[Federal Register Volume 70, Number 146 (Monday, August 1, 2005)]
[Proposed Rules]
[Pages 44154-44175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14930]
[[Page 44153]]
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Part II
Environmental Protection Agency
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40 CFR Part 51
Regional Haze Regulations; Revisions to Provisions Governing
Alternative to Source-Specific Best Available Retrofit Technology
(BART) Determinations; Proposed Rule
Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 /
Proposed Rules
[[Page 44154]]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 51
[FRL-7944-6]
RIN 2060-AN22
Regional Haze Regulations; Revisions to Provisions Governing
Alternative to Source-Specific Best Available Retrofit Technology
(BART) Determinations
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: On July 1, 1999, EPA promulgated regulations to address
regional haze (64 FR 35714). These regulations were challenged twice.
On May 24, 2002, the U.S. Court of Appeals for the District of Columbia
Circuit issued a ruling vacating the regional haze rule in part and
sustaining it in part. American Corn Growers Ass'n v. EPA, 291 F.3d 1
(D.C. Cir. 2002). On June 15, 2005, we finalized a rule addressing the
court's ruling in that case. On February 18, 2005, the U.S. Court of
Appeals for the District of Columbia Circuit issued another ruling
vacating the regional haze rule in part and sustaining it in part.
Center for Energy and Economic Development v. EPA, No. 03-1222, (D.C.
Cir. Feb. 18, 2005) (``CEED v. EPA''). In this case, the court granted
a petition challenging provisions of the regional haze rule governing
the optional emissions trading program for certain western States and
Tribes (the ``WRAP Annex Rule''). Today's proposed rule would revise
the provisions of the regional haze rule governing alternative trading
programs, and would provide additional guidance that is needed.
DATES: Comments must be received on or before September 17, 2005. A
public hearing will be held on August 17, 2005, in Denver, Colorado.
Please refer to the section on SUPPLEMENTARY INFORMATION for more
information on the comment period and the public hearing.
ADDRESSES: Submit your comments, identified by Docket ID No. OAR-2002-
0076 by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
on-line instructions for submitting comments. Agency Web site: http://www.epa.gov/edocket. EDOCKET, EPA's electronic public docket and
comment system, is EPA's preferred method for receiving comments.
Follow the on-line instructions for submitting comments.
E-mail: http://www.epa.gov/edocket.
Fax: 202-566-1741.
Mail: OAR Docket, Environmental Protection Agency, Mailcode: B102,
1200 Pennsylvania Ave., NW., Washington, DC 20460. Please include a
total of 2 copies.
Hand Delivery: EPA/DC, EPA West, Room B102, 1301 Constitution Ave.,
NW., Washington, DC. Such deliveries are only accepted during the
Docket's normal hours of operation, and special arrangements should be
made for deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. OAR-2002-0076.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at http://www.epa.gov/edocket, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through EDOCKET, regulations.gov, or e-
mail. The EPA EDOCKET and the federal regulations.gov Web sites are
``anonymous access'' systems, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through EDOCKET or regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket visit EDOCKET on-line or see the Federal Register of May 31,
2002 (67 FR 38102).
For additional instructions on submitting comments, go to unit II
of the SUPPLEMENTARY INFORMATION section of this document.
Docket: All documents in the docket are listed in the EDOCKET index
at http://www.epa.gov/edocket. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in EDOCKET or in hard
copy at the OAR Docket, EPA/DC, EPA West, Room B102, 1301 Constitution
Ave., NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is (202) 566-1744, and the
telephone number for the OAR Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT: Kathy Kaufman at 919-541-0102 or by e-
mail at [email protected] or Todd Hawes at 919-541-5591 or by e-
mail at [email protected].
SUPPLEMENTARY INFORMATION: Regulated Entities. This proposed rule will
affect the following: State and local permitting authorities and Indian
Tribes containing major stationary sources of pollution affecting
visibility in federally protected scenic areas.
This list is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This list gives examples of the types of entities EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed could also be affected. To determine whether your
facility, company, business, organization, etc., is regulated by this
action, you should examine the applicability criteria in Part II of
this preamble. If you have any questions regarding the applicability of
this action to a particular entity, consult the people listed in the
preceding section.
What Should I Consider as I Prepare My Comments for EPA?
1. Submitting CBI. Do not submit this information to EPA through
EDOCKET, regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI). In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
[[Page 44155]]
2. Tips for Preparing Your Comments. When submitting comments,
remember to:
A. Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).
B. Follow directions--The agency may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.
C. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
D. Describe any assumptions and provide any technical information
and/or data that you used.
E. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
F. Provide specific examples to illustrate your concerns, and
suggest alternatives.
G. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
H. Make sure to submit your comments by the comment period deadline
identified.
Public Hearing
The EPA will hold one public hearing on today's proposal. The
hearing will be on August 17, 2005, at the EPA Region 8 Office
Conference Center (second floor), 999-18th St. Suite 300, Denver, CO
80202-2466. Because the hearing is being held at U.S. government
facilities, everyone planning to attend the hearing should be prepared
to show valid picture identification to the security staff in order to
gain access to the meeting room. The public hearings will begin at 8
a.m. and continue until 12 p.m. Oral testimony will be limited to 5
minutes per commenter. The EPA encourages commenters to provide written
versions of their oral testimonies either electronically (on computer
disk or CD-ROM) or in paper copy. Verbatim transcripts and written
statements will be included in the rulemaking docket. If you would like
to present oral testimony at the hearing, please notify Kathy Kaufman
at 919-541-0102 or by e-mail at [email protected] or Todd Hawes at
919-541-5591 or by e-mail at [email protected] by August 7. Persons
wishing to present oral testimony that have not made arrangements in
advance should register by 9 a.m. the day of the hearing. The public
hearing will provide interested parties the opportunity to present
data, views, or arguments concerning the proposed rules. The EPA may
ask clarifying questions during the oral presentations, but will not
respond to the presentations or comments at that time. Written
statements and supporting information submitted during the comment
period will be considered with the same weight as any oral comments and
supporting information presented at a public hearing.
Outline. The contents of today's preamble are listed in the
following outline.
I. Overview and Background
II. Revisions to Regional Haze Rule Sec. 51.308(e)(2)
A. Revisions Related to the Demonstration That an Alternative
Program Makes Greater Reasonable Progress than BART
B. State Options for Complying with Sec. 51.308(e)(2)(i) as
Proposed
C. Analysis under Sec. 51.308(e)(2) when an independent
requirement determines the level of emission reductions needed
D. Revisions to Sec. 51.308(e)(2) to standardize and clarify
the minimum elements of emissions trading programs in lieu of BART
III. Revisions to Regional Haze Rule Sec. 51.309
A. Background
B. Proposed Regulatory Framework for States choosing to
implement the GCVTC/WRAP Strategies
IV. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination with
Indian Tribal Governments
G. Executive Order 13045: Protection of Children from
Environmental Health Risks and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution, or Use.
I. National Technology Transfer Advancement Act
J. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations
I. Overview and Background
Today's rulemaking provides the following changes to the regional
haze regulations:
(1) revised regulatory text in Sec. 51.308(e)(2)(i) in response to
the CEED court's remand, to remove the requirement that the
determination of the BART ``benchmark'' be based on cumulative
visibility analyses, and to clarify the process for making such
determinations, including the application of BART presumptions for EGUs
as contained in Appendix Y to 40 CFR 51.
(2) new regulatory text in Sec. 51.308(e)(2)(vi), to provide
minimum elements for cap and trade programs in lieu of BART,
(3) revised regulatory text in Sec. 51.309, to reconcile the
optional framework for certain western States and Tribes to implement
the recommendations of the Grand Canyon Visibility Transport Commission
(GCVTC) with the CEED decision.
How This Preamble Is Structured. Section I provides background on
the Clean Air Act (CAA) BART requirements as codified in the regional
haze rule, on the DC Circuit Court decision which remanded parts of the
rule, and on the June 2005 BART rule. Section II discusses specific
issues relating to the proposed revisions to Sec. 51.308(e)(2) of the
Regional Haze Rule governing alternatives to source-by-source BART.
Section III discusses specific issues relating to the proposed
revisions to Sec. 51.309 of the Regional Haze Rule pertaining to the
optional emissions trading program for certain western States and
Tribes. Section IV provides a discussion of how this rulemaking
complies with the requirements of Statutory and Executive Order
Reviews.
The Regional Haze Rule and BART Guidelines
In 1999, we published a final rule to address a type of visibility
impairment known as regional haze (64 FR 35714, July 1, 1999). The
regional haze rule requires States to submit implementation plans
(SIPs) to address regional haze visibility impairment in 156 Federally-
protected parks and wilderness areas. These 156 scenic areas are called
``mandatory Class I Federal areas'' in the Clean Air Act (CAA),\1\ but
are referred to simply as ``Class I areas'' in today's rulemaking. The
1999 rule was issued to fulfill a long-standing EPA commitment to
address regional haze under the authority and requirements of sections
169A and 169B of the CAA.
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\1\ See, e.g. CAA Section 169(a)(1).
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As required by the CAA, we included in the final regional haze rule
a requirement for BART for certain large stationary sources that were
put in place between 1962 and 1977. We discussed these requirements in
detail in the preamble to the final rule (64 FR 35737-35743). The
regulatory requirements for BART were codified at 40 CFR 51.308(e), and
in definitions that appear in 40 CFR 51.301.
In the preamble to the regional haze rule, we committed to issuing
further guidelines to clarify the requirements of the BART provision.
We announced
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these final guidelines on June 15, 2005.\2\ The purpose of the BART
guidelines is to assist States as they identify which of their BART-
eligible sources should undergo a BART analysis (i.e., which are
``sources subject to BART''), and select controls in light of the
statutory factors listed above (``the BART determination'').
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\2\ See http://www.epa.gov/visibility/actions.html#bart1.
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We explained in the preamble to the 1999 regional haze rule that
the BART requirements in section 169A(b)(2)(A) of the CAA demonstrate
Congress' intent to focus attention directly on the problem of
pollution from a specific set of existing sources (64 FR 35737). The
CAA requires that any of these existing sources ``which, as determined
by the State, emits any air pollutant which may reasonably be
anticipated to cause or contribute to any impairment of visibility [in
a Class I area],'' shall install the best available retrofit technology
for controlling emissions.\3\ In determining BART, the CAA requires the
State to consider several factors that are set forth in section
169A(g)(2) of the CAA, including the degree of improvement in
visibility which may reasonably result from the use of such technology.
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\3\ CAA Sections 169A(b)(2) and (g)(7).
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The regional haze rule addresses visibility impairment resulting
from emissions from a multitude of sources located across a wide
geographic area. Because the problem of regional haze is caused in
large part by the long-range transport of emissions from multiple
sources, and for certain technical and other reasons explained in that
rulemaking, we adopted an approach that required States to look at the
contribution of all BART sources to the problem of regional haze in
determining both applicability and the appropriate level of control.
Specifically, we had concluded that if a source potentially subject to
BART is located in an area from which pollutants may be transported to
a Class I area, that source ``may reasonably be anticipated to cause or
contribute'' to visibility impairment in the Class I area. Similarly,
we also concluded that in weighing the factors set forth in the statute
for determining BART, the States should consider the collective impact
of BART sources on visibility. In particular, in considering the degree
of visibility improvement that could reasonably be anticipated to
result from the use of such technology, we stated that the State should
consider the degree of improvement in visibility that would result from
the cumulative impact of applying controls to all sources subject to
BART. We concluded that the States should use this analysis to
determine the appropriate BART emission limitations for specific
sources.\4\
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\4\ See 66 FR 35737-35743 for a discussion of the rationale for
the BART requirements in the 1999 regional haze rule.
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The 1999 regional haze rule also included Sec. 51.309, containing
the strategies developed by the Grand Canyon Visibility Transport
Commission (GCVTC). Certain western States and Tribes were eligible to
submit implementation plans under Sec. 51.309 as an alternative method
of achieving reasonable progress for Class I areas which were covered
by the GCVTC's analysis--i.e., the 16 Class I areas on the Colorado
Plateau. In order for States and Tribes to be able to utilize this
section, however, the rule provided that EPA must receive an ``Annex''
to the GCVTC's final recommendations. The purpose of the Annex was to
provide the specific provisions needed to translate the GCVTC's general
recommendations for stationary source SO2 reductions into an
enforceable regulatory program. The rule provided that such an Annex,
meeting certain requirements, be submitted to EPA no later than October
1, 2000. See Sec. Sec. 51.309(d)(4) and 51.309(f).
American Corn Growers v. EPA
In American Corn Growers v. EPA, 291 F.3d 1 (DC Cir. 2002),
industry petitioners challenged EPA's interpretation of the BART
determination process and raised other challenges to the rule. The
court in American Corn Growers concluded that the BART provisions in
the 1999 regional haze rule were inconsistent with the provisions in
the CAA ``giving the states broad authority over BART determinations.''
291 F.3d at 8. Specifically, with respect to the test for determining
whether a source is subject to BART, the court held that the method EPA
had prescribed for determining which eligible sources are subject to
BART illegally constrained the authority Congress had conferred on the
States. Id. The court did not decide whether the general collective
contribution approach to determining BART applicability was necessarily
inconsistent with the CAA. Id. at 9. Rather, the court stated that
``[i]f the [regional haze rule] contained some kind of a mechanism by
which a state could exempt a BART-eligible source on the basis of an
individualized contribution determination, then perhaps the plain
meaning of the Act would not be violated. But the [regional haze rule]
contains no such mechanism.'' Id. at 12.
The court in American Corn Growers also found that our
interpretation of the CAA requiring the States to consider the degree
of improvement in visibility that would result from the cumulative
impact of applying controls in determining BART was inconsistent with
the language of the Act. 291 F.3d at 8. Based on its review of the
statute, the court concluded that the five statutory factors in section
169A(g)(2) ``were meant to be considered together by the states.'' Id.
at 6. The final rule signed on June 15, 2005 responded to the American
Corn Growers court's decision on the BART provisions by amending the
regional haze rule at 40 CFR 51.308 and by finalizing changes to the
BART guidelines at 40 CFR part 51, appendix Y.\5\ These changes
eliminate the previous constraint on State discretion and provide
States with appropriate techniques and methods for determining which
BART-eligible sources ``may reasonably be anticipated to cause or
contribute to any impairment of visibility in any mandatory Class I
Federal area.'' In addition, the revised regulations list the
visibility improvement factor with the other statutory BART
determination factors in Sec. 51.308(e)(1)(A), so that States will be
required to consider all five factors, including visibility impacts, on
an individual source basis when making each individual source BART
determination.
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\5\ http://www.epa.gov/visibility/actions.html#bart1.
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The Annex Rule
In a rule dated June 5, 2003, EPA approved the WRAP's Annex to the
GCVTC report, which had been submitted by the WRAP prior to October 1,
2000, in accordance with Sec. 51.309(f). 68 FR 33764, June 5, 2003. In
this action, referred to as the ``Annex rule,'' EPA approved the
quantitative SO2 emission reduction milestones and the
detailed provisions of the backstop market trading program developed by
the WRAP as meeting the requirements of Sec. 51.309(f). EPA therefore
codified the Annex provisions in Sec. 51.309(h). Subsequently, five
States and one local agency submitted SIPs developed to comply with all
of Sec. 51.309, including the Annex provisions at Sec. 51.309(h). In
accordance with Sec. 51.309(c) these SIPs were submitted prior to
December 31, 2003.
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Center for Energy and Economic Development v. EPA
After the May 2004 reproposal of the BART guidelines, the DC
Circuit decided another case where BART provisions were at issue,
Center for Energy and Economic Development v. EPA, No. 03-1222, (D.C.
Cir. Feb. 18, 2005) (``CEED v. EPA''). In this case, the court granted
a petition challenging provisions of the regional haze rule governing
the optional emissions trading program for certain western States and
Tribes (the ``WRAP Annex Rule'').
The court in CEED affirmed our interpretation of CAA 169A(b)(2) as
allowing for non-BART alternatives where those alternatives are
demonstrated to make greater progress than BART. (CEED, slip. op. at
13). The court, however, took issue with provisions of the regional
haze rule governing the methodology of that demonstration.
Specifically, 40 CFR 51.308(e)(2) required that visibility improvements
under source-specific BART--the benchmark for comparison to the
alternative program--must be estimated based on the application of BART
controls to all sources subject to BART. (This section was incorporated
into the WRAP Annex rule by reference at 40 CFR 51.309(f)). The court
held that we could not require this type of group BART approach, which
was vacated in American Corn Growers in a source-specific BART context,
even in an alternative trading program in which State participation was
wholly optional.
The BART guidelines as proposed in May 2004 contained a section
offering guidance to States choosing to address their BART-eligible
sources under the alternative strategy provided for in 40 CFR
51.308(e)(2). This guidance included criteria for demonstrating that
the alternative program achieves greater progress towards eliminating
visibility impairment than would BART.
In light of the DC Circuit's decision in CEED, we did not address
alternative programs in the rulemaking finalizing the BART guidelines.
However we note that our authority to address BART through alternative
means was upheld in CEED, and we remain committed to providing States
with that flexibility. Today's proposed revisions to the Regional Haze
Rule, which responds to the holding in CEED, would provide that
flexibility that States need to implement alternatives to BART.
Overview of Proposed Changes to Sec. Sec. 51.308(e)(2) and 51.309 of
the Regional Haze Rule
The EPA continues to support State efforts to develop trading
programs and other alternative strategies to accomplish the
requirements of the regional haze rule, including BART. We believe such
strategies have the potential to achieve greater progress towards the
national visibility goals, and to do so in the most cost effective
manner practicable. Therefore, we are proposing the following
amendments to the regional haze rule at Sec. Sec. 51.308(e)(2) and
51.309 to enable States to continue to develop and implement such
programs. We request comment on all of the provisions in this proposed
rule.
First, we are proposing amending the generally applicable
provisions in Sec. 51.308(e)(2) prescribing the type of analysis used
to determine emissions reductions achievable from source-by-source
BART, for purposes of comparing to the alternative program. The
proposed amendments would: reconcile the methodology with the court's
decision in CEED v. EPA; provide additional guidance to States and
Tribes regarding the minimum elements of an acceptable cap and trade
program; and provide for consistent application of the BART guidelines
for EGUs between source-by-source programs and alternative cap and
trade programs.
Second, we are proposing amendments to Sec. 51.309 to enable
certain western States and Tribes to continue to utilize the strategies
contained in this section as an optional means to satisfy reasonable
progress requirements for certain Class I areas, for the first long-
term planning period. These changes would provide States and Tribes
with an opportunity to revisit the details of the backstop
SO2 emissions trading program without being required to
assess visibility on a cumulative basis when determining emissions
reductions achievable by source-by-source BART.
II. Revisions to Regional Haze Rule Section Sec. 51.308(e)(2)
A. Revisions Related to the Demonstration That an Alternative Program
Makes Greater Reasonable Progress Than BART
The DC Circuit's decision in CEED v. EPA prohibits the Agency from
requiring that a BART alternative trading program be compared to a
source-by-source BART program by assessing the effect on visibility of
the source-by-source BART program on a cumulative basis.
The general provision in the regional haze rule authorizing
alternative programs in lieu of BART had required such an approach. See
40 CFR 51.308(e)(2)(2004). The general provision, Sec. 51.308(e)(2),
was incorporated by reference into the WRAP-specific section of the
rule at Sec. 51.309(f)(1)(I).
Section 51.308(e)(2)(i) specified the methodology for comparing a
BART alternative trading program against source-by-source BART. This
provision required States to demonstrate that a ``trading program or
other alternative measure will achieve greater reasonable progress than
would have resulted from the installation and operation of BART at all
sources subject to BART in the State.'' The methodology consisted of
three steps, quoted here in full:
(A) A list of all BART eligible sources within the State.
(B) An analysis of the best system of continuous emission
control technology available and associated emission reductions
achievable for each source within the State subject to BART. In this
analysis, the State must take into consideration the technology
available, the costs of compliance, the energy and nonair quality
environmental impacts of compliance, any pollution control equipment
in use at the source, and the remaining useful life of the source.
The best system of continuous emission control technology and the
above factors may be determined on a source category basis. The
State may elect to consider both source-specific and category-wide
information, as appropriate, in conducting its analysis.
(C) An analysis of the degree of visibility improvement that
would be achieved in each mandatory Class I Federal area as a result
of the emission reductions achievable from all such sources subject
to BART located within the region that contributes to visibility
impairment in the Class I area, based on the analysis conducted
under Sec. 51.308(e)(2)(i)(B).
Although the DC Circuit had found this methodology to be
inconsistent with the statutory requirements for source-by-source BART,
when EPA revised the regional haze rule to incorporate the WRAP Annex
in 2003, we did not believe that the decision in American Corn Growers
in any way affected our ability to approve alternative measures such as
trading programs. In reviewing our approval of the Annex submitted by
the WRAP, however, the CEED court stated that EPA could not ``under
section 309 require states to exceed invalid emission reductions.'' The
court granted the petition challenging the Annex because, consistently
with Sec. 51.308(e)(2)(i), EPA's regulations had required States to
consider ``the impact of all emissions reductions to estimate
visibility progress.''
[[Page 44158]]
Based on our review of the CEED court's ruling, we believe that our
regulations, which required an analysis of emissions reductions
achievable for each source that was bifurcated into an individual
source assessment for the first four of the five BART factors
identified in the CAA for States to consider in BART determinations,\6\
and a cumulative source assessment for the fifth factor of visibility
improvement, must be revised.
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\6\ These four factors are the costs of compliance, the energy
and non-air environmental impacts of compliance, any controls
already in use, and the remaining useful life of the source.
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Revision to Sec. 51.308(e)(2)(i) To Address CEED
We propose to revise Sec. 51.308(e)(2)(i) to provide that BART
determinations be made in the trading program context in the same
manner as in the source-by-source context. This would be accomplished
by a cross reference to Sec. 51.308(e)(1) in proposed Sec.
51.308(e)(2)(i)(C). Section 51.308(e)(1)(A), as contained in the recent
action finalizing the BART guidelines, provides that the degree of
visibility improvement be considered along with the other statutory
factors when making BART determinations. Appendix Y to part 51 sets
forth the process by which States should assess visibility improvement
in BART determinations. Thus, with this amendment, the regional haze
rule would not impose a bifurcated methodology for defining the level
of emission reductions needed by an alternative program in lieu of
BART. We believe this revision is the only regulatory change necessary
to comply with the court's decision in CEED.\7\ The potential range of
options States would have for performing analyses in compliance with
this provision is discussed in section B below.
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\7\ It is important to note that existing paragraph (C) does
not, in and of itself, necessarily indicate a group BART approach.
That is, if BART-equivalent reductions are estimated in an
appropriate manner under paragraph (B) (i.e., a manner that takes
into account the degree of visibility improvement anticipated from
controls), nothing in paragraph (C)'s requirement to analyze the
degree of improvement expected from all sources subject to BART
would run afoul of the court's prohibition of a group-BART
requirement. In other words, it is the absence of visibility
improvement as a factor in the BART determination under paragraph
(B) which is problematic, not its inclusion in paragraph (C) as an
indicator of the overall improvement achievable from BART.
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Revisions to Demonstration Framework
The other proposed changes to Sec. 51.308(e)(2)(i) are intended to
provide a clearer framework for the demonstration that an alternative
program provides greater reasonable progress than BART. Specifically,
we propose revising paragraph (D) to require States to project
visibility improvements resulting from the alternative program, and
adding a new paragraph (E) to require that States compare the
visibility results from source by source BART and the alternative
program, using the test criteria in Sec. 51.308(e)(3).
We are also clarifying the requirement in existing Sec.
51.308(e)(2)(i)(C) that a State analyze ``the degree of visibility
improvement that would be achieved in each mandatory Class I Federal
area as a result of the emissions reductions achievable from all such
sources subject to BART located within the region that contributes to
visibility impairment in the Class I area, based on the analysis
conducted under [Sec. 51.308(e)(2)(i)(B)].'' We believe this language
is somewhat ambiguous, as it could be read to require an analysis for
every Federal mandatory Class I area nationwide, regardless of the
scope of the program at issue. Moreover, it seems to demand a
determination of what region, which could be a subregion of the trading
area, contributes to impairment at each Class I area. We anticipate
that modeling will be conducted on a regionwide basis, based on
emissions reductions achievable by BART at all sources subject to BART
within the program area, rather than as a series of groupings of areas
of contribution with impacted Class I areas.
To clarify that every program need not address every Class I area
nationwide, we propose adding the term ``affected'' to modify ``class I
areas'' in paragraph (C). As noted in the preamble discussion of the
finalization in Sec. 51.308(e)(3) of the criteria for determining
whether an alternative program makes greater reasonable progress than
BART, states have some discretion in defining ``affected'' Class I
areas. See part IV.B. of final BART guideline preamble.\8\ We also
propose eliminating the ambiguous clause formerly in paragraph (C).
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\8\ http://www.epa.gov/visibility/actions.html#bart1.
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In addition, we propose to clarify (in revised paragraph (B)) that
the alternative program need not cover every BART category, but must
cover every BART-eligible source within an affected category. The
rationale for this is discussed below in the discussion of ``Minimum
Universe of Affected Sources.''
Finally, we propose to add a paragraph (E) which would direct the
State to compare the expected visibility improvement under the
alternative program and under BART according to the criteria
established in Sec. 51.308(e)(3).
With these changes, paragraphs within Sec. 51.308(e)(2)(i) would
read as follows:
(A) A list of all BART-eligible sources within the State.
(B) A list of all BART source categories covered by the
alternative program. The State is not required to include every BART
source category in the program, but for each source category
covered, the State must include each BART-eligible source within
that category in the analysis required by paragraph (C) below.
(C) An analysis of the degree of visibility improvement that
would be achieved in each affected mandatory Class I Federal area as
a result of the emission reductions projected from the installation
and operation of BART controls under paragraph (e)(1) of this
section at each source subject to BART in each source category
covered by the program.
(D) An analysis of the emissions reductions, and associated
visibility improvement anticipated at each Class I area within the
State, under the trading program or other alternative measure.
(E) A determination that the emission reductions and associated
visibility improvement projected under (D) above (i.e., the trading
program or other alternative measure) comprise greater reasonable
progress, as defined in paragraph (e)(3) of this section, than those
projected under (C) above (i.e., BART).
The new Sec. 51.308(e)(3), cross referenced in proposed Sec.
51.308(e)(2)(i)(E) above, was finalized in the June 15, 2005 notice of
final rule making for the BART guidelines. In that action, we noted
that we would seek comment in this rulemaking on whether compliance
with the two-pronged visibility test contained in Sec. 51.308(e)(3)
should be the only means of demonstrating greater reasonable progress
than BART, or whether other means, including qualitative factors,
should also be allowed. Consequently, we seek comment in this proposal
on whether it would be reasonable to allow States to use a weight-of-
evidence approach to evaluate both air quality modeling results and
other policy considerations. Such an approach might be reasonable, for
example, where (1) the alternative program achieves emissions
reductions that are within the range believed achievable from source-
by-source BART at affected sources, (2) the program imposes a firm cap
on emissions that represents meaningful reductions from current levels
and, in contrast to BART, would prevent emissions growth from new
sources, and (3) the State is unable to perform a sufficiently robust
assessment of the programs using the two pronged visibility test due to
technical or data limitations. Regarding the last point above, we are
cognizant of the fact that
[[Page 44159]]
there may not be methods available to accurately project the
distribution of emission reductions for source categories other than
EGUs. Modeling tools such as the Integrated Planning Model, which
enables projections of emission control decisions at EGUs based on
regulatory requirements with a reasonable degree of confidence, do not
exist for other source categories. We therefore seek comment on the
extent to which other, non-modeled factors may be taken into
consideration. We note that we are not soliciting comments on the terms
of Sec. 51.308(e)(3), as that provision is final.
Role of BART Guidelines for EGUs
The BART guidelines establish certain control levels or emission
rates as presumptive standards for EGUs of greater than 200 MW capacity
at plants with total generating capacity in excess of 750 MW. These
presumptive levels were developed pursuant to EPA's duty under CAA
section 169A(b)(2) to develop the guidelines under which States are
required to make BART determinations for EGUs. The presumptive
standards were developed through a formal rulemaking process, including
extensive public comment and full analysis of costs and economic
impacts, and apply to certain EGUs on a mandatory basis in the context
of Sec. 51.308(e)(1). Because they have been developed for application
on a source-specific basis, we believe it is all the more appropriate
to apply them in a trading context where the burden to meet BART-
equivalent reductions may be shared among non-BART eligible sources as
well. We therefore propose to make the presumptive standards guidelines
applicable to alternative programs through a cross reference to Sec.
51.308(e)(1) within Sec. 51.308(e)(2)(i)(C). Thus, when States are
estimating emissions reductions achievable from source-by-source BART,
they must assume that all EGUs which would otherwise be subject to BART
will control at the presumptive level, unless they demonstrate such
presumptions are not appropriate at particular units. This
demonstration should be guided by the same criteria discussed in the
BART guidelines. We request comment on this proposed requirement.
Minimum Universe of Affected Sources
Section 51.308(e)(2)(ii) currently provides that, where a State
opts to implement an alternative strategy to BART, the program must
apply, at a minimum, to all BART-eligible sources within the State.
Since the promulgation of the regional haze rule in 1999, EPA has had
occasion to consider BART alternative programs in more detail,
including the WRAP Annex and the Clean Air Interstate Rule, or CAIR.\9\
We now believe that this ``all or nothing'' requirement is unduly
restrictive and could pose an unnecessary barrier to the development of
BART alternatives. The reason for this is that some BART-eligible
source categories might not be suitable for participation in a trading
program. For example, for some source categories there may be
difficulty in quantifying emissions with sufficient accuracy and
precision to guarantee fungibility of emission allowances. Because of
these considerations, we believe States should have the opportunity to
pursue source-by-source BART for one or more categories which are more
appropriately addressed in that manner and a trading program for other
source categories. Once a source category is selected for inclusion in
the alternative program, however, all BART sources within the effected
categories must be covered. Therefore, we are proposing to revise
Sec. Sec. 51.308(e)(2)(i)(B) and 51.308(e)(2)(ii) to this effect.
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\9\ In the case of the CAIR, EPA adopted separate provisions
that allow the use of an alternative trading program for a subset of
BART-eligible sources.
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B. State Options for Complying With Sec. 51.308(e)(2)(i) as Proposed
Under the framework provided by CAA sections 169A and 169B, there
are several different contexts in which visibility impact analysis
could be conducted. The development of a BART-alternative program could
entail separate visibility analysis in as many as three distinct
stages: (1) Determining which BART eligible sources are subject to
BART, (2) determining what BART is, for each source or source category
subject to BART, and (3) determining the overall visibility improvement
anticipated from the application of BART to all sources subject to
BART. In addition, the first two stages, if conducted on a source-by-
source basis, could involve hundreds of separate modeling runs in each
State. This could impose a tremendous burden on State air agency
resources, and eliminate the administrative efficiency advantages
provided by emission-trading alternatives. The EPA therefore seeks to
allow States to combine modeling stages or use simplifying assumptions
to the extent allowed by the CAA and controlling case law.
Before discussing the first two stages, we note that an
individualized analysis is never required at the third stage--
determining the overall improvement anticipated from source-by-source
BART applied to all sources. By definition, visibility modeling at this
stage must be done on a cumulative basis. This does not make it a
prohibited approach under CEED v. EPA, because at this stage of the
analysis, relevant aspects of the BART benchmark and the alternative
program have already been determined. For example, if the emissions
reductions anticipated from source-by-source BART were determined by
conducting a full-scale BART analysis in accordance with Sec.
51.308(e)(1) on each source, including the use of individualized
modeling analysis for each source, it would then be appropriate to
determine the overall visibility improvement expected from the
application of this BART to all sources subject to BART.\10\ We now
turn to the discussion of the potential for providing flexibility to
States in assessing visibility in the first two stages listed above.
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\10\ This is the stage of the analysis prescribed by existing
Sec. 51.308(e)(2)(i)(C), as noted in the section II.A above.
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1. Determination of Which BART-Eligible Sources Are Subject to BART
In the BART guidelines, announced on June 15, 2005,\11\ we provide
States with guidance on how to determine which BART-eligible sources
are ``reasonably anticipated to cause or contribute to any visibility
impairment at any Class I area.'' Such sources are ``subject to BART,''
meaning that the State must perform a BART determination based on the
five statutory factors. Under the guidelines, States have considerable
discretion to determine which BART-eligible sources are subject to
BART, as the court emphasized in American Corn Growers.
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\11\ http://www.epa.gov/visibility/actions.html#bart1.
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In providing States with the guidance for these determinations, we
note that States may choose to make BART determinations for all BART-
eligible sources.\12\ Alternatively, States could determine which BART-
eligible sources are subject to BART using any of the options provided
in the BART guidelines. States opting to develop a trading program or
other alternative measure may wish to exercise their discretion to
determine that all BART-eligible sources within affected categories are
reasonably anticipated to cause or contribute to visibility impairment
and therefore should be
[[Page 44160]]
included in the analysis of emissions reductions achievable by BART.
While this might eliminate the need for visibility modeling for each
BART eligible source(reducing the administrative burden on the State),
it also maximizes the number of BART-eligible sources included in this
step of the analysis of an alternative strategy. At the next stage of
the process, the BART determination (i.e., a determination of emissions
reductions that would be achievable under source-by-source BART), a
visibility impact analysis of some sort (discussed in next section
below) would still be required. Therefore, States would have the
opportunity to consider the anticipated visibility improvement from
imposing controls on a single source against cost of control and other
factors.
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\12\ As noted in the preamble to the BART guidelines, States
choosing this approach should use the data being developed by the
regional planning organizations, or on their own, as part of the
regional haze SIP development process to make a showing that the
State contributes to visibility impairment in one or more Class I
areas.
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2. Determination of What Constitutes BART for Each BART Eligible Source
Source-by-Source Visibility Impact Analysis
One way to handle the visibility improvement element of the BART
determination for all BART sources covered by the program would be to
conduct individualized assessments of visibility improvement expected
from each BART source under various control scenarios, as described in
the BART guidelines. Such an approach would comport with the court's
decision in CEED v. EPA, as it would completely avoid any taint of a
``group BART'' approach.
However, such an approach, when used in the context of an
alternative program, could impose a significant resource burden upon
the States, especially if the State is modeling a large number of BART-
eligible sources over a broad regional area (i.e. multiple States). For
example, a State could potentially need to conduct hundreds of model
runs to isolate individual source contributions to multiple Class I
areas across multiple States, and assess several sets of meteorological
and terrain data to appropriately simulate the geophysical conditions
influencing visibility. We seek comments, particularly from States and
interested Tribes, regarding the feasibility of such an approach and
other recommendations for the alternative program analysis. Although
such an analysis is appropriate in the Sec. 51.308(e)(1) source-by-
source context, there may be more streamlined approaches that would be
appropriate for BART determinations within an alternative program.
One area of consideration might be the type of model used. The BART
guidelines provide that CALPUFF is the preferred model for the
visibility improvement analysis in the source-by-source (Sec.
51.308(e)(1)) context but note that other appropriate models may be
used. A regional modeling approach, using a photochemical grid model,
may be more appropriate for an alternative program. In many cases,
regional planning organizations (RPOs) have already prepared data sets
that are ``model ready'' for a regional modeling application; this
could significantly reduce the resource burden on States. We request
comment on a preferred modeling methodology and whether the use of
other models, including regional scale models such as the Community
Multiscale Air Quality model (CMAQ) and the Comprehensive Air quality
Model with extensions (CAMX), would be appropriate for BART
determinations in the alternative-program context \13\, and whether
their use would significantly ease the burden on States.
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\13\ To reiterate, the comments we seek in this part of the
preamble are with respect to the use of other models for use in the
course of estimating the BART ``benchmark'' through the
determination of BART control levels at sources subject to BART. For
example, regional scale models might be used to inform BART
determinations at many sources simultaneously through the use of
techniques which can track multiple single source contributions.
This type of modeling is different from the use of regional scale
models to assess the cumulative impact on visibility after BART
determinations have been made. There is no question that the use of
regional scale models is appropriate for the latter purpose, as with
our use of CMAQ to assess the visibility effects of CAIR and of the
most-stringent-case BART for EGUs.
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Potentially Permissible Uses of Cumulative Approach
Today's proposed revisions would require States to consider
anticipated visibility improvement along with the other statutory
factors when determining BART for each source subject to BART in a
source-by-source program. The analysis would then be used to compare
BART to the alternative program. A State that complied with this
requirement by performing a full-scale individualized visibility impact
determination for each source would clearly satisfy the American Corn
Growers and CEED decisions.
What is less clear from the decisions is whether a State may, in
exercising its discretion, employ some type of cumulative approach or
simplifying assumptions in the process of considering visibility
improvement when estimating emissions reductions achievable by source-
by-source BART. The EPA believes that States retain such discretion,
and that the holding of CEED v. EPA is limited to circumstances where
the EPA attempts to require or induce States to adopt cumulative
approaches. The EPA is not requiring such a cumulative approach.
The court did not specifically discuss the relationship between the
invalid ``group BART'' approach contained in the Annex (and approved in
the Annex rule) and the requirements of the regional haze rule which
governed the development of the Annex in the first place (i.e.,
Sec. Sec. 51.308(e)(2) and 51.309(f)). However, the idea that the EPA
apparently forced this methodology upon the States appears to be
central to the Court's reasoning in invalidating the Annex Rule. This
is most clearly demonstrated in the court's discussion of the
preliminary issue of whether the petitioner had standing to bring the
suit. In that discussion, the court held that neither the fact that the
States had a choice between the GCVTC provisions (Sec. 51.309) and the
nationally applicable provisions (Sec. 51.308), nor the fact that
States had taken the initiative in designing the Annex, was sufficient
to ``undermine the inference that EPA's pressure has been decisive.''
CEED v. EPA at 8-9. The issue here was whether the petitioner's current
``injury in fact'' (compliance with reporting requirements necessitated
by the Annex) was fairly traceable to EPA's regulatory scheme, not
whether the ``group BART'' provision per se was forced upon the States.
However, since the ``group BART'' methodology was prescribed by the
regulations which governed the Annex, to the extent EPA induced or
``pressured'' States into accepting Sec. 51.309, it also must have
pressured them into accepting group BART. Therefore, the CEED decision
did not address the situation where a State exercises its discretion to
use a cumulative approach to visibility modeling, absent any
``pressure'' from the EPA.
This reading of the case is not inconsistent with the court's
statement that group BART is ``invalid in any 169A context,''--a
statement made in the context of EPA's ripeness claim. The EPA had
argued the claims brought by the petitioner in CEED v. EPA had been
ripe for review in 1999 at the time the action in American Corn Growers
was brought and were thus precluded from being raised several years
later. Petitioner CEED argued that American Corn Growers had either
invalidated Sec. Sec. 51.308(e)(2) and 51.309(f) (providing the States
with the opportunity to submit the Annex), or regarded those issues as
unripe at the time. CEED, Slip. Op. at 11. The court determined that
American Corn Growers had not addressed ``better than BART in the 309
context,'' and that the prior court's
[[Page 44161]]
hesitation to do so was ``reasonably based on the possibility that the
BART benchmark used to calculate ``better-than-BART'' might in the end
differ materially from the original BART.'' Finally, the court stated
that ``either way American Corn Growers is read, it plainly forbade use
of the original BART methodology in any 169A context.'' Id.
We read the prohibition of group BART in ``any 169A context'' to
mean that, in exercising its duty under CAA section 169A to promulgate
BART regulations, EPA may not prescribe group BART in either the
context of source specific BART or the context of a trading
alternative. In both cases, it is EPA that is barred from prescribing
such a methodology. Nothing in this decision appears to bar a State
exercising its own discretion under CAA section 169A to define the BART
benchmark using some approach that employs a cumulative analysis of
visibility impairment.
For the reasons above, the EPA believes that although EPA may not
require a cumulative visibility approach to estimating emissions
reductions achievable from BART, States are not barred from using such
approaches if they so choose
C. Reliance on Emissions Reductions Required for Other Purposes
In some cases, emissions reductions required to fulfill CAA
requirements other than BART (or to fulfill requirements of a State law
or regulation not required by the CAA) may also apply to some or all
BART eligible sources. In such a situation, a State may wish to
determine whether the reductions thus obtained would result in greater
reasonable progress than would the installation and operation of BART
at all sources subject to BART which are covered by the program.
One prominent example of an independent requirement which would
satisfy BART for affected sources in affected States is the CAIR. (70
FR 25162, May 12, 2005). The emissions reductions required by the CAIR
are for the purpose of addressing significant interstate contributions
to PM and ozone nonattainment. The level of emissions reductions
required was determined by an analysis of highly cost effective
controls at EGUs. The CAIR establishes an EPA-administered cap and
trade program for SO2 and NOX from EGUs, in which
affected States may participate as a way of meeting their emission
reduction requirements. (States can also choose to meet their emission
reduction requirements in other ways, subject to certain limitations).
Because the CAIR trading program would cover BART-eligible EGUs,
and because the CAIR would result in emission reductions surplus to CAA
requirements as of the baseline date of the SIP (defined as 2002 for
regional haze purposes), we determined that it was appropriate to treat
participation in this program as a potential means of satisfying BART
requirements for that source sector. See section IV of the preamble to
the final BART rule.\14\
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\14\ http://www.epa.gov/visibility/actions.html#bart1.
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The fact that the CAIR reductions were required in order to assist
in attainment of the NAAQS, rather than for the purpose of satisfying
BART, significantly alters the consideration of what type of analysis
is permissible to show greater reasonable progress than BART. At the
heart of the court's decision in CEED v. EPA was the concern that by
requiring States to use a group-BART approach in developing the
benchmark by which an alternative program would be measured, the
regional haze rule would require States to adopt an unduly stringent
alternative approach. No basis for such a concern exists when an
independent requirement determines the level of reductions required by
an alternative program covering a universe of sources (including BART
eligible sources). In such a case, the better-than-BART demonstration
is clearly an after-the-fact analysis, used simply for comparison of
the programs, and not to define the alternative program. In the CAIR
example, the emission reduction levels were not based on the invalid
``group-BART'' approach or any other assumptions regarding BART, but
were developed for other reasons. Specifically, the CAIR emission
reductions were developed to assist with attainment of the NAAQS for
PM2.5 and ozone. Had EPA not performed the comparison of
CAIR to BART for visibility progress purposes, the CAIR emission
reduction requirements would remain unchanged. Therefore, EPA could not
be construed as imposing an invalid BART requirement on States but
rather is simply allowing States, at their option, to utilize the CAIR
cap and trade program as a means to satisfy BART for affected EGUs.
This same reasoning would be applicable whenever any requirement other
than BART defines the emission reductions required by the alternative
program.
Reasonable Progress as an Independent Requirement
The EPA believes that the requirement to make reasonable progress
towards the national visibility goal, while related to the BART
requirement, is a separate requirement analogous to the NAAQS-based
requirements in CAIR. Therefore, where a State designs a program to
meet reasonable progress goals, the ``better-than-BART'' demonstration
would not be used to define the alternative programs, and the concerns
of the DC Circuit in American Corn Growers and CEED v. EPA would not be
applicable.
A State may choose to exercise its discretion under CAA section
169A and section 169B to achieve a larger portion of its reasonable
progress requirements by use of an alternative program that affects
non-BART eligible sources (including future sources) as well as BART-
eligible sources. The fact that the CAA establishes a minimum
reasonable progress requirement in the form of BART for a certain
subset of sources, based on category, size, and age, does not restrict
the States' authority to establish a more ambitious reasonable progress
program. The emission reduction requirements of such a program could be
based on a number of different approaches not driven by a requirement
to demonstrate greater reasonable progress than BART. In such a case,
the better-than-BART test would serve simply as a check that the
program had in fact met the minimum requirement of achieving more
progress than BART. Because the BART estimation would not be defining
the emission reductions required, the State would be free to use its
discretion to begin the analysis with the simplifying assumption of a
most-stringent-case BART scenario (similar to our application of the
presumptive BART EGU standards to all-BART eligible sources in our CAIR
analysis). If the program made greater reasonable progress than the
most-stringent-case BART, the State could end its analysis there. In
such a case, the program would obviously make greater reasonable
progress than BART defined in any less stringent manner. If the program
is not shown to make greater progress than most-stringent-case BART,
the State could use its discretion to perform additional analysis to
determine what progress would be achievable by BART after taking into
account visibility on a source-by-source basis.
To summarize, the EPA believes that where a State develops a
program that include BART sources with the purpose of satisfying
reasonable progress requirements for a larger universe of sources, the
State's use of a most-stringent-case BART benchmark to satisfy the
better than BART test would not run afoul of the D.C. Circuit's
[[Page 44162]]
decisions, as long as EPA does not attempt to require or otherwise
impose such a benchmark.
D. Revisions to Sec. 51.308(e)(2) To Standardize and Clarify the
Minimum Elements of Emissions Trading Programs in Lieu of BART
EPA is proposing to add provisions that list fundamental elements
that any cap and trade program adopted under Sec. 51.308(e)(2) in lieu
of BART must contain. A cap and trade program, for the purposes of this
section, means a program that establishes a cap on total annual
emissions from the sources in the program, issues allowances with a
total tonnage value equal to the tonnage of the cap, requires each
source in the program to hold an amount of allowances after the end of
the year with a tonnage value at least equal to the tonnage of the
source's emissions during the year, and allows the purchase and sale of
allowances by sources or other parties.
EPA is adding these elements in order to provide the States with
the crucial requirements they need to adopt into their SIPs for a cap
and trade program and also to help guide EPA's review of the SIPs. For
a cap and trade program to function properly, States will need to adopt
a number of specific provisions into their SIPs, but these fundamental
elements are the ones EPA deems as necessary to ensure the integrity of
any cap and trade program adopted in a SIP under Sec. 51.308(e)(2)in
lieu of BART. The elements listed below are consistent with the
provisions of EPA's guidance for economic incentive programs titled
``Improving Air Quality with Economic Incentive Programs'' (EIP) (EPA-
452/R-01-001, January 2001).
The following is a description of each of the trading program
requirements that are included in proposed Sec. 51.308(e)(2)(vi). For
each of these proposed requirements, EPA requests comment on whether we
have addressed the requirement to an appropriate level of detail and on
whether the substance of the requirement is sufficient to ensure
program integrity for the cap and trade program.
Applicability Provisions
EPA is proposing that States and Tribes must include applicability
provisions specifically defining which sources are subject to the
program. Applicability, or the group of sources that the cap and trade
program will affect, must be essentially the same from state to state,
or across a state, to minimize confusion and administrative burdens.
For a cap and trade program, some of the factors States and Tribes may
want to consider when defining the group of sources subject to the
program include contribution to total emissions from each source within
a given source category, and the ability to reliably measure emissions
from the source. We encourage States and Tribes to design trading
programs to be as inclusive as practicable, in order to maximize the
efficiency of the market.
The emission cap of a cap and trade program may be compromised if a
State or Tribe defines the population of sources in a way that allows
production and emissions from sources covered under the program to
shift to those that are not covered under the program. EPA is proposing
that States and Tribes must demonstrate in their SIPs/TIPs that the
applicability provisions are designed to prevent any significant,
potential shifting of production and emissions from sources in the
program to sources outside the program. For programs covering a single
State, the demonstration should address potential shifting within the
State, while multi-state programs must address shifting among those
states covered under the program.
States and Tribes can demonstrate that the applicability provisions
in the program will not result in significant shifting of emissions or
production to sources outside the program by: (1) Showing that all the
sources providing a product in the trading region are included in the
cap and no sources outside the cap can pick up production from the
capped source; or (2) otherwise showing that significant shifting of
production and emissions is unlikely to occur, due to the nature of the
program and the sources in the surrounding area.
Allowances
Allowances are a key feature of a cap and trade program. An
allowance is a limited authorization for a source to emit a specified
amount of a pollutant, as defined by the specific trading program,
during a specified period of time. While allowances are frequently
denominated at one ton, an allowance could be valued at more than or
less than one ton, depending on the needs of the specific trading
program or the monitoring method. At the end of the compliance period,
a source owner's total tonnage value of allowances held must exceed or
equal its annual actual total tonnage of emissions. For example, if an
allowance was valued at one ton, a source that emits 1,000 tons of a
pollutant in a given year must hold at least 1,000 allowances for that
same pollutant.
Allowances are fully marketable commodities. Once allocated,
allowances may be bought, sold, traded, or (where allowed) banked for
use in future years.\15\ Allowances are the currency used to achieve
compliance with the emission limitation requirements. A cap and trade
program provides compliance flexibility because each covered source has
four compliance options: (1) Emit at its allowance allocation; (2) emit
less than its allocated allowances and transfer extra allowances to
other sources; (3) emit less than its allocated allowances and (if
banking is allowed) save unused allowances for a later compliance
period; and (4) obtain allowances from other sources and emit more than
its allocation.
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\15\ Allowances are typically defined as not constituting
property rights. See e.g. CAA section 403(f): ``An allowance
allocated under this title is a limited authorization to emit sulfur
dioxide in accordance with the provision of this title. Such
allowance does not constitute a property right. Nothing in this
title or in any other provision of law shall be construed to limit
the authority of the United States to terminate or limit such
authorization.'' 42 U.S.C. 7651b(f).
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EPA proposes not to include the detailed requirements on how States
and Tribes will allocate allowances for a cap and trade program adopted
under Sec. 51.308(e)(2) in lieu of BART. A State or Tribe can
determine how to allocate allowances as long as the SIPs/TIPs require
that the allocation of the tonnage value of allowances not exceed the
total number of tons of emissions capped by the budget. For example, if
the emissions budget is capped at 100,000 tons of emissions, and each
allowance is valued at one ton, the SIP/TIP must prohibit the
allocation of more than 100,000 allowances in any year.
Monitoring, Recordkeeping, and Reporting
Monitoring, recordkeeping, and reporting of a source's emissions
are integral parts of any cap and trade program. Consistent and
accurate measurement of emissions ensures that each allowance actually
represents its specified tonnage value of emissions and that one ton of
reported emissions from one source is equivalent to one ton of reported
emissions at another source. This establishes the integrity of the
allowance and instills confidence in the market mechanisms designed to
provide sources with flexibility in achieving compliance. EPA is
proposing that the monitoring, recordkeeping, and reporting provisions
for boilers, combustion turbines, and cement kilns comply with 40 CFR
Part 75, and that other sources include monitoring, recordkeeping, and
reporting provisions
[[Page 44163]]
that result in information of the same precision, reliability,
accessibility and timeliness as provided for under 40 CFR Part 75.\16\
Under certain circumstances, there may be some cap and trade programs
that prevent certain sources from selling any allowances. EPA is
expressly providing that such sources are not subject to the
requirement that the monitoring, recordkeeping, and reporting
provisions be consistent with, or equivalent to, 40 CFR Part 75.
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\16\ Part 75 establishes requirements for continuous emissions
monitoring systems (CEMS), as well as other types of monitoring
(e.g., low mass emissions monitoring under 40 CFR 75.19) that may be
used in lieu of CEMS under certain circumstances. Part 75 also
establishes a process for proposal by owners and operators, and
approval by the Administrator, of alternative monitoring systems
(under subpart E of part 75) that meet requirements concerning
precision, reliability, accessibility, and timeliness. Under today's
proposed rule, a unit that meets the requirements for, and uses,
monitoring specifically provided under part 75 (e.g., a CEMS or low
mass emissions monitoring) or that meets the requirements for, and
uses, an alternative monitoring system approved under subpart E of
part 75 could be included in a cap-and-trade program and could sell
allowances.
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Tracking System
A properly designed and implemented tracking system is critical to
the functioning of a cap and trade program as allowance transfers,
allocations, compliance, penalties, and banking are all components of
the system. The tracking system must be accurate and efficient to allow
for proper operation of an emissions trading market. The tracking
system must also be transparent, allowing all interested parties access
to the information contained in the accounting system. Transparency of
the system increases the accountability for regulated sources and
contributes to reduced transaction costs of transferring allowances by
minimizing confusion and making allowance information readily
available. The tracking system functions as the official record for the
trading program. States, Tribes, and sources participating in the cap
and trade program need to obtain accurate information about program
activities, including information that allows them to track generation
and use of allowance allocations and to ensure compliance. The
allowance accounts in the tracking system are the official records for
compliance purposes.
The proposed rule requires that the SIPs/TIPs must include
provisions identifying a specific tracking process to track allowances
and emissions. The proposed rule requires that the implementation plans
must provide that emissions, allowance, and transaction information is
transparent and publicly available in a secure, centralized data base
that allows for frequent updates. The SIPs/TIPs must also provide for a
tracking system that provides a unique way to identify each allowance,
enforceable procedures for recording data, and enforceable time frames
for submitting information and balancing accounts. If the trading
program covers more than one State, the tracking system should be
coordinated among all participating States and consistent for all
sources and other participants.
Account Representative
EPA believes it is important that each source owner or operator
designate an individual (account representative) who is authorized to
represent the owner or operator in all matters pertaining to the
trading program and who is responsible for the data reported for that
source. The account representative will be responsible for, among other
things, permit, compliance, and allowance related actions. In addition
to designating an account representative, the SIP/TIP must provide that
all matters pertaining to the account shall be undertaken only by the
designated account representative. The proposed rule includes a
requirement that the SIPs/TIPs must include such provisions.
Allowance Transfer
The proposed rule requires that SIPs/TIPs contain provisions
detailing a uniform process for transferring allowances among all
sources covered by the program and other possible participants. The
provisions must provide procedures for sources to request an allowance
transfer, for the request and transfer to be recorded in the allowance
tracking system, for notification to the source that the transfer has
occurred, and for notification to the public of each transfer and
request. The provisions must allow timely transfer and recording of
allowances and minimize administrative barriers to the operation of the
allowance market.
Compliance
The proposed rule requires that cap and trade programs include a
compliance provision that prohibits a source from emitting more
emissions than the total tonnage value of allowances the source holds
for that year. The proposed rule also requires that the cap and trade
program specify the methods and procedures for determining on an annual
basis whether a source holds sufficient allowances, by total tonnage
value, for its emissions.
Penalty
In order to provide sources with a strong incentive to comply with
the requirement to hold sufficient allowances for their emissions on an
annual basis and to establish an immediate minimum economic consequence
for non-compliance, the program must include a system for mandatory
allowance deductions. We are proposing that if a source has excess
emissions in a given year, allowances allocated for the subsequent year
will be deducted from the source's account in an amount at least equal
to three times the excess emissions. For example, if a source had 10
tons of excess emissions in the year 2014, and one allowance is valued
at one ton, 30 allowances allocated for the year 2015 will be deducted
from the source's account. This is consistent with existing trading
programs such as the CAIR and the NOX SIP call, and is
designed to ensure that the penalty is a sufficient deterrent to non-
compliance.
While we are proposing that the allowance deduction would be
mandatory, a source would have the right to seek administrative or
judicial review of the State's or Tribe's determination that the source
had excess emissions in a given year. For example, the regulations
would not limit the ability of the source to appeal the following
determinations made by the State or Tribe: The number of allowances
held by the source as of the deadline for transferring allowances and
available for compliance, the amount of the source's emissions, and the
comparison of the amount of the source's emissions and the total
tonnage value of the source's allowances held and available for
compliance. If the State or Tribe determines that the source's
emissions exceed the source's total tonnage value of allowances for the
year, we are proposing that at least three times the tonnage of excess
emissions for the year be automatically deducted from the source's
allowance holdings for the next year, even if an appeal is pending. The
allowance deduction can be reversed to the extent the source prevails
on appeal, but we believe that certain and immediate penalties are
necessary to ensure the integrity of the market for allowances. The
mandatory allowance deduction penalty provision will not limit the
ability of the State, Tribe, or EPA to take enforcement action under
State or Tribal law or the CAA.
Banking Provisions
The banking of allowances occurs when allowances that have not been
used for compliance are set aside for use
[[Page 44164]]
in a later compliance period. Banking provides compliance flexibility
to sources, encourages early reductions, and encourages early
application of innovative technology. However, banking also carries an
associated risk of delayed or impaired achievement of air quality goals
due to the use of banked allowances. The proposed rule allows trading
programs to include provisions for banked allowances, so long as the
SIPs/TIPs clearly identify how unused allowances may be kept for use in
future years and whether there are any restrictions on the use of any
such banked allowances.
Periodic Assessment of the Trading Program
The proposed rule requires the trading program to include
provisions for periodic assessment of the program. Such periodic
assessments are a way to retrospectively assess the performance of the
trading program in meeting the goals of the regional haze program and
determining whether the trading program needs any adjustments or
changes. At a minimum, the program evaluation must be conducted every
five years to coincide with the periodic report describing progress
towards the reasonable progress goals required under Sec. 51.308(g)
and must be submitted to EPA. The information needed to perform the
program should be collected through the monitoring, recordkeeping, and
reporting requirements for the program. SIPs/TIPs should also provide
procedures to make the public aware the program is being assessed and
to give the public an opportunity to comment on the assessment.
Section 5.3(b) of the EIP contains a list of performance measures
that States or Tribes should consider including in the program
assessment. The performance measures needed by States/Tribes will
depend upon the type of trading program, the amount of emissions
covered by the program, the sources covered by the program, or public
comments received during rulemaking. EPA suggests that States and
Tribes work closely with their EPA Regional Office when developing the
program assessment procedures.
III. Revisions to Regional Haze Rule Sec. 51.309
A. Background
The previous section discussed the proposed changes to our
regulations at Sec. 51.308(e)(2) governing alternative programs to
BART, in general. In this section, we discuss the implications of the
CEED decision on the particular program at issue in that case--the WRAP
Annex--and our proposed revisions in the section of the haze rule which
specifically addresses the optional approach for certain western states
(Sec. 51.309).
What Portion of the WRAP's Regional Haze Strategies Were Affected by
the Court's Decision?
The petition for review granted by the court in CEED v. EPA
requested that the ``Annex Rule'' be vacated and remanded. The ``Annex
Rule'' refers to the June 2003 rule approving and codifying the
``Annex'' to the Grand Canyon Visibility Transport Commission (GCVTC)
Recommendations. (68 FR 33764, June 5, 2003). The Annex contained
SO2 emission reduction milestones and the detailed
provisions of a cap and trade program to be implemented automatically
if voluntary measures failed to achieve the milestones. The Annex Rule
codified these provisions in Sec. 51.309(h)
The Annex was developed to implement the recommendations of the
GCVTC for stationary sources. The court's decision in CEED v. EPA
invalidated EPA's approval of the Annex, but did not question the
validity of the GCVTC recommendations for a backstop trading
program.\17\
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\17\ Subsequent to the CEED decision, the WRAP States expressed
their disappointment with the decision and their desire to continue
working with EPA to reconcile the WRAP's program to the court's
decision. See WRAP State's statment at http://www.wrapair.org/news/releases/PR_Holmstead_ltr.pdf.
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How Is the ``WRAP Annex'' Related to Other Strategies Contained in
Regional Haze Rule Sec. 51.309?
As noted, the WRAP Annex was designed to implement one of the
recommendations of the GCVTC. This commission, the creation of which
was expressly required by CAA section 169B(f), also made numerous other
recommendations. Other important provisions of the GCVTC report
include: Strategies for addressing smoke emissions from wildland fires
and agricultural burning; provisions to prevent pollution by
encouraging renewable energy development; and provisions regarding
clean air corridors, mobile sources, and wind-blown dust, among other
things. The backstop cap and trade program which eventually became the
Annex thus comprised only one component--albeit a central one--of a
suite of strategies developed by the GCVTC.
The requirement that Western States submit an Annex to the GCVTC
report in order to complete the GCVTC recommendations as an alternative
means of regional haze compliance was contained in the 1999 Regional
Haze Rule. In that rulemaking, we determined that the GCVTC strategies
would provide for reasonable progress when supplemented by an Annex
containing quantitative emission reduction milestones and documentation
of the trading program or other alternative measure. See 64 FR 35749
and 35756-57. We therefore provided that the States' ability to comply
with regional haze rule requirements through implementation of the
provisions of Sec. 51.309 was contingent upon EPA receiving the Annex
meeting certain requirements no later than October 1, 2000. See Sec.
51.309(f).
Five of the nine eligible States and one local agency (Bernalillo
county, NM) opted to submit SIPs under section 51.309 prior to the 2003
deadline in 51.309(c). Doing so was not simply a matter of codifying
those recommendations into State law but required the production,
through a consensus process, of numerous subsidiary policy and
technical tools. These included emissions inventories for stationary,
mobile, area, fire, and road dusts sources; policy agreements on
various issues such as annual emissions goals for wild land fires and
incentives to increase renewable energy production (to name just a few
of many); development of numerous technical support documents, and, of
course, the development of the actual model rules for the backstop
trading program. See the ``Section 309 implementation Material'' page
of the WRAP's Web site at http://www.wrapair.org/309/index.html for a
more complete listing.
The EPA believes the dedication of the WRAP States and Tribes to
move forward with regional haze implementation in an expeditious manner
is commendable and we want to continue to support these efforts. The
substantial investment in time and resources (including millions of
dollars of Congressionally allocated funding) made over a period of
more than a decade has tremendously advanced the scientific
understanding of the causes of visibility impairment in the West. In
addition, the GCVTC, and the WRAP after it, have been extraordinarily
successful in forging consensus on a large number of policy measures
among a wide variety of States, Tribal governments, environmental
advocates, and industry interests. As a result, EPA believes there are
compelling policy reasons to continue to recognize the GCVTC/WRAP
strategies and to provide a regulatory framework in the regional
[[Page 44165]]
haze rule that allows for expedited implementation by interested States
and Tribes.
The EPA also has the authority to promulgate regulations which are
responsive to the GCVTC recommendations for addressing visibility
impairment. In addition to requiring EPA to establish the GCVTC,
Congress also imposed a duty upon EPA to promulgate regulations
pursuant to CAA section 169A within 18 months of receipt of the report
from the GCVTC, and to take that report into account in doing so. See
CAA section 169B(e). Congress clearly intended EPA's regional haze
regulations to be informed by the knowledge and information developed
by the GCVTC.
The EPA is committed to fulfilling its obligation to further the
work of the GCVTC by permitting the western states and tribes to move
forward with the regional haze program recommended by the GCVTC.
Therefore, in order to provide GCVTC States and Tribes an opportunity
to revisit the program without being constrained by the invalid group
BART methodology, we propose to amend the regional haze rule to allow
states to submit (or resubmit) implementation plans under Sec. 51.309,
in conjunction with the first regional haze SIPs otherwise required
under 51.308. This will provide time for States to revisit the
SO2 milestones and backstop emission trading program.
With respect to the other strategies contained 51.309, although
these other provisions of Sec. 51.309 were not affected by the
decision in CEED v. EPA and may remain effective as a matter of State
law in each State, the EPA cannot approve implementation plans under
Sec. 51.309 as meeting reasonable progress until the plans contain
valid provisions for addressing stationary sources. The backstop
SO2 emissions trading program was a key element of the GCVTC
recommendations, as evidenced by the fact that the use of the Sec.
51.309 strategies to satisfy reasonable progress requirements was made
contingent upon EPA receiving a satisfactory Annex. Because the Annex
has been invalidated, States must have an opportunity to resubmit the
details of the backstop trading program, before EPA can take action to
determine whether reasonable progress requirements will be satisfied by
Sec. 51.309 SIPs.
The regulatory structure proposed to provide States and Tribes with
this opportunity is discussed in more detail below.
B. Proposed Regulatory Framework for States and Tribes Choosing To
Implement the GCVTC/WRAP Strategies
We interpret the court's decision in CEED v. EPA as having vacated
the provisions in Sec. 51.309(h) which were promulgated in 2003. (68
FR 33764, June 5, 2003.) The vacature of these provisions returns Sec.
51.309 to the status quo ante as of that rulemaking. This included
certain provisions for stationary sources contained in Sec.
51.309(d)(4) and the provision calling for the submission of the Annex
in the first place in Sec. 51.309(f). For the reasons discussed below,
we are not proposing to require States to resubmit another ``Annex'' to
the GCVTC report, and are therefore repealing Sec. 51.309(f); we are
also proposing to retain the general stationary source requirements at
Sec. 51.309(d)(4), with certain modifications.
Will States Be Required To Submit a Revised Annex?
Section 51.309(f) made the approvability of Sec. 51.309 SIPs
contingent upon EPA receiving from the GCVTC (or other regional
planning organization) an ``annex'' to the GCVTC report no later than
October 1, 2000. The Annex was required to contain: quantitative
emissions milestones for the years 2003, 2008, 2103, and 2018, which
would provide for steady and continuing emissions reductions for the
2003-2018 period and satisfy the GCVTC goal of 50-70 percent reductions
from 1990 emissions by 2040. The milestones were also required to show
greater reasonable progress than would be achieved by the application
of BART per Sec. 51.308(e)(2) and be approvable in lieu of BART. In
addition to quantitative milestones meeting these criteria, the Annex
was required to contain documentation of the ``backstop'' market
trading program, including model rules, monitoring provisions,
provisions for the ``triggering'' of the trading program, and
operational details. See Sec. 51.309(f)(1)(i)-(ii).
Section 51.309(f) further provided procedures by which EPA would
incorporate the provisions of the Annex into the regional haze rule (if
an acceptable Annex were received). This in fact occurred, with the
Annex being incorporated at Sec. 51.309(h). Section 51.309 in its
totality, including the new Sec. 51.309(h), then governed the content
of the SIPs which were due no later than December 31, 2003, per Sec.
51.309(c).
The EPA believes the substantive requirements of Sec. 51.309(f)
remain valid. However, we do not believe the unusual procedural
approach required by that section--wherein States submit provisions for
EPA to codify in federal regulation for the purpose of governing
subsequent SIP content--is either necessary or appropriate at this
time. Therefore, we are proposing to import those substantive
provisions of Sec. 51.309(f) which are still relevant into Sec.
51.309(d)(4), and to repeal the Sec. 51.309(f) mechanism requiring an
Annex. We are also proposing to import into Sec. 51.309(d)(4) a few
selected substantive provisions from the repealed Annex rule (Sec.
51.309(h)) for reasons explained later in this section of the preamble.
In 1999, EPA included Sec. 51.309 in response to the western
States' and Tribes' comments calling for recognition of the policy
development efforts of the GCVTC. The Western Governors' Association in
particular requested that EPA issue a final rule that explicitly
described the content of SIPs that would assure reasonable progress in
addressing visibility impairment on the Colorado Plateau based on the
technical work and policy recommendations of the GCVTC. At that time,
however, the GCVTC's recommendations did not address the requirements
for BART, or provide sufficient detail to allow EPA to ascertain
whether the backstop market trading program that was a central element
of the Commission's recommendations would provide greater reasonable
progress than BART. The purpose of the requirement in the 1999 rule
that an Annex to the GCVTC report be submitted by October of 2000 was
to insure that the GCVTC stationary source recommendations were
developed and refined in sufficient detail to enable EPA to make an up-
front determination that SIPs based on the work of the GCVTC would meet
the requirements of the CAA. The decision to utilize an intermediate
step of requiring States and Tribes to submit the details of the
stationary source provisions in an ``Annex'', rather than directly in
their SIPs (or TIPs), was a policy decision on EPA's part to
accommodate the western State's request for endorsement of the
substantial work of the GCVTC. In light of the facts as they exist now,
six years later, the EPA does not believe that an ``Annex'' type
approach is appropriate going forward.
One reason that an Annex approach would not be appropriate is that
it would not be practicable to repeat such an approach at this time
given that all regional haze SIPs, whether under Sec. 51.309 or Sec.
51.308, are due at the end of 2007, or about 18 months after
[[Page 44166]]
today's proposal.\18\ The 1999 rule provided that EPA would promulgate
regulations incorporating the Annex provisions within one year of
receipt of the Annex. If a similar approach were followed today, there
would not be sufficient time for States to follow their internal
processes for SIP revisions, even if a new Annex were made due
immediately upon finalization of this rule.
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\18\ See 42 U.S.C. 7407(d)(7)(A).
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In addition, we are proposing that States submit Sec. 51.309 SIPs
at the same time as Sec. 51.308 SIPs. These Sec. 51.308 SIPS will
establish reasonable progress goals for all Class I areas in the
region. It is expected that some States will wish to build on the Sec.
51.309 strategies in developing Sec. 51.308 SIPs. Because both types
of SIPs will be reviewed concurrently, it is a better policy in terms
of both administrative efficiency and environmental progress to review
both Sec. Sec. 51.308 and 51.309 SIPs under the same overarching
criteria, rather than providing prescriptive requirements for Sec.
51.309 which may interfere in unforeseen ways with the integration of
Sec. Sec. 51.308 and 51.309 SIPs without providing any environmental
benefits.
Finally, in 1999, the GCVTC had discharged its duties and the WRAP
had not yet established a track record for producing consensus
decisions on difficult policy issues such as the design of the backstop
market trading program. Six years later, the WRAP has built up
considerable institutional capacity, with EPA's support, and is well
positioned to facilitate consensus and coordinate SIP development to
insure inter-state consistency, without the need for prescriptive
requirements at the level of detail formerly contained in the Annex
Rule.
Therefore, we propose to amend Sec. 51.309(d)(4) to provide that
the major substantive requirements formerly required to be submitted in
the form of an Annex to the GCVTC report will instead now be required
in the Sec. 51.309 SIP itself. These major substantive requirements
include quantitative emissions milestones for the years 2008, 2013, and
2018 which provide for steady and continuing emissions reductions,
satisfy the GCVTC goal of 50-70 percent reductions from 1990 emissions
by 2040, and achieve greater reasonable progress than would be achieved
by the application of BART per Sec. 51.308(e)(2).
Which States and Tribes May Submit Implementation Plans Under Sec.
51.309 as Proposed for Revision?
Because the WRAP Annex was invalidated due to its reliance on a
group-BART methodology, the EPA cannot condition future participation
in the Sec. 51.309 program upon the submission and implementation of
SIPs under the Annex rule (i.e., the SIPs that were due in 2003). Doing
so would have the effect of continuing to impose upon the four states
that did not opt for Sec. 51.309 the choice between a Sec. 51.309
program defined by an invalid methodology and Sec. 51.308. Therefore,
States in the 9-state visibility transport region that did not submit a
SIP in 2003 under Sec. 51.309 are not precluded from submitting a SIP
under Sec. 51.309 in 2007. Tribes in the transport region, as
determined in earlier rulemakings, are not subject to the same
deadlines and may submit a TIP under Sec. 51.309 at a later date. In
addition, nothing precludes States outside of the 9-state transport
region from incorporating elements of the GCVTC strategies into their
SIPs (under Sec. 51.308), provided they demonstrate that such
strategies meet the reasonable progress requirements of Sec. 51.308.
What Is the Proposed Implementation Plan Schedule?
We are proposing that SIPs under Sec. 51.309 will be due at the
same time as those under Sec. 51.308. The implementation plan
deadlines for regional haze were amended by Congress to provide that
regional haze SIPs for the entire State shall be submitted no later
than three years after the promulgation of designations for the PM2.5
NAAQS.\19\ Those designations were promulgated by EPA on December 17,
2004. Therefore regional haze SIPs are due no later than December 17,
2007. CAA 107(d)(7)(A).
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\19\ See Consolidated Appropriations Act for Fiscal Year 2004,
Public Law 108-199, January 23, 2004.
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CAA 107(d)(7)(B) provides that the above requirement does not
preclude implementation plan revisions by the GCVTC States in 2003.
However, as portions of the haze rule that governed the 2003 SIPs have
been invalidated, States opting for Sec. 51.309 will be required to
resubmit SIPs some time after those portions have been rectified
through finalization of today's proposed rule. As a practical matter it
would be difficult for States to complete this process any time
appreciably sooner than the end of 2007. The EPA sees no environmental
advantage to requiring Sec. 51.309 SIPs to be submitted on a different
schedule than under Sec. 51.308. Moreover, simultaneous deadlines will
allow States and participating Tribes to more effectively integrate the
technical work and policy development under the two sections.
Therefore, we propose amending Sec. 51.309(c) to replace the December
31, 2003 deadline with December 17, 2007.
In addition, we are proposing to delete certain language included
in the SIP schedule provision in Sec. 51.309(c) and replace it with
similar provisions in the purpose provisions in Sec. 51.309(a).
Specifically, Sec. 51.309(c) currently provides that ``A Transport
Region State that does not submit an implementation plan that complies
with the requirements of this section (or whose plan does not comply
with all of the requirements of this section) is subject to the
requirements of Sec. 51.308 in the same manner and to the same extent
as any State not included within the Transport Region.'' This language
was formerly included in the SIP schedule section to clarify that,
under the former bifurcated schedule, the final date for a State to
make a decision between Sec. Sec. 51.308 and 51.309 was at the time
the Sec. 51.309 SIP was due, in 2003. Now that we are proposing the
same deadline for both sections, it is not necessary to specify that
Sec. 51.308 will come into effect if a GCVTC State misses the Sec.
51.309 deadline. Each State in the GCVTC may choose between submitting
a SIP under Sec. Sec. 51.308 and 51.309 as it's regional haze strategy
for the Colorado Plateau Class I areas; in either case the State must
submit its SIP by the same deadline. Moreover, all GCVTC States will
also be required to submit SIPs under Sec. 51.308 whether or not they
submit Sec. 51.309 SIPs, in order to cover at a minimum any non-
Colorado Plateau Class I areas within or affected by the States, unless
those Class I areas have been covered under Sec. 51.309(g) (additional
Class I areas).
Finally, Sec. 51.309(d)(1) currently requires that Sec. 51.309
SIPs must be effective for the entire time between December 31, 2003,
and December 31, 2018. We propose striking the reference to beginning
in 2003, but maintaining the requirement to be effective through 2018.
We also propose adding a clause to clarify that Sec. 51.309 SIPs shall
continue in effect until an implementation plan revision is approved by
EPA in accordance with Sec. 51.308(f). This will provide for
continuity of visibility protection during the transition to the next
long-term strategy period.
[[Page 44167]]
What Stationary Source Provisions Must Sec. 51.309 SIPs Contain?
The 1999 regional haze rule, in addition to providing in Sec.
51.309(h) for the submission of an Annex containing further elaboration
of the GCVTC stationary source recommendations, also included certain
fundamental requirements in Sec. 51.309(d)(4) for a market trading
program addressing stationary sources. These Sec. 51.309(d)(4)
requirements established the basic framework of the backstop trading
approach, which were to be given more detailed form through the Annex
provisions. Specifically, this section called for monitoring and
reporting of SO2 emissions, criteria and procedures for
activation and operation of the backstop trading program, and
provisions for compliance reporting. The section also called for a
report on the necessity of adding stationary source provisions for
NOX and PM in the next SIP (due in 2008). See Sec.
51.309(d)(4)(i)-(v). Upon the finalization of the Annex rule, these
provisions were amended to add cross references as appropriate to the
new Annex rule at Sec. 51.309(h).
The EPA believes it is appropriate to retain these provisions in
Sec. 51.309(d)(4), in order to provide for the broad contours of a
backstop cap and trade program consistent with the GCVTC
recommendations. Nothing in these very general requirements imposes any
invalid constraints upon the program in violation of CEED v. EPA. In
addition, in the process of working over the past several years on the
development of the detailed provisions of the Annex backstop trading
program, EPA and the States have identified several specific areas
where regulatory guidance is desirable. Therefore, certain provisions
codified as part of the Annex rule in Sec. 51.309(h) have been
retained as SIP requirements in Sec. 51.309(d)(4). By specifying EPA's
expectations clearly in the rule provisions, we will promote
consistency between States and provide greater certainty for the SIP
review process. In doing so, EPA is cognizant of the need to avoid
importing into Sec. 51.309(d)(4) any provisions of the Annex rule that
were directly or indirectly dependent on or related to the specific
quantitative milestones contained in the Annex. Therefore, we have
retained only those provisions we believe are critical to any
conceivable variation on the GCVTC's backstop trading program
recommendation. These are described in the following sections.
Provisions for Stationary Sources of Sulfur Dioxide
One of the critical components of the GCVTC's recommendations was
the establishment of a series of declining caps on regional sulfur
dioxide emissions from stationary sources. These declining caps on
emissions are referred to as emissions milestones and must provide for
steady and continuing reductions in sulfur dioxide emissions over time.
While EPA is not specifying what the milestones must be, this provision
requires the States to submit milestones for the period through 2018
that are consistent with the GCVTC's definition of reasonable progress
and its goal of reducing sulfur dioxide emissions by 2040 to 50-70
percent of 1990 actual levels. We are proposing that the milestones be
defined on an annual basis. However, we do not interpret the GCVTC's
recommendation for steady and continuing reduction as requiring the
milestones to decline each year. Rather, as was the case in the annex,
the milestone may remain the same for more than one year as long as
they provide for steady and continuing reductions over the course of
long term planning period.
States must also show that the milestones provide for greater
reasonable progress than would be achieved by application of BART in
accordance with Sec. 51.308(e)(2) and be approvable in lieu of BART.
Because the Sec. 51.308(e)(2) is proposed to be amended to remove the
group BART requirement, there is no longer the concern that the Sec.
51.309 option might be defined by an invalid condition. Instead, the
Sec. 51.308(e)(2) demonstration simply insures that the backstop
trading program is approvable in lieu of BART, an approach based on our
interpretation of CAA 169A(b)(2) which was upheld by the D.C. Circuit.
Documentation of Emissions Calculation Methods [(Sec.
51.309(d)(4)(ii)]
EPA is proposing that States must include documentation of the
specific methodology used to calculate emissions in the base year for
each source included in the program. EPA is also proposing that States
must provide for the documentation of the specific emission calculation
methods used for determining emissions from stationary sources for each
of the subsequent years after the base year. This requirement was
originally included in Sec. 51.309(h)(2)(ii), and EPA is proposing to
include it in Sec. 51.309(d)(4)(ii). This provision is necessary
because in establishing the baseline emissions for stationary sources,
States will be using emissions data that reflect the emission
calculation methodology the source was using at that time. It is likely
that some facilities that have relied on emission factors and other
less accurate methods for determining the emissions will improve the
accuracy of the emission estimates. In order to ensure the
determination of emissions and emission reductions are a true measure
of progress and not a change in emission calculation methods, the rule
requires States to provide documentation of the emission calculation
methods that were used for affected sources. This information will be
relied upon by the States and EPA to ensure that the comparison of
emissions at the beginning of the program to the current reporting year
takes into account changes in emissions calculation methods and ensures
that comparisons do not provide for ``paper'' increases or decreases in
emissions.
Monitoring, Recordkeeping, and Reporting of Sulfur Dioxide Emissions
[Sec. 51.309(d)(4)(iii)]
EPA is proposing to revise Sec. 51.309(d)(4)(ii) to incorporate
necessary changes reflecting the new date of SIP submittals, to address
the implications of the court's decision in CEED v. EPA as it affects
the Annex, and to add a recordkeeping requirement. In addition, we are
renumbering Sec. 51.309(d)(4)(ii) through (d)(4)(iii). Under the
revised language, a State must require monitoring and annual reporting
of sulfur dioxide emissions within the State, and require that records
be retained for a minimum of 10 years from the establishment of the
record in order to ensure the enforceability of the program. EPA
believes that requiring records to be retained for 10 years is
reasonable because of the long duration of each planning period (i.e.,
the first planning period for the Sec. 51.309 program extends to the
year 2018). In addition, by requiring records to be maintained for 10
years, States will ensure that any lag between the first phase of the
program and full implementation of the backstop trading program will
not hamper the enforceability of the program. EPA has determined these
provisions are necessary to assess compliance with the sulfur dioxide
milestones each year of the program. The monitoring, recordkeeping and
reporting data required by each State must be sufficient to determine
whether the milestones are achieved for each year through 2018.
[[Page 44168]]
Criteria and Procedures for a Market Trading Program [Sec.
51.309(d)(4)(iv)]
The approach to addressing stationary source SO2
emissions recommended by the GCVTC was to establish a declining cap on
emissions that would be met through voluntary measures. If voluntary
measures did not succeed, however, the GCVTC recommended that States
implement an enforceable market-based program that would serve as the
``backstop'' to the voluntary measures. EPA is proposing to require
States to include in their SIPs the criteria and procedures for
implementing the voluntary phase of the program and for triggering and
activating the backstop phase of their programs if the voluntary
measures do not succeed. The main elements of this requirement were
originally included under Sec. 51.309(h)(2)(iv), (v), and (vii), and
Sec. 51.309(h)(3). EPA is proposing to include these elements under
Sec. 51.309(d)(4)(iv). This provision requires the States annually to
compare regional sulfur dioxide emissions to the milestone to determine
whether the milestone was achieved for that year. The States must
complete a draft annual evaluation report no later than 12 months after
the milestone year. The Annex had provided that the annual compliance
check be based on a three-year rolling average of actual emissions
versus the corresponding three-year rolling average of the milestone,
except for the first two years and the last year (2018) of the program.
While we do not think it is appropriate to require the use of three-
year average,we continue to believe that such an approach would be
acceptable. We therefore propose to allow for this approach in Sec.
51.308(d)(4)(i). If the comparison shows the milestone has been
achieved, the plan must include procedures to activate the backstop
trading program. This provisions also requires that the plans provide
for program assessments in the years 2013 and 2018.
Market Trading Program [Sec. 51.309(d)(4)(v)]
As a backstop to voluntary measures, the implementation of the
market trading program must be akin to a ``turn-key'' operation. EPA
proposes to require that the plan include a complete and fully
developed backstop market trading program sufficient to achieve the
2018 milestone that is consistent with the criteria for cap and trade
program in Sec. 51.308(e)(2)(vi). In the event a milestone has not
been achieved, the States will be required to make this final
determination no later than 15 months after the end of the first year
in which the milestone was not achieved. The final determination that
the milestone has not been achieved will trigger (i.e., activate) the
trading program. After the market trading program has been triggered,
some time will be required before the full implementation of the
trading program can be accomplished, but the trading program should
come into effect as soon as practicable.
Provision for 2018 Milestone [Sec. 51.309(d)(4)(vi)]
We are proposing new provisions governing the period beginning in
2018. The Sec. 51.309 program generally focuses on setting and
achieving milestones for the period of 2003 through 2018. States
participating in the Sec. 51.309 program will eventually need to
prepare additional plans to address visibility beyond 2018. See Sec.
51.308(f). These plans will need to meet the requirements of Sec.
51.308 or other alternate regulations EPA may adopt in the future. The
proposed language in Sec. 51.309(d)(4)(vi) is intended to bridge any
potential gaps between the Sec. 51.309 plan and these future plans and
to ensure the milestone for 2018 is achieved by the Sec. 51.309 plans
and maintained in future plans. Section 51.309(d)(4)(vi)(A) requires
that Sec. 51.309 plans clearly prohibit emissions beginning in 2018 in
excess of the 2018 milestone unless and until a new plan covering the
period after 2018 is approved by EPA.
Section 51.309(d)(4)(vi)(B) requires that Sec. 51.309 plans
include special provisions for ensuring the 2018 milestone is achieved
beginning in 2018. Specifically, this provision requires Sec. 51.309
plans to address the potential gap created by any lag between the date
the backstop trading program is triggered and the date the trading
program is fully implemented and source compliance is required. Under
the backstop trading program, sources have an incentive to voluntarily
achieve the milestones to avoid triggering an enforceable trading
program. Because the Sec. 51.309 plans are designed generally to cover
the period between the initial submission in 2007 and 2018, the
deterrent incentives of the backstop trading program are diminished
where enforceable requirements do not begin until after the end of the
covered period or where such enforceable requirements may never be
implemented because they will be replaced by a different planning
approach. Thus, a special regulatory provision is necessary to address
the possible situation where a milestone is exceeded close to, in, or
after 2018 such that any delay in the implementation of the trading
program could undercut the necessary incentives to meet the 2018
milestone.
To satisfy the requirements of Sec. 51.309(d)(4)(vi), States will
need to address both the situation where milestones are exceeded in or
after 2018, and the situation where milestones are exceeded before 2018
but the backstop emissions trading program will not be fully
implemented and enforceable until after 2018. In both situations, the
Sec. 51.309 plan must include special provisions, including financial
penalties, to prohibit and enforce against any exceedances of the 2018
milestone beginning in 2018 and continuing until the Sec. 51.309
program is replaced with a plan covering the period after 2018.\20\
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\20\ This special penalty provision for 2018 is distinct from
the requirement for automatic allowance deductions in Sec.
51.308(e)(2)(vi)(J), which is also applicable to the WRAP's program
per the cross reference to Sec. 51.308(e)(2) in Sec.
51.309(d)(4)(v). In the Annex rule, SIPs were required to provide
for automatic allowance deductions at a 2:1 ratio, and for automatic
financial penalties of $5000/ton or an alternative amount that
substantially exceeds the cost of allowances. See Sec. 51.309(h)(x)
and preamble discussion at 68 FR 33776-33777. Because some States
subsequently determined that they lack authority to impose automatic
financial penalties, we are proposing to instead utilize the 3:1
ratio for automatic allowance deductions as provided in Sec.
51.308(e)(2)(vi)(J) in order to insure there is a sufficient
incentive for compliance.
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With respect to the financial penalty provisions to be included in
the SIPs, it is important that the mechanism for assessing and
collecting penalties be sufficiently immediate to provide the proper
incentives for the cap and trade program. Penalties that are negotiated
and require potentially drawn out litigation to enforce may not ensure
that sources have a clear, known cost associated with a given amount of
excess emissions. One option to create the proper incentives is for
States to require automatic penalties or, for States lacking authority
for such automatic penalties, to create a streamlined penalty approach
that encourages timely payment. Specifically, EPA believes States could
adopt an approach that sets a fixed penalty (e.g., $5,000 per ton of
excess emissions) that sources can volunteer to pay to quickly settle
an excess emissions violation. The States would commit to take formal
enforcement action and seek higher penalties as authorized by law
against any source that has excess emissions and does not agree to the
streamlined settlement. Such an enforcement strategy, if consistently
and aggressively administered, should result in a penalty scheme that
is sufficiently immediate to create the proper cap and trade
incentives. EPA will review State implementation of any such
streamlined
[[Page 44169]]
settlement approaches and will consider taking separate federal
enforcement action in the event a State fails to pursue adequate
enforcement against a source declining the streamlined settlement. In
such cases, EPA will pursue penalties up to the maximum allowed under
the CAA (currently $32,500 per day per violation). In addition, if EPA
finds a pattern of State failure to obtain appropriate penalties, EPA
could use its authority under CAA section 110 to call for a SIP
revision to address the deficiency.
Provisions for NOX and PM BART Requirements [Sec.
51.309(d)(4)(vii)]
In the 1999 rule Sec. 51.309(d)(4)(v) required States to submit a
report assessing emission control strategies for stationary source
NOX and PM. The report was required to include an evaluation
of the need to establish milestones for NOX and PM to avoid
any net increases in these pollutants from Stationary Sources within
the Transport region. The report was also intended to support the
potential development and implementation of a multipollutant market
based program. The initial Sec. 51.309 SIPs (submitted by 12/31/2003)
were required to provide for SIP revisions no later than 12/31/2008,
containing any long term strategies and BART requirements for
stationary source PM and NOX.
The WRAP developed the report required by this section.\21\ The
development of the report provided much useful information on the role
of PM and NOX in visibility impairment at western Class I
areas, and the contribution of stationary source emissions to
impairment caused by these pollutants. However, the report concluded
that currently available computer models could not replicate the
chemical interactions of NOX with other atmospheric
constituents with sufficient accuracy to support regulatory decisions.
For this and other reasons, the WRAP States have not yet determined
appropriate control strategies for NOX and PM, but are
continuing to work on these issues.
---------------------------------------------------------------------------
\21\ ``Stationary Source NOX and PM Emissions in the
WRAP Region: An Initial Assessment of Emissions, Controls, and Air
Quality Impacts'' http://www.wrapair.org/forums/mtf/nox-pm.html.
---------------------------------------------------------------------------
Therefore, we propose amending the stationary source NOX
and PM provision within Sec. 51.309 (now numbered Sec.
51.309(d)(4)(vii)) to specify that States submitting Sec. 51.309 SIPs
must address BART for PM and NOX. This proposed provision is
intended to clarify that if EPA determines that the SO2
emission reductions milestones and backstop trading program submitted
in the Sec. 51.309 SIPs makes greater reasonable progress than BART
for SO2, this will not constitute a determination that BART
for PM or NOX is satisfied for any sources which would
otherwise be subject to BART for those pollutants.\22\ Proposed Sec.
51.309(d)(4)(vii) would allow States the flexibility to address these
BART provisions either on a source-by-source basis under Sec.
51.308(e)(1), or through an alternative strategy under Sec.
51.308(e)(2). The determination of which strategy to use is separate
for each pollutant. For example, a State could choose to address PM
through a source-by-source BART program, while addressing
NOX by use of a trading program or other alternative
measure. Moreover, such an alternative measure could build upon the
backstop SO2 program under Sec. 51.309 and employ a similar
approach for PM and/or NOX, or the alternative measure could
be completely different than the SO2 approach. For example,
a State (or group of States) could decide to implement a NOX
cap and trade program from the outset, rather than employ a
``backstop'' approach.
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\22\ In limited circumstances, it may be possible for a State to
demonstrate that an alternative program which controls only
emissions of SO2 could achieve greater visibility
improvement than application of source-specific BART controls on
emissions of SO2, NOX and/or PM. We
nevertheless believe that such a showing will be quite difficult to
make in most geographic areas, given that controls on SO2
emissions alone in most cases will result in increased formation of
ammonium nitrate particles.
---------------------------------------------------------------------------
Projection of Visibility Improvement (Sec. 51.309(d)(2) and Periodic
SIP Updates (Sec. 51.309(d)(10)
Section 51.309(d)(10), as promulgated in 1999, required periodic
SIP revisions in 2008, 2013, and 2018. Among other things, these
revisions were to include an assessment of whether current SIP elements
and strategies are sufficient to enable the State (and other States
affected by its emissions) to meet ``all established reasonable
progress goals.'' Sec. 51.309(d)(10)(i)(G). Section 51.309(d)(10) also
required that if the State determines that existing measures were
inadequate to meet reasonable progress goals, the State must revise its
SIP to contain additional strategies within one year, or take certain
other specified actions in the event that emission sources in other
jurisdictions threaten reasonable progress. See Sec.
51.309(d)(10)(ii)(A)-(D).
Because implementation of Sec. 51.309 SIPs has been delayed by the
CEED decision and the consequent need to revise Sec. 51.309 in this
rulemaking, a SIP revision in 2008 will no longer be appropriate. Under
today's proposed revisions to Sec. 51.309, SIPs will not be due until
December 2007, and therefore will not have been in effect long enough
to permit assessment in 2008. Given these facts, we believe that the
visibility projection called for by Sec. 51.309(d)(2) should serve as
a demonstration that the complete strategies contained in Sec. 51.309
SIPs comprise reasonable progress for the 16 mandatory federal areas on
the Colorado Plateau.
This also points to a need for clarification of what that
reasonable progress test entails. Section 51.309(d)(10) refers to
strategies which meet ``established reasonable progress goals.'' As the
preamble notes, the language of Sec. 51.309(d) is virtually identical
to the periodic SIP review provisions in Sec. Sec. 51.308(g) and
51.308(h). 64 FR 35755. In the Sec. 51.308 context, the meaning of
that term is clear, as Sec. 51.308(d)(1) calls for the establishment
of reasonable progress, in deciviews, for each federal mandatory Class
I area, based upon a uniform rate of progress to natural conditions in
2064 and the application of the statutory reasonable progress factors.
See 64 FR 35731. Section 51.308(d)(1) also provides that reasonable
progress goals must ``ensure no degradation of visibility for the least
impaired days.'' In the Sec. 51.309 context, however, it is less clear
what yardstick should be used against the visibility projections
because by definition reasonable progress under Sec. 51.309 is defined
as compliance with all the provisions of Sec. 51.309.
In our Guidance for Tracking Progress Under the Regional Haze Rule,
we explained:
Section 169A(a)(4) and other subsections of the Clean Air Act
call for reasonable progress ``toward meeting the national goal'' of
eliminating man-made impairment of visibility. Since any progress
goal calling for degradation of visibility, even at a modest rate,
would not be progress toward the goal, it is unlikely that EPA could
propose to approve any demonstrations that purport to show further
visibility degradation as reasonable progress, (e.g., in situations
where visibility would be expected to degrade, and such projected
degradations would be lessened but not reversed thru proposed
emission control strategies). EPA-454/B-03-004, September 2003, at
p. 1-9.
Therefore, although reasonable progress for the 16 Class 1 areas on
the Colorado Plateau is not defined by the ``glide path'' methodology
in Sec. 51.308, we propose establishing as a minimum criterion of
reasonable progress for these areas a requirement of no degradation
from baseline conditions, for both the 20 percent most impaired and 20
percent least impaired days. These criteria should be used in the
visibility
[[Page 44170]]
projection under Sec. 51.309(d)(2) and in the progress reports under
Sec. 51.309(d)(10). Furthermore, the assessment required in Sec.
51.309(d)(10)(i)(C) should be conducted as described in the Tracking
Progress guidelines. Baseline conditions, as defined in that document,
should be based on monitoring data from the 2000-2004 period.
We also wish to clarify that a projection of visibility conditions
is not necessarily limited to the output of air quality simulation
models. Under Sec. 51.309(d)(2), the State could use the same methods
to project visibility improvement that a State could use under Sec.
51.308(d)(3)(ii) and (iii) to demonstrate how its long term strategy
will satisfy its contribution to achieving the reasonable progress
goals established for each Class I area the State may affect. Examples
of such methods are described in the EPA's Draft Guidance for
Demonstrating Attainment of Air Quality Goals for PM2.5 and
Regional Haze (January 2, 2001).
Additional Class I Areas [Sec. 51.309(g)]
In the 1999 rule, Sec. 51.309(g) provided that a State could
satisfy reasonable progress requirements for mandatory Class I Federal
areas in addition to the 16 Class I areas on the Colorado plateau by
implementing the strategies in Sec. 51.309. To do so, a State was
required to establish reasonable progress goals for the additional
Class I areas and adopt additional measures if necessary, in accordance
with Sec. 51.308(d)(1) through (4) (i.e., the generally applicable
requirements for reasonable progress). States were also required to
declare in the SIP submitted no later than December 31, 2003 whether
their other Class I areas would be addressed under Sec. 51.308 or
under Sec. 51.309(g). Section 51.309(g)(4)(i) clarified that States
could build upon and take credit for the strategies under Sec. 51.309
in developing long term strategies for additional Class I areas.
Section 51.309(g)(4)(ii) clarified that the SO2 backstop
emissions trading program could satisfy BART for additional Class I
areas, subject to a demonstration that greater reasonable progress
would be achieved at such Class I areas.
We are proposing to retain the substance of the additional Class I
area provisions in Sec. 51.309(g), but to eliminate the requirement
that States make a declaration in the SIP due in 2003 as to which
section of the rule would be used to address additional Class I areas.
This change is to conform with our determination, discussed earlier in
this preamble, that it is no longer appropriate to impose a 2003
deadline or to condition future participation in Sec. 51.309
strategies upon the submission of SIPs in 2003. Other administrative
changes in the structure of Sec. 51.309 are proposed to accommodate
this change (i.e., renumbering of paragraphs and corrections of cross
references).
IV. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to Office of Management and Budget (OMB) review
and the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.''
Pursuant to the terms of Executive Order 12866, we have determined
that this proposed rule is a significant regulatory action. We have
therefore provided it to OMB for review.
Today's proposed rule would provide States and interested Tribes
with optional means, such as emissions trading programs, to comply with
CAA requirements for BART. The proposed rule would require that
alternatives achieve greater ``reasonable progress'' towards CAA
visibility goals than would source-by-source BART. By their nature,
emissions trading programs are designed to achieve a given level of
environmental improvement in the most cost effective manner possible.
Therefore, today's proposed rule would achieve at least as a great a
societal benefit as source-by-source BART, at a social cost that is
likely to be less than, or at worst equal to, the social costs of
source-by-source BART.
In the Regulatory Impact Analysis (RIA) for our recent promulgation
of the source-by-source BART guidelines, we determined that the social
costs of source-by-source BART for both EGUs and non-EGUs nationwide
was between $0.3 and $2.9 billion (1999 dollars), depending on the
level of stringency implemented by States and on the interest rate
used. The human health benefits of BART, in contrast, ranged from $1.9
to $12 billion (1999 dollars), depending on the same variables. These
figures do not include many other human health benefits that could not
be quantified or monetized, including all benefits attributable to
ozone reduction (the benefits were based on reductions in PM only). In
addition, economic benefits due to visibility improvement in the
southeastern and southwestern U.S. were estimated to be from $80
million to $420 million. Finally, BART would also produce visibility
benefits in other parts of the country, and non-visibility ecosystem
benefits, which were also not quantified. Therefore, the social
benefits of BART far outweigh the social costs.
It is not possible to perform an economic analysis of today's rule
because the actual parameters of any trading programs in lieu of BART
will be determined by States and Tribes. However, because trading
program alternatives would produce comparable overall benefits (in the
course of satisfying the requirement to achieve greater ``reasonable
progress'' towards visibility goals ) and use market forces to reduce
costs, the benefits of today's rule would also far outweigh the costs.
B. Paperwork Reduction Act
This action does not add any new requirements involving the
collection of information as defined by the Paperwork Reduction Act, 44
U.S.C. 3501 et seq. The OMB has approved the information collection
requirements contained in the final Regional Haze regulations (64 FR
35714, July 1, 1999) and has assigned OMB control number 2060-0421 (EPA
ICR No. 1813.04).
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources;
[[Page 44171]]
complete and review the collection of information; and transmit or
otherwise disclose the information. An agency may not conduct or
sponsor, and a person is not required to respond to a collection of
information unless it displays a currently valid OMB control number.
The OMB control numbers for EPA's regulations are listed in 40 CFR part
9 and 48 CFR chapter 15.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
governmental jurisdictions.
For purposes of assessing the impacts of today's proposed
rulemaking on small entities, small entity is defined as: (1) A small
business that is a small industrial entity as defined in the U.S. Small
Business Administration (SBA) size standards (as discussed on the SBA
Web site at http://www.sba.gov/size/indextableofsize.html); (2) a small
governmental jurisdiction that is a government of a city, county, town,
school district or special district with a population of less than
50,000; and (3) a small organization that is any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.
After considering the economic impacts of today's proposed rule on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. This
proposed rule will not impose any requirements on small entities. This
proposed rule would revise the provisions of the regional haze rule
governing alternative trading programs, and provide additional guidance
to States, which are not defined as small entities. We continue to be
interested in the potential impacts of our rules on small entities and
welcome comments on issues related to such impacts.
D. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) (UMRA), establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, 2
U.S.C. 1532, EPA generally must prepare a written statement, including
a cost-benefit analysis, for any proposed or final rule that ``includes
any Federal mandate that may result in the expenditure by State, local,
and Tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more * * * in any one year.'' A ``Federal mandate'' is
defined under section 421(6), 2 U.S.C. 658(6), to include a ``Federal
intergovernmental mandate'' and a ``Federal private sector mandate.'' A
``Federal intergovernmental mandate,'' in turn, is defined to include a
regulation that ``would impose an enforceable duty upon State, local,
or tribal governments,'' section 421(5)(A)(i), 2 U.S.C. 658(5)(A)(i),
except for, among other things, a duty that is ``a condition of Federal
assistance,'' section 421(5)(A)(i)(I). A ``Federal private sector
mandate'' includes a regulation that ``would impose an enforceable duty
upon the private sector,'' with certain exceptions, section 421(7)(A),
2 U.S.C. 658(7)(A).
Before promulgating an EPA rule for which a written statement is
needed under section 202 of the UMRA, section 205, 2 U.S.C. 1535, of
the UMRA generally requires EPA to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule. In addition, before EPA establishes any
regulatory requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
We believe that this rulemaking is not subject to the requirements
of UMRA. For regional haze SIPs overall, it is questionable whether a
requirement to submit a SIP revision constitutes a Federal mandate, as
discussed in the preamble to the regional haze rule (64 FR 35761, July
1, 1999). However, today's proposed rule contains no Federal mandates
(under the regulatory provisions of title II of the UMRA) for State,
local or Tribal governments or the private sector. In addition, the
program contained in 40 CFR 51.309, including today's revisions, is an
optional program. Because the alternative trading programs under 40 CFR
51.308 and 40 CFR 51.309 are options that each of the States may choose
to exercise, these revisions to Sec. Sec. 51.308 and 51.309 do not
establish any regulatory requirements that may significantly or
uniquely affect small governments, including Tribal governments. The
program is not required and, thus is clearly not a ``mandate.''
Moreover, as explained above, today's proposed rule would reduce any
regulatory burdens. Accordingly, this rule will not result in
expenditures to State, local, and tribal governments, in the aggregate,
or the private sector, of $100 million or more in any given year. Thus
EPA is not obligated, under section 203 of UMRA, to develop a small
government agency plan.
E. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Under section 6(b) of Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing a regulation. Under section 6(c) of Executive Order 13132,
EPA may not issue a regulation that has federalism implications and
that preempts State law, unless EPA consults with State and local
officials early in the process of developing the regulation.
This proposed rule does not have federalism implications. It would
not have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. As described above, this
proposed rule contains revisions to Sec. Sec. 51.308 and 51.309 of the
[[Page 44172]]
regional haze rule which would reduce any regulatory burden on the
States. In addition, these are optional programs for States. These
revisions to Sec. Sec. 51.308 and 51.309, accordingly, would not
directly impose significant new requirements on State and local
governments. Moreover, even if today's proposed revisions did have
federalism implications, these proposed revisions would not impose
substantial direct compliance costs on State or local governments, nor
would they preempt State law. Thus, Executive Order 13132 does not
apply to this proposed rule.
Consistent with EPA policy, we nonetheless did consult with
representatives of State and local governments in developing this
proposed rule. This rule directly implements specific recommendations
from the Western Regional Air Partnership (WRAP), which includes
representatives from all the affected States.
In the spirit of Executive Order 13132 and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on today's rule from
State and local officials.
F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments
Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on one or more Indian tribes, on
the relationship between the Federal government and the Indian tribes,
or on the distribution of power and responsibilities between the
Federal government and Indian tribes.''
This proposed rule will overall reduce any regulatory burden on the
Tribes. Moreover, the Sec. Sec. 51.308 and 51.309 programs are
optional programs for Tribes. Accordingly, this proposed rule would not
have tribal implications. In addition, this proposed rule would
directly implement specific recommendations from the Western Regional
Air Partnership (WRAP), which includes representatives of Tribal
governments. Thus, although this proposed rule would not have tribal
implications, representatives of Tribal governments have had the
opportunity to provide input into development of the recommendations
forming its basis.
G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks
Executive Order 13045: ``Protection of Children from Environmental
Health and Safety Risks'' (62 FR 19885, April 23, 1997) applies to any
rule that: (1) Is determined to be ``economically significant'' as
defined under Executive Order 12866, and (2) concerns an environmental
health or safety risk that EPA has reason to believe may have a
disproportionate effect on children. If the regulatory action meets
both criteria, the Agency must evaluate the environmental health or
safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that are based on health or safety risks, such that
the analysis required under section 5-501 of the Order has the
potential to influence the regulation. Similarly to the recently
finalized source-specific BART revisions (70 FR 39104, July 6, 2005),
this proposed rule is not subject to Executive Order 13045 because it
does not establish an environmental standard based on health or safety
risks. Therefore this proposed rule does not involve decisions on
environmental health or safety risks that may disproportionately affect
children. The EPA believes that the emissions reductions from the
control strategies considered in this rulemaking will further improve
air quality and will further improve children's health.
H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution or Use
This proposed rule is not subject to Executive Order 13211,
``Actions that Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) because it is not likely to have a
significant adverse effect on the supply, distribution, or use of
energy. This rule is not a ``significant energy action,'' because it
will have less than a 1 percent impact on the cost of energy production
and does not exceed other factors described by OMB that may indicate a
significant adverse effect. (See, ``Guidance for Implementing E.O.
13211,'' OMB Memorandum 01-27 (July 13, 2001) www.whitehouse.gov/omb/memoranda/m01-27.html.) This proposed rule provides an optional cost
effective and less burdensome alternative to source-by-source BART as
recently finalized (70 FR 39104, July 6, 2005); we have already found
that source-by-source BART is not likely to have a significant adverse
effect on the supply, distribution, or use of energy. The 1999 regional
haze rule provides substantial flexibility to the States, allowing them
to adopt alternative measures such as a trading program in lieu of
requiring the installation and operation of BART on a source by source
basis. This proposed rule contains provisions governing these
alternative measures, which will provide an alternative to BART that
reduces the overall cost of the regulation and its impact on the energy
supply.
I. National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C.
272 note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
This proposed rulemaking does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards. We welcome comments on this aspect of the proposed
rulemaking and, specifically, invite the public to identify
potentially-applicable voluntary consensus standards and to explain why
such standards should be used in this regulation.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898 requires that each Federal agency make
achieving environmental justice part of its mission by identifying and
addressing, as appropriate, disproportionately high and adverse human
health or environmental effects of its programs, policies, and
activities on minorities and low-income populations. The requirements
of Executive Order 12898 have been previously addressed to the extent
practicable in the Regulatory Impact Analysis (RIA) for the regional
[[Page 44173]]
haze rule (cited above), particularly in chapters 2 and 9 of the RIA.
This proposed rule makes no changes that would have a
disproportionately high and adverse human health or environmental
effect on minorities and low-income populations.
IV. Statutory Provisions and Legal Authority
Statutory authority for today's proposed rule comes from sections
169(a) and 169(b) of the CAA (42 U.S.C. 7545(c) and (k)). These
sections require EPA to issue regulations that will require States to
revise their SIPs to ensure that reasonable progress is made toward the
national visibility goals specified in section 169(A).
List of Subjects in 40 CFR Part 51
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.
Dated: July 21, 2005.
Stephen L. Johnson,
Administrator.
For the reasons set forth in the preamble, part 51 of chapter I of
title 40 of the Code of Federal Regulations is proposed to be amended
as follows:
PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF
IMPLEMENTATION PLANS
1. The authority citation for part 51 continues to read as follows:
Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.
Subpart P--Protection of Visibility
2. Section 51.308 is amended by revising paragraphs (e)(2)(i)(A),
(e)(2)(i)(B), (e)(2)(i)(C), and (e)(2)(ii), and adding paragraphs
(e)(2)(i)(D), (e)(2)(i)(E), and (e)(2)(vi) to read as follows:
Sec. 51.308 Regional haze program requirements.
* * * * *
(e) * * *
(2) * * *
(i) * * *
(A) A list of all BART-eligible sources within the State.
(B) A list of all BART source categories covered by the alternative
program. The State is not required to include every BART source
category in the program, but for each source category covered, the
State must include each BART-eligible source within that category in
the analysis required by paragraph (e)(2)(i)(C) of this section.
(C) An analysis of the degree of visibility improvement that would
be achieved in each affected mandatory Class I Federal area as a result
of the emission reductions projected from the installation and
operation of BART controls under paragraph (e)(1) of this section at
each source subject to BART in each source category covered by the
program.
(D) An analysis of the emissions reductions, and associated
visibility improvement anticipated at each Class I area within the
State, under the trading program or other alternative measure.
(E) A determination that the emission reductions and associated
visibility improvement projected under paragraph (e)(2)(i)(D) of this
section (i.e., the trading program or other alternative measure)
comprise greater reasonable progress, as defined in paragraph (e)(3) of
this section, than those projected under paragraph (e)(2)(i)(C) of this
section (i.e., BART).
(ii) A demonstration that the emissions trading program or
alternative measures will apply, at a minimum, to all BART-eligible
sources within the covered source categories within the State. Those
sources having a federally enforceable emission limitation determined
by the State and approved by EPA as meeting BART in accordance with
section 302(c) or paragraph (e)(1) of this section do not need to meet
the requirements of the emissions trading program or alternative
measure, but may choose to participate if they meet the requirements of
the emissions trading program or alternative measure.
* * * * *
(vi) A cap and trade program adopted by a State in lieu of BART
must include the following elements:
(A) Applicability provisions defining which sources are subject to
the program. The state must demonstrate that the applicability
provisions (including the size criteria for including sources in the
program) are designed to prevent any significant, potential shifting
within the state of production and emissions from sources in the
program to sources outside the program. In the case of programs
including multiple states, the states must demonstrate that the
applicability provisions cover essentially the same size facilities
and, if source categories are specified, the same source categories and
prevent any significant, potential shifting within such states of
production and emissions to sources outside the program.
(B) Allowance provisions ensuring that the total tonnage value of
allowances issued each year under the program will never exceed the
total number of tons of the emissions cap established by the budget or
milestone.
(C) Monitoring provisions providing for consistent and accurate
emissions measurements to ensure that each allowance actually
represents the same specified tonnage of emissions and that emissions
are measured with similar accuracy at all sources in the program. The
monitoring provisions must require that boilers, combustion turbines,
and cement kilns allowed to sell allowances comply with part 75 of this
chapter. The monitoring provisions for other sources allowed to sell
allowances must require that such sources provide emissions information
with the same precision, reliability, accessibility, and timeliness as
information provided under part 75 of this chapter.
(D) Recordkeeping provisions that ensure the enforceability of the
emissions monitoring provisions and other program requirements. The
recordkeeping provisions must require that sources allowed to sell
allowances comply with the recordkeeping provisions of part 75 of this
chapter.
(E) Reporting provisions requiring timely reporting of monitoring
data with sufficient frequency to ensure the enforceability of the
emissions monitoring provisions and other program requirements and the
ability to audit the program. The reporting provisions must require
that sources allowed to sell allowances comply with the reporting
provisions of part 75 of this chapter, except that, if the
Administrator is not the tracking system administrator for the program,
emissions may be reported to the tracking system administrator, rather
than the Administrator.
(F) Tracking system provisions which provide for a tracking system
that is publicly available in a secure, centralized database to track
in a consistent manner all allowances and emissions in the program.
(G) Authorized account representative provisions ensuring that a
source owner or operator designates one individual who is authorized to
represent the owner or operator in all matters pertaining to the
trading program.
(H) Allowance transfer provisions providing procedures that allow
timely transfer and recording of allowances, minimize administrative
barriers to the operation of the allowance market and ensure that such
procedures apply uniformly to all sources and other potential
participants in the allowance market.
[[Page 44174]]
(I) Compliance provisions prohibiting a source from emitting a
total tonnage of a pollutant that exceeds the tonnage value of its
allowance holdings and including the methods and procedures for
determining whether emissions exceed allowance holdings. Such method
and procedures shall apply consistently from source to source.
(J) Penalty provisions providing for mandatory allowance deduction
for excess emissions that apply consistently from source to source. The
tonnage value of the allowances deducted shall equal at least three
times the tonnage of the excess emissions.
(K) For a trading program that allows banking of allowances,
provisions clarifying any restrictions on the use of these banked
allowances.
(L) Program Assessment provisions providing for periodic program
evaluation to assess whether the program is accomplishing its goals,
and whether modifications to the program are needed to enhance
performance of the program.
3. 51.309 is amended as follows:
a. Revising paragraph (a).
b. Revising paragraphs (b)(5) and (b)(7).
c. Revising paragraph (c).
d. Revising paragraphs (d)(1), (d)(4)(i) through (v) and (d)(10).
e. Revising paragraph (f).
f. Revising paragraphs (g) introductory text and paragraphs (g)(1)
and (2).
g. Removing paragraphs (g)(3) and (g)(4).
h. Adding paragraphs (d)(vi)(A), (d)(vi)(B) and (d)(vii).
i. Removing paragraph (h).
Sec. 51.309 Requirements related to the Grand Canyon Visibility
Transport Commission.
(a) What is the purpose of this section? This section establishes
the requirements for the first regional haze implementation plan to
address regional haze visibility impairment in the 16 Class I areas
covered by the Grand Canyon Visibility Transport Commission Report. For
the period through 2018, certain States (defined in paragraph (b) of
this section as Transport Region States) may choose to implement the
Commission's recommendations within the framework of the national
regional haze program and applicable requirements of the Act by
complying with the provisions of this section. If a transport-region
State submits an implementation plan which is approved by EPA as
meeting the requirements of this section, it will be deemed to comply
with the requirements for reasonable progress with respect to the 16
Class I areas for the period from approval of the plan through 2018.
Any Transport Region State electing not to submit an implementation
plan under this section is subject to the requirements of Sec. 51.308
in the same manner and to the same extent as any State not included
within the Transport Region. Except as provided in paragraph (g) of
this section, each Transport Region State is also subject to the
requirements of Sec. 51.308 with respect to any other Federal
mandatory Class I areas within the State or affected by emissions from
the State.
(b) * * *
(5) Milestone means the maximum level of annual regional sulfur
dioxide emissions, in tons per year, for a given year, assessed
annually, through the year 2018, consistent with paragraph (d)(4) of
this section.
* * * * *
(7) Base year means the year for which data for a source included
within the program were used by the WRAP to calculate emissions as a
starting point for development of the milestone required by paragraph
(d)(4)(i) of this section.
* * * * *
(c) Implementation Plan Schedule. Each Transport Region State
electing to submit an implementation plan under this section must
submit such a plan no later than December 17, 2007. Indian Tribes may
submit implementation plans after this deadline.
(d) * * *
(1) Time period covered. The implementation plan must be effective
through December 31, 2018, and shall continue in effect until an
implementation plan revision is approved by EPA in accordance with
Sec. 51.308(f).
* * * * *
(4) * * *
(i) Provisions for stationary source sulfur dioxide. The plan
submission must include a sulfur dioxide program that contains
quantitative emissions milestones for stationary source sulfur dioxide
emissions for each year through 2018. Compliance with the annual
milestones may be measured by comparing a three-year rolling average of
actual emissions with a rolling average of the emissions milestones for
the same three years. The milestones must provide for steady and
continuing emissions reductions through 2018 consistent with the
Commission's definition of reasonable progress, its goal of 50 to 70
percent reduction in sulfur dioxide emissions from 1990 actual emission
levels by 2040, applicable requirements under the CAA, and the timing
of implementation plan assessments of progress and identification of
deficiencies which will be due in the years 2013 and 2018. The
milestones must be shown to provide for greater reasonable progress
than would be achieved by application of BART pursuant to Sec.
51.308(e)(2) and approvable in lieu of BART.
(ii) Documentation of emissions calculation methods. The plan
submission must include documentation of the specific methodology used
to calculate emissions during the base year for each emitting unit
included in the program. The implementation plan must also provide for
documentation of any change to the specific methodology used to
calculate emissions at any emitting unit for any year after the base
year.
(iii) Monitoring, recordkeeping, and reporting of sulfur dioxide
emissions. The plan submission must include provisions requiring the
monitoring, recordkeeping, and annual reporting of actual stationary
source sulfur dioxide emissions within the State. The monitoring,
recordkeeping, and reporting data must be sufficient to determine
annually whether the milestone for each year through 2018 is achieved.
The plan submission must provide for reporting of these data by the
State to the Administrator and to the regional planning organization.
The plan must provide for retention of records for at least 10 years
from the establishment of the record.
(iv) Criteria and Procedures for a Market Trading Program. The plan
must include the criteria and procedures for conducting an annual
evaluation of whether the milestone is achieved and in accordance with
paragraph (d)(4)(v) of this section, for activating a market trading
program in the event the milestone is not achieved. A draft of the
annual report evaluating whether the milestone for each year is
achieved shall be completed no later than 12 months of the end of each
milestone year. The plan must also provide for assessments of the
program in the years 2013 and 2018.
(v) Market Trading Program. The implementation plan must include
requirements for a market trading program to be implemented in the
event a milestone is not achieved. The plan shall require that the
market trading program be activated beginning no later than 15 months
after the end of the first year in which the milestone is not achieved.
The plan shall also require that sources comply, as soon as
practicable, with the requirement to hold allowances covering their
emissions. Such market trading program
[[Page 44175]]
must be sufficient to achieve the milestones in paragraph (d)(4)(i) of
this section, and must be consistent with the elements for such
programs outlined in Sec. 51.308(e)(2)(vi).
(vi) Provision for the 2018 milestone.
(A) Unless and until a revised implementation plan is submitted in
accordance with Sec. 51.308(f) and approved by EPA, the implementation
plan shall prohibit emissions from covered stationary sources in any
year beginning in 2018 that exceed the year 2018 milestone. In no event
shall a market-based program approved under Sec. 51.308(f) allow an
emissions cap that is less stringent than the 2018 milestone, unless
the milestones are replaced by a different program that meets BART and
reasonable progress requirements established in Sec. 51.308, and is
approved by EPA.
(B) The implementation plan must provide a framework, including
financial penalties for excess emissions based on the 2018 milestone,
sufficient to ensure that the 2018 milestone will be met even if the
implementation of the market trading program in paragraph (d)(4)(v) of
this section has not yet been triggered, or the source allowance
compliance provision of the trading program is not yet in effect.
(vii) Provisions for stationary source NOX and PM. The
implementation plan must contain any necessary long term strategies and
BART requirements for stationary source PM and NOX. Any such
BART provisions may be submitted pursuant to either Sec. 51.308(e)(1)
or Sec. 51.308(e)(2).
* * * * *
(10) Periodic implementation plan revisions. Each Transport Region
State must submit to the Administrator periodic reports in the years
2013 and 2018. The progress reports must be in the form of
implementation plan revisions that comply with the procedural
requirements of Sec. Sec. 51.102 and 51.103.
* * * * *
(f) [Reserved]
(g) Additional Class I areas. Each Transport Region State
implementing the provisions of this section as the basis for
demonstrating reasonable progress for mandatory Class I Federal areas
other than the 16 Class I areas must include the following provisions
in its implementation plan. If a Transport Region State submits an
implementation plan which is approved by EPA as meeting the
requirements of this section, it will be deemed to comply with the
requirements for reasonable progress for the period from approval of
the plan to 2018.
(1) A demonstration of expected visibility conditions for the most
impaired and least impaired days at the additional mandatory Class I
Federal area(s) based on emissions projections from the long-term
strategies in the implementation plan. This demonstration may be based
on assessments conducted by the States and/or a regional planning body.
(2) Provisions establishing reasonable progress goals and
implementing any additional measures necessary to demonstrate
reasonable progress for the additional mandatory Federal Class I areas.
These provisions must comply with the provisions of Sec. 51.308(d)(1)
through (4).
(i) In developing long-term strategies pursuant to Sec.
51.308(d)(3), the State may build upon the strategies implemented under
paragraph (d) of this section, and take full credit for the visibility
improvement achieved through these strategies.
(ii) The requirement under Sec. 51.308(e) related to Best
Available Retrofit Technology for regional haze is deemed to be
satisfied for pollutants addressed by the milestones and backstop
trading program if, in establishing the emission reductions milestones
under paragraph (d)(4) of this section, it is shown that greater
reasonable progress will be achieved for these additional Class I areas
than would be achieved through the application of source-specific BART
emission limitations under Sec. 51.308(e)(1).
(iii) The Transport Region State may consider whether any
strategies necessary to achieve the reasonable progress goals required
by paragraph (g)(2) of this section are incompatible with the
strategies implemented under paragraph (d) of this section to the
extent the State adequately demonstrates that the incompatibility is
related to the costs of the compliance, the time necessary for
compliance, the energy and no air quality environmental impacts of
compliance, or the remaining useful life of any existing source subject
to such requirements.
[FR Doc. 05-14930 Filed 7-29-05; 8:45 am]
BILLING CODE 6560-50-P