## The National Rural Electric Cooperative Association

Comments On

Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act; Proposed Rule

(74 Fed. Reg. 18886, April 24, 2009)

Submitted Electronically to: The Environmental Protection Agency Air Docket Attention: Docket ID No. EPA-HQ-OAR-2009-0171

June 23, 2009 Bill Wemhoff – Sr. Principal, Environmental Policy (703) 907-5824 / bill.wemhoff@nreca.coop

4301 Wilson Boulevard, EU 11-249 Arlington, VA, 22203-1860Docket ID No. EPA-HQ-OAR-2009-0171 National Rural Electric Cooperative Association Comments: June 23, 2009

Introduction

The National Rural Electric Cooperative Asso ciation (“NRECA”) offers the following comments on the Environmental Protection Agency’s (“EPA”) “ Proposed Endangerment and Cause or Contribute Findings for Greenhous e Gases Under Section 202(a) of the Clean Air Act; Proposed Rule,” released for public comment on April 24, 2009. 1

NRECA is the national trade association for more than 900 not-for-profit, member-owned rural electric cooperative power systems that s upply central station elect ricity to 42 million consumers in 47 states. All or portions of 2,500 of the nation’s 3,141 counties are served by rural electric cooperatives. The cooperative combined service areas cover 75 percent of

the U.S. landmass.

Cooperatives average fewer than seven customers per mile of electric distribution line, the lowest density in the industry. Low populati on densities, together with the issues of traversing vast expanses of remote and often rugged topography, present unique economic and engineering challenges for electric cooperatives. As well, many co-op consumers face economic challenges. The service territory average household income for 786 electric coops (93 percent) falls below the U.S. aver age household income of $71,212. The service territory average household income fo r all electric co-ops is $61,416.

Of the more than 900 rural el ectric cooperatives, 65 rura l electric generation and transmission cooperatives (“G&Ts”) gene rate and transmit power to 670 of the 865 distribution cooperatives. The G&Ts are ow ned by the distribution cooperatives they serve. The remaining distribution coopera tives receive power directly from other generation sources within the el ectric utility sector. A very significant portion of the power purchased directly by distribution cooperative s originates from co al-fired generation.

1 74 Fed. Reg. 18886 (April 24, 2009)

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Eighty percent of the electric power ge nerating plants owned by cooperatives, approximately 24,000 MWs, is coal-fired gene ration. NRECA believes that fossil-fuel fired electric generating facilities would be significantly affected by any decisions EPA may make regarding regulation of greenhous e gases (“GHGs”) emitted from mobile or stationary sources under the exis ting provisions of the Clean Ai r Act (“CAA”) or (“Act”). Being not-for-profit, cooperativ es will be forced to pass along all costs of meeting any new requirements to their consumer-owners. Increas ed costs of electric power, particularly in rural areas served by cooperatives, has ne gative impacts on economic development and jobs. Because cooperatives have a disproportionate amount of coal-based generation when compared to the electric utility industry as a whole, these negative impacts could be disproportionately higher for cooperatives and their consumer-owners.

NRECA believes that curtailing economic costs is perhaps the most significant issue to consider in addressing the na tion’s energy and climate change objectives. The nation is currently in an already sluggish economy facing a significant and worrisome economic

downturn of uncertain duration. Most sector s of the economy are facing rising costs and lower economic output. It is simply not appropriate to institute a regulatory program at this time that would impose even higher energy costs on American businesses and

consumers.

As consumer-owned electricity suppliers , cooperatives understand that reliable, affordable electricity has been one of the ke y drivers of economic gr owth and prosperity in this country. That fact must not be for gotten as the agency makes decisions on whether and how to regulate GHGs through this and future potential rulemakings.

Recently, several of the nation’s leading cons umer advocates wrote to then Presidentelect Obama to urge him to “give careful cons ideration to the impact of policies to reduce energy consumption and greenhouse gas emi ssion on consumer pocketbooks...” The coalition noted that electricity prices have already risen “ by about 40 percen t since 2002.” The coalition of consumer advocates urged that one of the key principles that must be

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followed in any effort to address climate ch ange is, “Rigorous adherence to least cost principles applied to all custom er classes within th e electricity industry and all sectors of the economy.” NRECA could not agree more and stands ready to work alongside consumer groups to help the Administration and Congress craft an energy plan that allows the energy sector to affordably meet rising demand while fulfilling its responsibility to addres s climate change.

NRECA is an active member of the Utility Air Regulatory Group (“UARG”) and fully supports the comments submitted by UARG in this rulemaking. 2 UARG’s comments include a more expansive discussion of many of the issues described below.

Also, NRECA filed comments in response to EPA’s July 30, 2008, Advanced Notice of Proposed Rulemaking Regarding Regulating Greenhouse Gas Emissions Under the

Clean Air Act , (73 Fed. Reg. 44354). 3 These comments are attached here and should be included as part of NRECA’s response to these proceedings.

NRECA appreciates the opportunity to comm ent on this important rulemaking and the significant issues it raises.

It Appears that Finalizing the Proposed Endangerment Finding May Be Little More Than a Formality

On May 19, less than one month after EP A published the Proposed Endangerment Finding, the President announced “a new nationa l policy” to reduce GHG emissions from

2 UARG is a voluntary, nonprofit group of electric generating companies and organizations and four national trade associations (NRECA, the Edison Electri c Institute, the American Public Power Association, and the National Mining Association). UARG’s purpose is to participate collectively on behalf of its members in EPA rulemakings, related litigation, and other Clean Air Act proceedings that affect the interests of electric generators. 3 See NRECA comments attached dated November 26, 2008

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all new cars and trucks sold in the U.S 4 . The President’s new national policy requires the promulgation by EPA of GHG emission standards under section 202 of the CAA in conjunction with the establishment of the Department of Transportation (“DOT”) of comparable national fuel economy standards for vehicles under the Energy Policy and

Conservation Act.

The President’s announcement – a major news event that commanded front-page

headlines and led television news programs throughout the co untry – establishes a new national policy that requires EPA to adopt section 202 GHG standards. Without a final affirmative endangerment finding, of course , EPA may not regulate under section 202. Thus, the outcome of the present proceeding appears, for all practical purposes, to be preordained and the merits of the endangerment issue to be prejudged.

It appears the only real questi ons left to EPA concern cert ain details regarding how, but not whether, to control GHG emissions under section 202 of the CAA. These circumstances, therefore, seriously undermine EPA’s credibility and it s ability to provide an objective considerat ion of comments in response to this proposed rulemaking.

EPA needs to explain how comments in respons e to this rulemaking wi ll be given serious consideration and not simply ignored as a resu lt of an apparent predetermined outcome in this proceeding.

EPA’s Stated Rationale for an Affirmat ive Endangerment Finding is Inadequate

and Fails to Address Critical Issues

The CAA and its endangerment provisions do not call for “regulation for regulation’s sake” but for regulation where it can be shown to achieve the objective of preventing

4 White House Press Release, “President Obama Ann ounces National Fuel Efficiency Policy” (May 19, 2009).

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damage. As stated in the 1977 legislative hi story quoted by EPA itself, the effect of the CAA’s endangerment criterion is to assure th at regulatory action can effectively prevent

harm before it occurs. 5

The agency has failed to show that the c ontemplated regulation resulting from an affirmative endangerment finding would preven t a substantial part of the danger from global climate change at which th e regulation ostensibly is aimed.

Given the importance of this issue, if EPA be lieves that a basis exists to conclude that regulation of GHG emissions from new U.S. motor vehicles would meaningfully mitigate the endangerment it proposes to find, th en EPA should publish for public comment a supplemental notice provid ing that basis.

In the Proposed Endangerment Finding, EPA pres ents information on the contribution to

total GHG emissions of “all of the section 202(a) source cate gories,” meaning passenger cars, light-duty trucks, motorcycles, buses, and medium/heavy-duty trucks. A meaningful

assessment of this issue would have to take into account the degree of contribution to the asserted endangerment that section 202 regulation actually would address. Only a small portion (“new” motor vehicles) of the mob ile source categories is to be included. Moreover, since publication of the Proposed Endangerment Finding, EPA has explained that only a subset of even the new-source category of section 202(a) sources would in fact be regulated under sec tion 202(a) as a result of a final endangerment finding. 6

Furthermore, emission standards obviously will not eliminate all GHG emissions from the subset of vehicles that are regulated under those standards. Also, individual consumers, businesses, and other vehicle purcha sers can be expected to hold on to their

5 74 Fed. Reg. 18891 6 In the May 22 Joint Rulemaking Notice, EPA states that it intends, based on its anticipated section 202(a)(1) endangerment finding, to propose GHG emission standards under section 202(a) for “passenger cars, light-duty trucks, and medium-duty passenger vehi cles (light-duty vehicles) built in model years 2012 through 2016.” 74 Fed. Reg. 24007

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existing vehicles to a greater ex tent than would otherwise be the case in order to avoid or defer paying the increased price tag for ne w vehicles that must be manufactured, at greater cost, to meet more demanding em ission and fuel economy standards.

In sum, the Proposed Endangerment Finding provides no basis for concluding that the purpose of the section 202(a)(1) endangerment criterion, preventing danger from global climate change, would be served by making an affirmative final endangerment finding.

EPA’s Technical Support Document (“TSD” ) does not Support a Final Finding of Endangerment by the Administrator

Exclusion of Adaptation Considerations

Both the TSD and the EPA Administrator ha ve concluded that c onsideration of the effects of adaptation is not appropriate in conducting an endangerment analysis. Thus, the agency has determined, as a matter of policy, to exclude a key focus area of the climate change research community.

It is simply unsupportable that adaptation is not relevant to determining whether endangerment exists or will exist. The fundame ntal question that an endangerment analysis must seek to answer is what type and extent of harm is likely to occur. This question cannot be answered if one does not examine what the actual impacts of climate change are likely to be, and that cannot be done while i gnoring the role that adaptation will play.

Further, adaptation assessment is central to the statutory requirements governing EPA’s endangerment inquiry, and not merely some peri pheral or likely minor consideration that the agency may reasonably overlook. On the contrary, the TSD quotes a significant conclusion of the U.S. Climate Change Scie nce Program (“CCSP”) indicating that “[t]he

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United States is certainly capable of adapti ng to the collective impact s of climate change.” 7 At the very least, it is inappropriate for such a significant policy determination to be made by the agency in its preparation of a foundati onal scientific assessment to be used in support of policy decisions. A scientific document should present all of the science relevant to whether public health and welfare will be endangered by GHG emissions.

Commingling GHG and Non-GHG Effects

The Proposed Endangerment Finding includes a numb er of statements that indicate that the Administrator has relied upon the effects of climate change in general to support her Proposed Endangerment Finding. For instance, th e Administrator states “the analysis was not restricted to only those climate and public health or welfare effects which may be attributable solely to greenhouse gas emissions from section 202(a) sources under the Act.” 8

Examination of the TSD reveals that EPA has, in fact, improperly commingled the effects on climate of the six GHGs for which it proposes to find endangerment with the effects of all other sources of climate change, anth ropogenic and biogenic. Accordingly, the analysis contained in the TSD is wholly unsuitable for the task of assessing endangerment for the suite of GHGs that is the subject of this action and the Administrator’s proposed judgments based on th e TSD are, thus, inherently inaccurate.

Addressing the impacts that may result from climate change in genera l is not the purpose of the TSD, and this information does not provide support for any potential endangerment finding. Rather, the purpose of the documen t is to assess whether anthropogenic GHG emissions themselves endanger public health and welfare. This lack of clarity as to the scope of climate effects that are the subject of this analysis is problematic. It is impossible to determine whether the effects described, and any potential endangerment, are the result of anthropogeni c emissions of GHGs or climat e-related effects that do not

7 TSD at 69 (quoting CCSP (2008b)) 8 74 Fed. Reg. 18894

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result from human activities or GHG emissions . Because it is impossible to determine based on the analysis contained in the Enda ngerment TSD what prec isely might be the ultimate source of any possible endangerment, the document cannot serve as a basis for an endangerment finding under the CAA. EPA, therefore, must revise this document to address only those effects that are relevant to an endangerment finding as defined by the

standards contained within the CAA.

The TSD and the Administrator Rely on Sources of Scientific Information That Do Not Adequately Address the Issu es Relevant Under the CAA

Review of the TSD and the Proposed Endangerm ent Finding indicate that the Agency has relied almost exclusively upon the Fourth A ssessment Report of the Intergovernmental Panel on Climate Change (“IPCC”) and the S ynthesis and Assessment Products prepared by the CCSP. 9

Reliance on the IPCC is problematic because the IPCC Fourth Assessment Report does not address U.S.-specific effects in isolati on as is ultimately necessary to support an endangerment finding. Instead, the IPCC Asse ssments are devoted primarily to global effects and global emissions. Further, EPA’s adoption of the IPCC’s regional analysis of North American impacts, including projections for changes in temperature, precipitation, and sea level rise, cannot substitute for a U.S.-specific analysis because the IPCC’s analysis and EPA’s discussion of that analysis failed to distinguish adequately between

U.S. and Canadian effects.

In addition to the scientific imprecision introduced to the endangerment analysis process by adoption of general North American IP CC analysis as a proxy for scientific information specific to the United States, it is also important to note that the IPCC Assessment Reports are not themselves prepar ed in accordance with the U.S. standards for scientific assessments. The IPCC is gove rned by its own set of principles that

9 See TSD at ES-1

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emphasize that approval of the contents of IPCC Assessment Reports is to be performed on the basis of consensus among IPCC member governments.

In addition to the statutory principles found in the CAA, EPA’s Endangerment TSD is also subject to the Information Quality Act and its guidelines establishing standards for the quality, objectivity, integrity, a nd utility of information disse minated by federal agencies. Adopting scientific conclu sions of a body not subject to these requirements and “generalizing” such conclusions to stand for propositions that were not intended by their originator raises substantial questions as to whether the requirements of the Information Quality Act are being met. Indeed, EPA high lights this issue itself when describing the process for approving IPCC Assessment Report a nd the Information Quality Act procedures utilized during the review and approval of U.S. CCSP Synthesis and Assessment Products. 10

EPA should, therefore, ensure that it independently concurs with the conclusions presented in the IPCC’s Assessment Reports and address the possible consequences of the IPCC’s procedures with respect to the conclusions reached by that body.

Further, the fact that the IPCC and CCSP re ports have been prepared under conditions and for reasons substantially dissimilar from the standpoint of assessing endangerment to U.S. public health and welfare in contempla tion of regulation pursuant to the CAA also

indicate that wholesale reliance on these reports is inappropriate.

The agency has conducted its own evaluation of specific scientific issues in the past, demonstrating that it is capable of doing so and underscoring the propriety of EPA conducting its own, independent assessment of the science. The current approach to scientific assessment renders the Proposed Endangerment Finding invalid, as it is based on information concerning climate change-related effects that are not relevant to U.S. interests and that have not been thoroughly evaluated by EPA.

10 See Endangerment TSD at 3

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If EPA Decides to Finalize the Propos ed Endangerment Finding, Regulation of Numerous, Previously Unregulated Sources Will Result

Finalization of the Proposed Endangerment Finding would affect more than the new

motor vehicles whose GHG emissions EPA woul d be required to re gulate under section 202(a) of the CAA. As the agency recogni zed in its 2008 Advanced Notice of Proposed Rulemaking (“ANPR”) 11 , “if EPA were to regulate greenhouse gas emissions from motor vehicles under the Clean Air Act, then regula tion of smaller stationa ry sources that also emit GHGs – such as apartment buildings, la rge homes, schools, and hospitals – could also be triggered” through the Act’s Prevention of Signi ficant Deterioration (“PSD”)

program. 12

The PSD program requires owners and operato rs of major stationa ry sources of air pollution to obtain construction permits before building or modifying those sources. Although PSD primarily applies to criteria ai r pollutants for which a national ambient air quality standard (“NAAQS”) has been establis hed, PSD can also apply to CAA-regulated pollutants for which there is no NAAQS.

A PSD permit is required for the constructi on or modification of any major stationary source that emits or has the potential to em it 250 tons per year of a regulated pollutant (100 tons per year for a source in listed categor ies, including large fo ssil fuel-fired steam electric plants). Because many sources em it CO2, EPA noted in the ANPR that “many types of new small fuel-combusting equipmen t could become newly subject to the PSD program if CO2 become s a regulated...pollutant.” 13

11 Advanced Notice of Proposed Rulemaking entitled “Regulating Greenhouse Gas Emissions under the Clean Air Act” (73 Fed. Reg. 44354, July 30, 2008) 12 73 Fed. Reg. 44355 13 73 Fed. Reg. 44498

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Additionally, for sources already considered majo r sources, such as fossil fuel-fired power plants, regulation of CO2 likely would create the risk that many more change-related activities would arguably be deem ed major modifications. EPA, therefore, should consider carefully the effects of regulating under the PSD program when it considers finalizing the Proposed Endangerment Finding. Also, because of the significantly increased burden on administrative agencies and regulated entitie s that would occur if GHGs became regulated pollutants for purposes of the PSD program, EP A should consider not only the nature but also the timing of any regulation of GHGs under the CAA.

Finally, it is not just the PSD program that could lead to the regulation of numerous,

small sources that are current ly unregulated. Regulating GHGs would also result in numerous sources needing to obtain a Title V operating permit. Once EPA regulates GHGs under the Act, many sources that emit grea ter than 100 tons pe r year of one of those GHGs, including CO2, would need to appl y for a Title V permit within one year of becoming subject to Title V requirements. The Title V permit for that source would include not only applicable requirements for the GHGs but also general requirements that apply to other pollutants regulated under the Act.

Moreover, to the extent EPA believes it can pr opose alternatives to ease this regulatory burden, it will have to provide in any notice of proposed rulemaking a complete and adequate explanation of the authority it believes it has to accomplish this and how its action would not conflict with positions previously taken by th e agency or the courts in this matter.

A Final Endangerment Finding for GHGs Under Section 202(a) Would Not Satisfy the Criteria Necessary To List GHGs as a Criteria Air Pollutant Under Section 108

of the Act

.

Should EPA decide to finalize the Endange rment Proposal, that finding would not be dispositive with regard to section 108 that governs the identification of criteria air pollutants. Section 108 contai ns language different from that in section 202. Unlike

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section 202(a), sections 108 and 109 of the CA A authorize listing of a pollutant as a criteria air pollutant, and regulation of th at pollutant through th e National Ambient Air Quality Standards (“NAAQS”), for the purpose of addressing any endangerment of the public health or welfare that may reasonably be anticipated due to the quantities of the pollutant in the ambient air - a relatively limited portion of the atmosphere to which the general public has access.

Thus, before the agency could list any GHGs as criteria air pollutant s under section 108 of the Act, it would have to examine what the eff ect is on U.S. public health or welfare due to the presence of GHGs in the ambient air in the United States. The Endangerment Proposal and TSD do not accomplish this task. Notably, the absence of information regarding the effects of GHGs on public health and welfare due to their presence in the U.S. ambient air could, in fact, lead the Administrator to conclu de that she has no “plans to issue air quality

criteria” for GHGs – which also is a prerequisite for listing under section 108.

Additionally, even if EPA decided to regulat e GHGs as criteria pollutants, the agency would need to develop “criteria documents” th at “accurately reflect the latest scientific knowledge useful in indicating the kind and ex tent of all identifia ble effects on public health or welfare which may be expected fr om the presence of such pollutant in the ambient air, in varying quan tities.” CAA section 108(a)(2). Reliance on the IPCC and CCSP reports for this purpose, without any i ndependent analyses by EPA of the latest relevant scientific knowledge, would not be appropriate and would not comply with the requirements of the CAA.

A Final Endangerment Finding for GHGs Under Section 202(a) Would Not Satisfy the Criteria Necessary To Regula te Under Section 115 of the Act.

Section 115 of the CAA allows the EPA Administra tor to require states to establish emission control requirements where the Administrator “has reason to believe that any air pollutant or

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pollutants emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a fore ign country.” If EPA finalizes the Endangerment Proposal, such a fi nding would not satisfy the requirements of section 115. Before regulating under section 115, EPA would need to examine issues such as whether the foreign nation in ques tion gives the United States reci procal rights (a prerequisite to any section 115 regulation) and whether revi sions to state implementation plans resulting from any EPA decision under section 115 could “prevent or eliminate the endangerment” (another section 115 requirement). EPA would al so have to show that it has “sufficient evidence correlating the endangerment to sources of pollution within a particular State,” a

criterion EPA and the courts have drawn from section 115.

Conclusion

NRECA appreciates the opportunity to comment on this important rulemaking that has enormous significance for cooperatives. Finalization of the Proposed Endangerment Finding for new mobile sources could substant ially affect stationary sources as well, including power plants owned by rural electric cooperatives

.

Unless legislation is passed by Congress in th e near-term and that legislation addresses

how GHG emission reductions are to be ach ieved, new requirements for reducing GHG emissions will almost assuredly be put in place under the existing provisions of the CAA.

As described in the attached comments NR ECA filed in response to EPA’s July 30, 2008, ANPR, the result would be a complicated, ti me-consuming and, likely, convoluted set of regulations that would largely pre- empt or overlay existing programs.

As stated above, being not-for-profit, cooperativ es will be forced to pass along all costs of meeting any new requirements for controlling GHG emissions to their consumer-owners. Increased costs of electric energy, particularly in the rural areas served by rural electric cooperatives, has negative impacts on economic development and jobs. With the nation

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currently in an alrea dy sluggish economy, NRECA believes that curtailing economic costs is a very important, if not the most significant, issue to be considered when addressing the nation’s energy and climate change objectives.

NRECA is concerned that EPA has predetermine d the outcome of this rulemaking and will finalize its Proposed Endangerment Findi ng without adequately addressing the many

critical issues described above. While NRECA believes addressing climate change is necessary, we also strongly believe that it must be done through a careful and comprehensive analysis of all the relevant factors involved and the agency must develop a firm basis on which to support its final determination.

EPA’s Proposed Endangerment Finding provides no basis for concluding that the purpose of the section 202(a )(1) endangerment criterion, preven ting danger from global climate change, would be served by making an affirmative final endangerment finding. Furthermore, the agency’s Technical Suppor t Document does not support an affirmative final endangerment finding. It fails to consider the effects of adaptation that will play a role in determining whether endangerment exists or will exist, commingles GHG and non-GHG effects in assessing endangerment, and relies on sources of scientific information that do not adequately addr ess the issues relevant under the CAA.

Also, finalizing the proposed endangerment finding would affect more than the motor

vehicles whose GHG emissions EPA would be required to regulate under the section 202(a) of the CAA. As EPA recognized in its 2008 ANPR, regulating GHGs from motor vehicles could also trigger th e regulation of numerous smaller stationary sources. If the agency believes it can ease this regulato ry burden, it must provide a complete and adequate explanation of the authority it be lieves it has to accomplish this objective.

Finally, an affirmative endangerment findi ng for GHGs under section 202(a) would not satisfy the criteria necessary to regulate under s ections 108 or 115 of the Act. Before a final

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endangerment finding could be reached under th ese sections, EPA would need to conduct independent analysis and meet other provisions of the Act as further described above.

NRECA would be happy to answer any quest ions EPA may have regarding these comments or provide any additional information the agency may desire.

U:\My Documents\ Global Warming\CAA A

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