Final Transport Rule OMB Briefing

EPA

May 17, 2011
Outline

• Context for Final Transport Rule

– Clean Air Act’s statutory obligation to address interstate transport of air pollution

– Response to Court’s concerns

– Public comment on proposed rule leading to subsequent NODAs

– Supplemental proposal for 6 states under the Transport Rule

• Core Elements and Updates from Proposal to Final 

– States in the final Transport Rule

– Level of SO2and NOXcontrol that removes each state’s significant contribution and 

interference with maintenance of the PM2.5 and ozone NAAQS

– Four air quality-assured trading programs

– Allowance allocation

– Transition from CAIR to Transport Rule programs

– Compliance deadlines 

• Air Quality Results of the final Transport Rule

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Transport under the Clean Air Act

• Clean Air Act includes statutory obligation for states and EPA to address interstate transport of air pollution

– States have the primary responsibility; EPA must act where states do not sufficiently prohibit emissions to eliminate significant 

contribution to downwind nonattainment or interference with maintenance

– This “bounded obligation” does not direct EPA to use this authority to produce full attainment, but to promote it by addressing 

upwind element

• EPA promulgated CAIR in May 2005 with regional NOx and SO2trading programs slated to begin in 2009 and 

2010, respectively.

• The DC Circuit Court vacated and remanded CAIR in July 2008 but modified its decision in December 2008 to 

remand the rules back to EPA without vacatur

– CAIR programs remain in effect while EPA acts to replace them

– In court documents filed in fall 2008, the Agency stated that it expected to provide replacement rule in about 2 years. Court noted 

in its remand that it expected EPA to replace CAIR expeditiously.

• The Court found that in CAIR, EPA had not:

– Adequately quantified and addressed each upwind state’s significant contribution

– Given independent meaning to “interfere with maintenance” prong of 110(a)(2)(D)

– Provided adequate assurance that necessary reductions would occur within each state

– Properly established state-level emission budgets for NOx and SO2

– Properly addressed the timing of the second phase (set for 2015)

– Shown that it had authority to use Title IV SO2 allowances in the program

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Response to Court’s Concerns

• Transport Rule addresses Court decision on CAIR

– Identifies states that contribute at least 1% of NAAQS to downwind areas with 

projected nonattainment and/or maintenance concerns

– Identifies emissions, if any, in each such state that could be eliminated at 

specific cost thresholds.

– Balances upwind responsibility for highly cost-effective emission reductions 

against downwind responsibility for local air quality control

– Uses 2 groupings of states for upwind SO2control based on air quality at linked 

downwind receptors, which reduces compliance costs for some states

– Gives independent meaning to “interference with maintenance” by projecting 

maximum design values at monitoring sites, to account for variability around 

average design values that may frustrate NAAQS attainment 

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Proposal’s Public Comment and NODAs

• Public comment broadly supportive of “preferred remedy” that maintains marketbased trading flexibilities to achieve substantial emission reductions and health 

benefits at very low costs

• Public comment identified three major areas of concern with the Transport Rule 

proposal that EPA followed up in detail by issuing NODAs

– Power sector modeling assumptions and unit-level representation of the fleet

• NODA issued September 1, 2010

– Emissions inventories used for air quality modeling 

• NODA issued October 27, 2010

– Data and methodology used to determine unit-level allowance allocations

• NODA issued January 7, 2011

• Updated power sector modeling yielded lower baseline emissions in most states 

than at proposal

– Affects the baseline downwind air quality problems projected in final rule’s analysis

– Affects the linkages with upwind contributor states due to changing emission patterns

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Determining Geographic Coverage (I)

• Identified downwind air quality problems

– Identified receptors modeled to have nonattainment and/or maintenance 

problems in 2012

• CAMx modeling results modeling results for 2005 for 2005 and 2012 and 2012 were coupled with 2003 were coupled with 2003 - 2007 

PM2.5 and ozone measurements to project “design values” in 2012. 

– Monitoring sites with 2012 average design values exceeding the NAAQS are 

projected to be nonattainment in 2012.

• Projection of the average of 2003-2005, 2004-2006, and 2005-2007 ambient design 

values

– Monitoring sites with 2012 maximum design values exceeding the NAAQS are 

projected to have maintenance problems in 2012.

• Projection of the maximum of 2003-2005, 2004-2006, and 2005-2007 ambient design 

values

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2012 Base Case Annual PM2.5 Nonattainment and 

Maintenance Receptors 

Proposal

Final

Deliberative 7 - Do not cite of quote
2012 Base Case 24-hour PM2.5 Nonattainment 

and Maintenance Receptors

Proposal

Final

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2012 Base Case Ozone Nonattainment

and Maintenance Receptors 

Proposal

Final

Deliberative 9 - Do not cite of quote
Determining Geographic Coverage (II)

• Identified upwind linkages to downwind air quality problems

– Quantify the air quality contributions from emissions in upwind states to downwind nonattainment 

and maintenance receptors

• CAMx Source Apportionment modeling was performed for the 2012 base case to 

quantify quantify the contributions of the contributions of SO2 and NOX emissions in each state to annual and daily 2 and NOX emissions in each state to annual and daily 

PM2.5 and ozone at each nonattainment and/or maintenance receptor site.

• Each upwind-to-downwind contribution (i.e., “linkage”) was evaluated against 

thresholds based on 1 percent of the NAAQS. 

– Annual PM2.5: contributions >= 0.15 μg/m3 [NAAQS = 15.0 ug/m3]

– Daily PM2.5: contributions >= 0.35 μg/m3 [NAAQS = 35 ug/m3]

– 8-Hour Ozone: contributions >= 0.8 ppb [NAAQS = 0.08 ppm]

• States that contribute amounts that meet or exceed the thresholds at a 

downwind receptor are considered “linked” to those downwind areas and are 

considered for inclusion in the Transport Rule programs.

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States Covered in the Final Rule

Final Transport Rule*

Proposed Transport Rule

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Drop Out Come In

Annual and/or 

24-hr PM

CT, DC, DE, FL, 

LA, MA TX

Ozone CT, DC, DE IA, MO, WI

*Map includes six states whose 

coverage in the ozone-season NOX

program is subject to an SNPR
Determining State Budgets

• Quantify and eliminate emissions in each “linked” state which constitute that state’s 

“significant contribution and interference with maintenance”

• Consider both control costs and air quality improvements (multifactor analysis) to identify 

appropriate cost thresholds

– Used Integrated Planning Model (IPM) to estimate emissions reductions at various cost thresholds

– Used Air Quality Assessment Tool (AQAT) calibrated with CAMx model to estimate downwind air 

quality impacts associated with the reductions at each cost threshold

• Calculated state-specific budgets by quantifying emissions remaining after all reductions 

available at the appropriate cost threshold are achieved.

– Upwind states linked for ozone 

• Ozone-season NOx budgets based on a $500/ton cost threshold

– Upwind states linked for PM2.5

• Annual NOx budgets based on a $500/ton cost threshold

• Annual SO2 budgets in Group 1 states based on a $2300/ton threshold

• Annual SO2 budgets in Group 2 states based on a $500/ton threshold

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Air Quality-Assured Trading Programs

Group 1 versus Group 2 SO2 States

Total Program Coverage*

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SO2Control

Group 1

IL, IN, IA, KY, MD, MI, 

MO, NJ, NY, NC, OH, 

PA, TN, VA, WV, WI

Group 2

AL, GA, KS, MN, NE, 

SC, TX

*Map includes six states whose 

coverage in the ozone-season NOX

program is subject to an SNPR
Supplemental Proposal for Notice and Comment

• Analysis conducted with updated inventories/modeling platforms results in new 

ozone receptors and states not included at proposal

– Two new ozone maintenance receptors (Allegan, MI and Harford, MD)

• Five states are only linked to these new receptors: IA, KS, MI, OK, and WI

– Three new upwind states in ozone program not included at proposal

• IA, MO, and WI

• EPA is issuing a narrow supplemental proposal to provide opportunity for 

comment

• Would accept comment only on whether these six states satisfy the test for inclusion in the 

TR ozone-season NOX program

• Would not re-open methodological issues finalized in the TR

• EPA is seeking to finalize this supplemental by no later than October 31

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Allowance Allocation under FIPs

• EPA proposed an emissions-based approach and also solicited comments on 

historic heat input-based alternatives

• Commenters noted the following advantages of the historic heat inputbased approaches:

– Superior Superior data that is quality that is quality-assured assured

– Less complex and more transparent than proposal’s approach

– Does not penalize units for choosing cleaner fuels or installing pollution controls

• The final rule allocates allowances to existing units based on share of state’s 

heat input constrained not to exceed a unit’s maximum historic emissions

– Uses highest three of the last five years for each unit to establish heat input baseline

– Constrains unit-level allocations not to exceed maximum emissions from 2003-2010

• States can establish allocations to existing units from 2013 onward

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Transition from CAIR

• Court held that EPA did not have authority to modify title IV 

SO2allowances in a 110(a)(2)(D) rule. 

– Transport Rule will establish new SO2allowances separately for Group 1 and 

Group 2 compliance use.

• Transport Rule does not allow “carryover” of CAIR NOX

allowances

– State budgets under Transport Rule are determined to eliminate 

significant contribution; adding the CAIR NOX bank would “undo” 

emission reductions deemed legally necessary to satisfy requirements 

of 110(a)(2)(D)(i)(I)

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Transport Rule Compliance Deadlines

• January 2012 for annual NOX/SO2and May 2012 for ozone-season 

NOX; deeper reductions from January 2014 for SO2in Group 1 states

– The 2012/2014 compliance dates are responsive to Court’s direction to 

align emissions reductions with the NAAQS attainment deadlines. 

• Basis for reductions in each compliance period

– 2012: operation of planned/existing controls; fuel-switching; cleaner 

dispatch; and installation or upgrade of combustion controls

– 2014: installation of less than 6 GW of scrubbers and 3 GW of dry sorbent 

injection (DSI)

• Significant decrease in retrofit effort compared to proposal’s modeling projections of 

14 GW of scrubber installations by 2014, due to updated gas supply assumptions and 

the inclusion of DSI technology in the final rule’s modeling

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Transport Rule Air Quality Results

1997 Annual PM 2006 24-Hour PM 1997 Ozone

2012 Base Case

Non-attainment 7 areas

Atlanta

Birmingham

Cincinnati

Cleveland-Akron

Detroit

Liberty-Clairton (Allegheny)

St. Louis

11 areas

Birmingham

Chicago-Gary-Lake1

Cleveland-Akron

Detroit

Indianapolis

Lancaster

Liberty-Clairton (Allegheny)

Milwaukee

2 areas

Baton Rouge

Houston

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1 The Chicago-Gary-Lake and Dayton areas are not officially classified for 24-hour PM non-attainment. For the purposes of this exercise we assumed that these 

areas would be similar to their annual PM non-attainment areas. Therefore, the Lake, IN and Cook, IL receptors were included in the Chicago-Gary-Lake area.

2012 Base Case Milwaukee

Pittsburgh

St. Louis

Steubenville

Maintenance 1 area

Indianapolis

3 areas

Cincinnati

Dayton

Harrisburg

3 areas

Allegan

Baltimore

New York

20141 Transport Rule

Non-attainment No areas 1 area

Liberty-Clairton (Allegheny)

1 area

Houston

Maintenance No areas 3 areas

Chicago-Gary-Lake1

Detroit

Lancaster

1 area

Baton Rouge
Final TR Annual Reductions, Costs, and Benefits 

(reductions in thousands of tons) 2012 2014

SO2Reductions 4,010 3,866

Annual NOXReductions 120 155

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Ozone-Season NOXReductions 60 75

Incremental Costs

(Billion 2007$) 1.4 0.8

Annual estimated benefits 

(Billion 2007$, 3% discount rate)

A

-- 120-280

Annual estimated deaths 

avoided (Thousands) -- 13-34

A Sum of PM2.5 and ozone-related health benefits, value of visibility improvements in Class I areas 

and CO2-related benefits
APPENDIX

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Major Updates to Emission Inventories

• 2012 and 2014 EGU emissions were revised based on a new version of IPM with updated inputs

• Updated plant closures for non-EGU point sources based on comments

• Removed duplicate non-EGU point sources

• Added known ethanol plants

• Updated 2005 PM2.5 to match IPM 4.1 emission factors

• Updated Updated projections projections for cement plants using Industrial using Industrial Sector Integrated Sector Integrated Solutions Solutions (ISIS) model (ISIS) model

• Included emissions reductions from reciprocating internal combustion engines (RICE)

• Included additional consent decrees

• Used MOVES 2010 NOX, SO2, and PM for all vehicles (including diesel) 

• Coastal states: 

– only category 3 (C3) commercial marine vessel emissions close to coast are allocated to states 

(but emission levels do not change from this update)

– Emissions control area (ECA) International Maritime Organization (IMO) control strategy implemented for SO2

• Delaware: State-supplied C3 marine, nonpoint, and non-EGU projections

• Nebraska: Used CENRAP-derived non-point industrial fuel combustion

• South Carolina: removed industrial/residual oil fuel combustion emissions

• Texas and Oklahoma: updated oil and gas emissions

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Projected Transport Rule Budgets from EGUs 

Compared to Proposal*

(Thousand tons)

Proposed 

2012 TR 

Budget

Final 2012 

TR Budget

Proposed 

2014 TR 

Budget

Final 2014 TR 

Budget

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•For comparability, only includes states in both proposal, final, and supplemental proposal 

(for ozone):

• 23 for OS NOX: AL, AR, FL, GA, IL, IN, KS, KY, LA, MD, MI, MS, NJ, NY, NC, OH, OK, PA, SC, TN, TX, 

VA, WV 

•22 for annual NOX and SO2: AL, GA, IL, IN, IA, KS, KY, MD, MI, MN, MO, NE, NJ, NY, NC, OH, PA, SC, 

TN, VA, WV, WI 

Budget TR Budget Budget Budget

SO2 3,623

1,197

638

3,057

1,112

556

2,229

1,197

638

1,884

1,031

524

Annual NOX

Ozone-Season NOX
EGU Budgets under Transport Rule Compared 

to CAIR

(Thousand tons)

CAIR 2012 Final 2012 

TR Budget 

CAIR Phase 2 

(2015)

Final 2014 TR 

Budget

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For comparability, only includes states in both rules’ programs (including those in the 

supplemental proposal for ozone) 

•22 for OS NOX: AL, AR, FL, IL, IN, IA, KY, LA, MD, MI, MO, MS, NJ, NY, NC, OH, PA, SC, TN, VA, 

WV, WI

•20 for annual NOX and SO2 : AL, GA, IL, IN, IA, KY, MD, MI, MO,NJ, NY, NC, OH, PA, SC, TN, TX, 

VA, WV, WI

* Note that Title IV SO2 allowance bank of 12.7 million tons in 2010 available to CAIR SO2 sources

SO2 3,254* 

1,512

555

3,152* 

1,159

483

2,278

1,111

459

1,980

1,083

460

Annual NOX

Ozone-Season NOX
Geographic Changes from CAIR

Final Transport Rule*

CAIR

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Drop Out Come In

Annual and/or 

24-hr PM

DC, DE, FL, LA,

MS, KS, MN, NE

Ozone CT, DC, DE, 

MA

GA, KS, OK, 

TX

*Map includes six states whose 

coverage in the ozone-season NOX

program is subject to an SNPR