Energy Law Alert: Boiler Hazardous Air Pollutant Emission Rules Released By EPA

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On February 23, 2011, the U.S. Environmental Protection Agency (EPA) released final rules regulating hazardous air pollutant (HAP) emissions from boilers at major sources of HAPs (Boiler MACT) and boilers at minor or area sources of HAPs (Boiler GACT), for Commercial and Industrial Solid Waste Incinerators (CISWI) and for defining what constitutes a solid waste when burned. EPA also released a notice that it plans to reconsider key aspects of these rules. These rules impose significant burdens on certain classes of boilers and risk forcing many companies to stop using valuable fuels. EPA estimates that the Boiler MACT rule will impact 13,555 boilers and process heaters and that the Boiler GACT rule will impact 187,000 boilers and process heaters.

Background

For a decade EPA has been working on the Boiler MACT and Boiler GACT rules, as well as requirements for CISWIs. In response to a 2007 court decision throwing out EPA's Boiler MACT rules, EPA also was charged with having to define what constitutes a solid waste so the agency can distinguish between boilers (those combustion units that don't combust solid waste) and incinerators (those that do). On June 4, 2010, EPA proposed rules (1) regulating HAPs from all types of boilers (MACT and GACT), (2) regulating multiple pollutants from waste incinerators and (3) defining what constitutes a solid waste. These rules were greeted with shock from the regulated community because they were so stringent, and the solid waste rules required all sorts of common fuels (e.g., whole tires) to be regulated as solid wastes. Many in Congress recognized the burden these regulations would place on U.S. industry and demanded that EPA reconsider their approach.

In December, EPA sought more time to reconsider its approach to the boiler and solid waste rules. EPA was under a court order to issue the final boiler and solid waste rules by January 16, 2011. On December 7, 2010, EPA requested that the court grant the agency time to start the rulemaking process over again and re-propose the Boiler MACT/GACT, CISWI and solid waste definition rules in light of the extensive comments they received. EPA stated that they wanted until at least June of this year, but preferably until April 2012, to issue the rules. Sierra Club responded, asking that the court order EPA to issue the rules immediately. The court sided with Sierra Club and ordered EPA to issue the rules by February 21, 2011.

The Final Rules

Below is a short summary of what was stated in the just-released, over 1,500-page rule package.

Boiler GACT (Boilers at Non-Major HAP Sources)

The news is good for those sources whose HAP emissions are less than the major source threshold (10 tons/yr for any individual HAP and 25 tons/yr for aggregate HAPs). The only area (i.e., non-major) source boilers/process heaters that are subject to substantive requirements are boilers burning coal (10 million Btus or greater). This means that natural-gas-fired, oil-fired or biomass-fired boilers located at facilities that are not major sources of hazardous air pollutant emissions do not have to comply with any substantive emission limits (they still have limited work practices). The rules still impose some requirements on these non-coal-fired boilers, but nothing that is likely to require capital investments to achieve compliance. Boilers combusting coal that are located at major HAP sources will need to consider the overall benefits of that fuel as today's final rules impose material burdens.

Boiler MACT (Boilers at Major HAP Sources)

Boilers used as backup/emergency units (i.e., operated less than 10% of the year) and boilers burning natural gas, refinery gas or "equivalent fuel" (with limited exceptions for gas curtailments or emergencies) are subject only to the requirement that the operator perform annual tune-ups. Boilers of less than 10 MMBtu/hr heat input(regardless of fuel type) are similarly only subject to tune-up requirements. Coal-fired boilers with 10 MMBtu/hr or greater heat input are burdened with significant requirements. However, wood-fired and other solid-fuel-fired boilers (other than coal-fired) are still subject to significant requirements.

Boilers burning 10% or more biomass (and not coal or other solid fuels) are regulated under one of 10 biomass subcategories (five for new units, five for existing units). biomass boilers of all sorts are subject to a 0.039 lb/MMBtu PM limit, a 0.035 lb/MMBtu HCl limit and a 0.0000046 lb/MMBtu mercury limit. Carbon monoxide limits vary from 430 ppm to 3,500 ppm (3% O2) depending on boiler type. Dioxin/furan limits for biomass boilers similarly vary by boiler type. New biomass boilers are subject to limits for the same pollutants, but the limits are more stringent. New biomass boilers of all sorts are subject to a 0.0011 lb/MMBtu PM limit, a 0.00022 lb/MMBtu HCl limit and a 0.0000035 lb/MMBtu mercury limit. Carbon monoxide limits vary from 160 ppm to 1,500 ppm (3% O2) depending on boiler type. Dioxin/furan limits for biomass boilers similarly vary by boiler type. All of these limits are based on heat input; EPA also included a voluntary alternative to these limits whereby a source can demonstrate compliance with output-based limits (i.e., lb/MMBtu of steam output).

CISWI Rule

The final rules impose serious limitations on the ability of many industries to be able to use certain useful fuel materials based on the idea that they are now considered solid wastes. Any device combusting solid waste (with certain limited exceptions such as space heaters) will be regulated as CISWI units (i.e., solid waste incinerators). Under these rules, nine pollutants or pollutant groups are regulated for new and existing sources. The CISWI rules are somewhat more reasonable than what was first proposed but are still so restrictive that few facilities will be able to justify the capital investment required to comply with these requirements. Therefore, upon the CISWI rules becoming effective (2016 at the latest), the vast majority of facilities will likely stop burning anything defined in the rule as a solid waste.

Definition of Solid Waste

EPA considers anything that is "discarded" to be solid waste. In the final rules, EPA attempts to define what materials are solid waste when combusted and whether they are legitimately being used as a fuel or ingredient. Several of the key aspects of the rules are summarized below.

The rules attempt to draw a bright line between "traditional fuels" and solid waste. The rules define traditional fuels to include (1) fossil fuels (e.g., coal, oil and natural gas) and their derivatives (e.g., petroleum coke, bituminous coke, coal tar oil, refinery gas, synthetic fuel, heavy recycle, asphalts, blast furnace gas, recovered gaseous butane and coke oven gas), (2) cellulosic biomass (virgin wood), (3) alternative fuels developed from virgin materials that can now be used as fuel products (including used oil that meets the specifications outlined in 40 C.F.R. 279.11) and (4) clean cellulosic biomass. EPA stated that these fuels are not secondary materials or solid waste unless discarded before they are used.

EPA continued an approach in the final rules that was problematic in the proposed rules. EPA has codified that whether certain fuels are solid waste depends on whether they are combusted at the facility where they are generated or a facility under the control of the generator. One example given was that old corrugated cardboard rejects, a normal fuel source at many paper mills, would not be considered waste if used at the mill that generates them, but would be considered a waste if sent elsewhere to be burned.

Tires. In its proposal EPA declared that whole tires would be solid waste while chipped tires might not be. This was a policy that made little sense from a waste or air quality point of view and it has changed, somewhat, in the final rules. The final rules instead state that tires collected and managed under the oversight of established tire collection programs are not solid waste. This provides some relief for industries such as cement manufacturing that use a lot of tires. However, it places restrictions on the beneficial use of tires that are unlikely to result in material air quality benefits while increasing the number of tires that need to be disposed of in landfills.

Resinated wood. EPA had questioned in the proposal whether resinated wood (e.g., plywood trim) constitutes a solid waste. In the final rules EPA states that so long as the resinated wood meets certain "legitimacy criteria," it is not a solid waste regardless of where it is combusted (i.e., by the generator or someone else).

Treated wood. While it is no great surprise that wood treated with pentachlorophenol is considered a solid waste, there was a lot of support for not considering creosote-treated wood as solid waste. Creosote-treated wood (e.g., railroad ties) is a valuable, high-Btu fuel source made from coal tar and wood. However, EPA concluded that creosote-treated wood is now a solid waste, so it is likely that this fuel will be largely relegated to landfills. Interestingly, borate-treated wood may qualify as a legitimate fuel depending on the circumstances.

Construction and demolition (C&D) wood. EPA has taken the position that C&D wood is a legitimate fuel, and not a waste, so long as it has been cleaned or otherwise processed such that it meets the legitimacy criteria. Thus some restrictions are placed on the use of the material, but it is not universally relegated to the waste bin.

Non-hazardous secondary materials used as ingredients in a process are not solid waste so long as they meet the legitimacy criteria. Key components of the rules are the legitimacy criteria and how they will be applied.

Sewage Sludge Incinerators

EPA also finalized rules on sewage sludge incinerators regulating the same nine pollutants as CISWI sources.

Next Steps

The final rules released on February 23, 2011 are far from the end of this process. EPA simultaneously signed a notice stating that they intend to reconsider these rules to achieve the additional review time that the court denied in January. EPA has not identified all of the specific aspects of the rules that they will open to reconsideration; that will come in a future rulemaking notice. However, they did indicate an intent to reconsider, among other things, the following: (a) the subcategories established under Boiler MACT, (b) the possibility of allowing gas-fired boilers at major HAP sources to utilize additional fuels without losing their special gas-fired regulatory status, (c) the establishment of work practice standards for limited-use major source boilers, (d) the establishment of GACT standards for biomass and oil-fired boilers at area sources, (e) revisions to the CO standards for major source boilers and CISWI units and (f) the applicability of Title V permitting requirements to area source boilers.

The reconsideration notice is good news for regulated entities to the extent that EPA is generally expected to make the rules more lenient based on additional data. However, the absence of certainty is a mixed bag for many sources. EPA has not indicated that the 2014 compliance date will be held up, and the environmental groups are likely to sue EPA if they try to defer the compliance date beyond the three-year period allowed under the Clean Air Act. In addition, it is a given that a broad array of trade associations will challenge the rules issued today so as to achieve a more rational set of requirements. Therefore, those sources facing potential capital investments in order to achieve compliance are in a difficult position in light of the uncertainty of the rules. There are potential strategies for addressing this uncertainty, but each strategy will be highly facility-specific.

For more information about these rules and how they might affect you contact a key contributor.

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Key Contributors

Kevin D. Johnson
Allison C. Smith
Thomas R. Wood
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