KY Department for Environmental Protection - DEP Update-

1. KY Department for Environmental Protection- DEP Update- Presentation to the Kentucky Professional Engineers in Mining Seminar September 6, 2013 To Protect and Enhance Kentucky’s Environment

2. Presentation Overview • USEPA Clean Water Act (CWA) regulatory issues • KY DEP water regulatory issues • KY CWA 402 permitting issues • KY air quality trends and litigation • USEPA Clean Air Act (CAA) regulatory issues

3. USEPA Clean Water Act (CWA) Regulatory Issues

4. EPA: Clean Water Act • Steam Electric Effluent Guidelines. Revisions were proposed on April 19, 2013. Comments are due Sept. 20, 2013. Final rule to occur no later than May 22, 2014 • Definition of Waters of the U.S. guidance. Proposed guidance was issued in April 2011. Comments were due July 31, 2011. Final guidance is currently undergoing interagency review. Federal rulemaking is also being internally developed.

5. EPA: Clean Water Act • Federal Water Quality regulations (40 CFR Part 131). Regulations have not been revised in over 25 years. EPA proposed revisions on Sept. 4, 2014. Comments are due Dec. 3, 2013. • Federal water quality standards for Selenium. EPA has been working on this for several years. EPA proposed a revision in 2004, but was not finalized. Recent indications are that EPA may propose revised standards in CY2013-14

6. KY DEP Regulatory Issues

7. Wastewater Lab Certification regulation • 401 KAR 5:320 goes into Sept. 5, 2013requiring certification of wastewater labs performing CWA 402 data analysis and applications will be accepted after this date for processing. • General wastewater labs must be certified by Jan. 1, 2015. • Wastewater labs performing field analysis only (D.O., TRC, pH, temperature, conductivity, and turbidity) must be certified by Jan. 1, 2016. • Don’t wait until the last minute to get certified.

8. KY Triennial Review of KY Water Quality Regulations • Among the proposed changes include a revision to the water quality criteria for selenium to reflect the latest available science: • Aug. 2012, KY proposed to delete existing acute criteria of 20 µg/l • Feb. 2013, as a result of comments received, the agency proposed revised Kentucky state specific acute and chronic water quality criteria for selenium: • Acute criteria = ≤ 258 µg/L • Chronic criteria = 8.6 µg/g total selenium dw whole body fish tissue, or, 19.3 µg/g total selenium dw egg/ovary tissue. • April 2013, proposal approved by KY legislative committee. • May 22-23, 2013, proposed regulation sent to EPA for review and action (EPA has 60-90 days for review). Numerous conversations with USEPA – still awaiting final EPA response.

9. CWA 402 Permitting Issues

10. CWA 402 Permitting issues • Of the ~10,000 KPDES active permitted entities, approximately 1750 KPDES permits are for coal mining operations in Kentucky. • Currently, there are approximately 180 coal mining operations permit applications (105 IP’s and 75 GP’s) that are being reviewed and processed. • Oversight by USEPA of proposed CWA 402 permits continues to be a challenge for processing individual permit applications. • Proposed surface coal mining individual permits in Appalachia for new and expanded activities have not been able to be processed through EPA. • 36 EPA permit objections are still pending, some for as long as 2-3 years.

11. Total KPDES Permits Pending – Coal only

12. Total KPDES Permits Pending – Coal IP’s only

13. Total KPDES Permits Pending – Coal GP’s only

14. Coal Mining Permitting: Priority Focus • Continue to work with USEPA and affected permit applicants regarding pending coal mining permit applications to: • Issue GP permit coverage’s as appropriate under existing GP prior to permit expiration July 31, 2014, • Draft proposed IP’s for EPA review, and • Continue to work toward resolution of EPA’s permit objections following June 5 & 7, 2012 EPA public hearings on 36 EPA draft individual permit objections. • Reissuance of the Coal General Permit prior to expiration on July 31, 2014. • Intention is to reissue two (or more) KY Coal Mining General Permits, one each for western Kentucky and eastern Kentucky respectively. • Plan to public notice before end of CY2013. • Development ofe-NOIfor permit application submittals &e-DMRfor compliance monitoring submittals for coal mining sector.

15. CWA 402 Permitting: Key Dates • What should I plan for between now and the reissuance of the Coal GP(s) in order to obtain GP coverage under the existing Coal GP prior to expiration on July 31, 2014: • To ensure coverage for an eligible activity, a permit application (NOI) should be submitted by or before June 1, 2014. • Applications (NOIs) submitted between June 1, 2014 and July 31, 2014 cannot be assured of being processed prior to July 31, 2014. • Operations are free at any time to submit an individual permit application if preferred

16. CWA 402 Permitting: Key Dates • What happens when the new Coal GP(s) are reissued? • The newly issued Coal GP(s) will describe in the permit itself the process for maintaining or obtaining permit coverage for both existing and new operations • It is anticipated that for existing operations that do not have a change in operation, that a new application (e-NOI) with some information will need to be submitted to be processed in a streamlined manner – TO BE DETERMINED IN COAL GP • For operations that have new or expanded operations, a new application (e-NOI) will need to be submitted and processed consistent with the current permitting process. • Operations are free at any time to submit an individual permit application if preferred to 1) convert an existing GP coverage to an individual permit, or 2) permit a new or expanded operation.

17. CWA 402 Permitting: Key Dates • What happens in the unintended event that the existing Coal GP expires on July 31, 2014 before new Coal GP(s) are reissued? • Current Coal GP coverage holders as of the expiration of the current GP will be authorized to continue to operate without submitting a new permit application (NOI) • However, a new GP coverage cannot be issued for a new or expanded operation after the existing Coal GP expires on July 31, 2014 until a new Coal GP is reissued. • An ownership change to an existing Coal GP coverage may occur at any time as a minor modification • Operations are free at any time to submit an individual permit application if preferred to 1) convert an existing Coal GP coverage to an individual permit, or 2) permit a new or expanded operation.

18. CWA – Decisions must be made • Given what we have discussed thus far, it is extremely clear: • We must obtain timely resolution to water quality regulation issues and CWA permitting requirements and processes in order to achieve certainty in the process so that everyone knows the expectations and can plan accordingly.

19. Kentucky’s Air Quality Continues to Improve

20. Air Quality Improvements Are Projected to Continue 85% actual reduction since 1980, 90% projected by 2016

21. Kentucky utilities are projected to meet vacated CSAPR SO2 targets

22. Kentucky utilities are projected to meet vacated CSAPR NOx targets

23. Air Litigation: Ozone SIP • Conn, Delaware, and Maryland filed petition with the 6th Circuit Court of Appeals to review EPA’s approval of KY’s and TN’s 2008 8-hour ozone SIP which EPA approved on March 2013. The Sierra Club has also filed suit. • Kentucky intervened in this action on June 19, 2013. • As previous slides show, KY projects that it will meet the vacated emission reduction targets of CSAPR which went beyond that required for CAA “good neighbor” and NAAQS’s requirements • Is Kentucky a significant downwind state contributor? No.

24. Air Litigation: SO2 Designations • Sierra Club, North Carolina, North Dakota, Nevada, South Dakota and Texas have all sent EPA Notices of Intent (“NOI”) to sue for failing to designate areas as attainment, non-attainment or unclassifiable for the 2010 SO2 National Ambient Air Quality Standard. • Under Section 107(d) of the Clean Air Act, EPA has a non-discretionary duty to designate areas after the promulgation of a new or revised standard. EPA’s deadline was June 3, 2013. •  Only two counties in Kentucky received designations (Jefferson & Campbell). •  On August 26, 2013, the Sierra Club and Natural Resources Defense Council filed a complaint in the U.S. District Court for the Northern District of California. • Kentucky filed a NOI on Sept. 4, 2014 citing EPA’s failure to make designations.

25. USEPA CAA Regulatory Issues

26. President’s Climate Action Plan • 2009: President pledged to reduced GHG emissions by 17% from 2005 levels by 2020 • 2013: President’s Climate Action Plan • Cut carbon pollution in America. • Prepare the U.S. for impacts of climate change. • Lead international efforts to address global climate change.

27. President’s Memo to EPA – New EGUs • New Power Plants: • Directed EPA to issue revised standards under CAA Section 111(b) for new power plants by September 20, 2013. • Original standard of 1000 lbs CO2/MWhour was proposed April 13, 2012. • Depending upon what EPA decides with the final rule, this could be a “game-changer” regulation that would effectively eliminate the ability to build a new coal fired power plant absent cost-effective and technically viable use of carbon capture sequestration (CCS) or other currently non-existent commercially available technology.

28. President’s Memo to EPA – Existing EGUs • Existing, Modified, or Reconstructed Power Plants: • Issue proposed standards under CAA Section 111(d) by June 1, 2014. • Issue final standard by June 1, 2015. • States submit a State Implementation Plan (SIP) to EPA by June 30, 2016. • Huge implications for Kentucky: • How much flexibility will we have regionally or within a state? • What will the implementation schedule be once rules are finalized? • Coal currently accounts for 92% of KY electricity generation. Kentucky’s current coal fleet in CY2012 averaged 1969 lbs CO2/MWhour.

29. KY’s position in U.S. manufacturing • Why is this issue so important to Kentucky? • The manufacturing sector employs more than 213,000 Kentuckians. • Manufacturing accounts for 17% of state GDP. • The state’s most energy-intensive industries—aluminum smelting, iron & steel mills, paper mills, chemical production, and glass manufacturing employ more than 12,000 Kentuckians and account for 3.2% of state GDP. • KY has the most electricity-intensive manufacturing economy in the United States. Consequently, KY plays a vital role in U.S. manufacturing even though KY is only 1.3% of nation’s population: • Aluminum (~40%), Stainless Steel (~30%), 3rd largest automobile manufacturer • Per capita carbon footprint is 50% higher than the national average. • The manufacturing sector is very susceptible to increasing electricity costs.

30. KY has the most electricity-intensive manufacturing economy in the United States

31. What should KY’s position be on GHG rules? • Therefore, in light of KY’s energy portfolio with coal, manufacturing economy, cost of electricity, relatively low state per capita income, and other factors – if a GHG rule is to be proposed, what should EPA do? • EPA should not establish a GHG emission requirement for existing EGU’s under CAA 111(d) that is a fuel specific and rate-based (ex., lbs CO2/MWHr for coal EGU’s). In this approach, Kentucky and a few other states would inequitably bear significantly disproportional impacts on the behalf of the U.S. while achieving nominal GHG emission reductions.. • A mass based percent emission reduction guideline on the other hand would require all states to achieve equitable overall GHG percent reductions and would achieve much more substantial overall GHG emission reductions in the U.S. consistent with the President’s stated goals while lessening impact to the economies of states like KY. • Must be allowed state flexibility and time to achieve reductions.

32. Questions? Contact: R. Bruce Scott Commissioner, KY DEP 300 Fair Oaks Frankfort, KY 502-564-2150 Bruce.Scott@ky.gov