[Federal Register Volume 70, Number 231 (Friday, December 2, 2005)]
[Proposed Rules]
[Pages 72268-72282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23501]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 51 and 96
[OAR 2003-0053; FRL-8003-7]
Rule To Reduce Interstate Transport of Fine Particulate Matter
and Ozone (Clean Air Interstate Rule): Reconsideration
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of reconsideration; request for comment; notice of
public hearing.
-----------------------------------------------------------------------
SUMMARY: On May 12, 2005, EPA published in the Federal Register the
final ``Rule to Reduce Interstate Transport of Fine Particulate Matter
and Ozone'' (Clean Air Interstate Rule or CAIR). The CAIR requires
certain upwind States to reduce emissions of nitrogen oxides
(NOX) and/or sulfur dioxide (SO2) that
significantly contribute to nonattainment of, or interfere with
maintenance by,
[[Page 72269]]
downwind States with respect to the fine particle and/or 8-hour ozone
national ambient air quality standards (NAAQS). Subsequently, EPA
received 11 petitions for reconsideration of the final rule. In this
notice, EPA is announcing its decision to reconsider four specific
issues in the CAIR and is requesting comment on those issues.
The EPA is seeking comment only on the aspects of the CAIR
specifically identified in this notice. We will not respond to comments
addressing other provisions of the CAIR or any related rulemakings.
DATES: Comments must be received on or before January 13, 2006. A
public hearing will be held on December 14, 2005 in Washington, DC. For
additional information on the public hearing, see the SUPPLEMENTARY
INFORMATION section of this preamble.
ADDRESSES: Submit your comments, identified by Docket ID No. OAR-2003-
0053, by one of the following methods:
Federal Rulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments. Attention E-
Docket No. OAR-2003-0053.
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. Attention E-Docket No. OAR-2003-0053.
E-mail: [email protected]. Attention E-Docket No.
OAR-2003-0053.
Fax: The fax number of the Air Docket is (202) 566-1741.
Attention E-Docket No. OAR-2003-0053.
Mail: EPA Docket Center, EPA West (Air Docket), Attention
E-Docket No. OAR-2003-0053, Environmental Protection Agency, Mail Code:
6102T, 1200 Pennsylvania Ave., NW., Washington, DC 20460.
Hand Delivery: EPA Docket Center (Air Docket), Attention
E-Docket No. OAR-2003-0053, Environmental Protection Agency, 1301
Constitution Avenue, NW., Room B102, 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-2003-0053.
The EPA's policy is that all comments received will be included in the
public docket without change and may be made available on-line 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. (For instructions on submitting CBI, see
below under SUPPLEMENTARY INFORMATION.)
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 information on submitting comments,
go to 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 EPA Docket Center (Air Docket), EPA/DC, EPA West, Room
B102, 1301 Constitution Ave., NW., Washington, DC. The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone number for the Public Reading
Room is (202) 566-1742 and the fax number is (202) 566-1741.
FOR FURTHER INFORMATION CONTACT: For general questions concerning
today's action, please contact Carla Oldham, U.S. EPA, Office of Air
Quality Planning and Standards, Air Quality Strategies and Standards
Division, Mail Code C539-02, Research Triangle Park, NC 27711, phone
number (919) 541-3347, e-mail address[email protected]. For
questions concerning the analyses described in section III of this
notice, please contact Chitra Kumar, U.S. EPA, Office of Atmospheric
Programs, Clean Air Markets Division, Mail Code 6204J, 1200
Pennsylvania Avenue, NW., Washington, DC 20460, telephone (202) 343-
9128, e-mail address [email protected]. For legal questions, please
contact Sonja Rodman, U.S. EPA, Office of General Counsel, Mail Code
2344A, 1200 Pennsylvania Avenue, NW., Washington, DC 20460, telephone
202-564-4079, e-mail address [email protected].
For information concerning the public hearing, please contact Jo
Ann Allman, U.S. EPA, Office of Air Quality Planning and Standards, Air
Quality Strategies and Standards Division, Mail Code C539-02, Research
Triangle Park, NC 27711, phone number (919) 541-1815, e-mail address
[email protected].
SUPPLEMENTARY INFORMATION:
Does This Action Apply to Me?
The CAIR does not directly regulate emissions sources. Instead, it
requires States to develop, adopt, and submit SIP revisions that would
achieve the necessary SO2 and NOX emissions
reductions, and leaves to the States the task of determining how to
obtain those reductions, including which entities to regulate.
Public Hearing. On December 14, 2005, EPA will hold a public
hearing on today's notice at EPA Headquarters, 1310 L Street (closest
cross street is 13th Street), 1st floor conference rooms 152 and 154,
Washington, DC. The closest Metro stop is McPherson Square (Orange and
Blue lines)--take 14th Street/Franklin Square Exit. Because the hearing
will be held at a U.S. government facility, everyone planning to attend
should be prepared to show valid picture identification to the security
staff in order to gain access to the meeting room.
The hearing will begin at 9 a.m. and end at 12 noon. Persons
wishing to speak at the public hearing should contact Jo Ann Allman by
December 9 at telephone number (919) 541-1815 or by e-mail at
[email protected]. The hearing will be limited to the subject matter
of this document. Oral testimony will be limited to 5 minutes. The EPA
encourages commenters to provide
[[Page 72270]]
written versions of their oral testimonies either electronically (on
computer disk or CD-ROM) or in paper copy. The public hearing schedule,
including the list of speakers, will be posted on EPA's Web site at:
www.epa.gov/cair. Verbatim transcripts and written statements will be
included in the rulemaking docket.
The public hearings 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.
Because of the need to resolve the issues in this document in a
timely manner, EPA will not grant requests for extensions of the public
comment period.
What Should I Consider as I Prepare My Comments for EPA?
Note that general instructions for submitting comments are provided
above under the ADDRESSES section.
Submitting CBI. Do not submit comments that include CBI 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. Send or deliver information
identified as CBI only to the following address: Roberto Morales, U.S.
EPA, Office of Air Quality Planning and Standards, Mail Code C404-02,
Research Triangle Park, NC 27711, telephone (919) 541-0880, e-mail at
[email protected], Attention Docket ID No. OAR-2003-0053.
Tips for Preparing Your Comments. When submitting comments,
remember to:
i. Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).
ii. 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.
iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
iv. Describe any assumptions and provide any technical information
and/or data that you used.
v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
vi. Provide specific examples to illustrate your concerns, and
suggest alternatives.
vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
viii. Make sure to submit your comments by the comment period
deadline identified.
Availability of Related Information
Documents related to the CAIR are available for inspection in
docket OAR-2003-0053 at the address and times given above. The EPA has
established a Web site for the CAIR at http://www.epa.gov/cleanairinterstaterule or more simply http://www.epa.gov/cair/.
Outline
I. Background
II. Today's Action
A. Grant of Reconsideration
B. Schedule for Reconsideration
III. Discussion of Issues
A. SO2 Allocation Methodology in the CAIR Model
Trading Rules
B. Fuel Adjustment Factors Used To Set State NOX
Budgets
C. PM2.5 Modeling for Minnesota
D. Inclusion of Florida in the CAIR Region for Ozone
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 and Safety Risks
H. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution or Use
I. National Technology Transfer Advancement Act
J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low Income
Populations
I. Background
On May 12, 2005, the EPA (Agency or we) promulgated the final
``Rule to Reduce Interstate Transport of Fine Particulate Matter and
Ozone'' (Clean Air Interstate Rule or CAIR) (70 FR 25162). In this
action, EPA found that 28 States and the District of Columbia
contribute significantly to nonattainment of, or interfere with
maintenance by, downwind States with respect to the NAAQS for fine
particles (PM2.5) and/or 8-hour ozone. The CAIR requires
these upwind States to revise their State implementation plans (SIPs)
to include control measures to reduce emissions of SO2 and/
or NOX. Sulfur dioxide is a precursor to PM2.5
formation and NOX is a precursor to PM2.5 and
ozone formation. By reducing upwind emissions of SO2 and
NOX, CAIR will assist downwind PM2.5 and 8-hour
ozone nonattainment areas in achieving the NAAQS.
The EPA promulgated the CAIR based on the ``good neighbor''
provision of the Clean Air Act (CAA), section 110(a)(2)(D), which
establishes State obligations to address interstate transport of
pollution. The EPA conducted extensive air modeling to determine the
extent to which emissions from certain upwind States were impacting
downwind nonattainment areas. All States found to contribute
significantly to downwind PM2.5 nonattainment or maintenance
problems are included in the CAIR region for PM2.5 and are
required to reduce annual emissions of SO2 and
NOX. All States found to contribute significantly to
downwind 8-hour ozone nonattainment are included in the CAIR region for
ozone and required to reduce NOX emissions during the 5-
month ozone season (May-September). The CAIR establishes regional
emission reduction requirements for annual SO2 and
NOX emissions and seasonal NOX emissions. The
reduction requirements are based on control technologies known to be
highly cost effective for electric generating units (EGUs). The first
phase of NOX reductions starts in 2009 (covering 2009-2014)
and the first phase of SO2 reductions starts in 2010
(covering 2010-2014). The second phase of both SO2 and
NOX reductions starts in 2015 (covering 2015 and
thereafter).
Each State covered by CAIR may independently determine which
emission sources to control, and which control measures to adopt.
States that choose to base their programs on emissions reductions from
EGUs may allow their EGUs to participate in an EPA-administered cap and
trade program. The CAIR includes model
[[Page 72271]]
rules for multi-State cap and trade programs for annual SO2
and NOX emissions, and seasonal NOX emissions.
States may choose to adopt these rules to meet the required emissions
reductions in a flexible and highly cost-effective manner. To learn
more about the CAIR and its impacts, the reader is encouraged to read
the preamble to the CAIR (70 FR 25162; May 10, 2005).
The CAIR was promulgated through a process that involved
significant public participation. The EPA published a notice of
proposed rulemaking on January 30, 2004 (69 FR 4566) and a notice of
supplemental rulemaking on June 10, 2004 (69 FR 32684). The EPA also
published a notice of data availability on August 6, 2004 (69 FR
47828). The Agency held public hearings on the January 2004 proposed
rule on February 25 and 26, 2004, and an additional hearing on the
supplemental proposal on June 3, 2004. In addition, the EPA received
thousands of comments on the proposals. We responded to all significant
public comments in the preamble to the final rule and the final
response to comments document available in the CAIR docket (Docket No.
OAR-2003-0053-2172).
Following publication of the final rule on May 12, 2005, the
Administrator received eleven petitions requesting reconsideration of
certain aspects of the final CAIR. These petitions were filed pursuant
to section 307(d)(7)(B) of the CAA. Under this provision, the
Administrator is to initiate reconsideration proceedings if the
petitioner can show that an objection is of central relevance to the
rule and that it was impracticable to raise the objection to the rule
within the public comment period or that the grounds for the objection
arose after the public comment period but before the time for judicial
review had run. The petitions for reconsideration of the CAIR ask EPA
to reconsider several specific aspects of the final rule, and many of
the petitions make similar requests. This notice addresses four of the
issues raised in those petitions. The EPA expects to issue decisions on
all remaining issues raised in the petitions for reconsideration by
March 15, 2006. The complete petitions are available in the docket for
the CAIR.\1\
---------------------------------------------------------------------------
\1\ Petitions for reconsideration were filed by: State of North
Carolina (OAR-2003-0053-2192); FPL Group OAR-2003-0053-2201);
Florida Association of Electric Utilities (OAR-2003-0053-2200);
Entergy Corporation (OAR-2003-0053-2195 and 2198 (attachment 1));
Massachusetts Department of Environmental Protection (OAR-2003-0053-
2199); Integrated Waste Services Association (OAR-2003-0053-2193);
Texas Commision on Environmental Quality (OAR-2003-0053-2212);
Northern Indiana Public Service Corporation (OAR-2003-0053-2194 and
2213 (supplemental petition)); City of Amarillo, Texas, El Paso
Electric Company, Occidental Permian Ltd, and Southwestern Public
Service Company d/b/a/ Xcel Energy (OAR-2003-0053-2196 and 2197
(attachment 1) and 2205-2207 (attachments 2-4)); Connecticut
Business and Industry Ass'n (OAR-2003-0053-2203); and Minnesota
Power, a division of ALLETE. Inc. (OAR-2003-0053-2212).
---------------------------------------------------------------------------
In addition, fourteen petitions for judicial review of the final
rule were filed with the U.S. Court of Appeals for the District of
Columbia.\2\ The fourteen cases have been consolidated into a single
case, State of North Carolina v. EPA (No. 05-1244) (D.C. Cir). Many of
the parties who petitioned EPA for reconsideration of the CAIR also
petitioned for judicial review of the rule.
---------------------------------------------------------------------------
\2\ State of North Carolina v. EPA (No. 05-1244); Minnesota
Power v. EPA (No. 05-1246); ARIPPA v. EPA (No. 05-1249); South
Carolina Public Service Authority et al. v. EPA (No. 05-1250);
Entergy Corp. v. EPA (No. 05-1251); Florida Ass'n of Electric
Utilities (No. 05-1252); FPL Group v. EPA (No. 05-1253); Northern
Indiana Public Service Co. v. EPA (No. 05-1254); South Carolina
Electric & Gas Co. v. EPA (No. 05-1256); Integrated Waste Services
Ass'n v. EPA (No. 05-1257); AES Corp v. EPA (No. 05-1259); City of
Amarillo, Texas et al. v. EPA (No. 05-1260); Appalachian Mountain
Club et al. v. EPA (No. 05-1246); Duke Energy v. EPA (No. 05-1246).
---------------------------------------------------------------------------
By letters dated August 1, 2005, EPA granted reconsideration of the
definition of ``electric generating unit'' or ``EGU'' as it relates to
solid waste incinerators (and particularly municipal waste
incinerators).\3\ The EPA explained that the issue would be addressed
in the proposed rule signed the same day. That proposed rule, entitled
``Rulemaking on Section 126 Petition from North Carolina to Reduce
Interstate Transport of Fine Particulate Matter and Ozone; Federal
Implementation Plans to Reduce Interstate Transport of Fine Particulate
Matter and Ozone; Revisions to the Clean Air Interstate Rule; Revisions
to the Acid Rain Program; Proposed Rule,'' was published on August 24,
2005 (70 FR 49708). In that proposed rule, EPA reconsidered the
definition of ``EGU'' in the final CAIR as it relates to solid waste
incinerators (70 FR 49738). We proposed revisions to the definition of
``EGU'' and requested comment on this issue. In that action, we did not
address any other issues raised in the petitions for reconsideration of
the CAIR. Today's action does not reopen for comment any aspect of the
August 24, 2005, proposed rule.
---------------------------------------------------------------------------
\3\ These letters are available in the CAIR Docket. (OAR-2003-
0053-2209 and 2210).
---------------------------------------------------------------------------
The EPA also received two requests to stay the implementation of
the CAIR in limited geographic areas pending resolution of this
reconsideration process. One petitioner requested a stay of
implementation of the CAIR in the State of Florida, and one petitioner
requested a stay of implementation of the CAIR in the State of
Minnesota. By letter dated August 1, 2005, EPA declined to stay
implementation of the CAIR in Florida.\4\ The EPA has not yet acted on
the request to stay implementation of the CAIR in Minnesota.
---------------------------------------------------------------------------
\4\ This letter is also available in the CAIR Docket (OAR-2003-
0053-2208).
---------------------------------------------------------------------------
By letters dated November 21, 2005, we informed several petitioners
of our intent to grant reconsideration on one or more issues addressed
in their petitions for reconsideration. We indicated in those letters
that we would initiate the reconsideration process by publishing this
notice.
II. Today's Action
A. Grant of Reconsideration
In this notice, EPA is announcing its decision to grant
reconsideration on four issues raised in the petitions for
reconsideration. This notice initiates that reconsideration process and
requests comment on the issues to be addressed. Given the intense
public interest in this rule, EPA has decided to provide this
additional opportunity for public comment. At this time, however, EPA
does not believe that any of the information submitted to date
demonstrates that EPA's final decisions were erroneous or
inappropriate. Therefore, we are not proposing any modifications to the
final CAIR.
The first issue on which EPA is requesting comment relates to
analysis done by EPA to address petitioner's claims regarding alleged
inequities resulting from the application of the SO2
allowance allocation methodology that States choosing to participate in
the trading program would use to allocate SO2 allowances to
sources. The second issue relates to EPA's use of specific fuel
adjustment factors to establish NOX budgets for each State.
The third issue relates to modeling inputs used by EPA to determine
whether emissions from Minnesota should be included in the CAIR region
for PM2.5. And the fourth issue relates to EPA's
determination that the State of Florida should be included in the CAIR
region for ozone. Each issue is described in greater detail in Section
III of this notice.
The EPA is requesting comment only on the issues specifically
described in Section III. We are not taking comment on any other
provisions in the CAIR or otherwise reopening any other issues decided
in the CAIR for reconsideration or comment.
[[Page 72272]]
B. Schedule for Reconsideration
For the four issues addressed in this notice, EPA expects to take
final action on reconsideration by March 15, 2006. By that date, EPA
will finalize the process of reconsideration by issuing a final rule or
proposing a new approach. EPA also expects, by March 15, 2006, to issue
decisions on all remaining issues raised in the petitions for
reconsideration.
III. Discussion of Issues
A. SO2 Allocation Methodology in the CAIR Model Trading
Rules
One petitioner argues that the SO2 allowance allocation
methodology in the CAIR model trading rules is unreasonable and
inequitable, and asks EPA to establish a different approach. According
to the petitioner, the methodology is inequitable because it results in
owners of units that have lower emission rates, historically, buying
allowances from historically higher emitting units that install new
emission controls. EPA does not accept the petitioner's
characterization of this issue. EPA continues to believe that the
methodology selected is reasonable for the reasons explained in the
final rule and further outlined below. Furthermore, numerous
opportunities for public comment on this issue were provided, and a
full discussion of the allowance allocation options occurred during the
rule development process. Nonetheless, given the intense public
interest in this issue, EPA has decided to grant the Petition for
Reconsideration insofar as it raises issues regarding alleged
inequities resulting from the application of the SO2
allowance allocation.
As explained below, EPA has conducted additional analyses
concerning the impact of the SO2 allowance allocation
approach adopted in the model rules, comparing this approach to various
other alternatives considered during the rulemaking process. These
analyses further illustrate that the approach selected produces a
reasonable result, not the inequities alleged in the Petition for
Reconsideration. Therefore EPA is not proposing any changes to the CAIR
SO2 allocation approach as part of this reconsideration
notice. We are taking comment on the analyses conducted and our
discussion of the petitioner's concerns.
Title IV and CAIR
The CAIR model SO2 trading program relies on the use of
title IV SO2 allowances for compliance with the allowance-
holding requirements of CAIR. Title IV SO2 allowances have
already been allocated on a unit-by-unit basis in perpetuity, based on
formulas set forth in section 405 and 406 of title IV, which were
implemented through final regulations issued in 1998 (Sec 42 U.S.C.
7651d and 7651e; and 18 CFR 73.10(b)). The statutory formula for
SO2 allocations was generally based on unit data for 1985-
1987 and, for some units, data for years up to 1995. For the title IV
SO2 trading program, each allowance authorizes one ton of
SO2 emissions.
For the CAIR SO2 trading program, SO2
reductions would be achieved by generally requiring CAIR sources to
retire more than one title IV allowance for each ton of their
SO2 emissions for 2010 and thereafter. Specifically, each
title IV SO2 allowance issued for 2009 or earlier would be
used for compliance by CAIR sources at a ratio of one allowance per ton
of SO2 emissions and would authorize one ton of
SO2 emissions. Each title IV allowance of vintage 2010
through 2014 would be used for compliance under CAIR at a two-to-one
ratio and authorize 0.5 tons of SO2 emissions. Each title IV
allowance of vintage 2015 and later would be used at a 2.86-to-1 ratio
and authorize 0.35 tons of SO2 emissions. See discussion in
the preamble to the final CAIR in section VII (70 FR 25255-25273) and
section IX (70 FR 25290-25291).
SO2 Allocation Options in CAIR
A variety of SO2 allowance allocation methodologies were
raised and analyzed during the rulemaking process, including the one
EPA selected. Alternative methodologies analyzed included allocating on
the basis of historic tonnage emissions, heat input (with alternatives
based on heat input from all fossil generation, and heat input from
coal- and oil-fired generation only) and output (with alternatives
based on all generation and all fossil-fired generation). While every
allocation methodology suggested by commenters during the rulemaking
process has its advantages and disadvantages for different companies
and States, EPA explained in the final rule that its chosen methodology
is reasonable on several grounds. First, EPA believes that ``achieving
SO2 reductions for EGUs using the title IV allowances is
necessary in order to ensure the preservation of a viable title IV
program'' (Response to Comments (RTC) at page 511, section X.A.26,
2005). See also discussion in preamble to the final CAIR in section IX
(70 FR 25290-25291). Second, in using the title IV allowances, EPA
relied on the selection by Congress of the permanent allocation
methodology established in title IV for purposes of reducing
SO2 emissions. As stated in the RTC (page 512), ``Congress
clearly did not choose a policy to regularly revisit and revise these
allocations, believing that its allocations methodology for title IV
allowances would be appropriate for future time periods.''
Third, title IV allowance allocations provide a logical and well
understood starting point from which additional EGU SO2
emission reductions can be achieved for Acid Rain units, which account
for over 90% of the SO2 emissions from CAIR EGUs. Finally,
EPA's State-by-State analysis of several methods for SO2
allocations shows that the use of title IV allowances to develop state
budgets creates a reasonable result (See RTC, section X.A.26). The
policy decision to base the CAIR SO2 budgets on the existing
title IV allowance system, and EPA's demonstration that the result of
using the system is reasonable fully support the use of an allocation
system based on title IV allowances.
Analysis of SO2 Allocation Options
As a part of this reconsideration, EPA performed additional
analyses, explained below, to evaluate the SO2 allocation
methodology in the final CAIR rule in light of the petitioner's
concerns. In these analyses, EPA compared three alternative
SO2 allowance allocation methodologies to the methodology in
the final CAIR to see how companies fared in terms of the amount of
allowances allocated relative to their projected SO2
emissions. The allocation allowance methodologies evaluated by EPA were
the ones referred to by the petitioner in the Petition for
Reconsideration. EPA believes that, for purposes of evaluating the
various allocation methodologies, computing allocations on a company-
by-company basis is more appropriate than comparing allocations on a
unit-by-unit basis. This is because, while one unit could be allocated
fewer allowances under one methodology, another unit owned by the same
company could be allocated more allowances, which may offset the
smaller allocation of the first unit.
The three alternative allowance allocation methodologies EPA
analyzed were suggested by various commenters during the rulemaking
process. Also note that methodologies 2 and 3 were suggested by the
petitioner. These methodologies are:
1. Allocating allowances based on more recent heat input data;
[[Page 72273]]
2. Allocating allowances based on more recent heat input data
adjusted for fuel type (e.g., coal, oil and gas);
3. Allocating allowances based on more recent heat input data
adjusted both for fuel type (e.g., coal, oil and gas) and for coal type
(e.g., bituminous, sub-bituminous and lignite).
In comparing the CAIR final SO2 allocation methodology
and the three alternative methodologies, EPA took into account certain
factors that are applicable to the CAIR final allocation methodology
but not to the three alternative methodologies. For all four
methodologies, EPA analyzed the resulting total allowance allocations,
and the total projected emissions, for companies' sources located in
the States subject to CAIR. In addition, for all the methodologies, EPA
analyzed the relationship between allowances and emissions in two ways.
In the first, EPA calculated the ratio of allowances to total projected
emissions before CAIR controls (base case). This measures how much each
company falls short of allowance needs. Then, in the second approach,
EPA calculated the ratio of allowances to total projected emissions
with CAIR controls installed (control case). This way measures how many
allowances a company would need to purchase after controls are
installed.
For the CAIR final methodology, EPA also considered both the
allowance allocations and emissions for companies' sources both in the
CAIR region and outside the CAIR region. EPA believes that this is
appropriate because, under the CAIR final methodology, if a company's
sources outside the CAIR region have more title IV allowances than
needed to cover their emissions under the Acid Rain Program, the
company could transfer, at little or no net cost, excess allowances to
the company's sources in the CAIR region for use to cover emissions
under the CAIR trading program. Under the three alternative
methodologies, which would require creating new CAIR SO2
allowances independent of the existing title IV allocations, CAIR
sources could not use title IV for compliance with the CAIR
SO2 allowance holding requirements.
Further, in the analysis of the CAIR final methodology, EPA
considered the allocation of title IV allowances to CAIR region units
that are not currently in the Acid Rain Program but that could opt into
the Acid Rain Program and receive title IV allowances (see 42 U.S.C.
7651i and 18 CFR part 74). This analysis assumed that companies owning
non-Acid Rain units affected by CAIR would opt into the Acid Rain
Program because they would receive title IV allowances to cover a
portion of the unit's emissions under CAIR. EPA believes this
assumption is reasonable because there is very little cost associated
with opting into the Acid Rain Program.\5\ In contrast, the analysis of
the three alternative methodologies did not consider Acid Rain Program
opt-in allowances because these approaches do not use title IV
allowances for CAIR compliance.
---------------------------------------------------------------------------
\5\ The greatest cost associating with opting in to the title IV
program is the cost of monitoring. Since these sources are already
required to monitor using the same monitoring methodologies that
would be required if they were to opt in, their costs for opting in
are significantly reduced.
---------------------------------------------------------------------------
EPA's analyses, of which a detailed description is available in the
docket, encompassed 112 (control case) to 114 (base case) parent/
holding companies with sources covered by the CAIR. These 112 to 114
companies represent about two-thirds of the total number of CAIR
plants, over 95 percent of total annual allocations for all
methodologies during 2015, and about 97 percent of the total projected
emissions in the CAIR region in 2015.\6\
---------------------------------------------------------------------------
\6\ According to EPA inventory data, there are a total of 921
CAIR affected plants. EPA did not have complete owner, parent
company information for all of these plants.
---------------------------------------------------------------------------
While allocations vary from company to company under the four
methodologies, overall, the distributions of allowances that companies
received relative to their projected emissions for both the base case
and control case are very similar. In other words, no methodology
stands out as providing a more reasonable method of allocation across
all companies when examining allowance needs under either the base case
or control case. Figures 1 and 2, below, show the distribution of
values for each methodology under the two cases, and support this
conclusion. EPA repeated these analyses for 2010, which show similar
results. Separate analyses of owner/operating company allowances
compared to emissions in 2010 and 2015, show similar results, as well.
See TSD Memo, ``Technical Support Document for Clean Air Interstate
Rule Response to Petition for Reconsideration.''
BILLING CODE 6560-50-P
[[Page 72274]]
[GRAPHIC] [TIFF OMITTED] TP02DE05.037
[[Page 72275]]
[GRAPHIC] [TIFF OMITTED] TP02DE05.038
BILLING CODE 6560-50-C
[[Page 72276]]
EPA also notes that, while the Petitioner states that the CAIR
final allocation methodology is ``inequitable'' because lower emitting
units would buy allowances from higher emitting units that install
emission controls, it is unclear why such a result would actually be
inequitable. On the contrary, the owner of each of the units involved
would be choosing to adopt the most economic compliance strategy in
light of the unit's emission control costs and the market value of
allowances. The ability of the owners to make such choices reflects the
flexibility provided by a cap and trade program.
The EPA requests comment on its analyses of the four allocation
methodologies and on the above discussion of the Petitioner's concerns.
B. Fuel Adjustment Factors Used To Set State NOX Budgets
Several petitioners argue the Agency did not provide adequate
notice regarding the use of specific fuel adjustment factors to
establish NOX budgets for States in the CAIR region. As
explained below, EPA believes that it provided adequate notice both
that the fuel adjustment factors might be used and of the calculation
procedures that it would use to determine the specific factors.
Nevertheless, given the significant public interest in this issue, EPA
has decided to grant reconsideration of, and to take comment on, EPA's
use of fuel adjustment factors (i.e., 1.0 for coal, 0.4 for gas, and
0.6 for fuel oil) in setting State NOX budgets. Today's
action also presents additional analysis that EPA conducted to further
explain the impact of these factors on State annual NOX
budgets. This analysis demonstrates that the factors selected are
reasonable and decrease the disparity between most States' actual
electric generation unit (EGU) emissions and their State NOX
budgets. For that reason, EPA is not proposing any changes to the final
CAIR at this time.
The CAIR establishes regional emission budgets for annual
NOX, and seasonal NOX emissions. These regional
budgets are then further divided into State budgets, with a share of
each total regional budget allocated to each State in the corresponding
CAIR region. States choosing to participate in the trading programs
will be able to allocate, to sources in their State, the number of
allowances in their budgets. Petitioners challenge the methodology EPA
used to establish these State budgets for annual and seasonal
NOX.
Background
For States choosing to participate in the trading program, these
budgets determine the number of allowances that could be allocated to
sources in that State. In a cap and trade system, however, the
methodology used to allocate allowances in any given year would not
affect where control technologies are installed.\7\ Rather, the
determinant would be the cost of adding controls compared to the cost
of buying, or the profit from selling, allowances. Controls are
expected to be installed where it is relatively less expensive, without
regard to which units received the initial allocation of allowances.
Further, the total cost to industry of controlling emissions and the
total amount of reductions achieved would not be affected by the
allocation methodology in a given year (for a permanent system). The
allocation method, however, could have financial impacts on individual
units and companies. A unit that receives more allocations than it has
emissions would get a benefit at the expense of a unit that does not
receive enough allocations to cover its emissions. While States
choosing to participate in the cap and trade program can determine how
to allocate allowances among their units, companies in States whose
budgets exceed projected EGU emissions would likely receive a financial
benefit while companies in States whose budgets are lower than their
EGU emissions would likely incur additional costs. In the absence of
other considerations, EPA believes that it is in the public interest to
reduce the disparity between the number of allowances in a State budget
and total projected State EGU emissions.
---------------------------------------------------------------------------
\7\ A permanent allocation approach, such as the CAIR allocation
methodology in the model trading rules, should not affect where
controls are installed. This is true regardless of the type of
approach used to permanently allocate allowances (e.g., heat input,
adjusted heat input, or output). The use of an updating allocation
system, on the other hand, could impact future generation behavior.
---------------------------------------------------------------------------
Notice of Fuel Factor Use in CAIR Promulgation
In the CAIR notice of proposed rulemaking (NPR), EPA proposed to
use the simple heat input method. (69 FR 4566) This approach used the
un-adjusted heat input to set budgets based on heat input data from the
years 1999 through 2002. EPA proposed to give each State a pro rata
share of the regional NOX budget based on the ratio of its
average annual heat input to the regional total average annual heat
input.
In the Supplemental Notice of Proposed Rulemaking (SNPR), EPA
proposed to supplement and update the data used to calculate the State
annual NOX budgets (69 FR 32684). EPA also described an
alternative method that could be used to calculate the budgets--the
adjusted heat input (fuel factor) method. This approach, EPA explained,
would ``* * * reflect the inherently higher emissions rate of coal-
fired plants, and consequently the greater burden on coal plants to
control emissions.'' (See 69 FR 32689.) The SNPR further explains ``in
contrast to allocations based on historic emissions, the factors would
also not penalize coal-fired plants that have already installed
pollution controls'' (69 FR 32689). In the SNPR, EPA also described the
method that it would use to derive specific fuel factors if this
adjusted heat input method was selected. EPA explained, ``States'
shares would be determined by the amount of the State heat input, as
adjusted, in proportion to the total regional heat input. The factors
could be based on average historic emissions rates (in lbs/mmBtu) by
fuel type (coal, gas, and oil) for the years 1999-2002'' (69 FR 32689).
The SNPR did not identify the specific numeric factors that would be
used. EPA received and responded to numerous comments addressing this
alternative fuel factor approach. (See ``Corrected Response to
Significant Public Comments on the Proposed Clean Air Interstate
Rule,'' pp. 520-576.)
EPA established State NOX budgets for the final CAIR
using the adjusted heat input method. The specific fuel factors used to
adjust heat input data were 1.0 for coal, 0.4 for gas and 0.6 for oil.
These factors are based on the average historic NOX
emissions rate for each fuel. They reflect for each fuel, the 1999-2002
average emissions by State summed for the CAIR region, divided by
average heat input by fuel by State, summed for the CAIR region (70 FR
25230-25231).
EPA Analyses of Potential Impacts
EPA conducted two analyses to evaluate the potential impact of
using the adjusted heat input method versus the simple heat input
method on State annual NOX budgets: one on a regionwide
scale and the second on a State-by-State level.
The regionwide analysis of the potential impacts compared
regionwide budgets using both approaches (i.e. simple heat input and
fuel factor) to the regionwide projected emissions of units fired with
that fuel.\8\ Regional budgets and emissions, by fuel type, are
summarized in Table 1.
---------------------------------------------------------------------------
\8\ It should be noted that simple heat input or adjusted heat
input are used to set State budgets and do not imply that States
would allocate allowances to units in that manner. In the proposal,
EPA gives States flexibility in the distribution of allowances.
[[Page 72277]]
Table 1.--Regionwide Comparison of CAIR Allowance Distributions and Emissions by Fuel Type
[Thousand tons]
----------------------------------------------------------------------------------------------------------------
Projected 2009* emissions and Projected 2015 emissions and
allowances allowances
-----------------------------------------------------------------
Other Other
Coal fossil** Total Coal fossil Total
----------------------------------------------------------------------------------------------------------------
Base Case Emissions........................... 2,635 97 2,732 2,650 96 2,746
CAIR Emissions................................ 1,404 99 1,503 1,151 89 1,254
Simple Heat Input Allowances.................. 1,197 308 1,505 998 256 1,254
Fuel Factor Adjusted Allowances............... 1,349 156 1,505 1,124 130 1,254
----------------------------------------------------------------------------------------------------------------
* Numeric value is based on 2010 projections.
** Numeric value includes wood and refuse in three States.
Assuming allowancesare often passed through to generation units in
the same way that they are apportioned to the States, Table 1
illustrates that under either approach natural gas-fired and other non-
coal-fired generation receives more allowances than their projected
emissions in both 2009 and 2015 and therefore States with more units of
this type receive a greater share of the budget. However, using the
fuel factor approach, the disparity between the number of allowances
provided and the emissions is less than under the simple heat input
method. Table 1 also demonstrates that the majority of emission
reductions are made by coal-fired sources. States with more of these
types of units receive a greater share of the regional budget under the
fuel factor approach (however, the portion of the budget derived from
the heat input from these units is still generally smaller than their
projected emissions). Therefore, the fuel factor approach generally
provides additional allowances to States with large amounts of coal-
fired units that are making the investments in emission control
measures and technologies. Conversely the simple heat input approach
provides more allowances to States with larger amounts of gas-fired
units that are not making reductions. Note that under either approach
the portion of the State budgets derived from the heat input from the
gas-fired units generally exceeds both the historical and the future
projected emissions from these units. This finding led EPA to believe
that the fuel factor approach better reduced the disparity between
projected emissions and State budgets.
EPA conducted a second analysis that examined the potential impacts
of the two approaches for developing Statewide budgets (i.e., simple
heat input and fuel factor) on a State-by-State basis. This analysis,
summarized in Tables 2 and 3 below, shows that States receiving fewer
allowances using a fuel factor approach, generally still receive
Statewide budgets that are greater than their projected emissions in
2009 and 2015. This results because a substantial portion of their
generation portfolio consists of gas-fired sources with generally low
NOX emission levels.
Table 2.--Comparison of Projected NOX Missions and State Budgets for CAIR States Not Dominated by Coal
Generation
[Thousand tons]
----------------------------------------------------------------------------------------------------------------
Projected 2009 * emissions and Projected 2015 emissions and
budgets budgets
State -----------------------------------------------------------------
Other Other
Coal fossil Total Coal fossil Total
----------------------------------------------------------------------------------------------------------------
DC **................ Base Case Emissions.... 0 0 0 0 <1 <1
CAIR Emissions......... 0 <1 <1 0 <1 <1
Simple Heat Input 0 <1 <1 0 <1 <1
Budget.
Fuel Factor Adjusted 0 <1 <1 0 <1 <1
Budget.
LA................... Base Case Emissions.... 45 5 49 45 5 50
CAIR Emissions......... 30 4 35 27 5 32
Simple Heat Input 19 23 42 16 26 42
Budget.
Fuel Factor Adjusted 21 14 36 18 12 30
Budget.
NY................... Base Case Emissions.... 38 7 45 38 6 44
CAIR Emissions......... 29 7 36 15 6 21
Simple Heat Input 19 42 61 16 35 51
Budget.
Fuel Factor Adjusted 21 25 46 17 21 38
Budget.
TX................... Base Case Emissions.... 141 45 186 141 39 179
CAIR Emissions......... 122 44 166 122 35 157
Simple Heat Input 114 118 231 95 98 192
Budget.
Fuel Factor Adjusted 128 53 181 106 44 151
Budget.
MS................... Base Case Emissions.... 36 1 37 36 2 37
CAIR Emissions......... 30 1 31 6 2 8
Simple Heat Input 11 10 21 9 8 18
Budget.
Fuel Factor Adjusted 13 5 18 10 4 15
Budget.
FL................... Base Case Emissions.... 132 19 151 132 18 151
CAIR Emissions......... 51 17 69 44 18 61
Simple Heat Input 58 58 116 48 48 97
Budget.
[[Page 72278]]
Fuel Factor Adjusted 65 34 99 54 28 83
Budget.
----------------------------------------------------------------------------------------------------------------
* Numeric value is based on 2010 projections.
** For DC: Projected Base Case emissions are 35 tons in 2015. CAIR Emissions are projected to be 35 tons in both
2009 and 2015. Simple Heat Input budgets are 213 and 178 tons in 2009 and 2015, respectively. Fuel Factor
budgets are 144 and 120 tons in 2009 and 2015, respectively.
Table 2 lists those States in the CAIR region that have significant
amounts (i.e., 40 percent or greater) of generation sources that
combust fossil fuels other than coal. As illustrated by Table 2, DC,
FL, LA, MS, NY, and TX, while receiving fewer allowances under a fuel
factor approach, are provided with reasonable Statewide budgets that
are comparable to their projected emissions in 2009 and 2015. If the
States were to directly pass through allowances to their gas-fired
units, these units would still have excess allowances. Furthermore in
most cases, these States still receive a larger budget than they need
to cover their projected emissions.
Table 3.--Comparison of Projected NOX Emissions and State Budgets for CAIR States
[Thousand tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected 2009 * emissions and budgets Projected 2015 emissions and budgets
-------------------------------------------------------------------------------------------------------------
Emissions Budget Emissions Budget
State -------------------------------------------------------------------------------------------------------------
Simple Fuel Simple Fuel
Base case CAIR heat factor Percent Base case CAIR heat factor Percent
input adjusted change input adjusted change
--------------------------------------------------------------------------------------------------------------------------------------------------------
DC **..................................... 0 <1 <1 <1 -32 <1 <1 <1 <1 -33
LA........................................ 49 35 50 36 -29 50 32 42 30 -29
NY........................................ 45 36 61 46 -25 44 21 51 38 -25
TX........................................ 186 166 231 181 -22 179 157 192 151 -22
MS........................................ 37 31 21 18 -16 37 8 18 15 -16
FL........................................ 151 69 116 99 -14 151 61 97 83 -14
MI........................................ 117 88 64 65 3 120 90 53 54 3
MD........................................ 57 13 27 28 4 57 12 22 23 4
VA........................................ 68 43 35 36 5 60 39 29 30 5
AL........................................ 132 65 64 69 8 134 49 53 58 8
GA........................................ 143 106 61 66 9 141 67 51 55 9
IL........................................ 146 66 70 76 9 159 65 58 64 9
WI........................................ 71 47 37 41 9 69 34 31 34 9
PA........................................ 198 86 90 99 10 193 72 75 83 10
SC........................................ 49 38 30 33 10 50 36 25 27 10
MO........................................ 116 64 54 60 10 118 66 45 50 10
MN........................................ 72 36 28 31 11 74 37 24 26 11
NC........................................ 60 59 56 62 11 61 49 47 52 11
IN........................................ 234 121 98 109 11 233 79 81 91 11
OH........................................ 264 91 97 109 12 274 90 81 91 12
TN........................................ 106 37 46 51 12 106 27 38 42 12
KY........................................ 176 99 74 83 12 176 74 62 69 12
IA........................................ 76 45 29 33 12 81 47 24 27 12
WV........................................ 179 62 66 74 13 176 40 55 62 13
------------
Total................................. 2732 1503 1505 1505 0 2746 1254 1254 1254 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numeric value is based on 2010 projections.
** For DC: Projected ** Base Case emissions are 35 tons in 2015. CAIR Emissions are projected to be 35 tons in both 2009 and 2015. Simple Heat Input
budgets are 213 and 178 tons in 2009 and 2015, respectively. Fuel Factor budgets are 144 and 120 tons in 2009 and 2015, respectively.
Table 3 shows that relative to the simple heat input method the
fuel factor method reduces the disparity between projected State
emissions and State budgets, because the fuel factor approach allocates
State budgets that are generally closer to projected State emissions.
As explained above, the States that receive smaller budgets under the
fuel factor method are still generally receiving budgets that exceed
their projected emissions. States that receive larger budgets under the
fuel factor method are generally States with a large amount of coal-
fired generation that are installing post combustion controls as a
result of CAIR.
[[Page 72279]]
Analysis of Potential Delaware and New Jersey Impacts
The analyses described above were conducted for the States in the
CAIR PM2.5 region only. EPA has proposed to add Delaware and
New Jersey to the CAIR region for PM2.5 (``Inclusion of
Delaware and New Jersey in the Clean Air Interstate Rule'', EPA, May
10, 2005), but has not yet taken final action on this proposal. EPA
proposed a separate 2-State ``regional'' budget for Delaware and New
Jersey of just over 14,000 tons. EPA's analysis, presented in Table 4,
shows that apportioning this budget between the two States based on a
fuel factor method instead of a simple heat input method, is
reasonable. (``Inclusion of Delaware and New Jersey in the Clean Air
Interstate Rule'', EPA, May 10, 2005)
Table 4.--Comparison of Projected NOX Emissions and State Budgets for New Jersey and Delaware
[Thousand tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected 2009 * emissions and allowance allocation Projected 2015 emissions and allowance allocation
-------------------------------------------------------------------------------------------------------------
Simple Fuel Simple Fuel
State Base case CAIR heat factor Percent Base case CAIR heat factor Percent
emissions input adjusted change emissions input adjusted change
emissions budget budget emissions budget budget
--------------------------------------------------------------------------------------------------------------------------------------------------------
NJ........................................ 16.8 12.0 13.4 12.7 -5.6 17.9 12.8 11.2 10.6 -5.6
DE........................................ 9.4 8.5 3.4 4.2 22.1 10.7 9.5 2.8 3.5 22.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numeric value is based on 2010 projections.
Other Considerations
EPA notes that the analyses above were conducted for State annual
NOX budgets established in the CAIR. CAIR also establishes
seasonal NOX budgets using the fuel factor approach. EPA did
not conduct a similar analysis of the seasonal NOX budgets.
EPA modeling indicates that the ozone season program is likely to
function as a backstop to the annual NOX program, and that
the annual NOX program is likely to impose the binding
constraint on NOX emissions.
Finally, to ensure that our estimates appropriately reflect the
distribution of emissions in the case of higher electricity demand and
increased gas and oil prices, EPA conducted a sensitivity run using
EIA's forecast of higher electricity demand and gas and oil prices.
This run produced very similar emissions results to the original
NOX analysis, showing that EPA's original analysis is robust
enough to support the fuel adjusted heat input approach finalized in
CAIR. (See the ``CAIR Statewide NOX Budget Calculations
Technical Support Document, EPA 2005, for additional discussion of the
analysis.)
C. PM2.5 Modeling for Minnesota
One petitioner asserts that EPA's modeling to determine whether
emissions from Minnesota significantly contribute to downwind
nonattainment of the PM2.5 NAAQS failed to take into account
certain emissions reductions required by State programs. The petitioner
asserts that if these reductions had been properly included in the
modeling done for CAIR, the modeling might show that the State of
Minnesota does not significantly contribute to downwind nonattainment
of the PM2.5 NAAQS. The petitioner also asked EPA to stay
implementation of the CAIR in Minnesota. The Agency is not taking
action on the request for a stay at this time.
The Agency agrees that EPA's modeling of the contribution of
emissions from Minnesota to downwind PM2.5 nonattainment for
the final CAIR did not fully account for the effects on future year
emissions of certain State control programs. In order to ensure that
all parties have ample opportunity to comment on all aspects of this
issue, EPA is reconsidering the air quality modeling inputs for
Minnesota.
Using the corrected inputs described below, EPA recently remodeled
the PM2.5 contributions from emissions in Minnesota. In this
analysis, EPA used the same PM2.5 modeling platform that was
used for the final CAIR modeling. This modeling platform is described
in the CAIR Air Quality Modeling Technical Support Document
(``Technical Support Document for the Final Clean Air Interstate Rule,
Air Quality Modeling,'' March 2005, OAR-2003-0053-2123). The EPA is not
taking comment on the modeling platform itself, only on the corrected
2010 emissions inputs for Minnesota, as described below.
The result of the revised 2010 Minnesota PM2.5
contribution modeling is that Minnesota contributes a maximum of 0.20
[mu]g/m3 to PM2.5 nonattainment in Chicago, IL.
This result confirms the findings from the CAIR PM2.5
contribution modeling that emissions in Minnesota make a significant
contribution to PM2.5 nonattainment in Chicago, IL. The 2010
emissions inputs used in the revised Minnesota modeling and the revised
contributions to each downwind nonattainment receptor county can be
found in the CAIR docket.
The following discussion provides background on the corrected
emissions inputs for Minnesota and on air quality analyses that the
Agency conducted prior to finalizing CAIR.
The emissions for the electric power sector used in EPA's
contribution modeling for the final CAIR were derived from the
Integrated Planning Model (IPM). The IPM is designed to forecast the
projected impact of environmental polices on the electric power sector.
The Agency updated its IPM modeling for the final CAIR. As part of a
routine model update to the IPM and in response to comments from
various parties, EPA updated the inventory of EGUs, made revisions to
several model assumptions, and added various State rules, regulations,
and New Source Review settlements to best reflect available data and
information.
In that IPM update for the final CAIR, the Agency included emission
reduction actions that are required by Minnesota for certain units,
based on the data available. However, as discussed in the RTC for the
final CAIR (``Corrected Response to Significant Public Comments on the
Proposed Clean Air Interstate Rule,'' March 2005, corrected April 2005,
OAR-2003-0053-2172) as well as in a memorandum to the CAIR docket
entitled ``Emissions in Minnesota: Additional Analysis'' (OAR-2003-
0053-2091) (''Minnesota memorandum''), the Agency discovered that there
may be some discrepancies between how the Agency represented the
Minnesota emissions reductions in the final CAIR IPM update and how the
reductions would be implemented. The Agency revised its IPM model to
better reflect the emissions reductions from
[[Page 72280]]
those Minnesota units and conducted revised emissions modeling using
the IPM (in the memorandum mentioned above, the revised emissions
modeling is described as a sensitivity analysis.) The revised emissions
modeling (sensitivity analysis) resulted in somewhat lower
NOX and SO2 emission projections for Minnesota in
the base case, compared to the emissions modeling done for the final
CAIR. The revised emissions modeling was discussed in the RTC for the
final CAIR and in the Minnesota memorandum.
Specifically, that revised IPM modeling projects statewide utility
NOX emissions roughly 16,500 tons lower and SO2
emissions about 5,800 tons lower than the emissions modeling used in
the final CAIR. These revised NOX and SO2
emission projections result in lower total NOX and
SO2 emissions of 4.6 percent and 4.3 percent, respectively,
than the emission projections used in the final CAIR modeling. In order
to account for these revised emission projections, the Agency performed
two analyses to estimate whether air quality modeling based on the
lower emission projections would show that Minnesota's downwind
contribution was below the PM2.5 significance threshold of
0.2 [mu]g/m3. The EPA's modeling of Minnesota for the final
CAIR showed that Minnesota's maximum downwind contribution is 0.21
[mu]/m3 to Cook County, Illinois. The Agency's analyses of
the effects of the lower emission projections on Minnesota's maximum
contribution, which were presented in the RTC for the final CAIR and
the Minnesota Memorandum, are summarized below:
Analysis 1: We reduced the maximum PM2.5
contribution by the larger of the percent reduction in NOX
and SO2 emissions (i.e., the 4.6 percent reduction in
NOX). The maximum PM2.5 contribution after making
this adjustment is 0.2 [mu]g/m3.
Analysis 2: We reduced the sulfate and nitrate portions of
the maximum PM2.5 contribution by the corresponding
reductions in SO2 and NOX emissions.
Specifically, the sulfate portion (including sulfate, ammonium, and
particle-bound water) was reduced by the 4.3 percent reduction in
SO2 emissions and the nitrate portion was reduced by the 4.6
percent reduction in NOX emissions. We then recalculated the
maximum contribution using these lower components. The result is that
the adjusted maximum PM2.5 contribution is 0.2 [mu]g/
m3.
Thus, the analyses presented in the RTC and the Minnesota
memorandum indicate that Minnesota makes a significant contribution to
PM2.5 nonattainment, even after considering the lower
emissions levels in the revised emissions modeling.\9\
---------------------------------------------------------------------------
\9\ Although the petition acknowledges that the Agency revised
its IPM emissions analysis to reflect emission reductions at certain
Minnesota units, it states incorrectly that ``EPA subsequently
learned that emission levels in the IPM sensitivity analysis were
overstated by an additional 16,500 tons of annual NOX
emissions and 5,800 tons of annual SO2 emissions''
(petition, p. 7). As discussed above, the emission projections in
EPA's revised IPM modeling (the sensitivity analysis) were in fact
lower by 16,500 tons of annual NOX emissions and 5,800
tons of SO2 emissions than the emission projections in
EPA's modeling for the final CAIR. For the same reason, the petition
is incorrect in stating (p. 7) that EAP failed to consider these
emission reductions in its analysis.
---------------------------------------------------------------------------
Although the Agency's analyses of downwind impacts from Minnesota
which were based on the revised emissions modeling (and presented in
the RTC and the Minnesota memorandum) indicate that the State makes a
significant contribution to downwind PM2.5 nonattainment,
the Agency acknowledges that it did not at that time conduct air
quality modeling based on the revised emissions modeling. However, as
discussed above, the Agency has now remodeled the PM2.5
contribution from emissions in Minnesota and the results of that
revised modeling confirm that emissions in Minnesota make a significant
contribution to PM2.5 nonattainment in Chicago, IL. This
revised PM2.5 contribution modeling used the same modeling
platform as EPA used for the final CAIR modeling coupled with the
revised emissions inputs for Minnesota discussed above. The EPA is
taking comment only on the revised inputs for Minnesota discussed
above.
D. Inclusion of Florida in the CAIR Region for Ozone
Florida petitioners (the Florida Association of Electric Utilities
and FPL Group) maintain that neither the proposed rule nor the
supplemental proposal or notice of additional data availability gave
adequate notice that Florida might be included within the CAIR region
as a significant contributor for ozone. They further maintain that
EPA's ultimate determination to include Florida within the ozone CAIR
region was based on modeling inputs not readily available for comment.
The petitioners state that they therefore lacked adequate opportunity
to comment on this issue.
The EPA does not fully accept the Florida petitioners'
characterization. Clearly, for example, EPA gave notice that it would
utilize a different modeling platform for the final rule, with the
necessary implication that this could change the makeup of the CAIR
ozone (and PM2.5) regions (69 FR 47828; August 6, 2004). The
EPA also provided access to the data inputs for the modeling runs,
including emissions data and the information necessary to process that
emissions data into model-ready files. Nonetheless, considering all the
factors here (notably the absence of Florida from the CAIR region for
ozone in the NPR and SNPR), EPA has decided to provide an opportunity
for additional public comment on the inclusion of Florida within the
CAIR region for ozone.
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, OMB has determined
that this is not a significant regulatory action. This notice takes
comment on several aspects of the CAIR, but does not propose any
modifications.
B. Paperwork Reduction Act
This action does not propose information collection request
requirements under the provisions of the Paperwork Reduction Act, 44
U.S.C. 3501 et seq. Therefore, an information collection request
document is not required.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose
[[Page 72281]]
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; complete and review the collection of
information; and transmit or otherwise disclose the information.
An agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act generally requires an Agency to
prepare a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements under the Administrative Procedures
Act or any other statute unless the Agency certifies 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 rule 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. (See 13 CFR part 121.); (2) a
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 notice
does not impose any requirements on small entities. We are only
announcing our decision to reconsider and request comment on specific
issues in the CAIR. We continue to be interested in the potential
impacts of the rule 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 (UMRA), Public
Law 104-4, 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, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures by State, local, and Tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
1 year. Before promulgating an EPA rule for which a written statement
is needed, UMRA section 205 generally requires EPA to identify and
consider a reasonable number of regulatory alternatives and adopt the
least costly, most cost-effective, or least-burdensome alternative that
achieves the objectives of the rule. The provisions of section 205 do
not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least-
costly, most cost-effective, or least-burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. 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's regulatory proposals with
significant Federal intergovernmental mandates, and informing,
educating, and advising small governments on compliance with the
regulatory requirements.
The EPA has determined that today's notice of reconsideration does
not contain a Federal mandate that may result in expenditures of $100
million or more for State, local, and Tribal governments, in the
aggregate, or the private sector in any 1 year. Today's notice of
reconsideration of the CAIR does not add new requirements that would
increase the cost of the CAIR. Thus, today's notice of reconsideration
is not subject to the requirements of sections 202 and 205 of the UMRA.
In addition, EPA has determined that today's notice of reconsideration
does not significantly or uniquely affect small governments because it
contains no requirements that apply to such governments or impose
obligations upon them. Therefore, today's notice of reconsideration is
not subject to section 203 of the UMRA.
E. Executive Order 13132: Federalism
Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that have ``substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
This action 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. The CAA establishes the
relationship between the Federal Government and the States, and this
action would not impact that relationship. Thus, Executive Order 13132
does not apply to this action.
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 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by Tribal officials in the development of regulatory
policies that have Tribal implications.''
For the same reasons stated in the final CAIR, today's notice does
not have Tribal implications as defined by Executive Order 13175. It
does not have a substantial direct effect on one or more Indian Tribes,
since no Tribe has implemented a federally-enforceable air quality
management program under the CAA at this time. Furthermore, this action
does not affect the relationship or distribution of power and
responsibilities between the Federal government and Indian Tribes. The
CAA and the Tribal Air Rule establish the relationship of the Federal
government and Tribes in developing plans to attain the NAAQS, and
today's notice does nothing to modify that relationship. Because this
notice does
[[Page 72282]]
not have Tribal implications, Executive Order 13175 does not apply.
If one assumes a Tribe is implementing a Tribal implementation
plan, the CAIR could have implications for that Tribe, but it would not
impose substantial direct costs upon the Tribe, nor would it preempt
Tribal Law.
Although Executive Order 13175 does not apply to the CAIR or this
notice of reconsideration of the CAIR, EPA consulted with Tribal
officials in developing the CAIR.
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.
This notice is not subject to Executive Order 13045 because it does
not involve decisions on environmental health risks or safety risks
that may disproportionately affect children. The EPA believes that the
emissions reductions from the CAIR will further improve air quality and
children's health.
H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use
Executive Order 13211 (66 FR 28355, May 22, 2001) provides that
agencies shall prepare and submit to the Administrator of the Office of
Regulatory Affairs, OMB, a Statement of Energy Effects for certain
actions identified as ``significant energy actions.'' Section 4(b) of
Executive Order 13211 defines ``significant energy actions'' as ``any
action by an agency (normally published in the Federal Register) that
promulgates or is expected to lead to the promulgation of a final rule
or regulation, including notices of inquiry, advance notices of final
rulemaking, and notices of final rulemaking (1)(i) a significant
regulatory action under Executive Order 12866 or any successor order,
and (ii) likely to have a significant adverse effect on the supply,
distribution, or use of energy; or (2) designated by the Administrator
of the Office of Information and Regulatory Affairs as a ``significant
energy action.'' The final CAIR is a significant regulatory action
under Executive Order 12866, and EPA concluded that the final CAIR rule
may have a significant adverse effect on the supply, distribution, or
use of energy. The impacts are detailed in the final CAIR (70 FR
25315). Today's notice of reconsideration of the CAIR is not a
significant action under Executive Order 12866 and does not change
EPA's previous conclusions.
I. National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer Advancement Act
of 1995, 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 National Technology Transfer
Advancement Act of 1995 directs EPA to provide Congress, through OMB,
explanations when the Agency decides not to use available and
applicable voluntary consensus standards.
Today's notice does not involve technical standards. Therefore, the
National Technology Transfer and Advancement Act of 1995 does not
apply.
J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations
Executive Order 12898, ``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations,'' requires
Federal agencies to consider the impact of programs, policies, and
activities on minority populations and low-income populations.
According to EPA guidance,\10\ agencies are to assess whether minority
or low-income populations face risks or a rate of exposure to hazards
that are significant and that ``appreciably exceed or is likely to
appreciably exceed the risk or rate to the general population or to the
appropriate comparison group.'' (EPA, 1998).
---------------------------------------------------------------------------
\10\ U.S. Environmental Protection Agency, 1998. Guidance for
Incorporating Environmental Justice Concerns in EPA's NEPA
Compliance Analyses. Office of Federal Activities, Washington, DC,
April, 1998.
---------------------------------------------------------------------------
In accordance with Executive Order 12898, the Agency has considered
whether the CAIR may have disproportionate negative impacts on minority
or low-income populations. The EPA expects the CAIR to lead to
reductions in air pollution and exposures generally. Therefore, EPA
concluded that negative impacts to these sub-populations that
appreciably exceed similar impacts to the general population are not
expected. For the same reasons, EPA is drawing the same conclusion for
today's notice to reconsider certain aspects of the CAIR.
List of Subjects
40 CFR Part 51
Environmental protection, Administrative practice and procedure,
Air pollution control, Intergovernmental relations, Nitrogen dioxide,
Ozone, Particulate matter, Reporting and recordkeeping requirements,
Sulfur oxides.
40 CFR Part 96
Environmental protection, Administrative practice and procedure,
Air pollution control, Nitrogen oxides, Reporting and recordkeeping
requirements.
Dated: November 22, 2005.
Stephen L. Johnson,
Administrator.
[FR Doc. 05-23501 Filed 12-1-05; 8:45 am]
BILLING CODE 6560-50-P