Emergency Application — North Dakota, et al., Applicants v. Environmental Protection Agency, et al.

USCA Case #24-1119 | Document #2058570 Filed: 06/07/2024 Page 31 of 96

acceptability” for protecting public health with an adequate margin of safety. '® Similarly, EPA’s

risk assessment supports the conclusion that residual risks of HAP emissions from the EGU source

category are “acceptable” for other potential public health effects, including both chronic and acute

non-cancer effects. !”

These conclusions have been confirmed by the detailed reevaluation of the 2020 risk assessment

that the Agency is now completing as part of the current rule-making action. That EPA

reevaluation clearly demonstrates that the 2020 risk assessment did not contain any significant

methodological or factual errors that could call into question the results and conclusions reached

in the 2020 risk assessment. Most notably, EPA used well-accepted approaches and methodologies

for performing a residual risk analysis that adhere to the requirements of the statute and are

consistent with prior residual risk assessments performed by EPA over the years for other industry

sectors. 18

The results from both residual risk assessments can lead to only one rational conclusion: the current

MATS limitations provide an ample margin of safety to protect public health in accordance with

CAA section 112.

The DEQ filed comments addressing these points and asking EPA to provide a better health benefit

justification than the rationale currently included in the Regulatory Impacts Analysis (RIA).!? In

particular, DEQ noted that EPA cannot rely on non-HAPs' co-benefits to justify the Proposed Rule,

and EPA has not identified any HAP-related benefits that would be sufficient to justify the

Proposed Rule. The agency also voiced skepticism over what it called EPA' s suspect

characterization of the health benefits that it identified, which is quoted below:

While the screening analysis that EPA completed suggests that exposures

associated with mercury emitted from EGUs, including lignite-fired EGUs, are

below levels of concern from a public health standpoint, further reductions in these

emissions should further decrease fish burden and exposure through fish

consumption including exposures to subsistence fishers. ”°

DEQ’s well-founded concern is that EPA’s admission that current exposure associated with

mercury is below levels of concern is directly inconsistent with, not support of, EPA’s proposal

for a lower standard.

DEQ commented that this theme, unfortunately, is consistent across the entire "Benefits Analysis"

section of the RIA, citing another example of this inconsistency, which is quoted below:

“Regarding the potential benefits of the rule from projected HAP reductions,

we note that these are discussed only qualitatively and not quantitatively

16 88 Fed. Reg. at 24,865.

17 Td. at 24,865-66.

18 88 Fed. Reg. at 24,865.

19 Regulatory Impact Analysis for the Proposed National Emission Standards for Hazardous Air Pollutants: Coal- and

Oil-Fired Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review (Apr. 2023),

Docket ID: EPA-HQ-OAR-2018-0794-5837.

20 Td. At p. 0-8.

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....Overall, the uncertainty associated with modeling potential of benefits of

mercury reduction for fish consumers would be sufficiently large as to

compromise the utility of those benefit estimates-though importantly such

uncertainty does not decrease our confidence that reductions in emissions

should result in reduced exposures of HAP to the general population,

including methylmercury exposures to subsistence fishers located near these

facilities. Further, estimated risks from exposure to non-mercury metal HAP

were not expected to exceed acceptable levels, although we note that these

emissions reductions should result in decreased exposure to HAP for

individuals living near these facilities.”!

Comments filed by the Lignite Energy Council (LEC) further emphasize the point. LEC stated

that according to the risk review EPA conducted in 2020, which EPA has proposed to reaffirm, the

risks from current emissions of hazardous air pollutants (HAP) emitted by coal-fired power plants

are several orders of magnitude below what EPA deems sufficient to satisfy the Clean Air Act.”

LEC points out that EPA has for decades found risks to be acceptable with an ample margin of

safety if maximum individual excess cancer risks presented by any single facility is less than “100-

in-1 million.” In comparison, EPA’s analysis of the coal- and oil-fired electric utility source

category recognizes the risk it presents is now at one tenth of that acceptable level, with a

maximum risk from any individual facility of “9-in-1 million.”

However, even that value vastly overstates the risk associated with coal-fired power plants. The

“9-in-1 million” risk level identified by EPA is only associated with a single, uncontrolled, residual

oil-fired facility located in Puerto Rico.?? What EPA’s discussion of risk fails to recognize, but its

analysis clearly shows, is that the highest level of risk presented by any coal-fired power plant is

actually “0.3-in-1 million,” more than 300 times lower than the threshold EPA deems acceptable.

The level of risk presented by North Dakota lignite-powered plants is lower still. According to

EPA’s risk review, the maximum risks presented by any North Dakota lignite-fired power plant is

“0.08-in-1 million,” yet another order of magnitude lower than the highest risk from any coal-fired

plant, and more than three orders of magnitude lower than EPA’s “acceptable” level of risk with

an “ample margin of safety.”

21 Td. at pp. 4-1 - 4-2.

22 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

3 Residual Risk Assessment for the Coal- and Oil-Fired EGU Source Category in Support of the 2020 Risk and

Technology Review Final Rule, Docket ID No. EPA-HQ-OAR-2018-0794-4553, App. 10, Tbls. 1 & 2a (Sept. 2019)

(“Risk Assessment”) (note that Table 2a is printed upside down in the final September 2019 version of the Residual

Risk Assessment posted at www.regulations.gov, which may interfere with search commands; a searchable version of

the same table is available in the December 2018 draft version, Docket ID No. ). See also 84 Fed. Reg. at 2699 (“There

are only 4 facilities in the source category with cancer risk at or above 1-in-1 million, and all of them are located in

Puerto Rico.”).

4 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

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The risks from North Dakota lignite are so low that they are more easily expressed, not in a million,

but in a billion—EPA has determined that the excess cancer risks from all North Dakota lignite

plants fall between 5- and 80-in-1 billion.2> Moreover, EPA’s analysis indicates that those

maximum risks are not associated with mercury.”°

In fact, EPA’s own analysis confirms the risks from North Dakota lignite-powered plants are so

low they are little more than a rounding error that does not even qualify as a significant digit. In

its analysis of the still low but relatively higher risk from the Puerto Rican oil-fired plants, EPA

determined that one of those facilities presented a risk no greater than “1-in-1 million,” even

though EPA’s modeling actually returned a risk level of “1.09-in-1 million.”6 EPA discarded the

extra “.09,” apparently finding it too small to matter. However, that extra “.09” risk equates to “90-

in-1 billion,” and it is therefore higher than the entire risk identified for any North Dakota lignite

plant.

The Administrative Record Indicates the Mercury Standard of 1.2 lb./TBtu

is Technically Unachievable for EGUs using North Dakota Lignite Coal

The Administrative Record for the proposed rule suggests EPA made numerous critical mistakes

in assuming lignite fired EGUs can achieve a 1.2 Hg/Ib limit with 90% Hg removal. As detailed in

the Cichanowicz Report, Section 6, EPA assumed the characteristics of lignite and subbituminous

coals are similar such that the Hg removal by emission controls capabilities is similar. In this light,

EPA did not consider that the high presence of sulfur trioxide (SO3) in lignite coal combustion flue

gas that significantly limits the Hg emissions reduction potential of emissions controls.7’

Similarly, as noted by LEC, EPA’s proposal references data obtained via an information collection

request as indicative of the level of performance achievable at North Dakota lignite facilities, but

that data only reflects relatively short-term testing that does not fully capture the significant

variability of lignite coals. Also, unlike other types of facilities that may be able to blend coals to

achieve greater consistency in the character of their fuel, all North Dakota lignite units are located

at mine-mouth facilities without access to other coal types, and therefore depend entirely on the

fuel extracted from the neighboring mine. As a result, changes in constituents between seams of

lignite coal can result in a high level of variability in the emission rates that result from use of the

coal as it is mined over time.”°

While LEC agreed with EPA that the injection of activated carbon is the most effective means of

reducing mercury emissions from lignite-powered units, LEC also criticized EPA for ignoring the

well-known diminishing returns of injecting more carbon. With each marginal increase in carbon

25 Risk Assessment, Tbl. 2a (indicating cancer risks of 8.07e-08, 3.09e-08, 1.31e-08, 1.21e-08, and 5.12e-09 for

Facility NEI IDs 380578086511, 380578086311, 380558011011, 380578086511, 380578086611 (Milton R. Young,

Leland Olds, Coal Creek, Antelope Valley, and Coyote).

26 Td., at Tbl. 2a (indicating the target organ of the risk associated with the plants identified in note 5 is “respiratory”).

27 J, Cichanowicz et al., Technical Comments on National Emission Standards for Hazardous Air Pollutants: Coaland Oil-fired Electric Utility Steam Generating Units Review of Residual Risk and Technology, at 29, Figure 6-7 (June

2, 2023) (“Cichanowicz Report”).

8 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

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injection, the incremental increase in emission reduction capability falls. Thus, injecting more and

more carbon will not necessarily result in greater emission reductions beyond a certain injection

level. LEC asked EPA to evaluate the effect of diminishing returns on its conclusion that North

Dakota lignite-powered facilities can achieve the standard designed for all other units of 1.2

Ib/TBtu.

EPA does not appear to have taken the above concerns into account in claiming lignite- powered

facilities can achieve the performance levels achieved at subbituminous plants. As a result, EPA

has significantly underestimated the level of control needed to achieve the proposed standard of

1.2 lb/TBtu. Contrary to the analysis EPA relies upon to justify lowering the standard for lignite

plants, control efficiencies of greater than 90 percent would be needed for North Dakota lignitepowered facilities.2? LEC’s comments asked EPA to reconsider its proposal in light of these

concerns, and in light of EPA’s legal obligation to ensure all standards are “achievable,” which

means they “must be capable of being met under most adverse conditions which can reasonably be

expected to recur.”°°

The Administrative Record indicates a key reason why EPA’s proposed standards are

unachievable is the chemical composition of North Dakota lignite. For example, lignite has

different heat and moisture content than subbituminous coals. As a result, a greater volume of

fuel and air is needed at lignite plants to produce the same heat input compared to subbituminous

plants. Due to higher fuel and air flows, a much greater volume of sorbent is needed to achieve

similar emission reductions, and the additional sorbent dramatically increases cost, and therefore

reduces the cost-effectiveness, of the controls.*!

Another distinguishing difference EPA appeared to overlook in its proposal is the higher sulfur

concentration in North Dakota lignite relative to subbituminous Powder River Basin coal, which

in turn produces a higher level of sulfur trioxide (“SO3”). In the past, EPA has worked with a

consultant that recognized this reality as follow:

With flue gas SO3 concentrations greater than 5-7 ppmv, the sorbent feed rate may

be increased significantly to meet a high Hg removal and 90% or greater mercury

removal may not be feasible in some cases. Based on commercial testing, capacity

of activated carbon can be cut by as much as one half with an SO3 increase from

just 5 ppmv to 10 ppmv. 32

Cichanowicz et al. highlighted this passage from the S&L technology assessment and also noted

that the presence of SO3 often affects capture rates in another way—by requiring units with

measurable SO3 to be designed with higher gas temperature at the air heater exit to avoid

corrosion that would otherwise occur if the SO3 is allowed to cool and condense on equipment

7° Cichanowicz Report, at 25, Table 6-1.

3° White Stallion Energy Center, LLC v. EPA, 748 F.3d 1222, 1251 (2014) (citing Nat’l Lime Ass’n v. EPA, 627 F.2d

416, 431 n. 46 (D.C. Cir.1980)).

31 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

32 Sargent & Lundy, IPM Model — Updates to Cost and Performance for APC Technologies: Mercury Control Cost

Development Methodology, Project 12847-002, at 3 (Mar. 2013).

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components. However, that higher exit gas temperature also impacts the effectiveness of sorbent

injection systems—special-purpose tests on a fabric filter pilot plant showed an increase in gas

temperature from 310°F to 340°F lowered sorbent Hg removal from 81% to 68%.*°_ The higher

levels of SO3 formed by the higher sulfur content found in lignite fuels will inhibit the ability

of injected sorbents to reduce mercury emissions at lignite plants to a far greater extent than at

subbituminous plants.

LEC agreed with these concerns in its comments and raised another important consideration —

the fact that, unlike subbituminous plants, selective catalytic reduction (SCR) is technically

infeasible on North Dakota lignite, due to its chemical composition. Although SCR systems are

primarily installed for the control of nitrogen oxides (NOx), SCR can enhance the oxidation of

elemental mercury (“Hg®”) which facilitates removal in downstream control equipment, such as

wet flue gas desulfurization (FGD) systems.** The higher level of mercury control achievable

with an SCR is almost certainly why the one lignite plant (Oak Grove) evaluated by EPA as part

of its review of the MATS RTR appears capable of achieving the mercury limit set for other coal

ranks—it has an SCR that cannot be installed on North Dakota lignite facilities. *

LEC’s comments also highlighted the experience of two LEC members that recently evaluated

the difference in mercury control achieved by plants using subbituminous coal equipped with an

SCR and plants using lignite coal without an SCR. Based on those evaluations, North Dakota

lignite-powered facilities were found to have much greater difficulty reducing mercury

emissions, despite using more than three times the amount of halogenated activated carbon than

the subbituminous plant.

In the past, EPA has questioned whether SCR is technically feasible for North Dakota lignitepowered facilities, and recent research has confirmed that the significant challenges associated

with using SCR on North Dakota lignite remain unresolved.*° Although SCR has been

demonstrated on the types of lignite found in other parts of the country, North Dakota lignite

differs substantially in chemical makeup because it contains a much higher concentration of

alkali metals (e.g., sodium and potassium) that render the catalyst ineffective. *’

In particular, the relatively high concentration of sodium in North Dakota lignite forms vapor,

condenses, and then coats other particles, or it forms its own particles at a size range of 0.02-

0.05 um. As a vapor or as a very small particle, the sodium will pass through any upstream

emissions control equipment (e.g., electrostatic precipitators and scrubbers), and thus will reach

the SCR regardless of whether the SCR is located before other emission control devices (highdust configuration) or after those other controls (low-dust or tail-end configurations). °°

33 Sjostrom 2016.

34 88 Fed. Reg. at 24875.

35Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

36 See Draft SIP, App. D, at D.2.c-5 (citing Benson, Schulte, Patwardhan, Jones (2021) “The Formation and Fate of

Aerosols in Combustion Systems for SCR NOx Control Strategies” A& WMA’s 114 Annual Conference, #983723).

37

1d

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Once the sodium particles reach the SCR, they plug the pores of the catalyst, which are the key

feature that allows for improved oxidation of other pollutants. The sodium also poisons the

catalyst both inside the pores and on the surface, rendering the active component of the catalyst

inactive. Recent efforts to address these concerns through either cleaning or regeneration of the

catalyst have not been successful, even at pilot scale. A study recently cited by DEQ in its

regional haze plan provides additional details on these efforts and the unsolved technical

challenges that remain regarding the impact of alkali metals in North Dakota lignite on the

technical feasibility of SCR.*?

According to LEC, its members report that efforts to identify a willing vendor for an SCR on a

North Dakota lignite unit have been unsuccessful—all vendors have declined to offer SCR for

use on North Dakota lignite once they have closely reviewed the unique characteristics that make

SCR infeasible on that particular fuel.*°

In short, the Administrative Record and other available evidence indicates that North Dakota

lignite-powered facilities will likely not be able to meet the revised emission standards EPA is

proposing for the MATS Rule.

The Administrative Record Indicates the Lower PM Standard May Also Not

Be Technically Feasible

In addition to imposing a more stringent mercury standard on lignite by essentially eliminating the

subcategory, EPA’s proposal also lowers the standard on fPM for all existing units to the level

previously deemed achievable only by new units. However, like its proposed Hg standard for

lignite, EPA’s proposal to revise the PM standard for all coal types remains unjustified by any

demonstration of potential human health or environmental benefits.

The LEC’s comments detail particular concerns associated with EPA’s failure to provide a

reasonable justification for so dramatically reducing the PM limit.*! As LEC noted, the risks that

the MATS Rule is designed to address have already been eliminated, down to several orders of

magnitude below the level at which Congress directed EPA to stop regulating. The highest residual

risk for the entire source category, which is based on an oil-fired unit, is just one tenth of EPA’s

acceptable level of risk, and the highest risk from any coal plant is more than an order of magnitude

below the risk presented by oil-fired units.

Furthermore, the Administrative Record suggests that EPA’s analysis of the achievability of the new

0.01 lb/mmBtu standard is based on an arbitrary data set, and that analysis also suffers from a lack

of transparency. Specifically, commenters observed that EPA relies on a Sargent & Lundy

memorandum that lacks sufficient detail or supporting documentation to verify the assumptions

made, essentially hiding much of the agency’s thought process behind the claim that the

9 Td.

40 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

41 Td.

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information on which it is based is not available in public forums.* In doing so, EPA seemingly

commits what it has previously cited as error in plans developed by states and industry—failing to

provide sufficient information to understand the reasoning underlying key conclusions.”

Moreover, the Administrative Record indicates the combined effect of both the proposal to require

universal use of CEMS and the lower standard of 0.01 lb/mmBtu will present a compounded

challenge if finalized as proposed. Commenters indicated that the difficulty in demonstrating

achievement of the new standard will be exacerbated by the requirement to use the less accurate

CEMS, and the difficulty in using CEMS will be exacerbated by the dramatically lower standard.“

In particular, serious concerns remain with respect to whether a fPM CEMS can effectively

estimate emission rates at such low levels, or whether emissions that low will be too small for a

CEMS to differentiate compliance from a false reading.** EPA attempts to allay these fears by

claiming existing units can simply follow in the footsteps of new units, since new units have been

subject to a CEMS requirement with a fPM emission limit of 0.090 lb/megawatt-hour since the

inception of MATS.*° But that assurance provides no comfort—there are no new units.*”

In light of these shortcomings, the NDTA contracted with Center of the American Experiment to

model the impacts of the MATS rules on resource adequacy, reliability, and cost of electricity to

consumers. The findings of this analysis are detailed in Section D.

section C: Impact of MATS Regulations- Power Plant

Economics and Grid Reliability

Power Plant Economic Impacts

The economic impacts for a lignite power plant from the Mercury and Air Toxics Standards

(MATS) finalized rule can be substantial. The updated MATS rule, if implemented by the

42 PM Incremental Improvement Memo, Doc. ID EPA-HQ-OAR-2018-0794-5836 (March 2023) (“Improvements to

existing particulate control devices will be dependent on a range of factors including the design and current operation

of the units, which is not documented in public forums. ... Unfortunately, the details of how those units’ ESP designs,

upgrades, and operation are not publicly available .... In order to evaluate the applicability of one or more of these

potential improvements, information would need to be known about the existing ESPs and their respective operation

which is not documented in public forums.”).

43 See, e.g., Approval and Promulgation of Implementation Plans; Louisiana; Regional Haze State Implementation

Plan, 82 Fed. Reg. 32,294, 32,298 (July 13, 2017) (“Entergy’s DSI and scrubber cost calculations were based on a

propriety [sic] database, so we were unable to verify any of the company’s costs. ... Because of these issues, we

developed our own control cost analyses ....”).

44 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

45 Td.

46 88 Fed. Reg. at 24874. The electrical output-based limit for new EGUs translates to approximately 0.009 lb/mmBtu,

which is slightly below EPA’s proposed limit of 0.010 lb/mmBtu.

47 Jason Bohrer, “Comments on National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired

Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review, 88 Fed. Reg. 24854

(Apr. 24, 2023), June 23, 2024.

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Environmental Protection Agency (EPA), aims to reduce mercury and other hazardous air pollutant

emissions from coal-fired power plants. Coal-firing power plants, and lignite-firing power plants

in particular, may face specific challenges and economic consequences in complying with these

regulations, which could result in their forced retirement. Some potential economic impacts

include:

1. Escalating Operational Expenditures: Under this rule, lignite power plants will face an

excessive economic burden from a significant uptick in operational costs due to the

integration of pollution control equipment. The installation of advanced technologies like

activated carbon injection (ACI) and flue gas desulfurization (FGD) systems necessitates

continuous monitoring and maintenance to ensure optimal performance. Design

specifications vary from plant to plant which increases the complexities of the operating

systems that require regular cleaning, replacement of consumables, and calibration, all of

which incur additional expenses. Moreover, the implementation of pollution control,

measures may necessitate alterations in combustion processes or the introduction of

supplementary fuel, further driving up operational costs. As a result, lignite power plants

are burdened with substantial ongoing expenditures, while also lacking a positive cost

benefit analysis, which will undermine their economic viability and competitiveness in the

energy market.

2. Dilemma of Plant Retrofitting or Retirement: Lignite power plants are confronted with

the challenging prospect of either retrofitting existing facilities or contemplating retirement

in response to the stringent requirements of the Mercury and Air Toxics Standards (MATS).

Plant retrofitting involves substantial investment in upgrading equipment and

implementing advanced pollution control technologies to achieve compliance with

regulatory mandates. However, these retrofitting endeavors entail significant additional

costs, potentially straining the financial resources of plant owners and operators. Moreover,

the uncertainty surrounding the long-term economic viability of retrofitted plants further

complicates decision-making processes.

3. Impact on Electricity Prices: The implementation of pollution control technologies to

comply with MATS regulations can impose significant financial burdens on lignite power

plants. These costs, encompassing the installation, maintenance, and operation of such

technologies, would ultimately be transferred to consumers in the form of higher electricity

prices. As power plants seek to recoup the expenses incurred in meeting regulatory

requirements, consumers will experience an uptick in their electricity bills. This escalation

in electricity prices will have far-reaching implications for households, businesses, and

industries reliant on affordable energy. It will affect household budgets, impact the

competitiveness of businesses, and influence consumer spending patterns. Additionally,

higher electricity prices will introduce challenges for industries sensitive to energy costs,

potentially leading to shifts in production, investment, and employment patterns within the

broader economy. Therefore, the economic impact of elevated electricity prices resulting

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from MATS compliance should be carefully considered within the context of the energy

market, taking into account the implications for consumers, businesses, and overall

economic growth.

4. Employment Effects: The escalation in costs and the possibility of plant retrofitting or

retirement can reverberate through the lignite industry and associated sectors, potentially

leading to job losses. As lignite power plants grapple with increased operational expenses

and the financial strain of compliance with regulatory requirements, they may be compelled

to streamline operations or even cease production altogether. Such decisions can have a

ripple effect on employment within the community, impacting not only plant workers but

also individuals employed in ancillary industries such as mining, transportation, and

manufacturing. Job losses in these sectors can contribute to economic challenges, including

reduced consumer spending, increased unemployment rates, and a decline in overall

economic activity. Furthermore, the social and psychological impacts of job loss on

affected individuals and communities cannot be understated, as they may face financial

insecurity, stress, and uncertainty about their future prospects. Therefore, the potential job

impacts stemming from increased costs and plant adjustments underscore the broader

economic implications of regulatory compliance measures in the lignite industry.

5. Regional Economic Consequences: Lignite power plants are often linchpins of regional

economies, exerting substantial influence on employment, tax revenue, and economic

activity. Any shifts in the economic viability of these plants, whether due to increased costs,

regulatory compliance burdens, or operational adjustments, will trigger broader

consequences for local economies. The potential closure or downsizing of lignite power

plants can result in the loss of direct and indirect employment opportunities, affecting not

only plant workers but also individuals and businesses reliant on plant-related activities.

Moreover, the decline in plant operations will lead to reduced tax revenue for local

governments, impacting their ability to fund essential services and infrastructure projects.

Additionally, the loss of economic activity associated with lignite power plants will ripple

through the supply chain, affecting suppliers, vendors, and service providers in the region.

This domino effect will exacerbate economic challenges, including decreased consumer

spending, increased business closures, and a general downturn in economic vitality.

Therefore, changes in the economic landscape of the lignite industry will have far-reaching

consequences for regional economies, underscoring the interconnectedness between

energy production, employment, and overall economic well-being at the local level.

6. Impact on Investment Decisions: The economic ramifications of the MATS rule can

significantly shape investment decisions within the lignite industry. Plant owners and

prospective investors must carefully evaluate the long-term economic feasibility and

potential returns on investment in light of stringent regulatory compliance mandates. The

substantial costs associated with MATS compliance, including technology upgrades and

operational adjustments, may deter investment in lignite power plants or prompt

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divestment from existing assets. Investors may reassess the risk-return profile of ligniterelated ventures, considering factors such as regulatory uncertainty, market volatility, and

shifting energy trends. Moreover, the potential for increased operational costs and

regulatory burdens may incentivize investment in alternative energy sources or cleaner

technologies, which align more closely with evolving environmental and sustainability

objectives. Therefore, the economic implications of the MATS rule play a pivotal role in

shaping investment decisions within the lignite industry, influencing capital allocation,

project planning, and strategic resource allocation strategies.

7. Legal and Regulatory Costs: Meeting MATS requirements often entails significant legal

and regulatory costs associated with monitoring, reporting, and ensuring continued

compliance. Lignite power plants must allocate resources to navigate complex regulatory

frameworks, engage legal counsel, and implement robust monitoring and reporting systems

to adhere to emissions standards. These additional expenses contribute to the overall

economic strain on lignite power plants, exacerbating the financial challenges associated

with regulatory compliance. As a result, the burden of legal and regulatory costs further

underscores the financial pressures faced by lignite power plant operators, shaping their

strategic decision-making and resource allocation efforts.

Grid Reliability Impacts

Compliance with the Mercury and Air Toxics Standards (MATS) rule will likely have grid

reliability impacts on regional power grids that rely on lignite- or other coal-firing power plants.

The impacts on grid reliability for power grids that rely on lignite- or other coal-firing power plants

can include:

1. Operational Adaptations and Flexibility Constraints: The implementation of pollution

control technologies like activated carbon injection (ACI) and flue gas desulfurization

(FGD) systems necessitates operational modifications within lignite power plants. These

adjustments may include alterations to combustion processes, fuel handling procedures,

and overall plant operations to accommodate the integration of new equipment and

systems. However, such operational changes can compromise the inherent flexibility of

lignite power plants to respond effectively to fluctuating load conditions and grid demands.

The need for continuous operation of pollution control systems, coupled with potential

limitations in responsiveness, may impede the plant's ability to ramp up or down quickly

in response to changes in electricity demand or supply. Consequently, the reliability of

lignite power plants to maintain grid stability and meet grid operator requirements may be

compromised, raising concerns about their ability to ensure consistent and secure

electricity supply. Thus, while MATS compliance aims to mitigate environmental impacts,

the operational adaptations required may introduce challenges to the reliability and

flexibility of lignite power plants in supporting a resilient and dynamic energy grid.

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2. Disruptions Due to Equipment Installation: The installation and retrofitting of pollution

control equipment often necessitate temporary shutdowns or reduced operating capacities

within lignite power plants. These planned downtime periods are essential for integrating

new equipment, conducting modifications, and ensuring compliance with regulatory

requirements. However, the interruptions in plant operations during these installation

phases will have adverse effects on the overall reliability and availability of the plant. The

temporary cessation of power generation activities will disrupt electricity supply,

potentially affecting grid stability and reliability. Moreover, extended downtime periods

may lead to revenue losses for plant operators and suppliers, as well as inconvenience for

consumers and end-users reliant on consistent electricity provision. Therefore, while

essential for achieving compliance with MATS regulations, the equipment installation

process poses challenges to the reliability and continuity of lignite power plant operations,

emphasizing the importance of efficient planning and management to minimize

disruptions.

3. Efficiency Implications: The introduction of pollution control technologies, especially

those targeting mercury emissions reduction, will potentially undermine the overall

efficiency of lignite power plants. While these technologies play a crucial role in meeting

regulatory standards, they often require additional energy inputs and introduce operational

complexities that can compromise plant efficiency. For instance, activated carbon injection

(ACI) systems necessitate the injection of powdered carbon into the flue gas stream, which

can increase resistance and pressure drops within the system, thus reducing overall

efficiency. Similarly, flue gas desulfurization (FGD) systems require energy-intensive

processes such as limestone slurry preparation and circulation, further impacting plant

efficiency. The reduction in efficiency can translate to decreased electricity output per unit

of fuel input, potentially affecting the plant's ability to generate electricity reliably and meet

demand fluctuations. Consequently, while pollution control measures are essential for

environmental protection, the associated efficiency implications underscore the need for

careful optimization and balancing of environmental and operational considerations to

ensure reliable power generation from lignite plants.

4. Elevated Maintenance Demands: The incorporation of MATS-compliant equipment,

including ACI and FGD systems, often translates to heightened maintenance requirements

within lignite power plants. The intricate nature of these pollution control technologies

necessitates more frequent inspections, cleaning, and servicing to ensure optimal

performance and regulatory compliance. However, the increased maintenance needs can

result in extended periods of downtime, during which the plant may be unable to generate

electricity, impacting its reliability and availability. Moreover, the allocation of resources

and manpower to address maintenance tasks diverts attention and resources away from

other operational activities, potentially affecting overall plant efficiency and productivity.

Therefore, while essential for environmental compliance, the elevated maintenance

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demands associated with MATS-compliant equipment pose challenges to the reliability and

operational continuity of lignite power plants, highlighting the importance of proactive

maintenance planning and execution to minimize disruptions.

5. Inherent Fuel Supply Hurdles: Lignite power plants grapple with inherent challenges

associated with the utilization of lignite coal, particularly in meeting stringent emission

standards. Lignite, characterized by its lower rank and elevated moisture content, poses

unique obstacles in combustion processes. The variability in chemical composition across

different seams of coal extracted from mines further complicates the task of ensuring

consistent and efficient combustion. Each seam presents distinct combustion

characteristics, necessitating meticulous adjustments in operational parameters to maintain

compliance with emission regulations. Consequently, lignite power plants encounter

difficulties in securing a reliable and uniform fuel supply, which undermines their ability

to consistently meet emission targets and operational efficiency goals. The intricacies of

managing diverse coal qualities exacerbate the complexities of pollution control measures,

posing significant operational challenges for lignite power plants.

6. Integration Challenges: The introduction of new pollution control technologies into

operational lignite power plants may encounter compatibility hurdles. Ensuring seamless

integration with existing infrastructure is paramount for preserving reliability.

Compatibility issues can emerge from differences in technology specifications, operational

parameters, or control systems between the new equipment and the plant's established

infrastructure. Unaddressed disparities may lead to operational inefficiencies,

malfunctions, or system failures. Thus, meticulous planning and coordination are vital to

mitigate compatibility risks and uphold the reliability of lignite power plants. Failure to

address these challenges will compromise plant performance, emphasizing the need for

thorough assessment and integration procedures when adopting new technologies.

7. System Coordination and Grid Stability: Adjustments in operating conditions and

responses to fluctuating load demands can disrupt system coordination and compromise

grid stability. Lignite power plants must coordinate closely with grid operators to maintain

reliable electricity supply while adhering to MATS requirements. Changes in plant

operations, such as implementing pollution control technologies or adjusting output levels,

can affect the overall balance of supply and demand within the grid. Without effective

coordination, these changes may lead to imbalances, voltage fluctuations, or frequency

deviations, posing risks to grid stability. Therefore, robust communication and

collaboration between lignite power plants and grid operators are essential to ensure

seamless integration of plant operations with broader grid dynamics. By coordinating

effectively, lignite power plants can contribute to grid stability while meeting regulatory

obligations, ensuring the reliable delivery of electricity to consumers.

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8. Continuous Compliance Management: Adhering to emission limits mandated by MATS

necessitates ongoing monitoring and fine-tuning of pollution control equipment. The

chemical properties of lignite can vary even within coal seams from the same mine, posing

challenges in preparation and adjustment for plant operations. This variability complicates

efforts to maintain consistent compliance, requiring dynamic adjustments in day-to-day

plant operations. Consequently, ensuring reliable compliance becomes a dynamic process,

demanding meticulous attention to detail and proactive management of pollution control

systems. Consistent monitoring and adjustment are essential to mitigate emissions

effectively while sustaining the operational reliability of lignite power plants amidst the

inherent variability of lignite coal properties.

9. Supply Chain Vulnerabilities: The consolidation in the power plant equipment sector

over the past decade has reduced the number of suppliers available. Relying on specific

suppliers for pollution control equipment and technologies introduces supply chain risks.

Disruptions in the supply chain, such as shortages, delays, or quality issues, will impede

the timely installation and operation of essential equipment, jeopardizing reliability.

Lignite power plants must carefully assess and manage these supply chain vulnerabilities

to ensure uninterrupted access to critical components and technologies necessary for

regulatory compliance and operational integrity. Proactive measures, such as diversifying

suppliers or implementing contingency plans, are crucial for mitigating supply chain risks

and maintaining the reliability of lignite power plants.

10. Long-Term Viability and Aging Infrastructure: Compliance with MATS regulations

will raise concerns about the long-term viability of older lignite power plants. Aging

infrastructure may struggle to adapt to the requirements of new pollution control

technologies, posing challenges that will impact reliability. The integration of these

technologies into outdated systems may require extensive retrofitting or upgrades, which

can strain resources and prolong downtime. Moreover, the operational lifespan of aging

infrastructure may be limited, leading to questions about the economic feasibility of

investing in costly compliance measures. Plant owners must carefully assess the costbenefit ratio of compliance efforts and consider the potential impact on reliability when

evaluating the long-term viability of older lignite power plants. Failure to address these

challenges will compromise the reliability and competitiveness of these facilities in the

evolving energy landscape.

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Section D: Modeling Results

Summary

The EPA did not conduct a reliability analysis for its proposed MATS rules or its Post IRA base

case, instead it conducted a Resource Adequacy and reserve margin analysis, which EPA has

claimed is necessary but not sufficient to grid reliability.”

EPA’s lack of reliability modeling prompted several entities to voice concerns in the original docket

for the Proposed MATS rule would negatively impact grid reliability, including the National Rural

Electric Coop Association, the American Coal Council, The Lignite Energy Council, PGen, the

American Public Power Association, and the National Mining Association. *9°°.°1°2,°3.°4

To provide this necessary perspective, Center of the American Experiment modeled the reliability

and cost impacts of the proposed Mercury and Air Toxics Standards (MATS) in the subregions

consisting of the Midcontinent Independent Systems Operator (MISO) as it relates to the

elimination of the subcategory for lignite-fired power plants.»

Our analysis determined that the closure of lignite-fired powered power plants in the MISO

footprint would increase the severity of projected future capacity shortfalls, 1.e. rolling blackouts,

in the MISO system if these resources are replaced with wind, solar, battery storage, and natural

gas plants consistent with the EPA’s estimates for capacity values for intermittent and thermal

resources.

Building these replacement resources would come at a great cost to MISO ratepayers. The existing

lignite facilities are largely depreciated assets that generate large quantities of dispatchable, lowcost electricity. Our modeling determined the total cost of replacement generation capacity in the

Status Quo, Partial, and Full scenarios will cost $12.93 billion, $14.88 billion, and $16.76 billion,

respectively, from 2024 through 2035, resulting in incremental costs of $1.9 billion in the Partial

48 Resource Adequacy Analysis Technical Support Document, New Source Performance Standards for Greenhouse

Gas Emissions from New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units; Emission

Guidelines for Greenhouse Gas Emissions from Existing Fossil Fuel-Fired Electric Generating Units; and Repeal of

the Affordable Clean Energy Rule Proposal Docket ID No. EPA-HQ-OAR-2023-0072 U.S. Environmental Protection

Agency Office of Air and Radiation April 2023.

49 NRECA Comments, EPA-HQ-OAR-2018-0794-5956, at 5-6.

3° American Coal Council Comments, EPA-HQ-OAR-2018-0794-6808, at 3.

5! LEC Comments, EPA-HQ-OAR-2018-0794-5957, at 17.

52 PGen Comments, EPA-HQ-OAR-2018-0794-5994, at 5.

33 APPA Comments, EPA-HQ-OAR-2018-0794-5958, at 33.

>4 NMA Comments, EPA-HQ-OAR-2018-0794-5986, at 29.

5 U.S. Environmental Protection Agency, “National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-

Fired Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review,” 88 FR 24854,

April 24, 2023, https://www.federalregister.gov/documents/2023/04/24/2023-07383/national-emission-standards-for-

hazardous-air-pollutants-coal--and-oil-fired-electric-utility-steam.

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