Comments of Southern Company on EPA’s Advance Notice of Proposed Rulemaking “Regulating Greenhouse Gas Emissions Under the Clean Air Act” Docket ID No. EPA–HQ–OAR–2008–0318 On July 30, 2008, EPA issued an advance notice of proposed rulemaking (ANPR) seeking to regulate greenhouse gases (GHGs ) under the Clean Air Act (CAA) 73 Fed. Reg. 44354 (2008). The following comments ar e submitted by Southern Company, one of the largest investor-owned electric utility companies. Southern Company commends EPA fo r exploring the impacts of GHG regulation on the United States. Southern Company believ es the CAA is ill-suited for such broadbased, multi-sectoral, economic regulation. Rath er, the appropriate focus should be on a legislative program that fairly addresses costs, risks, and t echnology needs across the economic spectrum.

Problems with Regulation of Gree nhouse Gases under the Clean Air Act In the ANPR, EPA emphasizes the char acteristics that separate GHGs from traditional air pollutants, such as their longer atmospheric lifetimes and the fact that GHG emissions mix uniformly throughout the globa l atmosphere. Southern Company believes that these characteristics, among other factors, render the CAA regulatory programs inappropriate and ineffective for regulati ng GHGs. Air pollutants currently regulated under the CAA tend to have local (a few kilometers) or regional (hundred to thousands of kilometers) impacts and relatively short atmospheric lifetimes (days to months). EPA states, that “historically, this has meant that EPA could identify and differentiate between affected and unaffected areas and devise cont rol strategies appropria te for each area.” This is not the case with GHGs. Control stra tegies imposed only on the United States,

1while clearly impacting the United States ec onomically, are highly unl ikely to have any substantial impact on global GHG concentrations. 1 Beyond the fact that the Clean Air Act is ill-suited for regulation of GHGs, EPA’s own analysis of key policy and economic considerations shows that broad-based legislative programs would be more cost-eff ective and fair than CAA regulation, which tends to be more sectoral in nature. EPA further finds that establishing market-based mechanisms is the most cost-effective m eans to reduce GHG emissions, and we agree. However, the structure of the Clean Air Act may dictate command-and-control requirements be layered on top of a market-b ased program, undercutting its cost savings. Market-based mechanisms also involve the allocation of allo wances or auction revenues. Southern Company agrees with the EPA that this action may be very challenging for an executive branch agency to design without cl ear legislative authorit y because of the high monetary stakes and divergent stakeholder views on how to distribute the allowances or

revenues. Accelerating the flight of industry to othe r countries is another concern associated with regulating GHGs under the CAA. It is unlikely that other c ountries would enact comparable requirements causing the accelerated flight of industry and the inevitable loss of significant American jobs. Putting the Un ited States at an economic disadvantage without the ability to gu arantee global GHG reductions via CAA regulation is unacceptable. Overall, it is clear that CAA regulation of GHGs would be environmentally and economically ineffective. However, EPA does rightly state that al l policy and economic considerations associated with each potential regulatory approach need to be thoroughly

1 “EPA Analysis of Bingaman-Specter Request on Global CO2 Concentrations,” EPA, 1 October 2007.

2considered prior to reaching any conclusions. Southern Company agrees that EPA should evaluate the CAA options in light of the following considerations:

− effectiveness of health and e nvironmental risk reductions;

− certainty and transparency of results;

− cost-effectiveness and economic efficiency considerations;

− equity considerations (i.e . distributiona l effects);

− policy flexibility over time;

− incentives for innovation and technology development;

− competitiveness/emissions shifts;

− administrative feasibility;

− enforceability;

− unintended consequences; and,

− suitability of tool for the job. It is believed by Southern Company th at an adequate evaluation by EPA will prove the CAA a completely inappropriate and ineffective tool for regulating GHGs.

Endangerment Analysis and Issues EPA appears to assume from the outset in Section V of the ANPR that it must make a finding regarding endangerment with re spect to new motor vehicle emissions of CO2 and certain other GHGs. However, the Supreme Court ruling in Massachusetts v.
EPA , 127 S.Ct. 1438 (2007), imposes no such requirement: “We need not and do not reach the question whether on remand EPA must make an endangerment finding, or

3whether policy concerns can inform EPA’s ac tion in the event it makes such a finding.” Id. at 1463. Among an evaluation of numerous policy concerns, Southern Company believes EPA needs to adequately research the broa d effects of regulati on of motor vehicle GHG emissions. Southern Company understands the complexities that EPA continuously notes of estimating, quantifying, and projecting past, current, and future costs and benefits of GHGs and potential regulation. However, any regulation of motor vehicle GHG emissions under section 202 could trigger Prev ention of Significant Deterioration (PSD) regulation of GHGs. All sources that emit or ha ve the potential to emit 250 tons per year (tpy) of a regulated New Source Review (NSR ) pollutant are subjected to PSD regulation. PSD regulation of GHGs could have profoundl y damaging effects on the United States’ economy, and especially the Southeast due to our continuing growth, that in turn could harm public health or welfare. An accura te evaluation of the impact on the economy, as well as the United States’ public health and welfare, of motor vehicle GHG regulation needs to be completed.

Clean Air Act Authorities The following paragraphs present S outhern Company’s comments on EPA’s consideration of various Clean Air Act authorities for regulating GHGs.

4National Ambient Air Quality Standards The ANPR relies on the CAA’s definition of “air pollutant,” and sections 108 and 109 focus on the effect of an air pollutant in the ambient air . The ambient air is that air to which the general public has access. Current scientific theory hypothesizes that anthropogenic global warming results from the interaction of outgoing infrared radiation with GHGs in the upper atmosphere. EPA need s to consider how to differentiate the effects of GHGs in the ambient air from t hose in the upper atmosphere. In Section V, EPA states, “current and future projected leve ls of ambient concentrations of the six GHGs are not expected to cause any direct adve rse health effects, such as respiratory or toxic effects, which would occur as a result of elevated GHG concentrations themselves rather than through the effects of climate ch ange.” Southern Company agrees with EPA’s statement and concludes that the National Ambient Air Quality Standards (NAAQS) are an invalid and inappropriate C AA authority to control GHGs. In promulgating a NAAQS for GHGs, because GHG concentrations are not localized, EPA would need to identify th e entire country as in attainment or nonattainment. This would create an overwhe lming burden on EPA and, in turn, on state governments. The increased burden placed on st ates, due to State Implementation Plan (SIP) requirements, may not be overcome. SIPs need to demonstrate compliance and address any noncompliance issues. The global nature of GHGs would render this action impossible by states, with SIP requirements al so likely creating a national patchwork of regulations. Also, the 10-year maximum time line for meeting primary attainment is unachievable for GHGs, especially due to rising GHG emissions from developing countries. If states do not meet primary attainment within the maximum 10-year

5timeframe, which is highly likely, results w ould include restrictions on highway funding, on approvals of transportation projects, and programs related to transportation conformity. EPA states, “at th e outset, it would appear to be an inescapable conclusion that the maximum 10-year horizon for attaini ng the primary NAAQS would be ill-suited to GHGs.” Clearly, the NAAQS programs unde r the Clean Air Act are completely illsuited for regulation of GHGs. EPA invites comments on the extent to wh ich it would be appr opriate to use the most recent IPCC reports, including the chap ters focusing on North America, and the U.S. government Climate Change Science Progra m (CCSP) synthesis re ports as scientific assessments that could serve as an importa nt source or as the primary basis for the Agency’s issuance of air quality criteria. The recent IPCC and CCSP reports do not, by any means, qualify as appropriate for use as “criteria documents,” or as they have recently been termed, “integrated science assessments.” The focus of the IPCC is global effects and emissions – not at all the kind of asse ssment of emissions and effects within the United States that is the purpose of a criteria document. Southern Company agrees with EPA that pollutants “already subject to NAAQS are typically local and/or re gional in nature, so the st andards are designed to limit ambient concentrations of pollutants associat ed with emissions typically originating in and affecting various parts of the United States,” again, not a characteristic of GHGs. Further, determining the geographical extent of potential human health and welfare effects, if present, associated with G HGs should be taken into consideration in determining what level and other elements of a standard would provide the appropriate protection. This would be very difficult a nd resource-consuming for GHGs. Expanding

6NAAQS authority to encompass th e global nature of GHGs is not the intent of the CAA. Again, NAAQS are ill-suited to meet the requ irements needed to effectively control
GHGs. EPA lists key milestones and implementati on timelines if GHGs were regulated as a NAAQS pollutant. Southern Company agrees with EPA that it would be difficult to meet NAAQS milestones and timelines, furthe r uncovering the inappr opriateness of the CAA for GHG regulation. Clearly, without global cont rol of GHGs, atmospheric concentrations of GHGs will not decrease. Global in creases in GHG emissions will occur in spite of CAA regulation of GHGs in the United States. The magnitude of this global issue can be illustrated by considering that China alone adds CO2 emissions equa l to four times those of th e state of Alabama to its emissions total each and every year. Thus, a complete cessation of all CO2 emissions in the state of Alabama would be completely subsumed by Chinese emissions growth in about 84 days

. 2 It is imperative to have global cont rol of GHGs if it is decided that the goal is to stabilize or reduce atmo spheric concentrations of GHGs.

Standards of Performance for New and Existing Sources Southern Company does not believe that the use of EPA’s authority to set New Source Performance Standards (NSPS) under se ction 111 of the CAA is an appropriate mechanism for regulating GHGs. Using se ction 111 would require lengthy and complicated consideration of source-cat egory-specific factors focusing on limited

2 “Observed Climate Change and the Negligible Global Effect of Greenhouse-gas Emission Limits in the State of Alabama,” Science and Public Policy Institute (SPPI), 2008.

7available technologies. Furthermore, secti on 111 cannot be used to regulate mobile

sources.

National Emission Standards for Hazardous Air Pollutants Section 112 allows the Administrator to a dd a pollutant to th e list of Hazardous Air Pollutants (HAPs) if the pollutant pres ents, or may present, “through inhalation or other routes of exposure, a threat of adve rse human health effects (including, but not limited to, substances which are known to be , or may reasonably be anticipated to be, carcinogenic, mutagenic, tero tagenic, neurotoxic, which cause reproductiv e dysfunction, or which are acutely or chronically toxic) or adverse environmental effects whether through ambient concentrations, bioaccumulation, deposition, or otherwise . . . .” CAA § 112(b)(2). GHGs do not pose a direct threat to human health through such exposure, voiding section 112 from regulating GHGs. Furthermore, in section 112 a major source is defined as a source that emits or has the potential to emit 10 tpy or more of any HAP or 25 tpy of any combination of HAPs. GHG regulation under section 112 would dras tically increase the number of source categories covered by EPA. The need to crea te, monitor, and regulate national emission standards for GHGs for each major source ca tegory would generate an overwhelming administrative burden for the Agency.

Preconstruction Permits Under the New Source Review Program Under the NSR program, the CAA require s the owners and operators of large stationary sources of air po llution to obtain construction pe rmits prior to building or

8modifying such a facility. The program is divided into the PSD and nonattainment NSR (NNSR). The drastic increase in the NSR program due to the myriad of new sources that would be brought into the program through possibly any form of GHG regulation under the CAA is an element that EPA and state ag encies cannot effectiv ely handle. According to the United States Chamber of Commerce, from the commercial sector alone therewould be an estimated 1 million new regulated stationary sources including “over onefourth of all school buildings, over two-thirds of health care facilities, one-third of office buildings, half of those in lodging, and one-fifth of food services.” A possibly even bigger problem w ould be that under a GHG NAAQS, the possibility exists that the entire country c ould be deemed to be in nonattainment status, which would trigger the nonattainment NSR permitting program nationally. Economic ramifications of this program for the nati on would be disastrous, requiring all new emissions to be offset and application of Lowest Achievable Emission Rate (LAER) standards for all new sources.

Title V Operating Permits Program EPA states that Title V operating perm its would be required if regulation of GHGs occurs under any of the approaches me ntioned in the ANPR. EPA estimates that currently 15,000-16,000 Title V permits exists; this would increase to about 550,000 if GHGs were regulated under the CAA. The ad ministrative burden pr oduced by the drastic increases in the number of Title V operating permits is likely to be unreasonable for EPA. EPA confirms that these numbers could ev en increase if GHG were regulated under section 112 authority, due to the lower threshold limits. B ecause of the huge number of

9Title V permits, it is likely that EPA couldn’t meet key milestones and deadlines required by the Act, such as timely processing of permit applications. The United States Chamber also noted th at Title V permits could have severe impacts on the economy because, under the Act, su ch permits are subject to citizen suits. It is possible that every Title V permit c ould be challenged by citizen groups, which would slow down, if not stop, crucial economic activities. Regarding EPA’s question as to whether re lief should be given to smaller sources with respect to Title V fees, Southern Comp any believes that any relief given for fees should apply to all sources regardless of size. Large sources should not have to bear the permitting cost for smaller sources. It is clear that Title V permitting burdens, fees, and timeline issues make the CAA ill-suited for GHG regulation. The CAA creates more problems a nd issues than it solves and transforms an already disheveled progr am into a regulatory labyrinth.

Draft Technical Support Document – E ndangerment Analysis for Greenhouse Gas Emissions Under the Clean Air Act Southern Company has several questi ons and concerns about EPA’s Draft Technical Support Document (TSD) for Endangerment Analysis for Greenhouse Gas Emissions Under the Clean Air Act. The TSD primarily references IPCC and CCSP documents. Generally, EPA relies almost ex clusively on the IPCC Fourth Assessment Report. However, this summary report, as stated before, focuses on global emissions, atmospheric concentrations, and presumed im pacts – not on those related to the United States. EPA states that it relies primarily on IPCC chapters addressing the United States,

10but acknowledges that this information is not as detailed as certain other sources of data. When the United States is studied by the IPCC, it is at a macro-level that includes the North American region as a whole. Because EPA only has authority to regulate U.S. emissions, any finding of endangerment would have to rest on a determination of whether U.S. emissions by themselves cause endangerment. The TSD may also overstate the likeli hood of endangerment. The TSD does not address the potential for adaptation or potential to reduce GHGs through mitigation measures. EPA provides unrealistic approaches by incorporating emission scenarios that assume no new GHG mitigation policies in either the United States or the rest of the world and IPCC scenarios that do not take in to account the implementation of the Kyoto Protocol.

Conclusions In conclusion, Southern Company agr ees with EPA Administrator Johnson and several Federal agencies that a regulatory program under the Clean Air Act is singularly ill-suited for regulation of greenhouse gases.

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