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Adopted Part 246, Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units - Revised Regulatory Impact Statement

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

Statutory Authority

The statutory authority for this promulgation is the Environmental Conservation Law (ECL) Sections 1-0101, 3-0301, 19-0103, 19-0105, 19-0301, 19-0303, 19-0305, and 19-0311.

ECL section 1-0101. This section declares it to be the policy of New York State to conserve, improve and protect its natural resources and environment and control air pollution in order to enhance the health, safety and welfare of the people of New York State and their overall economic and social well being. Section 1-0101 further expresses, among other things, that it is the policy of New York State to coordinate the State's environmental plans, functions, powers and programs with those of the federal government and other regions and manage air resources to the end that the State may fulfill its responsibility as trustee of the environment for present and future generations. This section also provides that it is the policy of New York State to foster, promote, create and maintain conditions by which man and nature can thrive in harmony by, among other things, preserving the unique qualities of special resources such as the Adirondack and Catskill forest preserves and providing that care is taken for the air resources that are shared with other states in the manner of a good neighbor.

ECL section 3-0301. This section empowers the Department to coordinate and develop programs to carry out the environmental policy of New York State set forth in section 1-0101. Section 3-0301 specifically empowers the Department to: provide for the prevention and abatement of air pollution; cooperate with officials and representatives of the federal government, other States and interstate agencies regarding problems affecting the environment of New York State; encourage and undertake scientific investigation and research on the ecological process, pollution prevention and abatement, and other areas essential to understanding and achievement of the environmental policy set forth in section 1-0101; and monitor the environment to afford more effective and efficient control practices.

ECL section 19-0103. This section declares that it is the policy of New York State to maintain a reasonable degree of purity of air resources, which shall be consistent with the public health and welfare and the public enjoyment thereof, the industrial development of the State, and to that end to require the use of all available practical and reasonable methods to prevent and control air pollution in the State. "It is declared to be the policy of the State of New York to maintain a reasonable degree of purity of the air resources of the State . . . and to that end to require the use of all available practical and reasonable methods to prevent and control air pollution."

ECL section 19-0105. This section sets out the purpose of Article 19, "to safeguard the air resources of the State from pollution . . ."

ECL section 19-0301. This section declares that the Department has the power to promulgate regulations for preventing, controlling or prohibiting air pollution and shall include in such regulations provisions prescribing the degree of air pollution that may be emitted to the air by any source in any area of the State. Specifically Sections 19-0301(1)(a) and (b) state that:

ECL section 19-0303. This section provides that the terms of any air pollution control regulation promulgated by the Department may differentiate between particular types and conditions of air pollution and air contamination sources. Section 19-0303 also provides that the Department, in adopting any regulation which contains a requirement that is more stringent than the CAA or its implementing regulations, must include in the Regulatory Impact Statement, among other things, an evaluation of the cost-effectiveness of the proposed regulation in comparison to the cost-effectiveness of reasonably available alternatives and a review of the reasonable available alternative measures along with an explanation of the reasons for rejecting such alternatives. The analysis of the cost effectiveness of Part 246 is set forth in Section 4 - Costs. The analysis of alternatives and their cost-effectiveness is set forth in Section 8 - Alternatives.

ECL section 19-0305. This section authorizes the Department to enforce the codes, rules and regulations established in accordance with Article 19. Section 19-0905 also empowers the Department to conduct or cause to be conducted studies and research with respect to air pollution control, abatement or prevention.

Legislative Objectives

Article 19 of the ECL was enacted for the purpose of safeguarding the air resources of New York from pollution, to ensure the protection of the public health and welfare, the natural resources of the State, physical property, and industrial development. It is the stated policy of the State to require the use of all available practical and reasonable methods to prevent and control air pollution in New York. To facilitate this policy objective, the Legislature bestowed specific powers and duties on the Department, including the power to adopt and promulgate regulations for preventing, controlling and prohibiting air pollution. This authority specifically includes promulgating standards for the coordination of State and Federal pollution reduction programs.

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. (70 Fed-Reg 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 November 15, 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. For New York State, these distributions equal 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 a mercury regulation which will, in two phases, achieve a 90 percent reduction from the coal-fired electricity generating units covered by the CAMR. The State regulation being proposed will set limits for each applicable stationary coal-fired boiler that has ever served a generator with a nameplate capacity of greater than 25 MWe (Megawatt electrical, or megawatt produced as electricity) producing electricity for sale or a stationary coal-fired combustion turbine that has ever served a generator with a nameplate capacity of greater than 25 MWe and supplying 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.

Phase I of the proposed State regulation, 6 NYCRR Part 246, will impose facility-wide mercury emission limitations, based upon the state mercury budget distributed to New York State by EPA. Applicable facilities will not be permitted to generate and trade mercury reductions with other facilities or other States as allowed under the federal CAMR program. The Department will limit applicable facilities to a specified amount of mercury emissions expressed in pounds per year in total, not to exceed New York's mercury state budget. The facility-wide emission limitations will be in effect from 2010 to 2014. The Department is withholding 40 pounds of emissions from the overall State CAMR mercury budget of 786 pounds for new sources. Individual new sources will also be required to meet an emission rate limit of 0.6 pounds of mercury per trillion Btu on a 30-day rolling average basis.

Starting in 2015, the State mercury regulation will establish a facility-wide emission limit. Each applicable facility will be required to meet an emission rate limit of 0.6 pounds per trillion Btu on a 30-day rolling average basis. This is expected to result in annual emissions of mercury from applicable units of less than 200 pounds. Since the State rule will meet or exceed the minimum federal requirements to limit emissions of mercury from applicable units to 786 pounds in 2010 and 310 pounds in 2018, the Department will submit Part 246 to EPA for approval in accordance with 40 CFR 60.24 in lieu of New York State accepting the model rule requirements of the federal Clean Air Mercury Rule.

Needs and Benefits

Mercury is a toxic metal that persists and cycles in the environment as a result of natural and human activities. When mercury is released into the air, it is transported and eventually deposited back onto the earth. The distance of this transport and eventual deposition depends on the chemical and physical form of the mercury emitted. In aquatic ecosystems, inorganic mercury is transformed into an extremely toxic organic form of mercury, methylmercury. Methylmercury bioaccumulates up the food chain as humans and animals consume mercury-contaminated organisms, particularly fish. Two conditions common in the Northeast, acidified water bodies and elevated ozone levels, are thought to promote the deposition of mercury into the environment.

Mercury emissions are a major threat to public health and natural resources in New York State. 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 93.¹ The Department has an on-going study that will increase our knowledge about mercury in fish from New York State waters. Preliminary information about mercury levels in the Adirondack and Catskill Mountain regions suggest that larger, older individuals of pickerel, northern pike, small mouth and largemouth bass, walleye and yellow perch often have relatively high levels of mercury in their flesh, higher levels than similar fish from other regions in the state. Because of this, infants, children under 15 and women of child-bearing age are advised to avoid consuming fish from Adirondack and Catskill Mountain waters. In addition, the 2006-2007 Department of Health publication lists a new section entitled "Regional Advice" which advises that women and children consuming fish in the Catskills and Adirondack regions should eat no more than one meal per month of certain fish, and avoid consuming northern pike, pickerel, walleye, large and small mouth bass and large yellow perch altogether. The list of restricted water bodies and fish species continues to grow each year. 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.

The current deposition rate of mercury in all areas of New York State needs to be reduced to a much greater degree than would be achieved by the emissions caps established by EPA as part of the cap-and-trade program. EPA's Mercury Study Report to Congress concluded that the Great Lakes, the Ohio River Valley, the Northeastern United States and scattered areas in the south are predicted to have the highest annual deposition rates of mercury in the United States.² A recently completed study of mercury deposition in the Adirondack Mountain region of New York showed that sources located in the United States contribute 42 percent of the mercury deposition in this region.³ Regional modeling work conducted by the Electric Power Research Institute concluded that 80 percent of the mercury deposition that occurs in the southern New York region and surrounding states comes from sources based in the United States.⁴

The Deposition modeling study conducted in the Florida Everglades⁵ was designed to simulate changes in atmospheric deposition of mercury from local and distant sources and to determine how these changes will affect the Total Maximum Deposition Loads (TMDLs) and the concentration of mercury in top-of-the-food chain predatory fish. It was estimated that it takes an 80 percent reduction in mercury emissions from the maximum deposition rate to reduce the mercury concentration in predatory fish three-fold to meet the current Florida fish advisory action level of 0.5 ppm. The study also predicts an initial rapid decrease in mercury concentrations of predatory fish - 10 years for an approximately 50 percent decline, and a slower response of 30 years for approximately 90 percent decline. The Florida deposition model study showed that while fish mercury levels are directly related to the contribution of mercury to the water body, the reduction in fish mercury levels will only occur after many years once deposition is reduced. The Department expects that fish mercury levels will also decrease in Adirondack lakes in a similar timeframe but the Florida study showed that the conversion from deposited mercury to methyl mercury is dictated by the geology of the water body and ultimately the water chemistry. The western Adirondacks are considered a "hotspot" due to their 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.⁶,⁷ Research such as the Florida study and documented reductions in western Massachusetts shows that New York needs to act earlier than 2018 to reduce mercury emissions and achieve greater than the 70 percent reduction predicted from CAMR if mercury levels in fish are to be eliminated or significantly reduced within the next ten to fifteen years as the Florida model indicates. The Department implemented the Acid Deposition Reduction Programs in 2003 to reduce emissions of Sulfur Dioxide and Nitrogen Oxides. The federal Clean Air Interstate Rule (CAIR) will add to these reductions in 2010 and 2015. Part 246 is designed to work in conjunction with these regulations and their timeframes to allow the regulated community an opportunity to plan effectively. The recovery of New York's lakes and rivers will be a slow process and the Department needs to act to reduce mercury emissions sooner than the timetable for reductions under CAMR to protect the health of New Yorkers and our wilderness and wildlife areas.

The term "hot-spot" has been used by the EPA and environmental organizations to describe a particular area vulnerable to sustained mercury deposition based upon different regulatory scenarios. One of the shortcomings of CAMR is that the federal cap-and-trade strategy will not mitigate the current "hot-spots" created by localized deposition from coal-fired electric utilities who buy may buy allowances rather than install pollution control equipment to reduce emissions. The Department believes,⁸ that the Adirondacks or the Northeast region is a "hot-spot" due in part to persistent deposition of mercury from the coal-fired electric utility sector. Consequently, the Department has opposed the trading of mercury allowances. Recent research in Ohio and Massachusetts has addressed the issue of localized deposition at near-by receptors from coal-fired electric utilities and municipal waste combustors respectively. New York State has implemented regulations⁹ that are stricter than the federal National Emission Standard for Hazardous Air Pollutants for Municipal Waste Combustors to minimize localized deposition impacts, and anticipates that reductions achieved from the proposed Part 246 will do the same for the coal-fired electric utilities located in New York State.

The electric utility industry, along with municipal solid waste combustors and the Portland cement manufacturing sector comprise the largest point source categories of mercury emissions in New York State. Since 1999, New York State has reduced emissions from the municipal solid waste combustor sector by approximately 90 percent. New York State is currently examining technology to reduce emissions in the Portland cement manufacturing sector following the EPA's promulgation of a National Emission Standard for Hazardous Air Pollutants (NESHAP) which did not control mercury from this source category.¹⁰ With the proposed reductions targeted for 2015, the statewide reduction in mercury from 1999 levels will equate to 75 percent¹¹ statewide for all point sources comprised of fuel burning equipment, incineration and manufacturing.

With respect to solid waste initiatives that reduce mercury to the environment, the Department recently promulgated regulations that prohibit the use and possession of non-encapsulated mercury and set standards for the recycling of dental amalgam waste and pre-encapsulated elemental mercury wastes from dental offices. The regulations also require dentists to install mercury amalgam separators and collection equipment, which is designed to remove 99 percent of that mercury waste that would have ended up in the wastewater treatment plants, and ultimately in New York State's waterways. Some of this wastewater mercury ends up as sludge and is subsequently burned in sewage sludge incinerators. Sewage Sludge Incineration is another source category the EPA decided not to regulate under the National Emission Standard for Hazardous Air Pollutants program. New York State conducted a successful pilot automotive switch collection and recycling program to prevent mercury-containing switches used on the hoods and trunks of cars from entering the waste stream. Over 5,000 switches containing over 10 pounds of mercury were collected during this project and New York State recognizes that this is a significant source of elemental mercury and has been addressing this issue with recyclers and auto manufacturers. On July 12, 2004, Governor Pataki signed into law Chapter 145 of the Environmental Conservation Law, which bans the sale and distribution of mercury-added novelty products, the sale of mercury fever and body thermometers without a prescription, and the use or purchase of elemental mercury in schools.

In conclusion, the Department has determined that federal cap-and-trade program would prolong the existence of "hot spots" in the Catskill and Adirondack region until 2020 and beyond. Allowing the banking and sale of mercury allowances to be sold to New York applicable facilities or to facilities in regions where westward winds prevail would not reduce the unacceptable mercury concentrations in fish and wildlife in New York's lakes, streams and estuaries. Regional concentrations will be reduced sooner through implementation of a New York State rule which controls facility-wide mercury emissions five years earlier and to a greater extent than the federal rule.

Costs

Costs to Regulated Utilities

New York currently has thirteen coal-fired electric utility steam generating stations, two of which, AES Hickling and AES Jennison, have been on cold standby since October 2000. The thirteen stations have electric generation capacities per plant ranging from 50 MW to 800 MW. There are two cogeneration facilities, Trigen Energy-Syracuse and WPS Niagara Generating Facility, generating steam for both electric production and process use. At this time, only those units which meet the federal definition of electric utility steam generating unit, including the thirteen coal-fired steam generating stations and the two co-generation units, will be subject to Part 246.

Mercury control that has been achieved through the operation of existing oxides of nitrogen, sulfur dioxide, and particulate matter control equipment at the thirteen active facilities is expected to range from 25 percent to 90 percent. Based upon data collected during the Information Collection Request (ICR) conducted in 1999, EPA established emission reduction factors for the numerous types of coal-fired and coal derived fuel-fired electric utility steam generating units. Facilities employing effective sulfur dioxide and particle control achieved the greatest co-benefits in mercury reduction. These facilities included either wet scrubber or spray dryer adsorption systems in conjunction with baghouse fabric filters. These control systems exhibited the greatest mercury control when firing bituminous coal and to a lesser degree when firing sub-bituminous coal, 97 percent vs. 75 percent respectively. Facilities employing low sulfur coal for sulfur control and an electrostatic precipitator (ESP) for particle control exhibited mercury control ranging from 28 percent to 60 percent depending on if the ESP was being operated as a hot-side ESP or cold-side ESP. The US Department of Energy /National Energy Technology Laboratory (DOE/NETL) began carrying out a comprehensive mercury research and development program in the 1990s. To date, DOE/NETL's has tested various control options under a two phase program. The first phase started in 2001 and the second phase is finishing this year. Phase two focuses on longer term, large scale field testing on a broad range of coal rank and air pollution control devices. Activated carbon injection has shown the most promise as a near term mercury control technology.¹²

The Department believes the thirteen facilities will choose from two control devices in order to achieve compliance with the proposed regulatory cap and timelines. The two control devices the Department has identified are: (1) the addition of an activated carbon injection unit in conjunction with a cold-side electrostatic precipitator; and (2) the addition of a baghouse fabric filter and activated carbon injection unit. Facilities potentially not requiring additional add-on control devices in the State's 2010 regulatory timeframe would be those already equipped with spray dryers or wet scrubbers, which in series with effective particle control may demonstrate a near equivalent degree of control as a fabric filter baghouse in combination with an activated carbon injection system. The future addition of an oxidizing catalyst, precipitating agent or carbon additive may be required by those sources operating wet scrubbers to promote further oxidation of elemental mercury and greater capture and control.

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. Reagents for mercury capture in most cases consist of a powdered activated carbon or carbon enhanced with a halogen such as bromine. The incremental cost of generation for New York coal-fired units implementing a standard or enhanced powdered activated carbon system will be in the range of 0.37 to 1.66 mills/kWh¹³,¹⁴ . A mill is defined as one-tenth of a cent. This is approximately one percent to eight percent increase on the 20 to 30 mills/kWh ($0.02/kWh to $0.03/kWh) most coal-fired power plants currently incur to generate electricity. For comparison, in the day ahead market during a summer month a kWh is sold by a generator for approximately $0.08 upstate and $0.15 downstate¹⁵. Monitoring, record keeping and reporting are being incorporated into Part 246 from CAMR and regulated facilities will incur the same costs with the Department's program or the federal CAMR.

The Department in coordination with NYSERDA compared a reference or business-as-usual case (absent either CAIR or a mercury control program) to each of three policy cases: New York's proposed approach for implementing both CAIR and a mercury control program, CAIR only, and mercury only. CAIR and Mercury policies (implemented together, as proposed) could increase wholesale electricity prices by an average of 1.7 percent or $1.14 per MWh over the 2010 to 2020 timeframe. For a typical residential customer (using 750 kWh per month), this translates into a monthly retail bill increase of $0.86. Model runs assuming CAIR only (i.e., without a mercury control program) and mercury only control program (i.e., without CAIR) indicate that virtually the entire incremental electricity price impact of implementing CAIR and a mercury rule together is due to CAIR. There is virtually no incremental electricity price impact due to mercury control in conjunction with the sulfur and NO_x CAIR program.¹⁶

Given the variability in the type, operation and fuel mix of sources in the electric utility steam generating sector, EPA believes emissions must be monitored continuously through the use of continuous emissions monitoring systems (CEMS) or sorbent trap monitoring systems to ensure the needed accuracy and reliability. However, alternative monitoring methodologies may be appropriate for a limited number of small sources. Rigorous quality assurance and quality control requirements for mercury CEMS and sorbent trap monitoring systems are necessary to assure the emission reduction goals are met, and to assure high quality emission data are collected.

CAMR includes mercury monitoring requirements that are cost-effective and technically viable based on compliance-capable technologies. These technologies are subject to rigorous quality assurance standards based on those already established in Part 75. Industry continues to develop new and better mercury CEMS, with current technologies being demonstrated at various coal-fired power plant sites in the United States. It is apparent through the results from each subsequent field evaluation that the reliability and accuracy of mercury CEMS continues to improve.¹⁷ There are several mercury monitors currently available that have an approximate cost of between $130,000 and $200,000 for the product and installation per stack.

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 has a fixed cost of approximately $984,000 (2003 dollars). Annualized over 20 years at an interest rate of approximately 10 percent this translates to a cost of $117,460 per year¹⁸. The Huntley and Dunkirk Steam Stations in New York have begun converting to a western sub-bituminous coal. Through research projects partially funded by DOE, it has been demonstrated that mercury emissions from facilities burning sub-bituminous coals are more readily controlled using an enhanced PACI system, brominated or treated carbons than previously understood prior to the promulgation of CAMR¹⁹.

Annual operating costs and reagent costs will drive the cost of mercury control for most facilities in New York. Studies show that, for a unit combusting sub-bituminous coal, an insufflation rate of three pounds of brominated powdered activated carbon (PAC) per million actual cubic feet of flue gas exiting the stack can achieve at least 90 percent reduction of mercury. The cost of enhanced PAC is approximately $0.68 to $0.85 per pound²⁰. The cost of enhanced carbon applied to year 2004 flue gas air flow rates would equate to a range of $40,000 to $700,000 depending on size of the unit and the overall electric production rate of the facility.

The cost of land filling the additional carbon material can vary greatly, but can be approximated as $17 per ton of fly ash based on a 2001 report from the American Coal Ash Association²¹. This translates to an additional $2,000 to $20,000 (in 2004 dollars) for 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 per 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 fabric filter 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 for sale in commercial uses.

Costs to the State

The costs to the Department for promulgating Part 246 will include additional Central Office staff and Regional Office staff to modify permits and create monitoring conditions in the permitting database to assure uniformity from Region to Region. Approximately 15 Title V facility permits will have to be modified to incorporate Part 246 requirements. Department staff will be responsible to review stack test protocols, field witness the required stack tests, review final reports and CEM relative accuracy tests. Implementation of the federal or state rule requires quarterly submittals of compliance documentation which will need to be reviewed, tracked and acted upon if necessary.

The modification of Title V permits requires trained environmental engineers with knowledge of utility combustion systems, sulfur dioxide and particle control devices and knowledge of CEM documentation and stack testing. At the current staffing levels, the addition of new staff will be needed to continue some of the routine permitting and compliance work currently being performed by more experienced staff.

These costs, however, would be incurred whether the Department adopted Part 246 or implemented the federal rule as written. Indeed, the federal cap and trade program would likely entail more significant administrative costs since the Department would have to approve and keep track of trading allowances. Under Part 246, facilities in New York will not be allowed to trade mercury allowances.

Source of Information upon which the cost analysis is based.

The information used to determine the costs to the affected industries is based upon the Department of Energy's National Energy Technology Laboratory (DOE/NETL). DOE/NETL continues to conduct pilot studies involving slip stream tests and full scale tests involving many innovative technologies to determine mercury control²² from applicable CAMR facilities.

Local Government Mandates

Local governments will not be directly impacted by Part 246 with the exception one municipality which owns and operates an electric generating facility. The future costs of regulating mercury emissions from the electric generating utility sector are directly related to the additional control devices required on a plant-by-plant basis. Jamestown Power's Samuel A. Carlson Generating Station, a municipally owned electric generating facility, operates four boilers in total, which are divided into two emission units; emission unit U-00003 contains boilers No.9 and No.12 (rated at 190 and 297 MMBtu/hr, respectively) exiting to a single stack, emission point 00003. U-00004 contains boilers No.10 and No.11 (each rated at 190 MMBtu/hr), exiting to a single stack, emission point 00004. The facility exhausts flue gas through one stack per generator for a total of two stacks. Taking into consideration the installation an activated carbon injection system and use of an enhanced activated carbon at an insufflation rate of 3 lb carbon/MMACF, electric use to operate any additional pollution control equipment and operating costs in addition to reagent materials and land filling of additional fly ash; the installation would have an associated incremental cost of generation (implementation cost) in the range of 0.23 to 0.63 mills/kWh. The facility would also be required to install, operate, and maintain a continuous monitoring system to measure and record mercury mass emissions. Based upon Staff discussions and interviews with mercury emissions monitoring companies, the Department estimates that the purchase and installation of a mercury monitoring system is currently in the range of $130,000 to $200,000 per unit. An annualized cost per monitoring unit is predicted by EPA to be on the order of $89,500 per year for testing, maintenance, and operation²³. Although increases may be minimal, the on-site cost of installing, operating, and maintaining mercury emission control equipment would directly increase the cost of generation associated with the Mercury Reduction Program units²⁴.

Paperwork

Part 246 adopts the federal requirements for monitoring, reporting, and record keeping thereby eliminating redundant or duplicative reporting. Facilities will not incur additional costs in this regard. In addition, Part 246 does not implement the labor intensive cap-and-trade-portion of the federally mandated model rule, which requires the tracking of emission credits, reducing the regulatory burden on facilities to track allowances. Facilities subject to Part 246 are required to submit quarterly reports electronically, in accordance with federal requirements, and along with their compliance reporting under the Acid Rain and CAIR rules. The coordination of reporting for these three regulatory programs will reduce paperwork requirements substantially.

Duplication

The proposed rule does not duplicate or conflict with any other New York or federal rule. The federal model rule, Emission Guidelines and Compliance Times for Coal-Fired Electric Steam Generating Units, is the first regulation to control the emissions of a bio-persistent, bioaccumulating hazardous air pollutant from an electric steam generating source. New York State has opted to not accept the model cap-and-trade rule, but in stead submit a State Plan containing an alternate strategy to reduce mercury emissions from coal-fired power plants in a shorter time frame requiring greater reductions.

Alternatives

Pursuant to ECL Sections 19-0303 (b) and (c), when the Department adopts a regulation which contains a requirement that is more stringent than the Clean Air Act, the Department must provide, among other things, an evaluation of the cost-effectiveness of the proposed rule in comparison with the cost effectiveness of reasonably available alternatives and discuss the reasonably available alternative measures considered by the Commissioner and the reasons for rejecting those alternatives. The Department evaluated four alternatives. These alternatives are: (1) adopt a regulation based on CAMR's cap-and-trade approach; (2) take no action; (3) adopt the STAPPA/ALAPCO model rule; (4) adopt 6 NYCRR Part 246, a State-specific mercury regulation with definite emission limits. The Department also received comments from the public urging the Department to require proposed Part 246 Phase II emission reductions by 2010 instead of 2015.

Adopt CAMR Cap-And-Trade program or Take No Action

The Department rejected the alternatives of submitting a state regulation based on CAMR or taking no state action and allowing EPA to implement a federal plan based on CAMR for two reasons. First, the cap-and-trade program will continue to contribute to the widespread elevated regional concentrations of mercury and also, as reported by the Inspector General of the EPA, would potentially postpone the mitigation of local "hot spots" of mercury deposition²⁵. Second, the mercury reductions called for under CAMR are not to the level necessary to promote biologic recovery, decreasing mercury concentrations to below the fish advisory action level.

Regional concentrations can be reduced much sooner through implementation of a program which requires actual emission reductions in facilities in both New York and states which are upwind of the affected areas in New York State. The federal mercury program includes a provision allowing the "banking" of mercury allowances from year to year, which enables facilities to emit more mercury than their initial allocation. Although CAMR ensures that mercury emissions nationwide will be constrained to the federal mercury budget, CAMR does not provide assurances of mercury reductions on a state or local level where mercury emissions could exceed State budgets through the banking and trading of allowances. Thus, the federal rule therefore does not achieve nor ensure the emission reductions that are technically and economically achievable in the most expeditious manner. The federal program allows trading which will potentially allow the "hotspot" problem to continue if emission reductions do not occur in these sensitive areas. The banking provisions of the federal program will potentially also stretch the achievement of final reduction goal of 15 tons per year nationwide to 2025²⁶. This delay will prolong the adverse environmental and public health impacts caused by the emission of mercury into the atmosphere and is not acceptable to the Department.

The federal regulation will not achieve the necessary reductions of deposited mercury compounds. The federal rule claims a 70 percent reduction of mercury compounds from all coal-fired electric utilities by 2018 but on a local level reductions may not achieve or even approach a 70 percent reduction. The Department's analysis has shown that a 90 percent reduction by 2015 by New York applicable sources can be done in a cost effective manner. The time frame for implementing Part 246 runs parallel with the implementation of State ozone and particulate matter regulations that will work to reduce NO_x and SO₂ emissions from power plants as required under CAIR. As discussed in Section 4 of this document, when studying the costs of implementing both Part 246 and CAIR, and co-benefits are considered, IPM modeling suggests that a significant portion of the incremental cost for wholesale and retail electricity prices is related to a control strategy necessary to satisfy emission limitations imposed on facilities through the implementation of CAIR. With the implementation of co-benefit, multi-pollutant control strategies in almost all cases no further mercury-specific control technology would be required. Section 4 identifies additional mercury-specific equipment, such as activated carbon injection systems, that may be required to be installed to meet Phase II emission rate limits on a facility basis. In almost all cases, the Jamestown facility is discussed separately in Section 5, costs associated with additional equipment installation, maintenance and operation are far outweighed by other control systems necessary for compliance with CAIR.

The sensitive ecosystems found in New York and the Northeast require reductions in both acid rain precursor emissions (NO_x and SO₂) and mercury deposition to see meaningful changes in mercury levels in fish, mammals and birds. As stated in the Needs and Benefits Section, New York State needs greater reductions to see meaningful changes in fish and wildlife mercury concentrations. For these reasons, the alternatives of implementing the CAMR rule through State regulation or a federal plan were not selected.

STAPPA/ALAPCO Model Rule

STAPPA/ALAPCO, a national organization representing State interests for the implementation of federal air programs, issued a model rule with more stringent requirements than CAMR. Under STAPPA's model rule, all new major electric generating units would be required to install state-of-the-art mercury emission controls when built and all existing electric generating units would be required to install technology on an earlier timetable than CAMR. STAPPA's rule includes two options to provide owners and operators of electric generating units flexibility to craft their own compliance plan. Option I under STAPPA's model rule requires a facility to install pollution control technology achieving an 89 percent reduction in mercury emissions no later than 2008 on units generating half of a generating company's power and to install technology achieving a 90-95 percent reduction on the remaining units by 2012. Option II allows an owner or operator to postpone compliance with mercury emission limitations on all units until 2012, if the owner or operator makes enforceable commitments to install state-of-the-art technology to reduce emissions of sulfur oxides, nitrogen oxides, particulate matter, and mercury to specified levels. Option II is designed to allow owners and operators of units that do not yet have scrubbers and/or selective catalytic reduction ("SCR") units installed to synchronize their installation of criteria pollution control equipment with mercury control technology.

The Department rejected STAPPA/ALAPCO's model rule and requests from public commenters to require the implementation of Phase II emission standards by 2010. First, most New York facilities cannot meet Phase II emission limits with existing pollution control equipment and will need to make modifications to existing control systems. The Department does not believe that all facilities could complete this work by 2010 or 2012. Second, the time frames for implementation conflict with CAIR and the Regional Greenhouse Gas Initiative (RGGI). Furthermore, there are questions whether these reductions are achievable by deadlines in the model rule. CAIR requires the State to implement NO_x and SO₂ controls on power plants through an emission budget and trading program in two phases. The first phase of the program requires additional NO_x reductions in 2009 and SO₂ reductions in 2010. The second phase of CAIR requires NO_x and SO₂ reductions in 2015. New York is a signatory state of the RGGI Memorandum of Understanding (MOU). In the RGGI MOU, States agree to a program to stabilize CO₂ emissions from power plants at current levels from 2009 to 2015 and reduce CO₂ emissions by 10 percent by 2019. As a result, major actions, modifications and construction projects are likely to occur at New York's coal fired power plants by 2010 but more specifically by 2015. Also, the Department believes that it is not realistic for New York's electric generating units to meet a 2008 and 2012 timeframe for these emission reductions. For example, facilities selecting limestone with forced oxidation systems, wet flue gas desulfurization, for the co-benefit control of sulfur dioxide and mercury require at least 27 to 36 months from award of contract to control technology testing. In addition, facilities selecting selective catalytic reduction systems for the control of NO_x and to further promote the oxidation of mercury require at least 21 to 35 months from award of contract to technology testing²⁷. Under both the outlined examples it is assumed that planned outages, usually the Spring or Fall season when demand is lowest, fall in line with completion of construction for timely tie-in to the flue gas handling system. Taking into consideration necessary construction schedules and unit downtimes, the timeframes identified in the STAPPA model rule or a timeframe associated with a compliance date of 2010 as suggested by commenters are not sufficient to implement all of the necessary controls while keeping electricity system reliability at an acceptable level by the model rule deadlines.

State Specific Plan

The Department has chosen to implement a New York State specific mercury emission reduction program to meet the requirements of the federal CAMR and its own stated goals of implementing a mercury emission reduction program that will prohibit trading and require steep emission reductions in a timely and cost-effective manner. The Department chose to use the emission trading budget required by the federal CAMR in Phase I to establish facility emission limitations in order to achieve the interim federal budget mandate in the clearest, most concise manner possible. The Department by requiring strict adherence to the budget levels on a facility basis is not allowing trading between locations in order to assure that emission reductions occur throughout the State so that the "hotspot" issue mentioned above is addressed.

The Department set the mercury limitation for 2015 based on the ability of these units to control mercury emissions in a cost effective manner. The cost analysis for this proposal shows that the incremental cost of generation for applicable units, when considering co-benefit control strategies, will be in the range of 0.37 to1.66 mills/kWh and virtually no incremental electricity price impact to consumers. Therefore, the Department opted to require this aggressive control regimen that will facilitate significant reductions of a highly toxic compound. Section 3 Needs and Benefits discusses the benefits that will occur as a result of the implementation of Part 246.

The Department set the timing for implementing these mercury control requirements. At the same time that the EPA promulgated CAMR, EPA promulgated CAIR, both of which have timeframes that overlap with this proposed regulation. In addition, New York electric generating units already need to comply with 6 NYCRR Part 238, Acid Deposition Reduction SO₂ Budget Trading Program in 2009. The Department and EPA expect co-benefit reductions of mercury when the implementation of CAIR and 6 NYCRR Part 238 are achieved in 2010 and 2009 respectively. Part 246 is designed to have similar dates for achieving emission reductions as the CAIR rule to create consistency for the regulated industry and to provide facilities with an ability to align construction projects with planned outage time periods. Part 246 has a second phase in 2015, in conjunction with other electric generating sector regulations such as RGGI and the second phase of CAIR. As CAIR implements another round of SO₂ reductions, it is logical to coordinate mercury reductions with SO₂ reductions, again as in Phase I, allowing for an alignment of construction schedules. The federal CAMR, with its second phase implementation in 2018, would have imposed an additional regulatory timeframe for the regulated community to contend with. The Department believes that a better approach is to have consistent implementation dates for these regulations inasmuch as they impact the same regulated entities.

While EPA believes that sources will mainly utilize add-on equipment to control sulfur dioxide and obtain co-benefits of mercury reduction, the Department believes that many existing facilities across the nation will meet sulfur reductions by coal switching to lower sulfur coal. The use of low sulfur coal will not necessarily result in a current reduction in mercury emissions. There are low cost mercury control options available to those facilities that choose to fuel switch to comply with CAIR and 6 NYCRR Part 238. Mercury reductions from facilities utilizing low sulfur coal for sulfur control can reduce mercury emissions by applying more effective particle control or the injection of powered activated carbon and upgraded electrostatic precipitator units. Still it is the decision of the owners of the individual facilities to opt for the optimal control configuration for their plants. Timing the implementation of these programs to start at or near the same time will take advantage of these decisions being made by the owners, increase the probability that construction schedules will be coordinated, and assure that these important emission reductions are made in the most expeditious and cost-effective manner possible. It is for these reasons that the Department has chosen to control mercury emissions from coal fired power plants in the manner proposed in Part 246.

Federal Standards

Part 246, exceeds the minimum standards of the federal government in the following ways. First, the proposed rule has no provisions for trading of excess mercury emissions within or out of state because a cap-and-trade program would maintain existing local hot spots of mercury deposition and more importantly, continue to contribute to widespread regional concentrations of mercury. Regional concentrations can be reduced much sooner through implementation of a New York State rule which limits mercury emissions earlier and to a greater extent. Second, Part 246 shortens the timeframe for final compliance from 2018 to 2015. Third, Part 246 does not allow "banking" of allowances generated by control of emissions to be sold and/or kept for future use after 2018. These last two items highlight the Department's goal of adopting a mercury rule which will not exacerbate or contribute to widespread deposition of mercury in New York State's sensitive Adirondack and Catskill mountain lakes areas and coastal estuaries.

For EPA to regulate mercury emissions from the electric utility steam generating sector under section 111(d) of the Clean Air Act (Act), EPA needed to reverse its December 2000 regulatory finding in which the Administrator found that it was both appropriate and necessary to regulate utilities under Section 112 of the Act as a result of the Utility Study to Congress. The revision to the December 2000 regulatory finding allowed the EPA to conclude that it did not have to rely on the results the Utility Study and could consider new information as well as other sections of the Act to regulate this source category. EPA decided that the costs of regulating mercury exceeded the benefits to public health and concluded that any benefits directly related to the reduction of mercury in fish and wildlife are unrelated to public health and do not justify regulation under section 112. EPA states that section 112(n)(1)(a) requires EPA to analyze only the "hazards to public health" resulting from utility HAP emissions, not the environmental effects caused by such emissions. The Department does not agree with this analysis or conclusions. New York State's natural wilderness areas are largely responsible for the State's valuable tourist industry. New York's abundance of wildlife, waterfowl and fish has attracted sportsman and outdoorsman for years and are a significant makeup of New York's tourist income. Equally important are New York's Native American tribes and members of environmental justice communities who depend greatly on New York's abundant natural resources, in particular wildlife, fish and waterfowl, for subsistence living and whose public health would be significantly adversely affected by the consumption of mercury laden food. Thus, the Department sees a direct correlation between controlling mercury emissions from coal-fired electric utilities and protecting the public health and environment by maintaining healthy lakes, fish, birds, waterfowl and wildlife. The adoption of Part 246 is in furtherance of the Department's statutory responsibility under the Environmental Conservation Law to protect the air resources of the State and require use of all practical and reasonable methods to prevent and control air pollution.

New York State Energy and Research Authority (NYSERDA) has calculated the costs of the proposed mercury rule and the federal Clean Air Interstate Rule (CAIR) on the citizens of New York in the form of their monthly electric bill increase due to these regulatory actions. The estimated New York retail electricity price impact showed that the costs to the consumer of implementing Part 246 to be $0.002 per month. For both regulations (CAIR and Part 246), the cost will be $0.86 per month equating to 0.8 percent of their total monthly bill. For the industrial consumer, the cost increase for CAIR and Part 246 equals $193 per month or 1.7 percent of their monthly bill, the mercury only portion for the industrial user is $0.5 cents per month.²⁸ Thus the Department concluded costs associated with the adoption and implementation of Part 246 were reasonable given the significant benefits associated with reducing mercury deposition to the environment.

Compliance Schedule

The compliance schedule for the proposed rule includes two Phases, Phase I, 2010 and Phase II, 2015. The first compliance date is mandated from the federal Emission Guidelines and Compliance Times for Coal-Fired Electric Steam Generating Units, and all electric generating units in the nation will be on the same compliance schedule. In Phase II, the proposed rule coordinates the requirements of the Clean Air Interstate rule and the Regional Greenhouse Gas Initiative. The Department believes that the regulated sources will have ample time to comply with the Phase II portion of the rule three years earlier than federally required because of the advances in mercury pollution control demonstrated by the Department of Energy's National Energy Technology Laboratory.

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Footnotes

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