Adopted Part 246, Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units - Revised Rural Area Flexibility Analysis

6 NYCRR Part 246, Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units and 6 NYCRR Part 200.9, Referenced Material

On March 15, 2005 EPA announced the final Clean Air Mercury Rule (CAMR). CAMR limits mercury emissions from new and existing coal-fired electric steam generating units, and creates a market-based cap-and-trade program that will permanently cap utility mercury emissions nationwide in two phases: the first phase cap is 38 tons beginning in 2010; the second phase cap set at 15 tons beginning in 2018. EPA believes these mandatory declining caps will ensure that mercury reduction requirements are achieved and sustained. On May 18, 2005, EPA promulgated Emission Guidelines and Compliance Times for Coal-Fired Electric Steam Generating Units. (70FR 28606-28700) Pursuant to 40 CFR 60.4141, all States are required to submit to the Administrator their designated mercury allowances for each coal-fired electric steam generating unit by October 31, 2006. Regardless if a State is adopting the federal program or creating its own State control plan, all States must require applicable sources to limit mercury emissions at or below levels which meet the allocations designated in 40 CFR 60.4140, the State trading budget. For New York State, the State trading budget equates to 786 pounds per year of allowable mercury emissions in 2010-2017 and 310 pounds per year in 2018 and beyond.

The Department is proposing to adopt 6 NYCRR Part 246 which utilizes the CAMR emission budgets to set facility-wide annual emission limitations in the first phase and a traditional unit level emission rate limit based program in the second phase. In 2010, Phase I, Part 246 establishes annual facility-wide emission limitations for subject facilities based on the New York State mercury budget. New York facilities will not be allowed to trade mercury emissions with other facilities. The annual facility-wide emission limitation will be in effect from 2010 through 2014. In 2015, Phase II, in conjunction with other electric sector regulations such as the Regional Greenhouse Gas Initiative (RGGI) and the second phase of the Clean Air Interstate Rule (CAIR), Part 246 establishes a facility-wide emission limit for each facility representing a 90 percent reduction of mercury emissions from 2005 levels. The Department will submit Part 246 to EPA for approval as New York's mercury state plan, in lieu of adopting CAMR.

Types and Estimated Number of Rural Areas Affected

6 NYCRR Part 246 applies to coal-fired electric utility steam generating boilers or a coal-fired electric utility steam generating combustion turbines with nameplate capacity of more than 25 MWe (Megawatt electrical, or Megawatt produced as electricity) which produces or has produced electricity for sale firing coal or coal-derived fuel. In addition, Part 246 applies to cogeneration units which serve or have served a generator with a nameplate capacity of more than 25 MWe and supply in any calendar year more than one-third of the unit(s potential electric output capacity or 219,000 MWh, whichever is greater, to any utility power distribution system for sale. The Department has identified 13 facilities in New York which are subject to Part 246. These facilities are large industrial sources that produce electricity for commercial sale. These units are located in both rural and urban areas in western New York and the Hudson River Valley. Facilities subject to Part 246 may dispose of fly ash in lagoons or onsite landfills. Depending on the mercury control strategy implemented at the facility and the capacity of the generating units, the proposed regulation may negatively increase the volume of fly ash generated, resulting in up to an additional 500 tons per year of fly ash disposed of in landfills¹.

Reporting, Record Keeping and Other Compliance Requirements

CAMR imposes certain minimum requirements, requirements that states must include in a state plan to be approved by EPA, for reporting and recordkeeping and other compliance requirements such as the requirement to meet the State mercury budget through facility-wide emission caps, and continuous emission monitors for mercury calculation. These requirements are not envisioned to affect local governments, except in the case of Jamestown which owns and operates an affected facility, or citizens of rural areas.

Costs

Most facilities in New York will need to install activated carbon injection systems to work in conjunction with existing cold-side ESPs, especially those facilities burning western sub-bituminous coals. Some facilities may need to install pulse jet fabric filter baghouse systems for particulate collection to achieve the higher rates of mercury capture proposed for 2015 than could be realized through operation of a cold-side ESP alone. For those facilities combusting sub-bituminous coals, high percentage sub-bituminous coal blends, or facilities with existing fabric filter baghouses, total capital requirements include the purchase and installation of dosing and storage equipment related to the powdered activated carbon injection (PACI) system. The PACI will be a nearly fixed cost of $984,000 (year 2003 dollars)². Annualized over 20 years at an interest rate of approximately 10 percent this translates to a cost of $117,460 per year. Through research projects partially funded by DOE, it has been realized that mercury emissions from facilities burning sub-bituminous coals are more readily controlled than previously predicted through the use of an enhanced PACI system and brominated or treated carbons³.

The cost of land filling the additional carbon material can vary greatly, but can be approximated as $17/ton of fly ash through a 2001 report from the American Coal Ash Association⁴, which translates to an additional $2,000 to $20,000 for year 2004 disposal costs. Numerous studies have shown that mercury captured on activated carbon surfaces will not leach into liquid collection systems in landfills after disposal. Those facilities that are currently selling collected ash may have problems associated with carbon content of ash and may find it difficult to continue sale of the product. Average sales are approximately $18/ton of fly ash with 50 percent of the ash sold going to Portland cement companies as a kiln additive. An alternative control scheme would be to install activated carbon injection with a polishing baghouse after the primary particulate collection device, for example a cold-side ESP, so that fly ash composition and its sale would not be negatively affected.

The future actual costs of regulating mercury emissions from the electric utility steam generating sector are directly related to any additional control device(s) required on a plant-by-plant basis, in addition to the volume and cost of reagent required. With regards to costs to rural communities or rural entities it is not envisioned that Part 246 will affect these areas of the State.

Minimizing Adverse Impact

The objective of Part 246 is to reduce mercury emissions statewide. The Rural Area Flexibility Analysis (RAFA) under section 202-bb(2)(b) of the State Administrative Procedures Act requires State agencies to take into consideration issues which may impact the ability of regulated entities in rural areas to comply with regulatory requirements. The Legislature has stated that the ability of private and public sector interests in rural areas to respond to state agency regulations may be constrained by operating environments which are distinctly different from that found in suburban and urban areas, including, among other things, population sparsity, limited access to financial and technical resources, and lack of economies of scale. Agencies must assess the regulatory impact and alternatives for rural areas and whether alternative regulatory approaches such as differing compliance or reporting requirements, the use of performance or outcome standards, or exemptions from applicability are warranted.

The Department has considered these issues and determined that Part 246 will not have an adverse impact on rural areas. Notably, Part 246 affects large industrial electric generators who produce electricity for commercial sale, some of which are located in rural areas. The ability of a facility to meet the requirements of Part 246, which include the installation and operation of pollution control technologies and continuous emission monitors, and recordkeeping and reporting, will not be influenced by the location of the facility in a rural versus a suburban or urban area. Moreover, as a matter of federal law, the Department is constrained to adopt requirements no less stringent than CAMR, which include emission caps based on the New York State mercury budget and federal reporting requirements. Part 246 meets these minimum federal requirements.

Currently, mercury emissions continue to be a major threat to public health and natural resources in New York State's rural areas. Due to the high levels of mercury in freshwater fish, the Department and the New York State Department of Health have issued specific warnings advising that pregnant women and children should not consume any servings of specific fish species that are caught in 93 lakes and more than 265 miles of rivers in the State. The New York State Department of Health publication, 'Chemicals in Game and Sportfish 2006-2007', identified fifty-two new areas with elevated mercury levels in fish since the 2003-2004 edition, bringing the number of lakes in New York State with specific fish advisories for mercury to ninety-three⁵. Many of the lakes sampled are in remote rural and mountainous areas of the State that do not have any known mercury inputs other than atmospheric deposition. With the proposed regulation, the current deposition rate of mercury in all areas of New York State, urban and rural will be reduced to a much greater degree than would be achieved by the emissions caps sought to be established by EPA as part of the federal proposed cap-and-trade program.

The Western Adirondacks is considered a "hotspot" due to its unique geology and acidified lakes. A significant inverse relationship is found in Adirondack lakes between lower pH levels and increasing fish mercury levels and adult and juvenile loons.⁶ The Department implemented the Acid Deposition Reduction Programs for Sulfur Dioxide and Nitrogen Oxides in 2003 and the federal Clean Air Interstate Rule will add to these reductions in 2009 and 2015. Part 246 is designed to work in conjunction with these regulations and their timeframes. The recovery of New York's lakes and rivers will be a slow process and the Department needs to act sooner than the federal program prescribes to protect New York's rural areas.

CAMR's cap-and-trade provisions which allow for the banking of mercury allowances, and the potential for New York's emission reductions to be sold to facilities located in upwind states, will prolong the "hot spots" in the rural Catskill and Adirondack region until 2020 and beyond. Regional concentrations will be reduced sooner through implementation of Part 246 which controls unit-level mercury emissions at least three years earlier than the federal cap-and-trade program and to a greater extent. CAMR's cap and trade provisions jeopardize the public health of New Yorkers and the natural resources of the State.

Rural Area Participation

The State Administrative Procedures Act requires agencies to provide public and private interests in rural areas the opportunity to participate in the rule making process and or public hearings. The Department will hold public hearings on Part 246 in upstate areas and will notify interested parties of this proposed rulemaking.

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Footnotes

¹ EPA Office of Solid Waste and Emergency Response, EPA 530-S-99-010, March 1999, Report to Congress: Waste from the Combustion of Fossil Fuels

² USDOE/NETL, Preliminary Cost Estimate of Activated Carbon Injection for Controlling Mercury Emissions from a Un-Scrubbed 500 MW Coal-Fired Power Plant, prepared by Science International Corporation, May 2003

³ Sorbent Technologies Corporation, Sid Nelson Jr. - Recipient Project Director, Advanced Utility Mercury-Sorbent Field-Testing Program: Semi-Annual Technical Progress Report

⁴ American Coal Ash Association, 2001 coal combustion product (CCP) production and use statistics

⁵ New York State Department of Health. 2006-2007 Health Advisories: Chemicals in Sportfish and Game. 2006. URL www.health.state.ny.us/nysdoh/fish/fish.htm

⁶ Internal DEC work, Bureau of Habitat, Division of Fish and Wildlife, H. Simonim, J. Loukmas, paper to be published 2006