On Dec. 23, 2011, the United States Environmental Protection Agency (EPA) proposed changes to the National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters (the Boiler MACT) Rule. On the same day, EPA also proposed changes to a similar rule that applies to industrial commercial and institutional boilers and process heaters at area sources (the “Area Source Boiler NESHAP”).

In the publication of both proposed rules, EPA solicited public comments relating to the proposed changes. Comments must be received on or before Feb. 21, 2012. If adopted, these proposed rules would amend the Boiler MACT and Area Source Boiler NESHAP rules that were issued by EPA on March 21, 2011. EPA issued a Notice of Reconsideration for the Boiler MACT and the Area Source Boiler NESHAP on the same day the rules were issued, and several petitioners also sought reconsideration of both rules. The new proposals represent EPA’s proposed response to the reconsideration petitions.

The Boiler MACT applies to certain boilers and process heaters used in industrial facilities, excluding utility boilers, solid waste incinerators, and area source boilers. Industrial boilers and process heaters subject to the Rule burn a variety of fuels including natural gas, fuel oil, coal, biomass, and other fuels to produce heat or steam. The Boiler MACT applies emission standards to industrial boilers and process heaters for several hazardous air pollutants (HAPs) including, among others, mercury (Hg), particulate matter (PM) as a surrogate for non-mercury HAP metals, and hydrogen chloride (HCl) as a surrogate for acid gas HAPs. These emission standards were based on several “subcategories” of industrial boilers. Similarly, the Area Source Boiler NESHAP applies generally available control technologies (GACT) and/or work practice standards to certain industrial boilers and process heaters which are generally smaller than those regulated by the Boiler MACT.

EPA’s proposals includes several changes to the Boiler MACT, including the application of new emission limits and work practice standards based on new subcategories of industrial boilers. These new subcategories are proposed to better reflect the design differences associated with boilers that burn different fuels. EPA proposes 17 subcategories of industrial boilers and process heaters. Fourteen of these categories are required to meet specific emissions limitations. Three of the subcategories (metal process furnaces, limited-use units, and units that combust only natural gas and other clean fuels) are required to meet work practice standards, including annual tune-ups, in lieu of emission limits. Because each subcategory would be subject to new emission limits that reflect design differences, EPA expects that the Rule will generally result in a greater aggregate reduction in most pollutants, while also improving the ability of sources to achieve compliance with the standards.

In addition to the new emission limits, the proposed Boiler MACT Rule also indicates that it will increase flexibility by including additional options for sources to demonstrate compliance. For example, certain sources can demonstrate compliance by relying either on fuel sampling or performance testing. Also, under the proposal, certain sources have the option of demonstrating compliance with the particulate matter emission limitations by installing PM continuous emissions monitoring system (CEMS) or by measuring metallic air toxic pollutants instead of particle matter. In addition, EPA proposes to allow carbon monoxide limits to be achieved by operating an oxygen analyzer system or by operating a CEMS in certain instances.

According to EPA, the proposed modifications to the Boiler MACT are anticipated to result in a nationwide reduction of certain HAPs emissions by 45,000 tons per year from existing units. In addition, nationwide reductions of filterable PM from existing units are anticipated to be 41,200 tons per year, and nationwide reductions of SO2 emissions from existing units are estimated to be 558,400 tons per year. Of the HAPs emissions reductions, nationwide mercury emissions are estimated to be reduced by 0.5 to 1.8 tons per year from existing units, and non-mercury metals are estimated to be reduced from existing units by 2,200 tons per year. EPA anticipates the societal benefits resulting from these emissions reductions would total between $27 billion and $67 billion dollars by 2015, depending on the discount rate. This represents an increase in benefits by approximately 23 percent from the Boiler MACT promulgated by EPA in March 2011. According to EPA, the costs of implementing this proposal will be approximately $5.4 billion in capital expenditures and $1.9 billion in total annual costs, with coal-fired units bearing the largest portion of these costs. The cost estimates associated with the proposal are higher than the costs estimated to implement the Boiler MACT promulgated in March 2011 ($5.0 billion in capital expenditures and $1.75 billion in annual costs).

Finally, EPA’s proposals also solicit comments on the Area Source Boiler NESHAP. EPA is soliciting comments relating to establishing GACT standards for oil-fired area source boilers, setting particulate matter standards under GACT, and the possible relationship between Title V permits and the Area Source Boiler NESHAP, among other issues.