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Docket Number: 

# A-90-3 7

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' « MMl V ^ UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGFNr v WASHINGTON

. D.C

. 2045 0 

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### 2 6 1990

TH E ADMINISTRATO R 

## T P. 2
p^.'.(.iv »

Th e Honorabl e Michae l BosJci n Chairma n Counci l o f Economi c Adviser s Executive Offic e o f th e Presiden t Washington, . D.C . 2050 0 Dea r Michael : 

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As yo u procee d vit hth e analysi s th e Presiden t ha s requeste d o f th e economi c cost s o f th e Clean Ai r Ac t conferenc e report , I wante d t o assis t thi s proces s b y communicatin

g t o yo u th e intentio n o f thi s Agenc y

wit hrespec t t o implementationo f th e Act . An y attemp t t o calculat e th e cos t o f variou s provision s o f th e Ac t involve s som

e interpretatio no f hov thos e provision s wil l b e implemente d i nth e developmen t o f rule s and guidelines . I though t a clea r statemen t o f ho v w e inten

d t o procee d woul d allow yo u t o giv e th e Presiden t th e mos t accurat e pictur e possibl e o f th e Act' s economi c implications .

tt A s a genera l matter , th e Agenc y intend s t o exercis e th e discretionary

authorit y

vhic hi t i s grante d unde r variou s section s i na manne r consisten t vit hth e principle s upo n vhic hth e President' s clea n Ai r proposa l va s based . Thi s mean s that , t o th e mayimr m exten t mad e possibl e by th e actua l statutory language , v e wil l mak e us e o f th e flexible , market-base d approache s tha t ar e th e hallmar k o f th e president' s successfu l initiative . Fo r example , w e wil l attemp t i nth e rulemaking proces s t o mak e maximu m us e o f suc hconcept s a s bankin g an d trading , a s w e hav e don e bot h i nth e developmen t o f th e aci d rai nproposa l an d i nth e propose d Federa l Implementatio nPlanfo r California . Moreover , a s v e di d during the debat e o nth e bil l itself , v e vil l embrac e wher e eve r possibl e a performanc e standar d approac h t o achievin g ou r environmenta l objectives , rathe r tha nth e comman d an d contro l approache s tha t hav e no t bee nsuccessfu l i nth e past . Whe n no t specificall y prohibite d b

y th e statute , w e wil l attemp t i nou r decisionmakin g t o achieve environmenta l objective s i n th e mos t cos t ef f ectiv e wa y t o ensur e tha t ou r nationa l aspiration s fo r economi c growt har e no t compromised .P. 3

Ther e ar e a nunbe r o f issue s o nwhic hth e Administratio na s a vhol e reache

d consensu s durin

g th e developmen t o f ou r proposa l an d th e legislativ

e debat e o

nthe bill . I nsom e cases , o f course , the Congres s ha s reached a somewha t differen t position , onthese , needles s t o say , w e wil l follo

w th e law , including meeting statutor

y deadlines . Other s remai nsubjec t t o interpretatio nin the rulemakin

g process . On these , i t woul d b e ou r intention t o adop t a s th e basi s fo r regulator y an d administrative action s the positionreached b y th e Administrationduring th e clea nai r debate . I n severa l instances , implementationo f th e Ac t wil l requir e determinationo f th e workability , feasibility , o r cos t o f variou s actions . We , o f course , wil l wor k closel y wit hth e relevan t economi c an

d lin e agencies , suc ha s CEA , Treasury , OMB , Transportation , an d Energy , i nth e desig nan d applicatio no f suc h determinations . Decision s relate d t o permittin g and enforcemen t ar e som e o f th e mos t importan t i nth e Act . We hav e worke d i nth e developmen t o f th e legislationfo r a permittin g an d enforcemen t regim e tha t reduce s unnecessar y administrativ

e burden s fo r permittees . I t i s ou r inten t t o implemen t the provision s whic hhav e bee nenacte d wit h th e sam

e goa l i nmind . W e worke d t o develop a comprehensive permitting sectiontha t reduce s redundan t paperwor k requirement s an d th e potentia l fo r "doubl e jeopardy• » i nth e Agency' s permi t revie w process; , w e recogniz e tha t micromanagemen t b y EPA o f permitting decision s i s unnecessar y an d likel y

t o b e extremel y costly . I believe tha t th e CleanAi r Ac t Amendmen t o f 199 0 i s a landmar k achievemen t for th e Presiden t vhic hca nb e implemente d i n a way tha t i s consisten t wit hhi s principle s o f balance , flexibility , an

d suppor t fo r marke t mechanisms . I hav e attache d t o thi s lette r a mor e detailed statemen t o f ou r inten t i n implementin

g th e Act . I hop e i t i s helpfu l t o yo u a s yo u prepar e you r fina l cos t estimat e fo r the President . I loo k forward t o vorkin g wit hyo u a s th e Administration continue s t o promot e bot heconomi c growt han d environmenta l protection . Sincerel y yours ,

Willi ' Attachmen tP. 4

T — — v

1

. Nettina/Ne w sourc e Revie w —Wher e ther e i s legislativ e discretion , EP Awil l allo w source s t o us e nettin g t o th e maximu m exten t possible , i n accordanc e wit h th e President' s origina l proposal

. 2

. WEPCO/Genera l Modificatio n Rule s —T o th e exten t permitte d b

y lav , EP A

vil J revis e th e Agency' s draf t interpretative rul e o n WEPC O vithi n4 month s t o confor m t r th e Administration' s recen t legislative proposal , a s indicate d i nAdministratio n response s t o recen t querie s fro m Senato r Ford . T o th e exten t permitte d b

y lav , EP A

vil l issue » n interpretativ e ruling t o appl y th e sam e basi c principle s t o pollutio n contro l project s undertake n t o mee t requirement s impose d pursuan t t o othe r title s o f th e bill ; 3

. Pilo t Recmlator v Budge t —T o th e exten t permitte d b y lav , th e EP A

vil l develop a ninnovativ e pilo t progra

m fo r a regulator

y budge t fo r CTG s (Contro l Technolog y Guidelines ) consisten t vit h CEA' s cos t analysis

. 4 . Permi t Progra mImplementatio n and Regulator yBudge t —EP A vil l implemen t th e permi t progra m i nth e followin

g ways : (a ) us e th e discretiono f th e bil l t o phase-i nth e permi t progra m startin g vit hmajo r sources ; (b ) establis ha polic y o f relianc e o nreview o f stat e permi t programs , rathe r tha nth e individua l permi t veto , a s th e primary

oversigh t tool ; an d (c ) ensur e tha t modification s t o instal l pollutio ncontrol s d o no t i nan d o f themselve s trigge r th e issuanc e o f a ne v permit , t o th e exten t allowed b y law . 5 . NOxContro l i n Wonafctainman t Area s —Befor e requiring NO X control s i nnonattainmen t areas , the EPA wil l provid e area s wit h a fai r opportunit y t o sho w tha t thes e control s wil l no t contribut e t o ozon e attainment , an d thu s shoul d ho t b e required . 6 . Realisti c Assumption s fo r EstHwatHn g Ris k —EP A wil l continu e t o ensur e tha t i t use s realisti c assumption s i n it s ris k models , including accurat e exposur e modeling an d maximu

m us e o f actua l data . Whe nallowed b y law , EPA

wil l bas e ris k assessmen t o nactua l dat a an

d reasonabl e assumption s t o th e maximu m exten t possible . 7 . TO P Down BAC T Polic v Revisio n —EP A wil l undertak e a rulemaking o

nit s BAC T polic

y onanexpedited basi s t o replac e curren t guidelines

. Th e rulemaking , t o b e propose d t o OM B withi n 12 0 days , wil l b e base d o n a cost-effectiv e approach , an d th e curren t guideline s wil l no t b e bindin g precedent

. 8

. Utilit yMAC T Decisio n —EP Awil l bas e it s utilit yMAC T decisio n fo r particulate s an d mercur yo n th e stud yundertake n pursuan t t o statutor yrequirements

.• l •'• •f P. 5

7<7-T^

....„.1?. ' J lf!? & Jl°. P llTT * Ai rTov1 TM Contr-n ; —EP A wil l en

_ u „ 

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### , increaaa d ai rtoxlc a

### control s wit h th e ex S regulator y requirement s o n auto s and fuels . existin g enfore^n£ n 

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J wil l develo o a n 

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### ffMtwntWftrllinfjfffll —BP A wil l mak

e maximu m dSiSi TM IJSIS* "^-categorie s fo r MAC T determinations . i n SSfiSiS^fSSr 3 

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### ** ' if e wll r

### conside rIssue s lik e technoloo v proces s differences , emission , potential , an d exposur e potSStiS. ' 

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## l» rSffiffiffi Sg f 

## ^nnti1nt;n arnrlf t—EP A vii i ac twithi n is o days , a a require d b y th e statute , t o certif y reformulate d fuels ! 

## allowed ' sxpedjte g p^rajtttnr rr> rTfrrtnrrlpf

f •:

—T O th e exten t refWieet o aU tA,. V±1 

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A wil l ac tpromptl y o n to?ZS3^'a_^^ EP A 

### wil l no tassum e us e ialSmntl v L^<$?^5 d 

### v P U to f e 

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### * * market s i n whic h it s us e i s currentl y subsidise d b y stat e programs . economi c aS^SST * T 

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Progra m ^0^^^^%^^ ' *e*or e issuin g guideline s o n *th eP. 6

12E£ " UNITE D STATE S ENVIRONMENTA L PROTECTIO N AGFNr v

't ~o.-f WASHINGTON

. D.C

. 1045 0 

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### 199 0 

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# /0<i/


# uW ly TH E ADMINISTRATO R



### Th e Honorabl e Michae l Boski nH^Nr " Chairma n\\\'-.. ^ ,- . Counci l o f Economi c Adviser s ' W M * J

### * ' Executiv e Offic e o f th e President , _T 

### Washington , D.C . 2050 0 { : : 

### "•'•-•'^^T" \ 

## 1 ; J;.7..^-7\'-, - "'' ' ' " Dea r Michael : "" ^ A s yo u procee d wit hth e analysi s th e Presiden t ha s requeste d o f th e economi c cost s o f th e Clea nAi r Ac t conferenc e report , I wante d t o assis t thi s proces s by communicatin g t o yo u th e intentio n o f thi s Agenc y

wit hrespec t t o implementatio no f th s Act . An y attemp t t o calculat e th e cos t o f variou s provision s o f th e Ac t involve s some interpretatio no f how thos e provision s vil l b e implemente d i nth e developmen t o f rule s and guidelines . I though t a clea r statemen t o f ho v v e intend t o procee d woul d allow yo u t o giv e th e Presiden t th e mos t accurat e pictur e possibl e o f th e Act' s economi c implications . A s a genera l matter , th e Agenc y intend s t o exercis e th e discretionar y

authorit y

whic hi t i s grante d unde r variou s section s i na manne r consisten t wit hth e principles - upo nwhic hth e President' s Clea nAi r proposa l wa s based . Thi s mean s that , t o th e Tnavimn nexten t mad e possibl e b y th e actua l statutor y language , w e wil l mak e us e o f th e flexible , market-base d approache s tha t ar e th e hallmar k o f th e President' s successfu l initiative . Fo r example , w e wil l attemp t i nth e rulemakin g proces s t o mak e maximu m us e o f suc hconcept s a s bankin g an d trading , a s w e hav e don e bot h i nth e developmen t o f th e aci d rai nproposa l and i nth e propose d Federa l Implementatio nPla nfo r California . Moreover , a s w e di d durin g th e debat e o nth e bil l itself , v e wil l embrac e wher e eve r possibl e a performanc e standar d approac h t o achievin g ou r environmenta l objectives , rathe r tha nth e command and contro l approache s tha t hav e no t bee nsuccessfu l i nth e past . Whe nno t specificall y prohibite d b

y th e statute , w e wil l attemp t i nou r decisionmakin g t o achiev e environmenta l objective s i nth e mos t cos t ef f ective wa y t o ensur e tha t ou r nationa l aspiration s fo r economi c growt har e no t compromised .

## - 

## r ~ ,7 -, •• } P. 7

Ther e ar e a numbe r o f issue s o nwhic hth

e Administrationa s a vhol e reached consensu s durin g the developmen t o f our proposa l an d the legislativ

e debat e onthe bill . I nsom e cases , o f course , the Congres s ha s reached a somewha t differen t position , on these , needles s t o say , we wil l follo w th e law , includin g meetin

g statutor

y deadlines . Other s remai nsubjec t t o interpretationi n the rulemakin

g process . O

nthese , i t woul d b e ou r intentio n t o adop t a s th e basi s fo r regulator y an d administrativ

e action s th

e positionreached b y th e Administrationdurin g th e cleanai r debate . I n severa l instances , implementatio no f th e Ac t wil l requir e determinationo f th e workability , feasibility , o r cos t o f variou s actions . We , o f course , vil l wor k closel y vit hth e relevan t economi c an

d lin e agencies , suc ha s CEA , Treasury , OMB , Transportation , an d Energy , i nth e desig nan d application o f suc h determinations . Decision s related t o permittin g an d enforcemen t ar e som e o f the mos t important : i nth e Act . We hav e worked i nth e developmen t o f the legislationfo r a permittin g an d enforcemen t regim e tha t reduce s unnecessary administrativ

e burden s fo r permittees . I t i s ou r inten t t o implemen t the provision s whic hhave bee nenacted wit h th e sam

e goa l i nmind . W e worked t o develo p a comprehensiv

e permitting sectiontha t reduce s redundan t paperwor k requirement s an d th e potentia l fo r "doubl e jeopardy " i nth e Agency' s permi t revie w process ; • w e recogniz e tha t micromanagemen t b y EP A o f permitting decision s i s unnecessar y an d likel y

t o b e extremel y costly . I believe tha t th e CleanAi r Ac t Amendmen t o f 199 0 i s a landmark achievemen t for th e Presiden t whichcanb e implemented i n a wa y tha t i s consisten t wit hhi s principle s o f balance , flexibility , an

d suppor t fo r marke t mechanisms . I hav e attached t o thi s lette r a aor e detailed statemen t o f ou r inten t i n implementin

g th e Act . I hop e i t i s helpfu l t o you a s you prepar e you r fina l cos t estimat e fo r the President . I loo k forward t o working wit hyo u a s th e Administration continue s t o promot e bot heconomi c growt han d environmenta l protection . Sincerel y yours ,

Willi ' Attachmen tP. 8 

# f

1 . Nettina/Np v sourc e Revie

w — Wher e ther e i s legislativ e discretion , EP

A wil l allo

w source s t o us e nettin g t o the maximu

m exten t possible , i naccordanc e wit hth e President' s origina l proposal . 2 . WEPCO/Genera l Modificatio n Rule ? —

J ? the exten t permitte d b

y law , EP

A vil j revis e the Agency' s araf t interpretativ e rul e onWEPC O withi n4 month s t o confor m t r th e Administration' s recen t legislative proposal , a s indicated i nAdministration response s t o recen t querie s fro m Senato r Ford . T o th e exten t permitte d b

y law , EPA

wil l issu

e «n interpretativ

e rulin g t o appl y th e sam e basi c principle s t o pollution , contro l projects , undertaken t o mee t requirement s impose d pursuan t t o othe r title s o f the bill . 3 . Pilo t Regulator y Budge t —

T o th e exten t permitted b y law , th e EPA

wil l develo

p aninnovativ

e pilo t progra

m for a regulator

y budge t fo r CTG s (Contro l Technolog y Guidelines ) consisten t wit hCEA' s cos t analysis . 4 . Permi t Progra

m implementatio

n an d Regulator

y Budge t —

EP A wil l implemen t th e permi t progra m i nth e followin

g ways : (a ) us e th e discretiono f th e bil l t o phase-i nth e permi t progra m startin

g wit hmajo r sources ; (b ) establis ha policy o f relianc e o

nrevie w o f stat e permi t programs , rathe r thanthe individua l permi t veto , a s th e primary

oversigh t tool ; an d (c ) ensur e tha t modification s t o instal l pollutio ncontrol s do no t i nan d o f themselve s trigge r th e issuanc e o f a ne w permit , t o the exten t allowe d b y law . 5. " NOxContro l i

nNonattainmen t Area s — Befor e requirin

g NO x control s i nnonattainmen t areas , th e EPA wil l provid e area s wit h a fai r opportunit y t o sho w tha t thes e control s wil l no t contribut e t o ozone attainment , an d thu s shoul d ho t b e required . 6 . Realisti c Assumption s for Estimatin g Ris k —

EPA ' wil l continu e t o ensur e tha t i t use s realisti c assumption s i nit s ris k models , including accurat e exposur e modelin g an d maximu

m us e o f actua l data . Whe nallowe d b y law , EP

A wil l bas e ris k assessmen t o nactua l dat a an

d reasonabl e assumption s t o th e maximu m exten t possible . 7 . TO P Dow

nBAC T Polic

v Revisio

n— EP A will , -undertak

e a rulemaking o

nit s BAC T polic

y o na nexpedited basi s t o replac e curren t guidelines . The rulemaking , t o be proposed t o OM B withi n 12 0 days , wil l b e based o na cost-effectiv

e approach , an

d the curren t guideline s vil l no t b e bindin

g precedent . 8

. Utilit yMAC T Decisio n — EP Awil l bas e it s Utilit yMAC T decisionfo r particulate s an d mercur

y o nth e stud y undertaken pursuan t t o statutor y requirements .

### .? * "Mobil e pourc e Ai r Toxic s mnt- T9 

### ] — EP A wi u ensur e 

### coordinatio no f increase dai r toxic s control s vit hth e existin a regulator y

requirement s o nauto s an d fuels . existing +-*~J.°'fniPfCPfflfn

t Discretio n—

EPA an d DO J wil l develo o an enforcemen t polic y

whic hprovide s incentive s fo r compan y interna l -\7£lS3? aU 

### 2 i t a Vhic hre8ul t i n

### « arl v 

### detectio nan

dcorraoSo i 2J5 t 2? ' S 0 

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### allowe db y lav , EP A

an d DOJ wi nalso " violations ! ° rlalna l 

### «n'°rceaen t Polic y tha t focuse s o nsignifican t
^»,J£wt.J tt 

### ** IWa 

### J yflf t 

### ** SMbgfltogorizatlo n— EP A wil l mak e maximu

m reaaonabl e us e o f sub-categorie s fo r MAC T determinations . i n 22S . *i?2" cat,9orlM 

### ' l t wU 1 

### conside r issue s lik e technology , proces s differencaa , emission s potential , and exposur e potential .


## « » v 

## . l 

## l l cgrtigylnqRgfflriTitTlntft qmrl * — EP A wi nac t withi nis o cays , a a require db y

th e statute , t o certif y reformulate dfuels .



## ., , " * sxpedlte dp e 

## rnit.t1nf f v f Refinerie s : — T O th e exten t £2?ES « • ? «i*I r 

### PL v11 1 

### attemp t t o expedit e permittin g fo r oSa^iS S ^JTf

*£.* ««bitiou s schedule s fo r reformulate dand oxygenate dfuel s i nth e statute .

na i int A 

### ~+*E£ JSLf o J2 f

f ic a ff 

### * v1 fiy



### —EP A wil l ensur e tha t th e 2 2 S^Sif i w 

### i t , 

### l l nth 

### * Agenc y ha s reviewe dal l majo r regulation s an dguideline s befor e submittin g the m to'OMB . „..," • QXVgenatflr

t Fue l Wn1v<»rf

f — EPA wil l ac t promptl y

o n S i * JLSJE! ! I nconsidering , availability , EPA wil l no t assume 2 ! i^r^n^S a n

### * e 

### ,$? c 

### * e 

### < * °« t o f existin g market s i nwhic hit s us e i s currentl y

subsidize db

y stat e programs . 

## *,.„TM? I AlXovgncf

l Tracin g Prwnin —EP

A wi n consul twit

h 52S?STM«i?f n.•- ' P artlCTlar l y OMB f CEA , OP D (Offic e o f

Progra m 

# SlSlSS^i^p^S^ ' bef 

# ° " iSSUi 

# ^ *.«•"»• • o n th e