[[pp. 57405-57454]] Finding of Significant Contribution and Rulemaking for Certain

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: October 27, 1998 (Volume 63, Number 207)]
[Rules and Regulations]
[Page 57405-57454]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc98-15]

[[pp. 57405-57454]] Finding of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for Purposes of
Reducing Regional Transport of Ozone

[[Continued from page 57404]]

[[Page 57405]]

justification did not support its proposed reduction requirements.
The EPA acknowledges the concerns expressed by the commenters that
focusing solely on the cost effectiveness, defined in terms of cost per
ton removed, of the emissions reductions would exclude consideration of
the total costs incurred by the upwind sources, and would exclude
consideration of the downwind ambient benefits that those costs
achieve, compared to the costs of achieving the same ambient impact
through either local reductions or more extensive reductions in
adjacent upwind areas. The EPA further acknowledges air quality
modeling makes clear that reductions in emissions closer to the air
quality problem have a greater ambient impact.
However, EPA has not been presented with, nor been able to develop,
an accurate comparison of the downwind costs of emissions reductions
that would achieve the same ambient impact as the regional reductions
required by today's action. The EPA does not have comprehensive
information concerning available local measures or their costs or
ambient impacts.
However, as a qualitative matter, EPA believes that available
evidence indicates that the upwind costs are reasonable not only in
light of cost-effectiveness per ton removed, but also in light of the
downwind ambient impact of the emissions reductions. Under the 1-hour
NAAQS, emissions from each upwind State generally affect several
downwind nonattainment urban areas. Thus, matching the total ambient
impact of the emissions reductions from the upwind State would require
emissions reductions in several downwind areas.⁵⁸
---------------------------------------------------------------------------

\58\ Although the reductions required of any one individual
upwind State under today's rule may not, by themselves, result in
large ambient impacts downwind, those reductions, when combined with
reductions from other upwind States, do result in appreciable
reductions downwind.
---------------------------------------------------------------------------

Although presently available information does not permit a useful
quantitative comparison of total upwind and downwind costs in terms of
their ambient impact, EPA believes that upwind reductions replace local
reductions that, on a cost-per-ton removed basis, may be expected to be
more expensive. Moreover, it should be recognized that for all of the
nonattainment areas under the 1-hour NAAQS, the residents have already
incurred substantial control costs to eliminate part of the local
contribution to the air quality problem. Under these circumstances, EPA
considers it equitable to require the upwind emitters to offset their
contribution to the problem through at least the reductions that are
the most highly cost-effective--in terms of cost-per-ton removed--
rather than require the residents of the downwind area to offset those
upwind contributions through even more local control measures.
Furthermore, under the 8-hour NAAQS, the available information--
again, on a qualitative basis--indicates that the upwind emissions
reductions replace a significantly greater set of local measures. As
indicated above, emissions from each upwind State affect a wide swath
of downwind areas with nonattainment problems. As a result, the
emissions reductions from the upwind State replace local reductions in
numerous downwind areas. Moreover, some of these downwind areas are
adjacent to the upwind State, while others are further away. Thus,
under the 8-hour NAAQS, EPA believes that the qualitative case is even
more vivid that the upwind emissions reductions replace substantial and
costly local measures.
Finally, with respect to the meteorological phenomenon that upwind
reductions have less ambient impact the further away they are from the
downwind nonattainment problem: EPA modeled the ambient impact of
regional variations in the levels of upwind emissions reductions. This
modeling, and its results, are discussed in the Air Quality TSD. In
brief, the modeling results indicate that it is neither more cost-
effective nor more beneficial to air quality to pursue subregional
variations in upwind emissions controls.
4. Conclusion
For the reasons discussed above, EPA believes that adequate
information is available to determine, on a qualitative basis, that the
upwind reductions required by today's action are reasonable in light of
the attainment needs downwind, and that the costs of those reductions
are reasonable in light of the costs the downwind areas would otherwise
face. For these and other reasons noted elsewhere, EPA believes that
requiring the regional reductions in today's notice is a reasonable
step to take at this time.
Of course, as more comprehensive information becomes available
(including additional modeling, additional information concerning local
control options and costs, as well as more refined regional air quality
information), EPA will continue to examine the issue of regional
transport. In addition, as described in Section III., EPA expects to
review the issue of regional transport by the year 2007 and may require
additional steps by either the upwind States or the downwind States, or
both, to address the issue further. Even so, as noted above, the
information that is available provides no evidence that the regional
reductions required today may prove not to be needed.

III. Determination of Budgets

The EPA used the highly cost-effective measures identified in
Section II.D. above to calculate the amounts of emissions in each
covered State that will contribute significantly to nonattainment or
interfere with maintenance in one or more downwind States (the
``significant amounts''). This Section further describes issues related
to cost-effective controls and the role of these controls in the
calculation of budgets.
First, as described earlier in this notice, EPA projected the total
amount of NO_X emissions that sources in each covered State
would emit, in light of expected growth, in 2007 taking into account
measures required under the CAA (the ``2007 base year emissions
inventory''). The EPA then projected the total amount of NO_X
emissions that each of those States would emit in 2007 if each such
State applied these highly cost-effective measures (2007 controlled
inventory). The difference between the 2007 base inventory and the 2007
controlled inventory for each covered State is the ``significant
amount'' that the State's SIP must prohibit to satisfy section
110(a)(2)(D)(i)(I). Each covered State's 2007 controlled inventory--
referred to in this Section as the State's ``emissions budget''--
expresses the total amount of NO_X emissions remaining after
the State's SIP prohibits the ``significant amount'' of NO_X
emissions in that State. Each covered State must demonstrate that its
SIP includes sufficient measures (of the State's choice) to eliminate
those emissions, and thereby meet its budget, in the time frames
discussed later in this notice.

A. General Comments on the Base Emission Inventory

Background: In the NPR, EPA solicited comment on technical
information used in revising the 1996 base year emissions inventories
and the growth and control assumptions used to develop the 2007
projection year base inventories. The EPA received over 200 comment
letters (from industry, associations, States, environmental
organizations, and U.S. Congressional representatives) on the condition
of 1996 base year and projected 2007 emission inventories. The EPA accepted

[[Page 57406]]

proposed modifications to the extent EPA was able to validate them.
As discussed in the NPR (62 FR 60318), EPA established a 120-day
comment period (ending March 9, 1998) to address issues related to the
proposed rule. In order to develop revised inventories used to
recalculate the budgets for final rulemaking in a timely manner, EPA
felt that comments received after the March 9, 1998 deadline would be
addressed only if time and resources were available and after directing
attention to comments received prior to the end of the comment period.
The EPA is legally obligated under the Administrative Procedure Act to
respond only to comments timely submitted during the public comment
period. Response to comments timely submitted before the end of the
comment period fulfills EPA's obligation to 5 U.S.C. 553(c).
Although the Agency was not able to address all comments submitted
after March 9, 1998, as discussed in Section III.F.5. of this notice,
EPA is allowing commenters an additional opportunity to request
revisions to the source-specific data used to establish each State's
budget. During this time, EPA will be addressing those comments
submitted during the NPR and SNPR comment periods which were not
addressed for reasons indicated above, as well as evaluate comments
that are submitted per Section III.F.5. of the NFR.
1. Quality
Comment: Commenters suggested that the OTAG inventory may not be of
sufficient quality for use in the modeling and budget determinations
for the non-EGU point, area, nonroad mobile, and highway vehicle source
sectors. The commenters stated that OTAG originally intended the
inventories to be used in analyzing ozone transport mechanisms and the
effect of possible control measures, not for establishing emission
budgets as EPA has proposed. Additionally, as one commenter mentioned,
many States had prepared inventories only for their moderate and above
nonattainment areas, so that the remainder of the State's counties were
supplemented with USEPA data. In contrast to these criticisms, other
commenters supported the quality of the inventories and the procedures
used in their development.
Response: Under the initial OTAG inventory collection process, the
37 States in the domain provided emission estimates for each entire
State. The majority of the supplied data were 1990 State ozone SIP
emission inventories, but some States supplied data from later years
that reflected significant improvement over the 1990 data.
Additionally, OTAG collected point source data from the States to
update and revise existing emissions inventories used by OTAG. The
result of these efforts was an improved emissions inventory which OTAG
utilized for modeling as well as strategy analyses.
The EPA used the final OTAG version of the inventory for the
emission estimates in the NPR, and then improved the inventory with
data supplied by the States and industry through the public comment
period. As a result, the revised emissions inventory is the most
accurate available for modeling, strategy analyses, and budget
calculation purposes. The inventory has been through numerous versions,
each version reviewed and extensively commented on by States, industry,
and the public. These inventory data are more accurate than any other
data used in the past as the basis for the various State-specific SIP
revisions (such as rate-of progress SIP revisions or attainment
demonstrations). The EPA considers it sufficiently accurate for
purposes of determining the budgets.
The EPA recognizes that emission inventories change as more
accurate data or methods are developed for estimating emissions. For
inventory changes that may be necessary after final promulgation of the
budgets, EPA has a process for determining what changes need to be made
as well as how the changes would be made to the inventories. This is
discussed in further detail in Section III.F.5. of this notice.
Comment: Several commenters were concerned that the initial State
NO_X emissions inventories submitted by the States were never
quality-assured or commented upon by the States, the regulated
community, or the public. Some commenters suggested the reevaluation of
emissions estimates with State, local, and industry support.
Response: Under the guidance of OTAG, the initial emission
inventories submitted by the States were quality-assured by technical
experts, including State and local emission inventory contacts,
industry, EPA staff and contractors, and the OTAG Emission Inventory
Technical Committee. As EPA amended and modified the inventory for use
in the modeling for the NPR, SNPR, and the budget analyses, additional
quality assurance was completed. The most accurate inventory
development tools available at the time were used to validate these
data and to quality assure emission calculations in these data bases.
Existing data sets, including the NET data, the OTC NO_X
Baseline emission inventory, EPA'S AIRS/AFS major point source
reporting system, and EPA's Emission Tracking System (ETS), which
contains data submitted and certified as correct by the States, were
used for comparison purposes. Where discrepancies were found, either
before, during, or after the public comment period, States and industry
were contacted to clarify and support revised emission estimates.
2. Availability
Comment: Commenters asserted that the emissions inventory used for
the SIP modeling and budget calculations were not made available for
public review along with the proposed rule. One commenter stated that
the emissions inventory that forms the basis for the NPR (the SIP Call
inventory) did not become available until the first week in February 1998.
Response: On October 10, 1997, EPA posted emissions data on the TTN
for use and review during the public comment period (See NPR, 60318).
These data, in conjunction with the OTAG inventories, were the basis of
the initial proposed budgets and modeling analyses in the NPR. Thus,
these data were available to the public before the beginning of the
120-day comment period on the NPR, which allowed ample time to develop
budget, modeling, and cost analyses for submission during the comment
period. By notice dated January 28, 1998 (63 FR 4206), EPA issued a
caution that comments on the inventory must be submitted by the March
9, 1998 close-of-public-comment date, so that EPA could finalize the
inventories and use them for further analyses.
On February 3, 1998, in response to initial public comments and
internal review of the initially released data, draft amendments to the
emissions inventory were posted on the EPA's TTN site. These changes
included the addition of EGU sources less than or equal to 25 MWe which
were excluded from the initial budget calculation, correction of EGU
growth factors, and the reclassification to the non-EGU file of some
sources previously erroneously identified by OTAG as EGU sources.
Erroneously omitted non-EGU point source records were also added to the
emissions inventory. Area, highway, and nonroad mobile source
information was not modified in this iteration. By posting this data on
February 3, 1998, EPA allowed 5 more weeks for public comment on the
revised data, until the conclusion of the comment period for inventory
data on March 9, 1998. Because the revisions were fairly minor, EPA
believes this amount of time was adequate. The EPA did receive

[[Page 57407]]

comments by March 9, 1998 on the revised data it had posted on February
3, 1998.

B. Electricity Generating Units (EGUs)

Background: To determine the budget for each State's electricity
generating sector, EPA developed an inventory of baseline heat input
(mmBtu) and NO_X emissions (tons/season) data for each unit.
In the NPR, EPA proposed to use the higher, by State, of 1995 or 1996
heat input data to calculate baseline heat input rates (62 FR 60352).
The EPA maintained this approach for the SNPR, but added 577 smaller
units to the State budget inventories, which had erroneously been
omitted for the NPR. These units included electricity generating
sources of 25 megawatts of electrical output (MWe) or smaller and
additional units not affected under the Acid Rain Program.
1. Base Inventory
Comment: Commenters suggested that using the higher of 1995 or 1996
utilization rates for setting the baseline for the EGU portion of the
budget may not be appropriate in all instances. In general, commenters
argued for various degrees of flexibility in choosing the baseline
year(s) to be used for calculation of budgets.
Response: As discussed below, EPA has made corrections to the
baseline heat input data for a small number of EGUs based on careful
review of the data supplied with source-specific comments. Using 1997
CEMS data is not a practical option because EPA has not had time to
extract from the Acid Rain Emissions Tracking System (ETS) the 5-month
ozone season heat input values, quality assure them, or publish them.
(Although EPA's Acid Rain Program intends to publish its 1997 Emissions
Scorecard later in 1998, this publication will contain only annual, not
ozone season, data.) Accordingly, EPA has finalized the EGU portion of
the budget for each State using the higher of the 1995 or 1996 ozone
season heat input values.
Comment: Commenters asserted revisions were needed to the published
heat input data for some EGUs and proposed related additional source-
specific changes. Commenters on this issue stated that inaccurate
calculations of heat input data resulted in significant errors in the
Statewide budgets. Several suggested the need for revision before
calculation of final budgets. Many of these commenters provided
specific data that they urged EPA to use in the final budget setting
process.
Response: The EPA has analyzed the data submitted by these
commenters and, where warranted, has made the requested adjustments.
Approximately 200 corrections were made to the baseline heat input data
for EGU sector inventories.
Comment: Commenters also noted the need to further correct, for
some States, the listing of units in the electricity generating sector
inventory. Commenters listed specific EGUs that EPA should either
include or remove from the inventory, or for which EPA should correct
applicable baseline data (e.g., capacity, operating parameters).
Several commenters argued that substantial revision of the inventory
was necessary before setting budgets under the final rulemaking.
Response: The EPA has analyzed the data submitted by these
commenters, including following up with commenters when needed to
assure proper interpretation of the data. Where warranted, EPA has
corrected the State inventories of units and applicable baseline data.
While the vast majority of corrections consisted of adding small
units (e.g., municipal generators and peaking diesel units), combustion
turbines, and independent power producers not affected under the Acid
Rain Program, some involved deleting units that are no longer
operational or have been misclassified and, in actuality, are
industrial non-electricity generating boilers. The net result is that
EPA has added approximately 800 units to the State EGU inventories. The
EPA believes that these inventories are sufficiently accurate to
develop a budget.
Comment: Commenters suggested types and sizes of sources to include
or exclude from the electricity generating sector inventory. As to the
sizes of sources to include in the inventory, commenters on the NPR
were roughly split on the inclusion of units less than or equal to 25
MWe. Several noted that emissions from sources below this level were
negligible and should not be included. One commenter noted, however,
that these sources should be included in the final budget because they
tend to operate on peak demand days which frequently correspond to high
ozone days. Several suggested that 15 MWe be the cutoff for the utility
component of the budget.
On a separate concern, a few commenters disagreed with the
inclusion of non-utility power generators in the utility list of
sources and proposed that they be included with industrial non-
electricity generating unit sources.
Response: Many of these comments appear to confuse discussions of
other related issues (e.g., core sources for NO_X cap and
trade rule, appropriate sources for cost-effective control) with the
types and sizes of EGUs to be included in the baseline inventory for
setting the budget. All emissions should be included in the base
inventory and, thus, in the budget. As noted previously, using
information supplied by commenters, EPA has agreed to add many small
units to the base inventories of several States. Concurrently, EPA has
also decided not to classify EGUs less than or equal to 25MWe as core
sources for the trading program, as discussed in Section VII of this
notice, or to assume an emissions decrease for these small units
(``cutoff level'') as part of Statewide budgets for EGUs.
The EPA maintains its decision to include industrial units that
generate electricity in the definition of EGUs is entirely consistent
with the changing, more competitive, character of today's electric
power generation industry in the US. Also, these units are amenable to
the same NO_X control technologies, at generally the same
cost-effectiveness, as utility units.
2. Growth
Background: In the NPR and SNPR, EPA used forecasts of future
electricity generation to apply State-specific growth factors in
calculating the emissions budgets for the electricity generating
sector. In the SNPR, EPA revised the growth factors (the ``corrected''
projections) to account for projected new combustion turbine and
combined cycle units inadvertently excluded in the analysis developed
in support of the NPR. The EPA also discussed in the SNPR that
``revised'' electricity generation projections could lead to lower
growth rates, and therefore lower budgets, and placed supporting
information in the docket. However, EPA proposed to use the
``corrected'' projections in calculating State budgets to provide
additional compliance flexibility to sources and States (63 FR 25905).
a. Growth Rates.
Comment: The EPA received approximately 36 comments in response to
the NPR and roughly 28 comments in response to the SNPR regarding the
estimated growth rates that were used to determine the NO_X
budget for each State. These comments were submitted by State agencies,
associations, utilities, and a public interest group. Commenters
expressed concern regarding a number of specific issues, including the
following:
(i) the appropriateness of using growth factors to determine the
NO_X budget,

[[Page 57408]]

(ii) use of the IPM model to establish the growth factors for each
State, and
(iii) the use of the ``corrected'' instead of the ``revised''
projections.
Some of these commenters opposed growth factors generally, but many
of them supported the concept of--but not the method proposed for--
applying a growth factor.
Response: The OTAG's technical analyses of NO_X emissions
suggested that EPA needed to consider the electric power industry's
future growth in determining the amount of NO_X reduction
that would be reasonable for the power industry to make in the future.
The OTAG factored the growth of the power industry's emissions from
1990 to 2007 into the air quality analysis that it performed. The
results of this analysis were the basis of its recommendations to EPA
to lower NO_X emissions from the power industry in many
Eastern States. Because the Agency made its predictions about
attainment in 2007 based on projections of emissions considering
growth, rather than on historical emissions, the Agency also believes
that the State budgets to be used up to 2007 should account for growth
in electricity demand. Not accounting for growth in demand for
electricity would require States to reduce emissions below the level
that EPA predicted was necessary to reach attainment. By accounting for
growth through 2007 and applying that growth beginning in 2003, EPA
essentially allows sources to emit at a slightly higher level than 0.15
lb/mmBtu in the years 2003 through 2006.
In today's action, the Agency has determined to continue to
incorporate growth out to 2007 in developing State budgets for summer
NO_X emissions. Not accounting for growth would mean that
additional control measures--to offset growth--would be required, and
EPA has not determined that those additional control measures would be
cost-effective. In considering growth, EPA has determined to continue
to use either 1995 or 1996 State-wide heat input data, for whichever
year was higher for units over 25 megawatts that burn fossil fuels for
baseline data. (More details on this approach can be found above in
Section III.B.1. Base Inventory).
To estimate growth, EPA considered several options. Ultimately, the
Agency has decided to use State-specific growth factors derived from
application of the Integrated Planning Model (IPM) using the 1998 Base
Case ⁵⁹ (also referred to as the ``revised'' growth
factors). This is the same Base Case used for the Regulatory Analysis
in support of the SNPR. The reasons for using these data are discussed
below under ``Use of IPM.''
---------------------------------------------------------------------------

\59\ The Base Case is the condition of the industry in the
absence of the SIP call.
---------------------------------------------------------------------------

b. Use of IPM.
Comment: Many commenters questioned whether use of the IPM model
was appropriate to derive accurate State-specific growth factors.
Commenters expressed concern that there was too much variation between
each State's individual growth rate as determined by the IPM model, and
suggested that use of region-wide IPM growth factors may be more
appropriate. They also questioned the reliability and accuracy of the
IPM model, especially as applied on an individual State basis. A number
of commenters stated that EPA's growth projections were lower than
growth rates projected in the context of State utility planning
efforts. Several commenters suggested that EPA base its growth rates on
projections other than OTAG, or EPA's IPM forecasts; they especially
urged the Agency to consider individual State-prepared forecasts. This
was to avoid problems that commenters believe exist in EPA's use of the
IPM model for forecasting electricity generation in various areas of
the country. Specific concerns focused on:
(i) the effect of IPM projections and associated NO_X
budgets on future growth within each State, and
(ii) how the IPM model accounts for:

--planned nuclear unit retirements,
--the impact of a deregulated utility marketplace, and
--improvements in energy efficiency and control technology.

Many commenters also generally expressed concern that there is
insufficient information or documentation on how EPA used the IPM model
to determine growth factors.
Many commenters asserted that EPA should not incorporate the growth
factors into the budget calculation process. These commenters argued
that adding growth to baseline activity and subsequently applying
controls reduces the stringency of the standards, and introduces an
unacceptable level of uncertainty. They suggested that the budgets
should be based on historic utilization rates, and that States could
then determine how to allocate their budgets to provide for growth.
These commenters recommended that, if a growth factor must be used,
then EPA should apply a uniform growth rate region-wide to determine
the NO_X budget for each State.
Response: The EPA initially considered using the OTAG growth rates,
but found that they were largely based on past, State-specific
generation trends and did not factor in the more competitive electric
power market where electricity will be increasingly moving between
regions in response to the cost of producing electricity. The Agency
also found that there were several other major limitations that were
described in the NPR. (62 FR 60352-60353).
The Agency considered setting the State NO_X budgets
based on past generation levels in States, but this approach also does
not consider how competition in the industry in the future will alter
electricity generation practices. It ignores growth and shifts in
production altogether. A variant of this approach, suggested by several
commenters, would be to use a uniform growth factor for all States
based on some projection of future growth through the 23 jurisdictions
covered by this rule. This approach appears even-handed, but EPA views
it as unfair and inaccurate with respect to States in which:
(i) utilities are particularly economical to operate, and
(ii) the generation of power by these firms is expected to grow at
a rate greater than average.
Another similar alternative suggested in the public comments was
that EPA use a uniform growth factor for all States in the same region,
e.g., the North American Electricity Reliability Council (NERC)
regions, or subregions. The problem with this approach is, again, that
certain States within the same region are expected to vary in their
rate of growth, given differences in their electric utilities. The fact
that some States are in several NERC regions also makes this approach
less practical.
The Agency looked at several well-recognized forecasts of regional
electricity generation growth, such as those provided by NERC, the
Annual Energy Outlook of the Energy Information Administration (EIA),
and Data Resources Incorporated's (DRI) World Energy Service U.S.
Outlook. None of these modeling systems provides results at the State
level. Therefore, the Agency would have to develop ways to apportion
these regional predictions to States. The EPA knows of no way to
apportion these regional values to States that would resolve the
concerns expressed by commenters. Furthermore, the Agency uses the
growth rates from IPM to calculate the cost-effectiveness of
NO_X emission reductions, as well as to determine
NO_X budgets for States. Therefore, using growth rates that
are not from IPM would lead the Agency to using one set of State-specific

[[Page 57409]]

generation estimates to develop NO_X budgets and a different
set of State-specific generation estimates for determining cost-
effectiveness. As a result, EPA's evaluations of future activities of
the power industry might not be considered consistent. Finally,
although each of these sources provides reasonable electricity
generation forecasts, each of the forecasts could be criticized for the
assumptions they make in a manner similar to the way commenters have
criticized growth factors from IPM.
Some commenters suggested that the Agency use individual State
forecasts instead of IPM forecasts, including projections used for
State utility planning efforts. The EPA rejected this type of approach
for two reasons. First, nothing in the comments suggested to EPA that
the State forecasts are more accurate or more reliable than the IPM
forecasts. Instead, the State forecasts varied State by State in the
way they predicted future electricity generation. Adoption of these
forecasts could result in inconsistencies in setting the State budgets.
Electricity generation forecasts require making many technical
assumptions which, admittedly, lead to some uncertainty in the results.
Accordingly, the Agency believes that the fairest way to determine
emissions budgets is to handle these assumptions in a consistent way
for all of the States, as long as a reasonable approach and reasonable
modeling assumptions are used.
Therefore, EPA has decided to use the IPM 1998 Base Case emissions
forecast for deciding State NO_X budgets in today's action.
The Agency finds it to be the fairest and most reliable overall
approach to estimating growth factors. It deals consistently with the
technical assumptions that occur in energy forecasting and employs a
reasonable set of assumptions in the process of making a forecast. As
an added advantage, it has undergone considerable review by the
electric power industry over the last two years, and the industry was
aware that it might be applied as it is in today's rulemaking. Finally,
EPA's use of IPM for forecasting State growth rates provides for
overall consistency in forecasting future emissions and estimating the
cost-effectiveness of reductions in this rulemaking.
The EPA believes that IPM provides a reasonable forecast of State
growth rates because it carefully takes into account the most important
determinants of electricity generation growth that are facing the power
industry today. These major factors include: regional demands for
electricity, the impacts of wholesale competition that lead to changes
in market share for various utilities, changes in fossil fuel prices,
expected improvements in electricity generation technology, costs of
emission control technology, expected changes in generation unit
operations and regional dispatch practices to lower production costs,
nuclear unit retirements, alteration in planning reserve margins to
meet peak demand, and limitations in moving power between regions due
to transmission constraints.
An explanation of how EPA uses IPM to address these issues and
other important factors is included in EPA's Analyzing Electric Power
Generation under the CAAA, March 1998 (Docket no. V-C-3). Because EPA's
assumptions have been reviewed by the public over the last two years
and the Agency has worked with EIA and other groups to improve them in
response to comments and new information, the Agency believes that it
has made reasonable assumptions for a Base Case forecast of electric
power generation.
c. Use of ``Corrected'' Growth Rates.
Comment: Some comments on the SNPR expressed concern that the new
``corrected'' growth factors are artificially inflated and will
compromise efforts to improve air quality throughout the region. Some
of the commenters suggested that States should have the flexibility to
determine how to manage emissions from new sources in the context of
the original growth factors and NO_X budgets proposed in the
NPR. Some of these commenters also stated that it was unclear why EPA
chose to use the ``revised'' projections in its cost analysis but
retained the ``corrected'' growth factors in its budget calculations.
Other commenters, however, were supportive of the new growth factors
and the use of the ``corrected'' projections. Finally, several
commenters requested that EPA further explain how the ``corrected''
growth factors were derived and subsequently used to generate the
NO_X budgets.
Response: In the NPR, EPA proposed a set of growth factors based
upon the 1996 IPM Base Case forecast. In the SNPR, EPA corrected the
growth factors used in calculating State budgets to account for new
generation that had inadvertently been left out of the original
calculations (the ``corrected'' growth factors). On the basis of
comments that EPA has received on its assumptions for forecasting
electricity generation throughout the country during the last year, the
Agency revised a set of key assumptions at the beginning of 1998. These
assumptions lead to a better projection of electricity generation
nationally, by region, and by State. Therefore, the Agency has decided
to use the 1998 IPM Base Case forecast over the 1996 IPM Base Case
forecast as the basis for its ``revised'' State growth estimates.
The recent important changes that were incorporated into EPA's use
of IPM in 1998 include using the most recent NERC estimate of regional
electricity demand; the latest available EIA and NERC generation unit
data; updated fuel forecasts; updated assumptions on nuclear,
hydroelectric, and import assumptions (with special attention to
differences in summer use); and an increase in the level of detail in
the model to more accurately capture the transmission constraints that
exist for moving power between various regions of the country. The
Agency also updated its assumptions on the size and operation of all
electricity generation units of utilities and independent power
producers (with special attention to cogenerators) and updated its
assumptions on planning reserve margins and the costs of building new
generation capacity. For this, the Agency relied heavily on information
compiled from utilities by NERC and the EIA. Each of these agencies has
regular contact with the power industry and has its data reviewed by
the power industry. Again, details on these improvements in IPM can be
found in EPA's Analyzing Electric Power Generation under the CAAA,
March 1998 (Docket no. V-C-3).
In the SNPR, EPA used the ``revised'' growth factors in the IPM
model in its cost analysis but used the higher, ``corrected'' growth
factors to calculate State budgets. The EPA proposed the higher growth
factors because the Agency believed that this results in less cost and
more flexibility for sources to achieve their budget reductions
beginning in 2003. However, some commenters pointed out that EPA had
provided sufficient flexibility by accounting for growth to the year
2007 and applying that growth estimate beginning in 2003. These
commenters remarked that it was not necessary to add further
flexibility by using the higher, but less current and less accurate,
``corrected'' growth rates. They also stated that EPA should use the
most up-to-date information available. The EPA agrees and is using the
``revised'' growth rates based upon the 1998 IPM Base Case forecast to
calculate the State budgets used in today's final rule.
3. Budget Calculation
a. Input vs. Output.
Background: In the SNPR, the component of each State's budget
assigned to electricity generation was determined using the State's
total heat

[[Page 57410]]

input, applicable emission rate (0.15 lb/mmBtu), and projected growth
in total heat input to 2007. The Agency solicited comment on an
alternative approach to calculating the State's budget using each
State's share of the 23 jurisdiction electricity generation (electrical
output). The SNPR describes in detail the output-based approach, and
its possible benefits as advanced by its proponents (63 FR 25907). The
Agency asked for comments on the appropriateness, legality, rationale,
and methodology for incorporating the output-based approach when
calculating the electricity generation component of each State's budget.
Comments: The Agency received comments both supporting and opposing
output-based State budgets. Supporters of output-based budgets asserted:
. An output-based budget would promote competition among
different types of electricity providers on an equal basis in a
deregulated electric utility industry.
. An output-based budget would promote CO₂,
mercury, SO₂ and off-season NO_X reductions beyond
what would occur under a system that assigns State budgets based upon
input.
. An output-based budget may result in more cost-effective
NO_X reductions.
. Issuing output-based budgets is legally permissible.
The commenters opposed to output-based State budgets objected to
the allocation of allowances to non-NO_X-emitting units, such
as nuclear, hydroelectric, solar, or geothermal power plants. They
claimed that this would make compliance more difficult and more costly
for fossil-fuel burning sources because fewer allowances would be
allocated to them.
Commenters opposed to output-based budgets also claimed that:
. Output-based budgets would not necessarily improve energy
efficiency compared to existing incentives, such as fuel costs.
. The output-based State budgets may not result in the same
geographic distribution of emissions as would occur under the original
budget allocation.
. There could be significant administrative problems with
changing the basis of the State budgets.
In addition, some commenters, though in general supporting
allocations by output, specifically objected to allocating allowances
to nuclear-powered units because they believed that this method would
encourage nuclear-powered electrical generation, which, they further
believed, would have adverse ancillary impacts on the environment.
The Agency received additional comments on the method of allocating
State budgets to sources. Further discussion of these comments can be
found in Section VI.C.2 of this preamble.
Response: The EPA has an extensive history of promoting the
efficient use of natural resources, particularly energy, through both
voluntary and regulatory measures. Key emissions standards, such as the
standards for new vehicles and the recently promulgated new source
performance standards to new power plants, are written as output-based
fuel-neutral performance standards that promote the efficient use of
energy. The EPA has begun to work with States to find mechanisms to
more directly credit the use of energy efficiency measures in SIP. The
EPA also has a number of programs that encourage the use of energy
efficient technologies by providing energy users, particularly in the
residential, commercial and industrial sectors, with information on the
economic and environmental benefits of such technologies.
Although the Agency has concluded, for the reasons stated below,
that heat-input-based budgets to States are more appropriate at this
time, the EPA intends to work with stakeholders to overcome existing
obstacles and to design an output allocation system that could be used
by States as part of their trading program rules in their SIPs and by
EPA in future allocations to States.
The EPA considered how State NO_X budgets would be
changed using the output approaches suggested by the commenters. The
EPA revised its State budget calculations using available electrical
generation data from the EIA for utility and non-utility generators for
the higher electrical generation output of either 1995 or 1996, by
State. In Table III-1 below, Column 2 presents the proposed budgets
based upon heat input. Column 3 presents the revised budgets based upon
heat input and the revised growth factors. Column 4 shows output-based
budgets, based upon all electrical generation. Some commenters
suggested including fossil-fuel and renewable energy source
generation--including hydroelectric, solar, wind, and geothermal
generation--but not nuclear generation. These are included in Column 5.
One commenter suggested using electrical generation from fossil-fuel
only, which is included in Column 6.

Table III-1.--State Budgets by Energy Source Basis
(Higher of 1995 or 1996 EIA data]
----------------------------------------------------------------------------------------------------------------
Column 1 Column 2 Column 3 Column 4 Column 5 Column 6
----------------------------------------------------------------------------------------------------------------
Proposed input- Revised input- Output-based
based budgets based budgets Output-based budgets--all Output-based
State fossil fuel- fossil fuel- budgets all generation budgets fossil
burning burning generation sources except fuel-burning
generators generators sources nuclear generators
----------------------------------------------------------------------------------------------------------------
Alabama......................... 30644 29026 34832 35068 32744
Connecticut..................... 5245 2583 7677 5156 4456
Delaware........................ 4994 3523 2392 3214 3417
District of Columbia............ 152 207 100 133 142
Georgia......................... 32433 30255 32223 31713 30819
Illinois........................ 36570 32045 44253 27888 29602
Indiana......................... 51818 49020 32212 43285 45831
Kentucky........................ 38775 34923 24847 33389 34166
Maryland........................ 12971 15033 13284 12969 13212
Massachusetts................... 14651 14780 11017 13248 13496
Michigan........................ 29458 28165 32275 32037 32457
Missouri........................ 26450 23923 19790 22700 23498
New Jersey...................... 8191 10863 12764 11227 11470
New York........................ 31222 30273 39503 39440 32114

[[Page 57411]]

North Carolina.................. 32691 31394 32006 30156 29866
Ohio............................ 51493 48468 39790 47143 50019
Pennsylvania.................... 45971 52006 53450 47014 48476
Rhode Island.................... 1609 1118 2242 3012 3202
South Carolina.................. 19842 16290 23252 14085 13831
Tennessee....................... 26225 25386 26410 26084 24770
Virginia........................ 20990 18258 19091 15700 15567
West Virginia................... 24045 26439 22853 30708 32527
Wisconsin....................... 17345 18029 15745 16637 16324
-------------------------------------------------------------------------------
Total....................... 563785 542007 542007 542007 542007
----------------------------------------------------------------------------------------------------------------

The Agency then calculated the effective NO_X emission
rate for each State in terms of lb/mmBtu, assuming that the entire
electricity generation component of the budgets, as determined by the
input or output methods, were allocated to the electric generating
units (EGUs). The Agency wanted to evaluate whether the effective
NO_X emission rate would be too low to prove feasible absent
participation by the State in an interstate NO_X emission
trading program. The EPA found that under output-based State budgets
from all generation sources, three States would need to impose an
effective emission limitation of 0.10 lb/mmBtu or less on their fossil-
fuel burning electricity generators (see Column 3 in Table III-2
below). One State would need to impose an emission limitation of 0.07
lb/mmBtu. Such a low effective emission limitation may not be
technically achievable if a State chooses not to join an interstate
allowance trading program, unless the State requires some sources to
shutdown. In contrast, the Agency found that it was feasible and cost-
effective to make reductions even without an interstate NO_X
trading program under an input-based State budget calculated using a
uniform NO_X emission rate of 0.15 lb/mmBtu.

Table III-2.--Effective Emissions Rates for Each State by Output Basis
[Higher of 1995 or 1996 EIA data]
----------------------------------------------------------------------------------------------------------------
Column 1 Column 2 Column 3 Column 4 Column 5
----------------------------------------------------------------------------------------------------------------
Effective Effective
emission rate Effective emission rate Effective
under input- emission rate under output- emission rate
based budgets under output- based budgets under output-
State (Fossil fuel based budgets (all based budgets
burning (All generation (Fossil fuel-
generators) generation) except burning
(lb/mmBtu) nuclear) generators)
----------------------------------------------------------------------------------------------------------------
Alabama......................................... 0.15 0.18 0.18 0.17
Connecticut..................................... 0.15 0.45 0.30 0.26
Delaware........................................ 0.15 0.10 0.14 0.15
District of Columbia............................ 0.15 0.07 0.10 0.10
Georgia......................................... 0.15 0.16 0.16 0.15
Illinois........................................ 0.15 0.21 0.13 0.14
Indiana......................................... 0.15 0.10 0.13 0.14
Kentucky........................................ 0.15 0.11 0.14 0.15
Maryland........................................ 0.15 0.13 0.13 0.13
Massachusetts................................... 0.15 0.11 0.13 0.14
Michigan........................................ 0.15 0.17 0.17 0.17
Missouri........................................ 0.15 0.12 0.14 0.15
New Jersey...................................... 0.15 0.18 0.16 0.16
New York........................................ 0.15 0.20 0.20 0.16
North Carolina.................................. 0.15 0.15 0.14 0.14
Ohio............................................ 0.15 0.12 0.15 0.15
Pennsylvania.................................... 0.15 0.15 0.14 0.14
Rhode Island.................................... 0.15 0.30 0.40 0.43
South Carolina.................................. 0.15 0.21 0.13 0.13
Tennessee....................................... 0.15 0.16 0.15 0.15
Virginia........................................ 0.15 0.16 0.13 0.13
West Virginia................................... 0.15 0.13 0.17 0.18
Wisconsin....................................... 0.15 0.13 0.14 0.14
----------------------------------------------------------------------------------------------------------------

[[Page 57412]]

Advocates of an output-based approach contend that individual
sources would have the greatest incentive to improve their efficiency,
relative to all other sources in the program, if both State budgets and
individual source allocations were on an output basis and were updated
periodically. For example, if a company replaces a turbine with a more
efficient one, the unit supplying the turbine would reduce the amount
of fuel (heat input) the unit combusts and would reduce NO_X
emissions proportionately, while the associated generator would produce
the same amount of electricity. Thus, the company would receive the
same allowances if an output-based allocation were updated after the
efficiency improvement. This same company would receive fewer
allowances under a system that reallocates based on heat input after
the efficiency improvement. The company would keep the same allowance
allocation if it had a permanent allocation, based upon either heat
input or output. With a permanent allocation, the company would have
more allowances available than before its efficiency improvements
because of its emission reductions, but fewer allowances than if it had
greater electrical output recognized through an updated allocation.
Thus, of the four approaches, an updated allocation based upon output
gives the greatest incentive for improving efficiency in electricity
generation.
To provide an incentive within the State budget determinations for
improving efficiency over time, EPA would need to issue the State
budgets based upon output and periodically update those State budgets.
However, many industry commenters wanted long-term or permanent
allowance allocations to allow for compliance planning. Updates to the
State budgets would require States to reallocate allowances to their
sources. In addition, States (both upwind and downwind) would find it
easier to manage their resources for improving air quality if they
receive a fixed budget for a period of years. With a fixed budget, a
State would have the choice of whether to periodically adjust
allocations rather than being required to periodically reallocate
allowances to its sources.
Finally, the Agency continues to have concerns about data available
to establish the baseline for an output-based State budget. The EIA
withholds some of the electricity generation information it collects
from non-utility generators in order to protect source confidentiality.
Therefore, part of the generation data required to establish State
budgets is not available to EPA. Thus, EPA would have difficulty in
computing and defending State budgets.
In addition, some units are cogenerators, which are electrical
generators that divert part of their heated steam to provide heat
(steam output), rather than to generate electricity. Information on
steam output from cogenerating units or from industrial boilers is not
currently available to EPA. A cogeneration unit that was included under
the State budget as an electricity generating unit based upon heat
input would only have its electrical output included in an output-based
State budget, ignoring the portion of heat input used to generate steam
output. Thus, output-based State budgets based on currently available
data could inadvertently underallocate budgets to States with many
cogenerators, which are some of the most efficient units. This could
actually discourage improvements in efficiency through cogeneration.
For the reasons stated above, the Agency concludes that it is not
appropriate to develop output-based State NO_X emission
budgets at this time. However, the Agency does believe that output-
based allocations to sources could provide significant benefits. As
stated earlier in this Section, the EPA intends to work with
stakeholders to overcome existing obstacles and to design an output
allocation system based on electricity and steam generation that could
be used by States as part of their trading program rules in their SIPs.
In addition, EPA is proposing FIPs for States that do not submit
adequate SIPs by the deadline required by this final rulemaking. As
part of its proposal, the Agency is soliciting comment on source
allocations for each State based upon both input and output. While EPA
believes that the output data are not sufficiently complete or accurate
to use for final budgets or for final source allocations at this time,
the Agency is taking comment on the proposed allocations in order to
receive public comment and to develop more accurate and more complete
output data that could be used in the final FIP rulemaking.
The EPA does believe that, over the long-term, it should continue
to look at the issues that surround the use of output-based
allocations. In addition, as stated in Section III.B.5. of this
preamble, the Agency will review the progress of States in meeting
their budgets in 2007. In that review, the Agency will consider not
only whether the SIPs achieved the reductions that had been projected
to meet the budgets, but also issues such as future budget levels and
allocation mechanisms including shifting to an output-based allocation
method.
b. Alternative Emission Limits.
Comments: The EPA received numerous comments on the proposed
uniform control level of 0.15 lbs/mmBtu for the EGU sector assumptions
across the 23 jurisdictions. Many States supported this proposed
control assumption. The EPA also received a number of alternative
proposals. These contain emission-reduction assumptions ranging from
0.12 lb/mmBtu to be implemented on the schedule proposed in the NPR to
a phased approach that starts with 0.35 lb/mmBtu to be implemented by
sector and provides for further evaluation of the need for more
stringent levels. The latter commenters based their recommendations on
their views that emissions from upwind States do not have an ambient
impact that is as important as EPA believes, or that implementation of
the EGU control levels proposed by EPA would not be feasible by the
date EPA proposed. In addition, a number of utilities and other
commenters voiced concern that the proposed control assumption of 0.15
lb/mmBtu would be too stringent to provide sufficient surplus
allowances for trading.
Response: At the time of the proposal, EPA chose 0.15 lb/mmBtu as
the assumed uniform control level for EGUs because it provided the
greatest air quality improvements feasible and was cost-effective
because its cost ($1,700 per ton NO_X removed in the 5-month
ozone season) was, on average, within the cost range of other controls
that had been recently promulgated or proposed. The EPA also
investigated the costs of several alternative uniform control options:
0.25, 0.20, and 0.12 (though 0.12 resulted in lower emission levels,
its average cost-effectiveness calculated at the time of the proposal
was $2,100/ton, exceeding EPA's target cost range of $1,000 to $2,000/ton).
Subsequent to the NPR and SNPR, EPA updated its EGU costing model
(IPM) and revised stationary source emission inventories (based on
public comment). These revisions and corrections lowered the average
cost of compliance for all the control levels considered. Additionally,
EPA conducted extensive air quality modeling of a number of alternative
control levels. The results of the air quality analyses were examined
using a number of different metrics for both the one-hour and eight-
hour standards. These air quality analyses are discussed in more detail
in Section IV of this notice.

[[Page 57413]]

The revised air quality analyses show that there is no ``bright
line'' to illustrate at what control levels the air quality benefits
begin to diminish. The air quality metrics suggest there are
corresponding incremental air quality improvements at every incremental
control level. For example, tightening the control level improves ozone
levels in many non-attainment areas and leads to additional counties
achieving attainment under the one-and eight-hour standards. All
metrics analyzed show that as the control level moves from 0.25 to 0.20
to 0.15 to 0.12 lb/mmBtu, air quality benefits increase. The analyses
also show that none of the alternative control options results in
attainment of the ozone standard in all nonattainment areas.
The EPA did not select levels higher than 0.15 lb/mmBtu (such as
0.20 lb/mmBtu or higher) because the 0.15 lb/mmBtu level offers more
air quality benefits at a cost that is still highly cost-effective.
Moreover, EPA did not have information to indicate that these higher
levels could be implemented meaningfully sooner than controls at the
0.15 lbs/MmBtu level. The EPA acknowledges that the 0.12 lbs/MmBtu
emission level is also within the average cost-effectiveness range
based on the revised cost analysis. The incremental cost-effectiveness
of this option is $4,200 per ton, an incremental cost per ton which is
85 percent higher than that for the 0.15 lb/mmBtu level. However, for
reasons explained Section II.D., the EPA is not relying on this
emission level.
The revised IPM analyses project that under the 0.12 control
option, 54 percent of affected EGU capacity should install selective
catalytic reduction (SCR) and 41 percent should install selective non-
catalytic reduction (SNCR). The installation requirements for SNCR are
significantly less extensive than for SCR. The analysis of the 0.15 lb/
mmBtu control option projects 31 percent of affected EGU capacity
should install SCR and 54 percent should install SNCR. Further, the
technical record provides many examples in the United States and
internationally of the ability of coal-fired units to achieve emission
levels below 0.15 lb/mmBtu with the installation of SCR. The record
contains fewer international examples, and only one US example, of a
coal-fired unit's ability to achieve emission levels below 0.12 lb/mmBtu.
In terms of the proposed level of control on which the trading
program budget is based, EPA believes that trading at 0.15 lb/mmBtu is
feasible because the proposed limit can readily be achieved by gas and
oil-fired boilers. In fact, more than 50 percent of gas and oil-fired
boilers already operate at NO_X levels below 0.15 lb/mmBtu
and should readily be able to generate emission credits if affected
States join a trading program.
The EPA recognizes that for coal-fired boilers to operate at or
below a 0.15 lb/mmBtu emission limit, SCR would generally be necessary.
Under a trading scenario, however, if one coal-fired boiler is able to
emit below 0.15 lb/mmBtu by installing SCR, it can provide emission
credits to another coal-fired boiler and obviate the need for that
second boiler to install SCR.
A remaining issue is whether SCR can achieve NO_X levels
below 0.15 lb/mmBtu. The EPA believes that SCR technology is capable
both of reducing NO_X emissions by more than 90 percent and
reducing NO_X rates below the proposed 0.15 lb/mmBtu limit,
provided the appropriate regulatory incentive (i.e., emission limit or
economic incentive) exists. As discussed in EPA's recent report,
``Performance of Selective Catalytic Reduction on Coal-Fired Steam
Generating Units,'' emission rates below 0.15 lb/mmBtu are currently
being achieved by a number of coal-fired boilers using SCRs. Examples
include: (1) Three Swedish boilers achieving rates between 0.04 and
0.10 lb/mmBtu; (2) six German boilers achieving rates between 0.08 and
0.14 lb/mmBtu; (3) two Austrian boilers achieving rates between 0.08
and 0.12 lb/mmBtu; and (4) four U.S. boilers achieving rates between
0.07 and 0.14 lb/mmBtu. The EPA also recognizes that these boilers,
with the exception of the Swedish boilers, have SCR systems designed to
achieve target emission limits. As a result, they fail to provide an
accurate picture of the emission levels which SCR is capable of
achieving below the target emission threshold. For this reason, EPA
cannot confidently conclude that enough units can feasibly achieve
levels at 0.12 lbs/MmBtu. In summary, EPA believes that an emission
rate of 0.15 lb/mmBtu reflects the greatest emissions reduction that
EPA can confidently conclude is feasible and that is highly cost-
effective, and provides ample allowances to sustain a market under the
NO_X Budget Trading Program.
c. Consideration of the Climate Change Action Plan.
Background: The President's Climate Change Action Plan (CCAP) calls
for implementation of over 100 voluntary programs aimed at reducing
greenhouse gas emissions. A large number of them are aimed at reducing
future electricity demand throughout the country. Already, some of
these programs have shown striking results in accomplishing their
energy efficiency objectives.
Comment: Two commenters noted that it is inappropriate for EPA to
incorporate assumed reductions in energy use based on the voluntary
measures of the CCAP, which are not binding like a regulation.
Response: The EPA believes that it is appropriate to incorporate
the impact of the voluntary measures in the CCAP on future electricity
demand. The EPA has always believed that it is appropriate to
incorporate any reasonable assumptions that the Agency can support that
will affect future electricity demand, or electricity generation
practices, into its Base Case forecast. For example, improvements in
electricity generation technology, fuel prices changes, and other types
of assumptions that are important elements of EPA's forecast of
electricity generation and resulting air emissions are also not
mandated by regulation. The Agency has considered the impact of the
CCAP in using the IPM model for analysis since 1996, and documentation
of the assumptions that the Agency has been making have been available
for public review since April 1996. Until now, there have been no
challenges to this consideration in the numerous reviews that there
have been of EPA's documentation of how it uses the IPM model. Also, no
one has challenged EPA's specific approach to factoring the CCAP into
its electricity generation forecast. (This can be confirmed by
examination of the dockets for the Clean Air Power Initiative and the
Phase II Title IV NO_X Rule, records of EPA's Science
Advisory Board, and the records of the Ozone Transport Assessment Group
meetings.)
The EPA updated its assumptions in IPM for the CCAP at the
beginning of 1998. The EPA updated its assumptions in the same manner
as it has done in the past--by lowering the most recent NERC demand
forecast by the amount of electricity demand between 2000 and 2010 that
the best available analysis suggests will occur due to the activities
in CCAP. The EPA used the in-depth evaluation of the future
implications of the CCAP for reducing electricity demand that was the
basis for the findings in the Administration's Climate Action Report,
July 1997. The amount of demand reduction that occurs appears in
Analyzing Electric Power Generation under the Clean Air Act, March
1998. The Climate Action Report analysis was reviewed extensively
within the Federal government by EPA, the Department of Energy and
other Federal agencies, and the report was reviewed publicly before its
publication. The EPA has not received criticism that it has overstated

[[Page 57414]]

the electricity demand reductions that are the basis for the carbon
reductions under the CCAP.
Notably, the electricity demand reductions were distributed evenly
throughout the United States, and therefore have no influence on the
share of the total amount of NO_X emissions that each State
receives. Furthermore, the Agency examined the implications on its
cost-effectiveness determination of not including the CCAP reductions
in its electricity demand forecast. The EPA found that even if the
Agency did not assume the CCAP reductions, it was still highly cost-
effective to develop a regional level NO_X budget for the
electric power industry, based on the level of control that EPA has
assumed. (These results appear in Chapter 6 of the Regulatory Impact
Analysis for the Regional NO_X SIP Call, September 1998.)

C. Non-EGU Point Sources

Background: The EPA developed the NO^X SIP call emissions
inventory for non-EGU point sources based on data sets originating with
the OTAG 1990 base year inventory. The OTAG prepared these base year
inventories with 1990 State ozone SIP emission inventories, and EPA
supplemented them with either State inventory data, if available, or
EPA's National Emission Trends (NET) data if State data were not available.
For the SNPR, non-EGU point source inventory data for 1990 were
then grown to 1995 using Bureau of Economic Analysis (BEA) historical
growth estimates of industrial earnings at the State 2-digit Standard
Industrial Classification (SIC) level. These emissions were grown to
1995 for the purposes of modeling and to maintain a consistent base
year inventory with the EGU data. Because BEA data are historical
documentation of industry earnings, EPA considered these to be among
the best available indicators of growth between 1990 and 1995 (63 FR
25915). Once the common base year of 1995 was established for these
source categories, the BEA growth assumptions utilized by OTAG were
used to estimate the 2007 base case inventory.
1. Base Inventory
Comment: The majority of comments related to the non-EGU point
source inventory alleged that these inventories were incomplete or
inaccurate. The comments generally addressed missing sources, non-
existent or retired sources, incorrect source sizes, mis-classification
of processes, or emission allocation inconsistencies. Many of these
commenters provided specific adjustments to be made to the inventories,
including emissions modifications, activity factors, source sizes, and
facility name changes. A number of States supplied completely new
inventories to replace what was in the proposed data sets. Other
commenters made broad, general categorical comment on the quality of
the inventories with no supporting data.
Response: As was followed under the OTAG inventory update
procedures, all State supplied comments were generally incorporated
``as is'' with the understanding that each State quality-assured its
own data before submission. Industry-supplied comments were forwarded
to respective State agencies for review and where data were deemed
appropriate for inclusion, integrated into the inventories. In some
instances, States responded that the data provided by the State should
override that supplied by industry, or vice-versa. Comments were, in
some cases, not incorporated when necessary to prevent double counting
of emissions in point and area source inventories, where base year
emission modifications were calculated from permitted emission levels
and not actual operating activity, where additional supporting data
could not be provided by the commenter, or where comments were general
characterizations of inventories or inventory sectors. Note that even
after State review, if the EPA felt that the data, procedures,
methodologies, or documentation provided with the comment were not
sufficient, valid, or justifiable, comments, or portions thereof, were
excluded from the revision.
Both 1990 and 1995 base year emission and growth modifications were
submitted and where 1990 data were provided, the methods described
earlier in this Section were utilized to account for growth to 1995 and
2007 levels.
2. Growth
Comment: Several commenters suggest that the growth factors used to
determine 2007 non-EGU point source base year inventories are
inaccurate or inconsistent across regions and categories of the
inventory. They explained that if growth factors are to be used to
estimate future base year emissions, consistent national or region-wide
values should be utilized for all categories across all States within
the domain. This, they continue, would promote equitable potential
progress to all areas and not penalize those that have shown past poor
growth rates. Some commenters go on to state that growth rates based on
past growth automatically disadvantage States which have suffered from
unusually low growth rates. In addition to growth rates, some
commenters provided 2007 base year emission estimates either with or
without the growth and control information needed to validate their
calculation.
Response: As noted above, EPA relied on BEA State-specific
historical growth estimates of industrial earnings at the 2-digit SIC
level as among the best available indicators of growth for non-EGU
point sources. The BEA projection factors assume the continuance of
past economic relationships. These factors are published every five
years and adjusted to account for recent production and growth trends.
For this reason, BEA data provide a useful set of regional growth data
that EPA recommends for use in preparing emission inventory
projections. It is true that BEA projection factors differ among
different areas and different source categories because of historical
differences in industrial growth among those different areas and source
categories. However, in general, these projection factors offer the
most reliable indicators of future growth as are available.
In cases where commenters questioned the use of EPA's growth rates
but provided no alternative of their own, EPA had little choice but to
continue to use the BEA-derived growth rates. Some commenters provided
alternative or supporting information for modification of source
category or State growth estimates. In those cases where a State or
industry may have had more accurate information than the BEA forecast
(e.g., planned expansion or population rates), data were verified and
validated by the affected States and by EPA, and revisions were made to
the factors used for that category.
3. Budget Calculation
Background: In the NPR and SNPR, EPA proposed that EGUs with a
capacity less than or equal to 25 MWe or 250 mmBtu/hour would be
considered small sources (``cutoff level'') and, as such, EPA would not
assume an emissions decrease as part of the Statewide budget for this
group of sources. At the same time, EPA proposed 2 cutoff levels for
industrial (non-EGU) boilers and turbines: units with a capacity
greater than 250 mmBtu/hour were defined as large units subject to a 70
percent emission reduction assumption; units with a capacity less than
or equal to 250 mmBtu/hr but with emissions greater than 1 ton/day were
defined as medium units subject to reasonably available

[[Page 57415]]

control technology (RACT); and units with a capacity less than or equal
to 250 MmBtu/hr and with emissions less than or equal to 1 ton per day
were considered small sources for which no reduction would be assumed
in the budget. In the SNPR, EPA specifically invited comment on the
size cutoffs and on treating large industrial combustion sources
(greater than 250 mmBtu or approximately 1 ton per day) at control
levels equal to that for EGUs (63 FR 25909). As described below, this
approach has been modified somewhat in response to comments and further
analysis.
a. Proposed Control Assumptions.
Comments: Some comments supported EPA's proposed approach of
assuming 70 percent and RACT controls in its calculation of the
budgets. Numerous comments were received stating that the 70 percent
reduction is inappropriate, may not be cost-effective and may not be
achievable, especially for the following industries: cement plants;
municipal waste combustors; certain pulp and paper operations,
including lime kilns and recovery furnaces; glass manufacturing; steel
plants; and some industrial boilers. Some comments suggested a control
level of 60 percent rather than 70 percent. On the other hand, one
commenter stated that SCR and SNCR are applicable and have been
installed on hundreds of industrial sources.
Response: The EPA generally agrees that 70 percent emissions
reduction is not appropriate for all large sources or all large source
categories, even though SCR and SNCR are applicable and cost-effective
for many sources. Instead of applying a one-size-fits-all percentage
reduction to all large non-EGU sources, the specific emissions
decreases assigned to each of these source categories for purposes of
budget calculation in the final SIP Call rulemaking reflect the
specific controls available for each source category that achieve the
most emissions reductions at costs less than an average of $2,000 per
ton. As described elsewhere in this notice, EPA's analysis results in
calculating budget reductions ranging from 30 percent to 90 percent for
several source categories and no controls to several other source
categories.
b. Small Source Exemption.
Comments: In general, commenters were supportive of EPA including a
cutoff level as part of the budget calculation; however, there were
many suggestions on what the cutoff should be. The EPA received
numerous comments supporting the proposed cutoff level of 25 MWe for
EGUs, which is approximately equivalent to 250 mmBtu/hr or one ton per
day. In addition, EPA received a few comments supporting a 250 mmBtu/hr
cutoff for non-EGU point sources. Commenters indicated that the levels
were appropriate and that it was important to be consistent with cutoff
levels in the OTC's NO_X trading program. The Ozone Transport
Commission (OTC) comprises the States of Maine, New Hampshire, Vermont,
Massachusetts, Connecticut, Rhode Island, New York, New Jersey,
Pennsylvania, Maryland, Delaware, the northern counties of Virginia,
and the District of Columbia. In September 1994, the OTC adopted a
memorandum of understanding (MOU) to achieve regional emission
reductions of NO_X. These reductions are in addition to
previous OTC state efforts to control NO_X emissions, which
included the installation of reasonably available control technology.
The OTC's NO_X trading program requires utility and
nonutility boilers greater than 25 MWe or 250 mmBtu to reduce emissions
in order to meet a NO_X budget and allows emissions trading
consistent with that budget. These NO_X reductions will take
place in two phases, the first phase beginning on May 1, 1999 and the
second phase on May 1, 2003.
Some comments suggested assuming budget controls on units less than
or equal to 25 MWe at RACT levels without a cutoff level. Others
supported EPA's proposal of assuming no additional controls on these
sources. Some comments suggested exempting medium-sized non-EGU sources.
Many commenters supported the general 1 ton per day exemption
contained in the NPR and SNPR. However, a few comments suggested a more
stringent cutoff level of 50-100 tons per year, similar to definitions
of ``major source'' in the CAA. One commenter recommended a less
stringent level of 5 tons per day cutoff level.
A few comments suggest using tons per day as the primary criterion
to define large- and medium-sized non-EGU sources, rather than boiler
capacity. This approach would exempt, for example, industrial boilers
that exceed the 250 mmBtu capacity, but which emit less than one ton
per day on average. The EPA's proposed approach considers a source
large if heat input capacity data are available and exceed the 250
mmBtu capacity criterion, regardless of its average daily emissions. In
support of this approach, commenters stated that industrial operations
do not usually operate at or near capacity, while EGUs often do.
A few commenters indicated that the OTAG recommendations for
turbines and internal combustion engines (in terms of horsepower cutoff
levels) be used. OTAG had recommended cutoff levels of 4,000 horsepower
for stationary internal combustion engines and 10,000 horsepower for
gas turbines.
Response: For reasons described below and in the NPR (62 FR 60354),
EPA believes that the cutoff levels of 250 mmBtu/hr and 1 ton per day
for large non-EGU point sources are appropriate. The EPA selected 250
mmBtu/hr and 1 ton per day primarily because this is approximately
equivalent to the 25 MWe cutoff used for the EGU sector. Emission
decreases from sources smaller than the heat input capacity cutoff
level, and that emit less than 1 ton of NO_X per ozone season
day, are not assumed as part of the budget calculation; these sources
are included in the budget at baseline levels.
The EPA believes that the 1 ton per day exclusion contained in the
NPR and SNPR is appropriate and necessary. This level allows today's
rulemaking to focus, for the purpose of calculating the budget, on the
group of emission sources that contribute the vast majority of
emissions, while at the same time avoids assuming emissions reductions
from a very large number of smaller sources (as described in the
following paragraph). In taking today's first major step towards
reducing regional transport of NO_X, EPA does not believe
that emission reductions from these small sources need to be assumed.
This approach provides more certainty and fewer administrative
obstacles while still achieving the desired environmental results.
Although other cutoff levels were suggested by commenters, EPA believes
that the cutoff levels described above strike the appropriate balance
so that reasonable controls may be applied by States to a sufficient
but manageable number of sources to efficiently achieve the needed
emission reductions.
Most small sources emit less than 100 tons of NO_X per
year. Although their total emissions are low, small sources account for
about 90 percent of the total number of point sources. Thus, not
assuming controls on these sources at the present time would greatly
limit administrative complexity and reporting costs. This common-sense
approach results in reducing the non-EGU population potentially
affected by the ozone transport rule from more than 13,000 sources
estimated in the NPR and SNPR to under 1,200.
Although a few comments suggested using tons per day, not capacity
(MWe or mmBtu/hr), for setting cutoff levels, EPA chose primarily to
use capacity indicators. This approach is consistent

[[Page 57416]]

with the framework of the emissions trading program. In addition, EPA
is concerned that units could have low average emissions during the
ozone season but relatively high emissions on some high ozone days.
Accordingly, EPA is relying on a capacity approach first and a tons per
day approach second (where capacity data is not available or
appropriate) to define units for which reductions are assumed in EPA's
budget calculations.
As noted in the proposal notices, horsepower data was generally
absent from the available emissions inventory data. Thus, the OTAG
recommendation could not be used. Because quality assured data are
still lacking, EPA used alternative approaches to determine size
categories as described above. For the purposes of calculating the
State budgets, the following approach is used to determine whether
controls should be assumed on a particular source for the purposes of
calculating the budget:

1. Use heat input capacity data for each source if the data are
in the updated inventory.
2. If heat input capacity data are not available, use the
default identification of small and large sources developed by EPA/
Pechan for OTAG and also used to develop the NPR and SNPR budgets
for source categories with heat input capacity fields (``default data'').
3. Emission reductions would be assumed if specific source heat
input capacity data or default data indicate that a source is
greater than 250 mmBtu/hr in the updated inventory.
4. If specific or default heat input capacity data are not
available in the updated inventory (or not appropriate for a
particular source category), emission reductions would be assumed if
the unit's average summer day emissions are greater than one ton per
day based on the updated inventory.
5. All others are ``small'' and no emission reductions are assumed.

c. Exemptions for Other Non-EGU Point Sources.
Comments: Several comments described source categories that might
be excluded from being assigned assumed emissions decreases for
purposes of calculation of the NO_X budgets. In the NPR, EPA
assumed a 70 percent reduction from large sources and RACT on medium-
sized sources. Some commented that it is not possible to control lime
kilns and recovery furnaces or that potential NO_X emissions
reductions are very small. One comment noted that recovery units
typically emit at a rate of 0.15 lb/mmBtu or less and lime kilns at
0.20 lb/mmBtu or less and suggested establishing an emissions rate
floor so that sources emitting less than 0.15 lb/mmBtu (or some other
floor) would not need to further control. Other commenters suggested
exempting cyclone boilers less than 155 MWe and all aircraft engine
test facilities.
Response: The EPA agrees that for purposes of today's rulemaking
the State budgets should not reflect assumed reductions in emissions
from lime kilns, recovery units and aircraft engine test facilities.
The amount of emissions from these source categories is very small
relative to other point source categories considered in this
rulemaking. Further, there is no experience in applying NO_X
control technologies full scale to aircraft engine test cells in the
U.S. (EPA-453/R-94-068, October 1994).
The EPA acknowledges that NO_X controls may be available
at costs less than $2,000 per ton for lime kilns, recovery units and
aircraft engine test cells. However, these source categories include a
relatively small number of sources with a small amount of emissions.
The EPA is concerned that assuming controls on these sources for
purposes of State budgets would encourage States to attempt to regulate
these sources. The EPA believes State regulation could be inefficient
because of the relatively high administrative costs of developing
regulations for these few source categories (particularly for aircraft
engine test cells because no regulations have been developed for this
source category).
Similarly, EPA determined for each of the following non-EGU point
source categories that the amount of emissions are small relative to
the total non-EGU point source emissions and, thus, State regulation
could be inefficient because of the relatively high administrative
costs of developing regulations for these few source categories:
ammonia, ceramic clay, fiberglass, fluid catalytic cracking, iron &
steel, medical waste incinerators, nitric acid, plastics, sand/gravel,
secondary aluminum, space heaters, and miscellaneous fuel use
operations. Further, for many of these categories the number of sources
is small and/or control technology information is limited (e.g., where
an Alternative Control Techniques document does not exist for that
category). The EPA believes that it would be an inefficient approach to
suggest that States consider adopting emissions reduction regulations
for each of these categories. Therefore, EPA did not calculate
emissions reductions from these source categories for purposes of
calculating the budget.
At this stage in the process to reduce regional transport, EPA
considers it most efficient to focus State and administrative resources
on the source categories with greater amounts of emissions. While
States may choose to control any mix of sources in response to the SIP
call, EPA is not, in today's rulemaking, assuming reductions from these
source categories as part of the budget reduction calculation and does
not believe it is necessary for States to do so.
It should be noted that EPA is generally treating the non-EGU
boilers/turbines in the same manner as the EGUs to enable States that
opt into a trading program to develop a simple and effective trading
program. Thus, the size cutoffs discussed earlier in this section are
identical. Further, the regulatory definition of a unit has been
revised to make it clear that only fossil-fuel fired boilers and
turbines are affected; this is discussed in detail in the trading
program section later in today's notice. In addition, it should be
noted that EPA is not excluding reductions from cyclone boilers,
whether EGU or non-EGU, between 25-155 MWe from the calculation of the
State budgets in this rulemaking. Such sources can be large emitters of
NO_X and EPA expects the control costs will be less than
$2000/ton on average through participation in the emissions trading
program.
d. Sources Without Adequate Control Information.
Comments: As described in the SNPR, there are many sources in the
emissions inventory which lack information EPA would need to determine
potentially applicable control techniques. The SNPR proposed to leave
these sources in the budget without assigning any emissions reductions.
The EPA received comments that generally supported the SNPR approach
not to assign emissions reductions to the diverse group of sources
where the Agency lacked sufficient information to identify potential
control techniques (63 FR 25909).
Response: This group of sources is diverse and does not fit within
the categories set out by EPA, but total emissions are low for this
group. The EPA believes that the effort needed to collect adequate
information concerning controls for those sources (about 6,000 small
and 260 medium or large) would be time consuming, the quality of the
information may be uncertain, and it would potentially affect only a
small amount of NO_X emissions. Therefore, for purposes of
today's action, EPA continues not to assume decreases in emissions for
these sources for purposes of calculation of the State budgets, but to
keep them in the budgets at baseline levels. In the future, as more
information becomes available, and if additional NO_X control
is needed to further reduce ozone transport, further

[[Page 57417]]

consideration of these sources may be necessary. Of course, States with
adequate information may choose to control these sources to meet their
budgets.
e. Case-By-Case Analysis of Control Measures.
Comments: Some commenters suggested that EPA simply assume
reasonably available control technology (RACT) for medium and, in some
comments, large sources in all upwind States on a case-by-case basis
and assure that marginally stringent source-specific reduction levels
are rejected. Many commenters stated that RACT default levels used by
EPA were not sufficiently accurate and that case-by-case analysis was
needed because every industrial source is different. Other comments
generally stated that control level decisions should only be made on a
case-by-case basis because each affected unit may have unique features
that alter its cost-effectiveness.
Response: In the final budget calculation procedure EPA does not
calculate RACT requirements for medium-sized sources. The assumption of
RACT or other controls on industrial boilers and turbines between 100-
250 mmBtu/hr would have been inconsistent with EPA's approach for
utility boilers and turbines, which exempts units less than or equal to
250 mmBtu/hr. To be consistent with the way EPA treats EGUs and because
data is often lacking for the smaller size sources, EPA redefined
``affected'' non-EGU units to primarily include those greater than 250
mmBtu. In cases where heat input data are not available, affected non-
EGU units are those greater than 1 ton per day; this level is also
consistent with the EGU cutoff because it is approximately equivalent
to the 250 mmBtu level. Consistency with the EGU approach is important
because it provides equity, especially among the smaller boilers and
turbines and simplifies the model trading program. Therefore, the final
rule does not calculate budget reductions for the medium size non-EGUs.
For the above reasons and as described below, EPA has examined the
non-EGU sources on a category-by-category basis and determined
appropriate control level assumptions for the large units. There are
several reasons why EPA did not choose to calculate the budget by
examining sources on a case-by-case basis. First, such an approach
would be inefficient since all large sources would need to be examined,
rather than some source categories being eliminated due to category
specific cost-effectiveness limitations or amount of emissions. Second,
it would be very difficult for the States to complete a case-by-case
analysis of their large sources, develop rules, and respond to the SIP
call within the 12 month time frame (or the statutory maximum 18
months). States needed much more time to respond to a similar
requirement, the 1990 CAA NO_X RACT program. The CAA allowed
a 2-year period before the NO_X RACT rules were due from the
States; however, few States met this time frame and several adopted
generic RACT rules which, in practice, resulted in much longer time
frames before the case-by-case RACT analyses were completed and State
rules adopted. Third, the option of participating in a trading program
should mitigate cost impacts on some sources that may have unique
configurations or other constraints. Fourth, EPA has often issued
standards on a category-wide basis (e.g., New Source Performance
Standards) which have proved workable even though some individual units
have higher costs than the average. Fifth, the results of such case-by-
case analyses may not be perceived to be as equitable as the
categorical approach because the control levels resulting from the
case-by-case approach are likely to vary from source-to-source and
State-to-State. Finally, the category-by-category approach selected by
EPA is preferred because it will achieve air quality benefits sooner
than the case-by-case approach.
f. Cost-Effectiveness.
Comments: The EPA received numerous comments on cost-effectiveness.
Those comments related to uniform control levels or cost per air
quality improvement are addressed elsewhere in this notice. Some
comments supported EPA's proposed $2,000 per ton approach. Some
commented that EPA should use incremental costs, which are the costs
and reductions associated with obtaining further control from a unit
that already has some level of controls installed. Several commenters
suggested using marginal costs, defined as the cost of the last ton of
NO_X removed by a control strategy. Many stated that the
costs for non-EGUs should be no greater than for utilities on a $/ton
basis. One commenter noted that non-EGU costs will be considerably
lower than EPA estimates. One comment suggested that EPA assume no
further controls if the source has BACT, LAER, MACT or RACT already in
place. One comment supported a command-and-control approach instead of
the least cost for the non-EGUs, and asserted that controlling 13,000
sources through this rulemaking may not be feasible. Several commenters
suggested that CEMS costs for non-utilities should be included in the
cost-effectiveness determinations and that alternative monitoring
methodologies should be considered.
Response: The EPA believes that the approach of average cost-
effectiveness described in the proposal notices is appropriate for this
rulemaking. In establishing the upper limit of the cost-per-ton range
that EPA considers highly cost-effective for this rulemaking, EPA
relied on average cost-effectiveness values estimated for recently
proposed or promulgated rulemakings. The marginal cost-effectiveness
for the level of control decided upon in the other programs and
rulemakings was not always estimated or readily available. The EPA's
latest assessment of cost-effectiveness does account for the level of
existing or planned control in the baseline case. Therefore, when EPA
refers to average cost-effectiveness it is the average incremental cost
between the base and the more stringent level of control.
For the non-EGU point sources, in the NPR and SNPR EPA had
aggregated the non-EGUs as one group, which meant that a few source
categories with relatively low costs and high percentage emissions
decreases dominated overall average cost-effectiveness. For today's
final action, EPA revised its approach and analyzed individual source
categories to determine if control techniques are available at average
costs less than $2,000 per ton. Further, EPA included in this cost-
effectiveness approach the costs related to CEMS, because this is a new
and potentially high cost to some of the non-EGU source categories. As
described in the RIA that supports this final rulemaking, EPA's
analysis determined that the following non-EGU source category
groupings could achieve substantial emissions decreases at average
costs less than $2,000 per ton: industrial boilers and turbines,
stationary internal combustion engines, and cement manufacturing. As
further described in the RIA, controls for sources grouped in the
following categories exceed $2,000 per ton: glass manufacturing,
process heaters, and commercial and industrial incinerators.
The EPA believes that, over time, costs for non-EGU point sources
will be lower than current EPA estimates; however, the changes cannot
be quantified at this time. As discussed below, EPA agrees that one
source category that has a NO_X standard set through the MACT
process should not be assumed to implement further controls.
g. Industrial Boiler Control Costs.
Comments: Several comments were submitted indicating that industrial

[[Page 57418]]

boiler costs are generally higher than utility boiler costs. The
comments cited factors of load variability, smaller size/economies of
scale, firing of multiple fuels, and the ability to finance new
controls and pass on costs. Some comments stated that most industrial
boilers are one-seventh the size of utilities and, thus, EPA should
recognize that the costs of controls would generally be higher due to
economies of scale.
Response: The EPA agrees that industrial boiler sources are
generally smaller than utility boiler sources; however, some individual
industrial sources are larger than some utility sources. The EPA agrees
that costs, on average, to the industrial sector are expected to be
somewhat greater than that expected by the utilities due, in part, to
economies of scale and the need for CEMS (which are already in place at
utilities). Primarily due to the costs related to continuous emissions
monitoring systems, EPA's reanalysis of cost-effectiveness for
industrial boilers resulted in a control level of 60 percent, which is
less stringent on average than that for utilities.
h. Cement Manufacturing.
Comments: In the NPR, EPA proposed a 70 percent control assumption
on large sources and RACT on medium sources, including cement plants.
Some commenters suggested that cement manufacturing should be excluded
because in the SIP Call area, there are only a few cement plants and
they have low emissions. Several commenters noted that many cement
plants had already implemented NO_X RACT controls. Some
comments disagreed with the costs and controls contained in EPA's
Alternative Control Techniques document (EPA-453/R-94-004, March 1994)
and added that EPA should not assume the same controls for different
types of cement plants. Several commenters stated that 70 percent
control is not feasible and SCR costs would be greater than $4,500 per
ton, but that 20-30 percent control is possible. One commenter stated
that the SIP call would provide a major competitive advantage to plants
outside the region, and that multi-plant companies may shut down
facilities inside the SIP call region and increase output at plants
outside.
Response: Over 50 cement manufacturing units together emit more
than twenty percent of emissions from large point sources not in the
trading program (about 40,000 tons per season). The EPA believes that
the emissions from this one industry are sufficiently high that it is
appropriate to examine the availability of cost-effective controls.
The cost and control estimates in the Alternative Control
Techniques (ACT) document were peer reviewed and, as such, are
considered by EPA as the best data available. Consistent with the ACT
document for this industry, EPA generally agrees with the commenters
that a 70 percent control level would exceed the $2,000 per ton level
used as EPA's cost-effectiveness framework. But, with the evidence
cited in the cement ACT document and in some comments, EPA believes
that a 30 percent reduction from uncontrolled levels would be within
the cost-effectiveness range for reducing emissions at all types of
cement manufacturing facilities. Therefore, the budget calculations
assume a 30 percent control level for this source category. The EPA
does not anticipate that, if States were to choose to apply a 30
percent control level to cement plants, this would be a major
competitive disadvantage for plants located in the SIP call area
because many cement plants in the region have already successfully
implemented such controls in State RACT programs.
i. Stationary Internal Combustion Engines.
Comments: One comment suggested EPA set RACT levels at 25 percent
for this category.
Response: As noted above, EPA is not using a RACT approach in the
final rulemaking, but has examined each non-EGU point source category
separately to determine the maximum available emissions reductions from
controls that would cost less than $2,000 per ton on average. As
described in the RIA, this process of looking at source categories
individually resulted in EPA changing the control level assumption for
this category from 70 percent in the NPR to 90 percent control in
today's final rule. As described elsewhere in this notice, EPA also
changed the control level assumptions for other source categories
through this more detailed approach.
For this source category, EPA determined based on the relevant ACT
document, that post-combustion controls are available that would
achieve a 90 percent reduction from uncontrolled levels at costs well
below $2,000 per ton. (EPA-453/R-93-032, 1993.) Therefore, the budget
calculations include a 90 percent decrease for this source category
from uncontrolled levels.
For spark ignited rich-burn engines, non-selective catalytic
reduction (NSCR) provides the greatest NO_X reduction of all
technologies considered in the ACT document and is capable of providing
a 90 to 98 percent reduction in NO_X emissions. The control
technique for spark ignited lean burn, diesel, and dual fuel engines is
selective catalytic reduction (SCR). The SCR provides the greatest
NO_X reduction of all technologies considered in the ACT
document for these engines and is capable of providing a 90 percent
reduction in NO_X emissions.
j. Industrial Boilers and Turbines.
Comments: Several commenters indicated that boilers using SNCR may
achieve 40-60 percent reduction, but not 70 percent. Other comments
supported the 70 percent control level proposed.
Response: The EPA examined the category of industrial boilers and
turbines to determine the largest emissions reductions that would
result from controls costing less than $2,000 per ton on average,
including costs related to CEM systems. As described in the RIA, for
this source category, EPA determined that controls, including SCR and
SNCR, are available that would achieve a 60 percent reduction from
uncontrolled levels at costs less than $2,000 per ton on average. For
those sources that participate in the trading program, EPA believes
that the costs would be further reduced. Therefore, the budget
calculations include a 60 percent reduction for this source category
from uncontrolled levels.
k. Municipal Waste Combustors (MWCs).
Comments: Several comments suggested that State budgets should not
reflect emissions decreases for MWCs beyond those already required by
the MACT rules.
Response: The NPR did not assume reductions for MWCs in the
calculation of the budgets. However, since MACT reductions are
required, and will be achieved well before 2007, those reductions
should be accounted for in the 2007 baseline emissions inventory. The
EPA agrees that additional emissions decreases beyond MACT levels are
not warranted for this source category at this time because they would
exceed the $2,000 per ton framework for highly cost-effective controls.
Therefore, EPA has incorporated the NO_X emissions decreases
due to the MACT requirements into the 2007 baseline levels and not
assume any further reductions.

D. Highway Mobile Sources

Background: For the NPR and SNPR, highway vehicle emissions were
projected to 2007 from a base year of 1990. The NPR used the 1990 OTAG
inventory as its baseline. The 1990 OTAG inventory was based on actual
1990 vehicle-miles-traveled (VMT) levels for each State, based on State

[[Page 57419]]

submittals to OTAG where available, or on historical VMT data obtained
from the Highway Performance Monitoring System (HPMS) if State data
were not available. The EPA proposed to switch to historical 1995 VMT
levels from the HPMS; States were encouraged to submit their own 1995
VMT estimates where those estimates differed from HPMS.
In today's notice, EPA has implemented the changes it proposed in
the NPR in calculating baseline and projected future NO_X
emissions from highway vehicles. A 1995 baseline is used for today's
notice in place of the 1990 baseline used in the NPR. The HPMS data
were used to estimate States' 1995 VMT by vehicle category, except in
those cases where EPA accepted revisions per the comments. These VMT
estimates reflect the growth in overall VMT from 1990 to 1995, as well
as the increase in light truck and sport-utility vehicle use relative
to light-duty vehicle use. The 1995 NO_X emissions
inventories also reflect the type and extent of inspection and
maintenance programs in effect as of that year and the extent of the
Federal reformulated gasoline program. The EPA is continuing to use the
growth factors developed by OTAG for the purpose of projecting VMT
growth between 1995 and 2007. These growth factors were revised with
appropriately explained and documented growth estimates submitted
during the comment period for the NPR.
The 2007 highway vehicle budget components presented in today's
notice are based on EPA's MOBILE5a emission inventory model with
corrected default inputs, which represents the most current EPA
modeling guidance to States when developing their SIPs.⁶⁰
---------------------------------------------------------------------------

\60\ Both MOBILE5a and MOBILE5b are official EPA models. States
can use either model in their SIPs, provided they use the corrected
default inputs with MOBILE5a. For the control programs evaluated in
today's action, MOBILE5a with corrected default inputs gives the
same emission estimates as MOBILE5b. Because both models are
considered valid by EPA and give the same emission estimates, the
EPA has determined that the choice of which model to use in
calculating highway vehicle emission budget components is a matter
of convenience. The EPA has chosen to retain the use of MOBILE5a for
today's action in order to maintain consistency with the OTAG
process, in which MOBILE5a with corrected default inputs was used to
construct its highway vehicle emission inventories and to calculate
the effectiveness of highway vehicle emission control options.
---------------------------------------------------------------------------

1. Base Inventory
Comment: The EPA received a number of comments on baseline highway
vehicle emission inventories. Most of these commenters proposed changes
to baseline VMT estimates or to control factors related to highway
vehicle emissions.
Response: In the NPR and SNPR, EPA asked commenters to provide
sufficiently detailed information to permit revision to county-level
emission inventories, in order to allow airshed modeling to be
performed using the revised inventories. A number of proposed VMT
revisions submitted by commenters were not sufficiently detailed to
permit county-level inventory revisions and therefore these revisions
were rejected. Other commenters provided sufficiently detailed data,
which were incorporated into the base year VMT inventory, with two
exceptions. Two States submitted 1995 VMT estimates that were
inconsistent with EPA and U.S. Department of Transportation information
on the relative contribution of light-duty trucks to total VMT. The EPA
chose to use the HPMS default data for these two States.
Comment: One commenter asked the EPA to use VMT from the 1996
Periodic Emissions Inventory (PEI) or 1996 National Emissions Trends
(NET), rather than 1995 Highway Performance Modeling System (HPMS) data
when calculating baseline inventories. Several other commenters
supported EPA's use of 1995 HPMS data to calculate baseline VMT
inventories.
Response: Guidance on how to construct the 1996 PEI was not
released until July 1998 and State PEI submittals are not expected
until 1999. The EPA has determined for this reason that the 1996 PEI is
not suitable for calculating the baseline VMT inventory. The EPA
considered using 1996 NET VMT data in its base inventories, but those
data were based on estimated 1995 HPMS inputs. The EPA has chosen to
use the actual 1995 HPMS data rather than estimates in order to reduce
the uncertainties associated with estimating baseline and 2007 emission
inventories.
Comment: One commenter suggested using a multi-year VMT activity
average to establish the highway emission baselines to smooth out
abnormal patterns, instead of relying solely on 1995 activity.
Response: The EPA proposed using 1995 VMT in order to shorten the
time period over which VMT growth would have to be projected. The EPA
is not aware of any evidence that suggests that 1995 was an abnormal
year in terms of VMT activity. Furthermore, States did not submit
multi-year VMT averages in response to the EPA's invitation to submit
their own VMT data. If the EPA were to construct multi-year averages,
it is not clear what time frame would be appropriate. The EPA believes
that the uncertainty related to having to project VMT growth estimates
over a longer time period is at least as great as the uncertainty
related to the representativeness of 1995 VMT. For these reasons, EPA
has chosen to use 1995 VMT for base year and projection year inventories.
Comment: A number of commenters raised various issues about the use
of the MOBILE5 emission factor model for this analysis. Most of these
comments focused on specific assumptions or estimates incorporated in
MOBILE5 which may need to be modified or updated to account for new
information.
Response: The EPA is currently developing an updated emission
factor model called MOBILE6. When final, this model will supersede the
MOBILE5 model used by the EPA to develop baseline and 2007 emission
inventories and States' highway vehicle budget components. The concerns
raised by commenters are being evaluated as part of the MOBILE6
development process. At the present time, however, MOBILE5 remains
EPA's official emission factor model. The EPA currently is not able to
determine whether the highway vehicle emission modeling concerns raised
by commenters are valid or whether the changes they suggest would raise
or lower emission estimates; EPA is also not able to quantify the
effects of commenters' concerns using its current emission models. Some
of the changes EPA expects to make in its next official emission factor
model, such as the effects of aggressive driving and air conditioner
use, are likely to raise emission estimates; others, such as less-rapid
deterioration of emissions performance than previously forecast, are
likely to lower emission estimates. Because the overall effect of these
and other changes cannot yet be determined, the EPA has chosen to
continue using its current official emission model in today's action.
As discussed in Section III.F.5, the budgets presented in today's
action serve as a tool for projecting in advance whether States have
adopted measures that would produce the required amount of emissions
reductions, as indicated by the initial demonstration submitted in
September 1999. The budgets are also a means for determining from 2003
to 2007 whether States are fully implementing those measures. Thus, the
budgets are an accounting mechanism for ensuring that the upwind States
have adopted and implemented control measures that prohibit the
significant amounts of NO_X emissions targeted by section
110(a)(2)(D)(i)(I). Although EPA's

[[Page 57420]]

projections of emissions from highway vehicles will change as the
Agency improves its emission models, these changes will not in and of
themselves require changes in the actions States undertake to reduce
ozone transport under today's action.
2. Growth
Comments: The EPA received numerous comments concerning its
projection of States' 2007 highway vehicle budget components. In
addition to the changes in baseline VMT discussed previously in Section
III.D.1 of this notice, the EPA received from a number of States
proposed revisions to VMT growth estimates and the effectiveness of
emission control programs.
Response: In today's action, EPA has implemented the following
changes it proposed in the NPR in calculating States' 2007 highway
vehicle budget components. The EPA has used State projections of VMT
growth from 1995 through 2007 for States that submitted appropriately
explained projections of VMT growth from 1995 to 2007. For other
States, EPA projected 2007 VMT levels from the 1995 baseline VMT levels
using the OTAG projected growth rates.
As proposed in the NPR, neither the highway vehicle budget
components nor the overall NO_X budgets promulgated in
today's action alter the existing conformity process or existing SIPs'
motor vehicle emissions budgets under the conformity rule. The EPA has
determined that Federal agencies or Metropolitan Planning Organizations
(MPOs) operating in States subject to today's action do not have to
demonstrate conformity to the SIP Call budgets or the highway vehicle
budget component levels used to calculate the budgets. However, areas
will be required to conform to the motor vehicle emissions budgets
contained in the attainment SIPs for the new eight-hour standard. For
their attainment SIPs for transitional ozone nonattainment areas,
States might seek to rely on the modeling performed for the SIPs
submitted in response to today's action. To the extent that this
occurs, the VMT projections and motor vehicle emissions inventories
associated with today's action could have a role in the conformity
process, beginning when transitional areas are designated and
classified in 2000.
3. Budget Calculation
Background: The EPA proposed highway budget components based on
projected highway vehicle emissions in 2007 from a base year of 1990,
assuming implementation of CAA measures, such as inspection and
maintenance programs and reformulated fuels, measures already
implemented federally, and those additional measures expected to be
implemented federally by 2007. The additional Federal measures included
the National Low Emission Vehicle Standards and the 2004 Heavy-Duty
Engine Standards. The emission effects of revisions to the Federal
Emissions Test Procedure, which had also been promulgated in final
form, were not reflected in the projected 2007 emissions presented in
the proposal because neither the emissions that this measure is
designed to control nor the reductions in those emissions expected from
the test procedure revisions had been incorporated in the projected
2007 emission estimates or in peer- and stakeholder-reviewed EPA
emission models. The proposal also did not incorporate any benefits
from Tier 2 light-duty vehicle standards since the EPA had not yet
proposed or promulgated regulations concerning the level and
implementation schedule for Tier 2 standards. Seasonal emissions were
calculated by estimating emissions for a specific weekday, Saturday and
Sunday during the ozone season and multiplying by the number of days of
each type in the ozone season. These estimates were based on
temperatures and temperature ranges recorded for actual ozone episodes.
In the NPR, EPA proposed to change this approach to substitute monthly
average temperatures and temperature ranges for ozone episode-specific
temperatures when constructing the 2007 budgets. The highway vehicle
budget components presented in today's notice reflects this change.
Comment: A number of commenters suggested that the EPA change its
assumptions regarding emission control programs from those used in the
NPR. One commenter claimed that the NPR did not include a number of
cost-effective highway and nonroad mobile source NO_X
reduction programs in its budget calculations. Other commenters
suggested that the EPA focus more on expanding the RFG and I/M
programs, adopting gasoline sulfur controls, implementing a
reformulated diesel fuel program, or implementing the Tier 2 program.
Contrary to these positions, a number of commenters agreed with the
EPA's decision not to assume any expansion of the RFG or I/M programs,
while still other commenters argued that the EPA should not include the
emission effects of gasoline sulfur controls or reformulated diesel
fuel in its calculation of State NO_X budgets. One commenter
suggested that the EPA change its NLEV phase-in assumptions to match
the final NLEV agreement. One commenter asked EPA to include the effect
of the recent Revised Federal Test Procedure rule, which is aimed at
reducing excess emissions from aggressive driving or air-conditioner
use, in its budget calculation.
Response: Both the NPR and today's action include those mobile
source reductions which EPA has determined or proposed to determine are
technologically feasible, highly cost-effective, and appropriate to
implement on a national basis, and which have been promulgated in final
form or are expected to be promulgated in final form before States are
required to submit revised SIPs. The highway vehicle budget components
include the emission reductions resulting from implementation of the
NLEV program, including the phase-in schedule agreed to by the States,
automobile manufacturers, and EPA. The highway budget components do not
include the effect of Tier 2 light-duty vehicle and truck standards and
any associated fuel standards since these standards have not yet been
proposed.
The extent of the RFG and I/M programs was not assumed to change
beyond that assumed for the NPR, except for those States who were able
to demonstrate that the NPR's modeling assumptions did not conform to
the State's SIP and did not reflect CAA requirements. As discussed
elsewhere in today's notice and in the NPR, the NO_X
reductions alone from these measures do not appear to be highly cost
effective in all of the areas that would be subject to reduced budgets.
Because these measures offer additional benefits beyond NO_X
reductions, specific local areas may determine that these measures are
appropriate and cost effective given their full range of benefits.
The baseline and budget calculations include neither the increased
emissions from aggressive driving or air conditioner use, nor the
reductions in those emissions resulting from the Revised Federal Test
Procedure rule. These emission effects are not reflected in EPA's
MOBILE5a model; they are being evaluated for inclusion in MOBILE6.
While the EPA has developed a modified version of its MOBILE5 model to
estimate these effects for its Tier 2 study, this modified model has
not been used in any regulatory actions and is still subject to
revision as part of EPA's model development process. As discussed above
and in Section III.F.5. below, any

[[Page 57421]]

changes by EPA in its emission models will not in and of themselves
alter the emission reductions States must achieve to comply with the
requirements of today's action.
Comment: One commenter suggested that the EPA not split VMT using
weekend and weekday travel fractions when calculating monthly and
seasonal total VMT. Another State commenter proposed an alternative
method for calculating monthly and seasonal VMT from average daily VMT
which did not rely on the EPA weekend/weekday travel fractions, but
instead used monthly travel fractions specific to that State. Other
commenters supported the weekend/weekday inventory modeling approach
proposed by the EPA.
Response: The EPA and other organizations have amassed considerable
evidence that weekend and weekday travel patterns differ significantly.
The OTAG Final Report requested day-specific inventories for developing
day-of-the-week activity levels used in emission inventory development
and episode-specific modeling. Given this requirement, EPA has
determined that the approach outlined in the NPR is appropriate and
reasonable. The alternative method using State-specific monthly travel
fractions as proposed by one State is a reasonable alternative.
However, because EPA does not have the necessary information to apply
this method to all other States, EPA did not incorporate this method in
its analysis.
a. I/M Program Coverage.
Comment: One commenter urged the EPA to expand I/M programs to
cover all urbanized areas with populations above 500,000 as recommended
by OTAG. Other commenters also requested that EPA expand the I/M
program or require specific States to adopt specific types of I/M
programs. By contrast, other commenters supported the I/M approach
taken by the EPA in the NPR.
Response: The OTAG recommended that States consider expanding I/M
programs to cover all urbanized areas with populations above 500,000.
The EPA has considered this recommendation but does not believe it to
be appropriate to assume broader I/M implementation in calculating
State budgets for the reasons outlined in the NPR (62 FR 60355). The
State budgets promulgated in today's action reflect full implementation
of I/M as required by the CAA and State SIPs.
b. Emissions Cap.
Comment: One commenter suggested that the EPA consider capping
mobile source emissions, arguing that the proposed rule would place an
undue burden on stationary sources.
Response: The State NO_X budgets promulgated in today's
action include the projected emission benefits of those NO_X
controls that the EPA has determined are technologically feasible and
highly cost effective, as well as additional controls whose
implementation is not dependent on this rule. While the EPA's analysis
indicates that certain categories of stationary sources offer the
potential for large, highly cost-effective NO_X emission
reductions, the State NO_X budgets also reflect the emission
effects of a number of mobile source controls (See Table IV-2). The EPA
believes that it has applied its criteria for determining which
controls to assume in State NO_X budgets equitably to both
mobile and stationary sources. In contrast to EGUs and large non-EGUs,
EPA has not concluded that a mass cap (which would effectively require
offsets for VMT growth) is highly cost effective. For these reasons,
EPA does not believe that today's action places an undue burden on any
emission sector and does not believe that a separate cap on mobile
source emissions is necessary.
c. Tier 2 Standards.
Comment: One commenter requested that EPA include the effects of
Tier 2 light-duty vehicle standards when calculating State budgets if
the NLEV program fails. Another commenter suggested that States not be
permitted to adjust their budgets in case the NLEV program fails.
Response: This issue is not yet ``ripe'' because NLEV is currently
being implemented and there are no signs that the program will fail.
The EPA will consider whether to adjust State budgets if automakers
representing a significant portion of new vehicle sales withdraw from
the NLEV program, as discussed in Section III.F.5.
d. Low Sulfur Fuel.
Comment: One commenter stated that the EPA disregarded OTAG's call
for reducing sulfur levels in fuel, which would have the effect of
reducing NO_X emissions.
Response: The EPA's proposed rule and other actions match the OTAG
recommendations on fuels, contrary to the commenter's suggestion. The
OTAG gasoline recommendation stated, ``The USEPA should adopt and
implement by rule an appropriate sulfur standard to further reduce
emissions and assist the vehicle technology/fuel system [to] achieve
maximum long term performance.'' It did not request that EPA implement
a specific sulfur reduction proposal. The EPA is evaluating the costs
and benefits of reducing gasoline sulfur levels as part of its proposed
rulemaking to implement Tier 2 light-duty vehicle and truck standards.
The EPA is also evaluating the relationship between diesel fuel
standards and the emission standards as part of (i) its 1999 technology
review for its 2004 highway heavy-duty diesel engine standards and (ii)
its 2001 technology review for the Tier 3 and Tier 2 nonroad diesel
engine standards. Until these evaluations are complete, EPA believes it
is premature to assume any changes in fuel properties when calculating
States' highway vehicle budget components.
e. Conformity.
Comment: One commenter recommended that NO_X
transportation conformity waivers should lapse in the wake of today's
action.
Response: Conformity waivers were granted on an area-by-area basis,
given the facts of the situation in each local area. Any withdrawal
should be based on similar local analysis, or upon submittal of a valid
attainment plan. Today's action is not based on this kind of local
analysis. Thus, there is no basis for any withdrawal of existing
NO_X transportation conformity waivers. Furthermore, any such
withdrawal would not alter the Statewide NO_X budgets set
forth in today's action. For these reasons, the EPA has concluded that
today's action does not alter existing conformity requirements,
including any NO_X conformity waivers.
Comment: One commenter expressed concern that if current conformity
budgets do not incorporate the same control assumptions as the States'
budgets submitted in response to today's rulemaking, the growth in
areas currently subject to conformity budgets could threaten the
ability of States to meet the SIP call budgets. The commenter continued
that failure to tie conformity budgets to transport budgets would allow
these areas to grow to pre-SIP call control budget levels that could
cause an exceedance of the Statewide budget. The commenter also stated
that to address local ozone problems, transportation conformity plans
should reflect the mobile source controls assumed in the SIP call.
Response: Conformity budgets cannot be tied directly to the SIP
Call budgets because the latter are statewide and the former are
nonattainment-area-specific. The Statewide NO_X budgets will
be enforced as described in today's action, regardless of the
conformity budgets in specific areas within the affected States. These
budgets should reflect the actual level of motor vehicle emissions
which States expect to occur.

[[Page 57422]]

As noted elsewhere in this section, conformity budgets will reflect
the mobile source controls assumed in the SIP Call budgets to the
extent that the attainment SIP ultimately relies upon those controls.
Today's action does not change the rules governing generation and use
of emission reduction credits to offset further growth in the
transportation sector as part of a local area's conformity demonstration.

E. Stationary Area and Nonroad Mobile Sources

Background: The EPA developed the NO_X SIP call emissions
inventory for area and nonroad mobile sources based on data sets
originating with the OTAG 1990 base year inventory. These base year
inventories were prepared with 1990 State ozone SIP emission
inventories supplemented with either State inventory data, if
available, or EPA's National Emission Trends (NET) data if State data
were not available. The OTAG 1990 nonroad emission inventories were
based primarily on estimates of actual 1990 nonroad activity levels
found in the October 1995 edition of EPA's annual report, ``National
Air Pollutant Emission Trends.'' In the NPR, EPA proposed switching to
EPA's 1997 ``Trends'' estimate of 1995 nonroad activity levels.
For the SNPR, area and nonroad mobile source inventory data for
1990 were then grown to 1995 using Bureau of Economic Analysis (BEA)
historical growth estimates of industrial earnings at the State 2-digit
Standard Industrial Classification (SIC) level. Because BEA data are
historical documentation of industry earnings, EPA considered these to
be among the best available indicators of growth between 1990 and 1995
(63 FR 25915). Once the common base year of 1995 was established for
these source categories, BEA growth assumptions utilized by OTAG were
used to estimate the 2007 base case inventory.
1. Base Inventory
Comment: The EPA received several comments on baseline area and
nonroad mobile source emission inventories. Several commenters
submitted estimates of their 1990 nonroad activity levels that differed
from NPR estimates. One commenter provided statewide 2007 base year
emissions estimates for numerous area source categories, while others
provided similar information for 1990 or 1995 emission estimates. Many
commenters expressed concern with existing area source inventory
estimates and provided revised county-level area source inventories.
One commenter suggested using a multi-year activity average to
establish the nonroad emission baseline, arguing that a multi-year
average would provide a more representative baseline than would a
single year's data alone.
Response: In the NPR and SNPR, EPA asked commenters to provide
sufficiently detailed information to permit revision to county-level
emission inventories, in order to allow airshed modeling to be
performed using the revised inventories. Some proposed area and nonroad
inventory revisions submitted by commenters were State-wide revisions
and did not contain sufficient detail to permit the EPA to revise
county-level nonroad emission inventories. Because the EPA could not
use these submittals to revise the county-level inventories used as
inputs to its air quality modeling analyses, these submittals were not
accepted. Other commenters did provide sufficiently detailed data, and
EPA revised the appropriate emission inventories to reflect the
commenters' estimates. These revised inventories were then grown to
1995 using BEA-derived growth factors, as described above.
Although EPA proposed in the NPR to switch to a 1995 inventory in
calculating baseline NO_X emissions from nonroad mobile
sources, EPA has chosen not to do so in today's action. Using the 1995
inventory presented in the ``Trends'' report as the baseline for
today's action would have required the use of geographic allocation
methods that have not undergone peer review and have not been made
available for public comment by affected interests. The EPA has
concluded that the use of these unreviewed methods in today's action
would have deprived stakeholders of adequate opportunity to review,
understand, and comment on their baseline inventories and the methods
used to construct them. Hence, EPA has chosen to retain the 1990
baseline inventories for nonroad mobile sources presented in the NPR
for today's action, with the changes made in response to comments.
As discussed above, EPA has chosen to use 1990 nonroad activity
level estimates as the basis for its nonroad inventory projections. The
EPA is not aware of any evidence that suggests that 1990 was an
abnormal year in terms of nonroad activity. Furthermore, States did not
submit multi-year nonroad activity averages in response to EPA's
invitation to submit their own nonroad activity data. If EPA were to
construct multi-year averages, it is not clear what time frame would be
appropriate. To reduce the impact of unusual years, EPA would have to
take a long-term average. However, doing so would require EPA to use an
even earlier year as its base year for nonroad activity and inventory
projections. The EPA believes that the uncertainty related to having to
project nonroad activity growth estimates over a longer time period is
at least as great as the uncertainty related to the representativeness
of 1990 nonroad activity.
2. Growth
Comment: Several commenters suggest that the growth factors used to
determine 2007 stationary area and nonroad mobile source base year
inventories are inaccurate or inconsistent across regions and
categories of the inventory. They explained that if growth factors are
to be used to estimate future base year emissions, consistent national
or region-wide values should be utilized for all categories across all
States within the domain. This, they continue, would promote equitable
potential progress to all areas and not penalize those that have shown
past poor growth rates. Some commenters go on to state that growth
rates based on past growth automatically disadvantage States which have
suffered from unusually low growth rates. In addition to growth rates,
some commenters provided 2007 base year emission estimates either with
or without the growth and control information needed to validate their
calculation.
Response: As noted above, EPA relied on BEA State-specific
historical growth estimates of industrial earnings at the 2-digit SIC
level as among the best available indicators of growth for stationary
and nonroad area sources. BEA projection factors assume the continuance
of past economic relationships. These factors are published every five
years and adjusted to account for recent production and growth trends.
For this reason, BEA data provide a useful set of regional growth data
that EPA recommends for use in preparing emission inventory
projections. It is true that BEA projection factors differ among
different areas and different source categories because of historical
differences in industrial growth among those different areas and source
categories. However, in general, these projection factors offer the
most reliable indicators of future growth as are available.
In cases where commenters questioned the use of EPA's growth rates
but provided no alternative of their own, EPA had little choice but to
continue to use the BEA-derived growth rates. Some commenters provided
alternative or supporting information for modification of source
category or State

[[Page 57423]]

growth estimates. In those cases where a State or industry may have had
more accurate information than the BEA forecast (e.g., planned
expansion or population rates), data were verified and validated by the
affected States and by EPA, and revisions were made to the factors used
for that category.
3. Budget Calculation
Background: The EPA proposed nonroad mobile source budget
components based on projected nonroad mobile source emissions in 2007
from a base year of 1990. These projections were developed by
estimating the emissions expected in 2007 from all nonroad engines,
assuming implementation of those measures incorporated in existing
SIPs, measures already implemented federally, and those additional
measures expected to be implemented federally. The additional Federal
measures include: the Federal Small Engine Standards, Phase II; Federal
Marine Engine Standards (for diesel engines of greater than 50
horsepower); Federal Locomotive Standards; and the Nonroad Diesel
Engine Standards. In the NPR, EPA used the estimates developed by the
OTAG for nonroad mobile source baseline emissions and growth rates.
Comments: The EPA received comments to use a State-specific set of
growth rates for nonroad mobile source emissions.
Response: The EPA has used State estimates of 1990 nonroad activity
levels and growth rates for 1990 through 2007 received during the
comment period to revise its estimates of nonroad NO_X
emissions in 2007, where those State estimates were appropriately
explained and documented. For other States, the EPA has retained the
baseline activity levels and growth rates used in the NPR, which in
turn were based on the growth rates developed for OTAG.

F. Other Budget Issues

1. Uniform vs. Regional Controls
Background: In the NPR, EPA bases the State budgets upon assumed
application of reasonable, highly cost-effective NO_X control
measures. These measures were uniform across the 23 affected
jurisdictions. They consisted of 0.15 lbs/MmBtu for the EGU sector; and
70 percent control for large, and RACT for medium-sized, non-EGU point
sources.
Comments: A number of commenters opposed calculating budgets based
on uniform emissions reductions and cited the fact that OTAG
recommended a range of control levels. These commenters offered no
specific alternatives, such as varying the assumed control levels by
State or by groups of States, or alternative methods for determining
different control levels. Numerous comments were received supporting
the proposed uniform level of emissions reductions.
Response: The EPA has determined that each of the 23 jurisdictions
has sources that emit NO_X in amounts that significantly
contribute to downwind nonattainment problems. Moreover, EPA has
determined that specified levels of control on certain sources in all
of the jurisdictions would be highly cost-effective. This analysis
applies with equal force to each of the 23 jurisdictions. It may be
that emissions from some States have greater ambient impact on downwind
nonattainment areas than emissions from more distant States. Even so,
each of the States' NO_X emissions have a sufficient ambient
impact downwind to conclude that those amounts are significant
contributions and that NO_X emissions from all the upwind
jurisdictions collectively contribute significantly to nonattainment
downwind. Differentiating the contributions of individual upwind States
on multiple downwind nonattainment areas is a highly complex task. The
contributions of individual States are likely to vary from downwind
area to downwind area, from episode to episode, and from NAAQS to
NAAQS. Accordingly, it would be extremely complex to develop a budget
for each State that would reflect the different impacts of its sources'
emissions on different downwind States.
Among many factors that EPA considered in weighing whether to
finalize a uniform control level or regional control levels in
calculating States' emission budgets was the concern that different
controls in one part of the SIP call area in combination with an
interstate emissions trading program may lead to increases in pollution
within areas having more restrictive controls. That is, if unrestricted
interstate emissions trading were allowed on an one-for-one basis,
emissions reductions might be expected to shift away from States
assigned more restrictive controls to States which received less
restrictive control requirements due to the lower control costs likely
to exist in States with less restrictive controls. This may result in
emissions above the budget level in areas with more restrictive controls.
There are two alternatives for addressing the problem of shifting
emissions. The first is to allow trading only within uniform control
regions, but not between regions with NO_X budgets reflecting
different levels of control. The advantage to this approach is that it
provides a straightforward way of preventing trades of excess emissions
into regions with more stringent standards. However, a trading program
that covers a smaller market area will provide less flexibility and
reduce the possible savings for the affected sources as compared with
larger trading programs. The second alternative is to establish a
trading ratio for trades between regions, to reflect the differential
impact of the emissions on nonattainment. The trading ratio should
reflect the relative contribution of emissions to downwind non-
attainment problems. The advantage to this approach is that it provides
the flexibility for trades between regions when the benefits of such
trades are large, while discouraging a shift of excess emissions into
regions with more stringent standards. However, none of the comments on
the proposal included a justification or description for trading
ratios, which would reflect the differential environmental implications
and discourage inappropriate shifting of excess emissions.
The ozone problem in the Eastern United States is the result of a
large number of different types of sources which affect widely
distributed nonattainment areas at different times under changing
weather patterns such that a broadly-established control program is
necessary. The EPA believes a reasonable strategy is to apply the most
cost-effective control strategies uniformly in contributing States in
order to eliminate the combined significant contribution from these
multiple sources in multiple States.
The EPA analyzed costs and air quality benefits for two regional
control level options that were based on a varying level of controls in
different parts of the 23 jurisdictions. The analysis did not show that
these two regional control alternatives would provide either a
significant improvement in air quality or a substantial reduction in
cost. An analysis of the costs and benefits of different control
options can be found in the docket. On the basis of the analysis, EPA
believes an alternative approach with differentiated NO_X
budgets and regionally differentiated trading would not yield
significant additional air quality benefits or cost savings vis a vis a
regionwide trading program based on uniform NO_X budgets.
2. Seasonal vs. Annual Controls
Comments: One commenter suggested that controls should be required
for the

[[Page 57424]]

entire year rather than just during the 5-month ozone season as
proposed.
Response: The EPA recognizes that control of nitrogen oxide
emissions would likely produce non-ozone benefits, as well as ozone
benefits. For example, NO_X control would likely reduce
surface water acidification or eutrophication of surface waters. Annual
control of NO_X may have a greater impact on winter and
spring NO_X emissions, and therefore on acidification and
eutrophication, than ozone season (summer) NO_X control to
the extent that acidification and eutrophication result from the
release of nitrogen compounds from snowpack during snowmelt and rain in
the spring. Control of NO_X emissions also reduces fine
particulates and regional haze, so that annual control of
NO_X emissions would result in greater non-ozone benefits.
However, the commenter's suggestion that EPA analyze the costs of, and
assume in calculating the budgets, annual NO_X control to
address non-ozone problems is outside the scope of this rulemaking
proceeding. Here, EPA has proposed a NO_X SIP call to address
the failure of certain SIPs to prohibit sources from emitting
NO_X in amounts that contribute significantly to
nonattainment (or interfere with maintenance of attainment) of the
ozone NAAQS during the ozone season.
In analyzing the benefits of ozone season NO_X control
under the proposed NO_X SIP call for purposes of the RIA
(though not as a basis for the decisions in today's rule), EPA
considered both the ozone and non-ozone benefits. Non-ozone benefits
include the impact of ozone season NO_X control on
acidification and eutrophication. In particular, emission modeling
performed by EPA indicates that the SIP Call would reduce wintertime
NO_X emissions. This results in part because, once installed
to comply with the NO_X SIP call, some NO_X control
systems (e.g., low NO_X burners which alter the combustion
process and cannot simply be turned off) would reduce emissions
throughout the year, even though the NO_X limits would be
seasonal. Also see Section IX.
3. Full vs. Partial States
Background: In the NPR, the Agency indicated it was proposing to
include entire States rather than exempting portions of States in the
development of emissions budgets. The Agency's decision to include full
States was based upon three major points: (1) The division of
individual States by OTAG was based, in part, on computational
limitations in OTAG's modeling analyses; (2) the additional upwind
emissions from full, as opposed to partial, States would provide
additional benefit to downwind nonattainment areas; and, (3) Statewide
emissions budgets create fewer administrative difficulties than a
partial-State budget.
Comments: During the two comment periods, 43 comments were received
which specifically addressed some or all of the major points outlined
above. The underlying theme throughout the comments on this issue was
that the States and EPA had undertaken a comprehensive, scientifically
credible modeling/analysis study during the OTAG, and that the Agency
should follow OTAG's recommendations on this issue (i.e., allow for
partial-State emission budgets). Another common theme was that the
administrative difficulties outlined by the Agency in the NPR were
exaggerated, and that the affected States should be allowed to generate
partial-State, as opposed to statewide, emissions budgets, if their
State considered it feasible to do so. Comments were received that
portions of Alabama, Georgia, Michigan, Missouri, North Carolina, and
Wisconsin should be excluded from the SIP Call.
Response: The underlying concepts for responding to these comments
are (a) that the atmosphere is constantly in motion and has no
limitations at geo-political boundaries, and (b) that the larger the
geographic area that is controlled, the greater the downwind benefits.
For the States requesting partial-State emissions budgets, there are
NO_X emissions throughout these entire States. The EPA did
State-specific modeling for each of the affected States, and these
additional modeling analyses support the concept of statewide emissions
budgets for each of the affected States. Furthermore, it is a
reasonable assumption, given the nature of ozone chemistry, that if
emissions from part of a State contribute significantly to downwind
nonattainment or maintenance problems, emissions from the entire State
contribute significantly to downwind nonattainment or maintenance
problems. In each of the affected States, there is no peculiar
meteorological phenomenon that would indicate that emissions from some
portion of that State would not impact downwind nonattainment or
maintenance problems. Thus, based on additional EPA modeling analyses
and their technical interpretation, EPA is not promulgating partial-
State emissions budgets. Since each State has the flexibility to
determine which sources to control in order to meet the budget, a State
can structure its control strategy to require fewer reductions in
certain portions of the State and greater controls in other areas, as
long as the significant amounts of emissions are eliminated.
4. NO_X Waivers
Comments: The EPA received several comments supporting the approach
outlined in the NPR in which EPA would treat areas that had previously
received NO_X waivers under section 182(f) of the CAA in the
same manner as other areas in the SIP call. The comments stated that
(1) special treatment (i.e., higher budget) for the waiver areas would
increase the burden on downwind States; (2) numerous modeling efforts,
including OTAG's, have shown that such disbenefits are generally minor
and occur on days with low ozone concentrations; (3) disbenefits are
small when upwind NO_X reductions are modeled; (4)
disbenefits are better addressed at the local level; and (5) States
already have the flexibility to deal with NO_X disbenefits,
if any, through the budget and trading by meeting the budget through
NO_X emission decreases in other areas of the State or
acquiring allowances through trading. In addition, some commenters
requested EPA to revoke waivers previously granted. Commenters also
noted that the localized disbenefits are no less of a problem in the
Northeast than in the Midwest.
Numerous comments were also submitted which oppose the approach
outlined in the NPR. The comments generally stated that in States with
NO_X waiver areas, the NO_X budget should be
increased where NO_X decreases lead to ozone increases;
otherwise States might seek reductions disproportionately outside the
sensitive areas, resulting in cost-effectiveness levels greater than
the $2000 per ton framework described in the SIP call proposals.
Comments referred to disbenefits in Cincinnati, Louisville and the
Chicago/Gary areas. Many commenters suggested that EPA wait for further
modeling analyses to be completed and that the zero-out runs are
inappropriate for evaluating the NO_X disbenefit issue. Some
stated that the NO_X budget might interfere with local
attainment and harm local public health. Other comments recommended
that EPA consider the impact of additional VOC costs that might be
needed to offset local ozone increases.
Response: In today's final rulemaking, EPA is setting
NO_X emissions budgets for each of the jurisdictions affected
by this action. These budgets are set in the same manner for areas
without NO_X waivers as areas with NO_X waivers,
except in the case of NO_X waivers granted for I/M programs. Although

[[Page 57425]]

adverse comments were submitted, none of them provided any modeling
analysis or support documentation showing how a State or States with
NO_X waiver areas should be assigned a larger budget or
proposing a specific alternative approach for assigning those budgets.
In contrast, modeling described by EPA in the NPR and SNPR as well as
additional modeling conducted by the Agency and some commenters
continues to show that the benefits of NO_X emissions
decreases greatly outweigh any disbenefits. These findings are
discussed in Section IV, and summarized below.
The EPA considered the strengths and limitations in the commenters'
modeling analyses in evaluating whether the technical evidence
presented in the comments supports the arguments made by the
commenters. The EPA's review of the commenters' modeling indicates that
in general (a) downwind ozone benefits increase as greater
NO_X controls are applied to sources in upwind States, (b)
the net benefits of NO_X control at the level of the SIP Call
outweigh any local disbenefits, and (c) upwind NO_X
reductions tend to mitigate local disbenefits in downwind areas.
One commenter, the Lake Michigan Air Director's Consortium (LADCO),
submitted air quality modeling directed toward investigating the
disbenefits in nonattainment areas around Lake Michigan due to the
NO_X controls in the SIP Call proposal. The commenter's
general finding was that the greatest ozone decreases with these
NO_X controls occur on high ozone days, while the greatest
disbenefits occur on low ozone days. The EPA concurs with this finding,
based on a review of the technical information provided by the
commenter. Specifically, there were no predicted increases in ozone
(i.e., disbenefits) in peak 1-hour ozone on any of the 4 days modeled
by LADCO that had daily maximum 1-hour concentrations >=125 ppb in the
Base Case. Also, on the 3 low ozone days which had predicted
disbenefits, the increases were not large enough to result in a peak
value >=125 ppb. Concerning 8-hour concentrations, only 1 of the 9 days
with a predicted 8-hour daily maximum concentration >=85 ppb had an
increase in peak ozone due to the SIP Call NO_X controls.
Also, there was a small disbenefit on the one day modeled which had an
8-hour daily maximum concentration <85 ppb, but the magnitude of the
disbenefit on this day was relatively small and did not cause the 8-
hour peak value to exceed 85 ppb. Thus, based on this evaluation, EPA
generally found that the submitted modeling did not refute the overall
conclusions EPA has drawn concerning the impacts of NO_X
emissions in the relevant geographic areas.
As described in the NPR, the OTAG process included lengthy
discussions on the potential increase in local ozone concentrations in
some urban areas that might be associated with a decrease in local
NO_X emissions. The OTAG modeling results indicate that urban
NO_X emissions decreases produce increases in ozone
concentrations locally, but the magnitude, time, and location of these
increases generally do not cause or contribute to high ozone
concentrations. That is, NO_X reductions can produce
localized, transient increases in ozone (mostly due to low-level, urban
NO_X reductions) in some areas on some days, but most
increases occur on days and in areas where ozone is low. In the SNPR,
EPA documented the estimated ozone benefits of the proposed Statewide
NO_X budgets based on an air quality modeling analysis. The
major findings of that analysis include: Any disbenefits due to the
NO_X reductions associated with the budgets are expected to
be very limited compared to the extent of the air quality benefits
expected from these budgets.
The results of EPA's assessment of the comments and available
modeling corroborate and extend the findings presented in the SNPR.
Thus, with respect to regional ozone transport and today's final
action, EPA believes it is not appropriate to give special treatment to
areas with NO_X waivers.
Several nonattainment areas in the 23 jurisdictions were granted
waivers from certain NO_X requirements in past rulemaking
actions. In the Federal Register notices granting the waivers, EPA
stated that the continued approval of these waivers is contingent on
the results of the final ozone attainment demonstrations and plans (See
61 FR 2428 January 26, 1996, LADCO). The attainment plans will
supersede the initial modeling information which was the basis for
waivers EPA granted (e.g., the LADCO waiver). The attainment plans were
due in April 1998 and were to incorporate the results of the OTAG
process. The EPA's rulemaking action to reconsider the initial
NO_X waiver may occur simultaneously with rulemaking action
on the attainment plans. Therefore, as these new modeling analyses are
submitted to EPA, they will be reviewed to determine if the
NO_X waiver should be continued, altered, or removed.
As discussed above, EPA has accounted for the continued presence of
NO_X waivers for I/M programs in modeling States'
NO_X budgets. Historically, EPA gives States considerable
latitude in designing their I/M programs. This latitude is granted in
recognition of the unique economic and air quality circumstances faced
by each State. States have used this latitude to develop a range of I/M
program designs. Some States have adopted EPA-recommended enhanced I/M
programs; other States have adopted different I/M program designs.
The EPA acknowledges that some of the States granted NO_X
waivers may be able to modify their programs to obtain NO_X
reductions at minimal cost. However, some of the States which have been
granted an I/M NO_X waiver have developed unique I/M program
designs in terms of the model years covered, the emission testing
equipment used, and possibly the number, location, and design of the
testing and repair stations. The cost for these States to modify their
I/M programs to obtain NO_X reductions are likely to exceed
the level that EPA has determined to be highly cost-effective for the
purpose of reducing ozone transport. As a result, the EPA has chosen to
not include additional emissions reductions due to I/M NO_X
programs when calculating NO_X budgets.
5. Recalculation of Budgets
In the NPR, the EPA made proposals concerning what would happen if
additional information becomes available after EPA's final rulemaking
action. Examples of such information might include: (a) Source-specific
information useful in determining RACT, (b) revised growth or other
assumptions, (c) revised models and inventory estimates, (d)
unexpectedly low implementation rates for NLEV, and (e) other new
federal measures, i.e. Tier 2 controls. In the Recalculation of Budgets
Section of the NPR, EPA proposed that if additional data become
available after EPA's final rulemaking action, such data could be
considered prior to State submittal of revised SIPs. The EPA asked for
comments on this approach.
Most of the comments received were in favor of allowing States to
adjust their emission budgets based on the most recent available data
on emissions and RACT levels. There were several comments that any new
calculation methodologies should be applied across all States and be
approved at EPA Headquarters, and that all States should use the same
methodology.
A few commenters did not agree, however. One said that EPA should
not recalculate the budgets upward. Another said there should be no
downward ratcheting of budgets. One

[[Page 57426]]

commenter said that it would be premature to assume that as new
information becomes available the budget should be adjusted to reflect
this. According to this commenter, it would be more appropriate to
perform a complete air quality modeling analysis to determine if an
adjustment in States' NO_X budgets is in order.
The divergent views reflected in these comments has convinced EPA
that it should clarify the role of the budgets in this rule. In light
of that role, as explained below, EPA has decided to allow only a
limited opportunity to revise the budgets in the very near term.
However, under the approach the Agency is following, the rule would not
penalize States for not ultimately achieving the budgets, if the State
initially projected compliance using the data set forth in this rule,
and the State has fully implemented all of the measures reflected in
those initial projections, and the measures are as effective in
reducing NO_X emissions as they were projected to be in the
State plan.
As explained in the NPR, SNPR, and above, EPA based the budgets on
its choice of measures that are highly cost-effective and therefore are
the easiest for upwind States to implement to reduce transport.
However, EPA sought to structure the rule to give the upwind States a
choice of which mix of measures to adopt to achieve the aggregate
amount of required NO_X emissions reduction.
To offer the States this choice, EPA employed a multi-step approach
leading to a numerical budget for each State. In the first step, EPA
projected the mass emissions for EGUs and industrial boilers out to
2007, taking into account measures required under the CAA and projected
growth. The result was a base case 2007 subinventory for each of those
two categories. Next, EPA projected the 2007 mass emissions for other
sectors of the emission inventory (e.g., mobile sources), again taking
into account projected growth and measures required under the CAA and
existing SIPs, thereby creating a base case 2007 subinventory for each
of them as well. The aggregation of all of the base case 2007
subinventories is the complete base case 2007 inventory. The EPA then
applied cost-effective control measures to the EGU, industrial boiler
and other non-EGU source categories as explained in section III., to
determine the amount of the reductions from these categories. The EPA
applied control measures to the base case inventory to develop the
final budget. Thus, the final budget is the sum of (1) the emissions
remaining after application of the cost-effective control measures to
the subinventories for the categories for which controls are assumed
for purposes of budget calculation and (2) the emissions in the base
case 2007 subinventories for the categories for which EPA assumed no
controls.
The rule then requires each upwind State to use the same base case
2007 inventory in its 1999 SIP submittal as EPA used in developing the
State's budget. In that SIP submittal, the State must show that the
measures it has adopted will achieve the same aggregate emissions
reductions as the control strategies assumed by EPA in developing the
State's budget. More specifically, to demonstrate compliance with the
SIP call, a State must adopt and implement control measures that are
projected to achieve the aggregate emissions reductions determined by
EPA based on the application of highly cost-effective controls to EGUs,
industrial boilers and other affected non-EGUs. While a State may
choose to achieve those reductions through application of measures
other than those used by EPA in calculating required reductions, any
measures it adopts must achieve the reductions assumed by EPA in the
development of its budgets.
The control measures that the State chooses to require will become
the enforceable mechanism under the NO_X SIP call. If a State
elects to regulate boilers, turbines or combined cycle units that are
greater than 250 mmBtu/hr-- regardless of whether they are connected to
an electrical generator of any size--or to regulate boilers, turbines
and combined cycle units that serve electrical generators greater than
25 Mwe, regardless of the heat input capacity of the unit, the State
must provide mass emissions limits or their equivalent (see section
VI.A.2) for these sources or source categories. The mass emissions
limits may be set on a source-by-source basis or may be set for an
entire group of sources allowing trading between the sources. These
mass emission limits must assume growth no greater than EPA's
calculations. Any growth that occurs in that category would have to be
accommodated within the mass emission allocations provided by the State
for that category, even if the growth in that category should prove to
exceed EPA's projections. This is appropriate because as discussed in
the SNPR and Section VI.A.2. of today's preamble, EPA believes that the
control approaches, growth assumptions, and monitoring for this group
of sources have advanced to the point that complying with, tracking,
and enforcing a maximum mass emissions limit is reasonable.
Furthermore, based on the analyses in the RIA, EPA believes that mass
emission limits remain highly cost-effective for these categories when
growth is accommodated within the limits. The EPA modeled the expected
growth in capacity and capacity utilization of the source categories
listed above based on growth assumptions in the IPM that have been
subject to extensive public comment and refinement over a several-year
period. On the basis of their growth, assumptions and assumed emissions
rates, EPA determined that mass emission limits would remain highly
cost-effective when new sources are covered within the limits. EPA
projects that even if actual growth for this group of sources exceeds
the projected growth by over one-third, mass emission limits would
remain highly cost-effective according to the criteria used for this
rule.
For other categories, EPA will not require a State to remain within
a mass emission allocation. Today's rule does require a State to use
the base case 2007 inventory in its budget demonstration. However, the
rule does not require States to obtain additional reductions in cases
where a State's 2007 emissions exceeds its budget due to higher than
expected emissions from source categories other than the categories
listed above (certain boilers, turbines, and combined cycle units).
These exceedances may be the result of growth that exceeds projections
for those source categories. However, if a State elects to control
these other source categories to achieve the required reductions in
whole or part, the adopted measures must be as effective in reducing
NO_X emissions as they were projected to be in the State
plan. Any failure by a State to adopt measures adequate to achieve
reductions equal to the required amount would be treated as
noncompliance with this rule. Any failure by the State to implement
these measures by the appropriate date would be considered a failure to
implement those measures.
In contrast, the overall budget number itself is not enforceable
against the State. The budget serves as a tool for projecting in
advance whether a State has adopted measures that would produce the
required amount of emissions reductions, as indicated by the initial
demonstration submitted in September 1999. The budgets are also a means
for determining from 2003 to 2007 whether States are fully implementing
those measures. Thus, the budgets are an accounting mechanism for
ensuring that the upwind States have adopted and implemented control
measures that prohibit the significant

[[Page 57427]]

amounts of NO_X emissions targeted by section
110(a)(2)(D)(i)(I).
Given that States will not be subject to enforcement actions if
emissions in 2007 from uncontrolled sectors exceed the base case 2007
inventory projections, EPA does not intend to revise those projections
merely because such new information becomes available over time.
Rather, EPA intends to allow commenters an additional opportunity to
request revisions to the source-specific data used to establish each
State's budget in this SIP call. This opportunity will be made
available during the first sixty days of the 12-month period between
signature of today's rule and the deadline for submission of the
required SIP revisions (i.e., November 23, 1998). Commenters would need
to submit any proposed changes in their inventories to the EPA Air and
Radiation docket (A-96-56) within that sixty day period. Individuals
interested in modifications requested by commenters may review the
materials as they are submitted and available in the docket. At the end
of this period, EPA will, within sixty days, evaluate the data
submitted by commenters and, if it is determined to be technically
justified, revise this rule to incorporate it into the State budget
determinations. For a comment to be considered, the request for
modification must be submitted in electronic format containing, at a
minimum, the data elements listed below for each source category.
Additionally, no comment will be considered unless information is
provided to corroborate and justify the need for the requested
modification. For example, corroborating information in the case of the
EGUs can be the inclusion of copies of each source's official same year
EIA 860 or 861 form submissions that support the requested change. For
non-EGUs, corroborating information can include 1995 operational and
emissions information officially submitted (during that time period) by
the source to a federal, State, or local government regulating entity.
Each request for modification of data for EGU sources must include
the following information:
. Federal Information Placement System State Code.
. Federal Information Placement System (FIPS) County Code.
. Plant name.
. Plant ID numbers (ORIS code preferred, State agency
tracking number also or otherwise).
. Unit ID numbers (a unit is a boiler or other combustion device).
. Unit type (also known as prime mover; e.g., wall-fired
boiler, stoker boiler, combined cycle, combustion turbine, etc.).
. Primary fuel on a heat input basis.
. Maximum rated heat input capacity of unit.
. For electrical generating units, nameplate capacity of the
largest generator the unit serves.
. For 1995 and 1996 ozone season heat inputs.
. 1996 (or most recent) average NO_X rate for the
ozone season.
. Latitude and longitude coordinates.
. Stack parameter information (height, diameter, flow, etc.).
. Operating parameters (hours per day, seasonal throughput, etc.).
. Identification of specific change to the inventory, and
. The reason for the change.
Each request for modification of data for non-EGU point sources
must include the following information:
. Federal Information Placement System State Code.
. Federal Information Placement System (FIPS) County Code.
. Plant name.
. Facility primary standard industrial classification code (SIC).
. Plant ID numbers (NEDS, AIRS/AFS, and State agency
tracking number also or otherwise).
. Unit ID numbers (a unit is a boiler or other combustion device).
. Primary source classification code (SCC).
. Maximum rated heat input capacity of unit.
. 1995 ozone season or typical ozone season daily NO_X emissions.
. 1995 existing NO_X control efficiency.
. Latitude and longitude coordinates.
. Stack parameter information (height, diameter, flow, etc.).
. Operating parameters (hours per day, seasonal throughput, etc.).
. Identification of specific change to the inventory, and
. The reason for the change.
Each request for modification of data for stationary area and
nonroad mobile sources must include the following information:
. Federal Information Placement System State Code.
. Federal Information Placement System (FIPS) County Code.
. Primary source classification code (SCC).
. 1995 ozone season or typical ozone season daily NO_X emissions.
. 1995 existing NO_X control efficiency.
. Identification of specific change to the inventory, and
. The reason for the change.
Each request for modification of data for highway mobile sources
must include the following information:
. Federal Information Placement System State Code.
. Federal Information Placement System (FIPS) County Code.
. Primary source classification code (SCC) or vehicle type.
. 1995 ozone season or typical ozone season daily vehicle
miles traveled (VMT).
. 1995 existing NO_X control programs.
. Identification of specific change to the inventory, and
. The reason for the change.
After this initial ``shake out'' period before submission of the
SIP revisions, EPA will not adjust inventories or the resulting State
budgets merely because some new information on a segment of EPA's
projections comes to its attention. However, when EPA reviews each
State's reports, it will pay special attention to the causes for any
exceedance of the portions of the inventory that the State is
controlling as a means to meet today's rule. If a State exceeds its
budget because of greater-than-expected growth in areas not having
additional controls, EPA would not penalize the State by requiring the
State to offset those increased emissions. Rather, EPA would use the
base case projections for all sectors (as revised after the initial
period described above) and focus on whether the State had implemented
the measures that its 1999 demonstration had shown would, based on
those base case inventories, achieve the budget levels. Similarly, the
rule would not penalize the State if components in the budget prove
inaccurate because of changes in models (e.g., the release of an
updated MOBILE model) or because of technical errors (e.g., the size of
a unit was incorrectly identified in the inventory, a unit was double-
counted, or the RACT level assumed in the base is different from what
the State ultimately selected as RACT with EPA approval).
In the NPR, EPA also raised the question of what would happen if
EPA adopts national measures beyond what EPA already assumed in the
base case 2007 inventory. The EPA indicated that it could use either of
two approaches in response: (1) States could receive credits for the
real emission reductions that result from the new Federal measures and,
therefore, implement a smaller portion of its planned emission
reductions, or (2) States would be required to continue to implement
the measures in their revised SIPs because affected States are required
to continue to achieve emissions reductions equivalent to those which
can be achieved through application of highly cost-effective control
measures.

[[Page 57428]]

One commenter supported the emission reduction credit for State
SIPs resulting from new Federal national measures adopted after the
State emission budgets are defined but before 2007. According to this
commenter, in such a case the State could implement a smaller portion
of its planned emission reductions because of the reduction brought
about by the Federal national rule. Another commenter said the EPA
should allow full credit for all Federal measures and encouraged the
EPA to timely implement and adopt all Federal measures. A State said
States should be allowed to take full SIP credit for Federal measures
which are implemented in these States. According to one commenter, not
allowing States to take credit for new Federal measures would have the
effect of downward ratcheting of NO_X budgets. Other States
said new Federal measures not accounted for in the SIP call should not
be used to offset State measures required to achieve the mandated
NO_X emissions reductions.
The EPA has decided to adopt the second approach described above.
Thus, EPA's adoption of a national measure not reflected in the base
case 2007 inventory would not allow the State to avoid a measure that
would otherwise be needed to demonstrate that the State will achieve
the required reductions. As stated above, the SIP must prohibit all
emissions that contribute significantly to downwind nonattainment and
maintenance problems. The State therefore is required to eliminate an
amount of emissions corresponding to what is achievable with the highly
cost-effective measures identified in this notice. The comments
received have not provided an adequate basis for concluding that EPA's
adoption of an additional national measure justifies scaling back on
that requirement. For that reason, EPA will not allow States to adjust
the base case 2007 inventory inventories to reflect any such additional
national measures. Rather, for these reports the States should continue
to use the base case 2007 inventory set forth in this rule.
In the SNPR, EPA also discussed establishing a process for
reassessing the State budgets for the post-2007 timeframe. Today's
final rule is based on analyses using the most complete,
scientifically-credible tools and data available for the assessment of
transport. The EPA expects that there will be a number of updates and
refinements in air quality methodologies and emissions estimation
techniques over the next 10 years. Therefore, EPA intends to reassess
ozone transport using the latest emissions and air quality monitoring
data and the next generation of air quality modeling tools. The
reassessment will include an evaluation of the effectiveness of the
regional NO_X measures States have implemented in response to
today's final rule. Modeling analyses will be used to evaluate whether
additional local or regional controls are needed to address residual
nonattainment in the post-2007 timeframe. The assessment will also
examine differences in actual growth versus projected growth in the
years up to 2007 as well as expected future growth throughout the
entire OTAG region. The reassessment will also review advances in
control technologies to determine what reasonable and cost-effective
measures are available for purposes of controlling local and regional
ozone problems. In addition, EPA will continue to look at the issues
that surround the use of output-based State budget allocations. Based
on this reassessment, EPA may establish new budget levels and
allocation mechanisms for the post-2007 timeframe. The current budget
levels and the measures used to comply with today's final rule will
remain in effect until EPA takes action on establishing new State budgets.
6. Compliance Supplement Pool
The EPA has received comments expressing concern that some sources
may encounter unexpected problems installing controls by the compliance
deadline that, in turn, could cause unacceptable risks for a source and
its associated industry. More specifically, commenters have expressed
concerns related to the electricity industry. If unexpected problems
arise for specific sources that are used to generate electricity, some
commenters believe that compliance with the May 1, 2003 deadline could
adversely impact the reliability of the electricity supply. Commenters
that raised concerns regarding the compliance deadline generally
supported additional compliance flexibility for the SIP call.
In both the NPR and SNPR, EPA solicited comment on a number of
provisions that would provide additional flexibility to both States and
sources for the requirements of the NO_X SIP call. In the
NPR, EPA proposed that the NO_X SIP call would require full
implementation of controls by no later than September 2002, but
solicited comment on the range of implementation dates from between
September 2002 and September 2004. In addition to the compliance
deadline, EPA also solicited comment on the role of banking as a
separate compliance flexibility for the NO_X SIP call.
Banking may generally be defined as allowing sources that make
emissions reductions beyond current requirements to save and use these
excess reductions to exceed requirements in a later time period.
Depending upon the design of a trading program, banking provisions can
provide companies greater latitude for when controls are installed at
particular sources. In the SNPR, EPA presented a range of options for
incorporating banking in the NO_X Budget Trading Program
including early reduction provisions and phasing in controls. The EPA
received many comments supporting banking in the NO_X Budget
Trading Program and also as a general flexibility mechanism that should
be permissible for any State program used to comply with the
NO_X SIP call.
In response to comments supporting an extended compliance deadline,
EPA has moved the deadline from the proposed date of September 2002 in
the NPR to May 1, 2003. As discussed further in Section V, this change
provides sources 7-8 additional months for implementing control
requirements while ensuring that controls are fully implemented by the
2003 ozone season. The EPA believes that the compliance date of May 1,
2003 for NO_X controls to be installed to comply with the
NO_X SIP call is a feasible and reasonable deadline. See
Section V.A.1. and the technical support document ``Feasibility of
Installing NO_X Control Technologies By May 2003'' for
further discussion.
To provide additional flexibility to States and sources for
complying with the NO_X SIP call beyond the extension of the
compliance deadline, EPA is establishing banking provisions and a
compliance supplement pool in today's final rule. The banking
provisions are outlined in Section III.F.7. The compliance supplement
pool is a voluntary provision that provides flexibility to States in
addressing concerns associated with full compliance by May 1, 2003.
Each State will be able to use the pool to cover excess emissions of
sources that are unable to meet the compliance deadline during the 2003
and 2004 ozone seasons. The pool may be used to credit sources that
make early reductions and to directly delay the compliance deadline for
specific sources. Credits issued from the compliance supplement pool
will not be valid for compliance past the 2004 ozone season. The EPA
established the compliance supplement pool by calculating one pool for
the entire NO_X SIP call region. The pool was then allocated
to the States in proportion to the size of the emissions reduction they
are required to achieve under the NO_X SIP call so that each

[[Page 57429]]

State has its own compliance supplement pool. The size of each State's
compliance supplement pool and the procedures that will apply to the
use of the pool are described below.
a. Size of the Compliance Supplement Pool. The EPA believes it is
important for the size of the pool to be capped. Capping the pool makes
it possible to estimate the potential impact that the compliance
supplement pool may have on NO_X emissions during the 2003
and 2004 ozone seasons. Furthermore, EPA does not anticipate problems
for sources in meeting the May 1, 2003 deadline. If there are such
cases, they should be relatively few in number. Therefore, the size of
the pool only needs to be large enough to cover the limited potential
for unexpected compliance delays.
Today's final rule sets the size of the regional compliance
supplement pool at 200,000 tons. The EPA believes this is a reasonable
size for the pool given the analyses that were used in establishing the
State NO_X budgets for today's final rule. As discussed in
Section V.A.1., EPA believes the most cost-effective control strategies
available to comply with the proposed budgets include post-combustion
controls (Selective Catalytic Reduction [SCR] and Selective Non-
catalytic Reduction [SNCR]) and combustion controls (e.g., low
NO_X burners, overfire air, etc.) on large electric
generating units and large non-electric generating units. For the
reasons cited in Section V.A.1., EPA estimates that the implementation
of SCR controls is potentially more complicated and requires more time
than SNCR or combustion controls and, therefore, would determine what
the longest schedule would be for full implementation of the assumed
NO_X controls. Since EPA estimates that a single SCR
installation will take about 23 months, EPA expects the first SCR
installations to be completed in 2001. Since compliance is required by
2003, one can assume 33 percent of SCR capacity will be installed each
year from 2001 to 2003. The 200,000 ton number is sufficient to cover
the excess emissions that must be offset if one year's worth of SCR
installations were delayed by a year. Table III-3 shows each State's
compliance supplement pool. The 200,000 tons were allocated to States
in proportion to the size of the emissions reduction they are required
to achieve under the NO_X SIP call. The EPA used this
allocation methodology based on the assumption that the need for the
pool would be directly related to the magnitude of the emissions
reductions required in each State to comply with the NO_X SIP
call.

Table III-3.--State Compliance Supplement Pools
[Tons]
----------------------------------------------------------------------------------------------------------------
Compliance
State Base Budget Tonnage supplement
reduction pool
----------------------------------------------------------------------------------------------------------------
Alabama......................................... 218,610 158,677 59,933 10,361
Connecticut..................................... 43,807 40,573 3,234 559
Delaware........................................ 20,936 18,523 2,413 417
District of Columbia............................ 6,603 6,792 (189) 0
Georgia......................................... 240,540 177,381 63,159 10,919
Illinois........................................ 311,174 210,210 100,964 17,455
Indiana......................................... 316,753 202,584 114,169 19,738
Kentucky........................................ 230,997 155,698 75,298 13,018
Maryland........................................ 92,570 71,388 21,182 3,662
Massachusetts................................... 79,815 78,168 1,648 285
Michigan........................................ 301,042 212,199 88,842 15,359
Missouri........................................ 175,089 114,532 60,557 10,469
New Jersey...................................... 106,995 97,034 9,960 1,722
New York........................................ 190,358 179,769 10,590 1,831
North Carolina.................................. 213,296 151,847 61,450 10,624
Ohio............................................ 372,626 239,898 132,728 22,947
Pennsylvania.................................... 331,785 252,447 79,338 13,716
Rhode Island.................................... 8,295 8,313 (18) 0
South Carolina.................................. 138,706 109,425 29,281 5,062
Tennessee....................................... 252,426 182,476 69,950 12,093
Virginia........................................ 191,050 155,718 35,332 6,108
West Virginia................................... 190,887 92,920 97,967 16,937
Wisconsin....................................... 145,391 106,540 38,851 6,717
---------------------------------------------------------------
Total....................................... 4,179,751 3,023,113 .............. 200,000
----------------------------------------------------------------------------------------------------------------

b. State Distribution of the Compliance Supplement Pool. States
have two options for making the pool available to sources. One option
is to distribute some or all of the pool to sources that generate early
reductions during ozone seasons prior to May 1, 2003. The second option
is to run a public process to provide tons to sources that demonstrate
a need for a compliance extension. A State wishing to use the
compliance supplement pool may divide the State pool and make some of
it available to sources through both options, or may use only one of
the options for distributing the pool to sources prior to May 1, 2003
according to the procedures discussed below. Tons that are not
distributed by a State prior to May 1, 2003 will be retired by EPA.
(1) Early Reduction Credits. The EPA encourages States to consider
making the compliance supplement pool available to sources through an
early reduction credit program. States may use early reduction credits
as an incentive for sources to make NO_X emissions reductions
prior to the 2003 ozone season that would otherwise not occur. By
generating early credits or acquiring them from other sources,
companies will be able to use the early reduction credits to extend the
timeframe for achieving actual emissions reductions at specific sources
that may require additional time. To establish an early credit program,
States that participate in the NO_X Budget Trading Program
may use the provisions

[[Page 57430]]

set forth in that trading program (See Section VII.F). States not
participating in the NO_X Budget Trading Program are also
free to develop their own rules for granting early reduction credits
and recognizing the credits for compliance during the 2003 and 2004
ozone seasons. The procedures for establishing an early credit program
are presented below in Section III.F.7.c.
(2) Direct Distribution to Sources. States may also distribute the
compliance supplement pool directly to sources that demonstrate a need
for the compliance supplement. Under this approach, sources would be
responsible for demonstrating to the State and public that achieving
compliance by May 1, 2003 would create undue risk either to its own
operation or its associated industry. Before granting a direct
distribution to a source, the State must provide the public an
opportunity to comment on the validity of the need for direct
distribution of the compliance supplement. The direct distribution
process must be initiated and completed between September 30, 2002 and
May 1, 2003. States which choose to grant early reduction credits
cannot conduct the direct distribution until all early reduction
credits have been issued by the State. By postponing the direct
distribution until after September 2002, sources will have the maximum
opportunity to achieve compliance, either through installation of
controls or with early reduction credits, before using this option.
States and the public will also be better positioned to determine
legitimate requests after September 2002.
To ensure that direct distribution of the compliance supplement is
only provided to sources that truly need a compliance extension, States
are only permitted to give credits to an owner or operator of a source
that demonstrates the following:
. The process of achieving compliance by May 1, 2003 would
create undue risk for the source or its associated industry. For
electric generating units, the demonstration should show that
installing controls would create unacceptable risks for the reliability
of the electricity supply during the time of installation. This
demonstration would include a showing that it was not feasible to
import electricity from other systems during the time of installation.
Non-electric generating sources may also be eligible for the compliance
supplement based on a demonstration of risk comparable to that
described for the electricity industry.
. For a source subject to an early reduction credit program,
it was not possible to compensate for delayed compliance by generating
early reduction credits at the source or by acquiring credits generated
by other sources.
. For a source subject to an emissions trading program, it
was not possible to acquire allowances or credits for the 2003 ozone
season from sources that will make reductions beyond required levels
during the 2003 ozone season.
7. Banking
As noted in the NPR and SNPR, States have the flexibility to choose
their own set of control measures to meet their Statewide
NO_X budget established under the NO_X SIP call.
States and sources have supported the use of emissions trading programs
as a control measure for complying with the NO_X SIP call
requirements. EPA has provided a model cap-and-trade program
(NO_X Budget Trading Program) for large stationary sources
that States can adopt as one option for establishing an emissions
trading program. A number of commenters (both States and sources) have
also expressed interest in pursuing alternative trading programs in
addition to or as a substitute for the NO_X Budget Trading
Program. One possible flexibility mechanism available to sources
subject to an emissions trading program is the ability to bank
emissions reductions. Banking may generally be defined as allowing
sources that make emissions reductions beyond required levels to save
and use these excess reductions to compensate for emitting emissions
above required levels in a later time period. In the SNPR, EPA
requested comment on whether and how banking should be incorporated
into the design of the NO_X Budget Trading Program. In the
proposal, four banking options were presented: (1) Banking would not be
a feature; (2) banking would begin when the trading program begins (May
2003); (3) sources would be allowed to generate early reductions
credits for use after the start of the program and banking would
continue after the program begins; (4) banking would begin with the
first phase of a two-phase trading program and continue thereafter
(i.e., phased-in control requirements). The EPA also requested comment
on options for managing the use of banked allowances in order to limit
the potential for emissions to be significantly higher than budgeted
levels because of banking. The EPA specifically proposed using a ``flow
control'' mechanism in the latter two banking options where the
potential exists for a large amount of banked allowances to be
available for use at the start of the program.
a. Banking Starting in 2003. Comments for the NO_X Budget
Trading Program were generally supportive of including banking in the
trading program. Commenters noted that allowing sources to make excess
reductions in one year and use these reductions to emit above required
levels in a later year encourages early and cost-saving emission
reductions, helps avoid end-of-season emissions spikes (because unused
allowances retain their value for compliance in future years), and
encourages more expedient development and implementation of
NO_X control technology. Commenters pointed out that banking
also provides sources flexibility in achieving emission reduction
goals, allowing them to save allowances in years when the cost of
achieving a given emission level is relatively low for use in years
when the cost is relatively higher (for example, a year characterized
by low availability of nuclear and hydro generation capacity would be a
higher cost year). Thus, banking was seen by many commenters as a
critical tool for sources to respond to uncertainty. Some commenters,
however, expressed caveats along with their support for banking. They
cited the need for some form of bank management to ensure that the use
of banked allowances does not detract from the environmental goal of
the NO_X SIP call. At least one commenter recommended that
EPA identify banking as an area to be reviewed for problems during
audits of the program to ensure it did not have a detrimental impact.
The EPA also received comments supporting banking that were not
specific to the NO_X Budget Trading Program. Many commenters
addressed the concept of banking when proposing alternative strategies
for establishing and implementing the State budgets that were proposed
in the NO_X SIP call. These comments regarded banking as a
fundamental factor in establishing the timing and control level for the
State budgets. With all other factors being equal, a NO_X SIP
call that allows banking provides additional flexibility and cost
savings to affected sources than a NO_X SIP call without
banking. For this reason, many commenters included banking in their
alternative proposals.
In order to provide additional flexibility to States and sources
under the NO_X SIP call as discussed in section III.F.6., and
recognizing that States may pursue alternative trading programs other
than the NO_X Budget Trading Program, the Agency believes it
is important to establish criteria for banking that would apply to all
programs that States may use to comply with requirements of the
NO_X SIP call.

[[Page 57431]]

Therefore, EPA is setting forth provisions in today's final rule that
will allow banking in the NO_X Budget Trading Program and
other State trading programs. Trading programs used to comply with the
NO_X SIP call may allow banking to start in the first control
period of the program, May 1 through September 30, 2003. Beginning in
that control period, States may allow sources included in these
programs to bank NO_X emissions reductions not otherwise
required by the State's SIP, for compliance in future control periods.
As outlined below, the banking provisions also require the use of a
flow control mechanism beginning in 2004 and allow States to credit
early reductions generated by sources prior to 2003 that may be used
for compliance only in the 2003 and 2004 ozone seasons. The final rule
for the NO_X Budget Trading Program conforms with these
banking provisions. Additionally, alternative emissions trading
programs used to comply with the SIP call will be subject to these
banking criteria as well other applicable criteria in Sec. 51.121 and
any other applicable EPA guidance such as the Economic Incentive
Program rules and guidance.
b. Management of Banked Allowances. Many utility and industry
commenters generally opposed the use of discounts or constraints on
banked allowances, arguing that such measures would reduce the
incentives to control emissions beyond required levels. In addition,
commenters felt the measures were overly complex and restrictive, as
well as unnecessary, since the stringent control level proposed would
serve as a barrier to overcontrol, precluding the establishment of a
sizeable bank. Several commenters remarked that any decision regarding
whether and to what extent a trading program should impose restrictions
on the use of banked allowances should proceed from an analysis of the
air quality effects of that use; in the absence of such an analysis,
there would be little basis for imposing restrictions or for deciding
what restrictions would properly address air quality effects. However,
these commenters did not provide analyses demonstrating that the use of
banked allowances in any given season would not be a problem in the
context of the NO_X SIP call. One commenter pointed out
specifically that the sheer magnitude of the SIP call region should
preclude EPA from implementing a flow control management scheme similar
to that used under the Ozone Transport Commission's (OTC) trading
program, since protection of problem areas would not be feasible on
such a large scale.
Several commenters who were opposed to the management of banked
allowances, however, stated that if restrictions were to be imposed,
they would favor flow control as the most cost-effective, least rigid
means of management. A few commenters added that, if implemented, flow
control should be applied on a source-by-source basis so as to avoid
penalizing all of the participants in the trading program for the
excess banking of individual participants. One commenter stated that if
EPA concludes that there is an adequate basis for imposing some type of
restriction, it should avoid placing any absolute limit on the amount
of banked allowances that can be used in a given season. Another
commenter suggested that if EPA chooses to propose managed banking, it
should consider establishing an initial period without managed banking
upon which a managed banking program can later be based if it turns out
that ``trading contributes to nonattainment.'' Several additional
commenters, most notably northeastern States and a few environmental
groups, supported the use of a flow control management system to
discourage excess use of banked allowances in any one ozone season. One
such commenter suggested that EPA conduct an analysis similar to that
used by the OTC in determining the appropriate level of flow control
for the SIP call region.
Based on the stated goal of the NO_X SIP call, to achieve
specified limits on NO_X emissions for the purpose of
reducing NO_X and ozone transport across State boundaries in
the eastern half of the United States, EPA believes it is appropriate
to place some limitation on the amount of emissions variability that
may occur with banking, and therefore, occur with the transport of
NO_X. At the same time, any limitations on banking should
still fit within the market-based structure of trading programs, rather
than imposing overly stringent limits that would potentially eliminate
the advantages of having banking in the first place. For these reasons,
EPA is including a provision in today's final rule requiring any State
program used to comply with the requirements of the NO_X SIP
call that allows banking to limit the potential effects of banking
through a flow control mechanism as described below. The flow control
mechanism will be applicable starting in the 2004 ozone season. In this
year, unused credits from the compliance supplement pool as well as
unused credits or allowances from the 2003 ozone season would be
considered banked.
The EPA believes that the flow control mechanism serves as an
important insurance policy against emissions variability in emissions
trading programs used to comply with the NO_X SIP call. The
mechanism as described below would only restrict the use of banked
allowances or credits when a significant amount are used for compliance
in a specific ozone season. Based on the analyses in the RIA, EPA
believes that the flow control mechanism is set at a level that will
allow sources to use banking without restriction. However, the flow
control mechanism provides the extra security to downwind areas that
banking will not result in significant increases of emissions above
budgeted levels. The EPA also recognizes that a wide variety of
emissions trading programs may be used by States. Therefore, the
requirements for the flow control mechanism described below are
intended to be general, thus allowing States the flexibility to adjust
the flow control mechanism to fit the specific needs of each program.
Section VII.F. also provides further discussion of the flow control
mechanism and describes how it is incorporated into the NO_X
Budget Trading Program.
The flow control mechanism allows the unlimited banking of
emissions reductions by sources during and after 2003, but discourages
the ``excessive use'' of banked allowances or credits by establishing
either an absolute limit on the number of banked allowances or credits
that can be used each season or a rate discounting the use of banked
allowances or credits over a given level. The key issue with flow
control is to establish the level at which flow control is triggered.
In the SNPR, EPA solicited comment on establishing the level at 10
percent of the ozone season budget for the sources included in the
trading program. This level was proposed because 10 percent seems to be
a reasonable number that would allow a significant amount of banked
allowances or credits to be used, but not so many as to jeopardize the
intended effects of the NO_X SIP call in a given season. The
EPA also proposed the 10 percent number because it is the level used
for flow control in the OTC's trading program. Although some commenters
questioned whether this number is appropriate for the NO_X
SIP call region, commenters did not provide explicit analyses or
recommendations for a different number. Thus, EPA continues to believe
that 10 percent is a reasonable number and is including this in today's
final rule. Based on the analyses in the RIA, EPA does not

[[Page 57432]]

anticipate sources to bank above the 10 percent level. Therefore, this
level should prevent significant emissions increases resulting from
banking without restricting sources normal operations. The effect of
flow control set at 10 percent of the trading program budget is that
for a given season, sources may use banked allowances or credits for
compliance without restrictions in an amount up to 10 percent of the
NO_X budget for those sources in the trading program. Banked
allowances or credits that are used in an amount greater than 10
percent of the NO_X budget for those sources will have
restrictions that are described below.
The EPA believes it is necessary to provide flexibility to States
for determining how to apply the 10 percent flow control in individual
trading programs and for determining the appropriate restrictions for
banked allowances or credits that are used in an amount greater than
the 10 percent number. States have the flexibility to apply the flow
control mechanism to specifically control the use of banked allowances
or credits at each source or to apply the mechanism more broadly across
the entire trading program. For example, by applying flow control at
the source level, a State would allow each source participating in the
trading program to use banked allowances without restrictions in an
amount not greater than 10 percent of its allowable NO_X
emissions for the ozone season. Conversely, flow control could be
applied so that individual sources may use banked allowances or credits
in an amount more than 10 percent without restrictions, but the total
number used throughout the entire trading program (i.e., total number
of banked credits or allowances used for compliance throughout all
States participating in the trading program) could not exceed 10
percent of the allowable NO_X emissions for all sources in
the trading program without restrictions. The net effect is the same
under either approach--banked allowances or credits may be used each
year without restrictions in an amount that does not exceed 10 percent
of the allowable NO_X emissions for all sources covered by
the trading program. The NO_X Budget Trading Program uses the
latter approach. See Section VII.F. for more details.
The second issue for the flow control mechanism is to determine
what restrictions should be placed on banked allowances or credits that
are used in an amount greater than 10 percent of the allowable
NO_X emissions for all sources covered by the trading
program. Again, EPA is providing flexibility for the restrictions that
States may use. States may use a discount that is no less than two-for-
one, requiring sources to retire one additional banked allowance or
credit for each banked allowance or credit used for compliance in an
amount greater than the 10 percent level. Or States may set the 10
percent level as a hard cap and not allow any banked allowances or
credits to be used in an amount greater than the 10 percent level.
Although the discount option provides more flexibility to sources and
more uncertainty regarding NO_X emissions in a given year,
EPA believes both options serve as an acceptable restriction for
limiting the variability of emissions associated with banking. As
described in Section VII.F, the NO_X Budget Trading Program
uses the 2-for-1 discount as the applicable restriction.
c. Early Reduction Credits. The majority of commenters for the
NO_X Budget Trading Program generally supported the option of
awarding early reduction credits. Commenters noted that the issuance of
credits will provide cost savings and environmental benefits by
encouraging early reductions, facilitate compliance with the budget by
allowing sources to earn allowances that may be used to delay more
stringent emission reductions, and stimulate the market by ensuring
allowances are available for trading at the program start. Several
commenters advocated making early reduction credits available for any
reductions that exceed baseline controls, whereas other commenters
supported early reduction credits only if they exceed the controls
required under the SIP call, as was proposed by EPA. A few other
commenters suggested levels between these two options. A few OTC States
suggested that OTC allowances banked in Phase II (between 1999-2003 for
reductions beyond an approximate 0.20 lb/mmBtu rate) could be used as
early reduction credits in the NO_X Budget Trading Program,
either one-for-one or at a discount ratio, depending on the level
beyond which credits were awarded in the latter program. A few
remaining commenters, concerned about the potential for creating or
exacerbating ozone violations, supported early reduction credits and
banking only if coupled with flow control.
Regarding the appropriate length of the period in which early
reductions could be earned, some commenters supported EPA's proposed
option in the SNPR of a two-year early reduction period, while others
favored a three or four-year period. At least one commenter
specifically recommended that the early reduction period start in
January 1995, while another suggested September 1998. Several
commenters rejected EPA's suggestion that early reduction credits be
calculated as a set-aside from the first five years of allowances,
arguing that treating the credits as set-asides would be inconsistent
with the nature of early reduction credits. Conversely, a few other
commenters felt the credits should be awarded from within State budgets
to avoid budget inflation. Additional commenters criticized EPA's
suggestion that if early reduction credits were awarded, they be
awarded at the company level, arguing instead for individual source
awards. One commenter stated that awards on a company basis would not
address the load shifting concerns EPA cited, while another thought EPA
could address the load shifting concern by basing credits on activity
levels in a historic period rather than by shifting to a company-level
award. Finally, at least one commenter felt that States should be able
to independently establish parameters for awarding voluntary early
reductions.
For the reasons set forth in Section III.F.7, Compliance Supplement
Pool, EPA is allowing, but not requiring, States to grant early
reduction credit to sources that reduce their ozone season
NO_X emissions below levels specified by the State prior to
the 2003 control period. The early reduction credits may be used by
sources for compliance during the 2003 and 2004 ozone seasons. EPA
believes that an early credit program can be helpful to encourage
emissions reductions prior to the 2003 ozone season that would not be
made without an economic incentive for the sources to act. Furthermore,
the early credit program will provide additional allowances or credits
for use during the 2003 and 2004 ozone seasons. By generating early
credits or acquiring early credits from other sources that generated
credits, companies would have greater latitude in determining when
actual emissions reductions are achieved at specific sources. As
discussed in Section III.F.7, this may be beneficial to some companies
that are concerned about the time and effort required to install all
necessary emissions controls prior to May 2003. States will be limited
in the amount of early reduction credits that they may grant by the
amounts set forth in Section III.F.7 Compliance Supplement Pool. The
potential pool of credits that is available to each State is intended
to be large enough to provide a real incentive for early reductions and
enough flexibility to allow the installation of some control equipment,
if necessary, past May 2003.

[[Page 57433]]

Section VII.F. of today's preamble outlines how the early credit
program is being incorporated into the NO_X Budget Trading
Program and how banked allowances from the OTC program may be
integrated with this provision. States that develop alternative trading
programs may craft their early reduction program to meet the needs of
their specific trading program. The following outlines the general
requirements that any early reduction program used to comply with the
NO_X SIP call should meet. For an emission reduction to be
eligible as an early reduction credit, it must meet the following
criteria:
. Surplus--The reduction is not contained in the State's SIP
or otherwise required by the CAA.
. Verifiable--The reduction can be verified as actually
having occured.
. Quantifiable--The reduction is quantified according to
procedures set forth by the State and approved by EPA. Early reduction
credits generated by sources serving electric generators with a
nameplate capacity greater than 25 MWe or greater or boilers,
combustion turbines and combined cycle units with a maximum design heat
input greater than 250 mmBtu/hr, should be quantified according to the
monitoring provisions of part 75, subpart H as required in
Sec. 51.121(h)(1)(iv).
Beyond the above requirements, States are free to develop an early
credit program that meets the needs of their specific trading program
provided the State does not issue credits in an amount greater the size
of the credit pool presented in Section III.F.7. A State's early credit
program may be established for any ozone season occurring after a
State's early credit rule is approved by EPA into the State's SIP
revision and before May 1, 2003.
To ensure that a State does not issue an amount of early credits
beyond the amount specified in each State's compliance supplement pool,
EPA recommends that a State develop procedures to be used in case there
is an over-subscription of the early credit pool. Possible options
include granting early credits on a first-come, first-served basis or
waiting until all applications are submitted and then discounting the
early credits on a pro-rata basis so that the amount of early credits
issued equals the size of the State's pool. States may also influence
the amount of early credits that sources generate by considering what
level of emissions reductions the State will recognize as early
reductions. For example, a State may choose to issue early reduction
credits for any reductions below applicable requirements. However, the
State may choose to make the demonstration more stringent by requiring
early reduction credits to be generated by reductions that are below a
limit that is tighter than applicable requirements (e.g., grant early
reductions that are 30 percent below applicable requirements or below a
fixed level such as 0.20 lb/mmBtu).
In the SNPR, EPA also solicited comment on a phased-in
NO_X Budget Trading Program that would begin in 2001, two
years prior to the compliance date for the NO_X SIP call. In
response to the proposal, most commenters that discussed the phase-in
program option were generally opposed to it. Their primary argument was
that such a program would effectively accelerate the compliance date
for NO_X controls under the SIP call. A few commenters,
however, still supported the phase-in approach as a means of mitigating
the uncertainties inherent in the allowance market that would develop
for the 2003 control period, allowing sources to gain experience prior
to 2003. Some commenters specifically favored a phase-in approach only
if it does not interfere with the 2003 ozone season compliance
schedule, whereas others supported a phase-in approach as a means of
reducing the burdens of the 2003 ozone season compliance schedule.
Today's final rule requires States to achieve the necessary
emissions reductions by May 2003 and does not require States to phase-
in controls prior to 2003. States that wish to phase-in controls prior
to 2003 as a part of a State trading program may do this, but they are
not required to do so to comply with the NO_X SIP call.
States that establish a phased-in trading program in order to allow
sources to generate early reduction credits will be subject to the
requirements for early reductions as described above, including the
requirement that a State may not grant an amount of early reductions in
excess of the State's compliance supplement pool. For a discussion of
how the Ozone Transport Commission's trading program may be integrated
with the compliance supplement pool and the early reduction provisions,
see Section VII.F, which describes the banking provisions of the
NO_X Budget Trading Program.

G. Final Statewide Budgets

1. EGU
a. Description of Selected Approach. As described in Section
III.B.3. of this notice, the EGU budget component is calculated based
on applying a 0.15 lb/mmBtu emission limit to sources greater than 25
MWe. This limit is applied uniformly across all States that are covered
by this SIP call. The higher of 1995 or 1996 heat input, grown to 2007
is used to calculate the budget component.
b. Summary of Budget Component. Both the 2007 electricity
generating Base Case and the electricity generating Budget component
were revised from the levels in the SNPR based on the changes described
in Section III.B.3. of this notice. These revisions are shown in Tables
III-4 and III-5. The difference between the revised 2007 Base Case and
Budget emissions from the SNPR and the final Base Case and Budget
emissions is shown in Table III-4. Negative changes indicate decreases.
The final percent reduction from the 2007 Base Case to the Budget is
shown in Table III-5.

Table III-4.--Changes to Revised SNPR Base Case and Budget Components for Electricity Generating Units
[Tons NO_X/season]
----------------------------------------------------------------------------------------------------------------
Percent Revised Final Percent
State Revised base Final base change budget budget change
----------------------------------------------------------------------------------------------------------------
Alabama..................... 85,201 76,900 -10 30,644 29,051 -5
Connecticut................. 7,048 5,600 -21 5,245 2,583 -51
Delaware.................... 10,727 5,800 -46 4,994 3,523 -29
District of Columbia........ 236 *0 -100 152 207 36
Georgia..................... 84,890 86,500 2 32,433 30,255 -7
Illinois.................... 119,756 119,300 0 36,570 32,045 -12
Indiana..................... 159,917 136,800 -14 51,818 49,020 -5
Kentucky.................... 130,919 107,800 -18 38,775 36,753 -5

[[Page 57434]]

Maryland.................... 37,575 32,600 -13 12,971 14,807 14
Massachusetts............... 24,998 16,500 -34 14,651 15,033 3
Michigan.................... 73,585 86,600 18 29,458 28,165 -4
Missouri.................... 81,799 82,100 0 26,450 23,923 -10
New Jersey.................. 17,484 18,400 5 8,191 10,863 33
New York.................... 43,705 39,200 -10 31,222 30,273 -3
North Carolina.............. 86,872 84,800 -2 32,691 31,394 -4
Ohio........................ 167,601 163,100 -3 51,493 48,468 -6
Pennsylvania................ 120,979 123,100 2 45,971 52,000 13
Rhode Island................ 1,351 1,100 -19 1,609 1,118 -31
South Carolina.............. 57,146 36,300 -36 19,842 16,290 -18
Tennessee................... 83,844 70,900 -15 26,225 25,386 -3
Virginia.................... 51,113 40,900 -20 20,990 18,258 -13
West Virginia............... 76,374 115,500 51 24,045 26,439 10
Wisconsin................... 45,538 52,000 14 17,345 17,972 4
-----------------------------------------------------------------------------------
Total................... 1,568,655 1,501,800 -4 563,784 543,825 -4
----------------------------------------------------------------------------------------------------------------
*The base case for DC is actually projected to be 3 tons per season. The base case values in this table are
rounded to the nearest 100 tons.

Table III-5.--Final NO_X Budget Components and Percent Reduction for Electricity Generating Units
[tons/season]
----------------------------------------------------------------------------------------------------------------
Percent
State Final base Final budget reduction
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 76,900 29,051 62
Connecticut..................................................... 5,600 2,583 54
Delaware........................................................ 5,800 3,523 39
District of Columbia............................................ *0 207 NA
Georgia......................................................... 86,500 30,255 65
Illinois........................................................ 119,300 32,045 73
Indiana......................................................... 136,800 49,020 64
Kentucky........................................................ 107,800 36,753 66
Maryland........................................................ 32,600 14,807 55
Massachusetts................................................... 16,500 15,033 9
Michigan........................................................ 86,600 28,165 67
Missouri........................................................ 82,100 23,923 71
New Jersey...................................................... 18,400 10,863 41
New York........................................................ 39,200 30,273 23
North Carolina.................................................. 84,800 31,394 63
Ohio............................................................ 163,100 48,468 70
Pennsylvania.................................................... 123,100 52,000 58
Rhode Island.................................................... 1,100 1,118 -2
South Carolina.................................................. 36,300 16,290 55
Tennessee....................................................... 70,900 25,386 64
Virginia........................................................ 40,900 18,258 55
West Virginia................................................... 115,500 26,439 77
Wisconsin....................................................... 52,000 17,972 65
-----------------------------------------------
Total....................................................... 1,501,800 543,825 64
----------------------------------------------------------------------------------------------------------------
*The base case for DC is actually projected to be 3 tons per season. The base case values in this table are
rounded to the nearest 100 tons.

2. Non-EGU Point Sources
As indicated in the proposal and discussed earlier in this notice,
EPA continues to believe that technically feasible control measures
costing between an average of $1,000 to $2,000 per ozone season ton
(1990 dollars) are highly cost-effective and therefore should be the
basis for determining the significant amounts that must be eliminated
by each covered jurisdiction. In the SNPR, EPA committed to examining
alternatives that would limit the number of affected non-EGU sources
for the purpose of establishing emissions budgets, yet still achieve
the environmental objective of mitigating broad-scale ozone transport.
The EPA examined alternatives that target reductions from the largest
non-EGU source category groupings, and within each of the largest
groupings applied the cost-effectiveness criteria. The resulting
emissions budget covers the majority of emissions from large non-
utility sources, and does not include reductions from small sources and
sources that, as a group, are not efficient to control, or are already
covered by other Federal measures (e.g., CAA Sec. 112 MACT). The
description below summarizes the budget approach for non-EGU point sources.
a. Description of Selected Approach.
(1) NO_X Budget Sources. The following approach is used
to determine if a unit's emissions would be decreased as part of the
budget calculation.

[[Page 57435]]

Industrial boilers, turbines, stationary internal combustion engines
and cement manufacturing are the only non-EGU sources for which
reductions are assumed in the budget calculation.
1. Use heat input capacity data for each source if the data are in
the updated inventory.
2. If heat input capacity data are not available, use the default
identification of small and large sources developed by EPA/Pechan for
OTAG and also used to develop the NPR and SNPR budgets for source
categories with heat input capacity fields (``default data'').
3. Emission reductions would be assumed if specific source heat
input capacity data or default data indicate that a source is greater
than 250 mmBtu/hr in the updated inventory.
4. If specific or default heat input capacity data are not
available in the updated inventory (or not appropriate for a particular
source category), emission reductions would be assumed if the unit's
average summer day emissions are greater than one ton per day based on
the updated inventory.
5. All others are ``small'' and no emission reductions are assumed.
It should be noted (as described earlier in this section) that no
emissions reductions are assumed for point sources with capacities less
than or equal to 250 mmBtu/hr but with emissions greater than 1 ton/day
for purposes of calculating the budget. This is a change from the NPR
which assumed RACT controls on units with capacities less than or equal
to 250 mmBtu/hr and emissions greater than 1 ton/day.
(2) Control Levels. For purposes of calculating the State
NO_X budgets for the relevant sources (described above), the
following emissions decreases from uncontrolled levels were assumed:
1. Non-EGU boilers and turbines--60% decrease.
2. Stationary internal combustion engines--90% decrease.
3. Cement manufacturing plants--30% decrease.
These controls result in an overall reduction in emissions from all
affected large non-EGU point sources of almost 40 percent (187,800 tons
per season decrease).
Each State's budget is based on application of these controls
beginning on May 1, 2003. The EPA recognizes that if States include
these source categories in a regionwide trading program, as EPA
encourages States to do, each State will comply with its budget through
compliance of its sources with the requirements of the regionwide
trading program. Of course, under the trading program, sources in a
State may acquire or sell allowances that will, in turn, allow for
higher or lower emissions levels for that State than assumed in this
action. Because EPA has determined that the ambient effect of such a
trading program across the region is consistent with the basis for
including States in the SIP call (see discussion below at Section IV),
EPA has structured its rule to allow a State to meet its budget by
including the amount of emissions for which sources in the State hold
allowances from out-of-State sources. Overall, total NO_X
emissions in the region will be within the budget.
b. Summary of Budget Component. Both the 2007 Base Case and Budget
component for non-electricity generating point sources were revised
based on the changes described above. Changes to the 2007 base reflect
changes in the base year (1995) emissions and changes in growth
factors. Changes to the budget components reflect these changes as well
as the change in level of control. These resulting budget components
are shown in Tables III-5 and III-6. The difference between the 2007
Base Case and Budget emissions as revised in the SNPR and the final
Base Case and Budget emissions for non-electricity generating point
sources is shown in Table III-6. Negative changes indicate decreases.
The final percent reduction from the 2007 Base Case to the Budget is
shown in Table III-7.

Table III-6.--Changes to Revised Base Case and Budget Components for Non-Electricity Generating Point Sources
[Tons NO_X/season]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revised base Final base Percent change Revised budget Final budget Percent change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama................................................. 48,187 49,781 3 24,416 37,696 54
Connecticut............................................. 5,254 5,273 0 3,103 5,056 3
Delaware................................................ 5,276 1,781 -66 2,271 1,645 -28
District of Columbia.................................... 311 310 0 259 292 13
Georgia................................................. 33,939 33,939 0 14,305 27,026 89
Illinois................................................ 65,351 55,721 -15 40,719 42,011 3
Indiana................................................. 51,839 71,270 37 29,187 44,881 54
Kentucky................................................ 19,019 18,956 0 11,996 14,705 23
Maryland................................................ 10,710 10,982 3 5,852 7,593 30
Massachusetts........................................... 9,978 9,943 0 6,207 9,763 57
Michigan................................................ 61,656 79,034 28 35,957 48,627 35
Missouri................................................ 12,320 13,433 9 9,012 11,054 23
New Jersey.............................................. 22,228 22,228 0 12,786 19,804 55
New York................................................ 20,853 25,791 24 14,644 24,128 65
North Carolina.......................................... 34,412 34,027 -1 19,267 25,984 35
Ohio.................................................... 53,329 53,241 0 30,923 35,145 14
Pennsylvania............................................ 74,839 73,748 -1 41,824 65,510 57
Rhode Island............................................ 327 327 0 327 327 0
South Carolina.......................................... 34,994 34,740 -1 18,671 25,469 36
Tennessee............................................... 67,774 60,004 -11 34,308 35,568 4
Virginia................................................ 25,509 39,765 56 10,919 27,076 148
West Virginia........................................... 42,733 40,192 -6 21,066 31,286 49
Wisconsin............................................... 21,263 22,796 7 11,401 17,973 58
-----------------------------------------------------------------------------------------------
Total............................................... 722,101 757,281 5 399,416 558,618 40
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57436]]

Table III-7.--Final NO_X Budget Components and Percent Reduction for Non-Electricity Generating Point Sources
[Tons/season]
----------------------------------------------------------------------------------------------------------------
Percent
Final base Final budget reduction
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 49,781 37,696 24
Connecticut..................................................... 5,273 5,056 4
Delaware........................................................ 1,781 1,645 8
District of Columbia............................................ 310 292 6
Georgia......................................................... 33,939 27,026 20
Illinois........................................................ 55,721 42,011 25
Indiana......................................................... 71,270 44,881 37
Kentucky........................................................ 18,956 14,705 22
Maryland........................................................ 10,982 7,593 31
Massachusetts................................................... 9,943 9,763 2
Michigan........................................................ 79,034 48,627 38
Missouri........................................................ 13,433 11,054 18
New Jersey...................................................... 22,228 19,804 11
New York........................................................ 25,791 24,128 6
North Carolina.................................................. 34,027 25,984 24
Ohio............................................................ 53,241 35,145 34
Pennsylvania.................................................... 73,748 65,510 11
Rhode Island.................................................... 327 327 0
South Carolina.................................................. 34,740 25,469 27
Tennessee....................................................... 60,004 35,568 41
Virginia........................................................ 39,765 27,076 32
West Virginia................................................... 40,192 31,286 22
Wisconsin....................................................... 22,796 17,973 21
-----------------------------------------------
Total....................................................... 757,281 558,618 26
----------------------------------------------------------------------------------------------------------------

3. Mobile and Area Sources
a. Description of Selected Budget Approach. As discussed in Section
III.D.3 of the notice, EPA proposed highway budget components based on
projected highway vehicle emissions in 2007 from a base year of 1990,
assuming implementation of those measures incorporated in existing
SIPs, such as inspection and maintenance programs and reformulated
fuels, measures already implemented federally, and those additional
measures expected to be implemented federally by 2007. As discussed in
Section III.E of this notice, EPA proposed nonroad mobile source budget
components based on projected nonroad mobile source emissions in 2007
from a base year of 1990. These projections were developed by
estimating the emissions expected in 2007 from all nonroad engines,
assuming implementation of those measures incorporated in existing
SIPs, measures already implemented federally, and those additional
measures expected to be implemented federally. For area sources, no
cost-effective control measures were identified in the NPR. Because no
comments were received that demonstrate that additional controls for
highway, nonroad, or area sources are both feasible and highly cost-
effective, the final budgets are based on the same levels of controls
that were proposed.
b. Summary of Budget Component. Changes were made to the baseline
stationary area, nonroad and highway mobile source budget data as
discussed in Sections III.D. and III.E. of this notice. Budget
components were calculated using the updated baseline and the controls
discussed above. The resulting final budget components for these
sectors are contained in Tables III-7, III-8, and III-9 below, along
with the difference between the proposed Budget emissions and the final
Budget emissions. The budget components are not compared to the 2007
base because no reductions were calculated beyond the base case. In the
NPR and SNPR, EPA used a 2007 CAA baseline for these source sectors.
Because the measures that are assumed in the budgets for these sectors
are measures that would occur in the absence of the SIP call, EPA
believes that it is more appropriate to use the budget level for these
source sectors as the baseline and compare the total budgets to this
revised baseline.

Table III-8.--Final NO_X Budget Components for Stationary Area Sources
[Tons/season]
----------------------------------------------------------------------------------------------------------------
Proposed
budget Final budget Percent change
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 25,229 25,225 0
Connecticut..................................................... 4,587 4,588 0
Delaware........................................................ 1,035 963 -7
District of Columbia............................................ 741 741 0
Georgia......................................................... 11,901 11,902 0
Illinois........................................................ 7,270 7,822 8
Indiana......................................................... 25,545 25,544 0
Kentucky........................................................ 38,801 38,773 0
Maryland........................................................ 8,123 4,105 -49
Massachusetts................................................... 10,297 10,090 -2

[[Page 57437]]

Michigan........................................................ 28,126 28,128 0
Missouri........................................................ 6,626 6,603 0
New Jersey...................................................... 11,388 11,098 -3
New York........................................................ 15,585 15,587 0
North Carolina.................................................. 9,193 10,651 16
Ohio............................................................ 19,446 19,425 0
Pennsylvania.................................................... 17,103 17,103 0
Rhode Island.................................................... 420 420 0
South Carolina.................................................. 8,420 8,359 -1
Tennessee....................................................... 11,991 11,990 0
Virginia........................................................ 25,261 18,622 -26
West Virginia................................................... 4,901 4,790 -2
Wisconsin....................................................... 10,361 8,160 -21
-----------------------------------------------
Total....................................................... 302,350 290,689 -4
----------------------------------------------------------------------------------------------------------------

Table III-9.--Final NO_X Budget Components and Percent Reduction for Nonroad Sources
[Tons/season]
----------------------------------------------------------------------------------------------------------------
Proposed
budget Final budget Percent change
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 18,727 16,594 -11
Connecticut..................................................... 9,581 9,584 0
Delaware........................................................ 4,262 4,261 0
District of Columbia............................................ 3,582 3,470 -3
Georgia......................................................... 22,714 21,588 -5
Illinois........................................................ 56,429 47,035 -17
Indiana......................................................... 27,112 22,445 -17
Kentucky........................................................ 22,530 19,627 -13
Maryland........................................................ 18,062 17,249 -4
Massachusetts................................................... 19,305 18,911 -2
Michigan........................................................ 24,245 23,495 -3
Missouri........................................................ 19,102 17,723 -7
New Jersey...................................................... 21,723 21,163 -3
New York........................................................ 30,018 29,260 -3
North Carolina.................................................. 18,898 17,799 -6
Ohio............................................................ 42,032 37,781 -10
Pennsylvania.................................................... 29,176 25,554 -12
Rhode Island.................................................... 2,074 2,073 0
South Carolina.................................................. 12,831 11,903 -7
Tennessee....................................................... 47,065 44,567 -5
Virginia........................................................ 25,357 21,551 -15
West Virginia................................................... 10,048 10,220 2
Wisconsin....................................................... 15,145 12,965 -14
-----------------------------------------------
Total....................................................... 500,018 456,818 -9
----------------------------------------------------------------------------------------------------------------

Table III-10. Final NO_X Budget Components and Percent Reduction for Highway Vehicles
[Tons/season]
----------------------------------------------------------------------------------------------------------------
Proposed
budget Final budget Percent change
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 56,601 50,111 -11
Connecticut..................................................... 17,392 18,762 8
Delaware........................................................ 8,449 8,131 -4
District of Columbia............................................ 2,267 2,082 -8
Georgia......................................................... 77,660 86,611 12
Illinois........................................................ 77,690 81,297 5
Indiana......................................................... 66,684 60,694 -9
Kentucky........................................................ 46,258 45,841 -1
Maryland........................................................ 28,620 27,634 -3
Massachusetts................................................... 23,116 24,371 5
Michigan........................................................ 81,453 83,784 3
Missouri........................................................ 55,056 55,230 0
New Jersey...................................................... 39,376 34,106 -13
New York........................................................ 94,068 80,521 -14

[[Page 57438]]

North Carolina.................................................. 73,056 66,019 -10
Ohio............................................................ 92,549 99,079 7
Pennsylvania.................................................... 73,176 92,280 26
Rhode Island.................................................... 5,701 4,375 -23
South Carolina.................................................. 49,503 47,404 -4
Tennessee....................................................... 67,662 64,965 -4
Virginia........................................................ 79,848 70,212 -12
West Virginia................................................... 21,641 20,185 -7
Wisconsin....................................................... 41,651 49,470 19
-----------------------------------------------
Total....................................................... 1,179,477 1,173,163 -1
----------------------------------------------------------------------------------------------------------------

4. Potential Alternatives to Meeting the Budget
The EPA believes that there are additional control measures and
alternative mixes of controls that a State could choose to implement by
May 1, 2003. Examples of such measures are described below and
illustrate that options are potentially available in several source
categories.
The EPA believes that, with respect to EGUs, there is a large
potential for energy efficiency and renewables in the NO_X
SIP call region that reduce demand and provide for more
environmentally-friendly energy resources. For example, if a company
replaces a turbine with a more efficient one, the unit supplying the
turbine would reduce the amount of fuel (heat input) the unit combusts
and would reduce NO_X emissions proportionately, while the
associated generator would produce the same amount of electricity.
Renewable energy source generation includes hydroelectric, solar, wind,
and geothermal generation. EPA recognizes that promotion of energy
efficiency and renewables can contribute to a cost-effective
NO_X reduction strategy. As such, EPA encourages States in
the NO_X SIP call region to consider including energy
efficiency and renewables as a strategy in meeting their NO_X
budgets. One way to achieve this goal is by including a provision
within a State's NO_X Budget Trading Rule that allocates a
portion of a State's trading program budget to implementers of energy
efficiency and renewables projects that reduce energy-related
NO_X emissions during the ozone season. Another is to include
energy efficiency and renewables projects as part of a State's
implementation plan.
The EPA is working to develop guidance on how States can integrate
energy efficiency into their SIPs by both of these mechanisms. The
guidance will present EPA's current thinking on the important elements
to include in a functional system that allocates a portion of a State's
trading program budget to implementers of energy efficiency and
renewables projects within the context of the NO_X Budget
Trading Program. In addition, EPA will issue guidance outlining
procedures for including energy efficiency and renewables projects in a
State's SIP as control strategies for achieving the State's
NO_X budget, separate from the NO_X Budget Trading
Program. EPA plans to issue these guidance documents in the Fall of
1998 so that they will be available to States early in their SIP
planning process.
With respect to non-EGUs, individual States could choose to require
emissions decreases from sources or source categories that EPA exempted
from the budget calculations. For example, there are many large sources
for which EPA lacked enough information to determine potential controls
and emissions reductions; States may have access to such information
and could choose to apply cost-effective controls. In addition, States
could choose to regulate one or more of the non-EGU stationary sources
or source categories which EPA had exempted because emissions were
relatively low considering other source categories in the 23
jurisdictions. In individual States, emissions from such sources could
be a high percentage of uncontrolled emissions and, thus, be subject to
efficient, cost-effective control for that particular State. Further,
States may take other approaches to developing their budgets, such as
cutoffs based on horsepower rather than tons per day, since they might
have access to data that EPA did not have for all 23 jurisdictions.
With respect to mobile sources, States could implement other
NO_X control measures in lieu of the controls described
earlier in this section. For example, vehicle inspection and
maintenance programs can provide significant NO_X reductions
from highway vehicles. Additional NO_X reductions can be
obtained by opting into the reformulated gasoline program, by
implementing measures to reduce the growth in VMT, and by implementing
programs to accelerate retirement of older, higher-emitting highway
vehicles and nonroad equipment.
5. Statewide Budgets
The revised Statewide budgets that reflect the changes to the base
year inventory and growth factors for all sectors and the revised
control levels for the non-EGU point source sector described above are
shown in Table III-11. For the 23 jurisdictions combined, the budgets
result in a 28 percent reduction from the base case. In the NPR and
SNPR the percent reduction was 35 percent. The difference in the
percent reduction is due to several factors. First, in the NPR and SNPR
reductions from certain highway and nonroad controls were assumed to
occur as a result of measures implemented between promulgation of this
rule and 2007. These measures include National Low Emission Vehicle
Standards, the 2004 Heavy-Duty Engine Standards, the Federal Small
Engine Standards, Phase II, Federal Marine Engine Standards (for diesel
engines of greater than 50 horsepower), Federal Locomotive Standards,
and the Nonroad Diesel Engine Standards. These controls were reflected
in the budget but were not included in the base case. For the final
rule, EPA determined that these measures should be included in the base
case, rather than the budgets, because the measures would be
implemented even in the absence of this rulemaking. Based on the
emission levels that were used in the SNPR, the effect of using this
approach to setting the base case is to decrease the percent reduction
from 35 percent to approximately 31 percent.

[[Page 57439]]

The additional change in the percent reduction (from 31 percent to 28
percent) is primarily due to EPA's decision not to assume controls for
several non-EGU source categories and to change the level of control
for those non-EGU categories for which controls are assumed. Although
the overall percent reduction went from 35 percent to 28 percent, the
difference between the budget proposed in the SNPR and the final
budgets in today's notice is less than 3 percent.

Table III-11.--Revised Statewide NO_X Budgets
[Tons/season]
----------------------------------------------------------------------------------------------------------------
Percent
State Base Budget reduction
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 218,610 158,677 27
Connecticut..................................................... 43,807 40,57 37
Delaware........................................................ 20,936 18,523 12
District of Columbia............................................ 6,603 6,792 -3
Georgia......................................................... 240,540 177,381 26
Illinois........................................................ 311,174 210,210 32
Indiana......................................................... 316,753 202,584 36
Kentucky........................................................ 230,997 155,698 33
Maryland........................................................ 92,570 71,388 23
Massachusetts................................................... 79,815 78,168 2
Michigan........................................................ 301,042 212,199 30
Missouri........................................................ 75,089 114,532 35
New Jersey...................................................... 106,995 97,034 9
New York........................................................ 190,358 179,769 6
North Carolina.................................................. 213,296 151,847 29
Ohio............................................................ 372,626 239,898 36
Pennsylvania.................................................... 331,785 252,447 24
Rhode Island.................................................... 8,295 8,31 30
South Carolina.................................................. 138,706 109,425 21
Tennessee....................................................... 252,426 182,476 28
Virginia........................................................ 191,050 155,718 18
West Virginia................................................... 190,887 92,920 51
Wisconsin....................................................... 145,391 106,540 27
-----------------------------------------------
Total........................................................... 4,179,751 3,023,113 28
----------------------------------------------------------------------------------------------------------------

IV. Air Quality Assessment

A. Assessment of Proposed Statewide Budgets

In the SNPR, EPA documented the estimated ozone benefits of the
proposed Statewide NO_X budgets based on an air quality
modeling analysis. The major findings of that analysis are as follows:
(1) The emissions reductions associated with the proposed Statewide
budgets are predicted to produce large reductions in both 1-hour and 8-
hour concentrations in areas which currently violate the NAAQS and
which would likely continue to have violations in the future without
the SIP call budget reductions.
(2) Looking at individual ozone ``problem areas'' considered by
OTAG shows similar results, based on the available metrics.
(3) Any ``disbenefits'' due to the NO_X reductions
associated with the budgets are expected to be very limited compared to
the extent of the benefits expected from these budgets.
(4) Even though the budgets are expected to reduce 1-hour and 8-
hour ozone concentrations across all 23 jurisdictions, nonattainment
problems requiring additional local control measures will likely
continue in some areas currently violating the NAAQS.

(63 FR 25903)

B. Comments and Responses

The EPA received numerous comments on the air quality modeling of
the proposed NO_X budgets. The following is a summary of the
main comments and EPA's responses.
Comment: Commenters stated that the emissions inventories used for
modeling were flawed because EPA's projection of the base year
emissions to 2007 improperly treated growth for certain electric
generation units by growing these units beyond their design capacity.
Response: The EPA agrees with this comment and has revised the 2007
emissions projections for modeling to take this factor into account.
For the modeling described in the SNPR, EPA applied State-level growth
factors uniformly to existing sources in each State. This did not
account for maximum capacity and could have resulted in sources being
modeled with emissions that were higher than their actual capacity
would allow. For the modeling described in this notice, EPA has revised
the projection procedures to use IPM to allocate growth to existing
units considering their design capacity. As described below, EPA has
remodeled the 2007 Base Case and the Statewide budgets using this
revised inventory and found that the conclusions from the revised runs
do not differ from those based on the SNPR model runs of these budgets.
Comment: Commenters stated that EPA's modeling in the SNPR examined
the impacts of the budgets applied regionwide (i.e., for each State for
which a budget is required), rather than the impacts on downwind
nonattainment of the budgets applied only in upwind States. Therefore,
according to the commenters, this modeling is not useful for indicating
the impact of the State budgets on downwind nonattainment or
maintenance problems.
Response: The EPA is well aware that many States in the SIP Call
region are both upwind and downwind States, that is, they are upwind of
certain nonattainment areas and downwind from other States. For
example, Pennsylvania is upwind of New York City, and emissions from
Pennsylvania sources significantly contribute to this nonattainment
problem; and

[[Page 57440]]

Pennsylvania is downwind of several States, emissions from which
significantly contribute to Philadelphia's nonattainment problem.
The EPA is further aware that modeling analyses that evaluate
emissions reductions in each State affected by today's rulemaking do
not isolate the precise impact of emissions reductions from each upwind
State on nonattainment in a State that is itself both an upwind and
downwind State. That is, the emissions reductions in that upwind/
downwind area impact its own nonattainment problems. To return to the
example noted above, because emissions reductions in Pennsylvania
affect Philadelphia's air quality, modeling Pennsylvania's emissions
reductions along with emissions reductions in all other affected States
does not isolate the impact of emissions reductions from States upwind
of Pennsylvania on Philadelphia's air quality. As a result, EPA is
aware that the regionwide modeling of different budget levels does not
indicate the differential impact on downwind areas of higher budget
levels as compared to lower budget levels in upwind areas.
Nevertheless, EPA believes that regionwide modeling of the State
budgets is a useful indication of the overall impacts of various budget
levels. Today's rulemaking requires regionwide emissions reductions,
which will carry certain costs and will have certain impacts viewed on
a State-by-State basis and on a regionwide basis. The multi-State
budgets promulgated today mean that in a State that is both upwind and
downwind of other States, such as Pennsylvania, the air quality will,
in fact, be improved by the emissions reductions in upwind States and
by the reductions within the States that are required to improve air
quality further downwind. Thus, it is necessary to consider the upwind
emissions reductions together with the downwind emissions reductions in
order to fully evaluate the air quality impacts of the Statewide
budgets. Regionwide modeling is the only available approach to indicate
these ``real world'' impacts in individual States, as well as allow an
assessment of those impacts in light of their costs. Accordingly, this
modeling is useful in evaluating the overall impacts of the alternative
budget levels considered in the course of the rulemaking. The EPA
believes that a comparison of the overall impacts of alternative budget
levels, in turn, serves as a means to confirm whether the budget levels
promulgated in today's rulemaking yield meaningful air quality
benefits. Moreover, EPA has conducted other modeling which indicates
the impact of budget-level emissions on air quality downwind, as
discussed below.
Comment: Commenters stated that EPA should have modeled the
proposed budgets on a State-by-State basis in order to assess the
downwind benefits of applying the budgets in each State.
Response: The EPA performed a multi-factor analysis to determine
the amount of a State's emissions that significantly contribute to
downwind nonattainment and what the resulting State budget should be.
This is discussed in detail in Section II.C., Weight of Evidence
Determination of Covered States. Specifically, EPA determined that
emissions from all sources in certain States contribute to downwind
problems, but that only a portion of those emissions--in some cases, a
relatively small portion--may be reduced through highly cost-effective
controls. The EPA established a budget for each State based on the
elimination of these emissions. After EPA established the budgets, EPA
performed air quality modeling to quantify the overall ozone benefits
of the budgets applied in all upwind States on selected downwind areas.
This modeling is described below. The EPA considered the results of
this modeling as an additional piece of evidence in the analysis to
confirm that the amount of emissions reductions from upwind States
collectively provide meaningful reductions in nonattainment downwind.
For the purposes of this modeling it is sufficient to model the
budgets collectively, and not State-by-State, to demonstrate that the
intended benefits of the budgets are achieved. Commenters who
recommended State-by-State modeling generally argued that it would
indicate that the reductions from a particular State would have a
relatively small impact downwind, particularly compared to the impact
of local reductions or reductions from other upwind States. In general,
such a modeling result could stem from the relatively small amount of
emissions reductions required of a particular upwind State under the
SIP Call, due to EPA's decision to base the budgets on cost-effective
controls rather than, more expensive controls. However, EPA's air
quality modeling of the ambient impact of the required budgets in the
upwind States on downwind nonattainment (discussed below) shows that
even if the downwind ambient impact of the required reductions from a
particular upwind State were small, that impact, when combined with the
impact from the reductions required from other upwind States, provides
meaningful downwind benefits. Ozone air quality problems are caused by
the collective contribution from numerous sources over a large
geographic area, so that it is appropriate to assess the impact of
reductions from a particular upwind State in combination with
reductions from other upwind States. The downwind air quality benefits
from these upwind reductions confirm the appropriateness of the
promulgated budgets.
Comment: Commenters stated that EPA should have modeled alternative
control options to determine if less stringent controls, either applied
uniformly or on a subregional basis (i.e., multi-State subregional
variations in control levels), would provide air quality benefits
essentially equivalent to EPA's proposal. In addition, commenters
submitted a considerable number of new modeling analyses intended to
show that (a) sufficient downwind ozone benefits can be achieved with
control levels less stringent than those associated with EPA's
proposal; (b) controls applied in certain upwind States, when examined
on a State-by-State basis, do not provide ``significant'' benefits in
any downwind nonattainment area; and/or (c) NO_X controls
increase ozone locally in some areas and these increases are greater
than the predicted decreases. In addition to new control strategy
modeling, commenters submitted modeling that pertains to the finding of
significant contribution. The EPA's responses to this modeling are
discussed in Section II.C., Weight of Evidence Determination of Covered
States and in the Response to Comment document.
Response: In response to the comments on the need to model
alternative controls, EPA has modeled alternative budgets based on
several EGU and non-EGU control options. For the most part, these
alternative budgets were modeled regionwide in order to assess, as
discussed above, the benefits considering both downwind and upwind
emissions reductions, collectively. Further, as discussed below, EPA
modeled several other types of scenarios including runs to assess the
impacts of the proposal applied in upwind States on several downwind
areas. The EPA's modeling analyses are summarized below and described
in detail in the Air Quality Modeling TSD.
Regarding the new control strategy modeling submitted by
commenters, EPA has reviewed this information in the same way it
reviewed the new modeling on ``significant contribution'', as described
in Section II.C., Weight of Evidence Determination of Covered States.
Specifically, EPA reviewed the commenters' modeling to determine and

[[Page 57441]]

assess (a) the technical aspects of the models that were applied; (b)
the treatment of emissions inventories; (c) the types of episodes
modeled; (d) the methods for aggregating, analyzing, and presenting the
results; (e) the completeness and applicability of the information
provided; and (f) whether the technical evidence supports the arguments
made by the commenters. A summary of this review is discussed next. For
the most part, the commenters used either the UAM-V model and/or the
CAM_X model to assess the relative impacts of various
NO_X control strategies. As discussed in Section II.C. Weight
of Evidence Determination of Covered States, modeling results from both
models are viewed by EPA as technically acceptable. Concerning the
emissions used for modeling, most commenters stated that they used the
EPA SNPR or IPM-derived 2007 Base Case emissions as a starting point
for developing emissions for the control scenarios. However, the
commenters did not provide emissions data summaries in order for EPA to
confirm which inventories were used in the modeling. Also, the
commenters did not document in detail how they applied the controls to
the emissions inventory.
Most of the control strategy modeling submitted by commenters was
performed for the July 1995 episode although a few commenters performed
modeling for all four OTAG episodes and one commenter provided modeling
for a non-OTAG episode in June of 1991. As discussed in Section II.C.,
and in the Response to Comment document, EPA's ability to fully
evaluate and utilize the modeling submitted by commenters was hampered
in some cases because only limited information on the results was provided.
The EPA considered the strengths and limitations in the commenters'
modeling analyses in evaluating whether the technical evidence
presented in the comments supports the arguments made by the
commenters. A detailed review of the commenters' modeling is contained
in the Response to Comment document. In general, this review indicates
that (a) downwind ozone benefits increase as greater NO_X
controls are applied to sources in upwind States, (b) emissions
reductions at the level of the SIP Call, even when evaluated on an
individual State-by-State basis, reduce ozone in downwind nonattainment
areas, (c) the net benefits of NO_X control at the level of
the SIP Call outweigh any local disbenefits, and (d) upwind
NO_X reductions tend to mitigate local disbenefits in
downwind areas. Thus, based on this evaluation, EPA generally found
that the submitted modeling did not refute the overall conclusions EPA
has drawn concerning the impacts of NO_X emissions in the
relevant geographic areas. However, because the extent and level of
detail in the information presented by the commenters was, in many
cases, limited and/or qualitative, the EPA decided to model a number of
alternative control scenarios for all four OTAG episodes. The results
of EPA's modeling of the impacts of alternative NO_X controls
are described next.

C. Assessment of Alternative Control Levels

As indicated above, EPA has remodeled the Base Case and Statewide
budgets using updated EGU emissions which do not exceed the capacity of
individual units. In addition, EPA has performed modeling of various
alternative EGU and non-EGU control options. Further, EPA has modeled
the benefits in selected downwind areas of the budgets applied in
upwind States. The results of EPA's modeling analyses are summarized
below and described in more detail in the Air Quality Modeling TSD.
1. Scenarios Modeled
As part of EPA's assessment, a 2007 SIP Call Base Case (hereafter
referred to as the ``Base Case'') and eight emissions scenarios were
modeled, as listed in Table IV-1. The first four scenarios (i.e.
``0.25'', ``0.20'', ``0.15t'', and ``0.12'') were designed to evaluate
alternative EGU and non-EGU controls applied uniformly in all 23
jurisdictions. For each of these four scenarios, EGU emissions were
determined assuming a cap-and-trade program across all 23
jurisdictions. The 0.15t scenario reflects the SIP Call proposal for
both non-EGU and EGU sources. Note that non-EGU controls were modeled
at the level of the proposal for all scenarios except for the 0.25
scenario for which less stringent controls were assumed.

Table IV-1.--Emissions Scenarios Modeled
Base Case:
2007 SIP Call Base Case \1\
Point Sources: CAA Controls.
Area Sources: OTAG ``Level 1'' Controls.
Highway Vehicles: OTAG ``Level 0'' Controls.

0.25......................................... 0.25 lb/mmBtu, interstate 60% reduction for large
trading. sources.
0.20......................................... 0.20 lb/mmBtu, interstate 70% reduction for large
trading. sources, RACT for medium
sources\2\.
0.15t........................................ 0.15 lb/mmBtu, interstate 70% reduction for large
trading. sources, RACT for medium
sources.
0.12......................................... 0.12 lb/mmBtu, interstate 70% reduction for large
trading. sources, RACT for medium
sources.
0.15nt....................................... 0.15 lb/mmBtu, intrastate 70% reduction for large
trading. sources, RACT for medium
sources.

Downwind Scenarios for Analysis of ``Transport'':
(1) 0.15nt EGU and non-EGU controls in the Northeast \3\; 2007 Base
Case emissions elsewhere.
(2) 0.15nt EGU and non-EGU controls in Georgia; 2007 Base Case
emissions elsewhere.
(3) 0.15nt EGU and non-EGU controls in Illinois, Indiana, and
Wisconsin; 2007 Base Case emissions elsewhere.
\1\ See Table IV-2 for a listing of Base Case control measures.
\2\ Reductions are from 2007 ``uncontrolled'' emissions. Non-EGU sources
>250mmBtu/hr are considered as ``large''; sources <250mmBtu/hr, but
>1tpd are considered as ``medium''. The non-EGU point source controls
assumed for purposes of this modeling do not match the levels assumed
for the purpose of calculating the final budgets.
\3\ Northeast includes Connecticut, Delaware, District of Columbia,
Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Rhode
Island.

[[Page 57442]]

The EPA also modeled a 0.15 intrastate trading scenario,
``0.15nt'', which was constructed with EGU emissions that meet each
State's budget without interstate trading. In developing the EGU
emissions for this scenario, intrastate trading among sources in a
State was allowed to occur. The benefits of the 0.15nt scenario
compared to those from the 0.15t scenario were examined to determine
whether an interstate trading program would affect the overall benefits
of the proposal.
The last three scenarios in Table IV-1 were designed to evaluate
the downwind benefits resulting from reductions in transport due to the
budgets in upwind States. Each of these scenarios constitutes a
separate modeling run that applies the 0.15nt scenario in a different
downwind area. For example, in the ``nt15NE'' scenario, the 0.15nt
emissions budgets were applied only in those Northeast States subject
to the SIP Call. The predictions from each of these three modeling runs
for specific downwind areas were compared to the Base Case to estimate
the impacts of the budgets applied only within the downwind area. The
predictions from these three runs were then compared to the 0.15nt
scenario across all 23 jurisdictions to estimate the additional
benefits in each downwind area due to reductions in transport resulting
from the budgets applied in both upwind and downwind States.
2. Emissions for Model Runs
As indicated in Table IV-1, Base Case emissions for area sources
(including nonroad), highway vehicles, and non-EGU sources represent a
combination of OTAG emissions data for various control levels. This
includes CAA controls on non-EGU point sources, OTAG ``level 1''
controls on area sources, and ``level 0'' controls on highway vehicles.
The control measures included in the Base Case for each source category
are listed in Table IV-2. These modeling runs were performed before
changes were made to the inventory in response to comments. For the 23
jurisdictions as a whole, the Base Case NO_X emissions that
were modeled are 2 percent higher than the final Base Case emissions
that reflect changes made in response to comments.

Table IV-2.--2007 SIP Call Base Case Controls
------------------------------------------------------------------------
EGUs:
Title IV Controls [ phase 1 and 2 ].
--250 Ton PSD and NSPS.
--RACT & NSR in non-waived NAAs.
Non-EGU Point:
--NO_X RACT on major sources in non-waived NAAs.
--250 Ton PSD and NSPS.
--NSR in non-waived NAAs.
--CTG and Non-CTG VOC RACT at major sources in NAAs and OTR.
--New Source LAER.
Stationary Area:
--Two Phases of VOC Consumer and Commercial Products and One Phase
of Architectural Coatings controls.
--VOC Stage 1 and 2 Petroleum Distribution Controls in NAAs.
--VOC Autobody, Degreasing and Dry Cleaning controls in NAAs.
Nonroad Mobile:
Fed Phase II Small Eng. Stds.
--Fed Marine Eng. Stds.
--Fed Nonroad Heavy-Duty (£=50 hp) Engine Stds--Phase 1.
--Fed RFG II (statutory and opt-in areas).
--9.0 RVP maximum elsewhere in OTAG domain.
--Fed Locomotive Stds (not including rebuilds).
--Fed Nonroad Diesel Engine Stds--Phases 2 and 3.
Highway Vehicles:
--National LEV.
--Fed RFG II (statutory and opt-in areas).
--9.0 RVP maximum elsewhere in OTAG domain.
--High Enhanced I/M (serious and above NAAs).
--Low Enhanced I/M for rest of OTR.
--Basic I/M (mandated NAAs).
--Clean Fuel Fleets (mandated NAAs).
--On-board vapor recovery.
--HDV 2 gm std.
Rate of Progress Requirements:
--Effectively, ROP through 1999.
------------------------------------------------------------------------

Note that area and mobile source emissions were held constant at
Base Case levels in all scenarios. The Base Case emissions for EGUs
were obtained from simulations of IPM which projected 1996 electric
generation to 2007 based on economic assumptions, unit specific
capacity, and the requirements in Title I and Title IV of the CAA. The
Base Case emissions that were modeled for the EGU sector are 4 percent
higher than the final Base Case emissions for this sector. The EGU
emissions estimates for each of the control scenarios in Table IV-1
were also derived using the IPM. Table IV-3 summarizes the emissions
reductions provided by the control scenarios compared to the Base Case.
The development of emissions data for air quality modeling is further
described in the Air Quality Modeling TSD.

[[Page 57443]]

Table IV-3.--Summary of NO_X Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Region \1\ 0.25 0.20 0.15t 0.12 0.15nt
----------------------------------------------------------------------------------------------------------------
Percent Reduction in Point Source NO_X Emissions From 2007 SIP Call Base Case
----------------------------------------------------------------------------------------------------------------
Northeast....................... 29 39 49 52 46
Midwest......................... 40 51 59 65 58
Southeast....................... 35 49 54 61 56
SIP Call \2\.................... 37 48 57 62 57
----------------------------------------------------------------------------------------------------------------
Percent Reduction in Total NO_X Emissions From 2007 SIP Call Base Case
----------------------------------------------------------------------------------------------------------------
Northeast....................... 13 18 22 24 21
Midwest......................... 22 28 33 36 32
Southeast....................... 19 26 29 32 30
SIP Call \2\.................... 20 26 30 33 30
----------------------------------------------------------------------------------------------------------------
\1\ The Northeast includes Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Jersey, New
York, Pennsylvania, and Rhode Island; the Midwest includes Illinois, Indiana, Kentucky, Michigan, Missouri
Ohio, West Virginia, and Wisconsin; the Southeast includes Alabama, Georgia, North Carolina South Carolina,
Tennessee and Virginia.
\2\ ``SIP Call'' includes the total percent reduction over all 23 jurisdictions subject to budgets as part of
this notice.

3. Modeling Results
The EPA applied UAM-V for each of the four OTAG episodes to
simulate ozone concentrations for the Base Case and each scenario. The
results for the uniform regionwide scenarios are presented first. This
is followed by the results comparing interstate and intrastate trading.
The results for the assessment of overall downwind benefits of the
budgets applied in upwind States is presented last.
The analysis of model predictions focused 1-hour daily maximum
values and 8-hour daily maximum values predicted for all 4 episodes.
The rationale for analyzing the model predictions in this way is
discussed in Section II.C. Each of the control scenarios was evaluated
using the four ``metrics'' listed in Table IV-4. Note that the model
predictions used in calculating the metrics were restricted to those 1-
hour values >=125 ppb and 8-hour values >=85. Model predictions less
than these concentrations were not included in the analysis.

Table IV-4.--Air Quality Metrics
------------------------------------------------------------------------
Metric 1: Exceedances........ The number of values above the
concentration level of NAAQS.\1\
Metric 2: Ozone Reduced-ppb.. The magnitude and frequency of the
``ppb'' reductions in ozone.
Metric 3: Total ppb Reduced.. The total ``ppb'' reduced by a given
scenario, not including that portion of
the reduction that occurs below the
level of the NAAQS.
Metric 4: Population-Weighted The same as Metric 3, except that the
Total ppb Reduced. ozone reductions are weighted by the
population in the grid cell in which the
reductions occur.
------------------------------------------------------------------------
\1\ 1-hour values >=125 ppb; 8-hour values >=85 ppb.

A full description of these metrics and the procedures for
selecting ``nonattainment'' receptors for calculating the metrics can
be found in the Air Quality Modeling TSD. In brief, ``nonattainment''
receptors for the 1-hour analysis include those grid cells that (a) are
associated with counties designated as nonattainment for the 1-hour
NAAQS and (b) have 1-hour Base Case model predictions >=125 ppb. These
grid cells are referred to as ``designated plus modeled'' nonattainment
receptors. Using these receptors, the metrics were calculated for each
1-hour nonattainment area as well as for each State. To calculate the
metrics by State, the ``nonattainment'' receptors in that State were
pooled together.
For the 8-hour analysis, ``nonattainment'' receptors include those
grid cells that (a) are associated with counties currently violating
the 8-hour NAAQS and (b) have 8-hour Base Case model predictions >=85
ppb. These grid cells are referred to as ``violating plus modeled''
nonattainment receptors. The metrics were calculated on a State-by-
State basis for the 8-hour analyses.
In general, the four metrics lead to similar overall conclusions.
The results for the full set of receptor areas (i.e., ``designated plus
modeled'' for the 1-hour NAAQS and ``violating plus modeled'' for the
8-hour NAAQS) are provided in the Air Quality Modeling TSD for all four
metrics. In this preamble, Metrics 1 and 3 are presented to illustrate
the results.
a. Impacts of Alternative Controls. The impacts on ozone
concentrations of the 0.15t scenario and each of the alternative
scenarios are provided by region (i.e., Midwest, Southeast, and
Northeast) in Tables IV-5 and IV-6 for Metrics 1 and 3, respectively.
The complete set of data for individual States and 1-hour nonattainment
areas is provided in the Air Quality Modeling TSD. Table IV-5 shows the
percent reduction in the number of exceedances across all four episodes
between each control scenario and the Base Case. Table IV-6 shows the
percent reduction in total ozone above the NAAQS provided by each
scenario, compared to the total ozone above the NAAQS in the Base Case.

[[Page 57444]]

Table IV-5.--Results for Metric 1: Number of Exceedances
----------------------------------------------------------------------------------------------------------------
0.25 0.20 0.15t 0.12 0.15nt
----------------------------------------------------------------------------------------------------------------
Percent Reduction in the Number of Exceedances 1-Hour Daily Maximum >=125 ppb
----------------------------------------------------------------------------------------------------------------
Midwest......................... 25 32 38 43 38
Southeast....................... 23 33 34 40 36
Northeast....................... 24 31 36 39 36
SIP Call Total.................. 24 31 36 40 37
----------------------------------------------------------------------------------------------------------------
Percent Reduction in the Number of Exceedances 8-Hour Daily Maximum >=85 ppb
----------------------------------------------------------------------------------------------------------------
Midwest......................... 35 44 50 54 49
Southeast....................... 30 40 46 51 48
Northeast....................... 26 34 41 44 41
SIP Call Total.................. 30 39 45 49 45
----------------------------------------------------------------------------------------------------------------

Table IV-6.--Results for Metric 3: Total ``ppb'' Reduced
----------------------------------------------------------------------------------------------------------------
0.25 0.20 0.15t 0.12 0.15nt
----------------------------------------------------------------------------------------------------------------
Total ``ppb'' Reduced Compared to the Total ``ppb'' Above NAAQS in Base Case \1\ 1-Hour Daily Maximum >=125 ppb
----------------------------------------------------------------------------------------------------------------
Midwest......................... 31 39 45 49 44
Southeast....................... 27 37 39 44 41
Northeast....................... 25 32 37 40 37
SIP Call Total.................. 27 35 40 43 40
----------------------------------------------------------------------------------------------------------------
Total ``ppb'' Reduced Compared to the Total ``ppb'' Above NAAQS in Base Case 8-Hour Daily Maximum >=85 ppb
----------------------------------------------------------------------------------------------------------------
Midwest......................... 35 42 48 52 47
Southeast....................... 33 44 49 53 50
Northeast....................... 28 37 43 46 43
SIP Call Total.................. 31 40 46 50 46
----------------------------------------------------------------------------------------------------------------
\1\ The values in this table were calculated by dividing the Total ``ppb'' Reduced in the control scenario by
the Total ``ppb'' above the NAAQS in the Base Case. These values represent the percent of total ozone above
the NAAQS in te Case that is reduced by the control scenario.

The results indicate that the 0.15t scenario provides substantial
reductions in both 1-hour and 8-hour ozone concentrations in all three
regions.
In the Midwest the 0.15t scenario provides a 38 percent reduction
in 1-hour exceedances and a 45 percent reduction in ``total ozone''
>=125 ppb. The regionwide Midwest reductions in 8-hour exceedances and
``total ozone'' >=85 ppb are 45 percent and 50 percent, respectively.
Considering individual 1-hour nonattainment areas in this region, the
reduction in exceedances due to the 0.15t controls are 36 percent over
Lake Michigan,⁶¹ 73 percent in Southwest Michigan, and 54
percent in Louisville. The corresponding reductions in ``total ozone''
>=125 ppb are 44 percent over Lake Michigan, 81 percent in southwest
Michigan, and 64 percent in Louisville. The results for other areas are
contained in the Air Quality Modeling TSD.
---------------------------------------------------------------------------

\61\ The rationale for analyzing the impacts over Lake Michigan
is discussed in Section II.C, Weight of Evidence Determination of
Covered States.
---------------------------------------------------------------------------

In the Southeast, 1-hour exceedances are reduced by 39 percent and
the ``total ozone'' >=125 ppb by 34 percent. Considering individual
nonattainment areas in the Southeast, the 0.15t scenario provides a 36
percent reduction in 1-hour exceedances in Atlanta and a 39 percent
reduction in exceedances in Birmingham. The reduction in ``total
ozone'' >=125 ppb is 41 percent in Atlanta and 54 percent in
Birmingham. The overall regionwide ozone benefits across the Southeast
are also large for the 8-hour NAAQS. For example, the number of 8-hour
exceedances in this region is reduced by 46 percent with the 0.15t
scenario.
In the Northeast, 0.15t provides a 37 percent reduction in 1-hour
exceedances and a 34 percent reduction in ``total ozone'' >=125 pp. For
individual nonattainment areas in the Northeast, the reductions in both
Metrics 1 and 3 range from approximately 25 percent in Washington, DC
up to 100 percent in Pittsburgh. For the serious and severe 1-hour
nonattainment areas along the Northeast Corridor from Washington, DC to
Boston, the 1-hour reductions vary from city to city, but are generally
in the range of 25 percent to 55 percent. The regionwide reductions in
8-hour exceedances and ``total ozone'' >=85 ppb in the Northeast are
above 40 percent.
In general, results from the scenarios evaluated demonstrate that
the larger the reduction in NO_X emissions, the greater the
overall ozone benefit. As indicated in Table IV-5 and IV-6, the 0.25
and 0.20 scenarios generally do not provide the same level of reduction
as the 0.15t scenario in any of the three regions, whereas the 0.12
scenario provides additional ozone benefits beyond 0.15t in all three
regions. Also, the results indicate that even with the most stringent
control option considered, nonattainment problems requiring additional
local controls may continue in some areas currently violating the
NAAQS.
The impact on ozone reductions of a trading program versus meeting
the budgets in each State can be seen by comparing the results for the
0.15t and 0.15nt scenarios. The data in Tables IV-5 and IV-6 indicate
that there is no overall loss of ozone benefits for either 1-hour or 8-
hour concentrations across the 23 jurisdictions due to trading. On a
regional basis, the benefits of interstate and intrastate trading at
the 0.15 control level are essentially the same in the Northeast and
Midwest and slightly less with interstate trading in the Southeast.

[[Page 57445]]

As indicated in the summary of comments, several commenters stated
that there would be local disbenefits due to the EPA proposal that
would outweigh any benefits. The modeling runs discussed here shed
light on the issue. Of the four metrics examined by EPA, Metrics 3 and
4 (i.e., ``Total ppb Reduced'' and ``Population-Weighted Total ppb
Reduced'') are most appropriate for identifying any net disbenefits
because the ozone decreases and any increases (disbenefits) are
considered in calculating each of these metrics. The metrics will have
negative values for situations in which the total disbenefits are
greater than the total benefits. The EPA examined the 1-hour estimates
for these metrics for each 1-hour nonattainment area and the 8-hour
estimates by State to identify any areas in which the modeling
indicated a net disbenefit. The results indicate that the only net
disbenefit predicted in any of the scenarios was in Cincinnati for the
1-hour NAAQS. However, these disbenefits occurred only in the 0.25 and
0.20 scenarios. In the 0.15t scenario, there is a net 32 percent
benefit in Cincinnati with Metric 3 and a net benefit of 23 percent
with Metric 4. There were no net Statewide 8-hour disbenefits in any of
the scenarios examined by EPA.
b. Impacts of Upwind Controls on Downwind Nonattainment. The
impacts of the budgets applied in upwind States on downwind ozone in
the (a) the Northeast, (b) Georgia, and (c) Illinois-Indiana-Wisconsin,
were evaluated by comparing the 0.15nt scenario to the three downwind
transport assessment scenarios listed in Table IV-1. In each of these
three scenarios, EPA modeled the 0.15nt option in one of the downwind
areas with the Base Case emissions applied in the rest of the OTAG
region.⁶² The results of each downwind control run were
compared to the Base Case in order to assess the benefits of the
controls applied within those areas (i.e., the downwind areas).
Similarly, the predictions for the 0.15nt regionwide scenario were
compared to the Base Case to estimate the benefits in each area of the
downwind plus upwind controls. The benefits of the upwind controls were
determined by calculating the difference between the benefits of the
downwind controls compared to the benefits of the downwind plus upwind
controls. The results are provided in Table IV-7. The following is an
example of how the benefits of upwind controls were calculated for
Metric 1 (i.e., number of exceedances). In the Northeast, there were
1052 grid-day exceedances of the 1-hour NAAQS predicted in the Base
Case scenario. In the downwind control scenario (i.e., 0.15nt applied
in the Northeast only), the number of exceedances declined to 827 grid-
days which represents a 21 percent reduction in exceedances from the
Base Case due to controls in the Northeast. In the downwind plus upwind
scenario, the number of 1-hour exceedances declined even further to 670
grid-days which is a 36 percent reduction from the Base Case.
Therefore, the upwind controls provide a 15 percent reduction in 1-hour
exceedances in the Northeast (i.e., 36 percent versus 21 percent).
---------------------------------------------------------------------------

\62\ As described in the Air Quality Modeling TSD, emissions
from the intrastate trading scenario rather than the interstate
trading scenario were used for the analysis of upwind controls in
order to avoid any potentially confounding effects of small changes
in the downwind emissions between the downwind control scenario and
the downwind plus upwind control scenario due to interstate trading.
---------------------------------------------------------------------------

For Metric 3 (i.e., Total ``ppb'' Reduced), the impact of upwind
controls on downwind ozone was determined using two approaches. The
first approach is similar to the procedures followed described above
for exceedances. For example, in the Northeast the total ppb >=125 ppb
(across all grids and days) in the Base Case was 14,724 ppb. In the
downwind control scenario the total ppb reduced by these controls was
3289 ppb which represents a 22 percent reduction (i.e., 3289 ppb
divided by 14,724 ppb) in total ppb >=125 ppb. In the downwind plus
upwind control scenario, the total ppb reduced was 5500 ppb which
represents a 37 percent reduction in total ppb >=125 ppb in the Base
Case. Therefore, the upwind controls provide a 15 percent reduction in
total ppb >=125 ppb (i.e., 37 percent versus 22 percent). The results
for Metric 3 calculated using this first approach are presented in
Table IV-7.
A second approach to analyze the benefits of upwind controls using
Metric 3 is to determine the fraction or percentage of the total
reduction from downwind plus upwind controls that comes from just the
upwind controls. This is determined by first subtracting the ppb
reduced by downwind controls from the ppb reduced by downwind plus
upwind controls. This difference provides an estimate of the portion of
the reduction due to upwind controls. Then, the portion of the
reduction due to upwind controls is divided by the reduction from
downwind plus upwind controls to estimate the percent of reduction due
to the upwind controls only. For example, in the Northeast the 1-hour
total ppb reduced by the downwind plus upwind controls is 5500 ppb and
the total ppb reduced by the downwind controls is 3289 ppb. The
difference (2211 ppb) is the estimated amount of reduction due to
upwind controls. Thus, in this example, the upwind controls provide 40
percent (i.e., 2211 ppb divided by 5500 ppb) of the total ppb reduction
in the downwind plus upwind regionwide scenario. The results for Metric
3 using this second approach for estimating the impacts of upwind
controls are provided in Table IV-8.

--------------------------------------------------------------------------------------------------------------------------------------------------------
1-hour daily max 8-hour daily max
-----------------------------------------------------------------------------------------------
DW \1\ DW + UW \1\ UW \1\ DW DW + UW UW
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Reduction in Exceedances
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast............................................... 21 36 15 18 40 22
Lake MI................................................. 29 36 7 11 17 6
IL/IN/WI................................................ 35 50 15 27 57 30
Atlanta................................................. 30 39 9 \2\ NA NA NA
Georgia \3\............................................. 30 39 9 15 27 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Reduction in Total ``ppb'' Above the NAAQS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast............................................... 22 37 15 23 43 20
Lake MI................................................. 39 44 5 20 28 8
IL/IN/WI................................................ 17 33 16 32 62 30
Atlanta................................................. 37 43 6 NA NA NA

[[Page 57446]]

Georgia................................................. 37 43 6 25 35 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ ``DW'' denotes the reductions due to the downwind controls; ``DW + UW'' denotes the reductions due to controls applied regionwide in upwind plus
downwind areas; and ``UW'' denotes the incremental additional reduction in exceedances.
\2\ NA: The metrics for the 8-hour NAAQS were not calculated for individual 1-hour nonattainment areas.
\3\ The 1-hour results for Georgia are the same as for Atlanta because Atlanta is the only 1-hour nonattainment area in that State.

Table IV-8.--Percent of the Total ppb Above the NAAQS That Is Reduced
Due to Upwind Controls
------------------------------------------------------------------------
1-hour daily 8-hour daily
max (percent) max (percent)
------------------------------------------------------------------------
Northeast............................... 40 48
Lake MI................................. 12 27
IL/IN/WI................................ 49 48
Atlanta................................. 14 NA
Georgia................................. 14 28
------------------------------------------------------------------------

In the following discussion of the impacts of upwind controls on
ozone in the three downwind areas, the results for Metric 3 focus on
the second approach for calculating upwind impacts using this metric
since the results based on the first approach are similar to those for
Metric 1, as indicated in Table IV-7.
In the Northeast, the upwind controls provide a 15 percent
reduction in 1-hour exceedances and a 22 percent reduction in 8-hour
exceedances. The results in Table IV-8 indicate that upwind controls
provide 40 percent or more of the total ppb reduction from the downwind
plus upwind control scenario for both the 1-hour and 8-hour NAAQS.
Considering the results for several 1-hour nonattainment areas in the
Northeast, the upwind controls reduce the number of 1-hour exceedances
by 21 percent in Baltimore, 12 percent in Philadelphia, 12 percent in
New York City, 19 percent in Greater Connecticut, and 3 percent in
Boston. The percent of the total ppb reduction from the downwind plus
upwind controls that is due to the upwind controls alone is 48 percent
in Baltimore, 29 percent in Philadelphia, 38 percent in New York City,
47 percent in Connecticut, and 25 percent in Boston. The results for
all of the Northeast 1-hour nonattainment areas are provided in the Air
Quality Modeling TSD.
The impacts of upwind controls on nonattainment in Georgia were
examined using the 0.15nt scenario in Georgia versus the Base Case
scenario and the scenario with 0.15nt applied regionwide. The results,
as shown in Table IV-7, indicate that the upwind controls are predicted
to reduce the number of 1-hour exceedances in Atlanta by 9 percent.
Also, in Atlanta, 14 percent of the 1-hour total ppb above the NAAQS
reduced by the downwind plus upwind regionwide scenario is due to the
controls applied in upwind States. For the 8-hour NAAQS, the upwind
controls provide a 12 percent reduction in 8-hour exceedances within
the State of Georgia. The upwind controls provide 28 percent of the
total ppb reduction in the downwind plus upwind regionwide control scenario.
To assess the benefits in Illinois-Indiana-Wisconsin due to upwind
controls, EPA examined the data for the Lake Michigan receptor area and
for the three States, combined. The discussion of results focuses on
the Lake Michigan receptor area. The data for this area and the three
States are provided in Table IV-7. For the Lake Michigan receptor area,
there is a 7 percent reduction in 1-hour exceedances and a 6 percent
reduction in 8-hour exceedances due to upwind controls. The upwind
controls provide 12 percent of the total 1-hour reduction and 27
percent of the total 8-hour reduction that results from the downwind
plus upwind regionwide controls. In Illinois, Indiana, and Wisconsin,
the reduction in 1-hour and 8-hour exceedances due to upwind controls
are larger than over Lake Michigan (i.e., 15 percent and 30 percent for
1-hour and 8-hour exceedances, respectively). The upwind controls
provide nearly 50 percent of the total ppb reductions associated with
the downwind plus upwind regionwide control scenario for both the 1-
hour and 8-hour NAAQS.
Based on the results discussed above, EPA believes that the
controls in today's rulemaking applied in upwind areas will reduce the
number of 1-hour and 8-hour exceedances in downwind nonattainment
areas. The analysis indicates that in downwind areas, a substantial
portion of the 1-hour and 8-hour ozone reductions provided by the
regionwide application of these controls are due to those controls in
upwind areas.
c. Summary of Findings. The EPA has performed an air quality
assessment to estimate the ozone benefits of the proposal and several
alternative uniform regionwide control levels. In addition, EPA
examined the overall benefits in several major downwind nonattainment
areas of the application of the proposal in upwind States. The results
of EPA's assessment corroborate and extend the findings presented in
the SNPR. The major findings are as follows: (1) The NO_X
emissions reductions associated with the proposed Statewide budgets are
predicted to produce large reductions in (a) 1-hour concentrations
>=125 ppb in areas which are currently nonattainment for the 1-hour
NAAQS and which would likely continue to have a 1-hour nonattainment
problem in the future without the SIP call budget reductions, and (b)
8-hour concentrations >=85 ppb in areas which currently violate the 8-
hour NAAQS and which would likely continue to have an 8-hour ozone
problem in the future without the SIP call budget reductions.
(2) The more NO_X emissions are reduced, the greater the
benefits in reducing ozone concentrations. There does not appear to be
any ``leveling off'' of benefits within the range of NO_X
reductions associated with EPA's proposal. That is, NO_X
reductions at control levels less than EPA's proposal provide fewer air
quality benefits than the proposal and NO_X reduction greater
than the proposal provide more air quality benefits.

[[Page 57447]]

(3) Any disbenefits due to the NO_X reductions associated
with the budgets are expected to be very limited compared to the extent
of the benefits expected from these budgets.
(4) There are likely to be benefits in major nonattainment areas
due to the downwind application of controls in the proposed budgets.
Reductions in ozone transport associated with the collective
application of the budgets in upwind States are expected to provide
substantial ozone benefits in downwind areas, beyond what is provided
by the budgets applied in the downwind areas alone. Together, the
downwind reductions and transport reductions from upwind controls will
provide significant progress toward attainment in major nonattainment
areas within the OTAG region. However, even with the most stringent
control option considered, nonattainment problems requiring additional
local control measures may continue in some areas currently violating
the NAAQS.

V. NO_X Control Implementation and Budget Achievement Dates

A. NO_X Control Implementation Date

In the NPR, the EPA proposed to mandate NO_X emissions
decreases in each affected State leading to a budget based on
reductions to be achieved from both Federal and State measures. The EPA
further proposed that the required SIP revisions for achieving the
portion of the NO_X reduction from State measures be
implemented by no later than September 2002. The EPA also requested
comment on a range of compliance dates between September 2002 and
September 2004.
The EPA stated that this range of compliance dates is consistent
with the requirement for severe 1-hour nonattainment areas to attain
the standard no later than 2005 (for severe-15 areas) or 2007 (for
severe-17 areas). With respect to the 8-hour ozone standard, EPA stated
that the CAA provides for attainment within 5 years of designation as
nonattainment, which must occur no later than July 2000, with a
possible extension of up to 10 years following designation as
nonattainment. The EPA stated that the range of implementation dates--
from September 2002 to September 2004--is consistent with the
attainment time frames for the 8-hour standard (62 FR 60328-29). For
the reasons described in Section III, below, the applicable attainment
date for all affected downwind areas is ``as expeditiously as
practicable,'' but no later than certain prescribed dates. In many
cases, the date for achieving the upwind reductions will make the
difference as to when downwind States will attain. Thus, it is
appropriate for EPA to require the upwind reductions to be achieved as
expeditiously as practicable. Subsection 1., below, analyzes the
earliest date feasible for achieving the upwind reductions.
1. Practicability
After reviewing the comments and analyzing the feasibility of
implementing the NO_X controls assumed for purposes of
developing the State emissions budgets, as well as other measures which
States may choose to rely on to meet the rule, the EPA is today
determining that the required implementation date must be by no later
than May 1, 2003. The Agency received many comments on the feasibility
of installing appropriate control technology by 2003, and the
succeeding paragraphs address many of the significant comments
submitted on this topic.
Some commenters asserted that a compliance deadline of September
2002 is infeasible for completing the installation of the assumed
NO_X controls. Some of these commenters argued that there are
not enough trained workers, engineering services or materials and
equipment to install NO_X controls by the September 2002
deadline. Other commenters expressed concern that utilities will not
have sufficient time to install NO_X controls without causing
electrical power outages; these commenters stated that such power
outages would have adverse impacts on the reliability of the
electricity supply. Commenters also expressed concern that retrofitting
NO_X controls would require increasing the operation of less
efficient units, which would increase compliance costs.
In response to these comments, the Agency has conducted a detailed
examination of the feasibility of installing the NO_X
controls that EPA assumed in constructing the emissions budgets for the
affected States (hereinafter, the ``assumed control strategy''). See
the technical support document ``Feasibility of Installing
NO_X Control Technologies By May 2003,'' EPA, Office of
Atmospheric Programs, September 1998. The Agency's findings are
summarized below. Based on these findings, the EPA believes that the
compliance date of May 1, 2003 for NO_X controls to be
installed to comply with the NO_X SIP call is a feasible and
reasonable deadline. The Agency is also providing some compliance
flexibility to States for the 2003 and 2004 ozone seasons by
establishing State compliance supplement pools as described above in
Section III.F.6.
The EPA's projections for the assumed control strategy include
post-combustion controls (Selective Catalytic Reduction [SCR] and
Selective Noncatalytic Reduction [SNCR]) and combustion controls (e.g.,
low NO_X burners, overfire air, etc.)
a. Combustion Controls. In general, the implementation of
combustion controls should be readily accomplished by May 1, 2003 for
the following reasons. First, there is considerable experience with
implementing combustion controls. Combustion control retrofits on over
230 utility boilers, accounting for over 75 GWe of capacity under the
title IV NO_X program, took place within 4 years (i.e., from
1992 through 1995). Moreover, the combustion retrofits under Phase I of
the Ozone Transport Commission's Memorandum of Understanding were
completed in the same time frame. As a result of this experience, the
sources and permitting agencies are familiar with the installation of
combustion controls. This familiarity should result in relatively short
time frames for completing technology installations and obtaining
relevant permits.
Second, combustion controls are constructed of commonly available
materials such as steel, piping, etc., and do not require reagent
during operation. Therefore, the EPA does not expect delays due to
material shortages to occur at sites implementing these controls.
Third, there are many vendors of combustion control technology.
These vendors should have ample capacity to meet the NO_X SIP
call needs because they were able to satisfy significant installation
needs during the period 1992 through 1995, as mentioned above. Since
then these vendors have had relatively few installation needs to fill.
Therefore, it is reasonable to expect that implementation of post-
combustion controls, not combustion controls, would determine the
schedule for implementing all of the projected NO_X controls.
b. Post-Combustion Controls. Tables V-1 and V-2 present the Agency
projections of how many electricity generating units and industrial
sources, respectively, would need to be retrofitted with post-
combustion NO_X controls under the assumed control strategy.

[[Page 57448]]

Table. V-1.--Electricity Generating Units
------------------------------------------------------------------------
Projected No.
NO_X Control of
installations
------------------------------------------------------------------------
Coal SCR................................................. 142
Coal SNCR................................................ 482
Oil/gas SNCR............................................. 15
--------------
Total................................................ 639
------------------------------------------------------------------------

Table. V-2.--Non-Electricity Generating Units
------------------------------------------------------------------------
Projected No.
NO_X Control of
installations
------------------------------------------------------------------------
SCR on coal-fired sources................................ 55
SCR on oil/gas-fired sources............................. 225
SCR on other sources..................................... 1
--------------
Total................................................ 281
==============
SNCR on coal-fired sources............................... 195
SNCR on oil/gas-fired sources............................ 0
SNCR on other sources.................................... 40
--------------
Total................................................ 235
------------------------------------------------------------------------

There are three basic considerations related to implementation of
post-combustion controls (SCR and SNCR) by the compliance date: (1)
Availability of materials and labor, (2) the time needed to implement
controls at plants with single or multiple retrofit requirements, and
(3) the potential for interruptions in power supply resulting from
outages needed to complete installations.
The EPA examined each of these considerations. An adequate supply
of off-the-shelf hardware (such as steel, piping, nozzles, pumps, soot
blowers, fans, and related equipment), reagent (ammonia and urea), and
labor would be available to complete implementation of post-combustion
controls projected under the assumed control strategy.
However, the catalyst used in the SCR process is not an off-the-
shelf item and, therefore, requires additional consideration. Based on
the projections shown in the tables above, the EPA estimates that about
54,000 to 90,000 m\3\ of catalyst may be needed in SCR installations.
The EPA has found that currently the catalyst suppliers can supply
about 43,000 to 67,000 m\3\ of catalyst per year. However, of this
supply about 5,000 to 8,000 m\3\ of catalyst per year is needed to meet
the requirements of the existing worldwide SCR installations. Based on
these estimates, the EPA conservatively concludes that adequate
catalyst supply should be available if SCR installations were to occur
over a period of two years or more.
In addition, in comments to EPA's proposed NO_X reduction
program, the Institute of Clean Air Companies (ICAC) stated that more
than sufficient vendor capacity existed to supply retrofit SCR catalyst
to the sources that would be controlled by SCR under the assumed
control strategy.
Implementation of a NO_X control technology on a
combustion unit involves conducting facility engineering review,
developing control technology specifications, awarding a procurement
contract, obtaining a construction permit, completing control
technology design, installation, testing, and obtaining an operating
permit. The EPA evaluated the amount of time potentially needed to
complete these activities for a single unit retrofit and found that
about 21 months would be needed to implement SCR while about 19 months
would be needed to implement SNCR.
The EPA examined several particularly complicated implementation
efforts to assure an accurate and realistic estimate of the time needed
to install SCR and SNCR. The EPA examined the data and determined that
the assumed control strategy might lead one plant to choose to install
a maximum of 6 SCRs. In another instance, a different plant might
choose to install a maximum of 10 SNCRs under the assumed control
strategy. The estimated total time needed to complete these
installations is 34 months for 6 SCR systems and 24 months for 10 SNCR
systems.
Finally, the EPA examined the impact(s) that outages required for
connecting NO_X post-combustion controls to EGUs could
potentially have on the supply of electricity and on the cost of this
rule. The EPA has found that, generally, connections between a
NO_X control system and a boiler can be completed in 5 weeks
or less. This connection period has been accounted for in both the
single and multi-unit implementation times presented in the previous
paragraph. On an EGU, the connection would have to be completed during
an outage period in which the unit is not operational. The EPA's
research reveals that currently, on average, about 5 weeks of planned
outage hours are taken every year at an electricity generating unit.
Therefore, the EPA expects that connection between a NO_X
control system and such a unit would be completed during one of these
planned outages.
Results of EPA's analyses reflect that, even if all of the post-
combustion controls projected in Table V-1 for the EGUs were to be
connected to these units in one single year, no disruption in the
supply of electricity would occur. If each of these plants takes the
five week outage in a single block of time, no cost increase is
expected to occur. However, if a plant divides the five week outage
into two or more periods, a cost increase of less than one-half of one
percent may be expected. See the technical support document
``Feasibility of Installing NO_X Control technologies By May
2003,'' EPA, Office of Atmospheric Programs, September 1998.
Based on the estimated timelines for implementing NO_X
controls at a plant and availability of materials and labor, the EPA
estimates that the NO_X controls in the assumed control
strategy (which is one available method for achieving the required
NO_X reductions in each covered State) could be readily
implemented by September 2002, without causing an adverse impact on the
electricity supply or on the cost of compliance. The EPA bases this
conclusion on its analysis that the most complex and time-consuming
implementation effort--one involving 6 SCR systems--would take 34
months, and that all of the controls could be installed within this
period without causing any disruptions in the supply of electricity.
Further, the EPA notes that the September 27, 1994 OTC
NO_X Memorandum of Understanding (MOU) provides that large
utility and nonutility NO_X sources should comply with the
Phase III controls by the year 2003. The levels of control in the MOU
are 75 percent or 0.15 lb/10⁶ btu in the inner and outer
zones of the Northeast OTR, levels comparable to the controls assumed
in setting the budget for today's rulemaking. Moreover, several States
in the Northeast OTR have submitted SIP revisions implementing this
level of emissions reductions from NO_X sources in those
States by May 1, 2003. This further supports the feasibility of the May
1, 2003 implementation date for these controls.
The EPA has determined that States would have sufficient time to
implement other NO_X control measures in lieu of the boiler
controls described above. For example, vehicle I/M programs have
historically required no more than two years to implement, including
the time needed to pass enabling State legislation and to construct the
necessary emission testing facilities. The time required to implement
measures to reduce VMT depends on the nature of the measure, but many
VMT reduction measures require no more than one or two years to
implement. State opt-ins to the RFG program have generally required less

[[Page 57449]]

than one year to implement. Even if the EPA were to determine that
supply considerations warranted a delay in implementing the opt-in
request, the delay cannot exceed two years.
States can also take advantage of the NO_X-reducing
benefits that energy efficiency and renewables projects provide, many
of which could be developed in less than three years and incorporated
into a SIP. Examples of efficiency/renewables projects that have been
accomplished within a 3-year time frame and have resulted in
significant NO_X reductions include reducing boiler fuel use
by utilizing waste heat, implementing short-term steam trap maintenance
and inspection programs, and undertaking building upgrades using EPA's
Energy Star Buildings approach.
2. Relationship to SIP Submittal Date
Under this rule, as explained in Section B. below, States are
required to submit revised SIPs by September 30, 1999. Commenters have
suggested that based on the requirements of this rulemaking, sources in
these States would need to begin early planning of compliance
strategies before the September 30, 1999 date. The EPA disagrees. The
EPA's technical analysis described above indicates that if these
sources begin planning and specification of controls by even as late as
April 2000, then they would be able to complete control technology
implementation by May 1, 2003.
3. Rationale
To assure adequate lead-time for implementation of controls, the
EPA has moved the compliance deadline from the proposed date of
September 2002 in the NPR to May 1, 2003. Since the ozone seasons in
areas in the eastern U.S. end in the fall and begin in the spring,
setting the implementation date for May 1, 2003 will provide sources 7-
8 additional months for implementing control requirements while not
undermining the ability of areas to attain. The additional
implementation time will occur during the cooler months of the year, a
time when ozone exceedances generally do not occur. Thus, with either
the September 2002 implementation date or the May 1, 2003
implementation date, the 2003 ozone season would be the first to
benefit from full implementation of the SIP call reductions.
Several commenters contend that EPA does not have the authority to
establish the compliance date. Since section 110(a)(2)(D)(i) is silent
as to the implementation schedule for measures to prevent significant
contribution, the EPA disagrees that the statute prohibits the EPA from
establishing an implementation date for control measures that will
achieve the reductions established by the SIP call. Thus, the EPA must
look to the other provisions in the CAA, the legislative history, and
the specific facts of today's rule to determine whether it is
reasonable for the Agency to set the implementation date for the
control measures. Furthermore, for the reasons provided in this
Section, the EPA believes it is necessary to use its general rulemaking
authority under section 301(a) to establish the latest date for
implementation through a rule in order to ensure that downwind areas
attain the standard as expeditiously as practicable and that areas
continue to make progress toward attaining the NAAQS. See NRDC v. EPA,
22 F.3d 1125, 1146-48 (D.C. Cir. 1994).
With respect to the facts of this particular situation, this SIP
call entails a complex analysis of the interstate transport of
NO_X and ozone and involves 23 jurisdictions. Although the
States made significant progress through the OTAG process, they were
unable to reach a final resolution on the emission reductions necessary
or the schedule to achieve reductions to address upwind emissions.
Thus, it would not be reasonable for EPA to leave open the issue of
implementation in light of the need for downwind areas to rely on these
reductions in order to demonstrate attainment by their attainment
dates. See also the discussion in Section II.A.
Furthermore, EPA believes that requiring implementation of the SIP-
required upwind controls, and thereby mandating those upwind
reductions, by no later than May 1, 2003, is consistent with the
purpose and structure of title I of the CAA. Under both section
172(a)(2), which establishes attainment dates for areas designated
nonattainment for the 8-hour standard, and section 181(a), which
establishes attainment dates for nonattainment areas for the 1-hour
standard, areas are required to attain ``as expeditiously as
practicable'' but no later than the statutorily-prescribed (for section
181(a)) or EPA-prescribed (for section 172(a)(2)) attainment dates. The
implementation date of May 1, 2003 fits with both the more general
requirement for areas to attain ``as expeditiously as practicable'' and
the latest attainment dates that apply for purposes of the 1-hour
standard and that EPA will establish for the 8-hour standard.
The overarching requirement for attainment is that areas attain
``as expeditiously as practicable.'' This requirement was established
in the CAA in the 1970 Amendments and has been carried through in both
the 1977 and 1990 Amendments. Thus, although Congress has provided
outside attainment dates under the 1970, 1977, and 1990 Amendments,
States have always been required to attain as expeditiously as
practicable. Congress has furthered this concept of ensuring that
emission reductions are achieved on an expeditious, yet practicable,
schedule through its inclusion of other provisions in the CAA that rely
on similar concepts. Most notably, under both subpart 1 and subpart 2
of part D of title I of the CAA, areas are required to make reasonable
further progress toward attainment and thus are not allowed to delay
implementation of all measures until the attainment year.\63\ While the
ROP requirements directly apply only to emission reductions that
designated nonattainment areas need to achieve to address local
violations of the standard, these provisions highlight congressional
intent that--at a minimum--reasonably available or practicable measures
should not be delayed if such measures are needed to attain the
standard by the applicable attainment date. Thus, it is consistent for
EPA to require upwind areas to adopt practicable control measures on a
schedule that will help to ensure timely attainment of the standard in
downwind areas.
---------------------------------------------------------------------------

\63\ CAA sections 171(1) and 172(c)(2) (requiring that
nonattainment area SIPs provide for reductions in emissions that may
reasonably be required by the Administrator for the purpose of
ensuring attainment of the applicable national ambient air quality
standard by the applicable date; 182(b)(1) and (c)(2)(B) (requiring,
respectively, 15 percent reductions between 1990 and 1996 and
additional 3 percent average reductions per year until the
attainment date, unless, among other things, the plan includes ``all
measures that can be feasibly implemented in the area, in light of
technological achievability'').
---------------------------------------------------------------------------

In addition, the May 1, 2003 implementation date is consistent with
the statutorily-prescribed ``outside'' 1-hour attainment dates for many
of the areas that will benefit from the SIP call reductions.
Currently, areas designated nonattainment for the 1-hour standard
have attainment dates ranging from 1996 to 2010. For those with
attainment dates in the years 1996-1999, EPA is analyzing whether such
areas should receive an attainment date extension due to transported
emissions or whether such areas should be reclassified, or ``bumped
up,'' under section 181(b)(2), to the next higher classification and
therefore be subject to additional control requirements and a later
attainment

[[Page 57450]]

date.\64\ To the extent that an attainment date extension is
appropriate, consistent with the general requirement of the CAA, it
should be no later than the date by which the necessary reductions can
practicably be achieved. Thus, it is appropriate for EPA to require
upwind reductions by May 1, 2003--a date that EPA has determined can be
practicably achieved--in order to allow these areas to attain as
expeditiously as practicable. Additionally, there are areas with
attainment dates of 2005 \65\ and 2007 \66\ that will benefit from the
reductions upwind States will require in response to the SIP call. The
May 1, 2003 compliance date is sensible in light of the requirement for
these areas to make reasonable further progress toward attainment under
section 182(c)(2)(B) and to attain as expeditiously as practicable but
no later than 2005 or 2007.
---------------------------------------------------------------------------

\64\ See Guidance on Extension of Attainment Dates for Downwind
Transport Areas, Memorandum from Richard Wilson, dated July 17, 1998.
\65\ Severe-15 areas, such as Baltimore and Philadelphia, as
well as any Serious areas that do not receive an attainment date
extension and are bumped up due to a failure to attain, will need to
attain no later than 2005.
\66\ Severe-17 areas, such as New York City, Philadelphia,
Chicago and Milwaukee, need to attain the standard no later than 2007.
---------------------------------------------------------------------------

The implementation date of May 1, 2003 is also consistent with the
attainment date scheme for the 8-hour ozone NAAQS. The EPA is required
to promulgate designations for areas under the 8-hour ozone NAAQS by
July 2000. Pub. L. No. 105-178 section 6103 and CAA section 107(d)(1).
In draft guidance EPA made available for comment in August 1998, the
EPA indicated that most new areas that violate the 8-hour ozone NAAQS
(but not the 1-hour ozone NAAQS) can achieve sufficient emissions
reductions to produce one ozone season's clean air quality by the end
of 2003 if EPA establishes May 1, 2003 as the compliance date for this
rule.\67\ The EPA suggested that these areas would also be eligible for
an ozone transitional classification, provided they submit a SIP by
2000 (see the August 1998 proposed guidance). Therefore, in the
proposed guidance, EPA has indicated that when the Agency reviews and
approves ozone transitional area SIPs, the Agency anticipates
establishing December 31, 2003 as the attainment date, for planning
purposes, for almost all of the transitional areas. The EPA believes
that establishing December 31, 2003 as the attainment date for these
areas is consistent with the requirement of CAA section 172(a)(2)(A)
that ``the attainment date for an area designated nonattainment with
respect to a [NAAQS] shall be the date by which attainment can be
achieved as expeditiously as practicable, but no later than 5 years
from the date of designation.'' The EPA interprets this requirement to
mandate that controls, either in the downwind nonattainment area or in
upwind areas, should be implemented as expeditiously as practicable,
when doing so would accelerate the date of attainment. For the reasons
described elsewhere, the EPA believes it is practicable for States to
implement the controls mandated under today's rulemaking by May 1,
2003, and that doing so would ensure that areas subject to the 8-hour
NAAQS will attain the standard as expeditiously as practicable. Doing
so will be consistent with the requirement that downwind nonattainment
areas make reasonable further progress toward attainment.
---------------------------------------------------------------------------

\67\ ``Proposed Implementation Guidance for the Revised Ozone
and Particulate Matter (PM) National Ambient Air Quality Standards
(NAAQS) and the Regional Haze Program,'' John S. Seitz, Director,
Office of Air Quality Planning and Standards, to Regional Office Air
Division Directors, August 18, 1998. The guidance has been made
available for 30-days public comment through a Federal Register
Notice of Availability (63 FR 45060, August 24, 1998). The date of
the notice is the official start date for the comment period.
---------------------------------------------------------------------------

B. Budget Achievement Date

In the NPR, the EPA stated that although it would mandate the full
implementation of the required SIP controls by an earlier date, it
would require the affected States to demonstrate that they will achieve
their NO_X budgets as of the year 2007. The NPR explained
that the 2007 date would allow EPA to make use of the substantial
technical information collected by OTAG. The OTAG had selected the year
2007, had collected inventory data geared towards this date, and had
generated air quality modeling information geared towards this date.
The NPR further stated that the EPA had doubts that there would be
significant differences in amounts of emissions and impact on ambient
air quality between an earlier date and 2007, in light of the fact that
during this period, emissions would generally increase somewhat as a
result of growth in activities that generate emissions, but would also
decrease due to continued application of federally mandated controls.
The EPA continues to believe that 2007 is an appropriate target
date for the affected States to use in demonstrating whether their SIP
will achieve the required emissions reductions, generally for the same
reasons as expressed in the NPR. Based on the 2007 projections, States
are expected to achieve their statewide emissions budgets (based on the
required emissions reductions achieved by May 1, 2003) by September 30,
2007 which is the end of the ozone season.
Throughout this rulemaking process, the EPA has relied on technical
data generated by OTAG geared towards the 2007 date, and it would be an
ill-advised use of resources if EPA did not incorporate the emissions
inventories and modeling results generated by the multi-stakeholder
OTAG process, and instead developed comparable information for an
earlier date. Such an effort would be time consuming and resource
intensive. Furthermore, no State is disadvantaged by the requirement to
demonstrate compliance with the budget later than the requirement to
implement SIP controls because States may count both the growth in
emissions and the reductions in emissions from Federal measures that
would occur in the interim. Finally, the year 2007 is the latest
attainment date under the 1-hour NAAQS for areas in States affected by
today's rulemaking, i.e., the severe-17 areas of including Chicago,
Milwaukee, and New York, so that this date is a sensible target date
for affected States to use in projecting whether they will achieve the
required emissions reductions.

VI. SIP Criteria and Emissions Reporting Requirements

A. SIP Criteria

The NPR and SNPR discussed SIP revision approval criteria and the
schedule for States' submission plans for meeting statewide emission
budgets in response to this SIP call under section 110(a)(2)(D). The
EPA received a number of comments related to the proposed SIP approval
criteria. This section summarizes these comments on key issues and
presents EPA responses.
1. Schedule for SIP Revision
In the NPR, EPA proposed that each State must submit a
demonstration that it will meet its assigned Statewide emission budget
(including adopted rules needed to meet the emission budget) by
September 30, 1999.⁶⁸ The EPA received numerous comments
concerning this proposed timeframe.
---------------------------------------------------------------------------

\68\ In the NPR, EPA proposed the SIP submittal date to be
within 12 months of the date of final promulgation of this
rulemaking. Promulgation means signature so long as the rulemaking
is made available to the public on the same day.
---------------------------------------------------------------------------

Comments: The EPA received many comments on the practicality of
allowing States 12 months to submit SIPs in response to this
rulemaking. Some commenters articulated that some States anticipate
administrative obstacles that could create problems in

[[Page 57451]]

submitting their SIP revisions by 1999. On the other hand, many
commenters expressed concern about extending the SIP submittal deadline
to 18 months based on the additional adverse impact that NO_X
emissions from upwind areas would have on downwind air quality if the
schedule for reductions were extended. Arguing that the States would
have ample time to formulate an approvable SIP, these commenters
supported a 12-month SIP submission date.
Response: After considering these comments, EPA is requiring that
SIP revisions be submitted within 12 months after the date of signature
of this final rule. This date is appropriate in light of the fact that
States which are subject to today's rulemaking will need to achieve
reductions in NO_X emissions by May 1, 2003. Requiring States
to submit SIP revisions within the 12-month timeframe will ensure that
controls necessary to reduce these emissions will be in place on time.
The Agency believes the health risks associated with ozone
pollution require the NO_X SIP call to proceed expeditiously.
Delaying the SIP submission date by an additional 6 months would hinder
downwind areas' efforts to improve air quality in a timely manner.
Twelve months is adequate time to submit a NO_X reduction
SIP. States were involved in the OTAG for 2 years and, during that
time, developed lists of feasible NO_X control strategies and
compiled information about control strategy costs. This groundwork will
assist States in making decisions about their NO_X reduction
strategies and should expedite the SIP submittal process. Further,
States developed NO_X emission inventories for modeling
purposes during the OTAG process. The States, therefore, have the
information for the source categories on which to focus. As a result,
many elements needed for putting together a NO_X reduction
strategy have already moved forward.
Since OTAG concluded in June 1997, the States have had time for
internal review of data, and refinement of their emission inventories.
This SIP call rulemaking provides EPA's view of a reasonable cost-
effective strategy to reduce NO_X in the 23 jurisdictions.
The EPA's action provides a good starting point for State
NO_X reduction strategies; States can embrace the Agency's
approach or use it as a basis for tailoring their own programs. If
States elect to participate in EPA's model trading rule, the SIP
process will be further simplified because States can adopt the entire
package of recommended strategies.
Therefore, under section 110(k)(5) for the 1-hour NAAQS and section
110(a)(1) for the 8-hour NAAQS, a demonstration that each State will
meet the assigned Statewide emission budget (including adopted rules
needed to meet the emission budget) must be submitted to EPA in its SIP
revision.
2. Approvability Criteria
In the NPR, EPA described the elements listed below that States
must include in their ozone transport SIP revisions (62 FR 60365).
The EPA proposed that the approvability criteria for transport SIP
submissions appear in 40 CFR 51.121. Most of the criteria are
substantially identical to those that already apply to attainment SIPs,
for example, a description of control measures that the State intends
to use.
The SNPR proposed additional SIP approvability criteria for control
strategies that will help States meet their NO_X budgets (63
FR 25912-25914). The legal authority for these additional approvability
criteria was articulated in the SNPR (63 FR 25913, footnote 5). The EPA
received numerous comments related to these additional criteria.
a. Source Categories Subject to Additional Approvability Criteria.
In the SNPR, EPA proposed that, if a State should choose to meet this
SIP call by regulating NO_X sources (boilers, turbines and
combined cycle units) serving electric generators with a nameplate
capacity greater than 25 MWe and boilers with a maximum design heat
input greater than 250 mmBtu/hr, the State would need to frame these
control measures and monitoring requirements as either: (1) Mass
emissions limits, (2) emissions rates assuming maximum utilization, or
(3) an alternative approach, as described more fully in the next
subsection. The EPA solicited comment on the reasonableness of
extending these approvability criteria to additional NO_X
sources. The EPA explained that the ability to comply with a mass
emissions limit using reasonably available technology and to accurately
and consistently monitor mass emissions were key factors for coverage
by the additional approval criteria.
In the SNPR (63 FR 25923), EPA also outlined criteria for sources
to participate in the NO_X Budget Trading Program. The EPA
explained that the ability to accurately and consistently monitor
NO_X mass emissions was a key factor for participation in the
trading program. The EPA proposed that the trading program include the
same sources listed above as well as other large steam-producing units
(units above 250 mmBtu/hr) which would include combustion turbines or
combined cycle systems, as well as boilers that do not serve electrical
generators.
The EPA now believes that the SIP approvability criteria should
cover all NO_X sources serving electric generators with a
nameplate capacity greater than 25 Mwe and all boilers, combustion
turbines and combined cycle units with a maximum design heat input
greater than 250 mmBtu/hr. The Agency believes this group is
appropriate because of the considerations set forth in the SNPR. For
example, all of these sources can comply with a mass emissions limit
using reasonably available technology and can accurately and
consistently monitor mass emissions. In addition, EPA believes that
mass emissions limits remain highly cost-effective for these sources,
even when future growth is accommodated within the limits. Based on the
analyses in the RIA, EPA projects that even if actual growth for this
group of sources exceeds EPA's projected growth by over one-third, mass
emission limits would remain highly cost-effective according to the
criteria used for this rule. Therefore, in this final rule, EPA is
requiring that the additional SIP approvability criteria outlined below
apply to States that select regulatory requirements covering boilers,
turbines and combined cycle units that are greater than 250 mmBtu/hr--
regardless of whether they are connected to an electrical generator of
any size--or to boilers, turbines and combined cycle units that serve
electrical generators greater than 25 Mwe, regardless of the heat input
capacity of the unit.
b. Pollution Abatement Requirements. The EPA proposed requiring
States that choose to meet their budget through control requirements
for such large NO_X sources to express the requirements in
one of three ways: (1) In terms of mass emissions, which would limit
total emissions from a source or group of sources; (2) in terms of
emissions rates that when multiplied by the affected source's maximum
operating capacity would meet the tonnage component of the emissions
budget for this source or for these sources; or (3) an alternative
approach for expressing regulatory requirements, provided the State
demonstrates to EPA that its alternative provides assurance equivalent
to or greater than option (1) or (2) that seasonal emissions budgets
will be attained and maintained.
Comments: Seven commenters generally support the approach of

[[Page 57452]]

expressing regulatory requirements as mass emissions limitations. One
of these commenters does not object to a mass limit provided that the
limit covers a time period no shorter than the ozone season, and that
sources should be allowed to maintain flexibility within the ozone
season. Several commenters generally support a rate-based limit, one of
which noted that EPA's own rule-effectiveness studies show that rate-
based limits can be very effective. Another commenter opposes the use
of mass emission limits and urges EPA not to require monitoring
procedures and data generation that are inconsistent with current
requirements under the Acid Rain Program (namely the use of an
emissions rate limit). Other commenters believe that States, not EPA,
should decide the form of the limit. Finally, one commenter recommends
both a cap on mass emissions and an emissions rate limitation.
Response: As explained in the SNPR (63 FR 25912), EPA believes that
regulatory requirements in the form of a maximum level of mass
emissions for a source or group of sources have the greatest likelihood
of achieving and maintaining the Statewide NO_X emissions
budget. As with the entire SIP call, the new approvability criteria are
designed to apply to total emissions throughout the ozone season and
are not intended to apply to shorter time periods within the ozone
season. This, however, does not limit a State's ability to require
emissions limitations for a shorter time period if deemed necessary in
a specific ozone attainment plan.
Although several commenters supported using rate-based limits, they
did not provide evidence to refute EPA's belief that the proposed
criteria would provide superior environmental results over rate-based
limits alone. The EPA maintains that the proposed criteria provide the
greatest assurance to downwind States that the air emissions from
upwind States will be effectively managed over time. Regarding EPA's
rule effectiveness studies, they do confirm that rate-based limits can
be effective in achieving a specific emissions rate. However, the
studies do not address the emissions variations that may take place at
the regulated sources due to changes in utilization under rate-based
limits, including the potential for significant increases, particularly
in light of utility restructuring. Under the proposed criteria, mass
emissions from the regulated sources would stay within a fixed tonnage
amount despite shifts in utilization of the sources. Finally, EPA does
not believe that the rate-based NO_X emissions limits
prescribed under title IV of the CAA are relevant to this rulemaking.
Since the time of the 1990 CAA amendments, EPA, States, local
governments, and the regulated community have all gained considerable
experience with regulatory requirements expressed in terms of mass
emissions limitations which demonstrates their feasibility and high
degree of effectiveness. For these reasons and the reasons described in
the SNPR, EPA is including these additional SIP approvability criteria
in today's action.
c. Monitoring Requirements. The Agency proposed requiring these
large combustion NO_X sources to use continuous emissions
monitoring systems (CEMS), and requested comment on requiring the use
of the NO_X mass monitoring provisions in 40 CFR part 75 to
demonstrate compliance with applicable emissions control requirements.
Comments: Some commenters generally support the use of CEMS for
large combustion sources. One commenter noted that while the preamble
and the proposed revisions to part 51 would require CEMS on all
sources, the requirements set forth in subpart H of part 75 allow for
non-CEMS monitoring options for units that are infrequently operated or
that have low mass emissions of NO_X.
Response: The EPA believes that programs like the Acid Rain Program
and RECLAIM have shown that CEMS can be effectively used on boilers,
turbines and combined cycle units to demonstrate compliance with a mass
emissions limitation. The Agency also believes that, while CEMS provide
more consistent and accurate data, allowing non-CEMS monitoring options
for low-emitting or infrequently operated units greatly increases the
cost effectiveness of these requirements without significantly
jeopardizing the quality of the data used to ensure compliance with the
requirements of the SIP call. Therefore, EPA agrees with the commenter
that the part 75 provisions allowing non-CEMS monitoring options for
low-emitting or infrequently operated units are reasonable. The EPA is
requiring the use of the NO_X mass monitoring provisions in
40 CFR part 75 in the final SIP approval criteria.
d. Approvability of Trading Program. In the SNPR, EPA expressed its
intent to approve the portion of any State's SIP submission that adopts
the model rule, provided: (1) The State has the legal authority to
adopt the model rule and implement its responsibilities under the model
rule, and (2) the SIP submission accurately reflects the NO_X
emissions reductions to be expected from the State's adoption of the
model rule (63 FR 25913). The EPA also stated that a State could
develop State regulations in accordance with the model rule. In Section
VII.C.3 of this preamble, the Agency clarifies the extent to which a
State's regulations may deviate from the model rule and still receive
streamlined approval. Regulations providing for streamlined approval
appear in paragraph (p) of 40 CFR 51.121.
3. Sanctions
In the preamble to the proposed rule, EPA explained the mandatory
sanctions process that is established in section 179(a) and (b) of the
CAA (62 FR 60368). This process is triggered upon a finding by EPA that
a State failed to submit a SIP in response to a SIP call. One
sanction--either increased offsets for new or modified major stationary
sources or restrictions on highway funding--is imposed 18 months after
the finding is made and the second sanction 6 months later. The EPA
requested comment on the order in which these two sanctions should be
imposed in response to the SIP call. The EPA further requested comment
on whether EPA should use its discretion under section 110(m) to expand
the geographic scope of the highway funding sanction.
Comment: One commenter specifically commented on the order in which
the two sanctions should be imposed. The commenter recommended that the
offset sanctions apply first--18 months after the finding--and the
restrictions on highway funding apply second--6 months after the offset
sanction.
Response: This is the approach that EPA took in its final rule
addressing the sequence of mandatory sanctions for State failures to
respond to submittals required under part D of title I of the CAA. For
the reasons stated in the preamble to that final rule (59 FR 39832),
EPA is providing in the final SIP call rule that the offset sanction
will apply 18 months after EPA makes a finding and the restrictions on
highway funding will apply 6 months after the offset sanction applies.
Comments: Several commenters generally commented that EPA should be
fair and equitable in making findings and imposing sanctions. Other
commenters suggested that to be fair and equitable--and because the
sanctions are an important backstop to ensuring emission reduction are
achieved--EPA should apply the same or similar sanctions to upwind
attainment areas as to nonattainment areas that do not comply with the
SIP call. Recognizing that the highway

[[Page 57453]]

sanction can apply to attainment areas only under section 110(m), one
commenter encouraged EPA to develop a mandatory clock for the
imposition of discretionary sanctions. Finally, one commenter stated
that the nature and timing of sanctions should reflect a State's
particular circumstances; however, this commenter also emphasized the
need for parties to know the impact of sanctions ahead of time so that
they can effectively react.
Response: The EPA agrees that sanctions are an important backstop
and plans to make timely findings where States fail to submit or submit
an incomplete or disapprovable SIP in response to the SIP call. The EPA
agrees that areas should be treated fairly and plans to ensure that
areas with similar circumstances are not treated differently in making
findings of failure to submit and incompleteness. However, at this
time, EPA is not prepared to determine whether and when it is
appropriate to use the discretion provided under section 110(m) in
imposing sanctions. The EPA believes it is not appropriate to make a
general determination regarding the application of sanctions under
section 110(m); rather if circumstances warrant the use of sanctions
under section 110(m), EPA may take future rulemaking action to use that
authority. Before EPA uses the section 110(m) authority, EPA must go
through notice-and-comment rulemaking, which should provide States
adequate certainty about EPA's intentions on the use of discretionary
sanctions and time to respond to any action that EPA may take.
Comment: One commenter suggested that the timeframes for the
imposition of sanctions are too short and will undermine States'
efforts to comply with the SIP call. In addition, the commenter states
that the imposition of sanctions serves no useful purpose in light of
EPA's intent to promulgate a FIP.
Response: The EPA did not propose imposing sanctions more
expeditiously than the timeframes mandated by the CAA. If EPA makes a
finding of failure to submit or incompleteness shortly after the SIP is
due, the State will have 18 months in which to make a submission that
EPA determines is complete before the first sanction would be imposed.
Thus, the statute provides sufficient additional time for the State to
correct the problem before any sanction would apply. Under the statute,
sanctions apply independently of EPA's obligation to promulgate a FIP.
Congress recognized that the most efficient and effective programs are
those operated by the State; thus, the CAA provides for the continued
imposition of sanctions as a means to encourage States to adopt a
program to replace the FIP.
Comment: One commenter opposes restrictions on highway funding
imposed by any highway sanction in nonattainment areas and especially
Statewide.
Response: Under section 179(a) and (b), the highway funding
sanction is one of two sanctions that must be imposed due to a
continuing failure of a State to adopt a SIP program, including a SIP
in response to a SIP call. Under section 179(b), the highway funding
sanction can only apply in a nonattainment area. However, under the
discretionary sanctions provision in section 110(m), EPA may impose the
highway funding Statewide. (See 59 FR 1476, 1479-80 for a more detailed
discussion.) The EPA would undertake notice-and-comment rulemaking
before imposing sanctions beyond the nonattainment area pursuant to
section 110(m).
Comments: Finally, several commenters recommended that EPA not
sanction serious areas for failing to demonstrate attainment by 1999
where those areas are affected by transported emissions that will not
be controlled until after the 1999 attainment date.
Response: The EPA is not addressing in this rulemaking the process
for imposing sanctions for areas that fail to submit or submit
incomplete or unapprovable attainment demonstrations. The EPA recently
issued a policy memorandum explaining how it anticipates addressing
transport for serious areas through rulemaking actions on submitted
attainment demonstrations. See memorandum from Richard D. Wilson, EPA
Acting Assistant Administrator, to EPA Regional Administrators, dated
July 16, 1998, ``Extension of Attainment Dates for Downwind Transport
Areas.''
In the preamble to the proposed rule, EPA indicated that if an area
fails to implement an approved SIP, the Agency can make a finding that
triggers the sanctions clock but does not trigger an obligation to
promulgate a FIP. Compare sections 179(a)(1) and 110(c)(1). One
commenter noted that EPA should take a forceful role in assuring
implementation. Implementation of control measures to achieve the
reductions required under the NO_X SIP call is crucial in
moving all areas to attainment of the ozone standards. The EPA intends
to make findings of failure to implement where the circumstances
warrant such a finding.
4. FIPs
Comment: The EPA received several comments supporting the approach
outlined in the NPR in which EPA would propose a FIP at the same time
as taking final action on the SIP call. The comments noted that the
FIPs may be necessary to enforce the SIP call budgets and to assure
fair treatment of complying States and industry as compared to States
that are not responsive to the SIP call. In addition, many comments
were submitted urging EPA to delay proposal of FIPs until (1) after the
States have had time to respond to the SIP call, (2) the need for the
FIP is established, or (3) up to 2 years after the final SIP call.
Response: Also signed today is a separate notice titled ``Federal
Implementation Plans to Reduce the Regional Transport of Ozone,'' EPA
is proposing FIPs for each of the jurisdictions affected by the final
SIP call rulemaking. While EPA will have a non-discretionary duty to
promulgate a FIP within 2 years of a finding that a State has failed to
submit a complete SIP, EPA agrees with certain commenters that the
timing of the FIP proposal should allow for promulgation in time to
require NO_X emissions reductions by sources at about the
same time in States that comply with the SIP call and States that do
not. Under a delayed FIP proposal approach, sources in the non-
complying States might experience an unfair competitive advantage over
sources in States which elected to reduce their NO_X
emissions and reduce interstate transport of ozone and ozone precursors
in an earlier timeframe, consistent with the SIP call rulemaking. More
importantly, delaying the FIP proposal would potentially delay
reductions of ozone pollution and NO_X emissions in any non-
complying State which would unnecessarily jeopardize attainment and
public health and welfare. Therefore, proposing a FIP today will ensure
that EPA can promulgate a FIP very shortly after the time the SIPs are
due, in the event of any State's failure to comply with today's final rule.

B. Emissions Reporting Requirements for States

As stated in the November 7, 1997 NPR and the May 11, 1998 SNPR,
the EPA believes it is essential that compliance with the regional
control strategy be verified. Tracking emissions is the principal
mechanism to ensure compliance with the SIP call and to assure the
downwind affected States

[[Page 57454]]

and EPA that the ozone transport problem is being
mitigated.⁶⁹
---------------------------------------------------------------------------

\69\ Legal authority for the reporting requirements was
articulated in the supplemental notice of proposed rulemaking (63 FR
25915-6).
---------------------------------------------------------------------------

1. Use of Inventory Data
If tracking and periodic reports indicate that a State is not
implementing all of its NO_X control measures beginning on
May 1, 2003 or is off track to meet its required reductions by
September 30, 2007, EPA will work with the State to determine the
reasons for noncompliance and what course of remedial action is needed.
The EPA will expect the State to submit a plan showing what steps it
will take to correct the problems. Noncompliance with the
NO_X transport SIP call may lead EPA to make a finding of
failure to implement the SIP and potentially to implement sanctions, if
the State does not take corrective action within a specified time period.
The EPA will use 2007 data to assess how each State's SIP actually
performed in meeting the statewide NO_X emissions budget.
2. Response to Comments
The EPA proposed reporting requirements in the May 11, 1998 SNPR.
That proposal elicited several comments during the public comment
period. Some of these comments resulted in changes to the final
reporting requirements.
Comment: One commenter asked that the EPA review the need for
triennial collection of annual (i.e for the full year) emissions data
for uncontrolled sources, as compared to collection of only ozone
season data for uncontrolled sources.
Response: The EPA has reviewed the need for reporting of full year
emissions (as opposed to only ozone season emissions), and has revised
the final rule to remove a requirement that full year emissions be
reported. In the final rule, only ozone season emissions must be
reported in the annual, triennial and 2007 reports. This NO_X
SIP call is aimed at controlling transport of emissions during the
ozone season and reporting of full year emission for the purposes of
this SIP call is not necessary.
Comment: One commenter said that EPA should evaluate the reporting
burden to entities other than the 22 States and the District of
Columbia. These entities are likely to include owners/operators of
facilities that will be required to report emissions data to States as
part of this information collection. Another commenter said EPA should
address the additional resource burden on States and facilities
required to report.
Response: Since the emissions reporting rule does not place
requirements directly on any sources but only on the 23 jurisdictions
which receive the SIP call, the EPA is under no legal obligation to
evaluate the indirect burdens on sources that may result from the
promulgation of this rule. However, based on EPA's assumed control
strategy, EPA has performed an analysis of costs which could be
incurred by facilities if States require facilities analyzed in EPA's
assumed control strategy to report information to aid States in
complying with the rule. This cost information includes both capital
costs for monitoring equipment, such as continuous emission monitors,
and labor costs for testing. These costs are included in the RIA for
this rule which is located in the docket for the rulemaking (docket no.
A-96-56).
Comment: One commenter is concerned that the definition of point
and area sources does not coincide with the definition of smaller point
sources included in the inventory, nor with the definition of major
sources in ozone nonattainment areas where the threshold is either 25
or 50 tons per year. Another commenter stated that the definition of
``point source'' should reach at least down to the 50 ton per year
level, if not lower. This commenter also said that, for consistency,
EPA should have a single definition of ``point source'' for the purpose
of this rule.
Response: All sources with NO_X emissions equal to or
greater than 100 tons per year will remain point sources. However, the
EPA has revised its definition of point source for this final rule's
reporting requirements to allow States the option of specifying a
smaller threshold than 100 tons/year of NO_X for defining
point source. When a State chooses this option, non-mobile sources
smaller than the State-defined threshold would be area sources in that
State. This allows States to tailor their definition of point source to
maintain consistency with their own current requirements.
In the proposal, the EPA specifically solicited comments on whether
the State reporting time for source emissions should be shortened to no
later than 6 or 9 months after the end of the calendar year for which
the data are collected. This would allow corrective actions, if needed,
to be taken prior to the next ozone season. The EPA also solicited
comments on whether different reporting schedules should be established
for the different source categories, so that the data which can be
obtained more readily would be submitted sooner. The EPA has received
several comments on these topics, suggesting a variety of reporting times.
Comment: A State recommended that since the performance of electric
generating facilities is known promptly, EPA should shorten the
reporting time to no later than 4 to 6 months after the end of the
ozone season for which the data are collected. The comment did not
specify whether this reporting period , which is shorter than the
proposed 12 months, would apply only to electric generating facilities
or should apply to all NO_X emitting sources. Another State
said the point source emissions reporting period can be shortened to 9
months. Other commenters favored a 12 month or more reporting period.
Several commenters did not believe that 12 months after the end of the
calendar year is a reasonable time to submit reports and suggested
periods ranging from 18 to 24 months. Some commenters thought the
reporting time for area and mobile sources must be longer than for
point sources; one commenter thought the reporting time for all source
types should be uniform.
Response: Many of the emissions from large electric generating
facilities would be reported directly to EPA more rapidly than 12
months, if States elect to adopt the model trading program; however,
the EPA continues to believe that 12 months from the end of the
calendar year for which the data is collected is a reasonable time to
require a State to report all emissions from all types of sources. This
12 month period is supported by the comments which say that 12 months,
or even less in some situations, is a sufficient reporting time. The
EPA believes that States can report emissions from area and mobile
sources, as well as stationary sources, within the 12 month period. The
uniform 12 month reporting period for all source types was chosen to
simplify reporting requirements. However, a State has the option of
collecting emissions from particular sectors more rapidly if it wishes.
Therefore in the final rule, the EPA is requiring that States submit
the required annual and triennial emissions inventory reports no later
than 12 months after the end of the calendar year for which the data
are collected. Because downwind nonattainment areas will be relying on
the upwind NO_X reductions to assist them in reaching
attainment by the required dates, EPA believes it is important that
data be submitted as soon as practicable to verify that the necessary
emissions reductions are being achieved. Early reports will allow
States to more quickly respond to implementation problems detected by
the reports. States should formally notify the appropriate EPA

[[Continued on page 57455]]

Notices For
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994

[[pp. 57405-57454]] Finding of Significant Contribution and Rulemaking for Certain

Local Navigation