OMB June 29 Comments on Transport Rule

A. Pathway from 2010 to 2012

- Generally further discussion is needed in the preamble explaining how sources will meet the 2012 caps given the 2010 known emissions – EPA has generated additional analysis on this point and it be helpful to explain this in the preamble.

Response: Please see attached redline to section VII. C.2 of preamble for the new language that EPA proposes to add in re gards to this issue.

B. Texas FIP Clarification for the PM NAAQS

- Please explain the following on pages 29 and 20 of th e redline – if Texas doe sn’t contribute to nonattainment or interfer ence with maintenance in another state for the 24-hour PM2.5 NAAQS, why is EPA making a statement that the FIP for Te xas satisfies its contribution to nonattainment or interference with main tenance of the 2006 24-hr PM 2.5 in another state? : With respect to the 24-hour PM 2.5 NAAQS, the analysis EPA conducted for the proposal did not identify Texas as a state that significantly contributes to nonattainment or interferes with maintenance of 24-hour PM 2.5 in another state. However, the analysis conducted for the final rule shows that emissions from Texas do significantly contribute to nonattainment of the 24-
hour PM 2.5 NAAQS in another state. EPA is not issuing a FIP for Texas with respect to the 24-hour PM 2.5 NAAQS in this rule. However, EPA believes that the FIP for Texas with respect to
the 1997 annual PM 2.5 NAAQS also addresses the emissions in Texas that significantly contribute to nonattainment and interference with maintenance of the 2006 24-hour PM 2.5 NAAQS in another

state.

Response: As explained in this section of the preamble, t he Transport Rule’s air quality analysis does show that Texas significantly contributes to nonattainment or interferes with maintenance for the 24-hour PM2.5 NAAQS. However, EPA is not issuing a FIP for Texas with respect to the 24-hour PM2.5 NAAQS because EPA requested comment on Texas inclusion in the propos al only with respect to the annual PM2.5 NAAQS. However, we continue to believe t hat inclusion of Texas in the Transport Rule annual NOx and annual SO2 programs will address their sign ificant contribution with respect to the 2006 PM2.5 NAAQS. Also, while we have proposed to disapprove the 2006 PM2.5 SIP for Texas, final action has not yet been taken on that proposal and thus we do not have an outstanding FIP obligation like we do with respect to the 1997 PM2.5 NAAQS. For these reasons, we are not including a FIP for Texas with respect to the 2006 PM2.5 NAAQS even though our analysis shows it does signific antly contribute to nonattainment or interfere with maintenance of the 24-hour PM2.5 NAAQS in another state.C. Cost-Benefit Table Adjustment

- Page 35 and 435 – Reorganize and label the CBA ta ble for clarity as follows (Table III-4, and Table VIII.C-3) – further, shouldn’t the ne t benefits be 1 billion lower based on rounding conventions?:

**Summary of Annual Benefits, Costs, and Net Benefits of the Final Transport Rule in 2014**  **a**

**Description Transport Rule Remedy (Billions of 2007$)**

3% discount rate 7% discount rate

**Total social costs** $0.81 $0.81

**Total monetized**
**benefits b**  $120 to $280 $110 to $250

**Net benefits**
**(benefits minus**

**costs** ) $120 to $280 $100 to $250

Response: EPA rounds benefits and net benefits to tw o significant figures, consistent with
review from the National Academies of Science. Given the magnitude of the benefits as compared to the costs of this rule, the net benefits, when rounded based on these scientifically-reviewed conventions, remain the sa me as the gross benefits in these tables. EPA appreciates the improvements offered by th e proposed restructuring of the tables and has implemented this recommende d change – please see the att ached “ Benefit Tables_Table Table III-4 and VIII.C-3” showing redline re visions to these tables for the preamble.

D. SNCR Clarifications

- Page 77 –Footnote 77 is referenced in support of the supposition that some plant owners might choose to achieve NOx reductions using options ot her than LNB/OFA, such as a selective noncatalytic reduction (SNCR) system. Please no te that the SNCR NOx reduction potential is significantly below the LNB/OFA level for pulve rized-coal boilers, as shown in EPA’s IPM documents. Therefore, an SNCR system may not be a substitute for LNB/OFA if such units are intended to reduce NOx to the levels expected fr om LNB/OFA. In addition, the document in the above footnote contains information on only the time it takes to install the SNCR equipment on the boiler. For total installation timing, EPA should be referencing another document that
contains such information. One such docum ent, “Typical Installation Timelines for NOxEmissions Control Technologies on Industria l Boilers,” by ICAC, December 4, 2006, show a total installation time of close to one year , which does not include any planning or preengineering by the owner. Furthermore, the inst allation time may be longe r for a larger utility boiler. Therefore, consideri ng the 6-month time the affected sources have for compliance, SNCR may not be a viable option. It may be helpful for EPA to ma ke note of that and point to a sensitivity analysis of this assumption.

Response : EPA’s suggestion in this section of the preamble that individual unit owners may consider SNCR does not convey that universal replacement in a state of LNB/OFA by SNCR would deliver adequate emission reductions for the state to meet its emission reduction requirements under the Transport Rule. Rather, th is reference appears in the context of the section describing the flexibilit ies that individual unit owners have under the Transport Rule to consider multiple NO X emission reduction strategies in response to the economic signal created by the programs. There is no specific unit-level requirement for NO X rate control under the Transport Rule programs. Regarding the sensitivity of NO X reductions to the timing of control installation (whether LNB or SNCR), table VII.C.2-2 in the preamble explains why the Transport Rule 2012 budgets are robust to the precise timing of the installation of these controls, ev en as EPA believes that there is adequate time to compete these retrofits by the beginning of the program.

E. Capital Investments for CAIR Clarifications

- Page 79, please explain/clarif y the meaning of “correctly” in the following statement; additionally, please change the phrase “ignore that capital investments have already been made to meet the requirements of CAIR” to state “assu me that capital invest ments have not already been made to meet the requirements of CAIR”:

Similarly, if EPA were to ignore that capital investments have already been made to meet the requirements of CAIR and that these investments comprise “sunk” capital costs and not new costs, EPA’s analysis would not correctly reflect the cost of emission reductions required by the Transport Rule.

Response: Please see attached redline to section V.B of the preamble for edits that EPA proposed to address this issue.

F. Canada and Mexico Emissions- Page 80 – can EPA add text explain how additional information or suspected trends for Canada and Mexico’s emissions would impact the mode led air quality? How does EPA know that the 2006 Canada inventory and 1999 Mexico inventory lead to a conser vative estimate of emissions?

Response: EPA lacks sufficiently detailed information to determine “trends” in Canadian or Mexican emissions beyond the invent ory data used in the Transpor t Rule air quality analyses. EPA agrees that it is unnecessary to characterize the analysis as “conservative.” Please see attached redline to se ction V.C.1 with EPA’s proposed clarifications.

G. NOx Variability

- For clarity, can you further explain the following statement on page 247 – the explanation that follows the sentence explains why downwind air quality (AQ) is not h eavily impacted by NOx, but it is not explained why the variation in SO2 emissions up to 20% does not have an impact: This analysis shows that year-to-year fluctuations of up to 20 percent in SO 2 emissions from upwind states linked to a given downwind receptor do not undermine the ability of the Transport Rule programs to resolve nonattainment or maintenance concerns at that receptor.

- Furthermore, this explanation on page 247 s eems to imply that only SO2 variability was analyzed, yet there is discussion of NOx emissi ons and their relationship to downwind AQ. Can you clarify in the preamble if the sensitivity analysis was done for both?

Response: Please see the attached “NOx variability in preamble” showing edits in redline that EPA proposes to this preamble section to cl arify the relationship of SO2 and NOx and why EPA’s analysis of SO2 variability is relevant to both pollutants. These clarifications also note that the SO2 analysis is found in the variability TSD.

H. Permitting

- Page 399: EPA has discussed th e CO2 increases associated with the use of limestone-based scrubbers and with increased parasitic loads as two separate issues. Shouldn’t these two be combined, since an application of wet FGD would automatically result in an increased parasitic load? Also, since NOx and SO2 controls were added for CAIR, is there any data available on whether NSR was triggered on any of the affected units? Could this discu ssion be added to this section to support the res ponse to comments on this.

Response: EPA believes the preamble clearly identifies the pe rmitting issues and makes it clear that all identified issues would need to be considered for future retrofits. EPA also notes that commenters did not provide the agency with any specific instances of CA IR retrofits triggering NSR, and that it would take several days to conduct a detailed review of historic perm itting that is not feasible in the time remaining.EPA believes the preamble section accurately captures the permitting issues relevant to Transport Rule compliance.

I. Texas Sensitivity Analysis

- Suggest that the following language be added: "Also, coal-switching is only one of many ways by which Texas can comply; [EPA estimates] 75% of Texas coal capacity will be scrubbed by 2012 and analysis shows that those units can increase their generation. Finally, natural gas-fi red units benefiting from substantially expanding Texas natural gas supplies and low near-term pri ces can also increase their generation to help Texas cost-effectively meet its 2012 SO2 budget."

Response: EPA agrees with this addition and has included it in redline in the “Texas sensitivity analysis findings in response to comments” document attached. Please also see the last paragraphs of the

attached redline of section VII.C.2 for EPA’s proposed preamble reference to this more detailed

discussion in the record.