1
X.
Statutory
and
Executive
Order
Reviews
A.
Executive
Order
12866:
Regulatory
Planning
and
Review
Under
Executive
Order
12866
(
58
FR
51735,
October
4,

1993),
the
Agency
must
determine
whether
a
regulatory
action
is
"
significant"
and
therefore
subject
to
Office
of
Management
and
Budget
(
OMB)
review
and
the
requirements
of
the
Executive
Order.
The
Order
defines
"
significant
regulatory
action"
as
one
that
is
likely
to
result
in
a
rule
that
may:

1.
Have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect
in
a
material
way
the
economy,
a
sector
of
the
economy,
productivity,
competition,
jobs,
the
environment,
public
health
or
safety,
or
State,
local,
or
Tribal
governments
or
communities;

2.
Create
a
serious
inconsistency
or
otherwise
interfere
with
an
action
taken
or
planned
by
another
agency;

3.
Materially
alter
the
budgetary
impact
of
entitlements,

grants,
user
fees,
or
loan
programs
or
the
rights
and
obligations
of
recipients
thereof;
or
4.
Raise
novel
legal
or
policy
issues
arising
out
of
legal
mandates,
the
President's
priorities,
or
the
principles
set
forth
in
the
Executive
Order.

In
view
of
its
important
policy
implications
and
potential
effect
on
the
economy
of
over
$
100
million,
this
2
1White
House,
National
Energy
Policy
­
Report
of
the
National
Energy
Policy
Development
Group,
May
2001.
action
has
been
judged
to
be
an
economically
"
significant
regulatory
action"
within
the
meaning
of
the
Executive
Order.
As
a
result,
today's
action
was
submitted
to
OMB
for
review,
and
EPA
has
prepared
an
economic
analysis
of
the
rule
entitled
"
Regulatory
Impact
Analysis
of
the
Final
Clean
Air
Interstate
Rule"
(
March
2005).

The
CAIR
builds
upon
the
findings
of
the
National
Energy
Policy
Development
Group
to
provide
reliable,

affordable,
and
environmentally
sound
energy
for
America's
future1
(
http://
www.
whitehouse.
gov/
energy).
Recognizing
the
need
for
an
integrated
approach
to
environmental,
energy,

and
economic
policy,
the
CAIR
is
an
example
of
aggressive
environmental
regulation
that
recognizes
and
balances
the
need
for
energy
diversity,
reliability,
and
affordability.

1.
What
Economic
Analyses
Were
Conducted
for
the
Rulemaking?

The
analyses
conducted
for
this
final
rule
provide
several
important
analyses
of
impacts
on
public
welfare.

These
include
an
analysis
of
the
social
benefits,
social
costs,
and
net
benefits
of
the
regulatory
scenario.
The
economic
analyses
also
address
issues
involving
small
business
impacts,
unfunded
mandates
(
including
impacts
for
3
Tribal
governments),
environmental
justice,
children's
health,
energy
impacts,
and
requirements
of
the
Paperwork
Reduction
Act
(
PRA).

2.
What
Are
the
Benefits
and
Costs
of
this
Rule?

The
benefit­
cost
analysis
shows
that
substantial
net
economic
benefits
to
society
are
likely
to
be
achieved
due
to
reductions
in
emissions
resulting
from
this
rule.
The
results
detailed
below
show
that
this
rule
would
be
highly
beneficial
to
society,
with
annual
net
benefits
(
benefits
less
costs)
of
approximately
$
71.4
or
$
60.4
billion
in
2010
and
$
98.5
or
$
83.2
billion
in
2015.
These
alternative
net
benefits
estimates
occur
due
to
differing
assumptions
concerning
the
social
discount
rate
used
to
estimate
the
annual
value
of
the
benefits
and
costs
of
the
rule
with
the
lower
estimates
relating
to
a
discount
rate
of
7
percent
and
the
higher
estimates
a
discount
rate
of
3
percent.
All
amounts
are
reflected
in
1999
dollars.

The
benefits
and
costs
reported
for
the
CAIR
represent
estimates
for
the
final
CAIR
program
that
includes
the
CAIR
promulgated
rule
and
the
concurrent
proposal
to
include
annual
SO2
and
NOx
controls
for
New
Jersey
and
Delaware.

The
modeling
used
to
provide
these
estimates
also
assumes
annual
SO2
and
NOx
controls
for
Arkansas
that
are
not
a
part
of
the
final
CAIR
program
resulting
in
a
slight
4
overstatement
of
the
reported
benefits
and
costs.

a.
Control
Scenario
Today's
rule
sets
forth
requirements
for
States
to
eliminate
their
significant
contribution
to
down­
wind
nonattainment
of
the
ozone
and
PM2.5
NAAQS.
In
order
to
reduce
this
significant
contribution,
EPA
requires
that
certain
States
reduce
their
emissions
of
SO2
and
NOx.
The
EPA
derived
the
quantities
by
calculating
the
amount
of
SO2
and
NOx
emissions
that
EPA
believes
can
be
controlled
from
the
electric
power
industry
in
a
highly
cost­
effective
manner.
The
EPA
considered
all
promulgated
CAA
requirements
and
known
State
actions
in
the
baseline
used
to
develop
the
estimates
of
benefits
and
costs
for
this
rule.
For
a
more
complete
description
of
the
reduction
requirements
and
how
they
were
calculated,
see
section
IV
of
today's
rulemaking.

Although
States
may
choose
to
obtain
the
emissions
reductions
from
other
source
categories,
for
purposes
of
analyzing
the
impacts
of
the
rule,
EPA
is
assuming
the
application
of
the
controls
that
it
has
identified
to
be
highly
cost
effective
on
all
EGUs
in
the
transport
region.

b.
Cost
Analysis
and
Economic
Impacts
The
CAIR
fulfills
the
commitment
made
in
the
President's
National
Energy
Policy,
that
calls
for
environmental
improvement
and
emissions
reductions
from
the
5
power
sector
while
recognizing
the
need
to
maintain
energy
diversity
and
reliability.

For
the
affected
region,
the
projected
annual
private
incremental
costs
of
the
CAIR
to
the
power
industry
are
$
2.4
billion
in
2010
and
$
3.6
billion
in
2015.
These
costs
represent
the
private
compliance
cost
to
the
electric
generating
industry
of
reducing
NOx
and
SO2
emissions
to
meet
the
caps
set
forth
in
the
rule.
Estimates
are
in
1999
dollars.

In
estimating
the
net
benefits
of
regulation,
the
appropriate
cost
measure
is
"
social
costs."
Social
costs
represent
the
welfare
costs
of
the
rule
to
society.
These
costs
do
not
consider
transfer
payments
(
such
as
taxes)
that
are
simply
redistributions
of
wealth.
The
social
costs
of
this
rule
are
estimated
to
be
approximately
$
1.9
billion
in
2010
and
$
2.6
billion
in
2015
assuming
a
3
percent
discount
rate.
These
costs
become
$
2.1
billion
in
2010
and
$
3.1
billion
in
2015
assuming
a
7
percent
discount
rate.

Overall,
the
impacts
of
the
CAIR
are
modest,

particularly
in
light
of
the
large
benefits
we
expect.

Ultimately,
we
believe
the
industry
will
pass
along
most
of
the
costs
of
the
rule
to
consumers,
so
that
the
costs
of
the
rule
will
largely
fall
upon
the
consumers
of
electricity.

Retail
electricity
prices
are
projected
to
increase
roughly
2.0­
2.7
percent
with
the
CAIR
in
the
2010
and
2015
6
timeframe,
and
then
drop
below
the
2.0
percent
increase
level
thereafter.
The
effects
of
the
CAIR
on
natural
gas
prices
and
the
power­
sector
generation
mix
are
relatively
small,
with
a
1.6
percent
or
less
increase
in
natural
gas
prices
projected
from
2010
to
2020.
There
will
be
continued
reliance
on
coal­
fired
generation,
that
is
projected
to
remain
at
roughly
50
percent
of
total
electricity
generated.

A
relatively
small
amount
of
coal­
fired
capacity,
about
5.3
GW
(
1.7
percent
of
all
coal­
fired
capacity
and
0.5
percent
of
all
generating
capacity),
is
projected
to
be
uneconomic
to
maintain.
For
the
most
part,
these
units
are
small
and
infrequently
used
generating
units
that
are
dispersed
throughout
the
CAIR
region.
Units
projected
to
be
uneconomic
to
maintain
may
be
"
mothballed,"
retired,
or
kept
in
service
to
ensure
transmission
reliability
in
certain
parts
of
the
grid.
The
EPA's
analysis
does
not
address
these
choices.

As
demand
grows
in
the
future,
additional
coal­
fired
generation
is
projected
to
be
built
under
the
CAIR.
As
a
result,
coal
production
for
electricity
generation
is
projected
to
increase
from
2003
levels
by
about
15
percent
in
2010
and
25
percent
by
2020,
and
we
expect
a
small
shift
towards
greater
coal
production
in
Appalachia
and
the
interior
coal
regions
of
the
country
with
the
CAIR.

For
today's
rule,
EPA
analyzed
the
costs
using
the
7
Integrated
Planning
Model
(
IPM).
The
IPM
is
a
dynamic
linear
programming
model
that
can
be
used
to
examine
the
economic
impacts
of
air
pollution
control
policies
for
SO2
and
NOx
throughout
the
contiguous
U.
S.
for
the
entire
power
system.
Documentation
for
IPM
can
be
found
in
the
docket
for
this
rulemaking
or
at
www.
epa.
gov/
airmarkets/
epa­
ipm.

c.
Human
Health
Benefit
Analysis
Our
analysis
of
the
health
and
welfare
benefits
anticipated
from
this
rule
are
presented
in
this
section.

Briefly,
the
analysis
projects
major
benefits
from
implementation
of
the
rule
in
2010
and
2015.
As
described
below,
thousands
of
deaths
and
other
serious
health
effects
would
be
prevented.
We
are
able
to
monetize
annual
benefits
of
approximately
$
73.3
or
$
62.6
billion
in
2010
(
based
upon
a
3
percent
or
7
percent
discount
rate,
respectively)
and
$
101
billion
or
$
86.3
billion
in
2015
(
based
upon
a
discount
rate
of
3
percent
or
7
percent,
respectively,
1999
dollars).

Table
X­
1
presents
the
primary
estimates
of
reduced
incidence
of
PM­
and
ozone­
related
health
effects
for
the
years
2010
and
2015
for
the
regulatory
control
strategy.
In
2015,
we
estimate
that
PM­
related
annual
benefits
include
approximately
17,000
fewer
premature
fatalities,
8,700
fewer
cases
of
chronic
bronchitis,
22,000
fewer
non­
fatal
heart
attacks,
10,500
fewer
hospitalizations
(
for
respiratory
and
8
cardiovascular
disease
combined)
and
result
in
significant
reductions
in
days
of
restricted
activity
due
to
respiratory
illness
(
with
an
estimate
of
9.9
million
fewer
cases)
and
approximately
1,700,000
fewer
work­
loss
days.
We
also
estimate
substantial
health
improvements
for
children
from
reduced
upper
and
lower
respiratory
illness,
acute
bronchitis,
and
asthma
attacks.

Ozone
health­
related
benefits
are
expected
to
occur
during
the
summer
ozone
season
(
usually
ranging
from
May
to
September
in
the
Eastern
U.
S.).
Based
upon
modeling
for
2015,
annual
ozone­
related
health
benefits
are
expected
to
include
2,800
fewer
hospital
admissions
for
respiratory
illnesses,
280
fewer
emergency
room
admissions
for
asthma,

690,000
fewer
days
with
restricted
activity
levels,
and
510,000
fewer
days
where
children
are
absent
from
school
due
to
illnesses.

While
we
did
not
include
in
our
primary
benefits
analysis
separate
estimates
of
the
number
of
premature
deaths
that
would
be
avoided
due
to
reductions
in
ozone
levels,
recent
studies
suggest
a
link
between
short­
term
ozone
exposures
with
premature
mortality
independent
of
PM
exposures.
Based
upon
a
recent
report
by
Thurston
and
Ito,
9
2
Thurston,
G.
D.
and
K.
Ito.
2001.
"
Epidemiological
Studies
of
Acute
Ozone
Exposures
and
Mortality".
J
Expo
Anal
Environ
Epidemiology
11
(
4):
286­
294.

3
Bell,
M.
L.,
A.
McDermott,
S.
Zeger,
J.
Samet,
F.
Dominichi.
2005.
"
Ozone
and
Mortality
in
95
U.
S.
Urban
Communities
from
1987
to
2000."
Journal
of
the
American
Medical
Association.
Forthcoming.
(
2001),
2
the
EPA
Science
Advisory
Board
has
recommended
that
EPA
reevaluate
the
ozone
mortality
literature
for
possible
inclusion
of
ozone
mortality
in
the
estimate
of
total
benefits.
More
recently,
a
comprehensive
analysis
using
data
from
the
National
Morbidity,
Mortality
and
Air
Pollution
Study
(
NMMAPS)
found
a
significant
association
between
daily
ozone
levels
and
daily
mortality
rates
(
Bell
et
al.
2004).
3
The
analysis
estimated
a
0.5
percent
increase
in
daily
mortality
associated
with
a
10
ppb
increase
in
ozone,
based
on
data
from
95
major
urban
areas.

Using
a
similar
magnitude
effect
estimate,
sensitivity
analysis
estimates
suggest
that
in
2015,
the
CAIR
would
result
in
an
additional
500
fewer
premature
deaths
annually
due
to
reductions
in
daily
ambient
ozone
concentrations.

The
EPA
has
sponsored
three
independent
meta­
analyses
of
the
ozone
mortality
epidemiology
literature
to
inform
a
determination
on
inclusion
of
this
important
health
impact
in
the
primary
benefits
analysis
for
future
regulations.

Table
X­
2
presents
the
estimated
monetary
value
of
10
reductions
in
the
incidence
of
health
and
welfare
effects.

Annual
PM­
related
and
ozone­
related
health
benefits
are
estimated
to
be
approximately
$
72.1
or
$
61.4
billion
in
2010
(
3
percent
and
7
percent
discount
rate,
respectively)
and
$
99.3
or
$
84.5
billion
in
2015
(
3
percent
or
7
percent
discount
rate,
respectively).
Estimated
annual
visibility
benefits
in
southeastern
Class
I
areas
are
approximately
$
1.14
billion
in
2010
and
$
1.78
billion
in
2015.
All
monetized
estimates
are
stated
in
1999$.
These
estimates
account
for
growth
in
real
gross
domestic
product
(
GDP)
per
capita
between
the
present
and
the
years
2010
and
2015.
As
the
table
indicates,
total
benefits
are
driven
primarily
by
the
reduction
in
premature
fatalities
each
year,
that
accounts
for
over
90
percent
of
total
benefits.

Table
X­
3
presents
the
total
monetized
net
benefits
for
the
years
2010
and
2015.
This
table
also
indicates
with
a
"
B"
those
additional
health
and
environmental
benefits
of
the
rule
that
we
were
unable
to
quantify
or
monetize.
These
effects
are
additive
to
the
estimate
of
total
benefits.
A
listing
of
the
benefit
categories
that
could
not
be
quantified
or
monetized
in
our
benefit
estimates
are
provided
in
Table
X­
4.
We
are
not
able
to
estimate
the
magnitude
of
these
unquantified
and
unmonetized
benefits.

While
EPA
believes
there
is
considerable
value
to
the
public
for
the
PM­
related
benefit
categories
that
could
not
be
11
monetized,
we
believe
these
benefits
may
be
small
relative
to
those
categories
we
were
able
to
quantify
and
monetize.

In
contrast,
EPA
believes
the
monetary
value
of
the
ozonerelated
premature
mortality
benefits
could
be
substantial.

As
previously
discussed,
we
estimate
that
ozone
mortality
benefits
may
yield
as
many
as
500
reduced
premature
mortalities
per
year
and
may
increase
the
benefits
of
CAIR
by
approximately
$
3
billion
annually.

d)
Quantified
and
Monetized
Welfare
Benefits
Only
a
subset
of
the
expected
visibility
benefits
­

those
for
Class
I
areas
in
the
southeastern
U.
S.
are
included
in
the
monetary
benefits
estimates
we
project
for
this
rule.
We
believe
the
benefits
associated
with
these
non­
health
benefit
categories
are
likely
significant.
For
example,
we
are
able
to
quantify
significant
visibility
improvements
in
Class
I
areas
in
the
Northeast
and
Midwest,

but
are
unable
at
present
to
place
a
monetary
value
on
these
improvements.
Similarly,
we
anticipate
improvement
in
visibility
in
residential
areas
where
people
live,
work
and
recreate
within
the
CAIR
region
for
which
we
are
currently
unable
to
monetize
benefits.
For
the
Class
I
areas
in
the
southeastern
U.
S.,
we
estimate
annual
benefits
of
$
1.78
billion
beginning
in
2015
for
visibility
improvements.
The
value
of
visibility
benefits
in
areas
where
we
were
unable
12
to
monetize
benefits
could
also
be
substantial.

We
also
quantify
nitrogen
and
sulfur
deposition
reductions
expected
to
occur
as
a
result
of
the
CAIR
and
discuss
potential
benefits
from
these
reductions
in
section
X.
A.
4
of
this
preamble.
While
we
are
unable
to
estimate
a
dollar
value
associated
with
these
benefits,
we
are
able
to
quantify
acidification
improvements
in
lakes
in
the
Northeast
including
the
Adirondacks
and
potential
benefits
of
reductions
in
nitrogen
deposition
to
estuaries
such
as
the
Chesapeake
Bay.

TABLE
X­
1.
Estimated
Annual
Reductions
in
Incidence
of
Health
Effectsa
Health
Effect
2010
Annual
Incidence
Reduction
2015
Annual
Incidence
Reduction
PM­
Related
Endpoints:

Premature
Mortalityb,
c
Adult,
age
30
and
over
Infant,
age
<
1
year
13,000
29
17,000
36
Chronic
bronchitis
(
adult,
age
26
and
over)
6,900
8,700
Non­
fatal
myocardial
infarction
(
adult,
age
18
and
over)
17,000
22,000
Hospital
admissions
­
respiratory
(
all
ages)
d
4,300
5,500
Hospital
admissions
­
cardiovascular
(
adults,
age
>
18)
e
3,800
5,000
Emergency
room
visits
for
asthma
(
age
18
years
and
younger)
10,000
13,000
Acute
bronchitis,
(
children,
age
8­
12)
16,000
19,000
Lower
respiratory
symptoms
(
children,
age
7­
14)
190,000
230,000
Upper
respiratory
symptoms
(
asthmatic
children,
age
9­
18)
150,000
180,000
13
4Pope,
C.
A.,
III,
R.
T.
Burnett,
M.
J.
Thun,
E.
E.
Calle,
D.
Krewski,
K.
Ito,
and
G.
D.
Thurston.
2002.
"
Lung
Cancer,
Cardiopulmonary
Mortality,
and
Long­
term
Exposure
to
Fine
Particulate
Air
Pollution."
Journal
of
American
Medical
Association
287:
1132­
1141.

5Woodruff,
T.
J.,
J.
Grillo,
and
K.
C.
Schoendorf.
1997.
"
The
Relationship
Between
Selected
Causes
of
Postneonatal
Infant
Mortality
and
Particulate
Infant
Mortality
and
Particulate
Air
Pollution
in
the
United
States."
Environmental
Health
Perspectives
105(
6):
608­
612.
Asthma
exacerbation
(
asthmatic
children,
age
6­
18)
240,000
290,000
Work
Loss
Days
1,400,000
1,700,000
Minor
restricted
activity
days
(
adults
age
18­
65)
8,100,000
9,900,000
Ozone­
Related
Endpoints:

Hospital
admissions­
respiratory
causes
(
adult,
65
and
older)
f
610
1,700
Hospital
admissions
­
respiratory
causes
(
children,
under
2)
380
1,100
Emergency
room
visit
for
asthma
(
all
ages)
100
280
Minor
restricted
activity
days
(
adults,
age
18­
65)
280,000
690,000
School
absence
days
180,000
510,000
aIncidences
are
rounded
to
two
significant
digits.
These
estimates
represent
benefits
from
the
CAIR
nationwide.
The
modeling
used
to
derive
these
incidence
estimates
are
reflective
of
those
expected
for
the
final
CAIR
program
including
the
CAIR
promulgated
rule
and
the
proposal
to
include
annual
SO2
and
NOx
controls
for
New
Jersey
and
Delaware.
Modeling
used
to
develop
these
estimates
assumes
annual
SO2
and
NOx
controls
for
Arkansas
resulting
in
a
slight
overstatement
of
the
reported
benefits
and
costs
for
the
complete
CAIR
program.
bPremature
mortality
benefits
associated
with
ozone
are
not
analyzed
in
the
primary
analysis.
cAdult
mortality
based
upon
studies
by
Pope,
et
al
2002.4
Infant
mortality
based
upon
studies
by
Woodruff,
Grillo,
and
Schoendorf,
1997.5
d
Respiratory
hospital
admissions
for
PM
include
admissions
for
chronic
obstructive
pulmonary
disease
(
COPD),
pneumonia
and
asthma.
e
Cardiovascular
hospital
admissions
for
PM
include
total
cardiovascular
and
subcategories
for
ischemic
heart
disease,
dysrhythmias,
and
heart
failure.
f
Respiratory
hospital
admissions
for
ozone
include
admissions
for
all
respiratory
causes
and
subcategories
for
COPD
and
pneumonia.

TABLE
X­
2.
Estimated
Annual
Monetary
Value
of
Reductions
in
Incidence
of
Health
and
Welfare
Effects
(
Millions
of
1999$)
a,
b
14
Health
Effect
Pollutant
2010
Estimated
Value
of
Reductions
2015
Estimated
Value
of
Reductions
Premature
mortalityc,
d
Adult
>
30
years
3
percent
discount
rate
7
percent
discount
rate
Child
<
1
year
PM2.5
$
67,300
$
56,600
$
168
$
92,800
$
78,100
$
222
Chronic
bronchitis
(
adults,
26
and
over)
PM2.5
$
2,520
$
3,340
Non­
fatal
acute
myocardial
infarctions
3
percent
discount
rate
7
percent
discount
rate
PM2.5
$
1,420
$
1,370
$
1,850
$
1,790
Hospital
admissions
for
respiratory
causes
PM2.5,
O3
$
45.2
$
78.9
Hospital
admissions
for
cardiovascular
causes
PM2.5
$
80.7
$
105
Emergency
room
visits
for
asthma
PM2.5,
O3
$
2.84
$
3.56
Acute
bronchitis
(
children,
age
8­
12)
PM2.5
$
5.63
$
7.06
Lower
respiratory
symptoms
(
children,
age
7­
14)
PM2.5
$
2.98
$
3.74
Upper
respiratory
symptoms
(
asthma,
age
9­
11)
PM2.5
$
3.80
$
4.77
Asthma
exacerbations
PM2.5
$
10.3
$
12.7
Work
loss
days
PM2.5,
$
180
$
219
Minor
restricted
activity
days
(
MRADs)
PM2.5,
O3
$
422
$
543
School
absence
days
O3
$
12.9
$
36.4
Worker
productivity
(
outdoor
workers,
age
18­
65)
O3
$
7.66
$
19.9
Recreational
visibility,
81
Class
I
areas
PM2.5
$
1,140
$
1,780
Monetized
Total
e
Base
estimate:
3
percent
discount
rate
7
percent
discount
rate
PM2.5,
O3
$
73,300
+
B
$
62,600
+
B
$
101,000
+
B
$
86,300
+
B
a
Monetary
benefits
are
rounded
to
three
significant
digits.
These
estimates
represent
benefits
from
the
CAIR
nationwide
for
NOx
and
SO2
emissions
reductions
from
electricity­
generating
units
sources
(
with
the
exception
of
ozone
and
visibility
benefits).
Ozone
benefits
relate
to
the
eastern
United
States.
Visibility
benefits
relate
to
Class
I
areas
in
the
southeastern
United
States.
The
benefit
estimates
reflected
relate
to
the
final
CAIR
program
that
includes
the
CAIR
promulgated
rule
and
the
proposal
to
include
annual
SO2
and
NOx
controls
for
New
Jersey
and
Delaware.
Modeling
used
to
develop
these
estimates
assumes
annual
SO2
and
NOx
controls
for
Arkansas
resulting
in
a
slight
overstatement
of
the
reported
benefits
and
costs
for
the
complete
CAIR
program.
b
Monetary
benefits
adjusted
to
account
for
growth
in
real
GDP
per
capita
between
1990
and
the
analysis
year
(
2010
or
2015).
15
6U.
S.
Environmental
Protection
Agency,
2000.
Guidelines
for
Preparing
Economic
Analyses.
www.
yosemite1.
epa.
gov/
ee/
epa/
eed/
hsf/
pages/
Guideline.
html.

Office
of
Management
and
Budget,
The
Executive
Office
of
the
President,
2003.
Circular
A­
4.
http://
www.
whitehouse.
gov/
omb/
circulars.
c
Valuation
assumes
discounting
over
the
SAB
recommended
20
year
segmented
lag
structure
described
in
the
Regulatory
Impact
Analysis
for
the
Final
Clean
Air
Interstate
Rule
(
March
2005).
Results
show
3
percent
and
7
percent
discount
rates
consistent
with
EPA
and
OMB
guidelines
for
preparing
economic
analyses
(
US
EPA,
2000
and
OMB,
2003).
6
d
Adult
mortality
based
upon
studies
by
Pope
et
al
2002.
Infant
mortality
based
upon
studies
by
Woodruff,
Grillo,
and
Schoendorf,
1997.

e
B
represents
the
monetary
value
of
health
and
welfare
benefits
not
monetized.
A
detailed
listing
is
provided
in
Table
X­
4.

3.
How
Do
the
Benefits
Compare
to
the
Costs
of
This
Final
Rule?

The
estimated
annual
private
costs
to
implement
the
emission
reduction
requirements
of
the
final
rule
for
the
CAIR
region
are
$
2.36
in
2010
and
$
3.57
billion
in
2015
(
1999$).
These
costs
are
the
annual
incremental
electric
generation
production
costs
that
are
expected
to
occur
with
the
CAIR.
The
EPA
uses
these
costs
as
compliance
cost
estimates
in
developing
cost­
effectiveness
estimates.

In
estimating
the
net
benefits
of
regulation,
the
appropriate
cost
measure
is
`
social
costs.'
Social
costs
represent
the
welfare
costs
of
the
rule
to
society.
These
costs
do
not
consider
transfer
payments
(
such
as
taxes)
that
are
simply
redistributions
of
wealth.
The
social
costs
of
this
rule
are
estimated
to
be
approximately
$
1.9
billion
in
16
2010
and
$
2.6
billion
in
2015
assuming
a
3
percent
discount
rate.
These
costs
become
$
2.1
billion
in
2010
and
$
3.1
billion
in
2015,
if
one
assumes
a
7
percent
discount
rate.

Thus,
the
net
benefit
(
social
benefits
minus
social
costs)

of
the
program
is
approximately
$
71.4
+
B
billion
or
$
60.4
+

B
billion
(
3
percent
and
7
percent
discount
rate,

respectively)
annually
in
2010
and
$
98.5
+
B
billion
or
$
83.2
+
B
billion
annually
(
3
percent
and
7
percent
discount
rate,
respectively)
in
2015.
Implementation
of
the
rule
is
expected
to
provide
society
with
a
substantial
net
gain
in
social
welfare
based
on
economic
efficiency
criteria.

The
annualized
regional
cost
of
the
CAIR,
as
quantified
here,
is
EPA's
best
assessment
of
the
cost
of
implementing
the
CAIR,
assuming
that
States
adopt
the
model
cap
and
trade
program.
These
costs
are
generated
from
rigorous
economic
modeling
of
changes
in
the
power
sector
due
to
the
CAIR.

This
type
of
analysis
using
IPM
has
undergone
peer
review
and
been
upheld
in
Federal
courts.
The
direct
cost
includes,
but
is
not
limited
to,
capital
investments
in
pollution
controls,
operating
expenses
of
the
pollution
controls,
investments
in
new
generating
sources,
and
additional
fuel
expenditures.
The
EPA
believes
that
these
costs
reflect,
as
closely
as
possible,
the
additional
costs
of
the
CAIR
to
industry.
The
relatively
small
cost
17
associated
with
monitoring
emissions,
reporting,
and
recordkeeping
for
affected
sources
is
not
included
in
these
annualized
cost
estimates,
but
EPA
has
done
a
separate
analysis
and
estimated
the
cost
to
less
than
$
42
million
(
see
section
X.
B.,
Paperwork
Reduction
Act).
However,

there
may
exist
certain
costs
that
EPA
has
not
quantified
in
these
estimates.
These
costs
may
include
costs
of
transitioning
to
the
CAIR,
such
as
the
costs
associated
with
the
retirement
of
smaller
or
less
efficient
EGUs,
employment
shifts
as
workers
are
retrained
at
the
same
company
or
reemployed
elsewhere
in
the
economy,
and
certain
relatively
small
permitting
costs
associated
with
title
IV
that
new
program
entrants
face.
Costs
may
be
understated
since
an
optimization
model
was
employed
that
assumes
cost
minimization,
and
the
regulated
community
may
not
react
in
the
same
manner
to
comply
with
the
rules.
Although
EPA
has
not
quantified
these
costs,
the
Agency
believes
that
they
are
small
compared
to
the
quantified
costs
of
the
program
on
the
power
sector.
The
annualized
cost
estimates
presented
are
the
best
and
most
accurate
based
upon
available
information.
In
a
separate
analysis,
EPA
estimates
the
indirect
costs
and
impacts
of
higher
electricity
prices
on
the
entire
economy
[
see
Regulatory
Impact
Analysis
for
the
Final
Clean
Air
Interstate
Rule,
Appendix
E
(
March
2005)].

The
costs
presented
here
are
EPA's
best
estimate
of
the
18
direct
private
costs
of
the
CAIR.
For
purposes
of
benefitcost
analysis
of
this
rule,
EPA
has
also
estimated
the
additional
costs
of
the
CAIR
using
alternate
discount
rates
for
calculating
the
social
costs,
parallel
to
the
range
of
discount
rates
used
in
the
estimates
of
the
benefits
of
the
CAIR
(
3
percent
and
7
percent).
Using
these
alternate
discount
rates,
the
social
costs
of
the
CAIR
are
$
1.9
billion
in
2010
and
$
2.6
billion
in
2015
using
a
discount
rate
of
3
percent,
and
$
2.1
billion
in
2010
and
$
3.1
billion
in
2015
using
a
discount
rate
of
7
percent.
The
costs
of
the
CAIR
using
the
adjusted
discount
rates
are
lower
than
the
private
costs
of
the
CAIR
generated
using
IPM
because
the
social
costs
do
not
include
certain
transfer
payments,

primarily
taxes,
that
are
considered
a
redistribution
of
wealth
rather
than
a
social
cost.

Table
X­
3.
Summary
of
Annual
Benefits,
Costs,
and
Net
Benefits
of
the
Clean
Air
Interstate
Rulea
(
Billions
of
1999
dollars)

Description
2010
(
Billions
of
1999
dollars)
2015
(
Billions
of
1999
dollars)

Social
Costsb
3
percent
discount
rate
7
percent
discount
rate
$
1.91
$
2.14
$
2.56
$
3.07
Social
Benefits
c,
d,
e
3
percent
discount
rate
7
percent
discount
rate
$
73.3
+
B
$
62.6
+
B
$
101
+
B
$
86.3
+
B
Health­
related
benefits
3
percent
discount
rate
7
percent
discount
rate
$
72.1
+
B
$
61.4
+
B
$
99.3
+
B
$
84.5
+
B
Visibility
benefits
$
1.14
+
B
$
1.78
+
B
19
7United
States
Environmental
Protection
Agency,
2000.
Guidelines
for
Preparing
Economic
Analyses.
www.
yosemite1.
epa.
gov/
ee/
epa/
eed/
hsf/
pages/
Guideline.
html.

Office
of
Management
and
Budget,
The
Executive
Office
of
the
President,
2003.
Circular
A­
4.
www.
http://
www.
whitehouse.
gov/
omb/
circulars.
Annual
Net
Benefits
(
Benefits­
Costs)
e,
f
3
percent
discount
rate
7
percent
discount
rate
$
71.4
+
B
$
60.4
+
B
$
98.5
+
B
$
83.2
+
B
a
All
estimates
are
rounded
to
three
significant
digits
and
represent
annualized
benefits
and
costs
anticipated
for
the
years
2010
and
2015.
Estimates
relate
to
the
complete
CAIR
program
including
the
CAIR
promulgated
rule
and
the
proposal
to
include
annual
SO2
and
NOx
controls
for
New
Jersey
and
Delaware.
Modeling
used
to
develop
these
estimates
assumes
annual
SO2
and
NOx
controls
for
Arkansas
resulting
in
a
slight
overstatement
of
the
reported
benefits
and
costs
for
the
complete
CAIR
program.
b
Note
that
costs
are
the
annual
total
costs
of
reducing
pollutants
including
NOx
and
SO2
in
the
CAIR
region.
c
As
this
table
indicates,
total
benefits
are
driven
primarily
by
PMrelated
health
benefits.
The
reduction
in
premature
fatalities
each
year
accounts
for
over
90
percent
of
total
monetized
benefits
in
2015.
Benefits
in
this
table
are
nationwide
(
with
the
exception
of
ozone
and
visibility)
and
are
associated
with
NOx
and
SO2
reductions
for
the
EGU
source
category.
Ozone
benefits
represent
benefits
in
the
eastern
United
States.
Visibility
benefits
represent
benefits
in
Class
I
areas
in
the
southeastern
United
States.
d
Not
all
possible
benefits
or
disbenefits
are
quantified
and
monetized
in
this
analysis.
B
is
the
sum
of
all
unquantified
benefits
and
disbenefits.
Potential
benefit
categories
that
have
not
been
quantified
and
monetized
are
listed
in
Table
X­
4.
e
Valuation
assumes
discounting
over
the
SAB­
recommended
20
year
segmented
lag
structure
described
in
chapter
4
of
the
Regulatory
Impact
Analysis
for
the
Clean
Air
Interstate
Rule
(
March
2005).
Results
reflect
3
percent
and
7
percent
discount
rates
consistent
with
EPA
and
OMB
guidelines
for
preparing
economic
analyses
(
U.
S.
EPA,
2000
and
OMB,
2003).
7
f
Net
benefits
are
rounded
to
the
nearest
$
100
million.
Columnar
totals
may
not
sum
due
to
rounding.

Every
benefit­
cost
analysis
examining
the
potential
effects
of
a
change
in
environmental
protection
requirements
is
limited
to
some
extent
by
data
gaps,
limitations
in
model
capabilities
(
such
as
geographic
coverage),
and
uncertainties
in
the
underlying
scientific
and
economic
20
studies
used
to
configure
the
benefit
and
cost
models.
Gaps
in
the
scientific
literature
often
result
in
the
inability
to
estimate
quantitative
changes
in
health
and
environmental
effects.
Gaps
in
the
economics
literature
often
result
in
the
inability
to
assign
economic
values
even
to
those
health
and
environmental
outcomes
that
can
be
quantified.
While
uncertainties
in
the
underlying
scientific
and
economics
literatures
(
that
may
result
in
overestimation
or
underestimation
of
benefits)
are
discussed
in
detail
in
the
economic
analyses
and
its
supporting
documents
and
references,
the
key
uncertainties
which
have
a
bearing
on
the
results
of
the
benefit­
cost
analysis
of
this
rule
include
the
following:

°
EPA's
inability
to
quantify
potentially
significant
benefit
categories;

°
Uncertainties
in
population
growth
and
baseline
incidence
rates;

°
Uncertainties
in
projection
of
emissions
inventories
and
air
quality
into
the
future;

°
Uncertainty
in
the
estimated
relationships
of
health
and
welfare
effects
to
changes
in
pollutant
concentrations
including
the
shape
of
the
C­
R
function,
the
size
of
the
effect
estimates,
and
the
relative
toxicity
of
the
many
components
of
the
PM
mixture;

°
Uncertainties
in
exposure
estimation;
and
21
8
Mrozek,
J.
R.
and
L.
O.
Taylor,
What
determines
the
value
of
a
life?
A
Meta
Analysis,
Journal
of
Policy
Analysis
and
Management
21
(
2),
pp.
253­
270.
°
Uncertainties
associated
with
the
effect
of
potential
future
actions
to
limit
emissions.

Despite
these
uncertainties,
we
believe
the
benefit­
cost
analysis
provides
a
reasonable
indication
of
the
expected
economic
benefits
of
the
rulemaking
in
future
years
under
a
set
of
reasonable
assumptions.

In
valuing
reductions
in
premature
fatalities
associated
with
PM,
we
used
a
value
of
$
5.5
million
per
statistical
life.
This
represents
a
central
value
consistent
with
a
range
of
values
from
$
1
to
$
10
million
suggested
by
recent
meta­
analyses
of
the
wage­
risk
value
of
statistical
life
(
VSL)
literature.
8
The
benefits
estimates
generated
for
this
rule
are
subject
to
a
number
of
assumptions
and
uncertainties,
that
are
discussed
throughout
the
Regulatory
Impact
Analysis
document
[
Regulatory
Impact
Analysis
for
the
Final
Clean
Air
Interstate
Rule
(
March
2005)].
As
Table
X­
2
indicates,

total
benefits
are
driven
primarily
by
the
reduction
in
premature
fatalities
each
year.
Elaborating
on
the
previous
uncertainty
discussion,
some
key
assumptions
underlying
the
primary
estimate
for
the
premature
mortality
category
include
the
following:
22
(
1)
EPA
assumes
inhalation
of
fine
particles
is
causally
associated
with
premature
death
at
concentrations
near
those
experienced
by
most
Americans
on
a
daily
basis.
Plausible
biological
mechanisms
for
this
effect
have
been
hypothesized
for
the
endpoints
included
in
the
primary
analysis
and
the
weight
of
the
available
epidemiological
evidence
supports
an
assumption
of
causality.

(
2)
EPA
assumes
all
fine
particles,
regardless
of
their
chemical
composition,
are
equally
potent
in
causing
premature
mortality.
This
is
an
important
assumption,
because
the
proportion
of
certain
components
in
the
PM
mixture
produced
via
precursors
emitted
from
EGUs
may
differ
significantly
from
direct
PM
released
from
automotive
engines
and
other
industrial
sources,

but
no
clear
scientific
grounds
exist
for
supporting
differential
effects
estimates
by
particle
type.

(
3)
EPA
assumes
the
C­
R
function
for
fine
particles
is
approximately
linear
within
the
range
of
ambient
concentrations
under
consideration.
In
the
PM
Criteria
Document,
EPA
recognizes
that
for
individuals
and
specific
health
responses
there
are
likely
threshold
levels,
but
there
remains
23
9U.
S.
EPA.
(
2004).
Air
Quality
Criteria
for
Particulate
Matter.
Research
Triangle
Park,
NC:
National
Center
for
Environmental
Assessment­
RTP
Office;
Report
No.
EPA/
600/
P­
99/
002aD.
little
evidence
of
thresholds
for
PM­
related
effects
in
populations.
9
Where
potential
threshold
levels
have
been
suggested,
they
are
at
fairly
low
levels
with
increasing
uncertainty
about
effects
at
lower
ends
of
the
PM2.5
concentration
ranges.
Thus,
EPA
estimates
include
health
benefits
from
reducing
the
fine
particles
in
areas
with
varied
concentrations
of
PM,

including
both
regions
that
are
in
attainment
with
fine
particle
standard
and
those
that
do
not
meet
the
standard.

The
EPA
recognizes
the
difficulties,
assumptions,
and
inherent
uncertainties
in
the
overall
enterprise.
The
analyses
upon
which
the
CAIR
is
based
were
selected
from
the
peer­
reviewed
scientific
literature.
We
used
up­
to­
date
assessment
tools,
and
we
believe
the
results
are
highly
useful
in
assessing
this
rule.

There
are
a
number
of
health
and
environmental
effects
that
we
were
unable
to
quantify
or
monetize.
A
complete
benefit­
cost
analysis
of
the
CAIR
requires
consideration
of
all
benefits
and
costs
expected
to
result
from
the
rule,
not
24
just
those
benefits
and
costs
which
could
be
expressed
here
in
dollar
terms.
A
listing
of
the
benefit
categories
that
were
not
quantified
or
monetized
in
our
estimate
are
provided
in
Table
X­
4.
These
effects
are
denoted
by
"
B"
in
Table
X­
3
above,
and
are
additive
to
the
estimates
of
benefits.

4.
What
are
the
Unquantified
and
Unmonetized
Benefits
of
the
CAIR
Emissions
Reductions?

Important
benefits
beyond
the
human
health
and
welfare
benefits
resulting
from
reductions
in
ambient
levels
of
PM2.5
and
ozone
are
expected
to
occur
from
this
rule.
These
other
benefits
occur
both
directly
from
NOx
and
SO2
emissions
reductions,
and
indirectly
through
reductions
in
co­
pollutants
such
as
mercury.
These
benefits
are
listed
in
Table
X­
4.
Some
of
the
more
important
examples
include:

Reductions
in
NOx
and
SO2
emissions
required
by
the
CAIR
will
reduce
acidification
and,
in
the
case
of
NOx,

eutrophication
of
water
bodies.
Reduced
nitrate
contamination
of
drinking
water
is
another
possible
benefit
of
the
rule.
This
final
rule
will
also
reduce
acid
and
particulate
deposition
that
cause
damages
to
cultural
monuments,
as
well
as,
soiling
and
other
materials
damage.

To
illustrate
the
important
nature
of
benefit
categories
we
are
currently
unable
to
monetize,
we
discuss
25
two
categories
of
public
welfare
and
environmental
impacts
related
to
reductions
in
emissions
required
by
the
CAIR:

reduced
acid
deposition
and
reduced
eutrophication
of
water
bodies.

a.
What
Are
the
Benefits
of
Reduced
Deposition
of
Sulfur
and
Nitrogen
to
Aquatic,
Forest,
and
Coastal
Ecosystems?

Atmospheric
deposition
of
sulfur
and
nitrogen,
more
commonly
known
as
acid
rain,
occurs
when
emissions
of
SO2
and
NOx
react
in
the
atmosphere
(
with
water,
oxygen,
and
oxidants)
to
form
various
acidic
compounds.
These
acidic
compounds
fall
to
earth
in
either
a
wet
form
(
rain,
snow,

and
fog)
or
a
dry
form
(
gases
and
particles).
Prevailing
winds
can
transport
acidic
compounds
hundreds
of
miles,

across
State
borders.
Acidic
compounds
(
including
small
particles
such
as
sulfates
and
nitrates)
cause
many
negative
environmental
effects,
including
acidification
of
lakes
and
streams,
harm
to
sensitive
forests,
and
harm
to
sensitive
coastal
ecosystems.

v.
Acid
Deposition
and
Acidification
of
Lakes
and
Streams
The
extent
of
adverse
effects
of
acid
deposition
on
freshwater
and
forest
ecosystems
depends
largely
upon
the
ecosystem's
ability
to
neutralize
the
acid.
The
neutralizing
ability
[
key
indicator
is
termed
Acid
Neutralizing
Capacity
(
ANC)]
depends
largely
on
the
26
watershed's
physical
characteristics:
geology,
soils,
and
size.
Waters
that
are
sensitive
to
acidification
tend
to
be
located
in
small
watersheds
that
have
few
alkaline
minerals
and
shallow
soils.
Conversely,
watersheds
that
contain
alkaline
minerals,
such
as
limestone,
tend
to
have
waters
with
a
high
ANC.
Areas
especially
sensitive
to
acidification
include
portions
of
the
Northeast
(
particularly,
the
Adirondack
and
Catskill
Mountains,

portions
of
New
England,
and
streams
in
the
mid­
Appalachian
highlands)
and
southeastern
streams.

Some
of
the
impacts
of
today's
rulemaking
on
acidification
of
water
bodies
have
been
quantified.
In
particular,
this
rule
will
result
in
improvements
in
the
acid
buffering
capacity
for
lakes
in
the
Northeast
and
Adirondack
Mountains.
Specifically,
12
percent
of
Adirondack
lakes
are
projected
to
be
chronically
acidic
in
the
base
case.
However,
we
project
that
the
CAIR
rule
will
eliminate
chronic
acidification
in
lakes
in
the
Adirondack
Mountains
by
2030.
In
addition,
today's
rule
is
expected
to
decrease
the
percentage
of
chronically
acidic
lakes
throughout
Northeast
from
6
to
1
percent.
However,
some
lakes
in
the
Adirondacks
and
New
England
will
continue
to
experience
episodic
acidification
even
after
implementation
of
this
rule.
27
10Banzhaf,
Spencer,
Dallas
Burtraw,
David
Evans,
and
Alan
Krupnick.
"
Valuation
of
Natural
Resource
Improvements
in
the
Adirondacks,"
Resources
for
the
Future
(
RFF),
September
2004.
In
a
recent
study,
10
Resources
for
the
Future
(
RFF)

estimates
total
benefits
(
i.
e.,
the
sum
of
use
and
nonuse
values)
of
natural
resource
improvements
for
the
Adirondacks
resulting
from
a
program
that
would
reduce
acidification
in
40
percent
of
the
lakes
in
the
Adirondacks
that
were
of
concern
for
acidification.
While
this
study
requires
further
evaluation,
the
RFF
study
suggests
that
the
benefits
of
acid
deposition
reductions
for
the
CAIR
are
likely
to
be
substantial
in
terms
of
the
total
monetized
value
for
ecological
endpoints
(
although
likely
small
in
comparison
to
the
estimated
premature
mortality
benefits
estimates).

vi.
Acid
Deposition
and
Forest
Ecosystem
Impacts
Current
understanding
of
the
effects
of
acid
deposition
on
forest
ecosystems
focuses
on
the
effects
of
ecological
processes
affecting
plant
uptake,
retention,
and
cycling
of
nutrients
within
forest
ecosystems.
Recent
studies
indicate
that
acid
deposition
is
at
least
partially
responsible
for
decreases
in
base
cations
(
calcium,
magnesium,
potassium,

and
others)
from
soils
in
the
northeastern
and
southeastern
United
States.
Losses
of
calcium
from
forest
soils
and
forested
watersheds
have
now
been
documented
as
a
sensitive
early
indicator
of
soil
response
to
acid
deposition
for
a
28
wide
range
of
forest
soils
in
the
United
States.

In
red
spruce
stands,
a
clear
link
exists
between
acid
deposition,
calcium
supply,
and
sensitivity
to
abiotic
stress.
Red
spruce
uptake
and
retention
of
calcium
is
impacted
by
acid
deposition
in
two
main
ways:
leaching
of
important
stores
of
calcium
from
needles
and
decreased
root
uptake
of
calcium
due
to
calcium
depletion
from
the
soil
and
aluminum
mobilization.
These
changes
increase
the
sensitivity
of
red
spruce
to
winter
injuries
under
normal
winter
conditions
in
the
Northeast,
result
in
the
loss
of
needles,
slow
tree
growth,
and
impair
the
overall
health
and
productivity
of
forest
ecosystems
in
many
areas
of
the
eastern
United
States.
In
addition,
recent
studies
of
sugar
maple
decline
in
the
Northeast
demonstrate
a
link
between
low
base
cation
availability,
high
levels
of
aluminum
and
manganese
in
the
soil,
and
increased
levels
of
tree
mortality
due
to
native
defoliating
insects.

Although
sulfate
is
the
primary
cause
of
base
cation
leaching,
nitrate
is
a
significant
contributor
in
watersheds
that
are
nearly
nitrogen
saturated.
Base
cation
depletion
is
a
cause
for
concern
because
of
the
role
these
ions
play
in
surface
water
acid
neutralization
and
their
importance
as
essential
nutrients
for
tree
growth
(
calcium,
magnesium
and
potassium).

This
regulatory
action
will
decrease
acid
deposition
in
29
the
transport
region
and
is
likely
to
have
positive
effects
on
the
health
and
productivity
of
forest
systems
in
the
region.

vii.
Coastal
Ecosystems
Since
1990,
a
large
amount
of
research
has
been
conducted
on
the
impact
of
nitrogen
deposition
to
coastal
waters.
Nitrogen
is
often
the
limiting
nutrient
in
coastal
ecosystems.
Increasing
the
levels
of
nitrogen
in
coastal
waters
can
cause
significant
changes
to
those
ecosystems.

In
recent
decades,
human
activities
have
accelerated
nitrogen
nutrient
inputs,
causing
excessive
growth
of
algae
and
leading
to
degraded
water
quality
and
associated
impairments
of
estuarine
and
coastal
resources.

Atmospheric
deposition
of
nitrogen
is
a
significant
source
of
nitrogen
to
many
estuaries.
The
amount
of
nitrogen
entering
estuaries
due
to
atmospheric
deposition
varies
widely,
depending
on
the
size
and
location
of
the
estuarine
watershed
and
other
sources
of
nitrogen
in
the
watershed.
There
are
a
few
estuaries
where
atmospheric
deposition
of
nitrogen
contributes
well
over
40
percent
of
the
total
nitrogen
load;
however,
in
most
estuaries
for
which
estimates
exist,
the
contribution
from
atmospheric
deposition
ranges
from
15­
30
percent.
The
area
of
the
country
with
the
highest
air
deposition
rates
(
30
percent
30
deposition
rates)
includes
many
estuaries
along
the
northeast
seaboard
from
Massachusetts
to
the
Chesapeake
Bay
and
along
the
central
Gulf
of
Mexico
coast.

In
1999,
National
Oceanic
and
Atmospheric
Administration
(
NOAA)
published
the
results
of
a
5­
year
national
assessment
of
the
severity
and
extent
of
estuarine
eutrophication.
An
estuary
is
defined
as
the
inland
arm
of
the
sea
that
meets
the
mouth
of
a
river.
The
138
estuaries
characterized
in
the
study
represent
more
than
90
percent
of
total
estuarine
water
surface
area
and
the
total
number
of
U.
S.
estuaries.
The
study
found
that
estuaries
with
moderate
to
high
eutrophication
represented
65
percent
of
the
estuarine
surface
area.

Eutrophication
is
of
particular
concern
in
coastal
areas
with
poor
or
stratified
circulation
patterns,
such
as
the
Chesapeake
Bay,
Long
Island
Sound,
and
the
Gulf
of
Mexico.
In
such
areas,
the
"
overproduced"
algae
tends
to
sink
to
the
bottom
and
decay,
using
all
or
most
of
the
available
oxygen
and
thereby
reducing
or
eliminating
populations
of
bottom­
feeder
fish
and
shellfish,
distorting
the
normal
population
balance
between
different
aquatic
organisms,
and
in
extreme
cases,
causing
dramatic
fish
kills.
Severe
and
persistent
eutrophication
often
directly
impacts
human
activities.
For
example,
fishery
resource
losses
can
be
caused
directly
by
fish
kills
31
associated
with
low
dissolved
oxygen
and
toxic
blooms.

Declines
in
tourism
occur
when
low
dissolved
oxygen
causes
noxious
smells
and
floating
mats
of
algal
blooms
create
unfavorable
aesthetic
conditions.
Risks
to
human
health
increase
when
the
toxins
from
algal
blooms
accumulate
in
edible
fish
and
shellfish,
and
when
toxins
become
airborne,

causing
respiratory
problems
due
to
inhalation.
According
to
the
NOAA
report,
more
than
half
of
the
nation's
estuaries
have
moderate
to
high
expressions
of
at
least
one
of
these
symptoms
 
an
indication
that
eutrophication
is
well
developed
in
more
than
half
of
U.
S.
estuaries.

This
rule
is
anticipated
to
reduce
nitrogen
deposition
in
the
CAIR
region.
Thus,
reductions
in
the
levels
of
nitrogen
deposition
will
have
a
positive
impact
upon
current
eutrophic
conditions
in
estuaries
and
coastal
areas
in
the
region.
While
we
are
unable
to
monetize
the
benefits
of
such
reductions,
the
Chesapeake
Bay
Program
estimated
the
reduced
mass
of
delivered
nitrogen
loads
likely
to
result
from
the
CAIR,
based
upon
the
CAIR
proposal
deposition
estimates
published
in
January
2004.
Atmospheric
deposition
of
nitrogen
accounts
for
a
significant
portion
of
the
nitrogen
loads
to
the
Chesapeake
with
28
percent
of
the
nitrogen
loads
from
the
watershed
coming
from
air
deposition.
Based
upon
the
CAIR
proposal,
nitrogen
deposition
rates
published
in
the
January
2004
proposal,
the
32
11
Sweeney,
Jeff.
"
EPA's
Chesapeake
Bay
Program
Air
Strategy."
October
26,
2004.
Chesapeake
Bay
Program
finds
that
the
CAIR
will
likely
reduce
the
nitrogen
loads
to
the
Bay
by
10
million
pounds
per
year
by
2010.11
These
substantial
nitrogen
load
reductions
more
than
fulfill
the
EPA's
commitment
to
reduce
atmospheric
deposition
delivered
to
the
Chesapeake
Bay
by
8
million
pounds.

B.
Are
There
Health
or
Welfare
Disbenefits
of
the
CAIR
that
Have
Not
Been
Quantified?

In
contrast
to
the
additional
benefits
of
the
rule
discussed
above,
it
is
also
possible
that
this
rule
will
result
in
disbenefits
in
some
areas
of
the
region.
Current
levels
of
nitrogen
deposition
in
these
areas
may
provide
passive
fertilization
for
forest
and
terrestrial
ecosystems
where
nutrients
are
a
limiting
factor
and
for
some
croplands.

The
effects
of
ozone
and
PM
on
radiative
transfer
in
the
atmosphere
can
also
lead
to
effects
of
uncertain
magnitude
and
direction
on
the
penetration
of
ultraviolet
light
and
climate.
Ground
level
ozone
makes
up
a
small
percentage
of
total
atmospheric
ozone
(
including
the
stratospheric
layer)
that
attenuates
penetration
of
ultraviolet
­
b
(
UVb)
radiation
to
the
ground.
The
EPA's
33
past
evaluation
of
the
information
indicates
that
potential
disbenefits
would
be
small,
variable,
and
with
too
many
uncertainties
to
attempt
quantification
of
relatively
small
changes
in
average
ozone
levels
over
the
course
of
a
year
(
EPA,
2005a).
The
EPA's
most
recent
provisional
assessment
of
the
currently
available
information
indicates
that
potential
but
unquantifiable
benefits
may
also
arise
from
ozone­
related
attenuation
of
UVb
radiation
(
EPA,
2005b).

Sulfate
and
nitrate
particles
also
scatter
UVb,
which
can
decrease
exposure
of
horizontal
surfaces
to
UVb,
but
increase
exposure
of
vertical
surfaces.
In
this
case
as
well,
both
the
magnitude
and
direction
of
the
effect
of
reductions
in
sulfate
and
nitrate
particles
are
too
uncertain
to
quantify
(
EPA,
2004).
Ozone
is
a
greenhouse
gas,
and
sulfates
and
nitrates
can
reduce
the
amount
of
solar
radiation
reaching
the
earth,
but
EPA
believes
that
we
are
unable
to
quantify
any
net
climate­
related
disbenefit
or
benefit
associated
with
the
combined
ozone
and
PM
reductions
in
this
rule.

Table
X­
4.
Unquantified
and
Non­
Monetized
Effects
of
the
Clean
Air
Interstate
Rule
Pollutant/
Effects
Effects
Not
Included
in
Primary
Estimates
­
Changes
in:

Ozone
Healtha
Premature
mortalityb
Chronic
respiratory
damage
Premature
aging
of
the
lungs
Non­
asthma
respiratory
emergency
room
visits
Increased
exposure
to
UVb
34
Pollutant/
Effects
Effects
Not
Included
in
Primary
Estimates
­
Changes
in:

Ozone
Welfare
Yields
for
­
commercial
forests
­
fruits
and
vegetables
­
commercial
and
non­
commercial
crops
Damage
to
urban
ornamental
plants
Impacts
on
recreational
demand
from
damaged
forest
aesthetics
Ecosystem
functions
Increased
exposure
to
UVb
PM
Healthc
Premature
mortality
­
short
term
exposuresd
Low
birth
weight
Pulmonary
function
Chronic
respiratory
diseases
other
than
chronic
bronchitis
Non­
asthma
respiratory
emergency
room
visits
Exposure
to
UVb
(+/­)
e
PM
Welfare
Visibility
in
many
Class
I
areas
Residential
and
recreational
visibility
in
non­
Class
I
areas
Soiling
and
materials
damage
Damage
to
ecosystem
functions
Exposure
to
UVb
(+/­)
e
Nitrogen
and
Sulfate
Deposition
Welfare
Commercial
forests
due
to
acidic
sulfate
and
nitrate
deposition
Commercial
freshwater
fishing
due
to
acidic
deposition
Recreation
in
terrestrial
ecosystems
due
to
acidic
deposition
Existence
values
for
currently
healthy
ecosystems
Commercial
fishing,
agriculture,
and
forests
due
to
nitrogen
deposition
Recreation
in
estuarine
ecosystems
due
to
nitrogen
deposition
Ecosystem
functions
Passive
fertilization
Mercury
Health
Incidences
of
neurological
disorders
Incidences
of
learning
disabilities
Incidences
of
developmental
delays
Potential
reproductive
effectsf
Potential
cardiovascular
effectsf,
including:
Altered
blood
pressure
regulationf
Increased
heart
rate
variability
f
Myocardial
infarctionf
Mercury
Deposition
Welfare
Impact
on
birds
and
mammals
(
e.
g.,
reproductive
effects)
Impacts
to
commercial,
subsistence,
and
recreational
fishing
35
Notes:

a
In
addition
to
primary
economic
endpoints,
there
are
a
number
of
biological
responses
that
have
been
associated
with
ozone
health
effects
including
increased
airway
responsiveness
to
stimuli,
inflamation
in
the
lung,
acute
inflammation
and
respiratory
cell
damage,
and
increased
susceptibility
to
respiratory
infection.
The
public
health
impact
of
these
biological
responses
may
be
partly
represented
by
our
quantified
endpoints.

b
Premature
mortality
associated
with
ozone
is
not
currently
included
in
the
primary
analysis.
Recent
evidence
suggests
that
short­
term
exposures
to
ozone
may
have
a
significant
effect
on
daily
mortality
rates,
independent
of
exposure
to
PM.
EPA
is
currently
conducting
a
series
of
meta­
analyses
of
the
ozone
mortality
epidemiology
literature.
EPA
will
consider
including
ozone
mortality
in
primary
benefits
analyses
once
a
peer
reviewed
methodology
is
available.

c
In
addition
to
primary
economic
endpoints,
there
are
a
number
of
biological
responses
that
have
been
associated
with
PM
health
effects
including
morphological
changes
and
altered
host
defense
mechanisms.
The
public
health
impact
of
these
biological
responses
may
be
partly
represented
by
our
quantified
endpoints.

d
While
some
of
the
effects
of
short
term
exposures
are
likely
to
be
captured
in
the
estimates,
there
may
be
premature
mortality
due
to
short
term
exposure
to
PM
not
captured
in
the
cohort
study
upon
which
the
primary
analysis
is
based.

e
May
result
in
benefits
or
disbenefits.

f
These
are
potential
effects
as
the
literature
is
insufficient.

B.
Paperwork
Reduction
Act
In
compliance
with
the
Paperwork
Reduction
Act
(
44
U.
S.
C.
3501
et
seq.),
EPA
submitted
a
proposed
Information
Collection
Request
(
ICR)
(
EPA
ICR
number
2512.01)
to
the
OMB
for
review
and
approval
on
July
19,
2004
(
FR
42720­
42722).

The
ICR
describes
the
nature
of
the
information
collection
36
and
its
estimated
burden
and
cost
associated
with
the
final
rule.
In
cases
where
information
is
already
collected
by
a
related
program,
the
ICR
takes
into
account
only
the
additional
burden.
This
situation
arises
in
States
that
are
also
subject
to
requirements
of
the
Consolidated
Emissions
Reporting
Rule
(
EPA
ICR
number
0916.10;
OMB
control
number
2060­
0088)
or
for
sources
that
are
subject
to
the
Acid
Rain
Program
(
EPA
ICR
number
1633.13;
OMB
control
number
2060­

0258)
or
NOx
SIP
Call
(
EPA
ICR
number
1857.03;
OMB
number
2060­
0445)
requirements.

The
EPA
solicited
comments
on
specific
aspects
of
the
information
collection.
The
purpose
of
the
ICR
is
to
estimate
the
anticipated
monitoring,
reporting,
and
recordkeeping
burden
estimates
and
associated
costs
for
States,
local
governments,
and
sources
that
are
expected
to
result
from
the
CAIR.

The
recordkeeping
and
reporting
burden
to
sources
resulting
from
States
choosing
to
participate
in
a
regional
cap
and
trade
program
are
expected
to
be
less
than
$
42
million
annually
at
the
time
the
monitors
are
implemented.

This
estimate
includes
the
annualized
cost
of
installing
and
operating
appropriate
SO2
and
NOx
emissions
monitoring
equipment
to
measure
and
report
the
total
emissions
of
these
pollutants
from
affected
EGUs
serving
generators
greater
than
25
megawatt
electrical.
The
burden
to
State
and
local
37
air
agencies
includes
any
necessary
SIP
revisions,

performing
monitoring
certification,
and
fulfilling
audit
responsibilities.

In
accordance
with
the
Paperwork
Reduction
Act,
on
July
19,
2004,
an
ICR
was
made
available
to
the
public
for
comment.
The
60­
day
comment
period
expired
September
19,

2004
with
no
public
comments
received
specific
to
the
ICR.

C.
Regulatory
Flexibility
Act
The
Regulatory
Flexibility
Act
(
5
U.
S.
C.
§
601
et
seq.)(
RFA),
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
Public
Law
No.
104­
121)(
SBREFA),

provides
that
whenever
an
agency
is
required
to
publish
a
general
notice
of
rulemaking,
it
must
prepare
and
make
available
an
initial
regulatory
flexibility
analysis,
unless
it
certifies
that
the
rule,
if
promulgated,
will
not
have
"
a
significant
economic
impact
on
a
substantial
number
of
small
entities."
5
U.
S.
C.
§
605(
b).
Small
entities
include
small
businesses,
small
organizations,
and
small
governmental
jurisdictions.

For
purposes
of
assessing
the
impacts
of
today's
rule
on
small
entities,
small
entity
is
defined
as:
(
1)
a
small
business
that
is
identified
by
the
North
American
Industry
Classification
System
(
NAICS)
Code,
as
defined
by
the
Small
Business
Administration
(
SBA);
(
2)
a
small
governmental
38
jurisdiction
that
is
a
government
of
a
city,
county,
town,

school
district
or
special
district
with
a
population
of
less
that
50,000;
and
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
which
is
independently
owned
and
operated
and
is
not
dominant
in
its
field.
Table
X­
5
lists
entities
potentially
impacted
by
this
rule
with
applicable
NAICS
code.

X­
5.
Potentially
Regulated
Categories
and
Entities
Category
NAICS
code1
Examples
of
potentially
regulated
entities
Industry
221112
Fossil
fuel­
fired
electric
utility
steam
generating
units.

Federal
government
2211122
Fossil
fuel­
fired
electric
utility
steam
generating
units
owned
by
the
Federal
government.

State/
local/
Tribal
government
2211122
921150
Fossil
fuel­
fired
electric
utility
steam
generating
units
owned
by
municipalities.
Fossil
fuel­
fired
electric
utility
steam
generating
units
in
Indian
Country.

1
North
American
Industry
Classification
System.
2
Federal,
State,
or
local
government­
owned
and
operated
establishments
are
classified
according
to
the
activity
in
which
they
are
engaged.

According
to
the
SBA
size
standards
for
NAICS
code
221112
Utilities­
Fossil
Fuel
Electric
Power
Generation,
a
firm
is
small
if,
including
its
affiliates,
it
is
primarily
engaged
in
the
generation,
transmission,
and
or
distribution
of
electric
energy
for
sale
and
its
total
electric
output
39
for
the
preceding
fiscal
year
did
not
exceed
4
million
megawatt
hours.

Courts
have
interpreted
the
RFA
to
require
a
regulatory
flexibility
analysis
only
when
small
entities
will
be
subject
to
the
requirements
of
the
rule.
See
Michigan
v.

EPA,
213
F.
3d
663,
668­
69
(
D.
C.
Cir.,
2000),
cert.
den.
121
S.
Ct.
225,
149
L.
Ed.
2d
135
(
2001).

This
rule
would
not
establish
requirements
applicable
to
small
entities.
Instead,
it
would
require
States
to
develop,
adopt,
and
submit
SIP
revisions
that
would
achieve
the
necessary
SO2
and
NOx
emissions
reductions,
and
would
leave
to
the
States
the
task
of
determining
how
to
obtain
those
reductions,
including
which
entities
to
regulate.

Moreover,
because
affected
States
would
have
discretion
to
choose
the
sources
to
regulate
and
how
much
emissions
reductions
each
selected
source
would
have
to
achieve,
EPA
could
not
predict
the
effect
of
the
rule
on
small
entities.

Although
not
required
by
the
RFA,
the
Agency
has
conducted
a
small
business
analysis.

Overall,
about
445
MW
of
total
small
entity
capacity,

or
1.0
percent
of
total
small
entity
capacity
in
the
CAIR
region,
is
projected
to
be
uneconomic
to
maintain
under
the
CAIR
relative
to
the
Base
Case.
In
practice,
units
projected
to
be
uneconomic
to
maintain
may
be
"
mothballed,"
40
retired,
or
kept
in
service
to
ensure
transmission
reliability
in
certain
parts
of
the
grid.
Our
IPM
modeling
is
unable
to
distinguish
between
these
potential
outcomes.

The
EPA
modeling
identified
264
small
entities
within
the
CAIR
region
based
upon
the
definition
of
small
entity
outlined
above.
From
this
analysis,
EPA
excluded
189
small
entities
that
were
not
projected
to
have
at
least
one
unit
with
a
generating
capacity
of
25
MW
or
great
operating
in
the
base
case.
Thus,
we
found
that
75
small
entities
may
potentially
be
affected
by
the
CAIR.
Of
these
75
small
entities,
28
may
experience
compliance
costs
in
excess
of
one
percent
of
revenues
in
2010,
and
46
may
in
2015,
based
on
the
Agency's
assumptions
of
how
the
affected
States
implement
control
measures
to
meet
their
emissions
budgets
as
set
forth
in
this
rulemaking.
Potentially
affected
small
entities
experiencing
compliance
costs
in
excess
of
1
percent
of
revenues
have
some
potential
for
significant
impact
resulting
from
implementation
of
the
CAIR.
However,

it
is
the
Agency's
position
that
because
none
of
the
affected
entities
currently
operate
in
a
competitive
market
environment,
they
should
be
able
to
pass
the
costs
of
complying
with
the
CAIR
on
to
rate­
payers.
Moreover,
the
decision
to
include
only
units
greater
than
25
MW
in
size
exempts
185
small
entities
that
would
otherwise
be
41
potentially
affected
by
the
CAIR.

Two
other
points
should
be
considered
when
evaluating
the
impact
of
the
CAIR,
specifically,
and
cap
and
trade
programs
more
generally,
on
small
entities.
First,
under
the
CAIR,
the
cap
and
trade
program
is
designed
such
that
States
determine
how
NOx
allowances
are
to
be
allocated
across
units.
A
State
that
wishes
to
mitigate
the
impact
of
the
rule
on
small
entities
might
choose
to
allocate
NOx
allowances
in
a
manner
that
is
favorable
to
small
entities.

Finally,
the
use
of
cap
and
trade
in
general
will
limit
impacts
on
small
entities
relative
to
a
less
flexible
command­
and­
control
program.

D.
Unfunded
Mandates
Reform
Act
Title
II
of
the
Unfunded
Mandates
Reform
Act
of
1995
(
Public
Law
104­
4)(
UMRA),
establishes
requirements
for
Federal
agencies
to
assess
the
effects
of
their
regulatory
actions
on
State,
local,
and
Tribal
governments
and
the
private
sector.
Under
section
202
of
the
UMRA,
2
U.
S.
C.

1532,
EPA
generally
must
prepare
a
written
statement,

including
a
cost­
benefit
analysis,
for
any
proposed
or
final
rule
that
"
includes
any
Federal
mandate
that
may
result
in
the
expenditure
by
State,
local,
and
Tribal
governments,
in
the
aggregate,
or
by
the
private
sector,
of
$
100,000,000
or
more
...
in
any
one
year."
A
"
Federal
mandate"
is
defined
42
under
section
421(
6),
2
U.
S.
C.
658(
6),
to
include
a
"
Federal
intergovernmental
mandate"
and
a
"
Federal
private
sector
mandate."
A
"
Federal
intergovernmental
mandate,"
in
turn,

is
defined
to
include
a
regulation
that
"
would
impose
an
enforceable
duty
upon
State,
Local,
or
Tribal
governments,"

section
421(
5)(
A)(
i),
2
U.
S.
C.
658(
5)(
A)(
i),
except
for,

among
other
things,
a
duty
that
is
"
a
condition
of
Federal
assistance,"
section
421(
5)(
A)(
i)(
I).
A
"
Federal
private
sector
mandate"
includes
a
regulation
that
"
would
impose
an
enforceable
duty
upon
the
private
sector,"
with
certain
exceptions,
section
421(
7)(
A),
2
U.
S.
C.
658(
7)(
A).

Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed
under
section
202
of
the
UMRA,
section
205,
2
U.
S.
C.
1535,
of
the
UMRA
generally
requires
EPA
to
identify
and
consider
a
reasonable
number
of
regulatory
alternatives
and
adopt
the
least
costly,
most
costeffective
or
least
burdensome
alternative
that
achieves
the
objectives
of
the
rule.

The
EPA
prepared
a
written
statement
for
the
final
rule
consistent
with
the
requirements
of
section
202
of
the
UMRA.

Furthermore,
as
EPA
stated
in
the
rule,
EPA
is
not
directly
establishing
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,

including
Tribal
governments.
Thus,
EPA
is
not
obligated
to
develop
under
section
203
of
the
UMRA
a
small
government
43
agency
plan.
Furthermore,
in
a
manner
consistent
with
the
intergovernmental
consultation
provisions
of
section
204
of
the
UMRA,
EPA
carried
out
consultations
with
the
governmental
entities
affected
by
this
rule.

For
several
reasons,
however,
EPA
is
not
reaching
a
final
conclusion
as
to
the
applicability
of
the
requirements
of
UMRA
to
this
rulemaking
action.
First,
it
is
questionable
whether
a
requirement
to
submit
a
SIP
revision
would
constitute
a
Federal
mandate
in
any
case.
The
obligation
for
a
State
to
revise
its
SIP
that
arises
out
of
section
110(
a)
of
the
CAA
is
not
legally
enforceable
by
a
court
of
law,
and
at
most
is
a
condition
for
continued
receipt
of
highway
funds.
Therefore,
it
is
possible
to
view
an
action
requiring
such
a
submittal
as
not
creating
any
enforceable
duty
within
the
meaning
of
section
421(
5)(
9a)(
I)

of
UMRA
(
2
U.
S.
C.
658
(
a)(
I)).
Even
if
it
did,
the
duty
could
be
viewed
as
falling
within
the
exception
for
a
condition
of
Federal
assistance
under
section
421(
5)(
a)(
i)(
I)
of
UMRA
(
2
U.
S.
C.
658(
5)(
a)(
i)(
I)).

As
noted
earlier,
however,
notwithstanding
these
issues,
EPA
prepared
for
the
final
rule
the
statement
that
would
be
required
by
UMRA
if
its
statutory
provisions
applied,
and
EPA
has
consulted
with
governmental
entities
as
would
be
required
by
UMRA.
Consequently,
it
is
not
necessary
for
EPA
to
reach
a
conclusion
as
to
the
44
applicability
of
the
UMRA
requirements.

The
EPA
conducted
an
analysis
of
the
economic
impacts
anticipated
from
the
CAIR
for
government­
owned
entities.

The
modeling
conducted
using
the
IPM
projects
that
about
340
MW
of
municipality­
owned
capacity
(
about
0.4
percent
of
all
subdivision,
State
and
municipality
capacity
in
the
CAIR
region)
would
be
uneconomic
to
maintain
under
the
CAIR,

beyond
what
is
projected
in
the
Base
Case.
In
practice,

however,
the
units
projected
to
be
uneconomic
to
maintain
may
be
'
mothballed,'
retired,
or
kept
in
service
to
ensure
transmission
reliability
in
certain
parts
of
the
grid.
For
the
most
part,
these
units
are
small
and
infrequently
used
generating
units
that
are
dispersed
throughout
the
CAIR
region.

The
EPA
modeling
identified
265
State
or
municipallyowned
entities,
as
well
as
subdivisions,
within
the
CAIR
region.
The
EPA
excluded
from
the
analysis
government­
owned
entities
that
were
not
projected
to
have
at
least
one
unit
with
generating
capacity
of
25
MW
or
greater
in
the
Base
Case.
Thus,
we
excluded
184
entities
from
the
analysis.
We
found
that
81
government
entities
will
be
potentially
affected
by
CAIR.
Of
the
81
government
entities,
20
may
experience
compliance
costs
in
excess
of
1
percent
of
revenues
in
2010,
and
39
may
in
2015,
based
on
our
assumptions
of
how
the
affected
States
implement
control
45
measures
to
meet
their
emissions
budgets
as
set
forth
in
this
rulemaking.

Government
entities
projected
to
experience
compliance
costs
in
excess
of
1
percent
of
revenues
have
some
potential
for
significant
impact
resulting
from
implementation
of
the
CAIR.
However,
as
noted
above,
it
is
EPA's
position
that
because
these
government
entities
can
pass
on
their
costs
of
compliance
to
rate­
payers,
they
will
not
be
significantly
impacted.
Furthermore,
the
decision
to
include
only
units
greater
than
25
MW
in
size
exempts
179
government
entities
that
would
otherwise
be
potentially
affected
by
the
CAIR.

The
above
points
aside,
potentially
adverse
impacts
of
the
CAIR
on
State
and
municipality­
owned
entities
could
be
limited
by
the
fact
that
the
cap
and
trade
program
is
designed
such
that
States
determine
how
NOx
allowances
are
to
be
allocated
across
units.
A
State
that
wishes
to
mitigate
the
impact
of
the
rule
on
State
or
municipalityowned
entities
might
choose
to
allocate
NOx
allowances
in
a
manner
that
is
favorable
to
these
entities.
Finally,
the
use
of
cap
and
trade
in
general
will
limit
impacts
on
entities
owned
by
small
governments
relative
to
a
less
flexible
command­
and­
control
program.

E.
Executive
Order
13132:
Federalism
Executive
Order
13132,
entitled
"
Federalism"
(
64
FR
46
43255,
August
10,
1999),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
State
and
local
officials
in
the
development
of
regulatory
policies
that
have
federalism
implications."

"
Policies
that
have
federalism
implications"
is
defined
in
the
Executive
Order
to
include
regulations
that
have
"
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,

or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government."

This
rule
does
not
have
federalism
implications.
It
will
not
have
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government,
as
specified
in
Executive
Order
13132.
The
CAA
establishes
the
relationship
between
the
Federal
government
and
the
States,
and
this
rule
does
not
impact
that
relationship.
Thus,
Executive
Order
13132
does
not
apply
to
this
rule.
In
the
spirit
of
Executive
Order
13132,
and
consistent
with
EPA
policy
to
promote
communications
between
EPA
and
State
and
local
governments,
EPA
specifically
solicited
comment
on
this
rule
from
State
and
local
officials.

F.
Executive
Order
13175:
Consultation
and
Coordination
47
with
Indian
Tribal
Governments
Executive
Order
13175,
entitled
"
Consultation
and
Coordination
with
Indian
Tribal
Governments"
(
65
FR
67249,

November
9,
2000),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
Tribal
officials
in
the
development
of
regulatory
policies
that
have
Tribal
implications."
This
rule
does
not
have
"
Tribal
implications"
as
specified
in
Executive
Order
13175.

This
rule
addresses
transport
of
pollution
that
are
precurors
for
ozone
and
PM2.5.
The
CAA
provides
for
States
and
Tribes
to
develop
plans
to
regulate
emissions
of
air
pollutants
within
their
jurisdictions.
The
regulations
clarify
the
statutory
obligations
of
States
and
Tribes
that
develop
plans
to
implement
this
rule.
The
Tribal
Authority
Rule
(
TAR)
give
Tribes
the
opportunity
to
develop
and
implement
CAA
programs,
but
it
leaves
to
the
discretion
of
the
Tribe
whether
to
develop
these
programs
and
which
programs,
or
appropriate
elements
of
a
program,
the
Tribe
will
adopt.

This
rule
does
not
have
Tribal
implications
as
defined
by
Executive
Order
13175.
It
does
not
have
a
substantial
direct
effect
on
one
or
more
Indian
Tribes,
because
no
Tribe
has
implemented
a
federally
enforceable
air
quality
management
program
under
the
CAA
at
this
time.
Furthermore,
48
this
rule
does
not
affect
the
relationship
or
distribution
of
power
and
responsibilities
between
the
Federal
government
and
Indian
Tribes.
The
CAA
and
the
TAR
establish
the
relationship
of
the
Federal
government
and
Tribes
in
developing
plans
to
attain
the
NAAQS,
and
this
rule
does
nothing
to
modify
that
relationship.
Because
this
rule
does
not
have
Tribal
implications,
Executive
Order
13175
does
not
apply.

If
one
assumes
a
Tribe
is
implementing
a
Tribal
Implementation
Plan,
today's
rule
could
have
implications
for
that
Tribe,
but
it
would
not
impose
substantial
direct
costs
upon
the
Tribe,
nor
preempt
Tribal
law.
As
provided
above,
EPA
has
estimated
that
the
total
annual
private
costs
for
the
rule
for
the
CAIR
region
as
implemented
by
State,

Local,
and
Tribal
governments
is
approximately
$
2.4
billion
in
2010
and
$
3.6
billion
in
2015
(
1999$).
There
are
currently
very
few
emissions
sources
in
Indian
country
that
could
be
affected
by
this
rule
and
the
percentage
of
Tribal
land
that
will
be
impacted
is
very
small.
For
Tribes
that
choose
to
regulate
sources
in
Indian
country,
the
costs
would
be
attributed
to
inspecting
regulated
facilities
and
enforcing
adopted
regulations.

Although
Executive
Order
13175
does
not
apply
to
this
rule,
EPA
consulted
with
Tribal
officials
in
developing
this
rule.
The
EPA
has
encouraged
Tribal
input
at
an
early
49
stage.
Also,
EPA
held
periodic
meetings
with
the
States
and
the
Tribes
during
the
technical
development
of
this
rule.

Three
meetings
were
held
with
the
Crow
Tribe,
where
the
Tribe
expressed
concerns
about
potential
impacts
of
the
rule
on
their
coal
mine
operations.
In
addition,
EPA
held
three
calls
with
Tribal
environmental
professionals
to
address
concerns
specific
to
the
Tribes.
These
discussions
have
given
EPA
valuable
information
about
Tribal
concerns
regarding
the
development
of
this
rule.
The
EPA
has
provided
briefings
for
Tribal
representatives
and
the
newly
formed
National
Tribal
Air
Association
(
NTAA),
and
other
national
Tribal
forums.
Input
from
Tribal
representatives
has
been
taken
into
consideration
in
development
of
this
rule.

G.
Executive
Order
13045:
Protection
of
Children
from
Environmental
Health
and
Safety
Risks
Executive
Order
13045,
"
Protection
of
Children
from
Environmental
Health
and
Safety
Risks"
(
62
FR
19885,
April
23,
1997)
applies
to
any
rule
that
(
1)
is
determined
to
be
"
economically
significant"
as
defined
under
Executive
Order
12866,
and
(
2)
concerns
an
environmental
health
or
safety
risk
that
EPA
has
reason
to
believe
may
have
a
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
Section
5
 
501
of
the
Order
50
directs
the
Agency
to
evaluate
the
environmental
health
or
safety
effects
of
the
planned
rule
on
children,
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

This
final
rule
is
not
subject
to
the
Executive
Order,

because
it
does
not
involve
decisions
on
environmental
health
or
safety
risks
that
may
disproportionately
affect
children.
The
EPA
believes
that
the
emissions
reductions
from
the
strategies
in
this
rule
will
further
improve
air
quality
and
will
further
improve
children's
health.

H.
Executive
Order
13211:
Actions
that
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
Executive
Order
13211
(
66
FR
28355,
May
22,
2001)

provides
that
agencies
shall
prepare
and
submit
to
the
Administrator
of
the
Office
of
Regulatory
Affairs,
OMB,
a
Statement
of
Energy
Effects
for
certain
actions
identified
as
"
significant
energy
actions."
Section
4(
b)
of
Executive
Order
13211
defines
"
significant
energy
actions"
as
"
any
action
by
an
agency
(
normally
published
in
the
Federal
Register)
that
promulgates
or
is
expected
to
lead
to
the
promulgation
of
a
final
rule
or
regulation,
including
notices
of
inquiry,
advance
notices
of
final
rulemaking,
and
notices
of
final
rulemaking
(
1)
(
i)
a
significant
51
regulatory
action
under
Executive
Order
12866
or
any
successor
order,
and
(
ii)
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy;
or
(
2)
designated
by
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs
as
a
"
significant
energy
action."
This
final
rule
is
a
significant
regulatory
action
under
Executive
Order
12866,
and
this
rule
may
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.

In
May
of
2001,
the
Administration
published
the
National
Energy
Policy
which
contained
key
recommendations
for
improving
energy
policy.
The
CAIR
has
the
potential
to
require
installation
of
significant
amounts
of
control
equipment
at
power
plants
that
are
integral
to
the
country's
electric
power
supply,
and
in
light
of
this,
EPA
has
focused
on
minimizing
the
impacts
of
the
CAIR
throughout
the
development
of
the
rule
in
keeping
with
the
National
Energy
Policy.
The
rule
follows
the
recommendations
of
the
National
Energy
Policy
to
use
cost
effectiveness
and
marketbased
mechanisms
while
providing
regulatory
certainty
and
sufficient
time
to
achieve
reductions
of
SO2
and
NOx
from
the
power
sector
in
a
way
that
will
help
the
country
maintain
electric
reliability
and
affordability
while
ensuring
environmental
goals
are
met.
Although
the
stated
52
recommendation
of
the
Administration's
energy
plan
was
to
adopt
multi­
pollutant
legislation,
like
the
Clear
Skies
Act,

EPA
has
acted
in
accordance
with
the
CAA
to
ensure
substantial
reduction
of
pollution
to
protect
human
health
and
welfare,
consistent
with
the
National
Energy
Policy.

If
States
choose
to
obtain
the
emissions
reductions
required
by
this
rule
by
regulating
EGUs,
EPA
projects
that
approximately
5.3
GWs
of
coal­
fired
generation
may
be
removed
from
operation
by
2010.
In
practice,
however,
the
units
projected
to
be
uneconomic
to
maintain
may
be
'
mothballed,'
retired,
or
kept
in
service
to
ensure
transmission
reliability
in
certain
parts
of
the
grid.
For
the
most
part,
these
units
are
small
and
infrequently
used
generating
units
that
are
dispersed
throughout
the
CAIR
region.
Less
conservative
assumptions
regarding
natural
gas
prices
or
electricity
demand
would
create
a
greater
incentive
to
keep
these
units
operational.
The
EPA
projects
that
the
average
annual
electricity
price
will
increase
by
less
than
2.7
percent
in
the
CAIR
region.
The
EPA
does
not
believe
that
this
rule
will
have
any
other
impacts
that
exceed
the
significance
criteria.

The
EPA
believes
that
a
number
of
features
of
today's
rulemaking
serve
to
reduce
its
impact
on
energy
supply.

First,
the
optional
trading
program
provides
considerable
flexibility
to
the
power
sector
and
enables
industry
to
53
comply
with
the
emission
reduction
requirements
in
the
most
cost­
effective
manner,
thus
minimizing
overall
costs
and
the
ultimate
impact
on
energy
supply.
The
ability
to
use
banked
allowances
from
the
existing
title
IV
SO2
trading
program
and
the
NOx
SIP
Call
Trading
Program
also
provide
additional
flexibility.
Second,
the
CAIR
caps
are
set
in
two
phases
and
provide
adequate
time
for
EGUs
to
install
pollution
controls.
For
more
details
concerning
energy
impacts,
see
the
Regulatory
Impact
Analysis
for
the
Final
Clean
Air
Interstate
Rule
(
March
2005).

I.
National
Technology
Transfer
Advancement
Act
Section
12(
d)
of
the
National
Technology
Transfer
and
Advancement
Act
(
NTTAA)
of
1995
(
Public
Law
No.
104­
113;
15
U.
S.
C.
272
note)
directs
EPA
to
use
voluntary
consensus
standards
in
its
regulatory
and
procurement
activities
unless
to
do
so
would
be
inconsistent
with
applicable
law
or
otherwise
impractical.
Voluntary
consensus
standards
are
technical
standards
(
e.
g.,
materials
specifications,
test
methods,
sampling
procedures,
business
practices)
developed
or
adopted
by
one
or
more
voluntary
consensus
bodies.
The
NTTAA
directs
EPA
to
provide
Congress,
through
annual
reports
to
OMB,
with
explanations
when
an
agency
does
not
use
available
and
applicable
voluntary
consensus
standards.

This
rule
would
require
all
sources
that
participate
in
54
the
trading
program
under
part
96
to
meet
the
applicable
monitoring
requirements
of
part
75.
Part
75
already
incorporates
a
number
of
voluntary
consensus
standards.

Consistent
with
the
Agency's
Performance
Based
Measurement
System
(
PBMS),
part
75
sets
forth
performance
criteria
that
allow
the
use
of
alternative
methods
to
the
ones
set
forth
in
part
75.
The
PBMS
approach
is
intended
to
be
more
flexible
and
cost­
effective
for
the
regulated
community;
it
is
also
intended
to
encourage
innovation
in
analytical
technology
and
improved
data
quality.
At
this
time,
EPA
is
not
recommending
any
revisions
to
part
75;
however,
EPA
periodically
revises
the
test
procedures
set
forth
in
part
75.
When
EPA
revises
the
test
procedures
set
forth
in
part
75
in
the
future,
EPA
will
address
the
use
of
any
new
voluntary
consensus
standards
that
are
equivalent.

Currently,
even
if
a
test
procedure
is
not
set
forth
in
part
75
EPA
is
not
precluding
the
use
of
any
method,
whether
it
constitutes
a
voluntary
consensus
standard
or
not,
as
long
as
it
meets
the
performance
criteria
specified;
however,
any
alternative
methods
must
be
approved
through
the
petition
process
under
Sec.
75.66
before
they
are
used
under
part
75.

J.
Executive
Order
12898:
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations
55
12
U.
S.
Environmental
Protection
Agency,
1998.
Guidance
for
Incorporating
Environmental
Justice
Concerns
in
EPA's
NEPA
Compliance
Analyses.
Office
of
Federal
Activities,
Washington,
D.
C.,
April,
1998.
Executive
Order
12898,
"
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations,"
requires
Federal
agencies
to
consider
the
impact
of
programs,
policies,
and
activities
on
minority
populations
and
low­
income
populations.
According
to
EPA
guidance,
12
agencies
are
to
assess
whether
minority
or
lowincome
populations
face
risks
or
a
rate
of
exposure
to
hazards
that
are
significant
and
that
"
appreciably
exceed
or
is
likely
to
appreciably
exceed
the
risk
or
rate
to
the
general
population
or
to
the
appropriate
comparison
group."

(
EPA,
1998)

In
accordance
with
Executive
Order
12898,
the
Agency
has
considered
whether
this
rule
may
have
disproportionate
negative
impacts
on
minority
or
low
income
populations.
The
Agency
expects
this
rule
to
lead
to
reductions
in
air
pollution
and
exposures
generally.
For
this
reason,

negative
impacts
to
these
sub­
populations
that
appreciably
exceed
similar
impacts
to
the
general
population
are
not
expected.

K.
Congressional
Review
Act
The
Congressional
Review
Act,
5
U.
S.
C.
801
et
seq.,
as
56
added
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996,
generally
provides
that
before
a
rule
may
take
effect,
the
agency
promulgating
the
rule
must
submit
a
rule
report,
which
includes
a
copy
of
the
rule,
to
each
House
of
the
Congress
and
to
the
Comptroller
General
of
the
United
States.
The
EPA
will
submit
a
report
containing
this
rule
and
other
required
information
to
the
U.
S.
Senate,
the
U.
S.

House
of
Representatives,
and
the
Comptroller
General
of
the
United
States
prior
to
publication
of
the
rule
in
the
Federal
Register.
A
Major
rule
cannot
take
effect
until
60
days
after
it
is
published
in
the
Federal
Register.
This
action
is
a
"
major
rule"
as
defined
by
5
U.
S.
C.
804(
2).
