THE

ENVIRONMENTAL

COUNCIL OF

THE STATES

----------------------------

50 F Street NW

Suite 350 Washington, D.C. 20001

-----------------------------

Tel: (202) 266

- 4920

Fax: (202) 266

- 4937

Email: ecos@ecos .org Webpage: www.ecos.org

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Richard Opper
Director, Montana Department of Environmental Quality

PRESIDENT

Thomas Burack
Commissioner, New Hampshire Department of Environmental Services

VICE PRESIDENT

Teresa Marks

Director, Arkansas Depar tment of Environmental Quality

SECRETARY

- TREASURER

Michael Linder
Director, Nebraska Department of Environmental Quality

PAST PRESIDENT

_____________ R. Steven Brown

Executive Director July 15 , 2011

Submitted via http://www.regulations.gov

EPA Docket Center (EPA/DC)

U.S. Environmental Protection Agency

Mailcode: 2822T 1200 Pennsylvania Avenue, NW Washington, DC 20460

Re : Docket ID No. EPA

- HQ

- OAR

- 2011

- 0044 (NSPS action)

Docket ID No. EPA

- HQ

- OAR

- 2009

- 0234 (NESHAP action)

RIN 2060

- AP52

To W hom I t M ay C oncern:

On behalf of the Envir onmental Council of the States (ECOS), I am pleased to

submit this comment letter to the U.S. Environmental Protection Agency ( EPA ) on its proposed new rule " National Emission Standards for H azardous Air Pollutants [NESHAP] f

rom Coal and Oil

- Fired Electric Utility Steam Generating Units and

Standards of Performance for Fossil

- Fuel

- Fired Electric Utility, Industrial

Commercial

- Institutional, and Small Industrial

- Commercial

- Institutional Steam Generating Units" [new source performance standards (NSPS)] publi shed i n the May 3, 2011 Federal Register

. T his letter provides comments to EPA on this proposed rule for both the NESHAP and NSPS actions, hereafter referred to as "utility MACT

rule."

S tates are co

- regulators with EPA as we jointly seek to deliver the n ation's environmental protection system.

States have long supported early, meaningful, and substantial state involvement in the development and implementation of environmental statu t es and related rules. Further, states have called on EPA to consult int egrally with the states’ environmental agencies as EPA's offices conduct these efforts in preference to after

these efforts have been discussed and drafted.

States appreciate EPA's commitment through its revised 2008 guidance to consult with states if a p roposed regulatory action is estimated to have an annual effect on state or local governments of $25 million or more in aggregate. EPA’s commitment exceeds the requirements of the Unfunded Mandates Reform Act of 1995 (UMRA)

as well as Executive Order 12866

– Regulatory Planning and Review (1993) and

Executive Order 13132

– Federalism (1999) to consult on proposed regulatory actions that are expected to exceed $100 million or more.

EPA estimates that the proposed utility MACT rule will result in expenditure s exceeding $100 million by state and local governments in aggregate in any one year

, and as such, the proposed rule is considered a significant regulatory action.ECOS comment to docket RIN 2060

- AP52, Ju ly 15

, 2011, page 2

In the proposed rule under "D. Unfunded Mandates Reform Act of 1995, 5. Consultation With Government," EPA notes that it held a consultation meeting with state, local and tribal governments on October 27, 2010. At this meeting, the proposed rule references that officials at the meeting expressed uncertainty "with regard to the potential burden associated with implementing the rule on state and local entities (i.e., burden to re

- permit affected EGUs or update existing permits)."

In the propo sed rule under "E. Executive Order 13132, Federalism," EPA notes that in its March 2011 Regulatory Impact Analysis (RIA), that the option may impose annual "direct compliance costs on an estimated 97 state or local governments. Specifically, we estimate th at there are 81 municipalities, 5 states, and 11 political subdivisions ... that may be directly impacted by today's proposed rule."

In the proposed rule's RIA, Chapter 10 discusses statutory and executive order impact analyses. Section

10.2 addresses UMRA. EPA notes that it identified state and municipality owned utilities and subdivisions that would be affected by the rule. EPA further notes that "after identifying the potentially affected government entities, EPA estimated the impact of the proposed rule in 2015 based on the following:

 Total impacts of compliance on government entities and

 Ratio of government entity impacts to revenues from electricity generation."

EPA's Table 10

- 3 summarizes capital costs plus operating costs, fuel costs, and change in r evenue to reach a total estimated cost of $571 million in 2015 to state and local governments and sub

- divisions.

Beyond these direct compliance costs to government

- owned utilities, no further discussion of costs to

states no r any reference to implementat ion or administrative costs to states can be found in the RIA.

Regarding the October 2010 meeting and the uncertainty expressed by officials regarding potential burden of state administrative costs to implement the rule, no response was found to this pot ential burden in the May 2011 Federal Register notice of proposed rule

- making.

The Unfunded Mandates Reform Act of 1995 directs federal agencies to include a number of statements to accompany significant regulatory actions in a notice of proposed rule maki ng.

EPA in its proposed rule seems to have addressed UMRA Section 202 (a)(3)(a)

, which states that “the agency shall prepare a written statement containing... estimates... of the future compliance costs of the

Federal mandate."

However, EPA in its proposed r ule does not appear to have addressed the statement in UMRA Section 202 (a)(2) that “the agency shall prepare a written statement containing... a qualitative and quantitative assessment of the anticipated costs and benefits of the Federal mandate, including the costs and benefits to State... governments."

In Executive Order 12866 for significant regulatory actions (unless prohibited by law), Section 6 (a)(3)(C)(ii) specifies that agencies should have developed “ [ a ] n assessment, including the underlying analys is, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost ... to the government in administering the regulation [emphasis added]

... ” as part of its decision

- making process. Section 6(a)(3)(E)(i) directs that this inform ation be made available to the public.ECOS comment to docket RIN 2060

- AP52, Ju ly 15 , 2011, page 3

EO 12866 further provides direction in Section 1(a) that " [c] osts and benefits should be understood to include both quantifiable measures (to the fulles t extent that these can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to

consider."

UMRA and EO 12866 are clear in directing federal agencies to consider direct state admi nistrative costs

and to make this information available to the public . This information does not appear to be included in the proposed rule or in underlying supporting documents made available for this rule.

In Executive Order 13132 on Federalism, Sectio n 6. (b)(2)(B) directs that EPA provide to the Office of Management and Budget a federalism summary impact statement (FSIS) containing a number of

elements

, including “a statement of the extent to which the concerns of State and local officials have

been me t.” States continue to remain uncertain of the extent to which EPA is considering state

administrative costs

, including state administrative costs for this proposed utility MACT rule.

ECOS and state environmental agencies have discussed with the EPA Offic e of Policy a number of categories of state implementation costs as a result of implementing new rules. For each new EPA rule, states may incur slightly different implementation costs. Cost categories may differ from state to state depending on legislative and regulated community differences. States ask that EPA consider as appropriate state costs for a wide range of implementation start

- up and recurring activities in its implementation cost estimation for this rule, as well as for other rules, using the at tached checklist (see Attachment). ECOS requests that EPA consider this full range of implementation cost items in its estimations for this rule before the final rule takes effect. ECOS also requests that EPA seek to secure federal funding for the states t o cover the customary portion of the costs associated with the state implementation of this federal rule and consider the availability of funding support in its planning for new rule adoption schedules and other implementation activities following new rule issuance.

Start

- up and recurring implementation costs to the states as a result of this rule are detailed in the attachment to this letter and may include, for example: obtaining additional delegated authority; attending EPA training; developing a syste m for monitoring affected entities; purchasing new equipment to enforce the new regulation; providing compliance assistance; conducting ongoing public outreach and education programs (to the regulated communities) on how to comply with the state agency’s

i mplementation of the rule; collecting and reviewing data from monitoring, recording, and storing data; and conducting enforcement inspections and follow

- up actions.

We seek to ensure here that all pertinent costs are included in any estimate the agency pr oduces. Failure to include an accurate assessment of the implementation costs may result in a rule that is not implemented properly or in a timely manner, which may adversely affect human health.

ECOS requests that EPA concurrently publish implementation guidance for this rule to states at the time of new rule issuance. Timely issuance of implementation guidance would facilitate state adoption of the new rule as well as increase state and EPA staff resource efficiency in completing activities related to

ne w rule adoption.

States have shared with EPA on a number of occasions the importance of having information about the costs to implement and administer new federal rules to share with the U.S. Congress and state legislatures and to use for planning resourc e needs. Costs of implementation of the rule can be covered two ways. The first is through U. S. Congressional appropriations. The other is through increases in permit fees allowed for Title V activities in the Clean Air Act. It may however, not be expedie nt toECOS comment to docket RIN 2060

- AP52, Ju ly 15 , 2011, page 4

receive state legislative approval for permit fee increases. If EPA estimated state administrative costs along with state direct compliance costs, the estimates might assist both the EPA in justifying their request for appropriations and states in justifying permit fee increases. States continue to request that EPA consider state administrative costs and make this information available as directed in UMRA, EO

12866 and EO 13132.

For the proposed utility MACT action, EPA needs to ensure that the mandate to consider state administrative costs as well as the mandate that this information accompany this significant regulatory

action have both been met.

We appreciate the opportunity to offer these comments. If you have any questions, please contact Steve
Brown, sbrown@ecos.org , 202

- 266

- 4920.

Sincerely,

Leo M. Drozdoff Chair, ECOS Planning Committee Director, Nevada Department of Conservation and Natu ral Resources

c c: ECOS Officers Steve Brown, ECOS Michael Goo, U.S. EPA Office of Policy Bicky Corman, U.S. EPA Office of Policy Sarah Hospodor

- Pallone, U.S. EPA Office of Congressional and Intergovernmental Relations

AttachmentAttachment

Excerpt f rom " White Paper Recommendations for Enhancing EPA’s State Administrative Cost Analyses, WORKING DRAFT, August 20, 2009 "

Table 3: Revised State Administrative Activity Cost Framework

Start

- Up Activity Categories Specific Activ ities

1. Tracking EPA’s Rulemaking Progress Review the Federal Register notices and/or other documents in order to decide whether to apply for delegated authority.

Attend EPA

- sponsored meetings/conferences on the rulemaki ng Attend other non

- EPA meetings/conferences on the rulemaking Provide EPA directly with comments on the proposed rule. Provide EPA with comments on the proposed rule through a third party (e.g., ECOS).
Conducted other start

- up activities associated with tracking EPA’s rulemaking

process.

2. Obtaining Additional Delegated Authority Work with EPA to obtain delegated authority Amend state law to incorporate the requirements of the new regulation. Issue new regulations in accordance with the requirements of state law 1
Incur litigation costs associated with the change in state laws.
Conduct other start

- up activ ities associated with obtaining additional delegated authority or the decision whether or not to obtain that authority.

3. Designing Implementation Plan Design alternative standards to those in the federal regulation

Per form activities related to obtaining EPA approval for the state implementation plan
Me e t with stakeholders and respond to concerns Conduct other start

- up activities associated with designing implementation plans

4. Genera l Start

- Up Activities Develop internal guidance and procedures for implementing the new regulation

Hire additional staff because of this rule Attend EPA training or other non

- EPA sponsored training for i mp lementing the new regulations Conduct internal training
Conduct other start

- up activities

5. Compliance Assistance Conduct outreach programs for affected entities Conduct public outreach and education programs to create awareness Develop training programs to help affected entities comply with the new regulation
Conduct other start

- up activities associ ated with compliance assistance

6. Permit Administrati on Develop additional infrastructure for permit admi nistration because of this rule Develop specific permit requirements
Conduct other start

- up activities associated with permit administration

7. Monitor ing Develop a system f or monitoring affected entities Purchase new equipment for monitoring purposes Develop new infrastructure for carrying out monitoring
Conduct other start

- up activi ti es associated with monitoring

8. Inspection and Enforcement Establish new procedures f or enforcing the new regulation Purchase new equipment for enforcing the new regulation
Conduct other start

- up activit ies associated with enforcement Recurring Activity Categories Specific Activities

9. Compliance Assistance Conduct ongoing training (in addition to the initial start

- up period) Respond regularly to letters, phone calls, emails or other inquiries in or der to assist affected entities; respond to inquiries by the media and the public
Conduct ongoing public outreach and education programs to create awareness Conducted other recurring activit ies associ ated with compliance assistance

10. Permit Administration Conduct regular reviews of submitted documents and supporting materials Verify data sources on a regular basis
Consult with facilities regularly about permitting process Issue notifications to affected entities about permits Provide opportunities for the public and/or stakeholders to comment on ongoing permitting processes Issue/review pe rmits to affected entities Conduct other recurring activities associ ated with permit administrationTable 3: Revised State Administrative Activity Cost Framework

11. Monitoring Collect data from monitoring on a continuous basis

Review co llected data on a regular ba sis

R ecord and store monitoring data Report monitoring data Provide notifications of monitoring requirements and schedule Conducted other recurring activities associated with monitoring.

12. Inspection and Enforcement Conduct and review regular inspections for regulatory enfor cement purposes If a national inspection priority, conduct additional inspections as per state

- region negotiated workplan Respond to citizen complaints Issue warnings and/or citations for violations Take legal action to enforce regulation
Collect fines for violations

Provide notif ications of enforceme nt actions Keep records for enforcement actions Report enforcement activities to EPA Conducted other recurring activit ies associated with enforcement Incur additional recurring costs assoc iated with enforc ement activities

13. Other Any other types of recurring activities not categorized above

1 While some states may simply incorporate federal rules by reference, others must undergo an in

- depth rulemaking process involving public notice, impact statements, rulemaking hearings, recordkeeping and various other steps