@} JouruDeene

July 14,2011

Mr. Brian Shrager

Energy Strategies Group

Sector Policies and Programs Division (D243-01)

Office of Air Quality Planning and Standards

U.S. Environmental Protection Agency

Research Triangle Park, NC 27711

SUBJECT: Comments on "National Emission Standards for Hazardous Air pollutants for Major Sources: lndustrial, Commercial, and lnstitutional Boilers and process Heaters,'

("lndustrial Boiler MACT')

Dear Mr. Shrager:

On behalf of Deere & Company ("Deere" or "John Deere"), I am pleased to submit the following

comments on the United States Environmental Protection Agency's (EPA) lndustrial Boile-r

MACT standard referenced above. These comments are submitteð puisuant to the Agency's

!9tj9e to delay the effective date of the standard published in the Federal Register on túay íg, 2ol1 (p.28663), and stated intention to reconsider certain aspects of the rule. ln regards tó tné

lndustrial Boiler MACT, we acknowledge the technical comments that have beeñ submitted previously by others. However, our comments today focus on the business aspects of

implementing this regulation and provide an alternative compliance timing proposalfor industrial

coal-fired units.

Deere is a world leader in providing advanced products and services for agriculture, forestry,

construction, lawn and turf care, landscaping and irrigation. Deere also manufactures and

markets off-highway diesel engines, and provides fínancial services worldwide. As a 1z4-yearold company with nearly 60,000 global employees, we are proud of our strong histoiy of

environmental compliance and sustainability efforts worldwide.

Scope of Boiler MACT and its affect on Deere & Company

Although the EPA estimatesl that there are more than 13,600 boilers and process heaters

located at major hazardous air pollutants (HAP) sources that will be subject to the lndustrial

Boiler MACT, the rule is expected to have the most significant impact on facilities that utilize coal- or biomass-burning boilers (solid-fuel-fired boilers). The EPA estimates there are

approximately 580 coal-fired boilers (4o/o of the anticipated regulated population) - of which

Deere owns six coal-fired boilers at two different facilities. The EPA estimates tnai the average

1 Environmentat Protection Agency (EPA) proposed rule, "National Emission Sfandards for Hazardous

Air Pollutants for Major Sources: lndustrial, Commerciat, and lnstitutionat Boiters and process Heaters,"

Federal Register / Vol. 75, No. 107 / Friday, June 4, 2010 / pg. S2OS|

Deere & Company

One John Deere Place

Moline, lL 61265 USA

Phone: (309) 765-5151

zelniolauriel@ohndeere.com

Laurie L. Zelnio

Director, Environment
'G,Jonru Deene

capital cost of retrofitting an industrial coal-fired boiler with pollution-control equipment that will

meet emissions limits will be nearly $8 million. Deere is a singularly careful steward of the

environment (since 1972 we have, for example, reduced our greenhouse gas emissions by

670/o) and we make our business decisions in light of our environmental responsibilities. Our

efficient and economical operation of these boilers requires careful lifecycle analysis and

planning.

Differences Between Utility and lndustrial Sources lndicate Need for Different Application

of MAGT Standard Compliance Timing

The Utility MACT will encompass coal-fired generation within the electric utility industry. The

economic and regulatory model for regulated utilities allows them to recover compliance costs

through ratemaking cases. Utilities that operate in a rate-regulated environment may apply to

utility commissions to recover the costs of "prudent investments." Pollution controls necessary

for compliance are typically deemed a prudent investment and this allows costs to be allocated

to many customers and recovered relatively quickly with limited risk. The direct applicability to

electric utilities and common features of compliance requirements across utilities will likely raise

competitive prices, allowing for some recovery by independent power producers in competitive

electricity market areas, as well. That is not true for Deere and other industrial firms operatinq

coal-fired boilers.

The 2015 Deadline is lmpractical

1. Competition between regulated sources will increase project cost

The utility industry has already voiced concerns about their ability to retrofit existing boilers

with environmental controls or build replacement capacity by 2015. They cite the

complicated logistics of simultaneous installations, industry-wide competition for materials

and craft labor, and increased permitting requirements that threaten to require multiple

simultaneous changes. lndustrial sources faced with the same retrofit requirement will be

forced to compete with utilities for engineering services, contractors, laborers, and

materials over this same time period. We believe it is likely this competition will escalate

project costs.

2. An accelerated compliance schedule disregards lifecycle cosfs of existing infrastructure and

creates inefficiencies of expenditures

A forced compliance timeline may lead to stranded investment for Deere where we still

have appreciable book value in coal ancillary assets. Businesses need certainty for

financial planning and the ability to manage their limited financial resources wisely with an

eye to lifecycle efficiencies and return on investment.

Alternative Proposal

Affected industrial coal-fired boilers represent only 4o/o of the anticipated regulated lndustrial

Boiler MACT population and face the highest cost-estimates for pollution control upgrades. ln

Deere & Company

One John Deere Place

Moline, lL 61265 USA

Phone: (309) 765-5151

zelniolauriel@oh ndeere.com

Laurie L. Zelnio

Director, Env¡ronment
@ JonruDeene

addition, they will be competing against the electric utility industry under the same timeline for

pollution control equipment and craft labor.

lnstead of one compliance date for the estimated 13,600 affected boilers and process heaters

under the lndustrial Boiler MACT, we propose the EPA consider a stased implementation plan

for the affected industrial coal-fired boilers (4o/o of the regulated population¡. WnereinStfecteO

industrial coal-fired boilers submit a transition plan to be in compliance by 2018 which would

have to be approved by the appropriate agencies.

We believe staged implementation that takes into account the types of sources and the source's

ability to spread out and recover costs in a fiscally responsible manner will provide industry the

flexibility needed to incorporate the lifecycle of their assets, provide certainty in business

investment planning, foster more time for innovation, and encourage compliance technology

transfer between the utility and índustrial sectors.

Closing

The Executive Order issued by President Obama last January laid out a new review process for

regulations, stating that an agency should "tailor its regulations to impose the least burden on

society, consistent with obtaining regulatory objectives, taking into account, among other things,

and to the extent practicable, the costs of cumulative regulations." ln particular, the Order asfèO

Agencies to "consider costs and how best to reduce burdens for American businesses and

consumers."

We applaud the Agency's efforts to balance regulatory reform with the need to support

American businesses in this challenging economy. We appreciate your consideration of our

proposalfor a time-limited transition plan for affected industrial coal-fired boilers.

Laurie L.

Deere &

Director - Environment & Energy, Standards & Product Safety

Deere & Company

One John Deere Place

Moline, lL 61265 USA

Phone: (309) 765-5151

zelniolauriel@ohndeere.com

Laurie L. Zelnio

Director, Environment