Division of Air Pollution Control Response to Comments · [email protected] 1000 Jackson Street 419.241.9000 Toledo, Ohio 43604-5573 419.241.6894 fax VIA EMAIL and U.S. MAIL

Division of Air Pollution Control Response to Comments

Rules: OAC Chapter 3745-14 “Nitrogen Budget Trading Program” and OAC Chapter 3745-109 “Clean Air Interstate Rule (CAIR)” Agency Contact for this Package Division Contact: Holly Kaloz, Division of Air Pollution Control, 614-644-3632, [email protected]

General/Overall Concerns Comment 1: Comments were received in support of Ohio’s proposed rescission of the

CAIR rules in OAC Chapter 3745-109. The full comment letter can be found at the end of this response to comments document. (Cheri A. Budzynski, Shumaker, Loop & Kendrick, LLP on behalf of the Ohio Utility Group)

Response 1: Thank you for your comments and support of the proposed rescission of

the CAIR rules in OAC Chapter 3745-109. 3745-14-08 Monitoring and Reporting Comment 2: Comments were received objecting to the retained requirement for

continuous monitoring and reporting of emissions under 40 CFR Part 75 (commonly referred to as Part 75 monitoring and reporting). The full comment letter can be found at the end of this response to comments document. (Douglas A. McWilliams, Squire Patton Boggs, LLP on behalf of ArcelorMittal)

Ohio EPA held an interested party comment period on August 4, 2017 regarding draft amended rules in Ohio Administrative Code (OAC) Chapter 3745-14, "NOx Budget Trading Program" and rescinded rules in Chapter 3745-109, “Clean Air Interstate Rule." This document summarizes the comments and questions received during the comment period, which ended on September 8, 2017. Ohio EPA reviewed and considered all comments received during the public comment period. By law, Ohio EPA has authority to consider specific issues related to protection of the environment and public health. In an effort to help you review this document, the questions are grouped by topic and organized in a consistent format. The name of the commenter follows the comment in parentheses.

Rule Package: OAC Chapters 3745-14 and 3745-109 Response to Comments September 2017 Page 2 of 3

Response 2: Ohio EPA has had several discussions with the commenter regarding the need for an alternative to Part 75 monitoring and reporting requirements. Ohio EPA does not disagree with many of issues raised by the commenter, and therefore has agreed to pursue an alternative to the Part 75 monitoring and reporting requirements. The main area of disagreement is the approach to use to obtain U.S. EPA approval of this alternative. Ohio EPA intends to use a phased approach and pursue the alternative in a second phase of rulemaking which would follow the current one, and the commenter prefers it to be included in the current rulemaking.

On May 15, 2017, Ohio EPA held a stakeholder meeting with all affected non-electric generating units (EGUs) requesting input on whether to pursue an alternative to Part 75 monitoring in a phased approach or to add the alternative to the current rulemaking. The majority of stakeholders preferred to add specific, approvable alternatives to the current rulemaking. However, because Part 75 monitoring is currently a State Implementation Plan (SIP) requirement, and therefore, a federal requirement, U.S. EPA will have to approve any alternatives as a revision to Ohio’s SIP. Ohio EPA expects this will take some time, and therefore has determined to proceed using a phased approach. This will allow us to more quickly address major issues with these rules that resulted from the discontinuation of the NOx trading program by U.S. EPA (i.e., rules and permit conditions that are not implementable; lack of a trading option) while we work with the regulated facilities and U.S. EPA to develop source-specific monitoring options that Ohio EPA can request U.S. EPA approve as an alternative to the current SIP-approved Part 75 monitoring. The current rulemaking will be followed by a second phase of rulemaking revising OAC rule 3745-14-08 to incorporate alternatives to the existing Part 75 monitoring and reporting requirements. The commenter continues to object to this phased approach, contending there is no material risk of enforcement under the current dormant rule for which recent allocations have not been properly made. The allocations in Appendix B are specific to the 2004-2007 time period, and Ohio EPA has not submitted subsequent allocations under these rules to U.S. EPA since 2008 when the program was effectively replaced by the CAIR program. OAC rule 3745-14-05(B)(5) indicates that, if Ohio EPA fails to submit allocations to U.S. EPA, then U.S. EPA shall allocate the same number of NOx allowances as were allocated for the preceding control period. The most recent U.S. EPA allocations were in 2008, again because the program was replaced by CAIR. The rules are silent as to whether a regulated unit has any requirements or liabilities if allocations are not properly made. As U.S. EPA has indicated that non-EGUs must continue to comply with the NOx SIP Call and these rules are currently unworkable, Ohio EPA needs to resolve these issues in a manner that can be quickly approved

Rule Package: OAC Chapters 3745-14 and 3745-109 Response to Comments September 2017 Page 3 of 3

by U.S. EPA. While Ohio EPA has committed to addressing the issue of an alternative to Part 75 monitoring in a separate rulemaking, based on previous experience Ohio EPA fully expects U.S. EPA consideration of alternatives to Part 75 monitoring requirements and evaluation of the CAA Section 110(l) anti-backsliding demonstration to significantly delay approval, despite the commenter’s contention that U.S. EPA should not need additional time. In particular, Ohio EPA anticipates there will continue to be some disagreement as to whether Part 75 monitoring is required by the Code of Federal Regulations (CFR). The commenter contends that Part 75 monitoring is not a federal requirement, as the selected regulatory approach does not include control measures on individual sources. To date, U.S. EPA has interpreted the CFR such that Part 75 monitoring continues to be required. It can be argued that ensuring all non-EGUs do not collectively exceed the statewide budget is the control measure which, in turn, requires Part 75 monitoring and reporting. Further, even if U.S. EPA were to agree that Part 75 monitoring is not required, coming to agreement on what specific alternatives are acceptable is expected to take some time. Therefore, Ohio EPA continues to believe that the current phased approach is necessary to relieve the affected sources from the current compliance situation. Further, the commenter indicates that other states, including North Carolina and Indiana, have proposed rules which do not require Part 75 monitoring. These rules have yet to be approved by U.S. EPA, and given U.S. EPA’s comments to date, may not be approvable. This is additional evidence that reaching agreement with U.S. EPA on acceptable alternatives will be a time-consuming process and delay approval of the straight-forward changes. The commenter also indicated the statement in the Business Impact Analysis (BIA) that the proposed rules “do not exceed the scope of the federal requirements” should be corrected because Part 75 monitoring is not federally required. As noted above, this issue is not settled. As U.S. EPA continues to indicate that Part 75 monitoring is a federal requirement, Ohio EPA does not intend to update the BIA at this time. In addition, the requirement is currently contained in Ohio’s SIP, making it a federally enforceable requirement.

End of Response to Comments

SHUIV1AKER. Shumaker, Loop 8z Kendrick, LLP

CHERI A. BUDZYNSKI 419.321.1332 [email protected]

1000 Jackson Street 419.241.9000 Toledo, Ohio 43604-5573 419.241.6894 fax

www.slk-law.com

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September 8, 2017

Paul Braun Ohio Environmental Protection Agency Division of Air Pollution Control Lazarus Government Center P.O. Box 1049 Columbus, Ohio 43216-1049 [email protected]

Re: Ohio EPA Draft Rule Language for Comment — Ohio Adm.Code 3745-14 NOx Budget Trading Program Rules and Ohio Adm.Code 3745-109 CAIR Our File No.: 043 5 90

Dear Mr. Braun:

On August 4, 2017, Ohio EPA issued a public notice regarding draft rules for comment on Ohio Adm.Code 3745-14, NOx Budget Trading Program and Ohio Adm.Code 3745-109 Clean Air Interstate Rule ("CAIR"). The following comments are submitted on behalf of the Ohio Utility Group and its member companies ("OUG" or "the Utilities"),1 which is an association of individual electric utilities in the State of Ohio. The electric utilities own and operate power plants and other facilities that generate electricity for residential, commercial, industrial, and institutional customers. These power plants and other facilities are subject to the Clean Air Act and Ohio's Air Rules. OUG's purpose, in part, is to participate collectively on behalf of its members in administrative proceedings under various environmental laws, including the Clean Air Act and in litigation arising from those proceedings that affect electric generators. Thus, the notice affects the members of OUG.

History of CAIR and the Cross State Air Pollution Rule ("CSAPR"). On May 12, 2005, U.S. EPA issued "Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NOx SIP Call; Final Rule," 70 F.R. 25162 (May 12, 2005). This rule was subsequently appealed to the United States Court of Appeals for the District of Columbia ("D.C. Circuit"). On July 11, 2008, the D.C. Circuit vacated CAIR; however, on December 24, 2008 the D.C. Circuit reversed its ruling that vacated CAIR; instead it left CAIR in place and remanded it to U.S. EPA until the Rule could be replaced.

The member companies include: AEP Generation Resources Inc., Buckeye Power, Inc., Duke Energy Ohio, Dynegy Commercial Asset Management, LLC, FirstEnergy Solutions, and Ohio Valley Electric Corporation.

CHARLOTTE I COLUMBUS I SARASOTA I TAMPA I TOLEDO

Paul Braun September 8, 2017 Page 2

On August 8, 2011, U.S. EPA issued the final CSAPR as the replacement for CAIR. Like CAIR, interested parties challenged CSAPR. On December 30, 2011, the D.C. Circuit issued an Order staying CSAPR pending the Court's resolution of several petitions for review of the final rule. In conjunction with the stay, the Court ordered that CAIR be reinstated. Oral arguments were heard on April 13, 2012.

On August 21, 2012, the Court vacated CSAPR and remanded it to U.S. EPA while leaving CAIR in place. On October 5, 2012, U.S. EPA petitioned the D.C. Circuit for a rehearing en banc of the August 21, 2012 decision, which was denied on January 24, 2013. On March 29, 2013, U.S. EPA petitioned the U.S. Supreme Court for a Writ of Certiorari. On June 24, 2013, the U.S. Supreme Court granted Writ to hear the petition. On April 29, 2014, the U.S. Supreme Court issued an opinion that reversed the D.C. Circuit's opinion and remanded the case to the D.C. Circuit for further proceedings consistent with its opinion. On October 23, 2014, the D.C. Circuit ordered that U.S. EPA's motion to lift the stay of CSAPR be granted and it became effective on January 1, 2015. Subsequently, on October 26, 2016, U.S. EPA issued the Cross-State Air Pollution Rule Update ("CSAPR Update").

History of the Appeals of Ohio Adm.Code 3745-109. On July 24, 2006, in response to U.S. EPA's CAIR, 70 F.R. 25162, the Director issued Ohio Adm.Code 3475-109-01 through 3745-109-21 for interested party comment. On August 23, 2006, the Utilities submitted comments to the Director expressing their general support for the overall program as well as specific legal and technical concerns with Ohio Adm.Code 3745-109. On April 9, 2007, the Director proposed Ohio Adm.Code 3745-109 as a draft rule for comment. On May 17, 2007, the Utilities again submitted comments to the Director expressing their legal and technical concerns with Ohio Adm.Code 3745-109. On September 17, 2007 the Director adopted Ohio Adm.Code 3745-109. On October 18, 2007, the Utilities filed an appeal at the Environmental Review Appeals Commission ("ERAC").

On April 23, 2009, the Director proposed additional changes to Ohio Adm.Code Chapter 3745-109 for comment. On June 2, 2009, the Utilities again submitted comments to the Director reiterating their concern with the legal and technical flaws in Ohio Adm.Code Chapter 3745-109. On June 6, 2009, the Director adopted the additional changes to Ohio Adm.Code Chapter 3745-109. The Utilities filed an appeal at ERAC on August 3, 2009.

On February 27, 2012, the Director published an Early Stakeholder Outreach for Ohio Adm.Code 3745-109. On March 30, 2012, the Utilities filed comments to the Director reiterating their concern with the legal and technical flaws of the rule. In April 2013, the Director drafted changes to Ohio Adm.Code Chapter 3745-109 for comment. On May 17, 2013, the Utilities again submitted comments to the Director reiterating their concern with the legal and technical flaws in Ohio Adm.Code Chapter 3745-109. On August 29, 2013, the Director proposed additional changes to Ohio Adm.Code Chapter 3745-109 for comment. On October 7, 2013, the Utilities submitted additional comments to the Director. On November 4, 2013, the Director adopted the additional changes to Ohio Adm.Code Chapter 3745-109. The Utilities filed an appeal at ERAC on December 4, 2013.

All of these appeals challenged the energy efficiency and innovative technology set-asides (Ohio Adm.Code 3745-109-17(C)(6) through (8)). Thus, on January 21, 2014, ERAC consolidated the three appeals. Since then, the parties have been submitting Joint Status Reports every 180 days.

SLK TOL:# 2856 3980

Paul Braun September 8, 2017 Page 3

Comments. On December 21, 2016, Ohio EPA issued an Early Stakeholder Outreach regarding Ohio Adm.Code 3745-109. In this rulemaking, Ohio EPA proposed to eliminate CAIR. On January 23, 2017, the Utilities submitted comments on the Early Stakeholder Outreach. On August 4, 2017, Ohio EPA issued draft rules on Ohio Adm.Code 3745-109.

For over 10 years, the Utilities have had pending appeals with ERAC on CAIR. Since then CAIR has been replaced with CSAPR. While interested stakeholders still have pending petitions for review of CSAPR, it remains in effect as a replacement of CAIR. Thus, the Utilities support Ohio EPA's draft proposal to rescind CAIR as it is no longer in effect. Rescinding these Rules will also render the Utilities' three appeals of Ohio Adm.Code 3745-109 as moot at ERAC. Thus, rescission has the added benefit of clearing the ERAC docket.

The Utilities thank Ohio EPA for the opportunity to comment on the draft rules.

Very truly yours,

Q . .6,06,4 Cheri A. Budzynski

CAB \bd

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September 8, 2017

VIA ELECTRONIC MAIL: [email protected]

Mr. Paul Braun Ohio EPA Division of Air Pollution Control P.O. Box 1049 Columbus, OH 43216-1049

Re: ArcelorMittal Cleveland LLC’s Interested Party Comments on OAC Chapter 3745-14 (NOx Budget Trading Program) and Chapter 3745-109 (Clean Air Interstate Rule)

Dear Mr. Braun:

Thank you for the opportunity to submit comments on Ohio EPA’s draft rule revisions to the NOx

Budget Trading Program (Chapter 14) and Clean Air Interstate Rule (Chapter 109). ArcelorMittal Cleveland LLC is an interested party that operates an integrated iron and steel-making plant in Cleveland, and its subsidiary ArcelorMittal Warren operates a coke plant in Warren (“ArcelorMittal”), both of which include large industrial boilers affected by this rulemaking.

ArcelorMittal supports Ohio EPA’s rule revisions to OAC Chapter 3745-14 that retire the trading program for Non Electric Generating Units (“non-EGUs”), eliminate individual source obligations for these large industrial boilers, and move to a simple statewide demonstration that total ozone season non-EGU NOx emissions remain below the established Non-EGU Ozone Season NOx Budget of 4,028 tons. ArcelorMittal objects, however, to the proposed use of Part 75 monitoring in this revised rule (see OAC rule 3745-14-08), which is more expensive and less accurate than alternative methods for measuring NOx emissions proposed by ArcelorMittal and others for the non-EGUs subject to Chapter 14.

I. BACKGROUND

ArcelorMittal operates eight large (>250 MMBtu/hr) industrial boilers that were included in Ohio’s original NOx Budget Trading Program (OAC Chapter 3745-14) (“Chapter 14”). To establish reliable emissions data essential to this trading program, Chapter 14 required ArcelorMittal to install (by 2003) and operate continuous emission monitors (“CEMS”) for NOx that met the requirements of 40 CFR Part 75 at each affected boiler’s exhaust stack. See OAC rule 3745-14-08.

Mr. Paul Braun September 8, 2017

2

Squire Patton Boggs (US) LLP

The trading program established under the Clean Air Interstate Rule (“CAIR”) (OAC Chapter 3745-109) superseded the NOx Budget Trading Program in 2009 and similarly required Part 75 CEMS for participating units. The CAIR program ended in 2014, replaced by the Cross-State Air Pollution Rule (“CSAPR”). Unlike the prior programs, the original CSAPR rule applied only to electric generating units (“EGUs”) and did not allow Ohio to include ArcelorMittal’s industrial boilers (non-EGUs) in this trading program. The updated CSAPR rule published on October 26, 2016, at 81 Fed. Reg. 74504 (“Updated CSAPR”) offered a last-minute option for states to add non-EGUs to their CSAPR trading program, but under restrictive conditions that Ohio EPA does not intend to adopt.

II. SUMMARY

A. Part 75 Monitoring is not a Federal Requirement

Federal Rule 40 CFR § 51.121(i)(4) only requires Part 75 monitoring if the SIP revision contains “measures to control fossil fuel-fired NOx” as a means of staying below the budget. Since the upcoming Ohio EPA Chapter 14 SIP revision has no provisions for control measures on non-EGUs, Part 75 monitoring is not required for these Ohio sources. The draft rule only requires non-EGUs to monitor and report actual NOx emissions. Other states, including North Carolina, have proposed to eliminate Part 75 monitoring for non-EGUs despite non-binding federal guidance suggesting otherwise. A Part 75 monitoring program could prove harmful to Ohio business competition when other states are allowing their non-EGUs to avoid such stringent and expensive monitoring. Thus, Ohio EPA’s Business Impact Assessment (BIA) for this rulemaking should correct the statement that the proposed rules “do not exceed federal requirements” and acknowledge that Part 75 rulemaking is no longer federally required for non-EGUs.

B. Monitoring Must Be Economically Reasonable

Without a federal obligation, Ohio EPA must choose monitoring in accordance with the limits and instructions established by Ohio Revised Code (“ORC”) section ORC 3704.03, which governs the agency’s authority to develop rules. ORC § 3704.03(I), for instance, dictates that Ohio EPA “shall give consideration to . . . economic reasonableness” when deciding what monitoring to include in a rule. ArcelorMittal has offered Ohio EPA monitoring alternatives that are more accurate and less costly than Part 75 monitoring. Ohio EPA is nonetheless choosing to require Part 75 monitoring in the first phase of this rulemaking with a promise to consider these economically reasonable alternatives in a second phase of this rulemaking. The statute, however, does not give Ohio EPA the discretion to ignore economic reasonableness when deciding on the monitoring for this first phase SIP rule.

Ohio EPA does not claim that Part 75 is the preferred economically reasonable monitoring alternative for non-EGUs. The agency prefers a phased approach because it has concluded that it will take longer for U.S. EPA to approve a rule that includes the economically reasonable monitoring alternatives. The statute does not authorize Ohio EPA to ignore statutory mandates to move rules along more quickly. The agency must consider economically reasonable alternative monitoring in all SIP rulemakings and it cannot arbitrarily delay consideration of ArcelorMittal’s lower cost alternative monitoring proposal to a later rulemaking.


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C. A Phased Rule Is Not Justified

Ohio EPA’s rush to complete the first phase rulemaking is unjustified. There is no material risk of enforcement for non-EGUs under the dormant Chapter 14 rule. First, the Chapter 14 trading program is no longer implemented by U.S. EPA’s Clean Air Markets Division or by Ohio EPA. It would be impossible in many respects to comply with a trading rule for which the agency does not allocate allowances and, therefore, affected sources cannot hold allowances to offset actual ozone season NOx emissions. A rule that does not offer a pathway to compliance is void and unenforceable. There is also no material risk of enforcement for those who may emit in excess of the current Appendix B source allocations in Chapter 14. The Appendix B table expressly limits those NOx allocations to “the ozone season in years 2004-2007 for regulated non-EGUs”. Subsequent allocations were to be made by the U.S. EPA Administrator upon information provided by the Ohio EPA Director in accordance with the formulas in OAC rule 3745-14-05(C). These formulas re-allocate allowances from the many shutdown sources to the non-EGUs that continue to operate, which would result in allowances well in excess of the old Appendix B allocations for every remaining non-EGU. With aggregate actual emissions being less than 25% of the budget, we do not expect any non-EGU sources to have actual NOx emissions in excess of properly updated NOx allowance allocations.

Ohio EPA also reports that U.S. EPA has indicated it will need more time to consider a Part 75 monitoring alternative due to Clean Air Act (“CAA”) Section 110(l). A change in monitoring does not result in additional emissions, so the anti-backsliding demonstration under CAA §110(l) is simple. See Kentucky Resources Council v. EPA, 467 F.3d 986, 995 (6th Circuit 2006) (allowing U.S. EPA to approve a SIP revision under CAA § 110(l) “unless the agency finds it will make the air quality worse” and finding that moving an automobile inspection and maintenance requirement to a contingency plan did not make air quality worse.) If U.S. EPA can move a control measure into a contingency plan without making air quality worse, a SIP revision that replaces Part 75 monitoring with a more accurate NOx measurement system cannot possibly constitute a backsliding rule that makes air quality worse. U.S. EPA should not need more time to evaluate the simple alternatives to Part 75 monitoring included in this comment letter.

D. Part 75 Monitoring is More Costly and Less Accurate than Alternative Monitoring

ArcelorMittal faces millions of dollars in Part 75 monitoring costs detailed below, which are significantly higher than the CEMS costs that Ohio EPA estimates in the BIA. More importantly, ArcelorMittal has provided Ohio EPA with far less costly alternatives for measuring actual ozone season NOx emissions that use refined emission factors and fuel use records. This approach is also more accurate than Part 75 monitoring, which requires the use of worst case emission assumptions when monitors go down. Ohio EPA must consider cost-effective alternatives to Part 75 monitoring that provide a more accurate measurement method. See ORC § 3704.03(E).

ArcelorMittal also operates its non-EGUs with naturally low-NOx fuels that do not generate enough NOx emissions to warrant costly and burdensome Part 75 monitoring. Using blast furnace gas and other process gases have allowed both ArcelorMittal facilities to maintain consistently low NOx emissions well below the allowances granted them under the trading program. These boilers are not large NOx sources that could justify the type of expensive Part 75 monitoring systems designed for monitoring the largest fossil fuel-fired electric utilities.


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In summary, Part 75 monitoring is not required by federal law and is far more costly and less accurate than necessary to supply Ohio EPA with the accurate data needed to verify its non-EGU budget has not been exceeded. Part 75 monitoring adds cost to the production of steel in Ohio, risking Ohio businesses’ competitive advantage and putting Ohio jobs at risk. This is a burden that outweighs any potential benefit of Part 75 monitoring for Ohio’s non-EGUs. ArcelorMittal asks that Ohio EPA protect Ohio businesses and jobs by implementing a rule that allows the use of a cost effective, reliable, and accurate monitoring alternative to ensure that Ohio EPA can reliably demonstrate that non-EGU NOx emissions do not exceed their ozone season budget.

III. PART 75 CEMS ARE NOT REQUIRED TO MEET OHIO’S NOX SIP CALL OBLIGATIONS FOR

NON-EGUS

When U.S. EPA first issued its NOx SIP Call in 1998, it established NOx budgets for each state. The budgets were designed to represent the levels of NOx emissions that a state could emit without “significantly contribut[ing]” to nonattainment in downwind states. 63 Fed. Reg. 57356, 57358-59 (Oct. 27, 1998). U.S. EPA encouraged states to meet their budgets through reductions at EGUs and large industrial non-EGU sources, but did not dictate how states must meet their budgets. Id. at 57360.

Ohio EPA adopted the EGU and non-EGU budgets for Ohio in Appendix A and Appendix B of the NOx Budget Trading Rule in OAC rule 3745-14-05 and adopted a NOx budget trading program as the control measure to demonstrate that Ohio met these budgets and, therefore, was no longer significantly contributing to nonattainment in downwind states. The trading program allocated NOx allowances from the EGU budget to EGU sources and from the non-EGU budget to non-EGU sources. Ohio’s SIP allowed trading among the emission units to help ensure the lowest cost approach to reducing emissions to meet the state budgets and mitigate downwind contributions. See OAC Chapter 3745-14. Reliable NOx emission measurements were essential to the integrity of the NOx trading program, so EPA required rigorous Part 75 monitoring of all participants in the trading program. U.S. EPA has now moved EGUs into a separate trading program under CSAPR that continues to require Part 75 monitoring. Ohio’s non-EGUs have not been included in this CSAPR NOx trading program.

For the reasons set forth in subpart A below, ArcelorMittal supports Ohio EPA’s decision to exclude non-EGUs from the CSAPR trading program. As discussed in subpart B below, Ohio EPA is not required to adopt Part 75 monitoring to implement its preferred option for demonstrating that non-EGUs will not exceed the Chapter 14 budget. Moreover, as discussed in subpart C below, Part 75 monitoring is less accurate and not well suited for the ozone season demonstration for non-EGUs. Finally, as explained in subpart D, Ohio EPA has more accurate and economically reasonable alternatives that do not require ArcelorMittal to spend over $1.4 million dollars to maintain and over $220,000 per year to operate Part 75 CEMS to generate NOx

data for emission units that are incapable of exceeding their non-EGU NOx budget.


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A. Ohio EPA Is Right to Decline EPA’s Late Offer to Include Non-EGUs in the CSAPR Rule

On October 26, 2016, U.S. EPA for the first time offered states the option to include non-EGUs in their CSAPR SIPs for the 2017 ozone season. This is an unreasonably short time to implement such a change. Ohio EPA declared that it “does not believe participation in the CSAPR program is the best option for Ohio.” See Ohio EPA Early Stakeholder Outreach -- OAC Chapter 3745-14 (NOx Budget Trading Program) and Chapter 3745-109 (Clean Air Interstate Rule) (December 21, 2016) at p. 2. ArcelorMittal agrees.

According to Ohio EPA, if the non-EGUs are included in CSAPR, Ohio EPA must accept a significant reduction in the non-EGU NOx budget despite EPA’s prior determination that the existing budget is sufficiently protective of downwind sources. The Updated CSAPR rule proposes to reset Ohio’s non-EGU budget from 4,028 tons of NOx per ozone season to 1,541 tons per ozone season if these sources are included in the trading program. This would effectively restrict Ohio’s non-EGUs to their highest aggregate ozone emission rate in the past three years. The most recent three years have been challenging for domestic iron and steel manufacturing. Cheaper imports accounted for almost one in three tons of steel sold in the United States in 2015.1

Given the success with steel trade cases, the relative cost of imports is expected to increase and so will the demand for domestic steel. Locking in a restricted non-EGU budget that reflects the NOx emission rates from the most recent three years creates an unnecessary impediment to the rebound of Ohio’s iron and steel production. Ohio EPA is right to choose a different option for demonstrating compliance with its non-EGU NOx emission budget that is adequately protective and does not impede economic growth and job creation in this sector.

B. Part 75 Monitoring Is Not Required for Ohio EPA’s Streamlined Option for Non-EGUs

In the December 21, 2016 Early Stakeholder Outreach announcement, Ohio EPA revealed its plan to select the streamlined demonstration option in which it demonstrates that the total ozone-season NOx emissions from all affected non-EGUs could not exceed the non-EGU budget in Chapter 14 even if these units were to operate every hour of the ozone season. Currently, the maximum mass NOx emission rate for all affected non-EGUs is 1,817 tons per ozone season, which is 45% of the 4,028-ton NOx ozone season budget for non-EGUs. As such, Ohio EPA can demonstrate compliance with the non-EGU budget without imposing any NOx control measures or individual mass emission limits on existing non-EGU sources. Where no control measures are imposed, Part 75 CEMS are neither required nor warranted. See 40 CFR § 51.121(i)(4) (“If the [SIP] revision contains measures to control fossil fuel-fired NOx sources, . . . then the revision must require such sources to comply with the monitoring provisions of part 75, subpart H.”) (Emphasis added.) Part 75 monitoring is not required in the absence of NOx control measures.

The SIP is only required to contain control measures “adequate to prohibit emissions of NOx that would otherwise be projected . . . to cause the jurisdiction’s overall NOx emissions to be in excess of the budget for that jurisdiction.” See 40 CFR § 51.121(b)(1)(i). Since the NOx emissions from

1 Thomas Gibson and Chuck Schmidt, The Crisis Facing the U.S. Steel Industry, CABLE NEWS NETWORK (March 23, 2016), http://www.cnn.com/2016/03/23/opinions/american-steel-industry-gibson-schmitt/.


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the non-EGUs in Ohio are not projected to exceed the budget even when operating every hour of the ozone season, Ohio EPA’s upcoming SIP revision will not contain any measures to control NOx from the existing affected non-EGUs. As a result, U.S. EPA cannot require that Ohio EPA adopt Part 75 monitoring as a condition of approving Ohio’s SIP for non-EGUs.

Rather, U.S. EPA merely offers nonbinding guidance in its FAQ document suggesting that non-EGUs retain Part 75 monitoring. However, this suggestion would require that Ohio adopt monitoring more stringent than what federal law requires for non-EGUs. More stringent Ohio regulations place Ohio businesses at a competitive disadvantage. North Carolina has proposed a non-EGU rule without costly Part 75 monitoring requirements. Indiana has proposed a non-EGU rule that includes an exemption from Part 75 monitoring for boilers that burn primarily process gases, like blast furnace gas or coke oven gas, which is common in the iron and steel industry. Ohio’s proposed rule would impose Part 75 costs on the iron and steel industry that Indiana and North Carolina would not.

Ohio EPA has an additional and independent statutory obligation to determine whether such monitoring is economically reasonable for non-EGUs before including this monitoring in a revised rule. See ORC § 3704.03(I). Ohio EPA must also consider the cost and benefit of its rulemakings. See ORC § 3704.03(E)(1). Part 75 monitoring is an unnecessary and significant economic burden that produces no material benefit to the people of Ohio. For non-EGUs there is a clear alternative that produces reliable data sufficient for Ohio EPA’s demonstration without the cost and burden imposed by Part 75 monitoring. Part 75 monitoring is an unnecessary and economically unreasonable burden for non-EGUs in this rulemaking that cannot be justified for this SIP revision.

C. Part 75 Monitoring Was Designed for Trading Programs That No Longer Exist and Is Not As Accurate as Other Non-EGU Alternatives

Part 75 monitoring requirements were developed to provide the detailed information necessary to support verification of emissions credits under the acid rain program. A significant degree of accuracy is required under these programs because emissions are bought and sold in a market-based system that demands this level of precision. This monitoring was justified for both the NOx

Budget Trading Program and CAIR. Now, however, non-EGUs will not be included in the CSAPR trading program. Ohio EPA is only required to assess whether the collective emissions from all non-EGU units exceed the Chapter 14 NOx budget for non-EGUs. There is no need for minute-by-minute or even hour-by-hour NOx emissions information when the relevant compliance measure is the collective emissions from all non-EGUs over the course of the entire 5-month ozone season. This additional Part 75 monitoring cost is not justified by any corresponding benefit. ArcelorMittal primarily combusts produced gases (blast furnace gas at ArcelorMittal Cleveland and coke oven gas at ArcelorMittal Warren) in these industrial boilers to recover energy from gas otherwise flared. Blast Furnace Gas is a naturally low-NOx fuel that generates less NOx

per MMBtu of heat input than natural gas or other fossil fuels. The significant burdens associated with Part 75 monitoring – which include some of the most rigorous testing and verification procedures for any monitoring devices under the Clean Air Act – are not warranted here.

Part 75 also contains provisions that distort the accuracy of the NOx emission rate. For instance, Part 75 penalizes a source for monitor downtime by requiring assumed NOx emission rates that


7


far exceed actual NOx emission rates. See 40 CFR §§ 75.31(c),(d), 75.33(c),(d). ArcelorMittal is finding that older CEMS experience more downtime and, therefore, the Part 75 missing data substitution penalty for downtime that results in reporting of emissions greater than actual is an increasingly significant component of the ozone-season NOx calculation for its non-EGU sources. This may have been justified as an incentive to monitor properly under a trading program when a source may purchase NOx allowances to cover the elevated gap-filling emission rates. However, outside of a trading program Part 75’s missing data substitution provisions result in emission reporting that is greater than actual emissions and unnecessarily exaggerates and distorts NOx

emission rates. This interferes with Ohio EPA’s obligation to measure accurately ozone-season emissions for non-EGUs to demonstrate properly that actual aggregate non-EGU emissions are below the ozone-season NOx budget for these sources.

D. Ohio EPA Has Economically Reasonable Alternatives to Costly CEMS for Non-EGUs

Part 75 monitoring is costly for non-EGU units. Many facilities, including ArcelorMittal, installed their CEMS over a decade ago, and several monitoring components are nearing the end of their useful lives. Most of ArcelorMittal’s CEMS are nearing end-of-life. ArcelorMittal is facing potential costs approaching $1.4 million to replace eight units with new CEMS that meet the Part 75 requirements.2 This is in addition to continuing operating costs of $221,872 each year for the eight Part 75 CEMS units at the two ArcelorMittal facilities.3 CEMS data acquisition system hardware upgrades alone will cost ArcelorMittal $48,000 prior to the 2018 ozone season to continue Part 75-compliant CEMS operations due to existing data controllers becoming obsolete. This cost is in addition to the annual operating cost of each CEMS unit, which includes software licensing fees, calibration gases, RATA testing, and consultant fees. These annual operating costs average $27,734 per unit or $221,872 each year for the eight CEMS units that ArcelorMittal facilities would be required to operate to comply with Part 75 monitoring requirements. Under the trading program, ArcelorMittal recovered these costs by the sale of excess NOx allowances generated when ArcelorMittal burns its low-NOx blast furnace gas to generate steam in an affected unit. Without a trading program, these onerous CEMS obligations are unrecoverable costs that ultimately increase the marginal cost of making steel and thereby make it more difficult for Ohio steel to compete in the global marketplace.

If Ohio EPA excludes Part 75 monitoring from the revised Chapter 14 rule, seven of ArcelorMittal’s non-EGUs will avoid these Part 75 monitoring costs entirely as they are not required by any other federal or state rule to operate Part 75 monitoring on its non-EGUs. One of the CEMS at the ArcelorMittal Warren facility is required to operate by a PSD permit, but that CEMS meets the Part 60 monitoring requirements instead of the more onerous Part 75 monitoring requirements. Thus, ArcelorMittal requests that this rule revision also recognize Part 60 monitoring as an

2 This CEMS cost is based on a 2002 vendor quote of $640,000 actually used to install the five CEMS at the ArcelorMittal Cleveland facility, which adjusted for inflation is $874,000 in 2017 dollars. The comparable cost for the three ArcelorMittal Warren CEMS is $524,400 in 2017 dollars. The replacement cost for CEMS reaching the end of their useful life is expected to be comparable to these cost estimates. Documentation for these costs is available upon request.

3 The CEMS operating cost is based on a 2017 vendor quote for CEMS operation and maintenance and an annual RATA for each facility. Documentation for this cost is available upon request.


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acceptable alternative to Part 75 monitoring. ArcelorMittal offers far less expensive alternatives to monitor NOx emissions from these non-EGUs, which Ohio EPA must consider and adopt if technically feasible and economically reasonable. As discussed below, non-EGUs should have the option of using an emission factor and an operating parameter as a more accurate and cost-effective method to monitor NOx emissions.4 ArcelorMittal non-EGUs have years of NOx CEMs data suitable for use in developing a reliable NOx emission factor (i.e., lbs NOx per unit of fuel). This emission factor can produce equally reliable ozone season NOx emissions data using operating parameters that ArcelorMittal is already required by permit to track regularly, such as fuel use or heat input for the ozone season. The combination of a robust NOx emission factor and an enforceable fuel use recordkeeping obligation generates reliable NOx emissions data from each non-EGU at far less cost than Part 75 monitoring. ArcelorMittal can use these data to report NOx emissions reliably at the end of each ozone season so that Ohio EPA can conduct its annual review to ensure that the aggregate ozone season NOx emissions remain below the non-EGU budget. This is an economically reasonable alternative to the Part 75 CEMs, which Ohio EPA must consider and should adopt for non-EGUs.

Ohio’s experience with non-EGUs indicates that actual NOx emissions from this sector are not expected to ever exceed the non-EGU budget. We are not aware of any new industrial boilers >250 MMBtu/hr installed in Ohio since the NOx Budget Trading Rule was promulgated. One of the reasons that maximum NOx emissions are just 45% of the ozone season non-EGU budget is that large industrial boilers are reaching the end of their useful lives and are not being replaced in kind. New steam needs are being served by smaller and more efficient modular package boilers with heat input rates well below 250 MMBtu/hr.5 Thus, Ohio EPA has no basis for concern that the non-EGU budget will be oversubscribed in the future. Unless and until there are competing demands for allocations from the non-EGU budget, it is not economically reasonable to impose burdensome Part 75 monitoring on non-EGUs.

In the Updated CSAPR rule, U.S. EPA suggests that the EGU trading program may not be sufficient to eliminate all of the ozone transport effect in downwind states. U.S. EPA suggests that upwind states with a continuing impact on downwind states may need future SIP revisions to reduce NOx emissions from smaller EGUs and non-EGUs. U.S. EPA’s speculation should not affect Ohio EPA’s current rulemaking. Until the CSAPR program is fully implemented, U.S. EPA cannot know if Ohio will continue to be an upwind state in need of additional reductions. U.S. EPA is not allowed to impose budgets on upwind states like Ohio that are more restrictive than necessary to address significant contributions to downwind air quality problems. See EME Homer City Generation, L.P. v. EPA (EME Homer City II), 795 F.3d 118 (D.C. Circuit 2015). Therefore,

4 Non-EGUs should also have the option of monitoring NOx using existing equipment required for other purposes. As discussed, Boiler No. 3 at ArcelorMittal Warren has a PSD permit obligation to continuously monitor and record NOx emissions with monitoring equipment that complies with the requirements specified in 40 CFR Part 60. Data from this monitor should be sufficient for the Chapter 14 non-EGU budget demonstration without having to meet the more stringent and costly Part 75 requirements.

5 Experts are recognizing that large industrial boilers are not being replaced in kind but by smaller and more efficient and agile units, which would not be subject to the Chapter 14 non-EGU rules. See Package Boilers Find New Friends, PLANT ENGINEERING (Aug. 12, 2016), http://www.plantengineering.com/single-article/package-boilers-find-new-friends/6dff20bf020db5486b2b87a3b6963077.html (a “clear trend is emerging toward a modular approach toward boiler capacity, using multiple package boilers.”)


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U.S. EPA must fully implement the CSAPR program before it can determine if additional upwind NOx restrictions are justified under EME Homer City II.

Even if Ohio is required to obtain additional NOx reductions in the future to eliminate ozone transport, Ohio EPA is not required to look to non-EGUs for those reductions. This speculative need for future rulemaking cannot render Part 75 CEMS economically reasonable now. Ohio EPA can use the emission factor approach described above to generate the NOx ozone season data for determining if additional reductions are necessary to protect downwind areas. These data are far more reliable than the typical data available at the start of a rulemaking process, because there are years of source-specific CEMS data collected during the trading program period. Speculative future rulemakings do not justify the continuation of burdensome Part 75 monitoring requirements for non-EGUs.

Conclusion

In conclusion, ArcelorMittal supports Ohio EPA’s proposal to use a streamlined demonstration to show that existing non-EGUs are incapable of exceeding the non-EGU Chapter 14 ozone-season NOx budget. However, Ohio EPA is not required to adopt Part 75 CEMs because there are no control measures necessary for non-EGUs. Rather, Ohio EPA must consider and should adopt an economically reasonable alternative to Part 75 CEMs. Each non-EGU should have the option of reporting ozone season NOx emissions to Ohio EPA using a reliable NOx emission factor developed with the benefit of the source-specific NOx CEMS data collected during the trading program years. The established emission factor can then be applied to parametric monitoring data such as operating hours, heat input, or fuel consumption to reliably calculate ozone season NOx emissions. One or more of these parametric data are already monitored and, therefore, can be generated at far less cost than maintaining, operating, and eventually replacing CEMS to comply with Part 75 requirements. This approach offers an economically reasonable alternative for generating the data needed for Ohio EPA’s non-EGU NOx budget demonstration at the end of each ozone season.

To assist Ohio EPA with its rule development process, ArcelorMittal is attaching as Appendix A proposed rule language to implement the alternative monitoring approach outlined in these comments.

If you have any questions or if you need additional support, please contact me at 216-479-8332.


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Sincerely,

Douglas A. McWilliams

cc: Craig Butler Robert Hodanbosi Keith Nagel Julianne Kurdila Rich Zavoda Pat Monnot Marian Gammon


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Appendix A:

Proposed Chapter 14 Rule Language to Implement ArcelorMittal’s Alternative Monitoring Proposal (September 8, 2017):

Insert the following language at the beginning of OAC Rule 3745-14-08(A)(2):

Except as set forth in paragraph (H) of this rule titled “Alternative Monitoring”,

Insert the following paragraph at the end of OAC Rule 3745-14-08(A)(3):

(h) For the owner or operator of a NOx budget unit complying with Alternative Monitoring under paragraph (H) of this rule, paragraphs (A)(2)(a) to (A)(2)(c) of this rule do not apply.

Insert the following language at the beginning of OAC Rule 3745-14-08(A)(4):


Insert the following language at the beginning of OAC Rule 3745-14-08(A)(5)(a):


Insert the following language at the end of OAC Rule 3745-14-08(A)(5)(b):

, or in accordance with the applicable provisions of paragraph (H) of this rule.

Insert the following language at the beginning of OAC Rule 3745-14-08(B)(1)(b):


Insert the following new subsection (H) at the end of OAC Rule 3745-14-08:

(H) Alternative Monitoring.

(1) An owner or operator of a NOx budget unit that is not participating in a trading program may elect to monitor NOx emissions using alternative monitoring under this subsection instead of monitoring pursuant to paragraph (A) and 40 CFR Part 75, Subpart H.

(2) Alternative monitoring must include monitoring of heat input or fuel use for each ozone season and a reliable emission factor for current operating conditions.

(3) An owner or operator of a NOx budget unit electing alternative monitoring shall meet all of the following requirements:


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(a) Install all monitoring systems required to monitor heat input or fuel use for alternative monitoring.

(b) Establish a reliable NOx emission factor in pounds of NOx emitted per unit of fuel or heat input based on U.S. EPA’s AP-42 Compilation of Emission Factors, based on a valid stack test using U.S. EPA standard test methods, or based on an average of continuous emission monitoring data representative of current ozone season operating conditions.

(c) Record, report and quality assure the data from the alternative monitoring systems required under (H)(3)(a) and (H)(3)(b) on and after May 1, 2018 or ninety days after the date on which the unit commences commercial operation, whichever is later.

(4) The owner or operator shall submit with its reported NOx emissions data for each ozone season the basis for the reliable emission factor and the parametric monitoring data for heat input or fuel use used to calculate ozone season NOx

emissions.


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Documents

Division of Air Pollution Control Response to Comments · [email protected] 1000 Jackson Street 419.241.9000 Toledo, Ohio 43604-5573 419.241.6894 fax VIA EMAIL and U.S. MAIL