44154 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

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.

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 email 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 kaufman.kathy@epa.gov or 

Todd Hawes at 919–541–5591 or by email at hawes.todd@epa.gov.

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. 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44155

1See, e.g. CAA Section 169(a)(1).

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 kaufman.kathy@epa.gov or Todd 

Hawes at 919–541–5591 or by e-mail at 

hawes.todd@epa.gov 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 

§ 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 

§ 51.308(e)(2)(i) as Proposed 

C. Analysis under § 51.308(e)(2) when an 

independent requirement determines the 

level of emission reductions needed 

D. Revisions to § 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 § 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 

§ 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 

§ 51.308(e)(2)(vi), to provide minimum 

elements for cap and trade programs in 

lieu of BART, 

(3) revised regulatory text in § 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 

§ 51.308(e)(2) of the Regional Haze Rule 

governing alternatives to source-bysource BART. Section III discusses 

specific issues relating to the proposed 

revisions to § 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.

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 

44156 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

2See http://www.epa.gov/visibility/

actions.html#bart1.

3CAA Sections 169A(b)(2) and (g)(7).

4See 66 FR 35737–35743 for a discussion of the 

rationale for the BART requirements in the 1999 

regional haze rule.

5http://www.epa.gov/visibility/

actions.html#bart1.

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’’).

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.

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

The 1999 regional haze rule also 

included § 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 § 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 

§§ 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 § 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.

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 § 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 § 51.309(f). EPA therefore codified the 

Annex provisions in § 51.309(h). 

Subsequently, five States and one local 

agency submitted SIPs developed to 

comply with all of § 51.309, including 

the Annex provisions at § 51.309(h). In 

accordance with § 51.309(c) these SIPs 

were submitted prior to December 31, 

2003. 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44157

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 sourcespecific 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 

§§ 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 §§ 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 

§ 51.308(e)(2) prescribing the type of 

analysis used to determine emissions 

reductions achievable from source-bysource 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 § 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 § 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, § 51.308(e)(2), was 

incorporated by reference into the 

WRAP-specific section of the rule at 

§ 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 categorywide 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 § 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 § 51.308(e)(2)(i), EPA’s 

regulations had required States to 

consider ‘‘the impact of all emissions 

reductions to estimate visibility 

progress.’’

44158 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

6These 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.

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.

8http://www.epa.gov/visibility/

actions.html#bart1.

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.

Revision to § 51.308(e)(2)(i) To Address 

CEED 

We propose to revise § 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-bysource context. This would be 

accomplished by a cross reference to 

§ 51.308(e)(1) in proposed 

§ 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.

Revisions to Demonstration Framework 

The other proposed changes to 

§ 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 § 51.308(e)(3).

We are also clarifying the requirement 

in existing § 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 [§ 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 § 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).

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 § 51.308(e)(3). 

With these changes, paragraphs 

within § 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 § 51.308(e)(3), cross 

referenced in proposed 

§ 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 § 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 sourceby-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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44159

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.

10This is the stage of the analysis prescribed by 

existing § 51.308(e)(2)(i)(C), as noted in the section 

II.A above.

11http://www.epa.gov/visibility/

actions.html#bart1.

12As 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.

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 § 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 

§ 51.308(e)(1). Because they have been 

developed for application on a sourcespecific 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 

§ 51.308(e)(1) within § 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 BARTeligible 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 §§ 51.308(e)(2)(i)(B) 

and 51.308(e)(2)(ii) to this effect.

B. State Options for Complying With 

§ 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 

§ 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.

1. Determination of Which BARTEligible 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.

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 BARTeligible sources within affected 

categories are reasonably anticipated to 

cause or contribute to visibility 

impairment and therefore should be 

44160 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

13To 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.

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 BARTeligible 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.

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 

§ 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-bysource (§ 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.

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 fullscale 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., §§ 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 

(§ 51.309) and the nationally applicable 

provisions (§ 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 § 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 

§§ 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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44161

14http://www.epa.gov/visibility/

actions.html#bart1.

hesitation to do so was ‘‘reasonably 

based on the possibility that the BART 

benchmark used to calculate ‘‘betterthan-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

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 ‘‘groupBART’’ 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 ‘‘betterthan-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 moststringent-case BART benchmark to 

satisfy the better than BART test would 

not run afoul of the D.C. Circuit’s 

44162 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

15Allowances 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).

decisions, as long as EPA does not 

attempt to require or otherwise impose 

such a benchmark.

D. Revisions to § 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 

§ 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 § 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 

§ 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 multistate 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.

EPA proposes not to include the 

detailed requirements on how States 

and Tribes will allocate allowances for 

a cap and trade program adopted under 

§ 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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44163

16Part 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.

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.

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 

44164 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

17Subsequent 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.

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 § 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 

§ 51.309 

A. Background 

The previous section discussed the 

proposed changes to our regulations at 

§ 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 (§ 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 

§ 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

How Is the ‘‘WRAP Annex’’ Related to 

Other Strategies Contained in Regional 

Haze Rule § 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 

§ 51.309 was contingent upon EPA 

receiving the Annex meeting certain 

requirements no later than October 1, 

2000. See § 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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 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 § 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 § 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 § 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 § 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 

§ 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 § 51.309(h) which were 

promulgated in 2003. (68 FR 33764, 

June 5, 2003.) The vacature of these 

provisions returns § 51.309 to the status 

quo ante as of that rulemaking. This 

included certain provisions for 

stationary sources contained in 

§ 51.309(d)(4) and the provision calling 

for the submission of the Annex in the 

first place in § 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 § 51.309(f); we are 

also proposing to retain the general 

stationary source requirements at 

§ 51.309(d)(4), with certain 

modifications. 

Will States Be Required To Submit a 

Revised Annex? 

Section 51.309(f) made the 

approvability of § 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 § 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 § 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 § 51.309(h). Section 

51.309 in its totality, including the new 

§ 51.309(h), then governed the content 

of the SIPs which were due no later than 

December 31, 2003, per § 51.309(c). 

The EPA believes the substantive 

requirements of § 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 

§ 51.309(f) which are still relevant into 

§ 51.309(d)(4), and to repeal the 

§ 51.309(f) mechanism requiring an 

Annex. We are also proposing to import 

into § 51.309(d)(4) a few selected 

substantive provisions from the 

repealed Annex rule (§ 51.309(h)) for 

reasons explained later in this section of 

the preamble. 

In 1999, EPA included § 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 

§ 51.309 or § 51.308, are due at the end 

of 2007, or about 18 months after 

44166 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

18See 42 U.S.C. 7407(d)(7)(A).

19See Consolidated Appropriations Act for Fiscal 

Year 2004, Public Law 108–199, January 23, 2004.

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.

In addition, we are proposing that 

States submit § 51.309 SIPs at the same 

time as § 51.308 SIPs. These § 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 § 51.309 strategies in 

developing § 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 §§ 51.308 and 51.309 SIPs under 

the same overarching criteria, rather 

than providing prescriptive 

requirements for § 51.309 which may 

interfere in unforeseen ways with the 

integration of §§ 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 

§ 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 § 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 § 51.308(e)(2).

Which States and Tribes May Submit 

Implementation Plans Under § 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 § 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 

§ 51.309 the choice between a § 51.309 

program defined by an invalid 

methodology and § 51.308. Therefore, 

States in the 9-state visibility transport 

region that did not submit a SIP in 2003 

under § 51.309 are not precluded from 

submitting a SIP under § 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 § 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 § 51.308), provided 

they demonstrate that such strategies 

meet the reasonable progress 

requirements of § 51.308. 

What Is the Proposed Implementation 

Plan Schedule? 

We are proposing that SIPs under 

§ 51.309 will be due at the same time as 

those under § 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).

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 § 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 

§ 51.309 SIPs to be submitted on a 

different schedule than under § 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 § 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 § 51.309(c) 

and replace it with similar provisions in 

the purpose provisions in § 51.309(a). 

Specifically, § 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 § 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 

§§ 51.308 and 51.309 was at the time the 

§ 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 § 51.308 will come into 

effect if a GCVTC State misses the 

§ 51.309 deadline. Each State in the 

GCVTC may choose between submitting 

a SIP under §§ 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 § 51.308 whether or not they 

submit § 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 § 51.309(g) 

(additional Class I areas).

Finally, § 51.309(d)(1) currently 

requires that § 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 § 51.309 SIPs shall 

continue in effect until an 

implementation plan revision is 

approved by EPA in accordance with 

§ 51.308(f). This will provide for 

continuity of visibility protection during 

the transition to the next long-term 

strategy period. 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44167

What Stationary Source Provisions Must 

§ 51.309 SIPs Contain? 

The 1999 regional haze rule, in 

addition to providing in § 51.309(h) for 

the submission of an Annex containing 

further elaboration of the GCVTC 

stationary source recommendations, 

also included certain fundamental 

requirements in § 51.309(d)(4) for a 

market trading program addressing 

stationary sources. These § 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 § 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 § 51.309(h). 

The EPA believes it is appropriate to 

retain these provisions in § 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 

§ 51.309(h) have been retained as SIP 

requirements in § 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 

§ 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 § 51.308(e)(2) and be 

approvable in lieu of BART. Because the 

§ 51.308(e)(2) is proposed to be 

amended to remove the group BART 

requirement, there is no longer the 

concern that the § 51.309 option might 

be defined by an invalid condition. 

Instead, the § 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 [(§ 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 

§ 51.309(h)(2)(ii), and EPA is proposing 

to include it in § 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 

[§ 51.309(d)(4)(iii)] 

EPA is proposing to revise 

§ 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 

§ 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 § 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. 

44168 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

20This special penalty provision for 2018 is 

distinct from the requirement for automatic 

allowance deductions in § 51.308(e)(2)(vi)(J), which 

is also applicable to the WRAP’s program per the 

cross reference to § 51.308(e)(2) in § 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 § 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 § 51.308(e)(2)(vi)(J) in order to insure 

there is a sufficient incentive for compliance.

Criteria and Procedures for a Market 

Trading Program [§ 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 § 51.309(h)(2)(iv), (v), and (vii), 

and § 51.309(h)(3). EPA is proposing to 

include these elements under 

§ 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 threeyear 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 

§ 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 

[§ 51.309(d)(4)(v)] 

As a backstop to voluntary measures, 

the implementation of the market 

trading program must be akin to a ‘‘turnkey’’ 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 

§ 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 

[§ 51.309(d)(4)(vi)] 

We are proposing new provisions 

governing the period beginning in 2018. 

The § 51.309 program generally focuses 

on setting and achieving milestones for 

the period of 2003 through 2018. States 

participating in the § 51.309 program 

will eventually need to prepare 

additional plans to address visibility 

beyond 2018. See § 51.308(f). These 

plans will need to meet the 

requirements of § 51.308 or other 

alternate regulations EPA may adopt in 

the future. The proposed language in 

§ 51.309(d)(4)(vi) is intended to bridge 

any potential gaps between the § 51.309 

plan and these future plans and to 

ensure the milestone for 2018 is 

achieved by the § 51.309 plans and 

maintained in future plans. Section 

51.309(d)(4)(vi)(A) requires that § 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 § 51.309 plans include special 

provisions for ensuring the 2018 

milestone is achieved beginning in 

2018. Specifically, this provision 

requires § 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 § 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 

§ 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 § 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 § 51.309 program is 

replaced with a plan covering the period 

after 2018.20

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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 44169

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.

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.

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 [§ 51.309(d)(4)(vii)] 

In the 1999 rule § 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 

§ 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.

Therefore, we propose amending the 

stationary source NOX and PM 

provision within § 51.309 (now 

numbered § 51.309(d)(4)(vii)) to specify 

that States submitting § 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 § 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 § 51.309(d)(4)(vii) would 

allow States the flexibility to address 

these BART provisions either on a 

source-by-source basis under 

§ 51.308(e)(1), or through an alternative 

strategy under § 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 

§ 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.

Projection of Visibility Improvement 

(§ 51.309(d)(2) and Periodic SIP Updates 

(§ 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.’’

§ 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 

§ 51.309(d)(10)(ii)(A)–(D). 

Because implementation of § 51.309 

SIPs has been delayed by the CEED 

decision and the consequent need to 

revise § 51.309 in this rulemaking, a SIP 

revision in 2008 will no longer be 

appropriate. Under today’s proposed 

revisions to § 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 § 51.309(d)(2) 

should serve as a demonstration that the 

complete strategies contained in 

§ 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 § 51.309(d) is virtually 

identical to the periodic SIP review 

provisions in §§ 51.308(g) and 

51.308(h). 64 FR 35755. In the § 51.308 

context, the meaning of that term is 

clear, as § 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 § 51.309 context, however, it is less 

clear what yardstick should be used 

against the visibility projections because 

by definition reasonable progress under 

§ 51.309 is defined as compliance with 

all the provisions of § 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 § 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 

44170 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

projection under § 51.309(d)(2) and in 

the progress reports under 

§ 51.309(d)(10). Furthermore, the 

assessment required in 

§ 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 

§ 51.309(d)(2), the State could use the 

same methods to project visibility 

improvement that a State could use 

under § 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 [§ 51.309(g)] 

In the 1999 rule, § 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 

§ 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 § 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 

§ 51.308 or under § 51.309(g). Section 

51.309(g)(4)(i) clarified that States could 

build upon and take credit for the 

strategies under § 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 § 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 § 51.309 strategies upon 

the submission of SIPs in 2003. Other 

administrative changes in the structure 

of § 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 nonvisibility 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; 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 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-forprofit 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 §§ 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 §§ 51.308 and 51.309 of the 

44172 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

regional haze rule which would reduce 

any regulatory burden on the States. In 

addition, these are optional programs 

for States. These revisions to §§ 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 §§ 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 potentiallyapplicable 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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 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:

§ 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. 

44174 Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 

(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).

§ 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 

§ 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 

§ 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 

§ 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 § 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 

Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Proposed Rules 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 

§ 51.308(e)(2)(vi). 

(vi) Provision for the 2018 milestone. 

(A) Unless and until a revised 

implementation plan is submitted in 

accordance with § 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 

§ 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 § 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 

§ 51.308(e)(1) or § 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 §§ 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 § 51.308(d)(1) 

through (4). 

(i) In developing long-term strategies 

pursuant to § 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 § 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 

§ 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