# Exhib it 1 6 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 1

### UNITED STATES COURT OF 

### APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Case No. 10-1131 (Consolidated with Nos. 1132, 1145, 1147-1148, 1199-1203,1205-1213, 1215-1216,1218-1222; Pending 10-1073, 1083, 1099,1109-1110,1114- 1115,1118-1120,1122- 1129) Petitioners,

Respondent. v. SOUTHEASTERN LEGAL FOUNDATION, ) FOUNDATION, ET AL., ) ) 

### ) ) ) ) ) ) ) ) )

### -------------~)
DECLARATION OF ANDREW GINSBURG IN OPPOSITION TO MOTIONS FORA STAY OF EPA'S GREENHOUSE GAS TAILORING RULE I, Andrew Ginsburg, declare as follows:

1. I am presently employed as the Air Quality Division Administrator of the Oregon Department of Environmental Quality (DEQ). I have been employed by DEQ since 1990, for over twenty years. 2. In my capacity as DEQ's Air Quality Division Administrator, I

am directly responsible for managing DEQ's efforts to protect Oregon's air by controlling, reducing and preventing air pollution. 3. Oregon statutes and administrative mles authorize DEQ to conduct a comprehensive program to address air pollution. See 

### Oregon Revised Statutes chapters 468 and 468A; Oregon Administrative Rules chapter 340, divisions 200 to 268. Many of these statutes and mles have

1 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 2

### been submitted by DEQ, and approved by the United States Environmental Protection Agency (EPA), for inclusion in Oregon's State Implementation Plan (SIP). Oregon's SIP implements a vaJiety of federal Clean Air Act programs in Oregon, including the Clean Air Act Prevention of Significant Deterioration (PSD) program. In addition, EPA has delegated to DEQ the authority to implement the Clean Air Act Title V Operating Permit program in Oregon pursuant to certain Oregon statutes and rules. 4. Earlier this year, EPA adopted a rule that is commonly known

as the "Tailoring Rule." 

### Prevention o/Significant Deterioration and Title V Greenhouse Gas Tailoring Rule, 75 Fed. Reg. 31514 (June 3, 2010). The Tailoring Rule applies the Clean Air Act PSD and Title V permitting programs to greenhouse gases. Pursuant to the Tailoring Rule and the Clean Air Act, each state must incorporate greenhouse gases into its SIP to implement the Clean Air Act PSD program by January 2, 2011, and must also incorporate greenhouse gases into its Clean Air Act Title V program. 5. Oregon's PSD and Title V permitting programs do not currently authorize DEQ to implement the Tailoring Rule in Oregon. Specifically, Oregon administrative rules do not include greenhouse gases in the list of "regulated pollutants" that are subject to the Clean Air Act PSD and Title V permitting programs administered in Oregon by DEQ. 6. As a result, EPA has proposed a finding of substantial inadequacy and a SIP Call concerning Oregon's SIP, on the basis that Oregon's current PSD program will not apply to greenhouse gases beginning

on January 2, 2011. 

### Action To Ensure Authority To Issue Permits Under the Prevention o/Significant Deterioration Program to Sources o/Greenhouse Gas Emissions: Finding o/Substantial Inadequacy and SIP Call, 75 Fed. Reg. 53,892 (Sept. 2, 2010).

2 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 3

### 7. DEQ is working cooperatively with EPA to implement the Tailoring Rule in Oregon, by revising both the Oregon SIP (concerning Oregon's PSD program) and Oregon's Title V program. By letter dated October 1,2010 (copy attached as Exhibit A), DEQ responded to EPA's requests for information concerning EPA's proposed finding and SIP call. In the letter, DEQ explained that it planned to propose adoption of rules by the Oregon Environmental Quality Commission (EQc) in February 2011 that would amend the Oregon SIP to allow DEQ to implement the Tailoring Rule. 8. DEQ initiated the rulemaking process referenced in paragraph 7
on October 14,2010. DEQ is currently conducting a public comment process on the proposed rules. The proposed rules would incorporate greenhouse gases into Oregon's PSD and Title V permitting programs. 9. Until the EQC adopts rules, DEQ will not be authorized to implement the Tailoring Rule in Oregon. Therefore, from January 2,2011 (the first date the Tailoring Rule applies) until the EQC adopts rules, there will be a gap in DEQ's PSD and Title V permitting authority. During that interim period, DEQ will lack authority to issue PSD or Title V permits for greenhouse gases. In order to prevent harm to air pollution sources that may need PSD permits for greenhouse gases before they can build new facilities

or expand large facilities during that interim period, DEQ has worked cooperatively with EPA to ensure that EPA will be able to fill the pennitting gap. Specifically, DEQ's October 1, 2010 letter referenced in paragraph 7 above agreed to a SIP revision deadline of December 22, 2010. This will allow EPA to implement a Federal Implementation Plan (FIP) in Oregon beginning January 2, 2011 

### so that EPA may provide any PSD permits for greenhouse gases that may be needed by air pollution sources in Oregon.

3 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 4

### 10. Pursuant to DEQ's current legislatively approved appropriations and expenditure limitations, DEQ has adequate resources both to conduct the rulemaking described in paragraphs 7 and 8 above, and upon adoption ofthose rules to implement PSD and Title V permitting for greenhouse gases in Oregon. 11. Because the Tailoring Rule justifies higher regulatory thresholds to phase in PSD and Title V permitting requirements for greenhouse gas emissions than the statutory Clean Air Act thresholds for other pollutants, the Tailoring Rule will save DEQ significant resources by requiring DEQ to issue many less permits than would otherwise be required under the statutory Clean Air Act thresholds for other pollutants. 12: DEQ is supportive of EPA's goal of reducing greenhouse gas emissions from station31y sources, because the state of Oregon faces significant harm from climate change. Pursuant to Oregon Revised Statutes 468A.200, the Oregon legislature has found that:

• "Global warming poses a serious threat to the economic wellbeing, public health, natural resources and environment of Oregon;"

• "Oregon relies on snowpack for summer stream flows to provide energy, municipal water, watershed health and irrigation. Also, a potential rise in sea levels threatens Oregon's coastal communities. Reduced snowpack, changes in the timing of stream flows, extreme or unusual weather events, rising sea levels, increased occurrences ofvector-bome diseases and impacts on forest health could significantly impact the economy, environment and quality oflife in Oregon;"

4 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 5

### • "Global warming will have detrimental effects on many of Oregon's largest industries, including agriculture, wine making, tourism, skiing, recreational and commercial fishing, forestry and hydropower generation, and will therefore negatively impact the state's workers, consumers and residents;" and

• Actions taken by Oregon in concert with complementary actions of the federal government and other states will reduce the impacts of greenhouse gas emissions.

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.
Executed on October 

# Z, 20 1 0, at the Oregon Department of Environmental Quality, 811 SW 6th Avenue, Portland, Oregon 97204.

Andrew Ginsburg Air Quality Division Administrator Oregon Department of Environmental Quality

5 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 6

# regon

Theodore R. Kulongoski, Governor

October 1, 2010
Dennis McLerran Regional Administrator U.S. EPA, Region 10 Regional Administrator's Office, RA-140 1200 Sixth Avenue, Suite 900 Seattle, WA 98101 

### Department of Environmental Quality Headquarters 811 SW Sixth Avenue Portland, OR 97204-1390 (503) 229-5696 FAX (503) 229-6124 TTY (503) 229-6993

OFFICE. OF THE EXEClITiVE

RE: Request for Submission of Information from States Regarding Permitting Authority for Greenhouse Gas Prevention of Significant Deterioration
Dear Mr. McLerran: The United States Environmental Protection Agency (EPA) has proposed a finding of substantial inadequacy and State Implementation Plan (SIP) Call under Clean Air Act section 110(k)(5) concerning Oregon's SIP, on the basis that Oregon's current SIP Prevention of Significant Deterioration (PSD) program will not apply to greenhouse gases beginning on January 2, 2011. Action To Ensure Authority To Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call, 75 Fed. Reg. 53,892 (Sept. 2, 20 I 0). This letter responds to the requests in EPA's proposal.
EPA asked Oregon to inform EPA of the period of time that Oregon would accept as the deadline for submittal of Oregon's SIP revisions in response to a SIP Call. EPA has proposed a finding of substantial inadequacy and SIP Call under Clean Air Act section 11 O(k)( 5) concerning Oregon's SIP PSD applicability provisions. Further, EPA has proposed a deadline for Oregon's submittal of a corrective SIP revision. EPA has requested Oregon's comments on the proposed deadline. In light of the importance of having in place as soon as possible PSD permitting authority for any greenhouse gasemitting sources that may be subject to PSD requirements, Oregon does not object to EPA's establishment ofa deadline of December 22, 2010.
The remainder of this letter responds to the EPA requests listed below.
raJ Confirm. with citations and a copy o(the relevant language. that the SIP PSD applicability provisions do not explicitly include GHG sources, Oregon's SIP PSD program applies to "regulated air pollutants" as defined in OAR 340- 200-0020(99): 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 7Dennis McLerran Regional Administrator U.S. EPA, Region 10 Page 2
"Regulated air pollutant" or "Regulated Pollutant": (a) Except as provided in subsections (b) and(c) of this rule, means: (A) Nitrogen oxides or any VOCs; (B) Any pollutant for which a national ambient air quality standard has been promulgated; (C) Any pollutant that is subject to any standard promulgated under section 

### 111 of the Act; (D) Any Class I or II substance subject to a standard promulgated under or established by Title VI of the Act; or (E) Any pollutant listed under OAR 340-244-0040 or 340-244-0230. (b) As used in OAR 340 division 220, regulated pollutant means particulates, volatile organic compounds, oxides of nitrogen and sulfur dioxide. (c) As used in OAR 340 division 224 any pollutant listed under OAR 340-244- 0040 or 340-244-0230 is not a regulated pollutant.
The list of regulated air pollutants does not include greenhouse gases; therefore, Oregon's SIP PSD program currently does not apply to greenhouse gas emissions from greenhouse gas sources. l (hi Identify and provide a copy o(any provision that specifically precludes PSD applicability for GHG sources. There are no provisions in Oregon law that specifically preclude PSD applicability for greenhouse gas sources.

1 To be precise, Oregon's SIP PSD program applies to greenhouse gas sources, but not to emissions of greenhouse gases from greenhouse gas sources. That is, Oregon's program applies to emissions of criteria pollutants and other non-greenhouse gas pollutants from greenhouse gas sources. However, it is our understanding that EPA's question was primarily aimed at confirming whether Oregon's program applies to greenhouse gas emissions from greenhouse gas sources, as opposed to non-greenhouse gas emissions from greenhouse gas sources. 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 8Dennis McLerran Regional Administrator U.S. EPA, Region 10 Page 3

ec) IdentifY and provide a copy of any provision of state constitution or other law, including the SIP, that may be read to limit the applicability ofthe PSD program to pollutants identified at a certain point in time, and therefOre not to GHGs.
The Oregon Environmental Quality Commission (EQC) has adopted administrative rules to implement the Clean Air Act PSD program in Oregon, and EPA has approved those rules as part of Oregon's SIP. However, the EQC's rules limit the applicability of the PSD program to "regulated pollutants" identified in rule by the EQC, and the rules do not currently include greenhouse gases. Unlike the administrative rules of some states, the EQC's rules do not purport to incorporate by reference future EPA rwes. The relevant EQC rule is found at Oregon Administrative Rule (OAR) 340-200-0020(99) and is included above. ed) Indicate, with citations and a copy ofthe relevant language, i[any, whether the SIP includes general authority for the state to issue PSD permits that meet EPA requirements.
The Oregon SIP does not include general authority for Oregon to issue PSD permits that meet EPA requirements for applying the PSD program to greenhouse gases. ee) Indicate, with citations and a copy of the relevant language, any other provisions of the SIP or state law that may bear on the applicability ofthe PSD program to GHGemitting sources. There are no other provisions in the Oregon SIP or Oregon law that bear on the applicability of the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources. See answers to (a) and (c) above, 

# co Indicate the state's interpretation as to whether the SIP, read as a whole, does or does not apply the PSD program to GHG sources or authorize the state to issue PSD permits fOr GHG sources that meet EPA requirements. This statement should be made by the commissioner or general counsel ofthe state environmental agency. or by the counterpart at the local or tribal level, or by the state Attorney General. 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 9Dennis McLerran Regional Administrator U.S. EPA, Region 10 Page 4

The state's interpretation is that the current Oregon SIP, read as a whole, does not apply the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources or authorize Oregon to issue PSD permits for greenhouse gas sources, based on greenhouse gas emissions, that meet EPA requirements. 2 

# wi Ifthe SIP, read as a whole, does not apply the PSD program to GHG sources or authorize the issuance of permits to GHG sources, indicate whether the state plans to develop adequate authoritv to apply the PSD program to GHG sources and to submit it to EPA as a SIP revision by December 1, 2010, which is shortly before the date on which, as discussed below, EPA intends to finalize its finding ofinadequacy and finalize the SIP Call. Oregon plans to develop adequate authority to apply the Oregon PSD program to greenhouse gas emissions from greenhouse gas sources and to submit 

### it to EPA as a SIP revision by the end of February 2011. As explained above, DEQ and the EQC must undertake a regulatory process to develop adequate authority. Oregon's PSD program applies to regulated pollutants, and Oregon's administrative rules define regulated pollutants by specifically listing the pollutants included in that definition. Currently, that definition does not include greenhouse gases. Therefore, to develop adequate authority, DEQ and the EQC must amend Oregon's administrative rules accordingly. DEQ plans to propose that the EQC amend its rules, in order to apply Oregon's PSD program to greenhouse gases. The draft proposed rulemaking package was sent to your office in early September for review, It is anticipated that the public comment period will begin sometime between mid-October and early November, with public hearings scheduled the week of November 15 th • DEQ plans to propose that the EQC adopt the rule amendments

2 Because I am the Director of the Oregon Department of Environmental Quality (a position commonly referred to as "commissioner" in other states), and because I am signing this letter, this statement is therefore made by the head of Oregon's primary environmental agency. 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 10Dennis McLerran Regional Administrator U.S. EPA, Region 10 Page 5

on February 17,2011. If the EQC amends the rules, DEQ will submit a SIP revision for EPA approval.
Thank you for the opportunity to comment. Sincerely,



# J/(vL

# ~e{/lUMl;.Y 

# !J$uJ}

Dick Pedersen Director, Oregon Department of Environmental Quality

cc: Andrew Ginsburg, Oregon Department of Environmental Quality Paul Logan, Oregon Department of Justice 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 11

# Exhib it 1 7 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 12

### UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

SOUTHEASTERN LEGAL FOUNDATION,) Case No. 10-1131 ET AL., 

### Petitioners,

v. 

### UNITED STATES ENVIRONMENTAL PROTECTIO AGENCY, Respondent. ) 

### ) (Consolidated with os. ) 1132,1145,1147-1148, ) 1199-1203,1205-1213, ) 1215-1216, 1218-1222; ) Pending 10-1073, 1083, 1099, ) 1109-1110,1114-1115,1118- ) 1120,1122-1129) ) 

### ) ) )



### DECLARATION OF RHODE ISLAND IN OPPOSITION TO MOTIONS FOR A STAY OF EPA'S GREENHOUSE GAS TAILORING RULE I, Douglas L. 

### McVay, declare as follows: 1. I am currently employed as Acting Chief ofthe Office of Air Resources for the Rhode Island Department of Environmental Management ("OEM"). I have been employed by the OEM for over 33 years. 2. I have primary responsibiliry at the Rhode Island OEM to oversee the protection and improvement of the air quality for the citizens of Rhode Island. This oversight includes maintaining, reviewing and updating the State regulations related to air pollution. Additionally, in the majority of my 33 years with OEM, I have supervised and managed the air pollution pemlitting programs. 3. On August 3, 20 I 0, I sent a letter to 

### H. 

### Curtis Spaulding, Regional Administrator for the U.S. Environmental Protection Agency (EPA), outlining Rhode Island's response to the 

### Prevention of Significant Deterioration and Title V

Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 13

## Greenhouse Gas Tailoring Rule (75 FR 31514; June 3, 20 I 0) (the "Tailoring Rule"). (Letter to U.S. EPA dated August 3, 2010 attached as Exhibit A) 4. The August 3, 2010 letter states OEM's plans to incorporate and implement greenhouse gas permitting requirements into Rhode Island's federally approved Title V and new source review prevention of significant deterioration (NSR PSD) permitting programs. 5. Rhode Island OEM has already begun the process to revise both the Title V and New Source Review permit program regulations to provide authority to issue permits for greenhouse gas emissions sources, consistent \vith the Tailoring Rule. We have drafted our initial proposal and plan to publish public notice on or about November 12, 20 I 

## O. 6. The EPA has found that the current and projected concentrations of the six greenhouse gases - carbon dioxide (CO,), methane (CH 4 ), 

### nitrous oxide (N,O), hydrofluorocarbons (GFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF,)- in the atmosphere threaten the public health and welfare of current and future generations. Consequently, if not mitigated, Rhode Island's environment will be impacted. 7. The Tailoring Rule is a good step in the direction oflimiting greenhouses gas emissions from new or modified major stationary sources in Rhode Island and throughout the country in an effort to protect the environment. 8. Rhode Island could face significant harm from climate change. Inundation and periodic storm surges and flooding events may cause significant detrimental impacts on coastal communities

- where a majority of the State's population is located

- and substantial loss of the State's coastal property, including infrastructure, public facilities, and habitat that is vital to rare and threatened species. Elevated temperatures may cause dangerously hot conditions in Rhode Islands' cities and could aggravate air pollution from ground level ozone and other components of smog. As a result, Rhode Island is committed to curbing GHG emissions and has

Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 14

### made substantial efforts to do so within its borders through participation in the regional greenhouse gas initiative. 

# J)aJf!.rl7lfJ= Dougl L. 

### McVay Acting Chief DEM Office of Air Resources

STATE OF RHODE ISLA D COUNTY OF PROVIDENCE Subscribed and sworn to before me this 

### 29"' day of October, 

### 2010.

No ry 

### P 

### blic My Commission expire.

RIChard M Bianculli Jr. Notary PublIC # 58013 My CommissIon Expires 4-17-2014 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 15Exhibit A

RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MA AGEMENT 235 Promenade Slreef. Providence. Rl 02908-5767 TDD 401-222-4462

3 August 2010

H.Curtis Spalding, Regional Administrator EPA New England. Region 1 5 Post Office Square-Suite 100 Boston, MA 02109-3912

Dear Mr. Spalding:
This letter is to inform you that the Rhode Island Department of Environmental Management. Office of Air Resources (OAR) intends to apply the meaning of the term "subject to regulation" consistent wIth EPA's definition of the tcrm in implementing both the PSD and Title V permitting programs for greenhouse gases in Rhode Island.
No statutory changes will be necessary to implement this approach. The definition of "air contaminant" in state law (Rhode Island General Laws §23-23-3(1» reads:
"Air cOlllami"anl" means Sool. cinders. ashes, a"y dusl.fumes, gas. misl, smoke. vapor, odor, loxic or radioactive malerial. paniculale molter. or any combination oflhese.
This definition is sufficiently broad to allow OAR to regulate greenhouse gases. In order to undertake this approach, OAR will need to amend the two state regulations implementing the PSD and Title V programs; AIr Pollution Control RegulatIon 10 • 9 and Air Pollution Control Regulation No. 29. h is our intention that the regulatory changes we adopt will be consistent with the applicability thresholds in the Tailoring rulc in both programs. We anticipate that the necessary regulatory changes will be adopted before January 2. 2011.
If you or your staff has any questions concerning approach. feel free to contact me at (401)·222·2808, x· 7011. Sincerely,

# ~~?tr ActlOg Chief Office of AIr Resources


# o post-eonsllmt:f fibe,



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 16

# Exhib it 1 8 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 17

### UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

SOUTHEASTERN LEGAL FOUNDATION, ) Case No. 10

- 1131 ET AL., ) ) (Consolidated with Nos. Petitioner s , ) 1132, 1145, 1147

- 1148, ) 1199

- 1203, 1205

- 1213, v. ) 1215

- 1216, 1218

- 1222; ) Pending 10

- 1073, 1083, 1099, UNITED STATES ENVIRONMENTAL ) 1109

- 1110, 1114

- 1115, 1118

- PROTECTION AGENCY, ) 1120, 1122

- 1129) ) Respondent. ) )

_____________________________________)

DECLARATION OF RICHARD VALENTINETTI IN OPPOSITION TO MOTIONS FOR A STAY OF EPA’S GREENHOUSE GAS

TAILORING RULE I, Richard Valentinetti , declare as follows: 1. Since 1970, I have been employed by the State of Vermont. From 1973 until the present, I have served in the position of Director of the Air Pollution C ontrol Divis ion (APCD) of the Department of Environmental Conservation (DEC) within the Vermont Agency of Natural Resources

. 2. The DEC has the primary responsibility to administer air pollution control programs authorized by federal and state laws. In my capacity as the APCD Director, my responsibilities includes maintaining, reviewing and updating Vermont’s Air Pollution Control Regulations and signing permits for the construction and operation of stationary sources of air emissions. 3. On July 22, 2010, DEC Commissio ner Justin Johnson sent a letter to H. Curtis Spalding, Regional Administrator for the U.S. Environmental Protection Agency (EPA), outlining Vermont’s response to the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rul e (75 FPR 31514; June 3, 2010) (the “Tailoring Rule”). (Letter to U.S. EPA dated July 22, 1010 attached as Exhibit A). Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 18

### 4. Amendments to Vermont’s air pollution control laws and regulations are

necessary to ensure the permitting thresholds for greenhouse gases (GHGs) in Vermont are consistent with those established by EPA’s Tailoring Rule. The necessary statutory amendments were adopted as part of Act 146 on June 1, 2010 and took effect on July 1, 2010. The APCD anticipates adopting the necessary regulatory amendment s to implement EPA’s tailoring approach for GHGs by the end of this year or shortly thereafter. 5. The APCD does not anticipate any halt to, or significant delays of, permitting come January 2, 2011 as a result of EPA’s Tailoring Rule.
6. The APCD has adequate resources to process permits for stationary sources of GHGs in Vermont, at the emissions thresholds established in the Tailoring Rule.
7. The burden to the APCD would be much greater than without the Tailoring Rule because applying the lower statutory thresholds for GHGs would result in more permit applications. 8. The APCD is generally supportive of goals of EPA’s GHG regulations as applied to stationary sources. It is in the interest of the citizens of Vermont to reduce GHG emissions to help to prevent negative impacts of climate change. In Vermont, climate change will, for example, harm hardwood forests in a manner that will negatively affect Fall tourism and threaten the maple sugar industry. See Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie , 508 F.Supp.2d 295, 321-25 (D.Vt. 2007) (bench trial findings of fact).
I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on October 26, 2010, at Waterbury, Vermont.

__________________________ Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 19

# ~.VERMONT LXIIIBIT A

Agency of NatlJral ResOl1rces
802-241-3808 802-244-5141 [phone] [fax] Vennont Department of Environmental Conservation Commissioner's Office 103 South Main Street, 1 South Waterbury, VI' 05671-0401
July 22,2010

H. Curtis Spalding, Regional Administrator EP A New England, Region 1, 5 Post Office Square

- Suite 100 Boston, MA 02109-3912
Re: Vermont's Implementation of the Tailoring Rule
Dear Regional Administrator Spalding:
I am writing in regard to the U.S. Environmental Protection Agency's (EPA's) "Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule," which phases in Prevention of Significant Deterioration (PSD) and Title V permitting requirements for stationary sources of greenhouse gases. See 75 Fed. Reg. 31,514 (June 3, 2010). Beginning on January 2, 2011, EPA's Tailoring Rule requires a stationary source that would already be subject to PSD and/or Title V pennitting requirements due to emissions of non-greenhouse gas pollutants to also comply with the PSD best available control technology (BACT) and other program requirements for greenhouse gas emissions if the source increases its greenhouse gas emissions by at least 75,000 tons per year (tpy) carbon dioxide equivalent (C02e) and/or to amend the source's Title V permit to incorporate any greenhouse gas requirements. Id at 31,523. Effective July 1, 2011 , EPA's Tailoring Rule expands the PSD and Title V permitting requirements to any stationary source with the potential to emit at least 100,000 tpy C02e and any modification of a major source that would result in an increase of greenhouse gas emissions of at least 75,000 tpy C0 2 e, independent of whether the source exceeds the permitting thresholds for a non-greenhouse gas pollutant. Id. at 31,523-24.
With respect to implementation, EPA decided to incorporate the permitting thresholds for greenhouse gases by codifying a definition of the- phrase "subject to regulation" so that the greenhouse gases emitted by sources that fall below the thresholds are not treated as "subject to regulation" and therefore do not trigger PSD and/or Title V. 75 Fed. Reg. at 31,579-81 and 31,583-84. EPA explained that such an approach would allow many states to immediately implement EPA's permitting thresholds for greenhouse gases without having to make any changes to state laws or regulations. Id at 31,580-81. In addition, EPA asked permitting authorities to submit a letter to EP A that explains whether the permitting authority will adopt an interpretation of the term "subject to regulation" that is consistent with EPA's interpretation, and, if so, whether the permitting authority intends to adopt such interpretation without undertaking a regulatory or legislative process. Id. at 31,582 and 31,584. The Vermont Department of Envirorunental Conservation's Air Pollution Control Division ("APCD") intends to adopt EPA's interpretation of the term "subject to regulation." However, amendments to Vennont's air pollution control laws and regulations are necessary to ensure the permitting thresholds for GHGs in Vennont are consistent with those established by EPA's Tailoring Rule. The necessary statutory amendments were adopted as part of Act 146 on June 1, 2010 and took effect on July 1, 2010. The relevant provisions of Act 146

To preserve, enhance, restore, and conserve Vermont's natural resources, and protect humull heCllth,Jor tile !>elle{it**o(thL~** wtd(uture generations.



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 20are enclosed. The APeD anticipates adopting the necessary regulatory amendments to implement EPA's tailoring approach for greenhouse gases by the end of this year. If you have any questions, please feel free to contact Richard Valentinetti, APeD Director, at (802) 241-3840 or dick. valentincniCd'state. vt. us.

Cc: Richard Valentinetti, APeD Director



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 21

# Exhib it 1 9 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 22

### UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT



### SOUTHEASTERN LEGAL FOUNDATION,) Case No. 10-1131 FOUNDATION, ET AL.,



### UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Petitioners,

Respondent. v. 

### ) 

### ) (Consolidated with Nos. ) 1132, 1145, 1147-1148, ) 1199-1203, 1205-1213, ) 1215-1216, 1218-1222; ) Pending 10-1073, 1083, 1099, ) 1109-1110, 1114-1115, 1118- ) 1120, 1122-1129) ) ) )

## ---------------~)
DECLARATION OF STUART A. CLARK IN OPPOSITION TO MOTIONS FOR A STAY OF EPA'S GREENHOUSE GAS TAILORING RULE 

### I, Stuart A. Clark, declare as follows: 1. I am now and at all times mentioned have been a citizen of the United States and a resident of the state of Washington, over the age of eighteen years, . competent to make this declaration, and I make this declaration from my own personallmowledge andjudgment. 2. I am the Manager of the Washington State Department of Ecology (Ecology) Air Quality Program. As Manager of the Air Quality Program, I oversee the work of Ecology's entire Air Quality Program throughout the state of Washington, including the air operating permit program. I have worked in this position five years. I have worked with Ecology on air quality issues for more than 30 years. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 23

### 3. Ecology is in the process of amending the state's general air permitting rule (WAC 173-400) and its air operating permit rule (WAC 173-401) to enable the state to comply with the U.S. Environmental Protection Agency (EPA) Tailoring Rule for greenhouse gases. Ecology is on track to have these rulemaking efforts completed, and the amended rules in effect, by January 2, 201l. 4. The Tailoring Rule significantly reduces the need for Title V permits and new
source review prevention of significant deterioration permits for greenhouse gas emissions. Ecology has adequate resources to implement the greenhouse gas permitting that will be required under the Tailoring Rule, and does not anticipate any halt to, or signif1cant delays in, permitting come January 2, 201l. Without the Tailoring Rule, the burden on Ecology permitting staff would be significantly greater. 5. Washington is especially vulnerable to climate change because of the state's dependence on snow pack for summer stream flows and because the expected rise in sea levels threatens our coastal communities. Extreme weather, a warming Pacific Northwest, reduced snow pack, and sea level rise are four major ways that climate change is disrupting Washington's economy, environment, and communities. 6. Washington has been working to mitigate greenhouse gas emissions in the state since 2004 and is supportive of EPA's efforts to regulate greenhouse gas emissions from stationary sources. In 2008, the Washington State legislature adopted ESHB 2815, a law that requires the state to reduce state-wide greenhouse gas emissions to 1990 levels by 2020, to 25% below 1990 levels by 2035, and to 50% below 1990 levels by 2050. 7. Washington has also adopted the California "clean cars" standards, which will reduce greenhouse gas emissions from motor vehicles by 30% by 2016. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 24

### , 2010, at 

# _----->-l "",,-Dc

## """'C:"-\:'J--l,V_C\---,~ __ 

### 8. Regulation of greenhouse gas emissions from stationary sources under the Tailoring Rule will advance the efforts made by the State of Washington to achieve its greenhouse gas emission reduction requirements and combat climate change.
I 

### declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on 

# 101 }(\lb

STUART A. CLARK Manager, Air Quality Program Washington State Department of Ecology 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 25

# Exhib it 2 0 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 26DECLARATION OF JOHN ARENSMEYER; CEO OF SMALL BUSINESS MAJORITY

I. I, John Arensmeyer, founder and CEO of Small Business Majority, make this Declaration in support of the response filed by the Environmental Defense.Fund, the Natural Resources Defense Council, and other environmental intervenors in opposition to motions filed by various parties to stay various actions of the U.S. Environmental Protection Agency (EPA) relating to the control of greenhouse gas (GHG) emissions under the Clean Air Act. The purpose ofthis Declaration is to express Small Business Majority's support for EPA's decisions to move forward with controls on emissions of GHGs under the Act and to oppose motions to stay EPA actions in order to further delay implementation of the Act as to GHG emissions. The EPA decisions at issue here include (I) determinations that the emissions of greenhouse gases from mobile sources cause or contribute to air pollution that endangers human health and the environment, (2) regulations limiting GHG emissions from motor vehicles; (3) an interpretative rule addressing when pollutants become "subject to regulation" for purposes of the Act's Prevention of Significant Deterioration and Title V permitting programs, and (4) a Tailoring Rule limiting application of the permitting requirements to the largest sources of GHG emissions during the initial phases of the program. If all of the motions were granted, the effect would be to delay application of the Act to mobile and stationary sources during this litigation. 2. I am the founder and CEO of Small Business Majority. Prior to starting Small Business Majority, I was the founder and CEO of ACI Interactive, an award-winning international ecommerce company. Earlier, I was the chief operating officer of a pioneering multimedia business, and prior to that was a practicing attorney.

Small Business Majority 3. Small Business Majority (SBM) is a national nonprofit small business advocacy organization founded and run by small business owners to focus on solving some of the biggest problems facing America's 28 niillion small businesses today. We are heavily involved in clean energy policy and comprehensive healthcare reform, as well as working on strategies to promote entrepreneurship and small business growth, including legislative provisions for job creation, tax credits and access to capital. We speak for the nearly 28 million Americans who are selfemployed or own businesses of up to 100 employees. We conduct extensive opinion and

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 27economic research and work with small business owners, policy experts and elected officials nationwide to bring nonpartisan small business voices to the public policy table

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A Stay of EPA's GHG Regulations Could Hamper the Growth of the Clean Energy Sector of the Economy 4. SBM opposes a stay of EPA's GHG regulations because it would delay and disrupt efforts to achieve controls of greenhouse gas emissions under the Clean Air Act. The clean energy economy is a sector that a majority of small business owners view as important to their ability to compete, and as one area that

- in a time when globalization and consolidation have limited small businesses' opportunities in many areas - represents promising opportunities for small business growth and innovation. Indeed, a June 2010 survey commissioned by SBM and two other organizations found that 61 percent of the 800 small business owners surveyed

across the nation agree that moving the U.S. toward clean energy is a way to restart the economy and help small businesses create jobs. l 5. EPA's GHG regulations can be an important first step toward long-term investment decisions that will help the transition to low-carbon, cleaner technologies and stimulate business for small businesses as well as clean energy jobs. SBM, together with the Main Street Alliance, recently released a report on the occasion of the 40 th anniversary of the Clean Air Act, documenting that the Act has yielded enormous benefits, at a small fraction of the costs originally predicted, and that it has been a major driver oftechnological innovation? As highlighted in the report, studies show that the economic benefits of the Act have far exceeded the costs of imposed on businesses. According to the Office of Management and Budget, the total economic benefits of the Clean Air Act are estimated at more than four to eight times the costs of compliance. Clean energy laws in individual states already show that clean energy standards create tremendous opportunities for small businesses. For example, California's clean energy standards (commonly referred to as AB 32) provide many opportunities for small

1 See Small Business Majority, Press Statement, New Polls Finds Support for Clean Energy Policies Among Small Businesses (June 9, 2010) (available at http://www.smallbusinessmajoritv.orglnews-and-events/press-room**view.php?id~54).** See also "Small Business and Clean Energy Policy." http://smallbusinessmajority.orglenergy/

2 See Small Business Majority and Main Street Alliance: The Clean Air Act's Economic Benefits: Past, Present and Future (October, 2010) (available at http://www.smallbusinessmajority.orgfpdflBenefits of CAA 10041 O.pdf).

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 28businesses to gain a financial edge in the burgeoning clean energy sector, according to an economic report recently released by SBM. 6. If the EPA actions at issue in this case are stayed by the Court, some investors could delay investments in small businesses that would be important sources of innovation in

areas such as greenhouse gas emissions control and energy efficiency and could reduce opportunities for small businesses in these areas. 7. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed in Sausalito, California on Oct. 25, 2010.

# AC~ C. Arensmeyer v

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# Exhib it 2 1 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 30· DECLARATION OF MICHAEL J. BRADLEY, PRESIDENT OF M.J. BRADLEY & ASSOCIATES LLC AND EXECUTIVE DIRECTOR OFTHE CLEAN ENERGY GROUP'S CLEAN AIR POLICY INITIATIVE, ON BEHALF OF CALPINE CORPORATION, EXELON CORPORATION, NATIONAL GRID, NEW YORK POWER AUTHORITY, NEXTERA ENERGY, PG&E CORPORATION, AND SEATTLE 

### CITY LIGHT

1. I, Michael I. Bradley, President ofM.I. Bradley & Associates LLC and Executive Director of the Clean Energy Group's Clean Air Policy Initiative, make this Declaration in support of the response filed by the Environmental Defense Fund, the Natural Resources Defense Council, and other environmental intervenors in opposition to motions filed by various parties to stay various actions of the U.S. Environmental Protection Agency (EPA) relating to the permitting of greenhouse gas (GHG) emissions from stationary sources under the Clean Air Act. The purpose of this Declaration is to express the view of Calpine Corporation, Exelon Corporation, National Grid, New York Power Authority, NextEra Energy, PG&E Corporation, and Seattle City Light, who are among the members of Clean Energy Group's Clean Air Policy Initiative, that, while there will be costs associated with regulating GHGs from stationary sources, the regulations and their implementation can be designed to manage those costs, and a stay of EPA's actions concerning GH G emissions for stationary sources would only exacerbate and prolong uncertainty associated with GHG regulation. Rather, the Tailoring Rule identifies which sources would be subject to the PSD permitting requirements for GHGs and which would not, and thus provides regulatory relief for many sources, while also establishing ground rules that will govern the PSD program's application to the large GHG sources that will initially be covered by PSD. 2. I am the President ofM.I. Bradley & Associates LLC (MJB&A) and the Executive Director of the Clean Energy Group's Clean Air Policy Initiative. I formed MJB&A in 1994 and .the Clean Energy Group in 1997. MJB&A provides private industry, nonprofit organizations, and government agencies with insightful advice on air quality and climate change policy. I have served on a number of national air quality and climate change committees, including the National Academy of Sciences, EPA's Clean Air Act Advisory Committee, and other EPA and state advisory groups. Prior to founding MJB&A, I was Executive Director of Northeast States

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 31for Coordinated Air Use Management (NESCAUM) for 12 years. In addition, I founded the Northeast Advanced Vehicle Consortium to promote advanced vehicle technologies in the Northeast.

The Clean Energy Group's Clean Air Policy Initiative 3. The Clean Energy Group's Clean Air Policy Initiative (CEG) is a coalition of electric and natural gas companies that share a commitment to responsible enviromnental stewardship. Among the members are some of the largest electric and natural gas utilities, serving over 25 million electric customers and over six million natural gas customers. The companies include

some of the nation's largest generators of electricity, with over 177,000 megawatts of generating capacity throughout the U.S. (16 percent of the U.S. total).

Reasonable Implementation of EPA's Greenhouse Gas Regulations 4. Based on the science underlying climate change, the companies on behalf of whom I am making this declaration agree that climate ·change is a significant problem that must be addressed

now. These companies have long supported federal climate and energy legislation because it can be designed to achieve the lowest cost reductions. However, in light of Congressional inaction

on climate legislation, these companies believe that EPA regulation of GHG emissions under the Clean Air Act can be an important first step in reversing the current trend of increasing GHG emissions. Further, these companies believe that EPA can design regulations for GHGs as well

as air quality to facilitate efficient and long-term investment decisions that can help the transition to low-carbon, cleaner technologies. For these reasons, these companies support EPA's implementation of reasonable regulations governing GHG emissions from the electric sector under the Clean Air Act. 5. EPA designed the Tailoring Rule in order to phase in the application of the PSD program to sources of GHGs, with the purpose of minimizing burdens on permitting authorities and

sources. The companies on behalf of whom I am making this declaration support this approach. Without the Tailoring Rule, smaller sources, including sources at these companies' facilities, would be subject to PSD and Title V starting on January 2,2011, which would likely lead to a significant permitting backlog, creating more uncertainty and barriers for new projects. EPA's

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 32final Tailoring Rule aptly refers to the "permit gridlock" that would occur without the Tailoring Rule. 6. Consistent with established EPA regulations and policies for criteria pollutants, the CEG companies have recommended to EPA that permitting authorities should limit best available control technology (BACT) determinations for GHG emissions to technologies and practices that

are available for implementation at the emissions unit being constructed, replaced, or modified. Given that GHG emissions control technology is in its infancy, improving thermal energy efficiency is likely the most effective means at this time to minimize GHG emissions from a new
or modified emission unit at an electric generation unit, and the appropriate metric for setting a BACT limit is heat rate calculated as the unit's heat input (Btu) per electricity output (kWh), adjusted for unit-specific variability and degradation. This approach is warranted under the Act's definition of "best available control technology," which provides that such technology is to be determined on a "case-by-case basis, taking into account energy, environmental, and economic impacts and other costs." 42 U.S.C. § 7479(3).

The Implications of Application of the PSD Program to Sources of Greenhouse 

### Gases 7. Under the Tailoring Rule, sources that must undergo PSD permitting anyway, based on their emissions of other pollutants, and would increase emissions by 75,000 tons per year of C02e or more, will become subject to PSD for their GHG emissions beginning January 2,2011. A larger category of new and modified sources of GHG emissions

- new sources with the potential to emit 100,000 tons per year, and source modifications that will result in a net emissions increase of75,000 tons per year of C02e

- will be subject to PSD permitting beginning July I, 2011. See, e.g., 75 Fed. Reg. 31523. The companies on behalf of whom I am making this declaration own facilities that are anticipated to trigger these thresholds and are, therefore, likely to be subject to PSD starting in January 2,2011 and/or July I, 2011. These companies also own other facilities that would be excluded from permitting requirements as a result of the Tailoring Rule. While the inclusion of GHGs will add new elements to the permitting process for new and modified facilities, these companies are committed to working with EPA and states to ensure that consideration ofGHGs can proceed without disruption of the permitting process.

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 338. These companies have also been constructively engaged with EPA through, for example, the individual companies' participation on the Climate Change Workgroup for the Clean Air Act Advisory Committee and through submissions to EPA to explain to the Agency how the Tailoring Rule could be implemented most effectively for the electric sector.

A Stay of the Tailoring Rule Would Create New Uncertainty for the Electric Sector' 9. The electric sector continues to face significant uncertainty as to how GHGs will ultimately be regulated. That uncertainty was not created by EPA's actions during the last year. The electric sector has long known that its GHG emissions would be regulated and many companies have made investments in anticipation of such regulations. While the companies on behalf of whom I am making this declaration prefer Congressional action to place a price on carbon emissions from the sector, the likelihood of Congressional action in the near future is unclear. Without knowing the ultimate statutory framework for such regulations, long-term company decision making has been stymied. 10. EPA's decisions in the Tailoring Rule and the Johnson Memo Reconsideration, 75 Fed. Reg. 17004 (April 2, 1010), will help sources understand what is required prior to Congressional action on climate legislation, and will make clear which sources are required to comply with PSD for GHG emissions and which are not, and when the obligations of covered sources take effect. Without the Tailoring Rule, the electric sector will face continued uncertainty and anticipate facility-specific litigation from various parties. Thus far, EPA has demonstrated a careful, measured approach, seeking input from industry and other stakeholders, and limiting the initial scope of regulation through the Tailoring Rule. EPA has demonstrated the ability to design GHG regulations to help reduce uncertainty, and a stay of EPA's regulations will only exacerbate the current uncertainty. 11. If the EPA actions that the moving parties have sought to stay in this case, including the Tailoring Rule, are stayed by the Court, it is likely**th~t** companies would delay investments until the conclusion of the litigation and wait for more clarity on the final shape of the regulations. A stay may also slow the development of technologies and improved energy efficiency processes that, if allowed to develop under the incentives created by application of the BACT standard, would reduce the costs of compliance with GHG regulations.

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### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 3412. 1 declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed in Concord, Massachusetts on October 28,2010.



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### I I I I I I I I I Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 36

# Exhib it 2 2 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 37

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### DECLARATION OF STEPHEN G. BRICK I, Stephen G. Brick, hereby declare and state under penalty of perjury the following:
1. This declaration is based on my personal knowledge. I am o ver the age of 18 (eighteen) and suffer from no legal incapacity. Isubmit this declaration in support of the State and Environmental Intervenors’ Response to Motions to Stay in Case Numbers 10-1131, 10-1073, 10-1092, 09-1322, 10- 1234. 2. I live at 5714 Tolman Terrace, Madison, Wisconsin 53711-3443. I received a Bachelor of Arts in U.S. History from the U niversity of Wisconsin in 1979 and received a Masters in Science in Energy Analysis and Policy from the Gaylord Nelson Institute of Environmental Studies at the University of Wisconsin in 1989. For the past 30 (thirty) years, my work has focused on various aspects of energy, climate change, and air quality policy, as well as other environmental issues. Most recently, from March 2009 to the present, I have served as Senior Fellow Climate and Energy Consultant at the Chicago Council on Global Affairs. In that capacity, I direct eff orts to develop a regional program on climate and energy policy, and I also a ssist private and Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 38

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### nonprofit clients in matters pertaining to energy economics, energy efficiency, environmental policy, and utility regulatory and technology asse ssment issues. 3. From November 2005 to March 2009, I served as Environmental Program Manager at The Joyce Foundation. My responsibilities included oversight of a $10 million (ten million dollars) per year environmental program, which focused on energy, global warming, Great Lakes protection, and river restoration. I also managed the foundation’s initiative to accelerate development of integrated gasification combined cycle te chnology in the Midwest. I also was charged with evaluating all aspects of the foundations environmental program and to design and recommend new program strategies.
4. From September 2002 to November 2005, I served as Associate Director for Research and Technical Programs at The Energy Center for Wisconsin. There I directed the work of 15 (fifteen) engineers and economists employed on a variety of projects related to energy eff iciency, renewable energy, and new energy technologies. In addition, I conducted due diligence on a wide variety of early stage technologies and worked with academics and others to support commercialization of such efforts. I also advised state and regional policy-makers on a range of energy and environmental issues. 5. I served as the Director of External Relations and Environ mental Affairs for PG&E National Energy Group from July 1998 to September 2002. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 39

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### In that capacity, I analyzed the potential economic impac ts of future environmental legislation on existing fossil fuel plants a s part of acquisition due diligence. I also coordinated environmental permitting and regulatory licensing for development of combined-cycle power plants in Wisconsin and Illinois. In addition, I managed state and local government relations for power plant developments in Wisconsin and Illinois. 6. From September 1996 to 1998, I served as Technical Director for the Clean Air Task Force, in which capacity I conducted technical and economic analyses of a wide range of state and national air quality policies and developed an analytic approach for analyzing costs and benefits of eli minating of old-new source distinction in national air quality policies, which ultimately supported the passage of the Clean Air Interstate Rule. From 1988 to 1996, I was Vice President of MSB Energy Associates, which serves a wide range of public and private clients with regard to utility economic and environmental regulations.
7. From 1979-1988, I worked for the Wisconsin Legislature, Resource Management Associates (consulting), and the Wisconsin Public Service Commission.
8. The purpose of this declaration is to respond to the declaration of Jennifer White Gradnigo for the Corn Refiners Association co ntained at Exhibit Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 40

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### 24 of the Motion to Stay filed by the National Association of Manufacturers et al. in the above-captioned cases (“Gradnigo declaration”). 9. The Gradnigo declaration asserts that members of the Corn Refiners Association will suffer harm due to the current determination by the U.S. Environmental Protection Agency (“EPA”) that biogenic CO 2

### emissions will be counted in determining whether a stationary source must com ply with certain permitting requirements of the Clean Air Act beginning on January 2, 2011. As set out below, in my expert opinion, these assertions of harm are wholly unsupported. First, only a small amount of biomass is used at currently operating ethanol facilities, as the primary fuel sourc e for these types of facilities is natural gas. In addition, there will likewise be very little use of biomass at ethanol facilities slated to come online. Sec ond, the members of the Corn Refiners Association exclusively use a wet milling process. However, of the existing ethanol production facilities, only a small percentage use the wet milling process and only one new facility (out of 11 (eleven)) slated to come online) will use the wet milling process. Therefore, the effect of this rule on the Corn Refiners Association’s members will be minimal.
10. In responding to this declaration, I have reviewed the following information:

• The Gradnigo Declaration; Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 41

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### • Environmental Protection Agency, “Regulation of Fuel and Fuel Additives: Changes to Renewable Fuel Standard Program” at 75 Fed. Reg. 14,670 (Mar. 26, 2010) (“Renewable Fuel Standard 2”) and the accompanying Regulatory Impact Analysis (February 2010), available at http://www.regulations.gov/search/Regs/home.html#home (Document ID No. EPA-HQ-OAR-2009-0472-1132) (“Renewable Fuel Standard 2 Regulatory Impact Analysis”);

• Environmental Protection Agency, “Technical Support Document for Ethanol Facilities: Rule for Mandatory Reporting of Greenhouse Gases” (June 24, 2010), available at http://www.regulations.gov/search/Regs/home.html#home (Document ID No. EPA-HQ-OAR-2008-0508-2308) (“Technical Support Document for Ethanol Greenhouse Gas Reporting”);

• Environmental Protection Agency, “Regulation of Fuels and Fuel Additives: 2011 Renewable Fuel Standards; Proposed Rule” at 75 Fed. Reg. 42,238 (July 2010) (“Proposed 2011 Renewable Fuel Standards”);

• The Renewable Fuel Association’s Biorefineries Locator available at http://www.ethanolrfa.org/bio-refinery-locations/ (updated September 30, 2010) (“Renewable Fuel Association Biorefineries Locator”) 1 

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• The state construction permits and other documents for the ethanol facilities identified on the Renewable Fuel Associatio n Biorefineries Locator as being currently under construction 2



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1 I am relying on the Renewable Fuel Association Biorefineries Locator solely because it was a source of information upon which EPA relied in the Renewable Fuel Standard 2. 75 Fed. Reg. at 14,746 n.60. My reliance on this information does not indicate any agreement with an y position, legal, policy, or otherwise, that the Renewable Fuel Association has taken. I realize that EPA relied upo n other sources that I have not or could not have reviewed, as some were not publicly available. However, my revie w is indicative of the current state of the industry. 2These include the permits and other documents for the following facilities: Aventine Renewable Energy, LLC (Mount Vernon, IN), Clean Burn Fuels, LLC (Raeford, NC), E Caruso (Goodland Energy Center) (Goodland, KS), Range Fuels (Soperton, GA), the AE Advanced Fuels Keyes (Keyes, CA) (previously known as Cilion Ethanol), Aventine Renewable Energy (Aurora, NE), and Ag Energy Re sources (Benton, IL).



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### 11. It is my understanding that the relevant period for asses sing harm in the context of a motion to stay the rule pending the outcome o f litigation is the time period over which the stay will be in effect, that, is the time period during which the court will confirm whether the rule(s) are lawful. Put differently, I know that a stay could be granted if those seeking it can show that the rule is likely to be found unlawful. And if the rule is found to be unlawf ul, then there will be no harm after that point, as the rule will no longer be in effect. So my discussion relates only to the time period between the grant of a stay, if any, and the final disposition of this litigation. 12. At the outset, I would like to note that predictions of how many new facilities are expected to come online, during the period a s tay is in place, and when they will come online is necessarily a difficult ta sk and one that the Gradnigo declaration did not undertake. In the Proposed 2011 Renew able Fuel Standards, EPA itself noted: Announcements of new projects, changes in project plans, project delays, and cancellations occur with great regularity. Biofuel producers face not only the challenge of the scale up of innovative, first-of- a-kind technology, but also the challenge of securing funding in a difficult eco nomy. 3 

### In fact, EPA has required all registered producers and importers of renewable fuels to submit annual Production Outlook Reports describing their e xpectations for new or expanded biofuels supplies to assist EPA in developing perc entage standards of

3 75 Fed. Reg. at 42,243.



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### renewable fuels for each year under the Renewable Fuel Standard 2. 4

### Therefore, while I reviewed publicly available construction permits and the Renewable Fuel Association’s website, it is possible that other new ethanol refineries have been proposed or modifications requested to the permits of currently operating plants that did not come to my attention. In spite of this possibility, my review is indicative of the state of the industry at present and a small number of additional new plants or plant modifications, during the relevant year or two that a stay might be in place, would not change my conclusions.

I. Current use of biomass by ethanol facilities and future p rojected use
13. The Gradnigo declaration claims that the current inclusi on of biogenic CO 2

### emissions would harm the members of the Corn Refiners A ssociation, [B]y creating a perverse incentive for waste in our industry and a disincentive for efficiency and environmentally-friendly processes which our corn refiners have already adopted. Corn refiners create biogenic emissions from the treatment of wastewater, fermentation process es, and burning biomass (from corn milling process and other external sources ) and biogas. . . . If biogenic emissions are treated in the same manner as fossil fuel emissions, the GHG Tailoring Rule serves as a disincentive to build or modify combustion sources to utilize agricultural or corn processing residual fuels. There may also be disincentives to developing fermentation processes that produce green feedstocks to replace chemical feedstocks currently obtained through the processing of oil and natural gas. Somefacilities may otherwise choose to switch to biogenic fuels to avoid coverage under Title V

4 Id. at 42,242 (citing 40 C.F.R. § 80.1449). These reports were due as of September 1, 2010 for the 2011 compliance year. Id. They have not, however, been made publicly availablethrough EPA’s website or the docket for that rulemaking and therefore were not reviewed.



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### permits, but this option would not be available under the current rule which again would remove incentives to fuel switch from fossilfuels. 5


### 14. The Gradnigo declaration identifies 3 (three) potential harms to the members of the Corn Refiners Association and, as I unders tand, the ethanol industry more broadly:

• A disincentive to use agricultural or corn processing residues as a fuel;

• A disincentive to replace fossil fuel derived feedstocks currently used in ethanol production with biomass; and

• A disincentive to switch from fossil fuels to unidentified “biogenic fuels” in ethanol production. 15. First and foremost, I note that the Gradnigo declaration provides absolutely no evidence to demonstrate that this claim of pote ntial harm to the members of the Corn Refiners Association, or the ethano l industry more generally, actually exists. The Gradnigo declaration provides no evidence as to 1) the current amount of biomass/bioenergy used by the Corn Refiners Association members or the ethanol industry more broadlyor 2) any concrete plans by any ethanol production facilities to use biomas s/bioenergy at any stage of the ethanol production process. In fact, of the facilities currently under construction, only 1 (one) is permitted to use any amount o f biomass energy at all. This facility, the Range Fuels facility located in Soperton, Georgia, uses

5 Gradnigo declaration at 6-7.



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### wood waste, not corn, as its feedstock, and is allowed to burn some of its process residue in only 1 (one) of its 8 (eight) boilers. 16. In fact, there is no evidence from any other source that I reviewed that the Corn Refiners Association’s members or the ethanol industry as a whole currently uses any significant amount of bioenergy at any stage of the ethanol production process. As demonstrated in the previo us paragraph, there is no evidence that the Corn Refiners Association’s members or other ethanol production facilities intend to use any significant amount of biomass in the future. 17. For the promulgation of the Renewable Fuel Standard 2, EPA compiled an extensive record of the current technologies and fuel used at ethanol production facilities and the projected technologi es and fuel use at new ethanol production facilities. This analysis also shows that only a small quantity of biomass is currently used in existing and operating ethanol production facilities and that the vast majority of new facilities will not use biomass. 18. In the analysis of the current operating ethanol industry for the Renewable Fuel Standard 2, EPA concluded that “[t]he ethanol industry primarily relies on natural gas.” 6

### Indeed, according to the Renewable Fuel

675 Fed. Reg. at 14,745.



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### Standard 2 rulemaking, of the 180 (one hundred and eighty) currently operating ethanol production facilities, “an estimated 151 burn natural gas (exclusively), three burn a combination of natural gas and biomass, oneburns natural gas and coal (although natural gas is the primary fuel), one burns a combination of natural gas, landfill biogas and wood, and two burn natural g as and syrup from the process.” 7

### Therefore, less than 2 (two) percent of existing facilities use biomass even as a portionof their fuel. I am not aware of any plant using biomass as its exclusive source of fuel. 19. Moreover, according to EPA, “the majority of new [ethanol] production is expected to come from natural gas.” 8

### EPA estimates that approximately 11 (eleven) new ethanol production facilities and 2 (two) expansion projects at existing facilities will come online. 9

### Of these, only 3 (three) are expected to use bioenergy as a fuel feedstock. 10

### Two of these new plants are expected to be coal-fired. 11



### II. Corn Refiners Association membership and member facilities impacted
20. I understand that the members of the Corn Refiners Assoc iation include those corn refining facilities that exclusively em ploy the wet milling

7 Id

. 8 Id. at 14,746. 9 Id

. 10 Id. This includes 2 (two) manure biogas plants (one that, at the time of the promulgation of the Renewable Fuel Standard 2 was idled and one new plant) and 1 (one) biomass -fired power plant. 11 Id

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### processes. 12

### In my expert opinion, the impact of the Tailoring Rule on w et milling facilities – and thus on the Corn Refiners Association’s members – is speculative and likely to be minimal, if any impact actually occurs. This is because, as described below, wet milling is employed at only a very few of the existing ethanol production facilities and is not expected to be employed at the vast majority of new ethanol production facilities. 21. The Gradnigo declaration identifies a total 27 (twenty-seve n) such plants, which process various types of products such as swe eteners, ethanol, and corn oil, among others. 13

### There is some confusion as to the extent that existing ethanol production facilities use wet mill processing. Based on information compiled by EPA for the Renewable Fuel Standard 2, only 11 ( eleven) of the 173 (one hundred and seventy-three) plants 14

### currently operating and processing corn and/or other similar processed grain for the productio n of ethanol (as opposed to other products) use wet mill processing. 15

### The rest use dry mill processing. 16

### However, EPA indicates in another document, the Technical

12 SeeCorn Refiners Association website, http://www.corn.org/ (identifying the industry represented as those refiners using wet milling processes. 13 Gradnigo declaration at 2. 14The Technical Support Document for Ethanol Greenhouse Gas Reporting estimates that there are approximately 170 (one hundred and seventy) ethanol refineries in the United States and its territories. Technical Support Document for Ethanol Greenhouse Gas Reporting at 3. 15 75 Fed. Reg. at 14,744. There are a total of 180 (one hundr ed eighty) ethanol plants, 7 (seven) of which process waste sugars/starches and employ different operations pr ocesses than plants processing corn and/or similar grain s. Id. at 14,745. 16EPA’s analysis did not address the 26 (twenty-six) ethan ol production facilities that, as of the rulemaking, it determined were not operating. Id. at 14,746; see also Renewable Fuel Standard 2 Regulatory Impact Analysis at 130. These numbers from the Renewable Fuel Standard 2 a re based on EPA’s November 2009 corn/starch ethanol 

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### Support Document for Ethanol Greenhouse Gas Reporting, that 25 (twentyfive) ethanol facilities use wet milling processing. 17

### This confusion may result from the fact that some plants both ship wet distillers grains to local markets but also have drying capacity to enable reaching more distant markets. It is fair to say, overall, that exclusive wet mills constitute a minority of current US ethanol capacity, and that for economic reasons, new construction heavily favors dry mills. 22. It is also my understanding that with the exception of one facility, all new corn ethanol production facilities will employ drymill processing 18

### and thus would not be among the Corn Refiners Association’s members 19 

### . The reason dry mill processing is favored stems from the ability to ship dried distillers grains further than wet grains. In sum, the vast majority of existing and currently operating ethanol facilities use dry mill processing and the vast majority of new ethanol facilities will also use dry mill processing. Therefore, the effect of the Tailoring Rule on the members of the Corn Refiners Association is likely to be limited to existing facilities that propose major modifications.

characterization. 75 Fed. Reg. at 14,746. EPA notes in th e Renewable Fuel Standard 2, however, that at least 1 (one) of the 27 (twenty-seven) plants has since come back online. Id

. 17Technical Support Document for Ethanol Greenhouse Gas Reporting at 4. 18 I base my understanding of the technology that new facilities will use on the record compiled by the EPA forthe RFS2. 75 Fed. Reg. at 14,746. 19 SeeCorn Refiners Association website, http://www.corn.org/ (identifying the industry represented as those refiners using wet milling processes).



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 49

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### 23. In addition, I note that the Gradnigo declaration states that “[e]xisting corn wet milling facilities already are subject to PS D and Title V requirements[.]” 20

### Therefore, these facilities will already be experienced in the PSD and Title V permitting processes, and the additional challenge posed by adding a new pollutant to an already familiar process is minor. Indeed, over the years, new pollutants have been regularly added to Preventio n of Significant Deterioration and Title V reviews, ammonia (NH4 

### ) being an example of a relatively recent addition.

III. Economic State of the Ethanol Industry Generally

24. The ethanol industry is currently in a slump. There are several reasons for this. First, the global economic recession has constrained access to capital for new industrial facilities. Second, the ethanol blend ceiling, which was until very recently set at 10 (ten) percent, constrained the market for new ethanol facilities. 21 

### Finally, uncertainty over the ethanol tax credit is an

20Gradnigo declaration at 4. 21 On October 13, EPA recently approved a waiver allowing the use of 15% (fifteen percent) ethanol blend ceiling in light duty and other motor vehicle types after model year2007. More information is available at http://www.epa.gov/otaq/regs/fuels/additive/e15/ . There is little reason to believe, however, that t his action will induce a rapid expansion of the ethanol industry, as thereare many obstacles to making E15 widely available. First, to provide pumps for E15 for cars, the gasoline industry woul d have to construct a new parallel gas infrastructure to accommodate the fuel. Second, it is my understanding that gas stations currently do not have the ability to s tore another fuel formulation and that E15 would damage the hose s at gas pumps. Finally, refiners have indicated that they are reluctant to sell E15 without congressional liability protection as E15 could lead to engine damage. For instance, a spokesman for Valero, one of the nation’s largest refiners, stated that “[w]e would be hesitant to sell a fuel that does not have some sort or warranty protectionor has been accepted by engine manufacturers or equipment manufacturers.” Bloomberg, Valero, Refiners Reluctant to Sell Higher Ethanol-Blend Gas (Oct. 12, 2010), available at http://www.bloomberg.com/news/2010-10-12/valero-refiners-reluctant-to-sell-higher-ethanol-blendgas.html . Similarly, a spokesman for Marathon Oil Co. has alsostated that it will be cautious about selling E15. Id

.



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 50

### 14



### impediment for new market entrants. According to the Renewable Fuel Standard 2, currently there are approximately 26 (twenty-six ) idled ethanol production facilities. 22

### In addition, based on our review of the plants identified Renewable Fuel Association Biorefineries Locator, at least 4 (four) of the facilities that are currently under construction have dec lared bankruptcy and are not currently operational. 25. In addition, we understand, according to the Renewable Fuel Standard 2, that only 11(eleven) new corn ethanol production f acilities are slated to come online along with two facility expansions. 23

### As was noted above, projecting the number of new facilities that will c ome online in a given year or expansions at existing facilities that will occ ur is inherently difficult. As EPA explained in the Proposed 2011 Renewable Fuel Standards and as noted above, this difficulty stems from several factors, including difficulties and/or delays in securing necessary funding and delays in permitting and/or construction. 24


### Conclusion 26. For the reasons stated above, it is my expert opinion that the assertions of harm in the Gradnigo declaration are who lly without foundation. Very little biomass is currently used at operating ethanol production facilities

2275 Fed. Reg. at 14,746 & n.58. 23 Id. at 14,746. 2475 Fed. Reg. at 42,245.



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 51

### 15



### and very little is expected to be used by plants coming online during the relevant year or two that a stay might be in place. Moreover, the Corn Refiners Association’s members exclusively employ the wet milling process. However, very few currently operating plants employ that process and instead use the dry milling process, and the overwhelming majority of facilities that may come online are expected to use the dry milling process. Finally, all of the documentation I have reviewed indicates that there will be very few new facilities or expansions at existing facilities coming online. I declare under the penalty of perjury that the foregoing is true and correct.

Executed on October 29, 2010.

_________________________ Stephen G. Brick 5714 Tolman Terrace Madison, Wisconsin 53711-3443 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 52

# Exhib it 2 3 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 53

### 1 

### DECLARATION OF DALLAS BURTRAW

1. My name is Dallas Burtraw and I am a senior fellow at Resources for the Future, a nonprofit and nonpartisan organization headquartered in Washington, D.C., that conducts independent research rooted primarily in economics and other social sciences on environmental, energy, natural resource and environmental health issues. I hold a Ph.D. in economics and a master’s degree in public policy from the University of Michigan and a bachelor’s degree from the University of California, Davis. My research includes the design of environmental regulation, the costs and benefits of environmental regulation, and the regulation of the electricity industry. I have recently estimated the change in value of electricity generation companies, and the incidence of cost on households, of alternative approaches to implementing carbon dioxide emissions trading programs in the US. I have examined the cost

- effectiveness of trading programs for nitrogen and sulfur dioxide in the US, and of carbon dioxide emissions trading in the EU. I have also recently analyzed the opportunities for regulatory approaches to reduce carbon dioxide. I have conducted integrated assessment modeling of nitrogen and sulfur dioxide emissions from the power sector including he alth and ecosystem effects and valuation. I am a co

- author of the Pizer et al. paper, 1 

### the conclusions of which are misrepresented in one of the declarations to which I am responding. 2. I submit this declaration to respond to errors in three declarations put forward in support of the stay motions: the declarations of Richard Bezdek , Margo Thorning, and Steven Peterson, exhibit attachments 13 , 19 , and 11 to the National Association of Manufacturers’ (NAM) motion for a stay. 3. Exhibits 13 and 19 offer inappropri ate comparisons between fundamentally different policies and reach conclusions that cannot be sustained based on the cited evidence. As a result, the exhibits provide no

1 

### William Pizer, Dallas Burtraw, Winston Harrington, Richard Newell, and James Sanchirico, 2006. “Modeling Economy

- wide vs. Sectoral Climate Policies Using Combined Aggregate

- Sectoral Models,” The Energy Journal . 27(3), 135

- 168. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 54

### 2



### meaningful information on the costs or economic impacts of the policies that NAM seeks to stay. 4. The stay motion sought by NAM seeks to block two regulatory policies of limited scope that address a fraction of the sources of greenhouse gas emissions: (1) emission standards applicable to a fraction of the vehicle fleet (affecting only new cars and light trucks built in model years 2012

- 16) and (2) a preconstruction review requirement for a fraction of the stationary source fleet (out of a population of tens of thousands of large stationary sources in the United States, the review is expected to add approximately 900 projects per year to the number of projects required to undergo preconstruction review ). 5. Exhibits 13 and 19 infer the impacts of these limited policies from their assessment of the impact of much larger and more far

- reaching legisl ative proposals for an economy

- wide emissions cap and trade program that would cover approximately 85 percent of the greenhouse gas emissions in the U.S., including the emissions from more than 10,000 stationary sources and the emissions associated with ga soline and other refined oil products when they are eventually combusted. These legislative proposals have not yet been enacted. 6. As I will explain below, the costs attributed to the legislative proposals for an economy

- wide cap and trade program have littl e relation to the costs attributable to the regulatory policies at issue in this case. Moreover, the description of costs attributed in exhibits 13 and 19 to the legislative proposal is inaccurate and misleading. In other words, even if exhibits 13 and 19 had provided a reasonable estimation of the costs and benefits of an economy

- wide cap and trade program (and they have not), that would tell us nothing about the costs and benefits associated with the more limited regulatory policies for new cars and the l argest new or expanded industrial sources that EPA is actually implementing. 7. One of the two regulatory policies in consideration in this case is the EPA’s vehicle emission standards, issued jointly with the National Highway Traffic Safety Administration’s fuel economy standards, that require reductions in the emissions of carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons from new cars and light trucks (SUVs, minivans, and pick

- up trucks) built in model years 2012 through 2016. Model year 2012 begins in January 2011. The standards ramp up over the five years, allowing manufacturers lead

- time to make improvements in their vehicles. The EPA has shown that by model year 2016, the Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 55

### 3



### greenhouse gas emissions of the new vehicle fleet will be 30 percent lower than the emissions of comparable vehicles built a few years ago. 8. The benefits of the EPA and NHTSA standards are substantial. According to the two agencies, the average owner of vehicles built under these standards will receive net savings of appro ximately $3,000 due to reduced fueling costs. These savings take into account the extra initial cost of the vehicles. This does not account for the additional benefits of reducing greenhouse gas emissions. It is difficult to see how, as exhibits 13 and 19 suggest, that this policy can be characterized as imposing excessive costs on the U.S. economy. The evidence is to the contrary

– the net cost of this regulation is negative and the U.S. economy, measured in terms of gross domestic product and balance of tra de, is likely to benefit from the introduction of the regulation. 9. The other policy at issue in this case is the inclusion of carbon dioxide and other greenhouse gases as part of the preconstruction review requirement applicable to the largest new and modif ied major stationary sources. This review procedure lead s to the identification of an emissions performance level that the permitting agency (usually a state agency and in some cases EPA) determines to reflect use of the best available control technology (BACT). Under the Clean Air Act, the determination of BACT explicitly takes costs into account, ensuring that regulation does not impose costs that are excessive and does not require the adoption of technologies or processes that are not available. 10. Further, the preconstruction review policy will be phased in slowly, so that over the time period pertinent for analysis of a potential judicial stay (the 12 to 18 months following January 1, 2011), it will affect only a limited number of sources. According to EPA, during the first half of 2011, the only sources affected will be ones that already are required to undergo preconstruction review because of other pollutants . They will be required to meet a BACT limit for greenhouse gases only if those emissions will increase by 75,000 tons per year of carbon dioxide (or an equivalent amount of another greenhouse gas). Over the following two years, EPA expects preconstruction review to affect an additional 900 large projects per year out of the population of tens of thousands of sources. These are projects that are not now subject to review for other pollutants. The 900 additional projects per year will consist of (1) new sources that will emit at le ast 100,000 tons per year of carbon dioxide and Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 56

### 4



### (2) modifications of existing sources that will increase their carbon dioxide emissions by at least 75,000 tons. 2 

### 11. Because the emission limitation reflecting BACT will be determined in the future for each co vered source on a case

- by

- case basis, taking costs into account, it is impossible to demonstrate now that the costs of those requirements will be excessive for the sources or burdensome

– or even noticeable

– for the overall economy. 12. These two policies are what is at issue in this case. But Exhibits 13 and 19 present selected, upwardly

- biased estimates of the costs associated with an entirely different policy framework

– a cap and trade proposal that would affect the entire economy. They present estimates of the costs they claim would be imposed by the implementation of legislation such as the American Clean Energy and Security Act (H.R. 2454), which passed the House of Representatives in 2009 but has not been enacted, and the American Power Act, a legislative proposal in the Senate which has been circulated as a discussion draft but also has not been enacted. 13. The two bills would have established a cap on the greenhouse gas emissions of covered sources, beginning in 2012, with the cap declining annually through the year 2050. Generally speaking, the bills would have covered more than 10,000 stationary sources

– both new and existing sources

– that emit at least 25,000 tons per year of greenhouse gases. The bills would also have covered oil refiners and i mporters for the emissions occurring upon the combustion of fuel that they distribute. This broad scope contrasts sharply with the limited coverage of preconstruction review program described above, which in the next 18 months will apply to only about 900 large projects not already subject to review, none making less than a 75,000 tons per year increase in greenhouse gas emissions. Even if exhibits 13 and 19 provided a valid estimate of the costs of implementing these bills, affecting more than 10,000 sources each year over the next 40 years, that estimate would have no reasonable bearing on the cost of implementing the much smaller preconstruction review program during the next 18 months, the period most likely to be affected by a potential stay. 14. It is al so noteworthy that an EPA program of regulations would lead to a smaller change in product prices than the cap and trade approach, over at

2 

### Environmental Protection Agency, Final Rule: Prevention of Significant Deterioration and Title V Greenhouse Gas Tailorin g Rule , FACT SHEET , http://www.epa.gov/nsr/documents/20100413fs.pdf

. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 57

### 5



### least the next decade. The legislative cap

- and

- trade proposals described above would have limited greenhouse gas emis sions by issuing a number of “emissions allowances” (each worth one ton of carbon dioxide emissions) equal to the emissions cap in each year through 2050. Each year, each covered source would have been required to surrender one emissions allowance for each ton of carbon dioxide emissions (or the equivalent amount of each other covered greenhouse gas). This policy design creates a new market for tradable emissions allowances and introduces a market price on emissions of carbon dioxide. This introduces a new cost on production processes that cause the release of carbon dioxide emissions. Product prices in the economy would increase by an amount reflecting the price of emissions allowances (the amount of emissions associated with the product’s production multi plied by the price of emissions allowances) plus the cost of the resources (i.e., capital and operating costs) directed to reducing those emissions. In a recent study, my research colleagues and I estimated that about 86 percent of the change in product prices associated with a cap and trade program in 2016 would arise from the price of these emissions allowances, and just 14 percent of the change in product prices would arise from the resource costs expended to achieve emissions reductions. 3 

### Thus, an econ omy wide regulatory approach that successfully identified and imposed a comparable set of emissions reduction measures without a requirement to surrender emissions allowances would lead to a change in product prices that is comparable to the resource costs , or just 14 percent of the change in product prices that would result from a cap and trade program. Further , the preconstruction review program actually being implemented covers only a small fraction of the sources that would have been covered by a cap and trade program. 15. Although assertions in exhibits 13 and 19 regarding the economic impacts of a cap and trade program are irrelevant to assessing the impacts of the more modest vehicle standards and preconstruction review

3 

### Allowance value is expected to constitute the major share of costs resulting from the introduction of a price on carbon dioxide for the first couple decades of the program. For example, Burtraw et al. (2009) show that resources costs (including the cost of offset purchases) account for 13.5 percent of the total costs in 2016 of an allowance price of $20.91. The remaining sh are (86.5 percent) is associated with the value of emissions allowances that would be introduced under a trading program. See: Dallas Burtraw, Richard Sweeney and Margaret Walls, 2009. “The Incidence of U.S. Climate Policy: Alternative Uses of Revenues fro m a Cap

- and

- Trade Auction,” 2009. National Tax Journal , LXII (3):497

- 518. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 58

### 6



### requirements, it should be noted that exhibits 13 and 19 present a highly exaggerated picture of the impacts of the cap and trade proposals. The industry

- funded studies upon which they rely make assumptions that result in estimates far higher than those derived from analyses by well

respe cted nonpartisan institutions including the Environmental Protection Agency, the Energy Information Administration, and the Congressional Budget Office. Specifically, the studies on which exhibits 13 and 19 rely include some or all of the following flaws:
a. Assuming that the economy already uses energy with perfect efficiency, which is widely recognized in the economics literature to be a false assumption; b. Capping production capacity for cleaner energy resources at very low and sometimes even current level s; c. Excluding from the analysis the impact of provisions in the proposed legislation to reduce costs or to help affected entities (for example, low

- income individuals or vulnerable industries), such as rebates to energy intensive manufacturers, rebates to low

- income households, energy efficiency programs, or opportunities to reduce greenhouse gases other than carbon dioxide (some of which are much cheaper to reduce than carbon dioxide). d. Obscuring the fact that future incomes (as opposed to today’s) are projected to grow much faster than future energy costs in the presence or absence of the policies. The result is that energy expenditures as a fraction of income go down over time, because economic growth is much faster than increases in energy costs, even under their extreme assumptions. 16. As a result of these errors, the more detailed assertions in exhibits 13 and 19 about secondary consequences of cap and trade policies, such as impacts on low income Americans , and the assertions in exhibit 11 about impacts on international competitiveness of American manufacturing, are also unreliable. The Congressional Budget Office, for example, concluded that the House

-passed cap and trade bill (H.R. 2454) would actually improve the economic position of the lowes t income quintile (the 20 percent of Americans with the lowest income), because the revenue from auctioning a portion of the emissions allowances would be rebated to low

- income Americans through the tax code and other mechanisms, and the amount rebated wou ld exceed the costs borne by low

- income Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 59

### 7



### Americans through direct and indirect increases in energy costs. 4 

### Research by my colleagues and me buttress this finding. We find that distributional impact of the cap and trade bill would be progressive over the bo ttom four

- fifths of the income distribution under alternative sets of assumptions about how various provisions of the legislation might be implemented. The average household in the lowest income quintile enjoys a net gain (negative burden), due to provisio ns in the bill itself and also to the indexing of social security benefits to changes in the price index. The indexing of social security also helps protect seniors across the income distribution, a fact that is not recognized in exhibit 13 (see page 2, paragraph 6). Historically the earned income tax credit also has been revised to reflect changes in the price index. 5 

### 17. Likewise, a federal interagency report on the impacts of the House bill on the manufacturing sector found that allowances allocated to that sector would cover the compliance costs for that sector well past 2020. 6 

### As a result, cap and trade legislation would not have created significant international competitive disadvantage with foreign suppliers of manufactured products. In my judgment, the much more limited policy of requiring BACT for a fraction of the largest new and expanded industrial projects will also have no discernible impact on firms’ international competitiveness, especially as this program does not impose any cost for emissions allowances. For these reasons, the predictions in exhibit 11 are unreliable. 18. In summary, the emission reduction requirements of an economy wide cap - and

- trade program as designed in the proposed legislation would have negligible impacts on low

- income Americans or the American manufacturing sector. The EPA’s preconstruction review program

– which will be imposed on far fewer sources and without allowance costs

4 

### C ongressional Budget Office, The Economic Effects of Legislation to Reduce Greenhouse

- Gas Emissions (Sept. 2009) , http://www.cbo.gov/ftpdocs/105xx/doc10573/09

- 17

- Greenhouse

- Gas.pdf

. 5 

### Joshua Blonz, Dallas Burtraw and Margaret Walls, 2010. “Climate Policy’s Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap

- and

- Trade,” B. E. Journal of Economic Analysis and Policy , forthcoming. See related RFF Discussion Paper 10

- 12

- REV. 6 

### The Effects of H.R. 2454 on International Competitiveness and Emission Leakage in Energy

- Intensive Trade

- Exposed Industries , An Interagency Report Responding to a Request from Senators Bayh, Specter, Stabenow, McCaskill, and Brown ( Dec

. 2, 2009 ), http://www.epa.gov/climatechange/economi cs/pdfs/InteragencyReport_Competitiveness

EmissionLeakage.pdf

. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 60

### 8



### – would have only a small fraction of the impact on product prices of a cap and trade program. And as noted, the vehicle standards will save consumers money. 19. Exhibit 13 fundamentally misrepresents the conclusion of work by my colleagues and me in the Pizer et al. paper cited on page iii and page 1 of the declaration. The Pizer et al. paper hypothesized t wo programs of equal economy

- wide scope, one implementing a cap and trade mechanism, and another regulatory approach attempting to achieve the same amount of emission reductions through a fuel economy standard and a renewable electricity standard. In mode ling the regulatory approach, the Pizer et al. paper assigned about two

- thirds of the emissions reductions to the renewable electricity standard. However, the renewable electricity standard modeled in that paper has no relation to the preconstruction revie w requirements at issue here. The renewable electricity standard is a requirement that all electricity suppliers incorporate a specified percentage of electricity from renewable sources (such as wind turbines) into the electricity that they deliver. In c ontrast, the preconstruction review requirement under consideration is of a totally different nature, and applies to only a fraction of those electricity generating sources. For these reasons, the preconstruction review requirement would very likely invol ve only a fraction of the costs of the renewable electricity standard we analyzed. The Pizer et al. paper does not analyze a program resembling the one at issue here. Thus the paper’s conclusion

– that a cap and trade program would be less expensive than the combination of a renewable electricity standard and a fuel economy standard

– is inapplicable to the program at issue here. 20. In conclusion, the exhibits 11, 13 and 19 assess a fundamentally different kind and scope of greenhouse gas emission reduction program than the ones at issue in this case, and are flawed even as analyses of that different program. As such, it is my judgment as an economist that they do not provide support for NAM’s allegations of economic harm from the EPA actions at issue here.

I, Dallas Burtraw , declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct to the best of my knowledge. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 61

### 9



### Executed this 2 5 nd of October, 2010.

Dallas Burtraw Senior Fellow Resources for the Future 1616 P Street, NW Washington DC 20036 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 62

# Exhib it 24 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 63DECLARATION OF THOMAS A. CACKETTE IN SUPPORT OF JOINT OPPOSITION OF STATE AND ENVIRONMENTAL INTERVENORS TO PETITIONERS' MOTIONS TO STAY
I, Thomas 

### A. Cackette, declare the following of my own knowledge: 1. I am currently the Chief Deputy Executive Officer of the California Air Resources Board (ARB or the Board), and have held that position since 1992. 2. The Board consists of 11 appointed members, including a full-time chairperson. The Board makes regulatory decisions on emissions standards for

new motor vehicles sold in California, and delegates consequent implementation and enforcement issues to ARB staff. 3. In my current position, I oversee the development of California's

new motor vehicle emissions control regulations for presentation to, and consideration of approval or adoption by, the Board. I also manage ARB staff's implementation of adopted new motor vehicle regulations. And I monitor federal agency regulatory developments, including those affecting passenger vehicle standards in particular. 4. When the Board approves or adopts regulations regarding emissions from new motor vehicles, the Board delegates to its Executive Office the responsibility to forward the adopted regulations to the U.S. Environmental Protection Agency (U.S. EPA) to request either a waiver of federal preemption pursuant to Clean Air Act (CM) section 209(b) (also known as a "new waiver"),

or confirmation by U.S. EPA that the adopted regulations fall "within the scope" of

an existing U.S. EPA waiver. 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 645. Well before EPA began to regulate greenhouse gas emissions in
response to Massachusetts v. EPA, 549 U.S. 497 (2007), in 2002 California determined unchecked anthropogenic greenhouse gas emissions to be a pressing concern for California's natural and human resources and directed ARB
to reduce such emissions from passenger vehicles beginning in the 2009 model
year. AB 1493 (Pavley), Stats. 2002, Chap. 200. A separate declaration in this
matter executed by ARB's Research Director, Mr. Bart Croes, addresses these ongoing resource concerns in more detail. 6. I was and remain ARB's Executive Officer overseeing the 2002- 2004 regulatory development, 2004 Board approval, 2005 EPA waiver request, and implementation thereafter of California's greenhouse gas emission standards for 2009-2016 model year passenger vehicles. These standards require automobile and light-duty truck manufacturers to reach a gradually more stringent fleet-wide average of greenhouse gas emissions for the vehicles sold in California. These standards have been adopted by thirteen other States and the District of Columbia under Clean Air Act section 177. EPA's 2009 approval of California's request to waive Clean Air Act preemption of these standards is the subject of a separate petition in this Court, Chamber of Commerce v. EPA (No. 09-1237 and consolidated cases). I also oversee for California the coordination with federal agencies of studies and pre-regulatory work that may lead to a continuation of the type of coordinated federal and state greenhouse gas emission reduction program for 2017 through 2025 model year passenger vehicles 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 657. As part of my duties, I was the principal ARB officer involved in discussions leading to the May 2009 Rose Garden announcement of a National Program to regulate passenger vehicle greenhouse gas emissions for the 2012- 2016 model years. The resulting EPA standards, which are essentially equivalent by the 2016 model year to California's, are among those for which the Petitioners here seek a stay, Coalition for Responsible Regulation v. EPA (No. 10-1092 and consolidated cases). 8. The Rose Garden announcement represented an historic policy breakthrough after a decade of federal inaction in response to the growing climate crisis. For the first time

- and seven years after California embarked on its regulation of greenhouse gas emissions

- the federal government recognized the critical importance of also reducing greenhouse gas emissions at the national level and taking affirmative steps toward doing so by federal regulation. The
announcement also acknowledged the vital pioneering role that California played in developing the first greenhouse gas emission standards and recognized California's ongoing role in setting future standards. And the announcement showed that a cooperative spirit between the federal government, California, and the automobile manufacturing companies

- instead of confrontation and litigation

- could achieve great progress for our Nation. 9. In furtherance of the Rose Garden announcement, ARB staff committed to propose and consider for Board approval amendments to its 2009- 2016 model year standards that would permit regulated automobile manufacturers to comply with California's program by demonstrating their 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 66compliance with the National Program. The proposal allowed manufacturers to submit to ARB the compliance documentation that will be submitted to EPA under one of Petitioners' stay targets, EPA's MY 2012-2016 greenhouse gas emissions vehicle rule, by May of the year after each particular model year ends. The Board adopted these amendments adding this National Program compliance option in March 2010, and in June 2010 ARB staff submitted them to EPA to confirm ARB's within-the-scope determination. 10. The Board committed to accept National Program compliance for the 2012-2016 model years in part to reduce the further expense and uncertainty of ongoing automobile industry appeals and litigation over California's standards. Equally important, the Board was persuaded that because the federal government will have caught up to California's stringent numerical greenhouse gas emission limit in 2016 but would apply its standards leading to that limit nationally

- Le., in substantially more states than California's standards would apply under Clean Air Act Section 177

- the net effect was greater greenhouse gas emission reductions to mitigate ongoing and accelerating resource impacts in California.
11. Under federal and California regulations, the 2012 model year can begin as early as January 1, 2011, depending on a manufacturer's production
onset. California's greenhouse gas emission standards require manufacturers to
state their compliance option choice no later than the start of the model year. 12. I understand that at least two of the seven largest manufacturers have formally declared to ARB that they will exercise the National Program 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 67option to show compliance in California for the 2012 model year, and that at least

one of the other five manufacturers has informally told ARB staff members that they would also use the National Program option. In addition, all seven manufacturers supported the National Program at the Rose Garden
announcement. Therefore, it is likely that every major automobile manufacturer intends to exercise the National Program option in California for model year 2012. 13. If the National Program rule for model year 2012 is stayed before a given manufacturer begins model year 2012 production, it is unclear if that manufacturer can continue to choose the National Program option in California due to the uncertain availability of its later use. If the National Program rule is stayed at any time after a given manufacturer begins model year 2012 production, it is unclear if ARB will be able to accept that manufacturer's later National Program compliance demonstration as compliance with California's 2012 model year standards. This is because, for example, manufacturers may not be generating the necessary compliance data for the National Program for the entire model year, that compliance data may not be verifiable, and the emissions credits and/or debits based on that compliance data may not be created (ensuring the benefits envisioned under the National Program). Thus, the manufacturers' use of the National Program compliance option is at substantial risk if EPA's vehicle regulations are stayed. 14. It is unknown whether ARB could accept voluntary compliance with the National Program for model year 2012 during a stay of the National Program 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 68rule. Voluntary compliance would at minimum raise potentially insurmountable enforcement concerns for the Board and ARB staff, potentially precluding its use, and may instead require further rulemaking. 15. It is unknown whether all manufacturers could show compliance in California for the 2012 model year without exercising the National Program option.

I declare under penalty of perjury that the foregoing is true and correct. Executed


### --. this 

# 2 0 lffi- day of October, 2010, at Sacramento, California.

hOmas 

### A. Cackette 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 69

# Exhib it 2 5 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 70DECLARATION OF JASON COLLETTE, ENVIRONMENTAL PROJECT DIRECTOR FOR THE MAIN STREET ALLIANCE

I. I, Jason Collette, the Environmental Project Director for The Main Street Alliance, make this Declaration in support of response filed by the Environmental Defense Fund, the Natural Resources Defense Council, and other environmental intervenors in opposition to motions filed by vatious parties to stay various actions of the U.S. Environmental Protection Agency (EPA) relating to the control of greenhouse gas (OHO) emissions under the Clean Air Act. The purpose of this Declaration is to express The Main Street Alliance's support for EPA's decisions to move forward with controls on emissions ofOHOs under the Act and to oppose motions to stay EPA actions in order to further delay implementation of the Act as to OHO emissions. The EPA decisions at issue here include (I) determinations that the emissions ofOHOs from mobile

sources cause or contribute to air pollution that endangers human health and the environment, (2) regulations limiting OHO emissions from motor vehicles; (3) an interpretative mle addressing when pollutants become "subject to regulation" for purposes of the Act's Prevention of Significant Deterioration and Title V permitting programs, and (4) a TailOling Rule limiting application of the pennitting requirements to the largest sources ofOHG emissions during the initial phases of the program. EPA's Tailoring Rule identifies which sources would be subject to the PSD pennitting requirements for GHGs and which would not, requiring only the largest new
or moditied emitters to begin addressing GHGs as part of their PSD pennits beginning January 2, 20 II. Thus, a stay of EPA's actions concerning GHO emissions for stationary sources would exacerbate and prolong uncertainty concerning the impact of GHG pemlitting requirements for small businesses. 2. With over three years of experience working with membership organizations on a host of campaigns, I am currently the Environmental Project Director for The Main Street Alliance. At The Main Street Alliance, my responsibilities include implementing member-driven campaigns and helping membership understand complex issues that atfect small businesses, including clean energy, climate legislation, and EPA regulatory actions.



### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 71The Main Street Alliance 3. The Main Street Alliance is a national network of small business coalitions in 15 states supporting small business owners to bring their values into the public dialog on pressing policy issues. Members of The Alliance network share a vision of public policies that work for small business owners, their employees and the communities they serve. The Alliance and its member coalitions create opportunities for small business owners to speak for themselves on issues of

common concem. EPA's Greenhouse Gas Regulations Create Clarity fot· Small Businesses 4. EPA's GHG regulations establish a mechanism for the implementation ofGHG pennitting starting with the largest sources. Under the Tailoring Rule, sources that must undergo PSD pennitting anyway, based on their emissions of other pollutants, and would increase emissions by 75,000 tons per year of COle or more, will become subject to PSD for their GHG emissions beginning January 2, 20 II. A larger category of new and modified sources ofGHG emissions

- new sources with the potential to emit 100,000 tons per year, and source modifications that will result in a net emissions increase of75,000 tons per year of COle

- will be subject to PSD pennitting for GHGs beginning July 1,2011. See, e.g., 75 Fed. Reg. 31523. 5. A stay would create the situation where small businesses would not know whether or not their sources would be subject to PSD. If the Tailoring Rule remains effective during the litigation, small businesses whose emissions are expected to be below the Tailoring Rule's thresholds can be confident that they are not subject to PSD during that period of time.

A Stay of EPA's GHG Regulations Could Hampe.· the Growth of the Clean Energy Sector of the Economy 6. The Main Street Alliance also opposes a stay because it would delay and disrupt efforts to achieve controls ofGHG emissions under the Clean Air Act, thereby creating regulatory uncertainty for business and deferring the development of clean energy opportunities and investment. The clean energy economy is a sector that a majority of small business owners view

as providing important job and growth opportunities and one that is essential to their ability to compete. 7. EPA"s GHG regulations can be an important tirst step toward long-teml investment decisions that will help the transition to low-carbon, cleaner technologies and stimulate

2 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 72opportunities for small businesses and clean energy jobs. Indeed, The Main Street Alliance, with the Small Business Majority, recently released a report on the occasion of the 40'h anniversary of the Clean Air Act, documenting that the Act has yielded enormous benefits, at a small fraction of the costs originally predicted, and that it has been a major driver of technological innovation. I As highlighted in the report, numerous studies show that the economic benefits of the Act have far exceeded the costs of controlling air pollution emissions. According to the Office of Management and Budget, the total economic benefits of the Clean Air Act are estimated at more than four to eight times the costs of compliance. 8. lfthe EPA actions at issue in this case are stayed by the Court, it is likely that some investors would delay investments in small businesses that would be important sources of innovation in areas such as GHG emissions control and energy efficiency. A stay would send signals that could dampen innovation and investment in the green technology area more generally and would be a source of uncertainty for small businesses. 9. I declare under penalty of perjury under the laws of the United States of America that the foregoing is ITue and correct. Executed in Seattle, Washington on 

# /0/2 S/iO

. I

I Sec Small Business Majority LInd The Main Street Alliance: The Clean Air Aer's Economic Benefits: Pasl. Present and Future (Oclober, 20 I 0) (available al hnp://www.smaJlbusinessmajority.org/pdf/Benefils of 

### eM 1004 JO.pdD.

3 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 73

# Exhib it 2 6 Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 74

### 1

. DECLARATION OF BART E. CROES IN SUPPORT OF JOINT OPPOSITION OF STATE AND ENVIRONMENTAL INTERVENORS TO PETITIONERS’ MOTIONS TO STAY
I, Bart E. Croes, declare the following of my own knowledge : 1. I am currently the Chief of the Research Division of the California Air Resources Board (ARB or the Board), and have held that position since 2000

. I am a Professional Engineer in Chemical Engineering certified in California, and hold advanced degrees with a M aster of Science in Chemical Engineering from the Univers ity of California at Santa Barbara and a Bachelor of Science in Chemical Engineering from the California Institute of Technology . I am responsible for California ’s health, e cosys tem , atmospheric processes, emission control, and economics research programs for air pollution. I was the program manager for the 1997 Southern California Ozone Study (SCOS97

- NARSTO), the SCOS97

- NARSTO Aerosol Program and Radiation Study, California's Particulate Matter Research Program, the California Acid Deposition Monitoring Program, atmospheric chemistry and modeling research, and California Clean Air Act ozone transport research

. I am a former member of the National Research Council Committee on Research Priorities for Airborne Particulate Matter (1998

- 2004) , and ha ve been a peer reviewer for the National Research Council, the U.S. E nvironmental Protection Agency (E PA ) , and numerous scientific journals

. 2. The B oard consists of 11 appointed members, including a full

- time chairperson. The B oard makes regulatory decisions on emissions standards for new motor veh icles sold in California pursuant to state law authorizing ARB to reduce air pollutants including greenhouse gases

. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 75

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. 3. In my current position I oversee ARB’s research program which investigates the causes of and human health and natural resource impacts from air pollutant emissions , and the potential for reducing those impacts through potential emission reduction strategies. In that role , for 10 years I have studied, reviewed, contributed to, and have been apprised of innumerable international, national, regio nal, and California state studies on the causes and effects of global warming, particularly as they affect California human and natural resource impacts. I am familiar with research cited in the paper of Dr. Michael MacCracken entitled “Prospects for Futu re Climate Change and the Reasons for Early Action , ” and agree with his summar y of the global warming science. 4. In 2002, well before EPA began to regulate greenhouse gas emissions in response to Massachusetts v. EPA , 549 U.S. 497 (2007), the California Legi slature determined unchecked anthropogenic greenhouse gas emissions to be a pressing concern for California’s natural and human resources , and directed ARB to reduce such emissions from passenger vehicles beginning in the 2009 model year (AB 1493 (Pavley), Stats. 2002, Chap. 200 )

. Results of the Research Division’s review of later additional global warming science formed the scientific basis for the Board’s new motor vehicle regulations approved in 2004

. EPA’s 2009 approval of California’s request to waive Clean Air Act preemption of these standards is the subject of a n extensive EPA waiver d ocket and separate petition in this Court, Chamber of Commerce v. EPA ( No. 09

- 1237 and consolidated cases). Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 76

### 3

. 5. Our submissions to EPA in the aforementioned waiver d ocket

catalogued a growing list of observed and projected impacts from climate change in California. See e.g. , Docket ID No EPA

– HQ

– OAR

–2006

–0173

- 9006.1, dated April, 2009, available at http://www.regulations.gov/search/Regs/home.html#docketDetail?R=EPA

- HQ

OAR

- 2006

- 0173

. As described and referenced in th at d ocket , and as I describe below , these California

- specific impacts include : human and economic impacts of sea level rise, exacerbation of harmful ozone (smog) levels, impacts on human health from increased smog and soot due to wildfires , increased hospitalization and mortality from severe heat, reduced water availability, agricultural impacts from extreme hea t and decreased freezing events, and negative impacts to California’s unique biodiversity. 6. Sea level rise is one of the most obvious and severe impacts of a warming world, leading to displacement of human populations and severe economic impacts. Californ ia has about 1,800 k ilometers of coastline, numerous estuaries including the San Francisco Bay and Delta, wetlands, and coastal aquifers. These water bounded lands are susceptible to harmful effects if se a level rises too much or too fast. As global warm ing continues, California’s coastal regions will be increasingly threatened by more intense storms and warmer water temperatures. As described and referenced in the d ocket, results of studies indicate that by 2050, sea

- level rise could range from 30 to 45 cm (11 to 18 inches) higher than in 2000, and by 2100, sea

- level estimates could be 60 to 140 cm (23 to 55 inches) higher than in 2000. As sea level rises, there will be Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 77

### 4

. an increased rate of extreme high sea

- level events, which can occur when high tides coincide with winter storms and their associated high wind wa ve and beach

run - up conditions. 7. Future temperature trends combined with historical statistical relationships suggest that California would experience an additional 10

–30 days per year conducive to unhealthy ozone levels by the year 2050. 8. Under future climate scenarios wildfire acreage in California would increase statewide by 57

- 169 percent, and over 100 percent in Northern California. A study of Southern California wildfires in 2003 found signi ficantly increased hospital admissions for respiratory illnesses, especially asthma. Studies of climate change impacts on wildfire indicate that wildfires increase the likelihood of exceeding the ozone standard in the Western United States. 9. Elevated tem peratures were linked with increased mortality in California and several populations that appear to be particularly vulnerable are people with cardiovascular disease, the elderly, infants, young children, and African Americans . Hospitalizations for direct ly heat

- related causes, such as heat stroke and dehydration, increased as temperature increased. In addition, hospitalizations for ischemic stroke, respiratory disease, diabetes, acute renal failure, and intestinal infectious disease also increased as tem perature increased. The results highlight the conclusion that there is an association between temperature and hospital admissions in California, even without extreme temperature events. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 78

### 5

. 10. 

### Several studies conclude that the changes already observed in the h istorical record regarding temperatures, timing of runoff, and snowpack levels in the Western United States are most likely due to the increased concentration of greenhouse gases in the atmosphere. Climate change impacts on water supply are more likely in the American West, including California as “it is likely that droughts will continue to be exacerbated by earlier and possibly lower spring snowmelt run

- off in the mountainous West, which results in le s s water availability in late summer.”
11. 

### For the Central Valley of California, “climate change will decrease crop yields in the long

- term, particularly for cotton,” and stone fruits will be affected by a loss of chilling hours.
12. 

### Climate change threatens biodiversity in California, “the fl ora of California, a global biodiversity hotspot, includes 2387 endemic plant taxa.” “With anticipated climate change, we project that up to 66% will experience >80% reductions in range size within a century. ” The United States Climate Change Science Program report concludes that “Climate change has very likely increased the size and number of forest fires, insect outbreaks and tree mortality in the interior west, the Southwest, and Alaska, and will continue to do so.”
13. 

### As greenhouse gas emissions continue to increase, both wa rming and the commitment to future warming are presently increasing, with projections that th e rate of warming will further increase if emission controls are not put in place. Such warming and the associated changes are likely to result in severe impacts on key societal and environmental support systems. See Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 79

### 6

. Dr

. MacCracken’s summary paper, Prospects for Future Climate Change and the Reasons for Early Action; available at: http:// www.climate.org/PDF/MacCracken

AWMACriticalReview.pdf . S cientists estimate that tipping points for abrupt climate changes (e.g., severe sea level rise, large

- scale forest dieback) could be passed this century, or even this decade. Under a “business

- as - u sual” scenario, where atmospheric CO 2 

### concentrations are increasing 2 to 3 p arts per million (ppm) per year, the question is not whether abrupt climate change will occur, but rather how soon

. See Dr. James Hansen ’s statement , available at http://www.igsd.org/docs/TPACC%2011Nov08.pdf

. 14. 

### The scientific record developed after the above April 2009 waiver docket submission has only heightened the need for immediate greenhouse gas emission reductions to reduce apparently accelerating human and natural resource impacts in California. The Pacific Institute report, “The Impacts of Sea

Level Rise on the California Coast” (2009; available at http://www.pacinst.org/reports/sea_level_rise/report.pdf), conclude s that sea

level rise will inevitably change the character of the California coast. A wide range of critical infrastructure, such as roads, hospitals, schools, emergency facilities, wastewater treatment plants, power plants, and wetlands is also vulnerabl e. In addition, $100 billion (in year 2000 dollars) worth of property is at risk of coastal flooding. Wildfires in California are increasing in frequency and intensity due to higher temperatures from greenhouse gas emissions, which also exacerbates the h istoric climate, topography, and population factors conducive to air quality problems (Global warming

- induced forest fires to increase health risks in western U.S, 2009, available at http://news. mongabay.com/2009/0728

- Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 80

### 7

. fires.html ). Additional research on t he regional assessment for California identified several key impact areas that would pose the most important challenges to the state

. For example, Schoups et al

. (2010; available at http://www.engr.scu.edu/~emaurer/papers/Schoupsetal_ClimaticChange_paper.p df) examines potential regional

- scale impacts of climate change on sustainability of irrigated agric ulture, focusing on the western San Joaquin Valley in California. They concluded that “the greatest threat to agricultural sustainability in the study area appears to be the continued salinization of down

- slope areas, jeopardizing crop production and requ iring future land retirement

. ” Millstein and Harley (2009; available at http://www.atmos

- chem

- phys.net/9/3745/2009/acp

- 9

- 3745

- 2009.pdf) concluded that g l obally driven climate changes will le ad to ozone increases in urban cities in California; “ These effects contribute to a climate change penalty for air quality management: additional controls on anthropogenic emissions will be needed to offset undesired effects of climate chang e on ozone

. ” A study by Mahmud et al (2010; available http://www.atmos

- chem

- phys

discuss.net/10/2985/2010/acpd

- 10

- 2985

- 2010

- print.pdf) indicates that annual

a verage concentrations of particulate matter ( PM2

. 5 ) , which ARB staff estimates contribute to 9,200 (uncertainty range of 7,300 to 11,000) premature deaths per year in California (see http://www.arb.ca.gov/research/health/pm

- mort/pm

report_2010.pdf), were predicted to increase at certain locations within the San Joaquin Valley and the Sacramento Valley due to the effects of climate change. Kapnick and Hall (2010; available a t http://journals.ametsoc.org/doi/pdf/10.1175/2010JCLI2903.1 ) concluded that Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 81

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. “taken together, this study and previous studies paint a picture of a California Sierra Nevada snowpack responding rapidly to the changing climate of the past few decades. These trends are likely to continue and may be accelerating

. ” 

### The early melting of the snow packs in the Sierras is one of the major contributing factors to the severe water supply and quality problems in California

. 15. ARB staff’s review of available scientific research makes clear that while greenhouse gas emission reductions California can obtain through its independent authority are critical to reducing global warming impacts in Califor nia, additional reductions at the national and international level from both mobile and stationary sources are needed to significantly reduce the potential breadth and severity of impacts in California. 16. I am familiar with the May 2009 Rose Garden announcem ent of a National Program to regulate passenger vehicle greenhouse gas emissions for the 2012

- 2016 model years. In committing to accept National Program compliance, the Board was persuaded that because the federal government had caught up to California’s stringent numerical greenhouse gas emission limit in 2016 but would apply its standards leading to that limit nationally

– i.e., in substantially more states than California’s standards would apply under Clean Air Act Section 177

– the net effect was gre ater greenhouse gas emission reductions to mitigate the aforementioned ongoing and accelerating resource impacts in California. 17. I understand from the Declaration of Mr. Thomas A. Cackette that a stay in this matter raises various uncertaint ies regarding ma nufacturers’ ability to Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 82

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. exercise their option for National Program compliance to serve as compliance with California’s standards for the 2012 model year. It seems reasonable that a stay of the National Program would also potentially delay implementation of greenhouse gas emission reduction standards nationally, in turn delaying greenhouse gas emission reductions from vehicle s sold in most U.S. states

. 18. Should a delay in National Program implementation occur that would permit greater greenhouse gas emissions than the status quo, California can expect the human health and natural resource impacts identified in the above paragraphs to occur more quickly. California would also need to consider greater greenhouse gas emission reduction regulations on passenger vehicle and other greenhouse gas emission sources to attempt to counteract the effects of any delay in reductions from a stayed National Program. Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 83I declare under penalty of perjury that the foregoing is true and correct. Executed this 23'd day of October, 2010, at Sacramento, California.

Bart 

### E. Croes 

### Case: 10-1131 Document: 1274851 Filed: 11/01/2010 Page: 84