**UNITED STA TES ENVIRONMENTA**  **L PROTECTION A GENCY**  AIR AND RADIATION DIVISION 77 W ESTJACKSON BOULEVARD

Vincent Hellwig , Chief Air Quality

Control Division Michigan Department of Environmental Quality P.O. Box 30260 Lansing, Mich i gan 48909 Dear Mr. Hellwig : Thank you for Michigan’s submittal o on our review of this submittal, we retrofit technology

on several sources the plan provides onl y for existing controls at these sources, t impacts on the Seney

Wildlife Refuge and other Class I areas, and effective controls may

be implemented at reasonable cost. In particular, we believe that the following controls warrant being mandated by t NewPage Paper

– Selective Cataly tic Reduction for control of NOx emissions from Boiler 8 and Boiler 9 St. Mary ’s Cement

– Selective Noncatal ytic reduction for control of NOx emissions. I n addition, a limit for sulfur dioxide emission requiring either continuation of current use of low sulfur raw materials, or, if higher sulfur raw materials must be used, emission control equipment to maintain low emissions. Tilden Mines

– As required in Mi emissions reflecting good combustion practice. In addition, a requirement for continuous NOx emission monitoring. The attachment provides further details on each of these facilities and the informati considered in reaching these conclusions. In conjunction with this attachment are spreadsheets showing revised estimates of costs for the above control equipment

**UNITED STA**

**TES ENVIRONMENTA L PROTECTION A**  **GENCY** REGION 5 AIR AND RADIATION DIVISION 77 W ESTJACKSON BOULEVARD CHICAGO, IL 60604

- 3590

REPLY TO THE ATTENTION OF:

Michigan Department of Environmental Quality

Thank you for Michigan’s submittal o f a regional haze plan on November 5, 2010 on our review of this submittal, we believe that the plan does not require best available retrofit technology

on several sources that must install and operate such control the plan provides onl y for existing controls at these sources, t h ese sources have significant impacts on the Seney

Wildlife Refuge and other Class I areas, and we believe that controls may

be implemented at reasonable cost. In particular, we believe that the following controls warrant being mandated by t he Michigan plan:

Selective Cataly

tic Reduction for control of NOx emissions from Boiler

Selective Noncatal ytic reduction for control of NOx emissions. I n addition, a limit for sulfur dioxide emission s reflecting current emission levels, thereby requiring either continuation of current use of low sulfur raw materials, or, if higher sulfur raw materials must be used, emission control equipment to maintain low emissions.

As required in Mi nnesota’s plan for similar facilities, a limit for NOx emissions reflecting good combustion practice. In addition, a requirement for continuous
The attachment provides further details on each of these facilities and the informati considered in reaching these conclusions. In conjunction with this attachment are spreadsheets showing revised estimates of costs for the above control equipment

**UNITED STA**

**TES ENVIRONMENTA L PROTECTION A**  **GENCY**

REPLY TO THE ATTENTION OF:

f a regional haze plan on November 5, 2010 . Based that the plan does not require best available that must install and operate such control

. Whereas

ese sources have significant we believe that more controls may

be implemented at reasonable cost. In particular, we believe that the
Selective Cataly

tic Reduction for control of NOx emissions from Boiler

Selective Noncatal ytic reduction for control of NOx emissions. I n s reflecting current emission levels, thereby requiring either continuation of current use of low sulfur raw materials, or, if higher sulfur raw materials must be used, emission control equipment to maintain low emissions. nnesota’s plan for similar facilities, a limit for NOx emissions reflecting good combustion practice. In addition, a requirement for continuous
The attachment provides further details on each of these facilities and the informati on we considered in reaching these conclusions. In conjunction with this attachment are spreadsheets showing revised estimates of costs for the above control equipment

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We have recentl y negotiated a consent decree with environmental groups to propose ac tion on Michigan’s regional haze plans by May 15, 2012 , to satisfy

regional haze requirements either through approval of state plans or promulgation of federal plans. I look forward to w orking with you to resolve our concerns, so that the Michigan regional haze plan will have the emission limits necessary to satisfy the requirement for best available retrofit technology . Please contact me or John Summerhay s at (312) 886

- 6067 if you have any questions. Sincerel y,

John Mooney , Chief Air Programs BranchBest Available Retrofit Technology For selected Michigan Sources

NewPage Paper Reevaluation of costs indicates that selective catalytic reduction (SCR) would provide cost

- effective control of nitrogen oxides (NOx) emissions at Boiler 8 and Boiler 9 of the NewPage Paper company facility in Escanaba, Michigan (NewPage). Spreadsheets showing a revised set of cost estimates are attached. Many of the elements of this spreadsheet are taken directly from est imates provided by the company’s consultant. The following elements reflect the following revisions:

- In accordance with the EPA Air Pollution Control Cost Manual (EPA CCM), installation costs are assumed to be 85 percent of purchased equipment costs. The EPA CCM acknowledges that retrofit installations may cost somewhat more than new installations, but the company’s estimate, that installation costs would be 185 percent of purchased equipment costs, is far higher than the range of retrofit installation costs indicated in the EPA CCM. The company has not provided adequate justification for its assumption of such high installation costs.

- The company’s cost estimates include costs of plant infrastructure replacements that have not been justified as nec essary for operation of SCR at Boilers 8 and 9 of NewPage Paper. The company assumes that installation of SCR at these boilers would require installation of new fans, new electrical equipment for operating the new fans, and new stacks for ducting the exha ust gas. However, the company has provided no justification that installation of SCR on these boilers would have sufficient effect on airflow at these boilers to necessitate these upgrades to plant infrastructure. The company estimated that these infrast ructure upgrades would cost more than the SCR equipment itself. Thus, incorporating these upgrade costs appears to yield an unjustified and substantial inflation of the costs of the SCR. Only the estimated costs of a platform f or placing control equipmen t have been included in the attached cost estimates.

- The attached spreadsheets use revised estimates of costs of reagent. In accordance with the EPA CCM, the necessary amount of urea may be assumed to be 5 percent above the stoichiometric- 2

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equivalent of the quantity of NOx reduced (i.e., 5 percent more than 30 grams of urea per 46 grams of NOx). The urea was assumed to cost $450 per ton.

- The company assumes a catalyst life of 12000 hours. In accordance with the EPA CCM, the attached spreadsheets ass ume a catalyst life of 24000 hours.

- In accordance with the EPA CCM, the attached spreadsheets assume that SCRs require minimal oversight to operate, such that no additional labor should be budgeted for their operation.

- In accordance with the EPA CCM, the attached spreadsheet annualizes investment costs by assuming a 15

- year equipment life and 7 percent interest.

- Operation of SCR will allow NewPage Paper to forgo operating flue gas recirculation (FGR), which the company currently operates for 5 mont hs per year. Therefore, operation of SCR will provide a savings of the costs that would otherwise be expended on FGR. The company estimated that the annual operating cost of FGR for boiler 8 would be $245,731. Costs for operation of FGR at Boiler 9 are assumed to be similar. Therefore, the attached spreadsheet estimates the savings from not operating FGR at each of these boilers to equal 5/12 of $245,731, or $102,390.

- A substantial fraction of the estimated costs of operating SCR at Boiler 9 are nat ural gas costs for reheating the flue gas. The company’s cost estimates treat this heat as waste heat that has no economic value to the company. However, plant operations require substantial process heat, and there is no reason given that the heat from c ombusting natural gas cannot be used in lieu of other natural gas or coal that the plant burns. In absence of data for a more complete analysis of this issue, the attached spreadsheet assumes that 3⁄4 of this heat will serve plant purposes in lieu of burnin g other fuels, and incremental costs of combusting natural gas in part for reheat purposes are 1⁄4 of the gas costs.

- In accordance with the EPA CCM, labor costs for operating an SCR are assumed to be negligible.
St. Mary’s Cement- 3

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A reevaluation of available evidence indicates that selective noncatalytic reduction equipment (SNCR) would provide cost

effective control of nitrogen oxides (NOx) emissions at the St. Mary’s Cement (SMC) facility in Charlevoix, Michigan. A spreadsheet is attached which shows a revised set of estimates of cost and cost

- effectiveness for the installation of SNCR at this facility. Many of the elements of this spreadsheet are taken directly from estimates provided by the company’s consultant. For example, t he estimates of capital costs are unchanged from those provided by the company’s consultant. The following elements reflect the following revisions:

- Electricity: The “cooler season,” for which 100 kW are estimated to be needed for heating urea, is assu med to be 4000 hours.

- Clean

- out: Pursuant to application number 700

- 77L, St. Mary’s Cement has been granted a permit to provide for kiln modifications that, in addition to providing for increased production, would address the plugging problems that have occurred with operation of the current SNCR system. In EPA’s view, addressing the plugging problems has economic benefits for the company, and so the cost evaluation here assumes that the company will make modifications independently of SNCR installation that remedy these problems. Therefore, the attached spreadsheet assumes no costs for lost revenue due to clean out of cementic build

- up.

- Capital recovery: In accordance with the EPA CCM, the equipment life should be assumed to be 15 years.

- Pollutan t Removed: The Environ report included in the SMC BART evaluation notes that SNCR achieves between 10 and 50 percent NOx control efficiency. While the current SNCR may have problems that limit its effectiveness to eliminating only 10 percent of NOx emissi ons, Michigan must evaluate control options which significant improve SMC’s NOx control efficiency. The BART determination cannot plausibly estimate substantial capital costs that achieve no improvement in NOx control as compared to existing equipment. T he attached spreadsheet assumes that the upgraded control equipment will achieve 40 percent NOx control. This control efficiency is applied against the full 5741 tons per year baseline emission level, since the submittal provides no justification that fut ure operation should assume different operations (e.g., a different number of hours of operation per year) than existed in the baseline period.- 4

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- The attached spreadsheet uses the company’s estimate of reagent costs. This assumes compensating adjustments to reflect use of a greater quantity of urea to achieve 40 percent control and to reflect a lower cost of urea solution.

- The revised spreadsheet estimates that SNCR would reduce NOx emissions at SMC’s facility at a cost of $865 per ton. Since this con trol would achieve substantial improvement in visibility at the Seney Wildlife Refuge, this evidence suggests that BART at this facility would include full year operation of upgraded SNCR.

- The evaluation of BART for sulfur dioxide (SO2) at the SMC facil ity is premised on the sulfur contents of materials in the future remaining similar to current sulfur contents. The submittal raises the possibility that future raw material may contain significantly more sulfur. Such an increase would make SO2 control e quipment more cost effective, since equipment at similar cost would control more SO2 emissions. While SO2 control equipment appears under current circumstances to be marginally more expensive than would be considered cost

effective, it appears likely that SO2 control equipment would be cost
- effective if the sulfur content of the raw materials increased. Therefore, this evidence suggests that current SO2 emissions represent BART for this facility. SMC could achieve current SO2 emissions either by continui ng to use comparatively low sulfur raw materials or by operating SO2 control equipment to accommodate use of higher sulfur raw materials. Under Michigan’s submittal, SMC is allowed much greater SO2 emissions than are currently emitted (as requested by SMC to accommodate higher sulfur raw materials). An emission limit reflecting current SO2 emissions is necessary to assure that BART is in place for SO2 for SMC.

Tilden Mine Available evidence indicates that BART control for NOx at Tilden Mine is good combustion control. Michigan’s SIP does not include limits on NOx emissions that mandate good combustion control, and Michigan’s SIP does not provide for adequate monitoring for judging whether emissions are being appropriately con trolled.- 5

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Substantial information on NOx emissions from well controlled taconite plants is available from continuous emission monitoring data for various taconite plants in Minnesota. This monitoring provides sufficient information to determine the NOx emission levels that can be achieved through good combustion control. Michigan must set a NOx emission limit that is sufficiently stringent to assure good combustion control. Michigan must also require installation and operation of a continuous emission monitoring system that provides for continuous monitoring of NOx emissions in accordance with Performance Specification 2 in Appendix B of 40 CFR 60. This monitoring will serve several purposes: 1) this monitoring will provide continuous information for assessing whether the facility is implementing good combustion control, 2) this monitoring will help define the operating conditions in which higher and lower NOx emissions occur, and 3) thereby, this monitoring will help the facility and the State determi ne how to minimize NOx emissions.- 6

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standard bcc’s: official file cop y w/enclosure

originator’s file cop y w/enclosure originating office reading file w/enclosure other bcc’s:

ARD: APB: APM S: js: 11/xx/2011 file: f:/jsummerh/M I/Regional Haze/MI Haze 12

- 11.doc