UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 5

VincentHellwig, Chief AIR AND RADIATION DIVISION 77 WEST JACKSON BOULEVARD CHICAGO, IL 60604-3590



## MAY 2 42012

Air Quality Control Division

--..------- MichiganDepartment ofEnvironmental Quality P.O. Box 30260 Lansing, Michigan 48909
Dear Mr. Hellwig: REPLY TO THE ATTENTION OF:

Thankyou for Michigan's submittal ofaregional haze plan onNovember 5, 2010. Based on ourreview ofthis submittal, we believe thatthe plan does notrequire best available retrofit technology (BART) on several sources that must install and operate such controL Whereas the planprovides only for existing controls atthese sources, these sources have significantimpacts on the Seney Wildlife Refuge and other Class I areas, and we believe that more effective controls may be implemented atreasonable cost. Inparticular, we believethatthe following controls warrant being mandated by the Michiganplan: NewPage Paper

- For nitrogen oxides (NOx), lowNOx burners for control ofemissions from Boiler 8 and Boiler 9
St. Mary's Cement

- Selective noncataIytic reduction for control ofNOx emissions. In addition, a limitfor sulfur dioxide emissions reflecting current emission levels, thereby requiring either continuation ofcurrentuse oflow sulfur raw materials, or, ifhigher sulfur raw materials mustbe used, emission control equipment to maintain low emissions.
TildenMines

- LowNOx burners, at a minimum, will likely berequired, along with continuous NOx emission monitoring. Requirements for sulfur dioxide controls and emissions monitoring will be further evaluated after reviewing the company's response to our section 114 informationrequest. The attachment provides further details on each ofthese facilities and the information we considered in reaching these conclusions. Inconjunction with this attachment are spreadsheets showing revised estimates ofcosts for the above control equipmentfor NewPagePaper and St. Mary's Cement as well as a spreadsheet analyzing emissions data from St. Mary's Cement.
We have been working withyour staffonthese issues, including sharing a draft ofthis letter and attachments. We appreciate your working withthe affected companies to solicit

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their comments onthe draft materials. As is particularly evident for NewPage Paper, we have given careful consideration to their comments.
Wehave negotiated a consent decree with the National Parks Conservation Association to specify deadlines for action onMichigan's and other states' regional haze plan submittals. This consent decree will require prompt action to satisfy regional haze requirements, either through approval ofstate plans or promulgation offederal plans. In particular, we are to sign proposed action by July 13,2012, and we are to sign final action byNovember 15, 2012. We are under the same timetable for acting on BART limits for taconite plants in Minnesota, and we planto act onTilden Mines and on the Minnesotataconite plants in a coordinated marmer that assures consistency inthe regulation ofthese plants inthe two states.
I look forward to continuing to work with you to resolve our concerns, to assure that emission limits necessary to satisfy the requirement for BART are inplace. Please contact me or John Surnmerhays at (312) 886-6067 ifyou have any questions. Sincerely,

Douglas Aburano, Chief AttaimnentPlanning and Maintenance Section
AttachmentsBestAvailable Retrofit Technology (BART) For NewPage Paper

Reevaluation ofcosts for controlling nitrogen oxides (NOx) emissions indicate that lowNOx burners wouldprovide cost-effective control ofemissions at Boiler 8 and Boiler 9 ofthe NewPage Paper company facility in Escanaba, Michigan (NewPage). Spreadsheets showing a revised set ofcost estimates are attached. Many ofthe elements ofthis spreadsheet are taken directly from estimates provided bythe company's consultant. The following elements reflect the following revisions:

- Installation costs are estimated to be 50 percent ofpurchased equipment costs. While lowNOx burners are not directly addressed inthe EPA Air Pollution Control Cost Manual (EPA CCM, available at http://www.epa.gov/ttncatcllproducts.html#cccinfo).this estimate is more consistent with cost factors given in the EPA CCM, adjusted for the fact (acknowledgedbyNewPage) that installing lowNOx burners is simpler than installing more complicated control such as selective catalytic reduction. Retrofit installations may cost somewhat more than new installations, but the company's estimates, that installation costs would be 114 percent and 184 percent of purchased equipment costs for boilers 8 and 9 respectively, is far higher than the range ofretrofit installation costs indicated inthe EPA CCM. The company has not provided adequate justificationfor its assumption ofsuch high installation costs.

- The company's estimate for the costs ofa lowNOx burner for Boiler 9 assumes that the boiler will become fired with natural gas. EPA is estimating costs based on an assumption that a substantial fraction ofthe fuel fired in the boiler will continue to be wood waste. LowNOx burners have been successfully demonstrated for use with a variety offuels including wood waste, thoughEPA is estimating that engineering costs for designing this installation will be 20 percent rather than 10 percent ofpurchase costs. EPA finds that firing this boiler with natural gas would also be a cost effective means ofreducing emissions, exceptthatEPA believes that the company misestimates the cost effectiveness ofthis measure. The company estimates that conversionto natural gas would reduce NOx emissions to 33.9 tons per year, andthatuse ofa lowNOx burner would reduce NOx emissions by a further 13.6 tons per year, to 20.3 tons per year. The company's cost effectiveness estimate credits the measure only for the 13.6 tons per year, as ifthe boiler had already been switched to fire only natural gas, but in fact this strategy should be credited as achieving the additional emissionreductions inherent in the switch to firing only natural gas. That is, the cost effectiveness ofthis measure shouldbe estimatedbased on credit for the full reduction from baseline NOx emissions of296.6 tons peryear.

- Consistent with recommendations in the EPA CCM for more complicated control equipment, the attached spreadsheets assume that lowNOx burners require minimal oversight to operate, such thatno additional labor should bebudgeted for their operation.

- The EPA CCM recommends annualizing costs by assuming substantially longer equipment life and lower interest rates than were assumed bythe company. The attached spreadsheet annualizes investment costs by assuming a IS-year equipment life and 7 percent interest.- 2 -



### - Installation oflowNOx burners will allowNewPage Paper to forgo operating flue gas recirculation (FGR), which the company currently operates for 5months per year. Therefore, use oflowNOx burners will provide a savings ofthe costs that would otherwise be expended on FGR. To estimate these savings, EPA used the company's annual FGR operating cost estimates, adjusted to reflect that the savings may be considered to be 5/12 ofthe costs of

### full year operation ofFGR. Since the company estimated the same annual operating cost ofFGRfor both boiler 8 and boiler 9, the attached spreadsheet applies the same estimate ofthe savings from not operating FGR for both boilers, namely $36,925.
Based onthese revised estimates, we estimate that low NOx burners could control NOx emissions at these boilers at a cost-effectiveness of$430 per ton and $250 perton at boilers 8 and 9, respectively. Even without crediting the savings ofnot operating FGR, lowNOx burners would be estimated to have a cost effectiveness of$1080 perton and $560 per ton at boilers 8 and 9, respectively. The significant impact ofthese boilers on visibility, and thus the substantial benefit ofcontrolling emissions from these boilers, indicates that low NOx burners for these boilers should be considered to be BART for this facility.Best Available Retrofit Technology (BART) For St. Mary's Cement

A reevaluation ofavailable evidence indicates that selective noncatalytic reduction (SNCR) wouldprovide cost-effective control ofnitrogen oxides (NOx) emissions at the St. Mary's Cement facility in Charlevoix, Michigan (SMC). The following discussion addresses the issue ofmaterial buildup, cost estimates, and evidence regarding an emission limitthat would be appropriate with this control.
In addition, while evidence submitted by Michigan appears to support defining BART for sulfur dioxide (S02) under current conditions as no further control, the company anticipates possible use ofhigher sulfurraw materials which would make emissions control more cost effective. Therefore, EPA believes that BART must be defined with a limit set at approximately current emissions. Such a limit would also prohibit switching to higher sulfur fuels without the installation ofadditional controls. The following discussion derives such a limit.
Material Buildup Issue
SMC's BART analysis asserts that introduction ofwet urea as part ofan SNCR system would seriously exacerbate the facility's problems withmaterial buildup, necessitating lost production during down-time for manual removal ofthe buildup to restore proper airflow. SNCRhas been successfully demonstrated at many cementplants across the country, which suggests that solutions to this problem are readily available.
One alternative for addressing material buildup issues involves redesign ofthe facility's preheater/precalciner system. Indeed, SMC applied for and was issued a permit, #700-77L, for a redesign that, byreplacing the existing flash precalciner with a lowNOx in-line calciner, will provide improved airflow and less potential for material buildup problems near the point ofurea injection. Although the company chose notto construct the modification authorized inthis permit, since the company determined that the price ofcement did not warrant the expense of this project, the pointhere is that options are available for reducing the potential for material buildup by adjusting the design ofthe preheater/precalciner system.
SMC notes a second option for addressing material buildup, by installing additional "air cannons" to provide periodic pneumatic cleaning at strategic locations. Other options may include use ofother cleaning approaches anduse ofhigher concentrations ofurea (i.e., urea with less water). EPA will not dictate a particular approach, butthe important pointhere is that this problem has been solved elsewhere, and EPA believes that either SMC or a suitable consultant can solve this problem here.
For purposes ofevaluating the cost-effectiveness ofSNCR atthe SMC, EPA assumed some costs would be incurred to mitigate material buildup. While a full engineering analysis would provide more precise cost estimates, the attached spreadsheet relies ontwo assumptions regarding these costs: I) that capital costs to address material buildup issues are as much as half the cost ofthe SNCRequipment costs, and 2) maintenance costs are twice the normal SNCR

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maintenance costs. CostEffectiveness ofSNCR at SMC
A spreadsheet is attached which shows a revised set ofestimates ofcost and cost-effectiveness for the installation ofSNCR at this facility. Many ofthe elements ofthis spreadsheet are taken directly from estimates provided by the company's consultant. For example, the estimates of capital costs are unchanged from those provided by the company's consultant. The following elements reflect the following revisions:

- Electricity: The "cooler season," for which 100 kilowatts are estimated to be needed for heating urea, is assumed to be 4000 hours.

- Clean-out: As discussed above, costs are added to address material buildup. The attached spreadsheet assumes no costs for lostrevenue due to clean out ofcementic build-up, and conversely assumes no gain in revenue from addressing material buildup issues that exist currently. However, the attached spreadsheet assumes that addressing material buildup sufficiently to accommodate use ofSNCR while having no more material buildup than presently occurs will impose costs equal to one halfofthe cost ofthe SNCR equipment and will require twice the maintenance that is normally associated with SNCR.

- Capital recovery: More consistently withthe range recommended inthe EPA CCM, the equipmentlife is assumed to be 15 years.

- PollutantRemoved: The Environreport included in the SMC BART evaluation notes that SNCR achieves between 10 and 50 percentNOx control efficiency. While the current SNCR mayhave problems that limit its effectiveness to eliminating only 10 percent ofNOx emissions, BART must reflect consideration ofcontrol options which significantly improve SMC'sNOx control efficiency. The BART determination cannotplausibly be based on an evaluation that finds that spending substantial capital costs would achieve no improvement inNOx control as comparedto existing equipment. Control efficiency is discussed further below. The attached spreadsheet assumes that the upgraded control equipment will achieve 50 percentNOx control. The continuous emission monitoring data provided by SMC for 2006 to 2008 indicates that average NOx emissions for those three years are 2518 tons per year. Thus, SNCR is assumed to reduce NOx emissions by 1259 tons per year.

- The attached spreadsheetuses a revised estimate ofreagent costs. Based on results at St. Mary's Cement's facility in Dixon, Illinois, the attached spreadsheet assumes that injection of ureain the quantity of57 percent ofthe molar equivalent ofthe quantity ofuncontrolled NOx will suffice to achieve 46 percent reduction ofNOx emissions, suggesting that injecting ureain a molar ratio to uncontrolledNOx of62 percent would achieve 50 percent NOxreduction. The costperton ofurea (before dilution) is assumed to be $450 per ton.

- The revised spreadsheet estimates that SNCR would reduce NOx emissions at SMC's facility at a cost of$983 perton. Since this control would achieve substantial improvement in visibility at the Seney Wildlife Refuge, this evidence suggests that BART atthis facility would include full- 3 -

year operation ofupgraded SNCR.

- The evaluation ofBART for S02 at the SMC facility is premised onthe sulfur contents of materials in the future remaining similar to current sulfur contents. The submittal raises the possibility that future raw material may contain significantly more sulfur. Such an increase would make S02 control equipment more cost effective, since equipment at similar cost would control more S02 emissions. While S02 control equipment appears under current circumstances to be marginally more expensive than would be considered cost-effective, it appears likely that S02 control equipment would be cost-effective ifthe sulfur content ofthe rawmaterials increased. Therefore, this evidence suggests that current S02 emissions represent BART for this facility. SMC could achieve current S02 emissions eitherby continuing to use comparatively low sulfur raw materials or by operating S02 control equipment to accommodate use ofhigher sulfur raw materials. Under Michigan's submittal, SMC is allowed much greater S02 emissions than are currently emitted (as requested by SMC to accommodate higher sulfur raw materials). An emission limit reflecting current S02 emissions is necessary to assure that BART is inplace for S02 for SMC.
Appropriate Emission Limits
Several types ofinformation are available to support a determination ofthe emission limit that SMC canbe expected to meet withproper installation anduse ofSNCR. According to continuous emission monitoring data reported by SMC, the average NOx emission rate for 2006 to 2008 is 4.52 pounds per ton ofclinker. This is quite similar to the representative emissionfactors for similar Portland cement manufacturing facilities given in the EPA emission factor guidance document known as AP-42, which is 4.2 pounds ofNOx per ton ofclinker for preheaterlprecalciner kilns and 4.8 pounds ofNOx per ton ofclinker for preheater process kilns. The SMC data for 2006 to 2008 also indicate that the maximum 30-day average NOx emission rate was 6.50 pounds perton, and the 95th percentile value among 30-day average NOx emission rates was 5.78 pounds per ton ofclinker. Conversely, the 5th percentile value among 30-day average NOx emission rates was 3.33 pounds per ton ofclinker. While SMC installed an indirect firing system in 2005/2006 that significantly reduced NOx emissions, the emission rates in 2006 are sufficiently similar to emissionrates in 2007 and 2008 that use ofa full 3-year baseline appears to provide a more robust representation ofcurrent emissions than use ofdata for a shorterperiod.
EPA has conducted a recent review ofoptions for controlling emissions for Portland cement plants, 

### in developing new source performance standards for these facilities. EPA published final new source performance standards on September 9, 2010, at 75 FR 54970. Unlike prior new source performance standards for cementkilns, whichhad been set to limit the pounds of emissions perton offeed material, the new standards set limits per ton ofclinker produced. These standards included a new standard for NOx emissions, set at 1.5 pounds perton ofclinker on a 30-day rolling average basis.

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Other reviews similar to EPA's review for its new source performance standards have also found SNCRto be an effective means ofcontrolling NOx emissions from existing cementkilns. EPA made similar findings in an earlier review, given in a report published in 2000 entitled, "NOx Control Technologies in the Cement Industry: Final Report" (EPA-457/R-00-002, September 2000, available at http://www.epa.gov/ttnnaags/ozone/ctg act/200009 nox epa457 r-OO002 cement industry.pdf). Although application ofNOx control technology was relatively rare in the United States at the time (i.e., before the NOx SIP Call required control), EPA found SNCRto be an effective means ofreducing NOx emissions, commonly achieving 50 percent or more reduction. Regional planning organizations evaluating options for BART also made similar findings. (See, for example, "Identification and Evaluation ofCandidate Control Measures-Phase II Final Report", June 2006, available at http://www.ladco.org/reports/control/final reports/identification and evaluation of candidate c ontrol measures ii june 2006.pdf.) Similarly, according to the RACT/BACT/LAERClearinghouse, recent permits for new Portland cementkilns have set BACT limits of 1.50 pounds ofNOx per ton ofclinker (issued on June 27, 2007 by Florida to Cemex) and 1.95 pounds ofNOx per ton ofclinker (on January 27,2010 by Georgia to Cemex and on June 19,2007 by Georgiato Houston American Cement). These limits were also set on a 30-day rolling average basis.
Extensive testing ofSNCR at St. Mary's Cement's facility in Dixon, Illinois, appears to provide the most germane information regarding the potential effectiveness ofSNCR at St. Mary's Cement's facility in Charlevoix, Michigan. The key portions ofthe report on this testing are provided as an additional attachment. Atthe Dixon facility, short term tests (generally between 5 and 10 minutes per test) were conducted to testthe emission impact ofdifferent rates ofurea injection, as well as to assess the most effective and appropriate location in the ductwork to inject urea. These tests are best considered inrelation to the stoichiometric ratio (i.e., the molar ratio) ofthe ammonia equivalent ofthe urea versus the pre-controlled quantity ofNOx. These tests used arange from 0.28 to 1.79 moles ofammonia-equivalent per mole ofpre-controlled NOx.
These tests showed SNCRto be highly effective. Even the lowest urea injection rates (with an average molar ratio of0.30) achieved an average of29 percent reduction ofNOx emissions. A set oftests with a molar ratio around 0.6 achieved an average 51 percentreduction in NOx emissions. Tests using an average molar ratio of 1.2 achieved an average of83 percent reduction inNOx emissions.
Additional longer term tests, lasting 1to 3 days each, were conducted at the Dixon facility to assess whether the NOx reductions demonstrated in the shortterm tests were sustainable for longerperiods. These tests used a quantity ofureainjection equivalent to a stoichiometric ratio with pre-control NOx emissions ofapproximately 0.6. The results were quite similar to the results ofthe short term tests, achieving a 46 percent reduction inNOx emissions.
This information supports setting a limit onNOx emissions that requires an average 50 percent control efficiency. Average emissions at SMC are 4.52 pounds perton ofclinker, and so 50- 5 -

percent control efficiency would achieve an emissionrate of2.26 pounds per ton ofclinker, which may be expressedintwo significantfigures as 2.3 poundsperton ofclinker. Achieving this emissionrate would require slightly under 60 percent reduction from the 95th percentile emission rate, while achieving this emission rate would require only about 31 percentreduction from the 5th percentile emission rate. The available evidence indicates that achievement of60 percent control ofNOx emissions at SMC is fully feasible, particularly since a limit of2.3 pounds perton would only occasionally require this level ofcontrol. Therefore, a limit of2.3 pounds per ton ofclinker, requiring an average control efficiency of50 percent, appears to be a fully achievable emission rate even under conditions ofrelatively higher uncontrolled NOx emission rates. Thus, this information indicates that the appropriate limit to mandate BART for NOx at SMC is a limit of2.3 pounds ofNOx per ton ofclinker, expressed as a 30-day rolling average. The purpose ofa limit on S02 emissions at SMC is not to require emission controls to achieve lower emissions; instead, the purpose is to assure that emissions do not increase significantly. Therefore, the appropriate starting point for determining a limit is maximum current emissions. The 95th percentile among 30-day average S02 emissionrates in 2006 to 2008 at SMC was 6.81 pounds per ton ofclinker, and the maximum 30-day average S02 emissionrate was 7.19 pounds per ton ofclinker. Since the average S02 emissionrate from 2006 to 2008 is 3.02 pounds per ton ofclinker, and mosUO-day average S02 emission rates during 2006 to 2008 are well below 7.19 pounds per ton ofclinker, only a 5 percent compliance margin appears warranted to accommodate current operations, including current sulfur contents ofraw materials and fuel. This indicates that an appropriate limit to require no additional control under current conditions but to require that emissions not increase significantly above current levels wouldbe a limit of 7.5 pounds ofS02per ton ofclinker on a 30-day average basis.BestAvailable Retrofit Technology (BART) For Tilden Mine

We have sent out a request for informationunder Clean Air Act section 114 to the TildenMining Company on April 20, 2012. We will determine BART for Tilden's indurating furnace(s) after reviewingthis information. However, available evidence indicates that lowNOx burners are a cost-effective means ofcontrolling NOx from indurating furnaces at taconite plants. Michigan's SIP does notrequire such control, and Michigan'S SIP does notprovide for adequate monitoring forjudging whether emissions are being appropriately controlled.
Also attached is a letter that EPA sent to Minnesota describing evidence from work by U.S. Steel at its Milmesotataconite facilities that lowNOx burners are a feasible and effective option for reducing NOx emissions. Inorderto obtainthe information necessaryto set appropriate NOx emissions limits, we are requesting pertinent information from taconite plants inMinnesota, to supplement information we have already requested from TildenMine.
We further believe that the taconite facilities inMinnesota and Michigan should install and operate systems thatprovide for continuous monitoring ofNOx emissions in accordance with Performance Specification 2 in Appendix B of40 CFR 60. This monitoring will serve several purposes: I) it will help identify the operating conditions in which higher and lower NOx emissions occur, 2) as the companies conducttrials ofburner designs and related combustion improvements, it will provide needed feedback on which approaches are most effective, and 3) it will help ensure the continuous, effective control ofNOx emissions.
In addition, the need for S02 controls and continuous monitoring ofS02 emissions will be evaluated after reviewing the requested information from Tilden.