to nonattainment or interfere with the maintenance of the 2006 24-hour PM2.5 NAAQS, the 2008 lead NAAQS, or the 2010 nitrogen oxide NAAQS. 80 Fed. Reg. 45,429; 80 Fed. Reg. 42,042. As such, EPA determined that Washington’s SIP meets the “good neighbor” or “interstate transport” requirements of the CAA for those standards.

Oregon

EPA SIP Approvals

As in Washington, EPA in December approved Oregon’s June 28, 2010, SIP submittal as meeting the “good neighbor” or “interstate transport” requirements of CAA section 110(a) (2)(D)(i)(I) for the 2008 ozone NAAQS. 80 Fed. Reg. 79,266. According to EPA’s earlier proposal to approve the Oregon SIP revision, published in October, the Oregon Department of Environmental Quality (DEQ) had consulted with air agencies in Washington, Idaho, Nevada, and California to evaluate case-specific air quality problems involving regional transport of air pollution. 80 Fed. Reg. 65,680. “These staff- level communications indicated no impacts on ozone concentrations in other states caused by transport from Oregon, and the submittal stated that this provided additional support for Oregon’s assertion that emissions from Oregon sources do not significantly contribute to nonattainment in or interfere with maintenance of the 2008 ozone NAAQS in any other states.”Id. at 65,682. EPA received no comments on the proposed rule before approving the Oregon SIP submittal. The docket for the proposed and final EPA rules can be viewed here.

Intel Corporation Settlement Agreements

Intel Corporation (Intel) owns and operates two semiconductor manufacturing facilities in Oregon. In 2014, Oregon DEQ signed a mutual agreement and order (order) with Intel to resolve allegations regarding Intel’s undisclosed and unpermitted emissions of certain fluorides from its semiconductor manufacturing facilities. The order required Intel to pay a $143,000 civil penalty. The order can be viewed here.

Also in 2014, Intel, Neighbors for Clean Air (NCA), and the Northwest Environmental Defense Center (NEDC) signed a settlement with Intel to resolve similar allegations regarding Intel’s emissions of certain fluorides.See settlement here.

Under the settlement, Intel agreed to prepare an inventory of Intel’s emissions; conduct a human health risk assessment utilizing the procedures referenced in California’s South Coast Air Quality Management District Rule 14023; enhance Intel’s stack emissions monitoring program; and provide resources to fund ambient air quality monitoring.

In December 2015, Intel, NCA, and NEDC entered into a “Good Neighbor Agreement” under which:

  • Intel will provide up to $150,000 to fund community ambient air monitoring to be conducted according to a mutually approved monitoring plan;
  • Intel will employ reasonable efforts to achieve reductions of toxic air contaminants (TACs);
  • Intel will perform periodic testing on the scrubbers and rotary concentrator thermal oxidizers for TACs;
  • Intel will allow representatives of the NCA and NEDC a reasonable opportunity to observe emissions tests that are undertaken pursuant to the Good Neighbor Agreement; and
  • Intel will install equipment, as needed, to meet any continuous monitoring obligations identified in the Good Neighbor Agreement.

See Good Neighbor Agreement here.

Alaska

In November 2015, Alaska asked EPA to divide the Fairbanks North Star Borough (FNSB) PM2.5nonattainment area into two separate nonattainment areas. See request here. EPA first designated the area as nonattainment for the 24-hour PM2.5 NAAQS in 2009. As a result of a delay caused by the litigation in Natural Resources Defense Council v. Environmental Protection Agency, 706 F.3d 428 (D.C. Cir. 2013)—in which the D.C. Circuit remanded EPA’s 2007 24-hour PM2.5 NAAQS for repromulgation under a different subpart of the CAA—Alaska adopted a SIP amendment to include an air quality plan for the FNSB in late 2014.

Alaska’s request to divide the FNSB PM2.5 nonattainment area stems from data showing that the western half of the area, encompassing downtown Fairbanks, has recently recorded much lower levels of ambient fine particulate matter than the eastern half of the nonattainment area, which encompasses the city of North Pole. Alaska’s request comes as the state expects EPA to downgrade the FNSB area from moderate to serious nonattainment in June of 2016. Although EPA is not required to decide the state’s request to divide the FNSB for 18 months, Alaska’s proposed division could allow current air quality improvement measures to continue in the Fairbanks area while limiting the need for a serious nonattainment air quality plan to the North Pole area. The FNSB area experiences high levels of PM2.5 in part due to residential wood burning, and, according to the state, the Fairbanks area has seen recent air quality improvements as lower fuel oil prices have resulted in less wood burning.

Idaho

In December 2015, EPA and the J.R. Simplot Company (Simplot) reached a significant settlement to resolve alleged CAA violations at five sulfuric acid plants owned by Simplot.

See consent decree here. Two of the plants are located in Pocatello, Idaho. According to a complaint filed by EPA concurrently with the parties’ proposed consent decree, EPA alleged in 2009 that Simplot improperly failed to obtain preconstruction PSD permits before making major modifications at its Pocatello plants.

Under the consent decree—which was approved in April 2016—Simplot will pay a civil penalty of $899,000 and upgrade emissions controls and emissions monitoring systems at the plants. EPA estimates that Simplot will spend $42 million to comply with the requirements of the consent decree and that the new controls will reduce SO2 emissions at Simplot’s five plants by more than 50 percent. EPA says that the consent decree will also reduce emissions of sulfuric acid mist and PM2.5 at one of the Idaho plants.

EPA’s focus on the Simplot sulfuric acid plants began as part of the agency’s National Enforcement Initiative aimed at acid plants. See EPA website here. The Simplot settlement, according to EPA, is the thirteenth acid settlement and ninth sulfuric acid settlement under the National Enforcement Initiative. EPA’s press release regarding the Simplot settlement can be viewed here.


PDF of newsletter.

A version of this article first appeared in the April 2016 Air Quality Committee Newsletter published by the American Bar Association’s Section of Environment, Energy, and Resources.

The opinions expressed in this article are those of the authors and do not necessarily reflect the views of Riddell Williams or its clients.  This article is for general informational purposes and is not intended to be, and should not be taken as, legal advice.

The Riddell Williams Environmental Group has played a key part in addressing some of the most challenging environmental issues in the Pacific Northwest and throughout the nation.  Our group’s clients include utilities, pulp and paper manufacturers, petroleum companies, regional energy companies, airlines and airfreight carriers, steel manufacturers, waste management companies, technology businesses, real estate development partnerships, private landowners, and some of the state’s leading environmental groups.