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Rule To Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NOX SIP Call
Note: EPA no longer updates this information, but it may be useful as a reference or resource.
[Federal Register: May 12, 2005 (Volume 70, Number 91)]
[Rules and Regulations]
[Page 25161-25210]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my05-16]
[[Page 25162]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51, 72, 73, 74, 77, 78 and 96
[OAR-2003-0053; FRL-7885-9]
RIN 2060-AL76
Rule To Reduce Interstate Transport of Fine Particulate Matter
and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program;
Revisions to the NOX SIP Call
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: In today's action, EPA finds that 28 States and the District
of Columbia contribute significantly to nonattainment of the national
ambient air quality standards (NAAQS) for fine particles
(PM2.5) and/or 8-hour ozone in downwind States. The EPA is
requiring these upwind States to revise their State implementation
plans (SIPs) to include control measures to reduce emissions of sulfur
dioxide (SO2) and/or nitrogen oxides (NOX).
Sulfur dioxide is a precursor to PM2.5 formation, and
NOX is a precursor to both ozone and PM2.5
formation. Reducing upwind precursor emissions will assist the downwind
PM2.5 and 8-hour ozone nonattainment areas in achieving the
NAAQS. Moreover, attainment will be achieved in a more equitable, cost-
effective manner than if each nonattainment area attempted to achieve
attainment by implementing local emissions reductions alone.
Based on State obligations to address interstate transport of
pollutants under section 110(a)(2)(D) of the Clean Air Act (CAA), EPA
is specifying statewide emissions reduction requirements for
SO2 and NOX. The EPA is specifying that the
emissions reductions be implemented in two phases. The first phase of
NOX reductions starts in 2009 (covering 2009-2014) and the
first phase of SO2 reductions starts in 2010 (covering 2010-
2014); the second phase of reductions for both NOX and
SO2 starts in 2015 (covering 2015 and thereafter). The
required emissions reductions requirements are based on controls that
are known to be highly cost effective for electric generating units (EGUs).
Today's action also includes model rules for multi-State cap and
trade programs for annual SO2 and NOX emissions
for PM2.5 and seasonal NOX emissions for ozone
that States can choose to adopt to meet the required emissions
reductions in a flexible and cost-effective manner.
Today's action also includes revisions to the Acid Rain Program
regulations under title IV of the CAA, particularly the regulatory
provisions governing the SO2 cap and trade program. The
revisions are made because they streamline the operation of the Acid
Rain SO2 cap and trade program and/or facilitate the
interaction of that cap and trade program with the model SO2
cap and trade program included in today's action. In addition, today's
action provides for the NOX SIP Call cap and trade program
to be replaced by the CAIR ozone-season NOX trading program.
DATES: The effective date of today's action, except for the revisions
to 40 CFR parts 72, 73, 74, and 77 of the Acid Rain Program
regulations, is July 11, 2005. States must submit to EPA for approval
enforceable plans for complying with the requirements of this rule by
September 11, 2006. The effective date for today's revisions to 40 CFR
parts 72, 73, 74, and 77 of the Acid Rain Program regulations is July
1, 2006.
ADDRESSES: The EPA has established a docket for this action under
Docket ID No. OAR-2003-0053. All documents in the docket are listed in
the EDOCKET index at http://www.epa.gov/edocket. Although listed in the
index, some information is not publicly available, i.e., Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available either electronically in EDOCKET or in hard copy at the EPA
Docket Center, EPA West, Room B102, 1301 Constitution Avenue, NW.,
Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30
p.m., Monday through Friday, excluding legal holidays. The telephone
number for the Public Reading Room is (202) 566-1744, and the telephone
number for the Air Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT: For general questions concerning
today's action, please contact Carla Oldham, U.S. EPA, Office of Air
Quality Planning and Standards, Air Quality Strategies and Standards
Division, Mail Code C539-02, Research Triangle Park, NC, 27711,
telephone (919) 541-3347, e-mail at oldham.carla@epa.gov. For legal
questions, please contact Sonja Petersen, U.S. EPA, Office of General
Counsel, Mail Code 2344A, 1200 Pennsylvania Avenue, NW., Washington,
DC, 20460, telephone (202) 564-4079, e-mail at petersen.sonja@epa.gov.
For questions regarding air quality analyses, please contact Norm
Possiel, U.S. EPA, Office of Air Quality Planning and Standards,
Emissions Monitoring and Analysis Division, Mail Code D243-01, Research
Triangle Park, NC, 27711, telephone (919) 541-5692, e-mail at
possiel.norm@epa.gov. For questions regarding the EGU cost analyses,
emissions inventories, and budgets, please contact Roman Kramarchuk,
U.S. EPA, Office of Atmospheric Programs, Clean Air Markets Division,
Mail Code 6204J, 1200 Pennsylvania Avenue, NW., Washington, DC, 20460,
telephone (202) 343-9089, e-mail at kramarchuk.roman@epa.gov. For
questions regarding statewide emissions inventories, please contact Ron
Ryan, U.S. EPA, Office of Air Quality Planning and Standards, Emissions
Monitoring and Analysis Division, Mail Code D205-01, Research Triangle
Park, NC, 27711, telephone (919) 541-4330, e-mail at ryan.ron@epa.gov.
For questions regarding emissions reporting requirements, please
contact Bill Kuykendal, U.S. EPA, Office of Air Quality Planning and
Standards, Emissions Monitoring and Analysis Division, Mail Code D205-
01, Research Triangle Park, NC, 27711, telephone (919) 541-5372, e-mail
at kuykendal.bill@epa.gov. For questions regarding the model cap and
trade programs, please contact Sam Waltzer, U.S. EPA, Office of
Atmospheric Programs, Clean Air Markets Division, Mail Code 6204J, 1200
Pennsylvania Avenue, NW., Washington, DC, 20460, telephone (202) 343-
9175, e-mail at waltzer.sam@epa.gov. For questions regarding analyses
required by statutes and executive orders, please contact Linda
Chappell, U.S. EPA, Office of Air Quality Planning and Standards, Air
Quality Strategies and Standards Division, Mail Code C339-01, Research
Triangle Park, NC, 27711, telephone (919) 541-2864, e-mail at
chappell.linda@epa.gov. For questions regarding the Acid Rain Program
regulation revisions, please contact Dwight C. Alpern, U.S. EPA, Office
of Atmospheric Programs, Clean Air Markets Division, Mail Code 6204J,
1200 Pennsylvania Avenue, NW., Washington, DC, 20460, telephone (202)
343-9151, e-mail at alpern.dwight@epa.gov.
SUPPLEMENTARY INFORMATION:
Regulated Entities
Except for the revisions to the Acid Rain Program regulations, this
action does not directly regulate emissions sources. Instead, it
requires States to
[[Page 25163]]
revise their SIPs to include control measures to reduce emissions of
NOX and SO2. The emissions reductions requirement
assigned to the States are based on controls that are known to be
highly cost effective for EGUs.
Entities potentially regulated by the revisions to the Acid Rain
Program regulations in this action are fossil-fuel-fired boilers,
turbines, and internal combustion engines, including those that serve
generators producing electricity, generate steam, or cogenerate
electricity and steam. Regulated categories and entities include:
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Examples of
Category \1\ NAICS code potentially
regulated entities
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Industry................... 221112 and others Electric service
providers, boilers,
turbines, and
internal combustion
engines from a wide
range of
industries.
Federal government......... 22112\2\ Fossil fuel-fired
electric utility
steam generating
units owned by the
Federal government.
State/local/Tribal 22112\2\ Fossil fuel-fired
government. 921150 electric utility
steam generating
units owned by
municipalities.
Fossil fuel-fired
electric utility
steam generating
units in Indian
Country.
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\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated
establishments are classified according to the activity in which they
are engaged.
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by the
revisions to the Acid Rain Program regulations in this action. This
table lists the types of entities that EPA is aware could potentially
be regulated. Other types of entities not listed in the table could
also be regulated. To determine whether your facility is regulated, you
should carefully examine the applicability criteria in 40 CFR 72.6 and
74.2 and the exemptions in 40 CFR 72.7 and 72.8. If you have questions
regarding the applicability of the revisions to the Acid Rain Program
regulations in this action to a particular entity, consult persons
listed in the preceding FOR FURTHER INFORMATION CONTACT section.
Web Site for Rulemaking Information
The EPA has also established a Web site for this rulemaking at
http://www.epa.gov/cleanairinterstaterule/ or http://www.epa.gov/cair/
(formerly at http://www.epa.gov/interstateairquality/) which includes
the rulemaking actions and certain other related information that the
public may find useful.
Outline
I. Overview
A. What Are the Central Requirements of this Rule?
B. Why Is EPA Taking this Action?
1. Policy Rationale for Addressing Transported Pollution
Contributing to PM2.5 and Ozone Problems
a. The PM2.5 Problem
b. The 8-hour Ozone Problem
c. Other Environmental Effects Associated with SO2
and NOX Emissions
2. The CAA Requires States to Act as Good Neighbors by Limiting
Downwind Impacts
3. Today's Rule Will Improve Air Quality
C. What was the Process for Developing this Rule?
D. What Are the Major Changes Between the Proposals and the Final Rule?
II. The EPA's Analytical Approach
A. How Did EPA Interpret the Clean Air Act's Pollution Transport
Provisions in the NOX SIP Call?
1. Clean Air Act Requirements
2. The NOX SIP Call Rulemaking
a. Analytical Approach of NOX SIP Call
b. Regulatory Requirements
c. SIP Submittal and Implementation Requirements
3. Michigan v. EPA Court Case
4. Implementation of the NOX SIP Call
B. How Does EPA Interpret the Clean Air Act's Pollution
Transport Provisions in Today's Rule
1. CAIR Analytical Approach
a. Nature of Nonattainment Problem and Overview of Today's Approach
b. Air Quality Factor
c. Cost Factor
d. Other Factors
e. Regulatory Requirements
f. SIP Submittal and Implementation Requirements
2. What Did Commenters Say and What Is EPA's Response?
a. Aspects of Contribute-Significantly Test
III. Why Does This Rule Focus on SO2 and NOX,
and How Were Significant Downwind Impacts Determined?
A. What Is the Basis for EPA's Decision to Require Reductions in
Upwind Emissions of SO2 and NOX to Address
PM2.5 related transport?
1. How Did EPA determine which pollutants were necessary to
control to address interstate transport for PM2.5?
a. What Did EPA propose regarding this issue in the NPR?
b. How Does EPA address public comments on its proposal to
address SO2 and NOX emissions and not other pollutants?
c. What Is EPA's Final Determination?
2. What Is the role for local emissions reduction strategies?
a. Summary of analyses and conclusions in the proposal
b. Summary and Response to Public Comments
B. What Is the Basis for EPA's Decision to Require Reductions in
Upwind Emissions of NOX to Address Ozone-Related Transport?
1. How Did EPA Determine Which Pollutants Were Necessary to
Control to Address Interstate Transport for Ozone?
2. How Did EPA Determine That Reductions in Interstate
Transport, as Well as Reductions in Local Emissions, Are Warranted
to Help Ozone Nonattainment Areas to Meet the 8-hour Ozone Standard?
a. What Did EPA Say in its Proposal Notice?
b. What Did Commenters Say?
C. Comments on Excluding Future Case Measures from the Emissions
Baselines Used to Estimate Downwind Ambient Contribution
D. What Criteria Should Be Used to Determine Which States
1. What Is the Appropriate Metric for Assessing Downwind
PM2.5 Contribution?
a. Notice of Proposed Rulemaking
b. Comments and EPA's Responses
c. Today's Action
2. What Is the Level of the PM2.5 Contribution Threshold?
a. Notice of Proposed Rulemaking
b. Comments and EPA's Responses
c. Today's Action
E. What Criteria Should Be Used to Determine Which States are
Subject to this Rule Because They Contribute to Ozone Nonattainment?
1. Notice of Proposed Rulemaking
2. Comments and EPA Responses
3. Today's Action
F. Issues Related to Timing of the CAIR Controls
1. Overview
2. By Design, the CAIR Cap and Trade Program Will Achieve
Significant Emissions Reductions Prior to the Cap Deadlines
3. Additional Justification for the SO2 and
NOX Annual Controls
4. Additional Justification for Ozone NOX Requirements
IV. What Amounts of SO2 and NOX Emissions Did
EPA Determine Should Be Reduced?
A. What Methodology Did EPA Use to Determine the Amounts of
SO2 and NOX Emissions That Must Be Eliminated?
1. The EPA's Cost Modeling Methodology
2. The EPA's Proposed Methodology to Determine Amounts of
Emissions that Must be Eliminated
a. Overview of EPA Proposal for the Levels of Reductions and
Resulting Caps, and their Timing
[[Page 25164]]
b. Regulatory History: NOX SIP Call
c. Proposed Criteria for Emissions Reduction Requirements
3. What Are the Most Significant Comments that EPA Received
about its Proposed Methodology for Determining the Amounts of
SO2 and NOX Emissions that Must Be Eliminated,
and What Are EPA's Responses?
4. The EPA's Evaluation of Highly Cost-Effective SO2
and NOX Emissions Reductions Based on Controlling EGUs
a. SO2 Emissions Reductions Requirements
b. NOX Emissions Reductions Requirements
B. What Other Sources Did EPA Consider when Determining Emission
Reduction Requirements?
1. Potential Sources of Highly Cost-Effective Emissions Reductions
a. Mobile and Area Sources
b. Non-EGU Boilers and Turbines
c. Other Non-EGU Stationary Sources
C. Schedule for Implementing SO2 and NOX
Emissions Reduction Requirements for PM2.5 and Ozone
1. Overview
2. Engineering Factors Affecting Timing for Control Retrofits
a. NPR
b. Comments
c. Responses
3. Assure Financial Stability
D. Control Requirements in Today's Final Rule
1. Criteria Used to Determine Final Control Requirements
2. Final Control Requirements
V. Determination of State Emissions Budgets
A. What Is the Approach for Setting State-by-State Annual
Emissions Reductions Requirements and EGU Budgets?
1. SO2 Emissions Budgets
a. State Annual SO2 Emission Budget Methodology
b. Final SO2 State Emission Budget Methodology
c. Use of SO2 budgets
2. NOX Annual Emissions Budgets
a. Overview
b. State Annual NOX Emissions Budget Methodology
c. Final Annual State NOX Emission Budgets
d. Use of Annual NOX Budgets
e. NOX Compliance Supplement Pool
B. What Is the Approach for Setting State-by-State Emissions
Reductions Requirements and EGU Budgets for States with
NOX Ozone Season Reduction Requirements?
1. States Subject to Ozone-season Requirements
VI. Air Quality Modeling Approach and Results
A. What Air Quality Modeling Platform Did EPA Use?
1. Air Quality Models
a. The PM2.5 Air Quality Model and Evaluation
b. Ozone Air Quality Modeling Platform and Model Evaluation
c. Model Grid Cell Configuration
2. Emissions Inventory Data
3. Meteorological Data
B. How Did EPA Project Future Nonattainment for PM2.5
and 8-Hour Ozone?
1. Projection of Future PM2.5 Nonattainment
a. Methodology for Projecting Future PM2.5
Nonattainment
b. Projected 2010 and 2015 Base Case PM2.5
Nonattainment Counties
2. Projection of Future 8-Hour Ozone Nonattainment
a. Methodology for Projecting Future 8-Hour Ozone Nonattainment
b. Projected 2010 and 2015 Base Case 8-Hour Ozone Nonattainment
Counties
C. How did EPA Assess Interstate Contributions to Nonattainment?
1. PM2.5 Contribution Modeling Approach
2. 8-Hour Ozone Contribution Modeling Approach
D. What Are the Estimated Interstate Contributions to
PM2.5 and 8-Hour Ozone Nonattainment?
1. Results of PM2.5 Contribution Modeling
2. Results of 8-Hour Ozone Contribution Modeling
E. What Are the Estimated Air Quality Impacts of the Final Rule?
1. Estimated Impacts on PM2.5 Concentrations and Attainment
2. Estimated Impacts on 8-Hour Ozone Concentrations and
Attainment
F. What Are the Estimated Visibility Impacts of the Final Rule?
1. Methods for Calculating Projected Visibility in Class I Areas
2. Visibility Improvements in Class I Areas
VII. SIP Criteria and Emissions Reporting Requirements
A. What Criteria Will EPA Use to Evaluate the Approvability of a
Transport SIP?
1. Introduction
2. Requirements for States Choosing to Control EGUs
a. Emissions Caps and Monitoring
b. Using the Model Trading Rules
c. Using a Mechanism Other than the Model Trading Rules
d. Retirement of Excess Title IV Allowances
3. Requirements for States Choosing to Control Sources Other than EGUs
a. Overview of Requirements
b. Eligibility of Non-EGU Reductions
c. Emissions Controls and Monitoring
d. Emissions Inventories and Demonstrating Reductions
4. Controls on Non-EGUs Only
5. Use of Banked Allowances and the Compliance Supplement Pool
B. State Implementation Plan Schedules
1. State Implementation Plan Submission Schedule
a. The EPA's Authority to Require Section 110(a)(2)(D)
Submissions in Accordance with the Schedule of Section 110(a)(1)
b. The EPA's Authority to Require Section 110(a)(2)(D)
Submissions Prior to Formal Designation of Nonattainment Areas under
Section 107
c. The EPA's Authority to Require Section 110(a)(2)(D)
Submissions Prior to State Submission of Nonattainment Area Plans
Under Section 172
d. The EPA's Authority to Require Section 110(a)(2)(D)
Submissions Prior to Completion of the Next Review of the
PM2.5 and 8-hour Ozone NAAQS
e. The EPA's Authority to Require States to Make Section
110(a)(2)(D) Submissions within 18 Months of this Final Rule
C. What Happens If a State Fails to Submit a Transport SIP or
EPA Disapproves the Submitted SIP?
1. Under What Circumstances Is EPA Required to Promulgate a FIP?
2. What Are the Completeness Criteria?
3. When Would EPA Promulgate the CAIR Transport FIP?
D. What Are the Emissions Reporting Requirements for States?
1. Purpose and Authority
2. Pre-existing Emission Reporting Requirements
3. Summary of the Proposed Emissions Reporting Requirements
4. Summary of Comments Received and EPA's Responses
5. Summary of the Emissions Reporting Requirements
VIII. Model NOX and SO2 Cap and Trade Programs
A. What Is the Overall Structure of the Model NOX and
SO2 Cap and Trade Programs?
B. What Is the Process for States to Adopt the Model Cap and
Trade Programs and How Will It Interact with Existing Programs?
1. Adopting the Model Cap and Trade Programs
2. Flexibility in Adopting Model Cap and Trade Rules
C. What Sources Are Affected under the Model Cap and Trade Rules?
1. 25 MW Cut-off
2. Definition of Fossil Fuel-fired
3. Exemption for Cogeneration Units
a. Efficiency Standard for Cogeneration Units
b. One-third Potential Electric Output Capacity
c. Clarifying ``For Sale''
d. Multiple Cogeneration Units
D. How Are Emission Allowances Allocated to Sources?
1. Allocation of NOX and SO2 Allowances
a. Required Aspects of a State NOX Allocation Approach
b. Flexibility and Options for a State NOX Allowance
Allocations Approach
E. What Mechanisms Affect the Trading of Emission Allowances?
1. Banking
a. The CAIR NPR and SNPR Proposal for the Model Rules and Input
from Commenters
b. The Final CAIR Model Rules and Banking
2. Interpollutant Trading Mechanisms
a. The CAIR NPR Proposal for the Model Rules and Input from Commenters
b. Interpollutant Trading and the Final CAIR Model Rules
F. Are There Incentives for Early Reductions?
1. Incentives for Early SO2 Reductions
a. The CAIR NPR and SNPR Proposal for the Model Rules and Input
from Commenters
b. SO2 Early Reduction Incentives in the Final CAIR
Model Rules
[[Page 25165]]
2. Incentives for Early NOX Reductions
a. The CAIR NPR and SNPR Proposal for the Model Rules and Input
from Commenters
b. NOX Early Reduction Incentives in the Final CAIR
Model Rules
G. Are There Individual Unit ``Opt-In'' Provisions?
1. Applicability
2. Allowing Single Pollutant
3. Allocation Method for Opt-Ins
4. Alternative Opt-In Approach
5. Opting Out
6. Regulatory Relief for Opt in Units
H. What Are the Source-Level Emissions Monitoring and Reporting
Requirements?
I. What is Different Between CAIR's Annual and Seasonal
NOX Model Cap and Trade Rules?
J. Are There Additional Changes to Proposed Model Cap and Trade
Rules Reflected in the Regulatory Language?
IX. Interactions with Other Clean Air Act Requirements
A. How Does this Rule Interact with the NOX SIP Call?
B. How Does this Rule Interact with the Acid Rain Program?
1. Legal Authority for Using Title IV Allowances in CAIR Model
SO2 Cap and trade Program
2. Legal Authority for Requiring Retirement of Excess Title IV
Allowances if State Does Not Use CAIR Model SO2 Cap and
trade Program
3. Revisions to Acid Rain Regulations
C. How Does the Rule Interact With the Regional Haze Program?
1. How Does this Rule Relate to Requirements for Best Available
Retrofit Technology (Bart) under the Visibility Provisions of the CAA?
a. Supplemental Notice of Proposed Rulemaking
b. Comments and EPA's Responses
c. Today's Action
2. What Improvements did EPA Make to the BART Versus CAIR
Modeling, and What are the New Results?
a. Supplemental Notice of Proposed Rulemaking
b. Comments and EPA Responses
c. Today's Action
D. How Will EPA Handle State Petitions Under Section 126 of the CAA?
E. Will Sources Subject to CAIR Also Be Subject To New Source Review?
X. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
1. What Economic Analyses Were Conducted for the Rulemaking?
2. What Are the Benefits and Costs of this Rule?
a. Control Scenario
b. Cost Analysis and Economic Impacts
c. Human Health Benefit Analysis
d. Quantified and Monetized Welfare Benefits
3. How Do the Benefits Compare to the Costs of This Final Rule?
4. What are the Unquantified and Unmonetized Benefits of CAIR
Emissions Reductions?
a. What are the Benefits of Reduced Deposition of Sulfur and
Nitrogen to Aquatic, Forest, and Coastal Ecosystems?
b. Are There Health or Welfare Disbenefits of CAIR That Have Not
Been Quantified?
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination with
Indian Tribal Governments
G. Executive Order 13045: Protection of Children from
Environmental Health and Safety Risks
H. Executive Order 13211: Actions that Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer Advancement Act
J. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income Populations
K. Congressional Review Act
L. Judicial Review
CFR Revisions and Additions (Rule Text)
Part 51
Part 72
Part 73
Part 74
Part 77
Part 78
Part 96
I. Overview
By notice of proposed rulemaking dated January 30, 2004 and by
notice of supplemental rulemaking dated June 10, 2004, EPA proposed to
find that certain States must reduce emissions of SO2 and/or
NOX because those emissions contribute significantly to
downwind areas in other States that are not meeting the annual
PM2.5 NAAQS or the 8-hour ozone NAAQS.\1\ Today, EPA takes
final action requiring 28 States and the District of Columbia to adopt
and submit revisions to their State implementation plans (SIPs), under
the requirements of CAA section 110(a)(2)(D), that would eliminate
specified amounts of SO2 and/or NOX emissions.
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\1\ ``Rule to Reduce Interstate Transport of Fine Particulate
Matter and Ozone (Interstate Air Quality Rule); Proposed Rule,'' (69
FR 4566, January 30, 2004) (NPR or January Proposal); ``Supplemental
Proposal for the Rule to Reduce Interstate Transport of Fine
Particulate Matter and Ozone (Clean Air Interstate Rule); Proposed
Rule,'' (69 FR 32684, June 10, 2004) (SNPR or Supplemental Proposal).
---------------------------------------------------------------------------
Each State may independently determine which emissions sources to
subject to controls, and which control measures to adopt. The EPA's
analysis indicates that emissions reductions from electric generating
units (EGUs) are highly cost effective, and EPA encourages States to
adopt controls for EGUs. States that do so must place an enforceable
limit, or cap, on EGU emissions (see section VII for discussion). The
EPA has calculated the amount of each State's EGU emissions cap, or
budget, based on reductions that EPA has determined are highly cost
effective. States may allow their EGUs to participate in an EPA-
administered cap and trade program as a way to reduce the cost of
compliance, and to provide compliance flexibility. The cap and trade
programs are described in more detail in section VIII.
The EPA estimates that today's action will reduce SO2
emissions by 3.5 million tons \2\ in 2010 and by 3.8 million tons in
2015; and would reduce annual NOX emissions by 1.2 million
tons in 2009 and by 1.5 million tons in 2015.\2\ (These numbers are for
the 23 States and the District of Columbia that are affected by the
annual SO2 and NOX requirements of CAIR.) If all
the affected States choose to achieve these reductions through EGU
controls, then EGU SO2 emissions in the affected States
would be capped at 3.6 million tons in 2010 and 2.5 million tons in
2015\4\; and EGU annual NOX emissions would be capped at 1.5
million tons in 2009 and 1.3 million tons in 2015. The EPA estimates
that the required SO2 and NOX emissions
reductions would, by themselves, bring into attainment 52 of the 79
counties that are otherwise projected to be in nonattainment for
PM2.5 in 2010, and 57 of the 74 counties that are otherwise
projected to be in nonattainment for PM2.5 in 2015. The EPA
further estimates that the required NOX emissions reductions
would, by themselves, bring into attainment 3 of the 40 counties that
are otherwise projected to be in nonattainment for 8-hour ozone in
2010, and 6 of the 22 counties that are projected to be in
nonattainment for 8-hour ozone in 2015. In addition, today's rule will
improve PM2.5 and 8-hour ozone air quality in the areas that
would remain
[[Page 25166]]
nonattainment for those two NAAQS after implementation of today's rule.
Because of today's rule, the States with those remaining nonattainment
areas will find it less burdensome and less expensive to reach
attainment by adopting additional local controls. The Clean Air
Interstate Rule (CAIR) will also reduce PM2.5 and 8-hour
ozone levels in attainment areas, providing significant health and
environmental benefits in all areas of the eastern US.
---------------------------------------------------------------------------
\2\ These data are from EPA's most recent IPM modeling
reflecting the final CAIR of today's notice. These results may
differ slightly from those appearing in elsewhere in this preamble
and the RIA, which were largely based upon a model run that included
Arkansas, Delaware, and New Jersey in the annual CAIR requirements
and also did not apply an ozone season cap on any States (the
modeling was completed before EPA had determined the final scope of
CAIR because of the length of time necessary to perform air quality
modeling).
\3\ These values represent reductions from future projected
emissions without CAIR. In 2010 CAIR will reduce SO2 by
4.3 million tons from 2003 levels and in 2015 it will reduce
SO2 emissions by 5.4 million tons from 2003 levels. In
2009, CAIR will reduce NOX levels by 1.7 million tons
from 2003 levels and in 2015 it will reduce NOX levels by
2.0 million tons from 2003 levels.
\4\ It should be noted that the banking provisions of the cap
and trade program which encourage sources to make significant
reductions before 2010 also allow sources to operate above these cap
levels until all of the banked allowances are used, therefore EPA
does not project that these caps will be met in 2010 or 2015.
---------------------------------------------------------------------------
The EPA's CAIR and the previously promulgated NOX SIP
Call reflect EPA's determination that the required SO2 and
NOX reductions are sufficient to eliminate upwind States'
significant contribution to downwind nonattainment. These programs are
not designed to eliminate all contributions to transport, but rather to
balance the burden for achieving attainment between regional-scale and
local-scale control programs.
The EPA conducted a regulatory impact analysis (RIA), entitled
``Regulatory Impact Analysis for the Final Clean Air Interstate Rule
(March 2005)'' that estimates the annual private compliance costs
(1999$) of $2.4 billion for 2010 and $3.6 billion for 2015, if all
States make the required emissions reductions through the power
industry. Additionally, the RIA includes a benefit-cost analysis
demonstrating that substantial net economic benefits to society will be
achieved from the emissions reductions required in this rulemaking. For
determination of net benefits, the above private costs were converted
to social costs that are lower since transfer payments, such as taxes,
are removed from the estimates. The EPA analysis shows that today's
action inclusive of the concurrent New Jersey and Delaware proposal
will generate annual net benefits of approximately $71.4 or $60.4
billion in 2010 and $98.5 or $83.2 billion in 2015.\5\ These alternate
net benefit estimates reflect differing assumptions about the social
discount rate used to estimate the benefits and costs of the rule. The
lower estimates reflect a discount rate of 7 percent and the higher
estimates a discount rate of 3 percent. In 2015, the total annual
quantified benefits are $101 or $86.3 billion and the annual social
costs are $2.6 or $3.1 billion--benefits outweigh costs in 2015 by a
ratio of 39 to 1 or 28 to 1 (3 percent and 7 percent discount rates,
respectively). These estimates do not include the value of benefits or
costs that we cannot monetize.
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\5\ Benefit and cost estimates reflect annual SO2 and
NOX controls for Arkansas that are not a part of the final CAIR
program. For this reason, these estimates are slightly overstated.
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In 2015, we estimate that PM-related annual benefits include
approximately 17,000 fewer premature fatalities, 8,700 fewer cases of
chronic bronchitis, 22,000 fewer non-fatal heart attacks, 10,500 fewer
hospitalization admissions (for respiratory and cardiovascular disease
combined) and result in significant reductions in days of restricted
activity due to respiratory illness (with an estimate of 9.9 million
fewer minor restricted activity days) and approximately 1,700,000 fewer
work loss days. We also estimate substantial health improvements for
children from reduced upper and lower respiratory illness, acute
bronchitis, and asthma attacks.
Ozone health-related benefits are expected to occur during the
summer ozone season (usually ranging from May to September in the
Eastern U.S.). Based upon modeling for 2015, annual ozone-related
health benefits are expected to include 2,800 fewer hospital admissions
for respiratory illnesses, 280 fewer emergency room admissions for
asthma, 690,000 fewer days with restricted activity levels, and 510,000
fewer days where children are absent from school due to illnesses.
In addition to these significant health benefits, the rule will
result in ecological and welfare benefits. These benefits include
visibility improvements; reductions in acidification in lakes, streams,
and forests; reduced eutrophication in water bodies; and benefits from
reduced ozone levels for forests and agricultural production.
Several other documents containing detailed explanations of other
key elements of today's rule are also included in the docket. These
include a detailed explanation of how EPA calculated the State-by-State
EGU emissions budgets, and a detailed explanation of the air quality
modeling analyses which support this rule.\6\ Responses to comments
that are not addressed in the preamble to today's rule are included in
a separate document.\7\
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\6\ Technical support document: ``Regional and State SO2 and
NOX Emissions Budgets'' is included in the docket.
Technical support document: ``Air Quality Modeling'' is included
in the docket.
\7\ ``Response to Significant Comments on the Proposed Clean Air
Interstate Rule'' is included in the docket.
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The remaining sections of the preamble describe the final CAIR
requirements and our responses to comments on many of the most
important features of the CAIR. Section II, ``EPA's Analytical
Approach,'' summarizes EPA's overall analytical approach and responds
to general comments on that approach. Section III, ``Why Does This Rule
Focus on SO2 and NOX, and How Were Significant
Downwind Impacts Determined?,'' outlines the rationale for the CAIR
focus on SO2 and NOX, which are precursors that
contribute to PM2.5 (SO2, NOX) or
ozone (NOX) transport, and the analytic approach EPA used to
determine which States had large enough downwind ambient air quality
impacts to become subject to today's requirements. Section IV, ``What
Amounts of SO2 and NOX Emissions Did EPA
Determine Should Be Reduced?,'' describes EPA's methodology for
determining the amounts of SO2 and NOX emissions
reductions required under today's rule. Section V, ``Determination of
State Emissions Budgets,'' describes how EPA determined the State-by-
State emissions reductions requirements and, in the event States elect
to control EGUs, the State-by-State EGU emissions budgets. Section VI,
``Air Quality Modeling Approach and Results,'' describes the technical
aspects of the air quality modeling and summarizes the numerical
results of that modeling. Section VII, ``SIP Criteria and Emissions
Reporting Requirements,'' describes the SIP submission date and other
SIP requirements associated with the emissions controls that States
might adopt. Section VIII, ``NOX and SO2 Model
Cap and Trade Programs,'' describes the EPA administered cap and trade
programs that States electing to control emissions from EGUs are
encouraged to adopt. Section IX, ``Interactions with Other Clean Air
Act Requirements,'' discusses how this rule interacts with the acid
rain provisions in CAA title IV, the NOX SIP Call, the best
available retrofit technology (BART) requirements, and other CAA or
regulatory requirements. Finally, section X, ``Statutory and Executive
Order Reviews,'' describes the applicability of various administrative
requirements for today's rule and how EPA addressed these requirements.
A. What Are the Central Requirements of This Rule?
In today's action, we establish SIP requirements for the affected
upwind States under CAA section 110(a)(2). Clean Air Act section
110(a)(2)(D) requires SIPs to contain adequate provisions prohibiting
air pollutant emissions from sources or activities in those States that
contribute significantly to nonattainment in, or interfere with
maintenance by, any other State with respect to a NAAQS. Based on air
[[Page 25167]]
quality modeling analyses and cost analyses, EPA has concluded that
SO2 and NOX emissions in certain States in the
eastern part of the country, through the phenomenon of air pollution
transport,\8\ contribute significantly to downwind nonattainment, or
interfere with maintenance, of the PM2.5 and 8-hour ozone
NAAQS. The EPA is requiring SIP revisions in 28 States and the District
of Columbia to reduce SO2 and/or NOX emissions,
which are important precursors of PM2.5 (NOX and
SO2) and ozone (NOX).
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\8\ In today's final rule, when we use the term ``transport'' we
mean to include the transport of both fine particles
(PM2.5) and their precursor emissions and/or transport of
both ozone and its precursor emissions.
---------------------------------------------------------------------------
The 23 States along with the District of Columbia that must reduce
annual SO2 and NOX emissions for the purposes of
the PM2.5 NAAQS are: Alabama, Florida, Georgia, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota,
Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
The 25 States along with the District of Columbia that must reduce
NOX emissions for the purposes of the 8-hour ozone NAAQS
are: Alabama, Arkansas, Connecticut, Delaware, Florida, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan,
Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and
Wisconsin. In addition to making the findings of significant
contribution to nonattainment or interference with maintenance, EPA is
requiring each State to make specified amounts of SO2 and/or
NOX emissions reductions to eliminate their significant
contribution to downwind States. The affected States and the District
of Columbia are required to adopt and submit the required SIP revision
with the necessary control measures by 18 months from the signature
date of today's rule.
The emissions reductions requirements are based on controls that
EPA has determined to be highly cost effective for EGUs. However,
States have the flexibility to choose the measures to adopt to achieve
the specified emissions reductions. If the State chooses to control
EGUs, then it must establish a budget--that is, an emissions cap--for
those sources. Today's rule defines the EGU budgets for each affected
State if a State chooses to control only EGUs. The rule also explains
the emission reduction requirements if a State chooses to achieve some
or all of its required emission reductions by controlling sources other
than EGUs. Due to feasibility constraints, EPA is requiring emissions
reductions be implemented in two phases. The first phase of
NOX reductions starts in 2009 (covering 2009-2014) and the
first phase of SO2 reductions starts in 2010 (covering 2010-
2014); the second phase of reductions for both NOX and
SO2 starts in 2015 (covering 2015 and thereafter). For
States subject to findings of significant contribution for
PM2.5, EPA is establishing annual emissions budgets. For
States subject to findings of significant contribution for 8-hour
ozone, the CAIR specifies ozone-season NOX emissions
budgets. States subject to findings for both PM2.5 and ozone
will have both an annual and an ozone season NOX budget.
The EPA is providing, as an option to States, model cap and trade
programs for EGUs. The EPA will administer these programs, which will
be governed by rules provided by EPA that States may adopt or
incorporate by reference.
With respect to federally recognized Indian Tribes, the
applicability of this rule is governed by three factors: The flexible
regulatory framework for Tribes provided by the CAA and the Tribal
Authority Rule (TAR); the absence of any existing EGUs on Tribal lands
in the CAIR region; and the existence of reservations within the
geographic areas which we determined to contribute significantly to
nonattainment areas.
Under CAA section 301(d) as implemented by the TAR, eligible Indian
Tribes may implement all, but are not required to implement any,
programs under the CAA for which EPA has determined that it is
appropriate to treat Tribes similarly to States. Tribes may also
implement ``reasonably severable'' elements of programs (40 CFR
49.7(c)). In the absence of Tribal implementation of a CAA program or
programs, EPA will utilize Federal implementation for the relevant area
of Indian country as necessary or appropriate to protect air quality,
in consultation with the Tribal government.
The TAR contains a list of provisions for which it is not
appropriate to treat Tribes in the same manner as States (40 CFR 49.4).
The CAIR is based on the States' obligations under CAA section
110(a)(2)(D) to prohibit emissions which would contribute significantly
to nonattainment in, or interfere with maintenance by, other States due
to pollution transport. Because CAA section 110(a)(2)(D) is not among
the provisions we determined to be inappropriate to apply to Tribes in
the same manner as States, that section is applicable, where necessary
and appropriate, to Tribes.
However, among the CAA provisions not appropriate for Tribes are
``[s]pecific plan submittal and implementation deadlines for NAAQS-
related requirements * * *'' (40 CFR 49.4(a)). Therefore, Tribes are
not required to submit implementation plans under section 110(a)(2)(D).
Moreover, because no Tribal lands in the CAIR region currently contain
any of the sources (EGUs) on which we based the emissions reductions
requirements applicable to States, there are no emission reduction
requirements applicable to Tribes.
At the same time, the existence of the CAIR cap and trade program
in some or all of the affected States will have implications for any
future construction of EGUs on Tribal lands. The geographic scope of
the CAIR cap and trade program is being determined by a two step-
process: the EPA's determination of which States significantly
contribute to downwind areas, and the decision by those affected States
whether to satisfy their emission reduction requirement by
participating in the CAIR cap and trade program.
With respect to the first step of this process (significant
contribution test), notwithstanding the political autonomy of Tribes,
we view the zero-out modeling as representing the entire geographic
area within the State being considered, regardless of the
jurisdictional status of areas within the State. Therefore, any EGU
constructed in the future on a reservation within a CAIR-affected State
would be located in an area which we have already determined to
significantly contribute to downwind nonattainment.\9\
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\9\ In this regard, the construction of a new EGU on a
reservation would be analogous to the construction of a new EGU
within a county or region of a CAIR-affected State that does not
presently contain any EGUs. This is not meant to imply that Tribes
are in any way legally similar to counties, only that, within the
CAIR region, the geographic scale of reservations is more similar to
counties than to States.
---------------------------------------------------------------------------
With respect to decisions by States to participate in the CAIR cap
and trade program, because Tribal governments are autonomous, such a
decision would not be directly binding for any Tribe located within the
State.
Nonetheless, as a matter of a policy, cap and trade programs by
their nature must apply consistently throughout the geographic region
of the program in order to be effective. Otherwise, the existence of
areas not covered by the cap could create incentives to locate sources
there, and thereby undermine
[[Page 25168]]
the environmental goals of the program.\10\
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\10\ Although it is possible that the CAIR cap and trade program
may cover a discontinuous area depending on which States
participate, the failure of a State to participate does not raise
the same environmental integrity concern. A state that does not
participate in the cap and trade program must still submit a SIP
that limits emissions to the levels mandated by the CAIR emission
reduction requirements, taking into account any emissions from new sources.
---------------------------------------------------------------------------
In light of these considerations, in the event of any future
planned construction of EGUs on Tribal lands within the CAIR region,
EPA intends to work with the relevant Tribal government to regulate the
EGU through either a Tribal implementation plan (TIP) or a Federal
implementation plan (FIP). We anticipate that at a minimum, a proposed
EGU on a reservation within a State participating in the CAIR cap and
trade program would need to be made subject to the cap and trade
program. In the case of a new EGU on a reservation in a CAIR-affected
State which chose not to participate in the cap and trade program, the
new EGU might also be required, through a TIP or FIP, to participate in
the program. This would depend on the potential for emissions shifting
and other specific circumstances (e.g., whether the EGU would service
the electric grid of States involved in the cap and trade program.)
Again, EPA will work with the relevant Tribal government to determine
the appropriate application of the CAIR.
Finally, as discussed in the SNPR, Tribes have objected to
emissions trading programs that allocate allowances based on historic
emissions, on the grounds that this rewards first-in-time emitters at
the expense of those who have not yet enjoyed a fair opportunity to
pursue economic development. Comments on the CAIR proposal from Tribes
requested a Federal set-aside of allowances for Tribes, or other
special Tribal allowance provisions. The few comments received from
States on the issue generally opposed allocations based on Indian
country status. One State expressed a willingness to share its
emissions budget with Tribes in the event an EGU locates in Indian country.
The EPA does not believe there is sufficient information to design
Tribal allocation provisions at this time. A program designed to
address concerns which remain largely speculative is likely to create
more problems through unintended consequences than it solves.
Therefore, rather than create a Federal allowance set-aside for Tribes,
EPA will work with Tribes and potentially affected States to address
concerns regarding the equity of allowance allocations on a case-by-
case basis as the need arises. The EPA may choose to revisit this issue
through a separate rulemaking in the future.
B. Why Is EPA Taking This Action?
Emissions reductions to eliminate transported pollution are
required by the CAA, as noted above. There are strong policy reasons
for addressing interstate pollution transport.
1. Policy Rationale for Addressing Transported Pollution Contributing
to PM2.5 and Ozone Problems
Emissions from upwind States can alone, or in combination with
local emissions, result in air quality levels that exceed the NAAQS and
jeopardize the health of residents in downwind communities. Control of
PM2.5 and ozone requires a reasonable balance between local
and regional controls. If significant contributions of pollution from
upwind States that can be abated by highly cost-effective controls are
unabated, the downwind area must achieve greater local emissions
reductions, thereby incurring extra clean-up costs. Requiring
reasonable controls for both upwind and local emissions sources should
result in achieving air quality standards at a lesser cost than a
strategy that relies solely on local controls. For all these reasons,
addressing interstate transport in advance of the time that States must
adopt local nonattainment plans, will make it easier for States to
develop their nonattainment plans because the States will know the
degree to which the pollution flowing into their nonattainment areas
will be reduced.
The EPA addressed interstate pollution transport for ozone in the
NOX SIP Call rule published in 1998.\11\ Today's rulemaking
is EPA's first attempt to address interstate pollution transport for
PM2.5. The NOX SIP Call is substantially reducing
ozone transport, helping downwind areas meet the 1-hour and 8-hour
ozone standards. The EPA has reassessed ozone transport in this
rulemaking for two reasons. First, several years have passed since
promulgation of the NOX SIP Call and updated air quality and
emissions data are available. Second, some areas are expected to face
substantial difficulty in meeting the 8-hour ozone standards. As a
result, EPA has determined it is important to assess the degree to
which ozone transport will remain a problem after full implementation
of the NOX SIP Call, and to assess whether further controls
are warranted to ensure continued progress toward attainment. The
modeling for the CAIR includes the NOX SIP Call in the
baseline and examines later years than the NOX SIP Call analyses.
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\11\ ``Finding of Significant Contribution and Rulemaking for
Certain States in the Ozone Transport Assessment Group Region for
Purposes of Reducing Regional Transport of Ozone; Rule,'' (63 FR
57356; October 27, 1998).
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a. The PM2.5 Problem
By action dated July 18, 1997, we revised the NAAQS for particulate
matter (PM) to add new standards for fine particles, using as the
indicator particles with aerodynamic diameters smaller than a nominal
2.5 micrometers, termed PM2.5 (62 FR 38652). We established
health- and welfare-based (primary and secondary) annual and 24-hour
standards for PM2.5. The annual standards are 15 micrograms
per cubic meter, based on the 3-year average of annual mean
PM2.5 concentrations. The 24-hour standard is a level of 65
micrograms per cubic meter, based on the 3-year average of the annual
98th percentile of 24-hour concentrations. The annual standard is
generally considered the most limiting.
Fine particles are associated with a number of serious health
effects including premature mortality, aggravation of respiratory and
cardiovascular disease (as indicated by increased hospital admissions,
emergency room visits, absences from school or work, and restricted
activity days), lung disease, decreased lung function, asthma attacks,
and certain cardiovascular problems such as heart attacks and cardiac
arrhythmia. The EPA has estimated that attainment of the
PM2.5 standards would prolong tens of thousands of lives and
would prevent, each year, tens of thousands of hospital admissions as
well as hundreds of thousands of doctor visits, absences from work and
school, and respiratory illnesses in children.
Individuals particularly sensitive to fine particle exposure
include older adults, people with heart and lung disease, and children.
More detailed information on health effects of fine particles can be
found on EPA's Web site at: http://www.epa.gov/ttn/naaqs/standards/pm/
s_pm_index.html.
At the time EPA established the PM2.5 primary NAAQS in
1997, we also established welfare-based (secondary) NAAQS identical to
the primary standards. The secondary standards are designed to protect
against major environmental effects caused by PM such as visibility
impairment--including in Class I areas which include national parks and
wilderness areas across the country--soiling, and materials damage.
[[Page 25169]]
As discussed in other sections of this preamble, SO2 and
NOX emissions both contribute to fine particle
concentrations. In addition, NOX emissions contribute to
ozone problems, described in the next section. We believe the CAIR will
significantly reduce SO2 and NOX emissions that
contribute to the PM2.5 and 8-hour ozone problems described here.
The PM2.5 ambient air quality monitoring for the 2001-
2003 period shows that areas violating the standards are located across
much of the eastern half of the United States and in parts of
California, and Montana. Based on these nationwide data, 82 counties
have at least one monitor that violates either the annual or the 24-
hour PM2.5 standard. Most areas violate only the annual
standard; a small number of areas violate both the annual and 24-hour
standards; and no areas violate just the 24-hour standard. The
population of these 82 counties totals over 56 million people.
Only two States in the western part of the U.S., California and
Montana, have counties that exceeded the PM2.5 standards. On
the other hand, in the eastern part of the U.S., 124 sites in 69
counties (with total population of 34 million) violated the annual
PM2.5 standard of 15.0 micrograms per cubic meter ([mu]g/
m3) over the 3-year period from 2001 to 2003, while 469
sites met the annual standard. No sites in the eastern part of the
United States exceeded the daily PM2.5 standard of 65 [mu]g/
m3. The 69 violating counties are located in a region made
up of 16 States (plus the District of Columbia), extending eastward
from St. Louis County, Missouri, the western-most violating county and
including the following States: Alabama, Delaware, Georgia, Illinois,
Indiana, Kentucky, Maryland, Missouri, Michigan, New Jersey, New York,
North Carolina, Ohio, Pennsylvania, Tennessee, West Virginia, and the
District of Columbia. The EPA published the PM2.5 attainment
and nonattainment designations on January 5, 2005 (70 FR 944). The
designations will be effective on April 5, 2005.
Because interstate transport is not believed to be a significant
contributor to exceedances of the PM2.5 standards in
California or Montana, today's final CAIR does not cover these States.
b. The 8-Hour Ozone Problem
By action dated July 18, 1997, we promulgated identical revised
primary and secondary ozone standards that specified an 8-hour ozone
standard of 0.08 parts per million (ppm). Specifically, under the
standards, the 3-year average of the fourth highest daily maximum 8-
hour average ozone concentration may not exceed 0.08 ppm. In general,
the revised 8-hour standards are more protective of public health and
the environment and more stringent than the pre-existing 1-hour ozone
standards. All areas that were violating the 1-hour ozone standard at
the time of the 8-hour ozone designations were also designated as
nonattainment for the 8-hour ozone standard. More areas do not meet the
8-hour standard than do not meet the 1-hour standard. The EPA published
the 8-hour ozone attainment and nonattainment designations in the
Federal Register on April 30, 2004 (69 FR 23858). The designations were
effective on June 15, 2004. Pursuant to EPA's final rule to implement
the 8-hour ozone standard (69 FR 23951; April 30, 2004), EPA will
revoke the 1-hour ozone standard on June 15, 2005, 1 year after the
effective date of the 8-hour designations.
Short-term (1- to 3-hour) and prolonged (6- to 8-hour) exposures to
ambient ozone have been linked to a number of adverse health effects.
Short-term exposure to ozone can irritate the respiratory system,
causing coughing, throat irritation, and chest pain. Ozone can reduce
lung function and make it more difficult to breathe deeply. Breathing
may become more rapid and shallow than normal, thereby limiting a
person's normal activity. Ozone also can aggravate asthma, leading to
more asthma attacks that require a doctor's attention and the use of
additional medication. Increased hospital admissions and emergency room
visits for respiratory problems have been associated with ambient ozone
exposures. Longer-term ozone exposure can inflame and damage the lining
of the lungs, which may lead to permanent changes in lung tissue and
irreversible reductions in lung function. A lower quality of life may
result if the inflammation occurs repeatedly over a long time period
(such as months, years, a lifetime).
People who are particularly susceptible to the effects of ozone
include children and adults who are active outdoors, people with
respiratory diseases, such as asthma, and people with unusual
sensitivity to ozone.
In addition to causing adverse health effects, ozone affects
vegetation and ecosystems, leading to reductions in agricultural crop
and commercial forest yields; reduced growth and survivability of tree
seedlings; and increased plant susceptibility to disease, pests, and
other environmental stresses (e.g., harsh weather). In long-lived
species, these effects may become evident only after several years or
even decades and have the potential for long-term adverse impacts on
forest ecosystems. Ozone damage to the foliage of trees and other
plants can also decrease the aesthetic value of ornamental species used
in residential landscaping, as well as the natural beauty of our
national parks and recreation areas. The economic value of some welfare
losses due to ozone can be calculated, such as crop yield loss from
both reduced seed production (e.g., soybean) and visible injury to some
leaf crops (e.g., lettuce, spinach, tobacco), as well as visible injury
to ornamental plants (i.e., grass, flowers, shrubs). Other types of
welfare loss may not be quantifiable (e.g., reduced aesthetic value of
trees growing in heavily visited national parks). More detailed
information on health effects of ozone can be found at the following
EPA Web site: http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_index.html.
Almost all areas of the country have experienced some progress in
lowering ozone concentrations over the last 20 years. As reported in
the EPA's report, ``The Ozone Report: Measuring Progress Through
2003,'' \12\ national average levels of 1-hour ozone improved by 29
percent between 1980 and 2003 while 8-hour levels improved by 21
percent over the same time period. The Northeast and West regions have
shown the greatest improvement since 1980. However, most of that
improvement occurred during the first part of the period. In fact,
during the most recent 10 years, ozone levels have been relatively
constant reflecting little if any air quality improvement. For this
reason, ozone has exhibited the slowest progress of the six major
pollutants tracked nationally.
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\12\ EPA 454/K-04-001, April 2004.
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Although ambient ozone levels remained relatively constant over the
past decade, additional control requirements have reduced emissions of
the two major ozone precursors, VOC and NOX, although at
different rates. Emissions of VOCs were reduced by 32 percent from 1990
levels, while emissions of NOX declined by 22 percent.
Ozone remains a significant public health concern. Presently, wide
geographic areas, including most of the nation's major population
centers, experience unhealthy ozone levels, that is, concentrations
violating the NAAQS for 8-hour ozone. These areas include much of the
eastern part of the United States and large areas of California. More
specifically, 297 counties with a total population of over 124 million
people currently violate the 8-hour ozone standard. Most of these ozone
[[Page 25170]]
violations occur in the eastern half of the United States: 268 counties
with a population of over 93 million.
When ozone and PM2.5 are examined jointly, 322 counties
with 131 million people are violating at least one of the standards
while 57 counties nationwide have concentrations violating both
standards with a total population of over 49 million people. Of these,
46 counties with a population of over 28 million are in the Eastern
United States.
c. Other Environmental Effects Associated With SO2 and
NOX Emissions
Today's action will result in benefits in addition to the
enumerated human health and welfare benefits resulting from reductions
in ambient levels of PM2.5 and ozone. Reductions in
NOX and SO2 will contribute to substantial
visibility improvements in many parts of the Eastern U.S. where people
live, work, and recreate, including Federal Class I areas such as the
Great Smoky Mountains. Reductions in these pollutants will also reduce
acidification and eutrophication of water bodies in the region. In
addition, reduced mercury emissions are anticipated as a result of this
rule. Reduced mercury emissions will lessen mercury contamination in
lakes and thereby potentially decrease both human and wildlife exposure
to mercury-contaminated fish.
2. The CAA Requires States To Act as Good Neighbors by Limiting
Downwind Impacts
The CAA includes the ``good neighbor'' provision of section
110(a)(2)(D), which requires that every SIP prohibit emissions from any
source or other type of emissions activity in amounts that will
contribute significantly to nonattainment in any downwind State, or
that will interfere with maintenance in any downwind State. In today's
action, EPA is determining that 28 States and the District of Columbia,
all in the eastern part of the United States, have emissions of
SO2 and/or NOX that will contribute significantly
to nonattainment, or interfere with maintenance, of the
PM2.5 NAAQS and/or the 8-hour ozone NAAQS in another State.
Under EPA's general authority to clarify the applicability of CAA
requirements, as provided in CAA section 301(a)(1), EPA is establishing
the amount of SO2 and NOX emissions that each
affected State must prohibit by submitting appropriate SIP provisions
to EPA. The improvements in air quality will assist downwind States in
developing their SIPs to provide for attainment and maintenance in
those nonattainment areas.
3. Today's Rule Will Improve Air Quality
The EPA has estimated the improvements in emissions and air quality
that would result from implementing the CAIR. These improvements, which
are substantial, are summarized earlier in this section.
C. What Was the Process for Developing This Rule?
By action dated January 30, 2004, EPA issued a proposal that
included many of the components of today's action. ``Rule to Reduce
Interstate Transport of Fine Particulate Matter and Ozone (Interstate
Air Quality Rule); Proposed Rule,'' (69 FR 4566). The Administrator
signed the proposed rule--termed, at that time, the Interstate Air
Quality Rule--on December 17, 2003, and EPA posted it on its Web site
for this rule on that date. The Web site address at that time was
http://www.epa.gov/interstateairquality. (The address has since changed
to http://www.epa.gov/cleanairinterstaterule/ or http://www.epa.gov/
cair/.)
The EPA held public hearings on the proposal, in conjunction with a
proposed rulemaking concerning mercury and other hazardous air
pollutants from EGUs, on February 25-26, 2004, in Chicago, Illinois;
Philadelphia, Pennsylvania; and Research Triangle Park, North Carolina.
The comment period for the NPR closed on March 30, 2004. The EPA
received over 6,700 comments on the proposal.
By action dated June 10, 2004, EPA issued a supplemental notice of
proposed rulemaking (SNPR), ``Supplemental Proposal for the Rule to
Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean
Air Interstate Rule); Proposed Rule,'' (69 FR 32684). The Administrator
signed the SNPR for this rule--now called the Clean Air Interstate
Rule--on May 18, 2004, and EPA placed it on the Web site on that date.
The SNPR included, among other things, proposed regulatory language for
the rule, revised proposals concerning State-level emissions budgets,
proposed State reporting requirements and SIP approvability criteria,
and proposed model cap and trade rules. The SNPR also proposed that
under certain circumstances the CAIR requirements could replace the
BART requirements of CAA sections 169A and 169B. The EPA held a public
hearing on the SNPR on June 3, 2004, in Alexandria, Virginia. The
comment period for the SNPR closed on July 26, 2004. The EPA received
over 400 comments on the SNPR.
By a notice of data availability (NODA) dated August 6, 2004, EPA
announced the availability of additional documents for this action.
``Availability of Additional Information Supporting the Rule To Reduce
Interstate Transport of Fine Particulate Matter and Ozone (Clean Air
Interstate Rule),'' (69 FR 47828). The documents had been placed on the
website on or about July 27, 2004, and in the EDOCKET on that date, or
shortly thereafter. The EPA allowed public comment on those additional
documents until August 27, 2004. Around 30 comments were received on
the NODA.
The EPA has responded to all significant public comments either in
this preamble or in the response to comment document which is contained
in the docket.
Comments on Rulemaking Process: Some commenters expressed concerns
about certain aspects of this process. One concern was that EPA did not
allow sufficient time to comment on the SNPR. Commenters noted that
important program elements--including regulatory language--appeared for
the first time in the SNPR, but EPA held a public hearing on the SNPR 7
days before the SNPR was published in the Federal Register and only 16
days after the SNPR had been posted on the website. The EPA believes
that the 16-day period preceding the public hearing, and the total of
45 days to comment on the SNPR following its publication in the Federal
Register, constituted an adequate opportunity for members of the public
to comment on the SNPR.
Commenters also expressed concern that certain technical documents
were not made available in sufficient time to comment. However, EPA had
placed all technical support documents for the NPR in the EDOCKET as of
the date of publication of the NPR, and all technical support documents
for the SNPR had been placed in the EDOCKET as of the date of
publication of the SNPR.
Commenters also expressed concern that in the SNPR, EPA proposed
significant changes to other regulatory programs. The EPA agrees that
the SNPR did include proposed changes to certain regulatory programs,
i.e., the requirements for BART under CAA sections 169A and 169B
(concerning visibility), certain provisions (primarily concerning the
allowance-holding requirement) in the title IV (Acid Rain Program)
rules, and certain emissions reporting rules under the NOX
SIP Call (40 CFR 51.122) and Consolidated
[[Page 25171]]
Emissions Reporting Rule (CERR) (title 40, part 51, subpart A). The EPA
believes that to the extent the requirements for BART and emissions
reporting rule revisions are tied to the CAIR, affected members of the
public had adequate notice of those revisions. (These revisions are
described in section VII.) However, the SNPR contained some revisions
to the emissions reporting rules that were not tied to the transport
provisions. The EPA is not taking final action today on the proposal
for the emissions reporting rules that were not tied to the transport
provisions and instead is issuing a new proposal for them, which will
provide additional notice and opportunity to comment.
Further, the Acid Rain Program rule revisions, although connected
to the CAIR, apply to all persons subject to the Acid Rain Program,
including persons who are not affected by the CAIR. (These revisions
are described in section IX.) Specifically, as explained in section IX,
the revisions to the Acid Rain Program rules are aimed at facilitating
coordination of the Acid Rain Program and the CAIR model SO2
cap and trade rule and/or are being adopted on their own merits,
independently of the need to coordinate with the CAIR. Most of the
proposed revisions involve changing from unit-by-unit to source-by-
source compliance with the allowance-holding requirement of the Acid
Rain Program and therefore affect every source subject to the Acid Rain
Program, whether or not the source is also in a State covered by the
CAIR. The change to source-by-source compliance increases a source's
flexibility to use--in meeting the allowance-holding requirement--
allowances held by any unit at the source. This flexibility reduces the
likelihood that sources will incur large excess emissions penalties
from inadvertent, minor errors (e.g., in how allowances are distributed
among the units at the source), while preserving the environmental
goals of the Acid Rain Program. The remaining revisions to the Acid
Rain Program rules similarly cover all Acid Rain Program sources.
Indeed, none of the comments on the proposed Acid Rain Program rule
revisions stated that the revisions would apply only to certain Acid
Rain Program sources, but rather seemed to treat the revisions as
applying program-wide. As discussed in section IX, EPA is finalizing,
with minor modifications, the Acid Rain Program rule revisions.
Commenters also expressed concern that between the NPR and the
SNPR, EPA had proposed program elements in a piecemeal fashion, which
made it more difficult to comprehend and comment on the rule, and that
the SNPR's comment period was too short to allow the public adequate
opportunity to comment on the numerous and complex issues raised in
that proposal. The EPA recognizes the challenges faced by commenters in
this rulemaking, however, we believe that the comment periods for the
NPR and SNPR were adequate, and note that we did receive extensive and
highly detailed, technical comments on both proposals.
D. What Are the Major Changes Between the Proposals and the Final Rule?
The EPA is finalizing a number of revisions to the proposed
elements of the CAIR. These revisions are in response to information
received in public comments and new analyses conducted by EPA. The
following is a summary list of those changes:
? The first phase of NOX reductions starts in
2009 (covering 2009-2014) instead of 2010. The first phase of the
SO2 reductions still starts in 2010 (covering 2010-2014).
? The emissions inventories used for PM2.5 and 8-
hour ozone air quality modeling have been updated and improved; we
modeled PM2.5 using the Community Multiscale Air Quality
Model (CMAQ) and meteorology for 2001 instead of the Regional Model for
Simulating Aerosols and Deposition (REMSAD) and meteorology for 1996.
? The final CAIR does not cover Kansas based on new analyses
of its contribution to downwind PM2.5 nonattainment.
? Arkansas, Delaware, Massachusetts, and New Jersey are not
subject to the CAIR based on their contribution to PM2.5
nonattainment and maintenance. However, they remain subject to
NOX emissions reductions requirements on the basis of their
contribution to downwind 8-hour ozone nonattainment. This requirement
is for the ozone season rather than the entire year. The EPA is issuing
a new proposal to include Delaware and New Jersey for the
PM2.5 NAAQS based on additional considerations.
? The change in States covered by the rule necessitates a
re-analysis of the NOX budgets for all covered States. This
changes the amount of the budget, but not the procedure EPA used to
calculate it.
? The SIP approval criteria have been changed to no longer
exclude measures otherwise required by the CAA from being included in
the State's compliance with CAIR.
? A 200,000 ton compliance supplement pool was added for
NOX. Allowances from this pool can either be awarded to
sources that make early reductions or to sources that demonstrate need.
? All States for which EPA has made a finding with respect
to ozone are subject to an ozone season cap. In order to implement this
ozone season cap, EPA has finalized an ozone season NOX
trading program in addition to the annual NOX and
SO2 trading programs that were proposed.
? A number of changes were made to the trading rule
including: changes to the model NOX allocation methodology
(to fuel weight allocations) and the addition of opt in provisions.
? The EPA is not finalizing some of the emissions reporting
requirements in response to public comments indicating we gave
inadequate notice of the changes that were proposed to be applicable to
all States, not just those affected by the CAIR emission reduction
requirements. These are being reproposed, with modifications, in a
separate action to allow additional opportunity for public comment by
all affected States and other parties.
II. The EPA's Analytical Approach
Overview: Today's rulemaking is based on the ``good neighbor''
provision of CAA section 110(a)(2)(D), which requires States to develop
SIP provisions assuring that emissions from their sources do not
contribute significantly to downwind nonattainment, or interfere with
maintenance, of the NAAQS. The EPA interpreted this provision, and
developed a detailed methodology for applying it, in the NOX
SIP Call rulemaking, which concerned interstate transport of ozone
precursors.
Today's rule requires upwind States to submit SIP revisions
requiring their sources to reduce emissions of certain precursors that
significantly contribute to nonattainment in, or interfere with
maintenance of, the PM2.5 and 8-hour ozone national ambient
air quality standards in downwind States. The EPA developed today's
rule relying heavily on the NOX SIP Call approach.
This section of the preamble outlines the key aspects of today's
approach, some of which are described in greater detail in other
sections of the preamble. The EPA received comments on today's approach
that we respond to either in this section or in the other sections of
the preamble. This section also describes how today's approach varies
from the NOX SIP Call, which variations result from, among
other things, the fact that today's action regulates a different
pollutant (PM2.5) with a different precursor (SO2).
[[Page 25172]]
A. How Did EPA Interpret the Clean Air Act's Pollution Transport
Provisions in the NOX SIP Call?
1. Clean Air Act Requirements
The central CAA provisions concerning pollutant transport, for
purposes of today's action, are found in section 110(a)(2)(D). Under
these provisions, each SIP must--
(D) Contain adequate provisions
(i) Prohibiting * * * any source or other type of emissions
activity within the State from emitting any air pollutant in amounts
which will--
(I) Contribute significantly to nonattainment in, or interfere with
maintenance by, any other State with respect to any * * * national
primary or secondary ambient air quality standard * * *.
2. The NOX SIP Call Rulemaking
Promulgated by action dated October 27, 1998, the NOX
SIP Call was EPA's principal effort to reduce interstate transport of
precursors for both the 1-hour ozone NAAQS and the 8-hour ozone NAAQS.
(See ``Finding of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for Purposes of
Reducing Regional Transport of Ozone; Rule,'' (63 FR 57356).) In that
rulemaking, EPA imposed seasonal NOX reduction requirements
on 22 States and the District of Columbia in the eastern part of the
country.
a. Analytical Approach of NOX SIP Call
In the NOX SIP Call, EPA interpreted section
110(a)(2)(D) to authorize EPA to determine the amount of emissions in
upwind States that ``contribute significantly'' to downwind
nonattainment or ``interfere with'' downwind maintenance, and to
require those States to eliminate that amount of emissions. The EPA
recognized that States must retain full authority to choose the sources
to control, and the control mechanisms, to achieve those reductions.
The EPA set out several criteria or factors for the ``contribute
significantly'' test, and further indicated that the same criteria
should apply to the ``interfere with maintenance'' provision: \13\
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\13\ In the NOX SIP Call, because the same criteria
applied, the discussion of the ``contribute significantly to
nonattainment'' test generally also applied to the ``interfere with
maintenance'' test. However, in the NOX SIP Call, EPA
stated that the ``interfere with maintenance'' test applied with
respect to only the 8-hour ozone NAAQS (63 FR 57379-80).
---------------------------------------------------------------------------
* * * EPA determined the amount of emissions that significantly
contribute to downwind nonattainment from sources in a particular
upwind State primarily by (i) evaluating, with respect to each upwind
State, several air quality related factors, including determining that
all emissions from the State have a sufficiently great impact downwind
(in the context of the collective contribution nature of the ozone
problem); and (ii) determining the amount of that State's emissions
that can be eliminated through the application of cost-effective
controls. Before reaching a conclusion, EPA evaluated several
secondary, and more general, considerations. These include:
? The consistency of the regional reductions with the
attainment needs of the downwind areas with nonattainment problems.
? The overall fairness of the control regimes required of
the downwind and upwind areas, including the extent of the controls
required or implemented by the downwind and upwind areas.
? General cost considerations, including the relative cost-
effectiveness of additional downwind controls compared to upwind controls.
63 FR 57403
i. Air Quality Factor
The first factor concerns evaluating the impact on downwind air
quality of the upwind State's emissions. As EPA stated in the
NOX SIP Call: * * *
EPA specifically considered three air quality factors with
respect to each upwind State * * *.
? The overall nature of the ozone problem (i.e.,
``collective contribution'').
? The extent of the downwind nonattainment problems to
which the upwind State's emissions are linked, including the ambient
impact of controls required under the CAA or otherwise implemented
in the downwind areas.
? The ambient impact of the emissions from the upwind
State's sources on the downwind nonattainment problems.
63 FR 57376
The EPA explained the first factor, collective contribution, by noting,
[V]irtually every nonattainment problem is caused by numerous
sources over a wide geographic area* * *[. This]
factor suggest[s]
that the solution to the problem is the implementation over a wide
area of controls on many sources, each of which may have a small or
unmeasureable ambient impact by itself.
63 FR 57377
The second air quality factor--the extent of downwind nonattainment
problems--concerns whether downwind areas should be considered to be in
nonattainment. This determination took into account the then-current
air quality of the area, the predicted future air quality (assuming the
implementation of required controls, but not the transport requirements
that were the subject of the NOX SIP Call), and the
boundaries of the area in light of designation status (63 FR 57377).
The EPA applied the third air quality factor--the ambient impact of
emissions from the upwind sources--by projecting the amount of the
upwind State's entire inventory of anthropogenic emissions to the year
2007, and then quantifying, through the appropriate air quality
modeling techniques, the impact of those emissions on downwind
nonattainment.\14\ Specifically, (i) EPA determined the minimum
threshold impact that the upwind State's emissions must have on a
downwind nonattainment area to be considered potentially to contribute
significantly to nonattainment; and then (ii) for States with impacts
above that threshold, EPA developed a set of metrics for further
evaluating the contribution of the upwind State's emissions on a
downwind nonattainment area (63 FR 57378). The EPA considered a State
with emissions that had a sufficiently great impact to contribute
significantly to the downwind area (depending on application of the
cost factor). In general, EPA established the thresholds at a
relatively low level, which reflected the collective contribution
phenomenon. That is, because the ozone problem is caused by many
relatively small contributions, even relatively small contributors must
participate in the solution.
---------------------------------------------------------------------------
\14\ Although EPA's air quality modeling techniques examined all
of the upwind State's emissions of ozone precursors (including VOC
and NOX), only the NOX emissions had
meaningful interstate impacts.
---------------------------------------------------------------------------
ii. Cost Factor
The cost factor is the second major factor that EPA applied to
determine the significant contribution to nonattainment: ``EPA * * *
determined whether any amounts of the NOX emissions may be
eliminated through controls that, on a cost-per-ton basis, may be
considered to be highly cost effective.'' (See 63 FR 57377.)
(I) Choice of Highly Cost-Effective Standard
The EPA selected the standard of highly cost effective in order to
assure State flexibility in selecting control strategies to meet the
emissions reduction requirements of the rulemaking. That is, the
rulemaking required the States to achieve specified levels of emissions
reductions--the levels achievable if States implemented the control
strategies that EPA identified
[[Page 25173]]
as highly cost effective--but the rulemaking did not mandate those
highly cost-effective control strategies, or any other control
strategy. Indeed, in calculating the amount of the required emissions
reductions by assuming the implementation of highly cost-effective
control strategies, EPA assured that other control strategies--ones
that were cost effective, if not highly cost effective--remained
available to the States.
(II) Determination of Highly Cost-Effective Amount
The EPA determined the dollar amount considered to be highly cost
effective by reference to the cost effectiveness of recently
promulgated or proposed NOX controls. The EPA determined
that the average cost effectiveness of controls in the reference list
ranged up to approximately $1,800 per ton of NOX removed
(1990$), on an annual basis. The EPA considered the controls in the
reference list to be cost effective.
The EPA established $2,000 (1990$) in average cost effectiveness
for summer ozone season emissions reductions as, at least
directionally, the highly cost-effective amount. Identifying this
amount on an ozone season basis was appropriate because the
NOX SIP Call concerned the ozone standard, for which
emissions reductions during only the summer ozone season are necessary.
This level of costs reflected the fact that in general, States with
downwind ozone nonattainment areas had already implemented extensive
controls. Accordingly, it was evident that the level of upwind controls
EPA selected would prove necessary for the downwind areas to reach
attainment.
(III) Source Categories
The EPA then determined that the source categories for which highly
cost-effective controls were available included EGUs, large industrial
boilers and turbines, and cement kilns. At the same time, EPA
determined, for those source categories, the level of controls that
would cost an amount consistent with the highly cost-effective amount
and that would be feasible. The EPA considered other source categories,
but found that highly cost-effective controls were not available from
them for various reasons, including the size of the sources, the relatively
small amount of emissions from the sources, or the control costs.
iii. Other Factors
The EPA also relied on several other, secondary considerations
before concluding that the identified amount of emissions reductions
were required. The first concerned the consistency of regional
reductions with downwind attainment needs. The EPA ascertained the
ozone air quality impacts of the required emissions reductions, and
determined that those impacts improved air quality downwind, but not to
the point that would raise questions about whether the amount of
reductions was more than necessary (63 FR 57379).
The second general consideration was ``the overall fairness of the
control regimes'' to which the downwind and upwind areas were subject.
The EPA explained:
Most broadly, EPA believes that overall notions of fairness suggest
that upwind sources which contribute significant amounts to the
nonattainment problem should implement cost-effective reductions.
When upwind emitters exacerbate their downwind neighbors' ozone
nonattainment problems, and thereby visit upon their downwind
neighbors additional health risks and potential clean-up costs, EPA
considers it fair to require the upwind neighbors to reduce at least
the portion of their emissions for which highly cost-effective
controls are available.
In addition, EPA recognizes that in many instances, areas
designated as nonattainment under the 1-hour NAAQS have incurred
ozone control costs since the early 1970s. Moreover, virtually all
components of their NOX and VOC inventories are subject
to SIP-required or Federal controls designed to reduce ozone.
Furthermore, these areas have complied with almost all of the
specific control requirements under the CAA, and generally are
moving towards compliance with their remaining obligations. The
CAA's sanctions and FIP provisions provide assurance that these
remaining controls will be implemented. By comparison, many upwind
States in the midwest and south have had fewer nonattainment
problems and have incurred fewer control obligations.
(63 FR 57379.)
The third general consideration was ``general cost
considerations.'' The EPA noted that ``in general, areas that currently
have, or that in the past have had, nonattainment problems * * * have
already incurred ozone control costs.'' The next set of controls
available to these nonattainment areas would be more expensive than the
controls available to the upwind areas. The EPA found that this cost
scenario further confirmed the reasonableness of the upwind control
obligations (63 FR 57379).
In the NOX SIP Call, EPA considered all of these factors
together in determining the level of controls considered to be highly
cost effective. This level of controls reflected the then-present state
of ozone controls: Within the region, the nonattainment areas were
already required to--and had already implemented--VOC and
NOX controls that covered much of their inventory. However,
the upwind States in the region generally had not done so (except to
the extent of their ozone nonattainment areas). In this context, EPA
considered it reasonable to impose an additional control burden on the
upwind States. Air quality modeling showed that even with this
additional level of upwind controls, residual nonattainment remained,
so that further reductions from downwind and/or upwind areas would be
necessary.
b. Regulatory Requirements
After ascertaining the controls that qualified as highly cost
effective, EPA developed a methodology for calculating the amount of
NOX emissions that each State was required to reduce on
grounds that those emissions contribute significantly to nonattainment
downwind. The total amount of required NOX emissions
reductions was the sum of the amounts that would be reduced by
application of highly cost-effective controls to each of the source
categories for which EPA determined that such controls were available
(63 FR 57378).
The largest of these source categories was EGUs. The EPA determined
the amount of reductions associated with EGU controls by applying the
control rate that EPA considered to reflect highly cost-effective
controls to each State's EGU heat input. That heat input, in turn, was
adjusted to reflect projected growth.
Each affected State retained the authority to achieve the required
level of reductions by implementing whatever controls on whatever
sources it wished, and EPA determined that there were other source
categories for which cost-effective, if not highly cost-effective,
controls were available (63 FR 57378). If the States chose to control
EGUs, then the NOX SIP Call mandated certain requirements--
including a statewide cap on EGU NOX emissions--but also
made available an EPA-administered regionwide EGU allowance trading
program that the States could choose to adopt.
c. SIP Submittal and Implementation Requirements
At the time EPA promulgated the NOX SIP Call, States
already had SIPs for the 1-hour ozone NAAQS in place. In the
NOX SIP Call, EPA determined that the 1-hour SIPs for the
affected States were deficient, and EPA called on these States, under
CAA section 110(k)(5), to submit, within 12 months of promulgation of
the NOX SIP Call, SIP revisions to cure the deficiency by
complying with the NOX SIP Call
[[Page 25174]]
regulatory requirements. The EPA further required that the
NOX SIP Call-required controls be implemented as
expeditiously as practicable. The EPA determined this date to be within
3 years of the SIP submittal date (with that period extended to the
beginning of the next ozone season), in light of the various
constraints that EGUs would confront in implementing controls.
For the SIPs due under the 8-hour ozone NAAQS, in the
NOX SIP Call, EPA did not incorporate a section 110(k)(5)
SIP call, but instead required States to submit, under section
110(a)(1)-(2), SIP revisions to fulfill the requirements of section
110(a)(2)(D). The EPA required these 8-hour ozone SIPs to be
submitted--and the controls mandated therein to be implemented--on the
same schedule as the 1-hour SIPs.
However, EPA stayed the 8-hour ozone requirements of the
NOX SIP Call, due to litigation concerning the 8-hour ozone
NAAQS. To date, EPA has not lifted that stay.
3. Michigan v. EPA Court Case
Petitioners brought legal challenges to various components of the
NOX SIP Call's analytical approach in the United States
Court of Appeals for the District of Columbia Circuit, in Michigan v.
EPA, 213 F.3d 663 (DC Cir., 2000), cert. denied, 532 U.S. 904 (2001).
The Court upheld the essential features of the air quality modeling
part of EPA's approach, id. at 673; as well as EPA's definition of
``contribute significantly'' to include the factor of highly cost-
effective controls, id. at 679. The Court did vacate or remand certain
specific applications of EPA's approach, and delayed the implementation
date to May 31, 2004. See, e.g., id. at 67, 681-85, 692-94. In
addition, in a subsequent case that reviewed separate EPA rulemakings
making technical corrections to the NOX SIP Call, the DC
Circuit remanded for a better explanation EPA's methodology for
computing the growth component in the EGU heat input calculation.
Appalachian Power Co. v. EPA, 251 F.3d 1026 (DC Cir., 2001).\15\
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\15\ By action dated January 18, 2000, EPA promulgated another
rulemaking that was related to the NOX SIP Call, known as
the section 126 Rule (65 FR 2675). The DC Circuit generally upheld
this rule, although it remanded for better explanation the EGU heat
input growth methodology. Appalachian Power Co. v. EPA. 249 F. 3d
1032 (DC Cir., 2001).
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4. Implementation of the NOX SIP Call
The court decisions left intact most of the NOX SIP Call
requirements. All States subject to those requirements--which EPA has
termed the NOX SIP Call Phase I requirements--submitted SIPs
incorporating them, and requiring control implementation by May 31,
2004 or earlier. The EPA has approved those SIPs.
The EPA responded to the DC Circuit's EGU growth remand decisions
through a Federal Register action that provided a more detailed
explanation and other supporting information for the EGU growth
methodology (67 FR 21868; May 1, 2002). The Court subsequently upheld
that explanation. West Virginia v. EPA, 362 F.3d 861 (DC Cir. 2004). In
addition, by action dated April 21, 2004, EPA promulgated a rulemaking
that responded to other remanded and vacated issues, and included the
remaining requirements--termed the NOX SIP Call Phase II
requirements--for the affected States (69 FR 21604).
B. How Does EPA Interpret the Clean Air Act's Pollution Transport
Provisions in Today's Rule?
1. CAIR Analytical Approach
Today, EPA adopts much the same interpretation and application of
section 110(a)(2)(D) for regulating downwind transport of precursors of
PM2.5 and 8-hour ozone as EPA adopted for the NOX
SIP Call. We are adjusting some aspects of the NOX SIP Call
analytic approach for various reasons, including the need to account
for regulation of a different pollutant (PM2.5) with an
additional precursor (SO2).
a. Nature of Nonattainment Problem and Overview of Today's Approach
As described in section I, above, the interstate transport
component of current nonattainment of the PM2.5 and 8-hour
ozone NAAQS is primarily confined to the eastern part of the country,
although in an area that is larger, by several States, than the area
that EPA focused on in the NOX SIP Call for only ozone. As
described in section III, it is evident that local controls alone
cannot be counted on to solve the nonattainment problems, although
uncertainties remain in the state of knowledge of these nonattainment
problems as well as the precise role interstate and local controls
should play. As in the case of the NOX SIP Call, it is not
reasonable to expect a local area to bear the entire burden of solving
the air quality problems, even if doing so were technically possible.
Turning to the interstate component of the nonattainment problems,
as discussed in section III below, for PM2.5, we find
sufficient information is available to address the adverse downwind
impacts caused by SO2 and NOX, and to develop
emissions reductions requirements for SO2 and
NOX. However, we do not have sufficient information to
address other precursors. As discussed in section III below, for 8-hour
ozone, we reiterate the finding of the NOX SIP Call that
NOX emissions, and not VOC emissions, are of primary
importance for interstate transport purposes.
We interpret CAA section 110(a)(2)(D) to require SIPs in upwind
States to eliminate the amounts of emissions that contribute
significantly to downwind nonattainment or interfere with downwind
maintenance. As described below, in today's rule, EPA determines that
upwind States' emissions contribute significantly to nonattainment or
interfere with maintenance of the PM2.5 NAAQS.
To quantify the amounts of those emissions that contribute
significantly to nonattainment, we primarily focus on the air quality
factor reflecting the upwind State's ambient impact on downwind
nonattainment areas, and the cost factor of highly cost-effective
controls. However, as with the NOX SIP Call, EPA also
considers other factors, which serve to establish the broad context for
applying the air quality and cost factors. Today, we adopt the
formulation of those factors as described in the CAIR NPR, which has
little conceptual difference from EPA's application of those factors in
the NOX SIP Call.
Discussion of issues relating to maintenance are found in section
III below.
b. Air Quality Factor
i. PM2.5
With respect to the PM2.5 NAAQS, as described in section
VI, we employed air quality modeling techniques to assess the impact of
each upwind State's entire inventory of anthropogenic SO2
and NOX emissions on downwind nonattainment and maintenance.
For air quality and technical reasons described below, EPA determined
that upwind SO2 and NOX emissions contribute
significantly to nonattainment as of the year 2010. Therefore, EPA
projected SO2 and NOX emissions to the year 2010,
assuming certain required controls (but not controls required under
CAIR), and then modeled the impact of those projected emissions (termed
the base case inventory) on downwind PM2.5 nonattainment in
that year.
As discussed in section III, we adopt today a threshold air quality
impact of 0.2 [mu]g/m3, so that an upwind State with
contributions to downwind nonattainment below this level would
[[Page 25175]]
not be subject to regulatory requirements, but a State with contributions
at or higher than this level would be subject to further evaluation.
Because of the inherent differences between the PM2.5
and ozone NAAQS, this threshold necessarily differs from the threshold
chosen for the NOX SIP Call in terms of: (i) The metrics
selected to evaluate the threshold, and (ii) the specific level of the
threshold. Even so, the threshold EPA proposed for PM2.5 is
generally consistent with the approach taken in the NOX SIP
Call for the threshold level for ozone in that both are relatively low.
This level reflects the fact that PM2.5 nonattainment, like
ozone, is caused by many sources in a broad region, and therefore may
be solved only by controlling sources throughout the region. As with
the NOX SIP Call, the collective contribution condition of
PM2.5 air quality is reflected in the proposed relatively
low threshold.\16\
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\16\ The second air quality factor described in the
NOX SIP Call--the extent of downwind nonattainment--is
reflected in the identification of downwind PM2.5
nonattainment areas, discussed elsewhere in today's final action.
The third air quality factor--the ambient impact of upwind
emissions--is reflected in the threshold level.
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The EPA determined that as of 2010, 23 upwind States and the
District of Columbia will have contributions to downwind
PM2.5 nonattainment areas that are sufficiently high to meet
the air quality factor of the transport test.
ii. 8-Hour Ozone
With respect to the 8-hour ozone NAAQS, we also employed, as
described in section VI, air quality modeling techniques to assess the
impact of each upwind State's entire inventory of NOX and
VOC emissions on downwind nonattainment. The EPA determined that upwind
NOX emissions contribute significantly to 8-hour ozone
nonattainment as of the year 2010. Therefore, EPA projected
NOX emissions to the year 2010, assuming certain required
controls (but not controls required under CAIR), and then modeled the
impact of those projected emissions (termed the base case inventory) on
downwind 8-hour ozone nonattainment in that year.
For the 8-hour ozone air quality factor, EPA employs the same
threshold amounts and metrics that it used in the NOX SIP
Call. That is, as described in section VI, emissions from an upwind
State contribute significantly to nonattainment if the maximum
contribution is at least 2 parts per billion, the average contribution
is greater than one percent, and certain other numerical criteria are met.
The EPA determined that as of 2010, 25 upwind States and the
District of Columbia will have contributions to downwind nonattainment
areas that are sufficiently high to meet the air quality factor of the
transport test.
c. Cost Factor
The second major factor that EPA applies is the cost factor. As in
the case of the NOX SIP Call, EPA interprets this factor as
mandating emissions reductions in amounts that would result from
application of highly cost-effective controls. We ascertain the level
of costs as highly cost effective by reference to the cost
effectiveness of recent controls. As we stated in the CAIR NPR, in
determining the appropriate level of controls, we considered
feasibility issues--as we did in the NOX SIP Call--
specifically, ``the applicability, performance, and reliability of
different types of pollution control technologies for different types
of sources; * * * and other implementation costs of a regulatory
program for any particular group of sources.'' (See CAIR NPR, 69 FR 4585.)
As described in section IV, today we conclude that at present, EGUs
are the only source category for which highly cost-effective
SO2 and NOX controls are available. In making
this determination, we examined what information is available
concerning which source categories emit relatively large amounts of
emissions, and what difficulties sources have in implementing controls.
These criteria are similar to those considered in the NOX
SIP Call.
As discussed in section IV, for PM2.5, today's action
finalizes our proposal to identify as highly cost effective the dollar
amount of cost effectiveness that falls near the low end of the
reference range for both annual SO2 controls and annual
NOX controls. We identify this level based on the overall
context of the PM2.5 implementation program, discussed below.
For upwind States affecting downwind 8-hour ozone nonattainment
areas, we apply the cost factor for ozone-season NOX
controls in much the same manner as for the NOX SIP Call,
although some aspects of the analysis have been updated. The level of
NOX control identified as highly cost effective is more
stringent than in the NOX SIP Call.
d. Other Factors
As with the NOX SIP Call, EPA considers other factors
that influence the application of the air quality and cost factors, and
that confirm the conclusions concerning the amounts of emissions that
upwind States must eliminate as contributing significantly to downwind
nonattainment. Specifically, as we stated in the CAIR NPR, ``We are
striving in this proposal to set up a reasonable balance of regional
and local controls to provide a cost effective and equitable
governmental approach to attainment with the NAAQS for fine particles
and ozone.'' (See 69 FR 4612.) In this manner, we broadly incorporate
the fairness concept and relative-cost-of-control (regional costs
compared to local costs) concept that we generally considered in the
NOX SIP Call.
i. PM2.5 Controls
For PM2.5, we promulgated the NAAQS in 1997, we issued
designations of areas in December 2004 (70 FR 944; January 5, 2005),
and we intend to promulgate implementation requirements during 2005. We
project that by 2010, without CAIR or other controls not already
adopted, 80 counties in the CAIR region would be in nonattainment of
the annual standard.
Our state of knowledge is incomplete as to the best control regime
to achieve attainment and maintenance of this NAAQS in individual
areas, but we do know that transported SO2 and
NOX emissions are important contributors to PM2.5
nonattainment. In addition, we have concluded that available controls
for at least the portion of these emissions from EGUs are feasible and
relatively inexpensive on a cost-per-ton basis, and generate
significant ambient benefits. These ambient benefits include bringing
many areas into attainment and decreasing PM2.5 levels in
the rest of the nonattainment areas. Moreover, available information
indicates that local controls are likely to be relatively more
expensive on a per-ton basis, and will not reduce emissions
sufficiently to bring many areas into attainment.
In light of this information, we plan to proceed by requiring the
level of regulatory control specified today on upwind SO2
and NOX emissions. We consider today's action to be both
prudent and effective within the circumstances of the developing
PM2.5 implementation program. This action is one of the
initial steps in implementing the PM2.5 NAAQS. States,
localities, and Tribes, as well as EPA, will continue to evaluate the
efficacy of local controls. Finally, as discussed in section VI, air
quality modeling confirms that these regional controls are not more
than is necessary for downwind areas to attain.
This overall plan is well within the ambit of EPA's authority to
proceed with regulation on a step-by-step basis. The time frame for
section 110(a)(2)(D) SIPs, described in section VII, makes clear that
EPA has the authority to
[[Page 25176]]
establish the upwind reduction obligations before having full
information about how best to achieve attainment goals, including
having full information about downwind control costs and the efficacy
of downwind control measures.
ii. Ozone Controls
The EPA determined the level of required NOX reductions
for purposes of 8-hour ozone transport through much the same process as
for purposes of PM2.5 transport.
e. Regulatory Requirements
i. Annual SO2 and NOX Emissions Reductions
Although EPA determined that upwind emissions will contribute
significantly to both PM2.5 nonattainment and 8-hour ozone
nonattainment in 2010, the amount of requisite emissions controls
cannot feasibly be implemented by 2009 for NOX, or 2010 for
SO2. Instead, EPA has determined to implement the reductions
in two phases for each pollutant: 2009 for NOX, and 2010 for
SO2 initially, with lower caps for both in 2015.
As described in section IV, EPA evaluated the cost of emissions
reductions under consideration against the level of highly cost-
effective controls. Through a multi-year process involving studies and
other regulatory and legislative efforts, as well as involvement with
citizen, industry, and State stakeholders, EPA arrived at an amount of
SO2 emissions reductions for evaluation purposes for the
CAIR region. The EPA ascertained the costs of these reductions and
today determines that they should be considered highly cost effective.
These amounts correspond to reducing Title IV SO2 allowances
for utilities by 65 percent in 2015 and 50 percent in 2010 in CAIR States.
As described in section V, EPA further determined that these
emissions reductions requirements should be allocated to the States in
proportion to the title IV SO2 allowances allocated under
the CAA to their EGUs. This approach is consistent with the system
Congress established for allocating title IV allowances and facilitates
implementation of the SO2 interstate trading program.
For annual NOX emissions, EPA determined a target
regionwide amount of both emissions reductions and the EGU budget by
multiplying current heat input by emission rates of 0.125 lb/mmBtu and
0.15 lb/mmBtu for 2015 and 2010, respectively. The EPA then evaluated
those amounts through the Integrated Planning Model (IPM), which
indicated the associated amounts of heat input and emission rates
projected for those years. The IPM indicated that the amounts of heat
input for 2015 and 2010 were higher than current heat input (in light
of the increased electricity demand for 2015 and 2010), and that the
emissions rates were lower than 0.125 lb/mmBtu (2015) and 0.15 lb/mmBtu
(2010). The IPM calculated the costs to achieve those emissions
reductions and EGU budget (assuming EGU controls) by 2015 and 2009,
which costs EPA determined were highly cost effective and feasible,
respectively. The EPA used this same approach to determine the seasonal
budget for NOX reductions for purposes of the ozone standard.
As described in section V, we allocated this regionwide amount to
the individual States in accordance with their average heat input from
EGUs both subject to and not subject to title IV. We adjusted heat
input for type of fuel used. The EPA believes that this method is a
reasonable indicator of each State's appropriate share of the
requirements. This method differs from what EPA used in the
NOX SIP Call, which relied on State-specific projections of
growth in heat input.
We require implementation of the PM2.5 and 8-hour ozone
reductions in two phases, in 2009 and 2015. As discussed in section IV,
these dates are the most expeditious that are practicable--the same
standard for the implementation period in the NOX SIP Call--
based on engineering and financial factors; the performance and
applicability of control measures; and the impact of implementation on,
in the case of EGUs, electricity reliability. The EPA considered these
same factors in determining the implementation period for the
NOX SIP Call requirements, but factual differences lead to
the two-phase approach adopted in today's action.
As discussed in section VII, each upwind State may achieve the
required reductions by regulating any sources of SO2 or
NOX that it wishes. However, if the State chooses to
regulate certain source categories (such as EGUs), it must comply with
certain requirements (such as capping EGU emissions), and it may take
advantage of certain opportunities (such as participation in the EPA-
administered EGU cap and trade program). Some aspects of these
requirements and the cap and trade program differ from those in the
NOX SIP Call, as explained in section VIII. However, like
the NOX SIP Call, the State may allow sources to opt in to
the CAIR trading program, as described in section VIII.
f. SIP Submittal and Implementation Requirements
Today EPA requires that the PM2.5 and 8-hour ozone SIPs
be submitted within 18 months of promulgation of today's action. This
period is 6 months longer than the SIPs due under the NOX
SIP Call. This difference is due to the fact that PM2.5
implementation is only now beginning, and it makes sense to keep the
NOX SIPs due under the 8-hour ozone requirements on the same
schedule as the NOX and SO2 SIPs due under the
PM2.5 requirements.
2. What Did Commenters Say and What Is EPA's Response?
Many of the comments on today's action concern various aspects of
EPA's analytical approach. Most of those comments are discussed
elsewhere in today's action. Comments on the most basic elements of
EPA's approach are discussed here.
a. Aspects of Contribute-Significantly Test
i. Date for Evaluation of Downwind Impacts
Comment: Some commenters took issue with EPA's approach of
determining the upwind State's air quality impact on downwind areas by
modeling only the State's 2010 base case emissions (that is, projected
2010 emissions before the 2010 CAIR controls). These commenters stated
that although evaluating the upwind State's base case emissions in 2010
might indicate whether that State's air quality impact on downwind
areas is sufficiently high to justify imposition of the 2010 (Phase I)
controls, it does not justify imposition of the 2015 (Phase II)
controls. Rather, according to the commenters, EPA should conduct
further air quality modeling that evaluates the upwind State's 2015
base case emissions--taking into account the CAIR 2010 controls but not
the CAIR 2015 controls--to determine whether the State continues (even
after imposition of the CAIR 2010 controls) to have a sufficient
downwind ambient impact to justify the 2015 controls.
Commenters added that, in their view, PM2.5 precursors
generally were decreasing after 2010, the PM2.5
nonattainment problem was generally diminishing as well, and the
contribution of some upwind States to downwind areas was relatively
small. These facts, according to the commenters, indicated that some
upwind States should not be subject to the 2015 reductions requirement.
Some commenters stated, more broadly, that the threshold contribution
[[Page 25177]]
level selected by EPA should be considered a floor, so that upwind
States should be obliged to reduce their emissions only to the level at
which their contribution to downwind nonattainment does not exceed that
threshold level.
Response: The EPA views the CAIR emission reduction requirements as
a single action, but one that cannot be fully implemented in 2009 (for
NOX) or 2010 (for SO2), and must instead be
partially deferred until 2015, solely for reasons of feasibility. Under
these circumstances, EPA does not believe it appropriate to re-evaluate
the 2015 component, as commenters have suggested.
Under EPA's approach, which mirrors that of the NOX SIP
Call, EPA projects, for each upwind State, SO2 and
NOX inventories, as of 2010, taking into account controls
required under other CAA provisions and controls adopted by State and
local agencies. The EPA then uses air quality modeling techniques to
determine the impact of these emissions on downwind air quality. The
EPA then requires upwind States whose emissions have a sufficiently
high impact to eliminate the amount of their emissions that could be
eliminated through application of highly cost-effective controls. These
emissions reductions must be implemented as expeditiously as
practicable. Were it feasible to implement all the reductions by 2009
(for NOX) or 2010 (for SO2), EPA would so
require. Because part of the emissions reductions cannot feasibly be
implemented until 2015, EPA is requiring today's two-phase approach.
This analytic method is the same as for the NOX SIP Call,
except that in that rulemaking all of the required emissions reductions
could feasibly be implemented in one phase.
As in the case of the NOX SIP Call, EPA takes the view
that once a State's emissions are determined to contribute to downwind
nonattainment by at least a threshold amount, then the upwind State
should reduce its emissions by the amount that would result from
implementation of highly cost-effective controls. This approach is
justified by the benefits of reducing the upwind contribution to
downwind nonattainment, coupled with the relatively low costs. However,
EPA does consider the ambient impacts of the required emissions
reductions. For today's action, air quality modeling indicates that the
regionwide emissions reductions do not reduce PM2.5 levels
beyond what is needed for attainment and maintenance. (See also section
III below.) Most important for present purposes, as long as the
controls yield downwind benefits needed to reduce the extent of
nonattainment, the controls should not be lessened simply because they
may have the effect of reducing the upwind State's contribution to
below the initial threshold.
The DC Circuit, in upholding the NOX SIP Call, rejected
similar arguments to those raised by commenters (Michigan v. EPA, 213
F.3d at 679). In the NOX SIP Call rulemaking, commenters
argued that EPA's analytic approach to the ``contribute significantly''
test was flawed because it meant that States with different impacts
downwind would nevertheless have to implement the same level of
controls (i.e., those that were highly cost effective). Commenters
urged EPA to recast its approach by limiting an upwind State's
emissions reductions to the point at which the remaining emissions no
longer caused a downwind ambient impact above the threshold level for
significance. (``Responses to Significant Comments on the Proposed
Finding of Significant Contribution and Rulemaking for Certain States
in the Ozone Transport Assessment Group (OTAG) Region for Purposes of
Reducing Regional Transport of Ozone (62 FR 60318; November 7, 1997 and
63 FR 25902; May 11, 1998),'' U.S. E.P.A. (September 1998), Docket
Number A-96-56-VI-C-1, at 213-16.)
Petitioners challenging the NOX SIP Call in Michigan v.
EPA used the same arguments to contend that EPA's analytic approach in
the NOX SIP Call was arbitrary and capricious. The Court
dismissed these arguments, stating:
* * * EPA required that all of the covered jurisdictions, regardless
of amount of contribution, reduce their NOX by an amount
achievable with ``highly cost-effective controls.'' Petitioners
claim that EPA's uniform control strategy is irrational. * * *
[T]hey observe that where two states differ considerably in the
amount of their respective NOX contributions to downwind
nonattainment, under the EPA rule even the small contributors must
make reductions equivalent to those achievable by highly cost-
effective measures. This of course flows ineluctably from the EPA's
decision to draw the ``significant contribution'' line on a basis of
cost differentials. Our upholding of that decision logically entails
upholding this consequence.
(Michigan v. EPA, 213 F.3d at 679.)
Thus, the Court approved EPA's approach of requiring the same
control level on all affected States, without concern as to the
arguably inconsistent ambient impacts that may result. By the same
token, in today's action, EPA's approach should be accepted
notwithstanding that the upwind controls could, at least in theory,
result in an ambient impact that is below the initial threshold. For
this reason, there is no basis to conduct a separate evaluation of the
2015 controls.
ii. Residual Nonattainment
Comment: A commenter expressed concern that too many areas will
remain out of attainment for the PM2.5 and 8-hour ozone
NAAQS even after implementation of the CAIR rule.
Response: Section 110(a)(2)(D) of the CAA requires upwind States to
prohibit the amount of emissions that contribute significantly to
downwind nonattainment, but does not require the upwind States to
prohibit sufficient emissions to assure that the downwind areas attain.
Rather, downwind areas continue to bear the responsibility of
addressing remaining nonattainment.
iii. Relationship of Reductions to Attainment Dates
Comment: Some commenters, who viewed the CAIR as imposing unduly
light obligations on upwind States, argued that because States with
nonattainment areas must develop SIPs that provide for attainment
regardless of the cost of the requisite controls, and because the
courts have viewed attainment deadlines as central to the CAA, EPA
should require that upwind emissions contributing to downwind
nonattainment must be eliminated by the downwind attainment dates, and
not later.
Other commenters, who viewed the CAIR as imposing unduly heavy
obligations on upwind States, argued that EPA had no authority to
require upwind emissions reductions after the downwind attainment dates
because by that time, the upwind emissions were no longer contributing
to nonattainment. These commenters further argued that EPA has no
authority to accelerate the emissions reductions because the controls
could not feasibly be implemented by an earlier date.
Response: We note first that part of this issue is moot since EPA
is requiring NOX controls in 2009, within the statutory time
periods for attainment. With respect to remaining issues, EPA's
interpretation and application of the ``contribute significantly to
nonattainment'' standard of section 110(a)(2)(D) is not necessarily
constrained by the downwind area's attainment date in either manner
suggested by the commenters.
First, although it is true that the nonattainment area requirements
and deadlines in CAA title I, part D, mean that the downwind area must
achieve attainment by its attainment date
[[Page 25178]]
without regard to the feasibility of emissions reductions from sources
in that nonattainment area, section 110(a)(2)(D) by its terms does not
apply those constraints to sources in the upwind States. Rather, EPA's
interpretation of the ``contribute significantly to nonattainment''
standard--which incorporates feasibility considerations in determining
the implementation period for the upwind emissions controls--continues
to apply.
Often, upwind emissions reductions affect at least several downwind
areas with different attainment dates. The EPA does not read section
110(a)(2)(D) to require that the pace of upwind reductions be
controlled by the earliest downwind attainment date. Rather, EPA views
the pace of reductions as being determined by the time within which
they may feasibly be achieved. In some cases, upwind sources are
themselves in a nonattainment area that has a longer attainment date
than the downwind area, and it may not be feasible for those upwind
sources to implement reductions prior to the downwind attainment date.
Therefore, the upwind emissions may be projected to continue to affect
adversely nonattainment in the downwind area even after the downwind
attainment date, in the manner described above. Further, emissions
reductions after the attainment date may be important to prevent
interference with maintenance of the standards.
The CAIR will achieve substantial reductions in time to help many
nonattainment areas attain the standards by the applicable attainment
dates. The design of the SO2 program, including the
declining caps in 2010 and 2015 and the banking provisions, will
steadily reduce SO2 emissions over time, achieving
reductions in advance of the cap dates; and the 2009 and 2015
NOX reductions will be timely for many downwind
nonattainment areas. Although many of today's nonattainment areas will
attain before all the reductions required by CAIR will be achieved, it
is clear that CAIR's reductions will still be needed through 2015 and
beyond. The EPA has determined that each upwind State's 2010 and 2015
emissions reductions will be necessary because, for purposes of both
PM2.5 and 8-hour ozone, we reasonably predict that a
downwind receptor linked to that upwind State will either: (i) Remain
in nonattainment and continue to experience significant contribution to
nonattainment from the upwind State's emissions; or (ii) attain the
relevant NAAQS but later revert to nonattainment due, for example, to
continued growth of the emissions inventory. This is discussed in
detail in section III below.
iv. Factors To Consider in Future Rulemaking
In the January and June CAIR proposals, we discussed regional
control requirements and budgets based on a showing of ``significant
contribution'' by upwind States to nonattainment in downwind States (69
FR at 4611-13, 32720). The CAA section 110(a)(2)(D), which provides the
authority for CAIR, states among other things that SIPs must contain
adequate provisions prohibiting, consistent with the CAA, sources or
other types of emissions activity within a State from emitting
pollutants in amounts that will ``contribute significantly to
nonattainment in, or interfere with maintenance by, any other State
with respect to'' the NAAQS. In the CAIR, EPA has interpreted section
110(a)(2)(D) to require that certain States reduce emissions by
specified amounts, and has determined those amounts based on the
availability of highly cost effective controls for identified source
categories. Following this interpretation, EPA has calculated CAIR's
emissions reduction requirements based on the availability of highly
cost-effective reductions of SO2 and NOX from
EGUs in States that meet EPA's proposed inclusion criteria.
One approach cited in the January 2004 CAIR proposal for ensuring
that both the air quality component and the cost effectiveness
component of the section 110 ``contribute significantly'' determination
is met, is to consider a source category's contribution to ambient
concentrations above the attainment level in all nonattainment areas in
affected downwind states. Id. In the June supplemental proposal, we
requested comment on a further refinement of this concept--i.e.,
whether a source category should be included in a broad regional rule
promulgated pursuant to section 110(a)(2)(D) only if the proposed level
of additional control of that category would meet a specified
threshold. Under that approach, EPA said it might determine, for
example, that in the context of a broad multi-state SIP call, emissions
reductions from particular source category are ``highly cost
effective'' only if emissions reductions from that source category
would result in at least 0.5 percent of U.S. counties and/or parishes
coming into attainment with a NAAQS. The EPA noted that, given the
number of counties and parishes in the United States, this requirement
would be met if at least 16 counties were brought into attainment with
a NAAQS as a result of the proposed level of control on a particular
source category.
The Agency received comments both supporting and opposing the
adoption of this test as a part of the ``highly cost effective''
component of the ``contribute significantly'' requirement of CAA
section 110(a)(2)(d). Commenters supporting this test asserted that it
was consistent with the CAA's overall focus on State, rather than
federal, control over which sources should be regulated, and also was
consistent with ensuring that broad, regional SIP calls, such as the
one at issue in this case, focus only on source categories the control
of which will result in substantial overall improvements in air
quality. Commenters opposing this screen with respect to the
application of section 110(a)(2)(D) asserted, in general, that the test
would be inconsistent with the analysis used by the Agency in the
NOX SIP call and with the language of section 110(a)(2)(D).
We have determined that it is not appropriate to adopt a statutory
interpretation embodying a ``bright line'' rule that 0.5 percent of the
U.S. counties and/or parishes must be brought from nonattainment into
attainment from controlling emissions from a particular source
category, in order for reductions from that source category to be
considered highly cost effective. We continue to believe, however, that
broad multi-state rules under section 110(a)(2)(D), such as the one we
are finalizing today, should play a limited role under the CAA and must
be justified by a careful evaluation of the air quality improvement
that will result from the controls under consideration. Therefore, we
intend to undertake any future broad, multi-state rulemakings under
section 110(a)(2)(D) regarding transported emissions only when, as
here, they produce substantial air quality benefits across a broad area
and have beneficial air quality impacts on a significant number of
downwind nonattainment areas, including bringing many areas into
attainment. We do not at this time anticipate the need for any such
rulemakings in the future. We believe that today's action, coupled with
current and upcoming national rules and local or subregional programs
adopted by States, will be sufficient to address the remaining
nonattainment problems.
In evaluating whether to undertake national or regional transport
rulemakings in the future, we believe it is not only appropriate but
necessary to consider the effectiveness of the proposed emissions
reductions in improving downwind air quality. We
[[Page 25179]]
believe it will be reasonable to initiate a broad multi-state
rulemaking under section 110(a)(2)(D) based on a determination that
particular emissions reductions are highly cost effective only when
those reductions will bring a significant number of downwind areas into
attainment. In adopting this approach for determining whether a future
broad, multi-state SIP call is appropriate, we note that other CAA
mechanisms, such as SIP disapproval authority and State petitions under
section 126, are available to address more isolated instances of the
interstate transport of pollutants.
The EPA projects that control of SO2 and NOX
through CAIR will bring 72 counties into attainment with the
PM2.5 and ozone NAAQS. The total number represents
approximately 3 percent of the counties/parishes in the United States,
and is clearly a significant number of areas. What will be considered a
significant number of areas in any future cases will need to be
determined on a case-by-case basis.
III. Why Does This Rule Focus on SO2 and NOX, and
How Were Significant Downwind Impacts Determined?
This section discusses the basis for EPA's decision to require
reductions in upwind emissions of SO2 and NOX to
address PM2.5 transport and to require reductions in upwind
emissions of NOX to address ozone-related transport. In
addition, this section discusses how EPA determined which States are
subject to today's rule because their sources' emissions will
significantly contribute to nonattainment of the PM2.5 or 8-
hour ozone standards, or interfere with maintenance of those standards,
in downwind States. The EPA assessed individual upwind States' ambient
impacts on downwind States and established a threshold value to
identify those States whose impact constitutes a significant
contribution to air quality violations in the downwind States. The EPA
used air quality modeling of emissions in each State to estimate the
ambient impacts. The technical issues concerning the modeling platform
and approach are discussed in section VI, Air Quality Modeling Approach
and Results. Also, EPA considered the potential for upwind state
emissions to interfere with maintenance of the PM2.5 and 8-
hour ozone NAAQS in downwind areas.
A. What Is the Basis for EPA's Decision To Require Reductions in Upwind
Emissions of SO2 and NOX To Address
PM2.5 Related Transport?
1. How Did EPA Determine Which Pollutants Were Necessary To Control To
Address Interstate Transport for PM2.5?
a. What Did EPA Propose Regarding This Issue in the NPR?
Section II of the January 2004 proposal summarized key scientific
and technical aspects of the occurrence, formation, and origins of
PM2.5, as well as findings and observations relevant to
formulating control approaches for reducing the contribution of
transport to fine particle problems (69 FR 4575-87). Key concepts and
provisional conclusions drawn from this discussion can be summarized as
follows: \17\
---------------------------------------------------------------------------
\17\ More complete discussions of the key scientific
underpinnings that form the basis of these conclusions in the
proposal and the discussion of these issues in this seciton of
today's notice can be found in the recently completed EPA Criteria
Document (USEPA, National Center for Environmental Assessment, Air
Quality Criteria for Particulate Matter, October 2004) and the
NARTSO assessment of fine participles (NARSTO, Particulate Matter
Science for Policy Makers--A NARSTO ASSESSMENT, February 2003).
---------------------------------------------------------------------------
(1) Fine particles (measured as PM2.5 for the NAAQS)
consist of a diverse mixture of substances that vary in size, chemical
composition, and source. The PM2.5 includes both ``primary''
particles that are emitted directly to the atmosphere as particles, and
``secondary'' particles that form in the atmosphere through chemical
reactions from gaseous precursors. The major components of fine
particles in the Eastern U.S. can be grouped into five categories:
carbonaceous material (including both primary and secondary organic
carbon and black carbon), sulfates, nitrates, ammonium, and crustal
material, which includes suspended dust as well as some other directly
emitted materials. The major gaseous precursors of PM2.5
include SO2, NOX, ammonia (NH3), and
certain volatile organic compounds.
(2) Examination of urban and rural monitors indicate that in the
Eastern U.S., sulfates, carbonaceous material, nitrates, and ammonium
associated with sulfates and nitrates are typically the largest
components of transported PM2.5, while crustal material
tends to be only a small fraction.
(3) Atmospheric interactions among particulate ammonium sulfates
and nitrates and gas phase nitric acid and ammonia vary with
temperature, humidity, and location. Both ambient observations and
modeling simulations suggest that regional SO2 reductions
are effective at reducing sulfate and associated ammonium, and,
therefore, PM2.5. Under certain conditions reductions in
particulate ammonium sulfates can release ammonia as a gas, which then
reacts with gaseous nitric acid to form nitrate particles, a phenomenon
called ``nitrate replacement.'' In such conditions SO2
reductions would be less effective in reducing PM2.5, unless
accompanied by reductions in NOX emissions to address the
potential increase in nitrates.
(4) Reductions in ammonia can reduce the ammonium, but not the
sulfate portion of sulfate particles. The relative efficacy of reducing
nitrates through NOX or ammonia control varies with
atmospheric conditions; the highest particulate nitrate concentrations
in the East tend to occur in cooler months and regions. At present, our
knowledge about sources, emissions, control approaches, and costs is
greater for NOX than for ammonia. Existing programs to
reduce NOX from stationary and mobile sources are well
underway. From a chemical perspective, as NOX reductions
accumulate relative to ammonia, the atmospheric chemical system would
move towards an equilibrium in which ammonium nitrate reductions become
more responsive to further NOX reductions relative to
ammonia reductions.
(5) Much less is known about the sources of regional transport of
carbonaceous material. Key uncertainties include how much of this
material is due to biogenic as compared to anthropogenic sources, and
how much is directly emitted as compared to formed in the atmosphere.
(6) Observational evidence suggests that the substantial reductions
in SO2 emissions in the eastern U.S. since 1990 have indeed
caused observed reductions in PM2.5 sulfate. The relatively
small historical reductions in NOX emissions do not allow
observations to be used similarly to test the effectiveness of
NOX reductions.
Based on the understanding of current scientific and technical
information, as well as EPA's air quality modeling, as summarized in
the January 30 proposal, EPA concluded that it was both appropriate and
necessary to focus on control of SO2 and NOX
emissions as the most effective approach to reducing the contribution
of interstate transport to PM2.5.
The EPA proposed not to control emissions that affect other
components of PM2.5, noting that ``current information
relating to sources and controls for other components identified
[[Page 25180]]
in transported PM2.5 (carbonaceous particles, ammonium, and
crustal materials) does not, at this time, provide an adequate basis
for regulating the regional transport of emissions responsible for
these PM2.5 components.'' (69 FR 4582). For all of these
components, the lack of knowledge of and ability to quantify accurately
the interstate transport of these components limited EPA's ability to
include these components in this rule.
b. How Does EPA Address Public Comments on Its Proposal To Address
SO2 and NOX Emissions and Not Other Pollutants?
i. Overview of Comments on This Issue
A large number of commenters including states, affected industries,
environmental groups, academics, and other members of the public agreed
with EPA's proposal to require cost-effective multipollutant reductions
of SO2 and NOX to address interstate transport
contributions to PM2.5 problems. Fewer commenters who
supported controlling SO2 and NOX commented on
inclusion of additional pollutants, but several also agreed that it
would be premature at this time to require control of emissions of
other chemical components and precursors to address such transport.
These commenters suggested that SO2 and NOX
emissions from EGUs and other sources indeed contribute significantly
to downwind PM2.5. They argued that control of other
components is premature because of a lack of knowledge, either about
the interstate contributions of other components or of control measures
for these components. Generally, EPA accepts and agrees with these
conclusions.
A number of commenters disagreed to varying degrees with part or
all of EPA's proposed focus on SO2 and NOX. The
main points raised by these commenters can be grouped as follows:
(1) The focus on SO2 and NOX is not
appropriate because sulfates and nitrates may not be (or are not) the
most important determinants of the health effects of PM2.5.
(2) The EPA should mandate, or at least permit, states to control
other precursors and particle emissions in addition to, or instead of,
SO2 and NOX. Commenters sometimes made specific
recommendations with respect to additional pollutants, including
carbonaceous (including organic) particles and precursors, ammonia, and
other direct emissions, including crustal material.
(3) The focus on SO2 may be appropriate, but the basis
for requiring NOX control is not clear.
ii. Summary of EPA's Response to the Major Comments on This Issue
The following subsections summarize both key comments and EPA's
responses organized by the major categories outlined above. As noted in
Section I, EPA has developed and placed in the rulemaking docket a
detailed response to these and other public comments.
(a) SO2 and NOX May Be Less Important to Health
Than Other Transport-Related Components
Comment: Several commenters argued that the proposed focus on
SO2 and NOX was premature, citing the potential
for differential toxicity of various PM2.5 components, and
in some cases advancing evidence (e.g., the Electric Power Research
Institute Aerosol Research and Inhalation Studies [ARIES]) \18\ that
other components such as organic particles appear to be more
responsible for health effects of particles than sulfates and nitrates.
Several argued that the relative contribution of components to health
impacts is an important uncertainty that should be researched more
carefully before proposing to control only SO2 and NOX.
---------------------------------------------------------------------------
\18\ R. J. Klemm, et al., ``Daily Mortality and Air Pollution in
Atlanta: Two Year of Data from ARIES'' (accepted, Inhalation
Toxicology).
---------------------------------------------------------------------------
Response: Today's rulemaking establishes requirements for SIP
submissions under section 110(a)(2)(D). Those SIP submissions must
prohibit emissions that contribute significantly to nonattainment of a
NAAQS in a downwind State. The EPA determined in the 1997 rulemaking
promulgating the PM2.5 NAAQS that specified levels of
PM2.5 adversely affect human health, and that sulfates and
nitrates are components of PM2.5 (62 FR 38652, July 18,
1997). SO2 and NOX, in turn, are precursors to
fine particulate sulfates and nitrates. Comments that sulfates and
nitrates do not cause adverse health effects are more appropriately
raised in the context of past or ongoing reviews of the PM NAAQS.
Because today's action forms part of implementing and not establishing
the PM NAAQS, comments relating to the evidence supporting or not
supporting health effects of all or portions of pollutants regulated by
the PM2.5 NAAQS are not germane to this rulemaking.
Nevertheless, we discuss briefly EPA's current response regarding
the contributions of different components of PM2.5 to health
effects. In establishing the current PM2.5 NAAQS, EPA found
that there was ample evidence to associate various health effects with
the measured mass concentration of particles smaller than a nominal 2.5
micrometers (um), termed PM2.5. The EPA recognizes that the
toxicity of different chemical components of PM2.5 may vary,
and that the observed effects may be the result of the mixture of
particles and gases. While research is underway to better identify
whether some chemical components are more responsible for health
effects than others, results now available from such research are
limited and inconclusive. A number of studies included in the recent
EPA PM criteria document \19\ have found effects to be associated with
one or more of the major components and sources of PM2.5,
including sulfates, nitrates, organic materials, PM2.5 mass,
coal combustion, and mobile sources. The criteria document concludes
that these studies suggest that many different chemical components of
fine particles and a variety of different types of source categories
are all linked to premature mortality and other serious health effects,
either independently or in combinations, but that it is not possible to
reach clear conclusions about differential effects of PM components.
Accordingly, individual studies or groups of studies such as ARIES
cannot be used to single out any particular component of
PM2.5 as wholly responsible (or not at all responsible) for
the array of health effects that have been found to be associated with
various chemical and mass indicators of fine particles. Other Federal
agencies and EPA continue to promote and support the epidemiological
and toxicological studies needed to better understand the effects of
different chemical components and different size particles on health
effects.
---------------------------------------------------------------------------
\19\ USEPA, National Center for Environmental Assessment, Air
Quality Criteria for Particulate Matter, October 2004.
---------------------------------------------------------------------------
In the meantime, EPA believes that, given the substantial evidence
of significant health effects of fine particles, it is important to
move forward expeditiously to address both transported and local
sources of all the major components of fine particles in an effort to
implement and attain the PM2.5 standards. Today's rule is
focused on the contribution of interstate transport of nitrate and
sulfates to PM2.5 in nonattainment areas. However, EPA has
already adopted other rules that are reducing emissions and exposures
to these and other major components of fine particles on a national,
regional, and local basis. Recent national mobile
[[Page 25181]]
rules and programs, in particular, have focused on carbonaceous
materials emitted from gasoline and both highway and non-road diesel
powered mobile sources (65 FR 6698; 66 FR 5002; 69 FR 38958). States
with nonattainment areas will also be required to address local sources
of PM2.5 in order to meet progress and attainment
requirements. Together, the collective effect of these programs ensures
a balanced approach to reducing all of the major components of
PM2.5 from transported and local sources.
(b) Inclusion of Other PM2.5 Precursors and Components
Comment: A number of commenters recommended that EPA either mandate
or at least permit controls on the emissions that cause interstate
transport of other components of PM2.5, in addition to or as
a substitute for, SO2 and NOX controls. Several
commenters recommended that EPA include emissions reductions related to
the components of PM2.5 other than sulfate and nitrate.
While many commenters suggested addressing all of the important
contributors to PM2.5, including those not regulated under
this Rule, others highlighted only one or two additional components as
most important to include. Of the PM2.5 components, direct
emissions and precursors to carbonaceous PM2.5 and ammonia
emissions were the omitted contributors most frequently discussed.
Some of these commenters argued that, by limiting the rule to
SO2 and NOX and excluding other sources of
ambient PM2.5, EPA would be limiting the choices that states
have to address their downwind interstate transport contributions.
These commenters argued that this limitation is contrary to the CAA,
which generally gives states the discretion to choose their own
emission control strategies. Commenters further asserted that the roles
of other components in PM2.5 are sufficiently well
understood that they should be included in state SIPs for
PM2.5 transport, and could partially satisfy the
PM2.5 reductions anticipated by this rule.
Response: The three main classes of PM2.5 precursors
that are not included in this rulemaking are carbonaceous material
(including both primary emissions and VOC emissions that form secondary
organic aerosol), ammonia, and crustal material. As noted in the
proposal(69 FR 4576) and as mentioned in several comments, these
components comprise a measurable faction of PM2.5 throughout
the Eastern U.S., and the contribution of carbonaceous material, in
particular, is often substantial. In addition, emissions contributing
to these components in one state likely do affect PM2.5
concentrations in other states to some extent. However, the extent of
those downwind contributions to nonattainment has not been quantified
adequately and current scientific understanding makes such a
determination more uncertain than is the case for SO2 and
NOX. Responses to recommendations for including each of
these three classes in the transport rule are summarized below.
(i) Carbonaceous Material
For carbonaceous material, uncertainties in both the quantity and
origins of emissions contributing to both primary and secondary
carbonaceous material on regional scales (including emissions from
fires and from biogenic sources) limit the quality of regional scale
modeling of carbonaceous PM2.5. This in turn causes
substantial uncertainties in determining the amount of interstate
transport from carbonaceous material and of the costs and effectiveness
of emission controls. Modeling and monitoring the relative amount of
organic particles that come from the formation of secondary organic
particles, versus primary organic particles, is also highly uncertain.
In addition, comparison of urban and nearby rural PM composition
monitors \20\ in the eastern U.S. find a significantly larger amount of
carbonaceous materials in urban areas as compared to rural areas,
suggesting that a substantial fraction of carbonaceous particles in
urban areas come from local sources. By contrast, urban and non-urban
monitors in the East show greater homogeneity for regional sulfate
concentrations as compared to carbonaceous materials, suggesting
regional sources are most important for sulfates. Results for nitrates
suggest both a mixture of regional and local sources. Furthermore, as
noted above and in the proposal (69 FR 4577-78), while the relative
contributions of different sources to regional sulfate and nitrates can
be quantified with certainty, the contributions of different sources to
carbonaceous materials on a regional scale are less clear. Moreover, as
noted in the NPR preamble, some research into mechanisms of formation
of organic particles suggests that both NOX and
SO2 reductions might be of some benefit in lowering the
amount of secondary organic particles.\21\ Current models are not,
however, capable of quantifying such potential benefits.
---------------------------------------------------------------------------
\20\ V. Rao, N. Frank, A. Rush, F. Dimmick. Chemical Speciation
of PM2.5 in Urban and Rural Area, in The Proceedings of
the Air & Waste Management Association Symposium on Air Quality
Measurement Methods and Technology, San Francisco, November 13-1, 2002.
\21\ Jang, M; Czoschke, N.M.; Lee, S.: Kamens, R.M.,
Heterogeneous Atmospheric Aerosol Production by Acid-Catalzyed
Particle Phase Reactions, Science, 2002, 298: 814-817.
---------------------------------------------------------------------------
While EPA does not believe that enough is known about the relative
effectiveness or costs of reducing anthropogenic sources of
carbonaceous particles on transported PM2.5, EPA agrees that
control of known source categories of these materials can have a
significant benefit in reducing the significant local contribution. For
this reason, EPA has already enacted other national rules that will
reduce emissions of primary carbonaceous PM2.5 from mobile
sources, the largest contributor to such emissions. In addition to
reducing PM2.5 in nonattainment areas, these regulations
will also have the benefit of reducing a large measure of whatever
interstate transport of carbonaceous PM2.5 occurs.
(ii) Ammonia
While current models are able to address the major chemical
mechanisms involving particulate ammonium compounds, regional-scale
ammonia emissions, particularly from agricultural sources, are highly
uncertain.\22\ Given the relative lack of experience in controlling
such sources, the costs and effectiveness of actions to reduce regional
ammonia emissions are not adequately quantified at present. As noted
above, ammonium would not exist in PM2.5 if not for the
presence of sulfuric acid or nitric acid; hence, decreases in
SO2 and NOX can be expected ultimately to
decrease the ammonium in PM2.5 as well. The additional
regional limits on SO2 and NOX emissions outlined
in today's notice added to those reductions provided under current
programs would likewise be expected to reduce the PM2.5
effectiveness of any ammonia control initiative.\23\ Unlike ammonium,
sulfuric acid has a very low vapor pressure and would exist in the
particle with or without ammonia. Therefore, while SO2
reductions would reduce particulate ammonium, changes in ammonia would
[[Page 25182]]
be expected to have very little effect on the sulfate concentration.
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\22\ Battye, W., V.P. Aneja, and P.A. Roelle, Evaluation and
improvement of ammonia emissions inventories, Atmospheric
Environment, 2003, 37: 3873-3883.
\23\ As pointed out by one commenter, a hypothetical new program
resulting in major regional reductions of ammonia would reduce the
effectiveness of NOX controls. However, given the
uncertainties in emissions, the dispersed nature of ammonia sources
and the lack of present controls, an effort to develop a new
regional ammonia program would likely take significantly longer than
the additional NOX reductions EPA is adopting today.
---------------------------------------------------------------------------
In addition to the above considerations, because ammonium nitrates
are highest in the winter, when ammonia emissions are lowest, reducing
wintertime NOX emissions may represent a more certain path
towards reducing this winter peak than ammonia reductions. Moreover,
reductions in ammonia emissions alone would also tend to increase the
acidity of PM2.5 and of precipitation. As noted in the
proposal, this might have untoward environmental or health consequences.
Some commenters highlighted ammonia as an important pollutant with
multiple effects on the environment, including its contributions to
PM2.5. These commenters highlighted that ammonia emissions
are not currently regulated extensively, and suggested that EPA
strengthen its efforts to better understand the many effects of ammonia
emissions and better research options for controlling ammonia, so that
it can be regulated where appropriate in the future programs.
Generally, EPA agrees with these commenters.
(iii) Crustal Material
The contributions of crustal materials to PM2.5
nonattainment are usually small, and the interstate transport of
crustal materials is even smaller. Emissions of crustal materials on
regional scales are uncertain, highly variable in space and time, and
may not be easily controlled in some cases, suggesting significant
uncertainties in quantifying emissions and the costs and effectiveness
of control actions. Emissions reductions of SO2 and
NOX will likely reduce some of the direct emissions of
PM2.5 from EGUs and other industries, which are responsible
for a portion of the ``crustal material'' measured downwind at receptors.
(c) Summary of Response To Requiring or Allowing Reductions in Other
Pollutants
After reviewing public comments in light of the current
understanding of alternative pollutants as summarized above, EPA
disagrees with those commenters who suggested that the final Clean Air
Interstate Rule should require states to address the interstate
transport of carbonaceous material (including VOCs), ammonia, and/or
crustal material in the present rulemaking.
At present, the sources and emissions contributing to these
components on regional scales are not sufficiently quantified. In
addition, the representation of atmospheric physics and chemistry for
these components in air quality models is in some cases poor in
comparison with current understanding of SO2 and
NOX (most notably for sources and amounts of secondary
organic aerosol production.\24\ Consequently, quantification of the
interstate transport of these components is significantly more
uncertain than for SO2 and NOX emissions. Given
these uncertainties in regional emissions and interstate transport of
these components, EPA has determined that it would be premature to
quantify interstate impacts of these emissions through zero-out
modeling, as was done for SO2 and NOX emissions.
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\24\ EPA OAQPS CMAQ Evaluation for 2001 Docket # OAR-2003-0053-1716.
---------------------------------------------------------------------------
In addition, the costs of control measures, their effectiveness at
reducing emissions, as well as their ultimate effectiveness at reducing
PM2.5 concentrations at downwind receptors are all
uncertain. The EPA does not believe it could reasonably evaluate
whether such State emissions contributed significantly to transport, or
what level of control would address the significant contribution.
Commenters have not provided us specific data and information to allow
such assessments.
The EPA also disagrees with commenters who argue that EPA should,
for the purposes of this rule, permit the States to substitute controls
of sources of any of these other three components for the required
limits on SO2 and NOX. Given the greater
uncertainties in estimating the contribution of alternative source
emissions, States would have difficulty developing, and EPA would have
difficulty in approving, SIPs that, by controlling these components,
purport to reduce an upwind State's impact on downwind PM2.5
nonattainment by an equivalent amount to that required in today's final
rule.
As explained in the proposal, a decision not to regulate these
components of PM2.5 in the present rulemaking does not
preclude state or local PM2.5 implementation plans from
reducing emissions of carbonaceous material, ammonia, or crustal
material, in order to achieve attainment with PM2.5
standards, in cases where there is evidence that such controls will be
effective on a local basis. Although uncertainties exist in addressing
long-range transport of these pollutants, state and local air quality
management agencies will need to evaluate reasonable control measures
for sources of these pollutants in developing SIPs due in 2008. We
expect continuous improvements will be made in our understanding of
source emissions and PM2.5 components not addressed under
CAIR. To assist future air quality management decisions, EPA is
actively supporting research into better understanding the emissions,
atmospheric processes, long range transport, and opportunities for
control of these PM2.5 components.
(d) Justification for Including NOX in Determining
Significant Contributions and for Regulating NOX Emissions
for PM2.5 Transport
Some commenters questioned the EPA's basis for requiring emissions
reductions of NOX, in addition to SO2, for the
purposes of controlling interstate transport of PM2.5. These
comments, and EPA's response, are discussed below. Other comments
addressing EPA's basis for requiring NOX for ozone are
addressed in a subsequent section.
Like SO2, NOX emissions are understood to
affect PM2.5 on regional scales, due in part to the time
needed to convert NOX emissions to nitrate. Like
SO2 but unlike precursors of other components of
PM2.5, emissions of NOX are well quantified for
EGUs and with reasonable accuracy for other urban and regional sources,
and the transport of NOX and PM2.5 derived from
NOX can also be quantified with a fair degree of certainty.
In addition, SO2 and NOX interact as part of the
same chemical system in the atmosphere. Controlling SO2
emissions without concurrently controlling NOX emissions can
lead to nitrate replacement whereby SO2 emissions reductions
will be less effective than expected. Finally, SO2 and
NOX share common sources in fossil fuel combustion. As such,
controlling emissions of both precursors in a coordinated way presents
opportunities to reduce the overall cost of the control program.\25\
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\25\ NARSTO, Particulate Matter Science for Policy Makers--A
NARSTO Assessment, February 2003.
---------------------------------------------------------------------------
Commenters questioned EPA's methodology of evaluating whether an
upwind State contributes significantly to PM2.5
nonattainment by considering (through the ``zero-out'' air quality
modeling technique) SO2 and NOX emissions
simultaneously. These commenters argued that zeroing out SO2
and NOX emissions simultaneously precludes determining the
contribution of each component to downwind nonattainment. Because
sulfates generally comprise a greater fraction of PM2.5 than
nitrates in the Eastern U.S., these commenters argued that the basis
for requiring NOX controls is weaker than for
SO2, and has not been determined directly by EPA.
[[Page 25183]]
The EPA's multi-pollutant approach of modeling SO2 and
NOX contributions at the same time is consistent both with
sound science and with the requirements of CAA section 110(a)(2)(D), as
EPA interpreted and applied them in the NOX SIP Call. This
provision requires each State to submit a SIP to prohibit ``any source
or other type of emissions activity within the State from emitting any
air pollutant in amounts which will * * * contribute significantly to
nonattainment'' downwind. As discussed in section II above, in the
NOX SIP Call, a rulemaking in which EPA regulated
NOX emissions as precursors for ozone, EPA found that ozone
resulted from the combined contributions of many emitters over a
multistate region, a phenomenon that EPA termed ``collective
contribution'' (63 FR 57356-86). As a result, EPA evaluated each
State's contribution to nonattainment downwind by considering the
impact of the entirety of that State's NOX emissions on
downwind nonattainment. Once EPA determined the State's entire
NOX emissions inventory to have at least a minimum downwind
impact, then EPA required the State to eliminate the portion of those
emissions that could be reduced through highly cost-effective controls.
The EPA considered this approach to be consistent with the section
110(a)(2)(D) requirements.
In a companion rulemaking, the section 126 Rule, EPA found that
certain, individual NOX emitters must be subject to Federal
regulation due to their impact on downwind nonattainment (65 FR 2674).
The EPA based this finding on the same notion of ``collective
contribution,'' that is, NOX emissions from those individual
sources were part of the upwind State's total NOX inventory,
the total NOX inventory had a sufficiently high impact on
downwind nonattainment, and therefore the individual NOX
emitters should be subject to control without any separate
determination as to their individual impacts on downwind nonattainment.
The DC Circuit accepted EPA's collective contribution approach
upholding most of the NOX SIP Call regulation, in Michigan
v. EPA, 213 F.3d 663 (DC Cir. 2000), cert. denied 532 U.S. 904 (2001).
Similarly, the DC Circuit upheld most aspects of EPA's Section 126
Rule, including the collective contribution basis for finding that
emissions from the individual sources should be subject to regulation.
Appalachian Power Co. v. EPA, 249 F.3d 1032 (DC Cir. 2001) (per curium).
As discussed elsewhere, PM2.5 is similar to ozone in
that it is the result of emissions from many sources over a multi-state
region. Accordingly, EPA considers that the phenomenon of ``collective
contribution'' is associated with PM2.5 as well.
In the CAIR NPR, EPA selected SO2 and NOX as
the appropriate precursors to be controlled for PM2.5
transport, for several reasons presented above. As in the
NOX SIP Call, today's rulemaking, under CAA section
110(a)(2)(D), requires EPA to evaluate whether a particular upwind
State must submit a SIP that prohibits ``any source or other type of
emissions activity within the State from emitting any air pollutant in
amounts which will * * * contribute significantly to nonattainment''
downwind. In making this determination, EPA considers the effects of
all of the appropriate precursors--here, both SO2 and
NOX--from all of the State's sources on downwind
PM2.5 nonattainment. If that collective contribution to
downwind PM2.5 nonattainment is sufficiently high, then EPA
requires the upwind State to eliminate those precursors to the extent
of the availability of highly cost-effective controls.
The EPA's approach to evaluating a State's impact on downwind
nonattainment by considering the entirety of the State's SO2
and NOX emissions is also consistent with the chemical
interactions in the atmosphere of SO2 and NOX in
forming PM2.5. The contributions of SO2 and
NOX emissions are generally not additive, but rather are
interrelated due to the nitrate replacement phenomenon, as well as
other complex chemical reactions that can include organic compounds as
well. As commenters point out, the nature of these reactions can vary
with location and time. The non-linear nature of some of these
reactions can produce differing results depending on the relative
amount of reductions and copollutants. Reductions in sulfates can
increase nitrates and, in some conditions, modest reductions in
nitrates can increase sulfates although through different mechanisms.
Large regional reductions in both pollutants, however, are more likely
to result in a significant reductions in fine particles.\26\
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\26\ NARSTO, Particulate Matter Science for Policy Makers--A
NARSTO Assessment, February 2003.
---------------------------------------------------------------------------
Based on its current understanding of regional air pollution and
modeling results, EPA believes that adopting a broad new program of
regional controls to continue the downward trajectory in both
SOX and NOX begun in base programs such as the
national mobile source rules and Title IV, as well as the
NOX SIP call, will ultimately result in significant benefits
not only in reducing PM2.5 nonattainment, but improving
public health, reducing regional haze, and addressing multimedia
environmental concerns including acid deposition and nutrient loadings
in sensitive coastal estuaries in the East.\27\
---------------------------------------------------------------------------
\27\ ``Regulatory Impact Analysis for the Final Clean Air
Interstate Rule (March 2005).''
---------------------------------------------------------------------------
Some commenters argued that the benefits of combining
NOX with SO2 reductions, if any, would be small,
and further argued that the effect of any nitrate reductions in the
environment would be further diminished by measurement losses that can
occur in the filter in the method used to measure PM2.5. In
so doing, they questioned the scientific basis for nitrate replacement,
suggesting that this response to changes in SO2 emissions
may not happen in all places and at all times. The commenters
referenced a study in the Southeastern U.S. by Blanchard and Hidy,\28\
which they claim calls into question whether nitrate replacement
actually occurs. In fact, the study finds evidence that nitrate
replacement occurs: ``the sulfate decreases were an input to the model
calculations, but their effect on fine PM mass was modified by
concomitant decreases in ammonium and increases in nitrate.'' A second
study by the same authors, using essentially the same dataset and
methods, and referenced both by EPA in the NPR and by the commenters,
gives very strong support for the existence of nitrate replacement, as
well as for coordinating SO2 and NOX reductions,
as indicated by the following conclusions: ``reductions in sulfate
through SO2 reduction at constant NOX levels
would not result in proportional reduction in PM2.5 mass
because particulate nitrate concentrations would increase. However, if
both NOX and SO2 emissions are reduced, then it
may be possible to achieve sulfate reductions without concomitant
nitrate increases * * *'' \29\
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\28\ Blanchard, C.L., and G.M. Hidy (2004) Effects of projected
utility SO2 and NOX emission reductions on
particulate nitrate and PM2.5 mass concentrations in the
Southeastern United States, Report to Southern Company. See CAIR docket.
\29\ Blanchard C.L., and G.M. Hidy (2003). Effects of changes in
sulfate, ammonia, and nitric acid on particulate nitrate
concentrations in the Southeastern United States, J. Air & Waste
Manage. Assoc., 53: 283-290.
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Nitrate replacement is well documented in the scientific literature
as a possible response of PM2.5 to changes in SO2
emissions.\30\ While these commenters are correct that nitrate
replacement is not expected to occur at all places and at all times,
even where average conditions are not favorable for
[[Page 25184]]
nitrate replacement, hourly variability in those conditions can create
conditions favorable for nitrate replacement at particular times.
Nitrate replacement theory predicts no conditions under which
SO2 reductions would decrease nitrate, and suggests that
nitrate may increase under fairly common conditions.\31\ Consequently,
the net effect of SO2 reductions can be only to increase
nitrate or not to have any effect. The variability of conditions
occurring over a year means that SO2 reductions would be
expected to increase nitrate on balance.
---------------------------------------------------------------------------
\30\ NARSTO, Particulate Matter Science for Policy Makers--A
NARSTO Assessment, February 2003.
\31\ Ibid.
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Even if the studies referenced by these commenters showed that
nitrate replacement does not occur in some circumstances, other studies
suggest that the conditions for nitrate replacement are common in the
Eastern U.S.\32\ Suggesting that nitrate replacement does not occur
under some conditions does not imply that NOX should not be
controlled, when it is known that nitrate replacement occurs under
other common conditions.
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\32\ For example, West, J.J., A.S. Ansari, and S.N. Pandis
(1999) Marginal PM2.5, nonlinear aerosol mass response to
sulfate reductions in the Eastern U.S., J. Air & Waste Manage.
Assoc., 49: 1415-1424.
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The EPA recognizes that the relative reductions in PM2.5
from implementation of the CAIR will be greater for SO2 than
for NOX. Nevertheless, overall costs for reducing
NOX in the CAIR region are much lower than SO2
because a large portion of the region has already installed
NOX controls for ozone in the summer months. Our revised
modeling approaches took into account the differences commenters note
between actual nitrate concentrations in the atmosphere and what is
measured as PM2.5. Nevertheless emissions of both pollutants
clearly contribute to interstate transport of ambient fine particles,
and EPA concludes that the best approach in this situation is to
provide highly cost effective reductions for both pollutants. Moreover,
in warmer conditions when apparent nitrate changes from NOX
reductions as measured on PM2.5 monitors are small, the
actual reductions in particulate and gaseous nitrates in the ambient
environment are larger; accordingly, NOX reductions combined
with SO2 reductions can be expected to reduce health risk,
visibility impairment, and other environmental damages.
c. What Is EPA's Final Determination?
After considering the public comments, EPA concludes that it should
adopt the approach it proposed for addressing interstate transport of
pollutants that affect PM2.5, for the reasons presented here
and in the proposal. That is, in today's action, EPA is requiring
states to take steps to control emissions of SO2 and
NOX on the basis of their contributions to nonattainment of
PM2.5 standards in downwind states. The EPA concludes that
we do not now have a sufficient basis for including emissions of other
components (carbonaceous material, ammonia, and crustal material) that
contribute to PM2.5 in determining significant contributions
and in requiring emission reductions of these components.
2. What Is the Role for Local Emissions Reduction Strategies?
a. Summary of Analyses and Conclusions in the Proposal
In section IV.F of the proposed rule, we discussed two analyses
that were completed to address the impact of local control measures
relative to regional reductions of SO2 and NOX
(69 FR 4596-99). In the first analysis, we applied a list of readily
identifiable control measures (NPR, Table IV-5) in the Philadelphia,
Birmingham, and Chicago urban primary metropolitan statistical areas
(PMSA) counties. In the second analysis, we applied a similar list of
control measures to 290 counties representing the metropolitan areas we
projected to contain any nonattainment county in 2010 in the baseline
scenario. The three-city analysis estimated that these local measures
would result in ambient PM2.5 reductions of about 0.5 [mu]g/
m\3\ to about 0.9 [mu]g/m\3\, which is less than needed to bring any of
the cities into attainment in 2010. The 290-county study, which
included enough counties to produce regional as well as local
reductions, found that while some of the 2010 nonattainment areas would
be projected to attain, many would not. Moreover, much of the
PM2.5 reduction in the 290-county study resulted from
assuming reduction in sulfates due to SO2 reductions on
utility boilers in the urban counties. Accordingly, we concluded that
for a sizable number of PM2.5 nonattainment areas it will be
difficult if not impossible to reach attainment unless transport is
reduced to a much greater degree than by the simultaneous adoption of
controls within only the nonattainment areas.
b. Summary and Response to Public Comments
A number of commenters supported EPA's conclusion that regional
reductions are necessary given the difficulty in achieving local
emission reductions, and given that they are generally more cost-
effective. Generally, EPA agrees with these commenters.
Other commenters were critical of the local measures analysis, and
recommended that EPA should consider a more appropriate mix of regional
and local controls before requiring substantial expenditures for
controls on power plants or other regional sources potentially affected
by this rule. These commenters believed that the proposed rule did not
represent the optimal emissions reduction strategy. Other commenters
believed that the local measures analysis underestimated the achievable
local emissions reductions. Some commenters believed that EPA should
include local control measures in the baseline scenario for the
analysis. Finally, some commenters questioned the feasibility of doing
a local measures analysis at all, given the uncertainties in the
analysis, the uncertainties regarding nonattainment boundaries, and the
work to be done by State and local areas to identify and evaluate strategies.
The EPA continues to conclude that it would be difficult if not
impossible for many nonattainment areas to reach attainment through
local measures alone, and EPA finds no information in the comments to
alter this conclusion. While recognizing the uncertainties in
conducting such an analysis (as noted in the preamble to the proposed
rule), we continue to believe that the two local measures scenarios
represent a highly ambitious set of measures and emissions reductions
that may in fact be difficult to achieve in practice. This analysis was
not intended to precisely identify local measures that may be available
in a particular area. The EPA believes that a strategy based on
adopting highly cost effective controls on transported pollutants as a
first step would produce a more reasonable, equitable, and optimal
strategy than one beginning with local controls. The local measures
analyses we conducted were not, however, intended to develop a specific
or ``optimal'' regional and local attainment strategy for any given
area. Rather, the analysis was intended to evaluate whether, in light
of available local measures, it is likely to be necessary to reduce
significant regional transport from upwind states. We continue to
believe that the two local measures analyses that were conducted for
the proposal rule strongly support the need for regional reductions of
SO2 and NOX.
[[Page 25185]]
B. What Is the Basis for EPA's Decision To Require Reductions in Upwind
Emissions of NOX To Address Ozone-Related Transport?
1. How Did EPA Determine Which Pollutants Were Necessary To Control To
Address Interstate Transport for Ozone?
In the notice of proposed rulemaking, EPA provided the following
characterization of the origin and distribution of 8-hour ozone air
quality problems:
The ozone present at ground level as a principal component of
photochemical smog is formed in sunlit conditions through atmospheric
reactions of two main classes of precursor compound: VOCs and
NOX (mainly NO and NO2). The term ``VOC''
includes many classes of compounds that possess a wide range of
chemical properties and atmospheric lifetimes, which helps determine
their relative importance in forming ozone. Sources of VOCs include
man-made sources such as motor vehicles, chemical plants, refineries,
and many consumer products, but also natural emissions from vegetation.
Nitrogen oxides are emitted by motor vehicles, power plants, and other
combustion sources, with lesser amounts from natural processes
including lightning and soils. Key aspects of current and projected
inventories for NOX and VOC are summarized in section IV of
the proposal notice and EPA websites (e.g., http://www.epa.gov/ttn/
chief.) The relative importance of NOX and VOC in ozone
formation and control varies with local- and time-specific factors,
including the relative amounts of VOC and NOX present. In
rural areas with high concentrations of VOC from biogenic sources,
ozone formation and control is governed by NOX. In some
urban core situations, NOX concentrations can be high enough
relative to VOC to suppress ozone formation locally, but still
contribute to increased ozone downwind from the city. In such
situations, VOC reductions are most effective at reducing ozone within
the urban environment and immediately downwind.
The formation of ozone increases with temperature and sunlight,
which is one reason ozone levels are higher during the summer.
Increased temperature increases emissions of volatile man-made and
biogenic organics and can indirectly increase NOX as well
(e.g., increased electricity generation for air conditioning).
Summertime conditions also bring increased episodes of large-scale
stagnation, which promote the build-up of direct emissions and
pollutants formed through atmospheric reactions over large regions. The
most recent authoritative assessments of ozone control approaches
33, 34 have concluded that, for reducing regional scale
ozone transport, a NOX control strategy would be most
effective, whereas VOC reductions are most effective in more dense
urbanized areas.
---------------------------------------------------------------------------
\33\ Ozone Transport Assessment Group, OTAG Final Report, 1997.
\34\ NARSTO, An Assessment of Tropospheric Ozone Pollution--A
North American Perspective, July 2000.
---------------------------------------------------------------------------
Studies conducted in the 1970s established that ozone occurs on a
regional scale (i.e., 1000s of kilometers) over much of the Eastern
U.S., with elevated concentrations occurring in rural as well as
metropolitan areas.35, 36 While progress has been made in
reducing ozone in many urban areas, the Eastern U.S. continues to
experience elevated regional scale ozone episodes in the extended
summer ozone season.
---------------------------------------------------------------------------
\35\ National Research Council, Rethinking the Ozone Problem in
Urban and Regional Air Pollution, 1991.
\36\ NARSTO, An Assessment of Tropospheric Ozone Pollution--A
North American Perspective, July 2000.
---------------------------------------------------------------------------
Regional 8-hour ozone levels are highest in the Northeast and Mid-
Atlantic areas with peak 2002 (3-year average of the 4th highest value
for all sites in the region) ranging from 0.097 to 0.099 parts per
million (ppm).\37\ The Midwest and Southeast States have slightly lower
peak values (but still above the 8-hour standard in many urban areas)
with 2002 regional averages ranging from 0.083 to 0.090 ppm. Regional-
scale ozone levels in other regions of the country are generally lower,
with 2002 regional averages ranging from 0.059 to 0.082 ppm.
Nevertheless, some of the highest urban 8-hour ozone levels in the
nation occur in southern and central California and the Houston area.
---------------------------------------------------------------------------
\37\ U.S. EPA, Latest Findings on National Air Quality, August
2003.
---------------------------------------------------------------------------
In the notice of proposed rulemaking, EPA noted that we continue to
rely on the assessment of ozone transport made in great depth by the
OTAG in the mid-1990s. As indicated in the NOX SIP call
proposal, the OTAG Regional and Urban Scale Modeling and Air Quality
Analysis Work Groups reached the following conclusions:
A. Regional NOX emissions reductions are effective in
producing ozone benefits; the more NOX reduced, the greater
the benefit.
B. Controls for VOC are effective in reducing ozone locally and are
most advantageous to urban nonattainment areas. (62 FR 60320, November
7, 1997).
The EPA proposed to reaffirm this conclusion in this rulemaking,
and proposed to address only NOX emissions for the purpose
of reducing interstate ozone transport.
Some commenters suggested that in this rulemaking EPA should
require regional reductions in VOC emissions as well as NOX
emissions in this rulemaking.\38\ The EPA continues to believe based on
the OTAG and NARSTO reports cited earlier, and the modeling completed
as part of the analysis for this rule, that NOX emissions
are chiefly responsible for regional ozone transport, and that
NOX reductions will be most effective in reducing regional
ozone transport. This understanding was considered an adequate basis
for controlling NOX emissions for ozone transport in the
NOX SIP call, and was upheld by the courts. As a result, EPA
is requiring NOX reductions and not VOC reductions in this
rulemaking.
---------------------------------------------------------------------------
\38\ Other commenters confirmed that the control of
NOX emissions is critical for interstate ozone transport,
and supported EPA's decision not to include VOC emissions in this rule.
---------------------------------------------------------------------------
However, EPA agrees, that VOCs from some upwind States do indeed
have an impact in nearby downwind States, particularly over short
transport distances. The EPA expects that States will need to examine
the extent to which VOC emissions affect ozone pollution levels across
State lines, and identify areas where multi-state VOC strategies might
assist in meeting the 8-hour standard, in planning for attainment. This
does not alter the basis for the CAIR ozone requirements in this rule;
EPA's modeling supports the conclusion that NOX emissions
from upwind states will significantly contribute to downwind
nonattainment and interfere with maintenance of the 8-hour ozone standard.
2. How Did EPA Determine That Reductions in Interstate Transport, as
Well as Reductions in Local Emissions, Are Warranted To Help Ozone
Nonattainment Areas To Meet the 8-Hour Ozone Standard?
a. What Did EPA Say in Its Proposal Notice?
In the NPR, EPA noted that the Agency promulgated the
NOX SIP call in 1998 to address interstate ozone transport
problems in the Eastern U.S. The EPA noted that it made sense to re-
evaluate whether the NOX SIP call was adequate at the same
time that the Agency was assessing the need for emissions reductions to
address interstate PM2.5 problems because of overlap in the
pollutants and relevant
[[Page 25186]]
sources, and the timetables for States to submit local attainment
plans. The EPA presented a new analysis of the extent of residual 8-
hour ozone attainment projected to remain in 2010, and the extent and
severity of interstate pollution transport contributing to downwind
nonattainment in that year.
The proposal notice said that based on a multi-part assessment, EPA
had concluded that:
? ``Without adoption of additional emissions controls, a
substantial number of urban areas in the central and eastern regions of
the U.S. will continue to have levels of 8-hour ozone that do not meet
the national air quality standards.
? * * * EPA has concluded that small contributions of
pollution transport to downwind nonattainment areas should be
considered significant from an air quality standpoint, because these
contributions could prevent or delay downwind areas from achieving the
standards.
? * * * EPA has concluded that interstate transport is a
major contributor to the projected (8-hour ozone) nonattainment problem
in the eastern U.S. in 2010. * * * (T)he nonattainment areas analyzed
receive a transport contribution of more than 20 percent of the ambient
ozone concentrations, and 21 of 47 had a transport contribution of more
than 50 percent.
? Typically, two or more States contribute transported
pollution to a single downwind area, so that the ``collective
contribution'' is much larger than the contribution of any single State.
Also, EPA concluded that highly cost-effective reductions in
NOX emissions were available within the eastern region where
it determined interstate transport was occurring, and that requiring
those highly cost effective reductions would reduce ozone in downwind
nonattainment areas.
In addition, the proposal examined the effect of hypothetical
across-the-board emissions reductions in nonattainment areas. The
notice stated that EPA had conducted a preliminary scoping analysis in
which hypothetical total NOX and VOC emissions reductions of
25 percent were applied in all projected nonattainment areas east of
the continental divide in 2010, yet approximately 8 areas were
projected to have ozone levels exceeding the 8-hour standard. Based on
experience with state plans for meeting the one-hour ozone standard,
EPA said this scenario was an indication that attaining the 8-hour
standard will entail substantial cost in a number of nonattainment
areas, and that further regional reductions are warranted.
b. What Did Commenters Say?
The Need for Reductions in Interstate Ozone Transport: Some
commenters argued that EPA should not conduct another rulemaking to
control interstate contributions to ozone because local contributions
in nonattainment regions appear, according to the commenters, to have
larger impacts than regional NOX emissions. The commenters
cited EPA's sensitivity modeling of hypothetical 25 percent reductions
as supporting this view.
The EPA disagrees that comparing the sensitivity modeling and the
CAIR control modeling is a valid way to compare the effectiveness of
local and regional controls. The two scenarios do not reduce emissions
by equal tonnage amounts, equal percentages of the inventory, or equal
cost. These scenarios therefore do not support an assessment of the
relative effectiveness of local and regional controls. While EPA in
general agrees that emissions reductions in a nonattainment area will
have a greater effect on ozone levels in that area than similar
reductions a long distance away, EPA does not agree that the modeling
supports the conclusion that all additional controls to promote
attainment with the 8-hour standard should be local. The level of
reduction assumed was a hypothetical level, not a level determined to
be reasonable cost nor a mandated level of reduction. The commenters
provided no evidence that reasonable local controls alone would result
in attainment throughout the East. However, EPA did receive comments
that such a level would result in costly controls and might not be
feasible in some areas that have previously imposed substantial controls.
The EPA believes it is clear that further reductions in emissions
contributing to interstate ozone transport, beyond those required by
the NOX SIP Call, are warranted to promote attainment of the
8-hour ozone standard in the eastern U.S. As explained elsewhere in
this final rule, EPA analyzed interstate transport remaining after the
NOX SIP Call, and determined--considering both the impact of
interstate transport on downwind nonattainment, and the potential for
highly cost effective reductions in upwind States--that 25 States
significantly contribute to 8-hour ozone nonattainment downwind. The
importance of transport is illustrated, as mentioned above, by EPA's
findings for the final rule that (1) all the 2010 nonattainment
counties analyzed were projected to receive a transport contribution of
24 percent or more of the ambient ozone concentrations, and (2) that 16
of 38 counties are projected to have a transport contribution of more
than 50 percent.
In addition, EPA received multiple comments from State associations
and individual States strongly agreeing that further reductions in
interstate ozone transport are warranted to promote attainment with the
8-hour standard, to protect public health, and to address equity
concerns of downwind states affected by transport. For example,
comments from the Maryland Department of the Environment stated, ``Our
15 year partnership with researchers from the University of Maryland
has produced data that shows on many summer days the ozone levels
floating into Maryland area are already at 80 to 90 percent of the 1-
hour ozone standard and actually exceed the new 8-hour ozone standard
before any Maryland emissions are added. * * * Serious help is needed
from EPA and neighboring states to solve Maryland's air pollution
problems. * * * Local reductions alone will not clean up Maryland's
air.'' The comments of the Ozone Transport Commission stated that even
after levels of control envisioned by EPA in 2010 (under the Clear
Skies Act), interstate transport from other states would continue to
affect the Ozone Transport Region created by the CAA (Connecticut,
Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont,
and Virginia). ``Our modeling demonstrates that even in the extreme
example of zero anthropogenic emissions within the OTR (Ozone Transport
Region), 145 of 146 monitors show a significant (>25%) increment of the
8-hour standard taken up by transport from outside the OTR.'' Comments
from the North Carolina Department of Environment and Natural Resources
stated, ``The reductions proposed in [EPA's rule]
in the other states
are needed to ensure that North Carolina can attain and maintain the
health-based air quality standards for * * * 8-hour ozone.''
Magnitude of Ozone Reductions Achieved: Commenters stated that
NOX reductions should not be pursued because the 8-hour
ozone reductions in projected nonattainment counties resulting from the
required NOX reductions are too small--1-2 ppb in only
certain areas. According to commenters, these benefits are smaller than
the threshold for determining significant contribution.
[[Page 25187]]
The EPA disagrees with the notion that if air quality improvements
would be limited, then nothing further should be done to address
interstate transport. Based on the difference between the base case and
CAIR control case modeling results, EPA has concluded that interstate
air quality impacts are significant from an air quality standpoint, and
that highly cost effective reductions are available to reduce ozone
transport. State comments have corroborated EPA's conclusion that a
number of areas will face high local control costs, or even be unable
to attain the 8-hour ozone standard, without further reductions in
interstate transport. Therefore, EPA believes it is important for
upwind states to modify their SIPs so that they contain adequate
provisions to prohibit significant contributions to downwind
nonattainment or interference with maintenance as the statute requires.
The EPA has established an amount of required emissions reductions
based on controls that are highly cost effective. The resulting
improvements in downwind ozone levels are needed for attainment, public
health and equity reasons.
The 2 ppb significance threshold that commenters cite is part of
the test that EPA used to identify which States should be evaluated for
inclusion in a rule requiring them to reduce emissions to reduce
interstate transport. (See section VI.) This 2 ppb threshold is based
on the impact on a downwind area of eliminating all emissions in an
upwind State. The ozone reductions from CAIR will improve public health
and will decrease the extent and cost of local controls needed for
attainment in some areas. In addition, base case modeling for this rule
shows that of the 40 counties projected in nonattainment in 2010, 16
counties are within 2 ppb of the standard, 6 counties are within 3 ppb,
and 3 counties are within 4 ppb. In 2015, projected base case ozone
concentrations in over 70 percent of nonattaining counties (i.e., 16 of
22 counties) are within 5 ppb of the standard.
Reducing NOX emissions has multiple health and
environmental benefits. Controlling NOX reduces interstate
transport of fine particle levels as well as ozone levels, as discussed
elsewhere in this notice. Although EPA is not relying on other benefits
for purposes for setting requirements in this rule, reducing
NOX emissions also helps to reduce unhealthy ozone and PM
levels within a State, as well as reduce acid deposition to soils and
surface waters, eutrophication of surface and coastal waters,
visibility degradation, and impacts on terrestrial and wetland systems
such as changes in species composition and diversity.
EPA's Authority To Require Controls Beyond the NOX SIP
Call: Commenters emphasized that in the NO X SIP Call, EPA
determined the States whose emissions contribute significantly to
nonattainment, EPA mandated NOX emissions reductions that
would eliminate those significant contributions, and EPA indicated that
it would reconsider the matter in 2007. This commenter argued that for
the States included in the NOX SIP Call, EPA may not, as a
legal matter, conduct further rulemaking at this time because the
affected States are no longer contributing significantly to
nonattainment downwind. In any event, the commenters said, EPA should
abide by its statement that it would revisit the matter in 2007, and
EPA should not do so earlier.
Sound policy considerations support re-examining interstate ozone
transport at this time. At the time of the NOX SIP Call, EPA
anticipated reassessing in 2007 the need for additional reductions in
emissions that contribute to interstate transport, but EPA has
accelerated that date in light of various circumstances, including the
fact that we are undertaking similar action with the PM2.5
NAAQS. In addition, in light of overlap in the pollutants, States, and
sources likely to be affected, it is prudent to coordinate action under
the 8-hour ozone standard. The EPA notes that evaluating
PM2.5 transport and ozone transport together at this time
will enable States to consider the resulting rules in devising their
PM2.5 and 8-hour ozone attainment plans, and will enable
States and sources to plan emissions reductions knowing their
transport-related reduction requirements for both standards.
CAA section 110(a)(2)(D) requires that State SIPs contain
``adequate provisions'' prohibiting emissions that significantly
contribute to nonattainment areas in, or interfere with maintenance by,
other States. Over time, emissions of ozone precursors, the (projected)
non-attainment status of receptors, the modeling tools that EPA and the
states use to conduct their analyses, the data available to the states
or EPA and other analytic tools or conditions may change. The EPA has
conducted an updated analysis of upwind contribution to downwind
nonattainment of 8-hour ozone nonattainment areas after the
NOX SIP Call, including updated emissions projections,
updated air quality modeling, and updated analysis of control costs.
This has revealed a need for reductions beyond those required by the
NOX SIP Call in order for upwind states to be in compliance
with section 110(a)(2)(D). The EPA thus disagrees with commenters'
assertions that the provisions of section 110(a)(2)(D) prevent EPA from
conducting further evaluation of upwind contributions to downwind
nonattainment at this time. The EPA also notes that the NOX
SIP Call, a 1998 rulemaking, promulgated a set of requirements intended
to eliminate significant contribution to downwind ozone nonattainment
at the time of implementation, which EPA identified on the basis of
modeling for the year 2007 (although implementation was required to
occur several years earlier). In today's action, EPA is reviewing the
transport component of 8-hour ozone nonattainment for the period
beginning in 2010, consistent with the criteria in the NOX
SIP Call as applied to present circumstances, concluding that even with
implementation of the NOX SIP Call controls, upwind States
will contribute significantly to downwind ozone nonattainment and
interfere with maintenance at a point after 2007. No provision of the
CAA prohibits this action.
Commenters added that the purpose of the CAIR rulemaking seemed to
be to account for the fact that control costs have changed since the
date of the NOX SIP Call. The commenters said that control
costs will frequently fluctuate, but that such fluctuations should not
merit revised rulemaking.
In response, we would note that EPA conducted an updated analysis
for air quality impacts, not only costs, in determining that further
reductions in interstate ozone transport are warranted. That air
quality analysis showed a substantial, continuing interstate transport
problem for areas after implementation of the NOX SIP Call.
The EPA does have the legal authority to reconsider the scope of the
area that significantly contributes and the level of control determined
to be ``highly cost-effective'' based on new information. Updated
information shows that lower NOX burners and SCR achieve
better performance than previously estimated and as a result are more
cost effective than previously anticipated. This rule follows the
NOX SIP Call by six years; EPA does not believe that this
represents a too-frequent re-evaluation, particularly given the stay of
the 8-hour basis for the NOX SIP Call (See, e.g., CAA
section 109(d)(1) requiring EPA to reevaluate the NAAQS themselves
every five years.) So both updated air quality and cost information
supports further
[[Page 25188]]
NOX controls to reduce interstate transport.
Some commenters argued that EPA should delay imposing control
obligations on upwind States for the 8-hour ozone NAAQS until after EPA
has implemented local control requirements, and after all of the
NOX SIP Call control requirements are implemented and
evaluated. Others said EPA should not impose requirements on non-SIP-
Call States until after all 8-hour controls--NOX SIP Call
and local--are implemented.
We agree that the NOX SIP Call should be taken into
account in evaluating the need for further interstate transport
controls. We have taken the NOX SIP Call into account by
including the effect of the NOX SIP Call in the base case
used for the CAIR analysis, and by conducting analyses to confirm that
CAIR will achieve greater ozone-season reductions than the SIP Call.
The EPA disagrees that the Agency should wait for implementation of
local controls before determining transport controls. There is no legal
requirement that EPA wait to determine transport controls until after
local controls are implemented. The EPA's basis for this legal
interpretation is explained in section II.A. above. In addition, the
Agency believes it is important to address interstate transport
expeditiously for public health.
C. Comments on Excluding Future Case Measures From the Emissions
Baselines Used To Estimate Downwind Ambient Contribution
The EPA received comments that the 2010 analytical baseline for
evaluating whether upwind emissions meet the air quality portion of the
``contribute significantly'' standard should reflect local control
measures that will be required in the downwind nonattainment areas, or
broader statewide measures in downwind states, to attain the PM2.5 or
8-hour ozone NAAQS by the relevant attainment dates, many of which are
(or are anticipated to be) 2010 or earlier. This single target year was
chosen both to address analytical tool constraints and to reasonably
reflect future conditions in or near the initial attainment years for
both ozone and PM nonattainment areas. The EPA did include in the
baseline most of the specifically required measures that can be
identified at this time, but did not include any further measures that
would be needed for satisfying ``rate of progress'' requirements or for
attainment of the PM2.5 and 8-hour ozone standards. If EPA had included
further local controls, the commenters contend, fewer upwind States
would have exceeded our significant contribution thresholds.
We reject any notion that in determining the need for transport
controls in upwind states, EPA should assume that the affected downwind
areas must ``go all the way first''--that is, assume that downwind
areas put on local in-state controls sufficient to reach attainment, or
assume that downwind states with nonattainment areas implement
statewide control measures. The EPA does not believe these are
appropriate assumptions. The former assumption would eviscerate the
meaning of CAA section 110(a)(2)(D). The latter assumption would make
the downwind state solely responsible for reductions in any case where
a downwind state could attain through in-state controls alone, even if
the upwind state contribution was significantly contributing to
nonattainment problems in the downwind state. We do not believe that
this approach would be consistent with the intent of section
110(a)(2)(D), which in part is to hold upwind states responsible for an
appropriate share of downwind nonattainment and maintenance problems,
and to prevent scenarios in which downwind states must impose costly
extra controls to compensate for significant pollution contributions
from uncontrolled or poorly controlled sources in upwind states. In
addition, this approach could raise costs of meeting air quality
standards because highly cost effective controls in upwind States would
be foregone.
Rather, in the particular circumstances presented here, we think
the adoption of regional controls at this time under section
110(a)(2)(D) is consistent with sound policy and section 110. Based on
our analysis, the states covered by CAIR make a significant
contribution to downwind nonattainment and the required reductions are
highly cost effective. The reductions will reduce regional pollution
problems affecting multiple downwind areas, will make it possible for
States to determine the extent of local control needed knowing the
reductions in interstate pollution that are required, will address
interstate equity issues that can hamper control efforts in downwind
States, and reflect considerations discussed in detail in section VII.
Although some commenters advocated specifically including
statutorily mandated future nonattainment area controls in the
analytical baseline, it would be difficult as a practical matter to
predict the extent of local controls that will be required (beyond
controls previously required) in each area in advance of final
implementation rules interpreting the Act's requirements for
PM2.5 and 8-hour ozone, and before the state implementation
plan process. Subpart 2 provisions that apply to certain ozone
nonattainment areas are quite specific regarding some mandatory
measures; we believe the CAIR baseline for the most part captures these
measures. (See Response to Comments document in the docket.) As noted
above, the choice of a single analytical year of 2010 was made to
reflect baseline conditions at a date at or near the attainment dates
for different pollutants and classes of areas. Because the attainment
date for many ozone areas is 2009 or earlier, it should be noted that
the analyses in 2010 may slightly overestimate the benefits of a number
of national rules for mobile sources that grow with time. As noted
elsewhere, these differences are unlikely to be significant.
D. What Criteria Should Be Used To Determine Which States Are Subject
to This Rule Because They Contribute to PM2.5 Nonattainment?
1. What Is the Appropriate Metric for Assessing Downwind PM2.5 Contribution?
a. Notice of Proposed Rulemaking
In the NPR, we proposed as the metric for identifying a State as
significantly contributing (depending upon further consideration of
costs) to downwind nonattainment, the predicted change, due to the
upwind State's emissions, in PM2.5 concentration in the
downwind nonattainment area that receives the largest ambient impact.
The EPA proposed this metric in the form of a range of alternatives for
a ``bright line,'' that is, ambient impacts at or greater than the
chosen threshold level indicated that the upwind State's emissions do
contribute significantly (depending on cost considerations), and that
ambient impacts below the threshold mean that the upwind State's
emissions do not contribute significantly to nonattainment. As detailed
in section VI below, EPA conducted the analysis through air quality
modeling that removed the upwind State's anthropogenic SO2
and NOX emissions, and determined the difference in downwind
ambient PM2.5 levels before and after removal. The modeling
results indicate a wide range of maximum downwind nonattainment impacts
from the 37 States that we evaluated. The largest maximum contribution
is 1.67 micrograms per cubic meter ([mu]g/m\3\), from Ohio to both
Allegheny and Beaver counties in Pennsylvania.
[[Page 25189]]
b. Comments and EPA's Responses
The EPA proposed to use the maximum contribution on any downwind
nonattainment area for assessing downwind PM2.5
contributions. Many commenters expressed agreement with our proposed
metric, however, many others disagreed. One group of these commenters
indicated that EPA should distinguish the relative contribution from
States using two parameters: (1) How many downwind nonattainment
receptors they contribute to, and (2) how much they contribute to each
such receptor. The commenters indicated that this approach would avoid
inequities created by the disproportionate impact of some upwind
contributors on their downwind neighbors. The EPA interprets these
comments to suggest a metric that collectively includes both of these
parameters, such as the sum of all downwind impacts on all affected
receptors. This metric would result in higher values for States
contributing to multiple receptors and at relatively high levels, and
lower values for States contributing to fewer receptors and at
relatively low levels.
The EPA's proposed metric does address how much each State
contributes to a downwind neighbor; however, EPA does not believe that
multiple downwind receptors need to be impacted in order for a
particular state to be required to make emissions reductions under CAA
section 110(a)(2)(D). Under this provision, an upwind State must
include in the SIP adequate provisions that prohibit that State's
emissions that ``contribute significantly to nonattainment in * * * any
other State * * *.'' (Emphasis added.) Our interpretation of this
provision is that the emphasized terms make clear that the upwind
State's emissions must be controlled as long as they contribute
significantly to a single nonattainment area.
One commenter agreed with EPA's use of maximum annual average
downwind contribution, but suggested that EPA consider additional
metrics such as: (a) Contributions to adverse health and welfare
effects from short-term PM2.5 concentrations; (b)
contributions to worst 20 percent haze levels in Class 1 areas; and (c)
contributions to adverse effects of sulfur and nitrogen deposition to
acid sensitive surface waters and forest soils. The EPA appreciates
that these metrics all have merit in their focus on the health and
environmental consequences of emissions, however, in determining a
metric for significant contributions, we must focus on implementation
of CAA section 110(a)(2)(D) provisions regarding significant
contribution to nonattainment of the PM2.5 NAAQS.
Another commenter suggested EPA use the maximum annual average
impact, as we proposed, but add the maximum daily PM2.5
contribution. The commenter notes that this additional metric would
indicate whether specific meteorological events drive the concentration
change or whether there is a consistent pattern of transport from one
area to another. It is not clear to EPA how the single data point of
the maximum daily contribution indicates a consistent pattern of
transport from one area to another since it is a measure from only a
single day. Further, EPA does not agree that multiple days of impact is
a relevant criterion for evaluating whether a State contributes
significantly to nonattainment, since in theory, a single high-
contribution event could be the cause or a substantial element of
nonattainment of the annual average PM2.5 standard. Because
we currently do not observe nonattainment of the daily average
PM2.5 standard in Eastern areas, nonattainment of the annual
average PM2.5 standard is the relevant evaluative measure.
Some commenters suggested separately evaluating the NOX-
and SO2-related impacts (i.e., particulate nitrate and
particulate sulfate) on nonattainment. As discussed in section II of
this notice, EPA's approach to evaluating a State's impact on downwind
nonattainment by considering the entirety of the State's SO2
and NOX emissions is consistent with the chemical
interactions in the atmosphere of SO2 and NOX in
forming PM2.5. The contributions of SO2 and
NOX emissions are generally not additive, but rather are
interrelated due to complex chemical reactions.
c. Today's Action
The EPA continues to believe that for each upwind State analyzed,
the change in the annual PM2.5 concentration level in the
downwind nonattainment area that receives the largest impact is a
reasonable metric for determining whether a State passes the ``air
quality'' portion of the ``contribute significantly'' test, and
therefore that State should be considered further for emissions
reductions (depending upon the cost of achieving those reductions).
This single concentration-based metric is adequate to capture the
impact of SO2 and NOX emissions on downwind
annual PM2.5 concentrations.
2. What Is the Level of the PM2.5 Contribution Threshold?
a. Notice of Proposed Rulemaking
In the NPR, EPA proposed to establish a State-level annual average
PM2.5 contribution threshold from anthropogenic
SO2 and NOX emissions that was a small percentage
of the annual air quality standard of 15.0 [mu]g/m3. The EPA
based this proposal on the general concept that an upwind State's
contribution of a relatively low level of ambient impact should be
regarded as significant (depending on the further assessment of the
control costs). We based our reasoning on several factors. The EPA's
modeling indicates that at least some nonattainment areas will find it
difficult or impossible to attain the standards without reductions in
upwind emissions. In addition, our analysis of ``base case''
PM2.5 transport shows that, in general, PM2.5
nonattainment problems result from the combined impact of relatively
small contributions from many upwind States, along with contributions
from in-State sources and, in some cases, substantially larger
contributions from a subset of particular upwind States. In the
NOX SIP Call rulemaking, we termed this pattern of
contribution--which is also present for ozone nonattainment--
``collective contribution.''
In the case of PM2.5, we have found collective
contribution to be a pronounced feature of the PM2.5
transport problem, in part because the annual nature of the
PM2.5 NAAQS means that throughout the entire year and across
a range of wind patterns--rather than during just one season of the
year or on only the few worst days during the year which may share a
prevailing wind direction--emissions from many upwind States affect the
downwind nonattainment area.
As a result, to address the transport affecting a given
nonattainment area, many upwind States must reduce their emissions,
even though their individual contributions may be relatively small.
Moreover, as noted above, EPA's air quality modeling indicates that at
least some nonattainment areas will find it difficult or impossible to
attain the standards without reductions in upwind emissions. In
combination, these factors suggest a relatively low value for the
PM2.5 transport contribution threshold is appropriate. For
reasons specified in the NPR (69 FR 4584), EPA initially proposed a
value of 0.15 [mu]g/m3 (1% of the annual standard) for the
significance criterion, but also presented analyses based on an
alternative of 0.10 [mu]g/m3 and called for comment on this
alternative as well as on ``the use of
[[Page 25190]]
higher or lower thresholds for this purpose'' (69 FR 4584).
The EPA adopted a conceptually similar approach to that outlined
above for determining that the significance level for ozone transport
in the NOX SIP Call rulemaking should be a small number
relative to the NAAQS. The DC Circuit Court, in generally upholding the
NOX SIP Call, viewed this approach as reasonable. Michigan
v. EPA, 213 F.3d 663, 674-80 (DC Cir. 2000), cert. denied, 532 U.S. 904
(2001). After describing EPA's overall approach of establishing a
significance level and requiring States with impacts above the
threshold to implement highly cost-effective reductions, the Court
explained: ``EPA's design was to have a lot of States make what it
considered modest NOX reductions * * *. '' Id. at 675.
Indeed, the Court intimated that EPA could have established an even
lower threshold for States to pass the air quality component:
The EPA has determined that ozone has some adverse health effects--
however slight--at every level [citing National Ambient Air Quality
Standards for Ozone, 62 FR 38856 (1997)]. Without consideration of
cost it is hard to see why any ozone-creating emissions should not
be regarded as fatally ``significant'' under section
110(a)(2)(D)(i)(I).''
213 F.3d at 678 (emphasis in original).
We believe the same approach applies in the case of PM2.5 transport.
b. Comments and EPA's Responses
Many commenters indicated that EPA did not adequately justify the
proposed annual average PM2.5 contribution threshold level
of 0.15 [mu]g/m3. Some commenters favor the alternative 0.10
[mu]g/m3 proposed by EPA, citing their agreement with EPA's
rationale for 0.10 [mu]g/m3 while criticizing as arbitrary
EPA's rationale for 0.15 [mu]g/m3.
Some commenters argued that the public health impact portion of
EPA's rationale for establishing a relatively low-level threshold was
not relevant. The commenters said that EPA previously determined, in
establishing the PM2.5 NAAQS, that ambient levels at or
above 15.0 [mu]g/m3 were of concern for protecting public
health, not the much lower levels that EPA proposed as the thresholds.
In the NPR, we stated that we considered that there are significant
public health impacts associated with ambient PM2.5, even at
relatively low levels. In generally upholding the NOX SIP
Call, the DC Circuit noted a similar reason for establishing a
relatively low threshold for ozone impacts. Michigan v. EPA, 213 F.3d
663, 678 (DC Cir. 2000), cert. denied, 532 U.S. 904 (2001). The EPA
notes that by using a metric that focuses on the contribution of upwind
areas to downwind areas that are above 15.0 [mu]g/m3,
relatively low contributions to levels above the annual
PM2.5 standard are highly relevant to public health protection.
Many commenters offered alternative thresholds higher than 0.15
[mu]g/m3, citing previous EPA rules or policies as
justification for the alternative level. Some suggested the
PM2.5 threshold should be equivalent in percentage terms to
the threshold employed for assessing maximum downwind 8-hour ozone
contributions. The threshold for maximum downwind 8-hour ozone
concentration impact used in the NOX SIP Call, and proposed
for use in the CAIR, is 2 parts per billion (ppb), or about 2.5 percent
of the standard level of 80 ppb. Applying the 2.5 percent criterion to
the 15.0 [mu]g/m3 annual PM2.5 standard would
yield a significance threshold of 0.35 [mu]g/m3.
The EPA disagrees with the comment that the thresholds for annual
PM2.5 and 8-hour ozone should be an equivalent percentage of
their respective NAAQS. Both the forms and averaging times of the two
standards are substantially different, with 8-hour ozone based on the
average of the 4th highest daily 8-hour maximum values from each of 3
years, and PM2.5 based on the average of annual means from 3
successive years. These fundamental differences in time scales, and
thus in the patterns of transport that are relevant to contributing to
nonattainment, do not suggest a transparent reason for presuming that
the contribution thresholds should be equivalent. As discussed above,
when more States make smaller individual contributions because of the
annual nature of the PM2.5 standard, it makes sense to have
a threshold for PM2.5 that is a smaller percentage of its NAAQS.
Other commenters suggested that in setting the maximum downwind
PM2.5 threshold, EPA should take into consideration the
measurement precision of existing PM2.5 monitors. The
commenters assert that such measurement carries ``noise'' in the range
of 0.5--0.6 [mu]g/m3. Because many daily average monitor
readings are averaged to calculate the annual average, the precision of
the annual average concentration is better than the figures cited by
the commenters. Indeed, the annual standard is expressed as 15.0 [mu]g/
m3, rounded to the nearest \1/10\ [mu]g, because such small
differences are meaningful on an annual basis. While disagreeing with
the specific amounts suggested by commenters, EPA recognizes that the
PM2.5 threshold specified in the proposal contains two
digits beyond the decimal place, while the NAAQS specifies only one.
The EPA agrees that specification of a threshold value of 0.15 [mu]g/
m3 does suggest an overly precise test that might need to
take into account modeled difference in PM2.5 values as low
as 0.001 [mu]g/m3.
Other commenters indicated that modeling ``noise''--that is,
imprecision--is a relevant consideration for establishing a threshold
whose evaluation depends on air quality modeling analysis. These
commenters indicated that a threshold of 5 percent of the NAAQS (i.e.,
0.75 [mu]g/m3) is more reasonable considering modeling
sensitivity. The commenters were not clear about what they mean by
modeling ``noise'' and did not explain how it relates to the use of a
threshold metric in the context of the CAIR.
In responding to the comment, we have considered some possible
contributors to what the commenter describes as ``noise.'' There is the
possibility that the air quality model has a systematic bias in
predicting concentrations resulting from a given set of emissions
sources. The EPA uses the model outputs in a relative, rather than an
absolute, sense so that any modeling bias is constrained by real world
results. As described further in section VI, EPA conducts a relative
comparison of the results of a base case and a control case to estimate
the percentage change in ambient PM2.5 from the current year
base case, holding meteorology, other source emissions, and other
factors contributing to uncertainty constant. With this technique, any
absolute modeling bias is cancelled out because the same model
limitations and uncertainties are present in each set of runs.
Another possible source of noise is in the relative comparison of
two model runs conducted on different computers. Since the computers
used by EPA to run air quality models do not have any significant
variability in their numerical processes, two model runs with identical
inputs result in outputs that are identical to many significant digits.
On the other hand, EPA believes it is not appropriate or necessary to
carry such results to a level of precision that is beyond that required
by the PM2.5 NAAQS itself \39\.
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\39\ In attainment modeling for the annual PM2.5
NAAQS, results are carried to the second place beyond the decimal,
in contrast to the three places beyond decimal noted above for the
proposed threshold.
---------------------------------------------------------------------------
Many commenters noted that EPA's proposed threshold of 0.15 [mu]g/
m3, or one percent of the annual PM2.5 NAAQS of
15.0 [mu]g/m3, is lower than the single-source contribution
thresholds
[[Page 25191]]
employed for PM10 in certain other regulatory contexts.
Commenters cited several different thresholds, including thresholds
governing the applicability of the preconstruction review permit
program and the emissions reduction requirement for certain major new
or modified stationary sources located in attainment or unclassified
areas;\40\ and thresholds in the PSD rules that may relieve proposed
sources from performing comprehensive ambient air quality analyses.\41\
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\40\ See 40 CFR 51.165(b)(2). New or modified major sources in
attainment or unclassifiable areas must undergo preconstruction
permit review, adopt best available control technology, and obtain
emissions offsets if they are determined to ``cause or contribute''
to a violation of the NAAQS. ``Cause or contribute'' is defined as
an impact that exceeds 5 [mu]g/m3 (3.3 percent) of the
150 [mu]g/m3 24-hour average PM10 NAAQS , or 1
[mu]g/m3 (2 percent) of the annual average PM10 NAAQS.
\41\ See 40 CFR 51.166(i)(5)(i). Proposed new sources or
existing-source modifications that would contribute less than 10
[mu]g/m3 (or 5.3%) of the 150 [mu]g/m3
PM10 24-hour average NAAQS, estimated using on a
screening model, may avoid the requirement of collecting and
submitting ambient air quality data.
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Since the thresholds referred to by the commenters serve different
purposes than the CAIR threshold for significant contribution, it does
not follow that they should be made equivalent. The implication of the
thresholds cited by the commenters is not that single-source
contributions below these levels indicate the absence of a
contribution. Rather, these thresholds address whether further more
comprehensive, multi-source review or analysis of appropriate control
technology and emissions offsets are required of the source. A source
with estimated impacts below these levels is recognized as still
affecting the airshed and is subject to meeting applicable control
requirements, including best available control technology, designed to
moderate the source's impact on air quality. The purpose of the CAIR
threshold for PM2.5 is to determine whether the annual
average contribution from a collection of sources in a State is small
enough not to warrant any additional control for the purpose of
mitigating interstate transport, even if that control were highly cost
effective.
One commenter suggested that EPA also establish and evaluate a
threshold for a potential new tighter 24-hour PM2.5 standard
(e.g., 1 percent of 30 [mu]g/m3). The EPA must base its
criteria on evaluation of the current PM2.5 standards and
not standards that may be considered in the future.
c. Today's Action
The EPA continues to believe that the threshold for evaluating the
air quality component of determining whether an individual State's
emissions ``contribute significantly'' to downwind nonattainment of the
annual PM2.5 standard, under CAA section 110(a)(2)(D) should
be very small compared to the NAAQS. We are, however, persuaded by
commenters arguments on monitoring and modeling that the precision of
the threshold should not exceed that of the NAAQS. Rounding the
proposal value of 0.15, the nearest single digit corresponding to about
1% of the PM2.5 annual NAAQS is 0.2 [mu]g/m3. The
final rule is based on this threshold. The EPA has decided to apply
this threshold such that any model result that is below this value
(0.19 or less)indicates a lack of significant contribution, while
values of 0.20 or higher exceed the threshold.\42\
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\42\ This truncation convention for PM2.5 is similar
to that used in evaluating modeling results in applying the ozone
significance screening criterion of 2 ppb in the NOX SIP
call and the CAIR proposal (Technical Support Document for the
Interstate Air Quality Rule Air Quality Modeling Analyses'', January
2004. Docket # OAR-2003-0053-0162), as well as today's final action.
---------------------------------------------------------------------------
Using this metric for determining whether a State ``contributes
significantly'' (before considering cost) to PM2.5
nonattainment, our updated modeling shows that Kansas, Massachusetts,
New Jersey, Delaware, and Arkansas (all included in the original
proposal) no longer exceed the 0.2 [mu]g/m3 annual average
PM2.5 contribution threshold. Of these states, only Arkansas
would exceed the threshold of 0.15 [mu]g/m3 that was
included in the proposal.
E. What Criteria Should Be Used To Determine Which States Are Subject
to This Rule Because They Contribute to Ozone Nonattainment?
1. Notice of Proposed Rulemaking
In assessing the contribution of upwind States to downwind 8-hour
ozone nonattainment, EPA proposed to follow the approach used in the
NOX SIP Call and to employ the same contribution metrics,
but with an updated model and updated inputs that reflect current
requirements (including the NOX SIP Call itself).\43\
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\43\ Today's action, including the updated modeling, fulfills
EPA's commitment in the NOX SIP Call (which EPA finalized
in 1998) to reevaluate interstate ozone contributions by 2007. See
63 FR 57399; October 27, 1998.
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The air quality modeling approach we proposed to quantify the
impact of upwind emissions includes two different methodologies: Zero-
out and source apportionment. As described in section VI, EPA applied
each methodology to estimate the impact of all of the upwind State's
NOX emissions on each downwind nonattainment areas.
The EPA's first step in evaluating the results of these
methodologies was to remove from consideration those States whose
upwind contributions were very low. Specifically, EPA considered an
upwind State not to contribute significantly to a downwind
nonattainment area if the State's maximum contribution to the area was
either (1) less than 2 ppb, as indicated by either of the two modeling
techniques; or (2) less than one percent of total nonattainment in the
downwind area.\44\
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\44\ See the CAIR Air Quality Modeling TSD for description of
the methodology used to calculate these metrics.
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If the upwind State's impact exceeded these thresholds, then EPA
conducted a further evaluation to determine if the impact was high
enough to meet the air quality portion of the ``contribute
significantly'' standard. In doing so, EPA organized the outputs of the
two modeling techniques into a set of ``metrics.'' The metrics reflect
three key contribution factors:
? The magnitude of the contribution (actual amount of ozone
contributed by emissions in the upwind State to nonattainment in the
downwind area);
? The frequency of the contribution (how often contributions
above certain thresholds occur); and
? The relative amount of the contribution (the total ozone
contributed by the upwind State compared to the total amount of
nonattainment ozone in the downwind area).
The specific metrics on which EPA proposed to rely are the same as
those used in the NOX SIP Call. Table III-1 lists them for
each of the two modeling techniques, and identifies their relationship
to the three key contribution factors.
[[Page 25192]]
Table III-1.--Ozone Contribution Factors and Metrics
------------------------------------------------------------------------
Modeling technique
Factor -------------------------------------------
Zero-out Source apportionment
------------------------------------------------------------------------
Magnitude of Contribution... Maximum contribution Maximum
contribution; and
Highest daily
average
contribution (ppb
and percent).
Frequency of Contribution... Number and percent Number and percent
of exceedances with of exceedances with
contributions in contributions in
various various
concentration concentration
ranges. ranges.
Relative Amount of Total contribution Total average
Contribution. relative to the contribution to
total exceedance exceedance hours in
ozone in the the downwind area.
downwind area; and.
Population-weighted
total contribution
relative to the
total population-
weighted exceedance
ozone in the
downwind area.
------------------------------------------------------------------------
In the NPR, EPA proposed threshold values for the metrics. An
upwind State whose contribution to a downwind area exceeded the
threshold values for at least one metric in each of at least two of the
three sets of metrics was considered to contribute significantly
(before considering cost) to that downwind area. To reiterate, the
three sets of metrics reflect the factors of magnitude of contribution,
frequency of contribution, and relative percentage on nonattainment.
In fact, EPA noted in the NPR that for each upwind State, the
modeling disclosed at least one linkage with a downwind nonattainment
area in which all factors (magnitude, frequency, and relative amount)
were found to indicate large and frequent contributions. In addition,
EPA noted in the NPR that each upwind State contributed to
nonattainment problems in at least two downwind States (except for
Louisiana and Arkansas which contributed to nonattainment in only 1
downwind State).
In addition, EPA noted in the NPR that for most of the individual
linkages, the factors yield a consistent result across all three sets
of metrics (i.e., either (i) large and frequent contributions and high
relative contributions or (ii) small and infrequent contributions and
low relative contributions). In some linkages, however, not all of the
factors are consistent. The EPA believes that each of the factors
provides an independent, legitimate measure of contribution.
In the NPR, EPA applied the evaluation methodology described above
to each upwind-downwind linkage to determine which States contribute
significantly (before considering cost) to nonattainment in the 40
downwind counties in nonattainment for ozone in the East. The analysis
of the metrics for each linkage was presented in the AQMTSD for the
NPR. The modeling analysis supporting the final rule is an update to
the NPR modeling, and is described in more detail in section VI below.
2. Comments and EPA Responses
Some commenters submitted comments specifically on the 8-hour ozone
metrics. One commenter asserted that in calculating the ``Relative
Amount of Contribution'' metric, EPA treats the modeled reductions from
zeroing out a State's emissions as impacting only the portion of the
downwind receptor's ambient ozone level that exceeds the 8-hour average
84 ppb level. The commenter asserted that this approach falsely treats
the upwind state's emissions as contributing to the amount of ozone
that exceeds the NAAQS, and thus inflates the ambient impact of those
emissions. The commenter concluded that it would be more appropriate to
treat the upwind emissions as impacting all of the downwind ozone level
(not just the portion greater than 84 ppb). We interpret this comment
to mean that in expressing an upwind State's contribution as a
percentage, the denominator of the percentage should be the downwind
area's total ozone contribution, rather than the downwind area's ozone
excess above the NAAQS, but that the same threshold should be used to
evaluate contribution. This would tend to result in fewer upwind States
being found to be significant with respect to this metric.
We believe that it is important to examine the ozone contribution
relative to the amount of ozone above the NAAQS as well as the amount
relative to total nonattainment ozone. Both approaches have merit. The
intent of the relative contribution metric, as calculated for the zero-
out modeling, is to view the contribution of the upwind State relative
to the amount that the downwind area is in nonattainment; that is, the
amount of ozone above the NAAQS. However, our relative amount metric
for the source apportionment modeling does treat the amount of
contribution relative to the total amount of ozone when ozone
concentrations are predicted to be above the NAAQS. To be found a
significant contributor, an upwind State must be above the threshold
for both the zero-out-based metric and the source-apportionment-based
metric. Thus, our approach to considering the significance of
interstate ozone transport captures both approaches for examining the
relative amount of contribution and does not favor one approach over
the other, as discussed above.
3. Today's Action
The EPA is finalizing the methodology proposed in the NPR, and
discussed above, for evaluating the air quality portion of the
``contribute significantly'' standard for ozone.
F. Issues Related to Timing of the CAIR Controls
1. Overview
A number of commenters questioned the need for CAIR requirements
considering that cap dates of 2010 and 2015 are later than the
attainment dates that, in the absence of extensions, would apply to
certain downwind PM2.5 areas and ozone nonattainment areas.
Other commenters, noting that states will be required to adopt controls
in local attainment plans, questioned whether CAIR controls would still
be needed to avoid significant contribution to downwind nonattainment,
or whether the controls would still be needed to the extent required by
the rule.
Of course, CAIR will achieve substantial reductions in time to help
many nonattainment areas attain the standards by the applicable
attainment dates. The design of the SO2 program, including
the declining caps in 2010 and 2015 and the banking provisions, will
steadily reduce SO2 emissions over time, achieving
reductions in advance of the cap dates; and the 2009 and 2015
NOX reductions will be timely for many downwind
nonattainment areas.
[[Page 25193]]
Although many of today's nonattainment areas will attain before all
the reductions required by CAIR will be achieved, it is clear that
CAIR's reductions will still be needed through 2015 and beyond. The
EPA's air quality modeling has demonstrated that upwind States have a
sufficiently large impact on downwind areas to require reductions in
2010 and 2015 under CAA section 110(a)(2)(D). Under this provision,
SIPs must prohibit emissions from sources in amounts that ``will
contribute significantly to * * * nonattainment'' or ``will interfere
with maintenance''.\45\ The EPA has evaluated the attainment status of
the downwind receptors in 2010 and 2015, and has determined that each
upwind State's 2010 and 2015 emissions reductions are necessary to the
extent required by the rule because a downwind receptor linked to that
upwind State will either (i) remain in nonattainment and continue to
experience significant contribution to nonattainment from the upwind
State's emissions; or (ii) attain the relevant NAAQS but later revert
to nonattainment due, for example, to continued growth of the emissions
inventory.
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\45\ As in the NOX SIP Call rulemaking, EPA
interprets the ``interfere with maintenance'' statutory requirement
``much the same as the term `contribute significantly' '', that is,
``through the same weight-of-evidence approach.'' 63 FR at 57379.
Furthermore, we believe the ``interfere with maintenance'' prong may
come into play only in circumstances where EPA or the State can
reasonably determine or project, based on available data, that an
area in a downwind state will achieve attainment, but due to
emissions growth or other relevant factors is likely to fall back
into nonattainment. Id.
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The argument that the CAIR reductions are justified, in part, by
the need to prevent interference with maintenance, is a limited one.
The EPA does not believe that the ``interfere with maintenance''
language in section 110(a)(2)(D) requires an upwind state to eliminate
all emissions that may have some impact on an area in a downwind state
that is (or once was) in nonattainment and that, therefore, will need
(or now needs) to maintain its attainment status. Instead, we believe
that CAIR emission reductions are needed beyond 2010 and 2015, in part,
to prevent upwind states from significantly interfering with
maintenance in other states because our analysis shows it is likely
that, in the absence of the CAIR, a current or projected attainment
area will revert to nonattainment due to continued emissions growth or
other relevant factors. We are not taking the position that CAIR
controls are automatically justified to prevent interference with
maintenance in every area initially modeled to be in nonattainment.
We also note that considering the emission controls needed for
maintenance, along with the controls needed to reach attainment in the
first place, is consistent with the goal of promoting a reasonable
balance between upwind state controls and local (including all in-
state) controls to attain and maintain the NAAQS. As discussed in
section IV of this notice, in the ideal world, the states and EPA would
have enough information (and powerful enough analytical tools) to allow
us to identify a mix of control strategies that would bring every area
of the country into attainment at the lowest overall cost to society.
Under such an approach, we would evaluate the impact of every emissions
source on air quality in all nonattainment areas, the cost of different
options for controlling those sources, and the cost-effectiveness of
those controls in terms of cost per increment of air quality
improvement. Such an approach would obviously make it easier for a
state to develop an appropriate set of control requirements for sources
located in that state based on (1) the need to bring its own
nonattainment areas into attainment and (2) its responsibility under
section 110(a)(2)(D) to prevent significant contribution to
nonattainment in downwind States and interference with maintenance in
those States.
Such an approach would also make it much easier for the Agency to
decide on efficiency grounds whether to take action under section 126
(or under section 110(a)(2)(D) if a State failed to meet its
obligations under that section) for purposes of either attainment or
maintenance of a NAAQS in another State. In the simplest example, we
might need to consider a case in which a downwind State with a
nonattainment area is seeking reductions from an upwind State based on
the claim that emissions from the upwind state are contributing
significantly to the nonattainment problem in the downwind State. In
such a case, the first question is whether the upwind state should be
required to take any action at all, and in the ideal world, it would be
simple to answer this question. If emission reductions from sources in
the upwind State are more cost-effective than emission reductions in
the downwind State--in terms of cost per increment of improvement in
air quality in the downwind nonattainment area--then the upwind State
would need to take some action to control emissions from sources in
that State.\46\ On the other hand, if controls on sources in the upwind
State are not more cost-effective in terms of cost per increment of
improvement in air quality, then the Agency would not take action under
sections 126 or 110(a)(2)(D); rather, the downwind State would need to
meets its attainment and maintenance needs by controlling sources
within its own jurisdiction. Of course, factors other than efficiency,
such as equity or practicality, also might affect the decision.
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\46\ This does not mean that the upwind state would be
responsible for making all the reductions necessary to bring the
downwind State's nonattainment area into attainment; how much would
be required of each State is a separate question. Again in the ideal
world, we would be able to find the right mix of controls in both
states so that attainment would be achieved at the lowest total cost.
---------------------------------------------------------------------------
Unfortunately, we do not have adequate information or analytical
tools (ideally a detailed linear programming model that fully
integrates both control costs and ambient impacts of sources in each
State on each of the downwind receptors) to allow us to undertake the
analysis described above at this time. However, the Agency believes
that CAIR is consistent with this basic approach and will result in
upwind States and downwind States sharing appropriate responsibility
for attainment and maintenance of the relevant NAAQS, considering
efficiency, equity and practical considerations. Under CAIR, the
required reductions in upwind States (including those projected to
occur after 2015) are highly cost effective, measured in cost-per-ton
of emissions reduction, as documented in section IV. This suggests
that, regardless of whether the CAIR reductions assist downwind areas
in achieving attainment or in subsequently maintaining the relevant
NAAQS, the upwind controls will be reasonable in cost relative to a
further increment of local controls that, in most cases, will have a
substantially higher cost per ton--particularly in areas that need
greater local reductions and require reductions from a variety of
source types.\47\ Thus, we believe that CAIR is consistent with the
goal of attaining and maintaining air quality standards in an
efficient, as well as equitable, manner.
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\47\ Tables describing cost effectiveness of various control
measures and programs are provided in section IV. These show that
the cost per ton of non-power-sector control options that states
might consider for attainment purposes typically is higher than for
CAIR controls.
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Another reason for considering both attainment and maintenance
needs at this time is EPA's expectation that most nonattainment areas
will be able to
[[Page 25194]]
attain the PM2.5 and 8-hour ozone standards within the time
periods provided under the statute. Considering both types of downwind
needs shows that there is a strong basis for CAIR's requirements
despite the potential for most receptor areas to attain before all the
emission reductions required by CAIR are achieved.
2. By Design, the CAIR Cap and Trade Program Will Achieve Significant
Emissions Reductions Prior to the Cap Deadlines
The EPA notes that Phase I of CAIR is the initial step on the slope
of emissions reduction (i.e., the ``glide path'') leading to the final
control levels. Because of the incentive to make early emission
reductions that the cap and trade program provides, reductions will
begin early and will continue to increase through Phases I and II.
Therefore, all the required Phase II emission reductions will not take
place on January 1, 2015, the effective date of the second phase cap.
Rather, these reductions will accrue throughout the implementation
period, as the sources install controls and start to test and operate
them. The resulting glide path of reductions with CAIR Phase II will
provide important reductions to areas coming into attainment over the
2010 to 2014 period.\48\
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\48\ A similar glide path will occur prior to the effective date
of the Phase I SO2 cap because this cap will complement
and extend the cap that currently exists under the Acid Rain program.
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3. Additional Justification for the SO2 and NOX
Annual Controls
Our modeling indicates that it is very plausible that a significant
number of downwind PM2.5 receptors are likely to remain in
nonattainment in 2010 and beyond. As noted below (Preamble Table VI-
10), the Agency has evaluated a wide range of emission control options
and found that the average ambient reduction in PM2.5
concentrations achievable through aggressive but feasible local
controls is 1.26 [mu]g/m\3\. In the 2010 base case (which does not
consider potential local controls or 2010 CAIR controls, but does
consider all other emission controls required to be in effect as of
that date), nearly half the receptor counties would be in nonattainment
by more than this amount. This indicates that nonattainment is of
sufficient severity to make it likely that, in the absence of CAIR,
many of these areas would need an attainment date extension of at least
one year.
Our base case modeling further shows that every upwind state is
linked to at least one receptor area projected to have nonattainment of
this severity. Tables VI-10 and VI-11. Thus, there is a reasonable
likelihood that CAIR controls will be needed from all of the upwind
states to prevent significant contribution to these downwind receptors'
nonattainment.
Nor is the amount of reduction in excess of what is needed for
attainment. We project that even with CAIR controls, almost all of the
upwind states in 2010 remain linked with at least one downwind receptor
that would not attain by the same substantial margin exceeding the
average of aggressive local controls. Tables VI-10 and VI-8. This not
only indicates that the 2010 CAIR controls are not excessive, but that
local controls will still be necessary for attainment.
In addition, there is potential for residual nonattainment in 2015
in view of the severity of PM2.5 levels in some areas,
uncertainties about the levels of reductions in PM2.5 and
precursors that will prove reasonable over the next decade, the
potential for up to two 1-year extensions for areas that meet certain
air quality levels in the year preceding their attainment date, and
historical examples in which areas did not meet their statutory
attainment dates for other NAAQS.
With respect to the argument that phase II emission reductions that
will be achieved after 2015 are not needed because all receptors will
have attained before 2015, we think it likely that some
PM2.5 nonattainment areas may qualify for 2014 attainment
dates and eventually, one-year attainment date extensions, and that
there may be residual nonattainment in 2015. We continue to project
that nearly half the downwind receptors in the 2015 base case will be
in nonattainment by amounts exceeding the average ambient reduction
(again, 1.26 [mu]g/m\3\) attributable to local controls we believe
would be aggressive but feasible for 2010. Table VI-11. The history of
progress in development of emission reduction strategies and
technologies indicates that greater local reductions could be achieved
by 2015 than in 2010; nonetheless, this potential nonattainment is of
sufficient severity to make it plausible that at least some of these
areas will need an extension. In such cases, this would eliminate the
issue of timing raised by commenters, since CAIR controls would no
longer be following attainment dates.
Our modeling further shows that, in the 2015 base case (which does
not include CAIR controls), all the upwind states in the CAIR region
are linked to areas projected to exceed the standard by at least 2
[mu]g/m\3\. Tables VI-11 and VI-8. Given the reasonable potential for
continued nonattainment, it is reasonable to require 2015 CAIR controls
from each upwind state to prevent significant contribution to nonattainment.
Moreover, even with 2015 CAIR controls (but not attainment SIP
controls), almost all of the upwind states remain linked with at least
one downwind receptor that would not attain by at least this same
substantial margin (at least 1.26 [mu]g/m\3\). Id. This shows that the
2015 CAIR controls are not more than are necessary to attain the NAAQS
(and also shows the necessity for local controls in order to attain).
Thus, we conclude that the further PM2.5 reductions achieved
by the second phase cap will likely be needed to assure all relevant
areas reach attainment by applicable deadlines.
Even if some of these areas make more progress than we predict,
many downwind receptor areas would be likely in 2010 and 2015 to
continue to have air quality only marginally better than the standard,
and be at risk of returning to nonattainment. Air quality is unlikely
to be appreciably cleaner than the standard because many areas will
need steep reductions merely to attain, given that we project
nonattainment by wide margins (as explained above).
Moreover, we project that without CAIR, PM2.5 levels
would worsen in 19 downwind receptor counties between 2010 and 2015,
reflecting changes in local and upwind emissions. Air Quality Modeling
Technical Support Document, November, 2004. This suggests a reasonable
likelihood that, without CAIR, these areas would return to
nonattainment. See 63 FR at 57379-80 (finding in NOX SIP
Call that upwind emissions interfere with maintenance of 8-hour ozone
standard under section 110(a)(2)(D)(i) where increases in emissions of
ozone precursors are projected due to growth in emissions generating
activity, resulting in receptors no longer attaining the standard).
These downwind receptors link to all but two of the upwind states, and
the remaining two upwind states are linked to receptors where projected
PM2.5 levels between 2010 and 2015 improve only slightly,
leaving their air quality only marginally in attainment. Response to
Comments, section III.C. In light of documented year-to-year variations
in PM2.5 levels, these receptors would have a reasonable
probability of returning to nonattainment in the absence of CAIR.
Emissions trends after 2015 give rise to further maintenance
concerns. Between 2015 and 2020, emissions of
[[Page 25195]]
PM2.5 and certain precursors are projected to rise. We do
not have air quality modeling for 2020. However, for PM2.5
and every precursor, the 2015-2020 emission trend is less favorable
than the 2010-2015 emission trend. Given the PM2.5 increases
our air quality modeling found for 19 counties between 2010 and 2015,
the emission trends suggest greater maintenance concerns in the 2015-
2020 period than during the 2010-2015 period. See Response to Comments
section III.C.
Accordingly, we believe that given these projected trends, and the
likelihood of only borderline attainment, CAIR controls from every
upwind state in the CAIR region are needed to prevent interference with
maintenance of the PM2.5 standard. The projected upwards
pressure on PM2.5 concentrations in most receptor areas
indicates that the amount of upwind reductions is not more than
necessary to prevent interference with maintenance of the standards,
again given the likelihood of initial attainment by narrow margins.
4. Additional Justification for Ozone NOX Requirements
We believe that most 8-hour ozone areas will be able to attain by
their attainment deadlines through existing measures, 2009 CAIR
NOX reductions, and additional local measures. However, we
also believe that a limited number of downwind receptor areas will
remain in nonattainment with the ozone standard after 2010. This is due
to the severity of projected ozone levels in certain areas,
uncertainties about the levels of emissions reductions in that will
prove reasonable over the next decade, and historical difficulties with
attaining the 1-hour ozone standard.
For ozone, the historic difficulties that many areas, particularly
large urban areas, have experienced in attaining the ozone NAAQS raises
the possibility that some areas may not attain by their attainment
dates, and may request a voluntary bump up to a higher classification
pursuant to section 181(b)(2) to gain an extension, or may fail to
attain by the attainment date and be bumped up under section 181(b)(2).
These authorities were used in the course of implementing the 1-hour
ozone NAAQS.
Our base case modeling (without CAIR, and without state controls
implementing the 8-hour standard) projects geographically widespread
nonattainment with the 8-hour ozone NAAQS in 2015. Tables VI-12 and VI-
13. Five counties that link to 14 upwind states have projected ozone
levels that exceed the 8-hour standard by 6 ppb or more, and 20 upwind
states are linked to counties projected to exceed the 8-hour standard
by more than 4 ppb. These two sets of linkages show that under a
scenario in which several of the receptors with the highest ozone
levels did not attain, CAIR reductions would be justified to prevent
significant contributions from many of the upwind states in the CAIR
ozone region.
The fact that receptors show significant nonattainment even after
implementation of the phase II CAIR reductions, as shown in Table VI-
13, indicates that these reductions would not be more than necessary to
prevent significant contribution to nonattainment in residual areas.
Even if all ozone nonattainment areas in the CAIR region could achieve
reductions sufficient to meet the level of the 8-hour ozone standard in
2009 \49\ based on local controls, 2009 CAIR NOX reductions,
and existing programs, we believe that numerous downwind receptor areas
would remain close enough to the standard to be at risk of falling back
into nonattainment for the reasons discussed below. These receptor
areas are linked to all states in the CAIR ozone region.
---------------------------------------------------------------------------
\49\ Attainment deadlines for moderate ozone areas are to be no
later than June 2010; an approvable attainment plan must demonstrate
the reductions needed for attainment will be achieved by the ozone
season in the preceding year.
---------------------------------------------------------------------------
First, it is highly unlikely that the receptor areas will be able
to attain by a wide margin. This is primarily because many of those
areas will need substantial emissions reductions merely to attain. This
is supported by modeling showing that in the 2010 base case, 30 percent
of the receptors are projected to be in nonattainment by the wide
margin of 6 ppb or more, indicating the steep emissions reductions
necessary just to come into attainment. Table VI-12. We recognize that,
unlike the trend in key PM receptor areas, our modeling projects that
the ozone levels in ozone receptor areas will improve somewhat between
2010 and 2015 due chiefly to downward trends in NOX
emissions projected under existing requirements. Nonetheless, as shown
in detail in the Response to Comments, the projected improvements in
ozone levels in the receptor areas are less (often considerably less)
than historic variability in monitored 8-hour ozone design values from
one three year period to the next.\50\ We believe this variability is
mostly attributable to changing weather conditions (which significantly
affect the rate at which ozone is formed in the atmosphere and movement
of ozone after it is formed), rather than variability in the emissions
inventory. Thus, absent the second phase CAIR cap, these receptors
remain vulnerable to falling back into nonattainment. The receptors for
which this is the case link to each of the upwind States in the ozone
CAIR region.
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\50\ We recognize that in the absence of substantial evidence,
variability alone would not be a sufficient basis for applying the
``interfere with maintenance'' prong of section 110(a)(2)(D). Here,
however, where there is a substantial body of historical data
documenting the variability in ozone concentrations, we believe it
is appropriate to consider variability in determining whether
emission reductions from upwind states are necessary to prevent
interference with maintenance of the ozone standard in downwind states.
---------------------------------------------------------------------------
IV. What Amounts of SO2 and NOX Emissions Did EPA
Determine Should Be Reduced?
In today's rule, EPA requires annual SO2 and
NOX emissions reductions and ozone-season NOX
emissions reductions to eliminate the amount of emissions that
contribute significantly to nonattainment of the NAAQS for
PM2.5 and ozone. The NOX reductions are phased in
beginning in 2009, the SO2 reductions beginning in 2010, and
both caps are lowered in 2015. In this section of the preamble, EPA
explains its analysis of the cost portion of the contribute-
significantly test, which determines the amount of required emissions
reductions. The cost portion requires analysis of whether the control
program under review is highly cost effective, and other factors that
are discussed below in section IV.A.
In section IV.A of today's preamble, EPA explains its methodology
for determining the amounts of SO2 and NOX
emissions that must be eliminated for compliance with the CAIR. Section
IV.A is divided into IV.A.1, IV.A.2, IV.A.3, and IV.A.4. In IV.A.1, EPA
explains the methodology that the Agency used to model control costs
for evaluation of cost effectiveness. In IV.A.2, EPA describes the
methodology that was proposed in the NPR for determining the amounts of
emissions that must be eliminated, including an overview of the
proposed methodology, a description of the NOX SIP Call
regulatory history in relation to the proposed methodology, and a
description of EPA's proposed criteria for determining emission
reduction requirements. Section IV.A.3 summarizes some comments
received regarding the proposed methodology. Section IV.A.4 describes
EPA's evaluation of highly cost-effective SO2 and
NOX emissions reductions based on controlling EGUs.
Section IV.A.4 is further divided into IV.A.4.a and IV.A.4.b, which
address
[[Page 25196]]
SO2 and NOX emission reduction requirements,
respectively. Section IV.A.4.a describes EPA's evaluation of highly
cost-effective SO2 reduction requirements, beginning with a
summary of the proposal and then describing today's final
determination. In IV.A.4.b., EPA describes its evaluation of highly
cost-effective NOX reduction requirements, also beginning
with a summary of the proposal and then describing today's final
determination. Section IV.A.4.b first addresses annual NOX
reductions, and then addresses ozone season NOX reductions.
The final regionwide CAIR SO2 and NOX control
levels are provided within section IV.A, while a more detailed
description of today's final emission reduction requirements is
presented in section IV.D.
In section IV.B of today's preamble, EPA discusses other (non-EGU)
sources that the Agency considered in developing today's rule.
Section IV.C of today's preamble explains the schedule for
implementing today's SO2 and NOX emissions
reductions requirements. This section begins with an overview of the
schedule (see section IV.C.1), then provides a detailed discussion of
the engineering factors that affect timing for control retrofits
(section IV.C.2). Within IV.C.2, EPA first describes the NPR discussion
of engineering factors including the availability of boilermaker labor
as a limitation (IV.C.2.a), then presents some comments received
(IV.C.2.b) and EPA's responses (IV.C.2.c). In section IV.C.3, EPA
discusses the financial stability of the power sector in relation to
the schedule for the CAIR.
Section IV.D of today's preamble provides a detailed description of
the final CAIR emission reduction requirements. Regionwide
SO2 and NOX control levels, projected base case
emissions and emissions after the CAIR, and projected emissions
reductions are presented. Section IV.D begins with a description of the
criteria used to determine final control requirements and provides the
details of the final requirements.
A. What Methodology Did EPA Use To Determine the Amounts of
SO2 and NOX Emissions That Must Be Eliminated?
1. The EPA's Cost Modeling Methodology
The EPA conducted analysis using the Integrated Planning Model
(IPM) that indicates that its CAIR SO2 and NOX
reduction requirements are highly cost effective. Cost effectiveness is
one portion of the contribute-significantly test. The EPA uses the IPM
to examine costs and, more broadly, analyze the projected impact of
environmental policies on the electric power sector in the 48
contiguous States and the District of Columbia. The IPM is a multi-
regional, dynamic, deterministic linear programming model of the U.S.
electric power sector. The EPA used the IPM to evaluate the cost and
emissions impacts of the policies required by today's action to limit
annual emissions of SO2 and NOX and ozone season
emissions of NOX from the electric power sector (on the
assumption that all affected States choose to implement reductions by
controlling EGUs using the model cap and trade rule).
The EPA conducted analyses for the final CAIR using the 2004 update
of the IPM, version 2.1.9. Documentation describing the 2004 update is
in the CAIR docket and on EPA's Web site. Some highlights of the 2004
update include: Updated inventory of electric generating units (EGUs)
and installed pollution control equipment; updated State emission
regulations; updated coal choices available to generating units;
updated natural gas supply curves; updated SCR and SNCR cost
assumptions; updated assumptions on performance of NOX
combustion controls; updated title IV SO2 bank assumptions;
updated heat rates and SO2 and NOX emission
rates; and, updated repowering costs.
The National Electric Energy Data System (NEEDS) contains the
generation unit records used to construct model plants that represent
existing and planned/committed units in EPA modeling applications of
the IPM. The NEEDS includes basic geographic, operating, air emissions,
and other data on all the generation units that are represented by
model plants in EPA's v.2.1.9 update of the IPM.
The IPM uses model run years to represent the full planning horizon
being modeled. That is, several years in the planning horizon are
mapped into a representative model run year, enabling the IPM to
perform multiple-year analyses while keeping the model size manageable.
Although the IPM reports results only for model run years, it takes
into account the costs in all years in the planning horizon. In EPA's
v.2.1.9 update of the IPM, the years 2008 through 2012 are mapped to
run year 2010, and the years 2013 through 2017 are mapped to run year
2015.\51\ Model outputs for 2009 and 2010 are from the 2010 run year.
Model outputs for 2015 are from the 2015 run year.
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\51\ An exception was made to the run year mapping for an IPM
sensitivity run that examined the impact of a NOX
Compliance Supplement Pool (CSP). In that run the years 2009 through
2012 were mapped to 2010 and 2008 was mapped to 2008.
---------------------------------------------------------------------------
The EPA used the IPM to conduct the cost-effectiveness analysis for
the emissions control program required by today's action. The model was
used to project the incremental electric generation production costs
that result from the CAIR program. These estimates are used as the
basis for EPA's estimate of average cost and marginal cost of emissions
reductions on a per ton basis. The model was also used to project the
marginal cost of several State programs that EPA considers as part of
its base case.
In modeling the CAIR with the IPM, EPA assumes interstate emissions
trading. While EPA is not requiring States to participate in an
interstate trading program for EGUs, we believe it is reasonable to
evaluate control costs assuming States choose to participate in such a
program since that will result in less expensive reductions. The EPA's
IPM analyses for the CAIR includes all fossil fuel-fired EGUs with
generating capacity greater than 25 MW.
The EPA's IPM modeling accounts for the use of the existing title
IV bank of SO2 allowances. The projected EGU SO2
emissions in 2010 and 2015 are above the cap levels, because of the use
of the title IV bank. The annual SO2 emissions reductions
that are achieved in 2010 and 2015 are based on the caps that EPA
determined to be highly cost effective, including the existence of the
title IV bank.
The final CAIR requires annual SO2 and NOX
reductions in 23 States and the District of Columbia, and also requires
ozone season NOX reductions in 25 States and the District of
Columbia. Many of the CAIR States are affected by both the annual
SO2 and NOX reduction requirements and the ozone
season NOX requirements.
The EPA initially conducted IPM modeling for today's final action
using a control strategy that is similar but not identical to the final
CAIR requirements.\52\ Many of the analyses for the final CAIR are
based on that initial modeling, as explained further below. The control
strategy that EPA initially modeled included three additional States
(Arkansas, Delaware and New Jersey) within the region required to make
annual SO2 and NOX reductions. However, these
three States are not required to make annual reductions under the final
CAIR. (In the ``Proposed Rules'' section of today's Federal
[[Page 25197]]
Register, EPA is publishing a proposal to include Delaware and New
Jersey in the CAIR region for annual SO2 and NOX
reductions.) The addition of these three States made a total of 26
States and the District of Columbia covered by annual SO2
and NOX caps for the initial model run. The initial model
run also included individual State ozone season NOX caps for
Connecticut and Massachusetts, and did not include ozone season
NOX caps for any other States.
---------------------------------------------------------------------------
\52\ The EPA began our emissions and economic analyses for the
CAIR before the air quality analysis, which affects the States
covered by the final rule, was completed
---------------------------------------------------------------------------
The Agency conducted revised final IPM modeling that reflects the
final CAIR control strategy. The final IPM modeling includes regionwide
annual SO2 and NOX caps on the 23 States and the
District of Columbia that are required to make annual reductions, and
includes a regionwide ozone season NOX cap on the 25 States
and the District of Columbia that are required to make ozone season
reductions. The EPA modeled the final CAIR NOX strategy as
an annual NOX cap with a nested, separate ozone season
NOX cap.
In this section of today's preamble, the projected CAIR costs and
emissions are generally derived from the final IPM run reflecting the
final CAIR. However, some of EPA's analyses are based on the initial
IPM run, described above, which reflected a similar but not identical
control strategy to the final CAIR. Analyses that are presented in this
section of the preamble that are based on the initial IPM run include:
IPM sensitivity runs that examine the effects of using the Energy
Information Administration (EIA) natural gas price and electricity
growth assumptions; marginal cost effectiveness curves developed using
the Technology Retrofitting Updating Model; estimates of average annual
SO2 and NOX control costs and average non-ozone
season NOX control costs, and projected control retrofits
used in the feasibility analysis. The air quality analysis in section
VI of today's preamble and the benefits analysis in section X, as well
as the analyses presented in the Regulatory Impact Analysis (RIA), are
based on emissions projections from the initial IPM run.
The EPA believes that the differences between the initial IPM run
that the Agency used for many of the analyses for the CAIR, and the
final IPM run reflecting the final CAIR requirements, have very little
impact on projected control costs and emissions. For the two IPM runs,
projected marginal costs of CAIR annual NOX reductions in
2009 and 2015 are identical. In addition, for the two IPM runs,
projected marginal costs of CAIR annual SO2 reductions in
2010 and 2015 are almost identical. Also, the 2009 and 2015 projected
annual NOX emissions in the region encompassing the States
that are affected by the final CAIR annual NOX requirements
are virtually identical when compared between the two model runs
(difference between projected NOX emissions is less than 1
percent for 2009 and less than 2 percent for 2015). In addition, the
2010 and 2015 projected annual SO2 emissions in the region
encompassing the States that are affected by the final CAIR annual
SO2 requirements are virtually the same when compared
between the two runs (difference between projected SO2
emissions is less than 1 percent for 2010 and less than 2 percent for
2015). These comparisons confirm EPA's belief that the initial IPM run
very closely represents the final CAIR program.
The IPM output files for the model runs used in CAIR analyses are
available in the CAIR docket. A Technical Support Document in the CAIR
docket entitled ``Modeling of Control Costs, Emissions, and Control
Retrofits for Cost Effectiveness and Feasibility Analyses'' further
explains the IPM runs used in the analyses for section IV of the preamble.
2. The EPA's Proposed Methodology To Determine Amounts of Emissions
That Must be Eliminated
a. Overview of EPA Proposal for the Levels of Reductions and Resulting
Caps, and Their Timing
In the NPR, the amounts of SO2 and NOX
emissions reductions that EPA proposed could be cost effectively
eliminated in the CAIR region in 2010 and 2015, and the amount of the
proposed EGU emissions caps for SO2 and NOX that
would exist if all affected States achieved those reductions by capping
EGU emissions, appear in Tables IV-1 and IV-2, respectively.
Table IV-1.--Projected SO2 and NOX Emission Reductions in the CAIR
Region in 2010 and 2015 for the Proposed Rule
[Million Tons]
\1\
------------------------------------------------------------------------
Pollutant 2010 2015
------------------------------------------------------------------------
SO2........................................... 3.6 3.7
NOX........................................... 1.5 1.8
------------------------------------------------------------------------
\1\ CAIR Notice of Proposed Rulemaking (69 FR 4618, January 30, 2004).
The proposed annual SO2 and NOX caps covered a 27-State (AL, AR, DE,
FL, GA, IL, IN, IA, KS, KY, LA, MD, MA, MI, MN, MO, NJ, NY, NC, OH,
PA, SC, TN, TX, VA, WV, WI) plus DC region. In addition, we proposed
an ozone-season only cap for Connecticut.
Table IV-2.--Proposed Annual Electric Generating Unit SO2 and NOX
Emissions Caps in the CAIR Region
[Million Tons]
\1\
------------------------------------------------------------------------
2015 and
Pollutant 2010-2014 later
------------------------------------------------------------------------
SO2........................................... 3.9 2.7
NOX........................................... 1.6 1.3
------------------------------------------------------------------------
\1\ CAIR Notice of Proposed Rulemaking (69 FR 4618, January 30, 2004).
The proposed annual SO2 and NOX caps covered a 27-State (AL, AR, DE,
FL, GA, IL, IN, IA, KS, KY, LA, MD, MA, MI, MN, MO, NJ, NY, NC, OH,
PA, SC, TN, TX, VA, WV, WI) plus DC region. In addition, we proposed
an ozone-season only cap for Connecticut.
In the NPR, EPA evaluated the amounts of SO2 and
NOX emissions in upwind States that contribute significantly
to downwind PM2.5 nonattainment and the amounts of
NOX emissions in upwind States that contribute significantly
to downwind ozone nonattainment. That is, EPA determined the amounts of
emissions reductions that must be eliminated to help downwind States
achieve attainment, by applying highly cost-effective control measures
to EGUs and determining the emissions reductions that would result.
From past experience in examining multi-pollutant emissions trading
programs for SO2 and NOX, EPA recognized that the
air pollution control retrofits that result from a program to achieve
highly cost-effective reductions are quite significant and can not be
immediately installed. Such retrofits require a large pool of
specialized labor resources, in particular, boilermakers, the
availability of which will be a major limiting factor in the amount and
timing of reductions.
Also, EPA recognized that the regulated industry will need to
secure large amounts of capital to meet the control requirements while
managing an already large debt load, and is facing other large capital
requirements to improve the transmission system. Furthermore, allowing
pollution control retrofits to be installed over time enables the
industry to take advantage of planned outages at power plants
(unplanned outages can lead to lost revenue) and to enable project
management to learn from early installations how to deal with some of
the engineering challenges that will exist, especially for the smaller
units that often present space limitations.
Based on these and other considerations, EPA determined in the NPR
that the earliest reasonable deadline for compliance with the final
[[Page 25198]]
highly cost-effective control levels for reducing emissions was 2015
(taking into consideration the existing bank of title IV SO2
allowances). First, the Agency confirmed that the levels of
SO2 and NOX emissions it believed were reasonable
to set as annual emissions caps for 2015 lead to highly cost-effective
controls for the CAIR region.
Once EPA determined the 2015 emissions reductions levels, the
Agency determined a proposed first (interim) phase control level that
would commence January 1, 2010, the earliest the Agency believed
initial pollution controls could be fully operational (in today's final
action, the first NOX control phase commences in 2009
instead of in 2010, as explained in detail in section IV.C). The first
phase would be the initial step on the slope of emissions reductions
(the glide-path) leading to the final (second) control phase to
commence in 2015. The EPA determined the first phase based on the
feasibility of installing the necessary emission control retrofits, as
described in section IV.C.
Although EPA's primary cost-effectiveness determination is for the
2015 emissions reductions levels, the Agency also evaluated the cost
effectiveness of the first phase control levels to ensure that they
were also highly cost effective. Throughout this preamble section, EPA
reports both the 2015 and 2010 (and 2009 for NOX) cost-
effectiveness results, although the first phase levels were determined
based on feasibility rather than cost effectiveness. The 2015 emissions
reductions include the 2010 (and 2009 for NOX) emissions
reductions as a subset of the more stringent requirements that EPA is
imposing in the second phase.
b. Regulatory History: NOX SIP Call
In the NPR, EPA generally followed the statutory interpretation and
approach under CAA section 110(a)(2)(D) developed in the NOX
SIP Call rulemaking. Under this interpretation, the emissions in each
upwind State that contribute significantly to nonattainment are
identified as being those emissions that can be eliminated through
highly cost-effective controls.
In the NOX SIP Call, EPA relied primarily on the
application of highly cost-effective controls in determining the amount
of emissions that the affected States were required to eliminate.
Specifically, EPA developed a reference list of the average cost
effectiveness of recently promulgated or proposed controls, and
compared the cost effectiveness of those controls to the cost
effectiveness of the NOX SIP Call controls under
consideration. In addition, EPA considered several other factors,
including the fact that downwind nonattainment areas had already
implemented ozone controls but upwind areas generally had not, the fact
that some otherwise required local controls would be less cost-
effective than the regional controls, and the overall ambient effects
of the reductions required in the NOX SIP Call (63 FR 57399-
57403; October 27, 1998).
i. Highly Cost-Effective Controls
In the NOX SIP Call, EPA presented control costs in 1990
dollars (1990$). For the electric power industry, these expenditures
were the increase in annual electric generation production costs in the
control region that result from the rule. In the CAIR NPR, SNPR, and
today's final action, EPA presents the same type of electric generation
as well as other costs in 1999$, and rounds all values related to the
cost per ton of air emissions controls to the nearest 100 dollars.
In the NOX SIP Call, EPA's decision on the amount of
required NOX emissions reductions was that this amount must
be computed on the assumption of implementing highly cost-effective
controls. The determination of what constituted highly cost effective
controls was described as a two-part process: (1) The setting of a
dollar-limit upper bound of highly cost-effective emissions reductions;
and (2) a determination of what level of control below this upper-bound
was appropriate based upon achievability and other factors.
With respect to setting the upper bound of potential highly cost-
effective controls, EPA determined this level on the basis of average
cost effectiveness (the average cost per ton of pollutant removed). The
EPA explained that it relied on average cost effectiveness for two reasons:
Since EPA's determination for the core group of sources is based
on the adoption of a broad-based trading program, average cost
effectiveness serves as an adequate measure across sources because
sources with high marginal costs will be able to take advantage of
this program to lower their costs. In addition, average cost-
effectiveness estimates are readily available for other recently
adopted NOX control measures (63 FR 57399).
At that time, EPA acknowledged that average cost effectiveness did
not directly address the fact that certain units might have higher
costs relative to the average cost of reduction (e.g., units with lower
capacity factors tend to have higher costs):
[I]ncremental cost effectiveness helps to identify whether a
more stringent control option imposes much higher costs relative to
the average cost per ton for further control. The use of an average
cost effectiveness measure may not fully reveal costly incremental
requirements where control options achieve large reductions in
emissions (relative to the baseline) (63 FR 57399).
Examination of marginal cost effectiveness--which examines what the
cost would be of the next ton of reduction after the defined control
level--would fill this gap. However, for the NOX SIP Call
rulemaking, adequate information concerning marginal cost effectiveness
was not available.
For the NOX SIP Call, to determine the average cost
effectiveness that should be considered to be highly cost effective,
EPA developed a ``reference list'' of NOX emissions controls
that are available and of comparable cost to other recently undertaken
or planned NOX measures. The EPA explained that ``the cost
effectiveness of measures that EPA or States have adopted, or proposed
to adopt, forms a good reference point for determining which of the
available additional NOX control measures can most easily be
implemented by upwind States whose emissions impact downwind
nonattainment problems.'' (63 FR 57400). The EPA explained that the
measures on the reference list had already been implemented or were
planned to be implemented, and therefore could be assumed to be less
expensive than other measures to be implemented in the future. The EPA
found that the costs of the measures on the reference list approached
but were below $2,000 per ton (1990$). The EPA concluded that
``controls with an average cost effectiveness [of] less than $2,000
[1990$, or $2,500 (1999$)] per ton of NOX removed [should be
considered] to be highly cost-effective.'' (63 FR 57400). Notably, the
reference costs were taken from the supporting analyses used for the
regulatory actions covering the NOX pollution controls--they
are what regulatory decision makers and the public believed were the
control costs.
Mindful of this $2,000 limit [1990$, or $2,500 (1999$)], EPA
considered a control level that would have resulted in estimated
average costs of approximately $1,800 (1990$) per ton. However, EPA
concluded that because the corresponding level of controls--nominally a
0.12 lb/mmBtu control level--was not well enough established, EPA was
``not as confident about the robustness'' of the cost estimates.
Moreover, EPA expressed concern that its ``level of comfort'' was not
as high as
[[Page 25199]]
it would have liked that the nominal 0.12 lb/mmBtu control level ``will
not lead to installation of SCR technology at a level and in a manner
that will be difficult to implement or result in reliability problems
for electric power generation'' (63 FR 57401).
Accordingly, EPA selected the next control level that it had
evaluated--a nominal 0.15 lb/mmBtu level--which would result in an
average cost of approximately $1,500 [1990$, or $1,900 (1999$)]
per
ton. The EPA determined that this control level did not present the
uncertainty concerns associated with the 0.12 level. The EPA added, in
this 1998 rule: ``With a strong need to implement a program by 2003
that is recognized by the States as practical, necessary, and broadly
accepted as highly cost-effective, the Agency has decided to base the
emissions budgets for EGUs on a 0.15 * * * level.'' (63 FR 57401--
57402). The EPA summarized its approach as determining ``the required
emission levels * * * based on the application of NOX
controls that achieve the greatest feasible emissions reduction while
still falling within a cost-per-ton reduced range that EPA considers to
be highly cost-effective.* * *'' (63 FR 57399).
The bulk of the cost for reducing NOX emissions for EGUs
is in the capital investment in the control equipment, which would be
the same whether controls are installed for ozone season only, or for
annual controls. The increased costs to run the equipment annually
instead of only in the ozone season is relatively small. Although the
NOX SIP Call is an ozone season NOX reduction
program, most of the NOX control costs on the reference list
are for annual reductions. If the NOX SIP Call were an
annual program instead of seasonal, its average control costs would be
lower, relative to the annual control costs in the reference list.
ii. Other Factors
In the NOX SIP Call, although considering air quality
and cost to be the primary factors for determining significant
contribution, EPA identified several other factors that it generally
considered. As one factor, EPA reviewed ``overall considerations of
fairness related to the control regimes required of the downwind and
upwind areas,'' particularly, the fact that the major urban
nonattainment areas in the East had implemented controls on virtually
all portions of their inventory of ozone precursors, but upwind sources
had not implemented reductions intended to reduce their impacts
downwind (63 FR 57404).
As another factor, EPA generally considered ``the cost
effectiveness of additional local reductions in the * * * ozone
nonattainment areas.'' The EPA included in the record information that
nationally, on average, additional local measures would cost more than
the cost of the upwind controls required under the NOX SIP
Call. This consideration further indicated that the regional controls
under the NOX SIP Call were highly cost effective (63 FR 57404).
In addition, EPA conducted air quality modeling to determine the
impact of the controls, and found that they benefitted the downwind
areas without being more than necessary for those areas to attain (63
FR 57403--57404).
c. Proposed Criteria for Emissions Reduction Requirements
i. General Criteria
In the CAIR NPR, EPA proposed criteria for determining the
appropriate levels of annual emissions reductions for SO2
and NOX and ozone-season emissions reductions for
NOX. The EPA stated that it considers a variety of factors
in evaluating the source categories from which highly cost-effective
reductions may be available and the level of reduction assumed from
that sector. These include:
? The availability of information,
? The identification of source categories emitting
relatively large amounts of the relevant emissions,
? The performance and applicability of control measures,
? The cost effectiveness of control measures, and
? Engineering and financial factors that affect the
availability of control measures (69 FR 4611).
Further, EPA stated that overall, ``We are striving * * * to set up
a reasonable balance of regional and local controls to provide a cost-
effective and equitable governmental approach to attainment with the
NAAQS for fine particles and ozone.'' (69 FR 4612)
The EPA has used these types of criteria in a number of efforts to
develop regional and national strategies to reduce interstate transport
of SO2 and NOX. Starting in 1996, EPA performed
analysis and engaged in dialogue with power companies, States,
environmental groups and other interested groups in the Clean Air Power
Initiative (CAPI).\53\ In that study of national emission reduction
strategies, EPA initially considered an emissions cap based on a 50
percent reduction in SO2 emissions from title IV levels
(i.e., 4.5 million tons nationwide) in 2010. For NOX, EPA
initially looked at ozone season and non-ozone season caps. Commencing
in 2000, the ozone season emissions cap would be based on an emission
rate of 0.20 lb/mmBtu, and in 2005, the ozone season cap would be
reduced to a level based on 0.15 lb/mmBtu (these cap levels would be
similar to the phased caps adopted by the Ozone Transport Commission
(OTC) States). The non-ozone season cap would be based on the proposed
title IV phase II NOX rule. The EPA also considered other
options in the CAPI study, including setting NOX caps based
on emission rates of 0.20 lb/mmBtu and 0.25 lb/mmBtu; setting
NOX caps based on rates of 0.15 lb/mmBtu and 0.20 lb/mmBtu
but lowering the SO2 allowance cap by 60 percent instead of
50 percent; and, keeping a NOX cap based on a rate of 0.15
lb/mmBtu but lowering the SO2 allowance cap by 50 percent in
2005 instead of in 2010.
---------------------------------------------------------------------------
\53\ U.S. Environmental Protection Agency, Office of Air and
Radiation, EPA's Clean Air Power Initiative, October 1996.
---------------------------------------------------------------------------
The EPA did a follow-up study in 1999 and discussed those results
with various stakeholder groups, as well.\54\ That study considered a
variety of SO2 emission caps ranging from a 40 percent
reduction from title IV cap levels in 2010 to a 55 percent reduction
from title IV cap levels in 2010. The 1999 study did not consider
additional reductions in NOX emissions beyond those required
under the NOX SIP Call.
---------------------------------------------------------------------------
\54\ U.S. Environmental Protection Agency, Office of Air and
Radiation, Analysis of Emission Reduction Options for the Electric
Power Industry, March 1999.
---------------------------------------------------------------------------
In the last several years, EPA has performed significant additional
analysis in support of the proposed Clear Skies Act.\55\ That
legislation, proposed in 2002 and 2003, would include nationwide
SO2 caps of 4.5 million tons in 2010 and 3.0 million tons in
2018 (i.e., 50 percent and 67 percent reductions from title IV cap
levels). The Clear Skies Act also includes a two-phase, two-zone
NOX emission cap program, with the first phase in 2008 and
the second phase in 2018. In the 2003 legislation, the first phase
NOX caps would result in effective NOX emissions
rates of 0.16 lb/mmBtu in the east and 0.20 lb/mmBtu in the west, and
the second phase would result in effective emission rates of 0.12 lb/
mmBtu in the east and 0.20 lb/mmBtu in the west.
---------------------------------------------------------------------------
\55\ EPA's Clear Skies Act analysis is on the web at: http://
www.epa.gov/air/clearskies/technical.html.
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[[Page 25200]]
ii. Reliance on Average and Marginal Cost Effectiveness
In the CAIR NPR, EPA supported the conclusion that its emissions
caps are highly cost effective based upon ``(1) comparison to the
average cost effectiveness of other regulatory actions and (2)
comparison to the marginal cost effectiveness of other regulatory
actions.'' (69 FR 4585). We supplemented these comparisons of cost-
effectiveness tables with an auxiliary evaluation of the marginal costs
curves, which allowed us to show that the selected control levels would
be ``below the point at which there would be significant diminishing
returns on the dollars spent for pollution control.'' (69 FR 4614).
Although in the NOX SIP Call, EPA based the required
controls on average cost alone, in today's rule, EPA uses both average
and marginal costs, including an evaluation of the marginal cost
curves. At the time of the NOX SIP Call, marginal cost
information was not as readily available. Today, such information is
available for both SO2 and NOX controls, although
marginal cost information remains more limited and EPA has had to
specifically develop marginal cost estimates for use in this rulemaking.
Marginal costs are a useful measure of cost effectiveness because
they indicate how much any additional level of control at the margin
will cost relative to other actions that are available. Using both
average and marginal control costs, provides a more complete picture of
the costs of controls than using average costs alone. Average costs
provide a means for a straightforward comparison between the CAIR and
other emissions reductions programs for which average costs are
generally the only type of costs available. Where marginal cost
information is available, it enables EPA to compare the costs of the
CAIR at the stringency level being considered to the costs of the last
increment of control in other programs. Moreover, evaluation of
marginal cost curves allows us to corroborate that the selected level
of stringency of the selected program stops short of the point where
the returns begin to diminish significantly.
Projected marginal cost information for controlling emissions from
EGUs is now available for some State programs, because EPA includes the
programs in its base case power sector modeling using the IPM to
develop the incremental costs of electricity production for the CAIR.
Marginal EGU control costs from State programs modeled using the IPM
were compared to projected marginal EGU control costs under the CAIR,
as discussed in more detail below.
3. What Are the Most Significant Comments That EPA Received About Its
Proposed Methodology for Determining the Amounts of SO2 and
NOX Emissions That Must Be Eliminated, and What Are EPA's Responses?
Some commenters took issue with EPA's reliance on cost-per-ton-of-
emissions-reductions as the metric for determining cost effectiveness.
These commenters observed that this metric does not take into account
that any given ton of pollutant reduction may have different impacts on
ambient concentration and human exposure. Some of these commenters
advocated use of a metric based on cost per unit of pollutant
concentration reduced. Another stated that EPA should account for cost
effectiveness based on geographical location relative to the area of
nonattainment.
Still other commenters took a contrasting view. They argued that a
metric based on cost-per-ambient-impact might be useful in justifying
control cost effectiveness for source categories within an individual
nonattainment area as part of an attainment SIP, but not for evaluating
costs of controlling long-range transport. These commenters stated that
it is impractical to calculate cost effectiveness of control on the
basis of cost per unit reduction in ambient concentration. One queried:
``Where would the ambient reduction be measured? 100 miles downwind?
1,500 miles downwind?''
The EPA agrees that optimally, the cost-per-ambient-impact of
controls could play a major role in determining upwind control
obligations (although equitable considerations and other factors
identified in the NOX SIP Call rulemaking and today's action
may also play a role). The EPA recognized the potential importance of
this factor during the NOX SIP Call rulemaking and
endeavored to develop technical information to support it. However, in
that rulemaking, EPA was not able to develop an approach to quantify,
with sufficient accuracy, cost-per-ambient impact because the
NOX SIP Call region was large--covering approximately half
of the continental U.S. and including approximately half the States--
and many upwind States with different emissions inventories had widely
varied impacts on many different nonattainment areas downwind.
This problem--the complexity of the task and the dearth of analytic
tools--remains today for both PM2.5 and 8-hour ozone
regional transport. Not surprisingly, no commenter presented to EPA the
analytic tools, which we would expect would consist of a complex,
computerized program that could integrate, on a State-by-State basis,
both control costs and ambient impacts by each State on each of its
downwind receptors under the CAIR control scenario.
In the absence of a scientifically defensible, practicable method
for implementing a program design approach based on the cost-per-
ambient-impact of emissions reductions, EPA is not able to employ such
an approach. However, EPA believes it appropriate to continue to
examine ways to develop such an approach for future use.
A few commenters suggested that EPA should use a cost-benefit
analysis for determining reduction levels. One noted that cost-benefit
analysis can help find the reduction levels that maximize societal net
benefit (benefits minus costs), and suggested the Agency should compare
the marginal cost of each ton of pollutant reduced to the marginal
benefit achieved, as well as compare the total costs to the total
benefits. Another stated that an optimal allocation of resources is
where the marginal cost equals the marginal benefit, and observed that
comparing the average cost to the average benefit of the controls
proposed in the CAIR NPR yields an average benefit significantly higher
than the average cost. This commenter concluded that EPA should require
controls beyond the controls described in the NPR as highly cost effective.
Although EPA strongly agrees that examination of costs and benefits
is very useful, in today's rulemaking, EPA does not interpret CAA
section 110(a)(2)(D) to base the amount of emissions reductions on
benefits other than progress towards attainment of the PM2.5
or the 8-hour ozone NAAQS. The EPA's interpretation does, however, use
cost effectiveness per ton of pollutant reduced, and we are using that
analytic tool for setting SO2 and NOX emission
reduction requirements. Additionally, EPA has prepared a cost-benefit
analysis to inform the Agency and public of the many other important
impacts of this rulemaking.
A few commenters suggested that the Agency should set its
NOX and SO2 reduction requirements based on Best
Available Control Technology (BACT) emission rates for EGUs. Although
not clearly stated, the commenters appear to suggest BACT level
controls for both existing and new units.
The emission reduction requirements that EPA determined are based
on the application of highly cost-effective
[[Page 25201]]
controls that are a step that the Agency is taking at this time to
eliminate emissions that contribute significantly to nonattainment of
the ozone and fine particle NAAQS. As explained elsewhere, this step is
reasonable in light of the current status of implementation for those NAAQS.
Basing emission reduction requirements on a presumption of BACT
emission rates across the board would require scrubbers and SCRs on all
coal-fired units and SCRs on all gas-fired and oil-fired units. The
cost of these controls would vary considerably from source to source,
be expensive for many sources, and may cause substantial fuel switching
to natural gas and closure of smaller coal-fired units. Having
considered this suggestion for deeper regional reductions that would
not be as cost effective as the highly cost-effective reductions in
today's rule, EPA believes that a more tailored approach, such as the
CAIR level control as well as local controls under SIPs (where
necessary), is a more reasonable approach to achieving the level of
ambient improvement needed for attainment throughout the United States.
4. The EPA's Evaluation of Highly Cost-Effective SO2 and
NOX Emissions Reductions Based on Controlling EGUs
a. SO2 Emissions Reductions Requirements
i. CAIR Proposal for SO2
The NPR focused primarily on determining highly cost-effective
amounts of emissions reductions based on, as in the NOX SIP
Call, comparison to reference lists of the cost effectiveness of other
regulatory controls. In the NPR, EPA developed reference lists for both
the average cost effectiveness and the marginal cost effectiveness of
those other controls. These reference lists indicated that the average
annual costs per ton of SO2 removed ranged from $500 to
$2,100; and marginal costs of SO2 removal ranged from $800
to $2,200.
Moreover, EPA further considered the cost effectiveness of
alternative stringency levels for this regulatory proposal. That is,
EPA examined changes in the marginal cost curve at varying levels of
emissions reductions. The EPA determined in the NPR that the ``knee''
in the marginal cost-effectiveness curve--the point at which the
marginal cost per ton of SO2 removed begins to increase at a
noticeably higher rate--appears to start above $1,200 per ton (69 FR
4613--4615).
In the NPR, EPA then provided further analysis of a two-phase
SO2 reduction program. The final (second) phase, in 2015,
would reduce SO2 emissions in the CAIR region by the amount
that results from making a 65 percent reduction from the title IV Phase
II allowance levels (taking into consideration the existing bank of
title IV SO2 allowances). The first phase, in 2010, would
reduce SO2 emissions in the CAIR region by a lesser amount,
i.e., a 50 percent reduction from title IV Phase II allowance levels
(again, taking into consideration the banked title IV SO2
allowances). The EPA developed this target SO2 control level
for further evaluation because, based on all of the earlier work
performed on multi-pollutant power plant reduction programs and general
consideration, with technical support, of overall emissions reductions,
costs to industry and the general public, ambient improvement, and
consistency with the emerging PM2.5 implementation program,
we believed it would meet the criteria set forth above.
Then, EPA conducted cost analyses of this control level using the
IPM as well as additional analysis of the implications of this control
level to determine if it did indeed meet those criteria. The IPM
analysis considered the increase in annual electric generation
production costs in the CAIR region that result from the rule. The EPA
evaluated the cost effectiveness of the final phase (2015) cap to
determine if it is highly cost effective; and, we also evaluated the
cost effectiveness of the 2010 cap. The EPA used the IPM to estimate
cost effectiveness of the CAIR in the future. The IPM incorporates
projections of future electricity demand, and thus heat input growth.
The EPA's IPM analyses for the CAIR includes all fossil fuel-fired EGUs
with capacity greater than 25 MW. A description of the IPM is included
elsewhere in this preamble, and a detailed model documentation is in
the docket.
The SO2 annual control costs that were presented in the
CAIR NPR were average costs of $700 per ton and $800 per ton for years
2010 and 2015, respectively, and marginal costs of $700 per ton and
$1,000 per ton for years 2010 and 2015. In addition, the NPR included
the results of sensitivity analyses that examined costs of the proposed
SO2 controls based on the Energy Information
Administration's projections for electricity growth and natural gas
prices. These sensitivity analyses showed marginal SO2
control costs of $900 per ton and $1,100 per ton for years 2010 and
2015, respectively. The EPA proposed to consider the SO2
emissions reductions proposed in the NPR as highly cost effective
because they were consistent with the lower end of the reference list
range of cost per ton of SO2 reduction for controls on both
an average and a marginal cost basis (69 FR 4613--4615).
ii. Analysis of SO2 Emission Reduction Requirements for
Today's Final Rule
(I) Reference Lists of Cost-Effective SO2 Controls
For today's action, EPA updated the reference list of controls
included in the NPR of the average and marginal costs per ton of recent
SO2 control actions. The EPA systematically developed a list
of cost information from both recent actions and proposed actions. The
EPA compiled cost information for actions taken by the Agency, and
examined the public comments submitted after the NPR was published, to
identify all available control cost information to provide the updated
reference list for today's preamble. The updated reference list
includes both average and marginal costs of control, to which EPA
compares the CAIR control costs, and the list represents what
regulatory decision makers and/or the public believes are the control
costs.\56\
---------------------------------------------------------------------------
\56\ The updated reference list includes estimated average costs
for SO2 reductions from EGUs under best available
retrofit technology (BART) requirements. The BART rule was proposed
and has not been finalized (69 FR 25184; May 5, 2004).
---------------------------------------------------------------------------
Table IV-3 provides average costs of SO2 controls. This
table includes average costs for recent BACT permitting decisions for
SO2. Under EPA's New Source Review (NSR) program, if a
company is planning to build a new plant or modify an existing plant
such that a significant net increase in emissions will occur, the
company must obtain a NSR permit that addresses controls for air
emissions. BACT is the type of control required by the NSR program for
existing sources in attainment areas. The BACT decisions are determined
on a case-by-case basis, usually by State or local permitting agencies,
and reflect consideration of average and incremental cost
effectiveness. These decisions are relevant for EPA's reference list of
average costs of SO2 controls, because they represent cost-
effective controls that have been demonstrated.
[[Page 25202]]
Table IV-3.--Average Costs per Ton of Annual SO2 Controls
------------------------------------------------------------------------
Average cost per
SO2 control action ton
------------------------------------------------------------------------
Best Available Control Technology (BACT) \1\ $400-$2,100
Determinations......................................
Nonroad Diesel Engines and Fuel...................... \2\ $800
Proposed Best Available Retrofit Technology (BART) \3\ $2,600-$3,400
for Electric Power Sector...........................
------------------------------------------------------------------------
\1\ These numbers reflect a range of cost-effectiveness data entered
into EPA's RACT/BACT/LAER Clearinghouse (RBLC) for add-on SO2 controls
(www.epa.gov/ttn/catc/). We identified actions in the data base for
large, utility-scale, coal-fired boiler units for which cost
effectiveness data were reported. The range of costs shown here is for
boilers ranging from 30 MW to an estimated 790 MW (we used a
conversion factor of 10 mmBtu/hr = 1 MW for units for which size was
reported in mmBtu/hr). Emission limits for these actions ranged from
0.10 lb/mmBtu to 0.27 lb/mmBtu. Add-on controls reported for these
units are dry or wet scrubbers (in one case with added alkali and in
one case with a baghouse). Where the dollar-year was not reported we
assumed 1999 dollars. The cost range presented in the NPR was $500-
$2,100-today's range includes additional BACT costs that were entered
into the clearinghouse after the NPR was published.
\2\ Control of Emissions of Air Pollution From Nonroad Diesel Engines
and Fuel; Final Rule (69 FR 39131; June 29, 2004). The value in this
table represents the long-term cost per ton of emissions reduced from
the total fuel and engine program (cost per ton of emissions reduced
in the year 2030). 1999$ per ton.
\3\ The EPA IPM modeling 2004, available in the docket. The EPA modeled
the Regional Haze Requirements as source specific limits (90 percent
SO2 reduction or 0.1 lb/mmBtu rate; except the five state WRAP region
for which we did not model SO2 controls beyond what is done for the
WRAP cap in the base case modeling). Estimated average costs based on
this modeling are $2,600 per ton in 2015 and $3,400 per ton in 2020.
1999$ per ton.
Table IV-4 provides the marginal cost per ton of recent State and
regional decisions for annual SO2 controls.
Table IV-4.--Marginal Costs per Ton of Annual SO2 Controls
------------------------------------------------------------------------
Marginal cost per
SO2 control action ton
------------------------------------------------------------------------
New Hampshire Rule................................... \1\ $600
WRAP Regional SO2 Trading Program.................... \2\ $1,100-$2,200
------------------------------------------------------------------------
\1\ The EPA IPM base case modeling August 2004, available in the docket.
(1999$ per ton). We modeled New Hampshire's State Bill ENV-A2900,
which caps SO2 emissions at all existing fossil steam units.
\2\ ``An Assessment of Critical Mass for the Regional SO2 Trading
Program,'' prepared for Western Regional Air Partnership Market
Trading Forum by ICF Consulting Group, September 27, 2002, available
in the docket. This analysis looked at the implications of one or more
States choosing to opt-out of the WRAP regional SO2 trading program.
(1999$ per ton)
(II) Cost Effectiveness of the CAIR Annual SO2 Reductions
In the NPR, EPA evaluated an annual SO2 control strategy
based on a specified level of emissions reductions from EGUs. Available
information indicated that emissions reductions from this industry
would be the most cost effective. (As noted elsewhere, EPA considered
control strategies for other source categories, but concluded that they
would not qualify as highly cost-effective controls.) Of course, under
today's rule, although EPA calculates the amount of emissions
reductions States must achieve by evaluation of the EGU control
strategy, States remain free to achieve those reductions by
implementing controls on any sources they wish.
For today's action, EPA updated the predicted annual SO2
control costs included in the NPR. The EPA analyzed the costs of the
CAIR using an updated version of the IPM (documentation for the IPM
update is in the docket). Further, EPA modified the modeling to match
the final CAIR strategy (see section IV.A.1 for a description of EPA's
CAIR IPM modeling).
The EPA also updated its analysis of the sensitivity of the
marginal cost results to assumptions of higher electric growth and
natural gas prices than we used in the base case. These sensitivity
analyses were based on the Energy Information Administration's Annual
Energy Outlook for 2004.\57\
---------------------------------------------------------------------------
\57\ The EPA used the difference between EIA's estimates for
well-head natural gas prices and minemouth coal prices to determine
the sensitivity of IPM's results to higher natural gas prices. The
EPA describes this sensitivity analysis as ``EIA natural gas
prices''. For electric demand, we replaced EPA's assumed annual
growth of 1.6 percent with EIA's projection of annual growth of 1.8 percent.
---------------------------------------------------------------------------
In determining whether our control strategy is highly cost
effective, EPA believes it is important to account for the variable
levels of cost effectiveness that these sensitivity analyses indicate
may occur if electricity demand or natural gas prices are appreciably
higher than assumed in the IPM. Those two factors are key determinants
of control costs and, over the relatively long implementation period
provided under today's action, a meaningful degree of risk arises that
these factors may well vary to the extent indicated by the sensitivity
analyses. As a result, EPA wanted to examine the marginal costs that
would occur under the scenarios modeled in the sensitivity analyses to
see how they differed from the costs using EPA's assumptions.
Table IV-5 provides the average and marginal costs of annual
SO2 reductions under the CAIR for 2010 and 2015. (When
presenting estimated CAIR control costs in section IV of this preamble,
EPA uses ``Main Case'' to indicate the primary CAIR IPM analyses, as
differentiated from other IPM analyses such as sensitivity runs used to
examine the impacts of varying assumptions about natural gas price and
electric growth.)
Table IV-5.--Estimated Costs Per Tons of SO2 Controlled Under CAIR, Cap
Levels Beginning in 2010 and 2015 \1\
------------------------------------------------------------------------
Type of cost effectiveness 2010 2015
------------------------------------------------------------------------
Average Cost--Main Case............................... $500 $700
Marginal Cost--Main Case.............................. 700 1,000
[[Page 25203]]
Sensitivity Analysis: Marginal Cost Using EIA Electric 800 1,200
Growth and Natural Gas Prices........................
------------------------------------------------------------------------
\1\ The EPA IPM modeling 2004, available in the docket. $1999 per ton.
These estimated SO2 control costs under the CAIR reflect
annual EGU SO2 caps of 3.6 million tons in 2010 and 2.5
million tons in 2015 within the CAIR region. Based on IPM modeling, EPA
projects that SO2 emissions in the CAIR region will be about
5.1 million tons in 2010 and 4.0 million tons in 2015. The projected
emissions are above the cap levels because of the use of the existing
title IV bank of SO2 allowances. Average costs shown for
2015 are an estimate of the average cost per ton to achieve the total
difference in projected emissions between the base case conditions and
the CAIR in the year 2015 (the 2015 average costs are not based on the
increment in reductions between 2010 and 2015). (A more detailed
description of the final CAIR SO2 and NOX control
requirements is provided below in today's preamble.)
(III) SO2 Cost Comparison for CAIR Requirements
The EPA believes that if an SO2 control strategy has a
cost effectiveness that is at the low end of the updated reference
tables, the approach should be considered to be highly cost effective.
The costs in the reference range should be considered to be cost
effective because they represent actions that have already been taken
to reduce emissions. In deciding to require these actions, policymakers
at the local, State and Federal levels have determined them to be cost-
effective reductions to limit or reduce emissions. Thus, costs at the
bottom of the range must necessarily be considered highly cost effective.
Today's action requires SO2 emissions reductions (or an
EGU emissions cap) in 2015. The EPA has determined that those emissions
reductions are highly cost effective. In addition, today's action
requires that some of those SO2 emissions reductions (or a
higher EGU emissions cap) be implemented by 2010. The EPA has examined
the cost effectiveness of implementing those earlier emissions
reductions (or cap) by 2010, and determined that they are also highly
cost effective.
The cost of the SO2 reductions required under today's
action--if the States choose to implement those reductions through
EGUs, for which the most cost-effective reductions are available--on
average and at the margin, are at the lower end of the range of cost
effectiveness of other, recent SO2 control requirements.\58\
This is true for our analysis of both the costs EPA generally expects
as well as the somewhat higher costs that would result from higher than
expected electricity demand and natural gas prices, as indicated in the
sensitivity analyses that EPA has done.
---------------------------------------------------------------------------
\58\ The updated reference list of average SO2
control costs includes estimated average EGU costs under BART. The
BART rule has been proposed but not finalized (69 FR 25184; May 5, 2004).
---------------------------------------------------------------------------
Specifically, the average cost effectiveness of the SO2
requirements is $700 per ton removed in 2015. This amount falls toward
the low end of the reference range of average costs per ton removed of
$400 to $3,400. Similarly, the marginal cost effectiveness of the
SO2 requirements ranges from $1,000 to $1,200 for 2015 (with
the higher end of the range based on the sensitivity analyses). These
amounts fall toward the lower end of the reference range of marginal
cost per ton removed of $600 to $2,200.
The EPA believes that selecting as highly cost-effective amounts
toward the lower end of our average and marginal cost ranges for
SO2 and NOX control is appropriate because
today's rulemaking is an early step in the process of addressing
PM2.5 and 8-hour ozone nonattainment and maintenance
requirements. The CAA requires States to submit section 110(a)(2)(D)
plans to address interstate transport, and overall attainment plans to
ensure the NAAQS are met in local areas. By taking the early step of
finalizing the CAIR, we are requiring a very substantial air emission
reduction that addresses interstate transport of PM2.5 as
well as a further reduction in interstate transport of ozone beyond
that required by the NOX SIP Call Rule. Much of the air
quality improvement resulting from reduced transport is likely to occur
through broad and deep emissions reductions from the electric power
sector, which has been a major part of the transport problem. Other air
quality benefits will occur as the result of Federal mobile source
regulations for new sources, which cover passenger vehicles and light
trucks, heavy-duty trucks and buses, and non-road diesel equipment.
Against this backdrop of Federal actions that lower air emissions
(as well as some substantial State control programs), States will
develop plans designed to achieve the standards in their local
nonattainment areas. The EPA has not yet promulgated rules interpreting
the CAA's requirements for SIPs for PM2.5 and ozone
nonattainment areas,\59\ nor have States developed plans to demonstrate
attainment. As a result, there are significant uncertainties regarding
potential reductions and control costs associated with State plans. We
believe that some areas are likely to attain the standards in the near
term through early CAIR reductions and local controls that have costs
per ton similar to the levels we have determined to be highly cost
effective. We expect that other areas with higher PM2.5 or
ozone levels will determine through the attainment planning process
that they need greater emissions reductions, at higher costs per ton,
to reach attainment within the CAA's timeframes. For those areas,
States will need to assess targeted measures for achieving local
attainment in a cost-effective (but not necessarily highly cost-
effective) manner, in combination with the CAIR's significant
reductions. Given the uncertainties that exist at this early stage of
the implementation process, EPA believes this rule is a rational
approach to determining the highly cost-effective reductions in
PM2.5 and ozone precursors that should be required for
interstate transport purposes.
---------------------------------------------------------------------------
\59\ EPA did promulgate Phase I of the ozone implementation rule
in April 2004 (69 FR 23951; April 30, 2004) but has not issued Phase
II of the rule, which will interpret CAA requirements relating to
local controls (e.g., RACT, RACM, RFP).
---------------------------------------------------------------------------
As discussed above, the Agency believes this approach is consistent
with our action in the NOX SIP Call. While the cost level
selected for the NOX SIP Call was not at the low end of the
reference range of costs, if the NOX SIP Call costs were for
annual rather than seasonal controls they would have been lower
relative to the annual control costs on the list. This would make the
relationship between the cost of the NOX SIP Call and the
reference costs used in that rulemaking, more similar to relative costs
of CAIR compared to its reference lists. Also, significant local
controls for meeting the 1-hour ozone standard had already been adopted
in many areas.
Although EPA's primary cost-effectiveness determination is for the
2015 emissions reductions levels, the Agency also evaluated the cost
effectiveness of the interim phase control levels to ensure that they
were also highly cost effective. For the SO2 requirements
for 2010, the average cost effectiveness is $500 per ton removed, and
the marginal cost effectiveness
[[Page 25204]]
ranges from $700 to $800. The 2010 costs indicate that the interim
phase CAIR reductions are also highly cost-effective.
(IV) Cost Effectiveness: Marginal Cost Curves for SO2 Control
As noted above, the Agency also considered another factor to
corroborate its conclusion concerning the cost effectiveness of the
selected levels of control:
[GRAPHIC]
[TIFF OMITTED]
TR12MY05.000
The cost effectiveness of alternative stringency levels for today's
action. Specifically, EPA examined changes in the marginal cost curve
at varying levels of emissions reductions for EGUs. Figure IV-1 shows
that the ``knee'' in the 2010 marginal cost-effectiveness curve--the
point where the cost of controlling a ton of SO2 from EGUs
is increasing at a noticeably higher rate--appears to occur at about
$2,000 per ton of SO2. Figure IV-2 shows that the ``knee''
in the 2015 marginal cost-effectiveness curve also appears to occur at
about $2,000 per ton of SO2. (As discussed above, the
projected marginal costs of SO2 reductions for the CAIR are
$700 per ton in 2010 and $1,000 per ton in 2015.) The EPA used the
Technology Retrofitting Updating Model (TRUM), a spreadsheet model
based on the IPM, for this analysis. (The EPA based these marginal
SO2 cost-effectiveness curves on the electric growth and
natural gas price assumptions in the main CAIR IPM modeling run.
Marginal cost effectiveness curves based on other electric growth and
natural gas price assumptions would look different, therefore it would
not be appropriate to compare the curves here to the marginal costs
based on the IPM modeling sensitivity run that used EIA assumptions.)
These results make clear that this rule is very cost effective because
the control level is below the point at which the cost begins to
increase at a significantly higher rate.
In this manner, these results corroborate EPA's findings above
concerning the cost effectiveness of the emissions reductions.\60\
---------------------------------------------------------------------------
\60\ EPA is using the knee in the curve analysis solely to show
that the required emissions reductions are very cost effective. The
marginal cost curve reflects only emissions reduction and cost
information, and not other considerations. We note that it might be
reasonable in a particular regulatory action to require emissions
reductions past the knee of the curve to reduce overall costs of
meeting the NAAQS or to achieve benefits that exceed costs. It
should be noted that similar analysis for other source categories
may yield different curves.
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[[Page 25205]]
[GRAPHIC]
[TIFF OMITTED]
TR12MY05.001
b. NOX Emissions Reductions Requirements
i. The CAIR Proposal for NOX and Subsequent Analyses for
Regionwide Annual and Ozone Season NOX Control Levels
In this section, EPA describes its proposed method for determining
regionwide NOX control levels and the method used for the
final CAIR.
In the CAIR NPR, EPA updated the reference list included in the
NOX SIP Call for the average annual cost effectiveness of
recent or proposed NOX controls, and determined that these
amounts ranged from approximately $200 to $2,800. In addition, in the
NPR, EPA developed a reference list for marginal annual cost
effectiveness for NOX controls, and determined that these
amounts ranged from approximately $1,400 to $3,000 (69 FR 4614--4615).
In the NPR, EPA proposed a two-phased annual NOX control
program, with a final phase in 2015 and a first phase in 2010. The
regionwide emissions reduction requirements that EPA proposed--and the
budget levels that would apply if all States chose to implement the
reductions from EGUs--were based on using a combination of recent
historical heat input and NOX emissions rates for fossil
fuel-fired EGUs. For historical heat input, EPA proposed determining
the highest heat input from units affected by the Acid Rain Program for
each affected State for the years 1999-2002. The EPA then summed this
heat input for all of the States affected for annual NOX
reductions. For 2015, EPA calculated a proposed regionwide annual
NOX budget by multiplying this heat input by an emission
rate of 0.125 lb/mmBtu, and for 2010 by multiplying by 0.15 lb/mmBtu.
In developing the CAIR NPR, when EPA considered the appropriate
amount of annual SO2 emissions reductions, EPA relied on the
existing title IV annual SO2 cap as a starting point.
However, in considering the appropriate amount of NOX
reductions, the situation is different because title IV does not cap
NOX emissions. Therefore, EPA and the States have focused on
emissions caps based on a combination of heat input and NOX
emission rates. Emission rates similar to the rates used to develop the
CAIR NPR have been considered in the past. For example, the CAPI 1996
study, noted above, contemplated NOX caps based on an
emission rate of 0.15 lb/mmBtu (and other options based on
NOX rates of 0.20 lb/mmBtu and 0.25 lb/mmBtu). The
NOX SIP Call is based on an emission rate of 0.15 lb/mmBtu.
The methodology described in the NPR is best understood as the
means for developing the target 2015 annual NOX control
level (or emissions budget) for further evaluation through IPM. The EPA
developed this level mindful of its experience to date with the
NOX SIP Call and the earlier work EPA has performed on
multi-pollutant power plant reduction programs. The EPA also considered
available technical information on pollution controls, costs to
industry and the general public, ambient air improvement, and
consistency with the emerging PM2.5 implementation program,
in developing its target control level.
Recent advances in combustion control technology for NOX
reductions, as well as widespread use of selective catalytic reduction
(SCR) on U.S. coal-fired EGU boilers achieving NOX emission
rates of 0.06 lb/mmBtu and below, provide evidence that even lower
average NOX emission rates are more highly cost-effective
than rates considered in the past (based on analyzing EGUs), possibly
on the order of 0.12 lb/mmBtu or less. The EPA developed the target
annual NOX control level (or emissions budget) with
[[Page 25206]]
the understanding that the evaluation of that level might indicate that
average emission rates on the order of 0.12 lb/mmBtu or less might be
highly cost effective for the final (2015) control phase, and an
interim level resulting in an average emission rate of less than 0.15
lb/mmBtu might be feasible for the first phase.
The EPA did evaluate the target annual NOX control
levels (or emissions budgets) using the IPM. The EPA confirmed that the
2015 level is highly cost effective. The Agency also evaluated the cost
effectiveness of the proposed 2010 cap to assure that the interim phase
reductions would also be highly cost effective. The EPA's IPM analyses
for the CAIR includes all fossil fuel-fired EGUs with generating
capacity greater than 25 MW.
The proposed cap for the first phase was developed taking into
consideration how much pollution control for NOX and
SO2 could be installed without running into a shortage of
skilled labor, in particular boilermakers (EPA's assumptions regarding
boilermaker labor are described in section IV.C.2 of this preamble).
The Agency focused on providing substantial reductions of both
SO2 and NOX emissions at the outset of the
proposed program, leading to significant retrofits of Flue Gas
Desulfurization units (FGD) for SO2 control and SCR for
NOX control.
In the NPR, EPA explained that using the highest Acid Rain Program
heat input for each State to develop a regionwide heat input amount,
rather than the average Acid Rain Program heat input, provided a
cushion that represented a reasonable adjustment to reflect that there
are some non-Acid Rain units that operate in these States that will be
subject to the proposed CAIR emission reduction levels. The EPA
explained that it did not use heat input data from non-Acid Rain units
in the proposal because it did not have all the necessary data
available at the time the NPR was developed.\61\ Using the highest of
recent years' Acid Rain Program heat input provided an approximation of
the regionwide heat input, although it did not include heat input from
non-Acid Rain sources. Multiplying the approximate recent heat input by
0.125 lb/mmBtu to develop a proposed regionwide annual 2015
NOX cap could reasonably be expected to yield an average
effective NOX emission rate (considering all EGUs
potentially affected by CAIR for annual reductions, not only the Acid
Rain units, and considering growth in heat input) somewhat less than
0.125 lb/mmBtu. Likewise, multiplying the approximate recent heat input
by 0.15 lb/mmBtu to develop a regionwide annual 2010 NOX cap
could reasonably be expected to yield an average effective
NOX emission rate for all CAIR units of about 0.15 lb/mmBtu
or less.
---------------------------------------------------------------------------
\61\ The EPA does not collect annual heat input data from these
non-Acid Rain units. EIA does collect heat input from such units,
however there are some limitations to the data. First, there are no
requirements specifying how the data should be collected or quality
assured. Second, the data is collected on a plant-wide basis rather
than on a unit-by-unit basis.
---------------------------------------------------------------------------
Although EPA calculated--in essence, as a target level for further
evaluation--the proposed regionwide annual NOX control
levels (or emissions budgets) based on heat input from only Acid Rain
Program units, the Agency evaluated the cost effectiveness of the
control levels using heat input from all EGUs that potentially would be
affected by the proposed CAIR. The EPA evaluated cost effectiveness
using the IPM, which includes both Acid Rain units and non-Acid Rain
units. Further, the IPM incorporates assumptions for electricity demand
growth, and thus heat input growth.
Specifically, EPA evaluated these target annual NOX caps
on EGUs for 2010 and 2015--and therefore the associated regionwide
emissions reductions--using the IPM, which, in effect, demonstrated
that these proposed NOX emissions cap levels can be met
using highly cost-effective controls with the expected levels of
electricity demand in 2010 and 2015, respectively. Those expected
levels of electricity demand are higher than the electricity demand
during the 1999 to 2002 years upon which EPA based heat input; and as a
result, the amount of heat input necessary to meet the projected
electricity demand is expected to be higher than the amount that EPA
developed for evaluation purposes through the method described above.
The projected average future emissions rates that would be associated
with the 2010 and 2015 heat input levels needed to meet electricity
demand (coupled with the NOX emissions budgets developed
through the methodology described above) would be about 0.14 lb/mmBtu
and 0.11 lb/mmBtu in 2010 and 2015, respectively.\62\ These average
rates would be for all units affected by annual NOX controls
under CAIR, including non-Acid Rain units. Thus, the heat input is
projected to be higher in 2010 and 2015 than the recent historic heat
input used to develop the target emissions budgets, and the projected
NOX emission rates in 2010 and 2015 are lower than the 0.15
lb/mmBtu and 0.125 lb/mmBtu rates that were used to develop the
budgets. IPM determined the costs of meeting these average future
NOX emission rates of 0.14 lb/mmBtu and 0.11 lb/mmBtu. The
EPA considers these emission rates to be highly cost-effective and
feasible.
---------------------------------------------------------------------------
\62\ These projected average NOX emissions rates are
from updated IPM modeling done in 2004. The IPM modeling done prior
to the NPR also projected similar average emission rates, about 0.15
lb/mmBtu and 0.11 lb/mmBtu in 2010 and 2015, respectively.
---------------------------------------------------------------------------
In the NPR, EPA proposed an interim (Phase I) annual NOX
phase in 2010 and a final (Phase II) annual NOX phase in
2015. However, in today's final rule, EPA is promulgating a Phase I for
NOX in 2009 (with the Phase II for NOX in 2015,
as proposed). The EPA determined the regionwide NOX control
levels for 2009 and 2015 for today's final action using the same
methodology as we used to determine proposed levels. The Agency
evaluated the cost effectiveness of the final reduction requirements
(and average NOX emission rates) using IPM and determined
them to be highly cost-effective, assuming controls on EGUs. The EPA's
evaluation of the cost effectiveness of the emission reduction strategy
we assumed in establishing the final CAIR control levels is discussed
further below.
The average NOX emission rates in the first and second
phases of CAIR will be lower than the nominal emission rate on which
the NOX SIP Call was based, which was 0.15 lb/mmBtu. In the
NOX SIP Call, EPA also considered a control level based on a
lower nominal emission rate, 0.12 lb/mmBtu. However, at that time the
use of SCR was not sufficiently widespread to allow EPA to conclude
that the controls necessary to meet a tighter cap could be installed in
the required timeframe, without causing reliability problems for the
electric power sector. Now, through the experience gained from the
NOX SIP Call, EPA has confidence that with SCR technology
average emissions rates lower than the NOX SIP Call nominal
emission rate can be achieved on a regionwide basis.
In the CAIR NPR, after determining the regionwide control level and
evaluating it to assure that it is highly cost-effective, the Agency
then apportioned the regionwide budgets to the affected States. The EPA
proposed to apportion regionwide NOX budgets to individual
States on the basis of each State's share of recent average heat input.
In the NPR, EPA used the average share of Acid Rain Program heat input.
However, as discussed in the SNPR and the NODA, in order to distribute
more equitably to States their share of the regionwide NOX
budgets, EPA then
[[Page 25207]]
considered each State's proportional share of recent average heat input
using data from non-Acid Rain Program sources as well as Acid Rain
Program sources. The EPA obtained EIA heat input data reported for non-
Acid Rain sources and combined the EIA heat inputs with Acid Rain heat
inputs to determine each State's share of combined average recent heat
input.
The fact that EPA distributed the regionwide budget to individual
States based on their proportional share of heat input from Acid Rain
and non-Acid Rain units combined does not affect the determination of
the regionwide budgets themselves. The regionwide budgets were
determined to be highly cost-effective when tested for all units--both
non-Acid Rain units as well as Acid Rain units--that would be affected
by CAIR. (The EPA's method for apportioning regionwide NOX
budgets to States is discussed in more detail elsewhere in today's
preamble. That discussion includes an explanation of the differences
between the State budgets that were presented in the NPR, the SNPR, and
the NODA. In addition, see the TSD entitled ``Regional and State
SO2 and NOX Emissions Budgets.'')
In the NPR, EPA proposed that Connecticut contributed significantly
to downwind ozone nonattainment, but not to PM2.5
nonattainment. Thus, the Agency proposed that Connecticut would not be
subject to an annual NOX control requirement and was not
included in the region proposed for annual controls. We proposed that
Connecticut would be affected by an ozone season-only NOX
control level, and proposed to calculate Connecticut's ozone season
control level in a parallel way to how the regionwide annual
NOX control levels were calculated. That is, EPA selected
the highest of the same 4 years of (ozone season-only) heat input used
for the regionwide budget calculation, and multiplied that heat input
by the same NOX emission rates used to calculate the
regionwide control levels. Connecticut is the only State for which an
ozone season budget was proposed.
The EPA used the same methodology for developing regionwide budgets
for today's final rule as was proposed in the NPR. For the final CAIR,
EPA found that 23 States and the District of Columbia contribute
significantly to downwind PM2.5 nonattainment and found that
25 States and the District of Columbia contribute significantly to
downwind ozone nonattainment (section III in today's preamble describes
the significance determinations). CAIR requires annual NOX
reductions in all States determined to contribute significantly to
downwind PM2.5 nonattainment, and requires ozone season
NOX reductions in all States determined to contribute
significantly to downwind ozone nonattainment (many of the CAIR States
are affected by both annual and ozone season NOX reduction
requirements). The final CAIR ozone season NOX reductions
are required in two phases, with Phase I commencing in 2009 and Phase
II in 2015, the same years as the annual NOX reduction requirements.
As described above, the Agency proposed ozone season NOX
reduction requirements for Connecticut, and did not propose separate
ozone season reduction requirements in any other State. For today's
final rule, EPA requires ozone season reductions in all States
contributing significantly to downwind ozone nonattainment. The EPA
determined regionwide ozone season NOX control levels for
the final CAIR using the same methodology as was used for the annual
NOX reduction requirements (which is the same method that
was proposed for Connecticut's ozone season budget). That is, EPA
determined the highest (ozone season) heat input from Acid Rain Program
units for the years 1999-2002 for each State, then summed this heat
input for all of the States affected for ozone season NOX
reductions. For the final 2015 control level, EPA calculated a
regionwide ozone season NOX budget by multiplying this heat
input by an emission rate of 0.125 lb/mmBtu, and for 2009 by
multiplying by 0.15 lb/mmBtu. The Agency evaluated the cost
effectiveness of these ozone season NOX control levels (and
average NOX emission rates) using IPM and determined them to
be highly cost-effective, assuming controls on EGUs. The EPA's
evaluation of the cost effectiveness of the final CAIR control
requirements is discussed further below.
Based on EPA's analysis of proposed annual NOX control
levels, in the NPR the Agency presented average costs for annual
NOX control of $800 per ton and $700 per ton for 2010 and
2015, and marginal costs of $1,300 per ton and $1,500 per ton for 2010
and 2015. In the NPR, EPA also presented marginal costs of annual
NOX control from sensitivity analyses that used EIA
assumptions for electricity growth and natural gas prices. Those
marginal control costs were $1,300 per ton and $1,600 per ton for 2010
and 2015, respectively. The EPA also presented costs from a sensitivity
model run that used EIA assumptions for electricity growth and natural
gas price and higher SCR costs. These marginal control costs were
$1,700 per ton and $2,200 per ton for 2010 and 2015, respectively.\63\
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\63\ The control costs for this model sensitivity that were
presented in the NPR were in error (69 FR 4615). The corrected costs
from the sensitivity are as shown here.
---------------------------------------------------------------------------
In the NPR, EPA also presented the average cost effectiveness for
ozone season-only NOX control of $1,000 per ton and $1,500
per ton for 2010 and 2015, respectively, and a marginal cost for ozone
season-only control of $2,200 per ton and $2,600 per ton for 2010 and
2015. The EPA also presented average costs for the non-ozone season
(remaining seven months of the year) control of $700 per ton and $500
per ton in 2010 and 2015, respectively. (As noted above, the capital
costs of installing NOX control equipment would be largely
identical whether the equipment will be operated during the ozone
season only or for the entire year. However, the amount of reductions
would be less if the control equipment were operated only during the
ozone season compared to annual operation.)
The EPA proposed the conclusion that these costs met the criteria
for highly cost-effective emissions reductions for NOX (69
FR 4613-4615).
As with SO2, EPA also considered the cost effectiveness
of alternative stringency levels for this regulatory proposal
(examining changes in the marginal cost curve at varying levels of
emission reductions).
ii. What Are the Most Significant Comments That EPA Received About
Proposed NOX Emission Reduction Requirements, and What Are
EPA's Responses?
Some commenters expressed concern that EPA did not account for
growth of heat input in calculating regionwide NOX emissions
budgets, noting that growth was used in the calculation of the regional
budget for the NOX SIP Call. Commenters suggest that, by not
taking heat input growth into account, EPA developed regionwide budgets
that are unduly stringent.
On the other hand, some commenters noted that they supported EPA's
proposal to base regionwide budgets on historical heat input and did
not want EPA to use growth projections for calculating regionwide
NOX emissions budgets. Some stated that using actual,
historic heat input numbers would be more straightforward than using
growth projections, and some pointed to complications with the growth
projection methodologies used in the NOX SIP Call.
The EPA recognizes that it employed a growth factor in the
NOX SIP Call.
[[Page 25208]]
There, EPA determined the amount of the regional emissions reductions
and budgets by applying a growth factor to a historic heat input
baseline. The DC Circuit, after first remanding that growth methodology
for a better explanation, upheld it. West Virginia v. EPA, 362 F.3d 861
(DC Cir., 2004). See 67 FR 21868 (May 1, 2002).
For CAIR, as described above, EPA developed a target level for the
proposed NOX regionwide cap based on recent historic heat
input and assumed emission rates of 0.125 lb/mmBtu and 0.15 lb/mmBtu
for 2015 and 2010, respectively. The EPA evaluated these target
NOX emissions levels using IPM, which indicated that those
target caps--in conjunction with expected electricity demand for 2015
and 2010--would result from higher heat input levels and lower average
emissions rates (about 0.11 lb/mmBtu and 0.14 lb/mmBtu for 2015 and
2010, respectively) than the amounts assumed in developing the target
NOX caps. Most importantly, IPM indicated the cost levels
associated with those projected 2015 and 2010 average NOX
emission rates, and EPA has determined that those cost levels are
highly cost-effective. For the final rule, EPA revised its analyses to
reflect the 2009 initial NOX control phase, and determined
that the final CAIR requirements are highly cost-effective. The EPA's
methodology, in which the CAIR emissions reductions are predicted to be
cost-effective under conditions of projected electricity growth that,
in turn, projects heat input growth, in effect accounts for heat input
growth. Moreover, the amount of heat input growth is the amount
determined by IPM, a state-of-the-art model of the electricity sector
(detailed documentation for IPM is in the docket).
Some commenters suggested that EPA adjust the NOX
regionwide budget amounts to include heat input from non-Acid Rain
units. For example, some suggested adding the non-Acid Rain unit heat
input amounts that EPA used in apportioning regionwide NOX
budgets to the States, to the total regionwide heat inputs that EPA
used to calculate regionwide NOX budgets.
The regionwide budgets determined in the NPR were target levels
developed as a starting point for further evaluation. The regionwide
heat input amounts and NOX emission rates used to develop
target budget levels were inherently imprecise. As discussed above, IPM
modeling indicates that the projected future heat input amounts (based
on electricity growth) are greater than the recent historic regionwide
amount used to develop the target budget levels, and the future average
emission rates for all units affected by CAIR annual NOX
controls (including non-Acid Rain units) are less than the rates used
to develop the target budget levels. IPM indicates that the target
regionwide NOX budget levels (and corresponding future
average NOX emission rates and heat input levels) are highly
cost-effective for all CAIR units, including non-Acid Rain units. The
EPA does not believe it is necessary to adjust the target regionwide
budget levels to include the relatively small additional amount of heat
input from non-Acid Rain units. The method the Agency used to develop
target levels was not intended to be a precise methodology for
determining the NOX caps; rather, it was a reasonable method
for selecting a target level to be evaluated further. Upon evaluation
of the target level, EPA determined that it can be achieved using
highly cost-effective controls for all affected EGUs, including non-
Acid Rain units.
iii. Analysis of NOX Emission Reduction Requirements for
Today's Final Rule
(I) Reference Lists of Cost-Effective Controls
For today's action, EPA updated the reference list of controls
included in the NPR of the average and marginal costs per ton of recent
NOX control actions. The EPA systematically developed a list
of cost information from recent actions and proposed actions. The
Agency sought cost information for actions taken by EPA, and examined
the comments submitted after the NPR was published, to identify all
available control cost information to provide the updated reference
list for today's preamble. The updated reference list includes both
average and marginal costs of control to which EPA compares the CAIR
control costs, although the Agency has limited information on marginal
costs of other programs.
The EPA's updated summary of average costs of annual NOX
controls are shown in Table IV-6. The results of this reexamination
show that costs of recent actions are generally very similar to those
identified in the NOX SIP Call. The cost figures are
presented in 1999 dollars.\64\
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\64\ The updated reference list includes estimated average
NOX control costs under BART. The BART rule has been
proposed but not finalized (69 FR 25184; May 5, 2004).
Table IV-6.--Average Costs per Ton of Annual NOX Controls
------------------------------------------------------------------------
NOX control action Average cost per ton
------------------------------------------------------------------------
Marine Compression Ignition Engines..... Up to $200 \2\
Off-highway Diesel Engine............... $400-$700 \2\
Nonroad Diesel Engines and Fuel......... $600 \1\
Marine Spark Ignition Engines........... $1,200-$1,800 \2\
Tier 2 Vehicle Gasoline Sulfur.......... $1,300-$2,300\2\
Revision of New Source Performance $1,700 \3\
Standards for NOX Emissions-EGUs.
2007 Highway Heavy Duty Diesel Standards $1,600-$2,100 \2\
National Low Emission Vehicle........... $1,900 \2\
Tier 1 Vehicle Standards................ $2,100-$2,800 \2\
Revision of New Source Performance $2,200 \3\
Standards for NOX Emissions-Industrial
Units.
On-board Diagnostics.................... $2,300 \2\
Texas NOX Emission Reduction Grants FY $300-$12,700 \4\
2002-2003.
Best Available Retrofit Technology $800 \5\
(BART) for Electric Power Sector.
------------------------------------------------------------------------
\1\ Control of Emissions of Air Pollution From Nonroad Diesel Engines
and Fuel; Final Rule (69 FR 39131; June 29, 2004). The value in this
table represents the long-term cost per ton of emissions reduced from
the total fuel and engine program (cost per ton of emissions reduced
in the year 2030). This value includes the cost for NOX plus NMHC
reductions. 1999$ per ton.
\2\ Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine
and Vehicle Standards and Highway Diesel Fuel Sulfur Control
Requirements; Final Rule (66 FR 5102; January 18, 2001). The values
shown for 2007 Highway HD Diesel Stds are discounted costs. Costs
shown in this table include a VOC component. 1999$ per ton.
[[Page 25209]]
\3\ Proposed Revision of Standards of Performance for Nitrogen Oxide
Emissions From New Fossil-Fuel Fired Steam Generating Units; Proposed
Revision to Reporting Requirements for Standards of Performance for
New Fossil-Fuel Fired Steam Generating Units; Proposed Rule (62 FR
36953; July 9, 1997), Table 4 (the Agency's estimate of average
control costs was unchanged for the NSPS revisions final rule,
published September 5, 1998). In the CAIR NPR, we included a value
from the range of NOX controls for coal-fired EGUs from Table 2 in the
proposed NSPS proposed rule (62 FR 36951). 1999$ per ton.
\4\ Costs shown in this table are the range of project costs reported
for projects that were FY 2002-2003 recipients of the TERP Emission
Reductions Incentive Grants Program. These costs may not be in 1999
dollars. (www.tnrcc.state.tx.us/oprd/sips/grants.html) 
\5\ The EPA IPM modeling 2004 of the proposed BART for the electric
power sector (69 FR 25184, May 5, 2004), available in the docket. The
EPA modeled the Regional Haze Requirements as a source specific 0.2 lb/
mmBtu NOX emission rate limit. Estimated average costs based on this
modeling are $800 per ton in 2015 and 2020. 1999$ per ton.
Table IV-7 presents modeled marginal costs for recent State annual
NOX rules.
Table IV-7.--Marginal Costs per Ton of Reduction, Recent Annual NOX
Rules
------------------------------------------------------------------------
Marginal cost per
NOX control action ton
------------------------------------------------------------------------
Texas Rules.......................................... $2,000-$19,600
\1\
------------------------------------------------------------------------
\1\The EPA IPM base case modeling August 2004, available in the docket.
1999$ per ton. We modeled Senate Bill 7 and Ch. 117, which impose
varying NOX control requirements in different areas of the State; the
range of marginal costs shown here reflects the range of requirements.
The EPA does not believe that it has sufficient information, for
today's rulemaking, to treat controls on source categories other than
certain EGUs as providing highly cost-effective emissions reductions.
The CAA Section 110 permits States to choose the sources and source
categories that will be controlled in order to meet applicable emission
and air quality requirements. This means that some States may choose to
meet their CAIR obligations by imposing control requirements on sources
other than EGUs.
As examples of cost-effective actions that States can take in
efforts to provide for attainment with the air quality standards, Table
IV-8 presents estimated average costs for potential local mobile source
NOX control actions. The EPA received these cost data during
the public comments on the NPR.
Table IV-8.--Average Costs of Potential Local Mobile Source Control
Actions To Reduce NOX Emissions
[$ per Ton]
\1\
------------------------------------------------------------------------
Average cost per
Source category ton
------------------------------------------------------------------------
MWCOG Analysis: Mobile Source, Bicycle racks in DC... $9,000
MWCOG Analysis: Mobile Source, Telecommuting Centers. 7,300
MWCOG Analysis: Mobile Source, Government Action Days 5,000
(ozone action days).................................
MWCOG Analysis: Mobile Source, Permit Right Turn on 1,200
Red.................................................
MWCOG Analysis: Mobile Source, Employer Outreach..... 3,500
MWCOG Analysis: Mobile Source, Mass Marketing 2,900
Campaign............................................
MWCOG Analysis: Mobile Source, Transit Prioritization 8,500
------------------------------------------------------------------------
\1\ Washington DC Metro Area MWCOG Analysis of Potential Reasonably
Available Control Measures (RACM). Projects determined to be
``Possible'' by MWCOG but not RACM because benefits from the possible
control measures do not meet the 8.8 tpd NOX or 34.0 tpd VOC threshold
necessary for RACM. These costs may not be in 1999 dollars.
(www.mwcog.org/uploads/committee-documents/z1ZZXg20040217144350.pdf)
Comments submitted to the EPA CAIR docket from the Clean
Air Task Force et al., dated March 30, 2004, included costs from the
MWCOG analysis.
(II) Cost Effectiveness of CAIR Annual NOX Reductions
Table IV-9 provides the average and marginal costs of annual
NOX reductions under CAIR for 2009 and 2015. These costs are
updated from the NPR figures--the EPA analyzed the costs of the CAIR
using an updated version of IPM (documentation for the IPM update is in
the docket). Further, EPA modified the modeling to match the final CAIR
strategy (see section IV.A.1 for a description of EPA's CAIR IPM modeling).
CAIR provides for a Compliance Supplement Pool (CSP) of
NOX allowances that can be used for compliance with the
annual NOX reduction requirements. The CSP is discussed in
detail later in this preamble. The EPA used IPM to model marginal costs
of CAIR with the CSP. The magnitude of the NOX CSP is
relatively small compared to the annual NOX budget,\65\ thus
the CSP does not significantly impact the marginal costs (see Table IV-9).
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\65\ The CSP consists of 200,000 tons, which is apportioned to
each of the 23 States and the District of Columbia that are required
by CAIR to make annual NOX reductions, as well as the 2
States (Delaware and New Jersey) for which EPA is proposing to
require annual NOX reductions.
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As with SO2 marginal costs, EPA considered the
sensitivity of the NOX marginal cost results to assumptions
of higher electric growth and future natural gas prices than the Agency
used in the base case, as shown in Table IV-9.
Table IV-9.--Estimated Costs per Ton of Annual NOX Controlled Under CAIR
\1\
------------------------------------------------------------------------
Type of cost effectiveness 2009 2015
------------------------------------------------------------------------
Average Cost--Main Case............................... $500 $700
Marginal Cost--Main Case.............................. 1,300 1,600
[[Page 25210]]
Marginal Cost--With Compliance Supplement Pool (CSP).. 1,300 1,600
Sensitivity Analysis: Marginal Cost Using Alternate 1,400 1,700
Electricity Growth and Natural Gas Price Assumptions.
------------------------------------------------------------------------
\1\ The EPA IPM modeling 2004, available in the docket. 1999$ per ton.
These estimated NOX control costs under CAIR reflect
annual EGU NOX caps of 1.5 million tons in 2009 and 1.3
million tons in 2015 within the CAIR annual NOX control
region (the 23 States and DC that must make annual reductions). In both
the main IPM modeling case and the modeling case that includes the CSP,
projected annual NOX emissions in the CAIR region will be
about 1.5 million tons in 2009 and 1.3 million tons in 2015. The
projected emissions are very similar in both modeling cases because the
CSP is relatively small compared to the annual NOX budget.
Average costs shown for 2015 are based on the amount of reductions
that would achieve the total difference in projected emissions between
the base case conditions and CAIR in the year 2015. These costs are not
based on the increment in reductions between 2009 and 2015. (A more
detailed description of the final CAIR SO2 and
NOX control requirements is provided later in today's preamble.)
Most of the States subject to today's PM2.5 control
requirements have been subject to the NOX SIP Call
requirements. Some sources in these States have installed SCRs, and run
them during the ozone season. These sources might comply with the
PM2.5 annual NOX requirements by, at least in
part, running the SCR controls for the remaining months of the year.
Under these circumstances, the compliance costs for the
PM2.5 SIP requirements are lower.
Table IV-10 provides estimated costs per ton of NOX for
non-ozone season reductions under CAIR. These figures are updated from
the NPR calculations--the EPA analyzed the costs of the CAIR using an
updated version of IPM (documentation for the IPM update is in the
docket) and modeled controls on a region that more closely matches the
region affected by CAIR.
Table IV-10.--Predicted Costs per Ton of Non-Ozone Season NOX Controlled
Under CAIR \1\
------------------------------------------------------------------------
Type of cost effectiveness 2009 2015
------------------------------------------------------------------------
Average Cost.......................................... $500 $500
------------------------------------------------------------------------
\1\ The EPA IPM modeling 2004, available in the docket. 1999$ per ton.
The estimated non-ozone season NOX costs, like the
annual NOX costs, are on the low end of the cost
effectiveness range described in Table IV-6. The EPA considers the 2015
and also the 2009 costs to represent highly cost-effective controls.
Environmental Defense reached similar conclusions regarding the
cost effectiveness of non-ozone season NOX reductions, as
described in their report ``A Plan for All Seasons: Costs and Benefits
of Year-Round NOX Reductions in Eastern States (2002).'' As
stated in that report, ``[As Figure 4 shows,]
extending NOX
reductions throughout the year results in dramatic decreases in the
per-ton costs of NOX emission reductions for the 19
NOX SIP Call States. This is because the bulk of the cost
for reducing NOX emissions from power plants lies in the
capital investment in the control equipment. Once the primary
investment has been made, it costs relatively little to continue
running the control equipment beyond the summer months required by
EPA's NOX SIP Call.'' Environmental Defense based these
conclusions on analysis conducted by Resources for the Future (RFF). In
an RFF paper, ``Cost-Effective Reduction of NOX Emissions
from Electricity Generation (July 2001),'' RFF draws similar
conclusions.
(III) NOX Cost Comparison for CAIR Requirements
The EPA believes that selecting as highly cost-effective amounts at
the lower end of these average and marginal cost ranges is appropriate
for reasons explained above in this section of the preamble.
As discussed above, although in the NOX SIP Call the
cost level selected was not at the low end of the reference range of
costs, if the NOX SIP Call costs were for annual rather than
seasonal controls they would have been lower relative to the other
control costs on the reference list which were mostly for annual programs.
For annual NOX, the range of average cost effectiveness
extends broadly, from under $200 to thousands of dollars (Table IV-6).
The 2015 estimated average costs for CAIR annual NOX control
of $700 are consistent with the lower end of this range.
Less information is available for the marginal costs of controls
than for average costs. Looking at the available marginal costs (Table
IV-7), the 2015 CAIR marginal costs for annual NOX controls
are at the lower end of the range. The EPA also evaluated the cost
effectiveness of the 2009 cap, and concluded that the 2009 requirements
are highly cost-effective.
(IV) Cost Effectiveness: Marginal Cost Curves for Annual NOX Control
As with SO2 controls, EPA also considered the cost
effectiveness of alternative stringency levels for NOX
control for today's action by examining changes in the marginal cost
curve at varying levels of emissions reductions. Figure IV-3 shows that
the ``knee'' in the 2010 marginal cost effectiveness curve for EGUs--
the point where the cost of controlling a ton of NOX begins
to increase at a noticeably higher rate--appears to occur at over
$1,700 per ton of NOX. Although EPA conducted this marginal
cost curve analysis based on an initial NOX control phase in
2010, the results would be very similar for 2009, which is the initial
NOX phase in the final CAIR. Figure IV-4 shows that the
``knee'' in the 2015 marginal cost effectiveness curve for EGUs appears
to occur at over $1,700 per ton of NOX. (The EPA based these
marginal NOX cost effectiveness curves on the electricity
growth and natural gas price assumptions in the main CAIR IPM modeling
run. Marginal cost effectiveness curves based on other electric growth
and natural gas price assumptions would look different, therefore it
would not be appropriate to compare the curves here to the marginal
costs based on the IPM modeling sensitivity run that used EIA
assumptions.) The EPA used the Technology Retrofitting Updating Model
(TRUM), a spreadsheet model based on IPM, for this analysis. These
results make clear that this rule is very cost-effective because the
control level is below the point at which the cost begins to increase
at a significantly higher rate.
In this manner, these results corroborate EPA's findings above
concerning the cost effectiveness of the emissions reductions.\66\
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\66\ EPA is using the knee in the curve analysis solely to show
that the required emissions reductions are very cost effective. The
marginal cost curve reflects only emissions reduction and cost
information, and not other considerations. We note that it might be
reasonable in a particular regulatory action to require emissions
reductions past the knee of the curve to reduce overall costs of
meeting the NAAQS or to achieve benefits that exceed costs. As in
the case of SO2 controls, described above, it should be
noted that similar analysis for other source categories may yield
different curves.
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