Mercury Rule Summary

09/20/06/10:25 AM

The mercury rule components that were voted on last week are as follows. I will tell you what the rule says, what it means and why it is a problem. The board seems enamored with the term “soft landing” so I will point out to you the myriad of soft landings being provided by the rule. I count at least 7 soft landings in the following rule. There are a few more, but I won’t bore you with those details.

In short, the current problems with the rule are:

1. Gives agency almost unfettered discretion to establish emission limits

2. Does not require honest mercury controls until 2018 (or beyond if a company uses banking).

3. Sets a emission standard in 2018 that facilities could meet today.

4. Gives weaker limits to lignite coal, the dirtiest type of coal in Montana.

5. Encourages companies to burn lignite coal by giving them a weaker standard, despite the fact that Montana is loaded with higher quality coals.

6. Allows cap and trade in Montana in perpetuity. Companies can buy and sell their way out of complying with emission limits.

7. Establishes future limits based upon the weaker best available control technology standard and not the normal standard for hazardous air pollutants which is the stricter maximum achievable control technology standard. BACT is driven by economic factors. MACT is driven by what the best facilities in the country achieve.

How is my recollection of how the board voted and issues still open before the board:

• The Board voted against requiring stronger standards for lignite. Robin Shropshire made the motion, but instead of voting the board directed DEQ to provide it with the basis for the weak standards on lignite. The Board was not satisfied with the industry lignite experts testimony showing these facilities can reach 90% control.

• Robin Shropshire made the motion to give lignite the same trading credits as cleaner coals. The board rule gives them nearly double of cleaner coals. That motion failed. Robin Shropshire was the only vote in favor.

• Robin Shropshire made a motion to prohibit banking. That motion failed unanimously with Don Marble abstaining and Joe Russell not finishing the vote since it was clearly going down.

• Bill Rossbach made a motion to direct DEQ to establish some criteria by which the agency will make permitting decisions. That motion passed unanimously. Unfortunately, the rule still allows for little to no oversight by the board or courts for the decisions DEQ makes.

• Joe Russell made a motion to establish a maximum emission limit after 2018 of no more than 1.1 lbs/Tbtu. Motion passed with only Kim Lacey dissenting. She was concerned it might hurt Great Northern’s proposal to build a 500 MW lignite plant near Circle.

Summary of current rule:

1. All facilities have to submit an application to DEQ on Jan. 1. 2009 that demonstrates the ability to meet a 0.9 lbs/Tbtu emission limit. This provision is good. If facilities were indeed required to meet this limit it would be acceptable.

2. All facilities can violate the 0.9 standard at any time. As long as over the course of the year, their average annual emissions are not higher, they will not be penalized. SOFT LANDING.

3. If a facility fails to achieve 0.9 lbs/Tbtu over the course of the year they must submit a permit modification 18 months after they start operating. As currently written DEQ has no discretion in issuing that new permit for a higher limit (this new limit is known as an alternative emission limit). No enforcement action can be taken against them if they fail to meet their initial emission limit provided that DEQ determines they tried to meet the 0.9 lbs/Tbtu emission limit. SOFT LANDING. The Board asked DEQ to amend the rule to come up with criteria by which DEQ will decide whether and how an alternative emission limit will be issued.

4. DEQ has complete discretion as to whether a facility gets an alternative emission limit and they have almost complete discretion on what that new limit should be. DEQ cannot set the limits above a certain level though. But these levels are arbitrary, extremely weak and differ by coal type. For example, new facilities like the Highwood Generating Station near Great Falls would have an upper limit of 1.5 lbs/Tbtu (which happens to be the same level as DEQ put in its draft permit) which is only only 26% control of mercury. Existing lignite has a limit of 4.8 lbs/Tbtu. The Great Northern lignite plant in eastern Montana which hasn’t even applied for a permit yet, will have an upper limit of 3.6 lbs/Tbtu. New lignite after 1/1/2009 will have an upper limit of 2.16 lbs/Tbtu. The board or courts have have no ability, or at best and extremely limited ability, to review any agency decision on emission limits. SOFT LANDING. The numbers are completely arbitrary. The industries lignite expert who testified in Billings showed test results on lignite in which most results showed 90% reductions. These upper limits are more in the range of 30-50% reduction. DEQ argues that these are maximum limits they can set, but DEQ has gone along with industry on every power plant permitting decision to date. And with no oversight, there will be tremendous pressure on the agency, and incentive for the companies to convince the agency, that the weakest limit is the best they can do.

5. Facilities are not required to ever install mercury control equipment. If a facility can convince DEQ that its boiler can reduce mercury to the limit, it will not be required to install mercury controls. It can then get an alternative limit (weaker limit) even though it has NEVER installed mercury controls. This is troublesome because despite the fact that two facilities have already agreed to install mercury controls, DEQ is still saying those controls are not best available control technology and is therefore not requiring the Great Falls power plant to install mercury controls. If a company can convince DEQ that it doesn’t need to install mercury controls in the initial permit, it won’t have to install those controls until 2018, if ever.

6. Alternative limits (weaker limits) are good from the time DEQ establishes them (probably late 2011) until 2018 – approximately 7 years. SOFT LANDING. This provides an incentive for companies to convince DEQ that a cheap technology can meet 0.9 lbs/Tbtu and then for them to fail to meet that limit and therefore delay investment in mercury control technology.

7. If a company has an alternative limit (weaker limit) it will have to submit a permit application to DEQ in 2014 showing what “best available control technology” is for that facility. Hazardous air pollutants are supposed to be regulated under a maximum achievable control technology standard. A BACT standard is MUCH weaker than a MACT standard. The BACT standard is driven by economic factors. A MACT standard is driven by what the best facilities in the country are able to achieve. This is why EPA is being sued by 15 states and numerous public health organizations. MACT standards are required for hazardous air pollutants like mercury.

8. A facility that is operating under an alternative limit has to comply with a BACT limit by Jan 1, 2018. The limit set by DEQ must be no worse than 1.1 lbs/Tbtu. SOFT LANDING. The 1.1 lbs/Tbtu limit is 20% higher than the limit they are supposedly required to meet in 2010.

9. Trading of mercury credits is allowed. From 2010 until 2018 all nonlignite facilities will receive credits up to 0.9 lbs/Tbtu. Lignite facilities will get more credits, or credits up to 1.5 lbs/TBtu. If the plant can do better than those limits it can sell credits. If it cannot achieve those limits it has to buy credits down to that amount. So if Great Northern has an emission standard in its permit of 3.6 lbs/Tbtu but is actually able to achieve 1.1 lbs/Tbtu, it can sell those credits it received between 1.1 lbs/Tbtu and 1.5 lbs/Tbtu. It will profit off of failing to meet its supposed required emission rate of 0.9 lbs/Tbtu. SOFT LANDING.

10. Banking of mercury credits is allowed. That means that if a company does better than its limit, it can save those credits until after 2018 and instead of meeting its emission limit after 2018, it can apply those unused credits it accumulated before that date to its emissions to show that on paper (although no in practice) it is meeting its emission limit. SOFT LANDING

11. All facilities must go through BACT review every 10 years. Again, BACT is an analysis that is driven by how economical it is to control pollution. The standard should be MACT.

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Anne Hedges

Program Director

Montana Environmental Information Center

P.O. Box 1184

Helena, MT 59624

(406) 443-2520

fax: (406) 443-2507

ahedges@meic.org

http://www.meic.org