## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

1  Some commenters would like to better understand the implied consequences for small businesses that arise from the mix of known and unknown control strategies. To the extent that EPA projects costs based on known control strategies already considered in other rulemakings, we request EPA provide discussion of the relative contribution of small entities to the emissions inventory and the extent to which EPA has implicit assumed in its economic analysis that small entities would install control equipment not otherwise required in industry specific rules.

EPA Response: The control strategies presented in the RIA are not based on known control strategies from other rulemakings. T he control strategy analysis in the RIA relies on emissions and engineering data from the National Emissions Inventory (NEI) , which does not include comprehensive NAICS information , and therefore does not contain information on entity size.
See additional discussion below (in response to next comment) related to lack of in formation on entity size.

 Some commenters have attempted to understand these impacts for ICI boilers, but could not recreate the impacts based on the information made available so far. It is not clear in the RIA’s
estimation of costs and emission reductions from know n control strategies applied to ICI boilers if these are calculated from major or area sources or both. In order to properly evaluate the impact known controls will have on small entities, it is important to understand which sectors
will have known contro l costs from ICI boilers at major or area sources. Specifically, to reduce emissions further, is EPA assuming that ICI boilers at area sources will now require SCR and LNB
controls? If major and area ICI boilers apply controls beyond standards in the Boi ler MACT, a significant percentage of small entities may be impacted. From EPA’s 2013 ICI boiler MACT rule at major and area sources, the categories of small entities potentially affected included major sources at lumber mills (NAICS 321) and municipal bo ilers (NAICS 221), and area sources at schools (NAICS 611), churches (NAICS 8131), and hospitals (NAICS 622). To determine the impact on these entities, we need to find out their appropriate share of the calculated control

costs. Additionally, we do not have a clear understanding on how the projected costs from NOx measures applied to ICI boilers were calculated. When attempting to reproduce the projected costs of NOx measures to ICI boilers, we did not reach the same numbers from Ch.7 of the RIA
when us ing a straight forward calculation of multiplying the tons reduced per year to the average cost per ton for the non

- EGU point sector. We suggest EPA further explain how EPA arrived at these numbers when determining the costs of NOx measures to ICI boilers

.

EPA Response: The estimates of cost and emissions reductions from known control strategies applied to ICI boilers include major and area sources.

EPA is not expressly requiring ICI boilers at area sources to install SCR and LNB controls

-- t he RIA reflects illustrative control strategies of possible approaches to attain potential alternative standards in 2025 of 70 ppb and 65 ppb, as well as one more stringent standard than proposed (60 ppb). State, local, and tribal agencies will analyze ho w best to achieve needed emissions
reductions and will prepare control strategies through their state or tribal implementation plan (SIP/TIP) after a standard becomes final. The SIP/TIP process would likely take place several years from now and would invo lve the state/local/tribal agencies gathering current local information on sources of emissions, as well as information on control options, impacts of controls, and related costs. The SIP /TIP process involve s propos ing state/local/tribal rules, public

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

2 hea rings , and promulgating state/local/tribal final rules ; the final state/local/tribal rules would include any requirements for specific sources, including ICI boilers.

The analysis in the RIA relies on emissions and engineering data from the NEI, which does not
include comprehensive NAICS information , and therefore does not contain information on entity
size. T he NEI includes NAICS industry codes for non

- EGU point sour ces, but not for area (nonpoint) sources. To the extent that major and/or areas sourc es are small entities, EPA does not
have data to establish the connection between emissions source size (major and/or area) and entity size (small entity)

.

EPA can provide more details in the relevant RIA chapters or appendices on how costs were estimated for NOx control measures for ICI boilers.

 Similar issues arise in working to understand the incidence of nonroad controls. An unfunded nonroad diesel retrofit program would likely impose significant burdens on small entities. Some
commenters would like to have a better understanding of how much nonroad diesel equipment would need to be retrofitted and the economic sectors in which this equipment is operated. In sectors for which small entities are a significant presence, EPA may be underestimating the average cost of compliance.

EPA Response: EPA is not expressly requiring nonroad diesel retrofits on specific sources

-- the RIA reflects illustrative control strategies of possible approaches to attain potential alternative
standards in 2025. In addition, the percent of NOx emissions reductions estimated from nonroad
diesel retrofits for attainment of a potential alternative standard of 65 ppb is 1 % of the total NOx emissions reductions, representing a small portion of the illustrative control strategy

.

 Some commenters also have significant concerns about the extrapolation of costs for unknown compliance technologies, and seeks to better understand how EPA modeled these costs. As above, presentation of average costs can hide significant dispar ities in compliance costs for small entities, and where small businesses are a significant proportion of the industry, this may
lead to underestimates.

EPA Response: EPA un derstand s that costs can vary significantly across emissions source sizes

. EPA doe s not have information in the NEI or in the control cost equations , nor other factors
sufficient to determine the costs for each specific emissions source. As such, EPA present s costs averaged across broad sectors of the economy and across broad geographic regions. It is beyond the scope of the RIA to reflect specific, detailed costs for each source.

 EPA bases its estimates of the extrapolated costs for emissions reductions to be $15,000 per ton using the average

- cost methodology. This estimate is based off of known control costs available, which does not have a citation, rather than a survey of known control methods most likely to be used by firms. Additionally, it is reasonable to expect that the control cost for small businesses will be higher than th e assumed $15,000 per ton, but the commenters do not have the information necessary to understand the extent of this problem because EPA does not present industry analysis by subcategories of industry and firm size. Using the average

- cost methodology com bined with economies of scale, costs to small businesses will consistently be higher across all small firms.

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

3  EPA states that their estimate undervalues the higher cost controls that regions may apply to
meet the alternative standards. This means that sma ll firms may experience an even more severe cost of compliance than EPA has accounted for depending on their geographic
location. This is not factored into the $15,000/ton estimate.

EPA Response: The analysis in the RIA relies on emissions and engineeri ng data from the NEI,
which does not include comprehensive NAICS , and therefore does not contain information on entity size. To the extent that major and/or areas sources are small entities, EPA does not have
data to establish the connection between emiss ions source size (major and/or area) and entity size (small entity). EPA removed smaller point sources (sources emitting less than 25 tpy) and nonpoint (area) source categories for which countywide emissions were below 25 tpy from the
illustrative control strategies. To the extent that smaller emissions sources are small entities, this reduces their inclusion in the illustrative control strategy.

 Interagency commenters request that EPA provide citations for its data sources and discuss in greater detail t he barriers to obtaining consistent data across original data sources. Without the proper citation of sources, it is difficult to replicate and verify EPA’s cost estimates or understand the original studies’ methodologies. The commenters wish to encourag e EPA to share its data sources and methodology in a more transparent fashion.

EPA Response : EPA will post an updated CoST Equation Document and other supporting information on the CoST website and will provide more detail in the RIA docket.

 Tables ES

- 6, ES

- 8, 5

- 1, 5

- 2, 5

- 23, 5

- 30, 5C

- 10

– These tables should be split to show explicitly the benefits derived for ozone only and then for total benefits. We agree that the total benefits (ozone plus PM) should be shown; however, it is quite informative, esp ecially in an ozone rule,
to show the ozone

- only benefits in addition to the total benefits. That would give the public a more complete view of the related benefits achieved by this rule. Additionally, it is unclear
whether Tables 5

- 19, 5

- 20, 5

- 21, 5

- 22, 5

- 26, 5

- 27, 5C

- 6, and 5C

- 7 show combined ozone and PM
values. If so, these should also be split as suggested.

EPA Response : EPA added o zone

- only and PM 2.5 - only benefits row s to Tables 5

- 1, 5

- 2, 5

- 23, 5

- 3 0 and 5C

- 10. In the Executive Summary in Tables ES

- 6 and ES

- 8 (renumbered to ES

- 10) , EPA presents total costs, total benefits and net benefits and references Tables 5

- 1, 5

- 2, 5

- 23, and 5

- 30 for additional detail on the benefits breakdown. EPA also modified titles for Tables 5

- 19, 5

- 20,
5

- 21, 5

- 22, 5

- 26, 5

- 27, 5C

- 6, and 5C

- 7 to clearly identify whether they present estimates for

ozone

- only, PM 2.5 - only, or both combined.

 Tables ES

- 7 and ES

- 9 and Section 1.4

– EPA’s analysis of benefits related to human health are heavily weighted toward experi mental, theoretical, and statistical analyses. EPA has revised the

O 3 NAAQS a number of times since 1979, and there have been many areas that have achieved attainment and/or made progress toward achieving previous NAAQS. It would seem reasonable
that EPA should incorporate information related to the air quality improvement and resulting improvement in public health to verify that the assumptions and procedures used in setting the NAAQS actually make sense and accurately predict the actual improvement. Fo r example, EPA

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

4 could look at a number of nonattainment areas for O 3 that have achieved the standard and answer the following: “We expected __ improvement in O 3 concentrations due to the implementation and attainment of a certain NAAQS level in area __ and thus we expected to achieve __ improvement in public health (choose various public health metrics used in setting the standards, such as expected reduced mortalities, expected reduced hospital visits, etc.). After implementing the regulations and achievi ng O 3 concentrations of __, we actually saw __ improvement in public health.” Conducting such an analysis would lend credibility and a valuable means of verifying initial assumptions, as well as verifying those data obtained from
chamber studies and other experimental work matched reality. As such, EPA should prioritize research and analytical efforts to begin evaluating the actual impacts achieved from ozone
reductions.

EPA Response : This would represent new research conducted in the future and as such is out of scope for the current review

.

 Chapter 5 (and other benefits analyses)

– In estimating costs associated with this rule, EPA seems to exclude those costs associated with the implementation of already promulgated or
known rules. While this is acceptable, EPA needs to ensure that the benefits associated with those rules particularly are also excluded such that they are not double

- counted. It appears that EPA’s ozone benefits estimates simply look at benefits accrued by achieving certai n ambient standards without instead focusing on the difference in ozone concentrations expected after implementation of the promulgated or known rules and achievement of the various standard levels included in the analysis. For example, if already promulg ated or known rules would result in achievement of a 70 ppb level in a certain area, there should be a zero value for benefits resulting from this rule in that area, just as there is a zero value for costs to achieve the 70 ppb
level in that area. In shor t, benefits (and costs, for that matter) attributed to this rule should be strictly limited to those achieved via the attainment strategies needed to achieve the various standard levels in addition to those rules already promulgated or known.

EPA Response : All of the alternative standard levels are evaluated for benefits incremental to the
baseline. As discussed in section 5.2 of Chapter 5, the baseline reflects application of existing regulations potentially impacting ambient ozone levels. Consequently, if an existing regulation would drive ambient ozone levels in a given location below the current standard, that will be reflected in the baseline used to generate benefits estimates for this review.

 More Specific Comments:

(2

- 1) In practice, the distinction between natural and anthropogenic sources is often unclear, as human activities may directly or indirectly affect emissions from what would have been considered natural sources during the preindustrial era. Thus, emissions from plants, animals, and wildfires could be considered either natural or anthropogenic, depending on whether emissions result from agricultural practices, forest management practices, lightning strikes, or other types of events (US EPA, 2013, sections 3.2 and 3.7.1). Modern anthropogenic efforts to restore natural ecological function, such as those associated with prescribed fire (both forestry and agricultural) and forest management practices, should not be considered anthropogenic. Rather, they are intended to reverse nega tive anthropogenic influences on natural ecosystems.

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

5 (2

- 16)

– General Comment:

The RIA states “Background ozone is a relatively larger percentage (e.g., 70

- 80%) of the total seasonal mean ozone in locations within the intermountain western U.S. and along the U.S. border. In locations where ozone levels are generally higher, like California and the eastern U.S., the seasonal mean background fractions are relatively smaller (e.g., 40

- 60%). The additional 2007 modeling confirms that background ozone, while g enerally not approaching levels of the ozone standard, can comprise a considerable fraction of total seasonal mean ozone across the U.S (EPA, 2014c).”

Yet just 2 pages before (p. 2

- 14) EPA states “From a seasonal mean perspective, background
ozone levels are typically well

- below the NAAQS thresholds.” Clearly, 40

- 80% background (of total) is NOT “well

- below.” It is very significant, especially in the rural West, and the statement on p. 2

- 14 can be very misleading and is in fact erroneous. Please provide a more in

- depth and accurate discussion of background levels in different parts of the country.

EPA Response : EPA has revised the characterization of background ozone from “well

- below” to simply “below”. EPA has not added any additional information on b ackground ozone to this chapter of the RIA, as we believe the in

- depth discussion in Chapter 2.4 of the Policy Assessment in combination with section 2.4 of this document is already sufficiently detailed.

(2

- 17)

– General Comment:

The RIA states “It shoul d be noted here that EPA has policies for treatment of air quality monitoring data affected by these types of events. EPA’s exceptional events policy allows exclusion of certain air quality monitoring data from regulatory determinations if a State adequate ly demonstrates that an exceptional event has caused the exceedance or violation of a NAAQS. In addition, Section 179B of the Clean Air Act (CAA) also provides for treatment of air quality data from international transport when an exceedance or violation o f a NAAQS would not have occurred but for the emissions emanating from outside of the United States. Finally, CAA section 182(h) authorizes the EPA Administrator to determine that an area designated nonattainment can be treated as a “rural transport area”. In accordance with the statute, a nonattainment area may qualify for this distinction if it meets the following criteria: 1) the area does not contain emissions sources that make a significant contribution to monitored ozone concentrations in the area, or in other areas; and 2) the area does not include and is not adjacent to an MSA.”

First, as some interagency commenters have previously stated regarding the proposed new primary and secondary NAAQS levels, EER demonstrations can be unnecessarily burdensom e for states, and until fire

— both wild and prescribed

— is fully incorporated into EPA background levels there will be an increasing EER burden on the states. EER demonstrations are not easy, nor quick. The approach outlined by EPA is not a solution to thi s major issue.

Second, it would be good to know about “rural transport areas” and how vast areas of the western and central US might be designated in this way (esp. w.r.t. fire needs). Please provide

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

6 more discussion of RTA’s, how they have been used in the past, and the extent to which RTA’s can affect the obligations of States to demonstrate attainment in SIPs.

EPA Response : EPA has added an additional sentence to the RIA noting that more detail on how background ozone is addressed in CAA implementation is provided in Section VII.F of the NPR. A more in depth discussion regarding exceptional event determinations and rural transport areas
is outside of the scope of the RI A.

Additional Changes to RIA

 A request was made for EPA to solicit comment on the $15,000/ton costing method for unknown
controls.

EPA Response : Additional language was added to Chapter 7 to request comment on this topic.

 A request was made for EPA to provide details on what comprises the social vulnerability index discussed in Appendix 9A.

EPA Response : EPA removed the term social vulnerability index , and in Section 9A.1.1 of Appendix 9A retained separate paragraphs that discuss demographic variables of interest that are included in the analysis. Each paragraph contains a reference or references underlying each variable (endnotes 3 through 17).

 A request was made to add language to Chapter 7 about why average costs may decrease when analyzing lower alternative standards.

EPA Response: The following language was added to Section 7.1.2: The cost trend is increasing for some sectors and decreasing for others. The variation is small for most sectors and depends on the sources that happen to be in the geographic areas of control. In general, the same set of controls is being applied at each level of the alternative standards analyzed. The primary difference in the control strategies for the alternative standards is the greater size of the geographic area of control as the stringency of the alternative standards increases. Overall for all sectors as a whole, the average cost per ton is actually increasing slightly with increasing stringency of the alternative standard analyzed.

 A request was made to add language in Chapter 7 to the discussion about differences in methodology between 2008/10 analyses and the current analysis related to not including in the current analysis the hybrid methodology to estimate costs associated with unknown controls

.

EP A Response : In Chapter 7, Section 7.5, EPA added additional language about the hybrid approach not being used in this RIA.

 Chapter 9 Table 9

- 1: Please provide a footnote clarifying what “other or multiracial” constitutes.
Table 9

- 2: Please provide a foot note clarifying what “low income” constitutes.

EPA Response: Appendix 9A clarifies on page 2 that “other or multiracial” is derived from individual reporting on Census forms (Census information referenced in endnotes 1 and 4), and

## Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

7 on page 4 that “low income” in this analysis is defined as income two times the poverty line or
less. EPA has added two footnotes to Tables 9

- 1 and 9

- 2 in Chapter 9 to this effect.

 Executive Summary Suggest deleting “supplemental” in characterizing CA analysis.

EPA Response: EPA has changed 'suppl e mental' to 'separate' when referring to the California analysis.

 Chapter 5

Would you clarify exactly what air quality modeling was done to assess the reduction in secondary PM formation?

EPA Response: EPA enhanced the discussion to more clearly state that (i) denovo modeling was used to generate ozone

- specific benefits estimates, and (ii) PM 2.5 cobenefits were generated using
benefit

- per

- ton values derived using air quality modeling completed prior to this review, i.e ., no new air quality modeling was completed to estimate the benefit

- per

- ton values.

5

- 53

– 5

- 54: We suggest that using Graff Zivin and Neidell (2012) to assess worker productivity may not be appropriate without understanding the generalizability of the study results. We suggest that EPA use the previous discussion regarding the nascent literature on the effect of ozone on worker productivity.

EPA Response: The text that has been added addresses the issue related to generalizability of
data from this s ingle study in the context of making national

- scale benefits estimates.