1

MEMORANDUM

TO: Conrad Chin, U.S. Environmental Protection Agency, OAQPS

FROM: Beth Friedman, Jeff Harris, and Brad Nelson, EC/R

DATE : September 19 , 2011

SUBJECT: Cost Impacts of the Revised NESHAP for the Ferroalloys Production Source Category

T he purpose of this memorandum is to describe the methodology used to estimate the costs and emissions reductions for the proposed revisions to the Nation al Emissions Standards for Hazardous Air Pollutants (NESHAP) for the Ferroalloys Production source category. These impacts were calculated for existing units only, as no new facilities are expected to become operational within the next 5 years

. The results of the impacts analyses are presented for all regulatory options considered in addition to the regulatory options that were ultimately chosen for proposal. The development of the emissions estimates (baseline and for control scenarios) and the maximum ach ievable control technology (MACT) floors for this source category are discussed in other memoranda. The organization of this document is as follows:

1.0 Summary of Cost Estimates and Emissions Reductions for the Regulatory Options
Chosen for Proposal

2.0 Regulatory Options Considered for Proposal

3.0 Methodology for Estimating Control Costs

4 .0 Summary of Cost by Facility2

1.0 SUMMARY OF COST ESTIMATES AND EMISSIONS REDUCTIONS FOR THE REGULATORY OPTIONS CHOSEN FOR PROPOSAL
Regulatory options were co nsidered for control of emissions of particulate metal hazardous air pollutants (HAP)
, Mercury (Hg), organic HAP
, and Polycyclic Aromatic Hydrocarbons (PAH) from furnace stacks
, and metal HAP from product sizing stacks and fugitive sources.

Emissions of each pollutant vary considerably among facilities , and multiple control options are available for different groups of pollutant s

. Because of this, and the limited number of facilities in the source category (two)
, specific regulatory options were asses sed for each facility based on both technology review and modeled risk. Because of differences in modeled risk and existing controls, some options were not considered for all process lines at all facilities. Emissions reductions were estimated for each fa cility based on emissions data received in an information collection request (ICR) sent to the industry

. A brief description of the options selected for the proposed revisions to the NESHAP and the associated costs and emissions reductions for each facility in the source category are summarized in Table 1

- 1. All the options considered in this analysis are summarized in Table 1

- 2 , along with the total estimated cost for implementing each option . A more detailed description of all the regulato ry options considered for proposal and their associated cost and emissions reductions estimates are presented in section 2.0 of this memorandum.

The e missions reductions associated with the control options presented in sections 1.0 and 2.0 of this

memora ndum are calculated as the difference between baseline emissions and the estimated emissions for each control scenario. Details of the methodology employed to calculate these emissions are included in a separate memorandum. All costs are estimated in 201 0 dollars. PM emissions in this memo refer to total PM. Of the total PM, we assumed approximately 41 percent of the emissions are fine particulate (PM 2.5 ).3

Table 1

- 1: Summary of the Estimated Costs and Emissions Reductions of Regulatory Options Selected for Proposal4

Table 1

- 2: Summary of the Estimated Costs and Reductions for All Considered Options5

2.0 REGULATORY OPTIONS CONSIDERED FOR PROPOSAL
This section provides a detailed description of all regulatory options that were considered for the proposed revisions to the Ferroalloys NESHAP and their associa ted costs and emissions reductions.

2.1 Furnac e Stack Emissions

– Metal HAP

The selected standard for furnace stack emissions of PM (as a surrogate for metal HAP ) is based on a technology review, and is designed to ensure that the standard in place will reflect actual current performance of existing sources. The selected option is a numeric emission standard with which both facilities are already in compliance through current controls. Although it was not selected for proposal
, c osts for a beyond

- the

- floor regulatory option w ere estimated
, and are presented here

. a) Replacement of Existing Control Device with a New Negative

- pressure Fabric F ilter
This option was considered for a single furnace at one of the facilities, and represents a scenario of reducing PM emissions fr om the facility by 25 tons per year (and HAP emissions by 3 tons per year ) by replacing a wet scrubber with a large negative pressure fabric filter . The total estimated capital cost for the replacement fabric filter is $1 3

. 2 million . Annualized capital cost and operational and maintenance costs are estimated at $ 2.5 million or $1.5 million above the current annual cost for the existing scrubber, according to the facility ICR response.

2. 2 Furnace S tack Emissions

– Hg, PAH , Formaldeh yde 1

The selected standard s for Hg and PAH are numeric emission standards that represent a beyond

- the

floor option considered under section 112(d) of the Clean Air Act (the Act). We selected this option largely based on the potential risk impacts based on multi

- pathway screening and because of the potential to reduce the global pool of mercury. We determined that only one of the facilities would be required to implement controls for these pollutants 2 . Estimated costs associated with these controls are pr ese nted here

. a) Addition of Activated Carbon Injection for Fabric Filters and Scrubbers
This option was selected for two furnaces at one facility, and it represents a scenario of reducing emissions of Hg, PAH, and Formaldehyde from the facility by 3. 2 tons per year by installation of activated carbon injection (ACI). The total estimated capital cost for the retrofit of ACI is $ 1.7 million. Annualized capital cost and operational and maintenance costs are estimated at $ 1. 4 million

.

1 The Hg and PAH control will also achieve co

- control of formaldehyde. We propose to set a MACT floor limit for the Hg and PAH pollutant s because there are no compelling risks or environmental reasons to control the relatively low levels of formaldehyde emitted at a beyond

- the

- floor level. 2 Memorandum from Bradley Nelson, EC/R to Conrad Chin, EPA OAQPS/SPPD/MMG
, Methodology Used to Estimate Mercury Control Costs for the Ferro alloys Production Industry , September 8, 2011.6

2. 3 Process Fugitive Emission s

– Metal HAP
Several regulatory options were considered for control of fugitive metal HAP emissions , based on modeled risk

. We focused the options on the individual emissions sources at each plant that appeared to be risk drivers. We looked at several op tions to capture and control these process fugitives ranging from local ventilation and control, building ventilation and control, and fenceline monitoring. The regulatory options considered for control of process fugitive metal HAP emissions are presented in the following section.
a) Improvements to Capture Hoods for Tapping Operations

T his option was considered for tapping operations at two furnaces each for both of the facilities , not including some hoods which were recently upgraded. This option r epresents a scenario of reducing fugitive PM emissions from the facilities by 63 tons per year (and HAP emissions by 6.9 tons per year ) by upgrading the capture efficiency of capture hoods for tapping operations . The total estimated capital cost for the ho od upgrades is approximately $ 315,000 . Annualized capital cost and operational and maintenance costs are estimated at approximately $ 82 ,000

. b) Addition of Capture and Control for Casting Operations

S ome casting operations are alr eady controlled at each faci lity

. We developed costs to capture and control casting emissions the remaining uncontrolled casting operations. The estimated costs were based on the assumption that one of the two facilities would require addition of capture and control for two of their three casting operations and t he second facility would require addition of capture and control for one of their three casting operations. This scenario would red uce fugitive PM emissions from the facilities by 100 tons per year (and HAP emissions by 23 tons per year ) by adding hoods , ductwork, and fabric filters to capture and control emissions from currently uncontrolled casting operations . The total estimated ca pital cost for the hoods, ductwork, and fabric filters is approximately $ 5 million . Annualized capital cost and operational and maintenance costs are estimated at approximately $ 1. 6 million

. c) Building Ventilation
The selected control option involves instal lation of building ventilation for furnace buildings i nstead of installing fugitive controls on individual tapping and casting operations

. This option would require installation of ductwork from the roof vents of furnace buildings and a new fabric filter for each building. We assumed that one of the two facilities would require building ventilation for two buildings and the second facility would require it for a single building . This option would reduce fugitive PM

e missions from the facilities by 626 ton s per year (and HAP emissions by 80.4 tons per year ) by adding ductwork and fabric filters to capture and control all fugitive emissions from furnace buildings . The total estimated capital cost for the ductwork, and fabric filters is approximately $ 9.4 mil lion . Annualized capital cost and operational and maintenance costs are estimated at approximately $ 2.3 million.7

d) Fence line Monitoring

This is an alternative regulatory option selected by EPA for proposal in the revised NESHAP for the F erroalloys Production source category. This option allows facilities who may have already implemented improved capture and control of tapping and casting emissions to avoid installation of building ventilation by performing ambient monitoring for manganese at or near the boundaries of the facilit ies. Estimated emissions reductions would be the same as for the tapping and casting capture/control options described previously. Cost estimates were not prepared for this option.

2. 4 Product Sizing Operations

– Metal HAP

– I mprovements to Fabric Filters
The selected standard for product sizing stack emissions of PM (as a surrogate for metal HAP) is based on a technology review, and is designed to ensure that the standard in place will reflect actual current performance of ex isting sources. The selected option is a numeric emission standard with which both facilities are already in compliance through current controls (fabric filters). Although it was not selected for proposal, costs for a beyond

- the

- floor regulatory option wer e estimated, and are presented here.
a) Upgrade Fabric F ilter
For one facility, improvements to product sizing fabric filters were considered , and represent a scenario of reducing fugitive PM emissions from the facility by 11 tons per year (and HAP emissions by 4.6 tons per year ) by upgrading the bag material of fabric filters and conversion to reverse

- air cleaning . The total estimated capital cost for the fabric filter upgrades is approximately $ 59,000 . Annualized capital cost and operatio nal and maintenance costs are estimated at approximately $ 14,400

.
2. 4 Metal Oxygen Refining (MOR) Operations

– Metal HAP
Metal Oxygen Refining (MOR) is a post

- tapping process applied to the molten metal at one of the facilities. The selected standard for M OR stack emissions of PM (as a surrogate for metal HAP) is based on a technology review, and is designed to ensure that the standard in place will reflect actual current performance of existing sources. The selected option is a numeric emission standard wi th which the facility is already in compliance through current controls (a fabric filter). Modeled risk did not indicate any need for consideration of a beyond

- the

- floor control option , so no costs were estimated for this emission source

.
3.0 METHODOLOGY FOR ESTIMATING CONTROL COSTS
The following sections present the methodologies used to estimate the costs associated with the regulatory options considered for proposal in the revised NESHAP for the Ferroalloys Production source category.8

3 .1 Furnace Stack Emissions

– Metal HAP
The primary technologies used to control furnace stack emissions of metal HAP in the Ferroalloys source category are f

abric filters . One facility uses a wet scrubber to control emissions from one of their furnaces . Data from emissio n test s performed in conjunction with the ICR indicate that baghouses that are properly designed, installed, maintained and operated can meet all of the metal HAP stack emissions li mits selected for proposal in the revised NESHAP

.
In order to estimate the capital cost associated with a particular option, we first determined which stacks would b e required to reduce emissions. Only one stack was considered for any emission reductions, the one with a wet scrubber, for which an above

- the

- floor option was considered

– replacing the stack with a large negative pressure fabric filter. Because the requi red fabric filter would be a large, custom model,

we contacted a vendor who had recently supplied a similar model for installation at a ferroalloys facility to obtain assistance in developing a cost estimate. The equipment

- only cost supplied by the vendor 3 was used in conjunction with techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual 4 to estimate total installed capital cost and annual costs

.
Our cost model included installation of the fabric filter and any necessary f ans, ductwork, and site work. The total installed capital cost of a fabric filter designed for a flow

- rate of 1 80,000 actual cubic feet per minute (acfm) was estimated at $1 3.2 million. We did not consider the downtime associated with installation for the unit in our costs. The a nnualized capital cost and operational and maintenance costs are estimated at $ 2.5 million , via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual . The annualized cost assumes a 20 year life expectancy for the unit and, to be consistent with OMB Guidance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is commonly done for EPA standards such as this one

. All costs for t his estimate were based on 2010 dollars from a current vendor estimate. The annual cost for operation of the scrubber was estimated to be $1.0 million based on information obtained from the ICR submitted by the facility. Therefore, the incremental annual cost of replacing the current operating scrubber with a new negative pressure fabric filter was estimated to be $1.5 million. The incremental cost was used to calculate the cost effectiveness of this control option.

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. 2 Furnace S tack Emissions

– Hg, PAH, Formaldehyde

EPA believes that the most appropriate technology for control of exhaust emissions of Hg, PAH, and f ormaldehyde for the Ferroalloys Production source category is Activated Carbon Injection (ACI)

. Based on the proposed emission limit, we believe one facility would require installation of controls for Hg and PAH on two furnaces. To minimize generation of potentially hazardous waste (from contaminated carbon media) and avoid contamination of the salea ble byproduct baghouse dust, it was

3 E

- mail from Scott Gongaware of Mikropul Inc. to Jeff Harris of EC/R Inc., 8/05/2011. 4 http://epa.gov/ttn/catc/products.html#cccinfo9

assumed that the carbon injection would be performed at the outlet of the negative pressure fabric filter, with the car bon media collected by a second, small polishing baghouse. A ctivated carbon for the furnace equipped with a scrubber would be injected prior to the scrubber with no additional particulate control required

. Costs for Activated Carbon Inject ion were estimated using cost equations developed for the Utility NESHAP 5 and information provided by activated carbon vendors 6

. The calculated equipment costs for ACI and fabric filters were used in conjunction with techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual to estimate total installed capital cost and annual costs. It was esti mated that one facility would require installation of ACI on two furnaces, one exhausting to a fabric filter with an outlet flow rate of 245,000 acfm, and a second exhausting to a scrubber with an outlet flow rate of 184,000 acfm.

Our cost model included installation of the two activated carbon injection systems, one polishing fabric filter, and associated fans, ductwork, and site work. The total installed capital cost was estimated at $ 1.7 million. The a nnualized capital cost and operational and maintenance costs we re estimated at $ 1. 4 million

. A nnualized cost s assume a 20 year life expectancy for the unit s and, to be consistent with OMB Guidance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is commonly done for EPA standards such as this one

. All costs for this estimate were adjusted to 2010 dollars using Chemical Engineering Plant Cost Indices (CEPCI 7 ). We did not consider the downtime associated with insta llation for the unit in our costs.

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. 3 Process Fugitive Emissions

– Metal HAP
Fugitive emissions of metal HAP at Ferroalloys Production facilities result from several areas of the process . Process fugitive emissions primarily result from furnace leaks and incomplete capture of emissions during tapping and casting of product . Furnace upsets can result in release of emissions that would normally be contained by negative pressure occurring inside furnace hood . Process fugitive emi ssions can also result from in complete capture of emissions by tapping hoods, or from casting operations, some of which are uncontrolled at both facilities

. The 1999 NESHAP established a building opacity limit of 20 percent that is measured during the req uired furnace control device performance test. The rule provides an excursion limit of 60 percent opacity for one 6

- mi nute period during the performance test. The opacity observation is focused only on emissions exiting the shop due solely to operations of any affected submerged arc furnace. In addition, blowing taps, poling and oxygen lancing of the tap hole; burndowns associated with electrode

5 Sarge nt & Lundy, IPM Model

- Revisions to Cost and Performance for APC Technologies, Mercury Control Cost Development Methodology Final, March, 2011. http://www.epa.gov/airmarkt/pr ogsregs/epa

- ipm/docs/append5_3.pdf 6 Contact Report, Daryl Lipscomb, Albemarle, August 22, 2011. 7 CEPCI values employed: 539.1 for 2010, 575.4 for 2 0 08, and 361.3 for 1991.10

measurements; and maintenance activities associated with submerged arc furnaces and casting operations are exempt from the opacity standards specified in §63.1653.
Both facilities employ negative

- pressure hoods to collect emissions from tapping operations and direct them to a control device. Some casting operations at both facilities capture emissions and direct the m to a fabric filter , while some casting operations are currently uncontrolled.
Costs were estimated for several options for process fugitive control:

 Improvements to Capture Hoods for Tapping Operations

 Addition of Capture and Control for Casting Operations

 Building Ventilation
Building ventilation was the option selected for proposal, because it was associated with the lowest levels of modeled risk, and would capture any emissions that would have been collected by improved tapping capture and capt ure control of casting emissions, in addition to any furnace fugitives which escape current controls

. a) Improvements to Capture Hoods for Tapping Operations

Estimated costs for tap hood improvements were assumed to cover only the cost of an improved replace ment tapping hood on the assumption that sufficient control device capacity is already in place, since both facilities already have tapping capture and control in place. Because the capture hood equations in EPA’s cost manual were insufficient for large, m etal hoods of the type required, an equation from a book by Bill Vatavuk (the author of EPA’s Cost Manual) was used 8

, in conjunction with techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual 9 to estimate total installed ca pital cost and annual costs.
Our cost model included installation of the replacement tap hood. The total installed capital cost of four replacement tapping hoods (two at each facility) was estimated at $315,000. The

a nnualized capital cost and operational and maintenance costs are estimated at $ 81,000 via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual . The annualized cost assumes a 20 year life expectancy for the equipment and, to be consistent with OMB Gu idance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is commonly done for EPA standards such as this one . All costs for this estimate

8 Vatavuk, W.M., Estimating Costs of Air Pollution Control. Chelsea, Michigan, Lewis Book Publishers. 1990. Pp. 92 9 http://epa.gov/ttn/catc/products.html#cccinfo11

were adjusted to 2010 dollars using Chemical Engineering Plant Cost Indice s (CEPCI 10 ). We did not consider the downtime associated with installation for the unit in our costs.
b) Addition of Capture and Control for Casting Operations

Estimated costs for addition of capture and control of casting emissions were assumed to cover the c ost of hoods and ductwork for capture, plus a fabric filter for control of particulate emissions

. Because each facility already has installed capture and control for some of their casting operations, we estimated that additional capture and control for two casting operations would be required at one facility and for one casting operation at the second. Equipment costs for the hoods and ductwork, plus a fabric filter a fabric filter designed for a flow

- rate of 60,000 actual cubic feet per minute (acfm) were estimated via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual 11 to estimate total installed capital cost and annual
costs.

Our cost model included installation of casting hoods, ductwork, and a fabric filter . The to tal installed capital cost to add capture and control for three casting operations was estimated at $ 5.0 million . The a nnualized capital cost and operational and maintenance costs are estimated at $ 1.6 million via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual . The annualized cost assumes a 20 year life expectancy for the equipment and, to be consistent with OMB Guidance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is c ommonly done for EPA standards such as this one . All costs for this estimate were adjusted to 2010 dollars using Chemical Engineering Plant Cost Indices (CEPCI 12 ). We did not consider the downtime associated with installation for the unit in our
costs.
c) Buil ding Ventilation
To estimate the cost for the building ventilation fabric filter, EPA cont acted a vendor 13 who had recently supplied a fabric filter to one of the facilities to obtain assistance in developing a cost estimate for the installation. The equipment

- only cost supplied by the vendor was used in conjunction with techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual 14 to estimate total installed capital cost and annual costs.

10 CEPCI values employed: 539.1 for 2010, 359.2 for 1993 , and 3 42.5 for 19 88

.

11 http://epa.gov/ttn/catc/products.html#cccinfo 12 CEPCI values employed: 539.1 for 2010, 389.5 for 1998, 359.2 for 1993, and 342.5 for 1988. 13 E

- mail from Scott Gongaware of Mikropul Inc. to Jeff Harris of EC/R Inc. , 8/05/2011. 14 http://epa.gov/ttn/catc/products.html#cccinfo12

Our cost model included installation of the baghouse and any necessary fans, ductwork, and site work, including extra ductwork for connection to the building roof monitors. The total installed

ca pital cost of three fabric filter s (two at one facility, one at the second facility) designed for a flow

- rate of 150,000 actual cubic feet per minute (acfm) was estimated at $ 9.4 million. The

a nnualized capital cost and operational and maintenance costs ar e estimated at $ 2. 3 million , via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual . The annualized cost assumes a 20 year life expectancy for the unit and, to be consistent with OMB Guidance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is commonly done for EPA standards such as this one

. All costs for this estimate were based on 2010 dollars from a current vendor estimate. We did not consider the downtime associated with installation for the unit in our costs.

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. 4 Product Sizing Operations

– Metal HAP

– Improvements to Fabric Filters
The primary technology used to control emissions of particulate metal HAP from product sizing operations in the Ferroalloys Production source category are fabric filters. The fabric filters currently in use at the facilities are capable of meeting the proposed standard. Although it was not selected for proposal, costs for a beyond

- the

- floor regulatory option were estimated, and are presen ted here. The beyond

- the

- floor option was based on modeled risk, and only one product sizing line at one facility was determined to pose any exiting risk . The option considered was an upgrade to the fabric filter via improved bag materials and conversion t o reverse

- air cleaning . The costs associated with this upgrade were calculated via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual 15 to estimate total installed capital cost and annual costs. At the end, we concluded that the potential risk reduction was not meaningful compared to the risk reduction achieved by the building ventilation option.
The total installed capital cost of the fabric filter upgrade was estimated at $ 59,000 . The Annualized capital cost and operati onal and maintenance costs are estimated at $14,000 , via techniques described in the sixth edition of the EPA Air Pollution Control Cost Manual

. The annualized cost assumes a 5 year life expectancy for the equipment (fabric filter bags) and, to be consiste nt with OMB Guidance in Circular A

- 4, a 7 percent cost of capital as an estimate of the annualized capital cost as is commonly done for EPA standards such as this one . All costs for this estimate were adjusted to 2010 dollars using Chemical Engineering Pla nt Cost Indices (CEPCI 16 ). We did not consider the downtime associated with installation for the unit in our costs.

15 http://epa.gov/ttn/catc/products.html#cccinfo 16 CEPCI values employed: 539.1 for 2010, and 389.5 for 1998.13

4 .0 SUMMARY OF COST BY FACILITY

Table 4 .1 summarizes estimated costs for each facility in the Ferroalloys source category, assuming implem entation of the emission reduction options selected for proposal.

Table 4

- 1: Summary Cost Estimates by Facility *

* Overall cost estimates may be overstated since some facilities may be able to comply with the rule under the alternative compliance option (i.e., monitoring at facility boundary and improved casting/tapping capture & control) and may not need to install building ventilation. If so, ac tual costs would be significantly lower than shown here

.