DRAFT CAIR Replacement Rule

Discussions between NGOs and EPA

March 31, 2009

I.  Introduction

	On Tuesday, March 31, 2009, EPA held a meeting with nongovernmental
organizations (NGOs) concerned with environmental and health issues to
discuss the CAIR replacement rule.  NGOs at the meeting included the
Clean Air Task Force (CATF), Natural Resources Defense Council (NRDC),
Sierra Club, National Parks Conservation Association (NPCA), and the
American Lung Association.

The summary that follows covers the key issues discussed during the
call.  More detailed notes, including a list of call participants, are
being prepared.  

II.  EPA Opening Comments

	Sam Napolitano, CAMD, began with a short introduction, explaining that
EPA was beginning the process of creating a replacement rule for CAIR. 
The Agency is reviewing all options, setting up analyses, and preparing
technical models.  The goal is to finalize a replacement rule within two
years.  

	The primary objectives are to help states comply with the NAAQS and to
reduce interstate transport.  Therefore, EPA has decided that it would
be best to start working with states and other stakeholders immediately.
 EPA would like to hear from the stakeholders about what type of
replacement rule would most help states meet air quality requirements. 
Sam stressed that this is the beginning of a dialogue process, and that
EPA intends to continue these types of discussions throughout the rule
development process.  

	This is a chance for the NGOs to talk to the key EPA staff that will
actually develop and write the rules, as well as the OGC attorneys
assigned to the rule development.  Sam stressed that EPA is interested
in hearing the participants' thoughts and concerns.  Everything is on
the table as EPA puts together ideas for the new Assistant Administrator
for Air and Radiation, who should arrive within the next couple of
weeks.  

	

III.  NGO Opening Comments 

	Conrad Schneider, CATF, thanked EPA for the opportunity to share
suggestions on how to move forward with a CAIR replacement program.  The
CATF and other participants look forward to working closely with EPA
throughout the rule development process.  

	Conrad began by suggesting that EPA take a step back from CAIR and
rather look at the entire power sector in a holistic manner given the
myriad regulatory requirements applicable to the sector that are long
overdue.  The control programs that affect the sector include, but are
not limited to: the CAIR replacement rule, the EGU HAP MACT rule, RACT,
110, 126, SO2 NAAQS, PM NAAQS, CO2 NSPS, CO2 NSR, etc., and several
upcoming legal settlements will have effects on emissions as well.  It
is important to approach further EGU control in a coordinated and
comprehensive manner.  The NGO groups stressed that, in particular,
because it is national in scope and likely will require unit-by-unit
installation of flue gas desulfurization technology, EPA should closely
coordinate the formulation of the CAIR replacement rule with the EGU HAP
MACT rule development process. EPA should look at each requirement in
the Clean Air Act individually and make a determination as to what
program would satisfy each requirement, rather than trying to see how
many requirements one program can satisfy.  Claiming that one program
satisfies multiple requirements has been a legal weakness in the past.  

	The main point that all the NGO participants stressed was coordination.
 Beyond simply coordinating the program with other EPA programs, the
Agency needs to coordinate emission control efforts with other larger
administration efforts to reshape the power industry.  Laying out a
regulatory road map early in the process will allow companies to make
comprehensive long term plans.

IV.  General Discussion

	Conrad then invited other NGO participants to share thoughts and
concerns.  For the most part the discussion focused on macro level ideas
and did not delve too deeply into the specific issues related to CAIR
that EPA set out in the agenda.  

1.  Trading

	The D.C. Circuit Court's decision created a number of problems for the
current approach.  Thus, a new approach may be required to construct a
rule that will stand up to the inevitable legal challenges. 
Specifically, in reading the court decision, it does not appear that
trading is a viable option.  

Bruce Nilles, Sierra Club, and Janice Nolen, American Lung Association
noted the negative effect that trading has on residential neighborhoods.
 Small EGUs, usually located in those neighborhoods, often find it
prohibitively expensive to put on controls.  Therefore, those units,
which are frequently located in minority or low-income neighborhoods,
continue polluting and harming public health.  Trading exacerbates this
situation.  

There was general agreement in the expression of opposition to trading
and that uncontrolled coal-fired power plants should no longer be
allowed.  Plants should be required to put on controls, retire, or
re-power.  The public health cost is too high to justify continued
uncontrolled operation, and trading makes it possible for many of those
plants to continue without controls.  

2.  Scope

	The NGO participants all suggested that EPA should widen the scope in
an effort to get smaller power plants, which have historically avoided
putting on controls due to cost, to either shut down or re-power.  The
participants felt that EPA has a rare chance to significantly change the
structure of the power generating sector.  They also suggested that
closing down smaller, very dirty plants and shifting generation to
renewable and green sources would clearly be in-line with the Obama
Administration's priorities.  

	The investment required for these small plants to put on controls is so
high that, were the plants required to participate in a control program,
most would shut down or re-power.  This would have a large effect on
public health because, as noted earlier, many of the smaller plants are
located in residential neighborhoods.  

	The NGOs said that any CAIR replacement program should be national in
scope and again emphasized the importance of coordination.  When
expanding the scope of the programs, it is important to create a roadmap
of what EPA and the Administration imagine the power sector will look
like in the future.  It is important to at least consider coordination
and the impact of any NOx or SO2 program on CO2 emissions.

	Finally, everyone agreed that it was important to consider ICI boilers.
 Cement kilns were also mentioned as a possible source category.  EPA
noted that the states had been encouraging EPA to look at a broad set of
source categories, which could include area sources, mobile sources, and
possibly consumer products.  The NGOs were supportive of considering the
wider range of source categories but urged EPA not to get bogged down in
considering those sources.  The NGOs indicated that industrial boilers
should not be included in a program through a trading mechanism,
however.  Separate rules may be needed to address other sources.  EPA
indicated that the states had also emphasized quick, immediate emissions
reductions followed by other programs that might look at the wider range
of sources.  

In considering other sectors to control Sam Napolitano shared with the
group a set of graphs and data showing that eastern power plants have a
fair amount of control especially parts of the Midwest.  Although there
are still some reductions to be gained by further controlling the power
sector, EPA presented the argument that achieving the tighter standards
will most likely require controls in other sectors.  The NGOs agreed
that controlling other sectors would be an important part of meeting
increasingly strict standards.  However, there was also some concern
that responsibilities not get shifted because there are clearly
important reductions remaining from the EGU sector to be achieved from,
for example, smaller plants near residential areas.  

	

3.  Timing

	With regard to timing, NGOs said that it is understandable that a CAIR
replacement rule might take at least two years to develop, and that it
is good that EPA understands the urgency and is on an accelerated
timetable.  However, there is no reason to wait to enforce SIP
requirements for haze and BART.  Past delays in rulemaking and
enforcement are having a serious public health effect now.  Therefore it
is critical EPA take any immediate actions available to reduce
emissions, while simultaneously constructing future programs to meet the
air quality standards.  

	NGOs stressed the importance of coordinated timing, which would
encourage sources to make smart comprehensive investments rather than
the type of serial investments that have been made in response to an
ever-changing regulatory landscape.  Many small units have avoided
shutting down or re-powering and continue to operate because the owners
have no clear idea of future operational costs.  A comprehensive
timeline of regulations and programs that EPA foresees promulgating
would drive generation companies to implement comprehensive emission
reduction plans.

	Furthermore, by outlining upfront the projected compliance costs, EPA
could encourage generation companies to make the large investment
required for newer, more efficient power plants.  Knowing the high cost
of compliance might also drive many companies to consider more seriously
alternative energy sources.  All of this would be in line with the Obama
Administration's publicly stated goals for the next four years.  

4.  Standards

	Janice Nolen noted that the court had sent the 2006 PM standard back to
EPA for reconsideration because it had determined that the Agency had
not considered all the relevant science when making the initial
determination.  Most observers expect the standards will be tightened;
thus, it is important that EPA develop a program that helps states meet
tighter standards.  

	Sam Napolitano asked whether the NGOs would rather see EPA develop a
rule based on the 1997 standards or the 2006 PM (and possibly even 2008
ozone) standards with the understanding that developing a rule based on
the later standards would probably take longer.  

	The NGOs said they did not agree that such a trade off was required and
suggested that EPA could proceed using, for example, the MACT authority
to develop a program.  The specifics could be adjusted later to meet the
updated ambient standards.  Janice pointed out that using the stricter
standards would also bring in more units and possibly help expand the
scope to include the smaller units that can impact residential areas, as
discussed earlier.  

5.  Authority and Significant Contribution

	In response to questions from EPA about authority, the NGOs suggested
the Agency move away from only considering section 110(a)(2)(D).  The
NGOs suggested EPA consider section 111 or 112 authority (NSPS and
MACT).  They suggested that EPA step back from the section 110(a)(2)(D)
consideration, which is based on a finding of failure on the states'
part to submit implementation plans that demonstrate how each state will
address significant contribution.  Moving away from the significant
contribution requirements will help EPA avoid some of the pitfalls noted
in the court's decision.  

EPA should look at the Clean Air Act and define the full range of tools
available under the Act.  Then the Agency should choose which tools best
solve each problem.  There are often multiple avenues available for
dealing with one issue, for example transport.  Whenever possible, EPA
should construct a rule that rests on as many statutory bases as
possible.  This will also help the rule stand up to legal challenges and
ensure that EPA is taking full advantage of the legal authority granted
in the Clean Air Act.  

6.  NGO Final Points

	The NGOs concluded by re-emphasizing the importance of a comprehensive
approach that takes into consideration the full range of statutory
possibilities, along with a broad view of how the power generation
sector should look in the future.  A clean environment is interrelated
with other Administration priorities, such as clean energy and a green
economy.  It is important that EPA set out a regulatory roadmap showing
how regulations will clean up the environment and also help drive the
movement towards cleaner energy.

	Generation companies must be able to make comprehensive investment and
control decisions with a clear understanding of how emissions control
regulations fit into a broader view of the future of power generation in
America.  

V.  EPA Response and Conclusion

	Sam Napolitano indicated that EPA heard the NGOs' concerns,
specifically about coordination and taking a broader view.  EPA
appreciates the NGOs' willingness to think aloud and understands that
positions and ideas outlined in this discussion may not be each NGO's
official position.  The states have also been willing to think aloud and
outline concerns and suggestions.  The process of gathering ideas and
hearing concerns is very helpful for the Agency, and it looks forward to
working with all stakeholders in the future.  

APPENDIX:  PROGRESS OF ARP, NBP, CAIR through 2008

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