Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone
Federal RegisterAug 2, 2010
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51, 52, 72, 78, and 97
[EPA-HQ-OAR-2009-0491; FRL-9174-9]
RIN 2060-AP50
Federal Implementation Plans To Reduce Interstate Transport of Fine Particulate Matter and Ozone
AGENCY:
Environmental Protection Agency (EPA).
ACTION:
Proposed rule.
SUMMARY:
EPA is proposing to limit the interstate transport of emissions of nitrogen oxides (NO
X
) and sulfur dioxide (SO
2
). In this action, EPA is proposing to both identify and limit emissions within 32 states in the eastern United States that affect the ability of downwind states to attain and maintain compliance with the 1997 and 2006 fine particulate matter (PM
2.5
) national ambient air quality standards (NAAQS) and the 1997 ozone NAAQS. EPA is proposing to limit these emissions through Federal Implementation Plans (FIPs) that regulate electric generating units (EGUs) in the 32 states. This action will substantially reduce the impact of transported emissions on downwind states. In conjunction with other federal and state actions, it helps assure that all but a handful of areas in the eastern part of the country will be in compliance with the current ozone and PM
2.5
NAAQS by 2014 or earlier. To the extent the proposed FIPs do not fully address all significant transport, EPA is committed to assuring that any additional reductions needed are addressed quickly. EPA takes comments on ways this proposal could achieve additional NO
X
reductions and additional actions including other rulemakings that EPA could undertake to achieve any additional reductions needed.
DATES:
Comments
. Comments must be received on or before October 1, 2010.
Public Hearing:
Three public hearings will be held before the end of the comment period. The dates, times and locations will be announced separately. Please refer to
SUPPLEMENTARY INFORMATION
for additional information on the comment period and the public hearings.
ADDRESSES:
Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2009-0491 by one of the following methods:
•
http://www.regulations.gov
. Follow the online instructions for submitting comments. Attention Docket ID No. EPA-HQ-OAR-2009-0491.
•
E-mail: a-and-r-docket@epa.gov
. Attention Docket ID No. EPA-HQ-OAR-2009-0491.
•
Fax:
(202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-2009-0491.
•
Mail:
EPA Docket Center, EPA West (Air Docket), Attention Docket ID No. EPA-HQ-OAR-2009-0491, U.S. Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. Please include 2 copies. In addition, please mail a copy of your comments on the information collection provisions to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th Street, NW., Washington, DC 20503.
•
Hand Delivery:
U.S. Environmental Protection Agency, EPA West (Air Docket), 1301 Constitution Avenue, Northwest, Room 3334, Washington, DC 20004, Attention Docket ID No. EPA-HQ-OAR-2009-0491. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.
Instructions.
Direct your comments to Docket ID No. EPA-HQ-OAR-2009-0491. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at
http://www.regulations.gov
, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (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 e-mail. The
http://www.regulations.gov
Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through
http://www.regulations.gov
, your e-mail 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, 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 EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, avoid any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket, visit the EPA Docket Center homepage at
http://www.epa.gov/epahome/dockets.htm
.
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 Air and Radiation Docket and Information Center, EPA/DC, EPA 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 legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT:
Mr. Tim Smith, Air Quality Policy Division, Office of Air Quality Planning and Standards (C539-04), Environmental Protection Agency, Research Triangle Park, NC 27711; telephone number: (919) 541-4718; fax number: (919) 541-0824; e-mail address:
smith.tim@epa.gov
. For legal questions, please contact Ms. Sonja Rodman, U.S. EPA, Office of General Counsel, Mail Code 2344A, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202) 564-4079; e-mail address
rodman.sonja@epa.gov
.
SUPPLEMENTARY INFORMATION:
I. Preamble Glossary of Terms and Abbreviations
The following are abbreviations of terms used in the preamble.
ARP Acid Rain Program
BART Best Available Retrofit Technology
BACT Best Available Control Technology
CAA or Act Clean Air Act
CAIR Clean Air Interstate Rule
CBI Confidential Business Information
CFR Code of Federal Regulations
EGU Electric Generating Unit
FERC Federal Energy Regulatory Commission
FGD Flue Gas Desulfurization
FIP Federal Implementation Plan
FR Federal Register
EPA U.S. Environmental Protection Agency
GHG Greenhouse Gas
Hg Mercury
IPM Integrated Planning Model
lb/mmbtu Pounds Per Million British Thermal Unit
μg/m
3
Micrograms Per Cubic Meter
NAAQS National Ambient Air Quality Standards
NO
X
Nitrogen Oxides
NSPS New Source Performance Standard
OTAG Ozone Transport Assessment Group
PUC Public Utility Commission
SNCR Selective Non-catalytic Reduction
SCR Selective Catalytic Reduction
SIP State Implementation Plan
PM
2.5
Fine Particulate Matter, Less Than 2.5 Micrometers
PM
10
Fine and Coarse Particulate Matter, Less Than 10 Micrometers
PM Particulate Matter
RIA Regulatory Impact Analysis
SO
2
Sulfur Dioxide
SO
X
Sulfur Oxides, Including Sulfur Dioxide (SO
2
) and Sulfur Trioxide (SO
3
)
TIP Tribal Implementation Plan tpy Tons Per Year
TSD Technical Support Document
II. General Information
A. Does this action apply to me?
This rule affects EGUs, and regulates the following groups:
Industry group
NAICS
a
Utilities (electric, natural gas, other systems)
2211, 2212, 2213
a
North American Industry Classification System.
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is aware of that could potentially be regulated. Other types of entities not listed in the table could also be regulated. To determine whether your facility would be regulated by the proposed rule, you should carefully examine the applicability criteria in proposed §§ 97.404, 97.504, 97,604, and 97.704.
B. Where can I get a copy of this document and other related information?
In addition to being available in the docket, an electronic copy of this proposal will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this action will be posted on the transport rule Web site
http://www.epa.gov/airtransport
.
C. What should I consider as I prepare my comments for EPA?
1.
Submitting CBI
. Do not submit this information to EPA through
http://www.regulations.gov
or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to 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 that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted 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. Send or deliver information identified as CBI only to the following address: Roberto Morales, OAQPS Document Control Officer (C404-02), U.S. EPA, Research Triangle Park, NC 27711, Attention Docket ID No. EPA-HQ-OAR-2009-0491.
2.
Tips for preparing your comments
. When submitting comments, remember to:
• Identify the rulemaking by docket number and other identifying information (subject heading,
Federal Register
date and page number).
• Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.
• Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.
• Describe any assumptions and provide any technical information and/or data that you used.
• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.
• Provide specific examples to illustrate your concerns, and suggest alternatives.
• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.
• Make sure to submit your comments by the comment period deadline identified.
D. How can I find information about the public hearings?
The EPA will hold three public hearings on this proposal. The dates, times and locations of the pubic hearings will be announced separately. Oral testimony will be limited to 5 minutes per commenter. The EPA encourages commenters to provide written versions of their oral testimonies either electronically or in paper copy. Verbatim transcripts and written statements will be included in the rulemaking docket. If you would like to present oral testimony at one of the hearings, please notify Ms. Pamela S. Long, Air Quality Policy Division (C504-03), U.S. EPA, Research Triangle Park, NC 27711, telephone number (919) 541-0641; e-mail:
long.pam@epa.gov
. Persons interested in presenting oral testimony should notify Ms. Long at least 2 days in advance of the public hearings. For updates and additional information on the public hearings, please check EPA's website for this rulemaking,
http://www.epa.gov/airtransport
. The public hearings will provide interested parties the opportunity to present data, views, or arguments concerning the proposed rule. The EPA officials may ask clarifying questions during the oral presentations, but will not respond to the presentations or comments at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as any oral comments and supporting information presented at the public hearings.
E. How is this Preamble Organized?
I. Preamble Glossary of Terms and Abbreviations
II. General Information
A. Does this action apply to me?
B. Where can I get a copy of this document and other related information?
C. What should I consider as I prepare my comments for EPA?
D. How can I find information about the hearings?
E. How is the preamble organized?
III. Summary of Proposed Rule and Background
A. Summary of Proposed Rule
B. Background
1. What is the source of EPA's authority for this action?
2. What air quality problems does this proposal address?
3. Which NAAQS does this proposal address?
4. EPA Transport Rulemaking History
C. What are the goals of this proposed rule?
1. Primary Goals
2. Key Guiding Principles
D. Why does this proposed rule focus on the eastern half of the United States?
E. Anticipated Rules Affecting Power Sector
IV. Defining “Significant Contribution” and “Interference With Maintenance”
A. Background
1. Approach Used in NO
X
SIP Call and CAIR
2. Judicial Opinions
3. Overview of Proposed Approach
B. Overview of Approach To Identify Contributing Upwind States
1. Background
2. Approach for Proposed Rule
C. Air Quality Modeling Approach and Results
1. What air quality modeling platform did EPA use?
2. How did EPA project future nonattainment and maintenance for annual PM
2.5
, 24-Hour PM
2.5
, and 8-hour ozone?
3. How did EPA assess interstate contributions to nonattainment and maintenance?
4. What are the estimated interstate contributions to annual PM
2.5
, 24-hour PM
2.5
, and 8-hour ozone nonattainment and maintenance?
D. Proposed Methodology To Quantify Emissions That Significantly Contribute or Interfere With Maintenance
1. Explanation of Proposed Approach To Quantify Significant Contribution
2. Application
3. Discussion of Control Costs for Sources Other Than EGUs
E. State Emissions Budgets
1. Defining SO
2
and Annual NO
X
State Emissions Budgets for EGUs
2. Defining Ozone Season NO
X
State Emissions Budgets for EGUs
F. Emissions Reductions Requirements Including Variability
1. Variability
2. State Budgets With Variability Limits
3. Summary of Emissions Reductions Across All Covered States
G. How the Proposed Approach Is Consistent With Judicial Opinions Interpreting Section 110(a)(2)(D)(i)(I) of the Clean Air Act
H. Alternative Approaches Evaluated But Not Proposed
V. Proposed Emissions Control Requirements
A. Pollutants Included in This Proposal
B. Source Categories
1. Propose To Control Power Sector Emissions
2. Other Source Categories Are Not Included
C. Timing of Proposed Emissions Reductions Requirements
1. Date for Prohibiting Emissions That Significantly Contribute or Interfere With Maintenance of the PM
2.5
NAAQS
2. Date for Prohibiting Emissions That Significantly Contribute or Interfere With Maintenance of the 1997 Ozone NAAQS
3. Reductions Required by 2012 To Ensure That Significant Contribution and Interference With Maintenance Are Eliminated as Expeditiously as Practicable
4. How Compliance Deadlines Address the Court's Concern About Timing
5. EPA Will Consider Additional Reductions in Pollution Transport To Assist in Meeting Any Revised or New NAAQS
D. Implementing Emission Reduction Requirements
1. Approach Taken in NO
X
SIP Call and CAIR
2. Judicial Opinions
3. Remedy Options Overview
4. State Budgets/Limited Trading Proposed Remedy
5. State Budgets/Intrastate Trading Remedy Option
6. Direct Control Remedy Option
E. Projected Costs and Emissions for Each Remedy Option
1. State Budgets/Limited Trading
2. State Budgets/Intrastate Trading
3. Direct Control
4. State-Level Emissions Projections
F. Transition From the CAIR Cap-and-Trade Programs to Proposed Programs
1. Sunsetting of CAIR, CAIR SIPs, and CAIR FIPs
2. Change in States Covered
3. Applicability, CAIR Opt-Ins and NO
X
SIP Call Units
4. Early Reduction Provisions
5. Source Monitoring and Reporting
G. Interactions With Existing Title IV Program and NO
X
SIP Call
1. Title IV Interactions
2. NO
X
SIP Call Interactions
VI. Stakeholder Outreach
VII. State Implementation Plan Submissions
A. Section 110(a)(2)(D)(i) SIPs for the 1997 Ozone and PM
2.5
NAAQS
B. Section 110(a)(2)(D)(i) SIPs for the 2006 PM
2.5
NAAQS
C. Transport Rule SIPs
VIII. Permitting
A. Title V Permitting
B. New Source Review
IX. What benefits are projected for the proposed rule?
A. The Impacts on PM
2.5
and Ozone of the Proposed SO
2
and NO
X
Strategy
B. Human Health Benefit Analysis
C. Quantified and Monetized Visibility Benefits
D. Benefits of Reducing GHG Emission
E. Total Monetized Benefits
F. How do the benefits compare to the costs of this proposed rule?
G. What are the unquantified and unmonetized benefits of the transport rule emissions reductions?
1. What are the benefits of reduced deposition of sulfur and nitrogen to aquatic, forest, and coastal ecosystems?
2. Ozone Vegetation Effects
3. Other Health or Welfare Disbenefits of the Transport Rule That Have Not Been Quantified
X. Economic Impacts
XI. Incorporating End-Use Energy Efficiency Into the Proposed Transport Rule
A. Background
1. What is end-use energy efficiency?
2. How does energy efficiency contribute to cost-effective reductions of air emissions from EGUs?
3. How does the proposed rule support greater investment in energy efficiency?
4. How EPA and states have previously integrated energy efficiency into air regulatory programs?
B. Incorporating End-Use Energy Efficiency Into the Transport Rule
1. Options That Could Be Used To Incorporate Energy Efficiency Into Allowance Based Programs
2. Why EPA did not propose these options?
XII. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act (RFA)
D. Unfunded Mandates Reform Act
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 and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use
I. National Technology Transfer Advancement Act
J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations
1. Consideration of Environmental Justice Issues in the Rule Development Process
2. Potential Environmental and Public Health Impacts to Vulnerable Populations
3. Meaningful Public Participation
4. Determination
III. Summary of Proposed Rule and Background
A. Summary of Proposed Rule
CAA section 110(a)(2)(D)(i)(I) requires states to prohibit emissions that contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to any primary or secondary NAAQS. In this notice, EPA proposes to find that emissions of SO
2
and NO
X
in 32 eastern states contribute significantly to nonattainment or interfere with maintenance in one or more downwind states with respect to one or more of three air quality standards—the annual average PM
2.5
NAAQS promulgated in 1997, the 24-hour average PM
2.5
NAAQS promulgated in 2006, and the ozone NAAQS promulgated in 1997.
1
These emissions are transported downwind either as SO
2
and NO
X
or, after transformation in the atmosphere, as fine particles or ozone. This notice identifies emission reduction responsibilities of upwind states, and also proposes enforceable FIPs to achieve the required emissions reductions in each state through cost-effective and flexible requirements for power plants. Each state will have the option of replacing these Federal rules with state rules to achieve the required amount of emissions reductions from sources selected by the state.
1
In the context of the jurisdictions covered by this proposed rule, EPA uses the term “states” to include the District of Columbia.
With respect to the annual average PM
2.5
NAAQS, this proposal finds that 24 eastern states have SO
2
and NO
X
emission reduction responsibilities, and quantifies each state's full emission reduction responsibility under section 110(a)(2)(D)(i)(I). With respect to the 24-hour average PM
2.5
NAAQS, this proposal finds that 25 eastern states have emission reduction responsibilities. The proposed reductions will at least partly eliminate, and subject to further analysis may fully eliminate, these states’ significant contribution and interference with maintenance for purposes of the 24-hour average PM
2.5
standard. In all, emissions reductions related to interstate transport
of fine particles would be required in 28 states.
With respect to the 1997 ozone NAAQS, this proposal requires emissions reductions in 26 states. For 16 of these states, we propose that the required reductions represent their full significant contribution and interference with maintenance for the ozone NAAQS. For an additional 10 states, the required NO
X
reductions are needed for these states to make measurable progress towards eliminating their significant contribution and interference with maintenance. EPA has begun to conduct additional information gathering and analysis to determine the extent to which further reductions from these states may be needed to fully eliminate significant contribution and interference with maintenance with the 1997 ozone NAAQS.
This proposed rule would achieve substantial near-term emissions reductions from the power sector. EPA projects that with the proposed rule, EGU SO
2
emissions would be 5.0 million tons lower, annual NO
X
emissions would be 700,000 tons lower, and ozone season NO
X
emissions would be 100,000 tons lower in 2012, compared to baseline 2012 projections in the proposed covered states. Further, EGU SO
2
emissions would be 4.6 million tons lower, annual NO
X
emissions would be 700,000 tons lower, and ozone season NO
X
emissions would be 100,000 tons lower in 2014, compared to baseline 2014 projections (which will have dropped from 2012 due to other federal and state requirements, thereby lowering the 2014 baseline).
See
Table III.A-2 for projected EGU emissions with the proposed rule compared to baseline, and Table III.A-3 for projected EGU emissions with the proposed rule compared to 2005 actual emissions. The reductions obtained through the Transport Rule FIPs will help all but a very few areas in the eastern part of the country come into attainment with the 1997 PM
2.5
and ozone standards and take major strides toward helping states address nonattainment with the 2006 24-hour average PM
2.5
standard.
See
Table III.A-1 for proposed list of covered states.
EPA is committed to fulfilling its responsibility to ensure that downwind states receive the relief from upwind emissions guaranteed under CAA section 110(a)(2)(D) For the 24-hour PM
2.5
standard, EPA's air quality modeling shows that in the areas with continuing non-attainment or maintenance problems, the remaining exceedances occur almost entirely in the winter months. The relative importance of particle species such as sulfate and nitrate, is quite different between summer and winter. EPA is moving ahead before the final rule is published to determine the extent to which this wintertime problem is caused by emissions transported from upwind states. Further study of the 24-hour PM
2.5
results could lead to a number of possible outcomes; EPA cannot judge the relative likelihood of these outcomes at this time. To the extent possible, EPA plans to finalize this rule with a full determination of, and remedy for, significant contribution and interference with maintenance for the 24-hour PM
2.5
standard. To that end, EPA is expeditiously proceeding with examination of the residual wintertime problem. (See full discussion in section IV.D.)
In the case of ozone, EPA must determine whether further NO
X
reductions are warranted in certain upwind states that affect two or three areas with relatively persistent ozone air quality problems. To support a full significant contribution determination for these states, EPA is expeditiously conducting further analysis of NO
X
control costs, emissions reductions, air quality impacts, and the nature of the residual air quality issues. EPA's current information indicates that considering NO
X
reductions beyond the cost per ton levels proposed in this rule will require analysis of reductions from source categories other than EGUs, as well as from EGUs. EPA believes that developing supplemental information to consider NO
X
sources beyond EGUs would substantially delay publication of a final rule beyond the anticipated publication of spring 2011. EPA does not believe that this effort should delay the reductions and large health benefits associated with this proposed rule. Thus, EPA intends to proceed with additional rulemaking to address fully the residual significant contribution to nonattainment and interference with maintenance with the ozone standard as quickly as possible. (See full discussion in section IV.D.)
This proposed rule is the first of several EPA rules to be issued over the next 2 years that will yield substantial health and environmental benefits for the public through regulation of power plants. Fossil-fuel-fired power plants contribute a large and substantial fraction of the emissions of several key air pollutants, and the agency has statutory or judicial obligations to make several regulatory determinations on power plant emissions. The Administrator in January established improved air quality as an Agency priority and announced plans to promote a cleaner and more efficient power sector and have strong but achievable reduction goals for SO
2
, NO
X
, mercury, and other air toxics.”
In addition to this rule, other anticipated actions include a section 112(d) rule for electric utilities to be proposed by March 2011, potential rules to address pollution transport under revised NAAQS, revisions to new source performance standards for coal and oil-fired utility electric generating units, and best available retrofit technology (BART) and regional haze program requirements to protect visibility. These actions, and their relationship to this rule, are discussed further in section III.E.
Ongoing reviews of the ozone and PM
2.5
NAAQS could result in revised NAAQS. To address any new NAAQS, EPA would propose interstate transport determinations in future notices. Such proposals could require greater emissions reductions from states covered by this proposal and/or require reductions from states not covered by this proposal. In addition, while this action proposes to require reductions from the power sector only, it is possible that reductions from other source categories could be needed to address interstate transport requirements related to any new NAAQS.
With this proposal, EPA is also responding to the remand of the CAIR by the Court in 2008. CAIR, promulgated May 12, 2005 (70 FR 25162) requires 28 states and the District of Columbia to adopt and submit revisions to their State Implementation Plans (SIPs) to eliminate SO
2
and NO
X
emissions that contribute significantly to downwind nonattainment of the PM
2.5
and ozone NAAQS promulgated in July 1997. The CAIR FIPs, promulgated April 26, 2006 (71 FR 25328), regulate EGUs in the covered states and achieve the emissions reductions requirements established by CAIR until states have approved SIPs to achieve the reductions. In July 2008, the DC Circuit Court found CAIR and the CAIR FIPs unlawful.
North Carolina
v.
EPA
, 531 F.3d 896 (DC Cir. 2008). The Court's original decision vacated CAIR.
Id.
at 929-30. However, the Court subsequently remanded CAIR to EPA without vacatur because it found that “allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR.”
North Carolina
v.
EPA
, 550 F.3d 1176, 1178 (DC Cir. 2008). The CAIR requirements are correctly in place and the CAIR's regional control programs are operating
while EPA develops replacement rules in response to the remand.
As described more fully in the remainder of this preamble, the approaches used in this proposed rule to measure and address each state's significant contribution to downwind nonattainment and interference with maintenance are guided by and consistent with the Court's opinion in
North Carolina
v.
EPA
and address the flaws in CAIR identified by the Court therein. Among other things, the proposal relies on detailed, bottom-up scientific and technical analyses, introduces a state-specific methodology for identifying significant contribution to nonattainment and interference with maintenance, and proposes remedy options to ensure that all necessary reductions are achieved in the covered states.
In this action, EPA proposes to both identify and address emissions within states in the eastern United States that significantly contribute to nonattainment or interfere with maintenance by other downwind states. As discussed in sections III and VII in this preamble and described in greater detail in two separate
Federal Register
notices published on April 25, 2005 (70 FR 21147) and June 9, 2010 (75 FR 32673), EPA has determined, or proposed to determine, that the 32 states covered by this proposal either have not submitted SIPs adequate to meet the requirements of 110(a)(2)(D)(i)(I) with respect to the 1997 and 2006 PM
2.5
NAAQS and the 1997 ozone NAAQS, or that the SIP provisions currently in place are not adequate to meet those requirements.
As described in section IV in this preamble, EPA is proposing a state-specific methodology to identify specific reductions that states in the eastern United States must make to satisfy the CAA section 110(a)(2)(D)(i)(I) prohibition on emissions that significantly contribute to nonattainment or interfere with maintenance in a downwind state. The proposed methodology uses state-specific inputs and focuses on the emissions reductions available in each individual state to address the Court's concern that the approach used in CAIR (which identified a single level of emissions achievable by the application of highly cost effective controls in the region) was insufficiently state specific. The proposed methodology uses air quality analysis to determine whether a state's contribution to downwind air quality problems is above specific thresholds. If a state's contribution does not exceed those thresholds, its contribution is found to be insignificant and it is no longer considered in the analysis. If a state's contribution exceeds those thresholds, EPA takes a second step that uses a multi-factor analysis that takes into account both air quality and cost considerations to identify the portion of a state's contribution that is significant or that interferes with maintenance. Section 110(a)(2)(D) requires states to eliminate the emissions that constitute this “significant contribution” and “interference with maintenance.”
This proposed methodology for determining upwind state emission reduction responsibility is designed to be applicable to current and potential future ozone and PM
2.5
NAAQS. It is based on cost and air quality considerations that are common to any NAAQS, but also calls for evaluation of facts specific to a particular NAAQS. As a result, application of the methodology to a revised, more stringent NAAQS might lead to a determination that greater reductions in transported pollution from upwind states are reasonable than for a current, less stringent NAAQS.
To facilitate implementation of the requirement that significant contribution and interference with maintenance be eliminated, EPA developed state emissions budgets. By tying these budgets directly to EPA's quantification of each individual state's significant contribution and interference with maintenance, EPA directly linked the budgets to the mandate in section 110(a)(2)(D)(i)(I), and thus addressed the Court's concerns about the development of budgets for the CAIR. EPA also addressed these concerns by completely eschewing any consideration or reliance on Fuel Adjustment Factors and the existing allocation of Title IV allowances.
These new emissions budgets are based on the Agency's state-by-state analysis of each upwind state's significant contribution to nonattainment and interference with maintenance downwind. A state's emissions budget is the quantity of emissions that would remain after elimination of the part of significant contribution and interference with maintenance that EPA has identified in an average year (
i.e.
, before accounting for the inherent variability in power system operations).
2
EPA proposes SO
2
and NO
X
budgets for each state covered for the 24-hour and/or annual average PM
2.5
NAAQS. EPA proposes an ozone season
3
NO
X
budget for each state covered for the ozone NAAQS.
2
For the 10 states discussed above for which EPA has only quantified a minimum amount of emissions reductions needed to make measurable progress towards eliminating their significant contribution and interference with maintenance with respect to the 1997 8-hour ozone NAAQS, the emissions budget is the emissions that will remain after removal of those emissions.
3
Consistent with the approach taken by the Ozone Transport Assessment Group (OTAG), the NO
X
SIP call, and the CAIR, we propose to define the ozone season, for purposes of emissions reductions requirements in this rule, as May through September. We recognize that this ozone season for regulatory requirements differs from the official state-specific monitoring season.
EPA recognizes that baseline emissions from a state can be affected by changing weather patterns, demand growth, or disruptions in electricity supply from other units. As a result, emissions could vary from year to year in a state where covered sources have installed all controls and taken all measures necessary to eliminate the state's significant contribution and interference with maintenance. As described in detail in section IV of this preamble, EPA proposes to account for the inherent variability in power system operations through “assurance provisions” based on state variability limits which extend above the state emissions budgets.
See
section V for a detailed discussion of the assurance provisions. The small amount of variability allowed takes into account the inherent variability in baseline emissions. Section IV in this preamble describes the proposed approach to significant contribution and interference with maintenance and the state emissions budgets and variability limits in detail.
EPA is also proposing FIPs to immediately implement the emission reduction requirements identified and quantified by EPA in this action. For some covered states, these FIPs will completely satisfy the emissions reductions requirements of 110(a)(2)(D)(i)(I) with respect to the 1997 and 2006 PM
2.5
NAAQS and the 1997 ozone NAAQS. The exception is for the 10 eastern states for which EPA has not completely quantified the total significant contribution or interference with maintenance with respect to the 1997 ozone NAAQS and the 15 states for which EPA has not completely quantified total significant contribution or interference with maintenance with respect to the 2006 PM
2.5
NAAQS in which case the FIPs would achieve measurable progress towards implementing that requirement.
The emissions reductions requirements (
i.e.
, the “remedy”) that EPA is proposing to include in the FIPs responds to the Court's concerns that EPA had not shown that the CAIR reduction requirements would get all
necessary reductions “in the state” as required by section 110(a)(2)(D)(i)(I). The proposed FIPs include assurance provisions specifically designed to ensure that no state's emissions are allowed to exceed that specific state's budget plus the variability limit.
The proposed FIPs would regulate EGUs in the 32 covered states. EPA is proposing to regulate these sources through a program that uses state-specific budgets and allows intrastate and limited interstate trading. EPA is also taking comment on two alternative regulatory options. All options would achieve the emissions reductions necessary to address the emissions transport requirements in section 110(a)(2)(D)(i)(I) of the CAA.
The option EPA is proposing for the FIPs (“State Budgets/Limited Trading”) would use state-specific emissions budgets and allow for intrastate and limited interstate trading. This approach would assure environmental results while providing some limited flexibility to covered sources. The approach would also facilitate the transition from CAIR to the Transport Rule for implementing agencies and covered sources.
The first alternative remedy option for which EPA requests comment would use state-specific emissions budgets and allow intrastate trading, but prohibit interstate trading. The second alternative remedy option, for which EPA also requests comment, would use state-specific budgets and emissions rate limits. See section V for further discussion of the remedy options.
The proposed remedy option and the first alternative, both of which are cap-and-trade approaches, would use new allowance allocations developed on a different basis from CAIR. Allowance allocations, like the state budgets described previously, would be developed based on the methodology used by EPA to quantify each state's significant contribution and interference with maintenance.
See
section IV for the proposed state budget approach and section V for proposed allowance allocation approaches.
In this action, EPA proposes to require reductions in SO
2
and NO
X
emissions in the following 25 jurisdictions that contribute significantly to nonattainment in, or interfere with maintenance by, a downwind area with respect to the 24-hour PM
2.5
NAAQS promulgated in September 2006: Alabama, Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin.
EPA proposes to require reductions in SO
2
and NO
X
emissions in the following 24 jurisdictions that contribute significantly to nonattainment in, or interfere with maintenance by, a downwind area with respect to the annual PM
2.5
NAAQS promulgated in July 1997: Alabama, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin.
EPA also proposes to require reductions in ozone season NO
X
emissions in the following 26 jurisdictions that contribute significantly to nonattainment in, or interfere with maintenance by, a downwind area with respect to the 1997 ozone NAAQS promulgated in July 1997: Alabama, Arkansas, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia.
As discussed previously, EPA also is proposing FIPs to directly regulate EGU SO
2
and/or NO
X
emissions in the 32 covered states. The proposed FIPs would require the 28 jurisdictions covered for purposes of the 24-hour and/or annual PM
2.5
NAAQS to reduce SO
2
and NO
X
emissions by specified amounts. The proposed FIPs would require the 26 states covered for purposes of the ozone NAAQS to reduce ozone season NO
X
emissions by specified amounts.
In response to the Court's opinion in
North Carolina
v.
EPA
, EPA has coordinated the compliance deadlines for upwind states to eliminate emissions that significantly contribute to or interfere with maintenance in downwind areas with the NAAQS attainment deadlines that apply to the downwind nonattainment and maintenance areas. EPA proposes to require that all significant contribution to nonattainment and interference with maintenance identified in this action with respect to the PM
2.5
NAAQS be eliminated by 2014 and proposes an initial phase of reductions starting in 2012 (covering 2012 and 2013) to ensure that the reductions are made as expeditiously as practicable and that no backsliding from current emissions levels occurs when the requirements of the CAIR are eliminated. Sources will be required to comply by January 1, 2012 and January 1, 2014 for the first and second phases, respectively. With respect to the 1997 ozone NAAQS, EPA proposes to require an initial phase of NO
X
reductions starting in 2012 to ensure that reductions are made as expeditiously as practicable. Sources will be required to comply by May 1, 2012 and May 1, 2014 for the first and second phases, respectively. EPA has determined, that for many states, these reductions will be sufficient to eliminate their significant contribution with respect to the 1997 ozone NAAQS. EPA intends to issue a subsequent proposal that would require all significant contribution and interference with maintenance be eliminated by a future date for the 1997 ozone NAAQS.
See
Table III.A-1 for proposed lists of covered state.
Table III.A-1—Lists of Covered States for PM
2.5
and 8-Hour Ozone NAAQS
State
Covered for
24-hour and/or
annual PM
2.5
Required to
reduce SO
2
and
NO
X
Covered for
8-hour ozone
Required to
reduce ozone
Season NO
X
Alabama
X
X
Arkansas
X
Connecticut
X
X
Delaware
X
X
District of Columbia
X
X
Florida
X
X
Georgia
X
X
Illinois
X
X
Indiana
X
X
Iowa
X
Kansas
X
X
Kentucky
X
X
Louisiana
X
X
Maryland
X
X
Massachusetts
X
Michigan
X
X
Minnesota
X
Mississippi
X
Missouri
X
Nebraska
X
New Jersey
X
X
New York
X
X
North Carolina
X
X
Ohio
X
X
Oklahoma
X
Pennsylvania
X
X
South Carolina
X
X
Tennessee
X
X
Texas
X
Virginia
X
X
West Virginia
X
X
Wisconsin
X
Totals
28
26
As discussed previously, EPA is proposing new SO
2
and/or NO
X
emissions budgets for each covered state. The budgets are based on the EPA's state-by-state analysis of each upwind state's significant contribution to nonattainment and interference with maintenance downwind, before accounting for the inherent variability in power system operations.
As discussed in detail in section IV, the proposed approach to significant contribution to nonattainment and interference with maintenance would group the 28 states covered for the 24-hour and/or annual PM
2.5
NAAQS in two tiers reflecting the stringency of SO
2
reductions required to eliminate that state's significant contribution to nonattainment and interference with maintenance. There would be a stringent SO
2
tier comprising 15 states (“group 1”) and a moderate SO
2
tier comprising 13 states (“group 2”), with uniform stringency within each tier.
4
For these same 28 states, there would be one annual NO
X
tier with uniform stringency of NO
X
reductions across all 28 states. Similarly, for the 26 states covered for the ozone NAAQS there would be one ozone season NO
X
tier with uniform stringency across all 26 states.
4
With regard to interstate trading, the two SO
2
stringency tiers would lead to two exclusive SO
2
trading groups. That is, states in SO
2
group 1 could not trade with states in SO
2
group 2.
The proposed stringent SO
2
tier (“group 1”) would include Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin. The proposed moderate SO
2
tier (“group 2”) would include Alabama, Connecticut, Delaware, District of Columbia, Florida, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, and South Carolina.
As discussed previously, EPA proposes to require an initial phase of reductions starting in 2012 (covering 2012 and 2013) requiring SO
2
and NO
X
reductions in the 28 states covered for 24-hour and/or annual PM
2.5
NAAQS. A second phase of reductions would be due in 2014, covering 2014 and thereafter. As described later, for certain states the 2014 reduction requirements would be more stringent, and for certain states would remain at the same level as the 2012 requirements.
For the 15 states in the stringent SO
2
tier (“group 1”), the 2014 phase would substantially increase the SO
2
reduction requirements (
i.e.
, these states would have smaller SO
2
emissions budgets starting in 2014), reflecting the greater reductions needed to eliminate the portion of significant contribution and interference with maintenance that EPA has identified in this proposal from these states with respect to the 24-hour PM
2.5
NAAQS. For the 13 states in the moderate SO
2
tier (“group 2”), the 2014 SO
2
emissions budgets would remain the same as the 2012 SO
2
budgets for these states.
The 2014 annual NO
X
emissions budgets for all 28 states covered for the 24-hour and/or annual PM
2.5
NAAQS would remain the same as the 2012 annual NO
X
budgets.
With respect to the ozone NAAQS, EPA is proposing a single phase of reductions which begins in 2012. Thus, the rule does not call for any adjustment to be made to the 2012 ozone season NO
X
budgets for the 26 states covered for the ozone NAAQS. EPA intends to issue a subsequent proposal that would, among other things, address whether an additional phase of NO
X
reductions is necessary to address all significant
contribution and interference with maintenance with respect to the 1997 ozone NAAQS. While this proposal assures downwind states that they will receive relief from upwind reductions that will help them achieve the NAAQS, EPA is committed to fulfilling its obligation to assure the downwind states that they receive the full relief they are entitled to under section 110(a)(2)(D). The Agency intends to quickly address any remaining significant contribution to nonattainment and interference with maintenance in a subsequent action that will also address a new more stringent ozone standard that is expected to be established by EPA later in 2010.
Tables III.A-2 and III.A-3 show projected Transport Rule emissions reductions for EGUs in all states that EPA proposes to cover.
Table III.A-2—Projected SO
2
and NO
X
EGU Emissions in Covered States With the Transport Rule
5
Compared to Base Case
6
Without Transport Rule or CAIR
[Million tons]
2012
Base case
emissions
2012
Transport
rule
emissions
2012
Emissions
reductions
2014
Base case
emissions
2014
Transport
rule
emissions
2014
Emissions
reductions
SO
2
8.4
3.4
5.0
7.2
2.6
4.6
Annual NO
X
2.0
1.3
0.7
2.0
1.3
0.7
Ozone Season NO
X
0.7
0.6
0.1
0.7
0.6
0.1
Table III.A-3—Projected SO
2
and NO
X
EGU Emissions in Covered States With the Transport Rule Compared to 2005 Actual Emissions
[Million tons]
2005
Actual
emissions
2012
Transport
rule
emissions
2012
Emissions
reductions
from 2005
2014
Transport
rule
emissions
2014
Emissions
reductions
from 2005
SO
2
8.9
3.4
5.5
2.6
6.3
Annual NO
X
2.7
1.3
1.4
1.3
1.4
Ozone Season NO
X
0.9
0.6
0.3
0.6
0.3
In
addition to the emissions reductions shown previously, EPA projects other substantial benefits, as described in section IX in this preamble. Air quality modeling was used to quantify the improvements in PM
2.5
and ozone concentrations that are expected to result from the emissions reductions in 2014. The results of this modeling were used to calculate the average reduction in annual average PM
2.5
, 24-hour average PM
2.5
, and 8-hour ozone concentrations for monitoring sites in the eastern U.S. that are projected to be nonattainment in the 2014 base case. For annual PM
2.5
and 24-hour PM
2.5
, the average reductions are 2.4 micrograms per cubic meter (μg/m
3
) and 4.3 μg/m
3
, respectively. The average reduction in 8-hour ozone at monitoring sites projected to be nonattainment in the 2014 base case is 0.3 parts per billion (ppb). The reductions in annual PM
2.5
, 24-hour PM
2.5
, and ozone concentrations for individual nonattainment and/or maintenance sites are provided in section IX.
5
Projected Transport Rule emissions result from individual stae budgets in the proposed approach and include some banking of allowances in 2012 adn use of that bank in 2014.
6
EPA's base case EGU emissions modeling does not assume enforceable SO
2
or NO
X
reductions attributed to the Transport Rule or CAIR. In this base case, a unit with existing SO
2
or NO
X
control equipment, but without an enforceable federal or state control requirement, is allowed to choose its most economic approach to operation within existing Acid Rain Program requirements and may opt not to operate a control.
See
section IV.C.1 and the IPM Documentation for further information on the base case modeling.
Table III.A-4 compares projected EGU emissions with the Transport Rule to projected EGU emissions with CAIR.
Table III.A-4—Simple Comparison of SO
2
and NO
X
Emissions From Electric Generating Units in States in the CAIR or Transport Rule Regions * for Each Rule
2005
Actual
2012
Transport rule
CAIR **
2014
Transport rule
CAIR **
SO
2
(Million Tons)
9.5
4.1
5.1
3.3
4.6
NO
X
(Million Tons)
Annual
Ozone Season
2.9
1.0
1.6
0.7
1.7
0.8
1.6
0.7
1.7
0.8
* Emissions totals include states covered by either the Transport Rule or CAIR. For PM
2.5
(SO
2
and annual NO
X
), the following 30 states are included: AL, CT, DE, DC, FL, GA, IL, IN, IA, KS, KY, LA, MD, MA, MI, MN, MS, MO, NE, NJ, NY, NC, OH, PA, SC, TN, TX, VA, WV, WI. For ozone (ozone-season NO
X
), the following 30 states are included: AL, AR, CT, DE, DC, FL, GA, IL, IN, IA, KS, KY, LA, MD, MA, MI, MS, MO, NJ, NY, NC, OH, OK, PA, SC, TN, TX, VA, WV, WI.
** CAIR SO
2
totals are interpolations from emissions analysis originally done for 2010 and 2015. CAIR NO
X
totals are as originally projected for 2010. This CAIR modeling represents a scenario that differed somewhat from the final CAIR (the modeling did not include a regionwide ozone season NO
X
cap and included PM
2.5
requirements for the state of Arkansas).
In addition to discussion of EPA's proposed regulatory approach (discussed in sections IV and V), this preamble also covers the stakeholder outreach EPA conducted (section VI), SIP submissions (section VII), permitting (section VIII), projected benefits of the proposed rule (section IX), economic impacts (section X), end-use energy efficiency (section XI), and statutory and executive order reviews (section XII).
Table III.A-5 shows the results of the cost and benefits analysis for the proposed and alternate remedies. Further discussion of these results is contained in preamble section XII-A and in the Regulatory Impacts Analysis. A listing of health and welfare effects is provided in RIA Table 1-6. Estimates here are subject to uncertainties discussed further in the body of the document. The social costs are the loss of household utility as measured in Hicksian equivalent variation. The capital costs spent for pollution controls installed for CAIR were not included in the annual social costs since the Transport Rule did not lead to their installation. Those CAIR-related capital investments are roughly estimated to have an annual social cost less than $1.15 to $ 1.29 billion (under the two discount rates.)
Most of the estimated PM-related benefits in this rule accrue to populations exposed to higher levels of PM
2.5
. Of these estimated PM-related mortalities avoided, about 80 percent occur among populations initially exposed to annual mean PM
2.5
level of 10 μg/m
3
and about 97 percent occur among those initially exposed to annual mean PM
2.5
level of 7.5 μg/m
3
. These are the lowest air quality levels considered in the Laden
et al.
(2006) and Pope
et al.
(2002) studies, respectively. This fact is important, because as we estimate PM-related mortality among populations exposed to levels of PM
2.5
that are successively lower, our confidence in the results diminishes. However, our analysis shows that the great majority of the impacts occur at higher exposures.
Table III.A-5—Summary of Annual Benefits, Costs, and Net Benefits of Versions of the Proposed Remedy Option in 2014
a
[Billions of 2006$]
Description
Preferred remedy—State budgets/
limited trading
Direct control
Intrastate trading
Social costs:
3% discount rate
$2.03
$2.68
$2.49.
7% discount rate
$2.23
$2.91
$2.70.
Health-related benefits:
b, c
3% discount rate
$118 to $288 + B
$117 to $286 + B
$113 to $276 + B.
7% discount rate
$108 to $260 + B
$108 to $262 + B
$104 to $252 + B.
Net benefits (benefits-costs):
3% discount rate
$116 to $286
$115 to $283
$110 to $273.
7% discount rate
$105 to $258
$105 to $259
$101 to $249.
Notes:
(a) All estimates are rounded to three significant digits and represent annualized benefits and costs anticipated for the year 2014. For notational purposes, unquantified benefits are indicated with a “B” to represent the sum of additional monetary benefits and disbenefits. Data limitations prevented us from quantifying these endpoints, and as such, these benefits are inherently more uncertain than those benefits that we were able to quantify. (b) The reduction in premature mortalities account for over 90 percent of total monetized benefits. Benefit estimates are national. Valuation assumes discounting over the SAB-recommended 20-year segmented lag structure described in Chapter 5. Results reflect 3 percent and 7 percent discount rates consistent with EPA and OMB guidelines for preparing economic analyses (U.S. EPA, 2000; OMB, 2003). The estimate of social benefits also includes CO
2
-related benefits calculated using the social cost of carbon, discussed further in Chapter 5. Benefits are shown as a range from Pope
et al.
(2002) to Laden
et al.
(2006). Monetized benefits do not include unquantified benefits, such as other health effects, reduced sulfur deposition or visibility. These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because there is no clear scientific evidence that would support the development of differential effects estimates by particle type. (c) Not all possible benefits or disbenefits are quantified and monetized in this analysis. B is the sum of all unquantified benefits and disbenefits. Potential benefit categories that have not been quantified and monetized are listed in RIA Table 1-4.
B. Background
1. What is the source of EPA's authority for this action?
The statutory authority for this action is provided by the CAA, as amended (42 U.S.C. 7401
et seq.
). Relevant portions of the CAA include, but are not necessarily limited to, sections 110(a)(2)(D), 110(c)(1), and 301(a)(1).
Section 110(a)(2)(D) of the CAA, often referred to as the “good neighbor” provision of the Act, requires states to prohibit certain emissions because of their impact on air quality in downwind states. Specifically, it requires all states, within 3 years of promulgation of a new or revised NAAQS, to submit SIPs that:
(D) Contain adequate provisions—
(i) Prohibiting, consistent with the provisions of this subchapter, any source or other type of emissions activity within the State from emitting any air pollutant in amounts which will—
(I) Contribute significantly to nonattainment in, or interfere with maintenance by, any other State with respect to any such national primary or secondary ambient air quality standard, or
(II) Interfere with measures required to be included in the applicable implementation plan for any other State under part C of this subchapter to prevent significant deterioration of air quality or to protect visibility.
(ii) Insuring compliance with the applicable requirements of sections 7426 and 7415 of this title (relating to interstate and international pollution abatement). 42 U.S.C. 7410(a)(2)(D).
This proposal addresses the requirement in section 110(a)(2)(D)(i)(I) regarding the prohibition of emissions within a state that significantly contribute to nonattainment or interfere with maintenance of the NAAQS in any other state. As discussed in greater detail later, EPA has previously issued two rules interpreting and clarifying the requirements of section 110(a)(2)(D)(i)(I). The NO
X
SIP Call, promulgated in 1998, was largely upheld by the U.S. Court of Appeals for the DC Circuit in
Michigan
v.
EPA
, 213 F.3d 663 (DC Cir. 2000). The CAIR, promulgated in 2005, was remanded by the DC Circuit in
North Carolina
v.
EPA
, 531 F.3d 896 (DC Cir. 2008),
modified on reh'g
, 550 F.3d. 1176 (DC Cir. 2008). These decisions provide additional guidance regarding the requirements of section 110(a)(2)(D)(i)(I) and are discussed later in this section.
Section 301(a)(1) of the CAA gives the Administrator of EPA general authority to “prescribe such regulations as are necessary to carry out [her] functions under this chapter.” 42 U.S.C. 7601(a)(1). Pursuant to this section, EPA has authority to clarify the applicability of CAA requirements. In this action,
EPA is clarifying the applicability of section 110(a)(2)(D)(i)(I) by proposing to identify SO
2
and NO
X
emissions that each affected state must prohibit pursuant to that section with respect to the PM
2.5
NAAQS promulgated in 1997 and 2006 and the 8-hour ozone NAAQS promulgated in 1997. The improvements in air quality that would result from the reductions in upwind state emissions that EPA is proposing to require would assist downwind states affected by transported pollution in developing, pursuant to section 110 of the CAA, their SIPs to provide for expeditious attainment and maintenance of the NAAQS.
Section 110(a) of the CAA assigns to each state both the primary responsibility for attaining and maintaining the NAAQS within such state, 42 U.S.C. 7410(a)(1), and the primary responsibility for prohibiting emissions activity within the state which will significantly contribute to nonattainment or interfere with maintenance in a downwind area. 42 U.S.C. 7410(a)(2)(D)(i)(I). States fulfill these CAA obligations through the SIP process described in section 110(a) of the Act.
Section 110(c)(1) of the Act, however, requires EPA to act when a state has not been able to or has not fulfilled its obligation to submit a SIP that meets the requirements of the Act. Specifically, section 110(c)(1) provides that: The Administrator shall promulgate a Federal implementation plan at any time within 2 years after the Administrator—
(A) Finds that a State has failed to make a required submission or finds that the plan or plan revision submitted by the State does not satisfy the minimum criteria established under subsection (k)(1)(A) of this section, or
(B) Disapproves a State implementation plan submission in whole or part, unless the State corrects the deficiency, and the Administrator approves the plan or plan revision, before the Administrator promulgates such Federal implementation plan.
42 U.S.C. 7410(c)(1). Section 110(k)(1)(A), in turn, calls for the Administrator to establish criteria for determining whether SIP submissions are complete. 42 U.S.C. 7410(k)(1)(A).
As discussed in greater detail in section VII, for all states covered by the FIPs proposed in this action, EPA either has taken, has proposed to take, or believes it may need to take one of the following actions with respect to the 1997 ozone NAAQS, the 1997 PM
2.5
NAAQS and/or the 2006 PM
2.5
NAAQS: (1) Find that the state has failed to make a SIP submission required by section 110(a)(2)(D)(i)(I) or section 110(k)(5) of the Act; (2) find that such a SIP submission is incomplete; or (3) disapprove such a SIP submission. Once EPA has taken one of the these actions, pursuant to section 110(c)(1), it has authority to promulgate a FIP directly implementing the requirements of section 110(a)(2)(D)(i)(I), provided the state has not submitted and EPA has not approved a SIP submission that corrects the SIP deficiency prior to promulgation of the FIP.
2. What air quality problems does this proposal address?
a. Fine Particles
Fine particles are associated with a number of serious health effects including premature mortality, aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions, emergency room visits, health-related absences from school or work, and restricted activity days), lung disease, decreased lung function, asthma attacks, and certain cardiovascular problems.
See
EPA, Air Quality Criteria for Particulate Matter (EPA/600/P-99/002bF, October 2004) at 9.2.2.3.
See
also integrated science assessment for the PM NAAQS review, December 2009,
http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546.
Individuals particularly sensitive to fine particle exposure include older adults, people with heart and lung disease, and children. This rule, and the NAAQS to which it is related, consider the effects of fine particles on vulnerable populations (
see
further discussion in section XII.G and section XII.J of this notice). More detailed information on health effects of fine particles can be found on EPA's Web site at:
http://epa.gov/pm/standards.html
.
In addition to effects on public health, fine particles are linked to a number of public welfare effects. First, PM
2.5
are the major cause of reduced visibility (haze) in parts of the United States, including many of our national parks and wilderness areas. For more information about visibility, visit EPA's Web site at
http://www.epagov/visibility
. Second, particles can be carried over long distances by wind and then settle on ground or water. The effects of this settling include: Making lakes and streams acidic; changing the nutrient balance in coastal waters and large river basins; depleting the nutrients in soil; damaging sensitive forests and farm crops; and affecting the diversity of ecosystems. More information about these effects is available at EPA's Web site at
http://www.epa.gov/acidrain/effects/index.html
. Finally, particle pollution can stain and damage stone and other materials, including culturally important objects such as statues and monuments.
In 1997, EPA revised the NAAQS for PM to add new annual average and 24-hour standards for fine particles, using PM
2.5
as the indicator (62 FR 38652). These revisions established an annual standard of 15 μg/m
3
and a 24-hour standard of 65 μg/m
3
. During 2006, EPA revised the air quality standards for PM
2.5
. The 2006 standards decreased the level of the 24-hour fine particle standard from 65 μg/m
3
to 35 μg/m
3
, and retained the annual fine particle standard at 15 μg/m
3
.
In the preamble to the final rule for CAIR in May 2005, EPA discussed ambient monitoring for 2001-2003, the most recent 3-year period available at the time. These results showed widespread exceedances of the 15 μg/m
3
annual PM
2.5
standard in the eastern United States, with additional exceedances in parts of California and one county in Montana. At that time, 82 counties in the U.S. had at least one monitor that violated the 1997 annual PM
2.5
standard.
The PM
2.5
ambient air quality monitoring for the 2006-2008 period (most recent available) shows significant improvements. Nonetheless, areas which continue to violate the 15 μg/m
3
annual PM
2.5
standard are located across a significant portion of the eastern half of the United States, in parts of California and one county in Arizona. Based on these nationwide data, 23 counties have at least one monitor that violates the annual PM
2.5
standard.
The PM
2.5
ambient air quality monitoring for this same 2006-2008 time period shows that areas violating the 2006 24-hour PM
2.5
standard of 35 μg/m
3
(
i.e.
, the revised 2006 standard for 24-hour PM
2.5
) are located across much of the eastern half of the United States, in parts of California, and in some counties in several other western states—Alaska, Washington, Oregon, Utah, and Arizona. Based on these nationwide data, 52 counties have at least one monitor that violates the 24-hour PM
2.5
standard.
EPA believes that a great deal of the improvement in PM
2.5
annual and 24-hour concentrations in the eastern U.S. can be attributed to EGU SO
2
reductions achieved due to the CAIR. While the CAIR requirements related to SO
2
did not begin until 2010, many actions were taken by EGU owners and operators in anticipation of those requirements. Emissions of SO
2
from EGUs covered by the CAIR that were also in the acid rain
program (under CAA Title IV) tracking system decreased from 10.2 million tons in 2005 to 7.6 million tons in 2008. Almost all of these emissions reductions were achieved in the areas of the eastern United States covered by the CAIR. See
http://www.epa.gov/airmarkt/progress/ARP_4.html
. EPA believes that there would be substantially more nonattainment counties for both the annual and 24-hour standards if the CAIR were not in effect.
As required by the CAA, and in response to litigation over the 2006 standards, EPA is currently conducting a review of the 2006 PM
2.5
standards. Information and documents related to this review are available at:
http://epa.gov/ttn/naaqs/standards/pm/s_pm_index.html
. EPA expects to complete this review and to publish any revised standards that may result from the review by October 2011. EPA is planning to propose the revised standards by February 2011.
b. Ozone
Short-term (1- to 3-hour) and prolonged (6- to 8-hour) exposures to ambient ozone have been linked to a number of adverse health effects. At sufficient concentrations, short-term exposure to ozone can irritate the respiratory system, causing coughing, throat irritation, and chest pain. Ozone can reduce lung function and make it more difficult to breathe deeply. Breathing may become more rapid and shallow than normal, thereby limiting a person's normal activity. Ozone also can aggravate asthma, leading to more asthma attacks that may require a doctor's attention and the use of additional medication. Increased hospital admissions and emergency room visits for respiratory problems have been associated with ambient ozone exposures. Longer-term ozone exposure can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue and irreversible reductions in lung function. A lower quality of life may result if the inflammation occurs repeatedly over a long time period (such as months, years, or a lifetime). There is also recent epidemiological evidence indicating that there is a correlation between short-term ozone exposure and premature mortality.
People who are particularly susceptible to the effects of ozone include people with respiratory diseases, such as asthma. Those who are exposed to higher levels of ozone include adults and children who are active outdoors. This rule, and the NAAQS which it is related to, consider the effects of ozone on vulnerable populations (
see
further discussion in section XII.G and section XII.J of this notice).
In addition to causing adverse health effects, ozone affects vegetation and ecosystems, leading to reductions in agricultural crop and commercial forest yields; reduced growth and survivability of tree seedlings; and increased plant susceptibility to disease, pests, and other environmental stresses (
e.g.
, harsh weather). In long-lived species, these effects may become evident only after several years or even decades and have the potential for long-term adverse impacts on forest ecosystems. Ozone damage to the foliage of trees and other plants can also decrease the aesthetic value of ornamental species used in residential landscaping, as well as the natural beauty of our national parks and recreation areas. More detailed information on effects of ozone can be found at the following EPA Web site:
http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_index.html
.
In 1997, at the same time we revised the PM
2.5
standards, EPA issued its final action to revise the NAAQS for ozone (62 FR 38856) to establish new 8-hour standards. In this action published on July 18, 1997, we promulgated identical revised primary and secondary ozone standards that specified an 8-hour ozone standard of 0.08 parts per million (ppm). Specifically, the standards require that the 3-year average of the fourth highest 24-hour maximum 8-hour average ozone concentration may not exceed 0.08 ppm. In general, the 8-hour standards are more protective of public health and the environment and more stringent than the pre-existing 1-hour ozone standards.
At the time EPA published the CAIR and the CAIR FIP rulemakings, wide geographic areas, including most of the nation's major population centers, experienced ozone levels that violated the 1997 NAAQS of 8-hour ozone 0.08 ppm (effectively 0.084 ppm as a result of rounding). These areas included much of the eastern part of the United States and large areas of California. The EPA published the 8-hour ozone attainment and nonattainment designations in the
Federal Register
on April 30, 2004 (69 FR 23858). These designations, based on ozone season monitoring data for the 2001-2003 time period, resulted in 112 areas designated as nonattainment. As of December 2009, significant emissions reductions have allowed 58 of the original 112 nonattainment areas to be re-designated to attainment. In addition, a number of areas still designated as nonattainment ozone monitoring data for 2006-2008 (most recent data available) show levels below the standard. EPA believes a number of factors contributed to NO
X
emissions reductions subsequent to the 2001-2003 time period. First, EGU emissions were substantially reduced as EGUs in the eastern U.S. came into compliance with the NO
X
SIP Call. A series of progress reports discussing the effect of the NO
X
SIP Call reductions can be found on EPA's Web site at:
http://www.epa.gov/airmarkets/progress/progress-reports.html
. Additional information on emissions and air quality trends are available in EPA's 2007 and 2008 air quality trends reports, which are available at:
http://www.epa.gov/airtrends/
.
Second, mobile source emissions standards for onroad gasoline and vehicle emissions standards began to reduce mobile source emissions as the fleet began turning over vehicles to meet tightened NO
X
emissions standards. Continued improvement in ozone is expected with continued reductions in mobile source emissions.
On March 12, 2008, EPA published a revision to the 8-hour ozone standard, lowering the level from 0.08 ppm to 0.075 ppm. On September 16, 2009, EPA announced it would reconsider these 2008 ozone standards. The purpose of the reconsideration is to ensure that the ozone standards are clearly grounded in science, protect public health with an adequate margin of safety, and are sufficient to protect the environment. EPA proposed revisions to the standards on January 19, 2010 (75 FR 2938) and will issue final standards soon. Information on the 2008 revisions to the ozone standard, and on all subsequent activity based on the reconsideration, is available at:
http://www.epa.gov/air/ozonepollution/actions.html#sep09s
.
3. Which NAAQS does this proposal address?
This proposed action addresses the requirements of CAA section 110(a)(2)(D)(i)(I) as they relate to:
(1) The 1997 annual PM
2.5
standards,
(2) The 2006 daily PM
2.5
standards, and
(3) The 1997 ozone standards
The original CAIR and CAIR FIP rules, which pre-dated the 2006 standards, addressed the 1997 ozone and PM
2.5
standards only. The 1997 8-hour ozone standard is 0.08 ppm. The 1997 PM
2.5
standards promulgated in 1997 established a 15 μg/
3
standard for 24-hour PM
2.5
and a 65 μg/m
3
standard for annual PM
2.5
. In 2006, the 24-hour PM
2.5
standard was lowered to 35 μg/m
3
and the 15 μg/m
3
annual PM
2.5
standard was left unchanged.
For this proposal, EPA fully addresses the requirements of CAA section 110(a)(2)(D)(i)(I) for the annual PM
2.5
standard of 15 μg/m
3
. For the 24-hour standard of 35 μg/m
3
and for the 1997 8-hour ozone standard of 0.08 ppm, EPA fully addresses the CAA section 110(a)(2)(D)(i)(I) requirements for some states, but for the remaining states EPA will address whether further requirements are needed.
This action does not address the CAA section 110(a)(2)(D)(i)(I) requirements for the revised ozone standards promulgated in 2008. These standards are currently under reconsideration. We are, however, actively conducting the technical analyses and other work needed to address interstate transport for the reconsidered ozone standard as soon as possible. We intend to issue as soon as possible a proposal to address the transport requirements with respect to the reconsidered standard.
4. EPA Transport Rulemaking History
a. CAA Provisions
For almost 40 years, Congress has focused major efforts on curbing ground-level ozone. In 1970, Congress amended the CAA to require, in Title I, that EPA issue and periodically review and, if necessary, revise NAAQS for ubiquitous air pollutants (sections 108 and 109). Congress required the states to submit SIPs to attain and maintain those NAAQS, and Congress included, in section 110, a list of minimum requirements that SIPs must meet. Congress anticipated that areas would attain the NAAQS by 1975.
In 1977, Congress amended the CAA by providing, among other things, additional time for areas that were not attaining the ozone NAAQS to do so, as well as by imposing specific SIP requirements for those nonattainment areas. These provisions first required the designation of areas as attainment, nonattainment, or unclassifiable, under section 107; and then required that SIPs for ozone nonattainment areas include the additional provisions set out in part D of Title I, as well as demonstrations of attainment of the ozone NAAQS by either 1982 or 1987 (section 172).
In addition, the 1977 Amendments included two provisions focused on interstate transport of air pollutants: the predecessor to current section 110(a)(2)(D), which requires SIPs for all areas to constrain emissions with certain adverse downwind effects; and section 126, which, in general, authorizes a downwind state to petition EPA to impose limits directly on upwind sources found to adversely affect that state. Section 110(a)(2)(D)(i)(I), which is key to the present action, is described in more detail later.
In 1990, Congress amended the CAA to better address, among other things, continued nonattainment of the 1-hour ozone NAAQS, the requirements that would apply if EPA revised the 1-hour standard, and transport of air pollutants across state boundaries (Pub. L. 101-549, Nov. 15, 1990, 104 Stat. 2399, 42 U.S.C. 7401-7671q).
As amended in 1990, the CAA further requires EPA to designate areas as attainment, nonattainment, and unclassifiable under a revised NAAQS (section 107(d)(1); section 6103, Pub. L. 105-178). The CAA authorizes EPA to classify areas that are designated nonattainment under the new NAAQS and to establish for those areas attainment dates that are as expeditious as practicable, but not to exceed 10 years from the date of designation (section 172(a)).
All areas are required to submit SIPs within certain timeframes (section 110(a)(1)), and those SIPs must include specified provisions, under section 110(a)(2). In addition, SIPs for nonattainment areas are generally required to include additional specified control requirements, as well as controls providing for attainment of any revised NAAQS and periodic reductions providing “reasonable further progress” in the interim (section 172(c)). If states do not submit SIPs in a timely or approvable manner, EPA has the authority to make findings of failure to submit or impose FIPs on specific sources in the state that contribute to downwind nonattainment and interference with maintenance. Significant contribution and interference with maintenance are discussed in detail in section IV later.
The 1990 Amendments reflect general awareness by Congress that ozone is a regional, and not merely a local, problem. Ozone and its precursors may be transported long distances across state lines, thereby exacerbating ozone problems downwind. Ozone transport is recognized as a major reason for the persistence of the ozone problem, notwithstanding the imposition of numerous controls, both Federal and State, across the country.
The CAA further addresses interstate transport of pollution in section 126, which Congress revised slightly in 1990. Subsection (b) of that provision authorizes each state (or political subdivision) to petition EPA for a finding designed to protect that entity from upwind sources of air pollutants.
7
7
In addition, section 115 authorizes EPA to require a SIP revision in certain circumstances when one or more sources within a state “cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country.”
In addition, the 1990 Amendments added section 184, which delineates a multi-state ozone transport region (OTR) in the Northeast, requires specific additional controls for all areas (not only nonattainment areas) in that region, and establishes the Ozone Transport Commission (OTC) for the purpose of recommending to EPA regionwide controls affecting all areas in that region. At the same time, Congress added section 176A, which authorized the formation of transport regions for other pollutants and in other parts of the country.
In September 1994, the Northeast OTC states signed a Memorandum of Understanding (MOU) committing to reduce NO
X
emissions throughout the region. In 1999 through 2002, most of the OTC states achieved substantial NO
X
reductions through an ozone season cap and trade program for NO
X
called the OTC NO
X
Budget Program, which EPA administered, and through NO
X
emissions rate limits from certain coal plants under Title IV.
Separate from activity in the OTC, EPA and the Environmental Council of the States (ECOS) formed the OTAG in 1995. This workgroup brought together interested states and other stakeholders, including industry and environmental groups. Its primary objective was to assess the ozone transport problem and develop a strategy for reducing ozone pollution throughout the eastern half of the United States.
Notwithstanding significant efforts, the states generally were not able to meet the November 15, 1994 statutory deadline for the attainment demonstration and rate of progress (ROP) SIP submissions required under section 182(c). The major reason for this failure was that at that time, states with downwind nonattainment areas were not able to address transport from upwind areas. As a result, EPA recognized that development of the necessary technical information, as well as the control measures necessary to achieve the large level of reductions likely to be required, had been particularly difficult for the states affected by ozone transport.
Accordingly, as an administrative remedial matter, EPA established new timeframes for the required SIP submittals. To allow time for states to incorporate the results of the OTAG
modeling into their local plans, EPA extended the submittal date to April 1998.
8
The OTAG's air quality modeling and recommendations formed the basis for what became the NO
X
SIP Call rulemaking and included the most comprehensive analyses of ozone transport ever conducted. The EPA participated extensively in the OTAG process that generated much useful technical and modeling information on regional ozone transport.
8
Guidance for Implementing the 1-hour Ozone and Pre-Existing PM10 NAAQS, Memorandum from Richard D. Wilson, dated December 29, 1997.
OTAG was established to address transport issues associated with meeting the 1-hour standard. The EPA did not promulgate the 8-hour standard until shortly after OTAG concluded; thus, OTAG did not recommend strategies to address the 8-hour NAAQS. However, because EPA had proposed an 8-hour standard, OTAG did examine the impacts of different strategies on 8-hour average ozone predictions. They found that ozone transport caused problems for downwind areas under either the 1-hour or 8-hour standard.
EPA's Transport SIP Call Regulatory Efforts.
Shortly after OTAG began its work, EPA indicated that it intended to issue a SIP call to require states to implement the reductions necessary to address the ozone transport problem. On January 10, 1997 (62 FR 1420), EPA published a notice of intent and indicated that before taking final action, EPA would carefully consider the technical work and any recommendations of OTAG. The EPA published the NPR for the NO
X
SIP Call by notice dated November 7, 1997 (62 FR 60319). The NPR proposed to make a finding of significant contribution due to transported NO
X
emissions to nonattainment or maintenance problems downwind and to assign NO
X
emissions budgets for 23 jurisdictions. In light of OTAG's work and additional information, EPA was able to assess ozone transport as it relates to the 8-hour NAAQS and to set forth requirements as necessary to address the 8-hour standard in the rulemaking. The regional reductions of NO
X
that would have been achieved through this SIP call for the 1-hour NAAQS were key components for meeting the new 8-hour ozone standard in a cost-effective manner. Therefore, EPA believed that the OTAG recommendations for how to address ozone transport were valid for both NAAQS.
The EPA published a supplemental notice of proposed rulemaking (SNPR) dated May 11, 1998 (63 FR 25902), which proposed a model NO
X
budget trading program and state reporting requirements and provided the air quality analyses of the proposed statewide NO
X
emissions budgets.
Revision of the Ozone NAAQS.
On July 18, 1997 (62 FR 38856), EPA issued its final action to revise the NAAQS for ozone. The EPA's decision to revise the standard was based on the Agency's review of the available scientific evidence linking exposures to ambient ozone to adverse health and welfare effects at levels allowed by the pre-existing 1-hour ozone standards. The 1-hour primary standard was replaced by an 8-hour standard at a level of 0.08 ppm, with a form based on the 3-year average of the annual fourth-highest daily maximum 8-hour average ozone concentration measured at each monitor within an area. The new primary standard provided increased protection to the public, especially children and other at-risk populations, against a wide range of ozone-induced health effects.
The pre-existing 1-hour secondary ozone standard was replaced by an 8-hour standard identical to the new primary standard. The new secondary standard provided increased protection to the public welfare against ozone-induced effects on vegetation.
Section 126 Petitions.
In a separate rulemaking, EPA proposed action on petitions submitted by 8 northeastern states
9
under section 126 of the CAA. Each petition specifically requested that EPA make a finding that NO
X
emissions from certain major stationary sources significantly contributed to ozone nonattainment problems in the petitioning state. Both the NO
X
SIP Call and the section 126 petitions were designed to address ozone transport through reductions in upwind NO
X
emissions. However, the EPA's response to the section 126 petitions differed from EPA's action in the NO
X
SIP Call rulemaking in several ways. In the NO
X
SIP Call, EPA was determining that certain states were or would be significantly contributing to nonattainment or maintenance problems in downwind states. The EPA required the upwind states to submit SIP provisions to reduce the amounts of each state's NO
X
emissions that significantly contributed to downwind air quality problems. The states had the discretion to select the mix of control measures to achieve the necessary reductions. By contrast, under section 126, if findings of significant contribution were made for any sources identified in the petitions, EPA would have determined the necessary emissions limits to address the amount of significant contribution and would have directly regulated the sources. A section 126 remedy would have applied only to sources in states named in the petitions.
9
The 8 states were Connecticut, Massachusetts, Maine, New Hampshire, New York, Pennsylvania, Rhode Island, and Vermont.
b. NO
X
SIP Call
Based on the findings of OTAG, EPA proposed a rulemaking known as the NO
X
SIP Call in 1997 and finalized it in 1998. (
See
“Finding of Significant Contribution and Rulemaking for Certain States in the Ozone Transport Assessment Group Region for Purposes of Reducing Regional Transport of Ozone; Rule,” (63 FR 57356).) This rule concluded that NO
X
emissions in 22 states and the District of Columbia contribute to ozone nonattainment in other states, and the rule required affected states to amend their SIPs and limit NO
X
emissions. EPA set an ozone season NO
X
budget for each affected state, essentially a cap on ozone season (summertime) NO
X
emissions in the state. Sources in the affected states were given the option to participate in a regional cap and trade program. The first control period was scheduled for the 2003 ozone season.
In response to litigation over EPA's final NO
X
SIP Call rule, the Court issued two decisions concerning the NO
X
SIP Call and its technical amendments.
10
The Court decisions, discussed later, generally upheld the NO
X
SIP Call and technical amendments, including EPA's interpretation of the definition of ”contribute significantly” under CAA section 110(a)(2)(D). The litigation over the NO
X
SIP Call coincided with the litigation over the 8-hour NAAQS. Because of the uncertainty caused by the litigation on the 8-hour NAAQS, EPA stayed the portion of the NO
X
SIP Call based on the 8-hour NAAQS (65 FR 56245, September 18, 2000). Therefore, for the most part, the Court did not address NO
X
SIP Call requirements under the 8-hour ozone NAAQS.
(1) What was the NO
X
SIP Call?
10
See Michigan
v.
EPA,
213 F.3d 663 (DC Cir. 2000), cert. denied, 532 U.S. 904 (2001) (NO
X
SIP call) and
Appalachian Power
v.
EPA,
251 F.3d 1026 (DC Cir. 2001) (technical amendments).
The NO
X
SIP Call was EPA's principal effort to reduce interstate transport of precursors for both the 1-hour ozone NAAQS and the 8-hour ozone NAAQS. The EPA's rulemaking was based on its consideration of OTAG's recommendations, as well as information resulting from EPA's additional work, and extensive public input generated through notice-and-comment rulemaking. The EPA believed
that requiring NO
X
emissions reductions across the region in amounts achievable by uniform controls was a reasonable, cost-effective step to take to mitigate ozone nonattainment in downwind states for both the 1-hour and 8-hour standards.
It was also EPA's goal to ensure that sufficient regional reductions were achieved to mitigate ozone transport in the eastern half of the United States and thus, in conjunction with local controls, enable nonattainment areas to attain and maintain the ozone NAAQS.
This NO
X
SIP Call required those jurisdictions that EPA determined significantly contribute to 1-hour and 8-hour ozone nonattainment problems in downwind states to revise their SIPs to include NO
X
control measures to mitigate the significant ozone transport during summer months known as the “ozone season” (May-September). The EPA determined emissions reductions requirements for the covered states and source categories (
see
section IV.A for a description of the approach EPA used to determine emissions reductions requirements). The affected states were required to submit SIPs providing the specified amounts of emissions reductions. By eliminating these amounts of NO
X
emissions, the control measures would assure that the remaining NO
X
emissions would meet the level identified in the rule as the state's NO
X
emissions budget and would not “significantly contribute to nonattainment, or interfere with maintenance by,” a downwind state, under section 110(a)(2)(D)(i)(I).
The SIP requirements permitted each state to determine what measures to adopt to prohibit the significant amounts and hence meet the necessary emissions budget. Consistent with OTAG's recommendations to achieve decreased NO
X
emissions primarily from large stationary sources in a trading program, EPA encouraged states to consider electric utility and large boiler controls under a cap and trade program as a cost-effective strategy. The EPA also recognized that promotion of energy efficiency could contribute to a cost-effective strategy.
See
section V.D.1 for a discussion on the approach taken to implement the emissions reductions requirements in the NO
X
SIP Call.
(2) Legal Challenges to the NO
X
SIP Call
Several petitioners challenged the NO
X
SIP Call in the United States Court of Appeals for the District of Columbia Circuit (DC Circuit). In
Michigan
v.
EPA
, 213 F.3d 663 (DC Cir., 2000),
cert. denied
, 532 U.S. 904 (2001), the Court upheld the rule in most respects. Of greatest relevance here, the Court upheld the essential features of EPA's approach to identifying and eliminating states” NO
X
emissions that significantly contribute to downwind nonattainment. It upheld key aspects of EPA's air quality modeling and its use of cost-effectiveness criteria in defining states” “significant contribution.”
See id.
at 673-79. In addition, it accepted EPA's use of a uniform control requirement (
i.e.
, requiring all covered jurisdictions, regardless of amount of contribution, to reduce NO
X
emissions by an amount achievable with highly cost effective controls).
See id.
at 679-80. The Court, however, agreed with petitioners that certain specific applications of EPA's approach were flawed. It thus vacated the rule with respect to Wisconsin, Missouri, and Georgia, and held that EPA had failed to provide adequate notice on two specific issues (a change in the definition of EGU and a change in control level assumed for specific sources).
See id.
at 681-85, 692-94. The Court also subsequently delayed the implementation date to May 31, 2004.
Michigan
v.
EPA, 2000 WL 1341477 (DC Cir. 2000).
The decision resolved only issues involving the 1-hour ozone NAAQS and did not resolve any issues involving the 8-hour NAAQS, which provided another basis for the rule.
See id.
at 670-71. EPA ultimately stayed the 8-hour basis of the NO
X
SIP Call.
See
65 FR 56245. In addition, in a subsequent case that reviewed separate EPA rulemakings making technical corrections to the NO
X
SIP Call, the DC Circuit remanded the case for a better explanation of EPA's methodology for computing the growth component in the EGU heat input calculation.
See Appalachian Power Co.
v.
EPA
, 251 F.3d 1026 (DC Cir. 2001). More recently, the Court also rejected a challenge to a subsequent EPA rule withdrawing EPA's findings of significant contribution for Georgia for the 1-hour ozone standard.
See North Carolina
v.
EPA
, 587 F.3d 422 (DC Cir. 2009).
(3) How the NO
X
Budget Trading Program (NBP) Worked
The NBP was a market-based cap and trade program created to reduce the regional transport of emissions of NO
X
from power plants and other large combustion sources that contribute to ozone nonattainment in the eastern United States. Over six ozone seasons (2003-2008), the NBP significantly lowered NO
X
emissions from affected sources, contributing to improvements in regional air quality across the Midwest, Northeast, and Mid-Atlantic. The cap level was intended to protect public health and the environment and to sustain that protection into the future regardless of growth in the affected sector. Ozone season NO
X
emissions decreased from levels in baseline years in all states participating in the NBP. (All NBP states transitioned to the CAIR NO
X
ozone season program in 2009 except Rhode Island.) Allowance trading was generally active from the start of the program in 2003. Prices and trading were down in 2008, primarily due to uncertainty. Compliance remained virtually 100 percent throughout the program's 6 years. Many nonattainment areas in the East saw substantial improvements in air quality concentrations that brought them in line with ozone NAAQS. The NBP, together with other Federal, State, and local programs, contributed to NO
X
reductions that have led to improvements in ozone and PM
2.5
, saving 580-1,800 lives annually in 2008.
11
Changes in ozone and nitrate concentrations due to the NBP have also contributed to improvements in ecosystems in the East.
11
U.S.EPA. September, 2009.
The NO
X
Budget Trading Program: 2008 Environmental Results,
p.9.
EPA stopped administering the NBP at the conclusion of 2008 control period activities. States still have the emissions reductions requirement and could use the CAIR NO
X
ozone season trading program to achieve this.
See
section V.D.4.e. for a discussion of the results of the NO
X
Budget Trading Program.
(4) Clean Air Interstate Rule
Following promulgation of the new NAAQS in 1997, the CAA required all states, regardless of whether they have attainment air quality in all areas, to submit SIPs containing provisions specified under section 110(a)(2). In addition, states are required to submit SIPs for nonattainment areas which are generally required to include additional emissions controls providing for attainment of the NAAQS.
As described previously, section 110(a)(2)(D)(i)(I) provides a tool for addressing the problem of transported pollution that significantly contributes to downwind nonattainment and maintenance problems. Under section 110(a)(2)(D), a SIP must contain adequate provisions prohibiting sources in the state from emitting air pollutants in amounts that would contribute significantly to nonattainment or interfere with maintenance in one or more downwind states. Section 110(k)(5) authorizes EPA to find that a SIP is substantially inadequate to meet any CAA requirement. If EPA makes such a finding, it is to require the state
to submit, within a specified period, a SIP revision to correct the inadequacy (“SIP call”). In 1998, EPA used this authority to issue the NO
X
SIP Call, discussed previously, to require states to revise their SIPs to include measures to reduce NO
X
emissions that were significantly contributing to ozone nonattainment problems in downwind states.
Sulfur dioxide and NO
X
are not the only emissions that contribute to interstate transport and PM
2.5
nonattainment. However, EPA stated in the CAIR that it believed that, given current knowledge, it was not appropriate to specify emissions reductions requirements for direct PM
2.5
emissions or organic precursors (
e.g.
, volatile organic compounds (VOCs) or ammonia (NH
3
)). Similarly, for 8-hour ozone, EPA continued to rely on the conclusion of the OTAG that analysis of interstate transport control opportunities should have focused on NO
X
, rather than VOCs.
12
12
The OTAG was active from 1995-1997 and consisted of representatives from the 37 states in that region; the District of Columbia; EPA; and interested members of the public, including industry and environmental groups.
See
discussion below under NO
X
SIP Call for further information on OTAG.
(5) What is the CAIR?
The CAA contains a number of requirements to address nonattainment of the PM
2.5
and the 8-hour ozone NAAQS, including requirements that states address interstate transport that significantly contributes to such nonattainment.
13
Based on air quality modeling, ambient air quality data analyses, and cost analyses, EPA found that emissions in certain upwind states resulted in amounts of transported PM
2.5
, ozone, and their emissions precursors that significantly contributed to nonattainment in downwind states.
13
The term “transport” includes the transport of both PM
2.5
and their precursor emissions and/or transport of both ozone and its precursor emissions.
In the CAIR, promulgated on May 12, 2005 (70 FR 25162), EPA required SIP revisions in 28 states and the District of Columbia, within 18 months after publication of the notice of final rulemaking, to ensure that certain emissions of SO
2
and/or NO
X
—important precursors of PM
2.5
(NO
X
and SO
2
) and ozone (NO
X
)—were prohibited. Achieving the emissions reductions identified, EPA concluded, would address the states' requirements under section 110(a)(2)(D)(i)(I) of the CAA and would help PM
2.5
and ozone nonattainment areas in the eastern half of the United States attain the standards. Moreover, EPA concluded that such attainment would be achieved in a more certain, equitable, and cost-effective manner than if each nonattainment area attempted to implement local emissions reductions alone, and would also assist the covered states and their neighbors in making progress toward their visibility goals.
The CAIR built on EPA's efforts in the NO
X
SIP Call to address interstate pollution transport for ozone, and was EPA's first attempt to address interstate pollution transport for PM
2.5
. It required significant reductions in emissions of SO
2
and NO
X
, which contribute to fine particle concentrations. In addition, NO
X
emissions contribute to ozone problems. EGUs were found to be a major source of the SO
2
and NO
X
emissions which contributed to fine particle concentrations and ozone problems downwind.
CAIR was designed to provide significant air quality attainment, health, and environmental improvements across the eastern U.S. in a highly cost-effective manner by reducing SO
2
and NO
X
emissions from EGUs that contribute to the PM
2.5
and 8-hour ozone problems described in the rule. CAIR's emissions reductions requirements were based on controls that EPA had determined to be highly cost-effective for EGUs under optional cap and trade programs. However, states had the flexibility to choose the measures to adopt to achieve the specified emissions reductions. EPA required the emissions reductions to be implemented in two phases, with the first phase in 2009 and 2010 (for NO
X
and SO
2
, respectively), and the second phase for both pollutants in 2015. These requirements are described in more detail in section V.D.1.
In addition to promulgating findings of significant contribution to nonattainment, EPA assigned emissions reductions requirements for SO
2
and/or NO
X
that each of the identified states must meet through SIP measures.
Section V.D.1 discusses the approach taken in CAIR using three model multi-state cap and trade programs for SO
2
and NO
X
that EPA developed and that states could choose to adopt to meet the required emissions reductions in a flexible and cost-effective way.
The requirements in the CAIR were intended to address regional interstate transport of air pollution. EPA recognized, however, that additional local reductions might be necessary to bring some areas into attainment even after significantly contributing upwind emissions were eliminated. 70 FR 25165-66, May 12, 2005. In addition, states that shared an interstate nonattainment area were expected to work together in developing the nonattainment SIP for that area, reducing emissions that contributed to local-scale interstate transport problems.
CAIR FIPs.
When EPA promulgated the final CAIR in May 2005, EPA also issued a national finding that states had failed to submit SIPs to address the requirements of CAA section 110(a)(2)(D)(i) with respect to the 1997 ozone and PM
2.5
NAAQS. States were to have submitted 110(a)(2)(D)(i) SIPs for those standards by July 2000. This action triggered a 2-year clock for EPA to issue FIPs to address interstate transport. On March 15, 2006 the EPA promulgated FIPs to ensure that the emissions reductions required by the CAIR are achieved on schedule. The FIPs did not limit states” flexibility in meeting their CAIR requirements as all states remained free to submit SIPs at any time that, if approved by EPA, would replace the FIP for that state.
As the control strategy for the FIPs, EPA adopted the model cap and trade programs that it provided in the CAIR as a control option for states, with minor changes to account for federal, rather than state, implementation. The FIPs required power plants in affected states to participate in one or more of three separate emissions cap and trade programs that cover: (1) Annual SO
2
emissions, (2) annual NO
X
emissions, and (3) ozone season NO
X
emissions. Emission cap and trade programs are a proven method for achieving highly cost-effective emissions reductions while providing regulated sources with flexibility in choosing compliance strategies.
The FIPs also provided states with an option to submit abbreviated SIPs to meet CAIR. Under this option, states could save the time and resources needed to develop the complete trading program SIP, while still being able to make key decisions, such as the methodology for allocating annual and/or ozone season NO
X
allowances.
New Jersey and Delaware.
Separately, on March 15, 2006, EPA issued a final rule to include Delaware and New Jersey in the CAIR to control SO
2
and NO
X
emissions because they contribute to PM
2.5
nonattainment in other states. 71 FR 25288, April 28, 2006. These states were already included in the CAIR because their sources contributed to nonattainment of other states' 8-hour ozone air quality standard. The CAIR FIP established requirements for Delaware and New Jersey with respect to both ambient air quality standards.
(6) Legal Challenges to the CAIR
Petitions for review challenging various aspects of the CAIR were filed in the U.S. Court of Appeals for the DC Circuit. In
North Carolina
v.
EPA,
531
F.3d 896,
modified on reh'g
550 F.3d 1176 (D.C. Cir. 2008), the Court granted several of the petitions for review and remanded the rule to EPA for further proceedings. In its July 2008 opinion,
North Carolina,
531 F.3d 896, the Court upheld several challenged aspects of EPA's approach, but also found fatal flaws in the rule—flaws it found significant enough to warrant vacatur of the CAIR and the associated FIPs in their entirety. In December 2008, however, the Court responded to petitions for rehearing and determined that “notwithstanding the relative flaws of CAIR, allowing the CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the environmental values covered by CAIR.”
North Carolina,
550 F.3d at 1178. Accordingly, it decided to remand the rule without vacatur “so that EPA may remedy CAIR's flaws in accordance with [the Court's] July 11, 2008 opinion in this case.”
Id.
Although the entire rule was remanded, important parts of EPA's rulemaking were upheld by the Court in its July 2008 ruling. The Court upheld key aspects of the air quality modeling portion of EPA's significant contribution analysis. It upheld EPA's decision to consider upwind states for inclusion in the CAIR only if those states contributed to projected nonattainment in 2010.
See North Carolina,
531 F.3d at 913-914. The Court further upheld the contribution threshold used in the air quality modeling portion of the significant contribution analysis for PM
2.5
, EPA's use of whole states as the unit of measurement, and the first-phase NO
X
compliance deadline of 2009
See id.
at 914-17, 923-27, 928-29.
The Court also found significant flaws in EPA's approach. The Court emphasized the importance of individual state contributions to downwind nonattainment areas and held that EPA had failed to adequately measure significant contribution from sources within an individual state to downwind nonattainment areas in other states.
Id.
at 907. Further, the Court noted that EPA had not provided adequate assurance that the trading programs established in the CAIR would achieve, or even make measurable progress towards achieving, the section 110(a)(2)(D)(i)(I) mandate to eliminate significant contribution.
See North Carolina,
532 F.3d at 907-08. For these reasons, it concluded that EPA had not shown that the CAIR rule would achieve measurable progress towards satisfying the statutory mandate of section 110(a)(2)(D)(i)(I) and thus EPA lacked authority for its action.
See id.
at 908. Moreover, it emphasized that where the rule constitutes a complete 110(a)(2)(D)(i)(I) remedy, it must actually require the elimination of emissions that contribute significantly to nonattainment or interfere with maintenance downwind.
See id.
The Court further rejected the state budgets for SO
2
and NO
X
which were used to implement the CAIR trading programs, finding the budgets to be insufficiently related to the 110(a)(2)(D)(i)(I) mandate of eliminating significant contribution and interference with maintenance.
See id.
at 916-21. It also rejected EPA's effort to harmonize the CAIR SO
2
trading program with the existing requirements of Title IV of the CAA, holding that section 110(a)(2)(D)(i)(I) did not give EPA authority to terminate or limit Title IV allowances. In addition, the Court found that EPA had failed to give meaning to the “interfere with maintenance” prong of section 110(a)(2)(D)(i)(I), that EPA had not demonstrated that the 2015 compliance deadline used in the CAIR was coordinated with the downwind state's deadlines for attaining the NAAQS, and that EPA had not adequately supported its determination that sources in Minnesota significantly contributed to nonattainment or interfered with maintenance in downwind states.
See id.
at 908-11, 911-13, and 926-28.
(7) How the Clean Air Interstate Rule Worked
Building on the emissions reductions under the NBP and Acid Rain Program (ARP), CAIR was designed to permanently lower emissions of SO
2
and NO
X
in the eastern United States. As explained previously, although the DC Circuit remanded the rule to EPA, it did so without vacatur allowing the rule to remain in effect while EPA addresses the remand. Thus, CAIR is continuing to help states address ozone and PM
2.5
nonattainment and improve visibility, reducing transported precursors of SO
2
and NO
X
, through the implementation of three separate cap and trade compliance programs for annual NO
X
, ozone season NO
X
, and annual SO
2
emissions from power plants.
See
section V.D.4.e. for a discussion on CAIR implementation in 2009, the first year of the NO
X
annual and ozone season programs. The CAIR annual SO
2
program began January 1, 2010. Quarterly emissions will be posted on EPA's web site (
see http://camddataandmaps.epa.gov/gdm/
) and an assessment of emissions reduction data will be available at the end of each compliance period.
C. What are the goals of this proposed rule?
In developing this proposed rule, EPA was guided by a number of goals and guiding principles, as discussed in this section of the preamble.
1. Primary Goals
a. Respond to the Court Remand of the CAIR
Most importantly, this proposal responds to the remand of the CAIR by the Court. As noted previously, the Court granted several petitions for review of the CAIR, finding fatal flaws with the rule; yet, it ultimately decided to remand the rule without vacatur to preserve the environmental benefits of the rule.
North Carolina
v.
EPA,
531 F.3d 896,
modified on reh'g,
550 F.3d 1176 (DC Cir. 2008).
The action EPA is proposing would respond to the July and December 2008 opinions of the DC Circuit and correct the flaws in the CAIR methodology that were identified by the Court. The action responds to the Court's concerns in numerous ways. The methodology used to measure each state's significant contribution emphasizes air quality considerations and uses state specific data and information. The methodology also gives independent meaning to the interfere with maintenance prong of section 110(a)(2)(D)(i)(I). The state budgets for SO
2
, annual NO
X
and ozone season NO
X
are directly linked to the measurement of each state's significant contribution and interference with maintenance. The compliance deadlines are coordinated with the attainment deadlines for the relevant NAAQS. And the proposed remedy includes assurance provisions to assure that all necessary reductions occur in each individual state.
The action would also propose FIPs which would replace the remanded CAIR FIPs. The proposed FIPs would apply to all states covered by the rule, including those for which EPA had previously approved SIPs under the remanded CAIR. If finalized as proposed, these FIPs would eliminate or, at a minimum, make measurable progress towards eliminating emissions of SO
2
and NO
X
that significantly contribute to or interfere with maintenance of the 1997 and 2006 PM
2.5
NAAQS and the 1997 ozone NAAQS in the eastern half of the United States.
b. Address Transport Requirements With Respect to the Existing PM
2.5
Standards
This proposed rule is designed to address the requirements of section 110(a)(2)(D)(i)(I) of the CAA as they
relate to the 1997 and 2006 PM
2.5
standards for states in the eastern United States. The proposed rule would both identify the emissions from states in the eastern U.S. that significantly contribute to nonattainment and interfere with maintenance of the NAAQS in downwind states, and prohibit such emissions.
States are obligated to submit SIPs to EPA addressing the provisions of section 110(a)(2), including the transport provisions of section 110(a)(2)(D)(i)(I), within 3 years of the promulgation of a new or revised NAAQS. For the 1997 NAAQS, these SIPs were due in 2000. On April 25, 2005 (effective May 25, 2005) EPA issued findings that states had failed to submit SIPs to satisfy the requirements of section 110(a)(2)(D)(i) of the Act under the 1997 ozone and PM
2.5
standards. 70 FR 21147, April 25, 2005. These findings started a 2-year clock for the promulgation of a FIP by EPA unless, prior to that time, each state makes a submission to meet the requirements of 110(a)(2)(D)(i) and EPA approves the submission. This 2-year period expired in May 2007. Because the Court found CAIR inadequate to satisfy the requirements of 110(a)(2)(D)(i)(I), neither EPA's FIP implementing the requirements of CAIR nor any states SIPs that relied on CAIR to satisfy the requirements of this section, are adequate to meet the requirements of section 110(a)(2)(D)(i)(I). EPA's obligation to issue a FIP has therefore not yet been met. The requirements of the FIPs proposed in this rule are designed to address this obligation.
Revisions to the 1997 PM
2.5
standards were signed by the Administrator on September 21, 2006, and published in the
Federal Register
on October 17, 2006. 71 FR 61144. The revisions were effective December 18, 2006. EPA interprets the 3 year deadline for submission of 110(a)(2) SIPs to be 3 years from the date of signature. Accordingly, for the 2006 revisions to the PM
2.5
NAAQS, the SIPs under 110(a)(2) were due on September 21, 2009. On June 9, 2010, EPA issued a notice making findings that states had not submitted SIPs under the 2006 PM
2.5
NAAQS by the September 2009 deadline. 75 FR 32673. These findings started a 2-year clock for the promulgation of a FIP by EPA unless, prior to that time, each state makes a submission to meet the requirements of 110(a)(2)(D)(i)(I) and EPA approves the submission. This 2-year period will expire on July 9, 2012. This proposal is designed to provide FIPs for the 2006 standards to ensure that the 110(a)(2)(D)(i)(I) obligation is fully satisfied as it relates to those standards. EPA also notes that under FIPs, reduction requirements are immediately effective and thus FIPs provide for the most expeditious means to implement emissions reduction requirements.
c. Address Transport Requirements With Respect to the 1997 Ozone Standards
This proposed rule, in concert with other actions, largely eliminates upwind state emissions that contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the 1997 8-hour ozone NAAQS. EPA will issue a subsequent proposal for the 1997 8-hour ozone NAAQS to address fully the requirements of CAA Section 110(a)(2)(D)(i)(I). EPA's goal is to fully address transport requirements for the 1997 ozone standards as soon as possible.
d. Provide for a Smooth Transition From Existing Programs
In addressing the Court remand in a way that satisfies the CAA transport requirements, EPA is also mindful of the need to ensure a smooth transition from the existing requirements. Substantial improvements in air quality have resulted from those requirements with associated health benefits. It is important not to lose those benefits as the new requirements move forward. It is also important to move quickly with those portions of the new requirements that provide the greatest benefits.
2. Key Guiding Principles
a. Appropriately Identify Necessary Upwind Reductions
Emissions from upwind states can, alone or in combination with local emissions, result in air quality levels that exceed the NAAQS and jeopardize the health of residents in downwind communities. Each upwind state is required by the “good neighbor provision” to eliminate its individual significant contribution to downwind state nonattainment and to eliminate emissions that interfere with downwind states” maintenance of the air quality standards. The Act does not require upwind states to eliminate all emissions that affect downwind air quality or shift responsibility for attaining the NAAQS to the upwind states. Instead, the “good neighbor provision” requires each upwind state to, within 3 years of promulgation or revision of a NAAQS, submit a SIP to prohibit those emissions that significantly contribute to nonattainment or interfere with maintenance downwind. The prohibition on these emissions is intended to assist downwind states as they design strategies for ensuring that the NAAQS are attained and maintained.
In practice, it is very complex for individual states to address the transport requirements. Generally for transport of ozone, and for transport of sulfate and nitrate fine particles, each downwind area is affected by emissions from multiple upwind states. In addition, in many cases states are simultaneously both upwind and downwind of one another. Further, only emissions that will significantly contribute to nonattainment or interfere with maintenance in another state are prohibited. Thus, an upwind state's obligations are affected by the air quality downwind. Downwind air quality, in turn, is affected by both local emissions and the cumulative impact of emissions from all of the contributing upwind states.
The problem of interstate transport is thus extremely complex and any remedy must acknowledge the inherent complexity of the problem. It is appropriate for EPA in developing such a remedy to be mindful of the interaction between upwind emissions controls and local emissions controls.
The EPA continues to conclude, as it did in developing the CAIR, that it would be difficult if not impossible for many nonattainment areas to reach attainment through local measures alone, and EPA finds no information developed subsequent to development of CAIR to alter this conclusion. At the time of the proposed CAIR rule, EPA conducted a local measures analysis representing an ambitious set of measures and emissions reductions that may in fact be difficult to achieve in practice. (Ref: Section IX of Technical Support Document for the Interstate Air Quality Rule Air Quality Modeling Analyses, January 2004). This analysis was intended to provide illustrative examples of the nature of location measures and possible reductions. This analysis was not intended to precisely identify local emissions control measures that may be available in a particular area. The EPA continues to believe that a strategy based on adopting cost effective controls on sources of transported pollutants as a first step will produce a more reasonable, equitable, and optimal strategy than one beginning with local controls. The local measures analyses we conducted were not, however, intended to develop a specific or “optimal” regional and local attainment strategy for any given area. Rather, the analysis was intended to evaluate whether, in light of available
local measures, it is likely to be necessary to reduce significant regional transport from upwind states. EPA continues to believe that the two local measures analyses that were conducted for the CAIR strongly support the need for regional reductions of SO
2
and NO
X
.
In conclusion, EPA believes that the proposed rule represents the best approach for identifying upwind state emissions that significantly contribute to nonattainment in, or interfere with maintenance by, downwind states.
b. Ensuring That Pollution Controls Operate
The proposed Transport Rule would, by 2012, cap emissions of SO
2
and NO
X
on a state-by-state basis and guarantee that existing and planned pollution controls operate. EPA is convinced that the considerable benefits to air quality and public health that have been achieved must be ensured going forward. Keeping emissions of SO
2
and NO
X
from increasing by 2012 in 27 states and DC assures that recent gains are maintained and that states that significantly contribute to downwind PM
2.5
nonattainment and maintenance areas do not increase their contribution to those areas. Further, this proposal would maintain the ozone season emissions reductions achieved since 2005 in 26 states, ensuring that states that significantly contribute to downwind ozone nonattainment and maintenance areas do not increase their contribution to those areas. Tables III.A-2 and III.A-3 in section III.A, previously, show the projected EGU emissions for the 2012 phase of the Transport Rule.
c. Provide Workable Approach for EPA and States
Another important goal in developing the proposed requirements is to provide requirements that can, as a practical matter, be implemented by both EPA and state air quality agencies. Both EPA and state resources are limited and EPA recognizes the importance of developing requirements that make efficient use of limited EPA and state resources. EPA also notes that the air quality improvements brought about by reducing transport can greatly assist states in the development of SIPs and attainment demonstrations.
d. Ensure a Reliable Power Supply
EPA recognizes that requirements for EGUs must be mindful of the variability in the operation of the power grid, and that any requirements for broad reductions should be structured in a way that ensures a reliable power supply.
e. Provide for Cost-Effectiveness
EPA believes that is important to keep both cost-effectiveness and air quality objectives in mind in addressing the CAA transport requirements.
f. Provide Incentives and Flexibility to the Regulated Community
EPA seeks to provide approaches that provide regulated owners/operators of sources with the incentive to achieve all cost-effective reductions. EPA's experience shows that providing this incentive, and the flexibility to seek alternatives to less cost-effective controls, provides for greater environmental protection at reduced cost.
D. Why does this proposed rule focus on the eastern half of the United States?
For this proposal, we identified a 37 state region for the technical analysis, including all states east of the Rockies, from the Dakotas through Texas eastward. Western states also need to address the requirements of section 110(a)(2)(D)(i)(I) of the CAA. However, the transport issues in the eastern United States are analytically distinct and this rule focuses only on that subset of the 110(a)(2)(D)(i)(I) issues.
First, interstate transport of PM
2.5
and ozone is a substantial and critical component for attaining the ozone and PM
2.5
NAAQS in the eastern United States. The significant reductions in ambient air pollutant concentrations since CAIR, due largely to the large reductions in transported emissions, only serve to reinforce this point.
Second, in developing the CAIR, EPA found that interstate transport (particularly for anthropogenic emissions) made much smaller contributions to exceedances of the 1997 PM
2.5
standards in the western United States. At the time, the only exceedances of the 15 μg/m
3
in those states were in parts of California, and in Lincoln County (Libby), Montana. The Montana location has subsequently come into attainment.
Technical information developed for EPA's recently completed nonattainment designations suggests that interstate emissions transport makes a relatively small contribution to exceedances in the western United States under the 2006 PM
2.5
standards. For these designations, EPA identified several locations in the western U.S. with exceedances of the 24-hour PM
2.5
standards. These locations were in California and a few other western states: Alaska, Washington, Oregon, Utah, and Arizona. Technical support information describing the nature of the 24-hour PM
2.5
problem at each of these locations is available at:
http://www.epa.gov/pmdesignations/2006standards/tech.htm.
A review of this information suggests to EPA that the Western nonattainment problems are relatively local in nature with limited interstate transport. EPA requests comment on this assessment.
E. Anticipated Rules Affecting Power Sector
On January 12, 2010, the EPA Administrator outlined seven priorities for the Agency. One of them is to improve air quality. In her description of this priority she said, “EPA will develop a comprehensive strategy for a cleaner and more efficient power sector, with strong but achievable reduction goals for SO
2
, NO
X
, mercury, and other air toxics.” In furtherance of this priority goal, and to respond to statutory and judicial mandates, EPA is undertaking a series of regulatory actions over the course of the next 2 years that will affect the power sector in particular.
The rules under the CAA will substantially reduce the emissions of SO
2
, NO
X
, mercury, and other air toxics. To the extent that the Agency has the legal authority to do so while fulfilling its obligations under the Act and other relevant statutes, the Agency will also coordinate these utility-related air pollution rules with upcoming regulations for the power sector from EPA's Office of Water (OW) and its Office of Resource Conservation and Recovery (ORCR). EPA expects that this comprehensive set of requirements will yield substantial health and environmental benefits for the public, benefits that can be achieved while maintaining a reliable and affordable supply of electric power across the economy. In developing and promulgating these rules, the Agency will be providing the power industry with a much clearer picture of what EPA will require of it in the next decade. In addition to promulgating the rules themselves, the Agency will engage with other federal, state and local authorities, as well as with stakeholders and the public at large, with the goal of fostering investments in compliance that represent the most efficient and forward-looking expenditure of investor, shareholder, and public funds, resulting, in turn, in the creation of a clean, efficient, and completely modern power sector.
The major CAA rules that will drive these compliance investments are: (1) This transport rule; (2) potential future rules that may be needed to address transport under future revised ozone or fine particle health standards; (3) the
CAA Section 112(d) standards; (4) revisions to the NSPS for coal and oil-fired electric utility steam generating units; and (5) BART requirements and other requirements that address visibility and regional haze. Within the planning and investment horizon for compliance with these rules, the EPA very likely will be compelled to respond a pending petition to set standards for the emissions of greenhouse gases from steam electric generating units under the NSPS program. Furthermore, as set forth in the recently promulgated reinterpretation of the Johnson Memo, beginning in 2011 new and modified sources of GHG emissions, including EGUs, will be subject to permits under the Prevention of Significant Deterioration program requiring them to adopt BACT for their GHGs. Finally, EPA will also pursue with other federal agencies, states, and other groups energy efficiency improvements in the use of electricity throughout the economy that will contribute to additional environmental and public health improvements that the Agency wants to provide while lowering the costs of realizing those improvements.
A brief explanation of these major CAA rulemakings and activities follows.
Transport Rule.
This proposed transport rule includes emissions reductions requirements for EGUs to address interstate transport under the 1997 ozone NAAQS, the 1997 PM
2.5
NAAQS, and the 2006 PM
2.5
NAAQS. After considering public comments on this proposal, EPA will endeavor to issue a final rule in spring 2011.
Rules to Address Transport under Revised Air Quality Health Standards.
EPA currently is reconsidering its 2008 national ambient air quality standards for ozone, and is conducting a periodic review of the particulate matter NAAQS, including the fine particle standards. The Act requires EPA to ensure that primary standards are requisite to protect public health with an adequate margin of safety, and to set secondary standards requisite to protect public welfare. The Act requires EPA to review, and revise if appropriate, the primary and secondary NAAQS on a 5-year schedule to ensure that air quality standards reflect the latest scientific information on health and welfare effects. When air quality standards are set or revised, the Act requires revision of SIPs to ensure that these standards to protect public health and welfare are met expeditiously and, in the case of the health-based standards, within timetables in the Act.
If more protective NAAQS are promulgated, further emissions reductions would likely be needed in states where pollution levels exceed air quality standards, and in upwind states with emissions that significantly contribute to the air quality problems in another state. This may result in additional emission reduction requirements for facilities in the power sector, as well as for other sectors. The reconsideration of the March 2008 ozone air quality standards will be completed soon, and the review of particulate matter air quality standards by October 2011. SIP deadlines and attainment deadlines would flow from those dates.
EPA plans to make expeditious determinations of upwind state emissions reduction responsibilities for NAAQS for which interstate transport is an issue. This approach will lead to earlier emissions reductions to protect public health, as well as provide other benefits. In the
North Carolina
decision, the court made clear that downwind state nonattainment deadlines are legally relevant to the timing of reductions under section 110(a)(2)(D). Thus, expeditious determinations of upwind state responsibilities under section 110(a)(2)(D) can promote upwind reductions in time to help downwind states meet attainment deadlines, enable states and EPA to provide sources with earlier information on their emission reduction responsibilities, and maximize sources lead time to reduce emissions.
If a more protective ozone NAAQS is issued in August, EPA would plan to propose an interstate pollution transport rule for that NAAQS in 2011. We would expect work on that proposal to proceed in parallel with efforts to finalize this Transport Rule for the 1997 and 2006 NAAQS. A final rule to address interstate pollution transport for a reconsidered ozone NAAQS would be anticipated in 2012. In view of the implementation schedule for a reconsidered ozone NAAQS, compliance dates would be later than the compliance dates proposed for this Transport Rule, and would take into account attainment dates for that NAAQS and other factors such, as control cost and installation time. For any revised PM
2.5
NAAQS, EPA plans to conduct a similarly expeditious analysis of interstate transport to support a determination as to whether or not further emissions reductions from the power sector are required under section 110(a)(2)(D), in light of the emissions reductions required by other power sector rules.
A revised SO
2
NAAQS was issued on June 2 creating a new 1-hour SO
2
NAAQS which, when implemented, will protect Americans from asthma and respiratory difficulties associated with short term exposures to SO
2
. Although EPA does not expect peak SO
2
levels to be a long-range transport issue, power plants are among the sources that can contribute to peak SO
2
levels and will likely be evaluated by states as they consider control measures to attain the new standards. Anticipated emissions reductions from power plants and other SO
2
sources under other Clean Air Act (CAA or Act) requirements (
e.g.
, transport rules, and MACT standards) are expected to play a significant role in attainment of the 1-hour SO
2
NAAQS.
Section 112(d) Standards for Utility Units.
In 2008, the DC Circuit Court vacated the CAMR and the 112(n) Revision Rule, which removed coal- and oil-fired electric utility steam generating units from the section 112(c) list of sources subject to regulation. EPA is in the early stages of developing regulations under section 112 of the CAA that will require existing and new coal- and oil-fired utility units to meet emissions limits for mercury and other HAPs emitted from these sources. As required by section 112, EPA will issue a set of emissions standards. In part, the section 112(d) rule will require that all existing major sources achieve the emission limits for HAPs which will be at least as stringent as the average emissions reduction currently achieved by the best performing 12 percent of these units. Additionally, any new major source will be required to meet emission limits that are at least as stringent as what is currently achieved by the best-performing single source. Currently, the Agency is seeking data on five categories of HAP emissions: (1) Acid gases (
e.g.
, hydrochloric acid, hydrogen fluoride, and hydrogen cyanide); (2) mercury; (3) Non-Hg metals (
e.g.
, lead, cadmium, selenium, and arsenic); (4) dioxins/furans; and, (5) other organic hazardous air pollutants. EPA expects to receive the requested data, including stack testing results, by September 2010. EPA has agreed to sign the proposed rule by March 16, 2011, and sign the final rule no later than November 16, 2011. EPA may provide existing sources up to 3 years to comply with section 112(d) standards, and the CAA authorizes the permit authority to grant a 1 year extension of the compliance date on a case-by-case basis if such extension is necessary for the installation of controls. The CAA requires new sources to comply on the effective date of the final rule or at startup, whichever is later. If EPA were to provide 3 years for compliance with the section 112(d) standards,
compliance would generally be required by early 2015.
In developing these rules, EPA will endeavor to proceed in a way that provides all stakeholders and other Federal, State and local decision-makers with ongoing, up-to-date information about the full suite of environmental responsibilities that the power sector must undertake. This, in turn, will enable power companies and others whose policies and decisions affect their investment choice to adopt compliance strategies that take full advantage of co-control opportunities and efficiencies and other approaches to maximizing the cost-effectiveness and leveraging benefits of their investments.
New Source Performance Standards.
NSPS are administered under section 111 of the CAA. The standards for new, modified, and reconstructed steam EGUs are contained in 40 CFR part 60 subpart Da, which was last amended in 2006. The current structure of subpart Da sets output-based (
i.e.
, lbs of emission/MWh) emission limits for NO
X
and SO
2
and optional output-based standards for particulate matter. EPA is currently re-evaluating the standards in Subpart Da to determine whether they reflect the degree of emission limitation achievable through the application of the best system of emission reduction, which the Administrator determines has been adequately demonstrated. EPA also has a pending voluntary remand to decide whether NSPS standards for this source category should include limits on GHG emissions. EPA is considering the timetable for these actions and decisions in light of legal obligations and policy considerations, including the desirability of the industry knowing its regulatory obligations to inform investment decisions.
Regional Haze/BART.
States are required to develop SIPs that address regional haze in scenic areas such as national parks and wilderness areas. EPA regulations for regional haze appear in Chapter 40 of the CFR in sections 51.308 and 51.309. One of the requirements of the regional haze SIPs is to provide for BART for large industrial sources including EGUs. The BART provisions affect EGUs put into operation between 1962 and 1977.
Energy Efficiency.
Policies that will promote efficient use of electric power can be an integral, highly cost-effective component of power companies” compliance strategies. Reducing demand for electricity can in itself achieve large emissions reductions and public health benefits, while enhancing the reliability of the grid. It can also lower the cost of emissions reductions for consumers of electricity and for the power industry, as investments are avoided in unnecessary infrastructure.
EPA does not have sole responsibility for the development of energy policy to promote efficiency. To facilitate this component of the power sector's compliance strategy, EPA intends to engage with other federal, state, and local agencies whose policies and actions can make it easier for power companies to adopt, or benefit from, energy efficiency investments in their compliance strategies. EPA will continue to use its authorities to advance energy efficiency by providing incentives for energy efficiency in our regulatory programs (
e.g.
, output-based standards) and through our successful existing voluntary programs such as ENERGY STAR. The Department of Energy (DOE) also has considerable resources to encourage efficient use of electricity. Additional resources have been made available under the American Recovery and Reinvestment Act to both DOE and EPA to promote energy efficiency. State governments, both in their environmental programs and through their public service commissions, which regulate electric utility rates, can promote energy efficiency. Many state governments have been leaders in promoting efficient use of electricity through such mechanisms as energy efficiency standards and demand response, and EPA and DOE are assisting state governments in this effort. Local governments as well, through building codes, zoning, and other actions, can and do promote end-use energy efficiency. The Federal Energy Regulatory Commission (FERC) regulates wholesale electricity markets and sets mandatory reliability standards to assure a safe reliable power system. In carrying out this mission FERC recognizes that energy efficiency is a resource, to be considered along with other energy resources in reliability and economic planning.
All of these entities will need to work in concert to achieve a truly efficient, reliable, cost-effective electric power system. EPA is committed to meeting this challenge.
Non-Air Office Regulations.
EPA is also working on three additional rules that will have potential impacts on the power sector. The Office of Solid Waste and Emergency Response is developing revised regulations for coal combustion residues, which are the combustion byproducts associated with the use of coal as a fuel. The Administrator signed the proposed rule on May 4, 2010. Over the next few years, EPA's Office of Water plans to develop two rules affecting electric generating units; the precise timing of these rules is being determined. One will regulate cooling water intake structures. The other will revise the effluent guidelines for wastewater discharges from power plants. Each of these rules has cost implications to the power sector, and the Agency intends to coordinate these regulations with the upcoming air regulations. We intend to maximize reductions in pollution while maintaining cost-effective solutions.
As a first step to carrying out its commitment to promote and facilitate the most cost-effective and forward-looking compliance investments and strategies on the part of the power sector, EPA will conduct extensive outreach concerning the full range of the upcoming environmental responsibilities of the sector as it proposes the Transport Rule. Upon this proposal, the Agency will begin an outreach effort with the public, the regulated community, state air regulators, and others to (1) describe the Transport Rule proposal, and (2) provide information on the 2011 section 112 standards for utility units and other upcoming EPA rulemakings affecting the power sector. The intent will be to inform all stakeholders of the industry's obligations and opportunities for the industry to use investments in SO
2
and NO
X
reductions to help smooth transition to compliance with the Section 112(d) standards applicable to utility units.
At the same time EPA also intends to expand its outreach to others—who can play a significant role in promoting or requiring investment in energy efficiency. EPA intends to continue these efforts over time as more information becomes available in the development of the various rulemakings under development for the power sector.
IV. Defining “Significant Contribution” and “Interference With Maintenance”
This section describes EPA's proposed approach to define emissions that significantly contribute to nonattainment or interfere with maintenance of the PM
2.5
and ozone NAAQS downwind. The section begins by providing background on how “significant contribution” and “interference with maintenance” were defined in the past by EPA for the NO
X
SIP Call and the CAIR, describing past Court opinions on EPA's approach, and presenting an overview of EPA's proposed Transport Rule approach (section IV.A). Next, section IV.B describes the proposed approach to identify upwind contributing states. Section IV.C details the air quality modeling approach and results used for
this proposed rule. Section IV.D provides a detailed description of EPA's proposed approach to quantify emissions that significantly contribute and interfere with maintenance. Section IV.E includes proposed state emissions budgets before accounting for the inherent variability in power system operations. Section IV.F discusses the inherent variability in power system operations, proposes variability limits on the state budgets, and presents projected emissions reduction results. Section IV.G describes how the proposed approach is consistent with judicial opinions. Finally, section IV.H lists alternative approaches to defining significant contribution and interference with maintenance that EPA evaluated but is not proposing.
A. Background
1. Approach Used in NO
X
SIP Call and the CAIR
a. Significant Contribution
Two rules EPA promulgated that address interstate transport of pollutants are the NO
X
SIP Call (63 FR 57356; October 27, 1998) and the CAIR (70 FR 25162; May 12, 2005), which are described in section III.B. In both of these rules, EPA used a 2-step approach to quantify significant contribution. The approaches used in both rules were similar.
In the first step, EPA applied an air quality threshold to determine a set of upwind states whose potential for significant contribution should be evaluated further. That is, EPA compared the contributions that individual upwind states make to downwind receptors and identified states whose contributions were greater than the specified threshold amount. EPA referred to these states as significant contributors but did not rely on this first step to quantify or measure the states’ significant contribution.
In the second step, EPA determined the quantity of emissions that the states collectively could remove using highly cost-effective controls. EPA defined this quantity of emissions as the “significant contribution.” The approach used in each rule is described in more detail, later.
NO
X
SIP Call.
EPA addressed the section 110(a)(2)(D)(i)(I) requirement to prohibit emissions that significantly contribute to downwind nonattainment in the NO
X
SIP Call. To do so, EPA developed a methodology for identifying emissions that constitute upwind states’ “significant contribution.” EPA determined that emissions “contribute” to nonattainment downwind if they have an impact on nonattainment downwind (62 FR 60325). EPA established several criteria or factors for the “significant contribution” test (and further indicated that the same criteria should apply to the “interfere with maintenance” provision).
14
14
In the NO
X
SIP Call, because the same criteria applied, the discussion of the “contribute significantly to nonattainment” test generally also applied to the “interfere with maintenance” test. However, in the NO
X
SIP Call, EPA stated that the “interfere with maintenance” test applied with respect to only the 8-hour ozone NAAQS (63 FR 57379-80).
EPA determined the amount of emissions that significantly contribute to downwind nonattainment from sources in a particular upwind state by: (i) Evaluating, with respect to each upwind state, several air quality related factors, including determining that all emissions from the state have a sufficiently great impact downwind (in the context of the collective contribution nature of the ozone problem); and (ii) determining the amount of that state's emissions that can be eliminated through the application of cost-effective controls (63 FR 57403).
Air Quality Factor.
The first factor that EPA used to determine the amount of emissions that significantly contribute to downwind nonattainment was the air quality factor, consisting of an evaluation of the impact on downwind air quality of the upwind state's emissions.
EPA specifically considered three air quality factors with respect to each upwind state:
• The overall nature of the ozone problem (
i.e.
, “collective contribution”);
• The extent of the downwind nonattainment problems to which the upwind state's emissions are linked, including the ambient impact of controls required under the CAA or otherwise implemented in the downwind areas; and
• The ambient impact of the emissions from the upwind state's sources on the downwind nonattainment problems (63 FR 57376).
EPA explained the first factor, collective contribution, by noting,
[V]irtually every nonattainment problem is caused by numerous sources over a wide geographic area * * * [. This] factor suggest[s] that the solution to the problem is the implementation over a wide area of controls on many sources, each of which may have a small or immeasurable ambient impact by itself (63 FR 57377).
The second air quality factor is the extent of downwind nonattainment problems. EPA considered the then-current air quality of the area, the predicted future air quality (assuming implementation of required controls but not the transport requirements that were the subject of the NO
X
SIP Call), and, when air quality designations had already been made, the boundaries of the area in light of designation status (63 FR 57377).
15
15
EPA explained in the NO
X
SIP Call, “It should be reiterated that EPA relied on the designated area solely as a proxy to determine which areas have air quality in nonattainment. This proxy is readily available under the 1-hour NAAQS because areas have long been designated nonattainment. The EPA's reliance on designated nonattainment areas for purposes of the 1-hour NAAQS does not indicate that the reference in section 110(a)(2)(D)(i)(I) to “nonattainment” should be interpreted to refer to areas designated nonattainment.” (63 FR 57375, footnote 25)
EPA applied the third air quality factor by projecting the amount of the upwind state's entire inventory of anthropogenic emissions to the year 2007, and then quantifying the impact of those emissions on downwind nonattainment through the appropriate air quality modeling techniques.
16
Specifically, (i) EPA determined the minimum threshold impact that the upwind state's emissions must have on a downwind nonattainment area to be considered potentially to contribute significantly to nonattainment; and then (ii) for states with impacts above that threshold, EPA developed a set of metrics for further evaluating the contribution of the upwind state's emissions on a downwind nonattainment area (63 FR 57378). EPA referred to states with emissions that had a sufficiently great impact as significant contributors; however, the precise amount of their significant contribution was not calculated until the next step. Because the ozone problem is caused by many relatively small contributions, even relatively small contributors must participate in the solution. For this reason, EPA determined that even a relatively small contribution can be significant contribution given the nature of the problem, and established relatively low thresholds.
16
Although EPA's air quality modeling techniques examined all of the upwind state's emissions of ozone precursors (including VOC and NO
X
), only the NO
X
emissions had meaningful interstate impacts.
Cost Factor.
The cost factor is the second major factor that EPA applied to determine the significant contribution to nonattainment: “EPA* * * determined whether any amounts of the NO
X
emissions may be eliminated through controls that, on a cost-per-ton basis, may be considered to be highly cost effective” (63 FR 57377). Applying this cost factor on top of the air quality factor, EPA determined that emissions that both were from states that exceeded
the air quality thresholds and could be eliminated through the application of highly cost-effective controls constituted a given state's significant contribution.
Choice of Highly Cost-Effective Standard.
EPA chose the standard of “highly cost-effective” in order to assure state flexibility in selecting control strategies to meet the emissions reduction requirements of the rulemaking. That is, the rulemaking required the states to achieve specified levels of emissions reductions—the levels achievable if states implemented the control strategies that EPA identified as highly cost-effective—but the rulemaking did not mandate those highly cost-effective control strategies, or any other control strategy. Indeed, in calculating the amount of the required emissions reductions by assuming the implementation of highly cost-effective control strategies, EPA assured that other control strategies—ones that were cost-effective, if not highly cost-effective—remained available to the states.
Determination of Highly Cost-Effective Amount.
EPA determined the dollar amount considered to be highly cost-effective by reference to the cost-effectiveness of recently promulgated or proposed NO
X
controls. EPA determined that the average cost-effectiveness of controls ranged up to approximately $1,800 per ton of NO
X
removed (1990$) on an annual basis. The EPA considered the controls in the reference list to be cost-effective.
EPA established $2,000 per ton (1990$) in average cost-effectiveness for summer ozone season emissions reductions as, at least directionally, the highly cost-effective amount. Identifying this amount on an ozone season basis was appropriate because the NO
X
SIP Call concerned the ozone standard, for which emissions reductions during only the summer ozone season are necessary. In determining the highly cost-effective amount, EPA analyzed costs on a regionwide basis, and assumed a cap and trade program for EGUs and large non-EGU boilers and turbines.
Source Categories.
EPA then determined that the source categories for which highly cost-effective controls were available included EGUs, large industrial boilers and turbines, and cement kilns. At the same time, EPA determined, for those source categories, the level of emissions reductions in each state that would result from the application of all controls that would be highly cost-effective and that would be feasible. The EPA considered other source categories, but found that highly cost-effective controls were not available for various reasons, including the size of the sources, the relatively small amount of emissions from the sources, or the control costs.
Other Factors.
EPA also relied on several other, secondary considerations to identify the required amount of emissions reductions. The first concerned the consistency of regional reductions with downwind attainment needs. The second general consideration was “the overall fairness of the control regimes” to which the downwind and upwind areas were subject. The third general consideration was “general cost considerations.” The EPA noted that “in general, areas that currently have, or that in the past have had, nonattainment problems * * * have already incurred ozone control costs.” The next set of controls available to these nonattainment areas would be more expensive than the controls available to the upwind areas. The EPA found that this cost scenario further confirmed the reasonableness of the upwind control obligations (63 FR 57379).
In the NO
X
SIP Call, EPA considered all of these factors together in determining the level of controls considered to be highly cost-effective. Within the region, the nonattainment areas already had implemented required VOC and NO
X
controls that covered much of their inventory. However, the upwind states in the region generally had not implemented such controls (except as needed to address their ozone nonattainment areas). In this context, EPA considered it reasonable to impose an additional control burden on the upwind states. Air quality modeling showed that residual nonattainment remained even with this additional level of upwind controls so that further reductions from downwind and/or upwind areas would be necessary.
After ascertaining the controls that qualified as highly cost-effective, EPA developed a methodology for calculating the amount of NO
X
emissions that each state was required to reduce on grounds that those emissions contribute significantly to nonattainment downwind. The total amount of required NO
X
emissions reductions was the sum of the amounts that would be reduced by application of highly cost-effective controls to each of the source categories for which EPA determined that such controls were available (63 FR 57378).
Electric Generating Units.
The largest of the source categories discussed previously was EGUs. EPA determined the amount of reductions associated with EGU controls by applying the control rate that EPA considered to reflect highly cost-effective controls to each state's EGU heat input (adjusted for projected growth) (70 FR 25173.) In the NO
X
SIP Call, EPA evaluated the costs of control on a region-wide basis.
CAIR.
In the CAIR, EPA again addressed the section 110(a)(2)(D)(i)(I) requirement to prohibit emissions that significantly contribute to downwind nonattainment (70 FR 25162). While the NO
X
SIP Call had addressed significant contribution with respect to the 1997 ozone NAAQS, the CAIR addressed significant contribution with respect to both the ozone and annual PM
2.5
NAAQS promulgated in 1997. In the CAIR, EPA used a methodology to identify states” significant contribution based on and very similar to the methodology used in the NO
X
SIP Call.
To quantify the amounts of emissions that contribute significantly to nonattainment, EPA explained in the CAIR that the Agency primarily focused on the air quality factor reflecting the upwind state's ambient impact on downwind nonattainment areas, and the cost factor of highly cost-effective controls.
See
70 FR 25174.
Air Quality Factor—PM
2.5
. EPA employed air quality modeling techniques to assess the impact of each upwind state's entire inventory of anthropogenic SO
2
and NO
X
emissions on downwind nonattainment and maintenance for the annual PM
2.5
NAAQS.
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EPA determined that upwind NO
X
and SO
2
emissions contribute significantly to annual PM
2.5
nonattainment as of the year 2010.
17
EPA did not address 24-hour PM
2.5
NAAQS in CAIR, only the annual PM
2.5
NAAQS.
As in the NO
X
SIP Call, EPA used a 2-step approach to quantify significant contribution. In the CAIR, in the first step EPA adopted a threshold air quality impact of 0.2 μg/m3 for PM
2.5
. An upwind state with contributions to downwind nonattainment below this level would not be subject to regulatory requirements, but a state with contributions at or higher than this level would be subject to further evaluation (70 FR 25174-75).
This level reflects the fact that PM
2.5
nonattainment, like ozone, is caused by many sources in a broad region and therefore may be solved only by controlling sources throughout the region. As with the NO
X
SIP Call, the collective contribution condition of PM
2.5
air quality is reflected in the relatively low threshold (70 FR 25175).
Air Quality Factor—8-Hour Ozone.
EPA employed air quality modeling techniques to assess the impact of each upwind state's inventory of NO
X
and VOC emissions on downwind nonattainment. The EPA determined
that upwind NO
X
emissions contribute significantly to 8-hour ozone nonattainment as of the year 2010. Therefore, EPA projected NO
X
emissions to the year 2010, assuming certain required controls (but not controls required under the CAIR), and then modeled the impact of those projected emissions on downwind 8-hour ozone nonattainment in that year (70 FR 25175).
EPA used the same threshold amounts and metrics for 8-hour ozone that it used in the NO
X
SIP Call. That is, emissions from an upwind state were found to contribute significantly to nonattainment if the maximum contribution was at least 2 parts per billion, the average contribution greater than one percent, and certain other numerical criteria were met. EPA also evaluated frequency, magnitude, and relative amounts of contribution to determine which linkages were significant before costs were considered.
Cost Factor
. The second step in the 2-step process is to apply the cost factor. As in the NO
X
SIP Call, EPA interpreted this factor as mandating emissions reductions in amounts that would result from application of highly cost-effective controls. In the CAIR, EPA determined the level of costs that would be highly cost-effective on a regional basis by reference to the cost effectiveness of other recent controls. EPA concluded that EGUs were the only source category for which highly cost-effective SO
2
and NO
X
controls were available at the time. EPA determined as highly cost-effective the dollar amount of cost-effectiveness that falls near the low end of a reference range of control costs. See 70 FR 25175. In the CAIR, as in the NO
X
SIP Call, EPA analyzed the costs of control on a regionwide basis.
Other Factors.
As with the NO
X
SIP Call, EPA considered other factors that influence the application of the air quality and cost factors, and that confirm the conclusions concerning the amounts of emissions that upwind states must eliminate as contributing significantly to downwind nonattainment. See 70 FR 25175.
b. Interference With Maintenance
Section 110(a)(2)(D)(i)(I) requires that SIPs for national primary and secondary air quality standards contain adequate provisions prohibiting emissions in amounts that “interfere with maintenance by any other state” of any such standard.
In the NO
X
SIP Call and in the CAIR, EPA gave the term “interfere with maintenance” a meaning much the same as the meaning given to the term “significant contribution.” That approach, which was found inconsistent with the requirements of 110(a)(2)(D)(i)(I), is described later. EPA's proposed new approach to interpreting “interfere with maintenance” is described in section IV.D, later
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