Inclusion of Delaware and New Jersey in the Clean Air Interstate Rule

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

[Federal Register: May 12, 2005 (Volume 70, Number 91)]
[Proposed Rules]
[Page 25407-25423]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my05-30]
[[Page 25408]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 96
[OAR-2003-0053; FRL-7885-8]
RIN 2060-AM95

AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In this action, we are proposing to include Delaware and New
Jersey in the Clean Air Interstate Rule (CAIR) for fine particles (PM
_2.5 ), based on a preliminary assessment that they
contribute significantly to a downwind State's nonattainment. In the
CAIR, we determined that upwind States that contribute 0.2 [mu]g/m\3\
or more to a downwind fine particles (PM _2.5 ) nonattainment
area are potentially deemed to be contributing significantly to
nonattainment. We are proposing here to combine Delaware and New Jersey
for purposes of this test. We have tentatively determined that Delaware
and New Jersey should be covered by the CAIR for annual sulfur dioxide
(SO ₂ ) and nitrogen oxides (NO_X) requirements.
In this proposal, we are not reopening any of the technical aspects
of the CAIR final analyses. Rather, we are proposing to augment the
analytical approach used in the CAIR by supplementing the air quality
step of the contribution analysis.
For a more detailed discussion of the purpose, background, and
analytical approach of the CAIR, and for the detailed provisions of the
CAIR, see the CAIR final rule which is published in today's Federal
Register.

DATES: Comments must be received on or before June 27, 2005. A public
hearing, if requested, will be held in Washington, DC on May 26, 2005,
beginning at 9 a.m.

ADDRESSES: Submit your comments, identified by Docket ID No. OAR-2003-
0053, by one of the following methods:
? Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
? Agency Website: http://www.epa.gov/edocket. EDOCKET, EPA's
electronic public docket and comment system, is EPA's preferred method
for receiving comments. Follow the on-line instructions for submitting
comments.
? E-mail: A-and-R-Docket@epa.gov.
? Fax: (202) 566-1741.
? Mail: Air Docket, Environmental Protection Agency,
Mailcode: 6102T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.
Please include a total of two copies.
? Hand Delivery: EPA Docket Center (Air Docket), U.S.
Environmental Protection Agency, 1301 Constitution Avenue, NW., Room
B102, Washington, DC 20004. Such deliveries are only accepted during
the Docket's normal hours of operation, and special arrangements should
be made for deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. OAR-2003-0053.
The EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at http:/
/www.epa.gov/edocket, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through EDOCKET, regulations.gov, or e-
mail. The EPA EDOCKET and the Federal regulations.gov Web sites are
``anonymous access'' systems, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through EDOCKET or regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
Docket: All documents in the docket are listed in the EDOCKET index
at http://www.epa.gov/edocket. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in EDOCKET or in hard
copy at the Air Docket, EPA/DC, EPA West, Room B102, 1301 Constitution
Ave., NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is (202) 566-1744, and the
telephone number for the Air Docket is (202) 566-1742. This Docket
Facility is open from 8 a.m. to 5:30 p.m., Monday through Friday,
excluding legal holidays. The Docket telephone number is (929) 566-
1742, fax (202) 566-1741.

FOR FURTHER INFORMATION CONTACT: General questions concerning today's
action should be addressed to Jan King, U.S. EPA, Office of Air Quality
Planning and Standards, Air Quality Strategies and Standards Division,
Mail Code C539-02, Research Triangle Park, NC 27711, telephone (919)
541-5665, e-mail king.jan@epa.gov. For legal questions, please contact
Steven Silverman, U.S. EPA, Office of General Counsel, Mail Code 2344A,
1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202)
564-5523, e-mail at silverman.steven@epa.gov. For questions regarding
air quality analyses, please contact Norm Possiel, U.S. EPA, Office of
Air Quality Planning and Standards, Emissions, Monitoring, and Analysis
Division, Mail Code D243-01, Research Triangle Park, NC 27711,
telephone (919) 541-5692, e-mail at possiel.norm@epa.gov. For questions
regarding the EGU cost analyses, emissions inventories, and budgets,
please contact John Robbins, U.S. EPA, Office of Atmospheric Programs,
Clean Air Markets Division, Mail Code 6204J, 1200 Pennsylvania Avenue,
NW., Washington, DC 20460, telephone (202) 343-9390, e-mail at
robbins.john@epa.gov. For questions regarding statewide emissions
inventories, please contact Marc Houyoux, U.S. EPA, Office of Air
Quality Planning and Standards, Emissions, Monitoring, and Analysis
Division, Mail Code D205-01, Research Triangle Park, NC 27711,
telephone (919) 541-3649, e-mail at houyoux.marc@epa.gov. For questions
regarding emissions reporting requirements, please contact Bill
Kuykendal, U.S. EPA, Office of Air Quality Planning and Standards,
Emissions, Monitoring, and Analysis Division, Mail Code D205-01,
Research Triangle Park, NC, 27711, telephone (919) 541-5372, e-mail at
kuykendal.bill@epa.gov. For questions regarding the model cap and trade
programs, please contact Sam Waltzer, U.S. EPA, Office of Atmospheric
Programs, Clean Air Markets Division, Mail Code 6204J, 1200
Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202) 343-
9175, e-mail at

[[Page 25409]]

waltzer.sam@epa.gov. For questions regarding analyses required by
statutes and executive orders, please contact Linda Chappell, U.S. EPA,
Office of Air Quality Planning and Standards, Air Quality Strategies
and Standards Division, Mail Code C339-01, Research Triangle Park, NC
27711, telephone (919) 541-2864, e-mail at chappell.linda@epa.gov.

SUPPLEMENTARY INFORMATION:

Public Hearing

A public hearing, if requested, will be held in Washington, DC on
May 26, 2005 beginning at 9 a.m. If you wish to request a hearing and
present testimony or attend the hearing, you should notify, on or
before May 19, 2005, Jan King, U.S. EPA, Office of Air Quality Planning
and Standards, Air Quality Strategies and Standards Division, Mail Code
C539-02, Research Triangle Park, NC 27711, telephone (919) 541-5665, e-
mail king.jan@epa.gov. Oral testimony will be limited to 5 minutes
each. The hearing will be strictly limited to the subject matter of the
proposal, the scope of which is discussed below. Any member of the
public may file a written statement by the close of the comment period.
Written statements (duplicate copies preferred) should be submitted to
Docket OAR-2003-0053, at the address listed above for submitted
comments. The hearing location and schedule, including lists of
speakers, will be posted on EPA's webpage at http://www.epa.gov/
cleanairinterstaterule. A verbatim transcript of the hearing and
written statements will be made available for copying during normal
working hours at the Office of Air and Radiation Docket and Information
Center at the address listed for inspection for documents.
If no requests for a public hearing are received by close of
business on May 19, 2005, the hearing will be cancelled. The
cancellation will be announced on the webpage at the address shown above.

Outline

I. Background
A. Summary of the Clean Air Interstate Rule
B. What Are the Central Requirements of Today's Proposal?
II. Summary of EPA's Analytical Approach, Findings, and Final
Actions in the Interstate Air Quality Rule
A. How Did EPA Interpret the CAA's Pollution Transport Provisions?
B. Which Air Pollutants Did EPA Address In the CAIR and Why?
C. Air Quality Analysis of Ozone and PM_2.5 Contributions Among
States
D. Analysis of Highly Cost-Effective Controls and Timeframe For
Emissions Reductions
III. Proposed Inclusion of Delaware and New Jersey in the Clean Air
Interstate Rule
A. Why is EPA Reconsidering the Status of Delaware and New
Jersey in the CAIR?
B. Air Quality Modeling Results
IV. Proposed Findings and Action
A. Proposed Findings of Significant Contribution for Delaware
and New Jersey
B. SIP Approval Criteria
C. SIP Submittal Deadline
D. Emissions Reporting Requirements
V. Expected Effects of the Proposed Action
A. Emissions
B. Air Quality
VI. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution or Use
I. National Technology Transfer Advancement Act
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income Populations

I. Background

A. Summary of the Clean Air Interstate Rule

In a final rule published in today's Federal Register, titled the
Clean Air Interstate Rule (``CAIR''), EPA found that certain States
must reduce emissions of SO₂ and/or NO_X by
certain amounts because those emissions contribute significantly to
nonattainment in downwind areas in other States that are not meeting
the annual PM_2.5 national ambient air quality standard
(NAAQS), or the 8-hour ozone NAAQS.\1\ The CAIR establishes State
implementation plan (SIP) requirements for the affected upwind States
under Clean Air Act (CAA) section 110(a)(2). The CAA section
110(a)(2)(D) requires SIPs to contain adequate provisions prohibiting
air pollutant emissions from sources or activities in those States that
contribute significantly to nonattainment in, or interfere with
maintenance by, any other State with respect to a NAAQS. Based on air
quality modeling analyses and cost analyses, EPA has concluded in the
CAIR that SO₂ and NO_X emissions in certain States
in the eastern half of the nation, through the phenomenon of air
pollution transport,\2\ contribute significantly to nonattainment or
interfere with maintenance of the PM_2.5 and 8-hour ozone
NAAQS in another State.\3\ This is because NO_X and
SO₂ are important precursors of PM_2.5, and
NO_X is an important precursor of ozone. As a result of the
CAIR, EPA is requiring SIP revisions in 28 States and the District of
Columbia to reduce SO₂ and/or NO_X emissions.
---------------------------------------------------------------------------

\1\ ``Rule to Reduce Interstate Transport of Fine Particulate
Matter and Ozone (Interstate Air Quality Rule); Proposed Rule,'' (69
FR 4566, January 30, 2004) (NPR or January Proposal); ``Supplemental
Proposal for the Rule to Reduce Interstate Transport of Fine
Particulate Matter and Ozone (Clean Air Interstate Rule); Proposed
Rule'' (69 FR 32684, June 10, 2004) (SNPR or Supplemental Proposal).
We summarize major features of that rule here as an aid to the
reader. The EPA is not reconsidering any aspect of the CAIR rule and
not accepting comment in this proceeding on the promulgated CAIR rule.
\2\ In today's final rule, when we use the term ``transport'' we
mean to include the transport of both fine particles
(PM_2.5) and their precursor emissions and/or transport of
both ozone and its precursor emissions.
\3\ We also found that emissions of SO₂ and
NO_X from upwind States in the PM_2.5 and ozone
CAIR regions can interfere with these same downwind receptors'
maintenance of each NAAQS.
---------------------------------------------------------------------------

The 23 States along with the District of Columbia that must reduce
annual SO₂ and NO_X emissions for the purposes of
the PM_2.5 NAAQS are: Alabama, Florida, Georgia, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota,
Mississippi, Missouri, New York, North Carolina, Ohio, Pennsylvania,
South Carolina, Tennessee, Texas, Virginia, West Virginia, and
Wisconsin. While we had originally proposed including Delaware and New
Jersey in this group based on our initial air quality contribution
assessment, subsequent refinement of the emissions estimates and air
quality modeling system resulted in their estimated contributions to
PM_2.5 nonattainment being below the final CAIR threshold for
inclusion in the PM_2.5-related requirements.
The 25 States along with the District of Columbia that must reduce
NO_X emissions for the purposes of the 8-hour ozone NAAQS
are: Alabama, Arkansas, Connecticut, Delaware, Florida, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan,
Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and
Wisconsin.
Under CAA section 110 and thus under the CAIR, each State may
determine independently which sources to subject to controls, and which
control measures to adopt. Our analysis indicated that emissions
reductions from electric generating units (EGUs) are

[[Page 25410]]

highly cost effective, and, in the CAIR rule, we encouraged States to
adopt these controls. States that do so must place an enforceable
limit, or cap, on EGU emissions (see section VII of the CAIR for
further discussion). We calculated the amount of each State's EGU
emissions cap, or budget, based on reductions that we have determined
are highly cost-effective. States may allow their EGUs to participate
in an EPA-administered cap and trade program as a way to reduce the
cost of compliance, and to provide compliance flexibility. The cap and
trade programs are described in more detail in section VIII of the CAIR.

B. What Are the Central Requirements of Today's Proposal?

In today's action, we propose to combine Delaware and New Jersey
for purposes of assessing whether that combination is contributing
significantly to nonattainment of the PM_2.5 NAAQS by
downwind receptors under section 110(a)(2)(D), and to apply the finding
from that combined assessment to each State. Based on presently
available air quality modeling results, our tentative assessment is
that the combination of the two states does contribute significantly to
PM_2.5 nonattainment in New York County, NY, and possibly to
one or more counties in eastern Pennsylvania. Accordingly, we are
proposing that Delaware and New Jersey be required under CAA section
110(a)(2)(D) to adopt SIP requirements for addressing annual emissions
of the PM_2.5 precursors NO_X and SO₂.
We intend to conduct confirmatory air quality modeling and make the
results available through a Notice of Data Availability prior to
finalization of this proposal.
Delaware and New Jersey are already subject to the CAIR for
purposes of ozone, and must reduce ozone season emissions of
NO_X starting in 2009. This proposal would add requirements
for control of annual emissions of SO₂ and of NO_X.
We propose to require that SIPs to achieve the required
PM_2.5 emissions reductions be submitted as soon as
practicable, but no later than 18 months after the date of signature of
the CAIR, i.e., September 11, 2006, the same deadline as in the CAIR
rule. We are doing so because we anticipate being able to act quickly
on this proposal, and because we believe this is a reasonable amount of
time for submission of these States' SIPs. We also believe that there
are evident efficiencies in having these reductions occur at the same
time as the reductions from other states covered by the CAIR rule for
NO_X and SO₂. See also section IV.D below.
As an option for Delaware and New Jersey, should EPA finalize this
proposal, we also propose to provide model cap and trade programs for
EGUs. We would also administer these programs, which would be governed
by rules provided by EPA that Delaware and New Jersey may adopt or
incorporate by reference.

II. Summary of EPA's Analytical Approach, Findings, and Final Actions
in the Interstate Air Quality Rule \4\
---------------------------------------------------------------------------

\4\ We note again that this section is provided for purposes of
information, and not to reopen or reconsider any issues discussed in
the section.
---------------------------------------------------------------------------

A. How Did EPA Interpret the CAA's Pollution Transport Provisions?

The CAIR is based on the ``good neighbor'' provision of CAA section
110(a)(2)(D), which requires States to develop SIP provisions assuring
that emissions from their sources do not contribute significantly to
downwind nonattainment or interfere with maintenance of the NAAQS. We
first interpreted this provision and developed a detailed methodology
for applying it in the NO_X SIP Call rulemaking (October 27,
1998), which concerned interstate transport of ozone precursors.
As summarized above, the CAIR requires upwind States to submit SIP
revisions requiring their sources to eliminate emissions of certain
precursors for PM_2.5 and ozone, to protect downwind
nonattainment areas. We developed the CAIR and this proposal relying
heavily on the NO_X SIP Call approach. In the NO_X
SIP Call, we interpreted section 110(a)(2)(D) to authorize us to
determine the amount of emissions in upwind States that ``contribute
significantly'' to downwind nonattainment or ``interfere with''
downwind maintenance, and to require those States to eliminate that
amount of emissions. We recognized that States must retain full
authority to choose the sources to control, and the control mechanisms,
to achieve those reductions.
In the NO_X SIP Call, we set out several criteria or
factors for the ``contribute significantly'' test, and further
indicated that the same criteria should apply to the ``interfere with
maintenance'' provision.\5\ The EPA determined the amount of emissions
that significantly contribute to downwind nonattainment from sources in
a particular upwind State primarily by (i) evaluating, with respect to
each upwind State, several air quality related factors, including
determining that all emissions from the State have a sufficiently great
impact downwind (in the context of the collective contribution nature
of the ozone problem); and
---------------------------------------------------------------------------

\5\ In the NO_X SIP Call, because the same criteria
applied, the discussion of the ``contribute significantly to
nonattainment'' test generally also applied to the ``interfere with
maintenance'' test. However, in the NO_X SIP Call, EPA
stated that the ``interfere with maintenance'' test applied with
respect to only the 8-hour ozone NAAQS (63 FR 57379-80).
---------------------------------------------------------------------------

(ii) Determining the amount of that State's emissions that can be
eliminated through the application of highly cost-effective controls.
Before reaching a conclusion, EPA evaluated several secondary, and more
general, considerations. These include:
? The consistency of the regional reductions with the
attainment needs of the downwind areas with nonattainment problems;
? The overall fairness of the control regimes required of
the downwind and upwind areas, including the extent of the controls
required or implemented by the downwind and upwind areas;
? General cost considerations, including the relative cost
effectiveness of additional downwind controls compared to upwind
controls (63 FR 57403).
In the CAIR rulemaking, we utilized much the same interpretation
and application of section 110(a)(2)(D) for regulating downwind
transport of precursors of ozone and PM_2.5 as we adopted for
the NO_X SIP Call. We adjusted some aspects of the CAIR
analytic approaches for various reasons, including the need to account
for regulation of a different pollutant (PM_2.5) with an
additional precursor (SO₂). The CAIR's approach to the ozone
issue is essentially the same as in the NO_X SIP Call, but
applied to more recent data on the relevant air quality and cost factors.
For a more detailed discussion of how we interpreted the CAA
pollution transport provisions, see section II of the CAIR in today's
Federal Register.

B. Which Air Pollutants Did EPA Address in the CAIR and Why?

In section III of the CAIR (add cite), EPA provided the following
characterization of the origin and distribution of 8-hour ozone air
quality problems: The ozone present at ground level as a principal
component of photochemical smog is formed in sunlit conditions through
atmospheric reactions of two main classes of precursor compound:
Volatile organic compounds (VOCs) and NO_X [mainly nitrogen
oxide (NO) and nitrogen dioxide (NO₂)]; and the formation of

[[Page 25411]]

ozone increases with temperature and sunlight, which is one reason
ozone levels are higher during the summer.
In the CAIR, EPA noted that we continue to rely on the assessment
of ozone transport made in great depth by the Ozone Transport
Assessment Group (OTAG) in the mid-1990s.\6\ As indicated in the
NO_X SIP Call proposal, the OTAG Regional and Urban Scale
Modeling and Air Quality Analysis Work Groups reached the following
conclusions:
---------------------------------------------------------------------------

\6\ Ozone Transport Assessment Group, OTAG Final Report, 1997.
---------------------------------------------------------------------------

? Regional NO_X emissions reductions are effective
in producing ozone benefits; the more NO_X reduced, the
greater the benefit.
? Controls for VOC are effective in reducing ozone locally
and are most advantageous to urban nonattainment areas (62 FR 60320,
November 7, 1997).
In section III of the CAIR, we summarized key scientific and
technical aspects of the occurrence, formation, and origins of
PM_2.5, as well as findings and observations relevant to
formulating control approaches for reducing the contribution of
transport to fine particle problems. For a detailed discussion of the
key concepts and provisional conclusions drawn from the CAIR, see
section III of the CAIR published in today's Federal Register.
PM_2.5 in ambient air is a complex mixture of component
of different chemical compositions and origins. Based on the
understanding of current scientific and technical information, as well
as our air quality modeling, as summarized in the CAIR in today's
Federal Register, we concluded that it was both appropriate and
necessary to focus on control of SO₂ and NO_X
emissions as the most effective approach to reducing the contribution
of interstate transport to PM_2.5. Current information
relating to sources and controls for other components identified in
transported PM_2.5 (carbonaceous particles, ammonium, and
crustal materials) does not, at this time, provide an adequate basis
for regulating the regional transport of emissions responsible for
these PM_2.5 components (69 FR 4582). For all of these
components, the lack of knowledge of and ability to quantify accurately
the interstate transport of these components limited our ability to
include these components in this rule.
For a more detailed discussion of how we chose which pollutants to
regulate, see section III.B.1.a of the final CAIR in the rules section
of today's Federal Register.

C. Air Quality Analysis of Ozone and PM_2.5 Contributions
Among States

For the CAIR, we performed State-by-State zero-out modeling to
quantify the contribution from emissions in each State to future ozone
and PM_2.5 nonattainment in other States and to determine
whether that contribution meets requirements of the ``contribute
significantly'' test. This zero-out modeling technique provides an
estimate of downwind impacts by comparing the model predictions from
the 2010 base case to the predictions from a run in which all
anthropogenic NO_X emissions (in the case of ozone) or all
anthropogenic SO₂ and NO_X emissions (in the case
of PM_2.5) are removed from specific States, one State at a
time. Counties presently exceeding the ozone or PM_2.5 NAAQS
and forecast to be nonattainment for ozone or PM_2.5 in the
2010 Base Case were used as receptors for quantifying interstate
contributions of ozone and/or PM_2.5. For each State-by-State
zero-out run, we projected the ozone design value or the annual average
PM_2.5 concentration at each receptor. The contribution from
an upwind State to nonattainment at a given downwind receptor was
determined by calculating difference in ozone or PM_2.5
concentration between the 2010 Base Case and the zero-out run at that
receptor. We followed this process for each State-by-State zero-out run
and each receptor, for both ozone and PM_2.5. For each upwind
State, we identified the largest PM_2.5 contribution from
that State to a downwind nonattainment receptor in order to determine
the magnitude of the maximum downwind contribution to PM_2.5
nonattainment from each State. The maximum downwind contribution was
our chosen metric for determining whether or not the PM_2.5
contribution was significant. After considering an updated analysis and
public comments, we applied a threshold of 0.2 [mu]g/m3 for
this determination. For ozone, we applied a multi-metric test of
significant contribution. For ozone, we also used a second method of
quantifying State-to-State contributions, known as source receptor
modeling, in addition to the emissions zero-out approach just
described. This contribution analysis is more fully described in
section VI of the preamble for the CAIR.

D. Analysis of Highly Cost-Effective Controls and Timeframe for
Emissions Reductions

1. Overall Criteria
In section IV.A of the CAIR rulemaking published in today's Federal
Register, we considered a variety of factors in evaluating the source
categories from which highly cost-effective reductions may be available
and the level of reduction assumed from that sector. These include:
? The availability of information,
? The identification of source categories emitting
relatively large amounts of the relevant emissions,
? The performance and applicability of control measures,
? The cost effectiveness of control measures, and
? Engineering and financial factors that affect the
availability of control measures.
We further stated that overall, ``We are striving * * * to set up a
reasonable balance of regional and local controls to provide a cost-
effective and equitable governmental approach to attainment with the
NAAQS for fine particles and ozone.'' These criteria are unaffected by
this proposal.
2. Evaluation of Cost Effectiveness and Feasibility
Section IV in the CAIR Notice of Final Rulemaking (NFR) preamble
describes EPA's determination of regionwide SO₂ and
NO_X control levels. As described in section IV in the CAIR
NFR preamble, EPA determined that highly cost-effective emissions
reductions may be obtained by controlling EGUs. The EPA determined the
amounts of emissions reductions that must be eliminated in upwind
States to help downwind States achieve attainment of the
PM_2.5 and ozone NO_X NAAQS, by assuming the
application of highly cost-effective control measures to EGUs and
determining the emissions reductions that would result.
For CAIR, EPA determined highly cost-effective regionwide amounts
of emissions reductions based on, as in the NO_X SIP Call,
comparison to reference lists of the cost effectiveness of other
regulatory controls. We developed reference lists for both average and
marginal cost effectiveness of those other controls. By comparison to
the reference lists, EPA determined that the CAIR final (2015)
SO₂ and NO_X regionwide control levels are highly
cost effective. The EPA also developed marginal cost-effectiveness
curves for SO₂ and NO_X abatement at varying
levels of stringency, to corroborate its cost-effectiveness determinations.
The EPA determined the interim control levels (commencing in 2009
for NO_X and in 2010 for SO₂) based on evaluating
the feasibility of installing the necessary emission control retrofits.
Although the interim regionwide control levels were determined based on

[[Page 25412]]

feasibility considerations, EPA also evaluated the cost effectiveness
of the interim control levels to ensure that they were also highly cost
effective.
Section IV.C in the CAIR NFR preamble describes EPA's feasibility
analysis, and section IV.A describes our evaluation of highly cost-
effective controls. Section V in the CAIR NFR preamble describes the
method EPA used to apportion regionwide control levels to the affected
States. A technical support document in the CAIR docket entitled
``Modeling of Control Costs, Emissions, and Control Retrofits for Cost
Effectiveness and Feasibility Analyses'' describes EPA's use of the
Integrated Planning Model (IPM) for its cost-effectiveness and
feasibility analyses. In addition, a technical support document
entitled ``Boilermaker Labor Analysis for the Final Clean Air
Interstate Rule'' provides further explanation of EPA's feasibility
analyses. Documentation for IPM, as well as IPM output files, are
available in the CAIR docket.
3. CAIR Regionwide SO₂ and NO_X Emission Reduction
Requirements
The CAIR requires annual SO₂ and NO_X
reductions in the District of Columbia and the following 23 States:
Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, New
York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia, West Virginia, and Wisconsin. If all affected States
choose to implement the CAIR annual SO₂ emission reduction
requirements by controlling EGUs, the regionwide annual SO₂
emissions caps that will apply for EGUs in these 23 States and the
District of Columbia are 3.6 million tons in 2010 and 2.5 million tons
in 2015. If all affected States choose to implement the CAIR annual
NO_X emission reduction requirements by controlling EGUs, the
regionwide annual NO_X emissions caps that will apply for
EGUs in these 23 States and the District of Columbia are 1.5 million
tons in 2009 and 1.3 million tons in 2015.
The CAIR does not require annual SO₂ or NO_X
emissions reductions in Delaware or New Jersey. However, today EPA is
proposing to require annual SO₂ and NO_X
reductions in these two States. Proposed annual SO₂ and
NO_X budgets for Delaware and New Jersey are presented later
in this preamble. If EPA finalizes these proposed annual SO₂
and NO_X budgets for Delaware and New Jersey--and if those
States choose to implement their annual emission reduction requirements
by controlling EGUs--then the CAIR regionwide EGU caps would be revised
to include reduction requirements for these two States. The revised
annual SO₂ caps, including Delaware and New Jersey, would be
3.7 million tons in 2010 and 2.6 million tons in 2015. The revised
annual NO_X caps, including Delaware and New Jersey, would be
1.5 million tons in 2009 and 1.3 million tons in 2015.
In addition to its annual SO₂ and NO_X
emission reduction requirements, the CAIR requires ozone season
NO_X emissions reductions in the District of Columbia and the
following 25 States: Alabama, Arkansas, Connecticut, Delaware, Florida,
Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts,
Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia,
and Wisconsin. If all affected States choose to implement the CAIR
ozone season NO_X emission reduction requirements by
controlling EGUs, the regionwide ozone season NO_X emissions
caps that will apply for EGUs in these 25 States and the District of
Columbia are 0.6 million tons in 2009 and 0.5 million tons in 2015.

III. Proposed Inclusion of Delaware and New Jersey in the Clean Air
Interstate Rule

A. Why Is EPA Reconsidering the Status of Delaware and New Jersey in
the CAIR?

As explained earlier, section 110(a)(2)(D) of the CAA requires
States to include in their SIPs adequate provisions prohibiting
emissions that will contribute significantly to nonattainment in, or
interfere with maintenance by, any other State. The term ``contribute
significantly'' is not further defined, so in implementing this section
we have had to develop an analytical approach to give specific meaning
to that term. The underlying logic of the analytical approach used in
both the NO_X SIP Call and the CAIR is that the emission
reduction efforts needed to reach attainment should be reasonably
balanced between the State containing a nonattainment area and upwind
States significantly contributing to the nonattainment. In this way,
control efforts on one side of a border are not undermined (and even
rendered futile) by out-of-State emissions, and highly cost-effective
emissions reductions by out-of-State sources which contribute
significantly to downwind receptors' nonattainment are achieved. We
believe this approach is both efficient and equitable, so that overall
costs are less and costs are more fairly distributed than if the burden
of reaching attainment were entirely on the State with the nonattainment
area.
We are proposing to retain this underlying analytical approach, but
to treat Delaware and New Jersey as special cases and as a single
geographic area, because of their relatively small size (and
correspondingly lower total emissions), because of the relatively high
emissions density of these States, because we believe doing so will
achieve a result that is more in keeping with the intention of section
110(a)(2)(D), and because doing so will ensure that a State located
between an upwind State that significantly contributes to nonattainment
in a downwind State, and that downwind State, carries its appropriate
emission reduction obligation mandated by section 110(a)(2)(D).
Specifically, we propose to combine Delaware and New Jersey for
purposes of assessing whether that combination is contributing
significantly to nonattainment of the PM_2.5 NAAQS by
downwind receptors under section 110(a)(2)(D), and to apply the finding
from that combined assessment to each State.
As stated earlier, the analytical approach used for the CAIR has
two parts, the first of which is a test of whether the air quality
contribution from one entire State to nonattainment in any part of
another State is strong enough to be considered significant, pending
consideration of control costs. For ozone, we used a test for this
first part which is based on several metrics of air quality
contribution, involving absolute magnitude, relative magnitude, and
frequency. For PM_2.5, we used a test with the single
criterion of whether the PM_2.5 air quality contribution from
an upwind State to nonattainment in a downwind State, due to total
anthropogenic SO₂ and NO_X emissions in the upwind
State, was 0.2 [mu]g/m3 or more. We believe that this
specific form of the analytical approach used in the final CAIR rule
has very appropriately identified a set of 23 States and the District
of Columbia that should make certain reductions in annual emissions by
2009 for NO_X and by 2010 for SO₂, and larger
reductions by 2015 for NO_X and SO₂, in order to
avoid contributing significantly to PM_2.5 nonattainment or
interfere with maintenance in other States. Similarly, we believe that
the original analytical approach has very appropriately identified a
set of 25 States and the District of Columbia that should make certain
reductions in ozone season NO_X emissions by 2009, and larger
reductions by 2015, in order to avoid contributing significantly to

[[Page 25413]]

ozone nonattainment or interfere with maintenance in other States.
In the course of applying that analytical approach, we realized
that an upwind State may have relatively low total emissions and thus
have a maximum contribution on other States that is below the air
quality contribution threshold used in the CAIR, simply because the
State is small in geographic area, and yet clearly contributes to a
degree to PM_2.5 nonattainment in downwind States, because
the upwind State is located between an even further upwind State that
significantly contributes to nonattainment in a downwind State, and the
downwind receptor State. Also, Delaware and New Jersey each has
substantial emissions for its size. Therefore, excluding Delaware or
New Jersey from emission reduction requirements related to
PM_2.5 might prevent the desired balancing of local and
upwind controls. Excluding either State could forgo opportunities for
highly cost-effective control that would improve air quality in nearby
States' nonattainment areas. Ignoring the contributions of Delaware and
New Jersey could result in both air quality detriments and cost
inefficiencies and inequities.
The EPA considered alternative approaches to addressing this issue.
We do not believe it would be appropriate to consider amending or
revising the significance critria set forth in the final CAIR notice.
Nevertheless, we believe that these two States, which combined
represent a significant source of emissions, should not be allowed to
fail to meet these tests, in the unique circumstances presented here,
solely because of their comparatively small geographic size. We have
faced a similar issue with respect to small geographic entities in the
NO_X SIP Call, and more recently in CAIR. In the
NO_X SIP Call we combined both Delaware and the District of
Columbia with Maryland in the contribution analyses, foreshadowing the
issues addressed by this proposal. Furthermore, the final CAIR
similarly addressed the special case of one small political
jurisdiction, the District of Columbia and combined that with Maryland.
In all the analysis of air quality contributions for the CAIR, we
combined the District of Columbia and Maryland into one unit for
purposes of analyzing contributions to nonattainment in other States,
because of the small size of the District of Columbia and, hence, its
emissions, and its close proximity to Maryland. We applied the finding
from this combined analysis to each jurisdiction separately. We did not
receive any adverse comment on this approach. Nor did we receive
adverse comment in the SIP Call rule regarding combining Delaware,
Maryland, and the District of Columbia in the contribution analysis.
The final CAIR's exclusion of Delaware and New Jersey for purposes
of PM_2.5 drew our attention because of features unique to
Delaware and New Jersey. Table III-1 presents relevant facts regarding
Delaware and New Jersey, and Table III-2 presents similar information
for Maryland, New York, and Pennsylvania for comparison. On balance, we
believe the most appropriate way to address the factual situation of
the issue here is to consider Delaware's and New Jersey's contributions
together, as one unit of analysis. Since Delaware and New Jersey are
already subject to CAIR for purposes of ozone, the remainder of this
discussion focuses on PM_2.5 considerations.
Delaware and New Jersey are both relatively small in land area;
both are smaller than any of the 23 states already subject to CAIR for
purposes of PM_2.5. Portions of both States are urbanized and
industrialized, and overall both have a high emissions density,
comparable to that of their neighbors.\7\ Delaware has an emissions
density of 76.1 tons/year per square mile, almost twice that of
neighboring Pennsylvania and also higher than that of Maryland, States
already linked to downwind nonattainment areas. New Jersey has an
emissions density of 46.6 tons/year per square mile, above that of
Pennsylvania although somewhat lower than that of Maryland.
---------------------------------------------------------------------------

\7\ By emissions density we mean the total SO₂ and
NO_X emissions from each State in tons per year, divided
by the geographic area of the State in square miles. For comparing
emissions densities for the purposes of contributions to
PM_2.5 nonattainment, we have compared the emissions
density expressed in terms of SO₂ plus NO_X
emissions per square mile. Such a comparison is a reasonable measure
of comparison that is independent of the disparity in the land area
size of the two States.
---------------------------------------------------------------------------

Delaware and New Jersey are near major cities where current
PM_2.5 nonattainment affects large populations. Also, both
are relatively near to a county or counties in other States that are
projected to still be nonattainment for PM_2.5 in 2010 in the
base case. Delaware and New Jersey are also near large markets for
electric power in other States subject to CAIR for PM_2.5,
and both are part of the PJM Interconnection electricity grid. Another
consideration is the potential for emission increases as a result of
emissions shifting from States subject to the PM_2.5
requirements of CAIR to States not subject to those requirements, e.g.,
New Jersey and Delaware. The EPA requests comment on whether it is
appropriate under section 110(a)(2)(D) to consider this factor in this
rulemaking.\8\
---------------------------------------------------------------------------

\8\ Because electricity generation costs in States subject to
the CAIR will in general rise to some degree to cover the cost of
new emission controls, there is the possibility that some electrical
generation load and the associated emissions may shift to States
that remain outside the CAIR. Such shifting may not always occur,
because physical factors in the electrical transmission and
distribution system, economic factors, or other regulatory
requirements may prevent it. The IPM model predicts that increases
will occur in Delaware and New Jersey if they are not included under
CAIR's PM_2.5-related requirements.
---------------------------------------------------------------------------

Both Delaware and New Jersey lie between upwind States that are now
subject to the CAIR for both ozone and PM_2.5 and downwind
receptor PM_2.5 nonattainment areas that are linked to one or
both of those upwind States. Maryland has already been determined to
contribute significantly to nonattainment in both Philadelphia and New
York City, Pennsylvania has already been determined to contribute
significantly to nonattainment in New York City, and New York has been
determined to contribute to nonattainment in Lancaster County,
Pennsylvania. New Jersey lies between Pennsylvania and New York City,
and Delaware lies between Maryland and both Philadelphia and New York
City. This means that emissions from Delaware and New Jersey are mixed
with the emissions of these other upwind States and arrive together at
the downwind nonattainment areas in other States. Moreover, Delaware
and New Jersey are closer to these receptors.
Given these highly distinctive facts, considered in conjunction
with the data concerning the downwind emissions contributions from New
Jersey and Delaware, it is reasonable that Delaware and New Jersey
could be viewed as contributing significantly to PM_2.5
nonattainment in downwind States. We have therefore considered how to
determine in an objective way whether they should be formally
considered to contribute to PM_2.5 nonattainment in specific
other States and thus whether they incur a section 110(a)(2)(D)
obligation. We propose to do this by treating the combination of these
two small states as a unit, subjecting that combination to the 0.2
[mu]g/m3 threshold for PM_2.5 air quality contribution used in the
original analytical approach for the CAIR. As noted, this is consistent
with our approach in the NO_X SIP Call, where Maryland, Delaware,
and the District of Columbia were treated as a combined unit. We note
also that Delaware and New Jersey lie side-by-side and together form a
compact geographic area. In addition, Delaware

[[Page 25414]]

and New Jersey are both part of the PJM Interconnection, which means
they are in a coordinated portion of the electricity grid. We believe
this further supports combining them for purposes of this analysis. By
combining these two small States we believe the underlying cost-
balancing and control program efficiency goals of our original
analytical approach can be better met.
Based on the air quality modeling that was done for the CAIR, we
propose to find that when treated as a combined unit, Delaware and New
Jersey do in fact contribute 0.2 [mu]g/m3 or more to PM_2.5
nonattainment in New York County, NY and may do so in one or more
counties in eastern Pennsylvania. The next section of this preamble
presents these modeling results.

Table III-1.--Contribution Factors for States Under Review
------------------------------------------------------------------------
State Contribution factors
------------------------------------------------------------------------
Delaware......................... Land Area of State
2050 square miles.
Most Affected Downwind Nonattainment
Counties
Philadelphia Co., PA.
Delaware Co., PA.
Lancaster Co., PA.
Berks Co., PA.
New York Co., NY.
Geography
The Wilmington area, which is the
most densely industrialized and
populated part of Delaware, lies on
or very close to the lines of
transport between the Maryland
suburbs of the District of Columbia
and Philadelphia Co. and Delaware
Co. PA, and also on or very close to
the lines of transport between
Baltimore and the Philadelphia Co.
and Delaware Co., PA.
The Wilmington area also lies on or
very close to the line of transport
between these areas of Maryland and
New York Co., NY.
2010 Base Emissions of SO2 plus NOX
156,000 tons/year.
SO2 plus NOX Emissions Density
76.1 tons/year per square mile.
Emission Changes
IPM predicts that implementing the
CAIR without subjecting Delaware to
limits on annual emissions will
result in increases in EGU SO2
emissions of 5,000 tons and 2,000
tons in 2010 and 2015, respectively,
and an increase in NOX emissions of
2,000 tons in 2010 with no increase
in 2015.
----------------------------------
New Jersey....................... Land Area of State
7510 square miles.
Most Affected Downwind Nonattainment
Counties
New York Co., NY.
Berks Co., PA.
Lancaster Co., PA.
Geography:
Some part of New Jersey lies in the
path of transport connecting any
source in Pennsylvania to New York
Co., NY.
2010 Base Emissions of SO2 plus NOX
350,000 tons/year.
SO2 Plus NOX Emissions Density
46.58 tons/year per square mile.
SO2 plus NOX Emission Changes
IPM predicts that implementing the
CAIR without subjecting New Jersey
to limits on annual emissions will
result in increases in EGU SO2
emissions of 1,000 and 2,000 tons in
2010 and 2015, respectively, and an
increase in EGU NOX emissions of
1,000 tons in 2010 and 2015.
------------------------------------------------------------------------

Table III-2.--Contribution Factors for Neighboring States Already
Subject to the CAIR, for Purposes of Comparison to Delaware and New
Jersey
------------------------------------------------------------------------
State Contribution factors
------------------------------------------------------------------------
Maryland & DC.................... Size of State
Land Area
9,740 square miles.
2010 Base Emissions of SO2 plus NOX
631,000 tons/year.
Nearby Downwind Nonattainment
Counties with Significant
Contribution From This State
Lancaster Co., PA.
Berks Co., PA.
Philadelphia Co., PA.
Delaware Co., PA.
New York Co., NY.
Union Co., NJ.
SO2 plus NOX Emissions Density
64.8 tons/year per square mile.
----------------------------------

[[Page 25415]]

New York......................... Size of State
Land Area
48,560 square miles.
2010 Base Emissions of SO2 plus NOX
902,400 tons/year.
Nearby Downwind Nonattainment
Counties with Significant
Contribution From This State
New Haven, CT.
Berks Co., PA.
Lancaster Co., PA.
Philadelphia Co., PA.
Delaware Co., PA.
Union Co., NJ.
SO2 plus NOX Emissions Density
18.6 tons/year per square mile.
----------------------------------
Pennsylvania..................... Size of State
Land Area
45,360 square miles.
2010 Base Emissions of SO2 plus NOX
1,818,000 tons/year.
Nearby Downwind Nonattainment
Counties with Significant
Contribution From This State
New York Co., NY.
Union Co., NJ.
SO2 plus NOX Emissions Density
40.1 tons/year per square mile.
------------------------------------------------------------------------

B. Air Quality Modeling Results

As explained in section II above, the air quality modeling used to
assess contributions to PM_2.5 nonattainment estimated the
contribution by individual States by selectively removing anthropogenic
emissions of SO₂ and NO_X from one State at a
time, and observing how that change in emissions affected
PM_2.5 concentrations in other States. This included separate
assessments for New Jersey and Delaware, and did not include any run in
which emissions in both states were removed together. Consequently, we
do not presently have exactly the same type of air quality modeling
analysis for the combination of Delaware and New Jersey as we do for
the 23 States already subject to CAIR for purposes of PM_2.5.
We intend to perform such modeling as soon as possible and to make the
results available for public comment through a Notice of Data Availability.
However, a tentative assessment is currently possible. Since
results are available from the separate air quality model runs that
were done for Delaware and New Jersey, we can add (or superimpose) the
contributions from the two States on each individual receptor monitor
in order to estimate the contribution that would be calculated if the
two states were taken as one unit of analysis. While there are non-
linear chemical and other atmospheric processes which could make the
outcomes of these two approaches somewhat different, we believe the
superimposition approach is sufficiently persuasive to support
proposing inclusion of both States as significantly contributing to
downwind PM_2.5 nonattainment problems.
Table III-3 presents the superimposition analysis, using detailed
contribution results from the air quality analysis for the final
CAIR.\9\ The table shows that the sum of Delaware's and New Jersey's
contributions to PM_2.5 nonattainment in New York County, New
York is 0.21 [mu]g/m3 for one of the monitors in that
county. We note that this is the result that obtained from using the
base case emissions from the two States. In actuality, as previously
stated, we estimate, based on the IPM model, that under the final CAIR,
which does not require reductions from Delaware and New Jersey for
purposes of PM_2.5, emissions in Delaware and New Jersey will
be higher than in this base case. Thus, the actual contribution of
Delaware and New Jersey combined and considered as a unit may be higher
than the 0.21 [mu]g/m3 result shown in the table. As
mentioned above, non-linearities in the atmospheric process may also
affect the result, in either direction. Based on this analysis, we
propose that New Jersey and Delaware taken together as one unit contribute
significantly to PM_2.5 nonattainment in New York County.
---------------------------------------------------------------------------

\9\ The Air Quality Technical Support Document provides full
details of how the air quality modeling was done and all of the results.
---------------------------------------------------------------------------

Of the several PM_2.5 nonattainment counties in eastern
Pennsylvania that are shown in Table III-3, none have a superimposed
contribution from Delaware and New Jersey that is as large as 0.2
[mu]g/m\3\. However, the planned air quality modeling that treats
Delaware and New Jersey as a combined unit and that reflects the above
mentioned emissions increases as a result of their current exclusion
from CAIR may yield a different result.

[[Page 25416]]

Table III-3.--Assessment of Combined Contribution by Delaware and New Jersey to PM2.5 Nonattainment Based on
Superimposition of Results From Air Quality Modeling for CAIR
----------------------------------------------------------------------------------------------------------------
PM2.5 Contribution PM2.5 Contribution
Receptor state Receptor county from Delaware from New Jersey Sum ([mu]g/
([mu]g/m\3\) ([mu]g/m\3\) m\3\)
----------------------------------------------------------------------------------------------------------------
New York........................ New York.......... 0.08 0.13 0.21
Pennsylvania.................... Berks............. 0.10 0.06 0.16
Pennsylvania.................... Dauphin........... 0.07 0.04 0.11
Pennsylvania.................... Delaware.......... 0.14 0.04 0.18
Pennsylvania.................... Lancaster......... 0.12 0.06 0.18
Pennsylvania.................... Philadelphia...... 0.14 0.04 0.18
Pennsylvania.................... York.............. 0.09 0.04 0.13
----------------------------------------------------------------------------------------------------------------

IV. Proposed Findings and Action

A. Proposed Findings of Significant Contribution for Delaware and New
Jersey

We are proposing to find that emissions of the PM_2.5
precursors SO₂ and NO_X emitted by Delaware and
New Jersey contribute significantly to nonattainment of the
PM_2.5 NAAQS in downwind States. Accordingly, we are
proposing SIP requirements for these States under section 110(a)(1) to
meet the requirements of section 110(a)(2)(D), namely, to contain
adequate provisions to prohibit SO₂ and NO_X
emissions from sources or activities within the States from
``contribut[ing] significantly to nonattainment'' of the PM_2.5 NAAQS
in downwind States.

B. SIP Approval Criteria

The CAIR added two new sections to Title 40 of the Code of Federal
Regulations, Sec. Sec. 51.123 and 51.124 containing requirements
related to NO_X and SO₂ respectively, which
establish the requirement for submission of SIP revisions to comply
with the CAIR and the criteria which EPA will use to review these
revisions for approval or disapproval. The content of these sections is
presented in section VII of the preamble to the CAIR, which appears in
the rules section of today's Federal Register. Delaware and New Jersey
are already subject to the ozone-related provisions of these sections
but not to the provisions that relate to PM_2.5. We propose
to amend these two sections to extend the PM_2.5-related
provisions to both States. The practical effect of the proposed
amendments will be to subject the States to budgets (if they choose to
control large EGUs) for annual emission reduction requirements of
NO_X and SO₂.
The proposed NO_X and SO₂ annual and ozone
season budgets for New Jersey and Delaware are shown below in Tables
IV-1 and IV-2.

Table IV-1.--Proposed Annual NOX Budgets
[Tons]
------------------------------------------------------------------------
Year Delaware New Jersey
------------------------------------------------------------------------
2009.......................................... 4,166 12,670
2015.......................................... 3,472 10,558
------------------------------------------------------------------------

Table IV-2.--Proposed Annual SO2 Budgets
[Tons]
------------------------------------------------------------------------
Year Delaware New Jersey
------------------------------------------------------------------------
2010.......................................... 22,411 32,392
2015.......................................... 15,687 22,674
------------------------------------------------------------------------

State annual SO₂ budgets for the years 2010-2014 (Phase
I) are based on a 50 percent reduction from title IV allocations for
all units in the affected State. The State annual budgets for 2015 and
beyond (Phase II) are based on a 65 percent reduction from title IV
allowances allocated to units in the affected State for SO₂ control.
To calculate annual State NOX budgets, EPA calculated a total
``regional'' budget for Delaware and New Jersey using the same
methodology as in the CAIR. The EPA calculates the regional
NO_X budget using the highest heat input for each State for
the years 1999-2002, multiplied by 0.15 lb/mmBtu (for 2009) and 0.125
lb/mmBtu (for 2015).
The EPA is proposing to calculate State NO_X budgets
through a fuel-adjusted heat-input basis, as is being finalized in the
CAIR. State budgets would be determined by multiplying historic heat
input data (summed by fuel) by different adjustment factors for the
different fuels. These factors reflect for each fuel (coal, gas and
oil), the 1999-2002 average emissions by State, summed for the CAIR
region, divided by average heat input by fuel by State, summed for the
CAIR region. The resulting adjustment factors from this calculation are
1.0 for coal, 0.4 for gas and 0.6 for oil. The factors would reflect
the inherently higher emissions rate of coal-fired plants, and
consequently the greater burden on coal plants to control emissions.
The regional budget is then apportioned to States on a pro-rata basis,
based on each State's share of total adjusted average heat input.
The final CAIR annual NO_X cap and trade rule will
provide additional incentives for early annual NO_X
reductions by creating a Compliance Supplement Pool (CSP) for CAIR
States from which they can distribute allowances for early, annual
NO_X emissions reductions in the years 2007 and 2008. The CSP
functions much like the NO_X SIP Call's CSP. The CSP would be
comprised of CAIR annual NO_X allowances of vintage year 2009.
In the final CAIR, EPA apportions a 200,000 ton CSP to all States.
The CSP was apportioned based on a State's share of the required
emissions reductions (i.e., the difference between their State baseline
emissions and their projected emissions under the CAIR). States may
distribute these CAIR NO_X allowances to sources based upon
either: (1) A demonstration to the State of NO_X emissions
reductions in surplus of any existing NO_X emission control
requirements; or (2) a demonstration to the State that the facility has
a ``need'' that would affect electricity grid reliability. Sources that
wish to receive CAIR CSP allowances based upon a demonstration of
surplus emission reductions will be awarded one CAIR annual
NO_X allowance for every ton of NO_X emissions
reductions. (Should a State receive more requests for allowances than
their share of the CAIR CSP, the State would pro-rate the allowance
distribution.) Determination of surplus emissions must use emissions
data measured using Part 75 monitoring.
The CSP for CAIR States affected by the CAIR NFR has a total of
198,494 CAIR NO_X allowances in addition to the annual CAIR
NO_X budgets. If Delaware and New Jersey are part of the
final CAIR program, as we propose, they would be allotted an additional
1,503

[[Page 25417]]

allowances. Table IV-3 shows the NO_X CSP for New Jersey and Delaware.

Table IV-3.--Proposed NOX Compliance Supplement Pool
[Tons]
------------------------------------------------------------------------
Delaware New Jersey
------------------------------------------------------------------------
843 660
------------------------------------------------------------------------

C. SIP Submittal Deadline

We are also proposing today to require that PM_2.5
transport SIPs be submitted, under CAA section 110(a)(1), as soon as
practicable, but not later than 18 months from the date of signature of
the CAIR, i.e., September 11, 2006. Our expectation is that this will
be no less than 12 months from the date of promulgation of the present
proposal.
We note that this would leave the two States affected by this
proposal less time to submit transport SIPs than allowed for States
covered by the CAIR rule. There are a number of reasons this result
appears to be justifiable. First, Delaware and New Jersey were covered
by the initial CAIR proposal for PM_2.5 precursors, so the
States already have been on notice that they might have to submit
transport SIPs for PM_2.5. Moreover, we are proposing here to
adopt all of the key features of the initial CAIR proposal, including
the same annual SO₂ and NO_X reductions and
budgets and the same implementation mechanisms. Again, since these
States have been on notice regarding these issues, we believe that less
time would be needed to submit transport SIPs. Moreover, as noted, we
expect to finalize this proposal within 6 months. If we do so, and if
we adopt the proposed SIP submittal deadline, transport SIPs would be
required within 12 months of the final action, the same period as
provided in the NO_X SIP Call (69 FR 4585).
According to EPA modeling, including New Jersey and Delaware in the
annual CAIR program results in only one additional flue gas
desulfurization (FGD) unit installation in the two States, i.e., one
additional FGD in New Jersey.\10\ The EPA modeling shows no additional
selective catalytic reduction (SCR) units would be required in the two
States.\11\ Assuming EPA finalizes this proposal in 6 months (by
September 15, 2005) and allows the two States 18 months from signature
of the CAIR to submit their SIPs (i.e., due by September 11, 2006),
there would be about 40 months remaining for the installation of the
one additional FGD required. The EPA estimates 27 months are required
to install an FGD. Also, EPA believes sufficient boiler maker labor and
other resources exist to support one additional FGD installation by
January 1, 2010. Therefore, EPA proposes the above schedule for
finalizing and implementing this rule.
---------------------------------------------------------------------------

\10\ The EPA compared IPM runs with and without New Jersey and
Delaware to make this determination. See IPM runs in the docket for
further details.
\11\ The EPA compared IPM runs with and without New Jersey and
Delaware to make this determination. See IPM runs in the docket for
further details.
---------------------------------------------------------------------------

For all these reasons, we think it reasonable to propose that
Delaware and New Jersey submit PM_2.5 transport SIPs by
September 11, 2006.

D. Emissions Reporting Requirements

In order to provide emissions inventory information that will allow
EPA to better monitor the implementation and effects of the CAIR's
emissions reductions, EPA incorporated into the CAIR revisions to the
pre-existing emission inventory reporting requirements applicable to
States affected by the CAIR. Those requirements were specific to
whether a State was affected by the annual emission reduction
requirements for SO₂ and NO_X or only the ozone-
season reduction requirements for NO_X. Because we are
proposing to apply the annual emissions reduction requirements to
Delaware and New Jersey, we are also proposing to place these two
States under the corresponding provisions of the emissions reporting
requirements. The only practical effect of this change relative to
existing requirements is that if either State chooses to obtain some of
the required annual emissions reductions from a source which emits less
than 2500 tons/year of both SO₂ and NO_X and that
source is not also made subject to the EPA-operated emissions trading
programs, the State must report the annual emissions of that source to
EPA annually in contrast to the triennial requirement that presently
applies to such sources.

V. Expected Effects of the Proposed Action

A. Emissions

EPA has conducted power sector analysis of The CAIR using the IPM.
The IPM is a dynamic linear programming model that can be used to
examine air pollution control policies for SO₂ and
NO_X throughout the contiguous United States for the entire
power system. Documentation for IPM can be found at www.epa.gov/
airmarkets/epa-ipm.
Emissions of SO₂ and NO_X in the CAIR region
would be higher under the final CAIR where Delaware and New Jersey are
only included in a summer season ozone cap, similar to Connecticut and
Massachusetts. If these two States are included as part of the annual
SO₂ and NO_X caps for the CAIR as proposed in this
proposal, emissions in the region would be reduced by another 48,000
tons of SO₂ and 11,000 tons of NO_X from the final
CAIR scenario.
The inclusion of Delaware and New Jersey in the annual CAIR
requirements would result in additional reductions of SO₂ and
NO_X that would help in achieving attainment for downwind States.
---------------------------------------------------------------------------

\12\ The CAIR region for purposes of this table includes the
following States: Alabama, Arkansas, Connecticut, Delaware, District
of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky,
Louisiana, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West
Virginia, Wisconsin.

Table V-1.--Annual Emissions From Affected Sources for the CAIR Region \12\
[Thousand tons]
----------------------------------------------------------------------------------------------------------------
2015
2010 --------------------------------------------
SO2 NOX SO2 NOX
------------------------------------------------------------------------------------------------------------- -----
Base Case................................................ 8,868 2,826 8,056 2,853
Final CAIR (DE and NJ Included for Ozone Season NOX Only) 5,336 1,592 4,216 1,342
CAIR Modified By This Proposal (DE and NJ Included for 5,305 1,582 4,168 1,331
Annual SO2 and NOX).....................................
Difference between CAIR Scenarios........................ 32 10 48 11
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not add due to rounding.

[[Page 25418]]

B. Air Quality

Section VI of the preamble to the CAIR, which appears in the rules
section of today's Federal Register, describes the air quality modeling
performed to determine the projected impacts of the CAIR on
PM_2.5 and 8-hour ozone of the SO₂ and
NO_X emissions reductions in the control region modeled. The
modeling used to estimate the air quality impact of these reductions
assumed annual SO₂ and NO_X controls for Arkansas,
Delaware, and New Jersey (as had been proposed before completion of the
final contribution analysis) in addition to the 23-States plus the
District of Columbia. Since Arkansas, Delaware, and New Jersey are not
included in the final CAIR PM_2.5 region, the modeled
estimated impacts are overstated for today's final CAIR which excludes
all three States from the CAIR region for PM. Because we are now
proposing that Delaware and New Jersey become subject to the
PM_2.5-related emissions limits for SO₂ and
NO_X, the air quality modeling for the final CAIR better
approximates the net effects of the CAIR plus today's proposal, but
still overestimates the air quality changes somewhat due to the
continued discrepancy regarding Arkansas. The Regulatory Impact Analysis
for the CAIR discusses these differences in scenarios in more detail.
The EPA analyzed the impacts of the regional emissions reductions
in both 2010 and 2015. These impacts are quantified by comparing air
quality modeling results for the regional control scenario to the
modeling results for the corresponding 2010 and 2015 Base Case
scenarios. The 2010 and 2015 emissions reductions and air quality
improvements from the regional control strategy modeled are presented
in summary form in section VI of the preamble to the CAIR and in detail
in the Emission Inventory Technical Support Document and the Air
Quality Modeling Technical Support Document for the CAIR.
The EPA estimates, based on the air quality analysis for the CAIR,
that the required SO₂ and NO_X emissions
reductions would, by themselves, bring into attainment 52 of the 80
counties that are otherwise expected to be in nonattainment for
PM_2.5 in 2010, and 57 of the 75 counties that are otherwise
expected to be in nonattainment for PM_2.5 in 2015. The EPA
further estimates that the required NO_X emissions reductions
would, by themselves, bring into attainment 3 of the 40 counties that
are otherwise expected to be in nonattainment for 8-hour ozone in 2010,
and 6 of the 22 counties that are expected to be in nonattainment for
8-hour ozone in 2015. In addition, today's rule will improve
PM_2.5 and 8-hour ozone air quality in the areas that will
remain nonattainment for those two NAAQS after implementation of
today's rule. Because of today's rule, the States with those remaining
nonattainment areas will find it less burdensome and less expensive to
reach attainment by adopting additional local controls. The CAIR will
also reduce PM_2.5 and 8-hour ozone levels in attainment areas.
We have not conducted an incremental analysis of the air quality
effects from the proposed extension of the annual emissions reductions
requirements to New Jersey and Delaware. However, IPM modeling of EGU
emissions indicates that assuming that all States join the EPA trading
programs, highly cost-effective emissions reductions will be
distributed across the region in addition to New Jersey and Delaware
themselves, and contribute to the attainment of these two States'
downwind neighbors as well as other States with nonattainment areas.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether a regulatory action is ``significant''
and therefore subject to Office of Management and Budget (OMB) review
and the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
1. Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or communities;
2. Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
3. Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
4. Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
In view of its important policy implications and potential effect
on the economy of over $100 million, the CAIR program inclusive of this
proposal has been judged to be an economically ``significant regulatory
action'' within the meaning of the Executive Order. As a result,
today's proposal was submitted to OMB for review, and EPA has prepared
an economic analysis of the CAIR program including this proposal
entitled ``Regulatory Impact Analysis of the Final Clean Air Interstate
Rule'' (March 2005).
1. What Economic Analyses Were Conducted for the Rulemaking?
The analyses conducted for the CAIR program (CAIR final rule plus
this New Jersey and Delaware proposal) provide several important
analyses of impacts on public welfare. These include an analysis of the
social benefits, social costs, and net benefits of the regulatory
scenario. The economic analyses also address issues involving small
business impacts, unfunded mandates (including impacts for Tribal
governments), environmental justice, children's health, energy impacts,
and requirements of the Paperwork Reduction Act.
2. What Are the Benefits and Costs of the CAIR Program?
The benefit-cost analysis shows that substantial net economic
benefits to society are likely to be achieved due to reduction in
emissions resulting from the CAIR program that includes annual
SO₂ and NO_X controls for New Jersey and Delaware.
The results show that the CAIR program would be highly beneficial to
society, with annual net benefits (benefits less costs) of
approximately $71.4 or $60.4 billion in 2010 and $98.5 or $83.2 billion
in 2015. These alternative net benefits estimates occur due to
differing assumptions concerning the social discount rate used to
estimate the annual value of the benefits of the rule with the lower
estimates relating to a discount rate of 7 percent and the higher
estimates a discount rate of 3 percent. All amounts are reflected in
1999 dollars. For more information, see the NFR for the CAIR published
in today's Federal Register and the Regulatory Impact Analysis for the
Final Clean Air Interstate Rule (March 2005).
3. What Are the Incremental Costs to the Electricity-Generating
Industry Associated With This New Jersey and Delaware Proposal?
The costs presented here represent the total incremental cost to
the electricity-generating industry of reducing NO_X and
SO₂ emissions to meet the reduction requirements set forth
in the rule, assuming all States participate in a regionwide cap-and-
trade program. These costs estimates are referred to as private costs,
and these estimates differ

[[Page 25419]]

from the cost of the program to society or social cost estimates
presented for the CAIR program discussed previously. As shown in Table
VI-1, EPA estimates the annual private costs of this proposal are
approximately $30 million in 2010 and $40 million in 2015. All
estimates reflect 1999 dollars. Overall, the impacts of the CAIR
program are modest, particularly in light of the large benefits we
expect. This industry generates over $250 billion in annual
revenues.\13\ The industry has the ability to largely pass along the
costs of the rule to consumers, and this will result in the costs
largely falling upon the consumers of electricity. Retail electricity
prices are projected to increase roughly 2.0--2.7 percent with the CAIR
program (inclusive of this proposal) in the 2010 and 2015 timeframe,
and then drop below 2.0 percent thereafter. The effects of the CAIR
program on natural gas prices and the power sector generation mix is
also small, with a 1.6 percent or less increase in natural gas prices
projected from 2010 to 2020. There will be continued reliance on coal-
fired generation, which is projected to remain at roughly 50 percent of
total electricity generated. A relatively small amount of coal-fired
capacity, about 5.3 GW (1.7 percent of all coal-fired capacity and 0.5
percent of all generating capacity), is projected to be uneconomic to
maintain. For the most part, these units are small and infrequently
used generating units that are dispersed throughout the CAIR region.
Units projected to be uneconomic to maintain may be `mothballed,'
retired, or kept in service to ensure transmission reliability in
certain parts of the grid.
---------------------------------------------------------------------------

\13\ In 2003, the electric power industry had retail sales of
259 billion dollars (http://www.eia.doe.gov/cneaf/electricty/epm/
table5-2.html).
---------------------------------------------------------------------------

As demand grows in the future, additional coal-fired generation is
projected to be built under the CAIR program. As a result, both coal-
fired generation and coal production for electricity generation are
projected to increase from 2003 levels by about 15 percent in 2010 and
25 percent by 2020, and we expect a small shift towards greater coal
production in Appalachia and the Interior coal regions of the country
with the CAIR.
For today's proposal, EPA analyzed the costs using the IPM. The IPM
is a dynamic linear programming model that can be used to examine the
economic impacts of air pollution control policies for SO₂
and NO_X throughout the contiguous U.S. for the entire power
system. Documentation for IPM can be found in the docket for this
rulemaking or at www.epa.gov/airmarkets/epa-ipm. The additional
annualized incremental cost of including Delaware and New Jersey in the
CAIR program occur because of the additional installation and operation
of a modest amount of pollution control equipment and other relatively
minor compliance costs.

Table VI-1.--Annualized Incremental Private Costs for the CAIR Region
[Billions of 1999 dollars]
------------------------------------------------------------------------
Costs in Costs in
Program 2010 2015
------------------------------------------------------------------------
Final CAIR (DE and NJ: Ozone Season NOX Only)..... $2.33 $3.59
Final CAIR plus NJ and DE proposal (DE and NJ: 2.36 3.63
Annual SO2 and NOX)..............................
Difference between CAIR scenarios................. 0.03 0.04
------------------------------------------------------------------------

4. What Potential Benefits May Be Associated With This Proposal?
Air quality modeling was not conducted for the New Jersey and
Delaware proposal. For this reason, an analysis of the potential
benefits for the New Jersey and Delaware proposal could not be
completed with any degree of specificity. However based on the air
quality modeling results for the CAIR, we make ball park estimates of
the benefits and net benefits that might occur with this proposal.
Including New Jersey and Delaware in the CAIR program would result in
additional reductions of SO₂ and NO_X emissions.
We estimate that approximately $630 million of the total annual CAIR
program benefits previously discussed are attributable to annual
SO₂ and NO_X controls for New Jersey and Delaware
in 2010. This estimate increases to over $1.1 billion in 2015. The full
CAIR analysis including New Jersey and Delaware showed a benefit-cost
ratio of around 39:1 in 2015. Based on the relatively low estimated
private costs of including New Jersey and Delaware of $30 million in
2010 and $40 million in 2015, it is highly unlikely that costs of
including New Jersey and Delaware would exceed benefits even if
benefits of controlling SO₂ and NO_X for New
Jersey and Delaware were substantially lower than the average benefit
we used to estimate the benefits. It is highly unlikely that benefits
are much lower than average given the urban nature of much of New
Jersey, and the proximity of New Jersey and Delaware to many heavily
populated urban areas.

B. Paperwork Reduction Act

The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Information Collection Request (ICR) document prepared by EPA has been
assigned EPA ICR number 2184.01.
The purpose of the ICR is to estimate the anticipated monitoring,
reporting, and recordkeeping burden estimates and associated costs for
States, local governments, and sources that are expected to result from
this proposal. This ICR describes the nature of the information
collection and the estimated burden for this proposal. In cases where
information is already collected by a related program, the ICR takes
into account only the additional burden. This situation arises in
States that are also subject to requirements of the Consolidated
Emissions Reporting Rule (EPA ICR number 0916.10; OMB control number
2060-0088) or for sources that are subject to the Acid Rain Program
(EPA ICR 2152.01; EPA ICR number 1633.13; OMB control number 2060-0258)
or NO_X SIP Call (EPA ICR number 1857.03; OMB number 2060-
0445) requirements.
The total monitoring, recordkeeping, and reporting burden to
sources resulting from New Jersey and Delaware choosing to participate
in a regional cap and trade program are expected to be approximately
$270,000 at the time the monitors are implemented. This estimate
includes the annualized cost of installing and operating appropriate
SO₂ and NO_X emissions monitoring equipment to
measure and report the total emissions of these pollutants from
affected EGUs (serving generators greater than 25 megawatt capacity)
for this proposed rule. The burden to State and local air agencies
includes any necessary SIP revisions, performing monitoring
certification, and fulfilling audit responsibilities.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of

[[Page 25420]]

information; search data sources; complete and review the collection of
information; and transmit or otherwise disclose the information.
An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including the use of automated collection
techniques, EPA has established a public docket for this rule, which
includes this ICR, under Docket ID number OAR-2003-0053. Submit any
comments related to the ICR for this proposed rule to EPA and OMB. See
ADDRESSES section at the beginning of this notice for where to submit
comments to EPA. Send comments to OMB at the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th Street,
NW., Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after May 12, 2005, a comment to OMB is best assured of having its full
effect if OMB receives it by June 13, 2005. The final rule will respond
to any OMB or public comments on the information collection
requirements contained in this proposal.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.)(RFA), as
amended by the Small Business Regulatory Enforcement Fairness Act (Pub.
L. 104-121)(SBREFA), provides that whenever an agency is required to
publish a general notice of rulemaking, it must prepare and make
available an initial regulatory flexibility analysis, unless it
certifies that the rule, if promulgated, will not have ``a significant
economic impact on a substantial number of small entities.'' 5 U.S.C.
605(b). Small entities include small businesses, small organizations,
and small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business that is
identified by the North American Industry Classification System (NAICS)
Code, as defined by the Small Business Administration (SBA); (2) a
small governmental jurisdiction that is a government of a city, county,
town, school district or special district with a population of less
that 50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field. Table VI-2 lists entities potentially impacted
by this rule with applicable NAICS code.

VI-2.--Potentially Regulated Categories and Entities
----------------------------------------------------------------------------------------------------------------
Category NAICS code \1\ Examples of potentially regulated entities
----------------------------------------------------------------------------------------------------------------
Industry...................................... 221112 Fossil fuel-fired electric utility steam
generating units.
Federal government............................ \2\ 221122 Fossil fuel-fired electric utility steam
generating units owned by the Federal
government.
State/local/Tribal government................. \2\ 221122 Fossil fuel-fired electric utility steam
generating units owned by municipalities.
921150 Fossil fuel-fired electric utility steam
generating units in Indian Country.
----------------------------------------------------------------------------------------------------------------
\1\ North American Industry Classification System.
\2\ Federal, State, or local government-owned and operated establishments are classified according to the
activity in which they are engaged.

According to the SBA size standards for NAICS code 221112
Utilities-Fossil Fuel Electric Power Generation, a firm is small if,
including its affiliates, it is primarily engaged in the generation,
transmission, and or distribution of electric energy for sale and its
total electric output for the preceding fiscal year did not exceed 4
million megawatt hours.
Courts have interpreted the RFA to require a regulatory flexibility
analysis only when small entities will be subject to the requirements
of the rule. See Michigan v. EPA, 213 F.3d 663, 668-69 (D.C. Cir.,
2000), cert. den. 121 S.Ct. 225, 149 L.Ed.2d 135 (2001).
The CAIR final rule and this proposed rule would not establish
requirements applicable to small entities. Instead, it would require
States to develop, adopt, and submit SIP revisions that would achieve
the necessary SO₂ and NO_X emissions reductions,
and would leave to the States the task of determining how to obtain
those reductions, including which entities to regulate. Moreover,
because affected States would have discretion to choose the sources to
regulate and how much emissions reductions each selected source would
have to achieve, EPA could not predict the effect of the rule on small
entities. Although not required by the RFA, the Agency has conducted a
small business analysis for the CAIR program inclusive of the New
Jersey and Delaware proposal.
Overall, about 445 MW of total small entity capacity, or 1.0
percent of total small entity capacity in the CAIR region, is projected
to be uneconomic to maintain under the CAIR relative to the base case.
In practice, units projected to be uneconomic to maintain may be
``mothballed,'' retired, or kept in service to ensure transmission
reliability in certain parts of the grid. Our IPM modeling is unable to
distinguish between these potential outcomes.
The EPA modeling identified 264 small power-generating entities
within the entire CAIR region based upon the definition of small entity
outlined above. The EPA excluded from this analysis 189 small entities
that were not projected to have at least one unit with a generating
capacity of 25 MW or great operating in the base case. Thus, we found
that 75 small entities may potentially be affected by the CAIR program.
Of these 75 small entities, 28 may experience compliance costs in
excess of 1 percent of revenues in 2010, and 46 may in 2015, based on
the Agency's assumptions of how the affected States implement control
measures to meet their emissions budgets as set forth in this
rulemaking. Potentially affected small entities experiencing compliance
costs in excess of 1 percent of revenues have some potential for
significant impact resulting from implementation of the CAIR. However,
it is the Agency's position that because none of the affected entities
currently operate in a competitive market environment, they should be
able to pass the costs of complying with the CAIR on to rate-payers.
Moreover, the decision to include only units greater than 25 MW in size
exempts 185 small entities that would otherwise be potentially affected
by the CAIR.
Two other points should be considered when evaluating the impact of
the CAIR program (inclusive of the New Jersey and Delaware proposal),
specifically, and cap and trade programs more generally, on small
entities. First, under the CAIR program, the cap-and-trade program is
designed such that States determine how NO_X allowances

[[Page 25421]]

are to be allocated across units. A State that wishes to mitigate the
impact of the rule on small entities might choose to allocate
NO_X allowances in a manner that is favorable to small
entities. Finally, the use of cap and trade in general will limit
impacts on small entities relative to a less flexible command-and-
control program.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4)(UMRA), establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, 2
U.S.C. 1532, EPA generally must prepare a written statement, including
a cost-benefit analysis, for any proposed or final rule that ``includes
any Federal mandate that may result in the expenditure by State, local,
and Tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal
intergovernmental mandate'' and a ``Federal private sector mandate.'' A
``Federal intergovernmental mandate,'' in turn, is defined to include a
regulation that ``would impose an enforceable duty upon State, Local,
or Tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i),
except for, among other things, a duty that is ``a condition of Federal
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector
mandate'' includes a regulation that ``would impose an enforceable duty
upon the private sector,'' with certain exceptions, section 421(7)(A),
2 U.S.C. 658(7)(A).
Before promulgating an EPA rule for which a written statement is
needed under section 202 of the UMRA, section 205, 2 U.S.C. 1535, of
the UMRA generally requires EPA to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule.
The EPA prepared a written statement for the CAIR final inclusive
of this proposal consistent with the requirements of section 202 of the
UMRA. Furthermore, as EPA stated in the rule, EPA is not directly
establishing any regulatory requirements that may significantly or
uniquely affect small governments, including Tribal governments. Thus,
EPA is not obligated to develop under section 203 of the UMRA a small
government agency plan. Furthermore, in a manner consistent with the
intergovernmental consultation provisions of section 204 of the UMRA,
EPA carried out consultations with the governmental entities affected
by this rule.
For several reasons, however, EPA is not reaching a final
conclusion as to the applicability of the requirements of UMRA to this
rulemaking action. First, it is questionable whether a requirement to
submit a SIP revision would constitute a Federal mandate in any case.
The obligation for a State to revise its SIP that arises out of section
110(a) of the CAA is not legally enforceable by a court of law, and at
most is a condition for continued receipt of highway funds. Therefore,
it is possible to view an action requiring such a submittal as not
creating any enforceable duty within the meaning of section
421(5)(9a)(I) of UMRA (2 U.S.C. 658 (a)(I)). Even if it did, the duty
could be viewed as falling within the exception for a condition of
Federal assistance under section 421(5)(a)(i)(I) of UMRA (2 U.S.C.
658(5)(a)(i)(I)).
As noted earlier, however, notwithstanding these issues, EPA
prepared the statement that would be required by UMRA if its statutory
provisions applied for the CAIR final rule and this proposal. The EPA
also consulted with governmental entities as would be required by UMRA.
Consequently, it is not necessary for EPA to reach a conclusion as to
the applicability of the UMRA requirements.
The EPA conducted an analysis of the economic impacts anticipated
from the CAIR program inclusive of the New Jersey and Delaware proposal
for government-owned entities. The modeling conducted using the IPM
projects that about 340 MW of municipality-owned capacity (about 0.4
percent of all subdivision, State and municipality capacity in the CAIR
region) would be uneconomic to maintain under the CAIR program, beyond
what is projected in the base case. In practice, however, the units
projected to be uneconomic to maintain may be ``mothballed,'' retired,
or kept in service to ensure transmission reliability in certain parts
of the grid. For the most part, these units are small and infrequently
used generating units that are dispersed throughout the CAIR region.
The EPA modeling identified 265 State or municipally-owned
entities, as well as subdivisions, within the entire CAIR region. The
EPA excluded from the analysis government-owned entities that were not
projected to have at least one unit with generating capacity of 25 MW
or greater in the base case. Thus, we excluded 184 entities from the
analysis. We found that 81 government entities will be potentially
affected by the CAIR. Of the 81 government entities, 20 may experience
compliance costs in excess of 1 percent of revenues in 2010, and 39 may
in 2015, based on our assumptions of how the affected States implement
control measures to meet their emissions budgets as set forth in this
rulemaking.
Government entities projected to experience compliance costs in
excess of 1 percent of revenues have some potential for significant
impact resulting from implementation of the CAIR. However, as noted
above, it is EPA's position that because these government entities can
pass on their costs of compliance to rate-payers, they will not be
significantly impacted. Furthermore, the decision to include only units
greater than 25 MW in size exempts 179 government entities that would
otherwise be potentially affected by the CAIR program.
The above points aside, potentially adverse impacts of the CAIR
program on State and municipality-owned entities could be limited by
the fact that the cap and trade program is designed such that States
determine how NO_X allowances are to be allocated across
units. A State that wishes to mitigate the impact of the rule on State
or municipality-owned entities might choose to allocate NO_X
allowances in a manner that is favorable to these entities. Finally,
the use of cap and trade in general will limit impacts on entities
owned by small governments relative to a less flexible command-and-
control program.

E. Executive Order 13132: Federalism

Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This proposal does not have federalism implications. It will not
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. The CAA establishes the
relationship between the

[[Page 25422]]

Federal government and the States, and this proposed rule does not
impact that relationship. Thus, Executive Order 13132 does not apply to
this proposal. In the spirit of Executive Order 13132, and consistent
with EPA policy to promote communications between EPA and State and
local governments, EPA specifically solicited comment on the CAIR from
State and local officials.

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

Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (59 FR 22951, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.'' The CAIR program (CAIR final
and New Jersey and Delaware proposed rule) does not have ``Tribal
implications'' as specified in Executive Order 13175.
The CAIR program addresses transport of pollution that are
precursors for ozone and PM_2.5. The CAA provides for States
and Tribes to develop plans to regulate emissions of air pollutants
within their jurisdictions. The regulations clarify the statutory
obligations of States and Tribes that develop plans to implement this
rule. The Tribal Authority Rule (TAR) give Tribes the opportunity to
develop and implement CAA programs, but it leaves to the discretion of
the Tribe whether to develop these programs and which programs, or
appropriate elements of a program, the Tribe will adopt.
The CAIR program does not have Tribal implications as defined by
Executive Order 13175. It does not have a substantial direct effect on
one or more Indian Tribes, because no Tribe has implemented a federally
enforceable air quality management program under the CAA at this time.
Furthermore, the CAIR program does not affect the relationship or
distribution of power and responsibilities between the Federal
government and Indian Tribes. The CAA and the TAR establish the
relationship of the Federal government and Tribes in developing plans
to attain the NAAQS, and this rule does nothing to modify that
relationship. Because the CAIR program does not have Tribal
implications, Executive Order 13175 does not apply.
If one assumes a Tribe is implementing a Tribal Implementation
Plan, today's proposal could have implications for that Tribe, but it
would not impose substantial direct costs upon the Tribe, nor preempt
Tribal law. As provided above, EPA has estimated that the total annual
private costs for the CAIR program inclusive of the New Jersey and
Delaware proposal for the CAIR region as implemented by State, Local,
and Tribal governments is approximately $2.4 billion in 2010 and $3.6
billion in 2015 (1999 dollars). There are currently very few emissions
sources in Indian country that could be affected by the CAIR program
and the percentage of Tribal land that will be impacted is very small.
For Tribes that choose to regulate sources in Indian country, the costs
would be attributed to inspecting regulated facilities and enforcing
adopted regulations.
Although Executive Order 13175 does not apply to this proposal, EPA
consulted with Tribal officials in developing the CAIR program. The EPA
has encouraged Tribal input at an early stage. Also, EPA held periodic
meetings with the States and the Tribes during the technical
development of the CAIR program. Three meetings were held with the Crow
Tribe, where the Tribe expressed concerns about potential impacts of
the CAIR on their coal mine operations. The addition of Delaware and
New Jersey to the CAIR program does not have any bearing upon the
concerns expressed by the Tribes. In addition, EPA held three calls
with Tribal environmental professionals to address concerns specific to
the Tribes. These discussions have given EPA valuable information about
Tribal concerns regarding the development of the CAIR program. The EPA
has provided briefings for Tribal representatives and the newly formed
National Tribal Air Association (NTAA), and other national Tribal
forums. Input from Tribal representatives has been taken into
consideration in development of the CAIR program.

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

Executive Order 13045, ``Protection of Children from Environmental
Health and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any
rule that (1) is determined to be ``economically significant'' as
defined under Executive Order 12866, and (2) concerns an environmental
health or safety risk that EPA has reason to believe may have a
disproportionate effect on children. If the regulatory action meets
both criteria, Section 5-501 of the Order directs the Agency to
evaluate the environmental health or safety effects of the planned rule
on children, and explain why the planned regulation is preferable to
other potentially effective and reasonably feasible alternatives
considered by the Agency.
The CAIR program inclusive of the New Jersey and Delaware proposal
is not subject to the Executive Order, because it does not involve
decisions on environmental health or safety risks that may
disproportionately affect children. The EPA believes that the emissions
reductions from the strategies in this rule will further improve air
quality and will further improve children's health.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

Executive Order 13211 (66 FR 28355, May 22, 2001) provides that
agencies shall prepare and submit to the Administrator of the Office of
Regulatory Affairs, OMB, a Statement of Energy Effects for certain
actions identified as ``significant energy actions.'' Section 4(b) of
Executive Order 13211 defines ``significant energy actions'' as any
action by an agency (normally published in the Federal Register) that
promulgates or is expected to lead to the promulgation of a final rule
or regulation, including notices of inquiry, advance notices of final
rulemaking, and notices of final rulemaking (1) (i) a significant
regulatory action under Executive Order 12866 or any successor order,
and (ii) likely to have a significant adverse effect on the supply,
distribution, or use of energy; or (2) designated by the Administrator
of the Office of Information and Regulatory Affairs as a ``significant
energy action.'' The CAIR program (the CAIR final and the New Jersey
and Delaware proposal) is a significant regulatory action under
Executive Order 12866, and the CAIR program may have a significant
adverse effect on the supply, distribution, or use of energy.
If States choose to obtain the emissions reductions required by the
CAIR final and this proposed rule by regulating EGUs, EPA projects that
approximately 5.3 GWs of coal-fired generation may be removed from
operation by 2010. In practice, however, the units projected to be
uneconomic to maintain may be ``mothballed,'' retired, or kept in
service to ensure transmission reliability in certain parts of the
grid. For the most part, these units are small and infrequently used
generating units that are dispersed throughout the CAIR region. Less
conservative assumptions regarding natural gas prices or electricity
demand would create a greater incentive to keep these units
operational. The EPA projects that the average annual electricity price
will increase by less than 2.7 percent in the

[[Page 25423]]

CAIR region for the CAIR program. The EPA does not believe that the
CAIR final and this proposed rule will have any other impacts that
exceed the significance criteria.
The EPA believes that a number of features of today's rulemaking
serve to reduce its impact on energy supply. First, the optional
trading program provides considerable flexibility to the power sector
and enables industry to comply with the emission reduction requirements
in the most cost-effective manner, thus minimizing overall costs and
the ultimate impact on energy supply. The ability to use banked
allowances from the existing title IV SO₂ Trading Program
and the NO_X SIP Call Trading Program also provide additional
flexibility. Second, the CAIR program caps are set in two phases and
provide adequate time for EGUs to install pollution controls. For more
details concerning energy impacts, see the Regulatory Impact Analysis
for the Final Clean Air Interstate Rule (March 2005).

I. National Technology Transfer Advancement Act

Section 12(d) of the National Technology Transfer Advancement Act
(NTTAA) of 1995 (Pub. L. 104-113; 15 U.S.C. 272 note) directs EPA to
use voluntary consensus standards in its regulatory and procurement
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, business practices) developed or adopted by one or more
voluntary consensus bodies. The NTTAA directs EPA to provide Congress,
through annual reports to OMB, with explanations when an agency does
not use available and applicable voluntary consensus standards.
The CAIR final and this proposed rule would require all sources
that participate in the trading program under part 96 to meet the
applicable monitoring requirements of part 75. Part 75 already
incorporates a number of voluntary consensus standards. Consistent with
the Agency's Performance Based Measurement System (PBMS), part 75 sets
forth performance criteria that allow the use of alternative methods to
the ones set forth in Part 75. The PBMS approach is intended to be more
flexible and cost effective for the regulated community; it is also
intended to encourage innovation in analytical technology and improved
data quality. At this time, EPA is not recommending any revisions to
part 75; however, EPA periodically revises the test procedures set
forth in Part 75. When EPA revises the test procedures set forth in
Part 75 in the future, EPA will address the use of any new voluntary
consensus standards that are equivalent. Currently, even if a test
procedure is not set forth in part 75, EPA is not precluding the use of
any method, whether it constitutes a voluntary consensus standard or
not, as long as it meets the performance criteria specified; however,
any alternative methods must be approved through the petition process
under section 75.66 before they are used under part 75.

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

Executive Order 12898, ``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations,'' requires
Federal agencies to consider the impact of programs, policies, and
activities on minority populations and low-income populations.
According to EPA guidance,\14\ agencies are to assess whether minority
or low-income populations face risks or a rate of exposure to hazards
that are significant and that ``appreciably exceed or is likely to
appreciably exceed the risk or rate to the general population or to the
appropriate comparison group.'' (EPA, 1998)
---------------------------------------------------------------------------

\14\ U.S. Environmental Protection Agency, 1998. Guidance for
Incorporating Environmental Justice Concerns in EPA's NEPA Compliance
Analyses. Office of Federal Activities, Washington, DC, April, 1998.
---------------------------------------------------------------------------

In accordance with Executive Order 12898, the Agency has considered
whether the CAIR program inclusive of the New Jersey and Delaware
proposed rule may have disproportionate negative impacts on minority or
low income populations. The Agency expects the CAIR program to lead to
reductions in air pollution and exposures generally. For this reason,
negative impacts to these sub-populations that appreciably exceed
similar impacts to the general population are not expected.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. The EPA will submit a report containing this rule and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A Major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is a ``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects

40 CFR Part 51

Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Nitrogen dioxide,
Ozone, Particulate matter, Reporting and recordkeeping requirements,
Sulfur oxides, Volatile organic compounds.

40 CFR Part 96

Environmental protection, Administrative practice and procedure,
Air pollution control, Nitrogen oxides, Reporting and recordkeeping
requirements.

Dated: March 10, 2005.
Stephen L Johnson,
Acting Administrator.
[FR Doc. 05-5520 Filed 5-11-05; 8:45 am]
BILLING CODE 6560-50-P

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

Inclusion of Delaware and New Jersey in the Clean Air Interstate Rule

Local Navigation