Interim Joint Committee on Natural Resources and Environment


Minutes of the<MeetNo1> 1st Meeting

of the 2012 Interim


<MeetMDY1> June 7, 2012


Call to Order and Roll Call

The<MeetNo2> 1st meeting of the Interim Joint Committee on Natural Resources and Environment was held on<Day> Thursday,<MeetMDY2> June 7, 2012, at<MeetTime> 1:00 PM, in<Room> Room 149 of the Capitol Annex. Representative Jim Gooch, Jr., Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Jim Gooch, Jr., Co-Chair; Senators Joe Bowen, Ernie Harris, Ray S. Jones II, Dorsey Ridley, Katie Stine, Robert Stivers II, Johnny Ray Turner, and Robin L. Webb; Representatives Hubert Collins, Tim Couch, Stan Lee, Reginald Meeks, Tim Moore, Marie Rader, John Short, Jim Stewart III, and Jill York.


Legislative Guest: Representative John Will Stacy.


Guests: John Lyons, Shea Hogan, and Sean Alteri, Kentucky Division for Air Quality; Benjy Kinman and Mark Mangeot, Kentucky Department for Fish and Wildlife Resources.


LRC Staff: Tanya Monsanto, Stefan Kasacavage, and Kelly Blevins.


Division of Air Quality update on new standards for Kentucky

A quorum being present, the chair invited representatives from the Division of Air Quality to provide an update on air quality regulations and the new greenhouse gas rule. John Lyons, Director Division of Air Quality, discussed the greenhouse gas new (GHG) source performance standards, mercury and air toxics standards, and other air quality issues such as ozone, particulate matter, and sulfur dioxide. The greenhouse gas new source performance standards, proposed in April 13, 2012, is still in the comment period. Comments are due on June 25, 2012.


The (GHG) new source performance standards apply to all fossil-fired electric generating units (EGUs) with a baseload capacity of more than 73 megawatts (MW). The standards do not apply to EGUs existing on the date the regulation goes into effect or to EGUs that are making modifications or that are in reconstruction. There are exemptions for EGUs deemed transitional units, burn certain types of waste, and that are simple cycle turbines. Transitional units are defined as an EGU that has received a preconstruction permit and whose proposed date of construction is prior to 2013. Cash Creek is the only unit in Kentucky that may be deemed a “transitional unit,” but the EGU must commence construction prior to 2013. There also is an exemption for EGUs that burn municipal solid waste or commercial/industrial waste.


The new source standard for carbon dioxide on fossil-fired plants is no more than 1,000 pounds (lbs) of carbon dioxide (CO2) per megawatt hour (MWh) of gross output on an annual basis. However, if coal or petcoke is used and it is designed for installation and operation of a carbon capture and storage, then it can emit 1800 lbs CO2/MWh of gross output during a 12-month period up to the 11th year of operation before the emissions rate is reduced to 1,000 lbs CO2/MWh. Under the new source standards, natural gas fired units become the best available control technology; therefore, the new standards promote fuel switching from coal to natural gas. The new standards actually set energy policy by regulation. Additionally, existing source standards are being evaluated by federal air quality for determining their carbon dioxide contribution and may be regulated in the future. This regulatory climate does create uncertainty for the electric generating industry. The result of the new rules discussed today will be increased fuel switching, retirement of older plants, higher electricity prices, increased permitting costs and increased costs to Kentucky citizens and businesses. There are no environmental benefits from the GHG new performance standards.


In response to a question about which regional administrator claimed that natural gas will be the new fuel stock of the future, Director Lyons replied it was the Regional Administrator was from the United States Environmental Protection Agency (USEPA) Region 1. Currently, natural gas prices are low; Kentucky is litigating permits for coal, and this new rule is designed to impact coal-fired generation. Those three things are negatively impacting Kentucky.


In response to a question about the part of the rule that allows for new coal fired plants to be built in 10 years, Director Lyons replied that there is a part that applies to “supercritical” plants. In response to an inquiry about Cash Creek, Director Lyons explained that the EGU probably will not be built. Natural gas prices are very low.


In response to a question as to whether there is a tipping point where it is better to switch from coal to natural gas and whether that tipping point is predicated on the type and cost of technology, Director Lyon explained that it is as cheap to use coal as it is to use natural gas. The tipping point is being driven not by technology but by pollution policy. Director Lyons stated he would provide more specific information after polling the various utilities. Director Lyons furthered that the fleet of EGUs in the state is old, and there are questions about whether these plants should be retrofitted or retired. Combustion turbines are cheaper to install than a coal-fired boiler.


One legislator remarked that Kentucky has vast coal reserves, and the market should determine which generating technology is used. If coal is cheaper, it should be coal, but regulatory policy should not be deciding which fuel type is a winner or a loser. There are also concerns about whether Kentucky has the infrastructure to support a transition to natural gas. Director Lyons added that the Mercury and Air Toxics Rule (MATS) and the Utility Most Achievable Control Technology rule (MACT) are reaching final implementation date. The rule became effective April 16, 2012, and sources will have three years to comply. There are new controls for hazardous air pollutants (HAPs) and new limitations on air emissions of mercury. Overall, the rule is expected to achieve a 91 percent reduction in mercury and acid gases and 55 percent reduction in sulfur dioxide (SO2). The most impacted sources will be coal and oil-fired power plants.


In response to a question about the percentage of mercury that comes from coal-fired power plants, Director Lyons stated that he did not know where it falls in rank order of emitting sources. Power plants contribute a sizable proportion. More information will be forthcoming. Most EGUs are in a good position to comply with the new air pollution rules because of earlier technological controls, and many sources of pollution have been considerably reduced. Particulate matter (PM), sulfur dioxide (SO2) and nitrogen oxides (NOx) have been reduced considerably. The programs have worked to clean the air.


Director Lyons continued with a discussion of the new standards for Ozone PM 2.5 and SO2. There are 140 monitors across the state, and until recently, ozone designations showed that Kentucky was in compliance with all ozone standards. There is a new SO2 standard which has resulted in one area on nonattainment and the nonattainment is being caused by a power plant located outside the state. It is expected that the new one-hour standard will result in non attainment in Jefferson and Campbell counties.


In response to a remark that US EPA does not factor in the cost to each state individually but only looks at costs in aggregate, Director Lyons stated that, because Kentucky relies heavily on coal, it will be affected more than other states. US EPA uses national statistics that sometimes do not treat each state fairly.


In response to a question about how different environmental groups achieve standing in lawsuits against US EPA, Director Lyons stated that these groups want to make the national standards more stringent. To clarify, Lyons furthered, there are lawsuits instigated by both proponents and opponents to new standards. US EPA does not have the resources to handle all these lawsuits. The Kentucky Division of Air Quality has defended every permit issued by the state.



Kentucky Department of Fish and Wildlife Resources presentation on “no net loss” of public hunting land

Benjy Kinman, Deputy Director for the Kentucky Department of Fish and Wildlife Resources (KDFWR) and Mark Mangeot, government liaison for KDFWR provided an update on Senate Bill 64 “No Net Loss” provisions. This provision required an annual report of changes in the department’s holdings of public hunting lands. Mr. Kinman described various categories of public land. Overall, Kentucky has increased its holding of public hunting land by 4 percent. This is an overall increase of half a percent in total public land for the Commonwealth.


Mr. Kinman detailed specific purchases for the Big Rivers Wildlife Management Area (WMA) and State Forest in Union and Griffith counties. There were additions in Veterans Memorial WMA in Scott County. In response to a question about elk tags for high school students, Mr. Kinman stated that there is a 10 percent cap on nonresidents obtaining elk tags. There are no special opportunities for high school students or seniors, but the department is discussing a bonus preference point system for residents who apply each year but are unsuccessful in the draw.


The meeting adjourned at 2:15 PM (EDST).