National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units-Reconsideration of Supplemental Finding and Residual Risk and Technology Review

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[EPA-HQ-OAR-2018-0794; FRL-10008-60-OAR]

RIN 2060-AT99

National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

The U.S. Environmental Protection Agency (EPA) is revising its response to the U.S. Supreme Court decision in

Michigan

v.

EPA,

which held that the EPA erred by not considering cost in its determination that regulation under section 112 of the Clean Air Act (CAA) of hazardous air pollutant (HAP) emissions from coal- and oil-fired electric utility steam generating units (EGUs) is appropriate and necessary. After primarily comparing the cost of compliance relative to the benefits of HAP emission reduction from regulation, the EPA finds that it is not “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired EGUs, thereby reversing the Agency's previous conclusion under CAA section 112(n)(1)(A) and correcting flaws in the Agency's prior response to

Michigan

v.

EPA.

We further find that finalizing this new response to

Michigan

v.

EPA

will not remove the Coal- and Oil-Fired EGU source category from the CAA section 112(c) list of sources that must be regulated under CAA section 112(d) and will not affect the existing CAA section 112(d) emissions standards that regulate HAP emissions from coal- and oil-fired EGUs. The EPA is also finalizing the residual risk and technology review (RTR) conducted for the Coal- and Oil-Fired EGU source category regulated under national emission standards for hazardous air pollutants (NESHAP), commonly referred to as the Mercury and Air Toxics Standards (MATS). Based on the results of the RTR analyses, the Agency is not promulgating any revisions to the MATS rule.

DATES:

Effective May 22, 2020.

ADDRESSES:

The EPA has established a docket for these actions under Docket ID No. EPA-HQ-OAR-2018-0794.

1

All documents in the docket are listed on the

https://www.regulations.gov/

website. Although listed, some information is not publicly available,

e.g.,

confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through

https://www.regulations.gov/,

or in hard copy at the EPA Docket Center, WJC West Building, Room Number 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room hours of operation are 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through Friday. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Docket Center is (202) 566-1742.

1

As explained in a memorandum to the docket, the docket for these actions include the documents and information, in whatever form, in Docket ID Nos. EPA-HQ-OAR-2009-0234 (National Emission Standards for Hazardous Air Pollutants for Coal- and Oil-fired Electric Utility Steam Generating Units), EPA-HQ-OAR-2002-0056 (National Emission Standards for Hazardous Air Pollutants for Utility Air Toxics; Clean Air Mercury Rule (CAMR)), and Legacy Docket ID No. A-92-55 (Electric Utility Hazardous Air Pollutant Emission Study).

See

memorandum titled

Incorporation by reference of Docket Number EPA-HQ-OAR-2009-0234, Docket Number EPA-HQ-OAR-2002-0056, and Docket Number A-92-55 into Docket Number EPA-HQ-OAR-2018-0794

(Docket ID Item No. EPA-HQ-OAR-2018-0794-0005).

FOR FURTHER INFORMATION CONTACT:

For questions about these final actions, contact Mary Johnson, Sector Policies and Programs Division (D243-01), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-5025; and email address:

johnson.mary@epa.gov.

For specific information regarding the risk modeling methodology, contact Mark Morris, Health and Environmental Impacts Division (C539-02), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541-5416; and email address:

morris.mark@epa.gov.

For information about the applicability of the NESHAP to a particular entity, contact your EPA Regional representative as listed in 40 CFR 63.13 (General Provisions).

SUPPLEMENTARY INFORMATION:

Preamble acronyms and abbreviations.

We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

CAA Clean Air Act

CAMR Clean Air Mercury Rule

CEMS continuous emissions monitoring systems

CFR Code of Federal Regulations

CRA Congressional Review Act

EGU electric utility steam generating unit

EPA Environmental Protection Agency

EPRI Electric Power Research Institute

HAP hazardous air pollutant(s)

HCl hydrochloric acid

HF hydrogen fluoride

HQ hazard quotient

ICR information collection request

km kilometer

MACT maximum achievable control technology

MATS Mercury and Air Toxics Standards

MIR maximum individual risk

MW megawatt

NAAQS National Ambient Air Quality Standards

NAICS North American Industry Classification System

NEI National Emissions Inventory

NESHAP national emission standards for hazardous air pollutants

NOAEL no-observed-adverse-effect-level

NO

X

nitrogen oxides

NTTAA National Technology Transfer and Advancement Act

OAQPS Office of Air Quality Planning and Standards

OMB Office of Management and Budget

PB-HAP hazardous air pollutants known to be persistent and bio-accumulative in the environment

PDF Portable Document Format

PM particulate matter

PM

2.5

fine particulate matter

POM polycyclic organic matter

PRA Paperwork Reduction Act

RDL representative detection level

REL reference exposure level

RFA Regulatory Flexibility Act

RIA regulatory impact analysis

RTR residual risk and technology review

SO

2

sulfur dioxide

TOSHI target organ-specific hazard index

tpy tons per year

UMRA Unfunded Mandates Reform Act

Background information.

With this action, the EPA is, after review and consideration of public comments, finalizing two aspects of the 2019 Proposal. On February 7, 2019, the EPA proposed to find that it is not “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired EGUs, thereby reversing the Agency's prior conclusion under CAA section 112(n)(1)(A) and correcting flaws in the Agency's prior response to

Michigan

v.

EPA,

135 S. Ct. 2699 (2015). 84 FR 2670 (2019 Proposal). We further proposed that finalizing this new response to

Michigan

v.

EPA

would not remove the Coal- and Oil-Fired EGU source category from the CAA section 112(c) list of sources that must be regulated under CAA section 112(d) and would not

affect the existing CAA section 112(d) emissions standards that regulate HAP emissions from coal- and oil-fired EGUs. In the same action, the EPA also proposed the results of the RTR of the NESHAP for Coal- and Oil-Fired EGUs. In this action, we are taking final action with regard to these aspects of the 2019 Proposal.

2

We summarize some of the more significant comments regarding the proposed rule and provide our responses in this preamble. A summary of all other significant comments on the 2019 Proposal and the EPA's responses to those comments is available in the document titled

Final Supplemental Finding and Risk and Technology Review for the NESHAP for Coal- and Oil-Fired EGUs Response to Public Comments on February 7, 2019 Proposal

(Response-to-Comment (RTC) document), in Docket ID No. EPA-HQ-OAR-2018-0794.

2

The EPA took final action on the other aspect of the 2019 Proposal (

i.e.,

solicitation of comment on establishing a subcategory of certain existing EGUs firing eastern bituminous coal refuse for emissions of acid gas HAP) on April 15, 2020, in a separate action (85 FR 20838).

Organization of this document.

The information in this preamble is organized as follows:

I. General Information

A. Do these actions apply to me?

B. Where can I get a copy of this document and other related information?

C. Judicial Review and Administrative Reconsideration

II. Appropriate and Necessary Finding

A. Overview

B. Background

C. EPA's Finding Under CAA Section 112(n)(1)(A)

D. Effects of This Reversal of the Supplemental Finding

III. Background on the RTR Action

A. What is the statutory authority for this action?

B. What is the Coal- and Oil-Fired EGU source category and how does the NESHAP regulate HAP emissions from the source category?

C. What changes did we propose for the Coal- and Oil-Fired EGU source category in our February 7, 2019, proposed rule?

IV. What is included in this final rule based on results of the RTR?

A. What are the final rule amendments based on the residual risk review for the Coal- and Oil-Fired EGU source category?

B. What are the final rule amendments based on the technology review for the Coal- and Oil-Fired EGU source category?

C. What are the effective and compliance dates of the standards?

V. What is the rationale for our final decisions regarding the RTR action for the Coal- and Oil-Fired EGU source category?

A. Residual Risk Review for the Coal- and Oil-Fired EGU Source Category

B. Technology Review for the Coal- and Oil-Fired EGU Source Category

VI. Summary of Cost, Environmental, and Economic Impacts and Additional Analyses Conducted

A. What are the affected facilities?

B. What are the air quality impacts?

C. What are the cost impacts?

D. What are the economic impacts?

E. What are the benefits?

F. What analysis of environmental justice did we conduct?

G. What analysis of children's environmental health did we conduct?

VII. Statutory and Executive Order Reviews

A. Executive Orders 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. Executive Order 13771: Reducing Regulation and Controlling Regulatory Costs

C. Paperwork Reduction Act (PRA)

D. Regulatory Flexibility Act (RFA)

E. Unfunded Mandates Reform Act (UMRA)

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act (NTTAA)

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

L. Congressional Review Act (CRA)

I. General Information

A. Do these actions apply to me?

Regulated entities.

Categories and entities potentially regulated by these final actions are shown in Table 1 of this preamble.

Table 1—NESHAP and Industrial Source Categories Affected by These Final Actions

NESHAP and source category

NAICS

1

code

Coal- and Oil-Fired EGUs

221112, 221122, 921150.

North American Industry Classification System.

Table 1 of this preamble is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by these final actions for the source category listed. To determine whether your facility is affected, you should examine the applicability criteria in the appropriate NESHAP. If you have any questions regarding the applicability of any aspect of this NESHAP, please contact the appropriate person listed in the preceding

FOR FURTHER INFORMATION CONTACT

section of this preamble.

B. Where can I get a copy of this document and other related information?

In addition to being available in the docket, an electronic copy of this document will also be available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this document at:

https://www.epa.gov/mats/regulatory-actions-final-mercury-and-air-toxics-standards-mats-power-plants.

Following publication in the

Federal Register

, the EPA will post the

Federal Register

version and key technical documents at this same website.

Additional information regarding the RTR action is available on the RTR website at

https://www3.epa.gov/ttn/atw/rrisk/rtrpg.html.

This information includes an overview of the RTR program, links to project websites for the RTR source categories, and detailed emissions and other data we used as inputs to the risk assessments.

C. Judicial Review and Administrative Reconsideration

Under CAA section 307(b)(1), judicial review of these final actions is available only by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) by July 21, 2020. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by the EPA to enforce the requirements.

Section 307(d)(7)(B) of the CAA further provides that only an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised

during judicial review. That section of the CAA also provides a mechanism for the EPA to reconsider the rule if the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within the period for public comment or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule. Any person seeking to make such a demonstration should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, WJC South Building, 1200 Pennsylvania Ave. NW, Washington, DC 20460, with a copy to both the person(s) listed in the preceding

FOR FURTHER INFORMATION CONTACT

section, and the Associate General Counsel for the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

II. Appropriate and Necessary Finding

A. Overview

On June 29, 2015, the U.S. Supreme Court ruled in

Michigan

v.

EPA

that the Agency had erred when it failed to take cost into account in its previous CAA section 112(n)(1)(A) determination that it is appropriate and necessary to regulate HAP emissions from coal- and oil-fired EGUs. In response to that decision, the EPA finalized a supplemental finding on April 25, 2016, that evaluated cost considerations and concluded that the appropriate and necessary finding was still valid. 81 FR 24420 (2016 Supplemental Finding). On February 7, 2019, the EPA proposed a revised response to the U.S. Supreme Court decision. 84 FR 2670 (2019 Proposal). In the 2019 Proposal, after primarily comparing the cost of compliance relative to the benefits of HAP emission reduction from regulation, the EPA proposed to find that it is not appropriate and necessary to regulate HAP emissions from coal- and oil-fired EGUs, thereby reversing the Agency's conclusion under CAA section 112(n)(1)(A), first made in 2000 and later affirmed in 2012 and 2016. Specifically, the Agency proposed that the 2016 Supplemental Finding considering the cost of MATS was flawed as it did not satisfy the EPA's obligation under CAA section 112(n)(1)(A), as interpreted by the U.S. Supreme Court in

Michigan.

Additionally, the EPA proposed that while finalizing the action would reverse the 2016 Supplemental Finding, it would not remove the Coal- and Oil-Fired EGU source category from the CAA section 112(c)(1) list, nor would it affect the existing CAA section 112(d) emissions standards regulating HAP emissions from coal- and oil-fired EGUs that were promulgated on February 16, 2012. 77 FR 9304 (2012 MATS Final Rule).

In section II.B of this preamble, which finalizes the reversal of the 2016 Supplemental Finding, the EPA provides background information regarding the previous appropriate and necessary findings, including the affirmations in the preamble of the 2012 MATS Final Rule and in the 2016 Supplemental Finding. Section II.C of this preamble describes why the 2016 Supplemental Finding was flawed, why the EPA has authority to revisit that finding now, and what the EPA is finalizing as the appropriate approach to satisfy the EPA's obligation under CAA section 112(n)(1)(A) as interpreted by the U.S. Supreme Court in

Michigan.

Finally, section II.D of this preamble explains that the EPA's revised determination that regulation of HAP emissions from EGUs under CAA section 112 is not appropriate and necessary will not remove coal- and oil-fired EGUs from the CAA section 112(c) list of source categories, and that the previously established CAA section 112(d) standards for HAP emissions from coal- and oil-fired EGUs will remain in place. In this preamble, the EPA provides a summary of certain significant comments received on the 2019 Proposal and the Agency's response to those comments. The RTC document for this action summarizes and responds to all other significant comments that the EPA received.

B. Background

The CAA establishes a multi-step process for the EPA to regulate HAP emissions from EGUs. First, section 112(n)(1)(A) of the CAA requires the EPA to perform a study of the hazards to public health reasonably anticipated to occur as a result of HAP emissions from EGUs “after imposition of the requirements of this chapter.”

3

If, after considering the results of this study, the EPA determines that it is “appropriate and necessary” to regulate EGUs under CAA section 112, the EPA shall then do so.

3

See

CAA section 112(n)(1)(A);

see

also

Michigan

v.

EPA,

135 S. Ct. at 2705 (“Quite apart from the hazardous-air-pollutants program, the Clean Air Act Amendments of 1990 subjected power plants to various regulatory requirements. The parties agree that these requirements were expected to have the collateral effect of reducing power plants' emissions of hazardous air pollutants, although the extent of the reduction was unclear.”).

The required study, which the EPA completed in 1998, contained an analysis of HAP emissions from EGUs, an assessment of the hazards and risks due to inhalation exposures to these emitted pollutants, and a multipathway (inhalation plus non-inhalation exposures) risk assessment for mercury and a subset of other relevant HAP.

4

The study indicated that mercury was the HAP of greatest concern to public health from coal- and oil-fired EGUs. Mercury is highly toxic, persistent, and bioaccumulates in food chains. The study also concluded that numerous control strategies, of varying cost and efficiency, were available to reduce HAP emissions from this source category. Based on this study and other available information, the EPA determined in December 2000, pursuant to CAA section 112(n)(1)(A), that it was appropriate and necessary to regulate coal- and oil-fired EGUs under CAA section 112 and added such units to the CAA section 112(c) list of sources that must be regulated under CAA section 112(d). 65 FR 79825 (December 20, 2000) (2000 Finding).

5

The 2000 Finding did not consider the cost of regulating EGUs in its finding that it was appropriate and necessary to do so.

Id.

at 79830.

4

U.S. EPA. 1998.

Study of Hazardous Air Pollutant Emissions from Electric Utility Steam Generating Units—Final Report to Congress, Volume 1.

EPA-453/R-98-004a.

5

In the same 2000 action, the EPA Administrator found that regulation of HAP emissions from natural gas-fired EGUs is not appropriate or necessary. 65 FR 79826.

In 2005, the EPA revised the original 2000 Finding and concluded that it was neither appropriate nor necessary to regulate EGUs under CAA section 112. 70 FR 15994 (March 29, 2005) (2005 Revision). This action was taken because, at that time, the EPA concluded that the original 2000 Finding lacked foundation in that it failed to consider: (1) The HAP reductions that could be obtained through implementation of CAA sections 110 and 111; and (2) whether hazards to public health would still exist after imposition of emission reduction rules under those sections. The 2005 Revision also removed coal- and oil-fired EGUs from the CAA section 112(c) list of source categories to be regulated under CAA section 112. In a separate but related 2005 action, the EPA also promulgated the Clean Air Mercury Rule (CAMR) which established CAA section 111 standards of performance for mercury emissions from EGUs. 70 FR 28605 (May 18, 2005).

Both the 2005 Revision and the CAMR were vacated by the D.C. Circuit in 2008. The Court held that the EPA had failed to comply with the requirements of CAA section 112(c)(9) for delisting source categories, and consequently also vacated the CAA section 111 performance standards promulgated in CAMR, without addressing the merits of those standards.

New Jersey

v.

EPA,

517 F.3d 574 (D.C. Cir. 2008).

In response to the

New Jersey

decision, the EPA conducted additional technical analyses, including peer-reviewed risk assessments on human health effects associated with mercury and non-mercury HAP emissions from EGUs, focusing on risks to the most exposed and sensitive individuals in the population. Those analyses found that mercury and non-mercury HAP emissions from EGUs remain a significant public health hazard and that EGUs were the largest U.S. anthropogenic source of mercury emissions to the atmosphere.

6

Based on these findings, in 2012, the EPA affirmed the original 2000 Finding that it is appropriate and necessary to regulate EGUs under CAA section 112. 77 FR 9304 (February 16, 2012).

6

U.S. EPA. 2011.

Revised Technical Support Document: National-Scale Assessment of Mercury Risk to Populations with High Consumption of Self-caught Freshwater Fish in Support of the Appropriate and Necessary Finding for Coal- and Oil-Fired Electric Generating Units.

Office of Air Quality Planning and Standards. December. EPA-452/R-11-009. Docket ID Item No. EPA-HQ-OAR-2009-0234-19913.

In the same 2012 action, the EPA established a NESHAP, commonly called MATS, that required coal- and oil-fired EGUs to meet HAP emission standards reflecting the application of the maximum achievable control technology (MACT) for mercury and other air toxics. After MATS was promulgated, both the rule itself and many aspects of the EPA's appropriate and necessary finding were challenged in the D.C. Circuit. In

White Stallion Energy Center

v.

EPA,

the Court denied all challenges. 748 F.3d 1322 (D.C. Cir. 2014). One judge dissented, expressing the view that the EPA erred by refusing to consider cost in its “appropriate and necessary” determination.

Id.

at 1258-59 (Kavanaugh, J., dissenting).

The U.S. Supreme Court subsequently granted

certiorari,

directing the parties to address a single question posed by the Court itself: “Whether the Environmental Protection Agency unreasonably refused to consider cost in determining whether it is appropriate to regulate hazardous air pollutants emitted by electric utilities.”

Michigan

v.

EPA,

135 S. Ct. 702 (Mem.) (2014). In 2015, the U.S. Supreme Court held that “EPA interpreted [CAA section 112(n)(1)(A)] unreasonably when it deemed cost irrelevant to the decision to regulate power plants.”

Michigan

v.

EPA,

135 S. Ct. 2699, 2712 (2015). In so holding, the U.S. Supreme Court found that the EPA “must consider cost—including, most importantly, cost of compliance—before deciding whether regulation is appropriate and necessary.”

Id.

at 2711. It is “up the Agency,” the Court added, “to decide (as always, within the limits of reasonable interpretation) how to account for cost.”

Id.

The rule was ultimately remanded back to the EPA (without vacatur) to complete the required cost analysis.

White Stallion Energy Ctr.

v.

EPA,

No. 12-1100, ECF No. 1588459 (D.C. Cir. December 15, 2015).

In response to the U.S. Supreme Court's direction, the EPA in the 2016 Supplemental Finding promulgated two different approaches to incorporate cost into the appropriate and necessary finding. 81 FR 24420. The EPA's preferred approach (referred to as the “cost reasonableness” approach) compared the estimated cost of compliance in the regulatory impact analysis (RIA) for the 2012 MATS Final Rule (referred to here as 2011 RIA

7

) against several cost metrics relevant to the EGU sector (

e.g.,

historical annual revenues, annual capital expenditures, and impacts on retail electricity prices). The “cost reasonableness” approach did not compare costs to benefits. Under this approach, the EPA concluded that the power sector would be able to comply with the MATS requirements while maintaining its ability to generate, transmit, and distribute reliable electricity at reasonable cost to consumers. Using a totality-of-the-circumstances approach, the EPA weighed this analysis that the costs of the rule were reasonable along with its prior findings about the amount of HAP pollution coming from the Coal- and Oil-Fired EGU source category, the scientific studies and modeling assessing the risks to public health and the environment from domestic EGU HAP pollution, and information about the toxicity and persistence of HAP in the environment.

7

U.S. EPA. 2011.

Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards.

EPA-452/R-11-011. Available at:

https://www3.epa.gov/ttn/ecas/docs/ria/utilities_ria_final-mats_2011-12.pdf.

In a second, alternative, and independent approach (referred to as the “cost benefit” approach), the EPA considered the benefit-cost analysis in the RIA for the 2012 MATS Final Rule. In that analysis, the EPA estimated that the final MATS rule would yield total annual monetized benefits (in 2007 dollars) of between $37 billion to $90 billion using a 3-percent discount rate and $33 billion to $81 billion using a 7-percent discount rate, plus additional benefits that cannot be quantified, in comparison to the projected $9.6 billion in annual compliance costs. That analysis reflects that 99.9 percent of the total annual monetized benefits were attributable not to benefits from HAP reduction, but rather from benefits from co-reduction of non-HAP pollutants. In the 2016 Supplemental Finding, the EPA determined that both the preferred “cost reasonableness” approach and the alternative “cost benefit” approach supported the conclusion that regulation of HAP emissions from EGUs is appropriate and necessary.

Several state and industry groups petitioned for review of the 2016 Supplemental Finding in the D.C. Circuit.

Murray Energy Corp.

v.

EPA,

No. 16-1127 (D.C. Cir. filed April 25, 2016). In April 2017, the EPA moved the D.C. Circuit to continue oral argument and hold the case in abeyance in order to give the new Administration an opportunity to review the 2016 action. (As further explained below, as of the date of signature, the case remains pending in the D.C. Circuit.) Accordingly, the EPA reviewed the 2016 action and proposed on February 7, 2019, to correct flaws in the prior response to

Michigan

v.

EPA

(84 FR 2670). Specifically, the 2019 Proposal proposed to reverse the 2016 action and to conclude that it is not “appropriate and necessary” to regulate HAP emissions from coal- and oil-fired EGUs. The public comment period for the 2019 Proposal ended on April 17, 2019. The remainder of this section of this preamble responds to significant comments received on the appropriate and necessary finding and describes the EPA's justification for finalizing this reversal of the 2016 Supplemental Finding.

C. EPA's Finding Under CAA Section 112(n)(1)(A)

1. EPA Has the Statutory Authority To Revisit the Appropriate and Necessary Finding

a. Summary of 2019 Proposal

Section 112(n)(1)(A) of the CAA directs the Administrator of the EPA to determine whether it is “appropriate and necessary” to regulate HAP emissions from fossil fuel-fired EGUs after conducting a study of the hazards to public health reasonably anticipated to occur as a result of emissions of HAP

from EGUs after imposition of emission controls imposed under other provisions of the CAA. In

Michigan

v.

EPA,

the U.S. Supreme Court instructed the Agency that it was required to consider cost as part of its appropriate and necessary determination. The Agency completed a consideration of the cost to regulate HAP emissions from coal- and oil-fired EGUs in the 2016 Supplemental Finding. The EPA's 2019 action proposed to revisit the 2016 Supplemental Finding's consideration of cost, on the basis that the 2016 action is flawed. The 2019 Proposal stated that such reexamination was permissible as a basic principle of administrative law and under the CAA. 84 FR 2674 n.3.

b. Final Rule

The EPA is finalizing this action as proposed in February 2019 on the basis that the CAA and CAA section 112(n)(1)(A) do not prohibit the Administrator from revisiting a prior finding made under that section.

c. Comments and Responses

Comment:

Some commenters asserted that it is unlawful for the EPA to revisit its 2016 Supplemental Finding at all, because the EPA has completed the analytic process Congress set in motion in 1990, and the statute unambiguously prohibits the EPA from revisiting or revising the CAA section 112(n)(1)(A) finding. Commenters asserted that the legislative history, statutory context, and statutory structure support their position that Congress intended the CAA section 112(n)(1)(A) appropriate and necessary finding to be a one-time decision, and that the provision gives the EPA “limited discretion to activate a one-way switch to `turn on' regulation of power plants.” The commenters argued that “[o]nce EPA turns on that switch, as it did in its 2000 finding . . . it must regulate power plants under section 112.”

Moreover, those commenters argued that even if CAA section 112 were ambiguous as to the EPA's authority to revisit the appropriate and necessary finding, the EPA was still bound to follow CAA section 112(c)(9)'s delisting procedure before it could reverse its finding under CAA section 112(n)(1)(A). The commenters claimed that

New Jersey

confirms that the EPA lacks inherent authority to reconsider the appropriate and necessary finding.

Finally, the commenters claimed that it would be “illogical” for the EPA to have authority to revise the appropriate and necessary finding independent of removing power plants from the list of regulated sources under CAA section 112. Commenters argued that a revised finding that has no regulatory effect would be “inherently irrational,” and that the EPA has failed to articulate a reasoned basis for undertaking this action (citing

Air Alliance Houston

v.

EPA,

906 F.3d 1049 (D.C. Cir. 2018), and asserting that in that decision the D.C. Circuit found an EPA rule irrational where the EPA tried to “have it both ways” by claiming that a rule was necessary to prevent harms to regulated industry but also “does nothing more than maintain the status quo,”

Id.

at 1068).

Other commenters said that the EPA has authority to reconsider prior Agency decisions and the 2016 Supplemental Finding in particular. These commenters noted that if the 2016 Supplemental Finding were left unamended, it would establish policy precedents at odds with well-established precepts about how benefits and costs should be considered in regulatory decisions.

Response:

The EPA disagrees with commenters that CAA section 112(n)(1)(A) speaks to the EPA's authority to revisit its appropriate and necessary finding, and we, therefore, disagree with commenters' contention that the statute on its face prohibits the EPA from revisiting a determination made under that provision. The provision reads: “The Administrator shall regulate electric utility steam generating units under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph [the “Utility Study”

8

].” The only clear requirement with regard to timing or sequence found in the text of the provision is that the Administrator may not make the finding prior to considering the results of the Utility Study, which the EPA completed in 1998. The statute does not restrict the Administrator's ability to revise or reconsider a prior finding made under CAA section 112(n)(1)(A).

8

CAA section 112(n)(1)(A) directs the EPA to conduct a study to evaluate the hazards to public health reasonably anticipated to occur as the result of HAP emissions from EGUs after the imposition of the requirements of the CAA, and to report the results of such study to Congress by November 15, 1993.

See

U.S. EPA,

Study of Hazardous Air Pollutant Emissions from Electric Utility Steam Generating Units—Final Report to Congress.

EPA-453/R-98-004a, February 1998.

We also disagree with commenters' argument that because other statutory provisions in the CAA mandate that the EPA review and revise regulations on a set schedule or continuing basis, it must follow that every other statutory provision lacking such a review-and-revise clause prohibits an agency from rethinking its interpretation of such provision. The EPA's CAA rulemaking history contains many examples of the Agency's changing position on a previous interpretation of a provision, even where there is no explicit directive within the provision to review or revise.

Absent a specific statutory prohibition, the EPA's ability to revisit existing decisions is well established. The EPA has inherent authority to reconsider and/or revise past decisions to the extent permitted by law so long as the Agency provides a reasoned explanation. The authority to reconsider exists in part because the EPA's interpretations of statutes it administers “[are not] instantly carved in stone,” but must be evaluated “on a continuing basis.”

Chevron U.S.A.

v.

Natural Resources Defense Council,

467 U.S. 837, 863-64. This is true when, as is the case here, review is undertaken partly “in response to . . . a change in administrations.”

National Cable & Telecommunications Ass'n

v.

Brand X internet Services,

545 U.S. 967, 981 (2005). Indeed, “[a]gencies obviously have broad discretion to reconsider a regulation at any time.”

Clean Air Council

v.

Pruitt,

862 F.3d 1, 8-9 (D.C. Cir. 2017).

Commenters' assertions that the statutory context and structure of CAA section 112 and the legislative history of that provision support their view that the EPA lacks authority to revisit its CAA section 112(n)(1)(A) determination are marred by the commenters' assumed premise that the EPA necessarily would find that it

is

appropriate and necessary to regulate EGUs. The commenters argue that their interpretation of the statute must be correct because it creates a tidy framework: The EPA makes an affirmative appropriate and necessary finding, regulations under CAA section 112 are promulgated, and the

only

statutory means by which the appropriate and necessary finding could be revisited is to satisfy the delisting criteria under CAA section 112(c)(9). According to commenters, such a framework fits with Congress' concerns about dangers to public health and welfare due to air pollution and what they broadly characterize as congressional desire to regulate HAP from power plants “promptly.” The problem with the commenters' statutory interpretation is that it makes sense only if an affirmative appropriate and necessary finding occurs in the first instance. If, as commenters assert, CAA section 112(c)(9) is the

only

statutory means by which a finding under CAA section 112(n)(1)(A) may be revisited, commenters' framework provides no pathway by which the EPA could revisit

a finding that it is

not

appropriate and necessary to regulate HAP from power plants. Commenters' “unambiguous” reading of CAA section 112(n)(1)(A) and its assumption that Congress drafted the provision in order to ensure “prompt” reductions of HAP from EGUs treats an affirmative finding under that section as a foregone conclusion rather than a decision left up to the expertise of the Agency and its Administrator.

The commenters' reading of the statute also cannot be squared with the

Michigan

v.

EPA

decision. They assert that CAA section 112(n)(1)(A) only allows the EPA “to activate a one-way switch to `turn on' regulation,” and notes that the Agency did so “in its 2000 finding.” Commenters are essentially arguing that the U.S. Supreme Court's instruction to the EPA that it was required to consider cost as part of a CAA section 112(n)(1)(A) finding could

never

have had any practical effect, because according to commenters, the “only . . . statutorily mandated avenue to turn the switch off and reverse course . . . [is] the section 112(c)(9) procedures.” Therefore, in petitioners' view, regardless of what the EPA determined on remand from

Michigan,

only the satisfaction of the CAA section 112(c)(9) criteria, which contain no consideration of cost, could have altered the EPA's finding under CAA section 112(n)(1)(A). We do not agree that this is a reasonable reading of the statute or the

Michigan

decision.

Additionally, the EPA notes that the D.C. Circuit in

New Jersey

held that the EPA's reversal of a prior determination that it was appropriate and necessary to regulate EGUs under CAA section 112 did not by itself effect a delisting of EGUs from the CAA section 112(c) list of source categories. This holding recognizes that the CAA section 112 appropriate and necessary determination is structurally and functionally separate from the EPA's ability, conditioned on certain predicate findings, to remove source categories from the CAA section 112(c) list. Commenters are, therefore, wrong to assert that the EPA can reverse an appropriate and necessary determination under CAA section 112(n)(1)(A) only if it has first undertaken CAA section 112(c)(9)'s delisting procedure, and wrong to assert that

New Jersey

supports their position that the EPA lacks inherent authority to reconsider the appropriate and necessary finding; in fact, that case supports the opposite position.

For similar reasons, we also reject the commenters' contention that CAA section 112(c)(9)'s health protective criteria are substantively incorporated into CAA section 112(n)(1)(A)'s appropriate and necessary determination, such that a failure to consider those criteria in the context of reversing a determination under CAA section 112(n)(1)(A) is arbitrary and renders CAA section 112(c)(9) a nullity. As explained in section II.D of this preamble, we agree that the EPA may not delist EGUs from the CAA section 112(c) list and revoke MACT standards for power plants without meeting the delisting criteria of CAA section 112(c)(9). We do not agree, however, that the delisting provision has any effect on the Agency's ability to make an affirmative or negative determination under CAA section 112(n)(1)(A) where we are not purporting to alter the CAA section 112(c) list. In particular, we do not agree with the commenters' reading of

New Jersey

that the D.C. Circuit's holding means that the EPA could reverse an affirmative appropriate and necessary finding only if it found that the CAA section 112(c)(9) delisting criteria were met. The Court's holding in

New Jersey

plainly states that CAA section 112(c)(9) “unambiguously limit[s] EPA's discretion to remove sources, including EGUs, from the section 112(c)(1) list once they have been added to it.” 517 F.3d 574, 583 (D.C. Cir. 2008). Commenters' presumed incorporation of the statutory delisting criteria into the CAA section 112(n)(1)(A) determination also finds no support in the

Michigan

decision, which said nothing about the EPA's obligation to consider those criteria in determining whether regulation of power plants is appropriate and necessary.

Finally, we disagree with commenters who assert that this final action is “inherently irrational” because the MATS standards would not be reversed as a result of the negative appropriate and necessary finding, due to controlling legal precedent from the D.C. Circuit (

New Jersey

). In this action the EPA is setting out the Agency's revised reasoning to respond to a U.S. Supreme Court decision and remand (

Michigan

), because the EPA concludes that the 2016 Supplemental Finding is not appropriate as a matter of interpretation of the statute or as a matter of policy. As noted by some of the commenters, leaving in place the incorrect interpretation of “appropriate” in CAA section 112(n)(1)(A) could establish policy precedent that could have “long-term and harmful consequences.”

Moreover, the EPA disagrees that

Air Alliance Houston

v.

EPA

has any bearing on this action. There, in admonishing the Agency that it could not “have it both ways,” the Court was criticizing the EPA for attempting to characterize its rule as relieving “substantial compliance and implementation burden” while also “maintaining the status quo” (such that the rule would have little effect on compliance requirements).

See Air Alliance Houston,

906 F.3d at 1068. Here, the Agency believes a different finding and better response to the U.S. Supreme Court's decision in

Michigan

v.

EPA

is warranted given the proper application of that decision and the facts in the EPA's record. We acknowledge that this change in policy will not affect the CAA section 112 MACT standards for EGUs because the D.C. Circuit's decision in

New Jersey

v.

EPA

prohibits the Agency from removing listed sources from the CAA section 112(c) list without satisfying the CAA section 112(c)(9) delisting criteria (

see

section II.D of this preamble). But we do not agree that simply because D.C. Circuit precedent establishes that the Agency's reversing its prior determination will have a particular regulatory consequence, the Agency is, therefore, prohibited from revisiting that prior determination in the first instance.

Comment:

Some commenters stated that the EPA has no authority to “revise” its response to the U.S. Supreme Court's decision in

Michigan,

and its attempt to do so would impermissibly subvert the judicial review process. These commenters argued that the EPA's response to

Michigan

is the 2016 Supplemental Finding, and that at this stage, that response cannot be altered or reversed. The commenters contended that the 2016 Supplemental Finding constitutes final Agency action and noted that the Finding is currently subject to petitions for review in the D.C. Circuit. The commenters suggested that seeking to undo the 2016 Supplemental Finding by administrative action would unlawfully circumvent that review. Other commenters asserted that the EPA has an obligation to explain how final action on the 2019 Proposal could impact the government's position in ongoing litigation of the 2016 Supplemental Finding. Commenters also said the EPA must address the implications of a reversal of that finding, considering the petitioner's positions in the ongoing litigation where the petitioner has argued that reversal of the appropriate and necessary finding must be followed by vacatur of MATS.

Response:

The EPA disagrees with the commenters that finalizing this action “subverts the judicial review process” with respect to the 2016 Supplemental Finding. To the extent that commenters are arguing that the EPA lacks statutory

authority to review the 2016 Supplemental Finding, the EPA has addressed that contention in the response to the comment above. We agree that the 2016 Supplemental Finding constituted final Agency action, and we acknowledge that petitions for review of that action were filed in the D.C. Circuit in

Murray Energy Corp.

v.

EPA,

No. 16-1127 (and consolidated cases) (D.C. Cir. filed April 25, 2016). However, we disagree that our final action unlawfully circumvents the judicial process. The EPA filed a motion in the

Murray Energy

litigation requesting the Court to continue oral argument, which had been scheduled for May 18, 2017, to allow the new Administration adequate time to review the 2016 Supplemental Finding to determine whether it needed to be reconsidered.

9

On April 27, 2017, in consideration of the EPA's motion, the D.C. Circuit ordered that the consolidated challenges to the 2016 Supplemental Finding be held in abeyance.

10

That case continues to be held in abeyance, pending further order of the Court. In its order, the Court directed the parties to file motions to govern future proceedings within 30 days of the Agency's concluding its review of the 2016 Supplemental Finding.

11

9

Respondent EPA's Motion to Continue Oral Argument at 6,

Murray Energy Corp.

v.

EPA,

No. 16-1127 (D.C. Cir. April 18, 2017), ECF No. 1671687.

10

Order,

Murray Energy Corp.

v.

EPA,

No. 16-1127 (D.C. Cir. April 27, 2017), ECF No. 1672987.

11

Id.

The EPA disagrees with the commenters that the Agency has an obligation to address in the context of this regulatory action the government's position in that ongoing litigation. We address in section II.D of this preamble the implications of the reversal of the 2016 Supplemental Finding, including addressing those comments received that argue that a vacatur of MATS is required upon finalization of this action. To the extent that the commenter is suggesting that it would be appropriate or required for the EPA at this point to address potential

future

arguments petitioners might make in the

Murray Energy

litigation following this final action, the Agency disagrees. The appropriate venue for addressing such arguments is the judicial review process for that action. Commenters provide no authority to support their assertion that an agency is obliged to discuss in a rulemaking the implications of that rulemaking for pending litigation challenging a previous, related agency action; the EPA is aware of no such authority; and the EPA declines to take such litigation positions in this final action.

2. The Preferred Cost Reasonableness Approach of the 2016 Supplemental Finding Was Deficient

a. Summary of 2019 Proposal

The EPA proposed to determine that the Agency's 2016 Supplemental Finding erred in its consideration of cost. Specifically, we proposed to find that what was described in the 2016 Supplemental Finding as the preferred approach, or the “cost reasonableness test,” does not meet the statute's requirements to fully consider costs and was an unreasonable interpretation of CAA section 112(n)(1)(A)'s mandate, as informed by the U.S. Supreme Court's opinion in

Michigan.

A summary of that approach can be found in the 2019 Proposal. 84 FR 2674-75.

b. Final Rule

After considering comments submitted in response to the EPA's 2019 Proposal, the EPA is finalizing the proposed approach. The EPA concludes that the “preferred approach” in the 2016 Supplemental Finding did not meaningfully consider cost, which the

Michigan

Court observed to be a “centrally relevant factor” in making the CAA section 112(n)(1)(A) appropriate and necessary finding. The 2016 Supplemental Finding's de-emphasis of the importance of the cost consideration in the appropriate and necessary determination was based on an impermissible attempt to “harmonize” CAA section 112(n)(1)(A) with the remainder of CAA section 112,

12

and was not consistent with Congress' intent and the U.S. Supreme Court's decision in

Michigan

v.

EPA,

given that statutory provision's directive to treat EGUs differently from other sources.

See

135 S. Ct. at 2710 (“The Agency claims that it is reasonable to interpret [CAA section 112(n)(1)(A)] in a way that `harmonizes' the program's treatment of power plants with its treatment of other sources. This line of reasoning overlooks the whole point of having a separate provision about power plants: Treating power plants

differently

from other sources.”) (emphasis in original).

12

See Legal Memorandum Accompanying the Proposed Supplemental Finding that it is Appropriate and Necessary to Regulate Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units (EGUs)

(2015 Legal Memorandum) (Docket ID Item No. EPA-HQ-OAR-2009-0234-20519), at 6-15 (describing statutory purpose of 1990 CAA Amendments and CAA section 112, and concluding that “while cost is certainly an important factor, it is one of several factors that must be considered and section 112(n)(1) does not support a conclusion that cost should be the predominant or overriding factor.”).

c. Comments and Responses

Comment:

Some commenters asserted that the cost analysis in the 2016 Supplemental Finding was consistent with longstanding cost-effectiveness methodologies used in other CAA programs, such as the CAA section 111 New Source Performance Standards and CAA section 169 Prevention of Significant Deterioration (PSD). These commenters disagreed with what they characterized as the 2019 Proposal's position that CAA section 111 case law was irrelevant to the CAA section 112(n)(1)(A) appropriate and necessary determination, noting that cost effectiveness is used in CAA section 111 to determine standards for existing sources, much as the EPA is determining whether to regulate existing sources in CAA section 112(n)(1)(A). These commenters further said that the proposed monetized cost-benefit approach is inferior to the longstanding cost-effectiveness test for addressing concerns about standards that impose costs too high for the industry to bear. However, other commenters agreed with the EPA that cases interpreting section 111 of the CAA were not an appropriate guide to considering costs under CAA section 112(n)(1)(A).

Response:

The broad language of CAA section 112(n)(1)(A) and the holding of the

Michigan

Court suggest that there is more than one permissible way to interpret the Agency's obligation to consider cost in the appropriate and necessary finding. The text of that section does not require the Agency to consider cost in a particular fashion. The U.S. Supreme Court, in identifying that the Agency's obligation to consider cost in

some

fashion in light of the broad term “appropriate,” recognized the discretion afforded the Administrator, noting, “[i]t will be up the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.” 135 S. Ct. at 2711. Even in the final 2016 Supplemental Finding, the EPA acknowledged that the cost reasonableness test was but one way to interpret its CAA section 112(n)(1)(A) obligation to consider cost, and “that the agency need not demonstrate that [its] decision is the same decision that would be made by another Administrator or a reviewing court.” 81 FR 24431. The commenters provide many reasons for why they preferred the EPA's “cost reasonableness” test, but even they do not attempt to argue that the EPA's 2016 “preferred approach” is

the

only

permissible interpretation of the statute.

Comparisons of a regulation's costs and the relationship of those costs to the benefits the regulation is expected to accrue are a traditional and commonplace way to assess the costs of a regulation and are a permissible way to comply with Congress' broad directive to the Administrator to determine whether regulation is “appropriate” in CAA section 112(n)(1)(A). The EPA has never taken the position, nor do commenters argue now, that

any

comparison of costs to benefits would be an impermissible reading of the Agency's obligation to consider cost in CAA section 112(n)(1)(A); indeed, the Agency's alternative approach to considering cost in the 2016 Supplemental Finding was a formal cost-benefit analysis based on its 2011 RIA, and many of the commenters who now evince a preference for the 2016 “cost reasonableness test” at the time agreed that the 2011 RIA cost-benefit analysis could independently satisfy the Agency's obligation to consider cost under CAA section 112(n)(1)(A). U.S. Supreme Court precedent also supports the Agency's position that, absent an unambiguous prohibition to use cost-benefit analysis, the Agency generally may do so as a reasonable way to consider cost.

13

In

Entergy Corp.

v.

Riverkeeper, Inc.,

556 U.S. 208 (2009), the U.S. Supreme Court struck down a Second Circuit decision prohibiting the EPA from employing benefit-cost analysis where the statute was silent as to how the Agency was to consider cost in adopting standards for cooling water intake standards for power plants. The Second Circuit found that because analogous provisions in the Clean Water Act explicitly instructed the EPA to consider “the total cost of application of technology in relation to the effluent reduction benefits to be achieved,” (33 U.S.C. 1314(b)(4)(B)), Congress' failure to include such an instruction to the EPA in the provision at issue in the case meant that the EPA was not permitted to compare compliance costs to expected environmental benefits. The U.S. Supreme Court reversed, holding that the EPA's use of cost-benefit analysis “governs if it is a reasonable interpretation of the statute—not necessarily the only possible interpretation, nor even the interpretation deemed

most

reasonable by the courts.”

Id.

at 218 (emphasis in original).

13

See

S. Masur & Eric A. Posner,

Cost-Benefit Analysis and the Judicial Role,

85 U. Chi. L. Rev. 935, 981 (2018).

The EPA's choice to employ cost-effectiveness analyses, rather than cost-benefit comparisons, in the context of other statutory provisions such as CAA section 111 or the PSD program in no way binds the Agency to using that method to consider cost in CAA section 112(n)(1)(A). The EPA's citation in the 2015 Legal Memorandum of our consideration of cost under CAA section 111 and the case law evaluating those instances was only to provide context to explain the genesis of the EPA's newly minted “cost reasonableness” test in the 2016 Supplemental Finding. Even then the EPA did not take the position that the D.C. Circuit cases reviewing the Agency's cost considerations under CAA section 111 were binding precedent upon which the Court should review our action under CAA section 112(n)(1)(A). In short, the commenters' preference that the EPA consider cost in a different way does not preclude the Agency from instead considering cost using an approach that compares costs and benefits, where the statute's broad directive suggests that it may.

See Entergy,

556 U.S. at 226.

Comment:

Some commenters asserted that the EPA's proposed approach to considering costs and benefits is inconsistent with what they broadly characterize as congressional intent to err on the side of protecting public health. These commenters argued that Congress recognized the insufficiency of available methods for quantifying costs and benefits when revising CAA section 112 in 1990 and that Congress concluded that the nature and latency of harms posed by HAP are not given sufficient weight in a regulatory process that must balance long-term benefits against present-day costs. Commenters said that the Agency should not construe the

Michigan

Court's instruction to “meaningfully consider cost” as a requirement to consider benefits in a way that is inconsistent with Congress' determination that reductions in HAP emissions have great value to the public. These commenters added that the EPA's proposed approach is based on an incorrect interpretation of

Michigan,

which stated only that consideration of cost should play some role in the appropriate and necessary finding, not that cost considerations should dominate that finding. According to these commenters, the studies required in CAA section 112(n) indicate that Congress put public health and environmental concerns at the forefront of CAA section 112, which was enacted explicitly in response to the EPA's lack of action in addressing the harmful effects of HAP, and, therefore, shares the section's overall focus on harm prevention. These commenters asserted that the “preferred approach” in the 2016 Supplemental Finding met the requirements of

Michigan

and were consistent with congressional intent and the CAA's statutory goals.

Other commenters, however, agreed with the 2019 Proposal that the “cost reasonableness” test in the 2016 Supplemental Finding's “preferred approach” was invalid, harmful, and failed to meet the

Michigan

Court's expectation that the Agency should weigh benefits against costs. These commenters characterized the cost-reasonableness test, which compared costs of MATS compliance with various other costs incurred by the power sector, as an “affordability test,” or an inquiry into whether the power sector could absorb the costs of compliance. These commenters noted that such a test ignores benefits by failing to provide important information on whether society's investment in additional costs is worth the expected benefits and fails to consider whether costs would be “prudently incurred” as a means to reduce hazards to public health. As one commenter put it, “Simply because the power sector

could

absorb costs without affecting current operational performance does not mean that it

should

absorb those costs.” Some commenters objecting to the “preferred approach” in the 2016 Supplemental Finding emphasized that looking at cost in this manner would invite the promulgation of regulations that are poorly designed, with few potential benefits. They voiced concern that using affordability tests could result in agencies focusing public and private sector resources on extinguishing relatively small risks while leaving larger risks unattended. Other commenters noted that such tests also penalize successful industries due to their success, and risk failing to appropriately regulate industries that are less profitable.

Response:

The EPA agrees with commenters who stated that Congress' intent with respect to CAA section 112, as a whole, evinces an acknowledgment of the seriousness of toxic air pollutants. We do not agree, however, that general congressional concern about the toxicity of HAP overrides the specific instruction given to the Administrator in CAA section 112(n)(1)(A) to make a determination about whether regulation of EGUs in particular is “appropriate and necessary.” As the U.S. Supreme Court admonished the EPA in

Michigan,

the text and structure of CAA section

112, and 112(n)(1)(A) in particular, evince Congressional design to approach the question whether to regulate EGUs

differently

than other source categories:

Congress crafted narrow standards for EPA to apply when deciding whether to regulate other sources; in general, these standards concern the volume of pollution emitted by the source, [CAA section 112(c)(1)], and the threat posed by the source “to human health or the environment,” [citing CAA section 112(c)(3)]. But Congress wrote the provision before us [CAA section 112(n)(1)(A)] more expansively . . . That congressional election settles this case. [The Agency's] preference for symmetry cannot trump an asymmetrical statute.

135 S. Ct. at 2710 (internal citations omitted).

Moreover, we do not agree with commenters' suggestion that in the Agency's comparison of costs and benefits, the EPA is considering benefits in a way that is inconsistent with a congressional determination that reductions in HAP emissions have great value to the public and Congress' public health and environmental concerns. We disagree that CAA section 112's general concerns about public health and environmental risks from HAP emissions mandated a particular manner of valuing or weighing the benefits of reducing those risks.

As noted in the 2019 Proposal, we do not think the 2016 Supplemental Finding's analysis of cost satisfied the Agency's mandate under CAA section 112(n)(1)(A) and

Michigan.

The “preferred approach” in the 2016 Supplemental Finding considered cost insofar as the Agency at the time analyzed whether the utility industry as a whole could continue to operate, and found that it could (

i.e.,

that costs were “reasonable”). 81 FR 24420, 24422, 24424, 24427, 24428, 24429, 24430, 24431. But we do not think the “preferred approach” in the 2016 Finding gave sufficient weight to cost as a “centrally relevant factor,”

Michigan,

135 S. Ct. at 2707—that is, we do not think that a cost standard that is satisfied by establishing that regulation will not fundamentally impair the functioning of a major sector of the economy places cost at the center of a regulatory decision—and we are in this action heeding the

Michigan

Court's reading of the Administrator's role under CAA section 112(n)(1)(A), which directed the Agency to meaningfully consider cost within the context of a regulation's benefits. We agree that

Michigan

did not hold that the Agency is required to base its decision whether it is appropriate and necessary to regulate EGUs under CAA section 112 on a formal benefit-cost analysis, but neither did it hold that a comparison of costs and benefits is an impermissible approach to considering cost.

The U.S. Supreme Court contemplated that a proper consideration of cost would be relative to benefits, and the Court's decision contains many references comparing the two considerations. In establishing the facts of the case, the Court pointed out that “EPA refused to consider whether the costs of its decision outweighed the benefits.” 135 S. Ct. at 2706. The Court questioned whether a regulation could be considered “rational” where there was a gross imbalance between costs and benefits and stated that “[n]o regulation is `appropriate' if it does more harm than good.”

Id.

at 2707. The Court also made numerous references to a direct comparison of the costs of MATS with benefits from reducing emissions of HAP. For instance, the Court pointed out that “[t]he costs [of MATS] to power plants were thus between 1,600 and 2,400 times as great as the quantifiable benefits from reduced emissions of hazardous air pollutants.”

Id.

at 2706. Although the Court's holding established no bright-line rules, the opinion as a whole, thus, repeatedly suggests that CAA section 112(n)(1)(A)'s requisite consideration of cost would not be met if the cost analysis did not “prevent the imposition of costs far in excess of benefits.”

Id.

at 2710.

The 2016 Supplemental Finding's “test” of whether an industry can bear the cost of regulation, and its subsequent conclusion that such costs are “reasonable,” does not satisfy the statute's mandate to determine whether such regulation is appropriate and necessary. We agree with commenters who stated that the metrics “tested” by the Agency in the 2016 Supplemental Finding are not an appropriate basis for the determination whether it is “appropriate and necessary” to impose that regulation. Each cost metric the Agency examined compared the cost of MATS to other costs borne by the industry, but never in its “preferred approach” did the Agency make the assessment of whether the benefits garnered by the rule were worth it—

i.e.,

a comparison of costs and benefits. Even if the EPA determined that cost of regulation was, viewed on its own terms,

unreasonable

after comparing the cost of regulation to other costs borne by the industry, the “preferred approach” could have still resulted in a finding that regulation was “appropriate” because the EPA placed so much weight on hazards to public health and the environment that needed to be prevented.

See

81 FR at 24432. In other words, much as it did in 2012 when it read cost consideration entirely out of the CAA section 112(n)(1)(A) determination, the Agency in 2016 was fixated on the term “necessary,” without considering whether any countervailing factors,

i.e.,

cost, might call into question whether regulation was “appropriate.” As many commenters pointed out, the “cost reasonableness test” failed to consider cost relative to benefits, and really focused only on whether costs could be absorbed, rather than on whether they should be absorbed—the inquiry that is specifically required by the word “appropriate.” We, therefore, conclude that the “cost reasonableness” approach did not adequately address the U.S. Supreme Court's instruction that a reasonable regulation requires an agency to fully consider “the advantages

and

the disadvantages” of a decision.

See Michigan,

135 S. Ct. at 2707 (emphasis in original).

Moreover, we take seriously commenters' concerns that leaving the “preferred approach” in place, with its “cost reasonableness” or affordability test, could have a harmful influence on other agencies interpreting similarly broad congressional directives to consider cost. Statutes that direct agencies to make determinations about whether regulation is “appropriate” are precisely the contexts in which those agencies should retain discretion to select and prioritize public policies which provide the most value for the public good in relation to the cost.

Comment:

Commenters said that the EPA's proposed new approach to considering cost in the CAA section 112(n)(1)(A) finding is an impermissible interpretation of that provision because it fails to meaningfully address factors that are “centrally relevant” to the inquiry of whether it is appropriate and necessary to regulate HAP from EGUs. Some commenters noted that the Agency's alleged failure in the 2019 Proposal to adequately address these factors, upon which the 2016 Supplemental Finding was predicated, runs afoul of the Agency's obligation to provide a reasoned explanation for abandoning these considerations, citing

Motor Vehicle Mfrs. Ass'n of United States, Inc.

v.

State Farm Mut. Automobile Ins. Co.,

463 U.S. 29 (1983) and

FCC

v.

Fox Television Stations, Inc.,

556 U.S. 502 (2009). The commenters noted that these cases state the principle that agencies cannot simply ignore prior factual determinations but must provide a “reasoned explanation” for a proposed departure from “facts and circumstances that underlay or were engendered by the

prior policy.” These commenters specifically faulted the EPA for not giving appropriate weight to the following factors:

i. Unquantified Benefits

Commenters stated that the 2019 Proposal does not acknowledge that some “hazards to public health” are unquantified and asserted that the 2019 Proposal presents a significant change in position with insufficient justification for revising the EPA's longstanding interpretation that the phrase “hazards to public health” encompasses risks that have not been monetized because of the limitations of current methods, data, and uncertainty. Commenters said the 2019 Proposal gave no discernable weight to these risks as required by the statutory phrase “hazards to public health reasonably anticipated to occur.”

Moreover, the commenters asserted that the monetized, HAP-specific benefits at issue, which quantify avoided IQ loss in children associated with prenatal methylmercury exposure from self-caught fish consumption among recreational anglers, are but a small fraction of the public health benefits attributable to reductions in mercury emissions alone. The commenters cited the statement from the EPA's Science Advisory Board (SAB), which stated that IQ loss “is not the most potentially significant health effect associated with mercury exposure as other neurobehavioral effects, such as language, memory, attention, and other developmental indices, are more responsive to mercury exposure.” 80 FR 75040. The commenters noted that none of the environmental benefits from reductions in mercury emissions could be quantified, nor any of the health or environmental benefits attributable to reductions in other HAP.

ii. Qualitative Benefits Such as Impacts on Tribal Culture and Practices

Some commenters stated that the EPA's proposed approach ignores non-monetizable benefits. These commenters asserted that methylmercury contamination threatens traditional American Indian lifeways, including longstanding traditions of fishing and fish consumption that are central to many tribes' cultural identity and that make individual tribes as distinct as different individual people. These commenters stated that for many tribes, fishing and fish consumption are critical social practices, handed down from generation to generation. Where tribal members no longer fish due to health concerns, these fishing traditions are not passed down to new generations of tribal members, leading to permanent cultural loss. Furthermore, these commenters stated that many tribes are connected to particular waters for cultural, spiritual, or other reasons (and others' fishing rights are limited to certain grounds by treaty), so tribal members cannot simply move their fishing to another location to avoid mercury contamination. The commenters asserted that the preferred approach of the 2016 Supplemental Finding recognized that regulation of HAP from EGUs would benefit American Indians by allowing them to safely engage in, and thereby perpetuate, their culture. These commenters argued that the Agency's preferred approach in the 2016 Supplemental Finding properly deemed these qualitative benefits to be cognizable and highly significant. In addition, the commenters stated that mercury emissions likewise cause significant harm to Indian subsistence and fishing economies, contaminating food sources that many tribal members depend on for survival. According to these commenters, the EPA's 2016 preferred approach methodology allowed for a full range of qualitative benefits to be accounted for, whereas the 2019 proposed reversal does not.

iii. Latency, Persistence in the Environment, and Toxicity of Regulated Pollutants

Some commenters asserted that the EPA's proposed approach disregarded the physiochemical nature and toxicity of the toxic air pollutants regulated by CAA section 112 and the concern Congress had expressed about these qualities in enacting that section. These commenters pointed out that, in enacting the list of regulated air toxics, Congress deliberately

withdrew

the EPA's authority to judge the importance of the harms threatened by the listed pollutants. The commenters noted that Congress itself listed the pollutants, rather than waiting for the EPA to do so, because of a difficulty which commenters argue is particular to air toxics: “[t]he public health consequences of substances which express their toxic potential only after long periods of chronic exposure will not be given sufficient weight in the regulatory process when they must be balanced against the present-day costs of pollution control and its other economic consequences.” Leg. Hist. at 8522 (S. Rep. No. 101-228 at 182). The commenters argued that these identified harms from air toxics occur regardless of the source of the pollutants, and, therefore, there is no reason to believe that Congress might have, by inserting CAA section 112(n)(1)(A), authorized the EPA to reassess the benefits of reducing those harms in the context of EGUs. The commenters stated that no study, including the EPA's Utility Study, suggests that HAP from EGUs are of any different character or pose less harm by their nature than HAP emitted by any other industrial source category.

iv. Distributional Impacts of the Pollutants on the Population

Commenters pointed to Congress' intent to address harms that are concentrated within particular communities or populations, citing CAA section 112(f)(2)(A)'s requirement that the EPA address lifetime excess cancer risks borne by the “individual most exposed to emissions,” CAA section 112(n)(1)(C)'s directive that the EPA consider power plant mercury harms to sensitive fish-consuming populations, and legislative history (“EPA is to consider individuals who are sensitive to a particular chemical” in assessing whether a pollutant's harm warrants regulation) (Leg. Hist. at 8501). The commenters noted that the 2016 Supplemental Finding's preferred approach identified several populations that were disproportionately at risk of mercury exposure from EGUs, including African-Americans living below the poverty line in the Southeast who rely on the fish they catch for food, and the children and fetuses in those communities in particular whose risk of exposure is amplified; and individuals and communities who live near coal- and oil-fired power plants, who are disproportionately members of racial and ethnic minorities. The commenters cited a study that found that of the 8.1 million people living within 3 miles of a coal-fired plant in the year 2000, 39 percent were people of color, a percentage significantly higher than the proportion of people of color in the U.S. population as a whole. The same study found that people living within 3 miles of such power plants had an average annual per capita income of $18,596, significantly lower than the national average.

Some commenters pointed to various executive orders that independently direct the EPA to consider some of these factors, including Executive Order 12898 (February 11, 1994), which establishes that “disproportionately high and adverse human health or environmental effects” of EPA decisions “on minority populations and low-income populations in the U.S. and its territories and possessions” are of central concern to the EPA's decision-making, with specific emphasis upon “subsistence consumption of fish and

wildlife.” The commenters also pointed to Executive Order 13045 (April 21, 1997),

14

which is particularly concerned about “environmental health risks” that may “disproportionately affect children.”

14

Commenters cite Executive Order 13035 in their comments, but we believe this was a typographical error.

Response:

Agency decisions, once made, are not forever “carved in stone.”

Nat'l Cable & Telecomms. Ass'n

v.

Brand X Internet Servs.,

545 U.S. 967, 981 (2005) (internal quotation marks and citations omitted). We disagree with the commenters' view that the EPA is not permitted to determine that the “cost reasonableness” approach is not the correct way to consider cost in the CAA section 112(n)(1)(A) appropriate and necessary finding, and their view that the EPA is not permitted to re-evaluate the significance of the factual findings underpinning its 2016 Supplemental Finding and come to a different conclusion. D.C. Circuit and U.S. Supreme Court precedent, including those cases cited by the commenters, support the Agency's position that it is within its authority to do so, provided that the Agency's new action is based on a permissible interpretation of the statute and is supported by a reasoned explanation.

In

FCC

v.

Fox,

the U.S. Supreme Court stated an agency's obligation with respect to changing a prior policy quite plainly:

We find no basis . . . for a requirement that all agency change be subjected to more searching review. The [Administrative Procedure] Act mentions no such heightened standard. And our opinion in

State Farm

neither held nor implied that every agency action representing a policy change must be justified by reasons more substantial than those required to adopt a policy in the first instance.

15

15

FCC

v.

Fox,

556 U.S. at 514.

In cases where an agency is changing its position, the Court stated that a reasoned explanation for the new policy would ordinarily “display awareness that it is changing position” and “show that there are good reasons for the new policy.”

Id.

at 515. However, the Court held that the agency “need not demonstrate . . . that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency

believes

it to be better.”

Id.

In cases where a new policy “rests upon factual findings that contradict those which underlay its prior policy; or when its prior policy has engendered serious reliance interests that must be taken into account,” the Court found that a more detailed justification might be warranted than what would suffice for a new policy.

Although commenters assert that the EPA has failed to provide a reasoned basis for its action here, their real complaint with the Agency's abandonment of the 2016 Supplemental Finding's “cost reasonableness test” and “preferred approach” is that they favored the way the Agency under that approach weighed certain factors, including unquantified benefits, impacts on tribes and tribal culture, the latency and persistence of air toxics in the environment, and distributional concerns and impacts. That the EPA now weighs these concerns differently—a weighing that is further explained below—does not mean the Agency is “disregarding” or “dismissing” these concerns.

In the 2019 Proposal, the EPA clearly stated that the unquantified HAP benefits associated with regulating power plants were “significant,” and enumerated the impacts on human health that have been linked to mercury (including neurologic, cardiovascular, genotoxic, and immunotoxic effects), the adverse health effects associated with non-mercury HAP (including cancer and chronic and acute health disorders that implicate organ systems such as the lungs and kidneys), and other effects on wildlife and ecosystems. 84 FR 2677. Contrary to commenters' assertions, the EPA did not ignore these concerns but said, “The EPA acknowledges the importance of these benefits and the limitations on the Agency's ability to monetize HAP-specific benefits. The EPA agrees that such benefits are relevant to any comparison of the benefits and costs of a regulation.”

Id.

at 2677-78. Moreover, as the Agency pointed out in its proposal, the 2011 RIA, which summarizes the factual findings and scientific studies which form the basis of this action as well as the EPA's 2016 action, discussed all of the monetized and unquantified benefits of regulating HAP from power plants, including the qualitative impacts on American Indian tribes,

16

distributional impacts,

17

and latency and persistence of the pollutant.

18

Id.

at 2678.

16

2011 RIA at 7-40 to -49.

17

2011 RIA at 7-49 to -54.

18

2011 RIA at Chapter 4.

In the context of this action, in which the lens we use to consider cost is based on a comparison of benefits to cost, we are choosing to weigh these concerns (and particulate matter (PM) co-benefits discussed in more detail in section II.C.3 of this preamble) differently than the manner in which the EPA evaluated them in the 2016 Supplemental Finding. While it is true that many of the benefits associated with reducing emissions of HAP from power plants have not been quantified, the EPA provided in the 2019 Proposal its reasons for concluding that those unquantified benefits were not likely to overcome the imbalance between the monetized HAP benefits and compliance costs in the record. First, as the EPA pointed out and as discussed below, most of the unquantified benefits of MATS are morbidity effects associated with exposure to mercury and other HAP. Second, to the extent commenters have identified potential mortality outcomes such as potential cardiovascular impacts from mercury exposure and potential cancer risks from exposure to other HAP, the EPA disagrees, for the reasons provided below, with the proposition that significant monetized benefits would be expected from either outcome.

As the commenters acknowledged, the SAB noted that IQ loss “is not the most potentially significant health effect associated with mercury exposure, as other neurobehavioral effects, such as language, memory, attention, and other developmental indices, are more responsive to mercury exposure.” 80 FR 75040. The Agency explained in its 2019 Proposal that the neurobehavioral effects of mercury exposure identified by the SAB as more “potentially significant” are morbidity, not mortality, outcomes. In the EPA's experience, the economic value of avoided morbidity effects (

e.g.,

impaired cognitive development, problems with language, abnormal social development, etc.) per incident is a small fraction of the monetizable value of avoided premature deaths. Further, when estimating the economic value of avoided cases of air pollution-related effects, the Agency has generally found that the aggregate value of the avoided illnesses (

e.g.,

hospital admissions, emergency department visits, cases of aggravated asthma, etc.) is small as compared to the total value of avoided deaths.

19

19

See

U.S. EPA 2010a:

Regulatory Impact Analysis for the Nitrogen Oxide National Ambient Air Quality Standards

Page 4-8 through 4-10; U.S. EPA. 2010b:

Regulatory Impact Analysis for the Sulfur Dioxide National Ambient Air Quality Standards Page 5-26 through 5-28;

U.S. EPA. 2012:

Regulatory Impact Analysis for the Particulate Matter National Ambient Air Quality Standards pages 5-69;

U.S. EPA. 2015:

Regulatory Impact Analysis for the Ozone National Ambient Air Quality Standards.

Pages 6-57 through 6-60.

And the EPA does not expect that to the extent the prevention of any premature deaths due to regulation of

HAP could be associated with the MATS rule, the value of that effect would be significant. With respect to potential premature deaths due to cardiovascular impacts from mercury exposure, as discussed further in section II.C.4 of this preamble, there is inconsistency among available studies as to the degree of association between methylmercury exposure and various cardiovascular system effects, including studies showing no association. As a result, based on the presently available information, the EPA believes available evidence does not support a clear characterization of the potential relationship between mercury exposure and cardiovascular mortality. For that reason, the EPA has not modeled risk (incidence) estimates for this health endpoint and has not included benefits associated with that endpoint in the analysis. With respect to potential premature deaths associated with inhalation exposure to non-mercury HAP, based on existing case-study analyses for EGUs which focus on the assessment of individual risk based on a number of conservative assumptions regarding exposure, the EPA anticipates that the mortality incidence associated with these non-mercury HAP exposures would be low (see section II.C.3 of this preamble for additional detail).

20

In sum, while the EPA recognizes the importance of unquantified benefits in a comparison against costs, the evaluation of evidence of unquantified benefits is based on qualitative information that helps understand the likelihood and potential scale of those benefits, relative to the monetized benefits and monetized costs. These qualitative assessments help confirm that unquantified benefits do not alter the underlying conclusion that costs greatly outweigh HAP benefits. This topic is discussed in more detail in section II.C.3 of this preamble.

20

U.S. EPA,

Supplement to the Non-Hg Case Study Chronic Inhalation Risk Assessment In Support of the Appropriate and Necessary Finding for Coal- and Oil-Fired Electric Generating Units,

November 2011, EPA-452/R-11-013.

The other factors identified by the commenters concern qualitative concerns such as impacts to tribal cultures and the concentration of public health risks occurring among certain population subgroups or for individuals living proximate to EGUs. The distribution of potential health effects may indicate more risk to some individuals than to others or more impacts to some groups like tribes than others; but in a cost-benefit comparison, the overall amount of the benefits stays the same no matter what the distribution of those benefits is. The EPA, therefore, believes it is reasonable to conclude that those factors to which the EPA previously gave significant weight—including qualitative benefits, and distributional concerns and impacts on minorities—will not be given the same weight in a comparison of benefits and costs for this action under CAA section 112(n)(1)(A).

21

21

Nor does the EPA agree with the commenters that Executive Orders 12898 and 13045 require a particular outcome in the EPA's appropriate and necessary finding. Executive orders recognize that agencies must weigh conflicting goals, priorities, and associated costs as a necessary part of reasoned decision making. Other more recent executive orders, which emphasize the environmentally responsible use and development of domestic natural resources, are also part of the policy calculus to consider.

See, e.g.,

Executive Order No. 13783, 82 FR 16093 (March 28, 2017) (directing the EPA to review for possible reconsideration any rule that could “potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.

None of the information underlying the EPA's action here constitutes new factual findings, but rather is a reevaluation of the existing record to arrive at what the Agency believes to be the better policy regarding whether regulation is “appropriate.” In

Nat'l Ass'n of Home Builders

v.

EPA,

the D.C. Circuit reviewed challenges brought against the EPA that were similar to those concerns raised by commenters here and found that “this kind of reevaluation is well within an Agency's discretion.” 682 F.3d 1032, 1038 (D.C. Cir. 2012) (

NAHB

). There, the EPA reversed course on a prior policy, and petitioners in that case contended that “EPA has provided no justification for its decision to reverse course . . . that is grounded in any information or experience that was not available to the Agency when it [adopted] the original rule . . . Rather, EPA merely revisited old arguments that had already been addressed as part of the original rulemaking.”

NAHB,

682 F.3d at 1036. Petitioners insisted in that case that the Agency was required to be held to a higher standard in reversing its prior decision based on the same factual record, but the D.C. Circuit disagreed. The Court held that

FCC

v.

Fox

“foreclosed” petitioners' argument, and that the Agency was permitted to rely on “a reevaluation of which policy would be better in light of the facts.”

Id.

at 1036-38. It is well settled that such re-weighing or re-balancing is permissible.

See State Farm,

463 U.S. at 57 (“An agency's view of what is in the public interest may change, either with or without a change in circumstances.”);

Am. Trucking Ass'ns

v.

Atchison, Topeka & Santa Fe Ry. Co.,

387 U.S. 397, 416 (1967) (declaring that an agency, “in light of reconsideration of the relevant facts and its mandate, may alter its past interpretation and overturn past administrative rulings”);

Organized Village of Kake

v.

Dept. of Agriculture,

795 F.3d 956 (9th Cir. 2015) (“We do not question that the Department was entitled in 2003 to give more weight to socioeconomic concerns than it had in 2001, even on precisely the same record.”).

As alluded to in these cases, the “reasoned basis” for an agency's change of interpretation need not be overly complex. Even Justice Breyer, who dissented from the

FCC

v.

Fox

majority, admitted, “I recognize that sometimes the ultimate explanation for a change may have to be, `We now weight the relevant considerations differently.' ” 556 U.S. at 550. Such change can, and often is, fueled by the basic functioning of American democracy—when new presidential administrations come into office—and the courts have recognized this to be a legitimate basis for a re-weighing of priorities.

See NAHB,

682 F.3d at 1038 (noting the “inauguration of a new President and the confirmation of a new EPA Administrator” largely provided the reasoning for the EPA's change in policy). Unlike in

State Farm,

where the administering agency issued a rollback of a regulation requiring passive restraints in automobiles without even mentioning airbags at all, 463 U.S. at 48, 49, 51, here we acknowledge and address those factors to which we are giving less weight than was given in the 2016 Supplemental Finding.

Cf. Organized Village of Kake,

795 F.3d at 968 (suggesting that a policy reversal could be premised upon “merely decid[ing] that [the agency] valued socioeconomic concerns more highly than environmental protection”). The commenters disagree with the way the Agency has now weighed the facts and circumstances underlying the original appropriate and necessary finding and the Agency's consideration of cost in 2016. But that does not mean that the Agency has not provided a “reasoned basis” for its action.

Comment:

Some commenters asserted that a “more detailed justification” of the EPA's change in policy is required in this case given the “serious reliance interests” of states, the public, and industry in maintaining the appropriate and necessary determination and the MATS rule (citing

Fox,

556 U.S. at 515;

Encino Motorcars, LLC

v.

Navarro,

136 S. Ct. 2117 (2016)). With respect to state and public interests, the commenters pointed to the fact that the implementation of MATS has led to a dramatic decrease in HAP emissions

from power plants, and that the public has an interest in having those controls remain in place and in the continuation of improvements in air quality and the corresponding public health and environmental benefits. Other commenters pointed to the major capital investments that regulated utilities have already made to comply with MATS and asserted that a reversal of the 2016 Supplemental Finding creates uncertainty for the standards themselves. The commenters argued that these reliance interests, which they claim depend on the maintenance of the 2016 Supplemental Finding, therefore, require the EPA to provide the heightened justification required under

Fox

and

Encino Motorcars

for its reversal of that finding.

Response:

The EPA disagrees with the commenters that the Agency is required to provide a “heightened justification” for this action. In

Fox,

the U.S. Supreme Court stated that as a general matter, no heightened scrutiny or review applies to decisions by agencies to reverse policies, and that policy changes need not be justified by reasons more substantial than those required to adopt a policy in the first instance.

See Fox,

556 U.S. at 514-15. But the Court noted that “in such cases it is not that further justification is demanded by the mere fact of policy change; but that a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy,

i.e.,

. . . when its prior policy has engendered serious reliance interests that must be taken into account.”

Id.

at 515. The Court elaborated on this principle in

Encino Motorcars

v.

Navarro,

136 S. Ct. 2117 (2016). There, the Court found that the retail automobile and truck dealership industry had relied for decades on the Department of Labor's (DOL) position that service advisors are exempt from the Fair Labor Standard Act's overtime pay requirements. Given this reliance and the impact that the DOL's change in policy would have on the industry (citing “systemic, significant changes to the dealerships' compensation arrangements” and the risk that non-conforming dealerships could face “substantial FLSA liability”), the Court held that the DOL had not provided good reasons for its change in policy, noting that the agency “said almost nothing” and that it merely stated that exempting such employees from overtime pay was contrary to the statute and it believed its interpretation was reasonable.

Encino Motorcars,

136 S. Ct. at 2126-27. The Court stated that “an agency may justify its policy choice by explaining why that policy is more consistent with statutory language than alternative policies,”

Id.

(internal citations omitted), but chided the DOL for failing to include such a justification in its policy reversal.

First, we note that commenters raising serious reliance interests differ in at least one major way from the petitioners in

Encino Motorcars.

While those petitioners faced very real impacts based on the Agency's changed position (“systemic, significant” changes to employee compensation and potential liabilities from failure to comply with the changed policy), the reliance interests cited by the commenters are not upended by this final action. As we stated in the proposal, the EPA finds that its re-evaluation of the costs and benefits of regulation of HAP emissions from power plants will not rescind or affect the regulatory program upon which the commenters rely, due to binding D.C. Circuit precedent (

see

section II.D of this preamble). To the contrary, the EPA is finalizing the results of the proposed RTR of MATS in this final action. The EPA determined that after compliance with MATS, the residual risks due to emissions of HAP from the Coal- and Oil-Fired EGU source category are acceptable in accordance with CAA section 112, and that there are no developments in HAP emissions controls to achieve further cost-effective reductions beyond the current standards. Therefore, based on the results of the RTR analyses, the Agency is promulgating this final action that maintains MATS in its current form.

Second, unlike the DOL in

Encino Motorcars,

the EPA has provided its reasons for changing its determination that the regulation of HAP emissions from power plants is not “appropriate.” As explained in the proposal and in this preamble, the EPA believes that a consideration of costs that compares the costs of compliance with the HAP-specific benefits of regulation “is more consistent with statutory language” than the 2016 Supplemental Finding's “preferred approach.” Further, as discussed in section II.C.3 of this preamble, we do not think the determination that regulation is “appropriate” under CAA section 112(n)(1)(A), an air toxics provision, should primarily hinge on the monetary benefits associated with reductions in emissions of pollutants not regulated under CAA section 112. We believe the explanations provided in this action fully comply with the case law's requirement to provide a reasoned explanation for our reversal of the 2016 Supplemental Finding.

3. The EPA's Alternative Benefit-Cost Approach Used in the 2016 Supplemental Finding Improperly Considered Co-Benefits From Non-HAP Emissions Reductions

The 2016 Supplemental Finding presented an alternative approach under which the EPA made an independent finding under CAA section 112(n)(1)(A) based on a formal benefit-cost analysis

22

that it was appropriate and necessary to regulate EGUs under CAA section 112.

See

81 FR 24427. The formal benefit-cost analysis used in the 2016 Supplemental Finding relied on information reported in the RIA developed for the 2012 MATS Final Rule pursuant to Executive Orders 12866 and 13563 and applicable statutes other than the CAA (

e.g.,

the Regulatory Flexibility Act and the Unfunded Mandates Reform Act), as informed by Office of Management and Budget (OMB) guidance

23

and the EPA's Economic Guidelines.

24

22

We use the term “formal benefit-cost analysis” to refer to an economic analysis that attempts to quantify all significant consequences of an action in monetary terms in order to determine whether an action increases economic efficiency. A benefit-cost analysis evaluates the favorable effects of policy actions and the associated opportunity costs of those actions. The favorable effects are defined as benefits. Opportunities forgone define economic costs. A formal benefit cost analysis seeks to determine whether the willingness to pay for an action by those advantaged by it exceeds the willingness to accept the action by those disadvantaged by it. The key to performing benefit-cost analysis is the ability to measure both benefits and costs in monetary terms so that they are comparable. Assuming all consequences can be monetized, actions with positive net benefits (

i.e.,

benefits exceed costs) improve economic efficiency. This usage is consistent with the definition of a benefit-cost analysis used in the economics literature and the EPA's Guidelines for Preparing Economic Analyses.

23

U.S. OMB. 2003.

Circular A-4 Guidance to Federal Agencies on Preparation of Regulatory Analysis.

Available at

https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.

24

U.S. EPA. 2014.

Guidelines for Preparing Economic Analyses.

EPA-240-R-10-001. National Center for Environmental Economics, Office of Policy. Washington, DC. December. Available at

https://www.epa.gov/environmental-economics/guidelines-preparing-economic-analyses.

Docket ID Item No. EPA-HQ-OAR-2009-0234-20503.

The quantified benefits accounted for in the formal benefit-cost analysis in the 2016 Supplemental Finding's alternative approach included both HAP and non-HAP air quality benefits. Based on the 2011 RIA, the EPA projected the quantifiable benefits of HAP reductions under the rule to be $4 to $6 million in 2015.

25

The RIA also identified unquantified benefits associated with reducing HAP emissions from EGUs.

The EPA projected that the co-benefits associated with reducing these non-HAP pollutants would be substantial. Indeed, these projected co-benefits comprised the overwhelming majority (approximately 99.9 percent) of the monetized benefits of MATS ($36 billion to $89 billion in 2015). The compliance costs of the 2012 MATS Final Rule were projected to be $9.6 billion in 2015.

26

These compliance costs are an estimate of the increased expenditures in capital, fuel, and other inputs by the entire power sector to comply with MATS emissions requirements, while continuing to meet a given level of electricity demand.

25

Like the 2011 RIA, all benefits and costs in this and subsequent sections of this preamble are reported in 2007 dollars.

26

See Table 3-5 of the RIA:

https://www3.epa.gov/ttn/ecas/docs/ria/utilities_ria_final-mats_2011-12.pdf.

a. Summary of 2019 Proposal

The EPA proposed to find that it had erred in the 2016 Supplemental Finding's benefit-cost analysis in giving equal weight to the air quality co-benefits projected to occur as a result of the reductions in HAP. The focus of CAA section 112(n)(1)(A) is HAP emissions reductions.

The EPA outlined in detail in the 2019 Proposal that the Agency had erred in concluding in the 2016 Supplemental Finding that the statutory text of CAA section 112(n)(1)(A) and the legislative history of CAA section 112 more generally supported the position that it was reasonable to give equal weight to co-benefits in a CAA section 112(n)(1)(A) appropriate and necessary finding. 81 FR 24439. The EPA explained in the 2019 Proposal that, because the vast majority of the estimated monetized benefits in the 2011 RIA that were estimated to result from MATS are associated with reductions in fine particulate matter (PM

2.5

) precursor emissions, the EPA had erred in the 2016 Supplemental Finding by giving equal weight to non-HAP co-benefits in making the appropriate and necessary determination. As the 2019 Proposal observed, Congress, in the National Ambient Air Quality Standards (NAAQS) program, established a rigorous system for setting standards of acceptable levels of criteria air pollutants requisite to protect public health with an adequate margin of safety, and by state, regional, and national rulemakings establishing control measures to meet those levels.

The EPA did acknowledge the importance of unquantified benefits in the 2019 Proposal, but also pointed out the limitations of the Agency's ability to monetize HAP-specific benefits. The EPA explained that unquantified benefits are relevant to any comparison of the benefits and costs of regulation. Because unquantified benefits are, by definition, not considered in monetary terms, the EPA proposed that the Administrator would evaluate the evidence of unquantified benefits and determine the extent to which they alter any appropriate and necessary conclusion based on the comparison of monetized costs and benefits.

b. Final Rule

The EPA is finalizing the determination outlined in the 2019 Proposal. The EPA believes that the alternative approach to the 2016 Supplemental Finding was fundamentally flawed in applying a formal cost-benefit analysis to the specific decision making standard directed by CAA section 112(n)(1)(A) because, in the context of the appropriate and necessary finding, doing so implied that an equal weight was given to the non-HAP co-benefit emission reductions and the HAP-specific benefits of the regulation. The total cost of compliance with MATS ($9.6 billion in 2015) vastly outweighs—by a factor of 1 thousand, or 3 orders of magnitude—the monetized HAP benefits of the rule ($4 to $6 million in 2015). In these circumstances, to give equal weight to the monetized PM

2.5

co-benefits would permit those benefits to become the driver of the regulatory determination, which the EPA believes would not be appropriate for the reasons stated in the proposal and set forth below.

c. Comments and Responses

Comment:

Many commenters argued that the EPA's proposed approach to considering co-benefits in the CAA section 112(n)(1)(A) appropriate and necessary determination is not consistent with the statute. The commenters believe that basic principles of statutory construction do not allow the EPA to read CAA section 112(n)(1)(A) only in isolation. The commenters asserted that the EPA has not explained why CAA section 112(n)(1)(A)'s reference to regulation of EGUs allows the Agency to disregard a portion of the consequences of its decision. One commenter noted that the language in the Senate Report on the 1990 amendments to CAA section 112, which directs the EPA to consider the co-benefits of HAP regulation, is the closest specific indication of congressional intent for interpreting CAA section 112(n). The commenter also pointed to the portion of CAA section 112(n) that requires the EPA to conduct a study of hazards to health likely to occur from utility HAP emissions after implementation of other non-HAP provisions of the CAA, and suggested that this provision implies that the EPA should evaluate non-HAP benefits of HAP regulations to see if they are sufficient to establish the case for HAP regulation. One commenter noted that the EPA's approach arbitrarily excludes from consideration a critically important set of the consequences of the EPA's decision, namely the public health concerns at the heart of the CAA.

Response:

The EPA agrees with the commenters that it is critical to examine the language in CAA section 112(n)(1)(A), as well as the overall context of CAA section 112, in determining the scope of the cost consideration for the appropriate and necessary determination. In CAA section 112, Congress has a particularized focus on reducing HAP emissions and addressing public health and environmental risks from those emissions. In CAA section 112(n)(1)(A), Congress directs the EPA to decide whether regulation of EGUs is appropriate and necessary under CAA section 112,

i.e.,

whether the deployment of specific CAA provisions targeted at reducing HAP emissions from the EGU sector is warranted. The EPA believes that it cannot answer this question by pointing to benefits that are overwhelmingly attributable to reductions in an entirely different set of pollutants not targeted by CAA section 112. The EPA believes that it is illogical for the Agency to make a determination, informed by a study of what hazards remain after implementation of other CAA programs, that regulation under CAA section 112, which is expressly designed to deal with HAP emissions, is “appropriate” principally on the basis of criteria pollutant impacts.

The EPA believes that relying almost exclusively on benefits accredited to reductions in pollutants not targeted by CAA section 112 is particularly inappropriate given that those other pollutants are already comprehensively regulated under other CAA provisions, such as those applying to the NAAQS. As the EPA outlined in the 2019 Proposal, the determination that it is not appropriate to give equal weight to non-HAP co-benefits in making the appropriate and necessary determination is further supported by the fact that Congress established a rigorous system for setting standards of acceptable levels of criteria air pollutants and provided a comprehensive framework directing the implementation of those standards in

order to address the health and environmental impacts associated with those pollutants.

See, e.g.,

42 U.S.C. 7409; 7410; 7501; 7502; 7505a; 7506; 7506a; 7507; 7509; 7509a; 7511; 7511a; 7511b; 7511c; 7511d; 7511e; 7511f; 7512; 7512a; 7513; 7513a; 7513b; 7514; and 7515. The vast majority of the monetized benefits in the 2011 RIA that were estimated to result from MATS are associated with reductions in PM

2.5

precursor emissions, principally nitrogen oxides (NO

X

) and sulfur dioxide (SO

2

). NO

X

, SO

2

, and PM

2.5

are already addressed by a multitude of statutory provisions governing levels of these pollutants, including the NAAQS provisions that require the EPA to set standards for criteria pollutants requisite to protect public health with an adequate margin of safety, and by state, regional, and national rulemakings establishing control measures to meet those levels.

The 2016 Supplemental Finding pointed to CAA section 112(n)(1)(A)'s directive to “perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by electric utility steam generating units of [HAP] after imposition of the requirements of [the CAA],” and noted that the requirement to consider co-benefit reduction of HAP resulting from other CAA programs highlighted Congress' understanding that programs targeted at reducing non-HAP pollutants can and do result in the reduction of HAP emissions.

Id.

The finding also noted that the Senate Report on CAA section 112(d)(2) recognized that MACT standards would have the collateral benefit of controlling criteria pollutants.

Id.

However, these statements acknowledging that reductions in HAP can have the collateral benefit of reducing non-HAP emissions and vice versa, provides no support for the proposition that any such co-benefits should be considered on equal footing as the HAP-specific benefits when the Agency makes its finding under CAA section 112(n)(1)(A).

The study referenced in CAA section 112(n)(1)(A) specifically focuses on the hazards to public health that will reasonably occur as a result of HAP emissions, not harmful emissions in general. (“The Administrator shall perform a study of the hazards to public health reasonably anticipated to occur as a result of emissions by electric utility steam generating units of pollutants listed under subsection (b) of this section after imposition of the requirements of this chapter.”) According to that section, “[t]he Administrator shall regulate electric utility steam generating units under this section, if the Administrator finds such regulation is appropriate and necessary after considering the results of the study required by this subparagraph.” The text on its face suggests that Congress wanted the Administrator's appropriate and necessary determination to be focused on the health hazards related to HAP emissions and the potential benefits of avoiding those hazards by reducing HAP emissions. While the provision in one sense does acknowledge the existence of co-benefits—

i.e.,

by referencing the potential for ancillary reductions of HAP emissions by way of CAA provisions targeting other pollutants—it does not follow from this that any ancillary reductions of criteria pollutants that may be projected to result from the regulation of EGU HAP emissions should, therefore, play a part in the Administrator's consideration under CAA section 112(n)(1)(A) whether the regulation of EGUs is “appropriate and necessary.” To the contrary, the statutory direction to consider whether it is appropriate and necessary to regulate HAP after criteria pollutants have been addressed by the CAA's other requirements suggests that it is

not

proper for the co-benefits of further criteria pollutant reductions to provide the dominant justification for an affirmative CAA section 112(n)(1)(A) determination. Certainly, Congress' instruction to the EPA that it study HAP effects under CAA section 112

after

implementation of other CAA provisions cuts against any suggestion that such benefits should be given equal consideration in a CAA section 112(n)(1)(A) determination.

Comment:

Several commenters argued that the EPA's proposed approach, of not providing consideration to co-benefits equal to the consideration provided to the benefits specific to HAP reductions, takes a too-narrow approach that conflicts with

Michigan.

Commenters pointed out that the Court found that CAA section 112(n) tells the EPA to undertake a “broad and all-encompassing” review of “all the relevant factors.” 135 S. Ct. at 2707. Commenters argued that if the Court read “appropriate” to be a “broad and all-encompassing term,” then the EPA cannot excise relevant factors from consideration. Commenters also stated that the Court, in instructing the EPA to consider cost, appeared to adopt a broad reading of the word “cost,” including “more than the expense of complying with regulations; any disadvantage could be termed a cost.” 137 S. Ct. at 2707.

Response:

Nothing in the

Michigan

decision decides this issue. To the contrary, the Court said that the proper treatment of co-benefits is “a point we need not address.” 135 S.Ct. at 2711. Additionally, commenters seem to mistake the EPA's position (

see, e.g.,

Environmental Protection Network (EPN) comment at 25 (April 17, 2019) (Docket ID Item No. EPA-HQ-OAR-2018-0794-2261) (referring to “EPA's crabbed claim that it can focus only on reduction of `HAP emissions—without even considering reductions in non-HAP pollutants').”

See

also States and Local Governments comment at 35-36 (April 17, 2019) (Docket ID Item No. EPA-HQ-OAR-2018-0794-1175) (“In proposing to exclude consideration of [co-benefits], EPA misinterprets and misapplies the Supreme Court's directive in

Michigan.”

)). The commenters essentially argue that the language in

Michigan

requires the EPA to review “all the relevant factors,” including co-benefits. As described at length in the 2019 Proposal and other parts of this section of this preamble, the EPA

is

considering what significance co-benefits have for its determination under CAA section 112(n)(1)(A)—but we are concluding that the finding must be justified overwhelmingly by the HAP benefits due to the statutory structure.

Comment:

Some commenters argued that existing case law, beyond the

Michigan

decision, supports inclusion of indirect benefits into an agency's benefit-cost analysis. A commenter quoted the D.C. Circuit's statement in

American Trucking Ass'ns

v.

EPA

that the EPA must consider both the direct and indirect effects of pollutants, rather than only “half of a substance's health effects.” 175 F.3d 1027, 1051-53 (D.C. Cir. 1999),

rev'd on other grounds sub nom. Whitman

v.

Am. Trucking Ass'ns, Inc.,

531 U.S. 457 (2001). The commenter also cited a Fifth Circuit case in which the Court held that the EPA had to consider the indirect safety harm that could result from the use of substitute, non-asbestos brakes when attempting to ban asbestos-based brakes under the Toxic Substances Control Act.

Corrosion Proof Fittings

v.

EPA,

947 F.2d 1202, 1225 (5th Cir. 1991). A few commenters also noted the D.C. Circuit's favorable treatment of the EPA's consideration of co-benefits in regulating HAP from boilers, process heaters, and incinerators in

U.S. Sugar Corp.

v.

EPA,

830 F.3d 579, 591, 625 (D.C. Cir. 2016).

Response:

As explained elsewhere in this preamble, the EPA is interpreting and applying the statutory directive to make an appropriate and necessary determination under CAA section 112(n)(1)(A) and determining what role

consideration of co-benefits should play in making that determination. None of the case law the commenters cite pertains to CAA section 112(n)(1)(A), and, therefore, the case law is not directly relevant to this action.

As explained in the 2019 Proposal and in this preamble, the EPA believes that it would be inconsistent with the statute and with case law to base the appropriate and necessary finding on a monetized benefit estimate that is almost exclusively attributable to reductions of non-HAP pollutants. Further, the CAA sets out a specific regulatory scheme for the PM pollutants in question, the NAAQS, and as a first principle the EPA believes those regulations, not CAA section 112, should be the primary method by which the Agency targets those pollutants.

Comment:

Several commenters argued that the EPA's approach of giving less weight to co-benefits in the appropriate and necessary determination is fundamentally arbitrary. The commenters pointed out that the PM

2.5

emission reductions are a direct result of HAP emissions controls, and that there is no way to reduce the HAP emissions without reducing PM emissions. Some commenters asserted that excluding some benefits from the appropriate and necessary determination creates a biased analysis. One commenter argued that the EPA's approach is arbitrary and contrary to

Michigan

and other U.S. Supreme Court precedent because it “fai[ls] to consider [such] an important aspect of the problem.”

Michigan,

135 S. Ct. at 2707 (quoting

State Farm,

463 U.S. at 53).

Response:

The EPA acknowledges the existence and importance of these co-benefits. However, when the EPA is comparing benefits to costs as a required prerequisite to regulation, it is critical to examine the particular statutory provision that is being implemented. That statutory provision may limit the relevance of certain costs and benefits—

e.g.,

serve to establish that any benefits attributable to the ancillary reduction of pollutant emissions that are not the focus of the provision at issue are

not

“an important aspect of the problem” that Congress is seeking to address. As noted in the 2019 Proposal and in earlier responses to comments, in CAA section 112(n)(1)(A), Congress directs the EPA to decide whether regulation of EGUs is appropriate and necessary under CAA section 112; the EPA believes that it is not appropriate to answer this question in the affirmative by pointing to benefits that are overwhelmingly attributable to reductions in an entirely different set of pollutants that CAA section 112 is not designed to address. In fact, the EPA believes that it would be arbitrary and capricious to do so.

See Motor Vehicle Mfrs. Ass'n

v.

State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983) (“Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider.”).

The EPA is not turning a blind eye to the reasonably predictable consequences of MATS. The 2011 RIA appropriately details the magnitude of the PM

2.5

-related co-benefits in the form of avoided premature deaths, hospital admissions, emergency department visits and asthma attacks, among other endpoints. However, CAA section 112(n)(1)(A) requires a threshold determination of whether any regulation of EGUs under CAA section 112 is “appropriate and necessary.” The EPA believes that this inquiry must be focused primarily on the risks posed by the pollutants targeted by CAA section 112,

i.e.,

HAP emissions. The gross disparity between monetized costs and HAP benefits, which should be the primary focus of the Administrator's determination in CAA section 112(n)(1)(A), is so great as to make it inappropriate to form the basis of the necessary statutory finding. While the Agency acknowledges that PM co-benefits are substantial, the Agency cannot rely on PM co-benefits to supplant the primary factors Congress directed the Administrator to consider.

Comment:

Several commenters asserted that the EPA's approach to considering co-benefits under the CAA section 112(n)(1)(A) analysis was inappropriate because it is unprecedented in the EPA's regulatory practice and contrary to OMB and EPA policy. Commenters asserted that co-benefits are universally accepted as an important tool in regulatory economics and economic planning. Commenters quoted OMB Circular A-4 as directing agencies in conducting RIAs to “look beyond the direct benefits and direct costs of your rulemaking and consider any important ancillary benefits and countervailing risks.” The commenters also identified the EPA's “Guidelines for Preparing Economic Analyses” that states: “An economic analysis of regulatory or policy options should present all identifiable costs and benefits that are incremental to the regulation or policy under consideration. These should include directly intended effects and associated costs, as well as ancillary (or co-) benefits and costs.” Commenters also cited to previous clean air rules where the EPA has afforded co-benefits equal weight in cost-benefit analyses.

Response:

The EPA developed the 2011 RIA for the 2012 MATS Final Rule pursuant to Executive Orders 12866 and 13563, as well as certain other applicable statutes, as informed by OMB guidance and the EPA's Economic Guidelines. It is true that, in this action, the EPA is drawing on information generated in that RIA in order to make the determination required under CAA section 112(n)(1)(A) concerning whether regulation of EGUs under CAA section 112 is appropriate. How costs are to be considered in making the congressionally-directed CAA section 112(n)(1)(A) determination, however, is not governed independent from statutory requirements, by preexisting OMB or EPA guidelines, nor could it be. Furthermore, for the many reasons explained elsewhere in this preamble and in the 2019 Proposal, the CAA section 112(n)(1)(A) determination is governed by the particular statutory provision at issue, and, therefore, is distinct from any other CAA action.

In the context of conducting the CAA section 112(n)(1)(A) determination, the EPA finds it is not only appropriate but indeed, necessary for the EPA to interpret and apply the particular provision of CAA section 112(n)(1)(A), which as mentioned earlier specifically cites to HAP listed under section 112(b) of the CAA. To be valid, the EPA's analytical approach to that provision must recognize Congress' particular concern about risks associated with HAP and the benefits that would accrue from reducing those risks. OMB and EPA guidance outline regulatory principles that agencies are encouraged to follow to the extent permissible under law. These guidance documents, and the standard economic principles reflected in them, are not necessarily informative regarding how Congress intended the EPA to make the CAA section 112(n)(1)(A) determination, nor should they be read to override statutory text and structure that, as explained earlier in this preamble, requires a focus on a limited set of costs and benefits. Although an analysis of all reasonably anticipated benefits and costs in accordance with generally recognized benefit-cost analysis practices (including extending analytic efforts to ancillary impacts in a balanced manner across both benefits and costs) is appropriate for informing the public about the potential effects of any regulatory action, as well as for complying with the requirements of Executive Order 12866, it does not follow that equal consideration of all benefits and costs, including co-benefits, is warranted, or even

permissible, for the specific statutory provision requiring the EPA to make an appropriate and necessary finding called for under CAA section 112(n)(1)(A).

Comment:

Some commenters asserted that the EPA's 2019 Proposal erroneously suggests that CAA sections 110 and 112 must be treated as mutually exclusive authorities for reducing the public health impacts of PM emissions. Commenters argued that there is no basis to ignore the benefits of reducing pollutants merely because they are also subject to regulation under state and federal implementation plans approved to implement the NAAQS. One commenter noted that the existence of other CAA provisions that deal with criteria pollutant emissions likely indicates Congress' deep concern about the health and environmental risks they pose. One commenter argued that there is no legal support for the idea that CAA section 110 or 112 requires exclusivity; the EPA is not required to pick one avenue through which it can impact PM emissions. The commenter noted that many CAA provisions can address PM, such as those for interstate transport and regional haze, and the EPA itself has encouraged states in their implementation planning to consider selecting controls that will minimize emissions of multiple pollutants. Another commenter acknowledged that the EPA does not argue that the other provisions should be the exclusive vehicle for addressing criteria pollutants, but this commenter asserted that the 2019 Proposal did not explain how criteria pollutant reductions could be realized more effectively by some other legal mechanism and did not claim that criteria pollutants have been fully controlled through those other programs. One commenter also argued that the EPA's proposal is particularly unfounded because many metal HAP are emitted as PM.

Response:

The EPA disagrees with the commenters. The EPA's discussion of co-benefits, and the impropriety of giving them equal weight to HAP-specific benefits within the context of the appropriate and necessary determination, is based on an interpretation of CAA section 112(n)(1)(A), a provision enacted by Congress to address the unique situation facing EGUs. We have limited our analysis to the specifically tailored provision of CAA section 112(n)(1)(A), in which Congress recognized that EGUs would face regulation under numerous parts of the CAA and chose to ask the EPA to consider whether further regulation of EGUs under CAA section 112 would be appropriate and necessary. As noted previously in this preamble and the 2019 Proposal, the vast majority of estimated monetized benefits resulting from MATS are associated with reductions in PM

2.5

precursor emissions, principally NO

X

and SO

2.

Both NO

X

and SO

2

are criteria pollutants in their own right and are already addressed by the numerous statutory provisions governing criteria pollutants. In interpreting and applying CAA section 112(n)(1)(A), we believe it is important to acknowledge that the CAA has established numerous robust avenues for minimizing PM-precursor emissions to a level that is requisite to protect public health with an adequate margin of safety. Because other CAA programs are already in place to ensure reductions in criteria pollutants to the level requisite to protect public health with an adequate margin of safety, the EPA believes that it is not reasonable to point to criteria pollutant co-benefits as the primary benefit to justify regulation of EGUs under a provision of the CAA that authorizes such regulation only where the Administrator determines that it is “appropriate and

necessary”

to do so.

27

27

A number of commenters raised this same issue and made this same point.

See, e.g.,

Docket ID Item Nos. EPA-HQ-OAR-2018-0794-1135, -1178, -1189, -1190.

With respect to one commenter's assertion that the EPA's approach was particularly unfounded given that many metal HAP are emitted as PM, the EPA agrees that most non-mercury metal HAP are emitted as PM. In fact, the EPA established an emission standard for filterable PM in the 2012 MATS Final Rule that serves as a surrogate for the non-mercury metal HAP (recognizing that controls for PM are also effective for the non-mercury metal HAP). However, the fact that the non-mercury metal HAP are emitted in a solid particulate form does not mean that the EPA should give equal weight to the benefits from removal of all PM. As described in the 2011 RIA for the 2012 MATS Final Rule, PM

2.5

benefits result from emissions reductions of SO

2

(1,330,000 tons), NO

X

(46,000 tons), carbonaceous PM

2.5

(6,100 tons), and crustal PM

2.5

(39,000 tons). Control of directly-emitted filterable PM for purposes of controlling non-mercury metal HAP constituted approximately 5 percent of the total PM

2.5

health co-benefits of the rule. Based on analysis of available data, the EPA estimates that non-mercury metal HAP represent, at most, 0.8 percent of this directly emitted filterable PM.

28

The actual HAP-related benefits of controlling non-mercury metal HAP were unquantified. Again, the vast majority of estimated monetized benefits resulting from MATS are associated with reductions in premature mortality resulting from emissions reductions of PM precursors and not from metal HAP or even direct PM.

28

As mentioned in the

Emission Factor Development for RTR Risk Modeling Dataset for Coal- and Oil-fired EGUs

memorandum (Docket ID Item No. EPA-HQ-OAR-2018-0794-0010), the EPA developed ratios of non-mercury metal and filterable PM emissions for use in estimating emissions from coal- and oil-fired EGUs without current non-mercury metal emissions data. These ratios were determined by dividing the fuel-specific averages of the 2010 MATS Information Collection Request (ICR) non-mercury metals data, combined by control technique where possible, by the filterable PM emissions data. The ratios represent the amount of non-mercury metals present in filterable PM. For more detail, see memorandum titled

Non-mercury Metals Content of Filterable Particulate Matter

in the docket for this action.

Comment:

Several commenters asserted that the EPA has not explained what weight is given to co-benefits, or how the EPA chose that standard, aside from saying that the weight is less than what is given to HAP-specific benefits. One commenter noted that the EPA essentially claims that co-benefits cannot affect the appropriate and necessary determination unless quantified HAP benefits are “moderately commensurate” with compliance costs, but the EPA does not provide any clarity on the point at which HAP benefits would be “moderately commensurate” to allow the EPA to rely on co-benefits.

Response:

The Administrator has concluded that the following procedure provides the appropriate method under which the EPA should proceed to determine whether it is appropriate and necessary to regulate EGUs under CAA section 112(n)(1)(A). First, the EPA compares the monetized costs of regulation against the subset of HAP benefits that could be monetized. Here, those costs are disproportionate to the monetized benefits, by three orders of magnitude. That does not demonstrate “appropriate and necessary.” Second, the EPA considers whether unquantified HAP benefits may alter that outcome. For the reasons proposed in February 2019 and further discussed in this final action, the EPA determines they do not. Third, the EPA considers whether it is appropriate, notwithstanding the above, to determine that it is “appropriate and necessary” to regulate EGUs under CAA section 112(n)(1)(A) out of consideration for the PM co-benefits that result from such regulation. For the reasons proposed in February 2019 and set forth in this final action, on the record before the Agency, it is not appropriate to do so.

Here, almost the entirety of monetized benefits (about 99.9 percent) of MATS

reflected in the RIA were derived from non-HAP co-benefits. Had the HAP-specific benefits of MATS been closer to the costs of regulation, a different question might have arisen as to whether the Administrator could find that co-benefits legally form part of the justification for determination that regulation of EGUs under CAA section 112(d) is appropriate and necessary. The EPA does not need to, and does not, determine whether that additional step would be appropriate in this factual scenario given that the monetized and unquantified HAP-specific benefits do not come close to a level that would support the prior determination. Under the interpretation of CAA section 112(n)(1)(A) that the EPA adopts in this action, HAP benefits, as compared to costs, must be the primary question in making the `appropriate and necessary' determination. While the Administrator could consider air quality benefits other than HAP-specific benefits in the CAA section 112(n)(1)(A) context, consideration of these co-benefits could permissibly play only, at most, a marginal role in that determination, given that the CAA has assigned regulation of criteria pollutants to other provisions in title I of the CAA, specifically the NAAQS regime pursuant to CAA sections 107-110, which requires the EPA to determine what standards for the ambient concentration of PM are necessary to protect human health. Here, to the extent that the alternative approach set forth within the 2016 Supplemental Finding was legally grounded in co-benefits, the massive disparity between co-benefits and HAP benefits on this record would mean that that alternative approach clearly elevated co-benefits beyond their permissible role.

If the Administrator were to consider the size of the PM

2.5

-related co-benefits in deciding whether regulating EGUs under CAA section 112(d) is appropriate and necessary, he should also consider taking into account key assumptions affecting the size and distribution of these co-benefits and potential uncertainty surrounding them. In the past, the EPA has highlighted a number of these assumptions as having particularly significant effect on estimates of PM-related benefits, including assumptions about: The causal relationship between PM exposure and the risk of adverse health effects; the shape of the concentration-response relationship for long-term exposure-related PM

2.5

and the risk of premature death; the toxicity of individual PM

2.5

particle components; the levels of future PM

2.5

; the validity of the reduced-form technique used to relate PM

2.5

emission precursors to the number and value of PM

2.5

adverse health effects; and the approach used to assign a dollar value to adverse health effects. The Agency has separately noted that, in general, it is more confident in the size of the risks we estimate from simulated PM

2.5

concentrations that coincide with the bulk of the observed PM concentrations in the epidemiological studies that are used to estimate the benefits. Likewise, the Agency is less confident in the risk estimated from simulated PM

2.5

concentrations that fall below the bulk of the observed data in these studies.

29

Furthermore, when setting the 2012 PM NAAQS, the Administrator acknowledged greater uncertainty in specifying the “magnitude and significance” of PM-related health risks at PM concentrations below the NAAQS. As noted in the preamble to the 2012 PM NAAQS final rule, in the context of selecting an alternative NAAQS, the “EPA concludes that it is not appropriate to place as much confidence in the magnitude and significance of the associations over the lower percentiles of the distribution in each study as at and around the long-term mean concentration.” (78 FR 3154, January 15, 2013).

29

The

Federal Register

document for the 2012 PM NAAQS indicates that “[i]n considering this additional population level information, the Administrator recognizes that, in general, the confidence in the magnitude and significance of an association identified in a study is strongest at and around the long-term mean concentration for the air quality distribution, as this represents the part of the distribution in which the data in any given study are generally most concentrated. She also recognizes that the degree of confidence decreases as one moves towards the lower part of the distribution.”

Comment:

Some commenters argued that the EPA is inappropriately giving full weight to the consideration of indirect costs of regulating EGUs while simultaneously giving less than equal weight to co-benefits. One commenter argued that comparing direct and indirect costs to only the “direct” benefits associated with HAP reductions is not an apples-to-apples comparison. Some commenters stated that the EPA is including not only compliance costs incurred by the sources regulated under MATS, but also costs incurred by other power plants that are not regulated under MATS due to the effects on the power sector of regulated sources' investing in pollution abatement technologies or taking other steps to reduce emissions. The commenter argued that the EPA does not explain why it is appropriate to discount or ignore co-benefits while giving full weight to indirect compliance costs.

Response:

The EPA disagrees with the commenters that co-benefits and the types of compliance costs that the commenters consider “indirect” must be given comparable treatment within this action. As discussed throughout this section, the EPA believes that it is inappropriate to rely, as did the alternative, benefit-cost approach in the 2016 Supplemental Finding, almost exclusively on benefits accredited to reductions in pollutants not targeted by CAA section 112 when those other pollutants are already extensively regulated under other CAA provisions.

Additionally, unlike benefits, which can be disaggregated into benefits attributable to reduction in HAP and co-benefits attributable to reduction in non-HAP pollutants, costs cannot similarly be disaggregated. There is no analogous distinction with respect to compliance costs and, thus, nothing in the statute that directs the EPA to partition compliance costs into direct and indirect (or ancillary) costs, or that supports the view that such a partitioning would be appropriate.

From an economic perspective, MATS was a consequential rulemaking that was expected to induce changes in both electricity and fuel markets beyond the impacts on affected coal- and oil-fired EGUs. The policy case examined in the 2011 RIA introduced the requirements of MATS as constraints on affected EGUs, which resulted in new projections of power sector outcomes under MATS. These compliance costs are an estimate of the increased expenditures in capital, fuel, labor, and other inputs by the entire power sector to comply with MATS emissions requirements, while continuing to meet a given level of electricity demand. These costs were summarized in Table 3-16 of the 2011 RIA.

30

30

The EPA estimated the impacts of MATS on oil-fired units and costs associated with monitoring, recordkeeping, and reporting in separate analyses, which are summarized in Chapter 3 and Appendix 3A of the 2011 RIA.

The commenters do not attempt to present an alternative analysis under which the EPA would assess what they term “indirect costs.” To focus on the projected impact of MATS on only affected entities would produce an incomplete estimate of the entire cost of complying with the rule and, thus, lead to an inappropriate consideration of the costs of the 2012 MATS Final Rule. The costs termed “indirect costs” by commenters are neither ancillary or incidental costs; these costs are an integral part of the compliance costs that are attributable to expected changes

to production behavior in the sector in order to minimize the cost of complying with MATS. Furthermore, an evaluation of the costs borne solely by the owners of EGUs subject to MATS would need to account for the ability of owners of these EGUs to recoup their increased expenditures through higher electricity prices; otherwise, an estimate of the costs of MATS borne by the owners of those EGUs (

i.e.,

their economic incidence) would be an overestimate. However, if the EPA was to only account for the economic incidence for owners of EGUs, the costs borne by the consumers of electricity from these higher prices would be ignored, which the EPA finds inappropriate. Therefore, the EPA determined it was appropriate to account for all of the costs that may be incurred as a result of the rule that could be reasonably estimated, recognizing that these expenditures would ultimately be borne either by electricity consumers or electricity producers, rather than limiting our consideration of costs to just those borne by a subset of producers or consumers.

Comment:

Some commenters asserted that the EPA has failed to explain how it has given any meaningful consideration in its benefit-cost comparison to the numerous health effects of reducing HAP emissions that the EPA has not quantified. A few commenters asserted that the non-monetized benefits of the rule encompass virtually all the HAP reductions that the rule yields. One commenter argued that the EPA has only given “lip service” to these benefits, but not any discernible weight in reaching the conclusion that regulating EGUs under CAA section 112 is not appropriate and necessary. Further, the commenter asserted that the EPA has offered no support or explanation for the assertion that the unquantified benefits are not sufficient to overcome the difference between the monetized benefits and the costs of MATS.

Response:

The 2011 RIA attempted to account for all the monetized

and

unquantified benefits of the rule, and the EPA's benefit-cost analysis in the RIA does not discount the existence or importance of the unquantified benefits of reducing HAP emissions. However, in this final action, the EPA has determined that it is reasonable to evaluate unquantified benefits separately in the comparison of benefits and costs for this action under CAA section 112(n)(1)(A).

The EPA explained in the 2011 RIA that there are significant obstacles to successfully quantifying and monetizing the public health benefits from reducing HAP emissions (

see

also Gwinn,

et al.,

2011,

31

and Fann, Wesson, and Hubbell, 2016

32

for a detailed discussion of the complexities associated with estimating the benefits of reducing emissions of air toxics). These obstacles include gaps in toxicological data, uncertainties in extrapolating results from high-dose animal experiments and worker studies to estimate human effects at lower doses, limited monitoring data, difficulties in tracking diseases such as cancer that have long latency periods, and insufficient economic research to support the valuation of the health impacts often associated with exposure to individual HAP.

31

Gwinn, M.R.,

et al.,

2011.

Meeting Report: Estimating the Benefits of Reducing Hazardous Air Pollutants—Summary of 2009 Workshop and Future Considerations. Environmental Health Perspectives,

119(1): 125-130.

32

Fann N., Wesson K., and Hubbell B (2016), Characterizing the confluence of air pollution risks in the United States.

Air Qual Atmos Health

9:293. Available at

https://doi.org/10.1007/s11869-015-0340-9.

The EPA fully acknowledges the existence and importance of the unquantified benefits. The EPA explained in the 2019 Proposal reasons why the EPA has determined that the unquantified benefits are unlikely to overcome the significant difference (which, the EPA notes again, is a difference of three orders of magnitude) between the monetized HAP-specific benefits and compliance costs of the MATS rule. This is also further discussed in section II.C.2 of this preamble. As noted there, many of the HAP-related effects that were unquantified in the 2011 RIA consist of morbidity effects in humans. The EPA's methods estimating the economic value of avoided health effects values mortality effects significantly more than avoided illnesses (

e.g.,

hospital admissions, emergency department visits, cases of aggravated asthma,

etc.

).

33

Hence, valuing HAP-related morbidity outcomes would not likely result in estimated economic values similar to those attributed to avoiding premature deaths.

33

See

U.S. EPA. 2010a:

Regulatory Impact Analysis for the Nitrogen Oxide National Ambient Air Quality Standards

Page 4-8 through 4-10; U.S. EPA. 2010b:

Regulatory Impact Analysis for the Sulfur Dioxide National Ambient Air Quality Standards

Page 5-26 through 5-28; U.S. EPA. 2012:

Regulatory Impact Analysis for the Particulate Matter National Ambient Air Quality Standards

pages 5-69; U.S. EPA. 2015:

Regulatory Impact Analysis for the Ozone National Ambient Air Quality Standards.

Pages 6-57 through 6-60.

Commenters raised the possibility that there could be unquantified HAP-related benefits of mortality effects, based on the comments the EPA believes the most significant are associated with avoiding premature death, and in particular, potential cancer risks.

34

As part of the 2012 MATS Final Rule, the EPA modeled the maximum individual risk (MIR) associated with non-mercury HAP including arsenic, hexavalent chromium, nickel, and hydrogen chloride for a subset of 16 EGUs. MIR is the “maximum individual risk” experienced by the most highly exposed individual living in proximity to the source, presuming continuous exposure for 70 years. The analysis found that the one oil-fired EGU studied had a lifetime cancer risk of 20-in-1 million, and that none of the remaining 15 coal-fired EGU facilities posed a lifetime risk of cancer for the maximally exposed individual exceeding 8-in-1 million, with most facilities posing a risk of equal to, or less than, 1-in-1 million. These risks are significantly below the levels defined by the EPA as being the presumptive upper limit of acceptable risk

(i.e.,

1-in-10 thousand). While that analysis did not separately estimate the number of new cases of HAP-attributable cancer among each year, the size of the MIR implies that the number of new cases would likely be very small. The EPA's evaluation of evidence of unquantified benefits is based on qualitative information that helps understand the likelihood and potential scale of those benefits, relative to the monetized benefits and monetized costs. These qualitative assessments help confirm that unquantified benefits do not alter the underlying conclusions that costs greatly outweigh HAP benefits.

34

See

sections II.C.2 and II.C.4 of this preamble for the EPA's response to commenters' assertions regarding potential mortality effects due to methylmercury exposure and cardiovascular impacts.

Comment:

Several commenters pointed out that the EPA's 2019 Proposal relies on undefined terms such as “moderately commensurate,” “gross disparity,” and “significant difference,” which are not statutory terms and do not appear in prior regulatory actions associated with MATS. Without explanation of what these terms mean, the commenters asserted that the public did not receive adequate notice so that they could provide meaningful comments on the proposal. Commenters said the 2019 Proposal leaves the public in the dark as to what data and methodology the EPA relies on to determine that the costs of regulating power plants under CAA section 112 “grossly outweigh” the hazardous air pollution benefits. One commenter asserted that the failure to define these terms and outline the EPA's analytical

methodology has rendered this action in violation of CAA section 307(d).

Response:

The EPA believes that the language used in its 2019 Proposal and final actions is reasonable and understandable and is consistent with legal standards that have been previously upheld in litigation challenges. For example, in the

Entergy

decision the U.S. Supreme Court upheld the EPA's use of a “wholly disproportionate” standard. 556 U.S. at 224 (“[I]t is also not reasonable to interpret Section 1326(b) as requiring use of technology whose cost is wholly disproportionate to the environmental benefit to be gains”) (internal quotation removed). Further, as recognized in the 2016 Supplemental Finding, CAA section 112(n)(1)(A) and the

Michigan

decision give broad discretion to the Administrator to apply his expert judgment in considering cost in order to determine whether it is appropriate and necessary to regulate HAP emissions from EGUs.

See

81 FR 24428. CAA section 112(n)(1)(A) requires that “the Administrator shall regulate [EGUs] . . . if the Administrator finds such regulation is appropriate and necessary.” The

Michigan

Court explicitly acknowledged the discretion held by the Administrator: “[i]t will be up to the Agency to decide (as always, within the limits of reasonable interpretation) how to account for cost.” 135 S. Ct. at 2711. As explained in the prior response and in other places in this preamble, the EPA has concluded, as a result of our qualitative evaluation of evidence, that unquantified benefits cannot reasonably be expected to be comparable to the cost of regulation or to meaningfully redress the gross disparity between that cost and the monetized HAP benefits. The commenters take issue with some of the terminology used in the 2019 Proposal, but given the discretion afforded to the Administrator by CAA section 112(n)(1)(A), as acknowledged by the U.S. Supreme Court, we believe this preamble outlines a reasonable and fitting approach to Congress' open-ended instruction to the Administrator to determine whether a regulation of EGUs is “appropriate and necessary.” The EPA further believes that, in a context where costs outweigh monetized HAP-specific benefits by three orders of magnitude, the meaning and relevance of terms such as “gross disparity” and “significant difference” are self-evident.

4. It Is Reasonable To Continue To Rely on the Original 2011 Regulatory Cost-Benefit Data Comparison as Part of a CAA Section 112(n)(1)(A) Assessment of Costs and Benefits

a. Summary of 2019 Proposal

As discussed above, in the 2016 Supplemental Finding, the EPA considered an alternative approach to considering cost as part of the appropriate and necessary finding that was based on a benefit-cost analysis originally performed as part of the 2011 RIA for the 2012 MATS Final Rule. This analysis summarized the EPA's projected estimates of annualized benefits, costs, and net benefits of the MATS rule in 2015. The 2011 RIA considered costs, quantified HAP benefits, unquantified HAP benefits, and non-HAP co-benefits and concluded that aggregated monetized benefits ($37 to $90 billion each year) exceeded the costs of compliance ($9.6 billion) by 3 to 9 times. The EPA, therefore, concluded in the 2016 Supplemental Finding's alternative approach that the RIA's benefit-cost analysis supported its affirmation of the prior appropriate and necessary finding under CAA section 112(n)(1)(A).

The 2019 Proposal also used the estimates from the 2011 RIA to address costs in the context of a CAA section 112(n)(1)(A) appropriate and necessary finding but concluded that the alternative approach in the 2016 Supplemental Finding had improperly weighed the non-HAP co-benefits estimates reported in the 2011 RIA. Specifically, the EPA concluded that the Agency's previous equal weighting of the PM

2.5

co-benefits projected to occur as a result of the reductions in HAP emissions was inappropriate given that the focus of CAA section 112(n)(1)(A) is on the HAP emissions reductions themselves. Upon reconsideration, the EPA proposed to determine that it would be illogical for the Agency to decide that regulation under CAA section 112, which is expressly designed to deal with HAP, could be justified primarily based on the non-HAP pollutant impacts of these regulations. In the 2019 Proposal, the EPA provided an updated comparison of costs and targeted pollutant benefits

(i.e.,

HAP benefits) in a memorandum to the proposed rulemaking docket.

35

The EPA used the results from the 2011 RIA for the updated comparison, as this RIA contained the best available information on the projected costs, benefits, and impacts of the MATS rule at the time the Agency was making its regulatory decision to establish CAA section 112(d) emissions standards.

35

See Compliance Cost, HAP Benefits, and Ancillary Co-Pollutant Benefits for “National Emission Standards for Hazardous Air Pollutants: Coal-and Oil-Fired Electric Utility Steam Generating Units—Reconsideration of Supplemental Finding and Residual Risk and Technology Review”

(Docket ID Item No. EPA-HQ-OAR-2018-0794-0007).

b. Final Rule

The EPA is finalizing the determination outlined in the 2019 Proposal. The EPA believes that the approach to the formal benefit-cost analysis presented in the 2011 RIA contains the best available information on the projected costs, benefits, and impacts of the MATS rule at the time the Agency was making its regulatory decision to establish CAA section 112(d) emissions standards. The EPA maintains that, based upon an evaluation of the information in the record, even if the Agency were to perform new analysis to estimate the benefit and cost impacts of MATS, the results are unlikely to materially alter the general conclusions of the analysis, with small benefits associated with the targeted quantified HAP benefits and compliance costs and would not alter the final determination herein.

c. Comments and Responses

Comment:

Some commenters asserted that the EPA has failed to comply with basic principles of administrative law by failing to develop an adequate factual record in basing its cost-benefit comparison on the data contained in the 2011 RIA, as opposed to gathering the body of information relevant to these issues that has since become available. These commenters asserted that any consideration of the appropriate and necessary finding must consider new information on what the benefits and costs of regulating EGUs would be if the question were revisited in light of current knowledge, not as the facts were thought to be 8 years in the past.

Response:

The EPA agrees with the commenters that courts have required administrative agencies to address “newly acquired data in a reasonable fashion,” but depending on the circumstances, agencies are not always required to rely on updated data when engaged in decision-making.

American Iron & Steel Inst.

v.

EPA,

115 F.3d 979, 1007 (D.C. Cir. 1997). The EPA maintains that its use of benefit and cost information from the 2011 RIA is reasonable in this context.

To determine whether an agency reasonably addressed updated data, courts may look to the statutory mandate to the Agency.

NRDC

v.

Herrington,

786 F.2d 1355 (D.C. Cir.

1985). Under the statutory structure of CAA section 112, the CAA section 112(n)(1)(A) finding is a preliminary determination that is made significantly before the CAA section 112(d) standards would be promulgated. The suggestion by some commenters that the EPA is required to conduct a new analysis that attempts to estimate the actual costs incurred through compliance with the final CAA section 112(d) standards is, thus, not consistent with the statute. The 2016 Supplemental Finding similarly declined to conduct new analysis before reaffirming the appropriate and necessary determination, arguing that this was an appropriate approach to the problem because that determination is a threshold question under the statute. 81 FR 24432 (2016 Supplemental Finding). We also note that in 2012, the EPA interpreted CAA section 112(n)(1)(A) as not obligating the Agency to update its data, and we maintain that interpretation here. That interpretation is consistent with the text and structure of CAA section 112(n)(1)(A), which focuses on an expressly required study that evaluates hazards to public health. When the EPA reaffirmed the 2000 appropriate and necessary finding in 2012, it explained that although it was choosing to undertake an updated analysis of the public health risks associated with EGU HAP emissions, doing so was “not required.” 77 FR 9304, 9310 (February 16, 2012). The EPA argued at the time that the continued existence of the appropriate and necessary finding in 2012 was warranted by the analysis undertaken in 1998 and summarized in the 2000 appropriate and necessary finding.

Id.

Both the statute and the

Michigan

decision support the EPA's reliance on the cost estimates from the 2011 RIA. First, any cost analysis included in an “initial decision to regulate,”

Michigan,

135 S. Ct. at 2709, must precede any regulations flowing out of that decision. Therefore, in considering the costs of compliance as part of its appropriate and necessary finding, it is reasonable for the EPA to look at what types of cost information, such as the 2011 RIA cost estimates, would be available at this threshold stage. In addition, nothing in the

Michigan

decision precludes the EPA's use of the existing cost information in the record in addressing the Agency's obligation on remand to consider cost as part of the appropriate and necessary finding. In

Michigan,

the Court rejected arguments that it could conclude that the Agency had properly considered cost based on the Agency's consideration of costs in other stages of the rulemaking (

e.g.,

in setting the emission standards or in the RIA). The Court emphasized that the Agency itself had not relied upon these rationales at the finding stage. 135 S. Ct. 2710-11 (citing

SEC

v.

Chenery Corp.,

318 U.S. 80, 87 (1943)). However, the Court left open the possibility that the economic analyses the Agency had already conducted could suffice to satisfy its obligation to consider costs as part of the appropriate finding.

Id.

at 2711.

There is nothing in the operative statutory language here that is akin to wording that courts have found to require an agency to incorporate updated information.

See Sierra Club

v.

EPA,

671 F.3d 955 (9th Cir. 2012) (directing the EPA to rely on updated data when approving nonattainment state implementation plans (SIPs) because CAA section 172(c)(3) requires SIPs to include “comprehensive, accurate, current inventory of actual emissions”);

see

also

City of Las Vegas

v.

Lujan,

891 F.2d 927 (D.C. Cir. 1989) (holding that the Secretary of the Interior could not disregard available scientific information because the Endangered Species Act required the “best scientific and commercial data available”).

In addition to looking at the statutory language, courts also often examine the impact any updated data would have had on the agency's decision.

Catawba County

v.

EPA,

571 F.3d 20, 45 (D.C. Cir. 2009) (upholding the EPA's designations for the NAAQS because “EPA dealt with the newly acquired data in a reasonable fashion by explaining why it would not have changed the designations”);

see

also

Eastern Carolinas Broadcasting

v.

FCC,

762 F.2d 95, 98 (D.C. Cir. 1985) (upholding FCC's determination in light of the Commission's failure to utilize updated data because it was a “harmless error in light of the ultimate rationale”).

According to the commenters, costs of MATS compliance have been lower than the EPA estimated in 2011 and the EPA has not accounted for more recent studies of quantified HAP benefits. However, even if the EPA updated its analysis, there is no reason to believe that the new data and analysis would change the overall conclusion of the 2011 analysis that costs outweighed the quantified benefit attributed to reduction in HAP emissions.

However, while it is challenging to produce rigorous retrospective estimates of the benefits and costs of MATS, it is possible to demonstrate, using publicly available information, that there is no reason to believe that the relative difference between compliance costs and quantified HAP benefits projected in the 2011 RIA ($9.6 billion versus $4 to $6 million annually in 2015) would be materially different under any re-analysis.

36

Several commenters pointed to independent analyses that provided three estimates of the actual costs of MATS. While none of these estimates can be precisely compared against the EPA

ex ante

estimates because they use different cost metrics and dollar years, the independent analyses indicate that, if actual costs were to be estimated in a manner consistent with the EPA's 2011 RIA estimates, the compliance costs expenditures would still likely be in the billions of dollars.

36

The EPA's April 15, 2020, finalization of the subcategorization of Eastern Bituminous Coal Refuse-Fired EGUs could alter the benefits and costs of MATS. However, given that such subcategorization will affect only six units, we think it is reasonable to expect that any changes to the 2011 RIA's projected cost and benefits as a result of the potential subcategorization would not materially affect the EPA's conclusion that compliance costs of MATS disproportionately outweigh the HAP benefits associated with the standards.

First, a 2015 analysis by Andover Technology Partners referred to by commenters estimated that the actual cost of compliance in the initial years of implementation was approximately $2 billion per year.

37 38

The second study referred to by commenters was a study performed by M.J. Bradley & Associates (MJB&A) using information from the U.S. Energy Information Administration.

39

MJB&A estimated that MATS-regulated facilities incurred total capital expenditures on environmental retrofits of $4.45 billion, an estimate that does not include ongoing operating and maintenance expenditures. Finally, as documented in a letter to the EPA and cited by several commenters, the Edison Electric Institute estimated that the power sector incurred total compliance costs of more than $18 billion, including both capital and

operations and maintenance costs.

40

While these retrospective cost estimates are developed from bases that are dissimilar from one another and, in particular, from how the EPA developed the prospective cost estimates in the 2011 RIA, it is evident that the independent analyses each indicate that the industry costs of MATS are of a similar order of magnitude and in the billions of dollars.

37

Declaration of James E. Staudt, Ph.D., CFA, at 3,

White Stallion Energy Center

v.

EPA,

No. 12-1100 (D.C. Cir., December 24, 2015). Also available at Docket ID Item No. EPA-HQ-OAR-200

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