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- 1 **CHAPTER 6**  **STATUTORY AND EXECUT IVE**  **O RDER**  **A NALYSES**  **6 .1**  **Synopsis** This chapter presents discussion and analyses relating to Executive Orders and statutory requirements relevant to the proposed EGU GHG NSPS. 1 We discuss analyses conducted to meet the requirements of Executive Orders 12866 and 13563, as well as, potential impacts to affected small entities required by the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). We also d i s cuss the requirements of the Unfunded Mandates Reform Act of 1995 (UMRA) and assess the impact of the proposed rule on state, local and t ribal governments and the private sector, along with the analysis conducted to comply with the P aperwork Reduction Act (PRA). In addition, we address the requirements of Executive Order (EO) 13045: Protection of Children from Environmental Health and Safety Risks; EO 13132: Federalism; EO 13175: Consultation and Coordination with Indian Tribal Gove rnments; EO 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low
- Income Populations; EO 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use ; and the National Technology Transfer and Advancement A ct (NTTAA)
. **6 .2**  **Executive Order 12866, Regulatory Planning and Review, and Executive Order 13563, Improving Regulation and Regulatory Review**  Under EO 12866 (58 FR 51,735, October 4, 1993), this action is a “significant regulatory action” because it “raises novel legal or policy issues arising out of legal mandates
. ” Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this action. In addition, EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis is contained in this RIA. Based on the analysis presented in Chapter 5, EPA believes this rule will have negligible compliance costs associated with it, over a range of likely sensitivity conditions, because even in the absence of the proposal, electric power companies will choose to build new EGUs that comply with the regulatory requirements of this proposal because of existing and expected market conditions. Because our modeling shows

1 Electricity Generating Unit Greenhouse Gas New Source Performance Standard
- The NSPS would be established under section 111(b) of the Clean Air Act (CAA).***E.O. 12866 Review
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- 2 that new fossil
-fuel fired capacity constructed through 2020 will most likely be natural gas combined cycle capacity along with a small amount of coal with CCS supported by federal funding, the proposed standard of performance
–– which is based on the emission rate of a new NGCC unit –– would not add costs. The EPA d oes not project any new coal
-fired EGUs without CCS to be built. **6.3 Paperwork Reduction Act**  The information collection requirements have been submitted for approval to the Office of Management and Budget under the Paperwork Reduction Act , 44 U.S.C. 3501 et seq . The Information Collection Request (ICR) document prepared by the EPA has been assigned EPA ICR number 2465.01
.

This proposed action would impose minimal new information collection burden on affected sources beyond what those sources would already be subject to under the authorities of CAA parts 75 and 98 authorities . OMB has previously approved the information collection requirements contained in the exis ting part 75 and 98 regulations (40 CFR part 75 and 40 CFR part 98) under the provisions of the PRA, 44 U.S.C. 3501 et seq . and has assigned OMB control numbers 2060
- 0626 and 2060
- 0629, respectively. Apart from certain reporting costs based on requirements in the NSPS General Provisions (40 CFR part 60, subpart A), which are mandatory for all owners/operators subject to CAA section 111 national emission standards, there are no new information collection costs, as the information required by this proposed ru le is already collected and reported by other regulatory programs. The recordkeeping and reporting requirements are specifically authorized by CAA section 114 (42 U.S.C. 7414). All information submitted to the EPA pursuant to the recordkeeping and reportin g requirements for which a claim of confidentiality is made is safeguarded according to Agency policies set forth in 40 CFR part 2, subpart B. T he EPA believes that electric power companies will choose to build new EGUs that comply with the regulatory requirements of this proposal because of existing and expected market conditions. The EPA does not project any new coal
-fired EGUs without CCS tha t commence construction after this proposal to commence operation over the 3
-year period covered by this ICR. We estimate that 17 new affected NGCC units would commence operation during that time period. As a result of this proposal, those units would be required to prepare a summary report, which includes reporting of excess emissions and downtime every 6 months
. When a malfunction occurs, sources must report them according to the applicable reporting requirements of 40 CFR part 60, subpart TTTT. An affirmative defense to civil***E.O. 12866 Review
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- 3 penalties for exceedances of em ission limits that are caused by malfunctions is available to a source if it can demonstrate that certain criteria and requirements are satisfied. The criteria ensure that the affirmative defense is available only where the event that causes an exceedance of the emission limit meets the narrow definition of malfunction (sudden, infrequent, not reasonable preventable, and not caused by poor maintenance and or careless operation) and where the source took necessary actions to minimize emissions. In addition, the source must meet certain notification and reporting requirements. For example, the source must prepare a written root cause analysis and submit a written report to the Administrator documenting that it has met the conditions and requirements for assert ion of the affirmative defense. To provide the public with an estimate of the relative magnitude of the burden associated with an assertion of the affirmative defense position adopted by a source, the EPA has estimated what the notification, recordkeeping, and reporting requirements associated with the assertion of the affirmative defense might entail. The EPA’s estimate for the required notification, reports, and records, including the root cause analysis, associated with a single incident totals approxim ately totals $3,141, and is based on the time and effort required of a source to review relevant data, interview plant employees, and document the events surrounding a malfunction that has caused an exceedance of an emission limit. The estimate also includ es time to produce and retain the record and reports for submission to the EPA. The EPA provides this illustrative estimate of this burden, because these costs are only incurred if there has been a violation, and a source chooses to take advantage of the a ffirmative defense. The EPA provides this illustrative estimate of this burden because these costs are only incurred if there has been a violation and a source chooses to take advantage of the affirmative defense. Given the variety of circumstances under w hich malfunctions could occur, as well as differences among sources' operation and maintenance practices, we cannot reliably predict the severity and frequency of malfunction
- related excess emissions events for a particular source. It is important to note that the EPA has no basis currently for estimating the number of malfunctions that would qualify for an affirmative defense. Current historical records would be an inappropriate basis, as source owners or operators previously operated their facilities in r ecognition that they were exempt from the requirement to comply with emissions standards during malfunctions. Of the number of excess emissions events reported by source operators, only a small number would be expected to result from a malfunction (based o n the definition above), and only a subset of excess emissions caused by malfunctions would result in the source choosing to assert the affirmative defense. Thus, we believe the number of instances in***E.O. 12866 Review
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- 4 which source operators might be expected to avail thems elves of the affirmative defense will be extremely small. In face, w e estimate that there will be no such occurrences for any new sources subject to 40 CFR part 60, subpart TTTT over the 3
-year period covered by this ICR. We expect to gather information o n such events in the future, and will revise this estimate as better information becomes available. The annual information collection burden for this collection consists only of reporting burden as explained above. The reporting burden for this collection (averaged over the first 3 years after the effective date of the standards) is estimated to be $15,570 and 396 labor hours. This estimate includes semi
- annual summary reports which include reporting of excess emissions and downtime. All burden estimates ar e in 2010 dollars. Average burden hours per response are estimated to be 16.5 hours. The total number of respondents over the 3
-year ICR period is estimated to be 36. Burden is defined at 5 CFR 1320.3(b). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. To comment on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden the EPA has established a public docket for this proposed rule, which includes this ICR, under Docket ID number EPA
- HQ
- OAR
- 2011
- 0660. The final rule will respond to any OMB or public comments on the information collection requirements contained in this proposal. **6.4. Regulatory Flexibility Act as Amended by the Small**  **Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. et seq.**  The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure A ct or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business that is defined by the S mall B usiness Administration ’s regulations at 13 CFR 121.201 (for the electric power generation industry, the small business size standard is***E.O. 12866 Review
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- 5 an ultimate parent entity defined as having a total electric output of 4 million MWh or less in the previous fiscal year. The NAICS codes for the affected industry are in Table 6
- 1 below); (2) A small governmental jurisdiction that is a government of a city, county, town, school district , or special district with a population of less than 50,000; and (3) A small organization that is any not

-for
- profit enterprise which is independently owned and operated and is not dominant in i ts field. **Table 6 -**  **1 .**  **Potentially Regulated Categories and Entities a**  **Category NAICS Code**  **Examples of Potentially Regulated Entities** Industry 221112 Fossil fuel electric power generating units. Federal Government 221112 b Fossil fuel electric power generating units owned by the federal government. State/Local Government 221112 b Fossil fuel electric power generating units owned by municipalities. Tribal Government 921150 Fossil fuel electric power generating units in Indian Country.

a Include NAICS categories for source categories that own and operate electric power generating units (includes boilers and stationary combined cycle combustion turbines). b Federal, state, or local government
- owned and operated establishments are classified according to the activity in which they are engaged. After considering the economic impacts of this proposed rule on small entities, the Administrator of EPA certif ies th at this action will not have a significant economic impact on a substantial number of small entities. We do not include an analysis of the illustrative impacts on small entities that may result from implementation of this proposed rule by states because w e anticipate negligible compliance costs over a range of likely sensitivities as a result of this proposal. Thus the cost
to - sales ratios for any affected small entity would be zero costs as compared to annual sales revenue for the entity. The EPA believ es that electric power companies will choose to build new EGUs that comply with the regulatory requirements of this proposal because of existing and expected market conditions. (See the RIA for further discussion of sensitivities.) Because our modeling sho ws that new fossil
-fuel fired capacity constructed through 2020 will most likely be natural gas combined cycle capacity along with a small amount of coal with CCS supported by federal fund ing, the propos ed standard of performance
–– which is based on the emission rate of a new NGCC unit
–– would not add costs. The EPA does not project any new coal
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- 6 EGUs without CCS to be built. Accordingly, there are no anticipated economic impacts as a result of this proposal. Nevertheless, the EPA is aware that there is substantial interest in this rule among small entities (municipal and rural electric cooperatives)
. In light of this interest, the EPA determined to seek early input from representative s of small entities while formulating the provisions of this proposed regulation. Such outreach is also consistent with the President’s January 18, 2011 Memorandum on Regulatory Flexibility, Small Business, and Job Creation, which emphasizes the important role small businesses play in the American economy. This process has enabled the EPA to hear directly from these representatives, at a very preliminary stage, about how it should approach the complex question of how to apply Section 111 of the CAA to the r egulation of GHGs from these source categories. The EPA’s outreach regarded planned actions for new and existing sources, but only new sources would be affected by this proposed action. The EPA conducted an initial outreach meeting with small entity representatives on April 6, 2011. The purpose of the meeting was to provide an overview of recent EPA proposals impacting the power sector. Specifically, overviews of the Cross
- State Air Pollu tion Rule , the Mercury and Air Toxics Standards, and the Clean Water Act 316(b) Rule proposals were presented. The EPA conducted outreach with representatives from 20 various small entities that potentially would be affected by this rule. The representativ es included small entity municipalities, cooperatives, and private investors. The EPA distributed outreach materials to the small entity representatives; these materials included background, an o verview of affected sources and GHG emissions from the power sector, an overview of CAA section 111, an assessment of CO 2 emissions control technologies, potential impacts on small entities, and a summary of the five listening sessions that EPA held in February and March 2011 with various stakeholder groups to get feedback from key stakeholders and the public before the agency initiate d the rulemaking process for new greenhouse gas emissions standards
. 2 EPA met with eight of the small entity representatives, as well as three participants from organizations representi ng power producers, on June 17, 2011, to discuss the outreach materials, potential requirements of the rule, and regulatory areas where the EPA has discretion and could potentially provide flexibility.

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- 7 A second outreach meeting was conducted on July 13, 20 11. We met with nine of the small entity representatives, as well as three participants from organizations representing power producers. During the second outreach meeting, various small entity representatives and participants from organizations representi ng power producers presented information regarding issues of concern with respect to development of standards for GHG emissions for both new and existing sources . Specifically, topics discussed included: boilers with limited opportunities for efficiency im provements due to NSR complications for conventional pollutants; variances per kilowatt
- hour and in heat rates over monthly and annual operations; significance of plant age; legal issues; importance of future determination of carbon neutrality of biomass; and differences between municipal government electric utilities and other utilities. Small entities expressed concern regarding units making modifications being regulated as new sources. As explained above, we are not proposing a standard of performance fo r modifications. As a result, sources that undertake modifications would be treated as existing sources and thus would not be subject to the requirements proposed in this notice. As also explained above, the EPA is not proposing standards of performance fo r existing proposed EGUs, which are referred to as transitional sources, that have acquired a complete preconstruction permit by the time of this proposal and that commence construction within 12 months of this proposal. As a result, any transitional sourc es owned by small entities would not be subject to the standards of performance proposed in today’s rule. We invite comments on all aspects of the proposal and its impacts, including potential adverse impacts, on small entities. **6.5 Unfunded Mandates Refo**  **rm Act of 1995** This proposed rule does not contain a Federal mandate that may result in expenditures of $100 milion of more for State, local, or tribal governments , in the aggregate, or the private sector in any one year
. The EPA believes this proposed rule will have negligible compliance costs associated with it over a range of likely sensitivity conditions because electric power companies will choose to build new EGUs that comply with the regulatory requirements of this p roposal because of existing and expected market conditions. (See the RIA for further discussion of sensitivities.) As previously explained, because our modeling shows that new fossil
- fuel fired capacity constructed through 2020 will most likely be natural gas combined cycle capacity along with a small amount of coal with CCS supported by federal funding , the proposed standard of performance
–– which is based on the emission rate of a new NGCC unit

–– woul d not add costs. The EPA does not project any new coal
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- 8 built. Thus, this proposed rule is not subject to the requirements of sections 202 or 205 of UMRA. This proposed rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. In light of interest in this rule among governmental entities , the EPA initiated consultations with governmental entities. The EPA invited the following 10 national organizations representing state and local elected officials to a meeting held on April 12, 2011, in Washington DC: 1) National Governors Association; 2) National Conference of State Legislatures, 3) Council of St ate Governments, 4) National League of Cities, 5) U.S. Conference of Mayors, 6) National Association of Counties, 7) International City/County Management Association, 8) National Association of Towns and Townships, 9) County Executives of America, and 10) Environmental Council of States. These 10 organizations representing elected state and local officials have been identified by the EPA as the “Big 10” organizations appropriate to contact for purpose of consultation with elected officials. The purposes of the consultation s were to provide general background on the proposal, answer questions, and solicit input from state/local governments. The EPA’s consultation regarded planned actions for new and existing sources, but only new sources would be affected by this proposed action. During the meeting, officials asked clarifying questions regarding CAA section 111 requirements and efficiency improvements that would reduce CO 2 emissions. In addition, they expressed concern with regard to the potential burden assoc iated with impacts on state and local entities that own/operate affected utility boilers, as well as on state and local entities with regard to implementing the rule. Subsequent to the April 12, 2011 meeting, the EPA received a letter from the National Con ference of State Legislatures. In that letter, the National Conference of State Legislatures urged the EPA to ensure that the choice of regulatory options maximizes benefit and minimizes implementation and compliance costs on state and local governments; t o pay particular attention to options that would provide states with as much flexibility as possible; and to take into consideration the constraints of the state legislative calendars and ensure that sufficient time is allowed for state actions necessary t o come into compliance. **6.6 Executive Order 13132, Federalism**  This proposed action does not have federalism implications. It would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of***E.O. 12866 Review
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- 9 government, as specified in EO 13132
. This proposed action would not impose substantial direct compliance costs on state or local governments nor would it preempt state law
. Thus, Executive Order 13132 does not apply to this action
. The EPA consulted with state and local officials in the process of developing the proposed rule to permit them to have meaningful and timely input into its development. The EPA’s consultation regarded planned actions for new and existing sources, but only new sources would be affected by this proposed action. The EPA met with 10 n ational organizations representing state and local elected officials to provide general background on the proposal, answer questions, and solicit input from state/local governments. The UMRA discussion in this chapter includes a description of the consulta tion. In the spirit of EO 13132, and consistent with EPA policy to promote communications between the EPA and state and local governments, the EPA specifically solicits comment on this proposed action from state and local officials. **6.7 Executive Order 13**  **175, Consultation and Coordination with Indian Tribal Governments**  Subject to the EO 13175 (65 FR 67249, November 9, 2000) EPA may not issue a regulation that has tribal implications, that imposes substantial direct compliance costs, and that is not require d by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by tribal governments, or EPA consults with tribal officials early in the process of developing the proposed regulation and develops a trib al summary impact statement. EPA has concluded that this proposed action would not have tribal implications. It would neither impose substantial direct compliance costs on tribal governments, nor preempt t ribal law. This proposed rule would impose requirements on owners and operators of EGUs. The EPA is aware of three coal
-fired EGUs located in Indian c ountry but is not aware of any EGUs owned or operated by tribal entities. The EPA notes that this proposal does not affect existing sources such as the three coal
-fired EGUs located in Indian c ountry, but addresses CO 2 emissions for new EGU sources only. Because the EPA is aware of t ribal interest in this proposed rule , the EPA offered consultation with tribal officials early in the process of developing this proposed regulation to permit them to have meaningful and timely input into its development. The EPA’s consultation regarded planned actions for new and existing sources, but only new sources would be affected by th is proposed action.***E.O. 12866 Review
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- 10 Consultation letters were sent to 584 tribal leaders. The letters provided information regarding EPA’s development of NSPS and emission guidelines for EGUs and offered consultation. A consultation/outreach meeting was held on May 23, 20 11, with the Forest County Potawatomi Community, the Fond du Lac Band of Lake Superior Chippewa Reservation, and the Leech Lake Band of Ojibwe. Other tribes participated in the call for information gathering purposes. In this meeting, the EPA provided background information on the GHG emission standards to be developed and a summary of issues being explored by the Agency. Tribes suggested that the EPA consider expanding coverage of the GHG standards to include combustion turbines, lowering the 250 MMBtu per hour heat input threshold so as to capture more EGUs, and including credit for use of renewables. The tribes were also interested in the scope of the emissions averaging being considered by the Agency (e.g., over what time period, across what units) for a n possible existing source standard . In addition, the EPA held a series of listening sessions on this proposed action. T ribes participate d in a session on February 17, 2011 with the state agencies, as well as in a separate session with tribes on April 20, 2011. The EPA will also hold additional meetings with tribal environmental staff to inform them of the content of this proposal as well as provide additional consultation with tribal elected officials where it is appropriate. We specifically solicit additi onal comment on this proposed rule from tribal officials. **6.8 Executive Order 13045, Protection of Children from Environmental Health Risks and**  **Safety Risks** The EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying to those regulatory actions that concern health or safety risks, such that the analysis required under section 5
- 501 of the Order has potential to influence the regulation . This proposed action is not subject to EO 13045 because it is based solely on technology performance. The propo sal is not expected to produce changes in emissions of greenhouse gases or other pollutants but does encourage the current trend towards cleaner generation, helping to protect air quality and children's health. The Agency recognizes that children are amon g the groups most vulnerable to climate change impacts and the public is invited to submit comments or identify peer reviewed studies relevant to this proposal. **6.9 Executive Order 13211, Actions Concerning Regulations That Significantly Affect**  **Energy Sup ply, Distribution, or Use**  This proposed action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355 , May 22, 2001), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy
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- 11 negligible impacts on emissions, costs or energy supply decisions for the affected electric utility industry. **6.1 0**  **National Technology Transfer and Advancement Act** Section 12(d) of the NTTAA of 1995 (Public Law No. 104

- 113; 15 U.S.C. 272 note) directs the EPA to use Voluntary Census Standards (VCS) in their regulatory and procurement activities unless to do so would be inconsistent with applicable law or otherwise im practical. VCS are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices) developed or adopted by one or more voluntary consensus bodies. The NTTAA directs the EPA to provide Congress, through annual rep orts to the OMB, with explanations when an agency does not use available and applicable VCS. This proposed rulemaking involves technical standards. The EPA cites the following standards in this proposed rule: D5287
- 08 (Standard Practice for Automatic Sampl ing of Gaseous Fuels), D4057

- 06 (Standard Practice for Manual Sampling of Petroleum and Petroleum Products), and D4177

- 95(2010) (Standard Practice for Automatic Sampling of Petroleum and Petroleum Products). The EPA is proposing use of Appendices B, D, F, and G to 40 CFR part 75; these Appendices contain standards that have already been reviewed under the NTTAA. The EPA welcomes comments on this aspect of the proposed rulemaking and, specifically, invites the public to identify potentially
- applicable VCS an d to explain why such standards should be used in this action. **6.1 1**  **Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low** **- Income Populations**  Executive Order 12898 (59 FR 7629, February 16, 1994) establishe s Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, d isproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low
- income populations in the U.S. EPA has determined that this proposed rule would not result in disproportion ately high and adverse human health or environmental effects on any minority, low
- income , or indigenous populations
.