1 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 descri bing costs and benefits in the 111(b) RIA. Red text is the langua ge that has been added.

Nick

Around page 29 [Executive Summary] Thus, in Chapter 5 of the RIA, we also present an a nalysis of the projectlevel costs of a newly constructed coal-fired steam generating unit with partial CCS that meets the requirements of this fin al rule alongside the project-level costs of a newly constructed coal-fir ed unit without CCS. This analysis indicates that the quantified benefit s 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 se ction 111(a)(1)
does not authorize the EPA to consider the nationwi de 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 s ets of costs and, in fact, we are not identifying full CCS as the BSER p rimarily for reasons of its cost to individual sources. At the same time, t otal projected costs are relevant in assessing the overall reasonablenes s of costs associated with a standard. Our analysis demonstrates that the impacts on the industry as a whole are negligible, and are certain ly not greater than “what the industry could bear and survive.” These f acts support the EPA’s
overall conclusion that the costs of the standard a re 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 o f this final rule alongside the project-level costs of a newly constr ucted coal-fired unit without CCS. This analysis in RIA chapter 5 indicat es that the quantified benefits of the standards of performance would exce ed their costs under a range of assumptions.

As required under Executive Order 12866, the EPA co nducts benefitcost analyses for major Clean Air Act rules, and ha s done so here. While such analysis can help to inform policy decisions, as permissible and appropriate under governing statutory provisions, t he EPA does not use a2 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 reg ulations under the Clean Air Act, and is not doing so here.[FN] None theless, as just noted, the RIA analysis shows that the standard of perform ance 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