COMMENTS BY THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

REGARDING THE NOTICE OF DATA AVAILABILITY SUPPORTING FEDERAL

IMPLEMENTATION PLANS TO REDUCE INTERSTATE TRANSPORT OF FINE

PARTICULATE MATTER AND OZONE: REQUEST FOR COMMENT ON

ALTERNATIVE ALLOCATIONS, CALCULATION OF ASSURANCE PROVISION

ALLOWANCE SURRENDER REQUIREMENTS, NEW-UNIT ALLOCATiONS IN

INDIAN COUNTRY, AND ALLOCATIONS BY STATES

EPA DOCKET ID NO. EPA-HQ-OAR-2009-0491

I. Summary of Proposed Action

On January 7,2011, the United States Environmental Protection Agency (EPA) published in the

Federal Register a Notice of Data Availability (NODA) (76 FR 1109) supporting the previously

proposed Transport Rule Federal Implementation Plan (FIP) (75 FR 45210). The NODA

proposes alternatives for allocation methodologies, alternatives for calculation of assurance

provision allowance surrender requirements, new-unit allocations in Indian Country, and

provisions for states to submit state implementation plan (SIP) revisions providing for state

allocation of allowances in the proposed Transport Rule trading programs. The EPA requests

comment only on the new alternatives provided in the NODA.

II. Comments

General Comment

The EPA's request for comment on its proposed use of the revised data identified

in the NODA to make changes to the final Transport Rule is unreasonable and

does not provide adequate notice to the public of the potential changes to the

final Transport Rule.

The NODA does not provide adequate information or time for the public to comment on the

potential changes to the final Transport Rule. The mere provision of data or policy alternatives

without an explanation of the potential changes that could be made by the EPA in the final

Transport Rule is inadequate for the public to assess and comment on the potential future rule

changes or the implications of using revised data and alternatives. The EPA has stated that it

intends to rely on new data and alternatives for inclusion in computer modeling to determine

applicability for the final Transport Rule, but the public cannot reasonably provide meaningful

comments without some understanding of the final modeling results. Placing the burden on the

public to comment on changes to the final Transport Rule that will result from complex

computer modeling not yet completed nor available to the public does not allow the public to

ascertain whether they have a specific interest at stake.
DOCKET NO. EPAHQOAR20090491

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The EPA's continued piecemeal release of data and various program alternatives

that could result in significant changes to the originally proposed rulemaking

with limited comment periods and without opening the entire rule up for

comment results in inadequate public notice. The EPA should reopen the

comment period for the complete rulemaking package to allow for adequate

opportunity for the public to evaluate the full potential impact of the rule and

provide meaningful public comment.

If the EPA does continue to update information, including emission inventory data that is used

to support the final rulemaking, the Texas Commission on Environmental Quality (TCEQ)

requests that any such information be made available for public comment. Furthermore, the

TCEQ requests that the complete rulemaking package be reopened for comment and the EPA

provide adequate time for all the technical information and any potential changes to the rule to

be evaluated. Absent such an opportunity to comment on the complete proposed rule and any

substantive changes that the EPA may make using new information, the public is unable to

reasonably provide meaningful comments or to evaluate the potential impact of the rule.

Allocation Methodologies

The TCEQappreciates the removal of allocations from units that do not intend to

operate in the future and reallocation to existing units in the proposed

alternative allocation methodologies; however, the TCEQis concerned with the

EPA's apparent intent to apply allowance-holding requirements in perpetuity to

existing sources that may not currently be included in the list of potential

existing Transport Rule units, regardless of whether such units are ever allocated

allowances (76 FR 1.1.1.3).

The EPA intends to define "existing units" for the Transport Rule solely by the existence of such

units on the (presumably finalized) list of potential existing units. The EPA states that "If owners

and operators believe that their units should be, but are not, treated as potential existing

Transport Rule units and included in the list of such units provided by this NODA, these owners

and operators should submit comments on this NODA. .." but goes on to state that "A unit that

would not be allocated allowances as an existing unit because of the unit's exclusion from the list

of potential existing Transport Rule units could ultimately be determined to be a Transport Rule

unit ...subject to the allowance-holding requirements of the Transport Rule regardless of whether

the unit would be allocated any allowances as an existing unit." It would seem that the EPA has

simply created a sub-class of units, possibly defined as existing (and therefore not able to receive

new unit allocations) but without providing any existing unit allocations to said units,

apparently in perpetuity. The criteria for inclusion in this sub-class is the mere inability to

rapidly respond to the EPA's continued "updating" of the existing sources list in the repeatedly

limited Transport Rule-related comment periods. This policy could be challenging at a

minimum and likely inequitable for these sources. If the EPA truly intends to "define" existing

units by their inclusion (which relies at least partly on sources knowing they need to request

their inclusion) on a list, the EPA should provide a mechanism for existing sources left off of that

list to eventually be allocated allowances.
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The EPA's consideration of heat-in put-based allocation methodologies is

appropriate. However, the TCEQhas concerns regarding both provided

alternative allocation methodologies.

Option One

The EPA acknowledges that the historic heat input data are emissions-control neutral. However,

the allocation methodology itself goes no further than this historic heat input data and fails to

consider the technological feasibility of controls for different unit types, contrary to extensive

EPA guidance on control strategies for SIP submissions. While Option Two appears to consider

this technological feasibility in a manner that penalizes sources that have already controlled

emissions, technological feasibility is completely ignored under Option One. This proposed

approach arbitrarily penalizes or rewards companies based solely on the choice of technology of

the unit type, which may have been made decades prior to the EPA's Transport Rule proposal.

Option Two

Option Two appears to remove allowances from units that installed controls earlier and/or are

better controlled and redistribute them to units that were less controlled during the baseline

years of 2003 through 2009. Further, there appears to be some redistribution of allocations

based on source type. There appears to be no discernable pattern or purpose to this allocation

redistribution in Option Two. Without understanding fully the EPA's premises for Option Two

or the assumptions on which the data relies, it is difficult to determine if this complicated

allocation methodology meets its intended purpose, and therefore the TCEQ is unable to provide

meaningful comment on Option Two at this time.

The EPA's alternative allocation tables (Excel files) released with this NODA do not appear to

include complete formulas, which must be found in the Federal Register publication, making

the data more difficult to work with, and TCEQ staff has been unable to replicate or understand

the EPA's procedures. With the continued release of new data by the EPA in support of the

Transport Rule and the repeatedly limited comment periods, the TCEQ strongly requests that

the EPA provide all data and underlying assumptions in a timely, transparent, and user-friendly

manner.

Because the EPA has not proposed a state annual nitrogen oxide (NOx) or sulfur

dioxide budgetfor Texas or unit-level allocations for units in Texas that may be

subject to the Transport Rule'sfine particulate matter (PM2.sJ trading program,

the TCEQis unable to provide meaningful comment regarding whether either

alternative methodology is adequate orfair or whether allocation methodologies

could or should be differentfor different programs (ozone season versus annual

trading or interstate versus intrastate trading).

Should Texas be included in the Transport Rule annual trading program for PM2.

S, it would have

been denied reasonable notice of and the opportunity to comment on the allocation

methodology selected, unit-level allocations, and state budgets.
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The EPA notes that "final State budgets may differ from the proposed budgets

because EPA is still in the process of updating its emissions inventories and

modeling ..." (76 FR 1111) Because the EPA acknowledges that the Integrated

Planning Model (IPM) results may alter unit-level allocations, state budgets and

even the states subject to the Transport Rule, the TCEQrequests that states and

other stakeholders have the opportunity to review and comment onfinal IPM

results.

In addressing unit-level allocations in the NODA and the state emissions budgets, the EPA

explicitly acknowledges that the budgets in question are not finalized. To the extent that sources'

or states' comments to the EPA would be significantly influenced by actual knowledge of final

allocations, final state budgets, or final state inclusion in the Transport Rule trading programs,

the TCEQ requests that such information be made publicly available, and the opportunity for

comment provided prior to rule finalization.

Provisions for States to Submit Transport Rule SIP Revisions or Abbreviated SIP Revisions

Providing for State Allocation of Allowances in Proposed Transport Rule Trading Programs (76

FR l11g)

In identifying the parameters under which states might submit SIP revisions

addressing Transport Rule requirements, the EPA notes that "each state would

still have the ability to submit other types of SIPs using emissions reduction

approaches other than the proposed Transport Rule trading programs to correct

the deficiency under [Federal Clean Air Act] section 11o(a)(2)(D)(i)(I) in the

state's SIP that was the basis for the proposed Transport Rule FIPs." The TCEQis

unaware of any deficiency in Texas'SIP regarding transport obligations for the

1997 eight-hour ozone standard.

The TCEQ submitted a Federal Clean Air Act Section 110(a)(2)(D)(i) SIP revision for the 1997

eight-hour ozone standard in April 2008, with receipt acknowledged by the EPA as of May 5,

2008. Because Texas was not originally included in the Clean Air Interstate Rule (CAIR)

program for the 1997 eight-hour ozone standard, the state did not rely solely on CAIR modeling

in meeting this "infrastructure" SIP obligation and identified state-level controls adopted for

major point sources, along with their associated emission reductions, and other Texas SIP

revisions that would address Texas' Section 110(a)(2)(D)(i)(I) obligations. The submittal also

documented the greater stringency of state electric generating utility NOx control strategies

versus those required by CAIR. The EPA failed to consider many of these controls in its

proposed Transport Rule modeling. Additionally, in its Transport Rule proposal, the EPA

explicitly identified its plan for states not covered by the original CAIR who had, since 2005,

submitted SIP revisions to satisfy the requirements of Section 110(a)(2)(D)(i)(I) for the 1997

eight-hour ozone (and PM2.

S) NAAQS (75 FR 45342). "For the states that have now been

identified to be contributing significantly to nonattainment or interfering with maintenance

under this proposed rule and whose [Section] 110(a)(2)(D)(i)(I) with respect to 1997 ozone and

PM2.

S NAAQS are pending approval, EPA will finalize the FIP included in this proposed rule only

if EPA either determines that the SIP submission is incomplete or disapproves the SIP

submission." Because approximately 33 months have passed since the EPA-acknowledged

submittal date of the Texas' Section 110(a)(2)(D)(i)(I) SIP revision for the 1997 eight-hour ozone

standard, the revision has been deemed by operation oflaw as of November 5, 2008, to meet

minimum completeness requirements, in accordance with Section 110(k)(1) of the FCAA. The

EPA was therefore required to take action regarding full, partial, or conditional approval or
Q

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disapproval for this revision within 12 months of the completeness determination deemed by

operation oflaw (November 5,2009), but minimally, must do so prior to any Transport Rule

FIP finalization for Texas regarding the 1997 eight-hour ozone NAAQS. In any case, a FIP

relying on the 2005 notice of failure to submit would be inappropriate under the FCAAwhen the

EPA has failed to take action on a pending submittal directly responding to that notice.

Because Texas has submitted, in good faith, a SIP revision with additional substantive emission

reductions beyond CAIR to address Section 110(a)(2)(D)(i) obligations for the 1997 eight-hour

ozone standard; because the EPA must take action on such submittals prior to finalization of

Transport Rule FIPs and to date, has taken no action; and because Texas' proposed inclusion in

the Transport Rule is based on flawed modeling data that fails to account for certain controls

explicitly identified in its 2008 submittal, the inclusion of Texas in the Transport Rule FIP

trading program is inappropriate.

The TCEQ appreciates the EPA providing mechanisms for SIP revisions to replace

the Transport Rule FIP prior to rule finalization, but is concerned that the EPA's

implementation timeframe does not allow states to assume control of allocations

prior to program implementation.

In comments regarding the original Transport Rule proposal submitted to the EPA on October 1,

2010, the TCEQ requested that the EPA allow public comment prior to finalization on any

specific SIP criteria states might follow in replacing Transport Rule FIPs with state plans. The

TCEQ appreciates the inclusion of these potential SIP criteria in the January 7,2011, NODA.

The EPA's January 7,2011, NODA states, "Because EPA anticipates issuing the final Transport

Rule around mid-2011, there would not be sufficient time for states to develop and submit

abbreviated or full SIPs with allowance allocation provisions, and for EPA to review and approve

such SIP submissions, before September 2011 when EPA would record allocations to existing

units for 2012 and 2013. Consequently, the tables assume that the first year for which state

allocations might be used, in lieu of EPA allocation, would be 2014." (76 FR 1120) Because

changes to allocation methodologies occurring after program implementation could result in

difficulties for stakeholders, the TCEQ suggests that the EPA's Transport Rule program provide

a mechanism by which states could assume control of allocations prior to program

implementation, if requested.

The EPA indicates that states may submitfull or abbreviated SIP revisions to

address allocations and/or Transport Rule tradingfor the 2014 control period

but would require these SIP revisions due by November 1,2011 (76 FR 1121).

Because this initial submittal time line is unrealistic, the EPA should either delay

the deadline for SIP submittals for the 2014 control period or eliminate the

disingenuous optionfor state-directed allocation and/or trading in 2014.

The Transport Rule is expected to be finalized in mid-2011. If states intended to assume control

of Transport Rule allocations (abbreviated SIP revisions) or the Transport Rule trading program

(full SIP revisions) starting with the 2014 control period, SIP revisions would be due to the EPA

by November 1, 2011. Because the FCAA and EPA guidance mandates that reasonable notice and

public hearing be provided for such SIP revisions, states would be unable to develop, propose,

provide notice and public hearing, and adopt a SIP revision after the Transport Rule is finalized

but prior to the November 1, 2011, submittal deadline.

If the EPA actually believes state control of allocations and/or trading to be plausible for the

2014 control period, then providing a November 1,2011, SIP submittal date for such an option
PAGE60F6

would result in states having to expend staff time and resources based on an unfinalized rule.

While few states would choose to develop SIP revisions based on options provided in a proposed

rule without some clear assurance that such options would not change at rule finalization, some

states may in fact choose to do so in order to attempt to meet the short submittal deadline.

Given that, it is troubling that the EPA did not originally identify the mechanisms by which

states may submit SIP revisions to assume certain control of their Transport Rule participation

when it proposed the Transport Rule on July 6, 2010, instead of providing these proposed

mechanisms a full six months later in the process. The EPA has demonstrated a repeated

pattern of forcing states to accelerate SIP and rule development processes to meet unrealistic

deadlines created by the EPA's own failures to act in a timely manner.

The EPA should either delay the SIP submittal deadline for states seeking to assume control of

allocations and/or the trading program for the 2014 control period, or the EPA should eliminate

this disingenuous option.

Request for Date Clarification

In describing the approachfor allowing abbreviated SIP revisions providing for

state allocation of allowances in the proposed Transport Rule trading programs,

the EPA specifies that states would issue final allocations by January 1 "of the

year two years before the year of the control periodfor which the allowances

would be distributed," for the NOx ozone season program (76 FR 1119). However,

Table IV of the NODA, "Deadlines for Submission of Abbreviated or Full SIPs and

Unit-By-Unit Allocations or Auction Results andfor Recordation; Ozone Season

Trading Programs," specifies May 1of the year two years before the year of the

control periodfor submittal of such allocations.

The TCEQ requests clarification of the submittal date for state allocations and further requests

clarification of SIP revision submittal due dates associated with state allocations. The EPA

stated that it needed approximately six months to review a SIP revision prior to allocations

being issued; if January 1is the correct date for final issuance of allocations for the NOx ozone

season program, would SIP revisions identifying this allocation methodology be due the July ist

prior to the allocation? If so, the TCEQ again notes that the 2014 control period is not

realistically available for state allocation.

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