### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

1 Environmental Protection Agency (EPA) : Proposed Rule

Cross

- State Air Pollution Rule for the 2008 Ozone

National Ambient Air Quality Standards

RIN 2060

- A S05

General Comments

1. Reviewer recommends updating the discussion for the final Ozone NAAQS that have been completed.

EPA Response:

Per the commenter’s suggestion, EPA updated the 2015 ozone NAAQS sections

. Among
other points

, the updates reflect:

o Timing of designations.

o Steps taken under this rule to reduce interstate ozone transport will help states attain and maintain the 2015 ozone NAAQS.

o Transport SIPs to address the 2015 ozone NAAQS would be due 3 years after promulgation. Specifically, these SIPs will be due Oct. 1, 2018.

2. Recognizing that the modeling was done prior to the budgets being invalidated by the D.C. District Court, reviewer recommends that a minimum providing a more complete discussion of how the baseline without the phase 2 ozone season emission budge ts would
influence the benefits and costs of the rule.

EPA Response:

This proposal is a single regulatory action that achieves two purposes simultaneously

– it addresses transport obligations under the 2008 ozone NAAQS while also addressing the

remanded ozone

- season NO X budgets. The costs and benefits quantified for this single regulatory action compare the world without this action (base case), and with this action (policy case); therefore, the estimated costs and benefits already reflect the impacts of addressing the remanded oz one

- season NOx budgets.

3. Reviewer recommends requesting comment on higher cost thresholds greater than $3,400/ton that would require some installation of new SCRs/SNCRs, including requesting comment on the appropriate timetable/phase

- in needed to accommodate new
installations.

EPA Response:

E PA will reque st comment on higher cost thresholds per the commenter ’s suggestion

. E PA examined higher cost thresholds an d found fe w additional significant abatement technologies available beyond those identified at $3,400

. However, EPA will clarify that

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

2 it is taking comment on the representativeness of the $3,400/ton cost threshold for the described technology. EP A bel i eves 2017 is the most appropriate timeframe by which to require compliance with the proposed budgets as it aligns with the attainment date for the 2008 ozone NAAQS, consistent with instruction from the court in North Carolina v. EPA
and C lean Air Act s ect ion 110(a)(2)(D)(i)(I) as described on page 16 of the preamble

. 1 EPA is taking comment on the 2017 compliance timeframe and the control feasibility for that timeframe on page 122. EPA request s comment on the $3,400/ton value on page 126.

4. Reviewer recommends requesting comment on the potential to cover non

- EGU sources as part of this rulemaking. To the extent that there are non

- EGU lower

- cost methods of compliance, this would imply that the rule is not cost

- effective. This appears to be a signific ant omission and inconsistent with the analysis within the latest ozone NAAQS, which includes other control strategies.

EPA Response:

Per the commenter suggestion, EPA will request comment on the potential to cover non

EGU sources as part of this rulemak ing. EPA notes that the rule assesses what controls

are cost

- effective at $1,300/ton by 2017 in order to provide reductions in a timeframe aligned with the attainment date for the 2008 ozone NAAQS , consistent with the D.C.
Circuit’s instruction in North Carolina. EPA’s initial assessment is that controls at non

EGU sources are not feasible within this timeframe even though they may ultimately prove to be less than $1,300/ton over a longer timeframe. EPA expects to consider these
abatement measures at a later time as this proposed rule would not fully address interstate transport with respect to nonattainment and maintenance issues in downwind states. Consistent with the comment, the preamble requests comment on the non

- EGU assessment on page 130. The non

- EGU TSD has detailed information on control costs and feasibility of control installation in the proposed 2017 compliance timeframe. The TSD is consistent with the analysis done within the 2015 ozone NAAQS.

5. Reviewer recommends removing the “state of the art combustion controls” measure. Specifically, the reviewer believes t hat EPA’s assumption that “state of the art combustion controls” (i.e., low NOx burners and overfire air) can be installed and operational within 6 months is much too optimistic. Whil e this equipment is proven and readily available, it is complex and must be tailored to each particular boiler type, size, and fuel properties and integrated into the unit’s digital electronic control system. Time must be allowed for engineering analysis and design, procurement, bid evaluation and selection, manufacturing, installation, and tuning. An outage window of several weeks is also required for installation. Reviewer recommends providing for 18

– 24 months or
more to install new low NOX burners a nd overfire air on a utility boiler. Since the majority of utility units in the CSAPR states have already installed low NOx burners and

1 Note

– page numbers referenced in responses pertain to initial preamble and RIA versions submitted.

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

3 in many cases overfire air, the reviewer does not believe that removing this provision will have a significant effect o n the final state emission budgets.

EPA Response:

EPA does not agree that removing the “state

- of

- the

- art” combustion controls measure is necessary. However, it will modify the language to replace “within 6 mo nths” to

“ consistent with the timeframe of this rulemaking and its compliance dates ” as sources are expected to have more than six months between signature and the beginning of the compliance period

. EPA will also add additional citations and supporting language on page 127 regarding the feasibili ty of installation of these controls on the proposed 2017 compliance timeframe. Moreover, this rule does not impose any technology requirement by 2017. Sources have the flexibility to comply through a variety of methods such as running existing installed controls or buying allowances.

Even though not required, if sources choose to install/upgrade combustion controls by the
2017 ozone

- season, EPA believes there is historical precedent indicating that sources can
make such modifications within that timefr ame. These controls are fully proven, widely used, and with a reasonable effort can be procured, designed, installed, tested and be in operation on any coal

- steam EGU in less than one year. Since Low NOx burner and/or overfire air is a mature technology requiring a short time to complete installation, the Agency concludes that sufficient time exists for EGU owners to select this option for compliance. Construction time requirements for installing combustion controls were examined by the EPA during develo pment of previous CSAPR rulemaking and are reported in the TSD for that rulemaking entitled; “Installation Timing for Low NOx Burners (LNB)”, Docket ID No. EPA

- HQ

- OAR

- 2009

- 0491. EPA will take comment on the timing feasibility of these controls.

6. Reviewer r ecommends providing additional clarification on how the allowance bank has reached the size that it has and has not been more fully used.

EPA Response:

Per the commenter's suggestion, EPA will add some more description to its explanation already present on page 179. The allowance bank discussed in the preamble is an estimate, as the size of the actual allowance bank will not be known until post 2016. T he
estimate was developed using recent historical emissions data relative to the budgets to
calculate the total unused allowances anticipated after the 2015 and 2016 ozone season.

As described on page 179, the allowance bank is anticipated to occur due t o quantities of excess allowances resulting from both market forces (e.g., observed gas prices lower than originally forecasted natural gas prices) and the tolling of the CSAPR implementation (2012 budgets were not applied until 2015). During this three y ear delay, turnover in fleet put downward pressure on NOx emissions and helped push fleet

- wide emissions below their budgets initially designed for 2012.

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

4 7. Reviewer recommends requesting comment and evaluating the full spectrum of the allowance bank, incl uding ratios of 3

- to

- 1 and 4

- to

- 1.

EPA Response: Consistent with the comment, EPA is requesting comment on page 186 of more or less restrictive approaches (e.g., different surrender ratios) to address the allowance bank. EPA does not plan on any additional evaluation at th is time other than what is outli ned on page 180 of the preamble that resulted in the proposed 4:1 surrender ratio.

8. Reviewer recommends providing additional discussion around the uncertainty engendered from allowances banked from 2015 and 2016. Similarly, it would be useful to know why the 4

- to

- 1 ratio based on the ratio of the anticipated allowance bank in 2017 to the ozone season variability limit is the right approach to use. Are there modeled results that support this choice ?

EPA Response:

The proposed trading ratio for banked allowances is the product of analysis of recent historical emissions data relative to the budgets to estimate the total unused allowances anticipated after the 2015 and 2016 ozone seasons. EPA is t aking broad comment on the treatment of banked allowances and the analysis leading to the proposed 4:1 ratio. The concerns about the banked allowances lies in their ability to reduce the effectiveness of the 2017 emission budgets. If EPA permits use of t he banked allowances at a 1:1 ratio, regional emissions would be expected to significantly exceed the collective 2017 emissions budget and the ozone

- season trading program would not achieve necessary emissions reductions to address downwind air quality.

E PA believes that a carryover of banked allowances equal to the variability limit was appropriate. The variability limit expects the upper bound variation in emissions EPA would expect in a ny given year. Thus, carryover of one year’s worth of allowances provides the affected fleet with the ability to accommodate yearly variation from the
mean in its load and emission patterns, while balancing the need to ensure that emissions are reduced, on average, to the level of the budgets and within the assurance le vels in subsequent years.

9. When considering EGU NOx mitigation strategies, EPA includes generation shifting to

lower NOx

- emitting EGUs as a mitigation strategy. EPA limits shifting generation to

units with lower NOx emission rates within the same state du e to the near

- term 2017 implementation timing for this proposed rule and takes comment on this limitation. Given the regional nature of the power sector, is there a reason to include such a limitation?

EPA Response:

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

5 Consistent with EPA's approach to anchor budgets in state

- level historical generation values, EPA d oes not feel it i s appropriate to codify the near

- term interstate generation shifting projections of a model directly into a n emissions budget for this rulemaking . The

model is a least

- cost linear dispatch model that reflects perfect foresight over a 40 year

time frame. There may be some non

- economic and out

- of

- merit order dispatch variables at the state level not recognized by the m odel , but particularly relevant to the near

- term
time horizon relevan t for this rule's compliance period. Consistent with the comment, EPA request stakeholder comment on imposing this limitation on page 129.

10. Reviewer recommends requesting comment on other approaches to allocations besides based on historical heat input and historical emissions (with set

- asides) for 2017 in addition to later compliance years. The current proposed approach would favor the historically highest

- emitting plants, by providing a windfall.

EPA Response:

Per the suggestion, EPA will take general comment on the allocation approach proposed. However, EPA believes there is a misunderstanding in the above comment. The proposed approach relies on historical emissions as a mechanism for capping allocations to sources, not as an apportioning mechanism. Limiting allocations to levels below the historical maximum emissions prevents surplus allowances rather than providing for it as suggested by the comment. For example two sources with identical heat inputs in a state (one coal

- fired EGU and one gas

- fired EGU) would have the same allocation under EPA’s proposed approach (assuming that allocation is less than their historical maximum emissions).

Specific Comments

1. Page 17

– Reviewer re commends clarifying whether EPA is taking comment on options to evaluate interstate transport as it relates to western states.

EPA Response: EPA will clarify in the preamble

.

2. Page 24

– Reviewer recommends clarifying the timeframe for the updated analysis.

EPA Response: The existing preamble language says that the updated analysis will be performed for the
final rule base d on comments on the proposal. EPA will modify the preamble to clarify
this.

3. Page 30

– Reviewer recommends providing citations for the “authoritative assessments”
references.

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

6 EPA Response:
EPA will modify the preamble to address this comment.

4. Page 33

– Reviewer recommends replacing the following sentence:

a. “Ozone causes a variety of negative effects on human health, vegetation, and ecosystems.”
b. With the following: “ Exposure to ambient ozone causes a variety of negative effects on human health, vegetation and ecosystems. ”

EPA Response: EPA will modify the l anguage per commenter suggestion

5. Page 180

– Reviewer recommends clarifying where the information is derived from and calculated for the 210,000 tons by the start of 2017 ozone

- season compliance period, including citations, where appropriate.

EPA Respons e: EPA will clarify, see response to comment #6 and #8 above.

Regulatory Impact Analysis

1. Reviewer recommends providing a justification for why $1,300/ton was chosen for the primary analysis. EPA states that $1,300/ton is not an artifact of IPM modeling, rather it is an exogenous assumption that was imposed on IPM. Reviewer also recommends providing explanations why $1,300/ton, $3,400/ton, and $500/ton were chosen and no
numbers in between.

EPA Response: This is exp lained on pages 120

- 121 of the pream ble. These cost thresholds were chosen as they reflect technology break points where new abatement measures were consider e d (exogenously to the model) to become cost effective. These breakpoints reflect an engineering assessment of when the technologies become cost effective . EPA did not identify any other technologies for NOx mitigation purposes that would be cost

- effective and available by 2017.

2. Reviewer recommends providing a discussion of SCR idling including how likely it is. Specifically, it does not appear that idling SCR and SNCR is straight forward depending on whether the affected entities built in bypass structures. Are there implementation concerns about whether idling is possible without a bypass? If so, how would this affect EPA’s analys is?

EPA Response:

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

7 Id ling of either SCR or SNCR is straightforward. In either case it involves simply stopping injection of the reagent, typically by closing a valve and turning off a pump; no flue gas bypass capabilities are needed. It is true that a few SCR installations have included provisions for bypassing flue gas around the SCR, so that maintenance or catalyst replacement can be performed while the boiler continues operating, but this is not common. On the other hand, many SCR installations do inclu de provisions for partial bypass of flue gas around the boiler economizer, or partial bypass of feedwater around the economizer, in order to raise the temperature of flue gas entering the SCR catalyst at low loads. These flue gas temperature control bypass es are used during the startup and shutdown of the boiler and SCR, not for idling the SCR. EPA will add footnote to RIA
refere ncing these points

.

3. Reviewer recommends providing additional clarification as to why 2017 was chosen as the analytical year, especially since EPA had to “adjust” 2018 IPM modeling results to produce 2017 results presented in the analysis. Given the lag in the implementation of ozone NAAQS as well as the number of rules in the baseline, especially the Clean Power Plan, EPA shoul d look at years further out such as 2030.

EPA Response:

EPA will modify the preamble to address this comment Response: Pages 1

- 5 and 1

- 6 of the RIA clarify how the choice of a 2017 compliance timeframe was prompted by a
revision to the attainment date f or the 2008 ozone NAAQS and the instruction in North
Carolina that EPA’s compliance timeframe to address interstate transport be aligned with
the relevant attainment date

. In addition we have added to, and clarified, language on p.
1

- 6 which explains the choice to report emissions information for 2017 as well as certain impacts in 2020.

4. Table ES

- 1

– Reviewer recommends clarifying why t he less stringent option results in a greater reduction in CO2 than the proposed or more stringent option.

EPA Response:

The CO 2 emissions reductions are better understood by segmenting into both the covered region and non

- covered region impacts. Within the covered region, the more stringent policy results in greater emission reductions for CO 2 as would be anticipated. Ho wever , the more stringent policy results in slightly fewer emission reductions at the national
level due to emission increases in the non

- covered region.

5. Reviewer recommends discussing at least qualitatively how adding the Phase 2 emission budgets would affect the baseline.

EPA Response:

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

8 The CSAPR NO x ozone season Phase 2 emission budgets are in the baseline. See p. 3

- 5
of the RIA. EPA will clarify in the RIA text that these budgets are included in the base case analysis.

6. Table 5

- 7

– Reviewer recommends clarifying why there is a larger percentage decrease in coal capacity in the less stringent alternative and how does that reconcile with a lower MW coal capacity decrease a few rows below in the same table.

EPA Response:
The correct number for the national coal capacity for the two rows referenced are below.

EPA will make the correction in the RIA. $500 $1,300 $3,400 Coal Capacity % Change:

- 0.14%

- 0.14%

- 0.16% Coal Capacity Change (MW)

- 266

- 282

- 318

7. Table 5

- 8, asterisk

– Should the analysis be in cents/kWh?

EPA Response:

Table 5

- 8 currently presents the change in electricity prices in % terms. The changes are quite small (e.g., 2018 in

- region is

- 0.01%). EPA did not believe reporting the change in cents/kwh is practical. For example, the 2018 in

- region average price decrease is

- $0.000096/kwh (a very small ch ange from the in

- region base case average price of 9.7 cents/kwh. Per the commenter suggestion, we will revise the table to present the 2018 projected retail prices in cents/kWh, and also the % change as shown

.

8. Page 6

- 2

– Reviewer recommends clarifying the sentence “The estimated benefits associated with these emissions reductions are beyond those achieved in previous EPA rulemakings, including the finalized CPP.”

EPA Response:

Per the commenter suggestion, EPA will revise the sentence to read: “ The e stimated benefits associated with these emissions reductions are additional to those achieved by previous EPA rulemakings, including the finalized CPP. ”

9. Table 8

- 2

– Reviewer recommends providing CO2 emissions in metric tons as Table
ES

- 1 is in metric tons and should be reported consistently throughout the document.

EPA Response:

### Summary of Interagency Working Comments on Draft Language under

EO12866/13563 Interagency Review. Subject to Further Policy Review.

9 All CO 2 tons in the RIA will be changed to be consistently reported in short tons. This is
consistent with what EPA did in the CPP RIA and consistent with reporting requirements

.