United States            Air and Radiation          EPA430-R-00-C
                                   '«™o h               May 2000

Environmental Protection

&EPA      Kentucky State  Primer

                                                A Primer on
                                                Developing Kentucky's
                                                Landfill Gas-to-Energy

                                       Kentucky Natural Resources and
                                      Environmental Protection Cabinet
                   Printed on paper that contains at least
                   30 percent postconsumer fiber.

       Introduction	j
       1.   The Goals of This Primer	i
       2.   LFGTE Projects in Kentucky	ii
       3,   About the Landfil! Methane Outreach Program	iv
       Part  1:
       1. Overview of Federai Regulations and Permits  	1
           11   Ciean Air Act (CAA)  	1
           1.2   Resource Conservation and Recovery Act Subtitle D 	4
           1,3   National Pollutant Discharge Elimination System (NPDES) Permit 	5
           1,4   Clean Water Act, Section 401 	5
           1,5   Other Federal Permit Programs 	6
       2,   State Regulations and Permits	7
       3.   Overview of Local Regulations and Permits	15
       Part  2: Incentiwe Programs
       1.   Overview of Federal Incentive Programs 	17
           1,1   Renewable Energy Production incentive (REP!)  	17
           1.2   Qualifying Facilities Certification	17
           1.3   Section 29  Tax Credit 	18
       2,   State Incentive Programs	18
       3.   Electricity Restructuring and LFGTE	19
       Table  A  Candidate  Landfills for LFGTE Projects in Kentucky	ill
       Table  2.1  Summary Table of State Regulations/Permits  	8
       Table  2.2 Permit Approval Timeline	9
       Table  2.3 Permit to Construct and Operate an Air Contaminant Source	10
       Table  2,4 Kentucky Pollutant Discharge Elimination  System (KPDES)	12
       Table  3,1  Local Regulations and Permits	16
       Appendix  A
       State  Contacts	20

Q     The Goals of This Primer
 Throughout the country, the number of landfill gas-to-energy (LFGTE) projects is growing. Recovering methane
 gas at solid waste landfills provides significant environmental and economic benefits by eliminating methane
 emissions while capturing the emissions' energy value. The methane captured from landfills can be transformed
 into a cost-effective fuel source for generating electricity and heat, firing boilers,  or even powering  vehicles.

 Permits, incentive programs, and policies for LFGTE project development vary greatly from state to state. To
 guide LFGTE project developers through the state permitting process and to help them to take advantage of
 state incentive programs, the U.S. Environmental Protection Agency's (EPA's) Landfill  Methane Outreach Program
 (LMOP) has worked with state agencies to develop individual primers for states  participating in the State Ally
 Program. By presenting the latest information on federal and state regulations and incentives affecting LFGTE
 projects in this primer, the LMOP and Kentucky state officials hope to facilitate development of many of the land-
 fills listed in Table A.

 To develop this primer, the Commonwealth of Kentucky identified all the permits and funding programs that could
 apply to LFGTE projects developed in  Kentucky. It should be noted, however, that the regulations,  agencies, and
 policies described are subject to change. Changes are likely to occur whenever a state legislature  meets, or when the
 federal government imposes new directions on state and local governments. LFGTE project developers should verify
 and continuously monitor the status of laws and rules that  might affect their plans or the  operations of their projects.

 Who Should Read This Primer?
 This primer is designed to help realize the potential of landfill gas recovery in the Commonwealth  of Kentucky.  It
 provides information for developers of LFGTE projects, as well as all other participants in such  projects: landfill
 operators, utility companies, independent power producers, utility regulators, state regulators, engineers, and
 equipment vendors.

     • Landfill operators                       • State regulators

     • Utility companies                       • Engineers

     • Independent power producers            • Equipment vendors

     • Utility regulators

 What Information Does This  Primer Contain?
 If you are interested in taking advantage of the economic and environmental opportunities in LFGTE recovery
 in Kentucky, you will need to know the regulatory requirements that apply. You will also need to know what
 economic incentives are available to help make these  projects more economically viable.

 To address these needs, this primer covers the following topics:

     • Federal Regulations and Permits. This section provides information on federal regulations that may pertain
       to LFGTE projects, including solid  waste, air quality, and water quality regulations.

     • State Regulations and Permits. This section provides information on state permits that apply to landfill gas
       recovery projects in Kentucky.
                                    A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

       Local Regulations and Permits. Local permit approval will often be needed for LFGTE projects. This
       section offers a step-by-step process you can follow to secure this approval.

       Federal Incentive Programs. This section presents information on federal incentives that may apply to
       LFGTE projects.

       State Incentive Programs. This section presents information on the environmental infrastructure financing
       opportunities that are available in the Commonwealth of Kentucky.
Ill     LFGTE Projects in Kentucky
 One LFGTE project is presently operating in Kentucky. It is designed to recover all of the LFG produced by the
 Commonwealth's largest landfill, the Outer Loop Landifll in Jefferson County, and provide it to a nearby industrial
 plant for use an an energy source. The volume of LFG being recovered is approximately 4  million cubic feet per
 day. The contact at the company that developed the project, Toro Energy, is Taylor Clark. He can be reached at
 either (512) 322-9781 (Austin, TX) or (214) 691-0011 (Dallas). The contact person at Waste Managment,  Inc., the
 landfill operator, is Mark Messics, (610) 285-3106.

 According to EPA's Opportunities for Landfill Gas Energy Recovery in  Kentucky, another 20 landfills have the
 potential to support economically viable LFGTE projects. (Candidate landfills are defined as having more than 1
 million tons of waste in  place.) If these 20 landfills developed projects,  2.9 million tons of CO2 equivalent could be
 reduced annually. Table A on the next page contains information on Kentucky's 20 candidate landfills.

 The goal of the Commonwealth of Kentucky is to encourage the efficient capture and utilization of landfill  gas in
 order to reduce harmful emissions and, where cost  effective, to encourage the efficient production of energy.
        Landfill Gas Projects in Kentucky

Table A
Candidate Landfills
Landfill Name
Addington Environ mental/Tri-K
Bavarian Trucking Co. LF
BFI/Franklin LF
City of Bowling Green LF
City of Glasgow LF
City of Hopkinsville LF
City of Owensboro LF
Cooksey Brothers Disposal Company
Dozit Company
Epperson Waste Disposal Company LF
E.R. Hopper & Son LF
Hardin County LF
Laidlaw/Valley View LF
McCracken County LF
Pulaski Grading LF
Rumpke/Montgomery County LF
Rumpke/Pendleton County LF
Southern Sanitation LF
Williams LF
WMI/Lexington-Fayette LF
Operational Status
                                A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

       About the Landfill Methane Outreach Program
The recovery of energy from landfill gas provides local and global environmenfal and energy benefits, as well as
economic benefits. The mefhane captured from landfills can be transformed into a cost-effective fuel source for
generating electricity and heat, firing boilers, or even powering vehicles.

To promote the use of  landfill gas as an energy source, EPA has established the Landfill Methane Outreach
Program (LMOP). The  goals of LMOP are to reduce methane emissions from landfills by:

    • Encouraging environmentally and economically beneficial landfill gas-to-energy development

    • Removing barriers to developing LFGTE projects

    To achieve these goals, EPA establishes alliances with four key constituencies:

    • State environmental and energy agencies

    • Energy users/providers (including investor-owned, municipal and other public power utilities, cooperatives,
      direct end users, and power marketers)

    • Industry (including developers, engineers, and equipment vendors)

    • Community partners (municipal and small private landfill owners and operators; cities, counties, and other
      local governments; and community groups)

EPA establishes these alliances through a Memorandum of Understanding (MOU). By signing the MOU, each  ally
and partner acknowledges a shared commitment to promoting landfill gas energy recovery at solid waste
landfills, recognizes that the widespread use of landfill gas as  an energy resource will reduce methane and other
air emissions, and commits to certain activities that enhance the development of this resource.

As of  September 1999, more than 270 landfill methane recovery projects were operating in the United States.
EPA estimates that up to 750 landfills could install economically viable landfill energy projects.

For more information about LMOP, contact:

U.S. Environmental Protection Agency
Landfill  Methane Outreach  Program (6202J)
1200 Pennsylvania Avenue,  N.W.
Washington, DC  20460
(888)  STAR-YES (782-7937)
Fax (202) 565-2077

For more information about LFGTE Projects in Kentucky, contact:

Mr. Geoffrey Young
Kentucky Division of Energy
663 Teton Trail
Frankfort, KY 40601
(502)  564-7192, or in Kentucky (800) 282-0868
Fax: (502) 564-7484
E-mail: geoffrey.young@mail.state.ky.us
iv      Landfill Gas Projects in Kentucky

 Part  1: Regulations and  Permits
QOverview Of  Federal  Regulations And  Permits
        The following section discusses federal regulations that may pertain to LFGTE projects. LFGTE projects
        can be subject to solid waste, air quality, and water quality regulations. The federal regulations are
        presented in general terms, because individual state/local governments generally develop their own
        regulations for carrying out the federal mandates. Specific requirements may therefore differ among
        states.  Project developers will have to contact  relevant federal agencies and, in some cases, state
        agencies for more detailed information and applications. The discussion of each key federal
        regulation/permit contains three components:

            • Importance of the  regulation/permit to LFGTE  project developers

            • Applicability to LFGTE projects

            • Description of each regulation/permit

 1.1    Clean Air Act (CAA)
        The CAA regulates emissions of pollutants to  ensure that air quality meets specified  health and welfare
        standards. The CAA contains two provisions that may affect LFGTE projects: New Source Performance
        Standards (NSPS) and New Source Review (NSR). Facilities that are planning to construct a new LFGTE
        system or that plan to modify a landfill operation to incorporate a LFGTE system must obtain an
        Authority to Construct (ATC) permit from the responsible air regulatory agency if emissions from the
        project exceed the major facility emission thresholds. The ATC permit specifies the NSPS and  NSR
        requirements that the project must meet. Once construction is complete, the facility must obtain an oper-
        ating permit that meets the requirements defined in Title V of the 1990 CAA Amendments. The general
        requirements of NSPS, NSR, and Title Vfor LFGTE projects are discussed below.

        New Source Performance Standards (NSPS) and Emissions Guidelines
        for MSW Landfills

            Importance  LFGTE projects can be part of a compliance strategy to meet EPA's new emissions
                         standards for landfill gas.

            Applicability Landfills meeting certain design  capacity, age, and emissions criteria are required
                         to collect LFG and to either flare it or use  it for energy.

            Description  EPA final regulations under Title I of the CAA Amendments require affected landfills
                         to collect and control LFG. Specifically, the CAA targets reductions in the emissions
                         of non-methane organic compounds (NMOCs) such as benzene, carbon
                         tetrachloride, and chloroform found in LFG because they contribute to local smog
                         formation. For landfills that received waste  after November 8, 1987 ("existing landfills"),
                         the standards are Emissions Guidelines (EG), and for landfills that commenced
                         construction, reconstruction, modification,  or began accepting waste on or after May
                         30, 1991 ("new landfills"), the standards are New Source Performance Standards
                         (NSPS). The final regulations can be found in the Federal Register, March 12, 1996,
                         Vol. 61, No. 49, pgs. 9907-9944.

                   The basic requirements are the same for both existing and new landfills. Landfills
                   that meet both of the following criteria must comply with the regulations.

                   •   Capacity—maximum design capacity greater than or equal to 2.5 million Mg
                       (or 2.5 million cubic  meters, about 2.75 million tons).1

                   •   Emissions—annual NMOC emission  rate is greater than 50 Mg  (about 55 tons).

 Air Emissions: New Source Review (NSR) Permitting Process

     Importance   New LFGTE  projects may be required to obtain  construction permits under
                   New Source  Review (NSR). Depending on the area in which the  project is located,
                   obtaining these permits may  be the most critical aspect of project approval.

     Applicability  The combustion of LFG results in  emissions of carbon monoxide  and oxides of
                   nitrogen. Requirements vary for control of these  emissions depending on local air
                   quality. The relevant standards for a particular area will be discussed in Section 2,
                   State Standards and Permits. Applicability of these standards to LFGTE projects will
                   depend on the level of emissions resulting from the technology used in the project
                   and the project's location (i.e., attainment or non-attainment area).

     Description   CAA regulations require new stationary sources and modifications to existing sources
                   of certain air emissions to undergo NSR  before they can operate. The purpose of
                   these regulations is to ensure that  sources meet the applicable air quality standards
                   for the area in which they are located. Because these regulations  are complex, a
                   landfill owner or operator may want to consult an attorney or expert familiar with
                   NSR for more information about permit requirements in a particular area.

 The existing CAA regulations for attainment and maintenance of ambient  air quality standards regulate
 six criteria pollutants — ozone, nitrogen dioxide (NO2), carbon monoxide (CO), particulate matter
 (PM-10), sulfur dioxide (SO2), and lead.  The CAA authorizes the EPA to set both health and public
 welfare-based national ambient air quality standards (NAAQS) for each criteria pollutant. Areas that
 meet the NAAQS for a particular air pollutant are classified as being in "attainment" for that pollutant and
 those that do  not are in "non-attainment."  Because each state is required to  develop an air quality imple-
 mentation plan (called a State Implementation Plan or SIP) to attain  and maintain compliance with the
 NAAQS in each Air Quality Control Region within the state, specific  permit requirements will vary by
 state. (See 40 CFR  51.160-51.166 for more information.)

 The location of the  LFGTE project will dictate what kind of construction and operating permits are
 required. If the landfill is located in an area that is in attainment for a particular pollutant, the LFGTE
 project must undergo Prevention of Significant Deterioration  permitting. Nonattainment Area permitting is
 required for those landfills that are located in areas that do not meet the NAAQS for a particular air pollu-
 tant. Furthermore, the level of emissions from the project determines whether the project must undergo
 major NSR or minor NSR. The requirements of major  NSR permitting are  greater than those
 for minor NSR. The following provides more detail on  new source permits:

 Prevention of Significant Deterioration Permitting
 Prevention of Significant Deterioration (PSD) review is used in attainment areas to determine whether a
 new or modified emissions source will cause significant deterioration of local air quality. The State air office
 can assist LFG project developers in determining whether a proposed project requires PSD approval.
1 Landfills with less than 2.5 million Mg are required to file a design capacity report.

Landfill Gas Projects in Kentucky

All areas are governed to some extent by PSD regulations because no location is in nonattainment for all
criteria pollutants. Applicants must determine PSD applicability for each individual pollutant. For gas-fired
sources, PSD major NSR is required if the new source will emit or has the potential to emit any criteria
pollutant at a level greater than 250 tons per year.

For each pollutant for which the source is considered major, the PSD major NSR permitting process
requires that the applicants determine the maximum degree of reduction achievable through the
application of available control technologies. Specifically, major sources  may have to undergo any or all
of the following four PSD steps:

    • Best Available Control Technology (BACT) analysis

    • Monitoring of local air quality

    • Source impact analysis/modeling

    • Additional impact  analysis/modeling (i.e., impact on vegetation, visibility, and Class areas)2

Minor sources and modifications (i.e., below 250 tons per year) are exempt from this process, but these
sources must still obtain construction and operating air permits (see CFR. 40 CFR 52.21 for more
information on PSD).

Nonattainment Air Permitting
An area that does not meet the NAAQS for one or more of the six criteria pollutants is classified as
being in "nonattainment" for that pollutant. Ozone is the most pervasive nonattainment pollutant, and
the one most likely to affect LFGTE projects. A proposed new emissions source or modification of an
existing source located in a nonattainment area must undergo nonattainment major NSR if the new
source or  the modification is classified as major (i.e., if the new or modified source exceeds specified
emissions thresholds). To obtain a nonattainment NSR  permit for criteria pollutants, a project must
meet two  requirements:

    • Must use technology that achieves the  Lowest Achievable Emissions Rate (LAER) for the
      nonattainment pollutant

    • Must arrange for an  emissions reduction at  an existing combustion source that offsets the
      emissions from the new project at specific ratios

Potential Exemptions
EPA recently furnished a guidance document to state and regional permitting authorities that provides
an exemption from major NSR  permitting  requirements for landfill projects that qualify as "pollution
control projects." An existing landfill that plans to install  a LFGTE recovery project may qualify as a pollu-
tion control project as long as it reduces non-methane organic compounds (NMOC) at the site. Under
the guidance, the permitting authority may exempt the project from major NSR, provided  it meets all
other requirements under the CAA and  the state,  including minor source requirements. In nonattainment
areas, offsets will still be required, but need not exceed a 1:1  ratio. States have discretion to exercise the
increased  flexibility allowed by the guidance on a  case-by-case basis.
2Class I areas are specified under the Clean Air Act and include national parks. Projects situated within a certain
distance from Class I areas are subject to more stringent criteria for emissions levels.
                            A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

       Title V Operating Permit

           Importance   Many LFGTE projects must obtain operating permits that satisfy Title V of the 1990
                         CAA Amendments.

           Applicability Any LFGTE plant that is a major source, as defined  by the Title V regulation (40 CFR
                         Part 70), must  obtain an operating permit.

           Description   Title V of the CAA requires that all major sources obtain new federally enforceable
                         operating permits. Title V is modeled after a similar program established under the
                         National Pollution Discharge Elimination System (NPDES). Each major source must
                         submit an application for an operating permit that meets guidelines spelled out in
                         individual state Title V programs. The operating permit describes the emission limits
                         and operating  conditions that a facility must satisfy, and specifies the reporting
                         requirements that a facility must meet to show compliance with the air pollution
                         regulations. A Title V operating  permit must be renewed every 5 years.

1.2    Resource Conservation and  Recovery Act Subtitle D
           Importance   Before a LFGTE project can be developed, all  Resource Conservation and Recovery
                         Act (RCRA) Subtitle D requirements (i.e., requirements for non-hazardous waste
                         management)  must  be satisfied.

           Applicability Methane is explosive in certain  concentrations and  poses a hazard if it migrates
                         beyond the landfill facility boundary. Landfill gas collection systems must meet
                         RCRA Subtitle D standards for gas control.

           Description   Since October 1979, federal regulations promulgated under Subtitle D of RCRA
                         required controls on migration of landfill gas. In 1991, EPA promulgated landfill
                         design and performance standards; the newer standards apply to municipal solid
                         waste landfills that were active on or after October 9, 1993.  Specifically, the
                         standards require monitoring of LFG and establish performance standards for
                         combustible gas migration control. Monitoring requirements must be met at landfills
                         not only during their operation,  but also for a period of 30 years after closure.

       Landfills affected by RCRA Subtitle D are required to control gas by establishing  a program to periodically
       check for methane emissions and prevent offsite migration. Landfill owners and operators must ensure
       that the concentration of methane gas does not exceed:

           • 25 percent of the lower explosive limit for methane in facilities' structures

           • The lower explosive limit for  methane at the facility boundary

       Permitted limits on methane levels  reflect the fact that methane is explosive within the range of
       5 to 15 percent concentration in  air. If methane emissions exceed permitted limits, corrective action
       (i.e., installation of a LFG collection system) must be taken. Subtitle D may provide an impetus for
       some landfills to install energy recovery projects in cases where a gas collection system is required
       for compliance (see 40 CFR Part 258 for more information).
       Landfill Gas Projects in Kentucky

1.3   National  Pollutant Discharge Elimination System (NPDES)  Permit
           Importance   LFGTE projects may need to obtain NPDES permits for discharging wastewater that
                         is generated during the energy recovery process.

           Applicability  LFG condensate forms when water and other vapors condense out of the gas stream
                         due to temperature and pressure changes within the collection system. This wastewater
                         must be removed from the collection system. In addition, LFGTE projects may generate
                         wastewater from system maintenance and cooling tower blowdown.

           Description   NPDES permits regulate discharges of pollutants to surface waters. The authority to
                         issue these permits is delegated to state governments by EPA. The permits, which
                         typically last five years, limit the quantity and concentration of pollutants that may be
                         discharged.  To ensure compliance with the limits, permits require wastewater
                         treatment or impose other operation conditions. The state water offices or EPA
                         regional office can provide further information on these permits.

       The permits are required for three categories of sources and can be issued as individual or general
       permits. A LFGTE project would  be included in the "wastewater discharges to surface water from
       industrial facilities" category and would require an individual permit. An individual permit application for
       wastewater discharges typically requires information on:

           • Water supply volumes

           • Water utilization

           • Wastewater flow

           • Characteristics and disposal methods

           • Planned improvements

           • Storm water treatment

           • Plant operation

           • Materials and chemicals used

           • Production

           • Other relevant information.
1.4   Clean  Water Act, Section 401
           Importance   LFGTE projects may need CWA Section 401 certification for constructing pipelines
                         that cross streams or wetlands.

           Applicability  LFG recovery collection pipes or distribution pipes from the landfill to a nearby gas
                         user may cross streams or wetlands. When construction or operation of such pipes
                         causes any discharge of dredge into streams or wetlands, the project may require
                         Section 401  certification.

           Description   If the  construction or operation of facilities results in any discharge into streams or
                         wetlands, such construction is regulated under Section 401. This requirement may
                         affect the construction of LFGTE project facilities or pipelines to transport LFG.
                                  A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

       The applicant must obtain a water quality certification from the State in which the discharge will
       originate. The certification should then be sent to the U.S. Army Corps of Engineers. The certification
       indicates that such discharge will comply with the applicable provisions of Sections 301, 302, 303, 306,
       and 307 of the Clean Water Act (CWA).
1.5   Other Federal Permit Programs
       The following are brief descriptions of how other federal permits could apply to LFGTE project

           • RCRA Subtitle C could apply to a LFG project if it produces hazardous waste. While some LFG
             projects can return condensate to the landfill, many dispose of it through the public sewage system
             after some form of on-site treatment. In some cases, the condensate may contain high enough
             concentrations of  heavy metals and organic chemicals for it to be classified  as a hazardous waste,
             thus triggering federal regulation.

           • The Historic Preservation Act of 1966 or the Endangered Species Act could  apply if power lines
             or gas pipelines associated with a project infringe upon an historic site or an area that provides
             habitat for endangered species.
       Landfill Gas Projects in Kentucky

Ill    State Regulations and Permits
        This section provides information on permits required by the Commonwealth of Kentucky for the
        development of a LFGTE project.3 Information provided on each permit includes how the permit is
        applicable to LFGTE projects, the appropriate agency contact, a description of the permit, the
        statute/regulation, information required and suggestions for a successful application, the application
        and  review process, the review/approval period, and any fees required. For an overview of required
        permits, contact information, and length of the review period, see Tables 2.1  and 2.2.

        Currently, the Commonwealth of Kentucky does  not have written  criteria for landfill gas collection and
        energy systems. It is anticipated that Kentucky will  develop criteria within the next few years.

        Summary of  Permits
        The  principal permits required for LFGTE projects  in Kentucky are related to air quality and water quality,
        and  are regulated by the Kentucky Department for Environmental Protection (DEP), a department  of the
        Natural Resources and Environmental Protection Cabinet (NREPC).

        Permitting Assistance
        The  DEP has implemented a one-stop permit coordination process to assist applicants in obtaining
        necessary state-level environmental permits and to improve coordination of the DEP's permitting processes
        for projects requiring multiple permits. The purpose  of the  process is to aid applicants at the  initial stages
        of project planning by identifying all DEP permits,  registrations, or approvals that could be required for a
        project. A permits coordinator position has been established within the Commissioner's Office in the DEP.
        The  permits coordinator undertakes the following  activities:

             • Serves as a central contact for applicants to  obtain permit application information including  permit
              application forms and copies of current regulations.

             • Identifies,  based on information supplied by  the applicant, all DEP permit and registration
              requirements and outlines the probable steps and times involved to secure the permits.

             • Coordinates pre-application conferences between the applicant and the DEP.

             • Provides coordination for  DEP during the permit application review process and can respond to
              applicant inquiries concerning the DEP review process.

        This process does not eliminate or modify any requirement set out by Kentucky statutes or regulations. This
        process provides the applicant and other individuals a central contact point for DEP information. Contact
        Margaret Shanks at the Department for Environmental Protection, Commissioner's Office, at  502-564-2150
        for more  information.

        The  DEP has also published a handbook called The Environmental Permitting Handbook which focuses
        on DEP-administered permitting  programs. Information on  the Department's permit requirements and
        application procedures are contained in this document and were compiled in January 1998. Additional
        information or detailed instructions on applying for the environmental permits issued by the DEP may be
        obtained on the Internet at http://www.nr.state.ky.us/nrepc/permithome.htm or by phone at  502-564-2150.
         3The permits contained in this handbook were suggested by state permitting agencies.

                                    A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

Table 2.1
Summary Table of State Regulations/Permits
Review Period
       Permit to Construct
       and Operate an
       Air Contaminant
Division for Air Quality
803 Schenkel Lane
Frankfort, KY 40601
Tel: 502-573-3382
Fax: 502-573-3787
60 to 210 days
       Kentucky Pollutant
       Discharge Elimination
       System (KPDES)
 Division of Water
 KPDES Branch
 Frankfort Office Park
 14 Reilly Road
 Frankfort, KY 40601
 Tel: 502-564-3410
 Fax: 502-564-4245
 180 days
       Landfill Gas Projects in Kentucky

Table 2.2
Permit Approval Timeline
                                                    10    12
                    Solid black band denotes the minimum review/approval
                    period; gray band the maximum.
                                A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

Table 2.3
       Permit to Construct and Operate an Air Contaminant Source
Applicability to
Landfill Gas Projects
                  Emissions from equipment used at LFGTE recovery facilities, such as gas turbines
                  or boilers, are subject to state air regulations. However, LFGTE projects may be
                  exempt from the requirement to  obtain an air pollution permit if emissions are
                  below de minimis regulated levels.
Agency Contact
                  Division for Air Quality
                  803 Schenkel Lane
                  Frankfort, KY 40601
                  Tel: 502-573-3382
                  Fax: 502-573-3787
                  Owners of equipment that emits, or controls the emission of, substances into the air
                  are required to obtain a Permit to Construct and Operate an Air Contaminant Source.
                  The purpose of this permit is to prevent the significant deterioration of air quality
                  in areas of the Commonwealth of Kentucky and to provide conditions for the
                  construction of new or modified sources that would impact on nonattainment areas
                  so that major new or major modified sources will not exacerbate existing violations
                  of the ambient air quality standards. Separate construction and operating permits
                  were replaced by one permit issued in three phases (draft, proposed and final) to
                  major sources and in one step (final) to minor sources. New major sources, if subject
                  to Prevention of Significant Deterioration (PSD) regulations or nonattainment area
                  regulations, must be issued a  proposed permit prior to the start of construction.
                  Kentucky issues  two types of permits: federally enforceable permits, issued to major
                  sources under Title V, and state origin permits, issued to minor sources or synthetic
                  minors (a voluntary limit on production  to qualify as a minor source) under Title V.
                  Kentucky Revised Statute (KRS) 224.10-100 and 224.20-110 and 401

                  Kentucky Administrative Regulation (KAR) 50:035
                  New sources must have a permit to authorize construction prior to beginning
                  construction. Construction must be commenced within 18 months after the permit
                  is issued.
Application Process
                 Applicants can obtain DEP 7007 form series from the Division for Air Quality or
                 via the Internet at http://www.nr.state.ky.us/nrepc/dep/daq/prb/daqapp.htm
Landfill Gas Projects in Kentucky

Review Process
After the permit application is submitted, the division must make a completeness
determination within 60 days. The permit review process after that step depends
on whether a source is new or existing and whether the source is major or minor.
Some applications will be reviewed by the federal Environmental Protection Agency.
A public notice and hearing may also be required. However, there is no public notice
requirement at this time for a state origin permit.
The regulatory review/approval period for the federally enforceable draft permit is
120 days and for a proposal permit 210 days; however, the Division for Air Quality
target review time is 60 days for a draft permit and 120 days for a  proposal permit.
The regulatory review/approval period for a state enforceable permit is 120 days;
however, the Division for Air Quality target review time is 60 days.
There is no air permit application fee or permit issuance fee. The state has general
emission fee authority to fund various aspects of its air pollution control program.
Sources with actual emissions of less than 25 tons of pollutants (sulfur dioxide,
nitrogen dioxide, volatile organic compounds and PM10  [ particulate matter under
10 microns in diameter]) per year pay a flat $150 annual  fee. Larger sources are
required to pay a per-ton fee, which for Fiscal Year 1998  was $32.50.
                                    A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential

Table 2.4
       Kentucky Pollutant Discharge Elimination System (KPDES)
       (Discharges to Surface Water or Ground Water)
Applicability to
Landfill Gas Projects
                 Some LFGTE projects treat condensate, which forms as water and other vapors
                 condense out of the gas steam due to temperature and pressure changes within the
                 gas collection system. Also, energy recovery projects may generate wastewater from
                 system maintenance and cooling tower blowdown. Such wastewater streams are
                 typically combined with landfill leachate streams for treatment and discharge to
                 surface waters or ground waters. In addition, any project that disturbs more than
                 5 acres needs a construction site erosion control permit.
Agency Contact
                 Division of Water
                 KPDES Branch
                 14 Reilly Road
                 Frankfort, KY 40601
                 Tel: 502-564-3410
                 Fax: 502-564-4245
                 The KPDES program requires permits for the discharge of pollutants from any point
                 source into surface and ground waters of the Commonwealth of Kentucky. These
                 permits typically place limits on the quantity concentration of pollutants that may
                 be discharged. Compliance with the  KPDES program requirements constitutes
                 compliance with the operational permit requirements of 401 KAR 5:005. The permit
                 is valid for a period of 5 years. Storm water discharges associated with construction
                 activity are also required.
                 Statute - KRS 224.10-100, 224.16-050, KRS 224.70-110 and KRS 224.70-120.

                 Regulation - 401 KAR 5:055.
                 Applications must be submitted at least 180 days before the date on which the
                 discharge is to commence. Storm water discharges associated with construction
                 activity must have applications submitted 90 days before the date construction begins.
Application Process
                 The applicant should obtain the appropriate KPDES application forms from the Division
                 of Water and submit the completed application to the division. Forms can also be
                 obtain from the Internet at http://water.nr.state.ky.us/dow/permapr.htm
Landfill Gas Projects in Kentucky

Review Process           Upon completing the administrative review of the application, the division will notify
                          the applicant in writing within 30 days if the application is complete or incomplete.
                          Once a draft permit is prepared (based on a completed application), at least 30 days
                          are allowed for public comment. A public hearing on the decision to issue a permit
                          may be required if there is a significant degree of public interest in a draft permit.
                          Public notice of the hearing  is to be given at least 30 days before the hearing.
Review/Approval          180 days

Fees                     An application filing fee must be submitted with each KPDES permit application.
                         The filing fee is 20 percent of the appropriate permit base fee. The Division of Water
                         determines the total permit fee and bills the applicant for the permit fee less the filing
                         fee before issuing the permit. The base fee for a permit is $2,100.
                                    A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential     13

14      Landfill Gas Projects in Kentucky

Overview of Local Regulations and Permits
Within the framework of federal and state regulation, local governments will have some jurisdiction over
LFGTE development in nearly all cases. Typically, local permits address issues that affect the surrounding
community. These permits generally fall under the categories of construction, environment and health,
land use, and water quality/use. Local governments are also responsible for administering some permits
for federal and state regulations in addition to their own. For example, many local governments are
responsible for ensuring compliance with federal air quality regulations. It should be noted, however,
that some local standards and regulations are more strict than state or federal regulations.

Steps to Successful Local Permits Approval:
The following 6 steps will assist LFGTE project developers to achieve successful local  permits approval:

    Step 1    Determine which local authorities have jurisdiction over the project site.

    Step 2    Contact local, city, and/or county planning and public works departments to obtain
              information about applicable permits and to discuss your plans.  Meeting with agency
              staff to discuss the LFG project and required permits often  helps to expedite the
              permitting process.

    Step 3    Obtain essential information regarding each permit, including:

               • what information is required

               • the permitting process that should be followed

               • time frames (including submittal, hearing, and decision dates)

    Step 4    Obtain copies of the  regulations to compare and verify what is required in the permit
              applications. If they differ, contact the appropriate permitting agency.

    Step 5    Submit a complete application. Incomplete applications typically result in processing

    Step 6    Attend meetings or hearing(s) where the application will be discussed to respond to any
              questions that are raised. Failure to do  so could result in delays.

Typical Local Permits
Table 3.1 lists typical local permits and approvals required for LFGTE projects.
                            A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential     15

Table 3.1
       Local Regulations and Permits
Building Permit
                  Most county/local governments require building permits for construction, which entail
                  compliance with several types of building codes, such as plumbing and  electrical.
                  Atypical building permit application may require detailed final plans for structures,
                  including electrical and  plumbing plans, floor layout, sewage facilities, storm water
                  drainage plan, size and  shape of lot and buildings, setback of buildings from
                  property lines and drain field, access, size and  shape of foundation walls, air
                  vents, window access, and heating or cooling plants (if included in the design).
Zoning/Land Use
                  Most communities have a zoning and land use plan that identifies where different
                  types of development are allowed (i.e., residential, commercial, and industrial). The
                  local zoning board determines whether a particular project meets local land use
                  criteria, and can grant variances if conditions warrant. A landfill gas project may
                  require an industrial zoning classification.
Storm Water
                  Some local public works departments require a permit for discharges during
                  construction and operation of a LFGTE project. Good facility design that maintains
                  the pre-development runoff characteristics of the site will typically enable the project
                  to  meet permitting requirements easily.
Solid Waste Disposal
                  A LFGTE project may generate solid wastes, such as packaging material, cleaning
                  solvents, and equipment fluids. If the landfill is closed, disposal of these solid wastes
                  may be subject to review by a local authority.
                  The primary types of wastewater likely to be generated by a LFGTE project include
                  maintenance wastewater and cooling tower blowdown. The city engineer's office
                  should be contacted to provide information about available wastewater handling
                  capacity, and any unique condensate treatment requirements or permits for landfills.
Fire Hazards
and Precautions
                  The mix of gases in landfill gas has a moderate to high explosion potential; methane
                  is explosive in concentrations of 5 to 15 percent in air. Because methane has the
                  potential to migrate from the landfill to onsite or offsite structures, it poses a
                  significant public safety hazard. EPA requires that methane concentrations be
                  less than 5 percent at a landfill  property line, and less than 25 percent of the lower
                  explosive limit (LEL) in a facility's structures. County regulations may call for as strict
                  or stricter standards to be observed at the landfill.
                  Most local zoning ordinances stipulate the maximum allowable decibel levels from
                  noise sources. These levels vary depending on the location of the site.  For example,
                  LFG energy recovery projects located near residential areas will likely have to comply
                  with stricter noise level standards than projects located in  non-populated areas.
Landfill Gas Projects in Kentucky

 Part  2: Incentive Programs
Q    Overview of Federal Incentive Programs
        There are three federal incentive programs that may apply to LFGTE projects: the Renewable Energy
        Production Incentive (REPI), the Qualifying Facilities (QF) Certification and the Section 29 Tax Credit.
        Each program is described below.
 1.1    Renewable Energy Production Incentive (REPI)
        The Renewable Energy Production Incentive (REPI), mandated under the Energy Policy Act of 1992, may
        provide a cash subsidy of up to 1.5 cents per kilowatt hour to owners and operators of qualified renewable
        energy sources, such as landfills, that began operation between October 1993 and September 2003.4
        Private sector entities may qualify to earn tax incentives based on a tier system. Tier 1 facilities (soloar, wind,
        geothermal, or closed loop biomass) receive full payments or pro rata payments if funds are too minimal to
        match all requests. Any remaining funds fall to Tier 2 which includes landfill gas facilities. If there are insuffi-
        cient funds to cover Tier 2 applicants, a pro-rata system is implemented. The Department of Energy (DOE)
        will make incentive payments for 10 fiscal years, beginning with the fiscal year in which application for
        payment for electricity generated by the facility is first made and the facility is determined by DOE to be
        eligible for receipt of an incentive payment. The period for payment under this program ends in fiscal year
        2013. REPI payments are subject to adjustment because they are appropriated  by Congress each year.

        For further information, contact:

        U.S. Department of Energy
        National Renewable Energy Laboratory
        Golden  Field Office
        Golden,  Colorado 80403
        (303) 275-4795
        U.S. Department of Energy

        Efficiency and Renewable Energy
        Forrestal Building,  Mail Station EE-10
        1000 Independence Avenue, S.W.
        Washington, DC 20585
        Phone: (202) 586-2206

 1.2    Qualifying Facilities Certification
        LFGTE projects that generate electricity will benefit from Qualifying Facilities (QF) certification, which is
        granted  through the Federal Energy Regulatory Commission (FERC).  The following describes the
        benefits of QF status and the steps for applying for such status.

        The Public Utility Regulatory Policies Act (PURPA) — one of five parts of the National Energy Act of 1978
        — was designed to promote conservation of energy and energy security by removing  barriers to the
        development of cogeneration facilities and facilities that employ waste or renewable fuels. Such facilities
        are called Qualifying Facilities, or QFs. Under PURPA,  utilities are required to  purchase electricity from

        4 Final Rule Making, 10 Federal Register Part 451, July 19, 1995, Vol. 60, No. 138.

                                   A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential     17

       QFs at each utility's avoided cost of generating power. PURPA provides that a small power production
       facility, such as a LFGTE project that meets FERC standards, can become a QF.

       In order to apply for QF status, applicants must prepare either (1) a Notice of Self-Certification, which
       asserts compliance with the FERC's technical and ownership criteria, or (2) an Application for Commission
       Certification of Qualifying Status, which requires a draft Federal Register notice and which provides actual
       FERC approval of QF status. In either case, the applicant must  also file Form 565, which is a list of
       questions about the project, and must pay any filing fees associated with certifications, exemptions, and
       other activities. FERC will provide the QF "Info Packet" that describes the necessary steps, requirements,
       and background information. After submittal of the initial  application, further justifications and submittal
       of information may be required.

       For the QF Info Packet and applications, contact:

       Federal Energy Regulatory Commission
       Qualifying Facilities Division
       825 North Capitol Street, N.E.
       Washington, DC 20426
       Phone: (202) 208-0577

1.3   Section 29 Tax Credit
       Developers of LFGTE projects who sell  LFG to  an unrelated third  party may qualify for a tax credit under
       Section 29 of the Internal Revenue Service (IRS) tax code. In order to take advantage of the credits,
       project developers may bring in an outside party when developing power projects. The Section 29 tax
       credit was established in 1979 to encourage development of unconventional gas  resources, such as landfill
       gas. Section 29 tax credits are available through 2007 to  LFG projects that have a gas sales agreement in
       place by December 31, 1996 and  are placed in service by June 30, 1998. The credit has been extended
       several times by the U.S. Congress and currently it is discontinued.
       State Incentive Programs
       State-level incentives for LFGTE projects are valuable for several reasons: projects that use landfill gas
       for energy require large capital investments, and federal tax incentives for this type of energy project
       are no longer available. In addition, the prices that utility companies pay for excess electricity are low
       in Kentucky.  In  1998, legislation to provide state-level tax credits was proposed by Kentucky's Natural
       Resources and Environmental Protection Cabinet and  introduced by Representative  Jim Wayne, but
       was not considered by the House Appropriations and Revenue Committee.

       The Kentucky Division of Energy makes approximately $24,000 a year available to help fund biomass
       energy demonstration projects in Kentucky. LFGTE projects are eligible. The funding is  from the U.S.
       Department of  Energy's Southeastern Regional Biomass Energy Program. Projects are selected competi-
       tively; a match of at least 50 percent funding from non-federal sources is required.

       Contact: Mr.  Geoffrey Young
       Kentucky Division of Energy
       (502) 564-7192, or in Kentucky (800) 282-0868
       Fax 502-564-7484
       E-mail: geoffrey.young.@mail.state.ky.us
18     Landfill Gas Projects in Kentucky

       Electricity Restructuring and LFGTE
What Is Electricity Restructuring?
Electricity restructuring refers to the introduction of competition into both the wholesale and retail electricity
markets.  Until now, electric utilities operated as monopolies authorized by federal and state regulatory authorities
as the sole provider of electric service to consumers within a specific service territory. Under restructuring,
utilities will lose these monopolies, enabling other energy providers to compete for their customers. The result
may be more energy options for consumers, lower energy prices, and greater use of renewable energy sources.

Efforts to restructure the electric utility industry began  in 1978 with passage of the Public Utilities Regulatory
Policies Act (PURPA), which required utilities to buy a portion of their power from unregulated power generators in
an effort to encourage the development of smaller generating facilities, new technologies, and renewable energy
sources. The National Energy Policy Act of 1992 (EPACT) expanded on PURPA, allowing more types of unregulated
companies to generate and sell electricity, effectively creating a competitive wholesale market for electric power.

Restructuring at the retail level has been a hot issue in many states since the passage of EPACT, which delegated
states the authority to introduce competition among  electric utilities within their borders. As of January 1999,
22 states have enacted some form of restructuring legislation, while the remaining 28 are considering such legislation.

How Do These Changes Affect Landfill Gas Recovery?
Many states are including  renewable energy provisions  in their restructuring legislation. Such provisions mandate
utilities to include a certain percentage of electricity generated from renewable, or "green energy," sources into
their energy mixes.  LFGTE is one such green  energy source.

In  March 1998, the  Clinton Administration unveiled its "Comprehensive Electricity Competition Plan" to
restructure the electricity industry  nationwide. Contained in that proposal is a Renewable Portfolio Standard
(RPS) that would guarantee that a minimum percentage of the nation's electricity be powered by green energy.
Energy service providers would  be required to cover a percentage of their electricity sales with generation from
non-hydroelectric renewable sources such as  wind, solar,  geothermal, and  biomass (which includes LFGTE).

Marketing Landfill Gas Recovery as Green Power
One of the emerging areas and  most promising mechanisms to encourage  utilities and other energy marketers
to  participate in LFGTE projects is the development of green marketing programs.  Green marketing programs
are designed to enable energy marketers to position renewable energy products (including LFGTE) as premium
products, and therefore, collect  a premium price from their customers. In addition,  green marketing allows
energy marketers in competitive marketplaces to differentiate their energy product, and allows utilities in
non-restructured marketplaces to gain critical  product marketing experience in preparation for competition.
However, the general  public is less familiar with LFGTE than other sources of renewable energy; support from
the LMOP can help ensure the success of early LFGTE green marketing efforts.

Get the Latest Information on Electricity Restructuring in Your State
For up-to-date information on electricity restructuring in Kentucky, visit
www. nr.state.ky.us/nrepc/dnr/energy/dn rdoe.html.
                                   A Primer on Developing Kentucky's Landfill Gas-to-Energy Potential     19

Appendix A: State Contacts
Department of Natural Resources
Natural Resources and
Environmental  Protection Cabinet
Frankfort Office Park
14 Reilly Road
Frankfort, KY 40601
Tel: 502-564-3350
Fax: 502- 564-3354

Department for
Environmental  Protection
Frankfort Office Park
14 Reilly Road
Frankfort, KY 40601
Tel: 502-564-2150
Fax: 502-564-4245

Air Quality
Division for Air Quality
803 Schenkel Lane
Frankfort, KY 40601
Tel:  502-573-3382
Fax: 502-573-3787

Water Quality
Division of Water
KPDES Branch
Frankfort Office Park
14 Reilly Road
Frankfort, KY 40601
Tel:  502-564-3410
Fax: 502-564-4245

Waste Management
Division of Waste Management
Frankfort Office Park
Frankfort, KY 40601
Tel:  502-564-6718
Fax: 502-564-4049

Other Contacts:
Public Information and Education
Tel: 502-564-5525
                           Regional Air Offices
                           Ashland Regional Office
                           3700 13th Street
                           Ashland, KY 41105
                           Tel: 606-325-8569

                           Bowling Green Regional Office
                           1508 Westen Avenue
                           Bowling Green, KY 42101
                           Tel: 502-843-5475

                           Florence Regional Office
                           7964 Kentucky Drive, Ste. 8
                           Florence, KY 41042
                           Tel: 606-292-6411

                           Hazard Regional Office
                           233 Birch Street
                           Hazard, KY 41701
                           Tel: 606-439-2391

                           Ownsboro Regional Office
                           311 West Second Street
                           Owensboro, Ky 42301
                           Tel: 502-686-3304

                           Paducah Regional Office
                           4500 Clarks River Road
                           Paducah, KY 42003
                           Tel: 502-898-8468
Landfill Gas Projects in Kentucky