11 10 05 DRAFT DO NOT QUOTE OR CITE 1 II. Today's Action A. Grant of Reconsideration In this notice, EPA is announcing its decision to grant reconsideration on four issues raised in the petitions for reconsideration. This notice initiates that reconsideration process and requests comment on the issues to be addressed.

Given the intense public interest in this rule, EPA has decided to provide this additional opportunity for public comment. At this time, however, EPA does not believe that any of the information submitted to date demonstrates that EPA's final decisions were erroneous or inappropriate.

Therefore, we are not proposing any modifications to the final CAIR.

The first issue on which EPA is requesting comment relates to analysis done by EPA to address petitioner's claims regarding alleged inequities resulting from the application of the SO2 allowance allocation methodology an element of the model rules for the CAIR SO2 trading program,

specifically the SO2 allocation methodology that States'

choosing to participate in the trading program would use to allocate SO2 allowances to sources. The second issue relates to EPA's use of specific fuel adjustment factors to establish NOx budgets for each State. The third issue 11 10 05 DRAFT DO NOT QUOTE OR CITE 2 relates to modeling inputs used by EPA to determine whether emissions from Minnesota should be included in the CAIR region for PM2.5. And the fourth issue relates to EPA's determination that the State of Florida should be included in the CAIR region for ozone. Each issue is described in greater detail in Section III of this notice.

The EPA is requesting comment only on the issues specifically described in Section III. We are not taking comment on any other provisions in the CAIR or otherwise reopening any other issues decided in the CAIR for reconsideration or comment.

B. Schedule for Reconsideration For the four issues addressed in this notice, EPA expects to take final action on reconsideration by March 15,

2006. By that date, EPA will finalize the process of reconsideration by issuing a final rule or proposing a new approach. EPA also expects, by March 15, 2006, to issue decisions on all remaining issues raised in the petitions for reconsideration.

III. Discussion of Issues A. SO2 Allocation Methodology in the CAIR Model Trading Rules One petitioner argues that the SO2 allowance allocation methodology in the CAIR model trading rules is unreasonable 11 10 05 DRAFT DO NOT QUOTE OR CITE 3 and inequitable, and asks EPA to establish a different approach. According to the Petitioner, the methodology is inequitable because it results in owners of units that have lower emission rates, historically, buying allowances from historically higher emitting units that install new emission controls. The Petitioner requests that EPA reconsider using an allocation methodology for SO2 allowances analogous to the sample allocation methodologies finalized for NOx under CAIR and for mercury under CAMR. EPA does not accept the petitioner's characterization of this issue. EPA continues to believe that the methodology selected is reasonable for the reasons explained below. Furthermore, numerous opportunities for public comment on this issue were provided, and a full discussion of the allowance allocation options occurred during the rule development process.

Nonetheless, given the intense public interest in this issue, EPA has decided to grant the Petition for Reconsideration insofar as it raises issues regarding alleged inequities resulting from the application of the reconsider whether changes to the SO2 allowance allocation methodology are warranted.

As explained below, EPA has conducted additional analyses concerning the impact of the SO2 allowance allocation approach adopted in the model rules, comparing 11 10 05 DRAFT DO NOT QUOTE OR CITE 4 this approach to various other alternatives considered during the rulemaking process. These analyses further illustrate that the approach selected produces a reasonable result, not the inequities alleged in the Petition for Reconsideration. , and Therefore EPA is not proposing any changes to the CAIR at this time. We are taking comment on the analyses conducted and our discussion of the petitioner's concerns.

Title IV and CAIR The CAIR model SO2 trading program relies on the use of title IV SO2 allowances for compliance with the allowanceholding requirements of CAIR. Title IV SO2 allowances have already been allocated on a unit by unit basis in perpetuity, based on formulas set forth in section 405 and 406 of title IV, which where implemented through final regulations issued in 1998 ( Sec 42 U. S. C. 7651d and 7651e;

and 18 CFR 73.10( b)). The statutory formula for SO2 allocations was generally based on unit data for 1985 1987 and, for some units, data for years up to 1995. For the title IV SO2 trading program, each allowance authorizes one ton of SO2 emissions.

For the CAIR SO2 trading program, SO2 reductions would be achieved by generally requiring CAIR sources to retire 11 10 05 DRAFT DO NOT QUOTE OR CITE 5 more than one title IV allowance for each ton of their SO2 emissions for 2010 and thereafter. Specifically, each title IV SO2 allowance issued for 2009 or earlier would be used for compliance by CAIR sources at a ratio of one allowance per ton of SO2 emissions and would authorize one ton of SO2 emissions. Each title IV allowance of vintage 2010 through 2014 would be used for compliance under CAIR at a two to one ratio and authorize 0.5 tons of SO2 emissions. Each title IV allowance of vintage 2015 and later would be used at a 2.86 to 1 ratio and authorize 0.35 tons of SO2 emissions.

See discussion in the preamble to the final CAIR in section VII ( 70 FR 25255 25273) and section IX ( 70 FR 25290 25291).

SO2 Allocation Options in CAIR A variety of SO2 allowance allocation methodologies were raised and analyzed during the rulemaking process,

including the one EPA selected. Alternative methodologies analyzed included allocating on the basis of historic tonnage emissions, heat input ( with alternatives based on heat input from all fossil generation, and heat input from coal and oil fired generation only) and output ( with alternatives based on all generation and all fossil fired generation). While every allocation methodology suggested by commenters during the rulemaking process has its advantages and disadvantages for different companies and 11 10 05 DRAFT DO NOT QUOTE OR CITE 6 States, EPA explained in the final rule that its chosen methodology is reasonable on several grounds. First, EPA believes that " achieving SO2 reductions for EGUs using the title IV allowances is necessary in order to ensure the preservation of a viable title IV program" ( Response to Comments ( RTC) at 511, section X. A. 26, 2005). See also discussion in preamble to the final CAIR in section IX ( 70 FR 25290 25291). Second, in using the title IV allowances,

EPA relied on the selection by Congress of the permanent allocation methodology established in title IV for purposes of reducing SO2 emissions. As stated in the RTC ( p. 512),

" Congress clearly did not choose a policy to regularly revisit and revise these allocations, believing that its allocations methodology for title IV allowances would be appropriate for future time periods."

Third, title IV allowance allocations provide a logical and well understood starting point from which additional EGU SO2 emission reductions can be achieved for Acid Rain units,

which account for over 90% of the SO2 emissions from CAIR EGUs. are the vast majority of affected CAIR EGUs. Finally,

EPA's State by State analysis of several methods for SO2 allocations shows that the use of title IV allowances to develop state budgets creates a reasonable result ( See RTC,

section X. A. 26). The policy decision to base the CAIR SO2 11 10 05 DRAFT DO NOT QUOTE OR CITE 7 budgets on the existing title IV allowance system, and EPA's demonstration that the result of using the system is reasonable fully support the use of an allocation system based on title IV allowances.

Analysis of SO2 Allocation Options As a part of this reconsideration, EPA performed additional analyses, explained below, to evaluate the SO2 allocation methodology in the final CAIR rule in light of the petitioner's concerns. In these analyses, EPA compared three alternative SO2 allowance allocation methodologies to the methodology in the final CAIR to see how companies fared in terms of the amount of allowances allocated relative to their projected SO2 emissions. The allocation allowance methodologies evaluated by EPA were the ones referred to by the petitioner in the Petition for Reconsideration. EPA believes that, for purposes of evaluating the various allocation methodologies, computing allocations on a company by company basis is more appropriate than comparing allocations on a unit by unit basis. This is because, while one unit could be allocated fewer allowances under one methodology, another unit owned by the same company could be allocated more allowances, which may offset the smaller allocation of the first unit.

The three alternative allowance allocation 11 10 05 DRAFT DO NOT QUOTE OR CITE 8 methodologies EPA analyzed were suggested by various commenters during the rulemaking process. Also note that methodologies 2 and 3 were suggested by the petitioner.

These methodologies are:

1. Allocating allowances based on more recent heat input data;

2. Allocating allowances based on more recent heat input data adjusted for fuel type ( e. g.

coal, oil and gas);

3. Allocating allowances based on more recent heat input data adjusted both for fuel type ( e. g. coal, oil and gas) and for coal type ( e. g. bituminous, sub bituminous and lignite).

In comparing the CAIR final SO2 allocation methodology and the three alternative methodologies, EPA took into account certain factors that are applicable to the CAIR final allocation methodology but not to the three alternative methodologies. For all four methodologies, EPA analyzed the resulting total allowance allocations, and the total projected emissions, for companies' sources located in the States subject to CAIR. In addition, for all the methodologies, EPA analyzed the relationship between allowances and emissions in two ways. In the first, EPA calculated the ratio of allowances to total projected 11 10 05 DRAFT DO NOT QUOTE OR CITE 9 emissions before CAIR controls ( base case). This measures how much each company falls short of allowance needs. Then,

in the second approach, EPA calculated the ratio of allowances to total projected emissions with CAIR controls installed ( control case). This way measures how many allowances a company would need to purchase after controls are installed.

For the CAIR final methodology, EPA also considered both the allowance allocations and emissions for companies'

sources both in the CAIR region and outside the CAIR region.

EPA believes that this is appropriate because, under the CAIR final methodology, if a company's sources outside the CAIR region have more title IV allowances than needed to cover their emissions under the Acid Rain Program, the company could transfer, at little or no net cost, excess allowances to the company's sources in the CAIR region for use to cover emissions under the CAIR trading program.

Under the three alternative methodologies, which would require creating new CAIR SO2 allowances independent of the existing title IV allocations, CAIR sources could not use title IV for compliance with the CAIR SO2 allowance holding requirements.

Further, in the analysis of the CAIR final methodology,

EPA considered the allocation of title IV allowances to CAIR 11 10 05 DRAFT DO NOT QUOTE OR CITE 10 region units that are not currently in the Acid Rain Program but that could opt into the Acid Rain Program and receive title IV allowances ( see 42 U. S. C. 7651i and 18 CFR part 74). This analysis assumed that companies owning non Acid Rain units affected by CAIR would opt into the Acid Rain Program because they would receive title IV allowances to cover a portion of the units' emissions under CAIR. EPA believes this assumption is reasonable because there is very little cost associated with opting into the Acid Rain Program. 1 In contrast, the analysis of the three alternative methodologies did not consider Acid Rain Program opt in allowances because these approaches do not use title IV allowances for CAIR compliance.

EPA's analyses, of which a detailed description is available in the docket, encompassed 112 ( control case) to 114( base case) parent/ holding companies with sources covered by the CAIR. These 112 to 114 companies represent about twothirds of the total number of CAIR plants, over 95 percent of total annual allocations for all methodologies during 2015, and about 97 percent of the total projected emissions 1 The greatest cost associating with opting in to the Title IV program is the cost of monitoring. Since these sources are already required to monitor using the same monitoring methodologies that would be required if they were to opt in, their costs for opting in are significantly reduced. 11 10 05 DRAFT DO NOT QUOTE OR CITE 11 in the CAIR region in 2015.2 While allocations vary from company to company under the four methodologies, overall, the distributions of allowances that companies received relative to their projected emissions for both the base case and control case are very similar. In other words, no methodology stands out as providing a more reasonable method of allocation across all companies when examining allowance needs under either the base case or control case. Figures 1 and 2, below, show the distribution of values for each methodology under the two cases, and support this conclusion. EPA repeated these analyses for 2010, which show similar results. Separate analyses of owner/ operating company allowances compared to emissions in 2010 and 2015, show similar results, as well.

See TSD Memo, " Technical Support Document for Clean Air Interstate Rule Response to Petition for Reconsideration."

Figure 1. Note: A small number of the companies in the analysis are not shown because they are outliers  receiving allocations greater than four times their projected 2015 emissions   and if included, render the figure extremely difficult to understand. See table in the TSD for details.

2 According to EPA inventory data, there are a total of 921 CAIR affected plants. EPA did not have complete owner, parent company information for all of these plants. 11 10 05 DRAFT DO NOT QUOTE OR CITE 12 Ratio of SO2 Allowance Allocations to CAIR Base Case Emissions ( without Controls) in 2015 for 114 Companies under CAIR Method and Alternatives 0.00 1.00 2.00 3.00 4.00 1 10 19 28 37 46 55 64 73 82 91 100 109 Cumulative Number of Parent/ Holding Companies Ratio of SO2 Allowance Allocations to CAIR Base Case in 2015 Pure Heat Input HI w/ Fuel Factors HI w/ FF & Coal Type EPA Method ( w/ non CAIR + opt ins Figure 2. 11 10 05 DRAFT DO NOT QUOTE OR CITE 13 EPA also notes that, while the Petitioner states that the CAIR final allocation methodology is " inequitable"

because lower emitting units would buy allowances from higher emitting units that install emission controls, it is unclear why such a result would actually be inequitable. On the contrary, the owner of each of the units involved would be choosing to adopt the most economic compliance strategy in light of the unit's emission control costs and the market value of allowances. The ability of the owners to make such choices reflects the flexibility provided by a cap and trade program. Ratio of Allowance Allocations to Projected Emissions in 2015 for 112 Companies under EPA CAIR Method and Alternatives 0.00 1.00 2.00 3.00 4.00 1 10 19 28 37 46 55 64 73 82 91 100 109 Cumulative number of parent/ holding companies Ratio of Allowance Allocation to Projected Emissions in 2015 Pure Heat Input HI w/ Fuel Factors HI w/ FF + Coal Type EPA Method ( w/ non CAIR + opt ins) 11 10 05 DRAFT DO NOT QUOTE OR CITE 14 EPA requests comment on its analyses of the four allocation methodologies and on the above discussion of the Petitioner's concerns.


September 3, 2019
SUBJECT: 	Trip report for site visit to United Taconite LLC, Cleveland-Cliffs, Inc., Eveleth, MN, October 11, 2018
FROM:	Michael Laney, RTI International
TO:		David Putney, U.S. Environmental Protection Agency (EPA)
       BACKGROUND
As part of the risk and technology review (RTR) project for the national emission standards for hazardous air pollutants (NESHAP) for taconite iron ore processing, site visits were conducted to three taconite iron ore processing facilities located along the Mesabi Range in Minnesota. This trip report summarizes the October 11, 2018 visit to the United Taconite processing facility in Eveleth, MN.
       PARTICIPANTS
United Taconite
Candice Maxwell, Area Manager  -  Environmental Affairs
Jason Aagenes, Director, Air Reg Strategy & Prog
Chan Paine, Section Manager for Plant Operations
EPA
David Putney, Office of Air Quality Planning and Standards
RTI International
Michael Laney
       SUMMARY
 Preliminary Discussions
Prior to touring the facility, participants met to discuss the agenda for the day.
Overview of plant operations. Candice Maxwell provided the following overview of plant operations.
The mine is located about 7 miles from the processing facility. Ore undergoes primary and secondary crushing at the mine. Crushed ore is transported to the processing facility via third party rail. The mine is covered by a separate title V permit.
After unloading, the ore is conveyed to third stage crushing, screened, and oversize ore sent to stage 4 crushing. Excess ore from the mine is stored in the coarse ore surge pile. The facility uses dry controls or wet scrubbers to control particulate matter emissions from crushing and screening operations and various transfer points.
The crushed ore is then conveyed to the concentrator process. Upon entering the concentrator process, the ore is wet and any emissions are minimal. The wet ore is subjected to a series of processes to reduce the particle size and separate the iron from tailings. The process consists of series rod mills, ball mills, magnetic separators, roughers, concentrators, cyclones, hydro-separators, fine screens and vacuum disk filters to remove excess water.
The dewatered material next is conveyed to balling drums where the iron-rich material is formed into unfired ("green") pellets, ready for the indurating furnace.
Unfired pellets enter the grate kiln furnace and travel through increasingly hot sections of the furnace to dry the pellets, and then gradually heat them before they are hardened in the hottest part of the furnace. Typical of grate kiln furnaces, a variety of fuels are used, including natural gas, coal, coke, or fuel oil. From the furnace the fired ("finished") pellets pass through an annular rotary cooling section.
This facility uses wet scrubbers to control particulate emissions from both the furnace and cooler.
After cooling, the finished pellets are conveyed to bins and eventually loaded on to train cars. Particulate emissions from transfer of finished pellets to the bins are controlled using wet scrubbers.
Large amounts of water are used in processing the ore. Most of the water (about 95 percent) is recycled, recovered, and reused in the process. The tailings basin is also the water retention pond.
Following the overview of the plant operations, David Putney, EPA, provided background information on the RTR project, specific information needs for the RTR project, and responded to questions from United Taconite and Cleveland-Cliffs representatives. Topics discussed included the following:
Process diagrams. EPA requested a process flow diagram.
Technology review. According to United Taconite, there have been no developments in the material handling operations. Wet scrubbers, fabric filters, and cartridge filters are the principal technologies for emissions control of these operations.
Similarly, there have been no developments in the control of emissions from indurating furnaces. Venturi scrubbers, wet ESPs, and dry ESPs continue to be the principal controls. The selection of controls is affected by factors such as differences in dust characteristics (e.g., resistivity). United Taconite has considered using baghouses but they are not considered technically feasible due to the temperature and moisture content of the exhaust gases.
Minnesota Pollution Control Agency (MPCA) mercury initiative. United Taconite representatives stated that they are currently evaluating control options for meeting the requirements in Minnesota's 2014 Mercury Rule. Their proposal to MPCA for meeting the required reduction is due by December 30, 2018. The MPCA has scheduled implementation of the mercury reductions for January 2025. In MPCA's 2009 TMDL Implementation Plan, MPCA stated "... plant-ready mercury-reduction technology does not currently exist for use on taconite pellet furnaces."
United Taconite is conducting pilot plant tests of control technologies. They are looking at several technologies including oxidized mercury for wet scrubber removal, fixed carbon bed absorption, carbon injection, and membrane technology. Other technologies have been considered but eliminated.
Mercury concentration in raw ore. David Putney explained the process that would be used for setting emission limits for mercury if the EPA decides to propose numerical MACT standards for mercury emissions. He explained that, in addition to emissions data, information on the variability of mercury concentrations in raw ore could be important information for EPA to consider in developing emission standards that accurately reflect variability in mercury emissions. He noted that there is precedence for using information on mercury variability in raw ore to set emission standards. He requested that United Taconite provide the EPA with any such mercury data they may have, or can get, to assist EPA in the event they propose mercury emission standards for the industry.
United Taconite personnel stated that they did not have mercury concentration data from core samples. They noted that MDNR did perform sampling of raw ore many years ago.
David Putney described changes to the NESHAP that are being planned beyond any that might be made as a result of the RTR. Among the revisions currently planned are the following:
Once in always in. This refers to a provision of the rule (i.e., 40 CFR 63.9581), and has been EPA policy, whereby if a source was subject to the rule as a result of being a major source for purposes of title III of the CAA (greater than 10 tons of a single HAP or 25 tons of all HAP combined), it would always be subject to the rule, even if they reduce their HAP emissions to less than major source status. As a result of a change in EPA policy, this provision in the NESHAP will be modified.
Startup, shutdown, and malfunction (SSM). As a result of a court ruling, the exemption from the emission standards during periods of SSM will be removed. Sources will be subject to an emissions standard, but it may be a work practice standard if it is not possible to demonstrate compliance with the emission limits.
Electronic reporting. Compliance test results will be required to be submitted to EPA through EPA's electronic reporting tool (ERT).
Burden reduction. David Putney explained the EPA is interested in industry's experience with any requirements of the current rule that they consider to be burdensome that could be revised to be less burdensome while not comprising environmental protection.
United Taconite identified the following issues they have with the current rule:
-Bag leak detection (BLD) alarms are often triggered by events other than excessive dust loading in exhaust gases, such as atmospheric conditions. Such false alarms usually resolve themselves in a short amount of time (a few seconds). But under the current rule requirements, each BLD alarm must be investigated within an hour and resolved. They would like to see that requirement revised to account for false alarms that do not need to be investigated (and resolve themselves).
-The requirement to monitor pressure differential for certain types of scrubbers was not appropriate. They noted that this was the case for low pressure scrubbers.
- The rule limits to six the number of units that can be covered by testing one representative unit. They stated that they have eight identical units but under the current rule they cannot perform a single test on a representative unit. They are required to conduct additional tests to cover the other two units.
 Site Tour
Mine Operation. The tour did not include the mine operation, which is located about 7 miles from the processing facility. The mine is a NESHAP area source and is not subject to the Taconite MACT.
Processing. Chan Paine, Section Manager for Plant Operations, conducted the tour of the facility. The processes viewed included the fine crushing, concentrator operations, and the pellet plant. The details of the process are those that were described during the preliminary discussions at the beginning of site visit.
 Wrap Up
During the wrap up meeting, David Putney summarized the procedure and schedule for the final risk results and rule development. He noted that proposal is scheduled for April 2019 and promulgation of a final rule in June 2020.
United Taconite stated that they would be providing EPA with a flow diagram of their processing facility.
Following up on earlier discussions regarding mercury concentrations of taconite ore, parts of the rule that United Taconite considered particularly burdensome, and developments in processes, controls and work practices (as part of the technology review), David Putney requested that any information or input that United Taconite could provide on these and other topics be provided by the middle of November 2018.