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Major Rule Preamble 

Interim Final Rule

Has EPA considered issuing an interim final rule to address issues for which they 

received comment on but haven’t yet analyzed or considered those comments? Note 

that in an interim final rule, all aspects of the rule would be effectively final, but it would 

allow for comment and possible amendment of the final rule. 

For instance, has EPA considered issuing an interim final rule with a solicitation for 

comments on acute exposure, cumulative effects, and data necessary to calculate a 

facility-by-facility HBEL? If not? 

HBEL

In the 2004 rule [55244] EPA stated, “To identify HAP with potential to cause multimedia 

and/or environmental effects, the EPA has identified HAP with significant potential to 

exist in the environment and to bio-accumulate. This list does not include HCl or 

manganese, which are the only HAP with health based compliance alternatives in the 

final rule.” EPA went on to state, “Additionally, a screening level analysis conducted by 

the EPA indicates that acute impacts of these HAP from industrial boiler facilities are 

highly unlikely. For these reasons, we do not believe that emissions of HCl or 

manganese from industrial boiler facilities will pose a significant risk to the environment 

and facilities attempting to comply with the health based alternatives for these HAP are 

not required to perform an ecological assessment.” EPA states in the draft final rule 

that its concerns about environmental impacts and the cumulative impacts of acid gases 

“were not assuaged by the comments received.” Could EPA please describe in the 

preamble what has changed since 2004 that led to its reevaluation of environmental 

impacts and impacts of acute exposure to acid gases? Could EPA also explain in more 

detail why the information provided in the comments falls short? 

Does section 112(d) specify that emissions levels must be set or emissions standards? 

Are standards equivalent to levels? Can a standard consist of a methodology that 

applies equally to all facilities that results in exposure less than a given health 

threshold? 

Also, according to the statistical data provided, there is a wide variation in exposures 

that would result from similar emissions levels of different facilities because of different 

physical configurations. It therefore seems possible that an HBEL set on a nationwide 

basis would only be useful to a small sample of facilities with the most advantageous 

physical configuration. Section 112(d)(3) is very specific about the methodology to be 

used to set emissions limits generally. What is the methodology (including statistical 

methodology) specified in 112(d)(4) for establishing an HBEL on a nationwide basis? 

In its proposal, EPA indicated interest in receiving data to develop a “model plant” for 

each of the subcategories, to enable dispersion modeling. Wouldn’t this approach 
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ultimately require site-specific testing and an eligibility determination based on actual 

emissions data from a given plant? 

Has EPA consider an HBEL for manganese, or the use of a Total Select Metals 

approach for manganese? If not, why? 

Cost Estimates

The adjustment of subcategories and the new emissions limits based on data received 

has lowered EPA’s projected total capital costs by $4.4 billion, a reduction of almost 50 

percent. Regarding industry’s claim that the capital costs of the proposed rule would 

have been closer to $20 billion, to what extent has EPA modified its cost estimates to 

reflect industry’s comments? 

We also note that there is no estimate of the cost savings that would result from the 

HBEL alternative in the Regulatory Impact Analysis. Absent this information, a facilityby-facility HBEL, as proposed by industry, may still result in significant cost savings. 

Consistent with Executive Order 13563, could EPA quantify the anticipated costs of the 

draft final boiler MACT with and without an HBEL alternative? Regardless of the 

marginal impact (both costs and benefits) of the HBEL relative to the draft final rule’s 

chosen alternative, this supplemental analysis may provide useful information during the 

reconsideration phase of this final rule EPA has committed to. 

Emissions Limits

 Is EPA sure that the CO and NOx limits can be met simultaneously given that NOx 

increases when CO decreases and vice versa? If so, please describe in more detail the 

reasoning behind this conclusion. 

Energy Audits

Will federal agencies have an opportunity to comment on the energy audit provisions 

again when the Notice or Reconsideration is published? There is concern that requiring 

Federal facilities to comply with the energy audit provision of the rule is duplicative and 

unnecessary since Federal facilities are already subject to energy reductions goals 

under E.O. 13514 and "Comprehensive Energy and Water Evaluations" under the 

Energy Independence and Security Act for which DoE has developed detailed guidance 

and criteria. Similarly, has EPA considered clarifying that the energy audits required by 

EISA and E.O. 13514 would be sufficient for compliance with this provision? 

Tune-Ups

Several reviewers suggested that the documents provided to the interagency group do 

not provide support for EPA’s assertion that a 1% efficiency results from a tune-up – 

can EPA provide more information to support the 1% efficiency assumption included in 

the benefits estimates: 

The first document asserts a 1 to 5% efficiency gain in the executive summary, but does 

not provide a basis for the statement. The detailed tables present a confusing picture, 
Summary of Interagency Working Comments on Draft Language under

EO12866 Interagency Review.  Subject to Further Policy Review.

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since the time since last tune-up would have a significant impact on the projected fuel 

savings and costs. Nor is every boiler recommended for tune-up. The cost savings for 

annual tune-ups aren’t presented here. 

The second document was produced by “The Sustainable Energy Authority of Ireland,” 

but it isn’t sourced either. The graph is presented without additional information to 

support it. Also problematic is that the document is specifically about home boilers (i.e., 

very small and not subject to this rule) and is limited to home heating fuel sources (i.e., 

not coal or biofuels). 

RIA 

Challenges in Monetization of the Benefits of Reductions in HAPs

We applaud EPA for including detailed modeling of the Major Source Boilers MACT 

rule’s estimated reductions in mercury dispositions, which is a great initial step towards 

quantifying benefits for mercury reductions. We also applaud EPA’s more detailed 

modeling, at the boiler-sector-level, of the Major Source Boilers MACT rule’s estimated 

benefits. However, the preamble and RIA would benefit from a fuller discussion 

regarding the difficulties preventing monetization of reductions in HAPs, discussion of 

the qualitative benefits of reducing HAPs, and why quantified benefits are reductions in 

PM and ozone. At a minimum, we think EPA’s discussion on this topic can be improved 

by addressing the tone of the preamble and RIA language. 

For example, we suggest that this issue be acknowledged explicitly in the introduction, 

the executive summary, etc. A footnote to Table 1-1 isn’t sufficient. The fact that this 

RIA fails to monetize the objective of the regulation is not noted explicitly until the 

bottom of page 7-1. 

Presentation of Direct Benefits

Suggest putting the HAP benefits discussion that begins on page 7-36 up front more 

prominently, since this is the reason the Clean Air Act requires regulations of these 

sources, and this should therefore not be omitted. 

Interaction between this rule and others

Can EPA include a discussion of the interaction between this rule and others that 

regulate PM? If PM is abated from boilers, does that mean more PM can be emitted 

from other sources? If PM has already been abated from other sources, and as a cobenefit from other rules, does that mean the EPA’s standard valuation of PM reductions 

is becoming overstated? Has EPA made any adjustments to this analysis to account for 

potential double-counting of impacts (both costs and benefits); for example, by 

considering whether some boilers in PM-nonattainment areas may already be obliged to 

control PM or precursors? 

Discussion of EPA’s Analysis on the Employment Impacts of the Rules
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The RIA would benefit greatly from clarified exposition of the methodology used for 

employment impacts. 

In particular, EPA should be clear that they are not using the multimarket, partial 

equilibrium model to estimate employment effects. They are only using parameters from 

Table III of the Morgenstern et al paper (for now. On the call they mentioned potentially 

quantifying the impacts for the two other employment effects they listed, but are not 

addressed by Morgenstern et al). I’ve made some suggestions in the redline text. 

The employment effects, for the Major Source rule, should match in the preamble and 

the RIA. Currently, they differ. 

Employment impacts are reported as ranges, and are estimated using parameters from 

an academic paper in the literature (Morgenstern, Pizer, and Shih (2002)). The paper, 

examining data from four industries, concludes that increased pollution abatement 

expenditures generally do not cause a significant change in employment, and is so 

described in both the preamble and RIA. It is helpful that EPA includes a detailed 

discussion of the potential issues associated with using the paper and its limitations, 

while also describing its appropriateness for use in this context. 

The paper divides labor effects into three parts: a demand effect, a cost effect, and a 

factor-shift effect (changes in labor-intensity). The demand effect is negative, cost effect 

is positive, but the factor-shift effect could be either negative or positive, depending 

upon the relative labor-intensity of post-regulation production technologies. For 

transparency and methodological clarity, it would be helpful to describe the calculations 

for all three effects, in the RIA. Currently only the demand effect has a description. 

In addition, because the final rule includes requirements for work practice standards 

(“tune-ups”) that were not in the proposal, it would be helpful to include discussion of 

how this change has impacted the employment estimates (if work practice standards 

are labor-intensive, presumably through the factor-shift effect), separately by the Area 

Source Boilers MACT rule (where all sources are subject to work practice standards) 

versus the Major Source Boilers MACT rule (where some sources face work practice 

standards). 

It appears that EPA assumes employment changes are proportional to output changes; 

if this is not the case, EPA should clarify that in the text. If it is the case, then the text 

describing the multi-market model in Appendix 2 is inconsistent with the employment 

effect assumption. Specifically, the following statements are problematic: 

 Model time horizon (“short-run”) 
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– fixed production resources (e.g., capital) leads to an upward-sloping 

industry supply function 

– firms cannot alter input mixes; there is no substitution among production 

inputs (capital, labor, energy intermediates, and other intermediates) 

– price of labor (i.e., wage) is fixed 

Ignoring intermediate inputs (which you can because the intermediate technology is 

assumed Leontief), if capital and wages are fixed, output can change only by changing 

labor hours of employment. However, any given percent change in employment with 

capital fixed will lead to a smaller percent change in output (depending on the 

capital/labor ratio of the industry), which is inconsistent with the assumption that 

employment changes are proportional to output. 

We do not recommend changing the above text, since (except for the Leontief 

intermediate assumption) it describes standard assumptions for partial equilibrium 

models. One option is to redraft the text describing the “medium run” employment 

assumptions more carefully. Or, you could provide “short-run” and “medium-run” 

employment change estimates. The next paragraph describes how you could calculate 

“short run” employment effects consistent with the multi-market model assumptions 

(essentially, assuming capital and wages are fixed). The “medium-run” employment 

changes you’ve already calculated are an approximation of the employment effect after 

the capital stock has had a few years to adjust. 

Given the employment data and some compensation data from BLS, it should be 

possible to estimate the implied wage bill for each of the 100 sectors. Using the share 

of the wage bill in total output, and assuming fixed wages (and ignoring intermediate 

inputs), it would therefore be possible to calculate the percent change in employment 

required for a given percent change in output. 

The change in jobs range for the major boiler rule ranges between -3000 to 6000; the 

estimated change in jobs range for the area boiler rule ranges between -1000 to 2000. 

Would EPA articulate the job changes associated with compliance costs? Would EPA 

articulate the job changes associated with production decrease? 

Also, are the job effects analyzed outside the multimarket analysis? The multimarket 

analysis lists the following assumptions: (1) firms cannot alter input mixes (4-2), and (2) 

price of labor is fixed (4-2). Please explain whether the job effects results are consistent 

with the multimarket analysis results, and why. 
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Chapter 4 states that the “analysis’ time horizon is the intermediate run” (4-1). But the 

analysis goes on to state that “multimarket models focus on ‘short run’ time horizons.” 

Please discuss how the multimarket models were adjusted to analyze intermediate time 

horizon effects. 

Cost Estimate Methodology

Please provide undiscounted stream of costs estimated to occur with the rules. Over 

how many years are the capital costs spread over? 

Energy Audit Benefits

The assessments are presented as a top-line cost in RIA sec 3, but it’s not clear in the 

RIA of the reasoning for adopting it in addition to the tune-up. 

Impacts of Rules on Small Entities

One reviewer stated that it does not appear that EPA has demonstrated compliance 

with the RFA, raising serious concerns about the rules as a whole. 

For the major source rule, EPA provides a brief statement referencing the Initial 

Regulatory Flexibility Analysis (IRFA) from the proposed rule and a conclusory 

statement about the impacts on small entities. (See VIII.F of the preamble.) 

• The requirements for a Final Regulatory Flexibility Analysis (FRFA) differ from 

those for an IRFA, so a simple cross-reference is not sufficient. 

o EPA must respond to public comments on the IRFA, and specifically respond to 

comments from Chief Counsel for Advocacy. 

o Analysis prepared for the IRFA and the justifications for alternatives selected 

were based on the regulatory alternatives prepared for the proposed rule. New 

alternatives under consideration require a new discussion for the FRFA. 

• EPA has not provided an estimate of the number of small entities affected by this 

rule or explained why such an estimate is not available. 

• According to RIA Table 5-2, more small entities reach the 3% threshold under the 

final rule than the proposed rule, which contradicts the statement in the preamble. 

• EPA should direct the reader to its description of steps the agency has taken to 

minimize the significant economic impact on small entities. 

For the area source rule, EPA says in the preamble that it is certifying but the RIA says 

EPA cannot certify. It seems that EPA does not have a sufficient factual basis upon 

which to certify. EPA should prepare a FRFA that addresses the statutory points, 

including response to comments. The statutory points are summarized as follows: 

• EPA needs to provide an explanation of its assumptions about compliance costs 

and revenues. 

• EPA needs to estimate the number of small entities affected. 

• Average revenues are highly misleading, and that any significant variation in 

revenue or compliance cost would lead to significant economic effects. 
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• Even small changes in revenue for non-profits and public institutions have 

significantly greater impact that they might for private institutions. 

Memo titled “Revised Methodology for Estimating Cost and Emissions Impacts 

for Industrial, Commercial, Institutional Boilers and Process Heaters National 

Emission Standards for Hazardous Air Pollutants – Major Source 

Work Practice Costs 

We suggest EPA provide a source for its tune-up costs. The wide range of boiler sizes 

and fuels makes a single number hard to justify without more explicit support. 

On page 7, we suggest EPA should restate their annualization assumptions here as 

they do in the next bullet. 

If the cost of tune-up is related to the amount of time since the last tune-up (as would 

seem to be the case with the very large one-time cost), using the annual cost once 

every two years in lieu of the biennial cost understates the cost of the requirement. It is 

not clear from the write-up what was done; we suggest EPA clarify this. 

This document says energy audits are an annual requirement. This seems to contradict 

the rule. 

EPA should provide sources for its estimates of energy audit costs. (Footnote 2 is a 

self-reference; Is it supposed to be a reference to something else?) 

Fuel Savings Impacts (page 10)

EPA cites DOE estimate of 10 to 15 percent efficiency gains (please include 

references), but it isn’t clear to what extent these gains are incorporated into the 

analysis. This leaves the impression that benefits are being left on the table when, in 

fact, each process improvement must pass a C/B test and the costs of the energy audit 

are sunk. If EPA does not use the results of the energy audit to make assumptions 

about these calculations, they should be discussed elsewhere. If EPA does make use 

of the energy audits to make assumptions about cost savings, then the costs of the 

improvements needs to be incorporated into the cost estimates. 

The Sustainable Energy Authority of Ireland’s chart has no source, but, if reliable, the 

information presented should be applied only to home boilers using residential fuels, 

which are outside the scope of this rule. 

The statement about 1 to 5 percent efficiency is also unsupported. The document 

provided separate by EPA that makes this claim does not provide support for its 

assertion. I also note that this supporting document is focused on natural gas, oil, and 

propane boilers. It does not appear that the authors were addressing biofuels or coalfueled boilers. 
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Secondary impacts analysis (page 18)

The second paragraph of this section also cites the assumption of a 1% energy 

efficiency gain. 

Section 5.5 again cites the 10 to 15 percent gains. EPA should avoid mention of these 

gains in this context because they are not including the cost of implementing the energy 

audit recommendation in their cost calculations.