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Hutson, Nick

From: Hutson, Nick

Sent: Friday, July 31, 2015 2:34 PM

To: Frey, Nathan J.; 'Szabo, Aaron'

Cc: Culligan, Kevin; Fruh, Steve

Subject: FW: 111(b) cost language

Nathan - 

See below for the 111(b) preamble language that we added to replace previous (similar) language describing costs and 

benefits in the 111(b) RIA. Red text is the language that has been added. 

Nick 

Around page 29 [Executive Summary] 

Thus, in Chapter 5 of the RIA, we also present an analysis of the projectlevel costs of a newly constructed coal-fired steam generating unit with 

partial CCS that meets the requirements of this final rule alongside the 

project-level costs of a newly constructed coal-fired unit without CCS. 

This analysis indicates that the quantified benefits of the standards of 

performance would exceed their costs under a range of assumptions.

Around page 276 

Commenters stated that the cost provision in CAA section 111(a)(1) 

does not authorize the EPA to consider the nationwide costs of a system of 

emission reduction in lieu of considering the cost impacts for individual 

new plants. In this rule, we are considering both sets of costs and, in 

fact, we are not identifying full CCS as the BSER primarily for reasons of 

its cost to individual sources. At the same time, total projected costs 

are relevant in assessing the overall reasonableness of costs associated 

with a standard. Our analysis demonstrates that the impacts on the 

industry as a whole are negligible, and are certainly not greater than 

“what the industry could bear and survive.” These facts support the EPA’s 

overall conclusion that the costs of the standard are reasonable.

However, as noted earlier, for a variety of reasons, some companies 

may consider coal-fired steam generating units that the modeling does not 

anticipate. Thus, in Chapter 5 of the RIA, we also present an analysis of 

the project-level costs of a newly constructed coal-fired steam generating 

unit with partial CCS that meets the requirements of this final rule 

alongside the project-level costs of a newly constructed coal-fired unit 

without CCS. This analysis in RIA chapter 5 indicates that the quantified 

benefits of the standards of performance would exceed their costs under a 

range of assumptions. 

As required under Executive Order 12866, the EPA conducts benefitcost analyses for major Clean Air Act rules, and has done so here. While 

such analysis can help to inform policy decisions, as permissible and 

appropriate under governing statutory provisions, the EPA does not use a 
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benefit-cost test (i.e., a determination of whether monetized benefits 

exceed costs) as the sole or primary decision tool when required to 

consider costs or to determine whether to issue regulations under the 

Clean Air Act, and is not doing so here.[FN] Nonetheless, as just noted, 

the RIA analysis shows that the standard of performance has net quantified 

benefits under a range of assumptions.

[FN] cite to Memorandum on “Considering Costs Under the Clean Air Act” in the 

rulemaking docket

Nick Hutson, PhD 

Energy Strategies Group 

Office of Air & Radiation 

U.S. Environmental Protection Agency 

Research Triangle Park, NC 27711 

tel: +1 919 541 2968 

email: hutson.nick@epa.gov

From: Culligan, Kevin 

Sent: Friday, July 31, 2015 12:14 PM 

To: Hutson, Nick 

Subject: RE: 111(b) cost language 

Yes – do you have it? Can I see it before you send it? 

From: Hutson, Nick 

Sent: Friday, July 31, 2015 12:12 PM 

To: Culligan, Kevin 

Subject: 111(b) cost language 

Nathan sent the (d) language on cost ... they want to see (b) language too, right? 

Nick Hutson, PhD 

Energy Strategies Group 

Office of Air & Radiation 

U.S. Environmental Protection Agency 

Research Triangle Park, NC 27711 

tel: +1 919 541 2968 

email: hutson.nick@epa.gov