ÿWPC¨³ ×ýàŒZkxÙ¤å*CÈ £Ï‰[hß/å€ysw}Œ^s&ä¢àŒZkH)P…Ù’Ïhr†_û£ê²ŸR3d¼ ³Qô'“¾)XmeìôìÒcZÓÁ„bª‹íØ:%#y"ot!ð4Q¶•‡ËU&ëÇ{úMÂâfA_OZ'!ç~)î¸âh ý÷(¢©|þkIŒ)É9{°¶‘¾ŽÁXú %ìΉÕ\K¿žâ…jP”“º¦ ý@G’EÇ?‚=߃í§½6ÞÑæÞ‰ЇØÛ!˜Y°à(øs9 ‡ni„¦uÈÔ>üÚï—EA09†~X¬W.cËÍÙ·ðía2$>·*në8‘Ÿ[üš˜€æþGÏr…³J¾2R[é»4°Ä KDx7ôŒÎ§0mÞí¯²dXl µÃái âeEÅÝÏ}†zÙÅ¥p{¿-†Áxi&m‹ D} ¿ÇyŒ•á[ƒ+ØÅÓJO+zv­Dá WN*M4FX¼® S‡Wø €ñc‚€&6¢kY¿¿å7$„öêOtªàòÜ_‘ÃÔ8ÿ%ÐQxÕ¢E³Zå ám`ï<Ô¨Ü)ø3 8ýcjƒ{"éÀ݆ãƒé#!¾U•Nß %- 0:3U©FmU98³U>ëUƒF)¢o^ w.4K_n mpN‡³‰ D5<@q 09Ÿ± 09cP=³Iðð09fifkmf‡!aC‰!fÌ!ÒÎ! #f§$:©$]ã)ù@+Ž9./Ç0Sö4fI9aK9f_9aa9ãu9<X=”=Oš?_é@†HB¡ÎDÎD1oF£ H,CJoKvŠLRNÊROªQfÆRaÈR"ÜRVþUTYXrZXÊZ¹"[fÛ]ãÝ]À` BÎb D 3ëbìcl e|vf&òfia ia4ifHi³Jiaýk 0Nlf_laalfulawlf‹lalf¡l Bu£laÀlaÔlfèlaêlfþlam<m}PmÍnZpWpp8Çq(ÿqÿqò'uf{a{£/{Ò})àü „ „ „a…f…a…/…/…)?ˆ?ˆ=h‰ü¥C¡•¡•tä–ä–ä–LXXXXXXY¤fý£aÿ£ÿ£ÿ£ÿ£ÿ£O¤¤lbªbªbªbªbª B ΰΰΰaë°ë°ë°ë°ë°ë°ë°cÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ°ÿ° C b³b³b³b³b³b³b³b³b³b³b³b³b³b³b³|³’³˜HP LaserJet 4100 PCL 6ÈÈÈÈÈÈÈÈ0(ÖÃ9 Z‹6Times New Roman RegularX(üœ$¡¡ÔUSUS.,Ô<4šÛ 9Z ‹.Courier New Regular<4šÛ 9Z+‹ Courier New <èÀ( 9Z+&Courier Regular<¾½Q 9Z+‹.Courier New Regular Ò   ' &Kevin Culligan&0Kevin Culligan .   šc˜,ÆD{EWd0,@C$˜Ò,Xƒ¤3|x®ÿU‹ÿÀÀÀ ©Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_Ô€The€States€were:€Alabama,€Connecticut,€Delaware,€Georgia,Ð ° ÐIllinois,€Indiana,€Kentucky,€Maryland,€Massachusetts,ÏMichigan,€Missouri,€New€Jersey,€New€York,€North€Carolina,ÏOhio,€Pennsylvania,€Rhode€Island,€South€Carolina,€Tennessee,ÏVirginia,€West€Virginia,€and€Wisconsin.––––)óÿ!dxdxhttp://www.epa.gov/ttn/rto/,and(^2/¿$¤¤Ý ƒüœ!ÝÔUSUS.,ÔÝ  ÝÒ°ÒÔ€X¦^XXXÔòòÚ  Ú0Ú  Úóó("¨†$Ô‡XáDXXXÔòòÚ  Ú0Ú  Úóó 3Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_Ô€The€States€were:€Delaware,€Indiana,€Kentucky,€Maryland,Ð ° ÐMichigan,€North€Carolina,€New€Jersey,€New€York,€Ohio,ÏPennsylvania,€Virginia,€and€West€Virginia. ?Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú11Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔA€commenter€questioned€the€accuracy€of€the€projections€ofÐ e Ðreductions€attributable€to€the€programs€on€the€spreadsheetÏbecause€those€projections€were€done€on€a€program„by„programÏbasis,€without€consideration€of€the€interactive€effects€ofÏthe€programs.€€The€IDEAS€model€run,€noted€above,€in€effectÏconsidered€those€interactive€effects€of€the€programs€andÏprovided€as€an€output€the€total€electricity€savingsÐ i   Ðexpressed€in€billion€Kwh€(along€with€other€outputs,Ïincluding€the€emissions€reductions).€€The€total€electricityÏsavings€indicated€by€the€IDEAS€model€run€are€virtuallyÏidentical€to€the€total€amounts€projected€on€a€program„by„¼program€basis.€€Ô_Ô(DocketÔ_Ô€Ô_ÔÔ_ÔÔ_Ô#Ô_Ô€A„96Ô_Ô„56,€XIV„Ô_ÔFÔ_Ô„03).Ô#†X¦^XXX¦^ˆ#ÔÔ_Ô€ò òó ó &Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú53Ú  ÚóóÝ  ÝÔ_Ô€As€a€conceptual€matter,Ô‡X¦^XXX¦^Ô€EPA€considers€this€alternativeÐ e Ðless€reasonable€Ô_ÔthanÔ_Ô€EPAððs€methodology€because€it€calculatesÏgrowth€between€an€actual€year€of€heat€input€(1996)€and€aÏmodeled€year€of€heat€input.€€òòSeeóó€Ô_ÔsectionÔ_Ô€V.C.2€of€thisÐ ç‚ Ðnotice.Ô#†X¦^XXX¦^Ÿ#Ô¼ ¼  Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú5Ú  ÚóóÝ  ÝÔ_Ô€The€portion€of€EPAððs€brief€on€the€growth€rate€issue€inÐ ° ÐòòAppalachian€Power€v.€EPAóó€reflects€the€confusing€response€toÐ †Ö Ðcomments.€€As€discussed€above€and€contrary€to€the€suggestionÏin€the€brief€(at€71„2),€the€cost„effectiveness€run€and€EPAððsÏcost„effectiveness€analysis€did€not€use€ð ð1996„2001€growthÏratesðð€for€heat€input.à€(#(#K(#àhHCTABLE H/SIPSTATEHEATINPUTð¨ ÈÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú18Ú  ÚóóÝ  ÝÔ_Ô€This€issue,€like€the€CCAP€issues,€was€raised€byÐ e Ðcommenters€for€the€first€time€in€response€to€the€August€3,ÏÔ_Ô2001€NODAÔ_Ô€and€was€not€raised€in€any€earlier€rulemaking€orÏbefore€the€Court.€€Nevertheless,€EPA€is€addressing€all€theseÏissues€on€the€merits€in€todayððs€notice. ýÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú31Ú  ÚóóÝ  ÝÔ_ÔIn€one€of€those€States,€Michigan,€EPAððs€heat€inputÐ e Ðprojections€have€not€actually€been€exceeded.Xª 0Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú17Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔEPA€also€notes€that€the€Agencyððs€use€of€assumed€CCAPÐ e Ðreductions€did€not€significantly€affect€the€Ô_ÔcostÏeffectivenessÔ_Ô€of€the€NOx€emissions€reductions€on€which€theÏState€NOx€emission€budgets€are€based€and€did€not€changeÏwhether€the€reductions€met€EPAððs€Ô_Ôcost€effectivenessÔ_ÔÏcriteria.€€Ô_ÔAsÔ_Ô€explained€in€the€NOx€SIP€Call,€EPA€examinedÏthe€impact€of€the€CCAP€reductions€and€found€that€ð ðeven€ifÏthe€Agency€did€not€assume€the€CCAP€reductions,€it€was€stillÏhighly€Ô_Ôcost€effectiveÔ_Ô€to€develop€a€regional€level€NOx€budgetÏfor€the€electric€power€industry,€based€on€the€level€ofÏcontrol€that€EPA€has€Ô_Ôassumed,ððÔ_Ô€Ô_Ô(63Ô_Ô€Ô_ÔFÔ_ÔÔ_ÔRÔ_Ô€Ô_Ô57414).Ô_Ô€€Ô_Ô(òòSeeÔ_Ô€alsoóóÐ Á \  ÐRegulatory€Impact€Analysis€for€the€Regional€NOx€SIP€Call,€atÏ6„24€and€6„25,€September€Ô_Ô1998).ò òÔ#†X¦^XXX¦^ˆ#Ôó óÔ_Ô SÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_Ô€Unless€otherwise€stated,€all€references€in€this€notice€toÐ ° Ðactual€or€projected€ð ðheat€inputðð€or€ð ðheat€input€growthÏratesðð€concern€heat€input€during€the€ozone€season€for€EGUs. ïÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú33Ú  ÚóóÝ  ÝÔ_Ô€€EPA€calculated€the€partial€State€heat€input€budgets€forÐ e Ðlarge€EGUs€for€Alabama,€Georgia,€and€Missouri€by€summing€theÏheat€input€for€1996,€1995,€and€1995€respectively€for€allÏsuch€units€in€the€fine€grid€counties€of€the€particular€StateÏÔ_Ôand€applying€the€appropriate€growth€rate.Ô_Ô€€This€informationÏis€in€Docket€Item€XV„C„29€and€is€consistent€with€the€partialÏState€NOx€emission€budgets€proposed€in€67€Fed.€Reg.€Ô_Ô8395,Ô_ÔÔ_ÔÔ_ÔÏ8416,€Ô_ÔFeb.Ô_Ô€22,€Ô_Ô2002.Ô_Ô „Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú55Ú  ÚóóÝ  ÝÔ_Ô€Under€òòFederal€Registeróó€drafting€requirements,€EPA€mustÐ e Ðhave€an€ð ðActionðð€caption€in€every€document€published€in€theÏòòFederal€Registeróó.€The€use€of€caption€at€the€beginning€ofÐ ¬ Ðtodayððs€notice€does€not€make€the€notice€an€ð ðactionðð€underÏSection€307(d)(1)(N).€€The€ð ðActionðð€caption€is€required€for€Ïall€notices,€including€policy€statements€and€interpretationsÏfor€which€public€notice€and€comment€and€a€public€hearing€areÏclearly€not€required.€ %Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú36Ú  ÚóóÝ  ÝÔ_Ô€EPA€stated€that€the€improvements€in€the€1998€IPM€BaseÐ e ÐCase€forecast€included€ð ðusing€the€most€recent€NERC€estimateÏfor€regional€electricity€demand;€the€latest€available€EIAÏand€NERC€generation€unit€data;€updated€fuel€forecasts;Ïupdated€assumptions€on€nuclear,€hydro„electric€and€importÐ ½X ¤ Ðassumptions€(with€special€attention€to€differences€in€summerÏuse);€and€an€increase€in€the€level€of€detail€in€the€model€toÏmore€accurately€capture€the€transmission€constraints€thatÏexist€for€moving€power€between€various€regions€of€theÏcountry.ðð€òòId.ò òóóó ó€€In€addition,€the€forecast€included€updatedÐ ½X Ðassumptions€ð ðon€the€size€and€operation€of€all€electricityÏgeneration€units€of€utilities€and€independent€powerÏproducers€(with€special€attention€to€cogenerators)ðð€andÏð ðplanning€reserve€margins€and€the€costs€of€building€newÏgeneration€capacity.ðð€€òòId.óó IÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú30Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔCommenters€have€characterized€EPAððs€preliminary€views€inÐ e Ðthe€August€3,€Ô_Ô2000€NODAÔ_Ô€as€attempting,€in€essence,€to€argueÏthat€the€only€thing€that€matters€is€the€Ô_ÔregionwideÔ_Ô€heatÏinput€growth€rate,€not€the€individual€State€growth€rates.€ÏThis€is€a€mischaracterization.€€EPA€believes€that€as€long€asÏthe€Ô_ÔregionwideÔ_Ô€projection€is€reasonably€close€to€the€actualÏÔ_ÔregionwideÔ_Ô€heat€input,€then,€as€a€matter€of€simpleÏarithmetic,€trading€opportunities€will€likely€be€present€forÏany€State€whose€actual€NOx€emissions€exceed€its€NOxÔ#†X¦^XXX¦^ˆ#ÔòòóóÔ‡X¦^XXX¦^Ô€emissionÐ  ° B Ðbudget.€€As€discussed€above,€the€availability€of€trading,€inÏturn,€limits€the€impact€of€higher€than€expected€heat€input.€ÏÔ#†X¦^XXX¦^k#Ô¤xTABLE CDmTABLE G ÙÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú56Ú  ÚóóÝ  ÝÔ_Ô€One€of€these€commenters€argued€that€EPA€should€remove€anyÐ e Ðlimit€on€the€size€of€the€Compliance€Supplement€Pool,€whichÏis€a€pool€of€extra€allowances€established€by€EPA€for€eachÏState€for€use€in€the€first€Ô_Ô2Ô_Ô€years€of€the€NOx€SIP€Call€andÏthe€Ô_ÔsectionÔ_Ô€126€Rule€by€sources€that€may€not€be€able€toÏinstall€NOx€Ô_ÔemissionsÔ_Ô€in€time.€€Not€only€is€this€claimÏoutside€the€scope€of€this€notice,€but€also€the€Court€hasÏalready€ruled€on€and€upheld€EPAððs€imposition€of€the€cap€onÏthe€Compliance€Supplement€Pool.€€òòSeeóó€òòMichigan€v.€EPAóó,€Ô_Ô213Ô_ÔÔ_Ôò òÔ_ÔÐ  ° Ðó óF.3d€Ô_Ôat€694Ô_ÔÔ_Ô.Ô_Ô€Ô_ÔÔ_Ômailto:hoffman.howard@epa.gov üÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú48Ú  ÚóóÝ  ÝÔ_Ô€The€Ô_ÔÔ_ÔÔ_ÔÔ_ÔÔ_ÔperiodsÔ_Ô€for€decreasing€ozone€season€heat€inputÐ e Ðobviously€Ô_ÔdifferÔ_Ô€slightly€from€Ô_ÔtheÔ_ÔÔ_ÔÔ_Ô€Ô_ÔperiodsÔ_Ô€for€decreasingÏannual€heat€input.€ EÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú38Ú  ÚóóÝ  ÝÔ_Ô€This€contrasts€with€fossil€Ô_Ôfuel„firedÔ_Ô€units,€whoseÐ e Ðoperating€costs€are€higher€because€of€the€cost€of€fossilÐ ;Ö ¤ Ðfuel. UÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú51Ú  ÚóóÝ  ÝÔ_Ô€As€discussed€in€Ô_ÔsectionÔ_Ô€V.C.3€of€this€notice,€OTAGððsÐ e Ðprojections€also€are€fundamentally€flawed€in€that€they€areÏnot€based€on€consistent€assumptions.€€ |Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú19Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔAs€noted€in€the€August€3,€Ô_Ô2001€NODA,Ô_Ô€EPAððs€methodologyÐ e Ðcalled€for€projecting€2007€heat€input,€not€heat€input€atÏinterim€points€in€time.€€However,€for€purposes€of€respondingÏto€concerns€about€the€reasonableness€of€the€methodology,€itÏis€useful€to€examine€what€the€methodology€would€project€ifÏapplied€to€interim€points€in€time€when€data€concerningÏactual€heat€input€are€available.Ô#†X¦^XXX¦^ˆ#Ô —Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú4Ú  ÚóóÝ  ÝÔ_Ô€€EPA€is€not€analyzing€the€reasonableness€of€the€growthÐ ° Ðmethodology€with€respect€to€Wisconsin€because€the€CourtÏvacated€the€NOx€SIP€Call€for€that€State€and€EPA€does€notÏintend,€at€present,€to€further€evaluate€Wisconsin€in€theÏcontext€of€ozone€transport. 'Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú52Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔFurther,€as€a€conceptual€matter,€EPA€considers€thisÐ e Ðalternative€less€reasonable€Ô_ÔthanÔ_Ô€EPAððs€methodology€becauseÏthis€alternative€assumes€the€same€amount€of€heat€inputÏgrowth€for€each€State,€a€phenomenon€that€is€demonstrablyÏunrealistic,€based€on€both€historical€experience€and€modelÏprojections.Ô#†X¦^XXX¦^ˆ#Ô ™Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú7Ú  ÚóóÝ  ÝÔ_Ô€Note€that€while€EPA€started€its€electric€demand€forecastsÐ e Ðusing€NERC€forecasts€for€the€year€1997,€EPA€used€here€theÏactual€electricity€demand€for€1996€in€order€to€demonstrateÏthe€effective€growth€rate€for€1996„2001,€which€is€referencedÏby€the€commenters. "Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú54Ú  ÚóóÝ  ÝÔ_Ô€EPA€notes€that€the€District€of€Columbia€is€unique€in€thatÐ e Ðit€has€only€six€units€and€so€its€heat€input€is€particularlyÏvariable.ò ò€ó ó Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú44Ú  ÚóóÝ  ÝÔ_Ô€Monthly€data€was€not€available€for€the€year€1983,€so€aÐ e Ðcomparison€of€the€period€between€1977€and€1983€cannot€beÏmade. lÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú22Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔSeeÐ e Ðhttp://www.nrc.gov/reading-rm/doc-collections/news/archive/0¼1-136.htmlÔ#†X¦^XXX¦^ˆ#ÔÔ‡X¦^XXX¦^Ô.Ô#†X¦^XXX¦^)#Ô HÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú41Ú  ÚóóÝ  ÝÔ_ÔEIA€provided€generation€data€for€this€entire€period€onlyÐ e Ðfor€large€utility€units.€€In€the€State€of€Michigan,€non„¼utility€units€make€up€about€12%€of€the€generation€capacity. ÀÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú6Ú  ÚóóÝ  ÝÔ_Ô€In€addition,€EPA€considered,€but€rejected,€the€approach€ofÐ e Ðusing€a€single,€uniform€heat€input€growth€rate€in€developingÏall€of€the€State€Ô_ÔNOxÔ_Ô€emission€budgets.€€(See€Ô_ÔsectionÔ_Ô€Ô_ÔD.IVÔ_Ô.10Ïof€this€notice.)  Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú23Ú  ÚóóÝ  ÝÔ_Ô€SeeÐ e Ðhttp://yosemite.epa.gov/r5/il_permt.nsf/50d44ae9785337bf8625¼666c0063caf4/b04c4b1ab67564e48625685d0068df82/$FILE/99080101¼fnl.PDF;€andÏhttp://www.dom.com/operations/station-fossil/unit.htmlÔ‡X¦^XXX¦^Ô.Ô#†X¦^XXX¦^]#Ô¤ûTABLE L Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú24Ú  ÚóóÝ  ÝÔ_Ô€See€Ô‡X¦^XXX¦^Ôhttp://www.sargentlundy.com/fossil/plant.aspÔ#†X¦^XXX¦^Œ#ÔÔ4‚B5ЋÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  ÔÔ6úÔÝ‚TÍOng€gÝóóÔÿÔÝ  ÝÔ7ra‹<Ô;€andÐ e КÔ4‚C5ÐÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  ÔóóÔ‡X¦^XXX¦^Ôhttp://www.pegasustec.com/docs/NICE3.pdfÔ#†X¦^XXX¦^ #ÔÔ‡X¦^XXX¦^Ô.òòò òÔ6ºÔÝ‚TÍOÎng€gÝóóÔÿÔÝ  ÝÔ7ra üÔó óÔ#†X¦^XXX¦^s#Ô LÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú45Ú  ÚóóÝ  ÝÔ_Ô€EPA€notes€that€it€previously€solicited€corrections€toÐ e Ðbaseline€heat€input€data€and€responded€to€requestedÏcorrections€through€the€Technical€Amendments€in€1999€andÏ2000.€EPA€also€notes€that,€based€on€the€data€provided€byÏcommenters,€the€requested€changes€to€1996€heat€input€wouldÏhave€very€little€impact€on€Virginiaððs€EGU€NOx€emissionÏbudget.€€Ô_ÔVirginiaððsÔ_Ô€1996€baseline€heat€input€(which€was€usedÏto€develop€the€budget)€would€increase€by€131€tons,€and,€withÏthe€application€of€EPAððs€growth€factor€of€1.32€for€Virginia,Ð  ° € ÐÔ_ÔtheÔ_Ô€Stateððs€EGU€NOx€emission€budget€would€increase€by€173Ïtons€or€1%.€€ Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú46Ú  ÚóóÝ  ÝÔ_Ô€EPA€similarly€incorporated€other€specific€dataÐ e Ðcorrections€requested€by€commenters€for€other€States€for€Ï1997€or€later.€(http://www.pegasustec.com/docs/NICE3.pdf),(http://www.pegasustec.com/docs/NICE3.pdf). ¯Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú25Ú  ÚóóÝ  ÝÔ_Ô€One€commenter€claimed€EPAððs€heat€input€growth€methodologyÐ e Ðthereby€results€in€ð ðdraconian€economic€sanctionsðð€and€a€ð ðno„¼growth€policyðð€for€Michigan.€€As€discussed€below€in€Ô_ÔsectionÔ_ÔÏV.D.9€of€this€notice,€there€is€no€basis€for€claiming€thatÏEPAððs€heat€input€growth€rate€underestimates€MichiganððsÏfuture€heat€input.€In€fact,€Michiganððs€actual€heat€input€hasÏnever€exceeded€EPAððs€2007€projection€and,€since€1998,€hasÏdeclined€to€where€for€2001€it€is€8.7%€below€that€projection.€\| ÙÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú28Ú  ÚóóÝ  ÝÔ_Ô€òòInventory€of€Power€Plants€in€the€U.S.€as€of€January€1,Ð e Ð1998óó,Ô_ÔEIA,Ô_Ô€December€1998,€Ô_Ôat€pg.Ô_Ô€3;€òòInventory€of€ElectricÐ ;Ö ÐUtility€Power€Plants€in€the€U.S.€1999€With€Data€as€ofÏJanuary€1,€Ô_Ô1999,óó€EIA,Ô_Ô€November€1999,€at€Ô_Ôpg.€1;Ô_Ô€òòInventory€ofÐ ç‚ ÐElectric€Utility€Power€Plants€in€the€U.S.€Ô_Ô1999,óó€EIA,Ô_ÔÐ ½X ÐSeptember€2000€at€Ô_Ôpg.Ô_Ô€1. Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú50Ú  ÚóóÝ  ÝÔ_Ô€While€EPAððs€2007€heat€input€projection€was€exceeded€byÐ e ÐNew€Yorkððs€1999€heat€input,€no€commenter€disputed€the€heatÏinput€growth€rate€for€that€State.€€Moreover,€the€StateððsÏheat€input€has€decreased€since€1999€and€is€now€well€belowÏEPAððs€projection.€€In€fact,€heat€input€in€every€year€otherÏthan€1999€has€been€lower€than€the€actual€heat€input€in€1995.üÿ dHHHH'ûÿdxd âÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú29Ú  ÚóóÝ  ÝÔ_Ô€See€EPA€Region€4€National€Combustion€SpreadsheetÐ e Ðmaintained€atÏÔ_ÔÔ4‚Ll€ÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  Ôóóhttp://www.epa.gov/region4/air/permits/national_ct_list.xls.òòÔ6ëÔÝ‚TÍOÿectrÝóóÔÿÔÝ  ÝÔ7l€-ÔÔ_Ô bÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú9Ú  ÚóóÝ  ÝÔ_Ô€EIA€is€an€independent€agency€within€the€U.S.€Department€ofÐ e ÐEnergy€(DOE)€that€is€responsible€for,€among€other€things,Ïcollecting,€compiling,€and€reporting€information€on€the€U.S.Ïelectricity€industry.http://www.epa.gov/region4/air/permits/national_ct_list.xls). Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú20Ú  ÚóóÝ  ÝÔ_Ô€EPA,€of€course,€recognizes€that€there€also€can€beÐ e Ðsignificant€increases€in€State€heat€input€over€multi„yearÏperiods.€€However,€commenters€suggested€that€significantÏdecreases€could€not€occur.€€The€point€is€that,€sinceÏsignificant€decreases€can€occur,€the€fact€that€StateððsÏrecent€heat€input€exceeds€or€is€close€to€EPAððs€2007Ïprojection€does€not€make€the€projection€unreasonable. TABLE ITABLE A$® ©Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú15Ú  ÚóóÝ  ÝÔ_Ô€Ô‡X¦^XXX¦^ÔA€commenter€stated€that€CCAP€has€not€generated€theÐ e Ðexpected€level€of€reductions€because€it€did€not€achieve€itsÏgoal€of€reducing€U.S.€greenhouse€gas€emissions€to€1990Ïlevels.€€However,€the€amounts€of€reductions€projected€by€theÏClimate€Action€Report€for€particular€CCAP€programs€affectingÏelectricity€demand,€which€are€the€ones€relevant€for€presentÏpurposes,€were€far€less€than€would€be€necessary€to€reduceÏoverall€U.S.€greenhouse€gas€emissions€to€1990€levels.Ô#†X¦^XXX¦^ˆ#ÔTABLE A(ÍO$——ÔÿÔòòóóÔÿÔ¼ TABLE A¼ TABLE A¼ TABLE A¼  dTABLE BTABLE J€vTABLE DÈ/TABLE Emailto:culligan.kevin@epa.gov sÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú8Ú  ÚóóÝ  ÝÔ_Ô€In€addition,€EPA€notes€that€since€the€CCAP€reductions€areÐ e Ðassumed€to€occur€on€a€nationwide€basis,€any€assumptionsÏregarding€CCAP€would€not€have€been€the€cause€of€State„by„¼State€variation€in€heat€input€growth€rates.€ ƒÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú10Ú  ÚóóÝ  ÝÔ_Ô€Parties€to€the€1992€United€Nations€Framework€ConventionÐ e Ðon€Climate€Change€(including€the€U.S.)€agreed€to€submitÏreports€detailing€their€emissions€of€greenhouse€gases€(suchÏas€COòò2óó)€and€any€strategies€to€reduce€those€emissions. Ñ e Ñ MÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú12Ú  ÚóóÝ  ÝÔ_Ô€€Many€other€CCAP€programs€generated€energy€savings€but€inÐ e Ðways€other€than€reducing€electricity€demand,€so€that€EPA€didÏnot€take€into€account€benefits€from€these€programs€either.http://www.epa.gov/ttn/rto/ Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú14Ú  ÚóóÝ  ÝÔ_ÔÐ e ЀÔ‡X¦^XXX¦^ÔIndeed,€several€commenters€critical€of€EPAððs€electricityÐ ç‚ Ðdemand€assumptions€nevertheless€acknowledged€that€it€isÏunclear€to€what€extent€individual€utilities€incorporatedÏCCAP€programs€into€their€demand€projections.€€Ô_Ô(DocketÔ_Ô€Ô_Ô#€A„¼Ô_Ô96„56,€Item€#€XIV„DÔ_Ô„14,Ô_Ô€Ô_ÔMichigan,Ô_Ô€Attachment,€p.€Ô_Ô5,Ô_Ô€and€ItemÏ#€XIV„DÔ_Ô„31,Ô_Ô€Ô_ÔUARG,Ô_Ô€Attachment€H,€p.€7).Ô#†X¦^XXX¦^#Ô èÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú35Ú  ÚóóÝ  ÝÔ_ÔÔ_ÔEPAððs€review€indicates€that€four€out€of€the€34€seven„yearÐ e Ðperiods€from€1960„2000€had€a€decrease€in€annual€heat€input,Ïwith€a€decrease€of€over€4%€for€three€periods€(Docket€#€A„96„¼56,€Item€#€XV„C„18,€at€10),€while€two€out€of€the€21€seven„¼year€periods€from€1970„1998€had€a€decrease€in€ozone€seasonÏheat€input,€with€one€of€those€decreases€greatly€exceeding€4%Ï(Docket€#€A„96„56,€Item€#€XV„C„19,€at€10).€€Since€theseÏperiods€„„€although€a€minority€„„€indicate€that€suchÏdecreases€can€occur,€EPA€believes€that€its€methodologyÏshould€not€be€considered€unreasonable€based€on€the€recentÏState€heat€input.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„termÐ Á \  Ðhistorical€data€certainly€show€the€potential€for€suchÏdecreases,€the€data€are€otherwise€of€limited€use€inÏprojecting€future€heat€input.€€As€explained€in€SectionÏV.D.6.€of€this€notice,€the€electricity€industry€has€beenÏundergoing€deregulation€of€generation€and€restructuring.€€AsÏa€result,€trends€in€the€past,€as€reflected€in€the€data,Ô#†X¦^XXX¦^!#ÔÔ‡X¦^XXX¦^Ô€mayÐ Å`  Ðnot€continue€in€the€future.€€The€IPM€reflects€these€changes,Ïand€by€using€the€IPM€in€developing€heat€input€growth€rates,ÏEPA€has€taken€these€changes€into€account.Ô#†X¦^XXX¦^Û#ÔÔ_ÔD4TABLE A ™Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú21Ú  ÚóóÝ  ÝÔ_Ô€EIA€collected,€on€a€long€term€historical€basis,€monthlyÐ e Ðand€annual€plant„by„plant€data€on€quantity€and€heat€contentÏof€fuel€used.€€EIA€used€these€data€to€determine€annual€heatÏinput€for€each€State€and€did€not€determine€State€heat€inputÏon€an€ozone€season€basis.€€EPA€notes€that€its€analysis€doesÏnot€include€the€District€of€Columbia,€for€which€a€full€setÏof€historical,€annual€heat€input€data€was€not€available.€€ÏHowever,€the€heat€input€growth€rate€for€the€District€ofÏColumbia€is€not€disputed€by€commenters. Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú40Ú  ÚóóÝ  ÝÔ_Ô€It€has€been€suggested€thatÔ‡X¦^XXX¦^Ô€Cook€nuclear€generation€hasÐ e Ðbeen€taken€up€by€out„of„state€affiliates€of€Cook€andÏtherefore€that€Cookððs€operational€problems€have€not€affectedÏfossil„fired€generation€in€Michigan.€€However,€EPA€has€notÏreceived€specific€information€purporting€to€demonstrate€thisÏpattern.€€Indeed,€the€Michigan€Public€Utility€Commission€òòòòóóóóhasÐ “. Ðhighlighted€that€the€resumption€of€normal€operations€by€theÏCook€Nuclear€facility€increases€both€available€generationÏand€the€ability€to€import€power,€which€suggests€that€CookÏand€fossil„fired€Michigan€generators€are€interrelated.Ô#†X¦^XXX¦^¢#Ô€Ð ë †  ÐSummer€2001,€Energy€Appraisal,€Michigan€Public€UtilityÏCommission,ÏÔ_Ôhttp://www.cis.state.mi.us/mpsc/reports/energy/01summer/elec¼tric.htm.Ô_Ô Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú26Ú  ÚóóÝ  ÝÔ_ÔÔÿÔ€Ôÿ‡ÔOil/gas€units€are€included€in€the€same€category€becauseÐ e Ðmany€units€that€burn€one€fuel€can€also€burn€the€other.€ÏHowever,€as€the€analysis€points€out,€more€inefficientÏoil/gas€boilers€are€being€retired€and€most€of€the€increaseÏin€generation€comes€from€highly€efficient,€highly€controlledÏnatural€gas€combined€cycle€units.€€Analyzing€Electric€PowerÏat€8. òÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú27Ú  ÚóóÝ  ÝÔ_Ô€EPA€notes€that€oil€generation€will€account€for€a€trivialÐ e Ðamount€of€oil/gas€generation.TABLE A¼ TABLE A Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú49Ú  ÚóóÝ  ÝÔ_ÔThroughout€this€notice€the€term€growth€rate€(expressed€inÐ e ÐÔ_Ôpercent)Ô_Ô€has€been€Ô_Ôused.Ô_Ô€€In€the€original€Ô_ÔrulemakingÔ_Ô€EPAÏactually€used€growth€factors€(a€factor€used€to€multiply€theÏbaseline€heat€input).€€Growth€factors€can€be€converted€toÏgrowth€rates€by€subtracting€1€and€expressing€the€value€inÏterms€of€a€percent€(e.g.€a€growth€factor€of€1.08€isÏequivalent€to€a€growth€rate€of€8%).€€In€other€words,Ïincreasing€a€baseline€heat€input€by€8%€growth€rate€isÏequivalent€to€multiplying€the€baseline€heat€input€by€a€1.08Ïgrowth€factor. Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú32Ú  ÚóóÝ  ÝÔ_Ô€EPA€also€used€the€IPM€in€order€to€make€sure€thatÐ e Ðconsistent€assumptions€were€used€for€projecting€each€StateððsÏheat€input€growth. 3Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú43Ú  ÚóóÝ  ÝÔ_Ô€Ô_ÔEPAððs€review€indicates€that€ten€out€of€the€32€nine„yearÐ e Ðperiods€from€1960„2000€had€a€decrease,€or€an€increase€of€noÏmore€than€1%,€in€annual€heat€input€(Docket€#€A„96„56,€Item€#ÏXV„C„18,€at€58),€while€7€of€the€19€nine„year€periods€fromÏ1970„1998€had€a€decrease,€or€an€increase€of€no€more€than€1%,Ïin€ozone€season€heat€input€(Docket€#€A„96„56,€Item€#€XV„C„¼19,€at€58).€€Since€these€periods€„„€although€a€minority€„„Ïindicate€that€such€decreases€and€small€increases€can€occur,ÏEPA€believes€that€its€methodology€should€not€be€consideredÏunreasonable€based€on€the€recent€State€heat€input.€ÏMoreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„term€historical€data€certainlyÐ Á \  Ðshow€the€potential€for€such€decreases€and€small€increases,Ïthe€data€are€otherwise€of€limited€use€in€projecting€futureÏheat€input.Ô#†X¦^XXX¦^#ÔÔ‡X¦^XXX¦^Ô€€As€explained€in€Section€V.D.6.€of€this€notice,Ð CÞ  Ðthe€electricity€industry€has€been€undergoing€deregulation€ofÏgeneration€and€restructuring.€€As€a€result,€trends€in€theÏpast,€as€reflected€in€the€dataÔ#†X¦^XXX¦^ #ÔÔ‡X¦^XXX¦^Ô,€may€not€continue€in€theÐ Å`  Ðfuture.€€The€IPM€reflects€these€changes,€and€by€using€theÏIPM€in€developing€heat€input€growth€rates,€EPA€has€takenÏthese€changes€into€account.Ô#†X¦^XXX¦^%#ÔÔ_Ô òÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú47Ú  ÚóóÝ  ÝÔ_Ô€Ô_ÔÔ_ÔÔ_ÔEPAððs€review€indicates€that€two€out€of€the€31€ten„yearÐ e Ðperiods€from€1960„2000€had€a€decrease€in€annual€heat€input,Ïwith€the€largest€decrease€being€5.5%€(Docket€#€A„96„56,€ItemÏ#€XV„C„18,€at€61),€while€four€out€of€the€18€ten„yearsÏperiods€from€1970„1998€had€a€decrease€in€ozone€season€heatÏinput,€with€the€largest€decrease€being€9.1%€(Docket€#€A„96„¼56,€Item€#€XV„C„19,€at€61).€€€Since€these€periods€„„Ïalthough€a€minority€„„€indicate€that€such€decreases€canÏoccur,€EPA€believes€that€its€methodology€should€not€beÏconsidered€unreasonable€based€on€the€recent€State€heatÏinput.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„term€historical€dataÐ Á \  Ðcertainly€show€the€potential€for€such€decreases,€the€dataÏare€otherwise€of€limited€use€in€projecting€future€heatÏinput.Ô#†X¦^XXX¦^+#ÔÔ‡X¦^XXX¦^Ô€€As€explained€in€Section€V.D.6.€of€this€notice,€theÐ CÞ  Ðelectricity€industry€has€been€undergoing€deregulation€ofÏgeneration€and€restructuring.€€As€a€result,€trends€in€theÏpast,€as€reflected€in€the€data,€may€not€continue€in€theÏfuture.€€The€IPM€reflects€these€changes,€and€by€using€theÏIPM€in€developing€heat€input€growth€rates,€EPA€has€takenÏthese€changes€into€account.Ô#†X¦^XXX¦^#ÔÔ_Ô 9Ý ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú16Ú  ÚóóÝ  ÝÔ_Ô€Only€a€small€part€of€the€Energy€Star€reductions€wereÐ e Ðconsidered€to€be€included€in€the€NERC€forecasts€because€theyÏinvolved€programs€in€existence€before€1993. jÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú37Ú  ÚóóÝ  ÝÔ_ÔÔ_ÔEPAððs€review€indicates€that€13€out€of€the€32€nine„yearÐ e Ðperiods€from€1960„2000€had€a€decrease€in€annual€heat€input,Ïwith€a€decrease€of€more€than€10.2%€in€eight€of€those€periodsÏ(Docket€#€A„96„56,€Item€#€XV„C„18,€at€13),€while€11€of€theÏ19€nine„year€periods€from€1970„1998€had€a€decrease€in€ozoneÏseason€heat€input,€with€a€decrease€of€more€than€10.2%€inÏeight€of€those€periods.€€(Docket€#€A„96„56,€Item€#€XV„C„19,Ïat€13).€€Since€these€periods€„„€although€a€minority€„„Ð ? Ú ¤ Ðindicate€that€such€decreases€can€occur,€EPA€believes€thatÏits€methodology€should€not€be€considered€unreasonable€basedÏon€the€recent€State€heat€input.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„Ð ¬ Ðterm€historical€data€certainly€show€the€potential€for€suchÏdecreases,€the€data€are€otherwise€of€limited€use€inÏprojecting€future€heat€input.Ô#†X¦^XXX¦^L#ÔÔ‡X¦^XXX¦^Ô€€As€explained€in€SectionÐ “. ÐV.D.6.€of€this€notice,€the€electricity€industry€has€beenÏundergoing€deregulation€of€generation€and€restructuring.€€AsÏa€result,€trends€in€the€past,€as€reflected€in€the€data,Ô#†X¦^XXX¦^@#ÔÔ‡X¦^XXX¦^Ô€mayÐ  ° Ðnot€continue€in€the€future.€€The€IPM€reflects€these€changes,Ïand€by€using€the€IPM€in€developing€heat€input€growth€rates,ÏEPA€has€taken€these€changes€into€account.Ô#†X¦^XXX¦^]#ÔÔ_Ôhttp://www.epa.gov/capi/ipm/npr.htm). OÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú39Ú  ÚóóÝ  ÝÔ_ÔÔ_ÔEPAððs€review€indicates€that€eight€out€of€the€32€nine„yearÐ e Ðperiods€from€1960„2000€had€a€decrease,€or€an€increase€of€noÏmore€than€0.4%,€in€annual€heat€input€(Docket€#€A„96„56,€ItemÏ#€XV„C„18,€at€28),€while€2€of€the€19€nine„year€periods€fromÏ1970„1998€had€a€decrease,€or€an€increase€of€no€more€thanÏ0.4%,€in€ozone€season€heat€input.€€(Docket€#€A„96„56,€Item€#ÏXV„C„19,€at€28).€€Since€these€periods€„„€although€a€minorityÏ„„€indicate€that€such€decreases€and€small€increases€canÏoccur,€EPA€believes€that€its€methodology€should€not€beÏconsidered€unreasonable€based€on€the€recent€State€heatÏinput.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„term€historical€dataÐ Á \  ¤ Ðcertainly€show€the€potential€for€such€decreases€and€smallÏdecreases,€the€data€are€otherwise€of€limited€use€inÏprojecting€future€heat€input.Ô#†X¦^XXX¦^#ÔÔ‡X¦^XXX¦^Ô€€As€explained€in€SectionÐ ¬ ÐV.D.6.€of€this€notice,€the€electricity€industry€has€beenÏundergoing€deregulation€of€generation€and€restructuring.€€AsÏa€result,€trends€in€the€past,€as€reflected€in€the€data,Ô#†X¦^XXX¦^%#ÔÔ‡X¦^XXX¦^Ô€mayÐ “. Ðnot€continue€in€the€future.€€The€IPM€reflects€these€changes,Ïand€by€using€the€IPM€in€developing€heat€input€growth€rates,ÏEPA€has€taken€these€changes€into€account.Ô#†X¦^XXX¦^B#ÔÔ_ÔàTABLE A EÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú34Ú  ÚóóÝ  ÝÔ_ÔÔ_ÔEPAððs€review€indicates€that€one€out€of€the€33€eight„yearÐ e Ðperiods€from€1960„2000€had€a€decrease€in€annual€heat€inputÏof€well€over€3.8%€(Docket€#€A„96„56,€Item€#€XV„C„18,€at€1),Ïwhile€three€out€of€the€20€eight„year€periods€from€1970„1998Ïhad€a€decrease€in€ozone€season€heat€input,€with€a€decreaseÏof€well€over€3.8%€for€two€periods€(Docket€#€A„96„56,€Item€#ÏXV„C„19,€at€1).€€Since€these€periods€„„€although€a€minorityÏ„„€indicate€that€such€decreases€can€occur,€EPA€believes€thatÏits€methodology€should€not€be€considered€unreasonable€basedÏon€the€recent€State€heat€input.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„Ð ë †  € Ðterm€historical€data€certainly€show€the€potential€for€suchÏdecreases,€the€data€are€otherwise€of€limited€use€inÏprojecting€future€heat€input.Ô#†X¦^XXX¦^#ÔÔ‡X¦^XXX¦^Ô€€As€explained€in€SectionÐ ¬ ÐV.D.6.€of€this€notice,€the€electricity€industry€has€beenÏundergoing€deregulation€of€generation€and€restructuring.€€AsÏa€result,€trends€in€the€past,€as€reflected€in€the€data,Ô#†X¦^XXX¦^û#ÔÔ‡X¦^XXX¦^Ô€mayÐ “. Ðnot€continue€in€the€future.€€The€IPM€reflects€these€changes,Ïand€by€using€the€IPM€in€developing€heat€input€growth€rates,ÏEPA€has€taken€these€changes€into€account.Ô#†X¦^XXX¦^#ÔÔ_ÔÔ_ÔÔ_Ô bÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú42Ú  ÚóóÝ  ÝÔ_Ô€Ô_ÔEPAððs€review€indicates€that€six€out€of€the€33€eight„yearÐ e Ðperiods€from€1960„2000€had€a€decrease€in€annual€heat€input,Ïwith€a€decrease€of€8.4%€or€more€in€one€of€these€periodsÏ(Docket€#€A„96„56,€Item€#€XV„C„18,€at€31),€while€two€out€ofÏthe€20€eight„year€periods€from€1970„1998€had€a€decrease€inÏozone€season€heat€input,€with€a€decrease€of€8.4%€or€more€inÏone€of€these€periods€(Docket€#€A„96„56,€Item€#€XV„C„19,€atÏ31).€€Since€these€periods€„„€although€a€minority€„„€indicateÏthat€such€decreases€can€occur,€EPA€believes€that€itsÏmethodology€should€not€be€considered€unreasonable€based€onÏthe€recent€State€heat€input.òòòòò òóóó óóó€€Moreover,€Ô‡X¦^XXX¦^Ôwhile€these€long„Ð Á \  Ðterm€historical€data€certainly€show€the€potential€for€suchÏdecreases,€the€data€are€otherwise€of€limited€use€inÏprojecting€future€heat€input.Ô#†X¦^XXX¦^1#Ô€òòòòò òóóó óóóÔ‡X¦^XXX¦^Ô€As€explained€in€SectionÐ CÞ  ÐV.D.6.€of€this€notice,€the€electricity€industry€has€beenÏundergoing€deregulation€of€generation€and€restructuring.€€AsÏa€result,€trends€in€the€past,€as€reflected€in€the€dataÔ#†X¦^XXX¦^8#ÔÔ‡X¦^XXX¦^Ô,€mayÐ Å`  Ðnot€continue€in€the€future.€€The€IPM€reflects€these€changes,Ïand€by€using€the€IPM€in€developing€heat€input€growth€rates,ÏEPA€has€taken€these€changes€into€account.Ô#†X¦^XXX¦^S#Ô€Ô_Ôöÿ  dTABLE K YÝ ƒ/¿$ÝÔUSUS.,ÔÒ°ÒÔ€X¦^XXXÔòòÚ  Ú13Ú  ÚóóÝ  Ý€For€example,€the€Residential€Appliance€Program€dependedÐ e Ðon€a€series€of€DOE€regulations€establishing€standards€forÏnumerous€appliances.€€By€1997,€DOE€had€not€yet€promulgatedÏthe€first€of€these€regulations.€€As€of€1997,€the€DOE€programÏmanager€would€nevertheless€be€in€a€position€to€estimate€theÏimpact€of€this€program€on€a€national€level€for€future€years,Ïbut€individual€utilities€estimating€electricity€demand€inÏtheir€areas€would€not€be€in€a€position€to€do€so.öÿÀÀÀdÿÿÿd Ñ Ö Ñ Ñ Ö ÑÝ ƒüœ!ÝÔUSUS.,ÔÝ  ÝÔ_ÔÒ°ÒÔ‡X¦^XXXÔÑ8€$nXXdìdÈ8ÑÑ€fïO%Ñà ` àà ¸ àà  àà h àà À àà  àà p àà È à6560„50„P€€€€€€Ð ° Ðà ` àà ¸ àà  àà h àà À àà  àà p àà È àà  àò òó ó€€€€€€€€€€€€€€€ò òó óÐ †Ö Ðà@-àˆÌÓ  Óò òENVIRONMENTAL€PROTECTION€AGENCYÐ 2‚ ÐÌ40€Ô_ÔCFRÔ_Ô€Parts€51,€52,€96,€and€97ÌÌ[FRL„ññ7203„3ññññXXXX„Xññ]ÌÌNotice€in€Response€to€Court€Remand€on€Ô_ÔNOxÔ_Ô€Ô#†X$nXXX¦^K#ÔòòóóÔ‡X¦^XXX$nÔSIP€CallÐ Š Ú  Ѐand€Section€126€Ruleòòóó€€Ð n ¾  ÐÌÓ  ÓÓÓAGENCY:ó óà ¸ àEnvironmental€Protection€Agency€(EPA)Ð 6†  Ðò òACTION:à0 ¸ àó óNotice€in€Response€to€Court€Remandòòóóà  àà x àà Ð àà @Ð àà @Ð àÐþN ¸ (#¸ (# Ðò òSUMMARYó ó:à ¸ àIn€todayððs€notice,€EPA€is€responding€to€two€courtÐ Æ Ðdecisions€directing€EPA€to€reconsider€heat€input€growthÏrates€projected€and€used€in€setting€nitrogen€oxides€(Ô_ÔNOxÔ_Ô)Ïemission€budgets€in€two€rules€designed€to€reduce€interstateÏtransport€of€ozone€and€Ô_ÔNOxÔ_Ô,€an€ozone€precursor.€€AfterÏreviewing€the€heat€input€growth€rates€and€considering€theÏcourt€decisions€and€additional€comments,€EPA€has€decided€toÏcontinue€to€use€the€heat€input€growth€rates€developed€in€theÏrules.€€One€rule,€the€Ô_ÔNOxÔ_Ô€State€Implementation€Plan€CallÏ(Ô_ÔNOxÔ_Ô€SIP€Call)€under€Section€110€of€the€Clean€Air€Act€(CAA),Ïset€ozone€season€Ô_ÔNOxÔ_Ô€emission€budgets€based,€in€part,€onÏemissions€reductions€calculated€for€large,€fossil€fuel„firedÏelectric€generating€units€(Ô_ÔEGUsÔ_Ô)€in€22€States€and€theÏDistrict€of€Columbia.€€The€second€rule,€issued€in€responseÏto€petitions€by€northeastern€States€under€Section€126€of€theÏCAA€(Section€126€Rule),€included€ozone€season€Ô_ÔNOxÔ_Ô€emissionÐ ö+F'. ÐÔ_Ôbudgets€for€EGUs€in€12€States€and€the€District€of€Columbia.Ô#†X$nXXX¦^Q#ÔÔ‡X¦^XXX$nԀР° ÐThe€U.S.€Court€of€Appeals€for€the€District€of€ColumbiaÏCircuit€(the€Court)€remanded€the€heat€input€growth€rates€toÏEPA€to€either€properly€justify€the€growth€rates€currentlyÏused€by€EPA€or€to€develop€and€justify€new€growth€rates.€ÏAfter€reviewing€the€matter,€EPA€believes€that€theÏmethodology€used€in€developing€the€heat€input€growth€ratesÏand€the€resulting€growth€rates€are€reasonable€based€on€theÏinformation€available€at€the€time€the€rules€were€issued,Ïconfirmed€by€new€information€concerning€activity€to€date.€Ô#†X$nXXX¦^ü #ÔÔ‡X¦^XXX$nÔÐ ¼  Ðò òòòóóADDRESSESó ó:€Documents€relevant€to€this€action€are€availableÐ h¸ Ðfor€inspection€at€the€Docket€Office,€located€at€401€MÏStreet,€SW,€Waterside€Mall,€Room€M„1500,€Washington,€D.C.Ï20460,€between€8:00€a.m.€and€5:30€p.m.,€Monday€throughÏFriday,€excluding€legal€holidays.€€A€reasonable€fee€may€beÏcharged€for€copying.Ìò òFOR€FURTHER€INFORMATION€CONTACTó ó:€General€questions,€andÐ ŒÜ  Ðquestions€on€technical€issues€concerning€today'sÔ#†X$nXXX¦^U #ÔÔ‡X¦^XXX$nÔ€noticeÐ T!¤" Ðshould€be€addressed€to€Kevin€Culligan,€Office€of€AtmosphericÏPrograms,€Clean€Air€Markets€Division,€U.S.€EnvironmentalÏProtection€Agency,€1200€Pennsylvania€Ave.,€N.W.€(6204N),ÏWashington,€D.C.€20460,€telephone€(202)€564„9172,€e„mail€atÏÔ4‚cÝ ÌÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  Ôculligan.kevin@epa.govÔ6¦ÔÝ‚TÍOºƒÝóóÔÿÔÝ  ÝÔ7Ý ŠèÔ.€€Questions€on€legal€issuesÐ °)%, Ðconcerning€todayððs€noticeÔ#†X$nXXX¦^€#ÔÔ‡X¦^XXX$nÔ€should€be€addressed€to€Howard€J.Ð \+¬&. ÐHoffman,€Office€of€General€Counsel,€U.S.€EnvironmentalÏProtection€Agency,€1200€Pennsylvania€Ave.,€N.W.€(2344A),ÏWashington,€D.C.€20460,€telephone€(202)€564„5582,€e„mail€atÏÔ4‚.Ý ÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  Ôhoffman.howard@epa.govÔ#†X$nXXX¦^Ñ#ÔÔ‡X¦^XXX$nÔÔ6ÒÔÝ‚TÍOæƒÝóóÔÿÔÝ  ÝÔ7Ý ÆÔ€or€Dwight€C.€Alpern,€Clean€AirÐ ´  ÐMarkets€Division,€U.S.€Environmental€Protection€Agency,€1200ÏPennsylvania€Ave.,€N.W.€(6204N),€Washington,€D.C.€20460,Ïtelephone€(202)€564„9151,€e„mail€at€alpern.dwight@epa.gov.€Ìò òSUPPLEMENTARY€INFORMATIONó ó:Ð d´  Ðà ` àIn€todayððs€notice,€EPA€is€responding€to€two€rulings€byÏthe€€Court€directing€EPA€to€reconsider€growth€rates€for€heatÏinput€(i.e.,€fossil€fuel€use)€for€the€ozone€season€(May€1„¼September€30)€projected€and€used€in€setting€State€NOxÏemission€budgets€in€two€rules€designed€to€reduce€interstateÏtransport€of€ozone€and€NOx.Ô#†X$nXXX¦^W#ÔÔ‡X¦^XXX$nÔ׃$×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€X¦^X XXNÔòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€On€May€15,€2001,€the€CourtÐ ˆØ Ðissued€a€decision€in€òòAppalachian€Power€v.€U.S.€EPAóó,€249€F.3dÐ 4„ Ð1032€(D.C.€Cir.€2001)€concerning€the€Section€126€RuleÏ(ð ðSection€126€Decisionðð).€€As€part€of€that€decision,€theÏCourt€remanded€the€heat€input€growth€rates€that€EPA€used€toÏcalculate€NOx€emission€budgets€set€in€response€to€severalÏpetitions€by€northeastern€States€under€Section€126€of€theÏCAA.€€The€Court€remanded€these€growth€rates€to€EPA€to€eitherÏproperly€justify€the€growth€rates€currently€used€by€EPA€orÐ è'8#* Ðto€develop€and€justify€new€growth€rates.€€On€June€8,€2001,Ïthe€Court€issued€a€similar€decision€in€òòAppalachian€Power€v.Ð \¬ ÐU.S.€EPAóó,€251€F.3d€1026€€(D.C.€Cir.€2001)€concerning€heatÐ X Ðinput€growth€rates€used€to€develop€NOx€emission€budgets€usedÏin€the€NOx€Ô#†X$nXXX¦^X#ÔòòóóÔ‡X¦^XXX$nÔSIP€Call€related€to€interstate€transport€of€ozoneÐ ` ° Ð(ð ðTechnical€Amendments€Decisionðð).€€The€Court€raisedÏconcerns€about€EPAððs€explanation€of€the€methodology€forÏdeveloping€projected€heat€input€growth€rates€and€aboutÏStates€for€which€heat€input€for€EGUs€had€already€exceededÏthe€heat€input€that€EPA€projected€for€2007.Ìà ` àIn€response€to€the€Courtððs€decisions,€EPA€has€reviewedÏthe€heat€input€growth€rates€for€EGUs€and€the€methodologyÏused€to€develop€those€growth€rates.€€Based€on€that€review,ÏEPA€believes€that€the€heat€input€growth€rates€and€theÏmethodology€used€to€develop€them€were€reasonable.€ÏFurthermore,€in€response€to€the€Courtððs€and€commentersððÏconcerns,€EPA€has€also€reviewed€new€information€concerningÏcurrent€activity.€€This€notice€explains€why€EPA€thinks€thatÏthe€growth€rates€were€reasonable€based€on€the€informationÏthat€EPA€had€available€at€the€time€of€the€originalÏrulemakings,€as€confirmed€by€new€information.€à x àÐ  &p!( Ðò òAvailability€of€Related€Informationó óÐ Ì'#* Ðà ` àThe€official€record€for€the€Section€126€rulemaking€hasÏbeen€established€under€docket€number€A„97„43.€€The€officialÐ @+&. Ðrecord€for€the€NOx€SIP€Call€rulemaking€has€been€establishedÏunder€docket€number€A„96„56.€€The€public€version€of€bothÏrecords,€including€printed,€paper€versions€of€electronicÏcomments,€which€does€not€include€any€information€claimed€asÏconfidential€business€information,€is€available€forÏinspection€from€8:00€a.m.€to€5:30€p.m.,€Monday€throughÏFriday,€excluding€legal€holidays.€€The€rulemaking€record€isÏlocated€at€the€U.S.€Environmental€Protection€Agency,€401€MÏStreet,€SW,€Waterside€Mall,€Room€M„1500,€Washington,€D.CÔ#†X$nXXX¦^Ï#ÔÔ‡X¦^XXX$nÔ.Ð `  Ð20460.€€In€addition,€the€òòFederal€Registeróó€rulemakings€andÐ ¼  Ðassociated€documents€are€located€atÏÔ4‚hab=ÔÝ‚TÍOÝÔÿÔòòÝ  ÝÔ5  Ôhttp://www.epa.gov/ttn/rto/Ô6€!ÔÝ‚TÍO”!.€€FÝóóÔÿÔÝ  ÝÔ7abl Â!Ô,€and€certain€documents€areÐ d Ðlocated€atÏhttp://www.epa.gov/airmarkets/fednox/126noda2/index.htmlÔ#†X$nXXX¦^Ó #ÔÔ‡X¦^XXX$nÔ.Ð l¼ Ðò òÑ€çÐ-,ÑÑ€èÐ- ÑOutlineó óÐ h ÐÓÓI.à0 ` àBackgroundÐà0` (#` (# ÐA.à0 ` àNOx€SIP€Callж` (#` (# ÐB.à0 ` àSection€126€RuleÐŒÜ ` (#` (# ÐC.à0 ` àTechnical€AmendmentsÐb ²!` (#` (# ÐII.à0 ` àCourt€DecisionsÐ8!ˆ"` (#` (# ÐA.à0 ` àSection€126€DecisionÐ"^#` (#` (# ÐB.à0 ` àTechnical€Amendments€DecisionÐä"4$` (#` (# ÐIII.€Notices€of€Data€AvailabilityÌÔ#†X$nXXX¦^Ö"#ÔÔ‡X¦^XXX$nÔIV.€€States€Addressed€in€Todayððs€NoticeÐ $à& ÐA.à0 ` àNOx€Ô#†X$nXXX¦^\%#ÔòòóóÔ‡X¦^XXX$nÔSIP€CallÐf%¶ '` (#` (# ÐB.à0 ` àSection€126€RuleÔ#†X$nXXX¦^õ%#ÔÔ‡X¦^XXX$nÔ€Ð<&Œ!(` (#` (# ÐV.à0 ` àEPAððs€Explanation€of€Heat€Input€Growth€Rate€MethodologyÐ 'b") Ðand€Response€to€Court€Remand€and€Public€CommentsÐ ` (#` (# ÐA.€à0 ` àOverview€Ð¾($+` (#` (# ÐB.à0 ` àDescription€of€EPAððs€MethodologyД)ä$,` (#` (# Ðà0 ` àà  à1.€à0` ` (#` (#àEPAððs€Methodology€for€Determining€State€NOx€Ô#†X$nXXX¦^|&#ÔòòóóÔ‡X¦^XXX$nÔEmission€Ð j*º%- ÐBudgets€and€Heat€Input€Growth€Rates€Ð ` (#` (# Ð2.€à0 ` àUse€of€Consistent€Heat€Input€Growth€Rates€for€DifferentÐ ,f'/ ÐParts€of€EPAððs€AnalysisÐ ` (#` (# ÐC.€à0 ` àJustification€for€EPAððs€Methodology€and€ReasonablenessÐ †Ö Ðof€EPAððs€Underlying€AssumptionsÔ#†X$nXXX¦^m(#ÔÔ‡X¦^XXX$nÔÐ\¬` (#` (# Ð1.€à0 ` àCourtððs€and€Commentersðð€ConcernsÐ2‚` (#` (# Ðò òÔ#†X$nXXX¦^*#ÔÔ‡X¦^XXX$nÔó ó2.€à0 ` àEPA€Reasonably€Decided€to€Develop€State€Ô#†X$nXXX¦^Ë*#ÔòòóóÔ‡X¦^XXX$nÔNOx€EmissionÐ X ÐBudgets€by€Using€Heat€Input€Growth€Rates.€Ô#†X$nXXX¦^M+#ÔÔ‡X¦^XXX$nÔÐÞ.` (#` (# Ð3.€à0 ` àState€Heat€Input€Growth€Rates€Based€on€IPM€Outputs€forÐ ´  Ð2001„2010€Were€Reasonably€Representative€of€1997„2007ÏHeat€Input€Growth.€Ð ` (#` (# Ð4.€à0 ` àEPA€Did€Not€ð ðDouble€Countðð€Electricity€DemandÐ 6 †  ÐReductions€Under€CCAP.Ð ` (#` (# Ð5.€à0 ` àEPAððsò òÔ#†X$nXXX¦^Ú+#ÔÔ‡X¦^XXX$nÔó ó€Assumptions€Regarding€the€Location€of€New€UnitsÐ â 2  ÐWere€ReasonableÔ#†X$nXXX¦^“-#ÔÔ‡X¦^XXX$nÔ.и ` (#` (# ÐD.€à0 ` àActual€Heat€Input€Compared€to€EPAððs€Projections€of€HeatÐ ŽÞ  ÐInputÐ ` (#` (# Ð1.€à0 ` àCourtððs€and€Commentersðð€ConcernsÐ:Š ` (#` (# Ð2.€à0 ` àEPAððs€Heat€Input€Projections€for€the€Region€AreÐ `  ÐConsistent€With€Actual€Heat€Input€Data.Ð ` (#` (# Ð3.€à0 ` àEPAððs€Heat€Input€Growth€Rates€and€2007€Projections€forÐ ¼  ÐMost€States€are€not€Disputed€by€Commenters.Ð ` (#` (# Ð4.€à0 ` àHistorical€Data€Show€That€a€State's€Heat€Input€CanÐ h¸ ÐDecrease€Significantly€Over€Multi„Year€Periods.Ð ` (#` (# Ðò òÔ#†X$nXXX¦^,.#ÔÔ‡X¦^XXX$nÔó ó5.€à0 ` àApproach€of€Using€Recent€State€Heat€Input€to€ProjectÐ d ÐFuture€State€Heat€Input€is€not€Statistically€Sound.ò òò òó óó óÔ#†X$nXXX¦^.1#ÔÔ‡X¦^XXX$nÔÐê:` (#` (# Ð6.€à0 ` àEPAððs€Heat€Input€Projections€do€not€Implicitly€AssumeÐ À ÐNegative€Growth€in€Electricity€Generation.Ð ` (#` (# Ð7.€à0 ` àEven€if€There€Were€a€Substantial€Risk€that€EPAððs€StateÐ l¼ ÐHeat€Input€Projection€Would€be€Less€Than€a€StateððsÏActual€2007€Heat€Input,€This€Would€not€Make€EPAððsÏProjection€Unreasonable.€Ð ` (#` (# Ð8.€à0 ` àCommenters€Overstated€the€Impacts€of€Actual€State€HeatÐ Ä ÐInput€Exceeding€Projected€State€Heat€Input.Ð ` (#` (# Ð9.€à0 ` àDiscussion€of€Individual€States€for€Which€EPAððs€HeatÐ pÀ  ÐInput€Growth€Rates€are€Disputed€by€Commenters.Ð ` (#` (# Ð10.à0 ` àNo€Heat€Input€Growth€Methodology€has€Been€PresentedÐ !l" ÐThat€Would€Have€Results€That€Better€Comport€With€ActualÏHeat€Input.Ð ` (#` (# ÐE.€à0 ` àProcedural€IssuesО#î%` (#` (# Ð1.€à0 ` àNotice„And„Comment€RulemakingÐt$Ä&` (#` (# Ð2.€à0 ` àPetition€To€ReconsiderÐJ%š '` (#` (# ÐÌÓO#Óò òI.€€BackgroundÐ ö&F") ÐA.€òòNOx€SIP€Callóóó óÐ ¾($+ Ðà ` àIn€October€1998,€EPA€issued€the€NOx€SIP€Call€--€a€Ìfinal€rule€under€Section€110(k)(5)€of€the€CAA,€42€U.S.C.Ð 2,‚'/ Ððð7410(k)(5)€„„€requiring€22€States€and€the€District€ofÏColumbia€("upwind€States")€to€revise€their€SIPs€to€imposeÏadditional€controls€on€NOx€emissions.׃×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€X¦^X XXNÔòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€€òòSeeóó€Finding€ofÐ X ÐSignificant€Contribution€and€Rulemaking€for€Certain€StatesÏin€the€Ozone€Transport€Assessment€Group€Region€for€PurposesÏof€Reducing€Regional€Transport€of€Ozone,€63€FR€57,356€(Oct.Ï27,€1998).€€EPA€concluded€that€emissions€from€the€upwindÏStates€"contribute€significantly"€to€ozone€nonattainment€inÏdownwind€States,€in€violation€of€Section€110(a)(2)(D)(i).€ÏUnder€the€NOx€SIP€Call,€upwind€States€are€required€to€reduceÏemissions€by€amounts€that€would€allow€meeting€NOx€emissionÏbudgets.€€EPA€determined€these€budgets€by€projecting€NOxÏemissions€to€2007€for€all€source€categories€and€thenÏreducing€those€amounts€by€the€emissions€reductionsÏachievable€using€the€controls€that€EPA€determined€to€beÏhighly€cost€effective.€€EPA€defined€highly€cost„effectiveÏcontrols€as€those€controls€capable€of€removing€NOx€at€anÏaverage€cost€of€$2,000€or€less€per€ton.€€For€EGUs,€EPAÏdetermined€that€it€was€highly€cost€effective€to€achieve€anÏaverage€emission€rate€of€0.15€lb/mmBtu,€based€on€projectedÏ2007€fossil€fuel€use€(i.e.,€heat€input).€€Projected€2007Ð  &p!( Ðheat€input€for€each€State€was€calculated€by€applying€ozoneÏseason€heat€input€growth€rates€developed€by€EPA€for€eachÏState€for€EGUs€(referred€to€as€ð ðState€heat€input€growthÏratesðð)€to€baseline€(the€higher€of€1995€or€1996)€EGU€heatÏinput.Ìà ` àEPA€recommended€that€a€State€could€meet€the€StateððsÔ#†X$nXXX¦^ 2#ÔòòóóÔ‡X¦^XXX$nÔ€NOxÐ  \  Ðemission€budget€in€part€by€establishing€a€cap„and„tradeÏprogram€for€NOx€emissions€from€EGUs.€€Covered€sources€wouldÏbe€required€to€hold€NOx€allowances€at€least€equal€to€theirÏNOx€emissions€and€could€either€obtain€additional€allowancesÏor€reduce€emissions,€e.g.,€by€installing€additionalÏcontrols.€€The€total€number€of€allowances€distributed€toÏEGUs€would€equal€the€EGU€portion€of€the€NOx€emission€budget,Ïi.e.,€the€projected€2007€heat€input€multiplied€by€a€NOxÏemission€rate€of€0.15€lb/mmBtu.€€States€had€the€option€ofÏadopting€approaches€other€than€a€cap„and„trade€program€toÏmeet€the€budgets.Ìò òB.€òòSection€126€Ruleóóó óÐ !l" Ðà ` àOn€January€18,€2000,€EPA€issued€a€final€rule€to€controlÏemissions€of€NOx€òòóóunder€Section€126€of€theCAA,€42€U.S.C.Ð $à& Ððð7426.€€In€the€rule,€EPA€made€final€its€findings€thatÏstationary€sources€of€NOx€òòóóemissions€in€12€upwind€States€andÐ è'8#* Ðâ âthe€District€of€Columbia€contribute€significantly€to€ozoneÐ ”)ä$, Ðnonattainment€in€northeastern€States.׃×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€X¦^X XXNÔòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×€€This€findingÐ ° Ðâ âtriggered€direct€Federal€regulation€of€stationary€sources€ofòòóóÐ \¬ ÐNOx€in€the€upwind€States.€€The€Section€126€Rule€furtherÏestablished€a€cap„and„trade€program€for€NOx€emissions€withinÏeach€upwind€jurisdiction,€including€NOx€emissions€from€EGUs.€ÏThis€program€was€essentially€the€same€as€that€suggested€byÏEPA€for€State€implementation€in€the€NOx€SIP€Call.€€EPAÏdetermined€the€total€number€of€NOx€allowances€to€beÏdistributed€to€EGUs€in€each€individual€State€based€on€theÏsame€methodology€used€in€the€NOx€SIP€Call€(i.e.,€projectedÏ2007€heat€input€multiplied€by€a€NOx€emission€rate€of€0.15Ïlb/mmBtu).Ìò òC.€òòTechnical€Amendmentsóóó óÐ À Ðà ` àWhen€EPA€promulgated€the€NOx€SIP€Call€on€October€27,Ï1998,€EPA€reopened€public€comment€on€the€accuracy€of€dataÏupon€which€the€emission€inventories€and€budgets€were€basedÏ(63€FR€57,427).€€On€December€24,€1998,€EPA€extended€theÏcomment€period€"for€emission€inventory€revisions€to€2007Ïbaseline€sub-inventory€information€used€to€establish€eachÏState's€budget€in€the€NOx€SIP€Call"€and€further€explainedÏthat€it€was€seeking€comment€on€the€relevant€data€andÏassumptions€so€the€Agency€could€correct€errors€and€updateÐ è'8#* Ðinformation€used€to€compute€the€2007€budgets.€€(CorrectionÏand€Clarification€to€the€Finding€of€Significant€ContributionÏand€Rulemaking€for€Purposes€of€Reducing€Regional€TransportÏof€Ozone,€63€FR€71,220,€Dec.€24,€1998).€€EPA€also€announcedÏthat€it€would€reopen€the€comment€period€on€equivalentÏinventory€data€for€the€Section€126€rulemaking€because€theÏrules€relied€upon€the€same€inventories.€€òòId.óóÐ ¸  Ðà ` àSubsequentlyÔ#†X$nXXX¦^ >#ÔÔ‡X¦^XXX$nÔ,€EPA€published€two€Technical€AmendmentsÐ d´  Ðrevising€the€NOx€SIP€Call€emission€budgets.€€In€the€firstÏTechnical€Amendment,€EPA€made€some€modifications€toÏsource-specific€1995€and€1996€emissions€data,€which€resultedÏin€changes€in€the€2007€NOx€emission€budgets€(TechnicalÏAmendment€to€the€Finding€of€Significant€Contribution€andÏRulemaking€for€Certain€States€for€Purposes€of€ReducingÏRegional€Transport€of€Ozone,€64€FR€26,298,€May€14,€1999).€ÏIn€the€second€Technical€Amendment,€EPA€made€more€correctionsÏbased€upon€additional€public€comments€it€received€and€EPA'sÏown€internal€review€of€the€accuracy€of€its€data€andÏcalculations€(Technical€Amendment€to€the€Finding€ofÏSignificant€Contribution€and€Rulemaking€for€Certain€StatesÏfor€Purposes€of€Reducing€Regional€Transport€of€Ozone,€65€FRÏ11,222,€Mar.€2,€2000).€€EPA€also€explained€that€the€MarchÏ2000€Technical€Amendment€was€"necessary€to€make€the€NOx€SIPÏCall€inventory€consistent€with€the€inventory€adopted"€by€theÐ $+t&. ÐEPA€in€the€Section€126€rule,€as€the€two€rules€were€to€beÏbased€upon€the€same€inventory.€€òòId.óó€€€€€Ð \¬ Ðò òII.€Court€DecisionsÐ X ÐA.€òòSection€126€Decisionóóó óÐ Ð  Ðà ` àOn€May€15,€2001,€the€Court€ruled€on€a€number€ofÏchallenges€to€EPAððs€Section€126€Rule.€€òòSeeóó€òòAppalachian€PowerÐ D ”  Ðv.€EPAóó,€249€F.3d€1032.€€While€the€Courtððs€decision€largelyÐ ð@  Ðupheld€the€Section€126€Rule,€the€Court€remanded€two€issuesÏto€EPA.€€The€Court€remanded€the€Section€126€Rule€to€EPA€toÏallow€EPA€to€(1)€properly€justify€either€the€current€or€newÏState€heat€input€growth€rates€for€EGUs€used€in€calculatingÏprojected€State€heat€input€for€2007€and€(2)€either€properlyÏjustify€or€alter€its€categorization€of€cogenerators€thatÏsell€electricity€to€the€electricity€grid€as€EGUs.€€WithÏregard€to€heat€input€growth€rates,€the€Court€was€concernedÏthat€EPA€may€have€used€inconsistent€growth€rates€inÏdifferent€parts€of€the€Agencyððs€analysis€and€that€someÏStates€already€had€heat€input€exceeding€the€levels€projectedÏby€EPA€for€2007.€€EPA€is€responding€to€the€remand€related€toÏthe€categorization€of€cogenerators€in€a€separate€rulemaking€€Ï(Interstate€Ozone€Transport:€Response€to€Court€Decisions€inÏNOx€SIP€Call,€NOx€SIP€Call€Technical€Amendments,€and€SectionÏ126€Rules,€67€FR€8396,€Feb.€22,€2002).Ìò òB.€òòTechnical€Amendments€DecisionóóÐ \+¬&. Ðó óà ` àOn€June€8,€2001,€the€Court€ruled€on€a€number€ofÐ ° Ðchallenges€to€EPAððs€Technical€Amendments.€òòSeeóó€òòAppalachianÐ \¬ ÐPower€v.€EPAóó,€251€F.3d€1026.€€In€its€decision,€the€CourtÐ X Ðremanded€to€EPA€the€same€issues€as€in€the€Section€126ÏDecision€concerning€(1)€State€heat€input€growth€rates€forÏEGUs€and€(2)€cogenerators.€€The€Court€cited€its€decision€inÏthe€Section€126€Decision.€€òòId.óó,€251€F.3d€at€1034.Ô#†X$nXXX¦^ŸJ#ÔÔ‡X¦^XXX$nÔÐ ¸  Ðò òIII.ó óÔ#†X$nXXX¦^MV#ÔÔ‡X¦^XXX$nÔ€ò òNotices€of€Data€Availability€ó óÐ d´  Ðò òó óÔ#†X$nXXX¦^®V#ÔÔ‡X¦^XXX$nÔà ` àÔ#†X$nXXX¦^/W#ÔÔ‡X¦^XXX$nÔA€Notice€of€Data€Availability€(NODA)€of€documents€thatÐ ,|  ÐEPA€was€considering€in€response€to€the€remand€concerningÏheat€input€growth€rates€was€publishedòòóó€on€August€3,€2001,€66Ð „Ô ÐFR€40609Ô#†X$nXXX¦^}W#ÔÔ‡X¦^XXX$nÔ).€€These€documents€were€placed€in€the€NOòòxóó€SIP€CallÐ 0€ Ðand€Section€126€Rule€dockets.€€The€new€documents€contain,Ïamong€other€things,€information€and€data€on€more€recentÏelectricity€sales€and€generation.Ô#†X$nXXX¦^¡X#ÔÔ‡X¦^XXX$nÔ€€The€information€and€dataÐ 4„ Ðwere€not€available€when€the€two€rules€were€promulgated.€ÏTable€1€of€the€NODA€contains€actual€heat€input€values€forÏthe€1995„2000€ozone€seasons€for€the€District€of€Columbia€andÏ21€States,€which€are€subject€to€the€NOx€SIP€Call€and€includeÏthe€States€subject€to€the€Section€126€Rule.€€Comments€on€theÏnew€information€and€data€were€requested.€€Thirty„fourÏcomments€were€received.Ìà ` àThe€NODA€explains€that€there€are€substantialÏfluctuations€in€State€heat€input€for€EGUs€on€a€year„by„yearÐ @+&. Ðbasis.€€Some€of€the€reasons€mentioned€for€these€fluctuationsÏare€forced€outages,€variations€in€energy€costs,€weather,€andÏeconomic€conditions.€€A€discussion€of€the€growth€rateÏmethodology€used€by€EPA€to€develop€State€heat€input€growthÏrates€for€EGUsÔ#†X$nXXX¦^ÄY#ÔÔ‡X¦^XXX$nÔ€and€of€the€rationale€for€different€componentsÐ ` ° Ðof€the€methodology€is€included€in€the€NODA.€ò ò€ó óEPA€states€inÐ  \  Ðthe€NODA€that€the€Agencyððs€preliminary€view€is€that€the€newÏdata€and€the€existing€record€in€the€NOòòxóó€SIP€Call€and€SectionÐ d´  Ð126€rulemakings€appear€to€confirm€the€reasonableness€of€theÏheat€input€growth€rates€used€by€EPA€in€developing€NOòòxóóÐ ¼  Ðemission€budgets€for€EGUs.€Ìà ` àA€second€NODA€was€published€on€March€11,€2002,€67òòóóÔ#†X$nXXX¦^/]#ÔÔ‡X¦^XXX$nÔ€FRÐ d Ð10844òòóóÔ#†X$nXXX¦^Š_#ÔÔ‡X¦^XXX$nÔ.€€Documents€referenced€in€this€NODA€include,€amongÐ À Ðother€things,€2001€ozone€season€heat€input€data€and€1960„¼2000€annual€heat€input€data€and€1970„1998€ozone€season€heatÏinput€data€for€the€District€of€Columbia€and€21€States,€whichÏare€subject€to€the€NOx€SIP€Call.€OneÔ#†X$nXXX¦^ï_#ÔÔ‡X¦^XXX$nÔ€comment€was€received€onÐ pÀ  Ðthis€notice.Ô#†X$nXXX¦^Pa#ÔÔ‡X¦^XXX$nÔ€€In€the€March€11,€2002€NODA,0€EPA€stated€thatÐ !l" Ðit€might€place€additional€documents€in€the€docket,€withÏnotice€thereof€provided€on€a€particular€website.€€EPA€did€soÏat€various€times€after€ò ò€ó óMarch€11,€2002.€€EPA€also€statedÐ  &p!( Ðthat€if€the€Agency€decided€to€confirm€its€previously€adoptedÏheat€input€growth€rates,€it€intended€to€issue€its€responseÏto€the€remand€by€March€29,€2002.Ð $+t&. Ðà ` àEPA€received€a€comment€on€the€March€11,€2002€NODA€Ïstating€that€there€was€no€reason€to€expect€that€EPA€wouldÏtake€additional€comments€into€consideration€since€the€AgencyÏwould€be€issuing€its€response€by€March€29,€2002.€€TheÏcommenter€also€asserted€that€both€NODAððs€failed€to€explainÏthe€relevance€of€the€documents€that€were€added€to€theÏdocket.ò òÐ ¸  Ðà ` àó óOn€March€29,€2002,€EPA€informed€the€commenter€inÐ d´  Ðwriting€that€the€Agencyððs€response€to€the€remand€would€beÏissued€on€or€about€April€17,€2002€and€that€the€Agency€wouldÏconsider€comments€submitted€sufficiently€in€advance.€€InÏaddition,€EPA€noted€that€additional€documents€would€beÏplaced€in€the€docket.€€EPA€also€identified€the€purposes€forÏwhich€the€data€referenced€in€the€March€11,€2002€NODA€hadÏbeen€added€to€the€docket.€€(Docket€#€A„96„54,€Item€#€XV„E„¼2.)€€Copies€of€all€these€documents€and€information€wereÏplaced€in€the€docket.€€EPA€subsequently€received€a€secondÏcomment€that€was€similar€to€the€first€comment,€and€EPAÏreferred€the€commenter€to€the€relevant€documents€andÏinformation€in€the€docket.€€Finally,€EPA€received€a€thirdÏcomment€stating€that€the€data€referenced€in€the€March€29,Ï2002€NODA€were€highly€germane€and€supported€EPAððs€heat€inputÏgrowth€rate€methodology.Ìò òIV.€States€Addressed€in€Todayððs€Noticeó óÐ $+t&. Ðà ` àAt€the€outset,€it€should€be€established€which€StatesÏshould€be€addressed€in€todayððs€notice€on€the€heat€inputÏgrowth€rate€issue,€in€light€of€the€Courtððs€decisionsÏvacating€EPAððs€rules€with€respect€to€certain€States€andÏEPAððs€response€to€those€vacaturs.Ô#†X$nXXX¦^Ëa#ÔÔ‡X¦^XXX$nÔÐ ` ° Ðò òÔ#†X$nXXX¦^3j#ÔÔ‡X¦^XXX$nÔA.€€òòNOx€SIP€Callóóó óÐ  \  Ðà ` àAs€noted€above,€the€NOx€SIP€Call€covered€22€States€andÏthe€District€of€Columbia.€€In€reviewing€the€NOx€òòóóSIP€Call,Ð €Ð  Ðthe€Court€€òòóóÔ#†X$nXXX¦^j#ÔÔ‡X¦^XXX$nÔvacated€theòò€óóNOx€SIP€Call€for€Georgia€and€MissouriÐ ,|  Ðon€the€ground€that€there€was€insufficient€record€evidenceÏconcerning€portions€of€those€States.€€òòMichigan€v.€EPAóó,€213Ð „Ô ÐF.3d€663,€685€òòóóÔ#†X$nXXX¦^¥k#ÔÔ‡X¦^XXX$nÔ(D.C.€Cir.,€2000).ò òó óÔ#†X$nXXX¦^Öl#ÔÔ‡X¦^XXX$nÔ€€The€record€includedÐ 0€ Ðmodeling€by€the€Ozone€Transport€Assessment€Group€(OTAG)„„€aÏpartnership€among€EPA,€37€eastern€States€and€the€District€ofÏColumbia,€industry,€and€environmental€groups€„„€that€dividedÏthe€eastern€U.S.€into€two€grids,€the€ð ðfine€gridðð€and€theÏð ðcoarse€grid.ðð€€The€grids€did€not€track€State€boundaries,Ïand€Georgia€and€Missouri€were€split€between€the€fine€andÏcoarse€grids.€€OTAG€stated€that,€based€on€air€qualityÏimpacts,€it€was€recommending€Ô#†X$nXXX¦^0m#ÔòòóóÔ‡X¦^XXX$nÔNOx€emission€controls€for€theÐ $à& Ðfine€grid€area€but€not€the€coarse€grid€area.€€In€light€ofÏOTAGððs€recommendations,€the€Court€concluded€that€EPA€had€notÏsufficiently€explained€the€basis€for€including€the€entireÏStates€of€Georgia€and€Missouri,€rather€than€simply€the€fineÐ @+&. ÐÑèÐ-Ñâ èâÑÖÈÑâ èâÑ  Ñgrid€portions.€€The€Court€vacated€and€remanded€the€NOÔ#†X$nXXX¦^co#ÔòòóóÔ‡X¦^XXX$nÔx€SIPÐ ° ÐCall€for€these€States€for€agency€reconsideration.€The€CourtÏalso€vacated€the€rule€for€Wisconsin€on€grounds€not€relevantÏhere.€€òòId.óó€at€681.€Ð ´  Ðà ` àOn€February€22,€2002,€EPA€issued€a€notice€of€proposedÏrulemaking€in€response€to€the€Courtððs€remand,€(67€FR€8396).€ÔÿÔÏÔÿ»rÔIn€that€notice,€EPA€stated€that€the€Agency€does€not€intendÏto€proceed€at€this€time€with€further€action€evaluatingÏwhetherÔ#†X$nXXX¦^[q#ÔòòóóÔ‡X¦^XXX$nÔ€NOx€emissions€should€be€reduced€for€ozone€transportÐ `  Ðreasons€in€Wisconsin€or€the€coarse€grid€portions€of€GeorgiaÏand€Missouri.€€In€addition,€EPA€noted€that,€while€notÏaddressed€by€the€Court,€Alabama€and€Michigan€also€areÏdivided€between€the€fine€grid€and€the€coarse€grid€in€OTAGððsÏmodeling.€€EPA€stated€that€it€would€therefore€treat€all€fourÏStates€the€same€and€include€in€theòòóó€NOòòXóó€SIP€Call€onlyÐ h Ðcounties€that€are€fully€within€the€fine€grid€portions€of€theÏfour€States.€€EPA€proposed€partial€State€NOx€emissionÏbudgets€for€Alabama,€Georgia,€Michigan,€and€Missouri€usingÏthe€State€heat€input€growth€rates€established€for€the€wholeÏStates.€Ô#†X$nXXX¦^‚s#ÔÔ‡X¦^XXX$nÔÐ t$Ä& ÐÔ#†X$nXXX¦^xv#ÔÔ‡X¦^XXX$nÔà ` àEPA€has€taken€the€position€that€a€single€heat€inputÐ  &p!( Ðgrowth€methodology€should€be€consistently€applied€to€eachÏState,€and€EPA€received€numerous€comments€disputing€theÏapplication€of€EPAððs€heat€input€growth€methodology€to€theseÐ $+t&. Ðfour€States,€as€well€as€to€three€other€States€(i.e.,ÏIllinois,€Virginia,€and€West€Virginia).€€Consequently,€inÏthe€context€of€responding€to€the€remand€on€the€heat€inputÏgrowth€issue€in€todayððs€notice,€EPAððs€analysis€of€theÏreasonableness€of€that€methodology€and€the€resulting€heatÏinput€growth€rates€includes€Alabama,€Georgia,€Michigan,€andÏMissouri.€Ô#†X$nXXX¦^Ïv#ÔÔ‡X¦^XXX$nÔ€As€noted€below,€for€Alabama,€Georgia,€andÐ ¸  ÐMissouri,€EPA€has€evaluated€the€reasonableness€of€theÏmethodology€with€respect€to€both€the€entire€State€and€theÏfine€grid€portion€alone.€€For€Michigan,€EPA€evaluated€theÏmethodology€for€the€entire€State€and€not€for€the€fine€gridÏportion€alone€because€the€amount€of€NOx€emissions€in€theÏcoarse€grid€portion€was€trivial€for€present€purposes.׃3×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€X¦^X XXNÔòòÚ  Ú4Ú  ÚóóÝ  Ý×  ×€Ô#†X$nXXX¦^y#ÔÔ‡X¦^XXX$nÔÐ À Ðò òÔ#†X$nXXX¦^õ{#ÔÔ‡X¦^XXX$nÔB.€òòSection€126€Ruleóó€ó óÐ l¼ Ðà ` àAs€noted€above,€the€Section€126€Rule€covered€12€StatesÏand€the€District€of€Columbia.€€Of€the€four€States€that€EPAÏproposed€to€include€only€partially€in€the€NOx€SIP€Call,€onlyÏMichigan€is€subject€to€the€Section€126€Rule.€€As€discussedÏabove,€the€NOx€emission€budget€for€Michigan€changes€veryÏlittle€when€the€coarse€grid€portion€of€the€State€isÏexcludedÔ#†X$nXXX¦^O|#ÔÔ‡X¦^XXX$nÔ,€and€EPA€has€therefore€analyzed€the€heat€inputÐ <&Œ!( Ðgrowth€only€for€the€entire€State.€Ô#†X$nXXX¦^.~#ÔÔ‡X¦^XXX$nÔ€In€addition,€with€regardÐ ° Ðto€the€three€other€States€concerning€which€EPA€receivedÏadverse€comments€on€its€heat€input€projections,€the€SectionÏ126€Rule€covers€Virginia€and€West€Virginia,€but€notÏIllinois.€€Ô#†X$nXXX¦^Ö~#ÔÔ‡X¦^XXX$nÔAs€a€result,€strictly€speaking,€the€validity€ofÐ ` ° ÐEPAððs€growth€rate€methodology€for€the€Section€126€RuleÏshould€not€depend€on€its€application€to€Alabama,€Georgia,ÏMissouri,€Illinois,€or€any€other€State€covered€under€the€NOxÏSIP€Call,€but€not€the€Section€126€Rule.Ô#†X$nXXX¦^ù#ÔÔ‡X¦^XXX$nÔ€€Ô#†X$nXXX¦^W#ÔÔ‡X¦^XXX$nÔò ò€Ð `  ÐÔ#†X$nXXX¦^›#ÔÔ‡X¦^XXX$nÔV.€EPAððs€Explanation€of€Heat€Input€Growth€Rate€MethodologyÐ Ø( Ðand€Response€to€Court€Remand€and€Public€Commentsó óÐ  ð Ðò òA.€òòOverviewó óóóÐ h¸ Ðà ` àAfter€a€thorough€review,€Ô#†X$nXXX¦^ö#ÔÔ‡X¦^XXX$nÔEPA€has€concluded€that€itsÐ 0€ Ðmethodology€for€developing€State€heat€input€growth€rates,Ïand€the€resulting€growth€rates€themselves,€were€reasonableÏin€light€of€the€record€developed€for€the€NOx€SIP€Call€andÏSection€126€Rule,€and€remain€reasonable€in€light€of€newÏinformation€concerning€current€activity€that€has€sinceÏbecome€availableÔ#†X$nXXX¦^#ƒ#ÔÔ‡X¦^XXX$nÔ.€€The€reasons€are€summarized€below€andÐ 8#ˆ$ Ðexplained€more€fully€in€the€remainder€of€this€notice.ÌÔ#†X$nXXX¦^„#ÔÔ‡X¦^XXX$nÔà ` à1.€Ô#†X$nXXX¦^v…#ÔÔ‡X¦^XXX$nÔEPA€believes€that€its€methodology€was€reasonable€inÐ &à!( Ðlight€of€the€record€for€the€NOx€SIP€Call€and€the€Section€126ÏRule,€based€on€the€following€considerations:Ô#†X$nXXX¦^Ç…#ÔÔ‡X¦^XXX$nÔà  àa.€Ô#†X$nXXX¦^º†#ÔÔ‡X¦^XXX$nÔEPAððsÐ è)8%, Ðmethodology€for€projecting€future€heat€input€was€logical€andÐ ”+ä&. Ðwas€consistently€applied€to€all€NOx€Ô#†X$nXXX¦^ ‡#ÔòòóóÔ‡X¦^XXX$nÔSIP€Call€States.€Ô#†X$nXXX¦^å‡#ÔÔ‡X¦^XXX$nÔ€EPAÐ ° Ðused€an€actual€State€heat€input€baseline€(the€higher€of€1995Ïor€1996€levels)Ô#†X$nXXX¦^8ˆ#ÔÔ‡X¦^XXX$nÔ€in€view€of€year„to„year€variability€of€StateÐ X Ðheat€input.€€EPA€applied€to€each€Stateððs€baseline€a€heatÏinput€growth€rate€estimated€using€Ô#†X$nXXX¦^߈#ÔÔ‡X¦^XXX$nÔthe€Integrated€PlanningÐ ` ° ÐModel€(the€IPM),Ô#†X$nXXX¦^Á‰#ÔÔ‡X¦^XXX$nÔ€a€state„of„the„art€model€for€analyzingÐ  \  Ðfuture€electricity€markets.€€€EPAððs€use€of€the€IPM€wasÏupheld€by€the€Court.ò òÔ#†X$nXXX¦^?Š#Ôòòóóó óÔ‡X¦^XXX$nÔÐ d´  Ðà ` àb.€Contrary€to€the€Courtððs€understanding,€EPA€usedÏconsistent€State€heat€input€growth€rates€(i.e.,€growth€ratesÏbased€on€2001„2010€heat€input€growth€determined€using€IPMÏprojections€for€2001€and€2010)€throughout€the€analysis€forÏthe€NOx€Ô#†X$nXXX¦^‹#ÔòòóóÔ‡X¦^XXX$nÔSIP€Call€and€the€Section€126€Rule.€€EPA€did€not€use,Ð À Ðor€even€have€available,€1996„2000€heat€input€growth€ratesÏdetermined€using€IPM€projections€for€1996€and€2000.€€Ô#†X$nXXX¦^pŒ#ÔÔ‡X¦^XXX$nÔEPAÐ h Ðacknowledges€that€the€Courtððs€misunderstanding€on€this€pointÏstemmed€from€inadvertently€confusing€statements€EPA€made€inÏthe€record.Ô#†X$nXXX¦^j#ÔÔ‡X¦^XXX$nÔÐ !l" Ðà ` àc.€The€specific€assumptions€that€EPA€made€in€using€theÏIPM€to€develop€State€heat€input€growth€rates€wereÏreasonable.€€These€included€assumptions€that:€(i)€heat€inputÏgrowth€rates€during€2001„2010€are€reasonably€representativeÏof€heat€input€growth€during€1996„2007;€(ii)€electricityÏdemand€projections€should€be€reduced€to€take€account€ofÐ $+t&. Ðdemand€reductions€under€Climate€Challenge€Action€ProgramÏ(CCAP);€and€(iii)€the€use€of€available€data€on€new€units€andÏthe€historical€distribution€of€generating€capacity€amongÏStates€could€be€used€to€project€the€location€of€new€units.€€Ìò òà ` àó ó2.€The€State€heat€input€growth€rates€and€projectionsÐ ` ° Ðwere€generated€using€a€reasoned€methodology€and€reasonableÏassumptions,€along€with€data€that€went€through€full€publicÏreviewò ò€ó ó(and€were€not€at€issue€in€the€Court€remands),€andÐ d´  Ðthis€suggests€that€the€resulting€heat€input€projections€areÏreasonable.€€Ô#†X$nXXX¦^KŽ#ÔÔ‡X¦^XXX$nÔTo€confirm€this,€and€to€respond€to€concernsÐ ¼  Ðexpressed€by€the€Court€and€commenters€about€the€plausibilityÏof€EPAððs€projections€based€on€recent,€actual€heat€inputÏdata,€EPA€has€examined€the€projections€in€light€ofÏhistorical€heat€input€data€and€new€heat€input€data€that€haveÏbecome€available€since€the€Agency€developed€the€projections.€ÏEPA€believesÔ#†X$nXXX¦^m’#ÔÔ‡X¦^XXX$nÔ€that€its€heat€input€projections€remainÐ Ä Ðplausible€and€reasonable€based€on€the€followingÏconsiderations:Ô#†X$nXXX¦^!”#ÔÔ‡X¦^XXX$nÔÐ !l" Ðò òó óÔ#†X$nXXX¦^Þ”#ÔÔ‡X¦^XXX$nÔà ` àa.€€The€State€heat€input€amounts€projected€by€EPA€areÐ È"$ Ðreasonably€consistent€with€the€actual€heat€input€data€thatÏhave€become€available€since€the€projections€were€made.€€On€aÏregionwide€basis,€EPAððs€projected€heat€input€for€2000€andÏ2001€are€0.1%€lower€and€2.0%€higher€respectively€than€actualÏregional€heat€input.€€Further,€for€most€States,€EPAððs€heatÐ $+t&. Ðinput€growth€rates€have€not€been€specifically€challenged.€ÏCommenters€have€disputed€EPAððs€heat€input€growth€rates€forÏseven€out€of€the€22€jurisdictions€under€the€NOx€SIP€Call€onÏthe€ground€that€the€States€involved€had€recent€heat€inputÏamounts€exceeding,€or€close€to,€EPAððs€2007€heat€inputÏprojections.€€However,€recently,€heat€input€for€several€ofÏthese€States€declined€significantly.€Moreover,€State€heatÏinput€is€quite€variable€from€year„to„year€and€so,€in€oneÏyear€or€over€several€years,€may€increase€and€then€decrease.€ÏIndeed,€there€have€been€many€instances€in€the€past€whenÏState€ò òó óheat€input€has€decreased€significantly€for€the€lastÐ h¸ Ðyear€of€a€multi„year€period€as€compared€to€the€first€year€ofÏsuch€period.€€Consequently,€the€fact€that€a€Stateððs€recentÏheat€input€exceeds,€or€is€close€to,€EPAððs€2007€heat€inputÏprojection€does€not€by€itself€demonstrate€that€theÏprojection,€or€the€underlying€heat€input€growth€rate,€isÏunreasonable.€Ìà ` àb.€Commenters€who€argue€that€EPAððs€2007€projection€isÏunreasonable€based€on€recent€heat€input€data€are€in€effectÏasserting€that€predicting€a€Stateððs€2007€heat€input€based€onÏtrends€in€recent,€short„term€heat€input€data€is€a€betterÏmethodology€than€the€one€employed€by€EPA.€€Some€commentersÏexplicitly€recommended€this€approach.€€In€response,€EPAÏexamined€this€approach€using€historical€annual€heat€inputÐ $+t&. Ðdata€and€found€that€in€most€States,€recent,€short„term€dataÏis€an€unreliable€predictor€of€a€Stateððs€heat€input€in€theÏfuture.€€Therefore,€EPA€believes€that€its€methodology,€usingÏa€state„of„the„art€model€that€takes€into€account€manyÏfactors,€including€the€dynamics€of€regional€electricityÏmarkets,€is€more€rational.Ô#†X$nXXX¦^;•#ÔÔ‡X¦^XXX$nÔÐ  \  Ðà ` àc.€Contrary€to€the€Courtððs€understanding,€EPAððs€2007Ïheat€input€projections€do€not€assume€negative€growth€inÏelectricity€generationò òó ó.€€State€heat€input€(i.e.,€fossil€fuelÐ `  Ðuse€for€generation)€can€decrease€while€electricityÏgeneration€increases€in€the€State€or€in€the€region€as€aÏwhole.€€Within€a€State,€electricity€generation€does€notÏnecessarily€vary€with€heat€input€because:€Ô#†X$nXXX¦^á#ÔÔ‡X¦^XXX$nÔ(i)€significantÐ À Ðamounts€of€electricity€are€produced€using€non„fossil€fuelÏgeneration;€and€(ii)€efficiency€improvements€(e.g.,€fromÏreplacement€of€old€units€with€new,€more€efficient€units)Ïmake€it€possible€to€produce€more€electricity€with€less€heatÏinput.€€Further,€electricity€is€generated€and€sold€on€aÏregional,€not€on€a€State„by„State€basis.Ô#†X$nXXX¦^ÛŸ#ÔÔ‡X¦^XXX$nÔ€€Heat€input€andÐ È"$ Ðelectricity€generation€may€decrease€in€one€State€becauseÏthat€State€is€importing€more€electricity€generated€inÏanother€State€in€the€region.€€This€is€consistent€withÏincreased€electricity€generation€in€the€region€as€a€whole.Ìà ` àd.€EPAððs€heat€input€projections€are€simply€required€toÐ $+t&. Ðbe€reasonable,€not€to€match€perfectly€actual€heat€input.€ò òÐ ° ÐÔ#†X$nXXX¦^‰¡#ÔÔ‡X¦^XXX$nÔó óThis€is€because€the€Courts€recognize€that€predictions€of€theÐ \¬ Ðresults€of€complex€activities€(in€this€case,€future€StateÏheat€input,€which€will€result€from€operation€of€the€regionalÏelectricity€market)€will€not€necessarily€match€actual,Ïfuture€results€exactly.€€Ô#†X$nXXX¦^{£#ÔÔ‡X¦^XXX$nÔTo€require€such€perfection€would€beÐ  \  Ðto€preclude€the€use€of€projections€or€of€a€model€to€developÏsuch€projections.Ô#†X$nXXX¦^ؤ#ÔÔ‡X¦^XXX$nÔ€€EPAððs€heat€input€projections€thus€shouldÐ d´  Ðnot€be€considered€unreasonable€even€if€there€were€aÏsubstantial€risk€that€they€would€turn€out€to€be€less€thanÏStatesðð€actual€2007€heat€input,€in€light€of€all€the€otherÏcircumstances.€Ô#†X$nXXX¦^Ÿ¥#ÔÔ‡X¦^XXX$nÔ€In€this€case,€unavoidable€limitations€on€theÐ d Ðaccuracy€of€heat€input€projections€result€from:€Ô#†X$nXXX¦^ݦ#ÔÔ‡X¦^XXX$nÔ(i)€theÐ À Ðcomplexity€of€the€electricity€marketing€system,€which€cannotÏbe€modeled€perfectly€because€of€the€necessity€to€useÏsimplifying€assumptions€about€factors€(e.g.,€fuel€prices€andÏelectricity€demand€in€the€future)€affecting€future€heatÏinput;€(ii)€the€necessity€to€make€State„by„State€projectionsÏof€heat€input€even€though€electricity€is€generated€and€soldÏon€a€regional€basis;€Ô#†X$nXXX¦^‘§#ÔÔ‡X¦^XXX$nÔand€(iii)€significant€variability€„„€onÐ t$Ä& Ða€year„to„year€and€several€year€basis€„„€inherent€in€StateÏheat€input.Ô#†X$nXXX¦^d©#ÔÔ‡X¦^XXX$nÔ€€Therefore,€EPAððs€heat€input€projections€shouldÐ Ì'#* Ðnot€be€considered€unreasonable€in€the€current€context,€evenÏif€there€were€a€substantial€risk€that€they€would€turn€out€toÐ $+t&. Ðbe€less€than€Statesðð€actual€2007€heat€input.€Ô#†X$nXXX¦^(ª#ÔÔ‡X¦^XXX$nÔ€Ô#†X$nXXX¦^o«#ÔÔ‡X¦^XXX$nÔÐ ° Ðà ` àe.€Commenters€overstated€the€impacts€of€a€Stateððs€ò òó ó2007Ð \¬ Ðheat€input€exceeding€EPAððs€2007€heat€input€projection€forÏthat€State.€€The€NOx€SIP€Call€and€the€Section€126€Rule€limitÏNOx€emissions,€not€heat€input.€€Even€if€a€Stateððs€actualÏheat€input€for€2007€turns€out€to€exceed€the€projected€heatÏinput,€NOx€emissions€would€increase€at€a€much€lower€rateÏthan€heat€inputÔ#†X$nXXX¦^²«#ÔÔ‡X¦^XXX$nÔ€because€the€vast€majority€of€new€units€are,Ð d´  Ðand€will€continue€to€be,€gas„fired€with€very€low€NOxÏemission€rates€and€high€efficiency.Ô#†X$nXXX¦^¢­#ÔÔ‡X¦^XXX$nÔ€€The€impact€on€theÐ ¼  Ðstringency€of€the€NOx€emission€budget€and€on€the€StateÏeconomy€therefore€would€be€much€less€than€claimed€byÏcommenters.€€Further,€the€NOx€SIP€Call€and€the€Section€126ÏRule€are€being€implemented€through€a€NOx€cap„and„tradeÏprogram€that€further€mitigates€the€cost€impact€of€anyÏdifferences€between€projected€and€actual€State€heat€input.€€¼à ` àÌà ` àf.€€No€commenter€has€identified€an€alternativeÏmethodology€for€developing€State€heat€input€growth€ratesÏthat€would€be€likely€to€yield€growth€rates€that€wouldÏcomport€better€with€actual€heat€input€data€than€the€growthÏrates€under€EPAððs€methodology.€€In€light€of€the€variabilityÏof€State€heat€input,€it€is€quite€possible€that€anyÏalternative€methodology€for€predicting€State€heat€input€willÐ $+t&. Ðresult€in€projected€values€for€some€States€that€will€notÏmatch€actual€heat€input€in€some€future€year.ÌÔ#†X$nXXX¦^}®#ÔÔ‡X¦^XXX$nÔà ` àg.€Commenters€failed€to€show€that€EPAððs€heat€inputÐ X Ðgrowth€rate€for€any€of€the€seven€individual€States€for€whichÏadverse€comments€were€received€(Alabama,€Georgia,€Illinois,ÏMichigan,€Missouri,€Virginia,€and€West€Virginia)€areÏunreasonable.€€The€heat€input€for€several€of€the€States€hasÏalready€decreased€to€levels€below€or€only€slightly€aboveÏEPAððs€projection.€In€addition,Ô#†X$nXXX¦^S²#ÔÔ‡X¦^XXX$nÔ€ò òó óthe€comments€failed€toÐ `  Ðaddress€the€fact€that,€in€the€past,€each€State€Ô#†X$nXXX¦^/´#ÔÔ‡X¦^XXX$nÔhas€had€manyÐ ¼  Ðmulti„year€periods€when€heat€input€has€declinedÏsignificantly€for€the€last€year,€as€compared€to€the€firstÏyear€of€such€periods.€€Further,€in€arguing€that€economicÏgrowth€or€planned€new€capacity€prove€that€heat€input€willÏincrease€substantially€for€particular€States,€the€commenters€Ïlimited€the€information€they€provided€to€statewide€data€andÏfailed€to€provide€ò òó óregional€data.€€As€a€result,€theseÐ pÀ  Ðcomments€are€not€persuasive€because€any€particular€StateððsÏheat€input€is€determined€byÔ#†X$nXXX¦^Ò´#ÔÔ‡X¦^XXX$nÔ€Ô#†X$nXXX¦^4·#ÔÔ‡X¦^XXX$nÔò òó óregional,€not€just€thatÐ È"$ Ðindividual€Stateððs,€demand€and€supply.Ô#†X$nXXX¦^w·#ÔÔ‡X¦^XXX$nÔ€òòò òó óóóÐ t$Ä& ÐÔ#†X$nXXX¦^¸#Ôò òÔ‡X¦^XXX$nÔB.€òòDescription€of€EPAððs€MethodologyóóÔ#†X$nXXX¦^{¸#ÔÔ‡X¦^XXX$nÔÐ  &p!( Ð1.Ô#†X$nXXX¦^é¸#ÔÔ‡X¦^XXX$nÔ€EPAððs€Methodology€for€Determining€State€NOx€EmissionÐ è'8#* ÐÔ#†X$nXXX¦^B¹#ÔòòóóÔ‡X¦^XXX$nÔBudgets€and€Heat€Input€Growth€Ratesó óÔ#†X$nXXX¦^×¹#ÔÔ‡X¦^XXX$nÔÐ °)%, Ðà ` àÔ#†X$nXXX¦^?º#ÔÔ‡X¦^XXX$nÔEPA€used€a€multi„step€procedure€to€determine€for€eachÐ x+È&. ÐState€the€portion€of€the€NOx€SIP€Call€emissions€budgetÏattributable€to€EGUs.€€In€brief,€EPA€started€with€theÏStateððs€baseline€of€the€higher€of€EGU€heat€input€for€1995Ïand€1996€and€grew€that€amount€to€the€2007€level€using€theÏprojected€heat€input€growth€rate€for€that€State€based€on€theÏIPM.€€Ô#†X$nXXX¦^¢º#ÔÔ‡X¦^XXX$nÔThen,€EPA€determined€the€appropriate€level€of€NOxÐ  \  Ðemissions€control€(which€was€the€same€level€for€each€State)Ïand€applied€this€level€to€each€Stateððs€projected€2007€heatÏinput.€€The€result€was€each€Stateððs€NOx€emissions€budget€forÏEGUs.€Ìà ` àThroughout€the€methodology,€EPA€relied€on€the€IPM.Ô#†X$nXXX¦^U¼#Ô€€Ô‡X¦^XXX$nÔ€TheÐ h¸ ÐIPM€simulates€the€operation€of€the€electricity€market€in€theÏcontinental€U.S.€by€using€inputs€(such€as€electricity€demandÏand€fuel€and€emission€control€costs)€and€by€modelingÏelectricity€generation,€transmission,€and€distribution€on€aÏsubregional€basis.€€The€IPM€projects€the€least€cost€scenarioÏfor€the€region€for€generating€electricity€consistent€withÏthis€set€of€inputs.€€This€scenario€includes€projections€ofÏwhich€units€operate€at€what€levels,€which€units€installÏemission€controls,€and€what€type,€when,€and€where€new€unitsÏare€built.€Ìà ` àTo€develop€the€State€heat€input€growth€rates,€EPA€firstÏconducted€an€IPM€run€(the€ð ðbase€case€runðð).€€This€base€caseÏrun€was€designed€to€yield,€as€outputs,€projections€of€theÐ \+¬&. Ðheat€input€necessary€to€generate€electricity€sufficient€toÏmeet€projected€electricity€demand€in€the€2001€and€2010€ozoneÏseasons.€€To€conduct€this€run,€EPA€used,€as€model€inputs,Ïassumptions€regarding,€among€many€other€things:€(i)Ïelectricity€demand€in€2001„2020,€which€EPA€calculated€byÏdetermining€actual€electricity€demand€in€1997ò òó óò òó ó€and€applyingÐ  \  Ðgrowth€rates€in€electricity€demandò òó ó€for€1997ò òó óò òó ó„2020;€(iiò òó ó)Ð ¸  Ðreductions€in€electricity€demand€based€on€the€CCAP,Ïdiscussed€below;€(iii)ò òó óò òó ó€NOx€Ô#†X$nXXX¦^Þ½#ÔòòóóÔ‡X¦^XXX$nÔemission€control€requirements€andÐ `  Ðassociated€costs;€(iv)€location€and€costs€of€projected€newÏunits;€and€(v)€fuel€costs.€€For€this€base€case€run,€EPAÏassumed€no€additional€NOx€emission€controls€would€beÏrequired€for€ozone€transport€purposes€(62€FR€60318,€60347,ÏNov.€7,€1997).€€Ìà ` àWith€these€inputs,€the€base€case€run€produced,€asÏoutputs,€the€sources€of€electricity€generation€for€yearsÏselected€by€EPA,€including€2001,€2007,€2010,€and€2020.€€InÏaddition,€the€outputs€included€the€amounts€of€heat€inputÏused€by€the€fossil„fuel„fired€sources€in€those€years,€theÏprojected€NOx€emissions€for€the€2007€ozone€season,€and€theÏtotal€cost€for€generating€electricity€for€the€2007€ozoneÏseason.òòò òó óóóÐ Ì'#* ÐÔ#†X$nXXX¦^hÃ#Ôò òó óÔ‡X¦^XXX$nÔà ` àEPA€used€the€2001€and€2010€ò òó óheat€input€to€generate€heatÐ x)È$, Ðinput€growth€rates€for€each€State.€€For€example,€the€baseÐ $+t&. Ðcase€run€projected€òòò òó óóóthat€Virginiaððs€base€case€2001€and€2010Ð ° Ðheat€input€would€be€194,000,000€mmBtu€and€243,000,000€mmBtu,Ïrespectively.€€An€annual€heat€input€growth€rate€was€thenÏmathematically€determined.€€For€Virginia,€this€annual€growthÏrate€is€1.025.€€Ìà ` àThen,€EPA€applied€each€Stateððs€annual€heat€input€growthÏrate€€to€the€baseline€heat€input€for€the€State€(the€higherÏof€the€1995€or€1996€actual€heat€input€for€EGUs)ò òò òó óó ó€to€developÐ d´  Ðthe€Stateððs€emission€budget€for€2007€(63€FR€57406„57408)Ô#†X$nXXX¦^›Æ#ÔÔ‡X¦^XXX$nÔ.€Ð `  Ðò òÔ#†X$nXXX¦^ÂÉ#ÔÔ‡X¦^XXX$nÔó óFor€example,€for€Virginia,€the€1995€heat€input€wasÐ ¼  ÐÔ#†X$nXXX¦^Ê#ÔÔ‡X¦^XXX$nÔ154,233,310Ô#†X$nXXX¦^ªÊ#ÔÔ‡X¦^XXX$nÔ€mmBtu,€the€1996€heat€input€was€Ô#†X$nXXX¦^÷Ê#ÔÔ‡X¦^XXX$nÔ172,633,028Ô#†X$nXXX¦^YË#ÔÔ‡X¦^XXX$nÔÐ h¸ ÐmmBtu,€and€so€EPA€used€the€1996€heat€input€as€the€baselineÏheat€input.€€For€West€Virginia€€the€opposite€occurred.€€TheÏ1995€heat€input€was€Ô#†X$nXXX¦^¦Ë#ÔÔ‡X¦^XXX$nÔ347,687,307Ô#†X$nXXX¦^ˆÌ#ÔÔ‡X¦^XXX$nÔ€mmBtu,€and€the€1996€heatÐ l¼ Ðinput€was€Ô#†X$nXXX¦^ÕÌ#ÔÔ‡X¦^XXX$nÔ341,738,426€mmBtu,€and€soÔ#†X$nXXX¦^OÍ#ÔÔ‡X¦^XXX$nÔ€EPA€used€the€1995€heatÐ h Ðinput€as€the€baseline€heat€input.Ô#†X$nXXX¦^ªÍ#Ôòòò òóóó óÔ‡X¦^XXX$nÔÐ Ä Ðà ` àÔ#†X$nXXX¦^EÎ#ÔÔ‡X¦^XXX$nÔThen,€EPA€applied€to€each€Stateððs€baseline€amount€ð!ðÐ pÀ  Ðwhich€EPA€treated€as€the€1996€value€even€if€the€higher€heatÏinput€amount€actually€occurred€in€1995€ð!ð€that€Stateððs€annualÏheat€input€growthÔ#†X$nXXX¦^¨Î#ÔÔ‡X¦^XXX$nÔ€Ô#†X$nXXX¦^ÈÏ#ÔÔ‡X¦^XXX$nÔrate€to€determine€the€projected€2007€heatÐ t$Ä& Ðinput.€€For€Virginia,€this€computation€(172,633,028€mmBtuÏmultiplied€by€1.025€over€an€11„year€period)€yieldedÏ227,875,597€mmBtu.Ìà ` àNext,€EPA€used€projected€2007€heat€input€to€test€theÐ $+t&. Ðcost€effectiveness€of€various€NOx€emission€control€levels.€ÏFirst,€EPA€selected€a€set€of€NOx€emissions€control€levels€asÏcandidates€to€be€tested€for€appropriateness.€€The€levelsÏtested€were,€0.12€pounds€of€NOx€per€mmBtu€of€heat€inputÏ(lbs/mmBtu),€0.15€lb/Btu,€0.2€lb/Btu,€and€0.25€lb/Btu.€ÏThen,€EPA€applied€one€of€the€control€levels€to€each€StateððsÏprojected€2007€heat€input.Ô#†X$nXXX¦^ Ð#ÔÔ‡X¦^XXX$nÔ€Ô#†X$nXXX¦^ÜÒ#ÔÔ‡X¦^XXX$nÔ€For€example,€for€Virginia€theÐ ¸  Ð2007€projected€heat€input€of€Ô#†X$nXXX¦^Ó#ÔÔ‡X¦^XXX$nÔ227,875,597Ô#†X$nXXX¦^±Ó#ÔÔ‡X¦^XXX$nÔ€mmBtu€wasÐ d´  Ðmultiplied€by€0.15€lb/mmBtu€to€obtain€an€EGU€NOx€emissionÏbudget€of€Ô#†X$nXXX¦^þÓ#ÔÔ‡X¦^XXX$nÔ34,181,340Ô#†X$nXXX¦^£Ô#ÔÔ‡X¦^XXX$nÔ€pounds€or€17,091€tons.òòò òóóó óÔ#†X$nXXX¦^ïÔ#ÔÔ‡X¦^XXX$nÔ€€Ô#†X$nXXX¦^TÕ#ÔÔ‡X¦^XXX$nÔIn€this€manner,Ð ¼  ÐEPA€calculated€the€NOx€emission€budget€for€each€State€basedÏon€the€level€of€NOx€emissions€control€to€be€tested.€€Then,ÏEPA€summed€each€Stateððs€NOx€emissions€budget€to€determineÏthe€regionwide€NOx€emissions€budget€for€the€NOx€controlÏlevel€tested.€ò òó óòòò òó óóóÐ h Ðà ` àThen,€EPA€conductedÔ#†X$nXXX¦^˜Õ#ÔÔ‡X¦^XXX$nÔ€òòò òó óóóanother€IPM€run€(the€ð ðcost„Ð Ä Ðeffectiveness€runðð)€to€determine€the€cost€effectiveness€ofÏmeeting€the€regionwide€NOx€emission€budget€for€the€controlÏlevel€tested.€€For€this€run,€EPA€included€in€the€model€eachÏof€the€assumptions€that€were€used€in€the€base€case€run.€ÏÔ#†X$nXXX¦^>×#Ôò òò òÔ‡X¦^XXX$nÔó óó óHowever,€EPA€added€one€additional€assumption,€i.e.,€theÐ  &p!( Ðrequirement€that€total€NOx€emissions€for€EGUs€in€the€NOx€SIPÏCall€region€could€not€exceed€the€regionwide€NOx€emissionÏbudget€(i.e.,€the€sum€of€the€State€NOx€emission€budgets€forÐ $+t&. ÐEGUs€developed€using€the€2001„2010€heat€input€growth€ratesÏfrom€the€base€case€run€and€the€specified€level€of€NOxÏemission€controlsÔ#†X$nXXX¦^´Ø#ÔÔ‡X¦^XXX$nÔ€being€tested).€Ô#†X$nXXX¦^Ú#Ôò òó óÔ‡X¦^XXX$nÔ€This€cost„effectivenessÐ X Ðrun€yielded,€as€an€output,€the€total€cost€of€generatingÏelectricity€for€the€2007€ozone€season€for€the€control€level.€ÏEPA€repeated€this€process€for€each€control€level€tested.€Ô#†X$nXXX¦^èÚ#ÔÔ‡X¦^XXX$nÔÐ  \  Ðà ` àEPA€then€performed,€for€each€NOx€emissionÔ#†X$nXXX¦^Ü#ÔÔ‡X¦^XXX$nÔ€controlÐ ¸  Ðlevel,€three€calculations€to€determine€the€cost€per€ton€ofÏNOx€emissions€reduced,€of€meeting€the€regionwide€NOxÏemission€budget€associated€with€that€control€level.€€First,ÏEPA€subtracted€the€total€NOx€emissions€in€the€cost„¼effectiveness€run€from€the€total€NOx€emissions€in€the€baseÏcase€run€to€calculate€the€tons€of€NOx€reduced€due€to€theÏimposition€of€the€control€level.€€Second,€EPA€subtracted€theÏtotal€cost€of€generating€electricity€in€the€base€case€runÏfrom€the€total€cost€in€the€cost„effectiveness€run€toÏcalculate€the€total€cost€of€meeting€the€regionwide€budget.€ÏThird,€EPA€divided€the€total€cost€of€meeting€the€budget€byÏthe€total€tons€reduced€due€to€the€imposition€of€the€controlÏlevel€to€calculate€the€cost€effectiveness€of€meeting€theÏbudget€associated€with€the€control€level€(in€dollars€perÏton).€€ò òó óÔ#†X$nXXX¦^’Ü#ÔÔ‡X¦^XXX$nÔFor€example,€the€cost€effectiveness€of€meeting€theÐ Ì'#* Ð0.15€lb/mmBtu€control€level€was€$1,440€per€ton€of€NOxÏemissions€reduced€in€2007ò ò€ó ó(Regulatory€Impact€Analysis€forÐ $+t&. Ðthe€NOx€SIP€Call,€FIP,€and€Section€126€Petitions,€Volume€1:ÏCosts€and€Economic€Impacts,€September€1998,€at€p.€ADD„2).€ÏOf€course,€the€cost€effectiveness€was€a€higher€dollar€amountÏfor€more€restrictive€control€levels€(e.g.,€0.08€lb/mmBtu)Ïand€a€lower€dollar€amount€for€less€restrictive€controlÏlevels€(e.g.,€0.2€lb/mmBtu).Ìà ` àFinally,€EPA€evaluated€the€cost„effectiveness€level€forÏeach€control€level€against€certain€criteria€Ô#†X$nXXX¦^#à#ÔÔ‡X¦^XXX$nÔand€selectedÐ d´  Ð0.15€lb/mmBtu€as€the€highly€cost€effective€level€for€EGUs.€ÏThe€basis€for€this€selection,€which€is€not€at€issue€inÏtodayððs€notice,€is€discussed€at€63€FR€57401„2.Ô#†X$nXXX¦^èâ#ÔÔ‡X¦^XXX$nÔÐ h¸ Ðà ` àHaving€selected€0.15€lb/mmBtu,€EPA€set,€as€the€NOxÏemission€budget€for€EGUs€for€each€State€in€the€NOx€SIP€Call,Ïthe€Stateððs€budget€associated€with€that€control€level.€€ForÏexample,€for€Virginia,€the€NOx€emission€budget€for€EGUs€wasÏ17,091€tons.€Ìà ` àFor€the€Section€126€Rule,€which€imposed€requirements€onÏindividual€EGUs€in€certain€States,€but€did€not€imposeÏstatewide€control€limitations,€EPA€used€the€same€State€NOxÏemission€budgets€that€were€developed€for€the€NOx€SIP€Call.€ÏFor€the€individual€EGUs€in€a€given€State,€EPA€allocated€aÏtotal€amount€of€allowances€equal€to€the€amount€of€tons€ofÏNOx€in€the€State€NOx€emissionÔ#†X$nXXX¦^ïã#ÔÔ‡X¦^XXX$nÔ€Ô#†X$nXXX¦^Íæ#ÔÔ‡X¦^XXX$nÔbudget€for€EGUs.€€IndividualÐ x)È$, ÐEGUs€were€allocated€a€proportionate€share€of€the€State€NOxÐ $+t&. Ðemission€budget€based€on€its€share€of€the€total€heat€inputÏfor€EGUs€in€that€State.€ò òÔ#†X$nXXX¦^ç#Ôó óÔ‡X¦^XXX$nÔòòò òó óóóÐ \¬ ÐÔ#†X$nXXX¦^+è#Ôò òó óÔ‡X¦^XXX$nÔò ò2.Ô#†X$nXXX¦^”è#ÔÔ‡X¦^XXX$nÔ€Use€of€Consistent€Heat€Input€Growth€Rates€for€DifferentÐ X ÐParts€of€EPAððs€Analysisó óÔ#†X$nXXX¦^Ûè#ÔÔ‡X¦^XXX$nÔÐ Ð  ÐÔ#†X$nXXX¦^‡é#ÔÔ‡X¦^XXX$nÔà ` àOne€concern€that€the€Court€had€about€the€reasonablenessÐ ˜ è Ðof€EPAððs€approach€was€the€belief€that€EPA€ð ðutilized€one€setÏof€growth-rate€projections€to€set€allowance€budgets,€[and]Ïanother€to€assess€emission€reduction€costs.ðð€€òòAppalachianÐ œì  ÐPower€v.€EPAóó,€249€F.3d€at€1054.€€The€Court€thereforeÐ H˜  Ðbelieved€that€ð ðEPA€had€other€ways€of€generating€2007Ïutilization€projections.ðð€€òòId.óó€€€Ô#†X$nXXX¦^Þé#ÔÔ‡X¦^XXX$nÔà p àÔ#†X$nXXX¦^÷ë#ÔÔ‡X¦^XXX$nÔThe€above€description€ofÐ  ð ÐEPAððs€multi„step€procedure€makes€clear€that,€in€fact,€EPAÏutilized€only€IPM€heat€input€growth€rate€projections€forÏ2001„2010.€€The€methodology€required€(i)€developing€manyÏinputs€inò òó ó€the€IPM,€including€assumptions€about€growth€inÐ P  Ðelectricity€demand€during€1997„2020;€(ii)€conducting€an€IPMÏbase€case€run€and€a€set€of€cost€effectiveness€runs;€andÏ(iii)€using€IPM€outputs€to€make€various€computations.€ÏHowever,€at€any€step€that€required€IPM€generated€heat„inputÏgrowth€rate€projections€„„€whether€for€purposes€ofÏdetermining€a€budget€or€for€purposes€of€determining€the€costÏeffectiveness€of€control€levels€„„€EPA€used€only€theÏprojections€for€2001„2010,€and€not€any€other€period.Ô#†X$nXXX¦^Eì#ÔÔ‡X¦^XXX$nÔ€€Ð °)%, Ðà ` àEPA€respectfully€observes€that€the€Courtððs€views€to€theÐ \+¬&. Ðcontrary€are€misperceptions€that€resulted€from€what€EPA€nowÏrealizes€was€EPAððs€own€inadvertently€confusing€statement€byÏEPA€in€the€Response€to€Comment€document€for€the€Section€126ÏRule.Ô#†X$nXXX¦^vï#ÔÔ‡X¦^XXX$nÔ€€The€Response€to€Comment€document€states,€in€relevantÐ ´  Ðpart:Ô#†X$nXXX¦^æð#ÔÔ‡X¦^XXX$nÔ€€òòò òó óóóÐ ` ° ÐÓÓà0 ` àThe€budgets€were€constructed€using€growth€rates€forÏ1996„2007€that€were€consistent€with€the€growth€rates€inÏIPM€for€2001„2010,€which€may€be€higher€or€lower€thanÏthe€growth€rates€for€the€years€1996„2001.€€EPA'sÏanalysis€of€the€costs€of€complying€with€these€budgets,Ïhowever,€was€conducted€using€IPM,€which€incorporatesÏinternally€consistent€growth€assumptionsð"ði.e.,€theÏgrowth€for€1996€through€2001€is€based€on€IPMÏassumptions€for€1996€through€2001,€and€the€growth€forÏ2001€through€2010€is€based€on€IPM€assumptions€for€2001Ïthrough€2010.€€These€IPM€growth€forecasts€areÏconsistent€with€the€NERC€forecasts.ò òÐ>Ž` (#` (# ÐÌó óÓºñÓDocket€#€A„97„43,€Item€#€VI„C„01,€ð ðResponse€to€SignificantÐ øH ÐComments€on€the€Proposed€Findings€of€SignificantÏContribution€and€Rulemaking€on€Section€126€Petitions€forÏPurposes€of€Reducing€Interstate€Ozone€Transport,ðð€April€1999Ïat€p.€112.Ô#†X$nXXX¦^xñ#ÔÔ‡X¦^XXX$nÔ€€Ô#†X$nXXX¦^œõ#ÔÔ‡X¦^XXX$nÔò òÐ ¨ø Ðó óà ` àThe€first€two€sentences€in€the€response€refer€toÐ T ¤! Ðð ðgrowth€rates,ðð€€ð ðgrowth€assumptions,ðð€or€ð ðgrowth,ðð€butÏunfortunately€fail€to€provide€further€clarification€as€toÏwhat€type€of€ð ðgrowthðð€is€being€referenced.€€The€firstÏsentence€indicates€that,€for€budget€purposes,€EPA€determinedÏthe€ð ðgrowth€ratesðð€for€1996„2007€based€on€"the€growth€ratesÏin€IPM€for€2001„2010."€òòóó€The€second€sentence€indicates€that,Ð \*¬%- Ðfor€cost€analysis€purposes,€EPA€used€ð ðgrowthðð€for€1996„2001Ð ,X'/ Ð"based€on€IPM€assumptions€for€1996€through€2001"€andÏð ðgrowthðð€for€2001€through€2010€"based€on€IPM€assumptions€forÏ2001€through€2010."€òòóó€However,€the€response€fails€to€explainÐ X Ðthat€the€references€in€the€first€sentence€to€"growth€ratesððÏare€to€growth€in€heat€input,€which€is€an€output€from€IPMÏruns€for€the€years€2001€and€2010,€while€the€references€inÏthe€second€sentence€to€the€"growth€assumptions"€and€ð ðgrowthððÏfor€1996„2001€and€2001„2010€are€to€growth€in€electricityÏdemand,€which€is€an€input€into€the€IPM.€€The€third€sentenceÏconfirms€that€the€ð ðgrowth€assumptionsðð€in€the€secondÏsentence€are€„„€like€the€ð ðNorth€American€ElectricÏReliability€Council€(NERC)€forecastsðð€„„€for€electricityÏdemand.€€€Ìà ` àThe€second€sentence€of€the€Response€to€Comment€documentÏshould€not€be€read€to€indicate€that€EPA€had€available€IPM„¼generated€growth€rates€in€heat€input€for€the€1996„2001Ïperiod.€€Ô#†X$nXXX¦^àõ#ÔÔ‡X¦^XXX$nÔIt€is€simply€not€true€that€EPA€had€that€dataÐ pÀ  Ðavailable.€Ô#†X$nXXX¦^'ü#ÔÔ‡X¦^XXX$nÔ€Rather,€EPA€had€available€IPM„generated€heatÐ !l" Ðinput€data€for€only€2001„2010,€and€EPA€developed€the€budgetsÏand€cost€analyses€in€the€manner€described€in€section€V.B.1Ïof€this€notice.€Ô#†X$nXXX¦^µü#ÔÔ‡X¦^XXX$nÔ€Therefore,€of€course,€EPA€did€not€use€suchÐ  &p!( Ðdata€ð ðto€assess€emission€reduction€costsðð€and€could€not€haveÏused€such€data€as€another€way€ð ðof€generating€2007Ïutilization€projections.ðð€€òòAppalachian€Power€v.€EPAóó,€249Ð $+t&. ÐF.3d€at€2054.Ô#†X$nXXX¦^Áý#ÔÔ‡X¦^XXX$nÔ׃×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€XN X XXNÔÔ€X¦^X XXNÔòòÚ  Ú5Ú  ÚóóÝ  Ý×  ×€Ô#†X$nXXX¦^ÿ#ÔÔ‡X¦^XXX$nÔÐ ° ÐÔ#†X$nXXX¦^¬#ÔÔ‡X¦^XXX$nÔò òC.€òòJustification€for€EPAððs€Methodology€and€Reasonableness€ofÐ \¬ ÐEPAððs€Underlying€Assumptionsóó€ó óÐ $t ÐÔ#†X$nXXX¦^#ÔÔ‡X¦^XXX$nÔò ò1.€Courtððs€and€Commentersðð€Concernsó óÐ ì < Ðà ` àWhile€upholding€in€general€EPAððs€use€of€the€IPM€and€notÏfinding€that€any€specific€assumptions€or€other€aspects€ofÏEPA's€methodology€were€unreasonable,€the€Court€stated€thatÏ"even€in€the€face€of€evidence€[i.e.,€actual€State€heat€inputÏin€excess€of€EPAððs€projection]€suggesting€the€EPAððsÏprojections€were€erroneousÔ#†X$nXXX¦^Ú#ÔÔ‡X¦^XXX$nÔ,€EPA€never€explained€why€itÐ ` Ðadopted€this€particular€methodology."€€òòAppalachian€Power€v.Ð ¼  ÐEPAóó,€249€F.3d€at€1053.Ô#†X$nXXX¦^­#ÔÔ‡X¦^XXX$nÔ€€Ð h¸ Ðà ` àMoreover,€commenters€raised€concerns€about€certainÏassumptions€that€EPA€made€in€the€IPM,€or€in€using€theÏresults€from€the€IPM,€to€develop€heat€input€growth€rates.€ÏIn€particular,€commenters€were€concerned€about:Ìà0 ` à1)€The€assumption€that€State„by„State€heat€input€growthÏrates,€derived€from€the€IPM€outputs€for€2001€and€2010,Ïwere€reasonably€representative€of,€and€reasonably€usedÏto€calculate,€heat€input€growth€rates€for€1996€to€2007.ÐÈ$ &` (#` (# Ðà0 ` à2)€The€assumption€that€electricity€demand€projectionsÏwere€reasonably€reduced€by€reductions€under€the€CCAP;ÏandÐ ` (#` (# Ðà0 ` à3)€The€assumption€that€the€locations€of€new€units€wereÏreasonably€projected€using€currently€available€data€onÏnew€units€and€the€historical€distribution€of€generatingÏcapacity.Ô#†X$nXXX¦^Œ#ÔÔ‡X¦^XXX$nÔи ` (#` (# Ðà ` àAs€discussed€below,€EPA€believes€that€its€methodologyÏand,€in€particular,€all€of€the€challenged€assumptions€had€aÏreasonable€basis.Ìò ò2.€EPA€Reasonably€Decided€to€Develop€State€Ô#†X$nXXX¦^#ÔòòóóÔ‡X¦^XXX$nÔNOx€EmissionÐ h¸ ÐBudgets€by€Using€Heat€Input€Growth€Rates€ó óÐ 0€ Ðà ` àÔ#†X$nXXX¦^? #ÔÔ‡X¦^XXX$nÔAs€noted€above,€EPAððs€methodology€for€projecting€2007Ð øH Ðheat€input€was€based,€in€essence,€on€establishing€a€baselineÏbased€on€actual€heat€input,€and€then€applying€an€IPM„¼determined€growth€rate€to€that€baseline.€€The€overallÏapproach€of€using€an€actual€baseline€and€applying€a€growthÏrate€was€reasonable€and€consistent€with€the€way€EPAÏprojected€utilization€for€other€stationary€sourceÏcategories.€€(Docket€#€A„96„56,€Item€#€X„B„09,€ð ðDevelopmentÏof€Emission€Budget€Inventories€for€Regional€Transport€NOxÏSIP€Callðð,€U.S.€EPA,€Office€of€Air€Quality€Planning€andÏStandards,€May€1999.)Ìà ` àStarting€with€an€actual€baseline€obviously€constitutesÐ \+¬&. Ða€reasonably€accurate€starting€point€for€the€calculation.€ÏBecause€of€the€year„to„year€variability€in€heat€input,€asÏdiscussed€below,€EPA€decided€to€allow€each€State€to€use€theÏhigher€of€two€years€as€the€baseline.€€EPA€initiated€the€NOxÏSIP€Call€rulemaking€in€1997,€and€so€EPA€selected€as€the€twoÏyears€1995€and€1996.€€EPAððs€approach€overstated€total€actualÏheat€input€for€the€region.€€Since€some€States€had€higherÏheat€input€in€one€year€and€other€States€had€higher€heatÏinput€in€the€second€year,€the€total€of€the€Statesðð€baselinesÏexceeded€the€total€heat€input€for€the€States€in€either€ofÏthe€years.€Ìà ` àApplying€to€that€baseline€an€IPM„generated€heat€inputÏgrowth€rate€is€also€reasonable€because€the€IPM€provides€aÏreasonably€ò òò òó óó ó€accurate€method€ò òó óof€predicting€growth€in€heatÐ l¼ Ðinput.€€òòò òó óóóThe€model€has€been€thoroughly€vetted€through€publicÐ h Ðcomment€in€several€rulemakings€and€generally€has€been€upheldÏby€the€Court€in€both€the€NOx€SIP€Call€Decision€and€anÏearlier€decision.€€òòAppalachian€Power€v.€EPAóó,€247€F.3d€atÐ !l" Ð1052„53;€òòAppalachian€Power€v.€EPAóó,€135€F.3d€791,€814„15Ð È"$ Ð(D.C.€Cir.,€1998).€€Ô#†X$nXXX¦^ï #ÔÔ‡X¦^XXX$nÔAs€discussed€below,€EPAððs€approach€ofÐ t$Ä& Ðdetermining€the€growth€rate€of€State€heat€input€from€oneÏmodeled€year€(here,€2001)€to€a€later€modeled€year€(here,Ï2010)€minimized€the€effect€of€necessary,€simplifyingÏassumptions€used€by€the€IPM€and€thereby€increased€theÐ $+t&. ÐÑfïO&Ñâ fâÑe°Ñâ fâÑ  Ñaccuracy€of€the€determination.€Ìà ` àÔ#†X$nXXX¦^¬#ÔòòóóÔ‡X¦^XXX$nÔEPA€considered€alternative€ways€to€handle€heat€inputÐ ¬ Ðgrowth€in€determining€State€NOx€emission€budgets.€€ForÏexample,€EPA€considered€not€allowing€for€heat€input€growthÏat€all.€€Under€this€method,€EPA€would€base€each€Stateððs€NOxÏemission€budget€on€heat€input€as€of€a€selected€year€forÏwhich€historical€data€was€available,€without€accounting€forÏchanges€in€future€heat€input.€€In€the€NOx€SIP€Call,€EPAÏrejected€this€method,€explaining€that€although€it€would€haveÏbeen€simpler,€it€ð ðmay€be€viewed€as€less€equitable€for€StatesÏwith€significantly€higher€projected€utilization,ðð€(62€FRÏ60318,€60351,Ô#†X$nXXX¦^“#ÔÔ‡X¦^XXX$nÔ€Nov.€7,€1997).Ô#†X$nXXX¦^A#ÔÔ‡X¦^XXX$nÔÐ Éd ÐÔ#†X$nXXX¦^’#ÔÔ‡X¦^XXX$nÔà ` àEPA€also€considered€using,€as€the€State€NOxÔ#†X$nXXX¦^é#ÔòòóóÔ‡X¦^XXX$nÔ€emissionÐ u Ðbudget€for€each€State,€the€amount€of€NOx€emissions€that€theÏIPM€projected€for€the€State€in€2007€in€the€cost„¼effectiveness€run.׃;×Ý ƒ¨†ÝÔ€XN XXX¦^ÔÔ€X¦^X XXNÔòòÚ  Ú6Ú  ÚóóÝ  Ý×  ×€€EPA€did€not€use€this€approach€forÐ y Ðseveral€reasons.€€First,€this€approach€would€have€made€itÏdifficult€to€accommodate€changes€in€the€State€inventory€ofÏEGUs€as€EPA€received€better€information€regarding€existingÏunits.€€EPA€undertook€multiple€notice„and„commentÏrulemakings€to€obtain€the€most€accurate€data€possible€aboutÐ Õ%p!( Ðexisting€units€and€received€new€data€through€eachÏrulemaking.€€It€was€relatively€simple€for€EPA€to€use€thisÏnew€information€to€adjust€the€Stateððs€1995€and€1996€emissionÏinventories,€and€thus€the€Stateððs€baseline,€and€then€applyÏprojected€future€growth€from€the€IPM€to€adjust€the€StateððsÏNOx€emission€budget.€€If€instead€EPA€had€used€the€IPM€2007Ïprojected€heat€input,€then,€each€time€new€data€wereÏreceived,€EPA€would€have€had€to€rerun€the€IPM€for€2007€withÏthe€State€inventory€of€EGUs€revised€to€include€the€newÏinformation.€€It€would€have€taken€Ô#†X$nXXX¦^h#ÔÔ‡X¦^XXX$nÔsignificant€resources€andÐ q  Ðtime€to€change€the€IPM€on€several€occasions€to€reflect€thisÏnew€information.Ô#†X$nXXX¦^n#ÔÔ‡X¦^XXX$nÔÐ Éd Ðà ` àFurther,Ô#†X$nXXX¦^*#ÔÔ‡X¦^XXX$nÔ€the€IPM€is€likely€to€be€more€accurate€inÐ u Ðprojecting€State„by„State€rates€of€change€of€an€output€fromÏone€year€in€an€IPM€run€to€another€year€in€that€IPM€runÏ(here,€growth€in€State€heat€input€from€2001„2010)€than€inÏÔ#†X$nXXX¦^•#ÔÔ‡X¦^XXX$nÔpredicting€an€actual€output€State„by„State€in€a€particularÐ %À  Ðyear€(here,€actual€heat€input€in€2007).Ô#†X$nXXX¦^Â#ÔÔ‡X¦^XXX$nÔò ò€€ó óThis€is€becauseÐ Ñ l" Ðmodeling€of€complex€activities€requires€the€use€ofÏsimplifying€assumptions€in€order€to€make€the€model€feasibleÏ„„€from€the€standpoint€of€resources€and€time€„„€to€run.€€ÏThis€is€particularly€true€here,€where€EPA€must€developÏState„by„State€projections€of€heat€input€that€results€fromÏcomplex€activities€(i.e.,€the€operation€of€the€regionalÐ Ù*t&. Ðelectricity€market).€(See€sections€V.C.3€and€V.D.7€of€thisÏnotice.)Ô#†X$nXXX¦^z#ÔÔ‡X¦^XXX$nÔ€€Becauseò ò€ó óthe€same€assumptions€were€made€for€everyÐ ¬ Ðyear€modeled,€calculating€differences€between€two€modelÏyears€reduces€any€inaccuracies€caused€by€these€assumptions.€Ïòòò òó óóóTherefore,€EPA€believes€that,€on€a€State„by„State€basis,€theÐ  ° ÐIPM€is€likely€to€be€more€accurate€in€projecting€rates€ofÏchange€between€modeled€years.Ô#†X$nXXX¦^’!#Ôò òó óò òÔ‡X¦^XXX$nÔòòó óóóÐ m  Ðà ` àFor€these€reasons,€EPA€decided€that€the€approach€ofÏapplying€an€IPM„generated€heat€input€growth€rate€for€eachÏState€to€a€baseline€State€heat€input€based€on€historicalÏdata€Ô#†X$nXXX¦^R##ÔÔ‡X¦^XXX$nÔwould€be€a€reasonably€accurate€predictor€of€the€StateððsÐ ¸ Ðactual€heat€input€in€2007€and€a€more€accurate€predictor,€andÏsignificantly€simpler€and€less€costly€from€an€administrativeÏstandpointÔ#†X$nXXX¦^j$#ÔÔ‡X¦^XXX$nÔ,€than€IPMððs€projection€of€the€Stateððs€2007€heatÐ !¼ Ðinput.€Ô#†X$nXXX¦^%#ÔÔ‡X¦^XXX$nÔÐ Íh Ðòòò òó óóóò òÔ#†X$nXXX¦^&#ÔÔ‡X¦^XXX$nÔ3.€State€Heat€Input€Growth€Rates€Based€on€IPM€Outputs€forÐ y Ð2001„2010€Were€Reasonably€Representative€of€1996„2007€HeatÏInput€Growth€ó óÐ  !¤" Ðò òa.€€EPA's€Methodologyó ó.€€A€number€of€commenters€suggestedÐ Ñ"l$ Ðthat€instead€of€using€heat€input€growth€rates€based€on€2001Ïto€2010€projections,€EPA€should€have€used€State€heat€inputÏgrowth€rates€based€on€1996€dataÔ#†X$nXXX¦^y&#ÔÔ‡X¦^XXX$nÔ€and€2007€projections.€€Ô#†X$nXXX¦^R(#ÔÔ‡X¦^XXX$nÔEPAÐ ñ'Œ#* Ðbelieves€that€relying€on€the€IPM€projections€for€2001€toÏ2010€is€reasonably€accurate.ò òÐ I+ä&. Ðà ` àó óAlthough€Ô#†X$nXXX¦^¬(#ÔÔ‡X¦^XXX$nÔEPA€had€information€on,€and€projections€of,Ð e Ðannual€growth€rates€in€regionwide€electricity€demand€fromÏ1995€or€1996€to€2007€(which€EPA€used€as€inputs€to€the€IPM),ÏEPA€was€not€aware€of€any€projected€heat€input€growth€ratesÏfor€that€period€for€each€State€in€the€NOx€SIP€Call€regionÏthat€were€developed€using€a€consistent€set€of€assumptions.€ÏòòSee,€e.g.,óó€63€FR€57409Ô#†X$nXXX¦^‹)#Ô.€€Ô‡X¦^XXX$nÔ€Ô#†X$nXXX¦^S+#ÔÔ‡X¦^XXX$nÔSince,€as€discussed€in€sectionÐ m  ÐV.D.6€of€this€notice,€electricity€is€generated,€transmitted,Ïand€distributed€on€a€regional€basis,€consistent€assumptionsÏabout€regional€and€subregional€factors€(e.g.,€demand€forÏelectricity,€fuel€costs,€ò òó óò òó óand€cost€of€new€units)€must€be€usedÐ Uð Ðto€develop€the€heat€input€growth€rates€for€all€States.€€Ô#†X$nXXX¦^–+#ÔÔ‡X¦^XXX$nÔTheÐ œ ÐCourt€has€already€upheld€EPAððs€decision€to€rely€on€anÏinternally€consistent€methodology€for€determining€heatÏinput,€as€opposed€to€recommendations€by€various€commentersÏfavoring€State„specific€growth€rates€that€would€have€beenÏinconsistent€with€each€other.€€òòAppalachian€Power€v.€EPAóó,€249Ð ]ø  ÐF.3d€at€1052„53.ÌÔ#†X$nXXX¦^R-#ÔÔ‡X¦^XXX$nÔ€à ` àSince€EPA€was€not€aware€of€any€available€consistent€setÐ µ"P$ Ðof€heat€input€growth€rate€projections,€EPA€developed€its€ownÏprojections.€€Ô#†X$nXXX¦^ù.#ÔÔ‡X¦^XXX$nÔEPA€decided€toò òó óòòóó€use€the€heat€input€values€fromÐ  &¨!( ÐIPM€runs€for€2001€and€2010€to€calculate€a€long€term€heatÏinput€growth€rate€for€each€State.€€Because,€as€discussedÏabove,€the€IPM€is€a€comprehensive€model€of€the€electricityÐ +¬&. Ðmarket,€EPA€believes€that€it€provides€reasonable€heat€inputÏgrowth€rate€projections.€€Further,€EPA€believes€that€heatÏinput€growth€rates€for€the€nine„year€period€2001„2010€wereÏreasonably€representative€of€the€eleven„year€period€1996„¼2007€because,€among€other€things,€the€periods€overlap€andÏare€of€similar€length.€€In€addition,€EPA€believes€that€theÏassumptions€used€in€the€IPM€runs€for€2001€and€2010€areÏreasonably€applicable€to€the€1996„2001€period€as€well€asÏ2001„2007.€€(See€section€V.D.7€of€this€notice€discussingÏassumptions€in€the€IPM.)€€In€fact,€out€of€the€manyÏassumptions€in€the€IPM,€commenters€have€pointed€to€only€aÏfew€that€they€believe€differ€pre„€and€post„2001.€€AsÏdiscussed€below,€EPA€examined€the€assumptions€discussed€byÏcommenters€and€maintains€that€these€assumptions€do€notÏdiffer€in€any€way€that€would€affect€the€reasonableness€ofÏthe€heat€input€growth€rates.€Ô#†X$nXXX¦^ß/#ÔÔ‡X¦^XXX$nÔÐ y ÐÔ#†X$nXXX¦^¤4#ÔÔ‡X¦^XXX$nÔà ` àEPA€considered€developing€heat€input€growth€rates€basedÐ %À  Ðon€data€developed€by€OTAG.€€OTAG€developed€a€heat€inputÏgrowth€projection€separately€for€each€individual€State€forÏthe€years€1990€to€2007€without€considering€the€interactionsÏamong€the€individual€States.Ô#†X$nXXX¦^û4#ÔÔ‡X¦^XXX$nÔ€€EPA€chose€to€use€the€IPMÐ Õ%p!( Ðgrowth€rates€because,€Ô#†X$nXXX¦^`6#ÔÔ‡X¦^XXX$nÔunlike€the€OTAG€growth€projections,Ð '#* Ðthe€IPMððs€were€Ô#†X$nXXX¦^ç6#ÔÔ‡X¦^XXX$nÔnot€developed€separately€for€each€State,€butÐ -)È$, Ðwere€developed€by€analyzing€performance€of€the€electricÐ Ù*t&. Ðindustry€as€a€regionwide€system.€€Therefore,€the€IPM€growthÏrates€are€a€more€internally€consistent€set€of€growth€ratesÏthan€the€OTAG€growth€rates,€(62€FR€60353).Ìb.€Cost€of€adding€run€years.€€Some€commenters€questioned€whyÏEPA€did€not€program€the€IPM€to€provide€outputs€for€1996€inÏorder€to€generate€1996„2007€heat€input€growth€rates€(in€lieuÏof€2001„2010€growth€rates)€using€the€IPM.€€EPA€believes€thatÏits€decision€to€program€the€IPM€beginning€with€2001€wasÏreasonable.€€Ìà ` àAs€explained€by€the€Court€in€the€Section€126€Decision:€ÌÓÓà0 ` à[T]he€EPA€has€ð ðundoubted€power€to€use€predictiveÏmodelsðð€so€long€as€it€ð ðexplain[s]€the€assumptions€andÏmethodology€used€in€preparing€the€modelðð€andÏð ðprovide[s]€a€complete€analytic€defenseðð€should€theÏmodel€be€challenged.€€òòSmall€Refiner€Lead€Phase„DownÐ u ÐTask€Force€v.€EPAóó,€705€F.2d€506,€535€(D.C.€Cir.Ð Kæ Ð1983)...(citations€and€internal€quotation€marksÏomitted).€€That€a€model€is€limited€or€imperfect€is€not,Ïin€itself,€a€reason€to€remand€agency€decisions€basedÏupon€it.€Ð ` (#` (# Ðà ` àà0 ¸ àà0¸ (#¸ (#àUltimately...we€must€defer€to€the€agencyððsÏdecision€on€how€to€balance€the€cost€andÏcomplexity€of€a€more€elaborate€model€againstÏthe€oversimplification€of€a€simpler€model.€ÏWe€can€reverse€only€if€the€model€is€soÏoversimplified€that€the€agencyððs€conclusionsÏfrom€it€are€unreasonable.€Ð (#(# ÐÌÓ=:Óà ` àòòId.óóÐ )$Ä& ÐòòAppalachian€Power€v.€EPAóó,€294€F.3d€at€1052.€Ô#†X$nXXX¦^s7#ÔÔ‡X¦^XXX$nÔÐ Õ%p!( Ðà ` àThe€IPM€was€programed€to€model€specified€years€startingÏwith€2001.€€EPA€selected€these€run€years€Ô#†X$nXXX¦^}>#ÔÔ‡X¦^XXX$nÔto€provideÐ -)È$, Ðinformation€not€just€for€the€NOx€SIP€Call€and€Section€126Ð Ù*t&. ÐRule,€but€also€for€several€other€programs€over€the€next€fewÏyears,€includingÔ#†X$nXXX¦^A?#ÔÔ‡X¦^XXX$nÔ€implementation€programs€for€the€recentlyÐ ¬ Ðrevised€National€Ambient€Air€Quality€Standards€for€ozone€andÏfine€particles.€Ô#†X$nXXX¦^<@#ÔÔ‡X¦^XXX$nÔ(Regulatory€Impact€Analysis€for€the€Nox€SIPÐ i  ÐCall,€FIP€and€Section€126€Petitions,€Volume€1:€Costs€andÏEconomic€Impacts,€September€1998,€at€p.4„2.,ÏÔ#†X$nXXX¦^ A#ÔÔ‡X¦^XXX$nÔhttp://www.epa.gov/ttn/rto/sip/related.html#doc.Ô#†X$nXXX¦^ñA#Ô)Ô‡X¦^XXX$nÔ€€€AddingÐ m  Ðmore€run€years€(e.g.,€1996)€Ô#†X$nXXX¦^dB#ÔÔ‡X¦^XXX$nÔwould€not€have€providedÐ Qì  Ðinformation€useful€for€those€other€programs,€but€Ô#†X$nXXX¦^àB#ÔÔ‡X¦^XXX$nÔwould€haveÐ ý˜  Ðadded€significant€complexity€and€costs€to€the€modeling.Ô#†X$nXXX¦^C#ÔÔ‡X¦^XXX$nÔò òó óÐ ©D Ðà ` àThe€model€consists€of€model€plants€that€representÏindividual€generating€units€(e.g.,€fossil„fuel„firedÏboilers,€nuclear€units€and€hydro„electric€units)€thatÏcomprise€the€inventory€of€electricity€producers.€ÏDuplicating€precisely€each€of€the€boilers€and€generatorsÏwould€be€impracticable;€accordingly,€the€model€aggregatesÏthe€fossil„fuel€fired€units€into€a€series€of€model€plantsÏand€aggregates€the€non„fossil„fuel€fired€units€into€separateÏmodel€plants.€€(Docket€#€A„96„56,€Item€#€V„C„03,€Report€onÏAnalyzing€Electric€Power€Generation€Under€the€Clean€Air€ActÏAmendments,€at€p.5.)Ìà ` àForò ò€ó óeach€run€year,€EPA€provides€various€inputs€(i.e.,Ð ¹'T#* Ðconstraints),€such€as€the€requirement€to€meet€a€certainÏelectricity€demand€for€each€season€and€each€geographicÐ +¬&. Ðsubregion€modeled.€€In€addition,€for€each€run€year,€theÏmodel€provides€variables,€which€are€values€based€on€theÏinputs,€such€as€the€level€of€electricity€generation€fromÏeach€model€plant€and€the€level€of€emission€controls€at€aÏmodel€plant.€€For€each€year€the€model€is€run,€the€model€mustÏoptimize€(i.e.,€determine€the€least€cost€scenario,€includingÏfuel€mix,€emission€controls,€and€amount€of€operation)€forÏevery€model€plant€to€reach€each€constraint€in€the€model.€ÏThe€IPM€includes€thousands€of€constraints€and€variables.ò òÐ Å`  Ðà ` àó óThe€complexity€of€the€model€„„€its€simulations,€inputs,Ð q  Ðand€variables€„„€means€that€each€additional€run€year€addsÏmany€more€calculations€to€the€model,€a€task€that€requiresÏtime€and€resources.€€To€keep€the€model€manageable,€meet€timeÏschedules,€and€conserve€resources,Ô#†X$nXXX¦^D#ÔÔ‡X¦^XXX$nÔ€adding€an€additional€runÐ !¼ Ðyear€would€have€meant€simplifying€other€assumptions€withinÏthe€model.€€In€other€words,€because€the€number€of