Date: September 16, 1997
To: Art Fraas, OMB
Tom Helms, EPA
From: Kevin Bromberg, SBA
Subject: OTAG Draft Proposal
We agree with OMB that it is very important to allow cap and trade to go beyond "large combustion sources" to include both medium and small sources. Small sources in this rule, I believe, are those under 0.25 tons/day, which are not that "small" in emissions. EPA should welcome additional opportunities for cost reductions. Also, trading should not be limited solely to those sources with existing monitoring requirements.
We understand that some of the elements of this cap and trade program will appear later this month in a draft open market trading rule. We would like to receive a copy of that draft when available.
SBA also suggests that EPA think about whether it could permit trading by equipment manufacturers governed by some of the Federal measures, such as nonroad diesel. The draft rule says that many of the federal measures are relatively cheap. As I recollect, Nox reductions from nonroad diesel combustion sources are extremely cheap (about $200/ton in the current proposal). Perhaps, some large manufacturers could produce forklifts, etc. for sale in the year 2003 (for example) or later solely in designated states with lower than Federal standards (Tier 2 or Tier 3, etc.) The total 1994 inventory for nonroad combustion engines is about 150,000 tons of Nox. Are any of these inventories large enough to warrant consideration of trading?