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Ren, C., G.M. William, L. Morawska, K. Mengensen, and S. Tong. 2008b. "Ozone Modifies Associations between Temperature and Cardiovascular Mortality: Analysis of the NMMAPS Data." Occupational and Environmental Medicine. 65:255-260.
Sisler, J.F. 1996. Spatial and Seasonal Patterns and Long-Term Variability of the Composition of the Haze in the United States: An analysis of data from the IMPROVE network. CIRA Report, ISSN 0737-5352-32, Colorado State University.
Schwartz, J. 2005. "How Sensitive is the Association between Ozone and Daily Deaths to Control for Temperature?" American Journal of Respiratory and Critical Care Medicine. 171(6): 627-31.
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U.S. Environmental Protection Agency (U.S. EPA). 2010a. Integrated Science Assessment for Carbon Monoxide. National Center for Environmental Assessment, Research Triangle Park, NC. EPA/600/R-09/019F. January. Available at: <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686>.
U.S. Environmental Protection Agency (U.S. EPA). 2010b. Technical Support Document: Summary of Expert Opinions on the Existence of a Threshold in the Concentration-Response Function for PM2.5-related Mortality. Research Triangle Park, NC. June. Available at: <http://www.epa.gov/ttn/ecas/regdata/Benefits/thresholdstsd.pdf>.
U.S. Environmental Protection Agency (U.S. EPA). 2010c. Regulatory Impact Analysis (RIA) for Existing Stationary Compression Ignition Engines NESHAP Final Draft.
U.S. Environmental Protection Agency (U.S. EPA). 2010d. Regulatory Impact Analysis for the Proposed Federal Transport Rule.
U.S. Environmental Protection Agency (U.S. EPA). 2011a. Policy Assessment for the Review of the Particulate Matter National Ambient Air Quality Standards. EPA-452/D-11-003. Office of Air Quality Planning and Standards, Health and Environmental Impacts Division. April. Available at: <http://www.epa.gov/ttn/naaqs/standards/pm/data/20110419pmpafinal.pdf>.
U.S. Environmental Protection Agency (U.S. EPA). 2011b. The Benefits and Costs of the Clean Air Act from 1990 to 2020. Office of Air and Radiation, Washington, DC. March. Available at: <http://www.epa.gov/cleanairactbenefits/feb11/fullreport_rev_a.pdf>.
U.S. Environmental Protection Agency (U.S. EPA). 2011c. Regulatory Impact Analysis for the Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 States.
U.S. Environmental Protection Agency (U.S. EPA). 2011d. Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards.
U.S. Environmental Protection Agency (U.S. EPA). 2012. Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter. EPA-452/R-12-003. Office of Air Quality Planning and Standards, Health and Environmental Impacts Division, Research Triangle Park, NC. Available at: < http://www.epa.gov/ttnecas1/regdata/RIAs/finalria.pdf>.
U.S. Environmental Protection Agency (U.S. EPA). 2013a. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). EPA/600/R-10/076F. National Center for Environmental Assessment  -  RTP Division, Research Triangle Park. Available at: <http://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=247492#Download>.
U.S. Environmental Protection Agency (U.S. EPA). 2013b. Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter.
U.S. Environmental Protection Agency (U.S. EPA). 2014a. Regulatory Impact Analysis (RIA) for Proposed Residential Wood Heaters NSPS Revision.
U.S. Environmental Protection Agency (U.S. EPA).  2014b. Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants.
U.S. Environmental Protection Agency (U.S. EPA). 2014c. Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone.
U.S. Environmental Protection Agency (U.S. EPA). 2015a. Regulatory Impact Analysis for Residential Wood Heaters NSPS Revision: Final Report.
U.S. Environmental Protection Agency (U.S. EPA). 2015b. Regulatory Impact Analysis for the Clean Power Plan Final Rule.
U.S. Environmental Protection Agency (U.S. EPA). 2015c. Regulatory Impact Analysis for the Proposed Cross-State Air Pollution Rule (CSAPR) Update for the 2008 Ozone National Ambient Air Quality Standards (NAAQS).
U.S. Environmental Protection Agency (U.S. EPA). 2015d. Regulatory Impact Analysis for the Proposed Federal Plan Requirements for Greenhouse Gas Emissions from Electric Utility Generating Units Constructed on or Before January 8, 2014; Model Trading Rules; Amendments to Framework Regulations. 4-52
U.S. Environmental Protection Agency (U.S. EPA). 2015e. Regulatory Impact Analysis of the Final Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone, EPA-452/R-15-07. EPA-452/R-12-003. Office of Air Quality Planning and Standards, Health and Environmental Impacts Division, Research Triangle Park, NC. (https://www.epa.gov/sites/production/files/2016-02/documents/20151001ria.pdf).
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CHAPTER 6:  STATUTORY AND EXECUTIVE ORDER REVIEWS
Overview
      This chapter presents the statutory and executive orders applicable to EPA rules, and discusses EPA's actions taken pursuant to these orders.
6.1 	Executive Order 12866:  Regulatory Planning and Review
This action is an economically significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. EPA believes if the ozone and PM2.5-related health benefits were quantified and monetized that the benefits of the proposed rule would exceed $100 million in one of the analytic years. Any changes made in response to OMB recommendations have been documented in the docket. EPA prepared an analysis of the potential costs and benefits associated with this proposed action. This analysis is available in the docket and is briefly summarized in Section IX of the preamble.
6.2 	Executive Order 13771
This action is expected to be an Executive Order 13771 regulatory action.
6.3 	Paperwork Reduction Act
This action does not impose any new information collection burden under the PRA. This action would relocate certain existing information collection requirements for certain sources from subpart EEEEE of 40 CFR part 97 to a new subpart GGGGG of 40 CFR part 97 but would make no changes to any existing information collection requirements for any source. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control number 2060-0667.
6.4 	Regulatory Flexibility Act
EPA certifies that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (RFA). The small entities subject to the requirements of this action are small businesses, small organizations, and small governmental jurisdictions. EPA has determined that no small entities potentially affected by the proposal will have compliance costs greater than 1 percent of annual revenues in 2021. Details of this analysis are presented below.
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act (Public Law No. 104 121), provides that whenever an agency is required to publish a general notice of proposed rulemaking, it must prepare and make available an initial regulatory flexibility analysis, unless it certifies that the proposed rule, if promulgated, will not have a significant economic impact on a substantial number of small entities (5 U.S.C.  605[b]). Small entities include small businesses, small organizations, and small governmental jurisdictions.
EPA conducted regulatory flexibility analysis at the ultimate (i.e., highest) level of ownership, evaluating parent entities with the largest share of ownership in at least one potentially-affected EGU included in EPA's base case using the IPM v.6, used in this RIA. This analysis draws on the "parsed" unit-level estimates using IPM results for 2021, as well as ownership, employment, and financial information for the potentially affected small entities drawn from other resources described in more detail below. This analysis is focused on estimating impacts in 2021 because implementation of the proposed EGU controls occurs in the 2021 ozone season.
EPA identified the size of ultimate parent entities by using the Small Business Administration (SBA) size standard guidelines. The criteria for size determination vary by the organization/operation category of the ultimate parent entity, as follows:
 Privately-owned (non-government) entities (see Table 6-1)
 Privately-owned entities include investor-owned utilities, non-utility entities, and entities with a primary business other than electric power generation.
 For entities with electric power generation as a primary business, small entities are those with less than the threshold number of employees specified by SBA for each of the relevant North American Industry Classification System (NAICS) sectors (NAICS 2211).
 For entities with a primary business other than electric power generation, the relevant size criteria are based on revenue, assets, or number of employees by NAICS sector.
 Publicly-owned entities
 Publicly-owned entities include federal, state, municipal, and other political subdivision entities.
 The federal and state governments are considered to be large. Municipalities and other political units with populations fewer than 50,000 ae considered to be small.
 Rural Electric Cooperatives
 Small entities are those with fewer than the threshold level of employees or revenue specified by SBA for each of the relevant NAICS sectors.
6.4.1 	Identification of Small Entities
In this analysis, EPA considered EGUs that meet the following five criteria: 1) EGU is represented in NEEDS v6; 2) EGU is fossil fuel-fired; 3) EGU is located in a state covered by this proposed rule; 4) EGU is neither a cogeneration unit nor solid waste incineration unit; and 5) EGU capacity is 25 MW or larger. EPA next refined this list of EGUs, narrowing it to those that exhibit at least one of the following changes under the proposal, in comparison to the baseline.
 Summer fuel use (BTUs) changes by +/- 1 percent or more
 Summer generation (GWh) changes by +/- 1 percent or more
 NOx summer emissions (tons) changes by +/- 1 percent or more
	Based on these criteria, EPA identified a total of 97 potentially affected EGUs warranting examination in this RFA analysis. Next, we determined power plant ownership information, including the name of associated owning entities, ownership shares, and each entity's type of ownership. We primarily used data from Ventyx, supplemented by limited research using publicly available data. Majority owners of power plants with affected EGUs were categorized as one of the seven ownership types. These ownership types are:
 Investor-Owned Utility (IOU): Investor-owned assets (e.g., a marketer, independent power producer, financial entity) and electric companies owned by stockholders, etc.
 Cooperative (Co-Op): Non-profit, customer-owned electric companies that generate and/or distribute electric power.
 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 to an investor-owned utility, however, ownership shares are not openly traded on the stock markets.
 State: Utility owned by the state.
 Federal: Utility owned by the federal government.
Next, EPA used both the D&B Hoover's online database and the Ventyx database to identify the ultimate owners of power plant owners identified in the Ventyx database. This was necessary, as many majority owners of power plants (listed in Ventyx) are themselves owned by other ultimate parent entities (listed in D&B Hoover's). In these cases, the ultimate parent entity was identified via D&B Hoover's, whether domestically or internationally owned.
EPA followed SBA size standards to determine which non-government ultimate parent entities should be considered small entities in this analysis. These SBA size standards are specific to each industry, each having a threshold level of either employees, revenue, or assets below which an entity is considered small. SBA guidelines list all industries, along with their associated NAICS code and SBA size standard. Therefore, it was necessary to identify the specific NAICS code associated with each ultimate parent entity in order to understand the appropriate size standard to apply. Data from D&B Hoover's was used to identify the NAICS codes for most of the ultimate parent entities. In many cases, an entity that is a majority owner of a power plant is itself owned by an ultimate parent entity with a primary business other than electric power generation. Therefore, it was necessary to consider SBA entity size guidelines for the range of NAICS codes listed in Table 6-1. This table represents the range of NAICS codes and areas of primary business of ultimate parent entities which are majority owners of potentially affected EGUs in EPA's IPM base case.

Table 6-1. SBA Size Standards by NAICS Code
                                 NAICS Codes
                           NAICS U.S. Industry Title
                     Size
Standards (millions of
dollars)
                     Size
Standards (number of
employees)
                                    221111
                        Hydroelectric Power Generation

                                      500
                                    221112
                     Fossil Fuel Electric Power Generation

                                      750
                                    221113
                       Nuclear Electric Power Generation

                                      750
                                    221114
                        Solar Electric Power Generation

                                      250
                                    221115
                        Wind Electric Power Generation

                                      250
                                    221116
                     Geothermal Electric Power Generation

                                      250
                                    221117
                       Biomass Electric Power Generation

                                      250
                                    221118
                        Other Electric Power Generation

                                      250
                                    221121
                 Electric Bulk Power Transmission and
Control

                                      500
                                    221122
                          Electric Power Distribution

                                     1000
                                    221210
                           Natural Gas Distribution

                                     1000
                                    221310
                      Water Supply and Irrigation Systems
                                      $30

                                    221320
                          Sewage Treatment Facilities
                                      $22

                                    221330
                       Steam and Air-Conditioning Supply
                                      $16

Note: Based on size standards effective at the time EPA conducted this analysis (SBA size standards, effective August 19, 2019. Available at the following link: https://www.sba.gov/document/support--table-size-standards). Source: SBA, 2019

EPA compared the relevant entity size criterion for each ultimate parent entity to the SBA size standard noted in Table 6-1. We used the following data sources and methodology to estimate the relevant size criterion values for each ultimate parent entity:
 Employment, Revenue, and Assets: EPA used the D&B Hoover's database as the primary source for information on ultimate parent entity employee numbers, revenue, and assets. In parallel, EPA also considered estimated revenues from affected EGUs based on analysis of parsed-file estimates for the proposal. EPA assumed that the ultimate parent entity revenue was the larger of the two revenue estimates. In limited instances, supplemental research was also conducted to estimate an ultimate parent entity's number of employees, revenue, or assets.
 Population: Municipal entities are defined as small if they serve populations of less than 50,000. EPA primarily relied on data from the Ventyx database and the U.S. Census Bureau to inform this determination.
Ultimate parent entities for which the relevant measure is less than the SBA size standard were identified as small entities and carried forward in this analysis. In total EPA identified 97 potentially affected EGUs, owned by 16 entities. Of these, EPA identified 7 potentially affected EGUs owned by 2 small entities included in EPA's Base Case.
6.4.2 	Overview of Analysis and Results
	This section presents the methodology and results for estimating the impact of the Revised CSAPR Update proposal on small entities in 2021 based on the following endpoints:
 annual economic impacts of the Revised CSAPR Update proposal on small entities, and
 ratio of small entity impacts to revenues from electricity generation.
<IP_ADDRESS> Methodology for Estimating Impacts of the Revised CSAPR Update proposal on Small Entities
	An entity can comply with the Revised CSAPR Update proposal through some combination of the following: optimizing existing SCRs, turning on idled SCR controls, using allocated allowances, purchasing allowances, or reducing emissions through a reduction in generation. Additionally, units with more allowances than needed can sell these allowances in the market. The chosen compliance strategy will be primarily a function of the unit's marginal control costs and its position relative to the marginal control costs of other units.
To attempt to account for each potential control strategy, EPA estimates compliance costs as follows:
	CCompliance = Δ COperating+Retrofit + Δ CFuel + Δ CAllowances + Δ CTransaction + Δ R
where C represents a component of cost as labeled, and Δ R represents the value of foregone electricity generation, calculated as the difference in revenues between the base case and the Revised CSAPR Update proposal in 2021.
Realistically, compliance choices and market conditions can combine such that an entity may actually experience a savings in any of the individual components of cost. Under the Revised CSAPR Update proposed rule, some units will forgo some level of electricity generation (and thus revenues) to comply and this impact will be lessened on these entities by the projected increase in electricity prices under the Revised CSAPR Update proposed rule. On the other hand, those increasing generation levels will see an increase in electricity revenues and as a result, lower net compliance costs. If entities are able to increase revenue more than an increase in fuel cost and other operating costs, ultimately they will have negative net compliance costs (or savings). Overall, small entities are not projected to install relatively costly emissions control retrofits but may choose to do so in some instances. Because this analysis evaluates the total costs along each of the compliance strategies laid out above for each entity, it inevitably captures savings or gains such as those described. As a result, what we describe as cost is really more of a measure of the net economic impact of the proposal on small entities.
For this analysis, EPA used IPM-parsed output to estimate costs based on the parameters above, at the unit level. These impacts were then summed for each small entity, adjusting for ownership share. Net impact estimates were based on the following: operating and retrofit costs, sale or purchase of allowances, and the change in fuel costs or electricity generation revenues under the Revised CSAPR Update proposal relative to the base case. These individual components of compliance cost were estimated as follows:
      (1) 	Operating and retrofit costs: Using engineering analytics, EPA identified which compliance option was selected by each EGU in 2021 (i.e., SCR optimization or turning on existing SCR controls) and applied the appropriate cost to this choice. EPA assumes that state of the art combustion controls may be installed in 2022 and are not part of the controls available in 2021.
      (2) 	Sale or purchase of allowances: To estimate the value of allowances holdings, allocated allowances were subtracted from projected emissions, and the difference was then multiplied by $1,600 (2016$) per ton, which is the marginal cost of NOX reductions used to set the proposed budgets in the Revised CSAPR Update proposal. While this is a reasonable approximation, it is possible that the actual allowance price could be lower. Units were assumed to purchase or sell allowances to exactly cover their projected emissions under the Revised CSAPR Update proposal.
      (3) 	Fuel costs: The change in fuel expenditures under the Revised CSAPR Update proposal was estimated by taking the difference in projected fuel expenditures between the IPM estimates for the Revised CSAPR Update proposed rule and the base case.
      (4) 	Value of electricity generated: To estimate the value of electricity generated, the projected level of electricity generation is multiplied by the regional-adjusted retail electricity price ($/MWh) estimate, for all entities except those categorized as private in Ventyx. For private entities, EPA used the wholesale electricity price instead of the retail electricity price because most of the private entities are independent power producers (IPP). IPPs sell their electricity to wholesale purchasers and do not own transmission facilities. Thus, their revenue was estimated with wholesale electricity prices.
      (5) 	Administrative costs: Because most affected units are already monitored as a result of other regulatory requirements, EPA considered the primary administrative cost to be transaction costs related to purchasing or selling allowances. EPA assumed that transaction costs were equal to 1.5 percent of the total absolute value of the difference between a unit's allocation and projected NOX emissions. This assumption is based on market research by ICF.
<IP_ADDRESS> Results
The potential impacts of the Revised CSAPR Update proposal on small entities are summarized in Table 6-2. All costs are presented in 2016$. EPA estimated the annual net compliance cost to small entities to be approximately $0.04 million in 2021.
Table 6-2.  Projected Impact of the Revised CSAPR Update Proposal on Small Entities in 2021

                              EGU Ownership Type

                    Number of Potentially Affected Entities
                          Total Net Compliance Cost
                               ($2016 millions)

 Number of Small Entities with Compliance Costs >1% of Generation Revenues

 Number of Small Entities with Compliance Costs >3% of Generation Revenues
Cooperative
                                       1
                                     0.04
                                       0
                                       0
Private
                                       1
                                     0.00
                                       0
                                       0
Total
                                       2
                                     0.04
                                       0
                                       0
Source: IPM analysis
EPA assessed the economic and financial impacts of the proposed rule using the ratio of compliance costs to the value of revenues from electricity generation, focusing in particular on entities for which this measure is greater than 1 percent. Although this metric is commonly used in EPA impact analyses, it makes the most sense when as a general matter an analysis is looking at small businesses that operate in competitive environments. However, small businesses in the electric power industry often operate in a price-regulated environment where they are able to recover expenses through rate increases. Given this, EPA considers the 1 percent measure in this case a crude measure of the price increases these small entities will be asking of rate commissions or making at publicly owned companies. Of the 2 small entities considered in this analysis, neither is projected to experience compliance costs greater than 1 percent of generation revenues in 2021. EPA has concluded that there is no significant economic impact on a substantial number of small entities (no SISNOSE) for this rule.
The separate components of annual costs to small entities under the Revised CSAPR Update proposal are summarized in Table 6-3. The most significant components of incremental cost to the cooperative category under the Revised CSAPR Update proposal are due to higher operating costs (reflecting the cost of controls). Among the private category, however, reduced generation is the key driver. Total impacts to the private category are well below $10,000.
Table 6-3.  Incremental Annual Costs under the Revised CSAPR Update Proposal Summarized by Ownership Group and Cost Category in 2021 (2016$ millions)
                              EGU Ownership Type
                                Operating Cost
                          Net Purchase of Allowances
                                   Fuel Cost
                           Lost Electricity Revenue
                              Administrative Cost
Cooperative
                                     0.06
                                     0.00
                                     -0.02
                                     0.00
                                     0.00
Private
                                     0.00
                                     0.00
                                     0.00
                                     0.00
                                     0.00
Source: IPM analysis
6.4.3 	Summary of Small Entity Impacts
EPA examined the potential economic impacts to small entities associated with this proposal based on assumptions of how the affected states will implement control measures to meet their emissions. To summarize, of the 2 small entities potentially affected, none are projected to experience compliance costs in excess of 1 percent of revenues in 2021, based on assumptions of how the affected states implement control measures to meet their emissions budgets as set forth in this proposal.
EPA has lessened the impacts for small entities by excluding all units smaller than 25 MW. This exclusion, in addition to the exemptions for cogeneration units and solid waste incineration units, eliminates the burden of higher costs for a substantial number of small entities located in the 12 states for which EPA is proposing FIPs.
6.5 	Unfunded Mandates Reform Act
	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 intergovernmental 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).
As outlined in Section 4.4.2, EPA projects the total cost of compliance with the Revised CSAPR Update proposal to be well below $100 million in every year. Furthermore, as EPA stated in the proposal, EPA is not directly establishing any regulatory requirements that may significantly or uniquely affect small governments, including Tribal governments. Thus, under the Revised CSAPR Update proposal, EPA is not obligated to develop under Section 203 of the UMRA a small government agency plan.
6.6 	Executive Order 13132: Federalism
This proposed action does not have federalism implications. If finalized, this proposed action will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
6.7 	Executive Order 13175: Consultation and Coordination with Indian Tribal Governments
This proposed action has tribal implications. However, it would neither impose substantial direct compliance costs on federally recognized tribal governments, nor preempt tribal law.
This action proposes to implement EGU NOX ozone season emissions reductions in 12 eastern states (Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia). However, at this time, none of the existing or planned EGUs affected by this rule are owned by tribes or located in Indian country. This proposed action may have tribal implications if a new affected EGU is built in Indian country. Additionally, tribes have a vested interest in how this proposed rule would affect air quality.
In developing the CSAPR, which was promulgated on July 6, 2011, to address interstate transport of ozone pollution under the 1997 ozone NAAQS, EPA consulted with tribal officials under EPA Policy on Consultation and Coordination with Indian Tribes early in the process of developing that regulation to allow for meaningful and timely tribal input into its development. A summary of that consultation is provided at 76 FR 48346.
EPA received comments from several tribal commenters regarding the availability of the CSAPR allowance allocations to new units in Indian country. EPA responded to these comments by instituting Indian country new unit set-asides in the final CSAPR. In order to protect tribal sovereignty, these set-asides are managed and distributed by the federal government regardless of whether the CSAPR in the adjoining or surrounding state is implemented through a FIP or SIP. While there are no existing affected EGUs in Indian country covered by this proposal, the Indian country set-asides will ensure that any future new units built in Indian country will be able to obtain the necessary allowances. This proposal maintains the Indian country new unit set-aside and adjusts the amounts of allowances in each set-aside according to the same methodology of the CSAPR rule.
EPA informed tribes of our development of this proposal through a National Tribal Air Association  -  EPA air policy conference call on June 25, 2020. EPA plans to further consult with tribal officials under EPA Policy on Consultation and Coordination with Indian Tribes early in the process of developing this proposed regulation to solicit meaningful and timely input into its development. EPA will facilitate this consultation before finalizing this proposed rule.
6.8 	Executive Order 13045: Protection of Children from Environmental Health & Safety Risks
This proposed action is not subject to EO 13045 because EPA does not believe the environmental health risks or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are discussed in Chapter 5.
6.9 	Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use
This action, which is a significant regulatory action under EO 12866, is likely to have a significant effect on the supply, distribution, or use of energy. EPA has prepared a Statement of Energy Effects for the proposed regulatory control alternative as follows. We estimate a less than 1 percent change in retail electricity prices on average across the contiguous U.S. in 2021, and a less than 1 percent change in coal-fired electricity generation in 2021 as a result of this proposed rule. EPA projects that utility power sector delivered natural gas prices will change by less than 1 percent in 2021. For more information on the estimated energy effects, please see Chapter 4 of this RIA.
6.10 	National Technology Transfer and Advancement Act
The proposed rulemaking does not involve technical standards.
6.11 	Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income, or indigenous populations.
EPA notes that this action proposes to revise the CSAPR Update to reduce interstate ozone transport with respect to the 2008 ozone NAAQS. This rule uses EPA's authority in CAA section 110(a)(2)(d) (42 U.S.C. 7410(a)(2)(d)) to reduce NOX pollution that significantly contributes to downwind ozone nonattainment or maintenance areas. As a result, the rule will reduce exposures to ozone in the most-contaminated areas (i.e., areas that are not meeting the 2008 ozone NAAQS). In addition, the proposed rule separately identifies both nonattainment areas and maintenance areas. This requirement reduces the likelihood that areas close to the level of the standard will exceed the current health-based standards in the future. EPA proposes to implement these emission reductions using the CSAPR NOX Ozone Season Group 3 program with assurance provisions.
EPA recognizes that many environmental justice communities have voiced concerns in the past about emission trading and the potential for any emission increases in any location. The CSAPR NOX Ozone Season Group 3 trading program in the proposed action is the result of EPA's application of the 4-step framework to reduce interstate ozone pollution and implement those reductions, similar to the emissions trading programs developed in the CSAPR (CSAPR NOX Ozone Season Group 1 trading program) and modified in the CSAPR Update (CSAPR NOX Ozone Season Group 2 trading program), both of which also resulted from the application of the 4-step framework. EPA believes that this approach used in the CSAPR and in the CSAPR Update mitigated community concerns about emissions trading, and that this proposal, which applies the same 4-step framework and proposes an emissions trading program similar to those used in the CSAPR and the CSAPR Update, will also minimize community concerns. EPA seeks comment from communities on this proposal.
Ozone pollution from power plants has both local and regional components: part of the pollution in a given location -- even in locations near emission sources -- is due to emissions from nearby sources and part is due to emissions that travel hundreds of miles and mix with emissions from other sources. It is important to note that the section of the Clean Air Act providing authority for this proposed rule, section 110(a)(2)(D) (42 U.S.C. 7410(a)(2)(D)), unlike some other provisions, does not dictate levels of control for particular facilities. In this proposed action, as in the CSAPR and the CSAPR Update, sources in the emissions trading program may trade allowances with other sources in the same or different states, but any emissions shifting that may occur is constrained by an effective ceiling on emissions in each state (the assurance level). As in the CSAPR and the CSAPR Update, assurance provisions in the proposed rule outline the allowance surrender penalties for failing to meet the assurance level (see section VIII.C.2.); there are additional allowance for failing to hold an adequate number of allowances to cover emissions.
This approach will reduce EGU emissions in each state that significantly contributes to downwind nonattainment or maintenance areas with respect to the 2008 ozone NAAQS, while allowing power companies to adjust generation as needed and ensure that the country's electricity needs will continue to be met. As in the CSAPR and the CSAPR Update, EPA believes that the existence of these assurance provisions in the emissions trading program, including the penalties imposed when triggered, will ensure that emissions from states covered by this proposal will stay below the level of the budget plus variability limit.
In addition, under this proposed rule all sources participating in the CSAPR NOX Ozone Season Group 3 trading program must hold enough allowances to cover their emissions. Therefore, if a source emits more than its allocation in a given year, either another source must have used less than its allocation and be willing to sell some of its excess allowances, or the source itself had emitted less than its allocation in one or more previous years (i.e., banked allowances for future use).
In summary, like the CSAPR and the CSAPR Update, this proposed rule minimizes community concerns about localized hot spots and reduces ambient concentrations of pollution where they are most needed by sensitive and vulnerable populations by: considering the science of ozone transport to set strict state emissions budgets to reduce significant contributions to ozone nonattainment and maintenance (i.e., the most polluted) areas; implementing air quality-assured trading; requiring any emissions above the level of the allocations to be offset by emission decreases; and imposing strict penalties for sources that contribute to a state's exceedance of its budget plus variability limit. In addition, it is important to note that nothing in this proposed rule allows sources to violate their title V permit or any other federal, state, or local emissions or air quality requirements.
In addition, it is important to note that CAA section 110(a)(2)(D), which addresses transport of criteria pollutants between states, is only one of many provisions of the CAA that provide EPA, states, and local governments with authorities to reduce exposure to ozone in communities. These legal authorities work together to reduce exposure to these pollutants in communities, including for minority, low-income, and tribal populations, and provide substantial health benefits to both the general public and sensitive sub-populations.
EPA has already taken steps to begin informing communities of our development of this proposal through a National Tribal Air Association  -  EPA air policy conference call on June 25, 2020. EPA plans to further consult with communities early in the process of developing this regulation to permit them to have meaningful and timely input into its development. EPA will facilitate this engagement before finalizing this proposed rule.

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CHAPTER 7: COMPARISON OF BENEFITS AND COSTS
Overview
EPA performed an analysis to estimate the costs and climate benefits of compliance with the proposed Revised CSAPR Update and more and less stringent alternatives. EPA is proposing electric generating unit (EGU) oxides of nitrogen (NOX) ozone season emissions budgets for 12 states. This action proposes to find that for these states, their projected 2021 ozone season NOx emissions significantly contribute to downwind states' nonattainment and/or maintenance problems for the 2008 ozone national ambient air quality standards (NAAQS). For these 12 states, EPA proposes to amend their federal implementation plans (FIPs) to revise the existing Cross-State Air Pollution Rule (CSAPR) NOx Ozone Season Group 2 emissions budgets for EGUs and implement the revised budgets beginning in the 2021 ozone season (May 1, 2021 - September 30, 2021) via a new CSAPR NOx Ozone Season Group 3 Trading Program.
The proposed Revised CSAPR Update state budgets reflect the optimization of existing selective catalytic reduction (SCR) controls and installation of state-of-the-art NOX combustion controls, with an estimated marginal cost of $1,600 per ton (2016$). For the RIA, in order to implement the OMB Circular A-4 requirement for fulfilling Executive Order 12866 to assess one less stringent and one more stringent alternative to the proposal, EPA is also analyzing EGU NOX ozone season emissions budgets reflecting NOX reduction strategies that are widely available at a uniform cost of $9,600 per ton (2016$) and strategies that are widely available at a uniform cost of $500 per ton (2016$). These alternatives are used illustrate the monetized cost and climate benefit impacts of varying program stringency. They are designed to show the effects of more stringent and less stringent NOx reduction requirements in a regulatory structure that is otherwise the same as the proposed NOx emissions budgets. We show the results for 2021 to reflect the year in which implementation of this proposal begins, and for 2025 to reflect full implementation of the proposal. This RIA evaluates how the EGUs covered by the proposed rule are expected to reduce their emissions in response to the requirements and flexibilities provided by the remedy implemented by the proposed Revised CSAPR Update and the benefit, cost and impacts of their expected compliance behavior. This chapter summarizes these results.
7.1 	Results
The proposal and regulatory control alternatives' compliance costs are estimated using the IPM model and an evaluation of control technologies evaluated outside of IPM. As shown in Chapter 4, the estimated annual compliance costs to implement the proposal, as described in this document, are approximately $21 million in 2021 and $6 million in 2025 (2016$). As described in Section 4.5, this RIA uses compliance costs as a proxy for social costs. As shown in Chapter 5, the estimated monetized climate benefits from implementation of the proposal are approximately $0.31 million and $0.05 million in 2021 (2016$, based on a real discount rate of 3 percent and 7 percent, respectively). For 2025, the estimated monetized climate benefits from implementation of the proposal are approximately $33 million and $5.4 million (2016$, based on a real discount rate of 3 percent and 7 percent, respectively). As discussed in Chapter 5, the monetized benefits presented in this proposal RIA are those for climate (from CO2 emissions reductions). The non-monetized benefits for ozone and PM2.5 are discussed qualitatively in Chapter 5.
EPA calculates the net benefits of the proposal by subtracting the estimated compliance costs from the estimated climate benefits in both 2021 and 2025. The annual net benefits of the proposal in 2021 (in 2016$) are approximately -$21 million using both a 3 percent and 7 percent real discount rate for the climate benefits. The annual net benefits of the proposal in 2025 are approximately $27 using a 3 percent real discount rate and -$0.9 million using a 7 percent real discount rate. Table 7-1 presents a summary of the climate benefits, costs, and net benefits of the proposal and the more and less stringent alternatives for 2021. Table 7-2 presents a summary of these impacts for the proposal and the more and less stringent alternatives for 2025. The tables represent the present annual value of non-monetized benefits from ozone, PM2.5 and NO2 reductions as a B. The annual value of B will differ across discount rates, year of analysis, and the regulatory alternatives analyzed.  At a 3 and 7 percent real discount rate the least stringent alternative has the greatest annual monetized net-benefits in the two analytic years. The monetized net-benefit estimates exclude important benefits from reductions in ozone and PM2.5 concentrations.
Table 7-1. Benefits, Costs, and Net Benefits of the Proposal and More and Less Stringent Alternatives for 2021 for the U.S. (millions of 2016$) [a][,b,c][,d]
                                 Discount Rate
                                   Benefits
                                     Costs
                                 Net Benefits
Proposal

3%
                                   0.31 + B
                                      21
                                    -21 + B
7%
                                   0.05 + B

                                    -21 + B
More Stringent Alternative

3%
                                   0.80 + B
                                      37
                                    -36 + B
7%
                                   0.12 + B

                                    -37 + B
Less Stringent Alternative

3%
                                   0.17 + B
                                       4
                                    -4 + B
7%
                                   0.03 + B

                                    -4 + B
[a] We focus results to provide a snapshot of costs and benefits in 2021, using the best available information to approximate social costs and social benefits recognizing uncertainties and limitations in those estimates.
[b] Benefits ranges represent discounting of climate benefits at a real discount rate of 3 percent and 7 percent. Climate benefits are based on changes (reductions) in CO2 emissions. The costs presented in this table are 2021 annual estimates for each alternative analyzed.
[c] All costs and benefits are rounded to two significant figures; rows may not appear to add correctly.
[d] B is the sum of all unquantified ozone, PM2.5, and NO2 benefits. The annual value of B will differ across discount rates, year of analysis, and the regulatory alternatives analyzed. While EPA did not estimate these benefits in this RIA, Appendix 5B presents PM2.5 and ozone estimates quantified using methods consistent with the previously published ISAs to provide information regarding the potential magnitude of the benefits of this proposed rule.

Table 7-2. Benefits, Costs, and Net Benefits of the Proposal and More and Less Stringent Alternatives for 2025 for the U.S. (millions of 2016$) [a][,b,c][,d]
                                 Discount Rate
                                   Benefits
                                     Costs
                                 Net Benefits
Proposal

3%
                                    33 + B
                                       6
                                    27 + B
7%
                                    5.4 + B

                                   -0.9 + B
More Stringent Alternative

3%
                                   71.5 + B
                                      132
                                    -61 + B
7%
                                   11.7 + B

                                   -120 + B
Less Stringent Alternative

3%
                                    25 + B
                                      -12
                                    37 + B
7%
                                    4.2 + B

                                    16 + B
[a] We focus results to provide a snapshot of costs and benefits in 2025, using the best available information to approximate social costs and social benefits recognizing uncertainties and limitations in those estimates.
[b] Benefits ranges represent discounting of climate benefits at a real discount rate of 3 percent and 7 percent. Climate benefits are based on changes (reductions) in CO2 emissions. The costs presented in this table are 2025annual estimates for each alternative analyzed.
[c] All costs and benefits are rounded to two significant figures; rows may not appear to add correctly.
[d] B is the sum of all unquantified ozone, PM2.5, and NO2 benefits. The annual value of B will differ across discount rates, year of analysis, and the regulatory alternatives analyzed. While EPA did not estimate these benefits in this RIA, Appendix 5B presents PM2.5 and ozone estimates quantified using methods consistent with the previously published ISAs to provide information regarding the potential magnitude of the benefits of this proposed rule.

      As part of fulfilling analytical guidance with respect to E.O. 12866, EPA presents estimates of the present value of the benefits and costs over the five-year period of 2021 to 2025, which is the analytical period for this proposal. To calculate the present value of the social net-benefits of the proposed Revised CSAPR Update, annual benefits and costs are discounted to 2021 at 3 percent and 7 discount rates as directed by OMB's circular A-4. The present value (PV) of the net benefits, in 2016$ and discounted to 2021, is -$68 million when using a 7 percent discount rate and $14 million when using a 3 percent discount rate. The equivalent annualized value (EAV), an estimate of the annualized value of the net benefits consistent with the present value, is -$17 million per year when using a 7 percent discount rate and $3 million when using a 3 percent discount rate. The EAV represents a flow of constant annual values that, had they occurred in each year from 2021 to 2025, would yield a sum equivalent to the PV. The EAV represents the value of a typical cost or benefit for each year of the analysis, in contrast to the year-specific estimates mentioned earlier in the RIA for the analysis years 2021 and 2025. The comparison of benefits and costs in PV and EAV terms for the proposal can be found in Table 7-3. Estimates in the table are presented as rounded values. The table represents the present value of non-monetized benefits from ozone, PM2.5 and NO2 reductions as a β, while b represents the equivalent annualized value of these non-monetized benefits. These values will differ across the discount rates and depend on the value of the B's in the previous tables.

Table 7-3. Summary of Present Values and Equivalent Annualized Values for the 2021-2025 Timeframe for Estimated Compliance Costs, Climate Benefits, and Net Benefits for the Proposed Rule (millions of 2016$, discounted to 2021)[a,b]

                               3% Discount Rate
                               7% Discount Rate
         Present Value
                                Benefits[c][,d]
                                    101+β
                                     15+β

                              Climate Benefits[c]
                                      101
                                      15

                              Compliance Costs[e]
                                      87
                                      83

                                 Net Benefits
                                     14+β
                                    -68+β
                         Equivalent Annualized Value

                                   Benefits
                                     22+b
                                     4+b

                               Climate Benefits
                                      22
                                       4

                               Compliance Costs
                                      19
                                      20

                                 Net Benefits
                                      3+b
                                    -17+b
[a] All estimates in this table are rounded to two significant figures, so numbers may not sum due to independent rounding.
[b] The annualized present value of costs and benefits are calculated over a 5 year period from 2021 to 2025.
[c] Benefits ranges represent discounting of climate benefits at a real discount rate of 3 percent and 7 percent. Climate benefits are based on changes (reductions) in CO2 emissions.
[d] β and b is the sum of all unquantified ozone, PM2.5, and NO2 benefits. The annual values of β and b will differ across discount rates. While EPA did not estimate these benefits in this RIA, Appendix 5B presents PM2.5 and ozone estimates quantified using methods consistent with the previously published ISAs to provide information regarding the potential magnitude of the benefits of this proposed rule.
[e] The costs presented in this table reflect annualized present value compliance costs calculated over a 5 year period from 2021 to 2025.

United States
Environmental Protection
Agency
Office of Air Quality Planning and Standards
Health and Environmental Impacts Division
Research Triangle Park, NC
Publication No. EPA-452/P-20-003
October 2020