Revised Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS

Federal RegisterOct 30, 2020

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 78, and 97

[EPA-HQ-OAR-2020-0272; FRL-10013-42-OAR]

RIN 2060-AU84

Revised Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

This proposed action is taken in response to the United States Court of Appeals for the District of Columbia Circuit's (D.C. Circuit) remand of the Cross-State Air Pollution Rule (CSAPR) Update in

Wisconsin

EPA

on September 13, 2019. The CSAPR Update finalized Federal Implementation Plans (FIPs) for 22 states to address their interstate pollution-transport obligations under the Clean Air Act (CAA) for the 2008 ozone National Ambient Air Quality Standards (NAAQS). The D.C. Circuit found that the CSAPR Update, which was published on October 26, 2016, as a partial remedy to address upwind states' obligations prior to the 2018 Moderate area attainment date under the 2008 ozone NAAQS, was unlawful to the extent it allowed those states to continue their significant contributions to downwind ozone problems beyond the statutory dates by which downwind states must demonstrate their attainment of the air quality standards. On the same grounds, the D.C. Circuit also vacated the CSAPR Close-Out in

New York

EPA

on October 1, 2019. This proposed rule, if finalized, will resolve 21 states' outstanding interstate ozone transport obligations with respect to the 2008 ozone NAAQS. The U.S. Environmental Protection Agency (EPA) is taking this action under the Clean Air Act section known as the “good neighbor provision.”

This action proposes to find that for 9 of the 21 states for which the CSAPR Update was found to be only a partial remedy (Alabama, Arkansas, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Texas, and Wisconsin), their projected nitrogen oxides (NO

) emissions in the 2021 ozone season and thereafter do not significantly contribute to a continuing downwind nonattainment and/or maintenance problem, and therefore the states' CSAPR Update FIPs (or the SIPs subsequently approved to replace certain states' CSAPR Update FIPs) fully address their interstate ozone transport obligations with respect to the 2008 ozone NAAQS. This action also proposes to find that for the 12 remaining states (Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia), their projected 2021 ozone season NO

emissions significantly contribute to downwind states' nonattainment and/or maintenance problems for the 2008 ozone NAAQS. EPA proposes to issue new or amended FIPs for these 12 states to replace their existing CSAPR NO

Ozone Season Group 2 emissions budgets for electricity generating units (EGUs) with revised budgets via a new CSAPR NO

Ozone Season Group 3 Trading Program. EPA is proposing to require implementation of the revised emission budgets beginning with the 2021 ozone season (which runs annually from May 1-September 30). Based on EPA's assessment of remaining air quality issues and additional emission control strategies for EGUs and other emissions sources in other industry sectors (non-EGUs), EPA further proposes that the proposed NO

emission reductions fully eliminate these states' significant contributions to downwind air quality problems for the 2008 ozone NAAQS. EPA also proposes in this action an error correction for its June 2018 approval of Kentucky's good neighbor SIP.

DATES:

Comments must be received on or before December 14, 2020.

Public Hearing:

EPA will hold a virtual public hearing on November 12, 2020. Please refer to the

SUPPLEMENTARY INFORMATION

section for additional information on the public hearing.

ADDRESSES:

You may send comments, identified by Docket ID No. EPA-HQ-OAR-2020-0272, via the Federal eRulemaking Portal:

https://www.regulations.gov/

. Follow the online instructions for submitting comments.

Instructions:

All submissions received must include the Docket ID No. for this rulemaking. Comments received may be posted without change to

https://www.regulations.gov/

, including any personal information provided. For detailed instructions on sending comments and additional information on the rulemaking process, see the “Public Participation” heading of the

SUPPLEMENTARY INFORMATION

section of this document. Out of an abundance of caution for members of the public and our staff, the EPA Docket Center and Reading Room are closed to the public, with limited exceptions, to reduce the risk of transmitting COVID-19. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. We encourage the public to submit comments via

https://www.regulations.gov/

or email, as there may be a delay in processing mail and faxes. Hand deliveries and couriers may be received by scheduled appointment only. For further information on EPA Docket Center services and the current status, please visit us online at

https://www.epa.gov/dockets

Throughout this proposal, EPA is soliciting comment on numerous aspects of the proposed rule. EPA has indexed each comment solicitation with an alpha-numeric identifier (

e.g.,

“C-1”, “C-2”, “C-3”, . . .). Accordingly, we ask that commenters include the corresponding identifier when providing comments relevant to that comment solicitation. We ask that commenters include the identifier in either a heading, or within the text of each comment (

e.g.,

“In response to solicitation of comment C-1, . . .”) to make clear which comment solicitation is being addressed. We emphasize that we are not limiting comment to these identified areas and welcome comments on any matters that are within scope of this action.

EPA will announce further details on the virtual public hearing, as well as registration information, at

https://www.epa.gov/csapr/revised-cross-state-air-pollution-update

. Refer to the

SUPPLEMENTARY INFORMATION

section below for additional information.

FOR FURTHER INFORMATION CONTACT:

Mr. Daniel Hooper, Clean Air Markets Division, Office of Atmospheric Programs (Mail Code 6204M), Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: (202) 343-9167; email address:

Hooper.Daniel@epa.gov

SUPPLEMENTARY INFORMATION:

Preamble Glossary of Terms and Abbreviations

The following are abbreviations of terms used in the preamble.

4-Step Good Neighbor Framework 4-Step Framework

AEO Annual Energy Outlook

AQAT Air Quality Assessment Tool

AQM TSD Air Quality Modeling Technical Support Document

CAA or Act Clean Air Act

CAIR Clean Air Interstate Rule

CAMx Comprehensive Air Quality Model with Extensions

CBI Confidential Business Information

CEMS Continuous Emission Monitoring Systems

CFR Code of Federal Regulations

CMDb Control Measures Database

CMV Commercial Marine Vehicle

CoST Control Strategy Tool

CRA Congressional Review Act

CSAPR Cross-State Air Pollution Rule

EGU Electric Generating Unit

EISA Energy Independence and Security Act

EPA U.S. Environmental Protection Agency

FIP Federal Implementation Plan

FR Federal Register

GWh Gigawatt-hour

IC Internal Combustion

ICI Industrial, Commercial, and Institutional

ICR Information Collection Request

IPM Integrated Planning Model

iSIP Infrastructure State Implementation Plan

km Kilometer

lb/mmBtu Pounds per Million British Thermal Units

LEC Low Emission Combustion

LNB Low-NO

Burners

MJO Multi-Jurisdictional Organizations

mmBtu Million British Thermal Units

MOVES Motor Vehicle Emission Simulator

MSAT2 Mobile Source Air Toxic Rule

NAAQS National Ambient Air Quality Standard

NEI National Emission Inventory

NESHAP National Emission Standards for Hazardous Air Pollutants

Nitrogen Oxides

NODA Notice of Data Availability

Non-EGU Non-electric Generating Unit

NSPS New Source Performance Standard

NUSA New Unit Set-Aside

OSAT/APCA Ozone Source Apportionment Technology/Anthropogenic Precursor Culpability Analysis

OMB Office of Management and Budget

OTR Ozone Transport Region

PEMS Predictive Emissions Monitoring System

2.5

Fine Particulate Matter

ppb Parts Per Billion

RACT Reasonably Available Control Technology

RIA Regulatory Impact Analysis

RICE Reciprocating Internal Combustion Engines

RRF Relative Response Factor

SCR Selective Catalytic Reduction

SIP State Implementation Plan

SMOKE Sparse Matrix Operator Kernel Emissions

SNCR Selective Non-catalytic Reduction

Sulfur Dioxide

TIP Tribal Implementation Plan

TSD Technical Support Document

tpy Ton Per Year

ULNB Ultra-low NO

Burner

VOC Volatile Organic Compound

WRF Weather Research and Forecasting Model

Table of Contents

I. Executive Summary

A. Purpose of Regulatory Action

B. Summary of the Major Provisions of the Regulatory Action

C. Benefits and Costs

II. Public Participation

A. Written Comments

B. Participation in Virtual Public Hearing

III. General Information

A. Does this action apply to me?

IV. EPA's Legal Authority for the Proposed Rule

A. Statutory Authority

B. Prior Good Neighbor Rulemakings Addressing Regional Ozone

V. Air Quality Issues Addressed and Overall Approach for the Proposed Rule

A. The Interstate Ozone Transport Challenge

B. Relationship Between This Regulatory Action and the 2015 Ozone NAAQS

C. Proposed Approach To Address the Remanded Transport Obligations for the 2008 Ozone NAAQS

1. Events Affecting Application of the Good Neighbor Provision for the 2008 Ozone NAAQS

2. FIP Authority for Each State Covered by the Proposed Rule

3. The 4-Step Good Neighbor Framework

VI. Analyzing Downwind Air Quality and Upwind-State Contributions

A. Overview of Air Quality Modeling Platform

B. Emission Inventories

1. Foundation Emission Inventory Data Sets

2. Development of Emission Inventories for EGUs

3. Development of Emission Inventories for Non-EGU Point Sources

4. Development of Emission Inventories for Onroad Mobile Sources

5. Development of Emission Inventories for Commercial Marine Vessels

6. Development of Emission Inventories for Other Nonroad Mobile Sources

7. Development of Emission Inventories for Nonpoint Sources

C. Air Quality Modeling To Identify Nonattainment and Maintenance Receptors

D. Pollutant Transport From Upwind States

1. Air Quality Modeling To Quantify Upwind State Contributions

2. Application of Screening Threshold

VII. Quantifying Upwind-State NO

Reduction Potential To Reduce Interstate Ozone Transport for the 2008 NAAQS

A. The Multi-Factor Test

B. Identifying Levels of Control Stringency

1. EGU NO

Mitigation Strategies

2. Non-EGU NO

Mitigation Strategies

3. Mobile Source NO

Mitigation Strategies

C. Control Stringencies Represented by Cost Threshold ($ per ton) and Corresponding Emission Reductions

1. EGU Emission Reduction Potential by Cost Threshold

2. Non-EGU Emission Reduction Potential by Cost Threshold

D. Assessing Cost, EGU and Non-EGU NO

Reductions, and Air Quality

1. EGU Assessment

2. Non-EGU Assessment

3. Overcontrol Analysis

VIII. Implementation of Emissions Reductions

A. Regulatory Requirements for EGUs

B. Quantifying State Emissions Budgets

C. Elements of Proposed Trading Program

1. Applicability

2. State Budgets, Variability Limits, Assurance Levels, and Penalties

3. Unit-Level Allocations of Emission Allowances

4. Transitioning From Existing CSAPR NO

Ozone-Season Group 2 Trading Program

5. Compliance Deadlines

6. Monitoring and Reporting

7. Recordation of Allowances

8. Proposed Conforming Revisions to Regulations for Existing Trading Programs

D. Submitting a SIP

1. SIP Option To Modify 2022 Allocations

2. SIP Option To Modify Allocations in 2023 and Beyond

3. SIP Revisions That Do Not Use the New Group 3 Trading Program

4. Submitting a SIP To Participate in the New Group 3 Trading Program for States Not Included

E. Title V Permitting

F. Relationship to Other Emission Trading and Ozone Transport Programs

1. Existing Trading Programs

2. Title IV Interactions

3. NO

SIP Call Interactions

IX. Costs, Benefits, and Other Impacts of the Proposed Rule

X. Summary of Proposed Changes to the Regulatory Text for the Federal Implementation Plans and Trading Programs

A. Amended CSAPR Update FIP Provisions

B. New CSAPR NO

Ozone Season Group 3 Trading Program Provisions

C. Transitional Provisions

D. Conforming Revisions, Corrections, and Clarifications to Existing Regulations

XI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. Executive Order 13771: Reducing Regulations and Controlling Regulatory Costs

C. Paperwork Reduction Act (PRA)

D. Regulatory Flexibility Act (RFA)

E. Unfunded Mandates Reform Act (UMRA)

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution or Use

J. National Technology Transfer and Advancement Act (NTTAA)

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

L. Determinations Under CAA Section 307(b)(1) and (d)

I. Executive Summary

The 2008 ozone National Ambient Air Quality Standards (NAAQS) is an 8-hour standard that was set at 75 parts

per billion (ppb).

The U.S. Environmental Protection Agency (EPA) published the Cross-State Air Pollution Rule (CSAPR) Update on October 26, 2016, which partially addressed the interstate transport of emissions from 21 states with respect to the 2008 ozone NAAQS.

81 FR 74504. On December 21, 2018, EPA published the CSAPR Close-Out, which found that the CSAPR Update was a complete remedy based on air quality analysis of the year 2023.

73 FR 16436 (March 27, 2008).

In the CSAPR Update, EPA found that the finalized Tennessee emission budget fully addressed Tennessee's good neighbor obligation with respect to the 2008 ozone NAAQS. 81 FR 74504, 74508 n. 19 (Oct. 26, 2016).

83 FR 65878 (Dec. 21, 2018).

On September 13, 2019, the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) remanded the CSAPR Update, concluding that it was invalid in one respect because it unlawfully allowed upwind states to continue their significant contributions to downwind air quality problems beyond the statutory dates by which downwind States must demonstrate their attainment of ozone air quality standards.

Wisconsin

EPA,

938 F.3d 303, 318-20 (D.C. Cir. 2019) (

Wisconsin

) (per curiam);

See also

82 FR 51238, 51248 (Nov. 3, 2017) (citing 76 FR 48208, 48222 (Aug. 8, 2011)) and 63 FR 57381 (Oct. 27, 1998).

Clean Air Act (CAA or the Act) section 110(a)(2)(D)(i)(I), which is also known as the “good neighbor provision,” requires states to prohibit emissions that will contribute significantly to nonattainment or interfere with maintenance in any other state with respect to any primary or secondary NAAQS.

The statute vests states with the primary responsibility to address interstate emission transport through the development of good neighbor State Implementation Plans (SIPs), which are one component of larger SIP submittals typically required three years after EPA promulgates a new or revised NAAQS. These larger SIPs are often referred to as “infrastructure” SIPs or iSIPs.

See

CAA section 110(a)(1) and (2). EPA supports state efforts to submit good neighbor SIPs for the 2008 ozone NAAQS and has shared information with states to facilitate such SIP submittals. However, the CAA also requires EPA to fill a backstop role by issuing Federal Implementation Plans (FIPs) where states fail to submit good neighbor SIPs or EPA disapproves a submitted good neighbor SIP.

See generally

CAA section 110(k) and 110(c).

42 U.S.C. 7410(a)(2)(D)(i)(I).

On October 26, 2016, EPA published the CSAPR Update, which finalized FIPs for 22 states that EPA found failed to submit a complete good neighbor SIP (15 states)

or for which EPA issued a final rule disapproving their good neighbor SIP (7 states).

The FIPs promulgated for these states included new electric generating units (EGUs) NO

ozone season emission budgets to reduce interstate transport for the 2008 ozone NAAQS. These emission budgets took effect in 2017 in order to assist downwind states with attainment of the 2008 ozone NAAQS by the 2018 Moderate area attainment date. EPA acknowledged at the time that the FIPs promulgated for 21 of the 22 states only partially addressed good neighbor obligations under the 2008 ozone NAAQS.

The 22 states for which EPA promulgated FIPs to reduce interstate ozone transport as to the 2008 ozone NAAQS are listed in Table I.A-1.

Alabama, Arkansas, Illinois, Iowa, Kansas, Maryland, Michigan, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Tennessee, Virginia, and West Virginia.

Indiana, Kentucky, Louisiana, New York, Ohio, Texas, and Wisconsin.

In the CSAPR Update, EPA found that the finalized Tennessee emission budget fully addressed Tennessee's good neighbor obligation with respect to the 2008 ozone NAAQS.

Table I.A—1 List of 22 Covered States for the 2008 8-Hour Ozone NAAQS in the CSAPR Update

State

Alabama

Arkansas

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maryland

Michigan

Mississippi

Missouri

New Jersey

New York

Ohio

Oklahoma

Pennsylvania

Tennessee

Texas

Virginia

West Virginia

Wisconsin

In response to the D.C. Circuit's remand of the CSAPR Update in

Wisconsin

EPA

and the court's vacatur of the CSAPR Close-Out in

New York

EPA,

this rule proposes to find that 12 of the 22 states listed in Table I.A-1 require further ozone season NO

emission reductions to address the good neighbor provision as to the 2008 ozone NAAQS. As such, EPA proposes to promulgate new or revised FIPs for these states that include new EGU NO

ozone season emission budgets, with implementation of these emission budgets beginning with the 2021 ozone season.

The 12 states for which EPA is proposing to promulgate new or revised FIPs to reduce interstate ozone transport as to the 2008 ozone NAAQS in this rulemaking are listed in Table I.A-2.

As discussed in section V.C.2.c., in 2018 EPA approved a SIP revision for Indiana replacing the state's CSAPR Update FIP with equivalent state regulations. This SIP revision, like the CSAPR Update FIP it replaced, was partial in nature. EPA is therefore proposing in this action to issue a new FIP rather than a revised FIP for Indiana.

Table I.A—2 Proposed List of 12 Covered States for the 2008 8-Hour Ozone NAAQS

State

Illinois

Indiana

Kentucky

Louisiana

Maryland

Michigan

New Jersey

New York

Ohio

Pennsylvania

Virginia

West Virginia

EPA also proposes to adjust these states' emission budgets for each ozone season thereafter to incentivize ongoing operation of identified emission controls to address significant contribution, until such time that our air quality projections demonstrate resolution of the downwind nonattainment and/or maintenance problems for the 2008 ozone NAAQS. No further budget adjustments would be made after that time (

i.e.,

after the 2024 ozone season in EPA's proposed analysis). EPA proposes to implement the new state-level ozone season emission budgets through a new CSAPR NO

Ozone Season Group 3 Trading Program. Based on EPA's assessment of remaining air quality issues and additional emission control strategies, EPA further proposes to find that these NO

emission reductions fully eliminate these states' significant contributions to downwind air quality problems for the 2008 ozone NAAQS.

As discussed in more detail in Section V.C.2.b below, for one state, Kentucky, EPA is proposing to make an error correction under CAA section 110(k)(6) of its June 2018 approval of that state's SIP, which had concluded that the CSAPR Update was a complete remedy based on modeling of the 2023 analytic year. EPA proposes to determine that the basis for that conclusion has been invalidated by the decisions in

Wisconsin

and

New York,

and that Kentucky's good neighbor obligations are outstanding. In light of the

Wisconsin

remand of Kentucky's FIP and our proposed error correction, EPA has the necessary authority to amend the CSAPR Update FIP for Kentucky.

For the nine remaining states with FIPs promulgated under the CSAPR Update that EPA previously found partially addressed good neighbor obligations for the 2008 ozone NAAQS (Alabama, Arkansas, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Texas, and Wisconsin), EPA's updated air quality and contributions analysis shows that these states are not linked to any downwind air quality problems in 2021.

Therefore, EPA proposes to find that the existing CSAPR Update FIPs (or the SIP revisions later approved to replace the CSAPR Update FIPs) for these states satisfy their good neighbor obligations for the 2008 ozone NAAQS.

Consequently, EPA is not proposing to require additional emission reductions from sources in these states in this proposed rulemaking.

EPA's use of a contribution threshold to determine, without further analysis of potential emissions reduction opportunities, that certain states have no remaining good neighbor obligations with respect to a given NAAQS is part of the analytic approach that was followed in the CSAPR rulemaking and upheld by the Supreme Court.

See EPA

EME Homer City Generation, L.P.,

572 U.S. 489, 521-22 (2014).

As discussed in section V.C.2.c., in 2017 and 2019 EPA approved SIP revisions for Alabama and Missouri replacing the states' CSAPR Update FIPs with equivalent state regulations. These SIP revisions, like the CSAPR Update FIPs they replaced, were partial in nature. EPA is therefore proposing to determine in this action that the states' existing SIP provisions satisfy these states' good neighbor obligations for the 2008 ozone NAAQS.

B. Summary of the Major Provisions of the Regulatory Action

To reduce interstate ozone transport under the authority provided in CAA section 110(a)(2)(D)(i)(I), this rule proposes to further limit ozone season (May 1 through September 30) NO

emissions from EGUs in 12 states using the same framework used by EPA in developing the CSAPR and other good neighbor rules (the 4-step good neighbor framework or 4-step framework). The 4-step good neighbor framework provides a process to address the requirements of the good neighbor provision for ground-level ozone NAAQS: (1) Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS; (2) determining which upwind states contribute to these identified problems in amounts sufficient to “link” them to the downwind air quality problems (

i.e.,

here, a 1 percent contribution threshold); (3) for states linked to downwind air quality problems, identifying upwind emissions that significantly contribute to downwind nonattainment or interfere with downwind maintenance of the NAAQS; and (4) for states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, implementing the necessary emissions reductions through enforceable measures. In this proposed rule, EPA applies this 4-step framework to respond to the D.C. Circuit's remand and to revise the CSAPR Update with respect to the 2008 ozone NAAQS.

In order to apply the first step of the 4-step framework to the 2008 ozone NAAQS, EPA performed air quality modeling coupled with ambient measurements in an interpolation technique to project ozone concentrations at air quality monitoring sites in 2021.

EPA evaluated 2021 projected ozone concentrations at individual monitoring sites and considered current ozone monitoring data at these sites to identify receptors that are anticipated to have problems attaining or maintaining the 2008 ozone NAAQS.

The next relevant attainment date for the 2008 ozone NAAQS is July 20, 2021, for Serious nonattainment areas. 80 FR 12264, 12268; 40 CFR 51.1103.

To apply the second step of the framework, EPA used air quality modeling and an interpolation technique to quantify the contributions from upwind states to ozone concentrations in 2021 at downwind receptors. Once quantified, EPA then evaluated these contributions relative to a screening threshold of 1 percent of the NAAQS (

i.e.,

0.75 ppb). States with contributions that equal or exceed 1 percent of the NAAQS were identified as warranting further analysis for significant contribution to nonattainment or interference with maintenance. States with contributions below 1 percent of the NAAQS were considered to not significantly contribute to nonattainment or interfere with maintenance of the NAAQS in downwind states. Based on EPA's updated air quality and contribution analysis using 2021 as the analytic year, EPA proposes that the following 12 states have contributions that equal or exceed 1 percent of the 2008 ozone NAAQS, and thereby warrant further analysis for significant contribution to nonattainment or interference with maintenance: Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, Virginia, and West Virginia.

At the third step of the 4-step framework, EPA applied the multi-factor test used in the CSAPR Update, which evaluates cost, available emission reductions, and downwind air quality impacts to determine the amount of linked upwind states' emissions that “significantly” contribute to downwind nonattainment or maintenance receptors. In this action, EPA applies the multifactor test to both EGU and non-EGU source categories and assesses potential emission reductions in all years for which there is a potential remaining interstate ozone transport problem (

i.e.,

through 2025), in order to ensure a full remedy in compliance with the

Wisconsin

decision.

EPA identified a control strategy that reflects the optimization of existing selective catalytic reduction (SCR) controls and installation of state-of-the-art NO

combustion controls at EGUs, with an estimated marginal cost of $1,600 per ton. It is at this control stringency where incremental EGU NO

reduction potential and corresponding downwind ozone air quality improvements are maximized. That is, the ratio of emission reductions to marginal cost and the ratio of ozone improvements to marginal cost are maximized relative to the other control stringency levels evaluated. EPA finds that these very cost-effective EGU NO

reductions will make meaningful and timely improvements in downwind ozone air quality to address interstate ozone transport for the 2008 ozone NAAQS, as discussed in section VII.D.1 below. Further, this evaluation shows that emission budgets reflecting the $1,600 per ton cost threshold do not over-control upwind states' emissions relative to either the downwind air quality problems to which they are linked at step 1 or the 1 percent contribution threshold that triggers further evaluation at step 2 of the 4-step framework.

EPA notes that these proposed EGU control strategies (optimization of existing SCR controls and installation of state-of-the-art NO

combustion controls) were the same strategies selected in the CSAPR Update for the 2017 ozone season, and which at that time EPA characterized as only a partial remedy. For this rule, EPA extends its evaluation of the reduction potential from these control strategies to years beyond 2017 in order to assess a full remedy. EPA's updated analysis, as discussed in more detail in Section VII, leads the Agency to propose that these control strategies can provide additional cost-effective emission reductions for the 2021 through 2024 ozone seasons. While EPA's analysis indicates that the majority of EGUs implemented these control strategies in response to the CSAPR Update, changes in the power sector since the 2017 ozone season and updated air quality and contribution analysis show that there is a demonstrated need to update the emission budgets for these 12 states to fully eliminate significant contribution.

For non-EGU industry sectors and emissions sources, EPA applied the step 3 multi-factor test to determine whether any emissions reductions should be required from non-EGU sources to address significant contribution under the 2008 ozone NAAQS. EPA acknowledges that its current datasets with information on emissions, existing controls on emissions sources, emission-reduction potential, and air quality impacts for these sources are relatively incomplete and uncertain compared to the datasets it has for EGUs. Nonetheless, using the best information currently available to the Agency, the proposed analysis suggests that there are relatively fewer emissions reductions available at a cost threshold comparable to the cost threshold selected for EGUs. Such reductions are estimated to have a relatively small effect on any downwind receptor in the year by which such controls could likely be installed. For these reasons, EPA proposes that limits on ozone season NO

emissions from non-EGU sources are not required to eliminate “significant” contribution under the 2008 ozone NAAQS (see section VII.D.2).

To improve the underlying data and assessment of emission reduction potential from non-EGU sources for this and future regulatory efforts, EPA is soliciting comment on the assessment of emission reduction potential from the glass and cement manufacturing sectors discussed in Sections VII.B.2, VII.C.2, and VII.D.2. In addition, EPA summarizes the available information on all potential control measures for non-EGU emissions sources or units with 150 tons per year or more of pre-control NO

emissions in several industry sectors for the 12 states in Table I.A-2. This information illustrates that there are many potential approaches to assessing emissions reductions from non-EGU emissions sources or units. EPA is soliciting comment on the completeness and accuracy of this additional information on potential control measures for non-EGU emissions sources or units in several industry sectors. Specifically, EPA summarized information on the application, costs, and installation timing of ultra-low NO

burners on industrial, commercial, and institutional (ICI) boilers and low emission combustion on reciprocating internal combustion (IC) engines.

Based on EPA's analysis at step 3, the Agency proposes EGU NO

ozone season emission budgets developed using uniform control stringency represented by $1,600 per ton. EPA proposes to determine that with implementation of this control strategy, the 12 states in Table I.A-2 will have fully addressed significant contribution under the good neighbor provision for the 2008 ozone NAAQS. EPA is proposing to align implementation of emission budgets with relevant attainment dates for the 2008 ozone NAAQS, as required by the D.C. Circuit's decision in

Wisconsin

EPA.

As EPA's final 2008 Ozone NAAQS SIP Requirements Rule

established the attainment deadline of July 20, 2021, for ozone nonattainment

areas currently designated as Serious, EPA proposes to establish emission budgets and implementation of these emission budgets starting with the 2021 ozone season as shown in Table I.B-1.

938 F.3d 303, 320 (D.C. Cir. 2019) (holding that EPA must align interstate transport compliance deadlines with downwind attainment deadlines unless EPA can demonstrate an impossibility or other necessity).

80 FR 12264, 12268; 40 CFR 51.1103.

Table I.B—1 Proposed EGU NO

Ozone Season Emission Budgets Emissions

[Ozone season NO

tons] *

State

2021 Budget

2022 Budget

2023 Budget

2024 Budget

Illinois

9,444

9,415

8,397

Indiana

12,500

11,998

9,447

Kentucky

14,384

11,936

Louisiana

15,402

14,871

Maryland

1,522

1,498

Michigan

12,727

11,767

9,803

9,614

New Jersey

1,253

New York

3,137

3,119

Ohio

9,605

9,676

Pennsylvania

8,076

Virginia

4,544

3,656

3,395

West Virginia

13,686

12,813

11,810

Total

106,280

100,096

96,111

93,092

Note

—the 2022 and beyond budgets incorporate the installation of state-of-the-art NO

combustion controls; whereas the 2021 budgets do not. Additionally, the 2024 emissions budget applies to 2024 and each year thereafter.

As noted in Section I, EPA further determined which emission reductions are impossible to achieve by the 2021 attainment date—and whether any such additional emission reductions should be required beyond that date.

See Wisconsin,

938 F.3d at 320. EPA estimates that one part of the selected control strategy—installation of state-of-the-art NO

combustion controls—can occur between approximately one to six months at any particular unit. As the final rule will likely become effective either immediately prior to or slightly after the start of the 2021 ozone season, EPA determined it is not possible to install state-of-the-art NO

combustion controls on a regional scale by the beginning of the 2021 ozone season.

EPA proposes to conclude that an emission reduction strategy is impossible if it cannot be implemented statewide by the relevant attainment date because statewide budgets are based on fleetwide averages. Therefore, the proposed 2021 ozone season emission budgets reflect only the control strategy of optimizing existing SCR controls at the affected EGUs, but the proposed emission budgets for the 2022 ozone season and beyond reflect both the continued optimization of existing SCR controls and installation of state-of-the-art NO

combustion controls. Detailed installation-timing information for this technology is available in Section VII.B and the EGU NO

Mitigation Strategies TSD.

As described in detail in Sections VII.B and VII.C, some mitigation efforts that require the installation of significant new plant hardware (

e.g.,

combustion control upgrade, selective catalytic reduction, and non-selective catalytic reduction) are not possible by the start of the 2021 ozone season. However, EPA proposes some of these measures (

i.e.,

combustion controls) be factored into its quantification of significant contribution starting at the later date of the start of the 2022 ozone season.

On July 28, 2020, the U.S. District Court for the Southern District of New York issued a decision establishing a deadline of March 15, 2021, for EPA to issue a final rule fully resolving good neighbor obligations under the 2008 ozone NAAQS for seven upwind states.

New Jersey

Wheeler,

No. 1:20-cv-01425 (S.D.N.Y. July 28, 2020).

As discussed in section VII.D.1, EPA's air quality projections anticipate that with the implementation of the identified control stringency for EGUs represented by $1,600 per ton, downwind nonattainment and maintenance problems for the 2008 ozone NAAQS will persist through the 2024 ozone season. Therefore, EPA is proposing to adjust emission budgets for upwind states that remain linked to downwind nonattainment and maintenance problems through the 2024 ozone season to incentivize the continued optimization of existing SCR controls and installation of state-of-the-art NO

combustion controls. The 2024 emission budgets would then continue to apply in each year thereafter.

As discussed below, EPA notes that emissions budgets are implemented through the market-based mechanism of a trading program for emission allowances. Under such a trading program, sources have the compliance flexibility to make emissions reductions themselves or to purchase allowances from other sources (either directly from those sources or indirectly through a third party) that do not need those allowances to cover their remaining emissions. Given this compliance flexibility, EPA is taking comment on whether delaying the incorporation of emission reduction potential from the installation of state-of-the-art NO

combustion controls into state emission budgets until 2022 is necessary (Comment C-1).

To apply the fourth step of the 4-step framework (

i.e.,

implementation), EPA proposes to include enforceable measures in the promulgated FIPs to achieve the required emission reductions in each of the 12 states. Specifically, the FIPs would require power plants in the 12 states to participate in a new CSAPR NO

Ozone Season Group 3 Trading Program that largely replicates the existing CSAPR NO

Ozone Season Group 2 Trading Program; with the main differences being the geography and budget stringency. Aside from the removal of the 12 covered states from the current CSAPR NO

Ozone Season Group 2 Trading Program, this proposal leaves unchanged the budget stringency and geography of the existing CSAPR NO

Ozone Season Group 1 and Group 2 trading programs.

For this rulemaking, EPA is proposing to authorize a one-time conversion of allowances banked in 2017-2020 under the CSAPR Update NO

Ozone Season Group 2 Trading Program into a limited number of allowances that can be used for compliance in the CSAPR NO

Ozone Season Group 3 Trading Program. Similar to the approach taken in the CSAPR Update, EPA is proposing to base the conversion on a formula that ensures emissions in the CSAPR NO

Ozone Season Group 3 Trading Program region do not exceed a specified level (defined as emissions up to the sum of

the states' ozone season emissions budgets and variability limits) as a result of the use of banked allowances from the Group 2 trading program. EPA also proposes to provide a process through which holders of Group 2 allowances in non-facility accounts (“general” accountholders) could designate any Group 2 allowances that they do not wish to have converted to Group 3 allowances.

The remainder of this preamble is organized as follows: Section IV describes EPA's legal authority for this proposed action; section V describes the human health and environmental context, as well as EPA's proposed approach for addressing interstate transport for the 2008 ozone NAAQS; section VI describes its assessment of downwind receptors of concern and upwind state ozone contributions to those receptors, including the air quality modeling platform and emission inventories that EPA used; section VII describes EPA's approach to quantify upwind state obligations in the form of final EGU NO

emission budgets; section VIII details the implementation requirements including key elements of the CSAPR trading program and deadlines for compliance; section IX describes the expected costs, benefits, and other impacts of this proposed rule; section X discusses changes to the existing regulatory text; and section XI discusses the statutes and executive orders affecting this proposed rulemaking.

C. Costs and Benefits

A summary of the key results of the cost-benefit analysis that was prepared for this proposed rule is presented in Table I.C-1. Table I.C-1 presents estimates of the present values (PV) and equivalent annualized values (EAV), calculated using discount rates of 3 and 7 percent as directed by OMB's Circular A-4, of the compliance costs, climate benefits, and net benefits of the proposed rule, in 2016 dollars, discounted to 2021. The estimated net benefits are the estimated benefits minus the estimated costs of the proposed rule. The table represents the present value of non-monetized benefits from ozone, PM

2.5

and NO

reductions as a β, while b represents the equivalent annualized value of these non-monetized benefits. These values will differ across the discount rates and depend on the B's in Tables IX.4 and IX.5 presented in Section IX.

Table I.C—1 Estimated Compliance Costs, Climate Benfits and Net Benefits of the Proposed Rule, 2021 Through 2025

[Millions 2016$, discounted to 2021]

Discount rate

Present Value:

Benefits

101+β

15+β

Climate Benefits

101

Compliance Costs

Net Benefits

14+β

−68+β

Equivalent Annualized Value:

Benefits

22+b

4+b

Climate Benefits

Compliance Costs

Net Benefits

3+b

−17+b

All estimates in this table are rounded to two significant figures, so numbers may not sum due to independent rounding.

The annualized present value of costs and benefits are calculated over a 5 year period from 2021 to 2025.

Benefits ranges represent discounting of climate benefits at a real discount rate of 3 percent and 7 percent. Climate benefits are based on changes (reductions) in CO

emissions.

β and b is the sum of all unquantified ozone, PM

2.5

, and NO

benefits. The annual values of β and b will differ across discount rates. While EPA did not estimate these benefits in the RIA, Appendix 5B in the RIA presents PM

2.5

and ozone estimates quantified using methods consistent with the previously published ISAs

to provide information regarding the potential magnitude of the benefits of this proposed rule.

The costs presented in this table reflect annualized present value compliance costs calculated over a 5 year period from 2021 to 2025.

Table 1.C-1 does not

include quantified and monetized health benefits associated with reduced exposures to concentrations of ground-level ozone and fine particulates. The Agency intends to update its approach for quantifying the benefits of air quality changes by considering the evidence reported in recently completed Integrated Science Assessments for ground-level ozone and fine particulates and accounting for forthcoming recommendations from the Science Advisory Board on this issue. This process is still underway and will not be completed in time for this proposed rule. See Section IX of this preamble for more discussion. However, to provide perspective regarding the scope of the estimated benefits, Appendix 5B of the RIA illustrates the potential health effects associated with the changes in PM

2.5

and ozone concentrations as calculated using methods developed prior to the 2019 p.m. ISA and 2020 Ozone ISA. That analysis provides perspective regarding the scope of the estimated benefits. EPA is in the process of recalibrating its benefits estimates for all PM and ozone health endpoints. EPA intends to update its quantitative methods for estimating the number and economic value of PM

2.5

and ozone health effects in time for publication as part of the final rule.

U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report). EPA-600-R-08-139F. National Center for Environmental Assessment—RTP Division, Research Triangle Park, NC. December. Available at:

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546

U.S. Environmental Protection Agency (U.S. EPA). 2013. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). EPA/600/R-10/076F. National Center for Environmental Assessment—RTP Division, Research Triangle Park. Available at:

http://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=247492#Download

As shown in Table I.C-1, the PV of the climate benefits of this proposed rule, discounted at a 7-percent rate, is estimated to be about $15 million, with an EAV of about $4 million. At a 3-percent discount rate, the PV of the climate benefits is estimated to be about $101 million, with an EAV of $22 million. The PV of the compliance costs, discounted at a 7-percent rate, is estimated to be about $83 million, with an EAV of about $20 million. At a 3-percent discount rate, the PV of the compliance costs is estimated to be about $87 million, with an EAV of about

$19 million. The PV of the net benefits of this proposed rule, discounted at a 7-percent rate, is estimated to be about −$68 million, with an EAV of about −$17 million. At a 3-percent discount rate, the PV of the net benefits is estimated to be about $14 million, with an EAV of about $3 million .

II. Public Participation

A. Written Comments

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2020-0272, at

https://www.regulations.gov

. Once submitted, comments cannot be edited or removed from the docket. EPA may publish any comment received to its public docket. Do not submit to EPA's docket at

https://www.regulations.gov

any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (

i.e.

, on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit

https://www.epa.gov/dockets/commenting-epa-dockets

EPA is temporarily suspending its Docket Center and Reading Room for public visitors to reduce the risk of transmitting COVID-19. Written comments submitted by mail are temporarily suspended and no hand deliveries will be accepted. Our Docket Center staff will continue to provide remote customer service via email, phone, and webform. We encourage the public to submit comments via

https://www.regulations.gov

. For further information and updates on EPA Docket Center services, please visit us online at

https://www.epa.gov/dockets

EPA continues to carefully and continuously monitor information from the Centers for Disease Control and Prevention (CDC), local area health departments, and our Federal partners so that we can respond rapidly as conditions change regarding COVID-19.

B. Participation in Virtual Public Hearing

Please note that EPA is deviating from its typical approach because the President has declared a national emergency. Because of current CDC recommendations, as well as state and local orders for social distancing to limit the spread of COVID-19, EPA cannot hold in-person public meetings at this time.

EPA will begin pre-registering speakers for the hearing upon publication of this document in the

Federal Register

. To register to speak at the virtual hearing, please use the online registration form available at

https://www.epa.gov/csapr/revised-cross-state-air-pollution-update

or contact Ms. Kimberly Liu at

liu.kimberly@epa.gov

or 202-564-6586 to register to speak at the virtual hearing. The last day to pre-register to speak at the hearing will be November 6, 2020. On November 10, 2020, EPA will post a general agenda for the hearing that will list pre-registered speakers in approximate order at:

https://www.epa.gov/csapr/revised-cross-state-air-pollution-update

EPA will make every effort to follow the schedule as closely as possible on the day of the hearing; however, please plan for the hearings to run either ahead of schedule or behind schedule.

Each commenter will have 5 minutes to provide oral testimony. EPA encourages commenters to provide EPA with a copy of their oral testimony electronically (via email) by emailing it to Ms. Kimberly Liu at

liu.kimberly@epa.gov

. EPA also recommends submitting the text of your oral comments as written comments to the rulemaking docket.

EPA may ask clarifying questions during the oral presentations but will not respond to the presentations at that time. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral comments and supporting information presented at the public hearing.

Please note that any updates made to any aspect of the hearing will be posted online at

https://www.epa.gov/csapr/revised-cross-state-air-pollution-update

. While EPA expects the hearing to go forward as set forth above, please monitor our website or contact Ms. Kimberly Liu at

liu.kimberly@epa.gov

or 202-564-6586 to determine if there are any updates. EPA does not intend to publish a document in the

Federal Register

announcing updates.

If you require the services of a translator or special accommodations such as audio description, please pre-register for the hearing with Kimberly Liu at

liu.kimberly@epa.gov

or 202-564-6586 and describe your needs by November 5, 2020. EPA may not be able to arrange accommodations without advanced notice.

III. General Information

A. Does this action apply to me?

This proposed rule affects EGUs, and regulates the groups identified in Table III.A-1:

Table III.A-1—Regulated Groups

Industry group

NAICS *

Fossil fuel-fired electric power generation

221112

* 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 now aware could potentially be regulated by this action. Other types of entities not listed in the table could also be regulated. For example, as discussed in Section VII.D.2 below, EPA is requesting comment on potential control strategies for emissions sources and industry sectors outside of the fossil fuel-fired power sector. Some of these industry sectors include cement, glass, chemical, and paper manufacturing, pipeline transportation, and oil and gas extraction. To determine whether your EGU entity is proposed to be regulated by this action, you should carefully examine the applicability criteria found in 40 CFR 97.804, which EPA is not proposing to alter in this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the

FOR FURTHER INFORMATION CONTACT

section.

IV. EPA's Legal Authority for the Proposed Rule

A. Statutory Authority

The statutory authority for this final action is provided by the CAA as amended (42 U.S.C. 7401

et seq.

). Specifically, sections 110 and 301 of the CAA provide the primary statutory underpinnings for this action. The most relevant portions of CAA section 110 are subsections 110(a)(1), 110(a)(2) (including 110(a)(2)(D)(i)(I)), 110(c)(1), and 110(k)(6).

CAA section 110(a)(1) provides that states must make SIP submissions “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” and that these SIP submissions are to provide for the “implementation, maintenance, and

enforcement” of such NAAQS.

The statute directly imposes on states the duty to make these SIP submissions, and the requirement to make the submissions is not conditioned upon EPA taking any action other than promulgating a new or revised NAAQS.

42 U.S.C. 7410(a)(1).

See EPA

EME Homer City Generation, L.P.,

572 U.S. 489, 509-10 (2014).

EPA has historically referred to SIP submissions made for the purpose of satisfying the applicable requirements of CAA sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” or “iSIP” submissions. CAA section 110(a)(1) addresses the timing and general requirements for iSIP submissions, and CAA section 110(a)(2) provides more details concerning the required content of these submissions.

It includes a list of specific elements that “[e]ach such plan” submission must address.

42 U.S.C. 7410(a)(2).

EPA's general approach to infrastructure SIP submissions is explained in greater detail in individual notices acting or proposing to act on state infrastructure SIP submissions and in guidance.

See, e.g.,

Memorandum from Stephen D. Page on Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2) (Sept. 13, 2013).

CAA section 110(c)(1) requires the Administrator to promulgate a FIP at any time within two years after the Administrator: (1) Finds that a state has failed to make a required SIP submission; (2) finds a SIP submission to be incomplete pursuant to CAA section 110(k)(1)(C); or (3) disapproves a SIP submission. This obligation applies unless the state corrects the deficiency through a SIP revision that the Administrator approves before the FIP is promulgated.

42 U.S.C. 7410(c)(1).

CAA section 110(a)(2)(D)(i)(I), also known as the “good neighbor provision,” provides the primary basis for this proposal.

It requires that each state SIP include provisions sufficient to “prohibit[ ], 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 [NAAQS].”

EPA often refers to the emission reduction requirements under this provision as “good neighbor obligations” and submissions addressing these requirements as “good neighbor SIPs.”

42 U.S.C. 7410(a)(2)(D)(i)(I).

Id.

Once EPA promulgates a NAAQS, EPA must designate areas as being in “attainment” or “nonattainment” of the NAAQS, or “unclassifiable.” CAA section 107(d).

For ozone, nonattainment is further split into five classifications based on the severity of the violation—Marginal, Moderate, Serious, Severe, or Extreme. Higher classifications provide States with progressively more time to attain and additional control requirements.

See

CAA sections 181, 182.

In general, states with nonattainment areas classified as Moderate or higher must submit plans to EPA to bring these areas into attainment according to the statutory schedule. CAA section 182.

If an area fails to attain the NAAQS by the attainment date associated with its classification, it is “bumped up” to the next classification. CAA section 181(b).

42 U.S.C. 7407(d).

42 U.S.C. 7511, 7511a.

42 U.S.C. 7511a.

42 U.S.C. 7511(b).

Section 301(a)(1) of the CAA also gives the Administrator the general authority to prescribe such regulations as are necessary to carry out functions under the Act.

Pursuant to this section, EPA has authority to clarify the applicability of CAA requirements and undertake other rulemaking action as necessary to implement CAA requirements. In this proposal, among other things, EPA is clarifying the applicability of CAA section 110(a)(2)(D)(i)(I) with respect to the 2008 ozone NAAQS. In particular, EPA is using its authority under CAA sections 110 and 301 to issue new or amended FIPs to revise NO

ozone season emission budgets for 12 states to eliminate their significant contribution to nonattainment or interference with maintenance of the 2008 ozone NAAQS in another state, and EPA is making findings as to 9 additional states that the CSAPR Update FIPs (or SIP revisions later approved to replace those FIPs) are a complete remedy and need no further revision.

In addition, EPA is obligated to respond to the D.C. Circuit's remand of the CSAPR Update in

Wisconsin

EPA,

938 F.3d 303, with respect to the 21 states for which the FIPs created by that rule were found to be only a partial remedy. This proposal, if finalized, will wholly resolve the Agency's obligations on remand. Finally, CAA section 301

affords the Agency any additional authority that may be needed in order to make certain other changes to its regulations under 40 CFR parts 52, 78, and 97, as discussed in Section VIII of this preamble.

42 U.S.C. 7601(a)(1).

42 U.S.C. 7410, 7601.

42 U.S.C. 7601.

B. Prior Good Neighbor Rulemakings Addressing Regional Ozone

EPA has issued several rules interpreting and clarifying the requirements of CAA section 110(a)(2)(D)(i)(I) with respect to the regional transport of ozone for states in the eastern United States. These rules, and the associated court decisions addressing these rules, summarized here, provide important direction regarding the requirements of CAA section 110(a)(2)(D)(i)(I).

The NO

SIP Call, promulgated in 1998, addressed the good neighbor provision for the 1979 1-hour ozone NAAQS.

The rule required 22 states and the District of Columbia to amend their SIPs to reduce NO

emissions that contribute to ozone nonattainment in downwind states. EPA set ozone season NO

budgets for each state, and the states were given the option to participate in a regional trading program, known as the NO

Budget Trading Program.

The D.C. Circuit largely upheld the NO

SIP Call in

Michigan

EPA,

213 F.3d 663 (DC Cir. 2000),

cert. denied,

532 U.S. 904 (2001).

63 FR 57356 (Oct. 27, 1998). As originally promulgated, the NO

SIP Call also addressed good neighbor obligations under the 1997 8-hour ozone NAAQS, but EPA subsequently stayed and later rescinded the rule's provisions with respect to that standard.

See

84 FR 8422 (March 8, 2019).

“Allowance Trading,” sometimes referred to as “cap and trade,” is an approach to reducing pollution that has been used successfully to protect human health and the environment. Trading programs have two key components: Emissions budgets (the sum of which provide a cap on emissions), and tradable allowances equal to the budgets that authorize allowance holders to emit a specific quantity (

e.g.,

one ton) of the pollutant. This approach ensures that the environmental goal is met while the tradable allowances provide flexibility for individual participants to establish and follow their own compliance path. Because allowances can be bought and sold in an allowance market, these programs are often referred to as “market-based.”

EPA's next rule addressing the good neighbor provision, the Clean Air Interstate Rule (CAIR), was promulgated in 2005 and addressed both the 1997 fine particulate matter (PM

2.5

) NAAQS and 1997 ozone NAAQS.

CAIR required SIP revisions in 28 states and the District of Columbia to reduce emissions of sulfur dioxide (SO

) and/or NO

—important precursors of regionally transported PM

2.5

(SO

and annual NO

) and ozone (summer-time NO

). As in the NO

SIP Call, states were given the option to participate in regional trading programs to achieve the reductions. When EPA promulgated the

final CAIR in 2005, EPA also issued findings that states nationwide had failed to submit SIPs to address the requirements of CAA section 110(a)(2)(D)(i) with respect to the 1997 PM

2.5

and 1997 ozone NAAQS.

On March 15, 2006, EPA promulgated FIPs to implement the emission reductions required by CAIR.

CAIR was remanded to EPA by the D.C. Circuit in

North Carolina

EPA,

531 F.3d 896 (D.C. Cir. 2008),

modified on reh'g,

550 F.3d 1176. For more information on the legal issues underlying CAIR and the D.C. Circuit's holding in

North Carolina,

refer to the preamble of the CSAPR rule.

70 FR 25162 (May 12, 2005).

70 FR 21147 (April 25, 2005).

71 FR 25328 (April 28, 2006).

76 FR 48208, 48217 (Aug. 8, 2011).

In 2011, EPA promulgated the CSAPR to address the issues raised by the remand of CAIR. The CSAPR addressed the two NAAQS at issue in CAIR and additionally addressed the good neighbor provision for the 2006 PM

2.5

NAAQS.

The CSAPR required 28 states to reduce SO

emissions, annual NO

emissions, and/or ozone season NO

emissions that significantly contribute to other states' nonattainment or interfere with other states' abilities to maintain these air quality standards.

To align implementation with the applicable attainment deadlines, EPA promulgated FIPs for each of the 28 states covered by the CSAPR. The FIPs require EGUs in the covered states to participate in regional trading programs to achieve the necessary emission reductions. Each state can submit a good neighbor SIP at any time that, if approved by EPA, would replace the CSAPR FIP for that state.

76 FR 48208.

The CSAPR was revised by several rulemakings after its initial promulgation in order to revise certain states' budgets and to promulgate FIPs for five additional states addressing the good neighbor obligation for the 1997 ozone NAAQS. See 76 FR 80760 (Dec. 27, 2011); 77 FR 10324 (Feb. 21, 2012); 77 FR 34830 (June 12, 2012).

The CSAPR was the subject of an adverse decision by the D.C. Circuit in August 2012.

However, this decision was reversed in April 2014 by the Supreme Court, which largely upheld the rule, including EPA's approach to addressing interstate transport in the CSAPR.

EPA

EME Homer City Generation, L.P.,

572 U.S. 489 (2014) (

EME Homer City I

). The rule was remanded to the D.C. Circuit to consider claims not addressed by the Supreme Court.

Id.

In July 2015 the D.C. Circuit generally affirmed EPA's interpretation of various statutory provisions and EPA's technical decisions.

EME Homer City Generation, L.P.

EPA,

795 F.3d 118 (2015) (

EME Homer City II

). However, the court remanded the rule without vacatur for reconsideration of EPA's emissions budgets for certain states, which the court found may have over-controlled those states' emissions with respect to the downwind air quality problems to which the states were linked.

Id.

at 129-30, 138. For more information on the legal issues associated with the CSAPR and the Supreme Court's and D.C. Circuit's decisions in the

EME Homer City

litigation, refer to the preamble of the CSAPR Update.

On August 21, 2012, the D.C. Circuit issued a decision in

EME Homer City Generation, L.P.

EPA,

696 F.3d 7 (D.C. Cir. 2012), vacating the CSAPR. EPA sought review with the D.C. Circuit

en banc

and the D.C. Circuit declined to consider EPA's appeal

en banc. EME Homer City Generation, L.P.

EPA,

No. 11-1302 (D.C. Cir. January 24, 2013), ECF No. 1417012 (denying EPA's motion for rehearing en banc).

81 FR 74504, 74511 (Oct. 26, 2016).

In 2016, EPA promulgated the CSAPR Update to address interstate transport of ozone pollution with respect to the 2008 ozone NAAQS.

The final rule generally updated the CSAPR ozone season NO

emissions budgets for 22 states to achieve cost-effective and immediately feasible NO

emission reductions from EGUs within those states.

EPA aligned the analysis and implementation of the CSAPR Update with the 2017 ozone season in order to assist downwind states with timely attainment of the 2008 ozone NAAQS.

The CSAPR Update implemented the budgets through FIPs requiring sources to participate in a revised CSAPR NO

ozone season trading program beginning with the 2017 ozone season. As under the CSAPR, each state can submit a good neighbor SIP at any time that, if approved by EPA, would replace the CSAPR Update FIP for that state. The final CSAPR Update also addressed the remand by the D.C. Circuit of certain states' CSAPR phase 2 ozone season NO

emissions budgets in

EME Homer City II.

Further details regarding the CSAPR Update are discussed in Sections V.C.1.a-b below.

81 FR 74504.

One state, Kansas, was made newly subject to the CSAPR ozone season NO

requirement by the CSAPR Update. All other CSAPR Update states were already subject to ozone season NO

requirements under the CSAPR.

81 FR 74516. EPA's final 2008 Ozone NAAQS SIP Requirements Rule, 80 FR 12264, 12268 (Mar. 6, 2015), revised the attainment deadline for ozone nonattainment areas designated as Moderate to July 20, 2018.

See

40 CFR 51.1103. In order to demonstrate attainment by this deadline, states were required to rely on design values calculated using ozone season data from 2015 through 2017, since the July 20, 2018, deadline did not afford enough time for measured data of the full 2018 ozone season.

In December 2018, EPA promulgated the CSAPR “Close-Out,” which determined that no further enforceable reductions in emissions of NO

were required with respect to the 2008 ozone NAAQS for 20 of the 22 eastern states covered by the CSAPR Update, and reflected that determination in revisions to the existing state-specific sections of the CSAPR Update regulations for those states.

Further details on the CSAPR Close-Out are discussed in Section V.C.1.c below.

83 FR 65878, 65882 (Dec. 21, 2018). After promulgating the CSAPR Update and before promulgating the CSAPR Close-Out, EPA approved a SIP from Kentucky resolving that state's good neighbor obligations for the 2008 ozone NAAQS. 83 FR 33730 (July 17, 2018). In this action, EPA is proposing an error correction under CAA section 110(k)(6) to convert this approval to a disapproval, because the Kentucky approval relied on the same analysis which the D.C. Circuit determined to be unlawful in the CSAPR Close-Out. Our action with respect to Kentucky is discussed in Section V.C.2.b. below.

The CSAPR Update and the CSAPR Close-Out were both subject to legal challenges in the D.C. Circuit.

Wisconsin

EPA,

938 F.3d 303 (D.C. Cir. 2019) (

Wisconsin

);

New York

EPA,

781 Fed. App'x 4 (D.C. Cir. 2019) (

New York

). As discussed in greater detail in Section V.C.1.d below, in September 2019, the D.C. Circuit upheld the CSAPR Update in virtually all respects, but remanded the rule because it was partial in nature and did not fully eliminate upwind states' significant contribution to nonattainment or interference with maintenance of the 2008 ozone NAAQS by “the relevant downwind attainment deadlines” in the CAA.

Wisconsin,

938 F.3d at 313-15. In October 2019, the D.C. Circuit vacated the CSAPR Close-Out on the same grounds that it remanded the CSAPR Update in

Wisconsin,

specifically that the Close-Out rule did not analyze “the next applicable attainment date” of downwind states.

New York,

781 Fed. App'x at 7.

V. Air Quality Issues Addressed and Overall Approach for the Proposed Rule

A. The Interstate Ozone Transport Challenge

Interstate transport of NO

emissions poses significant challenges with respect to the 2008 ozone NAAQS in the eastern U.S. and thus presents a threat to public health and welfare.

1. Nature of Ozone and the Ozone NAAQS

Ground-level ozone is not emitted directly into the air but is created by chemical reactions between NO

and volatile organic compounds (VOC) in

the presence of sunlight. Emissions from electric utilities and industrial facilities, motor vehicles, gasoline vapors, and chemical solvents are some of the major sources of NO

and VOC.

Because ground-level ozone formation increases with temperature and sunlight, ozone levels are generally higher during the summer. Increased temperature also increases emissions of volatile man-made and biogenic organics and can indirectly increase NO

emissions as well (

e.g.,

increased electricity generation for air conditioning).

The 2008 primary and secondary ozone standards are both 75 ppb as an 8-hour level.

Specifically, the standards require that the 3-year average of the fourth highest 24-hour maximum 8-hour average ozone concentration may not exceed 75 ppb as a truncated value (

i.e.,

digits to right of decimal removed).

In general, areas that exceed the ozone standard are designated as nonattainment areas, pursuant to the designations process under CAA section 107 and are subject to heightened planning requirements depending on the degree of severity of their nonattainment classification,

see

CAA sections 181, 182.

73 FR 16436 (Mar. 27, 2008).

40 CFR part 50, Appendix P to part 50.

2. Ozone Transport

Studies have established that ozone formation, atmospheric residence, and transport occur on a regional scale (

i.e.,

thousands of kilometers) over much of the eastern U.S.

While substantial progress has been made in reducing ozone in many areas, interstate ozone transport is still an important component of peak ozone concentrations during the summer ozone season.

Bergin, M.S. et al. (2007) Regional air quality: Local and interstate impacts of NO

and SO

emissions on ozone and fine particulate matter in the eastern United States. Environmental Sci & Tech. 41: 4677-4689.

EPA has previously concluded in the NO

SIP Call, CAIR, and the CSAPR that, for reducing regional-scale ozone transport, a NO

control strategy would be most effective. NO

emissions can be transported downwind as NO

or, after transformation in the atmosphere, as ozone. As a result of ozone transport, in any given location, ozone pollution levels are impacted by a combination of local emissions and emissions from upwind sources. The transport of ozone pollution across state borders compounds the difficulty for downwind states in meeting health-based air quality standards (

i.e.,

NAAQS). Assessments of ozone, for example those conducted for the October 2015 Regulatory Impact Analysis of the Final Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone (EPA-452/R-15-007), continue to show the importance of NO

emissions for ozone transport. This analysis is in the docket for this proposal and can be also found at EPA's website at:

https://www.epa.gov/ttnecas1/docs/20151001ria.pdf

Further, studies have found that EGU NO

emission reductions can be effective in reducing individual 8-hour peak ozone concentrations and in reducing 8-hour peak ozone concentrations averaged across the ozone season. For example, a study that evaluates the effectiveness on ozone concentrations of EGU NO

reductions achieved under the NO

Budget Trading Program (

i.e.,

the NO

SIP Call) shows that regulating NO

emissions in that program was highly effective in reducing both ozone and dry-NO

concentrations during the ozone season. Further, this study indicates that EGU emissions, which are generally released higher in the air column through tall stacks and are significant in quantity, may disproportionately contribute to long-range transport of ozone pollution on a per-ton basis.

Butler, et al., “Response of Ozone and Nitrate to Stationary Source Reductions in the Eastern USA”.

Atmospheric Environment,

2011.

Previous regional ozone transport efforts, including the NO

SIP Call, CAIR, and the CSAPR, required ozone season NO

reductions from EGUs to address interstate transport of ozone. EPA took comment on regulating EGU NO

emissions to address interstate ozone transport in the notice-and-comment process for these rulemakings. EPA received no significant adverse comments in any of these proposals regarding the rules' focus on ozone season EGU NO

reductions to address interstate ozone transport.

As described in Section VII, EPA's analysis finds that the power sector continues to be capable of making NO

reductions at reasonable cost that reduce interstate transport with respect to ground-level ozone. EGU NO

emission reductions can be made in the near-term under this proposal by fully operating existing EGU NO

post-combustion controls (

i.e.,

Selective Catalytic Reduction)—including optimizing NO

removal by existing operational controls and turning on and optimizing existing idled controls; installation of (or upgrading to) state-of-the-art NO

combustion controls; and shifting generation to units with lower NO

emission rates. Further, additional assessment reveals that these available EGU NO

reductions would make meaningful and timely improvements in ozone air quality.

EPA also observes that significant emissions reduction potential from EGUs is available through the post-combustion control retrofit strategies. These controls reduce emissions and can have a meaningful air quality impact, but, in contrast to the controls discussed above, they are not available in the near-term, and are only available on a longer time frame (reflecting the time required to develop, construct, and install the technology) and are estimated to have a higher cost.

3. Health and Environmental Effects

Exposure to ambient ozone causes a variety of negative effects on human health, vegetation, and ecosystems. In humans, acute and chronic exposure to ozone is associated with premature mortality and a number of morbidity effects, such as asthma exacerbation. In ecosystems, ozone exposure causes visible foliar injury, decreases plant growth, and affects ecosystem community composition.

See

EPA's November 2014 Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone (EPA-452/P-14-006), in the docket for this proposal and available on EPA's website at:

http://www.epa.gov/ttn/ecas/regdata/RIAs/20141125ria.pdf

, for more information on the human health and welfare and ecosystem effects associated with ambient ozone exposure.

B. Relationship Between This Regulatory Action and the 2015 Ozone NAAQS

On October 1, 2015, EPA strengthened the ground-level ozone NAAQS to 70 ppb on an eight-hour averaging time, based on extensive scientific evidence about ozone's effects on public health and welfare.

While reductions achieved by this rule may have the effect of aiding in attainment and maintenance of the 2015 standard, this action is taken solely with respect to EPA's authority to address remaining CAA good neighbor obligations under the 2008 ozone NAAQS. EPA and states are working outside of this proposed action to address the CAA good

neighbor provision for the 2015 ozone NAAQS.

80 FR 65291 (Oct. 26, 2015). On July 13, 2020, based on a review of the full body of currently available scientific evidence and exposure/risk information, EPA proposed to retain the existing ozone NAAQS.

See

https://www.epa.gov/ground-level-ozone-pollution/ozone-national-ambient-air-quality-standards-naaqs

C. Proposed Approach To Address the Remanded Transport Obligations for the 2008 Ozone NAAQS

1. Events Affecting Application of the Good Neighbor Provision for the 2008 Ozone NAAQS

EPA is taking this action to address the remand of the CSAPR Update in

Wisconsin

EPA,

938 F.3d 303 (D.C. Cir. 2019). This Section will discuss the key, relevant aspects of the CSAPR Update, the related CSAPR Close-Out, and the D.C. Circuit's decisions in

Wisconsin

and

New York

EPA,

781 Fed. App'x 4 (D.C. Cir. 2019) (the latter of which vacated the Close-out Rule based on the same reasoning as the

Wisconsin

decision remanding the Update). The basis for EPA's authority under CAA section 110(c) (42 U.S.C. 7410(c)) to promulgate good neighbor FIPs for the 21 states subject to this action on remand is discussed in Sections IV and V.C.2.

a. The CSAPR Update

On October 26, 2016, the CSAPR Update was published in the

Federal Register

. 81 FR 74504. The purpose of the CSAPR Update was to address the good neighbor provision for the 2008 ozone NAAQS, as well as address remanded CSAPR obligations for the 1997 ozone NAAQS. The CSAPR Update required EGUs in 22 states to reduce ozone season NO

emissions that significantly contribute to other states' nonattainment or interfere with other states' abilities to maintain the 2008 ozone NAAQS.

To establish and implement the CSAPR Update emissions budgets, EPA followed the same four-step analytic process that it used in the CSAPR, an approach which reflects the evolution of the Agency's prior regional interstate transport rulemakings related to ozone NAAQS. The 4-step framework is described in more detail in Sections V.C.3 and VII.A.

In the CSAPR Update, to evaluate the scope of the interstate ozone transport problem at Step 1, EPA identified downwind areas that were expected to have problems attaining and maintaining the 2008 ozone NAAQS using modeling that projected air quality to a future compliance year. 81 FR 74517. EPA aligned the analysis and implementation of the CSAPR Update with the 2017 ozone season (May 1-September 30) in order to assist downwind states with attainment of the 2008 ozone NAAQS by the 2018 Moderate area attainment date.

Id.

at 74516. (EPA's final 2008 Ozone NAAQS SIP Requirements Rule established the attainment deadline of July 20, 2018, for ozone nonattainment areas classified as Moderate.

) Because the attainment date fell during the 2018 ozone season, the 2017 ozone season was the last full season from which data could be used to determine attainment of the NAAQS by that date.

80 FR 12264, 12268 (Mar. 6, 2015);

see

40 CFR 51.1103.

At Step 2, EPA identified upwind states that collectively contribute to these identified downwind areas. In the CSAPR Update, EPA used a screening threshold of 1 percent of the NAAQS to identify states “linked” to downwind ozone problems sufficient for further evaluation for significant contribution to nonattainment or interference with maintenance of the NAAQS under the good neighbor provision. 81 FR 74518. This same threshold for analysis was used in the CSAPR as to the 1997 ozone NAAQS.

See

76 FR at 48237-38.

At Step 3, EPA quantified emissions from upwind states that would significantly contribute to nonattainment or interfere with maintenance by first evaluating various levels of uniform NO

control stringency, each represented by an estimated marginal cost per ton of NO

reduced. EPA then applied the same multi-factor test that was used in the CSAPR to evaluate cost, available emission reductions, and downwind air quality impacts to determine the appropriate level of uniform NO

control stringency that addressed the impacts of interstate transport on downwind nonattainment or maintenance receptors. EPA used this multi-factor assessment to gauge the extent to which emission reductions could be implemented in the future compliance year (

i.e.,

2017) and to evaluate the potential for over- and under-control of upwind state emissions.

Within the multi-factor test, EPA identified a “knee in the curve,”

i.e.,

a point at which the cost-effectiveness of the emission reductions was maximized, so named for the discernable turning point observable in a multi-factor (

i.e.,

multi-variable) curve.

See

81 FR 74550. EPA concluded that this was at the point where emissions budgets reflected a uniform NO

control stringency represented by an estimated marginal cost of $1,400 per ton (2011$) of NO

reduced. This cost threshold in turn represented a control strategy of installing or upgrading combustion controls and optimizing existing SCR controls. In light of this multi-factor test, EPA determined this level of stringency in emissions budgets represented the level at which incremental EGU NO

reduction potential and corresponding downwind ozone air quality improvements were maximized—relative to other control stringencies evaluated—with respect to marginal cost. That is, the ratio of emission reductions to marginal cost and the ratio of ozone improvements to marginal cost were maximized relative to the other levels of control stringency evaluated. EPA found that feasible and cost-effective EGU NO

reductions were available to make meaningful and timely improvements in downwind ozone air quality to address interstate ozone transport for the 2008 ozone NAAQS for the 2017 ozone season.

Id.

at 74508. Further, the Agency's evaluation showed that emissions budgets reflecting the $1,400 per ton cost threshold did not over-control upwind states' emissions relative to either the downwind air quality problems to which they were linked or the one percent contribution threshold in Step 2 that triggered their further evaluation in Step 3.

Id.

at 74551-52.

At Step 4, EPA finalized EGU ozone season NO

emissions budgets developed using uniform control stringency represented by $1,400 per ton. These budgets represented emissions remaining in each state after elimination of the amounts of emissions that EPA identified would significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS in downwind states. EPA promulgated FIPs requiring the covered power plants in the 22 covered states to participate in the CSAPR NO

Ozone Season Group 2 Trading Program starting in 2017.

The NO

ozone season trading program created under the CSAPR was renamed the CSAPR NO

Ozone Season Group 1 Trading Program and now applies only to sources in Georgia. In the CSAPR Update, EPA found that Georgia did not contribute to interstate transport with respect to the 2008 ozone NAAQS, but the state has an ongoing ozone season NO

requirement under the CSAPR with respect to the 1997 ozone NAAQS.

b. Partial Nature of the CSAPR Update

At the time it promulgated the CSAPR Update, EPA considered the FIPs to be “partial” and that the rule “may not be sufficient to fully address these states' good neighbor obligations” for the 2008 ozone NAAQS for 21 of the 22 states included in that rule. 81 FR 74508, 74521 (Oct. 26, 2016). Based on information available at the time of the rule's promulgation, EPA was unable to conclude that the CSAPR Update fully addressed most of the covered states'

good neighbor obligations for the 2008 ozone NAAQS.

Id.

at 74521. Information available at the time indicated that, even with the CSAPR Update implementation, several downwind receptors were expected to continue having problems attaining and maintaining this NAAQS and that emissions from upwind states were expected to continue to contribute greater than or equal to one percent of the NAAQS to these areas during the 2017 ozone season.

Id.

at 74551-52. Further, EPA could not conclude at that time whether additional EGU and non-EGU reductions implemented on a longer timeframe than 2017 would be necessary, feasible, and cost-effective to address states' good neighbor obligations for this NAAQS.

Additionally, EPA determined it was not feasible to complete an emissions control analysis that may otherwise have been necessary to evaluate full elimination of each state's significant contribution to nonattainment or interference with maintenance and also ensure that emission reductions already quantified in the rule would be achieved by 2017.

Id.

at 74522. EPA was unable to fully consider both non-EGU ozone season NO

reductions and further EGU reductions that may have been achievable after 2017.

Id.

at 74521.

See

Section V.D.3 below.

Thus, EPA also could not make an emissions reduction-based conclusion that the CSAPR Update would fully resolve states' good neighbor obligations with respect to the 2008 ozone NAAQS because the reductions evaluated and required by the CSAPR Update were limited in scope (both by technology and sector). As a result of the remaining air quality problems and the limitations on EPA's analysis, for all but one of the 22 affected states, EPA did not determine in the CSAPR Update that the rule fully addressed those states' downwind air quality impacts under the good neighbor provision for the 2008 ozone NAAQS.

Id.

at 74521. For one state, Tennessee, EPA determined in the final CSAPR Update that Tennessee's emissions budget fully eliminated the state's significant contribution to downwind nonattainment and interference with maintenance of the 2008 ozone NAAQS because the downwind air quality problems to which the state was linked were projected to be resolved with implementation of the CSAPR Update.

Id.

at 74552.

c. The CSAPR Close-Out

Following implementation of the CSAPR Update and the approval of Kentucky's SIP (under a court-ordered deadline),

on December 21, 2018, EPA issued the CSAPR “Close-Out” to address any good neighbor obligations that remained for the 2008 ozone NAAQS for the 20 remaining states in the CSAPR Update region.

See

83 FR 65878 (Dec. 21, 2018). The CSAPR Close-Out made a determination that, based on additional information and analysis, the CSAPR Update fully addressed the remaining 20 affected states' good neighbor obligations for the 2008 ozone NAAQS. In particular, EPA determined that 2023 was an appropriate future analytic year considering relevant attainment dates and the time EPA estimated to be necessary to implement new NO

control technologies at EGUs. Based on EPA's analysis of projected air quality in that year, EPA determined that, for the purposes of addressing good neighbor obligations for the 2008 ozone NAAQS, there would be no remaining nonattainment or maintenance receptors in the eastern U.S. As a result of this determination, EPA found that, with continued implementation of the CSAPR Update, these 20 states would no longer contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the 2008 ozone NAAQS.

Id.

83 FR 33730 (July 17, 2018) (approval of Kentucky's SIP for the 2008 ozone NAAQS).

See

section V.C.2.b. for discussion of our proposed action for Kentucky in this notice.

d. D.C. Circuit Decisions in Wisconsin v. EPA and New York v. EPA

The CSAPR Update was subject to petitions for judicial review, and the D.C. Circuit issued its opinion in

Wisconsin

EPA

on September 13, 2019. 938 F.3d 303. The D.C. Circuit upheld the CSAPR Update in all respects save one: The court concluded that the CSAPR Update was inconsistent with the CAA to the extent that it was partial in nature and did not fully eliminate upwind states' significant contribution to nonattainment or interference with maintenance of the 2008 ozone NAAQS by the downwind states' 2018 Moderate attainment date.

Id.

at 313.

The court identified three bases for this holding: (1) The D.C. Circuit's prior opinion in

North Carolina

EPA,

531 F.3d 896 (2008), which held, in the context of CAIR, that the good neighbor provision requires states to eliminate significant contribution “consistent with the provisions” of Title I of the CAA, including the attainment dates applicable in downwind areas, 938 F.3d at 314 (citing 531 F.3d at 912); (2) the unreasonableness of EPA's interpretation of the phrase “consistent with the provisions [of Title I]” in the good neighbor provision as allowing for variation from the attainment schedule in CAA section 181 because it would enable significant contribution from upwind states to continue beyond that statutory timeframe, 938 F.3d at 315-18; and (3) the court's finding that the practical obstacles EPA identified regarding why it needed more time to implement a full remedy did not rise to the level of an “impossibility,”

id.

at 318-20. With respect to the third basis, the court also found EPA must make a higher showing of uncertainty regarding non-EGU point-source NO

mitigation potential before declining to regulate such sources.

Id.

at 318-20.

However, the court identified flexibilities that EPA retains in administering the good neighbor provision, acknowledging that EPA has latitude in defining which upwind contribution “amounts” count as significant and thus must be abated, permitting EPA to consider, among other things, the magnitude of upwind states' contributions and the cost associated with eliminating them. 938 F.3d at 320. The court further noted that, in certain circumstances, EPA can grant extensions of the attainment deadlines under the Act; for instance, the court cited CAA section 181(a)(5), which allows EPA to grant one-year extensions from attainment dates under certain circumstances.

Id.

Finally, the court noted that EPA can attempt to show “impossibility.”

Id.

The court also recognized that the statutory command that compliance with the good neighbor provision must be achieved consistent with Title I might be read, upon a sufficient showing of necessity, to allow some deviation from downwind deadlines, so long as it is rooted in Title I's framework and provides a sufficient level of protection to downwind States.

Id.

The court in

Wisconsin

remanded but did not vacate the CSAPR Update, finding that vacatur of the rule could cause harm to public health and the environment or disrupt the trading program EPA had established and that the obligations imposed by the rule may be appropriate and sustained on remand.

Id.

at 336. The court also rejected petitioners' request to place EPA on a six-month schedule to address the remand, noting the availability of “mandamus” relief before the D.C. Circuit should EPA fail to “modify the rule in a manner consistent with our opinion.”

Id.

at 336-37.

On October 1, 2019, in a judgment order, the D.C. Circuit vacated the CSAPR Close-Out on the same grounds

that it remanded the Update in

Wisconsin. New York

EPA,

781 Fed. App'x 4 (D.C. Cir. 2019). Because the Close-Out analyzed the year 2023 rather than 2021 (“the next applicable attainment date”) and failed to demonstrate that it was impossible to address significant contribution by the 2021 attainment date, the court found the rule ran afoul of the

Wisconsin

holding.

Id.

at 7. “As the EPA acknowledges, the Close-Out Rule `relied upon the same statutory interpretation of the Good Neighbor Provision' that we rejected in

Wisconsin.

Thus, the Agency's defense of the Close-Out Rule in these cases is foreclosed.”

Id.

at 6-7 (internal citation omitted). The court left open the possibility that the flexibilities identified in

Wisconsin,

938 F.3d at 320, and outlined above, may be available to EPA on remand.

Id.

Following

Wisconsin

and

New York,

EPA on remand must address good neighbor obligations for the 21 states within the CSAPR Update region for which the Update was only a partial remedy. As explained in the following section, EPA already retains FIP authority as to 20 of these states. In addition, EPA is proposing action pursuant to CAA section 110(k)(6) (42 U.S.C. 7410(k)(6)) to find that Kentucky's SIP was approved in error and is thus proposing a FIP for Kentucky consistent with the obligations proposed for the other remaining CSAPR Update region states.

2. FIP Authority for Each State Covered by the Proposed Rule

On March 12, 2008, EPA promulgated a revision to the ozone NAAQS, lowering both the primary and secondary standards to 75 ppb.

See

National Ambient Air Quality Standards for Ozone, Final Rule, 73 FR 16436 (March 27, 2008). Specifically, the standards require that an area may not exceed 0.075 parts per million (75 ppb) using the 3-year average of the fourth highest 24-hour maximum 8-hour rolling average ozone concentration. These revisions of the NAAQS, in turn, triggered a 3-year deadline for states to submit SIP revisions addressing infrastructure requirements under CAA sections 110(a)(1) and 110(a)(2), including the good neighbor provision. Several events affected the timely application of the good neighbor provision for the 2008 ozone NAAQS, including reconsideration of the 2008 ozone NAAQS and legal developments pertaining to the CSAPR, which created uncertainty surrounding EPA's statutory interpretation and implementation of the good neighbor provision.

Notwithstanding these events, EPA ultimately affirmed that states' good neighbor SIPs were due on March 12, 2011.

These events are described in detail in section IV.A.2 of the CSAPR Update.

See

81 FR 74515.

a. FIP Authority for CSAPR Update States

EPA subsequently took several actions that triggered EPA's obligation under CAA section 110(c) to promulgate FIPs addressing the good neighbor provision for several states.

First, on July 13, 2015, EPA published a rule finding that 24 states failed to make complete submissions that address the requirements of section 110(a)(2)(D)(i)(I) related to the interstate transport of pollution as to the 2008 ozone NAAQS.

See

80 FR 39961 (effective August 12, 2015). This finding triggered a two-year deadline for EPA to issue FIPs to address the good neighbor provision for these states by August 12, 2017. The CSAPR Update finalized FIPs for 13 of these states (Alabama, Arkansas, Illinois, Iowa, Kansas, Michigan, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee, Virginia, and West Virginia), requiring their participation in a NO

trading program. EPA also determined in the CSAPR Update that the Agency had no further FIP obligation as to nine additional states identified in the finding of failure to submit because these states did not contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the 2008 ozone NAAQS.

See

81 FR 74506.

59 60

On June 15, 2016, and July 20, 2016, EPA published additional rules finding that Maryland and New Jersey, respectively, also failed to submit transport SIPs for the 2008 ozone NAAQS.

See

81 FR 38963 (June 15, 2016) (New Jersey, effective July 15, 2016); 81 FR 47040 (July 20, 2016) (Maryland, effective August 19, 2016). The finding actions triggered two-year deadlines for EPA to issue FIPs to address the good neighbor provision for Maryland by August 19, 2018, and for New Jersey by July 15, 2018. The CSAPR Update also finalized FIPs for these two states.

This section of the preamble focuses on SIP and FIP actions for those states addressed in the CSAPR Update. EPA has also acted on SIPs for other states not mentioned in this action. The memorandum, “Proposed Action, Status of 110(a)(2)(D)(i)(I) SIPs for the 2008 Ozone NAAQS,” more fully describes the good neighbor SIP status for the 2008 ozone NAAQS and is available in the docket for this proposal.

The nine states were Florida, Georgia, Maine, Massachusetts, Minnesota, New Hampshire, North Carolina, South Carolina, and Vermont. These determinations were not challenged in

Wisconsin,

and EPA is not reopening these determinations in this proposal.

The two remaining states addressed in the findings of failure to submit (California and New Mexico) were not part of the CSAPR Update or the CSAPR Close-Out analysis and are not addressed in this proposal.

In addition to these findings, EPA finalized disapproval or partial disapproval actions for good neighbor SIPs submitted by Indiana, Kentucky, Louisiana, New York, Ohio, Texas, and Wisconsin.

These disapprovals triggered EPA's obligation to promulgate FIPs to implement the requirements of the good neighbor provision for those states within two years of the effective date of each disapproval or, in the case of Kentucky, within two years of the issuance of the judgment in a subsequent Supreme Court decision.

EPA promulgated FIPs in the CSAPR Update for each of these states.

See

the following actions: Indiana (81 FR 38957, June 15, 2016); Kentucky (78 FR 14681, March 7, 2013); Louisiana (81 FR 53308, August 12, 2016); New York (81 FR 58849, August 26, 2016); Ohio (81 FR 38957, June 15, 2016); Texas (81 FR 53284, August 12, 2016); and Wisconsin (81 FR 53309, August 12, 2016).

In the 2013 disapproval action for Kentucky, EPA stated that it had no mandatory duty to issue a FIP because of the D.C. Circuit's holding in

EME Homer City Generation, L.P.

EPA,

696 F.3d 7 (D.C. Cir. 2012), that EPA cannot impose good neighbor FIPs without first quantifying states' obligations.

See

78 FR 14681. In 2014, the Supreme Court reversed the D.C. Circuit's holding.

EPA

EME Homer City Generation, L.P.,

572 U.S. 489, 509-10 (2014). In light of the Supreme Court's decision, on review of our 2013 disapproval action for Kentucky in the Sixth Circuit, EPA requested, and the court granted, a vacatur and remand of the portion of EPA's final action that determined that a FIP obligation was not triggered.

See

Order,

Sierra Club

EPA,

No. 13-3546, ECF No. 74-1 (6th Cir. Mar. 13, 2015). On remand, EPA determined that its FIP obligation as to Kentucky was triggered as of June 2, 2014, the date of issuance of the Supreme Court's judgment.

See

81 FR 74513.

As discussed in more detail above in section V.C.1, in issuing the CSAPR Update, EPA did not determine that it had entirely addressed EPA's outstanding CAA obligations to implement the good neighbor provision with respect to the 2008 ozone NAAQS for 21 of 22 states covered by that rule. Accordingly, the CSAPR Update did not fully satisfy EPA's obligation under CAA section 110(c) to address the good neighbor provision requirements for those states by approving SIPs, issuing FIPs, or some combination of those two actions. EPA found that the CSAPR Update FIPs fully addressed the good neighbor provision for the 2008 ozone NAAQS only with respect to Tennessee.

b. Correction of EPA's Determination Regarding Kentucky's SIP Revision and Its Impact on EPA's FIP Authority for Kentucky

After promulgating the CSAPR Update and before promulgating the CSAPR Close-Out, EPA approved a SIP from Kentucky resolving that state's good neighbor obligations for the 2008 ozone NAAQS. 83 FR 33730 (July 17, 2018). The action was separate from the CSAPR Close-Out because it was taken in response to a May 23, 2017 order from the U.S. District Court for the Northern District of California requiring EPA to take a final action fully addressing the good neighbor obligation for the 2008 ozone NAAQS for Kentucky by June 30, 2018.

EPA was obligated to address the outstanding obligation by either approving a SIP submitted by Kentucky or promulgating a FIP to address any remaining obligation.

See

Order,

Sierra Club

Pruitt,

No. 3:15-cv-04328 (N.D. Cal. May 23, 2017).

The obligation ultimately derives from EPA's 2013 action disapproving Kentucky's SIP addressing the 2008 ozone NAAQS on the basis that Kentucky relied on the CAIR program for the 2008 ozone NAAQS good neighbor obligation. However, as previously discussed, the trigger for the timing of the obligation was the 2014 issuance of the Supreme Court's judgment in

EPA

EME Homer City Generation, L.P.,

572 U.S. 489 (2014).

See supra

note 62.

On May 10, 2018, Kentucky submitted a final SIP to EPA, on which the Agency finalized approval consistent with the court-ordered deadline.

See

83 FR 33730. The Kentucky SIP revision that EPA approved relied on the reductions from the CSAPR Update FIP for Kentucky and provided a technical analysis, including emission projections and air quality modeling for 2023, showing that with the CSAPR Update level of reductions, the receptors to which Kentucky was linked were attaining and maintaining the 2008 ozone NAAQS in 2023. This allowed EPA to conclude that Kentucky did not have any further obligation for the 2008 ozone NAAQS, and EPA approved the SIP revision. Thus, the approval relied on the same rationale and technical analysis that was eventually used for the other CSAPR Update FIP states in the CSAPR Close-Out. EPA's approval stated:

“no additional emission reductions are necessary to address the good neighbor provision for the 2008 ozone NAAQS beyond those required by the Cross-State Air Pollution Rule Update (CSAPR Update) federal implementation plan (FIP). Accordingly, EPA is approving Kentucky's submission because it partially addresses the requirements of the good neighbor provision for the 2008 ozone NAAQS, and it resolves any obligation remaining under the good neighbor provision after promulgation of the CSAPR Update FIP. The approval of Kentucky's SIP submission and the CSAPR Update FIP, together, fully address the requirements of the good neighbor provision for the 2008 ozone NAAQS for Kentucky.”

83 FR 33730.

Subsequent to EPA's approval of the Kentucky SIP, EPA issued the CSAPR Close-Out, which concluded that, based on essentially the same analysis used for Kentucky, none of the other 20 CSAPR Update states had further good neighbor obligations to address the 2008 8-hour ozone NAAQS. In the Fall of 2019, the D.C. Circuit issued the

Wisconsin

and

New York

decisions remanding the CSAPR Update Rule and vacating the CSAPR Close-Out (see Section V.C.1.d.).

Kentucky's CSAPR Update FIP, which Kentucky relied on in its SIP revision, is part of the CSAPR Update remand, and EPA must address it in this action. Further, the D.C. Circuit's review of the CSAPR Close-Out found fault with, and vacated, the same rationale that EPA had used to approve Kentucky's SIP in June 2018.

Therefore, in light of the remand of Kentucky's CSAPR Update FIP in

Wisconsin

and vacatur of the CSAPR Close-Out in

New York,

EPA is proposing to determine in this action that its approval of Kentucky's SIP as fully resolving the state's 2008 ozone NAAQS good neighbor obligations was in error. Section 110(k)(6) of the CAA (42 U.S.C. 7410(k)(6)) gives the Administrator authority, without any further submission from a state, to revise certain prior actions, including actions to approve SIPs, upon determining that those actions were in error. The court's remand of the partial FIP for Kentucky in

Wisconsin

and the vacatur of EPA's conclusions for states identically situated to Kentucky in the CSAPR Close-Out means that EPA's approval of Kentucky's SIP was in error. EPA is compelled on remand to act consistently with the court's opinion and has reassessed Kentucky's good neighbor obligations under the 2008 ozone NAAQS here. In doing so, EPA's proposed analysis identifies an additional emission reduction obligation for Kentucky. Therefore, EPA is proposing to correct the error in Kentucky's SIP approval through this notice and comment rulemaking, as allowed by the CAA when a prior SIP approval was in error. The proposed error correction under CAA section 110(k)(6) would revise the approval of Kentucky's SIP to a disapproval and rescind any statements that the SIP submission fully addresses the requirements of the good neighbor provision for the 2008 ozone NAAQS for Kentucky. The Kentucky approval relied on the same analysis which the D.C. Circuit determined to be unlawful in the CSAPR Close-Out, because it only addressed conditions in 2023 without a showing of impossibility regarding the next attainment date in 2021. Kentucky's remanded partial FIP has been reassessed in this action, consistent with EPA's methodology to address the other 20 states with remanded CSAPR Update FIPs, and consistent with the D.C. Circuit's direction in

Wisconsin

and

New York.

As discussed in greater detail in the sections that follow, EPA proposes to determine that there are additional emission reductions that are required for Kentucky to fully satisfy its good neighbor obligation for the 2008 ozone NAAQS. The analysis on which EPA proposes this conclusion for Kentucky is the same, regionally consistent analytical framework on which the Agency proposes action for all of the other CSAPR Update states with remanded FIPs. The Agency recognizes that it is possible, based on updated information for the final rule—as applied within a regionally consistent analytical framework—that Kentucky (or other states for which EPA proposes revised FIPs in this action) may be found to have no further interstate transport obligation for the 2008 ozone NAAQS. If such a circumstance were to occur, EPA anticipates that it would not finalize this proposed error correction or may modify the error correction such that our July 2018 approval of Kentucky's SIP may be affirmed.

c. CSAPR Update SIP Revisions That Do Not Affect FIP Authority

Subsequent to the promulgation of the CSAPR Update, EPA approved SIPs fully replacing the CSAPR Update FIPs for Alabama, Indiana, and Missouri.

In those SIP approvals and consistent with the conclusions of the CSAPR Update, EPA found that the SIPs partially satisfy Alabama's, Indiana's, and Missouri's good neighbor obligations for the 2008 ozone NAAQS. Thus, EPA continues to have an obligation to fully address good neighbor requirements for the 2008 ozone NAAQS with respect to Alabama and Missouri, stemming from the July 13, 2015, findings of failure to submit, and Indiana, due to the June 15, 2016, disapproval of the state's good neighbor SIP.

See

80 FR 39961; 81 FR 38957. Other states have also submitted 2008 ozone NAAQS good neighbor SIPs or

SIPs to replace their CSAPR FIPs, some of which EPA has approved and some of which still remain pending. Because these circumstances do not affect the scope or basis for this rulemaking, these actions are not described in detail in this section.

82 FR 46674 (Oct. 6, 2017) (Alabama); 83 FR 64472 (Dec. 17, 2018) (Indiana); 84 FR 66316 (Dec. 4, 2019) (Missouri).

d. Summary of Authority for FIPs for This Action

Table V.C-1 summarizes the statutory deadline for EPA to address its FIP obligation under CAA section 110(c) and the event that activated EPA's obligation for each of the 21 CSAPR Update states that are the subject of this final action. For more information regarding the actions triggering EPA's FIP obligation and EPA's action on SIPs addressing the good neighbor provision for the 2008 ozone NAAQS, see the memorandum, “Proposed Action, Status of 110(a)(2)(D)(i)(I) SIPs for the 2008 Ozone NAAQS,” in the docket for this action.

Table V.C-1—Actions That Activated EPA's Statutory FIP Deadlines

State

Type of action

(

Federal Register

citation, publication date)

Statutory FIP

deadline

†

Alabama

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Arkansas

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Illinois

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Indiana

SIP disapproval (81 FR 38957, 6/15/2016)

7/15/2018

Iowa

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Kansas

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Kentucky

SIP disapproval (78 FR 14681, 3/7/2013)

6/2/2016

Louisiana

SIP disapproval (81 FR 53308, 8/12/2016)

9/12/2018

Maryland

Finding of Failure to Submit (81 FR 47040, 7/20/2016)

8/19/2018

Michigan

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Mississippi

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Missouri

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

New Jersey

Finding of Failure to Submit (81 FR 38963, 6/15/2016)

7/15/2018

New York

SIP disapproval (81 FR 58849, 8/26/2016)

9/26/2018

Ohio

SIP disapproval (81 FR 38957, 6/15/2016)

7/15/2018

Oklahoma

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Pennsylvania

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Texas

SIP disapproval (81 FR 53284, 8/12/2016)

9/12/2018

Virginia

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

West Virginia

Finding of Failure to Submit (80 FR 39961, 7/13/2015)

8/12/2017

Wisconsin

Partial SIP disapproval as to prong 2 (81 FR 53309, 8/12/2016)

9/12/2018

†

For states other than Kentucky, the FIP deadline is two years from the effective date of the SIP disapproval or Finding of Failure to Submit, which generally trails the publication date by 30 days. For Kentucky, the FIP deadline is two years after the issuance of the Supreme Court's judgment in

EPA

EME Homer City Generation, L.P.,

572 U.S. 489 (2014).

See supra

note 62.

3. The 4-Step Good Neighbor Framework

The CSAPR and the subsequent CSAPR Update, building on EPA's prior methodologies in the NO

SIP Call and CAIR, established a 4-step process to address the requirements of the good neighbor provision.

In this proposed action to address the remand of the CSAPR Update, EPA follows the same steps. These steps are: (1) Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS; (2) determining which upwind states contribute to these identified problems in amounts sufficient to “link” them to the downwind air quality problems; (3) for states linked to downwind air quality problems, identifying upwind emissions that significantly contribute to downwind nonattainment or interfere with downwind maintenance of the NAAQS; and (4) for states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, implementing the necessary emissions reductions through enforceable measures.

See

CSAPR, Final Rule, 76 FR 48208, 48248-48249 (Aug. 8, 2011); CSAPR Update, Final Rule, 81 FR 74504, 74517-74521 (Oct. 26, 2016).

Step 1—In the CSAPR, downwind air quality problems were assessed using modeled future air quality concentrations for a year aligned with attainment deadlines for the NAAQS considered in that rulemaking. The assessment of future air quality conditions generally accounts for on-the-books emission reductions and the most up-to-date forecast of future emissions in the absence of the transport policy being evaluated (

i.e.,

base case conditions). The locations of downwind air quality problems are identified as those with receptors that are projected to be unable to attain (

i.e.,

nonattainment receptor) or maintain (

i.e.,

maintenance receptor) the NAAQS. In the CSAPR Update, EPA also considered current monitored air quality data to further inform the projected identification of downwind air quality problems. These same considerations are included for this proposal. EPA is not reopening the definition of nonattainment and maintenance receptors promulgated in the CSAPR Update. Further details and application of Step 1 for this proposal are described in section VI.

Step 2—The CSAPR and the CSAPR Update used a screening threshold of 1 percent of the NAAQS to identify upwind states that were “linked” to downwind air pollution problems. States with contributions greater than or equal to the threshold for at least one downwind problem receptor (

i.e.,

nonattainment or maintenance receptor identified in Step 1) were identified as needing further evaluation for actions to address transport if their air quality was impacted.

EPA evaluated a given state's contribution based on the average relative downwind impact calculated over multiple days.

States whose air

quality impacts to all downwind problem receptors were below this threshold did not require further evaluation for actions to address transport—that is, these states were determined to not contribute to downwind air quality problems and therefore had no emission reduction obligations under the good neighbor provision. EPA has used this threshold because a notable portion of the transport problem in the eastern half of the United States can result from relatively small contributions from a number of upwind states. Use of the 1 percent threshold for the CSAPR is discussed in the preambles to the proposed and final CSAPR rules.

See

75 FR 45237 (Aug. 2, 2010); 76 FR 48238 (Aug. 8, 2011). The same metric is discussed in the CSAPR Update Rule.

See

81 FR 74538. While EPA has updated its air quality data for determining contributions, the Agency is not reopening the use of the 1 percent threshold in this action to address the remand of the CSAPR Update. Application of Step 2 for this proposal is described in section VI.

For ozone the impacts would include those from (VOC) and NO

, and from all sectors.

The number of days used in calculating the average contribution metric has historically been determined in a manner that is generally consistent with EPA's recommendations for projecting future year ozone design values. Our ozone attainment demonstration modeling guidance at the time of CSAPR recommended using all model-predicted days above the NAAQS to calculate future year

design values (

https://www3.epa.gov/ttn/scram/guidance/guide/final-03-pm-rh-guidance.pdf

). In 2014 EPA issued draft revised guidance that changed the recommended number of days to the top-10 model predicted days (

https://www3.epa.gov/ttn/scram/guidance/guide/Draft-O3-PM-RH-Modeling_Guidance-2014.pdf

). For CSAPR Update we transitioned to calculating design values based on this draft revised approach. The revised modeling guidance was finalized in 2019 and, in this regard, we are calculating both the ozone design values and the contributions based on a top-10 day approach (

https://www3.epa.gov/ttn/scram/guidance/guide/O3-PM-RH-Modeling_Guidance-2018.pdf

Step 3—For states that are linked in Step 2 to downwind air quality problems, the CSAPR and the CSAPR Update evaluated NO

reductions that were available in upwind states by applying a uniform control technology (represented by a marginal cost of NO

emissions) to entities in these states. EPA evaluated NO

reduction potential, cost, and downwind air quality improvements available at several cost thresholds in the multi-factor test. In both the CSAPR and the CSAPR Update, EPA selected the cost-threshold that maximized cost-effectiveness (of the cost thresholds examined), that is, the level of stringency in emission budgets at which incremental NO

reduction potential and corresponding downwind ozone air quality improvements are maximized with respect to marginal cost relative to the other emission budget levels evaluated.

See, e.g.,

81 FR 74550. This evaluation quantified the magnitude of emissions that significantly contribute to nonattainment or interfere with maintenance of a NAAQS downwind and apportioned upwind responsibility among linked states, an approach upheld by the U.S. Supreme Court in

EPA

EME Homer City.

In general, EPA proposes in this action to apply this approach to identify NO

emission reductions necessary to address significant contribution for the 2008 ozone NAAQS.

EPA

EME Homer City Generation, L.P.,

572 U.S. 489 (2014).

EME Homer City,

the Supreme Court held that “EPA cannot require a State to reduce its output of pollution by more than is necessary to achieve attainment in every downwind State or at odds with the one-percent threshold the Agency has set.” 572 U.S. at 521. The Court acknowledged that “instances of `over-control' in particular downwind locations may be incidental to reductions necessary to ensure attainment elsewhere.”

Id.

at 492.

“Because individual upwind States often `contribute significantly' to nonattainment in multiple downwind locations, the emissions reductions required to bring one linked downwind State into attainment may well be large enough to push other linked downwind States over the attainment line. As the Good Neighbor Provision seeks attainment in

every

downwind State, however, exceeding attainment in one State cannot rank as `over-control' unless unnecessary to achieving attainment in

any

downwind State. Only reductions unnecessary to downwind attainment

anywhere

fall outside the Agency's statutory authority.”

Id.

at 522 (footnotes excluded).

The Court further explained that “while EPA has a statutory duty to avoid over-control, the Agency also has a statutory obligation to avoid `under-control,'

i.e.,

to maximize achievement of attainment downwind.”

Id.

at 523. Therefore, in the CSAPR Update, EPA evaluated possible over-control by considering whether an upwind state is linked solely to downwind air quality problems that can be resolved at a lower cost threshold, or if upwind states would reduce their emissions at a lower cost threshold to the extent that they would no longer meet or exceed the 1 percent air quality contribution threshold.

See

81 FR at 74551-52. This evaluation of cost, NO

reductions, and air quality improvements, including consideration of potential over-control, results in EPA's determination of upwind emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind and should therefore be eliminated. This allows EPA to then determine an enforceable emissions limit (often embodied in the form of an emissions budget) for the covered sources. Emissions budgets are the remaining allowable emissions after the elimination of emissions identified as significantly contributing to nonattainment or interfering with maintenance of the standard downwind.

In both the CSAPR and the CSAPR Update, EPA focused its Step 3 analysis on EGUs. In the CSAPR Update, EPA did not quantify non-EGU stationary source emissions reductions to address interstate ozone transport for the 2008 ozone NAAQS for two reasons. First, EPA explained that there was greater uncertainty in EPA's assessment of non-EGU NO

mitigation potential, and that more time would be required for states and EPA to improve non-EGU point source data and pollution control assumptions before it could develop emission reduction obligations based on that data.

See

81 FR 74542. Second, EPA explained that it did not believe that significant, certain, and meaningful non-EGU NO

reduction was in fact feasible for the 2017 ozone season.

Id.

Wisconsin,

the D.C. Circuit found that the practical obstacles EPA identified with respect to its evaluation of non-EGUs did not rise to the level of an “impossibility,” 938 F.3d at 318-20. The court also found that EPA must make a higher showing of uncertainty regarding non-EGU point-source NO

mitigation potential before declining to regulate such sources on such a basis,

id.

Therefore, as discussed in more detail in Section VII, in this proposed action on remand from

Wisconsin,

EPA has included all major stationary source sectors in the linked upwind states in its “significant contribution” analysis at Step 3 of the 4-step framework.

Step 4—CSAPR and the CSAPR Update established interstate trading programs to implement the necessary emission reductions. Each state subject to the program is assigned an emissions budget for the covered sources. Emissions allowances are allocated to units covered by the trading program, and the covered units then surrender allowances after the close of each control period in an amount equal to their ozone season EGU NO

emissions.

EPA's trading programs under the good neighbor provision allow for interstate trading. However, in order to ensure that each state achieves reductions proportional to the level of their significant contribution, beginning with the CSAPR, EPA established “assurance levels” set as percentage of each state's budget (

e.g.,

121 percent) above which emissions from sources in that state become subject to a higher “penalty” surrender ratio. These assurance levels are designed to allow for a certain level of year-to-year

variability within power sector emissions to account for fluctuations in demand and EGU operations. The levels are therefore set by determining a “variability limit,” calculated based on an analysis of the historical level of variability in EGU operations.

Thus, both the CSAPR and the CSAPR Update set assurance levels equal to the sum of each state's emissions budget plus its variability limit. The CSAPR and the CSAPR Update included assurance provisions to limit state emissions to levels below 121 percent of the state's budget by requiring additional allowance surrenders in the instance that emissions in the state exceed this level. This limit on the degree to which a state's emissions can exceed its budget is responsive to previous court decisions (see discussion in section VIII.C.2 of this preamble) and was not part of the CSAPR Update aspects remanded to EPA in

Wisconsin.

EPA proposes to apply the same variability limits and assurance provisions in this rulemaking.

Implementation using a CSAPR trading program is further described in section VIII of this notice.

Historical heat input and NO

emissions in states covered by the CSAPR programs may be found in the “Historical CSAPR Update Emissions and Heat Input 2000 to 2019.xlsx” file.

VI. Analyzing Downwind Air Quality and Upwind-State Contributions

In this section, EPA describes the air quality modeling and analyses performed to identify nonattainment and/or maintenance receptors and evaluate interstate contributions to these receptors from individual upwind states for the 2021 analytic year. Although the air quality modeling was performed using an air quality modeling platform that covers the contiguous 48 states, the analysis to identify receptors and evaluate contributions focuses on the 21 upwind states that are the subject of this rule.

The year 2021 was selected as the appropriate future analytic year for this rule because it coincides with the July 20, 2021, Serious area attainment date under the 2008 ozone NAAQS. In the CSAPR Update, EPA had aligned its analysis and implementation of emission reductions with the 2017 ozone season (ozone seasons run each year from May 1-September 30) in order to assist downwind states with timely attainment of the 2008 ozone NAAQS by the Moderate area attainment date of July 20, 2018.

See

81 FR 74516. In order to demonstrate attainment by this deadline, states were required to rely on design values calculated using ozone season data from 2015 through 2017, since the July 20, 2018, deadline did not afford enough time for measured data of the full 2018 ozone season. Similarly, for the Serious area attainment date in 2021, states will rely on design values calculated using ozone season data from 2018 through 2020. However, it is not possible to impose emission reductions on upwind states in the 2020 ozone season, which has already passed. Reductions in the 2021 ozone season will nonetheless occur in time for the 2021 attainment date and therefore assist downwind states in achieving attainment by the July 20, 2021 attainment date, in compliance with the

Wisconsin

holding.

See Wisconsin,

938 F.3d at 309 (the CSAPR Update is unlawful to the extent it allowed upwind states to “continue their significant contributions to downwind air quality problems

beyond the statutory deadlines

by which downwind States must demonstrate their attainment of air quality standards”) (emphasis added). Further, EPA continues to interpret the good neighbor provision as forward-looking, based on Congress's use of the future-tense “will” in section 110(a)(2)(D)(i), an interpretation upheld in

Wisconsin,

938 F.3d at 322. It would be “anomalous,”

id.,

for EPA to impose good neighbor obligations in 2021 and future years based solely on finding that “significant contribution” had existed at some time in the past.

EPA has also conducted additional analysis of remaining air quality receptors and contribution in years beyond 2021, in order to ensure a complete Step 3 analysis. EPA has analyzed these later years to determine whether any additional emission reductions that are impossible to obtain by the 2021 attainment date may yet be necessary in order to fully address significant contribution. This comports with the D.C. Circuit's direction in

Wisconsin

that implementing good neighbor obligations beyond the dates established for attainment may be justified on a proper showing of impossibility and/or necessity.

See

938 F.3d at 320. However, for purposes of EPA's initial analysis of air quality at Step 1 of the 4-step framework, in accordance with

Wisconsin,

EPA has selected the 2021 ozone season, corresponding with the 2021 Serious area attainment date.

The remainder of this section includes information on (1) the air quality modeling platform used in support of the proposed rule with a focus on the base year and future year base case emission inventories, (2) the method for projecting design values in 2021, and (3) the approach for calculating ozone contributions from upwind states.

The Agency also provides the design values for nonattainment and maintenance receptors and the predicted interstate contributions that are at or above the one percent of the NAAQS screening threshold. The 2016 base period and 2021, 2023, and 2028 future design values and contributions for all ozone monitoring sites are provided in the docket for this proposed rule. The Air Quality Modeling Technical Support Document (AQM TSD) in the docket for this proposed rule contains more detailed information on the air quality modeling aspects of this rule.

For the 2023 and 2028 modeling used in the Step 3 analysis, EPA followed the same method for projecting design values and approach for calculating contributions as described for the 2021 analytic year.

A. Overview of Air Quality Modeling Platform

EPA used the 2016-based modeling platform for the air quality modeling for this proposed rule. This modeling platform includes 2016 base year emissions from anthropogenic and natural sources and 2016 meteorology. The platform also includes anthropogenic emission projections for 2023 and 2028. The emissions data contained in this platform were developed by EPA, Multi-Jurisdictional Organizations (MJOs), and state and local air agencies as part of the Emissions Inventory Collaborative Process. This process resulted in a common-use set of emissions data for a 2016 base year and 2023 and 2028 that can be leveraged by EPA and states for regulatory air quality modeling.

The air quality modeling was performed for a modeling region (

i.e.,

modeling domain) that covers the contiguous 48 states using a horizontal resolution of 12 x 12 km. EPA used the CAMx version 7beta6 for air quality modeling since this was the most recent version of CAMx available at the time the air quality modeling was performed.

Additional information on the 2016-based air quality modeling platform can be found in the AQM TSD.

http://views.cira.colostate.edu/wiki/wiki/9169

Ramboll Environment and Health, May 2020,

www.camx.com.

Note that CAMx v7beta6 is a pre-lease of version 7 that EPA used because the official release of version 7 did not occur until May 2020, which was too late for use in the air quality modeling for this proposal.

B. Emissions Inventories

EPA developed emission inventories for this proposal, including emission estimates for EGUs, non-EGU point sources, stationary nonpoint sources,

onroad mobile sources, nonroad mobile sources, wildfires, prescribed fires, and biogenic emissions that are not the result of human activities. EPA's air quality modeling relies on this comprehensive set of emission inventories because emissions from multiple source categories are needed to model ambient air quality and to facilitate comparison of model outputs with ambient measurements.

To prepare the emission inventories for air quality modeling, EPA processed the emission inventories using the Sparse Matrix Operator Kernel Emissions (SMOKE) Modeling System version 4.7 to produce the gridded, hourly, speciated, model-ready emissions for input to the air quality model. Additional information on the development of the emission inventories and on data sets used during the emissions modeling process are provided in the Technical Support Document (TSD) “Preparation of Emissions Inventories for the 2016v1 North American Emissions Modeling Platform,” hereafter known as the “Emissions Modeling TSD.” This TSD is available in the docket for this rule and at

https://www.epa.gov/air-emissions-modeling/2016v1-platform

1. Foundation Emission Inventory Data Sets

Emissions data were developed that represented the year 2016 to support air quality modeling of a base year from which future air quality could be forecasted. As noted above, EPA used the Inventory Collaborative 2016 version 1 (2016v1) Emissions Modeling Platform, released in October 2019, as the primary basis for the inventories supporting the air quality modeling. This platform was developed through a national collaborative effort between EPA and state and local agencies along with MJOs. The original starting point for the U.S. portions of the 2016 inventory was the 2014 National Emissions Inventory (NEI), version 2 (2014NEIv2), although all of the inventory sectors were updated to better represent the year 2016 through the incorporation of 2016-specific state and local data along with nationally applied adjustment methods. The future base case inventories developed for 2023 and 2028 represent projected changes in activity data and predicted emission reductions from on-the-books actions, planned emission control installations, and promulgated federal measures that affect anthropogenic emissions.

Biogenic emissions and emissions from wildfires and prescribed fires were held constant between 2016 and the future years because (1) these emissions are tied to the 2016 meteorological conditions and (2) the focus of this rule is on the contribution from anthropogenic emissions to projected ozone nonattainment and maintenance.

2. Development of Emission Inventories for EGUs

Annual NO

and SO

emissions for EGUs in the 2016 base year inventory are based primarily on data from continuous emission monitoring systems (CEMS) and other monitoring systems allowed for use by qualifying units under 40 CFR part 75, with other EGU pollutants estimated using emission factors and annual heat input data reported to EPA. For EGUs not reporting under part 75, EPA used the most recent data submitted to the NEI by the states. Emissions data for sources that did not have data provided for the year 2016 were pulled forward from data submitted for 2014. The Air Emissions Reporting Rule, (80 FR 8787; February 19, 2015), requires that Type A point sources large enough to meet or exceed specific thresholds for emissions be reported to EPA every year, while the smaller Type B point sources must only be reported to EPA every three years. For more information on how the 2016 EGU emissions data were developed and prepared for air quality modeling, see the Emissions Modeling TSD.

EPA projected future 2023 and 2028 baseline EGU emissions using the version 6—January 2020 reference case of the Integrated Planning Model (IPM).

75 76

IPM, developed by ICF Consulting, is a state-of-the-art, peer-reviewed, multi-regional, dynamic, deterministic linear programming model of the contiguous U.S. electric power sector. It provides forecasts of least cost capacity expansion, electricity dispatch, and emission control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. EPA has used IPM for over two decades to better understand power sector behavior under future business-as-usual conditions and to evaluate the economic and emission impacts of prospective environmental policies. The model is designed to reflect electricity markets as accurately as possible. EPA uses the best available information from utilities, industry experts, gas and coal market experts, financial institutions, and government statistics as the basis for the detailed power sector modeling in IPM. The model documentation provides additional information on the assumptions discussed here as well as all other model assumptions and inputs.

https://www.epa.gov/powersectormodeling

The 2016v1 platform released in October 2019 used the May 2019 reference case. The January 2020 IPM reference case is a later version than what was released with 2016v1.

Detailed information and documentation of EPA's Base Case, including all the underlying assumptions, data sources, and architecture parameters can be found on EPA's website at:

www.epa.gov/airmarkets/powersectormodeling

The IPM version 6—January 2020 reference base case accounts for updated federal and state environmental regulations, committed EGU retirements and new builds, and technology cost and performance assumptions as of late 2019. This projected base case accounts for the effects of the finalized Mercury and Air Toxics Standards rule, the CSAPR and the CSAPR Update, New Source Review settlements, and other on-the-books federal and state rules through 2019

impacting SO

, NO

, directly emitted particulate matter, and CO

, and final actions EPA has taken to implement the Regional Haze Rule.

For any specific version of IPM there is a cutoff date after which it is no longer possible to incorporate updates into the input databases. For version 6—January reference case, that cutoff date was November 2019.

Additional 2021 EGU emissions baseline levels were developed through engineering analytics as an alternative approach that did not involve IPM. EPA developed this inventory for use in Step 3 of this proposed rulemaking, where it determines emission reduction potential and corresponding emission budgets. IPM includes optimization and perfect foresight in solving for least cost dispatch. Given that the final rule will likely become effective either immediately prior to or slightly after the start of the 2021 ozone season, EPA adopted a similar approach to the CSAPR Update where it relied on IPM in a relative way in Step 3 to avoid overstating optimization and dispatch decisions that were not possible in the short time frame. EPA does this by using the difference in emission rate observed between IPM runs with and without the cost threshold applied, rather than using absolute values. In both the CSAPR Update and in this rule at Step 3, EPA complemented that projected IPM EGU outlook with historical (

e.g.,

engineering analytics) perspective based on historical data that only factors in known changes to the fleet. This 2021 engineering analytics data set is described in more detail in the Ozone Transport Policy Analysis TSD.

3. Development of Emission Inventories for non-EGU Point Sources

The non-EGU point source emissions in the 2016 base case inventory match those in the 2016v1 platform. Some non-EGU point source emissions were based on data submitted for 2016, others were projected from 2014 to 2016, and

the emissions for remaining small sources were kept at 2014 levels. Prior to air quality modeling, the emission inventories were processed into a format that is appropriate for the air quality model to use. Projection factors and percent reductions in this proposal reflect comments received as a result of the Inventory Collaborative development process, along with emission reductions due to national and local rules, control programs, plant closures, consent decrees, and settlements. Reductions from several Maximum Achievable Control Technology and National Emission Standards for Hazardous Air Pollutants (NESHAP) standards are included. Projection approaches for corn ethanol and biodiesel plants, refineries and upstream impacts represent requirements pursuant to the Energy Independence and Security Act of 2007 (EISA). Details on the development and processing of the non-EGU emissions inventories for 2016, 2023, and 2028 are available in the Emissions Modeling TSD.

For aircraft emissions at airports, the emissions used were based on adjustments to emissions in the 2017 NEI (see

https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data

for data and a TSD). EPA developed and applied factors to adjust the 2017 emissions to 2016, 2023, and 2028 based on activity growth projected by the Federal Aviation Administration Terminal Area Forecast system, published in 2018.

Emissions at rail yards were represented as non-EGU point sources. The 2016 rail yard emissions are largely consistent with the 2017 NEI rail yard emissions. The 2016, 2023, and 2028 rail yard emissions were developed through the Inventory Collaborative process. The rail yard emissions were interpolated from the 2016 and 2023 emissions. Class I rail yard emissions were projected using the Energy Information Administration's 2019 AEO freight rail energy use growth rate projections for 2016, 2023, and 2028 with the fleet mix assumed to be constant throughout the period.

Point source oil and gas emissions for 2016 were based on the 2016v1 point inventory, while nonpoint oil and gas emissions were primarily based on a run of EPA Oil and Gas Tool for the year 2016. The 2016 oil and gas inventories were projected to 2023 and 2028 using regional projection factors by product type based on Annual Energy Outlook (AEO) 2018 projections. NO

and VOC reductions that are co-benefits to the NESHAP and New Source Performance Standards (NSPS) for Stationary Reciprocating Internal Combustion Engines (RICE) are reflected for select source categories. In addition, Natural Gas Turbines and Process Heaters NSPS NO

controls and NSPS Oil and Gas VOC controls are reflected for select source categories. Additional information on the development and modeling of the oil and gas emission inventories can be found in the Emissions Modeling TSD.

4. Development of Emission Inventories for Onroad Mobile Sources

Onroad mobile sources include exhaust, evaporative, and brake and tire wear emissions from vehicles that drive on roads, parked vehicles, and vehicle refueling. Emissions from vehicles using regular gasoline, high ethanol gasoline, diesel fuel, and electric vehicles were represented, along with buses that used compressed natural gas. EPA developed the onroad mobile source emissions for states other than California using EPA's Motor Vehicle Emissions Simulator (MOVES) 2014b. MOVES2014b was used with inputs provided by state and local agencies, where available, in combination with nationally available data sets. Onroad emissions for the platform were developed based on emissions factors output from MOVES2014b run for the year 2016, coupled with activity data (

e.g.,

vehicle miles traveled and vehicle populations) representing the year 2016. The 2016 activity data were provided by some state and local agencies, and the remaining activity data were derived from the 2014NEIv2. The onroad emissions were computed within SMOKE by multiplying emission factors developed using MOVES with the appropriate activity data. Onroad mobile source emissions for California were consistent with the emissions provided by the state.

The future-year emissions for onroad mobile sources represent all national control programs known at the time of modeling except for the Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2

and the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule.

Finalized rules incorporated into the onroad mobile source emissions include: Tier 3 Standards (March 2014), the Light-Duty Greenhouse Gas Rule (March 2013), Heavy (and Medium)-Duty Greenhouse Gas Rule (August 2011), the Renewable Fuel Standard (February 2010), the Light Duty Greenhouse Gas Rule (April 2010), the Corporate-Average Fuel Economy standards for 2008-2011 (April 2010), the 2007 Onroad Heavy-Duty Rule (February 2009), and the Final Mobile Source Air Toxics Rule (MSAT2) (February 2007). Estimates of the impacts of rules that were in effect in 2016 are included in the 2016 base year emissions at a level that corresponds to the extent to which each rule had penetrated into the fleet and fuel supply by the year 2016. Local control programs such as the California LEV III program are included in the onroad mobile source emissions. The future year onroad emissions reflect projected changes to fuel properties and usage. MOVES was run for the years 2023 and 2028 to generate the emissions factors relevant to those years. Future year activity data for onroad mobile sources were provided by some state and local agencies, and otherwise were projected to 2023 and 2028 using AEO 2019-based factors. The future year emissions were computed within SMOKE by multiplying the future year emission factors developed using MOVES with the year-specific activity data. Additional information on the approach for generating the onroad mobile source emissions is available in the Emissions Modeling TSD.

The effect of the HDGHG Phase 2 rule on criteria pollutants is estimated in Table 5-48 of the Regulatory Impact Analysis, available from

https://nepis.epa.gov/Exe/ZyPDF.cgi/P100P7NS.PDF?Dockey=P100P7NS.PDF

Information on the SAFE vehicles rule is available from

https://www.epa.gov/regulations-emissions-vehicles-and-engines/safer-affordable-fuel-efficient-safe-vehicles-final-rule

. Preliminary analysis by the Office of Transportation and Air Quality of the impact of this rule on criteria pollutants show impacts of less than 1 percent for VOC and no impact for NO

5. Development of Emission Inventories for Commercial Marine Vessels

The commercial marine vessel (CMV) emissions in the 2016 base case emission inventory for this rule were based on those in the 2017 NEI. Factors were then applied to adjust the 2017 NEI emissions backward to represent emissions for the year 2016. The CMV emissions reflect reductions associated with the Emissions Control Area proposal to the International Maritime Organization control strategy (EPA-420-F-10-041, August 2010); reductions of NO

, VOC, and CO emissions for new C3 engines that went into effect in 2011; and fuel sulfur limits that went into effect prior to 2016. The cumulative impacts of these rules through 2023 and 2028 were incorporated into the projected emissions for CMV sources. The CMV emissions were split into emissions inventories from the larger category 3 (C3) engines, and those from the smaller category 1 and 2 (C1C2) engines. Some minor adjustments to the CMV

emissions were implemented following the October 2019 2016v1 release. These updated CMV inventories were released publicly by February, 2020.

See 2016 emissions, 2023 emissions, and 2028 emissions under

ftp://newftp.epa.gov/air/emismod/2016/v1/

6. Development of Emission Inventories for Other Nonroad Mobile Sources

Nonroad mobile source emission inventories (other than CMV, locomotive, and aircraft emissions) were developed from monthly, county, and process level emissions output from MOVES2014b. MOVES2014b included important updates to nonroad engine population growth rates. Types of nonroad equipment include recreational vehicles, pleasure craft, and construction, agricultural, mining, and lawn and garden equipment. State-submitted emissions data for nonroad sources were used for California.

EPA also ran MOVES2014b for 2023 and 2028 to prepare nonroad mobile emissions inventories for future years. The nonroad mobile emission control programs include reductions to locomotives, diesel engines, and recreational marine engines, along with standards for fuel sulfur content and evaporative emissions. A comprehensive list of control programs included for mobile sources is available in the Emissions Modeling TSD.

Line haul locomotives are also considered a type of nonroad mobile source but the emissions inventories for locomotives were not developed using MOVES2014b. Year 2016 locomotive emissions were developed through the Inventory Collaborative and are mostly consistent with those in the 2017 NEI. The projected locomotive emissions for 2023 and 2028 were developed by applying factors to the base year emissions using activity data based on 2018 AEO freight rail energy use growth rate projections and emission rates adjusted to account for recent historic trends.

7. Development of Emission Inventories for Nonpoint Sources

The emissions for stationary nonpoint sources in our 2016 base case emission inventory are largely consistent with those in the 2014NEIv2, although some were adjusted to more closely reflect year 2016 using factors based on changes to human population from 2014 to 2016. Stationary nonpoint sources include evaporative sources, consumer products, fuel combustion that is not captured by point sources, agricultural livestock, agricultural fertilizer, residential wood combustion, fugitive dust, and oil and gas sources. For more information on the nonpoint sources in the 2016 base case inventory, see the Emissions Modeling TSD and the 2014NEIv2 TSD.

Where states provided the Inventory Collaborative information about projected control measures or changes in nonpoint source emissions, those inputs were incorporated into the projected inventories for 2023 and 2028. Adjustments for state fuel sulfur content rules for fuel oil in the Northeast were included. Projected emissions for portable fuel containers reflect the impact of projection factors required by the final MSAT2 rule and the EISA, including updates to cellulosic ethanol plants, ethanol transport working losses, and ethanol distribution vapor losses.

For 2016, nonpoint oil and gas emissions inventories were developed based on a run of EPA Oil and Gas Tool for 2016. To develop the future year inventories, regional projection factors for nonpoint oil and gas sources were developed by product type based on AEO 2018 projections to 2023 and 2028. Estimates of criteria air pollutant (CAP) co-benefit reductions resulting from the NESHAP for RICE and NSPS rules and Oil and Gas NSPS VOC controls for select source categories were included. Additional details on the application of these rules and projections for nonpoint sources are available in the Emissions Modeling TSD.

Air Quality Modeling and Analyses To Identify Nonattainment and Maintenance Receptors

In this section the Agency describes the air quality modeling and analyses performed in Step 1 to identify locations where the Agency expects there to be nonattainment or maintenance receptors for the 2008 8-hour ozone NAAQS in the 2021 analytic future year. Where EPA's analysis shows that an area or site does not fall under the definition of a nonattainment or maintenance receptor in 2021, that site is excluded from further analysis under EPA's good neighbor framework.

In this proposed rule, EPA is not reopening the approach used in the CSAPR Update to identify nonattainment and maintenance receptors. However, as an aid to understanding EPA's approach to identifying receptors, a summary of this approach follows.

EPA's approach gives independent effect to both the “contribute significantly to nonattainment” and the “interfere with maintenance” prongs of section 110(a)(2)(D)(i)(I), consistent with the D.C. Circuit's direction in

North Carolina.

Further, in its decision on the remand of the CSAPR from the Supreme Court in the

EME Homer City

case, the D.C. Circuit confirmed that EPA's approach to identifying maintenance receptors in the CSAPR comported with the court's prior instruction to give independent meaning to the “interfere with maintenance” prong in the good neighbor provision.

EME Homer City II,

795 F.3d at 136.

531 F.3d at 910-911 (holding that EPA must give “independent significance” to each prong of CAA section 110(a)(2)(D)(i)(I)).

In the CSAPR Update, EPA identified nonattainment receptors as those monitoring sites that are projected to have average design values that exceed the NAAQS and that are also measuring nonattainment based on the most recent monitored design values. This approach is consistent with prior transport rulemakings, such as the NO

SIP Call and CAIR, where EPA defined nonattainment receptors as those areas that both currently monitor nonattainment and that EPA projects will be in nonattainment in the future compliance year.

See

63 FR 57375, 57377 (October 27, 1998); 70 FR 25241 (January 14, 2005).