Rule: Air Pollution Control: Fine Particulate Matter and Ozone Interstate Transport Control Measures Reconsideration

Friday,
April 28, 2006
Part III
Environmental
Protection Agency
40 CFR Parts 51 and 96
Rule To Reduce Interstate Transport of
Fine Particulate Matter and Ozone (Clean
Air Interstate Rule): Reconsideration;
Final Rule
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25304 Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations
ENVIRONMENTAL PROTECTION kumar.chitra@epa.gov. For legal IV. Statutory and Executive Order Reviews
AGENCY questions, please contact Sonja Rodman, A. Executive Order 12866: Regulatory
U.S. EPA, Office of General Counsel, Planning and Review
40 CFR Parts 51 and 96 B. Paperwork Reduction Act
Mail Code 2344A, 1200 Pennsylvania
C. Regulatory Flexibility Act
[OAR 2003–0053; FRL–8047–9] Avenue, NW., Washington, DC 20460, D. Unfunded Mandates Reform Act
telephone 202–564–4079, e-mail E. Executive Order 13132: Federalism
RIN 2060–AN57 address rodman.sonja@epa.gov. F. Executive Order 13175: Consultation
SUPPLEMENTARY INFORMATION: and Coordination With Indian Tribal
Rule To Reduce Interstate Transport of Governments
Fine Particulate Matter and Ozone Does This Action Apply to Me? G. Executive Order 13045: Protection of
(Clean Air Interstate Rule): The CAIR does not directly regulate Children From Environmental Health
Reconsideration emissions sources. Instead, it requires and Safety Risks
H. Executive Order 13211: Actions That
AGENCY: Environmental Protection States to develop, adopt, and submit SIP Significantly Affect Energy Supply,
Agency (EPA). revisions that would achieve the Distribution or Use
ACTION: Final notice of reconsideration. necessary SO2 and NOX emissions I. National Technology Transfer
reductions, and leaves to the States the Advancement Act
SUMMARY: On May 12, 2005, EPA task of determining how to obtain those J. Executive Order 12898: Federal Actions
published in the Federal Register the reductions, including which entities to to Address Environmental Justice in
final ‘‘Rule to Reduce Interstate regulate. Minority Populations and Low Income
Transport of Fine Particulate Matter and Populations
Ozone’’ (Clean Air Interstate Rule or How Can I Get Copies of This K. Congressional Review Act
CAIR). The CAIR requires certain Document and Other Related L. Judicial Review
upwind States to reduce emissions of Information?
I. Background
nitrogen oxides (NOX) and/or sulfur 1. Docket. EPA has established a
On May 12, 2005, the EPA (Agency or
dioxide (SO2) that significantly docket for action related to the CAIR
we) published the final ‘‘Rule to Reduce
contribute to nonattainment of, or under Docket ID No. EPA–HQ–OAR–
Interstate Transport of Fine Particulate
interfere with maintenance by, 2003–0053. All documents in the docket
Matter and Ozone’’ (Clean Air Interstate
downwind States with respect to the are listed in the http://
Rule or CAIR) (70 FR 25162). In this
fine particle and/or 8-hour ozone www.regulations.gov index. Although
action, EPA found that 28 States and the
national ambient air quality standards listed in the index, some information is
District of Columbia contribute
(NAAQS). Subsequently, EPA received not publicly available, e.g., CBI or other
significantly to nonattainment of, and
12 petitions for reconsideration of the information whose disclosure is
interfere with maintenance by,
final rule. On December 2, 2005, EPA restricted by statute. Certain other
downwind States with respect to the
published a notice of its decision to material, such as copyrighted material,
NAAQS for fine particles (PM2.5) and/or
grant reconsideration of four issues will be publicly available only in hard
8-hour ozone. The CAIR requires these
raised in the petitions for copy. Publicly available docket
upwind States to revise their State
reconsideration, and granted an materials are available either
implementation plans (SIPs) to include
additional opportunity for public electronically in http://
control measures to reduce emissions of
comment. On December 29, 2005, EPA www.regulations.gov or in hard copy at
SO2 and/or NOX. Sulfur dioxide is a
published a notice of its decision to the EPA Docket Center (Air Docket),
precursor to PM2.5 formation and NOX is
grant reconsideration of an additional EPA/DC, EPA West, Room B102, 1301
a precursor to PM2.5 and ozone
issue raised by a petition for Constitution Ave., NW., Washington,
formation. By reducing upwind
reconsideration, and again granted an DC. The Public Reading Room is open
emissions of SO2 and NOX, CAIR will
additional opportunity for public from 8:30 a.m. to 4:30 p.m., Monday
assist downwind PM2.5 and 8-hour
comment. In this notice, EPA is through Friday, excluding legal
ozone nonattainment areas in achieving
announcing its final decisions on the holidays. The telephone number for the
the NAAQS.
five specific issues addressed in the Public Reading Room is (202) 566–1744. The CAIR implements the ‘‘good
December 2005 notices. 2. Electronic Access. You may access
neighbor’’ provision of the Clean Air
DATES: Effective Dates: This this Federal Register document
Act (CAA), section 110(a)(2)(D), which
reconsideration is effective June 27, electronically through the EPA Internet
establishes State obligations to address
2006. under the ‘‘Federal Register’’ listings at
interstate transport of pollution. The
http://www.epa.gov/fedrgstr/. In
FOR FURTHER INFORMATION CONTACT: For EPA conducted extensive air modeling
addition, the EPA has established a Web
general questions concerning today’s to determine the extent to which
site for the CAIR at http://www.epa.gov/
action, please contact Carla Oldham, emissions from certain upwind States
cleanairinterstaterule or more simply
U.S. EPA, Office of Air Quality Planning were impacting downwind
http://www.epa.gov/cair/.
and Standards, Air Quality Strategies nonattainment areas. All States found to
and Standards Division, Mail Code Outline contribute significantly to downwind
C504–03, Research Triangle Park, NC I. Background PM2.5 nonattainment and maintenance
27711, phone number (919) 54l–3347, II. Today’s Action problems are included in the CAIR
e-mail address oldham.carla@epa.gov. III. Discussion of Issues region for PM2.5 and are required to
For questions concerning the analyses A. SO2 Allocation Methodology in the reduce annual emissions of SO2 and
described in section III of this notice, CAIR Model Trading Rules NOX. All States found to contribute
please contact Chitra Kumar, U.S. EPA, B. Fuel Adjustment Factors Used to Set significantly to downwind 8-hour ozone
State NOX Budgets
Office of Atmospheric Programs, Clean C. PM2.5 Modeling for Minnesota

nonattainment and maintenance
Air Markets Division, Mail Code 6204J, D. Inclusion of Florida in the CAIR Region problems are included in the CAIR
1200 Pennsylvania Avenue, NW., for Ozone region for ozone and are required to
Washington, DC 20460, telephone (202) E. Impact on CAIR Analyses of D.C. Circuit reduce NOX emissions during the
343–9128, e-mail address Decision in New York v. EPA 5-month ozone season (May–
Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations 25305
September). The CAIR establishes grounds for the objection arose after the the State of Minnesota, and one
regional emission reduction end of the public comment period but petitioner requested a stay of CAIR for
requirements for annual SO2 and NOX before the time for seeking judicial a limited subset of affected sources. By
emissions and seasonal NOX emissions. review had expired. The petitions for letter dated August 1, 2005, EPA
The reduction requirements are based reconsideration of the CAIR asked EPA declined to stay implementation of the
on performance of control technologies to reconsider several specific aspects of CAIR in Florida.2
which are known to be highly cost the final rule, and many of the petitions Finally, in addition to petitions for
effective for reducing emissions of made similar requests. reconsideration, fourteen petitions for
electric generating units (EGUs). The By letters dated August 1, 2005, EPA judicial review of the final rule were
first phase of NOX reductions starts in granted reconsideration of the definition filed with the U.S. Court of Appeals for
2009 (covering 2009–2014) and the first of ‘‘electric generating unit’’ or ‘‘EGU’’ the District of Columbia.3 The fourteen
phase of SO2 reductions starts in 2010 as it relates to solid waste incinerators cases have been consolidated into a
(covering 2010–2014). The second phase (and particularly municipal waste single case, State of North Carolina v.
of both SO2 and NOX reductions starts incinerators).1 The EPA explained that EPA (No. 05–1244) (D.C. Cir). Many of
in 2015 (covering 2015 and thereafter). the issue would be addressed in the the parties who petitioned EPA for
Each State covered by CAIR may proposed rule signed the same day. That reconsideration of the CAIR also
independently determine which proposed rule, entitled ‘‘Rulemaking on petitioned for judicial review of the
emission sources to control, and which Section 126 Petition from North rule.
control measures to adopt. States that Carolina to Reduce Interstate Transport
II. Today’s Action
choose to base their programs on of Fine Particulate Matter and Ozone;
emissions reductions from EGUs may Federal Implementation Plans to Reduce This notice addresses the five specific
allow their EGUs to participate in an Interstate Transport of Fine Particulate issues upon which we granted
EPA-administered cap and trade Matter and Ozone; Revisions to the reconsideration and solicited comment
program. The CAIR includes model Clean Air Interstate Rule; Revisions to in the December 2, 2005 and December
rules for multi-State cap and trade the Acid Rain Program; Proposed Rule,’’ 29, 2005 notices. Today’s action is one
programs for annual SO2 and NOX was published on August 24, 2005 (70 of three actions EPA is taking today to
emissions, and seasonal NOX emissions. FR 49708). In that proposal, EPA resolve all remaining issues relating to
States may choose to adopt these rules reconsidered the definition of ‘‘EGU’’ in the petitions for reconsideration of
to meet the required emissions the final CAIR as it relates to solid waste CAIR.
reductions in a flexible and highly cost- incinerators (70 FR at 49738). We This notice takes action only with
effective manner. To learn more about proposed revisions to the definition of respect to the five issues identified in
the CAIR and its impacts, the reader is ‘‘EGU’’ and requested comment on that the December 2005 notices. In those
encouraged to read the preamble to the issue. notices, we announced our decision to
CAIR (70 FR 25162; May 12, 2005). On December 2, 2005, EPA published grant reconsideration and solicited
The CAIR was promulgated through a a notice of its decision to grant comments on the specific issues to be
process that involved significant public reconsideration of four additional issues reconsidered. We did not, however,
participation. The EPA published a presented in the petitions for propose any changes to the CAIR or re-
notice of proposed rulemaking on reconsideration, and solicited public open for comment any other issues
January 30, 2004 (69 FR 4566) and a comment on those issues. On December determined in the CAIR. In this action,
supplemental notice of supplemental 29, 2005, EPA published a notice of its we take final action on the five issues
proposed rulemaking on June 10, 2004 decision to grant reconsideration of one identified in the notices of
(69 FR 32684). The EPA also published additional issue raised by petition for reconsideration and respond to
a notice of data availability on August reconsideration, and again solicited comments received during the
6, 2004 (69 FR 47828). The Agency held public comment on that issue. In those reconsideration process. The first issue
public hearings on the January 2004 two notices EPA did not propose any addressed in the December 2, 2005
proposed rule on February 25 and 26, modifications to the final CAIR, as we notice relates to analyses done by EPA
2004, and an additional hearing on the did not believe that any of the to address petitioner’s claims regarding
supplemental proposal on June 3, 2004. information that had been submitted alleged inequities arising from the
In addition, the EPA received thousands demonstrated that EPA’s final decisions application of the SO2 allowance
of comments on the proposals. We in the CAIR rulemaking were erroneous allocation approach to be used by States
responded to all significant public or inappropriate. choosing to participate in the EPA-
comments in the preamble to the final The EPA requested comment only on administered SO2 trading program. The
rule and in the final response to the issues specifically described in second issue relates to EPA’s use of
comments document available in the Section III of each December 2005 specific fuel adjustment factors to
CAIR docket (Docket No. OAR–2003– notice. We did not reconsider or re-open establish NOX budgets for each State.
0053–2172). for further comment any other The third issue relates to modeling
Following publication of the final provisions in the CAIR.
rule, the Administrator received twelve The EPA also received three limited
2 This letter is also available in the CAIR Docket
petitions requesting reconsideration of (OAR–2003–0053–2208).

requests to stay CAIR. The 3 State of North Carolina v. EPA (No. 05–1244);
certain aspects of the final CAIR. These implementation of the CAIR in limited Minnesota Power v. EPA (No. 05–1246); ARIPPA v.
petitions were filed pursuant to section geographic areas pending resolution of EPA (No. 05–1249); South Carolina Public Service
307(d)(7)(B) of the CAA. Under this this reconsideration process. One Authority et al. v. EPA (No. 05–1250); Entergy Corp.
provision, the Administrator is to v. EPA (No. 05–1251); Florida Ass’n of Electric
petitioner requested a stay of Utilities (No. 05–1252); FPL Group v. EPA (No. 05–
initiate reconsideration proceedings if implementation of the CAIR in the State 1253); Northern Indiana Public Service Co. v. EPA
the petitioner shows that an objection is of Florida, and one petitioner requested (No. 05–1254); South Carolina Electric & Gas Co. v.
of central relevance to the rule and EPA (No. 05–1256); Integrated Waste Services Ass’n
a stay of implementation of the CAIR in v. EPA (No. 05–1257); AES Corp v. EPA (No. 05–
either that it was impracticable to raise 1259); City of Amarillo, Texas et al. v. EPA (No. 05–
the objection to the rule within the 1 These letters are available in the CAIR Docket. 1260); Appalachian Mountain Club et al. v. EPA
public comment period, or that the (OAR–2003–0053–2209 and 2210). (No. 05–1246); Duke Energy v. EPA (No. 05–1246).
inputs used by EPA to determine stayed only for the subset of sources that appropriate. According to the petitioner,
whether emissions from Minnesota has either already received 2009 NOX the approach is inequitable because it
should be included in the CAIR region Budget Trading Program allowances or results in owners of units that have
for PM2.5. The fourth issue relates to is currently receiving ‘‘bonus’’ historically lower emission rates being
EPA’s determination that the State of allowances under section 405(a)(2) of forced to buy allowances from
Florida should be included in the CAIR Title IV of the Clean Air Act. historically higher emitting units that
region for ozone. The issue raised in the EPA has carefully considered each of install new emission controls. The
December 29, 2005 notice relates to the these requests for reconsideration. We petitioner asked EPA to establish a
potential impact of a recent judicial have concluded that reconsideration of different approach. As described in the
opinion, New York v. EPA, 413 F.3d 3 these issues is not warranted under Notice of Reconsideration, EPA does not
(D.C. Cir. 2005), certain analyses done section 307(d)(7)(B) of the Clean Air agree with petitioner’s conclusions
for the CAIR relating to the Act. EPA is therefore denying all about this issue. EPA continues to
identification of highly cost-effective remaining requests for reconsideration. believe that the approach selected is
controls and the timing of CAIR In addition, EPA is denying the reasonable for the reasons explained in
deadlines. New York v. EPA, 413 F.3d remaining requests to stay CAIR. These the CAIR final rule and further
3 (D.C. Cir. 2005) was decided on June decisions are fully explained in the discussed below. Furthermore,
24, 2005—after the final CAIR was letters to petitioners which are available numerous opportunities for public
published but before the time for in the CAIR docket (EPA–HQ–OAR– comment on this issue were provided,
judicial review of the rule had run. Each 2005–0053). In a separate action signed and a full discussion of the allowance
issue is described in greater detail in today, EPA is taking final action on the allocation options occurred during the
Section III of this notice. request for reconsideration discussed in rule development process. Nonetheless,
EPA also is taking two additional the August 1, 2005 Federal Register given the intense public interest in this
actions relating to the petitions for notice. This action is taken as part of issue, EPA decided to grant the petition
reconsideration of CAIR. First, EPA is our final action responding to North for reconsideration insofar as it raised
sending nine separate letters to the Carolina’s section 126 petition and issues regarding alleged inequities
petitioners with outstanding requests for promulgating Federal implementation resulting from the application of EPA’s
plans for all states in the CAIR regions. SO2 allowance allocation approach.
reconsideration. These letters address
In that action, we also take final action In the Notice of Reconsideration, EPA
their requests that EPA reconsider the
on the request reconsider EPA’s announced its decision to reconsider
following ten issues: (1) The 0.2µg/m3 this issue and solicited additional
threshold used to determine if a state’s treatment in CAIR of solid waste
incinerators (particularly municipal public input. EPA also solicited
emissions contribute significantly to comment on additional analyses it
PM2.5 nonattainment and maintenance waste combustors), and finalize the
revisions to the definition of ‘‘EGU’’ conducted in response to the petition
problems in downwind states (multiple for reconsideration concerning the
requests for reconsideration arguing proposed in response to that request.
This action, titled ‘‘Rulemaking on impact of the SO2 allowance allocation
both that the threshold is too high and approach adopted in the CAIR model
that it is two low); (2) the inclusion of Section 126 Petition from North
Carolina to Reduce Interstate Transport trading rule. This additional analysis
the full state of Florida in the CAIR compared the SO2 allocation approach
region for PM2.5 (two requests for of Fine Particulate Matter and Ozone;
Federal Implementation Plans to Reduce in CAIR to various alternatives EPA also
reconsideration challenging EPA’s considered during the rulemaking
decision to determine significant Interstate Transport of Fine Particulate
process. In response to comment on the
contribution on a statewide basis); (3) Matter and Ozone; Revisions to the
Notice of Reconsideration, EPA has
the inclusion of the full state of Texas Clean Air Interstate Rule; Revisions to
further refined some of its analyses and
in the CAIR region for PM2.5 (two the Acid Rain Program,’’ 4 will be
carefully considered the arguments of
requests for reconsideration challenging published shortly in the Federal
the petitioner. EPA continues to believe
EPA’s decision to determine significant Register.
that these analyses show that EPA’s
contribution on a statewide basis); (4) III. Discussion of Issues selected approach to SO2 allowance
the NOX budget allocated to the State of allocations is appropriate, given the
Connecticut (two requests for A. SO2 Allowance Allocation (& State objectives of CAIR and other relevant
reconsideration); (5) the treatment of Budget) Approach in the CAIR Model considerations. Moreover, EPA believes
previously allocated 2009 NOX Budget Trading Rules that the Agency’s approach produces a
Trading Program allowances; (6) the SO2 As noted above, EPA decided to grant reasonable result in terms of equity.
retirement ratio for Title IV allowances reconsideration on six issues related to Therefore, in this Notice of Final Action
as applied to units that receive, through the final CAIR. The first of these issues on Reconsideration, EPA is not altering
2009, ‘‘bonus’’ allocations under section relates to the SO2 allocation approach in the approach taken in CAIR for SO2
405(a)(2) of the Clean Air Act; (7) the the CAIR model rules. EPA received one allowance allocation. EPA’s response to
phase I NOX compliance date of 2009; petition for reconsideration that asked public comments on the analyses
(8) EPA’s interpretation of the ‘‘interfere EPA to reconsider the SO2 allocation presented in the Notice of
with maintenance’’ prong of section 110 approach to be used by States Reconsideration and further discussion
of the Clean Air Act; (9) the method participating in the EPA-administered of the petitioner’s concerns are provided
used to identify downwind CAIR SO2 trading program. This below (and in the Technical Support
nonattainment areas; and (10) the petitioner argued that the SO2 allowance Document, ‘‘CAIR SO2 Allocation
creation of a compliance supplement allocation approach is unreasonable and Approach Analysis’’ and the Response
pool for the annual NOX trading inequitable. The petitioner argued that to Comments).
program. Finally, the petitions for the approach is unreasonable because

reconsideration contain two outstanding Considerations Relevant To Choosing an
other approaches would be more
requests to stay CAIR: One asking for Allocation Approach
CAIR to be stayed in the state of 4 See http://www.regulations.gov, Docket ID No. While EPA did not explicitly define a
Minnesota and one asking that CAIR be EPA–HQ–OAR–2003–0053. distinct set of principles that should be
used in developing State budgets under central to our decisions, especially since discretion under section 110 of the CAA
a region-wide cap and trade program, the Title IV allocation structure was to determine how to meet their ‘‘good
EPA has made it clear throughout this erected by Congress for the long term. neighbor’’ obligations and to meet
process that it has relied upon several national ambient air quality standards.
Title IV and CAIR
consistent, important factors in These same concerns were also raised
developing both the SO2 and NOX The CAIR model SO2 trading program during the CAIR rulemaking process
budgets. relies on the use of title IV SO2 and EPA provided a detailed
The first is the impact of allowance allowances for compliance with the justification for its use of title IV
allocations on the specific allowance-holding requirements of allowances under CAIR, including
environmental objectives and overall CAIR. Title IV SO2 allowances have direct responses to these comments in
cost of the rule, as well as any potential already been allocated on a unit-by-unit the CAIR preamble (70 FR 25290–
adverse effects. In general, while the basis in perpetuity, based on formulas 25296). EPA maintains that its approach
chosen allocation or State budget set forth in sections 405 and 406 of the of using title IV allowances in the CAIR
calculation approach can affect the Clean Air Act (CAA), which EPA SO2 trading program and imposing an
distribution of compliance costs under a implemented through final regulations allowance-retirement requirement on
cap-and-trade program, it will have little issued in 1998 (See 42 U.S.C. 7651d and States that do not adopt the CAIR SO2
effect on overall compliance costs or 7651e; and 18 CFR 73.10(b)). The trading program is within its statutory
environmental outcome. This is because statutory formulas for allocation of title authority and is a reasonable exercise of
the incentives provided by cap-and- IV SO2 allowances were based on unit that authority. Additionally, there is
trade encourage economically efficient data for 1985–1987 and, for some units, nothing in section 110 of the CAA that
compliance over the entire region. data for years up to 1995. For the title would bar the use of title IV allowances
However, this may not always hold IV SO2 trading program, each allowance to accomplish attainment goals under
where there are interactions with authorizes one ton of SO2 emissions. 110(a)(2)(d).
existing environmental policies. In the For the CAIR SO2 trading program, One commenter suggests that EPA’s
case of NOX, EPA did not find this SO2 reductions will be achieved by SO2 allocation approach using title IV
consideration to be restrictive because generally requiring CAIR sources to allowances is in violation of CAA
there was not an existing annual NOX retire more than one title IV allowance section 110(a)(2)(d) because it
trading program and the SIP Call ozone of 2010 and later vintages for each ton distributes allowances among States in
season trading program could be easily of SO2 emissions in 2010 and thereafter. a way that would effectively result in
integrated into the CAIR ozone season Specifically, each title IV SO2 allowance different emissions rates among States,
trading program. As a result, a number issued for 2009 or earlier will be used and different resulting control costs.
of budget methodologies were for compliance by CAIR sources at a The commenter argues for an approach
compatible. For SO2, this consideration ratio of one allowance per ton of SO2 that results in an equal effective
played a larger role because depending emissions and would authorize one ton emissions rate across States. The
upon how the program was integrated of SO2 emissions. Each title IV commenter then cites section 102(a) of
within the existing Title IV structure, it allowance of vintage 2010 through 2014 the CAA, arguing that the provision
could impact emissions before the will be used for compliance under CAIR ‘‘directs EPA to promote the
program went into effect as well as at a two-to-one ratio and authorize 0.5 development of air pollution control
emissions in regions not affected by the tons of SO2 emissions. Each title IV laws at the state and local level that are
program. allowance of vintage 2015 and later will as ‘uniform’ from jurisdiction to
Another important consideration is be used at a 2.86-to-1 ratio and jurisdiction as practicable.’’ The
that an allocation methodology must be authorize 0.35 tons of SO2 emissions. commenter then proceeds to argue that
consistent with the existing regulatory See discussion in the preamble to the EPA’s use of title IV allowance
and legislative structure. Once again for final CAIR in section VII (70 FR 25255– allocations for SO2 allowance
NOX, this consideration could be 25273) and section IX (70 FR 25290– allocations under CAIR violates this
satisfied with a wide range of budget 25291). notion of parity without reason and is
methodologies. However, for SO2, therefore unlawful.
reductions for EGUs using Title IV Response to Comments on EPA’s EPA disagrees with the commenter’s
allowances is necessary in order to Statutory Authority interpretation of these two CAA
ensure the preservation of a viable Title Several commenters expressed provisions. First, nothing in section
IV program (70 FR 72272). Linking the support of EPA’s chosen allocation 110(a)(2)(d) indicates how EPA should
two programs maintains the trust and approach, arguing that EPA was entirely allocate allowances under a cap-and-
confidence that has developed in the within its legal authority to use title IV trade program. Second, while the
functioning market for title IV allowances to implement the SO2 commenter suggests that an allocation
allowances. The EPA recognizes this trading program under CAIR. These approach that results in a uniform
familiarity and confidence (especially in commenters generally argued that EPA’s effective emissions rate across all States
a market-based approach) as a key use of title IV allowances to implement would remedy the inequities the
source of the program’s success. CAIR reductions was necessary to commenter perceives in EPA’s
A third factor is equity. In the absence maintain the viability of the program application of 110(a)(2)(d), the
of other considerations, EPA believes and continued confidence in cap-and- allocation approach that the commenter
that it is in the public interest that the trade programs. actually recommends does not result in
distribution of allowances under a cap A few commenters on the Notice of this outcome. Third, section 102(a) of
and trade program be as equitable as Reconsideration assert that EPA has the CAA indicates that ‘‘The
possible. For NOX, since the other exceeded its statutory authority under Administrator shall * * * encourage
considerations could be satisfied with a title IV of the CAA by tying CAIR SO2 the enactment of improved and, so far
number of different methodologies, this allocations to title IV allowances. In as practicable in the light of varying
factor was the primary one. For SO2, addition, a few commenters argue that conditions and needs, uniform State and
where the other considerations were EPA’s final CAIR SO2 allocation local laws relating to the prevention and
more limiting, this factor was not as approach unlawfully limits States’ control of air pollution’’. As is discussed
throughout this section of the CAIR the highly successful title IV program. receives the maximum amount of SO2
Notice of Final Action on The disruption of the title IV SO2 allowances possible under any
Reconsideration, the existence of title IV trading program would also potentially approach. The goal of CAIR is to achieve
creates a set of conditions under which result in increased emissions outside of the SO2 emissions reductions through
it is not ‘‘practicable’’ to create a new set the CAIR region starting in 2010 the region-wide budgets. As EPA has
of allowance allocations for SO2 for the because, with title IV allowances having noted, selecting the most appropriate
purposes of CAIR. Finally, the use of the little or no value, the title IV program SO2 allowance allocation approach for
phrase ‘‘The Administrator shall would no longer constrain SO2 CAIR has required addressing a number
encourage’’ in section 102(a) indicates emissions in those States. Further, if of different considerations. The policy
that this provision is in no way a title IV allowances are not used for and air quality concerns specific to the
directive that requires the Agency to compliance in the CAIR SO2 trading CAIR SO2 trading program and noted by
obtain any specific result during its program, the likely result will be: a EPA above necessitate that EPA
rulemakings. Finally, the use of a cap- significant surplus of title IV implement the CAIR SO2 program using
and-trade program assures that the allowances; a collapse of the price of the existing structure of title IV.
marginal cost paid for a ton of emission title IV allowances; and a title IV SO2 Nevertheless, EPA has analyzed the
reduction should be close to the trading program that, contrary to impact of using title IV allocations on
observed allowance price, assuring a Congressional intent, no longer provides States relative to other possible
uniform marginal cost from State to incentives to minimize emissions allocation approaches, and found that
State. control costs and encourage pollution this approach produces a reasonable
prevention and innovation. result (See CAIR Corrected Response to
SO2 Allocation Options Discussed in If EPA adopts an approach that does Comments, section X.A.26, Docket #:
CAIR not preserve the structure of the title IV EPA–HQ–OAR–2003–0053–2172, and
EPA considered and analyzed a allowance market and the value of those ‘‘CAIR SO2 Allocation Approach
variety of SO2 allowance allocation allowances, the confidence in the cap- Analysis’’ Technical Support Document
methodologies during the CAIR and-trade policy instrument and available in the docket).
rulemaking process. After careful allowance markets in general, and in the In summary, EPA’s use of title IV
analysis, EPA decided to use the CAIR cap-and-trade programs in allowances in the CAIR SO2 trading
allocation approach chosen by Congress particular, would likely decline. Such program is supported by: (1) EPA’s
in title IV of the Clean Air Act. EPA also an outcome could result in a reduced determination that this approach is
considered the following alternative willingness of the owners of sources in necessary to maintain the efficacy of the
approaches, which are explained in the cap-and-trade programs to invest in title IV program and to prevent erosion
final CAIR ‘‘Corrected Response to control technologies that would of confidence in cap-and-trade programs
Significant Public Comments on the generate excess allowances for sale, or in general; and (2) EPA’s analysis
Proposed Clean Air Interstate Rule,’’ to purchase allowances for compliance, showing that the allocations resulting
Corrected April 2005 (Docket Number for fear that the rules might change. If from this approach are reasonable.
OAR–2003–0053): owners were to ignore the incentives Nevertheless, as a part of this
—Allocations based on historic tons of provided by cap-and-trade in such a reconsideration, EPA performed
actual emissions from more recent manner, efficiency and cost-savings additional analyses, explained below, to
years; provided by these programs would be evaluate the SO2 allocation approach in
—Allocations based on heat input (with lost. The preservation of title IV the final CAIR in light of the petitioner’s
alternatives based on heat input from allowances for use in CAIR, then, is concerns.
all fossil generation, and heat input integral to the viability and effectiveness
of both title IV and the CAIR trading Equitability of CAIR SO2 Allocation
from coal- and oil-fired generation Approach
only); and programs. See discussion in preamble to
the final CAIR in section IX (70 FR While the petitioner stated that the
—Allocations based on electricity
25293–25295). CAIR final allocation approach is
output (with alternatives based on all
Second, EPA relied on the permanent ‘‘inequitable’’ because lower emitting
generation and all fossil-fired
allocation methodology established by units would buy allowances from higher
generation).
Congress in title IV for purposes of emitting units that install emission
In addition to these alternatives, EPA reducing SO2 emissions. Congress chose controls, it is unclear why such a result
has analyzed other heat input-based a policy of not revisiting and revising would actually be inequitable. On the
allocation approaches in the these allocations and, apparently, contrary, the owner of each of the units
reconsideration process, explained believed that its allocation methodology involved would be choosing to adopt
below. Each allocation approach for title IV allowances would be the most economic compliance strategy
suggested by the petitioner and other appropriate for future time periods. in light of the unit’s emission control
commenters during the CAIR Third, title IV allowance allocations costs and the market value of
rulemaking and reconsideration process provide a logical and well understood allowances. The ability of the owners to
has advantages and disadvantages for starting point from which additional make such choices reflects the
different companies and States. electric generation unit (EGU) SO2 flexibility, inherent cost-effectiveness,
However, as explained in the final emission reductions can be achieved for and promotion of least-cost compliance
CAIR, EPA believes that the approach Acid Rain units, which account for over for all program participants provided by
used in the final CAIR is the most 90 percent of the SO2 emissions from a cap-and-trade program.
appropriate among the alternatives for CAIR EGUs.
several reasons. Finally, in response to comments on Response to Comments on the
Equitability of CAIR SO2 Allocation
First, EPA believes—based on strong the proposed CAIR, EPA performed an

policy and air quality concerns—that it analysis comparing the title IV Approach
is necessary to use the existing title IV methodology to other methodologies. At One commenter argued that EPA
allowances in order to preserve the the outset, EPA notes that the objective should use the same metrics and
viability and emissions reductions of of CAIR is not to ensure that each State methodologies used to evaluate NOX
allowance allocation approaches to fired units without disadvantaging ratios (the ratio of allowances to
evaluate SO2 allowance allocation another set of coal-fired units. projected emissions, discussed to some
approaches. The commenter suggests Second, while the commenter is degree in this section and presented in
that the metrics by which EPA assessed correct in noting that EPA stated in its the ‘‘CAIR SO2 Allocation Approach
NOX allocations included (1) whether discussion of NOX allocations in the Analysis’’ Technical Support Document,
the EPA method avoids penalizing coal- Notice of Reconsideration that it is in available in the docket), is not
fired generation units that already have the public interest to attempt to suggestive of this trend. In fact, looking
installed emissions controls and (2) minimize the disparity between at the differences in States’ projected
whether, relative to the alternative individual State budgets and projected emissions and coverage ratios between
allocation approaches, the EPA method emissions for each State, EPA did not the base case and CAIR, it becomes
better minimizes for each State the set this goal as one of only two primary evident that both lower- and higher-
disparity between allowances provided criteria for adoption of a given emitting States are projected to make
and projected emissions, and argued allocation strategy, as the commenter investments in emissions controls under
suggests. Rather, EPA notes that ‘‘In the CAIR, reducing their demand for
that EPA cites these rationales in
absence of other considerations, EPA allowances, or freeing up allowances for
justifying its chosen NOX allocation
believes that it is in the public interest sale, in the process. States that might be
approach. This commenter also suggests
to reduce the disparity between the categorized as high-emitting are not
that EPA’s use of title IV allowances number of allowances in a State budget always projected to be net sellers of
penalizes new units and independent and total projected State EGU allowances, and States that might be
power producers (IPPs) and results in emissions’’ (70 FR 72276, emphasis categorized as low-emitting are not
large wealth transfers from low-emitting added). As EPA has noted, the Agency always projected to be net purchasers of
to high-emitting States. had to weigh many considerations in allowances.
While EPA agrees that the Agency choosing an SO2 allowance allocation Another commenter argues that
considered these factors (among several approach. In particular, unlike in the smaller units would be forced to
others) in choosing its allocation case of NOX, EPA had to consider an purchase SO2 allowances from the
approach under the CAIR NOX trading existing, nationwide trading program market in order to comply with CAIR.
programs, EPA does not fully agree with implemented by statute in the case of This commenter argues that the SO2
the commenter’s characterization of SO2. allowance market is not efficient and
EPA’s considerations. EPA believes that Third, as EPA discussed in the CAIR subjects some participants to endure an
the commenter has omitted some of the Response to Comments, while undue amount of financial burden and/
significant context and caveats that were commenters express concern about the or risk. EPA believes that the
included in the discussion of NOX availability of allowances for non-Acid commenter’s claims about the state of
allocations and the use of fuel Rain units, it should be noted that not the SO2 allowance market are
adjustment factors in the all sources covered under the Acid Rain unfounded. As is discussed in the Acid
reconsideration notice, as well as a program received allowances. By the Rain Program Report (EPA 43–R–05–
number of other factors that EPA must design of the title IV program (as 012, October 2005), about 20,000
consider, particularly in the context of outlined by Congress), because of the allowance transactions, affecting about
SO2 allocations. First, EPA noted in the permanent allocation of allowances, 15.3 million allowances were recorded
June 10, 2004 Supplemental Notice of new units beginning commercial in the EPA Allowance Tracking System
Proposed Rulemaking and in the Notice operation after 1995 or beginning in 2004. In addition, title IV compliance
construction after 1990 did not receive costs have been much lower than
of Reconsideration that, ‘‘in contrast to
title IV allowances. Thus, Congress projected and allowance prices in the
allocations based on historic emissions,
recognized that, over time, new units SO2 allowance market have generally
the factors would also not penalize coal-
would be built and covered under the reflected this. Finally, as discussed
fired plants that have already installed
program, but felt it reasonable that such earlier in this section, sources have the
pollution controls’’ (69 FR 32869, 70 FR units would obtain title IV allowances option of purchasing allowances
72276, emphasis added). This language either through the auction or from the directly from the annual auction.
explains that NOX allocations using market. Under the auction, 250,000 title Further, in raising equity concerns, a
historic heat input adjusted for fuel IV allowances are be auctioned annually couple of commenters argue for
type, while providing additional (half for the current compliance year conflicting measures of equity within
allowances to coal-fired units that will and half for the compliance year seven their own comments. These commenters
likely install controls under CAIR, years in advance), and these allowances argue that an equitable emissions
would not simultaneously penalize can be used for compliance with CAIR. allocation approach will result in an
coal-fired units that had already made The availability of these allowances equivalent effective emissions rate
investments in emissions controls. An ensures that all sources, including new across States. These commenters then
approach based on historic emissions, units and non-title IV sources, will have point to EPA’s chosen CAIR NOX
on the other hand, would also provide access to a pool of allowances. Finally, emissions allocation approach as an
additional allowances to units that IPPs have the option of opting in to title exemplary allocation approach because
would likely have to install controls, but IV until their exemption expires in it limits the disparity between
would simultaneously penalize units order to obtain title IV allowances. EPA individual State budgets and projected
that had already done so. While EPA addresses other issues specific to IPPs in emissions. However, the commenters
makes this argument in support of its section VI.E of today’s CAIR FIP Notice fail to realize that EPA’s NOX
chosen approach for NOX allocations, of Final Rulemaking preamble. allocations approach does not actually
the Agency does not raise this point to Fourth, while the commenter asserts result in an equivalent emissions rate
establish a criterion for evaluating that EPA’s use of title IV allowances in across States. In other words, choosing
allowance allocation approaches. the CAIR SO2 trading program will a CAIR SO2 allocation approach with
Rather, it simply notes that its chosen result in significant wealth transfers the goal of minimizing the disparities
approach for NOX allocations can from low-emitting to high-emitting between State budgets and projected
provide an advantage to one set of coal- States, EPA’s analysis of SO2 coverage emissions would result in the selection
of a different approach than would the petitioner, the allowance distribution purchase or would be able to sell after
goal of equating effective emissions will result in the petitioner’s relatively any controls are installed. Some
rates across States. low-emitting units being forced to buy companies with low-emitting units may
Finally, some commenters argued that allowances from other companies’ have excess allowances to sell even if no
the use of title IV allowance allocations relatively high-emitting units. The controls are installed.
penalizes sources who have already petitioner thus argues the allocation In its analysis of the CAIR approach,
installed scrubbers prior to the start of approach used in CAIR is per se EPA also considered both the allowance
the Acid Rain Program. This is because, inequitable and unreasonable. To allocations and the emissions for
in general, allowances under title IV evaluate this concern, EPA compared companies’ units both within the CAIR
were allocated to units that had not projected allocations not to individual region and outside the CAIR region.
installed controls at a higher rate units, but to individual parent and EPA believes that this is appropriate
relative to units that had installed operating companies who own these because, under the CAIR approach, if a
controls. The title IV approach, in that units under various methodologies company’s units outside the CAIR
sense, is somewhat similar to the relative to projected SO2 emissions of all region have more title IV allowances
approach taken for NOX under CAIR, in the units owned by those companies. than needed to cover their emissions
that it provides additional allowances Figures and tables from the analysis under the Acid Rain Program, the
for units expected to install controls presented in the Notice of company might be able to transfer, at
under the rule. EPA believes that the Reconsideration can be found in the little or no net cost, excess allowances
commenters’ arguments that the docket, EPA–HQ–OAR–2003–0053, to the company’s units in the CAIR
continued use of title IV allowances ‘‘SO2 Allowance Allocation region for use to cover emissions under
penalizes sources that installed controls Methodology Comparative Analysis the CAIR trading program. Under the
prior to the Acid Rain Program are Data Files’’). three alternative methodologies, all of
unfounded. First, these controls were The three alternative allowance which would require creating new CAIR
installed over 20 years ago and were allocation methodologies EPA analyzed SO2 allowances independent of the
completed within a regulated electricity were suggested by various commenters existing title IV allocations, CAIR
sector, such that in most cases the cost during the rulemaking process and this sources could not use title IV
of installing these controls should have reconsideration process. These allowances held for sources outside (or
been recovered through electricity price methodologies are: inside) the CAIR region for compliance
rate increases. Second, these controls —Allocating allowances based on more with the CAIR SO2 allowance holding
were installed in response to recent heat input data; requirement.
requirements separate from both CAIR —Allocating allowances based on more Further, in the analysis of the CAIR
and the Acid Rain Program. Third, recent heat input data adjusted for approach, EPA considered the
Congress was clearly aware of the issues fuel type (e.g., coal, oil and gas); and allocation of title IV allowances to CAIR
raised by commenters when designing —Allocating allowances based on more units that are not currently in the Acid
the SO2 trading program in 1990, and recent heat input data adjusted both
consciously used a formula for future Rain Program but that could opt in to
for fuel type and for coal type (e.g., the Acid Rain Program and receive title
allocations for the length of time it bituminous, sub-bituminous and
believed was reasonable. In general, the IV allowances (see 42 U.S.C. 7651i and
lignite). 18 CFR part 74 and the discussion
Acid Rain Program has enjoyed 10 years
of operation without substantial concern In comparing the CAIR SO2 allocation below concerning the ability of units to
over this issue and with industry at- approach and the three alternative opt in). This analysis assumed that
large appreciating the program’s merits methodologies, EPA took into account companies owning non-Acid Rain units
in providing a cost-effective, flexible, certain factors that are applicable to the subject to CAIR would elect to opt in to
and balanced way to provide CAIR final allocation approach but not the Acid Rain Program because they
environmental protection. Finally, to the three alternative methodologies. would receive title IV allowances to
analysis by one of these two For all four methodologies, EPA cover a portion of the units’ emissions
commenters, which estimates the analyzed the resulting total allowance under CAIR. EPA believes this
windfall of allowances that a allocations, and the total projected assumption is reasonable because any of
hypothetical unscrubbed coal-fired unit emissions, for companies’ sources these units has the option of becoming
would attain by installing a scrubber located in the States subject to CAIR. In an Acid Rain Program opt-in unit and
and reducing emissions, neglects the addition, for all the methodologies, EPA thereby providing the company
fact that this unit would have to bear the analyzed the relationship between additional allowances at little or no
costs of installing controls. Thus, the allowances and emissions in two ways. additional cost, and the value of title IV
ostensible windfall would be First, EPA calculated the ratio of allowances could be substantial. In
significantly smaller than was suggested allowances to total projected emissions contrast, the analysis of the three
by the commenter. before CAIR controls (base case alternative methodologies did not
emissions). This provides a reasonable consider the impact of Acid Rain
Analysis of SO2 Allocation Options estimate of the extent to which each Program opt-ins because these
Presented in the Notice of company’s future emissions will exceed approaches do not use title IV
Reconsideration its allowances and, thus, indicates how allowances for CAIR compliance.
In the Notice of Reconsideration, EPA much effort a company must expend for EPA’s analysis indicated that while
compared three alternative SO2 compliance either by purchasing allocations vary from company to
allowance allocation methodologies to allowances or installing controls. company under the four methodologies,
the approach in the final CAIR. In these Second, EPA calculated the ratio of overall the distributions of allowances
analyses, EPA examined how allowances to total projected emissions that companies received relative to their
allowances would be distributed to after the installation of CAIR controls projected emissions for the CAIR control
individual companies instead of (control case emissions). This provides case are very similar. EPA came to
examining how they would be a reasonable estimate of the number of similar conclusions when looking at the
distributed to States. According to the allowances a company would need to base case.
Response to Comments on EPA’s Notice of Reconsideration and the final allocation approaches, though it will, of
Analysis CAIR itself. Finally, one commenter course, obscure some of the potential
noted that company-specific analysis company-level variability among
EPA received several comments on can obscure state-by-state variation and allowance approaches.
various aspects of the SO2 allocation may not be reliable given continual
analyses presented in the Notice of EPA presented such a State-by-State
shifts in ownership structure.
Reconsideration. A few commenters EPA agrees with the commenters that analysis in the final CAIR RTC (final
claimed that EPA should have focused one method of evaluating the CAIR ‘‘Corrected Response to
its analyses on State budgets rather than reasonableness of SO2 allocation Significant Public Comments on the
on projected allocations to companies approaches is (in addition to company- Proposed Clean Air Interstate Rule,’’
because, with an alternative allocation by-company analyses) to compare State Corrected April 2005 (Docket Number
approach, States would have the budgets calculated according to various OAR–2003–0053)). EPA recognizes that
responsibility for allocating allowances methodologies. Despite one the analysis prepared for the CAIR RTC
to their respective affected sources and commenter’s assertion that company- did not consider two of the alternative
could meet control requirements level analysis is made unreliable by allocation approaches discussed above.
differently than assumed in EPA’s constantly changing corporate For today’s notice, EPA has analyzed
analyses. Further, these commenters structures, EPA believes that such an State budgets calculated under eight
claimed a State-by-State analysis is analysis remains instructive. A State- different approaches (title IV and seven
more consistent with the analysis of level analysis provides additional alternatives). These eight approaches are
NOX allocation methodologies in the perspective on the impact of various described in Table IIIA.1, below.
TABLE III.A.1.—DESCRIPTION OF ALLOCATION APPROACHES INCLUDED IN EPA ANALYSIS

Approach name Description of approach
EPA Title IV .................................... Title IV allocations adjusted for the 2 to 1 allowance retirement ratio in 2010–2014 and the 2.86 to 1 allow-
ance retirement ratio in 2015 and thereafter. EPA’s chosen approach.
Average 1999–2002 (Pure) Heat For each State, calculates the average heat input over the years 1999–2002. Apportions the region-wide
Input. SO2 cap to individual States based on each State’s share of the total region-wide average for those
years.
1999–2002 Heat Input w/Fuel Fac- For each State, calculates the average adjusted heat input over the years 1999–2002. Adjusts heat input
tors. using factors of 1.0 for coal, 0.009 for natural gas, and 0.3 for oil. Apportions the region-wide SO2 cap to
individual States based on each State’s share of the total region-wide average adjusted heat input for
those years.
1999–2002 Heat Input w/Fuel Fac- For each State, calculates the average adjusted heat input over the years 1999–2002. Adjusts heat input
tors & Coal Type. using factors of 2.6 for bituminous coal, 1.0 for subbituminous and lignite coals, 0.2 for natural gas, and
0.7 for oil. Apportions the region-wide SO2 cap to individual States based on each State’s share of the
total region-wide average adjusted heat input for those years.
Average 1999–2002 Heat Input For each State, calculates the average heat input from coal- and oil-fired units over the years 1999–2002.
Coal + Oil. Apportions the region-wide SO2 cap to individual States based on each State’s share of the total region-
wide average heat input from these units for those years.
Average 1999–2002 SO2 Emissions For each State, calculates the average emissions over the years 1999–2002. Apportions the region-wide
SO2 cap to individual States based on each State’s share of the total region-wide average emissions for
those years.
Average 1999–2002 Generation For each State, calculates the average output over the years 1999–2002. Apportions the region-wide SO2
Output (all sources fossil and cap to individual States based on each State’s share of the total region-wide average output for those
non-fossil). years.
1999–2002 Generation Output For each State, calculates the average output from fossil fuel-fired units over the years 1999–2002. Appor-
(Fossil-fuel-fired units only). tions the region-wide SO2 cap to individual States based on each State’s share of the total region-wide
average output from these units for those years.
As is shown in Table III.A.2, the first input with fuel factors, heat input with this approach received more limited
component of EPA’s State-level analysis fuel factors and coal type, coal and oil commenter support.
compared the individual State shares of heat input and average output all), In examining the results of this
total region-wide SO2 allocations under distribution of State budgets using title analysis for the States where
the various approaches. The revised IV allocations results in an individual commenters that submitted adverse
analysis is consistent with EPA’s State receiving its smallest or greatest comments on the use of title IV own
original findings. As can be seen from share of total SO2 allocations relative to generating units (FL, IN, MD, MN, NY,
Table III.A.2, 80 percent of States get what the individual State receives under NC, PA, SC, TX), it becomes apparent
neither the most nor the least the alternative approaches the same that each allocation approach makes
allowances relative to what they receive number of times as the pure heat input some States better off and others worse
under the other allocation approaches, methodology and fewer times than the off. (See ‘‘CAIR SO2 Allocation
under the title IV approach. (See ‘‘Sulfur other methodologies supported by Approach Analysis’’ Technical Support
Dioxide Allowance Allocation commenters (see the last three rows of Document available in the docket.) 5
Methodology Comparative Analysis’’
Table III.A.2). Such results support
Technical Support Document (Docket 5 Also, it is worth noting that these many of the
EPA’s argument that its chosen commenters are all in cost-of-service States, where
ID: EPA–HQ–OAR–2003–0053)).
Furthermore, when compared allocation approach is reasonable. While they should be able to pass through costs. In other
the coal and oil heat input approach words, sources in these States are likely to recover
specifically to the methods supported their cost of compliance, and the rate impact in
by commenters (pure heat input, heat appears to perform best in this analysis, Continued
While using a heat input with fuel provided adverse comments on title IV, not counted) relative to the title IV
factors approach would provide an shifting to this approach would approach.
advantage to many of the States that disadvantage 10 of the 23 States (DC is
TABLE III.A.2.—STATES SHARE OF BUDGET UNDER VARIOUS ALLOCATION APPROACHES

1999–2002
Average 1999–2002 Average
Heat input Average Average Average
1999–2002 Heat input 1999–2002
State EPA title IV w/fuel fac- 1999–2002 1999–2002 1999–2002
(pure) heat w/fuel fac- heat input
tors & coal emissions output all output fossil
input tors coal + oil
type
AL ..................................... 4.4% 4.3% 4.9% 5.2% 4.7% 5.0% 4.7% 4.2%

DC .................................... 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
FL ..................................... 7.0% 7.7% 5.6% 6.7% 7.3% 6.0% 7.2% 7.7%
GA .................................... 5.9% 4.1% 4.7% 5.3% 4.5% 5.2% 4.5% 4.2%
IA ...................................... 1.8% 1.9% 2.4% 1.2% 2.3% 1.4% 1.5% 1.8%
IL ...................................... 5.3% 4.7% 5.4% 4.4% 5.2% 4.7% 6.6% 4.4%
IN ...................................... 7.0% 6.5% 7.9% 7.9% 7.5% 8.6% 4.6% 6.2%
KY .................................... 5.2% 4.9% 6.0% 7.3% 5.8% 5.8% 3.5% 4.5%
LA ..................................... 1.7% 3.3% 1.6% 1.0% 1.5% 1.1% 3.4% 3.6%
MD .................................... 2.0% 1.8% 1.9% 2.3% 2.0% 2.7% 1.9% 1.7%
MI ..................................... 4.9% 4.2% 4.4% 3.7% 4.3% 3.7% 4.1% 4.2%
MN .................................... 1.4% 1.9% 2.3% 1.1% 2.2% 1.0% 1.9% 1.7%
MO ................................... 3.8% 3.6% 4.3% 2.3% 4.1% 2.4% 2.9% 3.4%
MS .................................... 0.9% 1.4% 1.0% 1.0% 1.1% 1.2% 1.6% 1.6%
NC .................................... 3.8% 3.7% 4.5% 5.5% 4.3% 4.7% 4.5% 3.8%
NY .................................... 3.7% 4.0% 2.2% 2.7% 3.4% 2.7% 5.3% 3.9%
OH .................................... 9.2% 6.4% 7.9% 9.6% 7.5% 12.2% 5.4% 6.5%
PA .................................... 7.6% 6.0% 7.1% 8.4% 6.9% 9.5% 7.4% 6.1%
SC .................................... 1.6% 2.0% 2.3% 2.9% 2.2% 2.1% 3.4% 2.0%
TN .................................... 3.8% 3.0% 3.7% 4.4% 3.5% 4.0% 3.5% 3.0%
TX ..................................... 8.9% 15.3% 9.4% 5.5% 9.0% 6.0% 13.9% 16.6%
VA .................................... 1.8% 2.3% 2.5% 3.1% 2.5% 2.3% 2.8% 2.3%
WI ..................................... 2.4% 2.5% 2.9% 1.8% 2.8% 2.0% 2.2% 2.2%
WV ................................... 6.0% 4.4% 5.4% 6.7% 5.2% 5.8% 3.4% 4.5%
Total .......................... 100% 100% 100% 100% 100% 100% 100% 100%
Number of times method
provides least allow-
ances ............................ 3 4 1 7 0 2 4 4
Number of times method
provides most allow-
ances ............................ 2 1 5 6 0 4 4 4
Total (most + least) ... 5 5 6 13 0 6 8 8

Source: EPA, 2006.
Note: For NOX, EPA calculated a separate analysis proves that EPA’s SO2 arithmetic mean of the (absolute)
region-wide budget for New Jersey and allowance allocation approach is difference between the ratio of each
Delaware using the same approach that was inferior to a fuel-adjusted heat input State’s allowance allocation under each
used to calculate the larger CAIR region-wide method, such as the allocation approach approach to its projected emissions
budget. This region-wide budget was then
apportioned to individual State budgets
used in the CAIR NOX model trading under CAIR (coverage ratio), and 1.0
using the same approach used in CAIR. rule. They assert that EPA’s analysis of (i.e., the value representing a State’s
Because New Jersey and Delaware were NOX allocation methodologies is also projected emissions matching the State’s
treated separately in the context of NOX the appropriate way to compare the CAIR NOX budget). In other words, EPA
allocations, EPA has not included them in reasonableness of the SO2 allocation calculated how far off the State’s
the SO2 analysis. alternatives. coverage ratio was from 1.0, and then
As EPA explained in the Technical determined the average value of this
Two commenters performed Support Document for the Agency’s difference for each approach.
alternative analyses of State budgets, NOX budget analysis (‘‘CAIR Statewide One commenter performed a similar
modeled after the calculations done for NOX Budget Calculations,’’ available in analysis of State budgets, comparing
the CAIR Reconsideration related to the docket), to quantitatively evaluate each State’s projected emissions to its
NOX budgets (CAIR Statewide NOX whether the fuel factor approach is projected allowances under each
Budget Calculations, EPA Docket providing States with annual NOX allocation approach. The commenter
Number OAR–2003–0053, December budgets that more closely reflected their analyzed the results in relation to a
2005). The commenters claim that their projected emissions, EPA calculated the coverage ratio of 1.0 (as EPA did in its
these States, spread over all generation, CAIR region in 2010 and 2015, respectively. Florida retail electricity price increases lower than the
transmission, and distribution is likely to be is projected to experience an increase in retail regional average increases under CAIR in 2010 and
minimal. EPA’s Regulatory Impact Analysis for electricity prices of 0.8 percent in 2010 and 1.4 2015.
CAIR forecasts an increase of only about 2.0 percent percent in 2015. Also, the region containing North
and 2.7 percent in average electricity prices in the Carolina and South Carolina is forecast to have
NOX analysis) and averaged the values using a coverage ratio of 1.0, which factors and the allocation approach
for each approach. Another commenter would assume that in a given year total based on title IV, they do not conclude
performed a similar analysis but SO2 emissions in the region are equal to their analyses with any meaningful
presented the results as the cumulative the total region-wide SO2 budget, is not arguments that EPA’s approach is not
value (sum) of absolute differences appropriate for evaluating the SO2 State reasonable.
between the coverage ratios and 1.0. budgets resulting from the various SO2 As EPA noted earlier in this section,
EPA disagrees with the commenter’s allocation methodologies. A State that there are a number of ways by which to
assertion that the methodology that the had a coverage ratio of 1.0 would have assess the equitability of a given
Agency used to evaluate State NOX enough allowances to cover its allowance allocation approach. For a
allocations should be the primary means emissions, and, while this ratio would further understanding of the overall
by which to evaluate the reasonableness be a meaningful target in the context of relative impacts of the various
of the SO2 allocation methodology. As the CAIR NOX trading program, it is not allocation approaches, EPA believes that
explained in the CAIR preamble, in the for SO2, because 2010 and 2015
it is useful to apply the statistical
case of SO2, EPA needs to balance emissions will be higher than the
concepts of (1) bias and (2) consistency.
various considerations, including the region-wide cap due to the use of
need to allocate SO2 allowances in a EPA determined that an appropriate
banked allowances. For SO2, the region-
way that is less disruptive to the title IV statistic for examining the bias of a
wide ratios of allowances to projected
program. In light of these given allocation approach is the average
emissions are 0.70 for 2010 and 0.60 for
considerations, minimizing the difference between a State’s coverage
2015. On average, one would expect
disparity between a State’s allocation ratio and the coverage ratio for the
States to have coverage ratios similar to
and projected emissions cannot be the entire region (e.g., 0.70 for 2010 or 0.60
the region-wide average.
primary objective. For SO2, there is a While in both the NOX annual and for 2015). The degree of bias inherent in
pre-existing national trading program NOX ozone season trading programs a given allocation approach cannot be
(the Acid Rain SO2 trading program) some allowances beyond the State discerned from the absolute value
that Congress intended to continue as a Budgets (i.e., compliance supplement statistic, because it ignores the degree to
viable program into the future and pool allowances in the annual program which positive and negative differences
under which allowances have been and banked allowances from the NOX cancel each other out. A perfectly
allocated in perpetuity. For NOX, there Budget Trading Program in the ozone- unbiased distribution under a given
is no pre-existing national trading season program) will be available to allocation approach would be one that
program where efficiency and sources, the amount of these extra resulted in an average difference of zero,
effectiveness would be jeopardized by allowances will be too small to affect meaning that on average a State-by-State
creating new CAIR NOX allowances. the State-by-State NOX analysis. coverage ratio higher than the regional
There is, of course, a pre-existing Consequently, EPA believes that a more coverage ratio is balanced out by a ratio
regional NOX ozone-season program appropriate way to evaluate SO2 below. Another useful statistic is the
covering a portion of the CAIR region allocation methods is to use the 0.70 (for percent of instances in which the
(the NOX Budget Trading Program, 2010) and 0.60 (for 2015) coverage allocation approach yields a State
established by regulation, rather than ratios, rather than a ratio of 1.0. Further, coverage ratio that is high (or low)
directly by Congress). Under the because each allocation approach relative to the regional coverage ratio.
existing NOX ozone-season program, no results in allocations that are Lack of bias would be indicated if 50
State has allocated allowances past 2009 advantageous for different companies percent of the State coverage ratios are
(and only a handful of States have and States, EPA believes that the higher than the regional coverage ratio
allocated allowances past 2008). reasonableness of a given allocation and 50 percent are lower.
Therefore, in contrast with EPA’s approach should be judged by its overall EPA evaluated the four allocation
determination concerning SO2 impact on companies and States, not its approaches considered during the CAIR
allocations, evaluation of potential specific impact on any single company rulemaking (title IV, pure heat input,
approaches to NOX allocations did not or State or on a few companies or States. heat input with fuel-factors, and heat
involve concerns about Congressional EPA has redone the commenters’ input with fuel factors and coal type
intent to preserve an existing trading analysis, using the methodology used by factors) along these metrics. From EPA’s
program and about preserving the value EPA in its analysis of NOX allocations calculations (Table III.A.3), all the
of allowances already allocated in and corrected coverage ratios described approaches are biased high for 2010 and
perpetuity. For NOX, EPA does not need above. This analysis is presented in the all but one is biased high for 2015 (with
to consider other important policy ‘‘CAIR SO2 Allocation Approach CAIR controls). The average differences
concerns that are important for SO2. Analysis’’ Technical Support Document for EPA’s approach, 0.06 in 2010 and
While the methodology used by EPA available in the docket. While the title 0.17 in 2015, are among the closest to
to evaluate NOX allocation IV SO2 allocation approach does not zero compared to the alternatives
methodologies for CAIR can be applied perform the best of the allocation examined. The one approach (heat input
to analysis of SO2 allocations, EPA approaches considered using this with fuel and coal adjustment factors)
believes that the commenters performed metric, the differences observed among that exhibits less bias than the title IV
their State-by-State analyses incorrectly, the approaches are of a lower magnitude approach in 2010 exhibits bias of the
overlooking a fundamental difference than those suggested by the same magnitude (but opposite direction)
between the CAIR NOX and SO2 trading commenters. The commenters did not as the title IV approach in 2015. In
programs, which is the existence of a provide any benchmark in their analysis addition, the percent of positive
significant bank of pre-2010 allowances for assessing whether or not a given differences for EPA’s approach for 2010
that will be eligible for use for allocation approach was reasonable. and 2015 are near 50 percent and do not
compliance with CAIR. Because of the Further, although the commenters greatly vary from the alternative
existence of a SO2 allowance bank, EPA discuss some of the implications of the methods analyzed. This demonstrates
believes that the commenter’s differences observed between an that EPA’s approach provides a
comparison of allocation approaches allocation approach based on fuel reasonable result.
TABLE III.A.3.—EVALUATION OF BIAS AND CONSISTENCY OF FOUR DIFFERENT SO2 ALLOCATION APPROACHES, 2010 AND
2015
2010 2015
1999–2002 1999–2002
Average 1999–2002 Average 1999–2002
heat input heat input
1999–2002 heat input 1999–2002 heat input
EPA title IV w/fuel EPA title IV w/fuel fac-
(pure) heat w/fuel (pure) heat w/fuel fac-
factors & tors & coal
input factors input tors
coal type type
Average Difference .......... 0.06 0.11 0.06 0.05 0.17 0.18 0.14 ¥0.17
Percent Positive ............... 43% 39% 52% 48% 43% 43% 43% 52%
Source: EPA 2006.
Potential for Regional Emissions about 30 percent of the 0.9 million tons can opt into the title IV Acid Rain
Increases of emissions EPA projects for non-CAIR Program. The statutory and regulatory
As discussed above and in the CAIR region). This increase would occur provisions governing Acid Rain Program
because title IV allowances would have opt-in units allow units that are subject
preamble, another important reason for
no economic value. to CAIR, but not to the Acid Rain
use of the title IV allowances is to avoid
EPA has also considered the impact of Program, to opt into the Acid Rain
SO2 emissions increases in 2010 and opt-in unit allocations and projects that Program. Under section 410(a) of the
thereafter in non-CAIR States. If title IV in 2010 allowances equivalent to Clean Air Act, the owner or operator of
allowances were not used in the CAIR approximately 25,000 tons could be any unit that emits SO2 and ‘‘is not, nor
SO2 trading program, the resulting generated by units opting into the Acid will become, an affected unit’’ under the
reduction in the value of title IV Rain Program and used for compliance general applicability provisions of CAA
allowances would result in an increase in the CAIR SO2 trading program. This title IV (i.e., starting in 2000, CAA
in emissions in non-CAIR States. EPA is less than one percent of the projected sections 403(e)(for new units) and 405
estimates that emissions ‘‘leakage’’ of CAIR region-wide emissions in 2010. (for existing units)) may apply to have
title IV allowances from the CAIR region (See the spreadsheet ‘‘SO2 Allocation the unit become an opt-in unit under
into the non-CAIR region would be Analysis Data—Owner and Parent the Acid Rain Program. 42 U.S.C.
approximately 260,000 tons annually in Comparison’’ available in the docket). 7651i(a). (The separate treatment of
2010 and thereafter (See 70 FR 25293). Thus, EPA believes that the effect of ‘‘process sources’’ under sections 410(a)
One commenter argues that EPA has selecting the title IV allocation approach and (e) is not applicable to electric
not sufficiently evaluated and compared for SO2 under CAIR will not generating units covered by CAIR.)
the impact of the potential for increases significantly affect the overall SO2 Section 410 was added to the Clean Air
in CAIR region emissions under the emission reduction objectives of the Act by the Clean Air Act Amendments
approach of using title IV allowances rule. of 1990, which were enacted on
that could result from allocations to title It should also be noted that an November 15, 1990.
IV opt-in units and title IV allowances alternative to including non-title IV EPA interprets section 410(a) to allow
traded into the CAIR region from non- sources under CAIR and allowing them any SO2-emitting unit not currently
CAIR States to the potential for to use opt-in allowances from title IV covered by the general applicability
emissions increases in non-CAIR States would be excluding these units provisions to opt into the Acid Rain
from ‘‘leakage’’ of title IV allowances altogether from CAIR. In choosing to opt Program and receive SO2 allowances,
from CAIR States to non-CAIR States into title IV to provide allowances for provided that certain requirements (e.g.,
under an allocation approach that does use under CAIR, these units would have emissions monitoring and reporting
not rely on title IV. to reduce emissions from the baseline at requirements under part 75 of the Acid
EPA has, in fact, considered the issue which they were allocated in order to Rain regulations) are met. The use of
of emissions ‘‘leakage’’ outside of the generate excess title IV allowances. two separate terms, one to refer to a unit
CAIR region throughout its analysis of Thus, actual cumulative net emissions that ‘‘is not’’ an affected unit, and the
CAIR and has also analyzed the increases within the CAIR region from other to refer to a unit that ‘‘will not
potential increases outside of the CAIR title IV opt-in sources subject to CAIR become’’ an affected unit reflects the
region if EPA were to not use an are unlikely. Alternatively, excluding fact that there are two separate
allocation system based on title IV. EPA these units from CAIR and keeping the applicability provisions, section 405
estimates, based on its CAIR analysis, same SO2 allowance retirement ratios applying to units in existence and
that title IV allowances from the non- (and the same State budgets) would generating electricity for sale when the
CAIR region equivalent to about 150,000 achieve many, but not all, of the highly CAA Amendments were enacted and
tons of SO2 emissions may be traded cost-effective SO2 reductions and could section 403(e), applying to units to be
into the CAIR region in 2010, which result in emissions leakage within the constructed at some later date. In short,
represent about 4 percent of the CAIR region at these sources, as section 410(a) included language using
projected CAIR region emissions in generation (and thus emissions) shift both a verb in the present tense (i.e., ‘‘is
2010. This compares to approximately from the EGUs covered by the cap to not’’) to refer to existing units and a verb
260,000 title IV allowances, EGUs not covered by the cap. in the future tense (i.e., ‘‘nor will
representing that many tons of SO2 become’’) to refer to begin generation or
Opting Into the Acid Rain Program
emissions, that sources in non-CAIR begin construction in the future. EPA

States would have incentive to use to As discussed above, EPA’s analyses of does not interpret the term ‘‘nor will
cover emissions at little to no cost, if we the distribution of allowances under become’’ to bar, from opting in,
chose an alternative system that is not EPA’s allocation approach included currently operating units that are not
based on title IV (an increase equal to allowances allocated to CAIR units that covered by the generally applicability
provisions but that may become subject Agency did not provide adequate notice installed.6 Rather, the determinant
to those provisions sometime in the and that the use of the FAF approach would be the cost of adding controls
future. Consequently, a unit that adversely impacted States with large compared to the cost of buying, or the
currently has an exemption from the gas- and oil-fired generation portfolios. profit from selling, allowances. Controls
general applicability provisions (e.g., an Given the significant public interest in are expected to be installed where it is
exempt cogeneration unit under CAA this issue, EPA granted reconsideration relatively less expensive, without regard
section 402(17)(C) or 405(g)(6)(A)), may and solicited additional public to which units received the initial
opt in under section 410(a)) even if the comment on this issue. allocation of allowances. Further, the
exemption may be lost sometime in the The Notice of Reconsideration total cost to industry of controlling
future. Such a unit may become and explained that EPA believes that it emissions and the total amount of
remain an opt-in unit until the unit provided adequate notice both that the reductions achieved would not be
loses its exemption. fuel adjustment factors might be used affected by the allocation methodology
This interpretation of section 410(a) is in a given year (for a permanent system).
and of the calculation procedures that it
reflected in the implementing The allocation method, however, could
would use to determine the specific
regulations. For example, § 74.2 states have financial impacts on individual
factors. Nevertheless, in light of the
that the opt-in regulations apply to units units and companies. A unit that
significant public interest in this issue,
that ‘‘are not affected units under § 72.6 receives more allocations than it has
EPA granted reconsideration on the the
[the general applicability provisions] emissions would get a benefit at the
use FAFs (i.e., 1.0 for coal, 0.4 for gas,
* * * and that are operating and are expense of a unit that does not receive
and 0.6 for fuel oil) in the development
located in the 48 contiguous States of enough allocations to cover its
of statewide NOX budgets. The Notice of
the District of Columbia’’. 40 CFR 74.2. emissions. While States choosing to
The opt-in regulations do not exclude Reconsideration provided an additional
opportunity for public comment on the participate in the cap-and-trade program
operating units that are currently can determine how to allocate
exempt from the general applicability issue and presented additional analysis
that EPA conducted to further explain allowances among their units,
provisions but that may subsequently companies in States whose budgets
lose their exemption. Moreover, the impact of these factors on State
annual NOX budgets. That additional exceed projected EGU emissions would
§ 74.46(b)(iii) specifically addresses how likely receive a financial benefit while
to treat opt-in allowance allocations for analysis demonstrated that the factors
selected are reasonable and decrease the companies in States whose budgets are
operating units that opt in but lower than their EGU emissions would
subsequently become subject to the disparity between most States’ projected
electric generation unit (EGU) emissions likely incur additional costs. In the
general applicability provisions. The absence of other considerations, EPA
provision explains how to treat such and their State NOX budgets. The Notice
of Reconsideration did not propose to believes that it is in the public interest
allowance allocations for the year in to reduce the disparity between the
which the units lose their exemption change any aspect of how the CAIR
apportions the regionwide NOX budget number of allowances in a State budget
and for subsequent years. This supports and total projected State EGU emissions.
EPA’s interpretation that currently among States.
In the case of NOX allowances, there are
exempt units may become opt-in units Today’s action responds to public no considerations that offset the
even though they may lose their comment received on the Notice of desirability of reducing the disparity
exemption in the future. Reconsideration and presents some between a State’s budget and projected
EPA notes that the additional cost for additional analysis that supports the emissions. This contrasts with the case
CAIR units of opting into the Acid Rain analysis presented in the Notice of of SO2 allowances, as described above,
Program will be minimal. The major Reconsideration. where there are counter-balancing
cost for any unit to opt in is the cost of
Background on the Use of NOX FAFs in considerations, such as the importance
meeting emissions monitoring and
the Statewide NOX Budgets of preserving the efficacy of the existing
reporting costs under part 75. Whether
title IV SO2 trading program.
or not they become Acid Rain Program The CAIR establishes regional
opt-in units, all units under CAIR emission budgets for annual and 1. Summary of Additional Analysis
already have to meet, and incur the seasonal NOX emissions. These regional Presented in the Notice of
costs of, part 75 emissions monitoring budgets are then further divided into Reconsideration
and reporting requirements. EPA also State budgets, with a share of each total The Notice of Reconsideration
notes that currently under the Acid Rain regionwide budget apportioned to each presented two analyses that EPA
Program only a small number of units State in the corresponding CAIR region. conducted to evaluate the potential
have opted into the program. Because The CAIR determines each State’s pro- impact of using the adjusted heat input
EPA anticipates that the existence of the rata share of the regionwide budget by method versus the simple heat input
CAIR program will result in more units using that State’s share of the method on State annual NOX budgets:
opting in, EPA will work with potential regionwide heat input, as adjusted by one regionwide analysis and a second
opt-in sources to consider opportunities the FAFs (i.e., 1.0 for coal, 0.4 for gas, State-by-State analysis.
to improve the opt-in program. and 0.6 for fuel oil). Petitioners asked The regionwide analysis of the
B. Fuel Adjustment Factors Used to Set EPA to reconsider this methodology. potential impacts compared regionwide
State NOX Budgets As explained in the Notice of budgets using both approaches (i.e.,
Reconsideration, States choosing to simple heat input and fuel factor) to the
As described in the December 2, 2005
Notice of Reconsideration for CAIR, participate in the trading program may 6 A permanent allocation approach, such as the
EPA received several petitions for allocate their statewide budgets to CAIR allocation methodology in the model trading
reconsideration asking EPA to sources in their respective State. In a rules, should not affect where controls are installed.
reconsider its decision to use fuel cap-and-trade system, however, the This is true regardless of the type of approach used
methodology used to allocate to permanently allocate allowances (e.g., heat input,
adjustment factors (FAF) to establish adjusted heat input, or output). The use of an
NOX budgets for State in the CAIR allowances in any given year would not updating allocation system, on the other hand,
region. Petitioners contended that the affect where control technologies are could have some impact future generation.
regionwide projected emissions of units electricity demand and increased gas EPA disagrees that higher fuel costs of
fired with that fuel.7 That analysis and oil prices, the Notice of oil- and gas-fired units are not properly
illustrated that: under either approach, Reconsideration presented EPA analysis considered in the analysis of potential
the portion of the State budgets derived based upon a sensitivity run using EIA’s impacts of using the FAF method in
from the heat input from the gas-fired forecast of higher electricity demand developing statewide NOX budgets. In
units generally exceeds both the and gas and oil prices. This run projecting which sources would install
historical and the future projected produced very similar emissions results advanced controls under CAIR, EPA
emissions from these units; the fuel to the original NOX analysis, showing modeling factored-in the operating
factor approach generally provides that EPA’s original analysis is robust characteristics of each source, including
additional allowances to States with enough to support the fuel adjusted heat fuel costs.8 This modeling showed that
large amounts of coal-fired units that are input approach finalized in CAIR. (See coal-fired units—not gas- and oil-fired
making the majority of the investments the ‘‘CAIR Statewide NOX Budget units—would make the significant
in emission control measures and Calculations Technical Support investment in advanced controls in
technologies; and, using the fuel factor Document, EPA 2005, for additional order to achieve the CAIR mandated
approach, the disparity between the discussion of the analysis.) emission reductions. The commenter
number of allowances provided to each did not demonstrate that EPA modeling,
type of fossil fuel-fired electric 2. Public Comments on Analysis used in the development of CAIR and
generation and the projected emissions Presented in the Notice of the Notice of Reconsideration analysis,
for each fossil fuel type is less than Reconsideration mischaracterized the operating costs of
under the simple heat input method. Many commenters supported the EPA these units. Further, the commenter did
The second analysis presented in the analysis presented in the Notice of not explain how a decision to build a
Notice of Reconsideration examined the Reconsideration that demonstrated that: gas-or oil-fired unit prior to CAIR that
potential impacts of the two approaches • Under either approach, the portion has high operating costs, warrants an
for developing Statewide budgets (i.e., of the State budgets derived from the award of valuable allowances to offset
simple heat input and fuel factor) on a heat input from the gas-fired units operating costs that they would have
State-by-State basis. That analysis generally exceeds both the historical with or without CAIR. Notably,
showed that States receiving fewer and the future projected emissions from although natural gas inherently burns
allowances using a fuel factor approach, these units; with lower NOX emissions, its choice in
generally still receive Statewide budgets the CAIR region historically is based
• The fuel factor approach generally
that are greater than their projected much more on the economics to meet
provides additional allowances to States
emissions in 2009 and 2015. This electric demand requirements—electric
with large amounts of coal-fired units
results because a substantial portion of generation from natural gas has been the
that are making majority of the
their generation portfolio consists of cheapest approach.
investments in emission control
gas-fired sources with generally low In addition, it is not clear why the
measures and technologies; and
NOX emission levels. More specifically, commenter believes that using the FAF
the analysis illustrated that while States • Using the fuel factor approach, the
disparity between the number of approach would result in gas-fired units
dominated by gas-fired generation (i.e., having to purchase NOX allowances.
District of Columbia, Florida, Louisiana, allowances provided and the emissions
is less than under the simple heat input Analysis presented in the Notice of
Mississippi, New York, and Texas) Reconsideration showed that, in
receive fewer allowances under a fuel method.
general, States with predominantly gas-
factor approach, they are provided with Adverse Comments on the Notice of and oil-fired generation are provided
reasonable Statewide budgets that are Reconsideration with reasonable statewide budgets that
comparable to their projected emissions are comparable to their projected
in 2009 and 2015. In addition, this a. Comments on EPA’s
Characterization of Operational Costs emissions in 2009 and 2015. If the
analysis shows that, relative to the States were to directly pass through
simple heat input method, the fuel for Low-Emitting Generation in Analysis
allowances to their gas-fired units, these
factor method reduces the disparity Some commenters contended that
units would still have excess
between projected State emissions and EPA analysis of the projected impacts
allowances. Furthermore in most cases,
State budgets, e.g., allocating State on different types of power generation
these States still receive a larger budget
budgets that are generally closer to (i.e., coal-fired, gas- and oil-fired units)
than they need to cover their projected
projected State emissions. was inaccurate because it did not reflect
emissions.
EPA conducted the same analyses for inherent differences in the cost (e.g.,
In conclusion, EPA believes the
the annual NOX programs proposed for fuel costs) to operate each type of unit.
projected emission levels used in EPA’s
Delaware and New Jersey, which are Specifically, the commenters claim that
analysis of the potential impacts of
being included in the CAIR PM2.5 gas-fired units ‘‘have incurred historical
using a FAF method to apportion
finding of significant contribution in a costs to burn a cleaner but higher-priced
statewide NOX budgets appropriately
separate rulemaking published today. fuel.’’ The commenter continues with
considers the operational costs of oil-
This analysis showed results similar to ‘‘while gas-fired plants have continually
and gas-fired units.
that found for the other CAIR PM2.5 paid the price for cleaner fuels, under
States. CAIR these owners may be penalized b. Comments on EPA Projections of Oil-
Finally, to ensure that our estimates with additional costs of purchasing and Gas-Fired Boilers Retirement and
appropriately reflect the distribution of allowances.’’ The commenters believed Impacts on Analysis
emissions in the case of higher that, as a result, EPA analysis of the A few commenters believed that EPA
potential impacts of using the FAF inaccurately accounted for their
7 It should be noted that simple heat input or approach—which was based on projected emissions because the IPM
adjusted heat input are used to set State budgets comparing CAIR NOX allowances to the
and do not imply that States would allocate modeling did not consider
allowances to units in that manner. In the proposal,
projected emissions—has not properly
EPA gives States flexibility in the distribution of considered the economic impacts to 8 IPM modeling uses ‘‘model plants’’ to represent
allowances. these units and their customers. the characteristics of a group of actual facilities.
requirements, outside of environmental budgets. Many of these commenters also rulemaking by conducting a sensitivity
regulatory programs, to maintain reserve supported the analysis EPA presented in analysis (available in the CAIR docket),
electricity generation capacity. The the Notice of Reconsideration but had not conducted revised air
commenter claims that, as a result, there (discussed below.) quality modeling (70 FR at 72279–
are oil-fired units that would continue Other commenters maintained that 72280). In response to the
to operate even though IPM projects that the final CAIR did not provide sufficient reconsideration petition, EPA
they would retire because they are no notice on the use of the FAF approach conducted revised air quality modeling
longer economical to run. The to developing statewide budgets. The which used the inputs reflecting
commenter believes that this potential methodology used for developing the emission reductions required by the
underestimation of projected NOX statewide budgets, the FAFs, and the MERP. This modeling showed
emissions is significant enough to actual statewide budgets were discussed (consistent with the sensitivity analysis)
change the outcome of EPA’s analysis in detail in the CAIR NFR (70 FR 25230) that Minnesota contributes a maximum
which demonstrated that predominantly and supporting documentation.9 By of 0.20 µg/m3 to the downwind PM2.5
gas-fired States would receive CAIR granting reconsideration and, thereby, nonattainment area of Chicago-Gary-
NOX allowances sufficient to account requesting public comment on this issue Lake County, IL–IN. This modeling thus
for their future NOX emissions. in response to the Notice of supported EPA’s conclusion that
EPA disagrees with the commenters’ Reconsideration, the Agency has Minnesota’s contribution met the
contention that the potential provided an additional opportunity for criteria in CAIR for determining
underestimation of emissions for oil- public involvement. As a result, EPA ‘‘significant contribution.’’ Id. This
fired boilers would significantly impact believes that it provided ample notice revised air quality modeling used the
the EPA’s analysis comparing and opportunity for comment on the use same modeling platform used for all of
apportioning statewide NOX budgets of fuel adjustment factors, the the air quality modeling in CAIR. In the
using simple heat input and the FAF calculation procedures used to Notice of Reconsideration, EPA solicited
approach. The EPA analysis showed determine the specific factors, and the comment on the inputs used to model
that Florida, the State of concern to the specific factors themselves. Minnesota emissions, but declined to
commenter, has coverage ratios (i.e., the reconsider or reopen for public
ratio of the statewide NOX budget and 4. Use of FAF Approach To Determining comment issues relating to the air
the projected NOX emissions) of 1.45 Statewide NOX Budgets in the Final quality modeling platform itself. Id. at
and 1.35 under CAIR in 2009 and 2015, CAIR 72280.
respectively. In other words, the Today’s action does not change the Most of the comments received on
statewide NOX budget provides 145 use of the FAF methodology to this issue in response to the Notice of
percent of the allowances that Florida determine the statewide NOX budgets Reconsideration supported EPA’s
sources would need to account for their for the CAIR. While EPA believes that conclusion. These include comments
projected emissions. adequate notice was provided on the from the Minnesota Pollution Control
EPA modeling projected that use of the FAF approach and the Agency (MPCA), the entity with the
approximately 11 percent of the oil- and specific FAFs, EPA granted the petitions most direct knowledge of emission
gas-fired generation capacity (other than on this issue in consideration of general reductions required by state programs.
coal-fired generation and combined- public interest in the matter. EPA EPA also received no adverse comments
cycle turbines) would retire early in believes that today’s action, in from Xcel Energy, the entity that entered
both 2009 and 2015, respectively. These conjunction with the Notice of into the MERP with the MPCA and
retirements comprise 4 and 5 percent of Reconsideration, adequately responds to whose projected emission levels were
Florida’s total capacity in 2009 and concerns raised by the petitioners. the centerpiece of the reconsideration
2015, respectively. Even if it was petition. In fact, no other power
necessary for all of these units to remain C. PM2.5 Modeling for Minnesota generation source in Minnesota besides
in operation to comply with One Petition for Reconsideration Minnesota Power offered adverse
requirements for reserve capacity, it is asked EPA to reconsider whether comments.10 EPA views these
not clear that this relatively small emissions from Minnesota significantly comments as confirmation of the
portion of the total capacity would emit contribute to downwind nonattainment reasonableness of the modeling
enough NOX to significantly change the of the PM2.5 NAAQS. The petitioner approach used by EPA to assess
outcome of the EPA analysis. Should all (Minnesota Power, or MP) asserted that significance of contribution of the State.
or some portion of these units remain in EPA’s modeling failed to account for EPA also views these comments as
service, Florida’s NOX budget—which is certain emissions reductions required confirmation that its revised modeling
45 percent and 35 percent above their by State programs (especially those accurately accounts for the MERP
projected emissions according to EPA required under the Minnesota Emissions reductions.
analysis—would have a surplus of Reduction Program, or MERP). In Minnesota Power (MP) did not
allowances that it could provide to these granting reconsideration, EPA explained comment on the revised emissions
units to offset emissions. Further, these that it was aware of the emission modeling done for power sector units in
units could choose to reduce their reductions in question when it made the Minnesota and instead directed its
emissions using a range of advanced significant contribution determinations comments to the original emissions
control options that, in some cases, in the final CAIR. EPA had accounted modeling done for the Final CAIR that
achieve greater emission reduction for these reductions during the did not fully account for the MERP
levels than found in coal-fired units. reductions. MP does not directly
3. Public Comment on the Notice of
9 Both the ‘‘Corrected Response to Significant
challenge EPA’s conclusion that the
Public Comments on the Proposed Clean Air revised modeling accurately accounts
Reconsideration Discussion of Notice
Interstate Rule’’ (pp. 520–576) and the ‘‘Technical

Support Document for the Clean Air Interstate Rule for the emission reductions required by
Several commenters supported EPA’s
Notice of Final Rulemaking, Regional and State SO2
position that adequate notice was and NOX Emissions Budgets’’ include information 10 Another power company in the Midwest
provided on the use of FAFs in the on the use of FAFs for developing the statewide region, Midwest Generation, supported EPA
development of the statewide NOX NOX budgets. emissions assessment for Minnesota.
the MERP. MP claims, nonetheless, that unclear why Minnesota Power used 2001 with the revised emissions
the model inputs for the final CAIR 2001 data to develop 2010 emission modeling does not support this broad
modeling (not the modeling done for the levels, rather than 2004 data, for conclusion. Heat input usage does not
Notice of Reconsideration, as just noted) example. Data from 2004 (as opposed to change significantly, and although there
contain errors. To the extent these 2001 data), used in the manner MP has are some shifts in heat input usage
alleged errors relate to the MERP, EPA done, would produce different between 2010 EPA projections and the
has corrected the errors as explained emissions levels of SO2 and NOX in 2001 data, these shifts occur where the
above.11 The additional ‘‘errors’’ of 2010 for every unit in Minnesota. IPM projects it will be cost-effective to
which MP complains relate to inputs Selectively developing projections in make relatively small changes to where
regarding the projected 2010 emissions this manner is an insufficient approach electricity is produced. In addition, EPA
for certain units in Minnesota. Although for developing power sector forecasts does not accept the suggestion that
MP states that EPA has mischaracterized (see further discussion on IPM below). because a certain rate applied in 2001 it
emissions from some units, EPA MP also comments that ‘‘EPA had should be applied in 2010. This
believes that the emissions projections erroneously assigned 2010 sulfur argument is not adequate and ignores
done to provide inputs for the revised dioxide emission rates on scrubbed the many other factors that may change
air quality modeling described in the Minnesota units at values as much as in the future which could cause a
Notice of Reconsideration are double that of the performance levels change in the way a unit produces
appropriate. posted in 2001.’’MP Comment p. 4. electricity. These include (among
EPA believes its method of projecting After reviewing the modeling results, others) fuel supply and demand
power sector emissions for units in EPA is unable to find any instances in dynamics, the cost of technologies to
Minnesota reflects a more accurate and Minnesota where EPA projected SO2 reduce emissions, relative performance
robust method for projecting emissions emission rates of scrubbed units from changes in power generation
than the method used by MP. MP the revised power sector modeling that technologies, and the price of an
presents a method for projecting 2010 are double that of the 2001 performance allowance. EPA used a version of IPM
emissions for certain select units using level. Id. Although the emission rates completed in 2004 that incorporated the
the combination of a 2001 emission rate are higher in EPA 2010 projections for best available data for EPA’s power
(based on Title IV data) and EPA’s the 3 Sherburne County Plant units than sector database and the most recent cost
projected 2010 heat input projection 2001 levels, they are well within and performance of technologies at that
under the 2010 base case (no CAIR). MP permitted levels at those units and time, focusing on what emissions and
applies this method to several of its own reflect projected changes in unit emission rates are likely to occur in
units and several owned by Xcel Energy. operations to maximize efficiency (see 2010 with full consideration of all the
MP claims that if these lower further discussion on IPM below). key factors of power plant operations
emissions were used as inputs to the MP also claims that ‘‘NOX emission that can influence future emission
PM2.5 modeling, that modeling would rates deviated between 2001 and 2010 levels.
show that Minnesota’s contribution is without supportive operating rationale.’’ The power sector is a complicated,
below the PM2.5 significance threshold Id. The difference in NOX rates that MP interrelated, and interdependent system
of 0.2 µg/m3. However, the petitioner alludes to is again based upon the of operation, and must be looked at
was selective in its application of its modeling for the Final CAIR, not for the holistically to ascertain the sector’s
methodology for projecting emissions. Notice of Reconsideration. In addition, response to a certain set of conditions or
MP applies their method only for units MP’s characterization is inaccurate. constraints. The petitioner’s approach
where that method results in emissions First and most important, EPA’s 2010 selectively chooses the methodology for
projections that are lower than the projections of NOX emission rates are determining emissions at certain units
original EPA emissions projections. generally lower than 2001 NOX and ignores the changes that may occur
Application of this approach to all emission rate data for Minnesota units. at other units as a result. In addition, it
units in Minnesota would result in EPA’s projections show that for the 7 is easy to question the choices or
emissions levels for several units in non-MERP units in Minnesota where assumptions that one makes for
2010 that are above EPA’s projections. MP provided revised NOX emission selective forecasts of this nature, since
In such cases, however, MP relies upon estimates, 4 units have lower emission methodologies can be developed to
the lower EPA projections. It is also rates in 2010 under EPA projections and support foregone conclusions, like
only 3 units will have higher emission lower emission levels in a future year.
11 The revised IPM modeling performed for the rates (compared to 2001 data). Of the 3 For this reason, EPA uses the Integrated
reconsideration fully accounted for emission units where the 2010 emission rate Planning Model to develop its power
reductions attributable to the MERP. These include values are higher for those units in EPA sector emissions projections.
emission reductions from the repowering of the two revised emissions modeling versus 2001 IPM is a detailed, sophisticated, and
units at the Riverside plant from coal to natural gas
and the retirement of a third coal unit at the plant. data, EPA finds that one unit is higher comprehensive electric power sector
The inputs to the revised modeling for the Notice by 2 percent and two units are higher by model that is used to derive all manner
of Reconsideration also accounted for emission about 7 percent. Differences in emission of projections for the power sector and
reductions from retrofit of the coal unit at the Allen rates of this magnitude can occur for a is used to develop the power sector
S. King plant with advanced pollution controls
(scrubber for SO2 removal and selective catalytic variety of reasons and without emissions projections that are used in
reduction technology for NOX removal) and for significant operational changes to a air quality modeling. The model
emission reductions from re-powering of two units particular unit. Also, the petitioner has accurately reflects the power sector and
at the High Bridge plant that will be re-powered also failed to demonstrate that EPA’s contains millions of variables to best
from coal to natural gas. It should be noted that MP
has submitted revised projected emission levels for projected NOX emission rates are ascertain how specific facilities will
certain Xcel units covered by the MERP. These inaccurate. produce electricity to meet demand in
projections do not correspond precisely with the Another comment from MP stated that the most cost-effective manner possible.
projections EPA used in its revised modeling (but ‘‘the EPA IPM modeling had shifted The variables are based upon the best
are very similar). However, as explained below,
EPA believes the projections for these units used by
heat input from large, lower emission available data, both current and
EPA are more accurate than the projections MP units to higher emission units.’’ Id. A anticipated, and include permitted
suggests should be used. comparison of the historical data from emission rates for units, unit efficiency,
cost data, and operational constraints. BART controls before 2010. Thus, it is for the final CAIR, and provided full
This model has been used to support the highly unlikely that 2010 emissions notice and opportunity to comment on
development of Title IV of the Clean Air would be affected by the BART the appropriateness of the model. See 69
Act (the Acid Rain Program), the NOX requirements. In addition, MP does not FR 47828 (August 6, 2004) (announcing
SIP Call, the Clean Air Interstate Rule, quantify any reductions it believes will plan to use CMAQ 4.3 for the final rule);
the Clean Air Mercury Rule, and the occur due to the application of BART in see also 70 FR 25234–36 (summarizing
Clean Air Visibility Rule. In addition, it Minnesota. Thus, MP has not the use of CMAQ 4.3). There was ample
is used by the Federal Energy established that there will be additional opportunity to comment on any issues
Regulatory Commission, private sector, reductions due to BART that must be regarding the adequacy of the model
non-profits, research groups, States, and taken into account when projecting during the rulemaking. Nor is the
regional planning organizations for 2010 emissions for units in MN. It is existence of a new iteration of the model
power sector projections. The model has also important to note that EPA has ‘‘grounds for * * * objection ar[ising]
undergone extensive peer-review and determined that CAIR achieves greater after the period for public comment’’
scrutiny, and EPA believes it is an progress than BART, and may be used (CAA section 307(d)(7)(B)). Predictive
appropriate tool for use in developing by States in the CAIR region as an models are of course open to the
power sector emission projections and alternative to BART. possibility of updating and so are often
better accounts for the many dynamics In sum, EPA continues to believe its adjusted. Such adjustments do not
that exist in the power sector (http:// emission projections have reasonably normally occasion new opportunities
www.epa.gov/airmarkets/epa-ipm/ accounted for emission trends within for comment, particularly after the close
index.html). Minnesota and fully account for of a rulemaking. Indeed, doing so would
MP does not challenge the use of IPM emission reductions attributable to the create a perverse incentive to leave
for developing power sector emission MERP. EPA believes the inputs used for models unadjusted. The ultimate issue
projections for certain units, but the modeling discussed in the Notice of is whether the model used in the
comments that at other units, a revised Reconsideration are reasonable and rulemaking bears a ‘‘rational
methodology should be used. EPA rational projections of 2010 emissions in relationship to the characteristics of the
believes that a holistic approach is Minnesota.12 For these reasons, EPA is data to which it is applied’’.
necessary and using a modeling tool not making any additional changes to Appalachian Power v. EPA, 249 F. 3d
that reflects the integrated nature of the the inputs to the PM2.5 modeling for 1032, 1052 (D.C. Cir. 2001). There has
power sector as accurately as possible is Minnesota, beyond those changes already been full opportunity to
the most rational approach to described in the Notice of comment on this issue.
forecasting emissions for all units Reconsideration. Accordingly, after careful
comprehensively. For more detail on EPA’s examination of Minnesota Power’s
To its credit, MP also points out that characterization of power sector units in petition, as well as all comments
emissions from the Taconite Harbor Minnesota and power sector emission submitted in response to EPA’s notice,
Facility (a facility that was recently inputs to the air quality modeling, EPA continues to find that Minnesota
converted from an industrial source to please see the Technical Support emissions contribute significantly to
an electricity generating source) were Document titled ‘‘Emissions in downwind nonattainment of the PM2.5
not included by EPA in either the power Minnesota: Additional Analysis as Part NAAQS. EPA is therefore not amending
sector emissions data or in other of the CAIR Reconsideration’’ that is the rule to remove Minnesota from the
emissions inventory used for CAIR part of the record for this proceeding. CAIR PM2.5 region.
modeling. EPA will include the facility Minnesota Power also raised a new
in the next version of the IPM. If the D. Inclusion of Florida in the CAIR
issue in its comments on the Notice of Region for Ozone
facility had been included in the Reconsideration, which is that EPA
inventory, emissions in Minnesota should use a more recent version of its Several petitioners sought
would have been higher by almost 2,000 modeling platform to conduct air reconsideration of EPA’s determination
tons of SO2 and about 1,150 tons NOX quality modeling. MP argues that if EPA to include Florida within the CAIR
than what EPA projected (according to had done so, Minnesota would be below ozone region. Although there were
the commenter). Since EPA did not the PM2.5 significance threshold. EPA’s substantial arguments that EPA had
include this facility, EPA believes that modeling for the entire final CAIR (as already provided adequate notice on
its own projections of emissions in well as the revised Minnesota air quality this issue (see 70 FR at 72280; several
Minnesota underestimate likely future analysis) used the Community commenters also indicated that this
emissions. Multiscale Air Quality (CMAQ) model issue had already been noticed), EPA
MP also stated that it is ‘‘noteworthy decided to grant the petition.
4.3. Minnesota Power, however,
that there are other reductions that EPA included Florida within the
advocates use of the post-CAIR CMAQ
Minnesota Power has not modeled that CAIR ozone region because emissions
4.5. The commenter states that the
should warrant consideration by EPA, passed all of the contribution metrics
CMAQ 4.5 includes corrections to a
including those resulting from emission EPA uses to evaluate significance of
mass stability problem in the version
controls provided on Minnesota BART contribution for ozone, and because
(4.3) used by EPA.
eligible units for the regional haze As noted earlier, EPA stated when highly cost effective controls are
program.’’ MP Comment p. 6. The granting reconsideration that it was not available to control NOX emissions from
Regional Haze program requires Best reopening any issues dealing with the the state. Specifically, Florida
Available Retrofit Technology or BART modeling platforms used for the revised contributes significantly to
to be installed and operational on Minnesota modeling. We reiterate that nonattainment of the 8-hour ozone
sources that the State finds subject to position here. EPA used CMAQ 4.3 for NAAQS in Fulton County, Georgia
BART within five years after EPA all of the air quality analyses conducted (which includes Atlanta). See 70 FR at
approves a State’s regional haze SIP. 25249 (Table VI–9).
These SIPs are due in December 2007. 12 Another power company in the Midwest Many commenters agreed with EPA’s
EPA does not believe that States will region, Midwest Generation, supported EPA analysis. The petitioners and other
require the installation or operation of emissions assessment for Minnesota. commenters argued that Florida should
not be included within the CAIR ozone argued that because 0.81% is less than being said, however, it is commonplace
region at all, or that at most, only the one percent, the relative amount of to round fractions up or down to the
northern portion of the State should be contribution is too small and therefore nearest integer.
included. Although the reconsideration should not create a significant These same commenters argued that
petitions originally challenged EPA’s contribution linkage. due to the rounding convention, EPA’s
factual basis for including Florida For all relative amount of contribution screening criteria was really .5% rather
within the CAIR ozone region, the calculations (not just those involving than one per cent and that this is too
petitioners were able to duplicate EPA’s Florida and Fulton County), EPA low a level to be considered significant.
modeling results relating to magnitude rounded the average percent of This comment appears to misapprehend
of contribution, frequency of contribution figure up or down to the critical aspects of EPA’s significance
contribution, and relative amount of nearest integer value, so that values determination process. As described on
contribution (the three factors EPA 0.5% and higher were rounded up to pp. 32–35 of the CAIR Air Quality
evaluated in determining whether an one percent, and values less than 0.5% Modeling Technical Support Document,
upwind State’s contribution to a were rounded down to zero.15 EPA this process contains four steps: (1)
downwind State could be considered agrees with the petitioners (and other Evaluation of contributions against
significant), and therefore are not commenters) that it would have been screening criteria, (2) evaluation of
pursuing this claim. ‘‘Assessment of the preferable if EPA had stated this contributions from zero out modeling,
Contribution of Florida Emissions to rounding protocol explicitly.16 That (3) evaluation of contributions from
Ozone Nonattainment Under EPA’s source apportionment modeling, and (4)
Clean Air Interstate Rule’’ (Morris, Tai, the decimal place. The final average percent of a final aggregate determination of
Tesche, and McNally) (October, 2005) nonattainment value is reported to the nearest
integer. significance. The average percent
(‘‘Ozone Report’’) at pp. 4–6 to 4–7; see Applied to Florida NOX emissions to Fulton contribution metric is an initial
also Supplemental Brief of Florida County, this methodology yields the following: screening step (a step to screen out
Power and Light in North Carolina v. Step 1: Over the three episodes modeled, there contributions that are ‘‘clearly small’’,
EPA (D.C. Cir. No. 05–1244) at p. 9; was 120,511 ppb of ozone greater than or equal to
see id. at 32), which does not by itself
Supplemental Brief of Florida Electric 85.0 ppb (the level of the 8-hour NAAQS) in Fulton
County. identify a contribution as significant but
Utilities in the same case at pp. 5–6. Step 2: From source apportionment modeling, rather determines whether further
Rather, the commenters are now 96,067 ppb of the ozone in Fulton Co. was analysis of significance is justified. It is
challenging how to interpret the relative determined to be of anthropogenic origin. customary and appropriate for such
amount of contribution factor, which is Step 3: 781.0 ppb of the 8-hour ozone greater than
initial screening steps to be
one of the initial screening factors used or equal to 85.0 ppb was determined via the source
apportionment approach to be from emissions in conservative, that is, to cast a wider net,
by EPA to assess if it is appropriate to Florida. Thus the average percent nonattainment is with further winnowing to occur in the
further analyze the significance of a 0.81 percent. This value was rounded to 1 percent. subsequent steps when more detailed
State’s contribution to downwind ozone See generally the spreadsheet found in Document
analysis is applied. EPA views the
nonattainment areas. OAR–2003–0053–2214.
15 These commenters also correctly identified a average percent of contribution
In assessing relative amount of screening level of one percent, with
small discrepancy in the final rule’s technical
contribution, EPA stated that the analysis for assessing significance of upwind states’ customary rounding, as reasonable to
amount would not be considered to contribution to downwind states’ ozone serve this screening function. This is
contribute significantly if it was ‘‘less nonattainment. However, as we now explain, this
confirmed by the further analysis
than one percent of total nonattainment discrepancy does not affect the ultimate
conclusions as to which States should be included applied to assess Florida contributions
in the downwind area’’. 70 FR at 25191 in the CAIR ozone control region. Values of the to nonattainment of the 8-hour NAAQS
(at 70 FR 25175 and 70 FR 25246, EPA average percent contribution metric that were less in Fulton County. In the case of the
incorrectly described the metric as ‘‘the than 1% after rounding to the nearest integer were
Florida contribution, steps 2 and 3 of
average contribution is greater than one determined not to be significant and were dropped
from further evaluation. For the final CAIR the determination process indicated that
percent’’; the correct formulation is as modeling, values of this metric were calculated to there are large and frequent
quoted above).13 The average percent one place to the right of the decimal, after rounding. contributions from that State to elevated
contribution of Florida to nonattainment In a later step of the process, EPA then rounded
ozone concentrations in Fulton Co.
in Fulton County is 0.81%. Document these data to the nearest integer. The net effect was
an inappropriate ‘‘double rounding’’ for values that EPA’s CAIR modeling estimates that
OAR–2003–0053–2214.14 Commenters were between 0.450 and 0.499 percent. EPA has Florida can contribute as much as 3—
recalculated the values for the average percent 5 ppb, depending on the modeling
13 See also CAIR Air Quality Modeling Technical contribution metric without the inappropriate
Support Document at 32 (‘‘[t]his initial screening double rounding. Twenty upwind State-to- technique, toward modeled eight hour
was based on * * * a percent of total downwind nonattainment area linkages had average ozone exceedance periods in Fulton Co.
nonattainment of less than 1 percent’’). percent contribution values between 0.450 and Further, it was determined that between
14 There are three parts to the calculation of the 0.499 percent that were erroneously rounded to 1% 10—13 percent of the modeled periods
average percent of nonattainment metric. In step 1, (rather than 0%). Of these twenty linkages, 19 did
the ozone values for each of the exceedance periods not pass other screening criteria, so the linkages above 85 ppb in Fulton Co. were
in a particular downwind area (here, Fulton Co.) are were correctly categorized as not significant despite affected by at least 2 ppb of ozone that
summed over the three episodes. In step 2, the total the ‘‘double rounding’’ in the calculation of the resulted from emissions from Florida.17
ozone from the previous step that is due to average percent contribution metric. The remaining This means that emissions from Florida
anthropogenic sources is calculated based on the linkage (Mississippi’s contribution to Fulton Co.,
source apportionment results. In step 3, the GA) did pass the other screening tests, but was can cause as much as 6 percent (5 ppb/
contributions from a given source region to this subsequently determined in the post-screening
downwind area are summed over the exceedance aggregate determination of significance not to be region using this metric had average percent
periods. The total contribution calculated in step 3 significant based on EPA’s evaluation of all of the contributions greater than or equal to 0.5 and less
is then divided by the total nonattainment ozone contribution metrics. EPA has corrected the ozone than 1.0 percent. Two of these nine linkages,
resulting from manmade sources in step 2 to contribution metrics tables in Appendix G of the involving Massachusetts’ average percent
determine the fraction of ozone that is due to CAIR Air Quality Modeling Technical Support contribution, were between 0.5 and 1.0 percent and,
emissions from the upwind source area. The Document. like Florida’s, were rounded up to 1 percent. See
fractional value is multiplied by 100 to express the 16 Nor is this the only instance of where EPA used Revised Appendix G to Air Quality Modeling TSD.
metric in terms of percent. The values in steps 1 the rounding protocol in applying the average 17 The criteria used to distinguish which values
and 2 are reported to the nearest integer. The value percent of contribution metric. In total, nine of the comprise a significant contribution are set out at p.
in step 3 is reported with one digit to the right of 226 significant linkages in the entire CAIR ozone 40 of the Air Quality Modeling TSD.
85 ppb) of the ozone in Fulton County emissions. Since there is no direct region and 31 percent from the southern
during an exceedance period, and these comparison with the ozone NAAQS, region. Ozone Report at 5–3. Nor does
emissions contribute at least 2 ppb there is no reason to utilize the there appear to be any basis for the
during 10 per cent or more of Fulton conventions used in expressing that north-south divisions put forward in the
County’s exceedance periods, a NAAQS. comments. Not only does the report
contribution that reasonably can be The comments also maintain that EPA underlying the comments itself concede
regarded as significant. Accordingly, used a different protocol to evaluate that there are a multitude of potential
based on the magnitude and frequency, when an upwind State’s contribution to divisions (the Report suggests six ozone
but not the relative amount of downwind nonattainment of the PM2.5 subregions in various permutations, and
contribution, EPA determined that NAAQS is significant. EPA’s metric for the Report further states that ‘‘clearly
Florida’s contribution to nonattainment determining significant contribution to numerous other ones could be also be
in Fulton County, Georgia is PM2.5 NAAQS nonattainment is 1 % of constructed’’ (Ozone Report at 5–1)), but
significant.18 the standard, or .15 µg/m3 which EPA that the ones put forward were done so
Commenters further argued that EPA rounds up to 0.2 µg/m3. 70 FR at 25191. essentially to show that the (posited)
was applying the rounding protocol EPA took this step to avoid expressing northern portion met significance
inconsistently because in other the contribution metric using a greater criteria but the (posited) southern
instances, which they view as level of precision (i.e. a greater number portion(s) does not. Ozone Report at 3–
comparable, EPA truncates fractional of digits) than is used in the NAAQS 2. Accordingly, EPA does not agree with
digits (i.e. simply eliminates them), itself. Id. Since the PM2.5 contribution the commenters’ arguments that
rather than rounds them. The examples metric is expressed as a direct contribution must be assessed on a
given are the ozone magnitude of percentage of the NAAQS itself, it is different basis than EPA used in the
contribution metric (actual amount of appropriate that it conform to the form rule.
ozone contributed by emissions in the of the NAAQS. The percent of
nonattainment metric at issue here, as E. Impact on CAIR Analyses of D.C.
upwind State to nonattainment in the Circuit Decision in New York v. EPA
downwind area), and the annual average explained above, is not directly related
PM2.5 contribution threshold. to the form of the 8-hour ozone NAAQS, As described in the December 29,
EPA does truncate when applying so there is no reason to adopt the 2005 CAIR Supplemental Notice of
each of these metrics. The ozone conventions which are part of that form. Reconsideration, ‘‘Rule To Reduce
magnitude of contribution metric For the same reason, there is no Interstate Transport of Fine Particulate
quantifies a maximum impact (in parts inconsistency in EPA’s approach in Matter and Ozone (Clean Air Interstate
per billion) on predicted exceedances choosing for purposes of PM Rule): Supplemental Notice of
for a downwind nonattainment area. contribution expressed in terms of a Reconsideration’’ (70 FR 77101–77113),
The exceedance level—i.e. the level of percent of the PM2.5 NAAQS to use the EPA decided to grant Petitioner’s
the standard—for the 8-hour ozone conventions used in the form of that request that EPA reconsider the impact
NAAQS is 85 parts per billion (‘ppb’) NAAQS. of New York v. EPA, 413 F.3d 3 (D.C.
which is obtained by ‘‘report[ing] parts The comments go on to say that even Cir. 2005) on certain analyses prepared
per million values to the third decimal if it is reasonable to include Florida for the final CAIR. One petitioner
place, with additional digits to the right within the CAIR ozone region, only a claimed that this June 2005 opinion of
being truncated’’. 40 CFR part 50 App. portion of the state (the northern portion the D.C. Circuit raised questions about
I (‘‘Interpretation of the 8-Hour Primary as delineated in the comments) should the sufficiency of certain analyses
and Secondary National Ambient Air be included rather than the entire state. prepared for the CAIR. Among other
The commenters have the burden of things, the opinion vacated a provision
Quality Standard for Ozone’’) at 2.1.1.
demonstrating that EPA’s approach of of the New Source Review (NSR)
The truncation protocol used in the
assessing significant contribution based regulations, commonly known as the
magnitude of contribution metric is thus
on the collective emissions from the pollution control project (PCP)
directly related to the form of the
entire state lacks rationality. exclusion. The CAIR Supplemental
NAAQS itself. Because the magnitude of
Appalachian Power v. EPA, 249 F. 3d Notice of Reconsideration explained
contribution metric is tied directly to
1032, 1050 (D.C. Cir. 2001); see also that EPA reviewed the petition for
the 8-hour NAAQS exceedance level,
State of Michigan v. EPA, 213 F. 3d 663, reconsideration and analyzed the
EPA uses the identical truncation
683–84 (D.C. Cir. 2000) (burden is on potential impact of New York v. EPA on
protocol as is used in the NAAQS. In the party seeking to exclude a portion of CAIR analyses regarding cost-
contrast, the average percent of a State to demonstrate that the portion effectiveness and timing. This analysis
nonattainment metric is not directly is ‘‘innocent of material contribution’’). indicated that, as a result of the New
related to the form of the 8-hour ozone As EPA explained in responding to York v. EPA decision, some electric
NAAQS (indeed, it is not related at all). these same commenters’ motions for a generating units (EGUs) that install SO2
As stated earlier, and illustrated in note stay of the rule in the D.C. Circuit and/or NOX controls for CAIR may incur
14 above, the metric assesses overall (which response is part of the relatively minor additional costs and a
impacts which are expressed by administrative record for this few such units may be subject to
aggregating all the impacts of a State on proceeding), not only have the additional permitting requirements, but
a downwind receptor divided by the commenters failed to carry their burden, that these potential impacts will neither
total impacts from all anthropogenic but their modeling confirms that Florida affect the highly cost-effective
18 As explained on p. 33 of the Air Quality
represents a classic instance of determination that the Agency made in
Modeling TSD, for linkages in which the three
collective contribution to downwind CAIR nor impact the timeframe for CAIR
contribution factors were not unanimous, we nonattainment. The commenters’ report reductions.
required that two of the three factors had to indicate shows that both the (posited) northern The CAIR Supplemental Notice of
high magnitude, frequent, and/or relatively large and southern regions contribute Reconsideration presented this and
contributions in order to find that the linkage was
significant. EPA applied this approach consistently
substantial portions of the total ozone concluded that the potential impacts of
to each of the linkages for which it made a loading from Florida to Fulton County, the D.C. Circuit Decision in New York
significance determination. namely 69 percent from the northern v. EPA do not alter the final highly cost-
effective determination made in the however, that the impact of permitting The commenter believes these
final CAIR and do not affect the of such sources on EPA’s CAIR analyses assumptions are unrealistic. The Agency
feasibility of implementing the CAIR is minimal. The Agency believes that agrees that these assumptions lead to an
reductions in the required timeframe. the impacts of choosing to undertake overestimate of the cost impact of the
Thus, the CAIR Supplemental Notice of NSR for these units are not substantial decision in New York v. EPA, since the
Reconsideration did not propose any enough to affect the CAIR highly cost- number of EGUs with collateral
modifications to the final CAIR. effective determination or the feasibility increases in sulfuric acid mist will be
Today’s action finalizes EPA’s and timing analysis. (See 70 FR 77109– much smaller than the universe
determination that no modifications to 77111). assumed in EPA’s analysis and that the
the final CAIR are needed to address Overall, the analysis presented in the BACT determinations in those cases
this issue and responds to public CAIR Supplemental Notice of with significant increases in sulfuric
comments received on the CAIR Reconsideration showed that the acid mist may not involve the
Supplemental Notice of decision to vacate the PCP exclusion installation of wet ESP due to its high
Reconsideration. under NSR does not require any cost. As mentioned in the CAIR
modification of the final CAIR. The Supplemental Notice of
1. Background on the Impact on CAIR
Notice thus did not propose any Reconsideration, historically, BACT for
Analyses of D.C. Circuit Decision in
changes to the CAIR. sulfuric acid mist at combustion sources
New York v. EPA
3. Public Comment on the CAIR generally has been switching to lower
For background information on this sulfur coal or installation of wet FGD.
issue, please refer to the CAIR Supplemental Notice of Reconsideration
The commenter argued that EPA
Supplemental Notice of Reconsideration EPA received several comments on improperly assumed that condensable
(70 FR 77103–77113). the Supplemental Notice of emissions are regulated as a component
2. Additional Analysis on the Impact on Reconsideration.19 Most of the of PM, and suggested that EPA’s
CAIR Analyses of D.C. Circuit Decision commenters supported the conclusions analysis was flawed in this respect. It
in New York v. EPA Presented in the in EPA’s analysis regarding the impact should also be noted that EPA is not
CAIR Supplemental Notice of of the New York v. EPA decision on taking action to change the manner in
Reconsideration both the cost-effectiveness analysis and which EPA treats condensable
timing analysis prepared for CAIR. emissions. Further, the status of
The CAIR Supplemental Notice of Some commenters, however, did
Reconsideration presented analysis that condensable emissions as a regulated
disagree with some aspects of the NSR pollutant does not change the
EPA conducted to evaluate the potential analysis that EPA performed in coming
impact on CAIR Analyses of the D.C. outcome of the Agency analysis
to its conclusion. discussed here. This analysis, which
Circuit Decision in New York v. EPA. One commenter, who generally agreed
The analysis first examined the assumed that sulfuric acid mist would
with EPA’s conclusion that the potential
potential cost and timing impacts of the be regulated as a component of
impacts of D.C. Circuit Decision in New
decision, assuming units would take particulates, concludes that the New
York v. EPA do not alter the final highly
measures to mitigate any potential York v. EPA decision will not change
cost-effective determination made in the
significant collateral increases in the conclusions of the cost-effectiveness
final CAIR and do not affect the
emissions of NSR-regulated pollutants. and timing analyses prepared for
feasibility of implementing the CAIR
Then, the analysis examined the CAIR.20 If EPA were to assume, as the
reductions in the required timeframe,
potential impact of NSR permitting on commenter suggests, that these
disagreed with several points in the
the CAIR cost-effectiveness and timing emissions are not regulated as NSR
supporting analysis. First, the
analyses. pollutants, the conclusion of EPA’s
commenter does not believe that the
First, the analysis looked at the analysis would only be strengthened.21
emissions increases associated with coal
potential costs and timing implications The same commenter also suggested
switching identified in two categories of
of measures that could be taken to that for some large EGUs burning high
controls in EPA’s analysis would be
mitigate collateral emission increases sulfur coal and installing wet FGD,
considered in calculating collateral
and thus avoid NSR permitting. As part sulfuric acid mist emissions may exceed
emission increases. While EPA agrees
of the analysis, EPA made several the NSR threshold. While this may be
that in most cases coal switching would
assumptions it believes to be generally true in some cases, EPA does not feel
not be included in calculating collateral
very conservative. However, the that this will undermine the
emission increases for a PCP, this
analysis still showed that the potential conclusions of the analysis in the CAIR
inclusion/exclusion is dependent upon
impacts would neither affect the highly Supplemental Notice of Reconsideration
the specific permit of the affected
cost-effective determination that the because of the very conservative
source. In its analysis, EPA made the
Agency made in the CAIR nor impact assumptions made throughout the
conservative assumption that coal
the timeframe for CAIR reductions. (See analysis (For purposes of its cost
switching would be included in
70 FR 77105–77109). calculating collateral emission increases 20 The commenter challenges these conclusions
Second, the analysis examined the for PCPs involving SCR and/or FGD and says they only hold true if condensables are not
potential impact of NSR permitting. It retrofits. regulated. However, the commenter offers no
showed that, although sources installing In its cost-effectiveness analysis, EPA analysis to support this assertion or to identify any
controls for CAIR generally will have also made the conservative assumptions errors in EPA’s analysis to support this argument.
21 The commenter further notes that it would
options to avoid triggering NSR for that all EGUs that will install SCR and/ disagree with the conclusions in EPA’s analysis if
collateral increases, some sources may or wet FGD will experience a significant it assumes condensables are regulated; however, it
conduct projects that could result in a emissions increase in sulfuric acid mist does not provide any analysis to demonstrate that
net emissions increase despite possible and that all of those EGUs will install EPA’s conclusions are flawed. As explained above
mitigation measures. These sources and in the Supplemental Notice of Reconsideration,
a wet ESP to mitigate those emissions. EPA’s analysis shows that, even when very
might therefore apply for and obtain the conservative assumptions are made, the court
necessary NSR permits to address such 19 These documents are available in the docket for decision does not alter the conclusions of the
increase. EPA’s analysis showed, the CAIR (EPA–OAR–2003–0053). analyses supporting the CAIR.
analysis, EPA assumed that these units permitting requirements might apply to IV. Statutory and Executive Order
installed wet ESP). It is difficult to all categories of pollution control Reviews
estimate the number of such units activities (including those that were not
A. Executive Order 12866: Regulatory
without permit information for all units listed as a PCP under the NSR rules)
Planning and Review
at which this may occur. Further, as that might be undertaken by EGUs
mentioned in the CAIR Supplemental attempting to comply with the CAIR Under Executive Order 12866 (58 FR
Notice of Reconsideration, much of the requirements. The analysis was 51735, October 4, 1993), the Agency
SO3 produced by SCR does not reach conducted to determine whether the must determine whether the regulatory
the stack; SCR conditions favor a elimination of the PCP exemption action is ‘‘significant’’ and, therefore,
reaction between SO3 and ammonia that would impact the cost-effectiveness and subject to Office of Management and
produces ammonia bisulfate, which timing analyses for the CAIR. Potential Budget (OMB) review and the
condenses to form solid PM, the permitting requirements for categories requirements of the Executive Order.
majority of which will be captured in of activities that would not have been The Order defines ‘‘significant
the unit’s particulate control device. subject to that exemption are not regulatory action’’ as one that is likely
Thus, EPA does not feel that many such relevant to that analysis.22 to result in a rule that may:
units will reach the NSR threshold for On all other major points, (1) Have an annual effect on the
sulfuric acid mist. commenters agreed with EPA’s analysis, economy of $100 million or more or
Another commenter disagreed with and half of the commenters also adversely affect in a material way the
EPA’s assessment of potential collateral explicitly agreed with EPA’s conclusion economy, a sector of the economy,
increases in CO from low NOX burners that impacts of D.C. Circuit Decision in productivity, competition, jobs, the
(LNB). While EPA believes that New York v. EPA do not alter the final environment, public health or safety, or
installing combustion control systems highly cost-effective determination State, local, or Tribal governments or
can lead to collateral increases in CO, made in the final CAIR and do not affect communities;
triggering NSR, generally LNB will not the feasibility of implementing the CAIR (2) Create a serious inconsistency or
significantly affect the combustion reductions in the required timeframe. It otherwise interfere with an action taken
process and production of CO. It is the should also be noted that other than the or planned by another agency;
Agency’s position that increases in CO four commenters, no other affected (3) Materially alter the budgetary
can be minimized through adjustments parties offered problems associated with impact of entitlements, grants, user fees,
of combustion control systems (e.g., the impacts of D.C. Circuit Decision in or loan programs or the rights and
good combustion practices), and at this New York v. EPA that might undermine obligations of recipients thereof; or
time there are no other cost-effective the final CAIR cost-effective (4) Raise novel legal or policy issues
control options for reducing CO. determination and timing of compliance arising out of legal mandates, the
Therefore, even in cases where NSR is dates. President’s priorities, or the principles
triggered, no significant additional Today’s action does not modify the set forth in the Executive Order.
control costs would be incurred. final CAIR. In the CAIR Supplemental Pursuant to the terms of Executive
A third commenter asserts that ‘‘based Notice of Reconsideration, EPA Order 12866, OMB has determined that
upon EPA’s discussion in the announced that it would reconsider the this is a significant regulatory action in
Reconsideration Decision, [the impact of the New York v. EPA decision view of its important policy
commenter] understands that only those on cost-effectiveness and timing implications. As a result, this action was
analyses performed by EPA and analyses prepared for the CAIR. The submitted to OMB for review. However,
described in the Reconsideration EPA analyzed the potential impact of this action does not promulgate any
Decision are needed to assess whether a the decision and solicited, considered modifications to the CAIR. Therefore a
PCP undertaken for CAIR compliance and responded to public comment on regulatory impact analysis was not
would increase emissions of any NSR that analysis. The EPA’s analysis shows prepared.
regulated pollutant in an amount that that the D.C. Circuit Decision in New
B. Paperwork Reduction Act
exceeds the applicable NSR significance York v. EPA does not significantly
level. If there are other methods or impact either the CAIR cost- This action does not promulgate
means by which EPA believes a PCP effectiveness determination or the information collection request
performed for CAIR compliance would compliance dates. For that reason, EPA requirements under the provisions of
trigger NSR, or if, using EPA emission has determined that modifications to the the Paperwork Reduction Act, 44 U.S.C.
increase methodologies, EPA believes or final CAIR are not warranted. The 3501 et seq. Therefore, an information
would find that other air pollutant Agency believes that installation of collection request document is not
emissions would increase above an emission controls for CAIR, as well as required.
applicable NSR significance level as a other programs, is extremely beneficial Burden means the total time, effort, or
result of PCPs that are expected to be and is working on ways to minimize financial resources expended by persons
performed for CAIR compliance, then permitting issues associated with to generate, maintain, retain, or disclose
the Reconsideration Decision is installation of these devices in a way or provide information to or for a
deficient.’’ that is consistent with the D.C. Circuit Federal agency. This includes the time
The analysis presented in the CAIR Decision in New York v. EPA. needed to review instructions; develop,
Supplemental Notice of Reconsideration acquire, install, and utilize technology
addresses only those general categories 22 The analysis addresses all relevant categories of and systems for the purposes of
of projects that would have qualified as PCPs of which EPA is currently aware. The collecting, validating, and verifying
commenter failed to identify any concrete problems
PCPs under the NSR rules vacated by that they were concerned about facing or other
information, processing and
the court and that we believe have the relevant categories of PCPs. Moreover, in addressing maintaining information, and disclosing
potential to increase collateral the relevant general categories of PCPs, EPA does and providing information; adjust the
emissions of NSR regulated pollutants not purport to make determinations about whether existing ways to comply with any
NSR would be triggered in any specific PCPs
enough to trigger NSR. It is not our undertaken to comply with the CAIR, EPA will
previously applicable instructions and
intent, nor is it within the scope of our consider, and make determinations based on, the requirements; train personnel to be able
analysis, to consider at this time what specific circumstances of those projects. to respond to a collection of
information; search data sources; inconsistent with applicable law. Executive Order 13132. The CAA
complete and review the collection of Moreover, section 205 allows EPA to establishes the relationship between the
information; and transmit or otherwise adopt an alternative other than the least- Federal Government and the States, and
disclose the information. costly, most cost-effective, or least- this action would not impact that
An agency may not conduct or burdensome alternative if the relationship. Thus, Executive Order
sponsor, and a person is not required to Administrator publishes with the final 13132 does not apply to this action.
respond to a collection of information rule an explanation why that alternative
unless it displays a currently valid OMB F. Executive Order 13175: Consultation
was not adopted. Before EPA establishes
control number. The OMB control and Coordination With Indian Tribal
any regulatory requirements that may
numbers for EPA’s regulations in 40 Governments
significantly or uniquely affect small
CFR are listed in 40 CFR part 9. governments, including tribal Executive Order 13175, entitled
governments, it must have developed, ‘‘Consultation and Coordination with
C. Regulatory Flexibility Act Indian Tribal Governments’’ (65 FR
under section 203 of the UMRA, a small
EPA has determined that it is not government agency plan. The plan must 67249, November 9, 2000), requires EPA
necessary to prepare a regulatory provide for notifying potentially to develop an accountable process to
flexibility analysis in connection with affected small governments, enabling ensure ‘‘meaningful and timely input by
this final rule. officials of affected small governments Tribal officials in the development of
For purposes of assessing the impacts to have meaningful and timely input in regulatory policies that have Tribal
of today’s notice on small entities, small the development of EPA’s regulatory implications.’’
entity is defined as: (1) A small business proposals with significant Federal For the same reasons stated in the
that is a small industrial entity as intergovernmental mandates, and final CAIR 23, today’s notice does not
defined in the U.S. Small Business informing, educating, and advising have Tribal implications as defined by
Administration (SBA) size standards. small governments on compliance with Executive Order 13175. It does not have
(See 13 CFR part 121.); (2) a the regulatory requirements. a substantial direct effect on one or
governmental jurisdiction that is a The EPA has determined that today’s more Indian Tribes, since no Tribe has
government of a city, county, town, notice does not contain a Federal implemented a federally-enforceable air
school district or special district with a mandate that may result in expenditures quality management program under the
population of less than 50,000; and (3) of $100 million or more for State, local, CAA at this time. Furthermore, this
a small organization that is any not-for- and Tribal governments, in the action does not affect the relationship or
profit enterprise which is independently aggregate, or the private sector in any 1 distribution of power and
owned and operated and is not year. Today’s notice does not add new responsibilities between the Federal
dominant in its field. requirements that would increase the government and Indian Tribes. The
After considering the economic cost of the CAIR. Thus, today’s notice is CAA and the Tribal Air Rule establish
impacts of today’s notice on small not subject to the requirements of the relationship of the Federal
entities, I have concluded that this sections 202 and 205 of the UMRA. In government and Tribes in developing
action will not have a significant addition, EPA has determined that plans to attain the NAAQS, and today’s
economic impact on a substantial today’s notice does not significantly or notice does nothing to modify that
number of small entities. This notice uniquely affect small governments relationship. Because this notice does
does not impose any requirements on because it contains no requirements that not have Tribal implications, Executive
small entities. This notice does not apply to such governments or impose Order 13175 does not apply.
promulgate any modifications to the obligations upon them. Therefore, If one assumes a Tribe is
CAIR. today’s notice is not subject to section implementing a Tribal implementation
D. Unfunded Mandates Reform Act 203 of the UMRA. plan, the CAIR could have implications
for that Tribe, but it would not impose
Title II of the Unfunded Mandates E. Executive Order 13132: Federalism
substantial direct costs upon the Tribe,
Reform Act of 1995 (UMRA), Public Executive Order 13132, entitled nor would it preempt Tribal Law.
Law 104–4, establishes requirements for ‘‘Federalism’’ (64 FR 43255, August 10, Although Executive Order 13175 does
Federal agencies to assess the effects of 1999), requires EPA to develop an not apply to the CAIR or this notice of
their regulatory actions on State, local, accountable process to ensure final action on reconsideration of the
and Tribal governments and the private ‘‘meaningful and timely input by State CAIR, EPA consulted with Tribal
sector. Under section 202 of the UMRA, and local officials in the development of officials in developing the CAIR.
EPA generally must prepare a written regulatory policies that have federalism
statement, including a cost-benefit implications.’’ ‘‘Policies that have G. Executive Order 13045: Protection of
analysis, for proposed and final rules federalism implications’’ is defined in Children From Environmental Health
with ‘‘Federal mandates’’ that may the Executive Order to include and Safety Risks
result in expenditures by State, local, regulations that have ‘‘substantial direct Executive Order 13045: ‘‘Protection of
and Tribal governments, in the effects on the States, on the relationship Children From Environmental Health
aggregate, or by the private sector, of between the national government and and Safety Risks’’ (62 FR 19885, April
$100 million or more in any 1 year. the States, or on the distribution of 23, 1997) applies to any rule that (1) is
Before promulgating an EPA rule for power and responsibilities among the determined to be ‘‘economically
which a written statement is needed, various levels of government.’’ significant’’ as defined under Executive
UMRA section 205 generally requires This action does not have federalism Order 12866, and (2) concerns an
EPA to identify and consider a implications. It would not have environmental health or safety risk that
reasonable number of regulatory substantial direct effects on the States, EPA has reason to believe may have
alternatives and adopt the least costly, on the relationship between the national disproportionate effect on children. If
most cost-effective, or least-burdensome government and the States, or on the the regulatory action meets both criteria,
alternative that achieves the objectives distribution of power and the Agency must evaluate the
of the rule. The provisions of section responsibilities among the various
205 do not apply when they are levels of government, as specified in 23 http://www.epa.gov/cair.
environmental health or safety effects of directs EPA to use voluntary consensus Fairness Act of 1996, generally provides
the planned rule on children, and standards in its regulatory activities that before a rule may take effect, the
explain why the planned regulation is unless to do so would be inconsistent agency promulgating the rule must
preferable to other potentially effective with applicable law or otherwise submit a rule report, which includes a
and reasonably feasible alternatives impractical. Voluntary consensus copy of the rule, to each House of the
considered by the Agency. standards are technical standards (e.g., Congress and to the Comptroller General
This notice is not subject to Executive materials specifications, test methods, of the United States. The EPA will
Order 13045 because it does not involve sampling procedures, and business submit a report containing this notice
decisions on environmental health risks practices) that are developed or adopted and other required information to the
or safety risks that may by voluntary consensus standards U.S. Senate, the U.S. House of
disproportionately affect children. The bodies. The National Technology Representatives, and the Comptroller
EPA believes that the emissions Transfer Advancement Act of 1995 General of the United States prior to
reductions from the CAIR will further directs EPA to provide Congress, publication of the notice in the Federal
improve air quality and children’s through OMB, explanations when the Register. A major rule cannot take effect
health. Agency decides not to use available and until 60 days after it is published in the
H. Executive Order 13211: Actions That applicable voluntary consensus Federal Register. This action is not a
Significantly Affect Energy Supply, standards. ‘‘major rule’’ as defined by 5 U.S.C. 804.
Today’s notice does not involve
Distribution, or Use L. Judicial Review
technical standards. Therefore, the
Executive Order 13211 (66 FR 28355, National Technology Transfer and Section 307(b)(1) of the CAA indicates
May 22, 2001) provides that agencies Advancement Act of 1995 does not which Federal Courts of Appeal have
shall prepare and submit to the apply. venue for petitions of review of final
Administrator of the Office of actions by EPA. This section provides,
Regulatory Affairs, OMB, a Statement of J. Executive Order 12898: Federal
Actions To Address Environmental in part, that petitions for review must be
Energy Effects for certain actions filed in the Court of Appeals for the
identified as ‘‘significant energy Justice in Minority Populations and
Low-Income Populations District of Columbia Circuit if (i) the
actions.’’ Section 4(b) of Executive agency action consists of ‘‘nationally
Order 13211 defines ‘‘significant energy Executive Order 12898, ‘‘Federal applicable regulations promulgated, or
actions’’ as ‘‘any action by an agency Actions to Address Environmental final action taken, by the
(normally published in the Federal Justice in Minority Populations and Administrator,’’ or (ii) such action is
Register) that promulgates or is Low-Income Populations,’’ requires locally or regionally applicable, if ‘‘such
expected to lead to the promulgation of Federal agencies to consider the impact action is based on a determination of
a final rule or regulation, including of programs, policies, and activities on nationwide scope or effect and if in
notices of inquiry, advance notices of minority populations and low-income taking such action the Administrator
final rulemaking, and notices of final populations. According to EPA finds and publishes that such action is
rulemaking (1)(i) that is a significant guidance,24 agencies are to assess based on such a determination.’’
regulatory action under Executive Order whether minority or low-income Final actions described in this Notice
12866 or any successor order, and (ii) is populations face risks or a rate of of Final Action on Reconsideration are
likely to have a significant adverse effect exposure to hazards that are significant ‘‘nationally applicable’’ within the
on the supply, distribution, or use of and that ‘‘appreciably exceed or is likely
meaning of section 307(b)(1). This
energy; or (2) that is designated by the to appreciably exceed the risk or rate to
Notice explains the final actions EPA is
Administrator of the Office of the general population or to the
taking on the petitions for
Information and Regulatory Affairs as a appropriate comparison group.’’ (EPA,
reconsideration of the CAIR. It describes
significant energy action.’’ The final 1998).
In accordance with Executive Order EPA’s final action on the six issues for
CAIR is a significant regulatory action which EPA previously granted
under Executive Order 12866, and EPA 12898, the Agency has considered
whether the CAIR may have reconsideration, and provides notice of
concluded that the final CAIR rule may EPA’s decision to deny reconsideration
have a significant adverse effect on the disproportionate negative impacts on
minority or low income populations. of several additional issues. EPA has
supply, distribution, or use of energy. determined that all of these actions are
The impacts are detailed in the final The EPA expects the CAIR to lead to
reductions in air pollution and of nationwide scope and effect for
CAIR (70 FR 25315). Today’s notice is purposes of section 307(d)(1) because
a significant action under Executive exposures generally. Therefore, EPA
concluded that negative impacts to the actions directly affect the CAIR,
Order 12866, but it is not a rulemaking which previously was found to be of
action and does not revise the final these sub-populations that appreciably
exceed similar impacts to the general nationwide scope and effect. Thus, any
CAIR rule in any way. Therefore this petitions for review of the final
action does not change EPA’s previous population are not expected. For the
same reasons, EPA is drawing the same described in this Notice must be filed in
conclusions regarding the energy the Court of Appeals for the District of
impacts of CAIR. EPA’s analysis of these conclusion for today’s notice to
reconsider certain aspects of the CAIR. Columbia Circuit within 60 days from
impacts is explained in the preamble to the date this Notice is published in the
the CAIR (70 FR 25315–16) and in the K. Congressional Review Act Federal Register.
Regulatory Impact Analysis for the Final
CAIR (March 2005). The Congressional Review Act, 5 List of Subjects
U.S.C. 801 et seq., as added by the Small
I. National Technology Transfer Business Regulatory Enforcement 40 CFR Part 51
Advancement Act
Administrative practice and

24 U.S. Environmental Protection Agency, 1998.
Section 12(d) of the National procedure, Air pollution control,
Guidance for Incorporating Environmental Justice
Technology Transfer Advancement Act Concerns in EPA’s NEPA Compliance Analyses.
Intergovernmental relations, Nitrogen
of 1995, Public Law No. 104–113, Office of Federal Activities, Washington, DC, April, oxides, Ozone, Particulate matter,
section 12(d) (15 U.S.C. 272 note) 1998. Regional haze, Reporting and
recordkeeping requirements, Sulfur Electric utilities, Nitrogen oxides, Dated: March 15, 2006.
dioxide. Reporting and recordkeeping Stephen L. Johnson,
40 CFR Part 96 requirements, Sulfur dioxide. Administrator.
[FR Doc. 06–2693 Filed 4–27–06; 8:45 am]
Administrative practice and
BILLING CODE 6560–50–P
procedure, Air pollution control,

Rule: Air Pollution Control: Fine Particulate Matter and Ozone Interstate Transport Control Measures Reconsideration

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Rule: Air Pollution Control: Fine Particulate Matter and Ozone Interstate Transport Control Measures Reconsideration

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Friday,

April 28, 2006

Office of Atmospheric Programs, Clean C. PM2.5 Modeling for Minnesota

petitions requesting reconsideration of (OAR–2003–0053–2208).

program. Finally, the petitions for the approach is unreasonable because

First, EPA believes—based on strong the proposed CAIR, EPA performed an

TABLE III.A.1.—DESCRIPTION OF ALLOCATION APPROACHES INCLUDED IN EPA ANALYSIS

TABLE III.A.2.—STATES SHARE OF BUDGET UNDER VARIOUS ALLOCATION APPROACHES

AL ..................................... 4.4% 4.3% 4.9% 5.2% 4.7% 5.0% 4.7% 4.2%

Total (most + least) ... 5 5 6 13 0 6 8 8

emissions, that sources in non-CAIR begin construction in the future. EPA

Interstate Rule’’ (pp. 520–576) and the ‘‘Technical

Administrative practice and

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