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The U.S. Environmental Protection Agency (EPA) published its final maximum achievable control technology (MACT) emission standards under the Clean Air Act (CAA) for sewage sludge incinerators (SSIs) on March 21, 2011.  Though improvements were made from the proposed rule, the final standards will have significant impacts on new and existing SSIs.  This Advocacy Alert provides a comprehensive overview of clean water agency obligations under the new rule and in-depth information on compliance requirements and key compliance dates.  The Alert also provides additional clarification on several important issues including what constitutes a ‘modification’ requiring existing units to meet the standards for new units as well as invaluable flow charts (Attachment B) that will provide utilities with all the key compliance components.

NACWA continues to believe that EPA’s final emission standards were developed under the wrong CAA statutory provisions and used insufficient data and information about the unique properties of sewage sludge and SSI operation.  NACWA is proceeding with a petition for reconsideration of the final rule and a formal legal challenge of EPA’s authority to issue the standards.  Nevertheless, the provisions in the rule remain in effect and NACWA prepared this Alert to ensure its members fully understand their compliance obligations should the challenges not result in changes to EPA’s rules.  Advocacy Alert 11-12 provides an analysis of the final definition of solid waste rule that was developed in parallel with the SSI rule.

Overview, Applicability and Rule Effective Dates

On February 21, 2011, U.S. EPA released New Source Performance Standards (NSPS) and Emission Guidelines (EGs) for new and existing sewage sludge incinerator units (SSI units), collectively referred to as the SSI MACT Rule.  The SSI MACT Rule was officially published on March 21, 2011, with an effective date of May 20, 2011.  All existing SSIs, as defined below, will have to be in compliance with the new requirements no later than May 21, 2016, but the exact compliance date will vary.

The NSPS regulations apply to new SSI units that commenced construction after October 14, 2010 and SSI units that are modified (as defined in the regulations) after September 21, 2011.   “Commence construction” means to undertake a continuous program of fabrication, erection, or installation of an SSI Unit, which starts as early as the date that the owner or operator enters into a contractual obligation to construct the unit. ^[1] This includes the installation of new units and replacement units.  So, if a contract was entered prior to October 14, 2010 to replace multiple hearth incinerators with fluidized bed incinerators, and the project progressed through installation without any significant gaps of inactivity, the fluidized bed incinerators would be existing SSI units subject to the EGs and not new or modified units subject to the NSPS.  An existing SSI unit becomes subject to the NSPS if it is modified after September 21, 2011.  This means that it is undergoing a physical change (excluding routine maintenance and repairs) after this date that does one of the following: 1) it results in an increase in emissions of one of the pollutants regulated by the SSI MACT Rule; or 2) it contributes to a cumulative cost from all changes over the life of the SSI unit that exceed 50% of the original cost of the SSI unit (updated to today’s dollars), discussed in greater detail below.  If the SSI unit is already above the cumulative cost threshold on September 21, 2011, the next change (excluding routine maintenance and repairs) will trigger the NSPS.  SSI units subject to the NSPS must be prepared to comply upon startup after completing construction or modification.  The NSPS regulations will be located at 40 C.F.R. Part 60, Subpart LLLL and are directly enforceable by EPA beginning September 21, 2011.

The EGs apply to existing SSI units (all units that are not subject to the NSPS under this rule ^[2]), and will be located at 40 C.F.R. § 60 Subpart MMMM.  Unlike the NSPS, the EGs are not directly enforceable regulations; they are guidelines.  States are required to submit to EPA State Implementation Plans (SIPs) that contain regulations at least as stringent as the EGs by March 21, 2012.   EPA will consider the submitted SIP and, if it closely follows the EGs, the agency will approve the SIP.  If the state attempts changes that EPA finds objectionable, the state has until March 21, 2013 to amend and re-submit an approvable SIP, or EPA will issue a Federal Implementation Plan incorporating the SSI MACT Rule for the state.  This effectively encourages states to follow the EGs carefully when drafting their SIPs and there will be little opportunity to influence changes to the standards at the state level.

SIPs must require existing SSI units to comply by the earlier of March 21, 2016, or three (3) years from the effective date of EPA’s approval of the SIP.  Although the SIP may allow three years for compliance, sources that will take more than one year to comply must submit a Control Plan describing how it will come into compliance by the compliance date.  If EPA issues a FIP it must also require SSI units to comply no later than March 21, 2016.

Changes from the Proposal and Impacts on SSIs

The most significant change from the proposed SSI MACT Rule was the removal of the overly stringent “beyond the floor” level of control for mercury.  After taking NACWA’s input and data into account, lowering its mercury emission estimates for SSIs, and looking at the true cost of controlling mercury at SSIs, EPA determined that the beyond the floor mercury reductions were not cost-effective.  Most of the cost impacts of the proposed rule were related to controls necessary to meet the beyond the floor limit for mercury, and NACWA is pleased that this key change alone could save municipalities more than $1 billion nationally in capital costs.

While EPA had limited time to make revisions to the proposal, a number of other substantial changes were made based on the comments submitted by NACWA and its members.  In addition to the mercury issue, EPA also corrected some of its baseline emissions estimates and assumptions about SSI operation, resulting in changes to several of the other emission standards, making them less stringent.  In a few instances, however, the standards were made slightly more stringent than proposed.  EPA also subcategorized the standards for both existing units and new units into multiple hearth and fluidized bed.  Previously, only the existing unit standards were subcategorized and there was a single set of MACT standards that applied to  both new multiple hearth and new fluidized bed SSI units.

The new standards are a significant improvement over the proposed standards, particularly for multiple hearth Incinerators (see Attachment A, which compares the standards for new and existing SSI units).   Unfortunately, the new fluidized bed incinerator (FBI) standards are so stringent that the path to compliance is uncertain.  This may effectively discourage the replacement of older incinerators with more efficient new FBI units.

Each individual utility will have to evaluate its particular situation.  Utilities without emissions information based on stack testing will not be able to compare current emissions with the new standards.  Stack testing can be expensive (upwards of $60,000 per incinerator), but the information will ultimately be critical for determining a pathway to compliance.  Utilities may not need to conduct a comprehensive stack test on each unit as contemplated by EPA for this initial review.  For the initial review, testing can focus on one representative SSI unit and the period for testing may be reduced to save on testing costs. Note, however, that EPA chose to require for dioxin that each test run last long enough to collect 3 dry standard cubic meters of sample volume to help ensure that dioxin values will be above the method detection levels. One extended run may be necessary to obtain a reliable data point for dioxin and other pollutants with low expected concentrations (e.g., mercury).

Evaluating emissions and determining a path forward for compliance requires an understanding of the emission limits and the operating limits as well as the monitoring and recordkeeping requirements.  This Advocacy Alert was designed to assist in this evaluation.

Basic Requirements Of The Final SSI MACT Rule

The NSPS (Subpart LLLL) and the EGs (Subpart MMMM) contain nearly identical provisions.  Both set emission limits for particulate matter (PM), mercury (Hg), hydrogen chloride (HCl), dioxin/furan (D/F), carbon monoxide (CO), cadmium (Cd), lead (Pb), oxides of nitrogen (NOx), sulfur dioxide (SO₂), and fugitive emissions from ash handling.  These emission limits apply at all times, including periods of start up, shut down, and malfunction.  The SSI MACT rule provides sources some flexibility in demonstrating compliance with these limits.  In general, sources may either demonstrate compliance using stack testing, or through continuous emission monitors (CEMs) or continuous automated sampling systems (CAS).

If sources demonstrate compliance using stack testing, they must also establish operating limits during their stack tests and meet these operating limits anytime sewage sludge is in the combustion chamber.  These operating limits are unique to the type of control device used and correlate with the performance of the device.  Sources must install continuous monitoring systems (generally continuous parametric monitoring systems, or CPMS) to demonstrate compliance with the operating limits.  Sources demonstrating compliance with CEMS do not need to establish operating limits.

In addition to meeting the emission limits and operating limits, sources also must conduct initial and annual performance evaluations of all continuous monitoring systems (CMS), including CEMS, CAS, and CPMS, as well as perform regular calibration and other quality control/quality assurance procedures.  Sources also must: 1) meet operator training requirements; 2) conduct initial and annual inspections of pollution control equipment; and 3) submit site-specific monitoring plans for all required systems.

Detailed Rule Requirement Flow Charts

The attached flow charts provide a summary of the SSI MACT Rule provisions (See Attachment B).  There are a number of charts due to the many compliance options.  Each facility should be able to focus on only a fraction of the charts attached based on their compliance option choices.  The rest should be retained for future reference in case changes are contemplated.  The initial flow chart asks operators to identify whether their SSI units are new or existing units, and directs them to the appropriate summary page (Subpart LLLL for new SSI units, and Subpart MMMM for existing SSI units).  These summary pages will direct operators to the appropriate flow chart page for each requirement they wish to view.  While these flow charts do not cover every detail and exception to the SSI MACT Rule, they are designed to provide a reasonably thorough overview of the compliance requirements, and applicable monitoring, recordkeeping, and reporting requirements.

Important Dates and Deadlines

The following dates should be kept in mind when developing compliance strategies.  Exact dates cannot be provided for existing units because final compliance dates will be established in individual SIPs or a FIP.  Expected compliance dates have been provided.

Initial Compliance Demonstration with Emission Limits and Operating limits

• New Units: Demonstrate compliance within 60 days of reaching the feed rate at which the new SSI will operate or within 180 days of initial startup, whichever is earlier
• Existing Units: Demonstrate compliance by the date set in the SIP (likely 3 years from the date the SIP is approved)

Initial Performance Evaluation of All Continuous Monitoring Systems (CEM, CPMS, CAS)

• New and Existing Units: Demonstrate compliance within 60 days of installing the CMS

Monitoring Plan Submissions

• New and Existing Units: Submit plans 60 days prior to the initial Performance Evaluation for each CMS, and 60 days prior to the compliance test date for the ash handling system

Air Pollution Control Device Inspections

• New Units: Conduct an initial inspection within 60 days of installing the air pollution control device or within 180 days of initial start up of the unit, whichever is earlier
  • Complete all repairs within ten (10) operating days of the inspection unless an extension is granted

• Existing Units: Conduct an initial inspection by compliance date set in the SIP (likely three (3) years from the date the SIP is approved), or within 60 days of installation if the control device is installed after the final compliance date
  • Complete all repairs within ten (10) operating days of the inspection unless an extension is granted

Title V Operating Permit Applications
Under the rule, all POTWs that utilize incineration will be subject to requirements contained in Title V of the Clean Air Act.  Clean water agencies operating a SSI that do not currently have a Title V permit will have to apply for a permit in accordance with the following deadlines:

• New Units: Submit an application by March 21, 2012 if the unit is already operating on March 21, 2011.  If the unit is not yet operating on March 21, 2011, the application is due within one (1) year of the unit commencing operation.
• Existing Units: Submit an application on the earlier of: 1) one year after the effective date of an approved SIP; 2) one year after the effective date of an approved FIP; or 3) March 21, 2014.

Operating Training and Qualification

• New Units: Complete training and qualification procedures by the later of: 1) Six months after unit start up; or 2) the date before an employee assumes operating responsibility or supervision responsibility
• Existing Units: Complete training by the later of: 1) the final compliance date specified in the SIP (likely 3 years from the date the SIP is approved); 2) six months after unit start up; or 3) six months after an employee assumes operating responsibility or supervision responsibility

Clarifications on Key Rule Provisions

NACWA member agencies have requested additional explanation regarding the content of several provisions in the SSI MACT Rule.  In particular, members have sought clarification regarding the modification provisions, compliance determinations, and Title V requirements.  The following sections address these questions.

Modification Provisions
An existing SSI unit becomes subject to the NSPS Rule if it is “modified” as that term is defined in the rule.  Modification is defined as a change to an existing SSI unit later than September 21, 2011 that meets one of two criteria:  1) the cumulative costs of the changes over the life of the unit exceeds 50 percent of the original cost of building and installing the SSI unit (not including the cost of the land); or 2) any physical change in the SSI unit or change in the method of operating it that increases the amount of any air pollutant emitted for which section 129 or section 111 of the Clean Air Act has established standards.  A very limited number of facilities may have already invested more than 50% of the original cost paid for the SSI unit (updated to current dollars ^[3]) by September 21, 2011 when modified SSI units become subject to the NSPS rule.  For these facilities, the next change to that SSI unit or its ancillary equipment after September 21, 2011 will trigger the NSPS and the unit will be required to meet the more stringent NSPS limits for a modified unit.  Existing units that undergo changes before September 21, 2011 will not trigger NSPS, but the cost of the change will add to the cumulative cost calculation.

To calculate the cumulative cost trigger for modifications, it is important to start with an accurate assessment of the “original cost of construction and installation” of the SSI unit.  These determinations are highly source-specific and must be independently evaluated.  The following general guidance may be helpful for screening purposes.

The CAA allows operators to exclude the cost of any land purchased in connection with construction and installation of the SSI unit.  See 42 U.S.C. 7429(g)(3).  EPA has also clarified that the cost of air pollution control equipment is not part of the original cost of construction and must be excluded from the cumulative cost of changes to the SSI unit as well.  See 40 CFR 60.4930 and 60.5250 (defining Sewage Sludge Incineration Unit).  The original cost should include sums expended on the fabrication, erection and installation of the following components expressly include in the definition of SSI unit:

• Incinerator and its sludge feed system;
• Auxiliary fuel feed system;
• Grate system;
• Flue gas system (excluding air pollution control devices);
• Waste heat recovery equipment; and
• Bottom ash handling systems ending at the truck transfer station or equivalent point of transfer for final disposal.
  

The dewatering equipment and any systems prior to dewatering are not part of the SSI unit’s original cost and changes to that equipment should not be considered in cumulative cost analysis.  While not expressly addressed in the rule, the cost of constructing a control room and installing instrumentation for the SSI unit would be within the original cost of construction.  Also, the cost of a building (or a portion of the building) dedicated to housing the incinerator and the associated control room are reasonable additions to the original cost of construction.  There will also be “gray” areas that will require site-specific evaluations, including how to count the costs of sludge treatment systems designed to improve the characteristics of the sludge when burned and other ancillary equipment not expressly listed above.   Also, if the units were first installed in 1960, for example, but substantially reconstructed in 1975, the facility would have to determine which cost constitutes the original cost of the current SSI units.  If the 1975 reconstruction is greater than the 1960 construction cost (when both are updated to present dollars), then the 1975 costs could be considered so substantial that they effectively installed new units with a new original cost.

EPA provides some additional guidance regarding what costs to include or exclude from the sum of the cumulative cost of changes to the SSI unit.  Costs of any changes made to existing units primarily to comply with the SSI MACT Rule should be excluded.  See 40 CFR 60.5060(c).   Also, EPA guidance supports excluding maintenance, repair and similar replacement costs that are designed to sustain and not “change” the SSI unit.  See e.g., 40 CFR 60.2 (defining “capital expenditure” to exclude the costs within the Internal Revenue Service (IRS) annual asset guideline repair allowance for determining if NSPS is triggered by a modification.)  This arguably excludes the periodic replacement of refractory rabble arms/teeth, etc. from the cumulative cost calculation along with costs typically characterized as maintenance or operational costs in accounting ledgers.

On the other hand, capital costs on accounting ledgers that are related to changes to any of the equipment listed above or otherwise included in the original construction cost estimate of a ‘Sewage Sludge Incineration Unit’ should be included in the cumulative cost calculation in most instances.  EPA considers engineering and installation costs, as well as safety and emergency controls, and electrical components associated with the project, to be part of the capital cost of the project.  By contrast, EPA has determined in previous policy statements that spare equipment purchases, tools and equipment used to construct and maintain the unit, and process piping should not be included in a cumulative capital cost calculation.

Sources with an SSI unit close to the 50 percent cumulative cost threshold should undertake a very careful analysis before instituting any capital changes to the unit other than those necessary to comply with the SSI MACT Rule.

Title V Operating Permits
All sources with incinerators subject to the SSI MACT Rule (both new and existing) must submit a Title V Permit application.  The application must be submitted to the permit authority, which in many cases, will be the relevant state agency.  Application deadlines depend on whether the unit is a new unit or an existing unit.  For facilities with new units (i.e., constructed after October 14, 2010) that have commenced operation of those units by March 21, 2011, complete Title V permit applications must be submitted by March 21, 2012.  If the new SSI unit has not commenced operation by March 21, 2011, the Title V permit application must be submitted within 12 months of commencing operation as a new source.

For facilities with existing SSI units, a complete Title V permit application must be submitted by the earlier of the following dates:  1) twelve months after the effective date of any approved SIP; 2) twelve months after the effective date of any FIP; or 3) March 21, 2014.  Facilities with existing Title V Permits must submit an application to amend the permit to include SSI requirements in accordance with any applicable schedule in their permit.  These deadlines may be earlier if the facility is subject to Title V for other reasons.

Continuous Compliance Demonstrations and Sewage Sludge Variability
One of the primary concerns with the SSI MACT Rule is it establishes numeric emission limitations that apply at all times to a process that combusts a material that is inherently variable.  Nitrogen content in sewage sludge may vary by season, but the same NOx limit applies year round.  Similarly, the metal content of sludge will vary depending upon the upstream dischargers, yet SSI units must consistently meet the applicable lead, cadmium, and mercury emission limits at all times.  Fortunately, the SSI MACT Rule offers options for demonstrating continuous compliance that mitigate some of this concern.  For instance, a facility can demonstrate continuous compliance with its NOx limit by conducting an annual performance test that shows a 3-run average emission rate below the limit.  Monitoring nitrogen content in the sludge is not required and seasonal variability would not be an issue as long as the source does not opt to install a continuous emission monitor for NOx.

Annual performance tests can also be used to demonstrate compliance with lead, cadmium and mercury limits.  Sludge variability is not an issue between tests, because the utility demonstrates continuous compliance based on maintaining scrubber water flow, pH and other operational variables at levels established during the most recent performance test.  A spike in lead, cadmium or mercury concentrations in the sludge outside the test period would not affect the compliance demonstration.  By focusing on the operating parameters for control devices, and not on measured concentrations in the sludge, spikes and other day-to-day variability outside the performance test period will not affect the compliance determinations.   The challenge will be consistently meeting the limits during the short period of time covered by the annual performance tests under normal operating conditions.

EPA also stated that if during two consecutive annual air emissions test, actual emission are less than 75% of the permitted limits, the testing requirements would be changes from annual to once every three years.

NACWA Next Steps

NACWA is embarking on a multi-pronged legal effort to challenge the final SSI MACT Rule and seek administrative review of those final standards.  In tandem with those efforts, NACWA will also file a legal challenge of the final definition of solid waste rule, as a key regulatory underpinning for the SSI standards and as a major impediment to the use of biosolids as a renewable fuel source.  NACWA needs to file its challenge to the SSI MACT Rule by May 20, 2011, and the definition of solid waste rule by June 17, 2011, and has formed a Sewage Sludge Incineration Advocacy Coalition (SSIAC) to guide both efforts.

In addition, there are a number of items within the SSI MACT Rule that are subject to a variety of interpretations (e.g., modifications, testing, etc.) and NACWA will be working with EPA personnel on clarification on a number of issues.

• Attachment A – Emission Limit Summary
• Attachment B – Instructions and Flow Charts of Rule Requirements

1  The definition of “Commence Construction” is derived from a series of definitions in 40 CFR 60.2 “Definitions,” which are incorporated by reference into the SSI MACT Rule at 40 CFR 60.5250.  “Commenced means … that an owner or operator has  undertaken a continuous program of construction or modification or that an owner or operator has entered into a contractual obligation to undertake and complete, within a reasonable time, a continuous program of construction or modification.”  “Construction means fabrication, erection, or installation of an affected facility.”  “Affected facility means … any apparatus to which a standard is applicable” which for the SSI MACT rule is the sewage sludge incineration unit as it is defined in the rule at 40 CFR 60.5250.    

2  The references to NSPS in this document are to the SSI MACT Rule only.  Many existing SSI units are subject to other NSPS requirements, including Subpart O “Standards of Performance for Sewage Treatment Plants,” which regulates particulate matter and opacity for units constructed or modified after June 11, 1973.    The SSI MACT Rule’s NSPS is an additional obligation that does not change whether a unit is subject to Subpart O.  

3   A construction cost index will be necessary to update costs to current dollars.  Engineering News Record maintains a cost index dating back to 1908.