No. 36033 (5-year Review): Rule R307-424. Permits:Mercury Requirements for Electric Generating Units

DAR File No.: 36033
Filed: 04/05/2012 12:15:52 PM

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Subsection 19-2-104(1)(a) states that the Air Quality Board may make rules "regarding the control, abatement, and prevention of air pollution from all sources and the establishment of the maximum quantity of air contaminants that may be emitted by any air contaminant source." Subsection 19-2-104(3)(e) states that the Air Quality Board may "prepare and develop a comprehensive plan or plans for the prevention, abatement, and control of air pollution in this state."

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

This is the first five-year review of this rule. Therefore, the Air Quality Board (AQB) has included the comments the Division of Air Quality (DAQ) received during the original rulemaking process. AQB has also included DAQ's responses to those comments. Since the rule was enacted on 05/09/2007, DAQ has received no further comments regarding this rule. Comment No. 1: Expressing support for this rule, which limits mercury emissions from electric generating units (EGUs) and creates an offset bank patterned after the successful PM10 offset bank. The comment also acknowledges that the Clean Air Mercury Rule (CAMR), by itself, would not prevent an increase in mercury emissions from EGUs in Utah. (Comment made by Wasatch Clean Air Coalition) Response: DAQ notes the comment and reiterates that its primary concern is to see that mercury emissions are on a downward trend in Utah. Comment No. 2: EPA notes that it is still reviewing the offset provisions of the rule, and is reserving the right to make further comment at some later date. (Comment made by the EPA) Response: Noted. Comment No. 3: Banking of mercury offset credits from tribal land should not be allowed unless a mechanism can be found to prevent the scenario under which such credits could be used to elsewhere in Utah, and subsequently additional generating capacity could be added on tribal land which, independent of DAQ permitting requirements, would require no offset credits. (Comment made by Wasatch Clean Air Coalition) Response: DAQ notes the concern of the commenter and would add that this is a topic about which the agency specifically solicited public input. The State of Utah has no jurisdiction on Tribal lands, and could therefore not ultimately prevent the scenario described above. The AQB does not necessarily believe it to be likely that coal fired power generation would cease to be economically viable, and then subsequently begin again on those Tribal lands. Nevertheless, in the final proposal, the AQB has eliminated the potential for credits to be generated by units outside of the AQB's jurisdiction. The proposed revision to the language is as follows: Section R307-424-3. Offset Requirement: Mercury. Sources meeting the applicability requirements... (1) The permitted increase in... (2) The averaging period... (3) Mercury emission credits must be obtained from an EGU located within the State of Utah, excluding [including] any EGU located on Indian lands within the State. Comment No. 4: Due to the limited ability of Utah's existing facilities to create offset credits, the 1.1 to 1 offset ratio in the proposed rule will substantially increase costs to both existing and proposed facilities. It appears that unburned carbon in Utah coals acts in a similar manner to activated carbon injection (ACI), the most widely anticipated control for mercury emissions. Thus, ACI may not provide much benefit to Utah's EGUs, and further technology may not exist to create the offset credits necessary for permitting additional generating capacity. Furthermore, there is a limited number of units that can potentially generate offset credits by retrofitting with more traditional equipment (fabric filters and sulfur scrubbers.) This could encourage EGUs to locate outside Utah and still impact the state with mercury emissions. Finally (comment received orally), should DAQ propose to retain these offset provisions, the rule should establish a baseline date for the determination of credits. (Comment made by Pacificorp Energy) Response: The AQB recognizes the potentially limited quantity of offset credits for permitting new EGUs. However, the AQB also anticipates that there will be a significant number of credits generated in the near term due to retrofits, and the AQB is optimistic that advancements in technology will lead to continued opportunity for the generation of credits in the future. Therefore, in the final proposal, the AQB recommends retaining the notion of offsets. The AQB agrees with the suggestion to establish a baseline date, from which point forward one could establish credits to be used in subsequent permitting actions. As such, the following language is proposed in subsection (6) of Section R307-424-3: (6) The quantity of mercury emission reductions to be used for credit will be determined in accordance with 40 CFR part 75, or will be based on the best available data reported to the executive secretary. To the extent that the EGU has been subject to the requirements of part 75, mercury emissions data shall be the average of the 3 highest annual amounts over the most recent 5-year period. Mercury emission reductions made prior to 12/31/1999 shall not be creditable for such purpose. The basis for the selection of this date is that 1999 was the year that the EPA used as a reference for evaluating mercury emissions as part of the CAMR. Comment No. 5: The Department has proposed a rule that takes away the option of choosing cost effective reductions by mandating that facilities in the state meet either an emission limit or a specific degree of reduction. Additional control at one EGU may not be credited toward compliance with the rule at another. This removes the ability to choose the most cost effective method of compliance with the reduction requirements. (Comment made by Pacificorp Energy) Response: The commenter makes an interesting suggestion, but DAQ remains of the opinion that compliance on a unit-by-unit basis is ultimately more aligned with the goal of reducing mercury emissions for the protection of the public and the environment. Unlike the case with a criteria pollutant, there is in this instance neither a prescribed level of ambient concentration nor a quantitative demonstration of attainment thereof to indicate some margin of safety beyond which a concept such as unit averaging might be acceptable for economic reasons. In the absence of such criteria, DAQ believes it prudent to err on the side of protection. Comment No. 6: There is still a great deal of uncertainty regarding the magnitude of mercury emissions from EGUs. Meeting an emission limit of 6.50 x 10-7 lb/mmbtu or an overall reduction requirement of 90% may not be achievable as contemplated by the proposed rule. This uncertainty is potentially compounded by coal supply issues. While Subsection R307-424-4(3) allows the owner of a facility to petition for a modification to these limits, it is only after the facility is found to be in noncompliance with such, "despite properly operating the unit in conjunction with a baghouse as well as wet or dry flue gas de-sulfurization," that this provision applies. This exposes the facility to potential action by a third party regardless of any regulatory discretion exercised by the Department. Reference to non-compliance for not meeting the target rate should be removed from the rule. It appears that the intent of the proposed rule is to ensure that, at a minimum, mercury emissions are controlled through proper use of flu gas de-sulfurization and a baghouse. The Department should consider removing the 6.50 x 10-7 lb/mmbtu emission limit from the rule, or at least structuring the rule such that it becomes a target objective rather than an enforceable limit. (Comment made by Pacificorp Energy) Response: DAQ appreciates the concerns surrounding both the accuracy of measuring mercury concentrations and the variability likely observed throughout an entire year. Nevertheless, the data that is available at this point in time would indicate that the "target objectives" specified in Section R307-424-4 are or will be reasonably achievable. For this reason, the AQB is compelled to include them as enforceable limits. With regard to the concern about third party interference, DAQ believes the commenter has raised a valid point, and is proposing that the following revision appear in the first two lines of paragraph (3.) Additional clarification also appears at the recommendation of staff: Section R307-424-4. Emission Rates. (1) By no later than... (2) Compliance with... (3) Should an EGU be unable to achieve the maximum emission rate or the minimum control efficiency described in [found in noncompliance with] (1) above, despite proper[ly] operation of[ng] the unit in conjunction with a baghouse as well as wet or dry flue gas de-sulfurization, the owner or operator may petition the executive secretary for a modification to the compliance limitation for the unit [limits therein] in accordance with Rule R307-401. Comment No. 7: It may be premature to impose emission limits or control efficiency requirements based upon data that may only represent a snapshot in time. THe AQB does not believe that the levels proposed for either of these is attainable on an ongoing annual basis given the variability of both coal quality and facility operations. The CAMR will require continuous emissions monitoring beginning in 2009, and the data collected may reflect emission rates that are significantly different from the estimates made by EPA. DAQ should wait until this data has been collected before making policy decisions of this magnitude. Additionally (comment received orally), the AQB appreciates that DAQ has provided a mechanism by which one could petition the executive secretary for relief from limits established prior to the collection of continuous data. However, we believe the Division should add some specificity concerning this process. In addition to the CEM data, the AQB is concerned that there may be other mitigating factors which might be overlooked in such an instance. (Comment made by IPSC) Response: DAQ understands both the difficulty in attaining a reliable measurement using current techniques as well as, the difference between a few isolated data points and an entire year of continuous data. Nevertheless, the AQB does not feel that it is appropriate to wait four or five years until there is a more reliable data set before taking steps to address mercury emissions in Utah. Based on the data that is available, the AQB believes that the limits that were proposed are achievable with a reasonable margin for compliance. DAQ did consider the possibility that neither condition could be achieved, and for that reason, included the option to petition the executive secretary for an alternate limit. The AQB agrees with the commenter that the rule would benefit from the addition of some pre-defined criteria by which such a petition might be evaluated. As such we are proposing to add the following language in subsections (a) and (b): Section R307-424-4. Emission Rates. (1) By no later than... (2) Compliance with... (3) Should an EGU be unable to achieve the maximum emission rate or the minimum control efficiency described in [found in noncompliance with] (1) above, despite proper[ly] operation of[ng] the unit in conjunction with a baghouse as well as wet or dry flue gas de-sulfurization, the owner or operator may petition the executive secretary for a modification to the compliance limitation for the unit [limits therein] in accordance with Rule R307-401. (a) Such petition shall be received no later than the date upon which the compliance assessment required under (2)(a) above is due. (b) Any such determination by the executive secretary will be made on a case-by-case basis, taking into consideration energy, environmental and economic impacts and other costs. It will be based on the best information and analytical techniques available. See also response to Comment No. 6 above. Comment No. 8: The Department's cost analysis anticipates that three of Utah's seven affected EGUs would need to retrofit, at a cost of $50,000,000 each, in order to comply with the rule. However, if monitoring indicates that any of the other four EGUs cannot meet the proposed limits, the cost to utility customers could exceed $350,000,000. (Comment made by Pacificorp Energy) Response: DAQ stands by its analysis, and would reiterate that the option to petition the executive secretary for an alternate limit makes this scenario unlikely. Comment No. 9: This proposed rule places more restrictions on mercury emissions than the federal CAMR in many ways. Its emission limits are more restrictive than those contained in 40 CFR 60 subpart Da; its deadlines are sooner than Phase II of the CAMR; it includes a potential minimum removal efficiency which may not be consistently attainable; and it includes offset requirements for permitting. Utah State Statute (Section 19-2-106) allows the AQB to put in place rules that are equivalent to similar federal standards: neither less stringent or more stringent. In this case, the proposed rules may be interpreted to be more stringent than the federal rules and would therefore be in violation of State Statute. That said, the Board is not precluded from making more stringent rules when it has obtained written opinion and findings that federal requirements are not sufficiently protective of human health and the environment. However, we do not believe this to be the case in this instance. The AQB are not aware of any hearings or public record concerning the inadequacy of the federal regulations, nor have we seen any data showing how the proposed rules would be more protective than the CAMR. Furthermore, the AQB is not aware of any study regarding mercury impacts from any of the affected sources. Aside from the obvious concerns with the statute itself, the AQB is concerned that EPA may be unable to approve a State plan that was not on sound legal footing. This may have the effect of delaying Utah's participation in the federal trading program. (Comment made by IPSC) Response: DAQ is firstly and foremostly concerned with the health and well being of the public. With respect to mercury, the State Department of Health has issued consumption advisories for fish and ducks inhabiting many areas of the State. Concentrations of methylmercury found in the Great Salt Lake are among the highest recorded anywhere in the nation. There can be no doubt that mercury concentrations, and therefore, mercury deposition, within the State of Utah are already too high. Improving Utah's watersheds by reducing concentrations of mercury and methylmercury requires a comprehensive effort to prevent mercury emissions from all of the significant source categories. Other source categories that emit mercury in significant amounts already have been regulated here in Utah. As recently as 1990, Medical Waste Incinerators and Municipal Waste Combustors, for example, each accounted (nationally) for as many mercury emissions as are currently attributable to coal-fired EGUs. Subsequent regulation has resulted in emission reductions of roughly 100 tons per year (or 94%.) In 2006, Utah passed legislation to introduce a $5 bounty on the mercury switches found in cars. The Division of Solid and Hazardous Waste is developing rules to implement this program in July of 2007. Removal of these switches prior to the melting-down of the scrapped vehicles prevents mercury from being released at steel mills like Nucor Steel. Coal-fired EGUs are the next source category to be regulated, but exclusive reliance on a nationwide cap and trade program may not help our State meet this challenge. The federal CAMR offers Utah no guarantee that mercury emissions from coal-fired EGUs will not increase. The mercury emission budgets given the State for both phases of the CAMR are higher than the historical emission rates from these sources. Furthermore, the compliance mechanism inherent in the cap and trade program allows the future emissions of mercury to exceed even these budgets, so long as additional allowances are secured from somewhere else to cover the overage. This offers no relief to the Utah public in terms of excessive concentrations of mercury already present in our watersheds. Subsection 19-2-106(1) limits rules to be no more stringent than corresponding federal regulations. In this case, the federal regulations do not establish a mandatory mercury trading program, but instead leave policy determinations on mercury regulation to the states, with options to determine emission standards and compliance schedules, so long as the state plans lead to compliance with the annual mercury budgets for the appropriate control periods. Finally, revisions to the proposed rule, as a result of other comments, provide adequate opportunity for the owner or operator of an EGU to seek regulatory flexibility if the proposed requirements are technically unfeasible or cost prohibitive. Comment No. 10: The cap and trade approach of the CAMR is, by itself, sufficient to keep mercury emissions within the state specific budget for Utah. There is no need for an overly high minimum efficiency in removal of mercury. Rule R307-424 goes beyond the federal requirements and will potentially and substantially reduce mercury emissions in Utah if adopted. Furthermore, enhancing mercury regulations beyond CAMR can impact unit operating capacity, availability, and economic stability. The AQB recommends that DAQ retract Section R307-424 in its entirety, and instead rely on the CAMR to achieve its goal of nationwide mercury reductions. (Comment made by IPSC) Response: As discussed in the response to the previous comment, DAQ is not convinced that the cap and trade approach of the CAMR is, by itself, sufficient to keep mercury emissions within a level that is protective of the health and well being of Utah's public. Already there are levels of mercury and methylmercury present in Utah's watersheds that have led to the issuance of fish and duck advisories. Clearly the levels of mercury emissions are already too high, and the CAMR by itself could only add to those emission rates. In order to be protective of public health, mercury emissions will have to be reduced, and these reductions will have to come from all significant source categories. Coal-fired EGUs are but one of these source categories.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

It is the primary intent of this rule to see that mercury emissions within the state of Utah are set on a downward trend. Rule R307-424 includes state-only provisions that establish minimum performance criteria for existing EGUs and requires offsets for potential increases in mercury emissions. Therefore, this rule should be continued.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Environmental Quality
Air QualityRoom Fourth Floor
195 N 1950 W
SALT LAKE CITY, UT 84116-3085

Direct questions regarding this rule to:

• Mark Berger at the above address, by phone at 801-536-4000, by FAX at 801-536-0085, or by Internet E-mail at [e-mail]

Authorized by:

Bryce Bird, Director

Effective:

04/05/2012

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