Eugene M. Trisko Attorney at Law*

P.O. Box 596 Berkeley Springs, WV 25411 (304) 258-1977 (301) 639-5238 (Cell)

emtrisko@earthlink.net

*Admitted in DC Susan Weirman January 9, 2008

Executive Director

MARAMA

8600 LaSalle Road

Suite 636 Towson, MD 21286.

By E-Mail Transmission

Re: ACCCE Comments on “Public Hea lth Benefits of Reducing GroundLevel Ozone and Fine Pa rticulate Matter in the Northeastern U.S.”

Dear Susan:

I am writing on behalf of the Am erican Coalition for Clean Coal Electricity (“ACCCE”) regarding th e Draft Report by NESCAUM, “Public Health Benefits of Reducing Ground- level Ozone and Fine Particulate

Matter in the Northeastern U.S.” (November 14, 2007). ACCCE is the successor organization to CEED, e ffective January 1, 2008. The NESCAUM Draft Report was cited in support of various MANE-VU regional haze initiatives at the MANE-VU stakeholders meeting on November 15, 2007.

ACCCE is a national membership organization representing major U.S. railroads, coal producers, electr ic generators and numerous other

industrial firms. ACCCE members have direct and substantial interests in the production and transportation of coal, and in coal-based electric generation in the Northeast and thro ughout the United States. Through CEED, ACCCE has contributed se veral comments to the MANE-VU regional haze planning process, and ha s participated in both the OTC and MANE-VU stakeholder processes.2 Summary of Comments

ACCCE is pleased that all of the Class I areas within MANE-VU are expected to meet or to surpass thei r EPA-recommended “glide path” targets for achieving reasonable progress towa rd regional haze goals, based on emission reductions resulting from EPA’s Clean Air Interstate Rule (CAIR)

and other federal and st ate air quality programs. 1 We are not persuaded that any of the proposed controls on electr ic generating units discussed in the NESCAUM report - within MANE-VU or in other RPOs - are warranted in view of the extent of visibility im provement expected at MANE-VU Class I

areas under current law.

We are more concerned about th e policy implications of the NESCAUM draft report, assessing the pote ntial health benefits of control strategies to improve visibility at Cl ass I parks and wilderness areas, and to achieve air quality levels below thos e required by U.S. EPA’s current and proposed ambient sta ndards for ozone and PM 2.5 . The latter analyses may be appropriate for U.S. EPA to consider in the context of its regular reviews of the adequacy of the NAAQS. Our comments here focus particularly on

NESCAUM’s BART and “167 Stack” an alyses using the BenMAP model. We believe that NESCAUM’s analyses of potential BART and “167 Stack” emission controls on electric generating units are deficient, or are otherwise objectionable, in several key respects:

1) The Clean Air Act’s visibility protection program for Class I parks

and wilderness areas is not intended to provide public health benefits such as those resulting from implementation of the National Ambient Air Quality Standards. As impl emented through the 1999 Regional Haze Rule and related EPA regu lations, the visibility protection program provides welfare-related be nefits in the form of improved visibility, and protection against visibi lity deterioration, at protected

Class I areas.

2) NESCAUM’s analysis of the potentia l health benefits of alternative control strategies is not require d or even recommended by current U.S. EPA guidance on assessing reas onable progress toward regional haze goals.

1 See, C. Salmi and G. Kleiman, “The M ANE-VU Approach to Improving Visibility,” MANE-VU Stakeholder Briefing, N ovember 15, 2007 (available at http://www.manevu.org/meetings.asp#).3 3) NESCAUM’s estimates of potential health benefits from BART and “167 Stack” control strategies ove rlook potential offsetting ambient air quality effects when emission trading is allowed.

4) NESCAUM’s assumption that “CAIR -Plus” control strategies could be imposed with restrictions on em ission trading is inconsistent with relevant legal precedent, would unde rmine the cost-effectiveness of the CAIR program, and could lead to the premature retirements of many smaller generating units th at are not economic retrofit

candidates.

5) NESCAUM likely has underestimat ed the extent of emission reductions associated with implem entation of CAIR, and thus has overestimated the extent of air qua lity improvement resulting from its BART and “167 Stack” strategies.

Each of these issues is a ddressed in more detail below.

Misleading health benefits assessment

NESCAUM relies on the BenMAP desktop PC model to support claims that implementation of BART or “167 Stack” control strategies would generate significant public health benefits within and outside of the MANE-VU region.

NESCAUM’s calculations suggest th at the “167 Stack” strategy could generate $6.5 billion in annual health benefits within MANE-VU in 2018, primarily due to reduced premature mort ality. Benefits of $2.1 billion in the VISTAS region and $2.2 billion in the Midwest RPO st ates also are

estimated. 2

ACCCE does not agree with th e methodology or assumptions underlying the BenMAP analysis, fo r reasons discussed in comments previously submitted to the Midwes t RPO by Cambridge Environmental, 3

and attached here. We note that simila r analyses of “CAIR-Plus” strategies evaluated for MRPO by Stratus C onsulting in 2006 also presented alternative modeling resu lts based on unrestricted emission trading.

2 NESCAUM, Draft Report at 4-11,12.

3 Dr. Laura Green, Cambridge Environmen tal Inc., “Comments on ‘Benefit Study of MRPO Candidate Control Options for Elec tricity Generation,’ (November 17, 2006).4 Stratus’ findings for MRPO, summa rized in the IPM cases modeled below, indicate that the potential downwind impacts of emissions “leakage” from the MRPO region largely offset the benefits of controls imposed within the MRPO. When unrestricted emission trading is permitted, the emission reductions resulting from CAIR-Plus controls within the MRPO region generate tradable allowanc es that can be sold outside the region. The Stratus analysis illustrates the effects of such trading in states outside the MPRO region, based on IPM m odeling of annual PM 2.5 concentrations:

Modeled PM 2.5 Impacts from MRPO CAIR-Plus Strategies with Interstate Emissions Trading

Source: Stratus Consulting, Inc. (Report prepared for MRPO, 2006).5 Inconsistencies with U.S. EPA Guidance

NESCAUM’s assessment of the poten tial health benefits of the EGU strategies is not called for by cu rrent U.S. EPA guidance on measuring reasonable progress toward regional haze goals. 4 EPA’s recent guidance discusses the four statutory factors to be considered in determining appropriate source controls to achieve reasonable progress goals. In fact,

EPA makes no reference what soever to “public health ” as a consideration. The only reference to “health” is to the health of affected industries :

“The first factor to take into consideration is the “costs of compliance.” In this context we believe that the cost of compliance factor can be interpre ted to encompass the cost of compliance for individual sources or source categories, and more broadly the implication of compliance costs to the health and vitality of industries within a state.” 5

ACCCE agrees that public health considerations are relevant to state strategies for attaining health-pro tective primary National Ambient Air Quality Standards for polluta nts such as ozone and PM 2.5 . However, public

health is not a relevant consideration fo r strategies to achie ve welfare-related reasonable progress toward visibility im provement goals at Class I national parks and wilderness areas.

Constraints on emissions trading

The only means to confine the emissions reductions and associated air quality benefits due to the application of “CAIR-Plus” strategies is to limit emissions trading of surplus allowances outside affected states. NESCAUM apparently has assumed just such limitations in its analyses of these strategies. 6

4 U.S. EPA, “Guidance for Setting Reasonable Progress Goals Under the Regional Haze Program” (June 1, 2007).

5 Id., at 18.

6 See, e.g., NESCAUM Draft Report at Figure 4-5 (average change in 24-hour PM2.5 due to 167 Stack emission reduction.) There is no corresponding analysis of the offsetting air quality impacts of the sale of excess allo wances that may be created by the 167 Stack strategy, comparable to the IPM mo deling for MRPO discussed above.6 Requiring 90% emission reduction le vels on 110 units (of 246 total units covered by the “167 Stack” strate gy) projected by the IPM model to be uncontrolled or partially controlled in 2018 would require the retrofit of

scrubbers on numerous olde r and smaller units that are not economic to

retrofit. The cost-effectiveness of th e CAIR program depends on the ability

to concentrate retrofit controls on ne wer and larger units, using emission allowances to offset a portion of th e emissions of uneconomic units.

NESCAUM should provide a credib le assessment of the potential impact of its “167 Stack” proposal on the premature retirement of the older

and smaller units that are not retrofitte d with scrubbers in the IPM model, including impacts on natural gas utiliza tion and system reliability. Impeding emissions trading and mandating scrubbe r retrofits on units that are not economic to retrofit would severely unde rmine the cost-effectiveness of the CAIR program while leading to potentia lly unintended consequences such as sharp natural gas price increases.

ACCCE also questions the legality of constraints on emissions trading in light of the decision in Clean Air Markets Group v. Pataki , 194 F. Supp. 2d 147, 160 (N.D.N.Y. 2002), aff’d , 338 F.3d 82 (2d Cir. 2003). In Clean Air Markets Group ( CAMG ), plaintiffs objected to a New York statute seeking to limit the geographic sale of Title IV sulfur dioxide emissions allowances to certain upwind states. Plaintiffs argued that New York’s allowance trading restrictions were impermissible under the Clean Air Act and various provisions of the U.S. C onstitution, including the Supremacy

and Commerce clauses.

The Commerce Clause implications of potential restrictions on the trading of allowances for visibility protection need to be carefully considered by MANE-VU states. Where a state law or regulation is found to be discriminatory, courts will employ st rict scrutiny, and the defendant must “show that it advances a legitimate lo cal purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Notwithstanding the underlying legislative or regulatory pur pose, however laudable, a statute or regulation that discriminates against co mmerce is protectionist and violates the Constitution. If a plaintiff can demons trate that a regulation discriminates against interstate commerce, the burden of proof shifts to the defendant to

demonstrate that there are no other non- discriminatory means to advance a legitimate local interest.7 In CAMG , the 2d Circuit upheld the district court decision finding that New York’s statute was unconstitutional and was preempted by the Clean

Air Act. The 2d Circuit summarized the holdings of the lower court before affirming the decision in favor of plaintiffs:

Because SO2 emissions can travel hundr eds of miles in the wind, much of the acid deposition in the Adirondacks results not from SO2 emissions in New York, but, rather, from SO2 emissi ons in fourteen “upwind” states. These states include New Jersey, Pennsylvania, Maryland, Delaware, Virginia, North Carolina, Tennessee, West Virginia, Ohio, Michigan, Illinois, Kentucky, Indiana, and Wisconsin.

In 2000, the New York legislature so ught to address this problem by passing the Air Pollution Mitigation Law, N.Y. Pub. Serv. L. § 66-k (“section 66-k”). Pursuant to this statute, the New York State Public Service Commission (“PSC”) is requ ired to assess “an air pollution mitigation offset” upon any New York utility whose SO2 allowances are

sold or traded to one of the fourteen upwind states. N.Y. Pub. Serv. L. § 66-k(2). The amount assessed is equal to the amount of money received by the New York utility in exchange for the allowances. Id . Moreover, the assessment is made regardless of whethe r the allowances are sold directly to a utility in an upwind state or are subsequently transferred there. Id. Accordingly, in order to avoid the assessment, New York utilities must

attach a restrictive covenant to any allowances they sell that prohibits their subsequent transfer to any of the fourteen upwind states. See N.Y. Pub. Serv. L. § 66-k(3).

With respect to preemption, the Court fi rst determined that section 66-k is not expressly preempted by Title IV. Id . at 157. Next, it held that Title IV is not “sufficiently comprehensive” to preempt all state law in the field of air pollution control. Id . Nevertheless, the Distri ct Court concluded that section 66-k was preempted because it “actually conflicts with” Title IV by creating “an obstacle to the accomp lishment and execution of the full purposes and objectives of Congr ess” in passing the Act. Id . at 158 (quoting Hillsborough County, Florida v. Automated Med. Labs., Inc. , 471 U.S. 707, 713 (1985) (internal quotati on marks and citation omitted)). The

Court reasoned that “New York’s rest rictions on transf erring allowances to [utilities] in the Upwind States is contrary to the federal provision that

allowances be tradeable to any other person.” Id . It also noted that “Congress considered geographically re strict[ing] allowance transfers and rejected it,” and that “[t]he EPA, in setting regulations to implement Title IV, also considered geographically restricted allowance trading and rejected it over New York State’s objections.” Id . (citations omitted).

The District Court next considered CAMG’s alternative argument that

section 66-k violates the Commerce Cl ause of the Constitution. The Court8 concluded that section 66-k “is a constitutionally invalid protectionist measure” because “[its] explicit restriction on the transfer of SO2 allowances to [utilities] in Upwind Stat es erects . . . a barrier against the

movement of interstate trade.” Id . at 161; see also City of Philadelphia v. New Jersey , 437 U.S. 617, 624 (1978) (hol ding that “where simple economic protectionism is effected by state legislation, a virtually per se rule of invalidity has been erected”). The Court further held that, even if the statute were not merely protect ionist, it would still violate the

Commerce Clause because “it cannot be ‘fairly . . . viewed as a law directed to legitimate local conc erns, with effects upon interstate commerce that are only incidental.’” Hillsborough , 471 U.S. at 161 (quoting City of Philadelphia , 437 U.S. at 624); see also Pike v. Bruce Church, Inc. , 397 U.S. 137, 142 (1970) (“Wh ere the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only inci dental, it will be upheld unless the burden imposed on such commerce is cl early excessive in relation to the putative local benefits.”).

In light of its conclusion that sect ion 66-k violates the Supremacy Clause and the Commerce Clause of the Constitution, the District Court denied defendants’ motions for summary judgment, granted CAMG’s crossmotion for summary judgment, and en joined defendants from enforcing

section 66-k. ...

Although section 66-k does not techni cally limit the authority of New

York utilities to transfer their allowances, it clea rly interferes with their ability to effectuate such transfers. First, by requi ring utilities to forfeit one hundred percent of their proceeds from any allowance sale to a utility in an upwind state, section 66-k effec tively bans such sales. Moreover, the only way for New York utilities to ensu re that they will not be assessed pursuant to section 66-k is to att ach to every allo wance they sell a

restrictive covenant that prohibits the subsequent transfer of the allowance to an upwind state. Because such a restrictive covenant indisputably decreases the value of the allowances, section 66-k clearl y “restrict[s] or interfere[s] with allowa nce trading,” 40 C.F.R.§ 72.72(a). In sum, section 66-k impermissibly “interferes with the methods by which [Title IV] was designed to reach [the] goal” of decr easing SO2 emissions, and therefore it “stands as an obstacle” to the execution of Title IV’s objectives. International Paper , 479 U.S. at 494 (emphasis added).

Defendants argue that, even if sectio n 66-k “stands as an obstacle” to the execution of Title IV’s objectives, see Hillsborough County , 471 U.S. at 713, it does not “actually conflict” with federal law because it is expressly permitted by two other statutory provisions of the Clean Air Act. First,

defendants draw our attention to 42 U. S.C. § 7416, a savings clause that preserves state authority “to9 adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement resp ecting control or abatement of air pollution.” Defendants argue that secti on 66-k is a “requi rement respecting

control or abatemen t of air pollution,” id ., that is not preempted because it “simply goes further than the releva nt federal law.” Pataki Br. at 26. But, as properly noted by the Dist rict Court, section 66-k does not set requirements for air pollution control or abatement within New York, but, rather, is an attempt to “control emissions in another state.” CAMG , 194 F. Supp.2d at 159. Nothing in the language of 42 U.S.C. § 7416 permits such legislation.

Defendants also maintain that section 66-k is authorized by 42 U.S.C. §7651b(f), which provides in relevant part that the allowance trading system “shall [not] be construed as requiring a change of any kind in any State law regulating electric utility ra tes and charges or affecting any State law regarding such State regulation or as limiting State regulation . . .

under such a State law.” But section 66-k does not regulate “utility rates and charges” and it does not “aff ect[] any State law regarding” the regulation of “utility rates and charges.” Accordingly, 42 U.S.C. §7651b(f) does not save section 66-k from preemption.

In sum, section 66-k is preempted by Title IV of the Clean Air Act Amendments of 1990 because it impedes the execution of “the full purposes and objectives” of Title IV, see Hillsborough County , 471 U.S. at 713, and because it is not otherw ise authorized by federal law. Accordingly, section 66-k violates the Supremacy Clause of the United

States Constitution.”

The decision in CAMG is a controlling precedent against any proposed restrictions on trading of Title IV/CAIR SO2 allowances for purposes of achieving progress toward visibility protection goals. New York’s purposes in restricting allowa nce sales to certain states to help protect its ecosystems against welfar e-related acid deposition are quite similar to state objectives in lim iting allowance trading for visibility protection purposes.

Underestimated Emission Reductions

ACCCE believes that the emission projections that NESCAUM relied upon to derive estimates of the reducti ons potentially associated with its BART and “167 Stack” strategies are in accurate, and do not properly reflect10 the extent of reductions likely to o ccur under CAIR and other federal and state programs by 2018.

Specifically, as other comments will attest, the estimates of emission

reductions at 14 BART units do not fully account for all CAIR-related reductions likely to occur at covere d EGU facilities by 2018. Similarly, NESCAUM’s methodology for estima ting the incremental emissions

reductions from its “167 Stack” stra tegy underestimates the degree of controls likely to result from CAIR by 2018, because many of the scrubber installations to be accomplished in this timeframe have not yet been announced, or otherwise are not reflected in the outdated VISTAS IPM 2.1.9 inventory.

Regional Fuels Proposals

NESCAUM also has estimated the potential visibility and health

benefits associated with alternative low-sulfur fuels strategies for the

Northeast. These controls would redu ce sulfur in home heating fuels to levels of 500 ppm (S1) or 15 ppm (S2), resulting in estimated SO2 reductions of 110,000 to 140,000 tons for distillate oil units in the

Northeast. 7 Costs per ton reduced are es timated in a range of $500 to $5,000. Most of these emission reducti ons would occur at residential and

commercial oil furnaces.

Most of the PM 2.5 air quality benefits re sulting from these proposals appear to result from implementation of the 500 ppm standard, with little

incremental benefit from the mo re stringent 15 ppm alternative. 8 These

benefits are concentrated in the eas tern portion of MANE-VU, where most

of the emission reductions would occur.

ACCCE takes no position on the ne ed for these low-sulfur fuel strategies for visibility protection purpo ses, but notes that they would apply to largely unregulated sources of sulfur dioxide emissions and could produce substantial emissions reductions potentially relevant for other purposes, such as meeting PM 2.5 standards. We respectfully suggest that MANE-VU states

7 Salmi and Kleiman, supra n. 1 at 14.

8 Id., at 17-18.11 give careful consideration to the relativ e costs and benefits of the S1 and S2 strategies.

ACCCE appreciates the opportunity to submit these comments. Please post them on an appropriate se ction of the MANE-VU or MARAMA

website.

Sincerely,

/s/

Eugene M. Trisko

Attachment

Cc: Anna Garcia, OTC Gary Kleiman, NESCAUM Tad Aburn, MDE Joyce Epps, PADEP Chris Salmi, NJDEP Rob Sliwinski, NYSDEC Richard Valentinetti, VTDEC