Ron Evans/RTP/USEPA/US

09/25/2008 10:33 PM

	

To

"King, Heidi R." <Heidi_R._King@omb.eop.gov>

cc

Brian Heninger/DC/USEPA/US@epa, Charlotte Bertrand/DC/USEPA/US@epa,
Charles Fulcher/RTP/USEPA/US@EPA, Darryl Weatherhead/RTP/USEPA/US@epa,
Kathy Kaufman/RTP/USEPA/US@epa, Michael_C._Clark@omb.eop.gov,
simon.nathalie@epa.gov, Al McGartland, fann.neal@epa.gov, Tricia
Crabtree/RTP/USEPA/US@EPA, Lydia Wegman, rosalina rodriguez,
walton.tom@epa.gov, Arthur_G._Fraas@omb.eop.gov,
Amanda_I._Lee@omb.eop.gov, Dominic_J._Mancini@omb.eop.gov.

Subject

RE: background for tomorrow's extrapolated cost discussion









Heidi

OK, first off I have demonstrated the postulate that humans can screw
up, but it takes a computer to screw up big time.  Somewhere some stray
characters got into my list of e-mail addresses.  Thus, both my original
note and your response only went to about 1/2 the people intended and
apparently several unintended.  No harm done but certainly bizarre. 
Also, it appears that the graphics which I hoped would explain my points
better were likely stripped in the hand-off between our e-mail systems. 
It does appear that you were able to confirm that you were using the
updated graph which included the green line at the top of the chart,
that helps.

As to the focus of the discussion tomorrow, I am in 100% agreement with
you, we are only looking for the best way to estimate the extrapolated
costs.  At the same time, I am not sure that my first point came thru
about emissions.   This round we are able to reduce nearly 95% of needed
emissions using identified controls (for the selected standard).   Thus,
the extrapolated methodology only has to cover the costs of reducing the
last 5%.   While these can be expensive reductions, what I was trying to
say was that it does not seem like a fruitful use of anyone's time to
spend much effort on this.   We certainly need to have an estimate for
these extrapolated costs, we have offered 3 and are certainly open to
considering your suggestions.  However, time is short and we are working
with a limited and uncertain set of data.   The uncertainties in the
estimates are likely to be very large.

That is what I was trying to get across with my first point.  I would
like to try to reach agreement tomorrow on a path forward for the
estimate of the extrapolated costs.  I hope we can accomplish this. 
Talk to you in the morning.

Ron

"King, Heidi R." <Heidi_R._King@omb.eop.gov> 

09/25/2008 04:29 PM

	

To

Ron Evans/RTP/USEPA/US@EPA

cc

Kathy Kaufman/RTP/USEPA/US@EPA, Brian Heninger/DC/USEPA/US@EPA, Darryl
Weatherhead/RTP/USEPA/US@EPA, Charlotte Bertrand/DC/USEPA/US@EPA,
<clark.jeffery@epa.gov>, <"Michael_C.
<Michael__C.__Clark@omb.eop.gov/O=, "@mintra01.rtp.epa.gov>,
<Mancini/@epamail.epa.gov>, <"Dominic_J.
<Dominic__J.__Mancini@omb.eop.gov/O=, "@mintra01.rtp.epa.gov>,
<Lee/@epamail.epa.gov>, <"Amanda_I. <Amanda__I.__Lee@omb.eop.gov/O=,
"@mintra01.rtp.epa.gov>, <Fraas/@epamail.epa.gov>, <"Arthur__G.
<Arthur____G.____Fraas@omb.eop.gov/O=, Lydia
Wegman/RTP/USEPA/US.EPA,NathalieSimon/DC/USEPA/US.EPA,AlMcGartland/DC/US
EPA/US.EPA,TriciaCrabtree/RTP/USEPA/US/@epamail.epa.gov"@mintra01.rtp.ep
a.gov>

Subject

RE: background for tomorrow's extrapolated cost discussion









Thanks Ron

- The focus of the discussion is best method to estimate the cost of

those emissions reductions beyond the set of known controls,

"extrapolated costs".  Our shared goal is to estimate costs accurately

using economic theory and best data available.  The comments were not

intended to address emission estimates, except to the extent that

emission estimates influence best methods for extrapolated cost

estimation.

- I am working from the presentation in which a green curve segment is

appended to a curve with a steeper slope.  Labeled as cum costs, the

change in the shape of the curve suggests that the green segment

represents a lower MC than the previous (steeper sloped) segment of cum

cost curve.

- Understood that time is a concern, that is why the note was short and

alternative #3 is already calculated.  I would be happy to share the

Excel sheet with you.

Thanks Ron, and I look forward to our conversation tomorrow morning.

Several of us understood that several alternative approaches have been

explored by EPA and we look forward to learning more about those

approaches

Heidi

-----Original Message-----

From: Evans.Ron@epamail.epa.gov [mailto:Evans.Ron@epamail.epa.gov] 

Sent: Thursday, September 25, 2008 4:06 PM

To: King, Heidi R.

Cc: Evans.Ron@epamail.epa.gov; Kaufman.Kathy@epamail.epa.gov;

Heninger.Brian@epamail.epa.gov; Weatherhead.Darryl@epamail.epa.gov;

Bertrand.Charlotte@epamail.epa.gov; clark.jeffery@epa.gov; "Michael_C.

<Michael__C.__Clark@omb.eop.gov/O=, "@mintra01.rtp.epa.gov;

Mancini/@epamail.epa.gov; "Dominic_J.

<Dominic__J.__Mancini@omb.eop.gov/O=, "@mintra01.rtp.epa.gov;

Lee/@epamail.epa.gov; "Amanda_I. <Amanda__I.__Lee@omb.eop.gov/O=,

"@mintra01.rtp.epa.gov; Fraas/@epamail.epa.gov; "Arthur__G.

<Arthur____G.____Fraas@omb.eop.gov/O=, Lydia

Wegman/RTP/USEPA/US.EPA,NathalieSimon/DC/USEPA/US.EPA,AlMcGartland/DC/US

EPA/US.EPA,TriciaCrabtree/RTP/USEPA/US/@epamail.epa.gov"@mintra01.rtp.ep

a.gov

Subject: background for tomorrow's extrapolated cost discussion

Heidi, thanks for the thoughts on the additional functional forms of the

equations which could be used to estimate the extrapolated costs.   We

are looking forward to the conversation.    We did have a few questions

& comments which I thought would be useful to send to you prior to the

meeting.

The first thing I need to get out there is to raise the obvious.   The

rule and the RIA are scheduled to be released on October 15th.   The

period of time between proposal and final is way too short.   By the end

of the conversation tomorrow I think we need to come to closure on the

method to be used to estimate the extrapolated portion of the costs.

We have discussed the data limitations, uncertainties and concerns which

I think we all share in all portions of this analysis.   Going into the

discussion tomorrow we all need to consider that we have captured

roughly 95% of the emission reductions (see table below) needed for the

selected standard using identified costs.   How much effort should we

all be putting into nailing that last 5% with all the stated concerns

which we share?

(Embedded image moved to file: pic13917.jpg)

The second is a question.   As you were considering your alternative

functional forms, were you considering the updated graphical

representation (from the presentation dated 9/5 which I sent you after

the Monday meeting) of what we did in our analysis?   Based on some of

your questions on the 3rd page we were concerned that you may have been

working from the earlier edition.

(Embedded image moved to file: pic04006.jpg)

Please give me a call in the morning before our scheduled meeting if you

have any questions about this e-mail.

Ron

