RPC Reg Spotlight April 4, 2011

 

Regulatory Action in the Spotlight:

 

Environmental Protection Agency’s (EPA) Final Rule governing Maximum Achievable Control Technology (MACT) standards for Industrial Boilers (Boiler MACT).

 

Adverse Effects:

 

  • Hundreds of thousands of lost jobs
  • Loss of manufacturing capacity

 

Response of the Obama Administration:

 

The EPA first issued its Boiler MACT Rule on September 13, 2004. These standards, however, were vacated by the United States Court of Appeals after the Court found EPA’s definition of “commercial or industrial waste” conflicted with the language of the Clean Air Act (NRDC v. EPA, 489 F. 3d 1250 (D.C. Cir. 2007)). In June 2010, the United States District Court for the District of Columbia granted several unopposed motions to extend this deadline for the Boiler MACT Rule, resulting in an eventual deadline of January 21, 2011. The EPA submitted the final rules to the White House Office of Management and Budget for review on January 21, 2011, and the new MACT standardsFinal Rule was issued on March 21, 2011. 

 

The Rule covers industrial boilers and process heaters, and would impose stringent emission limits and monitoring requirements for eleven subcategories of boilers and process heaters, based on fuel type and unit design.  These standards, which are intended to address hazardous air pollutant (HAP) emissions, would impose tighter limits on five HAP’s:

 

Mercury

Hydrogen Chloride

Particulate Matter

Carbon monoxide

Dioxins/Furans

 

EPA contends that implementing the proposed MACT standards for these five pollutants will minimize emissions of all HAPs.   Compliance with the other emission limits would be determined through fuel analyses, performance tests, and monitoring.  The owner or operator of an existing boiler must comply with the standards in three years.  New boilers will have 60 days to comply.  (Federal Register, Vol. 76, No. 54, Monday March 21, 2011, Rules and Regulations, P. 15559, http://www.epa.gov/ttn/atw/boiler/fr21mr11a.pdf )

 

The Council of Industrial Boiler Operators (CIBO) believes its members may be subject to significant economic hardship should the proposed EPA rules regulating boiler emissions be adopted. Potential consequences include the shuttering of domestic manufacturing capacity – and the associated jobs loses -- for those CIBO members that find the capital costs associated with compliance via plant retrofitting make it economically unfeasible to continue operations.

 

Impact on the United States:

 

The rules prescribe stringent emission limits for large boilers, including those firing coal, biomass or oil utilizing a standard based on technology that few if any real-life boilers can attain.  According to the March 3, 2011 Legal Update from McGuire Woods, LLP, these limits are based on a model boiler that industry has dubbed the “Frankenstein Boiler” or the “Franken Boiler” because it does not exist in the real world. 

 

A study commissioned for The Council of Industrial Boiler Owners by IHS Global Insight estimates that every $1 billion spent on upgrade and compliance costs will put 16,000 jobs at risk and reduce U.S. GDP by as much as $1.2 billion.   The study estimates that the potential total economic impact of the Rule could amount to the loss of:

 

  • 798,250 jobs
  • $14.3 billion in tax receipts
  • $63.3 billion contribution to the U.S. GDP

 

In Closing:

 

The new Boiler MACT rules will make it more expensive for manufacturing concerns to operate and will lead to a loss of jobs and valuable tax revenues in already hard-pressed communities.  The Forest Resource Association notes that compelling additional investment to upgrade boilers which already comply with existing Clean Air Act standards prevents manufacturers from applying scarce resources toward creating jobs.

 

Relevant Legislation:

 

Rep. Labrador introduced an amendment to H.R. 1 (February 14, 2011) prohibiting funds directed toward the Environmental Protection Agency to finalize a proposed rule regarding boilers and heaters (75 Fed Register 32006).