[Federal Register Volume 80, Number 230 (Tuesday, December 1, 2015)]
[Proposed Rules]
[Pages 75025-75042]
[FR Doc No: 2015-30360]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 63

[EPA-HQ-OAR-2009-0234; FRL-9939-45-OAR]
RIN 2060-AS76

Supplemental Finding That It Is Appropriate and Necessary To
Regulate Hazardous Air Pollutants From Coal- and Oil-Fired Electric
Utility Steam Generating Units

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed supplemental finding and request for comment.

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SUMMARY: The Environmental Protection Agency (EPA) is soliciting
comment on a proposed supplemental finding that consideration of cost
does not alter the agency's previous conclusion that it is appropriate
and necessary to regulate coal- and oil-fired electric utility steam
generating units (EGUs) under section 112 of the Clean Air Act (CAA).
In light of the U.S. Supreme Court decision in Michigan v. EPA, 135
S.Ct. 2699 (2015), the EPA has taken cost into account in evaluating
whether such regulation is appropriate. In this document, the EPA sets
forth its proposed supplemental finding and requests comment on all
aspects of that finding and the supporting legal memorandum in the
docket for this action. This proposed supplemental finding, if
finalized after consideration of comments, will conclude that coal- and
oil-fired EGUs are properly included on the CAA section 112(c) list of
sources that must be regulated under CAA section 112(d).

DATES: Comments. Comments must be received on or before January 15,
2016.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2009-0234 at http://www.regulations.gov. Follow the online
instructions for submitting comments. Once submitted, comments cannot
be edited or removed from regulations.gov. The EPA may publish any
comment received to its public docket. Do not submit electronically any
information you consider to be Confidential Business Information (CBI)
or other information whose disclosure is restricted by statute.
Multimedia submissions (audio, video, etc.) must be accompanied by a
written comment. The written comment is considered the official comment
and should include discussion of all points you wish to make. The EPA
will generally not consider comments or comment contents located
outside of the primary submission (i.e., on the Web, Cloud, or other
file sharing system). For additional submission methods, the full EPA
public comment policy, information about CBI or multimedia submissions,
and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.
    Instructions: All submissions must include the agency name and
Docket ID No. (EPA-HQ-OAR-2009-0234). The EPA's policy is to include
all comments received without change, including any personal
information provided, in the public docket, available online at http://www.regulations.gov, unless the comment includes information claimed to
be CBI or other information whose disclosure is restricted by statute.
Do not submit information that you consider to be CBI or otherwise
protected through http://www.regulations.gov or email. Send or deliver
information identified as CBI only to the following address: OAQPS
Document Control Officer (C404-02), Office of Air Quality Planning and
Standards, U.S. EPA, Research Triangle Park, North Carolina 27711,
Attention Docket ID No. EPA-HQ-OAR-2009-0234. Clearly mark the part or
all of the information that you claim to be CBI. For CBI information on
a disk or CD-ROM that you mail to the EPA, mark the outside of the disk
or CD-ROM as CBI and then identify electronically within the disk or
CD-ROM the specific information you claim as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, you must submit a copy of the comment that does not contain the
information claimed as CBI for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    The EPA requests that you also submit a separate copy of your
comments to the contact person identified below (see FOR FURTHER
INFORMATION CONTACT). If the comment includes information you consider
to be CBI or otherwise protected, you should send a copy of the comment
that does not contain the information claimed as CBI or otherwise
protected.

    The www.regulations.gov Web site is an ``anonymous access'' system,
which means the EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an email
comment directly to the EPA without going through http://www.regulations.gov, your email address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, the EPA recommends that you include your name and other
contact information in the body of your comment and with any disk or
CD-ROM you submit. If the EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, the EPA may not
be able to consider your comment. Electronic files should avoid the use
of special characters, any form of encryption, and be free of any
defects or viruses.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available (e.g., CBI or other information
whose disclosure is restricted by statute). Certain other material,
such as copyrighted material, will be publicly available only in hard
copy. Publicly available docket materials are available either
electronically in http://www.regulations.gov or in hard copy at the EPA
Docket Center, EPA WJC West Building, Room 3334, 1301 Constitution Ave.
NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday, excluding federal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Air Docket is<PHONE_NUMBER>. Visit the EPA
Docket Center homepage at http://www.epa.gov/epahome/dockets.htm for
additional information about the EPA's public docket.
    In addition to being available in the docket, an electronic copy of
this proposed supplemental finding will be available on the World Wide
Web (WWW). Following signature, a copy of the proposed supplemental
finding will be posted at the following address: http://www3.epa.gov/mats/actions.html.
    Public Hearing: A public hearing will be held if requested by
December 6, 2015 to accept oral comments on this proposed action. The
hearing will be held, if requested, on December 16, 2015 at the EPA's
North Carolina Campus located at 109 T.W. Alexander Drive, Research
Triangle Park, NC 27711. The hearing, if requested, will begin at 9:00
a.m. (local time) and will conclude at 1:00 p.m. (local time). To
request a hearing, to register to speak at a hearing, or to inquire if
a hearing will be held, please contact Ms. Virginia Hunt at (919) 541-
0832 or by email at<EMAIL_ADDRESS>The last day to pre-register
to speak at a hearing, if one is held, will be December 14, 2015.
Additionally, requests to speak will be taken the day of the hearing at
the hearing registration desk, although preferences on speaking times
may not be able to be fulfilled. Please note that registration requests
received before the hearing will be confirmed by the EPA via email.
    Please note that any updates made to any aspect of the hearing,
including whether or not a hearing will be held, will be posted online
at http://www3.epa.gov/mats/actions.html. We ask that you contact Ms.
Virginia Hunt at<PHONE_NUMBER> or by email at<EMAIL_ADDRESS>or
monitor our Web site to determine if a hearing will be held. The EPA
does not intend to publish a notice in the Federal Register announcing
any such updates. Please go to http://www3.epa.gov/mats/actions.html
for more information on the public hearing.

FOR FURTHER INFORMATION CONTACT: Dr. Nick Hutson, Energy Strategies
Group, Sector Policies and Programs Division (D243-01), U.S. EPA,
Research Triangle Park, NC 27711; telephone number<PHONE_NUMBER>,
facsimile number<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    Organization of This Document. The information presented in this
document is organized as follows:

I. General Information
    A. Executive Summary
    B. Does this action apply to me?
    C. The Limited Scope of This Action
II. Hazards to Public Health and the Environment From HAP Emitted by
EGUs
III. Cost Consideration Under CAA Section 112(n)(1)
IV. Considerations of Cost
    A. Introduction
    B. Consideration of Cost to the Power Sector
    C. Other Costs
    D. Incorporating Cost Into the Appropriate Finding
V. Consideration of the Benefit-Cost Analysis in the MATS RIA
    A. Introduction
    B. Background on Benefit-Cost Analyses
    C. Consideration of HAP Benefits
    D. Consideration of Total Benefits and Benefit-Cost Comparisons
    E. Conclusions Regarding the Benefit-Cost Analysis
VI. Conclusion
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act (NTTAA)
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Determination Uunder CAA Section 307(d)
VIII. Statutory Authority

I. General Information

A. Executive Summary

    The EPA is requesting comment on this proposed supplemental finding
that including a consideration of cost does not alter the agency's
previous determination that it is appropriate and necessary to regulate
coal- and oil-fired EGUs under section 112 of the CAA. In light of the
U.S. Supreme Court (Supreme Court) decision in Michigan v. EPA, 135
S.Ct. 2699 (2015), the EPA has taken cost into account in evaluating
whether such regulation is appropriate and has determined that
including such consideration does not alter the EPA's original
conclusion that it is appropriate to regulate hazardous air pollutant
(HAP) emissions from EGUs. This proposed supplemental finding, if made
final after consideration of public comments, will conclude that coal-
and oil-fired EGUs are properly included on the CAA section 112(c) list
of sources that must be regulated under CAA section 112(d).
    The EPA issued national emission standards for hazardous air
pollutants (NESHAP) for coal- and oil-fired electric utility units,
known as the Mercury and Air Toxics Standards or ``MATS,'' on February
16, 2012. Almost 12 years earlier, on December 20, 2000, the EPA
determined, pursuant to CAA section 112(n)(1)(A), that it was
appropriate and necessary to regulate coal- and oil-fired EGUs under
CAA section 112 and added such units to the CAA section 112(c) list of
sources that must be regulated under CAA section 112(d). (December 2000

Finding; 65 FR 79825.) The appropriate and necessary finding was based
primarily on consideration of the Utility Study Report to Congress
(Utility Study),\1\ the Mercury Study Report to Congress (Mercury
Study),\2\ the National Academies of Science's Toxicological Effects of
Methylmercury (NAS Study),\3\ and mercury data collected from coal-
fired EGUs after completion of the studies. 65 FR 79826. After
consideration of this information, the EPA found that it was
appropriate to regulate HAP emissions from EGUs because such emissions
pose significant hazards to public health and the environment and also
because the EPA determined that there were available controls to
effectively reduce mercury and other HAP emissions from EGUs. 64 FR
79825, 79830/2. The EPA found that it was necessary to regulate HAP
emissions from EGUs because implementation of the other requirements of
the CAA would not adequately address the serious hazards to public
health and the environment posed by HAP emissions from EGUs and because
CAA section 112 is the authority intended to regulate HAP emissions
from stationary sources. Id.
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    \1\ U.S. EPA. 1998. Study of Hazardous Air Pollutant Emissions
from Electric Utility Steam Generating Units--Final Report to
Congress. EPA-453/R-98-004a. February. Docket ID No. EPA-HQ-OAR-
2009-0234-3052.
    \2\ U.S. EPA. 1997. Mercury Study Report to Congress. EPA-452/R-
97-003. December. Docket ID No. EPA-HQ-OAR-2009-0234-3054.
    \3\ National Research Council. 2000. Toxicological Effects of
Methylmercury. Committee on the Toxicological Effects of
Methylmercury, National Academy Press, Washington, DC. Docket ID No.
EPA-HQ-OAR-2009-0234-3055.
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    On May 3, 2011, the EPA reaffirmed the 2000 appropriate and
necessary finding and listing of EGUs, and proposed MATS pursuant to
CAA section 112(d). 76 FR 24976. The EPA responded to comments on the
appropriate and necessary finding, as well as the proposed MATS, and
issued the final MATS on February 16, 2012. 77 FR 9304. Industry,
states, environmental organizations, and public health organizations
challenged many aspects of the EPA's appropriate and necessary finding
and the final MATS rule in the U.S. Court of Appeals for the District
of Columbia Circuit (D.C. Circuit Court), and the Court denied all
challenges. White Stallion Energy Center v. EPA, 748 F.3d 1222 (D.C.
Cir. 2014). Some industry and state petitioners sought further review
of the final MATS rule, and the Supreme Court granted certiorari to
determine whether the EPA erred when it concluded that the appropriate
and necessary finding under CAA section 112(n)(1)(A) could be made
without consideration of cost. On June 29, 2015, the Supreme Court
ruled that the EPA acted unreasonably when it determined cost was
irrelevant to the appropriate and necessary finding. Michigan v. EPA,
135 S.Ct. 2699 (2015). Specifically, the Supreme Court held that the
agency must consider cost before deciding whether regulation is
appropriate and necessary, noting also that it will be up to the agency
``to decide, within the limits of reasonable interpretation, how to
account for cost.'' Michigan, 135 S.Ct. at 2711.
    The EPA, in response to the Supreme Court's direction, has now
added consideration of cost to the appropriate and necessary finding as
detailed in this document. In this document, the EPA concludes that
including such consideration of cost does not alter the agency's
previous determination that it is appropriate to regulate HAP emissions
from EGUs. The agency is taking comment on the proposed supplemental
finding through this document. The EPA is also taking comment on the
supporting document ``Legal Memorandum Accompanying the Proposed
Supplemental Finding that it is Appropriate and Necessary to Regulate
Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility
Steam Generating Units (EGUs)'' (Legal Memorandum) available in the
docket for this action (EPA-HQ-OAR-2009-0234).

B. Does this action apply to me?

    The regulated categories and entities potentially affected by this
proposed supplemental notice are shown below in Table 1.

                         Table 1--Potentially Affected Regulated Categories and Entities
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                                                                             Examples of potentially affected
                    Category                          NAICS Code \1\                     entities
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Industry.......................................                   221112  Fossil fuel-fired electric utility
                                                                           steam generating units.
Federal government.............................               \2\ 221122  Fossil fuel-fired electric utility
                                                                           steam generating units owned by the
                                                                           federal government.
State/local/tribal government..................               \2\ 221122  Fossil fuel-fired electric utility
                                                                           steam generating units owned by
                                                                           municipalities.
                                                                  921150  Fossil fuel-fired electric utility
                                                                           steam generating units in Indian
                                                                           country.
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\1\ North American Industry Classification System (NAICS).
\2\ Federal, state, or local government-owned and operated establishments are classified according to the
  activity in which they are engaged.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities that may be affected by this
action. If you have any questions regarding the applicability of this
action to a particular entity, consult either the air permitting
authority for the entity or your EPA Regional representative as listed
in 40 CFR 60.4 or 40 CFR 63.13 (General Provisions).

C. The Limited Scope of This Action

    This action is in response to the Supreme Court's decision that the
EPA must consider cost in the initial determination that regulation of
HAP emissions from EGUs is appropriate under CAA section 112. In this
document, the EPA provides detailed information on how the agency has
taken cost into account in evaluating whether regulation of HAP from
coal- and oil-fired electric utility steam generating units is
appropriate and explains why the EPA proposes to find that including
such consideration does not alter the previous determination. The EPA
requests comment on this proposed supplemental finding and on the
supporting Legal Memorandum available in the rulemaking docket (EPA-HQ-
OAR-2009-0234).
    The EPA is accepting comment only on the consideration of cost in
making the appropriate determination and listing of EGUs. The analyses
presented in this document and the Legal Memorandum in support of this
document do not affect or alter other aspects of the appropriate and
necessary interpretation or finding, or the CAA section 112(d) emission
standards promulgated in MATS. These analyses also do not alter the
Regulatory Impact Analysis (RIA) prepared for the final MATS.
Specifically, the EPA is not

accepting comment on the scientific or technical aspects of the 2000
appropriate and necessary finding and subsequent reaffirmation. These
findings include that mercury and other HAP emissions are hazardous to
public health and the environment, that EGUs are the largest emitter of
many HAP, that effective control strategies for HAP emissions are
available, and that HAP hazards remain after implementation of other
CAA provisions. We are only accepting comment on the consideration of
cost aspect presented in this proposed supplementary finding.
Therefore, we are not opening for comment or proposing to revise any
other aspects of the appropriate and necessary interpretation or
finding, or the MATS standards themselves, as part of this action. The
final MATS standards were supported by an extensive administrative
record and based on available control technologies and other practices
already used by the better-controlled and lower-emitting EGUs, and the
EPA previously concluded that the standards are achievable and reduce
hazards to public health and the environment from HAP emitted by EGUs.
76 FR 24976 (MATS proposal); 77 FR 9304 (MATS final). In addition, the
public had ample opportunity to comment on all aspects of the CAA
section 112(d) standards, the RIA, and the appropriate and necessary
finding beyond the consideration of cost; and the EPA responded to all
of the significant comments.\4\
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    \4\ 77 FR 3919-62; 77 FR 9386-9423; U.S. EPA. 2011. EPA's
Responses to Public Comments on EPA's National Emission Standards
for Hazardous Air Pollutants from Coal- and Oil-Fired Electric
Utility Steam Generating Units. December 2011. Volumes 1 and 2.
Docket ID No. EPA-HQ-OAR-2009-0234-20126.
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    Also, the Supreme Court's decision neither calls into question nor
reverses the portions of the D.C. Circuit Court's opinion unanimously
rejecting all other challenges to the appropriate and necessary
interpretation and finding and the HAP emission standards that the EPA
promulgated in the final MATS rule. Industry, states, environmental
organizations, and public health organizations challenged many aspects
of the EPA's appropriate and necessary finding and the MATS emissions
standards, including: (1) The EPA's reliance on the CAA section
112(c)(9) delisting criteria for determining the level of risk worth
regulating; (2) the EPA's decision not to consider cost in making the
appropriate and necessary determination and listing of EGUs; (3) the
EPA's use of identified environmental harms as a basis for finding it
appropriate and necessary to regulate HAP emissions from EGUs; (4) the
EPA's consideration of the cumulative impacts of HAP emissions from
EGUs and other sources in determining whether EGUs pose a hazard to
public health or the environment; (5) the EPA's regulation of EGUs
pursuant to CAA section 112(d) after adding EGUs to the section 112(c)
list pursuant to the appropriate and necessary finding; (6) the EPA's
determination that all HAP from EGUs should be regulated; (7) the EPA's
technical basis for concluding that EGUs pose a hazard to public health
or the environment; (8) the EPA's determination to regulate all EGUs as
defined in CAA section 112(a)(8) in the same manner whether or not the
individual units are located at major or area sources of HAP; (9) the
EPA's emissions standards for mercury and acid gas HAP, including the
EPA's decision not to set health based emission standards for acid gas
HAP; (10) the EPA's use of certified data submitted by regulated
parties; (11) the EPA's denial of a delisting petition filed by an
industry trade group; (12) the EPA's decision not to subcategorize a
certain type of EGU; and (13) the EPA's decision to allow EGUs to
average HAP emissions among certain EGUs. The D.C. Circuit Court denied
all challenges to the CAA section 112(n)(1)(A) appropriate and
necessary finding and to the CAA section 112(d) MATS rule, and, with
the exception of the cost issue relevant to the section 112(n)(1)(A)
finding, all the challenges were unanimously rejected. White Stallion
Energy Center v. EPA, 748 F.3d 1222 (April 15, 2014). Consequently, we
are not soliciting comment nor are we revisiting those final actions
that were unanimously upheld in White Stallion Energy Center v. EPA,
748 F.3d 1222 (April 15, 2014).
    In addition, the EPA's citation to any final decision,
interpretation, or conclusion in the MATS record does not constitute a
re-opening of the issue or an invitation to comment on the underlying
decision in which the EPA considered some cost of MATS (e.g., in CAA
section 112(d) beyond-the-floor analyses either establishing or
declining to establish a standard more stringent than the maximum
achievable control technology (MACT) floor).
    It is worth noting that the issue addressed in this document--
whether a consideration of cost alters the agency's previous
determination that it is appropriate and necessary to regulate HAP
emissions from coal- and oil-fired EGUs--goes to the listing of EGUs
under CAA section 112. Under CAA section 112, such listing decisions
are not final agency actions for purposes of judicial review. Instead,
the public can comment on listing decisions during the CAA section
307(d) standard development process and challenge such decisions when
the EPA issues final standards for a source category. See CAA section
112(e)(4) (``Notwithstanding section [307 of the CAA], no action of the
Administrator . . . listing a source category or subcategory under
subsection (c) of this section shall be a final agency action subject
to judicial review, except that any such action may be reviewed under
section [307 of the CAA] when the Administrator issues emission
standards for such . . . category.''). Because the final standards for
coal- and oil-fired EGUs have been issued, the normal vehicle for
taking comment on aspects of the listing decision is not available to
the EPA at this time. Consequently, the agency is providing this
separate proposal to provide an opportunity for public comment on this
nationally applicable proposed supplemental finding that it is
appropriate and necessary to regulate coal- and oil-fired EGUs after
considering cost, the cost analyses set forth below, and the
supplemental legal analysis in the supporting Legal Memorandum
available in the docket for this rulemaking. The EPA will issue its
final determination after consideration of significant comments,
consistent with the rulemaking requirements set forth in CAA section
307(d).

II. Hazards to Public Health and the Environment From HAP Emitted by
EGUs

    In the current action, the EPA adds a consideration of cost to the
determination of whether it is appropriate to regulate HAP emissions
from EGUs. As discussed in Sections III and IV.D of this document, it
is the EPA's view that the consideration of cost in the appropriate
finding should be weighed against, among other things, the volume of
HAP emitted by EGUs and the associated hazards to public health and the
environment. In this supplemental finding, therefore, the significant
hazards to public health and the environment from HAP emitted by EGUs
(and the substantial reductions in HAP emissions achieved by MATS that
are described in Section IV.B.2 of this document) should be weighed
against the costs of compliance.\5\ Indeed, these

hazards provided the basis for the EPA's December 2000 Finding,\6\ and
the agency's 2011 reaffirmation of the finding,7 8 that
regulation of HAP emissions from EGUs is appropriate and necessary. In
this Section, we provide a summary of these hazards, which are further
described in the record for the MATS.
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    \5\ The context provided by CAA section 112 generally
demonstrates Congress' focus on the inherent risks posed by HAP
emissions. To address those risks, Congress substantially amended
CAA section 112 in 1990 to achieve prompt, permanent and ongoing
reductions of HAP emissions from stationary sources and to reduce
the associated risks to public health, including the effects on the
most exposed and sensitive members of the population, and the
environment. See NMA v. EPA, 59 F.3d at 1352-53 (discussing the
purpose and impact of the 1990 CAA Amendments to section 112); see
also Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 857-58
(D.C. Cir. 2001); Sierra Club v. EPA, 353 F.3d at 978-80; NRDC v.
EPA, 489 F.3d 1364, 1368-69 (D.C. Cir. 2007); NRDC v. EPA, 529 F.3d
1077, 1079-80 (D.C. Cir. 2008).
    \6\ 65 FR 79825-31.
    \7\ 76 FR 24976-25020.
    \8\ 77 FR 9304-66.
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    As described in the peer-reviewed Mercury Study, mercury is a
persistent, bioaccumulative toxic metal that can be emitted from coal-
fired power plants in several chemical forms. Once deposited to water
or land, mercury can be transformed into methylmercury (MeHg) by
microbial action. MeHg is efficiently taken up by aquatic organisms and
bioaccumulates in the aquatic food web. Larger predatory fish may have
MeHg concentrations many times higher than, typically on the order of 1
million times, that of the concentrations in the freshwater body in
which they live. Exposure to MeHg through ingestion of fish is the
primary route for human exposures in the U.S. In 2000, the NAS Study
reviewed the effects of MeHg on human health and concluded that mercury
is highly toxic to multiple human and animal organ systems. Chronic
low-dose prenatal exposure to MeHg from maternal consumption of fish
has been associated with subtle neurotoxicity, which is manifest as
poor performance on neurobehavioral tests, particularly on tests of
attention, fine motor-function, language, and visual-spatial ability.
The NAS concluded that the population at highest risk is the children
of women who consumed large amounts of fish and seafood during
pregnancy and that the risk to that population is likely to be
sufficient to result in an increase in the number of children who have
to struggle to keep up in school.
    Exposure to high levels of the various non-mercury HAP (e.g.,
arsenic, nickel, chromium, selenium, cadmium, hydrogen chloride,
hydrogen fluoride, hydrogen cyanide, formaldehyde, benzene,
acetaldehyde, manganese, and lead) emitted by EGUs is associated with a
variety of adverse health effects. See, e.g., 76 FR 25003-5. These
adverse health effects include chronic health disorders (e.g.,
irritation of the lung, skin, and mucus membranes, effects on the
nervous system, and damage to the kidneys), and acute health disorders
(e.g., lung irritation and congestion, alimentary effects such as
nausea and vomiting, and liver, kidney and nervous system effects).
Three hazardous air pollutant metals (i.e., arsenic, nickel, and
chromium) have been classified as human carcinogens, and cadmium is
classified as a probable human carcinogen.
    In 2011, the EPA conducted additional technical analyses to support
the appropriate and necessary finding reaffirmation, including peer-
reviewed risk assessments on human health effects associated with
mercury and non-mercury HAP emissions from EGUs, focusing on risks to
the most exposed and sensitive individuals in the population. In
addition, the EPA found that EGUs are by far the largest U.S.
anthropogenic source of mercury, selenium, hydrogen chloride, and
hydrogen fluoride emissions, and a significant source of metallic HAP
emissions including arsenic, chromium, nickel, and others.\9\ The
revised nationwide Mercury Risk Assessment \10\ estimated that up to 29
percent of modeled watersheds potentially have sensitive populations at
risk from exposure to mercury from U.S. EGUs, including up to 10
percent of modeled watersheds where deposition from U.S. EGUs alone
leads to potential exposures that exceed the reference dose \11\ for
MeHg. See, e.g., 77 FR 9310-6. In addition, the inhalation risk
assessment for non-mercury HAP \12\ of 16 facilities estimated a
lifetime cancer risk for an oil-fired EGU facility of 20-in-1 million,
five coal-fired EGU facilities with cancer risks greater than 1-in-1
million, and one coal-fired facility with cancer risks of 5-in-1
million. See, e.g., 77 FR 9317-9.\13\ Further, qualitative analyses on
ecosystem effects found that mercury emissions from U.S. EGUs
contribute to adverse impacts on fish-eating birds and mammals and that
acid gases contribute to environmental acidification and chronic non-
cancer (respiratory) toxicity. See, e.g., 77 FR 9362-3. Moreover, the
EPA concluded that in 2016, after implementation of other provisions of
the CAA, HAP emissions from U.S. EGUs would still reasonably be
anticipated to pose hazards to public health. See, e.g., 77 FR 9362-3.
Finally, the EPA stated that the only way to ensure permanent
reductions in HAP emissions from U.S. EGUs and the associated risks to
public health and the environment is through standards set under CAA
section 112.
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    \9\ Specifically, the EPA estimated that in 2005 (the most
recent inventory year available during the MATS rulemaking), U.S.
EGUs emitted 50 percent of total domestic anthropogenic mercury
emissions, 62 percent of total arsenic emissions, 39 percent of
total cadmium emissions, 22 percent of total chromium emissions, 82
percent of total hydrogen chloride emissions, 62 percent of total
hydrogen fluoride emissions, 28 percent of total nickel emissions,
and 83 percent of total selenium emissions. Docket ID No. EPA-HQ-
OAR-2009-0234-19914.
    \10\ U.S. EPA. 2011. Revised Technical Support Document:
National-Scale Assessment of Mercury Risk to Populations with High
Consumption of Self-caught Freshwater Fish In Support of the
Appropriate and Necessary Finding for Coal- and Oil-Fired Electric
Generating Units. Office of Air Quality Planning and Standards.
November. EPA-452/R-11-009. Docket ID No. EPA-HQ-OAR-2009-0234-
19913.
    \11\ A reference dose is an estimate of daily exposure,
experienced over a lifetime that is likely to be without a risk of
adverse health effects to humans, including sensitive
subpopulations.
    \12\ U.S. EPA. 2011. Supplement to Non-mercury Case Study
Chronic Inhalation Risk Assessment for the Utility MACT Appropriate
and Necessary Analysis. Office of Air Quality Planning and
Standards. November. Docket ID No. EPA-HQ-OAR-2009-0234-19912.
    \13\ For context, CAA section 112(c)(9)(B) does not allow the
EPA to delete a source category from the CAA section 112(c) list if
any source in the category emits HAP in quantities that may cause a
lifetime risk of cancer greater than 1-in-1 million to the most
exposed individual.
---------------------------------------------------------------------------

    As explained above, the agency's conclusions regarding these public
health and environmental hazards are not affected by the cost analyses
presented in this document and comments on the hazard conclusions will
be considered outside the scope of this action. However, it is critical
to note that the EPA's conclusions regarding the public health and
environmental hazards associated with emissions from EGUs form the
primary basis for the agency's previous determinations that regulation
of HAP emissions from coal- and oil-fired EGUs is appropriate and
necessary. See December 2000 Finding and proposed and final MATS.
Furthermore, in evaluating costs (Section IV, below), the agency has
considered whether the cost of compliance estimated to be incurred by
the utility sector under MATS is reasonable when weighed against, among
other things, the substantial hazards to public health and the
environment posed by HAP emissions from EGUs.

III. Cost Consideration Under CAA Section 112(n)(1)

    In Michigan, the Supreme Court held that the EPA erred when it
concluded that it need not consider cost when determining whether the
regulation of HAP emissions from coal- and oil-fired EGUs was
appropriate and necessary. Because the EPA had adopted this

interpretation in the December 2000 Finding and confirmed it in the
MATS rulemaking, before now the agency had not evaluated the statute to
determine how cost should be considered when determining whether
regulation is appropriate. The EPA has now reevaluated its
interpretation of CAA section 112(n)(1) to identify how cost
considerations should be incorporated into this threshold listing
determination. See ``Legal Memorandum Accompanying the Proposed
Supplemental Finding that it is Appropriate and Necessary to Regulate
Hazardous Air Pollutants from Coal- and Oil-Fired Electric Utility
Steam Generating Units (EGUs)'' (Legal Memorandum). In this Section,
the EPA provides a summary of the legal conclusions relating to the
consideration of cost in the appropriate finding. The Legal Memorandum
lays out, in more detail, the interpretation of CAA section
112(n)(1)(A) that provides the basis for this proposed action. The EPA
is requesting comment on the Legal Memorandum.\14\
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    \14\ Nothing in this document or the Legal Memorandum disturbs
the EPA's prior interpretations of the terms ``appropriate'' and
``necessary'' set forth in the proposed and final MATS rules, except
to the extent they concluded that the EPA was not required to take
cost into account when deciding whether regulation is
``appropriate.''
---------------------------------------------------------------------------

    In the Legal Memorandum, the EPA reevaluates the statute in light
of the Supreme Court's holding in Michigan. The EPA considers the
purpose and scope of the 1990 amendments to CAA section 112, including
section 112(n)(1), to determine the cost considerations generally
relevant to HAP-related actions, the advantages of regulating HAP
emissions from stationary sources, and a reasonable approach to
weighing the costs with the other factors relevant to determining
whether regulation of HAP emissions from EGUs is appropriate. See Legal
Memorandum, pages 6-23.
    The EPA's evaluation of CAA section 112 leads us to conclude that
the purpose of that section of the CAA is to achieve prompt, permanent
and ongoing reductions in HAP emissions from stationary sources to
reduce the hazards to public health and the environment inherent in
exposure to such emissions, with the goal of limiting the risk to the
most exposed and most sensitive members of the population. See Legal
Memorandum, pages 6-13. To accomplish this goal, the statute requires
as a starting point uniform levels of control from all sources in the
same listed category or subcategory, and ongoing review to determine
whether additional reductions can be achieved to further reduce the
volume of HAP emissions. Id. Thus, the EPA concludes that the benefit
Congress sought in amending CAA section 112 was permanent and ongoing
reductions in the volume of HAP emissions. Id. These general goals are
relevant to the EPA's evaluation of specific statutory provisions
including the EGU specific requirements in CAA section 112(n)(1). See
New Jersey v. EPA, 517 F.3d at 582 (rejecting the EPA's argument that
section 112(c)(9) does not apply to EGUs, and citing section 112(c)(6)
as support for the conclusion that ``where Congress wished to exempt
EGUs from specific requirements of section 112, it said so
explicitly.'').
    The EPA has also evaluated the specific section under which the
appropriate and necessary determination is made--CAA section
112(n)(1)--to further inform our interpretation of the role of cost in
making the appropriate determination under section 112(n)(1)(A). See
Legal Memorandum, pages 13-17. The studies required under CAA section
112(n)(1) focus on potential hazards to public health and the
environment, including the potential hazards to the most sensitive
members of the population. In addition, the statute requires the agency
to evaluate available control technologies for HAP emissions from EGUs,
and to specifically evaluate the cost of mercury controls. See CAA
sections 112(n)(1)(A) and 112(n)(1)(B). Thus, cost is one of the
several factors that the EPA must consider in addition to the other
relevant factors identified in the statute when determining whether
regulation of HAP emissions from EGUs is appropriate, but CAA section
112(n)(1) does not support a conclusion that cost should be the
predominant or overriding factor. See Legal Memorandum, pages 13-17.
    CAA section 112(n)(1)(A) also does not dictate the manner in which
cost is to be considered in the appropriate finding. In fact, the sole
mention of cost in CAA section 112(n)(1) is the direction in section
112(n)(1)(B) to consider the costs of mercury controls. The statute
thus gives the EPA discretion to identify a reasonable approach to
incorporating cost into the analysis required under CAA section
112(n)(1)(A). In addition, because section 112(n)(1)(A) is a listing
provision, the EPA must focus on whether HAP emissions from EGUs
collectively should be regulated, and not on the specific manner of
regulation.\15\ Under the statutory structure, this listing decision is
to be made significantly before the 112(d) standards would be
promulgated, and, therefore, it is reasonable for the EPA to consider
what types of cost information would be available at that threshold
stage when determining how to consider cost in the analysis. See Legal
Memorandum, pages 19-21.
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    \15\ As explained in the MATS record and the Legal Memorandum,
the manner of regulation for listed source categories is established
pursuant to CAA section 112(d)(2) for major stationary sources. In
addition, the EPA determined in the Legal Memorandum that CAA
section 112(d)(3) minimum stringency standards are technologically
feasible and presumptively cost reasonable because the standards are
based on existing sources in the same category or subcategory of
sources. See Legal Memorandum, page 8 and Section III of this
document.
---------------------------------------------------------------------------

    In determining whether it is appropriate to regulate HAP emissions
from EGUs, the EPA concludes that it is reasonable to focus on whether
the power sector can reasonably absorb the cost of compliance with
MATS. The D.C. Circuit has previously provided general guidance on how
to evaluate cost in the context of determining the reasonableness of
New Source Performance Standards under section 111 of the CAA. The
approach under CAA section 112 is somewhat different as section
112(d)(3) of the statute defines the minimum level of control based on
levels that have been actually achieved by the best performing similar
sources in the source category--a level deemed per se reasonable for
other similar sources. Thus, the agency need not determine in the
analysis the level of control that is technologically feasible and cost
reasonable as is required when establishing standards under CAA section
111. Instead, the purpose of the cost analysis under CAA section
112(n)(1)(A) is to help evaluate whether the costs of regulation are
reasonable when weighed against other relevant factors, most notably
the identified hazards to public health and the environment from HAP
emitted by EGUs that are reduced when the significant volume of HAP
emission from EGUs is reduced. For EGUs, the reasonableness of the
costs of CAA section 112(d) standards could be determined in part by an
evaluation of this sector's ability to perform its primary and unique
function--the generation, transmission and distribution of electricity.
As explained below, the EPA considered several different cost metrics
to evaluate whether cost of compliance with MATS are reasonable.
    The statute also does not specify how much weight should be given
to cost relative to other relevant factors. It thus provides the EPA
discretion to develop reasonable approaches to considering

cost while taking into account the goals of the statute. Cost is but
one of several factors the EPA must consider before it may add,
pursuant to CAA section 112(n)(1)(A), EGUs to the list of source
categories to be regulated under section 112. Specific pollutants were
listed by Congress as HAP under CAA section 112 due to their inherently
harmful characteristics, and this section instructs the EPA to reduce
the risks to public health and the environment, including the risks to
the most sensitive individuals in the population from those harms, by
reducing the volume of such HAP emissions from stationary sources.
Thus, the advantages of reducing identified hazards to public health
and the environment must be considered and weighed against the costs or
disadvantages, taking into account the statutory goals. See Legal
Memorandum, pages 21-29.
    The EPA also concludes in the Legal Memorandum that a benefit-cost
analysis is not required to support a threshold finding that regulation
is appropriate. However, to the extent a benefit-cost analysis is used
to evaluate whether regulation of HAP emissions from EGUs is
appropriate, it is important to account for the full range of benefits
associated with the action, including benefits that cannot be monetized
due to lack of data. The statute does not require the EPA to compare
only the monetized HAP-specific benefits to the compliance costs to
support the finding. Neither does the statute direct the EPA to
consider only the HAP benefits of the rule and ignore co-benefits, if
the control strategies employed achieve multi-pollutant reductions.
Instead, the EPA concludes that such an analysis would appropriately
evaluate all of the known consequences of the rule. The Legal
Memorandum concludes that the benefit-cost analysis in the RIA that
accompanied the final MATS presents a reasonable evaluation of the
costs and benefits of the final MATS rule.
    The legal interpretations summarized above, and explained in
greater detail in the Legal Memorandum, provide the basis for the
evaluation of cost and conclusions presented in the remainder of this
document. The EPA is requesting comment on all aspects of the Legal
Memorandum and all conclusions contained therein.

IV. Considerations of Cost

A. Introduction

    This Section explains how the EPA has taken cost into account in
evaluating whether regulation of coal- and oil-fired EGUs under section
112 of the CAA is appropriate. As the EPA explains above, and in the
Legal Memorandum, there is little guidance in CAA section 112 on how
the EPA could or should consider cost when making the threshold finding
under CAA section 112(n)(1)(A) and the EPA has substantial discretion
in identifying appropriate metrics for considering cost. The EPA has
evaluated costs in this Section primarily through a consideration of
whether the cost of compliance to the power sector is reasonable.
    In Section IV.B below, the EPA discusses how it evaluated the
reasonableness of the direct and indirect costs of the final CAA
section 112(d) standards. As discussed earlier and in the Legal
Memorandum, the EPA has substantial discretion in identifying
appropriate metrics for considering cost. In evaluating how to
appropriately consider costs, the EPA was mindful of Congress'
statement regarding the 1990 CAA Amendments: ``Our goal . . . has been
to promote the public health and welfare and the productive capacity of
our nation. We have given EPA both the regulatory tools to accomplish
cleaner air and the flexibility to protect our industrial and
productive capacity.'' \16\ In the context of CAA section 112(n)(1),
adherence to Congress' goal can be evaluated by considering whether the
cost of addressing, through MATS, the significant public health and
environmental hazards posed by emissions of HAP from EGUs is reasonable
and whether those hazards can be addressed while protecting the
``productive capacity'' of the power sector (i.e., without significant
harm to the power sector's ability to perform its primary and unique
function--the generation, transmission, and distribution of
electricity.) In Section IV.B the EPA presents an evaluation of
multiple metrics to determine the cost reasonableness of the CAA
section 112(d) standards for EGUs.
---------------------------------------------------------------------------

    \16\ ``A Legislative History of the Clean Air Act Amendments of
1990'' (CAA Legislative History), Vol II, p. 3187.
---------------------------------------------------------------------------

    The EPA has also identified other costs that help inform the
agency's understanding of whether it is appropriate to regulate HAP
emissions from EGUs. As discussed in the Legal Memorandum, the explicit
reference to the cost of mercury controls in CAA section 112(n)(1)(B)
and the reference to the availability of alternative control strategies
in section 112(n)(1)(A) suggests that the EPA should consider the cost
of controls for mercury and other HAP emitted from EGUs when
determining whether regulation is appropriate.\17\ The cost of the ARP
is also worth noting in light of its relationship to the inclusion of
CAA section 112(n)(1)(A) in the 1990 CAA amendments. Thus, in Section
IV.C below, the EPA discusses briefly the cost of the ARP, the
evolution of mercury controls and the reduction in the cost of such
controls since the EPA issued the Mercury Study. The EPA also discusses
the controls for other HAP emissions from EGUs.
---------------------------------------------------------------------------

    \17\ The EPA believes that it could have developed rough
projections of the control technology costs of an eventual standard
based on information obtained in the CAA section 112(n)(1) studies
and general knowledge of the costs of controls at the time the
agency made the appropriate finding. For example, the Mercury Study
estimated the potential cost of mercury controls for EGUs and other
sources, and the EPA could have attempted to provide similar cost
estimates for the other HAP emissions from EGUs based on available
information, including information in the Utility Study. However,
the agency now has an updated and further refined cost estimate of
the cost of compliance with the final MATS rule, and the EPA is
using this cost information in this action because it was developed
at the time the EPA reaffirmed the finding that regulation of HAP
emissions from EGUs is appropriate and necessary. See U.S. EPA.
2011. Regulatory Impact Analysis for the Final Mercury and Air
Toxics Standards. Office of Air Quality Planning and Standards,
Research Triangle Park, NC. EPA-452/R-11-011. Docket ID No. EPA-HQ-
OAR-2009-0234-20131.
---------------------------------------------------------------------------

    Finally, while the EPA recognizes that cost is an important
consideration in the determination of whether it is appropriate to
regulate HAP emissions from EGUs, it is not the only consideration and
CAA section 112(n)(1) does not support a conclusion that cost should be
the predominant or overriding factor. As stated earlier, and detailed
in the Legal Memorandum, the EPA must weigh the cost of compliance
against other relevant factors--such as the advantages of regulation
and achievement of statutory goals--in determining whether such
consideration of cost causes the agency to alter its previous
determination that it is appropriate to regulate HAP emissions from
EGUs. This is discussed below in Section IV.D. As noted in Section I.C
of this document, the public had ample opportunity to comment on all
aspects of the MATS RIA, and the EPA responded to all of the
significant comments.\18\ Although the EPA is not accepting comments on
the methods applied in the MATS RIA, the agency requests comments on
the use of the MATS RIA results as a way to consider cost in the CAA
section 112(n)(1)(A) determination.
---------------------------------------------------------------------------

    \18\ See pp. 477-660 of the EPA's Responses to Public Comments
on EPA's National Emission Standards for Hazardous Air Pollutants
from Coal- and Oil-Fired Electric Utility Steam Generating Units.
Volume 2. Docket ID No. EPA-HQ-OAR-2009-0234-20126.

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

B. Consideration of Cost to the Power Sector

1. Introduction
    In light of the statutory ambiguity regarding how to consider cost
in making the appropriate and necessary finding, the EPA has exercised
the discretion granted to it and applies several metrics relevant to
the power sector to determine whether the estimated cost of compliance
with MATS is reasonable. The EPA has also considered the reasonableness
of the direct and indirect costs of compliance with MATS and the power
sector's ability to maintain performance of its primary and unique
function--the generation, transmission, and distribution of
electricity.
    As explained below, the EPA considered direct and indirect costs at
the sector level because of the interconnectedness of the electricity
grid and the fact that most power companies own diverse inventories of
power generating units, including coal- and oil-fired EGUs. In this
Section, the EPA has applied a number of different analyses (metrics)
to assess whether the power sector's costs of compliance with the CAA
section 112(d) standard is reasonable. Each of these analyses
independently support a conclusion that the estimated costs of
compliance with MATS are reasonable.
    In 2012, the EPA reaffirmed the appropriate and necessary finding
and established CAA section 112(d) standards, and, as part of that
rulemaking, the EPA estimated the cost of compliance with the proposed
and final MATS standards pursuant to Executive Orders 12866 and 13563
and other applicable statutes and executive orders. In this Section,
the EPA is evaluating whether the costs of compliance with MATS is
reasonable, based on the RIA cost estimates.
    In the following Sections, the EPA presents the methodology used to
estimate annual compliance costs for MATS. The EPA then evaluates the
estimates of the total annual costs of compliance with the standards,
including a focus on estimates of total annualized costs of compliance
compared to power sector retail sales and a comparison of capital
expenditures required under MATS to overall power sector capital
expenditures. We also present analyses of the impacts these costs are
projected to have on the power sector and its consumers, including
estimates of impacts on the average retail price of electricity and the
characteristics of the units choosing to retire as a result of MATS.
2. Predicted Compliance Costs for MATS
    In this and the following Sections, we present compliance cost and
impact estimates from the MATS RIA for the year of 2015 in the broader
historical context of power sector trends. The analyses demonstrate
that the projected costs and impacts of MATS requirements are
reasonable.
    We focus on the 2015 impacts presented in the RIA because these
results represent the first year of compliance with the MATS rule, and
those compliance cost estimates would be the most relevant to the
threshold determination. As discussed later, of the years analyzed in
the MATS RIA, the compliance costs are highest in 2015, and thus we
focus on it here as a representation of the maximum impact. The
analyses in the final MATS RIA represented the best forecast of cost
and impacts available to the EPA when MATS was promulgated.
    In accordance with guidance issued by the Office of Management and
Budget (OMB) \19\ and the EPA,\20\ the EPA developed RIAs for the
proposed \21\ and final \22\ MATS rulemakings. In the MATS RIAs, the
compliance cost estimates were established using the Integrated
Planning Model (IPM).\23\ IPM, developed by ICF International, is a
state-of-the-art, peer-reviewed dynamic, deterministic linear
programming model of the contiguous U.S. electric power sector. IPM
provides forecasts of least-cost capacity expansion, electricity
dispatch, and emission control strategies while meeting electricity
demand and various environmental, transmission, dispatch, and
reliability constraints. The EPA has used IPM for over 2 decades to
understand power sector behavior under future business-as-usual
conditions and to evaluate the economic and emission impacts of
prospective environmental policies. The model is designed to reflect
electricity markets as accurately as possible using the best available
information from utilities, industry experts, gas and coal market
experts, financial institutions, and government statistics. Notably,
the model includes state-of-the-art estimates of the cost and
performance of air pollution control technologies with respect to
mercury and other HAP controls.\24\
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    \19\ Office of Management and Budget. 2003. Circular A-4:
Regulatory Analysis. Washington, DC. Available at: http://www.whitehouse.gov/omb/circulars/a004/a-4.html.
    \20\ U.S. EPA. 2010. Guidelines for Preparing Economic Analyses.
EPA 240-R-10-001. National Center for Environmental Economics,
Office of Policy Economics and Innovation. Washington, DC. December.
Available at http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE-0568-
50.pdf/$file/EE-0568-50.pdf.
    \21\ U.S. EPA. 2011. Regulatory Impact Analysis of the Proposed
Toxics Rule. March 2011. Docket ID No. EPA-HQ-OAR-2009-0234-3051.
    \22\ U.S. EPA. 2011. Regulatory Impact Analysis for the Final
Mercury and Air Toxics Standards. EPA-453/R-11-011. December 2011.
Docket ID No. EPA-HQ-OAR-2009-0234-20131.
    \23\ Detailed IPM documentation and run files for MATS are
available in the docket (see, for example, EPA-HQ-OAR-2009-0234-
19996 and EPA-HQ-OAR-2009-0234-3071). The underlying data inputs to
IPM continually evolve as the emissions profile of the power sector
changes with time in response to control technology advances,
environmental regulation, and economic influences, such as changes
in fuel prices. The EPA provides information on, and documentation
of, underlying assumptions and any changes to the IPM each time it
is used in a regulatory context.
    \24\ See, for example, USEPA Base Case v.4.10 Documentation
(EPA-HQ-OAR-2009-0234-3049) and Documentation Supplement for EPA
Base Case v.4.10_MATS--Updates for Final Mercury and Air Toxics
Standards (MATS) (EPA-HQ-OAR-2009-0234-19996).
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    In the MATS RIA, the power sector's ``compliance costs'' are
estimated in IPM as the change in electric power generation costs
between a base case without MATS and a policy case where the sector
complies with the HAP emissions limits in the final MATS. The base case
provides a future projection of the power sector in the absence of
MATS, and serves as the baseline against which projections under policy
cases are compared. The policy case examined in the MATS RIA introduces
the requirements of the rule as constraints on affected EGUs, which
results in new projections of power sector outcomes under MATS. In
simple terms, these compliance costs are an estimate of the increased
expenditures by the entire power sector to comply with the EPA's
requirements while continuing to serve a given level of electricity
demand. Therefore, the projected compliance cost estimate is not
limited to the increase in expenditures by those EGUs directly affected
by MATS, nor does it account for the ability of many electricity
producers to reduce the costs they bear by passing along their costs to
consumers of electricity through higher electricity prices.\25\
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    \25\ The MATS RIA does not clearly distinguish how much of the
increased expenditures are incurred by owners of EGUs and how much
are borne by consumers of electricity. Therefore, the $9.6 billion
in compliance costs are relevant to all participants in the U.S.
economy, not just individuals that own EGUs. In addition, these
compliance costs do not account for changes in profits for firm
owners who supply inputs such as coal and natural gas to the
electricity sector. The compliance costs for MATS are, in part,
attributable to higher fuel prices due to higher fuel demand,
particularly natural gas, which would likely increase the profits
for those fuel producers. A more comprehensive assessment of costs
that accounted for these net changes in profits and consumer welfare
would also subtract the higher profits to fuel producers from the
compliance costs. Similarly, such an assessment would also subtract
from the compliance costs changes in tax payments by electricity
producers, which are transfers rather than the use of real resources
that have an opportunity cost to society as a whole.

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

    The EPA notes that the projected compliance cost estimate
represents the incremental costs to the entire power sector to generate
electricity, not just the compliance costs projected to be borne by
coal-fired and oil-fired EGUs regulated under MATS. EGUs operate
interdependently within a large and complex system. While the MATS
requirements are directed at a subset of EGUs in the power sector, the
compliance actions of the MATS-regulated EGUs will affect production
costs and revenues of other units due to fuel and electricity price
changes. Furthermore, EGUs are often owned and operated by firms with
multiple generating sources, many of which are not subject to MATS
requirements. Therefore, limiting the consideration of costs only to
those expenditures incurred by EGUs directly regulated by MATS, and not
the other costs expended by their owners, would provide an incomplete
assessment of the costs of the rule. Thus, analyses that compare
system-wide (or sector-level) compliance cost impacts of MATS to
sector-level economic indicators are appropriate for considering
whether the power sector can absorb compliance costs, and do so without
diminishing its ability to supply electricity. This approach is also
consistent with the EPA's analytical objective to evaluate as best as
is reasonable and possible all consequences of economically significant
regulatory actions.
    Using IPM, the EPA estimated the emissions reductions and annual
incremental costs resulting from MATS, including the costs of
installing and operating additional pollution controls, investments in
new generation capacity, shifts between or amongst various fuels, and
other actions associated with compliance. The EPA estimated that,
relative to the base case, the final MATS rule would reduce annual
emissions of mercury by 75 percent, hydrogen chloride by 88 percent,
and fine particulate matter (PM2.5) (filterable PM is a
surrogate for non-mercury metal HAP) by 19 percent from coal-fired EGUs
greater than 25 megawatts (MW) projected for 2015. IPM was also used to
estimate reductions of other pollutants that resulted from the
application of the MATS emissions limits. The EPA projected sulfur
dioxide (SO2) emissions reductions of 41 percent and carbon
dioxide (CO2) reductions of one percent from coal-fired EGUs
greater than 25 MW in 2015, relative to the base case. The EPA
projected that the annual incremental cost of final MATS would be $9.6
billion in 2015.\26\ The MATS RIA also reports estimates of compliance
costs of $8.6 billion and $7.4 billion in 2020 and 2030, respectively.
Compliance cost estimates are, therefore, highest in 2015. Incremental
annual capital expenditures represent approximately $2.4 billion of the
$9.6 billion in annual costs in 2015.\27\ All costs in this and
subsequent Sections are reported in 2007 dollars.
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    \26\ As described in the MATS RIA, IPM was used to estimate the
compliance costs to the sector associated with applying MATS
emissions limitations to coal-fired EGUs. The EPA did not use IPM,
however, to estimate compliance costs to the sector associated with
applying MATS emissions limitations to oil-fired steam boilers or to
estimate monitoring, reporting, and recordkeeping (MR&R) costs for
MATS-regulated EGUs. The cost of control for oil-fired steam boilers
was estimated separately in the RIA, and then added to the IPM-based
compliance costs for coal-fired unit emissions limitations. The cost
of control for the oil-fired steam boilers was either the
expenditures by these units to install pollution controls or
increased expenditures of switching to lower-emitting fuels. Broken
into the three components, IPM-based compliance costs were $9.4
billion, the separately estimated cost of control for oil-fired
steam boilers was $56 million, and MR&R costs were $158 million,
totaling the $9.6 billion compliance cost estimate. Note the sum
does not total exactly because of independent rounding.
    \27\ The $2.4 billion increase in capital expenditures under
MATS is found by taking the difference between capital expenditures
in the IPM MATS policy case and the capital expenditures in the IPM
MATS base case. These values are found in Table 15 of ``MATS Policy
Case Summary Report'' (Docket ID No. EPA-HQ-OAR-2009-0234-19985) and
Table 15 in ``MATS Base Case Summary Report'' (Docket ID No. EPA-HQ-
OAR-2009-0234-19984).
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3. Annual Compliance Costs as a Percent of Power Sector Sales
    We compare annual compliance costs to electricity sales at the
power sector-level, often called a sales test. The sales test is a
frequently used indicator of potential impacts from compliance costs on
regulated industries.\28\
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    \28\ For example, the sales test is often used by the EPA when
evaluating potential economic impacts of regulatory actions on small
entities. In the context of a small entity analysis, an evaluation
of the change in profits to owners is likely the best approach to
assessing the economic burden to owners from a regulatory action. In
the analysis provided in this section, the sum of the change in
profits to EGU owners in the entire sector and the increased
electricity bills of consumers of electricity is compared to total
revenues. Data limitations prevent solely analyzing profit changes
to EGU owners as a result of MATS in this proposed supplemental
finding.
---------------------------------------------------------------------------

    Table 2 presents the value of retail electricity sales from 2000 to
2011, based on information from the U.S. Energy Information
Administration (EIA).\29\
---------------------------------------------------------------------------

    \29\ We do not include figures for years after 2011 in this and
later comparisons as this information would not have been available
during the development of the MATS RIA.

      Table 2--Retail Electricity Sales, All Sectors, 2000 to 2011
                             [2007 dollars]
------------------------------------------------------------------------
                                              Revenue from retail sales
                   Year                      (billions of 2007 dollars)
------------------------------------------------------------------------
2000......................................  277.2
2001......................................  287.5
2002......................................  285.5
2003......................................  291.5
2004......................................  295.0
2005......................................  315.3
2006......................................  335.2
2007......................................  343.7
2008......................................  356.6
2009......................................  343.9
2010......................................  354.8
2011......................................  349.6
------------------------------------------------------------------------
Source: U.S. Energy Information Administration, Form-826 Detailed Data,
  http://www.eia.gov/electricity/data/eia826/, accessed 10/14/15.
Note: Dollar figures adjusted to 2007 dollars using the Gross Domestic
  Product--Implicit Price Deflator, https://research.stlouisfed.org/fred2/series/GDPDEF fred2/series/GDPDEF, accessed 10/14/15.

    Revenues from retail electricity sales increased from $277.2
billion in 2000 to a peak of $356.6 billion in 2008 (an increase of 29
percent during this period). As would be expected, the general increase
in sales (in dollar terms) over this time period is partly due to
increases in electricity sales (in electricity sold) and increases in
prices over the same time period. The $9.6 billion in annual compliance
costs of MATS projected for 2015 would represent about 2.7 percent of
2011 power sector revenues from retail electricity sales. If retail
sales were to return to their 2008 peaks, the annual compliance costs
would also represent about 2.7 percent of sales. If retail electricity
sales were to decline to 2000 levels, the estimated annual compliance
costs for MATS would represent approximately 3.5 percent of retail
sales. Thus, the projected annual compliance costs of MATS represent a
small fraction of the value of overall sales.
    After considering the potential costs of MATS in light of power
sector sales, the EPA concludes that the costs to the power sector are
reasonable. As noted above, the EPA is not accepting comments on the
methods applied in the MATS RIA, but rather the agency requests
comments on the use of incremental compliance costs from the MATS RIA
results as a way to consider costs in the CAA section 112(n)(1)(A)
determination.

4. Annual Compliance Capital Expenditures Compared to the Power
Sector's Annual Capital Expenditures
    Another way in which cost can be evaluated is by comparing the
annual capital expenditures required by MATS to the range of variation
in capital expenditures from year to year. Capital costs represent
largely irreversible investments for firms that must be paid off
regardless of future economic conditions, as opposed to other important
variable costs, such as fuel costs, that may vary according to economic
conditions and generation needs. Table 3 presents two sets of estimates
for trends in the annual capital expenditures by the electric power
sector. This information informs the second metric used to consider the
costs of MATS to the power sector, namely a ratio of annual capital
expenditures estimated to be needed for MATS compliance to historical
power sector-level overall capital expenditures.
    For power sector-level capital expenditures, the EPA relies on two
sets of information. The first set of information is from the U.S.
Census Bureau's Annual Capital Expenditures Survey. The second set of
information is from information compiled by SNL, a private sector firm
that provides data and analytical services. While each dataset has
limitations, the estimates from each correspond to one another
reasonably well. The annual sector-level capital expenditures reported
by SNL are generally lower than the information from the Census Bureau.
This is in part because SNL captures information on capital
expenditures from Securities and Exchange Commission (SEC) filings,
which are submitted by most but not by all entities in the power
sector, whereas the U.S. Census Bureau's estimate of capital
expenditures in the power sector is intended to capture capital
expenditures for all entities in the power sector. For this reason, we
present both sets of information to better depict capital expenditures
in the power sector.

               Table 3--Total Capital Expenditures for the Electric Power, Generation, Transmission, and Distribution Sector, 2000 to 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Capital expenditures collected by SNL from SEC     Capital expenditures based on U.S. census bureau
                                                                      filings \1\                           annual capital expenditures survey \2\
                                                 -------------------------------------------------------------------------------------------------------
                      Year                          Capital expenditures      Change from previous      Capital expenditures      Change from previous
                                                      (billions of 2007      year (billions of 2007       (billions of 2007      year (billions of 2007
                                                          dollars)                  dollars)                  dollars)                  dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2000............................................                      51.8  ........................                      62.5  ........................
2001............................................                      70.1                      18.2                      85.9                      23.4
2002............................................                      56.4                     -13.6                      66.4                     -19.6
2003............................................                      43.8                     -12.6                      52.7                     -13.7
2004............................................                      40.4                      -3.4                      45.0                      -7.7
2005............................................                      46.7                       6.3                      50.0                       5.0
2006............................................                      57.6                      10.9                      61.6                      11.6
2007............................................                      66.9                       9.3                      73.9                      12.3
2008............................................                      78.1                      11.2                      83.5                       9.6
2009............................................                      76.6                      -1.5                      87.9                       4.4
2010............................................                      75.1                      -1.5                      79.8                      -8.2
2011............................................                      79.6                       4.5                      79.2                      -0.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Source: SNL, accessed 10/14/15.
\2\ Source: U.S. Census Bureau, Annual Capital Expenditures Survey, http://www.census.gov/econ/aces/index.html, accessed 10/14/15.
Note: Dollar figures adjusted to 2007 dollars using the Gross Domestic Product--Implicit Price Deflator, https://research.stlouisfed.org/fred2/series/GDPDEF GDPDEF, accessed 10/14/15. Changes may not sum due to independent rounding.

    Capital expenditures generally increase from 2000 to 2011 but not
in a linear fashion, partly a result of increased demand. In 2000,
capital expenditures for the electric power sector are estimated to be
$51.8 billion (based on SNL) and $62.5 billion (based on Census).
Capital expenditures for this sector reached a low in 2004 at $40.4
billion (based on SNL) and $45.0 billion (based on Census), rising to
their peak in 2011 at $79.6 billion (based on SNL) or in 2009 at $87.9
billion (based on Census).
    The final MATS RIA estimated the incremental capital expenditures
to be $2.4 billion for 2015, which represent about 3.0 percent of 2011
power sector-level capital expenditures using either SNL or Census
information.\30\ If power sector-level capital expenditures declined to
2004 levels, the incremental capital expenditures estimated for MATS
would represent about 5.9 percent (based on SNL) or 5.3 percent (based
on Census).
---------------------------------------------------------------------------

    \30\ As noted above in this Section, the incremental annual
capital expenditures represent approximately $2.4 billion of the
$9.6 billion in annual compliance costs in 2015. The incremental
capital expenditures is the change in capital expenditures for the
entire sector as a result of the MATS emissions limitations (that
is, above those estimated in the base case). As a result, the
estimate includes the change in capital expenditures from installing
pollution controls and the capital expenditures of new generating
technologies in the MATS policy case relative to the base case.
---------------------------------------------------------------------------

    The increased capital expenditures estimated to be required under
MATS represent a small fraction of the power sector's overall capital
expenditures in recent years. Additionally, the EPA notes that the
projected $2.4 billion in incremental capital costs is well within the
range of annual variability over the 2000-2011 period. During this
period, based on the Census information for example, the largest year-
to-year decrease in power sector-level capital expenditures was $19.6
billion (from 2001 to 2002) and the largest year-to-year increase in
power sector-level capital expenditures was $23.4 billion (from 2000 to
2001). This wide range indicates substantial year-to-year variability
in industry capital expenditures, and the projected $2.6 billion
increase in capital expenditures in 2015 projected under MATS falls
well-within this variability. Similar results are found using the SNL
information.
    After considering the potential impacts of MATS on industry capital
expenditures, the EPA concludes that the costs to the power sector are
reasonable. As noted above, the EPA is not accepting comments on the
methods applied in the MATS RIA, but rather the agency requests
comments on the use of incremental compliance expenditures from the
MATS RIA results as a way to

consider costs in the CAA section 112(n)(1)(A) determination.
5. Impact on Retail Price of Electricity
    In electricity markets, costs imposed on utilities can be fully or
partly passed through to consumers, which can result in increased
retail electricity prices. Evaluating the projected effect on retail
electricity prices against the variations in electricity prices from
year to year therefore provides an additional way to evaluate the
``cost'' or impact of MATS, in this instance on electricity consumers,
instead of on owners of EGUs in the power sector. Using data from the
EIA, Table 4 presents trends in the average retail price of electricity
for all sectors (residential, commercial, industrial, transportation,
and other sectors) from 2000 to 2011. This information informs the
comparison of the percent increase in retail electricity prices
projected to result from MATS for 2015 to historical levels of
variation in electricity prices.
    While compliance costs and electricity prices are evaluated
independently when considering whether it is appropriate to regulate
steam-fired EGUs under MATS, they are not independent or separable
economic indicators. The cause of higher electricity prices is the
increase in expenditures by the power sector described earlier.
Therefore, the electricity price impacts and the associated increase in
electricity bills by consumers are not costs that are in addition to
the compliance costs described earlier in this section, and, in fact,
to the extent the compliance costs are passed on to electricity
consumers, the costs to the EGU owners in the power sector are reduced.

                     Table 4--Average Retail Price of Electricity, All Sectors, 2000 to 2011
----------------------------------------------------------------------------------------------------------------
                                                                  Average electricity      Change from previous
                                                                retail price (cents per      year (cents per
                             Year                                kilowatt-hour in 2007    kilowatt-hour in 2007
                                                                        dollars)                 dollars)
----------------------------------------------------------------------------------------------------------------
2000..........................................................                     8.10
2001..........................................................                     8.47                     0.38
2002..........................................................                     8.24                     0.23
2003..........................................................                     8.35                     0.11
2004..........................................................                     8.31                     0.04
2005..........................................................                     8.61                     0.30
2006..........................................................                     9.14                     0.52
2007..........................................................                     9.13                    -0.01
2008..........................................................                     9.55                     0.42
2009..........................................................                     9.56                     0.01
2010..........................................................                     9.45                    -0.11
2011..........................................................                     9.33                    -0.13
----------------------------------------------------------------------------------------------------------------
Source: U.S Energy Information Administration, Electricity Data Browser, http://www.eia.gov/electricity/data/browser browser, accessed 10/14/15.
Notes: Dollar figures adjusted to 2007 dollars using the Gross Domestic Product--Implicit Price Deflator, https://research.stlouisfed.org/fred2/series/GDPDEF, accessed 10/14/15. Changes may not sum due to independent
  rounding.

    The final RIA estimated that MATS would result in relatively small
changes in the average retail price of electricity. Retail electricity
prices for 2015 were projected to increase from 9.0 cents per kilowatt-
hour on average in the base case to 9.3 cents per kilowatt-hour with
MATS, an increase of about 3.1 percent. The regional price increases
projected for MATS ranged from 1.3 percent to 6.3 percent. Four regions
out of the 13 regions for which retail prices were estimated
(encompassing all lower 48 states) were projected to have a higher
percentage increase in prices than the national average increase of 3.1
percent. However, each of these four regions also has a price that is
lower than the national average.
    The EPA notes that the projected 0.3 cents per kilowatt-hour
increase in national average retail electricity price under MATS is
well within the range of annual variability over the 2000-2011 period.
During this period, based on the EIA information, the largest year-to-
year decrease in national average retail electricity price was -0.2
cents per kilowatt-hour (from 2001 to 2002) and the largest year-to-
year increase in national average retail electricity price was 0.5
cents per kilowatt-hour (from 2005 to 2006). This wide range indicates
substantial variability, and the 0.3 cents per kilowatt-hour increase
in the national average retail electricity price under MATS is well-
within normal historical fluctuations.
    After considering the potential impacts of MATS on retail
electricity prices, the EPA concludes that the estimated increase in
electricity prices is within the historical range and is reasonable. In
addition, because the increase in electricity prices is in part due to
the ability of many EGUs to pass their costs on to consumers, the
estimated MATS compliance costs discussed above are in fact less of a
burden on owners of EGUs in the power sector. As noted above, the EPA
is not accepting comments on the methods applied in the MATS RIA, but
rather the agency requests comments on the use of average retail price
increases from the MATS RIA results as a way to consider costs in the
CAA section 112(n)(1)(A) determination.
6. Impact on Power Sector Generating Capacity
    The EPA believes the statutory concern with the cost of compliance
expressed in CAA section 112(n)(1) can reasonably be tied to a concern
with the ability of EGUs to comply with the ARP and other CAA
requirements, as well as CAA section 112(d)(3) standards, while at the
same time maintaining a reliable supply of electricity.\31\ Therefore,
the EPA recognized the importance of considering the ability of EGUs to
comply with MATS and maintain a reliable supply of electricity.
---------------------------------------------------------------------------

    \31\ The EPA generally uses the term ``reliability'' to refer to
the ability to deliver the resources to the projected electricity
loads so the overall power grid remains stable, and the term
``resource adequacy'' generally refers to the provision of adequate
generating resources to meet projected load and generating reserve
requirements in each region.
---------------------------------------------------------------------------

    The MATS RIA reported projected net changes in generation capacity
under MATS, as compared to the base case. Relative to the base case,
about 4.7 gigawatts (GW) of additional coal-fired capacity was
projected to retire by 2015

as the result of MATS.\32\ These projected retirements reflect less
than two percent of all coal-fired generation capacity projected in
2015 (310 GW in the base case without MATS) and less than 0.5 percent
of total projected capacity (1,026 GW in the base case without MATS).
As with the estimate of compliance costs and capital expenditures
projected by IPM and described above in this Section, this projection
was based on assumptions about a number of factors that affect the
power sector (e.g., other available capacity, demand for electricity,
fuel supply and fuel prices) and unit attributes (e.g.,
efficiency).\33\ In addition, as Table 6 shows, the units that were
projected to retire under MATS are, on average, older, smaller in terms
of capacity, and less frequently used as indicated by capacity factors.
---------------------------------------------------------------------------

    \32\ In this analysis, changes in generation capacity levels
should be viewed as ``net'' changes as some units that retire from
service in the base case do not do so in the MATS policy case.
    \33\ A number of these factors have changed since promulgation
and as a result there were additional retirements that are not
directly attributed to MATS. The EPA's projections under MATS are
based on information available at the time of MATS promulgation.

 Table 6--Characteristics of Covered Operational Coal Units and Additional Coal Units Projected To Retire Under
                                                   MATS, 2015
----------------------------------------------------------------------------------------------------------------
                                                                                Average capacity
                                                            Average age      Average capacity    factor in base
                                                              (years)              (MW)             case (%)
----------------------------------------------------------------------------------------------------------------
Retire.................................................                 52                129                 54
Operational............................................                 43                322                 71
----------------------------------------------------------------------------------------------------------------
Source: Integrated Planning Model run by the EPA, 2011. Table 3-7 in final MATS RIA.

    This analysis indicates that the vast majority of the generation
capacity in the power sector directly affected by the requirements of
MATS would be able to absorb the anticipated compliance costs and
remain operational. In order to ensure that any retirements resulting
from MATS would not adversely impact the ability of affected sources
and electric utilities from meeting the demand for electricity, the EPA
conducted an analysis of the impacts of projected retirements on
electric reliability. These resource adequacy analyses found that
reserve margins could be maintained over a three-year MATS compliance
period indicating that reliability could be maintained as the power
sector complied with MATS.\34\
---------------------------------------------------------------------------

    \34\ U.S. EPA. 2011. Resource Adequacy and Reliability in the
Integrated Planning Model Projections for the MATS Rule, http://www3.epa.gov/ttn/atw/utility/revised_resource_adequacy_tsd.pdf,
Docket ID No. EPA-HQ-OAR-2009-0234-19997.
---------------------------------------------------------------------------

    After considering the potential impacts of MATS on power sector
generation capacity, the EPA concludes that the costs to the power
sector are reasonable. As noted above, the EPA is not accepting
comments on the methods applied in the MATS RIA, but rather the agency
requests comments on the use of the MATS RIA results as a way to
consider costs in the CAA section 112(n)(1)(A) determination and on the
analyses (metrics used to assess whether the power sector's cost of
compliance with the CAA section 112(d) standards are reasonable).
7. Conclusions of Considerations of Costs to Power Sector
    In this Section, the EPA considers the costs of MATS to the power
sector from a variety of perspectives. First, the EPA estimates that
the total projected cost of the MATS rule to the power sector in 2015
represents between 2.7 and 3.5 percent of annual electricity sales when
compared to years from 2000 to 2011, a small fraction of the value of
overall sales. Second, the EPA demonstrates that the projected capital
expenditures in 2015 represent between 3.0 and 5.9 percent of total
annual power sector capital expenditures when compared to years leading
up to the finalization of the MATS rule. This investment by the power
sector comprises a small percentage of the sector's historical annual
capital expenditures on an absolute basis and also falls within the
range of historical variability in such capital expenditures. Third,
the EPA finds the projected average retail price increases are within
the range of historical variability as well as lower than their peak on
an absolute basis. The EPA has compared the projected national average
retail electricity price for 2015 under MATS to the period from 2000 to
2011 and has shown that the projected increase in electricity rates of
0.3 cents/kWh for 2015 represents an increase of 3.1 percent, well
within the range of retail price fluctuations over the 2000 to 2011
period. Finally, this analysis indicates that the vast majority of the
generation capacity in the power sector would be able to absorb the
anticipated compliance costs and remain operational and that the
generating capacity the EPA estimated would retire as a result of the
rule was generally older and less efficient than the capacity projected
to operate.
    The EPA judges each of these analyses to be appropriate bases for
evaluating whether the costs to the power sector are reasonable. Having
performed these analyses independently, the EPA concludes that every
one of them supports its conclusion that costs are reasonable.

C. Other Costs

1. Introduction
    In addition to the cost considerations described in Section IV.B
above, the EPA considered the cost of mercury controls consistent with
the requirement in CAA section 112(n)(1)(B), and the cost of controls
for other HAP emissions from EGUs. In addition, we discuss the cost of
implementing the ARP because of its relationship to the inclusion of
section 112(n)(1)(A) in the 1990 CAA Amendments. Below we first address
the ARP and then the costs of mercury and other controls.
2. Cost of the Acid Rain Program (ARP)
    As explained above and in the MATS record, section 112(n)(1)(A) was
added to the CAA in 1990 along with other significant revisions to
section 112, and that provision requires the EPA to conduct the Utility
Study and determine the hazards to public health reasonably anticipate
to occur after imposition of the other requirements of the CAA. In
addition to significantly revising section 112, the 1990 amendments to
the CAA included the utility specific ARP. The ARP was established with
the goal of reducing emissions of SO2 and nitrogen oxides
(NOX) from the power sector, and

there was an expectation that compliance with the ARP could result in
widespread installation of control technologies that would also lead to
ancillary or co-benefit reductions in HAP emissions.\35\ The ARP was
also projected to be costly--estimates of the cost of the program
ranged from $6 to $9 billion per year (2000 dollars).\36\ Notably, the
ARP has been extremely successful in reducing emissions of
SO2 and NOX from the utility power sector, and
the cost of the ARP has been shown to be much less than what was
initially estimated (up to 70 percent lower than initial
estimates).\37\ In addition, the compliance choice to not use scrubbers
reduced the cost of the ARP and significantly reduced the co-benefit
reductions in HAP emissions that would have occurred if more EGUs
installed SO2 scrubbers. As a result, in both 2000 when the
EPA made its initial finding and in 2011 when it reaffirmed the finding
that it is appropriate and necessary to regulate HAP from EGUs, those
sources were still significant emitters of HAP, and almost all EGUs are
major sources of HAP.
---------------------------------------------------------------------------

    \35\ For example, flue gas scrubbers that control SO2
can also be effective at controlling acid gas HAP such as hydrogen
chloride, hydrogen fluoride, and selenium oxide. Note, however, that
NOX controls are not effective at directly controlling
HAP (though selective catalytic reduction units can promote improved
mercury control in scrubbers).
    \36\ U.S. EPA Clean Air Markets Div., 2005, National Acid
Precipitation Assessment Program Report to Congress 2005: An
Integrated Assessment, National Science and Technology Council,
Washington, DC; Note: These estimates would be approximately $7 to
$11 billion in 2007 dollars using a GDP deflator.
    \37\ U.S. EPA Clean Air Markets Div., 2011, National Acid
Precipitation Assessment Program Report to Congress 2011: An
Integrated Assessment, National Science and Technology Council,
Washington, DC.
---------------------------------------------------------------------------

3. Consideration of the Cost of HAP Control Technologies
    As described below, the EPA first considers the cost of mercury
control technologies, consistent with CAA section 112(n)(1)(B),
focusing on information available at the time the agency issued the
Mercury Report through the time the EPA reaffirmed the appropriate and
necessary finding in 2011. The EPA then considers the cost of control
technologies for non-mercury HAP, and the changes in those costs over
time.
    The Mercury Study estimated the potential cost of mercury controls
for EGUs and other sources,\38\ and the agency updated and further
refined the mercury control cost estimate information in the RIA
conducted for the final MATS rule.\39\ The EPA also estimated the cost
of controls for other HAP in the RIA. These analyses show that mercury
control is more effective and less costly than initially estimated in
1997. The cost of non-mercury HAP control has also generally decreased
since 1990.
---------------------------------------------------------------------------

    \38\ At the time the Mercury Study was developed, mercury
controls for utility boilers were still in the research, development
and pilot program phase. The Mercury Study concluded that full-scale
emission tests were needed and that the presented cost estimates
were highly uncertain. The Mercury Study also noted that significant
research on mercury emission control was underway and concluded that
there were strong incentives for technology innovation and that the
development of more cost-effective controls was likely.
    \39\ U.S. EPA. 2011. Regulatory Impact Analysis for the Final
Mercury and Air Toxics Standards. Office of Air Quality Planning and
Standards, Research Triangle Park, NC. EPA-452/R-11-011. Docket ID
No. EPA-HQ-OAR-2009-0234-20131.
---------------------------------------------------------------------------

a. Cost of Technologies for Control of Mercury Emissions
    Pursuant to CAA section 112(n)(1)(B), the EPA completed the peer-
reviewed Mercury Study in 1997, and it considered, among other things,
the availability and cost of mercury controls. The EPA used the
findings in the Mercury Study to develop the mercury-related findings
contained in the Utility Study.
    Based on data available at the time, detailed estimates of mercury
control costs were developed for several model plants that represented
electric power generation at coal-fired power plants. For the EGUs, the
Mercury Study evaluated the costs of activated carbon injection and
carbon filter beds at model plants with different pre-existing
controls. The Mercury Study also described the potentially significant
co-benefit control of mercury emissions by conventional SO2
scrubbers and PM controls. At the time the Mercury Study was developed,
mercury controls for utility boilers were still in the research,
development and pilot program phase. The Mercury Study concluded that
full-scale emission tests were needed and that the presented cost
estimates were highly uncertain. The Mercury Study also noted that
significant research on mercury emission control was underway and
concluded that there were strong incentives for technology innovation
and that the development of more cost-effective controls was likely.
Because the EPA did not incorporate consideration of cost into the
December 2000 Finding, no conclusions were reached at that time
regarding whether the costs of the technologies outlined in the Mercury
Study were reasonable for purposes of the mercury reductions that could
be achieved.
    The agency also considered alternative control strategies that were
available and effective in reducing HAP emissions from EGUs pursuant to
CAA section 112(n)(1)(A). In fact, in the December 2000 Finding, the
EPA stated that ``the application of technologies used to control
mercury emissions in conjunction with technologies used to control
other pollutants, an approach called multi-pollutant control, can
substantially reduce or offset the costs of HAP control.'' 65 FR 79825,
at 79828 (December 20, 2000). The EPA also discussed new methods in
development to adsorb mercury onto injected particles (sorbents) so
that the mercury could be more readily removed by PM controls. Id. at
79829. While the EPA did not explicitly consider costs in the December
2000 Finding, the inclusion of this information demonstrates that the
EPA was mindful even then of mercury controls and associated costs.
    The EPA similarly concluded in the MATS rule that there were
available mercury controls (76 FR 25014), and the record reflects that
mercury control costs have declined considerably since 2000.\40\ In
fact, the mercury sorbents discussed in the Mercury Study and the
December 2000 Finding are now routinely used and newer and more
effective mercury sorbents and other control strategies have been
developed prior to and during the MATS rulemaking process.
---------------------------------------------------------------------------

    \40\ For example, see Docket ID No. EPA-HQ-OAR-2009-0234-20232.
---------------------------------------------------------------------------

b. Cost of Technology for Control of Non-Mercury HAP
    The EPA considered the cost of controls for the non-mercury metal,
acid gas, and organic HAP. In 1990, the types and costs of control
technologies were generally known (e.g., PM controls (bag-houses and
electrostatic precipitators) were the best controls for non-mercury
metal HAPs and SO2 scrubbers were the best controls for acid
gas HAP, and the costs of those controls were known in 1990). CAA
section 112(n)(1)(A) thus reasonably required the EPA to ``develop and
describe . . . alternative control strategies for [HAP] emissions which
may warrant regulation under this section'',\41\ but did not require
the EPA to consider the cost of such alternative controls. In the
Utility Study, the EPA developed and described many pre- and post-
combustion controls, both proven and being developed, for HAP

emissions, and many of those control approaches are in use today at
other HAP sources to reduce the cost of compliance with CAA section
112(d) standards. The EPA believes that many EGUs will use these
approaches to reduce the cost of compliance with MATS.
---------------------------------------------------------------------------

    \41\ The EPA states in the Utility Study that ``[t]he HAPs of
concern include the trace elements identified in chapter 5 as
potential health risks. These consist of arsenic, cadmium, chromium,
lead, manganese, mercury, and nickel; dioxins and furans (due to the
toxicity of the organic chemical); and HCl [hydrogen chloride] and
HF [hydrogen fluoride] (due to the estimated emission quantities of
the compounds).'' Utility Study, 13-1.
---------------------------------------------------------------------------

    Concerning the cost of non-mercury controls, we considered flue gas
desulfurization (FGD) controls that can effectively reduce acid gas HAP
and can also reduce mercury and other non-mercury HAP to varying
degrees based in part on control configuration (e.g., some
NOX controls facilitated the removal of mercury with a wet
scrubber). The cost to reduce acid gas HAP using SO2
controls has declined over time with the increased use of alternative
technologies such as spray drier absorber and dry sorbent injection.

D. Incorporating Cost Into the Appropriate Finding

    In response to the Supreme Court's holding in Michigan that the EPA
erred in concluding that it was appropriate and necessary to regulate
EGUs without considering cost, the EPA has now evaluated cost. The EPA
must now, because it has already determined that HAP emissions from
EGUs present significant hazards to public health and the environment,
consider its conclusions regarding the cost of MATS in light of other
factors relevant to the appropriate determination. Other relevant
factors include the EPA's prior conclusions that HAP emissions from
EGUs pose significant hazards to public health and the environment that
will not be addressed through imposition of the other requirements of
the CAA and that there are controls available to reduce HAP emissions
from EGUs. The EPA must also consider its prior conclusion that EGUs
are by far the largest remaining source of mercury, selenium, hydrogen
chloride, and hydrogen fluoride emissions, and a major source of
metallic HAP emissions including arsenic, chromium, nickel, and
others,\42\ and that MATS will significantly reduce EGU emissions of
many HAP. The EPA has estimated that MATS would reduce annual emissions
from EGUs of mercury by 75 percent, hydrogen chloride (a surrogate for
all acid gas HAP) by 88 percent, and PM2.5 (filterable PM is
a surrogate for all non-mercury metal HAP) by 19 percent.\43\
---------------------------------------------------------------------------

    \42\ See Section II of this document and Emissions Overview:
Hazardous Air Pollutants in Support of the Final Mercury and Air
Toxics Standard, Docket ID No. EPA-HQ-OAR-2009-0234-19914.
    \43\ See Section IV.B.2 of this document and 77 FR 9424.
---------------------------------------------------------------------------

    These conclusions, contained in the December 2000 Finding and the
2011 MATS rule \44\ were not affected by the Supreme Court decision in
Michigan. Instead, the Supreme Court concluded that the appropriate
finding could not be made without also considering cost. Michigan, 135
S.Ct. at 2711.
---------------------------------------------------------------------------

    \44\ December 2000 Finding, 65 FR 79825-31; Proposed MATS, 76 FR
24976-25020; Final MATS, 77 FR 9304-66.
---------------------------------------------------------------------------

    The EPA has now evaluated cost and considered cost in light of the
other factors relevant to determining whether regulation of HAP
emissions from EGUs is appropriate. Based on a consideration of these
factors, the EPA concludes that the consideration of cost does not
cause us to alter our determination that regulation of HAP emissions
from EGUs is appropriate.
    The EPA concludes above that the direct and indirect costs to the
power sector to comply with the final MATS standards based on several
different metrics. The EPA also concludes above that the costs of
compliance with the CAA section 112(d) standards established in MATS
are reasonable and do not jeopardize the power sector's ability to
perform its primary and unique function--the generation, transmission
and distribution of electricity.
    The EPA has considered the conclusion that the costs of compliance
with the final MATS rule are reasonable in conjunction with the other
relevant factors to determine whether the cost of regulation causes us
to conclude that, despite the advantages of regulation such as the
progress regulation will make toward reducing the identified hazards to
public health, it would not be appropriate to regulate HAP emissions
from EGUs. Specifically, the EPA considered the cost in light the
findings that mercury and non-mercury HAP from EGUs pose significant
hazards to public health and the environment that will not be addressed
through imposition of the other requirements of the CAA. See Section II
of this document, the December 2000 Finding, and the MATS record. The
EPA also considered the fact that coal- and oil-fired EGUs are the
predominant anthropogenic source in the U.S. of several listed HAP,
including mercury, hydrogen chloride, selenium, and hydrogen fluoride,
and all but a handful of EGUs are major sources of HAP.
    The EPA also considered the purpose of CAA section 112 to achieve
prompt, permanent and ongoing reductions in the volume of HAP emissions
that pose identified or inherent hazards to public health and the
environment to reduce the risks posed by such emissions, including
risks to the most exposed and most sensitive members of the population.
The EPA considered the fact that absent regulation of HAP emissions
from EGUs, such units would continue to emit significant volumes of HAP
emissions without a need to reduce or even monitor such emissions. This
is particularly problematic for persistent HAP such as mercury, which,
once emitted, can be re-emitted in the future, and as a result continue
to contribute to mercury deposition and associated health and
environmental hazards.\45\ The EPA also considered the fact that the
statute contemplates that all major sources of HAP will be subject to
standards and that all listed sources will be evaluated every 8 years
to determine if additional reductions in HAP emissions can be achieved
at a reasonable cost, based on the availability of new controls or work
practices. The statutory structure generally supports the regulation of
all significant sources of HAP emissions, and the EPA has demonstrated
that HAP are emitted in significant volumes by EGUs and such emissions
have been determined to pose ongoing hazards to public health and the
environment.
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    \45\ EGUs have emitted many hundreds of tons of mercury into the
environment and those emissions will continue to pose hazards to
public health and the environment into the future. 76 FR 25015.
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    Having considered all of the relevant factors, including cost, the
EPA finds that the cost of compliance with CAA section 112(d) standards
does not cause us to alter our determination that regulation of HAP
emissions from EGUs is appropriate. Numerous independent metrics
support the conclusion that MATS, the regulation promulgated by the EPA
to address HAP emissions from EGUs, is reasonable. MATS makes
significant progress toward implementing the statutory goals of
reducing the inherent hazards associated with HAP emissions and to
reduce the risks posed by such emissions, including risks to the most
exposed and most sensitive members of the population. In light of the
meaningful progress MATS makes towards the important statutory
objectives, and the EPA's conclusion that its associate costs are
reasonable and will not affect the power sector's ability to continue
supplying reliable power, the EPA concludes that it is appropriate to
regulate HAP emissions from EGUs after considering cost.
    Moreover, many of the congressional concerns related to costs and
regulatory burden on the power sector, which led to the inclusion of
section 112(n)(1) in

the CAA, have been mitigated by more recent developments and
consideration of these developments further supports the EPA's proposed
conclusion. The EPA is expressly required to consider the cost of
mercury controls in CAA section 112(n)(1)(B). The EPA has done so and
determined that the estimated cost of mercury control has decreased
significantly since 1997 when the EPA issued the Mercury Study. In the
MATS rule, the EPA determined that there were available mercury
controls (76 FR 25014), and the record reflects that mercury control
costs have further declined since 2000.\46\ In fact, the mercury
sorbents discussed in the Mercury Study and the December 2000 Finding
are now routinely used and new, more effective mercury sorbents and
other control strategies have been developed prior to and during the
MATS rulemaking process. The decreased cost of mercury controls and
further supports our conclusion that consideration of cost does not
cause us to alter our conclusion that it is appropriate to regulate HAP
emissions from EGUs.
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    \46\ For example, see Docket ID No. EPA-HQ-OAR-2009-0234-20232.
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    Finally, the EPA considered the fact that CAA section 112(d)
ensures that the MACT floor level of control is technologically
feasible and presumptively cost reasonable because it is based on the
level of control actually achieved by existing sources in the same
category or subcategory. See Legal Memorandum, Section III. In
addition, while the statute requires a minimum level of control, the
EPA maintains discretion under CAA section 112(d) to minimize the cost
of compliance, for example, through subcategorization and emissions
averaging. See December 2000 Finding, 65 FR 79830. The inherent
reasonableness of MACT floor standards and the flexibility included in
the standard setting process further support the EPA's proposed
supplemental finding.
    By adding cost considerations into the EPA's evaluation of whether
regulation of HAP emissions from EGUs is appropriate, the EPA has
corrected the deficiency identified by the Supreme Court in Michigan.
Now, having considered cost and for all of the reasons explained above,
the EPA is proposing this supplemental finding that, as the costs
imposed by MATS are reasonable, it is appropriate for the EPA to
regulate HAP emissions from EGUs in light of the meaningful progress
the rule makes toward achieving key statutory goals and reducing the
previously identified significant hazards to public health and the
environment. In sum, the significant advantages of regulating these
emissions outweigh the costs of regulation.

V. Consideration of the Benefit-Cost Analysis in the MATS RIA

A. Introduction

    As discussed above and in the Legal Memorandum, the EPA has
discretion to determine the manner in which to consider cost under CAA
section 112(n)(1). The EPA does not interpret CAA section 112(n)(1)(A)
as requiring a formal benefit-cost analysis in which benefits are
monetized and compared against the monetary costs of an action.
Further, it is the EPA's judgment that a formal, monetized benefit-cost
analysis is not the preferred approach for weighing the advantages and
disadvantages of regulating HAP emissions from EGUs. See Section IV.D
(setting forth the EPA's preferred approach to incorporating cost in
the appropriate finding). However, a formal benefit-cost analysis was
conducted in accordance with all relevant guidance and is presented in
the final MATS RIA. In this Section, the EPA provides background on the
benefit-cost approach and considers the results of the benefit-cost
analyses developed for MATS. As explained herein, the final MATS RIA
demonstrates that the benefits of the rule significantly outweighed the
costs of the rule and thus fully and independently supports the EPA's
proposed supplemental finding.
    As noted in Section I.C of this document, the public had ample
opportunity to comment on all aspects of the MATS RIA, including the
benefits analysis, and the EPA responded to all of the significant
comments.\47\ Although the EPA is not accepting comments on the methods
applied in the MATS RIA, the agency requests comments on the use of the
MATS RIA results as a way to consider costs in the CAA section
112(n)(1)(A) determination.
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    \47\ See pp. 477-660 of the EPA's Responses to Public Comments
on EPA's National Emission Standards for Hazardous Air Pollutants
from Coal- and Oil-Fired Electric Utility Steam Generating Units.
Volume 2. Docket ID No. EPA-HQ-OAR-2009-0234-20126.
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B. Background on Benefit-Cost Analyses

    The EPA developed RIAs for both the proposed and final MATS rule
pursuant to Executive Orders 12866 and 13563, as well as other
applicable statutes and executive orders. Among other requirements,
these executive orders require agencies to assess the costs and
benefits of significant regulatory actions with the recognition that
some impacts are difficult to quantify. Agencies are also required to
make a reasoned determination that the benefits of an action justify
its costs. The final MATS RIA met these requirements and followed all
applicable guidance documents by closely examining all of the important
consequences of the rule and applying rigorous, peer-reviewed methods
to calculate the monetized costs and benefits, when possible.
    According to the EPA's guidance, the foundation of benefit-cost
analysis is determining whether a policy's overall net benefits to
society are positive.\48\ Net benefits are derived by summing all of
the benefits that result from a policy change less the costs of that
policy, including all ancillary consequences (positive and negative).
Further, OMB's guidance notes that benefit-cost analysis can be used to
indicate which policy option generates the largest net benefits to
society, at least to the extent that all benefits and costs can be
quantified and expressed in monetary units.\49\ OMB also notes that
this information can be useful for decision makers and the public, even
when economic efficiency (e.g., maximizing net benefits) is not the
overriding public policy objective, such as when a policy is explicitly
designed to address distributional unfairness.\50\
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    \48\ See p. 1-4 of the EPA's Guidelines for Preparation of
Economic Analyses.
    \49\ See p. 2 of OMB's Circular A-4.
    \50\ OMB's guidance also recognizes that there may be other
social purposes for regulation beyond economic purposes such as
removing distributional unfairness. See p. 5 of OMB's Circular A-4.
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    In addition to interpreting CAA section 112(n)(1)(A) as not
requiring a benefit-cost analysis, the EPA does not consider a formal,
monetized benefit-cost analysis to be the preferred approach for
weighing advantages and disadvantages under that section for several
important policy reasons. First, it is well-recognized that some
categories of benefits can be difficult to monetize,\51\ and this
incomplete quantitative characterization of the positive consequences
can

underestimate the monetary value of net benefits. As discussed in
Sections V.C. and V.D. of this document, the numerous categories of
benefits that the EPA was unable to quantify leads to an underestimate
of the benefits in the MATS RIA. Second, national-level benefit-cost
analyses may not account for important distributional effects, such as
impacts to the most exposed and most sensitive individuals in a
population. Thus, these equity considerations that are difficult to
quantify are often considered outside of analyses that test (or
determine) whether actions strictly improve economic efficiency (i.e.,
increase net benefits).
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    \51\ See Executive Order 13563; pp. 2 of OMB's Circular A-4
(``It will not always be possible to express in monetary units all
of the important benefits and costs. When it is not, the most
efficient alternative will not necessarily be the one with the
largest quantified and monetized net-benefit estimate.''; and pp. 7-
49 of the EPA's Guidelines for Preparation of Economic Analyses
(``It often will not be possible to quantify all of the significant
physical impacts for all policy options . . . When there are
potentially important effects that cannot be quantified, the analyst
should include a qualitative discussion of benefits results. The
discussion should explain why a quantitative analysis was not
possible and the reasons for believing that these non-quantified
effects may be important for decision making.'').
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    Using peer-reviewed methods consistent with the agency's standard
practices and the EPA's and OMB's guidance, the final MATS RIA found
significant net benefits. As described in Section IV.B.2 of this
document, the EPA estimated the changes in costs and emissions from
MATS by using IPM to model the consequences of achieving the HAP
emission limits on the power sector (specifically, for coal-fired
EGUs). As described in the MATS RIA, the EPA evaluates the health
benefits associated with these changes in emissions using a multi-step
process. First, the EPA models the chemical transport of those emission
reductions and the associated change in exposure. Next, the EPA
estimates the number of specific health effects associated with the
modeled exposure changes using relationships from health studies.
Lastly, the EPA assigns a dollar value to those health effects based on
the economic literature.

C. Consideration of HAP Benefits

    The EPA estimated in the final RIA that MATS would reduce annual
emissions from EGUs of mercury by 75 percent, hydrogen chloride (a
surrogate for all acid gas HAP) by 88 percent, and PM2.5
(filterable PM is a surrogate for all non-mercury metal HAP) by 19
percent.\52\ Hazardous metals, acid gases, and organic pollutants can
cause various adverse cancer and noncancer health effects including
many chronic and acute health disorders, but the EPA was unable to
quantify many of the health effects attributable to these emission
reductions because data and methods available do not currently exist in
the scientific literature.\53\ Nevertheless, the EPA qualitatively
accounted for these benefits from HAP emission reductions in Chapter 4
of the final MATS RIA, and the EPA maintains that the HAP-specific
consequences of the rule are vital and further the goals of the
statute.\54\ In fact, the MATS RIA specifically accounted for these
benefits in the comparison of monetized benefits to costs by adding a
``+B'' to denote the sum of all unquantified benefits (see Table ES-1
of the final MATS RIA).
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    \52\ See 77 FR 9424.
    \53\ The EPA explained in the MATS RIA that there are
significant obstacles to successfully quantifying and monetizing the
public health benefits from reducing HAP emissions. These obstacles
include gaps in toxicological data, uncertainties in extrapolating
results from high-dose animal experiments to estimate human effects
at lower doses, limited monitoring data, difficulties in tracking
diseases such as cancer that have long latency periods, and
insufficient economic research to support the valuation of the
health impacts often associated with exposure to individual HAP.
    \54\ See p. 73-79 of the final MATS RIA for discussions of the
health effects associated with reducing emissions of 13 non-mercury
HAP emitted by EGUs.
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    In the MATS RIA, the EPA could only quantify and monetize a small
subset of the health and environmental benefits attributable to
reducing mercury emissions. Specifically, among neurodevelopmental
effects, the EPA was only able to quantify and monetize IQ loss among a
small subset of recreational fishers. The analyses the EPA conducted
for this endpoint generated an estimate of $4 to $6 million annually,
which reflects the dollar value of the reduction in IQ loss associated
with changes in mercury exposure for typical recreational fishers who
consume fish during pregnancy from the freshwater watersheds where the
EPA had fish tissue data. While IQ loss is the only health effect that
could be quantified and monetized, the EPA's independent Science
Advisory Board noted that it is not the most potentially significant
health effect associated with mercury exposure as other neurobehavioral
effects, such as language, memory, attention, and other developmental
indices, that are more responsive to mercury exposure.\55\ This
estimate of the monetized benefits of reducing mercury emissions did
not account for (1) benefits from reducing adverse health effects on
brain and nervous system development beyond IQ loss; (2) benefits for
consumers of commercial (store-bought) fish (i.e., the largest pathway
to mercury exposure in the U.S.); (3) benefits for consumers of self-
caught fish from oceans, estuaries or large lakes such as the Great
Lakes; (4) benefits for the populations most affected by mercury
emissions (e.g., children of women who consume subsistence-level
amounts of fish during pregnancy); (5) benefits to children exposed to
mercury after birth; and (6) environmental benefits from reducing
adverse effects on birds and mammals that consume fish. Thus, the
limited estimate for the single neurodevelopmental endpoint that could
be monetized (IQ loss among certain recreational fishers) is a
substantial underestimate of the total mercury impacts among affected
populations. These monetized estimates also do not reflect any benefits
associated with reducing non-mercury HAP emissions.
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    \55\ U.S. Environmental Protection Agency-Science Advisory
Board. 2011. Peer Review of EPA's Draft National-Scale Mercury Risk
Assessment. EPA-SAB-11-017. September. Docket ID No. EPA-HQ-OAR-
2009-0234-19689. Available at: http://yosemite.epa.gov/sab/
sabproduct.nsf/BCA23C5B7917F5BF8525791A0072CCA1/$File/EPA-SAB-11-
017-unsigned.pdf. See p. 2 (``IQ loss is not a sensitive response
endpoint for methylmercury and its use likely underestimates the
impact of reducing methylmercury in water bodies'') and p. 8 (``[I]n
the Faroe Island study the most sensitive indicators were in the
domains of language (Boston Naming Test), attention (continuous
performance) and memory (California Verbal Learning Test) . . . In
the Seychelles study, the Psychomotor Development Index was the most
sensitive measure'').
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D. Consideration of Total Benefits and Benefit-Cost Comparisons

    Because the subset of mercury-only benefits that the EPA could
quantify from MATS does not account for many of the important benefits
associated with reducing HAP emissions from EGUs, it would be
unreasonable to draw any conclusions from a comparison of the mercury-
only benefits to the full costs of MATS. Instead, a complete benefit-
cost comparison would account for all of the consequences of achieving
the HAP emission limits (i.e., direct and indirect as well as
quantified and unquantified).\56\ The MATS RIA contains a benefit-cost
comparison that reflects only certain categories of benefits that could
be confidently quantified and/or monetized. Reflecting just these
impacts, the EPA estimated that the final MATS would yield annual
monetized benefits (in 2007 dollars) of between $37 billion to $90
billion using a 3-percent discount rate and $33 billion to $81 billion
using a 7-percent discount rate. Despite the fact that these estimates
capture only a portion of the benefits of the rule, it is clear that
the benefits of MATS outweigh the costs substantially. Specifically,
the monetized benefits outweigh the estimated $9.6 billion in annual
costs by between 3-to-1 or 9-to-1 depending on the benefit estimate and
discount rate used. As noted above, these total monetized benefits are
underestimated due to the numerous categories of HAP and other benefits

that were not monetized in the MATS RIA.