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**MEMORANDUM**
TO: Jim Eddinger, U.S. Environmental Protection Age ncy, OAQPS/SPPD
FROM: Eastern Research Group

DATE: November 2011
SUBJECT: Estimated Impacts from the Proposed Amendm ents to the NESHAP for Area

Sources: Industrial, Commercial, and Institutional Boilers

**1.0 INTRODUCTION** This memorandum describes the estimated cost and em issions impacts of the proposed amendments to the promulgated March, 2011 Area Sour ce Industrial, Commercial, and Institutional Boiler NESHAP (76 FR 15554). The met hodology used to estimate the impacts for the March, 2011 rule is documented in the memorandu m “Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions” located in the docket 1 . Cost, emissions, and secondary impacts were assessed for the proposed reconsideration amendment s to the March, 2011 rule. Since the methodology specified in the promulgation memorandu m did not change, only the impacts of the proposed amendments are presented in this memor andum. This memorandum is separated into the following sec tions: 1.0 Introduction 2.0 Summary of Impacts Methodology 3.0 Summary of Results 4.0 References2

**2.0 SUMMARY OF IMPACTS REVISIONS** This section discusses the impacts analysis for the proposed reconsideration amendments of the promulgated March, 2011 Area Sour ce Boiler NESHAP. The area source model units developed for the promulgated March, 20 11 rule were used for the impacts analyses for the proposed reconsideration amendment s 2

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**2.1 Proposed Changes in Regulatory Requirements for Area Sources**  The promulgated rule required all new area source b oilers to perform an initial boiler tune-up. This provision is being proposed to be de leted from the final rule. For the promulgated rule, the cost of this initial tune-up was estimated to be $6,477 per boiler in capital costs and $2,875 per boiler in annual costs . Total cost savings are estimated to be $111 million in capital cost and $30 million in annual c osts. It was also assumed that the boiler tuneup would provide a one percent reduction in all pol lutant emissions. Without the tune-up, emission reductions would normally be assumed to de crease. However, since it is likely that manufacturers would conduct a tune-up as part of in stallation and startup of any new sources, there is no change in the estimated emission reduct ions for new area source boilers.

**2.2 Proposed Changes in Emission Level Requirements for Area Sources**  The numeric emission level requirements for mercury (Hg) from coal combustion at both existing and new area source boilers have chan ged. It was determined that the test data used to establish these emission limits for the p romulgated March, 2011 rule was a utility boiler and thus not subject to the provisions of th e Industrial, Commercial, and Institutional Area Source Boiler NESHAP. The numeric emission li mits were re-determined based on the next best-performing area source boiler; this unit served as the basis of the emission limit calculations for both existing and new area source coal-fired boilers. As a result, the Hg emission limit for coal combustion at existing and new area source boilers increased from 4.8E06 pounds per million British thermal unit of heat input (lb/MMBtu) to 2.2E-05 lb/MMBtu. As discussed in section 2.3, other changes were made t o the procedures for estimating impacts that, combined with the revisions to the Hg limits, result in negligible changes to the emission3

reductions estimates for Hg. This change in the me rcury emission limit will not change the estimated costs because the technology basis (i.e., fabric filter) has not changed. The limits for CO were also revised based on revisi ons to the MACT floor methodology 3

, resulting in a CO limit of 420 ppm. The revised li mit is similar to the limit finalized in the promulgated rule, 400 ppm, and has negligible impac ts on the estimated costs and emission reductions.

**2.3 Major Source Data and Analysis Changes that Aff ect Area Sources**  EPA performed a review of test reports for the top performers from the March, 2011 Major Source NESHAP. Numerous data corrections and new data submissions were received after the promulgation of the March, 2011 Major and Area Source NESHAPs. A summary of these data corrections and new data submissions is provided in other memoranda 4,5 . As a result of these changes, baseline emission factors for CO, Hg, and organic HAPs increased at major sources since promulgation of the March, 2011 rules. Since the area source model units utilize the major source baseline emission factors, the overall baseline emissions of these pollutants have changed. Without the initial tune- up requirement for new area source boilers, CO reductions would likely be decreased. However, as stated earlier, it is likely that manufacturers would conduct a tune-up as part of in stallation and startup of any new sources. The combination of changes has an overall effect of negligible impact on the estimated emission reductions for CO, Hg, and organic HAPs fr om existing and new area sources. The methods used to develop baseline emission factors f or major and area source units are detailed in another memorandum 6

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**3.0 SUMMARY OF RESULTS** Table 1 summarizes the cost impact changes discusse d in section 2.0 of this memorandum. The table also provides a comparison t o the impacts estimated for the promulgation of the March, 2011 Rule. As shown in Table 1, capital costs for existing area source boilers were unchanged as a result of this a nalysis. Annual costs were revised after correcting for a spreadsheet reference error discov ered in the calculation of costs for the4

promulgated Match 2011 rule. The change in annual c osts for existing area source shown in Table 1 is the corrected annual costs of the promul gated March 2011 rule. The changes discussed in section 2.0 did not result in increase d annual costs. Capital and annual costs for new area source boilers decreased due to the elimin ation of the initial tune-up provision in the proposed rule. As discussed in section 2.0, the re visions to the impacts analysis do not result in net changes to the emission reductions for Hg, CO, or organic HAP for the reconsideration.

Table 1 – Summary of Changes to Cost Impacts since Pro mulgated Rule

**Source Total Capital Investment ($2008)**  **Total Annual Costs ($2008)**

**Promulgated Rule Reconsideration**  **Promulgated Rule Reconsideration** 

Existing Sources 2,100,370,929 2,100,370,929 586,99 5,677 598,829,342

New Sources 619,756,216 508,933,671 264,869,374 234 ,624,437

**4.0 References** 1. Gibson, G., S. McClutchey, and A. Singleton, ERG . Revised Methodology for Estimating Impacts from Industrial, Commercial, Institutional Boilers at Area Sources of Hazardous Air Pollutant Emissions. February, 2011.
2. Gibson, G., and A. Singleton, ERG. New Unit Ana lysis for the Industrial, Commercial, and Institutional Boilers National Emission Standards f or Hazardous Air Pollutans – Area Source. April, 2010.
3. Eastern Research Group. Revised MACT Floor Analysis for the Industrial, Co mmercial, and Institutional Boilers National Emission Standards f or Hazardous Air Pollutants – Area Source. November, 2011.
4. Gibson, G., B. Long, and A. Singleton, ERG. Rev ised Methodology for Estimating Cost and Emissions Impacts for Industrial, Commercial, I nstitutional Boilers and Process Heaters National Emission Standards for Hazardous A ir Pollutants – Major Source. November, 2011.
5. Gibson, G., and A. Singleton, ERG. Handling and Processing of Corrections and New Data in the EPA ICR Databases – Revised November 2011. November, 2011.5

6. Gibson, G., and A. Singleton, ERG. Revised Deve lopment of Baseline Emission Factors for Boilers and Process Heaters at Commercial, Indu strial, and Institutional Facilities. November, 2011.