BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
FOR AN ADJUSTED STANDARD FROM 35 ILL.ADM.CODE 225.230.
APPEARANCE
BEFORE THE ILLlNOIS POLLUTION CONTROL BOARD
APPEARANCE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
APPEARANCE
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
PETITION FOR ADJUSTED STANDARD
A. Standard from Which an Adiusted Standard Is Sought
B. Implementation of Clean Air Act Requirement
C. Level of Justification
D. Description of the Nature of Petitioner's Activity
F. Description of Proposed Adiusted Standard
G. Description of the Impaet of the Adjusted Standard on the Environment
H. Justification for the Adiusted Standard
J. Request for Hearing
K. Supporting Authorities
L. Substantiallv and Significantly Different Factors Relatine to Petitioner
N. Environmental or Health Effects Not Significantly More Adverse Than Rule

40 CFR Q 60.24
Argus Air Daily
1. Fax: 713.622.2991 or Email: sales@argusmediagroup.com

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

PETITION OF MIDWEST GENERATION, LLC,

)

07-04

WILL COUNTY GENERATING STATION

(Adjusted Standard -Air)

FOR AN ADJUSTED STANDARD FROM

1LL.ADM.CODE

225.230.

NOTICE OF FILING

To:

Dorothy

Gunn, Clerk

Persons included on the

Illinois Pollution Control Board

ATTACHED SERVICE LIST

James R. Thompson Center

Suite 11-500

100 West Randolph

Chicago, Illinois 60601

PLEASE TAKE NOTICE that we have today filed with the Office of the Clerk of the

Pollution Control Board

APPEARANCES OF KATHLEEN C. BASSI, STEPHEN J.

BONEBRAKE, and SHELDON A. ZABEL ON BEHALF OF MIDWEST GENERATION,

LLC,

and PETITION FOR ADJUSTED STANDARD, copies of which are herewith served

Dated: January 10,2007

Sheldon

A. Zabel

Kathleen C. Bassi

Stephen

J. Bonehrake

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

3 12-258-5500

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PETITION OF MIDWEST GENERATION, LLC,

)

AS 07-04

WILL COUNTY GENERATING STATION

(Adjusted Standard

Air)

FOR AN ADJUSTED STANDARD FROM

ILL.ADM.CODE 225.230.

APPEARANCE

I, KATHLEEN C. BASSI, hereby file my appearance in this matter on behalf of

MIDWEST GENERATION, LLC, WILL COUNTY GENERATING STATION.

Respectfully submitted,

IS/

Kathleen

Bassi

Kathleen C. Bassi

Dated: January 10,2007

Sheldon A. Zabel

Kathleen C. Bassi

Stephen

J. Bonebrake

Joshua

R. More

Glenna Gilbert

SCHIFF

IiARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

3 12-258-5500

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

BEFORE THE ILLlNOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

PETITION OF MIDWEST GENERATION, LLC,

)

AS 07-04

WILL COUNTY GENERATING STATION

)

(Adjusted Standard -Air)

FOR AN ADJUSTED STANDARD FROM

35 1LL.ADM.CODE 225.230.

APPEARANCE

I, SHELDON A. ZABEL, hereby file my appearance in this matter on behalf of

MIDWEST GENERATION,

LLC, WILL COUNTY GENERATING STATION

Respectfully submitted,

is/

Sheldon

Zabel

Sheldon A. Zabel

Dated: January 10,2007

Sheldon

A. Zabel

Kathleen C. Bassi

Stephen

J. Bonebrake

Joshua R. More

Glenna Gilbert

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

3 12-258-5500

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PETITION OF MIDWEST GENERATION, LLC,

)

AS 07-04

WILL COUNTY GENERATING STATION

)

(Adjusted Standard -Air)

FOR AN ADJUSTED STANDARD FROM

35 1LL.ADM.CODE 225.230.

)

APPEARANCE

I, STEPHEN J. BONEBRAKE, hereby file my appearance in this matter on behalf of

MIDWEST GENERATION, LLC, WILL COUNTY GENERATING STATION.

Respectfully submitted,

1st

Stephen J. Bonebrake

Stephen J. Bonebrake

Dated: January

10; 2007

Sheldon A.

Zabel

Kathleen C. Bassi

Stephen

J. Bonebrake

Joshua R. More

Glenna Gilbert

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

312-258-5500

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PETITION OF MIDWEST GENERATION, LLC,

)

AS 07-04

WILL COUNTY GENERATING STATION

)

(Adjusted Standard -Air)

FOR AN ADJUSTED STANDARD FROM

35 1LL.ADM.CODE 225.230.

)

PETITION FOR ADJUSTED STANDARD

NOW COMES MIDWEST GENERATION, LLC, WILL COUNTY GENERATING

STATION, I.D. No.

197810AAK, by and through its attorneys, SCHIFF HARDIN LLP, and,

pursuant to Section

28.l(f) of the Environmental Protection Act ("Act"), 415 ILCS 5/28.1(f), and

Section 104.402 of the Board's regulations, 35

I11.Adm.Code

104.402, petitions the Board for

an adjusted standard from the requirements of the mercury rule, 35

I11.Adm.Code

225.230,

adopted by the Board on December 21,2006, in Docket R06-25 (the "mercury rule"). The

mercury rule requires, for the first time, control of mercury emissions by large coal-fired electric

generating plants. As this Petition is filed within 20 days of the Board's final order in R06-25,

pursuant to Section

28.1(t) of the Act, the Will County Generating Station ("Will County") is

exempt from the requirements of the mercury rule for such period of time as specified in Section

28.1

(t). 

Midwest Generation and the Illinois Environmental Protection Agency ("Agency")

jointly

filed comments in Docket R06-26 proposing the addition of Subpart F to 35 111.Adm.Code

Part 225. Subpart F provides for an alternative compliance route for Midwest Generation.

However, the Board has not yet acted upon Subpart F and cannot do so within the time necessary

for the filing of this Petition. This Petition seeks relief for the timing of compliance of the

hot-

side electrostatic precipitator ("HS ESP) at the Will County Generating Station, pending Board

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

action on Subpart F. Therefore, in support of its Petition for Adjusted Standard, Petitioner states

as follows:

A. Standard from Which an Adiusted Standard Is Sought

(§

104.406(a))

The Board adopted the mercury rule on December 21,2006. That rule became effective

December 21,2006. 31

I1l.Reg. 129 (January 5,2007). The mercury standard at 35

111.Adm.Code

225.230 from which Petitioner seeks relief is 0.0080 lb mercuryIGWh gross

electrical output or 90

reduction of input mercury. However, Petitioner seeks relief from the

emissions standard only until July 1,201

for only Unit 3.

B. Implementation of Clean Air Act Requirement

(§

104.406(b))

The Board promulgated the mercury rule in response to a requirement of Section 11 l(d)

of the Clean Air Act, 42 U.S.C.

741 1(d), under which the U.S. Environmental Protection

Agency ("USEPA") adopted the Clean Air Mercury Rule at 70

Fed.Reg. 28605 (May 18,2005).

C. Level of Justification

(a 104.406(c))

The mercury rule does not specify a level of justification necessary for the Board to grant

an adjusted standard from that rule.

D. Description of the Nature of Petitioner's Activity

104.406(d))

The Will County Generating Station is located at 529 East 135'~, Romeoville, Will

County, Illinois 60446. Though not pertinent to the mercury rule, Will County is located within

the Chicago ozone and

~~2.5~

nonattainment areas. Any area affected by Will County's

activities in question is not in the immediate vicinity of the plant but is, rather, downwind

hundreds of miles from the plant. As a large coal-fired power generating plant, emissions from

Particulate matter 2.5 microns in aerodynamic diameter.

-2-

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Will County exit very tall stacks and have very high plume rise. As a result, Will County's

emissions have more significance as a regional concem than as a local concern.

The Will County Station employs 191 people. The first boiler at the plant was

constructed in 1955, and the Station currently has four electric generating units

("EGUs").

The principal emissions from the Will County Station are nitrogen oxides ("NOx"),

sulfur dioxide ("SOP), and particulate matter ("PM). NOx is controlled through the use of

overfire air equipment on all four of the boilers and low NOx burners on two of the boilers. SOz

is controlled through the use of low sulfur Powder River Basin coal. PM is controlled through

the use of electrostatic precipitators ("ESPs") on the boilers and through enclosures, covers, dust

suppressant application, dust collection devices, and good management practices on station

activities supporting boiler operation, such as the coal pile and coal handling operations. In

2006, the Will County Station emitted 6,966 tons of

NOx, 17,293 tons of Sol, 1,049 tons of PM,

and an estimated 280 pounds of mercury.

E. Description of the Efforts and Costs Necessarv to Complv with the Mercurv Rule

(9 104.406(e))

?be Will County Station cannot comply with the mercury rule as adopted. The mercury

rule assumes that an EGU can comply with the rule with the addition of halogenated activated

carbon

("HCI") injected into the exhaust stream prior to the ESP. Based upon that assumption,

the mercury rule further assumes that all regulated sources can install and operate the necessary

control technology and thereby achieve compliance by the 2009 compliance date. However,

tests have shown and the Agency and Board have acknowledged that certain ESP configurations,

namely HS ESPs, do not perform to the requisite standard. R06-25 Springfield Transcript

("R06-25 S Tr.), June 21,2006, p.m., pp. 103-1041 R06-25, Board Order; Second Notice

(November

2,2006), pp. 24-25. Instead, to achieve a 90% reduction in mercury emissions,

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

EGUs with HS ESPs require, at a minimum, either the installation of a baghouse prior to the

stack or the conversion of the HS ESP to a cold-side ESP ("CS ESP").

R06-25 S Tr., June 21,

2006,

p.m., pp. 113-1 14. As a result, the costs of compliance for EGUs with HS ESPs are

significantly higher than the cost of merely adding

HCI. Additionally. the time necessary for an

EGU with a HS ESP to be able to comply is significantly longer than that required for units that

merely need to add HCI because EGUs with HS ESPs require significant additional controls to

comply. There is insufficient time for the additional required mercury controls to be designed,

acquired, installed, debugged, and placed into operation at the station prior to the compliance

date of the rule.

The Agency estimated that the cost of compliance for an EGU with a HS ESP is

$9-21

million. R06-25 S Tr., June 21,2006, p.m., pp. 24-25, 103. However, William DePriest, Senior

Vice-President at Sargent

Lundy, testified in the mercury hearings, that the cost of a baghouse

ranges from $42-92 million depending upon complexity and the time for project development,

installation, and shake-down is approximately

36 months. R06-25 Ex. 11 5, pp. 20,22;

generally

see

R06-25 Chicago Transcript ("R06-25 C Tr."), August 18,2006, a.m., pp. 1064, 1071-1072,

1226-1227.

Subsequent to the mercury hearings, Midwest Generation contracted with Shaw Stone

Webster to update Sargent

Lundy's projections regarding the installation cost for baghouses.

Shaw Stone

Webster estimated that the costs had increased approximately 92%, or

approximately

$129 million. Additionally, Midwest Generation has found, based upon the

availability of resources, that the time for project development through shake-down has

increased to a minimum of

38 months.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Midwest Generation also explored converting the HS ESPs to CS ESPs. The cost of

conversion to a CS ESP is $18-25 million but requires a 16-20 week outage, resulting in lost

sales opportunities. This period is significantly longer than any current planned outages. The

outage generally necessary for the installation of a haghouse, by comparison, is only

approximately 25 days.

Though the cost of conversion of the HS ESP to a CS ESP is less than the cost of the

installation of a baghouse, excluding the value of lost revenue, the reductions of

SO2 and PM that

would result through the

baghouse make that option more attractive to Midwest Generation.

Moreover, the installation of the

baghouse will result in greater benefit to the environment

because of the reductions of

SO2 and PM in addition to the reductions in mercury emissions

F. Description of Proposed Adiusted Standard

104.406(f))

Midwest Generation proposes that the requested adjusted standard provide a longer

period of time for the Will County Station to comply with the mercury rule adopted by the Board

in R06-25, with respect to Unit 3, as set forth in the following language:

Midwest Generation must install and properly operate and maintain ACI

equipment on Will County Unit 3 by July 1, 2009, consistent with

the

requirements of 35 111.Adm.Code Part 225, Subpart B.

Will County Unit 3 shall not be subject to the requirements of 35

111.Adm.Code

Part 225, Subpart B before July 1,201 1.

Beginning on July 1,201 1, and thereafter, Will County Unit 3 is subject to the

provisions of 35

I11.Adm.Code Part 225, Subpart B, as applicable on that date.

All other units at the Will County Generating Station are subject to the provisions

of 35

1ll.Adm.Code Part 225, Subpart B.

If Midwest Generation chooses to demonstrate compliance with the mercury rule

pursuant to 35

1ll.Adm.Code

225.230(d), Unit 3 shall not be included in the

source-wide averaging before July 1,201 1, unless Midwest Generation elects to

include Unit 3 prior to that date. If Midwest Generation chooses to include Unit 3

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

in the source-wide compliance averaging prior to July 1,201 1, it must provide the

Agency with

30 days' notice of its intent to include Unit 3.

If Midwest Generation chooses to demonstrate compliance at its other generating

stations pursuant to

35 1ll.Adm.Code

225.232, system-wide averaging provided

through December

3 1,2013, Midwest Generation may choose to include the Will

County Unit

3 in the averaging demonstration in the manner set forth in

subsection (e) above, or it may choose to exclude the Will County Unit

3 from the

averaging demonstration. Midwest Generation must provide the Agency with

days' notice of its intention to include or exclude the Will County Unit 3 from the

averaging demonstration pursuant to

35 111.Adm.Code

225.232.

G. Description of the Impaet of the Adjusted Standard on the Environment

(§

104.406(g))

No impact to the environment is expected if the adjusted standard is granted. The

Agency produced no evidence in the record in the mercury rulemaking,

R06-25, that indicated

that emissions of mercury from the Will County Station impacted local health or the local

environment. There are innumerable natural and

manmade sources of mercury. R06-25, Board

Order, Second Notice (November

2,2006), pp. 6-7. Mercury emissions from EGUs in the

United States account for only about

1% of worldwide mercury emissions

(

R06-25 Ex. 126, p.

3; R06-25 C Tr., August 21, 2006, p.m., p. 1488), and mercury emissions from the Will County

Station are a minute fraction of that amount. As noted above, the Will County Station is

estimated to have emitted about

280 pounds of mercury in 2006, and that is a reasonable estimate

of future mercury

emissions until additional mercury controls are installed. The adjusted

standard sought herein would only temporarily defer applicability of the mercury standard under

the rule to provide sufficient time for installation of controls. In addition, there is no direct,

measurable correlation between mercury emission reductions and decreases in fish tissue

mercury levels, and consumption of fish is the primary pathway of concern underlying the

mercury rule.

Generally see

R06-25 Exs. 126, 129, and 130. There is no evidence of a link

between mercury emissions from the Will County Station and any aquatic impact. The

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

temporary and relatively minute increase in mercury emissions attributable to the adjusted

standard sought herein would be inconsequential, and no environmental harm would result from

the granting of this adjusted standard.

Midwest Generation will implement mercury control measures on the

EGUs at the Will

County Station by July 1,2009. Some level of reduction less than 90% would likely occur at

Unit

3 with the installation of ACI by July 1, 2009, as required by the proposed adjusted standard

language. Consequently, the amount of mercury emitted after July 1,2009, from the Will

County Station would be at a rate less than the current emissions rate, further benefiting the

environment prior to the full compliance date required by the adjusted standard.

H. Justification for the Adiusted Standard

104.406(h))

The Agency's basic assumption during the mercury rulemaking was that installation of

HCI would result in a 90% removal of mercury as measured from input coal. However, the

Agency acknowledged that testing of HCI on various boiler and control equipment

configurations indicates that boilers equipped with HS

ESPs have not, in any of the testing of

HCI. achieved a 90% reduction in mercury emissions without the addition of a baghouse.

R06-

25 S Tr., June 21, 2006, p.m., pp. 106-107. It is not possible for Midwest Generation to design,

acquire, install, debug, and operate a

baghouse at the Will County Station by July 1,2009, the

compliance date for the mercury rule. R06-25 C Tr., August 18,2006, a.m., pp.

1226-1227.

Therefore, Midwest Generation requires additional time to comply with the rule. Failure to

obtain additional time could result in unit shutdown with attendant loss of electricity generation

and costs, including possible impact on the transmission grid and loss of jobs. Midwest

Generation is required to comply with the mercury rule with respect to four of its six other

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

stations2 as well, which when coupled with the required compliance activities at Will County,

including the significant costs of a baghouse, will strain Midwest Generation's resources.

Moreover, the additional environmental benefit of removal of

SO1 and PM emissions that are

inherent in the type of

baghouse necessary for this application justify the additional time

necessary for Midwest Generation to comply with the mercury rule.

The Agency and Midwest Generation filed Joint Comments in Docket R06-26, the CAIR

rulemaking, requesting that the Board adopt Part 225, Subpart

F, which establishes a compliance

date of July 1,201 1, for Will County Unit 3. This is additional, tacit acknowledgement on the

part of the Agency that Will County Unit 3 cannot comply with the requirements of the mercury

rule by July 1,2009. Further, as discussed above, the requested adjusted standard would not

result in environmental harm

I. Consistent with Federal Law

104.406(i) and 3 28.1(c)(4) of the Act)

The Board may grant the requested adjusted standard consistent with federal law.

Pursuant to the federal Clean Air Mercury Rule ("CAMR), 40 CFR

60.24, the Agency is

required to submit a state program that complies with the requirements of Section 11

l(d) of the

Clean Air Act, 42 U.S.C. 741

1(d). The CAMR requires that Illinois comply with a cap on

emissions of mercury from coal-fired power plants in a manner determined by the State. Based

upon information provided by

USEPA, the estimated regional reductions that would be achieved

Phase 1 (2010-2017) of the CAMR were 47% from a 1999 baseline.

Argus Air Daily

(March

16,

2005), p. 4 of 7. The 90% reduction required by the Illinois mercury rule far exceeds the

percentage reduction that

USEPA anticipated, even though the Will County Station may not

Note that Midwest Generation is seeking parallel adjusted standard for its HS ESP at the

Waukegan Generating Station in Docket AS 07-03.

-8-

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

achieve the 90% reduction by 2010, the compliance date for the CAMR. Jim Ross, Manager of

the Division of Air Pollution Control at the Agency, testified that the Agency believes that there

is sufficient margin under the cap to accommodate the less-than-90% reduction that the Will

County Station will achieve. R06-25, Board Order, Second Notice

Wovember 2,2006), p. 89.

Therefore, the adjusted standard is consistent with federal law.

J. Request for Hearing

(5 104.406Q))

Because the Agency must submit the adjusted standard, if granted, to USEPA to become

part of the State's implementation program for the CAMR pursuant to Section 11

l(d) of the

Clean Air Act, there must be a hearing on this matter. Midwest Generation requests that the

Board schedule and hold a hearing on this petition for adjusted standard.

K. Supporting Authorities

(s 104.406(k))

Midwest Generation has relied upon Clean Air Act Section 11 l(d), the federal CAMR,

and

Argus Air Daily,

in addition to the R06-25 record, in the development of this Petition for

Adjusted Standard. Copies of the appropriate portions of the Clean Air Act, the Code of Federal

Regulations, and the March 16,2005,

Argus Air Daily

are attached hereto for the Board's

reference. Although Midwest Generation has relied upon the written testimony and transcript

developed in Docket R06-25, it has not provided additional copies of that written testimony or

transcript, as the written testimony and transcript are already within the Board's possession in

that Docket and are therefore available to the Board, the Agency, and the public.

L. Substantiallv and Significantly Different Factors Relatine to Petitioner

($28.1(c)(l) of the Act)

Will County Station is substantially and significantly different from other EGUs subject

to the mercury

rnle because of the HS ESP on Unit 3. The Agency a31d the Board, as discussed

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

above. have acknowledged that an EGU with a HS ESP is a substantially and significantly

different boiler and pollution control equipment configuration that does not lend itself to

compliance with the mercury rule by the installation of HCI alone. The installation of the

additional equipment necessary for Will County Unit

3 to comply will take a significantly longer

period of time and impose significantly more expense than anticipated by the Agency in the

development of the mercury proposal for the CS ESPs in the state.

M. Adiusted Standard Justified by the Substantiallv and Sienificantlv Different Factors

28.1(c)(2) of the Act)

Both the Agency at hearing and the Board acknowledged that sources with HS ESPs

could seek relief through a variance or an adjusted standard. As discussed further above, units

with HS ESPs cannot comply by the July

1,2009, compliance date for the mercury rule. Failure

to extend that date for EGUs with

HS ESPs could result in unit shutdowns with attendant loss of

electricity generation and costs, including possible impacts on the transmission grid and loss of

jobs. An adjusted standard providing for a different compliance date or a different removal

standard is justified.

N. Environmental or Health Effects Not Significantly More Adverse Than Rule

(§

28.1(~)(3) of the Act)

Granting the Will County Station this requested adjusted standard will not result in

environmental or health effects significantly more adverse than the mercury rule. Will County is

only one of 21 generating stations subject to the rule. The Will County Station represents only

7% of the total megawatts in the state. Illinois EGUs as a whole contribute only a small portion

of the mercury emissions attributable to EGUs in the United States that are subject to CAMR,

and as discussed above, the total mercury emissions of all of these EGUs is a minute fraction of

the total worldwide mercury emissions that impact or may impact Illinois. Further, there is no

direct and measurable correlation between mercury emission reductions and reductions of fish

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

tissue mercury levcls, as discussed above. In addition, Midwest Generation proposes to

implement mercury reduction measures at all units at the Station by July 1,2009, as discussed

above. Accordingly, the requested temporary deferral of the mercury rule's standard is

inconsequential and

will not cause any adverse environmental impact.

WHEREFORE, for the reasons set forth herein, Midwest Generation, LLC, requests that

the Board grant the adjusted standard from 35

11l.Adm.Code 225, Subpart B sought herein for the

Will County Generating Station.

Respectfully submitted,

MIDWEST GENERATION, LLC,

WILL COUNTY GENERATING STATION

by:

Dated: January 10,2007

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

12-258-5500

Fax: 312-258-5600

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

8 7411

FEDERAL ENVIRONMENTAL LAWS

CAA

111

section shall be promulgated not later than one year

remaining useful lives of the sources m the category of

after August 7, 1977. Any new or modified fossil fuel

sources to which such standard applies.

fired stationary source which commences eonshetion

prior to the date of publication of the proposed revised

(e) Prohibited acts

standards shall not be required to comply

mth such

After the effective date of standards of performance

revised standards.

nromulwted under this section. it shall be unlawful

dards of performance

(1) Each State may develop and subnut to the

Administrator a

proeedure for unplementing and en-

forcing standards of performance for new sources

located in such State.

If the Admmistrator finds the

State procedure

is adequate, he shall delegate to such

State any authority he bas under this chapter to

implement and enforce such standards.

(2) Nothing in this subseetion shall prohthit the

Administrator

from enforcing any applicahle standard

~erformance under

this 

section.

(d) Standards of wrformance for existine sources:

remaining

;s&l

life of source

(1) The Administrator shall prescribe regulations

which shall establish a procedure

sunilar to that pro-

vided

by section 7410 of this title under which each

State shall suhmit to the Adnunistrator a plan

whtch

(A) establishes standards of performance for any

ex-

isting source for any air pollutant (i) for which aw

quality criteria have not been issued or which is not

included on a list published under section

7408(a) of

this 

title or emitted from a source category which is

regulated under section 7412 of this title but

Ci)

which a standard of performance under this section

would apply

tf

such existing source were a new source,

and

(B) provides for the unplementation and enforce-

ment of

snch standards of performance. Regulations

of the Administrator under

this 

paragraph shall per-

mit the State m applying a standard of performance to

any

parttcular source under a plan submitted under

this paragraph to take into consideration, among other

factors, the remaining useful life of the existing source

to which such standard applies.

(2)

The Admintstrator shall have the same authon-

ty-

(A) to prescribe a plan for a State in cases where

the State fails to

submit a satisfactory plan as he

would have under section

7410(c) of this title

m

the

ease of failure to submit an

mplementation plan,

and

(B) to enforce the provisions of such plan in

eases where the State fails

to enforce them as he

would have under sections 7413

and 7414 of this

title with respect to an implementation plan.

In promulgatmg a standard of performance under a

plan prescribed under

this

paragraph, the Administra-

tor shall take

into 

consideration, amone other factors.

Eor any owner or operator of any new source to

operate such

source in violation of any standard of

performance applicable to such source.

(fl

New source standards of performance

(1) For those categories of major stationary

sources that the Administrator listed under subsection

@)(l)(A) of this section before November 15, 1990, and

for which regulations bad not been proposed by the

Administrator by November

15,1990, the Administra-

tor

shall-

(A) propose regulations establishing standards of

performance for at least

25 percent of such catego-

ries of sources within

2 years after November 15,

OM.

IUYV,

(B) propose regulations establishing standards of

performance for at least

percent of such catego-

ries of sources within 4 years

after November 15,

1990; and

gories of sources

withm 6 years

after

November 15,

1990.

(2) In determining pnorities for promulgating stan-

dards for categories of major stationary sources for

the purpose of paragraph

(11, the Administrator shall

consider-

(A) the quantity of

air

pollutant emissions which

each such category

will

emit, or will be designed to

pmtt.

- -.

(B) the extent to which each snch pollutant may

reasonably be anticipated to endanger public health

or welfare; and

such category of sources and the consequent need

for nationally applicahle new source standards of

performance.

(3)

Before promulgatmg any regulations under this

subsection or listing any category of major stationary

sources as required nnder this subsection, the Admin-

istrator shall consult

with appropriate representatives

of the Governors and of State

air pollution control

agencies.

(g) Revision of regulations

(1) Upon application by the Governor of a State

showing that the Administrator has failed to specify in

regulations under subsection

(0(1) of this section any

category of major stationary sources required to he

s~ecifled nnder such reeulations. .the Administrator

Cmplete

Annotation Materials, see Title 42 US.C.A.

shall revlse such

gory.

(2)

Upon appliz

showing that any

IS

not included in

thts section cont,

which may reasc

public health or

category

IS not

sources), the Adn

tions to specify

(3)

Upon appli

showing that the

properly the

crite

subsection (fj(2)

shall revise the li

section to apply PI

(4) Upon appli

showng that-

(A)

a new,

process which

reduction has

any category of

(B) as a rest

new source sta~

th~s section for

greatest

degre

through appliea

of continuous e

consideration t

reduction, and

ronmental imp

been adequatel,

the

Administrato

formance for suck

(5) Unless late

trator are

otherw

Administrator sh

lowing the date

Governor of a

Sta

(A) find tha

the requisite

(B) grant

sl

required under

(6)

Before

taki

(0 of this section

trator shall

provi

hearing.

(h)

Design, equ

tional sta~

tion

(1)

For purpoc

of the Adminis*

enforce a standa

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

CFR

Q

60.24

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

00

CFR

Ch.

t (7-1-05

Edltion)

any plan revision necessary to meet

witnesses together with the text of

the requirements of this subpart.

each presentation.

(b) If no designated facility is located

The State shall submit with the

within a State, the State shall submit plan or revision:

a letter of certification

to that effect

(1) Certification that each hearing re-

to the Administrator within the time

quired by paragraph

specified in paragraph (a) of this

sec- was held in accordance with the notice

tion. Such certification shall exempt

required by paragraph (d) of this sec-

the State from the requirements of tiis

tion; and

subpart for that designated pollutant.

(2)

A list of witnesses and their orga-

(c)(l) Except as provided in para- nizational affiliations, if any, appear-

graphs

(c)(Z) and (c)(3) of this section,

ing at the hearing and a brief written

the State shall, prior to the adoption of

summary of each presentation or writ-

any plan or revision thereof, conduct

ten submission.

one or more public hearings within the

(8)

Upon written application by a

State on such plan or plan revision.

State agency

(through the appropriate

(2) No hearing shall be required for Regional Office), the Administrator

any change to

an increment of progress may aPProve State procedures designed

in an approved compliance schedule to insure public participation in the

unless the change is likely to cause the

matters for which hearings are re-

facility to be unable to comply with

quired and public notification of the

the final compliance date in the

sched-

o~~ortunity

to participate if, in the

judgment of the Administrator, the

(3) No hearing shall be required on an

procedures, although different from the

emission standard in effect prior to the

requirements of this subpart, in fact

effective date of this subpart if

it was

provide for adequate notice to and Par-

adopted after a public

heaing and is at

ticipation of the public. The Adminis-

least

as stringent

the corresponding

trator may impose such conditions on

emission guideline specified in the

his approval as he deems necessary.

plicable guideline document published

Procedures approved under this section

under

§M).22(a).

shall be deemed to satisfy the require-

(4) Any hearing required by para- ments of this subpart regarding proce-

graph (c) of this section shall be held

dupes for Public hearings.

only after reasonable notice. Notice

140

FR

53346, N~~.

,7,

1915,

st

60

shall be given at least 30 days prior to

FR 65414, 

19,1995] 

the date of such hearing and shall in-

5 60.24

Emission stan-

compli-

(1) Notification to the public by

ance schedules.

prominently advertising the date,

(a) Each plan shall include emission

time, and place of such hearing in each

standards and compliance schedules.

region affected;

(b)(l) Emission standards shall pre-

(2) Availability, at the time of public

scribe allowable rates of emissions ex-

announcement, of each proposed plan

cept when it is clearly impracticable.

or revision thereof

for public inspec- Such cases will be identified in the

tion in at least one location in each re- guideline documents issued under

gion to which

it will apply;

$60.22. Where emission standards

pre-

(3) Notification to the Administrator;

scribing equipment specifications are

(4)

Notification to each local air pol- established, the plan shall, to the de-

lution control agency in each region to gree possible, set forth the emission re-

which the plan or revision will apply; ductions achievable by implementation

of such specifications, and may permit

(5)

In the case of an interstate region, compliance by the use of equipment de-

notification to

any other State in- termined by the State to be equivalent

cluded in the region.

that prescribed.

(e) The State shall prepare and re-

(2)

Test methods and procedures for

tain, for a minimum of 2 Years, a determining compliance with the emis-

ance schet

record of each hearing for inspection

sion standards shall be specified in the

by any interested party. The record plan. Methods other than those speci-

shall contain, as a minimum, a list of fied in appendix A to this part may be

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

CFR

Ch.

(7-1-05

Ediin)

tnesses together with the text of

ch presentatloo.

The State shall submit with the

sn or revision:

(1) Certification that each hearing re-

lred by paragraph (c) of this section

15

held in accordance with the notice

quired by paragraph

(d) of this sec-

1n; and

:2) A list of witnesses and their orga-

mtional affiliations, if

ang,

appear-

at the hearing and a brief ~mtten

mmarp

of each presentation or Writ-

submission.

'e>

TI~lnn

- = - -

WPit,ten

- -

amlieation by a

ate agency (through-the appropriate

mod Office), the Admlmst~tor

ry approve State procedures designed

rnsure public participation

the

~tters for whlch heanngs are re-

Ired and publlc notiflcatlon of the

portun~ty to partlclpate ~f, in the

lgment of the Adrmmstrator, the

w~dures.

... -

although different from the

~nlrements of &s subpart,

ID

fact

>vide for adequate notice to and

Pas-

ipation of the public. The Adnums-

itor may impose such conrhtiens On

approval as he deems necessary.

wdures approved under tus seOtlOn

111 be deemed to satisfy the require-

nts of

this 

subpart regar-

Proce-

res for publ~c hearmgs.

FR 53346, 

Nov.

17, 1975, as 

amended

65414,

DBC.

19. 19951 

).z4

Emidon

standards

and

00rnpU-

mce schedules.

&oh plan shall ~nclude emlsslon

ndards and comphance schedules.

b)(l)

Ermssion standards shall pre-

be allowable rates of ermssions ex-

~t when it is clearly impracticable.

>h cases will be identified

m

the

dehe documents lssued under

.a.

Where emsslon standards Pre-

ibing equipment speciflcations are

ablished, the plan shall, to the de-

e possible, set forth the emlsslon re-

:tions achievable by implementation

such speceications, and msg pemit

npliance by the use of equipment de-

mined by the State to be equivalent

bat prescnbed.

Test methods and procedures for

ermimng compliance with the emis-

1

standards shall be specified m the

u. Methods other than those

speci-

11n appendn A to this part may be

conmental Protection

Agency

'ed in the plan if shown to be

ent or alternative methods

$60.2 (t) and (u).

ion standards shall apply to

eslgnated facilities within the

.plan may contain emission

ards adopted by local

jurisdic-

s provided that the standards are

rcsable by the State.

Except as provided in paragraph

this section, where the

Adminis-

has detemined that a des-

d pollutant may cause or con-

to endangerment of public

emission standards shall be no

stringent than the corresponding

sion

guideline(s) specified in snb-

C of this part, and final compli-

shall be required as expeditiously

racticable but no later than the

liance times specified in subpart

(d) where

the

Admlnlstracor

has

de-

terrnlned that a

designated

pollutant

cause

contribute

to

ngerment of public welfare but

adverse effects on public health

not been demonstrated, States

balance the emission guidelines,

liance times. and other infoma-

~-.

-~~

rovided in the applicable guide-

ocument against other factors of

cern in establishing emission

compliance schedules, and

css. Appropriate consideration

given to the factors specified

(b) and to information pre-

at the public hearing(s) con-

under §M).23(c).

Any compliance schedule ex-

more than 12 monthsfrom the

uired for submittal of the plan

elude legally enforceable incre-

of progress to achieve compli-

h designated facility or

ilities. Unless otherwise

e applicable subpart, in-

gress must include,

each increment of

560.21(h)

.~~,

and

~ -

mmt. 

ditional increments of

be necessary to

permit

tive supervision of

nal compliance.

provide that compli-

individual

souroes or

ources

will be formu-

an submittal. Any such

be the subject of a public

S60.24,

Note

hearing held according to

$60.23 

and

shall be submitted to the

Adminis:

trator within

€4

days after the date of

adoption of the

schedule but in no case

later than the date prescribed for

snb-

mittal of the first semiannual report

required by

5M.We).

O

Unless otherrpise specified in the

applicabie subpart on a case-by-case

basis for particular designated facili-

ties or classes of facilities, States may

provide for the application of less

stringent emissions standards or longer

compliance schedules than those

other-

wisa required by paragraph (c) of this

section, provided

that the State dem-

onstrates with respect to each such fa-

cility

(or class Of facilities):

(1) Unreasonable cost of control re-

sulting

from plant age, location, or

basic process design;

(2) Physical impossibility of install-

ing necessary control equipment; or

(3)

Other factors specific to the facil-

ity

(or class of facilities) that make ap

plication of a less stringent standard or

final compliance time

signiiicantly

more reasonable.

(g) Nothing in this subpart shall be

construed to preclude any State or po-

litical subdivision thereof from adopt-

ing or

enforeins

(1)

emission standards

more stringent than emission guide-

lines specified in subpart C of this part

or in applicable guideline documents or

(2) compliance schedules requiring

final compliance at earlier times than

those specified in subpart

C or in appli-

cable guideline documents.

[40

FR

53346,

Nov.

17, 1975, as 

amended

65414, 

Dso

19, 1995; 65 FR 76384, 

Dec

6,

EFF~E

DATE NOTE. 

At 70

FR

28649,

May

18,

W,

860.24 w&s

amended 

renszna

oara-

rraph

(bal); 

and

sd*

pa&raph \hi

kc-

five July

18.

2005.

For the conurmence of the

user, the

revlard

and

added

text

is

set forth

as

lolluws:

(bf(1) Enussion standsrtls

shall 

elther

based 

on an allowanw

mtem

prescribe

allowable

nrtea 

of emissions except

when 

clearly 

impracticable.

' * *

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

(h) Each of the States identified in para-

graph

ih)(l) of this section shall be subject to

the requirements of

parsgraphs (h)(2)

through

(7)

of this section.

(1)

Alaska, Alabams, Arkansas, Arizona.

60.4142

and

a year in

annual

EGK

treatment

as

a State under part 49 of this

chapter, the Navajo Nation and the Ute

In-

unit's alloc;

toher 31, 20

(2)

The State's State plan under paragraph

(hU1) of

this 

section must be submitted to

on or after J

tennine, an

each unit's

such action.

October 31

(3)

The State's State plan under paragraph

lowmes

art

(h)(l) of this seotion shall contain emission

standards and compliance schedules and

that differs

demonstrate that they will result in

compli-

HHHH

of

thi

ance with the State's annual electrical sen-

the

annuarl

appropriate

EGU Hg

periods.

budget,

The

in tons

amount

Hg

of the

per

each State plan under

year, shall be as follows, for the indicated

~&~~al",","~~rit~~

that the

the Admini2

State for the indicated period:

cordance

wi

EGU Hg budget under paragraph (hX3) of this

2010-2Q17

%$:

seotion; and

(it) Require

owners 

or operators of

EUs

0.m the State to meet the monitoring.

record 

0.m

keeping, and reporting requirements de-

,,,,

scribed

(6Mi)

Notwithstanding

paragraph (h)(4)

the

of this

pmvisions

seotion.

0.279

paragraphs (h)(3) and iS)(i) of this section, if

o.ml

a State adopts regulations substantively

0.028 identical to subpan HKKH of this part (Hg

Budget

Rading

Program), incorporates suoh

0.4a7 subpart by reference into its regulations, or

adopts regulations that differ substantively

fmm such subpart only as set forth in para-

0.287 graph ih)(BXii) of this seotion, then such al-

0.629 lowance system in the State's State plan

0.W1

Under such mgulations.

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

(March

16,

zoos)

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

Emissions

Market

Prices, News and Analysis

Volume 12,051, March 16.2005

.-...*.-:--::..:,

. . ,

Utility de-listing likely focus of Hg

lawsuits

EPA's decision to de-list power plants as a source of haz-

ardous air pollutants allowed the agency to select a cap-and-

Change

the final mercury rule.

3,350.00

3.425.00

3,387.50

3,450.00

3.550.00

3,500.00

"The de-listing is the big issue here. If you cannot de-list

2007

2.850.00

3,ooo.oo

2,925.00

then you need to have a maximum achievable control technol-

zoo8

z,300.00

2,750.00

2,525.00

ogy (MACT) standard," said Scott Edwards, legal director at the

zoos

2,200.00

2,500.00

2,350.~

Waterkeeper Alliance, which announced plans yesterday to sue

EPA over the mercury rule.

A

. ,,.

EPA determined in December 2000 that it was "appropriate

and necessary" to regulate power plants under Section 112 of

the Clean Air Act

(CAA) and listed them as a regulated source

category. This required EPA to implement a MACT standard to

limit mercury emissions from power plants, hut it preferred a

cap-and-trade approach under Section 11

1 and so had to de-list

power plants as a source category.

In a separate but related

mlemaking issued yesterday in con-

junction with the utility mercury

rule, EPA revised its December

2000 finding and de-listed power plants as a source category,

allowing it to use the

capand-trade approach.

EPA essentially argued that it made a mistake hack in De-

cember 2000 and should not have listed power plants as a source

Complaints from bituminous coal-producers that EPA's proposed

mercury rule would create an uneven playing field appear to have

fallen on deaf ears,

as the agency unveiled a final rule yesterday

that

is more favorable to sub-bituminous and lignite coals.

category. The CAA lays out specific procedures for de-listing

The coal Industry reacted postDvely to EPA's nenewly issued Clean

As Interstate Rule, parbcularly Eastern coal producers who say

the new regulations

wll make Appalachian coal more atlracbve to

East Coast

utlllties.

EPA's decision to de-list power plants as a source of hazard-

ous air pollutants allowed the agency to select a cap-and-trade

approach as a means to control mercury emissions, but the

move

will likely be a prime focus of any lawsuit attacking the final

mercury rule.

The Department of Energy today awarded $48.7mn in clean coal

grants to

32 research pro]ects as part of the Bush admln~stration's

zero-emissions power plant initlave, known as FutureGen.

a source category, which EPA did not follow. But the agency

argues in the de-listing

rulemaking that it can take such action

under another section of the law.

"Congress set up an entirely different structure and predicate

for assessing whether utility units should he listed for

regulation

under Section 112

. ..

[which] provides EPA significant discre-

Continued on page 2

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

Volume

12.051,

March

16,2005

SO, tradxng once at $690, a $5 jump slnce yesterday and no

NO, trades reported.

50 tons were reported trading in the NY NO, market for

about $2,000.

Utilities are continuing to digest the Clean Air Interstate

Rule and utility mercury

mle, recently issued by EPA

which might be contributing to the light volume.

Argusair Dairy is reevaluating its

assessment 

of NO, prices in 2009. EPA

ffnalized its Clean Air Interstate Rule March 10, which will replace the SIP

Call with a two-tiered trading scheme, one for the

summer

ozone season

and one for the entire

year

in the 28 stater under CAIR, starting in 2009.

Continued

fmm

page

52

tion in making the appropriate and necessary finding" and revis-

ing it,

EPA

argued in the de-listing rulemaking.

Once EPA established that it has the authority to de-list in the

32

manner it selected, it then argued that regulating power plants

under Section

112 is neither appropriate nor necessary since mer-

------t-

cury emissions will not pose a public health hazard to most of the

~J-DOC

5.is.n     

2%~~~

20.~eb

IB-M~~

US population after reductions from the cap-and-trade approach

Environmental groups questioned

EPA's findings on the fu-

ture health hazards of mercury pollution,

but argued more direct-

ly that EPA does not have the authority to utilize the alternative

de-listing approach that it selected.

Congress was clear when

amended the CAA in 1990 and re-

quired a MACT approach to control power plant mercury emis-

sions if their health impacts were found to be severe, Edwards

said. At best, Congress intended to give power plants a delay

John

Stanton, senior counsel at Clear the Air, noted that

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

Volume 12,051, March

16, 2005

EPA's approach for de-listing, which the agency did pursuant to

Powder River Basin

(PRB) coal, it does not have many scrubbed

Section 112 (n)

(1) (A) of the CAA, entails much more "broad

plants, he added. Michigan and Ohio will also have to take action

and nebulous authority" than the usual approach under Section

to address their mercury

obligations.

112 (c) (9).

EVA is evaluating the potential costs of mercury control

tech-

Under the rules of statutory construction, whenever a law has

nologies necessary to meet the new requirements and will release

a precise authority that says how to do something, it cannot he

the results of the study later this month.

over-ridden

by something that is more vague, he said. EPA was

Companies buming bituminous coals, particularly in

Pennsyl-

not available for comment.

vania, Illinois and Ohio, that do not already have plans to install

The decision to de-list power plants as a source category

al-

scrubbers, will he most at risk from the new rules, Hewson said.

lows EPA to proceed with the cap-and-trade approach for

mer-

For example, Reliant Energy's Keystone plant in Annstrong

cury emissions, hut more significantly it also allows EPA to

County, Pa., has not announced any plans to fit

scrubbers. Ac-

avoid controlling other hazardous air pollutants, including lead

cording to EPA's Toxic Release Inventory the plant emitted

and chromium, which form the vast majority of toxic emissions

1,8001b of mercury in 2001, more than any other power plant

from power plants and are arguably more dangerous than mer-

in the nation, while Pennsylvania had the highest mercury emis-

cury, Stanton added.

sions of any state.

EPA's final mercury rule sets a two-phase cap

38 tons in

Utilities huming lignites might

be a little bit better off than

2010 and 15 tons in 2018 -and permits utilities to buy and sell

they were before,

Hewson said, adding "hased upon initial tests

allowances to comply (AAD 3/15/05).

G~oups have 60 days after

Texas should be in pretty good shape if mercury technology can

the rule is published in the

Federal

achieve projected performance." Texas is a heavy lignite coal

dition to the Waterkeeper Alliance, Pennsylvania, New Jersey,

user and had the highest mercury emissions most years from

New York and Connecticut have also indicated they will sue.

1998-2002, so will get the most allowances: 4.657 tonslyr in the

first phase and 1.838

tonsly from 2018.

EPA hied to reflect the challenges of mercury removal in its

Mercury rule retains coal rank bias

uneven allocation of allowances. While some bituminous coals

may have above-average mercury content, much of it is oxidized

Complaints from bituminous coal-producers that EPA's pro-

during combustion, particularly if the unit has a selective catalyt-

posed mercury rule would create an uneven playing field ap-

ic reduction

(SCR) unit to control nitrogen oxides. Oxidized mer-

pear to have fallen on deaf ears, as the agency unveiled a final

cury is water-soluble and can therefore he captured in a scrubber

mle yesterday that is more favorable to sub-bituminous and

for sulfur dioxide controls. Mercury is more difficult to remove

lignite coals.

from sub-bituminous and lignite coals as more is emitted in the

EPA's mercury rule calls for a 38-ton cap on emissions from

elemental

form, of which little is removed by existing controls.

2010-2017 and a 15-ton cap from 2018 on, each to be met through

EPA has based the first phase cap of the mercury rule on the

as-

a cap-and-trade system (AAD 3/14/05). The contested allocation

sumption that controls installed to comply with its Clean Air Inter-

of three times as many allowances to lignite coals and 1.25 times

state Rule (CAIR) for

SO2 and NO, will hring mercury emissions

to sub-bituminous as compared with hituminous coals has not

down to at least 38 tons as a result of these so-called co-benefits.

been changed. EPA's unequal treatment of different ranks of coal

The agency projected 2010 emissions of 31.3 tons as utilities make

has already prompted the Pennsylvania Department of Environ-

early reductions in order to bank allowances for the future. But the

mental Protection to threaten a challenge to the final

(AAD

mercury rule will require further cuts even in the first phase ac-

03/15/05). "No coal-type should he given an artificial regulatory

cording to EVA, which is forecasting that co-benefits of the CAIR

or legislative advantage over another," agreed

Consol Energy,

will hring emissions down to 42 tons by 2010.

the largest US producer of bituminous coal, in a statement.

But states still have the discretion over allocation of

allow-

"Sometimes we take comments into account if we get a con-

ances to individual sources, and may not all follow EPA's pro-

sensus, but we did not get a consensus in this case," said Mary Jo

posed compliance schedule attached to the rule hased on historic

Krolewski, environmental engineer at EPA's Clean Air Markets

heat input. There is a danger that some states will allocate fewer

Division.

allowances to those facilities that

have already announced or un-

Northern Appalachian and some Illinois Basin coals have a

dertaken SCR and scrubber projects than to those that have done

higher mercury content than other bituminous coals, although

nothing.

they will be allocated allowances on the same basis. This will

The allowance allocations were based on the average of the

particularly

hun facilities huming coal from central Pennsylva-

highest three years of emission at the unit level from 1998-2002,

nia, which will have to achieve a much higher reduction than 0th-

based on coal type input in 1999. EPA suggested that states

ers, said Thomas Hewson, principal of consulting firm Energy

should use the years 2000-2004 to determine the baseline for

Ventures Analysis (EVA). Illinois has the highest risk exposure

Continued

on page 5

to the new rule, as while it already hums a lot of sub-bituminous

Page

of 7

www.argusonline.com

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

Volume

12,051, March 16,

XK15 

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air Daily

Volume 12,051, March 16,2005

Continued

from page

3

whether a premium for low-mercury coal would develop as it

allowance allocation to sources, as they will have that data in

has for low-sulfur coal, as producers do not know if there is a

time to present their allocation plan to the agency by the Oct. 31, consistency in mercury throughout a

mine or seam that can be

2006, deadline,

Krolewski said.

measured or controlled, Blaney said.

An even greater wild card is which states will participate. New

Jersey, which has already adopted a rule to cut mercury emis-

sions by 90

pct, said yesterday it will sue EPA for trying to use

a trading program to control a known neurotoxin, and repealing

its earlier findings that it should he treated as a hazardous pol-

lutant under a

plant-by-plant technology-based standard. Local

and state air regulators' groups

STAPPMALAPCO predicts that

many states will adopt their own programs as a result of what

thev consider a weak rule, as well as states

such as New Jersey,

Connecticut and Massachusetts that have already done so.

"What is key is how many states will participate and whether

there will be an active market," said John Blaney of ICF Consult-

ing. "If enough states opt out it may defeat the rationale for the

trading program, which is finding the most cost-effective way to

make cuts." Krolewski conceded that "it could possibly impact

the cost of the program if states with larger budgets do not par-

ticipate, but we could not be that predictive and assumed that all

would." EPA has removed the originally proposed "safety valve"

$35,00O/lb at which allowances could have been bought from

future

years' allocations, which may have significant implica-

tions if few states participate.

But if a viable trading program does develop, the marginal

cost of

scrubbers will decrease as a value is placed on the co-ben-

efit reduction of mercury. At a given SO, allowance price, 10-20

pct more coal plants may be scrubbed than without the additional

incentive of gaining mercury allowances, Blaney predicts. But

mercury will still not be

as big a driver for installing controls

as SO, and NO,, as even with allowance prices at

$30,M)O/lb,

it will only add somewhere between $1-$3/MWh onto the cost

of producing electricity, compared with AEP estimates for SO,

$5.60/MWh and $4.20/MWh for NO, at current allowance

prices for a typical Central Appalachian coal-fired plant (AAD

311 Of05).

PRB coal producers have a "critical window" to take ad-

vantage of the current strong incentive to switch to PRB coals

presented by their lower sulfur content in light of increasingly

stringent SO, limits, Blaney said. An additional

250mn touslyr

of spare permitted capacity on top of the roughly 400mn tonslyr

PRB output is available and in strong demand, but is constrained

by an inadequate rail network.

With prices for low-sulfur Eastern coals having risen to more

than

$60/ton from $30lton in the last three years and PRB coals

still only around

$6-7lton, there is a potential for PRB coal out-

put to grow even faster than the 5-6

pct increase seen last year,

Blaney said. But this incentive will go away as the large

coal-

fired generators install scmbbers and switch back to high-sulfur

coals, so the depletion of low-sulfur varieties becomes less of a

problem. Unless the railroads can resolve the bottlenecks,

PRB

coals may lose out on this opportunity, he added. It is not clear

Lignite

bred

145

Coal

refuse

bred

1.1

1.4

---~-~ .

--.

'Anthraute unils are induded Mth bituminous units.

Source

EPA

EPA's final rule has given new sources higher mercury emis-

sions limits than they had in the December 2003 proposal, al-

though they remain more lenient for sub-bituminous and lignite

coals. New sources burning lignite coals must not discharge gas-

es containing mercury in excess of

145 x

1(r6

ib/MWh, more than

double the originally proposed limit of 62 x

lb/MWh, while

the limit for bituminous coals has more than tripled to 21 x

Ib/MWh. Sub-bituminous coal consumers with a wet scrubber

must comply with a 42 x

10.' lb/MWh limit, and those with

dry

scrubbers with a 78 x

lb/MWh limit, compared with 20 x

Ib/MWh as set out in the proposed rule.

New sources will be allocated only as many allowances as

they need, as long

as they stay within their specified limits, from

a set-aside of initially 5

pct. After five years, when they will have

established a baseline, they may be able to overcomply and sell

their excess allowances.

Coal industry generally positive on CAlR

The coal industry reacted positively to EPA's newly issued

Clean Air Interstate Rule, particularly Eastern coal produc-

ers who say the new regulations

will

make Appalachian coal

more attractive to East Coast utilities.

The new rules will transform coal-fired power plants into

clean sources of low-cost, reliable electricity,

Consol Energy

said in a statement. The company said that while it would have

preferred a statutory approach to the emissions standards, the

new rules will continue to drive down emissions, ensuring that

the nation's abundant coal resources can continue to be used to

generate electricity.

EPA's mercury rule will also drive the installation of

emssions

control equipment, said Consol. 'We expect that the two rules,

when taken together, will result in a significant increase in the

use of modem pollution control technologies to meet the lower

standards for SO,, NO,, and

the first-ever standards for mercury,"

Consol said, noting that as the rules go into effect, the disparity he-

Page

5 of

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air

Daily

Volume

12,051,

March 16,2005

tween compliance and non-compliance coals will be eliminated.

"No coal will be clean enough to be burned without emissions

reductions achieved with retrofitted modem pollution control

equipment or the purchase of emission allowances from units

that do install technology,"

Consol said. "As a coal's sulfur con-

tent becomes less of a

concem (because of technology), high-Btu

coals in the eastern

US should become more attractive as a fuel

source to Eastern power plants because of those coals' lower de-

livered cost per Btu."

But the company warned that the mercury

mle creates an un-

level playing field by giving coal from some basins an unfair ad-

vantage over others. "No coal-type should be given

an artificial

regulatory or legislative advantage over another. By keeping all

of America's coal resources available for use, this country can

take an important step toward energy independence."

Jack Gerard, chief executive of the National Mining Associa-

tion, said critics of the new mercury mle overlook its benefits.

"In addition to entirely

overlooking the economic implications

from higher energy prices, critics who fault

EPA's rule miss two

obvious points

this is the first mle ever designed to reduce

mercury emissions from these sources, and it will achieve im-

pressive reductions."

While compliance will be expensive for coal-fired power

plants, the proposed

cap-and-trade system "will provide the na-

tion with lower mercury

levels than would he possible on a plant-

specific basis." The nationwide limits under cap and trade will

not expand to accommodate the operation of additional power

plants that will he needed for generating the projected increases

electric power.

The

NMA echoed Consol's call for a statutory approach to

emissions reductions, saying "Clear Skies legislation would still

be preferable

it offers similar improvements in air quality but

would provide power companies with greater regulatory certain-

for building the new baseload capacity that is needed to fuel a

growing economy.

Ted

Venners, chief executive of coal processing company

KFx, also expressed support for the new air rules, while calling

for a nationwide legislative approach to the emission issue.

"We remain committed to helping the

coal-fued indusuy com-

ply with these standards while calling on Congress to pass simi-

lar, nationwide legislation,"

Venners said. "The adoption of such

legislation would further drive the nation toward clean-energy

delivery and would provide additional clarity for the power in-

dustry as it implements measures to meet emissions standards."

DOE gives $48.7~1 for clean coal projects

The Department of Energy today awarded $48.7mn

clean

coal grants to

research projects as part of the Bush ad-

ministration's zero-emissions power plant initiative, known

FutureGen.

The projects focus on four key research areas

the carbon

sequesvation program area will fund eight programs, the power

systems advanced research program will fund eight: the coal

fuels and hydrogen project area will fund 12 projects; and the

advanced gasification program area will fund four projects. Re-

searchers will also contribute

$13.7mn towards the projects.

Projects will cover a wide range of topics, including:

improved and new methods of producing pure hydrogen

in coal gasification;

hydrogen handling

safe storage of hydrogen, and on-

board storage which will aid the commercialization of hydrogen

fuel cell vehicles;

improved and simplified removal of multiple pollutants

in coal gasification;

development of carbon dioxide capture technology that

can be retrofit on existing coal-based power plants;

expansion of carbon sequestration technology to iden-

tify and accurately assess the

CO, storage capacity of geologic

formations; and

development of new alloys to advance ultra-supercriti-

cal generation with pulverized coal, an emerging newer technol-

ogy that can deliver power with ultra-low emissions and ultra-

high efficiency.

Committee backs greater ethanol use

The Senate Environment and Public Works Committee vot-

ed today to increase the proposed national renewable fuels

standard included in the energy bill from

jbn gallonslyr to

6bn gallonslyr of ethanol or biodiesel by

2012,

while elimi-

nating

the

federal oxygenate requirement for non-attainment

areas.

The legislation seeks to

ban the use of MTBE, a clean hum-

ing fuel additive that has caused groundwater contamination,

2010

and replace it with increased use of renewable fuels

such as ethanol and hiodiesel to preserve the emissions benefits

MTBE. Previous versions of the renewable fuels standard

(RFS) called for mixing 5bn gallonslyr of ethanol or biodiesel

into the gasoline supply by

2012,

hut the committee decided to

increase that amount, citing the rising production levels from

the ethanol

industq.

'Today's vote clears the way for the Senate to make etha-

nol a cornerstone of America's energy policy," said Sen. John

Thune

(R-S.D.), who sponsored the legislation.

Relief from the oxygenate requirement is sought by sever-

al states, including Califomia, Louisiana and New York. Last

week, Sen. Dianne

Feinstein @-Calif.) asked EPA to speed up

consideration of her state's petition to waive the oxygenate re-

quirement so that it can use gasoline that does not contain etha-

nol, which the Califomia EPA claims would increase emissions

of some smog-forming pollutants

(AAD

3/10/05). But the leg-

islation would still require the use of ethanol, so Sen. Barbara

Boxer

@-Calif.), a member of the Senate committee, plans to

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, JANUARY 10, 2007

Argus Air

Daily

Volume

12,051,

March

16,2005

and

inward market plus for

four

addruonal

yews

Argw

pubhshes

daly

"We do not believe we need

for clean ur," she sald

SO, allowance mcer for went vlntage (spot)

Each 

Fnday on a

weekly

To address some of those concerns, the bill does rnclude a

. ... ..

offer an amendment on the floor to exempt Caltfomia from the

basis, Argus publisher forward det prices for

seven

additional years.

provision requiring EPA and other agencies to conduct several

The

fomd

SO,

mien

reflect 

the value on theFriday assessed,

not

vaiue

studies on the air aualitv, economic and health imacts from the

Arguspubltshes Wy NO, allowance

pnces

for mrrent vlntage

(spot)

. .

representative of the entire we&.

RFS. EPA would also have to conduct an analysis to ensure that

areas are not "backsliding" on their emissions reductions as a

result of the use of ethanol or biodiesel.

the midpint baween

the

assessed bid and

ask. 

The zsessedrange takes

By dropping the oxygenate requirement, ethanol producers

into

account

deals done, bids, offers,

spreads 

between amen1 and fume

say the bill will let refiners use renewables in those areas where

vintages, and other assessments of the det gatheKdthmugh a

wide   

it is most cost-effective while preserving the air benefits from

mey

panicipmts.

The

assessment repiesen13 the range wiihin which

the current mandate. But refiners said they have "serious con-

deals traded or could have traded at thc close of the aading day fn that

cems" about the increased ethanol mandate.

paniculw vintage. Argus holds

a3

piding

principle that our assessmenis

"A renewable fuels provision of 5bn gallonslyr with a na-

should be the product of intelligence, skill, and diligent

invmigation.

tional averaging and credit trading program would give refiners

Each week on Friday, Argus publishes a We&ly Index for

SO*

improved flexibility in their use of oxygenates," the American

and

NO,. These 

indices

are the 

arithmetic

average of

the

daily

"Price''

Petroleum Institute (API) said.

published

fm

nment

vintage

allowances far each day on which prices

API

and the National Petroleum Refiners Association also

want the Senate to include "safe harbor" protection from taw-

suits for

MTE3E

manufacturers. The hill approved today does

not contain a safe harbor provision for

MTBE, but does for

ethanol. Previous versions of the energy bill were

held up in

the Senate due to the inclusion of liability protection for

MTBE

suggested by theEmissions

Marketing 

Association.

producers.

Thc

US Enviromental Protection Agency (EPA) publishes lransfus

SO,& NO, 

allowances

every

bminess

day. Arp publishes

details

ou

daily W.%S between non-affiliated compvlier

organizations.

March

17 Federal Register

Separately, Argus collects details on

mactions

completedin the

over-&

cmter market for emission allowances and publishes them in the "Deals

Notices

Done" table in Argus Air

Doily 

each

business day. These transactions

Air programs: State imple-

mentation plans: adequacy

pmesed through the EFA'

status for transportation con-

Oregon,

formity purposes

05-05325 [FRL-7885-11

Meetings: Clean Air Act

Advisory Committee,

05-05321 [FRL-7885-51

new RFS.

Argus Air Daily

Washington Bureau Chief:

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Customer Sewice: For questions regarding

Ediors: Mike Ball, Larry Pearl,

Adn'an Binks

subscriptions or drwlation, please conta

Marcin Skomial

Production Editors: Hannah

McCa

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