7
- 1 **CHAPTER 7 STATUTORY AND EXECUT**  **IVE ORDER ANALYSES 7.**  **1 Introduction**  This chapter presents discussion and analyses relating to Executive Orders and statutory requirements relevant for the final Mercury and Air Toxics Standards (MATS)
. We discuss the analysis conducted to comply with Executive Order (EO) 12866 and the Paperwork Reduction Act (PRA) 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 describe the analysis conducted to meet the requirements of the Unfunded Mandates Reform Act of 1995 (UMRA) assessing the impact of the final rule on state, local and Tribal governments and the private sector
. In add ition, we address the requirements of EO 13132: Federalism; EO 13175: Consultation and Coordination with Indian Tribal Governments; EO 13045: Protection of Children from Environmental Health and Safety Risks; EO 13211: Actions that Significantly Affect Ene rgy Supply, Distribution, or Use; the National Technology Transfer and Advancement Act; EO 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low

- Income Populations ; and the Congressional Review Act
. **7.2 Executive Order 128** **66: Regulatory P lanning and Review**  Under Executive Order (EO) 12866 (58 FR 51,735, October 4, 1993), this action is an “economically significant regulatory action” because it is likely to have an annual effect on the economy of $100 million or more or adve rsely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. Accordingly, the EPA submitted this action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes in response to OMB recommendations have been documented in the docket for this action. In addition, EPA prepared this Regulatory Impact Analysis (RIA) of the potential costs and bene fits associated with this action. **7. 3**  **Paperwork Reduction Act** The information collection requirements in this rule have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The information collection requirements are not enforceable until OMB approves them.7
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The information requirements are based on notification, recordkeeping, and reporting requirements in the NESHAP General Provisions (40 CFR part 63, subpart A), which are mand atory for all operators subject to national emission standards. These 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 reporting requirements for which a claim of confidentiality is made is safeguarded according to Agency policies set forth in 40 CFR Part 2, subpart B. This final rule requires maintenance inspections of the control devices but would not require any notifications or reports beyond those required by the General Provisions. The recordkeeping requirements require only the specific information needed to determine compliance. The annual monitoring, reporting, and record

- keeping burden for this collection (averaged over the first 3 years after the effective date of the standards) is estimated to be $15 8 million. This includes 698,907 labor hours per year at a total labor cost of $49 million per year, and total non

- labor capital costs of $108 million per year. This estimat e includes initial and annual performance tests, semiannual excess emission reports, developing a monitoring plan, notifications, and record

- keeping. Initial capital expenses to purchase monitoring equipment for affected units are estimated at a cost of $2 31 million. This includes 504,629 labor hours at a total labor cost of $35 million for planning, selection, purchase, installation, configuration, and certification of the new systems and total non

- labor capital costs of $ 196 million. All burden estimates are in 2007 dollars and represent the most cost effective monitoring approach for affected facilities. 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 co ntrol number. The OMB control numbers for our regulations are listed in 40 CFR Part 9. When this ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR Part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in this final rule. **7. 4**  **Final Regulatory Flexibility Analysis**  The Regulatory Flexibility Act (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 Act 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 busin esses, small organizations, and small governmental jurisdictions.7
- 3

For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) a small business that is an electric utility producing 4 billion kilowatt

- hours or le ss as defined by NAICS codes 221122 (fossil fuel

-fired electric utility steam generating units) and 921150 (fossil fuel

-fired electric utility steam generating units in Indian country); (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 its field. Pursuant to section 603 of the RFA, the EPA prepared an initial regulatory flexibility analysis (IRFA) for the proposed rule and convened a Small Business Advocacy Review Panel to obtain advice and recommendations of representatives of the regulated small entities. A detailed di scussion of the Panel’s advice and recommendations is found in the Panel Report (EPA

- HQ
- OAR
- 2009
- 0234
- 2921). A summary of the Panel’s recommendations is presented at 76 FR 24975. As required by section 604 of the RFA, we also prepared a final regulatory flexibility analysis (FRFA) for today’s final rule. The FRFA addresses the issues raised by public comments on the IRFA, which was part of the proposal of this rule. The FRFA is summarized below and in the preamble
. **7.4.1 Reasons Why Action Is Being Cons** **idered** In 2000, the EPA made a finding that it was appropriate and necessary to regulate coal

and oil

-fired electric utility steam generating units (EGUs) under Clean Air Act (CAA) section 112 and listed EGUs pursuant to CAA section 112(c). On March 29, 2005 (70 FR 15,994), the EPA published a final rule (Section 112(n) Revision Rule) that removed EGUs from the list of sources for which regulation under CAA section 112 was required. That rule was published in conjunction with a rule requiring reductions in emissions of mercury from EGUs pursuant to CAA section 111 (Clean Air Mercury Rule (CAMR), May 18, 2005, 70 FR 28606). The Section 112(n) Revision Rule was vacated on February 8, 2008, by the U.S. Court of Appeals for the District of Columbia Circuit. As a result of that vacatur, CAMR was also vacated and EGUs remain on the list of sources that must be regulated under CAA section 112. This action provides the EPA’s final rule in response to the court’s decisions. Under authority of CAA section 112, t he EPA is proposing a national emission standard for hazardous air pollutants (NESHAP) for EGUs that will regulate units at both major and area sources, henceforth referred to as the Mercury and Air Toxics Standards (MATS).7
-4

**7.4.2 Statement of Objectives an**  **d Legal Basis for Final Rules** MATS would protect air quality and promote public health by reducing emissions of the HAP. In the December 2000 regulatory determination, the EPA made a finding that it was appropriate and necessary to regulate EGUs under CAA section 112. The February 2008 vacatur of the Section 112(n) Revision Rule reverted the status to that of the December 2000 regulatory determination. CAA section 112(n)(1)(A) and the 2000 determination do not differentiate between EGUs located at major versus area sources of HAP. Thus, the NESHAP for EGUs will regulate units at both major and area sources. Major sources of HAP are those that have the potential to emit at least 10 tons per year (tpy) of any one HAP or at least 25 tpy of any combination of HAP. **7.4.3 Summary of Issues Raised during the Public Comment Process on the IRFA** The EPA received a number of comments related to the Regulatory Flexibility Act during the public comment process. A consolidated version of the comments received is repro duced below. These comments can also be found in their entirety in the response to comment document in the docket. **Comment:** Two commenters expressed concern that smaller utilities and those in rural areas will be unable to get vendors to respond to their requests for proposals, since they will be able to make more money serving larger utilities. **Response:** The preamble to the proposed rule (76FR 25054, May 3, 2011) provides a detailed discussion of how the EPA determined compliance times for the proposed rule. The EPA has provided pursuant to section 112(i)(3)(A) the maximum three

-year period for sources to come into compliance. Sources may also seek a one

-year extension of the compliance period from their title V permitting authority if the needs that time to install controls. CAA section 112(i)(3)(B). If the situation described by commenters (i.e., where s maller utilities and those in rural areas are less able to get vendor responses to requests for proposals than larger utilities) results in the source needing additional time to install controls, they would be in a position to request the one

-year extensio n. The EPA discusses in more detail elsewhere in this notice how the agency plans to address those units that are still unable to comply within the statutorily mandated period. **Comment:** Several commenters expressed concern with the SBAR panel. Some believe Small Entity Representatives (SERs) were not provided with regulatory alternatives including descriptions of significant regulatory options, differing timetables, or simplifications of compliance and reporting requirements, and subsequently presented with an opportunity to7
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respond. One commenter believes the EPA’s formal SBAR Panel notification and subsequent information provided by the EPA to the panel did not include information on the potential impacts of the rule as required by section 609(b)(1). Addit ional commenters suggested that the EPA’s rulemaking schedule put pressure on the SBAR Panel through the abbreviated preparation for the Panel. Two commenters stated that the EPA did not identify regulatory alternatives for the SBAR Panel to consider. Comm enters also expressed concerns that the EPA did not provide participants more than cursory background information on which to base their comments. One commenter stated that the EPA did not provide deliberative materials, including draft proposed rules or d iscussions of regulatory alternatives, to the SBAR panel members. One commenter stated the SBAR Panel Report does not meet the statutory obligation to recommend less burdensome alternatives. The commenter suggested the EPA panel members declined to make re commendations that went further than consideration or investigation of broad regulatory alternatives, with the exception of those recommendations in which the EPA rejected alternative interpretations of the CAA section 112 and relevant court cases. Two sta ted that the EPA did not respond to the concerns of the small business community, the SBA, or OMB, ignoring concerns expressed by the SER panelists. One commenter believes the EPA failed to convene required meetings and hearings with affected parties as re quired by law for small business entities. One commenter stated that the SER panel is very important because more than 90 percent of public power utility systems meet the definition and qualify as small businesses under the SBREFA. **Response:** The RFA requires that panels collect advice and recommendations from SERs on the issues related to:

 the number and description of the small entities to which the proposed rule will apply;

 the projected reporting, record keeping and other compliance requirements of th e proposed rule;

 duplication, overlap or conflict between the proposed rule and other federal rules; and

 alternatives to the proposed rule that accomplish the stated statutory objectives and minimize any significant economic impact on small entities. The RFA does not require a covered agency to create or assemble information for SERs or for the government panel members. While section 609(b)(4) requires that the government panel members review any material the covered agency has prepared in connection with the RFA, the7
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law does not prescribe the materials to be reviewed. The EPA's policy, as reflected in its RFA guidance, is to provide as much information as possible, given time and resource constraints, to enable an informed panel discussion. In this rulem aking, because of a court

- ordered deadline, the EPA was unable to hold a pre

- panel meeting but still provided SERs with the information available at the time, held a standard Panel Outreach meeting to collect verbal advice and recommendations from SERs, an d provided the standard 14

- day written comment period to SERs. The EPA received substantial input from the SERs, and the Panel report describes recommendations made by the Panel on measures the Administrator should consider that would minimize the economic impact of the proposed rule on small entities. The EPA complied with the RFA. **Comment:** One commenter requested that the EPA work with utilities such that new regulations are as flexible and cost efficient as possible. **Response:** In developing the final rul e, the EPA has considered all information provided prior to, as well as in response to, the proposed rule. The EPA has endeavored to make the final regulations flexible and cost efficient while adhering to the requirements of the CAA. **Comment:** One commente r was concerned about the ability of small entities or nonprofit utilities such as those owned and/or operated by rural electric co

- op utilities, and municipal utilities to comply with the proposed standards within three years. The commenter believes that the EPA disregarded the SER panelists who explained that under these current economic conditions they have constraints on their ability to raise capital for the construction of control projects and to acquire the necessary resources in order to meet a thre e -year compliance deadline. **Response:** The preamble to the proposed rule (76FR 25054, May 3, 2011) provides a detailed discussion of how the EPA determined compliance times for the proposed rule. The EPA has provided pursuant to section 112(i)(3)(A) the max imum three

-year period for sources to come into compliance. Sources may also seek a one

-year extension of the compliance period from their title V permitting authority if the source needs that time to install controls. CAA section 112(i)(3)(B). If the situ ation described by commenters (i.e., where small entities or nonprofit utilities constraints on ability to raise capital for construction of control projects and to acquire necessary resources) results in the source needing additional time to install contr ols, they would be in a position to request the one

-year extension. The EPA discusses in more detail elsewhere in this notice how the agency plans to address those units that are still unable to comply within the statutorily mandated period.7
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**Comment:** Several commenters believe the EPA did not adequately consider the disproportionately large impact on smaller generating units. The commenters note the diseconomies in scale for pollution controls for such units. One commenter noted the rule will create a more serious compliance hurdle for small communities that depend on coal

-fired generation to meet their base load demand. The commenter notes that by not subcategorizing units, the EPA is dictating a fuel switch due to the disproportionately high cost on small communities. The other commenter believes the MACT and NSPS standards are unachievable by going too far without really considering the impacts on small municipal units, as public powers is critical to communities, jobs, economic viability and electric reli ability. One commenter that is a generating and transmissions electric cooperative which qualifies as a small entity and believes the proposed rule will ultimately result in increased electricity costs to its members and will negatively impact the economie s of the primarily rural areas that they serve. Another commenter believes there is no legal or factual basis for creating subcategories or weaker standards for state, tribal, or municipal governments or small entities that are operating obsolete units, pa rticularly given the current market situation and applicable equitable factors. The commenter suggests both the EPA’s and SBA’s analyses focus exclusively on the effects on entities causing HAP emissions and primarily on those operating obsolete EGUs, and fail to consider either impacts on downwind businesses and governments or the positive impacts on small entities and governments owning and operating competing, clean and modern EGUs. **Response:** The EPA disagrees with the commenters' belief that the impacts on smaller generating units were not adequately considered when developing the proposed rule. The EPA determined the number of potentially impacted small entities and assessed the potential impact of the proposed action on small entities, including munici pal units. A similar assessment was conducted in support of the final action. Specifically, the EPA estimated the incremental net annualized compliance cost, which is a function of the change in capital and operating costs, fuel costs, and change in revenu e. The projected compliance cost was considered relative to the projected revenue from generation. Thus, the EPA's analysis accounts not only for the additional costs these entities face resulting from compliance, but also the impact of higher electricity prices. The EPA evaluated suggestions from SERs, including subcategorization recommendations. In the preamble to the proposed rule, the EPA explains that, normally, any basis for subcategorizing must be related to an effect on emissions, rather than some d ifference which does not affect emissions performance. The EPA does not see a distinction between emissions from smaller generating units versus larger units. Another commenter believes that there is no legal or factual basis for creating subcategories or weaker standards7
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for state, tribal, or municipal governments or small entities that are operating obsolete units. The commenter points out that relaxation in standards would not only harm downwind governments and small businesses who incur higher labor co sts due to pollution, but will harm other small businesses and state, tribal and local governments developing or operating generation facilities using modern and less polluting generation technologies. The EPA acknowledges the commenter’s assertion. **Commen t:**  One commenter notes that the EPA recognizes LEEs in the rule such that they should receive less onerous monitoring requirements; however, the EPA does not recognize that small and LEEs also need and merit more flexible and achievable pollution control requirements. The commenter notes that the capital costs for emissions control at small

- sized utility units is disproportionately high due to inefficiencies in Hg removal, space constraints for control technology retrofits, and the fact that small units ha ve fewer rate base customers upon which to spread these costs. The commenter cites the Michigan Department of Environmental Quality report titled “Michigan’s Mercury Electric Utility Workgroup, Final Report on Mercury Emissions from Coal

- Fired Power Plants,” (June 2005). The commenter notes that the EPA has addressed such concerns previously, citing the RIA for the 1997 8

- hour ozone standard. The commenter also suggests smaller utility systems generally have less capital to invest in pollution control than larger, investor

- owned systems, due to statutory inability to borrow from the private capital markets, statutory debt ceilings, limited bonding capacity, borrowing limitations related to fiscal strain posed by other, non

- environmental factors, and other li mitations. **Response:** The EPA acknowledges its proposal of reduced monitoring requirements for existing units that qualify as low emitting EGUs. Although the EPA does not believe that reduced pollution control requirements are warranted for LEEs, including small entity LEEs, we believe that flexible and achievable pollution control requirements are promoted through alternative standards, alternative compliance options, and emissions averaging as a means of demonstrating compliance with the standards for existing EGUs. **Comment:** One commenter believes that the EPA should develop more limited monitoring requirements for small EGUs. The commenter notes small entities do not possess the monetary resources, manpower, or technical expertise needed to operate cutting

- edge monitoring techniques such as Hg CEMS and PM CEMs. The commenter notes the EPA could have identified monitoring alternatives to the SER panel for consideration. **Response:** The EPA provided monitoring alternatives to using PM CEMS, HCl CEMS, and Hg CEM S in its proposed standards. The continuous compliance alternatives would be available to7
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all affected sources, including small entities. As monitoring alternatives to use of PM CEMS and HCl CEMS, sources would be allowed to conduct additional performanc e testing. Sorbent trap monitoring would be allowed in lieu of Hg CEMS. **Comment:** Several commenters believe the EPA has not sufficiently complied with the requirements of the RFA or adequately considered the impact this rulemaking would have on small ent ities. One commenter believes the EPA has not given itself the opportunity to engage in meaningful outreach and consultation with small entities and therefore recommends that the EPA seek to revise the court

- agreed deadlines to which this rulemaking is subject, re
convene the SBAR panel, prepare a new initial regulatory flexibility analysis (IRFA), and issue it for additional public comment prior to final rulemaking. The commenter believes the IRFA does not sufficiently consider impacts on small entities as identified in the SBAR Panel Report. The commenter believes it is not apparent that the EPA considered the recommendations of the Panel. The commenter believes the description of significant alternatives in the IRFA is almost entirely quoted from the SBAR Panel Report, which the commenter does not believe is an adequate substitute for the EPA’s own analysis of alternatives. The commenter also notes the EPA does not discuss the potential impacts of its decisions on small entities or the impacts of possible flexibilities. Where the EPA does consider regulatory alternatives in principle, the commenter believes it does not provide sufficient support for its decisions to understand on what basis the EPA rejected alternatives that may or may not have reduced burd en on small entities while meeting the stated objectives of the rule. Additionally, the commenter notes that the EPA did not evaluate the economic or environmental impacts of significant alternatives to the proposed rule. One commenter believes that the EP A’s stated reasons for declining to specify or analyze an area source standard are inadequate under the RFA. The commenter believes the EPA must give serious consideration to regulatory alternatives that accomplish the stated objectives of the CAA while mi nimizing any significant economic impacts on small entities and that the EPA has a duty to specify and analyze this option or to more clearly state its policy reasons for excluding serious consideration of a separate standard for area sources. The commente r suggests that the EPA reconvene the SBAR Panel to solicit more meaningful consultation with the SERs; the EPA prepare an IRFA that includes descriptions of specific regulatory alternatives, the effects on small entities of the regulatory alternatives, an d the policy reasons for selected among them; and the EPA release the IRFA for additional public comment before making any decisions about the EPA’s preferred options for final rulemaking. The commenter recognizes that the EPA will have to request of the l itigants and the court an extension of the timeline for final rulemaking but believes strongly that this action is necessary. A commenter believes the EPA did not fully consider the subcategorization of sources such as7
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boilers designed to burn lignite coal s versus other fossil fuels, especially in regard to non

- Hg metal and acid gas emissions. The commenter references the SBAR Panel Report suggestion provided in the preamble of the proposed rule that the EPA consider developing an area source vs. major source distinction for the source category and the EPA’s response. Another commenter is concerned that the recommendations made by the SER participants were ignored and not discussed in the rulemaking. Specifically, the commenter notes the EPA did not discuss subcategorizing by age, type of plant, fuel, physical space constraints or useful anticipated life of the plant. Nor did the EPA provide any opportunity for smaller emitters to use GACT
— often used in other EPA MACT regulations to alleviate the regulatory costs and operational difficulties that would have burdened other small businesses including dry cleaners, metal fabricating, metal finishing, and others. A commenter believes it is likely that different numerical or work practice standards are appropriat e for area sources of HAPs, just as in other rulemakings such as the RICE rule, and that the EPA would have provided the opportunity for small entities to make such demonstration had they followed their own regulatory requirements. **Response:** The EPA disagrees with one commenter's assertion that the agency has not complied with the requirements of the RFA. The EPA complied with both the letter and spirit of the RFA, notwithstanding the constraints of the court

- ordered deadline . For example, the EPA notified the Chief Counsel for Advocacy of the SBA of its intent to convene a Panel; compiled a list of SERs for the Panel to consult with; and convened the Panel. The Panel met with SERs to collect their advice and recommendations; reviewed the EPA materials; and drafted a report of Panel findings. The EPA further disagrees with the commenter's assertion that the EPA's IRFA does not sufficiently consider impacts on small entities. The EPA's IRFA, which is included in chapter 10 of the RIA for the proposed rule, add resses the statutorily required elements of an IRFA such as, the economic impact of the proposed rule on small entities and the Panel's findings. Several commenters are concerned that recommendations made by the SERs were ignored and not considered or dis cussed in the proposed rulemaking. Specifically, commenters cite SER recommendations regarding subcategorization and separate standards for area sources. The EPA disagrees with the commenters. The preamble to the proposed standards includes detailed discus sion of how the EPA determined which subcategories and sources would be regulated (76 FR 25036

- 25037, May 3, 2011). In that discussion, the EPA explains the rationale for its proposed subcategories based on five unit design types. In addition, the EPA ack nowledges the subcategorization suggestions from the SERs and explains its reasons for not subcategorizing on those bases. The preamble to the proposed standards also includes a7
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discussion of the SERs' suggestion that area source EGUs be distinguished from major
- source EGUs and the EPA's reasons for not making that distinction (76 FR 25020

- 25021, May 3, 2011). One commenter suggests that the EPA pursue an extension of the timeline for final rulemaking such that the SBAR Panel can be reconvened and a new IRFA can be prepared and released for public comment prior to the final rulemaking. The EPA entered into a Consent Decree to resolve litigation alleging that the EPA failed to perform a non

- discretionary duty to promulgate CAA section 112(d) standards for EGU s. American Nurses Ass’n v. EPA , 08
- 2198 (D.D.C.). That Decree required the EPA to sign the final MATS rule by November 16, 2011, unless the agency sought to extend the deadline consistent with the requirements of the modification provision of the Consent Decree. If plaintiffs in the American Nurses litigation objected to an extension request, which we believe they would have based on their comments on the proposed rule, the agency would have had to file a motion with the Court seeking an extension of the d eadline. Consistent with governing case law, the agency would have been required to demonstrate in its motion for extension that it was impossible to finalize the rule by the deadline provided in the Consent Decree. See Sierra Club v. Jackson , Civil Action No. 01
- 1537 (D.D.C.) (Opinion of the Court denying EPA’s motion to extend a consent decree deadline). The EPA negotiated a 30

- day extension and was able to complete the rule by December 16, 2011; accordingly, the agency had no basis for seeking a further extension of time. A detailed description of the changes made to the rule since proposal, including those made as a result of feedback received during the public comment process can be found in sections VI (NESHAP) and X (NSPS) in the preamble. Changes ex plained in the identified sections include those related to applicability; subcategorization; work practices; periods of startup, shutdown, and malfunction; initial testing and compliance; continuous compliance; and notification, recordkeeping, and reporti ng. **7.4.4 Description and Estimate of the Affected Small Entities**  For the purposes of assessing the impacts of MATS on small entities, a small entity is defined as: (1) A small business according to the Small Business Administration size standards by the North American Industry Classification System (NAICS) category of the owning entity. The range of small business size standards for electric utilities is 4 billion kilowatt hours (kWh) of production or less;7
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(2) A small government jurisdiction that is a g overnment of a city, county, town, district, or special district with a population of less than 50,000; and (3) A small organization that is any not for profit enterprise that is independently owned and operated and is not dominant in its field. The EPA examined the potential economic impacts to small entities associated with this rulemaking based on assumptions of how the affected entities will install control technologies in compliance with MATS. The SBREFA analysis does not examine potential indirect ec onomic impacts associated with this rule, such as employment effects in industries providing fuel and pollution control equipment, or the potential effects of electricity price increases on industries and households. The EPA used Velocity Suite’s Ventyx da ta as a basis for identifying plant ownership and compiling the list of potentially affected small entities. The Ventyx dataset contains detailed ownership and corporate affiliation information. The analysis focused only on those EGUs affected by the rul e, which includes units burning coal, oil, petroleum coke, or coal refuse as the primary fuel, and excludes any combustion turbine units or EGUs burning natural gas. Also, because the rule does not affect combustion units with an equivalent electricity ge nerating capacity up to 25 megawatts (MW), small entities that do not own at least one combustion unit with a capacity greater than 25 MW were removed from the dataset. For the affected units remaining, boiler and generator capacity, heat input, generati on, and emissions data were aggregated by owner and then by parent company. Entities with more than 4 billion kWh of annual electricity generation were removed from the list, as were municipal owned entities serving a population greater than 50,000. For cooperatives, investor
- owned utilities, and subdivisions that generate less than 4 billion kWh of electricity annually but which may be part of a large entity, additional research on power sales, operating revenues, and other business activities was perfor med to make a final determination regarding size. Finally, small entities for which the EPA’s modeling with the Integrated Planning Model (IPM) does not project generation in 2015 in the base case were omitted from the analysis because they are not projected to be operating and, thus, are not projected to face the costs of compliance with the rule. After omitting entities for the reasons above, the EPA identified a total of 82 potentially affected small entities that are affiliated with 10 2 electric generating units. **7.4.5 Compliance Cost Impacts**  This section presents the methodology and results for estimating the impact of MATS on small entities in 2015 based on the following endpoints:7
- 13  annual economic impacts of MATS on small entities and

 ratio of small entity compliance cost impacts to revenues from electricity generation. 1 7.4.5.1 Methodology for Estimating Impacts of MATS on Small Entities

EPA estimate d compliance costs of MATS as follows:

C Compliance = Δ C Operating+Capital + Δ C Fuel - Δ R where C represents a component of cost as labeled, and Δ R represents the value of change in electricity generation, calculated as the difference in revenues between t he base case and MATS
. Based on this formula, compliance costs for a given small entity could either be positive or negative (i.e., cost savings) based on their compliance choices and market conditions. Under MATS, some units will forgo some level of electricity generation (and, thus, revenues) to comply and this impact will be lessened on those entities by the projected increase in electricity prices under the MATS scenario (which raises their revenues from the remainder of their sales). On the other han d, some units may increase electricity generation, and coupled with the increase in electricity prices, will see an increase in electricity revenues resulting in lower net compliance costs. If entities are able to increase revenue more than an increase in retrofit and fuel costs, ultimately they will have negative net compliance costs (or savings). Because this analysis evaluates the total costs as a sum of the costs associated with compliance choices as well as changes in electricity revenues, it capture s savings or gains such as those described. As a result, what EPA describes as a cost is really more of a measure of the net economic impact of the rule on small entities
. For this analysis, EPA used unit
- level IPM parsed output s – from modeling runs cond ucted with EPA’s base case v4.10_MATS assumptions
– to estimate costs based on the parameters above. These impacts were then summed for each small entity, adjusting for ownership share. 2 Net impact estimates were based on the following: changes in operat ing and

1 This methodology for estimating small entity impacts has been used in recent EPA rulemakings such as the CSAPR promulgated by EPA in July, 2011. 2 Unit
- level cost impacts are adjusted for ownership shares for individual small entities, so as not to overestimate burden on each company. If an individual unit is owned by multiple small entities, total costs for that unit to7
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capital costs, driven mainly by retrofit installations or upgrades, change in fuel costs, and change in electricity generation revenues under MATS relative to the base case. These individual components of compliance cost were estimated as follows : (1) **Operating and capital costs:** Using the IPM parsed outputs for the base case and MATS policy case, EPA identified units that installed one or more pollution control technologies under the rule. The equations for calculating operating and capital costs were adopted from technology as sumptions used in EPA’s version of IPM (version 4.10). The model calculates the capital cost (in $/MW); the fixed operation and maintenance (O&M) cost (in $/MW

-year); and the variable O&M cost (in $/MWh). (2) **Fuel costs:** Fuel costs were estimated by mul tiplying fuel input (in million British thermal units, MMBtu) by region and fuel prices ($/MMBtu) from EPA’s modeling with IPM. The incremental fuel expenditures under MATS were then estimated by taking the difference in fuel costs between MATS and the ba se case. (3) **Value of electricity generated:** EPA estimated the value of electricity generated by multiplying the electricity generation from EPA’s IPM modeling results with the regionally

- adjusted retail electricity price ($/MWh), for all entities except those categorized as “Private” in Ventyx. For private entities, EPA used wholesale electricity price instead of retail electricity price because most of the private entities are independent power producers (IPP). IPPs sell their electricity to wholesal e purchasers and do not own transmission facilities and, thus, their revenue was estimated based on wholesale electricity prices. 7.4.5.2 Results The number of potentially affected small entities by ownership type and potential impacts of MATS are summarized in Table 7

- 1 . All costs are presented in 200 7 dollars. EPA estimated the annualized net compliance cost to small entities to be approximately $106 million in 2015.

meet MATS obligations are distributed across all owners based on the percentage of the unit owned by each company. O wnership percentage was estimated based on the Ventyx database.7
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**Table 7 -**  **1. Projected Impact of**  **MATS on Small Entities**  **in 201 5** 

**EGU Ownership Type**  **Number of**

**Potentially Affected**  **Entities Number of** 

**Entities Projected to**  **Withdraw all Affected Units**  **as Uneconomic Total Net** 

**Compliance Costs (2007$**  **millions) Number of Small** 

**Entities with Compliance Cost >**  **1% of Generation Revenues**  **Number of**

**Small Ent ities**  **with Compliance**  **Cost > 3% of Generation**  **Revenues** Co
- Op 19 0
- 29 .7 9 8 IOU 8 0 33.0 7 5 Municipal 42 0 49.7 16 15 Sub

- division 9 0 44.8 4 3 Private 4 3 8.4 4 4 **Total 8**  **2 3**  **106 4** **0 3**  **5** Note s: T he total number of entities with costs greater than 1 percent or 3 percent of revenues includes only entities experiencing positive costs. About 23 of the 82 total potentially affected small entities are estimated to have cost savings under MATS (see text above for an explanation). Definitions of ownership types are based on those provided by Ventyx’s Energy Velocity. Co
- op (Cooperative): non

- profit, customer

- owned electric companies that generate and/or distribute electric power. I OU (Investor

- Owned Utility): Includes Investor Owned assets (e.g., a marketer, independent power producer, financial entity) and electric companies owned by stockholders, etc. Municipal: A municipal utility, responsible for power supply and distribution in a small region, such as a city
. Sub

- division: Political Subdivision Utility is a county, municipality, school district, hospital district, or any other political subdivision that is not classified as a municipality under state law. Private: Similar t o investor
- owned, but ownership s hares are not openly traded on the stock markets. Source: ICF International analysis based on IPM modeling results EPA assessed the economic and financial impacts of the final rule using the ratio of compliance costs to the value of revenues from electricity generation, and our results focus on those entities for which this measure could be greater than 1 percent or 3 percent. Of the 8 2 small entities identified, EPA’s analysis shows 40 entities may experience compliance costs greater than 1 percent of base generation revenues in 2015, and 35 may experience compliance costs greater than 3 percent of base revenues. 3 Also, all generating capacity at 3 small entities is projected to be uneconomic to maintain. In this analysis, the cost of

3 One percent and three percent of generation revenue criteria based on: “EPA’s Action Development Process : Final Guidance for EPA Rulewriters: Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act.” OPEI Regulatory Development Series. November 2006. This can be found on the Internet at http://www.epa.gov/sbrefa/documents/rfaguidance11

- 00
- 06.pdf
.7
- 16

withdrawing a unit as uneconomic is estimated as the base case profit that is forgone by not operating under the policy case. Because 3 5 of the 8 2 total entities, or more than 40 percent, are estimated to incur compliance cost greater tha n 3 percent of base revenues, EPA has concluded that it cannot certify that there will be no SISNOSE for this rule. Results for small entities discussed here , however, do not account for the reality that electricity markets are regulated in parts of the c ountry. Entities operating in regulated or cost

- of

- service markets should be able to recover all of their costs of compliance through rate adjustments. Note that the estimated costs for small entities are significantly lower than those estimated by EPA fo r the MATS proposal (which were $379 million). This is driven by a small group of units (less than 6 percent) which were projected to be uneconomic to operate under the proposal (and hence incurred lost profits due to lost electricity revenues), but are n ow projected to continue their operations under MATS. In addition, EPA’s modeling indicates one unit that would have operated at a low capacity factor under the base case would find it economical to increase its generation significantly under MATS to meet electricity demand in its region. Excluding this unit, the total cost impacts across all entities would be roughly $175 million. Changes in compliance behavior for this small group of units, in particular the one unit which operates at a higher capacity factor, has a substantial impact on total costs for the entire group as their increased generation revenues offsets a large portion of the compliance costs. The separate components of annualized costs to small entities under MATS are summarized in Table 7
- 2. The most significant components of incremental costs to these entities are increased capital and operating costs for retrofits , followed by changes in electricity revenues (i.e., cost savings).7
- 17

**Table 7** **- 2.**  **Incremental Annualized Costs under MATS**  **Sum marized**  **by Ownership Group and** 

**Cost Category in 2015 (200**  **7$ millions)** 
**EGU Ownership Type**  **Capital+**

**Operating Costs ($MM)**  **Fuel Costs**

**($MM) Change in** 

**Electricity Revenue ($MM)**  **Total**
A B C **=A+B -** **C** Co
- Op 161.5 86.4 277.5
- 29.7 IOU 39.3 0 6.3 33.0 Municipal 76.4 1.9 28.7 49.7 Sub

- division 73.9 2.2 31.3 44.8 Private 5.5 0
- 2.9 8.4 **Total 356**  **91 341**  **106** Note: Totals may not add due to rounding. Source: ICF International analysis based on IPM modeling results Capital and operating costs increase across all ownership types, but the direction of changes in electricity revenues vary among ownership types. All ownership types, with the exception of private entities, experience a net gain in electricity revenues un der the MATS, unlike projections from EPA’s modeling during the proposal, where only municipals benefitted from higher electricity revenues. The change in electricity revenue takes into account both the profit lost from units that do not operate under the policy case and the difference in revenue for operating units under the policy case. According to EPA’s modeling, an estimated 274 MW of capacity owned by small entities is considered uneconomic to operate under the policy case, resulting in a net loss o f $13 million (in 2007$) in profits. On the other hand, many operating units actually increase their electricity revenue due to higher electricity prices under MATS. In addition, as mentioned above, EPA’s modeling indicates one unit finds it economical t o increase its capacity factor significantly under the policy case which results in significantly higher revenues offsetting the costs. **7.4.6 Description of Steps to Minimize Impacts on Small Entities**  Consistent with the requirements of the RFA and SBREFA, the EPA has taken steps to minimize the significant economic impact on small entities. Because this rule does not affect units with a generating capacity of less than 25 MW, small entities that do not own at least one generating unit with a capacity grea ter than 25 MW are not subject to the rule. According to the EPA's analysis, among the coal

- and oil

-fired EGUs (i.e., excluding combined cycle gas turbines and gas combustion turbines) about 26 potentially small entities only own EGUs with a7
- 18

capacity less than or equal to 25 MW, and none of those entities are subject to the final rule based on the statutory definition of potentially regulated units. For units affected by the proposed rule, the EPA considered a number of comments received, both during the Small Business Advocacy Review (SBAR) Panel and the public comment period. While none of the alternatives adopted are specifically applied to small entities, the EPA believes these modifications will make compliance less onerous for all regulated units, in cluding those owned by small entities. 7.4.6.1 Work Practice Standards Consistent with Sierra Club v. EPA, the EPA proposed numerical emission standards that would apply at all times, including during periods of startup and shutdown. After reviewing comments and other data regarding the nature of these periods of operation, the EPA is finalizing a work practice standard for periods of start up and shut down. The EPA is also finalizing work practice standards for organic HAP from all subcategories of E GUs. The EPA has chosen to finalize work practice standards because the significant majority of data for measured organic HAP emissions from EGUs are below the detection levels of the EPA test methods, and, as such, the Agency considers it impracticable to reliably measure emissions from these units. Descriptions of the work practice requirements for startup and shutdown, as well as organic HAP, can be found in Section VI.D

- E. of the preamble. 7.4.6.2 Continuous Compliance and Notification, Record

-keeping, and Reporting The final rule greatly simplifies the continuous compliance requirements and provides two basic approaches for most situations: use of continuous monitoring and periodic testing. The frequency of periodic testing has been decreased from month ly in the proposal to quarterly in the final rule. In addition to simplifying compliance, the EPA believes these changes considerably reduce the overall burden associated with recordkeeping and reporting. These changes to the final rule are described in mo re detail in Section VI.G

- H. of the preamble. 7.4.6.3 Subcategorization The Small Entity Representatives on the SBAR Panel were generally supportive of subcategorization and suggested a number of additional subcategories the EPA should consider when develo ping the final rule. While it was not practicable to adopt the proposed subcategories, the EPA maintained the existing subcategories and spilt the “liquid oil

-fired units” subcategory into two individual subcategories
– contine ntal and non

- continental unit s.7
- 19

7.4.6.4 MACT Floor Calculations As recommended by the EPA SBAR Panel representative, the EPA established the MACT floors using all the available ICR data that was received to the maximum extent possible consistent with the CAA requirements. The Agency b elieves this approach reasonably ensures that the emission limits selected as the MACT floors adequately represent the level of emissions actually achieved by the average of the units in the top 12 percent, considering operational variability of those unit s. Additionally, following proposal, the EPA reviewed and revised the procedure intended to account for the contribution of measurement imprecision to data variability in establishing effective emissions limits. 7.4.6.5 Alternatives Not Adopted The EPA cho se not to adopt several of the suggestions posed either during the SBAR Panel or public comment period. The EPA did not propose a percent reduction standard as an alternative to the concentration

- based MACT floor. The percent reduction format for Hg and ot her HAP emissions would not have addressed the EPA’s desire to promote, and give credit for, coal preparation practices that remove Hg and other HAP before firing. Also, to account for the coal preparation practices, sources would be required to track the HAP concentrations in coal from the mine to the stack, and not just before and after the control device(s), and such an approach would be difficult to implement and enforce. Furthermore, the EPA does not believe the percent reduction standard is in line w ith the Court’s interpretation of the Clean Air Act section 112 requirements. Even if we believed it was appropriate to establish a percent reduction standard, we do not have the data necessary to establish percent reduction standards for HAP, as explained further in the response to comments. The EPA chose not to establish GACT standards for area sources for a number of reasons. The data show that similar HAP emissions and control technologies are found on both major and area sources greater than 25 MWe, an d some large units are synthetic area sources. In fact, because of the significant number of well

- controlled EGUs of all sizes, we believe it would be difficult to make a distinction between MACT and GACT. Moreover, the EPA believes the standards for are a source EGUs should reflect MACT, rather than GACT, because there is no essential difference between area source and major source EGUs with respect to emissions of HAP. The EPA chose not to exercise its discretionary authority to establish health

- based emission standards for HCL and other HAP acid gases. Given the limitations of the currently available information (e.g., the HAP mix where EGUs are located, and the cumulative impacts of7
- 20

respiratory irritants from nearby sources), the environmental effects of HCl and the other acid gas HAP, and the significant co

- benefits from reductions in criteria pollutants the EPA determined that setting a conventional MACT standard for HCl and the other acid gas HAP was the appropriate course of action. As required by section 212 of SBREFA, the EPA also is preparing a Small Entity Compliance Guide to help small entities comply with this rule. Small entities will be able to obtain a copy of the Small Entity Compliance guide at the following Web site: http://www.epa.gov/a irquality/powerplanttoxics/actions.html
. **7. 5**  **Unfunded Mandates Reform Act (UMRA) Analysis** Title II of the UMRA of 1995 (Public Law 104

-4)(UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and Tribal governments and the private sector. Under Section 202 of the UMRA, 2 U.S.C. 1532, EPA generally must prepare a written statement, including a cost

- benefit analysis, for any proposed or final rule that “ includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more ... in any one year. ” A “ Federal mandate ” is defined under Section 421(6), 2 U.S.C. 658(6), to include a “ Federal interg overnmental mandate ” and a “ Federal private sector mandate. ” A
“ Federal intergovernmental mandate ,” in turn, is defined to include a regulation that “would impose an enforceable duty upon State, Local, or Tribal governments, ” Section 421(5)(A)(i), 2 U.S.C . 658(5)(A)(i), except for, among other things, a duty that is “ a condition of Federal assistance, ” Section 421(5)(A)(i)(I). A “ Federal private sector mandate ” includes a regulation that “would impose an enforceable duty upon the private sector, ” with certain exceptions, Section 421(7)(A), 2 U.S.C. 658(7)(A). Before promulgating an EPA rule for which a written statement is needed under Section 202 of the UMRA, Section 205, 2 U.S.C. 1535, of the UMRA generally requires EPA to identify and consider a reasona ble number of regulatory alternatives and adopt the least costly, most cost - effective, or least burdensome alternative that achieves the objectives of the rule. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most costeffective or least burdensome alternative if the Administrator publishes an explanation why that alternative was not adopted. In a manner consistent with the intergovernmental consultation provisions of Section 204 of the UMRA, EPA carried out consultati ons with the governmental entities affected by this rule. EPA held meetings with states and Tribal representatives in which the Agency presented7
- 21

its plan to develop a proposal and provided opportunities for participants to provide input as part of the rule making process. EPA has also analyzed the economic impacts of MATS on government entities and this section presents the results of that analysis. The UMRA analysis does not examine potential indirect economic impacts associated with the rule, such as empl oyment effects in industries providing fuel and pollution control equipment, or the potential effects of electricity price increases on industries and households. **7.5.1 Identification of**  **Affected Government Entities**  Using Ventyx data, EPA identified state

- and municipality

- owned utilities and subdivisions that would be affected by th is rule. EPA then used IPM parsed outputs (based on EPA modeling assumptions) to associate these entities wi th individual generating units. The analysis focused only on EGUs affected by MATS, which includes units burning coal, oil, petroleum coke, or waste coal as the primary fuel, and excludes any combustion turbine units. Entities that did not own at least o ne unit with a generating capacity of greater than 25 MW were also removed from the dataset because of their exemption from the rule. Finally, government entities for which EPA’s modeling does not project generation in 2015 under the base case were also exempted from this analysis, because they are not projected to operate and are thus not projected to face compliance costs with th is rule. Based on this, EPA identified 96 state, municipal , and sub

- divisions affiliated with 172 electric generating units that are potentially affected by MATS
. **7.5.2 Compliance Cost Impacts**  After identifying the potentially affected government entities, EPA estimated the impact of MATS in 2015 based on the following:

 total impacts of compliance on government entities and

 ratio of government entity impacts to revenues from electricity generation.

7.5.2.1 Methodology for Estimating Impacts MATS on Government Entities EPA estimate d compliance costs of MATS as follows:

C Compliance = Δ C Operating+Capital + Δ C Fuel - Δ R7
- 22

where C represents a component of cost as labeled, and Δ R represents the retail value of change in electricity generation, calculated as the difference in projected revenues between the base case and MATS
. Based on this formula, compliance costs for a given government entity could either be positive or negative (i.e., cost savings) based on their compliance choices and market conditions. Under MATS, some units wi ll forgo some level of electricity generation (and thus revenues) to comply and this impact will be lessened on those entities by the projected increase in electricity prices under MATS . On the other hand, some units may increase electricity generation, a nd coupled with the increase in electricity prices, will see an increase in electricity revenues resulting in lower net compliance costs. If entities are able to increase revenue more than an increase in retrofit and fuel costs, ultimately they will have negative net compliance costs (or savings). Because this analysis evaluates the total costs as a sum of the costs associated with compliance choices as well as changes in electricity revenues, it captures savings or gains such as those described. As a re sult, what EPA describes as a cost is really more of a measure of the net economic impact of the rule on government entities
. For this analysis, EPA used unit

- level data from IPM runs conducted with EPA’s modeling assumptions to estimate costs based on the parameters above. These impacts were then aggregated for each government entity, adjusting for ownership share. Compliance cost estimates were based on the following: changes in capital and operating costs, change in fuel costs, and change in electricity generation revenues under MATS relative to the base case. These components of compliance cost were estimated as follows : **(1) Capital and operating costs:**  Using EPA’s modeling results for the base case and the MATS policy case, EPA identified units that inst all control technology under this rule and the technologies installed. The equations for calculating operating and capital costs were adopted from EPA’s version of IPM (version 4.10_MATS). The model calculates the capital cost (in $/MW); the fixed operat ion and maintenance (O&M) cost (in $/MW

-year); and the variable O&M cost (in $/MWh) **(2) Fuel costs:**  Fuel costs were estimated by multiplying fuel input (MMBtu) by region and fuel prices ($/MMBtu) from EPA’s modeling. The change in fuel expenditures under MATS was then estimated by taking the difference in fuel costs between MATS and the base case
.7
- 23

**(3) Value of electricity generated:**  EPA estimated the value of electricity generated by multiplying the estimated electricity generation from EPA’s IPM modeling results with the regional

- adjusted retail electricity price s ($/MWh)

. 7.5.2.2 Results As was done for the small entities analysis, EPA assessed the economic and financial impacts of the rule using the ratio of compliance costs to the value of revenues fr om electricity generation, and our results focus on those entities for which this measure could be greater than 1 percent or 3 percent of base revenues. EPA projects that 42 government entities will have compliance costs greater than 1 percent of base gen eration revenue in 201 5 and 32 may experience compliance costs greater than 3 percent of base revenues. Overall, 6 units owned by government entities are projected to be uneconomic to maintain. The separate components of the annualized costs to governme nt entities under MATS are summarized in Table 7
- 3 below. The most significant components of incremental costs to these entities are the increased capital and operating costs, followed by increases in electricity revenues (i.e., a cost saving)
. **Table 7** **- 3.**  **Incremental Annualized Costs under MATS**  **Summarized by Ownership Group and**

**Cost Category ( 200**  **7$ millions)**  **in 2015**
**EGU Ownership**  **Type Capital Costs +** 

**Operating Costs($MM)**  **Fuel Costs**

**($ MM) Change in** 

**Revenue ($ MM)**  **Total**
A B C =A+B
- C Sub

- Division 128.0 50.7 106.4 72.3 State 65.9 1.2 32.7 34.4 Municipal 516.3 45.4 374.3 187.4 Total **710 97**  **513 294**  Note: Totals may not add due to rounding. Definitions of ownership types are based on those provided by Ventyx’s Energy Velocity. Municipal: A municipal utility, responsible for power supply and distribution in a small region, such as a city. Sub

- division: Political Subdivision Utility is a county, municipality, school district, hospital district, or any other political subdivision that is not classified as a municipality under state law. Source: ICF International analysis based on IPM modeling results The number of potentially affected government entities by ownership type and potential impacts of MATS are summarized in Table 7
-4. All costs are reported in 200 7$ millions . EPA estimated the annualized net compliance cost to government entities to be approximately $294 million in 2015.7
- 24

**Table 7** **- 4.**  **Summary of Potential Impacts on Government Entities under MATS**  **in 2015**

**EGU Ownership**  **Type Number of** 

**Potentially Affected**  **Entities Number of** 

**Entities Withdrawing all**  **Affected units**  **Total Net Costs**

**of MACT compliance ($**  **MM) Number of** 

**Government Entities with Compliance Cost**  **> 1% of Generation Revenues**  **Number of Government**

**Entities with Compliance Cost > 3% of Generation**  **Revenues**
Sub

- Division 11 0 72.3 5 4 State 5 0 34.4 4 3 Municipal 80 0 187.4 33 2 5 **Total 96**  **0 294**  **42 32**  Note: The total number of entities with costs greater than 1 percent or 3 percent of revenues includes only entities experiencing positive costs. About 3 0 of the 96 total potentially affected government entities are estimated to have cost savings under the MACT policy case (see text above for an explanation). Source: ICF International analysis based on IPM mod eling results Capital and operating costs increase over all ownership types. All ownership types, however, also experience a net gain in electricity revenue, mainly due to higher electricity prices under the policy case. As described in the small entity analysis, the change in electricity revenue takes into account both the profit lost from units that do not operate under the policy case and the difference in revenue for operating units under the policy case. According to EPA’s modeling, an estimated 757 MW of electri city generation is estimated to be uneconomic to operate under the policy case, accounting for about $20 million in lost profits. On the other hand, many operating units actually increase their electricity revenue due to higher electricity prices under th e MATS policy scenario
. **7. 6**  **Executive Order 13132, Federalism** Under EO 13132, the EPA may not issue an action that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal gover nment provides the funds necessary to pay the direct compliance costs incurred by state and local governments, or the EPA consults with state and local officials early in the process of developing the final action. The EPA has concluded that this action ma y have federalism implications, because it may impose substantial direct compliance costs on state or local governments, and the Federal government will not provide the funds necessary to pay those costs. Accordingly, the EPA provides the following federal ism summary impact statement as required by section 6(b) of EO 13132.7
- 25

Based on estimates in the RIA, provided in the docket, the final rule may have federalism implications because the rule may impose approximately $294 million in annual direct compliance costs on an estimated 96 state or local governments. Specifically, we estimate that there are 80 municipalities, 5 states, and 11 political subdivisions (i.e., a public district with territorial boundaries embracing an area wider than a single municipality and frequently covering more than one county for the purpose of generating, transmitting and distributing electric energy) that may be directly impacted by this final rule. Responses to the EPA’s 2010 ICR were used to estimate the nationwide number of pot entially impacted state or local governments. As previously explained, this 2010 survey was submitted to all coal

- and oil

fired EGUs listed in the 2007 version of DOE/EIA’s “Annual Electric Generator Report,” and “Power Plant Operations Report.” The EPA c onsulted with state and local officials in the process of developing the rule to permit them to have meaningful and timely input into its development. The EPA met with 10 national organizations representing state and local elected officials to provide gene ral background on the rule, answer questions, and solicit input from state/local governments. **7. 7**  **Executive Order 13175, Consultation and Coordination with Indian Tribal Governments**  EPA has concluded that this action may have Tribal implications. The EPA offered consultation with Tribal officials early in the process of developing this regulation to permit them to have meaningful and timely input into its development. Consultation letters were sent to 584 Tribal leaders. The letters provided information regarding the EPA’s development of NESHAP for EGUs and offered consultation. Three consultation meetings were held on December 7, 2010, with the Upper Sioux Community of Minnesota; Dece mber 13, 2010, with Moapa Band of Paiutes, Forest County Potawatomi, Standing Rock Sioux Tribal Council, Fond du Lac Band of Chippewa; January 5, 2011, with the Forest County Potawatomi, and a representative from the National Tribal Air Association. In the se meetings, the EPA presented the authority under the CAA used to develop these rules, and an overview of the industry and the industrial processes that have the potential for regulation. Tribes expressed concerns about the impact of u tility u nits on the reservations. Particularly, they were concerned about potential Hg deposition and the impact on the water resources of the Tribes, with particular concern about the impact on subsistence lifestyles for fishing communities, the cultural impact of impaired w ater quality for ceremonial purposes, and the economic impact on tourism. In light of these concerns, the tribes expressed interest in an expedited implementation of the rule. Other concerns expressed by tribes were about how the Agency would consider vari a bility7
- 26

in setting the standards and the use of Tribal

- specific fish consumption data from the Tribes in our assessments . T hey were not supportive of using work practice standards as part of the rule and asked the Agency to consider going beyond the floor to offer more protection for the Tribal communities. In addition, to these consultations, the EPA also conducted outreach on this rule through presentations at the National Tribal Forum in Milwaukee, WI, phone calls with the National Tribal Air Association , and a webinar for Tribes on the proposed rule. The EPA specifically requested tribal data that could support the appropriate and necessary analyses and the RIA for this rule. In addition, the EPA held individual consultations with the Navajo Nation on October 12, 2011; as well as the Gila River Indian Community, Ak

- Chin Indian Community, and the Hopi Nation on October 14, 2011. These tribes include expressed concerns about the impact of the rule on the Navajo Generating Station (NGS), the impact on the co st of the water allotted to the tribes from the Central Arizona Project (CAP), the impact on tribal revenues from the coal mining operations, and the impacts on employment of tribal members at both the NGS and the mine. More specific comments can be found in the docket. **7. 8**  **Protection of Children from Environmental Health and Safety Risks** This final rule is subject to EO 13045 (62 FR 19885, April 23, 1997) because it is an economically significant regulatory action as defined by EO 12866, and the EPA belie ves that the environmental health or safety risk addressed by this action may have a disproportionate effect on children. Accordingly, we have evaluated the environmental health or safety effects of the standards on children. Although this final rule is ba sed on technology performance, the standards are designed to protect against hazards to public health with an adequate margin of safety as described in the preamble. The protection offered by this rule may be especially important for children, especially t he developing fetus. As referenced in Chapter 4 of this RIA, “Mercury and Other HAP Benefits Analysis” children are more vulnerable than adults to many HAP emitted by EGUs due to differential behavior patterns and physiology. These unique susceptibilities were carefully considered in a number of different ways in the analyses associated with this rulemaking, and are summarized in the RIA. **7. 9**  **Statement of Energy Effects** Our analysis to comply with EO 13211 (Statement of Energy Effects) can be found in Secti on 3. 1 6 of this RIA.7
- 27

**7. 1**  **0 National Technology Transfer and Advancement Act**  Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (Public Law No. 104

- 113; 15 U.S.C. 272 note) directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices ) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This rulemaking involves technical standards. The EPA cites the following standards in the final rule: EPA Methods 1, 2, 2A, 2C, 2F, 2G, 3A, 3B, 4, 5, 5D, 17, 19, 23, 26, 26A, 29, 30B of 40 CFR Part 60 and Method 320 of 40 CFR Part 63. Consistent with the NTTAA, the EPA cond ucted searches to identify voluntary consensus standards in addition to these EPA methods. No applicable voluntary consensus standards were identified for EPA Methods 2F, 2G, 5D, and 19. The search and review results have been documented and are placed in the docket for the proposed rule. The three voluntary consensus standards described below were identified as acceptable alternatives to EPA test methods for the purposes of the final rule. The voluntary consensus standard American National Standards Instit ute (ANSI) / American Society of Mechanical Engineers (ASME) PTC 19

- 10
- 1981, “Flue and Exhaust Gas Analyses [Part 10, Instruments and Apparatus] ” is cited in the final rule for its manual method for measuring the O2, CO2, and CO content of exhaust gas. This part of ANSI/ASME PTC 19
- 10
- 1981 is an acceptable alternative to Method 3B. The voluntary consensus standard ASTM D6348

-03 ( Reapproved 2010), “Standards Test Method for Determination of Gaseous Compounds by Extractive Direct Interface Fourier Transform (FTIR) Spectroscopy” is acceptable as an alternative to Method 320 and is cited in the final rule, but with several conditions: (1) The test plan preparation and implementation in the Annexes to ASTM D 6348

- 03, Sections A1 through A8 are mandatory; and (2) In ASTM D6348
- 03 Annex A5 (Analyte Spiking Technique), the percent (%) R must be determined for each target analyte (Equation A5.5). In order fo r the test data to be acceptable for a compound, %R must be 70 % ≥ R ≤ 130%. If the %R value does not meet this criterion for a target compound, the test data are not acceptable for that compound and the test must be repeated for that analyte (i.e., the sa mpling and/or analytical procedure should be adjusted before a7
- 28

retest). The %R value for each compound must be reported in the test report, and all field measurements must be corrected with the calculated %R value for that compound by using the following e quation: Reported Result = (Measured Concentration in the Stack x 100) / % R. The voluntary consensus standard ASTM D6784

-0 2, “Standard Test Method for Elemental, Oxidized, Particle

- Bound and Total Mercury in Flue Gas Generated from Coal

- Fired Stationary Sources (Ontario Hydro Method),” is an acceptable alternative to use of EPA Method 29 for Hg only or Method 30B for the purpose of conducting relative accuracy tests of mercury continuous monitoring systems under this final rule. Because of the limitations of this method in terms of total sampling volume, it is not appropriate for use in performance testing under this rule. In addition to the voluntary consensus standards the EPA used in the final rule, the search for emissions measurement procedures identi fied 16 other voluntary consensus standards. The EPA determined that 14 of these 16 standards identified for measuring emissions of the HAP or surrogates subject to emission standards in the final rule were impractical alternatives to EPA test methods for the purposes of this final rule. Therefore, the EPA does not intend to adopt these standards for this purpose. The reasons for this determination for the 14 methods are discussed below. The voluntary consensus standard ASTM D3154

-00, “Standard Method for Average Velocity in a Duct (Pitot Tube Method),” is impractical as an alternative to EPA Methods 1, 2, 3B, and 4 for the purposes of this rulemaking since the standard appears to lack in quality control and quality assurance requirements. Specifically, AST M D3154
- 00 does not include the following: (1) proof that openings of standard pitot tube have not plugged during the test; (2) if differential pressure gauges other than inclined manometers (e.g., magnehelic gauges) are used, their calibration must be che cked after each test series; and (3) the frequency and validity range for calibration of the temperature sensors. The voluntary consensus standard ASTM D3464

- 96 ( Reapproved 2001), “Standard Test Method Average Velocity in a Duct Using a Thermal Anemometer, ” is impractical as an alternative to EPA Method 2 for the purposes of this rule primarily because applicability specifications are not clearly defined, e.g., range of gas composition, temperature limits. Also, the lack of supporting quality assurance data for the calibration procedures and specifications, and certain variability issues that are not adequately addressed by the standard limit the EPA’s ability to make a definitive comparison of the method in these areas. The voluntary consensus standard ISO 10780:1994, “Stationary Source Emissions
– Measurement of Velocity and Volume Flowrate of Gas Streams in Ducts,” is impractical as an7
- 29

alternative to EPA Method 2 in this rule. The standard recommends the use of an L

- shaped pitot, which historically has not b een recommended by the EPA. The EPA specifies the S

-type design which has large openings that are less likely to plug up with dust. The voluntary consensus standard, CAN/CSA Z223.2

- M86 (1999), “Method for the Continuous Measurement of Oxygen, Carbon Dioxid e, Carbon Monoxide, Sulphur Dioxide, and Oxides of Nitrogen in Enclosed Combustion Flue Gas Streams,” is unacceptable as a substitute for EPA Method 3A since it does not include quantitative specifications for measurement system performance, most notably t he calibration procedures and instrument performance characteristics. The instrument performance characteristics that are provided are non

mandatory and also do not provide the same level of quality assurance as the EPA methods. For example, the zero and s pan/calibration drift is only checked weekly, whereas the EPA methods require drift checks after each run. Two very similar voluntary consensus standards, ASTM D5835

- 95 ( Reapproved 2001), “Standard Practice for Sampling Stationary Source Emissions for Auto mated Determination of Gas Concentration,” and ISO 10396:1993, “Stationary Source Emissions: Sampling for the Automated Determination of Gas Concentrations,” are impractical alternatives to EPA Method 3A for the purposes of this final rule because they lac k in detail and quality assurance/quality control requirements. Specifically, these two standards do not include the following: (1) sensitivity of the method; (2) acceptable levels of analyzer calibration error; (3) acceptable levels of sampling system bia s; (4) zero drift and calibration drift limits, time span, and required testing frequency; (5) a method to test the interference response of the analyzer; (6) procedures to determine the minimum sampling time per run and minimum measurement time; and (7) s pecifications for data recorders, in terms of resolution (all types) and recording intervals (digital and analog recorders, only). The voluntary consensus standard ISO 12039:2001, “Stationary Source Emissions

-- Determination of Carbon Monoxide, Carbon Dioxi de, and Oxygen

--Automated Methods,” is not acceptable as an alternative to EPA Method 3A. This ISO standard is similar to EPA Method 3A, but is missing some key features. In terms of sampling, the hardware required by ISO 12039:2001 does not include a 3

-wa y calibration valve assembly or equivalent to block the sample gas flow while calibration gases are introduced. In its calibration procedures, ISO 12039:2001 only specifies a two

- point calibration while EPA Method 3A specifies a three

- point calibration. Al so, ISO 12039:2001 does not specify performance criteria for calibration error, calibration drift, or sampling system bias tests as in the EPA method, although checks of these quality control features are required by the ISO standard.7
- 30

The voluntary consens us standard ASTM D6522

-00, “Standard Test Method for the Determination of Nitrogen Oxides, Carbon Monoxide, and Oxygen Concentrations in Emissions from Natural Gas

- Fired Reciprocating Engines, Combustion Turbines, Boilers and Process Heaters Using Portable Analyzers” is not an acceptable alternative to EPA Method 3A for measuring CO and O2 concentrations for this final rule as the method is designed for application to sources firing natural gas. The voluntary consensus standard ASME PTC

- 38
- 80 R85 (1985), “Determination of the Concentration of Particulate Matter in Gas Streams,” is not acceptable as an alternative for EPA Method 5 because ASTM PTC

- 38
- 80 is not specific about equipment requirements, and instead presents the options available and the pro’s an d con’s of each option. The key specific differences between ASME PTC

- 38
- 80 and the EPA methods are that the ASME standard: (1) allows in

- stack filter placement as compared to the out

- of

- stack filter placement in EPA Methods 5 and 17; (2) allows many diffe rent types of nozzles, pitots, and filtering equipment; (3) does not specify a filter weighing protocol or a minimum allowable filter weight fluctuation as in the EPA methods; and (4) allows filter paper to be only 99 percent efficient, as compared to the 99.95 percent efficiency required by the EPA methods. The voluntary consensus standard ASTM D3685/D3685M

- 98, “Test Methods for Sampling and Determination of Particulate Matter in Stack Gases,” is similar to EPA Methods 5 and 17, but is lacking in the follo wing areas that are needed to produce quality, representative particulate data: (1) requirement that the filter holder temperature should be between 120oC and 134oC, and not just “above the acid dew

- point;” (2) detailed specifications for measuring and mon itoring the filter holder temperature during sampling; (3) procedures similar to EPA Methods 1, 2, 3, and 4, that are required by EPA Method 5; (4) technical guidance for performing the Method 5 sampling procedures, e.g., maintaining and monitoring samplin g train operating temperatures, specific leak check guidelines and procedures, and use of reagent blanks for determining and subtracting background contamination; and (5) detailed equipment and/or operational requirements, e.g., component exchange leak che cks, use of glass cyclones for heavy particulate loading and/or water droplets, operating under a negative stack pressure, exchanging particulate loaded filters, sampling preparation and implementation guidance, sample recovery guidance, data reduction gui dance, and particulate sample calculations input. The voluntary consensus standard ISO 9096:1992, “Determination of Concentration and Mass Flow Rate of Particulate Matter in Gas Carrying Ducts

- Manual Gravimetric Method,” is not acceptable as an alternati ve for EPA Method 5. Although sections of ISO 9096 incorporate EPA Methods 1, 2, and 5 to some degree, this ISO standard is not equivalent to EPA Method 57
- 31

for collection of PM. The standard ISO 9096 does not provide applicable technical guidance for perfor ming many of the integral procedures specified in Methods 1, 2, and 5. Major performance and operational details are lacking or nonexistent and detailed quality assurance/quality control guidance for the sampling operations required to produce quality, rep resentative particulate data (e.g., guidance for maintaining and monitoring train operating temperatures, specific leak check guidelines and procedures, and sample preparation and recovery procedures) are not provided by the standard, as in EPA Method 5. A lso, details of equipment and/or operational requirements, such as those specified in EPA Method 5, are not included in the ISO standard, e.g., stack gas moisture measurements, data reduction guidance, and particulate sample calculations. The voluntary con sensus standard CAN/CSA Z223.1

- M1977, “Method for the Determination of Particulate Mass Flows in Enclosed Gas Streams,” is not acceptable as an alternative for EPA Method 5. Detailed technical procedures and quality control measures that are required in EP A Methods 1, 2, 3, and 4 are not included in CAN/CSA Z223.1. Second, CAN/CSA Z223.1 does not include the EPA Method 5 filter weighing requirement to repeat weighing every 6 hours until a constant weight is achieved. Third, EPA Method 5 requires the filter weight to be reported to the nearest 0.1 milligram (mg), while CAN/CSA Z223.1 requires only to the nearest 0.5 mg. Also, CAN/CSA Z223.1 allows the use of a standard pitot for velocity measurement when plugging of the tube opening is not expected to be a problem. The EPA Method 5 requires an S

- shaped pitot. The voluntary consensus standard EN 1911

- 1,2,3 (1998), “Stationary Source Emissions

Manual Method of Determination of HCl

- Part 1: Sampling of Gases Ratified European Text

- Part 2: Gaseous Compounds Absorpt ion Ratified European Text

- Part 3: Adsorption Solutions Analysis and Calculation Ratified European Text,” is impractical as an alternative to EPA Methods 26 and 26A. Part 3 of this standard cannot be considered equivalent to EPA Method 26 or 26A because th e sample absorbing solution (water) would be expected to capture both HCl and chlorine gas, if present, without the ability to distinguish between the two. The EPA Methods 26 and 26A use an acidified absorbing solution to first separate HCl and chlorine ga s so that they can be selectively absorbed, analyzed, and reported separately. In addition, in EN 1911 the absorption efficiency for chlorine gas would be expected to vary as the pH of the water changed during sampling. The voluntary consensus standard EN 13211 (1998), is not acceptable as an alternative to the Hg portion of EPA Method 29 primarily because it is not validated for use with impingers, as in the EPA method, although the method describes procedures for the use of impingers. This7
- 32

European standa rd is validated for the use of fritted bubblers only and requires the use of a side (split) stream arrangement for isokinetic sampling because of the low sampling rate of the bubblers (up to 3 liters per minute, maximum). Also, only two bubblers (or imping ers) are required by EN 13211, whereas EPA Method 29 require the use of six impingers. In addition, EN 13211 does not include many of the quality control procedures of EPA Method 29, especially for the use and calibration of temperature sensors and control lers, sampling train assembly and disassembly, and filter weighing. Two of the 16 voluntary consensus standards identified in this search were not available at the time the review was conducted for the purposes of the proposed rule because they are under d evelopment by a voluntary consensus body: ASME/BSR MFC 13M, “Flow Measurement by Velocity Traverse,” for EPA Method 2 (and possibly 1); and ASME/BSR MFC 12M, “Flow in Closed Conduits Using Multiport Averaging Pitot Primary Flowmeters,” for EPA Method 2. Fi nally, in addition to the three voluntary consensus standards identified as acceptable alternatives to EPA methods required in the final rule, the EPA is also specifying four voluntary consensus standards in the rule for use in sampling and analysis of liq uid oil samples for moisture content. These standards are: ASTM D95

- 05 (Reapproved 2010) , “Standard Test Method for Water in Petroleum Products and Bituminous Materials by Distillation”, ASTM D4006
- 11, “Standard Test Method for Water in Crude Oil by Disti llation”, ASTM D4177

- 95 (Reapproved 2010) , “Standard Practice for Automatic Sampling of Petroleum and Petroleum Products, and ASTM D4057

- 06 (Reapproved 2011), “Standard Practice for Manual Sampling of Petroleum and Petroleum Products.” Table 5, section 4.1 .1.5 of appendix A, and section 3.1.2 of appendix B to subpart UUUUU, 40 CFR Part 63, list the EPA testing methods included in the final rule. Under section 63.7(f) and section 63.8(f) of subpart A of the General Provisions, a source may apply to the EPA for permission to use alternative test methods or alternative monitoring requirements in place of any of the EPA testing methods, performance specifications, or procedures specified. **7. 11**  **Environmental Justice 7.**  **11 .1**  **Environmental Justice Impacts** Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 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 (EJ) part of thei r mission by identifying and addressing, as appropriate, disproportionately high and adverse7
- 33

human health or environmental effects of their programs, policies, and activities on minority populations and low

- income populations in the U.S. The EPA has deter mined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority, low income, or indigenous populations because it increases the level of environmental protection for all affected populations wi thout having any disproportionately high and adverse human health or environmental effects on any population, including any minority, low income, or indigenous populations. This final rule establishes national emission standards for new and existing EGUs t hat combust coal and oil. The EPA estimates that there are approximately 1,400 units located at 575 facilities covered by this final rule. This final rule will reduce emissions of all the listed HAP that come from EGUs. This includes metals (Hg, As, Be, Cd , Cr, Pb, Mn, Ni, and Se), organics (POM, acetaldehyde, acrolein, benzene, dioxins, ethylene dichloride, formaldehyde, and PCB), and acid gases (HCl and HF). At sufficient levels of exposure, these pollutants can cause a range of health effects including c ancer; irritation of the lungs, skin, and mucous membranes; effects on the central nervous system such as memory and IQ loss and learning disabilities; damage to the kidneys; and other acute health disorders. The final rule will also result in substantial reductions of criteria pollutants such as CO, PM, and SO2. Sulfur dioxide is a precursor pollutant that is often transformed into fine PM (PM2.5) in the atmosphere. Reducing direct emissions of PM2.5 and SO2 will, as a result, reduce concentrations of PM2 .5 in the atmosphere. These reductions in PM2.5 will provide large health benefits, such as reducing the risk of premature mortality for adults, chronic and acute bronchitis, childhood asthma attacks, and hospitalizations for other respiratory and cardiova scular diseases. (For more details on the health effects of metals, organics, and PM2.5, please refer to Chapters 4 and 5 of this RIA .) This final rule will also have a small effect on electricity and natural gas prices and has the potential to affect the cost structure of the utility industry and could lead to shifts in how and where electricity is generated. Today’s final rule is one of a group of regulatory actions that the EPA will take over the next several years to respond to statutory and judicial m andates that will reduce exposure to HAP and PM2.5, as well as to other pollutants, from EGUs and other sources. In addition, the EPA will pursue energy efficiency improvements throughout the economy, along with other7
- 34

Federal agencies, states and other gro ups. This will contribute to additional environmental and public health improvements while lowering the costs of realizing those improvements. Together, these rules and actions will have substantial and long

-term effects on both the U.S. power industry and on communities currently breathing dirty air. Therefore, we anticipate significant interest in many, if not most, of these actions from EJ communities, among many others. 7. 11 .1.1 Key EJ Aspects of the Rule This is an air toxics rule; therefore, it does not permit emissions trading among sources. Instead, this final rule will place a limit on the rates of Hg and other HAP emitted from each affected EGU. As a result, emissions of Hg and other HAP such as HCl will be substantially reduced in the vast majori ty of states. In some states, however, there may be small increases in Hg emissions due to shifts in electricity generation from EGUs with higher emission rates to EGUs with already low emission rates. Hydrogen chloride emissions are projected to increase at a small number of sources but that does not lead to any increased emissions at th e state level. The primary risk analysis to support the finding that this final rule is both appropriate and necessary includes an analysis of the effects of Hg from EGUs on people who rely on freshwater fish they catch as a regular and frequent part of t heir diet. These groups are characterized as subsistence level fishing populations or fishers. A significant portion of the data in this analysis came from published studies of EJ communities where people frequently consume locally

- caught freshwater fish. These communities included: (1) White and black populations (including female and poor strata) surveyed in South Carolina; (2) Hispanic, Vietnamese and Laotian populations surveyed in California; and (3) Great Lakes tribal populations (Chippewa and Ojibwe) active on ceded territories around the Great Lakes. These data were used to help estimate risks to similar populations beyond the areas where the study data was collected. For example, while the Vietnamese and Laotian survey data were collected in Califor nia, given the ethnic (heritage) nature of these high fish consumption rates, we assumed that they could also be associated with members of these ethnic groups living elsewhere in the U.S. Therefore, the high

- end consumption rates referenced in the Califor nia study for these ethnic groups were used to model risk at watersheds elsewhere in the U.S. As a result of this approach, the specific fish consumption patterns of several different EJ groups are fundamental to the EPA’s assessment of both the underlying risks that make this final rule appropriate and necessary, and of the analysis of the benefits of reducing exposure to Hg and the other hazardous air pollutants.7
- 35

The EPA’s analysis of risks from consumption of Hg

- contaminated fish is contained in Chapter 4 of this RIA . The effects of this final rule on the health risks from Hg and other HAP are presented in the preamble and in the RIA for this rule. 7. 11 .1.2 Potential Environmental and Public Health Impacts to Vulnerable Populations The EPA has conducted several analyses that provide additional insight on the potential effects of this rule on EJ communities. These include: (1) The socio

- economic distribution of people living close to affected EGUs who may be exposed to pollution from these sources; and (2) an analysis of the distribution of health effects expected from the reductions in PM2.5 that will result from implementation of this final rule (‘‘co

- benefits’’). **Socio -**  **economic distribution.** As part of the analysis for this final rule, the EPA reviewed the aggregate demographic makeup of the communities near EGUs covered by this final rule. Although this analysis gives some indication of populations that may be exposed to levels of pollution that cause concern, it does NOT identify the demographic characteristics of the most highly affected individuals or communities. EGUs usually have very tall emission stacks; this tends to disperse the pollutants emitted from these stacks fairly far from the source. In addition, several of the pollutants emitted by the se sources, such as a common form of mercury and SO2, are known to travel long distances and contribute to adverse impacts on the environment and human health hundreds or even thousands of miles from where they were emitted (in the case of elemental mercury, globally). The proximity

-to -the

- source review is included in the analysis for this final rule because some EGUs emit enough hazardous air pollutants such as Nickel or Chromium to cause elevated lifetime cancer risks greater than 1 in a million in nearb y communities. In addition, the EPA’s analysis indicates that there are localized areas with elevated levels of Hg deposition around most U.S. EGUs. 4 The analysis of demographic data used proximity

-to -the

- source as a surrogate for exposure to identify tho se populations considered to be living near affected sources, such that they have notable exposures to current hazardous air pollutant emissions from these sources. The demographic data for this analysis were extracted from the 2000 census data which were provided to the EPA by the US Census Bureau. Distributions by race are based on demographic information at the census block level, and all other demographic groups are based on the

4 See Excess Local Deposition TSD for more detail.7
- 36

extrapolation of census block group level data to the census block level. T he socio

- demographic parameters used in the analysis included the following categories: Racial (White, African American, Native American, Other or Multiracial, and All Other Races); Ethnicity (Hispanic); and Other (Number of people below the poverty line, Number of people with ages between 0 and 18, Number of people greater than or equal to 65, Number of people with no high school diploma). In determining the aggregate demographic makeup of the communities near affected sources, the EPA focused on those ce nsus blocks within three miles of affected sources and determined the demographic composition (e.g., race, income, etc.) of these census blocks and compared them to the corresponding compositions nationally. The radius of three miles (or approximately 5 ki lometers) is consistent with other demographic analyses focused on areas around potential sources. In addition, air quality modeling experience has shown that the area within three miles of an individual source of emissions can generally be considered the area with the highest ambient air levels of the primary pollutants being emitted for most sources, both in absolute terms and relative to the contribution of other sources (assuming there are other sources in the area, as is typical in urban areas). While facility processes and fugitive emissions may have more localized impacts, the EPA acknowledges that because of various stack heights there is the potential for dispersion beyond 3 miles. To the extent that any minority, low income, or indigenous subpopula tion is disproportionately impacted by the current emissions as a result of the proximity of their homes to these sources, that subpopulation also stands to see increased environmental and health benefit from the emissions reductions called for by this rul e. The results of EPA’s demographic analysis for coal fired EGUs are shown in Ta ble 7
- 5
. The data indicate that coal

-fired EGUs are located in areas where minority share of the population living within a three mile buffer is higher than the national averag e by 12 percentage points or 48%. For these same areas, the percent of the population below the poverty line is also higher than the national average by 4 percentage points or 31%. These results are presented in more detail in the ‘‘Review of Proximity Ana lysis,’’ February 2011, a copy of which is available in the docket. **PM 2.5**  **(co -**  **benefits) analysis.** As mentioned above, many of the steps EGUs take to reduce their emissions of air toxics as required by this final rule will also reduce emissions of PM and SO 2. As a result, this final rule will reduce concentrations of PM2.5 in the atmosphere. Exposure to PM2.5 can cause or contribute to adverse health effects, such as asthma and heart7
- 37

disease, that significantly affect many minority, low

- income, and tribal in dividuals and their communities. Fine PM (PM2.5) is particularly (but not exclusively) harmful to children, the elderly, and people with existing heart and lung diseases, including asthma. Exposure can cause premature death and trigger heart attacks, asthm a attacks in children and adults with asthma, chronic and acute bronchitis, and emergency room visits and hospitalizations, as well as milder illnesses that keep children home from school and adults home from work. Missing work due to illness or the illnes s of a child is a particular problem for people who work jobs that do not provide paid sick days. Many low

-wage employees also risk losing their jobs if they are absent too often, even if it is due to their own illness or the illness of a child or other relative. Finally, many individuals in these communities also lack access to high quality health care to treat these types of illnesses. Due to all these factors, many minority and low

- income communities are particularly susceptible to the health effects o f PM2.5 and receive many benefits from reducing it. We estimate that in 2016 the annual PM related benefits of the final rule for adults include approximately 4,200 to 11,000 fewer premature mortalities, 2,800 fewer cases of chronic bronchitis, 4,800 fewe r non -fatal heart attacks, 2,600 fewer hospitalizations (for respiratory and cardiovascular disease combined), 3.2 million fewer days of restricted activity due to respiratory illness and approximately 540,000 fewer lost work days. We also estimate substan tial health improvements for children in the form of 130,000 fewer asthma attacks, 3,100 fewer emergency room visits due to asthma, 6,300 fewer cases of acute bronchitis, and approximately 140,000 fewer cases of upper and lower respiratory illness. We also examined the PM2.5 mortality risks according to race, income, and educational attainment. We then estimated the change in PM2.5 mortality risk as a result of this final rule among people living in the counties with the highest (top 5 percent) PM2.5 mortal ity risk in 2005. We then compared the change in risk among the people living in these ‘‘high

- risk’’ counties with people living in all other counties. In 2005, people living in the highest risk counties and in the poorest counties were estimated to b e exposed to substantially higher concentrations of PM2.5
. . This was true regardless of race; the difference between the groups of counties for each race is large while the differences among races in both groups of counties are very small. In contrast, the analysis found that people with less than high school edu cation lived in areas that were predicted to have significantly greater exposure to PM2.5
. This was true both for the counties estimated to h ave the highest concentrations . In summary, the analysis indicates that in 2005, educational status, living in one of the poorest counties, and living in a high

- risk county are associated with7
- 38

higher estimated PM2.5 concentrations, thus are predicted to ha ve mortality risk that those living in other areas. As similar pattern was not observed for race . Our analysis predicts that that this final rule will likely significantly reduce the PM2.5 mortality among all populations of different races living throughout the U.S. compared to both 2005 and 2016 pre

- rule (i.e., base case) levels. The analysis indicates that people living in counties with the highest concentrations of PM2.5 (top 5 percent) of PM2.5 in 2005 receive the largest reduction in concentrations of PM, thus are predicted to have the largest county

- level reductions in premature mortality risk after this rule takes effect. We also estimate that people living in the poorest 5 percent of the counties will experience a larger reduction in exposure to PM2.5 , thus these counties are predicted to have a a greater reduction in mortality risk when compared with all other counties. More information can be found below in section 7.11.3
. The EPA estimates that the benefits of the final rule are likely distributed among these populations fairly evenly, although there is insufficient data to generate different concentration response functions for each demographic group
. Therefore, there is no indication that, on a national level, people of particular race, income, or level of education receive a greater benefit (or smaller benefit) than others. However, the analysis does indicate that this final rule in conjunction with the implementation of existing or final rules (e.g., the Cross

- State Air Pollution Rule) may help reduce the disparity in risk between those in the highest concentration counties and the other 95 percent of counties for all races and educational levels7-39 **Table 7** **- 5**  **. Comparative Summary of the Demographics within 5 Kilometers (3 Miles) of the Affected Sources (**  **population in millions**  **)**

**Population White**  **African American**  **Native**

**American Othe**  **r or**

**Multiracial Minority**  **Hispanic o**  **r Latino**  **Age**

**0 –** **17 Age** 

**65+ No High**  **School Diploma**  **Below**

**Poverty Line**  Near source total (3 mi) 13
. 9 8.78 2 .51 0.10 2 .52 5 .13 2 .86 3 .37 1 .65 2 .20 2 .43 % of near source total 63% 18% 1% 18% 37% 21% 24% 12% 16% 17% National total 285 215 35 .0 2 .49 33 .3 70 .8 39 .1 77 .4 35 .4 36 .7 37.1 % of national total 75% 12% 1% 12% 25% 14% 27% 12% 13% 13%7
-40

7. 11 .1.3 Meaningful Public Participation The EPA defines ‘‘Environmental Justice’’ to include meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and polices. To promote meaningful involve ment, the EPA publicized the rulemaki ng via newsletters, EJ listserve s, and the internet, including the Office of Policy’s (OP) Rulemaking Gateway Web site (http://yosemite.epa.gov/opei/RuleGate.nsf/). During the comment period, the EPA discussed the propo sed rule via a conference call with communities, conducted a community

- oriented webinar on the proposed rule, and posted the webinar presentation on

- line. The EPA also held three public hearings to hear comments on the proposal. Once this rule is finaliz ed, affected EGUs will need to update their Title V operating permits to reflect their new emissions limits, any other new applicable requirements, and the associated monitoring and recordkeeping from this rule. The Title V permitting process provides that when most permits are reopened (for example, to incorporate new applicable requirements) or renewed these permit actions must include an opportunity for public review and comments. In addition, after the public review process, the EPA has an opportunity t o review the proposed permit and object to its issuance if it does not meet CAA requirements. 7. 11 .1. 4 Summary This final rule strictly limits the emissions rate of Hg and other HAP from every affected EGU in the U.S. EPA’s analysis indicates substantial h ealth benefits, including for vulnerable populations, from reductions in PM2.5. The EPA’s analysis also indicates reductions in risks for individuals, including for members of many minority populations, who eat fish frequently from U.S. lakes and rivers an d who live near affected sources. Based on all the available information, the EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority, low income, or indigenous populations
. The EPA is providing multiple opportunities for EJ communities to both learn about and comment on this rule and welcomes their participation. **7. 11**  **.2 Analysis of High Risk Sub** **- Populations**  In addition to the previously described assessment of EJ impacts, EPA conducted an analysis at proposal of sub

- populations with particularly high potential risks of mercury7
-41

exposure due to high rates of fish consumption. 5 These populations overlap in many cases with traditional EJ populations and would benefit from mercury reductions resulting from this rule. Based on a detailed review of the literature, EPA identified several high

- risk sub

populations (Moya, 2004; Burger, 2002, Shilling et al., 2010, Dell inger, 2004). The analysis of potentially high

- risk groups focuses on six subpopulations:

 low

- income African

-American recreational/subsistence fishers in the Southeast region 6

 low

- income white recreational/subsistence fishers in the Southeast region

 low

- i ncome female recreational/subsistence fishers

 Hispanic subsistence fishers

 Laotian subsistence fishers

 Chippewa/Ojibwe Tribe members in the Great Lakes area The results of that analysis can be found in the document xxxx, available in the docket.

**7.1 1**  **.3 Characterizing the Distribution of Health Impacts across Population** **s** EPA is developing new approaches and metrics to improve characterization of the impacts of EPA rules on different populations. This analysis reflects one such approach, which explores two principal questions regarding the distribution of PM 2.5 - related benefits resulting from the implementation of MATS: 1. What is the baseline distribution of PM 2.5- related mortality risk for adults according to the race, in come and education of the population? 2. How does MATS change the distribution of PM 2.5 mortality risk among populations of different races
— particularly among those populations at greatest risk in the baseline? 15

5 This analysis was not updated based on the final policy case. For the remainder of this section “proposed MATS” refers to the proposal policy used to conduct the analysis. 6The low

- income designation is based on Census 2000 estimates of populations living in poverty. The Southeast for purposes of this analysis comprises Alabama, Arkansas, Florida, G eorgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia.7
-42

In this analysis we that estimated PM 2.5 mortality risk from the modeled scenarios is not distributed equally throughout the U.S., or among populations of different levels of educational attainment
— though the level of PM 2.5 mortality risk appears to be shared fairly equally among populations of different races. We estimate that the air quality and PM 2.5 - related mortality risk improvements achieved by MATS are relatively equally distributed among minority populations, and that PM 2.5 mortality risk is reduced most among those populations at greate st risk in the 2005 baseline we selected for this analysis
. We note that the methods used for this analysis are still being evaluated and EPA will continue to modify these approaches as new scientific information becomes available. 7.1 1 .3.1 Methodology Th e methods used here to describe the distribution of PM 2.5 mortality impacts are consistent with the approach used in the proposed MATS RIA (U.S. EPA, 2011a) and the final CSAPR RIA (U.S. EPA, 2011b). As a first step, we estimate the level of PM 2.5 - related mortality risk in each county in the continental U.S. based on 2005 air quality levels, which provides a baseline distribution of risk which we use to identify populations with initial higher and lower baseline PM 2.5- related mortality risk
. This portion of the analysis follows an approach described elsewhere (Fann et al. 2011a, Fann et al. 2011b), wherein modeled 2005 PM 2.5 levels are used to calculate the proportion of all

- cause mortality risk attributable to total PM 2.5 levels in each county in the Cont inental U.S. Within each county we estimate the level of all

- cause PM 2.5 mortality risks for adult populations as well as the level of PM 2.5 mortality risk according to the race, income and educational attainment of the population. Our approach to calcula ting the distribution of PM 2.5 mortality risk across the population is generally consistent with the benefits analysis conducted for the modeled scenario described in Appendix 5 C with two exceptions: the PM 2.5 mortality risk coefficients used to quantify impacts and the baseline mortality rates used to calculate mortality impacts (a detailed discussion of how both the mortality risk coefficients and baseline incidence rates are used to estimate the incidence of PM 2.5- related deaths may be found in the Chap ter 5 of the RIA ). We substitute risk estimates drawn from the Krewski et al. (2009) extended analysis of the ACS cohort. In particular, we applied the all

- cause mortality risk estimate random effects Cox model that controls for 44 individual and 7 ecologi cal covariates, using average exposure levels for

15 In this analysis we assess the change in risk among populations of different race, income and educational attainment. As we discuss further in the methodology, we consider this last variable because of the availability of education

- modified PM 2.5 mortality risk estimates.7
-43

1999
- 2000 over 116 U.S. cities (Krewski et al. 2009) (RR=1.06, 95% confidence intervals 1.04
— 1.08 per 10μg/m 3 increase in PM 2.5. This mean relative risk estimate is identical to the Pope et al. (2002) risk estimate applied for the benefits analysis (though the standard error around the mean RR estimate is slightly different). Within both this and other analyses of the ACS cohort (see Krewski et al. 2000), educational attainment has been found to be inversely related to the risk of all

- cause mortality. That is, populations with lower levels of education (in particular, < grade 12) are more vulnerable to PM 2.5 - related mortality. Krewski and colleagues note that “ ...the level of education attainment may likely ind icate the effects of complex and multifactorial socioeconomic processes on mortality... ,” factors that we would like to account for in this EJ assessment. When estimating PM mortality impacts among populations according to level of education, we applied PM 2. 5 mortality risk coefficients modified by educational attainment: less than grade 12 (RR = 1.082, 95% confidence intervals 1.024
— 1.144 per 10 μg/m 3 change), grade 12 (RR = 1.072, 95% confidence intervals 1.020
— 1.127 per 10 μg/m 3 change), and greater than g rade 12 (RR = 1.055, 95% confidence intervals 1.018
— 1.094 per 10 μg/m 3 change). The Pope et al. (2002) study does not provide education

- stratified RR estimates. The principal reason we applied risk estimates from the Krewski et al. (2009) study was to ensu re that the risk coefficients used to estimate all

- cause mortality risk and education

- modified mortality risk were drawn from a consistent modeling framework. The other key difference between this distributional analysis and the benefits analysis for thi s rule relates to the baseline mortality rates. As described in Chapter 5 of this RIA, we calculate PM 2.5 - related mortality risk relative to baseline mortality rates in each county. Traditionally, for benefits analysis, we have applied county

- level age

- an d sex

- stratified baseline mortality rates when calculating mortality impacts (Abt, 2010 ). To calculate PM 2.5 impacts by race, we incorporated race

- specific (stratified by White/Black/Asian/Native American) baseline mortality rates. This approach improves o ur ability to characterize the relationship between race and PM 2.5- related mortality, however, we do not have differential concentration
– response functions as we do for education. This introduces a significant level of uncertainty to the analysis
. The result of this analysis is a distribution of PM 2.5 mortality risk estimates by county, stratified by each of the three population variables (race, income and educational attainment). We have less confidence in county

- level estimates of mortality than the national or even state estimates, however, the modeling down to the county level can be considered reasonable because the estimates are based on 12km air quality modeling estimates of PM2.5, county level7
-44

baseline mortality rates, and a concentration

- response function that is derived from county level data. We next identified the counties at or above the median and upper 95 th percentile of the PM 2.5 mortality risk distribution. We selected this percentile cut

- off to capture the very highest levels of PM 2.5 mortality risk. Note that the distribution of risk and concentration (a surrogate for exposure ) are almost equivalent here. The second step of the analysis was to repeat the sequence above by estimating PM 2.5 mortality r isk in 2016 prior to, and after, the implementation of MATS. 7.1 1 .3.2 Results We estimated the change in PM 2.5 mortality risk in 2016 among populations living in those counties at the upper 95 th percentile of the mortality risk in 2005
. W e then compared t he change in risk among these populations living in high

- risk counties with populations living in all other counties (Tables 7
- 19 through 7
- 20 )
.7
-45

**Table 7** **- 19**  **. Estimated**  **Change in the Percentage of All Deaths Attributable to PM 2.5**  **Before**

**and After Implementation of MATS by 2016**  **for Each Populations, Stratified by Race** 

**Year Race** 
**Asian Black**  **Native American**  **White Among populations at**  **living in the 5% of counties with the greatest**  **concentrations of PM2.5** 2016 (pre

- MATS Rule) 4.3% 4.4% 4.4% 4.5% 201 6 (post

- MATS Rule) 4.1% 4.1% 5.1% 4.3% **Among all other populations** 2016 (pre

- MATS Rule) 3.2% 3.1% 3.1% 3.3% 201 6 (post

- MATS Rule) 3% 2.9% 2.9% 3.1%
**Table 7 -**  **20 .**  **Estimated Change in the Percentage of All Deaths Attributable to**  **PM 2.5**  **Before**

**and After Implementation of MATS by 2016 for Each Population, Stratified by**  **Race and Poverty Level**

**Year Race**  **Asian Black**  **Native American White**  **Among populations living in counties with the largest number of individuals living below the poverty line**  2016 (pre

- MATS) 3.6% 3.5% 3.6% 3.6% 201 6 (post

- MATS) 3% 3.4% 3% 3.5% **Among all other populations** 2016 (pre

- MATS) 3.2% 4.2% 3.2% 3.3% 201 6 (post

- MATS) 3% 2.9% 3% 3.1%7
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**Table 7** **- 21**  **. Estimated**  **Change in the Percentage of All Deaths Attributable to PM**  **2.5 Before** 

**and After the Implementation of MATS by 2016 for Each Population, Stratified by Educational Attainment** 

**Year Race**  **< Grade 12 = Grade 12**  **> Grade 12 Among populations**  **living in the 5% of counties with**  **greate st PM concentrations**  2016 (pre

- MATS) 6.2% 5.5% 4.3% 201 6 (post

- MATS) 5.9% 5.3% 4.1% **Among all other populations** 2016 (pre

- MATS) 4.5% 4% 3.1% 201 6 (post

- MATS) 4.2% 3.8% 2.9%

Table 7
- 19 , shows the estimated level of PM 2.5 mortality risk among populations of different races according to whether those populations live in counties identified as “greater exposure” counties or “ all other counties. ” As described above, we define “greater exposure ” counties as those at or above the 95 th percentile of the estimated PM 2.5 concentration in 2005, and “ all other counties” as those with estimated PM 2.5 concentrations below this level. The results of this analysis suggest that t he PM 2.5 mortality risk among these populations at “greater risk” falls with implementation of the 2016 MATS. These results also suggest that all populations, irrespective of race, may receive a n estimated reduction in PM 2.5 exposure, and likely mortality risk . However, limits to data resolution prevent us from delineating the PM 2.5 mortality risk according to population race with confidence. Table 7
- 20 illustrate s the estimated change in the level of PM 2.5 mortality risk among populations living in those counties that meet two criteria: (1) the county is at the upper 95 th percentile of PM2.5 concentrations in 2005; (2) the county is at the upper 95 th percentile in terms of the number of indivi duals living below the poverty line. We also estimate the change in PM 2.5 risk among all other counties. The analysis suggests that people living in the highest estimated exposures and poorest counties may experience a larger improvement in PM 2.5 morta lity risk than those living in lower risk counties containing a smaller number of individuals living below the poverty line.7
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Table 7
- 21 summarize s the estimated change in PM 2.5 mortality risk among populations who have attained three alternate levels of ed ucation
— less than high school, high school and greater than high school. As described above, we apply education

- stratified PM 2.5 mortality risk coefficients for this analysis. These results indicate that populations with less than a high school education a re at higher risk of PM 2.5 mortality, irrespective of whether these populations live in

“greater exposure ” counties, according to the definition described above. We estimate that with the implementation of MATS, all populations see their PM 2.5 mortality risk fall, regardless of educational attainment. **7. 12**  **Congressional Review Act** The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required infor mation to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Regi ster. This action is a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). This rule will be effective 60 days after publication
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