MEMORANDUM

To: File

From: Environmental Protection Agency ( EPA ) Region 9, Air Planning Office
Subject: Cost effectiveness of SO 2 Best Available Retrofit Technology ( BART ) controls for

converters at Miami Smelter using cost data from Freeport McMoRan Miami, Inc. ( FMMI )

Date: June 24 , 2014

In our February 18, 2014 Federal Register Notice (79 FR 9318 ) we relied on cost information provided by ASARCO for its Hayden Smelter to evaluate proposed BART controls for FMMI’s Miami Smelter. We did this because the cost information provided by FMMI was claimed as confidential business information (CBI)

. 1 Accordingly, we were constrained in our ability to incorp orate this information into our BART analysis

. 2
On May 7, 2014, FMMI released its claim of confidentiality on the cost information previously submitted

. 3 Accordingly, we are now able to consider cost effectiveness of SO 2 controls for the converter aisle using cost information provided by FMMI.

Control Costs Provided by FMMI

As an attach ment to its May 7, 2014 letter, FMMI provided the cost information that appears in Table 1

. Because this information was provided after the end of the public comment period and only weeks before
our court

- ordered deadline for promulgation of the final rule , we have not had time to review the cost information in detail for accuracy or to determine if inappropriate coasts have been included. Nonetheless, in order to evaluate whether this information, if accurate, would alter our BART determination for the Miami S melter
, we conducted a supplemental cost analysis based upon the cost data provided by FMMI

. The equipment upgrades and new construction that appear in Table 1 were originally proposed by FMMI
to address the one

- hour SO 2 NAAQS. 4 These projects have been designed to control emissions from both subject

- to

- BART and not subject

- to

- BART equipment

. 5 For example, according to FMMI, 55 percent of the SO 2 controlled as a result of upgrades to the tailstack scrubber is emitted by the pri mary smelter

1 Letter from Derek Cooke , FMMI, to Thomas Webb, US EPA ( July 12, 2013 ) . These costs were determined by FMMI for a smelter expansion and voluntary emission limit project.

2 See CAA section 307(d) (7)(A), 40 U.S.C. 7607(d)(7)(A) ( rule may not be based on any information or data which has not been placed in public docket ); 40 CFR § 2.301(g)(2) (criteria and procedures for disclosure of CBI in connection with a rulemaking under t he CAA).

3 Letter from Jay Spehar, FMMI, to Geoffrey Glass, US EPA ( May 7, 2014 )

4 See generally, ADEQ Significant Permit Revision Application, ADEQ Class I Permit Number 53592, Smelter Expansion & Enhanced Controls; (July 2013) (FMMI Permit Application),

5 Id.(a.k.a. the IsaSmelt )

. 6 The IsaSmelt was installed in 1991 and is not subject

- to

- BART. Therefore, we

expect the overall costs provided by FMMI to be higher than if FMMI planned to control emissions only from subject

- to

- BART equipment.

Table 1: Control Costs Provided by FMMI

EPA Item No. Proposed Improvement/Upgrades Proposed Costs

Equipment Installation O&M ($/yr)

1 New Converter Mouth Covers $1,367,000 $5,244,000 $ 165,000

2 Reconfigured Roofline Above Converters $2,806,000 $27,423,000 $ 1,353,000

3 New Aisle Scrubber $25,046,000 $ 63,292,000 $ 3,719,000

4 Upgraded Acid Plant Tail Scrubber $2,407,000 $ 11,986,000 $ 1,079,000

5 Upgraded Hood System $180,000 $ 1,028,000 $ 42,000

6 Upgraded Vent Fume Scrubber $2,335,000 $ 17,778,000 $ 2,622,000

Item number 5 , the upgraded hood system, will improve emissions capture from the electric furnace and not the converters. Item number 6, the upgraded vent fume scrubber, will improve the control efficiency of emissions from the electric furna ce and the smelter, not the converters. Thus we only considered items number 1

- 4 in our cost calculations. Because the equipment in items 1

- 4 were designed together (e.g. the new aisle scrubber was sized for use with the converter mouth covers, etc.), we o nly consider them together as part of a unified control strategy.

Baseline Emissions
In the Technical Support Document for our proposed rulemaking we calculated the following baseline SO 2 emissions from the converters in tons per year (tpy). Converter emissions from the acid plant tailstack were calculated assuming that 35 percent of SO 2 ducted to the acid plant originated in the converter aisle. 7 The range of uncollected emissions was calculated based on a collection efficiency of 95 to 98 percent for the existing side flue vent on the Hoboken converters. 8

Table 2: Baseline SO 2 Emissions from the Converters

Source Acid Plant Tailstack Emissions (tpy) Uncollected Emissions (tpy)

Converters 495 3,231

- 8,078

6 Letter from Derek Cooke, FMMI, to Thomas Webb, US EPA (July 12, 2013) , Table 4

- 1

7 Id.

8 See Letter from Derek Cooke, FMMI to Tom Webb, EPA (January 25, 2013) at 5 ( reporting a range of values of 87 percent to 98 percent). We used the high end of this range to ensure that our cost per ton estimates were conservative. That is, we assumed the baseline level of uncaptured emissions was lower and that there were therefore fewer emiss ion reductions available, resulting in higher cost per ton valuesCapture and Control Efficiencies

In its application for a permit revision submitted to ADEQ, dated July, 2013 9 and proposed BART analysis 10 , FMMI reported the following capture and control efficiencies from the equipment proposed in Table 1 :

 New converter mouth c overs: 80 percent capture ( page 2

- 4 , proposed BART analysis)

 Reconfigured roofline above converters: 84 percent capture (Section 4.1.3 , ADEQ permit appli c ation )

 Upgraded acid plant tailstack scrubber: 98 percent control (Section 4.1.1 , ADEQ permit appli c ation )

 New aisle scrubber: 90 percent control (Section 4.1.4 , ADEQ permit appli c ation )
We used these capture and control efficiency numbers to calculate the cost effectiveness of SO 2 control for items 1

- 4 in Table 1 as applied to emissions from the convert ers

. Cost Effectiveness of Proposed Converter SO 2 Controls Based on the cost information, baseline emissions, and capture and control efficiencies outlined above, we determined that the cost effectiveness of the proposed controls varies from $ 2 ,3 86 to $ 5
, 4 78 per ton of SO 2 on an annual basis. We assumed an interest rate of 7 percent and a 20 year payback period to annualize equipment and installation costs . The calculations are included in the docket 11 and the results summarized in Table 3.
Although these cost effectiveness values are higher than those that we calculated in our February 18, 2014 proposed rulemaking, we still consider these values to be reasonable

. In particular, the low

- end estimate ($2,386/ton) is well within the range what we have considered to be cost

- effective for BART determinations. 12 The high

- end estimate ($5,478/ton) would be higher than we have previously required for purposes of BART

. However, we consider this estimate to be conservative (i.e. tending to overestimate rather than underestimate costs) for several reasons. First, as noted above, t he costs provided by FMMI are not limited to control of emissions from uni ts that are subject

- to

- BART

. S e cond
, the cost values provided by FMMI are not supported by documentation sufficient to verify their accuracy. Finally, the cost values provided by FMMI include costs that are not permitted by the Control Cost Manual and that EPA has excluded from other BART analyses (e.g. owners cost). Therefore, we consider it very unlikely that the actual cost effectiveness of the controls would be as high as $5,478/ton. For these reasons, we have no basis to alter our BART determination based on the cost information provided by FMMI.

9 ADEQ Significant Permit Revision Application, ADEQ Class I Permit Number 53592, Smelter Expansion & Enhanced Controls (July 2013)

10 Best Available Retrofit Technology (BART) Analysis , Fre eport McMoRan Miami, Inc. (March, 2014)

11 Miami Smelter Converters SO2 BART Supplemental Cost Calculations

12 See, e.g. BART EGU FIP Summary.Table 3: Cost Effectiveness of Proposed Controls (High and Low Estimates of Uncaptured Emissions)

High baseline emissions estimate Low baseline

emissions estimate

Pre

- project uncaptured SO 2 emissions from converters (tpy) 8,078 3,231

Post

- project SO 2 emissions from converters captured by primary capture system as a result of new mouth covers (tpy) a 6,462 2,585

Post

- project SO 2 emissions from converters captured by primary capture system as a result of new mouth covers and controlled by acid plant and upgraded tailstack scrubber (tpy) b 6,462 2,585

Post

- project SO 2 emissions from converters captured at roofline (tpy) c 1,357 543

Post

- project SO 2 converter emissions captured at roofline and controlled by new aisle scrubber (tpy) d 1,221 489

Pre

- project acid plant tailstack SO 2 emissions from converters (tpy) e 495 495

Post

- project SO 2 emissions controlled by upgraded acid plant tailstack scrubber originating from converters (tpy) f 485 485

Total SO 2 emissions from converters controlled by proposed project (tpy) 8,169 3,558

Annualized cost $ 19,490 ,515 $19,490,515

Cost effectiveness (dollars per ton) $ 2,386 $ 5,478

a Assumes 80% of previously uncaptured converter emissions captured because of new mouth covers

b Assumes 99.69% control by acid plant and 98% control by tailstack scrubber, rounded to nearest ton

c Assumes 84% capture efficiency as provided by FMMI

d Assumes all post

- project captured emissions reduced by 90% in new aisle scrubber

e Measured by SO 2 CEMS and reported by FMMI to ADEQ in 2010 emission inventory

f Assumes 98% control from upgraded scrubber