Document ID: EPA-HQ-OAR-2002-0056-6211
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2005-03-15T05:00Z

RESPONSE
TO
SIGNIFICANT
PUBLIC
COMMENTS
ON
THE
PROPOSED
CLEAN
AIR
MERCURY
RULE
Received
in
response
to:

Proposed
National
Emission
Standards
for
Hazardous
Air
Pollutants;
and,
in
the
Alternative,
Proposed
Standards
of
Performance
for
New
and
Existing
Stationary
Sources:
Electric
Utility
Steam
Generating
Units
(
69
FR
4652;
January
30,
2004)

Supplemental
Notice
for
the
Proposed
National
Emission
Standards
for
Hazardous
Air
Pollutants;
and,
in
the
Alternative,
Proposed
Standards
of
Performance
for
New
and
Existing
Stationary
Sources:
Electric
Utility
Steam
Generating
Units
(
69
FR
12398;
March
16,
2004)

Proposed
National
Emission
Standards
for
Hazardous
Air
Pollutants;
and,
in
the
Alternative,
Proposed
Standards
of
Performance
for
New
and
Existing
Stationary
Sources,
Electric
Utility
Steam
Generating
Units:
Notice
of
Data
Availability
(
69
FR
69864;
December
1,
2004)

Docket
Number
OAR­
2002­
0056
7.0
IMPACT
ESTIMATES
US
Environmental
Protection
Agency
Emissions
Standards
Division
Office
of
Air
Quality
Planning
and
Standards
Research
Triangle
Park,
North
Carolina
27711
15
March
2005
i
General
Outline
1.0
INTRODUCTION
AND
BACKGROUND
2.0
APPLICABILITY
AND
SUBCATEGORIZATION
3.0
PERFORMANCE
STANDARDS
FOR
COAL­
FIRED
ELECTRIC
UTILITY
STEAM
GENERATING
UNITS
4.0
PERFORMANCE
STANDARDS
FOR
OIL­
FIRED
ELECTRIC
UTILITY
STEAM
GENERATING
UNITS
5.0
MERCURY
CAP­
AND­
TRADE
PROGRAM
6.0
MERCURY
EMISSIONS
MONITORING
7.0
IMPACT
ESTIMATES
8.0
COMPLIANCE
WITH
EXECUTIVE
ORDERS
AND
STATUTES
9.0
NODA
10.0
OTHER
Appendix
A
LIST
OF
COMMENTERS
7­
1
7.0
IMPACT
ESTIMATES
7.1
IPM
MODELING
Comment:

One
commenter
(
OAR­
2002­
0056­
2578)
stated
that
both
they
and
EPA
have
been
employing
Eulerian
regional
models
for
simulating
both
deposition
patterns
of
Hg
under
current
emissions,
and
how
those
deposition
patterns
might
change
under
proposed
utility
Hg
regulation.
The
commenter
stated
that
there
is
strong
evidence
that
those
models
tend
to
overestimate
near­
source
ground­
level
concentrations
and
deposition
of
Hg
when
compared
to
equivalent
calculations
using
Gaussian
plume
simulation
local­
scale
models.
The
commenter
stated
that
the
consequences
associated
with
this
model
precision
include
the
following:
1)
it
helps
explain
why
models
tend
to
show
higher
deposition
than
is
measured
by
Hg
monitoring
stations
in
some
regions
of
the
U.
S.,
and
2)
these
overpredictions
of
deposition
will
tend
to
overestimate
the
assessments
of
how
much
Hg
is
entering
various
waterbodies,
accumulating
in
fish
and
eventually
resulting
in
a
potential
exposure
to
humans.

Response:

There
is
no
evidence
that
in
our
applications
of
Eulerian
regional
models
that
they
overestimate
ground­
level
wet
deposition
of
Hg.
The
models
generally
do
not
show
higher
wet
deposition
than
the
Hg
monitoring
sites.
The
Community
Multiscale
Air
Quality
(
CMAQ)
Model
used
for
the
Clean
Air
Mercury
Rule
(
CAMR)
underestimated
annual
Hg
wet
deposition
at
the
majority
of
Mercury
Deposition
Network
sites.
There
is
not
a
measurement
network
for
Hg
dry
depositions
or
Hg
concentrations,
so
it
cannot
be
concluded
that
the
Eulerian
regional
models
overpredict
these
values.
In
general,
the
Gaussian
models
do
not
have
adequate
atmospheric
chemistry
or
deposition
algorithms
to
predict
Hg
as
well
as
the
Eulerian
regional
models.

Comment:

One
commenter
(
OAR­
2002­
0056­
3454)
stated
that
the
current
Hg
control
proposal
made
under
the
CAA,
section
111
provisions
would
not
create
markets
for
technology
development
nor
encourage
innovation
as
the
projected
Hg
cap
level
was
set
too
high
(
i.
e.,
at
the
revised
co­
benefit
level).
The
commenter
further
stated
that
EPA's
modeling
analysis
does
not
consider
the
low
cost
reductions
that
will
come
from
enhancing
existing
control
technologies
for
greater
Hg
capture.
The
commenter
stated
that
these
innovations
will
reduce
the
cost
and
overall
demand
for
Hg­
specific
reductions.
The
commenter
stated
that
EPA's
projections
for
Hg­
specific
control
installations
under
the
Section
111
proposal
estimate
that
only
1
GW,
or
approximately
two
of
the
more
than
1000
coal­
fired
boilers
in
the
U.
S.,
would
install
Hg
control
technologies
by
2010.

Response:

EPA
has
set
the
first
phase
cap
of
CAMR
at
a
level
that
represents
the
Hg
reductions
7­
2
expected
as
co­
benefits
accompanying
the
SO2
and
NOx
caps
under
CAIR
in
2010,
of
the
combined
emission
reductions
that
SO2
and
NOx
controls
provide
in
terms
of
reducing
Hg
emissions.
The
ability
of
sources
to
bank
excess
Hg
allowances
in
the
first
phase
of
the
program,
as
well
as
the
lower
second
phase
cap,
will
provide
a
strong
incentive
for
the
development
of
efficient
and
cost­
effective
Hg
control
technologies.
In
fact,
developments
in
Hg
control
technologies,
such
as
advanced
sorbents,
are
already
occurring.
EPA's
Office
of
Research
and
Development
has
a
white
paper
(
available
in
the
docket)
discussing
the
current
state
of
Hg
control
technology
development.

Comment:

One
commenter
(
OAR­
2002­
0056­
2578)
stated
that
modeled
predictions
of
when
emissions
would
ultimately
reach
the
15
ton/
yr
Phase
II
cap
in
the
proposed
cap
and
trade
rule
are
sensitive
to
model
assumptions
concerning
co­
benefits,
control
effectiveness,
and
other
poorly
determined
variables.
The
commenter
stated
that
EPA
assumptions
produce
a
longer
phase­
in
period
than
the
set
of
assumptions
used
by
the
commenter,
considered
more
realistic
based
on
research
results.
The
commenter
stated
that
differences
in
emissions
banking
behavior
between
their
simulations
and
EPA's
results
are
due
to
three
factors
(
the
commenter
provided
evidence
supporting
each
of
the
following
points):
1)
EPA
assumes
larger
Hg
reductions
from
key
SO2
and
NOx
controls
("
co­
benefits")
than
is
the
current
technical
consensus;
2)
EPA's
cost
and
effectiveness
assumptions
for
removal
of
Hg
using
activated
carbon
injection
are
more
pessimistic
than
those
incorporated
in
the
commenter's
model,
and;
3)
Other
EPA
assumptions
appear
to
cause
the
model
to
rely
more
on
FGD
retrofits
over
coal
switching
for
units
to
achieve
SO2
targets
than
the
commenter
assumed.
The
commenter
asserted
that
their
simulations
employ
assumptions
which
their
researchers
view
as
more
realistic
and
thus
result
in
the
15
ton
cap
being
met
by
2020.

Response:

EPA
agrees
that
projections
of
the
timeline
for
achievement
of
the
15
ton
second
phase
Hg
cap
are
sensitive
to
modeling
assumptions.
EPA
published
a
NODA
discussing
some
of
these
assumptions
and
input
the
Agency
received
from
commenters
that
conducted
modeling
of
the
Hg
cap­
and­
trade
program.
EPA
requested
comment
in
the
NODA
on
the
following:
projected
improvements
in
variable
operating
costs
for
ACI
over
time,
consideration
of
additional
Hg
control
technology
options,
availability
of
ACI,
Hg
control
technology
costs,
the
impact
of
banking
on
achieving
the
second
phase
Hg
cap,
the
level
of
co­
benefit
Hg
reductions
under
CAIR,
and
Hg
removal
assumptions
for
the
various
technology
combinations
included
in
IPM.
Assumptions
in
IPM
are
discussed
in
detail
in
the
documentation
for
IPM
v.
2.1.9,
which
is
available
in
the
docket.
EPA's
economic
analysis
of
the
final
rule
is
discussed
in
Chapter
7
of
the
Regulatory
Impacts
Analysis
(
RIA).
Regarding
the
modeling
submitted
by
the
commenter,
EPA
has
noted
that
the
projected
emissions
of
15
tons
in
2020
appear
to
be
an
artifact
of
the
grouping
of
the
2020
run
year
with
the
model
end
run
year
of
2040.
EPA
maintains
that,
in
a
least­
cost
solution
model
like
the
commenter's,
the
model
would
solve
for
the
cap
in
the
final
run
year
grouping.
7­
3
4
Comment:

One
commenter
(
OAR­
2002­
0056­
3552)
disputed
EPA's
rationale
for
not
using
section
112
as
a
control
strategy
because
of
the
anticipated
absence
of
local
or
regional
hot
spots.
The
commenter
stated
that
EPA
based
this
position
on
the
expected
70
percent
emission
reduction
under
the
proposed
section
111
rule
and
cap
and
trade
program
and
that
analyses
of
the
Acid
Rain
program
did
not
show
any
hot
spots.
The
commenter
stated
that
EPA
should
provide
evidence
to
support
this
position,
including
a
description
of
the
models,
assumptions,
and
default.
The
commenter
asserted
that
states
should
have
the
opportunity
to
review
the
modeling
runs
used
to
determine
local
deposition
and
check
input
values
such
as
default
values,
percent
Hg
in
coal,
control
devices
and
their
efficiencies,
and
Hg
composition
of
the
emissions
released.
The
commenter
stated
that
for
such
an
important
decision,
the
methodology
EPA
used
to
arrive
at
this
prediction
should
be
clear
to
the
states.

Response:

EPA
is
finalizing
a
cap­
and­
trade
program
under
section
111.
All
analysis
of
the
rule
is
available
in
the
RIA.
Documentation
of
EPA's
models
and
assumptions
are
available
in
the
docket.
EPA
believes
that
the
final
rule
will
protect
public
health,
as
show
in
its
analysis.

7.2
HEALTH
7.2.1
Mercury
in
Coal
Comment:

One
commenter
(
OAR­
2002­
0056­
3538)
stated
that
the
proposed
rule
downplays
Hg
health
risks,
retreats
from
previous
findings,
and
exaggerates
scientific
uncertainties
to
justify
a
weak
standard.

Response:

EPA
disagrees
with
the
comment.
The
U.
S.
is,
for
the
first
time,
establishing
Federal
rules
that
will
limit
Hg
emissions
from
coal­
fired
power
plants.
We
are
moving
forward
with
a
regulatory
program
that
is
unprecedented
in
the
world
and
will
address
health
risk
resulting
from
coal­
fired
utility
Hg
emissions.
As
new
scientific
and
health
data
become
available,
the
standards
provide
for
a
reanalysis
of
the
appropriateness
of
the
level
of
the
standard.

Comment:

One
commenter
(
OAR­
2002­
0056­
2929)
stated
that
in
EPA's
December
2000
regulatory
determination,
EPA
noted
"
there
are
uncertainties
regarding
the
extent
of
the
risks
due
to
electric
utility
mercury
emissions."
The
commenter
stated
that
previously,
in
its
Mercury
Research
Strategy,
EPA
stated
that
"[
t]
he
amount
of
mercury
deposited
in
the
United
States
that
can
be
directly
attributed
to
domestic
combustion
sources
remains
uncertain."
The
commenter
further
7­
4
stated
that
three
years
later,
after
extensive
research
on
the
fate
and
transport
and
atmospheric
chemistry
of
Hg,
EPA
stated
in
the
proposed
Hg
rule
that
the
agency
"
cannot
currently
quantify
whether,
and
the
extent
to
which,
the
adverse
health
effects
occur
in
the
populations
surrounding
these
facilities,
and
the
contribution,
if
any,
of
the
facilities
to
those
problems."
The
commenter
further
stated
that,
in
addressing
the
state
of
the
science,
the
proposed
rule
notes
that
"
the
relationship
between
Hg
emission
reductions
from
utility
units
and
methylmercury
concentrations
in
fish
cannot
be
calculated
in
a
quantitative
manner
with
confidence."
The
commenter
also
stated
that
EPA
admits
that
"[
t]
he
Agency
is
unable
to
provide
a
monetized
estimate
of
the
benefits
of
Hg
(
mercury)
and
Ni
(
Nickel)
emissions
reduced
by
the
proposed
rule
at
this
time."
The
commenter
added
that
recent
and
comprehensive
research
undertaken
by
the
Centers
for
Disease
Control
and
Prevention
(
CDC),
which
measured
Hg
in
the
blood
of
women,
indicates
that
people
in
the
U.
S.
are
not
being
exposed
to
levels
of
Hg
considered
to
be
harmful
to
fetuses,
children,
or
adults.
The
commenter
stated
that
according
to
the
CDC,
"
The
levels
reported
in
this
NHANES
[
National
Health
and
Nutrition
Examination
Survey]
1999­
2000
subsample
for
maternal­
aged
females
were
below
levels
associated
with
in
utero
effects
on
the
fetus,
or
with
effects
in
children
and
adults
(
National
Academy
of
Sciences,
2000)."
Another
commenter
(
OAR­
2002­
0056­
3440)
added
that
health
effects
of
Hg
reductions
from
power
plants
have
not
been
demonstrated.

Response:

As
part
of
its
analysis
of
the
final
rule,
EPA
has
estimated
the
health
benefits
of
reducing
Hg
from
utilities.
EPA's
analysis
focuses
on
the
benefits
of
reducing
neurological
impacts
of
exposure
to
MeHg
via
consumption
of
self­
caught
freshwater
fish.
The
RIA
for
this
rule
contains
this
analysis
in
Chapter
11.

Comment:

Many
State
Attorney
Generals
contended
that
EPA
downplayed
and
mischaracterized
the
current
science
and
technology
concerning
the
public
health
impacts
caused
by
Hg
exposure,
which
supports
the
need
for
an
appropriate
MACT
standard
under
section
112.
Many
U.
S.
Senators
and
one
Congressman
agreed
that
certain
scientific
evidence
appears
to
have
been
changed
to
diminish
the
significance
of
health
risks.
One
commenter
stated
that
EPA
disregarded
the
available
science
when
evaluating
the
adverse
health
impacts
of
Hg
exposure,
ignored
the
degree
to
which
the
public
is
exposed
to
Hg,
did
not
assess
the
benefits
to
public
health
of
decreased
MeHg
ingestion
in
fish,
and
presented,
without
foundation,
the
global
and
local
impacts
of
Hg
deposition.
The
commenters
contended
that
there
is
overwhelming
evidence,
including
recent
new
data,
that
Hg
emissions
from
U.
S.
powerplants
are
severely
impacting
inland
and
coastal
waters,
leading
to
massive
environmental
damage
and
the
need
for
fish
consumption
advisories.
The
commenters
stated
that
Hg
emissions
from
U.
S.
powerplants
are
also
contributing
to
adverse
effects
on
human
health.
The
commenters
stated
that
the
relationship
between
Hg
emissions
from
coal­
fired
plants
and
the
elevated
levels
of
Hg
in
fish
is
not
in
dispute.
The
commenters
added
that
there
is
sound
scientific
basis
for
requiring
stringent
controls
for
Hg
emissions
based
on
EPA's
own
statements.
Further,
the
commenters
stated
that
uncertainties
that
may
exist
point
to
the
need
for,
not
the
weakening
of,
safeguards
to
reduce
the
public's
exposure
to
Hg.
The
commenters
stated
that
in
light
of
EPA's
own
findings
that
power
plants
are
the
7­
5
largest
emitters
of
Hg,
the
overwhelming
evidence
that
8
percent
of
women
of
childbearing
age
have
elevated
Hg
levels,
that
over
600,000
babies
are
born
overexposed
to
Hg
in
utero
with
potential
neurological
deficits,
and
the
fact
that
fish
consumption
advisories
nationwide
are
on
the
rise,
EPA
regulatory
response
should
be
to
establish
an
appropriate
plant
by
plant
MACT
standard
under
section
112
to
achieve
meaningful
reductions
of
Hg
emitted
to
the
atmosphere.

Response:

Through
this
rulemaking
and
the
separate
CAIR
rule,
EPA
is
taking
steps
to
lower
the
Hg
emissions
from
utilities.
As
explained
in
the
preamble
to
the
final
rule,
EPA
believes
that
the
steps
taken
in
these
packages
will
provide
a
substantial
positive
step
in
reducing
the
health
effects
which
may
result
from
the
release
of
Hg
from
these
utilities.

As
part
of
its
analysis
of
the
final
rule,
EPA
has
estimated
the
health
benefits
of
reducing
Hg
from
utilities.
EPA's
analysis
focuses
on
the
benefits
of
reducing
neurological
impacts
of
exposure
to
MeHg
via
consumption
of
self­
caught
freshwater
fish.
The
RIA
for
this
rule
contains
this
analysis
in
Chapter
11.

Comment:

One
commenter
(
OAR­
2002­
0056­
3499)
stated
that
EPA
has
underestimated
and
distorted
the
health
effects
caused
by
Hg
from
power
plants.
The
commenter
stated
that
the
brief
discussion
of
the
potential
cardiovascular
effects
of
methylmercury
(
MeHg)
concludes
that
the
existing
studies
present
conflicting
results.
The
commenter
asserted
that
this
statement
is
not
documented
and
is
largely
not
the
case.
The
commenter
also
noted
that
EPA
identifies
those
at
risk
from
MeHg
as
those
who
regularly
and
frequently
consume
large
amounts
of
fish.
The
commenter
asserted
that
this
is
not
necessarily
the
case
and
misleading.
The
commenter
stated
that
even
moderate
consumption
of
fish
with
high
Hg
concentrations
can
lead
to
significantly
elevated
Hg
levels
and
health
risk.

Response:

The
science
of
documenting
and
estimating
the
health
effects
of
exposure
to
low
levels
of
Hg
is
evolving.
EPA
is
aware
that
a
study
on
potential
cardiovascular
effects
has
been
recently
entered
into
the
docket
to
this
rulemaking
(
February
22,
2005).
EPA
was
not
able
to
evaluate
the
results
of
this
study
in
the
determination
for
the
final
rule.
EPA
is
aware
of
this
effect
and
other
effects
of
low
level
Hg
exposures.
Our
RIA
for
this
rulemaking
lays
out
our
understanding
of
the
current
state
of
the
science
and
provides
quantified
or
qualitative
estimates
of
the
effects
of
reducing
Hg
emissions
from
utilities.

7.3
ENVIRONMENTAL
IMPACTS
Comment:

One
commenter
(
OAR­
2002­
0056­
2430)
recommended
that
if
EPA
pursues
regulation
7­
6
under
section
111,
it
include
some
type
of
risk
and
environmental
health
assessment
including
an
evaluation
of
the
effects
of
Hg
deposition.
The
commenter
stated
that
although
residual
risk
requirements
under
section
112
address
risk
to
public
health
and
the
environment,
section
111
does
not.
The
commenter
stated
that
the
disassociation
of
CAA
regulations
from
public
health
and
the
environment
is
unacceptable
public
policy
and
sets
a
bad
precedent.

Response:

EPA
has
addressed
the
implications
of
the
rule
as
suggested
by
the
commenter.

7.4
COSTS
AND
ECONOMICS
Comment:

One
commenter
(
OAR­
2002­
0056­
3528)
stated
that
most,
if
not
all,
small
businesses
will
be
impacted
by
a
regulatory
structure
that
imposes
new
requirements
on
Electric
Utility
Steam
Generating
Units
(
power
plants).
The
commenter
noted
that
small
business
owners
need
electricity
to
run
their
businesses,
and
it
is
certain
that
if
and
when
a
new
regulatory
scheme
is
implemented,
the
costs
associated
with
it
will
be
passed
on
to
small
firms
in
the
form
of
higher
electricity
prices.
The
commenter
stated
that
Dr.
Willie
Soon,
a
physicist
at
the
Solar,
Stellar,
and
Planetary
Sciences
Division
of
the
Harvard­
Smithsonian
Center
for
Astrophysics
and
an
astronomer
at
the
Mount
Wilson
Observatory,
has
noted
that
"
industrial
demands
for
mercury
(
and
hence
emissions)
in
the
U.
S.
have
been
systematically
and
rapidly
decreasing
over
time
through
common
sense
public
policy
controls
on
Hg
content
in
less
essential
products
like
paints,
pesticides
and
batteries.
From
a
regulatory­
efficiency
standpoint,
the
relatively
clean
U.
S.
power
plants
are
not
the
best
target
for
addressing
the
global
mercurial
emission
problem.
Why?
We
lack
the
technological
know­
how
to
eliminate
Hg
emissions...
As
such,
the
proposed
regulations
are
likely
to
drive
up
energy
costs
significantly.
Since
the
poor
and
middle
class
pay
a
greater
percentage
of
their
income
on
basic
energy
needs,
the
heaviest
burden
of
such
regulations
will
fall
on
those
least
able
to
afford
them."
The
commenter
submitted
that
indeed,
an
April
2003
report
from
the
U.
S.
Department
of
Energy
(
DOE)
declared
that
"
technology
to
cost­
effectively
reduce
mercury
emissions
from
coal­
fired
plants
is
not
yet
commercially
available."
The
commenter
stated
that
one
estimate
placed
the
annual
price
tag
of
reducing
Hg
emissions
from
U.
S.
power
plants
at
$
3
billion.
The
commenter
stated
that
the
electric
power
industry
provides
a
vital
service
to
our
nation
and
is
a
key
driver
of
local
and
national
economies.
The
commenter
believed
that
while
EPA
might
contend
that,
on
average,
the
costs
of
the
rule
will
be
"
low",
even
a
seemingly
small
5
to
10
percent
increase
in
electricity
costs
will
impact
small
businesses,
low­
income
families
and
retiree
households.
The
commenter
believed
that
in
the
end,
while
it
is
highly
unlikely
that
the
EPA
will
abandon
the
proposed
Hg
emissions
regulation,
the
Agency
must
present
clear
scientific
justification
for
moving
forward
 
that
regulating
will
create
net
significant
human
health
benefits,
especially
if
promulgated
under
the
Clean
Air
Act.
The
commenter
submitted
that
if
the
EPA
moves
forward,
it
cannot
require
too
much
too
soon
as
would
be
the
case
under
a
maximum
achievable
control
technology
(
MACT)
requirement.
The
commenter
noted
that
the
29
percent
reduction
target
for
2007
is
not
scientifically
feasible
as
noted
above.
The
commenter
believed
that
if
reductions
are
pushed
too
quickly,
this
would
endanger
the
use
of
cost­
effective
coal
as
a
7­
7
fuel
and
would
put
more
pressure
on
already
strained
natural
gas
markets.
The
commenter
stated
that
a
variety
of
fuels
is
needed
so
that
there
is
no
run
up
in
prices,
such
as
has
occurred
recently
for
natural
gas.
The
commenter
noted
that
natural
gas
prices
are
very
important
for
all
consumers,
including
families,
farmers,
manufacturers
and,
of
course,
small
businesses.
If
controls
are
required,
and
presented
with
the
limited
options
under
the
proposed
rule,
the
commenter
viewed
the
cap­
and­
trade
program
as
less
restrictive
and
more
cost­
efficient
than
MACT.
The
commenter
stated
industry
will
not
be
forced
to
utilize
expensive
alternatives
to
coal,
the
nation's
most
abundant,
affordable
fuel
source.
The
commenter
noted
that
the
cost
increases
for
small
businesses
will
not
be
as
high
(
though
any
cost
increase
is
burdensome
to
price
sensitive
small
firms).
Similar
to
the
acid
rain
program,
the
commenter
believed
EPA
should
manage
the
new
program
by
laying
out
the
rules
of
the
road
but
not
dictate
the
path
to
the
destination.

Response:

EPA
is
finalizing
a
cap­
and­
trade
program
for
Hg
emissions.
One
of
the
advantages
of
a
cap­
and­
trade
approach
is
that
the
ability
for
emissions
reductions
to
be
achieved
more
efficiently
than
a
command
and
control
approach.
EPA
projects
that
today's
rule
will
have
an
impact
on
retail
electricity
prices
of
less
than
1
percent.
This
analysis
is
discussed
in
Chapter
7
of
the
RIA.
It
should
also
be
noted
that
EPA's
modeling
does
not
take
into
account
advancements
in
pollution
control
technology
and
the
cost
reductions
associated
with
these,
such
that
EPA
is
likely
overestimating
the
impacts
of
the
final
rule.

Comment:

One
commenter
(
OAR­
2002­
0056­
3556)
stated
that
the
costs
of
implementing
this
program
are
significant.
The
commenter
supported
the
comments
on
implementation
and
compliance
being
supplied
by
UARG.
The
commenter
stated
that
EPA's
estimates
are
too
low.
The
commenter
stated
that
they
are
currently
spending
in
excess
of
seven
hundred
million
dollars
to
implement
the
NOx
SIP
Call.
The
commenter
stated
that
this
number
is
more
than
a
factor
of
3
higher
than
their
original
estimate
 
which
was
higher
than
EPA's
estimate.
The
commenter
stated
that
the
NOx
SIP
call
dealt
with
retrofitting
existing
units
with
known
technologies.
The
commenter
expected
the
costs
of
implementing
the
Hg
rule
to
be
higher,
once
the
to­
be­
determined
Hg­
specific
controls
are
included
in
the
system.
The
commenter
stated
that
many
utilities,
including
the
commenter,
are
facing
the
reality
of
obtaining
adequate
financing
to
cover
the
costs
of
implementation.
The
commenter
stated
that
this
is
further
complicated
by
the
need
to
clearly
layout
a
cost­
recovery
mechanism,
within
the
current
regulatory
system
in
Michigan.
The
commenter
strongly
recommended
that
EPA
use
a
more
accurate
methodology
for
projecting
the
costs
of
MACT,
including
characterizing
each
individual
unit
in
the
database,
using
site­
specific
conditions
to
determine
which
technology
is
the
least
cost
option.

Response:

EPA
is
finalizing
a
cap­
and­
trade
program
for
Hg
under
section
111
of
the
CAA,
rather
than
a
Hg
MACT.
This
system
allows
for
a
variety
of
control
technologies
and
provides
7­
8
incentives
for
achieving
least­
cost
reductions.
The
projected
impacts
of
the
final
CAMR
are
discussed
in
Section
7
of
the
RIA.

Comment:

One
commenter
(
OAR­
2002­
0056­
4191)
stated
that
EPA
must
ensure
that
the
Hg
rule
does
not
disadvantage
coal,
especially
Gulf
Coast
lignite,
because
doing
so
would
aggravate
the
already
precarious
natural
gas
supply
and
price
situation.
The
commenter
submitted
that
high
natural
gas
prices
are
a
significant
economic
challenge
to
business
and
industry,
especially
small
businesses.
The
commenter
added
that
high
natural
gas
prices
are
undermining
U.
S.
economic
recovery,
pushing
jobs
offshore
in
gas­
dependent
industries,
and
are
increasing
the
cost
of
electricity
in
several
regions
of
the
U.
S.
The
commenter
pointed
out
that
during
the
late
1990'
s,
the
historic
surplus
of
natural
gas
disappeared
due
to
a
growing
economy,
governmental
access
restrictions
to
large
gas
deposits
onshore
and
offshore,
and
clean
air
regulations
that
encouraged
electric
generators
to
use
natural
gas
instead
of
coal.
The
commenter
stated
that
by
2000,
spot
market
prices
soared
and
the
average
annual
price
for
gas
more
than
doubled.
The
commenter
added
that
the
industrial
sector,
unable
to
pass
through
costs
to
consumers,
was
hit
hard.
The
commenter
noted
that
U.
S.
natural
gas
production
is
not
keeping
pace
with
the
demands
of
a
growing
population
and
a
slowly
recovering
economy.
The
commenter
believed
that
this
crisis,
brought
on
partly
by
national
policies
encouraging
the
use
of
natural
gas
while
discouraging
its
domestic
production,
makes
clear
the
need
for
the
U.
S.
to
maintain
a
diverse
fuel
supply
and
provide
adequate
domestic
production
of
energy.
The
commenter
submitted
that
if
the
Hg
rule
was
to
even
slightly
decrease
the
dependence
on
coal
as
a
viable
fuel
for
electric
generation,
the
natural
gas
supply
and
the
price
problems
would
increase.
The
commenter
stated
that
it
is
estimated
that
forced
replacement
of
coal
with
natural
gas
as
fuel
in
electric
generation
would
increase
the
demand
for
natural
gas
by
about
35
percent
and
would
increase
natural
gas
prices
by
about
33
percent.
The
commenter
stated
that
EGUs
designed
to
burn
lignite
cannot
easily,
quickly,
or
cheaply
switch
to
burn
other
fuel
types.
The
commenter
noted
that
lignite's
low
heat
content
and
its
other
properties
call
for
a
specific
boiler
design.
The
commenter
claimed
that,
as
such,
lignite­
fired
EGUs
would
require
significant
alterations
to
allow
them
to
burn
non­
lignite
fuels.
The
commenter
added
that
in
addition
to
being
time
consuming,
such
alterations
would
be
very
expensive.
The
commenter
stated
further
that
companies
that
own
and
operate
lignite­
fired
EGUs
are
often
parties
to
long­
term
contracts
to
purchase
the
lignite.
The
commenter
noted
that,
therefore,
even
if
such
EGUs
could
no
longer
burn
lignite,
they
would
still
be
required
to
purchase
it
pursuant
to
any
such
long­
term
contracts.
The
commenter
added
that
moreover,
Gulf
Coast
lignite­
fired
EGUs
in
Texas
are
"
mine­
mouth"
plants,
which
means
they
are
located
on
the
property
from
which
the
lignite
is
mined.
The
commenter
stated
that
therefore,
for
many
such
EGUs,
rail
lines
to
the
EGUs
that
could
be
used
to
transport
other
types
of
fuel
to
the
site
would
have
to
be
constructed.
The
commenter
asserted
that
for
the
foregoing
reasons,
the
final
rule
must
take
into
account
the
need
to
avoid
any
undue
switching
from
coal,
especially
Gulf
Coast
lignite,
to
another
type
of
coal
or
natural
gas
as
fuel
in
electric
generation.

Response:

The
impacts
of
CAMR
on
coal
production
are
discussed
in
Chapter
7
of
the
RIA.
Coal­
7­
9
fired
generation
and
natural
gas­
fired
generation
are
projected
to
remain
relatively
unchanged
because
of
the
phased­
in
nature
of
CAMR,
which
allows
industry
the
appropriate
amount
of
time
to
install
the
necessary
pollution
controls.
Additionally,
no
coal
capacity
is
projected
to
be
uneconomic
to
maintain
under
CAMR
relative
to
the
CAIR.

Comment:

Several
commenters
(
OAR­
2002­
0056­
2609,
­
2684,
­
3380)
in
Colorado
believed
the
rule
will
have
a
negative
economic
impact
on
Aspen
because
continuation
of
high
Hg
emissions
from
coal­
fired
plants
subsidizes
coal
which
contributes
to
global
warming
and
prevents
a
level
playing
field
for
developers
of
renewable
energy
sources.

Response:

Under
this
rulemaking,
EPA
is
placing
Hg
emission
reduction
requirements
on
coal­
fired
electricity
generating
units
that
will
require
investment
by
the
industry,
and,
thus,
is
not
providing
a
subsidy
to
coal­
fired
generation.

Comment:

One
commenter
(
OAR­
2002­
0056­
2887)
recommended
that
the
capital
costs
and
cost
effectiveness
of
Hg
controls
be
expressed
in
terms
of
costs
to
the
ratepayer
(
e.
g.,
mills/
kWh
of
electricity).
The
commenter
believed
from
this
perspective,
the
costs
are
lower
than
those
for
NOx
control
from
electric
utilities
(
which
are
considered
to
be
cost
effective
by
industry
and
state
regulators
and
the
basis
for
the
"
Section
110
transport
SIP
call"
and
the
Clean
Air
Interstate
Rule
proposed
concurrently
with
the
MACT
standard).
According
to
the
commenter,
the
total
annual
costs
for
Hg
controls
ranges
from
0.18
to
1.15
mills/
kWh
compared
to
0.21
to
0.83
for
low­
NOx
burners
and
1.85
to
3.62
mills/
kWh
for
selective
catalytic
reduction.
The
commenter
contended
that
EPA's
presentation
of
cost
effectiveness
in
terms
of
dollars
per
pound
of
Hg
removed
by
a
control
technology
compared
to
the
costs
of
controlling
NOx
or
SO2
emissions
from
power
plants
is
misleading
because
Hg
is
emitted
in
far
small
quantities
than
conventional
pollutants.
The
commenter
added
that,
however,
Hg
presents
a
far
greater
public
health
and
environmental
threat
on
an
equivalent
mass
basis.

Response:

EPA
discusses
the
projected
impact
of
CAMR
on
retail
electricity
prices
in
Chapter
7
of
the
RIA.
EPA
believes
that
cost­
effectiveness
measures
(
e.
g.,
$/
ton)
are
useful
tools
to
evaluate
and
compare
marginal
costs
of
various
programs.
EPA
agrees
that
cost­
effectiveness
measures
for
different
pollutants
may
not
be
meaningfully
compared
with
each
other.
The
benefits
and
costs
of
CAMR
are
discussed
in
detail
in
the
RIA.

Comment:

One
commenter
(
OAR­
2002­
0056­
4177)
believed
EPA's
economic
analysis
is
inadequate
7­
10
and
flawed.
The
commenter
asserted
that
EPA
used
the
wrong
economic
benchmark.
The
commenter
stated
that
the
economic
cost
of
Hg
control
should
not
be
assessed
the
same
way
as
criteria
pollutants
because
Hg
creates
public
health
problems
at
lower
levels.
The
commenter
stated
that
EPA
should
evaluate
the
costs
in
terms
of
the
additional
cost
of
electrical
production
rather
than
in
cost/
ton
of
pollutant
removed.
The
commenter
stated
that
using
the
other
approach,
the
best
Hg
controls
cost
0.18
to
1.15
mils/
kWh.
The
commenter
stated
that
given
the
added
costs
of
litigation,
health
care,
and
special
education
for
affected
children,
EPA
would
determine
that
a
legally
reasonable
standard
is
economical.

Response:

EPA
does
evaluate
the
cost
of
Hg
control
in
terms
of
the
additional
cost
of
electrical
production.
This
analysis
is
presented
in
Chapter
7
of
the
RIA.

Comment:

One
commenter
(
OAR­
2002­
0056­
2819)
did
preliminary
cost
estimates
for
installing
FGD
or
ACI
on
their
coal­
fired
boilers
using
EPA
methodology
and
compared
their
estimates
to
those
from
Public
Service
of
New
Hampshire,
ADA­
ES,
and
DOE.
The
commenter
reported
that
the
results
are
similar
to
NESCAUM
estimates
(
see
Mercury
Emissions
from
Coal­
Fired
Power
Plants:
The
Case
for
Regulatory
Action,
October
2003).
The
commenter
reported
that
estimated
capital
costs
for
FGD
range
from
$
54.2­$
100.4
million
and
for
ACI
range
from
$
0.98
to
$
47.3
million
depending
on
size
and
other
factors.
The
commenter
stated
that
while
these
costs
may
not
be
applicable
to
all
units
nationwide,
they
are
sufficient
to
justify
standards
at
least
as
stringent
as
those
for
New
Jersey
and
Massachusetts.
The
commenter
added
that
allowing
emissions
averaging
can
further
reduce
the
costs.

Response:

See
the
preamble
for
EPA's
discussion
of
Hg
control
technology,
and
IPM
documentation
(
available
in
the
docket)
for
EPA's
assumptions
regarding
the
capital
costs
of
FGD
and
ACI.

Comment:

One
commenter
(
OAR­
2002­
0056­
3449)
believed
the
current
costs
of
ACI
are
reasonable.
The
commenter
noted
that
DOE
has
a
goal
of
reducing
it
to
1/
4
of
current
costs.
The
commenter
added
that
ACI
also
has
low
capital
costs,
which
would
allow
for
replacement
if
other
technology
is
shown
to
have
lower
operational
costs.
In
support,
the
commenter
cited
the
U.
S.
DOE
Report
on
Preliminary
Cost
Estimate
of
Activated
Carbon
Injection
for
Controlling
Mercury
Emissions
from
an
Unscrubbed
500
MW
Coal­
Fired
Power
Plant.

Response:

See
the
preamble,
and
EPA's
Office
of
Research
and
Development's
white
paper
on
Hg
7­
11
control
technology
for
the
Agency's
position
on
the
costs
and
availability
on
Hg
control
technologies.

Comment:

One
commenter
(
OAR­
2002­
0056­
2182)
stated
that
some
political
leaders
in
Ohio
argue
that
stricter
environmental
rules
will
cost
jobs,
but
Ohio
now
has
the
dirtiest
air
in
the
nation.
The
commenter
added
that
at
the
same
time,
Hg
pollution
has
cost
their
fisheries
millions
and
compromised
public
health.
The
commenter
stated
that
the
total
health
related
and
lost
productivity
costs
have
not
been
calculated.
The
commenter
stated
that
Ohio
can
have
both
cleaner
air
and
a
strong
economy
­
the
key
is
to
support
pollution
control
vendors
as
a
promising
new
industry.

Response:

EPA
believes
that
the
rule
being
finalized
is
the
best
approach
to
both
remove
Hg
from
the
air
and
water
and
promote
Hg­
specific
control
technologies
for
use
in
the
U.
S.
and
around
the
world.

Comment:

One
commenter
(
OAR­
2002­
0056­
0916)
stated
that
proposals
make
excessively
costly
restrictions
on
utilities.

Response:

EPA's
chosen
cap­
and­
trade
approach
to
reducing
Hg
emissions
will
limit
the
cost
impact
on
utilities
relative
to
a
command
and
control
approach.
The
economic
impacts
of
CAMR
are
discussed
in
Chapter
7
of
the
RIA.
Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

Comment:

One
commenter
(
OAR­
2002­
0056­
1352)
stated
that
the
proposals
will
be
harmful
to
the
economy
for
lack
of
positive
effect
on
the
environment
and
disruption
of
energy
supplies.

Response:

The
benefits
and
costs
of
CAMR
are
discussed
in
the
RIA.
It
should
be
noted
that
according
to
EO
13211:
Actions
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use,
this
rule
is
not
significant,
measured
incrementally
to
CAIR,
because
it
does
not
have
a
greater
than
1
percent
impact
on
the
cost
of
electricity
production
and
it
does
not
result
in
the
retirement
7­
12
of
greater
than
500
MW
of
coal­
fired
generation.

Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

Comment:

One
commenter
(
OAR­
2002­
0056­
1573)
stated
that
in
setting
its
reductions
targets
and
compliance
deadlines,
EPA
should
fully
consider
the
complexities
of
this
new
regulatory
program
and
the
costs
of
compliance.
The
commenter
stated
that
the
power
generation
industry
finds
itself
facing
the
biggest
round
of
emission
reductions
in
its
history.
The
commenter
pointed
out
that
the
power
generation
industry
also
faces
substantial
uncertainty
because
power
plant
Hg
controls
have
yet
to
be
commercially
demonstrated.
The
commenter
was
keenly
aware
that
some
view
compliance
cost
estimates
on
the
part
of
industry
as
little
more
than
"
crying
wolf"
whenever
a
new
regulatory
requirement
is
imposed.
However,
the
commenter
noted
their
experience
in
implementing
controls
under
the
NOx
SIP
Call.
The
commenter
stated
that
EPA
originally
projected
that
two­
thirds
of
the
controls
installed
for
NOx
SIP
Call
compliance
would
consist
of
Selective
Non­
Catalytic
Reduction
(
SNCR)
controls,
with
the
remaining
one­
third
mostly
consisting
of
Selective
Catalytic
Reduction
(
SCR)
controls.
The
commenter
also
stated
that
EPA
also
estimated
SCR
capital
costs
as
about
$
60/
kW.
Now
that
companies
have
installed
most
of
their
NOx
controls,
the
commenter
stated
that
EPA
substantially
underestimated
compliance
costs.
The
commenter
stated
that
across
the
industry,
the
vast
majority
of
the
NOx
SIP
Call
controls
have
been
SCR,
with
few
installations
of
SNCR.
The
commenter
opted
to
install
nine
SCRs
with
no
SNCR
at
all.
Contrary
to
EPA's
estimated
compliance
costs
of
$
60/
kW,
the
commenter's
actual
installed
SCR
costs
were
more
than
double
that
figure.
The
commenter
urged
EPA
to
carefully
assess
the
lessons
learned
from
the
regulatory
initiatives
of
the
recent
past.

Response:

EPA
is
addressing
uncertainty
in
the
cost
of
Hg
emissions
control
under
CAMR
by
having
a
first
phase
cap
that
is
equal
to
the
projected
co­
benefit
Hg
reductions
under
CAIR
in
2010,
and
thus
does
not
require
the
installation
of
Hg
specific
control.
Additionally,
the
second
phase
cap
of
15
tons
is
also
set
with
consideration
for
cost
uncertainty
faced
by
the
industry.
EPA
believes
that
the
use
of
a
Hg
cap­
and­
trade
program
will
lead
to
the
development
of
more
efficient
and
cost
effective
Hg
control
technology
options
through
the
market
incentives
provided
by
the
cap­
and­
trade
mechanism.

Comment:

One
commenter
(
OAR­
2002­
0056­
2067)
stated
that
in
addition
to
the
limitations
with
existing
control
technology,
structural
barriers
also
exist
in
terms
of
monitoring
equipment.
The
commenter
stated
that
to
adequately
demonstrate
removal
of
Hg,
monitoring
equipment,
such
as
7­
13
continuous
emissions
monitoring
systems
or
sorbent
trap
monitoring
technology,
must
also
be
installed.
According
to
the
commenter,
the
cost
of
monitoring
equipment,
as
well
as
the
cost
of
its
operation
and
maintenance,
is
significant,
and
no
monitoring
technology
has
emerged
that
is
both
cost
effective
and
accurate.
The
commenter
asserted
that
compliance
standards
must
recognize
the
limited
development
of
such
monitoring
technology
as
well.

Response:

The
final
rule
contains
flexibility
by
allowing
sources
to
account
for
their
Hg
emissions
by
using
Hg
CEMS,
sorbent
trap
monitoring
systems
(
or
a
combination
thereof),
and,
in
some
cases,
using
low
mass
provisions.
EPA
disagrees
with
the
commenter
and
believes
that
field
tests
have
demonstrated
Hg
CEMS
to
be
cost
effective,
accurate,
and
reliable.
The
Hg
CEMS
have
performed
adequately
for
several
months
and
meet
the
Ontario­
Hydro
Reference
Method
specifications.
Furthermore,
several
dry
chemistry
Hg
CEMS
are
currently
being
tested
at
sites
that
represent
the
most
challenging
conditions
and
the
Agency
plans
to
share
with
industry
the
results
of
such
experiences
to
facilitate
the
selection
of
appropriate
monitoring
methodology.
EPA
is
also
confident
that
substantial
advancement
of
Hg
CEMS
will
occur
before
the
implementation
of
the
rule
and
as
other
monitoring
techniques
may
become
available,
is
allowing
the
use
of
systems
that
can
meet
performance­
based
specifications.
The
performancebased
approach
allows
for
use
of
various
suitable
sampling
and
analytical
technologies
while
maintaining
a
specified
and
documented
level
of
data
quality.

Comment:

Several
commenters
(
OAR­
2002­
0056­
1269,
­
2065,
­
2074,
­
2082)
asked
how
much
will
plants
increase
rates
as
a
result
of
the
proposals.

Response:

The
impact
of
CAMR
on
retail
electricity
prices
relative
to
CAIR
is
projected
to
be
less
than
1
percent.
This
is
discussed
in
more
detail
in
Chapter
7
of
the
RIA.

Comment:

One
commenter
(
OAR­
2002­
0056­
2160)
was
concerned
about
the
potential
economic
impacts
of
losing
their
bituminous
coal
market.
The
commenter
asserted
that
to
meet
stringent
and
possibly
unattainable
limits,
plants
that
burn
bituminous
coal
mined
in
Illinois
will
switch
to
subbituminous
coal
because
of
the
cost,
less
stringent
limit,
or
unavailability
of
control
equipment.
The
commenter
stated
that
fuel
switching
would
have
a
devastating
economic
effect
on
their
coal
industry
(
the
Illinois
coal
market
will
fail),
associated
industries,
and
their
tax
base.
The
commenter
asserted
that
fuel
neutral
rules
would
avoid
this
effect.

Response:

The
reductions
in
emissions
from
the
power
sector
under
CAIR
and
CAMR
will
be
met
7­
14
through
the
installation
of
pollution
controls
for
Hg,
SO2,
and
NOx
removal.
The
pollution
controls
can
achieve
up
to
a
95
percent
SO2
removal
rate,
which
allows
industry
to
rely
more
heavily
on
local
bituminous
coal
in
the
eastern
and
central
parts
of
the
country
that
has
a
higher
sulfur
content
and
is
less
expensive
to
transport
than
western
subbituminous
coal.

Comment:

One
commenter
(
OAR­
2002­
0056­
2160)
stated
that
there
is
an
increased
risk
on
capital
investment
because
of
the
uncertainty
in
the
availability
of
control
technology.
The
commenter
stated
that
obtaining
financial
backing
for
purchasing
equipment
will
require
larger
outlays
from
power
companies
(
lending
institutions
avoid
risk).
The
commenter
believed
these
increased
costs
will
be
passed
on
to
consumers,
thus
harming
the
State's
ability
to
provide
inexpensive
electric
power­
an
economic
asset.
The
commenter
stated
that
the
proposed
rules
should
be
reviewed
to
determine
the
availability
of
technologies
which
have
minimal
risk
in
attaining
the
necessary
emissions
performance.

Response:

EPA's
Office
of
Research
and
Development
has
produced
a
white
paper
(
available
in
the
docket)
that
assess
the
current
state
of
Hg
emissions
control
technology.
EPA
has
set
the
first
phase
cap
at
a
level
that
represents
projected
co­
benefit
Hg
emission
reductions
that
will
occur
under
CAIR
as
of
2010,
and
the
15
ton
cap
in
2018
allows
sources
adequate
time
for
the
installation
of
the
necessary
pollution
controls.

Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

Comment:

One
commenter
(
OAR­
2002­
0056­
1969)
stated
that
monitoring
costs
for
small
units
will
be
disproportionate
to
the
costs
of
compliance
with
the
MACT
emissions
limit.
The
commenter
supported
lower
frequencies
and
lower
cost
monitoring
requirements
for
those
units
that
emit
under
25
pounds
per
year.

Response:

The
Agency
has
decided
to
use
a
cap­
and­
trade
program
to
control
Hg
emissions.
Complete
and
accurate
accounting
of
Hg
emissions
is
required
for
a
credible
cap
and
trade
program.
Therefore,
Hg
CEMS
or
sorbent
traps
are
required
in
the
final
rule.
However,
qualifying,
low
emitting
sources
may
comply
with
today's
monitoring
requirements
by
using
conservative
default
Hg
emission
factors
and
annual
or
semi­
annual
stack
testing.
7­
15
Comment:

One
commenter
(
OAR­
2002­
0056­
2075)
stated
that
if
the
proposed
regulations
result
in
the
closure
of
coal­
fired
generation
plants,
there
would
be
significant
fallout
for
the
state,
regional,
and
local
economies.
The
commenter
stated
that
excessive
regulation
decreases
the
capacity
of
U.
S.
companies
to
compete
in
global
markets.
The
commenter
also
stated
that
when
the
costs
of
compliance
with
environmental
regulations
rise,
U.
S.
firms
are
less
able
to
perform
optimally.
The
commenter
further
stated
that
the
entire
economy
suffers.
The
commenter
stated
that
for
Texas,
coal
mining
results
in
an
addition
to
business
activity
of:

$
2.438
billion
in
annual
Total
Expenditures;
$
0.957
billion
in
annual
Gross
Product;
$
0.713
billion
in
annual
Personal
Income;
$
0.258
billion
in
annual
Retail
Sales;
and
12,684
Permanent
Jobs.

The
commenter
stated
that
East
Texas
is
where
the
majority
of
Texas'
coal
mines
are
concentrated.
The
commenter
further
stated
that
the
economic
impact
of
coal
mining
on
the
regional
economy
is:

$
1.356
billion
in
annual
Total
Expenditures;
$
0.526
billion
in
annual
Gross
Product;
$
0.405
billion
in
annual
Personal
Income;
$
0.154
billion
in
annual
Retail
Sales;
and
7,210
Permanent
Jobs.

The
commenter
stated
that
the
total
economic
impact
of
coal
mining
and
coal­
fired
electric
generating
plants
is
estimated
to
be:

$
10.498
billion
in
annual
Total
Expenditures;
$
3.516
billion
in
annual
Gross
Product;
$
2.081
billion
in
annual
Personal
Income;
$
0.584
billion
in
annual
Retail
Sales;
and
33,197
Permanent
Jobs.

Response:

The
economic
impact
of
CAMR
is
discussed
in
Chapter
7
of
the
RIA.
It
should
be
noted
that
according
to
EO
13211:
Actions
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use,
this
rule
is
not
significant,
measured
incrementally
to
CAIR,
because
it
does
not
have
a
greater
than
a
1
percent
impact
on
the
cost
of
electricity
production
and
it
does
not
result
in
the
retirement
of
greater
than
500
MW
of
coal­
fired
generation.

Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
7­
16
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

Comment:

One
commenter
(
OAR­
2002­
0056­
2578)
performed
an
analysis
that
compared
the
Hg
cap­
and­
trade
provisions
of
the
Clear
Skies
Act
(
CSA)
of
2003
to
a
generic
MACT
standard
of
2.2
lb/
trillion
Btu
for
all
generating
units.
The
commenter
stated
that
these
two
policies
are
reasonably
similar
to
the
two
alternative
Hg
rules
proposed
by
EPA.
The
commenter's
cost­
effectiveness
analysis
found
that
the
CSA
cap
and
trade
alternative
would
cost
less
than
an
illustrative
MACT
rule
on
a
present­
value
basis
by
about
a
factor
of
3,
yet
it
would
produce
slightly
larger
deposition
changes
and
MeHg
exposure
reductions
by
2020.
The
commenter
pointed
out
that
in
either
case,
however,
the
effectiveness
of
the
policies
in
reducing
deposition
of
Hg
in
the
U.
S.
appeared
small.
The
commenter
analyzed
EPA's
December
2003
rule
proposals
using
the
same
analysis
framework
as
before
(
but
with
greater
detail
and
updated
modeling
assumptions)
and
found
a
similar
comparison.
According
to
the
commenter,
the
relative
cost­
effectiveness
of
the
proposed
cap
and
trade
rule
compared
to
the
proposed
MACT
rule
appears
to
be
even
greater
than
was
estimated
for
the
two
alternatives
studied
in
the
earlier
analysis.
The
commenter
stated
that
the
primary
apparent
difference
between
the
proposed
MACT
rule
and
the
cap
and
trade
rule
is
that
MACT
provides
earlier
reductions
than
the
proposed
cap
and
trade
policy.
However,
this
earlier
implementation,
according
to
the
commenter,
leads
to
a
small
percentage
change
in
deposition
(
and
hence
in
exposure)
but
at
an
additional
$
8
billion
(
present
value)
in
costs.

Response:

EPA
is
finalizing
a
cap­
and­
trade
program
for
Hg
under
section
111
of
the
CAA.
EPA
believes
there
are
a
number
of
advantages
to
this
approach
relative
to
a
MACT
approach.
First,
the
cap­
and­
trade
program
will
set
a
fixed
limit
on
the
total
number
of
allowable
Hg
emissions,
which
cannot
be
exceeded
even
when
existing
plants
are
expanded
and
new
plants
are
constructed.
Second,
a
trading
program
provides
a
market
incentive
for
sources
to
reduce
emissions
beyond
the
required
level,
because
of
the
ability
to
bank
allowances,
or
sell
allowances
on
the
market.
This
incentive
acts
to
stimulate
innovations
in
control
technology
that
might
not
occur
under
a
command
and
control
approach
such
as
MACT,
and
will
also
lead
to
cheaper
emissions
reductions
overall.

Comment:

One
commenter
(
OAR­
2002­
0056­
2634)
stated
that
the
cost
of
compliance
should
be
proportionate
to
the
intended
environmental
benefit.
The
commenter
noted
that
the
purpose
of
controlling
Hg
emissions
from
power
plants
is
to
address
potential
adverse
impacts
that
exposure
to
Hg
can
have
on
human
health
and
the
environment.
The
commenter
pointed
out
that,
more
specifically,
EPA
states
in
the
preamble
to
the
notice
of
proposed
rulemaking
(
NPR)
that
the
focus
of
this
rulemaking
relates
to
"
oral
exposure
of
MeHg
as
it
is
the
route
of
primary
interest
7­
17
for
human
exposures"
[
69
FR
4658].
The
commenter
pointed
out
that
EPA
further
states
that
MeHg
"
is
typically
formed
by
biological
processes
after
mercury
has
precipitated
from
the
air
and
deposited
into
water
bodies"
[
69
FR
4657].
The
commenter
stated
that,
therefore,
when
weighing
the
cost
of
compliance
against
the
environmental
benefit,
it
is
imperative
that
EPA
consider
the
impact
of
the
proposal
in
terms
of
reductions
in
Hg
deposition
(
and
ultimate
human
exposure)
versus
reductions
in
emissions.
The
commenter
pointed
out
that
over
70
percent
of
Hg
deposition
in
the
U.
S.
comes
from
sources
outside
of
the
U.
S.,
and
in
much
of
the
western
U.
S.,
between
80
percent
and
100
percent
of
the
deposition
originates
outside
of
the
U.
S.
["
New
Findings
on
Mercury
Dynamics,"
EPRI
et
al.,
presented
at
the
7th
Electric
Utilities
Environmental
Conference,
Tucson,
AZ,
January
21,
2004].
The
commenter
stated
that
modeling
performed
by
EPRI
indicates
that
a
reduction
of
Hg
emissions
from
coal­
fired
power
plants
to
15
tpy
(
an
approximate
70
percent
reduction
from
1999
levels)
would
result
in
only
a
6.9
percent
reduction
in
deposition.
The
commenter
stated
that
it
has
not
been
determined
whether
this
level
of
reduction
in
deposition
will
effectively
reduce
the
levels
of
MeHg
in
the
environment,
which
is
the
stated
focus
of
the
proposed
rule.
The
commenter
stated
that
the
level
of
Hg
reductions
and
the
means
to
achieve
those
reductions
must
be
"
cost
effective"
in
terms
of
the
ultimate
reduction
in
exposure
to
MeHg.

Response:

Executive
Order
12866
requires
EPA
to
estimate
and
compare
the
costs
and
benefits
for
major
regulatory
actions.
It
does
not
require
that
the
monetizable
benefits
exceed
the
monetizable
costs.
However,
in
the
design
of
this
rulemaking,
EPA
has
carefully
weighed
the
costs
of
controlling
Hg
from
utilities,
the
benefits
resulting
from
these
reductions
and
other
factors
(
e.
g.
the
desire
to
provide
global
leadership
in
reducing
Hg
emissions).
As
detailed
in
the
preamble
to
this
rulemaking
and
the
regulatory
support
documents,
EPA
has
selected
a
regulatory
approach
which
balances
all
these
factors.

Comment:

One
commenter
(
OAR­
2002­
0056­
2721)
strongly
disagreed
with
EPA's
estimated
annual
monitoring,
reporting
and
recordkeeping
costs
for
compliance
with
this
regulation.
The
commenter
stated
that
EPA
estimated
the
annual
reporting
costs
to
be
$
48.4
million,
which
equates
to
approximately
$
85,000
per
unit.
The
commenter
claimed
this
number
is
extremely
low
when
taking
into
account
the
annual
Hg
compliance
audit,
which
is
budgeted
over
$
30,000
for
a
single
annual
audit
alone.
The
commenter
pointed
out
that
the
number
of
audits
can
be
increased
to
semi­
annual
or
more
frequent
based
on
the
actual
monitor's
performance.
The
commenter
stated
that
the
capital
expense
that
EPA
reported
was
approximately
$
117,000
per
unit.
The
commenter
submitted
that
this
value
is
also
extremely
understated.
According
to
the
commenter
there
are
presently
no
long­
term
Hg
monitoring
systems
in­
place
at
a
coal­
fired
facility.
The
commenter
pointed
out
that
the
current
state
of
monitoring
is
very
labor
intensive
and
involves
an
extremely
highly
trained
workforce.
The
commenter
stated
that
the
current
monitor
itself
is
over
$
100,000
alone.
The
commenter
further
stated
that
this
does
not
account
for
secondary
systems
required
to
support
this
equipment,
e.
g.,
monitor
cabinets,
air
supplies,
electrical
power
supply,
electronic
communication
networks,
data
storage
devices,
software
enhancements,
etc.
7­
18
Response:

The
cost
information
is
largely
based
on
documents
generated
for
the
Clean
Air
Markets
Division,
specifically
the
Cost
Analysis
of
Mercury
Monitoring
Techniques
done
by
Arcadis
,
on
November
2003,
that
is
part
of
the
docket.
This
analysis
provides
an
overview
of
the
cost
information
gathered
and
analyzed
to
date,
focusing
on
sources
such
as
utility
boilers
that
are
required
to
monitor
Hg
emissions
under
the
proposed
rule.
EPA
believes
that
sources
will
probably
operate
the
systems
taking
advantage
of
installations
currently
in
use
under
other
Clean
Air
Act
programs,
such
as
CEMS
shelters,
platforms,
etc
and
will
not
be
the
focus
of
further
analysis.
In
addition,
it
is
estimated
that
no
major
structural
modifications
are
needed
for
access
or
support
equipment,
and
that
power
is
available
in
the
area.
Based
on
the
information
provided
by
the
Arcadis
report,
EPA
estimates
that
the
average
CEMS
cost
will
be
$
80,000
and
that
the
annual
operating
cost,
with
one
RATA
test
done
based
on
the
Ontario
Hydro
method
will
be
also
about
$
80,000.

EPA
believes
that
field
tests
have
demonstrated
Hg
CEMS
to
be
accurate
and
reliable.
The
Hg
CEMS
have
performed
adequately
for
several
months
and
meet
the
Ontario­
Hydro
Reference
Method
specifications.
EPA
is
also
confident
that
substantial
advancement
of
Hg
CEMS
will
occur
before
the
implementation
of
the
rule
and
as
other
monitoring
techniques
may
become
available,
is
allowing
the
use
of
systems
that
can
meet
performance­
based
specifications.
In
addition,
the
final
rule
contains
flexibility
by
allowing
sources
to
account
for
their
Hg
emissions
by
using
Hg
CEMS,
sorbent
trap
monitoring
systems
(
or
a
combination
thereof),
and,
in
some
cases,
using
low
mass
provisions.

Comment:

One
commenter
(
OAR­
2002­
0056­
2843)
expressed
concern
that
the
Hg
reduction
requirements
proposed
by
the
EPA
for
new
plants
fueled
with
Powder
River
Basin
(
PRB)
coals
will
be
so
restrictive
that
they
will
limit
the
fuels
that
can
be
burned
in
new
facilities.
The
commenter's
analysis
followed
the
forecast
of
available
PRB
fuels
performed
by
the
National
Mining
Association
(
NMA),
the
Subbituminous
Energy
Coalition
(
SEC),
and
the
Center
for
Energy
and
Economic
Development
CEED);
such
forecasts
generally
suggest
that
the
available
fuels
will
be
less
than
10
percent
of
the
360
million
tons
of
coal
mined
annually
in
the
PRB.
The
commenter
stated
that
if
this
forecast
is
correct,
the
cost
of
these
fuels
will
likely
be
impacted
so
substantially
that
the
development
of
new
generating
resources
using
PRB
coals
might
be
expected
to
be
diminished
substantially.

Response:

The
impacts
of
CAMR
on
coal
production
and
coal
costs
are
discussed
in
Chapter
7
of
the
RIA.

Comment:

One
commenter
(
OAR­
2002­
0056­
2843)
believed
that
new
coal­
fired
generating
plants
7­
19
are
vital
if
affordable
electric
energy
prices
are
to
be
ensured
in
the
future.
The
commenter
agreed
with
the
DOE,
Energy
Information
Administration,
(
DOE/
EIA)
Annual
Energy
Outlook
2004
forecast
that
projects
a
need
for
an
additional
112
Gigawatts
of
new
coal
generating
capacity
by
2025.
The
commenter
believed
that
any
new
Hg
emissions
standard
that
would
make
such
new
coal­
fired
generation
either
technically
or
economically
infeasible
will
compel
the
U.
S.
power
generation
industry
to
rely
upon
other
fuel
sources,
including
importation
of
"
compliance
coal"
or
reversion
to
natural
gas­
fired
combustion
turbines
as
the
only
near­
to
mid­
term
alternatives
to
provide
large
blocks
of
new
electric
generation
capacity.
The
commenter
stated
that
consequently,
imposition
of
such
a
standard
would
stimulate
additional,
significant
increases
in
the
price
of
compliance
coals
and
natural
gas
as
well
as
a
surge
in
imports
associated
with
increased
demand
for
LNG.
The
commenter
contended
that
such
an
increase
in
imports
would
further
exacerbate
U.
S.
dependence
upon
off­
shore
energy
supplies.
The
commenter
did
not
believe
that
this
outcome
has
been
considered
in
the
policy
debate
about
stringency
of
Hg
emissions
control
on
U.
S.
coal­
fired
power
plants.
The
commenter
felt
that
such
an
outcome
should
be
unacceptable
given
the
adverse
consequences
of
energy
inflation
and
further
reliance
upon
imported
energy.

Response:

The
projected
economic
and
energy
impacts
of
CAMR
are
discussed
in
Chapter
7
of
the
RIA.
It
should
be
noted
that,
according
to
EO
13211:
Actions
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use,
this
rule
is
not
significant,
measured
incrementally
to
CAIR,
because
it
does
not
have
a
greater
than
a
1
percent
impact
on
the
cost
of
electricity
production
and
it
does
not
result
in
the
retirement
of
greater
than
500
MW
of
coal­
fired
generation.
In
fact,
CAMR
is
not
projected
to
result
in
any
additional
coal
retirement
relative
to
CAIR.

Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

Comment:

One
commenter
(
OAR­
2002­
0056­
2843)
asserted
that
the
adverse
impact
of
the
proposed
rulemaking
upon
development
of
new
coal­
fired
electric
generation
will
have
a
direct
bearing
on
the
financial
condition
of,
and
prospects
for
electric
utilities
and
independent
power
producers
(
IPP)
alike.
Specifically,
the
commenter
stated
that
as
a
consequence
of
the
collapse
of
wholesale
power
markets
and
the
malaise
gripping
the
IPP
sector
for
the
past
two
years,
investors
and
lenders
require
assurance
that
new
plants
meet
rigorous
requirements
of
financial
performance
on
a
long­
term
basis.
The
commenter
pointed
out
that
such
requirements
include
the
need
to
incorporate
fixed
price,
turnkey
construction
with
strong
technology
performance
guarantees,
long­
term
fuel
contracts,
long­
term
off­
take
agreements
with
credit­
worthy
entities,
and
the
ability
to
achieve
compliance
with
current
(
as
well
as
contemplated)
environmental
requirements.
7­
20
Response:

The
projected
economic
and
energy
impacts
of
CAMR
are
discussed
in
Chapter
7
of
the
RIA.
It
should
be
noted
that,
according
to
EO
13211:
Actions
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use,
this
rule
is
not
significant,
measured
incrementally
to
CAIR,
because
it
does
not
have
a
greater
than
a
1
percent
impact
on
the
cost
of
electricity
production
and
it
does
not
result
in
the
retirement
of
greater
than
500
MW
of
coal­
fired
generation.
In
fact,
CAMR
is
not
projected
to
result
in
any
additional
coal
retirement
relative
to
CAIR.

Several
aspects
of
CAMR
are
designed
to
minimize
the
impact
on
energy
production.
First,
EPA
recommends
a
trading
program
rather
than
the
use
of
command­
and­
control
regulations.
Second,
compliance
deadlines
are
set
cognizant
of
the
impact
that
those
deadlines
have
on
electricity
production.
Both
of
these
aspects
of
CAMR
reduce
the
impact
of
the
proposal
on
the
electricity
sector.

35
Comment:

One
commenter
(
OAR­
2002­
0056­
3327)
claimed
that
without
changes
requested
by
the
commenter,
the
utility
Hg
reductions
rule
(
UMRR)
will
eliminate
Gulf
Coast
Lignite
from
the
marketplace.
The
commenter
submitted
that
if
Texas
loses
Gulf
Coast
Lignite,
it
will
lose
more
than
$
17
billion
annually
in
direct
and
indirect
benefits,
including
8,000
direct
jobs
and
more
than
100,000
indirect
jobs.
The
commenter
added
that
some
rural
communities
will
lose
more
than
50
percent
of
their
tax
revenues.
The
commenter
also
stated
that
without
Gulf
Coast
Lignite,
it
will
become
nearly
impossible
to
develop
a
balanced
energy
policy
or
ensure
the
reliability
and
affordability
of
electric
power
in
Texas.

Response:

The
impacts
of
CAMR
on
coal
production
are
discussed
in
Chapter
7
of
the
CAMR
RIA.
EPA
is
not
projecting
the
shutdown
of
any
coal
capacity
relative
to
CAIR.

Comment:

One
commenter
(
OAR­
2002­
0056­
3403)
requested
that
the
EPA
ensure
that
any
future
Hg
reductions
requirements
be
achieved
in
an
efficient
and
cost
effective
manner.
The
commenter
stated
that
as
a
not­
for­
profit,
they
will
be
forced
to
pass
along
the
costs
of
meeting
new
Hg
emissions
reduction
requirements
to
their
consumer­
owners.

Response:

EPA
is
finalizing
a
cap­
and­
trade
program
for
Hg
under
section
111
of
the
CAA,
which
will
provide
for
efficient
and
cost­
effective
Hg
emissions
reductions
relative
to
a
command
and
control
approach.