On March 15, 2023, the U.S. Environmental Protection Agency (EPA) issued its final Good Neighbor Plan, which secures significant reductions in ozone-forming emissions of nitrogen oxides (NO_X) from power plants and industrial facilities. This action will save thousands of lives and result in cleaner air and better health for millions of people living in downwind communities.

The Good Neighbor Plan ensures that 23 states meet the Clean Air Act’s “Good Neighbor” requirements by reducing pollution that significantly contributes to problems attaining and maintaining EPA’s health-based air quality standard for ground-level ozone (or “smog”), known as the 2015 Ozone National Ambient Air Quality Standards (NAAQS), in downwind states.

See https://www.epa.gov/csapr/good-neighbor-plan-2015-ozone-naaqs

Plan reflects President Biden’s commitment to reducing air pollution, delivering environmental and public health benefits for all

WASHINGTON (March 15, 2023) – Today, the U.S. Environmental Protection Agency (EPA) announced the final Good Neighbor Plan, a rule that will significantly cut smog-forming nitrogen oxide pollution from power plants and other industrial facilities in 23 states. The final rule will improve air quality for millions of people living in downwind communities, saving thousands of lives, keeping people out of the hospital, preventing asthma attacks, and reducing sick days.

The Clean Air Act directs EPA to issue a federal plan to address pollution that significantly contributes to unhealthy levels of ground-level ozone, or smog, formed from nitrogen oxide emissions traveling beyond certain states’ boundaries. Exposure to ground-level ozone can cause respiratory issues, aggravate asthma and other lung diseases, and lead to missed days of work or school, emergency room visits, and premature deaths. These costly public health impacts can be especially harmful to children and older adults, disproportionately affecting people of color, families with low-incomes, and other vulnerable populations.

In addressing the significant contribution of upwind states to downwind smog, the program is anticipated to deliver important emissions reductions for environmental justice communities.

“Every community deserves fresh air to breathe. EPA’s ‘Good Neighbor’ plan will lock in significant pollution reductions to ensure cleaner air and deliver public health protections for those who’ve suffered far too long from air-quality related impacts and illness,” said EPA Administrator Michael S. Regan. “We know air pollution doesn’t stop at the state line. Today’s action will help our state partners meet stronger air quality health standards beyond borders, saving lives and improving public health in impacted communities across the United States.”

This action will reduce ozone season NO_X pollution by approximately 70,000 tons from power plants and industrial facilities in 2026. By 2027, the emissions budget for power plants will reflect a 50% reduction from 2021 ozone season NOx emissions levels.

In 2026 alone, EPA projects that the final rule will result in significant public health benefits:

• preventing approximately 1,300 premature deaths,
• avoiding more than 2,300 hospital and emergency room visits,
• cutting asthma symptoms by 1.3 million cases,
• avoiding 430,000 school absence days,
• avoiding 25,000 lost work days.

Reducing smog also has economic benefits. Estimated annual net benefits, after taking costs into account, would be $13 billion each year over the period from 2023 to 2042.  Reducing smog also will improve visibility in national and state parks and increase protection for sensitive ecosystems, coastal waters, estuaries, and forests.

Relying on a longstanding regulatory framework and commonly used, affordable pollution controls, this action fully resolves Clean Air Act “Good Neighbor” obligations for the 2015 Ozone National Ambient Air Quality Standards (NAAQS) for the included states, enhancing public health and environmental protections regionally and for local communities. EPA’s approach provides a long-term planning horizon for states, grid operators, and power companies to make informed decisions and continue to ensure electric system reliability.

The Good Neighbor Plan announced today will ensure that 23 states meet the Clean Air Act’s “Good Neighbor” requirements. The rule will reduce pollution that significantly contributes to problems downwind states face in attaining and maintaining EPA’s health-based air quality standard for ground-level ozone, known as the 2015 Ozone National Ambient Air Quality Standards (NAAQS). EPA’s rule uses a proven, science-based approach to limit emissions of NO_X during the summertime “ozone season”: a NOx allowance trading program for fossil fuel-fired power plants in 22 states and NOx emissions standards for certain sources within nine industry categories in 20 states.

Beginning in the 2023 ozone season, power plants in 22 states will participate in a revised and strengthened Cross-State Air Pollution Rule ozone season trading program. To achieve emissions reductions as soon as possible, EPA is basing the initial control stringency on the level of reductions achievable through immediately available measures, including consistently operating emissions controls already installed at power plants. Further reductions will be phased in over several years starting in 2024 and reflect emissions levels that could be achieved through installation of new emissions controls.

The final Good Neighbor Plan builds on the demonstrated success of existing emissions trading programs by including additional features that promote consistent operation of emissions controls to enhance public health and environmental protection for affected downwind regions. These features include backstop daily emissions rates on large coal-fired units to promote more consistent operation and optimization of emissions controls, annual recalibration of the emissions allowance bank, and annual updates to the emissions budgets to account for changes in the generating fleet.

Beginning in the 2026 ozone season, EPA is setting enforceable NO_X emissions control requirements for certain sources at existing and new industrial facilities that have significant impacts on downwind air quality and the ability to install cost-effective pollution controls.

These industry-specific requirements will apply in 20 states and reflect proven, cost-effective pollution reduction measures that are consistent with standards that sources throughout the country have long implemented. Collectively, these standards will reduce ozone season NOx emissions by approximately 45,000 tons from the following types of emission sources:

• reciprocating internal combustion engines in Pipeline Transportation of Natural Gas;
• kilns in Cement and Cement Product Manufacturing;
• reheat furnaces in Iron and Steel Mills and Ferroalloy Manufacturing;
• furnaces in Glass and Glass Product Manufacturing;
• boilers in Iron and Steel Mills and Ferroalloy Manufacturing, Metal Ore Mining, Basic Chemical Manufacturing, Petroleum and Coal Products Manufacturing, and Pulp, Paper, and Paperboard Mills; and
• combustors and incinerators in Solid Waste Combustors or Incinerators.

This final rule implements the Clean Air Act’s “Good Neighbor” or “interstate transport” provision, which requires each state to submit a State Implementation Plan (SIP) that ensures sources within the state do not contribute significantly to nonattainment or interfere with maintenance of the NAAQS in other states. Each state must make this new SIP submission within 3 years after promulgation of a new or revised NAAQS.

Where EPA finds that a state has not submitted a Good Neighbor SIP, or if the EPA disapproves the SIP, the EPA must issue a Federal Implementation Plan (FIP) within 2 years to assure downwind states are protected.

More information on EPA’s final Good Neighbor Plan is available by clicking here.

For further information: EPA Press Office (press@epa.gov)

The basic premise for EJ is that no community should be subject to greater environmental burdens regardless of race, religion, etc. etc. No new regulations have been passed on EJ. However, Title VI of the Civil Rights Act has been used to justify federal interventions on EJ. By executive order, EJ and Climate have to be considered in any federal agency action. EPA issued revised EPA Legal Tools to Advance Environmental Justice.

EPA’s External Civil Rights Compliance Office issued guidance on permitting to point out that a permit may be denied even though all emissions requirements are met if the source does not meet EJ considerations. EPA is modifying its air monitoring plan to include cumulative impact assessments. This concept has been around for nearly 20 years. In this approach, the cumulative effects of all types of emissions and hazards need to be considered (ie traffic, socio-economic situation, etc.). The idea is that certain communities are subject to additional stressors which make it more difficult for them to cope with added environmental issues. Such evaluations would likely be done at the community level (as opposed to the plant level). A screening tool creates an EJ score for each community. Additional data such as health disparities, climate change, and critical services gaps that are not part of the EJ index calculations are being considered for addition. Threshold levels are being calculated. The ECHO database contains a record of violations. A new tool can be accessed and set up to provide an alert of notification if there has been a violation of a particular compound.

The EPA Nexus Tool provides an overlay of the various screens to identify “hot spots”. Some states are adding EJ SCREEN reports to all permit notices. Some states require an EJ assessment as part of the permitting process. California has a proposed EJ component in their permit process by law. Louisiana has gotten a lot of pressure from federal EPA. In one Louisiana Court decision, 14 air permits were denied for a large chemical complex on EJ and CAA grounds.

The EPA issued a 56-page letter suggesting that the Louisiana DEQ is violating Title VI of the Civil Rights Act in their permitting process. The letter recommends including a cumulative impact assessment in their permits. New Jersey requires EJ considerations for permit applications by state law. EPA is investigating Texas for permitting rules for batch concrete plants. One of the key concerns is that many of the requirements are somewhat vague (i.e. conduct an assessment). NGOs are starting to include EJ considerations in their complaints whether a particular facility is near an EJ community or not. Thus, EJ is everywhere. Public engagement is encouraged. Being well prepared well in advance is the best defense. Community involvement is a must. Know and understand your state environment relative to permitting, etc.

Rich Hamel, All4

For reciprocating engines there are MACT standards. There are also NSPS standards with new and existing units. The EPA recently sent out an enforcement alert indicating that there are a number of engines not reporting to EPA, primarily because they did not realize that their particular engine was covered by a regulation. Types of engine (IC or diesel), 2 stroke or 4 stroke, emergency or non-emergency, etc. all have different regulations. Emergency engines are not supposed to be operated in non-emergency situations. If the grid goes down, the emergency engine kicks in. As soon as the power is restored, any operating time counts as “non-emergency” time. There are limits on the amount of time to operate in non-emergency operation. There are around 100 different regulations on these engines. Storm mode operation is used to provide water supply either during or in anticipation of a power outage due to a storm. EPA has determined that anticipation of an outage is not an outage.

Citizens Thermal has 95 engines for their systems. These are both emergency and non-emergency units. Catalysts were installed in 2013. For emergency units, non- emergency operation for readiness, maintenance, and testing is limited to 100 hours. All other non-emergency operation is limited to 50 hours. Various tools were developed to help operations staff understand and follow compliance. Log books, stickers, fact sheets, and FAQ sheets were utilized. Compliance is a “team sport”. The various tools were updated and modified as operations personnel became more familiar with the requirements and related them to operations. Data visualization helps to monitor performance and alert operations staff. Engine maintenance was shifted to an annual basis based on ZZZZ requirements. The maintenance was moved to the 3^rd quarter to allow for full compliance checking by year end. An oil sampling program was developed. Oil has to be changed within 2 days of a non-compliance report. By correlating oil changes with use, oil change schedules for each engine were determined. Stack tests are required every 3 years for non-emergency engines. As a result, 5 non-emergency engines were re-classified to emergency engines.

Ann McIver and David Foster, Citizens Thermal

Regulatory agencies have pushed for more monitoring in general and fenceline monitoring in particular. A bill introduced in the House requires EPA to add fenceline monitoring at 100 industrial sites. EJ considerations also impact the drive for more monitoring. Reporting is mostly hard copy. However, public perception is looking at a dynamic website condition, with the idea that any delay in posting the data is indicative of industry attempting to hide something. Facilities do not operate in a vacuum. There are background levels of contaminant concentrations. Facilities also tend to congregate for supply line considerations. Wind and weather can impact results. There are high lab and capital costs. There may also be particle size or speciation requirements. Accurate wind field data should allow for proper evaluation of background or transport concentrations that come into the site. This could involve upwind monitoring to show concentrations that may net out the facility contributions. Sensor technology needs to be evaluated to control costs.

There are a number of passive and continuous monitoring approaches. For particulates there are beta attenuation techniques and light scattering monitors. The system also takes an air sample for other measurements. Continuous gas analysis systems are available. They can also be solar powered. Passive techniques do not provide continuous analysis. Refineries are required to do fenceline monitoring for benzene. Absorption tubes were used with a 14-day exposure period. Some exceedances were noted at one refinery. The refinery switched to a continuous system combined with wind data to provide much better temporal resolution. This system pinpointed whether the refinery or external sources were the primary contributor. A construction site used a continuous monitoring system combined with data analysis for particulates and heavy metals. Data analysis allowed the inclusion of telemetry data to again show the primary source and then alerts for actions needed to reduce concentrations. Data visualization also helps alert the facilities.

Looking ahead, drones will likely be utilized to collect and send data to data analysis systems. Both sensors and sampling systems can be included on the drones. The evidence of a plume can be isolated and centered. Trees and towers can be a problem for drones.

Rick Osa & Bryan Engelsen, Environmental Resources Management (ERM)

There are a number of issues that are having an impact on requirements for industry in the ozone transport region. The PM2.5 NAAQS current primary and secondary standards were retained by the Trump EPA. The Biden administration has chosen to review the standard. The administration has also revived the CASAC for advice on these issues. They reported a need to reduce the standard, although there were two different positions. The current standard is 12 micrograms/m3. There was one recommendation for 10 – 11 and a second recommendation for 8 – 10. Labor has stated that the standard should be no lower than 10. OMB is reviewing a proposal from EPA. Publication will likely be in the spring of 2023.

The ozone NAAQS final action is expected in March 2023. EPA has proposed disapprovals on 19 states, with requirements for 4 more SIPs. These will be finalized to a FIP the week of December 11, 2022. EPA needs to include more up to date data in their modeling efforts. EPA is pushing states to implement more monitors, especially nearer to roads. Lower NAQQS standards will impact much of the US. Smaller sources will probably need to be targeted. Non- point/dust/and biomass combustion are significant sources. Wild fires in the West are no significant sources. Agriculture is a major contributory in the mid-West. One problem with modeling is that 2016 data is out of date, 2020 data is skewed because of Covid, and 2023 will not be ready in time.

The EPA will be announcing a significant expansion of the Office of Environmental Justice. The EPA has not invited the business community to any meetings so as not to appear to be favoring industry. EPA studies show communities near highways, ports, wildfires, and multiple source industrial sites experience the greatest impact. EPA thinks there are too many synthetic minor sources. All planned EPA activities will likely cause problems and delays in the permitting process, the exact opposite of what is needed.

The OTC Modeling Committee has been revamped. There are two new co-chairs from the NYSDEC, not the most reasonable. Recent VOC modeling for the OTR showed little impact to a 30% reduction in VOC inventory, outside of New York City. The Great Lakes region is still in non-attainment. Modeling of that region continues to show more sensitivity to NOx rather than VOC. EPA’s revised CSPAR rule has been litigated. A decision could be near. On WV v EPA, the Supreme Court remanded the proposed rule from the Obama administration back to the lower courts. The court has asked the parties to come up with a proposal. At the moment, the request is to drop the mandate and await the new proposal from EPA this spring. The WV decision could impact some of the FIP issues, depending on the outcome of any litigation.

Skipp Kropp, Steptoe & Johnson

The GOP now has majority control of the House of Representatives. The Senate remains under the Democrats. This will make it somewhat more difficult to pass legislation. Compromise will be needed. A continuing resolution for funding in the next 2 weeks is likely. The government still needs to be funded. The debt ceiling will have to be released. The Chamber will still be pushing to improve the permitting process. There appears to be bipartisan support for this need. Despite all the climate goals and other objectives, these will not be achieved without a much better permit process. With the House under Republican control, the administration will likely need to issue more regulations and executive orders to achieve their objectives. While the Chamber does not agree with many administration objectives, the Chamber does have a good working relationship with the administration. Nevertheless, the Chamber is not shy about using litigation to support its membership.

The Chamber participated in COP27. The level of engagement from the business community was extensive. Climate activists may have been somewhat distraught (trade show for business?), but these policies, goals, and objectives cannot be achieved without the business community. The reality is that we will continue to need fossil energy and the energy security that those fuels provide for decades to come. The goal should be to reduce emissions, not to reduce the use of fossil fuels.

The debate needs to be changed from government’s need to do more and force businesses to do something to one of developing the necessary technologies, providing the right signals, and applying the appropriate solutions. There are 3 significant needs. The first is improved permitting. The goals cannot be achieved if it takes 5 – 7 years to get a permit for a needed technology. The second is critical materials. Shorter and more secure supply chains will be needed. Labor availability is also key. The third area is natural gas. The Chamber is a strong supporter of natural gas. By greater use of natural gas, the US has significantly reduced its GHG emissions. This fuel must be made available throughout the world, as developing countries attempt to meet their energy needs going forward.

Marty Durbin, US Chamber of Commerce

2023 Jan IRA Overview

For the short-term natural gas outlook, Henry Hub price is expected to average $7/MMBTU in 2022 and $6/MMBTU in 2023. Pricing has been volatile. Consumption is expected to increase this year with a potential slight decline next year. Net exports will increase. Working gas inventories are expected to remain below the 5-year average at the end of October. Natural gas provides 37% of generation but may drop slightly due to increased renewables. Export LNG will increase.

Pipeline exports to Mexico are expected to increase. Gas production is expected to increase. Recent production hit 100 BCF/day. Production is primarily coming from the Permian Basin (associated gas). Right now, LNG production in the US is pretty much maxed out. There are a couple of projects under construction, but they will not come online until 2024.

For the electric generation forecast, the share of renewables is expected to increase. Coal generation increased in 2021, but labor shortages, rail shortages, and some mine closures prevented coal from increasing in 2022. Some areas could not get coal to their plants during the heat wave. Gas prices are expected to rise somewhat into 2023, but decline after the summer of 2023, as normal temperatures are expected and the economy may not be as robust. Industrial consumption is expected to continue to increase.

Renewables in PJM are around 4% (not counting hydro). Gas prices tend to increase in the winter. Industrial electric prices are high in New England, but more modest in rest of the country. In the midcontinent ISO, coal is the dominant fuel. The Southwest Power Pool is higher on natural gas. ERCOT has a lot of wind. Wholesale prices are lower than in the Northeast. Industrial prices are about 2/3 of New England. California has a large amount of solar. Natural gas provides most of the rest. Coal, nuclear, and others are small. Western hub prices are between mid-continent and New England.

– Lori Aniti and Kathryn (Katy) Fleury, DOE EIA