Environmental Protection Agency: Findings of Significant Contribution and Rulemaking on Section 126 Petitions for Purposes of Reducing Interstate Ozone Transport

Published by the Government Accountability Office on 1999-06-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States

GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      June 9, 1999

      The Honorable John H. Chafee
      The Honorable Max Baucus
      Ranking Minority Member
      Committee on Environment and Public Works
      United States Senate

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dingell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      Subject: Environmental Protection Agency: Findings of Significant Contribution and
               Rulemaking on Section 126 Petitions for Purposes of Reducing Interstate
               Ozone Transport

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
      major rule promulgated by Environmental Protection Agency (EPA), entitled
      “Findings of Significant Contribution and Rulemaking on Section 126 Petitions for
      Purposes of Reducing Interstate Ozone Transport” (RIN: 2060-AH88). We received
      the rule on May 10, 1999. It was published in the Federal Register as a final rule on
      May 25, 1999. 64 Fed. Reg. 28250.

      In accordance with section 126 of the Clean Air Act, the rule contains EPA’s final
      action on petitions filed by eight northeastern states seeking to mitigate significant
      transport of nitrogen oxides (NOx), one of the main precursors of ground-level ozone,
      across state lines. In the rule, EPA determines that portions of six of the petitions are
      technically meritorious. Those portions will be automatically deemed granted or
      denied at certain later dates pending actions by the states and EPA regarding state
      submittals in response to the final NOx state implementation plan call.

      EPA intends to implement the section 126 control remedy through a federal NOx
      Budget Trading Program, the details of which will be promulgated by July 15, 1999.

On May 25, 1999, the United States Court of Appeals for the District of Columbia
Circuit issued an order granting a partial stay of the submission of revised state
implementation plans pending further order of the Court. State of Michigan, Michigan
Department of Environmental Quality and State of West Virginia, Division of
Environmental Protection v. Environmental Protection Agency (No. 98-1497).

Enclosed is our assessment of EPA’s compliance with the procedural steps required
by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. Our review
indicates that EPA complied with the applicable requirements.

If you have any questions about this report, please contact James W. Vickers,
Assistant General Counsel, at (202) 512-8210. The official responsible for GAO
evaluation work relating to the subject matter of the rule is Peter Guerrero, Director,
Environmental Protection Issues. Mr. Guerrero can be reached at (202) 512-6111.

Sincerely yours,

Robert P. Murphy
General Counsel


cc: Mr. Thomas E. Kelly
    Director, Office of Regulatory
       Management and Information
    Environmental Protection Agency

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        ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                 ISSUED BY
                             (RIN: 2060-AH88)

(i) Cost-benefit analysis

EPA has prepared a Regulatory Impact Analysis for the final NOx state
implementation plan call and section 126 petitions. It concludes that the national
annual cost of possible state actions to comply is approximately $1.7 billion. This
estimate will be revised following the promulgation of the trading program.

In terms of improvements in health, visibility, and ecosystem protection, the benefits
estimated from the NOx state implementation plan call, that EPA quantified and
monetized, range from $1.1 billion to $4.2 billion. According to EPA, due to practical
limitations, all potential benefits cannot be monetized or quantified.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605, 607,
and 609

In connection with the issuance of the final rule, EPA prepared Initial and Final
Regulatory Flexibility Analyses and convened a Small Business Advocacy Panel. The
final analysis contains the required information including the size and number of
small entities impacted by the final rule. EPA also discusses the steps it took to
reduce the impact on small entities. One step was to limit the small entities covered
by the rule to large electric generating units and large non-electric generating units.
By doing this, EPA has reduced by over 85 percent the number of small entities

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

EPA has determined that the final rule could result in the establishment of
enforceable mandates, as defined in the Act, directly applicable to sources (including
sources owned by state and local governments) that would result in costs greater
than $100 million in any one year. Therefore, EPA has prepared the required written
statement concerning the final rule that discusses the economic assessments,
estimates, and alternatives considered.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

Instead of the notice and comment procedures in the Administrative Procedure Act,
the EPA promulgated this rule using the procedures, which have similar notice and
comment requirements, contained in section 307(d) of the Clean Air Act, as amended.
42 U.S.C. § 7607(d). The use of these procedures regarding rules pertaining to
interstate pollution abatement is mandated by section 307(d)(1)(N) of the Clean Air

On October 21, 1998, EPA issued a Notice of Proposed Rulemaking regarding the
petitions filed by numerous northeastern states. 63 Fed. Reg. 56291. This was
followed by the issuance of a Supplemental Notice of Proposed Rulemaking dated
March 3, 1999. 64 Fed. Reg. 10342. The preamble to the final rule contains a
discussion of the comments generated by the proposed rules.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

EPA notes in the preamble to the final rule that the information collections contained
in the final rule will be submitted to the Office of Management and Budget when the
NOx trading portion of the section 126 rulemaking is promulgated.

Statutory authorization for the rule

The final rule was issued pursuant to the authority of the Clean Air Act, as amended,
particularly section 126, 42 U.S.C. § 7401 et seq.

Executive Order No. 12866

The final rule was found to be an “economically significant” regulatory action under
Executive Order No. 12866 and was reviewed and approved by the Office of
Management and Budget as complying with the requirements of the Order.

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