On December 16, 2011, the EPA finalized the new Mercury and Air Toxics Standard, which is widely referred to as the Utility MACT Rule (“Rule”). EPA also revised the new source performance standards for electric generating units (“EGU”). EPA has also released a memorandum explaining its enforcement policy regarding sources that cannot meet the compliance deadline. EPA projects that the Rule’s annual incremental compliances costs will be $9.6 billion. EPA projects that 4.7 GW of coal-fired generation will be retired because of the rule.
For coal-fired units, the Rule limits emissions for hydrogen chloride (as a surrogate for acid gas hazardous air pollutants (“HAP”)), filterable particulate matter (“PM”) (as a surrogate for nonmercury HAP metals), mercury, and organic HAP. The limits vary based on type of coal burned and whether the units are new or existing. Total nonmercury HAP metals and individual nonmercury HAP metals limits can be used as an alternate to the filterable PM limits. Coal-fired EGUs with flue gas desulfurization units can use SO2 limits as an alternative to the hydrogen chloride limits.
For oil-fired units, the Rule limits emissions of hydrogen chloride, hydrogen fluoride, filterable PM (as a surrogate for total HAP metals), and organic HAP. Oil-fired EGUs can use individual HAP metals limits as an alternate to the filterable PM limits.
During periods of startup and shutdown, the rule creates new work practices standards. Units must burn natural gas or distillate oil during periods of start-up. Controls must be operated during periods of start-up and shutdown. Malfunction can be used as an affirmative defense to emissions violations.
All sources are given three years to comply with the Rule. Sources can also apply to the EPA or appropriate state authority for a one-year compliance extension if the extension is needed to install controls—bringing the total compliance time to four years. The one-year extension is granted on a case-by-case basis, but the EPA expects the one-year extension to be widely available.
To address concerns regarding reliability, EPA has taken the additional step of issuing a memorandum stating that EPA is willing to use its enforcement authority (via administrative orders pursuant to 42 U.S.C. § 7413) to grant some sources an additional year to comply (bringing the total compliance time to five years). EPA will only grant these administrative orders to sources that are critical to electric reliability and, due to forces beyond their control, will be forced to deactivate temporarily to comply with the Rule or are unable to install controls in time. EPA anticipates few if any instances where it will use it enforcement power in this way. EPA will work with local utility authorities to determine whether a unit is critical for electric reliability. EPA does not intend to seek civil penalties for violations that occur in conformity with an administrative order issued under this policy.
The New Source Performance Standards
The revised new source performance standards will apply to any source that began construction, modification, or reconstruction after May 3, 2011. The Rule imposes new limits on SO2, PM, and NOx. Sources may elect to comply with a combined NOx/CO limit as an alternate to the new NOx limit.
For more information on this new Rule, please contact Jeff Stemerick or any member of Taft’s Environmental Practice Group.