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# OAR Box 1781 Prepped by Ollie Stewart



### Document

Number: 

# 123 ) IV-C-3

7
Docket Number: 

# A-90-3 7

Printed 10/29/2008 10:46:23 AM Sheet 123 of 142P. 2

| *££*

\ UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGENC Y vSE*- /

WASHINGTON , D.C

. 2046 0 

### FE B 2 9 200 0 

# 3SL > (L-3 4

OFFIC E O F GENERALCOUNSE L
Th e Honorabl e Davi d M . Mcintos h Chairma n Subcommitte e o n Nationa l Economi c Growth , Natura l Resources , an

d Regulatory Affairs Committe e o n GovernmentReform Hous e o f Representative s Dea rMr . Chairman : I a m please d t o provid e th e Environmenta l Protectio n Agency' s respons e to you rlette ro f Januar y 1 4 respectin g a pendin g rulemakin g wit h regard t o th e ne w sourc e revie w ("NSR" ) program . In particular , I write t o assure yo u tha tth e agency' s rulemakin g procedures hav e bee n an d wil l continu e t

o b e i n keepin g with th e requirement s specifie d i n th e Clea n Ai rAct . Befor e turning t

o you rspecifi c questions , som e backgroun d informatio n ma y b e useful . Although you rlette rraise s a numbe ro f concern s unde rth e Administrativ e Procedur e Ac t ("APA") , th e administrativ e proces s fo rthi s NS Rrulemakin g i s governe d b y sectio n 307(d ) o f th e Clea n Ai rAc t("CAA") . Sg £ CA A § 307(d)(l)(J) . Thi s sectio n expressl y supplant s th e APA' s procedura

l requirements , idj , § 307(d)(1) , an d substitute s a detaile d se to f procedures tha

t EP A mus tfollo w i n promulgatin g certain CA A rules . See , e.g. . Unio n Oi l Co . v . U.S . EPA , 82 1 F.2d 678 , 681-8 2 (D.C . Cir , 1987 ) (summarizin g difference s betwee n AP A an d CA A procedura

l requirements) . Accordingly , m y response s belo w t o you rlette rappl y th e standards se tfort h in tha tstatutor y provision . QI . EP A ha s hel d variou s communication s wit h peopl e outsid e th e federa l governmen t concernin g th e NS Rrulemakin g afte rth e extende d commen tperio d close d o n Octobe r8,1998 . Fo rinstance , o n Octobe r22,1998 , EP A metwit h representative s fro m th e utilit y industr y o n th e NS Rrulemaking . O n Octobe r26 th , EP A me twit h representative s o f

th e pul p an d pape rindustr y o n th e NS Rrulemaking . I n ye t anothe rexample , Mr . Seit z wrot e a lette rdate d Decembe r8 t h explainin g EPA' s curren tthinkin g abou tth e NS Rrulemakin g to th e Vic e Presiden to f th e America n Fores t& Pape rAssociation . I n n fina l example , EP A me twit h a manufacturers ' grou p o n th e NS Rrulemakin g o n Augus t18,1999 , i.e. , nearl y a yea rafte rth e NS R rulemakin g docke tofficiall y closed .

Primed on Recycled

PaperP. 3

I n ligh to f

th e close d commen tperio d fo rth e NS Rrulemaking , pleas e explai n ho w post-commen tperio d meetings , letter s an d alternativ e complianc e proposals , an d i n addition , th e Januar y 13 , 2000 , publi c meeting , compl y wit h th e Administrativ e Procedur e Act . Pleas e identif y an d provid e copie s o f an y notic e o rothe rdocumen t publishe d i n th e Federal Registertha treopene d th e NS Rrulemaking . Pleas e explai n th e step s yo u wil l tak e t o ensur e tha tthes e procedura l irregularitie s ar e rectifie d an d tha tthe y d o no thappe n agai n i n th e future . Finally , pleas e provid e a lega l opinio n concernin g whethe rth e NS Rrulemakin g i s capabl e o f bein g brough ti n t o complianc e wit h th e Administrativ e Procedur e Ac to ri s permanentl y tainted . Yo u hav e requeste d tha

tI identif y an y notic e tha

t"reopened " th e NS Rrulemakin g an d tha t I provid e m

y opinio n regarding whethe rth e rulemakin g i s procedurally flawed . I presum e th e rulemakin g t o whic h yo u referi s th e packag e commonl y know n a s "NS RReform, " th e docke t identificatio n fo rwhic h i s A-90-37 , an d th e propose d rule fo rwhic h wa s issue d o n Jul y 23 , 1996 . Tha trulemaking ha s no tye tclosed , insofara s EP A ha s no tpromulgate d a fina l rule , an d th e rulemakin g record —th e docke t—remains , ope n until promulgation . Se e CA A §307(d)(6)(C) . A s yourlette ridentified , EP A has o n severa l occasion s formally sough tcommentfro m th e publi c o n thi s rulemaking , bu

t— i n keepin g wit

h longstandin g practic e ~ th e Agenc y als o ha s accepte d comment s receive d outsid e o f

thes e forma

l periods . Similarly , i n a n effor tt o ensure tha

tw e conside ral

l relevantinformation , EP A has me twith numerou s stakeholder s intereste d in th e NS R Refor m rule , includin g man

y meeting s whic h occurre d outsid e o f th e forma

l commentperiod . I believ e tha

tthes e effort

s t o remai

n ope n t o ne w view s an

d informatio n reflecta soun d policy . All o f th e kind s o f

contact s describe d abov e ar e als o entirely prope rfro

m a legal perspective . Th e CA A contain s no prohibition o n contact s with stakeholder s durin g an y phas e o f a rulemaking . S_e

e Sierr a Clu b v . Costle . 65 7 F.2 d 298 , 39 6 (D.C . Cir. 1981) . Rather , a s th e U.S . Cour to f Appeal s fo rth e Distric to f Columbi a Circui thas observed : [T]h e importanc e t o effectiv e regulatio n o f continuin g contac twit h a regulate d industry , othe raffecte d groups , an d th e publi c canno tb e underestimated . Informa l contact s ma

y enabl e th e agenc y t o wi n neede d supportfo rit s program , reduc e futur e enforcementrequirement s b y helpin g thos e regulate d t o anticipat e an d shap e theirplan s fo rth e future , an d spu rth e provisio n o f

information whic h th e agenc y needs . I d a t401 . Th e CA A contain s safeguard s t o ensure thatthes e worthwhil e contact s onl y influenc e EP A rulemaking i n a way tha ti s transparent ; sectio n 30 7 requires tha tpromulgate d rules "ma

y no t b e based (i n par

to rwhole ) o n an

y information ordat

a whic h ha s no tbee n place d i n th e docket . . .

. " CA A § 307(d)(6)(C) , Further , th e Ac tmandate s tha tth e docke tinclud e al

l documents o f "centra l relevanc e t o th e rulemaking, " id, . § 307(d)(4)(B)(i) , an d thi s requiremen

thas bee n interprete d t o mean tha

tEP A mus

tals o docke ta

n adequat

e summar y o f an y ora l communication s tha tar e centrally relevantt o th e rule . Sierr a Club . 65 7 F.2 d a

t402 ; se e als o Memorandu m from AdministratorBrowne rt o All Employee s (attached ) a t2 (Aug . 6 , 1993 ) (hereinafter"Browne rP. 4

k *

Memo" ) (directin g tha t

al l writte n publi c comments , includin g post-comment-perio dcomments , b e entere din th e record , an ddirectin g tha t summarie s o f

any communicatio n i n whic h "significan t ne w dat ao r

informatio n likel y t o affec t th e final decision " i s receive dals o b e docketed)

. Th e fac t tha t materia l i s receive doutsid e o f aforma l commen t

perio ddoc s no t

rende r thes e otherwis e appropriat e contact s procedurall y deficient

. Instead , th e relevan t casela w establishe s that commeni s an dmeeting s ma y occu r after th e clos e o f

th e commen t

perio dan dth e agenc y may refus e formall y t o reope n th e commen t period , s o lon g a s thos e comment s an dmeeting s o f centra l relevanc e t o th e rulemakin g ar e entere di n th e docke t sufficientl y i n advanc e o f th e final rule' s promulgatio n tha t

ther e ma y b e "meaningfu l publi c comment " o n suc h additions

. Sierr aClub

. 65 7 F.2 da t 398 : se e als o Appalachia n Powe r Co

. v . EP A 13 5 F.3 d791 , 814-1 5 (D.C

. Cir

. 1998 ) (unde r circumstance s o f

particula r

rulemaking , two-and-a-hal f wee k tim e betwee n docketin g o f material an dfina

l rul e adequate)

. Thi s approac h ensure s tha t EP A ma y continu e t o hea r th e perspective s o f

stakeholder s fromal l sectors , includin g intereste dmember s o f Congres s lik e yourself. 1 EP A i s committe dl o followin g thes e procedura l requirement s rigorously. A s t o thi s NS R rulemakin g i

n particular , w e d o no t

vie w th e rulemakin g a s "tainted, " a s yo u suggest, 2 no r d o w e hav e any curren t

plan s t o alte r

ou r presen t practic e o f

promotin g maximu mpubli c involvemen t i n ou r rulemakin g activities

. Q2

. O n Januar y 13 , 2000 , th e da y o f EPA' s publi c meetin g discussin g CEG' s an dothe r alternatives , staf

f o f th e Subcommitte e sough t t o revie w Docke t

#A-99-4 4 a t

EPA

. Notwithstandin g th e representation s mad e b y you r staf f th e afternoo n before , ther e ar c absolutel y n o document s i n thi s docke t no w an dther e hav e neve r bee n an y
'A t you r request , EP A representative s me t wit h member s o f

you r staf f o n Januar y 12 , 2000 , ove r

ayea r after th e forma l commen t

perio do n th e pendin g rulemakin g las t closed

. A t

th e sam e time , however , you r lette r characterize s simila

r meeting s wit h othe r

intereste dpartie s a s "procedura l irregularities. " Th e applicabl e casela w establishe s tha t contact s wit h partie s outsid e th e executiv e branc h - - includin g briefing s o f Congressiona l staff

—shoul db e judge dunde r th e sam e standard

. See , Sierr aClub

. 65 7 F.2 da t 404 (findin g n o erro r

i n post-comment-perio d meetin g wher e Senat e staf f wer e briefe do n statu s o f upcomin g rule)

. Extendin g tha t logi c t o you r conclusio n tha t

meeting s with non-governmenta l partie s constitute dprocedura l error , EP A woul dhav e bee n preclude dfromacceptin g you r invitatio n t o brie f

you r staf f regardin g ou r rulemakin g activities

. A s describe dabove , I believ e th e bette r vie w o f th e la w i s tha t

ou r meeting s wit h othe r

group s an dwith you r

staf f wer e entirel y proper . 'Moreover , yo u shoul db e awar e tha t unde r CA A rulemaking , acour t reviewin g arul e "may invalidat e th e rul e onl y i f th e [procedural ] error s wer e s o seriou s an drelate dt o matter s o f suc h centra l relevanc e t o th e rul e tha t ther e i s asubstantia l likelihoo dtha t th e rul e woul dhav e bee n significantl y change di f suc h error s ha dno t

bee n made. " CA A § 307(d)(8) ; se e also^e.g.

. Appalachian Powe r

Co

. v . EPA

. 13 5 F.3 d791 , 81 5 (D.C

. Cir

. 1998)

.P. 5

document s i n thi s docket . Thi s mean s tha tmember s o f th e regulate d communit y an d th e publi c di d no thav e a meaningfu l opportunit y t o revie w th e document s befor e th e Januar y 13t h publi c meeting . Pleas e explai n wh y thes e document s wer e no tavailabl e i n th e docke tbefor e th e meetin g an d advis e m e whe n the y wil l b e publicl y availabl e i n th e docket . Also , pleas e provid e copie s o f EPA' s question s t o and/o rmeetin g minute s concernin g th e fou rstakeholder s wh o submitte d proposal s preparator y t o th e Januar y 13 , 200 0 stakeholder s meeting . A tth e Januar

y 1 2 meetin g betwee n you rstaf f an d EP A representatives , I understan d that 

### EP A official s conveye d thei runderstandin g thatcorrespondenc e receive d from variou s stakeholders woul d b e i n th e docket , withou tspecifyin g which.docket . I furthe runderstand , a s you rstaf f found , tha

tDocke tA-99-4 4 wa s empt y o n th e date o f

ou rmeeting , buttha

tsome , but no tall , o f th e documents wer e contained i n Docke tA-90-37 . I apologiz e fo rth e confusion . Sinc e w e receive d you rletter , w e hav e submitted thes e documents t o Docke tA-99-4 4 an d the y hav e bee n placed i

n th e docket . W e d o no tagree , however , wit h you rstatementtha

t"member

s o f th e regulated communit

y an d th e publi c di

d no thav e a meaningfu

l opportunit

y t o revie w th e document s befor e th e Januar

y 13 * publi c meeting. " T o th e contrary , EP A engage d i n extensiv e outreac h t o stakeholders , which consiste d o f publishin g a Federal Registe rnotic e announcing th e Januar y 13 meeting , postin g tha tnotic e an

d th e invitatio n lette rt o th e Offic e o f Ai ran d Radiatio n an d NS Rwebsites , e-mailin g th e invitatio n lette rt o know n stakeholders ' e-mail addresses , mailing th e invitatio n lette ran

d proposal s t o know n stakeholders , an d mailin g th e invitatio n lette ran d proposal s t o member

s o f th e publi c upo n request . Yo u hav e requeste d an

y copie s o f

question s sen tt o th e stakeholder s wh o submitted proposal s t o EP A an

d copie s o f

an y meetin g minute s take n during meeting s with suc h stakeholders prio rt o th e Januar y 1 3 meeting . I hav e attache d documents responsiv e t o you r request. Pleas e not e tha

tsom e o f thes e documents alread

y ar e containe d i n th e docket , whil e others ar e in th e proces s o f

bein g included . Q3 . O n Januar y 13 1 " , staf f o f th e Subcommitte e als o reviewe d portion s o f th e NS R rulemakin g (Docke t#A-90-37 ) a tEPA . Th e docke ti n no tcomplet e an d som e o f it s document s ar c misfiled , suc h tha tn concerne d membe ro f th e publi c i s prevente d fro m meaningfull y monitorin g th e agency' s rulemaking . Fo rexample , numerou s Federal Register notices , includin g th e crucia l Jul y 24,1998 , notic e o f a specifi c alternativ e t o th e NS Rpropose d rule , ar e no tinclude d i n th e docket . Furthermore , th e memorandu m o f

a meetin g betwee n EP A staf f an d Davi d Hawkin s o f th e Nationa l Resource s Defens e Counci l pertainin g t o th e NS Rrulemakin g an d dockete d a tH.-E- 4 i s missing . Numerou s document s ar e apparentl y misfiled , mos tnotabl y a larg e numbe ro f

document s file d unde rth e categor y "Reconsideration, " whic h i s imprope rsinc e this rulemakin g ha s no tye tbee n finalized .P. 6

Pleas e provid e m y staf

f wit h a cop y o f

th e JJ-E- 4 memorandu m an d advis e m c whe n i twil l b e publicl y availabl e i n th e docket . Pleas e advis e m e whe n th e docke tinclude s al l missin g documentatio n an d i n properl y reorganized . Than k yo u fo rbringin g certain mis-file d documents t o ou rattention . I n fact , EP A staf f als o ha d note d som e o f

thes e oversight s previousl y an d aske d i n Novembe ro f

las tyeartha

tthe y b e corrected . I a

m informed thatth e docke twa s correcte d o n Februar y 1 1 i n respons e t o thi s request. Regardin g th e 199 8 Federa l Registe rnotic e t o whic h yo u refer , I understand tha tthi s documentha

s bee n sentt o th e docke toffice recently . Wit h regar d t o th e memorandu

m summarizing a meetin g wit h Davi d Hawkin s o f NRDC , w e hav e examine

d th e docke tand , lik e you , hav e bee n unabl e t o locat e th e docke tite m labele d U E-4 . Accordingly , w e hav e attempte d t o fin d th e memorandu

m i n questio n t o includ e i ti n th e docke timmediately . Ou

rstaf f searche d thei rpersonal file s an d w c hav e locate d a memorandu m summarizin

g a n Octobe r20 , 199 2 meetin g with Mr . Hawkins . W e believ e tha tthi s i s th e memorandu

m tha tshoul d b e i n th e docket , becaus e th e meetin g i tsummarizes involve d th e correct participant

s an d becaus e th e docke tentr y numbe rindicate s tha

tth e documen twa s create d quit e som e tim e ago . Th e memorandu m i s attached , an

d w e ar e i n th e proces s o f

takin g th e requisit e step s t o include iti n th e NS RReform docket . Q4 . Pleas e advis e m e which , i f nny , othe rTVA majo r rule s ar e als o i n possibl e jeopard y becaus e o f

procedura l errors . A s evidence d b y my respons e t o you rfirstquestion , I d o no tfind th e NS RRefor m rul e t o b e in legal jeopard y fo rprocedura l reasons . W e understand thi s questio n t o as k whethe rorno t EPA . has , i

n othe rrulemaking actions , hel d meeting s o rreceive d comments outsid e th e forma l commentperiod . Th e Agenc y doc s s o regularly ; indeed , i ti s EPA' s state d polic y t o plac e lat e comment s i n th e public record . Se e Browne rMem o a t2 . A s m

y respons e t o you rfirstquestio n indicates , w e believ e tha

tther e ar e myria d policy advantage s t o a

n ope n publi c record . W e furthe r believ e tha

tth e applicabl e la w permit s post-comment-perio d comments an d meetings , eve n where th e rulemakin

g i s governe d b y th e APA , rathe rthan sectio n 307(d ) o f

th e CA A S^ e Sierr

a Club . 65 7 F.2 d a

t101-0 2 & n.507 . QS . CEG' s proposal , whic h EP A distribute d t o stakeholder s participatin g i n th e Januar y 13 th publi c meeting , woul d allo w companie s t o op tint o "cap-and-trad e program s fo r NOx , S02 , C02 , an d mercury " i n lie u o f meetin g certai n existin g NS Rrequirements . FormerEP A Genera l Counse l Jonatha n Z . Cannon , i n hi s Apri l 10,199 8 memorandu m t o EP A Administrato rCaro l Browner , entitle d "EPA' s Authorit y t o Regulat e Pollutant s Emitte d b y Electri c Powe rGeneratio n Sources, " wrote , i n part : "Technology-base d standard s underth e Ac tdirecte d t o stationar y source s hav e bee n interprete d b y EP A no tt o allo w complianc e throug h intersourc e cap-and-trad e approaches " (p . 5) . A s I rea d th e CE G proposal , companie s woul d b e allowe d t o trad e emissio n credit s acros s geographi c boundaries . Yet , accordin g t o Mr . Cannon ,P. 7

"...EP A ha s lon g hel d th e vie w tha ttradin g acros s plan tboundarie s i s impermissibl e unde r section s 11 1 an d 112 " o f th e Clea n Ai rAc t(p . 6) . Pleas e provid e a n opinio n o f th e legality , unde rth e Clea n Ai rAct , o f a CEG-typ e proposal . Coul d EP A legall y revis e th e NS Rprogra m alon g th e line s propose d b y CE G simpl y throug h a rulemaking , o rwoul d Congres s nee d t o amen d th e Clea n Ai r Act ? Yo u hav e requeste d a lega l opinio n regarding whethe rth e utilit y secto remissio n reductio n progra m suggeste d by th e Clea n Energ y Grou p ("GEG" ) coul d b e implemente d withou tamending th e Clea n Ai rAct . I hav e no tforme d m y legal opinio n regardin g thi s issu e an d therefore canno t completel y answe ryou rquestion . EP A i s jus tbeginnin g it s consideratio n o f programs suc

h a s th e on e endorsed b y CE G and , a s th e presentatio n made b y EP A staf f a tth e Januar

y 1 3 meetin g reveal s (attached) , th e Agenc y believe s tha tthere ar e a numbero f

question s tha

tmus tb e addressed i n th e developmento f

suc h a concept , includin g whethe ro rno tt o allo w trading betwee n affecte d sources . Shoul d EP A elec tt o pursu e thi s kin d o f altemativ e program , an

d shoul d th e Agenc y desir e t o includ e trading i n th e program , I wil l o f cours e advis e th e policymaker s o f an y legal risk i n doin g so . I als o wantt o assure yo u tha tth e legal issue s presente d b y a CEG-Iike proposal , i f EP A should propos e t o adop tsuc h a n option , wil l b e subjectt o publi c scrutiny a s par to f a notice-and commen trulemaking . A s yo u know , EP A ha s no tpropose d an y regulation s t o implemen tan y utilit y secto remissio n reductio n strategy . A ta minimum , rulemakin g woul d b e necessar y i n order t o mak e thi s alternativ e availabl e to participatin g sources . EP A woul d b e oblige d i n such a rulemakin g t o publish , a s par

to f its proposal , "the majorlega l interpretation s an d polic y consideration s underlying th e propose d rule. " CA A § 307(d)(3)(C) . Likewise , th e agency woul d hav e to explain th e lega

l rational e fo rth e final regulations , icJ L § 307(d)(6)(A) , an

d respond t o significan tcomments o rcriticism s receive d durin g th e commen tperiod , whic h ma y includ e objection s l o EPA' s lega

l analysis . T± § 307(d)(6)(D) . Q6 . CE G describe s it s propose d cap-aud-trad e regim e a s "voluntary. " I regar d suc h us e o f th e ter m a s inaccurat e an d misleading . CE G propose s tha tinstea d o f companie s havin g jus ton e optio n unde rth e NSR , the y shoul d hav e tw o option s —a technolog y standard s optio n an d an emissio n limi toption . Companie s woul d b e required t o choos e on e o rth e othe r~ an d both woul d h e legall y "enforceable. " So , unde rihf e CE G proposal , companie s hav e tw o regulatory options . I f companie s do no tpic k regulator y optio n A , the n the y must pic k regulator y optio n B , an d vic e versa . Makin g th e NS Rprogra m mor e flexible i n thi s fashio n doe s no tmake , i t"voluntary. " D o yo u agre e tha tCEG' s descriptio n o f Us proposa l a s "voluntary " i s a misnomer ? I f not , pleas e explai n why . EP A woul d conside ra

n alternativ e t

o th e cor e NS Rprogram , eve n a n altemativ e governe d b y regulations , to b e "voluntary. " Th e dictionar y definitio n o f

"voluntary " hold s tha

tsomethin g i sP. 8

voluntary i f

i t "proceed[s ] fromth e wil l o r fromone' s ow n choic e o r consent.... " WEBSTER'S NINT H NE W COLLEGIATE DICTIONAR Y 

### 132 2 (1990)

. CEG' s proposal , a s I rea dit , permit s individual companie s t o op t al l o r som e o f thei r unit s int o aprogra mb y whic h th e companie s agre e t o emissio n reductio n target s i n exchang e fo r a n alternativ e mean s o f

evaluatin g whethe r

o r no t any particular change s the y mak e trigge r NSR

. Companie s woul dno t b e compelle dt o joi n thi s program , bu t

woul dd o s o i f

i t mad e sens e a s amatte r

o f corporat e planning

. A t th e outset , I wan t

t o stres s tha t

EP A ha s mad e n o commitmen t t o any syste msuc h a s CE G i s proposing

. A t

th e sam e time , I thin k

tha t asyste mtha t

canno t appl y t o asourc e unles s th e sourc e volunteer s t o hav e i t appl y i s plainl y voluntary

. Fo r example , i n thi s NS RRefor m rulemaking , EP A ha s propose dt o amen dth e NS Rrule s t o allo w source s t o choos e t o accep t plantwid e emissio n cap s i n exchang e fo r mor e flexibilit

y i n makin g modifications , and , i n doin g so , w e describe dth e proposa l a s "voluntary. " Se e 6 1 Fed

. Reg

. 38249 , 3826 4 col

. 1 (Jul y 23 , 1996)

. Simpl y put , I woul dcharacteriz e aprogra mtha t allows , bu t

doe s no t require , aperso n o r compan y t o choos e a

n alternativ e strateg y fo r

complyin g wit h th e la w a s "voluntary. " Fo r instance , althoug h source s tha t discharg e int o water s o f th e Unite dState s ar e require dt o hav e an NPDE S permi t

unde r Sectio n 40 2 o f

th e Clean Wate r

Act , operator s o f

certai n classe s o f

source s ma y op t t o appl y fo r

discharg e authorizatio n unde r agenera l permi t

instea do f

applyin g fo r

an d obtainin g an individua l permit

. Se e 4 0 CF R§ 122.2 8 (1999)

. I conside r th e choic e t o opt

int o a general permi t

t o b e avoluntar y one , eve n thoug h discharger s ar e al l requiic dt o hav e som e kin do f NPDE S permit

. Similarly , i f source s ar e abl e t o choos e betwee n different kind s o f NS Rprograms , I believ e tha t

choic e i s voluntary , eve n thoug h th e source s mus t selec t on e optio n o r

th e other

. I appreciat e th e opportunit y t o addres s you r questions

. Shoul dyo u hav e an y question s regardin g thi s letter , pleas e d o no t hesitat e t o contac t

me , o r hav e you r

staf f contac t Jo n Devin e o f m y staf f at (202 ) 564-5576

. Sincerely ,

Gary S

. Guz y Genera l Counse l

attachment sP. 9

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l Protectio n Agency 41 0 M Street , S.W . Washington , D.C . 2046 0 Dea rMr . Guzy : H^rr^^ r 

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I a m writin g l o expres s my concer n abou twha tMr . Willia m T . Harnet to f the . -r"

c » % - Enyiroiunenta

l Protectio n Agency' s (EPA ) Offic e o f Ai rQualit

y Plannin g an

d Standards characterized t o u s i n & Januar y 12,200 0 meetin g wit h you rDeputy a s th e "rathe r unusual' * Ne w Sourc e Revie w (NSR ) rulemaking . Thi s lette rpose s specifi c question s for you rreply . You rpromptrespons e i s critical t o ensur e thatthi s rulemakin g i s no ttainte d b y procedura

l errors . i A s reflecte d i n th e attache d chart , prepare d b y th e Subcommitte e o n Nationa l Economi c Growth , Natura l Resources , an

d Regulator

y Affairs , o n July 23,1996 , EP A issue d i n th e Federal, Registera notic e o f propose d rulemakin g fo rNS R(EP A rulemaking Docke t#A-90-37 ) an d subsequently reopene d th e commen tperio d seven } times. EP A se tOctobe r8,199 8 - i.e. , ove rtw o year s afterth e proposa l - a s th e final commentdeadlin e b y a notie e published i n th e Augus t24,1998 , Federal Register. O n Decembe r20,1999 , EP A publishe d a Federal

Register notic e announcin g a Januar y 13 , 200 0 publi c meetin g "T o discus s EPA' s uiinkin g o n a n alternativ e approac h * fo rcomplianc e wit h ne w source revie w (NSR ) requirements.* ' O n th e sam e day , John S . Seitz , Directo ro f

th e Offic e o f

Ai rQualit

y Plannin g an

d Standards , sen ta lette rt o certain "participants " forwardin g fou rproposal s EP A ha

d receive d t o refor

m NS Rrequirements . Mr . Seit z state d i n thi s lene rtha tE P A ha d "t o determin e Whethe

ran d ho w t o propos e thi s alternative approac

h i n th e Federa

l Register. " Previously , EPA ha d reviewe d thes e four proposals , whic h include d a proposa l from th e Clea n Energy Grou p (CEG) . Mr . Seit z metwith CEG o n September30,1999 , aske d detaile d question s abou tit s proposal , an

d receive d a respons e o n Novembe r10th ,



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### (Januar y 13*) . member*it

f myJ^^^^r W neve r hav e been an y ther e ar e absolutel y n o document

s i n thi s docke taa u u « ^ document s in this docket

. Procedur e Ac tan d th e Federa l Advisor y C 

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e Counse l Sincerely . 

# Qs^-t ^ Davi d M . Mcintos h Chairma n Subcommittee o n National Economi c Growth , Natura l Resources , an

d Regulator

y Affair s Attachment

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c c Th e Honorabl e Da n Burto n The Honorabl e Denni s KucLnic h

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* QI . EP

A ha s hel d variou s ccmmurricatiop s wit h peopl e outsid e th e Federa l governmen

tconcernin g th e NS Rrulemakin g afterth e extende d commen tperio d close d o n Octobe r8,1998 . Fo rinstance , o n Octobe r22,1998 , EP A me twit h nmreserrtttives fro m th e utility i^ ^ O n Octobe r 26th , EP A metwit h representatives o f th e pul p and pape rindustr y o n Th e NS R rulemaking . I n ye tanothe rexample , Mr . Seit z wrot e a lette rdate d Decembe r8th explainin g EPA' s curren

tthinkin g abou

tth e NS Rrulemakin g t o th e Vic e Presidento f

th e America n Fores t& Pape rAssociation . I n a final example , EP A me twit h a manufacturers ' group o n th e NS Rrulemakin g o n Augus t18.1999 , i.e. , nearly a yearafterth e NS Rrulemaking docke tofficiall y closed . I n ligh to f

th e close d commen tperio d fo rth e NS Rrulemaking , pleas e explai n ho w post-commen tperio d meetings , letters an d alternativ e complianc e proposals , an d i n addition , th e Januar

y 13,2000 , publi c meeting , compl y with th e Administrative Procedure Act . Pleas e identif y an d provid e copie s o f

an y notic e orotherdocumen tpublishe d i n th e Federal Registertha

treopene d th e NS R rulemaking . Pleas e explai n th e step s yo u wil l tak e t o ensure thatthes e procedura l irregularities ar

e rectifie d an d matthe y d o no thappe n agai n i n th e future . Finally , pleas e provid e a lega l opinio n concenun g whethe rth e NS Rrulemakin g i s capabl e o f bein g broughtint o complianc e with th e Adrninisttarive Procedure A a o r i s permanentl

y tainted . Q'2 . O n Januar y 13,2000 , th e day o f

EPA' s publi c meetin g discussin g CEG' s an d othe ralternatives , staf

f o f th e Subcommitte e sough tt o revie w Docke t#A-99-4 4 a tEP A Notwithstandin g th e representations mad e b y you rstaf f th e afternoon before , ther

e ar e absolutel y n o document s i n thi s docke tno w and there hav e neve r bee n an y documents i n thi s docket . Thi s mean s tha tmember s o f

th e regulate d communit

y and th e publi c di d no thav e a meaningfu l opportunit y c o reviewth e document s befor e th e Januar

y 13t h publi c meeting . Pleas e explai n wh y thes e document s were no tavailabl e i n th e docke tbefore di e meetin g an

d advis e m e whe n the y wil l b e publicl y availabl e i n th e docke tAlso , pleas e provid e copie s o f

EPA' s question s t o and/o rmeetin g minute s concernin g th e fou rstakeholders wh o submitte d proposal s preparator y t o th e Januar

y 13 , 200 0 stakeholders meeting . . Q3 . O n Januar

y 13th , staf

f o f th e Subcommitte e als o reviewe d portion s o f th e NS R rulemaking (Docke t#A-90-37 ) a tEP A Th

e docke ti s no tcomplet e an d som e o f it s document

s ar e misfiled , suc h tha

ta concerne d membe ro f the publi c i s prevented from meaningfull y monitorin g th e agency' s rulemaking . Fo rexample , numerous Federal

Registernotices , includin g th e crucial July 24.1998 , notic e o f a specifi c altemativ e to th e NS Rpropose d rule , ar e no tinclude d i n th e docket . Furthermore, th e memorandum o f a meetin g betwee n EPA staf f an d Davi d Hawkins o f

th e Nationa l Resource s Defens e Counci l pertainin g t o th e NS R rulemaking an

d dockete d a

t1I-E- 4 i s missing . Numerou s documents ar e 

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.

Q6. apparentl

y misfiled , mos tnotabl y a large numbero f docvanent

s filed under th e categor y "Reconsideration,* ' whic h i s impropersinc e thi s rulemakin g ha s no tye t bee n finalized. Pleas e provid e m

y staf f wit h a cop y o f

th e Tl-E- 4 memorandum an d advis e m e whe n i twil l b e publicl y availabl e i n th e docke tPleas e advis e m e whe n th e docke tinclude s all missin g documentation and i s properly reorganized . Pleas e advis e m e which , i f any , othe r EP

A majo rrule s are als o i n possibl e jeopardy becaus e o f

procedura

l errors . CEG' s proposal , whic h EP A distributed t o stakeholders participatin g i n th e Januar y 13" * publi c meeting , woul d allo w companie s t o op tint o "cap-and-trade programs fo rNOx . S02 , C02 , an d mercury " i n lie u o f

meetin g certai n existin g NS Rrequirements . Forme rEP A Genera l Counse l Jonatha

n Z . Cannon , i n hi s April 10.199 8 memorandu m t o EPA Administrato rCarol Browner , entitle d "EPA' s Authorit

y t o Regulat e Pollutant

s F.rrrirH

1 b y Electri c Powe rGeneratio n Sources, " wrote , i n part : "Technology-base d standards unde rth e Ac tdirecte d t o stationar y source s hav e bee n interpreted b y EP A no tto allo w complianc e through intersource cap-and-trade approaches' * (p . 5) . A s I rea d th e CE G proposal , companie s woul d b e allowe d to trade emissio n credits acros s geographi c boundaries . Yet , accordin g t o Mr . Cannon,". . .EPA ha s lon g hel d th e vie w that trading acros s plan tboundarie s i s impermissibl e undersection s 11 1 an d 112 " o f th e Clean Ai rAc t(p . 6) . Pleas e provid e an opinio n o n th e legality , under th e Qea n Ai rAct , o f a CEG-typ e proposal . Coul d EP A legall y revis e th e NS Rprogra m alon g th e line s propose d b y CE G simpl y throug

h a rulemaking , or woul d Congres s nee d t o amend th e Clean Ai rAct ? CE G describe s it s propose d cap-and-trade regim e a s "voluntary. " 1 regard suc h us e o f th e ter m a s inaccurat

e and misleading . CE G propose s tha tinstea d o f companie s havin g jus ton e optio n unde rtiie NSR , the y shoul d hav e tw o option s - a technolog y standards optio n and a n emissio n limi toption . Companie s woul d b e required to choos e on e o rth e other- an d both woul d b e legall y "enforceable. " So , unde rth e CE G proposal , companie s hav e tw o regulatory options . I f companie s d o no tpic k regulator y optio n A the n the y must pic k regulator

y optio n B , an d vic e versa . Makin g th e NS Rprogra m more flexibl e i n thi s fashio n doe s no tmake i t"voluntary. " D o yo u agree tha tCEG' s descriptio n o f

it s proposal a s "voluntary " i s a misnomer ? I f not , pleas e explai n why .



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commentperio d '-•!-.'• ..vvfin :
7/23/9 6 | A«90-3 7 8/20796 | A-90-3 7 Comment s du e 10721/9 6 N o chang e t o deadlin e 10/25/9 6 A-90-3 7 Commeni s du e 12/5/9 6

A-90-3 7 7/24/9 8 A-90-3 7 

## rTrV-nlrr ^ ^"" ^ CogttneIlt S 

## * * 1/21/9 ?

8/24/9 8 A-90-3 7

1/26/9 9 12/20/9 9 Notic e o f specifi c alternative fcr comments Extensio n o f

commentperio d

A-90-3 7 (n o final Meetin g o n 7/23/9 6 NPR M * rul e issue d yet) 1 « "^" M sutmlcmenta l nouc e A-99-44(L«- « ne w rulemaking) * Meetin g o n alternative s Comment s du e 8/24/9 8
Comment s du e 10/8/9 8 & neve rextende d beyon d tha tdat e Meetin g 2/2-2/3/9 9 Meetin g o n 1/13/0 0

an dRegulator y Plan " estimate s ma tthi s 7/23/9 6 NPR M wil l 'Tb e 10/9 9 "Unifie dAgend ai b e finalizedi n 5/00

. TT * 1079 9 "Unifie dAgend aan dRegulator y Plan " doe s no t includ e an y entry for

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