Emergency Application — Westmoreland Mining Holdings LLC, et al., Applicants v. Environmental Protection Agency, et al.
Supreme Court briefAug 16, 2024
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TABLE OF CONTENTS
APPENDIX A
Order Denying Stay, State of North Dakota v. EPA,
No. 24-1119 (D.C. Circuit, August 6, 2024) ………………………………… App.1
APPENDIX B
42 U.S.C. § 7412 ………………………………………………………………… App.3
APPENDIX C
National Emission Standards for Hazardous Air Pollutants:
Coal- and Oil-Fired Electric Utility Steam Generating Units
Review of the Residual Risk and Technology Review,
89 Fed. Reg. 38508 (May 7, 2024) ……………………………………….…..App.34
APPENDIX D
Comments of Westmoreland Mining Holdings LLC,
EPA-HQ-OAR-2018-0794-5935………………………………………..…… App.120
APPENDIX E
Comments of Northwestern Energy,
EPA-HQ-OAR-2018-0794-5980……………………………………………...App.226
APPENDIX F
Comments of National Mining Association,
EPA-HQ-OAR-2009-0234-20531…………………………………………….App.251
APPENDIX G
Comments of Talen Montana,
EPA-HQ-OAR-2018-0794-5987……………………………………………...App.443
APPENDIX H
Declarations:
Exhibit 1 – Declaration of Patrick Barkey ………………………. App.484
Exhibit 2 – Declaration of Jeremy Cottrell …………………...…. App.518
APPENDIX
APPENDIX F 2
FEDERAL ENERGY REGULATORY COMMISSION
WASHINGTON, D.C. 20426
Office of Commissioner Philip D. Moeller
August 1, 2011
The Honorable Lisa A. Murkowski
United States Senate
Washington, DC 20510
Dear Senator Murkowski:
Thank you for your continuing interest in our work at the Federal Energy
Regulatory Commission (FERC). As described in your letter to me, | raised the
issue of how actions of the Environmental Protection Agency (EPA) could impact
the reliability of our nation’s electric system at the Commission’s September 2010
open meeting, and | have been deeply interested in how our staff has been
communicating with both the public and within government on this issue of critical
importance to our nation. Thus, | share your concern about ensuring that we
maintain a reliable and affordable supply of electricity.
Given these concerns, | have long-stated that | can be “fuel neutral” but | cannot
be “reliability neutral”. That is, | can be neutral as a regulator with regard to how
competitive markets ultimately decide which types of power plants are most
efficient and affordable, regardless of whether those power plants are fueled by
water, natural gas, fuel oil, uranium, coal, wind, the sun, or any other fuel. But |
cannot be neutral about the reliability of our electricity.
The Federal Power Act provides this Commission with statutory responsibilities
over certain reliability matters.
For that reason, the Commission has engineering
staff in its Office of Electric Reliability that is dedicated to the topic of electric
reliability, and many other Offices at the Commission have engineering and
technical staff with expertise on that topic. Thus, | believe that this Commission
can play an important role in providing information to the EPA on the extent to
which its proposed rules will have an impact on electric reliability.
Given that you've sent similar letters to my fellow Commissioners, my answers
could differ from their responses. Yet | think that should be expected, as we are
individuals with potentially different views on this matter.
App.353
Thank you for asking these questions.
Here are my answers:
Question 1. With respect to the impact on electric reliability of the listed EPA
rules affecting generation of electric power, please list and describe the
Commission’s actions taken; studies conducted; assistance provided to any other
agency, including EPA; collaborative efforts with any other agency; and provision
of data to any other agency.
Answer:
Concerning the impact of the listed EPA rules on electric reliability, the
Commission has not acted or studied or provided assistance to any agency,
including EPA.
Because this answer may not be expected, | wish to clarify that
the Commission acts mostly through orders in individual proceedings, although it
sometimes issues reports, or holds conferences for the public, or acts in other
ways.
While the Commission itself may not have acted, individual Commissioners can
express their opinions, as can the staff of the Commission. | have been informed
that our staff has provided assistance to other federal agencies on this topic, and
that the staff has been studying various impacts of EPA proposals on energy
markets. Such assistance by staff is not binding upon the Commission, and can
take place without the knowledge of all or some Commissioners. The
relationship of the Commission to its staff is described in the Code of Federal
Regulations, and includes the following:
The Commission staff provides informal advice and assistance to
the general public and to prospective applicants for licenses,
certificates, and other Commission
authorizations.
Opinions
expressed by the staff do not represent the official views of the
Commission, but are designed to aid the public and facilitate the
accomplishment of the Commission's functions. Inquiries may be
directed to the chief of the appropriate office or division. 18 CFR
Section 388.104(a).
In addition, the Commission has “delegated authority” to several individuals on its
staff. That delegated authority often extends only to matters that are unopposed
or of a noncontroversial nature.’
1 See 18 CFR Section 375.301(c); 18 CFR Section 375.303(b); 18 CFR
Section 375.307(b); 18 CFR Section 375.308(x); 18 CFR Section 375.315(b).
And for a general discussion of staff's relationship to Commission action, see,
Obtaining Guidance on Regulatory Requirements, 123 FERC ¥ 61,157, at PP 3034 (2008).
App.354
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Question 2. Regarding collaborative efforts between FERC and EPA described
2Qorw
above, has an Inter-Agency Task Force been established?
provide:
the date it was established:
the source of its authority;
a copy of its charter;
a description of the scope of its work;
If so, please state or
a schedule of its meetings, including a list of its meetings to date and
any planned meetings;
f, any minutes of its meetings; and
g. alist of the agencies and agency officials participating.
Answer: | do not believe that the meetings that have been held between staff in
the Office of Electric Reliability and EPA constitute an Inter-Agency Task Force
as described in the subparts of your question.
Question 3. Please describe all work being jointly performed by FERC staff,
including work done in collaboration with EPA — whether in connection with an
Inter-Agency task force or otherwise — regarding the potential impact of EPA
regulations on the retirement of electric generating units and, to the extent such
information has been developed, the specific type and characteristics of units
that may face retirement as a consequence of such regulations.
Answer: Based upon the information that | received from staff in the
Commission's Office of Electric Reliability (OER), staff has shared public
information with EPA, provided information to EPA on the types of studies that
would be needed to address reliability concerns, and provided EPA with a set of
questions about EPA's analytical results so that staff could better understand an
ICF model that was used by EPA. Staff in OER told me that they made an effort
not to create an impression that the Commission either endorses or disagrees
with the study performed by EPA. According to OER staff, EPA's reliability
analysis has been limited to generation adequacy assessments for 2015. EPA's
analysis is apparently limited to the expected retirements caused by two of its
rulings (does not include coal residuals, green house, clean water, and others).
According to the information that | received from Commission staff, they have
pointed out to EPA that a reliability analysis should explore transmission flows on
the grid, reactive power deficiencies related to closures, loss of frequency
response, black start capability, local area constraints, and transmission
deliverability.
In addition, and also based upon the information that staff has told me, staff has
indicated to EPA that the regional transmission planners would be best suited to
run these studies. Commission staff has suggested that EPA interact with the
ongoing initiatives at the grid operators known as “PJM” and “MISO” which are
assessing the effect of projected retirements on their grids. Commission staff
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informed me that they believe that EPA needs to interact with regional
transmission planners to determine the issues that may affect the regional grids,
especially during the transition period when plants are retired and others are shut
down to retrofit their facilities.
_ According to Commission staff, the ICF model used by EPA is a pipes and
bubbles tool which assumes transmission deliverability is not an issue within the
region. The ratings of the pipes (transfer limits) are apparently determined by
consultants who analyze available transmission planning studies, historical
OASIS postings and linear analysis. Based on the rating of the pipes, OER staff
understands that the tool determines if firm transfers can be delivered from
region to region as well as capacity additions needed to meet target reserve
margins. OER staff believes that the ICF model does not consider certain
reliability issues. According to OER staff, the ICF model could provide a potential
scenario of the generation mix available in future years.
OER staff believes that
a transmission requirements study would still be needed to develop a
transmission expansion plan for the potential generation mix that may result from
the ICF tool.
Question 4. Please describe FERC’s efforts to explain the effect of potential
retirements on electric reliability.
If research, data, or analysis has been
developed by or supplied to FERC, please provide it. If no analysis has been
conducted, please explain why.
Answer:
The Commission has not engaged in efforts to explain the effect of
potential retirements on electric reliability. The Commission has not issued any
reports, orders, held a conference, or taken any action on this matter. While the
Commission itself has not taken action, individual Commissioners have
expressed their opinions. In that regard, on May 3, 2011, | discussed this matter
with Gina McCarthy, Assistant Administrator for the Office of Air and Radiation,
and some of her staff. On October 28, 2009, at Chairman Wellinghoff’s
invitation, | participated in a meeting with EPA, White House, Department of
Energy, and others at a meeting with the White House Council on Environmental
Quality.
While the Commission has not acted on this matter, the staff of the Commission
has expressed its opinions.
In response to why the Commission has not
performed an “analysis”, | believe that the Commission should consider whether
it should issue a report containing a formal Commission analysis. If the
Commission decides against the issuance of an analysis, then at minimum, the
Commission should direct its staff to use its expertise to perform an analysis of
the EPA’s rules that could impact reliability of electricity --- and disclose that
analysis for public comment --- and then hold a technical conference for public
input.
App.356
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—
Question 5. Please describe fully FERC’s powers to protect electric reliability in
the event of plant retirements, and what measures FERC plans to take to ensure
electric reliability or an explanation of why such measures have not been
devised. Please provide the following assessments, or an explanation of why
such assessments have not yet been devised:
a,
an assessment of generation adequacy in the face of retirements of
b.
an assessment of the effect of retirements of generating units in
organized markets for energy and capacity (e.g. on prices and unit
commitment); and,
ageneral assessment of the capacity to permit and construct new
electric generation units in a timely manner such that electric supplies
form retired plants are replaced and anticipated demand growth is met.
significant generating units in transmission-constrained areas;
c.
Answer:
To the extent that measures to ensure reliability have not been devised
by Commission staff, then the Commission should direct its staff to develop such
plans and take such measures. Given the importance of electric reliability, such
plans and measures should be developed in an open process with opportunity for
input from the general public.
Question 6. The Clean Air Transport Rule specifically lists ensuring electric
reliability as a “key guiding principle.” Please describe any research,
documentation or analysis FERC has provided EPA for this rule.
Answer:
To my knowledge, the Commission has not provided EPA with any
research, documentation, or analysis of the Clean Air Transport Rule.
However,
individual Commissioners or the Commission staff may have provided their own
opinions to EPA. | believe that the Commission should consider whether it
should direct its staff to issue a report to the Commission on the Clean Air
Transport Rule.
Question 7. Regarding the Commission’s FY 2010 Performance and
Accountability Report to Congress, quoted above, and the staff analysis of
electric reliability impacts referenced in the quotation, please describe or provide:
a. the study and all supporting materials including research;
b. a list of any other agencies involved in the production of the study with
information on their involvement
c.
actions FERC has taken or plans to take based on the study; and
d. how and where the study has been made public, or why it has not
been released
Answer:
| believe that the Chairman will describe staff's work on this topic when
the Chairman sends his response to you.
App.357
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957"
Question 8. /n your view, would compliance with EPA or other environmental
regulations excuse a violation of FERC-approved electric reliability standards?
If
so, should the Commission refrain from imposing penalties for these violations?
Answer: In my view, compliance with EPA or other environmental regulations
would not necessarily excuse a violation of FERC-approved reliability standards.
Every individual case should be addressed on its merits. For example, instead of |
excusing reliability standards, perhaps in some cases compliance with FERC-
approved reliability standards should excuse non-compliance with EPA
regulations.
As stated above, | can be “fuel neutral” but | cannot be “reliability
neutral”.
Question 9. Please assess whether FERC has sufficient statutory authority to
protect electric reliability in collaboration with other federal entities that are
undertaking rulemakings.
Answer: At this time, the Commission seems to have sufficient statutory
authority to protect electric reliability against actions that might be taken by EPA -- given my assumption that EPA, if provided with accurate information, will take
actions that appropriately balance the importance of reliable electric supply
against its statutory obligations.
To assist the EPA, this Commission already has
authority to issue reports, hold conferences, and seek information from the public
on the reliability impacts of contemplated EPA rules. In addition, this
Commission can describe the reliability impacts of the actions contemplated by
the EPA by making appropriate submissions in the various rulemakings that are
in process at EPA.
My views are shaped by the complexity and cost associated with shutting down a
power plant --- and my concern that EPA be able to accurately model that
process as part of its decision making.
If a power plant is retired with inadequate
notice, electricity can become less affordable and less reliable. Before a power
plant is retired, the operator of the transmission grid must consider how to
provide reliable electricity without that plant as part of the network.
A numerical example shows how cost and reliability need to be considered when
a power plant is retired. That is, the operator of the transmission network could
determine that a power plant can be retired only after utilities invest $50 million
into upgrading the transmission system. Since they are long-lived transmission
assets, those $50 million in assets would be expected to be in-service for some
fifty years, which means that they would cost customers roughly $1 million a year
(ignoring interest and present value). But in the interim, the power plant owner
would be entitled to recover its costs of remaining open even after it had decided
to shut its plant down. That cost could be $50 million to customers for one year
of service --- a cost that could have been avoided had the $50 million in
transmission upgrades been in service. Thus, while the transmission upgrades
App.358
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6 aba"
might only cost about $1 million each year for fifty years, the $50 million paid by
consumers in one year to keep a plant open could make the retirement more
costly than necessary. And this example doesn’t even consider the cost of
building a new power plant to replace the power that will be unavailable with the
shut down.
In addition to this example, please see my concluding thoughts below, where |
describe the recent plans to close certain generating units in the Philadelphia
area that are known as Cromby and Eddystone.
Question 10. /s FERC or any other agency, to your knowledge, soliciting or
relying upon advice or assistance from any entity established pursuant to the
Federal Advisory Committee Act?
~ Answer:
No, not to my knowledge.
Concluding Thoughts
| greatly appreciate your decision to send me these questions. Not only have
you raised the visibility of this important issue, but your inquiry has prompted the
Commission staff to better inform me on this topic.
e
The Critical and Complex Role of Reliability
The recent and enduring heat wave that simultaneously impacted a large portion
of the population of the United States underscores the essential and life-saving
importance of electric reliability. With economic weakness and closed factories
throughout the nation, you might have expected the available power plants to
easily handle the heat wave. Yet the operators of the power grid relied on all of
their available resources, including coal plants that are expected to be shut down
because of EPA decisions, in order to ensure the reliability of the grid and the
health and safety of the public.
My consistently expressed concern with EPA rulemakings has been the potential
for a negative impact on reliability. | believe the system can absorb significant
retirement of older coal-fired, oil-fired and natural gas-fired generation units. But
it absolutely must be done in an orderly manner that does not impact our health
and safety.
e
Timing of EPA Regulations and Utility Planning Horizons
The timing of the EPA regulations does not conform to the relevant planning
horizons in the electric sector of our economy, one of the most capital-intensive
sectors of industry.
Transmission lines and power plants are often planned over
App.359
Padoy.3591
a ten-year period, and in consideration of the long-lived nature of assets that are
expected to be in service for more than forty years. Compounding this situation
is the fact that the United States has several distinct wholesale markets for
electricity, including different types of markets that are broadly categorized as
bilateral markets (covering many western and southeastern states) and
organized markets (including markets in Texas, California, and many Midwestern
and eastern states).
The rules for these electricity markets are not standardized. For reliability
purposes, this exacerbates the challenge of conforming to EPA rules. Each
region has different standards for planning for new power plants and
transmission lines, and different standards for retiring an existing power plant.
Thus, EPA and Commission staff must ensure that their analysis of reliability
impacts is applicable in all regions of the nation, not just one or two.
In addition, some of the organized markets hold auctions of electric capacity
three years in advance of the time when such capacity is needed. These
auctions are generally designed to ensure that adequate generating capacity will
be built when it is needed three years in the future.
Other markets are
considering equivalent types of “forward” capacity markets for the same reasons.
A three-year advance cycle of generation procurement does not align with the
EPA rules, as bidders into these markets may not know whether they can submit
bids for all of their power plants, or if some of their power plants will need to retire
within the next three years because of EPA regulations.
Prior to the most recent heat waves this summer, several studies concluded that
the nation has enough excess capacity to absorb the retirement of surplus power
plants. We should all be able to agree that surplus power plants can be retired if
the remaining power plants are located where they can replace the power that
will no longer be available.
But looking at this issue from the perspective of the
minimum number of power plants that is absolutely necessary doesn’t answer
the question of where power plants must be located. An older coal plant in a
specific location may not provide a lot of energy to the grid, but it may be in a
location with access to transmission lines or where its voltage support is critical
for reliability.
e
The Cromby-Eddystone Example
| have often cited the retirement of two electricity generating plants in the area
surrounding Philadelphia as an example of how EPA air rules could impact the
reliability of specific pockets of electricity load. In December 2009, Exelon
provided notice to PJM of its intent to deactivate the Cromby and Eddystone
units --- four fossil-fired generating units located in Southeastern Pennsylvania,
all of which had operated for more than fifty years. Cromby Unit No. 1 is a 144
MW coal-fired unit; Cromby Unit No. 2 is a 201 MW peaking unit that is fueled by
App.360
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gas or oil.
Eddystone No. 1 and No. 2 are both coal-fired units with a capacity of
279 MW and 309 MW, respectively.
Upon receipt of Exelon’s notice, PJM conducted a deactivation study and
determined that Cromby Unit No. 2 and Eddystone Unit No. 2 would be needed
past their planned deactivation date to manage localized reliability issues
pending completion of transmission system upgrades. Specifically, unless 18
identified transmission upgrades totaling $44 million were constructed and placed
into service, the study revealed that the retirement of these generating units
could have an adverse effect on reliability.
Some of these upgrades were placed
in-service earlier this year and the last of these upgrades are expected to be
completed by June 2012.
As part of its obligation to ensure just and reasonable rates, the Commission
conducted a proceeding that would determine the amount of compensation that
would allow Exelon to recover its costs if it decided to keep the units operational.
In that proceeding, Exelon explained that in 2009, the two generating units
realized negative pre-tax cash flow of approximately $28 million when selling
capacity, energy, and ancillary services at market rates. Exelon anticipated that
future cash flows would be significantly negative because the units would require
costly project investment to maintain their operability and because their dispatch
would be limited due to environmental restrictions.
Moreover, the generating
units failed to clear in their regional capacity auctions, demonstrating that
Exelon’s costs to operate the units as capacity resources exceed the market
price for capacity.
The proceeding settled prior to a formal hearing and the Commission ruled that
the generating units could collectively charge customers about $82 million to
continue operating before the transmission upgrades entered service.” The
financial implications of at least this situation are clear: in order to retire these
units, customers will pay at least $44 million for transmission upgrades, to be
collected over the next forty to fifty years, and customers will also pay some $82
million to Exelon so that the power plants will be available for about a year, to be
collected over the next year or so.
2 As provided in the settlement, Eddystone Unit No. 2 received a twelvemonth contract term, and Cromby Unit No. 2 received a seven-month term. If the
transmission upgrades do not enter service on the expected date, the settlement
provides for Exelon with an opportunity for additional compensation. See
application of Exelon Corp. in FERC Docket No. ER10-1418, and Commission
orders issued on September 16, 2010 and May 27, 2011: Exelon Generation Co.,
LLC, 132 FERC §] 61,219 (2010) and Exelon Generation Co., LLC,
61,190 (2011).
App.361
Paden
3044
135 FERC J
.
e
Better Data on Unit Retirements
Now Available
The uncertainty over proposed EPA rules has already impacted capacity
markets.
As described briefly above, some capacity auctions are held three
years in advance. In PJM, the most recent (2011) forward capacity auction for
2014/2015 revealed that an increasing amount of generation from coal-fired
plants is at risk of retirement; as 14% less capacity from coal plants cleared the
auction when compared to the 2010 auction.
PJM predicts that this trend of coal-
fired generation retirements will continue into 2012 for its 2015/2016 auction.
PJM’s RTO-wide capacity price for 2014/2015 substantially increased by 354
percent from the prior year’s auction results. Increased prices in the PJM-West
region showed much less price separation than in prior years from the PJM-East
region. The rise in PUM-West capacity prices reflects the fact that, due to
economic weakness, there are now fewer transmission constraints and
congestion on the grid, which in turn allows for more affordable power to flow
from west to east.
e
Recommendations
Not only do | suggest that you and your Committee continue to follow and
examine this issue, | respectfully offer several recommendations.
In speaking with reliability experts, one consistent recommendation is that the
EPA needs to be involved in regional market stakeholder meetings where system
planning is undertaken.
impacts of its actions.
Only then can EPA fully appreciate the location-specific
| have heard from our Office of Reliability that EPA has
not been involved to date.
In addition, | believe the federal government needs to convene an open and
transparent process to assess the reliability implications of the EPA rules
individually and in aggregate. EPA seems a natural choice, given that their rules
would be the topic of the process.
The Commission may also be a natural
choice, given our responsibility for electric reliability. Regardless of which part of
government convenes this open and transparent process, | would recommend
that the North American Electric Reliability Corporation (NERC) be a major
participant in any such process.
Given the time constraints imposed by the
courts on EPA, perhaps this process should have been initiated long ago.
In any
event, the feasibility of any court-imposed timeline is, at a minimum, worthy of
consideration by Congress.
My answers to your questions also contain several recommendations. In
response to question 4, | said that the Commission should consider whether it
should issue a report containing a formal Commission analysis of potential
retirements on electric reliability. If the Commission decides against the issuance
of an analysis, then at minimum, the Commission should direct its staff to use its
Page}
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App.362
expertise to perform an analysis of the EPA's rules that could impact reliability of
electricity --- and disclose that analysis for public comment --- and then hold a
technical conference for public input.
And in response to question 5, | said that to the extent that measures to ensure
reliability have not been devised by Commission staff, then the Commission
should direct its staff to develop such plans and take such measures.
Given the
importance of electric reliability, such plans and measures should be developed
in an open process with opportunity for input from the general public.
In response to question 6, | said that the Commission should consider whether it
should direct its staff to issue a report to the Commission on the Clean Air
Transport Rule.
e
Documents
| am not providing documents responsive to this request at this time, as | will first
have my personal staff review the documents that Commission staff is providing
to you. If after that review | discover that | have additional documents in my
possession that | believe are responsive, | will provide them to you.
e
Conclusion
Finally, the impact of retiring power plants can be cushioned by making it easier
to build the transmission lines that are needed to move powerto customers. By
building needed transmission, we can maintain the reliability of our nation’s
transmission network, while simultaneously improving consumer access to lowercost power generation. Plus, a well-designed transmission network can allow
efficient and cost-effective renewable resources to compete on an equal basis
with traditional sources of power. | am always willing to express my thoughts on
legislative changes that could ease the difficult process of building transmission.
| have no doubt that this nation is capable of retiring a substantial proportion of
older and less efficient power plants that produce a disproportionate amount of
air emissions. Nor do | doubt that power plants which emit too many pollutants
should be eventually retired. But these retirements must be done in an orderly
manner that does not threaten the reliability of electricity, which in turn affects our
public health and safety.
Sincerely,
Philip D.
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‘Moeller
FEDERAL ENERGY
REGULATORY
WASHINGTON, D.C.
OFFICE OF THE COMMISSIONER
COMMISSION
20426
August |, 2011
The Honorable Lisa A. Murkowski
United States Senator
Committee on Energy and
Natural Resources
Washington, D.C.
20510-6150
Dear Senator Murkowski:
Thank you for your letter of May 17, 2011, and for the opportunity to share with
you my thoughts on these important issues.
With regard to questions 1-7, I have no further information to add to the responses
provided by Chairman Wellinghoff and Commissioners Norris and LaFleur, and
by Commissioner Moeller, in their letters dated August 1, 2011. However, with
respect to questions 8, 9 and 10, I wish to separately set forth my own views
regarding the relationship between the Federal Government and users, owners, and
operators of the bulk electric system.
Regulated public utilities are obligated to serve electricity ratepayers. Congress
assigned to FERC authority with respect to the reliability of the bulk electric
system in 2005. The United States has superb records in both environmental
protection and electric reliability. I remain committed to ensuring the reliable
operation of our Nation’s electric grid. Reliable service of electricity is essential
to the health, welfare, and safety of the American people and necessary to serve
our economy. However, I recognize that environmental protection laws and
regulations are important to the well-being of our Nation as well.
Question 8 highlights the problem of an entity ensnared in the dilemma of
conflicting laws or regulations. I have not researched whether compliance with an
EPA regulation could excuse a violation of a FERC-approved reliability standard
and I have not reviewed, nor do I comment on, the authority of the United States
Department of Energy to address these issues. However, the users, owners and
operators of the bulk-electric system should not be compelled by their government
to choose between compliance with environmental laws or with FERC-approved
reliability standards. Put differently, regulated entities should not have to elect
which agency’s penalty they would rather face. Requiring public utilities to make
such a Hobson’s choice does not serve consumers and, frankly, is not good
government.
App.364
But I also believe that both the regulated and the regulators can and must do more
to ensure that regulated entities do not find themselves in the position of having to
make a Hobson’s choice.
First, FERC and the EPA need to be proactive to ensure
that reliability concerns are considered and addressed in any analysis by the EPA
of its environmental regulations affecting utilities. To this end, I recommend that
FERC and the EPA continue their dialogue but in a more formalized and
expansive fashion. Given the integrated nature of today’s society, such
coordination would ensure that the EPA will not enforce its rules in a vacuum.
Second, the electric industry recognizes its obligation to comply with both
environmental regulations and FERC-approved reliability standards and to plan
their systems to reliably serve consumers while complying with environmental
requirements. In the first instance, the regulated entity, with better knowledge of
its operations and requirements, should seek to harmonize how it will meet the
various regulatory requirements it faces. It must have adequate time to do that.
Finally, I suspect it will be the rare situation when a regulated entity finds itself,
notwithstanding adequate planning, in a position of having to choose between
compliance with one regulator’s rules over another’s. In that instance, however, it
should be the duty of the regulators to work together, and with the regulated entity,
to find a resolution that best assures reliable operation of the electric grid and
compliance with environmental standards.
I thank you very much for inquiring as to the relationship between affordable and
reliable electricity service and environmental regulation. I hope the foregoing
discussion has been responsive to your letter, and I invite any further questions or
comments on this critical topic.
Sincerely,
WZ
Marc Spitzer
Commissioner
Federal Energy Regulatory Commission
App.365
August 23, 2010
VIA ELECTRONIC MAIL TO: a-and-r-docket@epa.gov
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Washington, D.C. 20460
Attention: Docket ID Nos. EPA-HQ-OAR-2002-0058 and EPA-HQ-OAR-2006-0790
Re:
National Emission Standards for Hazardous Air Pollutants for Major Sources:
Industrial, Commercial and Institutional Boilers and Process Heaters, 75 Fed.
Reg. 32006 (Jun. 4, 2010); National Emission Standards for Hazardous Air
Pollutants for Area Sources: Industrial, Commercial, and Institutional Boilers,
Proposed Rule, 75 Fed. Reg. 31895, 31900 (June 4, 2010).
Dear Ladies and Gentlemen:
The National Mining Association (“NMA”) submits these comments in the two
above-referenced dockets, hereafter, respectively, the proposed “Boiler MACT” rule
and the proposed “Area Source” rule. NMA is a national trade association of mining
and mineral processing companies whose membership includes the producers of
most of the nation’s coal, metals, industrial and agricultural minerals; the
manufacturers of mining and mineral processing machinery, equipment and
supplies; and the engineering and consulting firms, financial institutions and other
firms serving the mining industry.
I.
Introduction
NMA member companies, along with the manufacturing and other industrial
customers they supply, provide fuel to and operate industrial boilers and process
heaters to generate steam and electricity. Extractive industries, energy intensive
industries and the manufacturing sector continue to face severe economic
conditions that impact millions of high-wage jobs. NMA supports policy decisions
that will lead to economic growth and recovery, create jobs, encourage
technological advancement and result in air quality improvement. The proposed
Boiler MACT standards, however, are far more stringent than needed to protect
human health and the environment from hazardous air pollutant (HAPs) emissions
from industrial boilers. EPA is afforded the discretion, and maintains the technical
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justification, to ease the burden of these proposed regulations on the economy
while adequately protecting health and the environment.
NMA offers the following comments on the proposed Boiler MACT and Area Source
rules. In addition, as discussed in more detail below, NMA believes that the
regulatory analysis supporting the proposed rules is fatally flawed because it fails to
take into account the cumulative impact of all of EPA’s now-numerous completed,
pending and expected rulemakings that are intended to and will have the effect of
substantially reducing the usage of coal in the United States. These rulemakings
include those affecting the use of coal for electric generation, where EPA is
implementing a coordinated program to create, in its words, a “clean, efficient, and
completely modern power sector,” those affecting the use of coal for industrial,
commercial and institutional purposes, such as the two rules specifically at issue
here, and those directly affecting coal mining.
All of these rulemakings together will produce a dramatic and cascading series of
effects not only in the coal industry but throughout the economy. There will be
direct effects on coal employment and indirect effects on employment generally in
the economy as a result of higher energy prices. Higher energy prices will also
affect GDP and economic activity generally. American competitiveness will also be
affected, as higher prices undermine the ability of American business to compete,
with resulting off-shoring of American business and jobs.
Impact analysis performed by EPA now proceeds on a rulemaking-by-rulemaking
basis, as if one rulemaking is unconnected to the next and as if the regulatory
consequences are not cumulative. As a result, EPA’s impact analyses mask the
cumulative effect of the Agency’s overall regulatory program. Individual-regulation
impact analyses often predict limited effects, when in truth the compounding effects
of the overall program may produce extremely large consequences.
This Balkanized approach to impact analysis impairs the public’s right to notice and
comment regarding EPA regulation. For instance, EPA’s Regulatory Impact Analysis
for the Boiler MACT rule shows relatively minor effects, which might lead the public
to believe that the rule is relatively innocuous. Cumulative analysis, on the other
hand, is likely to lead to a far different conclusion—that coal usage will decline
dramatically as a result of the combined effect of numerous EPA rulemakings with
attendant serious economic consequences. Armed with that information, the public
would likely provide significantly different comment on the rule. EPA and other
cooperating agencies rely upon similar cumulative impact assessments when
analyzing proposed federal actions subject to the National Environmental Procedure
Act, and the public should be afforded the same opportunity here.
Analyzing cumulative impacts is not just good policy, it is required by Executive
Order 12866 and the notice and comment rulemaking provisions of the Clean Air
Act (“CAA”). NMA therefore urges EPA to defer final action on the two rules at issue
here until the necessary cumulative impact assessment is produced. The specific
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type of analysis that NMA recommends is set forth as an attachment to these
comments.
II.
EPA Must Produce a Cumulative Impact Analysis of Its Regulatory
Program Affecting the Use of Coal
A.
Cumulative Analysis Is Needed
1.
EPA’s coordinated regulatory agenda to reduce coal
usage
EPA has undertaken a far-reaching regulatory program that is apparently designed
to reduce the use of coal throughout the American economy. The coordinated
nature of this program is most evident in the electric power sector, which EPA has
undertaken to transform. Upon taking office, the EPA Administrator formulated
seven priorities, one of which was to “develop a comprehensive strategy for a
cleaner and more efficient power sector, with strong but achievable reduction goals
for SO2, NO2, mercury and other air toxics.”1 This goal was reiterated by EPA in its
recently proposed Transport Rule, where the Agency said that “[i]n furtherance of
this priority goal, and to respond to statutory and judicial mandates, EPA is
undertaking a series of regulatory actions over the course of the next 2 years that
will affect the power sector in particular.”2
These EPA rulemakings include:
x
The recently completed National Ambient Air Quality Standards
(“NAAQS”) for sulfur dioxide (“SO2”) and nitrogen dioxide (“NO2”);
x
The currently proposed new ozone NAAQS and the soon-to-beproposed new PM2.5 NAAQS;
x
The proposed Transport Rule and expected additional transport rules
for the 1997 ozone NAAQS;
x
(“EGUs”);
The soon-to-be-proposed MACT standards for electric generating units
x
EPA’s greenhouse gas (“GHG”) regulation under the Prevention of
Significant Deterioration (“PSD”) program;
x
The soon-to-be-proposed New Source Performance Standards for EGUs
(including GHG NSPS);
1
Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone,
75 Fed. Reg. 45,210, 45,227/3 (August 2, 2010), quoting the EPA Administrator’s January 12, 2010
outline of the Agency’s seven priorities.
2
Id.
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x
Best Available Retrofit Technology (“BART”) standards for EGUs;
x
The proposed regulations for coal combustion residues; and
x
The soon-to-be-proposed water quality regulations for cooling intake
structures and soon-to-be-proposed effluent guidelines for discharges from power
plants.
Recognizing that all of these regulations are implementing a single overall priority
goal and constitute a “comprehensive set of requirements,”3 EPA pledged to
coordinate at least its power sector air quality regulations and, to the extent it
could under relevant statutory law, to coordinate these power sector air quality
regulations with the coal combustion residue regulations and the two power sector
water quality regulations.4 EPA further pledged to “engage with other federal, state
and local authorities, as well as with stakeholders and the public at large, with the
goal of fostering investments in compliance that represent the most efficient and
forward-looking expenditure of investor, shareholder, and public funds, resulting, in
turn, in the creation of a clean, efficient, and completely modern power sector.”5
EPA’s regulatory agenda for the power sector will almost certainly
significantly reduce the use of coal for electric generation. While EPA so far has not
done any study of the cumulative impact of these regulations on coal use (or
otherwise), the contractor EPA uses to model impacts of individual regulations
recently produced its own analysis showing that just the EGU MACT standards alone
will force major retirements of coal-fueled power plants.6 Forced retirements will
have substantial negative economic impacts nationally, but will also have severe
impacts locally, as exemplified by the Arizona Hopi and the Navajo Generation
Station:
“Scott Canty, the Hopi Nation’s general counsel, explained
to a panel of lawmakers on Nov. 2 that closure of the
Navajo Generating Station would cripple the tribal
government. The Hopi Nation relies heavily on coal
revenues to fund its government, Canty said. About 88
percent of the tribal government’s budget comes from
revenue generated by coal-fired energy production at the
Navajo Generating Station, Canty said. . . . The EPA has
proposed rules that would require the power plant to
install expensive emissions equipment to address visibility
impairment issues at the Grand Canyon. But the plant’s
3
Id.
4
Id.
5
Id.
6
Id.
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owners and the tribes argue that the retrofit is too
costly.”7
Moreover, news accounts recently reported that EPA is well aware that its
regulatory efforts in the power sector will increase the costs to coal-fueled EGUs
and make them less competitive with renewable resources. In an article entitled
“Administration Eyes EPA Rules To Spur Shift From Coal To Renewables,” it was
reported that:
Rob Brenner of EPA’s Office of Air & Radiation told a July
28 meeting of the agency’s environmental justice advisers
that pending rules to control emissions, waste and water
discharges from utilities will not only protect public health
but add costs to the industry that might make renewable
energy a more viable alternative.
“We need to set health-based standards for power plants,
and once we do that then they can compete with some of
these renewable sources,” Brenner said at the National
Environmental Justice Advisory Committee (NEJAC)
meeting in Washington, DC. He added later, “It’s not
really a fair competition because [coal-fueled power
plants] are cheaper than they should be because they're
not controlling their pollutants” to their full extent
because EPA is yet to issue key rules for the sector,
including a mercury air rule and a plan to regulate coal
combustion residue.8
The same article reported that the White House also understands that transforming
the power sector will inevitably result in reduced use of coal and increased use of
renewables. Referring to remarks of Nancy Sutley, Chair of the White House
Council on Environmental Quality, the article reported that:
Sutley responded that she doubts the existence of socalled clean coal. “Other people have labeled it ‘clean
coal,’” she said. “I don't know if I would necessarily
concede that that is real. . . . I think in the long run, not
just for the [United States] but for the world, that
7
Luige del Puerto, Hopi Nation in Arizona appeals for help as coal plant face disclosure, ARIZ. CAP.
TIMES, Nov. 3, 2009, available at http://www.allbusiness.com/government/government-bodies-officesregional/13389633-1.html.
8
Administration Eyes EPA Rules to Spur Shift from Coal to Renewables, InsideEPA.com (July 29,
2010), at http://insideepa.com/201007291915893/EPA-Daily-News/Daily-News/administration-eyesepa-rules-to-spur-shift-from-coal-to-renewables/menu-id-95.html.
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developing and making sure that there is access to these
inherently cleaner sources of energy is important. . . . .
We need to use energy more efficiently and more
cleanly.”9
Other EPA regulatory proposals are also part of an overall strategy to reduce the
use of coal throughout the economy. This strategy includes the Boiler MACT and
Area Source rule at issue here. In the regulatory preamble to the Boiler MACT rule
proposal, EPA stated forthrightly that its reason for proposing strict MACT standards
for coal boilers and process heaters but only work practice standards for natural gas
boilers was to incentivize operators of coal-fueled boilers to switch to natural gas
and to discourage operators of natural gas-fueled boilers from switching to coal.10
In discussing this issue, EPA made plain that it considers coal to be a “dirty” fuel
whose use is inconsistent with the CAA and therefore should be discouraged.11 In
contrast, EPA considers natural gas to be a “clean fuel” whose use should be
encouraged at coal’s expense. According to EPA:
In addition, emission limits on gas-fueled boilers and
process heaters may have the negative effect of providing
an incentive for a facility to switch from gas (considered a
“clean” fuel) to a “dirtier” but cheaper fuel (i.e., coal).12
The coal industry also faces a panoply of prospective regulation of the process of
producing coal. These regulations include potentially stricter NAAQS for PM10 which
may make western surface mining untenable, new restrictions in Appalachia that
could result in major reductions in coal mining in that region, and potential
imposition of NSPS standards on mining emissions of PM 10, methane, volatile
organic compounds, and nitrogen oxides. All of these regulations together—EPA’s
power sector regulations, its regulations for the use of coal in the manufacturing
and commercial sectors, and its regulations of coal mining—all have the potential to
combine to cumulatively and dramatically reduce coal usage.
2.
The effect of each EPA individual rule affecting coal,
including the rules at issue here, cannot be understood
without a cumulative analysis
Given EPA’s intent to transform the power sector from what it is today into
something different and given its efforts to reduce coal use throughout the
economy, EPA must produce a cumulative and economy-wide assessment of this
9
Id.
10
National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial,
and Institutional Boilers and Process Heaters, 75 Fed. Reg. 32,006, 32,025/3 (June 4, 2010).
11
Id.
12
Id.
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program. As EPA has proposed and finalized each individual regulation, EPA’s
impact analysis has been limited to the effect of the specific regulation in question.
However, to understand the effect that all the rules together will create, it is
necessary to study the effect of that program in total.
These effects could be extremely large. For instance, EPA projects the annual cost
of the SO2 NAAQS to be $2.9 billion to $3.0 billion in 2020, with most of those costs
associated with the power sector13; the annual cost of the Transport Rule (all in the
EGU sector) to be $3.7 billion in 2012 and $2.8 billion in 2014,14 with another $2
billion in 2020 and 202515; the annual cost of the ozone standard to be $32 – 44
billion, again with much of that cost in the EGU sector16; and the total costs of the
coal combustion residue rule to be over $8 billion under the Subtitle D option and
over $20 billion with the Subtitle C option.17 Despite the request from NMA and
others for EPA to assess the cost of its GHG regulatory program, EPA has refused to
do so, and so that cost is unknown but could be very substantial as well. The other
programs identified above will also add significant cost, with the new EGU MACT
standards expected to have a very large impact.
But these estimates, as large as they are, mask the overall effect of the regulations
when considered cumulatively. The proposed Transport Rule is an example. EPA’s
draft Regulatory Impact Analysis (“RIA”) for this proposed rule envisions relatively
small impacts to coal usage. EPA projects that EGUs can meet the requirements of
the rule by switching from high sulfur to low sulfur coal and by installing pollution
control equipment, with the result that EPA estimates the retirement of only 1.2 GW
of “small and infrequently used” coal-fueled generating units by 2014.18 Based on
the foregoing, EPA projects additional cost to the utility industry of $3.7 billion in
2012 and $2.8 billion in 2014 ($2006).19
13
U.S. Environmental Protection Agency, Final Regulatory Impact Analysis (RIA) for the SO2 National
Ambient Air Quality Standards (NAAQS) at 7-4, Table 7.1, June 2010 (Docket ID EPA-HQ-OAR-20090769-0059).
14
75 Fed. Reg. at 45348/1.
15
Id. at 45333, TableV.E-1.
16
U.S. Environmental Protection Agency, Final Ozone National Ambient Air Quality Standards (NAAQS)
Regulatory Impact Analysis at 5-23, March 2008 (Docket ID EPA-HQ-OAR-2005-0161-2849) (estimate
for 0.065 ppm standard; EPA’s proposal is 0.060-0.070).
17
Hazardous and Solid Waste Management System; Identification and Listing of Special Wastes;
Disposal of Coal Combustion Residuals From Electric Utilities, 75 Fed. Reg. 35218, 35134, Table 1
(June 21, 2010).
18
U.S. Environmental Protection Agency, Regulatory Impact Analysis for the Proposed Federal
Transport Rule at 14, June 2010 (Docket ID EPA-HQ-OAR-2009-0491-0078).
19
Id. at 31.
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NMA will comment on these projections in its comments on the proposed Transport
Rule, but for purposes here EPA’s projection of almost no impact to the coal
industry is not meaningful because it is based on an analysis of the Transport Rule
in isolation. Thus, even if EPA’s projected assessment of the effect of the Transport
Rule on coal is correct, that assessment assumes that there are no other
forthcoming EPA regulations that will affect the use of coal, an assumption that is
clearly wrong. The control options that the Transport Rule RIA envisions appear to
exhaust (and likely go beyond exhausting) the ability of the power sector to absorb
EPA regulation without large-scale closings of coal plants. The next regulation
following the Transport Rule that adds cost to coal-fueled electric generation
therefore will force plant closings, but it is incorrect to say that it was that next
regulation and not the Transport Rule that causes the plant closings. Both rules
and indeed the entire program cause that effect.
EPA’s push for replacement of coal with natural gas in the national electricity
generation mix, as discussed above, will have severe economic impacts. The
American Public Power Association recently published a study evaluating the
economic impact of relying more heavily on natural gas to generate electricity.20 It
provides insights into the potential cumulative economic impacts of the numerous
recent rulemakings, proposed rules and forthcoming proposals that focus on coalbased electricity generation. According to the study, the total cost of replacing all
existing coal generation with gas would be $743 billion. The study estimates that
the cost of just replacing the existing 335,000 MW of coal-based generation would
cost $335 billion. The need for new pipeline and storage capacity would be another
major hurdle to this fuel switching and the study estimates this would cost $348
billion. The remainder of the total costs would entail necessary changes in the way
natural gas is managed in the U.S. energy system, investment in training new staff
to deal with the fuel changes, among other changes in power support structure.
EPA itself recognizes the need for cumulative analysis in an analogous situation.
EPA requires that EPA reviewers of Environmental Impact Statements (“EISs”)
under the National Environmental Protection Act (“NEPA”) take cumulative impacts
into account, including consideration of “impacts that are due to past, present, and
reasonably foreseeable actions.”21 According to EPA, in assessing environmental
impacts, it is necessary to assess “[t]he combined, incremental effects of human
activity” rather than just the impacts of the particular action for which federal
approval is sought.22 This is based on the recognition that individual actions “may
be insignificant by themselves,” but that cumulative impacts accumulate over time,
20
Nicholas Braden, New Study Examines Economic Impacts on Utilities if Carbon Emission Rules
Cause Shift from Coal to Natural Gas (Amer. Pub. Power Assn., Wash., D.C.), July 7, 2010 (news
release).
21
U.S. Environmental Protection Agency, Consideration of Cumulative Impacts in EPA Review of NEPA
Documents (May 1999) at 10.
22
Id. at 1.
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from one or more sources and these cumulative effects must be taken into
consideration.23
The Council on Environmental Quality (“CEQ”) also requires cumulative impact
analysis in EISs. CEQ regulations require that agencies considering major actions
that could affect environmental quality consider the “overall, cumulative impact of
the action proposed (and of further actions contemplated).”24
EPA’s and CEQ’s reasons for requiring cumulative impact analysis in EISs apply with
equal force to economic analysis that EPA performs of its regulations. Where
effects of a proposed action accumulate with those of other related actions,
examining the effects of the proposed action in isolation will mask the overall effect
of the action. That is as true for EPA’s regulatory efforts to reduce coal usage as it
is for environmental analysis in the NEPA context. To again cite the proposed
Transport Rule as an example, as stated, EPA concludes that the rule will not
materially affect the use of coal for electric generation.25 But under the rationale of
CEQ’s NEPA regulations, cumulative impact analysis should be conducted because
“[c]umulative impacts can result from individually minor but collectively significant
actions taking place over a period of time.”26
The same is true for EPA’s analysis of the proposed Boiler MACT rule specifically at
issue here. EPA’s RIA concludes that the rule will have only relatively minor effects
on production costs for the sectors of the economy affected. But EPA’s analysis is
rudimentary and only takes into consideration increased engineering costs and does
not examine (at least so far as NMA can tell) fuel-switching. Yet, as stated above,
the rule is designed to encourage coal boilers to fuel-switch to gas and to
discourage gas-fueled boilers from fuel-switching to coal. Moreover, the proposed
rule is just one of a series of rules apparently designed to reduce coal use in the
United States. Even if the boiler MACT in and of itself did not significantly affect
coal usage (a conclusion that cannot be drawn from the face of the RIA), that result
may be masking a much larger effect on coal usage when seen in context of EPA’s
23
Id.
24
35 Fed. Reg. 7390, 7391 (1970). It should be emphasized that CEQ does not distinguish between
cumulative analysis of environmental impacts and of socioeconomic impacts. Under CEQ regulations,
agencies must examine the effect of the proposed action on the “human environment.” 40 C.F.R. §
1508.14 states that “[h]uman environment” shall be interpreted comprehensively to include the
natural and physical environment and the relationship of people with that environment.” While
“economic or social effects are not intended by themselves to require preparation of an environmental
impact statement,” “[w]hen an environmental impact statement is prepared and economic or social
and natural or physical environmental effects are interrelated, then the environmental impact
statement will discuss all of these effects on the human environment.” This applies to cumulative
analysis: where socioeconomic effects accumulate from multiple actions, they must be assessed
cumulatively, just as environmental effects must be assessed cumulatively. Thus, cumulative analysis
is as relevant for examining socioeconomics as it is for analyzing environmental impacts.
25
75 Fed. Reg. at 45357/1.
26
40 C.F.R. § 1508.7.
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overall program. Discerning whether that overall effect exists is the central
purpose of cumulative impact analysis and the reason why such analysis is required
in EISs.
B.
EPA’s Failure to Conduct a Cumulative Analysis Ignores
Executive Order 12866 and Violates the CAA
Cumulative analysis does not just make good regulatory sense; it is legally
required. Two separate authorities require cumulative analysis here.
1.
Executive Order 12866
Executive Order 12866 specifically requires cumulative analysis as follows:
Each agency shall tailor its regulations to impose the least
burden on society, including individuals, businesses of
differing sizes, and other entities (including small
communities and governmental entities), consistent with
obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the
costs of cumulative regulations.27
This requirement for cumulative analysis stems from the regulatory philosophy of
Executive Order 12866 that the need for and effects of government regulatory
actions should not be examined in isolation but instead on an overall and
coordinated basis. The preamble to the Order found that the then current
regulatory system did not work in a way that produced efficient results or
regulations that were “effective, consistent, sensible, and understandable.”28 The
first objective of the Order, therefore, was to “enhance planning and coordination
with respect to both new and existing regulations.” 29 In that vein, the main
administrative provisions of the Order—an interagency Planning Mechanism, the
requirement that each agency produce a Unified Regulatory Agenda and develop a
Regulatory Plan, the requirement for a Regulatory Working Group and the provision
for quarterly Conferences among OIRA and state, local and tribal governments—
were all included to enhance coordination of any specific regulation proposed by an
agency with that agency’s other existing and contemplated regulations, with other
regulations of other agencies, and with the President’s overall regulatory
priorities.30
27
Exec. Order No. 12,866, 58 Fed. Reg. 51735 (Sep. 30, 1993) (emphasis added).
28
Id.
29
Id.
30
Id.
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The Statement of Regulatory Philosophy and Principles in Executive Order 12866
also stressed the need for coordination. This Statement provides that “[i]n deciding
whether and how to regulate, agencies should assess all costs and benefits of
available regulatory alternatives.”31 Agencies are instructed to “examine whether
existing regulations (or other law) have created, or contributed to, the problem that
a new regulation is intended to correct and whether those regulations (or other law)
should be modified to achieve the intended goal of regulation more effectively”32; to
“base its decisions on its best reasonably obtainable scientific, technical, economic,
and other information concerning the need for, and consequences of, the intended
regulation”33; and to “avoid regulations that are inconsistent, incompatible, or
duplicative with its other regulations or those of other Federal agencies.”34 Indeed,
the preamble to the Executive Order states that “[t]he objectives of this Executive
order are to enhance planning and coordination with respect to both new and
existing regulation….”35
This requirement for coordinated government action based on coordinated and
cumulative analysis built on the same requirement in Executive Order 12291, the
predecessor order to Executive Order 12866 and the Order which first required
agencies to prepare Regulatory Impact Analyses. Executive Order 12291 required
agencies, in promulgating new regulations, to “tak[e] into account the condition of
the particular industries affected by regulations . . . and other regulatory actions
contemplated for the future.”36
The Executive Order 12866 requirements for coordinated and cumulative analysis
apply with particular force to EPA’s efforts to remake the power sector and its
apparent effort to reduce coal usage throughout the economy. As shown above,
each individual regulation that EPA promulgates in this area, including the Boiler
MACT rule and Area Source rule at issue here, is part of a single overall program
with cumulative consequences.
Moreover, EPA cannot say that cumulative analysis is not “practicable” within the
meaning of section 1(b)(11) of Executive Order 12866. EPA obviously has very
sophisticated modeling techniques at its disposal. If in any one rulemaking EPA
believes that it cannot anticipate and therefore assess the effects of future
rulemakings, EPA can assess a range of possible future regulation. Certainly, the
fact that EPA has indicated that it has an overall program in furtherance of one of
the Agency’s seven priorities suggests that EPA has a fairly concrete idea of the
31
32
Id. (emphasis added)
Id. at 51735-36.
33
Id. at 51736.
34
Id.
35
Id. at 51735.
36
Exec. Order No. 12,291 at § 2(e) (emphasis added).
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range of regulatory outcomes that it anticipates. Alternatively, EPA can delay any
particular rulemaking until it has better information about future regulatory
requirements that it intends to impose. What EPA cannot do, however, is to follow
its current regulatory course, where the Agency analyzes individual rulemaking
effects in isolation, as if there is no overall regulatory context.
2.
CAA
Cumulative impact analysis is also legally required under the rulemaking provisions
of the CAA where, as here, EPA has undertaken coordinated and comprehensive
regulation of the power and coal sectors through a series of related rulemakings.
The purpose of these CAA rulemaking provisions is both to ensure good regulatory
outcomes and to protect the public’s right to have adequate notice of the need for
and effect of EPA regulatory action so that the public can provide meaningful
comment.
In this context, section 307(d)(3) of the CAA requires that a rule be accompanied
by a statement of its basis and purpose, including “the major legal interpretations
and policy considerations underlying the proposed rule.”37 For the reasons
discussed above, an underlying policy consideration of the Boiler MACT rule and
Area Source rule at issue here is EPA’s overall intent to incentivize reductions in
coal usage and increases in resources that EPA considers to be “clean.” That being
the case, EPA must provide an analysis of the consequences of this policy so that
the public can comment adequately. As stated, the coal industry and public at
large might have an entirely different view of these proposed rules if EPA produced
a cumulative assessment rather than the narrow assessment reflected in the RIA.
The U.S. Court of Appeals for the D.C. Circuit has stated that “[i]t is not consonant
with the purpose of a rulemaking proceeding to promulgate rules on the basis of
inadequate data, or on data that, [in] critical degree, is known only to the
agency.”38 Unless the public knows the overall consequences of EPA’s regulations
in context of other related regulations, the public’s right to provide adequate
comment is compromised.
Additional support for cumulative analysis is found in section 318 of the CAA, which
requires that the Administrator undertake an analysis of the cost of complying with
various EPA actions, including rulemakings under section 111(d). Under section
318(d), such analyses “shall be as extensive as practicable” consistent with the
standards set forth in that provision.39
37
42 U.S.C. § 7607(d)(3) (emphasis added).
38
Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 373, 393 (D.C. Cir. 1973), cert. denied 417 U.S.
921 (1974).
39
42 U.S.C. § 7617(d).
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C.
The Specific Cumulative Impact Assessment Requested
NMA believes that the cumulative impact assessment should examine the following
factors:
x
Overall impacts on the economy. Specifically, the effect on GDP
and jobs. In this regard, some of EPA’s regulations (in particular, the NAAQS) will
not just affect energy but will affect other sectors of the economy as well both
directly (for example, through direct regulation of manufacturing sources) and
indirectly (for example, through increased energy costs). EPA should examine all
reasonably foreseeable effects of its regulations on the overall economy.
x
Energy. This part of the analysis should include impacts on
energy production and usage, energy shortages, energy costs, including fuel costs
and retail electricity prices, and energy employment should be determined.
Changes in the energy mix in the United States should be shown over time,
including electric capacity additions and reductions by fuel type. Employment and
energy cost impacts should be estimated for each energy sector.
x
Competitiveness. This part of the analysis should include
impacts on industrial and manufacturing production and competitiveness. EPA
should determine the impacts of regulation on cost of production and employment
in the relevant sectors, and the extent to which production and jobs will be reduced
as a result of higher costs and foreign competition.
x
Study design. Scenarios should be constructed for a businessas-usual case (without adoption of the contemplated regulations) and a case where
EPA adopts the contemplated regulations. Additional scenarios may be included to
test the findings under different appropriate assumptions. Where EPA regulation
does not directly regulate but instead requires states to adopt regulations meeting
EPA standards (for instance, EPA regulation under the NAAQS program and
NSR/PSD program), EPA should estimate state regulatory responses, using a range
if necessary. All assumptions, analytical methods and underlying data (or
appropriate citations to data sources) should be provided. All impacts should be
broken down on a state-by-state basis. Regulations included in the study should
not be limited to just those listed in NMA’s comments but should include any other
EPA regulations that EPA believes will affect the nation’s economy, production and
usage of energy and manufacturing.
III.
The Proposed Standards are Far More Stringent Then Necessary to
Protect Health and the Environment
A.
EPA Should Identify More Subcategories of Coal-fueled and
Specialized Industrial Boilers
Section 112(d)(1) of the Clean Air Act (CAA) states that, in promulgating
regulations establishing emission standards for major sources, the “Administrator
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may distinguish among classes, types, and sizes of sources within a category or
subcategory in establishing such standards.” Section 112(c)(1) also states that,
while “categories and subcategories listed under this subsection shall be consistent
with the list of source categories established pursuant to Section 111 of this title,”
nothing in that statement “limits the Administrator’s authority to establish
subcategories under this section, as appropriate.”
In coal-fueled industrial boiler units, testing has clearly indicated that coal rank has
a significant effect on the emission levels of HCl and mercury. Low-rank coals such
as lignite and sub-bituminous coals have higher moisture levels and lower carbon
and energy levels, whereas high-rank coals such as bituminous and anthracite colas
have lower moisture levels and higher carbon and energy levels. These qualities of
the various types of coal have a direct effect on the resulting HCl and mercury
emissions of the boilers that use them as feedstock. Therefore, pursuant to Section
112(d)(1), multiple subcategories should be created in the coal-fueled industrial
boiler category based upon the particular type of coal combusted by the unit.
Furthermore, industrial boilers that have specialized uses and are therefore
operated less frequently should be listed in a separate subcategory. Such auxiliary
boilers are often operated primarily during plant startups, and as such emit very
low levels of HAPs. These boilers should be categorized as those with a 10 percent
capacity factor for the maximum hourly heat input, and should be subject to a work
practice standard under Section 112(h) of the CAA.
B.
The “Pollutant By Pollutant” Approach to Determining MACT is
Not Appropriate Because it Results in Standards That Do Not
Reflect the Performance of the Best Performing Boilers
The proposed Industrial Boiler MACT standards are based on pollutant-by-pollutant
analyses that rely on a different set of best performing sources for each separate
HAP standard.40 In other words, EPA has “cherry picked” the best data in setting
each standard, without regard for the sources from which the data come. The
result is a set of standards that reflect the performance of a hypothetical set of best
performing sources that simultaneously achieve the greatest emission reductions
for each and every HAP rather than the actual performance of one or more real
sources. This “Frankenstein” approach41 is contrary to the language of § 112 and
produces unrealistic and impracticable standards.
The statute unambiguously directs EPA to set standards based on the overall
performance of sources. Sections 112(d)(1), (2), and (3) specify that emissions
40
See, e.g., 75 FR 32019 (“For each pollutant, we calculated the MACT floor for a subcategory of
sources by ranking all the available emissions data from units within the subcategory from lowest
emissions to highest emissions, and then taking the numerical average of the test results from the best
performing (lowest emitting) 12 percent of sources.”)
41
Industry Faults Strict EPA MACT Method for Regulating “Best” Sources, Inside EPA’s Clean Air Report,
Sept. 3, 2009.
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standards must be established based on the performance of “sources” in the
category or subcategory and that EPA’s discretion in setting standards for such
units is limited to distinguishing among classes, types, and sizes of sources. These
provisions make clear that standards must be based on actual sources, and cannot
be the product of pollutant-by-pollutant parsing which results in a set of composite
standards that do not necessarily reflect the overall performance of any actual
source. Congress provided express limits on EPA’s authority to parse units and
sources for purposes of setting standards under § 112 and that express authority
does not allow EPA to “distinguish” units and sources by individual pollutant as is
proposed in this rule. Sierra Club v. EPA, 551 F.3d 1019, 1028 (D.C. Cir. 2008).
Even assuming for the sake of argument that the Agency does have discretion to
depart from a source-wide approach to standard setting, EPA has improperly
exercised its discretion in this rule. EPA has failed to provide an assessment of how
many existing boilers and process heaters will be able to meet the proposed
standards without taking any further control measures – i.e., EPA has not shown or
attempted to show that the proposed standards reflect the performance of any
actual affected sources. This failure to investigate a fundamental aspect of the
proposed rule renders the rule arbitrary and capricious.
EPA’s database shows that very few units are best performers for more than one
pollutant. As a result, the record demonstrates that the proposed standards reflect
the performance of exceedingly few actual sources. Thus, even if EPA had
investigated the consequences of using a pollutant by pollutant approach, it could
not have reasonably concluded that the proposed standards reflect the performance
of actual sources. Of the approximately 2,000 sources within EPA’s inventory of
solid, liquid, and gas 2 boilers, based on the emissions data in EPA’s database, we
estimate that only 6 sources can currently comply with the proposed standards.
We believe such a result is well beyond what is required or intended for the MACT
program.
C.
The Proposed Rule Fails to Adequately Account for Variability in
Emissions That Reasonably is Expected From the Top
Performing Sources
EPA has improperly developed a CO standard that boilers must meet at all times
based on 3-run stack tests that fail to properly characterize the highly variable
nature of CO emissions in solid-fueled boilers. CO emissions from boilers can be
highly variable, especially when fuel mix and load change. Facilities are typically
required to conduct stack tests at least 90 percent of full load during normal
operating conditions. Therefore, a CO stack test is going to represent the best
operation of any boiler. EPA has used only 3-run stack test data, which represents
only a small and unrepresentative snapshot in time captured during the best
operating conditions, to set emission limits for a pollutant that is highly variable.
In fact, as demonstrated in the comments below, further analysis of CO CEMS data
included in EPA’s database for top performing units in each of the solid fuel
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subcategories reveals that even the top performing sources would not be able to
meet the proposed CO standards that are based on the performance of those very
units. Further analysis of record data also clearly shows that EPA is mistaken in its
suggestion that CO emissions do not vary with load. In fact, to adequately
accommodate expected CO emissions variability with load, the 2004 Industrial
Boiler MACT rule did not require CO CEMS data obtained at less than 50 percent of
maximum load to be included in the 30-day CO average. EPA’s proposal not to
accommodate load variability is not supported by the record and inexplicable as a
technical matter.
EPA makes a similar mistake with regard to its proposal not to set a separate
standard for periods of startup, shutdown, and malfunction. On the one hand, EPA
asserts that “[t]he standards we are proposing are daily or monthly averages …
[t]hus, we are not establishing separate emission standards for these periods
because startup and shutdown are part of their routine operations and, therefore,
are already addressed by the standards.”42 On the other hand, EPA uses short term
performance test results to set the standards rather than the results of long-term
CEMS monitoring. As a result, the emissions data on which the standards are
based do not, in fact, reflect or adequately accommodate emissions from periods of
startup, shutdown, or malfunction.
More generally, EPA proposes to use the 99 percent upper predictive limit (“UPL”)
to accommodate and reflect variability in the operation of the best performers in
calculating the MACT floor. The use of the 99 percent UPL calculated on only a
small number of sources in a subcategory does not adequately capture variability or
serve to predict the MACT floor level achievable by the top performers. In essence,
the Agency is using this statistical method in an attempt to overcome the limited
amount of emissions data available for top performers. However, this statistical
approach cannot overcome the fact that the data are not representative of the
entire population of boilers in each subcategory and that the available data do not
reflect the true variability of the top performing sources.
In the final rule, EPA must use data to set the standard that are consistent with the
form of the standard. As compliance with the CO standard is to be measured at all
times using CO CEMS for units of 100 MMBtu/hr and greater and the averaging time
is 30 days, EPA should use 30-day CEMS data from affected boilers to establish the
appropriate MACT floors and not 3-run stack test data. To assure that startup,
shutdown, and malfunction are appropriately accommodated, EPA must either
assure that the data on which the standard is based include representative data
from such periods or, alternatively, set a separate work practice standard to
properly accommodate startup, shutdown, and malfunction.
Lastly, we identify two statistical errors needing correction. First, instead of using
the UPL, EPA should use the upper tolerance limit (“UTL”), which is meant for use in
42
75 FR 32013
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situations where the available data does not represent the entire population. In
addition, since the proposed 99% confidence interval is applied to all 5 HAPs, the
combined probability of achieving the set of limits drops to 95%, which is
inappropriately low when facilities must be in compliance 100% of the time. EPA
therefore should use a 99.9% confidence limit for all standards.
D.
EPA Should Establish Health-based Emissions Limitations Under
§ 112(d)(4) Whenever Appropriate
Section 112(d)(4) authorizes EPA to set health-based emissions limitations when
establishing standards for HAPs under § 112(d). Section 112(d)(4) is a powerful
tool that enables EPA to match the stringency of a HAP emissions limitation to the
level determined necessary to fully protect human health. As a result, the standard
is no more stringent and no less stringent than needed to get the job done.
The default technology-based method of setting MACT standards is a cookie cutter
approach that can and does result in HAP emissions limitations that are Draconian
relative to what is needed to protect the public from HAP emissions. The clear
purpose of § 112(d)(4) is to prevent this from happening. The legislative history of
§ 112(d)(4) is abundantly clear on this point. In formulating § 112(d)(4), Congress
recognized that, “For some pollutants a MACT emissions limitation may be far more
stringent than is necessary to protect public health and the environment.” 43 As a
result, § 112(d)(4) was provided as an alternative standard setting mechanism for
HAPs “where health thresholds are well-established … and the pollutant presents no
risk of other adverse health effects, including cancer….”44
When the first Industrial Boiler MACT was promulgated in 2004, it included healthbased emissions limitations for two HAPs – hydrogen chloride (“HCl”) and
manganese. These health-based emissions limitations were rigorous standards that
demanded accountability. They were a winner for the Agency and the public
because public health would have been protected with an ample margin of safety.
At the same time, these standards were a winner for affected sources because the
standards would not have blindly required emissions to be reduced far below the
levels needed to assure that the public was protected. It was estimated at the time
that these health-based standards would have saved over $2 billion in compliance
costs, as compared to the technology-based standards that otherwise would have
applied.
In the newly proposed Industrial Boiler MACT, EPA acknowledges its authority under
§ 112(d)(4) to establish a health-based emissions limitation for threshold pollutants
in lieu of a MACT emissions limitation. However, the Agency proposes not to
establish any health-based emissions limitations “[g]iven the limitations of the
currently available information (i.e., the HAP mix where boilers are located, and the
cumulative health impacts from co-located sources), the environmental effects of
43
44
S. Rep. No. 101-228 (1990) at 171.
Id.
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HCl, and the significant co-benefits of setting a conventional MACT standard for
HCl.”45 Nevertheless, EPA asks for comment on a wide range of issues related to
the justification for setting health-based emissions limitations and the method by
which they should be set.
Ample scientific information supports a determination that HCl, hydrogen fluoride,
hydrogen cyanide, and manganese are threshold pollutants and, thus, are eligible
to be regulated under § 112(d)(4). In addition, the Agency has the technical tools
and significant factual support for establishing health-based emissions limitations
for these HAPs that would provide the requisite ample margin of safety to health
and the environment. Thus, health-based emissions limitations are fully justified on
scientific and technical grounds. EPA should set health-based emission limitations
for HAP acid gases and, as in the 2004 rule, a health-based emissions limit for
manganese, which should be implemented in conjunction with a Total Select Metal
(“TSM”) standard (where the TSM standard would be an alternative to the PM
surrogate, and where a “TSM less manganese” option would be provided when a
source elects to comply with the health-based compliance alternative for
manganese).
From a legal standpoint, the statute makes clear that criteria pollutant co-benefits
associated with the proposed MACT standards may not be considered in deciding
whether to establish § 112(d)(4) health-based emissions limitations. Also, EPA has
failed to explain why the health-based emissions limitations it established in the
2004 Industrial Boiler MACT and the justification provided for those limitations
should now be reversed. The preamble to the newly proposed rule sets out a
number of questions that might be relevant in deciding whether to establish healthbased emissions limitations, but merely asking questions is not a sufficient basis for
reversing prior determinations adopted through notice and comment rulemaking.
Thus, EPA’s proposal not to set health-based emissions limitations runs counter to
the law and is based on an inadequate explanation of why the Agency proposes to
depart from its prior approach.
E.
The Emissions Database Includes Numerous Fundamental
Flaws That Compromise the MACT Floor Analysis That is Based
on These Data
Given the limited comment period that has been provided on the Industrial Boiler
MACT proposal, it simply has not been possible to conduct a thorough data quality
assessment on EPA’s entire emissions data base. EPA’s failure to provide adequate
time for an appropriate assessment of the data violates the Agency’s obligation to
provide a full and fair opportunity for public comment on the proposed rule. Within
these severe time constraints, we conducted a spot check of approximately 100
stack test reports and associated information from top performers in order to
assess the quality of the data the Agency relied upon in calculating the MACT floors
that underlie the proposed rule.
45
75 FR 32032.
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This spot check revealed numerous data errors – many of which, if corrected, would
have a material impact on the stringency of EPA’s calculated MACT floors and
associated proposed standards. To name just a few, there was: (1) widespread
inconsistency in the data reported under the Phase I and Phase II ICRs, such as
entirely different methods of determining and reporting “non detects”; (2)
inconsistent reporting of dioxin/furan emissions testing results; (3) inconsistent and
incompatible PM emissions testing methods; and (4) mischaracterization of boiler
types, such as including a coal-fueled boiler in the biomass subcategory. The
number and magnitude of the errors provide clear evidence that the database is
fundamentally flawed and that any standard derived from the database does not
have adequate factual support.
To resolve this problem, EPA must conduct a thorough review of the database,
correct or eliminate the flawed data, recalculate the MACT floors and associated
proposed standards, and provide a new opportunity for public comments (including
sufficient time for commenters to conduct their own comprehensive review of the
data).
Along the same lines, the fact that EPA has not finalized the waste definition rule46
prior to asking for public comment on the Industrial Boiler MACT creates a
fundamental procedural problem that is not solved by EPA’s alternative MACT
proposal.47 While the waste definition proposal does set forth two basic approaches
to distinguishing waste from fuel, the proposal also asks for comments on
numerous specific elements of each of these approaches.48 As a result, the
proposal sets out a continuum of possible final rules rather than two distinctly
different possibilities. This means that commenters on the proposed Industrial
Boiler MACT have no way of knowing what population of units will qualify as boilers
upon promulgation of the waste rule and, therefore, cannot conduct a meaningful
review of the Industrial Boiler MACT emissions database with regard to the units
that ultimately will be used to determine the MACT floors and MACT standards.
The inability to reasonably ascertain which units will actually be used in setting the
final Industrial Boiler MACT standards prevents commenters from developing
meaningful comments on the emissions database and on EPA’s manipulation of the
data that ultimately will be used to set the standard. In short, EPA’s proposed rule
effectively requires commenters to guess what data EPA will eventually use to set
the standard. This violates EPA’s duty to provide a full and fair opportunity to
develop and submit comments on the proposal. This problem can only be cured by
46
The waste definition rule is proposed at 75 Fed. Reg. 31844 (June 4, 2010).
See, 75 FR 32035 (“Alternative Standard for Consideration”).
48
See, e.g., id. at 31873 (“EPA is proposing that non-hazardous secondary materials used as fuels in
combustion units that remain within the control of the generator and that meet legitimacy criteria specified
in section VII.D.6 would not be solid waste ….Nevertheless, EPA is seeking comment on whether such
secondary materials should be considered solid wastes and thus, be subject to the CAA section 129
requirements if combusted.”)
47
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promulgating the waste rule and then proposing industrial boiler standards based
on the units that are then known to be industrial boilers.
V.
Conclusion
NMA respectfully urges that EPA defer final action on the two rules at issue here
until the Agency has produced a cumulative impact assessment. In addition, these
comments demonstrate both the need and ability for EPA to revise these industrial
boiler proposals to address fundamental technical, legal and data-related issues
that subject the proposals to challenge. Owners and operators of industrial boilers
and process heaters would be required to invest time and resources into extensive
retrofits in order to meet tight compliance deadlines. At a time when the U.S.
economy requires every opportunity to recover from the most drastic economic
downturn since the Great Depression, the nation’s industrial backbone is faced with
further impediments. NMA appreciates the opportunity to submit these comments.
Sincerely,
Ben Brandes
Director, Air Quality
National Mining Association
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App.385
BRUCE WATZMAN
Senior Vice President, Regulatory Affairs
October 1, 2010
VIA ELECTRONIC MAIL TO: a-and-r-docket@epa.gov
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Washington, D.C. 20460
Attention: Docket ID Nos. EPA-HQ-OAR-2009-0491
Re: Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate
Matter and Ozone, 75 Fed. Reg. 45,210 (Aug. 2, 2010)
Dear Ladies and Gentlemen:
I.
Introduction
The National Mining Association (NMA) submits these comments on the proposed
Transport Rule. NMA is a national trade association of mining and mineral
processing companies whose membership includes the producers of most of the
nation‘s coal, metals, industrial and agricultural minerals; the manufacturers of
mining and mineral processing machinery, equipment and supplies; and the
engineering and consulting firms, financial institutions and other firms serving the
mining industry. NMA’s members mine over 75 percent of the coal produced
annually from operations located in 26 states.
NMA’s comments are divided into two sections. We first discuss EPA’s failure to
provide a cumulative impact assessment of the proposed rule in light of all of the
various rulemaking activity that the Agency has undertaken that will affect the use
of coal in this country and, in turn, the cost and reliability of the nation’s electricity
supply. We urge the Agency to conduct such an analysis and provide a suggested
format. We then comment on the timing of the emission reduction targets set forth
in the proposed rule.
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II.
EPA Must Produce a Cumulative Impact Analysis of Its Regulatory
Program Affecting the Use of Coal
A.
Overview
As discussed in more detail below, NMA believes that the regulatory analysis
supporting the proposed Transport Rule is fatally flawed because it fails to take into
account the cumulative impact of all of EPA’s now-numerous completed, pending
and expected rulemakings that are intended to and will have the effect of
substantially reducing the usage of coal in the United States.1 These rulemakings
include those affecting the use of coal for electric generation, where EPA is
implementing a coordinated program to create, in its words, a “clean, efficient, and
completely modern power sector,” those affecting the use of coal for industrial,
commercial and institutional purposes, such as the two rules specifically at issue
here, and those directly affecting coal mining.
All of these rulemakings together will produce a dramatic and cascading series of
effects not only in the coal industry but throughout the economy. There will be
direct effects on coal employment and indirect effects on employment generally in
the economy as a result of higher energy prices. Higher energy prices will also
affect GDP and economic activity generally. American competitiveness will also be
affected, as higher prices undermine the ability of American business to compete,
with resulting offshoring of American business and jobs.
Impact analysis performed by EPA now proceeds on a rulemaking-by-rulemaking
basis, as if one rulemaking is unconnected to the next and as if the regulatory
consequences are not cumulative. As a result, EPA’s impact analyses mask the
cumulative effect of the Agency’s overall regulatory program. Individual-regulation
impact analyses often predict limited effects, when in truth the overall program
may produce extremely large consequences.
This balkanized approach to impact analysis impairs the public’s right to notice and
comment regarding EPA regulation. For instance, EPA’s Regulatory Impact Analysis
for the proposed Transport Rule shows relatively minor effects, which might lead
the public to believe that the rule is relatively innocuous. Cumulative analysis, on
the other hand, could lead to a far different conclusion—that coal usage will decline
dramatically as a result of the combined effect of numerous EPA rulemakings with
attendant serious economic consequences. Armed with that information, the public
would likely provide significantly different comment on the rule.
1
The draft RIA is fundamentally flawed for another reason as well. On September 1, 2010, EPA
published a Notice of Data Availability (NODA) indicating that EPA had changed the assumptions it
used in its modeling in support of the proposed rule, with one of the principal changes being changed
natural gas supply and price assumptions. EPA, however, did not publish a new draft RIA that reflects
the new modeling assumptions. At this point, therefore, the public does not know exactly what the
regulatory impacts of the rule will be. NMA will address this point in more detail in its comments on
the NODA.
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Cumulative impact analysis is not just good policy, it is required by law, both by
Executive Order 12866 and the notice and comment rulemaking provisions of the
Clean Air Act (“CAA”). NMA therefore urges EPA to defer final action on the two
rules at issue here until the necessary cumulative impact assessment is produced.
The specific type of analysis that NMA recommends is set forth as an attachment to
these comments.
B.
Cumulative Analysis Is Needed
1.
EPA’s coordinated regulatory agenda to reduce coal
usage
EPA has undertaken a far-reaching regulatory program that is apparently designed
to reduce the use of coal throughout the American economy. The coordinated
nature of this program is most evident in the electric power sector, which EPA has
undertaken to transform. Upon taking office, EPA formulated seven priorities, one
of which was to “develop a comprehensive strategy for a cleaner and more efficient
power sector, with strong but achievable reduction goals for SO2, NO2, mercury and
other air toxics.” 2 This goal was reiterated by EPA in the proposed Transport Rule,
where the Agency said that “[i]n furtherance of this priority goal, and to respond to
statutory and judicial mandates, EPA is undertaking a series of regulatory actions
over the course of the next 2 years that will affect the power sector in particular.”3
These EPA rulemakings include:
x
The recently completed National Ambient Air Quality Standards
(“NAAQS”) for sulfur dioxide (“SO2”) and nitrogen dioxide (“NO2”);
x
The currently proposed new ozone NAAQS and the soon-to-beproposed new PM2.5 NAAQS;
x
The proposed Transport Rule and expected additional transport rules
for the 1997 ozone NAAQS, the currently proposed new ozone NAAQS, and the
soon-to-be-proposed new PM2.5 NAAQS;
x
(“EGUs”);
The soon-to-be-proposed MACT standards for electric generating units
x
EPA’s greenhouse gas (“GHG”) regulation under the Prevention of
Significant Deterioration (“PSD”) program;
2
Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone,
75 Fed. Reg. 45,210, 45,227/3 (August 2, 2010), quoting the EPA Administrator’s January 12, 2010
outline of the Agency’s seven priorities.
3
Id.
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x
The soon-to-be-proposed New Source Performance Standards for EGUs
(including GHG NSPS);
x
Best Available Retrofit Technology (“BART”) standards for EGUs;
x
The proposed regulations for coal combustion residues; and
x
The soon-to-be-proposed water quality regulations for cooling intake
structures and soon-to-be-proposed effluent guidelines for discharges from power
plants.
Recognizing that all of these regulations are implementing a single overall priority
goal and constitute a “comprehensive set of requirements,”4 EPA pledged in the
proposed Transport Rule to coordinate at least its power sector air quality
regulations and, to the extent it could under relevant statutory law, to coordinate
these power sector air quality regulations with the coal combustion residue
regulations and the two power sector water quality regulations. 5 EPA further
pledged to “engage with other federal, state and local authorities, as well as with
stakeholders and the public at large, with the goal of fostering investments in
compliance that represent the most efficient and forward-looking expenditure of
investor, shareholder, and public funds, resulting, in turn, in the creation of a clean,
efficient, and completely modern power sector.” 6
EPA’s regulatory agenda for the power sector will almost certainly significantly
reduce the use of coal for electric generation. While EPA so far has not done any
study of the cumulative impact of these regulations on coal use (or otherwise), the
contractor EPA uses to model impacts of individual regulations recently produced its
own analysis showing that just the EGU MACT standards alone will force major
retirements of coal-fueled powerplants.
A recent report by Credit Suisse (copy attached) examined the effect of the
Transport Rule and the upcoming EGU MACT rules and determined that:
2017.
x
About 60 GW of coal-fueled capacity will likely close between 2013 and
x
$70-$100 billion of capital expense in emission control equipment.
x
A 15-31% reduction in the use of coal for electric generation.
4
Id.
5
Id.
6
Id.
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x
MISO, SERC, PJM-West, and SPP will see an “accelerating reversion to
15% reserve margins.”
x
EPA’s standards cannot be met unless compliance deadlines are
extended to 2017.
Forced retirements will have substantial negative economic impacts nationally, but
will also have severe impacts locally, as exemplified by the Arizona Hopi and the
Navajo Generation Station:
Scott Canty, the Hopi Nation‘s general counsel, explained
to a panel of lawmakers on Nov. 2 that closure of the
Navajo Generating Station would cripple the tribal
government. The Hopi Nation relies heavily on coal
revenues to fund its government, Canty said. About 88
percent of the tribal government‘s budget comes from
revenue generated by coal-fired energy production at the
Navajo Generating Station, Canty said. . . . The EPA has
proposed rules that would require the power plant to
install expensive emissions equipment to address visibility
impairment issues at the Grand Canyon. But the plant’s
owners and the tribes argue that the retrofit is too
costly. 7
Moreover, news accounts recently reported that EPA is well aware that its
regulatory efforts in the power sector will increase the costs to coal-fueled EGUs
and make them less competitive with renewable resources. In an article entitled
“Administration Eyes EPA Rules To Spur Shift From Coal To Renewables,” it was
reported that:
Rob Brenner of EPA’s Office of Air & Radiation told a July
28 meeting of the agency’s environmental justice advisers
that pending rules to control emissions, waste and water
discharges from utilities will not only protect public health
but add costs to the industry that might make renewable
energy a more viable alternative.
“We need to set health-based standards for power plants,
and once we do that then they can compete with some of
these renewable sources,” Brenner said at the National
Environmental Justice Advisory Committee (NEJAC)
meeting in Washington, DC. He added later, “It’s not
7
Luige del Puerto, Hopi Nation in Arizona appeals for help as coal plant face disclosure, ARIZ. CAP.
TIMES, Nov. 3, 2009, available at http://www.allbusiness.com/government/government-bodiesoffices-regional/13389633-1.html.
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really a fair competition because [coal-fired power plants]
are cheaper than they should be because they're not
controlling their pollutants” to their full extent because
EPA is yet to issue key rules for the sector, including a
mercury air rule and a plan to regulate coal combustion
residue. 8
The same article reported that the White House also understands that transforming
the power sector will inevitably result in reduced use of coal and increased use of
renewables. Referring to remarks of Nancy Sutley, Chair of the White House
Council on Environmental Quality, the article reported that:
Sutley responded that she doubts the existence of socalled clean coal. “Other people have labeled it ‘clean
coal,’” she said. “I don't know if I would necessarily
concede that that is real. . . . I think in the long run, not
just for the [United States] but for the world, that
developing and making sure that there is access to these
inherently cleaner sources of energy is important. . . . .
We need to use energy more efficiently and more
cleanly.” 9
Other EPA regulatory proposals are also part of an overall strategy to reduce the
use of coal throughout the economy. This strategy includes the Boiler MACT and
Area Source rule on which EPA recently took comment. In the regulatory preamble
to the Boiler MACT rule proposal, EPA stated forthrightly that its reason for
proposing strict MACT standards for coal boilers and process heaters but only work
practice standards for natural gas boilers was to incent coal boilers to switch to
natural gas and to disincent natural gas boilers from switching to coal.10 In
discussing this issue, EPA made plain that it considers coal to be a “dirty” fuel
whose use is inconsistent with the CAA and therefore should be discouraged.11 In
contrast, EPA considers natural gas to be a “clean fuel” whose use should be
encouraged at coal’s expense. According to EPA:
In addition, emission limits on gas-fueled boilers and
process heaters may have the negative effect of providing
8
Administration Eyes EPA Rules to Spur Shift from Coal to Renewables, InsideEPA.com (July 29,
2010), at http://insideepa.com/201007291915893/EPA-Daily-News/Daily-News/administration-eyesepa-rules-to-spur-shift-from-coal-to-renewables/menu-id-95.html.
9
Id.
10
National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial,
and Institutional Boilers and Process Heaters, 75 Fed. Reg. 32,006, 32,025/3 (June 4, 2010).
11
Id.
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an incentive for a facility to switch from gas (considered a
“clean” fuel) to a “dirtier” but cheaper fuel (i.e., coal).12
The coal industry also faces a panoply of prospective regulation of the process of
producing coal. These regulations include potentially stricter NAAQS for PM10 which
may make western surface mining untenable, new restrictions on coal mine
permitting in Appalachia that could result in major reductions in surface and
underground coal mining in that region, and potential imposition of NSPS standards
on mining emissions of PM10, methane, volatile organic compounds, and nitrogen
oxides. All of these regulations together—EPA’s power sector regulations, its
regulations for the use of coal in the manufacturing and commercial sectors, and its
regulations of coal mining—all have the potential to combine to cumulatively and
dramatically reduce coal usage.
2.
The effect of each EPA individual rule affecting coal,
including the rules at issue here, cannot be understood
without a cumulative analysis
Given EPA’s intent to transform the power sector from what it is today into
something different and given its efforts to reduce coal use throughout the
economy, EPA must produce a cumulative and economy-wide assessment of this
program. As EPA has proposed and finalized each individual regulation, including
the proposed Transport Rule, EPA’s impact analysis has been limited to the effect of
the specific regulation in question. However, to understand the effect that all the
rules together will create, it is necessary to study the effect of that program in toto.
These effects could be extremely large. For instance, EPA projects the annual cost
of the SO2 NAAQS to be $2.9 billion to $3.0 billion in 2020, with most of those costs
associated with the power sector 13 ; the annual cost of the Transport Rule (all in the
EGU sector) to be $3.7 billion in 2012 and $2.8 billion in 2014, 14 with another $2
billion in 2020 and 2025 15 ; the annual cost of the ozone standard to be $32 – 44
billion, again with much of that cost in the EGU sector 16 ; and the total costs of the
coal combustion residue rule to be over $8 billion under the Subtitle D option and
12
Id.
13
U.S. Environmental Protection Agency, Final Regulatory Impact Analysis (RIA) for the SO2 National
Ambient Air Quality Standards (NAAQS) at 7-4, Table 7.1, June 2010 (Docket ID EPA-HQ-OAR-20090769-0059).
14
75 Fed. Reg. at 45348/1.
15
Id. at 45333, TableV.E-1.
16
U.S. Environmental Protection Agency, Final Ozone National Ambient Air Quality Standards (NAAQS)
Regulatory Impact Analysis at 5-23, March 2008 (Docket ID EPA-HQ-OAR-2005-0161-2849) (estimate
for 0.065 ppm standard; EPA’s proposal is 0.060-0.070).
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over $20 billion with the Subtitle C option. 17 Despite the request from NMA and
others for EPA to assess the cost of its GHG regulatory program, EPA has refused to
do so, and so that cost is unknown but could be very substantial as well. The other
programs identified above will also add significant cost, with the new EGU MACT
standards expected to have a potentially a very large impact.
But these estimates, as large as they are, mask the overall effect of the
regulations when considered cumulatively. The proposed Transport Rule is
an example. EPA’s draft Regulatory Impact Analysis (“RIA”) for this
proposed rule envisions relatively small impacts to coal usage. EPA projects
that EGUs can meet the requirements of the rule by switching from high
sulfur to low sulfur coal and by installing pollution control equipment, with
the result that EPA estimates the retirement of only 1.2 GW of “small and
infrequently used” coal-fired generating units by 2014. 18 Based on the
foregoing, EPA projects additional cost to the utility industry of $3.7 billion in
2012 and $2.8 billion in 2014 ($2006). 19
This EPA projection of almost no impact to the coal industry, however, is not
meaningful because it is based on an analysis of the Transport Rule in
isolation. Thus, even if EPA’s projected assessment of the effect of the
Transport Rule on coal is correct, that assessment assumes that there are no
other forthcoming EPA regulations that will affect the use of coal, an
17
Hazardous and Solid Waste Management System; Identification and Listing of Special Wastes;
Disposal of Coal Combustion Residuals From Electric Utilities, 75 Fed. Reg. 35218, 35134, Table 1
(June 21, 2010).
18
U.S. Environmental Protection Agency, Regulatory Impact Analysis for the Proposed Federal
Transport Rule at 14, June 2010 (Docket ID EPA-HQ-OAR-2009-0491-0078).
19
Id. at 31.
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assumption that is clearly wrong. The control options that the Transport Rule
RIA envisions appear to exhaust (and likely go beyond exhausting) the ability
of the power sector to absorb EPA regulation without large-scale closings of
coal plants. The next regulation following the Transport Rule that adds cost
to coal-fueled electric generation therefore will force plant closings, but it is
incorrect to say that it was that next regulation and not the Transport Rule
that causes the plant closings. Both rules and indeed the entire program
cause that effect.
EPA itself recognizes the need for cumulative analysis in an analogous situation.
EPA requires that EPA reviewers of Environmental Impact Statements (“EISs”)
under the National Environmental Protection Act (“NEPA”) take cumulative impacts
into account, including consideration of “impacts that are due to past, present, and
reasonably foreseeable actions.” 20 According to EPA, in assessing environmental
impacts, it is necessary to assess “[t]he combined, incremental effects of human
activity” rather than just the impacts of the particular action for which federal
approval is sought. 21 This is based on the recognition that individual actions “may
be insignificant by themselves,” but that cumulative impacts accumulate over time,
from one or more sources and these cumulative effects must be taken into
consideration. 22
The Council on Environmental Quality (“CEQ”) also requires cumulative impact
analysis in EISs. CEQ regulations require that agencies considering major actions
that could affect environmental quality consider the “overall, cumulative impact of
the action proposed (and of further actions contemplated).”23
20
U.S. Environmental Protection Agency, Consideration of Cumulative Impacts in EPA Review of NEPA
Documents (May 1999) at 10.
21
Id. at 1.
22
Id.
23
35 Fed. Reg. 7390, 7391 (1970). It should be emphasized that CEQ does not distinguish between
cumulative analysis of environmental impacts and of socioeconomic impacts. Under CEQ regulations,
agencies must examine the effect of the proposed action on the “human environment.” 40 C.F.R. §
1508.14 states that “[h]uman environment” shall be interpreted comprehensively to include the
natural and physical environment and the relationship of people with that environment.” While
“economic or social effects are not intended by themselves to require preparation of an environmental
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EPA’s and CEQ’s reasons for requiring cumulative impact analysis in EISs apply with
equal force to economic analysis that EPA performs of its regulations. Where
effects of a proposed action accumulate with those of other related actions,
examining the effects of the proposed action in isolation will mask the overall effect
of the action. That is as true for EPA’s regulatory efforts to reduce coal usage as it
is for environmental analysis in the NEPA context. To again cite the proposed
Transport Rule as an example, as stated, EPA concludes that the rule will not
materially affect the use of coal for electric generation.24 But under the rationale of
CEQ’s NEPA regulations, cumulative impact analysis should be conducted because
“[c]umulative impacts can result from individually minor but collectively significant
actions taking place over a period of time.” 25
C.
Cumulative Analysis is Legally Required
Cumulative analysis does not just make good regulatory sense; it is legally
required. Two separate authorities require cumulative analysis here.
1.
Executive Order 12866
Executive Order 12866 specifically requires cumulative analysis as follows:
Each agency shall tailor its regulations to impose the least
burden on society, including individuals, businesses of
differing sizes, and other entities (including small
communities and governmental entities), consistent with
obtaining regulatory objectives, taking into account,
among other things, and to the extent practicable, the
costs of cumulative regulations. 26
This requirement for cumulative analysis stems from the regulatory philosophy of
Executive Order 12866 that the need for and effects of government regulatory
actions should not be examined in isolation but instead on an overall and
coordinated basis. The preamble to the Order found that the then current
regulatory system did not work in a way that produced efficient results or
regulations that were “effective, consistent, sensible, and understandable.”27 The
impact statement,” “[w]hen an environmental impact statement is prepared and economic or social
and natural or physical environmental effects are interrelated, then the environmental impact
statement will discuss all of these effects on the human environment.” This applies to cumulative
analysis: where socioeconomic effects accumulate from multiple actions, they must be assessed
cumulatively, just as environmental effects must be assessed cumulatively. Thus, cumulative analysis
is as relevant for examining socioeconomics as it is for analyzing environmental impacts.
24
75 Fed. Reg. at 45357/1.
25
26
40 C.F.R. § 1508.7.
Exec. Order No. 12,866, 58 Fed. Reg. 51735 (Sep. 30, 1993) (emphasis added).
27
Id.
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first objective of the Order, therefore, was to “enhance planning and coordination
with respect to both new and existing regulations.” 28 In that vein, the main
administrative provisions of the Order—an interagency Planning Mechanism, the
requirement that each agency produce a Unified Regulatory Agenda and develop a
Regulatory Plan, the requirement for a Regulatory Working Group and the provision
for quarterly Conferences among OIRA and state, local and tribal governments—
were all included to enhance coordination of any specific regulation proposed by an
agency with that agency’s other existing and contemplated regulations, with other
regulations of other agencies, and with the President’s overall regulatory
priorities. 29
The Statement of Regulatory Philosophy and Principles in Executive Order 12866
also stressed the need for coordination. This Statement provides that “[i]n deciding
whether and how to regulate, agencies should assess all costs and benefits of
available regulatory alternatives.”30 Agencies are instructed to “examine whether
existing regulations (or other law) have created, or contributed to, the problem that
a new regulation is intended to correct and whether those regulations (or other law)
should be modified to achieve the intended goal of regulation more effectively”31 ; to
“base its decisions on its best reasonably obtainable scientific, technical, economic,
and other information concerning the need for, and consequences of, the intended
regulation” 32 ; and to “avoid regulations that are inconsistent, incompatible, or
duplicative with its other regulations or those of other Federal agencies.”33 Indeed,
the preamble to the Executive Order states that “[t]he objectives of this Executive
order are to enhance planning and coordination with respect to both new and
existing regulation….” 34
This requirement for coordinated government action based on coordinated and
cumulative analysis built on the same requirement in Executive Order 12291, the
predecessor order to Executive Order 12866 and the Order which first required
agencies to prepare Regulatory Impact Analyses. Executive Order 12291 required
agencies, in promulgating new regulations, to “tak[e] into account the condition of
28
Id.
29
Id.
30
Id. (emphasis added)
31
Id. at 51735-36.
32
Id. at 51736.
33
Id.
34
Id. at 51735.
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the particular industries affected by regulations . . . and other regulatory actions
contemplated for the future.” 35
The Executive Order 12866 requirements for coordinated and cumulative analysis
apply with particular force to EPA’s efforts to remake the power sector and its
apparent effort to reduce coal usage throughout the economy. As shown above,
each individual regulation that EPA promulgates in this area, including the
Transport at issue here, is part of a single overall program with cumulative
consequences.
Moreover, EPA cannot say that cumulative analysis is not “practicable” within the
meaning of section 1(b)(11) of Executive Order 12866. EPA obviously has very
sophisticated modeling techniques at its disposal. If in any one rulemaking EPA
believes that it cannot anticipate and therefore assess the effects of future
rulemakings, EPA can assess a range of possible future regulation. Certainly, the
fact that EPA has indicated that it has an overall program in furtherance of one of
the Agency’s seven priorities suggests that EPA has a fairly concrete idea of the
range of regulatory outcomes that it anticipates. Alternatively, EPA can delay any
particular rulemaking until it has better information about future regulatory
requirements that it intends to impose. What EPA cannot do, however, is to follow
its current regulatory course, where the Agency analyzes individual rulemaking
effects in isolation, as if there is no overall regulatory context.
2.
CAA
Cumulative impact analysis is also legally required under the rulemaking provisions
of the CAA where, as here, EPA has undertaken coordinated and comprehensive
regulation of the power and coal sectors through a series of related rulemakings.
The purpose of these CAA rulemaking provisions is both to ensure good regulatory
outcomes and to protect the public’s right to have adequate notice of the need for
and effect of EPA regulatory action so that the public can provide meaningful
comment.
In this context, section 307(d)(3) of the CAA requires that a rule be accompanied
by a statement of its basis and purpose, including “the major legal interpretations
and policy considerations underlying the proposed rule.” 36 For the reasons
discussed above, an underlying policy consideration of the Transport rule at issue
here is EPA’s overall intent to incent reductions in coal usage and increases in
resources that EPA considers to be “clean.” That being the case, EPA must provide
an analysis of the consequences of this policy so that the public can comment
adequately. As stated, the coal industry and public at large might have an entirely
35
Exec. Order No. 12,291 at § 2(e) (emphasis added).
36
42 U.S.C. § 7607(d)(3) (emphasis added).
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different view of these proposed rules if EPA produced a cumulative assessment
rather than the narrow assessment reflected in the RIA.
The U.S. Court of Appeals for the D.C. Circuit has stated that “[i]t is not
consonant with the purpose of a rulemaking proceeding to promulgate rules
on the basis of inadequate data, or on data that, [in] critical degree, is
known only to the agency.” 37 Unless the public knows the overall
consequences of EPA’s regulations in context of other related regulations, the
public’s right to provide adequate comment is compromised.
Additional support for cumulative analysis is found in section 318 of the CAA, which
requires that the Administrator undertake an analysis of the cost of complying with
various EPA actions, including rulemakings under section 111(d). Under section
318(d), such analyses “shall be as extensive as practicable” consistent with the
standards set forth in that provision.38
D.
Scope and Content of a Cumulative Impact Assessment
NMA believes that the cumulative impact assessment should examine the following
factors.
x
Overall impacts on the economy. Specifically, the effect on GDP
and jobs. In this regard, some of EPA’s regulations (in particular, the NAAQS) will
not just affect energy but will affect other sectors of the economy as well both
directly (for example, through direct regulation of manufacturing sources) and
indirectly (for example, through increased energy costs). EPA should examine all
reasonably foreseeable effects of its regulations on the overall economy.
x
Energy. This part of the analysis should include impacts on
energy production and usage, energy costs, including fuel costs and retail electricity
prices, and energy employment should be determined. Changes in the energy mix
in the United States should be shown over time, including electric capacity additions
and reductions by fuel type. Employment and energy cost impacts should be
estimated for each energy sector.
37
Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 373, 393 (D.C. Cir. 1973), cert. denied 417 U.S.
921 (1974).
38
42 U.S.C. § 7617(d).
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x
Competitiveness. This part of the analysis should include
impacts on industrial and manufacturing production and competitiveness. EPA
should determine the impacts of regulation on cost of production and employment
in the relevant sectors, and the extent to which production and jobs will be reduced
as a result of higher costs and foreign competition.
x
Study design. Scenarios should be constructed for a businessas-usual case (without adoption of the contemplated regulations) and a case where
EPA adopts the contemplated regulations. Additional scenarios may be included to
test the findings under different appropriate assumptions. Where EPA regulation
does not directly regulate but instead requires states to adopt regulations meeting
EPA standards (for instance, EPA regulation under the NAAQS program and
NSR/PSD program), EPA should estimate state regulatory responses, using a range
if necessary. All assumptions, analytical methods and underlying data (or
appropriate citations to data sources) should be provided. All impacts should be
broken down on a state-by-state basis. Regulations included in the study should
not be limited to just those listed in NMA’s comments but should include any other
EPA regulations that EPA believes will affect the nation’s economy, production and
usage of energy and manufacturing.
III.
Other Comments
A.
EPA Has not Provided an Adequate Opportunity for Comments
Apart from the cumulative impact assessment issue, EPA has made it very difficult,
indeed impossible, to provide meaningful comments on the proposed rule. In the
first place, EPA’s intention to begin phase one of the proposed rule in 2012 resulted
in an insufficient time for comments, only sixty days despite the extraordinarily
complex nature of the proposed rule and the underlying analysis that supports the
rule. NMA counts more than 20 Technical Support Documents as well as numerous
modeling files in the record. In particular, the modeling and the assumptions
underlying the modeling drive all facets of the rule, including the air quality analysis
and the determination of individual state significant contributions to downwind nonattainment or interference with maintenance, and this in turns drives calculation of
state budgets and whether states are classified as group 1 or group 2 states. Sixty
days is not enough time to analyze and understand this material.
The Agency should not provide an inadequate amount of time to comment because
of a self-imposed and impractical deadline to begin regulation. But the 2012
deadline is not feasible—and its extension would provide the collateral benefit of
allowing the public more time to understand this complex rulemaking and to
provide useful comment to the Agency.
The insufficient time to comment is compounded by EPA’s September 1, 2010
Notice of Data Availability (NODA), which indicates that EPA has made fundamental
changes to the assumptions used in the modeling to support the rule. These
changes evidently are sufficient to change EPA’s air quality analysis and costNational Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
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effectiveness analysis and therefore the emission budgets and even potentially
whether states are classified in group one or two. Indeed, even at this point EPA
has not fully explained how its proposal has been changed by the new modeling
assumptions, as EPA says that the state budgets “have not been modified to
account for any changes that the modeling might suggest.”39
In essence, the comments that EPA has called for as of October 1, 2010 pertain to
an obsolete proposal, one that is different from the one that EPA is now considering
and one that still has not been fully explained. But since the public has not yet had
an opportunity to examine and fully understand the NODA, the public cannot be
sure in exactly what ways the original proposal on which it is now commenting may
or may not remain valid.
In these circumstances, it would have been far better for EPA to have delayed the
entire comment period so that the public had at least an additional sixty days to
comment on the entire rule after publication of the NODA. But with phase one of
the rule nearing, EPA evidently concluded that there was insufficient time to do so.
This problem could have been solved had EPA proposed the Transport Rule sooner
and, when it did so, the Agency had completed its underlying analysis, and
therefore the proposal itself. The problem can still be solved if EPA will delay the
phase one requirements, a course it should do anyway given the lack of feasibility
of the phase one requirements.
B.
2012 Is Too Soon to Begin Phase One Regulation, and 2014 Is
Too Soon to Begin Phase Two Regulation
1.
2012
EPA proposes to require compliance with phase one requirements under the
proposed rule at the beginning of 2012, just six or so months after EPA anticipates
completion of the rule. 40 This is wholly unrealistic. States will not have had an
opportunity to examine and understand the final rule and adopt State
Implementation Plans (SIPs), and sources will not have had an adequate
opportunity to plan for the new requirements.
The phase one emission reduction obligations are significant. EPA indicates that the
2012 SO2 emission reductions required under the rule will be 4.1 million tons per
year, as compared with 5.1 million tons that would be expected otherwise. 41 EPA
evidently believes that this significant amount of emission reductions is feasible by
the beginning of 2012 because, in EPA’s analysis, sources will not be required to
39
See 75 Fed. Reg. at 53614/3.
EPA states that it anticipates issuance of the final rule in “June.” See slide 22 of “Overview
Presentation 7/26/2010,” http://www.epa.gov/airquality/transport/actions.html.
40
41
Id., slide 33. In a presentation by EPA held after the rule was proposed, EPA said that the 2012 cap
under the rule would be 3.9 million tons, a difference that, so far as NMA is aware, has not been
resolved.
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install new pollution control equipment, beyond those already planned and in
development, to meet the requirements of the rule. Instead, EPA believes that the
rule’s NOX requirements can be met by operating NOX control equipment year
round, and the rule’s SO2 requirements can be met principally through coalswitching from high sulfur to low sulfur coal and from low sulfur coal to very low
sulfur coal.
NMA understands that utility industry commenters will provide significant
information showing that EPA has made factual errors in the modeling inputs that
were used to demonstrate that the phase one emission reduction reductions could
be achieved by the beginning of 2012. For instance, NMA understands that this
information will show that EPA has overstated the number of scrubbers that are
under construction and will be operational by 2012. If EPA’s information is wrong,
then the only way the 2012 budgets can be met are by closing units or ramping
down production, a result that would fundamentally change the cost-effectiveness
of the rule.
Moreover, NMA is unable to find any documentation in the record of whether EPA
considered whether utilities are constrained by coal supply or rail contracts from
switching coal suppliers or coal sources. Many coal and rail contracts extend for a
period of years, in many cases for five or ten years or longer. Certainly, as of mid2011 when the Transport Rule is final, many utilities will be contractually locked
into their sources of coal for the 2012-14 period and will therefore be unable to
switch coal as EPA anticipates. If they are unable to do so, the 2012 budgets will
be unattainable, except by closing coal-fueled units or ramping back production,
which in turn will produce different impacts than those that the Agency has
analyzed. EPA must at least produce some form of analysis taking into account coal
supply and rail contract constraints.
Similarly, NMA is unable to find any documentation in the record of whether EPA
considered any physical constraints on substitution of one type of coal for another,
except where the switch would entail substitution of very low sulfur subbituminous
coal for bituminous coal. But many other types of coal characteristics affect
whether coal can be burned in a particular unit even for coal within a single coal
region. Unless EPA produces a unit-by-unit analysis demonstrating that coal can be
substituted in the manner that EPA anticipates, there will be no certainty that
utilities can meet the 2012 compliance deadline through coal-switching and that
unit closures or reductions in operations will not be required.
2.
2014
For compliance with the 2014 SO2 budgets, EPA projects the installation of
scrubbers on 14 GW of generation, in addition to the very substantial amount
otherwise planned for that period. For NOX compliance in 2014, EPA projects the
addition of SCRs on 51 GW of capacity. EPA expresses confidence that utilities can
install scrubbers on 14 GW of capacity during the three year period between 2011
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when the Transport Rule goes into effect and 2014 because utilities installed more
than that amount of scrubbers in past three-year periods in response to CAIR. But
that statement ignores the fact that EPA expects utilities to install scrubbers on an
additional 26 GW of capacity by 2014 under what EPA calls other requirements.
This is a great deal of construction activity in a very limited amount of time. In the
first place, since EPA has overstated the number of scrubbers that will be brought
on line by the beginning of 2012, it has underestimated the number that must be
brought on line between 2012 and 2014. Based on comments that will be
submitted by utility industry entities, industry estimates show that approximately
25 GW of new scrubbers will be required by 2014, not the 14 GW assumed by EPA.
Moreover, NMA understands that utility industry commenters will also be providing
information showing that EPA has severely underestimated the time it takes to plan
for, design and engineer, and construct scrubbers and SCRs. For example, EPA’s
estimate that a scrubber can be brought on line in 30 months is based on general
industry information taken from a period that did not experience the extremely high
volume of scrubber construction that EPA projects in the 2012-14 time period, and
the even higher volume of construction that will likely take place in actuality.
Furthermore, using general figures masks difficulties that may arise at individual
locations. Yet EPA’s ambitious schedule requires that every scrubber project be
completed by 2014, not just a hypothetical “average” project.
As with EPA’s assumptions on coal-switching, if EPA is wrong about the amount of
scrubbers that can be installed by 2014, the result will be the closing of coal plants
or the ramping down of production at those plants. That result, which EPA has not
analyzed, would completely change the basis for EPA’s conclusion that its phase two
emission reductions are cost-effective.
C.
EPA’s 2012 and 2014 Deadlines Result in the Usurpation of
State Authority under the Clean Air Act
The federalist nature of the Clean Air Act is well-established. EPA sets standards,
and states implement those standards through SIPs. Only if states do not submit
an adequate SIP may EPA step in and impose a Federal Implementation Plan (FIP).
Under Section 110(c)(1), EPA may impose a FIP within two years after EPA (a) finds
that a state has failed to make a required SIP submission or finds that the SIP does
not satisfy the minimum criteria under section 110 or (b) disapproves a SIP, unless
the State corrects the deficiency. Under Section 110(k)(5), if EPA finds that a SIP
fails “to mitigate adequately pollution transport” as may be found by EPA under
Sections 176A or 184, “[t]he Administrator shall require the State to revise the plan
as necessary to correct such inadequacies.” Further, “[t]he Administrator shall
notify the State of the inadequacies, and may establish reasonable deadlines … for
the submission of such plan revisions.”
National Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
App.402
U.S. Environmental Protection Agency
October 1, 2010
Page Eighteen
Thus, where as here, EPA has made findings that states are significantly
contributing to the interstate transport of pollution, the required procedure is for
EPA to so notify the states and to give them an adequate opportunity to submit a
SIP revision. If those SIP submissions are inadequate, EPA may impose a FIP.
Here, EPA has improperly reversed the procedure and skipped directly to imposition
of a FIP.
EPA’s reason for doing so, again, is its rush to begin phase one as of 2012. But
EPA’s policy interest does not permit it to ignore plain statutory language.
Moreover, EPA’s statement that imposition of FIPs “would in no way affect the
rights of states to submit … a SIP that replaced the federal requirements of the FIP
with a state requirement” 42 has it exactly backwards. The opportunity for a SIP
precedes the FIP; it doesn’t follow it.
EPA seeks to justify immediate imposition of FIPs on the ground that EPA, as a part
of CAIR, found that states were significantly contributing to downwind NAAQS nonattainment and therefore already had been given more than the required amount of
time to submit conforming SIPs. But, as EPA recognizes, the states fully complied
with the requirements that EPA imposed. As EPA states, following EPA’s interstate
transport findings, EPA in CAIR called for states to cure their SIP deficiencies by
submitting SIP revisions that complied with the standards set forth in CAIR. The
states did so, and EPA approved their SIPs. The only reason why states could be
said to be in violation of CAA interstate transport requirements is because CAIR was
overturned in Court. But that was not the state’s fault; it was EPA’s. Case law
supports a “resetting of the deadline clock” where, as here, states cannot meet
their statutory obligations because of EPA’s failure to carry out its CAA
responsibilities. NRDC v. EPA, 22 F.3d 1125 (D.C. Cir. 1994).
In short, EPA’s imposition of FIPs is improper. EPA should extend the time for
compliance with its phase one and two requirements and allow states adequate
time to formulate conforming SIPs.
D.
The Direct Control Remedy Option Also Usurps State Authority
EPA requests comments on the option of EPA imposing a Direct Control Remedy on
individual units by assigning them emission rates. As discussed, however, EPA
does not have authority to bypass SIPs and impose specific requirements on
individual units. In remedying significant contributions by states to downwind
attainment under section 110, EPA may impose emission reduction obligations on
states—but not on individual units.
E.
No Need Exists to Enforce More Stringent Requirements than
CAIR
42
75 Fed. Reg. at 45,342/2.
National Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
App.403
U.S. Environmental Protection Agency
October 1, 2010
Page Nineteen
Despite generating more and more electricity, the electric utility has made steady
and continuous progress in reducing emissions. According to EPA data, SO2
emissions from powerplants declined by 67 percent from 1980 to 2009, and NOX
emissions declined by 72 percent over the same period. Just in the East, NOX
emissions during the ozone season declined by 80 percent.
This progress will continue at the CAIR level of reductions. CAIR was widely
supported both by environmental groups and industry. It unraveled principally
because of its interstate trading component. But the Court did not require EPA to
produce more emission reductions than the CAIR amounts. CAIR was a reasonable
program when promulgated, and nothing has happened since it was promulgated to
justify further reductions. To the contrary, with the economic situation, load
growth and the demand for electricity has flattened. The country has also
undertaken a variety of new initiatives to foster renewable resource development.
As discussed above, the feasibility of the 2012 and 2014 emission reductions
required by the proposed rule are assumption and model driven—if the assumptions
are wrong, the feasibility of the whole program is in doubt and the economic cost
the program will rise dramatically. EPA has left the public very little time to
challenge (or even understand) these assumptions, and it has left almost no time
between finalization of the rule and the 2012 compliance deadline for
reconsideration of the rule if the assumptions prove to be faulty. Yet EPA already
has in place a program that will lead to an acceleration of the emission reductions
that the country has made in the last three decades.
F.
EPA Should Use the “Monitored-Plus-Modeled” Approach
Departing from its approach in the NOX SIP Call and CAIR, the proposed rule does
not use a combination of monitored and modeled data to determine the downwind
nonattainment areas that must be addressed under the rule. Instead, it uses only
modeled data. This departure from the approach used in the two previous rules is
not explained. The previous approach, however, was preferable because the
purpose of the Transport Rule is to remedy real world nonattainment, not
hypothetical nonattainment shown by a model. EPA should either return to its
previous approach or explain its reasoning for the new approach.
G.
The Proposed Rule Does not Assume Sufficient Emission
Reductions from Local Controls
The premise behind the proposed rule is that, to cure nonattainment or preserve
attainment, upwind sources should control first, then downwind sources should
address any remaining problem. As EPA stated, “EPA continues to believe that a
strategy based on adopting cost effective controls on sources of transported
National Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
App.404
U.S. Environmental Protection Agency
October 1, 2010
Page Twenty
pollutants as a first step will produce a more reasonable, equitable, and optimal
strategy than one beginning with local controls.” 43
In the court decision overturning CAIR, however, the court ruled that EPA’s notions
of what is “reasonable,” “equitable,” or “optimal” are irrelevant in applying the
CAA. 44 Congress determines what is the “reasonable,” “equitable,” and “optimal
strategy for addressing nonattainment and interference with maintenance; EPA
then carries out Congress’ wishes. Section 107(a) of the CAA plainly states that
“[e]ach State shall have the primary responsibility for assuring air quality within the
entire geographic area comprising such State.” EPA thus has it exactly
backwards—under the statute, the nonattaining state must first seek to achieve
attainment through local controls, and the upwind states may then be required to
address any remaining increment of nonattainment.
EPA’s flawed legal analysis is reflected in its base case modeling. That modeling
does not assume any further controls on local sources. Had new local controls been
assumed, the burden on upwind sources would have been reduced. Moreover,
EPA’s Emission Inventory TSD states that modeling of the 2014 control case is
indeed intended as a complete remedy for nonattainment (“The 2014 TR Control
Case was intended to represent the implementation of NOX and SO2 reductions to
attain the existing ozone and PM2.5 NAAQS in the eastern U.S.”).45
EPA’s policy requiring upwind states to go first is based on the Agency’s conclusion
that upwind controls are lower cost than local controls. Whether or not this is true,
it is irrelevant under the CAA. The notion that (presumably) lower cost controls in
upwind states should be installed before (presumably) higher cost local controls
derives from the Agency’s views of interstate equity, a concept that the North
Carolina court specifically found to be beyond the scope of EPA’s power to
implement under the CAA. Thus, EPA should at least have modeled a reasonable
level of local controls to achieve and maintain attainment, a level that cannot be
determined with reference to the cost of upwind controls.
IV.
Conclusion
NMA respectfully urges that EPA defer final action on the proposed Transport Rule
until the Agency has produced a cumulative impact assessment. Specific
recommendations for such an assessment are provided. NMA also urges EPA to
change the compliance deadlines in the proposed rule to more reasonable ones and
to allow states an opportunity to submit SIPs. NMA appreciates the opportunity to
submit these comments.
43
75 Fed. Reg. at 45,226/2.
44
North Carolina v. EPA, 531 F.3d 896, 919 (D.C. Cir. 2008), modified on petitions for rehearing, 550
F.3d 1176 (D.C. Cir. 2008).
45
Technical Support Document (TSD) for the Transport Rule, Docket ID No. EPA-HQ-OAR-2009-0491,
Emissions Inventories, June 2010, at 37.
National Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
App.405
U.S. Environmental Protection Agency
October 1, 2010
Page Twenty One
Sincerely,
Bruce Watzman
Senior Vice President – Regulatory Affairs
National Mining Association 101 Constitution Avenue, NW | Suite 500 East | Washington, DC 20001 | (202) 463-2600
App.406
Copyrighted page/s removed. Copyrighted material is not available in
Regulations.gov since it may not be reproduced without consent of
the copyright holder.
Contact the EPA Docket Center’s Public Reading Room to view
or receive a copy of this document.
Requests for copies may be made as follows:
In person/writing:
Environmental Protection Agency, Docket Center
1301 Constitution Ave NW, 2822T, Room 3334
Washington, DC. 20004
Telephone:
202-566-1744
Fax:
202-566- 9744
Email:
docket-customerservice@epa.gov
App.407
March 25, 2011 — Industry Update
FBR Research
Important disclosures can be found at the end of this document
Utilities
Marc de Croisset
646.885.5423
mdecroisset@fbr.com
Igor Gitelman
646.885.5426
igitelman@fbr.com
Energy Policy
Benjamin Salisbury
703.469.1052
bsalisbury@fbr.com
Metals & Mining
Coal Retirements—25 GW to 50 GW Remain at Risk
Contrary to initial media reports, we believe that EPA’s proposed air toxics rule (a.k.a. the Utility
MACT) has the potential to lead to a significant number of coal plant retirements. The proposal
projects just 10 GW of retirements, but we believe this implies 25 GW of retirements including
planned retirements and the forthcoming transport rule. This scenario depends heavily on the
widespread adoption of dry sorbent injection (DSI) to control emissions. Our analysis suggests
that the potential coal generation retirements from EPA’s two rules could be significantly higher if
DSI does not prove to be a successful alternative to scrubbing. In a scenario in which DSI is
impractical, coal retirements could be north of 50 GW. Thus, we maintain our view that 45 GW in
coal retirements is plausible, which would help normalize power markets. Retirements in the 35
GW range are possible if DSI proves more effective than we are assuming. Beneficiaries of the
coal fleet transformation are listed below.
The EPA’s proposed rule is stringent on hazardous air pollutants. The standards call for
reductions of 91% for mercury and acid gases and 55% for sulfur dioxide (SO2). EPA’s draft
chose to employ few of its flexibility options including subcategorization, health standards,
or monitoring during startup, malfunction, or shutdown. To date, the proposed standards
for hydrogen chloride (HCl) and mercury (Hg) appear challenging to achieve. Presently, only
12 of the best-performing generation units in each category meet the combination of these
two standards. These units are dressed for success and typically sport a full suite of
environmental controls (but not DSI). While the EPA has proposed DSI in combination with
fabric filters as a means to reduce HCl emissions, our conversations suggest that practical
use of this approach may have limits. The proposal would allow for a 30-day rolling average
compliance period and unit averaging within a facility.
DSI will drive the coal retirement debate. EPA’s headline retirement figure of 10 GW refers
to the incremental impact of the MACT rule after accounting for planned retirements and
the transport rule. EPA’s own gross retirement projection is in fact 25 GW, which reflects
widespread adoption of DSI. However, the practical applicability of DSI remains a debatable
point due to the disposal of additional ash produced, reliability of the reagent supply chain,
the lack of utility sector experience with this technology, and the potential impact on
dispatch. More limited adoption of this technology could lift the retirement number above
50 GW. Conversely, widespread adoption of DSI for sub-bituminous coals could reduce our
coal retirement expectation from 45 GW to 35 GW. Lower retirement numbers would
require even more adoption of DSI for on-the-bubble low-sulfur bituminous coal and from a
possible increase in low-sulfur coal blending.
Likely beneficiaries of higher retirements include select electric utilities and their
suppliers. For companies under coverage, acceleration in rate base growth is plausible for
The Southern Company (SO – Market Perform), Duke Energy Corporation (DUK –
Underperform), and Progress Energy (PGN – Market Perform). FirstEnergy Corporation (FE –
Market Perform) and PPL Corporation (PPL – Outperform) would likely receive a boost from
tightening power markets by 2015. Coal burn affected could reach up to 66 million tons and
gas could increase by up to 4.2 Bcf/day.
David Khani, CFA
703.469.1179
dkhani@fbr.com
Mitesh Thakkar
703.312.9705
mthakkar@fbr.com
App.408
Institutional Brokerage, Research and Investment Banking
FBR CAPITAL MARKETS
Table of Contents
The Proposed Rule Is Stringent on Hazardous Air Pollutants .................................................................... .................................... 3
What Is the Profile of a Top-Performing Plant? ................................................................................ ............................................. 5
Overview of the EPA’s Utility MACT Standards .............................................................................................................................. 6
What Are the EPA’s Proposed Requirements? .......................................................................................................................... 6
What Are the Paths to Compliance According to the EPA? ....................................................................................................... 7
How Does the EPA See Compliance Unfold? ....................................................................................... ...................................... 9
DSI May Be Required to Avoid Heavy Coal Retirements .............................................................................................................. 10
Impact of Retirements on Coal Demand .......................................................................................... ............................................ 13
Mercury Standard Appears to be Readily Achievable .................................................................................................................. 14
Policy Overview: EPA Rulemaking for Coal Generation ............................................................................................................... 16
Public Policy Factors Put Downward Pressure on Retirements ................................................................................................... 16
Appendix 1: List of Plants That Define the Top 12% by Category ................................................................................................ 18
Appendix 2: List of EPA’s Projected Coal Retirements by Unit .................................................................................................... 22
Industry Risks ................................................................................................................ ............................................................... 27
Energy & Natural Resources
App.409
2
Institutional Brokerage, Research and Investment Banking
FBR CAPITAL MARKETS
The Proposed Rule Is Stringent on Hazardous Air Pollutants
The proposed air toxics rule (a.k.a. the Utility MACT or Maximum Achievable Control Technology
rule) may have been initially interpreted by the market as lenient upon its release. This view may
have been supported by a number of provisions highlighted by the EPA, such as language
encouraging one-year extensions, a carve-out for lignite, unit averaging for emissions, and a 10 GW
headline number for coal retirements. However, the feasibility of achieving the HCl standard (a proxy
for acid gases) in particular makes this rule a challenge. EPA envisions that this requirement could be
met with the widespread use of dry sorbent injection (DSI), a substitute for scrubbers in capturing
HCl emissions, and, to a lesser extent, SO2. Practical limitations on the adoption of DSI, including its
impact on dispatch, could force more coal retirements than anticipated by the EPA.
By design, the MACT is prospective—the law’s goal is to require greater adoption of best-performing
technology (see our December 13 note, “Coal Retirements in Perspective—Quantifying the
Upcoming EPA Rules,” for a legal background). Our examination of what EPA views as the bestperforming units in the coal fleet confirms that nearly every coal-fired plant in the country will have
to install additional controls in order to comply with the new standards.
Very few of the highest-performing plants currently meet the combined requirements for HCl,
Hg, and particulate matter (PM). Utilities must comply with each of the three proposed
hazardous air pollutant (HAP) standards (Hg, HCl, and fine particulate matter [PM2.5])
separately. Only 12 of the units used by EPA to represent the top 12% performing units appear
to pass both the HCl and Hg standards.
Top performing plants are dressed for success, and without DSI. We analyzed EPA’s topperforming units that set the Hg and HCl floors and identified their general profile. Within the Hg
group, most bituminous units use an FGD and FF combination, and most sub-bituminous units
use an ACI/electrostatic precipitator (ESP) combination. Within the HCl group, most bituminous
units (roughly two-thirds of all units that set this floor) use an FGD/FF or FGD/ESP combination.
Only five units use solely DSI to control HCl or SO2 emissions.
EPA’s 10 GW headline coal retirement number from the MACT rule is not the full story.
Potential retirements could be higher. The EPA base case estimates 299 GW of coal generation
in 2015, down from 317 GW in 2010, which reflects an 18 GW decline in coal capacity assuming
the toxics and transport rules. This decline includes roughly 5 GW of planned retirements and 7
GW of planned coal additions through 2015. Thus, it appears that the EPA is forecasting for 18
GW + 7 GW = 25 GW of coal retirements through 2015, including what is already planned. Please
refer to Appendix 2 for a list of EPA’s coal retirement projections by unit.
EPA Projects Retirements of Old and Underutilized Plants (As Do We)
EPA
Specs Exclude New Additions
Category
Average
Age
Average
Capacity
(MW)
Average
Capacity
Factor
FBR
Specs Exclude New Additions
Retirem ent
Prediction
through
2015 (GW)
Average
Age
Average
Capacity
(MW)
All-in
Average Retirem ent
Capacity Prediction
Factor
(GW)
Retired Units
51
109
56%
25
46
110
54%
45
Operational Units in 2015
44
278
71%
299
42
271
67%
279
Average/Sum
45
265
70%
324
43
249
65%
324
Source: SNL, EPA, and FBR Research
The effective stringency of the proposed rule and subsequent retirements will pivot on EPA’s
DSI assumptions. The EPA projects that DSI installations could, in part, be used to remediate HCl
and, to a lesser extent, SO2 emissions in lieu of an FGD (thus preempting potential retirements
for small coal units). The EPA’s forecast reflects 65 GW of DSI installations by 2015, 56 GW of
which would be driven by the proposed MACT rule. If DSI proves to be less practical or economic
than assumed by the EPA, coal retirements could span a range of 25 GW to 81 GW (25 GW + 56
GW) if no DSI installations take place, which is unlikely. Assuming that half of DSI installations
prove practical for what we believe is the addressable market for this technology, then coal
Energy & Natural Resources
App.410
3
Institutional Brokerage, Research and Investment Banking
FBR CAPITAL MARKETS
retirement estimates could span 25 GW to 53 GW (25 GW + 56 GW/2) using the EPA’s
methodology. Practical limitations to the use for DSI include the disposal of ash, reliability of the
reagent supply chain, and the lack of utility sector experience with this technology. Also, we note
that the high variable cost associated with DSI could push down the utilization rate of many coal
plants to the point where one would simply retire them.
Our coal retirement estimate of 45 GW could be 35 GW if we assume widespread adoption of
DSI. We see roughly 10 GW in capacity among our high-risk plants that could support DSI and
thus potentially meet some of the proposed standards.
We Expect Co
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