# Regional Haze State Implementation Plan Supplement April 2012

### Appendix 3: Public Notice and Meeting

### State of Minnesota 

# State Register

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## Monday 19 December 2011 

# Volume 36, Number 22 Pages 679 - 700

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### Minnesota Legislative Information

Senate Public Information Office (651) 296-0504 House Public Information Services (651) 296-2146 State Capitol, Room 231, St. Paul, MN 55155 State Office Building, Room 175, Website: www.senate.mn 100 Rev. Dr. Martin Luther King Jr Blvd., St. Paul, MN 55155 Website: www.house.leg.state.mn.us/hinfo/hinfo.htm 

### Minnesota State Court System
Court Information Office (651) 296-6043 MN Judicial Center, Rm. 135, 25 Rev. Dr. Martin Luther King Jr Blvd., St. Paul, MN 55155 Website: www.mncourts.gov 

### Federal Register Office of the Federal Register (202) 512-1530; or (888) 293-6498 U.S. Government Printing Office – Fax: (202) 512-1262 Website: http://www.access.gpo.gov/su_docs/aces/aces140.html(Cite 36 SR 681) State Register , Monday 19 December 2011 Page 681 

# Contents **Minnesota Rules: Amendments & Additions**  Rules Index - Vol. 36, # 11-22: December 19, 2011............... 682



### Commissioners' Orders **Natural Resources Department (DNR)** Commissioner’s Order 11-002: Designation of Wildlife Management Lake-Teal Lake.......... 683

Commissioner’s Order 11-003: Designation of Wildlife Management Lake-Bolstad Slough... 683



### Official Notices Announcements, Meetings and More....................................... 684

**Pollution Control Agency (MPCA)** Environmental Analysis and Outcomes Division: Draft Supplemental Regional Haze State Implementation Plan Revision..................................... 684
Municipal Division: Request for Comments on Possible Amendments to Rules Governing Animal Feedlots..................................... 685

**Transportation Department (MnDOT)** Engineering Services Division, Office of Construction and Innovative Contracting: Notices of Suspension and Debarment..................................... 686
State Aid for Local Transportation Division: Appointment and Meeting of a State Aid Variance Committee............................................................. 687



### State Grants & Loans Active Grant Opportunities..................................................... 688 **Administration Department (Admin)** Governor’s Council on Developmental Disabilities: Cosponsorship Funds for Leadership Training Conferences..... 689
Governor’s Council on Developmental Disabilities: Request for Proposals for Partners in Policymaking®............. 689



### State Contracts
Vendors and Consultants.......................................................... 690

**Colleges and Universities, Minnesota State (MnSCU)** South Central College: Request for Proposal for Laser Engraving and Cutting System............................................................... 691

**Explore Minnesota Tourism** Availability of Contract for Research Vendor for Marketing ROI Study............................................................ 691 Contract information is available from the Materials Management (MMD) Helpline (651) 296-2600, or Web site: www.mmd.admin.state.mn.us
State Register information is available from Minnesota’s Bookstore (651) 297-3000, or (800) 657-3757, Web site: www.minnesotasbookstor e.com **Minnesota Management and Budget (MMB)** Request for Proposal for Master Equipment Lease Purchase Financing Program....................................... 692

**Minnesota State Retirement System (MSRS)** Availability of Contract for Risk Assessment........................... 692

**Transportation Department (Mn/DOT)** Engineering Services Division: Contracting Opportunities for a Variety of General Organizational Related Activities.......................................... 693
Engineering Services Division: Contracting Opportunities for a Variety of Highway Related Technical Activities (“Consultant Pre-Qualification Program”)................................................ 693
Engineering Services Division: Professional/Technical Contract Opportunities and Taxpayers’ Transportation Accountability Act Notices........ 694

Research Services Section: Request for Proposals (RFP) for Technology Transfer Material Development......................................................... 694



### Non-State Bids, Contracts & Grants
Local Contracts....................................................................... 695

**HMSHOST** Opportunities for Minority and Women-Owned Businesses to Participate in Construction Build-out of Concessions Operations at Minneapolis-St. Paul International Airport..... 696

**Metropolitan Airports Commission (MAC)** Minneapolis-Saint Paul International Airport: Call for Bids for Energy Conservation Project 2012 (P17/18/19)......................................................................... 696
Minneapolis-Saint Paul International Airport: Call for Bids for MAC Air Handling Unit Replacement 2012 (P2)....................................................... 697
Minneapolis-Saint Paul International Airport: Call for Bids for 2012 Restroom Upgrade................................ 697



### Minnesota’s Bookstore .................................... 698Page 684 State Register, Monday 19 December 2011 (Cite 36 SR 684) 

# Official Notices

Pursuant to Minnesota Statutes§§ 14.101, an agency must first solicit comments from the public on the subject matter of a possible rulemaking proposal under active consideration within the agency by publishing a notice in the State Register at least 60 days before publication of a notice to adopt or a notice of hearing, and within 60 days of the effective date of any new s tatutory grant of required rulemaking. The State Register also publishes other official notices of state agencies and non-state agencies, including notices of meetings and matters of public interest. 

# Announcements, Meetings and More
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All Official Notices, including the current volume as it grows, are indexed. Only subscribers can view this current index. Open the State Register and click on the Bookmarks icon in the upper left corner. You will see the growing index, and have fast access to all the onl ine indices to the State Register . You also receive a summarized “Contracts & Grants” section showing bids and grants still open. • Early delivery, on Friday • All Contracts & Grants Open for Bid • LINKS • Indexes to Vol. 27 - Vol. 33 • Access to State Register Archives • WORD SEARCH Capability • E-mailed to you . . . its so easy • Updates to Index to Vol. 33
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# Minnesota Pollution Control Agency (MPCA) **Environmental Analysis and Outcomes Division Public Notice on Draft Supplemental Regional Haze State Implementation Plan**  **Revision**

NOTICE IS HEREBY GIVEN that the Commissioner has determined that a supplemental State Implementation Plan (SIP) revision must be submitted to meet Minnesota’s requirements under the federal Regional Haze Rule (40 Code of Federal Regulations §§ 51.300 - 51.309).

Background. Under the authority of Section 169(a) of the Clean Air Act (the Act), the United States Environmental Protection Agency (EPA) on July 1, 1999 promulgated visibility goals for mandatory Class I Federal areas in the federal Regional Haze Rule. Secti on 169(a) of the Act and the Regional Haze Rule requires each state to adopt and submit a plan to EPA that addresses the state’s contribu tion to visibility impairment at the mandatory Class I Federal areas. Class I areas within Minnesota are the Boundary Waters Canoe Area Wilderness and Voyageurs National Park.

Purpose of the SIP Revision. The MPCA submitted a Regional Haze SIP for Minnesota to the EPA in December 2009. That submittal laid out how Minnesota intends to implement the Regional Haze Rule. The previously submitted SIP includes information on the following core requirements of the Regional Haze Rule: reasonable progress goals, baseline and natural visibility conditions, l ong-term strategy for regional haze, monitoring strategy, and Best Available Retrofit Technology (BART). The BART requirement targets certain older emission sources that have not been regulated under other provisions of the Act for additional emission controls.

The supplemental SIP includes additional BART emission limits for the taconite facilities, set after the review of additional emission information. It also includes enforceable documents, in the form of Administrative Orders, to implement the BART emission limit s for the taconite facilities. The supplemental SIP also includes a change to BART determinations for power plants. Rather than making enforceable individual BART emission limits on the subject-to-BART power plants, the supplemental SIP accepts the EPA’s proposed determination that the Cross State Air Pollution Rule (CSAPR) can substitute for BART.(Cite 36 SR 685) State Register , Monday 19 December 2011 Page 685 The supplemental SIP also proposes a change to the long-term strategy. As part of the long-term strategy, the MPCA develop ed a plan to target emission reductions in Northeast Minnesota. The strategy included a plan for pilot testing of emission controls at the taconite facilities. Implementation of new ambient air quality standards should provide appropriate evolution of emission controls at th ese facilities, so the supplemental SIP replaces the pilot testing requirement with requirements for expeditious attainment of new ambient standards.

The MPCA will consider changing the contents of the proposed SIP revision based on comments received during the comment period. MPCA Contact Person. The MPCA contact person is Catherine Neuschler. Written comments, requests and petitions should be mailed to: Catherine Neuschler, Minnesota Pollution Control Agency, Environmental Analysis and Outcomes Division, 520 Lafayette Road North, St. Paul, MN 55155-4194, telephone number: (651) 757-2607 Voice or toll free: 1-800-657-3864; facsimile number: 651-297- 8324; and e-mail: catherine.neuschler@state.mn.us

. TTY users may call the MPCA at TTY (651) 292-5332 or 1-800-657-3864.

Availability of SIP. A copy of the proposed SIP revision is available on the MPCA’s Web site at http://www.pca.state.mn.us/mvri4c0

. A copy of the proposed SIP is also available upon request by contacting Catherine Neuschler at 651-757-2607, or will be mailed to any interested person upon the MPCA’s receipt of a written request. Materials relating to the SIP revision are available for inspec tion by appointment at the MPCA St. Paul Office, 520 Lafayette Road North, St. Paul, Minnesota 55155, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday. To examine these materials, or for more information, please contact Catherine Neuschler.

Public Comment Period. Your comments must be in writing and received by the MPCA contact person by 4:30 p.m. on February 3, 2012. Written comments may be submitted to the MPCA contact person at the address, facsimile number, or e-mail address listed a bove.

Citizens’ Board Meeting . As provided by Minnesota Statutes § 116.02, the MPCA Citizens’ Board will make the decision on submitting the proposed SIP revision to the EPA. The Citizens’ Board meeting will fulfill the requirement for public hearing un der 40 Code of Federal Regulations§ 51.102. The proposed Regional Haze SIP revision will be heard at the MPCA Citizens’ Board Meeting on March 27, 2012. The Board meeting begins at 9 am. The Citizens’ Board meeting dates and agenda can be found at http://www.pca.state.mn.us/enzq405



# Minnesota Pollution Control Agency (MPCA) **Municipal Division Request for Comments on Possible Amendments to Rules Governing Animal**  **Feedlots, Minnesota Rules**  **7020**

Subject of Rules. The Minnesota Pollution Control Agency (Agency) requests comments on its planned amendments to rules governing animal feedlots.

The Agency is considering rule amendments that will administer the statutory changes that occurred in the special legislative session and remove some outdated language. Redundancies were removed and the language streamlined to be clearer and more concise.

Persons Affected. The amendment to the rules would likely affect animal feedlot owners.

Statutory Authority. Minnesota Statutes , section 115.03(1)(e) authorizes the Agency to adopt, issue, reissue, modify, deny, or revoke, enter into or enforce reasonable orders, permits, variances, standards, rules, schedules of compliance, and stipulation agreements, under such conditions as it may prescribe, in order to prevent, control or abate water pollution.

In addition, during the special session, the Legislature revised statute language in Minnesota Statutes 2010, section 116.07, subdivision 7c to streamline and clarify the statute. The rule needs to be updated to reflect these changes.

Public Comment. Interested persons or groups may submit comments or information on these draft rule amendments, in writing, until 4:30 p.m. on January 20, 2012. 

# Official Notices1 

### 520 Lafayette Road North, St. Paul, Minnesota 55155

- 4194


## M PCA CITIZENS’ BOARD SPECIAL MEETING

MA R CH 26 , 2012

MONDAY, MARCH 26, 2012, 1:00 p.m.

I. ADMINISTRATIVE BUSINESS 1. Call to Order 2. Agenda Review and Adoption



## II. DECISION ITEMS (Staff Presentation, Public Testimony and Discussion)

Northern Metals Request for Decision on the Need for an Environmental Impact Statement William Lynott 651-757-2542; Craig Affeldt 651-757-2181; Jess Richards 651-757-2858; Kathleen Winters, Esq. 651-757-1355; Michelle Beeman 651-757-2013



## III. RECESS (5:00 p.m.)

DAY 2 SPECIAL BOARD MEETING - TUESDAY, MARCH 27, 2012, 9:00 a.m.

I. DECISION ITEM CONTINUED (Board Discussion and Final Action)

Northern Metals Request for Decision on the Need for an Environmental Impact Statement



## II. ADJOURN SPECIAL BOARD MEETING

MPCA CITIZENS’ BOARD MEETING MARCH 27, 2012 (The MPCA Citizens’ Board Meeting for March the Administrative Business will convene at 10:30 a.m. and the Decision Item will begin at 11:00 a.m.)

I. ADMINISTRATIVE BUSINESS 10:30 a.m. 1. Call to Order 

## 2. Approval of Minutes 

## 3. Legal Report 

## 4. Commissioner’s Report2 

### 520 Lafayette Road North, St. Paul, Minnesota 55155

- 4194



## II. DECISION ITEM 11:00 a.m.

Minnesota’s Supplemental Regional Haze State Implementation Plan - Request for Authorization to Submit Catherine Neuschler 651- 757 -2607; Mary Jean Fenske 651-757-2354; Frank Kohlasch 651

- 757 -2500; Kathleen Winters, Esq. 651-757-1355; J. David Thornton 651-757-2018

III. ADJOURN

FUTURE
MPCA CITIZEN’S BOARD MEETING

April 24, 2012

LOCATION: MPCA Offices, 520 Lafayette Road North, St. Paul, Minnesota 55155 Lower Level Board Rooms

SCHEDULE: Board intends to adhere to the scheduled time limits for each listed agenda item. Agenda available 10 days prior to Board meeting

–

contact the Board Administrator.

WRITTEN MATERIALS: (SUBMIT FIVE DAYS BEFORE MEETING) Persons can provide written comments or information to Board members and Commissioner, five days in advance of meeting. Written material not served five days before a Board meeting may not be considered by the Board.
Contact the Board Administrator for permission to speak on an issue before the Board or sign up to speak while in attendance at meeting.

BOARD ADMINISTRATOR: 651- 757 -2025 email: citizensboard.pca@state.mn.us

OTHER: Anyone who intends to file written comments on or exceptions to an administrative law judge’s report for an agenda item must comply with Minn. R. 7000.2000, subps. 1 and 2, if it pertains to a matter for which a contested case hearing has been held, or with Minn. R. 7000.0650, subp. 6. B., if it pertains to a matter for which a rulemaking hearing has been held.
This agenda and schedule may be made available in other formats, such as Braille, large type or audiotape, upon request. Telephone Device for the Deaf (TDD): 651

- 282 -5332. People with disabilities should contact the Board Administrator as soon as possible to request an accommodation (e.g., sign language interpreter) to participate in these meetings.

WEBCASTING: The MPCA Citizens' Board meetings are webcast. Events can be viewed online as they happen, or watched later from the online archive. Find them on the MPCA website: http://www.pca.state.mn.us/webcasts1 

### 520 Lafayette Road North, St. Paul, Minnesota 55155

- 4194



## M PCA CITIZENS’ BOARD MEETING TUESDAY, April 24 , 20 1 2

I. ADMINISTRATIVE BUSINESS
9:00 a.m.

1. Call to Order 2. Agenda Review and Adoption 3. Approval of Minutes 4. Legal Report 5. Items by Board Members

DECISION ITEM COULD BE HEARD AS EARLY AS 9: 15 A.M.



## II. DECISION ITEM S Minnesota’s Supplemental Regional Haze State Implementation Plan

– Request for Authorization to Submit Catherine Neuschler 651

- 757

- 2607; Mary Jean Fenske 651

- 757

- 2354; Frank Kohlasch 651

- 757

- 2500; Mike Sandusky 651

- 757

- 2689; J. David Thornton 651

- 757

- 2018; Kathleen Winters, Esq. 651

- 757

- 1355

Hometown BioEnergy Facility

– Request for Approval of Findings o f Fact, Conclusions of Law, and Order, and Authorization to Issue a Negative Declaration on the Need for an Environmental Impact Statement William Lynott 651

- 757

- 2 5 42; Craig Affeldt 651

- 757

- 2181; Jess Richards 651

- 757

- 2858; Dave Benke 651

- 757

- 2221; Kathlee n Winters, Esq. 651

- 757

- 1330



## III. COMMISSIONER’S REPORT

IV. ADJOURN2 

### 520 Lafayette Road North, St. Paul, Minnesota 55155

- 4194



## F UTURE MPCA CITIZEN’S BOARD MEETING

Ma y 2 2 , 2012

LOCATION: MPCA Offices 520 Lafayette Road North, St. Paul, Minnesota 55155 Lower Level Board Rooms



## SCHEDULE: Board intends to adhere to the scheduled time limits for each listed agenda item. Agenda available 10 days prior to Board meeting

– contact the Board A dministrator.



## WRITTEN MATERIALS: (SUBMIT FIVE DAYS BEFORE MEETING) Persons can provide written comments or information to Board members and Commissioner, five days in advance of meeting. Written material not served five days before a Board meeting may not be considered by the Board.

Contact the Board Administrator for permission to speak on an issue befor e the Board or sign up to speak while in attendance at meeting.



## BOARD ADMINISTRATOR

- CATHY SCHAEFER : 651

- 757

- 2025

email: citizensboard.pca@state.mn.us

OTHER: Anyone who intends to file written comments on or exceptions to an administrative law judge’s report for an agenda item must comply with Minn. R. 7000.2000, subps. 1 and 2, if it pertains to a matter for which a contested case hearing has been held, or wit h Minn. R. 7000.0650, subp. 6. B., if it pertains to a matter for which a rulemaking hearing has been held.
This agenda and schedule may be made available in other formats, such as Braille, large type or audiotape, upon request. Telephone Device for the Deaf (TDD): 651

- 282

- 5332. People with disabilities should contact the Board Administrator as soon as possible to request an accommodation (e.g., sign language interpreter) to participate in these m eetings.



## WEBCASTING: The MPCA C itizens' Board meetings a re w ebcast . Events can be viewed online as they happen , or watched later from the online archive

. Find them on the MPCA website: http://www.pca.state.mn.us/webcasts

### Appendix 4: Public Comments and Response

### Minnesota Pollution Control Agency
Supplemental Regional Haze SIP

LIST OF COMMENT LETTERS RECEIVED
TIMELY COMMENTS (A1)

1. Timothy A. Dabney and Trent Wickman for US Forest Service, Superior National Forest, Letter Received January 13, 2012
2. Susan Johnson and Don Shepherd for National Park Service, Letter Received February 2, 2012 3. Janette Brimmer, Matthew Gerhart, Kevin Reuther, Paul Danicic and Jody Tableporter for Earthjustice, National Park Conservation Association, Friends of the Boundary Waters Wilderness, Voyageurs National Park Association, and Fresh Energy, Le tter Received February 3, 2012
4. Robb Kapla and Michelle Rosier for Sie rra Club, Letter Received February 3, 2012
5. Richard Rosvold for Xcel Ener gy, Letter Received February 3, 2012
6. Chrissy Bartovich for US Steel , Letter Received February 3, 2012
7. Jaime Baggenstoss for Arcelor MItt al, Letter Received February 3, 2012

LATE COMMENTS (A2)
8. Mike Cashin for Minnesota Power, Letter Received February 3, 2012
9. Michael Long for Cliffs Natural Reso urces, Letter Received February 3, 2012

EPA COMMENTS (A3)
10. Doug Aburano for EPA Region 5, Letter Received February 10, 2012

## A1United States Forest Superior 8901 Grand Ave. Place Department of Service National Duluth, MN 55808

- 1122 Agriculture For est Phone: (218) 626

- 4300 Fax: (218) 626

- 4398

File Code: 

### 2580 Date: 

### January 13, 2012

Mr. David Thornton Assistant Commissioner Minnesota Pollution Control Agency 520 Lafayette Rd St. Paul, MN 55155

Dear Mr. Thornton: Thank you for the opportunity to review the Regional Haze State Implementation Plan Supplement (Supplement). The Supplement focuses on the application of best available retrofit technology (BART) to the electrical generating units (EGUs) and taconite plants in Minnesota. BART is the last remaining part of Minnesota’s Regional Haze Plan that needs to be completed.
The focus of the Supplement is to set emission limits that reflect the BART determinations made in the December 2009 Regional Haze Plan submittal. We believe that the methodology used by your agency to set the BART emission limits results in limits that are too high and ask that you reconsider them. Our technical analysis is attached to this letter. In many cases your proposed BART emission limits are higher than current actual emissions and therefore could lead to emission increases instead of the decreases needed to improve visibility.
Our high level of interest in the program is tied to our role as Federal Land Manager of the Boundary Waters Canoe Area Wilderness (BWCAW) and our “affirmative responsibility” to protect air quality related values of this area, one of which is visibility. As you know, we have taken a very active role in the implementation of the Regional Haze Program. We have interacted with your staff for almost ten years and sent formal comment letters regarding regional haze on: April 10, 2007; March 5, 2008; April 28, 2009; July 10, 2009; May 10, 2010; and August 11, 2011. We believe it is our shared goal that this Supplement, and the entire Regional Haze Plan, make reasonable progress possible toward the national goal of preventing any future and remedying any existing, impairment of visibility in mandatory Class I areas, such as the BWCAW.
We are concerned your proposed BART limits will not make the progress envisioned by Congress. In the case of the EGUs, we and EPA found that some of the source-specific BART limits you previously proposed were too lenient (see our 2009 and 2011 letters and EPA’s September 3, 2009 and June 6, 2011 letters). We also disagree with your alternate proposal of allowing the EGU cap and trade program (the Cross-State Air Pollution Rule, CSAPR) to be substituted for source-specific BART. For Minnesota we find CSAPR is more lenient than both your original, and our recommended lower emitting, source-specific BART limits. It is clear that the source-specific BART limits provide the greatest visibility improvement and request that you use the values the EPA and FLMs proposed. The uncertain federal regulatory landscape (as

Caring for the Land and Serving People Printed on Recycled Paper

### evidenced by the recent stay of CSAPR) gives an additional reason to choose the source-specific BART limits.
Minnesota and Michigan have the responsibility to oversee the taconite industry in the United States since all of the facilities are in these two states. The Regional Haze Rule is just one of the air quality regulations facing the industry. In the past we were told there were economic and technological reasons why environmental improvements could not be made in this industry. It appears that times have changed. We are encouraged by the leadership shown by US Steel to comprehensively address these issues. They have installed modern emission monitoring systems

an d have proposed to install, or already installed, modern air emission controls for sulfur, nitrogen and mercury. After some tough years, the industry has returned to profitability. 1 

### We encourage you to level the playing field across the industry and thereby improve visibility, environmental quality and public health.
We look forward to working with you to address our comments. If you have questions about any of the technical comments in the attachment please feel free to contact Trent Wickman, Air Resources Management (218-626-4372; twickman@fs.fed.us ), of my staff.

Sincerely,

/s/ Timothy A. Dabney TIMOTHY A. DABNEY Acting Forest Supervisor

cc: Catherine Neuschler Matt Rau John Summerhays Don Shepherd Pat Brewer Tim Allen Robert Irvine Todd Hawes

1 For example, Cliffs Natural Resources, Inc. posted net income exceeding $200 million in each of the last four years, including over $1 billion in 2010. See http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=CLF:US

### Technical Comments
Electrical Generating Units - EGUs In letters dated April 28, 2009 and July 10, 2009 we commented on the source-specific EGU BART determinations proposed in the 2009 draft regional haze plan. In general we found that the BART emission limits for some of the facilities should have been lower, resulting in lower emissions (see previous letters for details). As was done in the 2008 draft of the regional haze plan, the transport rule (now known as the Cross-State Air Pollution Rule, CSAPR) is being substituted as BART for the source-specific EGU BART determinations.We do not agree that CSAPR is better than source-specific BART in Minnesota. No statespecific demonstration has been made that we are aware of. In the Supplement the emissions budget under the previous transport rule is compared to CSAPR. We do not see any value in this comparison. Both are different versions of the same trading program. Instead we attempted to compare source-specific EGU BART to CSAPR for Minnesota in Figure 1. The graph shows that the IPM prediction of the af fect of CSAPR in 2014 (i.e. “2014 IPM Emissions”) is an increase in emissions over current (2010) actual emissions. In addition CSAPR is well above both what was proposed as source-specific BART by MPCA and what we and the other Federal Land Managers (FLMs) proposed as source-specific BART. Without any other information specific to Minnesota we find source-specific BART to be far superior to CSAPR. We strongly encourage the MPCA to reject using CSAPR as a replacement and believe the source-specific BART limit approach should be maintained. The MPCA should also re-evaluate the limits determined for Xcel Energy’s Sherburne County and Northshore Mining’s Power House and consider the comments made by EPA (in letters dated September 3, 2009 and June 6, 2011) and ourselves (in our 2009 letters). The recent stay of CSAPR puts its future in doubt. The regional haze plans are more than four years overdue already. Please do not delay the plan and visibility improvement any longer by keeping Minnesota’s Regional Haze Plan tied to any of the federal trading rules. Please use source-specific BART limits in this plan.

### Figure 1

– Comparison of Emissions Under CSAPR and BART for BART-subject Units in Minnesota

20,000 30,000 40,000 50,000

2010* actuals 2014 IPM Emissions 2014 Allocations MPCA BART Presumptive BART FLM BARTTons 

# Comparison of CSAPR and BART in Minnesota

SO2

NOx

Taconite Facilities In their 2009 regional haze plan submittal the MPCA proposed that for the taconite facilities that primarily used natural gas as a fuel;
"For the taconite furnaces, BART for NOx is an operating standard of good combustion practices in combination with some proposed process changes , while BART for PM is equivalent to the taconite Maximum Available Control Technology (MACT) standard, and BART for SO 2 

### is generally existing particulate scrubbers optimized for SO 2 

### removal

. The MPCA is also requiring application of better emission measurement systems to set a NO x BART emission limit, SO 2 

### limits at lines that burn high sulfur fuels, and determine compliance."

In the highlighted portions above it can be seen that the MPCA proposed BART controls for thi s group of units. The facilities have to take actions during operations to optimize scrubbers (for example, adjust scrubber liquid pH) and follow good combustions practices (for example, adjust

### the air to fuel ratio). Scrubbers can also be optimized physically by optimizing the scrubbing water distribution inside the vessel. The MPCA was unclear as to the specifics of each BART control option, but they were clear that BART was not “no control.”
Due to a lack of emissions data, limits could not be set at that time. Most of the facilities now have continuous emission measurement systems (CEMS) and data from some of these were used to develop the proposed BART limits. We have repeatedly advocated that all facilities install these systems, and encourage the MPCA to take this opportunity and level the playing field by requiring the last few facilities to follow suit. As illustrated in a recent report by Minntac on their successes at reducing NOx “In order to reduce NOx emissions it is necessary to know w hat the emissions are on a short term basis. This enables real time data to be used when testing and tuning the equipment to better understand and evaluate how the changes are affecting NOx performance.” 1 

### Stated another way, to be serious about reducing NOx, CEMS must be installed.
The Supplement says the MPCA felt that at least one year of emissions data was needed from each facility in order to determine the appropriate BART limits.” It then goes on to say that only 150 hours of data was used to set the limits for most facilities. This is about six days versus the one year originally proposed and no explanation is given as to why such a small data set was chosen. We can only speculate that this was due to the fact that some of the facilities refused to install CEMS while others (such as Minntac) had CEMS installed and therefore had over a year’s worth of data.
To compensate for this lack of data, the Supplement discusses how the goal of the testing was to collect

- “a minimum of 150 one -hour data points under the range of [furnace] operating parameters that influence NOx emissions. The range of each operating parameter during testing should be representative of furnace’s operating range for the parameters in the 12 months previous to testing.”
Our view is that the testing should’ve been done under operating conditions that represent BART, as determined previously by MPCA to be good combustion parameters and scrubber optimization. Instead the incentive for the companies was to operate at the highest emitting levels during the testing. There is no other documentation in the Supplement regarding whether BART operating practices were being followed during the tests.
A further concern is the use of a 99% confidence interval. In other recent permit -related work the MPCA has used 95%. The MPCA chose a 99% value:

“ due to the need for limits to be met during all operating conditions, including during times of startup, shutdown, and malfunction.”
Other technology-based limits, such as best availabl e control technology (BACT) limits , are not set this way. The correct way is to set a separate limit for startup, shutdown, and malfunction ( SSM ) conditions and one for regular operations. Otherwise if an overall limit was set to encompass all possible emission scenarios (normal operations and SSM) the resulting limit

1 US Steel Minntac Line 6 Low NOx Burner Final Report and Facility NOx Management, 12/1/11

### would be inflated and not represent the capabilities of BACT. We believe a similar approach should be taken for BART.
The use of the 99% level in combination with a limited data set, while doing a good job of statistically encompassing all possible emission scenarios, artificially inflates the emission limits, which in the end do not require the facilities to operate according to BART.
United Taconite (United)

We believe the BART determination for United Taconite does not follow the Clean Air Act and does not follow the conditions in its permit.
United has two taconite lines. Previously it fired primarily natural gas in Line 1 and coal/coke in Line 2. This was the operating scenario under consideration when the original BART proposal was made by MPCA. For both lines NOx BART was proposed as good combustion practices. For SO 2

### BART, scrubber optimization was proposed for Line 1 and a limit of 1.7 pounds of SO 2 

### per million BTUs (lb/MMBtu) was proposed for Line 2 that could be met with a scrubber and/or fuel blending. We provided compelling evidence in a letter dated July 10, 2009 that the MPCA’s own analysis showed the Line 2 SO 2

### limit should be 0.68 lb/MMBtu.
In August 2010 MPCA issued United a permit for a plant expansion that also allowed Line 1 to burn coal. United used the BART-required emission reductions at Line 2 to avoid Federal New Source permitting requirements for the expansion. We commented to MPCA and EPA that we believed this was not allowed under the Clean Air Act. In spite of this, the MPCA issued United a permit for the expansion that included a condition to address BART on the now coal-fired Line 1: Within 120 days of being notified by the MPCA in writing of the final proposed NOx BART limits for Lines 1 and 2 (EU 040 and EU 042), the Permittee shall submit an application for a permit amendment to incorporate into its air emissions permit either (1) NOx and SO2 BART emission limits as proposed or (2) a BART alternative as described in the December 2009 Regional Haze State Implementation Plan submittal.
Alternatively, the Permittee may submit, within 120 days of the written notification, an updated BART analysis based on the modified Lines 1 and 2 for the facility with an appropriate permit amendment application to incorporate proposed NOx and SO2 BART limits into its air emissions permit 

### The Supplement states “On December 8, 2011, United Taconite proposed that the NO x and SO2 limits set as part of the abovementioned permit amendment be incorporated as the BART limits for the facility.” It appears that the option chosen by United is not one of the three included in their permit. Nonetheless MPCA proposes to accept the se limits “because these limits provided greater annual reductions of NOx and SO 2 

### than would be provided by the MPCA’s initial BART limits.”
This approach is problematic for a number of reasons. It is unclear how United’s proposal complies with its permit requirement included above. Is it a BART alternative? If so, what is the initial BART determination for coal-fired Line 1? To our knowledge no BART determination has been completed for a coal-fired Line 1. According to 40 CFR 51.308(e)(1)(ii)(A) the BART determination must consider

### the best system of continuous emissions control technology taking into account the following factors : “the technology available, the costs of compliance, the energy and non-air quality environmental impacts of compliance, any pollution control equipment in use at the source, the remaining useful life of the source, and the degree of improvement in visibility.” We find none of this information in the Supplement. The “reductions” in United’s proposal were calculated from an inflated baseline. The baseline values used in the Supplement rely on the baseline emissions value calculated in the permit for the plant expansion. Under those regulations the facility is free to choose the highest emitting two years in the past ten. As can be seen in Figure 2, the result is a value well above recent actual emissions. A major reason United’s proposed BART limits are more restrictive than the MPCA’s is because the MPCA’s NOx limits were set artificially high for many of the same r easons detailed above. In the case of SO 2 

### , as stated above, we believe the limit for line 2 should be 0.68 and not 1.7 lb/MMBtu.
The combination of these factors results in paper emission reductions. The following graph illustrates the point. It also includes actual emissions for 2002, 2007, 2008, and 2009.
Figure 2

– Emissions of NOx and SO 2

### Under Various BART Options for United Taconite


# United Taconite BART OptionsTons 

### 7000

5000

3000

1000 NOx

SO2

### The Supplement includes a table that is used to “demonstrate that the MPCA’s baseline BART proposal is essentially unconstraining, except for the SO 2

### emissions limit for Line 2. Compared to past actual emissions, the MPCA’s BART proposal results in about a 2500 tons per year decrease in overall emissions of NOx and SO 2 

### (from “ baseline ” ) . The proposal by UTac (United) results in a 4350 tons per year decrease in overall emissions as compared to the past emission scenario (“ baseline ” ) , and 1855 tons per year as compared to MPCA’s BART determination.” Note, clarification was added to the above text with the italicized words.
Figure 2 shows that all the BART proposals are unconstraining except for our BART proposal (which is based on the original BART determination for Line 1 in combination with a limit of 0.68 lb/MMBtu for Line 2). Since a proper BART analysis was not submitted for NOx, we have no information from which to propose a BART limit for NOx. Therefore no value was included in Figure 2 under FLM BART.
In summary please submit a full BART analysis for coal-fired Line 1 and correct the NOx BART analysis for Line 2. The BART proposal in the Supplement does not include a consideration of the Clean Air Act factors for BART. It is irrelevant that the emission limit chosen is less than both an inflated baseline value, and an inflated, initial BART determination. The emission limit should be selected as an outcome of an analysis of the Clean Air Act factors.
Long Term Strategy
As a part of the long term strategy the 2009 Regional Haze Plan includes the Northeast Minnesota Plan which sets emission reduction goals for 2012 and 2018 for NOx and SO 2

### from large sources in the six-county region. The Supplement expects that these goals will be met based on future emission projections. We would like to sound a note of caution. The most recent actual emission data cited was from 2009, a year where much of the taconite industry was shut down or curtailed. Future year projections have much uncertainty. To meet the 2012 and 2018 goals there will be very little room for any new projects other than those included in the projection, which generally were those that have already submitted permit applications.
While we agree in concept with MPCA’s plan to replace pilot testing with th e 1-hr SO 2

### and NOx NAAQS modeling and compliance, we are concerned about possible changes to the NAAQS and their compliance provisions being contemplated by Congress. We are unsure what would happen to the administrative orders if, for example, the NAAQS are revoked. We would feel comfortable if the MPCA committed itself to a schedule to incorporate the 1-hr SO 2

### and NOx NAAQS into state rules and the State Implementation Plan so they are enforceable under state law and not affected by changes at the Federal level.

# United States Department of the Interior
NATIONAL PARK SERVICE Air Resources Division 

### P.O

. Box 25287

IN REP L Y R E FER TO ' Denver, CO 80225



### N3615 (2350)

February 2, 2012

Mr. David Thornton, Assistant Commissioner Air Policy Mitmesota Pollution Control Agency 520 Lafayette Road St. Paul, Minnesota 55155

Dear Mr. Thornton:

# ee:~**~""( J**  TAKE P R IDE ' I N

AMERICA



### Thank you for the opportunity to review Minnesota's proposed Regional Haze State Implementation Plan Supplement (Supplement). The Supplement sets emission limits intended to reflect the application of best available retrofit technology (BART) determinations made in the December 2009 Regional Haze Plan submittal for the electrical generating units (EGUs) and taconite plants.

We share the concerns expressed by the US Forest Service (USFS) in its January 13 , 2012 , comments to you. The methodology used by MPCA results in emissions limits that

are too high, and we ask that you reconsider them. In many cases, MPCA's proposed BART emission limits are higher than current actual emissions and could lead to emission increases instead of the decreases needed to improve visibility. Our technical analysis is attached to this letter.

As the Federal Land Manager (FLM) of Voyageurs National Park (NP) and Isle Royale NP, the Department of the Interior (DOl) has an "affirmative responsibility" to protect air quality related values (e.g., visibility) of these areas. DOl and the National Park Service (NPS) have taken a very active role in the implementation of the Regional Haze Program;

we have interacted with your staff for several years and sent formal comment letters regarding regional haze on April 4, 2008, May 8, 2008 , and September 3, 2009 (September 3 , 2009 letters enclosed for your reference).

We are concerned that MPCA's proposed BART limits will not make the progress envisioned by Congress. In the case of the EGUs, we and EPA found that some of the source-specific BART limits MPCA previously proposed were too lenient (see our 2008 and 2009 letters and EPA's September 3, 2009 and June 6, 2011 letters). We also

### 2

disagree with MPCA's alternate proposal of allowing the EGU cap and trade program (the Cross-State Air Pollution Rule, CSAPR) to be substituted for source-specific BART. For Minnesota, we find CSAPR is more lenient than both MPCA's original, and our recommended lower-emitting, source-specific BART limits. It is clear that the sourcespecific BART limits provide the greatest visibility improvement, and we request that MPCA use the values that the FLMs proposed in 2009. The uncertain federal regulatory landscape (as evidenced by the recent stay ofCSAPR) gives an additional urgency to choose the source-specific BART limits. We ask that you choose source-specific BART limits that provide the certainty of lower emissions and can be readily implemented, as opposed to the higher emission that might be allowed ifCSAPR is upheld.

Minnesota and Michigan have significant responsibility to oversee the taconite industry in the United States, are these facilities are major causes of visibility impairment in several Class I areas in and near those states. In the past, we understood that there were economic and technological reasons why environmental improvements could not be made in this industry. We are encouraged, however, by the leadership shown by US Steel (USS) to comprehensively address these issues. USS has installed modern emission monitoring systems and has proposed to install, or has already installed, modern air emission controls for sulfur dioxide, nitrogen oxides, and mercury. After some difficult years, the industry appears to have returned to profitability, and new pollution control technologies provide the promise of dramatically reducing emissions at reasonable costs. We encourage MPCA to help EPA level the playing field across the industry and thereby improve visibility, environmental quality and public health.

For further information regarding our comments, please contact Don Shepherd at (303) 969-2075.
Again, we appreciate the opp01iunity to work closely with the State of Minnesota to improve visibility in our Class I areas.
Sincerely, 

# ;lL

Susan Johnson Acting Chief, Policy, Planning and Permit Review Branch

Enclosures

cc: John Summerhays U.S. EPA Region 5 77 W. Jackson Blvd. Chicago, Illinois 60604

### NPS Technical Comments on MPCA BART Supplement February 2, 2012

Electrical Generating Units

- EGUs 

### In our letter dated September 3, 2009 (attached), we commented on the source-specific EGU BART determinations proposed in MPCA' s 2009 draft regional haze plan. In general, we found that the BART emission limits for some of the facilities should have been lower, resulting in lower emissions (see the previous letter for details). As was done in the 2008 draft of the regional haze plan, the transport rule (now known as the Cross-State Air Pollution Rule, CSAPR) is being substituted as BART for the source-specific EGU BART determinations.

We do not agree that CSAPR is better than source-specific BART in Minnesota. No statespecific demonstration has been made that we are aware of. In the Supplement, the emissions budget under the Clean Air Interstate Rule (the previous transport rule) is compared to CSAPR. We believe the relevant comparison that is required is a comparison of controls under CSAPR with controls under fully implemented BART.

US Forest Service (USFS) analysis 1 

### shows that the !PM prediction of the affect ofCSAPR in 2014 is an increase in emissions over current (2010) actual emissions and above both what was proposed as source-specific BART by MPCA and what we and the other Federal Land Managers (FLMs) proposed as source-specific BART. Without any other information specific to Minnesota, we find source-specific BART to be far superior to CSAPR.

We strongly encourage the MPCA to reject using CSAPR as a replacement and believe the source-specific BART limit approach should be maintained. The MPCA should also re-evaluate the limits determined for Xcel Energy's Sherburne County and Northshore Mining's Power House and consider the comments made by EPA (in letters dated September 3, 2009 and June 6, 2011) and NPS (in our September 3, 2009letter).

With regional haze plans overdue already, and the recent stay ofCSAPR putting CSAPR's future in doubt, we are concerned with fmther delays in the plan and visibility improvement, and that Minnesota's Regional Haze Plan tied to rules that would provide less pollution reduction than those tailored specifically to Minnesota's needs. Instead, we ask that MPCA use source-specific BART limits that have already been evaluated and can be readily implemented in this plan.

Taconite Facilities 

### In their 2009 regional haze plan submittal, the MPCA proposed for the taconite facilities that primarily used natural gas as a fuel: For the taconite furnaces, BART for NOx is an operating standard of good combustion practices in combination with some proposed process changes, 

### while BART for PM is equivalent to the taconite Maximum Available Control Technology (MACT) standard, and BART for S0 2 

### is generally existing particulate scrubbers optimized for S0 2 

### removal. 

### The MPCA is also requiring application of better emission measurement systems to set a NOx BART emission limit, S0 2 

### limits at lines that burn high sulfur fuels, and determine compliance.

1 USFS January 13,2012 comments to MPCA

### In the 

### italicized portions above it can be seen that the MPCA proposed BART controls for this group of taconite units. The taconite facilities have to take actions during operations to optimize scrubbers and follow good combustions practices. The MPCA was unclear as to the specifics of each BART control option, but they were clear that BART was 

### not "no control."

Due to a lack of emissions data, limits could not be set at the time the Regional Haze SIP was submitted. Most of the facilities now have continuous emission measurement systems (CEMS) and data from some of these were used to develop the proposed BART limits. We have repeatedly advocated that all facilities install these systems, and encourage the MPCA to take this opportunity to level the playing field by requiring the last few facilities to follow suit. As illustrated in a recent report 2 

### by Minntac on their successes at reducing NOx: "In order to reduce NOx emissions it is necessary to know what the emissions are on a short term basis. This enables real time data to be used when testing and tuning the equipment to better understand and evaluate how the changes are affecting NOx performance." In order to reduce NOx through use of combustion controls, NOx CEMS must be installed.

The Supplement says the MPCA felt that at least one year of emissions data was needed from each facility in order to determine the appropriate BART limits. It then goes on to say that only !50 hours of data were used to set the limits for most facilities, which is less than 2% of the data originally said to be needed, and no explanation is given as to why such a small data set was chosen. To compensate for this lack of data, the Supplement discusses how the goal of the testing

was to collect:

a minimum of 150 one-hour data points under the range of [furnace) operating parameters that influence NOx 

### emissions. The range of each operating parameter during testing should be representative of furnace's operating range for the parameters in the 12 months previous to testing.

MPCA does not explain how it determined that such a small data set was representative of 12 months of operation. Furthermore, testing should have been done under operating conditions that represent BART, as determined previously by MPCA to be good combustion parameters and scrubber optimization. Instead, the incentive for the companies was to operate at the highest emitting levels during the testing. There is no other documentation in the Supplement regarding whether BART operating practices were being followed during the tests.

A further concern is the use of a 99% confidence interval; in other recent permit-related work, the MPCA has used 95%. The MPCA chose a 99% value: due to the need for limits to be met during all operating conditions, including during times of stattup, shutdown, and malfunction.

Other technology-based limits, such as best available control technology (BACT) limits, are not set this way. The correct way is to set a separate limit for statiup, shutdown, and malfunction (SSM) conditions and one for regular operations. Otherwise, if an overall limit were set to encompass all possible emission scenarios (normal operations and SSM), the resulting limit would be inflated and not represent the capabilities of BACT. We believe a similar approach should be taken for BART.

2 

### US Steel Minntac Line 6 

### Low NOx 

### Burner Final Report and Facility NOx 

### Management, 12/1/11


### 2

### In addition to our concern about the confidence level chosen for its statistical analyses, MPCA did not use a valid statistical approach in setting its limits. For example, most of the data distributions were skewed, and some were not close to "normal" in the statistical sense. We saw
no explanation of any adjustments made to the data to yield distributions to which conventional statistical procedures could be correctly applied. We therefore have serious concerns about the validity of these statistical analyses.

Our greatest concern is how the limits derived from the statistical analyses were used. MPCA used a (sometimes very small) set of 

### hourly data to estimate an emission rate that could be met 99% of the operating 

### hours. MPCA then assumed that this 

### hourly maximum emission was an appropriate limit to be met on a 

### 30-day rolling average basis. In effect, 

### MPCA is allowing

sources to emit at their almost-maximum one-hour emission rate every hour of every 30- day period. Combined with the use of the 99% level derived from an invalid analysis of a limited data set, the MPCA process artificially inflates the emission limits, which, in the end, do not require the facilities to operate according to BART.



### United Taconite (United) The BART determination for United Taconite is not consistent with the factors required to be considered under the Clean Air Act nor does it follow the conditions in its permit. United has two taconite lines. Previously, it fired primarily natural gas in Line I and coal/coke in Line 2, and this was the operating scenario under consideration when the original BART proposal was made by MPCA. For both lines NOx BART was proposed as good combustion practices. For S01 

### BART, scrubber optimization was proposed for Line I, and a limit of 

### I. 7 pounds of S01 

### per million BTUs (lb/mmBtu) was proposed for Line 2 (that could be met with a scrubber and/or fuel blending).

Mike Ward, the Superintendent of Voyageurs National Park personally testified at your June 22, 20 I 0 Board meeting: Today, we are discussing a permit which, if approved, would take future emissions reductions promised by the Minnesota Regional Haze Plan and use them to allow a separate planned increase in emissions as a way of avoiding scrutiny under the PSD program. This scheme would effectively negate the intended benefits of both programs.

As we have stated in our written comments, the Park Service doesn't believe such an emissions netting arrangement is legal. Even if EPA determines that this "double-counting" of emissions 

### is allowed under a temporary loophole, the NPS believes that it flies in the face of Minnesota's Regional Haze Plan and is poor public policy.

About eight months ago, many of us were here in this same room, before this Board, discussing Minnesota's Regional Haze Plan. That plan was developed specifically to reduce the impacts of regional haze on areas such as Voyageurs and Isle Royale National Parks.

In December of 2009 this Board found the following conclusions of law to be evident enough to approve the RHSIP: 

## * The Board concluded that the plan contained reasonable progress goals, calculations of baseline and natural visibility conditions, long term strategies for regional haze, and monitoring strategies,

as required under 40 CFR.

3*The Board concluded that the reasonable progress goals provide for reasonable progress towards natural visibility conditions and an improvement in visibility for the most impaired days while ensuring no degradation in visibility for the least impaired days. *The Board concluded that the plan contained appropriate Bart determinations and emissions limitations, as required under 40 CFR, that will achieve emission reductions that contribute to visibility impairment in the three Class I areas impacted by Minnesota facilities.

These conclusions then led to an "order" by the Chair that stated the MPCA hereby "adopts", and directs the commission to submit the plan to the EPA for approval. Today all of these conclusions of law and the order to "adopt" the RHSIP are being placed in a position in which they are no longer conclusions of law nor are they adopted by the MPCA as ordered by the chair.

Not all of us approved of every provision of that plan, and some of us believed it was not aggressive enough in reducing pollution, but we all agreed it was an important step in improving visibility in our parks and wilderness areas. That plan was approved by this Board and is currently under EPA review. Based on the permit proposed today, we are left wondering what that approval meant. We are especially concerned that we were not advised at that time that Utac had submitted a complete application in July 2008 for this major modification of its operation. We find it inconceivable that emissions reductions promised under the Minnesota Regional Haze Plan may be used as a "get out of regulation free" card.

We provided compelling evidence that the MPCA's own analysis showed the Line 2 S02 limit should be 0.68 lb/mmBtu.

Despite the concerns we publicly expressed to you, in August 2010, MPCA issued United a permit for a plant expansion that also allowed Line l to burn coal. United used the BARTrequired emission reductions at Line 2 to avoid Federal New Source permitting requirements for the expansion. The MPCA included a condition to address BART on the now coal-fired Line l: Within 120 days of being notified by the MPCA in writing of the final proposed NOx BART limits for Lines I and 2 (EU 040 and EU 042), the Permittee shall submit an application for a permit amendment to incorporate into its air emissions permit either (I) NOx and S02 BART emission limits as proposed or (2) a BART alternative as described in the December 2009 Regional Haze State Implementation Plan submittal.
Alternatively, the Permittee may submit, within 120 days of the written notification, an updated BART analysis based on the modified Lines I and 2 for the facility with an appropriate permit amendment application to incorporate proposed NOx and S02 BART limits into its air emissions permit

The Supplement states "On December 8, 20 ll, United Taconite proposed that the NOx and S02 limits set as part of the abovementioned permit amendment be incorporated as the BART limits for the facility." 

### It appears that the option chosen by United is not one of the three included in their permit. Nonetheless MPCA proposes to accept these limits "because these limits provided greater annual reductions ofNOx and S0 2 than would be provided 

### by the MPCA's initial BART limits."



### 4

### We share the concerns expressed by the USFS in its January 13,2012 comments to you: 

### • It is unclear how United's proposal complies with its permit requirement.

• The "reductions" in United's proposal were calculated from an inflated baseline.

• The combination of these factors results in paper emission reductions.

We support the USFS request that MPCA submit a full BART analysis for coal-fired Line I and correct both the S0 2 

### and NOx BART analysis for Line 2. The BART proposal in the Supplement does not include a consideration of the Clean Air Act factors for BART. It 

### is irrelevant that the emission limit chosen is less than both an inflated baseline value, and an inflated, initial BART determination. Instead, the emission limit should be selected as an outcome of a proper analysis of the BART factors.



### 5

# United States Department of the Interior
NATIONAL PARK SERVICE Air Resources Division P.O. Box 25287

!tiRI'J'lYREFERTO 

### Denver, CO 80225 

### September 

### 3, 2009



### N3615 (2350)

Ms. Catherine Neuschler Minnesota Pollution Control Agency 

### 520 Lafayette Road St. Paul, Minnesota 55155

Dear Ms. Neuschler: 

# If=: .I

# ~"" TAKE PRiDE' INAMERICA



### Following are our general comments on the Minnesota Pollution Control Agency's (MPCA's) current Best Available Retrofit Technology (BART) proposals for the Electric Generating Units (EGUs) located in Minnesota that are subject to BART. These comments update and supplement the comments that we provided on June 

### 26, 2009. While we recognize that many of the MN EGUs (especially MN 

### Power) are making large investments toward reducing their emissions, we believe that significant additional reductions can be 

### achieved and are warranted under the BART program. We have enclosed detailed comments that further support our position on the specific BART proposals.

Purnose of the BART Program The core purpose of the BART program is to improve visibility in our Class I areas. BART is not necessarily the most cost-effective solution but instead, BART represents a broad consideration of technical, economic, energy, and environmental (including visibility improvement) factors. We believe that it is essential to consider both the degree of visibility improvement 

### in a given Class 

### I area as well as the cumulative effects of improving visibility across all of the Class I areas affected. Voyageurs National Park (NP) in Minnesota and Isle Royale NP in Michigan are two Class I areas administered by the National Park Service that are currently impacted by MN EGU s.

Level Playing Field It 

### is important that regulatory agencies provide a level playing field and that they treat similar emission sources in a similar manner, unless exceptions are properly documented and justified. It 

### is also generally accepted, given economies of scale, that the large EGU s should 

### be more-stringently-controlled than the smaller EGUs. (We suggest that the MN EGUs can be divided into two categories-above 370 MW capacity and below 80 MW capacity.) Instead, within the large EGU category, there appears to be 

### a trend of declining stringency as the size of the EGU increases, and some of the smaller EGUs would actually be required to meet tighter limits than some of the larger EGUs. This is

### 2

especially apparent when one compares the higher limits proposed for Units #I and #2 at Xcel 's I ,400 MW Sherco fucility to the lower limits proposed by Minnesota Power for its 375 MW Boswell #3 (see table below). While we are pleased that the citizens of the Twin-Cities metropolitan area would receive some relief from Xcel's emissions, Xcel and the other EGUs still must address their impacts in Voyageurs and Isle Royale NPs. In the smaller EGU category, where the EGUs are virtually identical in size, we see that Minnesota Power has proposed the lowest Nitrogen Oxide (NOx) limits for its Taconite Harbor #3.

P dNO L'

rOJ)OSe 

### ' 1m1ts Proposed Operating Boiler Proposed Limit Company Plant Unit Type Fuel Rating Control (lb/mmBtu)

X

eel Sherburne County Unit subEneri!Y Generatinsz Station #I**tam~ential** bituminous 690 LNB+SOFA 0.15 X

eel Sherburne County Unit sub- Combustion Energy Genetllting Station #2 tangential bituminous 683 OntirnLzation 0.15

X

eel Allen S. King Unit ;u\). EnerlO' Generatin2 Plant #I**~vclone** bituminous 550 SCR 0.10
Minnesota Boswell Energy Unit subPower Center #) tangential bituminous 375 LNB+OFA•SCR 0.07
North shore Silver Bay Power Unit subMining Plant #2 wall-fired bituminous 75 LNB+OFA 0.41 Minnesota Unit bit/subPower Taconite Harbor #)**tan~ential** bituminous 75 ROF A/Rotamix 0.13 Rochester

Pub lie Unit Utilities Silver Lake Plant #4**wall-f~red** bituminous 60 ROFA!Rotamix 0.25

P SO I I

ronoMrl L m ts Proposed Operating Rating Proposed Limit Company Plant Unit Fuel 

### (MW) Control (lb/mmBtu)

X

eel Sherburne County subEnergy Generating Station Unit #I bituminous 690 FGD uoltrade 0.12 Xcel Sherburne County sub**Ener~ Generatin~**  Station Unit #2 bituminous 683 FGD UPJttade 0.12 Xcel Allen S. King subEnergy Generatino Plant Unit#l bituminous 550 FGDunorade 0.12 Minnesota Boswell Energy subPower Center Unit #3 bituminous 375 wetFGD 0.09 N

onhshore Silver Bay Power subMining Plant Unit#2 bituminous 75 LSD+FF 0.06* Minnesota bit/sub- FSI and new

Power Taconite Harbor Unit #3 bituminous 75 FF 0.32 Rochester

Public Utilities Silver Lake Plant Unit #4 bituminous 60 dry FGD 0.60 *MPCA has proposed an alternate hnnt for 

## so, at 0.48 lb/mmBtu at Nonhshore.

### 3

Proposed Tota IPM L' ' lto 1mds Proposed Operating Rating Proposed Limit Company Plant Unit Fuel (MW) Control (lb/mmBtu)

Xcel Sherburne County sub- existing wet EnerJtV Generating Station Unit #I bituminous 690 ESP 0.090

Xcel Sherburne County sub- existing wet Energy Generating Station Unit#2 bituminous 683 ESP 0.090

Xcel Allen 

## s. King subEnergy Generating Plant Unit#l bituminous 550 FF 0.030 Minnesota Boswell Energy subPower Center Unit #3 bituminous 375 FF 0.035 Northshore Silver Bay Power subMining Plant Unit #2 bituminous 75 existinR FF 0.094' Minnesota bit/sub- FSI and new

Power Taconite Harbor Unit #3 bituminous 75 FF 0.012 Rochester

Public dry FGD w Utilities Silver Lake Plant Unit #4 bituminous 60 

### FF 0.400 '0.046 gr/dscf


### Five-step BART Process It 

### appears that MPCA has attempted to ''re-brand" control programs already adopted 

### by the EGUs to meet other requirements and take advantage of state rate recovery allowances, as satisfyinf BART, without conducting the required five-step BART analyses for Boswell #3. Even when the five-step analysis is not a requirement, MPCA must still show (as it tried to do in its analysis for Northshore Mining) that it achieved an equivalent result? While we understand that MPCA has been forced to quickly react to recent EPA decisions affecting the status of the MN EGUs, MPCA has effectively preempted the five-step BART analysis (or 

### its equivalent) by 

### saying that BART is equivalent to BACT, or to whatever the EGU has already committed to installing? This approach is only allowed if MPCA demonstrates that the source has in place, or is committing to, federally-enforceable limits that represent the most stringent level of control. 4 

### None of the sources exempted by MPCA from the five-step BART process (or

1 The five-step process is required for EGUs at facilities with a total capacity of750 MW or more (e.g., Boswell, Sherburne County). 'Even though the five-step process is not required for the taconite plants reviewed by MPCA, that process was used by MPCA in its BART determinations for the taconite industry. 1 MPCA repeatedly contends that, because a source has "existing" controls, they must be considered in its BART analysis. While this would be true for controls that truly were existing as of the 2005 publication of the BART Guidelines, to cite controls installed after the BART guidelines became known as reasons for requiring less than BART is not appropriate. 'According to the BART Guidelines, "If you fmd that a BART source has controls already in place which

are the most stringent controls available (note that this means that all possible improvements to any control devices have been made), then it is not necessary to comprehensively complete each following step of the BART analysis in this section. As long as these most stringent controls available are made federally enforceable for the purpose of implementing BART for that source, you may skip the remaining analyses in this section, including the visibility analysis in step 5. Likewise, if a source commits to a BART4

its equivalent) meet that criterion. Without a five-factor analysis (or its equivalent) from the company or MPCA, it is difficult for us to fully evaluate whatever reasoning went into the MPCA proposal. Although we agree with MPCA that "different facilities may end up with different controls or emission limits due to site-specific factors," MPCA should explain how those site-specific factors influenced its decisions. Therefore, we recommend that MPCA either adopt limits that really are the most-stringent, or move quickly to complete the five-step, or equivalent, BART process.

In general, Steps #I (IdentifY all available retrofit options) and #2 (Eliminate technically infeasible options) of the BART process were adequately addressed, so we shall begin at: 

### Step 3 - Evaluate Control Effectiveness On page 

### 370 of its responses to comments, MPCA states that, "The MPCA has chosen in general, to accept each facility's determination of how effective a given control technology will be at that facility." As a result, MPCA and the BART sources have consistently underestimated the abilities of established pollution control technologies (e.g., wet scrubbers and Selective Catalytic Reduction) to reduce emissions. MPCA should also evaluate potential upgrades to the existing control equipment.

MPCA's estimates of control effectiveness appear inconsistent. For example, MPCA has determined that a spray dryer/fabric filter system can meet 

### 0.06 lb S0 2 /mmBtu at Northshore Mining's Unit 2, but the same system would only be required to meet a limit ten-times higher at Rochester Public Utilities' Silver Lake Unit 

### #4. And, even for the inherently more-efficient wet scrubbing systems at the larger EGU, the 

### S0 2 limits would be 

### SO% to 

### 100% higher than 

### S02 BART at Northshore. MPCA should explain these inconsistencies.


### Step 4- Evaluate Impacts and Document Results MPCA has accepted at face value cost estimates presented by the EGUs. 5 In the case of the Northshore Unit 2, those overestimates were so egregious that MPCA conducted its

own analysis, and we commend MPCA for that. However, Xcel submitted estimates that consistently exceeded national norms without the supporting documentation or analyses required by the EPA BART Guidelines.

determination that consists of the most stringent controls available, then there is no need to complete the remaining analyses in this section."
3 On page 376 of its responses to comments, MPCA states that, uThe MPCA relies on its permittees to understand their facilities, as well as the engineering, fmancing, construction and air pollution control equipment marl<.ets well enough to properly estimate project costs."5

While it is appropriate to consider incremental costs in addition to average costs, we have

a concern with the over-emphasis placed by MPCA upon this factor and with the way in which the incremental cost analysis was conducted. 6 Because, in most cases, the cost of pollution control rises exponentially with control efficiency, the slope of the cost-versusefficiency curve will also increase. For this reason, rigid use of incremental cost effectiveness will always result in the choice of the cheapest option if carried to this extent. (For example, if this approach were used to evaluate particulate controls, 

### it is likely that all controls more expensive than a multiple cyclone would be rejected.) According to the NSR Workshop manual, "As a precaution, the difference in incremental costs among dominant alternatives cannot be used by itself to argue one dominant alternative is preferred to another." Instead, it should be used to compare closely performing options.
Step 

### 5 - Evaluate Visibility 

### Impacts MPCA repeatedly states that, "Because [a given unit's] effilSSIOn reductions were included in the overall SIP modeling (see Tables 

### 8.1 and 

### 8.4 of the SIP), the visibility impact of the reductions at [the given unit] were considered." Only for Sheree and Northshore were the visibility impacts of any of the BART options specifically evaluated. 7 This fifth-step of the BART process is essential for assessing the ability of a potential control strategy to address the fundamental purpose of the BART program. And, this fifth-step can provide information critical to determining the true cost-effectiveness of 

### a visibility-improvement strategy. This analysis can also provide useful information on the relative importance of, for example, reducing NOx versus**S~** emissions from a given

source. Based upon the limited data provided, it appears that, on a per-ton basis, reducing NOx provides greater visibility benefits than reducing 

### S0 2 in the cool, moist climate of northern MN.

We believe that it is appropriate to consider both the degree of visibility improvement in

a given Class I area as well as the cumulative effects of improving visibility across all of the Class I areas affected. It simply does not make sense to use the same metric to evaluate the effects of reducing emissions from a BART source that impacts only one Class I area as for a BART source that impacts multiple Class I areas. And, it does not make sense to evaluate impacts at one Class 

### I area, while ignoring others that are similarly significantly impaired. If we look at only the most-impacted Class I area, we ignore that the other Class 

### I areas are all suffering from impairment to visibility "caused"s by the BART source. It follows that, if emission from the BART source are reduced, the benefits will be spread well beyond only the most impacted Class 

### I area, and this must be accounted for.**~PA** BART Guideline: "You should consider the incremental cost effectiveness in combination with the average cost effectiveness when considering whether to eliminate a control option."

... uYou should exercise caution not to misuse these [average and incremental cost effectiveness] techniques

... [but consider them in situations where an option shows]

... slightly greater emission reductions

.. ," 7 Even though Northshore did provide some visibility modeling results, no analysis was provided for the critical comparison of the alternative BART options, as explained in our comments sped fie to that facility. 1 EPA defmes a source with an impact greater than one deciview as "causing" impainnent.

### 6

The BART Guidelines represent an attempt to create a workable approach to estimating visibility impairment. As such, they require several assumptions, simplifications, and shortcuts about when visibility is impaired in a Class I area, and how much impairment is occurring. The Guidelines do not attempt to address the geographic extent of the impairment, but assume that all Class I areas are created 

### equal, and that there is no difference between widespread impacts in a large Class 

### I area 

### and isolated impacts in 

### a small Class 

### I area. To address the problem of geographic extent, we have been looking at the cumulative impacts of a source on all Class I areas affected, as well as the cumulative benefits from reducing emissions. While there are certainly more sophisticated approaches to this problem, we believe that this is the most practical, especially when considering the modeling techniques and information available.
Compared to the typical control cost analysis in which estimates fall into the range of $2,000- $10,000 per ton of pollutant removed, spending millions of dollars per deciview (dV) to improve visibility may appear extraordinarily expensive. However, our compilation9 of BART analyses across the U.S. reveals that the average cost per dV proposed by either a state or a BART source is $9- $19 million, 10 with a maximum of almost $50 million per dV proposed by Colorado at the Martin Drake power plant in Colorado Springs.

BART 

### Determinations

We.are confused by these apparently contradictory statements on page 371 of MPCA's responses to comments:

• The MPCA's position is that cost-effective controls should be installed, even if they result in limited improvement in visibility, and technically infeasible or not cost-effective controls are not required under BART, even if they result in significant visibility improvement.

• Because of the small visibility impact that would result from controls, the MPCA deemed existing controls and emission limits to be BART. We believe that it is 

### the intent of the Regional Haze program to make visibility improvement a prominent factor in the BART determination process. Therefore, even if only a small visibility improvement would result from revisiting existing controls, MPCA should require any cost effective and technically feasible alternatives.



### Reasonable Progress Even if an EGU is exempt from BART, it may still 

### be subject to review under the Reasonable Progress requirements of the Regional Haze Rule. MPCA may wish to consider additional emission reductions under that aspect of the Regional Haze program.

'http://www. wrapair.org/forums/ssjf/bart.html 10 For example, PacifiCorp has stated in its BART analysis for its Bridger Unit #2 that "The incremental cost effectiveness for Scenario 1 compared with the baseline for the Bridger W A, for example, is reasonable at $580,000 per day and $18.5 million per deciview."

### 7

ln conclusion, we appreciate MPCA's efforts to date regarding the BART process, but we believe that significant additional reductions can be achieved and are warranted. We look forward to working with the MPCA as 

### this process advances. We believe that good communication and sharing of information will 

### help expedite this process, and suggest that you contact Don Shepherd (don shepherd@nps.gov, 303-969-2075) if you have any questions or comments about this document. Sincerely,

# ~~ Chief, Policy, Planning and Permit Review Branch

Enclosures

cc: Trent Wickman. U.S. Department of Agriculture U.S. Forest Service 890 I Grand Avenue Place Duluth, Minnesota 55808

John Surnmerhays U.S. EPA Region 5 77 W. Jackson Boulevard (AR-l8J) Chicago, Illinois 60604

# United States Department of the Interior
NATIONAL PARK SERVICE Air Resources Division P.O. Box 25287

INP.EPLYP.EI'EII.To- Denver, CO 80225 September 3, 2009



### N3615 (2350)

Ms. Catherine Neuschler Minnesota Pollution Control Agency 520 Lafayette Road 

### St. Paul, Minnesota 

### 55155

Dear Ms. Neuschler:

## IE:~

# ~"" TAKE PRIDE' INAME:FUCA

Following are our general comments on the Minnesota Pollution Control Agency's (MPCA's) current Best Available Retrofit Technology (BART) proposals for the taconite plants located in Minnesota that are subject to BART. Due to their similarity, for the most part, the taconite BART determinations will 

### be addressed as a group. (Certain issues related to United and Keetac will be addressed in separate enclosures.) We will focus our review on the indurating furnaces, due to the dominance of their impact over the other BART -eligible units at the taconite facilities.

The recently promulgated Taconite Maximum Achievable Control Technology (MACT) standard represents a BART level of control for particulates from the furnaces; that leaves sulfur dioxide (SOz) and nitrogen oxide (NOx) as the remaining visibilityimpairing pollutants to be addressed from the furnaces.


### Five-step BART 

### Process We commend MPCA for requiring that the taconite plants follow EPA's recommended five-step BART process. However, we have concerns about how those five steps were implemented.


### Steps #1 (Identify all available retrofit options) and #2 (Eliminate technically infeasible options) A couple of key quotes from the EPA BART guidelines are important to keep in mind: "a demonstration of technical infeasibility may involve a showing that there are unresolvable technical difficulties with applying the control to the source 

### (e.g., size ofthe unit, location of the proposed site, operating problems related to specific circumstances of the source, space constraints, reliability, and adverse side effects on the rest of the facility). 

### Where the resolution of technical difficulties is merely a matter of increased cost, you should consider the technology to be technically ftasible." FR 

### 7/6105 pg 

### 39165, emphasis added.

### 2

"Physical modifications needed to resolve technical obstacles do

. not, in and of themselves, provide a justification for eliminating the control technique on the basis of technical infeasibility." FR 7/6/05 pg. 39165.



### Common Control Options Rejected as Technically Infeasible


### Rejected Sulfur Dioxide Controls

The option of modi tying the existing scrubbers was dismissed in the BART report from every facility as not being available and therefore not being technically feasible. The

reasons stated included corrosion of the process water handling system and the creation of solid wastes. Sulfur scrubbing technology has been in existence since the 1960's. The issues described above are not new, unique, or insurmountable. In addition, these issues

are not technical-feasibility issues but are economic-feasibility issues. The BART proposals did not provide the cost data for this option, so how economically infeasible they may, or may not be, is unknown.

The dry scrubbing options (Dry Sorbent Injection and Spray Dry Absorption) were deemed technically infeasible because the high moisture content ofthe gas stream would

cause blinding of the baghouse typically used downstream of the lime injection. However, these facilities should investigate the application of a wet electrostatic precipitator (ESP) downstream of the lime injection point, instead of a baghouse. Or, these facilities could investigate injection of lime upstream of the wet ESP that they have deemed technically feasible.

Coal Processing was eliminated because these facilities do not consider it to be commercially available.

Alternate Fuels were rejected on the premise that EPA did not intend to promote fuelswitching. However, this does not preclude evaluation of lower sulfur fuels. In its BART preamble, EPA states, "Our economic analysis suggests that switching to low sulfur fuel oil is a cost effective method in reducing S02 emissions from oil fired units."' EPA's BART Guidelines recommend that, "

... for oil-fired units, regardless of size, you should evaluate limiting the sulfur content of the fuel oil burned to I percent or less by weight. " 2 We believe that evaluation of lower sulfur oil, coal, and petroleum coke is also appropriate for those taconite facilities that already burn any of those fuels.


### Rejected Nitrogen Oxides Controls

All facilities rejected Low Temperature Oxidation (LoTOx) on the basis that it is not technically feasible because 

### it has not been used on an indurating furnace.

The issue of control of NO, from taconite furnaces has been approached in the past within the context of two Prevention of Significant Deterioration (PSD) permits: Minntac

1 p 159 of the BART Preamble 1 

### P 363 of the BART Guidelines

### 3

backwards PSD permit and the PSD permit for Minnesota Steel. Minntac is a grate-kiln furnace and Minnesota Steel is a straight grate furnace. This discussion initially focused

on the application of selective catalytic reduction (SCR) and more recently has looked at LoTOx.

• In the Minntac case, in a letter dated October 22, 2003, the MPCA determined that SCR was technically feasible but not economically feasible. This configuration assumed reheating of the waste gas. The cost per ton calculated

was sensitive to the assumed cost of natural gas and was "at or above the upper range of economic feasibility," and was rejected as best available control technology (BACT).

• In a letter dated August 18, 2006, the MPCA assessed the applicability of LoTOx at 90% control efficiency to Minntac and concluded that LoTOx was technically and economically feasible, and therefore BACT. Minntac is now required to test LoT Ox.

• In their PSD permit, Minnesota Steel and MPCA proposed Lo TOx on the waste gas stack at 90% control efficiency for their taconite furnace.

In summary, MPCA has declared that LoTOx is BACT for one type of taconite furnace (straight grate) and will soon require testing on the other (grate kiln). The technical feasibility issues brought up in the BART proposals for each fucility have been addressed by the developer of the technology and in the analyses above. This supports MPCA's conclusion that LoTOx is a viable candidate for BACT, and 

### that LoTOx can be applied to both types of indurating furnaces. In order to avoid further analysis of LoTOx, the other taconite plants must show why their indurating furnaces are so different from those at Minntac and MN Steel as to 

### preclude its application. Otherwise, they must evaluate LoTOx by applying the remaining BART factors.

All facilities eliminated Regenerative Selective Catalytic reduction (RSCR) on the basis that it was technically infeasible, citing several reasons:
• Taconite dust is different from boiler ash. (True, but SCRs have been successfully located in "high-dust" areas downstream of coal-fired boilers and upstream of particulate control equipment.)

• Taconite dust is erosive. (True, but so is flyash.)

• RSCR has not been applied downstream of a wet scrubber. (Why is this a problem for RSCR but not for SCR?)

• SCR catalyst may oxidize mercury. (That is a positive benefit of SCR.) We would like to see a response to these comments by a reputable vendor of RSCR. Furthermore, it is generally assumed that converting mercury to its oxidized state is a desirable co-benefit of SCR, which presents the opportunity to more easily capture it with

a wet scrubber. Considering that all taconite facilities determined that conventional SCR is technically feasible, even though it has never been applied to a taconite furnace either, it appears that the taconite industry approach is biasing the analysis away from a potentially viable alternative (RSCR) and toward an alternative (SCR) that can be easily rejected later. (See the "Straw Man" discussion below.)

### 4

Common Control Options Accepted as Technically Feasible

All but Northshore depend upon Venturi-rod wet scrubbers for particulate removal and

assume that these scrubbers also remove 15% · 30% of the uncontrolled S02. (Northshore

uses a wet ESP which it assumes removes 90% of the uncontrolled 80 2 .)


### Step 3 - Evaluate Control Effectiveness

S0 2 : 

### Addition of a Wet-Wall Electrostatic Precipitator (WESP) was assumed to remove 80% of the remaining S0 2 

### in the gas stream, regardless of the degree of 

### SOz removal already achieved. The facilities assume that an additional Wet Scrubber would remove 60% of the remaining S0 2 regardless of the degree of S0 2 

### removal already achieved. These facilities contend that the low scrubber efficiency estimate is due to the more dilute concentration of S0 2 

### in the exhaust gas stream due to much greater excess air in the indurating furnaces than in a boiler. However, we do not understand why a wet scrubber specifically designed for S02 removal would be less effective than a WESP which is

more typically used to remove PM. We suggest that the wet scrubber would be able to achieve at least the same 80% additional S0 2 control as the WESP. 3 

### The facilities should provide documentation to show why they cannot achieve a similar level of control with a wet scrubber. We also do not understand why the efficiency of the add-on controls would be independent of the degree ofremoval of the existing controls.



### NOx: Even though it has never been applied to a taconite furnace, all facilities assumed that addition of conventional SCR would reduce NO, emissions by 80%, regardless of the type of indurating process to which it would be applied. We understand that SCR can reduce 90% of the NO, in a given gas stream, but that it is most effective when applied to gas streams with relatively high NO, concentrations, such as the grate/kiln exhausts and the waste gas exhausts from the straight-grate kilns. We believe that a valid evaluation of SCR would consider these factors.
Step 

### 4 - Evaluate Impacts and Document 

### Results

BART Cost Ceilings for**SO~** 

### and NO, Control

All facilities presented a BART cost range for S0 2 

### and NO, of $1,000- $1,300 per ton as
a firm guideline that became the basis for deeming technically feasible control options as having unacceptable costs. All facilities postulated these ranges from information found in the Clean Air Interstate Rule (CAIR) and a few court cases.

All facilities appear to be confusing the costs incurred in BART versus costs incurred in trading programs such as CAIR. Any cost ranges derived from CAIR proceedings might be considered as relevant, but certainly not definitive. Any use of the value of a CAIR emission trading allowance to establish a BART cost range is erroneous, because the basis for the CAIR rule is reduction of 

### S0 1 

### and NO, emissions more cheaply than similar

'In its March 2007 pennit application, Minnesota Steel estimated that a wet scrubber could remove 90% of the SO, from both the hood exhaust and the Wll.!te giL! exhausts on its straight-grate indurating furnace.

### 5

reductions achieved on a technology basis. Again, court verdicts regarding a specific set of circumstances should not be relied upon to set a particular cost range, because many differences in relevant facts may exist between the BART source and the litigant.

We reject the adoption by a BART -eligible source of a specific BART cost range above which technically feasible control options are arbitrarily deemed to 

### be unacceptable. All of the above·narned references to cost are relevant considerations, but the particular circumstance of the source (fmancially and with respect to the magnitude of necessary visibility improvements to be achieved now and in the future) bears heavily on acceptable cost ranges.

"Universal" Retrofit Cost

The taconite consultant should describe its "experience with similar projects" that allowed it to estimate a 60% retrofit factor for all of the retrofit technologies evaluated at every facility. We doubt that each situation presents the same degree of difficulty and warrants the same assumption.

BART "Straw Man"

Each BART analysis appears to bias the analysis toward the option that is most expensive (e.g., WESP, conventional SCR), and away from the option that is most cost-effective (lower sulfur fuels, caustic reagent, dedicated wet scrubbers, LoTOx, RSCR). For example, RSCR, with its 90%

- 95% thermal efficiency was rejected as technically infeasible, while conventional SCR with its 60%

- 70% thermal efficiency was accepted,

even though neither has ever been applied to a taconite furnace. This essentially diverts attention from the option that might actually be chosen by an unbiased analysis.
Step 5- Evaluate Visibility Impacts


### Multiple Class I Areas

One of the factors comprising the BART evaluation is the resulting "degree of improvement in visibility

... " In their analyses, the taconite facilities presented only the visibility improvements that were predicted to occur at the nearest Class I area. Because it is likely that reduced emissions from any of these facilities will result in improved visibility at more than one of the four Class I areas 4 

### for which they are significant contributors to impairment, 5 

### any analysis of visibility improvement should consider these multiple benefits. And, the facilities should model the impacts of their final BART proposals to increase emissions upon visibility at the four Class I areas.

'Boundary Waters Canoe Area(BWCA), Isle Royale National Park (NP), Seney National Wildlife Refuge (Seney), and Voyageurs NP 'The six taconite facilities cause or significantly contribute to impaired visibility in a total of 17 cases
across the four Class I areas.

### 6

We believe that it is appropriate to consider both the degree of visibility improvement in

a given Class I area as well as the cumulative effects of improving visibility across all of the Class I areas affected. It simply does not make sense to use the same metric to evaluate the effects of reducing emissions from a BART source that impacts only one Class I area as for a BART source that impacts multiple Class ! 

### areas. And, it does not make sense to evaluate impacts at one Class I area, while ignoring others that are similarly significantly impaired. If we look at only the most-impacted Class I area, we ignore that the other Class I areas are all suffering from impairment to visibility "caused" 6 

### by the BART source. 

### It follows that, if emission from the BART source are reduced, the benefits will be spread well beyond only the most impacted Class I area, and this must be accounted for.

The BART Guidelines represent an attempt to create a workable approach to estimating visibility impairment. As such, they require several assumptions, simplifications, and shortcuts about when visibility is impaired in a Class I area, and how much impairment is occurring. The Guidelines do not attempt to address the geographic extent of the impairment, but assume that all Class I areas are created equal, and that there is no difference between widespread impacts in a large Class I area and isolated impacts in a small Class I area. To address the problem of geographic extent, we have been looking at the cumulative impacts of a source on all Class I areas affected, as well as the cumulative benefits from reducing emissions. While there are certainly more sophisticated approaches to this problem, we believe that this is the most practical, especially when considering the modeling techniques and information available.
Compared to the typical control cost analysis in which estimates fall into the range of $2,000 • $10,000 per ton of pollutant removed, spending millions of dollars per deciview (dV) to improve visibility may appear extraordinarily expensive. However, our compilation' of BART analyses across the U.S. reveals that the average cost per dV proposed by either a state or a BART source for an Electric Generating Uuit (EGU) is $9 • $19 million, 8 

### with a maximum of almost $50 million per dV proposed by Colorado at the Martin Drake power plant in Colorado Springs.

BART Determinations
Although the taconite industry, which is already responsible for very large impacts on visibility in the northern Class I areas, is actually proposing to increase emissions and impacts, MPCA has proposed limits which would keep those increases to a minimum, and, in some cases (as discussed in separate enclosures) reduce emissions. Nevertheless,

we believe that the taconite facilities should bear a similar share of the burden as the EGUs which are proposing to reduce emissions significantly.

6 EPA defmes a source with an impact greater than one deciview as "causing" impainnent. ' http://www. wnopair.org/forums/ssjflbart.html ' For example. PacifiCorp has stated in its BART analysis for its Bridger Unit #2 that "The incremental cost effectiveness for Scenario I compared with the baseline for the Bridger WA. for example, is reasonable at $580,000 per day and $18.5 million per deciview."

### 7

We commend MPCA for asserting that (p613) "United Taconite may choose to propose a BART Alternative project that is equivalent or better than BART. The BART Alternative must result in equivalent or greater emissions reductions and visibility benefits from the facility when compared to the MPCA's BART detennination." We ask that MPCA apply this same "greater emissions reductions and visibility benefits" standard to all of its BART alternatives.



### Reasonable Progress Even if a source is exempt from BART, it may still be subject to review under the Reasonable Progress requirements of the Regional Haze Rule. MPCA may wish to consider additional emission reductions under that aspect of the Regional Haze program. One component of MPCA's Reasonable Progress strategy is the Northeastern Minnesota Plan, discussed below.

Wbile MPCA is correct in saying (p64) that "all the estimated future visibility conditions

are moving in the desired downward direction toward natural conditions," they fall significantly short of the Uniform Rate of Progress (URP) needed to achieve that goal by the national target date of 2064. Instead, MPCA's proposed Reasonable Progress Goal (RPG) represents 35% of the URP at Voyageurs NP (and 67% at BWCA. Because it is generally understood that maintaining the URP will become more difftcult as the "low hanging fruit" is controlled, it will likely become even more difficult in the future to attain the URP unless MPCA increases the stringency and expands the scope of its emission reduction efforts. For example, as discussed below, MPCA could reduce its BART-exemption threshold to a value lower than the maximum 0.5 dv allowed by the BART Guidelines.

We ask that MPCA reconcile the following statements:

• p369: "The MPCA agrees with the commenter that imperceptible visibility improvement is not a justification for rejecting otherwise feasible and costeffective controls.

• p37I: "The MPCA's position is that cost-effective controls should be installed,

even if they result in limited improvement in visibility

... "

• p67: "Although the MPCA could set the contribution threshold lower than 0.5 deciviews and is cognizant of a number of existing sources in close proximity to Class I areas, the modeling showed no sources causing impacts at levels just slightly below 0.5 deciviews. Tbe 9Sth percentile deciview values for those subject-to-BART range from 0.6

- 4.4 deciviews, while the 98th percentile deciview values for those not subject-to-BART range from 0.0- 0.4 deciviews."

MPCA goes on to say that: A total of 15 facilities with BART-eligible sources were determined not subject-to-BART based on the 0.5 deciview threshold. Of those IS facilities, three are subject to the Northeast Minnesota Plan [Boise Wbite Paper, Hibbing Public Utilities, Virginia Public Utilities] and three are EGUs [Austin Public Utilities, Xcel-A.S. King, Otter Tail Power-Hoot Lake] that were initially subject to CAIR Minnesota was initially included in CAIR, leading many utilities to install controls in anticipation of CA!R compliance.8

EPA has recently published a proposed stay of CAIR in Minnesota until there is a repromulgated CAIR rule. Should Minnesota not be included in a re-promulgated rule, two of the three EGUs that showed modeling results closest to the BART threshold (Austin Public Utilities and Otter Tail Power Hoot Lake) will be re-evaluated for reasonable progress controls at the time of the Five Year SIP Assessment.

Based on these facts, the application of BART would likely have little impact on the emission reductions expected from these facilities. Of the remaining nine facilities not subject to the Northeast Minnesota Plan or initially subject to CAIR, all have 98th percentile deciview values of0.2 deciviews or less. Therefore, MPCA did not readjust the contribution threshold chosen for exempting sources from BART.

NPS believes that, in view of MPCA's failure to meet URP and its own commitment to require installation of cost-effective controls, "even if they result in limited improvement in visibility," MPCA should expand its BART or Reasonable Progress (RP) analyses to at least include sources (Boise White Paper, Hibbing Public Utilities, Virginia Public Utilities) with impacts between 0.2 and 0.5 dv. Inclusion in the Northeast Minnesota Plan does not guarantee that these sources will reduce emissions. Analysis of potential emission reduction strategies under the BART or RP provisions of the Regional Haze Rule could yield additional and needed emission reductions.

The Northeastern MN Plan

While we agree with the concept inherent in the Northeastern MN Plan, we have serious

concerns about the validity of the 2002 emission estimates upon which the Plan is based. Although we have sufficient confidence in the emission data collected from the Electric Generating Units, that is far from the case with the taconite emission estimates. For example, in its taconite BART analyses, MPCA repeatedly states that, "Due to the lack of sufficient emissions data representing the range of operating conditions that influence emissions, the MPCA is unable at this time to set an emission limit that corresponds to BART for [the source's] indurating furnace." 

### If the emissions data are not good enough for MPCA, then we question its use as a basis for determining the success of the NE MN Plan over the next nine years.

Our concerns are further illustrated by a closer inspection MPCA' s "Northeast Minnesota Plan Emission Tracking Spreadsheet." For all practical purposes, if the 2002 NO, emission estimates for Minntac are correct, then the NE MN Plan target is met with no additional reductions from the taconite industry. If the Minntac 2002 NO, emissions are not correct, then the 2018 target is not met. We request an explanation from MPCA for the reduction in Minntac's NO, emissions from 2002 to 2012 and to 2018.

One of the key elements of the NE MN Plan is that emissions must be accurately estimated and tracked. We understood that MPCA would require installation of Continuous Emission Monitors on all taconite lines to facilitate that process. We are very concerned that MPCA has not done so, and has allowed the taconite plants an option which we do not believe will provide equivalent results.9



### Continuous Emission Monitors (CEMs)

We understand that CEMs or an equivalent alternative were to have been installed or implemented at each of the taconite plants in 2008. However, that process has been delayed due to economic conditions and that ''the MPCA is placing the revised SIP, including Administrative Orders for both CEMs and Alternative Methods, on public notice." 

### (p366) However, at the same time, MPCA has rejected the concerns of the U.S. Forest Service that the alternative method 

### to CEMs that will be used by several of the taconite facilities will not provide accurate enongh data to achieve the aims of the Regional Haze SIP and will not allow facilities to identify operating scenarios that could result in lower emissions. The Forest Service requested that EPA performance specifications for predictive emission systems be used by the MPCA to evaluate the alternate systems. In rejecting that request, the MPCA responded that: The EPA's perfonnance specification was fmalized on March 25, 2009. The latest deadlines for any of the facilities to submit an alternative method proposal was March 1. 2009. The MPCA committed to approve or disapprove that alternate method within 30 days of submittal. Therefore, it was not feasible for the MPCA to evaluate the alternate method against EPA's promulgated perfonnance specification. However 1 the MPCA acknowledges that the federal perfonnance specification may be an appropriate compliance tool to ensure high quality data in the future. 

### If the MPCA has already made an irrevocable commitment ''to approve or disapprove that alternate method" by the end of March, what is the point of now announcing that it is taking comments on those Administrative Orders? Furthermore, what decisions did MPCA make, and upon what bases?
Nevertheless, we shall take this opportunity-our first-to provide our comments on the issue of CEMs and their alternatives. First, it is clear that MPCA recognizes the value of good emissions data as a component of its BART strategies: The MPCA has detennined that continuous emission monitors or a comparable alternative emission measurement method combined with hourly process data can provide data that would be necessary in setting BART NO, limits based on BART as good combustion practices, past installation of Low NOx Burners in the preheat zone and the upcoming implementation of furnace energy efficiency projects in early 2008.

From its experience with electric utilities. refmeries, and other**facilities~** the MPCA notes that strategies to use CEMs to reduce NOx have been successful. The MPCA believes that monjtoring NOx emissions with CEMs or other parametric monitoring at pelletizing furnaces will identify operating conditions under which NOx emissions can be reduced. The MPCA also notes that NOx reductions have occurred at another taconite facility after installing CEMs. While those reductions cannot be directly tied to operational changes identified with the aid of CEMs, this observation strongly suggests that using CEMs at pelletizing furnaces will help reduce NOx through the feedback to the operator and plant management that a CEMs or predictive emission monitoring system provides. Operators
can fme tune the operation since it responds to a number of variables under their control and the results of these adjustments can be seen with a CEMs. Plant management can analyze temporal differences in individual furnace operations and differences in emissioM among similar furnaces to gain understanding of the factors that influence NOx fonnation and apply that knowledge to lower emissions.

### 10

MPCA has approved installation and operation of CEMs for some taconite plants:

• p279: The U.S. Steel facilities will monitor their S()z emissions with Continuous Emission Monitors (CEMs), ensuring that the MPCA will have a more complete and accurate picture of actual emissions, compared to other facilities, and understand how emissions react to changes at the facility.

o Keetac (p6): An 

### SOz Continuous Emission Monitoring Systems (CEMS) will be required to gather data to establish the appropriate BART limit. The CEMS will also be used to determine continuous compliance with that limit. Through Administrative Orders 

### by Consent, the MPCA has required other taconite facilities that use solid fuels with a higher sulfur content (coal) to install S02 Continuous Emission Monitoring Systems and to monitor parameters that are linked to scrubber performance.

• p7: Keetac proposes existing combustion controls and fuel blending as BART, with the installation of continuous emission monitoring systems (CEMS) to monitor NOx emissions. The NOx limit for the furnace will be based on at least twelve months of monitoring data. The MPCA agrees with Keetac's proposal to install CEMS to monitor NOx emissions and to set a limit based on those measurements after acquiring twelve months of emission data.

• Minntac p551: The MPCA has determined that continuous emission monitors combined with hourly process data can provide data that would be necessary in setting BART NOx limits based on BART as good combustion practices, fuel blending and the operation of low-NOx burners for Lines 4, 5, 6, and 7 and combustion controls and fuel blending for Line 3.

o p559: Minntac has agreed to install SOz Continuous Emission Monitoring Systems (CEMS) on the waste gas stacks for Lines 3, 4, and 5; in addition, S01 CEMS and the collection of scrubber operating data are being required through an Administrative Order by Consent to provide more accurate emission data and scrubber operating parameter data for determination of a BART limit for only Lines 6 and 7 where a high sulfur fuel (coal) is burned.

• p532: If HTC decides to monitor S01 emissions with CEMs, the MPCA may adjust the 80 2 

### emission limit based on scrubber performance parameters (e.g., pH) and on the data collected from CEMs.

MPCA has also required CEMs at small EGUs: (p666) Northshore Compliance with the NOx and S02limits will be through the use of CEMs.

We therefore endorse the use of CEMs in the contexts described above, and encourage their use wherever good emissions data are essential and where CEMs are applicable.

We have some major concerns about the potential for the comparable altematives to be equivalent to CEMs:

• MPCA has not presented any evidence or examples that such an approach will work as well as the established CEM method. MPCA has consistently demanded that potential control technologies be demonstrated and proven before considering them as BART. MPCA should apply the same rigorous standard to the methods used to set and to verify compliance.II



### • MPCA should provide assurance that it is capable of obtaining the data necessary to adequately assess and evaluate the proposed alternatives. We are especially concerned by the apparent inability ofMPCA to obtain data it had twice requested from United Taconite, which twice "declined" to comply with MPCA 's requests, with no adverse consequences, as described below (by MPCA): p608: The MPCA requested that United Taconite amend the BART analysis to include an additional control technology- a new recirculating particulate matter wet scrubber to replace existing equipment on Line 2 to achieve an overall S02 control efficiency of at least 60%. When United Taconite declined to provide such information, the MPCA contracted with STS Consultants to prepare the cost estimate. The fmal cost estimate was completed by the MPCA, and is dated July 30,2007. The fmal cost estimate is attached. The MPCA also requested an analysis of alternative fuel blends (coal and petroleum coke) for Line 2 as an S02 control alternative. United Taconite dedlned to provide ouch analyoio. As a result, the MPCA prepared separately its analysis of fuel blends.



### We strongly believe that CEMs should be the preferred and presumptive method to determine emissions, and that any alternative approach should be used only if CEMs cannot be relied upon due to site-specific circumstances or that the alternative meets or exceeds the EPA performance specifications for predictive emission systems. We also request assurance from MPCA that it has the authority to obtain any information it needs from a source to ensure that any proposed alternative monitoring strategy can be successfully and transparently implemented.

In conclusion, we appreciate MPCA 's efforts to date regarding the BART process, but we believe that significant additional reductions can be achieved and are warranted. We look forward to working with the MPCA as this process advances. We believe that good communication and sharing of information will help expedite this process, and suggest that you contact Don Shepherd (don shepherd@nps.gov, 303-969-2075) if you have any questions or comments about this document.
Sincerely,

# £:~ Chief, Policy, Planning and Permit Review Branch

Enclosures

cc: Trent Wickman. U.S. Department of Agriculture U.S. Forest Service 8901 Grand Avenue Place Duluth, Mitmesota 55808 John Surnmerhays U.S. EPA Region 5 77 W. Jackson Boulevard (AR-18J) Chicago, Illinois 60604

### BART Determinations for United Taconite National Park Service {Seotember 3, 2009)

On page 379 of the Response to Comments, the U. S. Forest Service (USFS) states that the MPCA's S02 BART detennination for United Taconite of 1.7 lbslmmBtu, based on fuel blending, was selected inappropriately. The USFS notes that the memo states that fuel blending was selected because"!) it does not require additional construction, 2) is quicker, and 3) avoids further degradation of water quality." The USFS believes that the first two reasons are not included as factors for consideration 

### by the Clean Air 

### Act. The USFS also states that reason 3 does not appear to be valid because water treatment costs
are included as part of overall scrubber costs, sulfate treatment has been implemented at Minntac and is pr edicted to improve the quality of the tailing basin discharge, and therefore it is not clear that water quality would be degraded with a scrubber option. As the MPCA determined that all options are cost-effective, the USFS believes that fuel blending plus a polishing scrubber represents BART, with 

### an emission limit of 0.68 lbslmmBtu.

MPCA Response: The regulations at 40 CFR 51.308(e)(I)(ii)(A), mentioned by the commenter, specify certain mandatory criteria. The criteria are not identified as the exclusive criteria, however.

The consideration of the water quality drawbacks of scrubbing is part of the evaluation of "energy and nonair quality environmental impacts." A BART determination that does not exacerbate existing water quality issues is appropriate; when a BART determination is available that does not require extensive mitigation of nonair quality impacts such a determination should be strongly considered. Although the USFS states that sulfate treatment at Minntac "is predicted" to improve the quality of the discharge, the MPCA notes that this improvement has not yet been demonstrated. In addition, considerable energy usage is necessary for water treatment. Therefore, the MPCA believes its BART limit of I. 

### 7 lbs S0 2 /mmBtu 

### heat input is reasonable and appropriate, and has been demonstrated as such using the five factors.

NPS: MPCA cannot "derive" additional reasons to exclude a control technology. Furthermore, only those "energy and nonair quality environmental impacts" that cannot be evaluated as part of the technical economic feasibility analyses should be considered under that category. MPCA should provide reasons why it does not believe that sulfate treatment at Minntac would improve the quality of the discharge.
p612: The BART limit for Line 2 is 1.7lb S02/MMBtu heat input. This S0 2 

### 1imit can be met through modifying fuel blends; however, it could also be accomplished through use of additional air pollution control equipment. This limit is a 30-day rolling average, using S0 2 flue gas monitors. The emissions limit can be met through fuel changes, additional air pollution control equipment, or a combination of both.

NPS: MPCA should explain how it derived this limit.

### BART Determinations for Keewatin Taconite National Park Service (September 3. 2009)

MPCA p3: The permit for the US Steel

- Keetac facility allows the combustion of natural gas, distillate fuel oils, coal, and petroleum coke in the pelletizing furnace. Coal and natural gas are the primary fuels; coal is a significant source of sulfur. Another

source of sulfur emissions from this furnace is the iron ore used to form the green balls, although this represents a smaller contribution than the sulfur in the solid fuels burned. Sulfur dioxide emissions are currently controlled by wet scrubbers.

MPCA pS: The MPCA reviewed the BART analysis provided by Keetac and agrees with Keetac's assessment of technical infeasibility for Dry Sorbent Injection, Spray Dryer Absorption, Alternate Fuels, and Coal Processing.

NPS: MPCA should explain why it considers it teclmically infeasible for Keetac to burn

a lower-sulfur coal.ALASKA CALIFORNIA FLORIDA MID-PACIFIC NORTHEAST NORTHERN ROCKIES NORTHWEST ROCKY MOUNTAIN WASHINGTON, DC INTERNATIONAL



### February 3, 2012

Via Electronic and U.S. Mail

Catherine Neuschler Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 Lafayette Road North St. Paul, MN 55155-4194
Re: Minnesota Regional Haze Draft State Implementation Plan Supplement

On behalf of the National Parks Conservation Association, the Mi nnesota Center for Environmental Advocacy, the Friends of the B oundary Waters Wilderness, Fresh Energy, and the Voyageurs National Park Asso ciation (collectively, the “Cons ervation Organizations”), we submit these comments on Minnesota’s draft St ate Implementation Plan Supplement (the “Supplement” or “SIP Supplement”).
The most recent SIP Supplement, like the 2009 SIP submittal, does not contain the legally required measures that will ensure reas onable progress toward eliminating visibility impairment in the Boundary Waters Canoe Area Wilderness and Voyageurs and Isle Royale National Parks. In particular, the SIP Supplement does not meet the applicable requirements of the Clean Air Act (“CAA”) in its proposal to substitute the Cross State Air Pollution Rule (“CSAPR”) for best available retrofit tec hnology (“BART”) for electric generating units (“EGUs”) and in the proposed BART determinations (or lack of BART) and in the proposed inadequate monitoring for taconite facilities. Finally, the Minnesota Pollution Control Agency (“MPCA”) submitted the Supplement to the E nvironmental Protection Agency (“EPA”) on January 5, 2012, and EPA has proposed its approv al, all prior to completion of Minnesota’s public comment process. 1 

### Plainly, the public co mment period is not considered meaningful by MPCA given that it has already decided to submit the Supplemen t to EPA and EPA has already proposed its approval, ther eby frustrating the very goal of public process.

I. INTRODUCTION Minnesota is home to nationally important, ic onic landscapes such as those preserved in the Boundary Waters Canoe Area Wilderness an d Voyageurs National Park. Minnesota air pollutant emissions are also affecting places be yond the state’s borders, including Isle Royale National Park, which is enormously important historically, scientifically, and as an iconic wild

1 It appears that the MPCA Board will not take this matter up for final state action until the March 27 BoardMeeting, 36 Minn. Reg. 679, 684-85 (Dec. 19, 2011), well after the comment period ends on EPA’s recentlypublished proposal for Minnesota. This is a clear violation of public process requirements.

705 SECOND AVENUE, SUITE 203 SEATTLE, WA 98104-1711 T : 206.343.7340 F: 206.343.1526 E: eajuswa@earthjustice.org W: www.earthjustice.org

### landscape. These special places are designated “Class I areas” unde r the Clean Air Act (“CAA”)—places where this country requires the air quality to be at its mo st pristine, unaffected by man-made pollutants. Sadly, the air in many of our most sp ecial Class I areas, including those mentioned above, is much less than clean, being fouled on a regular basis by man-made emissions from industry and vehicles. Comply ing with the CAA’s haze requirements will reduce pollutants that adversely affect air quality resulting in the balance and health of natural ecosystems, restoration of the magnificent vistas and landscapes that these areas have to offer, and protection of public health by reducing th e air pollution that contributes to so many debilitating respir atory diseases.

The National Parks Conservation Associ ation (“NPCA”) is a national non-profit organization working to protect and enhance America’ s national parks for present and future generations. NPCA’s Midwest office works to prot ect air quality in national parks in the region, including Voyageurs and Isle Royale. NPCArepresents many members who use Boundary Waters, Voyageurs, and Isle Royale National Parks and are dedicated to protecting these areas for present and future generations.

The Minnesota Center for Environmental Advocacy (“MCEA”) is a Minnesota-based nonprofit environmental organization whose mission is to use law, science, and research to preserve and protect Minnesota’s natural resources, wildlife, and the health of its people. MCEA’s members live, work, and recreate in the Boundary Waters , Voyageurs, and Isle Royale National Parks.
The Friends of the Boundary Waters Wilderness (“Friends”) is the only organization in the country focused squarely on protecting the Boundary Waters Canoe Area Wilderness. The Friends, a non-profit organization, exists to protect, preserve, and restore the recreational and ecological treasures of the BWCAW, and to defend the BWCAW against pressures created by excessive logging, invasive specie s, overuse, development, and i ndustrial pollution. The Friends represent nearly 4,500 in dividuals, family foundations, and organizations, many of whom live adjacent to or regularly visit the Boundary Waters.
Voyageurs National Park Asso ciation is a private, non-profit organization with the mission of protecting and promoting Minnesota’s only National Park, Voyageurs National Park. The Voyageurs National Park Association meet s its mission through a focus on protecting the park by addressing policy issues, providing direct support to Park projects, and advocating to ensure long-term protection of the Park’s resources.
Fresh Energy is a nonprofit organization that wo rks in the public inte rest to catalyze state and regional policy and regulati on that will stimulate the technological advancements necessary for an energy system that sustains the economy, people, and the planet.
The Conservation Organizations submitted comments on Minnesota’s proposed SIP in 2009, wherein the Conservation Organizations critic ized the failures of th e MPCA to follow the required process for determining BART limits for EGUs and the failure to adequately address haze-causing pollutants from taconite industrial sources. Minnesota’s SIP submission still

2

### contains those flaws, and the Conservation Organizations reiterate those criticisms. 2 

### This comment letter will address primarily the item s contained in the more recent SIP Supplement. 3



### II. MPCA’S PROCESS DENIES EFFECT IVE PUBLIC PARTICIPATION. As noted above, Minnesota first submitted its proposed haze SIP to the EPA in late 2009. Minnesota was one of a number of states that EPA had previously found to be in violation of the Clean Air Act for failure to timely submit a proposed haze SIP. Early in 2011, a number of environmental organizations commenced suit ag ainst EPA for failure to enforce its earlier decision regarding states in viol ation of the CAA, by failing to timely approve or disapprove the SIPs that were submitted, and for EPA’s failure to prepare federal implementation plans for those states that had inadequate or nonexistent haze SIPs. The laws uit against EPA is in the final stages of resolution, with a consent decree containing deadlines by which EPA must issue decisions on state haze SIPs awaiting final review and approval by the court. The deadline in the consent decree for EPA to act on Minnesota’s haze SIP was January 17, 2012.
In late December of 2011, Minnesota publishe d the SIP Supplement that is the subject of these comments, giving the public until February 3, 2012 to comment—weeks beyond EPA’s deadline to take action on Minnesota’s SIP. It is our understanding fr om EPA that Minnesota also submitted the Supplement to EPA for approval on January 5, 2012, a month before public comments in the state process need be completeand more than two months before the MPCA Board will take final action to decide whether th e Supplement should be approved by the state. Minnesota’s actions, combined with EPA’s si multaneous consideration, plainly deprive the public of a meaningful opportunity to revi ew and comment on this significant decision. 4



### III. THE SIP SUPPLEMENT VIOLA TES THE CLEAN AIR ACT.

A. The SIP Supplement’s Proposal to Substitute CSAPR Allocations for BART Violates the CAA.

Minnesota’s 2009 SIP submittal included BART determinations for five EGUs: Taconite Harbor; Boswell Energy Center; No rth Shore Mining, Silver Bay; Rochester Public Utilities, Silver Lake; and Sherco. Minnesota Pollu tion Control Agency, Regional Haze State Implementation Plan at 68, 70-71, Appendix 9.4 (2009). The 2011 Supplement proposes to relieve these five Minnesota EGUs of the BARTrequirements on the grounds that the EGUs will be subject to pollutant allocations under CSAPR. “Rather than complying with the specific BART determinations made in the initial SIP submittal, Minnesota’s subject to BART power plants simply need to comply with their obligations unde r the transport rule in order to meet the

2Each of the undersigned organizations incorporates by reference its prior comments on the 2009 Minnesota SIP submittal.

3 Please note that the Conservation Organizations will be submitting detailed comments to the EPA by the February 24, 2012 comment deadline. We will provide a copy of th ose comments to MPCA and we hereby request that the entirety of those comments be in corporated into MPCA’s record.

4EPA can approve only state SIP submissions that have properly followed state public process requirements. 42 U.S.C. § 7410(l) (“Each revision to an implementation plan submitted by a State under this chapter shall be adopted by such State after reasonablenotice and public hearing.”).

3

### BART obligations.” Minnesota Pollution Contro l Agency, Regional Haze State Implementation Plan Supplement at 3 (Dec. 2011).
Relying on EPA’s proposed alternative to BA RT fails to ensure that the purpose and requirements of the regional haze program will be satisfied. Substitu ting CSAPR for BART would violate the Clean Air Act because CSAPR ha s been stayed by the D.C. Circuit Court of Appeals; EPA’s proposed “CSAPR is better thanBART” rule suffers from fatal legal flaws; neither the state nor EPA has demonstrated that CSAPR is better than BART for Minnesota; and EPA’s regulations do not allow an alternative to BART for sources such as the Sherco facility that have been certified as reas onably anticipated to cause or contribute to the impairment of visibility in a Class I area.

1. The SIP Supplement cannot substitute CSAPR for BART while the D.C. Circuit continues the stay of CSAPR. In response to the D.C. Circu it Court of Appeals rejecting an earlier pollutant trading rule (“CAIR”), EPA issued a replacement, CSAP R. 76 Fed. Reg. 48,208 (Aug. 8, 2011). EPA also recently proposed (but has not made a final de termination) that CSAPR will “achieve greater reasonable progress towards a national goal of achieving natural visibility conditions in mandatory Class I federal areas than source-specif ic BART,” and therefore states may substitute CSAPR for BART. 76 Fed. Reg. 82,219, 82,221 (Dec. 30, 2011).
The ability of states to substitute CSAPR is still only in the preliminary stage as EPA has yet to finalize its rulemaking and recent litigatio n has thrown EPA’s ability to do so into some doubt. On December 30, 2011, the D.C. Circuit i ssued a stay of CSAPR pending review on the merits of several consolidated petitions for re view of the rule. EME Homer City Generation, L.P. v. EPA, No. 11-1302 (D.C. Cir. stay issued Dec. 30, 2011). As a result of the stay, CSAPR currently has no legal effect and is not a binding legal requirement on states and covered sources. This in turn means that EPA’s proposal to allo w states to substitute CSAPR is premature and lacks foundation because CSAPR has not yet been allowed to take effect . Effectively, the Minnesota SIP Supplement is a house of cards and is not approvable under the law. This is true for two reasons under the CAA.
First, to reduce the air pollution that contributes to haze, the CAA requires each state 5 

### to include in its SIP “a requirement” that certain ma jor stationary sources “shall procure, install, and operate . . . the best avai lable retrofit technology.” 42 U.S.C. § 7491(b)(2)(A); 40 C.F.R. § 51.308(e). Any trading program substituted for BART must also satisfy the statutory criteria by being a “requirement” that each source “shall procure, install, and operate ” BART or equivalent technologies. Because the D.C. Circuit has stayed CSAPR, and no source is required to implement CSAPR, CSAPR is not a “requirement” and therefore cannot meet the requirement in the CAA for BART substitutions. Until the stayis lifted and CSAPR actually takes effect imposing requirements on air pollution sources, CSAPR cannot satisfy th e CAA’s mandate to

5 Clean Air Act section 169A requires SIP revisions for each st ate that either (a) has with in its borders a Class I area that has been designated by the Secretary of the Interior as an area where visibility is an important value or (b) is reasonably anticipated to cause or contribute to visibility impairment in such a Class I area in another state. 42 U.S.C. § 7491(b)(2).

4

### include a requirement that source s install BART or an alternativ e that makes as much progress towards improving visibility in Class I areas as would BART.
Second, the BART requirement must be in cluded in each state’s SIP, 42 U.S.C. § 7491(b)(2), and the elements of a SIP must be lega lly enforceable against the relevant sources. Id. § 7410(a)(2)(A). As EPA has reminded Minnesota, “under section 110 of the Clean Air Act, the U.S. Environmental Protection Agency cannot approve Minnesota’s plan as meeting requirements for BART without these requirement s first being established in an enforceable form.” Letter from Doug Aburano, Chief, C ontrol Strategies Section, EPA Region 5, to John Seltz, Chief, Air Assessment Section, MPCA at 1 (June 6, 2011). EPA has made clear that if Minnesota were to adopt source-specific BART in its SIP, BART must be included in an enforceable form; the CAA requires nothing less if Minnesota substitutes an alternative for BART. Right now, CSAPR limits are not enforceableand cannot be made so while the stay is in place. 6

### Therefore, EPA cannot approve the Su pplement as it is not enforceable.
EPA faces a May 30, 2012 deadline for either granting final approval of the Minnesota SIP or approving a final FIP. Nat’l Parks Conservation Ass’n v. Jackson , No. 11-01548 (D.D.C. consent decree proposed Nov. 9, 2011) (as modified by agreement of parties). If, on May 30, the D.C. Circuit stay of CSAPR remains in effect, the final regional haze plan cannot substitute CSAPR for BART.

2. EPA regulations do not authorize the s ubstitution of CSAPR for BART for a particular source if a Federal Land Manager has certified that visibility impairment is reasonably attri butable to that source. EPA’s regional haze regulations allow EPA or a state to approve an alternative to BART if the state demonstrates that th e alternative meets a two-part test for ensuring that the alternative makes as much progress towards improving vi sibility as would BART. 40 C.F.R. § 51.308(e)(2)-(4). But EPA’s regulations have never allowed an alternative to BART for a source certified as reasonably anticipated to cause or contribute to impairment of visibility in a Class I area (“RAVI” or “RAVI source”). See id. § 51.3 02. Once an FLM certifies a source as RAVI, nothing less than BART is required for that source. Id. § 51.302(c).
Indeed, when EPA issued its prior “CAIR is better than BART” determination, EPA expressly acknowledged that states participating in CAIR retain the obligation to impose BART on sources certified as RAVI. 70 Fed. Reg. 39,104, 39,137 (July 6, 2005) (“[T]he possibility of BART for reasonably attributable vi sibility protects against any poten tial ‘hot spots.’”); see also

6If Minnesota wishes to use the CSAPR allocations for BART independent of EPA’s actions, Minnesota must comply with the independent analysis requirements for demonstrating that assigned allocations are in fact “Better than BART” for Minnesota for protecting and improving the haze pollution inthe three Class I areas. 40 C.F.R. § 51.308(e)(2)-(3). Minnesota has not engaged in that process and therefore cannot cl aim that it “independently” proposes the CSAPR allocations as a BART alternative. Further, given what has been demonstrated in numerous comments to the agency from the Conservation Organizations and the Federal Land Managers, Minnesota cannot so demonstrate: even the extremely in adequate and non-compliant BART determinations in Minnesota’s 2009 SIP submission show better protection and improvement for the Class I areas than the CSAPR allocations. SeeLetter from Timothy A. Dabney, Acting Forest Supervisor, Superior National Forest, to David Thornton, Assistant Commissioner, MPCA at Attachment, p.1 (Jan. 13, 2012). .

5

### 40 C.F.R. § 51.308(e)(4) (“A State th at chooses to participate in such trading programs may also adopt provisions, consistent w ith such trading programs, for a geographic enhancement to the program to address the requirement under §51.302(c) related to BART for reasonably attributable impairment from the pollutants covered by the CAIR cap-and-trade programs.”).
On October 21, 2009, prior to Minnesota’s submission of its original haze SIP proposal, the United States Department of the Interior certi fied that “a portion of the existing visibility impairment in Voyageurs and Isle Royale [National Parks] is reasonably attributable to pollution emissions from [Xcel Energy’s] Sherco Units 1 and 2.” Letter from Thomas L. Strickland, Assistant Secretary for Fish and Wildlife and Park s, U.S. Department of the Interior, to Mr. Bharat Mathur, Acting Regional Administrator, EPA Region 5 at 2 (Oct. 21, 2009). In light of this certification, the Sherco f acility must comply with the BART obligations imposed by the regional haze and RAVI rules. The only way Sherco can comply with RAVI BART is through the establishment of BART emissions limits, co nsistent with 40 C.F.R. § 51.302(c)(2)(iii) and (c)(4). To the extent that the Supplement im plies that the CSAPR allocations may serve as RAVI BART limits, the Supplement has no basi s in the law—since the regulations do not authorize an alternative to RAVI BART—or in the record—since the CSAPR allocations are higher than the emissions limits represented by RAVI BART. 7



### 3. Minnesota has not performed the required analysis of whether CSAPR will achieve more visibility improvement at Minnesota’s Class I Areas than would source-specific BART and analys is by the FLMs shows it will not. MPCA seeks to rely on a proposed, nationw ide determination by EPA that “CSAPR is better than BART.” 8 

### EPA’s proposed rule, however, is fatally flawed. In the proposed rule, EPA uses the CSAPR allotments—meant for achieving different CAA goals—to assess the visibility improvement that will occur under CS APR averaged across 60 Class I areas in the eastern United States as well as averaged across 140 Class I areas nationwide. EPA then compares the emissions reductions anticipated u nder CSAPR to the reductions attainable under BART.
But instead of using actual, source-sp ecific BART, EPA uses “presumptive BART” emissions, 76 Fed. Reg. at 82,222, 82,225, a level of emissions that EPA itself has repeatedly stated is inadequate and in most cases is not BA RT for particular sources. See , e.g. , 76 Fed. Reg. 64,186, 64,201 (Oct. 17, 2011) (“The presumptive limits accordingly are the starting point in a BART determination . . . EPA did not provide th at states could avoid a source-specific BART

7 While the public comment period for Minnesota’s SIP supplement is still open, EPA has proposed to approve MPCA’s submittal, and has proposed to d eal with RAVI BART separately from regional haze. 77 Fed. Reg. at 3,689 (“EPA will act on RAVI BART in a separate notice.”). There is every reason for EPA to deal with regional haze and RAVI BART at the same time, given that all of these requirements pertain to the same problem of haze in Class I areas. Given that DOI certified Sherco as RAVI in 2009, and MPCA, the federal land managers, and EPA have all analyzed BART for Sherco, there is no reason for EPA to further delay the RAVI BART determination.

8 NPCA and Earthjustice are reviewing EPA’s “CSAPR is better than BART” proposal to determine the extent to which the rule is based on presumptive BART rather than actual BART as well as other problems with the EPA’s proposal.

6

### determination by adopting the pres umptive limits. In fact, nothing on the record would support the conclusion that the presumptive limits repres ent the “best available retrofit controls” for all EGUs at these large power plants.”). Conducting a comprehensive five-step BART analysis is critical to ensuring that a source will appropriately control its pollution and that the region will make reasonable progress toward meeting visib ility goals. Presumptive limits may be BART, but only after a thorough analysis shows that no more stringent limit is achievable. EPA, in its proposed rule, has not completed such an analysis. In short, even if it were proper for Minnesota to rely on a rule that purports only to show that CSAPR is better than BART on average across affected Class I areas, Minnesota should not rely on a rule that is not yet final and is of doubtful legality.
Moreover, EPA has not attempted to demonstr ate that CSAPR is better than BART on a state-by-state basis or what it means for the Class I areas adversely affected by Minnesota sources of air pollution. The CAA requires th at the Minnesota regional haze SIP ensure reasonable progress toward attaining natural visibility at the Class I areas located in Minnesota as well as the Class I areas affected by Minnesota’s emissions. Whereas EPA purports to show that CSAPR is better than BART nationwide, no one has attempted to demonstrate that CSAPR is better than BART for Minnesota—and, as explained below, the ex isting analyses suggest that CSAPR is worse than BART for Minnesota.

For at least one Minnesota EGU, the CSAP R allocations far exceed the emissions that would be allowed under BART. The Xcel Energy Sherco facility in Becker, Minnesota is the largest single source of pollutant s that are currently (and have been) damaging the Class I areas in Minnesota and several other states, including Michigan, North Dakota, and South Dakota. This is shown by MPCA’s own modeling performed as part of the developmen t of its initial haze SIP and verified by the RAVI certif ication by the Department of In terior. SeeMPCA, Results of Best Available Retrofit Tec hnology (BART) Modeling to Determine Sources Subject-to-BART in the State of Minnesota at 19 (2006). Both the National Park Service and EPA have indicated that NO x

### BART for Sherco units 1 and 2 is the installation of selective catalytic reduction (“S CR”) at an emission level of .05 lb/mmbtu. Letter from John Bunyak, Chief, Polic y, Planning and Permit Review Branch, NPS to Catherine Neuschler, MPCA at Attachment, p.7 (June 26, 2009); Letter from Doug Aburano, Chief, Control Strategies Section, EPA Region 5, to John Seltz, Chief, Air Assessment Section, MPCA at 2 (June 6, 2011). Based upon 2010 data, this emission rate would result in approximately 2450 tons of NO x

### per year. The CSAPR allocations, however, are more than 300% higher than the emission limit that would be authorized under BART, since CSAPR authorizes Sherco units 1 and 2 to emit 7800 tons of NO x

### per year. 9 

### Plainly, for Sherco units 1 and 2, CSAPR is not better than BART. 10

9 EPA, Final CSAPR Unit Level Allocations under the FIP at 44 (2011), available at http://www.epa.gov/airtransport/pdfs/UnitLevelAlloc.pdf

10Furthermore, CSAPR inexplicably allows Sherco unit 2 to emit 5789 tons of sulfur dioxide (“SO 2 ”) for 2012 and 2014. EPA, Final CSAPR Unit Level Allocations under the FIP at 44, available at http://www.epa.gov/crossstaterule/pdfs/U nitLevelAlloc.pdf. Sherco unit 2 actually emitted less than that—5250 tons of SO 2--in 2010. EPA, Clean Air Markets Database, available at http://camddataandmaps.epa.gov/gdm/inde x.cfm?fuseaction=emissions .wizard. To make th e point quite fine, the

7

### We are not aware of any analysis co nducted by either EPA Region 5 or MPCA demonstrating that CSAPR would be better th an BART in Minnesota. Conversely, a United States Forest Service (“USFS”) anal ysis concluded “[i]t appears that CSAPR will not drive any emission reductions in Minnesota .” Letter from James W. Sanders , Forest Supervisor, Superior National Forest, to Doug Aburano, Chief, Contro l Strategies Section, EPA Region 5 at 3 (Aug. 11, 2011) (emphasis added).
More recently, the USFS has once again inform ed MPCA that the Forest Service does “not agree that CSAPR is better than source-specific BART in Minnesota.” Letter from Timothy A. Dabney, Acting Forest Supervisor, Superior National Forest, to David Thornton, Assistant Commissioner, MPCA at Attachment, p.1 (Jan. 13, 2012). The Forest Service reached this conclusion after calculating that the 2014 CSAPR allocations authorize SO 2

### emissions which exceed the SO 2

### emissions that would be authorized under source-specific BART, as determined by the Forest Service. Id. at Attachment, Figure 1, p.2. Moreover, the Fo rest Service analysis indicates that the 2014 CSAPR allocations for SO 2

### exceed the SO 2

### emissions under MPCA’s 2009 BART determination, and the 2014 CSAPR allocations for NO x

### is only slightly below MPCAs 2009 BART determination for NO x 

### . Id.
The Forest Service has conducted the only study to date which quantifies and compares the emissions reductions anticipated under CSAP R, the proposed MPCA BART determinations, presumptive BART, and BART as determined by the FLMs. The study demonstrates that CSAPR will result in higher emissions than would source-specific BART if BART were properly determined. By authorizing higher emissi ons levels, CSAPR will result in less visibility improvement than would source-specific BART. Simply put, CSAPR is notbetter than BART for Minnesota. We urge MPCA to revise the proposed rule and propos e source-specific BART for each Minnesota EGU subject to BART.

B. Even If It Were Lawful to SubstituteCSAPR for BART, Minnesota Must Impose BART On EGUs in Order to Satisfy Its Legal Obligation to Meet the Reasonable Progress Goals. The CAA requires Minnesota to submit a stat e implementation plan that contains “such emission limits, schedules of compliance and other measures as may be necessary to make reasonable progress toward meeting the national goal” of returning Class I areas to natural visibility conditions. 42 U.S.C. § 7491(b)(2). Furthermore, EP A has interpreted the statute to mean that each state must establish a reasonable progress goal for each Class I area, 40 C.F.R. § 51.308(d)(1), and then, in its long-term strate gy, adopt enforceable emissions limitations and other measures “as necessary to achieve the r easonable progress goals.” Id. § 51.308(d)(3). If CSAPR alone will not ensure reasonable progress toward attaining natural visibility at Boundary Waters, Voyageurs, and Isle Royale—and it is pl ain it will not—Minnesota must include in its regional haze SIP additional measures to en sure that reasonable progress is made.

CSAPR allowance will allow Sherco—perhaps the wors t polluter in the region for Class I areas-- to increase its SO 2 pollution emissions.

8

### As explained above, the FLMs have amply demo nstrated that CSAPR will not result in as much visibility improvement at Boundary Waters , Voyageurs, and Isle Royale as would BART. Further, MPCA acknowledged that even its 2009 source-specific BART determinations would not allow Minnesota to achieve the uniform rate of progress toward attaining natural visibility. 2009 SIP at 94 (“It appears that ongoing air pollution control programs are not sufficient to meet the URP at Minnesota’s Class I areas, or at Is le Royale, to which Minn esota is a significant contributor, through 2018.”). 11 

### Now, Minnesota is proposing to make even less progress toward natural visibility, since the current proposal to rely on CSAPR allocations will result in higher emissions than would source-specific BART.
If Minnesota were to substitute CSAPR for source-specific BART, it would have to compensate for the underregulation of EGUs subject to BART in order to have a haze SIP that meets the requirements of the CAA to make r easonable progress. For example, Minnesota would then have to accept additi onal restrictions on other sources in order to meet the reasonable progress goals. The most obvious “other source” is taconite. Yet, as detailed below, the SIP requires little to no additional reduc tions on taconite either. This le aves other, smaller sources to carry the burden; an unlikely outcome given that reductions from smaller s ources will have much less impact. 12

### Nor does Minnesota appear ready to curtail new sources of pollutants, particularly in Northern Minnesota, calling in to question the ability to evenmaintain the status quo.
Plainly, substituting CSAPR, combined withthe underregulation in other areas of the SIP, results in a SIP that will not meet the mo st basic requirements of the CAA for haze pollution in Class I areas. In order to meet the require ments of the CAA, Minnesota must impose BART on all EGUs and taconite facilities. 13

11 In fact, Minnesota unashamedly predicts that it will not meet the goals of returning to natural air quality conditions until 2093, for the Boundary Waters, and 2177, fo r Voyageurs National Park. 2009 SIP at 107. Where a state will not meet the goal of restoring natural visib ility conditions by 2064, the state has an obligation to demonstrate to EPA that it has considered regulating all sources of visibility impairment, 40 C.F.R. § 51.308 (d)(3)(iv)-(v), and that despite appli cation of BART and other controls, it is unreasonable to meet the deadline of clean air in parks and wilderness by 2064. Id. § 51.308(d)( ii) (“[I]f the State establishes a reasonable progress goal that provides for a slower rate of improvement in visibility than the rate that would be needed to attain natural conditions by 2064 . . . the State must demonstrate . . . that the rate of progress for the implementation plan to attain natural conditions by 2064 is not reasonable.”). Minnesota not only fails the reasonable progress test, it makes no effort to meet the requirements of demonstrating why it is unreasonable to meet that requirement and that it is perfectly fine to wait for clean air for 81 and 165 years.

12Similarly, it is implausible to think that Minnesota will gain all it needs from mobile sources, a source of pollutants that Minnesota and other states have found next to impossible to control and reduce.

13 And, as set forth in previous comments and comments that will be submitted to EPA, BART in many of those instances is emissions limitations more stringent than thos e proposed by the MPCA in its 2009 proposal. The 2009 proposal contained glaring inconsistencies and failed to analyze BART under the factors required by the CAA. MPCA should withdraw the Supplement and assist EPA in proposing a FIP that includes comp liant BART analyses for these industries and results in real reductions of these harmful pollutants.

9

### IV. MINNESOTA’S TACONITE FACILITIES HAVE A VERY SIGNIFICANT ADVERSE IMPACT ON ALL THREE CLASS I AREAS. A critical component of Minnesota’s haze SIP co ncerns the taconite facilities in northern Minnesota. Due to the discrete location and size of this industry, it has not been subject to many of the overall air quality improvements and contro ls that have been imposed on other industrial sectors through the years such as power plants, cement kilns, or refineries. The haze BART requirements mandate cleaning up the problematic emissions of this industry. Minnesota should fully enforce the BART program and other Clean Ai r Act requirements at taconite plants in a manner that achieves real progress toward protec ting public lands and public health for current and future generations.
MPCA’s modeling demonstrates the magnitudeof the negative impact this industry has on Voyageurs National Park, Isle Royale National Park and the Boundary Waters Wilderness. Northshore Mining, Hibtac, Minntac, and Utac stand out as the cause of many days of significant pollution in all three Class I areas. SeeMPCA, Results of Be st Available Retrofit Technology (BART) Modeling to Determine Sources Subject- to-BART in the State of Minnesota (March 2006); Letter from James W. Sanders, Forest Superv isor, Superior National Forest, to Mary Jean Fenske, Staff Engineer, MPCA at T echnical Comments, p.5 (Apr. 10, 2007).

MPCA modeled the number of days, over a three-year period, during which taconite facilities would cause a visibility change greater than .5 deciview s. MPCA’s results indicated that, over a three-year period, Minntac reduces visibility by at l east .5 deciviews for 530 days in the Boundary Waters Wilderness and 289 days at V oyageurs; Utac reduces vi sibility by at least .5 deciviews for 442 days on the Boundary Waters and 214 days on Voyageurs; Northshore Mining impairs visibility by at least .5 deciviews for 316 days in the Boundary Waters; and Hibtac reduces visibility by at least .5 deciviews for 247 days in the Boundary Waters and 205 days in Voyageurs.
Due to the largely uncontrolled pollutant emissions from these faci lities and their very close proximity to Minnesota’s and the region’s most treasured natural and wild places, these facilities should be subject to adequate BARTdeterminations and controls. Unfortunately, neither MPCA’s 2009 haze SIP submission nor the current SIP Supplement provide for valid BART determinations nor enforceable BART emissions limits that wi ll result in any real reductions in pollution coming fr om taconite facilities.

V. NEITHER THE SIP SUPPLEMENT NOR THE 2009 HAZE SIP SUBMISSION COMPLIES WITH THE CAA FO R TACONITE IN MINNESOTA.

A. MPCA Has Not Done Proper BART Analys is for the Taconite Facilities and Therefore the Emissions Limits in the Supplement Require No Real Pollutant Reduction and Do Not Satisfy BART Requirements. The Conservation Organizations refer to and incorporate by reference the FLM comments that are part of the record, including letters dated July 10, 2009 (USFS), September 3, 2009 (NPS), and August 11, 2011 (USFS). As continually set forth in comments to MPCA and EPA, MPCA’s BART analysis for taconite has been nonexistent, incomplete, and/or

10

### inadequately-supported. The Conservation Organizations have engage d the services of an expert to try and work through the analysis of these issues and will provide that expert an alysis in the comments to EPA due February 24, 2012. The C onservation Organizati ons specifically refer MPCA to those upcoming comments and incorp orate them into the record for MPCA’s Supplement proposal.
Conservation Organizations will here a ddress specific examples of problems with MPCA’s proposals for taconite.

1. MPCA failed to consider the five factors the Clean Air Act requires to be considered in every BART analysis. The Clean Air Act requires states to consider the five factors listed in the statute when determining BART for any source subject to BA RT. MPCA has failed to documents that it properly analyzed the five fact ors required to demonstrate and determine BART for any BARTeligible taconite faci lity. 42 U.S.C. § 7491(b), (g). A ny BART analysis, such as MPCA’s analyses for taconite, that doe s not consider the five statut ory factors is per se invalid.

2. MPCA rejected potential contro l technologies without an adequate explanation.
Overall, due to the failure of MPCA to cons ider the five statutory factors to determine BART, MPCA has improperly rejected technologies for control of taconite air pollution that should have been included in a full BART analys is. As noted in previous FLM correspondence, SCR, RSCR, and SNCR have all been rejected w ithout proper analysis of those technologies. See , e.g. , Letter from James W. Sanders, Forest Supervisor, Superior National Forest, to Mr. David Thornton, Assistant Commissioner, MPCA at Attachment, pp.2-3 (Mar. 5, 2008) (recommending that the BART analysis consider installation of a recirc ulating scrubber for United Taconite, and noting that BART may also include improvements to the existing particulate scrubbers); Letter from James W. Sanders, Forest Supervisor, Superior National Forest, to Mary Jean Fenske, Staff Engineer, MPCA at Attach ment (April 10, 2007) (concluding that the taconite BART analyses should addres s the technical and economic feasibility of low temperature oxidation, SCR, optimizing exis ting scrubbers, and fuel switching).
Additionally, MPCA improperly used Cue Co st instead of EPA’s cost manual, and MPCA failed to consider the cumulative number of Class I areas that are affected by a source and the improvements to all of those Class I areas as a result of appropriateBART controls at a source. Even technologies such as LoTox that are less-effective in reduci ng pollutants, but are in use at some of the facilities, have been rejected for inadequately-documented reasons at other facilities. 14

### The 2009 haze SIP is so poor that the National Park Service points out MPCA’s plan

14Another example of MPCA’s failure to acknowledge the need for BART at taconite facilities concerns Northshore’s status as an EGU and an exchange between MPCA and the FLMs where MPCA appeared to reject strict BART analysis and controls on Northshore Mining as an EGU because it was a “small” source in comparison to EGUs. This is an invalid and improper consideration, pa rticularly in light of Norths hore’s proximity to the Class I areas of concern and MPCA’s own modeling showing the significant adverse impact Northshore has on area air quality.

11

### may well increase impacts from sources like Northshore and Utac to the Class I areas—a kind of “anti-reasonable progress” or “unreasonable progress” result. In sum, for the most part, the 2009 SIP provided only for “good combustion controls” and in a few cases, “fuel blending” as BART for the taconite facilities.

3. MPCA calculated emissions limits at a 99% confidence interval, on a 30

- day rolling average, an approach that is unsupported in the law and that assures no pollution reduction. For even those minimal BART requirements of good combustion and fuel blending, MPCA claimed it couldn’t actuallyset pollution emissions limits for the taconite operations—a requirement of BART—because of the lack of data . MPCA indicated it would therefore require installation of Continuous Emission s Monitors (“CEMs”) at all taconi te facilities so that data could be gathered for setting emission limits. Unfortunately, MPCA never did require CEMs in all the taconite facilities. In particular, it simply immediately capitulated when Northshore and UTAC refused, despite repeated requests and pr otests from the FLMs asking that MPCA remain firm on the CEMs requirement as a criticalcomponent of BART decision-making.
Because MPCA failed to follow-through on its earlier claim that itwould require CEMs in order to determine BART limits for taconite , MPCA used inferior data to set inadequate emissions limits in the Supplement. MPCA requi red the taconitefacilities to collect only 150 hours of emissions data for MPCA to set polluti on emissions limits. MPCA’s requirements for the data collected were that the data “be collected under the range of [furnace] operating parameters that influence NO x

### emissions” and that the range of each operating parameter reflect “the furnace’s operating range for the paramete rs in the 12 months previous to testing.” 15 

### Although MPCA required the data to reflect the range of operations, it does not appear that MPCA required data to be submitted in the tacon ite pellet production rate and/or the fuel firing rate during the periods tested based on a review of the NO x

### testing data presented in Appendix A of the Regional Haze Supplement. Without that data, MPCA could not verify that the companies had truly collected the required range of data.
In setting NO x

### BART limits for each unit, MPCA then determined the 99 th

### percentile Upper Confidence Level (“UPL”) emission rate ba sed on this 150 hours of emissions data. In plain terms, this means that MPCA set BART emi ssion limits for each unit at levels such that the unit’s NOx emissions are currentlylower than the emissions limits 99 percent of the time 16

### and sets that 99 percent level as th e BART emissions “limit.” Then, in case setting a limit that the facility currently meets 99 per cent of the time is not lenient enough, MPCA calculates the limit based on a 30-day rolling average. This is e ffectively no reduction for these facilities from current haze-causing emissions. In fact, MPCA shows that for some test results on taconite facilities, the facilities emitted on average much lo wer than the emissions “limits” set forth in the Supplement. This effectively means that for those facilities, the BART “limit” will allow an increase in pollution emissions.

15 SeeSIP Supplement, Appendix 1, Sec tion 2.4 of each memo establishing NO x BART limits.

16 Again, this could have been during 150 of the dirtiest hours of a facility’s operations.

12

### 4. MPCA has presented no evidence that the emissions limits are based on operating practices that reflect the use of BART. Even if we were to accept that “goo d combustion practices” might be BART for NO x 

### (which they are not), there is no evidence that the limits set will actually require use of the “good combustion practices” that MPCA claims are BART for the taconite industry. As noted above, there is no information or assurance provided to support the Supplement conclusions that the 150 hours provided by the taconite facilities are actually from when “good combustion practices” were being utilized at each fu rnace. If the only data MPCA ha s is the straight 150 hours of emissions data, then MPCA has no evidence that the data is representative of good combustion practices and therefore there is no evidence to support MPCA setting BART emissions limits for good combustion practices based on this data. Further, 150 hours of data, which does not even reflect one week’s worth of ope ration, much less one 30-day peri od, is simply not long enough of a period to know whether it reflec ts good combustion practices.
Similarly, for the units where MPCA decided th at fuel blending would be BART (Keetac, Minntac, Utac), MPCA provides no evidence that th e 150 hours of data upon which it bases the emissions limits reflect any fuel blending done specifically to lower NO x

### emissions. There is no way to tell whether the emissions limits reflect a valid connection to fuel blending that is to be used as BART.

5. For the facilities that are not re quired to install continuous emission monitors, the emissions limits are not enforceable and therefore are not approvable under the Clean Air Act. Finally, in the Supplement, MPCA appears r eady to continue the pattern of allowing a number of the taconite facilities to evade the ob ligation to install CEMs. And yet, MPCA states that it will assess compliance with the weak BART limits it is impos ing on a 30-day rolling average. It is impossible for MPCA, without CEMs, to acquire data to make a 30-day rolling average assessment. No CEMs means that MP CA cannot assess compliance with emissions limits it is imposing, meaning in turn, the emissions limits for the facilities without CEMs are unenforceable. If a BART emissions limit is not enforceable, the Supplement cannot be approved under the CAA.
Moreover, MPCA has not provi ded an adequate explanation for requiring some taconite facilities to install CEMs , but relieving other facilities of this obligation. Nor has the agency explained how its decision not to require CEMs for some facilities is consistent with EPA’s regulations, which require that BART be “based onan analysis of the best system of continuous emission control technology availabl e.” 40 C.F.R. § 51.308(e)(1)(ii)(A).
In sum, MPCA’s current proposal for taconite(1) sets emissions limits that result in no reductions of haze pollution from taconite faci lities (and maybe even allow increases in pollution); (2) is based upon inadequate data ; (3) does not allow th e Agency to actually determine whether BART practices correspond to the facility is supposed to employ them; and (4) will not require monitoring, for all facilities, that is adequate for it to enforce the “limits” that allow current levels of pollution to con tinue. MPCA’s Supplement and 2009 BART determinations for the taconite industry fail to follow the legal requirements of the CAA, have

13

### little to no factual underpinning in the record, and will result in li ttle to no reductions in hazecausing air pollutants in our national parks and Boundary Water Wilderness. The Supplement should not be adopted.

B. MPCA Must Require Significant Reductions in Haze Pollutants From Taconite if it is Going to Apply CSAPR Allocations for EGUs as BART. As noted above, application of the CSAPR allocations for EGUs means that Minnesota must obtain pollutant reductions elsewhere in order to demonstrate reasonable progress on haze in Class I areas as is required by the CAA. The most obvious and effective choice for those reductions from non-power plant facilities is from the taconite industry wh ich so plainly affects the Class I areas. Yet MPCA does not require reductions from the taconite industry. By refusing to require actual BART-level emissions reductions at either of the two indu stries that adversely affect the Class I areas, MPCA cannot demons trate that the 2009 haze SIP, modified by the Supplement, results in the reasonable progress required by law. As such, Minnesota’s haze SIP cannot be approved.

CONCLUSION
The Supplement proposes to substitute CS APR allocations for source-specific BART limits. This is unlawful for any source subject to BART because CSAPR currently is stayed and also because neither Minnesota nor EPA has dem onstrated that CSAPR is better than BART for Minnesota or the Class I areas impacted by Minneso ta facilities. Furthe rmore, source-specific BART must be imposed for Sherco, due toits certification as a RAVI source.
The proposed BART limits for taconite faci lities suffer from numerous procedural and substantive defects. MPCA failed to consider the five statutory factor s in determining BART; MPCA avoided full analyses of suggested pollu tion control technologies; the agency based the numeric emission limits on a data se t that is arbitrary and that doe s not necessarily reflect the use of technologies identif ied as BART; and, lastly, the agency has not required all taconite facilities to install continuous emission monitoring device s that would permit adequate monitoring and enforcement of the BART limits.
The residents of Minnesota, and visitors fr om around the country who come to its Class I areas, have waited decades for the state to comeup with a plan for reducing haze pollution in Boundary Waters and Voyageurs. The regional h aze plan is too important to finalize without adequate provisions. We urge the MPCA to revise its SIP submittal to propose source-specific BART limits for EGUs and taconite facilities that fully comply with the Clean Air Act.

14

### Sincerely,

Janette K. Brimmer Matthew E. Gerhart Earthjustice 705 Second Ave., Suite 203 Seattle, WA 98104-1711 (206) 343-7340 jbrimmer@earthjustice.org mgerhart@earthjustice.org

Counsel for National Parks Conservation Association

Kevin Reuther Legal Director Minnesota Center for Environmental Advocacy

Paul Danicic Executive Director Friends of the Boundary Waters Wilderness

Jody Tableporter Executive Director Voyageurs National Park Association
Fresh Energy

cc: EPA, Region 5 Janet McCabe, EPA Steven Page, EPA Rhea Jones, EPA Phil Lorang, EPA

15

### February 3, 2012

Via Electronic and U.S. Mail

Catherine Neuschler Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 Lafayette Road North St. Paul, MN 55155-4194
Re: Minnesota Regional Haze Draft State Implementation Plan Supplement
The Sierra Club respectfully submits these comments on Minnesota Pollution Control Agency's (“MPCA”) draft State Implementation Plan supplement (“SIP Supplement”). The Sierra Club’s mission is to explore, enjoy, and protect the wild places of the earth and educate and enlist humanity to protect and restore the quality of the natural and human environment. A primary focus of the Sierra Club’s efforts to fulfill this mission is to advocate for enforcement of air quality regulations. The Sierra Club’s North Star Chapter’s 15,000 members have direct and significant interests in the natural and human environment of the areas impacted by the SIP Supplement.
Together the SIP Supplement and the 2009 SIP fail to contain the legally required measures that will ensure reasonable progress toward eliminating visibility impairment and improving air quality in the Boundary Waters Canoe Area Wilderness and Voyageurs and Isle Royale National Parks. Specifically, the SIP Supplement’s proposal to substitute the Cross State Air Pollution Rule (“CSAPR”) for best available retrofit technology (“BART”) for electric generating units (“EGUs”) fails to meet the requirements of the Clean Air Act (“CAA”).

I. Introduction
The CAA calls for protecting air quality and visibility in 156 nationally significant natural areas (“Class I areas”), in order to eventually attain pristine natural conditions unaffected by man-made pollutants. Recognized for their historic, scientific, and recreational value, the Boundary Waters Canoe Area Wilderness and Voyageurs National Park in Minnesota and Isle Royale National Park in Lake Superior are Class I areas subject to the CAA protection. Currently, man-made pollutants from sources in Minnesota, including five coal-burning EGUs, adversely impact air quality in all three areas. Under the CAA, Minnesota is required to develop a SIP that outlines specific and enforceable BART emissions limits for these EGUs. But

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### Minnesota’s 2009 SIP failed make adequate BART determinations and the SIP Supplement proposes to skip BART altogether and rely on CSAPR to improve air quality in the Class I areas. As outlined below, MPCA’s proposal fails to meet the requirements of the CAA and therefore MPCA should withdraw and revise the SIP Supplement to include BART emissions limits for all five EGUs.

II. The SIP Supplement Violates the Clean Air Act
The Regional Haze Rule applies to EGUs built between 1962 and 1977. There are five such EGUs in Minnesota: Minnesota Power, Taconite Harbor; Minnesota Power, Boswell Energy Center; North Shore Mining, Silver Bay; Rochester Public Utilities, Silver Lake; and Xcel Energy’s Sherburne County (Sherco). MPCA’s 2009 SIP made BART determinations for all five EGUs. Minnesota Pollution Control Agency, Regional Haze State Implementation Plan at 68, 70-71, Appendix 9.4 (2009). The SIP Supplement erases these BART determinations and proposes that the five EGUs “simply need to comply with their obligations under the transport rule in order to meet the BART obligations.” Minnesota Pollution Control Agency, Regional Haze State Implementation Plan Supplement at 3 (Dec. 2011).
This substitution of CSAPR for BART is unwarranted and improper under the CAA. First, the DC Circuit Court has stayed CSAPR and thus CSAPR cannot be relied upon as an enforceable requirement in place of BART in the SIP. Second, EGUs that have been certified as directly impacting a Class I area must have BART emissions limits and cannot be assigned alternative means of compliance. Finally, to the extent CSAPR—when/if the rule is implemented—could apply to these EGUs, MPCA has not provided analysis illustrating that CSAPR will result in greater visibility improvements than BART emissions limits. In fact, as detailed below, the only substantive analysis in the record proves that CSAPR will not produce visibility improvements approaching those achieved by BART.

A. The SIP Supplement cannot substitute CSAPR for BART while the D.C. Circuit continues the stay of CSAPR.
MPCA proposes substituting CSAPR for BART based upon the EPA’s recent proposal that, once finalized, CSAPR will “achieve greater reasonable progress towards a national goal of achieving natural visibility conditions in mandatory Class I federal areas than source-specific BART,” and therefore states may substitute CSAPR for BART. 76 Fed. Reg. 82,219, 82,221 (Dec. 30, 2011). The proposed rule allowing substitution of CSAPR has not itself been finalized and, more significantly, the DC Circuit Court of Appeals stayed CSAPR pending the result of litigation over the rule. EME Homer City Generation, L.P. v. EPA , No. 11-1302 (D.C. Cir. stay issued Dec. 30, 2011). With CSAPR stayed, the rule has no legal effect and is not a binding legal requirement that can be relied upon in a SIP.
The CAA requires each state to include in its SIP “a requirement” that certain major stationary sources “shall procure, install, and operate . . . the best available retrofit technology.” 42 U.S.C. § 7491(b)(2)(A); 40 C.F.R. § 51.308(e). Any alternative means for controlling emissions that is substituted for BART must satisfy the statutory criteria by being a “requirement” for each source to “procure, install, and operate” technologies equivalent to

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### BART. With CSAPR stayed, no sources are subject to CSAPR and the rule imposes no requirements on any source. Thus, CSAPR is not a “requirement” and MPCA cannot substitute CSAPR for BART in its SIP.
Further, even if CSAPR was a requirement equivalent to BART, the requirement would need to be included in the SIP, 42 U.S.C. § 7491(b)(2), and the elements of a SIP must be legally enforceable. Id . § 7410(a)(2)(A). As EPA has reminded Minnesota, “under section 110 of the Clean Air Act, the U.S. Environmental Protection Agency cannot approve Minnesota's plan as meeting requirements for BART without these requirements first being established in an enforceable form.” Letter from Doug Aburano, Chief, Control Strategies Section, EPA Region to 5, to John Seltz, Chief, Air Assessment Section, MPCA at 1 (June 6, 2011). The SIP Supplement fails to include CSAPR as an enforceable provision of the SIP and, in fact, cannot do so while the DC Circuit stay remains in place.

B. EPA regulations do not authorize the substitution of CSAPR for BART for a particular source if a Federal Land Manager has certified that visibility impairment is reasonably attributable to that source.
Once a Federal Land Manager (“FLM”) certifies that a facility causes reasonably attributable visibility impairment (“RAVI”) to a Class I area, BART emissions limits must be determined and those limits must not be replaced by an alternative. 40 C.F.R. § 51.302(c). In the previous “CAIR is better than BART” determination, EPA acknowledged that states participating in CAIR retain the obligation to impose BART on sources certified as RAVI. 70 Fed. Reg. 39104, 39143 (July 6, 2005) id . at 39,137 (“[T]he possibility of BART for reasonably attributable visibility protects against any potential 'hot spots.'”); see also 40 C.F.R. § 51.308(e)(4) (“A State that chooses to participate in such trading programs may also adopt provisions, consistent with such trading programs, for a geographic enhancement to the program to address the requirement under §51.302(c) related to BART for reasonably attributable impairment from the pollutants covered by the CAIR cap-and-trade programs.”).
At least one of the five BART eligible EGUs in Minnesota, Xcel Energy’s Sherco facility, has been certified as RAVI and thus must be subject to BART. On October 21, 2009, the United States Department of the Interior certified that “a portion of the existing visibility impairment in Voyageurs and Isle Royale [National Parks] is reasonably attributable to pollution emissions from [Xcel Energy’s] Sherco Units 1 and 2.” Letter from Thomas L. Strickland, Assistant Secretary for Fish and Wildlife and Parks, U.S. Department of the Interior, to Mr. Bharat Mathur, Acting Regional Administrator, EPA Region 5 at 2 (Oct. 21, 2009). Because of this RAVI certification, the Regional Haze SIP for Minnesota must include BART emissions limits for the Xcel Energy Sherco facility. See 40 C.F.R. § 51.302(c)(2)(iii), (c)(4).

C. Minnesota failed to analyze whether CSAPR will achieve more visibility improvement at Minnesota's Class I Areas than source-specific BART and analysis by the FLMs shows it will not.

For at least one Minnesota EGU, the CSAPR allocations far exceed the emissions that would be allowed under BART. The Xcel Energy Sherco facility in Becker, Minnesota is the

85 Second Street, Second Floor San Francisco, CA 94105-3441 TEL: (415) 977-5772 FAX: (415) 977-5793 www.sierraclub.org

### largest single source of pollutants damaging these Class I areas. This is shown by MPCA’s own modeling performed as part of the development of its initial haze SIP as well as the RAVI certification by the Department of Interior. See MPCA, Results of Best Available Retrofit Technology (BART) Modeling to Determine Sources Subject-to-BART in the State of Minnesota at 19 (2006). Assuming CSAPR goes into effect, it would allow Sherco unit 2 to emit 5789 tons of sulfur dioxide (“SO 2 

### ”) for 2012 and 2014. 1 

### Sherco unit 2 emitted less than that— 5250 tons of SO 2

### —in 2010. 2

### The CSAPR allowance would thus allow Sherco—perhaps the worst polluter in the region for Class I areas—to increase its SO 2

### pollution emissions. Instead of making reasonable progress toward eliminating haze, as the Clean Air Act requires, Minnesota is proposing to make progress toward allowing more haze, by authorizing Sherco to increase emissions. Plainly, for Sherco unit 2, CSAPR is not better than BART.
Thus far, the Forest Service has conducted the only study that quantifies and compares the emissions reductions anticipated under CSAPR, the 2009 SIP’s proposed BART determinations, presumptive BART, and BART as determined by the FLMs. The Forest Service informed MPCA that USFS does “not agree that CSAPR is better than source-specific BART in Minnesota.” Letter from Timothy A. Dabney, Acting Forest Supervisor, Superior National Forest, to David Thornton, Assistant Commissioner, MPCA at Attachment, p.1 (Jan. 13, 2012). The Forest Service reached this conclusion after calculating that the 2014 CSAPR allocations authorize SO 2

### emissions which exceed the SO 2

### emissions that would be authorized under sourcespecific BART, as determined by the Forest Service. Id . at Attachment, Figure 1, p.2. Moreover, the Forest Service analysis indicates that the 2014 CSAPR allocations for SO 2

### exceed the SO 2

### emissions under MPCA's 2009 BART determination, and the 2014 CSAPR allocations for NO x

### is only slightly below MPCAs 2009 BART determination for NO x 

### . Id

. Simply put, the only study on the record concludes that CSAPR will result in higher emissions than would source-specific BART if BART were properly determined. By authorizinghigher emissions levels, CSAPR will result in less visibility improvement than would sourcespecific BART. In order to meet the requirements of the CAA, Minnesota must impose BART on all five EGUs.

III. Conclusion
The SIP Supplement proposes to substitute CSAPR allocations for source-specific BART limits. This is unlawful under the CAA because a.) CSAPR is subject to a stay and thus is unenforceable; b.) RAVI-certified facilities, such as the SherCo facility, are not eligible for alternatives to BART emissions limits; and c.) CSAPR, even if the DC Circuit lifts the stay, will not result in visibility improvements equivalent to those attained by BART limits.
The Sierra Club urges the MPCA to revise its SIP submittal to propose source-specific BART emissions limits for EGUs that fully comply with the Clean Air Act.

1 EPA, Final CSAPR Unit Level Allocations under the FIP at 44, available at http://www.epa.gov/crossstaterule/pdfs/UnitLevelAlloc.pdf

. 2 EPA, Clean Air Markets Database, available at http://camddataandmaps.epa.gov/gdm/index.cfm?fuseaction=emissions.wizard

.



### 85 Second Street, Second Floor San Francisco, CA 94105-3441 TEL: (415) 977-5772 FAX: (415) 977-5793 www.sierraclub.org

### Sincerely, 

## Robb Kapla Michelle Rosier
Robb Kapla, Staff Attorney Michelle Rosier Staff Attorney Senior Regional Organizing Manager Sierra Club Sierra Club North Star Chapter 85 Second St. 2 nd

### Floor 2327 E Franklin Avenue, Ste 1 San Francisco, CA 94105 Minneapolis, MN 55406

85 Second Street, Second Floor San Francisco, CA 94105-3441 TEL: (415) 977-5772 FAX: (415) 977-5793 www.sierraclub.org 

### cc: EPA, Region 5

# Xcel 

# Energy®

RESPONSIBLE BY NATUREm



### February 3, 2012

Submitted via Electronic Mail



### Catherine Neuschler Environmental Analysis and Outcomes Division Minnesota Pollution Control Agency 520 Lafayette Road North Saint, Paul, MN 55155-4194 414 Nicollet Mall Minneapolis, Minnesota 55401-1993



### Re: MPCA's Supplemental Notice on BART Determination for Units 1 and 2 at the Sherburne County Generating Station, Minnesota Regional Haze State Implementation Plan

Dear Ms. Neuschler:

Northern States Power Company-Minnesota d/b/a Xcel Energy ("NSPM") is providing these comments on the Minnesota Pollution Control Agency's ("MPCA") December 2011 draft "Regional Haze State Implementation Plan Supplement" ("SIP Supplement") to address best available retrofit technology ("BART") requirements for electric generating units ("EGU s"), which was submitted in advance of MPCA fmal action to U.S. EPA Region 5 on January 5, 2012. The MPCA proposed in the SIP Supplement that "[r]ather than complying with the specific BART determinations made in the initial SIP submittal, Minnesota's subject-to-BART power plants simply need to comply with their obligations under the Transport Rule in order to meet the BART obligations." SIP Supplement, p. 2.

NSPM generally supports the SIP Supplement as an appropriate approach to streamline air quality regulation in the State of Minnesota. We concur with MPCA that, if implemented, the Transport Rule (also known as the Cross-State Air Pollution Rule, or "CSAPR") will achieve greater environmental improvement than BART. In 

### fact, through partnership with MPCA, the Minnesota Public Utilities Commission, and community, advocacy and business representatives on state-led initiatives such as the Metropolitan Emission Reduction Program ("MERP"), NSPM has achieved far greater emission reductions across its system than any visibility program could require. Our customers are paying for these reductions, and they are key to environmental progress in Minnesota. They should be recognized in CSAPR, Regional Haze, and other programs.
Based on the emission reductions already achieved on NSPM's units, including emission controls installed on Units 1 and 2 at the Sherburne County Generating Station ("Sherco") and the broad reductions that will be achieved if CSAPR is implemented in Minnesota, we think it makes sense to conclude that compliance with CSAPR is superior to

### unit specific requirements under Section 169A. Nonetheless, because of the uncertain status of EPA's rule makings and challenges to the CSAPR, we believe it is premature to rely solely on CSAPR for meeting BART requirements in Minnesota. First, the SIP Supplement is based on EPA's 

### proposal that CSAPR can satisfy BART. EPA published its proposed determination on December 30, 2011. 

### Regional Haze: Revisions to Provisions Governing Alternatives to Source-Specific Best Available Retrofit Technology (BART) Determinations, Limited SIP Disapprovals, and Federal Implementation Plan, 76 Fed. Reg. 82219 (Dec. 30, 2011) (the "BART Alternative Compliance determination"). The proposal has not yet been finalized and therefore should not serve as the sole basis for the Minnesota Regional Haze SIP's BART determinations for EGUs.
Second, it is unclear when or even if EPA will finalize its BART Alternative Compliance determination. One day after EPA issued its proposal, the U.S. Court of Appeals for the District of Columbia Circuit stayed CSAPR pending resolution of legal challenges to the rule. 

### EME Homer City Generation, L.P., v. Environmental Protection Agency, Case No. 11-1302. Therefore, MPCA's SIP Supplement is based on a rule that is not currently legally in effect and may not go into effect if the court challenges are successful. Third, even if CSAPR is upheld and EPA finalizes its BART Alternative Compliance determination, that action would itself be subject to legal challenges. If EPA's determination were ultimately vacated, that would simultaneously vacate MPCA's Regional Haze SIP with respect to BART for EGUs.

All of these contingencies threaten the viability of the SIP Supplement. MPCA could eliminate the risks associated with one or more of these rules not proceeding by retaining in its Regional Haze SIP both its source-specific BART determinations and the BART Alternative Compliance option. If the latter could not go forward for any reason, MPCA's Regional Haze SIP would still contain the source-specific BART determinations that sources such as Sherco Units 1 and 2 could use to satisfy their BART obligations without requiring MPCA to undertake further SIP revisions.
Fortunately, MPCA already has taken measures to protect itself against the risk that

one or more of these EPA rules is struck down or withdrawn. MPCA's December 2009 BART determination for Units 1 and 2 at Sherco fully satisfies all applicable BART requirements, as mandated by Congress under Section 169A of the Clean Air Act, 42 U.S.C. 

### § 7491, and as promulgated by EPA in its BART Guidelines, and should be retained as the BART determination for these units. 

### See MPCA, 

### Regional Haze State Implementation Plan, December 2009 ("MPCA BART Analysis"). Accordingly, the MPCA should clarify to EPA that the SIP Supplement is intended as a supplement to, and not a substitute for, its 2009 SIP submittal and that the MPCA intends to retain the source-specific BART determination for Sherco Units 1 and 2 in the Minnesota Regional Haze SIP. If the uncertainties surrounding CSAPR are resolved and CSAPR is implemented in Minnesota, it would have no impact on the SIP. Yet, if CSAPR is vacated or remanded, or if EPA fails to finalize the BART Alternative Compliance option, MPCA will have submitted a complete and approvable Regional Haze SIP.

The MPCA BART Analysis is the product of countless hours of analysis and years of public proceedings to determine how best to control Sherco Units 1 and 2 to improve

2

### visibility. Consequently, the MPCA should not abandon its source-specific BART determination for Sherco Units 1 and 2, which already has been shown will result in measurable improvements in visibility in Minnesota's Class I areas, to instead rely solely on CSAPR to satisfY BART for EGUs. NSPM has installed the pollution controls for nitrogen oxides indicated by the MPCA's BART determination on Sherco Units 1 and 2. Furthermore, NSPM is moving forward with the upgrades to its scrubbers to reduce sulfur dioxide emissions, the project indicated by the MPCA's BART determination. MPCA further determined that the particulate emission controls on Sherco Units 1 and 2 already meet BART requirements. These emission reductions achieve substantial improvements in visibility, as documented in the MPCA's December 2009 SIP.

The attachment to this letter provides further support for the MPCA's BART determination for Sherco Units 1 and 2, including cost information updated from when NSPM last provided information in the regional haze proceecling in December 2009. This analysis confirms that the MPCA's 2009 decision was appropriate and that its BART determination is approvable under EPA's regulations and guidelines.

Please do not hesitate to contact if me if you would like to discuss any of these matters in greater detail. I can be reached at 612-330-7879 or at richard.a.rosvold@xcelenergy.com.

Attachment and Associated Exhibits Sincerely,

# ~a.~ Richard A. 

### Rosvold Air Quality Manager

cc: Environmental Policy & 

### Services Record Center

3

### ATTACHMENT A

MPCA'S BART DETERMINATION FOR SHERCO UNITS 1 AND 2 FULLY IMPLEMENTS THE BART REQUIREMENT UNDER THE CLEAN AIR ACT AND THE REGIONAL HAZE RULE



### This attachment is in response to the preliminary review comments that the U.S. Environmental Protection Agency ("EPA") provided to the Minnesota Pollution Control Agency ("MPCA") on MPCA's analysis of how Units 1 and 2 at the Sherburne County Generating Station ("Sherco") should comply with the Clean Air Act's Best Available Retrofit Technology ("BART") requirements for NOx (the "Sherco NOx Proposal") to address regional haze. In its comments, EPA states that the NOx BART requirements for Sherco should include the installation of selective catalytic reduction ("SCR") at both Sherco Units 1 

### and 2, a technology that MPCA analyzed and eliminated as BART.

Northern States Power Company-Minnesota d/b/a Xcel Energy ("NSPM") believes the Sherco NOx Proposal fully satisfies all applicable BART requirements, as mandated by Congress under Section 169A of the Clean Air Act ("CAA''), 42 U.S.C. § 7491, and as promulgated by EPA in its BART Guidelines. Accordingly, NSPM supports MPCA's BART determination and encourages MPCA to continue to work with EPA to address their comments regarding the installation of SCR at Sherco Units 1 and 2. To that end, NSPM has included supplemental cost information in this Attachment and its Exhibits that confirm the appropriateness of MPCA's BART determination. NSPM has already substantially completed implementation of the Sherco NOx Proposal as approved by MPCA in its Regional Haze State Implementation Plan ("Regional Haze SIP").

The MPCA submitted its Regional Haze SIP to EPA in December 2009. The proposed Regional Haze SIP includes determinations for BART pursuant to Section 169A of the CAA for applicable stationary sources in Minnesota, including Sherco Units l 

### and 2. Based on the five factors identified in Section 169A, MPCA determined that BART for Sherco Units 1 

### and 2 is a 30-day rolling average NOx limit of 0.15 lbs/MMBtu, which could be achieved with the addition of new low NOx burners, overfire air, and computerized combustion controls on Unit 1 and performance improvements to the existing low NOx burners and overfire air systems with new computerized combustion controls on Unit 2. For S0 2 , 

### MPCA determined that BART is a 30- day rolling average limit of 0.12 lbs/MMBtu, which could be met by retrofitting the existing wet scrubbers with sparger tubes and also using lime injection, if necessary. MPCA concluded that the existing controls represent BART for PM 10 , 

### with the addition of a permit limit of 0.09 lbs/MMBtu for Units 1 and 2, which is a tightening of the existing limit 

### in that it would limit PM 10 

### instead of filterable particulate matter only.

EPA provided comments on MPCA's Regional Haze SIP in a letter dated June 6, 2011. 1 

### Although EPA did not take issue with MPCA's determination of BART for S0 2 

### and PM 10 

### at Sherco Units land 2, the EPA stated that SCR should be included as BART for Sherco Units 1 and 2 to reduce NOx emissions. In reaching this conclusion, EPA relied on information from its

1 Letter from Doug Aburauo, Chief, Control Strategies Section, EPA Region 5, to John Seltz, Chief, Air Assessment Section, MPCA (June 6, 2011).



### A-1

### Control Cost Manual and an evaluation of emission limits of 0.05 lb/MMBtu and 0.08 lb/MMBtu. The Agency also claimed that the visibility benefit analysis for the controls should include the benefits at the most impacted Class I area as well as the cumulative benefit across all impacted areas.

EPA's comments are not in conformance with the CAA or its owu BART Guidelines. MPCA has full authority under the CAA to determine what controls constitute BART for the

sources in Minnesota and has done so with respect to the NOx BART requirements for Sherco Units 1 

### and 2 after a thorough consideration of the factors mandated by Congress. If MPCA

were to revise its BART determination for Sherco Units 1 and 2 as suggested by EPA, NSPM would be required to make investments in NOx controls that go well beyond the levels both the CAA and EPA's owu Guidelines require for BART. As such, MPCA should implement the Sherco NOx BART Proposal as approved by MPCA in its Regional Haze SIP.

In this Attachment, NSPM discusses the requirements of the CAA and the Regional Haze Rule, and how the MPCA's BART determination for Sherco Units 1 

### and 2 adopting the Sherco NOx Proposal fully implements the requirements of the regional haze program. In particular, NSPM discusses in detail the cost analysis EPA offered in its preliminary comments, and demonstrates why the NSPM cost analysis, which MPCA reviewed and included in Minnesota's Regional Haze SIP, is more appropriate and more closely reflects the cost of various levels of NOx control for Sherco Units 1 

### and 2. Finally, this Attachment updates comments submitted by NSPM on December 21, 2009 (included as Exhibit 1 ), 

### which demonstrated that SCR installation would cost dramatically more than the cost reflected in either the NSPM, MPCA or EPA cost analyses.



### I. ANALYSIS OF SHERCO NOx PROPOSAL

Under the CAA, Congress delegated to the states the responsibility for determining the appropriate BART for "BART-eligible" sources such as Sherco Units 1 and 2, with the requirement that states do so only after taking into account five essential source-specific factors:

1. 

### The costs of compliance;

2. The energy and non-air quality environmental impacts of compliance;

3. Any existing pollution control technology in use at the source;

4. The remaining useful life of the source; and

5. The degree of improvement in visibility that may reasonably be anticipated to result from the use of such technology.

42 U.S.C. § 749l(g)(2); 

### see also 40 C.F.R. § 51.308(e)(l)(ii)(B). None of these factors has precedence over the others- "All five§ 169A(g)(2) factors inform the states' inquiries into what BART controls are appropriate for particular sources. Although no weights were assigned, the factors were meant to be considered together by the states." 

### American Corn Growers Ass 'n v. E.P.A., 

### 291 F.3d 1, 6 (D.C. Cir. 2002).

A-2

### That the states and not EPA have the authority to determine BART for individual sources is clearly established in the CAA. 2 

### See 42 U.S.C. 

### § 749l(B)(2)(A) (requiring installation of BART, "as determined by the state

... "). Congress did, however, order EPA to develop guidelines to provide technical assistance to the states in applying the five statutory factors to establish BART limits. EPA's latest guidelines were published in 2005. 

### See Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations, 70 Fed. Reg. 39,104 (July 6, 2005) (the "Guidelines").

The Guidelines identify a six-step process for determining BART control technology: (l) 

### identify the available retrofit control options; (2) identify any pollution control equipment in use at the source (which affects the availability of options and their impacts); (3) calculate the costs of compliance with control options; ( 4) incorporate into the review the remaining useful life of the facility; (5) analyze the energy and non-air quality environmental impacts of control options; and (6) calculate the degree of impact on visibility. 70 Fed. Reg. 39,163; 40 C.P.R. Part 51, App. Y. 

### Importantly, the Guidelines must be used to determine BART for power plants that have the capacity to generate 750 megawatts ("MW") or more. 40 C.P.R. Sec. 51.302 (c)(4)(iii). This includes Sherco Units 1 and 2.

MPCA appropriately considered all five statutory factors and followed the Guidelines in determining the NOx BART limits for Sherco Units l and 2. EPA's comments are not persuasive and do not provide a basis for rejecting MPCA's more thorough analysis.

A. Cost of Compliance



### EPA's comments focus on the average costs of controls in determining what constitutes BART for Sherco Units l and 2. However, cost-effectiveness is only one of the five factors MPCA must consider and it does not take precedence over any of the other factors. 

### See American Corn Growers Ass 'n, 291 F.3d at 6. MPCA is not obligated to re-evaluate its holistic evaluation of the five factors simply because EPA disputes some of MPCA's cost numbers. MPCA thoroughly analyzed both the average and incremental cost of control devices, as indicated in the Guidelines, 3 

### and evaluated controls based on the presumptive limits and costs in the Guidelines. 70 Fed. Reg. 39,127. EPA's analysis fails to do either.

2 In addition to the state-operated BART program, the states are required to demonstrate to EPA that their regional haze programs are making "reasonable progress" towards meeting visibility goals. 42 U.S.C. § 749l(b)(2). As part of this requirement, the states must include in their SIP a BART determination for each existing source subject to BART. 42 U.S. C.§ 749l(b)(2); 40 C.P.R.§ 51.308. Although Congress did not grant EPA authority to approve the states' BART determinations, EPA does review and approve their SIPs. Thus, EPA retains a role in reviewing a state's overall regional haze SIP, although that authority does not allow EPA to substitute its own judgment for the state in determining what constitutes BART.

3 The average cost is the total annual cost of the control equipment divided by the resulting annual emissions reductions. 70 Fed. Reg. 39,127. The incremental cost is the difference in the cost of two control devices divided by the difference in the reduced emissions due to the devices. Even though each device might separately be considered reasonable, the more expensive device may be inappropriate due to a high incremental cost. 70 Fed. Reg. 39,127.



### A-3

### To assist states in performing cost analyses, EPA provided presumptive costeffectiveness thresholds in its Guidelines for reducing NOx from large, coal-fired electric generating units that do not already have post-combustion controls. The Guidelines conclude that technologies achieving an emissions rate of 0.15 lbs/MMBtu are generally highly costeffective for tangentially-fired subbituminous coal-fired units, such as those at Sherco Units l 

### and 2. According to the Guidelines, such technologies typically cost less than $1,500 per ton of NOx removed and result in a significant degree of visibility improvement. 70 Fed. Reg. 39,135. NSPM's analysis of the cost of the Sherco NOx Proposal, which MPCA reviewed and adopted in its Regional Haze SIP, found that an emission rate of 0.15 lbs/MMBtu could be met with technology costing $430/ton at Unit 1 and $360/ton at Unit 2. The Sherco NOx Proposal consists of adding combustion optimization controls ("CC") on both units, and installing low NOx burners ("LNB") and separated overfire air ("SOFA") on Unit 1.

Consistent with EPA's Guidelines, MPCA also considered both the average costs and the incremental costs of other NOx control devices. 70 Fed. Reg. 39,127. The primary technologies considered, SCR and Selective Non-Catalytic Reduction ("SNCR"), had incremental costs of anywhere between $7,600 and $15,500 per ton 4 

### MPCA BART Analysis at 902. The average cost effectiveness for SCR ranged from $1,700 to $4,600. !d. 

### Having fully considered the matter, the MPCA was well within the discretion afforded to it by Congress when it concluded that such NOx control technologies were simply too expensive to constitute BART given the marginal improvement in emission reduction and visibility they would provide. !d. 

### at 8, 906. It 

### also is worth noting that EPA's proposed BART Alternative Compliance proposal suggests that participation in CSAPR would satisfY a source's BART obligations; however, CSAPR establishes a NOx emission reduction cost-effectiveness threshold at $500 per ton. It 

### is difficult to square that position with a suggestion that BART should require reductions costing many thousands of dollars per ton.

1. Use of the CUECost Workbook is more reasonable than use of the Control Cost Manual.



### In calculating the costs of NOx controls for Sherco, MPCA required the use of EPA's CUECost Workbook, which is dedicated to calculating the cost of installing pollution control equipment at coal-fired power plants. Use of the CUECost Workbook is consistent with MPCA's March 2006 BART guidance, which specifically requests that parties use EPA's CUECost Workbook to perform cost calculations for electric generating units of greater than 100 MW.

In 

### contrast, according to its comments, EPA developed its NOx control costs for Sherco based upon the Control Cost Manual; an older, generic publication that was not developed for electric generating units and that does not take site-specific factors into account. EPA's insistence that the MPCA use EPA's Control Cost Manual to determine the cost of various control technologies is without merit. MPCA has no legal obligation to rely upon EPA's Control Cost Manual to determine the cost of control technology. EPA states in its letter that the Control

4 Memorandum from Anne Jackson, P.E., MPCA, to file, regarding BART Determination for Sherco Units I and 2, at 4 (Oct. 26, 2009). This memorandum is included in the Minnesota Regional Haze SIP at 899-906.



### A-4

### Cost Manual is "the preferred reference tool for cost calculations," which oversimplifies and distorts what EPA stated in its Guidelines:

States have flexibility in how they calculate costs. We believe that the Control Cost Manual provides a good reference tool for cost calculations, but if there are elements or sources that are not addressed by the Control Cost Manual or there

are additional cost methods that could be used, we believe that these could serve
as useful supplemental information.

70 Fed. Reg. 39,127 (emphases added).

EPA's Control Cost Manual specifically acknowledges that electrical utilities utilize different cost estimation methodology than that cited in the Control Cost ManuaL In section 1.1, EPA states that:

... this Manual does not directly address the controls needed to control air pollution at electrical generating units (EGUs) because of the differences in accounting for utility

sources. Electrical utilities generally employ the EPRI technical Assistance Guidance (TAG) as the basis for their cost estimation processes.
The footnote to this statement is:

This does not mean that this Manual is an inappropriate resource for utilities. In fact, many power plant permit applications use the Manual to develop their costs. However, comparisons between utilities and across the industry generally employ a process called "levelized costing" that is different from the methodology used here.

EPA's focus on use of the Control Cost Manual over other methodologies is inconsistent with efforts to consider the real cost to utilities, ratepayers and citizens for implementing new environmental control equipment. Nothing in the Guidelines suggests that states must use the Control Cost Manual or even that its use is preferred. As acknowledged by EPA, MPCA has "flexibility in how they calculate costs," and the MPCA was well within the discretion afforded to it by Congress in doing so in the Sherco NOx Proposal.

2. EPA's use of the Control Cost Manual results in control costs that are artificially low and significantly underestimate the actual estimated costs of installing NOx controls at Sherco Units 1 and 2.



### Nowhere in EPA's letter does the Agency suggest that its own CUECost Workbook is not a valid reference tool or generates inaccurate numbers. In fact, as demonstrated by vendor estimates that NSPM has received for the installation of SCR at Sherco Units 1 

### and 2, it is clear that EPA's Control Cost Manual generates highly inaccurate numbers. 5

5 EPA's generic approach also ignores the highly-respected ASTM International's preference for vendor quoted prices over relying upon historical data (such as data from 1he Control Cost Manual). See ASTM International, Standard Guide for Estimating Monetary Costs and Liabilities for Environmental Matters, E 2137-06, § 5.4.1



### A-5

### The EPA Control Cost Manual provides some insights into how EPA originally intended for it to be used iu regulatory processes. For evaluation of SCRs in particular, EPA states that

SCR system design is a proprietary technology

... Furthermore, the design is highly sitespecific. In light of these complexities, SCR system design is generally undertaken by providing all of the plant- and boiler-specific data to the SCR system supplier, who specifies the required catalyst volume and other design parameters based on pnor experience and computational fluid dynamics and chemical kinetic modeling.

Control Cost Manual at 2-30.
Furthermore, EPA goes on to state on page 2-42 that

The cost-estimatiug methodology presented here provides a tool to estimate study-level costs for high-dust SCR systems. Actual selection of the most cost-effective option should be based on a detailed engineeriug study and cost quotations from the system suppliers. The costs presented here are expressed in 1998 dollars.

Id. 

### At 2-42. Based on EPA's statements, ASTM's cost estimating guidance and general industry standards for estimating cost, NSPM contracted with Sargent & Lundy ("S&L") iu 2007 to develop a site-specific vendor cost quote to be used for actual selection of the most cost-effective option for NOx BART, which was sunnnarized in NSPM's December 21, 2009 letter. See 

### Exhibit 1.

There are multiple reasons why the Control Cost Manual generates unrealistically low cost numbers. For example, the Control Cost Manual does not account for site-specific issues such as significant and costly space constraiuts to install SCR equipment at Sherco Units 1 and 2. The Control Cost Manual also gives large space velocities, or shorter gas residence times, in the SCR. The shorter the residence time, the shorter the length of time for the necessary reactions to take place. Furthermore, the Control Cost Manual estimates a catalyst life of 24,000 hours when a minimum catalyst life of 16,000 hours is more reasonable based on our operation experience at the King Plant and published literature 6 

### Finally, the Control Cost Manual dramatically underestimates the catalyst volume required as compared to the CUECost Workbook and vendor specific data. The cost of SCR increases significantly with the volume of catalyst required to operate the SCR. These are just a few of the many technical reasons why EPA's cost numbers are too low. The MPCA was reasonable in electiug to continue its practice of using EPA's CUECost Workbook and EPA's comments offer no compelling reason why the Control Cost Manual should be used iustead.

We also note that vendor estimates show that SCR costs are significantly higher than either the Control Cost Manual or the CUECost methodology. This should not be unexpected as the vendor estimate provides for all activities necessary to actually construct the SCRs to within

("ASTM E 2137-06"). ASTM acknowledges EPA's approach ofre1ying upon historical data, but ASTM does not consider it as reliable as the use of more specific estimates. ASTM E 2137-06, § 5.4.2.4.

6 See discussion in Exhibit 3, page 6-7.



### A-6

### plus or minus 20 to 25 percent. The Control Cost Manual and the CUECost methodologies are used to provide an initial, study level cost estimate to within plus or minus 30 percent. Vendor estimates look at details such as overtime costs for labor to complete the project in the needed timeframe, cost escalation to place the SCRs in service by 2018 and 2019 for Units 1 and 2, respectively, costs associated with site-specific constraints, and contractor's profit. NSPM is confident that the values generated by vendor estimates are closer to the real costs of installation than those generated by either the Control Cost Manual or the CUECost methodology.

In 

### fact, EPA's cost analysis for the Cross-State Air Pollution Rule ("CSAPR") utilizes a cost calculation methodology developed by its contractor (S&L) for use in developing SCR installation costs as part of the IPM modeling effort. S&L's IPM cost calculation methodology includes many of the items that EPA specifically calls out as inappropriate for use in justifying its use of the Control Cost Manual. The S&L IPM methodology ends up yielding SCR costs estimates that are closer to our vendor estimates than they are to the Control Cost Manual on a dollar per kilowatt ("$/kW") installed basis. A brief description of this methodology is shown in Exhibit 2. As shown in this attachment, S&L showed the cost of installing an SCR in 20 1 0 on a 600 megawatt ("MW") unit using an average difficulty factor of 1 for bituminous coal would have a total project cost of $105,757,000 or $176/kW (per unit). This value developed for EPA's CSAPR program is well above EPA's cost methodology using the Control Cost Manual for the BART process. Beyond these cost methodologies, we searched for published data on the actual cost to construct recently installed SCRs and found a January 2010 paper presented by JE Cichanowicz. This paper included a graph with construction costs in $/kW for SCR projects in the 2008-2010 timeframe. An 

### interpolation of the data shows that the capital cost to install SCR on a 750 MW unit would be on the order of $190/kW. This calculates to a total capital cost of $142,500,000 per unit, again well above EPA's cost estimate using the Control Cost Manual for the BART process. This paper is provided in Exhibit 3.

Table 1 shows sunnnaries of cost comparisons between the calculation methodologies. The site specific cost estimate information provided by S&L in 2007 is clearly higher than the estimates generated using either the Control Cost Manual or CUECost. It 

### is important for both MPCA and EPA to recognize that the real cost of constructing a SCR is critical for consideration of whether a technology is truly cost effective. It 

### is also necessary to consider the real cost of construction for purposes of determining whether these costs should be imposed on utility ratepayers.

A-7

### Table I Per Unit Cost Estimates for SCR for Sherco Unit I or Unit 2 JE 

### Control S&L's IPM Cichanowicz's

Cost Methodology Paper Basis Manual CUECost a forCSAPR Methodology S&L(2007) 2006NSPM BART Submittal



## - $86,500,000



## - - - 2011 Cost Calculations $56,700,000 $84,700,000 $128,200,000 $142,500,000 $120,900,000b $/kW $76/kW $113/kW $141/kW $190/kW $161/kW

a- CUECost estimate mcludes a retrofit difficulty factor of 1.6. b- Unit 1 

### cost in 2007 dollars. The Unit 2 was calculated to be $122.6 million in 2007 dollars.

Table 2 shows the cost comparisons between the calculation methodologies for the 2007 SCR installation at the NSPM Allen S. King Plant. The site-specific actual costs are clearly higher than the estimates generated using either the Control Cost Manual or CUECost. This comparison shows that the real cost of constructing an SCR is truly higher than the cost estimates from the other methodologies. The King Plant is a single unit facility which was a relatively easy retrofit situation. This was previously presented to the MPCA in the December 21,2009 Letter (Exhibit 1).



### T bl 2 A

a e 

# . I dE f 

### ctua au 

### s Imate 

### dC E

. I) 

### SCR I) 

### Ki 

### U . 1 ost stimates or or ng mt


# . Basis Control Cost Manual CUECosta Actual Costs 20 11 Cost Calculations $35,300,000 $33,400,000 $60,100,000

a- CUECost estimate mcludes a retrofit difficulty factor of 1.0.

In contrast to the King Plant, the Sherco Plant has three units in close proximity to one another which will result in an increased level of retrofit difficulty. Figure 1 

### shows the three Sherco units in alignment, which clearly shows the difficulty in locating the equipment needed to construct SCRs on units 1 

### and 2. It would be especially difficult to locate cranes for site construction for Unit 2. Neither the Control Cost Manual nor the CueCost Workbook adequately account for these site-specific costs.

A-8

### Figure 2. Sherco Plant Site Photo

Limited space for construction
cranes



### A-9 Existing Wet FGD Buildings

SCR installation wm have to deal with existing site system interferences, such as coal conveyors, piping, ducting and existing buildings.

### B. Degree of Improvement in Visibility



### The overarching goal of Section 169A of the CAA and the Regional Haze program is to improve visibility in Class I areas and, ultimately, to eliminate anthropogenic impairment of visibility. 42 U.S.C. § 7491(a)(l). The Sherco NOx Proposal meets these objectives. It 

### will produce significant, permanent improvements in visibility. Sherco Unit 1 

### and 2's emissions have the highest modeled impact on the Boundary Waters Canoe Area ("BWCA W") where the modeled Sherco Unit 1 and 2's baseline impacts in 2002-2005 at 2.68 deciviews ("dvs"). 7 

### The modeling showed that the technology proposed for BART at Sherco would reduce those visibility impacts by 41%, or 1.11 dvs, which should result in a perceptible improvement in visibility in the most affected Class I area.

MPCA gave full consideration to the visibility improvements in the BWCAW that would result from other control technologies. For exan1ple, MPCA noted that installing SCR on Units 1 and 2 to obtain additional NOx emissions reductions would result in only 0.31 dvs of additional improvement over the BART that was selected. MPCA BART Analysis at 904. Thus, the MPCA was aware of the degree of visibility improvement available from various control technologies, and EPA cannot take issue with MPCA's determination so long as it was informed by the relevant facts.

EPA's comments state that MPCA should have considered "the cumulative benefit across all impacted area [sic] to give a fair picture of the benefit from emission reductions." However, EPA's recommendation would arbitrarily distort the MPCA's analysis and is inconsistent with EPA's own guidance. EPA's position in its comments improperly skews the calculated benefit associated with emission limitations at a single source based on how surrounding Class I boundaries are drawn rather than by actual improvements in visibility. For example, if a given Class I area were subdivided into two or more areas, then EPA's approach would double the benefit of the controls under consideration despite there being no additional improvement in visibility. The arbitrary nature of this approach is apparent when the same logic is applied in

reverse. If multiple Class I areas were merged or treated as one, then EPA's approach would conclude that potential BART controls under consideration provide less benefit even though, again, there has been no resulting change in visibility anywhere. This approach would justify less restrictive BART controls in areas with only one Class I area (i.e., no cumulative benefits). Thus, this approach does not create a more "fair" picture of the benefit of emissions reductions; rather, it creates a more arbitrary one.

EPA's position in its comments also is inconsistent with EPA's own guidance, which expressly allows states to focus only on the visibility changes in the most affected Class I area. See 

### 70 Fed. Reg. 39,170. As EPA (addressing states as "you") explains:

7 A "deciview" is a measure of visibility impairment. A deciview is a haze index derived from calculated light extinction, such that uniform changes in haziness correspond to uniform incremental changes in perception across the entire range of conditions, from pristine to highly impaired.



### A-10

### One important element of the [visibility modeling] protocol is in establishing the receptors that will be used in the model. The receptors that you use should be located in the nearest Class I area with sufficient density to identifY the likely visibility effects of the source. For other Class I areas in relatively close proximity to a BART-eligible source, you may model a few strategic receptors to determine whether effects at those areas may be greater than at the nearest Class I area.

. . . 

## If the highest modeled effects are observed at the nearest Class I
area, you may choose not to analyze the other Class I areas any further as additional analyses might be unwarranted.

70 Fed. Reg. at 39,170 (emphasis added). Although this guidance pertains to impacts modeling,

an agency cannot consider impacts it does not analyze. EPA's instruction that no further modeling need occur means, as a practical matter, that impacts on other Class I areas do not need to be considered. Consistent with the guidance, the MPCA focused upon the modeled impacts in the BWCA W. Therefore, the MPCA is not obligated to adopt EPA's suggestion that the MPCA consider the cumulative visibility benefit at additional Class I areas.

C, 

### Energy and Non-Air Quality Environmental Impacts of Compliance



### The CAA requires consideration of the energy and non-air quality environmental impacts resulting from the use of relevant control technologies. This includes the energy requirements of the technology, the local availability of necessary fuels, impacts on local water supplies, and the generation of solid wastes. 70 Fed. Reg. 39,169. These impacts allow "any important relative environmental impacts (both positive and negative) of alternatives" to "be compared with each other." 70 Fed. Reg. 39,169. The MPCA examined NSPM's October 25, 2006 BART Analysis for Sherco Units 1 

### and 2 ("Xcel Energy's BART Analysis") and concluded that no "energy or non-air quality impacts were identified as barriers to the use of any of the identified technologies." Regional Haze SIP at 902. Thus, the MPCA appropriately considered the energy and non-air quality impacts in its Sherco NOx Proposal. EPA's comments do not address this factor in its comments on the installation of SCRs at Sherco Units 1 

### and 2.

D. Any Existing Control Technology In Use



### Sherco Units 1 

### and 2 currently employ several control technologies to reduce emissions of pollutants that impair visibility, including venturi spray towers (wet scrubbers) and highefficiency wet electrostatic precipitators. In addition Unit 2 was equipped with low N Ox burners and separated/close coupled overfire air systems at the time of the analysis. The MPCA took these existing controls into account when evaluating control technologies for use at Sherco Units 1 

### and 2 and in the cost-effectiveness and visibility impact analyses as well. Although not required to do so, the MPCA went a step further and expressly noted that the existing technologies, when combined with the new BART controls, would not prohibit or prevent the future installation of additional control technologies if th.ey were needed to satisfy future reasonable progress requirements or other regulatory efforts. MPCA BART Analysis at 905. Again, EPA failed to consider this factor in its comments.

NSPM also notes that two years have passed since the MPCA made its BART determination, and over five years have passed since the NSPM BART study was submitted to

A-ll

### MPCA in 2006. NSPM has installed the equipment listed in its Sherco NOx Proposal and needs additional tuning outages to achieve the proposed BART emission rates.

E. Remaining Useful Life of Sherco Units 1 and 2



### The remaining useful life of a facility is a stand-alone component of the BART analysis. 70 Fed. Reg. 39,127. The lives of Sherco Units 1 and 2 are expected to exceed the study period and were projected to have no effect on the costing analyses. See 

### Xcel Energy's BART Analysis at 23, 47. Therefore, this factor should have no impact on the BART analysis, and the MPCA properly disregarded it.

II. CONCLUSION



### Based on the CAA, EPA's BART Guidelines and related guidance, the MPCA properly determined the NOx BART requirements for Sherco Units 1 and 2 as part of its broader Regional Haze SIP and EPA has offered no legally justified basis for objecting to the state's decision. EPA's conclusion that NOx BART for Sherco should include the installation of SCR is inadequate for a variety of reasons including the Agency's failure to explain how its analysis meets the five statutory BART factors. Cost effectiveness and visibility improvement are only two of the five factors MPCA must consider and they do not take precedence over any of the other factors. EPA's analysis also is flawed because EPA relied on cost numbers generated by its generic Control Cost Manual even though better and more current cost information is available from EPA's own CUECost Workbook that is designed for the electric power industry, and which clearly demonstrates that EPA's cost control numbers substantially underestimate the cost of installing SCR on Sherco Units I and 2. Beyond that, EPA states in its Control Cost Manual that actual selection of the most cost -effective option should be based on a detailed engineering study and cost quotations from the system suppliers. NSPM commissioned a detailed engineering study with supplier quotes which shows costs that are much higher than those derived from using the Control Cost Manual or CUECost Workbook.

MPCA has the ultimate authority over BART determinations for sources in Minnesota and it appropriately considered the cost of different NOx controls for Sherco Units I and 2, the relatively insignificant visibility improvement that expensive controls, such as SCR, would achieve in the most impacted Class I area, as well as the other statutory factors, in developing the Sherco NOx Proposal. Accordingly, NSPM urges MPCA to retain the Sherco BART Determination as approved by MPCA in its Regional Haze State Implementation Plan in adclition to adopting the EPA's proposed BART Alternative Compliance option.

A-12

### EXHIBIT 1 TO ATTACHMENT A

XCEL ENERGY'S LETTER TO MPCA OF DECEMBER 21, 2009

BEST AVAILABLE CONTROL TECHNOLOGY ("BART") DETERMINATION FOR SHERBURNE COUNTY GENERATING PLANT ("SHERCO") UNITS 1 AND 2

PREPARED BY RICHARD ROSVOLD

# Xcel 

# Energy@

RE.SPOIIJSIBL.-E BY NATURE"'

December 21, 2009

Ms. Catherine Neuschler Environmental Analpis and Outcomes Minoesota Pollution Control Agency 520 Lafayette Road No:tth St Paul, l\1N" 55155-4194 414 Nicollet Mall Minneapolis, Minnesota 55401-1993

Re: Best Available Retrofit Technology ("BART") Determination for Sherbume County Generating Plant ("Sherco") Units 1 and 2

Dear 

### Ms. Neuschler:

On October 21,2009, the United States Department of Interior certified that a portion of the visibility impairment io Voyageurs and Isle Royale Natioru.l Patks is reasonably attributable. to pollution emissions from Xcel Energy's Sherco Plant (Units 1 aod 2). The United States Environmental Protection Agency ("EPA") currently administers the 1980 Visibility Protection Rules for the State of :Minnesota through a Federal Implementation Plan. As such, EPA Region 5 is required to make its own dete.rminatioh as to whether Sherco Units 1 and 2 cause o.r contribute to visibility impairment and if so, to deterrnioe the appropriate B.ART levels of control. As EPA begios asking the Minoesota Pollution Control Agency ("'MPCA") questions regarding BART for Sheree Units 1 and 2, please keep io miod not only our 'Williogness to provide additional ioformation to the MPCA but also out hope for an opportunity to explain certaio aspects ditecdy to the EPA io a conference call or a meeting that iocludes MPCA. The following discussions address claims made by

. citizen gmups, the federal land managers, or EPA regardiug the Sherco BART analysis and Selective Catalytic Reduction ("SCR'') technology.

1. Comment: Xcel Energy ovemtimated the rost for SCB:.

Xcel Energy response: The SCR costs were not overestimated. The initial BART estimate, which

was part of the BART analysis submitted to MPCA io October of 2006, was $86 million per unit The estimates were based on EPA CUECost data with allov;rances for some site-specific aspects and retrofit factors, and should be considered as·having initial conceptual level accuracy. The MPCA compared that estimated cost for iostalliog SCR at Sheroo to actual costs for the SCR at the .Allen S. King plant The Sherco estimate of $86 million in 2006 dollars lines up with the actual cost for the SCR at the Kiog plant, which was $64 million for 2004-2005 contracts. Sherco Units 1 and 2 are each around 20 percent larger than the King plant unit Actual reported escalation from 2004 to 2006 per the Chemical Engioeeriog Plmt Cost Index was 12.5 percent On this basis, iocreasiog the King cost of $64 million by 20 percent results io $76.8 m:illion. Then adding the escalation of 12.5 percent results in $86.4 million.December 21, 2009 Page2

SCR costs usually 2J:e much higher at existing units as comp<rred to new**cons~ction.** 

### A> EPA states in its "Guidelines for BART Detetroiuatious Under the Regional Haze Rule" (40 CFR 51, AppendiX Y), "Physicl modifications needed to resolve technical obstacles do not, in and of themselves, provide a justification for eliminating the control technique on the basis of technical infeasibility. However;, you may consider the cost of such modifications ID estimating costs. This, ln.**~** may form the basis for eliminating a control technology

... "

Xcel Energy in late 2007 commissioned Sru:gent & Lundy, which provides engineering and design services to the power industry, to conduct an engineering stndy to further develop the ovetill scope, schedule, petfon::nance, and cost for a capacity inttease and environmental etriissions reduction program it proposed to the Mlnnesota Public Utilities Commission

.. As a part of that s tndy effort Sargent & Lundy fleterrnined that instllilation of SCRs would be difficult due to space constraints from eXisting ductwork, coal handling conveyors, and wet scrubber facilities. Factots at Sherco that would add to SCR costs are: complications with sttuctutal support, interterence with existing control equipment,**s~o1ng** installation on two units, and inte:tference -with Other plant systems. The cost estimations from Sargent & Lundy were $100 million for Unit 1 and $105 million for Unit 2, in 2007 dollars. ·

Escalation of costs should be consideJ.:ed fo.r SCR installations meeting commercial ope.tatio:tl dates in the 2014-2015 timefrarne. When the estimate was completed in late 2007 significant fo:rward escalation in the industry was anticipated and a 5 percent per y= rate was used. This resulted in the retrofit estimates being approximately $120 million per unit. Since then, major utility construction costs escalated upward from late 2007 through 2008 and went down in 2009, with the net result of nearly flat over.ill escalation from late 2007 to rnid-2009 per the Chemical E!'.gineeting Plant Cost Index. Anticipated escalation from rnid-2009 forward is now in the 2-3 percent per year range, so that the current capital cost estimate for SCRis approximately $110 to $122 million per uniJ:.

The estimates developed in 2007 '#-ith Sargent & Lundy involved a significant amount of time and effort at the plant, and were developed with a much better level of detail than can occur with tools such as EPA's Control Cost Manual and CUECost. No design, however, was .completed as part of this effort and the estimates should still be considered conceptnal with regard to acC1lli.Cy, likely in the 

### ± 25 percent mge.

2. Comment: MPCA hasprovitkd no rationak for allowing Xcel to avoidS CR insta!latWn at S herr:o whi.k requiring lYlinnesota Power to install SCR at its Boswell Unit 3.

Xcel Energy response: Minnesota Power volunteered to install an SCR for reasons beyond BART. The SCR is part of its Enviro=eutallrn.provement Plan, which qualified for special rate recovery treatment lvfi:o..,.1.esota Power 1 s business decision to install SCR voluntarily does npt mean SCR must .be instlliled at Shetco.

3. Comment: Sherco can achieve 0.051h/ mmBtu or**Jrm,e~** with SCR

Xcel Energy response: "When compar:i:.tg e:o:llssion limits between different units, it is .imperati:ve to remember that each emissions unit is unique. Two tangentially fired boilers burning sub-bituminous coal and employing the sarue design o: SCR will not necessarily have equal emissions rates. If emission 

### limits :are set without accounting for the emission. rate**v~b.ility** 

### that occu:rs when the unit and control equipment are properly run, then limits will not be met Since BART limits are effectiveDe=ber 21, 2009 Page3

during all times of operation, higher emissions during lower load operation and times of unit startup and shutdown at:e counted

How a un.itis**operate~** Whether at steady state or continuously dianging load to m.eet system demands, will also impact the perfo=ce of an SCR and the ability to meet p=it limits. On a unit with SCR, it is very likely that the unit will be able to achieve relatively low NOx emissions if it operates at a steady load and is able to maintain optimal flue gas tempetatures thxough an SCR. However, when a unit is called on to continuously change load to meet system demands} NO:x: emissions will be higher tbn at steady state operation. The cyclic operation brings a unit's flue gas out of the optimal tempetature range of 700-780°F for SCR operation, significantly reducing NOx removal efficiency. ·

In 2009, Sherco Units 1 and2 already cycle load many times each day to meet constantly changiog customer derru.nd and in response to wind variability. The available power from wind fluctuates greatly aod Sherco is required to cycle up or down depending on the amount of wind on the system. h1funesota cw:rently ranks first in the country. 

### vt7ith more tha....'tl 7 percent of the state's power coming &om wind energy. Mlnnesota statntes require Xcel Energy to further inctease renewable energy on the system by genetating 25 percent of its enetgy by wind energy conversion systems

.. Cycling therefore will increase substantially in the future, which will increase the difficulty in achieving low NOx emission rates. This operational :tealityd:tives the NOx emission rate hlghe:r as compared to a unit able to operate without cycling. NOx limits need to allow for how a unit must be operated to respond to continuous**~oes** in elec:cicity demand throughout the day and in availi.ble power from renewable energy, because electricity supply aod demand must be balanced continuously.

4. CAmmwt: Visibility impacts from Sherco on the Class I area.r justijj' nquiring SCR on these units.

Xcel Enetgy re,--pons-e: Xcel Energy performed visibility impact modeling for the proposed BART controls as well as for the SCR scenario. In this modeling, it was shown that at each Class I area the addition of SCR on both Units 1 and 2 would result in a visibility change of 0.16 to 0.28 deciviews ("dv") (defined as the 98"' percentile delta dv). By definition., 1 dv is usually visually perceptible

.. Therefore a chaoge of 0.16 to 0.28 dv is typically not perceptible, and spending hundreds of millions of dollars to achieve this level of visibility improvement does not make economic sense. EPA itself has recognized that where the**.te~uctions** achievable by the best available tet;hnology are not sufficient to achieve any perceptible improvement in visibility, tbe State is not obligated to require sucb controls. See 45 Fed. Reg. 80084,80087 (Dec. 2, 1980).

.

5. Comment: Xcel p77Jvided no riason 

### wf?J' the technologies oJMobotec's Rotamix, LiTO; and ECOWBE could not be tmnsfemd from similar, but smaller applimtions.

Xcel Energy response: Xcel Energy reviewed tbese technologies and detemtined that tbey had not yet been proven to be corrunercially available and not praven on Sherco-sized units. These technologies have not been successfully scaled up to 700+ MW units. Xcel Energy is**co~tted** to using commerc.ia1Iy available, ptoven control technologies to ma-rimize the .investments made fot oui customers and shareholders. Xcel Energy's customers aud shareholders should not be required to pay the development costs to scale up these technologies while other cost-effective, commercially proven techuologies exist In general, Xcel Energy considers scale-up of any technology more than two to three times what has achieved proven operation capability to be imprudent and 

### very risky.December 21, 2009 Page 4

Please contact eithei me at 612-330-7879 or Nancy Glass of my staff at 612-330-5520 with any questions you have on our comments. Xcel Energy looks forward to the opportunity for further participation in the BART process with EPA, MPCA and the Federal Land Managers.

Richard Rosvold Manager, Air Quality

C: Mlu:y Dieltz**~aucyGlass** Enviroumental Services Record Center

### EXHIBIT 2 TO ATTACHMENT A

IPM MODEL- REVISIONS TO COST AND PERFORMANCE FOR APC TECHNOLOGIES

SCR COST DEVELOPMENT METHODOLOGY

FINAL

AUGUST2010

PREPARED BY SARGENT & 

### LUNDY

### IPM Model- Revisions to Cost and Performance for APC Technologies

SCR Cost Development Methodology

FINAL



### Sarge August 2010 Project 12301-007
Perrin Quarles Associates, Inc.

Prepared by



## LundycLc

55 East Momoe Street • Chicago, IL 60603 USA • 312-269-2000LEGAL NOTICE

This analysis ("Deliverable 

### 'J was prepared by Sargent & Lundy, L.L. C. ("S&L "), expressly for the sole use C!fPerrin Quarles Associates, Inc. ('Client") in accordance with the agreement beru1een S&L and Client.
This Deliverable was prepared using the degree of skill and care ordinarily exercised by engineers practicing under similar circumstances. Client acknowledges: (1) S&L prepared this DeUverable subject to
the particular scope limitations, budgetary and time constraints, and business objectives of the Client; (2) information and data provided by others may not have been independently verified by S&L; and (3) the information and data contained in this Deliverable are time sensitive and changes in the data, applicable codes, standards, and acceptable engineering practices may invalidate the findings of this Deliverable. Any

use or reliance upon this Deliverable by third parties shall be at their sole risk

This work was funded and reviewed by the US Environmental Protection Agency under the supervision of
William A. Stevens, Senior AdFisor

- Power Technologies. Additional input and review was provided by
Dr. Jim Staudt, President of Andover Technology Partners.!PM Model- Revisions to Cost and Performance for APC Technologies


### SCR Cost Development Methodology- Final


### Establishment of Cost Basis Project No. 12301-007 August 20, 2010

The formulation of the SCR cost estimating model is based upon two data bases of actual SCR projects. The data bases used were those of the 2004 to 2006 industry cost estimates for SCR units published in the "ANALYSIS OF MOG AND LADCO'S FGD AND SCR CAPACITY AND COST ASSUMPTIONS IN THE EVALUATION OF PROPOSED EGU 

### 1 AND EGU 2 EMISSION CONTROLS" report prepared for Midwest Ozone Group (MOG) and a Sargent & Lundy LLC (S&L) proprietary in-house database. The available data was analyzed in detail regarding project specifics such as coal type, NOx reduction efficiency and air pre-heater requirements, and updated to include the cost of SCR projects available with both data sets.

The data sets were escalated to update the MOG information to 2009 and all of the data

was cross referenced with current 2009 projects. The MOG and S&L cost data were updated to reflect the changes in equipment and labor rates. The CEPCI index for power plants was used to escalate the costs. The Handy- Witman index was also used to escalate the project costs to account for regional effects; the results were compared with the CEPCI index and were within 2% for total project costs.

The comparison between the two sets of data was refmed by fitting each data set with a least squares curve to obtain an average $/k W project cost as a function of unit size. The data set was then collectively used to generate an average least-squares curve fit. The

curve fit indicated that both sets of data produced similar average costs (within 4%) at the 200 MW range, but deviate as the unit size increases to approximately 11% at 600 MW and 13% at 900MW. The costs for retrofitting a plant smaller than 100 MW increase rapidly due to the economy of size. The older units which comprise a large proportion of the plants in this range generally have more compact sites with very short flue gas ducts running from the boiler house to the chimney. Because of the limited space, the SCR reactor and new duct work can be expensive to design and install. Additionally, the plants might not have enough margins in the fans to overcome the pressure drop due to the duct work configuration and SCR reactor and therefore new fans may he required.

The least squares curve fit was based upon an average of the SCR retrofit projects. Retrofit difficulties associated with an SCR may result in capital cost increases of 30 to 50% over the base model. The least squares curve fits were based upon the following assumptions:

• Retrofit Factor 

### =1

• Gross Heat Rate= 9880

• S02 Rate = 

### < 3 lb/MMBtu

• Type of Coal= Bituminous

• Project Execution = Multiple lump sum contracts!PM Model- Revisions to Cost and Performance for APC Technologies



### Methodology Inputs 

### SCR Cost Development Methodology -Final ·**Lundy••~**

Project No. 12301-007 August 20.2010



### To predict future SCR retrofit costs several input variables are required. The unit size in MW is the major variable for the capital cost estimation followed by the type of fuel (Bituminous, PRB, or Lignite) which will influence the flue gas quantities as a result of the moisture content. The fuel type also affects the air pre-heater costs if ammonium bisulfate or sulfuric acid deposition poses a problem. The unit heat rate factors into the amount of flue gas generated and ultimately the size of the SCR reactor and reagent preparation. A 

### retrofit factor that equates to difficulty in construction of the system must be defined. The NOx rate and removal efficiency will impact the amount of catalyst required and size of the reagent handling equipment. The elevation of the site must be considered separately and factored into the unit MW size accordingly due to its effects on the flue gas volume.

The inputs that impact the variable O&M costs are based primarily on the plant capacity factor and the removal efficiency. The NOx removal efficiency specifically affects the SCR catalyst, reagent and steam costs. The lower level ofNOx removal is recommended

as:

• 0.07 NOx lb/mmBtu- Bituminous

• 0.05 NOx lb/mmBtu- PRB

• 0.05 NOx lb/mmBtu- Lignite
Outputs
Total Project Costs (TPC)


### First the bare costs are calculated for each required module (BM). The bare module costs include:



## • Equipment 

## • Installation 

## • Buildings 

## • Foundations 

## • Electrical 

## • Retrofit factor

The bare module costs do not include:

• Engineering and Construction Management

• Owner's cost

• AFUDC

2!PM Model- Revisions to Cost and Performance for APC Technologies



### SCR Cost Development Methodology

- Final

The modules are:

BMR = 

### Base module SCR cost
BMF = 

### Base module reagent preparation cost
BMA = 

### Base module air pre-heater cost Project No. 12301-007 August 20,2010



### BMB = 

### Base module balance of plan costs including: ID or booster fans, piping, etc

...
BM = 

### BMR+BMF+BMA+BMB

The total bare module cost (BM:) is then increased by:

• Engineering and construction management costs at I 0% of the BM cost.

• Labor adjustment for 6 x 10 hour shift premium, per diem, etc., at 10% of the BM cost.

• Contractor profit and fees at 10% of the BM cost.

A capital, engineering, and construction cost subtotal (CECC) is established as the sum of the BM and the additional engineering and construction fees.

Additional costs and financing expenditures for the project are computed based on the CECC. Financing and additional project costs include:

• Owner's home office costs (owner's engineering, management, and procurement) at 5% of the CECC; and

• Allowance for Funds Used During Construction (AFUDC) at 6% of the CECC and owner's costs. The AFUDC is based on a two-year engineering and construction cycle.

The total project cost is based on a multiple lump sum contract approach. Should a turnkey engineering procurement construction (EPC) contract be executed, the total project cost could be 10 to 15% higher than what is currently estimated.

Escalation is not included in the estimate. The total project cost (TPC) is the sum of the CECC and the additional costs and financing expenditures. Table 1 

### contains an example of the capital cost estimation.

Fixed O&M (FOM) 

### The fixed operating and maintenance cost is a function of the additional operations staff (FOMO) and maintenance labor and materials (FOMM) associated with the SCR installation. The FOM is the sum of the FOMO and the FOMM.

3**""''./~**

# Scn~ge,\\**Lundy•"~**

!PM Model- Revisions to Cost and Performance for APC Technologies


### SCR Cost Development Methodology- Final

### F~~~tV Project No. 12301-007 August 20,2010



### In 

### general, 1 additional operator is required for all installations. The FOMO is based on the number of additional operations staff required.

The fixed maintenance materials and labor is a direct function of the bare module cost (BM) at a retrofit factor of 1.0.

Variable O&M (VOM) 

### Variable O&M is a function of catalyst required and disposal costs, reagent consumption, and steam consumption. All of the YOM costs must be adjusted for plant capacity factor.

The reagent consumption rate is a function of unit size, NOx feed rate and removal efficiency. The steam usage is based upon reagent consumption rate.

The power required for the SCR system was not included in the variable O&M costs. The power requirements include increased fan power to overcome the added pressure drop across the catalyst and ductwork and the reagent supply system.

The variables that contribute to the overall YOM are:

VOMR = 

### Variable O&M costs for urea reagent VOMW = 

### Variable O&M costs for catalyst replacement & disposal
VOMM = 

### Variable O&M costs for steam

VOM VOMR 

### + VOMW 

### + VOMM.

4IPM Model- Revisions to Cost and Performance for APC Technologies


### SCR Cost Development Methodology- Final Lundy'l"-

Project No. 12301-007 August 20,2010



### Table 1. Example of the Capital Cost Estimate Work Sheet.

# ~ ; 

# = I' 

### ' 

### ,, ' 

### ' I

### ~- I 

### ' ' 

### ,, ' Type «fC:m.J F 

### '"'**~** <- - U''"' Input I I. I 

### ' I ' 

### ' I ' I

. ' I '

# ~ 

# i ,'j!i!!'''' iOllii[iL' i'!o!! :nq!'!i: 

### ' "·""·'·'·· ·'• I 

### ' 'i

I I

# ~ " i I'

are all based 0011 2009 dollars

I 

### ' ' I 

# '"i r I I I, and 1 I

## ~ 

# Ill I I I 

### ' I ·' I 

### ' ' .I 

## lWB i I' '

I

' 

# ' ' i

B'l**~** 5% ofGECC $

. '"'' ' 

### ' ' 1 :**~~~"~:~~-~~~ n~~~e** **;,7,;~~~~"'" (owne~**  

### '**.·:j'.:~'!Ji'iijh•·,;•·<·· B2~6%afCECC+B1**  

# • < ooo.nm AFUDC ("ase<J :- 

### , 

## . ,.f3% pe1· yea< fo1 a 2 yeac 1 .11 cvde}



### 5 '""'''!·!!;''

### Costs are all

JHxe<l U&M Cost !PM Model- Revisions to Cost and Performance for APC Technologies ',**Lund~''c**

Project No. 12301-007 August 20,2010 

### SCR Cost Development Methodology- Final

Table 2. Example of the Fixed and Variable O&M Estimate Work Sheet.

I i Units Value I JUnrt >eze A 1'""1 

### >.**-~~"** 1<--· Ulser Input



### > 

# ••u}f J<--· I I ,. = 1.0) 

## ,,1=)**i<···U~** JNU> Kate u ••• J<-IJISer

fype of Coal F 

## '""**~** 1<--· I <er Input Coal 'actor G 1.05 •, Liq=107 Heot Rate Footor H 1.988 JO HB3t I nput tlMnr)•**b.>~>t+u"** JA' JUU

# ~ 1<--i! 

### ' ""'""I cactor 

# "'" JIIJ

rea Rate (100%: (lbAl') 609 110.99

# ~ '"·':::Sii,:u 6B9 Ll3 ·:_,, ' !' : : : ' ! ii i**~** ' i i] , I

, wt

### solu;~l , ion) 

### < 310. •:ate l"'t Cost 1m3)**/~·····**



## '"" 'ower Cost**(~** !kWh) u i Labor Rate 

### v llhrl 60 I J all benefits



### based on 2009 dollars

$ O.'IG Fixed O&M; ··:::;)L!tii!"iHl!ii?i;d·····

...**FOMO($/kWyr),=(ll,~time> ~**  FOMM ($/kW yr) =IF A< J then $200,00 ELSE: !00,000 

### > 0.5G fixedO&M; I 'mate,jal and lobar oosfs

FOM $ 

# "'·"" otal c !Xed UM" '!OSIS

# ~~~~:,,=. $ ".31 Variable I 'for llreo**~($/MWhi** = diS<.IBie function of A, G, ,K,S $ G.35 Variable 08,M 

### ''"Is for cofalvsl: i disposal q {$1MIVhl = o• I $ G.ol VariobJ.e O&M custs for steom
f•VOMM $

6

### EXHIBIT 3 TO ATTACHMENT A

CURRENT CAPITAL COST AND COST-EFFECTIVENESS OF POWER PLANT EMISSION CONTROL TECHNOLOGIES

PREPARED BY J. EDWARD CICHANOWICZ

JANUARY 2010

## CURRENT CAPITAL COST AND COST-EFFECTIVENESS OF POWER PLANT EMISSIONS CONTROL TECHNOLOGIES

Prepared by J. Edward Cichanowicz
Prepared for Utility Air Regulatory Group
January 2010

### CURRENT CAPITAL COST AND COST-EFFECTIVENESS OF POWER PLANT EMISSIONS CONTROL TECHNOLOGIES

Section/Title Page No.
SECTION 1 Summary

........................................................................................................................... 1-1 SECTION 2 BACKGROUND

.............................................................................................................. 2-1 INTRODUCTION

............................................................................................................................. 2-1 RETROFIT OF CONTROL TECHNOLOGY

.................................................................................. 2-1 NEW GENERATING STATIONS

................................................................................................... 2-6 SECTION 3 MATERIAL AND LABOR ESCALATION

................................................................... 3-1 BASIC MATERIALS

........................................................................................................................ 3-1 LABOR

.............................................................................................................................................. 3-4 Labor Cost Escalation

.................................................................................................................... 3-4 Labor Pool Availability

................................................................................................................. 3-5 SECTION 4 FACTORS AFFECTING CAPITAL COST ESTIMATES

............................................. 4-1 CAPITAL COST ESTIMATING METHODOLOGY

...................................................................... 4-1 SITE AND DESIGN FACTORS

....................................................................................................... 4-3 SECTION 5 FLUE GAS DESULFURIZATION COSTS

.................................................................... 5-1 FGD CAPITAL COST

...................................................................................................................... 5-1 Wet FGD

........................................................................................................................................ 5-1 Dry FGD

........................................................................................................................................ 5-2 OPERATING COST

......................................................................................................................... 5-4 SECTION 6 SCR NO x

### COST

................................................................................................................ 6-1 SCR CAPITAL COST

....................................................................................................................... 6-1 COST ESCALATION

....................................................................................................................... 6-1 OPERATING COST

......................................................................................................................... 6-5 SCR Cataly st

.................................................................................................................................. 6-5 Reagent

.......................................................................................................................................... 6-6 Example Operating Cost

................................................................................................................ 6-7 SECTION 7 CONCLUSIONS

.............................................................................................................. 7-1 SECTION 8 REFERENCES

................................................................................................................. 8-1

iCapital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### LIST OF FIGURES
Figure 2-1. Historical and Projected Wet, Dry FGD Capacity: Installed MW by Year

...................... 2-3

Figure 6- 4. Site Layout for Associated Electric Cooperative‟s New Madrid Station, Units 1 and 2.
Figure 6- 5. Site Layout for Associated Electric Cooperative‟s Thomas Hill Station, Units 1 and 2. Figure 2-2. Historical and Projected Wet, Dry FGD Capacity: Cumulative MW by Year

................. 2-3 Figure 2-3. Historical and Projected SCR Capacity: Annual Installed Capacity (MW)

..................... 2-4 Figure 2-4. Historical and Projected SCR Capacity: Cumulative Installed SCR Capacity (MW)

...... 2-4 Figure 2-5. Historical, Projected FGD and SCR Annual Capacity (MW)

........................................... 2-5 Figure 2-6. Historical, Projected FGD and SCR Cumulative Capacity (MW)

.................................... 2-5 Figure 3-1. Steel Mill Products Cost History

....................................................................................... 3-2 Figure 3-2. Iron Ore Cost Escalation

.................................................................................................... 3-2 Figure 3-3. Price History Escalation: Nickel, Molybdenum, Copper, and Chromium

........................ 3-3 Figure 3-4. U.S. Bureau of Economic Analysis Finished Goods Capital Price Index

......................... 3-4 Figure 4-1. Graphic Depiction of Cost Elements

................................................................................. 4-2 Figure 5-1. Wet FGD Process Equipment Cost: Various Sources

...................................................... 5-2 Figure 5-2. Dry FGD Process Equipment Cost: Various Sources

........................................................ 5-3 Figure 5-3. Range of Wet FGD Operating Costs for 500 MW Units

................................................... 5-4 Figure 5-4. SO 2 

### Removal Cost per Ton ($/Ton), Year 2008 Basis

...................................................... 5-5 Figure 6-1. Capital Cost of SCR Process Equipment vs. Generating Capacity:

.................................. 6-2 Figure 6-2. Increase in SCR Capital Cost Based on Four Time Periods (Three Increments)

.............. 6-2 Figure 6-3. Average Generating Capacity of Unit Retrofit with SCR vs. Installation Date

................ 6-3
(SCR reactors denoted within red circle)

............................................................................................... 6-4
(SCR reactors denoted within red circle)

............................................................................................... 6-5 Figure 6-6. History of SCR Catalyst Prices: 1980- 2008 (2008 Dollar Basis)

..................................... 6-6 Figure 6-7. NO x

### Removal Cost per Ton ($/ton), Year 2008 Basis

....................................................... 6-8

LIST OF TABLES
Table 4-1. Examples of Indirect Charges, Assumptions

...................................................................... 4-2 Table 6-1. Key SCR Operating Cost Components: 500 MW Reference Plant ($150/kW Capital, 2008 Dollar Basis)

................................................................................................................................. 6-8

iiCapital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 1

SUMMARY

The utility industry faces numerous mandates to retrofit flue gas emission controls to existing power plants. For example, the Clean Air Interstate Rule (CAIR), Clean Air Visibility Rule (CAVR), and settlements with the Department of Justice over alleged NSR violations all require retrofit of control technology. In addition, the Hazardous Air Pollutant Maximum Achievable Control Technology (HAPs MACT) rule, and the increasingly stringent National Air Quality Standards (NAAQS) are anticipated to promote control technology application. Some of these mandates and consent decrees required equipment installation and operation before 2010, with provisions for additional controls. These additional control requirements could be for the second phase of CAIR

– or the equivalent program that replaces it. The HAPs MACT rule could also require reductions of NO x

### and SO 2 

### in the 2015 timeframe.
The demand for control equipment strained international and domestic supply chains until early 2008. Robust demand through 2007 for materials and labor to support expansion of petrochemical industries, urban infrastructure, and power generation in developing countries consumed much of the international supply. Exotic corrosion-resistant metals (such as C276 Hastolloy) were simply not available from many suppliers, almost regardless of price. As a consequence, capital cost escalated from approximately the time frame of 2000 through 2008 for flue gas desulfurization (FGD) and selective catalytic reduction (SCR) equipment, and shortages in material and labor forced construction delays. Some owners of small generating units

– less than 250 MW

– issued requests-for-proposals for FGD equipment for which no bids were offered

– or limited bids received at a premium price. Even major utilities encountered limits, as some reported it was not possible to secure fixed price contracts on construction projects, assigning all risk to owners.
The recent moderation in the world economy has removed many of the supply barriers and eased cost escalation. The cost to retrofit FGD and SCR equipment is expected to moderate from peak levels observed in the last 24 months, but may not significantly decline. A key reason is the ever-increasing complexity of the host sites. As host units are older and of smaller generating capacity, there is less available space for control equipment. Frequently, convoluted and complex ductwork is required, increasing retrofit difficulty.
Capital cost for FGD escalated significantly from the 2004-2006 timeframe to the 2008-2010 timeframe. Over the four-year period between the approximate m id -point of these intervals (e.g., 2005 vs. 2009), FGD cost escalated at 19% above the inflation rate. Specifically, on an average basis, retrofit of wet FGD to a 500 MW in the 2004-2007 timeframe required $342/kW (2008 dollars). A unit of the same capacity retrofit with FGD in the 2008-2010 timeframe required $407/kW (2008 dollars). The difference equates to an escalation of approximately $16/kW per year. At this rate of escalation, an FGD process installed for a 2015 startup on a 500 MW unit will require about $470/kW (in 2008 dollars).

1-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### For a coal with sulfur content of 4 lbs/SO 2 

### /MBtu, each increase in capital cost for wet FGD by $100/kW can increase the cost effectiveness of SO 2 

### removal by several hundred dollars per ton. At $400/kW, a typical 500 MW unit will expend about $600 to remove a ton of SO 2 

### from this coal. For PRB coal with 0.9 lbs SO 2 

### /MBtu, each increase in FGD capital cost by $100/kW will increase SO 2 

### removal cost effectiveness by $500/ton. For this PRB coal, an SO 2 

### removal cost of up to $2,300/ton will be incurred for a $400/kW FGD capital cost.
Capital cost for SCR NO x 

### control has similarly escalated over the same time period. Data obtained for this paper show a large number of units that recently retrofit SCR incurred capital cost between $300

- 350/kW (in 2008 dollars). Catalyst unit price has remained low in the last 4-5 years, with new catalyst requiring a cost between $4,000-5,000/cubic meter. The cost of ammonia-based reagent, after peaking in 2007 at over $600/ton, is predicted to average about $400/ton through early 2010. Reagent cost afte r that time is uncertain, and historically linked to natural gas prices. For most applications, reagent has replaced catalyst supply as the largest SCR operating cost component.
For a typical 500 MW unit firing an eastern bituminous coal and producing NO x

### at a rate of 0.38 lbs/MBtu, each $100/kW increase in SCR capital cost increases NO x 

### removal cost effectiveness by about $1,000/ton. The same unit equipped with a $300/kW SCR process would incur a NO x 

### removal cost-effectiveness of $3,500/ton. For a 500 MW unit firing PRB and producing NO x

### at a rate of 0.20 lbs/MBtu, each $100/kW increase in SCR capital cost elevates NO x

### removal cost effectiveness by $2,000/ton. A PRB-fired unit with a $300/kW SCR process would incur a NO x

### removal costeffectiveness of $6,500/ton.
In summary, the material and labor shortages witnessed during the 2007 and 2008 timeframe haveabated. However, the cost to retrofit FGD and SCR equipment is anticipated to escalate, over the longterm, at about the same rate since the year 2000. The cost will be driven by the increasing complexity of smaller sites, at generally older units. Typically, large units with accessible, open sites have already been retrofit, as the most cost effective projects were first sought. These site

– specific factors are anticipated to supersede the cost and availability of labor and components in determining installed equipment cost.

1-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 2

BACKGROUND

INTRODUCTION The cost to retrofit capital-intensive environmental controls to power stations rapidly escalated from the year 2000 through the end of 2009. In the U.S., several environmental mandates that stem from the 1990 Clean Air Act Amendments (CAAA) converged within the time span of only a few years. Since that time, the general slowdown in world-wide demand for chemical processing facilities, transportation, and urban infrastructure has diminished cost pressures for material and specialized construction labor. The relaxation in cost pressure was too late to moderate the installed FGD and SCR cost for units that planned to start-up in 2008 and 2009. Further contributing to the escalated cost for these units is an increase in the complexity of sites within which to retrofit equipment, as the units most amenable to retrofit were equipped first. As a consequence, although the price shocks of material and equipment observed in 2006 and 2007 have diminished, capital cost will continue to escalate due to more difficult retrofits.
On the supply side, the limit to construction schedule imposed by components such as rubber-lined slurry pumps, pulverization and reagent grinding equipment, and flue gas emission stacks has abated. Access to these components can still determine the schedule of a project, but availability is considerably improved since 2007.
RETROFIT OF CONTROL TECHNOLOGY Retrofit of control technology to existing plants is mandated by several actions subsequent to the 1990 Clean Air Act Amendment: the Clean Air Interstate Rule (CAIR), regional haze initiatives such as the Clean Air Visibility Rule (CAVR), and increasingly stringent National Ambient Air Quality Standards (NAAQS). Further, settlements with EPA and the Department of Justice (DOJ) over alleged New Source Review (NSR) violations may affect plans for SO 2 

### and NO x

### reduction, as well as the Hazardous Air Pollutant Maximum Achievable Control Technology (HAPs MACT) rule that is being developed. Each of these is further described as follows.
Clean Air Interstate Rule (CAIR). As initially promulgated, this two-phase program mandated reducing NO x

### and SO 2 

### in an initial Phase 1 (2009 for NO x 

### and 2010 for SO 2 

### ), and a Phase 2 (2015 for both SO 2 

### and NO x 

### ). The CAIR program was remanded but not vacated by the D.C. Circuit in December of 2008. However, the eventuality of more strict limits for SO 2 

### and NO x 

### emissions did not alter actions by most utility owners to install FGD and SCR.
National Ambient Air Quality Standards (NAAQS ). Under the Clean Air Act, NAAQS are to be reviewed every 5 years. Recently those reviews have lead to more stringent standards. As EPA continues to review and revise the NAAQS, States with areas exceeding the standards are required t o

2-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### develop State Implementation Plans (SIPs) to achieve compliance. In those SIPs, States have looked to power plants for further emission reductions.
Best Available Retrofit Technology (BART). BART requirements are part of the Clean Air Visibility Rule (CAVR). These federal regulations require all states to revise their State Implementation Plans (SIPs) to address visibility impairment in Mandatory Class I Federal Areas, which are specific national parks and wilderness areas across the country. Consequently, states may require retrofit of emissions controls to achieve “reasonable progress” toward eliminating manmade impairment of visibility in Mandatory Class I Federal Areas.
For example, the states of Illinois, Indiana, Michigan, and Wisconsin, through the Lake Michigan Air Directors Consortium are considering additional control measures for SO 2 

### and NO x

### beyond CAIR. Regulatory agencies in other regions in the country such as the southeast (VISTAS) and far west (WRAP) are considering similar mandates. The extent and timing of these mandates is uncertain, but most proposed initiatives will require control equipment by the 2014 to 2018 time period.
Settlements Regarding Alleged NSR Violations . Allegations by the U.S. EPA that provisions of the CAAA regarding NSR were violated prompted several owners to agree to the installation of FGD and SCR controls on schedules that differ from those required to meet CAIR.
Retrofit of FGD and SCR to many coal-fired boilers is required to meet these existing and proposed mandates. Figures 2-1 to 2-6 depict the inventory of wet and dry FGD and SCR process equipment that has been either installed or announced to meet various regulatory mandates. Figure 2-1 shows the incremental annual addition of both wet and dry FGD in terms of generating capacity (MW) through 2012. The annual capacity added reach es about 20,000 MW in 2008, 2009, and 2010. Figure 2-2 presents the cumulative total installed since 2001, reaching almost 100,000 MW by the end of 2012. Cumulatively with the 95,000 MW installed prior to the year 2000, almost 200,000 MW of the U.S. coal-fired fleet will be equipped with FGD by 2012. All new units treat 100% of flue gas. Estimates for equipment installed beyond 2012 are uncertain and thus not shown.
Figure 2-3 shows the incremental generating capacity retrofit with SCR over the same time period. Since the peaks in 2002 to 2004, the capacity retrofit with SCR in each year has ranged between almost 4,000 and 10,000 MW. Figure 2-4 shows the cumulative capacity retrofit with SCR approaches 130,000 MW by 2012.
The ability of SCR and FGD to remove mercury (Hg) and other HAPs may also prompt their installation. Specifically, the “co

- benefit” of Hg control, where oxidized Hg is removed as a consequence of SCR and wet FGD, is relevant to the anticipated HAPs MACT rule. This rule is expected to be proposed in 2011. The capacity projected to be equipped with both SCR and FGD is shown in Figures 2-5 and 2-6, showing the annual and cumulative totals, as designated by the first year of operation. Figure 2-6 shows almost 70,000 MW of capacity will be equipped with both SCR and FGD by 2012.

2-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 2-1. Historical and Projected Wet, Dry FGD Capacity: Installed MW by Year

Figure 2-2. Historical and Projected Wet, Dry FGD Capacity: Cumulative MW by Year

2-3Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 2-3. Historical and Projected SCR Capacity: Annual Installed Capacity (MW)

Figure 2-4. Historical and Projected SCR Capacity: Cumulative Installed SCR Capacity (MW)

2-4Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 2-5. Historical, Projected FGD and SCR Annual Capacity (MW)

Figure 2-6. Historical, Projected FGD and SCR Cumulative Capacity (MW)

2-5Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### NEW GENERATING STATIONS The number of new coal-fired units planned for operation between 2009 and 2020 has decreased notably in recent years. For example, in 2002 over 36,000 MW of capacity were scheduled to be installed by 2007, whereas only 12% of that amount (~4,500 MW) were actually completed (DOE, 2009). As of late 2009, approximately 15,000 MW of coal-fired capacity is under construction, with more than another 4,000 MW of capacity permitted. An additional 27,000 MW of new coal-fired generating capacity has been proposed for installation by 2018 (DOE, 2009). It is not clear how many of the proposed units will actually be built, as investment plans are subject to revision given the present economic climate and regulatory uncertainty regarding CO 2 

### regulation.

2-6Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 3

MATERIAL AND LABOR ESCALATION

This section addresses the escalation of material and labor costs through 2008, the relaxation or normalization in prices since that time, and discusses possible impacts on equipment cost and construction schedule.
BASIC MATERIALS Among the basic materials required for installation of environmental control technology and new generating equipment are iron ore, structural steel, copper for wire and cable, and elements such as nickel and molybdenum for exotic processed metals. These inputs, along with other construction materials and the cost and productivity of labor, determine the price of finished capital equipment. These materials are broadly available in the U.S. and throughout the world, but until mid-2008 experienced strong demand due to world-wide construction in process industries and infrastructure. Specifically, exotic corrosion-resistant metals (such as C276 Hastolloy) were simply not available from many suppliers, regardless of price. Further, several cases of substandard manufacturing quality were documented with certain international suppliers, ranging from failure of high pressure piping to poor castings that lead to catastrophic failures. The demand for these materials has relaxed, as have prices, mitigating but not completely eliminating both cost and quality concerns.
Figures 3-1 to 3-4 present price escalation data for selected materials over the last 10 years (with the exception of iron ore, for which data is only available over a three year period). These data, accessed either from the U.S. Bureau of Economic Analysis 1 

### (BEA) or a commercial source 2 

### , reflect pricing from 1999 to present. These data show that prices for key commodities have relaxed from the 2008-era high marks, reverting for many materials to 2007 levels. Consequently, all commodity prices are lower than their 2008 peaks but most are not depressed.
Figure 3-1 presents BEA data for steel products, using 1982 prices as a base case. Figure 3-1 shows 2009 steel mill prices to be 60-70% of peak prices reported in the mid-2008, and at year-end returning to early 2007 and 2008 levels. Similarly, the price for iron ore (as traded at Hamersley, Australia) has relaxed from 2008 highs, and at the year-end of 2009, exceeds early 2008 levels (Figure 3-2).
The cost for special alloys used for wet FGD reaction vessels, and for high pressure, high temperatureboiler components, has also relaxed from peak 2008 values. Specifically, key ingredients to corrosionresistant and high-strength materials

– nickel, molybdenum, and chromium

– all experienced increased

1 

### See U.S. Bureau of Economic Analysis, “Price Indices for Gross Domestic Product by Major Type of Product”, revised December, 2009, http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y
2 See www.Infomine.com



### 3-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### demand and higher prices up to 2008. Figure 3-3a presents price trends for molybdenum and nickel, showing that prices after escalating by a factor of 3 to 5, respectively, have relaxed to 2006 levels for nickel and to early 2004 levels for molybdenum. Figure 3-3b depicts a similar price trend for copper and chromium. Although the content of nickel, molybdenum, and chromium in finished steel products is small, cost escalation of this magnitude will affect final product cost.

Figure 3-1. Steel Mill Products Cost History

Figure 3-2. Iron Ore Cost Escalation

3-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### a. Molybdenum and Nickel Price History Escalation

b. Copper and Chromium Price History
Figure 3-3. Price History Escalation: Nickel, Molybdenum, Copper, and Chromium

3-3Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 3-4. U.S. Bureau of Economic Analysis Finished Goods Capital Price Index
The delivered price of key finished goods and materials has also declined. However, finished equipment price declines are moderated because many inputs are manufactured goods, which require labor. These include components such as pumps, gas fans, valves, and steel plate fabricated from alloys. The delivered prices of these key components are reported to be lower by 10-20% compared to the peak 2007 and 2008 values (Gaikwaid, 2009; Erickson, 2009).
One indicator of the cost of industrial components is the BEA cost index of finished products. This index, as exhibited in Figure 3-4, shows that prices have relaxed only moderately from the 2008 highs.
Several key components or services no longer limit impose rate-limiting steps on project schedule. These include reagent preparation equipment, slurry recirculating pumps, agitator pumps, certain categories of forced and induced draft fans, and the stack. Perhaps most notable is the availability of material and personnel resources to fabricate and erect a stack. The limited number of stack erectors world-wide, coupled with the demand for new stacks for both retrofit of wet FGD and new generating units, has significantly elevated costs.
LABOR The present cost trends and availability for qualified field labor are discussed in this section.


### Labor Cost Escalatio n Labor cost escalation experienced by the industry through 2007 was summarized by an architect/engineering firm involved in the construction of several new Midwestern plants (Black & Veatch, 2007). Through 2007, annual labor escalation was observed to be between 5.2 and 7.4% per year, averaging 6.2%.
Discussions with representatives of architectural/engineering firms and equipment suppliers, and public reports of pay scales indicate that despite the economic slowdown, labor rates are little changed since 2007. Modest increases (~2% annually) are noted in most but not all trades. This trend is

3-4Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### consistent with labor costs for general construction personnel increasing 2.1% from September 2008 to September 2009. 3 

### Labor rates are largely unchanged for the crafts with the most lengthy apprenticeship programs such as boilermakers, who are required for the heavy metal bending, forming, and erection duties required for SCR and FGD equipment. Labor rates for some crafts with less restrictive training (pipefitters, electricians) have slightly declined. Consequently, labor rates in 2007 and 2008 are likely representative of present-day costs, and modest escalation of nominally 2% annually can be anticipated.
The contribution of labor cost to future FGD or SCR retrofit projects is anticipated to increase due to greater site complexity which will require more skilled personnel. For example, early SCR retrofits required installation cost of 40-50% of the total project

– with the remaining cost for process equipment acquisition and design. Not all installation cost is devoted to labor

– cranes and other heavy equipment are required

–but the labor component is large. Inevitably, escalating labor cost will translate into higher installed emission control equipment cost. 

### Labor Pool Availability The availability of specialized labor required for SCR and FGD retrofit has modestly improved since the 2008 timeframe. Perhaps the most critical craft is “boilermakers” – the highly skilled metalworkers needed to fabricate the high pressure, high temperature steam piping and supply casings. Historically, this labor pool is restricted due to a lengthy apprenticeship that is necessary to assure quality fabrication.
The severe restrictions to the boilermaker labor pool incurred in 2007 and 2008 that limited SCR and FGD installation have subsided. The moderated demand allows project planners to construct a more productive schedule. For example, the ability to assign a work schedule of a “6 10‟s” (6 workdays per week, each 10 hours) is more feasible than in the 2007/2008 timeframe.
As noted previously, labor requirements for retrofit projects are anticipated to increase with greater complexity of host sites. Historically, wet FGD installation for a 500 MW unit requires from 600,000 to 900,000 man-hours of labor, depending on the design and site-specific conditions. The average value of 750,000 man-hours equates to 1,500 man-hours per MW of generating capacity. For SCR, an average of 500,000 hours is required for a 500 MW unit, which equates to 1,000 man-hours per MW of capacity.
In terms of construction schedule, installing FGD and SCR at a given site is assumed to require 36 and 28 months, respectively. It should be noted this schedule applies to the installation of a single control device at one unit; executing several of these projects in parallel can complicate logistics and significantly extend project duration. Although the demand for boilermaker man-hours required over the project duration is concentrated on the latter 2/3 of the schedule, key labor sources for all skill crafts must be arranged for well in advance of commencing construction.
Labor Required for New Plant Construction . In 2006, Black & Veatch estimated labor demand to construct the 80 GW of new plant capacity that at the time was either in construction, design, or permitting (Black & Veatch, 2006). In October of 2009, the Department of Energy National Energy

3 See Table 5, “Natural Resources, Construction, and Maintenance”, change registered in September 2009 versus September 2008, U.S. Bureau of Labor Statistics, www.bls.gov/news.release/eci.t05.htm


### 3-5Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### Technology Laboratory (NETL) revised the projected status of new coal-fired power plants either in construction, design, or permitting to be approximately 49 GW (NETL, 2009). From 2013 through 2016, the NETL predicts 21 GW of new coal- fi red capacity will be installed. The revised workforce duty to support this construction, if executed in the field as projected, represents a large decrease from the 2006 projections. Given the uncertainty of new coal- fired plants in the “proposed” or “permitted” status, and the possibility of CO 2 

### limits, the workforce demand due to new coal-fired generation is anticipated to be slight.
Separate from coal-fired power stations, skilled craft labor will still be in demand, although not in short supply as in 2006 and 2007. The NETL projected 37 and 48 GW of natural gas-fired and wind generating capacity, respectively, to be installed between 2012 and 2016. The field labor to install these generating units is less than for coal-fired generation, but still expected to contribute to demand. Finally, many of these skilled labor trades will be in demand due to present economic stimulus actions.
In summary, the supply of skilled labor is not anticipated to limit project schedules, or excessively escalate cost to retrofit FGD and SCR NO x

### control equipment. However, competition for skilled craft labor with other power generating projects and infrastructure improvements will exist, thus labor rates are not expected to change much from present values.

3-6Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 4

FACTORS AFFECTING CAPITAL COST ESTIMATES

A review of factors affecting capital cost estimates is presented in this section. These involve the costing methodology and site-specific and engineering decisions.
CAPITAL COST ESTIMATING METHODOLOGY Evaluating the capital cost of environmental controls requires a consistent accounting of costs. Both the costs directly incurred due to process equipment, and indirect costs imposed on plant and operations, must be accounted for. EPRI‟s Technical Assessment Guide (EPRI, 1993) provides a consistent methodology, and has served as a model by which DOE, EPA, and other organizations assess costs.
Figure 4-1 schematically depicts the key components of a capital cost estimate. The capital equipment directly purchased from the supplier, and installed by a construction contractor comprises the Total Process Capital. Several indirect charges consequential to these direct charges are incurred: (a) engineering design, (b) general facilities, (c) owners ‟ costs, and (d) contingencies (usually both a process and a project). Contingencies are key planning cost elements that are usually absorbed as a project evolves. Indirect fees should be consistent when comparing costs from various suppliers. Table 4-1 presents typical ranges of values historically used by EPRI, DOE, and EPA. Together with the Total Process Capital, these indirect charges comprise the Total Plant Cost.
A second series of indirect charges is incurred based on project execution: fees for the prime contractor, and financing for the construction period. Adding these costs to the Total Plant Cost determines the Total Plant Investment.
Finally, the equipment and site must be equipped with spare parts, and a supply of reagents, chemicals, or fuels, prior to operation. These pre-production charges and inventory capital complete the Total Capital Requirement.
Ideally, evaluating capital costs would utilize similar charges as defined in Figure 4-1 and Table 4-1. Some but not all data presented in Section 6 have been developed on a consistent basis. However, most reported costs are derived from the same suppliers and A/E‟s that use similar assumptions. These cos ts are inevitably scrutinized by the public utilities commissions and thus eventually tested for reasonableness. Accordingly, comparing lump-sum costs has limits but can identify trends.

4-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 4-1. Graphic Depiction of Cost Elements
Table 4-1. Examples of Indirect Charges, Assumptions Cost Element Purpose Range, % of Project Cost Engineering Establish design 7

- 15 General Facilities Roads, buildings, shops, 2

- 5, based on process capital laboratories Owner‟s Cost Staff, management 5

- 10 Process Contingency Uncertainty in process operation 5

- 10, for a mature process
Project Contingency Uncertainty in site 5

- 10, if detailed engineering init ially installation completed Prime Contractor Fees Business cost 2

- 8 AFDC Financing during 5

- 10 construction Preproduction Supply of parts, consumables 2, based on total process investment, plus 30 days fixed, variable O&M Inventory Capital Supply of consumables Based on 30 day reagent, chemicals storage

4-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### SITE AND DESIGN FACTORS Site characteristics and the operating philosophy, particularly the owner‟s tolerance for equipment outages, affect capital cost. These and other factors are responsible for variations in estimates of capital cost among projects.
The key site-specific factors that define capital cost are:
Fuel Composition . The fuel defines the volume of combustion products, content of particulates, SO 2 

### , and NO x

### production rates, and composition of fly ash. These characteristics drive process equipment cost. Most important is the volume of flue gas produced by fuel combustion. For example, PRB or other sub-bituminous coals can generate up to 30% greater volume flue gas to be treated, compared to an eastern bituminous coal, per unit generating capacity. For FGD, the amount of sulfur to be processed and the ultimate fate of the byproduct are factors. For SCR, the flue gas volume, the content and composition of ash, and trace elements in the fuel such as arsenic and phosphorous can determine reactor volume and catalyst layout.
Site Congestion and Retrofit Difficulty . Limited space for equipment location, access for construction, and access for labor will extend installation time. Generally, older units of smaller generating capacity will incur high costs due to limited access (as well as penalties due to economies-of-scale). Large generating units do not necessarily guarantee adequate space for equipment installation. Specifically, even though the area occupied by the plant will be larger, the opportunities for obstruction are greater.
Existing Site Auxiliary and Support Facilities . FGD and SCR process equipment demand auxiliary power, steam, and compressed air. The availability of these consumables at a site varies, and additional infrastructure to supply and distribute these consumables may be necessary. The most costly of these can be the requirement to provide new power distribution infrastructure including transformers, switchgear and/or “motor control centers” . The escalation in price until 2008 of copper-derived electrical subsystems has contributed to cost increases; during periods of peak copper pricing electrical infrastructure escalated from 5-6% of an FGD budget to more than 10%.
Flue Gas Draft System Upgrades . The retrofit of environmental controls will change the static pressure within the ductwork, which may require upgrades to fans, new fan motors, upgraded electrical systems, and strengthening of ductwork, ESPs, and boiler walls. The upgrade and strengthening of ductwork and boiler walls is necessary to prevent collapse or implosion.
Waste Water Treatment Requirements . For wet FGD, the need to treat process discharge water varies depending on permitted limits. Zero-water discharge requirements can impose large costs on the entire FGD slurry treatment and dewatering systems, and may possibly interfere with FGD chemistry. For a suite of wet FGD process equipment installed in North Carolina, wastewater treatment facilities comprised a total of between 9 and 14% of the total capital cost.
Stack Rebuild or Replacement . Retrofit of wet FGD process equipment can require replacement or major rebuild of the stack. Flue gas treated by wet FGD poses corrosion and deposition potential, due to relatively low saturation temperature and content of SO 3 

### . If space on- si te is available, the least cost

4-3Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### solution sometimes involves a new stack rather than retrofitting corrosion-resistant liners to an existing stack. FGD installation can be limited by the availability of expertise and resources to erect a new stack.
Equipment Sparing and Redundancy Philosophy . The operating strategy of the owner, and the cost incurred for an FGD outage in terms of compliance margin and SO 2 

### allowances, determines the equipment sparing and redundancy strategy. General convention defines equipm ent that is “spare” as that stored in a warehouse and ready to install; equipment that is redundant is installed and ready to run. Operators with sufficient margin in meeting the SO 2 

### or NO x

### cap, or for whom SO 2 

### or NO x 

### “allowances” are available, may choose to lower capital cost by minimizing redundant equipment. Conversely, operators for whom access to SO 2 

### or NO x

### allowances is limited or costly may elect to invest in more spare equipment. Sparing philosophy can affect capital cost by 10-20%.
Materials of Construction. The materials required to resist corrosion and erosion, in an effort to obtain high reliability, elevate capital cost. Specifically, high alloy containing steels or rubber-lined absorber vessels or pumps are needed to increase reliability. Although lower grade materials can sometimes be used for certain piping applications, the ability of a fluid to corrode, erode, or otherwise compromise the reliability of piping must be considered when selecting construction materials. For wet FGD, the need to use higher alloy and lined equipment adds 10-20% to the project capital cost.
Capital versus Operating Cost . Many decisions revert to a tradeoff between capital and operating cost; capital savings derived can be at the expense of higher operating cost. For SCR, a key example is the catalyst layout

– the number of initial and final layers of catalyst utilized. For example, a reactor layout of 2 initial layers and 1 spare layer (i.e., 2+1) will result in a lower capital but higher operating cost, compared to utilizing 3 initial layers and 1 spare layers (i.e., 3+1). The key difference is higher catalyst consumption over a long-term period.
Of these factors, perhaps the most important is site complexity. Plant sites where FGD and SCR are to be retrofit have become more complex for several reasons. First, the largest generating capacity, highest capacity factor units have already been equipped with FGD and SCR, leaving smaller and older units for future retrofit. The incurred capital cost per unit of generator output ($/kW basis) is disproportionately higher on these smaller units. Second, these units

– being older – are located on sites of limited area and restricted access. Consequently, these sites may not be amenable to retrofit of control equipment, without relocating other components. The limited space also restricts labor productivity and extends construction time. As a consequence, for FGD, the absorber towers are located further from the unit, requiring longer ductwork runs.

4-4Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 5

FLUE GAS DESULFURIZATION COSTS

This section presents capital and operating costs for wet and dry FGD process equipment.
FGD CAPITAL COST The capital costs for both wet and dry FGD process equipment are discussed in this section.


### Wet FGD Figure 5-1 depicts installed capital cost as a function of generating capacity for wet limestone-based FGD. The units depicted all employ limestone reagent, forced oxidation treatment of byproduct, deliver at least 97% SO 2 

### removal, and are equipped with mist eliminators. The influence of design or operating conditions different from those stated will impact cost, especially due to variations in inlet SO 2 

### and the subsequent impact on solids byproduct handling equipment. In addition, some of the cost data are derived from two or more identical units installed at one site, and thus reflect an economy- of

scale for engineering and procurement. The cost reported in Figure 5-1 includes both contracted and staff engineering charges, and financing of construction.
Figure 5-1 depicts two curves, based on when the FGD process started commercial service. All costs are reported on a 2008-dollar basis. One curve (Curve A) represents units starting commercial operation after January 2008, and includes several units scheduled for a 2010 startup. This curve, based on 20 data points for the 2008-2010 startup dates, suggests a modest economy of scale with larger generating capacities, enabling lower unit cost. Figure 5-1 also shows a cost curve (Curve B) similarly based on 20 data points (not shown for simplicity) for units that began commercial operation between 2004-2007, relating capital cost and gener ating capacity. The “midpoint” of these latter cost data is 2005.
Comparing the two curves in Figure 5-1 shows capital cost increased from the 2004-2006 to the 2008

- 2010 timeframe. Specifically, Curve B shows wet FGD capital cost for a 500 MW unit retrofit in the 2004-2006 timeframe escalated from $342/kW to $407/kW – anincrease of $65/kW over a mean time period of 4 years. The difference equates to an escalation of approximately $16/kW per year. At this rate of escalation, an FGD process installed for a 2015 startup on a 500 MW unit will require about $470/kW (in 2008 dollars).

5-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 5-1. Wet FGD Process Equipment Cost: Various Sources 

### Dry FGD Figure 5-2 depicts installed capital cost presented as a function of generating capacity, for dry lime

based FGD. The costs for all units with a lime-based spray dryer absorber (SDA) include a secondary fabric filter particulate collector. Most SDA equipment is designed for 93-95% SO 2 

### removal. For these designs, fly ash is removed in the existing particulate control device (an ESP in all cases), so ash handling and disposition is the same as prior to retrofit.
Figure 5-2 shows the estimated capital costs for eleven units evaluated for retrofit to a Midwestern utility operator. Similar to the case for wet FGD, these costs are expressed in 2008 dollars, and reflect a ready- to -operate FGD process accounting for all direct and indirect charges. For three dry FGD units that were actually constructed, the incurred costs are reported.

5-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 5-2. Dry FGD Process Equipment Cost: Various Sources
The dry FGD equipment costs reported do not suggest increases with time. However, the basic process equipment is the same as required for wet FGD, and escalation forces should be the same. Consequently, the same escalation rate of 19% over four years is assumed for dry FGD. These data suggest the capital cost of a 500 MW unit completed in late 2014 for process startup in 2015 would be approximately $385/kW.
Small units are particularly prone to escalated FGD cost, as fixed costs for items such as engineering

an d reagent preparation equipment are disproportionately borne by the limited plant output. An example of how capacity and market timing affects cost is presented by the case for PSHN Merrimack Units 1 and 2, where about $1,000/kW is projected for FGD to treat flue gas from both units. The site and market conditions are unique; so much that this value is not included in Figure 6-1. The small size of Units 1 and 2 (115 and 320 MW, respectively), the extensive ductwork to service both units, gas fan upgrades, enclosures for cold-weather maintenance, waste water treatment system, restricted site for equipment installation and construction, and strong market forces are responsible for the high cost. Notably, in 1993 Unit 2 was the first coal-fired generator in the U.S. retrofit with SCR. The conditions in 1993 under which the SCR reactor for Unit 2 was designed and installed featured aggressive pricing by early entrant suppliers, available materials and labor, and an accessible site. These conditions, which enabled Merrimack Unit 2 to acquire SCR for the lowest cost reported in the U.S., are the complete opposite for the acquisition of wet FGD.

5-3Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies


### OPERATING COST Op erating cost is defined in several ways

– total operating cost per unit of capacity per year, normalized to power generated, or per unit of emission species removed.
Figure 5-3 is a reproduction of a graphic describing the range of various FGD operating cost components as presented at the November 2006 PowerGen conference (Sargent & Lundy, 2006). Figure 5-3 compares (for a 500 MW plant) the various contributors to total operating cost for a limestone-based wet FGD process, designed for 95-97% SO 2 

### . Total O&M ranges from approximately $15 to $38/kW/yr, and is almost equally comprised of fixed and variable components. As noted in Figure 5-3, limestone reagent cost for this size of unit varies in direct proportion to the amount of sulfur in the coal. Other operating cost components directly related to sulfur content include operating and maintenance labor, and byproduct management.

Figure 5-3. Range of Wet FGD Operating Costs for 500 MW Units (after Sargent & Lundy, 2006)
The capital cost ranges in Figures 5-1 and 5-2, when combined with operating costs escalated to a 2008 year basis, provide an indicator of FGD cost-effectiveness, or the cost per ton of SO 2 

### removed. Figure 5-4 presents the cost per ton of SO 2 

### removal for a hypothetical 500 MW unit, utilizing a limestone based forced oxidation process. Calculations are reported for coals such as PRB, with low sulfur content, and include Pennsylvania and Ohio coals with 2.6% and 3.4% sulfur content, respectively. These coals present an uncontrolled sulfur content of 0.90, 4.0, and 5.8 lbs SO 2 

### /MBtu. Figure 5-4 presents results based operating costs similar to Figure 5-3, and calculated for the specific coal composition. It is possible that higher operating costs may be incurred that reflect higher labor rates

5-4Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### and other site-specific factors, such as reagent transportation. Figure 5-4 results also assume a 15-year book life (i.e., cost recovery period) and thus a capital recovery factor of 0.12.
For the Pennsylvania and Ohio coals, the unit cost of SO 2 

### removal is generally between $250 and $600/ton, exceeding $500/ton for the Pennsylvania coal when capital cost reaches $375/kW. Unit SO 2 

### removal cost approaches $500/ton for the Ohio coal as the capital cost exceeds $450/kW. For PRB coal, the same capital cost increase will elevate SO 2 

### removal cost from approximately $1,600 to $2,500/ton. The costs will change in proportion to the sulfur content of the fuel.

Figure 5-4. SO 2 

### Removal Cost per Ton ($/Ton), Year 2008 Basis

5-5Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 6

SCR NO X 

## COST

This section presents capital and operating costs for SCR NO x

### control.
SCR CAPITAL COST Figure 6-1 summarizes the reported capital cost for over fifty SCR installations, some installed as early as 2000, and includes estimates for process equipment presently under construction. All costs are reported on the basis of 2008 dollars, include both staff engineering and owners‟ engineering c harges, and financing charges (AFDC). Regarding process design, it should be cautioned that not all data represent comparable cases

– the inlet NO x

### removal, fuel type, outlet NO x 

### design level, number of catalyst layers, and reactor arrangement differ for most of the installations represented. However, the general trend in cost is believed to be an accurate reflection of the industry average.
Figure 6-1 reports cost incurred over four discrete time periods. These include the time periods for the years (a) pre-2000, reflecting the most early projects, (b) 2000-2002, reflecting the initial class of units installed prior to broad SIP-Call compliance, (c) 2003-2004, reflecting units installed during the height of the SIP-Call compliance, and (d) 2008-2010, reflecting units recently installed or presently under construction. A polynomial curve is fit to all data except that for the 2000-2002 timeframe, the latter excluded for graph clarity.
The data in Figure 6-1 reveal the cost penalty incurred by the smaller generating units is more acute for SCR retrofit to the most recent units; specifically, retrofitting SCR to the smallest units (<300 MW) compared to the largest units (>500 MW) incurs a relatively large cost penalty.
COST ESCALATION The data presented in Figure 6-1 can be used to infer the escalation in cost experienced for the installed SCR process equipment over time. For each of the four time periods presented in Figure 6-1, the average installed capital cost was determined. Specifically, the average capital cost was determined for the units within each group. The difference in the average cost

– all corrected to a 2008-dollar basis – suggests the cost escalation.
Figure 6-2 presents the difference in costs for the four periods, suggesting an escalation of $140/kW over the 12 year period, or about $12/kW per year. This trend can be anticipated to continue in to 2015, as the evolution to installing SCR at smaller, more complex sites continues.

6-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 6-1. Capital Cost of SCR Process Equipment vs. Generating Capacity: Four Time Periods

Figure 6-2. Increase in SCR Capital Cost Based on Four Time Periods (Three Increments)

6-2Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### Capital cost escalation of approximately $12/kW per year is apparent with SCR process equipment installed since 2000. In addition to the escalation in the basic cost of materials and labor, the complexity of the sites to which equipment is retrofit is believed to have increased. Although there is no index of site complexity that can be referenced, the average size of the generating unit retrofit has decreased. Specifically, Figure 6-3 presents the average generating capacity of the unit retrofit versus the startup year and shows a small but consistent decrease in the average generating capacity. This average capacity of units retrofit with SCR decreased from approximately 600 MW for the first wave of retrofits, to approximately 450 MW for those units deploying SCR in 2012.

Figure 6-3. Average Generating Capacity of Unit Retrofit with SCR vs. Installation Date
An example of how the role of market forces and site characteristics affect SCR cost is demonstrated by the case of the Associated Electric Cooperative (AEC) SCR installations at the New Madrid and Thomas Hill generating stations.
AEC was as an early adopter of SCR in the U.S., specifically to the challenging case of cyclone boilers, fired by PRB coal. Units 1 and 2 of the New Madrid station retrofit SCR in 2001 and 2002, respectively. These units were designed and constructed by a leading engineering firm, and have proved to be capable designs. AEC was able to exploit market forces at the time

– an evolving SCR market, with strong competition from numerous suppliers and service providers

– and retrofit each 680 MW unit for less than $100/kW (2008 dollar basis). Figure 6-4 depicts the site and layout of the New Madrid SCR-equipped units, showing the available space for the SCR reactors.

6-3Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 6-4 . Site Layout for Associated Electric Cooperative’s New Madrid Station, Units 1 and 2. (SCR reactors denoted within red circle)
In 2008, AEC completed construction of three SCR reactors for each of Thomas Hill Units 1-3. Units 1 and 2 are cyclone boilers, fired by PRB, similar to New Madrid. The small generating capacity of these units (180 and 285 MW for Units 1 and 2, respectively), the limited space to locate the reactors, and restricted access all serve to elevate construction cost. Figure 6-5 depicts the site and layout of the Thomas Hill station, identifying the SCR reactors for Units 1 and 2.
AEC was not able to replicate the favorable market conditions encountered when the New Madrid units were built; notably the process supplier that provided attractive terms for New Madrid has withdrawn from the market. The demand for components, materials, and construction labor incurred during 2007 and 2008 timeframe exceeded that for the timeframe when the New Madrid units were constructed. As a consequence of these conditions, the capital cost to retrofit SCR for these units averages $300/kW

– essentially three times the cost of New Madrid units. That an SCR-experienced owner such as AEC incurred these costs at Thomas Hill

– while expending the same diligent effort as at New Madrid

– demonstrates the strong role of market forces and site conditions in controlling technology costs.

6-4Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 6-5 . Site Layout for Associated Electric Cooperative’s Thomas Hill Station, Units 1 and 2. (SCR reactors denoted within red circle)
OPERATING COST Operating costs for SCR processes consist mostly of replacement catalyst and ammonia-based reagent. Each of these cost components has increased significantly in the last 10 years. In the early stages of SCR operation, catalyst replacement was the dominant component of operating cost. In the last ten years, a decrease in catalyst cost and escalating natural gas (and thus ammonia) prices have inverted this relationship, so that for most units reagent supply dominants operating cost. Fixed operating and maintenance costs are generally small compared to these two components, and typically are less than 1% of total capital, incurred annually.
Factors affecting catalyst and reagent supply and reagent cost are discussed subsequently. 

### SCR Catalyst Historically, supply of catalyst comprised the largest operating component of SCR NO x

### control. The unit cost of catalyst has greatly decreased since the early 1980s. Further, the ability to regenerate or rejuvenate catalyst for approximately 50% of new product price restrains price.
Figure 6-6 presents the unit price of catalyst since the early 1980s, corrected to a 2008-dollar basis, showing a decrease in unit price by a factor of five since the earliest commercial bids. The minimum price of near $4,000/m 3 

### first occurred in 2005, and prices approximating this level continue today.

6-5Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### Figure 6-6. History of SCR Catalyst Prices: 1980- 2008 (2008 Dollar Basis)
Limited catalyst availability, requiring orders to be placed almost one year in advance, was observed in recent years as many operators prepared seasonal SCR reactors for annual operation, which included supplementing or replacing existing catalyst layer. However, catalyst prices remain in the approximate range of $5,000-6,000/m 3 

### and are anticipated to remain in this range during the next 5 years.
The consequence of the catalyst price decrease is that catalyst procurement no longer dictates SCR cost as it has in the past. In fact, catalyst management decisions at present can exploit low prices to insure the reactor has adequate catalyst activity, to confine catalyst replacement to major outages, avoiding unit shutdown for the purpose of catalyst addition or exchange. 

### Reagent Any savings in SCR operating cost due to catalyst price decreases have been offset by escalation indelivered price of ammonia-based reagent. SCR operators can choose from four types of ammoniabased reagent: anhydrous ammonia, aqueous ammonia of 19.5% NH 3 

### content or 29% NH 3 

### content, or urea. For the purposes of this discussion, anhydrous ammonia will be discussed as an example, recognizing that the alternative reagent forms are equally viable.

6-6Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### The cost of anhydrous ammonia is as much as 80-90% determined by the cost of natural gas feedstock. In late 2008, the cost for anhydrous ammonia for both agricultural and industrial uses jumped to well in excess of $600/ton for many suppliers. The moderation in natural gas prices and muted demand in the global economy has allowed ammonia reagent prices to relax from these 2008 highs. An industry report (CRU, 2009) predicts the price of anhydrous ammonia as -deliveredto Tampa, Florida, to be approximately $300-350/ton for the early portion of 2010. This cost is consistent with a delivered cost to generating stations for anhydrous ammonia of $400/ton, the same as the level experienced in 2007. 

### Example Operating Cost The operating and maintenance cost for an SCR process can be developed (for a hypothetical 500 MW unit), based on assumptions in Table 6-1 that define the conditions of operation. These are:
Fixed O&M. Spare parts and support for miscellaneous duties that must be executed regardless of unit operation are assumed to require 0.50% of process capital.
Catalyst Supply . Catalyst supply cost is determined by long-term purchases from which an annualequivalent average can be calculated. The long-term purchases are dictated by catalyst addition to the empty spare layer, and replacement of existing layers. For an SCR reactor employing a 2+1 catalyst arrangement, an initial space velocity of 3,200 1/h, and a 16,000 hour period for an initial operating guarantee, the purchase of one layer for every 16,000-20,000 operating hours may be required, depending on the process design and fuel type. Operating experience through 2009 suggests this catalyst management strategy, typical of initial assumptions adopted by many operators, is proving to be a best-case scenario, and that greater volumes of catalyst are required, or more frequent catalyst changeout is needed.
Reagent Cost . The purchase of anhydrous ammonia for 90% NO x

### removal from 0.35 lbs/MBtu, at 85% capacity factor, defines the reagent cost. A delivered price of $400/ton is assumed.
Auxiliary Power . Auxiliary power for an additional 6 inch water gauge (w.g.) flue gas pressure drop is assumed

– 5 inch w.g. for the process flange- to -flange, and an additional 1 inch w.g. across the air heater.
Catalyst Cleaning . Sootblower consumption of 0.2% of the plant steam output is adopted; this steam is assigned a cost of $1/MBtu. Many new SCR installations employ acoustic horns for cleaning, which require less auxiliary power.
Operating Staff . The addition of one operator is assumed for maintenance of the above components. Also, a part time (25%) engineer to assess operation and evaluate data is assumed. The need to account for additional staff due to SCR is highly variable; some owners report additional operating or engineering staff is not added for these purposes. However, these assumptions are adopted to account for operations and staff duties that did not exist prior to SCR.
The capital cost observed in Figure 6-1, when combined with updated operating costs in Table 6-1, provides an indicator of SCR cost-effectiveness, or the cost per ton of NO x

### removed. Figure 6-7 presents the cost per ton of NO x

### removal for a hypothetical 500 MW unit, utilizing a 2+1 catalyst arrangement, with an initial NO x

### input of 0.38 lbs/MBtu, as a function of SCR capital cost.

6-7Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies 

### Calculations are reported for an eastern bituminous coal with approximately 0.38 lb/MBtu furnace NO x 

### exit, and a PRB-fired unit assumed to produce 0.20 lb/MBtu. Results presented in Figure 6-7 for the eastern bituminous coal employ operating cost in Table 6-1, while calculations for PRB coal employ lower cost for reagent use and catalyst consistent with lower inlet NO x 

### . Figure 6-7 results also assume a 15-year book life (i.e., cost recovery period) and thus a capital recovery factor of 0.12.
Table 6-1. Key SCR Operating Cost Components: 500 MW Reference Plant ($150/kW Capital, 2008 Dollar Basis)

Operating Cost Basis Annual Cost for Annual Cost for Component 500 MW ($/yr) 500 MW (mills/kWh) Fixed O&M 0.5% of Process Capital 150,000 0.04 Labor Operators/Part

- time Engineer 125,000 0.03 Fuel Cost Auxiliary Steam 100,000 0.02 Reagent 90% NO x 

### removal (from 0.38 885,000 0.25 lb/MBtu) Auxiliary power 6 in. w.g. total @ $20/MWh 265,000 0.07 Catalyst Supply 16,000 hr guarantee for 2+1 675,000 0.15 reactor Total 2,200,000 0.59

Figure 6-7. NO x

### Removal Cost per Ton ($/ton), Year 2008 Basis.

6-8Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



### For the eastern bituminous coal, an increase in capital cost from $100/kW to $300/kW elevates the cost of NO x

### removal from $1,200 to more than $3,200/ton. For the PRB coal, with lower inlet NO x

### rate and lower operating costs, the same capital cost increase elevates NO x

### removal cost from approximately $2,300 to more than $6,000/ton. The costs will change in proportion to the boiler NO x 

### generated.

6-9Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies



## SECTION 7

CONCLUSIONS

The escalation in cost to acquire and retrofit environmental control equipment has moderated from the rates in 2007 and 2008. Two factors are responsible for this outcome. First, the moderated demand for goods in response to a slower world-wide economy has lowered prices for most components of finished goods. Delivered prices for some goods are unchanged, while others are reduced by 10-20% from the 2007 and 2008 highs.
Second, the skilled labor pool for which shortages in 2007 and 2008 limited the rate of project completion is in less demand. For most skilled trades, labor prices have not decreased, but continue to escalate at modest rates of 1-2% annually. The productivity in deploying this labor will likely be higher, due to the improved skill and experience of the average available worker.
The capital cost of retrofitting either wet FGD or SCR increased over the recent 4-year period, from about 2005 through 2009, and specifically for a 500 MW plant, by approximately $50-65/kW. This same rate of cost escalation is anticipated to continue for the next 4-6 years, elevating the cost of equipment installed in 2014 and 2015 for a CAIR Phase 2 mandate and the anticipated HAPs MACT rule.
Two reasons suggest why installed cost will continue to escalate despite the world-wide economic slowdown. First, the $50-65/kW increase represents an average since approximately 2005; price and schedule pressures existed prior to the 2007 and 2008 increases. In 2009, material prices have moderated but not significantly, while labor escalation continues.
Second, the remaining units to be retrofit feature more complicated sites. These units are smaller in generating capacity, and frequently represent single-unit installations that cannot share common facilities, such as reagent preparation, byproduct handling and storage, and a wet stack. Further, the layout of the host sites will be more compact, with greater interference from existing equipment, requiring a more complex and labor-intensive design.

7-1Capital Cost and Cost-Effectiveness: Power Plant Emissions Control Technologies


## SECTION 8

REFERENCES

Reference Author
Black & Veatch, 2006 Black & Veatch, “Building New Baseload Generation in The Midwest” , presentation to MMEA, April 11, 2006.
CRU, 2009 CRU, “Ammonia Short

- Term Forecast and Review ” , Volume 02, Issue 12, November 5, 2009.
Cichanowicz, 2004 Cichanowicz, J.E., “Why are SCR Costs Still Rising ” , Power Magazine, April 2004.
DOE, 2009 U.S. Department of Energy, „Trackin g New Coal

- Fired Power Stations ” , National Energy Technology Laboratory, Office of Systems Analyses and Planning, October 8, 2009.
EPRI, 1993 EPRI Technical Assessment Guide, “Electricity Supply – 1993,” EPRI TR

102275

- V1R7, June 1993.
Erickson, 2009 Eri ckson , Clay, “Personal Communication ” , December 8, 2009.
Gaikwad, 2009 Gaikwad, R ajendra, Personal Communication ” , December 8, 2009.
Hoskins, 2003 Hoskins, B., et al., “Uniqueness of SCR Retrofits Transl ates Into Broad Cost Variations ” , Power Engineering, May 2003.
Katzberger, 2007 Katzberger, S., et al., “Impact of a Resource

- Constrained FGD Market” , Electric Power 2007 Conference and Exhibition, May 1

- 4, 2007, Chicago, IL.
Marano, 2006 Marano, M., et al., “Estimating SCR Installati on Costs ” , Power, January/February 2006.
NCDENR, 2009 North Carolina Department of Environment and Natural Resources, “Implementation of the Clean Smokestacks Act” , June 1, 2009.
NETL, 2009 National Technology Energy Laboratory, “Tracking New Coal

- Fired P ower Plants ” , Office of Systems Analyses and Planning, October 8, 2009.
Sargent & Lundy, 2006 Sargent & Lundy, “The Real Co st of Wet FGD Retrofit Projects ” , presentation to Power

- Gen, November 2007, Orlando, FL.

8-1

### Figure 2

. Sherco Plant Site Photo

Limited s p ace for const r uction
c r

anes



### A- 9 Existing Wet FGD Buildings

SCR ins t allation will h ave t o dea l with exis t i ng site system interferences
, such
as c o al conveyors , p i ping
, dueling and exist i ng bu il d i ngs

.U .S. Stee l C or porat i o n Minnesota Ore Opera ti ons P.O. Box 4 i 7 M I. Ir o n, MN 55768



### CERTIFIED MAIL 7006 0100 0006 4747 9780
February 3, 2012

VIA EMAIL- catherine.neuschler@state.mn.us and Facsimile- 651-297-8324

Ms. Catherine Neuschler Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 Lafayette Road North St. Paul, MN 55155-4194



### Re: United States Steel Corporation- Minnesota Ore Operations Minntac and Keetac Plants Comments on Draft Regional Haze State Implementation Plan Supplement

Dear Ms. Neuschler:

United States Steel Corporation (U. S. Steel) is pleased to submit comments on the subject Regional Haze State Implementation Plan Supplement. While the proposed revisions include some laudable provisions, we have significant concerns with the proposal as expressed herein. We believe the Minnesota Pollution Control Agency (MPCA) has not amply justified the need to impose the restrictions proposed on the U. S. Steel taconite facilities. We begin with general comments regarding the proposed revisions; and then provide specific comments as they are applied to Minntac and Keetac , respectively.



### GENERAL COMMENTS

1. MPCA has proposed to use Administrative Orders and Administrative Orders "by Consent" as a means to establish enforceable limitations as MPCA has unilaterally deemed necessary to satisfy BART. First, U. S. Steel would like to point out that the MPCA has not adequately worked with U.S. Steel on the administrative orders and, despite the Keetac order being referenced "by consent," by no means does U. S. Steel consent to the order as drafted. While we would be receptive to entering into such orders with MPCA, as appropriate to satisfy MPCA's Regional Haze obligations, we believe the Orders require substantial revision. Fmthermore, MPCA requires U. S. Steel's consent to use the Orders as patt of the proposed SIP revisions, as the authority to impose the Order without consent, per 116.07 subd 9, is limited to enforce Chapters 116 and 114C ofthe Minnesota statutes, none ofwhich includes

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page 2

BART or regional haze.

2. With regards to the Administrative Orders, the MPCA regulations provide that BART determinations in Minnesota are to be made according to EPA's guidelines at Appendix Y of 40 CPR 51. Under Section V of Appendix Y, the guidelines state, "To complete the BART process, you must establish enforceable emission limits that reflect the BART requirements and require compliance within a given period of time. " Since the SIP plan as submitted must contain emission limitations that represent BART and the BART process, to be complete, must be enforceable, this again supports the argument that the BART limitations, and thus the Administrative Orders, must be final and enforceable at the time the State submits the SIP revisions. While MPCA may anticipate that the Orders will be enforceable, the Orders are not currently enforceable and are inappropriately included as a proposed SIP revision until such Orders are indeed enforceable.

3. The draft Administrative Orders contain a requirement for "permanent" recordkeeping, e.g., "Minntac shall permanently maintain the following information together with all amendments, revisions, and modifications to this information. Information on NOx, S0 2 , 

### and PM emission limits and operational requirements imposed by this Order. These records include this Order. Such a requirement is unnecessary and onerous. Such records should only be required to be maintained until such limits and requirements are incorporated into a federally enforceable permit. In any case, a requirement to maintain records permanently, i.e., forever, is umeasonable.

4. The proposed revisions inappropriately rely on the Cross State Air Pollution Rule (CSAPR). As you are aware, on December 30, 2011 (albeit, after the draft revision

was submitted for public comment), the Court of Appeals for the District of Columbia Circuit stayed CSAPR pending the Court's review of petitions filed with the Court in the matter. While the Court has obligated EPA to continue to work with the remanded Clean Air Interstate Rule, in the interim, it is inappropriate and illogical to
assume that any reductions from EGUs would result from either rule, as one is stayed and the other is remanded. U. S. Steel specifically disagrees with MPCA's asse1iion that "it is reasonable to assume that EPA's [once anticipated] rulemaking will determine that the emission reductions from TR [Transport Rule, i.e., CSAPR] will be equivalent or better than those provided by source-specific BART." Fmihermore, U. S. Steel disagrees with MPCA's reliance on CSAPR or CAIR, as CAIR is remanded and inappropriate for reliance; and CSAPR is stayed and subject to cunent litigation. MPCA's has not substantiated its claim that it is appropriate to rely on controls at EGUs that the EGUs were plam1ing to install in order to comply with CAIR (or CSAPR} since EGUs have challenged these rules For these reasons, at this point, it is inappropriate to rely on CAIR, CSAPR, or any replacement or modified rule for BART. Because ofthe pending CSAPR litigation and remand ofCAIR, U.S. Steel is

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page 3

concerned that non-EGUs, like Keetac and Minntac, could bear a disproportionate burden to satisfy MPCA's BART obligations.

5. While MPCA has indicated that certain sources identified in the proposed SIP revisions are not included in the BART requirement, how MPCA came to such a conclusion is not clear in the proposed SIP revision. MPCA should provide its BART analysis in accordance with 40 CFR Part 51, Appendix Y.



### 6. The MPCA unnecessarily and inappropriately requires the sources to comply with the emission limits during periods of stati-up, shutdown, and malfunction (SSM). First,

as explained below, this is incorrect as to the derivation of the limits and confidence intervals, i.e., MPCA incorrectly assumed that the data included such events, as it is unclear how MPCA accounted for periods of SSM/bypass. Second, such a requirement and inclusion is inconsistent with EPA's BART Guidelines established at 40 CFR Part 51, Appendix Y, which clearly states, "[t]he emission estimates used in the models are intended to reflect steady-state operating conditions during periods of high capacity utilization. We do not generally recommend that emissions reflecting periods of start-up, shutdown, and malfunction be used, as such emission rates could produce higher than normal effects than would be typical of most facilities. We recommend that States use the 24-hour average actual emission rate from the highest emitting day of the meteorological period modeled, unless this rate reflects periods [of] stati-up, shutdown, or malfunction." As explained below, MPCA incorrectly concluded that the data sets used in its analysis included such periods of stati-up, shutdown, or malfunction. For this reason, U. S. Steel requests that the provision that the limits be met during periods of stmi-up, shutdown, or malfunction be removed from the proposed orders. In the alternative, U. S. Steel suggests that MCPA specifically include language in the Orders that would allow sources to asse1i the affirmative defense during such periods. The EPA's interpretation of the Act related to exclusions from emission limitations for sources in ce1iain startup, shutdown, or malfunction situations was upheld by the United States Comi of Appeals for the Sixth Circuit in Michigan Mfrs. Ass'n v. Browner, 230 F.3d 181 (6th Cir. 2000), upholding the 1982 and 1983 Bennet memos. USEP A has continued to use such an approach when reviewing SIPs. See, e.g., 

### approval ofNew Mexico SIP, 734 FR 46910, September 14, 2009, Federal Register.



### 7. MPCA has performed a statistical analysis on very limited data. Much of the CEMS data used to develop limits for the U. S. Steel facilities is based upon only six qumiers of data during a time period that was not representative of optimum production. Due to economic conditions lines at Minntac were just restmiing after idled periods and Keetac was not operating until January 2010. U.S. Steel is concerned that it could umeasonably be faced with non-compliance with the proposed Orders during periods of peak production since these periods are not represented in the data that MPCA used to develop the BART limits. U. S. Steel strongly believes that any emissions

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page4

limits must account for such peak production periods.

8. While U.S. Steel appreciates that MPCA is relying on current controls for non-EGUs to satisfy its BART requirements, the BART limits are inconsistent among similar operations (based upon existing equipment and practices at such sources), which results in an inequitable burden among sources to satisfy the BART requirements. While U. S. Steel is not suggesting that MPCA act contrary to anti-backsliding requirements, sources that have historically performed superiorly in the past, should be granted more flexibility in its options to satisfy BART.

KEETAC

9. As identified in the Consent Order, the MPCA's long tenn strategy determined that an appropriate mechanism for implementing the long term strategy for the taconite facilities is their demonstration that each facility is in attainment with the one-hour NAAQS for S02 and NOx.

U S. 

### Steel Comment: U. S. Steel- Keetac facility has already demonstrated compliance with the one-hour NAAQS for both the existing operations and permitted expansion at the facility and has enforceable limits associated with it. Therefore, U. S. Steel believes the Keetac facility has fulfilled its obligations associated with the SIP and no additional emission limits are necessary.
Proposed Resolution Remove the draft Order petiaining to Keetac from the MPCA's draft Regional Haze SIP Supplement. There is already a federally enforceable permit with such limits and requirements.

In the event that MPCA disagrees with the previous comments, and intends to keep the Keetac Order in the SIP and 

### U.S. Steel consents to the Keetac Order, then the following comments apply:

10. The Administrative Order is drafted to United States Steel Corporation Keewatin Taconite.

U S. 

### Steel Comment: The facility name is Keetac; and while U. S. Steel maintains that an order is not necessary or appropriate, any references to the facility should reflect the correct name ofthe source as Keetac.
Proposed Resolution

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page 5

Replace all references to "Keewatin Taconite" with Keetac.

11. The Order specifies, in paragraph 19, that Keetac must model compliance with the one-hour NAAQS. In paragraph 2l.I.a.i of the Order, MPCA specifies the schedule for modeling and the compliance demonstration requirements.

U 

### S. Steel Comment: The Keetac facility has already demonstrated compliance with the one-hour NAAQS for NOx and S0 2 during the Keetac Expansion permitting process. The permit was effective on October 19, 2011 and contains one-hour limits to ensure compliance with both standards.
Proposed Resolution: Delete the requirements stated in 21.I.a.

12. In paragraph 20.I.c.ii, the Order incorrectly discusses the flow weighted mean concentration of all stacks for the furnace.

U S. 

### Steel Comment: The Keetac furnace is constructed with one stack.
Proposed Resolution: Correct the reference to reflect that the furnace is constructed with one stack.

MINNTAC

13. In paragraphs 20.I.a.6 and 20.I.b.6 of the Order, MPCA specifies that hours during which the subject emission unit does not operate are not included in the calculation of the rolling average. Periods of startup, shutdown and malfunction are included in the calculation of the rolling average.

U 

### S. Steel Comment The analysis performed by the MPCA to determine appropriate limits utilized the 30 day rolling sum for S02 and NOx which is supplied qumierly to the agency. These calculations include the periods in which the emission unit is not in operation, in addition to periods of startup, shutdown, and malfunction. Therefore, the emission limit should include all these periods to maintain consistency. (See, also, general comment 6 above.)
Proposed Resolution The method of calculation to establish the NOx and S0 2 limits should be in accordance with 40 CFR §75. U.S. Steel utilizes a Data Acquisition System and follows standard data substitution procedures outlined in that part. The emission limit

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page 6

calculations should include periods of when the emission unit is not operating along with the data substitution method applied during periods of stmiup, shutdown and malfunction. U. S Steel has supplied this information in quarterly CEMS reports.

14. The Consent Order establishes limits for each emission unit (Agglomerating Lines 3- 7).



### U S. 

### Steel Comment U. S. Steel requests rather than the agency imposing a limit on each line, instead establish a limit for the combination of the emission units for S02 and NOx, respectively. A combined limit from all five lines provides operational flexibility for the facility without increasing overall emissions. This is necessary due to historical experience the facility has with Continuous Emissions Monitoring Systems (CEMS) and our commitment to future pollution reduction projects.

Minntac has CEMS on all five indurating lines at Minntac. Although two units have been recently replaced, the possibility exists for an issue to occur with an individual unit. As the downtime increases, data substitution requires high values to be input, which could put an individual line in jeopardy for noncompliance. With a combined limit, the oppmiunity exists for the other lines to compensate for any individual CEMS issues.

U. S. Steel has submitted an application for the installation of a dry scrubbing system
on indurating line 6 which includes state of the art S0 2 controls which have not been installed on pelletizing lines in the US. In addition, U. S. Steel has installed Low NOx Main Burners on two of its indurating lines and will be submitting an application to make installations on additional lines. Again, this was an innovative technology installed as a pilot testing requirement as this technology is not currently installed at other taconite facilities in the US. Based on our experiences a combined limit will allow U. S. Steel to install these controls, allow for a start up shakedown period, while ultimately reducing the facility's overall emissions.

In summary, a combination limit would allow for operational flexibility due to potential monitoring issues and, more impmiantly, to optimize pollution reduction equipment as it is installed without violating an individual emissions limit, while still meeting the BART requirements.


### Proposed Resolution Establish a combined S02 limit for Lines 3-7 and establish a combined NOx limit for Lines 3-7.

15. The Minntac Line 5 S0 2 limits in the Order are not consistent with what is provided in the text and the BART determination memo. In Paragraph 20.b

.. 3. of the Minntac

### Ms. Catherine Neuschler Minnesota Pollution Control Agency February 3, 2012 Page 7

Draft Order MPCA provides that, 

### "S0 2 

### emissionsfi·om Line 5, EU282, shall not exceed 1

. 19 tons per day at all times when EU282 is operating , measured on a 30- 

### day rolling average. This limit applies only when the line is burning natural gas or wood;"

U S. 

### Steel Comment The S02 limit for Line 5 is listed as 1.10 tons/day on a 30 day rolling average basis in Section 2.4 (Mi1mtac BART Determination memo section) and Table 1 ofMPCA's Regional Haze State Implementation Plan Supplement. However this appears to be in

enor with the analysis performed and does not agree with the 1.19 tons/ per day as identified in the Order


### Proposed Resolution Section 2.4 (BART Determination memo- Minntac Section) and Table 1 of the MPCA's Regional Haze State Implementation Plan Supplement needs to be corrected to 1.19 tons/day on a 30 day rolling average basis.

16. In paragraph 20.I.c.ii of the Order, MPCA provides a reference to "the flow weighted

mean concentration of all stacks for the furnace."



### U S. 

### Steel Comment: The Minntac lines are constructed with one stack.


### Proposed Resolution: Conect the reference to reflect that the Minntac lines are constructed with one stack.
Again, U. S. Steel appreciates the opportunity to provide these conunents and would be pleased to meet with the MPCA to discuss our concerns. We look forward to working with the MPCA to develop a Regional Haze State Implementation Plan Supplement that complies with the Clean Air Act and is protective of air quality in Mim1esota, especially its Class 1 areas, while not unnecessarily burdening our taconite operations. Should you have any questions regarding these comments, please contact me by phone at (218) 749- 7364 or via email at clbmtovich@uss.com.
Sincerely,

Chrissy Bar ovich Director, Environn1ental Control Mi1mesota Ore OperationsCatherine Neuschler Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 lafayette Road North St. Paul, MN 55155

- 4194 F ebruary 3, 2012 

# ArcelorMitt al

Re: Comment on Minnesota's Draft Regional Haze State Implementation Plan Supplement

ArcelorMittal Minorca Mine Inc. (ArcelorMittal) hereby submits its comments to the Minnesota Pollution Control Agency (MPCA) on its Draft Regional Haze State Implementation Plan (SIP) Supplement

. These comments address five areas of interest and revisions that we ask MPCA to consider before it finalizes the SIP Supplement:
(1) MPCA Appropriately Recognizes Existing Federal NAAQS Obligations as Its Long-Term Strategy for the Taconite Industry But Should Proceed without an Expedited BART Schedule for Modeling. (2) The Air Dispersion Modeling Schedule Should Be Delayed to Allow for Pending Model Improvements (3) The Proposed NOx Limitation is Inappropriate (4} The Proposed S0 2 Limitation Should Accommodate Higher Sulfur Iron Ore Deposits (5) The Compliance Testing and Monitoring Approach Is Unnecessarily Burdensome

Each of these issues is addressed in detail below and, where warranted, specific revisions to the SIP Supplement are proposed.



### The Regional Haze Rule

In 1999, the U.S. Environmental Protection Agency ("U

. S

. EPA") published regulations t o address visibility impairment in our nation's largest national parks and wilderness areas ("Class I areas")

. This rule is commonly known as the "Regional Haze Rule" (the "Rule")

. The Rule requires Minnesota to establish and achieve visibility goals for each of its Class I areas by regulating certain emissions believed to contribute to regional haze. The Rule requires that MPCA must submit to U

. S

. EPA a Regional Haze State Implementation Plan {SIP) that identifies sources that cause or contribute to visibility impairment in these areas. The Regional Haze SIP must also include a demonstration of reasonable progress toward reaching the 2018 visibility goal for each of the state's Class I areas

.
One of the provisions of the Regional Haze Rule is that certain large stationary sources that were put in place between 1962 and 1977 and have modeled contributions to regional haze in Class I areas must conduct a Best Available Retrofit Technology (BART) analysis

. The purpose of the BART analysis is to analyze available retrofit control technologies for these existing sourc es to determine if a technology meets the rule criteria and must be installed to improve visibility in Class I areas

. The chosen te c hnology

# r~ Ms

. Neuschler February 3, 2012 Page 2 of15 

# Arce lorMittal

is referred to as the BART controls, or simply BART. The SIP must require BART on all BART

- eligible
sources that are deemed "subject to BART."



### The Minnesota State Implementation Plan

- December 2009

Pursuant to the Rule, in December 2009 MPCA submitted a Regional Haze SIP to U

. S

. EPA identifying sources that cause or contribute to visibility impairment in its Class I areas

. The SIP states that key haze causing emissions in Minnesota are sulfur dioxide (S0 2 ), nitrogen oxides (NOx) and particulate matter (PM). As required by the Rule, the SIP documents the BART determinations for each subject-to

- BART facility. In general, BART for the taconite facilities consisted of the following:

S0 2 Operation of existing scrubbers NOx Good combustion practices PM Continued implementation of the Taconite Maximum Achievable Control Technology (MACT) standard

However, due to a lack of sufficient emissions data at the taconite facilities, the MPCA was unable to include numeric BART emission limits for NOx for Taconite facilities and S0 2 for taconite facilities that burn higher sulfur fuels. Therefore, the MPCA entered into Administrative Orders (AOs) with each of the taconite facilities, including ArcelorMittal. The AOs required the taconite facilities to perform testing and monitoring and to report the results to MPCA.



### The Draft Regional Haze State Implementation Plan Supplement

- December 2011

In December 2011, the MPCA published a draft SIP Supplement which contains proposed numeric BART limits for NOx and S0 2 for all taconite facilities, memos describing the process for setting the BART emission limits for each facility, and draft AOs designed to make the proposed BART limits enforceable

. In addition, the draft SIP Supplement proposes changes to the strategy for the Northeast Minnesota Plan, which is part of the long term strategy to improve visibility in Class I areas

.
The public comment period for the draft SIP Supplement runs through February 3, 2012

.


### ArcelorMittal Comments on the Draft Regional Haze State Implementation Plan Supplement

ArcelorMittal provides the following comments in regards to the draft SIP Supplement and the enclosed draft AOs as published by MPCA on December 19, 2011.

1. MPCA Appropriately Recognizes Existing Federal NAAQS Obligations as Its Long- Term Strategy for the Taconite Industry But Should Proceed without an Expedited BART Schedule for Modeling.

In the Regional Haze SIP Supplement, a key component of MPCA's "long

- Term Strategy'' for reducing regional haze emissions from the taconite industry is compliance with the 1

- hour S0 2 and N0 2 National Ambient Air Quality Standards (NAAQS)

. MPCA appropriately recognizes that the taconite industry is preparing to comply with a number of regulatory requirements that target reductions of theMs

. Neuschler February 3, 2012 Page 3 of 15 

# Arce lorMittal

compounds regulated for regional haze

. The State is required to consider these "emission reductions due to ongoing air pollution control programs" in developing its long

- Term Strategy for the BART SIP

. See 40 CFR 51.308{d)(3)(v)(A)

. After the 2009 Regional Haze SIP, new NAAQS were finalized for N0 2 and S0 2 that are expected to produce emission reductions relevant to regional haze goals, and these emission reductions must be considered in the development of Minnesota's long

-Term Strategy

. ArcelorMittal supports MPCA's decision to rely on the new NAAQS, instead of its 2009 Northeast Minnesota Plan for the taconite industry, to achieve the reasonable progress goals required in its long

Term Strategy under the Rule. The NAAQS approach allows sources to choose their compliance strategies to meet a common numeric federal standard. The Northeast Minnesota Plan, by contrast, would have imposed a unique obligation on Minnesota facilities to fund and implement pilot projects in the hope that they would produce a cost effective emission control technology for the industry. By adopting NAAQS compliance as its long

-Term Strategy for regional haze, MPCA removes an additional and unnecessary state

- specific burden on Minnesota businesses.

While MPCA appropriately considers the effect of the new NAAQS on relevant emission reductions to help Minnesota meet its regional haze goals, it is not necessary or appropriate to adopt aspects of those other programs into the BART SIP as MPCA does by mandating NAAQS modeling for the taconite industry as part of its proposed AO for BART

. NAAQS modeling is following an implementation schedule that is driven by federal requirements for establishing nonattainment areas and strategies to bring those areas into attainment

. S0 2 and N0 2 are on different implementation schedules with EPA prioritizing S0 2 modeling for a SIP Call deadline in June 2013

. N0 2 modeling is on a slower implementation schedule in part because the modeling must consider complex atmospheric interactions that convert some NOx emitted into N0 2 downwind

. Importantly, EPA is not currently requiring that states use modeling to set regulatory limits for N0 2

. It is premature, therefore, for MPCA to include N0 2 modeling in an AO with the intent of relying on its results for making decisions regarding emission controls at the end of 2012

.
MPCA may rely on the benefits to be derived from meeting the one - hour NAAQS for N0 2 without arbitrarily expediting its implementation ahead of the refinements to the model expected from EPA

. The N0 2 NAAQS process is currently on schedule to produce emission reductions by 2017, which will be in time to help MPCA achieve BART goals by 2018. S0 2 modeling is currently underway to meet NAAQS obligations so an AO mandating S0 2 modeling is also unnecessary

. MPCA is relying on CAIR, CSAPR, NAAQS, and many other regulatory obligations to help reduce S0 2 and NOx emissions without requiring or needing an AO from affected sources

. Thus, it seems arbitrary to require the taconite industry to sign an Order mandating NAAQS modeling for N0 2 and S0 2 • The NAAQS process will produce appropriate emission reductions on its own timeline, which can be relied upon to meet BART SIP limits without using an AO

.
2. The Air Dispersion Modeling Schedule Should Be Delayed to Allow for Pending Model Improvements

To the extent that MPCA chooses to require air dispersion modeling in its BART AOs, the schedules in the SIP Supplement must be adjusted to allow for pending model refinements. MPCA proposes that ArcelorMittal Minorca Mine and the rest of the taconite industry conduct air dispersion modeling to determine the nature and extent of emission controls that will be required to comply withMs

. Neuschler February 3, 2012 Page4 oflS 

# ArcelorMittal

the new one - hour NAAQS for S0 2 and N0 2 • ArcelorMittal and its industry group, the American Iron and Steel Institute (AISI), have been engaged in discussions with EPA and its air modeling group to raise
concerns about the accuracy of the current iterations of the AERMOD air dispersion model when predicting short

- term ambient air quality impacts. A study commissioned in Northwest Indiana compared AERMOD's predicted ambient impacts using a 2008 inventory of actual S0 2 emissions to the actual ambient S0 2 concentrations at two monitoring stations. See Attachment 1. The purpose of the study was to determine the model's accuracy in an area dominated by complex manufacturing facilities

. Using a Q

- Q plot to compare the results, a peer review of the study concluded that the model over predicted the S0 2 ambient impact by a factor of 10 at the ggth percentile (4th highest) daily maximum value

. This suggests a fundamental problem in how the model predicts ambient air quality impacts

. This study has been presented to EPA along with other studies that reach similar results. The agency will be considering data and presentations at its lOth Modeling Conference this March on how to improve the accuracy of the AERMOO predictions in the vicinity of complex manufacturing facilities. EPA will be considering, for example, methods that use targeted monitoring in the vicinity of the highest modeled concentration to validate or calibrate model predictions

. This work must precede any use of the model to render regulatory decisions on the level of emission reduction necessary to meet the national standards because the substantial evidence of inaccuracy would make such decisions arbitrary and vulnerable to legal challenge

.
The inaccuracy is more significant now because models are being asked for the first time to predict one - hour impacts for S0 2 and N0 2 • These short

- term concentrations are significantly affected by meteorological variations that are discounted by AERMOD's assumption that wind direction is constant. The evidence indicates that AERMOD becomes less accurate during low wind periods when its assumptions about wind speed and wind direction run counter to documented observations

. For instance, low wind observations typically show a plume moving straight up while AERMOD predicts the plume moves horizontally with downwash characteristics that will invariably produce a higher predicted concentration for local receptors than will actually occur. These obvious inaccuracies and strained assumptions are contributing to the over prediction increasingly demonstrated by model studies. EPA is expected to address some of these issues in modeling guidance after the lOth Modeling Conference.
Unfortunately, the schedules proposed by MPCA would not allow modeling protocols to incorporate EPA's final modeling guidance

. A key component of the draft Administrative Order appended to the BART SIP Supplement is a requirement to submit modeling protocols by April 1, 2012 and modeled attainment demonstrations by December 15, 2012 for both S0 2 and N0 2 • This schedule must be extended to allow Minnesota facilities to benefit from the refinements to the model anticipated from EPA's 10th Modeling Conference scheduled for March 13

- 15, 2012

. Federal guidance arising from the Modeling Conferen c e is anticipated in the late summer of 2012 and it is expected to address issues critical to improving the accuracy of the models for N0 2 and S0 2 • If MPCA moves forward with its current schedule the protocols submitted in April 2012 will have to be revised and resubmitted to address EPA's final guidance

.
MPCA's reliance on NAAQS compliance for its long

- T erm Regional Haze Strategy should not expedite the timelines for implementing the NAAQS

. EPA has embarked on an aggressive timeline for S0 2 modeling that requires states to conduct the air dispersion modeling before a June 2013 SIP Call deadline

. EPA is prioritizing efforts to refine and improve S0 2 modeling in 2012 to help addressMs. Neuschler February 3, 

### 2012 Page 5 oflS 

# Arcelor Mitta I

widespread concerns that the models significantly over predict ambient impacts. MPCA should require S0 2 modeling protocols no sooner than 60 days after the federal guidance on S0 2 modeling is finalized with final results 90 days after MPCA approves the S0 2 modeling protocol. This helps to ensure that ArcelorMittal will have the benefit of EPA ' s anticipated improvements to the model when we submit our modeling protocols

.
EPA has not called for SIPs that use air dispersion modeling for N0 2 • As a result, EPA is expected to continue to work on improvements to the N0 2 modeling after it releases the final S0 2 modeling guidance in 

### 2012. As described in more detail below, the N0 2 model refinements include better methods for predicting complex atmospheric chemistry reactions that produce N0 2 after the NOx exhaust leaves the stack. These refinements are expected to take more time

. Since MPCA does not have a current federally-imposed schedule for N0 2 modeling, ArcelorMittal recommends that the schedule for N0 2 protocols begin after the S0 2 modeling results are submitted. This allows EPA more time to address the complex N0 2 modeling issues before the state requires a modeling protocol. MPCA should require N0 2 modeling protocols no earlier than the first quarter of 

### 2013 with modeling results by the end of 

### 2013

. This is still plenty of time to have emission controls engineered and installed to meet the BART SIP goals for regional haze improvements. Minnesota should follow the federal timelines closely to ensure that Minnesota facilities are not burdened by using less accurate models for regulatory determinations than those used by other states.

In addition to the general concerns raised above, ArcelorMittal has several specific concerns about the accuracy of air dispersion modeling for predicting ambient impacts that can be addressed in part at the State level using the discretion that EPA accords to states in implementing the models

. The air dispersion modeling issues of concern include, but are not limited to, the following :

o Representative AERMINUTE Data Is Nat Available for All Sources : Current modeling guidance recommends the use of AERMINUTE for processing meteorological data

. The AERMINUTE data set has a much greater frequency of low wind speed conditions which tend to be associated with distorted maximum modeled concentrations, especially for low

- level sources and fugitive
sources. Since AERMINUTE data is not available from all meteorological stations and it is contributing to over prediction, ArcelorMittal asks that MPCA accept modeling that does not use AERMINUTE data to satisfy BART

.

o Reasonable Background Values Should be Used for Northeastern Minnesota : Actual ambient data from Northeastern Minnesota is limited, so background values must be developed in some other way

. The LADCO default values should provide a ceiling for background concentrations, but States should use lower background concentrations if local data supports the departure

. The background method should not include any conservative assumptions because the model predictions are already overly conservative. ArcelorMittal suggests that the State gather available representative actual ambient monitoring data that avoids double counting emissions already reflected by the model inputs

. The data should be averaged to remove spikes and outliers that would otherwise contribute to inaccurate assessments of the contribution of background to ambient monitors

.Ms. Neuschler February 3, 2012 Page 6 of15 

# ArcelorMittal

o Model the Individual Impact of Indurating Furnaces at Each Facility: EPA has confirmed that States have discretion to choose a threshold for NAAQS modeling

. Modeling all emission
sources at all facilities simultaneously at the potential to emit (PTE) is not representative of actual air quality due to the substantial difference between hourly PTE and actual emissions. To avoid overestimating air quality impacts, we suggest modeling the impact of the indurating furnaces at a reasonable maximum operational rate and exclude any space heaters or other minor combustion sources. Also, the impact of ArcelorMittal's emissions should not be combined with the emissions of other companies when evaluating receptor concentrations and emission reductions

. Modeling is not accurate enough to be used to allocate responsibility among companies

. Only monitored violations should trigger an evaluation of the relative culpability among contributing companies.

o Limit Modeled Receptors to those Reasonably Exposed: The role of receptor placement plays a significant part for modeled NAAQS attainment for 1-hour standards

. ArcelorMittal asks that MPCA allow NAAQS modeling using "reasonably exposed" receptors. For example, receptors should not be modeled on steep slopes, roadways or bicycle trails where people would be present for much less than one hour

.

o Exclude Intermittent Sources from 1

- hour NAAQS Modeling Inputs. Modeling of non-routine operations (examples: emergency generator, back

- up fuel oil, etc

. ) overestimates a source's actual ambient air impacts. For the probabilistic S0 2 and N0 2 NAAQS, EPA has suggested that intermittent sources have a de minimis likelihood of contributing emissions on the day when meteorological conditions and continuous sources have produced one of the 1

- 2% worst days of the year. See EPA's March 1, 2011 Modeling Guidance. We recommend modeling of typical facility operations so that the model reasonably predicts the future attainment status of actual air quality. Modeling of maximum potential emissions for all facilities will unnecessarily overestimate actual impacts

. Modeling of emergency engines 

## I peak shaving engines 

## I monthly engine testing is poorly represented in the model, and emissions are generally overstated in the modeling which leads to unnecessary permit conditions (e

. g., can only test one engine for 

### Y2 hour between the hours of 10

- 11 am)

. Therefore, we recommend that these types of sources should not be included in the modeling demonstrations for BART purposes

.

o N0 2 -specific modeling concerns :
a) Elevated ambient 1

- hour N0 2 concentrations are primarily an urban roadway corridor problem, and not due to stationary sources

. Facilities should have the option of placing a monitor in the receptor area with the highest model concentration to demonstrate that actual ambient impacts do not justify emission control expenditures

. b) The**N0 NO~e**  default in

- stack ratio of 0

. 5 leads to unrealistically high modeled N0 2 concentrations

. A more reasonable default in

- stack ratio of 0

. 1 should be applied for all
sources

. Alternatively, the timeline could be adjusted to allow the facilities sufficient timeMs. Neuschler February 3, 2012 Page 7 of15 

# Arcelor Mittal

to conduct performance testing under representative operating conditions to allow a facility to determine a site

- specific ratio.

c) MPCA should streamline approval of Tier 3 N0 1 modeling approaches {OLM 

### I PVMRM) for individual source modeling. To the extent multiple source modeling is conducted for N0 2 , it should be based on photochemical 

## I regional models and not AERMOD.

Based on these concerns with the current modeling and the expected federal guidance on some of these issues, ArcelorMittal recommends that the schedule for submitting the modeling protocol and modeled attainment demonstrations be extended to allow time for these modeling protocol issues to be resolved by EPA before regulatory decisions are made based on inaccurate and unreliable modeled predictions

. As indicated above, please consider separating the S0 2 and N0 2 modeling schedules so that S0 2 modeling protocols will come due 60 days after the final federal guidance for S0 2 NAAQS modeling and a modeling report due 90 days after MPCA approves the protocol. The N0 2 modeling protocol should follow the S0 2 modeling report and be due no earlier than April 1, 2013 with a report due be December 31, 2013

. These deadlines should be adjustable as needed to allow for the incorporation of anticipated federal developments designed to improve model accuracy.

3. The Proposed 

### NOx Limitation Is Inconsistent with the Definition of BART

Best Available Retrofit Technology means "an emission limitation based on the degree of reduction achievable through the application of the best system of continuous emission reduction for each pollutant which is emitted." See 40 CFR Part 51, Appendix Y, Section V "Enforceable limits/Compliance Date." BART does not require a redesign of the emission unit or a switch to a different fuel. See Appendix Y, Section IV.D.S

. BART does not require curtailments or compromise production rates

. As the definition dictates, the BART NOx emission limitation for an indurating furnace should reflect its full range of operating conditions when continuous good combustion practices are applied

. This means that the numeric BART emission limitation cannot be lower than the highest NOx rate measured during a test that reflects the continuous application of good combustion practices. To the extent that the test did not reflect all operating conditions, a reasonable margin should be added to account for that variability

. In the end, an appropriate BART analysis yields a NOx emission limit that is
no less stringent than the BACT limit already in its permit.

In the early 1990s, a BACT analysis was conducted at the Minorca Mine, and the indurating furnace at the facility received an emissions limit of 1088 pounds NOx per hour to represent the emission rate achieved by best available control technology for the indurating furnace at this facility

. The BACT determination and related permitting activities are described in the Technical Support Document for Air Emissions Permit No

. 13700062

- 001. BACT was based on good combustion practices; the same technology that MPCA determined constituted BART for the taconite industry

. For the reasons provided below, MPCA should adopt the existing BACT limit (1088 lbs NOJhr) as BART instead of the proposed limit in the Supplemental SIP (10181bs NOJhr)

.
EPA's Guidelines for BART Determinations under the Regional Haze Rule (Appendix Y to Part 51) proposes a method for evaluating whether an NSR/PSD BACT determination should constitute BART

. First, the technology determination should be more recent than "the 1970s or early 1980s"

. SeeMs

. Neuschler February 3, 2012 Page 8 of 15

# r~ ArcelorMitta I

Appendix Y at section IV

. C. The ArcelorMittal BACT determination meets this c riterion

. Second, no new technologies subsequent to the BACT determination which would lead to cost

- effective increases in the level of control are identified. If the two criteria are met, EPA finds it appropriate to re l y on the BACT standard for BART

. The good combustion practices that were used to set the BACT lim i t are the same practices implemented during the extended NOx stack test conducted in March 2008 under an MPCA AO that produced a maximum emission rate of 1060.51bs NOJhr

. Table 1 of the SIP Supplement references
a furnace efficiency project in 2007 as a component of the BART determination fo r ArcelorMittal. Furnace efficiency is an ongoing objective that is driven by the competitive necessity to reduce costs

. The 2007 project was part of an effort to sustain efficiency that would have otherwise deteriorated, but
as the 2008 data indicate, it did not constitute a new technology improvement that would justify a step change in the NOx emission rate since the 1990s BACT determination. ArcelorMittal asks that MPCA use this BACT=BART strategy and set the NOx BART limit at the 10881b/hr BACT limit

.
The draft SIP Supplement proposes a lower NOx BART limit for the Indurating Furnace (EU 026) at ArcelorMittal:

NOx emissions from EU026 shall not exceed 1018.0 lbsjhour at all times that EU026 is operating, measured on a 30-day rolling average.

The proposed emission limit was developed as described in the draft SIP Supplement in "Appendix 1

- BART Determination Memos" in the document titled Nitrogen Oxides BART Limits for ArcelorMittal Steel Company ("the Memo"). As stated in the Memo, the "MPCAfocused analysis on a set of 157 hourly NOx emission data points collected in March 2008" pursuant to a BART AO

. The purpose of this testing was stated in the Memo as follows :

Arcelor was required to collect a minimum of 150 one - hour data points under the range of {furnace] operating parameters that influence NOx emissions

. The range of each operating parameter during testing should be representative of furnace's operating range for the parameters in the 12 months previous to testing

. This requirement was to
ensure that the emissions data collected was appropriately representative of the range of operating conditions for the furnace

.
As ArcelorMittal explained throughout the data gathering process, a test conducted in one seven - day period cannot reflect the full range of operating parameters in the year prior to testing

. Seasonal variations and ore variations that contribute to emission variability cannot be re - created for a testing period

. Within this constraint, ArcelorMittal conducted the extended test to be representative of a range of operating conditions

.

T he Memo also describes MPCA's methodology for calculating the limit as follows :

The process of calculating the BART limit for Arcelor's indurating furnace began by constructing a 99% confidence interval and taking the upper prediction level

. The MPCA believes the use of a 99% upper predictive level for setting the limit is appropriate, due to the need for limits to be met during all operating conditions, including during times of startup , shutdown
, and malfunction

.Ms

. Neuschler February 3, 2012 Page 9 of 15

# r~ Arcelor Mitt a I

During the development of the statistical justification for the NOx BART limit, ArcelorMitta l again raised
concerns to MPCA that the database did not capture all seasonal and ore - related operating c onditions

. In response to this concern, MPCA used "bootstrapping," a resampling technique used for statistical inference

. Using this method, the original data set is resampled multiple times by randomly drawing a set of data points for each replication thereby allowing for a more robust estimation of the true standard error of the population

. MPCA used bootstrapping to generate a surrogate population {or data set) consisting of 30

- hour average emissions rates

. The standard error of this surrogate population was used in the calculation of an upper prediction limit of the mean emission rate of the original 15 7 data point population (i.e., 994.11bs/hour)

.
While bootstrapping can be an appropriate technique to estimate the true standard error of a population, the surrogate population used to calculate the standard error is based on the original limited data set and the erroneous assumption that the data were representative of all anticipated operating conditions

. Furthermore, inherent in the bootstrap procedure is the main underlying assumption that each data point is an independent observation or sample unrelated to any other data point or sample. This is not the case for the underlying data set and it cannot be true for the extended data set when the same population is resampled multiple times

. Although the bootstrap analysis increases the number of samples, it does not increase the amount of information in the original data set and is limited by the range of values in the original population (from the original 157 data points)

. This statistical exercise provides a better estimate of the true variance of the population; however, imposing
an emission limit based on this estimate fails to account for expected data points outside the range of values in the original population due to seasonal and ore - related variance

. Therefore, the proposed BART NOx limit does not meet MPCA's objective to set a limit that is achievable under all operating conditions when continuously applying BART technology (good combustion practices).

The MPCA AO for ArcelorMittal requires compliance with the NOx limit during periods of startup, shutdown and malfunction ("SSM")

. The dataset used to set the emission limitation did not contain emission information for SSM events. Therefore, an upper predicted limit calculated from that dataset would not cover the variability introduced by SSM events

. This provides additional justification for adding a margin of safety beyond the calculated BART limit in the proposed SIP Supplement.

It is common practice to apply a factor of 10 percent or more to stack test values to accommodate normal source variability and the accuracy of the proposed compliance method when setting an enforceable emission limit

. See e.g. MPCA Guidance for Proposing Synthetic Minor Permit limits, http ://www

. pca

. state.mn

. us/index

. php/air/air

- permits

- and

- rules/air

- permits

- and

- forms/air

permits/proposing

- synthetic

- minor

- permit

- limits

. html (recommending that a 10% factor be added to test

- based limits to accommodate the accuracy of the proposed compliance method and other variables) ; see also In re Prairie State, 13 E.A.D

. 1, 58 (U

. S

. Environmental Appeals Board 2006) (accepting Illinois EPA's use of a 10% safety factor as a standard method to accommodate variability in setting a consistently achievable BACT emission limitation)

.
Ten percent is not a random value; it correlates to the standard performance test objective, which is to operate within 10% (at 90%) of rated capacity

. Agencies recognize that operating at 100% capacity is not a realistic expectation during a given stack test because some variables are not within the company's control during a test. Seasonal variations, common in Northeastern Minnesota, and oreMs. Neuschler February 3, 2012 Page 10 of15 

# ArcelorMittal

variations common in any mining operation dictate that testing at or around 90% of capacity is all that
can be expected for any given test. Therefore, test data will not reflect the true maximum capacity of the equipment and an upward adjustment is needed to ensure that equipment can use their full capacity when conditions allow without violating their emission limit. Therefore, it is appropriate for MPCA to add 10% to the average value derived from the NOx stack test data when setting a limit t hat is achievable under all normal operating conditions

. Based on this standard approach to setting enforceable emission limitations from a limited data set, ArcelorMittal's BART NOx emission limit should be calculated as follows :

10181bs/hour (99% UPL from 7

- day stack test data set) +101.81bs/hour (10% margin of safety) 1119

. 81bs/hour

This value is greater than the existing NOx BACT determination already in ArcelorMittal's permit for its Indurating F u rnace (EU 026), which reads :
Nitrogen Oxides: less than or equal to 10881bs/hour. The sum of the NOx emissions from all four stacks (SV014

- 017) shall not exceed 10881bs/hour

. (40 CFR pt. 52.21 BACT)
Compliance with the BACT limit is demonstrated by periodic stack testing in accordance with standard EPA Methods but no averaging period is specified. MPCA's BART analysis sugges t s that a 30-day averaging period is an appropriate measure of compliance

. ArcelorMittal does not obje c t to utilizing this extended averaging period to demonstrate compliance with a BART NOx limit of 1088 lbs/hr.

4. The Proposed S0 2 Limitation Should Accommodate Higher Sulfur Iron Ore Deposits

MPCA has proposed a BART limit of 0

. 165 pounds S0 2 per long ton of pellets fired (finished) (ltpf) when the company is burning natural gas

. 1 MPCA acknowledges that natural gas has negligible sulfur content and the source of S0 2 emissions for ArcelorMittal's indurating furnace is the iron ore feedstock

. MPCA has determined that BART for this natural gas - fired indurating furnace is the ancillary S0 2 reductions achieved by the existing wet scrubber designed to contro l particulate emissions from the furnace

. ArcelorMittal does not object to the technology determination, but it cannot ensure continuous compliance with a numeric S0 2 limit when the sulfur content of the iron ore significantly increases

. Sulfur content is a variable inherent to this mining operation that ArcelorMittal does not control. Since Clean Air Act Section 302(k) requires that emission limits be met on a continuous basis, the BART S02 limit must reflect the highest S0 2 emission rate under expected operating conditions when applying the designated BART technology (wet PM scrubber). We propose the following solution to address this compliance concern

.
The S0 2 emission limitation (0

. 165 lb SOJitpf) was developed based on 99% upper predictive limit (UPL) from a data set generated by a continuous emissions monitor during an extended stack test in March 2008 under representative operating conditions for the ore processed

. As indicated above, It

1 ArcelorMittal uses fuel oil as its back up fuel for the Indurating furnace

. We agree with MPCA's determination that the BART 50 2 limit would not apply when burning back up fuel

.Ms. Neuschler February 3, 2012 Page 11 of 15 

# ArcelorMitta I

is common practice to apply a margin of safety factor of ten percent or more to stack test values when setting an emission limit to accommodate normal source variability not captured during the test period and the accuracy of the proposed compliance method

. This margin of safety will help accommodate the seasonal variability and the ore variability that could not be captured during the testing period

. Ten percent also accommodates the delta between the rated capacity and the utilization rate achieved during the stack test, which is typically within 10% (at 90%) of rated capacity for a valid test. Therefore, it is appropriate for MPCA to add 10% to the average value derived from the 50 2 stack test data (0.165 lb/ltpf) when setting a limit that is achievable under all normal operating conditions

. Based on this standard approach to setting enforceable emission limitations from a limited data set, ArcelorMittal's BART 50 2 emission limit should be 0.182 lbs/ltpf calculated as follows :

0

. 165 lb/ltpf (99% UPL from extended stack test) +0.0171bs/ltpf (10% of the average)


## =

0

. 182 lbs/ltpf

A ten percent margin of safety may not be sufficient to address potentially significant swings in the sulfur content of the ore mined in new locations

. ArcelorMittal has limited information regarding the sulfur content of ore deposits in the mining areas currently under development. The proposed BART 50 2 limit should not apply to new ore mined from areas with higher sulfur levels

. When higher sulfur
ores are encountered, ArcelorMittal would initiate a procedure established in i t s AO for setting a new 50 2 BART emission limit for ores mined from that zone or area

. This helps ensure that the BAR T limit(s) for 50 2 reflect the true variability of the emission unit including the variability of the sulfur content of the ore from areas that cannot technically be ascertained at this time

. The wet scrubber parameters for proper operation of the control device would continue to apply during the interim period, but the numeric S0 2 emission limit would need to be developed for the ore mined from the new high sulfur area based on a stack test conducted within 180 days after encountering the high sulfur ore

.
5

. The Compliance Testing and Monitoring Approach Is Unnecessarily Burdensome

The AO for ArcelorMittal proposes a number of requirements that are unnecessaril y burdensome and should be revised or streamlined to be more efficient and effective in rendering the appropriate BART limits enforceable

. As presented in the SIP Supplement, the draft Administrative Order (AO) for ArcelorMittal presents the following method of demonstrating compliance for both NOx and S0 2 :

o Simultaneous measurement of emissions from all four stacks for 30 hourly data points

. o Perform initial test within 12 months of the effective date of the limit

. o Conduct additional stack tests on an annual basis with each test being conducted within two

- month of the initial stack testing anniversary

. o CEMS can be installed as an alternative to stack testing

.
We have several concerns regarding this compliance demonstration :

o The Limits Should Be Effective Five Years After SIP Approval

. The draft AO states that the NOx and S0 2 emission limit "is effective on and after the date six months after the effective date ofMs

. Neuschler February 3, 2012 Page 12 of 15

# r~ ArcelorMittal

EPA's approval of this BART determination." By contrast the federal rule requires that existing facilities install and operate BART "no later than five years after plan approval." See 40 CFR 51.302(c)(4)(iv). MPCA should allow affected sources the full amount of time established by Federal rule. As MPCA indicates in the SIP Supplement, Minnesota has already surpassed its 2018 Regional Haze goal of a 30% reduction of combined S0 2 and NOx emissions from sources that emit over 100 tons per year. MPCA offers no reason to expedite this timeline and place Minnesota businesses at a competitive disadvantage with those in States that are following the 5

- year federal timeline for BART implementation

.

o Submit a Test Frequency Plan to Set Future Test Frequency: The draft AO for ArcelorMittal requires that stack testing for NOx and S0 2 be conducted every 12 months

. We believe that the requirement for annual stack testing should be adjusted based on the stack test results as allowed under MPCA's test frequency guidance. The AO should allow ArcelorMittal to submit a test frequency plan to MPCA following the initial stack test. The recommended frequency could be based on MPCA's test frequency guidance ( http://www.pca.state.mn.us/index.php/view

document.html?gid=409 ) which states:

Test Result Test Frequency Test results> 90% of limit Every 12 months 60% < test results < 90% of limit Every 36 months Test results< 60% of limit Every 60 months

To address this concern, the following requirement should be added to the AO:

Test Frequency Plan. Within 60 days following the initial performance test, ArcelorMittal may submit a Test Frequency Plan to set the frequency of future performance tests

.

o The Testing Deadlines Should Be Less Restrictive. The draft AO for ArcelorMittal requires that stack testing for NOx and S0 2 be conducted every 12 months within 2

- months of the anniversary date of the initial BART compliance test. The requirement is overly restrictive because it would limit the time

- of-year in which the testing can take place and would therefore limit the operating conditions in which the testing could occur. It is also important to note that the taconite industry has historically experienced unpredictable market swings causing decreased production and extended downtime. To address these concerns, the stack testing requirement should be rewritten as follows:

Periodic BART NOJS0 2 Tests

. Testing shall be conducted at the frequency set in the Test Frequency Plan

. Testing required every 12 months shall include a minimum of 6 months between tests; testing required every 36 months shall include a minimum of 24 months between tests; and testing required every 60 months shall include a minimum of 36 months between tests

.Ms

. Neuschler February 3, 2012 Page 13 of 15 

# ArcelorMittal

Automatic Stack Test Extensions

. If a facility experiences an extended outage (> 90 days) during a year in which a stack test is required, the facility will be granted an automatic 12

- month extension to the testing deadline provided that the facility submits written notification to MPCA

.

o The Test Duration is Too Long: The draft AO for ArcelorMittal requires that stack testing for NOx and S0 2 be conducted on all 4 stacks simultaneously for 30 consecutive hours. We believe that
a 30

- hour stack test is excessively long, particularly for ArcelorMittal's indurating furnace that demonstrated a low relative variability index (RVI) during its extended Method 7E test in March 2008. To address this concern, the stack testing requirement should be rewritten as follows:

Stack Test Duration: The initial BART performance test shall be conducted for a sufficient duration to generate 30 hourly data points

. Periodic BART NOJS0 2 Tests shall be scheduled to collect 30 hourly data points. However, if after collecting 3 hours of test data the results of the performance test are less than or equal to 90% of the emission limit, the stack test can be stopped and the test will be considered an acceptable duration for demonstrating compliance with the emission limitation

.

o Scrubber Operating Parameters Should Not be Set Based on BART S0 2 Stack Tests: The draft AO states that the S0 2 compliance stack test would be used to set the minimum scrubber water flow and pressure drop limits. These are the same scrubber parameters that are already set for the Taconite MACT when testing for filterable particulate matter. MPCA should not set new and potentially different limits during the S0 2 test on the same control device. Since the wet scrubber is primarily designed to control PM, the Taconite MACT parameter values should be used to demonstrate proper scrubber performance. Also, for BART testing, all stacks are tested simultaneously and the aggregate value is used to determine compliance. The Taconite MACT test evaluates each scrubber stack separately and is, thus, a more appropriate test for setting individual scrubber parameters

. To address this concern, the requirements to set scrubber operating limits based on S0 2 performance testing should be replaced with the following :

Scrubber Operating Parameters

. The scrubber operating parameters shall be those established pursuant to the Taconite MACT for this emission control system

.

o Permanent Recordkeeping is Inconsistent with Title V Permit Obligations

. The AO in c ludes a section entitled "permanent records" that would mandate that ArcelorMittal permanently maintain "information on the NO., S0 2 and PM emission limits and operations requirements imposed by this Order

. " First, the 5

- year recordkeeping requirement under the Title V program should be sufficient for any records required under the AO

. Second, the language does not provide a clear indication of what records must be kept. " Information on" these emission limits is too vague to be discernable

. The data that formed the basis of the emission limit determination for S0 2 and N0 2 has been provided to MPCA and can be permanently maintained by the agency

. The permanent records section of the recordkeeping provision in the AO should be removed

. All records required under the AO should be subject to the minimum 5

- year recordkeeping obligation in the Title V permit and recited in the second part of the recordkeeping section of the AO

.Ms. Neuschler February 3, 2012 Page 14of 15

Conclusion

# r~ ArcelorMitta I

The Regional Haze SIP Supplement should be revised

. While NMQS compliance is preferable to pilot testing, the schedule to complete NMQS modeling must be extended to allow EPA to improve the accuracy of the model and to provide states the guidance needed to properly implement the models. The N0 2 BART numeric limit should be revised upward so that it reflects the average emission rate during the extended test plus a margin of compliance. The effect of this change is to establish the BACT NOx limit as BART, which streamlines the compliance obligations for ArcelorMittal. The S0 2 BART numeric limit cannot account for changes in the sulfur content of ore deposits so we will need the opportunity to set new S0 2 BART limits if we encounter an ore deposit with high sulfur levels

. Finally, the testing and compliance obligations in the BART SIP and its appended Administrative Order can be streamlined to reduce unnecessary burdens on ArcelorMittal and the rest of the Minnesota taconite industry.

The draft SIP Supplement and the proposed AOs did not go through interested party review prior to public notice

. We would appreciate an opportunity to sit down with MPCA and discuss the portions of the SIP Supplement and AO that apply directly to ArcelorMittal before the draft SIP is finalized

. Please contact me at (218) 749

- 5910 x283 or Jaime.Baggenstoss@ArcelorMittal.com if you have any questions or if you would like to discuss this matter in more detail.
Sincerely,

Jai e Baggenstoss Environmental Engineer

Cc: Rich Zavoda, ArcelorMittal Tim Peterkoski, ArcelorMittal Keith Nagel, ArcelorMittalMs. Neuschler February 3, 2012 Page 15 of 15

Attachment 1 

# Arce l o rMittal

# Ambient Sulfur Dioxide Concentrations in Northwest Indiana in 2008: A Comparison Study of Monitored Values and AERMOD Predicted Values

September 2011

Prepared by:

OCS Environmental, Inc. Les Chapman, President



## www .ocsenv.com

Peer Reviewed by:

ENVIRON International Corporation Glenn England, Principal Consultant 

## www.environcorp.com

Prepared at the request of counsel for:

ArcelorMittal, Inc.

## Foreword:

This report entitled, "Ambient Sulfur Dioxide Concentrations in Northwest Indiana in 2008: A Comparison Study of Monitored Values and AERMOD Predicted Values" presents the results of a study designed to evaluate the accuracy ofthe AERMOD air dispersion model at predicting one-hour ambient concentrations of sulfur dioxide (S0 2 ). 

### Northwest Indiana was chosen for study because it had two monitor locations that collected ambient measurements of S0 2 

### surrounded by large and complex manufacturing facilities, including significant iron and steel facilities. The State of Indiana had prepared meteorological data that it deemed suitable for air dispersion modeling using AERMOD in this area. The primary author of the Study was able to obtain the State's 2008 inventory of actual S0 2 

### emissions and stack characteristics from large S0 2 

### sources in the vicinity of the monitors to use as model inputs.

The primary author, OCS Environmental, Inc., has significant air modeling experience in Indiana and has worked with the Indiana Department of Environmental Management (IDEM) on projects that use air modeling for many years. OCS collected the model input data and conducted the AERMOD modeling that forms the foundation for this Study. ENVIRON International Corporation, a nationally known expert in the development and implementation of air dispersion models, was asked to conduct a peer review of the initial and subsequent drafts of the OCS Study to provide critical feedback and analysis. This final Report reflects the benefit of the ENVIRON peer review including the additional 

### Q-Q plots analysis provided by ENVIRON.

The Study represents a single, conservative basis for evaluating the predictive accuracy of the AERMOD model. The model would over-predict by a far greater margin if the model inputs

were based on maximum allowable emissions as EPA guidance recommends, instead of the actual emission inventory based on 2008 production rates used in this Study. This Study suggests that the over-prediction bias for modeling complex manufacturing facilities may be far greater than the 2x factor that EPA has used to describe the accuracy of AERMOD following studies focused on large stack sources. This Study suggests that refinements are necessary to AERMOD and its implementation guidance before it can provide a reliable basis for making regulatory decisions with significant economic consequences. Douglas A. Me Williams Squire, Sanders & 

### Dempsey (US) LLP

## €NVIRON

September 23, 2011 

## MEMORANDUM

To:

From:



### c:

Subject: Doug McWilliams (Squire, Sanders & Dempsey)

Glenn England
Timothy Peterkoski (ArcelorMittal USA) Kyle Heitkamp, Ken Richmond, Ralph Morris (ENVIRON)

Peer Review of OCS S0 2 Ambient Air Quality Modeling Study

ENVIRON International Corporation (ENVIRON) was requested by ArcelorMittal USA (AMUSA) to conduct a peer review of a modeling study performed by OCS Environmental Inc. (OCS) that compared air quality modeling results for sulfur dioxide (S02) with observations in lake County, Indiana for the 2008 calendar year {"S02 Modeling Study"). The peer review consisted of confirming the models used in the analysis, comparing the modeling databases with available data and EPA's current guidance for model application, and reviewing the summary and interpretation of model results. No attempt was made to independently reproduce the modeling results. This peer review is based solely on information and data provided by OCS and AMUSA and publicly-available information regarding the models and EPA application guidance.
Summary

ENVIRON found that AERMOD was applied consistent with current EPA modeling guidance and the input files are accurate, with the limitations that source emissions data were not independently verified and processed meteorological data provided by IDEM were not reviewed for conformance with current EPA guidelines

. The results of this S02 Modeling Study demonstrate that the application of AERMOD following EPA's guidance can result in over predicting the ggth percentile of daily maximum S02 concentrations by a factor as high as 1 0 compared to monitoring data.
Background

EPA recently promulgated a new 1-hour S0 2 National Ambient Air Quality Standard {NMOS)

. The new standard specifies a maximum three year average of the ggth percentile of daily maximum 1-hour S0 2 concentrations of 75 ppb {when rounded to the nearest ppb). EPA is proposing to use both monitoring and modeling data to define areas that are not attaining the
new 1-hour S02 NMQS. This is in contrast to past NMQS in which nonattainment
areas {NAA) are designated based mainly on monitoring data. The EPA-recommended air quality model for near-source dispersion modeling is the AERMOD steady

- state Gaussian plume model. 1

1 Appendix W to Part 51

- Guideline on Air Quality Models

18100 Von Karman Avenue, Suite 600, Irvine
, California 92612 www

. environcorp

. com Tel : +1 949

. 261

. 5151 Fax : +1 949

. 261

. 6202Mr. Doug McWilliams 

### 2 September 23, 2011

ArcelorMittal USA sponsored a case study2 to perform S02 modeling for lake County, Indiana and the 2008 calendar year that included an AMUSA steel mill located in East Chicago. Emissions for the AMUSA steel mill were obtained from AMUSA and emissions for the remainder of the S02 sources were obtained from the Indiana Department of Environmental Management (IDEM). The AERMOD model was applied using 2008 data and the modeled S02 concentrations were compared against observed S02 values at two monitoring sites: Gary and Hammond, Indiana. The study found that the maximum AERMOD-estimated 1-hour S0 2 concentration at Gary was 5.1 times greater than the maximum observed value (unmatched by time) and on an annual average basis, the AERMOD-estimated S02 concentration at Gary was 4.8 times the observed value. At the Hammond monitoring site, the maximum AERMOD 1-hour S02 concentration was 9

. 3 times greater than the observed value (unmatched by time) and on an annual average basis the modeled value was 2.1 times greater than the observed value.

Peer-Review

ENVIRON performed several quality assurance checks to determine whether the AERMOD input files and AERMOD results are accurate and reasonable. OCS provided the following model files for this review:

File Name Date Time File Size Aermap domain detail file 9/19/2011 4:20PM 1,843 Aermap input file 9/19/2011 4:20PM 47,713 Aermap map detail file 9/19/2011 4:20PM 7,924 Aermap map parameters file 9/19/2011 4:20PM 1,532 Aermap output file 9/19/2011 4:20PM 138,258 Aermap receptor file 9/19/2011 4:20PM 879 Aermap source file 9119/2011 4:20PM 67,344 Aermod input file 9/19/2011 4 : 39PM 792,789 Aermod output file 9/19/2011 5:00PM 884,812 Bpip input file 9/19/2011 4:21PM 155,915 Bpip output file 9/19/2011 4:37PM 440,549 Bpip summary file 9/19/2011 4:37PM 6,002,516 Event output file 11/27/2009 10:53AM 1,417,441 Model objects

. dxf 9/19/2011 5:00PM 1,132 , 698 SBN081LX_1 MIN_ASOS_ADJ

. PFL 4/13/2011 11:49AM 588,528 So2, all, 1-hr

. pst 9/19/2011 5:00PM 958,423 SBN081LX_1 MIN_ASOS_ADJ.SFC 4/13/2011 11:49AM 1,449,460 Projection.txt 9/19/2011 5:00PM 50 Breeze

. xml 9119/2011 4:39PM 3,163 Polygon

. xml 9/19/2011 5:00PM 654,360

2 Suitability of Using AERMOD Dispersion Model in Determining Compliance with the Primary One-Hour Sulfur Dioxide NAAQS In Lake County, Indiana (no date

or author provided)Mr. Doug McWilliams 

### 3 September 23, 2011

limitations of our review are:

• AMUSA provided the basis for S02 emission rates from its facilities, and S0 2 emission rates were provided by IDEM for other sources. ENVIRON did not independently verify the accuracy of the emission rate data.

• The meteorological data files for 2008 were processed by IDEM and the AERMET summary files were not available for review. Thus, it could not be verified whether IDEM followed the latest EPA guidance for processing meteorological data and included available 1-minute ASOS data to limit periods of calm and variable winds at the primary surface meteorological station.

The following summarizes the findings of our peer-review:

• The latest versions of AERMOD and AERMET were applied in the S02 Modeling Study. EPA released an updated version of AERMET in February 2011 (Version 11059), which includes the pre-processor AERMINUTE. The latest version of AERMOD was released in April2011 (Version 11103). The modeling study used a previous version of AERMAP (Version 06431 ), but ENVIRON would not expect the receptor elevation or hill height to change based on using the existing digital elevation model (OEM) file and the latest version of AERMAP.

• The source and building/structure locations used in the AERMOD input file of the S02 Modeling Study were plotted on a Google Earth aerial map to verify whether their coordinates were reasonable. Figure 1 displays the source locations. Note that these types of overlays do not always line up perfectly. Given this uncertainty, the locations of the sources in the AERMOD database appear plausible and no unreasonable locations
were identified

.

• The S02 monitor locations used as receptors in the AERMOD input file were plotted on a Google Earth aerial map and compared with locations provided by IDEM on their website to determine whether the input coordinates appeared reasonable ( http://leads.idem.in.gov/cgi-bin/idem/daily summary.pl?cams=31 )

. Figure 2 displays the receptor locations. The monitor coordinates in the AERMOD input file are reasonable.

• ENVIRON verified that the observed S02 monitoring data used in the S02 Modeling Study and 1-hour S02 observations available from EPA's Air Quality System (AQS) Data Mart are consistent. The part per billion (ppb) S02 observations were converted to microgram per cubic meter (iJg/m 3 ) concentrations correctly. ENVIRON also verified the 99 1 h percentile daily maximum 1-hour S0 2 concentrations estimated by AERMOD and observed at the monitoring sites

.Mr

. Doug McWilliams 

### 4 September 23, 2011



### Figure 1. Plot of the locations of sources in the AERMOD input file on a Google Earth

Plot of the receptor locations in the AERMOD input file on a Google EarthMr. Doug McWilliams 

### 5 September 23, 2011

Findings
Overall, the approach used In the S02 Modeling Study followed current EPA guidelines for an air quality dispersion modeling analysis. The results of the S0 2 Modeling Study demonstrate that the application of AERMOD following EPA's guidance can result in over-predicting the 99 111 percentile of dally maximum S02 concentrations by a factor as high as ten compared to monitoring data.

Another generally-accepted practice for evaluating Gaussian plume models is to examine the highest predicted and observed concentrations unmatched by time. EPA's AERMOD evaluation report focused on comparing the frequency distribution of the predicted and observed concentrations unmatched by time. 3 The comparison of the cumulative frequency distribution plots are referred to as "Q-Q" plots. The Q-Q plots for both Gary and Hammond S02 monitor locations are presented as Figures 3 and 4, respectively. Both of the Q-Q plots show a significant over-prediction of daily maximum 1-hour S0 2 concentrations by AERMOD using EPA's latest modeling guidance.

3 hUpJ/www epa

. gov/ltn/saaml7thconf/aermod/aennod

_ mep

. pdl

## Q-Q Plot for 2008 Gary Monitor Max Daily 1-hour 

## 50 2 

## Concentrations

1 10 1 00 Observed Concentrations (J.Iilm " ) Figure 3. Q-Q Plot of the 50 2 Modeling Study at Gary Monitor.

18100 Von Kannan Avenue, Suite 600, Irvine, California 92612 www.environcorp

. com Tel : +1 949.261

. 5151 Fax: +1 949

. 261

. 6202 100 0 

### Page6

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. 1000.00 

### Page?SUITABILITY OF USING AERMOD AIR DISPERSION MODEL IN DETERMINING COMPLIANCE WITH THE PRIMARY ONE-HOUR SULFUR DIOXIDE NAAQS IN LAKE COUNTY INDIANA

USEPA has suggested the use of air dispersion modeling as well as ambient air monitoring data in determining compliance with the latest primary one-hour sulfur dioxide National Ambient Air Quality Standard (NMQS). We understand that modeled ground-level exceedances of the one-hour NMQS will be used to help formulate revised air emissions limitations for the regulated community even if available ambient air monitoring data shows compliance with the one-hour sulfur dioxide NMQS.

The AMS/U.S. EPA's AERMOD model is an EPA-preferred regulatory air dispersion model to be used in a wide variety of air dispersion modeling situations.' AERMOD is a steady-state plume model in that it
assumes that concentrations at all distances during a modeled hour are governed by the temporally averaged meteorology of the hour. The steady state assumption yields useful results since the statistics of the concentration distribution are of primary concern rather than specific concentrations at particular times and locations. AERMOD has been designed to handle the computation of pollutant impacts in both flat and complex terrain within the same modeling framework. In fact, with the AERMOD structure, there is no need for the specification of terrain type (flat, simple, or complex) relative to stack height since receptors at all elevations are handled with the same general methodology." AERMOD uses hourly meteorological data preprocessed by AERMET. At the present time AERMET is designed to accept data from any for the following sources: 1) standard hourly National Weather Service (NWS) data from the most representative site; 2) morning soundings of winds, temperature, and dew point from the nearest NWS upper air station; and 3) on-site wind, temperature, turbulence, pressure, and radiation measurements (if available)."'

Due to the meteorological data constraints, the one-hour averaging period is the shortest averaging period allowed by AERMOD and represents one data point per emission point-receptor pair. Longer averaging periods such as three-hour average or 24-hour average represents the average of three and 24 data points respectively. By necessity, the one-hour meteorological data must be consolidated into
one set of values per hour although wind speed, wind direction, ambient temperature and other meteorological parameters change during the one-hour period. The impact of condensing the variable meteorological data into a single value is most pronounced for the shortest (i.e

. , one-hour) averaging period. The averaging effect of longer averaging periods tends to mitigate the impact of variable meteorological conditions with the greatest mitigation associated with the longest averaging period. The variability of meteorological conditions can be particularly pronounced in Lake County where Lake Michigan can influence the local conditions due to effects such as on-shore and off-shore wind patterns in addition to normal frontal changes.

USEPA has conducted studies to evaluate how well AERMOD predicts ground-level concentrations that
are used to assess compliance with air quality regulations.lv The observed peak concentration for a given arc of samplers was compared to the predicted arc maximum. The comparisons included time and downwind-distance pairings to challenge the model components. Residual plots (predicted/observed, paired in time and downwind distance) of concentration estimates were used to judge whether AERMOD was performing correctly.v These evaluations were performed using short-term tracer studies and conventional long-term sulfur dioxide monitoring devices placed in arcs around emission points.v' In the case of the databases using conventional monitoring devices, the hourly sulfur dioxide emissions from the upstream monitoring point were well documented through continuous emissions monitors. The evaluation showed ratios of modeled to observed concentrations as high as 1.78:1.vl'

1The use of AERMOD to evaluate NAAQS compliance for an entire airshed introduces significantly greater uncertainties that those encountered during the evaluation studies described above. Air dispersion modeling associated with state implementation plans (SIPs) normally use steady-state emission rates (i.e./'allowable") emission rates for each major emission point modeled. Variance in emission rates is usually limited to seasonal variations or the development of completely different alternate operating scenarios. Most emission sources do not operate at steady-state rates and the allowable emission rates
are set to be protective of maximum production rates, which are infrequently obtained. This is further compounded in that 

### every emission point being modeled in the airshed is assumed to be at the infrequently achieved allowable emission rate 

### at the same time. Finally, using the daily maximum predicted concentrations at each receptor assumes that the unrealistic scenario of every source at the maximum allowable rate occurs during the 

### worst meteorological conditions of the day. The use of AERMOD with the inherent uncertainty pointed out in EPA's evaluation studies compounded with the overly conservative emission and meteorological assumptions described above can yield predicted ground-level sulfur dioxide concentrations vastly above those observed by ambient air monitoring stations.

A case study was undertaken to evaluate the impact of the uncertainties described above in sulfur dioxide modeling using AERMOD for lake County, Indiana. The year 2008 was used because of the availability of emissions, meteorological data and 1-hour ambient air monitoring data. lake County has two sulfur dioxide ambient monitoring stations operated by the Indiana Department of Environmental Management (IDEM). They are located in Gary and Hammond, lndiana.v 111 Hourly-average sulfur dioxide monitoring data were obtained from IDEM.'• The emissions rate data for 2008 were obtained from two
sources. Stack data and calculated emission data based on 2008 production rates for the ArcelorMittal steel mill located in East Chicago, Indiana was obtained from company sources. Stack data and emission rate data for 2008 for the remainder of the major sources in lake County was obtained from IDEM's NAAQS modeling database.X Monitoring site location data was obtained from IDEM.X 1 Meteorological data was preprocessed using AERMET with surface data obtained from the National Weather Service Station in South Bend, Indiana and upper air data obtained from Lincoln, Illinois. The South Bend location corresponds to the surface data station used to produce the regulatory five-year meteorological data used for Lake County {1988-1992). Upper air data previous obtained from Peoria, Illinois used in the 1988-1992 meteorological data has been moved to nearby Lincoln, Illinois.

The study used AERMOD version 09292 in the regulatory mode and the data described above. Predicted 1-hour sulfur dioxide ground-level concentrations for the two lake County ambient air monitoring sites from AERMOD were paired actual1-hour average concentrations from the ambient air monitors. Hours where 1-hour average monitoring data were not available (e.g., during calibrations and maintenance)
were excluded from the analysis. The concentration difference between the modeled and monitored sulfur dioxide concentrations (in micrograms per cubic meter) as well as the ratio of the modeled concentration to monitored concentration was calculated for each hour.

The results of the study are summarized in Table 1 for the Gary monitoring station and Table 2 for the Hammond monitoring station. For the Gary site, the model over-predicted the hourly-average sulfur dioxide concentration a mean of 36.7 micrograms per cubic meter (14.0 ppb) with a maximum overprediction of 880.7 micrograms per cubic meter {336 ppb)

. The ratio of modeled to monitored concentrations ranged up to 337:1. Similarly for the Hammond site, the model over-predicted the hourly-average sulfur dioxide concentration a mean of 2.86 micrograms per cubic meter {1.1 ppb) with a maximum over-prediction of 947 micrograms per cubic meter (361 ppb). The ratio of modeled to



### 2monitored concentrations ranged up to 362:1. A percentile analysis of the data shows that the model over-predicts the sulfur dioxide concentrations approximately 57 percent and 27 percent of the time in 2008 for Gary and Hammond, respectively. The over-prediction is extremely significant in light of the 75 ppb primary one-hour NMQS

.
In conclusion, the real

- life application of the AERMOD model as a predictor of 1-hour average ambient sulfur dioxide concentrations is flawed with over-predictions probable. Consequently, determination of compliance with the 1-hour primary sulfur dioxide NMQS should not be based on AERMOD modeling results alone.

i40 CFR Part 51, Appendix W.

n AERMOD : Description of Model Formulation, USEPA, EPA-454/R

- 03-004, September 2004, page 40

. mIbid, page 75.

iv AERMOD: Latest Features and Evaluation Results, USEPA, EPA-454/R-03-003, June 2003, page 13.

v Ibid, page 14.

vt Ibid, page 15.

vii Ibid, page 19.

vm Indiana 2011 Ambient Air Monitoring Network Plan, IDEM, July 1, 2010, page 51.

tx E

- mail from Usa Wagner (IDEM) to Les Chapman, sent September 13, 2010.

x NAAQS Modeling Database located on IDEM's Air Dispersion Modeling Website.

xi Indiana 2011 Ambient Air Monitoring Network Plan, IDEM, July 1, 2010 , page 51.

3Annual Average Annual Median Annual Maximum Annual Minimum TABLE 1· Revision 2 Comparison of Modeled v Monitored Ambient Air 50 2 Concentrations Gary, Indiana Ambient Air Monitoring Site 2008 50 2 Emission Rates 2008 NWS Meteorological Data for South Bend, IN and lincoln, ll

Modeled 50 2 Ambient Monitored 50 2 Concentration

Air Concentration Ambient Air Difference (ug/m 3 ) (ug/m 3 ) Concentration (ug/m 3 )

45.12 8.41 36.71 5.73 2.62 1.57 884

. 51 393.00 880.70

0.00 2.62 -244.43 Ratio of Modeled to Monitored Concentration

10.6897 1.4370 337.1465

0

. 0000

Model overpredicted ambient air concentrations 4,898 hours of 8,600 hours of available data (56.95%).

Comparison to 1-Hour NAAQS (75 ppb) based on 99th percentile of daily maximums Modeled: 293.47 ppb Monitored: 67.00 ppb

C:\AERMOO\M i ttaiiH\2011 502\SOAE

· Model v Monltor\SOAE08 Results.xlsx/SOAE08 Results

. xlsx 2/16/2011Annual Average Annual Median Annual Maximum Annual Minimum TABLE 2· Revision 2 Comparison of Modeled v Monitored Ambient Air S0 2 Concentrations Hammond, Indiana Ambient Air Monitoring Site 2008 50 2 Emission Rates 2008 NWS Meteorological Data for South Bend, IN and lincoln, ll

Modeled 50 2 Ambient Monitored 50 2 Concentration

Air Concentration Ambient Air Difference (ug/m 3 ) (ug/mi Concentration (ug/m 3 )

13.62 10.76 2.86 1.79 7.86 -4.70 949.53 110

. 04 946.91

0

. 00 2.62 -102.18 Ratio of Modeled to Monitored Concentration

1.8723 0.2358 362.4145

0

. 0000

Model overpredlcted ambient air concentrations 2,198 hours of 8,207 hours of available data (26.78%).

Comparison to 1-Hour NAAQS (75 ppb) based on 99th percentile of dally maximums Modeled: 240.65 ppb Monitored: 37.00 ppb

C:\AERMOD\MittaiiH\2011 502\SOAE

- Model v Monltor\SOAE08 Results

. xlsx/SOAE08 Results

. xlsx 2/16/2011

## A2

### February 3, 2012

Ms. Catherine Neuschler Environmental Analysis and Outcomes - Air Assessment and Environmental Data Management Minnesota Pollution Control Agency 520 Lafayette Road North St. Paul, MN 55155-4194
Submitted by email: Catherine.Neuschler@state.mn.us Phone: 651/757-2607

Re: Minnesota Power Comments on the Minnesota Amended Regional Haze State Implementation Plan (SIP)
Dear Ms. Neuschler,
The Minnesota Pollution Control Agency submitted a Supplemental Plan to the December 30, 2009 Minnesota Regional Haze State Implementation Plan (SIP) to the US Environmental Protection Agency (EPA) on January 5, 2012. The EPA has published in the Federal Register (40 CFR Part 52 EPA-R05-OAR-2010-0037; FRL-9622-B “Approval and Promulgation of Air Quality Im plementation Plans; Minnesota; Regional Haze”) its intent to fully approve the Minneso ta regional haze plan if Minnesota submits its proposed Best Available Retrofit Technology (BART) emission limits for taconite facilities in fully adopted form prior to EPA’s final action under their January 25, 2012 proposal or to conditionally approve the planif Minnesota has not done so. The MPCA is seeking comments to the Draft Regi onal Haze Implementation Plan Supplement through February 3, 2012. Minnesota Power respectfully submits the following comments to the Minnesota Regional Haze SIP and Supplement. Minnesota Power has been working cooperativ ely with the MPCA and other Minnesota stake holders to provide inputto the Minnesota Regional Haze SIP development over the last five to seven years and is a strong supporter of the MPCA’s Northeast Minnesota Plan. Minnesota Power coal-fired generating units are located in the six counties (St. Louis, Lake, Cook, Carlton, Itasca, and Koochi ching) in which the MPCA has targeted reductions in emissions of sulfur dioxide (SO 2 

### ) and oxides of nitrogen (NO x 

### ) that can contribute to visibility impairment (regional haze). In additio n to the electric generating unit long term strategy for emission reduc tions, the MPCA is finalizing emission reduction requirements for taconite mines operating in the region. The Northeast Minnesota Plan segment addressing power plant emissions has a “goal of a 30% reduction in combined SO 2

### and NO X

### emissions from larger sources, those that emit over 100 tons per year of either pollutant, by 2018 as compared to a baseline year of 2002.

### There is an interim goal of a 20% reduction by 2012. As of 2009, the most recent year for which emission inventory data is availabl e, emissions were down by 39%. Based on projections at the beginning of 2011, it appe ars Minnesota will meet both the 20% by 2012 and 30% by 2018 goals.” (Reference, MPCA Regional Haze web site http://www.pca.state.mn.us/index.php/air/ air-quality-and-pollutants/general-air

quality/minnesota-regional-haze-plan.html).
A key part of the Northeast Minnesota Planinvolves the emission reductions that were delivered by Minnesota Power on our coal-f ired generation units under the Arrowhead Regional Emissions Abatement (AREA) program, a voluntary emission reduction program facilitated by Minnesota regulators. These emission reductions have been supplemented by Minnesota Power’s 2009 retrof it of Best Available Control Technology (BACT) style controls on our Boswell Energy Center Unit 3 and supplemental emission reductions for NO x

### facilitated on Boswell Unit 4. These emission reduction measures include significant reductions in mercury emissions as a “work in progress” while Minnesota Power provides for deployment of new mercury reduction technologies on our units. As the MPCA has noted, such measures resulted in the Northeast Minnesota Plan already surpassing its 30% emission reducti on goal for 2018 by over nine percent.
Part of the MPCA Supplemental Plan to the Regional Haze SIP involves inclusion of EPA’s recent decision to propose the new Cross State Air Pollution Rule (CSAPR) reductions in SO 2

### and NO x

### emissions as being “better than BART”. “Better than” refers to how the collective regional emission re ductions from Minnesota and other CSAPR affected states will significantly exceed what is required to meet the first regional haze, Reasonable Further Progress targets that woul d otherwise have been addressed through various measures that included impositi on of Best Available Retrofit Technology (BART) on certain eligible uni ts within the same region. Minnesota Power agrees with the MPCA and EPA in recognizing that CSAPR is better than BART and notes that the emission reductions already ach ieved by Minnesota Power units retrofit with controls are lower than the emissions associated with emissions that might have been designated for Minnesota Power BART elig ible unit reductions.
While CSAPR is being designated as better than BART, it is also noteworthy that EPA had earlier designated that units in states affected by the Clean Air Interstate Transport Rule (CAIR) would be treated as “CAIR is better than BART”. Minnesota did not become an affected CAIR state, but it is noteworthy that the CSAPR requirements recently finalized by EPA impose even lower SO 2

### and NO x

### emissions budget restrictions on Minnesota than were designated for Mi nnesota under the CAIR . Consequently, Minnesota Power supports the MPCA and EPA acceptance of both “CAIR is better than BART” and “CSAPR is be tter than BART”.

Another item of note is that Minnesota is in attainment with all existing National Ambient Air Quality Standards (NAAQS) that are established by EPA to be protective of public health and welfare with a margin of safety. Regional haze, visibility impairment concerns do not extend to public health impacts, but the SO 2

### and NO x

### emission reductions delivered to support regional haze Reasonable Further Progress target

Page 2 of 4

### compliance have helped improve the marginby which Minnesota air quality stays in attainment with NAAQS. This is exemplified in Figures 1, 2 and 3.
Figure 1. Minnesota Power coal unit SO 2

### and NO x

### emission rates have significantly decreased, assisting with achie vement of Minnesota and regi onal air quality goals.

Minnesota Power Coal Unit Emission Rates Over Time

1980 Actual 2000 Actual 2010 Actual
Weighted Average Emission Rate 

### Figures 2 and 3. Minnesota Electric Ge nerating Unit Emission Rate Trends for SO 2

### and NO x

### demonstrate overall emissions from Minne sota coal-fired generating units have decreased, contributing to achievement of Minnesota air quality goals. (Ref. P. Ciborowski, MPCA). 0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400 1.600 1.800 2.000Emission Rate, Pounds per Million Btus SO2
NOx



### Minnesota Power expects to continue our tre nd of reducing emissions from our coal-fired generating units. While we have been reduci ng the emission rates from our existing coal units through measures such as selection of improved coal quality and retrofit of emission

Page 3 of 4

### control equipment, we have also been increasing the proportion of low-emitting energy alternatives such as renewable biomass, wind and hydroelectric generation (Wind, Water, Wood) in our energy mix. Our most recently filed Integr ated Resource Plan indicates how Minnesota Power expects to have shifted the proportion of coal in our generation mix from the 95% level of 2005 to about 53% by 2024. Expanded Minnesota Power use of renewable energy combined Minnesota Power Generation 2005

Coal 95% Biomass

1% MP Hydro 4%

MP Energy Sources in 2024 Latest Integrated Resource Plan MP Energy Sources in 2012 Market Purchases

8% Market Purchases Expanded Conservation 1% Manitoba Existing 1% Coal Manitoba 11%

MHEB ShortTerm 75% LongTerm Coal 1% 11% 53%

Wind 6%

Hydro Wind 4% 21%

Biomass

2% Hydro Biomass 4% 2% 

### with expanding implementation of conservation improvement measures leave Minnesota Power in a position where Minnesota can expe ct to benefit from yet lower emissions from our units when the MPCA seeks to de liver on the next Regional Haze, Reasonable Further Progress target to be developed in the 2018 through 2023 time frame.
Thank you for the opportunity to comment on the MPCA Draft Supplemental Regional Haze State Implementation Plan. Minnesota Power will be glad to address any clarifications or questions you may have about these comments.
Sincerely,

Michael G. Cashin Michael G. Cashin, PE Environmental Policy Manager Minnesota Power (ALLETE) 30 West Superior Street Duluth, MN 55802 218-355-3339 Cell: 218-349-9463
Cc David Thornton, MPCA

Page 4 of 4

# • CLIFFS 

# •

CLIFFS NATURAL RESOURCES INC. 1100 Superior Avenue

. Sui1e 1500. Cleveland

. OH 44114·2544 P 216

. 694

. 5700 F 216

. 694

. 4880 clillsnaturalresources.com

Catherine Neuschler Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 Lafayette Road North St. Paul, MN 55155-4194 February 3, 2012

Re: Comment on Minnesota's Draft Regional Haze State Implementation Plan Supplement

Cliffs Natural Resources ("Cliffs " ) hereby submits its comments to the Minnesota Pollution Control Agency (MPCA) on its Draft Regional Haze State Im p lem entation Plan (SIP) Supplement on behalf of Cliffs' three taconite mining operations in Minnesota: Northshore/Silver Bay, Hibbing Taconite, and United Taconite

.
As explained more completely below, Cliffs requests the following changes to the Regional Haze SIP Supplement:

o Rely on the anticipated emission reductions from the NAAQS implementation without including
a modeling requirement in the BART Administrative Orders;

o Extend the schedule for any required modeling delive r ables to allow time for EPA to finish its gu idan ce and to respond to concerns about the inaccuracy of model predictions.

o Adjust the BART limits as needed to reflect both an appropriate statistically derived upper bound limit using stack test data AND an additional 10% margin of safety to address the significant variability not reflected in the stack test data

.

o Establish a process to address unexpected increases in the su lfur content of the ore.

o Streamline the compliance demonstration requirements to mitigate unnecessary burdens

.
We appreciate the opportunity to provide comments on these issues, which are critical to our operations, and we ask that additional time be allocated to work through these comments before finalizing the SIP Supplement

.Ms. Neusch le r February 3, 2012 Page 2 of 27

The Regional Haze Rule

In 1999, the U.S. Environmental Protection Agency ("U.S. EPA") published regulations to address visibility impairment in our nation's largest national parks and wilderness areas ("Class I areas"). This rule is commonly known as the " Regional Haze Rule" (the "Ru l e"). The Rule requires Minnesota to establ i sh and achieve visibility goals for each of its Class I areas by regulating certain emissions believed to contribute to regiona l haze. The Rule requires that MPCA must submit to U.S. EPA a Regional Haze State Implementation Plan (SIP) that identifies sources that cause or contribute to visibility impairment in these areas. The Regional Haze SIP must also include a demonstration of reasonable progress toward reaching the 2018 visibility goal for each of the state's Class I areas.

One of the provisions of the Regional Haze Rule is that certain large stationary sources that were put in place between 1962 and 1977 and have modeled contributions to regiona l haze in Class I areas must conduct a Best Available Retrofit Technology (BART) analysis. The purpose of the BART ana l ysis is to analyze available retrofit control t echnologies for these existing sources to determine if a technology meets the rule criteria and must be installed to improve visibility in Cl ass I areas. The chosen technology is referred to as the BART controls, or simply BART. The SIP must require BART on all BART-eligible
sources that are deemed "s ubject to BART."

The Minnesota State Implementation Plan- December 2009

Pursuant to the Rule, in December 2009 MPCA submitted a Regional Haze SIP to U.S. EPA identifying sources that cause or contribute to visibility impairment in its Class I areas. The SIP states that key haze causing emissions in Minnesota are sulfur dioxide (S0 2 ), nitrogen oxides (NOx) and particulate matter (PM). As required by the Ru l e, the S I P documents the BART determinations for each subject-to-BART facility. In general, BART for the taconite facilities consisted of the following:

S0 2 Operation of existing scrubbers NO x Good combustion practices PM Continued implementation of the Taconite Maximum Achievable Control Technology (MACT) standard

However, due to a lack of sufficient emissions data at the taconite facilities, the MPCA was unable to include numeric BART emission limits for NOx for all taconite facilities and S0 2 for taconite faci l ities that burn higher sulfur fuels. Therefore, the MPCA entered into Administrative Orders (AOs) with each of the taconite facilities, including the three Cliffs facilities

. The AOs required the taconite facilities to perform testing and monitoring and to report the results to MPCA.

The Draft Regional Haze State Implementation Plan (SIP) Supplement- December 2011

On December 19, 2011, the MPCA publ i shed a draft Regional Haze SIP Supp l ement which contains proposed numeric BART limits for NOx and S0 2 for all taconite facilities, memos describing the process f or setting the proposed BART emission limits for each facility, and draft AOs designed to make the proposed BART limits enforceable. In addition, the draft SIP Supplement proposes changes to the strategy for the Northeast Minnesota Plan, which is part of the long term strategy to improve visibility in Class I areas.Ms. Neuschler February 3, 2012 Page 3 of 27

The public comment period for the draft SIP Supplement run s through February 3, 2012.

Cliffs' General Comments on the Draft Regional Haze SIP Supplement

1. Cliffs supports MPCA's decision to use the CSAPR rule as BART for the Northshore Silver Bay Power Station.

MPCA proposes to use the Cross-State Air Pollution Rule r'CSAPR") as BART for the Silver Bay Power Station and other utilities subject to BART. MPCA has ample legal and technical support for this determination. On De cember 23, 2011, EPA issued a proposed rule to clarify that the CSAPR as a replacement to CAIR, "achieves greater reasonable progress towards the national goal of achieving natural visibility conditions in Class I areas than source-specific Best Available Retrofit Technology (BART) in those states covered by the [CSAPR)." 76 Fed.Reg. 82219 (referencing 40 CFR 51.308(e)(2) as allowing alternative trading programs to satisfy BART if they achieve greater reasonable progress than BART toward visibility goals).

The D

. C. Circuit Court's December 30, 2011 decision to stay CSAPR pending a decision on the legal challenge to this ru le should not change MPCA's approach in the BART SIP Supplement

. MPCA indicates on page 3 of the draft BART SIP Supplement that "EPA has committed to doing a rulemaking to determine if the emission reductions provided by the Transport Rule are equivalent or better than applying BART to power plants on an individual basis." EPA is vigorously defending its Transport Rule and a decision from the Court is expected by the end of 2012. EPA will then finalize its December 23, 2011 proposed rulemaking to establish whether the CSAPR that remains after legal challenge provides emission reductions that are equivalent or better than applying BART on an individual basis

. Cliffs encourages MPCA to stay the course and allow this process to play out rather than move backward toward source - specific BART limits for the affected power plants, including Cliffs' Silver Bay Power Station.

2. Cliffs supports MPCA's decision to adjust its long-term strategy for regional haze set forth in the Northeast Minnesota Plan

MPCA appropriately proposes changes to its long

- term strategy fo r regional haze and the Northeast Minnesota Plan. MPCA reports that Minnesota has already surpassed its 2018 goal of a 30% reduction of combined S0 2 and NOx emissions from sources that emit over 100 tons per year. Given this rapid decline in emissions, it is appropriate for MPCA to re-evaluate the second component of the Northeast Minnesota Plan, which was designed to investigate control measures and pollution prevention practices that could be applied to the tacon i te industry. These would be measures and practices above and beyond what MPCA established as BART for sources to be regulated under the Regional Haze Rule. This long-term strategy should be adjusted as appropriate, when considered along with all of the other downward pressures on emission 

### rates, to meet the regional haze goals set forth in the Clean Air Act.

MPCA appropriately recognizes that the taconite industry is preparing to comply with a number of regulatory requirements that target reductions of the compounds regulated for regional haze. The State is required to consider these "e miss ion reductions due to ongoing air pollution control programs" in developing its Long

- Term Strategy for the BART SIP. See 40 CFR 51

. 308(d)(3)(v)(A). After the 2009Ms

. Neuschler February 3, 2012 Page 4 of27

Regional Haze SIP, new 1-hour S0 2 and N0 2 National Ambient Air Qua l ity Standards (NAAQS) were finalized and are expected to produce emission reductions relevant to regiona l haze goa l s. These emission reductions must be considered in the development of Minnesota's Long-Term Strategy. Cliffs supports MPCA's decision to rely on the new NAAQS
, instead of its 2009 Northeast Minnesota Plan for the taconite industry
, to achieve the reasonable progress goals required in its Long-Term Strategy under the Rule. The NAAQS approach allows sources to choose their compliance strategies to meet a common numeric federal standard

. The Northeast Minnesota Plan
, by contrast , would have imposed a unique obligation on Minnesota facilities to fund and implement pilot projects in the hope that they would produce a cost effective emission control technology for the industry. By adopting NAAQS compliance
as its Long-Term Strategy for regional haze, MPCA removes an additional and unnecessary state

- specific burden on Minnesota businesses

.

3. The NAAQS Air Dispersion Modeling Should Be Driven By Federal Requirements and Schedules

While MPCA can appropriately consider the effect of the new NAAQS on relevant emission reductions to help Minnesota meet its regional haze goals, it is not ne c essary or appropriate to adopt the NAAQS obligations into the BART SIP
, as MPCA does by mandating NAAQS modeling for the taconite industry as part of its proposed Administrative Order (AO) for BART. NAAQS modeling is following an implementation schedule that is driven by federal requirements for establishing nonattainment areas and strategies to bring those areas into attainment. S0 2 and N0 2 are on different implementation schedules with EPA prioritizing S0 2 modeling for a SIP Call deadline in June 2013. N0 2 modeling is on a slower implementation schedule in part because the modeling must consider complex atmospheric interactions that convert some NOx emitted into N0 2 downwind. Importantly, EPA is not currently requiring that states use modeling to set regulatory limits for N0 2 • It is premature , therefore, for MPCA to include N0 2 modeling in an AO with the intent of relying on its potentially erroneous and overly conservative results for making decisions regarding emission controls at the end of 2012

.
MPCA may rely on the benefits to be derived from meeting the one - hour NAAQS for N0 2 and S0 2 without arbitrarily expediting its implementation ahead of the refinements to the model expected from EPA. The N0 2 and S0 2 NAAQS are currently on schedule to produce emission reductions by 2017, which will be in time to help MPCA achieve its Regional Haze goa l s. S0 2 modeling is currently underway to meet NAAQS SIP Call deadlines in June 2013

. MPCA does not need AOs mandating S0 2 modeling in Minnesota

. MPCA is relying on CAIR, CSAPR, NAAQS, and many other regulatory obligations to help reduce S0 2 and NOx emissions without requiring or needing to adopt those obligations into AOs for affected facilities

. Thus
, it seems arbitrary to require the taconite industry sources to sign an Order mandating NAAQS modeling for N0 2 and S0 2 • The NAAQS process will produce appropriate emission reductions on its own timeline, which can be relied upon to meet BART SIP limits without an Administrative Order.

If MPCA insists on imposing a schedule for modeling in the BART AOs, the schedule must be extended beyond what has been proposed in the SIP Supplement to allow for improvements to the modeling being developed at the federal level. Cliffs and one of its industry groups, the American Iron and Steel Institute (AISI), have been engaged in discussions with EPA's air modeling group to raise
concerns about the accuracy of the current iterations of the AERMOD air dispersion model when predicting short

- term ambient air quality impacts. A study commissioned in Northwest Indiana compared AERMOD's predicted ambient impacts using a 2008 inventory of actual S0 2 emissions to theMs. Neuschler February 3, 2012 Page 5 of27

actual ambient S0 2 concentrations at two monitoring stations. The purpose of the study was to determine the model's accuracy in an area dominated by complex manufacturing facilities. Using a Q-Q plot to compare the results, a peer review of the study concluded that the model over predicted the S0 2 ambient impact by a factor of 10 at the ggt h percentile (4 1 h highest) daily maximum value. This suggests
a fundamental problem in how the model predicts ambient air quality impacts

. This study has been presented to EPA along with other studies that reach similar results. The agency will be considering data and presentations at its 10 1 h Modeling Conference this March on how to improve the accuracy of the AERMOO predictions in the vicinity of com plex manufacturing facilities

. EPA will be considering, for example, methods that use targeted monitoring in the vicinity of the highest modeled concentration to validate or calibrate model predictions. This work must precede any use of the model to render regulatory decision s on the level of emission reduction necessary to meet the national standards because the substantial evidence of inaccuracy would make such decisions arbitrary and vulnerable to legal challenge.

The inaccuracy of model predictions is more significant now because models are being asked for the first time to predict one-hour impacts for S0 2 and N0 2 • These short-term concentrations are significant l y affected by meteorological variations that are discounted by AERMOD's assumption that wind direction is constant. The evidence indicates that AERMOD becomes less accurate during low wind periods when its assumptions about wind speed and wind direction run counter to documented observations

. For instance
, low wind observations typically show a plume moving straight up whi l e AERMOD predicts the plume moves horizontally with downwash characteristics that will invariably produce a higher predicted concentration for local receptors than will actually occur. These obvious inaccuracies and strained assumptions are contributing to the over prediction increasingly demonstrated by model studies. EPA is expected to address some of these issues in mode l ing guidance after the lO th Modeling Conference.
Unfortunately, the modeling schedules proposed by MPCA in the SIP Supplement AOs would not allow modeling protocols to incorporate EPA 's final modeling guidance. A key component of the draft Administrative Order appended to the BART SIP Supplement is a requirement to submit modeling protocols by April 1, 2012 and modeled attainment demonstrations by December 15, 2012 for both S0 2 and N0 2 • This schedule must be extended to allow Minnesota facilities to benefit from the refinements to the model anticipated from EPA's lOth Modeling Conference scheduled for March 13-15, 2012. Federal guidance arising from the Modeling Conference is anticipated in the late summer of 2012 and it is expected to address issues critical to improving the accuracy of the models for N0 2 and S0 2 • If MPCA
moves forward with its current schedule, the protocols submitted in April 2012 will have to be revised and resubmitted to address EPA's final guidance.

MPCA 's reliance on NAAQS compliance for its Long

- Term Regional Haze Strategy should not expedite the timelines for implementing the NAAQS

. EPA has embarked on an aggressive timeline for S0 2 modeling that requires states to conduct the air dispersion modeling before a June 2013 SIP Call deadline

. EPA is prioritizing efforts to refine and improve 50 2 modeling in 2012 to help address widespread concerns that the models significant l y over predict ambient impacts. MPCA should require 50 2 modeling protocols no sooner than 60 days after the federal guidance on S0 2 modeling is finalized with final results 90 days after MPCA approves the S0 2 modeling protocol. This helps to ensure that Cliffs will have the benefit of EPA's anticipated improvements to the model when we submit our modeling protoco l s.Ms

. Neuschler February 3, 2012 Page 6 of 27

E PA has not called for SIPs that use air dispersion modeling for N0 2 • As a result, EPA is expected to continue to work on improvements to the N0 2 modeling after it releases the final S0 2 modeling guidance in 2012. As described in more detail below, the N0 2 model refinements include better methods for predicting complex atmospheric chemistry reactions that produce N0 2 after the NO x exhaust leaves the stack

. These refinements are expected to take more time

. Since MPCA does not have a current federally-imposed schedule for N0 2 modeling, Cliffs recommends that the schedule for N0 2 protocols begin after the S0 2 mode l ing results are submitted. This allows EPA more time to address the complex N0 2 modeling issues before the state requires a modeling protoco l. MPCA should require N0 2 modeling protocols no earlier than the first quarter of 2013 with modeling results by the end of 2013

. Th i s is still plenty of time to have emission controls engineered and installed to meet the BART SIP goals for regional haze improvements. Minnesota should follow the federal timelines closely to ensure that Minnesota faci l ities are not burdened by using less accurate models for regulatory determinations than those used by other states

.
In addition to the general concerns raised above
, Cliffs ha s several specific concerns about the accuracy of air dispersion modeling fo r predicting ambient impacts that can be addressed, in part , at the State level using the discretion that EPA accords to states in implementing the models. The air dispersion modeling issues of concern include
, but are not limited to, the following :

o Representative AERMINUTE Data Is Not Available for All Sources: Current modeling guidance recommends the use of AERMINUTE for processing meteorological data

. The AERMINUTE data set has a much greater frequency of low wind speed conditions which tend to be associated with distorted maximum modeled concentrations, especially for low

- level sources and fugitive
sources

. S i nce AERMINUTE data is not available from all meteorological stations and it i s contributing to over prediction
, Cliffs asks that MPCA accept modeling that does not use AERMINUTE data to satisfy BART

.

o Reasonable Background Values Should be Used for Northeastern Minnesota: Actual ambient data from Northeastern Minnesota is limited, so background values must be developed in some other way. The Lake Michigan Air Directors Consortium (LADCO) collected monitoring data supporting 4

- 8 ppb as a default va lu e for S0 2 background in the Midwest. MPCA can justify the low end of this range as background for Northeast Minnesota

. The background method for N0 2 should not include any conservative assumptions because the mode l predictions are already overly conservative. Cliffs suggests that the State gather available representative actua l ambient monito rin g data that avoids double counting emissions already reflected by the model inputs. The data should be averaged to remove spikes and outl i ers that would otherwise contribute to inaccurate assessments of the contribution of background to ambient monitors

.

o Model the Individual Impact of Indurating Furnaces at Each Facility : EPA has confirmed in its March 1, 2011 guidance that States have discretion to choose a thresho l d for NAAQS modeling

. Modeling all emission sources at all facilities simultaneously at the potential to emit (PTE) is not representative of actual air quality due to the substantial difference between hourly PTE and actual emissions. To avoid overestimating air quality impacts, we suggest modeling the impact of the indurating furnaces at a reasonable maximum operationa l rate and exclude any space heaters or other minor combustion sou r ces

. Also
, the impact of Cliffs' emissions should not be combined with the emissions of other companies when evaluating receptor concentrations andMs

. Neuschler February 3, 2012 Page 7 of 27

emission reductions. Modeling is not accurate enough to be used to allocate responsibility among companies

. Only monitored violations should trigger an evaluation of the relative culpability among contributing companies

.

o Limit Modeled Receptors to those Reasonably Exposed: The role of receptor placement plays a significant part for modeled NAAQS attainment for 1-hour standards. Cliffs asks that MPCA allow NAAQS modeling using "reasonably exposed " receptors. For example
, receptors should not be modeled on steep slopes
, waterways, roadways or bicycle trails where people would not normally be present for a full hour of exposure.

o Exclude Intermittent Sources from 1-hour NAAQS Modeling Inputs. Modeling of non - routine operat i ons (examples: emergency generator, back

- up fuel oil, etc.) overestimates a source ' s actua l ambient air impacts. For the probabilistic 50 2 and N0 2 NAAQS, EPA has suggested that intermittent sources have a de minimis likelihood of contributing emissions on the day when meteorological conditions and continuous sources have produced one of the 1

- 2% worst days of the year. See EPA ' s March 1 , 2011 Modeling Gu i dance

. We recommend modeling of typical facility operations so that the model reasonably predicts the future attainment status of actual air quality. Modeling of maximum potential emissions for all facilities will unnecessarily overestimate actua l impacts.
Modeling of emergency engines 

## I peak shaving engines 

## I monthly engine testing is poorly repre sented in the model
, and emissions are generally overstated in the modeling which leads to unnecessary permit conditions (e.g., can only test one engine for Y:z hour between the hours of 10

- 11 am). Therefore
, we recommend that these types of sources should not be included in the modeling demonstrations.

o N0 2 -specific modeling concerns : a) Elevated ambient 1-hour N02 concentrations are primarily an urban roadway corridor problem, and not due to stationary sources. Facilities should have the option of placing a monitor in the receptor area with the highest model concentration to demonstrate that actual ambient impacts do not justify emission control expenditures

. b) The N0 2 : NO x default in

- stack ratio of 

### 0

. 5 leads to unrealistically high modeled N02 concentrations. A more reasonable default in-stack ratio of 0.1 should be applied for all
sources

. Alternatively, the timeline could be adjusted to allow the facilities sufficient time to c onduct performance testing under representative operat i ng conditions to allow a facility to determine a site

- specific ratio

. c) MPCA should streamline approval of Tier 3 N0 2 modeling approaches {OLM 

## I PVMRM) for individual source modeling. To the extent multiple source modeling is conducted for N0 2 , it should be based on photochemical 

## I regional models and not AERMOD.

Based on these concerns with the current modeling and the expected federal guidance on some of these issues, Cliffs recommends that the schedule for submitting the modeling protocol and modeled attainment demonstrations be extended to allow time for these modeling protocol issues to be resolvedMs. Neuschler February 3, 2012 Page 8 of27

by EPA before regulatory decisions are made based on inaccurate and unreliable modeled predictions. As indicated above, please co nsider separating the S0 2 and N0 2 modeling schedules so that S0 2 modeling protocols will come due 60 days after the final federal guidance for S0 2 NAAQS modeling and
a modeling report due 90 days after MPCA approves the protocol. The N0 2 modeling protocol s hould follow the S0 2 modeling report and be due no earlier than April 1, 2013 with a report due by December 31, 2013. These deadlines should be adjustable as needed to allow for the incorporation of anticipated federal devel opme nts designed to improve model accuracy.

4. The Proposed NOx Limitation Is Inconsistent with the Definition of BART

Best Available Retrofit Technology means "an emission limitation based on the degree of reduction achievable through the application of the best system of continuous emission reduction for each pollutant which is emitted." See 40 CFR Part 51, Appendix Y, Section V "Enforceable Limits/Compliance Date." BART does not require a redesign of the emission unit or a switch to a different fuel. See Appendix Y, Section IV.D.S. BART does not require curtailments or production
cons traints. As the definition dictates
, the BART NO x emission limitation for an indurating furnace should reflect its full range of operating conditions when continuous good combustion practices are applied

. This means that the numeric BART emission limitation should not be lower than the highest NO. rate measured during a test that reflects the continuous application of good combust ion practices

. Cliffs supports the use of a statistical method to predict the upper bound limit from the variability within the data set as a refined starting point for establishing a BART li mit.

Additional upward adjustments are necessary , however, to reflect operational variability t hat is not captured in the stack test data set. A reasonable safety margin should be added to the statistically derived limit to account for the following:

• The delta between the production rate during testing and the product i on capacity of the equipment;

• Seasonal variations in temperature, humidity
, and precipitation that affect emission rates;

• The variations in the ore that serves as the primary raw material and variations in the product demands ;

• Startup, Shutdown and Malfunction events

. 1

1 The MPCA AOs require compliance with the NOx and S02 emission limits during periods of startup , shutdown and malfunction ("SSM")

. The dataset used to establish th e emission limitations did not contain emission information for SSM events. Therefore, an upper predicted limit calculated from that dataset would not cover the variability introduced by SSM events. This provides additional justification for adding a margin of safety beyond the calcula ted BART limit in the proposed SIP Supplement.Ms. Neuschler February 3 , 2012 Page 9 of 27

• The inherent variability contributed by sampling and analysis equipment when using stack test data to establish emiss i on limits.

It is common practice to app l y a factor of 10 percent or more to stack test values to accommodate
source variability not reflected in the stack test data set , and the inaccuracy of the proposed compliance method, when setting an enforceable emission limit

. See e.g

. MPCA Guidance for Proposing Synthetic Minor Permit Limit s, http://www.pca.state

. mn.us/index

. php/air/air

- permits

- and

- rules/air

- permits

- and

forms/air-permits/proposing

- synthetic-minor

- permit

- limits

. html (recommending that a 10% factor be added to test-based limits to accommodate the accuracy of the proposed compliance method and other variables); see also In re Prairie State, 13 E.A.D. 1, 58 (U.S. Environmental Appea l s Board 2006) (accepting Illinois EPA's use of a 10% safety factor as a standard method to accommodate variability in setting a consistent l y achievable BACT emission limitation)

. Emission limitations that must be met continuously should use the ten percent factor to ensure that the variability external to the data set is accounted for in the enforceable limit.

Ten percent is not a random value; it correlates to the standard performan c e test objective, which is to operate within 10% (at 90 % ) of rated capacity. Agencies recognize that operating at 100% capacity is not a realistic expectation during a given stack test because some variables are not within the company's control during a test

. Seasona l variations
, common in Northeastern Minnesota, and ore variations common in any mining operation dictate that test i ng at or around 90% of capacity is all that
c

an reasonably be expected for any given test

. Therefore
, test data will not reflect the true maximum capacity of the equipment and an upward adjustment is needed to ensure that equipment can be used at full capacity when conditions allow without violating an emission l i mit

. Therefore
, it is appropriate for MPCA to add 10% to the value derived from the NO

. stack test data when setting a limit that must be achievable under all normal operating conditions. This ana l ysis a l so applies to the development of S0 2 emission limits

.
5. The Proposed S0 2 Limitation Should Accommodate Higher Sulfur Iron Ore D e po sits

Cliffs cannot ensure continuous compliance with a numeric S0 2 1imit when the su l fur content of the iron ore significantly increases. S0 2 emissions are generated from the su l fur content of the fuel and the sulfur content of the ore

. The ore's sulfur content is a variab l e inherent to mining operations that Cliffs does not control. As indicated above, BART numeric emission limits must be derived from the
c

ontinuous application of BART controls to the full range of normal operating conditions. For S0 21 that is difficult in the taconite industry because the level of su l fur can increase as new zones of ore are excavated

. To account for this variabi l ity
, Cliffs generally recommends the use of an appropriate UPL based on available stack test data plus a 10% margin of safety

. However
, even this adjustment may be insufficient to account for the potential increases in the sulfur content of ore in newly mined areas

. The proposed BART S0 2 limit should not apply to new ore mined from areas with higher su l fur levels

. When higher su l fur ores are encountered, Cliffs proposes to initiate a procedure to be established in its AOs for setting new S0 2 BART emission limits for ores mined from that zone or area. This helps ensure that the BART limit(s) for S0 2 reflect the true variability of the emission unit includ i ng the variability of the sulfur content of the ore from areas that cannot technically be ascertained at this time. The wet scrubber parameters for proper operation of the control device would continue to apply during the interimMs

. Neuschler February 3 , 2012 Page 10 of27

period
, but the numeric S0 2 emission limit would need to be developed for the ore mined from the new high sulfur area based on a stack test conducted within 180 days after encountering the high sulfur ore.

6. MPCA's Compliance Testing and Monitoring Approach Is Unnecessarily Burdensome

The AOs in the SIP Supplement propose a number of requirements that are unnecessarily burdensome and should be revised or streamlined to be more efficient and effective in rendering the appropriate BART limits enforceable. As presented in the SIP Supplement, the draft AOs pre sent the following method of demonstrating comp liance for both NOx and S0 2 :

o Simultaneous measurement of emissions from multiple stacks for 30 hourly data points.
o Perform initial test within 12 month s of the effective date of the limit

. o Conduct additional stack tests on an annual basis with each test being conducted within two

- month of the initial stack testing anniversary.
o CEMS can be used as an alternative to stack testing.

We have several concerns regarding this compliance demonstration :

o The Limits Should Be Effective Five Years After SIP Approval. The draft AO states that the NOx and S0 2 emission lim its are "effective on and after the date six months after the effective date of EPA,s approval of this BART determination .// By contrast the federal rule requires that existing facilities install and operate BART " no later than five years after plan approval. // See 40 CFR 51.302(c)(4)(iv). MPCA should allow affected sou r ces the full amount of time established by Federal rule. As MPCA indicates in the SIP Supplement, Minnesota has already surpassed its 2018 Regional Haze goal of a 30% reduction of combined S0 2 and NO x emissions from sources that emit over 100 ton s per year. MPCA offers no reason to expedite this timeline and place Minnesota businesses at a competitive disadvantage with those in States that are following the 5-year federal timeline for BART implementation

.

o Submit a Test Frequency Plan to Set Future T est Frequency: The draft AO s requ ire that stack testing for NOx and 50 2 be conducted every 12 months. The requirement for annual stack testing s hould be adjusted based on the stack test results as allowed under MPCNs test frequency guidance. The AO should allow Cliffs to s ubmit a test frequency plan to MPCA following the initial stack test for each of its facilities. The recommended frequency could be based on MPCA's test frequency guidance ( http : //www.pca .state

. mn.us/index

. php/view

document

. html?gid=409 ) which s tates :

Test Result Test Frequency Test results > 90% of limit Every 12 months 60% <test results < 90% of limit Every 36 months Test results < 60% of limit Every 60 months

To address this concern, the following requirement should be added to each AO:

Test Frequency Plan. Within 60 days following the initial performance test , Cliffs may submit a Test Frequency Plan to set the frequency of future performance tests.Ms

. Neuschler February 3, 2012 Page 11 of27

o The Testing Deadlines Should Be Less Restrictive. The draft AOs require that stack testing for NO x and S0 2 be conducted every 12 months within 2

- months of the anniversary date of the initial BART compliance test

. The requirement is overly restrictive because it would limit the time

- of

- year in which the testing can take place and would therefore limit the operating conditions in which the testing could occur

. It is also important to note that the taconite industry has historically experienced unpredictable market swings causing decreased production and extended downtime. To address these concerns, the stack testing requirement should be rewritten as follows :

Periodic BART NOJS0 2 Tests

. Testing shall be conducted at the frequency set in the Test Frequency Plan. Testing required every 12 months shall occur within 6 months of the test anniversary; testing required every 36 months or longer shall occur within 12 months of the test anniversary.

Automatic Stack Test Extensions. If a facility experiences an extended outage (> 90 days) during a year in which a stack test is required, the facility wi ll be granted an automatic 12

- month extension to the testing deadline provided that the facility submits written notification to MPCA

.

o The Test Duration is Too Long: The draft AOs for Cliffs facilities require that stack testing for NO x and S0 2 be conducted simultaneously on all stacks for 30 consecutive hours

. We believe that an annual 30

- hour stack test is excessively long and burdensome

. To add r ess this concern, the stack testing requirement should be rewritten as follows :

Stack Test Duration : The initia l BART performance test shall be conducted for a sufficient duration to generate 30 hour l y data points. Subsequent BART NO x or S0 2 performance tests shall be schedu l ed to collect 30 hourly data points if needed. However, if after collecting 3 or more hours of test data the resu l ts of the performance test are less than or equal to 90% of t he emission limit, the stack test can be stopped and the test wi ll be considered an acceptab l e duration for demonstrating compliance with the emission limitation

.

o Scrubber Operating Parameters Should Not be Set Based on BART S0 2 Stack Tests : The draft AOs for No r thshore and H i bbing Tacon i te state that the S0 2 compliance stack test would be used to set the minimum sc r ubber water flow and pressure drop l i mits for t he existing wet scrubber system

. These are the same scrubber parameters that are already set for the Taconite MACT when testing for filterab l e particulate matter (PM). MPCA shou l d not set new and potentially different limits during the S0 2 test on the same control device. Since the wet scrubber i s primarily designed to control PM, the Taconite MACT parameter values should be used to demonstrate proper scrubber performance. Also
, BART testing measures em i ssions from all stacks simultaneously and the aggregate value is used to determ i ne comp l iance

. The Taconite MACT test, by contrast, evaluates each scrubber stack separately and is, thus, a more appropriate test for setting individual scrubber parameters

. To address this concern, the AO requirements to set scrubber operating limits based on S0 2 performance testing should be replaced with the following:Ms. Neuschler February 3, 2012 Page 12 of 27

Scrubber Operating Parameters

. The scrubber operating parameters shall be those established pursuant to the Taconite MACT for this emission control system.

o Permanent Recordkeeping is Inconsistent with Title V Permit Obligations. The AOs include a section entitled "permanent records" that would mandate that Cliffs permanently maintain "information on the NO
., S0 2 and PM emission limits and operations requirements imposed by this Order." First, the 5-year recordkeeping requirement under the Title V program should be sufficient for any records required under the AOs. Second, the language does not provide a clear indication of what records must be kept. "Information on" these emission limits is too vague to be discernable. The data that formed the basis of the emission limit determination for S0 2 and N0 2 has been provided to MPCA and can be permanently maintained by the agency. The permanent records section of the recordkeeping provision in the AOs should be removed. All records required under the AOs should be subject to the minimum 5-year recordkeeping obligation in the Title V permit and recited in the second part of the recordkeeping section of each AO.



### Facility-Specific Comments on Proposed BART Emission Limitations

In addition to the general comments above, Cliffs has prepared the following facility-specific comments on the proposed NO. and S0 2 BART emission limitations for each of its taconite facilities.

United Taconite: Nitrogen Oxides

The NO. limits proposed by the MPCA in the Regional Haze State Implementation Plan Supplement for United Taconite are as follows:

Line 1: 4.5 ton NO. 

### I day attributed to "Good Combustion Practices, past heat recuperation project" as BART Line 2: 10.1 ton NO

. 

### I day attributed to "Goo d Combustion Practices" as BART

Air Permit 13700113-005 issued to United Taconite cites the following existing NOx emissions limits:

Line 1: less than or equal to 816 tons using 180-day rolling sum rolled daily

. This condition restricts NO x emissions from EU 040 (Line 1) to 1655 tons per year. Line 2: less than or equal to 1820 tons using 180-day rolling sum rolled daily

. This condition restricts NO

. emissions from EU 042 (Line 2) to 3692 tons per year.

It appears as though MPCA has attempted to convert the 180-day rolling sum limits present in the existing air permit to daily values by simply dividing by 180 days, with the intent to assess compliance with that daily value on a 30-day rolling average basis. The condensation of the limits to a daily value eliminates the very reason for the 180-day rolling sum. The 180-day rolling sum enables operationally crucial fuel flexibility while still providing overall lower emissions of S0 2 and NOx. Allowing this fuel flexibility ultimately yields a 'better than BART' solution that benefits both the facility and the environment.Ms. Neuschler February 3, 2012 Page 13 of27

United Taconite is permitted to burn a combination of solid and gaseous fuel on both Line 1 and Line 2 during norma l operation. It is United Taconite's desire to burn as much solid fuel as practica l because it represents a more economic fuel source, and yields an overall lower emissions profi l e of combined 50 2 and NO. emissions. In fact, on a dai l y basis, 100% solid fuel combustion on both Lines 1 and 2 yields >800 l b/h r lower combined 50 2 and NOx emissions.

However, arbitrarily reducing the averaging period from 180

- days to 30

- days will make it impossible for UTAC to achieve compliance when the use of natural gas for an extended period of time is essentia l to furnace operations. Extended per i ods of natural gas usage arise in several situations.

The furnaces must be started up while burn in g natural gas because the energy - eff i cient design of the furnace requires recovered excess heat from latter regions of the furnace to dry the so l id f uel. Further
, kiln temperatu r es must be hot enough to ignite the solid fuel upon entry into the furnace, requiring startup on natural gas to elevate the kiln to that required temperature. A full furnace startup procedure, after a normal maintenance outage, will l ast severa l days. Depending on the nature of maintenance conducted during the outage, startup may l ast a week
or more wh ile the furnace reaches a stable operating state

.
Solid fuel combustion requires a more complex fuel delivery system than natural gas, and t h us temporary interruptions in solid fue l use, and the abi l i t y to revert to natural gas use must remain as part of the facility's operational plan. In terruptions to the system inclu de so l id fuel delivery issues or delays to the coa l dock and/or to the United Taconite plant, fuel handing conveyor ma l functions, bin storage and coa l mill pluggage due to elevated fuel moisture levels from atmospheric conditions, and p l anned and unp l anned ma in tenance on any of the above elements, including the coa l pulverizer and burners

. Despite our best efforts and the economic in centive to operate using the lowest cost fuel
, interruptions are inevitable and must be recognized in the BART NOx l i mits.

In August 2010, United Taconite experienced an unexpected catastrophic failure with the Line 2
coa l mill. The parts to repair the mill had over an 8-week l ead time, and the repair took seve r al days

. In order to continue production during that time, United Taconite produced pellets using 100% gas in the furnace

. This was not a foreseeable failure
, and had United Taconite not been able to switch to natural gas, it would have been forced to drastically reduce its operations and/or id l e the plant until the repairs could be made

. Precipitation events result in higher solid fuel moisture content and reduced heat i ng va l ue from the fue l. This scenario requires United to supplement solid fuel with gas to maintain requi r ed heat input to the f urnace in orde r to maintain quality standards for our customers.

The l imits proposed in the B AR T SIP Supplement, even when averaged over a 30-day period, will resu l t in t h e forced shutdown of United Taconite's furnaces to comp l y with the NO. l imits

. This forced shutdown could occur during any of the operationally crucia l extended natural gas usage events l isted above

. BART was not intended to force shutdowns or curtailments. BART l i mits should r eflect theMs. Neuschler February 3, 2012 Page 14 of27

furnace's operational capability with all existing fuels. See 40 CFR Part 51, Appendix Y (stating that BART is not intended to require fuel switching).

Application of the limits as designed in the present version of the United Taconite air permit actually yields the lowest overall combination of 50 2 and NOx emissions. These l i mits also go the furthest to reduce emissions of these haze-forming constituents, while still retaining the operational flexibility that allows United Taconite to produce a quality product and remain commercially competitive.

Cliffs cannot accept limits that over-reach the intent of BART by being more prescriptive than the furnaces' present capability and for which it already has information suggesting it will not be able to reliably assure continuous compliance with those limits

. Proposed limits
Considering all of the above information, Cliffs proposes that the NOx emission limits be revised for the United Taconite furnaces as follows in order of preference:
a) Utilize the existing permit limits in their 180-day forms as BART. This is the most straightforward approach, relying on the permit terms already in place.

Line 1: less than or equal to 816 tons using 180-day rolling sum rolled daily. This condition restricts NOx emissions from EU 040 (Line 1} to 1655 tons per year. Line 2: less than or equal to 1820 tons using 180-day rolling sum rolled daily. This condition restricts NOx emissions from EU 042 (Line 2} to 3692 tons per year.
b) In the alternative, utilize a 30-day limit that is reflective of United Taconite 's operationally required fuel flexibility to burn natura l gas for greater than 30 consecutive days in some circumstances, and retain the annual emissions caps already present in the air permit. A preliminary analysis supports the following NOx limits:

Line 1: less than or equol to 18.68 ton NOx/day on 30-day average. This condition restricts NOx emissions from EU 040 (Line 1} to 1655 tons per year. Line 2: less thon or equal to 29.7 ton NOx 

## I day on 30-day average. This condition restricts NOx emissions from EU 042 {Line 2} to 3692 tons per year.

If MPCA is interested in setting limits using this alternative approach, Cliffs requests a meeting to discuss the appropriate statistical procedure to use before settling on a numeric NOx limit.

United Taconite: Sulfur Dioxide

The 50 2 limits proposed in the Regional Haze State Imp l ementation Plan Supplement for United Taconite are as follows:

Line 1: 106.3 tons S0 2 , 30-day rolling sum attributed to 'Ex isting wet scrubber' as BARTMs

. Neuschler February 3, 2012 Page 15 of 27

Line 2: 197 tons S0 2 , 30

- day rolling sum, attributed to 'Existing wet scrubber' 2 as BART

These limits are reflective of the current operating restrictions in Air Permit 13700113

- 005 issued to United Taconite. Cliffs is supportive of these S0 2 1imits for its facility.

Hibbing Taconite Company: Nitrogen Oxides

The NOx limits proposed by MPCA in the Regional Haze State Implementation Plan Supplement for Hibbing Taconite Company are as follows:

Line 1: 447.4 lb NOx 

### I hour attributed to " Good Combustion Practices, furnace energy efficiency projects (2005 and 2006}" as BART

Line 2: 571.7 lb NOx 

### I hour attributed to "Good Combustion Practices, furnace energy efficiency projects (2005 and 2006}" as BART

Line 3: 338.3 lb NO x 

### I hour attributed to "Good Combustion Practices
, furnace energy efficiency projects (2005 and 2006}" as BART

Taconite Furnace Operations and Good Combustion Practices

Taconite i ndurating furnaces are complicated combustion devices that work to deliver consistent heat input to the pellets for consistent product quality. There are a number of factors that lead to inevitable day

- to

- day, season - to

- season, and testing or monitoring variation that must be accounted for in establishment of an emissions limit as prescribed by BART

. Those factors include:
Changes in fuel efficiency before and after regularly scheduled maintenance outages as a result of routine inspection and maintenance on physical elements of the furnace that may affect NOx generation including, fans, air supply ductwork, furnace refractory and burners

.
Furnace operating rates during the collection of available emissions test data not being reflective of furnace capacity

. Typically the operating rates during stack testing events do not reach 100% of the capacity of the process including throughput and product mix and ore mix worst case conditions, typically stack testing rates are performed within 90% of the operating capacity. A BART limit must account for the full present capability of the furnace.
Operational ability to produce more than one type of pellet products and operational production plans as future demand for those pellet products changes
Changes in ore body and respective changes in furnace heat input required to init i ate the exothermic conversion of magnetite to hematite.

2 MPCA also identifies " f ue l blending" as a component of the BART determination

. Cliffs objects to this characterization because it suggests incorrectly that BART technology dete r minations can drive fuel choices for Cl i ffs. P l ease delete that characterization from the BART descript i on

.Ms. Neuschler February 3, 2012 Page 16 of 27

NOx sampling and analysis also has inherent variability that should be recognized when using stack testing data to establish emission limits

.
Cliffs has been, and continues to utilize good combustion practices (GCP) as part of its normal operations because process fuel represents a significant cost of operation in the tens of millions annually for Cliffs Minnesota operations. GCP represents a set of operations and maintenance activities that support optimized operation of the furnace fuel and air delivery systems, burners and associated control systems. Cliffs' GCPs include the following :
Daily monitoring of fuel use per ton of product produced and comparison against established targets.

Routine monitoring of ore blends to anticipate potential changes to furnace heat load requirements

.
Established operational furnace settings understood to yield optimal conditions for combustion

.
Use of computer

- driven control systems maintain consistent combustion conditions in the furnace

. Operational responses for instances where fuel use exceeds targets

.

Routine maintenance practices to ensure optimal condition of fuel delivery, air handling and combustion systems , and associated monitoring equipment.
Availability of an array of diagnostic tools from infrared cameras to monitor flame characteristics to airflow surveys to watch for air losses

. Monthly and annual review of fuel use to correct for longer term trends.

As noted above
, the significant cost of fuel and Cliffs' obligations to produce a product that it can competitively sell on the open market have mandated that Cliffs utilize GCPs. It is essential to note that all the emissions test data collected from 2008 forward have been collected while good combustion practices have been in place at Cliffs' operations

.
However
, GCP is distinctly different from application of a control technology that is designed to deliver a precise emissions rate. In those cases, a specific technology has been manufactured to deliver a certain emissions rate. GCP ensures that fuel and air use is monitored and responded to on a daily and monthly basis, thus ensuring as good a combustion environment as is practical
, but lacking any direct numerical link to an emissions rate.

Statistical ApproachesMs. Neuschler February 3, 2012 Page 17 of 27

MPCA employs the Upper Predictive Limit (UPL) tool to derive its proposed limit and predicates its approach on the available emissions data as being fully representative of the entire range of permissible operating factors for the furnace

. The UPL as applied by MPCA is not appropriately reflective of furnace capability for the following reasons:

While NOx testing has been conducted over a 

### range ofoperating conditions thought to influence NO x, as outlined in the original BART Administrative Orders, it is inaccurate to characterize that this testing has encompassed the 

### range of NOx emissions for the facility. A correct application of the UPL must recognize the entire range of factors that could affect NOx variability (not only the range of furnace operating conditions during the test)

. While the testing conducted thus far
as a result of the Administrative O r ders improves understanding of NO x emissions from the furnaces, it does not account for those sources of variability outside the furnace (as described above), leading to an underestimate of the standard deviation, and thus an un r ealistically low UPL w i th wh i ch the facility would be unable to reliably comply while operating under GCP

.
The methodology MPCA used to set up the UPL is statistically flawed as it does not recognize the fact that successive hourly emiss i ons are highly correlated. The two-sample t-test depends critically on the assumption that the different observations in the emissions test data are mutually independent, a presumption which must also hold true for future test data. This

# ~ assumption is required for the

# ~m -t- 

# n factor of the t

- test , which is also present in the UPL method and requires the same mutual independence. A simple way to gauge data independence is to plot the current measurement against its predecessor. Under the independence assumptions required of the t analysis (and also of the UPL), the plot should be a formless circle of points, i ndicating independence of one measurement to the next. The plot clearly shows a strong dependence between the two measurements in the form of the linear relationship plotted on the chart. This dependence invalidates the base assumption required of utilizing the t-test and the UPL in that the emissions measurements are not mutually independent, but that any measurement point has some relationship to its predecessor. Ignoring this serial correlation as MPCA has done l eads to invalid and an unrealistically low UPL.

It is in fact this interdependence that also draws question to MPCA's use of the 'bootstrapping' method to gauge future ability to comply. Bootstrapping is a technique in which collected data is randomized to determine future ability to meet a certain threshold. Because data here are time-dependent, bootstrapping as implemented by MPCA fails to reflect the time dependency of the actual data series, which inappropriately overstates the amount of information in the constructed datasets than from the sample set, yielding a false sense of ability to meet a given threshold.

It is worth not i ng that the data interdependence demonstrated by these datasets also reinforces the understanding of relative stability of emissions from these units. Because the plot of value and its predecessor shows a strong relationship
, it also shows that the rate of change from these emissions units is slow and emissions are stable because any single data point is in factor a strong predictor of the points before and after it

.Ms. Neuschler February 3, 2012 Page 18 of27

HibTac 2010 HC Test Data: Current 

### vs

. Previous NOx Values

• U

. 20 10 H C • ll

. 20 10 H C " L 3

. 2 010 H C
850**~------------------------------------------------------**

### ~ 750

### ~ 650

### +----**=- -------------~**  

# a

550 +----- • C1) Q) :E 450**-r-- -.** **r- -e~IHIII**  

### c 350 +--- Q)

### ~ 250 -lnr.----.1111 u 1 5 0 150 250 350 45 0 550 650 750 850 Previous Measurement

Based on this information, the application of the UPL lead s to an incorrect derivation of limit s reflective of th e furnaces ' present capability, and a limit with which the furnaces will be unable to demonstrate continuous co mpliance.

In f ac t, available emissions data already demon st rate s inability for a ll three of Hibbing Taconite' s furnace l ines to reliably meet the li mits proposed as part of the SIP Supplement. As an example, a review of e mi ss ion s data co llect ed during 2010 , with a 30

- d ay rollin g average applied
, indicates the following:

HTC Lin e 1 would have emissions in excess of the propo se d limit 39% of the time durin g the duration of the te st.

HTC Line 2 would have emissions in excess of th e propo se d li mit 100 % of the time during the dur a tion of th e test.

HTC Lin e 3 would have emissions in excess of the propos e d limit 29 % of t h e time during the duration of the test.Ms

. Neuschler February 3, 2012 Page 19 of 27

550

....**~** 

# - HTC Line 1 HC 2010 Data Compliance with MPCA Proposed BART

X HT C F

- 1 H C lOlO 3 0

-Hr HT C Data

- MP CA Pro1>o se d B ART**500** 

### +--------------------------------------------------------------**~** 

# "' a: 

# g 450

## +---~**~~~~~~~~~~ ;,a.** **;;** 

# ..**~~~~~~~~~~ ~~~** **--- ~**  

## ...................... 

# ___**~** 400 X 0 

### z 35 0**+-------~----~------~------~** 7 / 1 7 / 10 7 / 1 8 / 10 7 / 19 / 10 7 / 20/ 1 0 7 / 2 1 / 10 7 / 22/10 7 / 23 / 10 7 / 24 / 10 7 / 25 / 10

800

....**~**

- 750**~ ~**  700 

## "' a:

VI 650 c 0**·~** 600



## .E**~** 550 0 HTC Line 2 HC 2010 Data Compliance w i th MPCA Proposed BART 

# I x HT C F -2 H C 20 10 3 0-Hr HT C D a t a

- MPC A Propo se d B A

RT 

# I



# -

........................

# _,..._ 

# __ _...

.... tPM"'*'

..... MfC A:KI Tfllllt$W4JIIIC ,.,. ..

_.....,UIOII

......

-



### z 5 00 ------.-- 11 / 7 / 10 11 / 8 / 10 11 / 9 / 10 11 / 10/ 10 11 / 11 / 1 0 11 / 12/ 10 11 / 1 3/ 10 11 / 1 4/ 10 11 / 1 5 / 10Ms. Neuschler February 3, 2012 Page 20 of 27

....**~** 

# - .J:I 450

:::. 4 0 0 Q.l



### .... I1J a:**~** 35 0 0**~**



# · e 3 oo UJ 

# r1

-

# ~ 250 

# l HTC line 3 HC 2010 Data Compliance with MPCA Proposed BART

x HT C F-3 H C2 010 3 0-Hr HTC Data

- MP CA Pro po se d B A RT

M V

11 / 17/ 10 11 / 18 / 1 0 11 / 19 / 10 11 / 2 0/ 10 11 / 2 1 / 10 11 / 22/ 10 11 / 2 3/ 10 11 / 2 4/ 10 11 / 2 5 / 10 11 / 2 6/ 10

Cliffs cannot accept limit s that over-reach the intent of BART by bein g more prescriptive than the furnace s' pres e nt capability and for which it already ha s information s ugge s ting it will not be able to reliably assure compliance with those limits

. Propo sed Limit s
Considering all of the above inform a tion
, Cliff s proposes that the NOx emissions limits be revised for the Hibbing Taconite furnace s to level s that a r e representative of the furnaces' pre se nt capability as follows :

Line 1: le ss than or equal to 565 lb NO x 

## I hour while combusting natural gas only

Line 2: le ss than or equal to 935 lb NOx 

### I hour while co mbusting natural gas only

Line 3 : less than or equal to 422 lb NO x 

## I hour while combusting natural gas only

These limits include a 10 % reasonable engineering margin of safe ty fa c tor added to an appropriate statistically derived 99% UPL limit from the s tack test data. As explained in more detail above, it is
common practice to apply a fa c tor of 10 p e rcent or more to stack test values to accommodate normal
source variability not reflected in the s ta ck te s t data set and the relative inaccuracy of the propo sed compliance method when setting an enforceable emission limit

.
The proposed revised NO x BART l i mits for Lines 1, 2 and 3 add this 10 % margin of sa fety to a corrected statistica l analysis

. The statistical analysis is set forth in an attachment prepared by Professor Dougla s Hawkins of the University of Minne so ta and appended to the end of thi s comment

. Compliance with the se limits would be assessed through an initial 30

- hour performance te s t for any furnace th a t doe s not employ a CEMS and subsequent test s based on the test frequency
r ec ommendations in the general comments above.Ms

. Neuschler February 3, 2012 Page 21 of 27

Hibbing Taconite Company : Sulfur Dioxide

The S0 2 limits proposed by MPCA in the Regional Haze State Implementation Plan Supplement for Hibbing Taconite Company Lines 1 , 2 and 3 are 0.207 lb S0 2 

### I LT pellets attributed to the 'Existing Wet Scrubber' as 50 2 control.

Sulfur is present in two key inputs to the furnaces: fuel and ore. While natural gas has generally negligible levels of sulfur, sulfur content in the ore body is known to vary to some degree. Hibbing Taconite Company's air emissions permit ascribes a rate of sulfur dioxide emissions related specifically to the ore to be 0.75 lb SOJmmbtu (at the stack, or post scrubber), based on a range of historical stack testing plus a reasonable margin of safety of 10%

. This value translates to 0.28 lb 50 2 /LT.

BART limits must reflect the continuous application of BART technology to the full range of existing furnace capability
, including the full range of ores anticipated to be processed

. The numeric BART limit
as proposed by MPCA does not represent the range of sulfur presently known to exist in Hibbing Taconite ' s ore body and thus represents an inappropriate BART limit that Hibbing Taconite cou l d not expect to reliably meet.

Cliffs cannot accept limits that over-reach the intent of BART by being more prescriptive than the furnaces ' present capability and for which it already has information suggesting it will not be able to reliably assure compliance with those limits.

Proposed Limits
Considering all of the above information, Cliffs proposes that the S0 2 emissions limits be revised for the Hibbing Taconite furnaces to levels that are representative of the furnaces' present capability as follows:

Lines 1, 2 and 3 502 emissions to be less than or equal to 0.28 lb 502/L Tore while com busting natural gas only.

Cliffs supports MPCA's determination that this limit applies only when combusting natural gas and does not apply when these furnaces are fueled by backup fuels other than natural gas. Cliffs' further requests that the SIP express l y include a process for setting new S0 2 limits as described in the general comments above when processing ores from areas with higher sulfur ore than was anticipated in establishing this BART limit. The new SIP limit would be set using an appropriate statistical analysis of new stack test data and would apply when Cliffs was processing this higher sulfur ore.

Northshore Mining Company: Nitrogen Oxides

The NO x limits proposed by MPCA in the Regional Haze State Implementation Plan Supplement for Northshore Mining Company are as follows:

Furnace 11: 115.5 lb NOx 

### I hour attributed to 'Good Combustion Practices' as BARTMs. Neuschler February 3, 2012 Page 22 of 27

Furnace 12: 115.5 lb NOx 

## I hour attributed to 'Good Combustion Practices' as BART

Taconite indurating furnaces are complicated combustion devices that work to deliver consistent heat input to the pellets for consistent product quality. There are a number of factors that lead to inevitable day

- to

- day, season-to-season, and testing or monitoring variation that must be accounted for in establ i shment of an emissions limit as prescribed by BART. Those factors include:
Changes in fuel efficiency before and after regularly scheduled maintenance outages as a result of routine inspection and maintenance on physical elements of the furnace that may affect NO x generation including, fans, air supply ductwork, furnace refractory and burners.

Furnace operating rates during the collection of available emissions test data not being reflective of furnace capacity

. Typically the operating rates during stack testing events do not reach 100% of the capacity of the process including throughput and product mix and ore mix worst case conditions, typically stack testing rates are performed within 90% of the operating capacity.
Operat i onal ability to produce more than one types of pellet products and operational product i on plans as future demand for those pellet products changes
Changes in ore body and respective changes in furnace heat input required to initiate the exothermic conversion of magnetite to hematite

. NOx sampling and analysis also has inherent variability that should be recognized when using stack testing data to establish emission limits.

Cliffs has been, and continues to utilize GCP as part of its normal operations considering that process fuel represents a significant cost of operation in the tens of millions annually for Cliffs Minnesota operations. GCP represents a set of operations and maintenance activ i ties that support optimized operation of the furnace fuel and air delivery systems, burners and associated control systems. Cliffs ' practices around GCP include the following:
Daily monitoring of fuel use per ton of product produced and comparison against established targets.

Routine monitoring of ore blends to anticipate potential changes to furnace heat load requirements

.
Established operational furnace settings understood to yield optimal conditions for combustion.
Computer

- driven control systems maintain consistent combustion conditions in the furnace.
Operational responses for instances where fuel use exceeds targets.Ms. Neuschler February 3, 2012 Page 23 of 27

Routine maintenance practices to ensure optimal condition of fuel delivery
, air handling and combustion systems, and associated monitoring equipment

. Availability of an array of diagnostic tools from infrared cameras to monitor flame characteristics to airflow surveys to watch for air losses

. Monthly and annual review of fuel use to correct for longer term trends.

As noted above
, the significant cost of fuel and Cliffs' obligations to produce a product that it can competitively sell on the open market have mandated GCP practices at Cliffs for several years

. It is essential to note that all the emissions test data collected from 2008 forward have been collected while good combustion practices have been in place at Cliffs' operations.

Statistical Approaches

However, GCP is distinct l y different from application of a control technology that is designed to deliver a precise emiss i ons rate. In those cases, a specific technology has been manufactured to deliver a certain emissions rate. GCP ensures that fuel and air use is monitored and responded to on a daily and monthly basis, thus ensuring as good a combustion environmental as practical, but lacks any direct numerical link to an emissions rate.

MPCA has proposed NO

. emissions limits for Northshore Mining based on a statistical prediction using emissions information available from NOx testing on Northshore's Furnace 11

. MPCA notes in the SIP Supplement that "Based on MPCA ' s experience in analyzing data from these units [Furnace 11 and 12], the recommended limit for Furnace 12 is the same as that for Furnace 11..." Northshore concurs with this approach in that the two furnaces are for all intents and purposes, identical to one another.

MPCA employs the Upper Predictive Limit (UPL) tool to derive its proposed limit and predicates its approach on the available emissions data as being fully representative of the entire range of permissible operating factors for the furnace. The UPL as applied by MPCA is not appropriately reflective of furnace capability for the following reasons:

While NO. testing has been conducted over a 

### range ofoperating conditions thought to influence NO., as outlined in the original BART Administrative Orders, it is inaccurate to characterize that this testing has encompassed the 

### range of NOx emissions for the facility. A correct application of the UPL must recognize the entire range of factors that could affect NOx variability (not only the range of furnace operating conditions). The testing conducted thus far as a result of the Administrative Orders, while it improves understanding of NO. emissions from the furnaces, does not account for those sources of variability outside the furnace (as described above), leading to an underestimate of the standard deviation, and thus unrealistically low UPL with which the facility would be unable to reliably comply while operating under GCP.

The methodology MPCA used to set up the UPL is statistically flawed as it does not recognize the fact that successive hourly emissions are highly correlated. The two

- sample t-test depends critically on the assumption that the different observat i ons in the emissions test data areMs

. Neus c hler February 3, 2012 Page 24 of27

mutually independent, a presumption which mu s t also hold true for future test data. This

assumption is required for

# the~ factor of the t

-test , which is also present in the UPL method and requires the same mutual independence

. A s imple way to gauge data independence i s to plot t he current measurement against it s predece ssor. Under the indepe n dence assum ption s required of the t analysis (and also of the UPL), the plot s hould be a formle ss circle of points
, indicating i ndependence of one mea su rement to the next. The plot clearly shows a s trong dependence between th e two measurements in the form of the linear relation shi p pl o tted on the chart. This depend e n ce inv a lidate s the ba se assumption required of utilizing the t -test and the UPL in that the emissions mea s ur emen ts are not mutually indep e nd en t , but that any mea s urement point has some relationship to its predeces sor. Ignoring this se rial co rrelation as MPCA ha s done lead s to invalid and unrealistically low UPL.

It is in fact thi s interdependence that also draws question to MPCA 's use of the ' bootstrapping' method to ga uge future ability to comply. Bootstrapping is a technique in which collected data i s randomized to determine future ability to meet a certain thre s hold

. Becau se data here are time -de pendent
, boot s trapping as impl e mented by MPCA fails to reflect the time dependency of the actual data se ries, whi c h inappropriately over s tate s the amount of information in the co nstructed datasets than from the sample set, yielding a false se n se of ability to m ee t a given thr esho ld

.

Northshore 2008 Test Data: Current vs. Previous NOx Values

• F11 2008
140**~-------------------------------------------------------** 

# ... c**~** E 120**~** ::J Ill 

# • :ll 100**+------------------ --,..1** **~** 

# .

...**~** 80



### ....

.... 

# • ::J u 60 

### +----,---,----.---.----.---.----,---, 60 70 80 90 100 110 120 130 140 Previous Measurement

Based on this inform atio n , th e ap pli ca tion of th e UPL leads to an in co rr ect derivation of limits reflectiv e of the furnaces ' pre se nt ca pability
, and a limit with which the furnaces will be unable to demonstrate continuous compliance.

In fact, available emissions data already demon s trate s inability for Northshore to reliably meet the limits proposed as part of the SIP Supplement

. As an example, a review of emissions data co llected durin gMs. Neu schler February 3, 2012 Page 25 of27

2008, with a 30

- day rolling average applied, indicates that Northshore's Furnace 11 would have emissions in excess of the proposed limit 13% of the time during the duration of the test

.

Furnace 11

- Compliance with MPCA's propos ed BART limit

• F11 2 00 8 (3 0

- hrR o llin gA v e ra ge s )

- B A

RT limit



## ..c 14o 

## I**130** 

## r------------------------------------------------------------**~** 1 20

## ~**~** •rrrn

## ~ ill¥**~** 1 1 0 1-· • ., 

### ?""

...**-~** 0

### ~-- ..

### -~~**~** 100 E UJ X 90 0 

### z 80 

# -.,

5 / 1 5/ 2008 5 / 1 6 / 2008 5 / 1 7 / 2008 5 / 1 8/ 200 8 5 / 1 9 / 2 00 8 5 / 20/ 2 008 5 / 2 1 / 2 008 5/ 2 2/2 00 8 5 / 23 / 2008

Cliffs cannot accept limits that over-reach the intent of BART by being more prescriptive than the furnaces' present capability and for which it already has information suggesting it will not be able to
r eliably assure compliance with those limits

. Propo sed Limits

It is important to recognize that NO. emissions from these sources are notably the lowest in the industry, and thus do not reasonably merit an overly restrictive limit establishment approach, especially considering the relative stabi lity of these emissions sources

.
Cons id er in g all of the above information, Cliffs proposes that the NO

. emissions limits be revised for the Northshore Mining furnaces to levels that are representative of the furnaces' present capability as follows:

Furnace 11 : less than ar equal ta 1411b NOx 

### I hour while combusting natural gas

Furnace 12: Jess than or equal to 1411b NOx 

### I hour while cam busting natural gas

These limits include a 10% reasonable engineering margin of safety factor added to an appropriate statistica lly derived 99% UPL value from test data. As discussed in detail above, it is common practice to apply a factor of 10 percent or more to stack test values to accommodate normal source variability and the relative inaccuracy of the proposed compl ian ce method when setting an enforceable emission limit

.
The proposed revised NO

. limits fo r Furnace 11 a nd 12 add this 10% margin of safety to a corrected statistical 99% UPL analysis

. The statistical analysis is set forth in an attachment prepared by Professor Douglas Hawkins of the University of Minnesota.Ms. Neuschler February 3, 2012 Page 26 of27

The 10% margin of safety is added to a baseline rate calculated from the available test data using the
same UPL statistical analysis prescribed by MPCA but with adjustments to overcome the shortcomings discussed above

. Those adjustments include:

o The confidence level in the UPL formula {t 1 .a, 0 • 1 ) is adjusted to reflect at-distribution appropriate to the dataset and the expected compliance test frequency

.

o The serial correlation or data interdependence requires a revision to

# the~ factor of the UPL formula to avoid the underprediction effect.
Compliance with these limits would be assessed through an initial 30

- hour performance test and subsequent testing as described in the general comments section above

.
Northshore Mining Company: Sulfur Dioxide

The S0 2 limits proposed in the Regional Haze State Implementation Plan Supplement for Northshore Mining Company Lines 1, 2 and 3 are 0.06511b S0 2 

### I LT pellets attributed to the ' Existing Wet Scrubber'
as S0 2 control.

Air Permit 07500003 issued to Northshore Mining cites the following BACT-established S0 2 emissions limit: Sulfur dioxide : less than ar equal to 0.22 lbs/million Btu heat input for EU 100 and EU 110 individually; less than or equal to 0.074 lbs/million Btu heat input for EU 104 and EU 114 individually; when burning natural gas

.
Note that EU 100 and EU 110 represent the hood exhaust segments of Furnaces 11 and 12 , respectively and EU 104 and EU 114 represent the waste gas segments of Furnaces 11 and 12 respectively. The combined hood exhaust and waste gas segments represent the total furnace emissions rate; in this case 0.22 lbs S0 2 

## I mmBtu 

### + 0

. 074 lbs S0 2 

## I mmbtu, or 0

. 29 lbs S0 2 

## I mmbtu. This value translates to 0

. 15 lb S02 

## I LT pellets

.
Sulfur is present in two key inputs to the furnaces: fuel and ore. While natural gas has generally low levels of sulfur, sulfur content in the ore body is known to vary to some degree, but limited S0 2 testing is available to accurately describe 50 2 emissions from these sources. It is important to recognize that S0 2 emissions from these sources are notably the lowest in the industry, and thus do not reasonably merit
an overly restrictive limit establishment approach, especially considering the limited information available to accurately assess variability

. Considering all of the above information, Cliffs proposes that the existing BACT S0 2 emission limits represent a reasonable emissions limit with which Northshore will reliably be able to assure compliance. That limit is restated here as follows:

Furnace 11 and 12 502 emissions to be less than or equal to 0

. 15 lb 502/L Tore while com busting natural gas only

.Ms

. Neuschler February 3, 2012 Page 27 of 27

Cliffs supports MPCA's determination that this limit applies on ly when combust in g natural gas and does not app ly when these furnaces are fueled by backup fuels other than natural gas. Cliffs ' further requests that the SIP expressly include a process for setting new S0 2 limit s as described in the general comments above when processing ores from areas with higher s ulfur ore than was anticipated in establis hin g this BART limit. The new S IP limit would be set using an appropriate statistica l ana ly sis of new stack test data and would apply when Cliffs was processing this higher sulfur ore.

Conclusion

The Regional Haze SIP Supplement should be revised as described above. While NAAQS compliance is preferable to the pilot testing previously proposed in the Northeast Minnesota Plan, the schedu le to complete NAAQS modeling need not be included in the BART S IP Supplement. To the extent
a schedule is included, it must be extended to allow EPA to improve the accuracy of the model and to provide states the guidance n eeded to properly implement the models before they become the basis for potentially erroneous regulatory decisions. The N0 2 BART numeric limi t s s h ould be revised upward to accommodate an appropriate statistical analysis plus a 10 % margin of safety

. The S0 2 BART numeric limits should also be adjusted where appropriate, but they cannot account for the full range of potential changes in the sulfur content of ore deposits

. Thus
, Cliffs will need the opportunity to set new S0 2 BART limits if we encounter an ore deposit with high sulfur l eve l s. Finally, the testing and compliance obligations in the BART SIP Supplement and it s appended Adm ini strative Order shou ld be streamlined as indicated to reduce unnecessary burdens on Cliffs and the rest ofthe Minnesota taconite industry.

The draft SIP Supplement and the proposed AOs did not go through significa nt interested party review prior to public notice. We would appreciate an opportunity to sit down with MPCA and discuss the portions of the S IP Supplement and AO that apply directly to Cliffs before the draft SIP Supplement is finalized. Please contact me at 216

- 694

- 7359

.

Attachments : Douglas Hawkins LLC Statistical Analysis

cc: Candice Maxwell- United Andrea Hayden- Northshore Julie Lucas

- Hibbing Dave Cartella- Cliffs Natural Resources 

# CLIFFS

MICHAEL E. LONG Director- Corporate Env i ronmental Regulatory Strategy and Analysis P 216.694.7359 (O) 216-262-8797 (M) Michaei.Long@cliffsnr.com CLIFFS NATURAL RESOURCES 1100 Superior Avenue, Suite 1500, Cleveland, OH 44114-2544

## Exhibits

# Memorandum

To: Scott Gischia Subject:Emissions limit for UTAC Line 1 running on natural gas Date: Feb 3, 2012 

## Douglas Hawkins LLC Douglas M. Hawkins PhD, Member ISI, Fellow ASA. ASQ

The NOx emissions vary with the fuel used. Of particular interest os the NOx limit when the l ine is using natural gas as a fuel and the production is above 260 tons/hr

.

I analyzed the 2011 data, extracting the periods when the fuel was natural gas and the production exceeded 260 tons/hr. Summary statistics on hourly NOx emiss i ons were:

Mean 938 lb/hr Standard d eviation 207 lb/hr.

The NOx emissions showed a st rong relationship from one hour to the ne xt

- the corre l ation coefficient
wa s 0 .903.

The furnace will be monitored using CEMS. Every day
, the average of the preceding month's hourly NOx measurements will be found. Compliance will be judged on the basis of the maximum of these 365 rolling averages.

Simulation wa s used to find the upper two-sided 99% point of this annual rolling maximum. Five thousand years of hourly data were sim ulated, usin g the Markov model with serial correlation 0.90 3. This s imulation found that the upper two

- sided 99% point of the maximum was 2.99 standard deviations above the mean

.
Thus a defensible two

- sided 99% upper limit for this furnace would be 938 + 2.99*207 

## = 1557 lbs/hr.

Attorney Work Product. Privileged and Confidential

ce ll : (61 2) 718 -5 033 fax: (952) 926 -8 11 7 4 7 1 3 Hi b i scus Avenue, Edi na , MN 55435

- 40 0 1 e - m ai l :dhawki n s@ mn

. rr .c om w e b : www.d o u g l as hawkin s

. co m

# Memorandum

To: Scott Gi sc hia Subject : The MPCA's BART NOx emissions limit Date: Feb 3, 2012

Executive Summary 

## Douglas Hawkins LLC Douglas M. Hawkins PhD, Member ISI, Fellow ASA, ASQ

The MPCA 's calculations of a proposed upper 99% predi ction limit for NOx emissions from your furnaces omit the crucial fact that the NOx emissions are highly correlated over time. As a result of this omission
, their UPL is substantially lower than it should be.

Problem with the UPL

The upper prediction lim it (UP L) proposed by MPCA is a lm ost the same as a conventional two-sample t tese , but written in an unfamiliar notation- the UPL is the value at which a future comp li ance mean would be significantly different from the mean of the hi s torical data set used to calibrate t h e limit. Specifically, the upper prediction limit is given by :



### -

# ~1 UPL = X +t 1

_

a 1

2 ,

_ 1 

### s 

## -+-

, n m

where 

### X and s are the mean and s t anda rd deviation of the calib r ation data set, n is the number of observations in the calibration data set, m i s the number of observations that will go into the compl i ance test , and 

### a is the desired confidence level.

Several elements of this formula warrant scrutiny

. • The calibration data set needs to he gathered under conditions that duplicate those of the subsequent compliance data set. There are many factors that could influ ence NOx emissionsseasonal effects, production levels
, ambient cond ition s and changes in the product to name just

a few. A data set gathered over a short time period is therefore questionable as it inevitably

3 The primary difference i s that a conventional two-sample t would pool the variances of the ca libration and the compliance te s t sa mples

. The UPL u ses just the varianc e of the ca l ibration sample

. Attorney Work Product. Privileged and Confidential

ce ll: (612) 718-5033 fax: (952) 926

- 8 11 7 4713 Hib iscus Avenue
, Ed ina, MN 55435

- 4001 e - mail:dhawkin s@mn.rr.com web: www.douglashawkins.comomits the variability due to these factors with their longer -term variation. While the instant snapshot at a random time should provide an unbiased estimate 

### X of the true mean, it necessarily underestimates the true variability and so it s standard deviations leads to an unjustifiably low upper limit.

• The confidence level 

### a needs to be considered carefully. The value a=O.OS i s almost a cliche as it i s used so commonly in statistica l analyses. It is easy to lo se sight of the fact that by design a two

- sided 

### a limit is supposed to fail in a fraction 

### a. of the times it is used. So while a 5% level may be adequate in situations where only a sing le test is done, it is not when multiple testing is to occur. And environmental monitoring involves multiple testing- different furnaces are tested at different times, different rolling averages are monitored. In this sort of multiple testing setting, the conventional sing le-analysis confidence l evels are inapp ropriate, and much smaller "m ultipli ci ty -ad ju sted" 

### a values shoul d be used. The MPCA has proposed an 

### a of 1%. Thi s is acceptable as long as the procedure is not used for multiple tests within a pl ant.

• Finally, the two-sample t methodology depends critically on the assumption that the different observations in the calibrat ion data set are mutually independent, as are the observations in the compliance data set

. This assumption is required for the 

### .J1 

### I m 

### + 1 / 

### n multiplier in the UPL formula.

• The degrees of freedom n-1 for the 

### t cutoff also requires that the data in the calibration set be independent. If they are not, then the degrees of freedom will not be n-1.

You have already commented on the first two of these points
, and I endorse the comments you have made. You have not however explicitly explored the last two issues, and so I will offer some comments
on them

.

Plant data are usually correlated over time, and this is tru e of th e NOx emissions. As an example, I looked at the 176 hourly readin gs in the Furnace 11 combined stacks data set. A plot of each NOx reading against its immediate predecessor sho ws :


### Current vs Previous NOx values

1 33

12

4



## c 1 1 5**~**
..... :::::1 (.) 106

9 7**M~------~------~------~------~------~** M 9 7 1 06 1 1 5 12 4 1 33 Previous

Under the independence assumptions of the 

### t analysis, this should be a formless circle of points;

Attorney Work Product. Privileged and Confidential 2clearly it is not. In fact, the correlation between the two is 0.862.

This means that then observations in the calibration data set co n tain much te ss information than would

n independent observations, as success ive observations largely reiterate the same informat ion that was already provided by their predecessors.

The Elements of the UPL

The UPL involves four elements: The sample mean 

### X The sample standard deviations The "samp le size multiplier" 

### .J'I_ I _n_+_l_ l _m_ The cutoff table value**a,~ ,**  n

- 1
Apart from the concern about using short-term data to estimate the longer-term variance, the first two of these are un-controversial. The third and fourth though are more problematic.

The Sample Size Multiplier

I carried out some calculations on the Furnace 11 combined stack data set. This data set included 176 "calibration" readings and the rule will use 30 compliance monitoring readings. The MPCA rule them gives the sample size multiplier as 

### .J11 n +11m = 

### .JI/176 

### + 1 

### I 30 = 0

. 197

A technical appendix sketches some calculations on this data set and leads to the conclus ion that, because of the serial corre lation, the "effective" sample size of both the calib rati on and the compliance assessment data sets is less than one tenth of their nominal si ze. This means that the UPL's "sa mpl e size multiplier" 

# ..J1 I n + 1

### I m is far too small, and instead of the value 0.197 used in the MPCA formula, it should be 0.651.

The Cutoff Value

The fourth element of the formula is the cutoff value**a,~ ,**  n ·l

This cutoff relies on the assumption that the standard deviation is estimated using an independent sample of size 

### n. But the actual NOx values are strongly serially dependent, and so contain far fewer than 

### n independent p ie ces of information.

The calculations in the technical appendix show that the standard deviation of a data set of length of the Furnace 11 data set and with its serial correlation is approximated reasonably well with the assumption that there are 12 degrees of freedom.

This changes the two -sided ggth percentile from 2.604 to 3.05.

The furnace 11 data set had a mean and variance of 111 .1 and 8.7 lbs/hr respectively. Incorporating these with the corrected 

### t cutoff and sample size multiplier gives:

Attorney Work Product

. Privileged and Confidential 3MPCA calculations Corrected for correlations 111

. 1 

### + 2

. 64 * 8.7 * 0

. 197 = 115

. 5 lbs/hr 111.1 

### + 3.05*8.7*0

. 651 = 128

. 4 lbs/hr

Comment on the MPCA Bootstrap Calculations

The MPCA reported some boot s trap calculations using the actual hourly data from the calibration data set

. These bootstrap runs supported their UPL However looking over their bootstrap code, the samples they took from the historical c alibration data set were drawn independently
, and so did not incorporate the vital feature of serial dependence of the data

. Thus the agreement between the bootstrap sample s and theory doe s not support the relevance of the theory to the actual monitoring situation you face

.

HTC 1 and 3

HTC furnace s 1 and 3 are s lated to be monitored by a parallel UPL limit. The ca l ibration dat a from these furna c es also show high serial correlation: 0

. 899 for HTC1 and 0.787 for HTC 3

. The UPL assuming i ndependence is therefore invalid for these furnaces also. The correct sample size multipliers are given in the technical appendi x

.

The mean s , standard deviations
, multiplier and UPL for these two furnace s are :

Mean S

. d

. multiplier UPL HTC1 428 38 0.743 514 HTC3 343 43 0

. 542 384

HTC2

The HTC furnace will be monitored differently, using CEMS

. Every day, the average of the preced i ng month ' s hourly NOx mea s urements will be found. Compliance will be judged on the basis of the maximum of these 365 rolling averages.

Stati s tical theory does not give good information on the distribution of the maximum of a rolling average of correlated data , s o simulation was used to explore it. Ten thousand years of hourly data
were simulated
, using the Markov model with serial correlation 0.862. This simulation found that the upper two -s ided 99 % point of the maximum wa s 2

. 69 standard deviations above the mean

.

The data from HTC 2 provided an hourly mean and standard deviation of 707 and 53 lbs/hr respectively. Thus a defensible two

- sided 99% upper limit for this furnace would be 707 

### + 2

. 69 * 53 

## = 850 lbs/hr

.

Attorney Work Product. Privileged and Confidential 4App e nd ix- D e p en d ence Monito rin g

Write Xr for the NOx measurement at t i met. Time series such as this can be modeled by autoreg r ession models, the simplest of which is the Markov mode l



### X , =fl.+ 

### rpX,

_ , +e,

where fL is the long

- term mean NOx emission level, 

### ¢ is the autoregression coefficient, and the 

### e 1 are independent "errors" with mean zero and standard deviation 

### a-

.
This model turns out to f i t the Furnace 11 data well. Output from the SA RIMA mode l ing of Sta t istix for Windows V9 gave :

Term Constant AR 1 Coefficient 15

. 3420 0.86229 Std Error 4

. 24441 0

. 03804

MS (Backcasts excluded) 16

. 8748 DF 174 Coef/SE 3

. 61 22.67 p 0

. 0003 0

. 0000

SS (Backcasts excluded) 2936.22 SS Due to Backcasts 9

. 91105 N Before Differencing 176 Marquardt Criterion of 0

. 010 was met

. Simplex Criterion of 0

. 010 was met

. Ljung -Box Portmanteau Lack-of-fit Diagnostics LAG (OF) 12 ( 10) 24 ( 22) 36 ( 34) 48 ( 46) Chi-Sq (P) 

### = 4.69(0.9109) 22.64(0.4222) 26

. 33(0

. 8235) 33

. 09(0.9232)

The last two lines of output show that t he Markov model passes all t he conventional tests of model fit.

If the Markov model holds, then observations k time periods a p art will h ave a co rr e l at i on of¢ k which, wit h ¢ being approx i mate l y 0.862, is a far cry from the value zero assumed by the two

- sample 

### t

The Sample Size Multiplier

The average of a Markov time se ri es of length n has a variance of 

## d m ultiplied by



### __!__ ""' II ""' II 

## v- J l n 2

### i=**J~ j=** **trp**

For n = 176 (the size of the Furnace 11 calibration data set), this m ultip l ier evaluates to 0

. 0737. T h is is much bigger than the 1/n = 0

. 00568 implied by t h e independence assumption. For n=30 (the size of t he 30-hour comp l iance assessment sample), it evaluates to 0.3503, w h ich is again much bigger than t h e 1/m = 0.0333 implied by the independe n ce assumption.
Putting the two t ogether, t h e i ndependent data assump t ion i mplies a multiplie r of

# ~**=~0.005682+0.03333** =0.197

But t he correct value o f t he multiplie r is

Atto rn e y W o rk P roduc t. Priv i le ge d and Confid e nti a l 

### 5

### ~0.0737 +{).3503 

## = 0.651

Thus, even absent concerns about the cutoff t and the likely downward bias in the standard deviation, the margin of error in the UPL calculation carried out by the MCPA is too small by a factor of 0.651/0 .1 87 ;; 3

. 31.

Another way of looking at the results is that, thanks to the serial correlation from one hourly reading to the next , the 167 observations in the calibration data set only contain as much information as would 14 independent observat i ons, and the 30 observations in the compliance testing data set contain less information than would 3 independent observations.

The corresponding analysis for the HTC 1 and HTC 3 data sets shows serial correlations of 0.899 and 0

. 787 respectively

. These lead to multipliers

HTC 1:

### ~0.1133 +{).4389 

## = 0.743

HTC 3 :

### ~0.0524 +{).2411 

## = 0.542

The Degrees of Freedom

The theoretical underpinning of the 

### t distribution is that the denominator variance follows a scaled chi

squared distribution

. If it is estimated from an independent normal sample of size 

### n, then there are n - 1 degrees of freedom . F amiliar statistical theory does not say what the d i stribution might be if the data
are dependent

. To explore this, I simulated 10000 sequences of normal Markov data, length 176 , with a serial correlation of 0.862 and made chi

- squared probability plots of the resulting variances.

These are shown below. The first plot shows the fit for the assumed 175 degrees of freedom. If the data set were 176 independent observations, this plot should be an approximately straight line

. Clearly it is not- it is highly curved
, as the dotted reference line shows.

The second p l ot shows the same va lu es plotted against a chi

- squared with 12 degrees of freedom. Here the straight line visibly fits quite well., suggesting using the t with 12 degrees of freedom for the compliance monitoring.

This figure of 12 fits in quite well with the conclusion from the sample size multiplier that the effective independent sample size is roughly 14.

Attorney Work Product. Privileged and Confidential 6(J)C0 Cl) 0 Cr-... 

### ro



### · c ro<O 

### > "'0 Cl)l.()

....... 

### ro 

### "5"'11' 

## E (j)C") 

# lot on 175 df

120 140 160 180 200 220 240 Ch i- squared scores



# lot on 12 df

5 

## 10 15 

## 20 

## 25 30 35 Ch i -squared scores

Attorney Work Product

. Privileged and Confidential 7

## A3UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 5 77 WEST JACKSON BOULEVARD CHICAGO
, IL 60604-3590



### Catherine Neuschler ... -· · -- ""-

- -- -

-- - ·. · -- - ·


## t- EB 1 0 2012

Minnesota Pollution Control Agency Environmental Analysis and Outcomes Division 520 Lafayette Road North St. Paul, Mi1mesota 55155-4194

Dear Ms. Neusc h ler : REPLY TO THE ATTENTION OF :



### We have reviewed MPCA's draft March 2012 Regional Haze State Implementation Plan Supplement and request that you consider the following information pr ior to setting the NOx limits for Minnesota's taconite facilities. As stated in the Mi1mesota Pollution Control Agency's (MPCA's) supp lement, BART must take into consideration the technology available , the costs of compliance, the energy and non-air quality environmental impacts, any pollution control equipment in use at the source , the remaining useful life of the source, and the degree of improvement in visibility which may reasonably be anticipated to result from use of the technology. Based upon these criteria, use of low NOx main burners could be considered to represent BART. Please share any information you may have regardin g the potential use oflow NOx burners as BART at taconite facilities in Minnesota.

U.S. Steel has demonstrated the development and use oflow NOx main burners that achieve 70 percent NOx reduction on its indurating lines. This level of control is not r eflec ted on any of the taconite indurating lines in Minnesota, including on the U.S. Steel lines on which this technology has, and presumably still is, being demonstrated

. Installation of low NOx m ain burners would therefore seem to have the potential of decreasing NOx emissions by over 60 tons per day if applied across all of the taconite facilities i n Minnesota.

As MPCA is aware, the use of improved NOx reduction technology h as been under discussion for some time. More spec ifically :

• A January, 2009, NOx reduction analys is was performed for U.S. Steel's Minntac Iron Ore Pelletizing Plant, with one of the recommendations being to pursue use of low NOx main burners.

• On April13, 2010 , U.S. Steel NOx Reduction Pilot Pro ject recommendeded further pilot testing and on October 22, 2010, t es t results on Minntac's Line 7 indicatin g that a 70 percent reduction goal is achievable via a low NOx main burner , was submitted to MPCA by U.S. Steel.

• On May 13, 2011, a final report on L ine 7 was submitted by U .S

. Steel to MPCA further indicating that 70 percent reduction was achievable using a low NOx main burner.

Re<:ycled/Re<:ycleble • Printed with Vegetable Oi l Based Inks on 100% Recycled Paper (50% Postconsumer)

### • A December 1, 2011 final report on the Line 6low NOx main burner, which was installed at Mirmtac in 2011, was submitted to MPCA. U.S. Steel concluded that, "Based

on testing conducted to date , Minntac is confident that low N Ox main burners are a technically and economically feasible mechanism to achieve NOx reductions."
Therefore, information supporting low NOx main burners as BART is well documented and has been available for some time. In contrast, MPCA's approach to setting limits seems to have been to reflect th e upper end of uncontrolled emission levels.

The proposed S02 limit for United Taconite's Line 2 of 197 tons as a 30-day rolling sum appears incons istent with your October 6, 2009 memorandum titled "Sulfur Dioxide BART Determination for United Taconites LLC's Indurating Furnaces," which contains a table "Sulfur Dioxide Removal Alternatives for United Taconite Line 2." This table includes six alternatives, including fuel blend changes with a corresponding limit of 1.70 lb/MMBtu (which forms the basis of the 197 tons as a 30-day rolling sum) and fuel blending plus polishing scrubber with a corresponding limit of 0.68 lb/MMBtu. The latter option will result in about 1,000 tons less S02 per year. However , MPCA determined that "It appears that all alternatives are cost effective" but chose fuel blends as BART because that option could be accomplished without additional construction and could be implemented more quickly, and avoids further degradation of water quality

. However, speed of implementation is not a specified criterion for selecting BART and furthermore, the fuel blending control option would not be implemented quicker than any other selected as BART unless specific limits requiring an expedited implementation schedule was included in an enforceable document. In addition , water treatment costs were included as part of the overall scrubber costs.

Please consider the above information for use in setting your final limits as well as the fact that additional time is available for these recommendations to be implemented.

Sincerely,

Douglas Aburano, Chief Attainment Planning and Maintenance Section

### ATTACHMENT B1

Minnesota Pollution Control Agency

RESPONSES TO TIMELY COMMENTS ON TH E SUPPLEMENTAL REGIONAL HAZE SIP

1. US Forest Service, Supe rior National Forest, Letter Received January 13, 2012

Comment 1-A: “We do not agree that CSAPR is better than source-specific BART in Minnesota. No statespecific demonstration has been made...In the Su pplement the emissions budget under the previous transport rule is compared to CSAPR. We do not se e any value in this comparison. Both are different versions of the same trading program.” Response: In 40 CFR 51.308(e)(2), the Regional Haze Rule gives states the ability to implement an emissions trading program or other measure as an alternative to source-specific BART requirements, if the alternative program achieves greater reas onable progress towards the visibility goals than application of source-specific BART. EPA then made a national determination that implementation of
EPA’s SO 2 

### and NOX 

### cap-and-trade program for power plants (o r electric generating units – EGUs) in the subject area and BART in areas of the country not covered by the trading rule provides for greater visibility improvement at all Class I areas than na tionwide implementation of source-specific BART. Because this is a national decision, no state specific demonstration is required. EPA originally made this determination for the trading program known as the Clean Air Interstate Rule (CAIR). States were therefore able to make a “CAIR=BART” determination. The MPCA made this determination in the initial draft Regional Haze SIP, which went on public notice in February 2008. As the result of litigation, CAIR was subsequent ly remanded to EPA. EPA then replaced CAIR with a revised trading program known as the Cross State Air Pollution Rule (CSAPR), sometimes also called the Transport Rule. After promulgation of CSAPR, EPA undertook a second rulemaking to determine if CSAPR
could also serve as a BART alternative. When the Su pplemental Regional Haze SIP went on public notice, on December 19, 2011, EPA had no t yet officially made available its analysis that CSAPR=BART. Therefore, the comparison of Minnesota’s budget und er both programs was provided to demonstrate that, since emissions budgets were as stringent under CSAPR as they were under CAIR, EPA would be likely to determine that covered states could substi tute implementation of CSAPR for source-specific
BART. On December 30, 2011, EPA publis hed in the Federal Register ( 76 FR 82219) 

### a proposed rulemaking and technical demonstration that implementa tion of CSAPR would result in greater visibility improvement in all Class I areas than implementation of source-specific BART at power plants. TheResponses to Comments on the Supplemental Regional Haze SIP 

### MPCA is therefore choosing to rely on this national determination. The final SIP submittal will remove the comparison of CAIR and CSAPR emission budget s and instead rely on EPA’s technical analysis demonstrating better visibility improvement from CSAPR than source-specific application of BART to power plants.

Comment 1-B: “We attempted to compare source-specific EGU BART to CSAPR for Minnesota...the graph shows that the IPM prediction of the [e]ffect of CSAPR in 2014...is an increase in emissions over current (2010) actually emissions. In addition, CSAPR is well above both what was proposed as sourcespecific BART by MPCA and what we and the other Federal Land Managers (FLMs) proposed as sourcespecific BART.” Response: The Integrated Planning Model (IPM) is used by EPA to predict future emissions from power plants based on energy demand and environm ental controls installed. Although looking at emission levels is also informative, the ultimate goal is to improve visibility; there is not necessarily a direct and simple correlation betw een emissions within Minnesota and visibility at Minnesota’s Class I areas. As shown in the graphs below, deep drops in statewide NO X 

### and SO 2 

### emissions since 2005 have not necessarily led to improved visibility. The same is true when looking at emissions from Northeast Minnesota. It should be noted that EPA’s analysis comparing BART to CSAPR uses air quality modeling to compare the visibility improvement that would result from application of each program. Graph: SO 2 

### and NO X 

### Emissions from Minnesota and Visibility at BWCAW on Worst 20% Days (as % of 2002 Baseline)

2Responses to Comments on the Supplemental Regional Haze SIP 

### Graph: Combined SO 2 

### and NO X 

### Emissions from NE MN Plan Tracked Sources and Visibility at BWCAW on Worst 20% Days (as % of 2002 Baseline)

As noted by the commenter, the Technical Su pport Document for the proposed CSAPR=BART rule projects that Minnesota utility boilers may emit 50, 000 tons per year (tpy) of SO 2 

### and about 35,000 tpy of NOX 

### in 2014 under the scenario of CSAPR in the cove red states and BART in all other states (2014 IPM CSAPR + BART). However, the TSD also shows th at under the application of the regional haze program requirements alone, Minnesota is projected to have higher SO 2 

### emissions (56,500 tpy) and only slightly lower NOX 

### emissions (34,000 tpy) than CSAPR in 2014 when BART is applied nationwide. These projections do remain slightly above the CSAPR “budget” for Minnesota of about 29,000 tpy of NO X 

### and 41,000 tpy of SO 2 

### . It is more difficult to project overall emission s from Minnesota power plants with the application of BART, as BART applies only to five facilities. IP M would likely adjust emissions at other facilities based on changes in emissions at the BART facilities. However, if we look at the projections of source-specific emissions for Minnesota’s power plants under CSAPR, it shows a total of 31,300 tpy of NOX 

### emissions and 45,499 tpy of SO 2 

### emissions. Replacing the IPM projections with the source-specific BART limits results in 30,704 tpy of NOX 

### and 35,444 tpy of SO 2 

### . The following table shows the 2010 actual emi ssions from each subj ect-to-BART EGU, the projected emissions from the MPCA’s source-specifi c BART determination, the allocation under the CSAPR, and EPA’s 2014 IPM projections.

3Responses to Comments on the Supplemental Regional Haze SIP 

### Facility Unit 2010 Actual Emissions, tons MPCA SourceSpecific BART, tons CSAPR Allocation, tons 2014 IPM CSAPR + BART Projection, tons NOX 

### SO 2 

### NOX 

### SO 2 

### NOX 

### SO 2 

### NOX 

### SO 2 

### Minnesota Power Boswell 3 890 258 988 1270 2142 3174 991 884 Minnesota Power Taconite Harbor 3 931 1512 568 1135 431 639 846 604 Northshore Mining 1 985 615 800 800 296 439 325 1299 Silver Bay Power 2 1525 1017 1045 1254 396 587 597 2490 Rochester Public 3 183 204 N/A 1645 N/A N/A N/A N/A Utilities Silver Lake 4 12 19 573 239 145 215 238 229 Xcel Energy Sherco 1 3866 6233 3862 3089 3908 5790 4713 7822 2 3220 5192 3861 3089 3907 5789 4582 7604

For various reasons, the MPCA does not believe power plants in Mi nnesota will exceed the CSAPR budget levels, despite EPA’s prediction. First, al though IPM is often used because it is one of few models that predict utility emissions (and because it is the model EPA relies on) states and others have frequently expressed concerns about the model’s tr ansparency and accuracy. Second, past experience shows that Xcel and Minnesota Power generally prefer not to be in a position where they are required to purchase emissions allowances. There is no indicati on that this position will change; both companies have completed SO 2 

### and NOX 

### reduction projects on all their operat ing boilers, not just the subject-toBART boilers. The MPCA believes that many of the subject-to -BART facilities are already operating (and will continue to operate) emission controls. Although not officially included in Minnesota’s SIP, limits requiring the operation of many of these emission controls are already federally enforceable. Minnesota Power Boswell Unit 3 already has limits equivalent to the BART emission limits (NO X 

### limit of 0.07 lbs/MMBtu and SO 2 

### limit of 0.09 lbs/MMBtu, both on a 30-day rolling average basis) contained in the current facility permit (Air Emission Permit 06100004- 006,issued on June 21, 2011). RPU Silver Lake also has a total facility permit containing limits equivalent to the BART limits (Air Emission Permit 10900011

- 004, issued September 7, 2007). Two remaining subject-to-BART units, Minnesota Power Taconite Harbor Unit 3 and Northshore Mining Silver Bay Power, Unit 2, are slated to rece ive emission allocations under CSAPR that are both lower than their 2010 actual facility emissions a nd lower than the MPCA’s source-specific BART
determination. The need to meet these emission b udgets or purchase emission allowances will likely
drive reductions at these facilities.

4Responses to Comments on the Supplemental Regional Haze SIP 

### There are specific concerns about Xcel Energy’s Sherburne County Generating Station (Sherco), which does not have enforceable limits implementing BART-level emission reductions and is slated to receive emission allocations under the Transport Rule that are much closer to its actual 2010 emissions. In addition, Sherco is projected by EPA’s IPM modeling to emit at mu ch higher levels in 2014 than it did in 2010. However, the MPCA understands that Xcel inte nds to install the controls on Sherco, equivalent to those determined by the MPCA to represent BART. Therefore, the MPCA is ch oosing to include in the SIP an enforceable document implementing a so urce-specific BART determination for Sherco. Under 40 CFR 51.308(e)(2)(v) and 40 CFR 51.308(e)(4), States that choose to implement a BART alternative also may choose to “include a geographic enhancement to the program to address the requirement under40 CFR 51.302(c) related to BART fo r reasonably attributable impairment”. In the preamble to the CSAPR=BART proposal, EPA also indi cates that “States may also include in their SIPs provisions applicable to a specific sources even if no federal land management agency has made such a reasonable attribution.” (76 FR 82224). The MPCA is choosing to add such a so urce-specific limit as described in the preamble. With the addition of en forceable limits on Sherco, the MPCA believes the SIP clearly demonstrates that the five subject-to-BART power plants will reduce their emissions to levels that will allow Minnesota to meet the goals of the Regional Haze program.

Comment 1-C: The MPCA should re-evaluate the limits determined for Xcel Energy’s Sherburne County and Northshore Mining’s Power Hous e and consider the co mments made by EPA and the Federal Land Managers. Response: I t should be noted that the CSAPR allocati ons for Northshore Mining’s Silver Bay Power plant are considerably smaller than the emi ssions that would be allowed under BART. Therefore, we believe CSAPR will likely drive more emissi on reductions at this source than BART. In response to this and other comments, the MPCA has determined that it is appropriate to add BART conditions for Xcel Sherco. However, the MPCA continues to believe that the Selective Catalytic Reduction (SCR) technology favored is not an appropriate BART determination due to cost
considerations. This information is contained in the MPCA’s BART determination memo and response to comments, provided in the 2009 SIP su bmittal. Subsequently, Xcel provid ed some additional information to MPCA further documenting the cost figures. The additional information is attached. Comment Letter 5, from Xcel Energy, further documents cost analysis for SCRs. Finally, even if SCRs were cost-effective, the MPCA has concerns (documented in 2009) about the feasibility of the emission limits that the FLMs believe can be achieved with SCR technology.

5Responses to Comments on the Supplemental Regional Haze SIP



### Comment 1-D: “The recent stay of CSAPR puts its future in doubt. The regional haze plans are more than four years overdue already. Please do not delay the plan and visibility improvement any longer by keeping Minnesota’s Regional Haze Plan tied to any of the federal trading rules.” Response: Although CSAPR has been stayed, the courts are moving very expeditiously to decide the case. Briefs have been submitted and oral argum ent will be held on April 13. A decision could be made by mid-2012. Again, the MPCA believes that many of the emission re ductions expected under CSAPR and BART are already being achieved. Should EPA believe that source-specific BART limits are necessary because of the legal uncertainty of CSAPR, it could choose to promulgate a FIP based on the information provided in th e 2009 Regional Haze SIP.

Comment 1-E: In the excerpt from the 2009 Regional Haze SI P “it can be seen that the MPCA proposed BART controls for this group of units [the taconite indurating furnaces]...the MPCA was unclear as to the specifics of each BART control options, but they were clear that BART was not ‘no control’.” Response: The MPCA agrees. The BART determination fo r the taconite facilities are, generally, optimization of the existing scrubber to ensure SO 2 

### removal and good combustion practices, along with past energy efficiency projects undertaken at many of the facilities, to reduce NO X 

### emissions. However, the MPCA does not believe that a precise combinatio n of specific practices can be enumerated that would represent “good combustion practices” at each facility or furnace.

Comment 1-F: “To be serious about reducing NOX 

### , CEMS must be installed.” Response: The issues concerning the installation of Continuous Emission Monitor Systems (CEMS) were discussed prior to the submittal of the 2009 Regional Haze SIP. It was determined at that time that CEMS were not necessary on all facilities. However, the MPCA does believe that the industry is moving in the direction of having CEMS. Keetac, Minnta c, and United Taconite all have CEMS installed.
Due to the Administrative Orders included in th e 2009 Regional Haze SIP, Northshore and Hibbing Taconite have installed and are operating stack gas flowmeters. In addition, the Order implementing the BART limits included in this Supplemental SIP requires installation of CEMS on Hibbing Taconite Line 2.

Comment 1-G: “The Supplement says the MPCA felt that at least one year of emissions data was needed from each facility in order to determine the appropriate BART limits. It then goes on to say that only 150
hours of data was used to set the limits for most fa cilities. This is about six days versus the one year originally proposed and no explanation given as to why such a small data set was chosen.”

6Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The Administrative Orders issued included in the 2009 Regional Haze SIP require each facility to make quarterly reports to the MPCA. For fac ilities with CEMS, the quarte rly report is to include
NOX 

### and SO 2 

### emissions, along with hourly data for heat input, pellet type, pellet production rate, fuel used, combustion zone temperature, stack gas flow rate, pH of water entering and leaving the scrubber, total volume of the water entering the scrubber, an d the units for each of the parameters. Facilities without CEMS were required to conduct continuous te sting of each indurating furnace for a period of time sufficient to gather a minimum of 150 one-ho ur data points under the range of operating parameters that influence NOX 

### emissions, and the range for each parameter was to be representative of the furnace’s operating range for the parameter in th e 12 months previous to the test. The parameters to be recorded included ferrous iron content of the feed materials, pellet type, production rate, heat input, stack gas flow rate, and combustion zone temperature. The facilities then were required to report relevant hourly average operating parameters on a quarterly basis to demonstrate that operating
conditions continue to be within the ra nge established during the 150 hour test. The MPCA chose to derive the limits by appl ying statistical techniques to the 150 hours of continuous data provided by the facilities without CEMS. These facilities had demonstrated, based on the procedures provided in the Or ders, that emissions were minimally variable. In order to check the
emission limits derived from the hours of continuous data, the MPCA also looked at prior stack test
information in order to determine if there were major inconsistencies.

Comment 1-H: “Our view is that the testing should’ve been done under operating conditions that represent BART, as determined previously by th e MPCA to be good combustion parameters and scrubber optimization. Instead the incentive for the companies was to operate at the highest emitting levels during the testing. There is no other documentation in the Supplement regarding whether BART operating practices were being followed during the tests.” Response: As noted in the response to Comment 1-E, given the diversity of the sources, the MPCA does not believe that a precise combination of specific practices can be enumerated that would represent “good combustion practices” at every facility or furnace. The facilities are in the best position to determine which specific combustion practices are appropriate to each furnace and process. As an example, comment letter 9 sets out some good combustion practices that are generally followed by the
Cliffs facilities. The conditions for the testing were set in th e 2009 Regional Haze SIP. As noted above, the facilities were required to conduct testing under th e range of operating parameters that influence NO X

7Responses to Comments on the Supplemental Regional Haze SIP 

### emissions, and that the range was to be represen tative of the furnace’s operating range in the 12 months prior to the testing. This requirement for representativeness serves to limit the ability to simply conduct a test at full capacity in order to secure th e highest emission limits. However, it is important that testing also represent the full capacity or wors t case operations of the facility. Therefore, the MPCA’s intention in requiring the testing was to force an appropriate level of variability.

Comment 1-I: “A further concern is the use of a 99% confiden ce interval. In other recent permit-related
work the MPCA has used 95%. The MPCA chose a 99 % value: ‘due to the need for limits to be met during all operating conditions, including during times of startup, shutdown, and malfunction.’ Other technology-based limits, such as be st available control technology (BAC T) limits, are not set this way. The correct way is to set a separate limit for startup, shutdown, and malfunction (SSM) conditions and one for regular operations. Otherwise if an overa ll limit was set to encompass all possible emission scenarios (normal operations and SSM) the resulting limit would be inflated and not represent BACT. We believe a similar approach should be taken for BART. The use of the 99% level in combination with a limited data set, while doing a good job of statistically encompassing all possible emission scenarios, artificially inflates the emission limits, which in the end do not require the facilities to operate according
to BART.” Response: To be clear, the MPCA used a predictioninterval, not a confidence interval. A prediction interval based on a sample is expected to contain an additional observation from the process with a specific degree of certainty. The interval is usually used to predict the next observed value in a sample. The prediction interval has two important va lues – the lower prediction limit, which the next observation would be expected to be above, and th e upper prediction limit, which the next observation would be expected to be below. In setting the emissi on limits, the MPCA used the upper prediction limit (UPL). The MPCA adjusted the formula for the predictioninterval to account for the fact that we are not trying to predict a single observation, but a value to be met within a series of several (30) additional operations. Using a confidence interval would underp redict the uncertainty. Based on this comment, for the majority of the sources, the MPCA has revised th e limits to use a 95% UPL for those sources without
CEMS data. The limits set for Keetac and Minntac were set slightly di fferently due to the availability of CEMS data, using a 98% and 99% interval, and these li mits have not been revised to use a 95% interval. The MPCA does believe that the limit can be met during regular operations and during startup
and shutdown events. The BART NOX 

### limit is not a technology-based limit, but rather a work-practices
based limit. In an emission unit with add-on controls , such as a utility boiler, there are times during the

8Responses to Comments on the Supplemental Regional Haze SIP 

### startup and shutdown phases when low flue gas temp erature prevents the add-on controls from being operated. This results in elevated NOX 

### emissions. Because the taconite furnaces are not equipped with
SCR or other controls at the end of the process, they do not experience this relatively predictable period of higher emissions. Instead, because the NOX 

### formed is primarily thermal NO X, 

### its formation is tied directly to temperature. Therefore, we would generally expect lower NOX 

### emissions during start up and shutdown than during operations, and there is no need to set a separate (higher) limit. The decision on whether failure to meet a limit during a malfunction results in enforcement action is a case by case decision. See also the response to Comment 6-F.

Comment 1-J: “We believe the BART determination for United Taconite does not follow the Clean Air Act and does not follow the conditions in its perm it...MPCA issued United a permit for the expansion
that included a condition to address BART on the now coal-fired Line 1: ‘Within 120 days of being notified by the MPCA in writing of the final proposed NOx BART limits for Lines 1 and 2 (EU040 and EU042), the Permittee shall submit anapplication for a permit amendm ent to incorporate into its air emissions permit either (1) NOx and SO2 BART emission limits as proposed or (2) a BART alternative as
described in the December 2009 Regional Haze State Implementation Plan submittal. Alternatively, the Permittee may submit, within 120 days of the written notification, an updated BART analysis based on the modified Lines 1 and 2 for the facility with an appropriate permit amendment application to incorporate proposed NOx and SO2 BART limits into its air emissions permit.’ “It is unclear how United’s proposal complie s with its permit requirement...Is it a BART alternative? If so, what is the initial BART determinat ion for coal-fired Line 1? To our knowledge no BART determination has been completed for a coal-fired Line 1. Accord ing to 40 CFR 51.308(e)(1)(ii)(A) the BART determination must consider...the following fact ors...we find none of this information in the Supplement.” Response: The BART determination for United Taconite, of good combustion practices for NOX 

### control and fuel blending on Line 2 for SO 2 

### control, was made for the 2009 Regional Haze SIP submittal and the BART factors were appropriately considered at that time. The role of the Supplemental Regional Haze SIP is simply to set and make enforceable em ission limits corresponding to those determinations. Throughout the process of considering BART at United Taconite, the MPCA looked for
information on how to deal with BA RT at a modifying facilities. Despite discussions with EPA, FLMs, and others familiar with the Regional Haze program, no useful guidance for dealing with such a situation was
found. The MPCA therefore made a BART determination based on the status of the facility as it existed

9Responses to Comments on the Supplemental Regional Haze SIP 

### when the Regional Haze SIP was wri tten and submitted in 2009. At that ti me, Line 1 at United used only natural gas as a fuel, while Line 2 used natural gas and solid fuels such as co al and petroleum coke. Use of natural gas tends to result in higher NOX 

### emissions, while use of solid fuels results in higher SO 2 

### emissions. Nearly a year later, in August 2010, the MPCA i ssued a permit allowing United Taconite to begin burning solid fuels on Line 1 and to produce more taconite pellets. In the permit, the MPCA offered United several options for fulfilling the BART requi rement. Option 1 was to accept the BART limits originally developed. Option 2 wa s to do a BART alternative. Option 3 was to complete a new BART analysis based on the modified facility. The MPCA did not intend for Option 2 to be contingent on completion of Option 3. The MPCA expected United to propose a BART al ternative, and had discussed this option with United. In the 2009 Regional Haze Submittal, the MPCA described the possibility that some sources with subject-to-BART sources may be considering projects that could result in greater overall emissions reductions than would be obtained through installation of BART. This was based on the preamble to EPA’s rule published in October 2006, Revisions to Provisions Governing Alternative to Source-Specific Best Available Retrofit Technology (BART) Determinations

. The preamble emphasized the auth ority provided to states to implement alternative measures, and stated that “States have the flexibility to design programs to reduce emissions from stationary
sources in a more cost-effective ma nner so long as they can demonstrate that the alternative approach will achieve greater reasonable progress towards improv ing visibility than would have been achieved by implementation of the BART requirements...[T]he emissions reductions that could be achieved through implementation of the BART provis ions at section 51.308(e)(1) serv e as the benchmark against which States can compare an alternative.” In order to evaluate the BART alternative, the MPCA used the BART emission reductions as a
benchmark. The MPCA set BART limits based on th e determination included in the 2009 Regional Haze
SIP. United was notified of these limits in a memo provided to them on December 8, 2011.

The limits were as shown below:
Line 1 Line 2
SO 2 

### BART Limit 0.121 lbs/LT pellets 1.7 lbs/MMBtu
NOX 

### BART Limit 1018.3 lbs/hour 753.8 lbs/hour

10Responses to Comments on the Supplemental Regional Haze SIP 

### The MPCA believes that the benchmark against which to evaluate any alternative is the total emission
reductions that would be achieved at an unmodified United facility from the implementation of these emission limits compared to an unmodifi ed United facility without these limits. The MPCA conducted this analysis as follows (and as shown in the attachment to the United Taconite BART determination memo).
1. Estimate the NOX 

### and SO 2 

### emissions from each indurating furnace using baseline information from the unmodified facility

a. A tons per year figure was calculated using the furnace capacity, emission rates
from the baseline actual emissions ca lculations included in the August 2010 permitting action, and 365 days of operation annually.
Line 1 Line 2 Total Facility
SO 2 

### Emissions (tpy) 38 7008 7046
NOX 

### Emissions (tpy) 4371 1968 6339

2. Estimate the NOX 

### and SO 2 

### emissions from each indurating furnace using the MPCA’s proposed BART limits.

a. A tons per year number was constructed using the MPCA’s limits applied to full furnace capacity and 365 days of operation annually.
Line 1 Line 2 Total Facility
SO 2 

### Emissions (tpy) 148 2978 3126
NOX 

### Emissions (tpy) 4460 3302 7762

3. Estimate the expected emi ssion reductions from BART

a. BART would result in 3920 tpy of SO2 em ission reductions and would allow a slight increase in NOX 

### emissions based on facility operations at full capacity, for
a total reduction of 2496 tons of emissions.

4. Look at the expected emissions from the BART alternative proposed by United.

a. United proposed the following emissions.
Line 1 Line 2 Total Facility
SO 2 

### Emissions (tpy) 1293 2394 3687
NOX 

### Emissions (tpy) 1655 3692 5347

5. Determine the emission reductions resulting from the BART alternative

11Responses to Comments on the Supplemental Regional Haze SIP



### a. The MPCA used the total tons per year of emissions resulting from the BART alternative and compared those to the tons per year emissions that would result from the application of MPCA’s BART de termination to the full furnace capacity.
6. Compare the BART alternative reductions to the BART reductions

a. When comparing the baseline operations (prior to the modification or application of BART) to the proposed BART alternative, the BART alternative
results in NOX 

### emission reductions of 991 tpy and SO 2 

### emission reductions of 3359 tpy. This is a total of 4350 tpy of emission reduced compared to the reductions from application of MPCA’s BA RT emission limits, or about 1850 total more total tons per year of emissionreductions of em ission reductions. Because the BART alternative offers greater emissionreductions than the MPCA’s BART analysis, the MPCA chose to accept the BART alternative, with one change. Rather than allow a 180-day limit for NOX 

### emissions, the MPCA proposed a 30-day limit to be consistent with the other BART determinations.

Comment 1-K: “The reductions in United’s proposal were calculated from an inflated baseline. The baseline values used in the Supplement rely on the baseline emissions value calculated in the permit for the plant expansion. Under those regul ations the facility is free to choose the highest emitting two years in the past ten...the result is a value well above recent actual emissions.” Response: The MPCA’s calculations use an emission fa ctor drawn from the factors shown in the
baseline actual emission calculations used in the most recent permit action . The factor chosen is generally in the mid to lower end of the factors shown. The calculation then uses the full capacity of the furnace to calculate the potential emissions from ap plication of BART. The MPCA believes this is an appropriate calculation, as the BART limit does not constrain hours of operation or furnace capacity. Also, in comparing the emissions resulting from the BART proposal to actual emissions from recent years, it is important to consider the impact of the recession. For instance, many taconite facilities experienced periods of extended shutdown. Therefore, the most recent actual emissions likely
do not reflect the maximum allowa ble emissions from the facility.

Comment 1-L: “A major reason United’s prop osed BART limits are more restrictive than the MPCA’s is
because the MPCA’s NOX 

### limits were set artificially high...In the case of SO 2

### , as stated above, we believe the limit for line 2 should be 0.68 and not 1.7 lbs/MMBtu.”

12Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The discussion of the NOX 

### BART limits is provided in response to other comments.
The issue over whether an SO 2 

### BART limit based on fuel blending should more appropriately be 1.7 lbs/MMBtu or 0.68 lbs/MMBtu was discussed during the preparation of the 2009 Regional Haze SIP. The MPCA chose a 1.7 lbs/MMBtu limit at that time, and this action is not meant to reconsider that limit. It therefore continues to serve as the appropriate benchmark against which th e BART alternative is
evaluated.

2. National Park Service, Lett er Received February 2, 2012

Comment 2-A: “We do not believe that CSAPR is better th an source-specific BART in Minnesota. No state-specific demonstration has been made...In the Supplement, the emissions budget under the Clean Air Interstate Rule (the previous transport rule) is compared to CSAPR. We believe the relevant comparison that is required is a comparison of controls under CSAPR with controls under fully implemented BART.” Response: See response to Comments 1-A and 1-B.

Comment 2-B: “US Forest Service (USFA) analys is shows that the IPM prediction of the [e]ffect of CSAPR in 2014 is an increase in emissions over current (2010) actual emissions and above what was proposed as source-specific BART by MPCA and what we an d other Federal Land Managers (FLMs) proposed as source-specific BART. Without any other information sp ecific to Minnesota, we find source-specific BART to be far superior to CSAPR.” Response: See response to Comment 1-B.

Comment 2-C: “We strongly encourage the MPCA to reject using CSAPR as a replacement and believe the source-specific BART limit approach should be maintained. The MPCA should also re-evaluate the limits determined for Xcel Energy’s Sherburne County and Northshore Mining’s Power House and consider the comments made by EPA...and NPS.” Response: See response to Comment 1-C.

Comment 2-D: “With regional haze plans overdue already, and the recent stay of CSAPR putting CSAPR’s future in doubt, we are concerned with further delays in the plan and visibility improvement, and that Minnesota’s Regional Haze Plan tied to rules that would provide less pollution reduction than those

13Responses to Comments on the Supplemental Regional Haze SIP 

### tailored specifically to Minnesota’s needs. Instead, we ask that MPCA use source-specific BART limits that have already been evaluated and can be readily implement in this plan.” Response: See response to comment 1-D.

Comment 2-E: In the excerpt from the 2009 Regional Haze SI P “it can be seen that the MPCA proposed BART controls for this group of ta conite units...the MPCA was unclear as to the specifics of each BART control options, but they were clear that BART was not ‘no control’.” Response: See response to Comment 1-E.

Comment 2-F: “To be serious about reducing NOX 

### , CEMS must be installed.” Response: See response to Comment 1-F.

Comment 2-G: “The Supplement says the MPCA felt that at least one year of emissions data was needed from each facility in order to determine the appropriate BART limits. It then goes on to say that only 150
hours of data was used to set the limits for most fac ilities, which is less than 2% of the data originally said to be needed, and no explanation is given as to why such a small data set was chosen...MPCA does not explain how it determined that such a small data set was representative of 12 months of operation.” Response: See response to Comment 1-G.

Comment 2-H: “Furthermore, testing should have been done under operating conditions that represent BART, as determined previously by the MPCA to be good combustion parameters and scrubber optimization. Instead the incentive for the companies was to operate at the highest emitting levels during the testing. There is no other documentation in the Supplement regarding whether BART operating practices were being followed during the tests.” Response: See response to Comment 1-H.

Comment 2-I: “A further concern is the use of a 99% confiden ce interval. In other recent permit-related
work the MPCA has used 95%. The MPCA chose a 99 % value: ‘due to the need for limits to be met during all operating conditions, including during times of startup, shutdown, and malfunction.’ Other technology-based limits, such as be st available control technology (BAC T) limits, are not set this way. The correct way is to set a separate limit for startup, shutdown, and malfunction (SSM) conditions and one for regular operations. Otherwise, if an overa ll limit were set to encomp ass all possible emission

14Responses to Comments on the Supplemental Regional Haze SIP 

### scenarios (normal operations and SSM), the resulting limit would be inflated and not represent the capabilities of BACT.” Response: See response to Comment 1-I.

Comment 2-J: “In addition to our concern about the confiden ce level chosen for its statistical analyses, MPCA did not use a valid statistical approach in settings its limits. For example, most of the data distributions were skewed, and some were not close to ‘normal’ in the statistical sense. We saw no explanation of any adjustments made to the data to yield distributions to which conventional statistical procedures could be correctly applied.” Response: The MPCA did some exploration of NOX 

### emission data in order to gain insight into distribution patterns from original data to different types of extracted data. As the commenter points out, the original hourly data is distributed with a long tail to the left, therefore conforming to a Weibull
distribution rather than a normal distribution. If we assume that the hourly data is coming from a large number of data points, than the mean of three new data points drawn from the original data (representing a routine stack test with three one-ho ur runs) would have a similar, but narrower Weibull distribution. As we move to the mean of 30 new data points (representing the 30-hour stack test proposed for compliance with the taconite facility limi ts), the distribution moves considerably closer to a
normal distribution. In addition, the MPCA used the bootstrap resampling technique to look at much of the data, although this technique has not been used to set the limits subsequently revised based on these responses to comments. If a bootstrap technique is us ed to derive multiple samples from the original data set, each of the same size as the original dataset, and then the mean of each of those “new” samples is plotted, the mean curve follows a normal distribution. Furthermore, the entire bootstrap curve generally fits within the 95% confidence interval around the mean of the original sample, and the mean of the bootstrap curve nearly coincides with th e mean of the original sample. This indicates that statistical analysis based on mean values should hold regardless of the fact that the original distribution was not normal. Therefore, the MPCA believes that th is approach is statistically valid and gives an adequate estimate for an emission limit. The attached data distribution summary docu ment contains a sample exploration of NO X 

### emission data and insight into the derivation of the prediction interval for 30 extra data points.

15Responses to Comments on the Supplemental Regional Haze SIP



### Comment 2-K: “Our greatest concern is how the limits deri ved from the statistical analyses were used. MPCA used a (sometimes very small) set of hourly da ta to estimate an emission rate that could be met 99% of the operating hours. MPCA then assume d that this hourly maximum emission was an appropriate limit to be met on a 30-day rolling average basis. In effect, MPCA is allowing sources to emit at their almost-maximum one-hour emission rate every hour of every 30-day period. Combined with the use of the 99% level...the MPCA process artificially infl ates the emission limits, which, in the end, do not require the facilities to operate according to BART.” Response: As stated in the response to Comment 1-I, the MPCA has revised the limits to use the 95% UPL. It is important to note that, for facilities without CEMS, the calculations predict a level to be met over the next 30 hours of operation, based on the compliance mechanism. If the statistical analysis had been used to set the next single value (the maximum one-hour emission rate), then the resulting emission limit would be much higher and would, effe ctively, allow the facility to emit at the maximum
level. As an example, take a stack test consisting of three one-hour runs. If this results in three emission values (lbs/hr) of 3.00, 12.0, and 6.00, then we have an average of 7.00 lbs/hr to compare with an enforceable limit based on a three-hour averaging time. If the same stack test is used to show compliance with a different limit associated with a one-hour averaging time, the 12.0 lbs/hr value would be used. A numeric emission limit is always linked to the averaging time. A longer averaging time (where more data points are used to calculate the average emission value) allows us to set a smaller numeric
emission limit. The following graph shows the nature of averaging time (note this does not discuss limit setting). The more data points are used, the less influence extreme values (peaks and valleys) would have on the resultant average value. A properly formulated rolling average value can reflect the central tendency of the data, however volatile it may first appear.

16Responses to Comments on the Supplemental Regional Haze SIP



### Comment 2-L: “We believe the BART determination for United Taconite does not follow the Clean Air Act and does not follow the conditions in its perm it...MPCA issued United a permit for the expansion
that included a condition to address BART on the now coal-fired Line 1: ‘Within 120 days of being notified by the MPCA in writing of the final proposed NOx BART limits for Lines 1 and 2 (EU040 and EU042), the Permittee shall submit anapplication for a permit amendm ent to incorporate into its air emissions permit either (1) NOx and SO2 BART emission limits as proposed or (2) a BART alternative as
described in the December 2009 Regional Haze State Implementation Plan submittal. Alternatively, the Permittee may submit, within 120 days of the written notification, an updated BART analysis based on the modified Lines 1 and 2 for the facility with an appropriate permit amendment application to incorporate proposed NOx and SO2 BART limits into its air emissions permit.’ “It is unclear how United’s proposal complie s with its permit requirement...Is it a BART alternative? If so, what is the initial BART determinat ion for coal-fired Line 1? To our knowledge no BART determination has been completed for a coal-fired Line 1. Accord ing to 40 CFR 51.308(e)(1)(ii)(A) the BART determination must consider...the following fact ors...we find none of this information in the Supplement.” Response: See response to comment 1-J.

17Responses to Comments on the Supplemental Regional Haze SIP



### 3. Earthjustice, National Park Conservation Association, Friends of the Boundary Waters Wilderness, Voyageurs National Park Association, and Fresh Energy, Le tter Received February 3, 2012

Comment 3-A: “Early in 2011, a number of environmental organization s commenced suit against EPA for failure to enforce its earlier decision regarding states in violation of the CAA, by failing to timely approve or disapprove the SIPs that were submitted, and for EPA’s failure to prepare federal implementation plans for those states that had inadequate or nonexistent haze SIPs. The lawsuit against EPA is in the final stages of resolution, with a co nsent decree containing deadlines by which EPA must issue decisions on state haze SIPs awaiting final review and approval by the court. The deadline in the
consent decree for EPA to act on Mi nnesota’s haze SIP was January 17, 2012. In late December of 2011, Minnesota published the SIP Supplement that is the subject of these comments, giving the public until February 3, 2012 to comment—weeks beyond EPA’s deadlin e to take action on Minnesota’s SIP. It is our understanding from EPA that Minnesota also submitte d the Supplement to EPA for approval on January 5, 2012, a month before public comm ents in the state process need be complete and more than two
months before the MPCA Board will take final action to decide whether the Supplement should be approved by the state. Minnesota’s actions, combin ed with EPA’s simultaneous consideration, plainly deprive the public of a meaningful opportunity to review and comment on this significant decision.” Response: After the 2009 submittal, the MPCA knew th at a second submittal would be necessary in order to complete the BART requirements. The MPCA was working to finalize the BART emission limits
and enforceable documents when the consent decree was announced (November 9, 2011) and EPA had only until January 2012 to propose action on Minn esota’s SIP. The MPCA could not complete an effective public process and submit the SIP by that time. Therefore, the MPCA completed the SIP and placed it on public no tice in December 2011; because the comme nt period included the holidays, it extended into February 2012 in order to ensure that the public had enough time to comment effectively. On January 5, 2012, the MPCA requested preliminary review of the plan from EPA as provided under 40 CFR 51.103(b). This does not constitute an official submittal to EPA for approval. Both MPCA and EPA can change the plan based on comments.

Comment 3-B: “The SIP Supplemental cannot substitute CSAPR for BART while the D.C. Circuit continues the stay of CSAPR.”

18Responses to Comments on the Supplemental Regional Haze SIP 

### Response: EPA has continued to indicate that this ave nue is available for the states. Should CSAPR be revoked, EPA can issue a SIP call for Minnesota or choose to promulgate a FIP based on the previous BART determinations sent to EPA by th e MPCA in the 2009 Regional Haze SIP.

Comment 3-C: “EPA regulations do not authorize the subs titute of CSAPR for BART for a particular source if a Federal Land Manager ha s certified that visibility impairment is reasonably attributable to
that source.” Response: EPA’s rules concerning Reasonably Attributable Visibility Impairment (RAVI) were written prior to the general use of cap-and-trade programs in environmental regulations. EPA’s more recent regulations provide for an alternative to source-specific BART under the Regional Haze program, including substitution of CSAPR for BART (and CAIR for BART previously). The MPCA’s intent is to fulfill the requirements of the Regional Haze portion of th e visibility rules. Before the 2009 certification of Xcel’s Sherburne County Generating Station (Sherc o) as causing RAVI, Minnesota did not have any sources so designated. Therefore, Minnesota did not submit a SIP for the RAVI visibility rules. This submittal also is not intended to address the RAVI po rtion of the rules. As noted in the Federal Register notice proposing approval of Mi nnesota’s Regional Haze SIP (7 FR 3681), EPA views Minnesota’s submittal as addressing Regional Haze under 40 CFR 51.308 and not RAVI under 40 CFR 51.302 to
51.306. EPA will make a determination on RAVI at a later date. The MPCA believes this process will continue to apply even with the inclusion of source-s pecific limits for Sherco in the Regional Haze SIP.

Comment 3-D: “Minnesota has not performed the required analysis of whether CSAPR will achieve more visibility improvement at Minnesota’s Class I Areas than would source-specific BART”. Response: See response to Comment 1-A and 1-B. In addition, much of this comment concerns EPA’s nation-wide analysis for the CSAPR=BART prop osed rule. These comments are more appropriately
raised to EPA.

Comment 3-E: “Whereas EPA purports to show that CSAPR is better than BART nationwide, no one has attempted to demonstrate that CSAPR is better than BART for Minnesota—and, as explained below, the existing analyses suggest that CSAPR is worse than BART for Minnesota. For at least one Minnesota EGU,
the CSAPR allocations far exceed the emissions that would be allowed under BART.” Response: See response to Comment 1-A and 1-B.

19Responses to Comments on the Supplemental Regional Haze SIP



### Comment 3-F: “Even if it were lawful to substitute CSAPR for BART, Minnesota must impose BART on EGUs in order to satisfy its legal obligation to m eet the reasonable progress goals...If CSAPR alone will not ensure reasonable progress toward attaining na tural visibility at Boundary Waters, Voyageurs, and Isle Royale—and it is plain it will not—Minnesota mu st include in its regional haze SIP additional measure to ensure that reasonable progress is made.” Response: The MPCA believes that the implementation of CSAPR as a substitute for BART can be expected to achieve the same reasonable progress goals (RPGs) as included in the December 2009 submittal. The RPGs for the worst 20% (W20%) days at each Class I area only changed by 0.1 dv from the first draft of Minnesota’s SIP, which relied on CAIR =BART, to the submitted version which included BART determinations. This is largely because some emission measures required under BART, along with other emission reductions at non-BART units, were already being implemented at the power plants in preparation for CAIR. The MPCA believes that th ese emission measures are continuing to be implemented due to CSAPR. In addition, the CSAPR allocations are generally more stringent than the CAIR allocation. Along with the source-specific cont rols for Sherco, the change to CSAPR=BART should not impact the RPGs.

Comment 3-G: “MPCA failed to consider the five factors the Clean Air Act requires to be considered in every BART analysis...MPCA has failed to document that it properly analyzed the five factors required to
demonstrate and determine BART for an y BART-eligible taconite facility.” Response: The Clean Air Act requires the consideration of five factors: available retrofit control options, pollution control equipment in use at the source, costs of compliance, remaining useful life, energy and non air quality environmental impacts, a nd visibility impacts. The MPCA considered these factors provided documentation thereof in the 2009 Regional Haze SIP submittal, when the BART determinations were made. The MPCA views the Suppl emental SIP as simply providing emission limits associated with these BART determinations, rath er than reexamining the BART determinations de novo

.

Comment 3-H: “MPCA rejected potential control technolo gies without an adequate explanation. Overall, due to the failure of MPCA to consider the five statutory fa ctors to determine BACT, MPCA has improperly rejected technologies for control of taconite air pollution that should have been included in a full BART analysis...SCR, RSCR, and SNCR have all be en rejected without proper analysis of those technologies. Additionally, MPCA improperly used Cue Cost instead of EPA’s cost manual, and MPCA
failed to consider the cumulative number of Cla ss I areas that are affected by a source and the

20Responses to Comments on the Supplemental Regional Haze SIP 

### improvements to all of those Class I areas as a result of appropriate BART controls at a source. Even technologies such as LoTOx that ar e less-effective in reducing pollutants, but are in use at some of the facilities, have been rejected for inadequa tely-documented reasons at other facilities.” Response: Again, the MPCA considered this informat ion and provided this documentation in the 2009 Regional Haze SIP submittal, when the BART determinations were made. The MPCA views the Supplemental SIP as simply providing emission limits associated with these BART determinations, rather than reexamining the BART determination. That be ing said, the BART analys es from the taconite
facilities do use EPA’s control cost manual, with only some small use of CUECost. Several technologies, such as SCR, RSCR, SNCR, LoTOx, and LNB in the in durating zone had never been previously used on taconite plants. As noted in the BART Guidelines “we do not expect the source owner to purchase or construct a process or control device that has not al ready been demonstrated in practice...Similarly, we do not expect a source owner to conduct extended tria ls to learn how to apply a technology on a totally new and dissimilar source type.” LoTOx is not in use at any taconite facility.

Comment 3-I: “Because MPCA failed to follow- through on its earlier claim that it would require CEMS in order to determine BART limits for taconite, MPCA used inferior data to set inadequate emissions limits in the Supplement. MPCA required the taconite facilities to collect on ly 150 hours of emissions data for MPCA to set pollution emissions limits. MPCA’s requi rements for the data collected were that the data ‘be collected under the range of [furnace] operating parameters that influence NOX 

### emissions’ and that the range of each operating parameter reflect ‘the furnace’s operating range for the parameters in the 12 months previous to testing.’ Although MPCA required the data to reflect the range of operations, it does not appear that MPCA required data to be submitted in the taconite pellet production rate and/or the fuel firing rate during the periods tested based on a review of the NOX 

### testing data presented in Appendix A of the Regional Haze Supplement. With out that data, MPCA could not verify that the companies had truly collected the required range of data.” Response: As noted before, in the response to Comment 1-F, the MPCA believes the issue of CEMS was fully aired and discussed in 2009. As th e commenter noted, the fa cilities were required to make quarterly reports of operating parameter data, including pellet production and fuel firing rate. NOX 

### testing results, around 150 hours, were submitted al ong with process operation data in stack test reports. Based on the analysis of the data, the fac ilities that do not have CEMS determined that the emissions were minimally variable. Therefore, althou gh process operating data was still collected, there was no development of a direct correlation between process parameters and NOX 

### emissions. Therefore,

21Responses to Comments on the Supplemental Regional Haze SIP 

### the process operation data were not used to formulate the proposed BART limit and are not included in the calculation spreadsheets supporting the BART limit.

Comment 3-J: “In setting NOX 

### BART limits for each unit, MPCA then determined the 99th percentile Upper Confidence Level (“UPL”) emission rate based on this 150 hours of emissions data. In plain terms,
this means that MPCA set BART emission limits for each unit at levels such that the unit’s NO X 

### emissions are currently lower than the emissions limits 99 percent of the time and sets that 99 percent level as the BART emissions ‘limit.’ Then, in case setting a limi t that the facility currently meets 99 percent of the time is not lenient enough, MPCA calculates the limit based on a 30-day rolling average. This is effectively no reduction for these facilities from current haze-causing emissions. In fact, MPCA shows that for some test results on taconite facilities, the facilities emitted on average much lower than the emissions ‘limits’ set forth in the Supplement. This effectively means that for those facilities, the BART ‘limit’ will allow an increase in pollution emissions.” Response: As noted above, in response to this comment and comments 1-I and 2-I, the MPCA recalculated the limits by using the 95% UPL in setti ng the emissions limits. Th e limits are based on a 30

- day rolling average, which the MPCA believes is the standard averaging time for BART limits across the country. It is also important to note that SIPs are developed and implemented based solely on allowable emissions, not actual emissions. NO X 

### emission limitations remain a relatively new phenomenon for this industry.

Comment 3-K: “[T]here is no evidence that the limits set will actually require use of the “good combustion practices” that MPCA claims are BART for the taconite industry. As noted above, there is no information or assurance provided to support the Supplement conclusions that the 150 hours provided by the taconite facilities are actually from when “good combustion practices” were being utilized at each furnace. If the only data MPCA has is the straig ht 150 hours of emissions data, then MPCA has no evidence that the data is representative of goodcombustion practices and therefore there is no evidence to support MPCA setting BART emissions limi ts for good combustion practices based on this data. Further, 150 hours of data, which does not evenreflect one week’s worth of operation, much less one 30-day period, is simply not long enough of a peri od to know whether it reflects good combustion practices. Similarly, for the units where MPCA decide d that fuel blending would be BART (Keetac,

22Responses to Comments on the Supplemental Regional Haze SIP 

### Minntac, Utac), MPCA provides no evidence that the 150 hours of data upon which it bases the emissions limits reflect any fuel blen ding done specifically to lower NO X 

### emissions. There is no way to
tell whether the emissions limits reflect a valid connectionto fuel blending that is to be used as BART.” Response: See response to Comment 1-H. As for fuel blending, use of various fuel blends is already in place as a standard operating scenar io at these three facilities. The MPCA’s BART determination is meant to ensure that this practice continue, not to mandate any specific fuel blend in
order to reduce NOX 

### emissions. Blending solid fuel withnatural gas serves to reduce NOX 

### emissions. The
MPCA believes that the standard use of fuel blends was represented during the time when CEMS data was gathered to set limits.

Comment 3-L: “For the facilities that are not required to install continuous emission monitors, the
emission limits are not enforceable and therefore ar e not approvable under the Clean Air Act...It is impossible for MPCA, without CEMS, to acquire data to make a 30-days rolling average assessment. No CEMS means that MPCA cannot assess compliance with emissions limits it is imposing, meaning in turn,
the emission limits for the facilities without CEMS are unenforceable.” Response: The lack of CEMS does not mean that emis sion limits are unenforceable, either from a historical perspective or for BART. Emission limits are routinely enforced through the use of stack testing. Compliance with the limit is determined through the extended, 30-hour, Method 7E stack test required by the proposed Administrative Order. The MPCA is requiring this longer stack test on an annual basis in order to ensure it is taking an ad equate look at each facility’s compliance status. In response to this comment, and other comment s on the recordkeeping an d reporting section of the Orders, the recordkeeping and reporting requirements have been changed. The MPCA has clarified what records need to be kept, including adding a requirement to continue to record the operating parameters that the facilities have been submitting over the past several years.

4. Sierra Club, Letter Received February 3, 2012

Comment 4-A: “The SIP Supplement cannot substitute CSAPR for BART while the D.C. Circuit continues the stay of CSAPR.” Response: See response to Comment 3-B.

23Responses to Comments on the Supplemental Regional Haze SIP



### Comment 4-B: “EPA regulations do not authorize the substi tute of CSAPR for BART for a particular source if a Federal Land Manager ha s certified that visibility impairment is reasonably attributable to
that source.” Response: See response to Comment 3-C.

Comment 4-C: “Minnesota failed to analyze whether CSAPR will achieve more visibility improvement at Minnesota’s Class I Areas than source-specific BA RT and analysis by FLMs shows it will not.” Response: See Response to Comment 1-A.

5. Northern States Power Minnesota/Xcel Energy, Letter Received February 3, 2012

Comment 5-A: “We concur with MPCA that, that, if implem ented, the Transport Rule (also known as the Cross-State Air Pollution Rule, or “CSAPR”) will achi eve greater environmental improvement than BART. Based on the emission reductions already achieved on NSPM’s units, including emission controls installed on Units 1 and 2 at the Sherburne County Generating Station (“Sherco”) and the broad reductions that will be achieved if CSAPR is impl emented in Minnesota, we think it makes sense to conclude that compliance with CSAPR is superior to unit specific requirements under Section 169A. Nonetheless, because of the uncertain status of EP A’s role makings and challenges to the CSAPR, we believe it is premature to rely solely on CS APR for meeting BART requirements in Minnesota.” Response: Xcel’s support of the CSAPR=BART is noted, as is the concern that the uncertain status of CSAPR makes it difficult for regulated parties to have the certainty of future regulations that would
desirable.

Comment 5-B: “ MPCA could eliminate the risks associated with...these rules not proceeding by retaining in its Regional Haze SIP both its source-s pecific BART determinations and the BART Alternative Compliance option. If the latter could not go forwar d for any reason, MPCA’s Regional Haze SIP would still contain the source-specific BART determinations that sources such as Sherco Units 1 and 2 could use to satisfy their BART obligations without requiring MP CA to undertake further SI P revisions...Accordingly, the MPCA should clarify to EPA that the SIP Supplement is intended as a supplement to, and not a substitute for, its 2009 SIP submittal and that the MPCA intends to retain the source-specific BART determination for Sherco Units 1 and 2 in the Minnesota Regional Haze SIP.”

24Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The MPCA believes that CSAPR=BART is the most appropriate determination for Minnesota’s power plants. However, due to the concer ns raised over the size of the emissions from Sherco and EPA’s 2014 IPM emission projections for Sherco, the MPCA will include a source-specific
Administrative Order for Sherco in the SIP. For the remaining facilities, the MPCA believes that developing and negotiating Administrative Orders ca nnot be completed in a timely enough fashion for that EPA Region 5 could meet its de adline of final approval of the Regional Haze SIP by May 30, 2012. If CSAPR is stayed or if EPA is unable to comple te the CSAPR=BART rulemaking, EPA has the prior determinations and limits that were provided by th e MPCA. EPA can then choose to issue a SIP call or to issue a FIP including those limits.

6. US Steel, Letter Received February 3, 2012

Comment 6-A: “MPCA has proposed to use Administrative Orders and Administrative Orders ‘by
consent’ as a means to establish enforceable limitations as MPCA ha s unilaterally deemed necessary to satisfy BART. First, U.S. Steel would like to point out that the MPCA has not adequately worked with U.S. Steel on the administrative orders and, despite the Keetac order being referenced ‘by consent,’ by no
means does U.S. Steel consent to th e order as drafted...Furthermore, MPCA requires U.S. Steel’s consent to use the Orders as part of the proposed SIP revi sions, as the authority to impose the Order without consent, per 116.07 subd 9, is limited to enforce Chapters 116 and 114C of the Minnesota statutes, none of which includes BART or regional haze.” Response: The MPCA chose to draft some of the Orders as Orders by consent due to a belief that some companies prefer to enter into consent orders. The MPCA’s intent is to work with the companies based on the comments received during the public notice period in order to reach agreement on the content of the Orders. The MPCA is prepared to issue either Orders by Consent or unilateral
Administrative Orders. The MPCA incorporated BART into the permitting rules at 7007.5000. This rule specifically requires subject-to-BART sources to submit BART analyses an d to install and operate BART as a result. Under Minn. Stat. 116.07, Subd 4, “the Pollution Control Agency may adopt, amend and rescind rules and standards having the force of law relating to any purp ose...for the prevention, abatement, or control of air pollution.” The BART emission limits are suchrules and standards and therefore MPCA has the authority to issue and enforce Orders . The MPCA has used Administrative Orders extensively in the past, particularly in the early 1990s, to implement SIP requirements.

25Responses to Comments on the Supplemental Regional Haze SIP



### Comment 6-B: “Since the SIP plan as submitted must contai n emission limitations that represent BART and the BART process, to be complete, must be enforceable, this again supports the argument that the BART limitations, and thus the Administrative Orders, must be final and enforceable at the time the State submits the SIP revisions. While MPCA may anti cipate that the Orders will be enforceable, the Orders are not currently enforceable and are inappropriately included as a proposed SIP revision until
such Orders are indeed enforceable.” Response: The MPCA believes it is important that the public and the affected facilities have the opportunity for public comment on the emission lim its and the compliance conditions prior to the submittal of the SIP. It is, for example, standard practice for the MPCA to place a draft/proposed Air Emission Permit on public notice as part of a prop osed SIP revision. Once the permit is issued, the SIP
revision is finalized and sent to EPA. In order to facilitate this review and comment, the Administrative Orders (and, indeed the entire SIP) were placed on notice as draft documents, which could more easily be modified in response to comments. Should the Board approve finalization of the Orders and submittal of the SIP, the Orders will be signed and become enforceable. They will then be submitted to EPA as part of the SIP revision.

Comment 6-C: “The draft Administrative Orders contain a requirement for ‘permanent’ recordkeeping... Such a requirement is unnecessary and onerous. Such records should only be required to be maintained until such limits and requirements are incorporated into a federally enforceabl e permit. In any case, a requirement to maintain records permanen tly, i.e., forever, is unreasonable.” Response: This permanent recordkeeping requirement was part of prior SIP Orders. The MCPCA discussed the issue with EPA Region 5 and determined that the five year recordkeeping requirements under the Title V program are sufficient. The Orders have been redrafted to more clearly define the recordkeeping requirements and require records to be kept for only five years.

Comment 6-D: “The proposed revisions inappropriately re ly on the Cross State Air Pollution Rule (CSAPR)...MPCA has not substantiated its claim that it is appropriate to re ly on controls at EGUs that the EGUs were planning to install in order to comply wi th CAIR (or CSAPR) since EGUs have challenged these rules...Because of the pending CSAPR litigation and re mand of CAIR, U.S. Steel is concerned that nonEGUs, like Keetac and Minntac, could bear a disproportionate burden to satisfy MPCA’s BART obligations.”

26Responses to Comments on the Supplemental Regional Haze SIP 

### Response: See response to Comment 1-A and 1-B. In response to the concern about non-EGUs bearing a disproportionate burden, it is important to note that BART determinations are source-specific. The BART determinations for the taconite facilities are not dependent on the BART determination or
level of emissions reductions resultin g from BART at the power plants.

Comment 6-E: “While MPCA has indicated that certain sources identified in the proposed SIP revisions are not included in the BART requirement, how MPCA came to such a conclusion is not clear in the proposed SIP revision. MPCA should provide its BART analysis in accordance with 40 CFR Part 51, Appendix Y. Response: Some existing indurating lines at taconite facilities were not subject-to-BART. In most cases, this is because the source or unit commenc ed operation outside of the BART timeframe of 1962 – 1977. The MPCA’s identification of BART-eligible so urces and analysis of wh ich sources should be subject-to-BART was provided in the December 2009 Regional Haze SIP, inthe Appendices to Chapter 9.

Comment 6-F: “The MPCA unnecessarily and inappropriately requires the sources to comply with the emission limits during periods of start-up, shutdown, a nd malfunction (SSM). First... this is incorrect as to
the derivation of the limits and confidence interval s, i.e., MPCA incorrectly assumed that the data included such events, as it is unclear how MPCA accounted for periods of SSM/bypass. Second, such a requirement and inclusion is inconsistent with EP A’s BART Guidelines...which clearly states, ‘[t]he
emission estimates used in the models are intended to reflect steady-state operating conditions during periods of high capacity utilization. We do not generally recommend that emissions reflecting periods of start-up, shutdown, and malfunction be used...We recommend that States use the 24-hour average actual emission rate from the highest emitting day of the meteorological period modeled, unless this rate reflects periods [of] start-up, shutdown, or malf unction.’...For this reason, U.S. Steel requests that the provision that the limits be met during periods of start-up, shutdown, or malfunction be removed from the proposed orders. In the alternative, U.S. Steel suggests that MPCA specifically include language in the Orders that would allow sources to assert the affirmative defense during such periods.” Response: The requirement that emission limits be met during periods of SSM is not in conflict
with the BART Guidelines . The portion of the BART Guidelines quoted is from the section of the
Guidelines relating to the kind of modeling to be used to determine which sources may not be subjectto-BART. It does not relate to setting emi ssion limits. See response to Comment 1-I.

27Responses to Comments on the Supplemental Regional Haze SIP 

### The MPCA’s inclusion of the language stating th at the limit applies during SSM is simply meant to emphasize that, as stated in the EPA Guidance Memorandum entitled State Implementation Plans (SIPs): Policy Regarding Excess Emissions Du ring Malfunctions, Startup, and Shutdown, 1 

### “EPA views all
excess emissions as violations of the applicable emission limitation. ” The MPCA is following EPA SIP guidance and clearly stating that the emi ssion limitation applies at all times. However, the memo also notes that “EPA recognizes that imposition of a penalty for sudden and unavoidable malfunctions caused by circumstances entirely beyond the control of the owner or operator may not be appropriate.” The Administrative Orders include requirements for facilities to submit an Excess Emission Report or Semi-Annual Deviation Report. MPCA compliance and enforcement staff review these reports, and determine if any de viations or excess emission s have occurred and need enforcement action. Often, the MPCA asks for addi tional information from the facility concerning the
deviation or excess emissions. The MPCA (and EPA) may exercise enfo rcement discretion and may allow facilities to provide an affirmative defense. This is standard procedure and does not need to be explicitly
stated in the Admini strative Order.

Comment 6-G: “Much of the CEMS data used to develop limits for the U.S. Steel facilities is based upon only six quarters of data during a time period that was not representative of optimum production. Due to economic conditions lines at Minntac were just restarting after idled periods and Keetac was not operating until January 2010. U.S. Steel is concerned that it co uld unreasonably be faced with non

compliance with the proposed Orders during periods of peak production since these periods are not represented in the data that MPCA used to develop the BART limits.” Response: Although the commenter states that the emi ssion limits should take into account peak production, the commenter did not provide any recommendation on data that would provide information on peak production periods or provid e any proposed emission limits. The MPCA believes that the use of a higher UPL in setting the limits fo r these facilities ensures that the limit can be met even under greater production, as does the change to a facility-wide limit for Minntac. In addition, the limits are based on application of good combustion practices. Given that Minntac and Keetac are installing Low NOX 

### burners and further optimizing their combustion practices, the MPCA believes the
limits can be met.

1 http://www.epa.gov/region07/air /title5/t5memos/excesem2.pdf

28Responses to Comments on the Supplemental Regional Haze SIP



### Comment 6-H: “While U.S. Steel appreciates that MPCA is relying on current controls for non-EGUs to satisfy its BART requirements, the BART limits are inconsistent amo ng similar operations (based upon existing equipment and practices at such sources), which results in an inequitable burden among sources to satisfy the BART requirements...[S]ources that have historically performed superiorly in the past, should be granted more flexibility in its options to satisfy BART.” Response: The BART determinations are based on having all sources operate under good combustion practices. One of the required factors to consider when determining BART and associated emission limits is the existing pollution control equi pment in use at the source. (See Comment Letter 10, from EPA Region 5, which raises the concern that th e BART limits for Minntac do not take into account
the installation of Low NOX 

### Burners.) Therefore, limits for sources that have better performance due to better controls or work practices need to take existing controls into account.

Comment 6-I: As part of the long-term strategy (LTS), the MPCA is requiring facilities to demonstrate
attainment with the one-hour NAAQS for SO 2 

### and NOX 

### . Keetac has already demonstrated compliance with these standards for both the existing operations and the permitted expansion. U.S. Steel believes Keetac has fulfilled its obligations and no additional emission limits or requirements are necessary. U.S. Steel requests that the draft Order pertaining to Keetac be removed from the SIP, as there is already a federally enforceable permit with such limits and requirements. Response: The MPCA agrees that the requirements to model and demonstrate compliance with the new one-hour NAAQS have already been met by the Keetac facility. These requirements will be removed from the Administrative Order. However, th e portion of the Order requiring the BART emission limits must be maintained. EPA requires that limits incorporated into the SIP be permanent and nonexpiring limits. Since Title V permits expire, althoughthey are federally enforc eable they do not meet the SIP requirements for permanence. MPCA and EPA have reached agreement allowing MPCA to include conditions from permits into the SIP, if th ey are identified as “Title I Condition: SIP for <pollutant>.” This citation is not in cluded in the Keetac permit. Theref ore, the Order is needed to make the limits part of the SIP.

Comment 6-J: The facility name is Keetac, and any issued Order should reflect that. Response: The MPCA will make this change, replacing any references to Keewatin Taconite with
Keetac.

29Responses to Comments on the Supplemental Regional Haze SIP



### Comment 6-K: Since the Keetac facility has already demo nstrated compliance with the one-hour NAAQS
for SO 2 

### and NOX 

### , this requirement should be removed from the Order. Response: The MPCA agrees and will remove the requirement.

Comment 6-L: The Order for Keetac incorrectly refers to the Keetac facility having multiple stacks. Response: The MPCA will correct this error.

Comment 6-M: In parts of the Order, MPCA specifies that hours during which the subject emission unit does not operate are not included in the calculat ion of the rolling average, while periods of SSM are
included. The data that the MPCA re lied on used 30-day rolling sum for SO 2 

### and NOX 

### , supplied quarterly to MPCA by Minntac. These calculations include period s when the emission unit is not in operation, in addition to periods of SSM. Therefore, the emissionlimit should include all these periods. U.S. Steel requests that the method of calculation of the limits should be in accordance with 40 CFR Part 75. Response: The MPCA made this correction in the Order. References to the times of operation and/or SSM were removed, and replaced with a requ irement that the CEMS be operated in compliance for 40 CFR Part 75. However, as noted in the recordkeeping and reporting requirements and as described above, emission limits due need to be met at all times.

Comment 6-N: The Order establishes limits for each emissionunit individually (Lines 3 – 7). U.S. Steel requests that MPCA establish a limit for the combination of the emission units for SO 2 

### and NOX 

### respectively, in order to provide operational flexibil ity without increasing overall emissions. Minntac has CEMS on all five lines. There is a potential for down time at any CEMS to result in the need for data substitution procedures which could result in noncompliance for any individual line. In addition, U.S. Steel has or plans to install new control equipment; past experience indicates that a combined limit will
allow for installation and shakedown of these new controls. Response: The MPCA believes it is appropriate to consider this need for flexibility, and developed facility-wide emission limits for both NOX 

### and SO 2 

### . Rather than simply summing the emission limits proposed in the Supplemental SIP, the MPCA re-exami ned the data. The days looked at were the subset of data used in the original BART calculations when all lines were operating and monitoring data (10/22/09 – 3/31/11 for NOX 

### data and 10/29/09 – 3/31/11 for SO 2 

### data; data from 1/01/10 through 3/31/10 was removed because Lines 3 and 4 were not operating during all or parts of that time period).
The NOX 

### and SO 2 

### emissions from each line were summed on a daily basis. The 99% UPL was then used to

30Responses to Comments on the Supplemental Regional Haze SIP 

### derive a facility-wide emission limit. This resulted in emission limits of 33.89 tpd NOX 

### and 6.35 tpd SO 2 

### . These are more stringent limits than if the origina lly proposed line-specific BART limits were simply added together. The proposed Order has been revised to reflect these new limits.

Comment 6-O: The Line 5 SO 2 

### limits for Minntac are inconsistent between the Order and the SIP text and BART determination memo. The limit should be corrected to 1.19 tons/day Response: This change is no longer necessary, due to th e move to the facility-wide emission limit.

Comment 6-P: The Order for Minntac incorrectly refers to th e Minntac facility having multiple stacks per
furnace. Response: The MPCA will correct this error.

7. Arcelor Mittal, Letter Received February 3, 2012

Comment 7-A: “ArcelorMittal supports MPCA’s decision to rely on the new NAAQS, instead of its 2009
Northeast Minnesota Plan for the ta conite industry, to achieve the reasonable progress goals required in its Long-Term Strategy.” Response: The MPCA appreciates Arcelor’s support of the proposed long-term strategy.

Comment 7-B: “While MPCA appropriately considers the effect of the new NAAQS on relevant emission reductions to help Minnesota meet its regional haze goals, it is not necessary or appropriate to adopt aspects of those other programs into the BART SIP as MPCA does by mandating NAAQS modeling for the taconite industry as part of its proposed AO for BART...NO 2 

### modeling is on a slower implementation schedule in part because the modeling must consider complex atmospheric interactions that convert
some NOX 

### emitted into NO 2 

### downwind. Importantly, EPA is not currently requiring that states use modeling to set regulatory limits for NO 2 

### . It is premature, therefore, for MPCA to include NO 2 

### modeling in the AO with the intent on relying on its result for making decision regarding emission controls at the
end of 2012.” Response: The MPCA is requiring NO 2 

### and SO 2 

### modeling as part of the long-term strategy (LTS). States “must submit a long-term st rategy that addresses regional haze visibility impairment...The longterm strategy must include enforceable emission lim itations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals.” (40 CFR 51.308(d)(3)). The LTS is a separate

31Responses to Comments on the Supplemental Regional Haze SIP 

### portion of the Regional Haze program, and is not rela ted to setting or meeting BART limits. The initial SIP
must include measures for both BART and the LTS. The MPCA simply chose to use one Order to house enforceable measures for both BART and the LTS, th ough these are separate parts of the Regional Haze
program. Although EPA is not currently requiring that states use modeling to set regulatory limits for
NO 2 

### /NOX 

### in the SIP context (as they are for SO 2 

### ) by requiring modeling of existing facilities that are not undergoing modifications, any new permit or permit modification that triggered thresholds for Prevention of Significant Deterioration permittingwould have to complete modeling for the new onehour standard. Regulatory limits would then be applied to ensure the NAAQS are met. At least one taconite facility in Minnesota has already completed NO 2 

### modeling and demonstrated that it can achieve compliance with the NAAQS. This demonstrates that the modeling tools are available for this kind of analysis, and that it is being used to set regulatory limits. The MPCA believes that the facilities should be treated as equitably as possible, and therefore the timeline for NO 2 

### modeling should not be
extended much further. The MPCA understands the commenter’s concern about the continuing evolution of the tools for modeling NO 2 

### /NOX 

### , and has made some adjustments to the modeling timeline laid out in the Orders. Protocols will be required by June 1, 2012. In additi on, the MPCA will work with facilities to update protocols and modeling as needed in response to EPA guidance changes. The MPCA is requiring modeling with emission limits that demonstrate compliance by the end of 2012, because we believe the industry needs to have a clear sense of the level of emission reductions needed to meet the NAAQS. Although MPCA has asked for this information by the end of 2012, compliance is not until the attainment date of 2017. If the models evolve such that the emission limits could be changed, the MPCA will be willing to discu ss that with an affected facility at that time. Without modeling, the MPCA cannot determine if the taconite facilities are in compliance with
the NAAQS for NOX 

### , and therefore cannot determine if addi tional controls are needed. The MPCA believes it is likely that NAAQS compliance at these facilities will require new emission limits and new control technologies, particularly for NOX 

### . The timeline for the modeling is based on ensuring that the facilities will be in compliance with the NO 2 

### and SO 2 

### NAAQS by the federal attainment deadlines in 2017. Therefore, the MPCA believes the schedule is appropriate for compliance planning purposes.

Comment 7-C: “To the extent that MPCA chooses to require air dispersion modeling in its BART AOs, the schedules in the SIP Supplement must be adjusted to allow for pending model refinements...

32Responses to Comments on the Supplemental Regional Haze SIP 

### ArcelorMittal and its industry group...have been engaged in discussions with EPA and its air modeling group to raise concerns about the accuracy of the current iterations of the AERMOD air dispersion model when predicting short-term ambient air quality impacts...The agency will be considering data and presentations at its 10 th 

### Modeling Conference this March on how to improve the accuracy of the AERMOD predictions in the vicinity of complex manufacturing facilities...This work must precede any use of the model to render regulatory decision on the level of emission reduction necessary to meet the national standards...A key component of the draft Administrative Order appended to the BART SIP Supplement is a requirement to submit modeling protocols by April 1, 2012 and modeled attainment demonstrations by December 15, 2012 for SO2 and NO 2. This schedule must be extended to allow
Minnesota facilities to benefit from the refinement s to the model anticipated...Federal guidance arising from the Modeling Conference is anticipated in the late summer of 2012 and it is expected to address issues critical to improving the accuracy of the models”. Response: Based on these concerns, the MPCA will ex tend the deadline for modeling protocols to June 1, 2012 and the total facility modeling to December 31, 2012. As noted above, the MPCA will work with the facilities to make changes to pr otocols and modeling if EPA guidance changes.

Comment 7-D: The commenter raised several detailed te chnical and “specific concerns about the accuracy of air dispersion modeling for predicting ambi ent impacts that can be addressed, in part, at the State level using the discretion that EPA accords to states in implementing the models.” These include:

• Representative AERMINUTE data is not available for all sources;

• Reasonable background values should be used for Northeastern Minnesota;

• Modeling the individual impact of indurating furnaces at each facility;

• Limit modeled receptors to those reasonably exposed;

• Exclude intermittent sources from one-hour NAAQS modeling inputs;

• Elevated ambient one-hour NO 2 

### concentrations are primarily an urban roadway corridor problem;

• The NO 2 

### :NOX 

### default in-stack ratio of 0.5 leads to an unrealistically high modeled NO 2 

### concentrations;

• There should be streamlined approval of Tier 3 NO 2 

### modeling approaches for individual source modeling.

33Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The MPCA believes that many of these i ssues can be resolved in the development and approval of modeling protocols for each taconite facility. However, there are some issues that can be addressed generally.

• AERMINUTE data – Meteorological data processed using AERMINUTE does need to be used in dispersion modeling. The MPCA can work with facilities during the development of model protocols to determine the most appropriate data to be used if site-specific
data is not available.

• Reasonable background values – It is the MP CA’s practice to use the most recent and readily available representative background values. Recent EPA guidance is followed when adding background concentrations to modeled concentrations. Again, the MPCA can work with facilities during the development of model protocols to determine what constitutes a reasonable background concentration.

• In terms of modeling the individual impact of indurating furnaces at each facility, the commenter states that “modeling all emission sources at all facilities simultaneously at the potential to emit (PTE) is not represen tative of actual air quality due to the substantial difference between hourly PTE and actual emissions...we suggest modeling the impact of the indurating furnaces at a reasonable maximum operational rate and exclude any space heaters or other minor combustion sources. Also, the impact of Cliffs’
emissions should not be combined with the emissions of other companies when evaluating receptor concentrations and emi ssion reductions.” If modeling is conducted at a reasonable maximum operat ional rate, then each facility must be prepared to take that maximum operational rate as a limit. Demonstrating compliance with a one-hour
standard with a level of emissions that is less th an what the facility is able to emit in one hour does not ensure that the NAAQS will be met at all times. Similarly, if nearby facilities have an impact on the same re ceptors, than compliance cannot be ensured unless the impact of the facilities is modeled together. It is standa rd to consider all contributing sources when modeling NAAQS compliance. The focus on the modeling should be on the indurating furnaces, but the decision of what other sources should be included is likely to be a source-specifi c one. The MPCA follows EPA guidelines for selecting modeling domains and recommends th at facilities also follow these guidelines, which will help identify sources that should be explicitly modeled within a domain.

34Responses to Comments on the Supplemental Regional Haze SIP



### • The commenter also s uggests that the MPCA limit modeled receptors to “reasonably exposed” receptors, excluding (for example) areas of steep slope, waterways, roadways, or trails where people would not normally be present for a full hour of exposure. The
MPCA follows EPA’s definition of ambient air. Air is either ambient air to which the public has access, in which case it should include modeling receptors, or it is not ambient air because the public does not have access. Receptors are not needed at areas
that are not ambient air.

• The MPCA is and will continue to follow EPA guidance on excluding intermittent sources from one-hour NAAQS modeling inputs.

• The commenter states that elevated ambient one-hour NO 2 

### concentrations are primarily an urban roadway corridor problem. Although EPA has required new monitoring for the one-hour standard only at roadways, due to a belief that roadways are likely key areas of elevated NO 2 

### concentrations, the NAAQS represent standards that
must be met in all areas of ambient air at all times.

• The commenter also states that the NO 2 

### :NOX 

### default in-stack ratio of 0.5 leads to an unrealistically high modeled NO 2 

### concentrations. Again, during development of modeling protocols, the MPCA can discuss with facilities the need for developing and submitting source specific in-stack ratios.

• MPCA does review Tier 3 NO 2 

### modeling approaches for individual source modeling. The MPCA’s model protocol form aids in stream lining modeling reviews for this kind of nondefault modeling. Note that when EPA recommended default values are used for Tier 3 modeling, review/approval times typical decrease.

Comment 7-E: “Best Available Retrofit Technology means ‘an emission limitation based on the degree of reduction achievable through the application of the best system of continuous emission reduction for each pollutant which is emitted.’...BART does not require a redesign of the emission unit or a switch to a different fuel...BART does not require curtailments or compromise production rates. As the definition dictates, the BART NOX 

### emission limitation for an indurating furnace should reflect its full range of operating conditions when continuous good combustion practices are applies. This means that the numeric BART emission limitation cannot be lower than the highest NO X 

### rate measured...to the extent that the test did not reflect all operating conditions, a reasonable margin should be added to account for that variability. In the end, an appropriate BART analysis yields a NO X 

### emission limit that is no less

35Responses to Comments on the Supplemental Regional Haze SIP 

### stringent than the BACT limit already in its permit ...In the early 1990s, a BACT analysis was conducted at the Minorca Mine, and the indurating furnace at the facility received an emissions limit of 1088 pounds
NOX 

### per hour to represent the emission rate achiev ed by best available control technology for the indurating furnace at this facility...BACT was based on good combustion practices...MPCA should adopt the existing BACT limits (1088 lbs NOX 

### /hr) as BART instead of the proposed limit in the Supplemental SIP (1018 lbs NOX

### /hr).” Response: As shown in the graph in the response to Comment 2-K, the averaging time is a critical component of any emission limit. The BACT limit curr ently applicable to ArcelorMittal has an averaging time of three hours. The BART limit averaging ti me is much longer, and compliance is to be demonstrated over a 30-hour stack test. Therefore, it is appropriate that the BART limit be lower than the BACT limit. It certainly is not appropriate for the BART limit to be 10% higher than the limit calculated by MPCA, which would put it considerably higher than the BACT limit. Because of the data smoothing effect of a longer averaging period, the BA RT limit can have a lower numeric value, while still representing the fluctuating behavior of the emission data.

Comment 7-F: “[A] test conducted in one seven-day period cannot reflect the full range of operating parameters in the year prior to testing. Seasonal variations and ore variations that contribute to emission variability cannot be re-created for a test ing period. Within this constraint, ArcelorMittal conducted the extended test to be representative of a range of operating conditions.” Response: Arcelor agreed to an Administrative Order that required the testing to reflect the full range of operating parameters in the year prior to te sting. Arcelor’s test report to the MPCA indicated that the primary variables were the green pellet feed rate, gas flows to the firing chamber and preheaters, firing chamber temperatures, and pellet tonnage. Arcelor looked at process data from January 2002 to March 2008 for day when more th an 23.5 hours of operation was used. Upper and lower bounds for each parameter were then set using two standard deviations, with a goal of having the average values for the parameters be within that range. The MPCA believes that this long look at the parameters should adequately represent th e operating conditions at the facility. Furthermore, after the stack testing was conducted, Arcelor conducted analysis of the NOX 

### emission data. The required analysis demonstrated that the relative variability index (RVI) was 0.16.
Arcelor therefore indicated to the MPCA that emissi ons from the facility were minimally variable, and that Arcelor merely needed to track relevant operating parameters to demonstrate that NO X 

### emissions remain comparable to the rate established during th e test. Based on the proposal by Arcelor, the MPCA

36Responses to Comments on the Supplemental Regional Haze SIP 

### confirmed in 2009 that, for reporting purposes, an appropriate emission factor is 994 lbs NOX 

### /hour. Although an emission factor is different than a limit, the MPCA believes this further demonstrates that the proposed BART NOX 

### emission limit is appr opriate and reasonable.
If Arcelor believed that the emissions were mo re variable, due to seasonal or ore variations, these should have been included in the report demonstrating a low RVI.

Comment 7-G: Arcelor “raised concerns to the MPCA that the database did not capture all seasonal and ore-related operating conditions. In response to th is concern, MPCA used ‘bootstrapping,’ a resampling technique used for statistical infere nce. Using this method, the original data set is resampled multiple times by randomly drawing a set of data points fo r each replication, therefore allowing for a more robust estimation of the true standard error of the population...While bootstrapping can be an appropriate technique to estimate the true standard error of a population, the surrogate population used to calculate the standard error is based on the original limited data set and the erroneous assumption that the data were representative of all anticipated operating conditions. Furthermore, inherent in the bootstrap procedure is the main underlying assumption that each data point is an independent observation or sample unrelated to any ot her data point or sample. This is not the case for the underlying data set and it cannot be true for th e extended data set when the same population is resampled multiple times. Although the bootstrap anal ysis increases the number of samples, it does not increase the amount of information in the original da ta set and is limited by the range of values in the original population (from th e original 157 data points).” Response: Although Arcelor (and the other facilities without CEMS) provided data on an hourly basis, viewing each data point as a discrete sample is not necessarily correct. Instead, each hourly data point represents part of a continuous data set. NOX 

### is formed due to natural gas combustion in the furnace. Because of the short residence time of the gas in the furnace, NO X 

### emissions are formed in these shorter (less than one hour) intervals. The MPCA believes that a full airing of all the issues surrounding the autocorrelation in the data requires some look at the furnace operation and chemistry that results in the emissions, not just a look at the resulting emission data. The MPCA undertook an exercise to re-do the analysis for the three facilities without CEMS data (Arcelor, Hibbing Taconite, and Northshore Mining ) with a correction for the autocorrelation. This analysis is shown in the attachme nt and in the individual facility BART determination memos. When combined with the move to the 95% UPL, the limit for Arcelor Mittal changes very slightly, going from 1018.0 to 1018.7. See response to Comment 9-Y.

37Responses to Comments on the Supplemental Regional Haze SIP 

### The MPCA did not re-do the bootstrap analysis after taking account of the autocorrelation; accounting for the autocorr elation will, like the boostrapping, pr ovide for a larger variance. While the bootstrapping is constrained to the space of the init ial sample (which in this case is acting as the surrogate population), the technique does provide im portant information on the potential variability of population emissions. Each assumption made during da ta analysis, such as the independence of the data points in the limited NOX 

### emission data, does have some effect on the results. Positive autocorrelation will generally tend to make the estimate of the e rror variance too small, leading to narrow confidence intervals; negative autocorrelation will genera lly lead to larger confidence intervals.

Comment 7-H: “The MPCA AO for ArcelorMittal requires compliance with the NO X 

### limit during periods of startup, shutdown and malfunction (‘SSM’). The da taset used to set the emission limitation did not
contain emission information for SSM events. Therefor e, an upper predicted limit calculated from that dataset would not cover the variability introduced by SSM event. This provides additional justification for adding a margin of safety beyond the calculated BART limit in the pr oposed SIP Supplement.” Response: See response to Comment 1-I and response to Comment 6-F.

Comment 7-I: “It is common practice to apply a factor of 10 percent or more to stack test values to accommodate normal source variability and the accu racy of the proposed compliance method when setting an enforceable emission limit...Ten percent is not a random value; it correlates to the standard performance test objective, which is to operation within 10% (at 90%) of rated capacity. Agencies recognize that operating at 100% capacity is not a re alistic expectation during a given stack test because some variables are not within the company’s control during a test. Seasonal variations, common in Northeastern Minnesota, and ore variations common in any mining operation dict ate that testing at or around 90% of capacity is all that ca n be expected for any given test. Ther efore, test data will not reflect the true maximum capacity of the equipment and an upward adjustment is needed to ensure that equipment can use their full capacity when conditions allow without violating their emission limit.” Response: The commenter refers to MPCA guidance fo r permitting synthetic minor sources, which states “Synthetic minor limits are set in order to ensure that a given operation does not trigger a regulatory requirement, therefore it is important that the proposed limit leave an adequate margin in order to account for the accuracy of the proposed compliance method and any emissions that may be left out of the on-going compliance tracking (e.g., insi gnificant activities). Facilities that propose a limit to avoid a threshold and hope to rely on general or non site-specific emissions factors typically receive

38Responses to Comments on the Supplemental Regional Haze SIP 

### limits with a margin of 10%. If you are willing to co llect on-going site-specifi c data (e.g., continuous emissions monitoring, analyze contents of raw materials, etc.), a na rrower margin might be appropriate.” This guidance does not speak directly to stack tests or setting limit s from stack tests. Given that the limits proposed here apply to individual units and do not include other activities, and the fact that the limits are set using site-specific data, th e MPCA does not believe that a 10% margin is appropriate. In a brief review of the case mentioned (re Prairie State, 13 E.A.D 1, 58), the MPCA found no indication of a specific 10% safety factor being a standard process. Instead, the Environmental Appeals Board recognized that states have an ability to include a safety fact or if they believe it necessary. Furthermore, that case deals generally with contro l efficiencies, which are not at issue here because add-on controls are not being required. Arcelor performed a calculation adding a 10% ma rgin of safety to the MPCA’s BART limit, resulting in an emission limit of 1119.8 lbs/hour. As Arcelor notes, this value is greater than the existing
NOX 

### BACT determination already in Arcelor’s permit , in which no averaging period is specified but compliance is demonstrated through a standard thre e-house stack test. As noted previously, in the response to Comment 7-F, a limit that is measured through a three-hour stack test must be higher to account for potential variability than a limit th at is measured through a 30-hour stack test.

Comment 7-J: ArcelorMittal “cannot ensure cont inuous compliance with a numeric SO 2 

### limit when the sulfur content of the iron ore significantly increases. Sulfur content is a variable inherent to this mining operation that ArcelorMittal does not control...We propose the following solution to address this compliance concern...it is appropriate for MPCA to add 10% to the average value derived from the SO 2 

### stack test data (0.165 lbs/ltpf) wh en setting a limit that is achie vable under all normal operating conditions...The proposed BART SO 2 

### limit should not apply to new ore mined from areas with higher sulfur levels. When higher sulfur ores are enco untered, ArcelorMittal would initiate a procedure established in its AO for setting a new SO 2 

### BART emission limit for ores mined from that zone or
area...the numeric SO 2 

### emission limit would need to be developed for the ore mined from the new high sulfur area based on a stack test conducted within 180 days after encountering the high sulfur ore. Response: The SO 2 

### BART limits for facilities that burn on ly natural gas were set in the 2009 SIP Submittal. At that time, Arcelor provided addition al data, which MPCA used to derive the proposed limit. The limit is based on the UPL, not the average value. At this time, Arcelor has not provided any
additional information and therefore the MPCA does no t believe it is necessary to change this limit. In

39Responses to Comments on the Supplemental Regional Haze SIP 

### addition, Arcelor provides no information as to how frequently the facility may be using different ore. The MPCA has heard that facilities may mine different ore bodies in the span of 30 to 60 days. Under these conditions, a stack test after 180 days would not be appropriate for testing.

Comment 7-K: “The draft AO states that the NOX 

### and SO 2 

### emission limit ‘is effective on and after the date six months after the effective date of EPA’s appr oval of this BART determination.’ By contrast the federal rule requires that existing facilities install a nd operation BART ‘no later than five years after plan approval.’ See 40 CFR 51.302(c)(4)(i v). MPCA should allow affected sources the full amount of time established by Federal rule.” Response: The rule cited by the commenter refers to BART implementation under the RAVI program. The BART requirements for regional haze are found in 40 CFR 51.308(e). The full regulation requires that the states must submit a SIP containing “A requirement that each source subject to BART be required to install and operate BART as expeditiously as practicable , but in no event later than 5 years after approval of the implementation planrevision.” (40 CFR 51.308(e)(1)(iv), emphasis added).
Given that the BART limits were based on data from current operations, and the fact that the facility already utilizes good combustion practices, the MPCA believes that five years are not necessary in order to demonstrate compliance.

Comment 7-L: “The draft AO for ArcelorMittal requires that stack testing for NOX 

### and SO 2 

### be conducted every 12 months. We believe that the requirement for annual stack testing should be adjusted based on the stack test results as allowed under MPCA’s test frequency guidance.” Response: Arcelor suggests that stack test results be used to set the frequency of future testing.
Results less than 60% of the limit should lead to stack testing every five years, results between 60 and 90% of the limit should lead to stack testing every 36 months, and results greater than 90% of the limit should require stack testing annually. Since a prime goal of the BART process and the data gathering over the last few years has been to learn more about NOX 

### emissions and formation from the taconite industry, the MPCA believes that reducing the stack test frequency is inappropriate.

Comment 7-M: “The draft AO for ArcelorMittal requires that stack testing for NOX 

### and SO 2 

### be conducted every 12 months within 2 months of the anniversar y date of the initial BART compliance test. The requirement is overly restrictive because it would lim it the time-of-year in wh ich the testing can take place and would therefore limit the operating conditions in which the testing could occur. It is also

40Responses to Comments on the Supplemental Regional Haze SIP 

### important to note that the taconite industry has hi storically experienced unpr edictable market swings causing decreased production and extended downtime.” The commenter suggests language that indicates that testing required every 12 months shall include a minimum of 6 months between tests and
asks for automatic stack test extensions if a fac ility experiences an outage greater than 90 days. Response: The MPCA has rewritten the stack testing language in the Order to indicate that the annual BART performance test shall be conducted once each calendar year and shall include a minimum
of 6 months and a maximum of 18 months between test s. In order to address the issue of an outage, the MPCA has also added language to the Order base d on 7017.2025, Subp 4., which sets forth conditions for requesting an extension.

Comment 7-N: “The draft AO for ArcelorMittal requires that stack testing for NOX 

### and SO 2 

### be conducted on all 4 stacks simultaneously for 30 consecutive hours. We believe that a 30-hour stack test is excessively long, particularly for ArcelorMittal’s i ndurating furnace that demonstrated a low relative variability index (RVI) during its exte nded Method 7E test in March 2008. ” To address this concern, the stack test requirement should be written so that th e initial BART performance test collects 30 hourly data points, while later tests may stop after collecting three hours of test data if the results are less than or equal to 90% of the emission limit. Response: Because a main goal of the BART implementa tion is to gather better information on emissions from the taconite facilities, the MPCA feel s that an annual 30 hour stack test is appropriate.

Comment 7-O: “The draft AO states that the SO 2 

### compliance test would be used to set the minimum scrubber water flow and pressure drop limits. These are the same scrubber parameters that are already set for the Taconite MACT...MPCA should not set new and potential different limits during the SO 2 

### test
on the same control device.” Response: The MPCA agrees and will remove the language referencing the need to set scrubber parameters. The language requiring parameter monito ring will be changed to reflect the Taconite
MACT.

Comment 7-P: “The AO includes a section entitled ‘permanent records” that would mandate that ArcelorMittal permanently maintain ‘information on the NOX 

### , SO 2 

### and PM emission limits and operation requirements imposed by this Order.’ First, the 5-year recordkeeping requirement under the Title V

41Responses to Comments on the Supplemental Regional Haze SIP 

### program should be sufficient for any records required under the AO. Second, the language does not provide a clear indication of what records must be kept.” Response: See response to Comment 6-C. The Orders have been redrafted to more clearly define the recordkeeping requirements and require records to be kept for only five years.

42

### ATTACHMENT B2

Minnesota Pollution Control Agency

RESPONSES TO LATE COMMENTS ON TH E SUPPLEMENTAL REGIONAL HAZE SIP

8. Minnesota Power

Comment 8-A: “Minnesota Power has been working cooperatively with the MPCA and other Minnesota stake holders to provide input to the Minnesota Regi onal Haze SIP development over the last five to seven years and is a strong supporter of the MPCA’s Northeast Minnesota Plan.” Response: Comment noted.

Comment 8-B: “A key part of the Northeast Minnesota Plan involves the emission reductions that were delivered by Minnesota Power on our coal-firedgeneration units under the Arrowhead Regional Emissions Abatement (AREA) program, a voluntary em ission reduction program facilitated by Minnesota regulators. These emission reductions have been supplemented by Minnesota Power’s 2009 retrofit of Best Available Control Technology (BACT) style controls on our Boswell Energy Center Unit 3 and supplemental emission reductions for NOX 

### facilitated on Boswell Unit 4...As the MPCA has noted, such
measures resulted in the Northeas t Minnesota Plan already surpassing its 30% emission reduction goal for 2018 by over nine percent.” Response: Comment noted.

Comment 8-C: “Minnesota Power agrees with the MPCA and EPA in recognizing that CSAPR is better than BART and notes that the emission reductions already achieved by Minnesota Power units retrofit
with controls are lower than the emissions associat ed with emissions that mi ght have been designated for Minnesota Power BART eligible unit reductions .” The commenter also provided other generally supportive comments. Response: Comment noted.

9. Cliffs Natural Resources

Comment 9-A: “Cliffs supports MPCA’s decision to use the CS APR rule as BART for the Northshore Silver Bay Power Station.” Response: Comment noted.Responses to Comments on the Supplemental Regional Haze SIP



### Comment 9-B: “MPCA appropriately proposes changes to its long-term strategy for regional haze and the Northeast Minnesota Plan. MPCA reports that Mi nnesota has already surpassed its 2018 goal of a
30% reduction of combined SO 2 

### and NOX 

### emissions from sources that emit over 100 tons per year. Given this rapid decline in emissions, it is appropriate for MPCA to re-evaluate the second component of the Northeast Minnesota Plan, which was designed to investigate control measures and pollution prevention practices that could be applied to th e taconite industry. These would be measures and practices above and beyond what MPCA established as BART for sources to be regulated under the Regional Haze Rule.” Response: The MPCA appreciates Cliffs’ support of th e proposed long-term strategy. However, it is important to note that the MPCAbelieves that relying on the NAAQS for the LTS will still require the industry to investigate control measures and pollution prevention practices. It simply offers a bright-line goal of compliance with the NAAQS rather than pilot testing. The desire to investigate control measures and pollution prevention practices from the industry ha s always been considered as separate to the 30% reduction goal. In addition, the LTS is intended to go above and beyond BART to establish other reasonable controls, and is a separate part of the Regional Haze Rule.

Comment 9-C: “While MPCA can appropriately consider the effect of the new NAAQS on relevant emission reductions to help Minnesota meet its regional haze goals, it is not necessary or appropriate to adopt the NAAQS obligations into the BART SIP, as MPCA does by mandating NAAQS modeling for the taconite industry as parts of its proposed Administrative Order (AO) for BART. NAAQS modeling is following an implementation schedule that is driven by federal requirements for establishing nonattainment areas and strategies to bring those areas into attainment...NO 2 

### modeling is on a slower implementation schedule in part because the modeli ng must consider complex atmospheric interactions
that convert some NOX 

### emitted into NO 2 

### downwind. Importantly, EPA is not currently requiring that states use modeling to set regulatory limits for NO 2 

### . It is premature, therefore, for MPCA to include NO 2 

### modeling in an AO with the intent of relying on its potentially erroneous and overly conservative results for making decisions regarding emissi on controls at the end of 2012.” Response: See response to comment 7-B.

Comment 9-D: “MPCA may rely on the benefits to be derived from meeting the one-hour NAAQS for
NO 2 

### and SO 2 

### without arbitrarily expediting its implementation ahead of the refinements to the model expected from EPA...MPCA is relying on CAIR, CSAPR, NAAQS, and many other regulatory obligations to

44Responses to Comments on the Supplemental Regional Haze SIP 

### help reduce SO 2 

### and NOX 

### emissions without requiring or needing to adopt those obligations into AOs for affected facilities. Thus, it seems arbitrary to require the taconite industry sources to sign an Order mandating NAAQS modeling for NO 2 

### and SO 2 

### . The NAAQS process will produce appropriate emission reductions on its own timeline, which can be re lied upon to meet BART SIP limits without an
Administrative Order.” Response: Again, the modeling for NAAQS compliance is part of the LTS, not BART. The MPCA does rely on emission reductions from CAIR/CSAPR in the SIP, but those rules are promulgated by EPA and enforceable through the federal process. Although NAAQS are always enforceable on facilit ies, facilities usually only have to demonstrate compliance with the NAAQS if the MPCA has reason to be lieve that there is a potential violation or if the facility is increasing emissions of the relevant pollutant. This generally occurs on a case-by-case basis through the permitting process. The MPCA believes it is likely that the taconite facilities could cause or contribute to a violation of the one-hour NAAQS, particularly for NO 2 

### . Therefore, we are requiring modeling for these NAAQS through the LTS; a main goal of the LTS is to evolve the available emission control measures and technologies. Establishing the requirement for modeling in the LTS also provides a level playing field for the industry, rather than having facilities mo del for compliance with these onehour standards if a permitting action is underway. Without that modeling, it is unclear whether the NAAQS process will produce emission reductions.

Comment 9-E: “If MPCA insists on imposing a schedule for modeling in the BART AOs, the schedule must be extended beyond what has been proposed in the SIP Supplement to allow for improvements to the modeling being developed at the federal level...The agency will be considering data and presentations at
its 10 th



### Modeling Conference this March on how to impr ove the accuracy of the AERMOD predictions in the vicinity of complex manufacturing facilities...This work must precede any use of the model to render regulatory decision on the level of emission reduction necessary to meet the national standards because the substantial evidence of inaccuracy would make such decisions arbitrary and vulnerable to legal challenge.” Response: The commenter refers to a study in NW Indiana that compares predicted ambient impacts from the AERMOD model us ing a 2008 inventory of actual SO 2 

### emissions to actual ambient concentration, and states that the study co ncluded that the model over predicted the SO 2 

### ambient impacts by a factor of 10 for the form of the standa rd. The MPCA acknowledges that models tend to be conservative, and EPA’s modeling guida nce is constantly evolving. Nevertheless, many states (including

45Responses to Comments on the Supplemental Regional Haze SIP 

### Minnesota) are already in process of using AERM OD to meet EPA’s timelines for demonstrating attainment with the one-hour SO2 NAAQS. In addition, the existing models are already being used for demonstrating compliance with these standards in permitting. The MPCA understands the importance of the March modeling conference, and will extend th e deadline for preparation of model protocols to June 1, 2012.

Comment 9-F: “The inaccuracy of model predictions is mo re significant now because models are being asked for the first time to predict one-hour impacts for SO 2 

### and NO 2 

### . These short-term concentrations are significantly affected by meteorological variati ons that are discounted by AERMOD’s assumption
that wind direction is constant. The evidence indi cates that AERMOD becomes less accurate during low wind periods when its assumptions about wind speed and wind direction run counter to documented
observations...These obvious inaccuracies and stra ined assumptions are co ntributing to the over prediction increasingly demonstrated by model studies . EPA is expected to address some of these in modeling guidance after the 10 th

### Modeling Conference. Response: Regulatory models continually evolve accord ing to the state-of-the-science. It would not be possible, or reasonable, to simply wait fo r a perfect model before completing modeling. MPCA believes that representative meteorological data is currently available for modeling the new short term standards. MPCA recently approved a modeling prot ocol for a mining project after an EPA decision which allowed the use of a low wind speed threshold of 0.5 m/sec, thus eliminating winds speeds that have been associated with potentially distorted ma ximum concentrations. Additionally, EPA is planning an update to the stage 3 AERMET program to accommodate such a threshold in the processing of meteorological data. MPCA believes that concerns over low wind speeds are addressed by this recent
EPA decision.

Comment 9-G: “Unfortunately, the modeling schedules proposed by MPCA in the SIP Supplement AOs would not allow modeling protocols to incorporate EPA’s final modeling guidance. A key component of
the draft Administrative Order...is a requirement to submit modeling protocols by April 1, 2012 and modeled attainment demonstrations by December 15, 2012 for both SO 2 

### and NO 2 

### . This schedule must
be extended to allow Minnesota facilities to benefi ts from the refinements to the model anticipated
from EPA’s 10 th 

### Modeling Conference...Federal guidance ar ising from the Modeling Conference is anticipated in the late summer of 2012 and it is expected to address issues critical to improving the

46Responses to Comments on the Supplemental Regional Haze SIP 

### accuracy of the models for NO 2 

### and SO 2 

### . If MPCA moves forward with it s current schedule, the protocols submitted in April 2012 will have to be revised and resubmitted to address EPA’s final guidance.” Response: The MPCA has revised the Orders to ex tend the deadlines to June 1, 2012 for protocols and December 31, 2012 for final modeling. The final modeling is meant to provide emission
limits that will meet the NAAQS. Facilities will th en need to spend time engineering and installing
controls in order to meet the emi ssion limits by 2017. If the modeling deadlines are pushed back too far, the facilities will have a difficult time engineering a nd installing controls by 2017. In addition, expecting EPA guidance on specific dates is difficult, so the MP CA does not believe that the submittal of modeling protocols should be depend ent on EPA revising its modeling guidance. If EPA does revise its guidance or general procedures, the MPCA is willing to work with the facilities to determine how any appropriate
revisions can be considered in final or additional mo deling without completion of an additional protocol.

Comment 9-H: “MPCA’s reliance on NAAQS compliance for its Long-Term Regional Haze Strategy should not expedite the timelines for implementing the NAAQS...MPCA should require SO 2 

### modeling protocols no sooner than 60 days after the federal guidance on SO 2 

### modeling is finalized with final results 90 days after MPCA approves the SO 2 

### modeling protocol. This helps to ensure that Cliffs will have the benefit of EPA’s anticipated improvements to the model when we submit our modeling protocols. Response: As the commenter states, EPA’s improvem ents are merely “anticipated”. Although MPCA is open to revising its strategy for the SO 2 

### NAAQS based on any change s to EPA’s guidance, the June 2013 deadline to submit a SIP showing attainment with the one-hour SO 2 

### standard means that modeling is already underway. Indeed, other major SO 2 

### sources will be required to submit final modeling to the MPCA by the end of September 2012.

Comment 9-I: “EPA has not called for SIPs that use air dispersion modeling for NO 2 

### . As a result, EPA is expected to continue to work on improvements to the NO 2 

### modeling after it releases the final SO 2 

### modeling guidance in 2012...Since MPCA does not h ave a current federally-imposed schedule for NO 2 

### modeling, Cliffs recommends that the schedule for NO 2 

### protocols begin after the SO 2 

### modeling results are submitted...MPCA should require NO 2 

### modeling protocols no earlier than the first quarter of 2013 with modeling results by the end of 2013. This is still plenty of time to have emission controls engineered and installed to meet the BART SIP goal s for regional haze improvements. Minnesota should follow the federal timelines closely to ensure that Minnesota facilities are not burdened by using less accurate models for regulatory determinat ions than those used by other states.”

47Responses to Comments on the Supplemental Regional Haze SIP 

### Response: EPA is not calling for a general use of air dispersion modeling to develop SIPs to
ensure attainment with the NO 2 

### NAAQS in all areas as they are for SO 2 

### . The timeline for modeling and a description of appropriate emission limits is based on ensuring compliance with the NAAQS by the
attainment date in 2017. Remember that the requirement to model for NAAQS compliance replaces the previous requirement to conduct pilot testing of emissioncontrols at the facilities. The Regional Haze SIP 2009 submittal called for the facilities to undertake pilot testing during 2012, and for MPCA to develop enforceable documents to require additional controls by June 2014. In order to have solid emission limits by that time with compliance by 2017, the MP CA believes modeling is needed by the end of 2012. Again, if there are significant model changes after 2012 and prior to the adoption of any enforceable limits, the MPCA will work with the fa cilities to see if revisions to originally modeling emission limitations are necessary and appropriate.

Comment 9-J: The commenter raised several detailed te chnical and “specific concerns about the accuracy of air dispersion modeling for predicting ambi ent impacts that can be addressed, in part, at the State level using the discretion that EPA accords to states in implementing the models.” These include:

• Representative AERMINUTE data is not available for all sources;

• Reasonable background values should be used for Northeastern Minnesota;

• Modeling the individual impact of indurating furnaces at each facility;

• Limit modeled receptors to those reasonably exposed;

• Exclude intermittent sources from one-hour NAAQS modeling inputs;

• Elevated ambient one-hour NO 2 

### concentrations are primarily an urban roadway corridor problem;

• The NO 2 

### :NOX 

### default in-stack ratio of 0.5 leads to an unrealistically high modeled NO 2 

### concentrations;

• There should be streamlined approval of Tier 3 NO 2 

### modeling approaches for individual source modeling. Response: See response to comment 7-D.

Comment 9-K: “Best Available Retrofit Technology means ‘anemission limitation based on the degree of reduction achievable through the application of the best system of continuous emission reduction for each pollutant which is emitted.’...BART does not require a redesign of the emission unit or a switch to a different fuel...BART does not require curtailments or compromise production rates. As the definition

48Responses to Comments on the Supplemental Regional Haze SIP


### dictates, the BART NOX 

### emission limitation for an indurating furnace should reflect its full range of operating conditions when continuous good combustion practices are applies. This means that the numeric BART emission limitation should not be lower than the highest NO X 

### rate measured during a test that reflect continuous application of good combustionpractices. Cliffs supports the use of a statistical method to predict the upper bound limit from the variability within the data set as a refined starting point for establishing a BART limit. Additional upw ard adjustments are necessa ry, however, to reflect operational variability that is not captured in the stac k test data set. A reasonable safety margin should be added to the statistically derived limit to accoun t for the following: the delta between the production rate during testing and the production capacity of the equipment; seasonal variations in temperature, humidity, and precipitation that affect emission rates; the variations in the ore that serves as the primary raw materials and variations in the product demands; Startup, Shutdown and Malfunction events; the inherent variability cont ributed by sampling and analysis equipment when using stack test
data to establish emission limits.” Response: The AO under which the data was collected by the facilities required the facilities to conduct extended stack tests. The AO requires that “Any proposed testing shall comply with the requirements of Minn. R. 7017.2020, subp. 2, 7017.2030, 7017.2035, and 7017.2040.” Minn. R. 7017.2030 explicitly states in Subp. 2 that “the perf ormance test shall be conducted at worst case conditions for each air pollutant that is required to be tested unless: A. the applicable requirement or compliance document specifies alternative operating conditions for performance testing; B. the worst
case condition is not known or calculable. In this ca se, worst case conditions sh all be assumed to be the maximum achievable process or operating rate of the emissions units; or C. the owner or operator of the emission facility elects to co nduct the performance test at conditions that are not worst case conditions.” Under Minn. R. 7017.2030, Subp. 3.A., “i f the owner or operator did not conduct the performance test at worst case co nditions as required, or elected to conduct the performance test
under alternative conditions...the affected emission unit shall not be operated at a process rate, operating rate, or regulated operating conditions that is closer to the worst case conditions than the actual conditions of the performance test.” The AO also requires that the facility collect “a minimum of 150 one-hour data points under the range of operating parameters that influence NO X 

### emissions. The range of each operating parameter during testing should be representative of the fu rnace’s range for that parameter in the 12 months previous to testing.” The facilities knew that MPCA wa s collecting this data in order to analyze emissions

49Responses to Comments on the Supplemental Regional Haze SIP 

### data and set BART limits, and therefore should have conducted testing that represented the full desired operational capacity of the furnace.
Comment 9-L: “It is common practice to apply a factor of 10 percent or more to stack test values to accommodate normal source variability not reflected in the stack test data set, and the inaccuracy of the proposed compliance method when setting an enfo rceable emission limit...Emission limitations that must be met continuously should use the ten percent fa ctor to ensure that the variability external to the
data set is accounted for in the enforceable limit.. . Ten percent is not a random value; it correlates to the standard performance test objective, which is to operation within 10% (at 90%) of rated capacity. Agencies recognize that operating at 100% capacity is not a realistic expectation during a given stack test because some variables are not within the compan y’s control during a test. Seasonal variations, common in Northeastern Minnesota, and ore variation s common in any mining operation dictate that testing at or around 90% of capacity is all that can be expected for any given test. Therefore, test data will not reflect the true maximum capacity of the equipment and an upward adjustment is needed to ensure that equipment can use their full capacity whenconditions allow without violating their emission limit. Therefore, it is appropriate for MPCA to add 10% to the value derived from the NO X 

### stack test data when setting a limit that must be achievable under all normal operating conditions.” Response: See response to Comment 7-I.

Comment 9-M: “Cliffs cannot ensure continuous compliance with a numeric SO 2 

### limit when the sulfur content of the iron ore significantly increases. SO 2 

### emissions are generated from the sulfur content of the fuel and the sulfur content of the ore. The ore’s sulfur content is a variable inherent to mining operations that Cliffs does not control...the level of sulfur can increase as new zones of ore are
excavated. To account for this varia bility, Cliffs generally recommends the use of an appropriate UPL based on available stack data plus a 10% margin of safety. However, even this adjustment may be insufficient to account for the potential increases in the sulfur content of ore in newly mined areas...Cliffs proposed to initiate a procedure to be established in its AOs for setting new SO 2 

### BART
emission limits for ores mined from that zone or area...the numeric SO 2 

### emission limit would need to be developed for the ore mined from th e new high sulfur area based on a stack test conducted within 180 days after encountering the high sulfur ore. Response: See response to Comment 7-J.

50Responses to Comments on the Supplemental Regional Haze SIP



### Comment 9-N: “The draft AO states that the NOX 

### and SO 2 

### emission limits are ‘eff ective on and after the date six months after the effective date of EPA’s appr oval of this BART determination.’ By contrast the federal rule requires that existing facilities install a nd operation BART ‘no later than five years after plan approval.’ See 40 CFR 51.302(c)(4)(i v). MPCA should allow affected sources the full amount of time established by Federal rule.” Response: See response to comment 7-K.

Comment 9-O: “The draft AOs require that stack testing for NOX 

### and SO 2 

### be conducted every 12 months. The requirement for annual stack testing should be ad justed based on the stack test results as allowed under MPCA’s test frequency guidance.” Response: See response to Comment 7-L.

Comment 9-P: “The draft AOs require that stack testing for NO X 

### and SO 2 

### be conducted every 12 months within 2-months of the anniversary date of the init ial BART compliance test. The requirement is overly restrictive because it would limit the time-of-year in which the testing can take place and would therefore limit the operating conditions in which the test ing could occur. It is also important to note that the taconite industry has historically experience d unpredictable market swings causing decreased production and extended downtime.” The commenter suggests language that indicates that testing required every 12 months shall include a minimum of 6 months between tests and asks for automatic stack test extensions if a facility expe riences an outage greater than 90 days. Response: See response to Comment 7-M.

Comment 9-Q: “The draft AOs for Cliffs facilities require that stack testing for NOX 

### and SO 2 

### be conducted simultaneously on all stacks for 30 consecutive hours. We believe that an annual 30-hour stack test is excessively long and burdensome.” To address this concern, the stack test requirement should be written so that the initial BART performance test collects 30 hourly data points, while later tests may stop after collecting three hours of test data if the results are less than or equal to 90% of the emission
limit. Response: See response to Comment 7-N. In addition, note that in the Alternative Method Proposal for Northshore Mining submitted to MPCA in June 2008 and the Alternative Method Proposal submitted to MPCA in December 2010 for Hibbing Taco nite, Cliffs suggested annual stack testing for 30 one-hour data points conducted once per calendar year.

51Responses to Comments on the Supplemental Regional Haze SIP



### Comment 9-R: “The draft AOs for Northshore and Hibbing Taconite state that the SO 2 

### compliance stack test would be used to set the minimum scrubber water flow and pressure drop limits for the existing wet scrubber system. These are the same scrubber parameters that are already set for the Taconite MACT...MPCA should not set new and potential different limits during the SO 2 

### test on the same control
device.” Response: See response to Comment 7-O.

Comment 9-S: “The AOs include a section entitled ‘permanent records” that would mandate that Cliffs permanently maintain ‘information on the NOX 

### , SO 2 

### and PM emission limits and operation requirements imposed by this Order.’ First, the 5-year recordkeeping requirement under the Title V program should be sufficient for any records required under the AO. Second, the language does not provide a clear indication of what records must be kept.” Response: See response to Comment 7-P.

Comment 9-T: United Taconite proposed BART NOX 

### limits that are based on li mits in the existing permit, which are on a 180 day rolling average basis. The MPCAindicated that shorter averaging time limits are standard for BART, and proposed tons per day limits on a 30-day rolling average basis. “The condensation of the limits to a daily value eliminates the very reason for the 180-day rolling sum. The 180-day rolling sum enables operationally crucial fuel flexibility while still providing overall lower
emissions of SO 2 

### and NOX 

### . Allowing this fuel flexibility ultimately yields a ‘better than BART’ solution...United Taconite is permitted to burn a comb ination of solid and gaseous fuel on both Line 1 and Line 2 during normal operation...on a daily basis, 100% solid fuel combustion on both Lines 1 and 2 yields > 800 lb/hr lower combined SO 2 

### and NOX 

### emissions. However, arbitrarily reducing the averaging period...will make it impossible for UTAC to achieve compliance when the use of natural gas for an extended period of time is essential to furnace operat ions...The limits proposed...will result in the forced
shutdown of United Taconite’s furnaces to comply with the NOX 

### limits. This forced shutdown could occur during any of the operationally cruc ial extended natural gas usage events”. The facility uses 100% natural gas in several situat ions: startup (7 – 10 days), interruptions to the solid fuel delivery systems (both delays in the deliv ery to the plant and problems within the plant, and during precipitation events. The co mmenter recommends retaining the 180-day limits, or utilizing a 30

- day limit that is reflective of the fuel flexibility. The commenter recommended 30-day limits are 18.68 tpd NOX 

### for Line 1 and 29.7 tpd NOX 

### for Line 2.

52Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The MPCA understands that the facility currently has and wishes to maintain the ability to operate on 100% natural gas. Howe ver, as this results in worst-case NOX 

### emissions, the MPCA believes it is appropriate to work towards limiting th e amount of time the facility unnecessarily operates under these conditions. Therefore, the MPCA has chosento retain the limits originally proposed as 30

- day rolling averages, but to add limits that the facility can choose to comply with during periods of operation on 100% natural gas. If there is extensive reliance on 100% na tural gas operation, the facility will be required to investigate the causes of such reliance.
The MPCA looked at data received from Unit ed Taconite for 2011, and pulled hours of 100% natural gas operation where production was over 100 to ns per hour on Line 1 and 200 tons per hour on Line 2. A series of 24-hour rolling averages were derived from this hourly data. The 95% UPL was then used to predict the next 24-hour average. 2 

### The resulting limits are 1144.7 lbs/hour on a 24-hour basis for Line 1 and 1366.8 lbs/hour on a 24-hour basis for Line 2. United may choose to comply with these limits for any calendar day during which a line operates on 100% natural gas for at least one hour. These days must be recorded, and will then be removed from determining compliance with the 30-day rolling average limit. If United chooses to opt-in to these li mits more than 10% of the time (measured as 9 days out of any 90 day rolling period), then United must co nduct a root cause analysis in order to identify the causes of incidents that required the facility to operate burning 100% natural gas and measures to minimize the duration of operation on 100% natural gas. This analysis is to be submitted to MPCA along with the required Semi-Annual Deviation Report. The MPCA also added a 1655 tons per year NOX 

### limit for Line 1 and a 3692 tons per year NOX 

### limit for Line 2 to the Administrative Order for UnitedTaconite. Although this limit is already federally enforceable, it is not in the SIP. Since the determination that this BART alternative does result in greater emission reductions than the MPCA’s original BART determination relies heavily on the total annual emissions, the MPCA feels it is importan t that the overall limit be in the SIP.

Comment 9-U: Cliffs is supportive of the SO 2 

### limits for the United Taconite facility. However, Cliffs does object to the characterization of “fuel blending” as part of the BART determination “because it suggests incorrectly that BART tech nology determinations can drive fuel ch oices for Cliffs. Please delete that characterization from the BART description.”

2 This data did not undergo the corr ection for autocorrelation because the correlation is lessened as the data is averaged up to longer time periods. In addition, particularly for Line 2, the hours of natural gas operation were not a continuous time series.

53Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The MPCA continues to believe that an emission limit based on a blend of fuels can be an appropriate BART determination, as repe atedly discussed during the preparation of the 2009 Regional Haze SIP submittal. The MPCA believes that a BART limit for Cliffs, or any other taconite facility, should be based on the current mix of fuels, and that in order to meet th e proposed limit United Taconite does need to spend time burning a mix of gas and various solid fuels. Ultimately, the key component of BART is the limit rather than the techno logy or work practice description. Therefore, the MPCA does not feel it is necessary to change the description of the BART determination.

Comment 9-V: This comment relates to the NO X 

### limits proposed for Hibbing Taconite. “Taconite indurating furnaces are complicated combustion devices...There are a number of factors that lead to inevitable day-to-day, season-to-seas on and testing or monitoring varia tion that must be accounted for in establishment of an emissions limit as prescrib ed by BART. Those factors include: Changes in fuel efficiency before and after regularly scheduled maintenance outages...Furnace operating rates during the collection of available emissions test data not being reflective of furnace capacity...Operational ability to produce more than one type of pellet pro ducts and operational production plans as future demand for those pellet products changes. Changes in ore body and respective changes in furnace heat input required to initiate the exothermic conversation of magnetite to hematite. NOX 

### sample and analysis has inherent variability that should be recogn ized when using stack testing to establish emission
limits.” Response: The MPCA understands that there are oper ational factors that lead to emission variability. However, Cliffs has provided to MPCA in formation documenting their belief that the furnaces at Hibbing Taconite have minimally variable emissions, particularly within production of each type of pellet product. Hibbing Taconite did provide the MPCA with data for production of two different types of pellet products, and this was taken into account. As noted in the response to Comment 9-K, th e AO under which the data was collected by the facilities required the facilities to conduct extende d stack tests under variable operating parameters and following the stack test rules.

Comment 9-W: “Cliffs has been and continues to utilize good combustion practices (GCP) as part of its normal operations because process fuel represents a significant cost of operat ions...GCP represents a set of operations and maintenance activities that suppo rt optimized operation of the furnace fuel and air delivery systems, burners, and associated control systems. Cliffs’ GCPs include the following:

54Responses to Comments on the Supplemental Regional Haze SIP



### • Daily monitoring of fuel use per ton of product produced and comparison against established targets.

• Routine monitoring of ore blends to anticipa te potential changes to furnace heat load requirements.

• Established operational furnace settings understood to yield optimal conditions for
combustion.

• Use of computer-driven control systems [to] maintain consistent combustion conditions
in the furnace.

• Operational responses for instances where fuel use exceeds targets.

• Routine maintenance practices to ensure opti mal condition of fuel delivery, air handling and combustion systems, and associated monitoring equipment.

• Availability of an array of diagnostic tool s from infrared cameras to monitor flame
characteristics to airflow surv eys to watch for air losses.

• Monthly and annual review of fuel use to correct for longer term trends.... However, GCP is distinctly different from application of a control technology that is designed to deliver a precise emissions rate...GCP ensures that fuel and ai r use is monitored and responded to on a daily and monthly basis, thus ensuring as good a combustion en vironment as is practical, but lacking any direct
numerical link to an emission rate.” Response: The MPCA appreciates this description of the good combustion practices that Cliffs undertakes at its facilities. However, BART requires the application of a numerical emission limit, and the MPCA believes that it is appropriate to set an emission limit that reflects the operation of these practices at the facilities. The MPCA believes these practices can be implemented on an hourly basis to
reduce emissions.

Comment 9-X: “MPCA employs the Upper Predictive Limit (UPL) tool to derive its proposed limits and predicates its approach on the available emissions data as being fully representative of the entire range of permissible operating factors for the furnace. The UPL as applied by the MPCA is not appropriately reflective of furnace capability for the following reasons: While NO X 

### testing has been conducted over a range of operating conditions thought to influence NOX 

### , as outlined in the orig inal BART Administrative Orders, it is inaccurate to characterize that this testing has encompassed the range of NOX 

### emissions for the facility. A correct application of the UPL must reco gnize the entire range of factors that could affect
NOX 

### variability (not only the range of furnace operating conditions during the test). While the test

55Responses to Comments on the Supplemental Regional Haze SIP 

### conducted...improves understand of NOX 

### emissions from the furnaces, it does not account for those sources of variability outside the furnace (as descri bed above), leading to an underestimate of the standard deviation, and an unrealistically low UPL”. Response: It is not clear what sources of variability outside the furnace the commenter is specifically referring to. The commenter has raised concerns about fuel efficiency surrounding maintenance outages, furnace operating rates, different pellet types, changes in ore body, and precipitation events as various fact ors that impact emission variability. However, the MPCA believes that many of these factors (operating rates, pellet type) can be considered furnace operating conditions, or are likely to be short-term events that will have re latively little effect on compliance with a 30-day rolling average. The bootstrapping technique used on the data was used specifically to determine the potential variance of a given data set, in order to ensure that the standard deviation/variance was not
underestimated.
Comment 9-Y: “The methodology MPCA used to set up the UPL is statistically flawed as it does not recognize the fact that successi ve hourly emissions are highly correlated. The two-sample t-test depends critically on the assumption that the different observations in the emissions test data are mutually independent, a presumption which must also ho ld true for future test data...Ignoring this serial
correlation as MPCA has done leads to invalid an d unrealistically low UPL. It is in fact this interdependence that also draws question to MPCA’s use of the ‘bootstrapping’ method to gauge future ability to comply...Because data here are time-depen dent, bootstrapping as implemented by MPCA fails to reflect the time dependency of the actual data se ries, which inappropriately overstates the amount of
information in the constructed datasets than from th e sample set, yielding a false sense of ability to meet a given threshold. It is worth noting that the data interdependence demonstrated by these
datasets also reinforces the unde rstanding of relative stability of emissions from these units...it also shows that the rate of changes from these emission units is slow a nd emissions are stable because any single data point is in factor a strong pred ictor of the points before and after it.” Response: The MPCA undertook some additional analysis to investigate the potential impact of autocorrelation. The MPCA could not simply rely on the analysis provided by the commenter because of the move to 95% UPL, and the fact that the analysis did not include ArcelorMi ttal. The MPCA’s analysis focused on ArcelorMittal, Hibbing Ta conite, and Northshore Mining – the three taconite facilities that do not have CEMS. It was assumed, for simplicity, th at the autocorrelation exhibited was first order autocorrelation – that is, that each data point is related only to the data point immediately ahead of it. The following equation, developed by Box and Jenkins and taken from Gilbert, R. O. (1987) Statistical

56Responses to Comments on the Supplemental Regional Haze SIP 

### Methods for Environmental Pollution Monitoring , was used to estimate the magnitude of the
autocorrelation coefficient:

௧ 

### ܺ ܺ ത

െ ߩො = ∑ ଵ 

### ሺ ௧ 

### ܺ ௧ୀ ௡ିଵ 

### െ ܺ ത ሻ ሺܺ௧ା ଵ 

### ሻ / ∑ ௡ ௧ୀ ଵ 

### ሺ െ ܺ ത ሻ ଶ



### So, each set of data that was used to derive the limits was placed in a spre adsheet. The sample mean was subtracted from each data point and each la gged data point, and these were then summed. The sample mean was subtracted from each data po int and squared, and these were also summed. was then used to calculate the “Effective n” or the effective sample size ሻି ఘଵ௡ሺ


### ൌ ௘௙௙ 

### ݊ ሺଵା ఘሻ 

### The equation based on the number of samples aris ing from the 150 hour stack test. 3 

### Using the equation above, the MPCA did find autocorrelation coefficients ranging from 0.35 to
0.97. Admittedly, estimation in the presence of po sitive autocorrelation without accounting for that
autocorrelation does tend to result in an un derestimation of variance and therefore narrower confidence and predictive intervals. The MPCA used the autocorrelation coefficient to change the effective sample size for both the sample data and the proposed compliance test, as s uggested by the commenter. This analysis is shown in the attachment. Ultimately, this does result in hi gher UPLs at each confidence level (95% and 99%). When coupled with the move to the 95% interval, the resulting emission limits for the most part do not change dramatically.

Comment 9-Z: “As an example, a review of emissions data collected during 2010, with a 30-day rolling average applies, indicates the following: HTC Line 1 wo uld have emissions in excess of the proposed limit 39% of the time during the duration of the test. HTC Line 2 would have emissions in excess of the proposed limit 100% of the time during the duration of the test. HTC Line 3 would have emissions in excess of the proposed limit 29% of the time during the duration of the test. Cliffs cannot accept limits that over-reach the intent of BART by being more prescriptive than the furnaces’ present capability and for which it already has information suggesting it will not be able to reliably assure compliance with
those limits.” The commenter th en proposes the following NOX 

### limits – Line 1: 565 lbs/hr; Line 2: 935 lbs/hr; and Line 3: 422 lbs/hr. These limits are base d on a 10% margin of safety added to a correct UPL based on the comments provided in 9-Y.

3 http://www.climatescience.gov/Library/sap/s ap1-1/third-draft/sap1-1-draft3-appA.pdf

57Responses to Comments on the Supplemental Regional Haze SIP 

### Response: The emission limits the MPCA has developed are meant to define the levels of emissions that are possible with good combustion practices. The MPCA does not believe that these limits over-reach the furnace’s present capability. Th e MPCA believes that the data in the graphs below shows that good combustion practices can provide em ission rates that meet the MPCA’s limits; note that they also show the impact of Energy Efficiency Projects which in 2005/2006 added new (lower)
burners within the combustion chamber and reduced NOX 

### emissions. The MPCA has proposed new limits based on the revised analysis that accounts for the autocorrelation. As stated previously, the MPCA does not believe an additional 10% margin of compliance is necessary or appropri ate. The new limits are 449.7 lbs NOX 

### /hr for Line 1 and 347.5 lbs
NOX 

### /hr for Line 3. A different approach is being used for Line 2, due to concerns about unexpected and unexplained differences in emissi ons between the furnaces. The following graphs show emissions from
HTC from the stack test in formation. The box-plots are one-hour averaged mass emission rates (lb/hr) based on the 150 hours simultaneous Method 7E samplin g from all four stacks of each furnace line. The
median is shown as a red diamond in the box. A red diamond without a box is for a three-hour Method 7E test conducted on each stack individually, and then added to give a rate for the entire furnace. The left most box-plot, from 2007 or 2008, is based ondata collected when the furnace was making both high compression and standard pellets. The other tw o box-plots are separated by standard pellets or high compression pellets (the high compression pellets produce higher emissions). Logically, the range of the left box-plot should cover the ranges of the other two box-plots, and this is generally seen for HTC Line 1 and Line 3.

58Responses to Comments on the Supplemental Regional Haze SIP 

### However, this pattern does not hold for HTC Line 2. As shown below, the emissions when producing high compression pellets in November 2010 were considerably higher than those from prior
tests.

Initially, the MPCA proposed to set a limit for Line 2 based on pooling all the data from the three 150-hour stack tests. We are requiring the installation of CEMS on Line 2. The commenter indicated that Line 2 would not be able to comply, at any time, with the proposed limit. Therefore, MPCA has decided
to set limits on Line 2 for the tw o distinct operating situations – pr oduction of standard pellets (608.9 lbs/hr) and production of high comp ression pellets (894 lbs/hr). These limits were derived using the 95% UPL, corrected for autocorrelation, and the separate standard and high compression pellet data sets provided in 2010. Once CEMS are installed and certif ied, these limits automati cally step down to the original limit proposed by MPCA (572 lbs/hr) unle ss the facility provides evidence supporting a higher limit. In that case, the higher dual limits continue to apply until the MPCA evaluated the data provided
and revises the Order.

Comment 9-AA: “Sulfur is present in two key inputs to the furnaces: fuel and ore...Hibbing Taconite Company’s air emissions permit ascribes a rate of sulfur dioxide emissions related specifically to the ore
to be 0.75 lbs SO 2 

### /mmbtu (at the stack, or post scrubber)...This value translates to 0.28 lb SO 2 

### /LT....the numeric BART limit as proposed by MPCA does not represent the range of sulfur presently known to exist in Hibbing Taconite’s ore body and thus represen ts an inappropriate BART limits...Considering all of the above information, Cliffs proposes that the SO 2 

### emissions limits be revised...Lines 1, 2, and 3 SO 2 

### emissions to be less than or equal to 0.28 lb SO 2 

### /LT ore while combusting natural gas only.” Response: The numeric BART limits for SO 2 

### for Hibbing Taconite were set as part of the 2009 SIP submittal. The Supplemental SIP simp ly makes these limits enforceable, it does not revise the limits.

59Responses to Comments on the Supplemental Regional Haze SIP



### Comment 9-AB: This comment re-states some of the discu ssion of potential sources of emission variability and good combustion practices, and the ge neral statistical concerns. Cliffs concurs with the MPCA’s decision to set equal limits for Furnace 11 and Furnace 12. Cliffs proposes NO X 

### emission limits
for Northshore of 141 lbs NOX 

### /hr, which includes a 10% margin of safety added to a revised 99% UPL. Response: See response to Comment 9-Y. The limits for Northshore have been revised to 122.4
lbs NOX 

### /hr.

Comment 9-AC: The air permit “issued to Northshore Mi ning cites the following BACT-established SO 2 

### emissions limit:...less than or equal to 0.22 lbs/millio n Btu heat input for EU 100 and EU 110 individually; less than or equal to 0.074 lbs/million Btu heat input for EU 104 and EU 114 individually...Note that EU 100 and EU 110 represent the hood exhaust segments of Furnaces 11 and 12, respectively and EU 104 and EU 114 represent the waste gas segments of Fu rnaces 11 and 12 respectively. The combined hood exhaust and waste gas segments represent the total furnace emissions rate; in this case 0.22 lbs
SO 2 

### /mmBtu + 0.074 lbs SO 2 

### /mmbtu, or 0.29 lbs SO 2 

### /mmbtu. This value translates to 0.15 lb SO 2 

### /LT pellets...Cliffs proposes that the existing BACT SO 2 

### emission limits represent a reasonable emission limit...Cliffs further requests that the SIP expressly include a process for setting new SO 2 

### limits as described in the general comments”. Response: See Response to Comment 9-AA.

60

### ATTACHMENT B3

Minnesota Pollution Control Agency

RESPONSE TO EPA COMMENTS ON TH E SUPPLEMENTAL REGIONAL HAZE SIP

10. EPA Region 5, Letter Received February 10, 2012

Comment 10-A: “We have reviewed MPCA’s draft March 2012 Re gional Haze State Implementation Plan Supplement and request that you consider the following information prior to setting the NO X 

### limits for
Minnesota’s taconite facilities...BART must take into consid eration the technology available, the costs of compliance, the energy and non-air quality environmen tal impacts, any pollution control equipment in use at the source, the remaining useful life of the so urces, and the degree of improvement in visibility which may reasonably be anticipated to result fromuse of the technology. Based upon these criteria,
use of low NOX 

### burners could be considered to represent BART.” Response: A full BART determination would need to fully examine the factors described above.
The MPCA believes that a determination of Low NOX 

### Burners as BART would be problematic when evaluating the very first factor – the technology available. The BART Guidelines at 40 CFR Part 51, Appendix Y, provide guidance for identifying availabl e retrofit control technologies and determining which of those technologies are technically in feasible. In identifyin g available controls, the Guidelines state “Available retrofit control options are those ai r pollution control technologies with a practical potential for application to the emissions unit and th e regulated pollutant under evaluation...The control alternatives can include not only existing controls for the source category in question but also take into account technology transfer of cont rols that have been applied to similar source categories and gas streams. Technologies which have not yet been applied to (or permitted for) full scale operations need not be considered as available; we do not expect the source owner to purchase or construct a process or control device that has not already been de monstrated in practice.” When looking at feasible options, the Guidelines state that EPA does “not expect a sour ce owner to conduct extended trials to learn how to apply a technology on a totally new and dissimilar source type. Consequently, you would not consider technologies in the pilot scale testing stages of development as ‘‘available’’ for purposes of
BART review.”
When the MPCA made the BART determinations in 2009, low NO X 

### burners (LNB) had not been tested on any existing taconite facility. BART analys es from the facility showed that LNB were likely feasible only in the pre-heat zones of the furnaces, not the indurating zone. The MPCA still believes that,Responses to Comments on the Supplemental Regional Haze SIP 

### as described further below, LNB remain in the pilot stage. Because of the lack of demonstrated feasible technologies, the MPCA chose to make a BART de termination of “good combustion practices.” The MPCA understood the purpose of the Supplemen tal SIP was to establish emission limits that correspond to the previously determined BART techno logy. The MPCA does not believe that completing the emission limits is a vehicle for completely re-evaluating the BART determinations for the taconite
facilities.

Comment 10-B: “Please share any information you may have regarding the potential use of low NO X 

### burners as BART at taconite facilities in Minneso ta. U.S. Steel has demonstrated the development and
use of low NOX 

### main burners that achieve 70% NOX 

### reduction on its indurating lines. This level of control is not reflected on any of the taconite indurating lines in Minnesota, including on the U.S. Steel lines on which this technology has, and presumably still is, being demonstrated. Installation of low NO X 

### main burners would therefore seem to have the potential of decreasing NOX 

### emissions by over 60 tons per day if applied across all of the taconite facilities in Minnesota.” Response: If the MPCA or EPA were to determine that low NOX 

### burners are BART, enforceable emission limitations would need to be developed. This would require gathering extensive additional emissions information, and this would likely take even longer than the two years needed to set emission limits for good combustion practices.
U.S. Steel Minntac has been in the process of testing the use of LNB in the indurating furnaces. In May 2011 and December 2011, Minntac submitted repo rts concerning the pilot testing of LNB on Line 6 and Line 7, respectively. The MPCA does not believe that these reports demonstrate that LNB with a
70% reduction in NOX 

### emissions are an appropriate BART dete rmination and emission limitation across the industry. First, these are pilot tests. Although they i ndicate a potential to reach a 70% reduction in NOX 

### emissions at the subject lines when the lines are running on natural gas, it is not clear that a 70%
reduction is feasible at all times. There are concerns about the ability of LNB to meet Minntac’s emission goals when using coal, and the burners have not been fully tested using biomass fuel blends. Blending natural gas with solid fuels is an important component of reducing NO X 

### emissions from these facilities. A further example is a recent permit issued to Keetac , which is reactivating an indurating furnace. The permit contains a combined NOX 

### limit for the existing and a reactivated furnace. As noted in the permit Technical Support Document, “Use of the reduced NOX 

### main burner may result in emissions below that represented by the combined NOX 

### emission limit. However, the ex act amount of reduction in NOX

62Responses to Comments on the Supplemental Regional Haze SIP



### emissions that can be attributed to the reduced NO X 

### burner is unknown at this time. ” The permit requirement is for US Steel to “install a low NO X 

### main burner on the Phase III (expansion) taconite indurating kiln that is designed to meet a goal of reducing NO X 

### emissions by a minimum of 30% to 50%
from the uncontrolled NO X 

### emissions.” This demonstrates the uncertainly surrounding the capability of LNB, which impacts limit setting. Furthermore, LNB cannot simply be considered an add-on control that can be dropped into the furnace and immediately provide a substantial reduction in emissions. As noted in the Minntac reports, significant process optimization is also needed in order to reduce emissions when using the Low NO X 

### Burners. The MPCA’s BART determination of good co mbustion practices requires facilities to understand their process and conduct process optimization wi th their existing burners. This understanding and ability to optimize the process is an important first step that should precede the installation of LNB and will allow the burners to be effective (and further optimized) once installed. More critically, there are key differences between taconite furnaces. Minntac is a grate kiln system (which consists of a traveling grate, a rota ry kiln furnace, and an annular cooler). Keetac operates a similar system. Northshore Mining operates a traditional straight-grate furnace, which places many burners along the length of the grate. Finally Hibbing Taconite and ArcelorMittal operate hybrid straight-grate pellet indurating furnaces. In addition to differences in process/construction, the facilities also make different pellets – both fully fluxed pell ets and acid pellets (standard and high compression) –
and use different fuels. As shown, the available data and the differences between the facilities make it extremely difficult to determine an appropriate emission reduction level or emission limit corresponding to operation of LNB. Given the length of time that has already passed, the MPCA believes it is better to place the emission limits corresponding to BART dete rminations of good combustion practices than to spend anywhere from two to four years to see if LN B are feasible on all lines and collecting the needed
data to set an enforceable BART limit. The MPCA does believe that the industry is headed towards using LNB as NO X 

### emission controls. As part of the long-term strategy, the MPCA is requi ring facilities to model for compliance with the new
one-hour NO 2 

### NAAQS. We believe that this modeling will demo nstrate that facilities will need to meet more stringent emission limits and thus will need to investigate emi ssion controls, particularly for NOX 

### . We believe that this will drive facilities to learn more about their combustion processes and to install LNB or other controls. The MPCA is asking for facili ties to develop limits to ensure compliance by the middle of 2017. If EPA must act by May 30, 2012, a nd makes a determination that LNB are BART, then

63Responses to Comments on the Supplemental Regional Haze SIP 

### compliance could be demonstrated as late as 2017. The MPCA believes that our LTS will likely provide LNB controls on the industry along the same time frame as a BART determination.

Comment 10-C: “In contrast, MPCA’s approach to setting lim its seems to have been to reflect the upper
end of uncontrolled emission levels.” Response: The MPCA does not believe this is a fair characterization. As noted in Comments 6, 7, and 9, the emission limits proposed are not ones that will be simple for facilities to meet.

Comment 10-D: “The proposed SO 2 

### limit for United Taconite’s Line 2 of 197 tons as a 30-day rolling sum appears inconsistent with yo ur October 6, 2009 memorandum titled ‘Sulfur Dioxide BART Determinations for United Taconites LLC’s Indurating Furnaces,’ which contains a table ‘Sulfur Dioxide
Removal Alternatives for United Taconite Line 2.’ This table includes six alternatives, including fuel blend changes with a corresponding limit of 1.70 lbs/MMBtu (which forms the basis of the 197 tons as a 30

- day rolling sum) and fuel blending plus polishing scru bber with a corresponding limit of 0.68 lb/MMBtu. The latter option will result in about 1,000 tons less SO 2 

### per year.” Response: The MPCA’s baseline BART determination for Line 2 is a limit of 1.7 lbs/MMBtu.
Comments about this limit were taken in 2009, and the MPCA dete rmined that it remained an appropriate limit. Although EPA previously provided us with some comments on the BART determinations for power plants, the MPCA is unaware of EPA comments specifically supporting the
0.68 lb/MMBtu limit. As noted in the memorandum, “United Taconite may choose to propose a BART Alternative project that is equivalent or better than BART.” Th e limit that is proposed in the Supplemental SIP is based on a BART alternative approa ch. See response to Comment 1-J.

64

# '(l Xcel 

# Energy®

RESPONSIBLE BY NATURETM

December 21, 2009

Ms. Catherine Neuschlet Environmental Analysis and Outcomes Minnesota Pollution Control Agency 520 Lafayette Road North St. Paul, MN 55155-4194 414 Nicollet Mall Minneapolis, Minnesota**55401~1993**

Re: Best Available Retrofit Technology ("BART") Determination for Sherburne County Generating Plant ("Sheree") Units 1 and 2

Dear Ms. Neuschler:

On October 21, 2009, the United States Department oflnterior certified that a portion of the visibility impairment io Voyageurs and Isle Royale National Parks is reasonably attributable to pollution emissions from Xcel Energy's Sheree Plant (Units 1 and 2). The United States Environmental Protection Agency ("EPA") currently administers the 1980 Visibility Protection Rules for the State ofMionesota through a Federal Implementation Plan. As such, EPA Region 5 is requited to make its own determination as to whether Sheree Units 1 and 2 cause or contribute to visibility impairment and if so, to determine the appropriate BART levels of control. As EPA begins askiog the Minnesota Pollution Control Agency (''MPCA") questions regardiog BART for Sheree Units 1 and 2, please keep in miod not only our willingness to provide additional ioformation to the MPCA but also our hope for an opportunity to explaio certaio aspects directly to the EPA io a conference call or a 111eeting that iocludes MPCA. The followiog discussions address claims made by citizen groups, the federal land managers, or EPA regardiog the Sheree BART analysis and Selective Catalytic Reduction ("SCR") technology.



### 1. Comment: Xcel Ener.gy overestimated the cost for SCR

Xcel Energy response: The SCR costs were not overestimated. The initial BART estimate, which

was part of the BART analysis submitted to MPCA io October of 2006, was $86 million per unit. The estimates were based on EPA CUECost data with allowances for some site-specific aspects and retrofit factors, and should be considered as haviog initial conceptual level accuracy. The MPCA compared that estimated cost for iostalliog SCR at Sheree to actual costs for the SCR at the Allen S. King plant. The Sherco estimate of $86 million io 2006 dollars lines up with the actual cost for the SCR at the Kiog plant, which was $64 million for 2004-2005 contracts. Sheree Units 1 and 2 are each around 20 percent larger than the King plant unit. Actual reported escalation from 2004 to 2006 per the Chemical Eng:ineeriog Plant Cost Index was 12.5 percent. On this basis, iocreasiog the Kiog cost of $64 million by 20 percent results io $76.8 million. Then adding the escalation of 12.5 percent results io $86.4 million.December 21, 2009 Page2

SCR costs usually are much higher at existing units as compared to new construction. As EPA states in its "Guidelines for BART Determinations Under the Regional Haze Rule" (40 CPR 51, Appendix 

### Y), "Physical modifications needed to resolve technical obstacles do not, in and of themselves, provide a justification for eliminating the control technique on the basis of technical infeasibility. However, you may consider the cost of such modifications in estimating costs. This, 

### in turn, may form the basis for eliminating a control technology

... "

Xcel Energy in late 2007 commissioned Sargent & Lundy, which provides engineering and design services to the power industry, to conduct an engineering study to further develop the overall scope, schedule, performance, and cost for a capacity increase and environmental emlssions reduction program it proposed to the Minnesota Public Utilities Commission

.. As a part of that study effort Sargent & Lundy determined that installation of SCRs would be difficult due to space constraints from existing ductwork, coal handling conveyors, and wet scrubber facilities. Factors at Sherco that would add to SCR costs are: complications with structural support, interference with existing control equipment, staging installation on two units, and interference with other plant systems. The cost estimations from Sargent & Lundy were $100 million for Unit 1 and $105 million for Unit 2, in 2007 dollars.

Escalation of costs should be considered for SCR installations meeting commercial operation dates in the 2014-2015 timeframe. When the estimate was completed in late 2007 significant forward escalation in the industry was anticipated and a 5 percent per year rate was used. This resulted in the retrofit estimates being approximately $120 million per unit. Since then, major utility construction costs escalated upward from late 2007 through 2008 and went down in 2009, with the net result of nearly flat overall escalation from late 2007 to mid-2009 per the Chemical Engineering Plant Cost Index. Anticipated escalation from mid-2009 forward is now in the 2-3 percent per year range, so that the current capital cost estimate for SCR is approximately $110 to $122 million per unit.

The estimates developed in 2007 with Sargent & Lundy involved a significant amount of time and effort at the plant, and were developed with a much better level of detail than can occnr with tools such as EPA's Control Cost Manual and CUECost. No design, however, was completed as part of this effort and the estimates should still be considered conceptual with regard to accuracy, likely in the 

### ± 25 percent range.

2. Comment: MPCA has provitkd no rationale for allowing X eel to avoid SCR installation at S herco while requiring Minnesota Power to install SCR at its Boswell Unit 3.

Xcel Energy response: Minnesota Power volunteered to install an SCR for reasons beyond BART. The SCR is part of its Environmental Improvement Plan, which qualified for special rate recovery treatment. Minnesota Power's business decision to install SCR voluntarily does not mean SCR must be installed at Sherco.

3. Comment: Sherco can achieve 0.05 lb/mmBtu or lower with SCR

Xcel Energy response: When comparing emission limits between different units, it is imperative to remember that each emissions unit is unique. Two tangentially fired boilers burning sub-bituminous coal and employing the same design of SCR will not necessarily have equal emissions rates. If emission limits are set without accounting for the emission rate**vari~bility** that occurs when the unit and control equipment are properly run, then limits will not be met. Since BART limits are effectiveDecember 21, 2009 Page 3

during all times of operation, higher emissions duting lower load operation and times of unit startup and shutdown are counted.

How a unit is operated, whether at steady state or continuously changiug load to m.eet system demands, will also impact the performance of an SCR and the ability to meet permit limits. On a unit with SCR, it is very likely that the unit will be able to achieve relatively low NOx emissions if it operates at a steady load and is able to maintain optimal flue gas temperatures through an SCR. However, when a unit is called on to continuously change load to meet system demands, NOx emissions will be higher than at steady state operation. The cyclic operation brings a unit's flue gas out of the optimal temperature range of 700-780°F for SCR operation, significantly reducing NOx removal efficiency. ·

In 2009, Sherco Units 1 and 2 already cycle load many times each day to meet constantly changiug customer demand and in response to wind variability. The available power from wind fluctuates greatly and Sherco is required to cycle up or down depending on the amount of wind on the system. Minnesota currently ranks first in the country with more than 7 percent of the state's power coming from wind energy. Minnesota statutes require Xcel Energy to further increase renewable energy on the system by generating 25 percent of its energy by wind energy conversion systems. Cycling therefore will increase substantially in the future, which will increase the difficulty in achieving low NOx emission rates. This operational reality drives the NOx emission rate higher as compared to a unit able to operate without cycling. NOx limits need to allow for how a unit must be operated to respond to continuous changes in electricity demand throughout the day and in available power from renewable energy, because electricity supply and demand must be balanced continuously.

4. Comment: Visibility impacts from S herco on the Class I areas justify requiring S CR on these units.

Xcel Energy response: Xcel Energy performed visibility impact modeling for the proposed BART controls as well as for the SCR scenario. In this modeling, it was shown that at each Class I area the addition of SCR on both Units 1 and 2 would result in a visibility change of 0.16 to 0.28 deciviews ("dv") (defined as the 98"' percentile delta dv). By definition, 1 dv is usually visually perceptible. Therefore a change of 0.16 to 0.28 dv is typically not perceptible, and spending hundreds of millions of dollars to achieve this level of visibility improvement does not make economic sense. EPA itself has recognized that where the reductions achievable by the best available technology are not sufficient to achieve any perceptible improvement in visibility, the State is not obligated to require such controls. See 45 Fed. Reg. 80084,80087 (Dec. 2, 1980).

5. Comment: Xcel provided no reason 

### wlij the technologies 

### of Mobotec's Rotamix, LoTOx and ECOTUBE could not be transfemd from similar, but smaller applic-ations.

Xcel Energy response: Xcel Energy reviewed these technologies and determined that they had not yet been proven to be commercially available and not proven on Sherco-sized units. These technologies have not been successfully scaled up to 700+ MW units. Xcel Energy is co!ll!!)itted to using commercially available, proven control technologies to maximize the investments made for our customers and shareholders. Xcel Energy's customers and shareholders should not be required to pay the development costs to scale up these technologies while other cost-effective, commercially proven technologies exist. In general, Xcel Energy considers scale-up of any technology more than two to three times what has achieved proven operation capability to be imprudent and very risky.December 21, 2009 Page 4

Please contact either me at 612-330-7879 or Nancy Glass of my staff at 612-330-5520 with any questions you have on our comments, Xcel Energy looks forward to the opportunity for further participation 

### in the BART process with EPA, MPCA and the Federal Land Managers.

Richard Rosvold Manager, Air Quality

C: Mary Dieltz ll'4ancy Glass Environmental Services Record Center,Emission Data DistributionsNOx, lb/hr Hourly Mean Mean_3 Mean_30 Z for 95% C.I. (of the Mean)Z30_mean700 2.49E-062.31E-08Probability Density for Pellet Furnace NOx Emissions725 6.20E-069.81E-08Two types of curves*HourlyMeanMean_3Mean_30750 1.49E-053.96E-07Hourly: Weibull Distribution0.025775 3.50E-051.53E-06Mean: Normal Distribution800 7.97E-055.63E-06Mean_3: Weibull Distribution825 1.77E-042.00E-05Mean_30: ~ Normal Distribution0.020850 3.81E-046.82E-05* Last 3 curves by bootstrapping.875 7.97E-042.24E-04900 1.61E-037.06E-04 3.65E-06-4.20.015925 3.08E-032.11E-03 7.30E-04-2.7950 5.43E-03 1.62E-13 5.71E-03 1.34E-02-7.4 -1.10.010955 5.99E-03 6.09E-10 6.83E-03 1.79E-02-6.1 -0.8960 6.58E-03 5.19E-07 8.09E-03 2.19E-02-4.9 -0.5965 7.17E-03 1.00E-04 9.47E-03 2.43E-02-3.7 -0.20.005968 7.53E-03 1.15E-03 1.03E-02 2.47E-02-3.0 0.0970 7.76E-03 4.37E-03 1.09E-02 2.45E-02-2.5 0.1972 7.99E-03 1.31E-02 1.15E-02 2.39E-02-2.0 0.30.000974 8.21E-03 3.08E-02 1.21E-02 2.30E-02-1.5 0.4976 8.43E-03 5.73E-02 1.26E-02 2.18E-02-1.0 0.5978 8.63E-03 8.40E-02 1.32E-02 2.03E-02-0.5 0.6979 8.74E-03 9.30E-02 1.34E-02 1.95E-02-0.3 0.7 NOx, lb/hrMean Mean_3 Mean_30980 8.83E-03 9.71E-02 1.37E-02 1.87E-02-0.1 0.7 Parameter 1Hourly26.97 980.2 42.151001 4.10 993.8972.3 922.0 967.0 Left 0.025 calc from Hourly, assuming a normal distribution988.2 1038.6 993.5 Right 0.025 calc from Hourly, assuming a normal distribution873.0 972.2910.4 936.2 Left 0.025 withbootstrap outcome1051.1 988.3 1025.2 999.6 Right0.025 with bootstrap outcome732.1 965.0 848.0 902.0 Actual min in bootstrap data1060.4 995.9 1044.8 1016.3 Actual max in bootstrap data967.9 <== Paramter 1980.28.86E-03 9.72E-02 1.38E-02 1.85E-020.0 0.8 Parameter 216.17<== Paramter 2981 8.93E-03 9.55E-02 1.39E-02 1.78E-020.2 0.8982 9.02E-03 8.85E-02 1.42E-02 1.69E-020.4 0.9984 9.20E-03 6.36E-02 1.46E-02 1.50E-020.9 1.0934.5986 9.36E-03 3.60E-02 1.50E-02 1.32E-021.4 1.1997.5988 9.50E-03 1.61E-02 1.53E-02 1.14E-021.9 1.2 Actual minImproved estimates990 9.63E-03 5.68E-03 1.55E-02 9.70E-032.41.4 Actual maxwith a Johnson992 9.73E-03 1.58E-03 1.56E-02 8.13E-032.9 1.5 Distribution Weibull Normal Weibull Normal These were determined using Minitab 15Transformation993.29.79E-03 6.36E-041.56E-027.23E-033.2 1.6B=1500 B=2000 B=2000 Bootstrap sample sizes used995 9.85E-03 1.48E-04 1.56E-02 6.06E-033.6 1.7 lbSO2/DLT997 9.90E-03 2.27E-05 1.54E-02 4.89E-034.1 1.8 Parameter 10.113 0.113 0.1130.034 0.003 0.0190.107 0.073 0.104 Left 0.025 calc from Hourly, assuming a normal distribution0.118 0.152 0.122 Right 0.025 calc from Hourly, assuming a normal distribution0.044 0.107 0.075 0.106 Left0.025 with bootstrap outcome0.181 0.118 0.151 0.120 Right 0.025 with bootstrap outcome0.038 0.104 0.0550.102 Actual min in bootstrap data0.206 0.122 0.172 0.124 Actual max in bootstrapdata0.113 <== Paramter 1999.69.92E-031.41E-06 1.50E-02 3.62E-034.7 2.0 Parameter 20.004<== Paramter 21000 9.92E-03 8.74E-07 1.49E-02 3.44E-034.8 2.01004 9.85E-03 4.94E-09 1.39E-02 2.04E-035.8 2.21008 9.66E-03 1.08E-11 1.23E-02 1.14E-036.8 2.51012 9.34E-03 9.14E-15 1.04E-02 5.98E-047.7 2.71016 8.90E-03 2.99E-18 8.32E-03 2.96E-048.7 3.0 Actual minReferences1020 8.34E-03 3.78E-22 6.19E-03 1.37E-049.7 3.2 Actual max1."An Introduction to the Bootstrap" byEfron and Tibshirani. © 1993, byChapman & Hall.,1025 7.50E-03 1.33E-27 3.82E-03 4.83E-0510.9 3.5 Distribution Normal Normal Normal Normal These were determined using Minitab 152. For Johnson Transformation, see "Statistical Models in Engineering," by Hahn and Shapiro.1030 6.52E-032.02E-03B=2000 B=2000 B=2000 Bootstrap sample sizes used© 1967, by John Wiley & Sons, pp. 198-220.1035 5.47E-038.85E-041040 4.41E-033.10E-041045 3.39E-038.25E-051050 2.47E-031.58E-051055 1.70E-032.01E-061060 1.10E-031.58E-071070 3.64E-041.49E-101080 8.28E-054.41E-151090 1.18E-058.72E-221100 9.29E-071.22E-3170080090010001100Emissions from all 4 stacks combined, lb/hrThe graph above is for SO2 data from the same furnace....Staff: HJ; File: A data distribution summary.xlsx, Sheet: Bootstrap outcome, Page 1 of 1; 11:42 AM, 2/28/2012

## Minnesota Pollution Control: Agency

520 Lafayette Road North I St. Paul, MN 55155-4194 1 651-296-6300 1 800-675-3843 1 651-282-5332 TTY 1 www.pca.state.mn.us**Oc~ober** 

### 20, 2009 

### Official File Stamp



## .**A.!u...~ct..k.:LI..J** 

### File Name 2Sf. 

### File Number

Mr. Jonathan Holmes 

### P13ge 

## =If: Staff**~**

### ~Q~ / 

### Vice President I 

### Operations Manager ArcelorMittal Minorca Mine. 5950 Old Highway 53 North Virginia, 

### MN 55792 

### Category 137000!P"L..



## RE: Alternative Method Proposal

Dear Mr. Holmes:

. The Minnesota Pollution Control Agency (MPCA) and ArcelorMittal Minorca Mine, Inc. (ArcelorMittal)

signed an Administrative Order by Consent (AO) to address the methods to monitor emissions of· Nitrogen Oxides (NOx). This AO took effect on January 22, 2009. 1



### As required by the AO, ArcelorMittal submitted its Alternative Method Proposal which the MPCA received on February.20, 2009. With this letter, the MPCA responds to this proposal. The MPCA:

• Acknowledges that ArcelorMittal submitted an Alternative Method proposal for its pellet furnace within 30 days of the effective date of the AO.

• Agrees that the relative variability index (RVI) is low.

• Agrees with the emission factor of994 lb NOx per hour for the purpose of reporting ArcelorMittal's NOx emissions. in compliance with the Administrative Order." (This agreement does not authorize ArcelorMittal use of this emission factor for other purposes; those approvals must**b~** 

### sought separately.)
Paragraph I O(e) of the AQ requires a description of and a schedule for quality assurance and quality control methods" by which the ArcelorMittal wilt ensure the continuing validity of the data collected for the RVI determination. This inCludes (a) the confirmation of the NOx emission factor with a standard three-hour stack test once every two years; and (b) the quarterly submittal of relevant hourly average ( 

### operating parameters to demonstrate that operating conditions continue to be within the range established using 9perating parameter data collected during testing under paragraph I 0.

As an initial step toward fulfilling item (a), ArcelorMittal conducted a performance tests for NOx emissions from its induratjng furnace between March 31, 2009, and April 2, 2009. These tests re.sulted in

an average emission rate of 813 lb NOxlhr. ArcelorMittal shall continue to confirm the NOx emission factor of 994 lb/hr with a standard three-hour stack test by Ju!le 29, 2011, and every two years thereafter. (This also fulfills a requirement in Air Emission Permit No. 13 700062-002 for ArcelorMittal 's facility.) To address item (b), ArcelorMittal committed to monitoring the Firing Chamber Gas Flow Rate (A+B) and the Preheat Gas Flow Rate (both in mmcflhr) in the letter received by the MPCA on February 20, 2009. ArcelorMihal should continue to monitor these parameters for the life of the AO.

St. Paul 

### I Brainerd 

### I Detroit Lakes 

### I Duluth 

### I Mankato 

### I Marshall 

### I Rochester 

### I Willmar 

### I Printed on 100% post-consumerrecycled paperMr. Jonathan Holmes Page 2

Please refer to paragraph 12.a)- c) of the AO for other ongoing requirements. If you have any comments
or questions, p!ease.contact Dick Cordes by telephone at 651-757-2291 or by electronic mail at ·

### richard.cordes@st~te.~~.~s.}hank.you: 1 . • ·



### . 

## ·-
.. ,, ' Sincerely, -· ···· ··

# ~~·.~;l--{:VJ**L~** 

# ' Richari:l Cordes, P.E. S . IE

. ·.· ...

emor: ngmeer

......... '':·.

_ Metallic Mining Sector Industr'iai'i5ivlslori · · -- . . '**'-~** 

### ..

.. "'·' • !**\~** 

### .**~** 

# :

. .**~** 

### ..**~:.** ;**'~** ......... _ 

## ---·

..... ;._;., 

# -
.. ""



## .. .**~** . 

### .. ... 

## .. ,._ '.**~··** .. .- 

# . RC:rm

cc: Jaime Bagenstoss, ArcelorMittal Mike Long, ArcelorMitta1 Bob Beresford, MPCA-Duluth Andy Place, MPCA Hongming Jiang, MPCA Catherine Neuschler, MPCA AQD File No. 257

I

### December 30, 2010 Certified Mail # 7004 1350 0001 2783 9440

Ms. Catherine Neuschler Environmental Analysis & Outcomes Division Minnesota Pollution Control Agency 520 Lafayette Road North St. Paul, MN 55155-4194

Re: Revised Alternative Method Proposal for Hibbing Taconite Company Furnace Lines 1 -3

Dear Ms. Neuschler:
The purpose of this letter is to provide the Minnesota Pollution Control Agency (MPCA) with Hibbing Taconite Company’s (HTC’s) revised Alternative Method Proposal for Furnace Lines 1­ 3.
In accordance with terms of the Administrative Order by Consent effective March 3, 2008, HTC had previously submitted Alternative Method Proposals for each furnace line to the MPCA. The proposals were based upon completion of a 150-hour continuous NOx performance test for each furnace line under a range of predetermined operating conditions. In particular, HTC selected a series of 7 -12 operating conditions for testing on each furnace line, with each condition ranging in duration from 8 to 24 hours. Selection of the specific operating conditions took place in order to force NOx emission variability for purposes of establishing a predictive emission monitoring system. Also, it should be noted that operating the furnace lin es under some of the selected conditions resulted in an inability to maintain HTC’s fired pellet quality specifications.
Recognizing the fact that the 2008 Alternative Method Proposals were formulated based upon forced NOx emission variability not typically observed during normal operation of Furnace Lines 1 -3, during 2010 HTC communicated to the MPCA a request to complete additional NOx performance testing in order to accurately determine NOx emission variability under normal furnace operating conditions. Following approval of a performance test plan by MPCA, HTC tested each furnace line while producing both standard and high compression pellets, which are HTC’s two normal furnace operating conditions. In total, testing of Furnace Lines 1 -3 resulted in the collection of 343, 231, and 320 validated hourly data points, respectively, which included 71-172 hourly data points for each operating condition . As expected , completion of the aforementioned testing has allowed HTC to demonstrate that normal furnace line operations are associated with low NOx emission variability.

### The enclosed Alternative Method Proposal contains a detailed summary of the recently complet ed NOx performance testing, as well as HTC’s determination of low NOx emission variability for each furnace line as defined by the Administrative Order by Consent.
If you have any questions regarding this matter, please contact me at (218) 262-5970 or andrew.mcdowell@cliffsnr.com

. Sincerely, Hibbing Taconite Company

Andrew S. McDowell Environmental Manager

Cc: Ed LaTendresse, HTC Scott Gischia, Cliffs Andy Place, MPCA

Enclosure

### Revised Alternative Method Proposal for Hibbing Taconite Company Furnace Lines 1 -3
Revision Date: December 30, 2010
The Administrative Order by Consent, effective March 3 , 2008, signed by the Minnesota Pollution Control Agency (MPCA) and Hibbing Taconite Company (HTC) states under item # 8:
Hibtac agrees to undertake the testing and analyses set forth below to provide the MPCA with data to determine whether an Alternative NOx Emissions Measurement Method is approvable by the MPCA and agrees to implement the Alternative Method, if it is approved by the MPCA.
This document serves as HTC’s revised Alternative Method Proposal for Furnace Lines 1-3 , as defined in items 10.a-g of the Administrative Order by Consent.

Administrative Order Part l0.a : The data points recorded during emissions testing conducted for these parameters at a minimum: ferrous iron content of the feed materials, pellet type, production rate, heat input, stack gas flow rate, and combustion zone temperature. Data for other parameters shall be submitted if Hibtac determines they are relevant to NOx formation. If the MPCA determines that any further parameters that are currently measured are relevant to NOx formation, those parameters shall be added to the list of operating parameters recorded and submitted

.
Administrative Order Part l0.b : Hibtac shall submit all results of the testing to the MPCA. If Hibtac believes that any data resulting from the testing is not valid, Hibtac shall include an explanation of why it believes the data is not valid with the test report and test data. All data shall be provided in an unlocked electronic spreadsheet.
The spreadsheets on the enclosed CD

- ROM titled “Line 1 NO x Hourly Data .xlsx ”, “Line 2 NOx Hourly Data .xlsx ”, and “Line 3 NOx Hourly Data. xls x” contain the NOx emission data from Barr Engineering Company (Barr) , as well as HTC’s internally recorded process data

. Rows highlighted in yellow indicate periods when Barr personnel were completing calibrations, moisture checks, and other minor equi pment maintenance during the course of performance testing, as well as any notable process upsets. Rows highlighted in redindicate periods of process upsets associated with abnormal furnace operating conditions, with this data classified as

non- represent ative and excluded from further calculations.

1

### Within each spreadsheet tab titled “Standard Pellet Data” and “High Compression Data”, columns C- CC contain the NOx emission data from Barr, while columns CG -DJ contain the parameters measured internally by HT C. It should be noted that all data was reduced from oneminute to hourly averages, with validated hourly data points marked with a “Yes” in column A. HTC has considered a valid hour of data to be: w here the furnace is operatingin controlled (not upset) conditions and where val id NOx data is collected.

As detailed in the Alternative Method P roposals submitted to and approved by the MPCA in 2008, HTC originally completed a 150-hour continuous NOx performance test for each furnace line under a range of predetermined operating conditions. In particular, HTC selected a series of 7-12 operating conditions for testing on each furnace line, with each condition ranging in duration from 8 to 24 hours. Selection of the specific operating conditions took place in order to force NOx emission rate variability for purposes of establishing a predictive emission monitoring system. Also, it should be noted that operating the furnace lines under some of the conditions resulted in an inability to maintain fired pellet quality specifications.
In 2010 HTC communicated to the MPCA a request to complete additional NOx performance testing in order to accurately determine NOx emission variability under normal furnace operating conditions. Following approval of a performance test plan by MPCA, HTC selected two operating conditions (standard and high compression pellet production modes) for testing on each furnace line, with each condition ranging in duration from 71-172 hours.
As previously mentioned, the test scenarios fo r each furnace line were defined as follows:

1. Standard Pellet Production Mode 2. High Compression Pellet Production Mode
Overall, considerably more than the requisite 150 hourly data points were collected for each furnace line, with 343, 231, and 320 hourly data points collected for Furnace Lines 1 -3, respectively. Also, the testing for each furnace line was completed without any major challenges, with the exception of an extended process upset that occurred midway through the Furnace Line 2 standard pellet test.

Administrative Order Part l0.c : Hibtac shall analyze the calculated hourly NOx concentration for each furnace weighted by stack flow rate and determine the relative variability index ( RVI) for the data set. The variability of the stack- flow weighted NOx concentration for each furnace will be quantified by a RVI, which is defined by the MPCA as the ratio of the width of a 95 percent prediction interval to the center of the interval. The stack -flow weighted NOx concentration for each hourly data point shall be calculated as follows:

2

### As dis cussed above relative to Part 10.a and 10.b, testing occurred while each furnace line was operating instandard and high compression pellet production modes, which represent HTC’s two distinct current and historical operating conditions. Consequently, separate RVIs were calculated for each production mode on each furnace line. The RVI calculations arecontained within the spreadsheet tabs titled “Standard Pellet RVI” and “High Compression P ellet RVI”, with results for all three furnace line summarized as follows:
Operating Scenario Parameter Furnace Line 1 Furnace Line 2 Furnace Line 3

Standard Pellet

Production Furnace Flow Weighted NOx Concentration 76.69 125.03 62.36

95% Prediction Interval 6.70 8.15 2.74
Relative Variability Index 0.17 0.13 0.09

High Compression Pellet Production Furnace Flow Weighted NOx Concentration 92.75 157.47 70.75

95% Prediction Interval 7.14 6.77 3.53
Relative Variability Index 0.15 0.09 0.10

Based on the information presented above, the RVI is considered to be low for Furnace Lines 1­ 3.

Administrative Order Part l0.d : If the RVI for the data is high, then Hibtac may evaluate whether operating parameters (predictors) can be used to predict NOx concentration for each stack, from which hourly mass rate emissions in pounds per hour can be calculated using hourly stack gas flow rate measurement. The MPCA will accept a multiple regression -based predictive equation for each stack for NOx emission calculation, if: 1) the residual standard deviation of the random

3

### differences between the actual measured concentration and the regression equation predicted value divided by the average NOx concentration is less than or equal to 0.09 at the midpoint of the predicted concentration; 2) the predictors used in the regression equations incorporate, either directly or by proxy, significant plant parameters that could affect the NOx concentration; and 3) the leverage is not large, as determined by the MPCA (leverage is a measure used by statisticians to identify the extent to which the predictors are extrapolations). All supporting calculations and data used in developing the predictive equation shall be provided to the MPCA.
As presented in Part 10.c, the RVI is low for Furnace Lines 1-3 and as such, a predictive equation approach is not required.

Administrative Order Part l0.e : A description of and schedule for quality assurance and quality control methods by which Hibtac will ensure the continuing validity of the data collected for RVI determination or for the calibration of the predictive equation. The description shall include at a minimum: annual extended method 7E emissions testing with justification for the proposed duration of testing, and the quarterly submittal of relevant hourly operating parameters to demonstrate that operating conditions continue to be 1) within the range of the data collected during testing under Part 10, if the RVI is low or 2) within the range of data collected during calibration testing of a predictive equation, if the RVI is high. If the RVI is high and a predictive equation is used, Hibtac shall provide a protocol consistent with U.S. EPA's monitoring protocol for an industrial furnace Predictive Emission Monitoring System. The protocol is available at: http://www.epa.gov/ttn/emc/cem/furnace.pdf

. Quality Control Methods
Annually Required Retes ting
Stacks: Furnace Lines 1, 2, and 3 (Continuous Testing of All Four Stacks per Line)
Method: Method 7E (Modified for Extended Duration)

Duration: 30 One- Hour Data Points
Justification: Standard statistical methods require a 30 -point dataset of ‘continuous’ data from which to draw meaningful statistical information.
Frequency: Once per Calendar Year

Submittals

**•** Operating parameter summaries will continue to be submitted quarterly. Summaries shall describe the typical operating ranges of Furnace Lines 1

- 3.

**•** Performance testdata will be submitted to the MPCA within 60 days of completionof the annually required retesting. The test report will include a comparison of data collected during the test to past extended test data.4

### Administrative Order Part l0.f:
A schedule for installation and certification of permanent stack gas flow monitors such that installation and certification occurs no later than November 30, 2008.
Currently the M PCA has approved an extension of the flow monitor installation / certification deadline to occur by December 31, 2010, to allow for completion of the aforementioned NOx performance testing as well as further investigation regarding the technical feasibilit y of stack gas flow monitors. In a letter dated December 14, 2010, HTC requested an extension of the December 31, 2010 deadline; MPCA consideration of HTC’s extension request is currently in progress. Administrative Order Part l0.g : If the RVI is high and a predictive equation is used, a schedule for installation of a readout in the pellet furnace operator control room with the predicted hourly NOx emissions such that installation occurs no later than November 30, 2008.

Please see di scussion under Part 10.c. The RVI is low for Furnace Lines 1 -3 and as such, a predictive equation is not required.

Similar to the terms of the Administrative Order, HTC will abide by the conditions of this proposal, upon approval from MPCA, until these conditions, or appropriate alternatives, are incorporated into HTC’s Title V air permit. Also, any conditions in this proposal may be amended by the written agreement of both MPCA and HTC.

5

# ta 

# Cleveland-Cliffs

June 30; 2008

Mr. Robert Beresford Minnesota Pollution Control Agency 525 Lake A venue South Suite 400 Duluth, MN 55802

Re: Alternative Method Proposal for Furnaces 11 and 12

Dear Mr. Beresford,

i be Administrative Order by Consent, 

### effective April 7 ; 2008, signed by the Minnesota Pollution: Control Agency (Ml>CA) and Northshore Mining Company (NSM), states under item# 8:

The Regulated Party agre· es to undertake the testing and analyses set forth below to provide the Jv!PCA with data to determine whether an Alternative NOx Emissions Measurement Method is approvable by the MPCA and agrees · to implement the Alternative Method
, 

## if it is approved by the 1'1PCA.



### This document serves as the Alternative Method Proposal 

### for Furnaces 11 

### and 12, as defined in items IO.a.-g. oftheAdministrative Order by Consent.



### Administrative Order Part 1 Oa:

The data points recorded during emissions testing conducted for these parameters at a minimum; ferrous iron content of the feed materials, pellet type, production rate, heat input, stack gas flow rate , and combustion zone temperature. Data for other parameiers shall be submitted 

# if the Regulated Party determines they are relevant to NOx formation. 

## If the MPCA determines that any further parameters that are currently measured are relevant to NOx formation, those parameters shall be added to the list of operating parameters recorded and submitted.



### Page 1 

### of6 Northshore Mining Company 1 0 Outer D ri v e S ilver Bay, MN 55 6 14

218.2264125 P H 2 18 226

. 6037 FAX

### Administrative Order Part 1 Ob:



### The Regulated Party shall submit all results ofthe testing to the MPCA. 

## If the Regulated Party believes that any data resultingfi·om the testing is not valid. the Regulated Party shall include an explanation of why 

### it believes the data is not valid with the test report and test data. All data shall be provided in an unlocked electronic spreadsheet.

The spreadsheet on the enclosed CD-ROM titled 

### Barr 2008 Fee II and I2 data.xls represents the dataset from Barr Engineering. Column X indicates data flags that indicate periods when Barr Engineering personnel were completing calibrations, moisture checks, and other minor equipment maintenance in the middle of stack testing, as well as any notable process upsets. Rows highlighted yellow in these datasets are ones that have been excluded from further calculations as non-representative due to process upsets where the furnace operations were temporarily halted.

The parameters measured internally at Northshore during the stack test can be found in the spreadsheet on the same CD-ROM titled 

### Hourlv Validated Process Data.xls. In these spreadsheets, relevant process data has been summarized for valid periods ofNOx data collection. Northshore has considered a valid hour of data to be: Where the furnace is operating in controlled (not upset) conditions and where valid NOx data is being collected.

To determine the sources of variation within the NOx emissions, it was necessary for Northshore to introduce controlled variation into the seven day test. Controlled variation was introduced through implementation of the eight scenarios below. Northshore ran each scenario for approximately 12-18 hours. In between each condition on the spreadsheet, there may be a section noted as "Transition" rather than a condition number. These periods represent the time required to re-stabilize the furnace operations after a condition change. Actual transitions in the furnace are relatively uncommon and in terms of actual operations, make up an insignificant amount of operating time. For this reason, transition periods were not included in RVI calculations.

The test scenarios were defined as follows: I. High Temperature 2. Low Temperature 3. High Tonnage 4. Low Tonnage 5. 

### 6. 7. 

### 8. Thick bed depth Thin bed depth High Firebox Pressure Low Firebox Pressure

Overall, more than the requisite 150 data points were collected for each furnace. The Furnace I 2 test ran very smoothly overall. The Furnace I I test was challenged by some operating issues outside the control of the test that made it difficult to maintain the scenarios as evenly as during the Furnace I 2 test.

Page2of6

### Administrative Order Part 1 

### O.c:

The Regulated Party shall analyze the calculated hourly NOx concentration for eachfurnace weighted by stack flow rate and determine the relative variability index (RVI)for the data set. The variability of the stack:flow weighted NOx concentration for eachfurnace will be quantified by a RVL which is defined by the MPCA as the ratio ofthe width of a 95 percent prediction interval to the center of the interval. The stack:flow weighted NOx concentrationfor each hourly data point shall be calculated as follows:



### ,, 

## .l:[NoxL,J flow,. 1 

### [NOx];.,J**=~'e"-'---c,----**

### Lf/ow,,~ Where: [NOx]ro.; is the How-weighted concentration, ppmvd, at the/' hour, j = 

### 1, 2,

... , 150

or higher; [NOx];.; is the measured concentration, ppmvd, of the i 111 

### stack at the j 111 

### hour, i = 

### 1 

### to 4·

## n~w;,i is the measured gas f1ow rate in dscf!11 of the i' 11 

### stack at the j' 11 

### hour, i = 1 

### to 4.



### ![the RV!for the [NOx] 11 

### data is less than or equal to 0.20, then variability will be considered to be "low''. ![the relative variability is greater than 0.20, then variability will be considered to be "high··.



### As discussed above relative to Part 1 

### O.a and 1 

### O.b, Northshore intentionally introduced controlled variation into the extended test period to attempt to determine the sources ofNOx variation in the furnaces. Also, as discussed above, introduction of controlled variation during the 7-day test period represented a much higher degree of change to furnace operations than is normally seen. As such, the 

### RVI was calculated for each scenario rather than the entire span of data which would be non-representative of actual operations. The 

### RVI data are presented below in Table 1 O.c.l.



### Table IO.c.l: Furnace RVI Calculations Euroace Etii'O<!CE! 

### 11 12

1 Concentration 52 56 PI 4 4 RVI 0.14 0.14 FWA 2 Concentration 45 45 PI 3 3 RVI 0.14 0.12 FWA 3 Concentration 48 43 PI 3 2 RVI 0.14 0.09



### Page 3 

### of 6

### FWA 4 Concentration 45 43 PI 4 2 RVI 0.17 0.09 

### FWA 5 Concentration 44 43 PI 4 RVI 0.17 0.04 

### FWA 6 Concentration 50 48 PI 5 2 RVI 0.20 0.07 

### FWA 7 Concentration 47 47 PI 3 3 RVI 0.13 0.12 

### FWA 8 Concentration 46 45 PI 2 2 RVI 0.11 0.11



### Based on the information presented above, the RVI is considered to be low for both Furnaces II and 12.

Administrative Order Part 1 Od:


### If the RV!for the data is high. then the Regulated Party may evaluate whether operating parameters (predict on) can be used to predict NOx concentrationfor each stack, jl-om which hourly mass rate emissions in pounds per hour can be calculated using hourly stack gasflow
rate measurement. The MPCA will accept a multiple regression-based predictive equationfor each stack for NOx emission calculation, if' I) the residual standard deviation olthe random diflerences between the actual measured concentration and the regression equation predicted value divided by the average NOx concentration is less than or equal to 0. 09 at the midpoint of the predicted concentration; 2) the predictors used in the regression equations incorporate. either directly or by proxy, significant plant parameters that could a!Ject the NOx concentration; and 3) the leverage is not large, as determined by the MPCA (leverage is a measure used by statisticians to identifY the extent to which the predictors are extrapolations). All supporting calculations and data used in developing the predictive equation shall be provided to the MPCA.



### As presented in Part IO.c, the RVI is low for both Furnaces II and 12 and as such, a predictive equation approach is not required.

Page 4 

### of6

### Administrative Order Part 1 

### Oe:

A description of and schedule for quality assurance and quality control methods by which the Regulated Party will ensure the continuing validity of the data collected for RV1 dete r mination

or for the calibration of the predictive equation. The description shall include at a minimum: annual extended method 7E emissions testing withjustification for the proposed duration of testing, and the quarterly submittal ofrelevant hourly operating parameters to demonstrate that operating conditions continue to be 1) 

### within the range of the data collected during testing under Part 10, 

## if the RVI is low or 2) within the range of data collected during calib ration testing of a predictive equation, 

## if the RVI is high. 

## If the R VI is high and a predictive equation is used, the Regulated Party shall provide a protocol consistent with US EPA 's 

### monitoring protocol for an industrial furnace Predictive Emission Monitoring System. The protocol is available at: hti p :/lwww. e p a/ g ovlttnl emcl {u rnace. p d f

. 

### Quality Control Methods
AnnuallyRequired Retesting:**Stacks ~**  

### Method: Duration: Justification:
Frequency:

Submittals; Fliffiace 11 

## and 12 waste gas stacks (1104, 1105, 1204, 1205) Modified Method 7E (modified for extended duration) 30 1-hour datapoints Standard statistical method::) require a

. 30-point dataset of 'continuous' data from which to draw meaningful statistical information. Once per caiendar year

• Operating parameter summaries will 

### be submitted quarterly, beginning with data from the 3rd quarter of2008. Summaries will be submitted 

### no later than 30 days after 

### the end of 

### quarter , Summaries shall describe the typical operating ranges of Furnaces 

### 11 and 12 with respect to 

### furnace ope rating temperature and 

### fuel consumption.

• Stack testing data 

### will be subn1itted 

### to the MPCA 

### \Vi thin 60 days of compietion of the annually required retesting. The test report will include a comparison of data collected duting the test to past extended test data

.



### Administrative Order Part 1 

### Of:

A schedule for installation and certification of permanent stack gas flow monitors such that installation and certification occurs no later than November 30, 2008

.
The proposed schedule for acquisition and installation of the airflow monitors required for Furnaces 11 artd 12 is as follows ; 

### Prpj_ed Planning Project Approval: Complete

Page 5 o f6

### Equipment Selectiort; Device Purchase and Acquisition:



### Installation and Commissionin g Conduit and Wiring: Ports 

### I Mounting Flanges: 

## Airflow monitors: Startup: Verification Testing:

Administrative Order Part 

### JOg: Complete Flowmeters to be ordered during week of June 30, 2008. Expected arrival around September 1, 

### 2008.

August2008 Install during week of October 6 (plant outage) Install during week of October 

### 13 October 15, 2008 November 2008



## If

the RVI is high and a predictive equation is used, a schedule for installation of a readout in the pellet furnace operator control room with the predicted hourly NOx emissions such that insraltation occurs no later than November · 30, 2008.



### Please see discussion under Part 

## ]Q , c , The RVI 

## is low for Furrtaces 11 and 12 and as such, a predictive equation is not required.

Similar to the terms of the Admirtistrative Order, Northshore will abide by 

### the conditions of this proposal, upon approval from MPCA, until these conditions, or appropriate alternatives, are incorporated into Northshote's air 

## permit. Also, any conditions in this proposal may be amended by the written agreement of both MPCA and Northshore.



### lt is understood by Northshore Mining Company that the MPCA will either approve or disapprove the use ofthis Alternative Method Proposal by August 31, 2008.

If you have any questions regarding the information in this letter, please contact me at your
convemence. Sincerely,

# J~f.~L Scott A. Gischia, P.E. Section Manager, Environmental Services

Cc: Michael Mlinar, Northshore David Cartella, Cleveland-Cliffs

Page 6 o f6

### Arcelor Mittal Mining - Data for NO X 

### BART Limit on Indurating Furn
Average St Dev Max Min Count t 0.05, c-1 

### UPL 95% t 0.01, c-1 

### UPL 99%

Auto Correlation "Effective N" "Effective M" Original Data 994.1 31.2 1060.5 909.4

157 1.98 1006.405 2.61 1010.341

0.6 39.3 7.5 Correction 994.1 31.2 1060.4 909.4

39 2.02 1018.654 2.71 1026.986Hibbing Taconite - Data for NOX BART Limit on Indurating Furnaces Line 1 - High Compression Line 2 - High Compression Line 3 - High Compression Original Data Correction Original Data Correction Original Data Correction Average 428.02 428.02 Average 711.46 711.46 Average 326.25 326.25

St Dev 37.95 37.95 St Dev 51.35 51.35 St Dev 23.41 23.41

Max 470.84 470.84 Max 765.20 765.20 Max 355.76 355.76 Min 207.96 207.96 Min 249.00 249.00 Min 134.97 134.97 Count 190 91 Count 179 4 Count 178 33 t 0.05, c-1 1.973 1.99 t 0.05, c-1 1.973 3.18 t 0.05, c-1 1.97 2.04 UPL 95% 442.73 449.66 UPL 95% 719.92 894.17 UPL 95% 335.37 347.46

t 0.01, c-1 2.602 2.63 t 0.01, c-1 2.604 3.50 t 0.01, c-1 2.60 2.63 UPL 99% 447.42 456.69 UPL 99% 722.63 912.37 UPL 99% 338.28 353.59

Autocorrelation 0.35 Autocorrelation 0.96 Autocorrelation 0.69 Effective "N" 91.48 Effective "N" 3.65 Effective "N" 32.65 Effective "M" 14.44 Effective "M" 0.61 Effective "M" 5.50

Line 1 - Standard Line 2 - Standard Line 3 - Standard Original Data Correction Original Data Correction Original Data Correction Average 376.10 376.10 Average 545.98 545.98 Average 285.69 285.69 St Dev 23.53 23.53 St Dev 38.04 38.04 St Dev 30.76 30.76 Max 423.20 423.20 Max 630.71 630.71 Max 423.20 423.20 Min 275.72 275.72 Min 437.07 437.07 Min 275.72 275.72 Count 198 26 Count 162 13 Count 193 59 t 0.05, c-1 1.973 2.06 t 0.05, c-1 1.973 2.18 t 0.05, c-1 1.973 2.00 UPL 95% 385.19 402.18 UPL 95% 719.92 608.93 UPL 95% 297.60 307.72 t 0.01, c-1 2.602 2.80 t 0.01, c-1 2.604 3.05 t 0.01, c-1 2.604 2.66 UPL 99% 388.09 411.44 UPL 99% 722.63 634.24 UPL 99% 301.41 315.01

Autocorrelation 0.77 Autocorrelation 0.85 Autocorrelation 0.53 Effective "N" 25.73 Effective "N" 13.14 Effective "N" 59.29 Effective "M" 3.90 Effective "M" 2.43 Effective "M" 9.22

Line 2 - All Data Original Data Correction Average 550.70 550.70

St Dev 141.90 141.90

Max 765.20 765.20 Min 249.00 249.00 Count 518 11 t 0.05, c-1 1.965 2.36 UPL 95% 566.76 906.59

t 0.01, c-1 2.604 3.50 UPL 99% 571.99 1077.40

Autocorrelation 0.97 Effective "N" 7.89 Effective "M" 0.61

### Northshore Mining - Data for NOX 

### BART Limit on Indurating Furnaces

Average St Dev Max Min Count t 0.05, c-1 

### UPL 95% t 0.01, c-1 

### UPL 99%

Auto Correlation "Effective N" "Effective M" Furnace 11 Original Data 111.1

8.7 130.4 73.5 176 1.97

0.8 19.6 3.3 Correction 111.1

8.7 130.4 73.5

20 2.09 Furnace 12 Original Data Correction 97.8 97.8 10.3 10.3 130 130 87.5 87.5 158 16 1.98 2.13 101.852 111.612

2.61 2.95 103.149 116.896

0.82 15.6 3.0 114.492 122.374

2.60 2.86 115.575 126.510

### Attachment C: Comments Submitted to MPCA Citizens’ Board

### Dear MPCA Citizens Board Members:

The Forest Service appreciate s the attention you have paid to address the issues related to the Minnesota R egional Haze P lan. At the Board meeting last month a number of questi ons were raised concerning the P lan. We thought it would be useful to you if we provided some additional information in an effort to help answer these questions and to provide you our perspective on them

. A key piece of new information since the last Board meeting is that EPA’s May deadline is no longer a concern since EPA recently announced the negotiation of a final deadline of July 13 to propose, and November 15, 2012 to finish, the taconite BART determinatio ns (the balance of Minnesota’s P lan is still due on May 30, 2012). The taconite facilities will then have 5 years to implement the BART determinations. We remain committed to work with the MPCA and the EPA especially now that we have more ti me.

TACONITE INDUSTRY

Issue 1 : At this time the MPCA is only "filling in the numerical limits" for the BART determinations for the taconite plants. The actual BART control technology decision was made in the previous version of the plan.
USFS perspective : The MPCA appears to not want to consider new information relative to the taconite plants , however it did i n regards to the power plants when it proposed to adopt the CSAPR rule in li e u of

source

- by

- source BART based on a December 2011 proposal by EPA. W e believe it is important for the MPCA to consider all available information so that the best possible decision is made.

LOW

- NOx BURNERS (LNBs)

Issue 2 : LNBs have only been “trialed” as a retrofit at only one facility

. MPCA s tated they do not have enough information to set LNBs as BART and that the time needed t o collect data to develop limits for LNB s would be more than 2 years and delay the implementation of BART

. MPCA indicated that they must help EPA meet their May 2012 c onsent decree timeline by finishing the plan and submitting it now

. USFS perspective: During the last Board meeting a number of inaccurate statements were made concerning the stat e of low

- NOx burners in the taconite industry. The following is a more co mplete summary of the current state of the technology.

May 2010

- LNB installed on existing line 7 at US S teel Minntac April 2011

- LNB installed on existing line 6 at US S teel Minntac June 2011

- LNB performance confirmed on 1⁄4 scale taconite furnace built to support Essar permit (now issued) December 2011

- permit issued for US S teel Keetac expansion. The p ermit includes application of a LNB to reconstructed furnace April 2012

- LNB proposed by Magnetation for their taconite furnace

### As you can see , US Steel has worked to upgrade its a ir pollution equipment on its existing plants. They

have developed and retrofitted a LNB for their grate

- kilns furnaces. Essar Steel will operate the other type of furnace used on the Range, a straight

- grate. They built a quarter

- scale model of a taconi te furnace to prove out low NOx burners for this type of furnace. Magnetation is also proposing to install LNBs for their taconite plant. All of these plants will be using modern continuous emission monitors (CEMs) to monitor and optimize control equipme nt performance. LNBs are being applied to both new and existing furnaces and on both types of furnaces on the Iron R ange

. The replacement of the main kiln burner at Minntac is not a “trial” or “ pilot test

. ” Trials or pilot tests are often done on a small slip stream of exhaust gas drawn out of boiler or furnace that can be easily stopped

. In this case t he entire burner is replaced during the annual maintenance outage. As you can see in Figure 1

- the main kiln burner is a large , integral part of the furnace and replacing it is not easily undone and should not be characterized as a “pilot test” or “ tr i a l”.
Figure 1

– Drawing of Minntac Grate

- Kiln Furnace

As with any new technology there is a certain amount of shakedown necessary but this does not make the technology technical infeasible as some h ave suggested. T hese shakedown issues are not insurmount able

– Minntac has dealt with them. Other than vague references to every furnace being different

- the specific differences that cause issues with the application of LNBs at the other facilities hav e not been specified. LNBs are being applied to grate

- kilns and straight grates

- th e two types of furnaces on the R ange. They are being applied to both existing and new furnaces

. According to EPA BART guidelines (FR, 7/6/05, 39165 ):

Control technologies are technically feasible if either (1) they have been installed and operated successfully for the type of source under review under similar conditions, or (2) the technology could be applied to the source under review. Two key concepts are important in determining

### whether a technology could be applied: ‘‘availability’’ and ‘‘applicability.’’ As explained in more

detail below, a technology is considered ‘‘available’’ if the source owner may obtain it through commercial channels, or it is otherwise available within the common sense meaning of the term. An available technology is ‘‘applicable’’ if it can reasonably be installed and operated on the source type under consideration. A technology that is available and applicable is technically feasible. Also, “In general, a commercially available control option will be presumed applicable if it has been used on the same or a similar source type.”

It is unclear to us what information is missing and why it would take MPCA staff so long to develop limits for the application of LNBs. They have already developed limits for LNBs for the Essar and Keetac permits and it did not take over 2 years. The emissions data from the lines at Minntac that have LNBs are currently available

. It would be helpful if the MPCA would provide a list of the necessary missing information

. EPA h as indicated it will be able to develop these limits by the new July 13 , 2012 deadline.

Re gardless of the outcome of the P lan at the April Board meeting, we ask that you please direct the MPCA staff to make themselves available to the EPA to assist them in their revie w of the taconite BART limits through the Novem ber deadline.

Issue 3 : The taconite BART limits proposed by the MPCA represent the statu s quo. Curren t l y the MPCA indicates that the taconite plants are operating under good combustion practices (GCP s )

– meaning essentially well

- t uned furnaces.
USFS perspective: The current emissions from the plants (2010 for all except Hibbing Taconite which we used 2008 since 2010 was a low production year for that plant ) were compared to the proposed BART limits assuming a 2 week annual maintenance outage at each plant. It can be seen in Figure 2 that the proposed BART limits are indeed above current actual emissions.

### Figure 2

– MPCA Taconite BART Emissions a nd Current Annual Actual Emissions

*NOTE: Northshore is not included under BART because BART only applied to some of the lines at th e facility and we only had actual emission for th e entire facility



### Note that t he proposed BART limits used in the graph were those proposed at the March Board meeting and do not reflect any further increase that may have happened since that time

.
Since the plants have different levels of production we were interested in the emission level per ton of production to better aid in comparing the facilities (Figure 3) . In addition to n itrogen oxides , we also added a set of bars that show sulfur dioxide plus nitrogen oxide emissions since the burning of coal can serve to reduce nitrogen oxide emissions, but will also increase sulfur dioxide emissions. The graph shows that some facilities emit twice as much haze

- causing pollution as others on a per ton basis

. As the US Steel facilities (Minntac and Keetac) continue to add LNBs and sulfur controls , their emissions will continue to de crease. Why can’t the other plants reduce their emission s to similar levels? 

### 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

Arcelor Mittal Hibtac Northshore United Keetac Minntac tons/year 

## Comparison of MPCA BART to Current Annual Actual Emissions of Nitrogen Oxides

MPCA BART

Current Actual Emissions

### Figure 3

– Taconite Industry E mission Rate Comparison

As mentioned above, t he MPCA BART determ in at i o n for the taconite industry was good combustion practices (GCP s ). The three main variables controlled with GCP s a re : time, temperature and turbulence in the furnace

. At the March Board meeting Cliffs testified that they were operating under GCPs to meet the federal taconite air toxics rules

. These rules apply to all the taconite plants. The air toxic pollutants controlled under this rule by GCPs are generally termed products of incomplete combustion

– essentially partially burned fuel. GCPs are used to manipulate the time, temperature and turbulence in the furnace to minimize these pollutants. GCPs can also be used to minimize nitrogen oxides as suggested by the MPCA in thei r BART determination s . The problem is that GCPs generally manipulate the time, temperature and turbulence for NOx control in the opposite direction than they do for products of incomplete combustion under the air toxics rule. Essentially you can’t contro l both sets of pollutants at the same time using GCPs. Note the following from the taconite air toxics rule (FR, 10/30/03, pg. 61883) :



### Althou gh all indurating furnaces need to use GCP to minimize PIC ( products of incomplete combustion ) emissions, de termining what precisely is GCP involves s ite

specific determinations for each furnace. For example, some indurat ing furnaces have 0 200 400 600 800 1000 1200 1400



### Arcelor Mittal Hibtac Northshore United Keetac Minntac tons pollutant/million tons pellets 

## Emission Rate Comparison

NOx

NOx + SO2

### been required to install NOx emission controls such as low NOx burners. The basic

method used in reducing NOx emissions is a reduc tion in combustion temperature, which is the opposite strategy needed for minimizing PIC (i.e. , increasing combustion temperature).

OTHER ISSUES

Issue 4 : This plan is only the first step in a long term program.
USFS perspective: T he next P lan is not due until 20 18 , with required pollution controls installed many years later. This P lan was originally due in 20 07. It has been delayed 5 years with any controls due 5 years from now. I f history is used as a guide , wait ing until the 2018 P lan would result in control s that
are not insta lled until 2028. We think it is important to act now to reduce haze causing emissions and not use the fact that this is a long term program as an excuse for inaction.

Issue 5 : EPA gave the states the option to substitute CSAPR for BART.
USFS perspective: It indeed gave the states the option to go with CSAPR. While this may be a good idea in some parts of the country, we believe the data we presented, along with MPCA data, show it is NOT a good idea in Minnesota because it is proj ected to result in fewer emission reductions overall. We continue to urge the Board to direct staff back to the source

- appropriate BART approach that they were prepared to finalize in 2009.

Issue 6 : A Board member asked why changes in visibility beyond t he length one can see due to the curvature of the earth are important.
USFS perspective: Visual range is just one metric used to describe visibility. Contrast and color of every scenic element are also important. For example a cloud will appear browner and more washed out as visual range decreases even when the visual range is much greater than the distance to the cloud. Similarly the sky appears increasingly hazy as visual range decreases even if the horizon is closer than the calculated visual range

. The view of the stars, moon and northern lights can also be affected.

Issue 7 : In the Board packet and at the meeting, MPCA staff showed a graph of Minnesota emissions of nitrogen oxides (NOx) and sulfur dioxide (SO2) versus measured visibility on the 20% haziest days in the Boundary Waters (BWCAW) and implied that what Minnesota does in relation to emission reductions from its sources does not matter to visibility in the BWCAW.

### Figure 4

– MPCA Graph of Minnesota SO2 and NOx Emissions Versus the Worst 20% Days

USFS perspective: W e are concerned that the importance of Minnesota sources is discounted by the staff's graph. The MPCA shows in the regional haze plan that Minnesota is the highest contributor to haze in the BWCAW at about 30%. The very nature of the regional haze problem is that many state s and sources contribute.
It is important to remember that haze is caused by a number of different chemicals including: sulfates, nitrates, organic and elemental carbon, soil and others. The MPCA gra ph takes NOx and SO2 em issions and compares them to the 20% haziest days. Using the 20% haziest days is a relatively poor metric to gauge the effect of Minnesota point source emission reductions on visibility at Boundary Waters because many of the s mall subset of days may not be related to SO2 and NOx emissions . These days could be due to sulfates and nitrates, but they could just as well be due to other sources of impairm ent such as organics

- most of which are uncontrollable and not related to NOx or SO2 emissions

.

# (l Xcel 

# Energy•

RESPONSIBLE BY NATURE""



### Apri118, 2012



### Submitted via Electronic Mail

Catherine Neuschler Environmental Analysis and Outcomes Division Minnesota Pollution Control Agency 520 Lafayette Road North Saint, Paul, 

### 1v1N 55155-4194 414 Nicollet Mall Minneapolis, Minnesot a 55401-1993



### Re: Additional Corrur1ents on MPCA's Supplemental Notice on BART Determination for Units 1 and 2 at the Sherburne County Generating Station, Minnesota Regional Haze State Implementation Plan

Dear Ms. Neuschler:

Northern States Power Company-Minnesota d/b/a Xcel Energy (NSPM) is providing these additional comments on the Minnesota Pollution Control Agency's Regional Haze State Implementation Plan (SIP) process as a result of the public comments raised at the MPCA Citizens Board Meeting on March 27, 2012. This 

### letter does not raise any new issues; rather it provides linkage to MPCA staffs previous response to the same or similar issues that are already in the public record. NSPM submits this letter as a way to clarify the public record ofthis proceeding, specifically about comments made at the MPCA Board's March 27, 2012 meeting related to Units 1 and 2 at the Sherburne County Generating Station (Sherco 1&2). NSPM specifically asks that this letter be added to the public record of this proceeding and presented to the MPCA Board.

1. 

### Several speakers claimed that Sherburne County Units 1 & 

### 2 are the #1 source of visibility impairment in Minnesota.

NSPM wishes to clarify this allegation to reflect what the SIP record already shows. On page 68 of the December 2009 Regional Haze SIP, the MPCA documents the**m~deled** 

### impacts of facilities with units subject to Best Available Retrofit Technology (BART). Table 9.2 shows the maximum number of modeled days of greater than a 0.5 deciview (dv) impact for 2002 through 2004 for these units. This data shows that five other facilities have higher modeled impacts thari Sherco 1 &2. 

### In addition, a study of the data presented on pages 715 through 933 of this same report shows three other facilities have higher modeled impacts than Sherco 1&2 in terms of 98th percentile dv. In summary, the MPCA's modeling data does not support the allegation that Sherco 1&2 are the number one source of visibility impairment 

### in Minnesota

### Letter to Catherine Neuschler

- : MPCA April18, 2012 Page 2 of4



### 2. Multiple speakers commented that CSAPR=BART does not protect the Class I

areas in Minnesota and tlzat unit-by-unit BART is 

### preferable.

The board packet for the March 27, 2012 MPCA Citizens' Board meeting included MPCA staffs response to comments to the Supplemental Regional Haze SIP (found in Attachment B1 of this document)

. Comments 1-A and 1-B clearly stated that CSAPR=BART applies only to the Electric Generating Units ("EGUs") in Minnesota. MPCA staff also clearly stated that the remaining sources subject to BART, the taconite facilities, will 

### all have unit-by-unit BART limits, independent of the CSAPR = BART approach for EGUs.

As 

### CSAPR=BART applies only to EGUs, MPCA staff pro v ided a table on page 4 of Attachment B1 comparing EGU emissions under various scenarios. This table included 2010 actual emissions, MPCA source-specific BART emissions, CSAPR allocations, and 2014 modeled CSAPR + BART Projections. MPCA's conclusion from this comparison is found

on page 5 and states:

"With the addition of enforceable limits on Sherco, the MPCA believes the SIP clearly demonstrates that the five subject

- to-BARTpower plants will reduce their emissions to levels that will allow Minnesota to meet the goals of the Regional Haze program. "



### This could be more clearl y shown if 

### MPCA amended the table and s howed a CSAPR+BART combined summary for NOx and S02. This summary would show that

source s pecific BART limits exist for Minnesota Power Boswell Unit 3, Rochester Public Utilities Silver Lake Unit 3 and 4 , and Xcel Energy Sherco Units 1 and 2. The summary would show the CSAPR allocations for Minnesota Power Taconite Harbor Unit 3 and Northshore Mining Silver Bay Power Units 1 and 2. The combined emissions from these units are lower than any of the other scenarios presented (20 1 0 actual emissions, MPCA

source

- specific BART emissions, CSAPR allocations, and 2014 modeled CSAPR + BART Projections). A table showing this restatement of the data is included as Exhibit A. Based on this data, it is clear that MPCA staffs proposed strategy of using a combination of CSAPR=BART and source-specific emission limits results in lower emissions than sourcespecific BART emissions alone.

### Letter to Catherine Neuschler- MPCA April18, 2012 Page 3 of4



### 3. Several commenters raised the issue of Reasonably Achievable Visibility Improvement ("RA VI'') certification for Sherco 1&2 and how this is dealt with in the MPCA 's Supplemental Regional Haze SIP.

In 

### Attachment B 1, page 19 in the response to comments to the Supplemental Regional Haze SIP, MPCA staff noted that this SIP deals with the Regional Haze Rule and does not address what may be required under a separate EPA proceeding to consider whether any sources in Minnesota contribute to RA VI. MPCA staff is clear that this issue will be dealt with by the EPA under a RA VI proceeding. Furthermore, MPCA has acted to obtain emissions reductions for Sherco 1 &2 by determining source-specific BART emission limits under this Regional Haze SIP. NSPM notes that RA VI is a separate visibility program with its own regulations, which focuses on whether the presence of a specifically identified plume blight can be established.

The assertion by some commenters that the Federal Land Manager (FLM) and EPA have already ruled that SCRs are BART for Sherco 1&2 is not true. The FLMs have submitted comment letters to the MPCA advocating this result, but FLMs do not have authority to establish BART limits under any visibility program regulations. EPA has also submitted comment letters to MPCA expressing their opinion on BART limits based on their review of the proposed SIP, however, the MPCA staffs analysis and the MPCA Board's 2009 BART determination examined the evidence and found the BART limits for Sherco 1

&2 to be appropriate. Under the Clean Air Act, states have the primary role in determining BART limits for their sources subject to BART.



### 4. The concept that Regional Haze 

### is a long-term program was not recognized by

some commenters.

The MPCA clearly stated on page 3 of the March 27, 2012 Board packet that the Regional Haze Rule sets a goal of restoring natural visibility conditions to Class I areas by 2064. MPCA further addresses the long-term strategy on page 13 of this same document, clarifying how Minnesota will work to achieve this goal through progress assessments and SIP updates. The nature of the program is to take multiple steps at regular intervals to realize the visibility goal and that the first step in the process does not need to resolve every issue identified by all commenters. The MPCA has a long-term plan to achieve these visibility goals and is taking an appropriate first step through the Regional Haze SIP proposal.

The MPCA's board packet for the March 27, 2012 MPCA Citizens' Board meeting contains on page 2 of Attachment Bl, a graph showing S02 and NOx emissions from Minnesota and the visibility at BWCAW on the Worst 20% Days. This table shows significant emissions reductions have already occurred in Minnesota, yet also shows no decernible visibility improvement to date. MPCA notes in the response to comment 1-B:



### "

... there is not necessarily a direct and simple correlation between emissions within

Minnesota and visibility at Minnesota's Class I areas. "

### Letter to Catherine Neuschler

- MPCA April18, 2012 Page 4 of4

By noting this lack of correlation at this time, MPCA staff frames the discussion for future SIP updates on regional haze that will decide what further actions should be taken to achieve the ultimate goal of improving visibility.

The attachment to this letter provides fmther support for the clarifications provided above. Please do not hesitate to contact if me if you would like to discuss any of these matters in greater detail. I can be reached at 612-330

- 7879 or at richard.a.rosvold@xcelenergy.com.

Attachment

# ~a-~ Richard A. Rosvold Air Quality Manager

cc: Environmental Policy & 

### Services Record Center

## Exhibit A. EGU Emissions Under Various Scenarios

Supp l emen t al S I P MPCA Source-Specific 2014 I PM CSAPR + [BART & CSAPR 2010 Actual Emiss i ons BART CSAPR Allocations BART P rojectio n Comb i ned] a NOx S02 NOx S02 NOx S02 NOX S02 NO X S02 Facility Unit (tpy) (ton/yr) (tpy) (ton/yr) (tpy) (ton /yr) (tpy) (ton /yr) (tpy) (ton/yr) Minnesota Power Boswell 3 890 258 988 1 270 2,142 2,174 99 1 884 988 1,270 Minnesota Power Taconite Harbor 3 931 1 , 512 568 1 135 43 1 639 846 604 431 639 Northshore Mining Silver Bay Powe r 1 985 615 800 800 296 439 325 1 , 299 29 6 439 Northshore Mining Silver Bay Power 2 1,525 1 , 017 1,045 1 , 254 396 587 597 2 , 490 396 587 Rochester Public Utilities Silver Lake 3 183 204



### - 1 , 645



## - - 

## - - - 1,645 Rochester Public Utilities Silver Lake 4 12 19 573 239 145 215 238 229 573 239 Xcel Energy Sherco 1 3 , 866 6,233 3 , 862 3 089 3 , 908 5 , 790 4 , 713 7 , 822 3,862 3 , 089 Xcel Energy Sherco 2 3 , 220 5,192 3 , 861 3 , 089 3,907 5 , 789 4 , 582 7 , 604 3 , 86 1 3,089

TOTAL 11,612 15,050 11,697 12,521 11,225 15,633 12,292 20,932 10,407 10,997

a- MPCA Source-Specific BART Limits for Minnesota Power-Boswell 3, Rocheste r Public Utilit i es-Silver Lake 3&4
, and Xcel Ene rgy-She rco 1&2; plus CSAPR Allocations for Minnesota Power- Taconite Harbor 3 and Northshore M i ning-S il ver Bay Power 1 &2.