Friday,

January 30, 2004

Part III

Environmental 

Protection Agency

40 CFR Parts 51, 72, 75, and 96

Rule To Reduce Interstate Transport of 

Fine Particulate Matter and Ozone 

(Interstate Air Quality Rule); Proposed 

Rule

4566 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 51, 72, 75, and 96

[FRL–7604–3] 

Rule To Reduce Interstate Transport of 

Fine Particulate Matter and Ozone 

(Interstate Air Quality Rule)

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: In today’s action, EPA is 

proposing to find that 29 States and the 

District of Columbia contribute 

significantly to nonattainment of the 

national ambient air quality standards 

(NAAQS) for fine particles (PM2.5) and/

or 8-hour ozone in downwind States. 

The EPA is proposing to require these 

upwind States to revise their State 

implementation plans (SIPs) to include 

control measures to reduce emissions of 

sulfur dioxide (SO2) and/or nitrogen 

oxides (NOX). Sulfur dioxide is a 

precursor to PM2.5 formation, and NOX

is a precursor to both ozone and PM2.5

formation. Reducing upwind precursor 

emissions will assist the downwind 

PM2.5 and 8-hour ozone nonattainment 

areas in achieving the NAAQS. 

Moreover, attainment would be 

achieved in a more equitable, costeffective manner than if each 

nonattainment area attempted to 

achieve attainment by implementing 

local emissions reductions alone.

Based on State obligations to address 

interstate transport of pollutants under 

section 110(a)(2)(D) of the Clean Air Act 

(CAA), EPA is proposing statewide 

emissions reduction requirements for 

SO2 and NOX. The EPA is proposing 

that the emissions reductions be 

implemented in two phases, with the 

first phase in 2010 and the second phase 

in 2015. The proposed emissions 

reduction requirements are based on 

controls that are known to be highly 

cost effective for electric generating 

units (EGUs). 

Today’s action also discusses model 

multi-State cap and trade programs for 

SO2 and NOX that States could choose 

to adopt to meet the proposed emissions 

reductions in a flexible and costeffective manner. The EPA intends to 

propose the model trading programs in 

a future supplemental action.

DATES: The comment period on this 

proposal ends on March 30, 2004. 

Comments must be postmarked by the 

last day of the comment period and sent 

directly to the Docket Office listed in 

ADDRESSES (in duplicate form if 

possible). 

Up to two public hearings will be 

held prior to the end of the comment 

period. The dates, times and locations 

will be announced separately. Please 

refer to SUPPLEMENTARY INFORMATION for 

additional information on the comment 

period and public hearings.

ADDRESSES: Comments may be 

submitted by mail to: Air Docket, 

Environmental Protection Agency, Mail 

code: 6102T, 1200 Pennsylvania Ave., 

NW., Washington, DC 20460, Attention 

Docket ID No. OAR–2003–0053. 

Comments may also be submitted 

electronically, by facsimile, or through 

hand delivery/courier. Follow the 

detailed instructions provided under 

SUPPLEMENTARY INFORMATION. 

Documents relevant to this action are 

available for public inspection at the 

EPA Docket Center, located at 1301 

Constitution Avenue, NW., Room B102, 

Washington, DC between 8:30 a.m. and 

4:30 p.m., Monday through Friday, 

excluding legal holidays. A reasonable 

fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: For 

general questions concerning today’s 

action, please contact Scott Mathias, 

U.S. EPA, Office of Air Quality Planning 

and Standards, Air Quality Strategies 

and Standards Division, C539–01, 

Research Triangle Park, NC, 27711, 

telephone (919) 541–5310, e-mail at 

mathias.scott@epa.gov. For legal 

questions, please contact Howard J. 

Hoffman, U.S. EPA, Office of General 

Counsel, Mail Code 2344A, 1200 

Pennsylvania Avenue, NW., 

Washington, DC, 20460, telephone (202) 

564–5582, e-mail at 

hoffman.howard@epa.gov. For 

questions regarding air quality analyses, 

please contact Norm Possiel, U.S. EPA, 

Office of Air Quality Planning and 

Standards, Emissions Modeling and 

Analysis Division, D243–01, Research 

Triangle Park, NC, 27711, telephone 

(919) 541–5692, e-mail at 

possiel.norm@epa.gov. For questions 

regarding statewide emissions 

inventories and emissions reductions 

requirements, please contact Ron Ryan, 

U.S. EPA, Office of Air Quality Planning 

and Standards, Emissions Modeling and 

Analysis Division, Mail Code D205–01, 

Research Triangle Park, NC, 27711, 

telephone (919) 541–4330, e-mail at 

ryan.ron@epa.gov. For questions 

regarding the EGU cost analyses, 

emissions inventories and budgets, 

please contact Kevin Culligan, U.S. 

EPA, Office of Atmospheric Programs, 

Clean Air Markets Division, Mail Code 

6204J, 1200 Pennsylvania Avenue, NW., 

Washington, DC, 20460, telephone (202) 

343–9172, e-mail at 

culligan.kevin@epa.gov. For questions 

regarding the model cap and trade 

programs, please contact Sam Waltzer, 

U.S. EPA, Office of Atmospheric 

Programs, Clean Air Markets Division, 

Mail Code 6204J, 1200 Pennsylvania 

Avenue, NW., Washington, DC, 20460, 

telephone (202) 343–9175, e-mail at 

waltzer.sam@epa.gov. For questions 

regarding the regulatory impact 

analyses, please contact Linda Chappell, 

U.S. EPA, Office of Air Quality Planning 

and Standards, Air Quality Strategies 

and Standards Division, Mail Code 

C339–01, Research Triangle Park, NC, 

27711, telephone (919) 541–2864, e-mail 

at chappell.linda@epa.gov.

SUPPLEMENTARY INFORMATION: 

Regulated Entities 

This action does not propose to 

directly regulate emissions sources. 

Instead, it proposes to require States to 

revise their SIPs to include control 

measures to reduce emissions of NOX

and SO2. The proposed emissions 

reductions requirements that would be 

assigned to the States are based on 

controls that are known to be highly 

cost effective for EGUs. 

Public Hearing 

The EPA will hold up to two public 

hearings on today’s proposal during the 

comment period. The details of the 

public hearings, including the times, 

dates, and locations will be provided in 

a future Federal Register notice and 

announced on EPA’s Web site for this 

rulemaking at http://www.epa.gov/

interstateairquality/.

The public hearings will provide 

interested parties the opportunity to 

present data, views, or arguments 

concerning the proposed rule. 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. 

How Can I Get Copies of This 

Document and Other Related 

Information? 

Docket. The EPA has established an 

official public docket for this action 

under Docket ID No. OAR–2003–0053. 

The official public docket consists of the 

documents specifically referenced in 

this action, any public comments 

received, and other information related 

to this action. Although a part of the 

official docket, the public docket does 

not include Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4567

The official public docket is the 

collection of materials that is available 

for public viewing at the Air Docket in 

the EPA Docket Center, (EPA/DC) EPA 

West, Room B102, 1301 Constitution 

Ave., NW., Washington, DC. The EPA 

Docket Center 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 Air 

Docket is (202) 566–1742. A reasonable 

fee may be charged for copying. 

Electronic Access. You may access 

this Federal Register document 

electronically through the EPA Internet 

under the ‘‘Federal Register’’ listings at 

http://www.epa.gov/fedrgstr/.

An electronic version of the public 

docket is available through EPA’s 

electronic public docket and comment 

system, EPA Dockets. You may use EPA 

Dockets at http://www.epa.gov/edocket/

to submit or view public comments, 

access the index listing of the contents 

of the official public docket, and to 

access those documents in the public 

docket that are available electronically. 

Once in the system, select ‘‘search,’’

then key in the appropriate docket 

identification number. 

Certain types of information will not 

be placed in the EPA Dockets. 

Information claimed as CBI and other 

information whose disclosure is 

restricted by statute, which is not 

included in the official public docket, 

will not be available for public viewing 

in EPA’s electronic public docket. The 

EPA’s policy is that copyrighted 

material will not be placed in EPA’s 

electronic public docket but will be 

available only in printed, paper form in 

the official public docket. To the extent 

feasible, publicly available docket 

materials will be made available in 

EPA’s electronic public docket. When a 

document is selected from the index list 

in EPA Dockets, the system will identify 

whether the document is available for 

viewing in EPA’s electronic public 

docket. Although not all docket 

materials may be available 

electronically, you may still access any 

of the publicly available docket 

materials through the docket facility 

identified above. The EPA intends to 

work towards providing electronic 

access to all of the publicly available 

docket materials through EPA’s 

electronic public docket. 

For public commenters, it is 

important to note that EPA’s policy is 

that public comments, whether 

submitted electronically or in paper, 

will be made available for public 

viewing in EPA’s electronic public 

docket as EPA receives them and 

without change, unless the comment 

contains copyrighted material, CBI, or 

other information whose disclosure is 

restricted by statute. When EPA 

identifies a comment containing 

copyrighted material, EPA will provide 

a reference to that material in the 

version of the comment that is placed in 

EPA’s electronic public docket. The 

entire printed comment, including the 

copyrighted material, will be available 

in the public docket. 

Public comments submitted on 

computer disks that are mailed or 

delivered to the docket will be 

transferred to EPA’s electronic public 

docket. Public comments that are 

mailed or delivered to the Docket will 

be scanned and placed in EPA’s 

electronic public docket. Where 

practical, physical objects will be 

photographed, and the photograph will 

be placed in EPA’s electronic public 

docket along with a brief description 

written by the docket staff.

For additional information about 

EPA’s electronic public docket, visit 

EPA Dockets online or see 67 FR 38102; 

May 31, 2002. 

The EPA has also established a Web 

site for this rulemaking at http://

www.epa.gov/interstateairquality/

which will include the rulemaking 

actions and certain other related 

information. 

How and to Whom Do I Submit 

Comments? 

You may submit comments 

electronically, by mail, by facsimile, or 

through hand delivery/courier. To 

ensure proper receipt by EPA, identify 

the appropriate docket identification 

number, OAR–2003–0053, in the subject 

line on the first page of your comment. 

Please ensure that your comments are 

submitted within the specified comment 

period. Comments received after the 

close of the comment period will be 

marked ‘‘late.’’ The EPA is not required 

to consider these late comments. If you 

wish to submit CBI or information that 

is otherwise protected by statute, please 

follow the instructions below under, 

‘‘How Should I submit CBI to the 

Agency?’’ Do not use EPA Dockets or email to submit CBI or information 

protected by statute. 

Electronically. If you submit an 

electronic comment as prescribed 

below, EPA recommends that you 

include your name, mailing address, 

and an e-mail address or other contact 

information in the body of your 

comment. Also include this contact 

information on the outside of any disk 

or CD ROM you submit, and in any 

cover letter accompanying the disk or 

CD ROM. This ensures that you can be 

identified as the submitter of the 

comment and allows EPA to contact you 

in case EPA cannot read your comment 

due to technical difficulties or needs 

further information on the substance of 

your comment. The EPA’s policy is that 

EPA will not edit your comment, and 

any identifying or contact information 

provided in the body of a comment will 

be included as part of the comment that 

is placed in the official public docket, 

and made available in EPA’s electronic 

public docket. 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. 

EPA Dockets. Your use of EPA’s 

electronic public docket to submit 

comments to EPA electronically is 

EPA’s preferred method for receiving 

comments. Go directly to EPA Dockets 

at http://www.epa.gov/edocket, and 

follow the online instructions for 

submitting comments. To access EPA’s 

electronic public docket from the EPA 

Internet Home Page, select ‘‘Information 

Sources,’’ ‘‘Dockets,’’ and ‘‘EPA 

Dockets.’’ Once in the system, select 

‘‘search,’’ and then key in Docket ID No. 

OAR–2003–0053. The system is an 

‘‘anonymous access’’ system, which 

means EPA will not know your identity, 

e-mail address, or other contact 

information unless you provide it in the 

body of your comment. 

Electronic mail. Comments may be 

sent by e-mail to A-and-RDocket@epa.gov, Attention Docket ID 

No. OAR–2003–0053. In contrast to 

EPA’s electronic public docket, EPA’s email system is not an ‘‘anonymous 

access’’ system. If you send an e-mail 

comment directly to the Docket without 

going through EPA’s electronic public 

docket, EPA’s e-mail system 

automatically captures your e-mail 

address. The e-mail addresses that are 

automatically captured by EPA’s e-mail 

system are included as part of the 

comment that is placed in the official 

public docket, and made available in 

EPA’s electronic public docket. 

Electronic submissions will be accepted 

in WordPerfect or ASCII file format. 

Avoid the use of special characters and 

any form of encryption. 

Disk or CD ROM. You may submit 

comments on a disk or CD ROM that 

you mail to the mailing address 

identified under Docket above. These 

electronic submissions will be accepted 

in WordPerfect or ASCII file format. 

Avoid the use of special characters and 

any form of encryption.

By Mail. Send your comments to Air 

Docket (in duplicate if possible), 

Environmental Protection Agency, Mail 

code: 6102T, 1200 Pennsylvania Ave., 

4568 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

NW, Washington, DC, 20460, Attention 

Docket ID No. OAR–2003–0053. 

By Hand Delivery or Courier. Deliver 

your comments to: Air Docket, 

Environmental Protection Agency, 1301 

Constitution Avenue, NW, Room B108, 

Mail code: 6102T, Washington, DC 

20004, Attention Docket ID No. OAR–

2003–0053. Such deliveries are only 

accepted during the Docket’s normal 

hours of operation as identified above 

under Docket. 

By Facsimile. Fax your comments to 

(202) 566–1741, Attention Docket ID. 

No. OAR–2003–0053. 

How Should I Submit CBI to the 

Agency? 

Do not submit information that you 

consider to be CBI electronically 

through EPA’s electronic public docket 

or by e-mail. Send or deliver 

information identified as CBI only to the 

following address: Roberto Morales, 

U.S. EPA, Office of Air Quality Planning 

and Standards, Mail Code C404–02, 

Research Triangle Park, NC 27711, 

telephone (919) 541–0880, e-mail at 

morales.roberto@epa.gov, Attention 

Docket ID No. OAR–2003–0053. You 

may claim information that you submit 

to EPA as CBI by marking any part or 

all of that information as CBI (if you 

submit CBI on disk or CD ROM, 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 CBI). Information so 

marked will not be disclosed except in 

accordance with procedures set forth in 

40 CFR part 2. 

In addition to one complete version of 

the comment that includes any 

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 and EPA’s electronic public 

docket. If you submit the copy that does 

not contain CBI on disk or CD ROM, 

mark the outside of the disk or CD ROM 

clearly that it does not contain CBI. 

Information not marked as CBI will be 

included in the public docket and EPA’s 

electronic public docket without prior 

notice. If you have any questions about 

CBI or the procedures for claiming CBI, 

please consult the person identified in 

the FOR FURTHER INFORMATION CONTACT

section. 

What Should I Consider as I Prepare 

My Comments for EPA? 

You may find the following 

suggestions helpful for preparing your 

comments: 

1. Explain your views as clearly as 

possible. 

2. Describe any assumptions that you 

used. 

3. Provide any technical information 

and/or data you used that support your 

views. 

4. If you estimate potential burden or 

costs, explain how you arrived at your 

estimate. 

5. Provide specific examples to 

illustrate your concerns. 

6. Offer alternatives. 

7. Make sure to submit your 

comments by the comment period 

deadline identified. 

8. To ensure proper receipt by EPA, 

identify the appropriate docket 

identification number in the subject line 

on the first page of your response. It 

would also be helpful if you provided 

the name, date, and Federal Register

citation related to your comments.

Outline 

I. Background 

A. Summary of Rulemaking and Affected 

States 

B. General Background on Air Quality 

Impacts of PM2.5 and Ozone 

1. What are the Effects of Ambient PM2.5? 

2. What are the Effects of Ambient Ozone? 

3. What Other Environmental Effects Are 

Associated with SO2 and NOX, the Main 

Precursors to PM2.5 and Ozone 

Addressed in this Proposal? 

C. What is the Ambient Air Quality of 

PM2.5 and Ozone? 

1. What is the PM2.5 Ambient Air Quality? 

2. What is the Ozone Ambient Air Quality? 

D. What is the Statutory and Regulatory 

Background for Today’s Action? 

1. What are the CAA Provisions on 

Attainment of the PM2.5 and Ozone 

NAAQS? 

2. What is the NOX SIP Call? 

3. What is the Acid Rain Program and Its 

Relationship to this Proposal? 

4. What is the Regional Haze Program and 

Its Relationship to this Proposal?

5. What is the Proposed Utility Control 

Program for Air Toxics and Its 

Relationship to This Proposal? 

II. Characterization of the Origin and 

Distribution of 8-Hour Ozone and PM2.5

Air Quality Problems 

A. Ground-level Ozone 

1. Ozone Formation 

2. Spatial and Temporal Patterns of Ozone 

B. Fine Particles 

1. Characterization and Origins of Fine 

Particles 

2. Spatial and Temporal Patterns of PM2.5

and Major Components 

3. Implications for Control of Transported 

PM2.5

4. Air Quality Impacts of Regional SO2

Reductions 

III. Overview of Proposed Interstate Air 

Quality Rule 

A. Purpose of Interstate Air Quality Rule 

B. Summary of EPA’s Key Findings and 

Proposed Remedy for Interstate 

Transport 

C. Coordination of Multiple Air Quality 

Objectives in Today’s Rulemakings 

1. Linkages Between Interstate Air Quality 

and Mercury Rulemakings 

2. Linkages Between PM2.5 and 8-Hour 

Ozone Transport Requirements 

3. Linkages Between Interstate Air Quality 

Rulemaking and Section 126 Petitions 

D. Overview of How EPA Assessed 

Interstate Transport and Determined 

Remedies 

1. Assessment of Current and Future 

Nonattainment 

2. Prospects for Progress Towards 

Attainment Through Local Reductions 

a. Fine Particles 

b. Eight-hour Ozone 

3. Assessment of Transported Pollutants 

and Precursors 

a. Fine Particles 

b. Ozone 

4. Role of Interstate Transport in Future 

Nonattainment 

a. Fine Particles 

b. Eight-hour Ozone 

5. Assessment of Potential Emissions 

Reductions 

a. Identifying Highly Cost-Effective 

Emissions Reductions 

b. Timing for Submission of Transport SIPs 

c. Timing for Achieving Emissions 

Reductions 

d. Compliance Approaches and Statewide 

Emissions Budgets 

E. Request for Comment on Potential 

Applicability to Regional Haze 

F. How Will the Interstate Air Quality Rule 

Apply to the Federally Recognized 

Tribes? 

IV. Air Quality Modeling to Determine 

Future 8-Hour Ozone and PM2.5

Concentrations 

A. Introduction 

B. Ambient 8-Hour Ozone and Annual 

Average PM2.5 Design Values 

1. Eight-Hour Ozone Design Values 

2. Annual Average PM2.5 Design Values 

C. Emissions Inventories 

1. Introduction 

2. Overview of 2001 Base Year Emissions 

Inventory 

3. Overview of the 2010 and 2015 Base 

Case Emissions Inventories 

4. Procedures for Development of 

Emissions Inventories 

a. Development of Emissions Inventories 

for Electric Generating Units 

b. Development of Emissions Inventories 

for On-Road Vehicles 

c. Development of Emissions Inventories 

for Non-Road Engines 

d. Development of Emissions Inventories 

for Other Sectors 

5. Preparation of Emissions for Air Quality 

Modeling 

D. Ozone Air Quality Modeling 

1. Ozone Modeling Platform 

2. Ozone Model Performance Evaluation 

3. Projection of Future 8-Hour Ozone 

Nonattainment 

E. The PM2.5 Air Quality Modeling 

1. The PM2.5 Modeling Platform 

2. The PM2.5 Model Performance 

Evaluation 

3. Projection of Future PM2.5

Nonattainment 

F. Analysis of Locally-Applied Control 

Measures for Reducing PM2.5

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4569

1. Control Measures and Percentage 

Reductions 

2. Two Scenarios Analyzed for the 

Geographic Area Covered by Control 

Measures 

3. Results of the Two Scenarios 

4. Additional Observations on the Results 

of the Local Measures Analyses 

V. Air Quality Aspects of Significant 

Contribution for 8-Hour Ozone and 

Annual Average PM2.5 Before 

Considering Cost 

A. Introduction 

B. Significant Contribution to 8-Hour 

Ozone Before Considering Cost 

1. Findings from Non-EPA Analyses that 

Support the Need for Reductions in 

Interstate Ozone Transport 

2. Air Quality Modeling of Interstate Ozone 

Contributions 

a. Analytical Techniques for Modeling 

Interstate Contributions to 8-Hour Ozone 

Nonattainment 

b. Zero-Out Metrics 

c. Source Apportionment Metrics 

d. Evaluation of Upwind State 

Contributions to Downwind 8-Hour 

Ozone Nonattainment 

C. Significant Contribution for Annual 

Average PM2.5 Before Considering Cost 

1. Analyses of Air Quality Data that 

Support the Need to Reduce Interstate 

Transport of PM2.5

a. Spatial Gradients of Pollutant 

Concentrations 

b. Urban vs. Rural Concentrations 

c. Inter-site Correlation of PM2.5 Mass and 

Component Species 

d. Ambient Source Apportionment Studies 

2. Non-EPA Air Quality Modeling Analyses 

Relevant to PM2.5 Transport and 

Mitigation Strategies 

3. Air Quality Modeling of Interstate PM2.5

Contributions 

a. Analytical Techniques for Modeling 

Interstate Contributions to Annual 

Average PM2.5 Nonattainment 

b. Evaluation of Upwind State 

Contributions to Downwind PM2.5

Nonattainment 

VI. Emissions Control Requirements 

A. Source Categories Used for Budget 

Determinations 

1. Electric Generation Units 

2. Treatment of Cogenerators 

3. Non-EGU Boilers and Turbines 

4. Other Non-EGUs 

B. Overview of Control Requirements and 

EGU Budgets 

C. Regional Control Requirements and 

Budgets Based on a Showing of 

Significant Contribution 

1. Performance and Applicability of 

Pollution Control Technologies for EGUs 

2. Evaluation of Cost Effectiveness 

a. Cost Effectiveness of SO2 Emissions 

Reductions 

b. Cost Effectiveness of NOX Emissions 

Reductions 

c. The EPA Cost Modeling Methodology 

3. Timing, Engineering and Financial 

Factor Impacts 

a. Engineering Assessment to Determine 

Phase 1 Budgets 

b. Financial and Other Technical Issues 

Regarding Pollution Control Installation

4. Interactions with Existing Title IV 

Program 

D. Methodology for Setting SO2 and NOX

Budgets 

1. Approach for Setting Regionwide SO2

and NOX Emissions Reductions 

Requirements 

a. SO2 Budgets for EGUs 

b. NOX Budgets for EGUs 

2. State-by-State Emissions Reductions 

Requirements and EGU Budgets 

E. Budgets for Use by States Choosing to 

Control Non-EGU Source Categories 

F. Timing and Process for Setting Baseline 

Inventories and Sub-inventories 

G. Comment on Emissions Caps and 

Budget Program 

H. Budgets for Federally-Recognized Tribes 

VII. State Implementation Plan Schedules 

and Requirements 

A. State Implementation Plan Schedules 

1. State Implementation Plan Submission 

Schedule 

2. Implementation Schedule 

B. State Implementation Plan 

Requirements 

1. The Budget Approach 

2. The Emissions Reduction Approach 

3. The EPA’s Proposed Hybrid Approach 

a. Requirements if States Choose to Control 

EGUs 

b. Requirements if States Choose to Control 

Sources Other than EGUs 

VIII. Model Cap and Trade Program 

A. Application of Cap and Trade Approach 

1. Purpose of the Cap and Trade Programs 

and Model Rules 

2. Benefits of Participating in a Cap and 

Trade Program 

a. Advantages of Cap and Trade Over 

Command-and-Control 

b. Application of the Cap and Trade 

Approach in Prior Rulemakings 

i. Title IV 

ii. Ozone Transport Commission NOX

Budget Program 

iii. NOX SIP Call 

c. Regional Environmental Improvements 

Achieved Using Cap and Trade Programs 

B. Considerations and Aspects Unique to 

the SO2 Cap and Trading Program 

1. The SO2 Cap and Trade Program 

Overview 

2. Interactions with Existing Title IV Acid 

Rain SO2 Cap and Trade Program 

a. Initial Analysis 

b. Emissions Increases Prior to 

Implementation of the Proposed Rule 

c. Consideration for Emissions Shifting 

Outside the Control Region 

d. Desired Outcomes in the Design of the 

Cap and Trade Rule 

e. Discussion of Possible Solutions 

f. Proposed Approach 

i. Using Pre-2010 Banked Title IV 

Allowances in Proposed SO2 Cap and 

Trade Program 

ii. Proposed Ratios and the Phasing of the 

Caps 

3. Allowance Allocations 

a. Statewide Cap and Trade Budgets 

b. Determination of SO2 Allowance 

Allocations for EGUs not Receiving Title 

IV Allowances 

C. Consideration and Aspects Unique to 

the NOX Cap and Trade Program 

1. NOX Cap and Trade Program Overview 

2. Interactions with the NOX SIP Call Cap 

and Trade Program and the Title IV NOX

Program 

a. Geographic Scope 

b. Seasonal-to-Annual Compliance Period 

c. Revision of Existing State NOX SIP Call 

Rules 

d. Retention of Existing Title IV NOX

Emission Rate Limits 

e. The NOX Allowance Banking 

3. NOX Allocations 

4. Joining Both SO2 and NOX Cap and 

Trade Programs for States Voluntarily 

Participating 

D. Cap and Trade Program Aspects that are 

Common to Both the SO2 and NOX

Programs 

1. Applicability 

a. Core Applicability 

2. Allowance Management System, 

Compliance, Penalties, and Banking 

a. Allowance Management 

b. Compliance 

c. Penalties 

d. Banking 

3. Accountability for Affected Sources 

4. Allowance Allocation Timing 

5. Emissions Monitoring and Reporting 

E. Inter-pollutant Trading 

IX. Air Quality Modeling of Emissions 

Reductions 

A. Introduction 

B. The PM2.5 Air Quality Modeling of the 

Proposed Regional SO2 and NOX Strategy 

C. Ozone Air Quality Modeling of the 

Regional NOX Strategy 

X. Benefits of Emissions Reductions in 

Addition to the PM and Ozone NAAQS 

A. Atmospheric Deposition of Sulfur and 

Nitrogen—Impacts on Aquatic, Forest, 

and Coastal Ecosystems 

1. Acid Deposition and Acidification of 

Lakes and Streams 

2. Acid Deposition and Forest Ecosystem 

Impacts 

3. Coastal Ecosystems 

B. Human Health and Welfare Effects Due 

to Deposition of Mercury 

XI. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination with Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children from Environmental Health and 

Safety Risks 

H. Executive Order 13211: Actions that 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer 

Advancement Act 

J. Executive Order 12898: Federal Actions 

to Address Environmental Justice in 

Minority Populations and Low-Income 

Populations

4570 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

1 In today’s proposal, when we use the term 

‘‘transport’’ we mean to include the transport of 

both fine particles (PM2.5) and their precursor 

emissions and/or transport of both ozone and its 

precursor emissions.

2The OTAG was active from 1995–1997 and 

consisted of representatives from the 37 states in 

that region; the District of Columbia; EPA; and 

interested members of the public, including 

industry and environmental groups. See discussion 

below under NOX SIP Call for further information 

on OTAG.

I. Background 

A. Summary of Rulemaking and 

Affected States

The CAA contains a number of 

requirements to address nonattainment 

of the PM2.5 and the 8-hour ozone 

national ambient air quality standards 

(NAAQS), including requirements that 

States address interstate transport that 

contributes to such nonattainment.1

Based on air quality modeling, ambient 

air quality data analyses, and cost 

analyses, EPA proposes to conclude that 

emissions in certain upwind States 

result in amounts of transported fine 

particles (PM2.5), ozone, and their 

emissions precursors that significantly 

contribute to nonattainment in 

downwind States. In today’s action, we 

are proposing State implementation 

plan (SIP) requirements for the affected 

upwind States under CAA section 

110(a)(1) to meet the requirements of 

section 110(a)(2)(D). Clean Air Act 

Section 110(a)(2)(D) requires SIPs to 

contain adequate provisions to prohibit 

air pollutant emissions from sources or 

activities in those States from 

‘‘contribut[ing] significantly to 

nonattainment in,’’ a downwind State of 

the PM2.5 and ozone NAAQS. In 

particular, EPA is proposing to require 

SIP revisions in 29 States and the 

District of Columbia to ensure that SIPs 

provide for necessary regional 

reductions of emissions of SO2 and/or 

NOX, which are important precursors of 

PM2.5 (NOX and SO2) and ozone (NOX). 

Achieving these emissions reductions 

will help enable PM2.5 and ozone 

nonattainment areas in the eastern half 

of the United States to prepare 

attainment demonstrations. Moreover, 

attainment would ultimately be 

achieved in a more certain, equitable, 

and cost-effective manner than if each 

nonattainment area attempted to 

implement local emissions reductions 

alone. We are proposing to require the 

submission of SIP measures that meet 

the specified SO2 and NOX emissions 

reductions requirements within 18 

months after publication of the notice of 

final rulemaking.

The EPA has evaluated current 

scientific and technical knowledge and 

conducted a number of air quality data 

and modeling analyses regarding the 

contribution of pollutant emissions to 

interstate transport. These evaluations 

and modeling analyses are summarized 

in section II, Characterization of the 

Origin and Distribution of 8-Hour Ozone 

and PM2.5 Air Quality Problems, section 

IV, Air Quality Modeling to Determine 

Future 8-Hour Ozone and PM2.5

Concentrations, and section V, Air 

Quality Aspects of Significant 

Contribution for 8-Hour Ozone and 

Annual Average PM2.5 Before 

Considering Cost. The EPA proposes to 

find, after considering relevant 

information, that SO2 and NOX

emissions in the District of Columbia 

and the following 28 States significantly 

contribute to nonattainment in a 

downwind State with respect to the 

PM2.5 NAAQS: Alabama, Arkansas, 

Delaware, Florida, Georgia, Illinois, 

Indiana, Iowa, Kansas, Kentucky, 

Louisiana, Maryland, Massachusetts, 

Michigan, Minnesota, Mississippi, 

Missouri, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, South 

Carolina, Tennessee, Texas, Virginia, 

West Virginia, and Wisconsin. The EPA 

also proposes to find, after considering 

relevant information, that NOX

emissions in the District of Columbia 

and the following 25 States significantly 

contribute to nonattainment in a 

downwind State with respect to the 8-

hour ozone NAAQS: Alabama, 

Arkansas, Connecticut, Delaware, 

Georgia, Illinois, Indiana, Iowa, 

Kentucky, Louisiana, Maryland, 

Massachusetts, Michigan, Mississippi, 

Missouri, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, South 

Carolina, Tennessee, Virginia, West 

Virginia, and Wisconsin. In addition to 

proposing findings of significant 

contribution to nonattainment, EPA is 

proposing to assign emissions 

reductions requirements for SO2 and/or 

NOX that each of the identified States 

must meet through SIP measures.

The proposed emissions reductions 

requirements are based on controls that 

EPA has determined to be highly cost 

effective for EGUs under an optional cap 

and trade program. However, States 

have the flexibility to choose the 

measures to adopt to achieve the 

specified emissions reductions. If the 

State chooses to control EGUs, then it 

must establish a budget—that is, an 

emissions cap—for those sources. Due 

to feasibility constraints, EPA is 

proposing that the emissions reductions 

be implemented in two phases, with the 

first phase in 2010 and the second phase 

in 2015. These requirements are 

described in more detail in section VI, 

Emissions Control Requirements; 

section VII, State Implementation Plan 

Schedules and Requirements; and 

section VIII, Model Cap and Trade 

Program. 

Section VIII discusses model multiState cap and trade programs for SO2

and NOX that EPA is developing that 

States could choose to adopt to meet the 

proposed emissions reductions in a 

flexible and cost-effective way. We 

intend to propose the model trading 

programs in a future supplemental 

notice of proposed rulemaking (SNPR) 

to be issued by May 2004. We plan to 

address several additional issues in the 

SNPR. 

Sulfur dioxide and NOX are not the 

only emissions that contribute to 

interstate transport and PM2.5

nonattainment. However, EPA believes 

that given current knowledge, it is not 

appropriate at this time to specify 

emissions reduction requirements for 

direct PM2.5 emissions or organic 

precursors (e.g. volatile organic 

compounds (VOCs) or ammonia (NH3)). 

(For further discussion of EPA’s 

proposal on which pollutant emissions 

to regulate, see section III.) Therefore, 

we are not proposing new SIP 

requirements for emissions of these 

pollutants for the purpose of reducing 

the interstate transport of PM2.5. States 

may, however, need to consider 

additional reductions in some or all of 

these emissions as they develop SIPs to 

attain and maintain the PM2.5 standards. 

Similarly, for 8-hour ozone, we continue 

to rely on the conclusion of the Ozone 

Transport Assessment Group (OTAG) 

that analysis of interstate transport 

control opportunities should focus on 

NOX, rather than VOCs.2

Section III of this preamble, Overview 

of Proposed Interstate Air Quality Rule, 

explains in broad overview our 

assessment of the interstate pollution 

transport problem and our development 

of this proposal to address transport 

under the CAA. 

The requirements in this proposal are 

intended to address regional interstate 

transport of air pollution. There are 

likely more localized transport problems 

that will remain, particularly between 

contiguous urban areas located in two or 

more States. States that share an 

interstate nonattainment area are 

expected to work together in developing 

the nonattainment SIP for that area, 

reducing emissions that contribute to 

local-scale interstate transport problems. 

In this preamble, we generally refer to 

States as both the sources and receptors 

of interstate transport that contributes to 

nonattainment. We intend to refer to 

Tribal governments in a similar way. 

Clean Air Act section 301(d) recognizes 

that American Indian Tribal 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4571

governments are generally the 

appropriate authority to implement the 

CAA in Indian country. The Tribal 

Authority Rule (TAR) (63 FR 7262; 

February 12, 1998 and 59 FR 43960–

43961; August 24, 1994) discusses the 

provisions of the CAA for which it is 

appropriate to treat Tribes in a manner 

similar to States. Therefore, in this 

preamble, unless otherwise specified, 

when we discuss the role of the State in 

implementing the Interstate Air Quality 

Rule, we are also referring to the Tribes. 

In certain parts of this preamble, 

however, we ask for comments on 

addressing the special needs of the 

Tribes. Section VI provides a more 

complete discussion of this Tribal issue.

Our benefit-cost analysis concludes 

that substantial net economic benefits to 

society are likely to be achieved as a 

result of the emissions reductions 

associated with this rulemaking. The 

results detailed in section XI show that 

this rule would be highly beneficial to 

society, with annual net benefits by 

2010 of approximately $55 billion ($58 

billion annual benefits compared to 

annual social cost of approximately $3 

billion) and net annual benefits by 2015 

of $80 billion ($84 billion in benefits 

compared to annual social costs of $4 

billion). Therefore, even if the benefits 

were overestimated by as much as a 

factor of twenty, benefits would still 

exceed costs. 

B. General Background on Air Quality 

Impacts of PM2.5 and Ozone 

1. What Are the Effects of Ambient 

PM2.5? 

On July 18, 1997, we revised the 

NAAQS for particulate matter (PM) to 

add new standards for fine particles, 

using as the indicator particles with 

aerodynamic diameters smaller than a 

nominal 2.5 micrometers, termed PM2.5. 

We established health- and welfarebased (primary and secondary) annual 

and 24-hour standards for PM2.5 (62 FR 

38652). The annual standards are 15 

micrograms per cubic meter, based on 

the 3-year average of annual mean PM2.5

concentrations. The 24-hour standard is 

a level of 65 micrograms per cubic 

meter, based on the 3-year average of the 

annual 98th percentile of 24-hour 

concentrations. 

Fine particles are associated with a 

number of serious health effects 

including premature mortality, 

aggravation of respiratory and 

cardiovascular disease (as indicated by 

increased hospital admissions, 

emergency room visits, absences from 

school or work, and restricted activity 

days), lung disease, decreased lung 

function, asthma attacks, and certain 

cardiovascular problems such as heart 

attacks and cardiac arrhythmia. The 

EPA has estimated that attainment of 

the PM2.5 standards would prolong tens 

of thousands of lives and prevent tens 

of thousands of hospital admissions 

each year, as well as hundreds of 

thousands of doctor visits, absences 

from work and school, and respiratory 

illnesses in children. Individuals 

particularly sensitive to fine particle 

exposure include older adults, people 

with heart and lung disease, and 

children. Health studies have shown 

that there is no clear threshold below 

which adverse effects are not 

experienced by at least certain segments 

of the population. Thus, some 

individuals particularly sensitive to fine 

particle exposure may be adversely 

affected by fine particle concentrations 

below those for the annual and 24-hour 

standards. More detailed information on 

health effects of fine particles can be 

found on EPA’s Web site at: http://

www.epa.gov/ttn/naaqs/standards/pm/

s_pm_index.html.

At the time EPA established the 

primary standards in 1997, we also 

established welfare-based (secondary) 

standards identical to the primary 

standards. The secondary standards are 

designed to protect against major 

environmental effects caused by PM 

such as visibility impairment, soiling, 

and materials damage. 

The EPA also established the regional 

haze regulations in 1999 for the 

improvement of visual air quality in 

Class I areas which include national 

parks and wilderness areas across the 

country. 

As discussed in other sections of this 

preamble, EGUs are a major source of 

SO2 and NOX emissions, both of which 

contribute to fine particle 

concentrations. In addition, EGU NOX

emissions contribute to ozone problems, 

described in the next section. We 

believe today’s proposal will 

significantly reduce SO2 and NOX

emissions that contribute to PM2.5 and 

8-hour ozone problems described here. 

The control strategies we are proposing 

are discussed in detail in section III and 

section VI below. 

2. What Are the Effects of Ambient 

Ozone? 

On July 18, 1997, EPA promulgated 

identical revised ozone primary and 

secondary ozone standards that 

specified that the 3-year average of the 

fourth highest daily maximum 8-hour 

average ozone concentration could not 

exceed 0.08 ppm. In general, the revised 

8-hour standards are more protective of 

public health and the environment and 

more stringent than the pre-existing 1-

hour ozone standards. There are more 

areas that do not meet the 8-hour 

standard than there are that do not meet 

the 1-hour standard. Short-term (1- to 3-

hour) and prolonged (6- to 8-hour) 

exposures to ambient ozone have been 

linked to a number of adverse health 

effects. Short-term exposure to ozone 

can irritate the respiratory system, 

causing coughing, throat irritation, and 

chest pain. Ozone can reduce lung 

function and make it more difficult to 

breathe deeply. Breathing may become 

more rapid and shallow than normal, 

thereby limiting a person’s normal 

activity. Ozone also can aggravate 

asthma, leading to more asthma attacks 

that require a doctor’s attention and the 

use of additional medication. Increased 

hospital admissions and emergency 

room visits for respiratory problems 

have been associated with ambient 

ozone exposures. Longer-term ozone 

exposure can inflame and damage the 

lining of the lungs, which may lead to 

permanent changes in lung tissue and 

irreversible reductions in lung function. 

A lower quality of life may result if the 

inflammation occurs repeatedly over a 

long time period (such as months, years, 

a lifetime). 

People who are particularly 

susceptible to the effects of ozone 

include children and adults who are 

active outdoors, people with respiratory 

diseases, such as asthma, and people 

with unusual sensitivity to ozone.

In addition to causing adverse health 

effects, ozone affects vegetation and 

ecosystems, leading to reductions in 

agricultural crop and commercial forest 

yields; reduced growth and survivability 

of tree seedlings; and increased plant 

susceptibility to disease, pests, and 

other environmental stresses (e.g., harsh 

weather). In long-lived species, these 

effects may become evident only after 

several years or even decades and thus 

have the potential for long-term adverse 

impacts on forest ecosystems. Groundlevel ozone damage to the foliage of 

trees and other plants can also decrease 

the aesthetic value of ornamental 

species used in residential landscaping, 

as well as the natural beauty of our 

national parks and recreation areas. The 

economic value of some welfare losses 

due to ozone can be calculated, such as 

crop yield loss from both reduced seed 

production (e.g., soybean) and visible 

injury to some leaf crops (e.g., lettuce, 

spinach, tobacco) and visible injury to 

ornamental plants (i.e., grass, flowers, 

shrubs), while other types of welfare 

loss may not be fully quantifiable in 

economic terms (e.g., reduced aesthetic 

value of trees growing in heavily visited 

National parks). More detailed 

information on health effects of ozone 

4572 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

3EPA 454/K–03–001, August 2003.

can be found at the following EPA Web 

site: http://www.epa.gov/ttn/naaqs/

standards/ozone/s_o3_index.html.

3. What Other Environmental Effects 

Are Associated With SO2 and NOX, the 

Main Precursors to PM2.5 and Ozone 

Addressed in This Proposal? 

This proposed action will result in 

benefits in addition to the enumerated 

human health and welfare benefits 

resulting from reductions in ambient 

levels of PM and ozone. Reductions in 

NOX and SO2 will contribute to 

substantial visibility improvements in 

many parts of the Eastern U.S. where 

people live, work, and recreate, 

including Federal Class I areas such as 

the Great Smoky Mountains. Reductions 

in these pollutants will also reduce 

acidification and eutrophication of 

water bodies in the region. In addition, 

reduced mercury emissions are 

anticipated as a result of this proposal. 

Reduced mercury emissions will lessen 

mercury contamination in lakes and 

thereby potentially decrease both 

human and wildlife exposure. 

C. What Is the Ambient Air Quality of 

PM2.5 and Ozone? 

1. What Is the PM2.5 Ambient Air 

Quality? 

The PM2.5 ambient air quality 

monitoring for the 2000–2002 period 

shows that areas violating the standards 

are located across much of the eastern 

half of the United States and in parts of 

California. Based on these data, 120 

counties have at least one monitor that 

violates either the annual or the 24-hour 

PM2.5 standard. Most areas violate only 

the annual standard; a small number of 

areas violate both the annual and 24-

hour standards; and no areas violate just 

the 24-hour standard. The population of 

these 120 counties totals 65 million 

people. 

Only two States in the western half of 

the U.S., California and Montana, have 

counties that exceed the PM2.5

standards. On the other hand, in the 

eastern half of the U.S., 175 sites in 106 

counties exceeded the annual PM2.5

standard of 15.0 micrograms per cubic 

meter (μg/m3) over the 3-year period 

from 2000 to 2002 and 395 sites meet 

the annual standard. No sites in the 

eastern half of the United States exceed 

the daily PM2.5 standard of 65 μg/m3. 

The 106 violating counties are located 

in a distinct region made up of 19 States 

(plus the District of Columbia), 

extending from St. Clair County, Illinois 

(East St. Louis), the western-most 

violating county, to New Haven, 

Connecticut, the eastern-most violating 

county, and including the following 

States located in between: Illinois, 

Michigan, Indiana, Ohio, Pennsylvania, 

New York, New Jersey, Kentucky, West 

Virginia, Virginia, Maryland, Delaware, 

Tennessee, North Carolina, Alabama, 

Georgia, and South Carolina.

Because interstate transport is not 

thought to be a main contributor to 

exceedances of the PM2.5 standards in 

California or Montana, today’s proposal 

is focused only on the PM2.5 monitoring 

sites in the Eastern U.S. 

Speciated ambient data, which 

measures the major components of 

PM2.5 (sulfate, nitrate, total 

carbonaceous mass, and crustal 

material) are invaluable in 

understanding the nature and extent of 

the PM2.5 problem. Speciated data from 

the Interagency Monitoring of Protected 

Visual Environments (IMPROVE), the 

Clean Air Status and Trends Network 

(CASTNET), both predominantly rural 

networks, along with EPA’s Speciation 

Network, show that ambient 

concentrations of PM2.5 species have 

distinctive seasonal and geographic 

patterns within the eastern United 

States. 

Mass associated with ammonium 

sulfate concentrations make up a 

significant portion (25 to 50 percent) of 

the annual average PM2.5 mass. The 

largest sulfate contributions to PM2.5

mass occur during the summer season 

mainly within a large multi-State area 

centered near Tennessee and Southwest 

Virginia. Sulfate concentrations during 

the winter season are relatively low. 

Concentrations of ammonium nitrate 

particles typically comprise less than 25 

percent of the annual average PM2.5

mass. Nitrates tend to be highest during 

the winter months over large portions of 

the Midwest including northern Ohio, 

Indiana, Michigan, and eastern 

Wisconsin. Relatively higher winter 

concentrations are also reported within 

and near major urban areas including 

metropolitan New York, Philadelphia, 

and the Baltimore-Washington, DC area. 

Nitrate concentrations reported in 

southern States represent a somewhat 

smaller portion of the PM2.5 mass, 

primarily due to warmer temperatures 

that are less conducive to nitrate 

formation and chemical stability. 

Total carbon also contributes a 

significant amount of mass to annual 

PM2.5 levels (25 to 50 percent) but does 

not exhibit strong seasonal or regional 

concentration patterns. As with nitrate, 

total carbon concentrations are higher in 

and near urban areas. 

Concentrations of the last PM2.5

component, crustal, are relatively small 

(less than 10 percent of PM2.5 mass) and 

do not exhibit strong regional or 

seasonal trends. (For further discussion 

on the science of PM2.5 formation, see 

section II; for further discussion of 

EPA’s proposal on which pollutant 

emissions to regulate, see section III.) 

2. What Is the Ozone Ambient Air 

Quality? 

Almost all areas of the country have 

experienced some progress in lowering 

ozone concentrations over the last 20 

years. As reported in the EPA’s report, 

‘‘Latest Findings on National Air 

Quality: 2002 Status and Trends,’’ 3

national average levels of 1-hour ozone 

improved by 22 percent between 1983 

and 2002 while 8-hour levels improved 

by 14 percent over the same time 

period. The Northeast and Pacific 

Southwest (particularly Los Angeles) 

have shown the greatest 20-year 

improvement. Even so, on balance, 

ozone has exhibited the slowest 

progress of the six major pollutants 

tracked nationally. During the most 

recent 10 years, ozone levels have been 

relatively constant reflecting little if any 

air quality improvement. During the 

period from 1993 to 2002, additional 

control requirements have reduced 

emissions of the two major ozone 

precursors, although at different rates. 

Emissions of VOCs were reduced by 25 

percent from 1993 levels, while 

emissions of NOX declined by only 11 

percent. During the same time period, 

gross domestic product increased by 57 

percent and vehicle miles traveled 

increased by 23 percent.

Despite the progress made nationally 

since 1970, ozone remains a significant 

public health concern. Presently, wide 

geographic areas, including most of the 

nation’s major population centers, 

experience unhealthy ozone levels—

concentrations exceeding the NAAQS 

for 8-hour ozone. These areas include 

much of the eastern half of the United 

States and large areas of California. 

More specifically, 297 counties with a 

total population of over 115 million 

people currently violate the 8-hour 

ozone standard. 

Existing regulatory requirements (e.g., 

Federal motor vehicle standards, EPA’s 

regional NOX rule known as the NOX

SIP Call, and local measures already 

adopted under the CAA) are expected to 

reduce over time the geographic extent 

of the nation’s 8-hour ozone problem. 

However, the number of people living in 

areas with unhealthy ozone levels will 

remain significant for the foreseeable 

future because existing control programs 

alone will not eliminate unhealthy 

ozone levels in some of the nation’s 

largest population centers. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4573

4For a more detailed background discussion, see

67 FR 8396; February 22, 2002.

5The jurisdictions are: Alabama, Connecticut, 

Delaware, District of Columbia, Georgia, Illinois, 

Indiana, Kentucky, Maryland, Massachusetts, 

Michigan, Missouri, New Jersey, New York, North 

Carolina, Ohio, Pennsylvania, Rhode Island, South 

Carolina, Tennessee, Virginia, West Virginia, and 

Wisconsin.

6See ‘‘Finding of Significant Contribution and 

Rulemaking for Certain States in the Ozone 

Transport Assessment Group Region for Purposes of 

Reducing Regional Transport of Ozone; Final Rule,’’

63 FR 57,356 (October 27, 1998). The EPA also 

published two Technical Amendments revising the 

NOx SIP Call emission reduction requirements. (64 

FR 26,298; May 14, 1999 and 65 FR 11222; March 

2, 2000).

7See Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 

2000), cert. denied, 532 U.S. 904 (2001) (NOx SIP 

call) and Appalachian Power v. EPA, 251 F.3d 1026 

(D.C. Cir. 2001) (technical amendments).

D. What Is the Statutory and Regulatory 

Background for Today’s Action? 

1. What are the CAA Provisions on 

Attainment of the PM2.5 and Ozone 

NAAQS?

The CAA, which was extensively 

amended by Congress in 1990, contains 

numerous State planning and 

attainment requirements associated with 

the PM and ozone NAAQS. In 1997, 

EPA revised the NAAQS for PM to add 

new annual average and 24–hour 

standards for fine particles, using PM2.5

as the indicator (62 FR 38652). At the 

same time, EPA issued its final action to 

revise the NAAQS for ozone (62 FR 

38856) to establish new 8–hour 

standards. These standards were subject 

to litigation, which delayed 

implementation. The litigation was 

sufficiently resolved in 2001 to permit 

the EPA and States to begin the process 

of implementing the new PM2.5 and 8–

hour ozone standards. See Whitman v. 

American Trucking Ass’n., 121 S.Ct. 903 

(2001). 

Following promulgation of new 

NAAQS, the CAA requires all areas, 

regardless of their designation as 

attainment, nonattainment, or 

unclassifiable, to submit SIPs containing 

provisions specified under section 

110(a)(2). This includes provisions to 

address the following required SIP 

elements: emission limits and other 

control measures; provisions for 

meeting nonattainment requirements; 

ambient air quality monitoring/data 

system; program for enforcement of 

control measures; measures to address 

interstate transport; provisions for 

adequate funding, personnel, and legal 

authority for implementing the SIP; 

stationary source monitoring system; 

authority to implement the emergency 

episode provisions in their SIPs; 

provisions for SIP revision due to 

NAAQS changes or findings of 

inadequacy; consultation requirements 

with local governments and land 

managers; requirement to meet 

applicable requirements of part C 

related to prevention of significant 

deterioration and visibility protection; 

air quality modeling/data; stationary 

source permitting fees; and provisions 

for consultation and participation by 

affected local entities affected by the 

SIP. In addition, SIPs for nonattainment 

areas are generally required to include 

additional emissions controls providing 

for attainment of the NAAQS. 

Under subpart 1 of part D, the SIPs 

must include, but are not limited to, the 

following elements: (1) Reasonably 

available control measures (RACM) and 

reasonably available control technology 

(RACT) control measures, (2) measures 

to assure reasonable further progress 

(RFP), (3) an accurate and 

comprehensive inventory of actual 

emissions for all sources of the relevant 

pollutant in the nonattainment area, (4) 

enforceable emissions limits for 

stationary sources, (5) permits for new 

and modified major stationary sources, 

(6) measures for new source review 

(NSR), and (7) contingency measures 

which should be ready to be 

implemented without further action 

from the State or EPA. 

Section 110(a)(2)(D) provides a tool 

for addressing the problem of 

transported pollution. This provision 

applies to all SIPs for each pollutant 

covered by a NAAQS and to all areas 

regardless of their attainment 

designation. Under section 110(a)(2)(D) 

a SIP must contain adequate provisions 

prohibiting sources in the State from 

emitting air pollutants in amounts that 

will contribute significantly to 

nonattainment in one or more 

downwind States.

The CAA section 110(k)(5) authorizes 

EPA to find that a SIP is substantially 

inadequate to meet any CAA 

requirement. If EPA makes such a 

finding, it must require the State to 

submit, within a specified period, a SIP 

revision to correct the inadequacy. This 

is generally known as a ‘‘SIP call.’’ In 

1998, EPA used this authority to issue 

the NOx SIP Call, discussed below, to 

require States to revise their SIPs to 

include measures to reduce NOx

emissions that were significantly 

contributing to ozone nonattainment 

problems in downwind States. 

2. What Is the NOx SIP Call? 4

In the early 1990’s, EPA recognized 

that ozone transport played an 

important role in preventing downwind 

areas from developing attainment 

demonstrations. In response to a 

recommendation by the Environmental 

Council of States, EPA formed a 

national work group to assess and 

attempt to develop consensus solutions 

to the problem of interstate transport of 

ozone and its precursors in the eastern 

half of the country. This work group, the 

Ozone Transport Assessment Group 

(OTAG), which was active from 1995–

1997, consisted of representatives from 

the 37 States in that region; the District 

of Columbia; EPA; and interested 

members of the public, including 

industry and environmental groups. The 

OTAG completed the most 

comprehensive analysis of ozone 

transport that had ever been conducted, 

developing technical data, including upto-date inventories and state-of-the-art 

air quality modeling, to quantify and 

identify the sources of interstate ozone 

transport. The OTAG concluded that 

regional NOx emissions reductions are 

effective in producing ozone benefits, 

while VOC controls are effective in 

reducing ozone locally and are most 

advantageous to urban nonattainment 

areas. 

In 1998, EPA promulgated a rule, 

based in part on the work by OTAG, 

determining that 22 States 5 and the 

District of Columbia in the eastern half 

of the country significantly contribute to 

1-hour and 8-hour ozone nonattainment 

problems in downwind States.6 This 

rule, generally known as the NOx SIP 

Call, required those jurisdictions to 

revise their SIPs to include NOx control 

measures to mitigate the significant 

ozone transport. The EPA determined 

the emissions reductions requirements 

by projecting NOx emissions to 2007 for 

all source categories and then reducing 

those emissions through controls that 

EPA determined to be highly cost 

effective. The affected States were 

required to submit SIPs providing the 

resulting amounts of emissions 

reductions.

Under the NOx SIP Call, States have 

the flexibility to determine the mix of 

controls to meet their emissions 

reductions requirements. However, the 

rule provides that if the SIP controls 

EGUs, then the SIP must establish a 

budget, or cap, for EGUs. The EPA 

recommended that each State authorize 

a trading program for NOx emissions 

from EGUs. We developed a model cap 

and trade program that States could 

voluntarily choose to adopt. 

In response to litigation over EPA’s 

final NOx SIP Call rule, the U.S. Court 

of Appeals for the District of Columbia 

Circuit issued two decisions concerning 

the NOx SIP Call and its technical 

amendments.7 The Court decisions 

generally upheld the NOx SIP Call and 

technical amendments, including EPA’s 

4574 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

8U.S. Environmental Protection Agency, EPA 

Acid Rain Program: 2002 Progress Report (EPA 

430–R–03–011), November 2003. (Available at: 

http://www.epa.gov/airmarkets/cmprpt/arp02/

2002report.pdf)

9See, e.g., U.S. EPA, National Center for 

Environmental Assessment, Office of Research and 

Development, Research Triangle Park, NC, Air 

Quality Criteria for Particulate Matter, EPA/600/P–

95/001bF, April 1996.

10H.R. Rep. No. 95–294 at 204 (1977).

11National Park Service, Air Quality in the 

National Parks: A Summary of Findings from the 

National Park Service Air Quality Research and 

Monitoring Program. Natural Resources Report 88–

1. Denver CO, July 1988.

12 64 FR 35714, July 1, 1999.

interpretation of the definition of 

‘‘contribute significantly’’ under CAA 

section 110(a)(2)(D). The litigation over 

the NOx SIP Call coincided with the 

litigation over the 8-hour NAAQS. 

Because of the uncertainty caused by 

the litigation on the 8-hour NAAQS, 

EPA stayed the portion of the NOx SIP 

Call based on the 8-hour NAAQS (65 FR 

56245, September 18, 2000). Therefore, 

for the most part, the Court did not 

address NOx SIP Call requirements 

under the 8-hour ozone NAAQS.

As in the NOx SIP Call, in today’s 

action EPA is exercising its Federal role 

to ensure States work in a coordinated 

way to solve regional pollution 

transport problems. Today’s action 

follows the NOx SIP Call approach in 

many ways. 

3. What Is the Acid Rain Program and 

Its Relationship to This Proposal?

Title IV of the CAA Amendments of 

1990 established the Acid Rain Program 

to address the deposition of acidic 

particles and gases. These particles and 

gases are largely the result of SO2 and 

NOx emissions from power plants that 

are transported over long distances in 

the atmosphere. In the environment, 

acid deposition causes soils and water 

bodies to acidify, making the water 

unsuitable for some fish and other 

wildlife. Acid deposition also damages 

forest soils by stripping soil nutrients, as 

well as damaging some sensitive tree 

species including maple and pine trees, 

particularly at high elevations. It speeds 

the decay of buildings, statues, and 

sculptures that are part of our national 

heritage. The nitrogen portion of acid 

deposition contributes to eutrophication 

in coastal ecosystems, the symptoms of 

which include algal blooms (some of 

which may be toxic), fish kills, and loss 

of plant and animal diversity. Finally, 

acidification of lakes and streams can 

increase the amount of methyl mercury 

available in aquatic systems. Most 

exposure to mercury results from eating 

contaminated fish. 

The Acid Rain Program requires a 

phased reduction of SO2 (and, to a lesser 

extent, NOX) emissions from power 

generators that sell electricity. Larger 

EGUs were covered in 1995 with 

additional generators being added in 

2000. Acid Rain Program affected 

sources would likely be affected by 

today’s action, which proposes to 

require additional cost-effective SO2 and 

NOX reductions from large EGUs. 

The Acid Rain Program utilizes a 

market-based cap and trade approach to 

require power plants to reduce SO2

emissions to 50 percent of the 1980 

emission levels. At full implementation 

after 2010, emissions will be limited 

(i.e., ‘‘capped’’) to 8.95 million tons in 

the contiguous United States. Individual 

existing units are directly allocated their 

share of the total emissions 

allowances—each allowance is an 

authorization to emit a ton of SO2—in 

perpetuity. New units are not allocated 

allowances. Today’s rule builds off of 

the Acid Rain cap and trade program 

and allows sources to use SO2

allowances to meet the proposed 

emissions caps. This effectively reduces 

the national cap on SO2 emissions. 

The Acid Rain Program has achieved 

major SO2 emissions reductions, and 

associated air quality improvements, 

quickly and cost effectively. In 2002, 

SO2 emissions from power plants were 

10.2 million tons, 41 percent lower than 

1980.8 These emissions reductions have 

translated into substantial reductions in 

acid deposition, allowing lakes and 

streams in the Northeast to begin 

recovering from decades of acid rain. 

Cap and trade under the Acid Rain 

Program has created financial incentives 

for electricity generators to look for new 

and low-cost ways to reduce emissions, 

and improve the effectiveness of 

pollution control equipment, at costs 

much lower than predicted. The 

Program’s cap on emissions, its 

requirement that excess emissions be 

offset with allowances (with the 

potential for fines and civil 

prosecution), and its stringent emissions 

monitoring and reporting requirements 

ensure that environmental goals are 

achieved and sustained, while allowing 

for flexible compliance strategies which 

take advantage of trading and banking. 

The level of compliance under the Acid 

Rain Program continues to be 

uncommonly high with over 99 percent 

of the affected sources holding sufficient 

allowances by the annual compliance 

deadline. Even this handful of noncompliant sources did not compromise 

the integrity of the cap because each ton 

emitted in excess of allowances must be 

automatically offset.

Title IV also specifies a two-part, ratebased strategy to reduce NOX emissions 

from coal-fired electric power plants. 

Beginning in 1996 with larger units, the 

Acid Rain Program included smaller 

EGUs and required additional 

reductions from the larger units in 2000. 

By basing the required levels of NOX

reductions on commercially available 

combustion controls, title IV has 

reduced NOX emissions to 2.1 million 

tons per year beginning in 2000. 

Utilities have the flexibility to comply 

with the rule by: (1) Meeting the 

standard annual emissions limitations; 

(2) averaging the emissions rates of two 

or more boilers; or (3) if a utility cannot 

meet the standard emission limit, 

applying for a less stringent alternative 

emission limit (AEL) based upon its 

unique application of NOx emissions 

control technology on which the rule is 

based.

4. What Is the Regional Haze Program 

and Its Relationship to This Proposal? 

Regional haze is visibility impairment 

that is caused by the same types of 

sources likely to be affected by this 

proposed rule. These types of sources 

emit fine particles and their precursors, 

and they are located across a broad 

geographic area.9 In 1977, in the initial 

visibility protection provisions of the 

CAA, Congress specifically recognized 

that the ‘‘visibility problem is caused 

primarily by emission into the 

atmosphere of SO2, oxides of nitrogen, 

and particulate matter, especially fine 

particulate matter, from inadequate[ly] 

controlled sources.’’ 10 The fine 

particulate matter, or PM2.5, that impairs 

visibility by scattering and absorbing 

light also causes serious health effects 

and mortality in humans discussed 

earlier in this section. Data from the 

existing visibility monitoring network 

show that visibility impairment caused 

by air pollution occurs virtually all of 

the time at most national park and 

wilderness area monitoring stations.11

Under the 1999 Regional Haze Rule,12

States are required to set periodic goals 

for improving visibility in the 156 Class 

I areas, and to adopt long-term strategies 

to meet the goal of returning visibility 

in these areas to natural conditions (see

40 CFR part 81, subpart D). Today’s 

proposal will reduce SO2 and NOX

emissions in 29 States, assisting those 

States and their neighbors in making 

progress toward their visibility goals.

5. What Is the Proposed Utility Control 

Program for Air Toxics and Its 

Relationship to This Proposal? 

Today’s interstate air quality proposal 

affecting SO2 and NOX emissions is 

related to a proposal signed on 

December 15, 2003 to regulate mercury 

from certain types of EGU’s using the 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4575

13Ozone Transport Assessment Group, OTAG 

Final Report, 1997. 14NARSTO, An Assessment of Tropospheric 

Ozone Pollution—A North American Perspective,

July 2000. 15National Research Council, Rethinking the 

Ozone Problem in Urban and Regional Air 

Pollution, 1991. 

16NARSTO, An Assessment of Tropospheric 

Ozone Pollution—A North American Perspective,

July 2000.

17U.S. EPA, Latest Findings on National Air 

Quality, August 2003.

maximum achievable control 

technology (MACT) provisions of 

section 112 of the CAA or using the 

performance standards provisions under 

section 111 of the CAA. 

The EPA believes that a carefully 

designed multi-pollutant approach—a 

program designed to control NOX, SO2, 

and mercury at the same time—is the 

most effective way to reduce emissions 

from electric utilities. One key feature of 

this approach is the interrelationship of 

the timing and cap levels for SO2, NOX, 

and mercury. Today, we know that 

electric utilities can reduce their 

emissions of all three pollutants by 

installing flue gas desulfurization (FGD) 

(which controls SO2 and mercury 

emissions) and selective catalytic 

reduction (SCR) (which controls NOX

and mercury). We have designed the 

interstate transport proposal and the 

mercury section 111 proposal to take 

advantage of the combined emissions 

reductions that these technologies 

provide. Taken together, these proposals 

would coordinate emissions reductions 

from electric utilities to achieve 

necessary health protections cost 

effectively. 

II. Characterization of the Origin and 

Distribution of 8-Hour Ozone and PM2.5

Air Quality Problems 

This section presents a simplified 

account of the occurrence, formation, 

and origins of ozone and PM2.5, as well 

as an introduction to certain relevant 

scientific and technical terms and 

concepts that are used in the remainder 

of this proposal. It also provides 

scientific and technical insights and 

experiences relevant to formulating 

control approaches for reducing the 

contribution of transport to these air 

quality problems.

A. Ground-level Ozone 

1. Ozone Formation 

Ozone is formed by natural processes 

at high altitudes, in the stratosphere, 

where it serves as an effective shield 

against penetration of harmful solar 

UV–B radiation to the ground. The 

ozone present at ground level as a 

principal component of photochemical 

smog is formed in sunlit conditions 

through atmospheric reactions of two 

main classes of precursor compounds: 

VOCs and NOX (mainly NO and NO2). 

The term ‘‘VOC’’ includes many classes 

of compounds that possess a wide range 

of chemical properties and atmospheric 

lifetimes, which helps determine their 

relative importance in forming ozone. 

Sources of VOCs include man-made 

sources such as motor vehicles, 

chemical plants, refineries, and many 

consumer products, but also natural 

emissions from vegetation. Nitrogen 

oxides are emitted by motor vehicles, 

power plants, and other combustion 

sources, with lesser amounts from 

natural processes including lightning 

and soils. Key aspects of current and 

projected inventories for NOX and VOC 

are summarized in section IV of this 

proposal and EPA Web sites (e.g.,

http://www.epa.gov/ttn/chief). 

The relative importance of NOX and 

VOC in ozone formation and control 

varies with location- and time-specific 

factors, including the relative amounts 

of VOC and NOX present. In rural areas 

with high concentrations of VOC from 

biogenic sources, ozone formation and 

control is governed by NOX. In some 

urban core situations, NOX

concentrations can be high enough 

relative to VOC to suppress ozone 

formation locally, but still contribute to 

increased ozone downwind from the 

city. In such situations, VOC reductions 

are most effective at reducing ozone 

within the urban environment and 

immediately downwind. 

The formation of ozone increases with 

temperature and sunlight, which is one 

reason ozone levels are higher during 

the summer. Increased temperature 

increases emissions of volatile manmade and biogenic organics and can 

indirectly increase NOX as well (e.g., 

increased electricity generation for air 

conditioning). Summertime conditions 

also bring increased episodes of largescale stagnation, which promote the 

build-up of direct emissions and 

pollutants formed through atmospheric 

reactions over large regions. The most 

recent authoritative assessments of 

ozone control approaches13 14 have 

concluded that, for reducing regional 

scale ozone transport, a NOX control 

strategy would be most effective, 

whereas VOC reductions are most 

effective in more dense urbanized areas.

2. Spatial and Temporal Patterns of 

Ozone 

Studies conducted in the 1970’s 

established that ozone occurs on a 

regional scale (i.e. 1000’s of kilometers) 

over much of the Eastern U.S., with 

elevated concentrations occurring in 

rural as well as metropolitan areas.15 16

While progress has been made in 

reducing ozone in many urban areas, the 

Eastern U.S. continues to experience 

elevated regional scale ozone episodes 

in the extended summer ozone season.

Regional 8-hour ozone levels are 

highest in the Northeast and MidAtlantic areas with peak 2002 (3-year 

average of the 4th highest value for all 

sites in the region) ranging from 0.097 

to 0.099 parts per million (ppm).17 The 

Midwest and Southeast States have 

slightly lower peak values (but still 

above the 8-hour standard in many 

urban areas) with 2002 regional averages 

ranging from 0.083 to 0.090 ppm. 

Regional-scale ozone levels in other 

regions of the country are generally 

lower, with 2002 regional averages 

ranging from 0.059 to 0.082 ppm. 

Nevertheless, some of the highest urban 

8-hour ozone levels in the nation occur 

in southern and central California and 

the Houston area.

B. Fine Particles 

1. Characterization and Origins of Fine 

Particles 

Particulate matter is a chemically and 

physically diverse mixture of discrete 

particles and droplets. It exists in the air 

in a range of particle sizes, from 

submicrometer to well above 30 

micrometers (μm). Most of the mass of 

particles is distributed in two size 

modes that are termed fine and coarse 

particles. Although there is some 

overlap at the division of the modes (1 

to 3 μm), fine and coarse particles 

generally have different origins, source 

types, chemical composition, and 

atmospheric transport and removal 

processes. In particular, because of their 

small size and mechanisms of 

formation, fine particles can be created 

and transported substantial distances 

(hundreds to over 1000 km) from 

emission sources. 

As noted above, EPA has established 

NAAQS for fine particles, which are 

defined as those smaller than a nominal 

2.5 μm (aerodynamic diameter) or PM2.5. 

Standards also exist for particles smaller 

than a nominal 10 μm aerodynamic 

diameter (or PM10) which include both 

fine particles and inhalable coarse mode 

particles. For reasons summarized in 

section III below, today’s proposal 

focuses on reducing significant 

transport of PM2.5 as it affects 

attainment of the annual standards. 

Fine particles can be directly emitted 

from sources or, like ozone, can be 

formed in the atmosphere from 

precursor gases. Directly emitted 

particles are often termed ‘‘primary’’

particles, while those formed in the 

4576 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

18These terms used in the context of atmospheric 

science should not be confused with similar terms 

that are used in section 109 of the CAA to 

distinguish standards that are intended to protect 

public health (primary) from those that protect 

public welfare (secondary).

19 Grosjean, D., Seinfeld, J.H., Parameterization of 

the formation potential of secondary organic 

aerosols, Atmospheric Environment 23, 1733–1747, 

1989.

20U.S. EPA, National Center for Environmental 

Assessment, Air Quality Criteria for Particulate 

Matter, 4th External Review Draft. June 2003. 21NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003. 22U.S. EPA, Review of the National Ambient Air 

Quality Standards for Particulate Matter: Policy 

Assessment of Scientific and Technical Information 

OAQPS Staff Paper—First Draft. August 2003. 23NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003.

24 V. Rao, N. Frank, A. Rush, F. Dimmick, 

Chemical Speciation of PM2.5 in Urban and Rural 

Areas, In the Proceedings of the Air & Waste 

Management Association Symposium on Air 

Quality Measurement Methods and Technology, 

San Francisco, on November 13–15, 2002.

atmosphere are called ‘‘secondary’’

particles.18 The most common source of 

directly emitted PM2.5 is incomplete 

combustion of fuels containing carbon 

(fossil or biomass), which produces 

carbonaceous particles consisting of a 

variety of organic substances and black 

carbon (soot), as well as gaseous carbon 

monoxide, VOCs and NOX. Certain high 

energy industrial processes also emit 

primary PM2.5. Examples of direct PM2.5

sources include diesel and gasoline 

vehicles, open burning, residential 

wood burning, forest fires, power 

generation, and industrial metals 

production and processing.

The major gaseous precursors of 

secondary PM2.5 include SO2, NOX, 

certain VOCs and NH3. The SO2 and 

NOX form, respectively, sulfuric and 

nitric acids, which then react with 

ammonia to form various sulfate and 

nitrate compounds. At typical 

summertime humidities in the East, 

these substances absorb water and the 

particles exist as tiny droplets. 

Ammonia generally would not form 

atmospheric particles in the absence of 

acidic sulfates and nitrates. Certain 

reactive VOCs of relatively high 

molecular weight (e.g., toluene, xylenes 

in gasoline) can be oxidized to form 

secondary organic aerosol particles 

(SOA) in the same kinds of 

photochemical processes that produce 

ozone.

The major sources of secondary PM2.5

forming gases (SO2, NOX, certain VOCs, 

NH3) include nearly every source 

category of air pollutants. Major SO2

sources in the U.S. include coal-fired 

power plants and industrial boilers and 

smelters. Major NOX sources were 

summarized in subsection 1 (ozone) 

above. Significant man-made sources of 

organic PM precursors (particularly 

aromatic compounds 19) include motor 

vehicle fuels, solvents, petrochemical 

facilities, diesel and gasoline vehicle 

emissions, and biogenic emissions from 

trees. Ammonia is emitted from 

numerous livestock and other 

agricultural activities and natural 

processes in soil, but smaller source 

categories may be important in urban 

areas.

Secondary formation of PM2.5

involves complex processes that depend 

on factors such as the amounts of 

needed precursor gases; the 

concentrations of other reactive species 

such as ozone (O3), hydroxyl radicals 

(OH¥), or hydrogen peroxide (H2O2); 

atmospheric conditions including solar 

radiation, temperature and relative 

humidity (RH); and the interactions of 

precursors and pre-existing particles 

with cloud or fog droplets or in the 

liquid film on solid particles. 

Significantly, these processes indicate 

an important link between PM2.5 and the 

pollutants and sources that form ozone. 

More complete discussions of the 

formation and characteristics of 

secondary particles can be found in the 

U.S. EPA Criteria Document,20 and in 

the recent NARSTO Fine Particle 

Assessment.21 More complete 

discussions of the characteristics and 

sources of both primary and secondary 

particles can be found in the U.S. EPA 

Staff Paper on Review of the National 

Ambient Air Quality Standards for 

Particulate Matter.22

2. Spatial and Temporal Patterns of 

PM2.5 and Major Components

As noted in section I above, the most 

recent PM2.5 monitoring data (2000–

2002) show numerous counties in 

violation of the annual standards across 

much of the Eastern U.S., as well as in 

southern and central California. A major 

reason for the high values in eastern 

urban areas is the regional contributions 

from sources distant to these areas.23

This is illustrated by comparing recent 

PM2.5 data from the EPA Speciation 

Network (urban sites) and the IMPROVE 

Network (non-urban sites). A tabular 

summary comparing these urban and 

rural ambient data is included in the Air 

Quality Data Analysis Technical 

Support Document. This comparison 

suggests that in the East, rural regional 

transport contributes well over half of 

the PM2.5 observed in urban areas.

The EPA Speciation Network and 

IMPROVE data also permits comparison 

of the regional contribution of the major 

components that comprise PM2.5. The 

major chemical compounds/classes 

typically measured or estimated include 

sulfate, and nitrate, ammonium 

(estimated from sulfate and nitrate in 

IMPROVE), total carbonaceous materials 

(TCM), including black carbon and 

estimated organic carbon, and crustalrelated materials. The crustal materials 

reflect intrusion of the smallest particles 

originating in the coarse mode as well 

as a number of fine mode metals and 

other elements present in small 

amounts. 

Nationally, the most recent urban 

PM2.5 composition data show a 

significant contribution of carbonaceous 

material at all sites, with sulfates higher 

in the East and nitrates higher in the 

West. Crustal material is typically less 

than 5 to 10 percent of the total. 

Focusing on the rural eastern sites 

representative of the regional 

contribution, sulfates and associated 

ammonium are the largest fraction, 

followed by carbonaceous material. 

Nitrates are also a significant 

contributor to PM2.5 in the more 

northern areas of the Eastern U.S., 

especially in the industrial Midwest 

(about 20 percent). 

Rao and Frank 24 (2003) have 

compared the concentrations of sulfates 

and carbonaceous particles for specific 

pairs of urban and nearby non-urban 

sites. In the East, sulfate at urban 

monitoring locations is only slightly 

higher than at nearby non-urban sites. In 

contrast, carbonaceous material at urban 

sites is significantly higher than at the 

non-urban sites. The similarity of urban 

and rural sulfates suggests that ambient 

sulfate is present on a regional scale and 

that most urban sulfate is likely 

associated with regional transport. On 

the other hand, urban carbonaceous 

material appears to have both a regional 

and an urban component. The much 

higher concentrations in urban areas 

indicate the importance of local sources. 

Detailed source apportionment studies 

discussed in section V below suggest 

that mobile and other combustion 

sources, which are much more 

concentrated in urban areas, may 

explain much of the elevated urban 

carbon concentrations.

Seasonal variations in PM2.5 and 

components provide useful insights into 

the relative importance of various 

sources and atmospheric processes. In 

the East, rural PM2.5 concentrations are 

usually significantly higher in the 

summertime than in the winter. In large 

urban areas, however, summer/winter 

differences are smaller, and winter 

peaks may be higher. More specifically, 

PM2.5 concentrations in urban areas in 

the Northeast, industrial Midwest, and 

upper Midwest regions peak both in the 

winter and in the summer and are 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4577

25NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003.

26NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003. 

27Blanchard and Hidy. J., Effects of Changes in 

Sulfate, Ammonia, and Nitric Acid on Particulate 

Nitrate Concentrations in the Southeastern United 

States, Air & Waste Manage. Assoc. 53:283–290. 

2003.

28The marginal effectiveness of reducing 

ammonia on PM2.5 is examined in West, J. J., A. S. 

Ansari, and S. N. Pandis, Marginal PM 2.5: nonlinear 

aerosol mass response to sulfate reductions in the 

eastern U.S., Journal Air & Waste Management 

Assoc., 49(12): 1415–1424, 1999.

29NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003.

30 Jang, M.; Czoschke, N. M.; Lee, S.; Kamens, R. 

M., Heterogeneous Atmospheric Aerosol Production 

by Acid-Catalyzed Particle Phase Reactions,

Science, 2002, 298, 814–817.

31Battye, W., V. P. Aneja, and P. A. Roelle, 

Evaluation and improvement of ammonia 

emissions inventories, Atmospheric Environment,

2003, 37, 3873–3883.

32 Jang, M.; Czoschke, N. M.; Lee, S.; Kamens, R. 

M., Heterogeneous Atmospheric Aerosol Production 

by Acid-Catalyzed Particle Phase Reactions,

Science, 2002, 298, 814–817.

lowest in the spring and fall. The 

concentrations in the peak seasons in 

the Northeast and industrial Midwest 

are 5 μg/m3 or more higher in 

concentration than the low seasons. The 

peak seasons in the upper Midwest are 

less than 5 μg/m3 higher than the low 

seasons. In the Southeast, however, the 

urban areas have just one peak that 

occurs in the summer, and that peak is 

only 4 to 5 μg/m3 higher than the lowest 

season.

The seasonal pattern of summer PM2.5

peaks in rural areas does not vary as 

much by region as do urban patterns. 

The composition data show that these 

summer peaks are due to elevated 

regional sulfates and organic carbon. 

Urban and rural nitrates tend to be low 

in the summer and significantly higher 

in the winter, when sulfates are lowest. 

Wintertime urban peaks appear to 

consist of increased ammonium nitrate 

and carbonaceous material of local 

origin.25

3. Implications for Control of 

Transported PM2.5

The interplay between sulfates and 

nitrates observed in the seasonal data 

above is of particular importance. The 

formation of ammonium nitrate is 

favored by availability of ammonia and 

nitric acid vapor, low temperatures, 

high relative humidity, and the absence 

of acid sulfate particles. At higher 

summer temperatures when 

photochemical processes and 

meteorological conditions in the East 

produce high sulfate levels, ammonia 

and nitric acid vapor tend to remain in 

the gas phase rather than forming 

ammonium nitrate particles. In winter 

months, with cooler temperatures and 

lower sulfur-related acidity, the 

presence of sufficient nitric acid and 

ammonia favors formation of nitrate 

particles. 

The chemistry summarized above has 

consequences for the effectiveness of 

SO2 reductions in lowering regional and 

urban PM2.5 concentrations. Both 

observations and modeling simulations 

(see subsection II.B.4 below) suggest 

that regional SO2 reductions are 

effective at reducing sulfates and PM2.5. 

When SO2 reductions reach a certain 

point in relation to other relevant 

reactants and conditions, however, the 

ammonia formerly associated with 

sulfate can react with excess nitric acid 

vapor to form nitrate particles, 

effectively replacing at least part of the 

PM2.5 reduction due to sulfate. This 

phenomenon is termed ‘‘nitrate 

replacement.’’ Under these conditions, 

SO2 reductions will not be as effective 

at reducing PM2.5. Empirical evidence 

based on ambient measurements and 

modeling simulations show nitrate 

replacement changes under differing 

scenarios involving meteorological 

factors and relative concentrations of 

important components.26, 27 Obviously, 

sulfate reduction approaches (SO2

controls) will be more effective at 

lowering PM2.5 if complemented by 

strategies that reduce nitrates (NOX

controls), particularly in the winter.

This chemistry also has implications 

for the role of ammonia sources in 

contributing to regional PM2.5. As noted 

above, ammonia would not be present 

in particle form were it not for the 

presence of sulfuric and nitric acids. 

Significant reductions of these acids 

through SO2 and NOX controls would 

also reduce particulate ammonia, 

without the need for ammonia controls. 

As evidenced in the discussion above, it 

is clear that any effects of ammonia 

emissions controls on PM2.5 would vary 

considerably with the concentrations of 

sulfate, total ammonia (gas phase plus 

aerosol), total nitric acid temperature, 

and location and season. In some cases, 

a decrease in ammonia will have no 

effect on PM2.5, while in other cases, the 

decrease will reduce total nitrate 

contributions.28

In essence, the effect of significant 

reductions in ammonia on PM2.5 is least 

in conditions with low particulate 

nitrate levels (e.g., warm conditions) or 

low nitric acid vapor levels (e.g.,

through NOX reductions) in comparison 

to ammonia levels. The most significant 

effects of ammonia control would occur 

in conditions where there is an 

abundance of nitric acid, in which 

ammonia limits particulate nitrate 

formation. Therefore, significant 

reductions in SO2 and NOX emissions 

would create conditions that would 

reduce the effectiveness of ammonia 

controls in reducing PM2.5. 

In addition to these direct effects of 

ammonia controls on PM2.5, ammonia is 

a weak base that serves to partially 

neutralize acids that occur in PM2.5. As 

such, reducing ammonia will make 

PM2.5, clouds, and precipitation more 

acidic, thereby exacerbating acidifying 

precipitation (acid rain) and possibly 

causing health effects related to PM2.5

acidity. Through this increased acidity 

of clouds and fogs, ammonia reductions 

can slow the conversion of SO2 to 

particle sulfate.29 The increased acidity 

associated with ammonia reductions 

may also increase the formation of 

secondary organic aerosols, according to 

recent laboratory studies.30 In contrast, 

NOX reductions can both slow sulfate 

formation through oxidant chemistry, 

while also reducing acidity.

A further complication in 

consideration of ammonia controls is 

the uncertainty regarding the location 

and temporal variations in ammonia 

emissions, particularly in urban areas. 

This is an area of active research and 

investigation for EPA and others. It is of 

note that the maximum concentration of 

ammonium nitrates occurs in the 

winter, a period that is expected to have 

the lowest ammonia emissions from 

agricultural activities; 31 by contrast, the 

potential PM2.5 benefit of reducing 

ammonia emissions in the summer 

when they may be at a peak is limited 

to the ammonium itself, because this is 

the time of lowest ammonium nitrate 

particle levels.

The origins of the carbonaceous 

component of regional transport are 

even less well characterized. It reflects 

a complex mixture of hundreds or even 

thousands of organic carbon 

compounds, most of which have not yet 

been successfully quantified. In 

addition to directly emitted 

carbonaceous materials from fires and 

transport from urban areas, a varying 

amount is likely derived from biogenic 

emissions—which may include both 

primary and transformed secondary 

materials. Because the observed 

summertime increase in organic 

particles may be related to 

photochemical activity, it is reasonable 

to expect that—as for regional ozone—

NOX reductions might produce some 

benefits. Further, recent work by Jang et 

al. suggests that acidic aerosols (e.g.,

sulfates) may increase the formation of 

secondary organic aerosols (SOA).32

Despite significant progress that has 

been made in understanding the origins 

4578 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

33NARSTO, Particulate Matter Science for Policy 

Makers—A NARSTO Assessment. February 2003.

34Butler, Thomas J., Gene E. Likens, Francoise M. 

Vermeylen and Barbara J. B. Stunder. The relation 

between NOX emissions and precipitation NO3¥in 

the eastern USA, Atmospheric Environment, 

Volume 37, Issue 15, May 2003, Pages 2093–2104.

35U.S. EPA, Clean Air Status and Trends 

Network 2002 Annual Report. November 2003.

36U.S. EPA, Acid Rain Progress Report,

November 2003.

37U.S. EPA, Clean Air Status and Trends 

Network 2002 Annual Report, November 2003.

38U.S. EPA, Clean Air Status and Trends 

Network 2002 Annual Report. November 2003.

39U.S. EPA, National Air Quality and Emissions 

Trends Report, 1999. March 2001.

40Malm, William C., Spatial and Seasonal 

Patterns and Temporal Variability of Haze and its 

Constituents in the United States:’’ Report III. May 

2000.

41National Atmospheric Deposition Program, 

National Atmospheric Deposition Program, 2002 

Annual Summary. 2003.

and properties of SOA, it remains the 

least understood component of PM2.5. 

Moreover, the contribution of primary 

and secondary organic aerosol 

components to measured organic 

aerosol concentrations is thought to be 

highly variable and is a controversial 

issue.33 The relative amounts of primary 

versus secondary organic compounds in 

the ambient air throughout the U.S., 

however, appear to vary with location 

and time of year. While carbonaceous 

material appears to be a significant 

component in regional transport in the 

East, it is currently not possible to 

determine with certainty the relative 

contribution of primary versus 

secondary carbonaceous particles, or to 

fully quantify the fraction that might be 

reduced by control of man-made 

sources. The EPA and others have 

funded substantial research and 

monitoring efforts to clarify these issues. 

New information from the scientific 

community continues to emerge to 

improve our understanding of the 

relationship between sources of PM 

precursors and secondary particle 

formation.

4. Air Quality Impacts of Regional SO2

Reductions 

As noted above, sulfates from SO2

comprise the largest component of 

regional transport in the East. 

Fortunately, we already have significant 

observational evidence of the 

effectiveness of reducing regional SO2

emissions. By contrast, while small to 

modest NOX emissions reductions from 

control programs to date have resulted 

in reduced nitrate deposition in some 

portions of the East,34 we have no 

comparable long-term experience in 

observing the expected effects of more 

substantial regional reductions for NOX. 

Perhaps the best documented example 

of the results of any major regional air 

pollution control program is reflected in 

the experience of the title IV Acid Rain 

Program (see section VIII below). From 

1990 to date, this market-based program 

reduced SO2 emissions from electric 

utilities throughout the country, with 

most of the emissions reductions 

achieved by sources in the East. The 

regional reductions have resulted in 

substantial improvements in air quality 

and deposition throughout the East. The 

spatial and temporal patterns of these 

improvements have been observed at 

most eastern rural monitoring 

networks.35

The signal of regional air quality has 

been detected by the CASTNET. The 

CASTNET sites in rural areas of the 

Midwest and East measured high 

average SO2 concentrations prior to the 

Acid Rain Program, particularly in areas 

of the Ohio River Valley and into New 

York and eastern Pennsylvania where 

electric utility SO2 emissions were high. 

Average concentrations of sulfates 

throughout this area were elevated 

throughout an even broader region, 

indicating that sulfates were being 

transported from the SO2 emission 

sources to areas throughout the East.

Since 1990, SO2 concentrations at 

CASTNET sites have been reduced 

substantially in the areas where 

concentrations were high before the 

Acid Rain Program.36 A comparison of 

current mean SO2 concentrations (3-year 

average 2000–2002) to SO2

concentrations before the Program 

(1990–1992) shows that all sites 

decreased. The largest decrease was 

observed at sites from Illinois to 

northern West Virginia across 

Pennsylvania to western New York.

Rural monitoring networks have also 

been able to detect temporal patterns in 

SO2 and sulfate concentrations. 

Temporal trends in rural concentrations 

of these pollutants can be used to 

determine if monitored concentrations 

responded to changes in emissions 

trends. The most substantial drop in 

SO2 emissions occurred in 1995 when 

Phase I of the Acid Rain Program began. 

After 1995, emissions increased slightly, 

as sources began to use allowances that 

they had banked by reducing emissions 

before the program began, until Phase II 

of the program began in 2000 and 

emissions declined again.37

Monitored SO2 concentrations, sulfate 

concentrations at eastern CASTNET 

sites, sulfur concentrations in 

precipitation at eastern National 

Atmospheric Deposition (NADP) sites, 

and total (Dry + Wet) sulfur deposition 

at NADP and CASTNET sites closely 

tracked the yearly trends in SO2

emissions from Acid Rain Program 

sources from 1990–2002. Notably, the 

most significant decline in the various 

pollutants was observed in 1995 

immediately after Phase I began.38

These trends in air quality and 

deposition at rural monitoring sites 

show that a large, regional emission 

reduction program can achieve 

significant, observable environmental 

improvements throughout a broad area, 

especially where pollution levels are 

elevated before the program is 

implemented. In addition, the temporal 

trend in observed improvements shows 

that emissions reductions can lead to 

immediate environmental 

improvements. Additional discussions 

of the air quality impacts of regional 

SO2 reductions can be found in the U.S. 

Air Quality and Emission Trends 

Report,39 as well as recent reports from 

IMPROVE 40 and the National 

Atmospheric Deposition Program.41

III. Overview of Proposed Interstate Air 

Quality Rule 

A. Purpose of Interstate Air Quality Rule 

For this rulemaking, EPA has assessed 

the role of transported emissions from 

upwind States in contributing to 

unhealthy levels of PM2.5 and 8-hour 

ozone in downwind States. Based on 

that assessment, the EPA is proposing 

emissions reduction requirements for 

SO2 and NOX that would apply to 

upwind States. 

Emissions reductions to eliminate 

transported pollution are required by 

the CAA and supported by sound 

policy. Clean Air Act section 

110(a)(2)(D) requires SIP revisions for 

upwind States to eliminate emissions 

that contribute significantly to 

nonattainment downwind. Under 

section 110(a)(1), these SIP revisions 

were required in 2000 (three years after 

the 1997 revision of the PM2.5 and 8-

hour ozone NAAQS); EPA proposes that 

they be submitted as expeditiously as 

practicable, but no later than 18 months 

after the date of promulgation. 

There are also strong policy reasons 

for addressing interstate pollution 

transport, and for doing so now. First, 

emissions from upwind States can 

alone, or in combination with local 

emissions, result in air quality levels 

that exceed the NAAQS and jeopardize 

the health of citizens in downwind 

communities. Second, interstate 

pollution transport requires some 

consideration of reasonable balance 

between local and regional controls. If 

significant contributions of pollution 

from upwind States go unabated, the 

downwind area must achieve greater 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4579

local emissions reductions, thereby 

incurring extra clean-up costs in the 

downwind area. Third, requiring 

reasonable controls for both upwind and 

local emissions sources should result in 

achieving air quality standards at a 

lesser cost than a strategy that relies 

solely on local controls. For all these 

reasons, EPA believes it is important to 

address interstate transport as early as 

possible. Doing so as we are today, in 

advance of the time that States must 

adopt local nonattainment plans, will 

make it easier for states to develop plans 

to reach attainment of the standards.

The EPA previously addressed 

interstate pollution transport for ozone 

in rules published in 1998 and 2000. 

These rules, known as the NOX SIP Call 

and Section 126 Rule, are substantially 

reducing ozone transport and helping 

downwind areas meet the 1-hour and 8-

hour ozone standards. However, EPA is 

reassessing ozone transport in this 

rulemaking for two reasons. First, 

several years have passed since 

promulgation of the NOX SIP Call and 

updated data are available. Second, in 

view of the difficulty some areas are 

expected to have meeting the 8-hour 

ozone standards, EPA believes it is 

important to assess the degree to which 

ozone transport will remain a problem 

after full implementation of the existing 

rules, and to determine whether further 

controls are warranted to ensure 

continued progress toward attainment. 

Today’s rulemaking is EPA’s first 

attempt to address interstate pollution 

transport for PM2.5. 

B. Summary of EPA’s Key Findings and 

Proposed Remedy for Interstate 

Transport 

Based on a multi-part assessment 

summarized below, EPA has concluded 

that: 

• Without adoption of additional 

emissions controls, a substantial 

number of urban areas in the central and 

eastern regions of the U.S. will continue 

to have levels of PM2.5 or 8-hour ozone 

(or both) that do not meet the national 

air quality standards. 

• Although States have not yet 

developed plans for meeting the PM2.5

and 8-hour ozone standards, predictive 

analyses by EPA for the year 2010 show 

that even with implementation of 

substantial local controls, many areas 

would continue to experience unhealthy 

air quality in that year. Consequently, 

EPA has concluded that small 

contributions of pollution transport to 

downwind nonattainment areas should 

be considered significant from an air 

quality standpoint because these 

contributions could prevent or delay 

downwind areas from achieving the 

health-based standards. 

• Based on our analyses, we have 

concluded that SO2 and NOX are the 

chief emissions contributing to 

interstate transport of PM2.5. For the 8-

hour ozone nonattainment, EPA 

continues to believe, in accordance with 

the conclusion of the Ozone Transport 

Assessment Group (OTAG), that the 

focus of interstate transport control 

should be on NOX. 

• For both PM2.5 and 8-hour ozone, 

EPA has concluded that interstate 

transport is a major contributor to the 

projected nonattainment problem in the 

Eastern U.S. in 2010. In the case of 

PM2.5, the nonattainment areas analyzed 

are estimated to receive a transport 

contribution attributable to SO2 and 

NOX emissions ranging from 4.22 to 

7.36 μg/m3 on an annual average basis, 

with an average of 5.47 μg/m3 across all 

nonattainment areas. In the case of 8-

hour ozone, the nonattainment areas 

analyzed receive a transport 

contribution of more than 20 percent of 

their ambient ozone concentrations, and 

21 of 47 had a transport contribution of 

more than 50 percent.

• Typically, two or more States 

contribute transported pollution to a 

single downwind area, so that the 

‘‘collective contribution’’ is much larger 

than the contribution of any single 

State. 

Based on these conclusions, EPA is 

proposing to make several findings, and 

to require the remedy summarized 

below: 

• For PM2.5, we are proposing to find 

that SO2 and NOX emissions in 28 States 

and the District of Columbia will 

contribute significantly in 2010 to PM2.5

levels in downwind nonattainment 

areas in amounts that exceed an air 

quality significance threshold proposed 

today. 

• For ozone, we are proposing to find 

that NOX emissions in 25 States and the 

District of Columbia will contribute 

significantly in 2010 to ozone levels in 

excess of the 8-hour standards in 

downwind nonattainment areas in 

amounts that exceed the air quality 

significance threshold EPA previously 

established in the 1998 NOX SIP Call, 

and which we propose today to 

continue to use. 

• We are also proposing to find that 

emissions reductions from EGUs in the 

identified upwind States and the 

District of Columbia would be highly 

cost effective. As in the NOX SIP Call, 

we propose to find that these highly 

cost-effective reductions constitute the 

significant contributions to downwind 

nonattainment in other States that must 

be eliminated under the CAA. 

• We are proposing that the level of 

reductions that would be highly cost 

effective corresponds to power sector 

emissions caps in a 28-state plus District 

of Columbia region of 2.7 million 

annual tons for SO2 and 1.3 million 

annual tons for NOX. 

• In order to strike a balance between 

the feasibility of achieving a substantial 

amount of emissions reductions, and the 

need to achieve them as expeditiously 

as practicable for attainment of health 

standards, we are proposing that the 

emissions caps for the affected States 

(and the District of Columbia) be 

implemented in two phases, with the 

first phase in 2010 and the second phase 

in 2015. The first phase caps would be 

3.9 million tons for SO2 and 1.6 million 

tons for NOX. 

• We estimate that, compared to the 

emissions that would otherwise occur in 

2010 and 2015, this proposal would 

result in emissions reductions of 3.6 

million tons SO2 (40 percent) and 1.5 

million tons NOX (49 percent) by 2010, 

and 3.7 million tons SO2 (44 percent) 

and 1.8 million tons NOX (58 percent) 

by 2015. 

• Compared to EGU emissions in 

2002 in the affected States, at full 

implementation of today’s proposal SO2

emissions would be reduced about 71 

percent. On the same basis, NOX

emissions would be reduced 65 percent. 

• The proposed emissions reductions 

would be met by affected States using 

one of two options for compliance: (1) 

Participating in an interstate cap and 

trade system that caps emissions from 

the electric generating sector, thereby 

reducing the costs of emissions 

reductions while ensuring that the 

required reductions are achieved by the 

region as a whole (an approach EPA 

believes is preferable); or (2) meeting an 

individual State emissions budget 

through measures selected by the State 

in accord with the requirements 

discussed in sections VI and VII below. 

Today’s proposal relies on 

information and analysis relevant to 

determining whether sources in upwind 

States emit in amounts that ‘‘contribute 

significantly to [downwind] 

nonattainment,’’ which the upwind 

States’ SIPs are required to prohibit 

under section 110(a)(2)(D)(i)(I). 

C. Coordination of Multiple Air Quality 

Objectives in Today’s Rulemakings 

1. Linkages Between Interstate Air 

Quality and Mercury Rulemakings

As noted above, today’s proposal for 

reducing the transport of pollutants that 

contribute significantly to violations of 

the PM2.5 and 8-hour ozone air quality 

standards is accompanied by separate 

4580 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

actions proposing EPA’s approach for 

addressing mercury from power plants. 

The EPA has endeavored to recognize 

and integrate the pollution reduction 

requirements incorporated in today’s 

proposed rules so as to provide benefits 

for public health and the environment 

in a manner that has proven effective in 

other programs. In so doing, we were 

guided by our experience and success in 

implementing the title IV Acid Rain 

Program for reducing some of the same 

pollutants. We have also fully 

considered the extensive analyses and 

assessment of options that EPA has 

conducted over the last eight years in 

developing proposals that would 

establish an integrated multi-pollutant 

program for addressing the power 

sector, including the President’s Clear 

Skies Act. 

Our experience with title IV and the 

assessments leading to the proposed 

Clear Skies Act have suggested that we 

can achieve substantial benefits at 

reduced costs by expanding the marketbased mechanisms of title IV to achieve 

substantial reductions in SO2, NOX, and 

mercury, and by recognizing the 

interactions inherent in designing 

control strategies in an integrated rather 

than sequential manner. This approach 

has the added advantage of providing 

regulatory certainty, both for the States, 

which are charged with developing 

attainment strategies for areas that are 

affected by interstate transport, and for 

sources that would be affected by 

today’s proposed rules for addressing 

transport and mercury emissions. 

While EPA still hopes that Congress 

will adopt the Administration’s Clear 

Skies multi-pollutant legislation, the 

outcome of that process is not certain. 

Accordingly, we believe it is our 

responsibility to move forward to 

achieve these reductions as 

expeditiously as possible under existing 

regulatory authorities. We believe 

today’s proposals reflect the best 

regulatory approach for making 

expeditious progress towards meeting 

air quality standards and other health 

and environmental goals, while 

providing flexibility that will minimize 

the cost of compliance. We have 

incorporated ambitious emissions 

reduction schedules to ensure the 

combined reductions of all pollutants 

occur as quickly as is feasible. We are 

proposing to offer, as an option for 

implementing the SO2 and NOX

reductions, emissions cap and trade 

programs that would provide a seamless 

transition from the current title IV and 

NOX SIP Call programs.

2. Linkages Between PM2.5 and 8-hour 

Ozone Transport Requirements 

Although PM2.5 and ozone are distinct 

NAAQS with separate implementation 

requirements, in reality they are closely 

linked in many ways. Because of these 

linkages, we have considered PM2.5 and 

ozone in an integrated manner in 

developing this proposal. The linkages 

between PM2.5 and ozone arise from 

their interactions in atmospheric 

chemistry, the overlap in the pollutants 

and emission sources that contribute to 

elevated ambient levels, and similarities 

in their implementation schedules. 

Emissions of NOX and SO2 contribute to 

PM2.5 nonattainment, and NOX

emissions also contribute to 8-hour 

ozone nonattainment. Moreover, 

because the power generation sector and 

other source types are major emitters of 

both NOX and SO2, and because control 

actions for these pollutants may 

reinforce or compete with each other, it 

is also appropriate to address NOX and 

SO2 control requirements in an 

integrated manner, keeping in mind that 

the relevant provisions of the CAA 

must, in the end, be met for each 

NAAQS and its associated pollutant 

precursors. 

3. Linkages Between Interstate Air 

Quality Rulemaking and Section 126 

Petitions 

Recent history of how EPA and the 

States have relied on certain CAA 

transport provisions indicates that a 

brief discussion of these provisions may 

be useful. In the NOX SIP Call rule, we 

determined that under section 

110(a)(2)(D), the SIP for each affected 

State (and the District of Columbia) 

must be revised to eliminate the amount 

of emissions that contribute 

significantly to nonattainment in 

downwind States. We further 

determined that amount, for each State, 

as the quantity of emissions that could 

be eliminated by the application of 

highly cost-effective controls on 

specified sources in that State. 

During July-August, 1997, EPA 

received petitions under CAA section 

126 from eight northeastern states. The 

petitions asked EPA to find that 

specified sources in specified upwind 

States were contributing significantly to 

nonattainment in the petitioning States. 

Shortly after promulgation of the NOX

SIP Call, in May, 1999, EPA 

promulgated a rule making affirmative 

technical determinations for certain of 

the section 126 petitions. Relying on 

essentially the same record as we had 

for the NOX SIP Call rulemaking, we 

made the affirmative technical 

determinations with respect to the same 

sources in certain of the same States 

covered under the NOX SIP Call. 

Moreover, we approved a section 126 

remedy based on the same set of highly 

cost-effective controls. However, EPA 

withheld granting the findings for the 

petitions. Instead, we stated that 

because we had promulgated the NOX

SIP Call—a transport rule under section 

110(a)(2)(D)—as long as an upwind 

State remained on track to comply with 

that rule, EPA would defer making the 

section 126 finding. 64 FR 28250 (May 

25, 1999) (‘‘May 1999 Rule’’). 

Following promulgation of the May 

1999 Rule, however, the U.S. Court of 

Appeals for the D.C. Circuit stayed the 

NOX SIP Call. We then promulgated a 

revised section 126 rule, in January 

2000. 65 FR 2674 (January 18, 2000) 

(‘‘January 2000 Rule’’). We stated that 

because upwind States were no longer 

obliged to adhere to the requirements of 

the NOX SIP Call, we would go ahead 

and make the section 126 findings. 

Even so, in the January 2000 Rule, we 

further indicated that we were 

considering rescinding the section 126 

finding with respect to an affected State 

if, in general, we approved a SIP 

revision submitted by the affected State 

as fully achieving the amount of 

reductions required under the NOX SIP 

Call. The reason for this rescission 

would be the fact that the affected 

State’s SIP revision would fulfill the 

section 110(a)(2)(D) requirements, so 

that there would no longer be any basis 

for the section 126 finding with respect 

to that State. In this manner, the NOX

SIP Call and the Section 126 Rules 

would be harmonized.

Today, we are similarly proposing a 

remedy under section 110(a)(2)(D) to 

eliminate the significant contribution of 

emissions, in this case both SO2 and 

NOX, from upwind States to downwind 

States’ nonattainment of the fine 

particle and 8-hour ozone standards. We 

believe it would be appropriate to apply 

the same approach to any section 126 

petitions submitted in the future, should 

there be any, as we used under the NOX

SIP Call and the related section 126 

rules. Thus, we expect that the remedy 

we would provide in response to a 

section 126 petition concerning 

reductions in EGU emissions of SO2 or 

NOX by 2010 would be identical to that 

provided in this rulemaking under 

section 110(a)(2)(D), assuming that the 

petition relies on essentially the same 

record. Thus, we would expect to take 

the same position we took in the May 

1999 Rule—that as long as EPA has 

promulgated a transport rule under 

section 110(a)(2)(D), the transport rule 

and the section 126 timeframes are 

roughly comparable, and a State is on 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4581

42See ‘‘Air Quality Data Analysis Technical 

Support Document for the Proposed Interstate Air 

Quality Rule (January 2004).’’ We expect that the 

actual designation of PM2.5 and 8-hour ozone 

nonattainment areas will be based on 2001–2003 

data. We plan to update our assessment to reflect 

the most recent data available at the time we issue 

the final rule.

43See section IV, Air Quality Modeling to 

Determine Future 8-hour Ozone and PM2.5

Concentrations, for more detail on the approach 

summarized in this subsection.

44The EPA also considered the current and likely 

future nonattainment of the PM10 NAAQS and the 

24-hour average PM2.5 NAAQS. Only a small 

number of areas are presently experiencing PM10

exceedances, and all have approved SIPs that are 

expected to result in attainment through local 

control measures. Accordingly, we do not believe 

that interstate transport will be an important 

consideration for PM10 implementation in the 

period from 2010, or beyond, and therefore PM10 is 

not a subject of today’s proposal. Few areas, all in 

the western U.S., presently have violations of the 

24-hour average PM2.5 NAAQS, and all of these are 

also violating the annual PM2.5 NAAQS. We believe 

that to the extent interstate transport is contributing 

to nonattainment of the 24-hour PM2.5 NAAQS, 

actions aimed at the broader problem of PM2.5

nonattainment will correct any transport affecting 

24-hour PM2.5 also. The 24-hour PM2.5 standard was 

not further assessed in our analysis for today’s 

proposal.

track to comply with the transport rule, 

then EPA is not required to approve 

section 126 petitions targeting sources 

in that State if those petitions rely on 

essentially the same record. 

If a section 126 petition is submitted, 

we would obviously need to set out in 

more detail our approach to the 

interaction between section 110(a)(2)(D) 

and section 126 in our response to that 

petition. Today, we are setting forth our 

general view of the relationship between 

these two sections and seeking comment 

on this view and on the issues raised by 

the interaction between these sections. 

D. Overview of How EPA Assessed 

Interstate Transport and Determined 

Remedies 

This section provides a conceptual 

overview of the EPA’s technical and 

legal analyses of the problem of 

interstate pollution transport as it affects 

attainment of the PM2.5 and 8-hour 

ozone standards. It is intended to 

provide an overall context for the more 

detailed discussions below. In general, 

EPA has taken a two-step approach in 

interpreting section 110(a)(2)(D). In the 

first step, EPA conducted an air quality 

assessment to identify upwind States 

which contribute significantly (before 

considering cost) to downwind 

nonattainment. In the second step, EPA 

conducted a control cost assessment to 

determine the amount of emissions in 

each upwind State that should be 

reduced in order to eliminate each 

upwind State’s significant contribution 

to downwind nonattainment. 

This two-step approach involved 

multiple technical assessments, which 

are listed below in brief, and explained 

in further detail in the subsections that 

follow. The EPA addressed: 

(1) The degree and geographic extent 

of current and expected future 

nonattainment with the PM2.5 and 8-

hour ozone NAAQS; 

(2) The potential impact of local 

controls on future nonattainment; 

(3) The potential for individual 

pollutants to be transported between 

States; 

(4) The extent to which pollution 

transport across State boundaries will 

contribute to future PM2.5 and 8-hour 

ozone nonattainment; and 

(5) The availability and timing of 

emissions reduction measures that can 

achieve highly cost-effective reductions 

in pollutants that contribute to 

excessive PM2.5 and 8-hour ozone levels 

in downwind nonattainment areas.

1. Assessment of Current and Future 

Nonattainment 

The EPA assessed the degree and 

geographic extent of current 

nonattainment of the PM2.5 and 8-hour 

ozone NAAQS. For the 3-year period 

2000–2002, 120 counties with monitors 

exceed the annual PM2.5 NAAQS and 

297 counties with monitor readings 

exceed the 8-hour ozone NAAQS.42

Nonattainment of the PM2.5 standards 

exists throughout the Eastern U.S.—

from western Illinois and Tennessee 

eastward—and in California. 

Nonattainment of the 8-hour ozone 

standards also exists widely east of the 

continental divide—from eastern Texas 

and Oklahoma to the Atlantic coast—as 

well as in California and Arizona.

In analyzing significant contribution 

to nonattainment, we determined it was 

reasonable to exclude the Western U.S., 

including the States of Washington, 

Idaho, Oregon, California, Nevada, Utah, 

and Arizona from further analysis due 

to geography, meteorology, and 

topography. Based on these factors, we 

concluded that the PM2.5 and 8-hour 

ozone nonattainment problems are not 

likely to be affected significantly by 

pollution transported across these 

States’ boundaries. Therefore, for the 

purpose of assessing States’

contributions to nonattainment in other 

States, we have only analyzed the 

nonattainment counties located in the 

rest of the U.S. 

We assessed the prospects for future 

attainment and nonattainment in 2010 

and 2015 with the 8-hour ozone NAAQS 

using the Comprehensive Air Quality 

Model with Extensions (CAMX), and 

with the PM2.5 NAAQS using the 

Regional Modeling System for Aerosols 

and Deposition (REMSAD).43 These two 

forecasting years were chosen because 

they include the range of expected 

attainment dates for many PM2.5

nonattainment areas, and under our 

proposed 8-hour implementation rule, 

the range of expected attainment dates 

for many 8-hour ozone nonattainment 

areas. In addition, considering the likely 

schedule for this rulemaking and the 

implementation steps that would follow 

it (see section VII), we believe that 2010 

would be the first year in which sizable 

emission reductions could confidently 

be expected as a result of this 

rulemaking.

In modeling the 2010 and 2015 ‘‘base 

cases,’’ we took into account adopted 

State and Federal regulations (e.g.,

mobile source rules, the NOX SIP Call) 

as well as regulations that have been 

proposed and that we expect will be 

promulgated before today’s proposal is 

finalized. 

Based on this approach we predicted 

that, in the absence of additional control 

measures, 47 counties with air quality 

monitors would violate the 8-hour 

ozone NAAQS in 2010, and 34 counties 

would violate in 2015. For PM2.5 we 

predicted that 61 counties would violate 

the standards in 2010, and 41 counties 

would violate in 2015.44 These counties 

are listed in Tables IV–3 and IV–4. The 

counties with predicted nonattainment 

are widely distributed throughout the 

central and eastern regions of the U.S. 

The degree of predicted nonattainment 

in both years spans a range of values 

from close to the NAAQS level to well 

above the NAAQS level. Given the 

number and geographic extent of 

predicted future nonattainment 

problems, we continued the assessment 

to quantify the role of interstate 

contributions to nonattainment. 

2. Prospects for Progress Towards 

Attainment Through Local Reductions

The assessments of future 

nonattainment presented above 

considered only the effect of emission 

reduction measures already adopted or 

that are specifically required and that 

we expect will be adopted by the time 

this rule is promulgated. Once 

designated, States containing PM2.5 and 

8-hour ozone nonattainment areas will 

be required to submit SIPs that may 

include additional local emission 

reduction measures designed to achieve 

attainment. Accordingly, we assessed, to 

the extent feasible with available 

methods, whether it would be possible 

for nonattainment areas to attain the 

annual PM2.5 and 8-hour ozone NAAQS 

through local emissions reductions with 

reasonably available control measures, 

or whether the amount of transport from 

4582 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

45See section IV and Tables IV–5, IV–6, and IV–

7 for details on the analyses of local control 

measures.

46This particular type of analysis is not able to 

similarly distinguish the separate effects of upwind 

and local NOX emissions reductions, but other 

types of analysis described in section V show the 

usefulness of upwind NOX reductions in reducing 

PM2.5 concentrations in nonattainment areas.

detailed results of this three-city analysis are 

provided in section IV.

47Emissions reductions required under section 

110(a)(2)(D) alone will not eliminate all transported 

ozone. Because areas with the highest interstate 

transport contributions tend to be located relatively 

close to major nonattainment areas in adjoining 

states, we expect that controls adopted for 

attainment purposes in upwind nonattainment 

areas will also reduce interstate ozone transport.

upwind States would make this difficult 

or impossible. This information could 

then be used to determine whether 

upwind States should be expected to 

reduce their emissions. 

a. Fine Particles 

We conducted an assessment of the 

emissions reductions that States may 

need to include in nonattainment SIPs, 

and identified measures that could 

provide those emission reductions. We 

focused on the counties predicted to be 

nonattainment in the 2010 base case. 

For our analysis of States’ ability to 

attain the PM2.5 standards, we 

developed a group of emissions 

reduction measures for SO2, NOX, direct 

PM2.5, and volatile organic compounds 

(VOC) as a surrogate for measures that 

States would potentially implement 

prior to 2009 in an effort to reach 

attainment. The measures address a 

broad range of source types.45 We 

analyzed the effect of applying this 

group of local controls in two different 

ways. First, we analyzed the impact of 

the emission controls on the immediate 

area in which they were applied. We 

applied the local control measures in 

three sample cities: Philadelphia, 

Birmingham, and Chicago. The group of 

local emissions controls was estimated 

to achieve ambient annual average PM2.5

reductions ranging from about 0.5 μg/m3

to about 0.9 μg/m3, which was less than 

the amount needed to bring any of the 

three cities into attainment in 2010. The 

detailed results of this three-city 

analysis are provided in section IV.

Second, we analyzed the impact of 

applying the group of local controls to 

all 290 counties that are located in 

metropolitan areas in the eastern and 

central U.S. and that contain one or 

more of the counties projected to be 

nonattainment in 2010. This analysis 

was designed to assess whether 

applying local controls in upwind 

nonattainment areas, as States are 

expected to do, would significantly 

reduce transport to downwind States. 

Based on this analysis, we concluded 

that for many PM2.5 nonattainment areas 

it would be difficult, if not impossible, 

to reach attainment unless transport is 

reduced to a much greater degree and 

over a much broader regional area than 

by the simultaneous adoption of local 

controls within specific nonattainment 

areas. In addition, we found that much 

of the air quality improvement that did 

occur in downwind areas with this 

strategy was due to reductions in 

transported sulfate attributable to 

upwind SO2 emissions. This indicates 

in particular that broader reductions in 

regionwide emissions of SO2, from 

sources located both inside and outside 

potential nonattainment areas, would 

lead to sizable reductions in PM2.5

concentrations.46

b. Eight-Hour Ozone 

Our analyses suggest that NOX

emissions in upwind States will 

contribute a sizable fraction of the 

projected 8-hour ozone nonattainment 

problem in most nonattainment areas 

east of the continental divide in 2010 

(even after the substantial 

improvements expected from 

implementing the NOX SIP Call).47 Our 

analysis also shows that additional 

highly cost-effective reductions of NOX

from power plants are available. Given 

continued widespread ozone 

nonattainment, we believe it is 

appropriate to require additional 

reductions in NOX emissions that 

contribute to future nonattainment due 

to interstate transport.

Although numerous areas will attain 

the 8-hour ozone standards in the near 

term with existing controls, EPA 

believes that 15–20 areas east of the 

continental divide will need further 

emissions reductions (in some cases, 

large reductions) to attain the 8-hour 

standard. These areas have already 

adopted numerous measures to reduce 

1-hour ozone levels. 

We analyzed the effect of local 

measures on 8-hour ozone attainment. 

We conducted a preliminary scoping 

analysis in which hypothetical total 

NOX and VOC emissions reductions of 

25 percent were applied in all projected 

nonattainment areas east of the 

continental divide in 2010. Despite 

these substantial reductions, 

approximately eight areas were 

projected to have ozone levels 

exceeding the 8-hour standard. We 

believe that this hypothetical local 

control scenario is an indication that 

attaining the 8-hour standard will entail 

substantial cost in a number of areas, 

and that further regional reductions are 

warranted. 

3. Assessment of Transported Pollutants 

and Precursors 

a. Fine Particles 

Section II provides a summary of our 

knowledge concerning the nature of 

PM2.5 and its precursors. We have 

reviewed several studies that confirm 

the presence of interstate transport and 

identify many States as either sources or 

receptors. We have also conducted new 

analyses based on comparisons of newly 

available urban and rural ambient air 

quality data, source-receptor 

relationships, satellite observations, and 

wind trajectories. The details of these 

most recent analyses are contained in 

section V. These analyses show a wide 

range of transport patterns for PM2.5. On 

different days in a year, transport 

follows a variety of paths, suggesting 

that to some extent emissions 

originating in one upwind State make 

some contribution to annual average 

PM2.5 in many downwind States, even if 

the upwind State is a considerable 

distance from the downwind States.

These analyses further conclude that 

sources of SO2 and NOX emissions 

continue to play a strong role in 

transported PM2.5. They suggest that 

nearly all the particulate sulfate in the 

cities we examined appears to result 

from transport from upwind sources 

outside the local urban area, while 

upwind and local contributions for the 

particle nitrate and carbonaceous 

components of PM2.5 are likely to come 

from both upwind and local sources. 

These findings are consistent with what 

is known about the location of 

emissions sources for these pollutants 

and their atmospheric formation and 

transport mechanisms. 

Based on a consideration of these 

findings regarding the origin and 

relative contribution of the major 

components to transported PM2.5 in 

rural areas of the U.S. (see section II), as 

well as the results of modeling the air 

quality improvements of adopting 

highly cost-effective controls on SO2

and NOX emissions from EGUs in 

certain states east of the continental 

divide (see section IX), EPA proposes to 

base the PM2.5 requirements on manmade SO2 and NOX emissions, and not 

other pollutants. As summarized below, 

current information related to sources 

and controls for the other components 

identified in transported PM2.5

(carbonaceous particles, ammonium, 

and crustal materials) does not, at this 

time, provide an adequate basis for 

regulating the regional transport of 

emissions responsible for these PM2.5

components. 

Carbonaceous substances (organic 

compounds and soot) form a large 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4583

component of PM2.5 in rural and urban 

areas of the East. As discussed in 

section II, the origins and effectiveness 

of alternative controls in reducing 

transported carbonaceous materials are 

particularly uncertain, and our ability to 

identify and quantify appropriate 

measures is quite limited. Some 

significant fraction may be of natural 

origin, including biogenic emissions 

and wildfires. The EPA has already 

issued national rules to reduce the most 

significant direct man-made source 

category of carbonaceous materials, the 

mobile source sector. These rules will 

provide some reduction of transported 

carbonaceous material, as well as 

significant reductions in urban areas. 

For other sources, the primary 

emissions of carbonaceous materials are 

not currently quantified with certainty. 

While controls for other man-made 

sources (e.g., prescribed fires, home 

heating) may be of significance in 

developing local control approaches for 

PM2.5 (e.g., as in the analysis 

summarized in section III.D.2), their 

relative effectiveness in addressing 

regional transport is not well enough 

understood at this time. Substantial 

uncertainty also exists in attempting to 

model the formation processes and 

regional transport of secondary organic 

particles deriving from biogenic or manmade emissions of organic precursors. 

To the extent that the production of 

regional secondary organic particles is 

related to ozone formation processes, 

regional NOX reductions could provide 

some additional benefit. Measures 

adopted to reduce man-made VOC 

emissions should also tend to reduce 

secondary organic PM2.5. 

We also do not feel it is necessary or 

appropriate at this time to attempt to 

reduce the ammonium portion of PM2.5

through regional ammonium controls. 

As indicated in section II, it is 

reasonable to expect that simultaneous 

significant reductions in regional SO2

and NOX emissions will also result in a 

decrease in particulate phase 

ammonium, while reducing the relative 

effectiveness of additional ammonia 

reductions. The alternative of reducing 

regional ammonia loadings in place of 

SO2 and NOX controls is unattractive 

because it increases the acidity of PM2.5

and of deposition, and is less effective 

at reducing total loadings of fine 

particles. Further, while local ammonia 

reductions might reduce nitrates in 

some locations, the peak nitrate 

concentrations in the East come in the 

wintertime, when ammonia emissions 

are lowest. As noted in section II, in 

such circumstances, reductions in NOX

are likely to be effective in reducing 

nitrates. Finally, the strength and 

location of ammonia emissions sources, 

including agricultural operations, are 

uncertain, and the costs and net 

effectiveness of alternative regionalscale ammonia controls from a variety of 

rural and urban sources cannot be 

adequately quantified. The EPA 

continues to support research on 

ammonia emissions, controls and 

atmospheric processes, which should 

inform State and local control agency 

decisions on ammonia controls in the 

future. 

We are proposing not to address 

direct emissions of crustal material 

because, among other things, the 

amount of crustal material is generally 

a small fraction of total PM2.5 in 

nonattainment areas, crustal material 

does not appear to be much involved in 

regional-scale transport on an annual 

basis, and we face uncertainties in 

inventories and control costs for crustal 

material. While most crustal material on 

a regional scale is likely derived from 

soils, a small but uncertain fraction of 

certain components of combustion 

emissions are classified as ‘‘crustal’’ or 

‘‘soil derived.’’ As a practical matter, we 

expect that implementation of today’s 

proposed controls to reduce SO2 and 

NOX from coal-fired EGUs would have 

co-benefits in reducing those direct 

emissions of PM2.5 that are now 

classified as crustal material.

The proposed decisions to focus on 

SO2 and NOX reductions for addressing 

interstate pollution transport should not 

preclude controls related to 

carbonaceous particles, ammonium, or 

other significant PM2.5 sources on a 

local basis, where these can be adopted 

cost effectively in local PM2.5 control 

plans. We welcome comment on the 

choice to not regulate the above 

components of transported PM2.5, 

including further information regarding 

the cost effectiveness of controls. 

b. Ozone 

Section II summarizes our knowledge 

regarding ozone and its precursors. We 

continue to rely on the assessment of 

ozone transport made in great depth by 

the OTAG in the mid-1990s. As 

indicated in the NOX SIP Call proposal, 

the OTAG Regional and Urban Scale 

Modeling and Air Quality Analysis 

Work Groups reached the following 

conclusions: 

• Regional NOX emissions reductions 

are effective in producing ozone 

benefits; the more NOX reduced, the 

greater the benefit. 

• Controls for VOC are effective in 

reducing ozone locally and are most 

advantageous to urban nonattainment 

areas. (62 FR 60320, November 7, 1997) 

We reaffirm this conclusion in this 

rulemaking, and propose to address 

only NOX emissions for the purpose of 

reducing interstate ozone transport. 

4. Role of Interstate Transport in Future 

Nonattainment 

a. Fine Particles 

For PM2.5, we used a ‘‘zero-out’’

approach to assess PM2.5 transport 

coming from each of the 41 States that 

lie at least partly east of the continental 

divide, i.e., New Mexico northwards to 

Montana and all States east of those. 

Our zero-out approach consisted of air 

quality model runs for each State, both 

with and without each State’s manmade SO2 and NOX emissions. We then 

compared the predicted downwind 

concentrations in the 2010 base case, 

which included the State’s SO2 and 

NOX emissions, to the ‘‘zero-out’’ case 

which excluded all of the State’s manmade SO2 and NOX emissions. From 

these results, we were able to evaluate 

the impact of, for example, Ohio’s total 

man-made SO2 and NOX emissions on 

each projected downwind 

nonattainment county in 2010. Using 

the results of this modeling, we 

identified States as significantly 

contributing (before considering costs) 

to downwind nonattainment based on 

the predicted change in the PM2.5

concentration in the downwind 

nonattainment area which receives the 

largest impact. 

As detailed in section VI below, EPA’s 

modeling indicates a wide range of 

maximum downwind nonattainment 

impacts from the 41 States. The largest 

contribution is from Ohio on Hancock 

County, WV where the annual PM2.5

impact is 1.90 μg/m3. Rhode Island has 

the lowest maximum contribution to a 

downwind nonattainment area, 

registering a maximum impact of 0.01 

μg/m3 on New Haven, Connecticut. 

We have considered what level of air 

quality impact should be regarded as 

significant (without taking costs into 

account), and believe that the level 

should be a small fraction of the annual 

PM2.5 NAAQS of 15.0 μg/m3. Our 

reasoning is based on two factors. First, 

as EPA determined in 1997 when we 

established the PM2.5 NAAQS, there are 

significant public health impacts 

associated with ambient PM2.5, even at 

relatively low levels. By the same token, 

as summarized earlier, EPA’s modeling 

indicates that at least some 

nonattainment areas will find it difficult 

or impossible to attain the standards 

without reductions in upwind 

emissions. In combination, these factors 

suggest a relatively low value for the 

4584 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

48An area with a reported rounded concentration 

of 15.0 μg/m3 would have actual air quality 

somewhere in the range of 14.95 to 15.04 μg/m3. An 

increase of 0.10 μg/m3 would make the rounded 

concentration equal 15.1 μg/m3, which would 

constitute an exceedance, no matter where in the 

14.95 to 15.04 μg/m3 range the concentration fell 

originally. This is not the case with any increase 

less than 0.10 μg/m3. For example, an increase of 

0.09 μg/m3 when added to 14.95 μg/m3 and then 

rounded would result in a NAAQS compliance 

value of 15.0 μg/m3, a passing result.

49The modeling for today’s proposal, and the 

proposal itself fulfills EPA’s commitment in the 

1998 NOX SIP Call final rule to reevaluate by 2007. 

See 63 FR 57399; October 27, 1998.

PM2.5 transport contribution threshold is 

appropriate. 

Second, our analysis of ‘‘base case’’

PM2.5 transport shows that many 

upwind States contribute to 

concentrations in each of the areas 

predicted to be nonattainment in 2010. 

This ‘‘collective contribution’’ is a 

feature of the PM2.5 transport problem, 

in part because the annual nature of the 

NAAQS means that wind patterns 

throughout the year—rather than wind 

patterns during one season of the year 

or on a few worst days during the year—

play a role in determining how States 

contribute to each other. The 

implication is that to address the 

transport affecting a given 

nonattainment area, many upwind 

States must reduce their emissions, even 

though their individual contributions 

may be relatively small. By the same 

token, as summarized earlier, EPA’s 

modeling indicates that at least some 

nonattainment areas will find it difficult 

or impossible to attain the standards 

without reductions in upwind 

emissions. In combination, these factors 

suggest a relatively low value for the 

PM2.5 transport contribution threshold is 

appropriate. 

We adopted a similar approach for 

determining the significance level for 

ozone transport in the NOX SIP Call 

rulemaking, and the D.C. Circuit viewed 

this approach as reasonable when the 

Court generally upheld the NOX SIP 

Call. The Court acknowledged that EPA 

had set a relatively low hurdle for States 

to pass the air quality component (and 

thus be considered to contribute 

significantly, depending on costs): 

‘‘EPA’s design was to have a lot of States 

make what it considered modest NOX

reductions. * * * ’’ See Michigan v. 

EPA, 213 F.3d 663(D.C. Cir. 2000), cert. 

denied, 532 U.S. 904 (2001). Indeed, the 

Court intimated that EPA could have 

established an even lower hurdle for 

States to pass the air quality component:

EPA has determined that ozone has some

adverse health effects—however slight—at 

every level [citing National Ambient Air 

Quality Standards for Ozone, 62 FR 38856 

(1997)]. Without consideration of cost it is 

hard to see why any ozone-creating 

emissions should not be regarded as fatally 

‘‘significant’’ under section 

110(a)(2)(D)(i)(I).’’ 213 F.3d at 678 (emphasis 

in original).

We believe the same approach should 

apply in the case of PM2.5 transport. 

In applying this approach, we first 

considered a significance level of 0.10 

μg/m3. This is a small level, which is 

consistent with the factors described. 

Further, an increment of this size in the 

annual average PM2.5 concentration is 

the smallest one that can make the 

difference between compliance and 

violation of the NAAQS for an area very 

near the NAAQS, due to the treatment 

of significant digits and rounding in the 

definition of the NAAQS. Because the 

PM2.5 NAAQS is 15.0 μg/m3 (three 

significant figures), a concentration after 

rounding of 15.1 μg/m3 would be a 

violation.48

On the other hand, we then 

considered that the air quality forecasts 

we have conducted in assessing future 

air quality impacts have, of necessity, 

been based on modeling, not monitoring 

data. In evaluating such results, we 

believe it is, on balance, more 

appropriate to adopt a small percentage 

value of the standard level, rather than 

absolute number derived from 

monitoring considerations. A percentage 

amount that is close to the value derived 

from the monitoring level described 

above is 1 percent. We therefore propose 

to adopt an annual PM2.5 significance 

level equal to 1 percent of the standard. 

We believe that contributions equal to 

or greater than 0.15 μg/m3 would reflect 

a reasonable threshold for determining 

significant levels of interstate transport. 

Applying the proposed cutoff of 0.15 

μg/m3 or higher to the results of the 

transport impact assessment identifies 

SO2 and NOX emissions in 28 States and 

the District of Columbia as contributing 

significantly (before considering costs) 

to nonattainment in another State. 

These States, with their maximum 

downwind PM2.5 contributions, are 

listed in section V, Table V–5. 

Although we are proposing to use 

0.15 μg/m3 as the air quality criteria, we 

have also analyzed the effects of using 

0.10 μg/m3. Based on our current 

modeling, two additional states, 

Oklahoma and North Dakota, would be 

included if we were to adopt 0.10 μg/

m3 as the air quality criterion. Thus, 

today’s proposal includes the State EGU 

budgets that would apply if these two 

states were included under the final 

rule. The EPA requests comments on the 

appropriate geographic scope of this 

proposal and the merits of the proposed 

0.15 μg/m3 threshold level as indicating 

a potentially significant effect of air 

quality in nonattainment areas in 

neighboring states. We request 

comments on the use of higher and 

lower thresholds for this purpose. 

b. Eight-Hour Ozone 

In assessing the role of interstate 

transport to 8-hour ozone 

nonattainment, we have followed the 

approach used in the NOX SIP Call, but 

have used an updated model and 

updated inputs that reflect current 

requirements (including the NOX SIP 

Call itself).49 Using updated 

contribution results, we rely on the 

same contribution indicators, or metrics, 

that were used to make findings in the 

NOX SIP Call. Section V and the air 

quality technical support document 

present the 8-hour ozone transport 

analysis and findings in detail.

In general, we found a range in how 

much transport from each upwind State 

contributes to 2010 nonattainment in 

downwind States. The EPA’s modeling 

indicates from 22 to 96 percent of the 

ozone problem is due to transport, 

depending on the area. 

Based on the same metrics employed 

in the NOX SIP Call, we have concluded 

that, even with reductions from the NOX

SIP Call and other control measures that 

will reduce NOX and VOC emissions, 

interstate transport of NOX from 25 

States and the District of Columbia will 

contribute significantly to downwind 8-

hour ozone nonattainment in 2010. 

These States are listed in Table V–2. We 

are deferring findings for Texas, 

Oklahoma, Kansas, Nebraska, South 

Dakota, and North Dakota, which at this 

time cannot be assessed on the same 

basis as States to the east because they 

are only partially included in the 

modeling domain. We intend to conduct 

additional modeling for these six States 

using a larger modeling domain, and 

may propose action on them based on 

that modeling in a supplemental 

proposal. 

5. Assessment of Potential Emissions 

Reductions 

Today’s proposal generally follows 

the statutory interpretation and 

approach under section 110(a)(2)(D) 

developed in the NOX SIP Call 

rulemaking. Under this interpretation, 

the emissions in each upwind State that 

contribute significantly to 

nonattainment are identified as being 

those emissions which can be 

eliminated through highly cost-effective 

controls.

Section 110(a) requires upwind States 

to eliminate emissions that contribute 

significantly to nonattainment 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4585

50The actual dates will be determined by relevant 

provisions in the CAA and EPA’s interpretation of 

these provisions published in upcoming 

implementation rules for the PM2.5 and 8-hour 

ozone NAAQS. 51Because Connecticut is affected only by the 8-

hour ozone findings, NOX emissions reductions are 

not necessary until the ozone season. Therefore, for 

Connecticut only, EPA is proposing a Phase I NOX

reduction compliance date of May 1, 2010.

downwind, and to do so through a SIP 

revision that must be submitted to EPA 

within 3 years of issuance of revised 

NAAQS. In addition, States are required 

to submit SIPs that provide for 

attainment in nonattainment areas no 

later than 3 years after designation. 

Through these provisions, the CAA 

places the responsibility for controls 

needed to assure attainment on both 

upwind States and their sources, and on 

local sources of emissions. The CAA 

does not specify the relative shares of 

the burden that each should carry, but 

section 110(a)(2)(D) clearly mandates 

that upwind States reduce those 

emissions that contribute significantly 

to downwind nonattainment. Moreover, 

as a matter of broad policy, even if an 

area could attain the NAAQS through 

technically feasible, but costly, local 

controls alone, some consideration 

needs to be given to a reasonable 

balance between regional and local 

controls to reach attainment. In the 

absence of regional controls on upwind 

sources, downwind States would be 

forced to obtain greater emissions 

reductions, and incur greater costs, to 

offset the transported pollution from 

upwind sources. 

For the PM2.5 and 8-hour ozone 

NAAQS, our air quality modeling shows 

attainment with local controls alone 

would be difficult or impossible for 

many areas. Our analysis in section VI 

shows that substantial regional 

reductions in SO2 and NOX emissions 

from EGUs are available at costs that are 

well within the levels of historically 

adopted measures. An attainment 

strategy that relies on a combination of 

local controls and regional EGU controls 

is a more equitable and therefore a more 

reasonable approach than a strategy that 

relies solely on local controls. 

a. Identifying Highly Cost-Effective 

Emissions Reductions 

As the second step in the two-step 

process for determining the amount of 

significant contribution, we must 

determine the amount of emissions that 

may be eliminated through highly costeffective controls. Today we are 

proposing to retain the concept of 

highly cost-effective controls as 

developed and used in the NOX SIP 

Call, in which we determined such 

controls by comparing the cost of 

recently required controls, and to apply 

it to the SO2 and NOX precursors of 

PM2.5 and 8-hour ozone nonattainment. 

For today’s proposal, EPA 

independently evaluated the cost 

effectiveness of strategies to reduce SO2

and NOX to address PM2.5 and ozone 

nonattainment. We developed criteria 

for highly cost-effective amounts 

through: (1) comparison to the average 

cost effectiveness of other regulatory 

actions and (2) comparison to the 

marginal cost effectiveness of other 

regulatory actions. These ranges 

indicate cost-effective controls. The EPA 

believes that controls with costs towards 

the low end of the range may be 

considered to be highly cost effective 

because they are self-evidently more 

cost effective than most other controls 

in the range. We also considered other 

factors. Our approach to the costeffectiveness element of significant 

contribution and the results of our 

analysis are presented in section VI. 

The other factors we have considered 

include the applicability, performance, 

and reliability of different types of 

pollution control technologies for 

different types of sources; the 

downwind impacts of the level of 

control that is identified as highly cost 

effective; and other implementation 

costs of a regulatory program for any 

particular group of sources. We also 

consider some of these same factors in 

determining the time period over which 

controls should be installed. Depending 

on the type of controls we view as cost 

effective, we must take into account the 

time it would take to design, engineer, 

and install the controls, as well as the 

time period that a source would need to 

obtain the necessary financing. These 

various factors, including engineering 

and financial factors, are discussed in 

section VI. We may also consider 

whether emissions from a particular 

source category will be controlled under 

an upcoming regulation (a MACT 

standard, for example). 

Today’s action proposes emissions 

reductions requirements based on 

highly cost-effective emissions 

reductions obtainable from EGUs. 

Section VI explains the proposed 

requirements.

b. Timing for Submission of Transport 

SIPs 

We are proposing today to require that 

PM2.5 and 8-hour ozone transport SIPs 

be submitted, under CAA section 

110(a)(1), as soon as practicable, but not 

later than 18 months from the date of 

promulgation of this rule. Based on the 

experience of States in developing plans 

to respond to the NOX SIP Call, we 

believe this is a reasonable amount of 

time. The NOX SIP Call required States 

to submit SIPs within 12 months of the 

final rule, a period within the maximum 

18 months allowed under section 

110(k)(5) governing States’ responses to 

SIP calls. The 12-month period was 

reasonable for the NOX SIP Call given 

the focus on a single pollutant, NOX, 

and the attainment deadlines facing 

downwind 1-hour ozone nonattainment 

areas. Since today’s proposal requires 

affected States to control both SO2 and 

NOX emissions, and to do so for the 

purpose of addressing both the PM2.5

and 8-hour ozone NAAQS, we believe it 

is reasonable to allow affected States 

more time than was allotted in the NOX

SIP Call to develop and submit transport 

SIPs. Since we plan to finalize this rule 

no later than mid-2005, SIP submittals 

would be due no later than the end of 

2006. Under this schedule, upwind 

States’ transport SIPs would be due 

before the downwind States’ PM2.5 and 

8-hour ozone nonattainment SIPs, under 

CAA section 172(b). We expect that the 

downwind States’ 8-hour ozone 

nonattainment area SIPs will be due by 

May 2007, and their nonattainment SIPs 

for PM2.5 by January 2008.50 As 

explained in section VII below, today’s 

proposed requirement that the upwind 

States submit the transport SIP revisions 

even before the downwind States 

submit nonattainment SIPs is consistent 

with the CAA SIP submittal sequence, 

will provide health and environmental 

benefits, and will assist the downwind 

States in their attainment demonstration 

planning.

c. Timing for Achieving Emissions 

Reductions 

As discussed in section VI, 

engineering and financial factors suggest 

that only a portion of the emissions 

reductions that EPA considers highly 

cost effective can be achieved by 

January 1, 2010. To ensure timely 

protection of public health, while taking 

into account these considerations, we 

are proposing to implement highly costeffective reductions in two phases, with 

a Phase I compliance date of January 1, 

2010, and a Phase II compliance date of 

January 1, 2015. 

Based on EPA’s analysis, we believe 

that a regional emissions cap on SO2 of 

3.9 million tons together with a NOX

emissions cap of 1.6 million tons is 

achievable by January 1, 2010, and 

therefore we are proposing these limits 

as the Phase I requirements.51 The EPA 

believes the remaining highly costeffective SO2 and NOX emissions 

reductions can be achieved by January 

1, 2015, and will be helpful to areas 

with PM2.5 or 8-hour ozone attainment 

dates approaching 2015. The EGU caps 

4586 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

52Excludes emissions from Connecticut.

in the proposed control region would be 

lowered in the second phase to 2.7 

million tons for SO2 and 1.3 million 

tons for NOX. The current 28-state52

emissions, baseline emissions in 2010 

and 2015 and proposed regional 

emissions caps are shown in Table III–

1.

TABLE III–1.—SO2 AND NOX REGIONWIDE EMISSIONS REDUCTIONS AND EMISSIONS CAPS

2002

Emissions

(tons) 

2010

(tons) 

2015

(tons) 

Baseline 

emissions Cap Baseline emissions Cap 

SO2 .......................................................................................................... 9.4M 9.0M 3.9M 8.3M 2.7M 

NOX .......................................................................................................... 3.7M 3.1M 1.6M 3.2M 1.3M 

We derived these amounts as follows: 

The SO2 emissions limitations 

correspond to 65 percent of the affected 

States’ title IV allowances in 2015, and 

50 percent in 2010. The NOX emissions 

limitations correspond to the sum of the 

affected States’ historic heat input 

amounts, multiplied by an emission rate 

of 0.125 mmBtu for 2015 and 0.15 

mmBtu for 2010. Historic heat input is 

derived as the highest annual heat input 

during 1999–2002. We are proposing 

that these regionwide limits correspond 

to costs that meet the highly costeffective criteria. 

Further, EPA proposes to apportion 

these regionwide amounts to the 

individual States in the region as 

follows: For SO2, EPA proposes to 

apportion the regionwide amounts to 

the individual States in the region in 

proportion to their title IV allocations. 

This would amount to requiring 

reductions in the amount of 65 percent 

of each affected State’s title IV 

allocations for 2015, and 50 percent for 

2010. The EPA is considering requiring 

an adjustment to these amounts to 

account for the fact that the utility 

industry has changed since the title IV 

allocation formulae were developed. For 

NOX, EPA proposes to apportion the 

regionwide amounts to the individual 

States in the region in proportion to 

their historic heat input, determined as 

the average of several years of heat 

input. 

d. Compliance Approaches and 

Statewide Emissions Budgets 

Today’s proposal affects 28 upwind 

States and the District of Columbia for 

the purpose of addressing PM2.5

transport, and 25 States and the District 

of Columbia for the purpose of 

addressing ozone transport. For States 

required to reduce NOX emissions to 

address 8-hour ozone transport, the NOX

reductions must be implemented at least 

during the ozone season. For States 

required to reduce SO2 and NOX

emissions to address PM2.5 transport, 

the NOX and SO2 reductions must be 

achieved annually. For States affected 

for both PM2.5 and ozone, EPA is 

proposing that compliance with the 

PM2.5-related annual emissions 

reduction requirement be deemed 

sufficient for compliance with the 

seasonal ozone-related emissions 

reduction requirement. 

The EPA also wants to streamline 

potentially overlapping compliance 

requirements between the existing NOX

SIP Call and today’s proposed action, 

while ensuring that the ozone benefits 

of the NOX SIP Call are not jeopardized. 

The EPA is proposing that States may 

choose to recognize compliance with 

the more stringent annual NOX

reduction requirements contained in 

today’s rulemaking as satisfying the 

original NOX SIP Call seasonal 

reduction requirements for sources that 

States cover under both the NOX SIP 

Call and today’s proposal. 

We are proposing to calculate the 

amount of required reductions on the 

basis of controls available for EGUs. We 

believe these EGU reductions represent 

the most cost-effective reductions 

available. In 2010, considering other 

controls that will be in place, but not 

assuming a rule to address transported 

pollution is implemented, EGUs are 

projected to emit approximately onequarter of the total man-made NOX

emissions in 2010 and two-thirds of the 

man-made SO2 emissions in the region 

proposed for reductions in today’s 

rulemaking. Extensive information 

exists indicating that highly costeffective controls are available for 

achieving significant reductions in NOX

and SO2 emissions from the EGU sector. 

We are proposing that (as under the 

NOX SIP Call) States obtaining 

reductions from EGUs to comply with 

today’s proposal must cap their EGUs at 

levels that will assure the required 

reductions. In addition, today’s action 

proposes an approach which permits 

the use of title IV SO2 allowances at 

discounted levels that provide for a 

planned transition toward 

accomplishing the objectives of the 

interstate air quality rule. 

Based on our experience in the NOX

SIP Call, we anticipate that States will 

choose to require EGUs to participate in 

the cap and trade programs 

administered by EPA. If States choose to 

participate in the cap and trade 

programs, States must adopt the model 

cap and trade programs, described in 

section VIII. The cap and trade programs 

will create incentives for EGUs to 

reduce SO2 and NOX emissions starting 

no later than 2010, and probably 

somewhat earlier, and continuing to 

2015 and beyond. The model cap and 

trade programs are designed to satisfy 

all the SO2 and NOX emissions 

reduction requirements proposed in 

today’s rule.

If a State imposes the full amount of 

SO2 and NOX emissions reductions on 

EGUs that EPA has deemed highly cost 

effective, we are taking comment on 

whether this approach to compliance 

with the interstate air quality rule by 

affected EGUs in affected States would 

satisfy for those sources the Best 

Available Retrofit Technology (BART) 

requirements of the CAA. We are further 

soliciting comment, for the 

circumstances just described, on 

whether compliance through 

participation in a regionwide or 

statewide cap and trade program, rather 

than source-specific emissions limits, 

could satisfy the BART requirements for 

those sources. 

States that choose to obtain some of 

the required SO2 or NOX reductions 

from non-EGU sources must adopt 

control measures for those other 

sources. To assure accurate accounting 

of emissions reductions, these States 

will have to establish sector-specific 

baseline emission inventories for 2010 

and 2015. These States will also have to 

measure projected emissions reductions 

from adopted measures from these 

baselines. The sector-specific baseline 

inventory minus the amount of 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4587

53See 40 CFR 49.4(a).

54 ‘‘Air Quality Modeling Technical Support 

Document for the Proposed Interstate Air Quality 

Rule (January 2004)’’ can be obtained from the 

docket for today’s proposed rule: OAR–2003–0053.

reduction the State chooses to obtain 

from that sector is the sector budget for 

those sources. The SIP must contain a 

projection showing that compliance 

with the adopted measure(s) for that 

sector will ensure that emissions from 

the sector will meet the sector budget. 

E. Request for Comment on Potential 

Applicability to Regional Haze 

We believe that the emissions 

reductions that would result from 

today’s proposed rulemaking would 

help the States in making substantial 

progress towards meeting the goals and 

requirements of the Regional Haze rule 

in the Eastern U.S. As a result of the 

predicted emissions reductions, we 

anticipate that visibility would improve 

in Class I areas in this region, including 

in areas such as the Great Smoky and 

Shenandoah National Parks. We request 

comment on the extent to which the 

reductions achieved by these rules 

would, for States covered by the IAQR, 

satisfy the first long term strategy for 

regional haze, which is required to 

achieve reasonable progress towards the 

national visibility goal by 2018. 

We also request comment on whether 

the cap and trade approach proposed in 

this rulemaking is a suitable mechanism 

that could be expanded to help other 

States meet their regional haze 

obligations under the CAA. If we were 

to propose this approach, we would 

address this further in a supplemental 

notice and we would need to amend our 

Regional Haze rule to specify that, in 

establishing a reasonable progress goal 

for any Class I area as required by CAA 

section 169A and our rule, the State 

would need to submit a SIP revision 

that, at a minimum, would enable the 

State to participate in a cap and trade 

program that reflects a rate of progress 

based on specified levels of SO2 and 

NOX reductions that we find are 

reasonable in light of the natural 

visibility goal that Congress established 

in 1977. Such an approach could be 

proposed to apply to areas identified in 

our final Regional Haze rule (64 FR 

35714, July 1, 1999) as having emissions 

that may reasonably be anticipated to 

cause or contribute to an impairment of 

visibility in at least one Class I area, to 

reduce those emissions. We note that, 

under such an approach, we could 

consider two separate NOX emission 

levels and two separate cap and trade 

zones for NOX. States included on the 

basis of their contribution to either 

ozone or PM2.5 nonattainment would be 

in one zone and would need to meet the 

NOX emission reduction requirements 

discussed elsewhere in this action. 

States included only on the basis of 

needing to achieve reasonable progress 

goals would be in a separate zone and 

would need to meet a level specifically 

designed to address that issue. We 

request comment on what emissions 

levels should be considered for SO2 and 

NOX if we were to pursue such an 

approach. We also request comment on 

how such an approach could be 

integrated with and combine the efforts 

of Regional Planning Organizations that 

are working to address regional haze.

F. How Will the Interstate Air Quality 

Rule Apply to the Federally Recognized 

Tribes? 

The Tribal Authority Rule (TAR) (40 

CFR part 49), which implements section 

301(d) of the CAA, gives Tribes the 

option of developing CAA programs, 

including Tribal Implementation Plans 

(TIPs). However, unlike States, Tribes 

are not required to develop 

implementation plans. Specifically, the 

TAR, adopted in 1998, provides for the 

Tribes to be treated in the same manner 

as a State in implementing sections of 

the CAA. The EPA determined in the 

TAR that it was appropriate to treat 

Tribes in a manner similar to a State in 

all aspects except specific plan 

submittal and implementation deadlines 

for NAAQS-related requirements, 

including, but not limited to, such 

deadlines in CAA sections 110(a)(1), 

172(a)(2), 182, 187, and 191.53

In addition, the TAR also indicates 

that section 110(a)(2)(d) applies to the 

Tribes. This provision of the Act 

requires EPA to ensure that SIPs and 

TIPs ensure that their sources do not 

contribute significantly to 

nonattainment downwind. In fact, 

Tribes generally have few emissions 

sources and thus air quality problems in 

Indian country are generally created by 

transport into Tribal lands. Specifically, 

in the February 12, 1998 preamble to the 

Tribal Air Rule we stated:

EPA notes that several provisions of the 

CAA are designed to address cross-boundary 

air impacts. EPA is finalizing its proposed 

approach that the CAA protections against 

interstate pollutant transport apply with 

equal force to States and Tribes. Thus EPA 

is taking the position that the prohibitions 

and authority contained in sections 

110(a)(2)(D) and 126 of the CAA apply to 

Tribes in the same manner as States. As EPA 

noted in the preamble to its proposed rule, 

section 110(a)(2)(D), among other things, 

requires States to include provisions in their 

SIPs that prohibit any emissions activity 

within the State from significantly 

contributing to nonattainment * * * In 

addition, section 126 authorizes any State or 

Tribe to petition EPA to enforce these 

prohibitions against a State containing an 

allegedly offending source or group of 

sources. See 63 FR 7262, 59 FR 43960–43961.

Because the Tribes, like the States are 

our regulatory partners, in developing 

the interstate air quality rule we want to 

ensure that the Tribes’ air quality and 

sovereignty are protected. Thus, we are 

exploring areas in the rule development 

where Tribes will be impacted. One 

area, in particular, is in the 

establishment of emissions reduction 

requirements and budgets. We are not 

aware of the presence of any EGUs on 

tribal lands located in the States for 

which EPA has conducted air quality 

modeling for today’s proposal. 

Although, it is possible that EGUs may 

locate in Indian country in the future. 

We are requesting comment on whether 

and how to apply any emissions 

reductions or budget requirements to 

the Tribes, as well as comments on 

other areas of the rule that will impact 

the Tribes. 

IV. Air Quality Modeling To Determine 

Future 8-Hour Ozone and PM2.5

Concentrations 

A. Introduction 

In this section, we describe the air 

quality modeling performed to support 

today’s proposal. We used air quality 

modeling primarily to quantify the 

impacts of SO2 and NOx emissions from 

upwind States on downwind annual 

average PM2.5 concentrations, and the 

impacts of NOx emissions from upwind 

States on downwind 8-hour ozone 

concentrations.

This section includes information on 

the air quality models applied in 

support of the proposed rule, the 

meteorological and emissions inputs to 

these models, the evaluation of the air 

quality models compared to measured 

concentrations, and the procedures for 

projecting ozone and PM2.5

concentrations for future year scenarios. 

We also present the results of modeling 

locally applied control measures 

designed to reduce concentrations of 

PM2.5 in projected nonattainment areas. 

The Air Quality Modeling Technical 

Support Document (AQMTSD) contains 

more detailed information on the air 

quality modeling aspects of this rule.54

Updates made between the proposed 

rule and the final rule to components of 

the ozone and PM modeling platform 

will be made public in a Notice of Data 

Availability.

4588 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

55 ‘‘Air Quality Data Analysis Technical Support 

Document for the Proposed Interstate Air Quality 

Rule (January 2004)’’ can be obtained from the 

docket for today’s proposed rule: OAR–2003–0053.

B. Ambient 8-Hour Ozone and Annual 

Average PM2.5 Design Values 

1. 8-Hour Ozone Design Values 

Future year levels of air quality are 

estimated by applying relative changes 

in model-predicted ozone to current 

measurements of ambient ozone data. 

Current measurements of ambient ozone 

data come from monitoring networks 

consisting of more than one thousand 

monitors located across the country. 

The monitors are sited according to the 

spatial and temporal nature of ozone, 

and to best represent the actual air 

quality in the United States. More 

information on the monitoring network 

used to collect current measurements of 

ambient ozone is in the Air Quality Data 

Analysis Technical Support 

Document.55

In analyzing the ozone across the 

United States, the raw monitoring data 

must be processed into a form pertinent 

for useful interpretations. For this 

action, the ozone data have been 

processed consistent with the formats 

associated with the NAAQS for ozone. 

The resulting estimates are used to 

indicate the level of air quality relative 

to the NAAQS. For ozone air quality 

indicators, we developed estimates for 

the 8-hour ozone standard. The level of 

the 8-hour ozone NAAQS is 0.08 ppm. 

The 8-hour ozone standard is not met if 

the 3-year average of the annual 4th 

highest daily maximum 8-hour ozone 

concentration is greater than 0.08 ppm 

(0.085 is rounded up). This 3-year 

average is called the annual standard 

design value. As described below, the 

approach for forecasting future ozone 

design values involved the projection of 

2000–2002 ambient design values to the 

various future year emissions scenarios 

analyzed for today’s proposed rule. 

These data were obtained from EPA’s 

Air Quality System (AQS) on August 11, 

2003. A more detailed description of 

design values is in the Air Quality Data 

Analysis Technical Support Document. 

A list of the 2000–2002 Design Values 

is available at http://www.epa.gov/

airtrends/values.html.

2. Annual Average PM2.5 Design Values 

Future year levels of air quality are 

estimated by applying relative changes 

in model predicted PM2.5 to current 

measurements of ambient PM2.5 data. 

Current measurements of ambient PM2.5

data come from monitoring networks 

consisting of more than one thousand 

monitors located across the country. 

The monitors are sited according to the 

spatial and temporal nature of PM2.5,

and to best represent the actual air 

quality in the United States. More 

information on the monitoring network 

used to collect current measurements of 

ambient PM2.5 is in the Air Quality Data 

Analysis Technical Support Document.

In analyzing the PM2.5 data across the 

United States, the raw monitoring data 

must be processed into a form pertinent 

for useful interpretations. For this 

action, the PM2.5 data have been 

processed consistent with the formats 

associated with the NAAQS for PM2.5. 

The resulting estimates are used to 

indicate the level of air quality relative 

to the NAAQS. For PM2.5, the annual 

standard is met when the 3-year average 

of the annual mean concentration is 

15.0 μg/m 3 or less. The 3-year average 

annual mean concentration is computed 

at each site by averaging the daily 

Federal Reference Method (FRM) 

samples taken each quarter, averaging 

these quarterly averages to obtain an 

annual average, and then averaging the 

three annual averages. The 3-year 

average annual mean concentration is 

also called the annual standard design 

value. As described below, the approach 

for forecasting future PM2.5 design 

values involved the projection of 1999–

2001 and 2000–2002 ambient design 

values to the various future year 

emissions scenarios analyzed for today’s 

proposed rule. These data were obtained 

from EPA’s Air Quality System (AQS) 

on July 9, 2003. A more detailed 

description of design values is in the Air 

Quality Data Analysis Technical 

Support Document. A list of the 1999–

2001 and 2000–2002 Design Values is 

available at http://www.epa.gov/

airtrends/values.html.

C. Emissions Inventories 

1. Introduction 

In order to support the air quality 

modeling analyses for the proposed 

rule, emission inventories were 

developed for the 48 contiguous States 

and the District of Columbia. These 

inventories were developed for a 2001 

base year to reflect current emissions 

and for future baseline scenarios for 

years 2010 and 2015. The 2001 base 

year and 2010 and 2015 future base case 

inventories were in large part derived 

from a 1996 base year inventory and 

projections of that inventory to 2007 

and 2020 as developed for previous EPA 

rulemakings for Heavy Duty Diesel 

Engines (HDDE) (http://www.epa.gov/

otaq/models/hd2007/r00020.pdf) and 

Land-based Non-road Diesel Engines 

(LNDE) (http://www.epa.gov/nonroad/

454r03009.pdf). The inventories were 

prepared at the county level for on-road 

vehicles, non-road engines, and area 

sources. Emissions for EGUs and 

industrial and commercial sources (nonEGUs) were prepared as individual 

point sources. The inventories contain 

both annual and typical summer season 

day emissions for the following 

pollutants: oxides of nitrogen (NOX); 

volatile organic compounds (VOC); 

carbon monoxide (CO); sulfur dioxide 

(SO2); direct particulate matter with an 

aerodynamic diameter less than 10 

micrometers (PM10) and less than 2.5 

micrometers (PM2.5); and ammonia 

(NH3). Additional information on the 

development of the emissions 

inventories for air quality modeling and 

State total emissions by sector and by 

pollutant for each scenario are provided 

in the AQMTSD. 

2. Overview of 2001 Base Year 

Emissions Inventory 

Emissions inventory inputs 

representing the year 2001 were 

developed to provide a base year for 

forecasting future air quality, as 

described below in section IV.D. for 

ozone and section IV.E. for PM2.5. 

Because the complete 2001 National 

Emissions Inventory (NEI) and future 

year projections consistent with that 

NEI were not available in a form 

suitable for air quality modeling when 

needed for this analysis, the following 

approach was used to develop a 

reasonably representative ‘‘proxy’’

inventory for 2001 in model-ready form 

that retained the same consistency with 

the existing future year projected 

inventories as the 1996 model-ready 

inventory that was used as the basis for 

those projected inventories. 

The EPA had available model-ready 

emissions input files for a 1996 Base 

Year and a 2010 Base Case from a 

previous analysis. In addition, robust 

NEI estimates were available for 2001 

for three of the six man-made emissions 

sectors: EGUs; on-road vehicles; and 

non-road engines. For the EGU sector, 

State-level emissions totals from the NEI 

2001 were divided by similar totals from 

the 1996 modeling inventory to create a 

set of 1996 to 2001 adjustment ratios. 

Ratios were developed for each State 

and pollutant. These ratios were applied 

to the model-ready 1996 EGU emissions 

file to produce the 2001 EGU emissions 

file.

The NEI 2001 emissions estimates for 

the on-road vehicles and non-road 

engines sectors were available from the 

MOBILE6 and NONROAD2002 models, 

respectively. Because both of these 

models were updates of the versions 

used to produce the existing 1996 

model-ready emissions files and their 

associated projection year files, a 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4589

56The 2001 NEI emissions for EGUs includes 

emissions for units reporting to EPA under title IV.

slightly different approach than that 

used for the EGUs was used to adjust 

the 1996 model-ready files to produce 

files for 2001. 

The updated MOBILE6 and 

NONROAD2002 models were used to 

develop 1996 emissions estimates that 

were consistent with the 2001 NEI 

estimates. A set of 1996–to–2001 

adjustment ratios were then created by 

dividing State-level total emissions for 

each pollutant for 2001 by the 

corresponding consistent 1996 

emissions. These adjustment ratios were 

then multiplied by the gridded modelready 1996 emissions for these two 

sectors to produce model-ready files for 

2001. These model-ready 2001 files, 

therefore, maintain consistency with the 

future year projection files that were 

based on the older emission model 

versions but also capture the effects of 

the 1996 to 2001 emission changes as 

indicated by the latest versions of the 

two emissions models. 

Consistent estimates of emissions for 

the 2001 Base Year were not available 

at the time modeling was begun for two 

other emission sectors: non-EGU point 

sources and area sources. For these two 

sectors, linear interpolations were 

performed between the gridded 1996 

emissions and the gridded 2010 Base 

Case emissions to produce 2001 gridded 

emissions files. These interpolations 

were done separately for each of the two 

sectors, for each grid cell, for each 

pollutant. As the 2010 Base Case 

inventory was itself a projection from 

the 1996 inventory, this approach 

maintained consistency of methods and 

assumptions between the 2001 and 2010 

emissions files. 

3. Overview of the 2010 and 2015 Base 

Case Emissions Inventories 

The future base case scenarios 

generally represent predicted emissions 

in the absence of any further controls 

beyond those State, local, and Federal 

measures already promulgated plus 

other significant measures expected to 

be promulgated before the final rule 

from today’s proposal. Any additional 

local control programs which may be 

necessary for areas to attain the annual 

PM2.5 NAAQS and the ozone NAAQS 

are not included in the future base case 

projections. The future base case 

scenarios do reflect projected economic 

growth, as described in the AQMTSD. 

Specifically, the future base case 

scenarios include the effects of the 

LNDE as proposed, the HDDE standards, 

the Tier 2 tailpipe standards, the NOX

SIP Call as remanded (excludes controls 

in Georgia and Missouri), and 

Reasonably Available Control 

Techniques (RACT) for NOX in 1-hour 

ozone nonattainment areas. 

Adjustments were also made to the nonroad sector inventories to include the 

effects of the Large Spark Ignition and 

Recreational Vehicle rules; and to the 

non-EGU sector inventories to include 

the SO2 and particulate matter cobenefit effects of the proposed 

Maximum Achievable Control 

Technology (MACT) standard for 

Industrial Boilers and Process Heaters. 

The future base case scenarios do not 

include the NOX co-benefit effects of 

proposed MACT regulations for Gas 

Turbines or stationary Reciprocating 

Internal Combustion Engines, which we 

estimate to be small compared to the 

overall inventory; or the effects of NOX

RACT in 8-hour ozone nonattainment 

areas, because these areas have not yet 

been designated. 

4. Procedures for Development of 

Emission Inventories 

a. Development of Emissions 

Inventories for Electric Generating Units

As stated above, the 2001 Base Year 

inventory for the EGU sector was 

developed by applying State-level 

adjustment ratios of 2001 NEI 56

emissions to 1996 emissions for the 

EGU sector to the existing model-ready 

1996 EGU file. Adjustments were thus 

made in the modeling file to account for 

emissions reductions that had occurred 

between 1996 and 2001, but at an 

aggregated State-level, rather than for 

each individual source. Future year 

2010 and 2015 Base Case EGU 

emissions used for the air quality 

modeling runs that predicted ozone and 

PM2.5 nonattainment status were 

obtained from version 2.1.6 of the 

Integrated Planning Model (IPM)

(http://www.epa.gov/airmarkets/epaipm/index.html). However, results from 

this version of the IPM model were not 

available at the time that the air quality 

model runs to determine interstate 

contributions (‘‘zero-out runs’’) were 

started. Therefore, we used EGU 

emissions from the previous IPM 

version (v2.1) for the zero-out air quality 

model runs and associated 2010 Base 

Case. Updates applied to the IPM model 

between versions 2.1 and 2.1.6 include 

the update of coal and natural gas 

supply curves and the incorporation of 

several State-mandated emission caps 

and New Source Review (NSR) 

settlements.

Tables IV–1 and IV–2 provide Statelevel emissions totals for the 2010 Base 

Case for SO and NOX, respectively, for 

each of the five sectors. These tables are 

helpful in understanding the relative 

magnitude of each sector to the total 

inventory. In addition, these tables 

include, for comparison, a column 

showing the EGU emissions from the 

older version 2.1 IPM outputs that were 

used for the zero-out modeling analysis. 

Our examination indicates that the EGU 

differences between the two IPM 

outputs are generally minor and have 

not affected the content of this proposal.

TABLE IV–1.—STATE SO2 EMISSIONS BY SECTOR IN THE 2010 BASE CASE 1

ST EGU v21 EGU v216 Non-EGU On-road Non-road Area Total 

AL ............................................................. 494,700 473,000 121,300 600 1,600 51,900 648,400 

AZ ............................................................. 47,800 47,800 120,800 600 700 4,300 174,200 

AR ............................................................ 119,300 122,700 17,500 300 500 21,200 162,100 

CA ............................................................ 17,300 17,300 44,000 3,400 13,000 10,700 88,400 

CO ............................................................ 90,400 73,100 15,900 500 800 4,700 94,900 

CT ............................................................ 6,600 6,300 7,600 300 400 500 15,000 

DE ............................................................ 36,800 46,400 38,400 100 300 10,200 95,400 

DC ............................................................ 0 0 2,100 0 100 5,800 8,000 

FL ............................................................. 230,300 233,200 90,400 1,700 15,100 44,700 385,300 

GA ............................................................ 610,000 609,200 92,800 1,100 2,600 6,700 712,300 

ID .............................................................. 0 0 26,800 200 300 8,800 36,000 

IL .............................................................. 591,500 600,800 277,200 1,100 1,700 36,400 917,300 

IN .............................................................. 599,000 670,400 152,200 800 1,100 2,200 826,700 

IA .............................................................. 186,200 169,900 84,000 300 600 14,600 269,400 

4590 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE IV–1.—STATE SO2 EMISSIONS BY SECTOR IN THE 2010 BASE CASE 1—Continued

ST EGU v21 EGU v216 Non-EGU On-road Non-road Area Total 

KS ............................................................ 71,500 63,500 16,000 300 800 3,500 84,100 

KY ............................................................ 393,300 363,100 42,900 500 1,800 58,000 466,400 

LA ............................................................. 96,300 112,500 193,600 400 21,100 94,000 421,700 

ME ............................................................ 4,700 3,200 22,200 200 200 10,800 36,600 

MD ............................................................ 261,400 232,200 22,500 600 8,100 900 264,300 

MA ............................................................ 17,700 15,600 15,300 600 1,200 61,300 94,000 

MI ............................................................. 375,800 387,600 135,000 1,000 1,300 32,700 557,600 

MN ............................................................ 94,200 91,600 41,200 500 1,100 5,700 140,000 

MS ............................................................ 84,600 73,500 77,500 400 2,000 82,700 236,100 

MO ........................................................... 261,000 293,100 128,600 700 900 31,900 455,200 

MT ............................................................ 17,700 17,900 34,700 100 300 1,400 54,400 

NE ............................................................ 97,200 97,600 7,300 200 600 10,100 115,800 

NV ............................................................ 56,700 16,400 3,500 200 400 3,900 24,300 

NH ............................................................ 7,300 7,300 7,900 100 200 90,800 106,300 

NJ ............................................................. 85,300 41,300 70,800 700 53,500 42,600 208,900 

NM ............................................................ 48,300 48,600 115,200 300 200 9,400 173,700 

NY ............................................................ 211,400 214,100 168,600 1,300 2,200 122,100 508,200 

NC ............................................................ 221,500 219,400 95,400 1,000 1,200 33,800 350,800 

ND ............................................................ 172,200 160,900 56,100 100 400 64,100 281,600 

OH ............................................................ 979,300 1,258,700 337,600 1,200 5,700 63,300 1,666,40 

OK ............................................................ 133,000 133,000 41,200 500 600 5,500 180,800 

OR ............................................................ 15,200 15,200 6,600 400 800 20,900 43,800 

PA ............................................................ 670,200 853,400 141,000 1,100 3,300 80,900 1,079,80 

RI .............................................................. 0 0 2,400 100 2,900 4,100 9,500 

SC ............................................................ 191,500 199,700 63,900 500 1,200 15,600 280,900 

SD ............................................................ 42,100 36,300 1,400 100 200 23,800 61,800 

TN ............................................................ 317,300 306,100 134,300 700 2,800 47,800 491,700 

TX ............................................................. 539,900 487,700 318,600 2,300 33,400 9,600 851,700 

UT ............................................................ 31,200 31,500 30,300 300 400 13,100 75,600 

VT ............................................................. 0 0 2,000 100 100 13,000 15,100 

VA ............................................................ 180,600 187,800 112,700 900 4,600 9,500 315,400 

WA ........................................................... 6,000 6,000 51,600 600 9,500 3,700 71,400 

WV ........................................................... 456,800 550,600 62,200 200 33,600 11,300 658,000 

WI ............................................................. 217,200 214,100 88,500 600 800 45,900 349,800 

WY ........................................................... 47,100 47,300 59,700 100 200 17,300 124,600 

9,435,400 9,856,900 3,799,200 29,800 236,400 1,367,600 15,290,0

1All values rounded to nearest 100 tons. EGU v216 emissions are latest version and are included in totals. EGU v21 emissions were used for 

the zero-out analysis. 

TABLE IV–2.—STATE NOX EMISSIONS BY SECTOR IN THE 2010 BASE CASE 1

ST EGU v21 EGU v216 Non-EGU On-road Non-road Area Total 

AL ............................................................. 129,500 134,100 83,400 110,200 55,800 69,400 453,000 

AZ ............................................................. 88,200 84,600 118,200 91,300 43,600 78,100 415,700 

AR ............................................................ 52,600 52,500 23,500 64,900 35,400 44,800 221,100 

CA ............................................................ 18,200 17,700 137,300 401,900 276,100 129,300 962,300 

CO ............................................................ 87,000 82,700 44,900 80,600 57,000 59,900 325,100 

CT ............................................................ 6,700 5,200 11,300 48,500 17,300 9,300 91,600 

DE ............................................................ 11,500 10,300 8,500 17,400 16,800 6,900 59,900 

DC ............................................................ 100 0 800 4,800 5,400 1,900 13,000 

FL ............................................................. 162,900 161,800 59,000 293,900 147,900 53,200 716,000 

GA ............................................................ 152,500 150,600 71,400 189,200 66,400 74,700 552,300 

ID .............................................................. 1,400 1,200 6,600 32,700 17,300 29,400 87,200 

IL .............................................................. 194,200 171,400 134,900 177,700 150,200 115,800 750,100 

IN .............................................................. 223,300 239,700 45,400 142,900 90,400 37,900 556,300 

IA .............................................................. 95,400 86,100 26,500 61,600 57,600 31,100 262,900 

KS ............................................................ 101,400 100,900 108,800 59,100 79,500 74,300 422,600 

KY ............................................................ 186,300 195,900 34,800 95,700 73,100 76,900 476,400 

LA ............................................................. 64,700 49,800 297,100 89,300 205,000 103,500 744,700 

ME ............................................................ 6,000 2,100 15,600 30,600 8,800 4,900 62,000 

MD ............................................................ 60,500 60,600 19,100 73,100 38,900 15,900 207,700 

MA ............................................................ 27,800 10,400 18,200 74,400 70,000 24,900 197,800 

MI ............................................................. 126,200 125,400 161,000 171,400 63,200 115,600 636,500 

MN ............................................................ 109,700 104,500 83,800 103,400 64,800 24,800 381,500 

MS ............................................................ 49,700 43,200 74,400 68,800 44,800 56,700 287,800 

MO ........................................................... 144,700 137,000 29,700 117,800 64,200 14,800 363,600 

MT ............................................................ 38,500 38,500 20,800 24,800 34,000 18,400 136,400 

NE ............................................................ 58,100 57,800 14,500 37,700 57,400 15,400 182,800 

NV ............................................................ 44,800 37,400 6,000 36,300 25,400 8,500 113,500 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4591

TABLE IV–2.—STATE NOX EMISSIONS BY SECTOR IN THE 2010 BASE CASE 1—Continued

ST EGU v21 EGU v216 Non-EGU On-road Non-road Area Total 

NH ............................................................ 3,000 3,600 4,200 25,700 6,200 13,900 53,700 

NJ ............................................................. 40,000 29,300 51,000 93,100 86,400 79,800 339,600 

NM ............................................................ 77,300 76,400 68,700 54,500 10,700 32,400 242,800 

NY ............................................................ 58,700 68,400 36,700 181,500 90,900 88,100 465,600 

NC ............................................................ 64,700 62,100 63,300 150,000 60,100 37,000 372,400 

ND ............................................................ 81,100 77,900 7,200 16,400 41,800 21,200 164,600 

OH ............................................................ 249,100 266,800 77,500 201,300 116,900 82,200 744,700 

OK ............................................................ 97,700 82,100 121,000 86,800 40,000 33,200 363,100 

OR ............................................................ 18,000 13,300 16,800 67,400 52,600 39,900 190,000 

PA ............................................................ 212,100 209,800 173,000 200,600 80,600 114,300 778,300 

RI .............................................................. 1,300 1,400 900 12,300 5,600 2,800 23,000 

SC ............................................................ 67,500 64,700 46,000 94,200 29,900 26,100 260,900 

SD ............................................................ 13,800 11,700 4,700 20,200 24,400 7,900 69,000 

TN ............................................................ 106,700 102,800 78,000 132,900 138,900 52,300 505,000 

TX ............................................................. 246,200 200,900 523,800 399,600 432,100 43,100 1,599,50 

UT ............................................................ 68,400 69,400 31,600 49,000 31,500 23,500 205,100 

VT ............................................................. 0 0 800 16,000 3,900 11,500 32,100 

VA ............................................................ 55,800 55,500 66,500 147,000 76,600 45,700 391,300 

WA ........................................................... 26,600 28,400 47,000 114,600 78,800 23,000 291,800 

WV ........................................................... 142,500 155,200 50,100 40,400 57,000 21,300 324,000 

WI ............................................................. 116,200 111,500 54,300 109,600 51,000 58,700 385,100 

WY ........................................................... 90,300 90,500 49,500 18,600 22,900 71,700 253,200 

4,079,200 3,943,400 3,228,200 4,931,900 3,405,000 2,225,900 17,734,4 

1All values rounded to nearest 100 tons. EGU v216 emissions are latest version and are included in totals. EGU v21 emissions were used for 

the zero-out analysis. 

b. Development of Emissions 

Inventories for On-road Vehicles 

The 2001 base year inventory for the 

on-Road vehicle sector was developed 

by applying State and pollutant specific 

adjustment ratios to each grid cell’s 

emissions as found in the existing 1996 

model-ready file for on-road sources. 

The adjustment ratios were created by 

dividing State-level emissions for each 

pollutant as estimated for the 2001 NEI 

using the MOBILE6 model by the Statelevel emissions for 1996 as estimated 

using the same MOBILE6 model. 

The 1996 model-ready file, along with 

consistent files for 2007 and 2020 

emissions, had been developed for 

previous EPA rulemakings using a 

version of the MOBILE5b model which 

had been adjusted to simulate the 

MOBILE6 model that was under 

development at that time. The 1996 and 

2007 emissions files had been 

developed for the HDDE rule (http://

www.epa.gov/otaq/models/hd2007/

r00020.pdf) and the 2020 emissions file 

had been developed for the LNDE rule 

(http://www.epa.gov/nonroad/

454r03009.pdf). Note that the 2020 onroad vehicle emissions file developed 

for the LNDE rule includes the 

reductions expected from 

implementation of the HDDE rule. 

Application of the MOBILE6-based 

adjustment ratios to the 1996 

MOBILE5b-based emission file allowed 

the resulting 2001 model-ready file to 

remain consistent in methodology with 

the existing 2007 and 2020 files. The 

2010 and 2015 base case emissions files 

used for this proposal were then 

developed as straight-line interpolations 

between those 2007 and 2020 files, and 

they are therefore also consistent with 

the 2001 file. 

c. Development of Emissions 

Inventories for Non-Road Engines 

For the non-road sector, the 2001 

model-ready emissions file was 

developed in a manner similar to that 

described above for the on-road vehicle 

sector. State-level 2001 NEI emissions 

developed from the NONROAD2002 

model were divided by a consistent set 

of emissions for 1996, also developed 

using the NONROAD2002 model, to 

produce a set of adjustment ratios for 

each State and pollutant. These 

adjustment ratios were applied to the 

existing 1996 model-ready emissions for 

each grid cell to produce a 2001 modelready file that remains consistent with 

the 1996 file and the existing future 

projections that were based on that 1996 

file.

For the future scenarios, the 2010 and 

2020 emissions files developed for 

EPA’s analysis of the preliminary 

controls of the LNDE rule were modified 

to reflect that rule as finally proposed 

(68 FR 28327, May 23, 2003) and to 

incorporate the effects of the Large 

Spark Ignition and Recreational Vehicle 

rules. These modifications were done 

using adjustment ratios developed from 

national-level estimates of the benefits 

of these two rules. A 2015 emissions file 

for this sector was then developed as a 

straight-line interpolation between the 

modified 2010 and 2020 files. 

d. Development of Emissions 

Inventories for Other Sectors 

The NEI estimates for 2001 were not 

available at the time modeling was 

begun for the remaining two man-made 

emission sectors: non-EGU point 

sources and area sources. For these two 

sectors, linear interpolations were 

performed between gridded 1996 

emissions and gridded projected 2010 

base case emissions to produce gridded 

2001 emissions files. The gridded 

emissions input files for 1996 and 2010 

were available from previous EPA 

analyses. The interpolations were done 

separately for each of the two sectors, 

for each grid cell, and for each 

pollutant. The 2010 and 2015 emissions 

files for these sectors that were used as 

part of this interpolation to 2001 were 

themselves developed as straight-line 

interpolations between the 2007 and 

2020 inventories described above for the 

on-road vehicle sector. The interpolated 

2010 and 2015 emissions were adjusted 

to reflect the SO2, PM10, and PM2.5 cocontrol benefits of the proposed 

Industrial Boiler and Process Heater 

MACT (68 FR 1660, January 13, 2003). 

The 2007 and 2020 projection 

inventories had been developed by 

applying State- and 2-digit SIC-specific 

economic growth ratios to the 1996 NEI, 

followed by application of any 

emissions control regulations. 

4592 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

57Environ, 2002: User’s Guide to the 

Comprehensive Air Quality Model with Extensions 

(CAMX), Novato, CA.

58Hogrefe, C., S.T. Rao, P. Kasibhatla, G. Kallos, 

C. Tremback, W. Hao, D. Olerud, A. Xiu, J. 

McHenry, K. Alapaty, 2001. ‘‘Evaluating the 

performance of regional-scale photochemical 

modeling systems: Part-I meteorological 

predictions.’’ Atmospheric Environment, vol. 35, 

No. 34, 4159–4174.

59U.S. EPA, 1999: Draft Guidance on the Use of 

Models and Other Analyses in Attainment 

Demonstrations for the 8-Hour Ozone NAAQS,

Office of Air Quality Planning and Standards, 

Research Triangle Park, NC.

5. Preparation of Emissions for Air 

Quality Modeling 

The annual and summer day 

emissions inventory files were 

processed through the Sparse Matrix 

Operator Kernel Emissions (SMOKE) 

Modeling System version 1.4 to produce 

36–km gridded input files for annual 

PM2.5 air quality modeling and 12–km 

input files for episodic ozone air quality 

modeling. In addition to the U.S. manmade emission sources described above, 

hourly biogenic emissions were 

estimated for individual modeling days 

using the BEIS model version 3.09 

(ftp.epa.gov/amd/asmd/beis3v09/). 

Emissions inventories for Canada and 

for U.S. offshore oil platforms were 

merged in using SMOKE to provide a 

more complete modeling data set. The 

single set of biogenic, Canadian, and 

offshore U.S. emissions was used in all 

scenarios modeled. That is, the 

emissions for these sources were not 

varied from run to run. Additional 

information on the development of the 

emissions data sets for modeling is 

provided in the AQMTSD. 

D. Ozone Air Quality Modeling 

1. Ozone Modeling Platform 

The CAMX was used to assess 8-hour 

ozone concentrations as part of this 

rulemaking. The CAMX is a publicly 

available Eulerian model that accounts 

for the processes that are involved in the 

production, transport, and destruction 

of ozone over a specified threedimensional domain and time period. 

Version 3.10 of the CAMX model was 

employed for this analyses. More 

information on the CAMX model can be 

found in the model user’s guide.57 The 

model simulations were performed for a 

domain covering the Eastern U.S. and 

adjacent portions of Canada.

Three episodes during the summer of 

1995 were used for modeling ozone and 

precursor pollutants: June 12–24, July 

5–15, and August 10–21. The start of 

each episode was chosen to correspond 

to a day with no ozone exceedances (an 

exceedance is an 8-hour daily maximum 

ozone concentration of 85 ppb or more). 

The first three days of each episode are 

considered ramp-up days and were 

discarded from analysis to minimize 

effects of the clean initial concentrations 

used at the start of each episode. In 

total, thirty episode days were used for 

analyzing interstate transport. As 

described in the AQMTSD, these 

episodes contain meteorological 

conditions that reflect various ozone 

transport wind patterns across the East. 

In general, ambient ozone 

concentrations during these episodes 

span the range of 2000–2002 8-hour 

ozone design values at monitoring sites 

in the East.

In order to solve for the change in 

pollutant concentrations over time and 

space, the CAMX model requires certain 

meteorological inputs for the episodes 

being modeled, including: winds, 

temperature, water vapor mixing ratio, 

atmospheric air pressure, cloud cover, 

rainfall, and vertical diffusion 

coefficient. Most of the gridded 

meteorological data for the three 

historical 1995 episodes were developed 

by the New York Department of 

Environment and Conservation using 

the Regional Atmospheric Modeling 

System (RAMS), version 3b. A model 

performance evaluation 58 was 

completed for a portion of the 1995 

meteorological modeling (July 12–15). 

Observed data not used in the 

assimilation procedure were compared 

against modeled data at the surface and 

aloft. This evaluation concluded there 

were no widespread biases in the RAMS 

meteorological data. The remaining 

meteorological inputs (cloud fractions 

and rainfall rates) were developed based 

on observed data.

2. Ozone Model Performance Evaluation 

The CAMX model was run with Base 

Year emissions in order to evaluate the 

performance of the modeling platform 

for replicating observed concentrations. 

This evaluation was comprised 

principally of statistical assessments of 

paired model/observed data. The results 

indicate that, on average, the predicted 

patterns and day-to-day variations in 

regional ozone levels are similar to what 

was observed with measured data. 

When all hourly observed ozone values 

(greater than 60 ppb) are compared to 

their model counterparts for the 30 days 

modeled (paired in time and space), the 

mean normalized bias is ¥1.1 percent 

and the mean normalized gross error is 

20.5 percent. As described in the 

AQMTSD, the performance for 

individual episodes indicates variations 

in the degree of model performance 

with a tendency for underprediction 

during the June and July episodes and 

overprediction during the August 

episode.

At present, there are no generally 

accepted statistical criteria by which 

one can judge the adequacy of model 

performance for regional scale ozone 

model applications. However, as 

documented in the AQMTSD, the base 

year modeling for today’s rule 

represents an improvement in terms of 

statistical model performance when 

compared to prior regional modeling 

analyses (e.g., model performance 

analyses for OTAG, the Tier-2/Low 

Sulfur Rule, and the Heavy Duty Engine 

Rule). 

3. Projection of Future 8-Hour Ozone 

Nonattainment 

Ozone modeling was performed for 

2001 emissions and for the 2010 and 

2015 Base Cases as part of the approach 

for forecasting which counties are 

expected to be nonattainment in these 2 

future years. In general, the approach 

involves using the model in a relative 

sense to estimate the change in ozone 

between 2001 and each future base case. 

Concentrations of ozone in 2010 were 

estimated by applying the relative 

change in model predicted ozone from 

2001 to 2010 with present-day 8-hour 

ozone design values (2000–2002). The 

procedures for calculating future case 

ozone design values are consistent with 

EPA’s draft modeling guidance 59 for 8-

hour ozone attainment demonstrations, 

‘‘Draft Guidance on the Use of Models 

and Other Analyses in Attainment 

Demonstrations for the 8-Hour Ozone 

NAAQS.’’ The draft guidance specifies 

the use of the higher of the design 

values from (a) the period that straddles 

the emissions inventory Base Year or (b) 

the design value period which was used 

to designate the area under the ozone 

NAAQS. In this case, 2000–2002 is the 

design value period which straddles the 

2001 Base Year inventory and is also the 

latest period which is available for 

determining designation compliance 

with the NAAQS. Therefore, 2000–2002 

was the only period used as the basis for 

projections to the future years of 2010 

and 2015.

The procedures in the guidance for 

projecting future 8-hour ozone 

nonattainment are as follows: 

Step 1: Hourly model predictions are 

processed to determine daily maximum 

8-hour concentrations for each episode 

day modeled. A relative reduction factor 

(RRF) is then determined for each 

monitoring site. First, the multi-day 

mean (excluding ramp-up days) of the 8-

hour daily maximum predictions in the 

nine grid cells that include or surround 

the site is calculated using only those 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4593

60 ICF Kaiser, 2002: User’s Guide to the Regional 

Modeling System for Aerosols and Deposition 

(REMSAD) Version 7, San Rafael, CA.

61Ammonium sulfates are referred to as ‘‘sulfate’’

in sections IV and V of today’s proposed rule.

predictions greater than or equal to 70 

ppb, as recommended in the guidance. 

This calculation is performed for the 

base year 2001 scenario and the futureyear scenario. The RRF for a site is the 

ratio of the mean prediction in the 

future-year scenario (e.g., 2010) to the 

mean prediction in the 2001 base year 

scenario. The RRFs were calculated on 

a site-by-site basis. 

Step 2: The RRF for each site is then 

multiplied by the 2000–2002 ambient 

design value for that site, yielding an 

estimate of the future design value at 

that particular monitoring location. 

Step 3: For counties with only one 

monitoring site, the value at that site 

was selected as the value for that 

county. For counties with more than 

one monitor, the highest value in the 

county was selected as the value for that 

county. Counties with projected 8-hour 

ozone design values of 85 ppb or more 

are projected to be nonattainment. 

As an example, consider Clay County, 

Alabama which has one ozone monitor. 

The 2000–2002 8-hour ambient ozone 

design value is 82 ppb. In the 2001 base 

year simulation, 24 of the 30 episode 

modeling days have CAMx values of 70 

ppb or more in one of the nine grid cells 

that include or surround the monitor 

location. The average of these predicted 

ozone values is 88.62 ppb. In 2010, the 

average of the predicted values for these 

same grid cells was 70.32 ppb. 

Therefore, the RRF for this location is 

0.79, and the projected 2010 design 

value is 82 multiplied by 0.79 equals 

65.07 ppb. All projected future case 

design values are truncated to the 

nearest ppb (e.g., 65.07 becomes 65). 

Since there are no other monitoring 

locations in Clay County, Alabama, the 

projected 2010 8-hour design value for 

this county is 65 ppb.

The RRF approach described above 

was applied for the 2010 and 2015 Base 

Case scenarios. The resulting 2010 and 

2015 Base Case design values are 

provided in the AQMTSD. Of the 287 

counties that were nonattainment based 

on 2000–2002 design values, 47 are 

forecast to be nonattainment in 2010 

and 34 in 2015. None of the counties 

that were measuring attainment in the 

period 2000–2002 are forecast to 

become nonattainment in the future. 

Those counties projected to be 

nonattainment for the 2010 and 2015 

Base Cases are listed in Table IV–3.

TABLE IV–3.—COUNTIES PROJECTED TO BE NONATTAINMENT FOR THE 8-HOUR OZONE NAAQS IN THE 2010 AND 2015 

BASE CASES

State 2010 Base case projected nonattainment counties 2015 Base case porojected nonattainment counties 

AR .......................... Crittenden ............................................................................... Crittenden. 

CT .......................... Fairfield, Middlesex, New Haven ........................................... Fairfield, Middlesex, New Haven. 

DC .......................... Washington, DC ..................................................................... Washington, DC. 

DE .......................... New Castle ............................................................................. None. 

GA .......................... Fulton ...................................................................................... None. 

IL ............................ None ....................................................................................... Cook. 

IN ........................... Lake ........................................................................................ Lake. 

MD ......................... Anne Arundel, Baltimore, Cecil, Harford, Kent, Prince 

Georges.

Anne Arundel, Cecil, Harford. 

MI ........................... None ....................................................................................... Macomb.

NJ .......................... Bergen, Camden, Cumberland, Gloucester, Hudson, 

Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean.

Bergen, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean. 

NY .......................... Erie, Putnam, Richmond, Suffolk, Westchester ..................... Erie, Richmond, Suffolk, Westchester. 

NC .......................... Mecklenburg ........................................................................... None. 

OH ......................... Geauga, Summit .................................................................... Geauga. 

PA .......................... Allegheny, Bucks, Delaware, Montgomery, Philadelphia ...... Bucks, Montgomery, Philadelphia. 

RI ........................... Kent ........................................................................................ Kent. 

TX .......................... Denton, Harris, Tarrant .......................................................... Harris. 

VA .......................... Arlington, Fairfax .................................................................... Arlington, Fairfax. 

WI .......................... Kenosha, Racine, Sheboygan ................................................ Kenosha, Sheboygan. 

The counties projected to be 

nonattainment for the 2010 Base Case 

are the nonattainment receptors used for 

assessing the contribution of emissions 

in upwind States to downwind 

nonattainment as part of today’s 

proposal. It should be noted that the 

approach used to identify these 

nonattainment receptors differed from 

that used in the NOX SIP Call where we 

aggregated on a State-by-State basis all 

grid cells which were both (a) associated 

with counties that violated the 8-hour 

NAAQS (based on 1994–1996 data), and 

(b) had future base case predictions of 

85 ppb or more. For this proposal, we 

have treated each individual county 

projected to be nonattainment in the 

future as a downwind nonattainment 

receptor.

E. The PM2.5 Air Quality Modeling 

1. The PM2.5 Modeling Platform 

The REMSAD model version 7 was 

used as the tool for simulating base year 

and future concentrations of PM2.5 in 

support of today’s proposed rule. The 

REMSAD is a publicly available model. 

An overview of the scientific aspects of 

this model is provided below. More 

detailed information can be found in the 

REMSAD User’s Guide.60 The basis for 

REMSAD is the atmospheric diffusion 

equation (also called the species 

continuity or advection/diffusion 

equation). This equation represents a 

mass balance in which all of the 

relevant emissions, transport, diffusion, 

chemical reactions, and removal 

processes are expressed in mathematical 

terms.

The REMSAD simulates both gas 

phase and aerosol chemistry. The gas 

phase chemistry uses a reduced-form 

version of Carbon Bond (CB4) chemical 

mechanism termed ‘‘micro-CB4’’

(mCB4). Formation of secondary PM 

species, such as sulfate 61 and nitrate, is 

simulated through chemical reactions 

within the model. Aerosol sulfate is 

formed in both the gas phase and the 

aqueous phase. The REMSAD also 

accounts for the production of 

secondary organic aerosols through 

atmospheric chemistry processes. Direct 

PM emissions in REMSAD are treated as 

inert species which are advected and 

4594 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

62Olerud, D., K. Alapaty, and N. Wheeler, 2000: 

Meteorological Modeling of 1996 for the United 

States with MM5. MCNC-Environmental Programs, 

Research Triangle Park, NC.

63 IMPROVE, 2000. Spatial and Seasonal Patterns 

and Temporal Variability of Haze and its 

Constituents in the United States: Report III.

Cooperative Institute for Research in the 

Atmosphere, ISSN: 0737–5352–47.

64U.S. EPA, Clean Air Status and Trends 

Network (CASTNet), 2001 Annual Report.

65NADP, 2002: National Acid Deposition 

Program 2002 Annual Summary.

66The dividing line between the West and East 

was defined as the 100th meridian (e.g., monitoring 

sites to the east of this meridian are included in 

aggregate performance statistics for the East).

deposited without any chemical 

interaction with other species.

The REMSAD was run using a 

latitude/longitude horizontal grid 

structure in which the horizontal grids 

are generally divided into areas of equal 

latitude and longitude. The grid cell size 

was approximately 36 km by 36 km. The 

REMSAD was run with 12 vertical 

layers extending up to 16,000 meters, 

with a first layer thickness of 

approximately 38 meters. The REMSAD 

modeling domain used for this analysis 

covers the entire continental United 

States. 

The REMSAD requires input of 

winds, temperatures, surface pressure, 

specific humidity, vertical diffusion 

coefficients, and rainfall rates. The 

meteorological input files were 

developed from a 1996 annual MM5 

model run that was developed for 

previous projects. The MM5 is a 

numerical meteorological model that 

solves the full set of physical and 

thermodynamic equations which govern 

atmospheric motions. The MM5 was run 

in a nested-grid mode with 2 levels of 

resolution: 108 km, and 36km with 23 

vertical layers extending from the 

surface to the 100 mb pressure level.62

All of the PM2.5 model simulations were 

performed for a full year using the 1996 

meteorological inputs.

2. The PM2.5 Model Performance 

Evaluation 

An annual simulation of REMSAD 

was performed for 1996 using the 

meteorological data and emissions data 

for that year. The predictions from the 

1996 Base Year modeling were used to 

evaluate model performance for 

predicting concentrations of PM2.5 and 

its related speciated components (e.g., 

sulfate, nitrate, elemental carbon, 

organic carbon). The evaluation was 

comprised principally of statistical 

assessments of model versus observed 

pairs. 

The evaluation used data from the 

IMPROVE,63 CASTNet 64 dry 

deposition, and NADP 65 monitoring 

networks. The IMPROVE and NADP 

networks were in full operation during 

1996. The CASTNet dry deposition 

network was partially shutdown during 

the first half of the year. There were 65 

CASTNet sites with at least one season 

of complete data. There were 16 sites 

which had complete annual data. The 

largest available ambient data base for 

1996 comes from the IMPROVE 

network. The IMPROVE network is a 

cooperative visibility monitoring effort 

between EPA, Federal land management 

agencies, and State air agencies. Data is 

collected at Class I areas across the 

United States mostly at national parks, 

national wilderness areas, and other 

protected pristine areas. There were 

approximately 60 IMPROVE sites that 

had complete annual PM2.5 mass and/or 

PM2.5 species data for 1996. Forty-two 

sites were in the West 66 and 18 sites 

were in the East. The following is a brief 

summary of the model performance for 

PM2.5 and deposition. Additional details 

on model performance are provided in 

the AQMTSD.

Considering the ratio of the annual 

mean predictions to the annual mean 

observations (e.g., predicted divided by 

observed) at the IMPROVE monitoring 

sites REMSAD underpredicted fine 

particulate mass (PM2.5), by 18 percent. 

Specifically, PM2.5 in the East was 

underpredicted by 2 percent, while 

PM2.5 in the West was underpredicted 

by 33 percent. Sulfate in the East is 

slightly underpredicted and nitrate and 

largely crustal material are 

overestimated. Elemental carbon is 

neither overpredicted nor 

underpredicted in the East. Organic 

aerosols are slightly overpredicted in 

the East. All PM2.5 component species 

were underpredicted in the West.

The comparisons to the CASTNet data 

show generally good model performance 

for sulfate. Comparison of total nitrate 

indicate an overestimate, possibly due 

to overpredictions of nitric acid in the 

model. 

Performance at the NADP sites for wet 

deposition of ammonium, sulfate, and 

nitrate was reasonably good. However, 

the nitrate and sulfate wet deposition 

were each underestimated compared to 

the corresponding observed values. 

Given the state of the science relative 

to PM modeling, it is inappropriate to 

judge PM model performance using 

criteria derived for other pollutants, like 

ozone. The overall model performance 

results may be limited by our current 

knowledge of PM science and 

chemistry, by the emissions inventories 

for direct PM and secondary PM 

precursor pollutants, by the relatively 

sparse ambient data available for 

comparisons to model output, and by 

uncertainties in monitoring techniques. 

The model performance for sulfate in 

the East is quite reasonable, which is 

key since sulfate compounds comprise a 

large portion of PM2.5 in the East. 

Negative effects of relatively poor 

model performance for some of the 

smaller (i.e., lower concentration) 

components of PM2.5, such as crustal 

mass, are mitigated to some extent by 

the way we use the modeling results in 

projecting future year nonattainment 

and downwind contributions. As 

described in more detail below, each 

measured component of PM2.5 is 

adjusted upward or downward based on 

the percent change in that component, 

as determined by the ratio of future year 

to base year model predictions. Thus, 

we are using the model predictions in 

a relative way, rather than relying on the 

absolute model predictions for the 

future year scenarios. By using the 

modeling in this way, we are reducing 

the risk that large overprediction or 

underprediction will unduly affect our 

projection of future year concentrations. 

For example, REMSAD may overpredict 

the crustal component at a particular 

location by a factor of 2, but since 

measured crustal concentrations are 

generally a small fraction of ambient 

PM2.5, the future crustal concentration 

will remain as a small fraction of PM2.5. 

A number of factors need to be 

considered when interpreting the results 

of this performance analysis. First, 

simulating the formation and fate of 

particles, especially secondary organic 

aerosols and nitrates is part of an 

evolving science. In this regard, the 

science in air quality models is 

continually being reviewed and updated 

as new research results become 

available. Also, there are a number of 

issues associated with the emissions 

and meteorological inputs, as well as 

ambient air quality measurements and 

how these should be paired to model 

predictions that are currently under 

investigation by EPA and others. The 

process of building consensus within 

the scientific community on ways for 

doing PM model performance 

evaluations has not yet progressed to the 

point of having a defined set of common 

approaches or criteria for judging model 

performance. Unlike ozone, there is a 

limited data base of past performance 

statistics against which to measure the 

performance of regional/national PM 

modeling. Thus, the approach used for 

this analysis may be modified or 

expanded in future evaluation analyses.

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4595

67U.S. EPA, 2000: Draft Guidance for 

Demonstrating Attainment of Air Quality Goals for 

PM2.5 and Regional Haze; Draft 1.1, Office of Air Quality Planning and Standards, Research Triangle 

Park, NC.

3. Projection of Future PM2.5

Nonattainment 

As with ozone, the approach for 

identifying areas expected to be 

nonattainment for PM2.5 in the future 

involves using the model predictions in 

a relative way to forecast current PM2.5

design values to 2010 and 2015. The 

modeling portion of this approach 

includes annual simulations for 2001 

emissions and for the 2010 and 2015 

Base Case emissions scenarios. As 

described below, the predictions from 

these runs were used to calculate RRFs 

which were then applied to current 

PM2.5 design values. The approach we 

followed is consistent with the 

procedures in the draft PM2.5 air quality 

modeling guidance,67 ‘‘Guidance for 

Demonstrating Attainment of Air 

Quality Goals for PM2.5 and Regional 

Haze.’’ It should be noted that the 

approach for PM2.5 differs from the 

approach recommended for projecting 

future year 8-hour ozone design values 

in terms of the base period for design 

values. The approach for ozone uses the 

higher of the ambient design values for 

two 3-year periods, as described above. 

In contrast, the PM2.5 guidance 

recommends selecting the highest 

design value from among the three 

periods that straddle the base emissions 

year (i.e., 2001). The three periods that 

straddle this year are 1999–2001, 2000–

2002, and 2001–2003. The data from the 

first two design value periods are 

readily available, but the data from the 

2001–2003 period could not be used 

since the 2003 data were not yet 

available. Thus, we have relied on the 

data for the two periods 1999–2001 and 

2000–2002. The design values from the 

period 2000–2002, which is the most 

recent period with available data, were 

used to identify which monitors are 

currently measuring nonattainment (i.e., 

annual average PM2.5 of 15.05 μg/m3 or 

more). To be consistent with procedures 

in the modeling guideline, we selected 

the higher of the 1999–2001 or 2000–

2002 design value from each 

nonattainment monitor for use in 

projecting future design values. The 

recommendation in the guidance for 

selecting the highest values from among 

3 periods is applicable for 

nonattainment counties, but not 

necessarily for attainment counties. 

Thus, for monitors that are measuring 

attainment (i.e., PM2.5 less than 15.05 

μg/m3) using the most recent 3 years of 

data, we used the 2000–2002 design 

values as the starting point for 

projecting future year design values. 

Note that none of the counties that are 

attainment for the period 2000–2002 are 

forecast to become nonattainment in 

2010 or 2015.

The modeling guidance recommends 

that model predictions be used in a 

relative sense to estimate changes 

expected to occur in each major PM2.5

species. These species are sulfate, 

nitrate, organic carbon, elemental 

carbon, crustal and un-attributed mass. 

Un-attributed mass is defined as the 

difference between FRM PM2.5 and the 

sum of the other five components. The 

procedure for calculating future year 

PM2.5 design values is called the 

Speciated Modeled Attainment Test 

(SMAT). The following is a brief 

summary of those steps. Additional 

details are provided in the AQMTSD.

Step 1: Calculate quarterly mean 

concentrations (averaged over 3 years) 

for each of the six major components of 

PM2.5. This is done by multiplying the 

monitored quarterly mean concentration 

of FRM-derived PM2.5 by the monitored 

fractional composition of PM2.5 species 

for each quarter in 3 consecutive years 

(e.g., 20 percent sulfate multiplied by 15 

μg/m3 PM2.5 equals 3 μg/m3 sulfate). 

Step 2: For each quarter, calculate the 

ratio of future (e.g., 2010) to current (i.e., 

2001) predictions for each component 

specie. The result is a componentspecific RRF (e.g., assume that 2001 

predicted sulfate for a particular 

location is 10 μg/m3 and the 2010 Base 

concentration is 8 μg/m3, then RRF for 

sulfate is 0.8). 

Step 3: For each quarter and each 

component specie, multiply the current 

quarterly mean component 

concentration (Step 1) by the 

component-specific RRF obtained in 

Step 2. This produces an estimated 

future quarterly mean concentration for 

each component (e.g., 3 μg/m3 sulfate 

multiplied by 0.8 equals future sulfate 

of 2.4 μg/m3). 

Step 4: Average the four quarterly 

mean future concentrations to get an 

estimated future annual mean 

concentration for each component 

specie. Sum the annual mean 

concentrations of the 6 components to 

obtain an estimated future annual 

average concentration for PM2.5. 

We are using the FRM data for 

projecting future design values since 

these data will be used for 

nonattainment designations. In order to 

apply SMAT to the FRM data, 

information on PM2.5 speciation is 

needed for the location of each FRM 

monitoring site. Only a small number of 

the FRM sites have measured species 

information. Therefore, spatial 

interpolation techniques were applied 

to the speciated component averages 

from the IMPROVE and Speciation 

Trends Network (STN) data to estimate 

concentrations of species mass at all 

FRM PM2.5 monitoring sites. Details on 

the procedures and assumptions used in 

mapping the IMPROVE and STN data to 

the locations of the FRM sites are 

described in the AQMTSD. 

The preceding procedures for 

determining future year PM2.5

concentrations were applied for each 

FRM site. For counties with only one 

FRM site, the forecast design value for 

that site was used to determine whether 

or not the county will be nonattainment 

in the future. For counties with multiple 

monitoring sites, the site with the 

highest future concentration was 

selected for that county. Those counties 

with future year design values of 15.05 

μg/m3 or more are predicted to be 

nonattainment. The result is that 61 

counties in the East are forecast to be 

nonattainment for the 2010 Base Case. 

Of these, 41 are forecast to remain 

nonattainment for the 2015 Base Case. 

The PM2.5 nonattainment counties for 

the 2010 and 2015 Base Cases are listed 

in Table IV–4. These counties were used 

as receptors for quantifying the impacts 

of the SO2 and NOX emissions 

reductions in today’s proposal, as 

presented in section IX.

TABLE IV–4. COUNTIES PROJECTED TO BE NONATTAINMENT FOR THE ANNUAL AVERAGE PM2.5 NAAQS FOR THE 2010 

AND 2015 BASE CASES

State 2010 Base case projected nonattainment counties 2015 Base case projected nonattainment counties 

AL .......................... DeKalb, Jefferson, Montgomery, Russell, Talladaga ............. Jefferson, Montgomery, Russell, Talladaga. 

CT .......................... New Haven ............................................................................. New Haven. 

DC .......................... Washington, DC ..................................................................... None. 

DE .......................... New Castle ............................................................................. None. 

4596 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

68Our assumptions regarding the measures for 

this analysis are not intended as a statement 

regarding the measures that represent RACT or 

RACM for PM2.5 nonattainment areas.

69Some VOCs are precursors to the secondary 

organic aerosol component of PM2.5.

TABLE IV–4. COUNTIES PROJECTED TO BE NONATTAINMENT FOR THE ANNUAL AVERAGE PM2.5 NAAQS FOR THE 2010 

AND 2015 BASE CASES—Continued

State 2010 Base case projected nonattainment counties 2015 Base case projected nonattainment counties 

GA .......................... Clarke, Clayton, Cobb, DeKalb, Floyd, Fulton, Hall, 

Muscogee, Paulding, Richmond, Wilkinson.

Clarke, Clayton, Cobb, DeKalb, Floyd, Fulton, Hall, 

Muscogee, Richmond, Wilkinson. 

IL ............................ Cook, Madison, St. Clair, Will ................................................ Cook, Madison, St. Clair. 

IN ........................... Clark, Marion .......................................................................... Clark, Marion. 

KY .......................... Fayette, Jefferson ................................................................... Jefferson. 

MD ......................... Baltimore City ......................................................................... Baltimore City. 

MI ........................... Wayne .................................................................................... Wayne. 

MO ......................... St. Louis ................................................................................. None. 

NY .......................... New York (Manhattan) ........................................................... New York (Manhattan). 

NC .......................... Catawba, Davidson, Mecklenburg ......................................... None. 

OH ......................... Butler, Cuyahoga, Franklin, Hamilton, Jefferson, Lawrence, 

Mahoning, Scioto, Stark, Summit, Trumbull.

Butler, Cuyahoga, Franklin, Hamilton, Jefferson, Scioto, 

Stark, Summit. 

PA .......................... Allegheny, Bucks, Lancaster, York ........................................ Allegheny, York. 

SC .......................... Greenville ............................................................................... None. 

TN .......................... Davidson, Hamilton, Knox, Roane, Sullivan .......................... Hamilton, Knox. 

WV ......................... Brooke, Cabell, Hancock, Kanawha, Marshal, Wood ............ Brooke, Cabell, Hancock, Kanawha, Wood. 

As noted above in section IV.C.4, the 

2010 Base Case used for the zero-out 

PM2.5 modeling included EGU 

emissions from an earlier simulation of 

the Integrated Planning Model. Of the 

61 2010 Base Case nonattainment 

counties listed in Table IV–4, 4 counties 

(i.e., Catawba Co., NC, Trumbull Co., 

OH, Greenville Co., SC, and Marshall 

Co., WV) were projected to be in 

attainment in the 2010 Base Case used 

for the zero-out modeling. Thus, 57 

nonattainment counties (i.e., the 61 

counties in Table IV–4 less these 4 

counties) were used as downwind 

receptors in the air quality modeling 

assessment of interstate PM2.5

contributions described in section 

V.C.3. 

F. Analysis of Locally-Applied Control 

Measures for Reducing PM2.5

We conducted two air quality 

modeling analyses to assess the 

probability that attainment of the PM 

standard could be reached with local 

measures only. The results of these 

analyses, discussed in detail in the 

AQMTSD, support the need for today’s 

rulemaking requiring reductions of 

transport pollutants. Both analysis were 

conducted by: 

• Identifying a list of local control 

measures that could be applied in 

addition to those measures already in 

place or required to be in place in the 

near future;

• Determining the emissions 

inventory categories that would be 

affected by those measures, and the 

estimated percentage reduction; 

• Applying those percentage 

reductions to sources within a selected 

geographic area; and 

• Conducting regional large-scale air 

quality modeling using REMSAD to 

determine the ambient impacts those 

measures would have, and the degree to 

which those measures would reduce the 

expected number of nonattainment 

areas. 

1. Control Measures and Percentage 

Reductions 

For our analysis of PM2.5 attainment 

prospects, we developed a list of 

emissions reductions measures as a 

surrogate for measures that State, local 

and Tribal air quality agencies might 

include in their PM2.5 implementation 

plans. The list includes measures that 

such agencies might be able to 

implement to reach attainment in 2009 

or as soon thereafter as possible. The 

measures address a broad range of manmade point, area, and mobile sources. In 

general, the measures represent what we 

consider to be a highly ambitious but 

achievable level of control.68 We 

identified measures for direct PM2.5 and 

also for the following PM2.5 precursors: 

SO2, NOX, and VOC.69 We did not 

attempt to address ammonia emissions, 

in part due to relatively low emissions 

of ammonia in urban areas and the 

likelihood of fewer controllable sources 

within the urban areas targeted for the 

analysis.

The percentage reductions were 

developed in two ways. First, we 

developed percentage reduction 

estimates for specific technologies when 

available. The available estimates were 

based on both the percentage control 

that might be achieved for sources 

applying that technology, and the 

percentage of the inventory the 

measures might be applicable to. For 

example, if a given technology would 

reduce a source’s emissions by 90 

percent where it was installed, but 

would be reasonable to install for only 

30 percent of sources in the category, 

that technology would be assigned a 

percentage reduction of 90 times 30, or 

27 percent. 

Second, there were some groups of 

control measures where data and 

resources were not available to develop 

technology-specific estimates in this 

manner. For these, we felt it preferable 

to make broad judgments on the level of 

control that might be achieved rather 

than to leave these control measures out 

of the analysis entirely. For example, 

the analysis reflects a reduction of 3 

percent from on-road mobile source 

emissions relative to a 2010 and 2015 

baseline. We judged this 3 percent 

estimate to represent a reasonable upper 

bound on the degree to which 

transportation control measures and 

other measures for reducing mobile 

source emissions could reduce the 

overall inventory of mobile source 

emissions in a given area. 

Additionally, we believe that it may 

be possible for point source owners to 

improve the performance of emissions 

control devices such as baghouses and 

electrostatic precipitators, and in some 

cases to upgrade to a more effective 

control device. In our current emissions 

inventories, we have incomplete data on 

control equipment currently in use. As 

a result, data are not available to 

calculate for each source the degree to 

which the control effectiveness could be 

improved. Nonetheless, we believed it 

important to include reasonable 

assumptions concerning controls for 

this category for direct PM2.5. For this 

analysis, we assumed across the board 

that all point sources of PM could 

reduce emissions by 25 percent. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4597

70For the three-city study, we chose the PMSA 

counties rather than the larger list of counties in the 

consolidated metropolitan statistical area (CMSA). 

Both the PMSA and the CMSA classifications for 

metrololitan areas are created by the Office of 

Management and Budget (OMB). For this study, we 

used the classifications of counties in place as of 

spring 2003, rather than the revised classifications 

released by OMB on June 6, 2003.

Table IV–5 shows the control 

measures selected for the analysis, the 

pollutants reduced and the percentage 

reduction estimates.

2. Two Scenarios Analyzed for the 

Geographic Area Covered by Control 

Measures 

We developed two scenarios for 

identifying the geographic area to which 

the control measures were applied. 

These two scenarios were intended to 

address two separate issues related to 

the effects of urban-based control 

measures. 

The first scenario was intended to 

illustrate the effect of the selected local 

control measures within the geographic 

area to which controls were applied. For 

this, we applied the control measures 

and associated emissions reductions to 

the inventories for three cities—

Birmingham, Chicago, and Philadelphia. 

We selected these three urban areas 

because each area was predicted to 

exceed the PM2.5 standard in 2010, 

albeit to varying degrees. Additionally, 

the three urban areas were selected 

because they are widely separated. 

Accordingly, we were able to conduct a 

single air quality analysis with less 

concerns for overlapping impacts due to 

transport than if less separated cities 

were selected. 

The control measures were applied to 

the projected 2010 baseline emission 

inventories for all counties within those 

Primary Metropolitan Statistical Areas 

(PMSAs).70 Thus, for Chicago, measures 

were applied to the 10 counties in 

Illinois, but were not applied in 

northwest Indiana or Wisconsin. For 

Philadelphia, measures were applied to 

the New Jersey and Pennsylvania 

counties within the Philadelphia urban 

area. For Birmingham, measures were 

applied to four Alabama counties.

The second scenario was intended to 

address the cumulative impact of local 

control measures applied within 

nonattainment areas. Recognizing that 

PM2.5 nonattainment areas may be near 

enough to each other to have transport 

effects between them, we applied the 

control measures identified in Table IV–

5, with some modifications discussed 

below, to all 290 counties of the 

metropolitan areas we projected to 

contain any nonattainment county in 

2010 in the baseline scenario. 

Specifically, the control measures were 

applied to all counties in Consolidated 

Metropolitan Statistical Areas (CMSAs) 

for which any county in the CMSA 

contained a nonattainment monitor.

3. Results of the Two Scenarios 

Table IV–6 shows the results of 

applying the control measures in each of 

the three urban areas addressed in the 

first scenario. The emissions reductions 

were estimated to achieve ambient PM2.5

reductions of about 0.5 μg/m3 to about 

0.9 μg/m3, less than needed to bring any 

of the cities into attainment in 2010. 

The SO2 reductions in Birmingham 

were large—80 percent—because of the 

assumption that scrubbers would be 

installed for two large-emitting power 

plants within the Birmingham-area 

counties. Reductions of other pollutants 

in Birmingham, and of all pollutants in 

the two other cities, were 33 percent or 

lower. We note that despite the large 

reduction assumed for SO2 emissions in 

the Birmingham area, ambient sulfate in 

Birmingham declined only 7 percent, 

indicating that the large majority of 

sulfate in Birmingham is attributable to 

SO2 sources outside the metropolitan 

area.

TABLE IV–5.—CONTROL MEASURES, POLLUTANTS, AND PERCENTAGE REDUCTIONS FOR THE LOCAL MEASURES ANALYSIS

Source Description Control Measure 

SO2 NOX PM2.5 Tol+Xyl (VOC) 

Eff Eff App Red Eff App Red Eff App % 

Red 

Utility boilers ...................... FGD scrubber for some or 

all unscrubbed units.

(1) .......... .......... ............ .......... .......... ............ .......... .......... ..........

Coal-fired industrial boilers 

> 250 mmBtu/hr.

Coal switching .................. 50 .......... .......... ............ .......... .......... ............ .......... .......... ..........

Petroleum fluid catalytic 

cracking units.

Wet gas scrubber ............. 50 .......... .......... ............ .......... .......... ............ .......... .......... ..........

Refinery process heaters—oil-fired.Switch to natural gas ........ 50 .......... .......... ............ .......... .......... ............ .......... .......... ..........

Sulfuric acid plants ............ Meet NSPS level .............. 42–96 .......... .......... ............ .......... .......... ............ .......... .......... ..........

Coal-fired industrial boilers SNCR ............................... .......... 50 20 10 .......... .......... ............ .......... .......... ..........

Gas-fired industrial boilers 

(large & medium).

SNCR ............................... .......... 45 20 9 .......... .......... ............ .......... .......... ..........

Gas-fired industrial boilers 

(small).

Low NOX burner ............... .......... 50 20 10 .......... .......... ............ .......... .......... ..........

Gas-fired IC Engines (reciprocating).NSCR ............................... .......... 94 10 9.4 .......... .......... ............ .......... .......... ..........

Gas-fired turbine & cogeneration.SCR .................................. .......... 90 10 9 .......... .......... ............ .......... .......... ..........

Asphalt Concrete, Lime 

Manufacture.

Low NoX burner ................ .......... 27 50 14 .......... .......... ............ .......... .......... ..........

Cement Manufacturing ...... Tire derived fuel & mid-kiln 

firing.

.......... 34 50 18 .......... .......... ............ .......... .......... ..........

Petroleum Refinery Gasfired Process Heaters.Ultra-low NoX burner & 

SNCR.

.......... 93 50 46.5 .......... .......... ............ .......... .......... ..........

All direct PM2.5 points 

sources.

Improve existing controls 

(baghouses, ESPs).

.......... .......... .......... ............ .......... .......... 25 .......... .......... ..........

Wood fireplaces 2 .............. Natural gas inserts ........... .......... .......... .......... ............ 80 30 24 .......... .......... ..........

Replace with certified noncatalytic woodstove........... .......... .......... ............ 71 30 21.4 .......... .......... ..........

4598 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE IV–5.—CONTROL MEASURES, POLLUTANTS, AND PERCENTAGE REDUCTIONS FOR THE LOCAL MEASURES

ANALYSIS—Continued

Source Description Control Measure 

SO2 NOX PM2.5 Tol+Xyl (VOC) 

Eff Eff App Red Eff App Red Eff App % 

Red 

HDDV including buses ...... Engine Modifications, Diesel oxidation catalyst........... 40 5 2 .......... .......... ............ .......... .......... ..........

Particulate filter ................. .......... .......... .......... ............ 90 30 27 .......... .......... ..........

Idling reduction ................. .......... .......... .......... 1.7 .......... .......... 1.7 .......... .......... 1.7 

Off-highway diesel construction and mining 

equipment.

Engine modifcations, diesel oxidation catalyst........... 40 73 29 .......... .......... ............ .......... .......... ..........

particulate filter ................. .......... .......... .......... ............ 25 73 18 .......... .......... ..........

Diesel Marine Vessels ...... SCR .................................. .......... 75 5 4 .......... .......... ............ .......... .......... ..........

Particulate filter ................. .......... .......... .......... ............ 90 30 27 .......... .......... ..........

Diesel locomotives ............ SCR .................................. .......... 72 5 4 .......... .......... ............ .......... .......... ..........

Electrification of yard ........ 2.5 2.5 6 0.2 2.5 6 0.2 2.5 6 0.2 

Unpaved roads .................. Gravel covering ................ .......... .......... .......... ............ 60 30 18 .......... .......... ..........

Construction road .............. Watering ........................... .......... .......... .......... ............ .......... 50 30 15 

Open burning .................... Ban ................................... .......... 100 75 75 100 75 75 100 75 75 

Agricultural tilling ............... Soil conservation measures, unspecified........... .......... .......... ............ 20 30 6 .......... .......... ..........

LDGV and LDGT1 ............ Combination of unspecified measures to reduce highway vehicle 

miles and emissions.

.......... .......... .......... 3 .......... .......... 3 .......... .......... 3 

1For the three-city study, we assumed controls to an emission rate of 0.15 lb/mmBtu on all currently unscrubbed coal-fired utility boilers within 

the three metropolitan areas. For the second scenario, we applied a 50 percent reduction to all unscrubbed utility units within the 290 counties, 

as a surrogate for a strategy that applied FGD scrubbers to enough units to achieve a 50 percent reduction overall. 2For the 1996 inventory, woodstoves and fireplaces are combined into one SCC category. We assumed for the purpose of this analysis, that 

woodstoves and fireplaces each comprise half of the total wood burned for the category overall. Thus, the total percentage reduction is 

(24+21.4)/2 = 22.7 percent. 

TABLE IV–6.—MODELED PM2.5 REDUCTIONS FROM APPLICATION OF HYPOTHETICAL LOCAL CONTROLS IN 3 URBAN AREAS

Metro area 

2010 base 

PM2.5

(μg/m3) 

PM2.5

reduction

(μg/m3) 

Final PM2.5

(μg/m3) 

Attainment 

achieved? 

Birmingham, AL ........................................................................................................... 20.07 ¥0.84 19.23 No. 

Chicago, IL ................................................................................................................... 18.01 ¥0.94 17.07 No. 

Philadelphia, PA .......................................................................................................... 15.6 ¥0.52 15.08 No. 

Table IV–7 shows the results for the 

second scenario which, again, applied 

the same list of controls to 290 counties, 

resulting in local and transport 

reductions. These results show that 

some of the 2010 nonattainment areas 

would be projected to attain, but many 

are not. Accordingly, we concluded that 

for a sizable number of PM2.5

nonattainment areas it will be difficult 

if not impossible to reach attainment 

unless transport is reduced to a much 

greater degree than by the simultaneous 

adoption of controls within only the 

nonattainment areas.

TABLE IV–7.—MODELED PM2.5 REDUCTIONS FROM APPLICATION OF HYPOTHETICAL LOCAL CONTROLS IN ALL AREAS

PREDICTED TO EXCEED THE NAAQS IN 2010 

Baseline With local 

controls 

Part A—Full Modeling Results Considering All Pollutants and Species 

Number of nonattainment counties ........................................................................ 61 ........................................................................ 26 

Average Reduction in PM2.5 Design Value (μg/m3) ............................................... Not Applicable .................................................... 1.26 

Part B—Results Not Counting Reductions in Sulfate Component of PM2.5

Number of nonattainment counties ........................................................................ 61 ........................................................................ 48 

Average Reduction in PM2.5 Design Value (μg/m3) ............................................... Not Applicable .................................................... 0.37 

We were interested in what part of the 

PM2.5 improvement seen in this 

modeling run was attributable to SO2

reductions both locally and upwind. 

Part B of Table IV–7 shows a re-analysis 

of the modeling results in which the 

observed sulfate reductions were not 

considered in calculating the PM2.5

effects of the control package. If, as we

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4599

expect, the observation from the earlier 

described modeling of Birmingham and 

two other cities that local SO2

reductions have relatively small local 

effects on sulfate applies more 

generally, then the difference between 

parts A and B of Table IV–7 would 

generally represent the effect of upwind 

reductions in SO2 from power plants 

and other sources in other urban areas. 

The results of the two scenarios show 

that much of the difference between the 

baseline case and the local control case 

is due to the sulfate component. 

4. Additional Observations on the 

Results of the Local Measures Analyses 

The application of control measures 

for the local measures analyses (with the 

exception of sulfur dioxide for 

Birmingham as noted previously) results 

in somewhat modest percentage and 

overall tons/year reductions. This is 

because a substantial part of local 

emissions is attributable to mobile 

sources, small business, and household 

activities for which practical, largereduction, and quick-acting emissions 

reductions measures could not be 

identified at this time. A list of the 

control measures and their reduction 

potential is contained in the AQMTSD. 

Preliminary analysis indicates that the 

reductions in SO2 and NOX required by 

today’s proposed rule, if achieved 

through controls on EGUs, will have a 

lower cost per ton than most of the 

measures applied in the local measures 

study. 

The EPA recognizes that the above 

analysis of the possible results of local 

control efforts is uncertain. It is not 

feasible at this time to identify with 

certainty the levels of emissions 

reductions from sources of regional 

transport and reductions from local 

measures that will lead to attainment of 

the PM standards. Much technical work 

remains as States develop their SIPs, 

including improvements in local 

emissions inventories, local area and 

subregional air quality analyses, and 

impact analysis of the effects and costs 

of local controls. At the same time, EPA 

believes that all of the available analyses 

of the effects of local measures support 

the reductions in transported pollutants 

that are addressed by today’s proposal. 

Taken as a whole, the studies described 

above strongly support the need for the 

substantial reductions in transported 

pollutants that EPA is proposing. 

At the same time, EPA believes that 

nothing in the local measures analysis 

should be interpreted as discouraging 

the development of urban-based control 

measures. Clearly, for many areas, 

attaining the PM2.5 standard will require 

measures to address both local and 

regional transport. We encourage the 

development of early reduction 

measures, and specifically we note that 

the CAA requires States to analyze the 

control measures necessary to attain the 

standard as soon as possible. 

We also note that the baseline 

emissions inventory used for this 

analysis has some known gaps. For 

example, direct PM2.5 and VOXC 

commercial cooking (e.g., charbroiling) 

are not included because no robust 

estimates were available for the 1996 

base year used for this analysis. Also, 

excess PM2.5 due to deterioration of 

engines in service, and emissions from 

open burning of refuse, may not be well 

represented. The effect of these 

omissions on our estimates of the 

number of areas reaching attainment is 

uncertain, but we do not believe the 

omissions affect our preliminary 

conclusions that transport controls are 

less expensive on a per ton basis, and 

are beneficial for attainment.

V. Air Quality Aspects of Significant 

Contribution for 8-Hour Ozone and 

Annual Average PM2.5 Before 

Considering Cost 

A. Introduction 

In this section, we present the 

analyses of ambient data and modeling 

which support the findings in today’s 

proposal on the air quality aspects of 

significant contribution (before 

considering cost) for 8-hour ozone and 

annual average PM2.5. The analyses for 

ozone are presented first, followed by 

the analyses for PM2.5. For both 

pollutants, we summarize information 

from non-EPA studies then present the 

procedures and findings from EPA’s air 

quality modeling analyses of interstate 

transport for ozone and PM2.5. 

B. Significant Contribution to 8-Hour 

Ozone Before Considering Cost 

1. Findings From Non-EPA Analyses 

That Support the Need for Reductions 

in Interstate Ozone Transport 

As discussed in section II, it is a longheld scientific view that ground-level 

ozone is a regional, and not merely a 

local, air quality problem. Ozone and its 

precursors are often transported long 

distances across State boundaries 

exacerbating the downwind ozone 

problem. This transport of ozone can 

make it difficult—or impossible—for 

some States to meet their attainment 

deadlines solely by regulating sources 

within their own boundaries. 

The EPA participated with States in 

the Eastern U.S. as well as industry 

representatives and environmental 

groups in the Ozone Transport 

Assessment Group (OTAG), which 

documented that long-distance transport 

of NOX (a primary ozone precursor) 

across much of the OTAG study area 

contributed to high levels of ozone. For 

background on OTAG and the results 

from the study, see the following Web 

site: http://www.epa.gov/ttn/naaqs/

ozone/rto/otag/index.html. 

The air quality and modeling analyses 

by OTAG yielded the following major 

findings and technical conclusions 

relevant to today’s proposed 

rulemaking: 

• Air quality data indicate that ozone 

is pervasive, that ozone is transported, 

and that ozone aloft is carried over and 

transported from 1 day to the next. 

• Regional NOX reductions are 

effective in producing ozone benefits; 

the more NOX reduced, the greater the 

benefit. 

• Ozone benefits are greatest where 

emissions reductions are made; benefits 

decrease with distance. 

• Elevated and low-level NOX

reductions are both effective. 

• Volatile organic compounds (VOC) 

controls are effective in reducing ozone 

locally and are most advantageous to 

urban nonattainment areas. The OTAG 

report also recognized that VOC 

emissions reductions do not play much 

of a role in long-range transport, and 

concluded that VOC reductions are 

effective in reducing ozone locally and 

are most advantageous to urban 

nonattainment areas. 

These OTAG findings provide 

technical evidence that transport within 

portions of the OTAG region results in 

large contributions from upwind States 

to ozone in downwind areas, and that a 

regional approach to reduce NOX

emissions is an effective means of 

addressing interstate ozone transport. 

2. Air Quality Modeling of Interstate 

Ozone Contributions 

This section documents the 

procedures used by EPA to quantify the 

impact of emissions in specific upwind 

States on air quality concentrations in 

projected downwind nonattainment 

areas for 8-hour ozone. These 

procedures are the first of the two-step 

approach for determining significant 

contribution, as described in section III, 

above. 

The analytic approach for modeling 

the contribution of upwind States to 

ozone in downwind nonattainment 

areas is described in subsection (a), the 

methodology for analyzing the modeling 

results is presented in subsection (b), 

and the findings as to whether 

individual States make a significant 

contribution (before considering cost) to 

8-hour ozone nonattainment is provided 

in subsection (c).

4600 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

71Environ, 2002: User’s Guide to the 

Comprehensive Air Quality Model with Extensions 

(CAMX), Novato, CA.

The air quality modeling for the 

interstate ozone contribution analysis 

was performed for those counties 

predicted to be nonattainment for 8-

hour ozone in the 2010 Base Case, as 

described above in section IV.D. The 

procedures used by EPA to determine 

the air quality component of whether 

emissions in specific upwind States 

make a significant contribution (before 

considering cost) to projected 

downwind nonattainment for 8-hour 

ozone are the same as those used by 

EPA for the State-by-State determination 

in the NOX SIP Call. 

a. Analytical Techniques for Modeling 

Interstate Contributions to 8-Hour 

Ozone Nonattainment 

The modeling approach used by EPA 

to quantify the impact of emissions in 

specific upwind States on projected 

downwind nonattainment areas for 8-

hour ozone includes two different 

techniques, zero-out and source 

apportionment. The outputs of the two 

modeling techniques were used to 

calculate ‘‘metrics’’ or measures of 

contribution. The metrics were 

evaluated in terms of three key 

contribution factors to determine which 

States make a significant contribution 

(before considering cost) to downwind 

ozone nonattainment. Details of the 

modeling techniques and metrics are 

described in this section. 

The zero-out and source 

apportionment modeling techniques 

provide different technical approaches 

to quantifying the downwind impact of 

emissions in upwind States. The zeroout modeling analysis provides an 

estimate of downwind impacts by 

comparing the model predictions from a 

base case run to the predictions from a 

run in which the base case man-made 

emissions are removed from a specific 

State. Zero-out modeling was performed 

by removing all man-made emissions of 

NOX and VOC in the State. 

In contrast to the zero-out approach, 

the source apportionment modeling 

quantifies downwind impacts by 

tracking the impacts of ozone formed 

from emissions in an upwind source 

area. For this analysis, the source 

apportionment technique was 

implemented to provide the 

contributions from all man-made 

sources of NOX and VOC in each State. 

Additional information on the source 

apportionment technique can be found 

in the CAMX User’s Guide.71 There is 

currently no technical evidence 

showing that one technique is clearly 

superior to the other for evaluating 

contributions to ozone from various 

emission sources; therefore, both 

approaches were given equal 

consideration in this analysis.

The EPA performed State-by-State 

zero-out modeling and source 

apportionment modeling for 31 States in 

the East. These States are as follows: 

Alabama, Arkansas, Connecticut, 

Delaware, Florida, Georgia, Illinois, 

Indiana, Iowa, Kentucky, Louisiana, 

Maine, Maryland, Massachusetts, 

Michigan, Minnesota, Mississippi, 

Missouri, New Hampshire, New Jersey, 

New York, North Carolina, Ohio, 

Pennsylvania, Rhode Island, South 

Carolina, Tennessee, Vermont, Virginia, 

West Virginia, and Wisconsin. In both 

types of modeling, emissions from the 

District of Columbia were combined 

with those from Maryland. For the 

source apportionment modeling, North 

Dakota and South Dakota were 

aggregated into a single source region. 

Because large portions of the six States 

along the western border of the 

modeling domain (i.e., Kansas, 

Nebraska, North Dakota, Oklahoma, 

South Dakota, and Texas) are outside 

the domain, EPA has deferred analyzing 

the contributions to downwind ozone 

nonattainment for these States. 

The EPA selected several metrics to 

quantify the projected downwind 

contributions from emissions in upwind 

States. The metrics were designed to 

provide information on three 

fundamental factors for evaluating 

whether emissions in an upwind State 

make large and/or frequent 

contributions to downwind 

nonattainment. These factors are: 

• The magnitude of the contribution, 

• The frequency of the contribution, 

and 

• The relative amount of the 

contribution.

The magnitude of contribution factor 

refers to the actual amount of ozone 

contributed by emissions in the upwind 

State to nonattainment in the downwind 

area. The frequency of the contribution 

refers to how often contributions above 

certain thresholds occur. The relative 

amount of the contribution is used to 

compare the total ozone contributed by 

the upwind State to the total amount of 

nonattainment ozone in the downwind 

area. The factors are the basis for several 

metrics that can be used to assess a 

particular impact. The metrics used in 

this analysis are the same as those used 

in the NOX SIP Call. These metrics are 

described below for the zero-out 

modeling and for the source 

apportionment modeling. Table V–1 

lists the metrics for each factor. 

Additional details with examples of the 

procedures for calculating the metrics 

are provided in the AQMTSD. We 

solicit comment on other metrics 

including whether it would be 

appropriate to develop a metric based 

on annualized costs for each State per 

ambient impact on each downwind 

nonattainment receptor.

TABLE V–1.—OZONE CONTRIBUTION FACTORS AND METRICS

Factor Zero-out Source apportionment 

Magnitude of contribution ................................... Maximum contribution ...................................... Maximum contribution; and 

Highest daily average contribution (ppb and 

percent). 

Frequency of contribution ................................... Number and percent of exceedances with 

contributions in various concentration 

ranges.

Number and percent of exceedances with 

contributions in various concentration 

ranges. 

Relative amount of contribution .......................... Total contribution relative to the total exceedance ozone in the downwind area and.Total average contribution to exceedance 

hours in the downwind area. 

Population-weighted total contribution relative 

to the total population-weighted exceedance 

ozone in the downwind area.

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4601

72 In some cases, we determined the contribution 

of some States to downwind problems as significant 

(before considering cost) because it passed two, but 

not all three, factors.

The values for each metric were 

calculated using only those periods 

during which model-predicted 8–hour 

average ozone concentration were of 85 

ppb or more in at least one of the model 

grid cells that are associated with the 

receptor county. That is, we only 

analyzed interstate ozone contributions 

for the nonattainment receptor counties 

when the model predicted an 

exceedance in the 2010 Base Case. The 

procedures for assigning model grid 

cells to each nonattainment county are 

described in the AQMTSD. 

As in the NOX SIP Call, the ozone 

contribution metrics are calculated and 

evaluated for each upwind State to each 

downwind nonattainment receptor. 

These source-receptor pairs are referred 

to as ‘‘linkages.’’

b. Zero-Out Metrics

A central component of several of the 

metrics is the number of predicted 

exceedances in the 2010 Base Case for 

each nonattainment receptor. The 

number of exceedances in a particular 

nonattainment receptor is determined 

by the total number of daily predicted 

peak 8-hour concentrations of 85 ppb or 

more across all the episode days for the 

model grid cells assigned to the 

receptor. 

The Maximum Contribution Metric 

for a particular upwind State to an 

individual downwind nonattainment 

receptor linkage is determined by first 

calculating the concentration 

differences between the 2010 Base Case 

and the zero-out simulation for that 

upwind State. This calculation is 

performed for all 2010 Base Case 

exceedances predicted for the 

downwind receptor. The largest 

difference (i.e., contribution) for the 

linkage across all of the exceedances at 

the downwind receptor is the maximum 

contribution. 

The Frequency of Contribution Metric 

for a particular linkage is determined by 

first sorting the contributions by 

concentration range (e.g., 2 to 5 ppb, 5 

to 10 ppb, etc.). The number of impacts 

in each range is used to assess the 

frequency of contribution. 

Determining the Total Ozone 

Contribution Relative to the Base Case 

Exceedance Metric for a particular 

linkage involves first calculating the 

total ozone of 85 ppb or more in the 

2010 Base Case and in the upwind 

State’s zero-out run. The calculation is 

performed by summing the amount of 

ozone above the NAAQS for each 

predicted exceedance at the downwind 

receptor area. Finally, the amount of 

ozone above the NAAQS from the zeroout run is divided by the amount of 

ozone above the NAAQS from the 2010 

Base simulation to form this metric. 

The Population-Weighted Relative 

Contribution Metric is similar to the 

total ozone contribution metric 

described in the preceding paragraph, 

except that during the calculation the 

amount of ozone above the NAAQS in 

both the base case and the zero-out 

simulation is weighted by (i.e.,

multiplied by) the 2000 population in 

the receptor county. 

c. Source Apportionment Metrics 

Despite the fundamental differences 

between the zero-out and source 

apportionment techniques, the 

definitions of the source apportionment 

contribution metrics are generally 

similar to the zero-out metrics. One 

exception is that all periods during the 

day with predicted 8-hour averages of 

85 ppb or more are included in the 

calculation of source apportionment 

metrics, as opposed to just the daily 

peak 8-hour predicted values which are 

used for the zero-out metrics. 

Additional information on differences 

between the zero-out and source 

apportionment metrics calculations can 

be found in the AQMTSD. 

The outputs from the source 

apportionment modeling provide 

estimates of the contribution to each 

predicted exceedance for each linkage. 

For a given upwind State to downwind 

nonattainment receptor linkage, the 

Maximum Contribution Metric is the 

highest contribution from among the 

contributions to all exceedances at the 

downwind receptor. The Frequency of 

Contribution Metric for the source 

apportionment technique is determined 

in a similar way to which this metric is 

calculated for the zero-out modeling. 

The Highest Daily Average 

Contribution Metric is determined for 

each day with predicted exceedances at 

the downwind receptor. The metric is 

calculated by first summing the 

contributions for that linkage over all 

exceedances on a particular day, then 

dividing by the number of exceedances 

on that day to produce a daily average 

contribution to nonattainment. The 

daily average contribution values across 

all days with exceedances are examined 

to identify the highest value which is 

then selected for use in the 

determination of significance (before 

considering cost). We also express this 

metric as a percent by dividing the 

highest daily average contribution by 

the corresponding ozone exceedance 

concentration on the same day. 

The Percent of Total Nonattainment 

Metric is determined for each of the 

three episodes individually as well as 

for all 30 days (i.e., all three episodes) 

combined. This metric is calculated by 

first summing the contributions to all 

exceedances for a particular linkage to 

produce an estimate of the total 

contribution. Second, the total 

contribution is divided by the total 

ozone for periods above the NAAQS.

d. Evaluation of Upwind State 

Contributions to Downwind 8-Hour 

Ozone Nonattainment 

The EPA compiled the 8-hour metrics 

by downwind area in order to evaluate 

the contributions to downwind 

nonattainment. The contribution data 

were reviewed to determine how large 

of a contribution a particular upwind 

State makes to nonattainment in each 

downwind area in terms of both the 

magnitude of the contribution, and the 

relative amount of the total 

contribution. The data were also 

examined to determine how frequently 

the contributions occur. 

The first step in evaluating this 

information was to screen out linkages 

for which the contributions were very 

low. This initial screening was based 

on: (1) A maximum contribution of less 

than 2 ppb from either of the two 

modeling techniques and/or, (2) a 

percent of total nonattainment of less 

than 1 percent. Any upwind State that 

did not pass both of these screening 

criteria for a particular downwind area 

was considered not to make a significant 

contribution to that downwind area. 

The finding of meeting the air quality 

component of significance (i.e., before 

considering cost) for linkages that 

passed the initial screening criteria was 

based on EPA’s technical assessment of 

the values for the three factors. Each 

upwind State that had large and/or 

frequent contributions to the downwind 

area, based on these factors, is 

considered as contributing significantly 

(before considering cost) to 

nonattainment in the downwind area. 

For each upwind State, the modeling 

disclosed a linkage in which all three 

factors—high magnitude of 

contribution, high frequency of 

contribution, high relative percentage of 

nonattainment—are met. In addition, 

each upwind State contributed to 

nonattainment problems in at least two 

downwind States (except for Louisiana 

and Arkansas which contributed to 

nonattainment in only Texas).72 There 

have to be at least two different factors 

that indicate large and/or frequent 

contributions in order for the linkage to 

be significant (before considering cost). 

4602 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

In this regard, the finding of a 

significant contribution (before 

considering cost) for an individual 

linkage was not based on any single 

factor. For most of the individual 

linkages, the factors yield a consistent 

result (i.e., either large and frequent 

contributions and high relative 

contributions or small and infrequent 

contributions and low relative 

contributions). In some linkages, 

however, not all of the factors are 

consistent. The EPA believes that each 

of the factors provides an independent, 

legitimate measure of contribution.

The EPA applied the evaluation 

methodology described above to each 

upwind-downwind linkage to determine 

which States contribute significantly 

(before considering cost) to 

nonattainment in the 47 specific 

downwind counties. The analysis of the 

metrics for each linkage is presented in 

the AQMTSD. Of the 31 States included 

in the assessment of interstate ozone 

contributions, 25 States were found to 

have emissions which make a 

significant contribution (before 

considering cost) to downwind 8-hour 

ozone nonattainment. These States are 

listed in Tables V–2 and V–3. The 

linkages which EPA found to be 

significant (before considering cost) are 

listed in Tables V–2 (by upwind State) 

and V–3 (by downwind nonattainment 

county) for the 8-hour NAAQS. Of the 

31 States included in the assessment of 

interstate ozone transport, the following 

six States are found to not make a 

significant contribution to downwind 

nonattainment: Florida, Maine, 

Minnesota, New Hampshire, Rhode 

Island, and Vermont.

TABLE V–2.—PROJECTED DOWNWIND COUNTIES TO WHICH SOURCES IN UPWIND STATES CONTRIBUTE SIGNIFICANTLY

(BEFORE CONSIDERING COST) FOR THE 8-HOUR NAAQS. 

Upwind 

state Downwind 2010 nonattainment counties 

AL ............ Crittenden AR, Fulton GA, Harris TX. 

AR ............ Harris TX, Tarrant TX. 

CT ............ Kent RI, Suffolk NY. 

DE ............ Bucks PA, Camden NJ, Cumberland NJ, Delaware PA, Gloucester NJ, Hunterdon NJ, Mercer NJ, Middlesex NJ, Monmouth NJ, 

Montgomery PA, Morris NJ, Ocean NJ, Philadelphia PA, Richmond NY, Suffolk NY. 

GA ........... Crittenden AR, Mecklenburg NC. 

IA ............. Kenosha WI, Lake IN, Racine WI. 

IL .............. Allegheny PA, Crittenden AR, Erie NY, Geauga OH, Kenosha WI, Lake IN, Racine WI, Sheboygan WI, Summit OH. 

IN ............. Allegheny PA, Crittenden AR, Geauga OH, Kenosha WI, Racine WI, Sheboygan WI, Summit OH. 

KY ............ Allegheny PA, Crittenden AR, Fulton GA, Geauga OH. 

LA ............ Harris TX, Tarrant TX. 

MA ........... Kent RI, Middlesex CT. 

MD ........... Arlington VA, Bergen NJ, Bucks PA, Camden NJ, Cumberland NJ, Delaware PA, Erie NY, Fairfax VA, Fairfield CT, Gloucester NJ, 

Hudson NJ, Hunterdon NJ, Mecklenburg NC, Mercer NJ, Middlesex CT, Middlesex NJ, Monmouth NJ, Montgomery PA, Morris 

NJ, New Haven CT, Newcastle DE, Ocean NJ, Philadelphia PA, Putnam NY, Richmond NY, Suffolk NY, Summit OH, Washington DC, Westchester NY. 

MI ............. Allegheny PA, Anne Arundel MD, Baltimore MD, Bergen NJ, Bucks PA, Camden NJ, Cecil MD, Cumberland NJ, Delaware PA, Erie 

NY, Geauga OH, Gloucester NJ, Harford MD, Hudson NJ, Hunterdon NJ, Kenosha WI, Kent MD, Lake IN, Mercer NJ, Middlesex 

NJ, Monmouth NJ, Montgomery PA, Morris NJ, Newcastle DE, Ocean NJ, Philadelphia PA, Prince Georges MD, Racine WI, 

Richmond NY, Suffolk NY, Summit OH. 

MO ........... Crittenden AR, Geauga OH, Kenosha WI, Lake IN, Racine WI, Sheboygan WI. 

MS ........... Crittenden AR, Harris TX. 

NC ........... Anne Arundel MD, Baltimore MD, Camden NJ, Cecil MD, Cumberland NJ, Fulton GA, Gloucester NJ, Harford MD, Kent MD, Newcastle DE, Ocean NJ, Philadelphia PA, Suffolk NY. 

NJ ............ Bucks PA, Delaware PA, Erie NY, Fairfax VA, Fairfield CT, Kent RI, Middlesex CT, Montgomery PA, New Haven CT, Philadelphia 

PA, Putnam NY, Richmond NY, Suffolk NY, Westchester NY. 

NY ............ Fairfield CT, Hudson NJ, Kent RI, Mercer NJ, Middlesex CT, Middlesex NJ, Monmouth NJ, Morris NJ, New Haven CT. 

OH ........... Allegheny PA, Anne Arundel MD, Arlington VA, Baltimore MD, Bergen NJ, Bucks PA, Camden NJ, Cecil MD, Cumberland NJ, 

Delaware PA, Fairfax VA, Fairfield CT, Gloucester NJ, Harford MD, Hudson NJ, Hunterdon NJ, Kenosha WI, Kent MD, Kent RI, 

Lake IN, Mercer NJ, Middlesex CT, Middlesex NJ, Monmouth NJ, Montgomery PA, Morris NJ, New Haven CT, Newcastle DE, 

Ocean NJ, Philadelphia PA, Prince Georges MD, Racine WI, Richmond NY, Suffolk NY, Washington DC, Westchester NY. 

PA ............ Anne Arundel MD, Arlington VA, Baltimore MD, Bergen NJ, Camden NJ, Cecil MD, Cumberland NJ, Erie NY, Fairfax VA, Fairfield 

CT, Gloucester NJ, Harford MD, Hudson NJ, Hunterdon NJ, Kenosha WI, Kent MD, Kent RI, Lake IN, Mecklenburg NC, Mercer 

NJ, Middlesex CT, Middlesex NJ, Monmouth NJ, Morris NJ, New Haven CT, Newcastle DE, Ocean NJ, Prince Georges MD, Putnam NY, Racine WI, Richmond NY, Suffolk NY, Summit OH, Washington DC, Westchester NY. 

SC ............ Fulton GA, Mecklenburg NC. 

TN ............ Crittenden AR, Fulton GA, Lake IN, Mecklenburg NC, Tarrant TX. 

VA ............ Anne Arundel MD, Baltimore MD, Bergen NJ, Bucks PA, Camden NJ, Cecil MD, Cumberland NJ, Delaware PA, Erie NY, Fairfield 

CT, Gloucester NJ, Harford MD, Hudson NJ, Hunterdon NJ, Kent MD, Kent RI, Lake IN, Mecklenburg NC, Mercer NJ, Middlesex 

CT, Middlesex NJ, Monmouth NJ, Montgomery PA, Morris NJ, New Haven CT, Newcastle DE, Ocean NJ, Philadelphia PA, 

Prince Georges MD, Putnam NY, Richmond NY, Suffolk NY, Summit OH, Washington DC, Westchester NY. 

WI ............ Erie NY, Lake IN. 

WV ........... Allegheny PA, Anne Arundel MD, Baltimore MD, Bucks PA, Camden NJ, Cecil MD, Cumberland NJ, Delaware PA, Fairfax VA, 

Fairfield CT, Fulton GA, Gloucester NJ, Harford MD, Hunterdon NJ, Kent MD, Mercer NJ, Middlesex NJ, Monmouth NJ, Montgomery PA, Morris NJ, New Haven CT, Newcastle DE, Ocean NJ, Philadelphia PA, Prince Georges MD, Suffolk NY, Summit 

OH, Washington DC, Westchester NY. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4603

TABLE V–3.—UPWIND STATES THAT CONTAIN EMISSIONS SOURCES THAT CONTRIBUTE SIGNIFICANTLY (BEFORE

CONSIDERING COST) TO PROJECTED 8-HOUR NONATTAINMENT IN DOWNWIND STATES. 

Downwind nonattainment counties Upwind States 

Crittenden AR ........................................................................................... AL GA IL IN KY MO MS TN

Fairfield CT ............................................................................................... MD NJ NY OH PA VA WV

Middlesex CT ........................................................................................... MA MD NJ NY OH PA VA 

New Haven CT ......................................................................................... MD NJ NY OH PA VA WV 

Washington DC ........................................................................................ MD OH PA VA WV 

Newcastle DE ........................................................................................... MD MI NC OH PA VA WV 

Fulton GA ................................................................................................. AL KY NC SC TN WV 

Lake IN ..................................................................................................... IA IL MI MO OH PA TN VA WI 

Anne Arundel MD ..................................................................................... MI NC OH PA VA WV 

Baltimore MD ............................................................................................ MI NC OH PA VA WV 

Cecil MD ................................................................................................... MI NC OH PA VA 

Harford MD ............................................................................................... MI NC OH PA VA WV 

Kent MD ................................................................................................... MI NC OH PA VA WV 

Prince Georges MD .................................................................................. MI OH PA VA WV 

Mecklenburg NC ....................................................................................... GA MD SC TN VA 

Bergen NJ ................................................................................................ MD MI OH PA VA 

Camden NJ .............................................................................................. DE MD MI NC OH PA VA WV 

Cumberland NJ ........................................................................................ DE MD MI NC OH PA VA WV 

Gloucester NJ ........................................................................................... DE MD MI NC OH PA VA WV

Hudson NJ ................................................................................................ MD MI NY OH PA VA 

Hunterdon NJ ........................................................................................... DE MD MI OH PA VA WV 

Mercer NJ ................................................................................................. DE MD MI NY OH PA VA WV 

Middlesex NJ ............................................................................................ DE MD MI NY OH PA VA WV

Monmouth NJ ........................................................................................... DE MD MI NY OH PA VA WV 

Morris NJ .................................................................................................. DE MD MI NY OH PA VA WV 

Ocean NJ ................................................................................................. DE MD MI NC OH PA VA WV 

Erie NY ..................................................................................................... IL MD MI NJ PA VA WI 

Putnam NY ............................................................................................... MD NJ PA VA 

Richmond NY ........................................................................................... DE MD MI NJ OH PA VA 

Suffolk NY ................................................................................................ CT DE MD MI NC NJ OH PA VA WV 

Westchester NY ....................................................................................... MD NJ OH PA VA WV 

Geauga OH .............................................................................................. IL IN KY MI MO 

Summit OH ............................................................................................... IL IN MD MI PA VA WV 

Allegheny PA ............................................................................................ IL IN KY MI OH WV 

Bucks PA .................................................................................................. DE MD MI NJ OH VA WV 

Delaware PA ............................................................................................ DE MD MI NJ OH VA WV 

Montgomery PA ........................................................................................ DE MD MI NJ OH VA WV 

Philadelphia PA ........................................................................................ DE MD MI NC NJ OH VA WV 

Kent RI ..................................................................................................... CT MA NJ NY OH PA VA 

Denton TX ................................................................................................ None of the upwind States examined in this analysis were found to 

make a significant contribution (before considering cost) to this nonattainment receptor. 

Harris TX .................................................................................................. AL AR LA MS 

Tarrant TX ................................................................................................ AR LA TN 

Arlington VA ............................................................................................. MD OH PA 

Fairfax VA ................................................................................................. MD NJ OH PA WV 

Kenosha WI .............................................................................................. IA IL IN MI MO OH PA 

Racine WI ................................................................................................. IA IL IN MI MO OH PA 

Sheboygan WI .......................................................................................... IL IN MO 

C. Significant Contribution for Annual 

Average PM2.5 Before Considering Cost 

1. Analyses of Air Quality Data That 

Support the Need To Reduce Interstate 

Transport of PM2.5

a. Spatial Gradients of Pollutant 

Concentrations 

Daily maps of PM2.5 mass 

concentrations from EPA’s national 

monitoring network show large areas of 

elevated PM2.5 occurring over 

monitoring locations in urban areas as 

well as rural areas. The fact that many 

of the rural monitors are not located 

near emissions sources, or at least not 

near large emission sources, and yet the 

rural concentrations are elevated like 

the neighboring urban concentrations, 

provides evidence that PM2.5 is being 

transported to the rural areas. 

When the daily maps of PM2.5 mass 

concentrations are viewed in sequence, 

they show the large areas of elevated 

PM2.5 moving from one area to another, 

suggesting that PM2.5 is being 

transported not just from urban areas to 

neighboring rural areas, but also from 

one State to another and from one part 

of the country to another. The smoke 

from wildfires in southeastern Ontario 

reaching all of the New England States 

in July of 2002 is but one wellpublicized example of transported 

PM2.5. 

It may be suggested that it is not PM2.5

that is being transported; rather, it is 

meteorological conditions conducive to 

PM2.5 formation that are being 

transported. However, the fact that the 

monitors located far from emission 

sources often report elevated PM2.5 just 

after the upwind monitors record high 

levels and just before the downwind 

monitors record high levels indicates 

strongly that it is PM2.5 that is being 

transported. 

Episodes of movement of elevated 

PM2.5 have been seen in almost every 

4604 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

73Battelle, Satellite Data for Air Quality Analysis.

July 2003.

74Rao, Tesh, Chemical Speciation of PM2.5 in 

Urban and Rural Areas, Published in the 

Proceedings of the Air and Waste Management 

Symposium on Air Quality Measurement Methods 

and Technology—2002, November 2002.

75North American Research Strategy for 

Tropospheric Ozone and Particulate Matter, 

Particulate Matter Science for Policy Makers—A 

NARSTO Assessment. February 2003.

direction in the Eastern United States, 

including in the west to east direction 

along the lower Great Lakes, in the 

south to north direction along the East 

Coast, in the south to north direction 

across the Midwestern States, in the 

north to south direction across the 

Midwestern States, and in the north to 

south direction along the East Coast. 

More information on episodes of 

movement of PM2.5 is contained in the 

Air Quality Data Analysis Technical 

Support Document. 

Satellite data from Moderate 

Resolution Imaging Spectroradiometer 

(MODIS) sensors, designed to retrieve 

aerosol properties over both land and 

ocean, are strongly correlated with the 

ground-based monitors that measure 

PM2.5 concentrations below. The MODIS 

data provide a visual corroboration for 

the above described regional transport. 

Three examples follow:73

Midwest-Northeast Haze Event: June 

20–28, 2002 

During late June 2002, the Central and 

Eastern United States experienced a 

haze event from a combination of manmade air pollutants combined with 

some smoke. The MODIS images 

document the buildup of aerosols in the 

Midwest from June 20–22, then the 

transport of aerosols across the 

Northeast from June 23–26. Images from 

June 27 and 28 show the beginning of 

smoke transported from fires in Canada 

into the Northern Midwest. This series 

from June 20–26 qualitatively 

documents a haze transport event from 

the Midwest into the Northeast. The 

imagery also documents the 

geographical scale of the smoke 

transport on June 27–28.

Northeast Fire Event: July 4–9, 2002 

In early July 2002, the MODIS 

imagery captured two events: an 

episodic widespread haze event in the 

East, Southeast, and Midwest; and an 

event directly related to major forest 

fires in Canada. On July 4 and 5, MODIS 

images show urban haze in the East, 

Southeast, and Midwest. This haze 

event persists in the Southeast and 

southern Midwest throughout the 

remaining days, July 7–9. At the same 

time, MODIS images for July 6 through 

July 8 document how the Northeast and 

mid-Atlantic become dominated by 

smoke transported into the region from 

Canada fires. On July 9, MODIS images 

show the smoke and the southern haze 

has moved towards the east while 

dissipating over the Atlantic. This series 

from July 6–8 qualitatively documents 

the smoke transport event from major 

fires in Canada. The imagery also 

documents the widespread geographical 

scale of haze, particularly from July 4–

8, as well as the movement of the haze 

(along with smoke) across large 

distances. 

Midwest-Southeast Haze Event: 

September 8–14, 2002 

This imagery during September 2002 

reveals the formation of a large-scale 

haze event over the lower Ohio River 

Valley that eventually transports over 

large portions of Southcentral and 

Southeastern United States. The MODIS 

images document the buildup of 

aerosols in the Midwest over September 

8 and 9. Influenced by a strong lowpressure system off the mid-Atlantic 

seaboard on September 10, the haze 

plume divides, with the majority 

traveling south and west toward Texas 

and a small remnant moving northeast. 

On September 11 and 12, the Midwest 

plume, combined with additional 

pollutants from Texas and the 

Southeast, is transported to the East. 

September 13 has another low pressure 

system, forcing collection of pollutants 

in Texas and Louisiana, which are 

obscured by cloud cover on September 

14. This series reveals the geographic 

extent and the complexities that are 

possible with the transfer of pollutants. 

More information on the use of satellite 

data to observe the movement of PM2.5

is contained in the Air Quality Data 

Analysis Technical Support Document. 

b. Urban vs. Rural Concentrations 

Differences between concentrations at 

urban areas and nearby rural locations 

help indicate the general magnitudes of 

regional and local contributions to PM2.5

and PM2.5 species.74 The differences 

indicate that in the Eastern United 

States, the regional contributions to the 

annual average concentrations at urban 

locations is 50 to 80 percent which, in 

terms of mass, is generally between 10 

and 13 μg/m3. For many rural areas, 

average PM2.5 concentrations exceed 10 

μg/m3 and are often not much below the 

annual PM2.5 NAAQS of 15 μg/m3. 

These results are consistent with those 

found in the NARSTO Fine Particle 

Assessment.75 More information on 

comparisons of urban and rural 

concentrations of PM2.5 is contained in 

the Air Quality Data Analysis Technical 

Support Document.

For the most part, sulfate is 

regionwide, as indicated by the rural 

sulfate concentrations being 80 to 90 

percent of the urban sulfate 

concentrations. Total carbon is less of a 

regional phenomenon than sulfate, as 

evidenced by the rural total carbon 

concentrations being about 50 percent of 

the urban total carbon concentrations. 

Last, nitrate has a regional component; 

however, the local component can be as 

large as 2.0 μg/m3. 

c. Inter-Site Correlation of PM2.5 Mass 

and Component Species 

Correlation analysis provides further 

evidence for the transport of PM2.5 and 

its constituents. Analysis of the time 

series history of PM2.5 among different 

monitoring locations indicates a strong 

tendency for PM2.5 concentrations to 

rise and fall in unison. Correlations of 

PM2.5 daily concentrations among 

stations separated by over 300 to 500 

kilometers frequently have correlation 

coefficients that exceed 0.7. The 

correlation coefficient is a measure of 

the degree of linear association between 

two variables, and the square of the 

correlation coefficient, denoted R2, 

measures how much of the total 

variability in the data is explained by a 

simple linear model. For example, in 

the preceding case, approximately 50 

percent, (0.7)2, of the variability in PM2.5

concentrations at one site frequently can 

be explained by PM2.5 concentrations at 

a site over 300 kilometers away. These 

high correlations occur both in warm 

and cool seasons suggesting that large 

scale transport phenomenon in 

conjunction with large and small scale 

meteorological conditions play a major 

role in particle concentration changes 

over large geographic areas.

Correlation of major PM2.5

constituents among monitoring stations 

show differing patterns as distance 

separating monitors increases. For 

sulfate, the correlation among daily 

average concentrations remains strong 

(above 0.7) at distances exceeding 300 

kilometers. Correlation of nitrates 

among monitoring stations tends to be 

lower than for sulfate and also varies 

somewhat among seasons. Warm season 

correlations, when nitrates are lowest, 

tend to be relatively low (about 0.4) for 

stations separated by 300 kilometers or 

more. Cool season correlations for 

nitrates are larger than warm season 

correlations and range from about 0.5 to 

above 0.6 for stations near urban areas 

and separated by 300 kilometers or 

more. Correlation coefficients for 

organic carbon typically range from 

about 0.4 to above 0.6 for separation 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4605

76Battelle, Compilation of Existing Studies of 

Source Apportionment for PM2.5. August 2003.

77Battelle, Eight Site Source Apportionment of 

PM2.5 Specification Trends Data. September 2003.

distances above 300 kilometers but 

appear to decrease more rapidly during 

the summer season compared with the 

other three seasons. For elemental 

carbon and crustal material, correlation 

with distance drops very rapidly to 

values below 0.2 or 0.3 for separation 

distances above 50 to 100 kilometers. 

The formation rate and relative 

stability for the major PM2.5 species help 

explain the observed correlation 

patterns. For sulfate, conversion of SO2

to sulfate occurs slowly over relatively 

large distances downwind of major 

emission sources of SO2. Slow 

conversion of SO2 to sulfate over large 

travel distances promotes greater spatial 

homogeneity and thus large correlation 

among distant monitoring stations. For 

nitrates, evidence suggests that higher 

inter-station correlations in winter are 

associated with increased stability of 

nitrate (longer travel distances) when 

conditions are cool compared with 

warm seasons when nitrates are much 

less stable. The formation of secondary 

organic carbon from natural sources 

helps maintain a relatively 

homogeneous regional component 

(higher correlation) that is offset 

somewhat by higher organic carbon in 

urban areas associated with local carbon 

sources. For elemental carbon and 

crustal material, almost all of the 

contributions come from nearby sources 

and hence the relatively low correlation 

among stations that are separated by 

even small distances. More information 

on inter-site correlation of PM2.5 and 

species is contained in the Air Quality 

Data Analysis Technical Support 

Document. 

d. Ambient Source Apportionment 

Studies 

Generally, sources emitting 

particulate matter, or precursors that 

later form particulate matter, emit 

multiple species of particulate matter 

simultaneously. Often, the proportions 

of the species are sufficiently different 

from one source type to another that it 

is possible to determine how much each 

source type contributes to the PM2.5

mass observed at a monitoring location. 

This technique is called source 

apportionment or receptor modeling.

A review of nearly 20 recently 

published articles using source 

apportionment modeling at over 35 

locations in the Eastern United States 

was conducted to understand 

commonalities and differences in source 

apportionment results.76 A large sulfate 

dominated source was identified as the 

largest or one of the largest source types 

in nearly every study. Some studies 

labeled this source coal combustion, 

while others labeled it secondary sulfate 

and did not attribute it to an emission 

source. For many of the locations, over 

50 percent of the PM2.5 mass is 

apportioned to this source type during 

some seasons. Summer is typically the 

season with the largest contributions. 

Most of the studies, by using back 

trajectory analysis, indicated that the 

probable location of the sulfate/coal 

combustion sources is in the Midwest. 

Also, studies with multiple years of data 

tended to identify a winter and summer 

signature of the sulfate source type, with 

more mass being apportioned to the 

summer version. Reasons cited in these 

studies for the two signatures included 

different types of coal being burned 

during the summer versus the winter or 

different atmospheric chemistry leading 

to different proportions of species at the 

monitoring location by season.

A nitrate-dominated source type was 

identified at approximately half the sites 

and contributes to between 10 and 30 

percent of the annual PM2.5 mass. The 

source has seasonal variation with 

maxima in the cold seasons. The back 

trajectories sometimes point to areas 

with high ammonia emissions. 

However, the interpretation of this 

nitrate-dominated source type is not 

consistent from study to study. Some 

authors associate this source type with 

NOX point sources and motor vehicles 

from major cities that are sufficiently far 

from the receptor for the NOX to oxidize 

and react with ammonia. Other authors 

associate this source type with mobile 

emissions from nearby highways. One 

author does not interpret the source 

type since he believes it is artificially 

created by the meteorological conditions 

and atmospheric chemistry required for 

formation of ammonium nitrate. 

Another major source type identified 

at nearly all the sites is one dominated 

by secondary organic matter. Some 

studies labeled this source motor 

vehicles, while other studies labeled it 

secondary organic matter and did not 

attribute it to an emission source. For 

several sites, this source type 

contributes more than 20 percent of the 

annual PM2.5 mass. Only a few studies 

separated the source type into the 

combustion of gasoline and diesel fuel, 

and this separation was generally 

accomplished by using the four organic 

carbon fractions and the three elemental 

carbon fractions available from the 

IMPROVE network. In Washington, DC, 

over 85 percent of the mobile source 

type contribution is associated with 

gasoline vehicles and less than 15 

percent with diesel. This contrasts with 

Atlanta, where only 33 to 55 percent 

(depending on the study) of the mobile 

source type contribution is associated 

with gasoline vehicles.

Wood smoke and forest fires were 

identified as a significant source type at 

several sites. The magnitude of their 

contributions varies from site to site. For 

a rural site in Vermont, the magnitude 

of the contribution of this source type is 

approximately 1 μg/m3, which is 

approximately 15 percent of the total 

PM2.5 mass. For Atlanta, the magnitude 

of contribution ranged from 0.5 to 2.0 

μg/m3 depending on the study, which is 

approximately 3 to 11 percent of the 

total PM2.5 mass. 

A crustal source category is identified 

for all sites and usually comprises 1 to 

3 percent of the total PM2.5 mass. 

In addition to reviewing the source 

apportionment results in the published 

literature, EPA conducted receptor 

modeling using the data from the EPA 

speciation network to identify and 

quantify major contributors to PM2.5 in 

eight urban areas: Houston, 

Birmingham, Charlotte, St. Louis, 

Indianapolis, Washington, DC, 

Milwaukee, and New York City.77 The 

‘‘8 city report’’ contains 2 general types 

of findings that provide evidence to 

support that interstate transport of fine 

particles occurs. First, the source 

apportionment analyses at the eight 

cities provides evidence of the types of 

sources that are most likely the major 

contributors to fine particle mass in 

each city. Second, linking wind 

trajectories with the source 

apportionment analyses provides 

evidence of the most likely locations of 

the source types that are the major 

contributors to fine particle mass in 

each city.

The source apportionment results 

identify the largest source type at each 

site to be coal combustion. The source 

type contains a large amount of sulfate 

and is a major source of selenium, a 

trace particle normally associated with 

the combustion of coal. The mass 

apportioned to this source type ranged 

from a low of 1 to 3 μg/m3 in the lowest 

season to more than 10 μg/m3 in the 

high seasons at 5 of the sites. The source 

type accounted for 30 to 50 percent of 

the overall mass, consistent with the 

proportions found in the published 

literature. The consistency in the 

relative and absolute magnitude in the 

contributions from the coal combustion 

source type in these eight cities, 

combined with the fact that the distance 

of major coal combustion sources from 

each city varies widely, indicates that it 

4606 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

is most likely a regional source rather 

than a local source. 

The second and third largest source 

types are an ammonium nitrate source 

type and mobile sources. As the name 

implies, the ammonium nitrate source 

type contains a large amount of both 

ammonium and nitrate. Association of 

actual emission sources with this source 

type is less definitive, as was the case 

in the published literature. It is most 

likely that the source type originates 

from both coal combustion and mobile 

emissions. The mass apportioned to this 

source type ranged from 1 to 5 μg/m3, 

which is 8 to 30 percent of the overall 

mass. This source type was identified in 

each city except Houston. 

The absolute and relative magnitude 

of contribution from this source type 

showed much more variation than the 

coal combustion source type. It was 

highest in the Midwest in the winter, 

contributing between 7 and 10 μg/m3, 

where the temperatures are cooler and 

there are more ammonia emissions. The 

summertime contributions of this source 

type are generally low, near 1 μg/m3. 

The mobile source type contains a 

large amount of organic carbon, some 

elemental carbon, very little sulfate and 

some metals (particularly barium from 

brake pads). The mass apportioned to 

this source type ranged from a low of 

2.5 μg/m3 at Milwaukee to a high of 6.5 

μg/m3 at Birmingham. This source type 

has the least seasonal variability of the 

largest source types. Contributions for 

the highest season, which varies from 

site to site but is generally fall or 

summer, are only 1.5 or 2 times higher 

than the contributions for the lowest 

season. As a percentage of mass, the 

mobile source type accounts for 15 to 40 

percent of the total mass. It is assumed 

that most of the mass apportioned to the 

mobile source type is associated with 

local sources.

Linking the wind trajectories with the 

source apportionment results allows us 

to develop source regions (i.e., 

geographic regions with a high 

probability of being the origin of the 

mass associated with a source profile). 

These source regions provide evidence 

that at least some of the particles 

associated with the source profiles are 

likely transported over long distances. 

For example, the highest probability 

source region for the coal combustion 

source profile for Birmingham includes 

parts of the following States: Missouri, 

Illinois, Indiana, Ohio, Kentucky, 

Virginia, North Carolina, South 

Carolina, Alabama, and Mississippi. 

Table V–4 lists the States included in 

the highest probability source regions 

for each of the three largest source 

profiles at each of the 8 sites. 

The EPA compared the source regions 

for the coal combustion source (the 

largest source in each city) with the 

results from the zero-out modeling 

(described below) at the six cities in the 

8 City Source Apportionment Study that 

were projected to violate the PM2.5

standard in 2010. To perform these 

comparisons, for each city, the States in 

the highest probability source regions 

were compared to the States with a 

maximum contribution of 0.10 μg/m3 or 

greater at the monitor in that city. These 

comparisons were generally good. At 

the Bronx site for instance, 8 of the 9 

States with a maximum contribution of 

0.10 μg/m3 or greater were included in 

the highest probability source region for 

the coal combustion source. In 5 of the 

6 cities for which the comparison was 

performed, at least two thirds of the 

States with a maximum contribution of 

0.10 μg/m3 were also in the highest 

probability source region for the coal 

combustion source. In the 6th city, St. 

Louis, 7 of the 13 States with a 

maximum contribution of 0.10 μg/m3

were the highest probability source 

region for the coal combustion source. 

In summary, the general agreement 

between these two independent 

methods (source apportionment linked 

with wind trajectories and zero-out 

modeling) produce similar results in 

determining what States impact 

downwind receptors. 

Sulfate is generally formed in the 

atmosphere from SO2 (which is why the 

source is often referred to as secondary 

sulfate). Since the major sources of SO2

emissions are utility plants, which are 

fairly well inventoried, the sulfate 

source locations have been compared to 

the utility plant SO2 emissions as a 

check on the source identifications. 

Similarly, much of the nitrate is formed 

from NOX reactions in the atmosphere 

with utility plants being a major source 

of NOX. Hence, the nitrate source 

locations have also been compared with 

utility plant NOX emissions inventories 

(although we do not expect the 

correlation to be as good because (a) 

nitrate is semi-volatile, (b) there are 

other significant sources of NOX, and (c) 

the nitrate formation is also dependent 

on NH3 emissions). 

The comparisons of the sulfate source 

regions with the utility SO2 emissions 

were good for some of the sites. At the 

Bronx site for instance, the back 

trajectories do yield the expected source 

region associations with large utility 

emissions of SO2, namely the Ohio 

River Valley and the borders of Ohio, 

West Virginia, and Pennsylvania. 

Comparisons of the contour maps of 

the various non-marine nitrate sources 

show a common pattern, namely 

Midwest farming regions. Illinois, in 

particular, stands out. It has both NOX

utility emissions and the farming 

regions for sources of ammonia. 

More information on ambient source 

apportionment studies is contained in 

the Air Quality Data Analysis Technical 

Support Document.

TABLE V–4.—EIGHT CITY SOURCE APPORTIONMENT STUDY STATES IN HIGHEST PROBABILITY REGIONS FOR LARGEST

SOURCES

Eight city source apportionment study states in highest probability regions for largest sources 

City Coal combustion source Mobile sources Ammonium nitrate source 

Bronx .............................................. NY, PA, MD, VA, NC, WV, OH, 

KY, IN, MI, IL, WI.

VT, MA, NY, NJ, PA, MD, VA, 

OH, IN, IL, WI, MN.

NY, NJ, DE, MD, VA, NC, PA, 

OH, IL, WI, MN. 

Washington, DC ............................. NY, PA, VA, NC, SC, GA, OH, 

KY, TN, IN, IL, AR.

MD, DE, VA, NC, SC, WV, OH, 

KY, TN.

NY, PA, MD, DE, KY, TN, IL. 

Charlotte ........................................ NY, CT, NJ, PA, MD, VA, NC, 

SC, GA, FL, WV, OH, KY, MI, 

IN, AL, MS.

NC, SC, GA, TN AR ..................... PA, MD, VA, NC, SC, GA, FL, 

KY, TN, AR, MO, KS. 

Birmingham .................................... VA, NC< SC, GA, FL, OH, KY, 

TN, AL, IN, IL, MO.

NC, SC, GA, AL, MS, AR ............. IN, KY, TN, IL, MS, MN, IA, AR, 

LA, NE, OK, TX. 

Milwaukee ...................................... OH, MI, IN, KY, TN, AL, MS, IL, 

WI, IA, MO, AR, LA, SD, NE, 

KS, OK.

AL, WI, TN, MS, MN, MO ............ MI, OH, IN, WI, IL, MN, IA, MO, 

AR, ND, KS, OK. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4607

78The eight States of the Southern Appalachians 

covered by SAMI are: Alabama, Georgia, Kentucky, 

North Carolina, South Carolina, Tennessee, 

Virginia, and West Virginia.

79Southern Appalachian Mountains Initiative 

Final Report, August 2002.

TABLE V–4.—EIGHT CITY SOURCE APPORTIONMENT STUDY STATES IN HIGHEST PROBABILITY REGIONS FOR LARGEST

SOURCES—Continued

Eight city source apportionment study states in highest probability regions for largest sources 

City Coal combustion source Mobile sources Ammonium nitrate source 

Indianapolis .................................... NC, KY, TN, AL, FL, IN, IL, IA, 

MO, AR, LA, TX, NE, KS.

OH, KY, TN, NC, GA, IN, MI, WI, 

AR, LA.

MI, OH, IN, WI, IL, MN, IA, MO, 

AR, ND, KS, OK. 

St. Louis ......................................... WV, MI, KY, TN, IL, MO, AR, LA, 

TX.

MO, LA, NE, KS ........................... OH, IN, KY, TN, IL, IA, KS. 

Houston 1 ........................................ SC, GA, FL, AL, MS, LA, TX, IN .. KY, TN, AL, MS, IN, IL, AR, LA, 

TX.

1 No ammonium nitrate source was identified in Houston. 

2. Non-EPA Air Quality Modeling 

Analyses Relevant to PM2.5 Transport 

and Mitigation Strategies 

Air quality modeling was performed 

as part of the Southern Appalachian 

Mountains Initiative (SAMI) to support 

an assessment of the impacts of 

aerosols, ozone, and acid deposition in 

Class I areas within an eight-State 

portion of the Southeast.78 The results 

of the SAMI modeling 79 provide the 

following technical information on 

transport relevant to today’s proposal:

• Emissions reductions strategies 

produce the largest changes in fine 

particle mass on days with the highest 

mass. 

• Most of the reductions in fine 

particle mass are due to reductions in 

sulfate particles. 

• Particle mass in Class I areas of the 

SAMI region are influenced most by SO2

emissions within the State and within 

adjacent States. 

• SO2 emissions in other regions 

outside SAMI also contribute to particle 

mass at Class I areas in the SAMI States. 

• Specifically, in a 2010 baseline 

scenario, SO2 emissions reductions in 

States outside the SAMI region 

accounted for approximately 20 percent 

to as much as 60 percent of the modeled 

sulfate reduction in the 10 Class 1 areas 

in the SAMI region. 

• The relative sensitivity of nitrate 

fine particle mass at the SAMI Class I 

areas to changes in NOX emissions from 

SAMI States and from other regions is 

similar to the above findings for sulfate 

fine particle mass. 

• For SAMI to accomplish its 

mission, emissions reductions are 

essential both inside and outside the 

SAMI region. 

• Formation of nitrate particles is 

currently limited in the rural 

southeastern U.S. by the availability of 

ammonia. As sulfate particles are 

reduced, more ammonia will be 

available to react with nitric acid vapor 

and form nitrate particles. 

The findings of the air quality 

modeling performed by SAMI are very 

consistent and supportive of EPA’s zeroout modeling, as described below. The 

findings indicate that interstate 

transport results in non-trivial 

contributions to PM2.5 in downwind 

locations. High concentrations of PM2.5

at sensitive downwind receptors are not 

only influenced by emissions within 

that State, but are also heavily 

influenced by emissions in adjacent 

States as well as emissions from States 

in other regions. The SAMI results 

support a regional control approach 

involving SO2 emissions reductions in 

order to sufficiently reduce PM2.5 to 

meet environmental objectives. The 

SAMI also found that SO2 emissions 

reductions can lead to an increase in 

particle nitrate (i.e., nitrate 

replacement). As described in section 

II.B.3, any such increases could be 

mitigated through reductions in 

emissions of NOX.

3. Air Quality Modeling of Interstate 

PM2.5 Contributions 

This section documents the 

procedures used by EPA to quantify the 

impact of emissions in specific upwind 

States on projected downwind 

nonattainment for annual average PM2.5. 

These procedures are part of the twostep approach for determining 

significant contribution, as described in 

section III, above. 

The analytic approach for modeling 

the contribution of upwind States to 

PM2.5 in downwind nonattainment areas 

and the methodology for analyzing the 

modeling results are described in 

subsection (a) and the findings as to 

whether individual States meet the air 

quality prong of the significant 

contribution test is provided in 

subsection (b). The air quality modeling 

for the interstate PM2.5 contribution 

analysis was performed for those 

counties predicted to be nonattainment 

for annual average PM2.5 in the 2010 

Base Case, as described above in section 

IV.E. 

a. Analytical Techniques for Modeling 

Interstate Contributions to Annual 

Average PM2.5 Nonattainment 

The EPA performed State-by-State 

zero-out modeling to quantify the 

contribution from emissions in each 

State to future PM2.5 nonattainment in 

other States and to determine whether 

that contribution meets the air quality 

prong (i.e., before considering cost) of 

the ‘‘contribute significantly’’ test. As 

part of the zero-out modeling technique 

we removed the 2010 Base Case manmade emissions of SO2 and NOX for 41 

States on a State-by-State basis in 

different model runs. The States EPA 

analyzed using zero-out modeling are: 

Alabama, Arkansas, Colorado, 

Connecticut, Delaware, Florida, Georgia, 

Illinois, Indiana, Iowa, Kansas, 

Kentucky, Louisiana, Maine, Maryland, 

Massachusetts, Michigan, Minnesota, 

Mississippi, Missouri, Montana, 

Nebraska, New Hampshire, New 

Mexico, New Jersey, New York, North 

Carolina, North Dakota, Ohio, 

Oklahoma, Pennsylvania, Rhode Island, 

South Carolina, South Dakota, 

Tennessee, Texas, Vermont, Virginia, 

West Virginia, Wisconsin, and 

Wyoming. Emissions from the District of 

Columbia were combined with those 

from Maryland. 

The contribution from each State to 

PM2.5 at nonattainment receptors in 

other States was determined in the 

following manner: 

Step 1: The PM2.5 species predictions 

from the zero-out run were applied 

using the SMAT to calculate PM2.5 at the 

57 2010 Base Case nonattainment 

receptor counties. These receptors are 

identified in section IV.E.3, above. 

Step 2: For each of the 57 receptors, 

we calculated the difference in PM2.5

between the 2010 Base Case and the 

zero-out run. This difference is the 

4608 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

contribution from the particular State to 

the downwind nonattainment receptor. 

As described above in section V.B.2., 

EPA used three fundamental factors for 

evaluating the contribution of upwind 

States to downwind 8-hour ozone 

nonattainment, i.e., the magnitude, 

frequency, and relative amount of 

contribution. One of these factors, the 

frequency of contribution, is not 

relevant for an annual average NAAQS 

and thus, frequency was not considered 

in the evaluation of interstate 

contributions to nonattainment of the 

PM2.5 NAAQS. 

The EPA considered a number of 

metrics to quantify the magnitude and 

relative amount of the PM2.5

contributions. All of the metrics are 

described in the AQMTSD. As 

discussed in section III, above, EPA is 

proposing to use the maximum 

downwind contribution metric as the 

means for evaluating the significance 

(before considering cost) of interstate 

PM2.5 transport. We solicit comment on 

other metrics including populationweighted metrics and whether it would 

be appropriate to develop a metric based 

on annualized costs for each State per 

ambient impact on each downwind 

nonattainment receptor. 

The procedures for calculating the 

maximum contribution metric are as 

follows: 

Step 1: Determine the contribution 

from each upwind State to PM2.5 at each 

downwind receptor; 

Step 2: The highest contribution from 

among those determined in Step 1 is the 

maximum downwind contribution. 

b. Evaluation of Upwind State 

Contributions to Downwind PM2.5

Nonattainment

The EPA is proposing to use a 

criterion of 0.15 μg/m3 for determining 

whether emissions in a State make a 

significant contribution (before 

considering cost) to PM2.5

nonattainment in another State. The 

rationale for choosing this criterion is 

described in section III, above. The 

maximum downwind contribution from 

each upwind State to a downwind 

nonattainment county is provided in 

Table V–5. Of the States analyzed for 

this proposal, 28 States and the District 

of Columbia contribute 0.15 μg/m3 or 

more to nonattainment in other States 

and therefore are found to make a 

significant contribution (before 

considering cost) to PM2.5. Although we 

are proposing to use 0.15 μg/m3 as the 

air quality criterion, we have also 

analyzed the impacts of using 0.10 μg/

m3. Based on our current modeling, two 

additional States, Oklahoma and North 

Dakota, would be included if we were 

to adopt 0.10 μg/m3 as the air quality 

criterion. The contributions to PM2.5

from each of the 41 upwind States to 

each of the downwind nonattainment 

counties are provided in the AQMTSD. 

Table V–6 provides a count of the 

number of downwind counties that 

received contributions of 0.15 μg/m3 or 

more from each upwind State. This 

table also provides the number of 

downwind counties that received 

contributions of 0.10 μg/m3 or more 

from each upwind State.

TABLE V–5.—MAXIMUM DOWNWIND PM2.5 CONTRIBUTION (μg/m3) FOR EACH OF 41 UPWIND STATES

Upwind state 

Maximum 

downwind

contribution 

Downwind nonattainment 

county of maximum

contribution 

Alabama .............................................................................................................................................. 1.17 Floyd, GA. 

Arkansas ............................................................................................................................................. 0.29 St. Clair, IL. 

Connecticut ......................................................................................................................................... 0.07 New York, NY. 

Colorado ............................................................................................................................................. 0.04 Madison, IL. 

Delaware ............................................................................................................................................. 0.17 Berks, PA. 

Florida ................................................................................................................................................. 0.52 Russell, AL. 

Georgia ............................................................................................................................................... 1.52 Russell, AL. 

Illinois .................................................................................................................................................. 1.50 St. Louis, MO. 

Indiana ................................................................................................................................................ 1.06 Hamilton, OH. 

Iowa .................................................................................................................................................... 0.43 Madison, IL. 

Kansas ................................................................................................................................................ 0.15 Madison, IL. 

Kentucky ............................................................................................................................................. 1.10 Clark, IN. 

Louisiana ............................................................................................................................................. 0.25 Jefferson, AL. 

Maryland/District of Columbia ............................................................................................................. 0.85 York, PA. 

Maine .................................................................................................................................................. 0.03 New Haven, CT. 

Massachusetts .................................................................................................................................... 0.21 New Haven, CT. 

Michigan .............................................................................................................................................. 0.88 Cuyahoga, OH. 

Minnesota ........................................................................................................................................... 0.39 Cook, IL. 

Mississippi ........................................................................................................................................... 0.30 Jefferson, AL. 

Missouri ............................................................................................................................................... 0.89 Madison, IL. 

Montana .............................................................................................................................................. 0.03 Cook, IL. 

Nebraska ............................................................................................................................................. 0.08 Madison, IL. 

New Hampshire .................................................................................................................................. 0.06 New Haven, CT. 

New Jersey ......................................................................................................................................... 0.45 New York, NY. 

New Mexico ........................................................................................................................................ 0.03 Knox, TN. 

New York ............................................................................................................................................ 0.85 New Haven, CT. 

North Carolina ..................................................................................................................................... 0.41 Sullivan, TN. 

North Dakota ....................................................................................................................................... 0.12 Cook, IL. 

Ohio .................................................................................................................................................... 1.90 Hancock, WV. 

Oklahoma ............................................................................................................................................ 0.14 Madison, IL. 

Pennsylvania ....................................................................................................................................... 1.17 New Castle, DE. 

Rhode Island ....................................................................................................................................... 0.01 New Haven, CT. 

South Carolina .................................................................................................................................... 0.72 Richmond, GA. 

South Dakota ...................................................................................................................................... 0.04 Madison, IL. 

Tennessee .......................................................................................................................................... 0.57 Floyd, GA. 

Texas .................................................................................................................................................. 0.37 St. Clair, IL. 

Vermont .............................................................................................................................................. 0.06 New Haven, CT. 

Virginia ................................................................................................................................................ 0.67 Washington, DC. 

West Virginia ....................................................................................................................................... 0.89 Allegheny, PA. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4609

TABLE V–5.—MAXIMUM DOWNWIND PM2.5 CONTRIBUTION (μg/m3) FOR EACH OF 41 UPWIND STATES—Continued

Upwind state 

Maximum 

downwind

contribution 

Downwind nonattainment 

county of maximum

contribution 

Wisconsin ............................................................................................................................................ 1.00 Cook, IL. 

Wyoming ............................................................................................................................................. 0.05 Madison, IL. 

TABLE V–6.—NUMBER OF DOWNWIND PM2.5 NONATTAINMENT COUNTIES THAT RECEIVE CONTRIBUTIONS 0.15 μg/m3 OR

MORE AND 0.10 μg/m3 OR MORE FROM EACH UPWIND STATE

Upwind state 

Number of 

downwind 

nonattainment 

counties with 

contributions 

of 0.10 μg/m3

or more 

Number of 

downwind 

nonattainment 

counties with 

contributions 

of 0.15 μg/m3

or more 

Alabama ................................................................................................................................................................... 43 32 

Arkansas .................................................................................................................................................................. 27 4 

Delaware .................................................................................................................................................................. 4 1 

Florida ...................................................................................................................................................................... 23 19 

Georgia .................................................................................................................................................................... 38 27 

Illinois ....................................................................................................................................................................... 53 53 

Indiana ..................................................................................................................................................................... 54 53 

Iowa ......................................................................................................................................................................... 30 13 

Kansas ..................................................................................................................................................................... 4 2 

Kentucky .................................................................................................................................................................. 52 50 

Louisiana .................................................................................................................................................................. 33 25 

Maryland/District of Columbia .................................................................................................................................. 9 7 

Massachusetts ......................................................................................................................................................... 2 1 

Michigan ................................................................................................................................................................... 55 39 

Minnesota ................................................................................................................................................................ 18 8 

Mississippi ................................................................................................................................................................ 28 18 

Missouri .................................................................................................................................................................... 47 31 

New Jersey .............................................................................................................................................................. 8 7 

New York ................................................................................................................................................................. 16 12 

North Carolina .......................................................................................................................................................... 35 28 

North Dakota ............................................................................................................................................................ 4 0 

Ohio ......................................................................................................................................................................... 47 47 

Oklahoma ................................................................................................................................................................. 3 0 

Pennsylvania ............................................................................................................................................................ 52 46 

South Carolina ......................................................................................................................................................... 23 19 

Tennessee ............................................................................................................................................................... 50 43 

Texas ....................................................................................................................................................................... 48 36 

Virginia ..................................................................................................................................................................... 35 17 

West Virginia ............................................................................................................................................................ 46 32 

Wisconsin ................................................................................................................................................................. 48 29 

VI. Emissions Control Requirements 

This section describes the proposed 

criteria EPA used to establish these new 

SO2 and NOX control requirements, for 

the States with emissions sources 

contributing to nonattainment as 

described in section V. This section also 

explains how information on EGUs was 

used in proposing emissions control 

requirements for SO2 and NOX to 

address interstate pollution transport, 

and what source categories were also 

considered by the Agency. This 

includes consideration of the 

technologies available for reducing SO2

and NOX emissions and the methods 

that we used to evaluate the cost 

effectiveness of these emissions 

reductions. This section also discusses 

interactions of today’s proposed action 

with the existing Acid Rain Program 

under title IV of the CAA. This section 

discusses the emission source categories 

that EPA considered for today’s action, 

and explains that we assumed control 

on EGUs in developing this proposal. 

This section also describes the 

methodology used for developing State 

budgets from the proposed control 

requirements, with a step in the 

methodology based on regionwide 

targets. Further, this section presents the 

proposed State budgets for NOX and SO2

for EGUs. (More details regarding 

requirements related to budget 

demonstrations can be found in section 

VII.) This section also discusses baseline 

inventories. 

A. Source Categories Used for Budget 

Determinations 

Today’s action proposes requirements 

based on emissions reductions for 

EGUs. The EPA is examining potential 

pollution control approaches and the 

cost effectiveness of emissions 

reductions for other source categories. 

Today, EPA solicits comments on those 

other source categories, but is not 

proposing action on them. 

1. Electric Generation Units 

In developing today’s proposal, we 

investigated various source categories to 

see which may be candidates for 

additional controls. Our attention 

focused on emission reductions from 

EGUs for several reasons. Electric 

Generating Units are the most 

4610 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

80The NOX SIP Call, as finalized in 1998, moved 

beyond the ‘‘utility unit’’ definition in the Acid 

Rain Program and treated as ‘‘ECUs’’ all fossil- fuelfired units serving generators with a nameplate 

capacity exceeding 25 MW and producing any 

electricity for sale. This EGU definition, as applied 

to cogeneration units, was remanded to EPA as a 

result of litigation. Subsequently, EPA proposed to 

retain the approach in the 1998 rule, but in 

response to comments EPA received on that 

proposal, EPA is preparing to finalize a response to 

the court remand in which EPA will change the 

definition of EGU originally finalized in the NOX

SIP Call to be very similar to the existing title IV 

definition.

81See ‘‘Identification and Discussion of Sources 

of Regional Point Source NOX and SO2 Emissions 

Other Than EGUs (January 2004)’’.

significant source of SO2 emissions and 

a very substantial source of NOX in the 

affected region. For example, EGU 

emissions are projected to represent 

approximately one-quarter (23 percent) 

of the total NOX emissions in 2010 and 

over two-thirds (67 percent) of the total 

SO2 emissions in 2010 in the 28-State 

plus DC region that is being controlled 

for both SO2 and NOX after application 

of current CAA controls. Furthermore, 

control technologies available for 

reducing NOX and SO2 from EGUs are 

considered highly cost effective and 

able to achieve significant emissions 

reductions. 

The methodology for setting SO2 and 

NOX budgets described below under 

sections VI.B, VI.C, and VI.D applies to 

EGUs only. Electric Generating Units are 

defined as fossil-fuel fired boilers and 

turbines serving an electric generator 

with a nameplate capacity of greater 

than 25 megawatts (MW) producing 

electricity for sale. Fossil fuel is defined 

as natural gas, petroleum, coal, or any 

form of solid, liquid, or gaseous fuel 

derived from such material. The term 

‘‘fossil fuel-fired’’ with regard to a unit 

means combusting fossil fuel, alone or 

in combination with any amount of 

other fuel or material. These definitions 

are the same as those used under the 

title IV Acid Rain program.

2. Treatment of Cogenerators 

The EPA is proposing that the 

determination of whether a boiler or 

turbine that is used for cogeneration 

should be considered an EGU is 

dependent upon the amount of 

electricity that the unit sells.80

We propose to treat a cogeneration 

unit as an EGU in this proposed rule if 

it serves a generator with a nameplate 

capacity of greater than 25 MW and 

supplies more than one-third of its 

potential electric output capacity and 

sells more than 25 MW electrical output 

to any utility power distribution system 

for sale in any of the years 1999 through 

2002. If one-third or less of the potential 

electric output capacity or 25 MW or 

less is sold during all of those years, the 

cogeneration unit would be classified as 

a non-EGU. The definition of potential 

electrical output capacity proposed for 

this rule is the definition under part 72, 

appendix D of the Acid Rain 

regulations. 

The definition of a cogeneration 

facility under the title IV Acid Rain 

program and the NOX SIP Call was 

based on the Federal Energy Regulatory 

Commission Qualifying Facility 

definition. We propose to use this same 

definition with one change. We propose 

to apply the efficiency standards under 

title 18, section 292.205 to coal, oil, and 

gas-fired units instead of applying the 

efficiency standards only to oil and gasfired units. The EPA believes this 

change would be more consistent with 

its fuel-neutral approach throughout 

this proposed rule. In addition, not 

applying an efficiency standard to coalfired units would be counter productive 

to EPA’s efforts to reduce SO2 and NOX

emissions under this proposed rule 

because of the relatively high SO2 and 

NOX emissions from coal-fired units. 

We solicit comment on use of this 

definition of cogeneration facility for 

purposes of developing emission 

budgets. 

3. Non-EGU Boilers and Turbines 

For several reasons, the approach we 

are proposing today would not require 

or assume additional emissions 

reductions from non-EGU boilers and 

turbines. First, compared to the 

information we have about emissions 

from EGUs and the costs of controlling 

those emissions, we have relatively little 

information about non-EGU boilers and 

turbines.81 In particular, we have 

limited information both about SO2

controls and the integration of NOX and 

SO2 controls. As a result, we are not 

able to determine that further emissions 

reductions from these sources would be 

highly cost effective. Second, based on 

the information we do have, projected 

emissions of NOX and SO2 from these 

sources in 2010 are much lower than 

those projected from EGUs. However, 

we invite information and comment on 

these source categories. In particular, we 

request comments on sources of 

emissions and cost information.

We recognize, for example, that some 

industrial boiler owners may prefer the 

certainty and flexibility of being 

included in a regional trading program, 

rather than facing the uncertainty of the 

SIP development process. In addition, 

many non-EGU boilers and turbines 

already are regulated under the NOX SIP 

Call and thus are part of a NOX trading 

program with EGUs. It is EPA’s intent 

that, for EGUs, compliance with the 

more stringent annual NOX reduction 

requirement in today’s proposed rule 

will be able to serve as compliance with 

the seasonal NOX SIP Call limits. 

Therefore since EGUs will no longer be 

participating in the seasonal NOX SIP 

Call Trading Program, the cost of 

compliance for non-EGUs will likely 

increase.

4. Other Non-EGUs 

We also evaluated the available 

information on SO2 and NOX emissions 

and control measures for source 

categories other than EGUs and large 

industrial boilers and turbines, in order 

to identify highly cost effective emission 

reductions. Our approach to considering 

these source categories is discussed in a 

technical support document available in 

the docket, entitled ‘‘Identification and 

Discussion of Sources of Regional Point 

Source NOX and SO2 Emissions Other 

Than EGUs (January 2004)’’. Based on 

this evaluation, we are not proposing to 

consider reductions from any of these 

source categories because we are unable 

to identify specific quantities of SO2 or 

NOX emissions reductions that would 

be highly cost effective. However, we 

invite information and comment on 

these sources categories. In particular, 

we request comment on sources of 

emissions and cost information. 

The EPA did not identify highly costeffective controls on mobile or area 

sources that would achieve broad-scale 

regional emissions reductions relative to 

baseline conditions and fit well with the 

regulatory authority available under 

section 110(a)(2)(D). We observe that 

Federal requirements for new on-road 

and off-road engines and motor vehicles 

will substantially reduce emissions as 

the inventory of vehicles and engines 

turns over. 

B. Overview of Control Requirements 

and EGU Budgets 

This section explains how EPA 

developed State emissions reduction 

requirements for NOX and SO2

emissions that will lead to reductions of 

emissions associated with the interstate 

transport of fine particles and ozone. We 

seek to implement the section 

110(a)(2)(D) requirement that upwind 

States act as ‘‘good neighbors’’ by 

eliminating the amount of their 

emissions that contribute significantly 

to the downwind nonattainment areas. 

The proposed requirements would 

apply to 29 Eastern States (and DC) that 

significantly contribute to fine particle 

and/or ozone nonattainment. 

We propose to establish these 

emissions reduction requirements, for 

both SO2 and NOX purposes, based on 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4611

assuming the application of highly costeffective controls to large EGUs. The 

approach of identifying highly costeffective controls was the basis for 

developing the emissions budgets in the 

NOX SIP Call, and is the basis for 

developing the emissions budgets in 

today’s action. Today’s proposal bases 

its reduction and control requirements 

solely on controls for EGUs. 

The States have full flexibility in 

choosing the sources that must reduce 

emissions. If the States choose to require 

EGUs to reduce their emissions, then 

the States must impose a cap on EGU 

emissions, which would, in effect, be an 

emissions budget. If a State chooses to 

control EGUs and elects to allow them 

to participate in the interstate cap and 

trade program, the State must follow 

EPA rules for allocating allowances to 

the individual EGUs. If a State wants to 

control EGUs but does not want to allow 

EGUs to participate in the interstate cap 

and trade program, the State has 

flexibility in allocating, but it must cap 

EGUs. The State must also assure that 

EGUs meet title IV requirements. 

In 2010, the proposed requirements 

would effectively establish emissions 

caps for SO2 and NOX of 3.9 million 

tons and 1.6 million tons, respectively. 

The budgets would be lowered in 2015 

to provide SO2 and NOX emissions caps 

of 2.7 million tons and 1.3 million tons, 

respectively, in the proposed control 

region. An SO2 emissions cap of 2.7 

million tons in 28 States will lead to 

nationwide emissions of approximately 

3.5 million tons when the cap is fully 

implemented. This is significantly lower 

than the 8.95 million tons of SO2

emissions allowed from EGUs under the 

current title IV Acid Rain SO2 Trading 

Program. EPA expects that States will 

elect to join a regional cap and trade 

program for these pollutants that the 

Agency will administer similar to the 

NOX SIP Call. This is discussed in 

section VIII of this proposal.

If the States choose to control other 

sources, then they must employ 

methods to assure that those other 

sources implement controls that will 

yield the appropriate amount of 

reductions. This is discussed further in 

section VII, below. 

The EPA believes that it will take 

substantial time (more than 3 years from 

completion of SIPs) to install all of the 

equipment necessary to meet the 

proposed control requirements. Thus, 

EPA is proposing that the required 

reductions be made in two phases, with 

annual emissions caps for NOX and SO2

taking effect in 2010 and 2015. 

Today’s approach is similar to that of 

the NOX SIP Call. In that case, EPA 

required States that controlled 

emissions from large boilers (either 

EGUs or non-EGUs) to cap emissions 

from those source categories. In 

addition, EPA allowed States to meet 

part of their emissions budget 

requirements by participating in an 

interstate emissions cap and trade 

program. The cap and trade program in 

effect meant that the total amount of 

NOX emissions from EGUs and nonEGU boilers and turbines was limited on 

a regionwide basis, rather than on a 

State-specific basis. For other source 

categories, EPA did not require the State 

to cap emissions, as long as it 

demonstrated that it had enforceable 

measures that achieved the necessary 

emission reductions. We are proposing 

to take a similar approach in today’s 

rulemaking. 

For convenience, we use specific 

terminology to refer to certain concepts. 

‘‘State budget’’ refers to the statewide 

emissions that may be used as an 

accounting technique to determine the 

amount of emissions reductions that 

controls may yield. It does not imply 

that there is a legally enforceable 

statewide cap on emissions from all SO2

or NOX sources. ‘‘Regionwide budget’’

refers to the amount of emissions, 

computed on a regionwide basis, which 

may be used to determine State-by-State 

requirements. It does not imply that 

there is a legally enforceable regionwide 

cap on emissions from all SO2 or NOX

sources. ‘‘State EGU budget’’ refers to 

the legally enforceable cap on EGUs a 

State would apply should it decide to 

control EGUs. 

C. Regional Control Requirements and 

Budgets Based on a Showing of 

Significant Contribution 

In determining States’ emissions 

reduction requirements, EPA considered 

both the level and timing of the 

emissions budgets for the electric power 

industry at a regional level and State 

level. The EPA wants to assist the States 

to attain the NAAQS for PM2.5 and 8-

hour ozone in a way that is timely, 

practical, and cost effective. 

For purposes of the PM2.5 and 8-hour 

ozone transport requirements, CAA 

section 110(a)(2)(D) requires that States 

submit SIPs than prohibit emissions in 

the amount that contributes 

significantly to nonattainment 

downwind. Our interpretation of the 

‘‘contribute significantly’’ determination 

includes an air quality component and 

a cost-effectiveness component. The air 

quality component is discussed in 

sections IV, V, and IX. As to the costeffectiveness component, in the NOX

SIP Call, we applied this component by 

employing ‘‘highly cost-effective’’

controls as the benchmark. We adopt 

that benchmark for today’s proposal. 

In determining the States’ obligations 

under this rule, EPA considers a variety 

of factors. These include: 

• The availability of information, 

• The identification of source 

categories emitting relatively large 

amounts of the relevant emissions, 

• The performance and applicability 

of control measures, 

• The cost effectiveness of control 

measures, and 

• Engineering and financial factors 

that affect the availability of control 

measures. 

We have relatively complete 

information with respect to these factors 

for the electric power industry. We do 

not have information to this degree of 

completeness for other sources. 

The electric power industry emits 

relatively large amounts of the relevant 

emissions. This factor is particularly 

important in a case such as this when 

the Federal government is proposing a 

multistate regional approach to reducing 

transported pollution.

We request comment on how to 

determine what constitutes ‘‘a relatively 

large amount’’ of the relevant emissions. 

One approach would be to consider the 

percent contribution the source category 

makes to the total inventory (e.g., 1 to 

10 percent). Another approach, which 

some have suggested, would be to 

consider the contribution of a source 

category to the total NAAQS exceedance 

level. For example, this approach might 

consider a source category’s 

contribution to ambient concentrations 

above the attainment level in all 

nonattainment areas in affected 

downwind States for PM2.5. We request 

comment on both of these approaches as 

well as what the appropriate percent 

contribution under each approach might 

be. 

Under the cost effectiveness 

component, we also take into account 

available information about the 

applicability, performance, and 

reliability of different types of pollution 

control technologies for different types 

of sources. Based on engineering 

judgement, we consider how many 

sources in a particular source category 

can install control technology, and 

whether such technology is compatible 

with the typical configuration of sources 

in that category. As was done in the 

NOX SIP Call, and as proposed in 

today’s rule we also evaluate the 

downwind impacts of the level of 

control that is identified as highly cost 

effective. The fact that a particular 

control level has a substantial 

downwind impact affirms the selection 

of that level as ‘‘highly cost effective.’’

4612 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

82References for this dicussion are provided in 

the docket for today’s rulemaking.

However, as noted above, we are 

requesting comment on an approach 

that would incorporate the effect on 

downwind States as part of the cost 

effectiveness component of significant 

contribution. 

There are other practical 

considerations that we may also 

consider. For example, if we are aware 

that emissions from a particular source 

category will be controlled under an 

upcoming regulation (a MACT standard, 

for example), we would also take that 

fact into account. 

We considered several additional 

factors, including the engineering 

factors concerning construction and 

installation of the controls when 

evaluating the time period needed to 

implement the controls. This analysis 

also involves consideration of the time 

period needed by sources to obtain the 

financing needed for the controls. 

Engineering and financial factors are 

discussed in this section. 

The EPA’s approach to controls 

factored in the air quality improvements 

that could occur. Air quality modeling 

that is covered in section IX indicates 

that today’s proposed transport 

reductions will bring many fine particle 

nonattainment areas and some ozone 

nonattainment areas into attainment by 

2010 or 2015, and improve air quality in 

many downwind PM2.5 and ozone 

nonattainment areas. The modeling also 

shows more reductions will be needed 

for some areas to attain. We are striving 

in this proposal to set up a reasonable 

balance of regional and local controls to 

provide a cost effective and equitable 

governmental approach to attainment 

with the NAAQS for fine particles and 

ozone. 

1. Performance and Applicability of 

Pollution Control Technologies for 

EGUs 

In developing today’s proposal, EPA 

focused on the utility industry as a 

potential source of highly cost effective 

reductions of both SO2 and NOX

emissions. We began by reviewing the 

reliability, capability and applicability 

of today’s SO2 and NOX pollution 

controls for this industry. 

Both wet and dry flue gas 

desulfurization (FGD) technologies for 

SO2 control, and the selective catalytic 

reduction (SCR) technology for NOX

control on coal-fired boilers, are fully 

demonstrated and available pollution 

control technologies. The design and 

performance levels for these 

technologies were based on proven 

industry experience.82

For SO2 control, EPA has considered 

two wet FGD technologies, consisting of 

the limestone forced oxidation system 

(LSFO) with dibasic acid injection and 

the magnesium enhanced lime (MEL) 

system. In addition, a dry FGD 

technology, lime spray dryer (LSD) 

system, has also been considered. Of 

these, the LSFO system is generally 

used for installations firing high-sulfur 

(2 percent and higher) coals, LSD for 

low-sulfur (less than 2 percent) coals, 

and MEL for both low- and high-sulfur 

coals, depending on the overall 

economics of each application. 

In EPA’s analyses, the SO2 reduction 

capabilities considered are 95 percent 

for the LSFO system, 96 percent for the 

MEL system, and 90 percent for the LSD 

system. A significant amount of 

industry information is available on the 

use of these technologies. One reference 

shows over 30 years of operating 

experience in U.S. electrical utility 

plants. The three FGD systems 

considered by EPA have been used in 

the majority of these plants. A 

significant number of the wet FGD 

systems, especially those installed in 

the last 10 years, have design SO2

removal efficiencies ranging from 95 to 

99 percent. Also, there are several LSD 

installations designed for 90 percent or 

higher SO2 removal, supporting the 

performance levels selected by EPA.

The EPA has also identified several 

other references that support its FGD 

technology selections. These references 

report long-term operating experience 

with wet FGD systems, with and 

without dibasic acids, at SO2 removal 

rates of 95 to 99 percent. We also 

performed a study that lists in a greater 

detail the criteria and the references for 

selection of all three FGD technologies 

considered. 

The NOX reduction capability 

considered by EPA for the SCR 

technology is 90 percent, with the 

minimum NOX emission rate limited to 

0.05 lb/mmBtu. Because of this 0.05 lb/

mmBtu limit, the actual NOX reduction 

requirement for SCR systems on the 

boilers with existing or future 

combustion controls is expected to be 

less than 90 percent. For example, the 

baseline NOX emissions on a large 

number of boilers with existing 

combustion controls are below 0.3 lb/

mmBtu, requiring SCRs with NOX

removal rates of approximately 83 

percent or lower. 

The first SCR application in the U.S. 

on a coal-fired boiler started operating 

in 1993. At the end of 2002, the number 

of operating SCR installations on U.S. 

boilers stood at 56. Another 85 SCR 

units are scheduled to go into operation 

in 2003. The design NOX reduction 

efficiencies of these SCR systems vary, 

but many of them are designed for 90 

percent reduction. Operating data 

available from many plants indicate that 

the 90 percent NOX removal rate has 

been met or exceeded at these plants. 

There is more long-term experience 

with coal-fired SCR applications in 

Europe and Japan. This experience 

includes high- and medium-sulfur coal 

applications and is directly applicable 

to the U.S. installations. The overall 

SCR experience both in the U.S. and 

abroad, therefore, supports the criteria 

EPA has used for this technology. 

SCRs and scrubbers have been used in 

combination on most new coal-fired 

powered plants built in the U.S. since 

the early 1990s. The combination has 

also been retrofit on a number of 

existing coal-fired units. 

2. Evaluation of Cost Effectiveness 

With effective, well-established 

controls available for both SO2 and NOX

emissions from EGUs, EPA must 

determine what is the appropriate level 

of costs for these controls. In the NOX

SIP Call rule, EPA defined the cost 

component of the ‘‘contribute 

significantly’’ test in terms of a level of 

cost effectiveness, that is, dollars spent 

per ton of emissions reductions. 

Specifically, in the NOX SIP Call, EPA 

defined the cost component in terms of 

‘‘highly cost-effective’’ controls, a 

definition upheld by the D.C. Circuit in 

the Michigan case. Today, EPA proposes 

to use this approach. 

We want to provide an emissions 

reductions program for SO2 and NOX

that complements State efforts to attain 

the PM2.5 and ozone standards in the 

most cost-effective, equitable and 

practical manner possible. The objective 

of the analysis is to select from the 

spectrum of possible pollution controls 

the least expensive approaches available 

at the time the controls are selected.

To ensure that EPA’s overarching goal 

of achieving the NAAQS in the most 

cost effective, equitable and practical 

manner possible is met by Federal and 

State actions, the Agency has decided to 

pursue emissions reductions that it 

considers are highly cost effective now 

before State plans for nonattainment are 

due. Proposing highly cost-effective 

controls also provides greater certainty 

that transport controls are not being 

overemphasized relative to local 

controls. 

For today’s proposal, EPA 

independently evaluated the cost 

effectiveness of strategies to reduce SO2

and NOX to address PM2.5 and ozone 

nonattainment. The results of EPA’s 

analysis are summarized below. (All 

costs in this summary are rounded to 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4613

the nearest hundred dollars, and are 

presented in 1999$.) It should be noted 

that the results of these analyses for SO2

controls are not relevant to NOX

controls, and vice versa. Each pollutant 

has a different history of cost of 

controls, which makes cross-pollutant 

comparison inappropriate. 

We note that comparisons of the cost 

per ton of pollutant reduced from 

various control measures should be 

viewed carefully. Cost per ton of 

pollutant reduction is a convenient way 

to measure cost effectiveness, but it does 

not take into account the fact that any 

given ton of pollutant reduction may 

have different impacts on ambient 

concentration and human exposure, 

depending on factors such as the 

relative locations of the emissions 

sources and receptor areas. Thus, for 

example, an alternative approach might 

adopt the effect of emission reductions 

on ambient concentrations in 

downwind nonattainment areas as the 

measure of effectiveness of further 

control. The EPA solicits comment on 

whether to take such considerations into 

account and what, if any, scientifically 

defensible methods may be available to 

do so. 

a. Cost Effectiveness of SO2 Emission 

Reductions 

The EPA developed criteria for highly 

cost-effective amounts through: (1) 

Comparison to the average cost 

effectiveness of other regulatory actions 

and (2) comparison to the marginal cost 

effectiveness of other regulatory actions. 

These ranges indicate cost-effective 

controls. EPA believes that controls 

with costs towards the low end of the 

range may be considered to be highly 

cost effective because they are selfevidently more cost effective than most 

other controls in the range. Moreover, 

this level of cost is consistent with SO2

and NOX emissions reductions that 

yield substantial ambient benefits in 

downwind nonattainment areas, as 

discussed in section IX. For these 

reasons, EPA proposes today the costs 

identified below as highly cost-effective 

levels, and the associated set of SO2 and 

NOX emissions reductions and 

emissions budgets, as the basis for the 

SIP requirements. 

Table VI–1 provides the average and 

marginal costs of annual SO2 reductions 

under EPA proposed controls for 2010 

and 2015. Also, EPA considered the 

sensitivity of the marginal cost results to 

assumptions of higher electric growth 

and future natural gas prices than it 

used in its base case. These assumptions 

in the sensitivity analysis were based on 

the Energy Information Agency’s 

Annual Energy Outlook for 2003.

Table VI–2 provides the average cost 

per ton of recent EPA, State, and local 

Best Available Control Technology 

(BACT) permitting decisions for SO2. 

These decisions reflect the application 

of BACT for SO2 to new sources and 

major modifications at existing sources. 

These decisions, which include 

consideration of average and 

incremental cost effectiveness, reflect 

the application of best available controls 

in attainment and unclassified areas. 

These decisions do not reflect the 

application of lowest achievable 

emission rate, which is required in 

nonattainment areas and which does not 

directly consider cost in any form. The 

BACT decisions are relevant for present 

purposes because they comprise cost 

effective controls that have been 

demonstrated.

Table VI–3 provides the marginal cost 

per ton of recent State decisions for 

annual SO2 controls where marginal 

cost information was available. These 

include the WRAP Regional SO2

Trading Program and statewide rules 

that have required significant reductions 

of SO2 in North Carolina and Wisconsin. 

The results of the sensitivity analysis 

of the marginal cost in Table VI–1 when 

compared to Table VI–3 results further 

supports that the SO2 controls are 

highly cost effective. 

Additionally, the Agency further 

considered the cost effectiveness of 

alternative stringency levels for this 

regulatory proposal (examining changes 

in the marginal cost curve at varying 

levels of emissions reductions). Figure 

VI–1 shows that the ‘‘knee’’ in the 

marginal cost effectiveness curve—the 

point where the cost of control is 

increasing at a higher rate than the 

amount of SO2 removal for EGUs—

appears to start above $1,200 per ton. 

The selected approach was well below 

the point at which there would be 

significant diminishing returns on the 

dollars spent for pollution control. The 

EPA used the Technology Retrofitting 

Updating Model (TRUM), a spreadsheet 

model based on the Integrated Planning 

Model (IPM), for this analysis. Details of 

this analysis can be found in ‘‘An 

Analysis of the Marginal Cost of SO2

and NOX Reductions’’ (January 2004) in 

the docket for today’s rulemaking.

TABLE VI–1.—PREDICTED COSTS PER

TON OF SO2 CONTROLLED UNDER

PROPOSED CONTROL STRATEGY

(1999$)/TON 1

2010 2015 

Average Cost .... $700 $800 

Marginal Cost ... 700 1,000 

Sensitivity Analysis: Marginal 

Cost, Assuming High Electric Demand 

and Natural 

Gas Price ...... 900 1,100 

1EPA IPM modeling; available in the 

docket. 

TABLE VI–2.—AVERAGE COSTS PER

TON OF ANNUAL SO2 CONTROLS

SO2 control action Average cost 

(1999$)/ton 

Best Available Control 

Technology (BACT) determinations.

$500–$2,100 1

1These numbers reflect a range of cost effectiveness data entered into EPA’s RACT/

BACT/LAER Clearinghouse (RBLC) for add-on 

SO2 controls. 

TABLE VI–3.—MARGINAL COSTS PER

TON OF ANNUAL SO2 CONTROL ACTIONS

SO2 control action Marginal cost 

(1999$)/ton 

Wisconsin Multi-pollutant 

rule.

$1,400 1

North Carolina Multi-pollutant rule.$800 2

WRAP Regional SO2 Trading Program.$1,100–$2,200 3

1EPA’s IPM Base Case run, available in the 

docket. 2EPA’s IPM Base Case run, available in the 

docket. 3 ‘‘An Assessment of Critical Mass for the 

Regional SO2 Trading Program,’’ Prepared for 

Western Regional Air Partnership Market 

Trading Forum by ICF Consulting Group, September 27, 2002, available in the docket and 

at http://www.wrapair.org/forums/mtf/critical_mass.html. This analysis looked at the implications of one or more States choosing to 

opt-out of the WRAP regional SO2 trading 

program. 

4614 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

b. Cost Effectiveness of NOX Emission 

Reductions 

In developing the NOX SIP Call, EPA 

determined that an average cost 

effectiveness of $2,500/ton (in 1999$, 

from original $2,000/ton in 1990$), or 

less, was highly cost effective for NOX

reductions during the ozone season. 

This was based on review of other 

relevant actions EPA and others had 

recently taken. An updated summary of 

average costs of NOX control actions is 

in Table VI–4. Each of the programs in 

Table VI–4 cover annual NOX

reductions, which makes comparison of 

these estimates to ozone season 

reductions a conservative comparison, 

as was done in the NOX SIP Call. The 

table’s results are very similar to what 

EPA found in 1998 and reaffirm the 

Agency’s earlier determination of what 

a highly cost-effective reduction of NOX

emissions is.

Table VI–5 provides the results of 

EPA’s analysis of the cost effectiveness 

of the proposed NOX control 

requirements for States contributing to 

downwind ozone nonattainment. The 

average costs are well below $2,500/ton. 

The marginal costs in 2010 are much 

lower than the benchmark, but in 2015 

are above it by a modest amount. 

Notably, if the controls during the ozone 

season are then used for the remaining 

months of the year, their costs are very 

low. Table VI–6 provides these results. 

These reductions are among the lowest 

cost EPA has ever observed in NOX

control actions and are obviously highly 

cost effective. 

Table VI–7 shows the average and 

marginal costs of year-round controls for 

EPA’s proposed approach. When these 

costs are compared to the costs in Table 

VI–8, it is clear that in the States that 

control NOX for PM2.5 only, the controls 

are highly cost effective. 

The Agency further considered the 

cost effectiveness of alternative 

stringency levels for this regulatory 

proposal (examining changes in the 

marginal cost curve at varying levels of 

emission reductions). Figure VI–2 

shows that the knee in the marginal cost 

effectiveness curve for NOX appears to 

start above $2,000 per ton. The selected 

approach was well below the point at 

which there would be significant 

diminishing returns on the dollars spent 

for pollution control.

TABLE VI–4.—AVERAGE COST PER

TON OF EXISTING AND PROPOSED

ANNUAL NOX RULES

NOX rule 1 Average cost 

(1999$) 

Tier 2 Vehicle Gasoline Sulfur 2.$1,300–

$2,300 

2004 Highway HD Diesel 2 ..... $200–$400 

Off-highway Diesel Engine 2 .. $400–$700 

Tier 1 Vehicle Standards 2 ..... $2,100–

$2,800 

National Low Emission Vehicle 2.$1,900 

Marine SI Engines 2 ............... $1,200–

$1,800 

2007 Highway HD Diesel 

Stds 2.

$1,600–

$2,100 

On-board Diagnostics 2 .......... $2,300 

Marine CI Engines 2 ............... Up to $200 

TABLE VI–4.—AVERAGE COST PER

TON OF EXISTING AND PROPOSED

ANNUAL NOX RULES—Continued

NOX rule 1 Average cost 

(1999$) 

Revision of NSPS for New 

EGUs.

$2,100 

1 Costs for rules affecting mobile sources 

presented here include a VOC component. 2 Control of Air Pollution from New Motor 

Vehicles: Heavy-Duty Engine and Vehicle 

Standards and Highway Diesel Fuel Sulfur 

Control Requirements; Final Rule (66 FR 

5102; January 18, 2001). The values shown 

for 2007 Highway HD Diesel Stds are discounted costs. 

TABLE VI–5.—PREDICTED COSTS PER

TON OF OZONE SEASON-ONLY NOX

CONTROLLED UNDER PROPOSED

CONTROL STRATEGY (1999$)/TON 1

2010 2015 

Average Cost ............ $1,000 $1,500 

Marginal Cost ........... 2,200 2,600 

1EPA IPM modeling; available in the 

docket. 

TABLE VI–6.—PREDICTED COSTS PER

TON OF WINTER SEASON NOX CONTROLLED UNDER PROPOSED CONTROL STRATEGY (1999$)/TON 1

2010 2015 

Average Cost ............ $700 $500 

1EPA IPM modeling; available in the 

docket. 


EP30JA04.000</GPH>
Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4615

TABLE VI–7.—PREDICTED COSTS PER

TON OF ANNUAL NOX CONTROLLED

UNDER PROPOSED CONTROL STRATEGY (1999$)/TON 1

2010 2015 

Average Cost ............ $800 $700 

Marginal Cost ........... 1,300 1,500 

Sensitivity Analysis:

of Marginal Cost, 

Assuming High 

Electricity Demand 

and Natural Gas 

Price ...................... 1,300 1,600 

TABLE VI–7.—PREDICTED COSTS PER

TON OF ANNUAL NOX CONTROLLED

UNDER PROPOSED CONTROL STRATEGY (1999$)/TON 1—Continued

2010 2015 

Sensitivity Analysis:

of Marginal Cost, 

Assuming High 

Electricity Demand, 

Natural Gas Price 

and SCR Costs ..... 2,200 2,000 

1EPA IPM modeling; available in the 

docket. 

TABLE VI–8.—MARGINAL COST PER

TON OF REDUCTION RECENT NOX

RULES

NOX action 

Marginal cost 

per ton 

(1999$) 

Wisconsin Rules—Annual 

Controls.

$1,800 1

Texas Rules—Annual Controls.$1,400–

$3,000 1

1EPA’s IPM Base Case run, available in the 

docket. NOX control requirements in Texas 

vary regionally; the range of marginal costs 

here reflects the various requirements in the 

State. 

c. EPA Cost Modeling Methodology 

The EPA conducted analysis through 

the Integrated Planning Model (IPM) 

that indicates that its proposed SO2 and 

NOX control strategies are consistent 

with the level of controls proposed as 

highly cost effective. We use IPM to 

examine costs and, more broadly, 

analyze the projected impact of 

environmental policies on the electric 

power sector in the 48 contiguous States 

and the District of Columbia. The IPM 

is a multi-regional, dynamic, 

deterministic linear programming model 

of the U.S. electric power sector. It 

provides forecasts of least-cost capacity 

expansion, electricity dispatch, and 

emission control strategies for meeting 

energy demand and environmental, 

transmission, dispatch, and reliability 

constraints. We used IPM to evaluate 

the cost and emissions impacts of the 

policies to limit emissions of SO2 and 

NOX from the electric power sector that 

are proposed in today’s rulemaking. The 

National Electric Energy Data System 

(NEEDS) contains the generation unit 

records used to construct model plants 

that represent existing and planned/

committed units in EPA modeling 

applications of IPM. The NEEDS 

includes basic geographic, operating, air 

emissions, and other data on all the 

generation units that are represented by 

model plants in EPA’s v. 2.1.6 update of 

IPM.

We used the IPM to conduct the cost 

effectiveness analysis for the emissions 

control program proposed in this action. 

The model was also used to derive the 

marginal cost of several State programs 

that EPA considers as part of its base 

case. 

For the purpose of preliminarily 

evaluating today’s proposal, EPA 

modeled a strategy that assumes SO2

controls in the 48 contiguous States in 

a manner that largely leads to a cap on 

Eastern States without leakage of 

emissions to nearby States. The 

modeled 48-State cap simulates a 

control program that is very similar to 

the program we are now proposing to 

control SO2 in only the 28-State and DC 

region. Most of the SO2 emissions and 

reductions would occur in the 28-State 

and DC control region and therefore a 

very similar result is expected. Based on 

IPM modeling, the SO2 emissions in 

2015 from the proposed 28-State and DC 

region would be 92 percent of national 

emissions under base case conditions 

(i.e., without implementation of today’s 

proposed program). In addition, 

emissions reductions in the 28-State and 

DC region would be 96 percent of total 

national reductions, under the 48 State 

cap that was modeled. Thus, the 48-


EP30JA04.001</GPH>
4616 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

83We began our emissions and economic analysis 

for today’s proposal before the air quality analysis, 

which affects the States we are proposing for 

control requirements, was completed. Thus, we 

modeled emissions and economic effects on regions 

that are similar but not identical to the region 

proposed today. We intend to publish revised 

emissions and economic modeling in a 

supplemental action.

84Other sources may face similar or other timing 

constraints for implementation purposes.

State cap that was modeled very closely 

represents the proposed 28-State and DC 

cap. 

We modeled NOX controls in a 31 and 

one-half State region that includes 

Minnesota, Iowa, Missouri, Arkansas, 

Louisiana, Eastern Texas and all of the 

States to the east, and DC. The NOX

control region proposed in today’s 

action (28-States and the District of 

Columbia, plus ozone season only 

control in Connecticut) is very similar to 

this region used for modeling. 

Because the regions used for modeling 

SO2 and NOX controls encompass a 

significant amount of the electricity 

generation in the country, they provide 

information that could be applied to 

somewhat smaller or larger regions. We 

believe that costs (both marginal and 

average) in a somewhat smaller or larger 

region would be similar.83

In this modeling case, EPA assumes 

interstate emissions trading. While EPA 

is not requiring States to participate in 

an interstate trading program for EGUs, 

EPA believes it is reasonable to evaluate 

control costs assuming States choose to 

participate in such a program since the 

program will result in less expensive 

reductions. 

The modeled case discussed below 

assumes a phased program, with the 

first set of reductions occurring in 2010 

and the second phase occurring in 2015. 

For SO2 in particular, it should be noted 

that the regional reductions or budget 

levels are not actually achieved in the 

year that they are implemented. This is 

because of the existence of an SO2

emission bank. The availability of the 

SO2 emission bank allows sources to 

make emission reductions earlier and 

then use the allowances that are saved 

at a later date. Banking has less of an 

effect on NOX emissions because in the 

existing ozone-season only program, 

NOX allowances are more expensive 

than they are expected to be in an 

annual program. Thus, there is not an 

incentive to make early NOX emission 

reductions to create allowances to be 

used in the future. 

3. Timing, Engineering and Financial 

Factor Impacts

While cost considerations are one of 

the primary components in establishing 

emission reduction requirements, 

another important consideration is the 

time by which the emission reductions 

may be achieved. The EPA has 

determined that for engineering and 

financial reasons, it would take 

substantial time to install the projected 

controls that would be necessary to 

reach the ultimate control levels 

proposed. We seek to require 

implementation of the reductions on a 

schedule that will provide air quality 

benefits as soon as feasible to as many 

nonattainment areas as possible. 

Therefore, we propose to require the 

implementation of as much of the 

reductions as possible by an early date 

and to set a later date for the remaining 

amount of reductions. 

Specifically, EPA proposes that the 

first phase must be implemented by 

January 1, 2010. This date is based upon 

the following schedule: EPA finalizes 

today’s proposed rule by mid-2005; 

States submit SIPs by the end of 2006; 

and sources install the first phase of 

required controls by January 1, 2010, 

and the second phase by January 1, 

2015. 

EPA recognizes that this two-phase 

approach assumes that States will 

achieve the reduction requirements 

imposed by the rules proposed today 

through controls on EGUs. Of course, 

States may choose to control different 

sources, and if so, the specific 

engineering constraints applicable to 

EGU compliance may not apply to these 

other sources.84 Nevertheless, EPA 

believes it appropriate to authorize a 

two-phase approach for all States, 

regardless of how they choose to 

achieve the reduction requirements. 

This approach is consistent with the fact 

that EPA calculated the amount of 

reductions required on the basis of 

assumed controls on EGUs, as well as 

the fact that as a practical matter, most 

(if not all) States are likely to adopt EGU 

controls as their primary (if not 

exclusive) way to achieve the required 

reductions.

a. Engineering Assessment To 

Determine Phase 1 Budgets 

When designing an emissions 

reductions program such as EPA is 

proposing in today’s action, the Agency 

must consider the effect that the timing 

and reduction stringency of the program 

will have on the quantity of resources 

required to complete the control 

technology installation and the ability of 

markets to adjust and to provide more 

resources where needed. We used IPM 

to predict the number and size of 

facilities that would install new 

emissions control equipment to meet 

the implementation dates and emissions 

reductions in today’s proposed rule. 

Then, we estimated the resources 

required for the installation of those 

control technologies.

Today’s proposed rule does not 

require the imposition of controls on 

any particular source and instead leaves 

that matter to the affected States. 

However, the cost effectiveness of EGU 

controls makes it likely that many States 

will achieve reductions through EGU 

controls. Accordingly, EPA considers it 

appropriate to evaluate the timing of the 

reduction requirements with reference 

to the EGU control implementation 

schedule. Therefore, today’s proposed 

rule assumes the installation of 

significant numbers of SO2 and NOX

controls on EGUs. To meet the existing 

Federal title IV program and NOX SIP 

Call requirements, there has been a 

reliance on low sulfur coal and limited 

use of scrubbers (also called FGD) for 

SO2 reductions and low NOX burners 

and post-combustion controls (e.g., SCR) 

for NOX reductions, as well as shifting 

of dispatch to more efficient and less 

polluting units for each air pollutant. 

However, to meet the future 

requirements proposed in today’s rule, 

for SO2 control we predict there will be 

heavy reliance on scrubbers in the 

decade following finalization of today’s 

rule. For NOX control, we predict there 

will be heavy reliance on SCR and, to 

a much lesser degree, selective noncatalytic reduction (SNCR) and gas 

reburn. 

The installation of the advanced postcombustion controls required under 

today’s proposal will take significant 

resources and time. Installation of these 

controls are large-scale construction 

projects that can span several years, 

especially if multiple units are being 

installed at a single power plant. If EPA 

were to allow sources all of the time 

they needed to install controls to meet 

the ultimate cap levels without the 

imposition of intermediate caps, the 

consequences for SO2 and NOX would 

be different. For SO2, the existence of 

the title IV program and the ability to 

bank would likely encourage sources to 

run their SO2 emission controls as soon 

as they were installed. While these early 

reductions would be environmentally 

beneficial, they would also allow 

sources to continue to increase their SO2

banks. By creating an intermediate cap, 

the ability to bank would be limited. For 

NOX, there would be little incentive to 

turn on controls and achieve additional 

reductions, particularly in the nonozone season and in the States not 

affected by the NOX SIP Call. Therefore, 

in order to get any additional NOX

reductions—either during the winter 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4617

85For instance, a SCR was installed on a 675 MW 

unit in about 13 months (Engineering and Economic 

Factors, p.21).

months from already installed SCRs or 

year-round from newly installed SCRs 

outside of the SIP Call region—it is 

necessary to impose an intermediate 

cap. 

We believe that 3 years is a reasonable 

amount of time to allow companies to 

install emission controls that could be 

used to comply with the first phase 

reduction requirements of today’s 

proposed rule. In certain circumstances, 

some individual units could install 

emissions reduction equipment in 

considerably less time than 3 years.85 In 

the report, ‘‘Engineering and Economic 

Factors Affecting the Installation of 

Control Technologies for Multipollutant Strategies’ (October 2002), 

EPA projected that it would take on 

average about 21 months to install a 

SCR on one unit and about 27 months 

to install a scrubber on one unit. 

However, many times, companies must 

install controls on units at the same 

plant. To do so, companies will often 

stagger installations to minimize 

operational disruptions, thereby taking 

more time. We project that seven SCRs 

could be installed at a single facility in 

3 years. Also, we project that three 

scrubber modules (scrubbing a total of 

six units) could be installed in 3 years. 

Since we believe that 3 years is enough 

time to install controls on all the units 

required at a large power plant, EPA 

believes that 3 years is a reasonable 

amount of time to allow for the first 

phase of compliance.

The availability of skilled labor—

specifically, boilermakers—is an 

important constraint for the installation 

of significant amounts of emission 

controls. Boilermakers are skilled steel 

workers who are specially trained to 

install both NOX controls such as SCR 

and SO2 controls such as scrubbers.

Since the availability of boilermaker 

labor affects the installation of both SO2

controls and NOX controls, it is also 

necessary to decide what mix of 

pollution reductions is desired in the 

first phase. In today’s rulemaking, EPA 

is proposing to require similar 

percentage reductions of both SO2 and 

NOX in the first phase. In developing 

the first phase control levels, we 

intended to maximize the total control 

installations possible (and thus total 

reductions) considering the constraint 

on boilermaker labor, while getting 

similar reductions for both pollutants. 

This results in predicted reductions of 

between 40 and 50 percent for both 

pollutants, in the first phase. 

Based on all of these constraints, EPA 

is proposing a two-phase reduction 

requirement, with a first phase cap on 

SO2 in 2010 based on a 50 percent 

reduction from title IV levels. This 

represents about a 40 percent reduction 

in emissions from the Base Case. This 

strategy would require about 63 GW of 

scrubbers to be installed by 2010. Of 

these, 49 GW of scrubbers would be 

incremental to the Base Case. (We based 

this analysis on the assumption that 

States choose to control EGUs.) 

The EPA’s proposed NOX reduction 

requirement would also be implemented 

in two phases, with a first phase cap 

based, in a comparable manner, on 

about a 49 percent decrease in 

emissions from the Base Case. (The 

calculation of this first phase cap is 

discussed more below.) This cap would 

require installation of about 39 GW of 

SCR between 2005 and 2010. Of this, 24 

GW are incremental to the Base Case. 

(We based this analysis on the 

assumption that States choose to control 

EGUs.) 

Since the NOX SIP Call experience 

showed that many power companies are 

averse to committing money to install 

controls until after State rules are 

finalized, EPA analyzed availability of 

boilermakers assuming companies did 

not begin installing controls until after 

the State rules were finalized. While 

boilermakers are one of the key 

components in building SCRs and 

scrubbers, most of their work cannot 

begin until well into the construction 

project. First, the power company must 

do preliminary studies to determine 

which controls to install, then jobs must 

be bid and design must begin. After the 

installation is designed, foundations 

must be poured and pieces of the 

control equipment must be built in 

machine shops. It is only after all of this 

activity has taken place that the 

boilermakers can erect the control 

equipment. 

We assumed, therefore, that most of 

the demand for boilermakers came in 

the last 21 months of the 3 year period 

to install controls. Furthermore, in order 

to have controls fully operational in 

time for the compliance deadline, 

companies would likely complete 

installation well before the deadline to 

allow for testing of the controls. 

Assuming that most companies would 

try to complete controls in time to 

provide for a 3-month testing period, 

most of the demand for boilermaker 

labor will come in an 18-month 

window. 

It is EPA’s projection that 

approximately 12,700 boilermaker years 

would be needed to install all of the 

required equipment for the first phase of 

compliance. We project that 

approximately 14,700 boilermaker years 

would be available during the time 

when first phase controls would be 

installed. This projected number of 

boilermakers is based on the assumption 

that all the boilermakers that EPA 

projects are available for work on power 

sector environmental retrofit projects 

would be fully utilized (e.g., 40 hours a 

week for 50 weeks of the year). In 

reality, it would be difficult to achieve 

this full utilization of boilermakers. For 

instance, boilermakers will be unable to 

work when moving from job-site to jobsite, during inclement weather, etc. We 

believe that the availability of 

approximately 15 percent more 

boilermaker years than are required 

assures that there are enough 

boilermakers available to construct all of 

the required retrofits.

b. Financial and Other Technical Issues 

Regarding Pollution Control Installation 

The EPA recognizes that the power 

sector will need to devote large amounts 

of capital to meet the control 

requirements of the first phase. Controls 

installed by 2010 will generally be the 

largest and easiest to install. Subsequent 

controls will need to be installed at 

more plants and under more challenging 

circumstances. We believe that deferring 

the second phase to 2015 will provide 

enough time for companies to overcome 

these technical challenges and raise 

additional, reasonably-priced capital 

needed to install controls. 

4. Interactions With Existing Title IV 

Program 

As EPA developed this regulatory 

action, great consideration was given to 

interactions between the existing title IV 

program and today’s proposed rule 

designed to achieve significant 

reductions in SO2 emissions beyond 

title IV. Requiring sources to reduce 

emissions beyond what title IV 

mandates has both environmental and 

economic implications for the existing 

title IV SO2 trading program. In the 

absence of a method for accounting for 

the statutory requirements of title IV, a 

new program that imposes a tighter cap 

on SO2 emissions for a particular region 

of the country would likely result in an 

excess supply of title IV allowances and 

the potential for increased emissions in 

the area not subject to the more 

stringent emission cap. The potential for 

increased emissions exists in the entire 

country for the years prior to the 

proposed implementation deadline and 

would continue after implementation 

for any areas not affected by the 

proposed rule. These excess emissions 

could negatively affect air quality, 

4618 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

disrupt allowance markets, and erode 

confidence in cap and trade programs. 

In view of the significant reductions 

in SO2 emissions under title IV of the 

CAA, the large investments in pollution 

controls that firms have made under 

title IV that enable companies to sell 

excess emissions reductions, and the 

potential for emissions increases, it is 

necessary to consider ways to preserve 

the environmental benefits achieved 

through title IV and maintain the 

integrity of the title IV market for SO2

allowances. The EPA does not have 

authority to address this issue by 

tightening the requirements of title IV. 

In any event, title IV has successfully 

reduced emissions of SO2 using the cap 

and trade approach, eliminating 

millions of tons of SO2 from the 

environment. Building on this existing 

program to further improve air quality 

by requiring additional reductions of 

SO2 emissions is appropriate.

We have developed an approach to 

incorporate the title IV SO2 market to 

ensure that the desired reductions under 

today’s action are achieved in a manner 

consistent with the previously stated 

environmental goals. Our proposed 

approach effectively reduces the title IV 

cap for SO2 and allows title IV 

allowances for compliance with this 

rule at a ratio greater than one-to-one. 

Section VIII provides more detail on our 

initial analysis of the interactions 

between the title IV Acid Rain program 

and today’s proposed cap and trade 

program and outlines a solution for 

creating a new rule that builds off of 

title IV. 

D. Methodology for Setting SO2 and 

NOX Budgets 

In section D, EPA describes in detail 

how it proposes to establish the 

reduction requirements and, to the 

extent applicable, budget requirements 

for EGUs. The first step for both SO2 and 

NOX was determining the total amount 

of emissions reductions that would be 

achievable based on the control strategy 

determined to be highly cost effective. 

Our evaluation of cost effectiveness for 

the proposed 2010 and 2015 emissions 

caps was explained in the preceding 

subsection as was the need to split these 

budget requirements into two phases to 

assure that emission reductions were 

achieved expeditiously considering 

factors that could limit the amount of 

emission controls that could be installed 

in a given time period. 

There were then two more steps that 

followed. In the second step, EPA 

determined the amount of emissions 

reductions that were needed across the 

region covered by this proposal and, for 

EGUs, set annual emissions caps 

accordingly in 2010 and 2015. These 

caps remain at the 2015 levels 

thereafter, to maintain air quality in the 

downwind areas. In the third step, EPA 

partitioned the cap levels into State 

emissions budgets that they may use for 

granting allowances for SO2 and NOX

emissions. 

1. Approach for Setting Regionwide SO2

and NOX Emission Reductions 

Requirements 

a. SO2 Budgets for EGUs 

The EPA is proposing a two-phase 

SO2 reduction program. The first phase, 

in 2010, would reduce SO2 emissions in 

the 28-State and DC region by the 

amount that results from making a 50 

percent reduction from title IV Phase II 

allowance levels. The second phase, in 

2015, would further reduce SO2

emissions by the amount that results 

from making a 65 percent reduction 

from the title IV Phase II allowance 

level. 

These amounts may be calculated in 

terms of regionwide EGU caps for the 

first and second phases, assuming that 

all the affected States control only 

EGUs. Similarly, it is necessary to 

calculate the amount of regionwide SO2

reductions for the first and second 

phase, for States that choose to control 

sources other than (or in addition to) 

EGUs. This calculation of the amount of 

the regionwide cap or emissions 

reductions is a useful step because this 

amount may then be apportioned to 

individual State. In addition, the 

methodology for calculating regionwide 

amounts should accommodate revisions 

in the universe of States in the region—

adding or subtracting individual 

States—based on refinement to the air 

quality modeling that EPA expects to 

complete and publish in the SNPR. 

The EPA proposes that the regionwide 

SO2 budgets may be calculated by 

adding together the title IV Phase II 

allowances for all of the States in the 

control region, and making a 50 percent 

reduction for the 2010 cap and a 65 

percent reduction for the 2015 cap. This 

results in a first phase SO2 cap of about 

3.9 million tons and a second phase cap 

of about 2.7 million tons, in the 28-State 

and DC control region.

Modeling predicts nationwide SO2

emissions of about 5.4 million tons in 

2015 with today’s proposed controls. 

(This compares to approximately 9.1 

million tons without today’s proposed 

controls.) Predicted emissions in the 28-

State and DC region that EPA is 

proposing to find significantly 

contribute to PM2.5 nonattainment are 

about 4.6 million tons in 2015. (These 

emission estimates are from modeling 

using the 48-State region as described 

above.) The projected SO2 emissions are 

higher than the caps due to use of 

banked allowances resulting from the 

incentive for early reductions. 

Accordingly, the 2015 annual SO2

emissions reductions amount to about 

3.7 million tons, and the 2010 annual 

SO2 emissions reductions amount to 

about 3.6 million tons. 

b. NOX Budgets for EGUs 

The EPA is proposing a two-phased 

annual NOX control program, with a 

first phase in 2010 and a second phase 

in 2015, which would apply to the same 

control region as the SO2 requirements, 

that is, 28-States and DC. In addition, 

Connecticut would be required to 

control NOX during the ozone season. 

On a regionwide basis, the control 

requirements EPA is proposing would 

result in a total EGU NOX budget of 

about 1.6 million tons in 2010 and 1.3 

million tons in 2015, in the 28-State and 

DC region that would be affected by 

today’s rulemaking (assuming each State 

controlled only EGUs and thereby 

subjected themselves to the proposed 

caps). In addition, the control 

requirements would lead to 2015 annual 

NOX emissions reductions of about 1.8 

million tons from the base case, and 

2010 annual NOX emissions reductions 

of about 1.5 million tons from the base 

case. 

Calculating the regionwide budget 

and emissions reductions requirements 

serve the same purposes as in the case 

of SO2, described above. Our 

methodology proposed today 

determines historical annual heat input 

data for Acid Rain Program units in the 

applicable States and multiplies by 0.15 

lb/mmBtu (for 2010) and 0.125 lb/

mmBtu (for 2015) to determine total 

annual NOX mass. For the annual heat 

input values to use in this formula, EPA 

proposes to take the highest annual heat 

input for any year from 1999 through 

2002 for each applicable State. This 

proposed approach provides a 

regionwide budget for 2010 that is 

approximately 37,500 tons more than 

the budget that would result from using 

the highest annual regional heat input 

for any of the 4 years, and about 60,700 

tons more than using the average 

regional heat input for the 4-year period. 

We believe that this cushion provides 

for a reasonable adjustment to reflect 

that there are some non-Acid Rain units 

that operate in these States that will be 

subject to the proposed budgets. 

Note that EPA proposes today that 

Connecticut contributes significantly to 

downwind ozone nonattainment, but 

not to fine particle nonattainment. Thus, 

Connecticut would not be subject to an 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4619

86 If Connecticut, or any State subject to an 

existing NOX ozone season-only budget program, 

chooses to participate in the interstate NOX trading 

program proposed today, that State would need to 

operate under an annual NOX cap rather than ozone 

season only. Interstate trading is discussed in more 

detail in section VIII, below.

annual NOX control requirement, and is 

not included in the 28-State and DC 

region we are proposing for annual 

controls. Connecticut would be subject 

to an ozone season-only NOX cap.86

Because Connecticut is required to make 

reductions only during the ozone 

season, compliance for sources would 

not be required to begin until May 1, 

2010. If Connecticut chooses to 

participate in the regional trading 

program on an annual basis, compliance 

would begin on January 1, 2010.

Although EPA proposes to determine 

the regionwide amount of EGU NOX

emissions by using historic heat input 

and emission rates of 0.15 lb/mmBtu 

and 0.125 lb/mmBtu, we take comment 

on using, instead, heat input projected 

to the implementation years of 2010 and 

2015 and/or different emission rates. 

Under this approach, we take comment 

on whether to use the same method for 

projecting heat input as used in the NOX

SIP Call, or a different method. The NOX

SIP Call method is described in 67 FR 

21868 (May 1, 2002). 

2. State-by-State Emissions Reductions 

Requirements and EGU Budgets

This section describes the 

methodologies used for apportioning 

regionwide emission reduction 

requirements or budgets to the 

individual States. State budgets may be 

set with a methodology different from 

that used in setting the regionwide 

budgets, for reasons described in this 

section. 

In practice, if States control EGUs and 

participate in the regional trading 

program, the choice of method used to 

impose State-by-State reduction 

requirements makes little difference in 

terms of total regionwide SO2 and NOX

emissions. The cap and trade framework 

would encourage least-cost compliance 

over the region, an outcome that does 

not depend on the individual State 

budgets. 

However, the distribution of budgets 

to the States is important in that it can 

have economic impacts on the State’s 

sources. Should a State receive a 

disproportionate share of the 

regionwide budget, there would be 

fewer allowances to allocate to its 

sources. This may adversely affect 

compliance costs for sources within that 

State as they are forced to increase their 

level of emission control or became net 

buyers from sources in States that may 

have received a greater share of 

regionwide cap. 

For SO2, we propose determining 

State SO2 budgets for EGUs on the basis 

of title IV allowances, which is in line 

with the planned interactions of this 

rule with title IV of the CAA 

Amendments. See section VIII for a 

more detailed discussion of interactions 

with title IV. Such budgets would be 

easy to understand, would be 

straightforward to set, would reflect 

previously implemented allocations and 

would allow for the smoothest 

transition to the new program proposed 

today. 

For the proposed 28 State SO2 control 

region, the proposed annual State EGU 

SO2 budgets are presented in Table VI–

9, below.

TABLE VI–9.—28-STATES AND DISTRICT OF COLUMBIA ANNUAL EGU SO2 BUDGETS

State 

28-State SO2

budget 2010 

(tons) 

28-State SO2

Budget 2015 

(tons) 

Alabama ................................................................................................................................................................... 157,629 110,340 

Arkansas .................................................................................................................................................................. 48,716 34,101 

Delaware .................................................................................................................................................................. 22,417 15,692 

District of Columbia ................................................................................................................................................. 708 495 

Florida ...................................................................................................................................................................... 253,525 177,468 

Georgia .................................................................................................................................................................... 213,120 149,184 

Illinois ....................................................................................................................................................................... 192,728 134,909 

Indiana ..................................................................................................................................................................... 254,674 178,272 

Iowa ......................................................................................................................................................................... 64,114 44,879 

Kansas ..................................................................................................................................................................... 58,321 40,825 

Kentucky .................................................................................................................................................................. 188,829 132,180 

Louisiana .................................................................................................................................................................. 59,965 41,976 

Maryland .................................................................................................................................................................. 70,718 49,502 

Massachusetts ......................................................................................................................................................... 82,585 57,810 

Michigan ................................................................................................................................................................... 178,658 125,061 

Minnesota ................................................................................................................................................................ 50,002 35,001 

Mississippi ................................................................................................................................................................ 33,773 23,641 

Missouri .................................................................................................................................................................... 137,255 96,078 

New Jersey .............................................................................................................................................................. 32,401 22,681 

New York ................................................................................................................................................................. 135,179 94,625 

North Carolina .......................................................................................................................................................... 137,383 96,168 

Ohio ......................................................................................................................................................................... 333,619 233,533 

Pennsylvania ............................................................................................................................................................ 276,072 193,250 

South Carolina ......................................................................................................................................................... 57,288 40,101 

Tennessee ............................................................................................................................................................... 137,256 96,079 

Texas ....................................................................................................................................................................... 321,041 224,729 

Virginia ..................................................................................................................................................................... 63,497 44,448 

West Virginia ............................................................................................................................................................ 215,945 151,162 

Wisconsin ................................................................................................................................................................. 87,290 61,103 

Total .................................................................................................................................................................. 3,864,708 2,705,293 

4620 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

If alternatively, EPA were to adopt an 

0.10 μg/m3 as the air quality criterion, 

Oklahoma and North Dakota would also 

receive SO2 budgets. Oklahoma’s 2010 

State SO2 budget would be 63,328 tons 

and its 2015 SO2 budget would be 

44,330 tons. North Dakota’s 2010 SO2

budget would be 82,510 tons and its 

2015 SO2 budget would be 57,757 tons. 

If the State EGU SO2 budget is entirely 

based on the title IV retirement ratio, 

then the budget would equal the title IV 

allowances multiplied by the retirement 

ratio (as discussed earlier in this 

section). However, under the CAA, the 

title IV SO2 allowances are allocated on 

the basis of activity as of 1985, and as 

a result, they do not take into account 

any of the significant changes and 

growth in the sectors since that time.

An alternate method of determining 

State SO2 EGU budgets would consist of 

two parts: 

(1) The first part of the budget would 

be based on title IV allocations—but 

with a tighter title IV retirement ratio 

than that proposed for the region. 

(2) The tighter retirement ratio would 

result in some un-allocated EGU 

allowances (reflecting the difference 

between the regionwide budget and 

State budgets calculated based on part 

(1)). These could be allocated to States’

budgets for their non-title IV EGUs, or 

as a way to redistribute or update 

allowances to the title IV EGUs. This 

allocation could be done on the basis of 

methods discussed in more detail 

below. Such a two-part EGU budget 

would recognize the fact that the sector 

has grown and changed since title IV 

allocations were initially made. 

For NOX, we propose determining 

State NOX budgets for EGUs on the basis 

of current/historic heat input rates. 

Regionwide budgets would be 

distributed to States based on an average 

of several years of historical data. We 

are proposing to use data from 1999 to 

2002. 

A similar approach was taken by the 

SO2 program under title IV of the CAA. 

As a result, States with significant 

projected increases in growth were 

required to either: (1) Reduce their 

emissions further, or (2) burn fuel more 

efficiently in order to compensate. (For 

such States, the ability to trade 

emissions regionwide was particularly 

attractive because States with low 

increases or decreases in utilization 

could trade emissions with States 

having significantly increased 

utilization). 

Most of the States within the 

proposed control region are part of the 

NOX SIP Call, with a regionwide budget 

that on a seasonal basis constrains 

increases in NOX emissions for the 

region as a whole. States with high 

growth (measured from a historic 

baseline to the start of the new program) 

would already be provided incentives to 

control NOX emissions as they would 

need to use additional NOX SIP Call 

allowances to emit during the ozone 

season. Consequently, growth in 

generation in the years after the 

proposed State budgets have been set 

would not necessarily lead to increased 

emissions. Furthermore, the majority of 

the growth (of heat input, or output) 

through 2010 is expected to be met by 

recently built natural gas units, with no 

SO2 and very low NOX emissions. 

Such an option is also appropriate to 

consider if it is decided that SO2

budgets for non-title IV sources should 

be developed as explained below.

Among the advantages of a budget 

methodology based on historic/current 

activity is that it is relatively simple to 

implement and would not need to be 

changed as a result of future data. 

For the proposed 28 State Annual 

NOX control region, the proposed 

annual State EGU NOX budgets based on 

this methodology are presented in Table 

VI–10, below.

TABLE VI–10.—28-STATES AND DISTRICT OF COLUMBIA ANNUAL EGU NOX BUDGETS

State 

28-State NOX

Budget 2010 

(tons) 

28-State NOX

Budget 2015 

(tons) 

Alabama ................................................................................................................................................................... 67,414 56,178 

Arkansas .................................................................................................................................................................. 24,916 20,763 

Delaware .................................................................................................................................................................. 5,039 4,199 

District of Columbia ................................................................................................................................................. 215 179 

Florida ...................................................................................................................................................................... 115,489 96,241 

Georgia .................................................................................................................................................................... 63,567 52,973 

Illinois ....................................................................................................................................................................... 73,613 61,344 

Indiana ..................................................................................................................................................................... 102,283 85,235 

Iowa ......................................................................................................................................................................... 30,454 25,378 

Kansas ..................................................................................................................................................................... 32,433 27,027 

Kentucky .................................................................................................................................................................. 77,929 64,940 

Louisiana .................................................................................................................................................................. 47,333 39,444 

Maryland .................................................................................................................................................................. 26,604 22,170 

Massachusetts ......................................................................................................................................................... 19,624 16,353 

Michigan ................................................................................................................................................................... 60,199 50,165 

Minnesota ................................................................................................................................................................ 29,300 24,417 

Mississippi ................................................................................................................................................................ 21,930 18,275 

Missouri .................................................................................................................................................................... 56,564 47,137 

New Jersey .............................................................................................................................................................. 9,893 8,245 

New York ................................................................................................................................................................. 52,448 43,707 

North Carolina .......................................................................................................................................................... 55,756 46,463 

Ohio ......................................................................................................................................................................... 101,692 84,743 

Pennsylvania ............................................................................................................................................................ 84,542 70,452 

South Carolina ......................................................................................................................................................... 30,892 25,743 

Tennessee ............................................................................................................................................................... 47,734 39,778 

Texas ....................................................................................................................................................................... 224,181 186,818 

Virginia ..................................................................................................................................................................... 31,083 25,903 

West Virginia ............................................................................................................................................................ 68,227 56,856 

Wisconsin ................................................................................................................................................................. 39,039 32,533 

Total .................................................................................................................................................................. 1,600,392 1,333,660 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4621

If alternatively, EPA were to adopt an 

0.10 μg/m3 as the air quality criterion, 

Oklahoma and North Dakota would also 

receive annual NOX budgets. The 

proposed annual State EGU NOX

budgets for all 30 States based on the 

proposed methodology are presented in 

Table VI–11 below.

TABLE VI–11.—30-STATE AND DISTRICT OF COLUMBIA ANNUAL EGU NOX BUDGETS

State 

30-State NOX

budget 2010 

(tons) 

30-State NOX

budget 2015 

(tons) 

Alabama ................................................................................................................................................................... 67,415 56,179 

Arkansas .................................................................................................................................................................. 24,916 20,763 

Delaware .................................................................................................................................................................. 5,039 4,199 

District of Columbia ................................................................................................................................................. 215 179 

Florida ...................................................................................................................................................................... 115,490 96,242 

Georgia .................................................................................................................................................................... 63,568 52,973 

Illinois ....................................................................................................................................................................... 73,614 61,345 

Indiana ..................................................................................................................................................................... 102,283 85,236 

Iowa ......................................................................................................................................................................... 30,454 25,378 

Kansas ..................................................................................................................................................................... 32,433 27,027 

Kentucky .................................................................................................................................................................. 77,929 64,941 

Louisiana .................................................................................................................................................................. 47,333 39,445 

Maryland .................................................................................................................................................................. 26,604 22,170 

Massachusetts ......................................................................................................................................................... 19,624 16,353 

Michigan ................................................................................................................................................................... 60,199 50,166 

Minnesota ................................................................................................................................................................ 29,300 24,417 

Mississippi ................................................................................................................................................................ 21,930 18,275 

Missouri .................................................................................................................................................................... 56,565 47,137 

New Jersey .............................................................................................................................................................. 9,894 8,245 

New York ................................................................................................................................................................. 52,448 43,707 

North Carolina .......................................................................................................................................................... 55,756 46,463 

North Dakota ............................................................................................................................................................ 26,570 22,141 

Ohio ......................................................................................................................................................................... 101,693 84,744 

Oklahoma ................................................................................................................................................................. 41,293 34,411 

Pennsylvania ............................................................................................................................................................ 84,543 70,452 

South Carolina ......................................................................................................................................................... 30,892 25,744 

Tennessee ............................................................................................................................................................... 47,734 39,778 

Texas ....................................................................................................................................................................... 224,183 186,819 

Virginia ..................................................................................................................................................................... 31,083 25,903 

West Virginia ............................................................................................................................................................ 68,227 56,856 

Wisconsin ................................................................................................................................................................. 39,040 32,533 

Total .................................................................................................................................................................. 1,668,268 1,390,223 

There are two different metrics that 

EPA could use for determining alternate 

State EGU NOX budgets. These metrics 

include: 

(1) Pro-rated emissions levels (budgets 

based on reductions in emissions 

levels), 

(2) Pro-rated share of Output (kwh) 

(budgets based on their output (same lb/

kwh rate)).

We solicit comment on the use of these 

different methods. 

There are options for implementing 

the heat input-based budget and the two 

different metrics in determining actual 

State budgets. Budgets could be based 

on projected levels (calculated by taking 

historical level and applying growth 

rates, or directly taking levels projected 

by IPM).

The methodology used in the NOX SIP 

Call (setting State budgets by applying 

State-specific growth rates for heat 

input) is an example of this approach. 

(67 FR 21868; May 1, 2002) 

Alternatively, it would be possible to 

use heat input or output as projected 

directly by IPM in the setting of budgets. 

This would have the benefit of being 

consistent with the methodology for 

determining cost. We would also have 

projections for relevant years, and there 

would be little disconnect between the 

years used to develop growth rates and 

the years to which growth rates are 

applied. However, under such a 

methodology, it would be difficult to 

adjust budgets if we receive comments 

about missing units. We solicit 

comment on these options. 

As noted above, EPA proposes that 

Connecticut contributes significantly to 

ozone nonattainment areas, but not to 

fine particle nonattainment areas. Thus, 

Connecticut would not be subject to 

proposed annual SO2 and NOX controls, 

but would be subject to ozone seasononly NOX control requirements. We 

propose an ozone-season EGU NOX

control level of 4,360 tons in 2010 and 

about 3,633 tons in 2015. 

If Connecticut (or any State subject to 

an existing NOX ozone season-only 

budget program) chooses to participate 

in the interstate trading program 

proposed today, that State would need 

to operate under an annual NOX cap 

rather than ozone season only. Interstate 

trading is discussed in more detail in 

section VIII of this preamble. The EPA 

proposes an annual NOX control level of 

about 9,283 tons in 2010 and 7,735 tons 

in 2015, if Connecticut were to 

participate in today’s proposed 

interstate trading program on an annual 

basis. 

The EPA calculated these proposed 

levels using the 1999 Acid Rain Program 

reported heat inputs for Connecticut. 

The ozone-season level was calculated 

by multiplying the reported ozoneseason heat inputs by 0.15 lb/mmBtu for 

2010 and 0.125 lb/mmBtu for 2015. The 

proposed annual level was determined 

by multiplying the reported annual heat 

input by 0.15 lb/mmBtu for 2010 and 

0.125 lb/mmBtu for 2015. We reviewed 

reported Acid Rain Program heat inputs 

for the years 1999 through 2002, and 

selected 1999 data for calculating these 

proposed levels because the 1999 

4622 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

Connecticut heat input was higher than 

the other 3 years considered, and this is 

similar to the way the regionwide 

proposed control levels were calculated. 

The EPA also takes comment on an 

alternate way to calculate a NOX budget 

for Connecticut that would be entirely 

consistent with the way that the budgets 

were calculated for other States. Under 

this methodology, EPA would calculate 

region wide NOX budgets for both the 

ozone season and non ozone season 

using State by State heat input data for 

the highest year between 1999 and 2002 

and multiplying it by 0.15 lbs/mmBtu 

for 2010 and 0.125 lbs/mmBtu for 2015. 

Both ozone season and non-ozone 

season State budgets would be 

calculated by giving States their prorated share of the budget based on 

annual heat input from the years 1999 

to 2002. For States required to make 

year-round reductions, their budgets 

would be based on the sum of their 

ozone-season and non-ozone season 

heat input. For a State such as 

Connecticut that was only required to 

make ozone-season reductions, its 

ozone-season budget would be based 

upon its share of the ozone-season 

budget. If Connecticut decided to 

participate on an annual basis, its 

budget would be calculated like all 

other States. 

E. Budgets for Use by States Choosing 

To Control Non-EGU Source Categories 

While EPA is not proposing to assume 

any emissions reductions from other 

source categories (e.g., non-EGU 

stationary sources, area sources and 

mobile sources), States may elect to 

obtain some or all of the required 

emissions reductions from other source 

categories. In this case, EGUs within the 

State would not be able to participate in 

the cap and trade programs.

If a State chooses to obtain some but 

not all of its required reductions from 

EGUs, it would set an EGU SO2 budget 

and/or an EGU NOX budget, at some 

level higher than shown in Tables VI–

9 and VI–10. The State must also (1) 

develop baseline emissions subinventories for all non-EGU sectors for 

2010 and 2015, (2) divide the portion of 

the required emissions reductions that it 

will not obtain from EGUs (i.e., the 

difference between its selected EGU 

budget for SO2 or NOX and the budget 

listed in Tables VI–9 or VI–10) among 

the non-EGU source sectors in any 

manner it chooses, (3) subtract these 

emissions reductions from the 

corresponding emissions subinventories to arrive at the emissions 

budget for each sector, and (4) adopt 

measures that are projected to achieve 

those budgets. Compliance with all of 

these control measures would be 

enforceable. Section VII explains the 

role of emission budgets for non-EGU 

sectors in more detail. We plan to 

propose in the SNPR requirements to 

ensure the accuracy of the baseline 

emission sub-inventories. 

We believe it is unlikely that any 

State will choose to obtain all or part of 

the required SO2 and NOX emission 

reductions from sources other than 

EGUs, but we do wish to offer States 

this alternative if equal reductions can 

be obtained. The SNPR will propose 

specific emission reductions for this 

purpose, or provisions for determining 

these emission reduction quantities. 

Once these are determined, the four 

steps described in the previous 

paragraph will apply. 

F. Timing and Process for Setting 

Baseline Inventories and SubInventories 

In the NOX SIP Call, EPA promulgated 

a NOX emission reduction requirement 

for each State (as we propose here for 

SO2 and NOX). We also promulgated 

baseline sub-inventories for each State 

for five sectors (EGU, non-EGU, area, 

non-road, and highway) which summed 

to an overall baseline inventory. Finally, 

the NOX SIP Call rule contained a table 

of State-by-State NOX emissions 

budgets, developed by subtracting the 

required NOX emission reduction from 

the overall baseline NOX inventory. 

Today, we are proposing specific EGU 

budgets for affected States for the 

purposes of the model trading program, 

but we are not proposing any baseline 

sub-inventories. There is no need for 

baseline sub-inventories to be 

established by rule for States choosing 

to participate in the model trading 

programs. As explained in section VI.E 

above, we propose that if a State 

chooses to obtain some of the required 

emission reductions from non-EGU 

sources, the baseline sub-inventories 

and the sector budgets should be 

developed by the State itself and be 

subject to EPA approval as part of the 

transport SIP. In this way, baseline subinventories and sector budgets will 

reflect updates to newer emission 

estimation methods, more recent data 

on current emissions, and updated 

projection methods. This will increase 

the certainty that the required emission 

reductions will be achieved in practice. 

We invite comment at this time on 

what assumptions and methods for 

establishing sector inventories should 

be specified in the supplemental 

proposal and final rule. In the NOX SIP 

Call, for example, we said that 

emissions reductions from subsequent 

Federal rules must be incorporated into 

the baseline sector inventories. Clear 

rules regarding determination of 

historical emissions, development of 

growth factors, estimation of rule 

effectiveness, and credibility of Stateadopted measures may also be needed. 

Section IV, above, presents the 

baseline emission projections that have 

been used in the air quality modeling 

that supports today’s proposal. We will 

be updating these baseline inventories 

for the final rule to incorporate newer 

data and methods. 

G. Comment on Emissions Caps and 

Budget Program

While EPA’s analysis indicates that 

the availability of boilermaker labor will 

be a limiting factor in first phase 

scrubber installations, the Agency is 

soliciting comment on this analysis. In 

particular, we’re asking for comment on 

whether there might be alternative postcombustion technologies that could 

reduce SO2 emissions in a manner 

equally cost-effective as scrubbers, but 

that wouldn’t require as much 

boilermaker labor. Examples might 

include multi-pollutant technologies 

(boilermaker labor might be less 

constrained if single technologies can be 

installed to reduce both SO2 and NOX). 

We also solicit comment on whether 

advanced coal preparation processes 

might provide highly cost effective 

emission reductions. We solicit 

comment on whether such alternative 

technologies will be commercialized by 

2010, and what the costs will be. 

In addition, EPA seeks comment on 

whether other factors such as other EPA 

regulatory actions will create an 

increase in boilermaker demand earlier 

than today’s proposal (pre-2007), 

resulting in growth in the number of 

boilermakers that could be used to 

install controls required under this 

program in 2007 and beyond. We solicit 

comments on whether other factors 

might increase demand for boilermakers 

in advance of 2007, and what these 

factors would be. 

As noted above, EPA is proposing to 

require SO2 and NOX to be reduced by 

similar percentages in the first phase of 

today’s proposed rule, given the limited 

supply of labor to install controls at 

electric generating units. An alternative 

would be to give priority to SO2 control 

in the first phase, and postpone 

summertime NOX reductions for a 

couple of years. This would focus 

limited labor resources on SO2 control 

to reduce the sulfate component of 

PM2.5 as quickly as possible. This 

approach could achieve more early 

PM2.5 reductions and might help some 

PM2.5 nonattainment areas attain earlier. 

On the one hand, based on the analysis 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4623

8See Virginia v. EPA, 108 F.3d 1397 (D.C. Cir. 

1997).

of section XI, the quantified benefits 

from PM2.5 control are generally larger 

than those for ozone. Nevertheless, the 

tradeoff would be that ozone reductions 

under the interstate air quality rule 

would be postponed. Because many 

ozone areas will be required to attain in 

2010, fewer projected ozone 

nonattainment areas would be helped 

by the interstate air quality rule. A 

number of areas required to attain in 

2010 (and perhaps some 2013 areas as 

well) would incur greater local control 

costs to attain on time, or achieve less 

improvement in ozone levels. We 

request comment on the relative merits 

of the proposed approach and this 

alternative, considering public health, 

costs, and equity. More generally, EPA 

seeks comment on the mix of first phase 

SO2 and NOX reductions that represents 

the proper balance between the goals of 

reducing PM2.5 transport and ozone 

transport in the near term. 

Additionally, EPA seeks comment on 

the level of the second phase caps and 

the resulting division of responsibility 

between local and interstate transport 

sources. Would a less stringent or more 

stringent level of transport control lower 

total costs of attainment, or better 

address equity issues? Has EPA 

identified the appropriate level of 

control as highly cost effective? Should 

the Agency reduce the second-phase 

reductions (or raise the second-phase 

caps) for NOX and SO2, and thereby 

leave more of the emissions reductions 

burden to the individual States 

preparing plans for meeting air quality 

standards in each nonattainment area? 

Or should the second-phase emissions 

reductions be increased (or the caps be 

made lower) in an effort to give more 

help to States through regional controls 

that achieve greater reductions and 

benefits while remaining cost effective? 

For example, rather than basing the 

2015 caps on a 65 percent reduction 

from title IV levels, should they be 

based on a 55 percent reduction or a 75 

percent reduction?

The EPA also requests comment on 

the timing of each phase of the cap and 

trade program. Regarding the first phase, 

EPA notes that the January 1, 2010 NOX

compliance date occurs after the last 

ozone season that influences the 

attainment status of the ‘‘moderate’’ 8-

hour ozone nonattainment areas that 

will receive an attainment date no later 

than April 2010. We also note that its 

analysis indicates that the level of 

control in the first phase is constrained 

by the amount of control equipment that 

can be installed by a limited labor force, 

and providing an earlier compliance 

deadline might reduce the reductions 

feasible in the first phase. We request 

comment on whether the first phase 

deadline should be as proposed, or 

adjusted earlier or later, in light of these 

competing factors. 

For SO2, if States choose to control 

EGUs through the model cap and trade 

program, emissions banking provides 

incentives that lead to steadily declining 

emissions and thus results in additional 

benefits before the 2010 and 2015 

reductions. However, it appears that it 

would help several States to reach 

attainment by CAA deadlines if the 

second phase emissions cap went into 

effect earlier, especially for NOX. This 

needs to be balanced against the ability 

of the power industry to do 

substantially more at that time. The EPA 

is soliciting comment on the timing of 

the second phase. 

The EPA strongly encourages each 

State to consider reserving a portion of 

its allowance budget for an auction. 

Proceeds from the auction would be 

fully retained by the State to be used as 

they see fit. Some possible suggestions 

for auction revenue that States may 

want to choose will be further explored 

in a supplemental notice. For example, 

a State could develop a program that 

uses the revenue to provide incentives 

for additional local reductions within 

nonattainment areas. 

The EPA sees benefits in requiring 

States to reserve a portion of their 

budgets for auction, but has concerns 

about whether such a requirement 

would intrude on State prerogatives.87

We solicit comment on this issue.

H. Budgets for Federally-Recognized 

Tribes 

In the 1990 CAA amendments, 

Congress recognized our obligation to 

treat Tribes in a manner similar to 

States. Currently, we are not aware of 

any EGUs in Indian country in the 

eastern and central U.S. that could 

potentially be affected by the interstate 

air quality rule. 

The Tribal air programs are relatively 

new and Tribes are just now 

establishing their capacity to develop air 

quality management plans and 

beginning to participate in national 

policy setting processes such as this 

rulemaking. In addition, past Federal 

policy limited the economic 

development and thus the number of 

emissions sources that might otherwise 

have been built on Tribal lands. 

However, many Tribes are currently 

encouraging economic development on 

their lands, particularly in the area of 

energy generation. 

In the NOX SIP Call, EPA did not 

explicitly consider the issue of Tribal 

lands and we made no specific 

provisions for them. One consequence is 

that Tribal implementation plans—even 

ones that cover new or existing sources 

on Tribal lands—apparently are not 

subject to any of the requirements of the 

NOX SIP Call rule. We now realize that 

we should adopt specific provisions for 

Tribal lands in today’s proposed 

rulemaking. For States, which have 

substantial emissions now and 

corresponding impacts on 

nonattainment in other States, we have 

focused in this proposal on what 

emissions reductions are needed to 

eliminate existing significant 

contributions to nonattainment. For 

Tribes, since there are few sources on 

Tribal lands now and no EGUs, we 

should consider what increases are 

possible without causing significant 

contributions to nonattainment in State 

lands and other Tribal lands.

Title IV SO2 allowances have been 

provided to EGUs. Because there are no 

EGUs on Tribal lands, title IV 

allowances have not been awarded to 

any EGUs on Tribal lands. Additionally, 

without EGUs there is no historical heat 

input for use in calculating an 

allowance budget for NOX for Tribal 

lands. In our discussions prior to this 

proposal, Tribal representatives have 

expressed concern that budgets based 

on existing emissions effectively 

exclude them from the program unless 

Tribes buy allowances from the 

surrounding States. If Tribes do buy 

allowances, they will be effectively 

subsidizing the development and 

inadequate environmental planning of 

surrounding States. In this rulemaking, 

we are taking into consideration the past 

inequities created by Federal policy and 

traditionally depressed development in 

Indian country, as well as the need to 

make progress in air quality. 

We are not proposing specific 

provisions for Tribal lands today. We 

invite comment generally and on the 

following specific questions regarding 

allowance allocation to Tribes: 

(1) Should allowance budgets for 

Tribes be created by the rule separately 

from State allowance budgets, or be 

deducted from the proposed State 

budgets? On what basis or criteria 

should either approach be 

implemented? 

(2) Alternatively, should the rule set 

an allowance pool for Tribes in the 

aggregate with some further process by 

EPA or by the Tribes collectively to 

allocate the allowances to specific 

Tribes? Should the allowance allocation 

issues be deferred entirely to separate 

action(s) later? Should any immediate or 

4624 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

88The actual dates will be determined by relevant 

provisions in the CAA and EPA’s interpretation of 

these provisions published in upcoming 

implementation rules for the PM2.5 and 8-hour 

ozone NAAQS.

eventual allocations to individual Tribes 

be based on current emissions, existing 

contracts for new sources, population, 

land base, or some other factor(s)? Some 

Tribes may have concerns that deferral 

of allowance allocations to individual 

Tribes does not adequately recognize 

the sovereignty of individual Tribal 

nations. There may also be concern that 

continued uncertainty in the allowances 

available to the individual Tribes may 

discourage planning for development. 

(3) Should allowances be tradeable 

among Tribes once allocated? Should 

they be bankable? 

(4) Because the SIPs do not generally 

apply in Indian country, the system for 

regulating sources on Tribal land for 

purposes of limiting transport will need 

to be implemented through either a 

Tribal implementation plan or a Federal 

implementation plan. We invite 

comment on the best mechanism to 

implement the budgets. 

We recognize that information on 

economic development and potential for 

growth may be sensitive for the Tribes 

to share with EPA or a public docket. 

We request input from the Tribes on 

how to determine the allowance needs 

for the Tribes.

VII. State Implementation Plan 

Schedules and Requirements 

This section describes the dates for 

submittal and implementation of the 

interstate transport SIPs that today we 

propose to require, and discusses those 

dates in the context of the attainment 

dates and SIP submittal requirements 

for the downwind nonattainment areas. 

In addition, this section describes the 

required SIP elements that we propose 

today. 

A. State Implementation Plan Schedules 

1. State Implementation Plan 

Submission Schedule 

Clean Air Act section 110(a)(1) 

requires each State to submit a SIP to 

EPA ‘‘within 3 years * * * after the 

promulgation of a [NAAQS] (or any 

revision thereof).’’ Section 110(a)(2) 

makes clear that this SIP must include, 

among other things, the ‘‘good 

neighbor’’ provisions required under 

section 110(a)(2)(D). These provisions 

may be read together to require that 

each upwind State submit, within three 

years of a NAAQS revision, SIPs that 

address the section 110(a)(2)(D) 

requirement. 

The PM2.5 and 8-hour ozone NAAQS 

revisions were issued in July 1997. More 

than 3 years have already elapsed since 

promulgation of the NAAQS, and States 

have not submitted SIPs to address their 

section 110(a)(2)(D) obligations under 

the new NAAQS. We further recognize 

that until recently, there was substantial 

uncertainty as to whether each NAAQS 

would be remanded to EPA, and that 

this uncertainty would, as a practical 

matter, render more complex the 

upwind States’ task of developing 

transport SIPs. 

In addition, today’s proposal makes 

available a great deal of data and 

analysis concerning air quality and 

control costs, as well as policy 

judgments from EPA concerning the 

appropriate criteria for determining 

whether upwind sources contribute 

significantly to downwind 

nonattainment under section 

110(a)(2)(D). We recognize that States 

would face great difficulties in 

developing transport SIPs without these 

data and policies. In light of these 

factors and the fact that States can no 

longer meet the original three-year 

submittal date, we are proposing that 

SIPs to reduce interstate transport, as 

required by this proposal, be submitted 

as expeditiously as practicable, but no 

later than 18 months from the date of 

promulgation. The EPA intends to 

promulgate today’s proposed rule 

between approximately December 2004 

and June 2005. In this case, the SIPs 

required today would be due between 

approximately July and December 2006. 

By comparison, in the NOX SIP Call 

rulemaking, EPA provided 12 months 

for the affected States to submit their 

SIP revisions. One of the factors that we 

considered in setting that 12-month 

period was that upwind States had 

already, as part of the Ozone Transport 

Assessment Group process begun three 

years before the NOX SIP Call 

rulemaking, been given the opportunity 

to consider available control options. 

Since today’s proposal requires 

affected States to control both SO2 and 

NOX emissions, and to do so for the 

purpose of addressing both the PM2.5

and 8-hour ozone NAAQS, we believe it 

is reasonable to allow affected States 

more time than was allotted in the NOX

SIP Call to develop and submit transport 

SIPs. Since we plan to finalize this rule 

no later than mid-2005, SIP submittals 

would be due no later than the end of 

2006. Under this schedule, upwind 

States’ transport SIPs would be due 

before the downwind States’ PM2.5 and 

8-hour ozone nonattainment SIPs, under 

CAA section 172(b). We expect that the 

downwind States’ 8-hour ozone 

nonattainment area SIPs will be due by 

May 2007, and their nonattainment SIPs 

for PM2.5 by January 2008.88

The SIP submittal date proposed 

today should be considered in the 

context of the downwind nonattainment 

area SIP submittal schedules and 

attainment dates. Under CAA section 

172(b), the downwind nonattainment 

SIPs are due no later than three years 

after the designations. The EPA expects 

to designate PM2.5 areas by December 

31, 2004, and to require the 

nonattainment area SIPs by three years 

of the designation. The EPA is required 

to designate 8-hour ozone areas by April 

15, 2004, with an effective date of May 

2004, and to require the nonattainment 

area SIPs by three years of the 

designation.

Accordingly, today’s proposal 

requires the submittal of the upwind 

transport SIPs before the downwind 

nonattainment area SIPs will be due. 

This sequence is consistent with the 

provisions of both section 110(a)(1)–(2), 

which provides that the submittal 

period for the transport SIPs runs from 

the earlier date of the NAAQS revision; 

and section 172(b), which provides that 

the submittal period for the 

nonattainment area SIPs runs from the 

later date of designation. 

The earlier submittal date for 

transport SIPs is also consistent with 

sound policy considerations. The 

upwind reductions required today will 

facilitate attainment planning by the 

downwind States. Further, most of the 

downwind States that will benefit by 

today’s rulemaking are themselves 

upwind contributors to problems further 

downwind, and, thus, are subject to the 

same requirements as the States further 

upwind. The reductions these 

downwind States must implement due 

to their additional role as upwind States 

will help reduce their own PM2.5 and 8-

hour ozone problems on the same 

schedule as emissions reductions for the 

upwind States. 

2. Implementation Schedule 

Section 110(a)(2)(D) requires SIPs to 

‘‘contain adequate provisions * * * 

prohibiting * * * [emissions that] will 

* * * contribute significantly to 

nonattainment in * * * any other State. 

***’’ The phrase ‘‘will * * * 

contribute significantly’’ suggests that 

EPA should establish the significance of 

the emissions’ contribution, and require 

their prohibition, as of a time in the 

future. However, the provision does not, 

by its terms, indicate the applicable date 

in the future; nor does it address the 

future period of time. 

For today’s proposal, EPA believes 

that determining significant 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4625

89These budget approaches authorize trading 

among sources, but other control methodologies, 

such as emission rate controls, may also authorize 

trading. See U.S. EPA, ‘‘Improving Air Quality with 

Economic Incentive Programs,’’ (January 2001).

contribution as of 2010, and requiring 

implementation of the reductions by 

January 1, 2010, is a reasonable 

application of the statutory provisions. 

As discussed in section VI, emissions 

controls for EGUs may be feasibly 

implemented by that time. As a result, 

January 1, 2010 is the date by which we 

can confidently predict that highly costeffective emission reductions from 

EGUs can begin, considering cost 

broadly to encompass many factors, 

including engineering feasibility and 

electricity supply reliability risks. 

Emissions reductions by this date will 

also provide significant air quality 

benefits to the downwind 

nonattainment areas. We expect that the 

attainment date for numerous 

downwind areas will be 2010 or later, 

so that these reductions will facilitate 

attainment. For ozone nonattainment 

areas, the reductions will reduce the 

amount of nonattainment. For PM2.5

nonattainment areas, the reductions will 

have the same effect, and help bring 

those areas into attainment. Indeed, we 

believe that the anticipation of the 

optional trading program beginning in 

2010 will create incentives for 

reductions in SO2 emissions prior to 

that date. Therefore, today’s proposal 

will have benefits for progress towards 

attainment with the PM2.5 NAAQS in 

the years between finalization of this 

rule and 2010. Further discussion of 

these air quality benefits is included in 

section IX. 

As discussed in section VI, feasibility 

considerations warrant deferring a 

portion of the emissions reductions to 

2015. As discussed in section IX, these 

reductions will provide air quality 

benefits at that time, as well, and, as in 

the case with the 2010 emission 

reductions, we expect that the 

anticipation of tighter controls will 

likely lead to SO2 emissions reductions 

prior to 2015.

B. State Implementation Plan 

Requirements 

Today’s proposal requires States to 

submit SIPs that contain controls 

sufficient to eliminate specified 

amounts of emissions. The EPA 

determined these amounts through the 

application of highly cost-effective 

controls to the EGU source category. 

The amount of the emissions reduction 

is determined by comparing the amount 

of EGU emissions in the base case—that 

is, in the absence of controls—to the 

amount of emissions after 

implementation of the controls. Section 

VI contains a more detailed discussion 

of the process for determining the 

amounts of emissions in the base case. 

As noted elsewhere, EPA is gathering 

information concerning certain other 

source categories. However, EPA does 

not, at present, have information upon 

which to propose a determination that 

any other source categories may achieve 

specific emissions reductions at a cost 

that could be considered highly cost 

effective. 

To achieve the required amount of 

emissions reductions, States may 

impose emission limits on other 

sources—in addition to EGUs—if they 

choose. The EPA is considering what 

additional requirements are needed to 

ensure that these limits are met. 

Overarching considerations include 

whether the requirements (i) provide 

certainty that all emissions that EPA 

determined to contribute significantly 

will be eliminated both at the State and 

regional level; (ii) ensure that 

contributions will continue to be 

eliminated in future years; and (iii) 

ensure that the control requirements can 

be feasibly implemented. 

The EPA considered two main 

approaches to the SIP requirements: a 

budget (i.e., cap) approach, and an 

emission reduction approach. The EPA 

is proposing a hybrid approach that we 

believe incorporates the best elements of 

both approaches while minimizing the 

shortfalls of both approaches. 

1. The Budget Approach 

In its most rigorous form, a budget 

approach would require a statewide cap, 

that is, the capping of aggregate 

emissions from all source categories in 

each State. Mechanisms would be set up 

to ensure that the overall budget was not 

exceeded. These mechanisms could 

require individual source categories to 

meet sub-budgets or could provide for 

emission shifting between source 

categories. Subjecting each State 

throughout the region to aggregate 

emissions budgets would provide great 

certainty that the amount of emissions 

identified as contributing significantly 

to nonattainment had been eliminated. 

This approach would also assure that 

the significant contribution was fully 

addressed for future years because any 

increase in activity across all emission 

sources would have to occur within the 

budget, that is, without generating 

additional emissions. If all States 

applied such an approach, it would also 

assure that emissions from a source 

within a given source category would be 

permanently reduced and not merely 

shifted to another source within the 

region, as could occur if sources in one 

State were controlled under a budget 

but similar sources in another State 

were not. 

A less rigorous approach would 

require enforceable budgets for only 

some source categories, namely, those 

that were required to make the 

emissions reductions. Under this 

approach, there would be less certainty 

that all States will continue to not 

contribute significantly (in terms of the 

air quality component) in future years 

because growth in overall emissions 

may still occur.

The U.S. EPA and State 

environmental agencies have 

successfully applied budget approaches 

to certain source categories and groups 

of source categories. For instance, the 

title IV requirements of the CAA applied 

a SO2 budget to most large EGUs. The 

Ozone Transport Commission (OTC) 

NOX budget trading program applied an 

ozone season NOX budget to large EGUs 

and non-EGU boilers and turbines, and 

many States have adopted the same 

approach to meet the requirements of 

the NOX SIP Call.89 These successes 

demonstrate that budget programs can 

work for large stationary sources. These 

types of sources can accurately monitor 

emissions at the unit level, and these 

sources are manageable in number, so 

that overall emissions can be 

determined using this unit level data.

On the other hand, there has been 

virtually no experience with budget 

programs for mobile and area sources, 

due to challenges in accounting for 

emissions from these types of sources. 

Emissions from these sources are 

typically estimated using emission 

factors and estimated emission data, so 

that there is much less certainty about 

the accuracy of these amounts of 

emissions. Additionally, monitoring at 

the unit level and tracking unit level 

emissions would be much more difficult 

because of the large number of small 

sources involved. 

As noted above, EPA believes that 

there are benefits from requiring a State 

to impose a cap on EGUs. We also 

believe that there would be benefits 

from requiring a State to impose a cap 

on any source category on which the 

State imposes controls. One benefit 

would be a permanent limit on the 

amount of emissions from that category 

to assure the reductions in emissions 

that significantly contribute to 

nonattainment in affected downwind 

States. We solicit comment on the 

approach of requiring States to impose 

caps on any source categories which the 

State chooses to regulate under the rule 

proposed today. 

4626 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

90 It should be noted that even if a State uses a 

budget approach for a source category within the 

State, it is possible that production may shift to 

another part of the transport region, so that the 

State’s claimed emission reductions may in fact 

simply represent emissions shifted to another part 

of the transport region.

2. The Emissions Reduction Approach 

Under the emissions reduction 

approach, SIPs must impose control 

requirements that typically consist of an 

emission rate limit or, possibly, 

application of a specified type of 

technology, but not an emissions cap. 

These control requirements, when 

implemented by the affected sources in 

the implementation years, must result in 

the amount of emission reductions that 

EPA required through the highly costeffective calculations described in 

section VI. 

This approach is most useful when a 

State chooses to apply the control 

requirements to a source category for 

which current source-monitoring 

methods do not permit specific 

emissions quantification for each 

source, and for which shifts in 

emissions-generating activity are 

unlikely to result from the control 

program. This limitation in the 

methodology may result because, among 

other possible reasons, (i) the source’s 

emissions generating activities are of a 

type for which no accurate 

quantification methodology exists; (ii) 

such a methodology would be 

unreasonably expensive to apply to the 

source; or (iii) the sources are too 

numerous. 

Even so, to ensure that the desired 

emissions reductions are achieved, this 

methodology requires accurate baseline 

emission estimates, which, as a practical 

matter, may be difficult to develop in 

light of the uncertainties in estimating 

emissions from the affected source 

types. If the baseline estimates are high, 

States may achieve credit for emissions 

reductions they will not in fact achieve 

(by reducing emissions to a certain 

emission rate from the incorrectly high 

baseline emission rate). Additionally, 

while this approach may assure similar 

emissions reductions to the budget 

approach in the early years following 

implementation, growth in activity 

levels in the controlled source 

categories would likely lead to growth 

in emissions in later years, which in 

turn may adversely affect downwind 

nonattainment areas. 

Although the emissions reduction 

approach has limitations, EPA believes 

it is the most workable approach for 

some source categories, such as mobile 

and area sources, for which there is 

little or no experience in using the 

budget approach and for which the 

available emissions quantification 

techniques are too imprecise to support 

the budget approach. 

3. The EPA’s Proposed Hybrid 

Approach 

The EPA proposes today to require 

each affected State to submit a SIP 

containing control requirements that 

will assure a specified amount of 

emissions reductions. These amounts 

would be computed with reference to 

specified control levels for EGUs, which 

EPA has determined to be highly cost 

effective. 

States may meet their emissions 

reduction requirements by imposing 

controls on any source category they 

choose. If they choose the EGU source 

category, they must impose a cap 

because this category may feasibly 

implement a cap. If States choose to get 

emissions reductions from other source 

categories, they may implement the 

emissions reduction approach, that is, 

they need not implement caps, but 

rather may implement other forms of 

controls. Even so, EPA strongly 

encourages States to control source 

categories for which workable budget 

programs can be developed, and to 

require the budget approach for those 

sources to which it can feasibly be 

applied.90

The EPA is proposing specific 

requirements that States must meet, 

depending on which source categories 

they choose to control. These 

requirements are intended to provide as 

much certainty as possible that the 

controls will eliminate the amounts of 

significant contributions. 

a. Requirements if States Choose To 

Control EGUs 

As explained above, States must 

apply the budget approach if they 

choose to control EGUs. That is, they 

must cap EGUs at the level that assures 

the appropriate amount of reductions. 

We believe that this is the preferable 

approach for complying with today’s 

proposed rule. 

Moreover, as discussed in sections VI 

and VIII, States that choose to allow 

their EGUs to participate in EPAadministered interstate SO2 and NOX

emissions trading program must adhere 

to EPA’s model trading rules, which we 

intend to propose in the SNPR. For SO2

sources, these rules will require the 

States to allocate control obligations to 

sources in a manner that mirrors the 

sources’ title IV allowance allocations, 

although EPA is considering certain 

variations that are described in section 

VI. 

With respect to monitoring, 

recordkeeping, and reporting 

requirements, most EGUs are already 

subject to the requirements of 40 CFR 

part 75 to demonstrate compliance with 

the title IV SO2 provisions. In addition, 

many EGUs are also subject to part 75 

due to SIP requirements under the NOX

SIP Call. The EPA believes that part 75 

provides accurate and transparent 

accounting of emissions from this 

source category. Therefore, EPA 

proposes to require States, if they apply 

controls to EGUs, to subject EGUs to the 

requirements of part 75. 

As explained in sections VI and VIII, 

today’s proposed SO2 emissions 

reductions requirement, when applied 

to EGUs subject to the title IV allowance 

programs, would result in a cap that, in 

turn, would create surplus title IV 

allowances. These surplus allowances, 

if allowed to be traded, may have 

adverse impacts in and outside of the 

States directly affected by today’s 

proposal. In particular, the large number 

of these allowances that become 

available may depress their price, which 

may lead to even more of them being 

purchased and used in States not 

affected by today’s proposed rule. 

To prevent these impacts, EPA is 

proposing that SIPs assure that the 

State’s title IV allowances exceeding the 

emissions that the State’s EGUs may 

emit under the rule proposed today are 

not used in a manner that undermines 

the rule proposed today. As a practical 

matter, SIPs may need to require the 

retirement or elimination of certain of 

the title IV allowances. The number of 

retired or eliminated allowances may 

well equal the difference between the 

number of title IV allowances allocated 

to a State and the SO2 budget that the 

State sets for EGUs under today’s 

proposed rule. For example, assume that 

a State’s EGUs are allocated a total 5,000 

SO2 allowances under title IV (each 

allowance authorizes one ton of SO2

emissions). Assume further that today’s 

proposed rule requires the State to 

reduce its SO2 emissions by 2,500 tons. 

Assume even further that the State 

chooses to achieve all of the required 

reductions from EGUs, beginning 

January 1, 2010. Under these 

circumstances, the SIP must include a 

mechanism to retire or eliminate the 

remaining 2,500 allowances. 

The EPA believes that this proposed 

requirement to retire or eliminate 

surplus allowances applies regardless of 

whether or not a State participates in 

the EPA-managed trading system. If the 

State does not participate in the EPAmanaged trading system, it may choose 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4627

91Of course, the State may be obligated to submit 

SIP revisions covering other source categories under 

applicable CAA provisions other than section 

110(a)(2)(D).

92http://www.epa.gov/airmarkets/business/

noxsip/atlanta/atl03.html.

the specific method to retire or 

eliminate surplus allowances from its 

sources. If it chooses the EPA-managed 

trading system, it must adhere to the 

provisions of the model trading rule, 

which are broadly outlined in section 

VIII.

States may allow EGUs to 

demonstrate compliance with the State 

EGU SO2 emission budget by using (i) 

allowances that were banked (that is, 

issued for years earlier than the year in 

which the source is demonstrating 

compliance), or (ii) title IV allowances 

from the same year purchased from 

sources in other States. 

b. Requirements if States Choose To 

Control Sources Other Than EGUs 

If a State chooses to require emissions 

reductions from only EGUs, then its SIP 

revision submitted under the rule 

proposed today need contain only 

provisions related to EGUs, as described 

above. The State need not adopt or 

submit, under the rule proposed today, 

any other provisions concerning any 

other source categories.91

On the other hand, if a State chooses 

to require emissions reductions from 

sources other than EGUs, the State must 

adopt and submit SIP revisions, and 

supporting documentation, designed to 

quantify the amount of reductions from 

the sources and to assure that the 

controls will achieve that amount of 

reductions. The EPA is not proposing 

today that the State be required to cap 

those sources. However, EPA solicits 

comment on whether to require States 

that choose to control sources other than 

EGUs to cap those sources. 

To demonstrate the amount of 

emissions reductions from the 

controlled sources, the State must take 

into account the amount of emissions 

attributable to the source category both 

(i) in the base case—that is, in the 

implementation year (2010 and 2015) 

without assuming SIP-required 

reductions from that source category 

under today’s proposed rule—and (ii) in 

the control case. Both scenarios (base 

case and control case) are necessary to 

determine the amount of emissions 

reductions that will result from the 

controls. As noted above, section VI 

contains a more detailed discussion of 

the process for determining the amounts 

of emissions in the base case. 

The EPA intends to propose in the 

SNPR monitoring, recordkeeping, and 

reporting requirements for sources other 

than EGUs. Further, EPA intends to 

include proposed rule language for 

these requirements. Commenters will 

have an opportunity to comment 

following publication of the SNPR. As a 

result, EPA is not soliciting comment on 

this subject now. Even so, EPA intends 

to consider any comments submitted on 

this subject that commenters may wish 

to submit. 

VIII. Model Cap and Trade Program

In today’s action, we are outlining 

multi-State cap and trade programs for 

SO2 and NOX that States may choose as 

a cost-effective mechanism to achieve 

the required air emissions reductions. 

Use of these cap and trade programs 

will not only ensure that emissions 

reductions under the proposed 

rulemaking are achieved, but also 

provide the flexibility and cost 

effectiveness of a market-based system. 

This section provides background 

information, a description of the cap 

and trade programs, and an explanation 

of how the cap and trade programs 

would interface with other State and 

Federal programs. It is EPA’s intent to 

propose model SO2 and NOX cap and 

trade rules in a future SNPR that States 

could adopt. 

By adopting the model rules, States 

choose to participate in the cap and 

trade programs, which are a fully 

approvable control strategy for 

achieving emissions reductions required 

under today’s proposed rulemaking. 

Should a State choose to participate in 

the cap and trade programs, EPA’s 

authority to cooperate with and assist 

the State in the implementation of the 

cap and trade program(s) would reside 

in both State law and the CAA. With 

respect to State law, any State that elects 

to participate in the cap and trade 

programs as part of its SIP will be 

authorizing EPA to assist the State in 

implementing the cap and trade 

program with respect to the regulated 

sources in that State. With respect to the 

CAA, EPA believes that the Agency’s 

assistance to those States that choose to 

participate in the cap and trade 

programs will facilitate the 

implementation of the programs and 

minimize any administrative burden on 

the States. One purpose of title I of the 

CAA is to offer assistance to States in 

implementing title I air pollution 

prevention and control programs (42 

U.S.C. 101(b)(3)). In keeping with that 

purpose, section 103(a) and (b) generally 

authorize EPA to cooperate with and 

assist State authorities in developing 

and implementing pollution control 

strategies, making specific note of 

interstate problems and ozone transport. 

Finally, section 301(a) grants EPA broad 

authority to prescribe such regulations 

as are necessary to carry out its 

functions under the CAA. Taken 

together, EPA believes that these 

provisions of the CAA authorize EPA to 

cooperate with and assist the States in 

implementing cap and trade programs to 

reduce emissions of transported SO2

and NOX that contribute significantly to 

ozone and PM2.5 nonattainment. 

To inform the current rulemaking 

process, EPA recently hosted two 

workshops in July and August of 2003 

to listen to States and multi-State air 

planning organization’s experience with 

the NOX SIP Call program to date: What 

has worked well, what may not have 

worked well, and what could be 

improved. (The EPA Web site 92

provides information on these 

workshops.) Workshops such as these 

have played an important role in the 

development and implementation of the 

NOX SIP Call and will help in the 

development of this rule.

This section in today’s action 

describes, on a generally conceptual 

level, the cap and trade program. EPA 

will publish, in a future SNPR, a more 

detailed description of the proposed 

rules, as well as model rules. As a 

result, EPA is not soliciting comment on 

this section in today’s action. Interested 

persons will have a full opportunity to 

comment on all aspects of this cap and 

trade program through the SNPR. Even 

so, EPA recognizes that continued 

stakeholder input on the cap and trade 

programs described in this section may 

be useful concerning the programmatic 

implications of addressing multiple 

environmental issues (i.e., PM2.5 and 

ozone) with synchronized cap and trade 

programs for SO2 and NOX. 

Accordingly, EPA intends to review 

comments that may be submitted on all 

of the program elements described in 

today’s NPR. 

A. Application of Cap and Trade 

Approach 

1. Purpose of the Cap and Trade 

Programs and Model Rules

In the cap and trade programs, EPA is 

proposing to jointly implement with 

participating States a capped marketbased program for EGUs to achieve and 

maintain an emissions budget consistent 

with the proposed rulemaking. 

Specifically, EPA has designed today’s 

proposal to assist States in their efforts 

to: (1) Improve air quality and achieve 

the emissions reductions required by 

the proposed rulemaking; (2) offer 

compliance flexibility for regulated 

sources; (3) reduce compliance costs for 

sources controlling emissions; (4) 

4628 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

93U.S. EPA, EPA Acid Rain Program: 2002 

Progress Report (EPA 430–R–03–011), November 

2003. Available at http://www.epa.gov/airmarkets/

cmprpt/arp02/2002report.pdf.

streamline the administration of 

programs to reduce multiple pollutants 

for States; and (5) ensure that emission 

reductions are occurring and that results 

are publicly available. In addition to 

realizing these benefits of a cap and 

trade program, EPA also seeks to create 

as simple a regulatory regime as 

possible by applying a single, 

comprehensive regulatory approach to 

controlling multiple pollutants across 

multiple jurisdictions. 

Beyond choosing to use a cap and 

trade program, State adoption of the 

model rule would ensure consistency in 

certain key operational elements of the 

program among participating States. 

Uniformity of the key operational 

elements across the region is necessary 

to ensure a viable and efficient cap and 

trade program with low transaction 

costs and minimum administrative costs 

for sources, States, and EPA. (These 

necessary elements are discussed in 

section B.3.). States will continue to 

have flexibility in other important 

program elements (e.g., allowance 

allocations, inclusion of additional 

measures to address persistent local 

attainment issues). 

2. Benefits of Participating in a Cap and 

Trade Program 

a. Advantages of Cap and Trade Over 

Command-and-Control 

When designed and implemented 

properly, a cap and trade program offers 

many advantages over traditional 

command-and-control and project-byproject emission reduction credit 

trading programs. There are several 

advantages of a well-designed cap and 

trade system that include: (1) Control of 

emissions to desired levels under a 

fixed cap that is not compromised by 

future growth; (2) high compliance 

rates; (3) lower cost of compliance for 

individual sources and the regulated 

community as a whole; (4) incentives 

for early emissions reductions; (5) 

promotion of innovative compliance 

solutions and continued evolution of 

generation and pollution control 

technology; (6) flexibility for the 

regulated community (without resorting 

to waivers, exemptions and other forms 

of administrative relief that can delay 

emissions reductions); (7) direct legal 

accountability for compliance by those 

emitting; (8) coordinated program 

implementation that efficiently applies 

administrative resources while 

enhancing compliance; and (9) 

transparent, complete, and accurate 

recording of emissions. These benefits 

result primarily from the rigorous 

framework established by a cap and 

trade program that provides flexibility 

in compliance options available to 

sources and the monetary reward 

associated with avoided emissions in a 

market-based system. The cost of 

compliance in a market-based program 

is reduced because sources have the 

freedom to pursue various compliance 

strategies, such as switching fuels, 

installing pollution control 

technologies, or buying emission 

allowances from a source that has overcomplied. Since reducing emissions to 

levels below the allocations for a source 

allows them to sell excess allowances 

on the market, this program promotes 

cost effective pollution prevention, and 

encourages innovations in less-polluting 

alternatives and control equipment. 

A market-based system that employs 

a fixed, enforceable tonnage limitation 

(or cap) for a source or group of sources 

provides the greatest certainty that a 

specific level of emissions will be 

attained and maintained. With respect 

to transport of pollution, an emissions 

cap also provides assurance to 

downwind States that emissions from 

upwind States will be effectively 

managed over time. The capping of total 

emissions of pollutants over a region 

and through time ensures achievement 

of the environmental goal while 

allowing economic growth through the 

development of new sources or 

increased use of existing sources. In an 

uncapped system (where, for example, 

sources are required only to 

demonstrate that they meet a given 

emission rate) the addition of new 

sources to the regulated sector or an 

increase in activity at existing sources 

can increase total emissions even 

though the desired emission rate control 

is in effect. 

In addition, the reduced 

implementation burden for regulators 

and affected sources benefits taxpayers 

and those who must comply with the 

rules. This streamlined administration 

allows a relatively small number of 

government employees to successfully 

manage the emissions of many sources 

by (1) minimizing the necessity for caseby-case decisions, and (2) taking full 

advantage of electronic communication 

and data transfer to track compliance 

and develop detailed inventories of 

emissions and plant operations. 

b. Application of the Cap and Trade 

Approach in Prior Rulemakings 

i. Title IV

Title IV of the CAA Amendments of 

1990 established the Acid Rain Program, 

a program that utilizes a market-based 

cap and trade approach to require power 

plants, to reduce SO2 emissions by 50 

percent from 1980. At full 

implementation after 2010, emissions 

will be limited, or capped, at 8.95 

million tons in the contiguous United 

States. The Acid Rain SO2 Program is 

widely acknowledged as a model air 

pollution control program because it 

provides significant and measurable 

environmental and human health 

benefits with low implementation costs. 

Individual units are directly allocated 

their share of the total allowances—each 

allowance is an authorization to emit a 

ton of SO2—based upon historical 

records of the heat content of the fuel 

that they combusted in 1985–1987. 

Units that reduce their emissions below 

the number of allowances they hold, 

may trade excess allowances on the 

open market or bank them to cover 

emissions in future years. Allowances 

may be purchased through the open 

market or at EPA-managed auctions. 

Each affected source is required to 

surrender allowances to cover its 

emissions each year. Should any source 

fail to hold sufficient allowances, 

automatic penalties apply. In addition 

to financial penalties, sources either 

will have allowances deducted 

immediately from their accounts or, if 

this would interfere with electric 

reliability, may submit a plan to EPA 

that specifies when allowances will be 

deducted in the future. 

The Acid Rain Program requires 

affected sources to install systems that 

continuously monitor emissions. The 

use of continuous emissions monitoring 

systems (CEMS) is an important 

component of the program that allows 

both EPA and sources to track progress, 

ensure compliance, and provide 

credibility to the cap and trade 

component of the program. 

While title IV does provide for an 

Acid Rain Permit, this is a simple 

permit that does not incorporate source 

specific requirements, but rather 

requires the source to comply with the 

standard rules of the program. The Acid 

Rain Permit has been easily 

incorporated into the title V permit 

process and does not require the 

typically resource intensive, case-bycase review associated with other 

permits under command-and-control 

programs. 

The Acid Rain Program has achieved 

major SO2 emissions reductions, and 

associated air quality improvements, 

quickly and cost effectively. In 2002, 

SO2 emissions from power plants were 

10.2 million tons, 41 percent lower than 

1980.93 (2002 Acid Rain Progress 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4629

94Ozone Transport Commission. NOX Budget 

Program 1999–2002 Progress Report, March 2003. 

Available at http://www.epa.gov/airmarkets/otc/

otcreport.pdf.

95Environmental Law Institute (http://

www.epa.gov/airmarkets/ articles/so2tradinghotspots_charts/pdf), Environmental Defense (http:/

/www.environmentaldefense.org/ documents/

645_SO2.pdf) and MIT’s Center for Energy and 

Environmental Policy Research (http://web.mit.edu/

ceepr/www/2003–015.pdf).

Report.) These emission reductions have 

translated into substantial reductions in 

acid deposition, allowing lakes and 

streams in the Northeast to begin 

recovering from decades of acid rain. In 

addition, substantial improvements in 

air quality have occurred under the 

Acid Rain Program. Fine particle 

exposures have been reduced, providing 

significant benefits to public health. 

These benefits include the annual 

reduction of thousands of premature 

mortalities, thousands of cases of 

chronic bronchitis, thousands of 

hospitalizations for cardiovascular and 

respiratory diseases.

Cap and trade under the Acid Rain 

Program has created financial incentives 

for electricity generators to look for new 

and low-cost ways to reduce emissions, 

and improve the effectiveness of 

pollution control equipment, at costs 

much lower than predicted. The cap on 

emissions, automatic penalties for 

noncompliance, and stringent emissions 

monitoring and reporting requirements 

ensure that environmental goals are 

achieved and sustained, while allowing 

for flexible compliance strategies which 

take advantage of trading and banking. 

The level of compliance under the Acid 

Rain Program continues to be 

uncommonly high, measuring over 99 

percent. 

ii. Ozone Transport Commission NOX

Budget Program 

The Ozone Transport Commission’s 

(OTC) NOX Budget Program was a cap 

and trade program to reduce NOX

emissions from power plants and other 

large combustion sources in the 

Northeast. The OTC was established 

under the CAA Amendments of 1990 to 

help States in the Northeast and MidAtlantic region meet the NAAQS for 

ground-level ozone. The NOX Budget 

Program set a regional budget on NOX

emissions from power plants and other 

large combustion sources during the 

ozone season (from May 1 through 

September 30) beginning in 1999. 

The OTC NOX Budget Program has 

significantly reduced NOX emissions 

from large combustion facilities in the 

Northeast and Mid-Atlantic region with 

total regional emissions in 2002 

approximately 60 percent below 1990 

levels; well under target levels. 

Significant reductions in ozone season 

NOX emissions have occurred in all 

States across the region. In addition, the 

emission reductions have proven to be 

cost effective with the cost of NOX

allowances stabilized below original 

projections.94

The OTC States generally folded their 

SIP requirements under the OTC NOX

Budget Program into the SIP revisions 

they submitted with the NOX SIP Call. 

The NOX Budget Program was 

incorporated into the NOX SIP Call. The 

2003 ozone season marked the first year 

of compliance with the NOX SIP Call for 

the OTC States. 

iii. NOX SIP Call

The NOX SIP Call, finalized in 1998, 

requires ozone season (i.e., 

summertime) NOX reductions across a 

region which includes most of the OTC 

States and southeastern and midwestern 

States that were found by EPA to have 

sources that contribute significantly to 

another State’s ongoing ozone NAAQS 

nonattainment problems. The NOX SIP 

Call proposed a cap and trade program 

as a way to make cost-effective NOX

reductions. Each of the States required 

to submit a NOX SIP under the NOX SIP 

Call chose to adopt the cap and trade 

program regulating large boilers and 

turbines. Each State based its cap and 

trade program on a model rule 

developed by EPA. This model rule 

included key elements such as the use 

of continuous emissions monitoring 

(CEMS) and 40 CFR part 75 monitoring 

and reporting requirements, and a single 

party that is legally responsible for 

compliance. Some States essentially 

adopted the full model rule as is, while 

other States adopted the model rule 

with changes to the sections that EPA 

specifically identified as areas in which 

States may have some flexibility. The 

NOX SIP Call cap and trade program, 

modeled closely after the OTC NOX

Budget Program takes effect in 2004. 

When it does so, it expands from the 

OTC States to eleven additional States 

in 2004. The EPA intends to draw 

heavily upon this and other experience 

in developing model SO2 and NOX cap 

and trade programs. 

c. Regional Environmental 

Improvements Achieved Using Cap and 

Trade Programs 

One concern with emissions trading 

programs is that the flexibility 

associated with trading might allow 

sources or groups of sources to increase 

emissions, resulting in areas of elevated 

pollution or ‘‘hot spots.’’ The 

environmental results observed under 

the Acid Rain Program have instead 

indicated that the combination of 

trading with a stringent emissions cap 

results in substantial reductions 

throughout the region, with the greatest 

reductions achieved in the areas where 

pollution was originally the highest. 

Since 1990, SO2 and sulfate 

concentrations at CASTNET sites have 

been reduced substantially in the areas 

where concentrations were highest 

before the Acid Rain Program. (Acid 

Rain Program Progress Report 2002). All 

sites in the East showed reductions in 

SO2 and sulfate 3 year average 

concentrations between 1990–1992 and 

2000–2002. The largest decreases in SO2

concentrations were observed at sites 

where SO2 emissions and monitored 

SO2 concentrations were highest before 

the program (from Illinois, to northern 

West Virginia, across Pennsylvania, to 

western New York). CASTNET sites 

throughout the broader eastern region 

also show a substantial reduction in 

sulfate concentrations, with the largest 

decreases in sulfate levels occurring 

along the Ohio River Valley from 

Illinois to West Virginia, Pennsylvania, 

and the mid-Atlantic states. 

Independent analyses, in addition to 

those conducted by EPA, have shown 

that emissions trading under this type of 

program has not resulted in the creation 

of ‘‘hot spots’’ because trading has 

resulted in emissions reductions being 

achieved in areas where emissions were 

highest before the program.95 The 

Environmental Law Institute, 

Environmental Defense, and the 

Massachusetts Institute of Technology’s 

Center for Energy and Environmental 

Policy have all examined emissions 

trading under the Acid Rain Program 

and none have concluded that the 

program has resulted in hot spots of 

high emissions. To the contrary, the 

highest emitting sources have tended to 

reduce emissions by the greatest 

amount. This is the case, in part, 

because trading occurs under a 

nationwide cap that represents a 

reduction in total emissions and 

improvements in regional air quality. 

The flexibility of a cap and trade system 

provides a mechanism for achieving 

established emission goal(s)at lowest 

possible cost. The most cost effective 

opportunities for reductions are at the 

larger, more efficient coal-fired units 

that have modest (or no) controls and 

are geographically dispersed.

Further support for trading actually 

reducing ‘‘hot spots’’ was found by 

Resources for the Future. Resources for 

the Future, a non-partisan 

environmental advocacy group, 

4630 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

96http://www.rff.org/CFDOCS/disc_papers/

PDF_files/9925.pdf

modeled air quality and health benefits 

under the trading program and under a 

non-trading scenario and found that 

trading actually resulted in additional 

benefits because emissions reductions 

took place in areas where they were 

more environmentally effective.96

Cap and trade programs are designed 

to reduce emissions of numerous 

polluting sources by significant amounts 

over large geographic areas. The trading 

mechanism does not replace the 

requirement to meet the NAAQSs at the 

local level, but rather helps achieve this 

requirement through significant 

reductions in background pollution. 

Thus, State and local governments will 

continue to have the obligation and the 

authority under the CAA to assure that 

the NAAQS are met.

Nearly 10 years of experience with the 

Acid Rain Program for SO2 has clearly 

demonstrated that market-based cap and 

trade programs are an effective vehicle 

for achieving broad improvements in air 

quality by reducing emissions of a 

regionally transported air pollutant. 

More recently, the OTC’s regional NOX

program also has shown the value of a 

cap and trade approach for NOX

reductions. The more stringent SO2 and 

NOX caps proposed in this rulemaking 

will build on this track record of 

success. 

B. Considerations and Aspects Unique 

to the SO2 Cap and Trading Program 

1. SO2 Cap and Trade Program 

Overview 

This section of today’s proposal 

outlines an SO2 cap and trade program 

which builds upon the concepts applied 

in the cap and trade programs described 

in section VIII.A. This section discusses 

elements unique to the proposed SO2

trading program, paying particular 

attention to those aspects that 

significantly differ from the 

corresponding provisions in existing 

programs. (Additional details on the 

SO2 and NOX trading program may be 

found in section VIII.D, which describes 

major program elements that must be 

consistent across States in order for EPA 

to implement a trading program.) 

While key considerations and 

program elements are outlined in 

today’s proposed rule, a complete model 

cap and trade rule will be proposed by 

EPA in a future SNPR. In addition to a 

model rule, the SNPR will address other 

issues such as allocations and voluntary 

measures for States to address persistent 

local non-attainment issues. 

The proposed SO2 cap and trade 

program would apply to the large power 

generators in the transport region. (See 

section VI of today’s rule for a 

discussion of the emission budgets and 

the core sources.) States would have 

some flexibility to include other sources 

or source categories in the trading 

program should they demonstrate their 

ability to measure the emissions from 

these other sources to the same 

standards required of the core trading 

sources. 

The units affected by today’s SO2 rule 

are already regulated by EPA. EPA is 

committed to a transition that ensures 

continued environmental progress, 

preserves the integrity of existing 

emission trading markets, and 

minimizes confusion and cost for the 

public, sources and regulators. Section 

VIII.B.2 below discusses the interactions 

between today’s proposal and existing 

programs by presenting analysis and 

implementation options. A discussion 

of the applicable sources is contained in 

section VIII.D.1. 

2. Interactions With Existing Title IV 

Acid Rain SO2 Cap and Trade Program 

As discussed above, title IV of the 

CAA requires reductions in SO2

emissions from power plants to abate 

acid rain and improve public health 

using a cap and trade approach. Further, 

title I of the CAA requires EPA to help 

States develop and design 

implementation plans to meet the 

NAAQS. To achieve that end, today’s 

action proposes a regional rule to reduce 

ambient concentrations of PM2.5, as 

mandated by the CAA. The SO2 program 

establishes a model cap and trade 

system for reducing emissions that 

States can adopt in order to help meet 

the NAAQS. 

As EPA developed this regulatory 

action, great consideration was given to 

interactions between the existing title IV 

program and a rulemaking designed to 

achieve significant reductions in SO2

emissions beyond title IV. Requiring 

sources to reduce emissions beyond the 

title IV mandates has implications for 

the existing title IV SO2 program which 

are both environmental and economic. 

In the absence of a method for 

incorporating the statutory requirements 

of title IV, a rule that imposes a tighter 

cap on SO2 emissions for a particular 

region of the country would likely result 

in an excess supply of title IV 

allowances and the potential for 

increased emissions in the area not 

subject to the more stringent emission 

cap. The potential for increased 

emissions exists in the entire country 

for the years prior to the proposed 

implementation deadline and would 

continue after implementation for any 

areas not affected by the proposed rule. 

These excess emissions could negatively 

affect air quality, disrupt allowance 

markets, and erode confidence in cap 

and trade programs. 

In view of the significant reductions 

in SO2 emissions under title IV of the 

CAA, the large investments in pollution 

controls that firms have made under 

title IV that enable companies to sell 

excess emissions reductions, and the 

potential for emissions increases, it 

became a priority to think of ways to 

preserve the environmental benefits 

achieved through title IV and maintain 

the integrity of the title IV market for 

SO2 allowances. 

In addition, EPA does not have 

authority to remove the statutory 

requirements of title IV and must work 

within the context of the existing CAA 

to further reduce emissions of SO2

through a new rule. Title IV has 

successfully reduced emissions of SO2

using the cap and trade approach, 

eliminating millions of tons of SO2 from 

the environment. Building off this 

existing program to further improve air 

quality by requiring additional 

reductions of SO2 emissions is 

appropriate.

The EPA has developed an approach 

to incorporate the title IV SO2 market to 

ensure that the desired reductions under 

this rule are achieved in a manner 

consistent with the previously stated 

environmental goals. The following 

sections provide more detail on EPA’s 

initial analysis of the interactions 

between the title IV Acid Rain program 

and this proposal outlines a solution for 

creating a rule that builds off of title IV. 

Initial Analysis 

Initial analytical work shows that a 

more stringent cap on SO2 emissions in 

the eastern part of the country, that is 

separate from the title IV cap, would 

create an excess supply of title IV 

allowances nationwide as sources in 

that eastern region comply with a tighter 

requirement than title IV and no longer 

need as many title IV allowances. As a 

result of this excess supply, all title IV 

allowances would lose value. This 

impact on the title IV market results in 

(1) an incentive to use all banked title 

IV allowances prior to implementation 

of the rule as firms anticipate the value 

of allowances dropping essentially to 

zero and (2) emission increases outside 

the region after rule implementation 

because those sources would be able to 

obtain title IV allowances at essentially 

no cost. 

b. Emissions Increases Prior to 

Implementation of the Proposed Rule 

The EPA expects that the number of 

banked (i.e., the retention of unused 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4631

allowances from one calendar year for 

use in a later calendar year) title IV 

allowances will be in the millions of 

tons at the end of 2009 in the absence 

of the rule. The actual number of 

allowances banked will depend upon 

future economic growth and the 

independent decisions of the sources 

between now and 2010, and EPA will 

continue to evaluate emissions trends 

and the bank prior to finalizing the rule. 

Should the rule not permit the use of 

banked title IV allowances in the 

program, the banked allowances would 

likely be expended during the years 

prior to implementation of the rule. This 

could cause over 1 million tons per year 

of additional SO2 emissions, 

nationwide, that could be emitted above 

levels projected in the absence of a rule. 

c. Consideration for Emissions Shifting 

Outside the Control Region 

Title IV sources outside the more 

stringently regulated region would be 

able to obtain title IV allowances from 

sources affected by the rule at very low 

cost after the commencement of the 

program. The flow of inexpensive, 

abundant allowances out of an area with 

more stringent emission control 

requirements is referred to as ‘‘leakage’’

and would likely result in increased 

emissions outside the region. In essence, 

sources outside of the region would not 

face a binding title IV constraint on their 

emissions of SO2 due to the potential 

availability of abundant allowances 

provided by sources inside of the 

control region. Though certain State and 

local requirements or physical 

constraints would mitigate the problem 

of emissions increases outside the 

region, meaningful increases would be a 

possibility. Emissions increases outside 

the region would worsen air quality in 

those areas and could potentially negate 

some of the reductions achieved in the 

region. 

The potential for leakage is dependent 

upon the size of the region. The large 

eastern trading region proposed in 

today’s rule—which is based upon 

addressing PM2.5—is not likely to result 

in significant leakage because the region 

is large enough to take advantage of the 

physical limitations in the electricity 

grid that prevent large power 

movements from the East to the West (or 

vice versa) through the Western 

Interconnect. 

d. Desired Outcomes in the Design of 

the Cap and Trade Rule 

The proposed cap and trade program 

will be designed to meet three primary 

goals: (1) Achieving environmental 

goals; (2) preserving and potential 

strengthening of allowance trading 

markets; and (3) providing the flexibility 

to incorporate additional jurisdictions 

and types of sources in the future, while 

maintaining the integrity of the cap and 

allowance markets.

First and foremost, the proposed cap 

and trade program must be designed to 

improve air quality to protect the 

public’s health and the environment. To 

accomplish this, the program must 

address the potential for emission 

leakage, require credible emission 

monitoring and reporting, and provide 

for source accountability. 

Preservation of the benefit of the title 

IV allowance market (i.e., a solution that 

would maintain or even increase the 

economic value of title IV allowances) 

would eliminate the incentive to 

increase emissions prior to the start of 

the program and ease the administrative 

transition. Incorporating title IV creates 

incentives for earlier reductions by title 

IV sources and may create incentives for 

title IV sources not included in the rule 

to maintain, or even reduce, emissions 

of SO2 both before and after the rule 

goes into effect. In addition, it sends a 

clear signal to sources that have already 

made investments in pollution control 

equipment that the allowance market is 

sound and will continue to operate. 

The proposed cap and trade solution 

must provide opportunities for 

incorporating additional sources (e.g., 

non-title IV sources, other source 

categories) and States, during 

promulgation and in the future. 

Designing a cap and trade program that 

can include these additional sources 

creates the potential to achieve 

additional environmental benefit and/or 

reduce the program’s total cost. 

e. Discussion of Possible Solutions 

The EPA explored several options for 

addressing the coordination of title IV 

and the proposed rule consistent with 

the objective of minimizing emissions 

increases and providing a mechanism of 

allocating allowances to sources lacking 

any title IV allocations. One option 

would establish a separate cap and trade 

program for SO2 that would require the 

retirement of surplus title IV allowances 

for the rule (i.e., the difference between 

total title IV allocations and the trading 

budget for a given State under the rule). 

Sources would have to comply with 

both programs independently, and 

States would have flexibility in 

allocating the newly created allowances 

to non-title IV sources. Although this 

option could be designed so as to 

maintain the value of title IV allowances 

once the new cap and trade program 

begins under the rule, thus minimizing 

leakage, it would not address banked 

title IV allowances accumulated before 

implementation of the program, 

resulting in possible emissions increases 

prior to rule implementation. 

Another option would allow for 

conversion of title IV allowances into 

separate allowances under a new cap 

and trade program. This conversion 

would be applied at a specific ratio (e.g., 

two-to-one) that yields the desired 

emission reductions, and could be 

applied to both banked and current title 

IV allowances. By complying with the 

rule and submitting more than one title 

IV allowance for every ton emitted, a 

source would be in compliance with 

both programs. New allowances could 

be created to give States flexibility with 

SO2 allocations, but the conversion ratio 

would need to be adjusted to 

incorporate these new allowances. This 

solution presents some challenges, such 

as establishing the proper conversion 

ratio and the need to adjust the cap 

under the rule to account for the 

converted allowances. In addition, the 

uncertainty surrounding how many 

banked allowances would be converted 

poses challenges when designing the 

cap and trade rule. 

f. Proposed Approach 

A third option and the approach 

proposed here best addresses the three 

principles identified above. It would 

require sources to use title IV 

allowances directly for compliance with 

the rule in a way that maintains the 

downward trend in emissions 

throughout the country, preserves the 

existing SO2 allowance market, and 

allows the inclusion of non-title IV 

sources, now and in the future.

Title IV sources in the region would 

be required to comply with the rule by 

using more than one title IV allowance 

for every ton emitted (e.g., a two-to-one 

ratio). EPA would propose to amend the 

title IV rules in a future SNPR so that 

sources that comply with the rule would 

be deemed in compliance with title IV 

since by submitting allowances at a 

greater than one-to-one ratio, a source 

would be going beyond what title IV 

required. The requirement to submit 

more than one allowance for every ton 

emitted is, in effect, a reduction of the 

title IV cap. The specific ratio would be 

determined based on the amount of 

emissions to be allowed for the region. 

The ratio, in essence, would reflect the 

cap levels and determine the ultimate 

emissions in the region. Section VIII.B.3 

below, discusses a methodology that 

could be used to provide allowances to 

EGUs that were not allocated 

allowances under title IV. 

While EPA is not currently proposing 

to require sources other than EGUs to be 

part of the cap and trade program, EPA 

4632 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

believes that this approach could also 

allow other sources to participate in the 

cap and trade program. States electing to 

include additional sources could 

develop mechanisms to provide them 

with access to allowances through 

auctions or direct allocations. (This is 

discussed in greater detail in section 

VIII.B.3.) 

i. Using Pre-2010 Banked Title IV 

Allowances in Proposed SO2 Cap and 

Trade Program 

Under the proposed approach, title IV 

allowances could be banked before the 

2010 implementation date for use in the 

new program. Pre-2010 title IV 

allowances banked prior to 2010 could 

be used at a one-to-one ratio for 

compliance at any time. This provides 

incentives to reduce emissions before 

the 2010 implementation date because 

sources would want to ease the 

transition to the more stringent caps in 

2010 and thereafter. However, it should 

be noted that these allowances could 

then be used in later years, delaying the 

amount of time until the ultimate cap 

level is achieved. 

ii. Proposed Ratios and the Phasing of 

the Caps 

The proposed SO2 program would 

allow: (1) Pre-2010 allowances to be 

used at a one-to-one ratio; (2) 2010 

through 2014 allowances to be used at 

a two-to-one; and (3) 2015 and later 

allowances to be used at a three-to-one 

ratio. Since title IV allowances are 

already identified by serial numbers that 

indicate the year the allowance is first 

allowed to be used, it is possible to use 

different retirement ratios for 

allowances of different vintages. The 

progressively more stringent, phased-in 

nature of the rule will be reflected in the 

proposed cap and trade program by 

adjusting the ratio for retiring 

allowances in each phase. EPA 

developed these ratios to achieve the 

emissions reductions as described in 

section VI with careful consideration 

given to the title IV bank, State EGU 

budgets, and phasing in order to create 

ratios that are consistent with the 

objectives of the rule. The ratios, in 

effect, tighten the existing title IV cap. 

States choosing to participate in the 

cap and trade program must require 

sources to submit title IV allowances at 

the ratios set in the model rule. 

The EPA projects that using 2010 to 

2014 vingtage title IV allowances at a 

ratio of two-to-one and post 2014 

allowances at a ratio of three-to-one in 

the second phase will produce the 

desired emission reductions for SO2. 

These ratios are projected to lead 

sources to bank roughly an additional 

10.5 million allowances prior to 2010. 

Vintage year allowances 2009 and 

earlier are projected to be used starting 

in 2010 at an average rate of 1.3 million 

per year. 

The value of title IV allowances is 

projected to increase to $400 during the 

first phase, and to fall to $330 during 

the second phase, according to EPA 

modeling. In other words, sources in the 

region would face a marginal cost of 

$805 per ton of emissions in the first 

phase at a two-to-one ratio and $989 in 

the second phase at a three-to-one ratio. 

The marginal cost numbers presented 

here are generated from EPA modeling 

of this rule, looking specifically at the 

interactions with title IV. 

3. Allowance Allocations 

a. Statewide Cap and Trade Budgets 

Today’s rule proposes statewide EGU 

SO2 emission budgets (detailed in 

section VI) that States may allocate. 

Discretion in the allocation of this 

budget to title IV units (which constitute 

a majority of the EGUs) that already 

receive allowances under title IV is 

somewhat limited for States because the 

existing title IV SO2 allocation 

provisions explicitly allocate 

allowances to specific units. Therefore, 

as a practical matter, States that wish to 

participate in an EPA-managed 

interstate trading program will not have 

as much flexibility in developing their 

SO2 allocation methodology for title IV 

units that already receive allowances 

than they will with NOX allocations. 

b. Determination of SO2 Allowance 

Allocations for EGUs Not Receiving 

Title IV Allowances

As discussed in section VI (Statewide 

Emissions Budgets), States will have the 

flexibility to address equity issues for 

newer units that do not receive title IV 

allowances. However, as mentioned 

above, because title IV allocates 

virtually all of the Acid Rain Program 

allowances directly to individual 

sources, any State electing to provide 

allowances to newer sources would 

have to develop a mechanism that 

creates an excess of allowances after the 

initial allocation. One potential remedy 

is a mechanism that creates a Statemanaged pool of allowances from EGUs 

within that State by either: (1) Requiring 

in-State EGUs that receive title IV 

allowances to surrender allowances at a 

rate tighter than today’s rule retirement 

ratio and transferring this overage to the 

State (e.g., an EGU would retire 2 

allowances and surrender 1 allowance 

for every ton emitted); or, (2) tightening 

the retirement ratio for in-State EGUs 

that receive title IV allowances and 

providing for EPA to create new SO2

allowances, the total being equal to or 

less than the overage, that are issued to 

the new sources (e.g., an EGU would 

retire 3 allowances for every ton emitted 

and EPA would issue a new SO2

allowance to the new source). EPA 

intends to assist States by providing a 

more detailed discussion of allocation 

alternatives in a future SNPR. 

Should States decide to allocate 

allowances to these newer EGUs, States 

would be given latitude in determining 

how they would distribute them from 

the pool of allowances for EGUs that 

receive title IV allowances. States may 

choose to hold an allowance auction or 

distribute allowances directly to 

sources. Should a State decide to 

allocate allowances, it would have 

flexibility in selecting the method upon 

which the allocation share is 

determined. Common methods for 

allocating allowances include: 

(1) Actual emissions (in tons) from the 

unit, 

(2) Actual heat input (in mmBtu) of 

the unit, and 

(3) Actual production output (in terms 

of electricity generation and/or steam 

energy) of the unit. 

Each of these options has variations, 

including the use of allowance setasides, and may be implemented with 

allocations performed on a permanent 

or an updating basis. 

The details of specific allocation 

options will be presented in greater 

detail in the future SNPR. 

C. Consideration and Aspects Unique to 

the NOX Cap and Trade Program 

1. NOX Cap and Trade Program 

Overview 

The NOX cap and trade program 

would be substantially similar, in its 

basic requirements and procedures, to 

the SO2 cap and trade program 

described above. However, some 

components of a proposed NOX cap and 

trade program are unique to its 

implementation in the context of 

existing regional NOX control programs. 

This section describes those unique 

components. Because the authority for 

the existing NOX cap and trade 

programs exists at the State level and 

are not constrained by intricate title IV 

interactions, States may have more 

flexibility to revise their existing rules 

than they would have in complying 

with the proposed SO2 program. Section 

VIII.D discusses elements of the cap and 

trade programs that are common to both 

the SO2 and NOX programs. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4633

97See Virginia v. EPA, 108 F.3d 1397 (D.C. Cir. 

1997).

2. Interactions with the NOX SIP Call 

Cap and Trade Program and the Title IV 

NOX Program 

This section discusses specific 

implementation issues related to 

transitioning from existing regional NOX

control programs to today’s proposed 

NOX cap and trade program. 

a. Geographic Scope 

States in the Proposed Region. Ideally, 

the NOX and SO2 cap and trade program 

regions would be identical. However, 

the geographic boundaries of the NOX

cap and trade program must be related 

to the contribution made by emissions 

sources to the interstate transport of 

NOX as it affects non-attainment of 

PM2.5 and ozone standards. While the 

PM2.5 standard of most interest is 

annual, the ozone standard is an 8-hour 

duration with exceedances in the 

summer season. Therefore, EPA is 

proposing a NOX trading region that 

applies to those States affected by the 

PM2.5 finding; a region which 

encompasses virtually the same region 

as would be affected by the ozone 

findings with the exception of the State 

of Connecticut. Furthermore, EPA is 

proposing to allow the State of 

Connecticut, which is required to 

reduce only summertime NOX

emissions to address ozone under 

today’s action, to participate in the EPAmanaged NOX cap and trade program on 

an annual basis. In addition, EPA 

proposes to allow other States currently 

participating in EPA-managed, ozone 

season, NOX cap and trade programs to 

join the year-round NOX cap and trade 

program on an annual basis. If States 

chose to participate on an annual basis, 

EPA will determine corresponding 

annual budgets. 

States Outside the Proposed Region 

with Existing Regional NOX Cap and 

Trade Programs. There are three States 

that participate in the existing regional 

NOX trading market that would not be 

affected by today’s proposed ozone or 

PM2.5 rules: New Hampshire (as part of 

the OTC), and Massachusetts and Rhode 

Island (as part of the NOX SIP Call). 

These States would be allowed and 

encouraged to voluntarily participate in 

the NOX cap and trade program under 

today’s rules in order to minimize 

administrative burden and simplify 

compliance for sources. Both the OTC 

and NOX SIP Call are ozone season only 

compliance programs. Any States 

choosing to participate in an EPAmanaged program proposed today, 

would be required to participate on an 

annual basis if they choose to 

participate in the proposed NOX cap 

and trade program.

b. Seasonal-to-Annual Compliance 

Period 

The NOX SIP Call regulates NOX

emissions during an ‘‘ozone season’’

that lasts from May 1 through 

September 30. The proposed rule 

requires annual NOX reductions. As 

explained in section VI, EPA analysis 

shows that under the proposed annual 

caps, EGUs in the NOX SIP Call region 

would emit less during the ozone season 

than they were allowed to emit under 

the NOX SIP Call. 

c. Revision of Existing State NOX SIP 

Call Rules 

The EPA plans to design the model 

cap and trade rule in such a way that 

States that are part of the NOX SIP Call 

will be able to modify their State rules 

to include the new provisions and new 

NOX caps, and States that are not 

currently part of the NOX SIP Call will 

be able to adopt the model rule language 

for the new program. Transition issues, 

such as new NOX caps and applicability 

will be discussed thoroughly in the 

SNPR. 

d. Retention of Existing Title IV NOX

Emission Rate Limits 

Title IV requires coal-fired EGUs to 

meet average annual NOX emission 

rates. These requirements would remain 

in effect after the 2010 compliance 

deadline for this proposed rule. EPA 

analysis shows that under the more 

stringent NOX cap of today’s rule, the 

title IV NOX limits would not be binding 

for most units. Therefore, the limits 

would not interfere with the ability of 

the NOX trading market to find the leastcost reductions. However, without a 

statutory change, the title IV NOX

program remains in effect and sources 

would have to continue to comply with 

its administrative requirements. 

e. The NOX Allowance Banking 

The NOX emission allowance trading 

market being administered by EPA for 

the NOX SIP Call States has been active 

and we wish to make the transition to 

the NOX program proposed today as 

simple as possible. For that reason, any 

entity holding existing NOX allowances 

will be able to bank them and carry 

them forward into the new, proposed 

cap and trade program. While EPA 

believes it is important to provide this 

compliance flexibility for sources, it is 

unlikely that many sources will take 

advantage of this mechanism because 

the projected future value of NOX

allowances under the proposed cap and 

trade program is less than under the 

existing NOX cap and trade programs. 

3. NOX Allocations 

Within each State participating in the 

proposed NOX cap and trade program, 

the statewide EGU budget (described in 

section VI of today’s proposal) would 

form the basis for NOX allocations. 

Unlike SO2 allocations that are heavily 

dictated by the interaction between the 

proposed SO2 cap and trade program 

and title IV, there are many allocation 

options that States could consider for 

distributing NOX allowances. 

There is a variety of allocation 

approaches that address equity issues 

and provide opportunities for States to 

encourage specific behaviors. This 

would include flexibility in how often 

the allocations are updated (i.e., a onetime permanent allocation or one that is 

periodically updated) and the process 

metric upon which the allocation share 

is determined. As described below in 

section VIII.D.4, States participating in 

an EPA-managed program would be 

required to be consistent in the deadline 

for finalizing their source-by-source 

allocation. 

The details of specific allocation 

options will be more fully developed 

and presented in detail in the future 

SNPR. 

4. Joining Both SO2 and NOX Cap and 

Trade Programs for States Voluntarily 

Participating 

The participation by States in both the 

EPA-managed NOX cap and trade 

program and the EPA-managed SO2

program offers administrative 

advantages to EPA and, we think, 

maximizes cost-effectiveness to the 

sources. We encourage each State to 

participate in both programs, and we 

think that, as a practical matter, many 

States will elect to do so. 

We would like, in the SNPR, to 

propose to require that States that elect 

to participate in the EPA-managed NOX

cap and trade program be required to 

participate in the EPA-managed SO2

program, and vice-versa. However, we 

are concerned that this requirement may 

be considered to intrude upon the 

prerogatives of the States in developing 

their SIPs.97 We solicit comment on this 

question.

D. Cap and Trade Program Aspects That 

Are Common to Both the SO2 and NOX

Programs 

Sections VIII.B and VIII.C discussed 

key considerations that are unique to 

the proposed SO2 and NOX cap and 

trade programs, respectively. This 

section presents elements of a cap and 

trade program that must be a part of a 

4634 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

State’s rule—for both the SO2 and NOX

programs—if it wishes to participate in 

the regional cap and trade program. As 

noted earlier, EPA intends to provide a 

detailed discussion and propose model 

rules in the future SNPR. Although EPA 

is not soliciting comment on the 

discussion in this section VIII, and 

instead will provide a full opportunity 

to comment on the SNPR, EPA 

recognizes that some may wish to 

comment on today’s discussion. As 

such, commenters are encouraged to 

focus on the implications of addressing 

multiple environmental problems (i.e., 

PM2.5 and ozone).

1. Applicability 

Applicability, or the group of sources 

that the regulations will affect, must be 

similar from State-to-State to minimize 

confusion, administrative burdens, and 

emission leakage. 

a. Core Applicability 

As discussed in section VI, we have 

determined State EGU emission 

reduction requirements (which are 

sometimes referred to as ‘‘budgets’’) 

assuming reductions from large EGUs 

(e.g. boilers and turbines serving an 

electrical generator with a nameplate 

capacity exceeding 25MW and 

producing power for sale). States must 

include these core sources if they wish 

to participate in the regional cap and 

trade program. While States have 

discretion to achieve the required 

reduction levels by regulating other 

sources, EPA analysis identified EGUs 

as appropriate candidates for achieving 

the mandated reductions. If a State 

chooses to regulate other source 

categories, EPA is proposing that these 

source categories can be included in the 

cap and trade program only if EPA and 

the State agree that each source category 

can meet all of the requirements that are 

mandated for EGUs (e.g., monitoring 

according to 40 CFR part 75 and the 

ability to clearly assign legal 

responsibility for compliance). 

Once a unit is classified as an EGU for 

purposes of this rule, the unit will 

remain classified as an EGU regardless 

of any future modifications to the unit. 

If a unit serving a generator that initially 

does not qualify as an EGU (based on 

the nameplate capacity) is later 

modified to increase the capacity of the 

generator to the extent that the unit 

meets the definition of EGU, this unit 

shall be considered an EGU for purposes 

of this rule. This approach is proposed 

to prevent sources from derating units 

for the purpose of avoiding regulation. 

2. Allowance Management System, 

Compliance, Penalties, and Banking 

The allowance management system, 

compliance, penalties and banking are 

all components of the accounting 

system that enables the functioning of a 

cap and trade program. An accurate, 

efficient accounting system is critical to 

an emissions trading market. 

Transparency of the system, allowing all 

interested parties access to the 

information contained in the accounting 

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. 

In order to guarantee the equitable 

treatment of all affected sources across 

the trading region, the elements 

included in this section need to be 

incorporated in the same manner in 

each State that participates in the cap 

and trade program. 

a. Allowance Management 

The EPA intends to propose a model 

cap and trade rule that will be 

reasonably consistent with the existing 

allowance tracking systems that are 

currently in use for the Acid Rain 

Program under title IV and the NOX

Budget Trading Program under the NOX

SIP Call. These two systems are called 

the Allowance Tracking System (ATS) 

and the NOX Allowance Tracking 

System (NATS), respectively. Under the 

cap and trade rule, the SO2 program and 

the NOX program would remain 

separate trading programs maintained in 

ATS and NATS. Both ATS and NATS 

would remain as automated systems 

used to track SO2 and NOX allowances 

held by affected units under the cap and 

trade program, as well as those 

allowances held by other organizations 

or individuals. Specifically, ATS and 

NATS would track the allocation of all 

SO2 and NOX allowances, holdings of 

SO2 and NOX allowances in accounts, 

deduction of SO2 and NOX allowances 

for compliance purposes, and transfers 

between accounts. The primary role of 

ATS and NATS is to provide an 

efficient, automated means of 

monitoring compliance with the cap 

and trade programs. ATS and NATS 

also provide the allowance market with 

a record of ownership of allowances, 

dates of allowance transfers, buyer and 

seller information, and the serial 

numbers of allowances transferred. 

b. Compliance 

Compliance in the cap and trade 

program consists of the deduction of 

allowances from affected facilities’

accounts to offset the quantity of 

emissions at the facilities for each 

compliance period. Currently under the 

Acid Rain and regional NOX cap and 

trade programs, compliance is assessed 

at the unit level. Some flexibility is 

allowed in the NOX program through 

the use of overdraft accounts. Both EPA 

and the regulated community find that, 

in practice, overdraft accounts and their 

use can be quite complicated and do not 

significantly reduce the burden of unitlevel accounting. EPA is considering an 

approach that assesses compliance at 

the facility level in the proposed cap 

and trade program. More discussion of 

this option will be included in the 

future SNPR. 

c. Penalties

The EPA plans to propose a system of 

automatic penalties should a facility not 

obtain sufficient NOX or SO2 allowances 

to cover emissions for the compliance 

period. In order to offset this deficiency 

in allowances, a facility must surrender 

allowances allocated for a future year 

equal in amount to the deficiency in 

allowances for the current compliance 

period. In addition, EPA will propose 

that an automatic penalty be imposed in 

addition to this offset in order to 

provide a strong incentive for facilities 

to hold sufficient allowances. The 

automatic penalty provisions will not 

limit the ability of the permitting 

authority or EPA to take enforcement 

action under State law or the CAA, but 

will establish for the regulated 

community the immediate, minimum 

economic consequences of 

noncompliance. 

d. Banking 

Banking is the retention of unused 

allowances from one calendar year for 

use in a later calendar year. Banking 

allows sources to make reductions 

beyond required levels and ‘‘bank’’ the 

unused allowances for use later. 

Generally speaking, banking has several 

advantages: it can encourage earlier or 

greater reductions than are required 

from sources, stimulate the market and 

encourage efficiency, and provide 

flexibility in achieving emissions 

reduction goals. On the other hand, it 

may result in banked allowances being 

used to allow emissions in a given year 

to exceed the cap and trade program 

budget. Banking of allowances from the 

Acid Rain and regional NOX cap and 

trade programs into the proposed cap 

and trade program is discussed above in 

section VIII.B.2.f(i) for Acid Rain and 

above in section VIII.C.2.e. for the NOX

SIP Call. 

Based on the experience of both the 

SO2 and NOX cap and trade programs, 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4635

EPA plans to propose in the future 

SNPR that the banking of allowances 

after the start of the cap and trade 

program be allowed with no restrictions. 

3. Accountability for Affected Sources 

Key to the success of existing cap and 

trade programs and the integrity of the 

allowance trading markets has been 

clear accountability for unit emissions. 

This takes the form of affected units 

officially designating a specific person 

(and alternate) as responsible for the 

official certification of all allowance 

transfers and emissions monitoring and 

reporting as submitted to EPA in 

quarterly compliance reports. With each 

quarterly submission, this responsible 

party must certify that: the monitoring 

data were recorded in compliance with 

the monitoring and reporting 

requirements, including quality 

assurance testing and missing data 

procedures; and, the emission and 

operational reports are true, accurate, 

and complete.

The cap and trade program to be 

proposed in the future SNPR will 

include provisions to provide for the 

same strict standards for source 

accountability established in the Acid 

Rain Program and the NOX SIP Call. 

This will include provisions for the 

establishment of an Authorized Account 

Representative. Adoption of these 

provisions will be required by all States 

that wish to participate in the cap and 

trade program. 

4. Allowance Allocation Timing 

The SNPR will propose requirements 

for when a State would finalize 

allowance allocations for each control 

period in the cap and trade program and 

submit them to EPA for inclusion into 

the ATS and NATS. The timing 

requirements ensure that all units 

would have equal and sufficient time to 

plan for compliance for each control 

period and equal time to trade 

allowances. The requirement would also 

contribute to the efficient 

administration of the trading program. 

By establishing this schedule at the 

outset of the cap and trade program, 

both the States and EPA would be able 

to develop internal procedures for 

effectively implementing the allowance 

provisions of the trading program. The 

timing requirements would ensure that 

EPA would be able to record in the ATS 

and NATS the allowance allocations for 

the budget units in all participating 

States at the same time for each control 

period. 

5. Emissions Monitoring and Reporting 

Monitoring and reporting of an 

affected source’s emissions are integral 

parts of any cap and trade program. 

Consistent and accurate measurement of 

emissions ensures each allowance 

actually represents one ton of emissions 

and that one ton of reported emissions 

from one source is equivalent to one ton 

of reported emissions from another 

source. This establishes the integrity of 

the allowance and instills confidence in 

the market mechanisms which are 

designed to provide sources with 

flexibility in achieving compliance. 

Given the variability in the type, 

operation and fuel mix of sources in the 

cap and trade program, EPA believes 

that to ensure the needed accuracy and 

consistency, emissions must be 

monitored continuously. For many 

sources, this accuracy and consistency 

is achieved through the use of 

continuous emissions monitors (CEMS); 

however, alternative monitoring 

methodologies are appropriate for 

certain types of sources. The continuous 

emissions monitoring methods must 

also incorporate rigorous quality 

assurance procedures (e.g., periodic 

testing to ensure continued accuracy of 

the measurement method). 

Additionally, in order to account for all 

emissions at all times, provisions for 

estimating emissions during times when 

monitors are unavailable because of 

planned and unplanned outages are also 

necessary. Part 75 of the Acid Rain 

regulations (40 CFR part 75) sets forth 

monitoring and reporting requirements 

for both SO2 and NOX mass emissions 

and includes the additional provisions 

necessary for a cap and trade program. 

Part 75 is used in both the Acid Rain 

and NOX SIP Call programs. 

In an effort to ensure program 

integrity, EPA proposes to require States 

to include year round part 75 

monitoring and reporting for SO2 and 

NOX for all sources. Monitor 

certification deadlines and other details 

will be specified in the model cap and 

trade rule. The EPA believes that 

emissions will then be consistently and 

accurately monitored and reported from 

unit to unit and from State to State. 

Part 75 also specifies reporting 

requirements. The EPA proposes to 

require year-round, quarterly reporting 

of emissions and monitoring data from 

each unit at each affected facility. The 

EPA proposes a single quarterly report. 

The single report will include hourly 

emissions information for both SO2 and 

NOX emissions on a quarterly basis in 

a format specified by the Agency. The 

reports must be in an electronic data 

reporting (EDR) format and be submitted 

to EPA electronically using EPA’s 

Emissions Tracking System (ETS). This 

coordinated reporting requirement is 

necessary to ensure consistent review, 

checking, and posting of the emissions 

and monitoring data at all affected 

sources, which contributes to the 

integrity and efficacy of the trading 

program. 

Many sources affected by this 

rulemaking are already meeting the 

requirements of part 75. Impacts on 

different types of sources will be 

discussed thoroughly in the SNPR. 

E. Inter-Pollutant Trading 

Cap and trade programs can 

incorporate mechanisms for 

interpollutant trading when more than 

one pollutant contributes to the same 

environmental problem. While the 

proposed cap and trade programs would 

control SO2 to address PM2.5 and NOX

for both PM2.5 and ozone, EPA solicits 

comment on whether SO2 allowances 

and NOX allowances should be 

interchangeable, and if so, at what ratio 

should the allowances be 

interchangeable. The main advantage of 

inter-pollutant trading is that it presents 

regulated entities with more flexibility 

in meeting compliance, thus reducing 

the costs of compliance. If the relative 

air quality impact of the two pollutants 

on the environmental issue (i.e., PM2.5

or ozone)is known, then inter-pollutant 

trading set at this ratio will achieve the 

same total air quality impact. There are 

many technical difficulties involved 

with incorporating an effective interpollutant trading mechanism, and EPA 

solicits opinions on the feasibility of 

addressing these concerns:

(1) What should be the exchange rate 

(i.e., the transfer ratio) for the two 

pollutants? 

(2) How can this transfer ratio best 

reflect the goals of achieving PM2.5 and 

ozone attainment in downwind States? 

(3) How would inter-pollutant trading 

accommodate the different geographic 

regions covered for SO2 and NOX under 

the proposed rule? 

IX. Air Quality Modeling of Emissions 

Reductions 

A. Introduction 

In this section, we describe the air 

quality modeling performed to 

determine the projected impacts on 

PM2.5 and 8-hour ozone of the regional 

SO2 and NOX emissions reductions in 

today’s proposal. The regional 

emissions reductions are associated 

with State emissions budgets in 2010 

and 2015, as explained in section VI. 

The impacts of the regional reductions 

in 2010 and 2015 are determined by 

comparing air quality modeling results 

for each of these regional control 

scenarios to the modeling results for the 

corresponding 2010 and 2015 Base Case 

4636 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

98 In addition, summer season only EGU NOX

controls are proposed for Connecticut which 

significantly contributes to ozone, but not PM2.5

nonattainment in other States.

99The modeled scenario reduces EGU emissions 

in the five New England States not covered by 

today’s proposal by less than 3,000 tons per year. 

In the 15 States located to the west of the region 

covered by today’s proposal, total EGU SO2

emissions decline by 17 percent.

100 ‘‘Air Quality Modeling Technical Support 

Document for the Proposed Interstate Air Quality 

Rule’’ (January 2004), can be obtained from the 

docket for today’s proposed rule: OAR–2003–0053.

scenarios. A description of the 2010 and 

2015 Base Cases is provided in section 

IV. Note that neither the Base Cases nor 

the regional control strategy scenarios 

include any of the local control 

measures discussed in section IV. Also 

note that the 2015 Base Case does not 

include any 2010 emissions reductions 

from the regional strategy. 

The 2010 and 2015 regional strategy 

budgets cover emissions from the power 

generation sector in 29 eastern States 

plus the District of Columbia that 

contribute significantly to both PM2.5

and ozone nonattainment in downwind 

States.98 These annual SO2 and NOX

budgets are provided in section VI.

As described in section VI, EPA 

modeled a two-phase cap and trade 

strategy for SO2 and for NOX using the 

IPM to assess the impacts of the budgets 

in today’s proposal. For the purposes of 

air quality modeling, we used a scenario 

that assumes a 48-State SO2 trading area 

and SO2 allowances. Most of the SO2

emissions reductions in this scenario 

occur in the 28-State and DC control 

region; there are only small changes in 

nearly States not affected by today’s 

proposal.99 We do not expect these 

latter changes to actually occur; but, 

because they are only small changes, the 

results of using this IPM scenario are 

expected to be very similar to the actual 

results of today’s proposal. For NOX, 

EPA modeled a NOX trading scenario 

covering 31 States, DC, and the eastern 

half of Texas. The 31 States include 

Arkansas, Iowa, Louisiana, Minnesota, 

Missouri, and all other States to the east 

of these five States. Thus, the modeled 

strategy does not match the NOX

reductions required in today’s proposal 

for Kansas and western Texas. In 

addition, the modeled strategy includes 

NOX reductions in Maine, New 

Hampshire, Rhode Island, and Vermont 

which do not have any required 

reductions in today’s proposal.

Phase 1 of the regional strategy is 

forecast to reduce total EGU SO2

emissions in the 28-States plus DC by 40 

percent in 2010. Phase 2 is forecast to 

provide a 44 percent reduction in EGU 

SO2 emissions compared to the Base 

Case in 2015. When fully implemented, 

we expect today’s proposed rule to 

result in more than a 70 percent 

reduction in EGU SO2 emissions 

compared to current emissions levels. 

The net effect of the strategy on total 

SO2 emissions in the 28-State plus DC 

region, considering all sectors of 

emissions, is a 27 percent reduction in 

2010 and a 28 percent reduction in 

2015. For NOX, Phase 1 of the strategy 

is forecast to reduce EGU emissions by 

44 percent and total emissions by 10 

percent in the 28-States plus DC region 

in 2010. In Phase 2, EGU NOX emissions 

are projected to decline by 53 percent in 

2015. Total NOX emissions are projected 

to be reduced by 14 percent in 2015. 

The percent change in emissions by 

State for SO2 and NOX in 2010 and 2015 

for the regional strategy are provided in 

the Air Quality Modeling Technical 

Support Document (AQMTSD).100

B. The PM2.5 Air Quality Modeling of the 

Proposed Regional SO2 and NOX

Strategy 

The PM modeling platform described 

in section IV was used by EPA to model 

the impacts of the proposed SO2 and 

NOX emissions reductions on annual 

average PM2.5 concentrations. In brief, 

we ran the REMSAD model for the 

meteorological conditions in the year of 

1996 using our nationwide modeling 

domain. Modeling for PM2.5 was 

performed for both 2010 and 2015 to 

assess the expected effects of the 

proposed regional strategy in each of 

these years on projected PM2.5 design 

value concentrations and 

nonattainment. The procedures used to 

project future PM2.5 design values and 

nonattainment are described in section 

IV. The projected design values for each 

nonattainment county for the 2010 and 

2015 scenarios are provided in the 

AQMTSD. The counties that are 

projected to be nonattainment for the 

PM2.5 NAAQS are listed in Table IX–1 

for the 2010 Base Case and the 2010 

regional strategy scenario and in Table 

IX–2 for the 2015 Base Case and 2015 

regional strategy scenario. The projected 

2010 Base Case and control scenario 

PM2.5 design values are provided in 

Table IX–3. The projected 2015 Base 

Case and control PM2.5 design values are 

provided in Table IX–4. Concerning the 

future baseline concentrations, we 

expect improvement beyond 2015 based 

on the fact that the bank will be used 

up and further reductions are expected 

from the Heavy Duty Diesel Engines and 

Land-based Non-road Diesel Engines 

rules. Also, even those counties that 

remain nonattainment in 2015 after the 

controls in today’s rule will benefit from 

air quality improvements and lower 

concentrations of fine particles as a 

result of the SO2 and NOX emissions 

reductions in this rule.

TABLE IX–1.—PROJECTED PM2.5 NONATTAINMENT COUNTIES FOR 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State 2010 base case projected PM2.5 nonattainment counties 2010 regional strategy case projected PM2.5 nonattainment 

counties 

AL .......................... DeKalb, Jefferson, Montgomery, Russell, Talladaga ............. Jefferson, Russell, Talladaga. 

CT .......................... New Haven ............................................................................. None. 

DC .......................... Washington DC ...................................................................... None. 

DE .......................... New Castle ............................................................................. None. 

GA .......................... Clarke, Clayton, Cobb, DeKalb, Floyd, Fulton, Hall, 

Muscogee, Paulding, Richmond, Wilkinson.

Clarke, Clayton, Cobb, DeKalb, Floyd, Fulton, Muscogee, 

Wilkinson. 

IL ............................ Cook, Madison, St. Clair, Will ................................................ Cook, Madison, St. Clair. 

IN ........................... Clark, Marion .......................................................................... None. 

KY .......................... Fayette, Jefferson ................................................................... None. 

MD ......................... Baltimore City ......................................................................... None. 

MI ........................... Wayne .................................................................................... Wayne. 

MO ......................... St. Louis ................................................................................. None. 

NY .......................... New York (Manhattan) ........................................................... New York (Manhattan). 

NC .......................... Catawba, Davidson, Mecklenburg ......................................... None. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4637

TABLE IX–1.—PROJECTED PM2.5 NONATTAINMENT COUNTIES FOR 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS—Continued

State 2010 base case projected PM2.5 nonattainment counties 2010 regional strategy case projected PM2.5 nonattainment 

counties 

OH ......................... Butler, Cuyahoga, Franklin, Hamilton, Jefferson, Lawrence, 

Mahoning, Scioto, Stark, Summit, Trumbull.

Cuyahoga, Hamilton, Jefferson, Scioto, Stark. 

PA .......................... Allegheny, Berks, Lancaster, York ......................................... Allegheny. 

SC .......................... Greenville ............................................................................... None. 

TN .......................... Davidson, Hamilton, Knox, Roane, Sullivan .......................... Knox. 

WV ......................... Brooke, Cabell, Hancock, Kanawha, Marshal, Wood ............ None. 

TABLE IX–2.—PROJECTED PM2.5 NONATTAINMENT COUNTIES FOR 2015 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State 2015 base case projected PM2.5 nonattainment counties 2015 regional strategy case projected PM2.5 nonattainment 

counties 

AL .......................... Jefferson, Montgomery, Russell, Talladaga Jefferson, Russel. 

CT .......................... New Haven ............................................................................. None. 

GA .......................... Clarke, Clayton, Cobb, DeKalb, Floyd, Fulton, Hall, 

Muscogee, Richmond, Wilkinson.

Clayton, DeKalb, Fulton. 

IL ............................ Cook, Madison, St. Clair ........................................................ Cook. 

IN ........................... Clark, Marion .......................................................................... None. 

KY .......................... Jefferson ................................................................................. None. 

MD ......................... Baltimore City ......................................................................... None. 

MI ........................... Wayne .................................................................................... Wayne. 

NY .......................... New York County (Manhattan) ............................................... None. 

OH ......................... Butler, Cuyahoga, Franklin, Hamilton, Jefferson, Scioto, 

Stark, Summit 

Cuyahoga, Hamilton, Jefferson, Scioto. 

PA .......................... Allegheny, York ...................................................................... Allegheny. 

TN .......................... Hamilton, Knox ....................................................................... Knox. 

WV ......................... Brooke, Cabell, Hancock, Kanawha, Wood None. 

TABLE IX–3.—PROJECTED PM2.5 DESIGN VALUES FOR THE 2010 BASE CASE AND REGIONAL STRATEGY SCENARIOS

State County 2010 base 

case 

2010 regional 

control

strategy 

Alabama ........................................................................ DeKalb .......................................................................... 15.22 13.92 

Alabama ........................................................................ Jefferson ....................................................................... 20.03 18.85 

Alabama ........................................................................ Montgomery .................................................................. 15.69 14.60 

Alabama ........................................................................ Russell .......................................................................... 17.07 15.77 

Alabama ........................................................................ Talladega ...................................................................... 16.44 15.26 

Connecticut ................................................................... New Haven ................................................................... 15.43 14.50 

Delaware ....................................................................... New Castle ................................................................... 15.43 14.12 

District of Columbia ...................................................... District of Columbia ...................................................... 15.48 13.70 

Georgia ......................................................................... Clarke ........................................................................... 17.04 15.56 

Georgia ......................................................................... Clayton .......................................................................... 17.73 16.43 

Georgia ......................................................................... Cobb ............................................................................. 16.80 15.56 

Georgia ......................................................................... DeKalb .......................................................................... 18.26 16.92 

Georgia ......................................................................... Floyd ............................................................................. 16.99 15.65 

Georgia ......................................................................... Fulton ............................................................................ 19.79 18.37 

Georgia ......................................................................... Hall ................................................................................ 15.62 14.24 

Georgia ......................................................................... Muscogee ..................................................................... 16.68 15.41 

Georgia ......................................................................... Paulding ........................................................................ 15.40 14.17 

Georgia ......................................................................... Richmond ...................................................................... 15.99 14.65 

Georgia ......................................................................... Wilkinson ...................................................................... 16.68 15.51 

Illinois ............................................................................ Cook ............................................................................. 17.90 16.90 

Illinois ............................................................................ Madison ........................................................................ 16.41 15.33 

Illinois ............................................................................ St. Clair ......................................................................... 16.31 15.11 

Illinois ............................................................................ Will ................................................................................ 15.21 14.25 

Indiana .......................................................................... Clark ............................................................................. 15.86 14.34 

Indiana .......................................................................... Marion ........................................................................... 15.89 14.39 

Kentucky ....................................................................... Fayette .......................................................................... 15.21 13.55 

Kentucky ....................................................................... Jefferson ....................................................................... 15.79 14.23 

Maryland ....................................................................... Baltimore City ............................................................... 16.58 14.82 

Michigan ....................................................................... Wayne ........................................................................... 18.78 17.65 

Missouri ........................................................................ St. Louis City ................................................................ 15.25 14.14 

New York ...................................................................... New York ...................................................................... 16.30 15.25 

North Carolina .............................................................. Catawba ........................................................................ 15.26 13.87 

North Carolina .............................................................. Davidson ....................................................................... 15.52 14.22 

4638 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE IX–3.—PROJECTED PM2.5 DESIGN VALUES FOR THE 2010 BASE CASE AND REGIONAL STRATEGY SCENARIOS—

Continued

State County 2010 base 

case 

2010 regional 

control

strategy 

North Carolina .............................................................. Mecklenburg ................................................................. 15.18 13.92 

Ohio .............................................................................. Butler ............................................................................ 16.01 14.53 

Ohio .............................................................................. Cuyahoga ..................................................................... 19.13 17.68 

Ohio .............................................................................. Franklin ......................................................................... 16.69 15.04 

Ohio .............................................................................. Hamilton ........................................................................ 17.75 15.96 

Ohio .............................................................................. Jefferson ....................................................................... 18.04 16.06 

Ohio .............................................................................. Lawrence ...................................................................... 15.48 13.67 

Ohio .............................................................................. Mahoning ...................................................................... 15.39 13.76 

Ohio .............................................................................. Scioto ............................................................................ 18.40 16.33 

Ohio .............................................................................. Stark ............................................................................. 17.09 15.19 

Ohio .............................................................................. Summit .......................................................................... 16.35 14.71 

Ohio .............................................................................. Trumbull ........................................................................ 15.13 13.56 

Pennsylvania ................................................................ Allegheny ...................................................................... 19.52 16.92 

Pennsylvania ................................................................ Berks ............................................................................. 15.39 13.84 

Pennsylvania ................................................................ Lancaster ...................................................................... 15.46 13.71 

Pennsylvania ................................................................ York .............................................................................. 15.68 13.93 

South Carolina .............................................................. Greenville ...................................................................... 15.06 13.75 

Tennessee .................................................................... Davidson ....................................................................... 15.36 13.92 

Tennessee .................................................................... Hamilton ........................................................................ 16.14 14.74 

Tennessee .................................................................... Knox .............................................................................. 18.36 16.60 

Tennessee .................................................................... Roane ........................................................................... 15.18 13.69 

Tennessee .................................................................... Sullivan ......................................................................... 15.24 13.77 

West Virginia ................................................................ Brooke .......................................................................... 16.60 14.77 

West Virginia ................................................................ Cabell ............................................................................ 16.39 14.41 

West Virginia ................................................................ Hancock ........................................................................ 16.69 14.85 

West Virginia ................................................................ Kanawha ....................................................................... 17.11 14.81 

West Virginia ................................................................ Marshall ........................................................................ 15.53 13.25 

West Virginia ................................................................ Wood ............................................................................ 16.30 14.15 

TABLE IX–4.—PROJECTED PM2.5 DESIGN VALUES FOR THE 2015 BASE CASE AND REGIONAL STRATEGY SCENARIOS

State County 2015 base 

case 

2015 regional 

control

strategy 

Alabama ........................................................................ Jefferson ....................................................................... 19.57 18.11 

Alabama ........................................................................ Montgomery .................................................................. 15.35 14.05 

Alabama ........................................................................ Russell .......................................................................... 16.68 15.05 

Alabama ........................................................................ Talladega ...................................................................... 15.97 14.57 

Connecticut ................................................................... New Haven ................................................................... 15.13 14.13 

Georgia ......................................................................... Clarke ........................................................................... 16.46 14.58 

Georgia ......................................................................... Clayton .......................................................................... 17.26 15.49 

Georgia ......................................................................... Cobb ............................................................................. 16.28 14.37 

Georgia ......................................................................... DeKalb .......................................................................... 17.93 16.22 

Georgia ......................................................................... Floyd ............................................................................. 16.51 14.71 

Georgia ......................................................................... Fulton ............................................................................ 19.44 17.62 

Georgia ......................................................................... Hall ................................................................................ 15.05 13.16 

Georgia ......................................................................... Muscogee ..................................................................... 16.31 14.71 

Georgia ......................................................................... Richmond ...................................................................... 15.51 13.82 

Georgia ......................................................................... Wilkinson ...................................................................... 16.40 14.88 

Illinois ............................................................................ Cook ............................................................................. 17.52 16.40 

Illinois ............................................................................ Madison ........................................................................ 16.03 14.88 

Illinois ............................................................................ St. Clair ......................................................................... 15.91 14.67 

Indiana .......................................................................... Clark ............................................................................. 15.40 13.69 

Indiana .......................................................................... Marion ........................................................................... 15.31 13.79 

Kentucky ....................................................................... Jefferson ....................................................................... 15.32 13.57 

Maryland ....................................................................... Baltimore City ............................................................... 16.11 14.20 

Michigan ....................................................................... Wayne ........................................................................... 18.28 17.06 

New York ...................................................................... New York (Manhattan) ................................................. 15.82 14.69 

Ohio .............................................................................. Butler ............................................................................ 15.39 13.77 

Ohio .............................................................................. Cuyahoga ..................................................................... 18.58 17.05 

Ohio .............................................................................. Franklin ......................................................................... 16.18 14.46 

Ohio .............................................................................. Hamilton ........................................................................ 17.07 15.15 

Ohio .............................................................................. Jefferson ....................................................................... 17.49 15.51 

Ohio .............................................................................. Scioto ............................................................................ 17.62 15.49 

Ohio .............................................................................. Stark ............................................................................. 16.42 14.52 

Ohio .............................................................................. Summit .......................................................................... 15.78 14.14 

Pennsylvania ................................................................ Allegheny ...................................................................... 18.64 16.09 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4639

TABLE IX–4.—PROJECTED PM2.5 DESIGN VALUES FOR THE 2015 BASE CASE AND REGIONAL STRATEGY SCENARIOS—

Continued

State County 2015 base 

case 

2015 regional 

control

strategy 

Pennsylvania ................................................................ York .............................................................................. 15.13 13.26 

Tennessee .................................................................... Hamilton ........................................................................ 15.63 13.91 

Tennessee .................................................................... Knox .............................................................................. 17.73 15.59 

West Virginia ................................................................ Brooke .......................................................................... 16.10 14.26 

West Virginia ................................................................ Cabell ............................................................................ 15.70 13.71 

West Virginia ................................................................ Hancock ........................................................................ 16.18 14.33 

West Virginia ................................................................ Kanawha ....................................................................... 16.45 14.10 

West Virginia ................................................................ Wood ............................................................................ 15.58 13.49 

The results of the air quality modeling 

indicate that 61 counties in the East are 

expected to be nonattainment for PM2.5

in the 2010 Base Case. Of these 61 

counties, 38 are projected to come into 

attainment in 2010 following the SO2

and NOX emissions reductions resulting 

from the regional controls in today’s 

proposal. The 23 counties projected to 

remain nonattainment after the 

application of the regional strategy are 

expected to experience a sizeable 

reduction in PM2.5 from this strategy, 

which will bring them closer to 

attainment. Specifically, the average 

reduction in these 23 residual 2010 

nonattainment counties is 1.50 μg/m3

with a range of 0.93 to 2.60 μg/m3.

In 2015, the SO2 and NOX reductions 

in today’s proposal are expected to 

reduce the number of PM2.5

nonattainment counties in the East from 

41 to 13. The regional strategy is 

predicted to provide large reductions in 

PM2.5 in those 13 residual 

nonattainment counties. Specifically, 

the average reduction in these 13 

residual 2015 nonattainment counties is 

1.70 μg/m3 with a range of 1.00 to 2.54 

μg/m3. 

Thus, the SO2 and NOX emissions 

reductions which will result from 

today’s proposal will greatly reduce the 

extent of PM2.5 nonattainment by 2010 

and beyond. These emissions reductions 

are expected to substantially reduce the 

number of PM2.5 nonattainment 

counties in the East and make 

attainment easier for those counties that 

remain nonattainment by substantially 

lowering PM2.5 concentrations in these 

residual nonattainment counties. 

C. Ozone Air Quality Modeling of the 

Regional NOX Strategy 

The EPA used the ozone modeling 

platform described in section IV to 

model the impacts of the proposed EGU 

NOX controls on 8-hour ozone 

concentrations. In brief, we ran the 

CAMx model for the meteorological 

conditions in each of the three 1995 

ozone episodes using the Eastern U.S. 

modeling domain. Ozone modeling was 

performed for both 2010 and 2015 to 

assess the projected effects of the 

regional strategy in each of these years 

on projected 8-hour ozone 

nonattainment. 

The results of the regional strategy 

ozone modeling are expressed in terms 

of the expected reduction in projected 8-

hour design value concentrations and 

the implications for future 

nonattainment. The procedures used to 

project future 8-hour ozone design 

values and nonattainment are described 

in section IV. The projected design 

values and exceedance counts for each 

nonattainment county for the 2010 and 

2015 scenarios are provided in the 

AQMTSD. The counties that are 

projected to be nonattainment for the 8-

hour ozone NAAQS are listed in Table 

IX–5 for the 2010 Base Case and the 

2010 regional strategy scenario and in 

Table IX–6 for the 2015 Base Case and 

2015 regional strategy scenario. The 

projected 2010 Base Case and control 

scenario 8-hour ozone design values are 

provided in Table IX–7. The projected 

2015 Base and control 8-hour ozone 

design values are provided in Table IX–

8.

TABLE IX–5.—PROJECTED 8-HOUR OZONE NONATTAINMENT COUNTIES FOR 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State 2010 base case projected 8-hour ozone nonattainment 

counties 

2010 regional strategy case projected 8-hour ozone nonattainment counties 

AR .......................... Crittenden ............................................................................... Crittenden. 

CT .......................... Fairfield, Middlesex, New Haven ........................................... Fairfield, Middlesex, New Haven. 

DC .......................... Washington, DC ..................................................................... Washington, DC. 

DE .......................... New Castle ............................................................................. New Castle. 

GA .......................... Fulton ...................................................................................... Fulton.

IL ............................ None ....................................................................................... None. 

IN ........................... Lake ........................................................................................ Lake. 

MD ......................... Anne Arundel, Baltimore, Cecil, Harford, Kent, Prince 

Georges.

Anne Arundel, Baltimore, Cecil, Harford, Kent, Prince 

Georges. 

MI ........................... None ....................................................................................... None. 

NJ .......................... Bergen, Camden, Cumberland, Gloucester, Hudson, 

Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean.

Bergen, Camden, Cumberland, Gloucester, Hunterdon, 

Mercer, Middlesex, Monmouth, Morris, Ocean. 

NY .......................... Erie, Putnam, Richmond, Suffolk, Westchester ..................... Erie, Putnam, Richmond, Suffolk, Westchester. 

NC .......................... Mecklenburg ........................................................................... Mecklenburg. 

OH ......................... Geauga, Summit .................................................................... Geauga. 

PA .......................... Allegheny, Bucks, Delaware, Montgomery, Philadelphia ...... Bucks, Delaware, Montgomery, Philadelphia. 

RI ........................... Kent ........................................................................................ Kent. 

TX .......................... Denton, Harris, Tarrant .......................................................... Denton, Harris, Tarrant. 

VA .......................... Arlington, Fairfax .................................................................... Arlington, Fairfax. 

4640 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

TABLE IX–5.—PROJECTED 8-HOUR OZONE NONATTAINMENT COUNTIES FOR 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS—Continued

State 2010 base case projected 8-hour ozone nonattainment 

counties 

2010 regional strategy case projected 8-hour ozone nonattainment counties 

WI .......................... Kenosha, Racine, Sheboygan ................................................ Kenosha, Racine, Sheboygan. 

TABLE IX–6.—PROJECTED 8-HOUR OZONE NONATTAINMENT COUNTIES FOR 2015 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State 2015 base case projected 8-hour ozone nonattainment 

counties 

2015 regional strategy case projected 8-hour ozone nonattainment counties 

AR .......................... Crittenden ............................................................................... None. 

CT .......................... Fairfield, Middlesex, New Haven ........................................... Fairfield, Middlesex, New Haven. 

DC .......................... Washington, DC ..................................................................... Washington, DC. 

DE .......................... None ....................................................................................... None. 

GA .......................... None ....................................................................................... None. 

IL ............................ Cook ....................................................................................... None. 

IN ........................... Lake ........................................................................................ Lake. 

MD ......................... Anne Arundel, Cecil, Harford ................................................. Anne Arundel, Cecil, Harford. 

MI ........................... Macomb .................................................................................. None. 

NJ .......................... Bergen, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean.Bergen, Camden, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Ocean. 

NY .......................... Erie, Richmond, Suffolk, Westchester ................................... Erie, Richmond, Suffolk, Westchester. 

NC .......................... None ....................................................................................... None. 

OH ......................... Geauga ................................................................................... None. 

PA .......................... Bucks, Montgomery, Philadelphia .......................................... Bucks, Montgomery, Philadelphia. 

RI ........................... Kent ........................................................................................ None. 

TX .......................... Harris ...................................................................................... Harris.

VA .......................... Arlington, Fairfax .................................................................... Arlington. 

WI .......................... Kenosha, Sheboygan ............................................................. Kenosha. 

TABLE IX–7.—PROJECTED 8-HOUR OZONE DESIGN VALUES FOR THE 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State County 2010 base 

case 

2010 regional 

control

strategy 

Arkansas ....................................................................... Crittenden ..................................................................... 86 86 

Connecticut ................................................................... Fairfield ......................................................................... 94 94 

Connecticut ................................................................... Middlesex ...................................................................... 91 91 

Connecticut ................................................................... New Haven ................................................................... 92 92 

District of Columbia ...................................................... District of Columbia ...................................................... 88 88 

Delaware ....................................................................... New Castle ................................................................... 87 86 

Georgia ......................................................................... Fulton ............................................................................ 86 85 

Indiana .......................................................................... Lake .............................................................................. 87 86 

Maryland ....................................................................... Anne Arundel ................................................................ 91 91 

Maryland ....................................................................... Baltimore ....................................................................... 85 85 

Maryland ....................................................................... Cecil .............................................................................. 90 90 

Maryland ....................................................................... Harford .......................................................................... 93 93 

Maryland ....................................................................... Kent .............................................................................. 89 88 

Maryland ....................................................................... Prince Georges ............................................................. 86 85 

New Jersey ................................................................... Bergen .......................................................................... 88 87 

New Jersey ................................................................... Camden ........................................................................ 93 92 

New Jersey ................................................................... Cumberland .................................................................. 86 85 

New Jersey ................................................................... Gloucester .................................................................... 95 95 

New Jersey ................................................................... Hudson ......................................................................... 85 84 

New Jersey ................................................................... Hunterdon ..................................................................... 89 89 

New Jersey ................................................................... Mercer ........................................................................... 98 98 

New Jersey ................................................................... Middlesex ...................................................................... 95 95 

New Jersey ................................................................... Monmouth ..................................................................... 89 89 

New Jersey ................................................................... Morris ............................................................................ 88 87 

New Jersey ................................................................... Ocean ........................................................................... 105 104 

New York ...................................................................... Erie ............................................................................... 90 89 

New York ...................................................................... Putnam ......................................................................... 85 85 

New York ...................................................................... Richmond ...................................................................... 90 89 

New York ...................................................................... Suffolk ........................................................................... 90 90 

New York ...................................................................... Westchester .................................................................. 86 85 

North Carolina .............................................................. Mecklenburg ................................................................. 85 86 

Ohio .............................................................................. Geauga ......................................................................... 88 88 

Ohio .............................................................................. Summit .......................................................................... 85 84 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4641

TABLE IX–7.—PROJECTED 8-HOUR OZONE DESIGN VALUES FOR THE 2010 BASE CASE AND REGIONAL STRATEGY

SCENARIOS—Continued

State County 2010 base 

case 

2010 regional 

control

strategy 

Pennsylvania ................................................................ Allegheny ...................................................................... 85 84 

Pennsylvania ................................................................ Bucks ............................................................................ 97 97 

Pennsylvania ................................................................ Delaware ....................................................................... 87 86 

Pennsylvania ................................................................ Montgomery .................................................................. 90 89 

Pennsylvania ................................................................ Philadelphia .................................................................. 92 92 

Rhode Island ................................................................ Kent .............................................................................. 89 88 

Texas ............................................................................ Denton .......................................................................... 87 87 

Texas ............................................................................ Harris ............................................................................ 100 100 

Texas ............................................................................ Tarrant .......................................................................... 88 87 

Virginia .......................................................................... Arlington ........................................................................ 88 88 

Virginia .......................................................................... Fairfax ........................................................................... 87 87 

Wisconsin ..................................................................... Kenosha ........................................................................ 94 93 

Wisconsin ..................................................................... Racine ........................................................................... 86 85 

Wisconsin ..................................................................... Sheboygan .................................................................... 90 89 

TABLE IX–8.—PROJECTED 8-HOUR OZONE DESIGN VALUES FOR THE 2015 BASE CASE AND REGIONAL STRATEGY

SCENARIOS

State County 2015 base 

case 

2015 regional 

control

strategy 

Arkansas ....................................................................... Crittenden ..................................................................... 85 83 

Connecticut ................................................................... Fairfield ......................................................................... 94 93 

Connecticut ................................................................... Middlesex ...................................................................... 89 88 

Connecticut ................................................................... New Haven ................................................................... 90 89 

District of Columbia ...................................................... District of Columbia ...................................................... 86 85 

Illinois ............................................................................ Cook ............................................................................. 85 84 

Indiana .......................................................................... Lake .............................................................................. 87 86 

Maryland ....................................................................... Anne Arundel ................................................................ 87 86 

Maryland ....................................................................... Cecil .............................................................................. 86 85 

Maryland ....................................................................... Harford .......................................................................... 89 88 

Michigan ....................................................................... Macomb ........................................................................ 86 84 

New Jersey ................................................................... Bergen .......................................................................... 87 86 

New Jersey ................................................................... Camden ........................................................................ 91 90 

New Jersey ................................................................... Gloucester .................................................................... 93 92 

New Jersey ................................................................... Hunterdon ..................................................................... 87 86 

New Jersey ................................................................... Mercer ........................................................................... 96 95 

New Jersey ................................................................... Middlesex ...................................................................... 92 92 

New Jersey ................................................................... Monmouth ..................................................................... 87 86 

New Jersey ................................................................... Morris ............................................................................ 85 83 

New Jersey ................................................................... Ocean ........................................................................... 102 101 

New York ...................................................................... Erie ............................................................................... 88 86 

New York ...................................................................... Richmond ...................................................................... 87 87 

New York ...................................................................... Suffolk ........................................................................... 89 89 

New York ...................................................................... Westchester .................................................................. 86 85 

Ohio .............................................................................. Geauga ......................................................................... 85 83 

Pennsylvania ................................................................ Bucks ............................................................................ 95 94 

Pennsylvania ................................................................ Montgomery .................................................................. 89 88 

Pennsylvania ................................................................ Philadelphia .................................................................. 91 90 

Rhode Island ................................................................ Kent .............................................................................. 85 84 

Texas ............................................................................ Harris ............................................................................ 99 98 

Virginia .......................................................................... Arlington ........................................................................ 87 86 

Virginia .......................................................................... Fairfax ........................................................................... 85 84 

Wisconsin ..................................................................... Kenosha ........................................................................ 93 91 

Wisconsin ..................................................................... Sheboygan .................................................................... 86 84 

In the 2010 Base Case (i.e., without 

the emissions reductions called for in 

today’s proposal), 47 counties in the 

East are forecast to be nonattainment for 

ozone. With the implementation of the 

proposed regional NOX strategy, three of 

the 47 2010 Base Case nonattainment 

counties are forecast to come into 

attainment. Of the 44 counties that are 

projected to remain nonattainment in 

2010 after the regional controls, 12 are 

projected to be within 2 ppb of 

attainment (i.e., counties that have 

design values of 85 or 86 ppb). 

In 2015, the number of nonattainment 

counties is expected to decline from 34 

counties in the Base Case to 26 counties 

after the NOX emissions reductions in 

today’s proposal. The proposed regional 

NOX strategy is projected to reduce 

nonattainment ozone design values in 

the East by 1 to 2 ppb in all but three 

of the 34 2015 Base Case nonattainment 

counties. Of the 26 counties that are 

4642 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

forecast to remain nonattainment in the 

control case, ten are projected to be 

within 2 ppb of attainment. Thus, our 

modeling indicates that by 2010 and 

2015 the NOX controls in today’s 

proposal will reduce ozone 

concentrations throughout the East and 

help bring areas into attainment with 

the 8-hour ozone NAAQS.

X. Benefits of Emissions Reductions in 

Addition to the PM and Ozone NAAQS 

This proposed action will result in 

benefits in addition to the enumerated 

human health and welfare benefits 

resulting from reductions in ambient 

levels of PM and ozone. These other 

benefits occur both directly, from the 

reductions in NOX and SO2, and 

indirectly, through reductions in copollutants, such as mercury. For 

example, reductions in emissions of 

NOX and SO2 will contribute to 

substantial visibility improvements in 

many parts of the eastern U.S. where 

people live, work, and recreate, 

including mandatory Federal Class I 

areas such as the Great Smoky 

Mountains. Reductions in NOX and SO2

emissions from affected sources will 

also reduce acidification and 

eutrophication of water bodies. The 

potential for reductions in nitrate 

contamination of drinking water is 

another possible benefit of the rule. This 

proposal will also reduce acid and 

particulate deposition that damages 

cultural monuments and other 

materials. Reduced mercury emissions 

will lessen mercury contamination in 

lakes that can potentially reduce both 

human and wildlife exposure through 

consumption of contaminated fish. In 

contrast to the benefits discussed, it is 

also possible that this proposal will 

lessen the benefits of passive 

fertilization for forest and terrestrial 

ecosystems where nutrients are a 

limiting factor and for some croplands. 

This rule will improve visibility in 

the transport region. Visibility 

impairment is widespread and expected 

to continue (67 FR 68251, November 8, 

2002) and this proposed rule will help 

to improve visibility. We provide a 

limited assessment of the economic 

value of expected improvements in 

visibility at some Federal Class I areas 

in section XI. 

The following section presents 

information on three categories of 

public welfare and environmental 

impacts related to reductions in 

emissions from affected sources: 

reduced acid deposition, reduced 

eutrophication of water bodies, and 

reduced human health and welfare 

effects due to deposition of mercury. A 

more thorough discussion of these 

effects is provided in ‘‘Benefits of the 

Proposed Interstate Air Quality Rule 

(January 2004).’’

A. Atmospheric Deposition of Sulfur 

and Nitrogen—Impacts on Aquatic, 

Forest, and Coastal Ecosystems 

Atmospheric deposition of sulfur and 

nitrogen, more commonly known as 

acid rain, occurs when emissions of SO2

and NOX react in the atmosphere (with 

water, oxygen, and oxidants) to form 

various acidic compounds. These acidic 

compounds fall to earth in either a wet 

form (rain, snow, and fog) or a dry form 

(gases and particles). Prevailing winds 

can transport acidic compounds 

hundreds of miles, often across State 

and national borders. Acidic 

compounds (including small particles 

such as sulfates and nitrates) cause 

many negative environmental effects, 

including acidifying lakes and streams, 

harming sensitive forests, and harming 

sensitive coastal ecosystems. 

1. Acid Deposition and Acidification of 

Lakes and Streams 

Acid deposition causes acidification 

of lakes and streams. The effect of 

atmospheric deposition of acids on 

freshwater and forest ecosystems 

depends largely upon the ecosystem’s 

ability to neutralize the acid. Acid 

Neutralizing Capacity (ANC), a key 

indicator of the ability of the water and 

watershed soil to neutralize the acid 

deposition it receives, depends largely 

on the watershed’s physical 

characteristics: geology, soils, and size. 

Waters that are sensitive to acidification 

tend to be located in small watersheds 

that have few alkaline minerals and 

shallow soils. Conversely, watersheds 

that contain alkaline minerals, such as 

limestone, tend to have waters with a 

high ANC. Areas especially sensitive to 

acidification include portions of the 

Northeast (particularly the Adirondack 

and Catskill Mountains, portions of New 

England, and streams in the midAppalachian highlands) and 

Southeastern streams. 

Quantitative impacts of this proposal 

on acidification of water bodies have 

been assessed. Modeling for this 

proposed rule indicates lakes in the 

Northeast and Adirondack Mountains 

would improve in acid buffering 

capacity. Specifically, no lakes in the 

Andirondack Mountains are projected to 

be categorized as chronically acidic in 

2030 as a result of this proposal. In 

contrast, twelve percent of these lakes 

are projected to be chronically acidic 

without the emissions reductions 

envisioned in this proposal. For 

Northeast lakes in general, 6 percent of 

the lakes are anticipated to be 

chronically acidic before 

implementation of this proposal. The 

IAQR is expected to decrease the 

percentage of chronically acidic lakes in 

the Northeast to 1 percent. 

2. Acid Deposition and Forest 

Ecosystem Impacts

Current understanding of the effects 

of acid deposition on forest ecosystems 

focuses on the effects of ecological 

processes affecting plant uptake, 

retention, and cycling of nutrients 

within forest ecosystems. Research 

results from the 1990s indicate 

documented decreases in base cations 

(calcium, magnesium, potassium, and 

others) from soils in the northeastern 

and southeastern United States are at 

least partially attributable to acid 

deposition. Losses of calcium from 

forest soils and forested watersheds 

have now been documented as a 

sensitive early indicator of soil response 

to acid deposition for a wide range of 

forest soils in the United States. 

Although sulfate is the primary cause 

of base cation leaching, nitrate is a 

significant contributor in watersheds 

that are nearly nitrogen saturated. Base 

cation depletion is a cause for concern 

because of the role these ions play in 

surface water acid neutralization and 

their importance as essential nutrients 

for tree growth (calcium, magnesium 

and potassium). 

In red spruce stands, a clear link 

exists between acid deposition, calcium 

supply, and sensitivity to abiotic stress. 

Red spruce uptake and retention of 

calcium is impacted by acid deposition 

in two main ways: leaching of important 

stores of calcium from needles and 

decreased root uptake of calcium due to 

calcium depletion from the soil and 

aluminum mobilization. These changes 

increase the sensitivity of red spruce to 

winter injuries under normal winter 

conditions in the Northeast, result in the 

loss of needles, slow tree growth, and 

impair the overall health and 

productivity of forest ecosystems in 

many areas of the eastern United States. 

In addition, recent studies of sugar 

maple decline in the Northeast link low 

base cation availability, high levels of 

aluminum and manganese in the soil, 

and increased levels of tree mortality 

due to native defoliating insects. This 

proposal will improve acid deposition 

in the transport region, and is likely to 

have positive effects on the health and 

productivity of forest systems in the 

region. 

3. Coastal Ecosystems 

Since 1990, a large amount of research 

has been conducted on the impact of 

nitrogen deposition to coastal waters. 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4643

Nitrogen is often the limiting nutrient in 

coastal ecosystems. Increasing the levels 

of nitrogen in coastal waters can cause 

significant changes to those ecosystems. 

In recent decades, human activities have 

greatly accelerated nitrogen nutrient 

inputs, causing excessive growth of 

algae and leading to degraded water 

quality and associated impairments of 

estuarine and coastal resources for 

human uses. 

It is now known that nitrogen 

deposition is a significant source of 

nitrogen to many estuaries. The amount 

of nitrogen entering estuaries due to 

atmospheric deposition varies widely, 

depending on the size and location of 

the estuarine watershed and other 

sources of nitrogen in the watershed. 

There are a handful of estuaries where 

atmospheric deposition of nitrogen 

contributes well over 40 percent of the 

total nitrogen load; however, in most 

estuaries for which estimates exist, the 

contribution from atmospheric 

deposition ranges from 15 to 30 percent. 

The area with the highest deposition 

rates stretches from Massachusetts to 

the Chesapeake Bay and along the 

central Gulf of Mexico coast. 

In 1999, National Oceanic and 

Atmospheric Administration (NOAA) 

published the results of a 5-year 

national assessment of the severity and 

extent of estuarine eutrophication. An 

estuary is defined as the inland arm of 

the sea that meets the mouth of a river. 

The 138 estuaries characterized in the 

study represent more than 90 percent of 

total estuarine water surface area and 

the total number of U.S. estuaries. The 

study found that estuaries with 

moderate to high eutrophication 

conditions represented 65 percent of the 

estuarine surface area. 

Eutrophication is of particular 

concern in coastal areas with poor or 

stratified circulation patterns, such as 

the Chesapeake Bay, Long Island Sound, 

and the Gulf of Mexico. In such areas, 

the ‘‘overproduced’’ algae tends to sink 

to the bottom and decay, using all or 

most of the available oxygen and 

thereby reducing or eliminating 

populations of bottom-feeder fish and 

shellfish, distorting the normal 

population balance between different 

aquatic organisms, and in extreme cases 

causing dramatic fish kills. Severe and 

persistent eutrophication often directly 

impacts human activities. For example, 

fishery resource losses can be caused 

directly by fish kills associated with low 

dissolved oxygen and toxic blooms. 

Declines in tourism occur when low 

dissolved oxygen causes noxious smells 

and floating mats of algal blooms create 

unfavorable aesthetic conditions. Risks 

to human health increase when the 

toxins from algal blooms accumulate in 

edible fish and shellfish, and when 

toxins become airborne, causing 

respiratory problems due to inhalation. 

According to the NOAA report, more 

than half of the nation’s estuaries have 

moderate to high expressions of at least 

one of these symptoms—an indication 

that eutrophication is well developed in 

more than half of U.S. estuaries.

This proposal is anticipated to reduce 

nitrogen deposition in the IAQR region. 

Thus, reductions in the levels of 

nitrogen deposition will have a positive 

impact upon current eutrophic 

conditions in estuaries and coastal areas 

in the region. 

B. Human Health and Welfare Effects 

Due to Deposition of Mercury 

Mercury emitted from utilities and 

other natural and man-made sources is 

carried by winds through the air and 

eventually is deposited to water and 

land. In water, Hg is transformed to 

methylmercury through biological 

processes. Methylmercury, a highly 

toxic form of Hg, is the form of Hg of 

greatest concern for the purpose of this 

rulemaking. Once Hg has been 

transformed into methylmercury, it can 

be ingested by the lower trophic level 

organisms where it can bioaccumulate 

in fish tissue (i.e., concentrations in 

predatory fish build up over the fish’s 

entire lifetime, accumulating in the fish 

tissue as predatory fish consume other 

species in the food chain). Thus, fish 

and wildlife at the top of the food chain 

can have Hg concentrations that are 

higher than the lower species, and they 

can have concentrations of Hg that are 

higher than the concentration found in 

the water body itself. Therefore, the 

most common form of exposure to Hg 

for humans and wildlife is through the 

consumption of contaminated predatory 

fish, such as: commercially consumed 

tuna, shark, or other saltwater fish 

species and recreationally caught bass, 

perch, walleye or other freshwater fish 

species. When humans consume fish 

contaminated with methylmercury, the 

ingested methylmercury is almost 

completely absorbed into the blood and 

distributed to all tissues (including the 

brain); it also readily passes through the 

placenta to the fetus and fetal brain. 

Based on the findings of the National 

Research Council, EPA has concluded 

that benefits of Hg reductions would be 

most apparent at the human 

consumption stage, as consumption of 

fish is the major source of exposure to 

methylmercury. At lower levels, 

documented Hg exposure effects may 

include more subtle, yet potentially 

important, neurodevelopmental effects. 

Some subpopulations in the U.S., such 

as: Native Americans, Southeast Asian 

Americans, and lower income 

subsistence fishers, may rely on fish as 

a primary source of nutrition and/or for 

cultural practices. Therefore, they 

consume larger amounts of fish than the 

general population and may be at a 

greater risk to the adverse health effects 

from Hg due to increased exposure. In 

pregnant women, methylmercury can be 

passed on to the developing fetus, and 

at sufficient exposure may lead to a 

number of neurological disorders in 

children. Thus, children who are 

exposed to low concentrations of 

methylmercury prenatally may be at 

increased risk of poor performance on 

neurobehavioral tests, such as those 

measuring attention, fine motor 

function, language skills, visual-spatial 

abilities (like drawing), and verbal 

memory. The effects from prenatal 

exposure can occur even at doses that 

do not result in effects in the mother. 

Mercury may also affect young children 

who consume fish contaminated with 

Hg. Consumption by children may lead 

to neurological disorders and 

developmental problems, which may 

lead to later economic consequences. 

In response to potential risks of 

consuming fish containing elevated 

concentrations of Hg, EPA and FDA 

have issued fish consumption advisories 

which provide recommended limits on 

consumption of certain fish species for 

different populations. EPA and FDA are 

currently developing a joint advisory 

that has been released in draft form. 

This newest draft FDA–EPA fish 

advisory recommends that women and 

young children reduce the risks of Hg 

consumption in their diet by moderating 

their fish consumption, diversifying the 

types of fish they consume, and by 

checking any local advisories that may 

exist for local rivers and streams. This 

collaborative FDA–EPA effort will 

greatly assist in educating the most 

susceptible populations. Additionally, 

the reductions of Hg from this 

regulation may potentially lead to fewer 

fish consumption advisories, which will 

benefit the fishing community. 

We are unable to quantify changes in 

the levels of methylmercury in fish 

associated with reductions in mercury 

emissions for this proposal. While it is 

beneficial to society to reduce mercury, 

we are unable to quantify and provide 

a monetized estimate of benefits at this 

time due to gaps in available 

information on emissions, fate and 

transport, human exposure, and health 

impact models. However, this proposal 

is anticipated to decrease annual EGU 

mercury emissions by 10.6 tons in 2010 

or approximately 23.5 percent, by 11.8 

tons in 2015 or 26.3 percent, and by 

4644 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

14.3 tons or 32 percent in 2020. 

Emission reduction percentage 

decreases are based upon expected 

mercury emissions changes from fossilfired EGUs larger than 25 megawatt 

capacity. 

XI. 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 a 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. 

In view of its important policy 

implications and potential effect on the 

economy of over $100 million, this 

action has been judged to be an 

economically ‘‘significant regulatory 

action’’ within the meaning of the 

Executive Order. As a result, today’s 

proposal was submitted to OMB for 

review, and EPA has prepared 

documents entitled ‘‘Benefits of the 

Proposed Interstate Air Quality Rule’’

(January 2004), ‘‘Economic and Energy 

Impact of the Proposed Interstate Air 

Quality Rule’’ (January 2004), and other 

related technical support documents 

collectively referred to here as the 

‘‘economic analyses.’’

1. Summary of Economic Analyses 

The economic analyses provide 

several important analyses of impacts 

on public welfare. These include an 

analysis of the social benefits, social 

costs, and net benefits of the regulatory 

scenario. The economic analyses also 

address issues involving small business 

impacts, unfunded mandates (including 

impacts for Tribal governments), 

environmental justice, children’s health, 

energy impacts, and requirements of the 

Paperwork Reduction Act (PRA). Many 

of the analyses summarized below are 

preliminary. The EPA intends to update 

these analyses as part of the SNPR. 

a. Benefit-Cost Analysis 

The benefit-cost analysis concludes 

that substantial net economic benefits to 

society are likely to be achieved as a 

result of the reduction in emissions 

occurring as a result of this rulemaking. 

The results detailed below show that 

this rule would be highly beneficial to 

society, with annual net benefits in 2010 

of approximately $55 billion, ($58 

billion benefits compared to social cost 

of approximately $3 billion) and net 

benefits in 2015 of $80 billion ($84 

benefits compared to social costs of $4 

billion). All amounts are reflected in 

1999$. As discussed in section IX, we 

did not complete air quality modeling 

that precisely matches the IAQR region. 

We anticipate that any differences in 

estimates due to the modeling region 

analyzed should be small. 

i. Control Scenario 

Today’s proposed rulemaking sets 

forth requirements for States to 

eliminate their significant contribution 

to down-wind State’s nonattainment of 

the ozone and PM2.5 NAAQS. In order 

to reduce this significant contribution, 

EPA is proposing to require that certain 

States reduce their emissions of SO2 and 

NOX. Those quantities were derived by 

calculating the amount of emissions of 

SO2 and NOX that EPA believes can be 

controlled from large EGUs in a highly 

cost-effective manner. For a more 

complete description of the reduction 

requirements and how they were 

calculated, see section VI of today’s 

rulemaking. 

While the emission reduction 

requirements were developed assuming 

highly cost-effective controls on EGUs, 

States are free to obtain the emissions 

reductions from other source categories. 

For purposes of analyzing the impacts of 

the rule, EPA is assuming the 

application of the controls that it has 

identified to be highly cost effective on 

all EGUs in the transport region. 

ii. Cost Analysis and Economic Impacts

For purposes of today’s proposal, EPA 

analyzed the costs using the IPM. The 

IPM is a model that EPA has used to 

analyze the impacts of regulations on 

the power sector. A description of the 

methodology used to model the costs 

and the results can be found in section 

VI. More details can be found in 

‘‘Economic and Energy Impact of the 

Proposed Interstate Air Quality Rule’’

(January 2004). 

iii. Human Health and Welfare Benefit 

Analysis 

Our analysis of the health and welfare 

benefits anticipated from this proposed 

rule are presented in this section. 

Briefly, the analysis projects major 

benefits from implementation of the rule 

in 2010 and 2015. As described below, 

thousands of deaths and other serious 

health effects would be prevented. We 

are able to monetize annual benefits of 

approximately $58 billion in 2010 and 

$84 billion in 2015 (1999$) of those 

benefits. 

Table XI–1 presents the primary 

estimates of reduced incidence of PM 

and ozone related health effects for the 

years 2010 and 2015 for the regulatory 

control strategy. In interpreting the 

results, it is important to keep in mind 

the limited set of effects we are able to 

monetize. Specifically, the table lists the 

PM and ozone related benefits 

associated with the reduction of 

ambient PM and ozone levels. These 

benefits are substantial both in 

incidence and dollar value. In 2010, we 

estimate that there will be 

approximately 9,600 fewer premature 

deaths annually associated with PM2.5, 

and the rule will result in 5,200 fewer 

cases of chronic bronchitis, 13,000 

fewer non-fatal heart attacks, 8,900 

fewer hospitalizations (for respiratory 

and cardiovascular disease combined); 

and result in significant reductions in 

days of restricted activity due to 

respiratory illness (with an estimate of 

6.4 million fewer cases). We also 

estimate substantial health 

improvements for children from 

reduced upper and lower respiratory 

illness, acute bronchitis, and asthma 

attacks. Ozone health related benefits 

are expected to occur during the 

summer ozone season (usually ranging 

from May to September in the Eastern 

U.S.). Based upon modeling for 2010, 

ozone-related health benefits are 

expected to include 1,000 fewer hospital 

admissions for respiratory illnesses, 120 

emergency room admissions for asthma, 

280,000 fewer days with restricted 

activity levels, and 180,000 fewer days 

where children are absent from school 

due to illnesses. While we did not 

include separate estimates of the 

number of premature deaths that would 

be avoided due to reductions in ozone 

levels, recent evidence has been found 

linking short-term ozone exposures with 

premature mortality independent of PM 

exposures. Recent reports by Thurston 

and Ito (2001) and the World Health 

Organization (WHO) support an 

independent ozone mortality impact, 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4645

and the EPA Science Advisory Board 

has recommended that EPA reevaluate 

the ozone mortality literature for 

possible inclusion in the estimate of 

total benefits. Based on these new 

analyses and recommendations, EPA is 

sponsoring three independent metaanalyses of the ozone-mortality 

epidemiology literature to inform a 

determination on inclusion of this 

important health endpoint. Upon 

completion and peer-review of the metaanalyses, EPA will make its 

determination on whether and how 

benefits of reductions in ozone-related 

mortality will be included in the 

benefits analysis for the final interstate 

air quality rule. 

Table XI–2 presents the estimated 

monetary value of reductions in the 

incidence of health and welfare effects. 

PM-related health benefits and ozone 

benefits are estimated to be 

approximately $56.9 billion and $82.4 

billion annually in 2010 and 2015, 

respectively. Estimated annual visibility 

benefits in Southeastern Class I areas 

brought about by the IAQR are 

estimated to be $880 million in 2010 

and $1.4 billion in 2015. All monetized 

estimates are stated in 1999$. Table XI–

3 presents the total monetized benefits 

for the years 2010 and 2015. This table 

also indicates with a ‘‘B’’ those 

additional health and environmental 

effects that we were unable to quantify 

or monetize. These effects are additive 

to the estimate of total benefits, and EPA 

believes there is considerable value to 

the public of the benefits that could not 

be monetized. A listing of the benefit 

categories that could not be quantified 

or monetized in our estimate is 

provided in Table XI–4. 

In summary, EPA’s primary estimate 

of the annual benefits of the rule is 

approximately 58 + B billion in 2010. In 

2015, total monetized benefits are 

approximately $84 + B billion annually. 

These estimates account for growth in 

real gross domestic product (GDP) per 

capita between the present and the years 

2010 and 2015. As the table indicates, 

total benefits are driven primarily by the 

reduction in premature fatalities each 

year, which account for over 90 percent 

of total benefits.

TABLE XI–1.—ESTIMATED REDUCTIONS IN INCIDENCE OF HEALTH EFFECTS

Endpoint Constituent 

2010

estimated

reduction 

2015

estimated

reduction 

Premature Mortality—Adult ...................................................................................... PM2.5 ................................. 9,600 13,000 

Mortality—Infant ....................................................................................................... PM2.5 ................................. 22 29 

Chronic Bronchitis .................................................................................................... PM2.5 ................................. 5,200 6,900 

Acute Myocardial Infarction—Total .......................................................................... PM2.5 ................................. 13,000 18,000 

Hospital Admissions—Respiratory ........................................................................... PM2.5, Ozone .................... 5,200 8,100 

Hospital Admissions—Cardiovascular ..................................................................... PM2.5 ................................. 3,700 5,000 

Emergency Room Visits—Respiratory ..................................................................... PM2.5, Ozone .................... 7,100 9,400 

Acute Bronchitis ....................................................................................................... PM2.5 ................................. 12,000 16,000 

Lower Respiratory Symptoms .................................................................................. PM2.5 ................................. 140,000 190,000 

Upper Respiratory Symptoms .................................................................................. PM2.5 ................................. 490,000 620,000 

Asthma Exacerbation ............................................................................................... PM2.5 ................................. 190,000 240,000 

Acute Respiratory Symptoms (MRADs *) ................................................................ PM2.5, Ozone .................... 6,400,000 8,500,000 

Work Loss Days ....................................................................................................... PM2.5 ................................. 1,000,000 1,300,000 

School Loss Days .................................................................................................... Ozone ................................ 180,000 390,000 

* MRADs = minor restricted activity days. 

TABLE XI–2.—ESTIMATED MONETARY VALUE OF REDUCTIONS IN INCIDENCE OF HEALTH AND WELFARE EFFECTS

(Millions of 1999 dollars) 

Endpoint group Constituent 

2010 estimated monetary value of 

reductions 

2015 estimated monetary value of 

reductions 

Premature Mortality—Adult ...................................................................................... PM2.5 ................................. $53,000 $77,000 

Mortality—Infant ....................................................................................................... PM2.5 ................................. 130 180 

Chronic Bronchitis .................................................................................................... PM2.5 ................................. 1,900 2,700 

Acute Myocardial Infarction—Total .......................................................................... PM2.5 ................................. 1,100 1,500 

Hospital Admissions—Respiratory ........................................................................... PM2.5, Ozone .................... 85 130 

Hospital Admissions—Cardiovascular ..................................................................... PM2.5 ................................. 78 110 

Emergency Room Visits—Respiratory ..................................................................... PM2.5, Ozone ................... 2.0 2.6 

Acute Bronchitis ....................................................................................................... PM2.5 ................................. 4.3 5.7 

Lower Respiratory Symptoms .................................................................................. PM2.5 ................................. 2.3 3.0 

Upper Respiratory Symptoms .................................................................................. PM2.5 ................................. 13 17 

Asthma Exacerbation ............................................................................................... PM2.5 ................................. 8.0 10 

Acute Respiratory Symptoms (MRADs *) ................................................................ PM2.5, Ozone .................... 320 440 

Work Loss Days ....................................................................................................... PM2.5 ................................. 140 170 

School Loss Days .................................................................................................... Ozone ................................ 13 28 

Worker Productivity .................................................................................................. Ozone ................................ 8.0 17 

Visibility—Southeastern Class I Areas .................................................................... Light Extinction .................. 880 1,400 

TOTAL + B * * .................................................................................................... ....................................... $58,000 $84,000 

B = non-monetized benefits 

* MRADs = minor restricted activity days. 

** Note total dollar benefits are rounded to the nearest billion and column totals may not add due to rounding. 

4646 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

2. Benefit-Cost Comparison 

Based upon Table XI–3, the estimated 

social costs to implement the proposed 

rule emission reductions in 2010 and 

2015 are $3 and $4 billion annually, 

respectively (1999$). Thus, the net 

benefit (social benefits minus social 

costs) of the program is approximately 

$55 + B billion annually in 2010 and 

$80 + B billion annually in 2015. 

Therefore, implementation of the 

proposed rule is expected to provide 

society with a net gain in social welfare 

based on economic efficiency criteria.

TABLE XI–3.—SUMMARY OF ANNUAL BENEFITS, COSTS, AND NET BENEFITS OF THE INTERSTATE AIR QUALITY RULE

(Billions of 1999 dollars) 

Description 2010 2015 

Social Costs a ................................................................................................................................ 2.9 ............................... 3.7 

Social Benefits b, c.

Ozone-related benefits .......................................................................................................... 0.1 ............................... 0.1 

PM-related health benefits .................................................................................................... 56.8 + B ...................... 82.3 + B 

Visibility benefits .................................................................................................................... 0.9 ............................... 1.4 

Annual Net Benefits (Benefits-Costs) b, c, d ................................................................................... $55 + B ....................... $80 + B 

Notes: 

a Note that costs are the estimated total annual costs of reducing pollutants including NOX and SO2 in the IAQR region. bAs the table indicates, total benefits are driven primarily by PM related health benefits. The reduction in premature fatalities each year accounts for over 90 percent of total benefits. Benefits in this table are associated with NOX and SO2 reductions. c Not all possible benefits or disbenefits are quantified and monetized in this analysis. B is the sum of all unquantified benefits and disbenefits. 

Potential benefit categories that have not been quantified and monetized are listed in Table XI–4. d Net benefits are rounded to nearest billion. Columnar totals may not sum due to rounding. 

Every benefit-cost analysis examining 

the potential effects of a change in 

environmental protection requirements 

is limited to some extent by data gaps, 

limitations in model capabilities (such 

as geographic coverage), and 

uncertainties in the underlying 

scientific and economic studies used to 

configure the benefit and cost models. 

Deficiencies in the scientific literature 

often result in the inability to estimate 

quantitative changes in health and 

environmental effects, such as potential 

increases in premature mortality 

associated with increased exposure to 

carbon monoxide. Deficiencies in the 

economics literature often result in the 

inability to assign economic values even 

to those health and environmental 

outcomes that can be quantified. While 

these general uncertainties in the 

underlying scientific and economics 

literatures (that can cause the valuations 

to be higher or lower) are discussed in 

detail in the economic analyses and its 

supporting documents and references, 

the key uncertainties which have a 

bearing on the results of the benefit-cost 

analysis of this proposed rule include 

the following: 

• The exclusion of potentially 

significant benefit categories (such as 

health and ecological benefits of 

reduction in mercury); 

• Errors in measurement and 

projection for variables such as 

population growth and baseline 

incidence rates; 

• Uncertainties in the estimation of 

future year emissions inventories and 

air quality; 

• Variability in the estimated 

relationships of health and welfare 

effects to changes in pollutant 

concentrations; 

• Uncertainties in exposure 

estimation; 

• Uncertainties in the size of the 

effect estimates linking air pollution and 

health endpoints; 

• Uncertainties about relative toxicity 

of different components within the 

complex mixture of PM; 

• Uncertainties associated with the 

effect of potential future actions to limit 

emissions. 

Despite these uncertainties, we 

believe the benefit-cost analysis 

provides a reasonable indication of the 

expected economic benefits of the 

proposed rulemaking in future years 

under a set of reasonable assumptions. 

There are a number of health and 

environmental effects that we were 

unable to quantify or monetize. A full 

appreciation of the overall economic 

consequences of the proposed rule 

requires consideration of all benefits 

and costs expected to result from the 

proposed rule, not just those benefits 

and costs which could be expressed 

here in dollar terms. A listing of the 

benefit categories that could not be 

quantified or monetized in our estimate 

are provided in Table XI–4. These 

effects are denoted by ‘‘B’’ in Table XI–

3 above, and are additive to the 

estimates of benefits. 

We are unable to quantify changes in 

levels of methylmercury contamination 

in fish associated with reductions in 

mercury emissions for this proposal. 

However, this proposal is anticipated to 

decrease annual EGU mercury 

emissions nationwide by 10.6 tons in 

2010 or approximately 23.5 percent, by 

11.8 tons in 2015 or 26.3 percent, and 

by 14.3 tons or 32 percent in 2020. 

Emission reduction percentage 

decreases are based upon expected 

mercury emissions changes from fossilfired EGUs larger than 25 megawatt 

capacity. In a separate action today, EPA 

is proposing to regulate mercury and 

nickel from certain types of electric 

generating units using the maximum 

achievable control technology (MACT) 

provisions of section 112 of the CAA or, 

in the alternative, using the performance 

standards provisions under section 111 

of the CAA. This proposal will have 

implications for mercury reductions, 

and potential interactions may exist 

between the rulemakings.

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4647

TABLE XI–4.—ADDITIONAL NON-MONETIZED BENEFITS OF THE PROPOSED INTERSTATE AIR QUALITY RULE

Pollutant Unquantified and/or nonmonetized effects 

Ozone Health ........................................................................... Premature mortality.a

Increased airway responsiveness to stimuli. 

Inflammation in the lung. 

Chronic respiratory damage. 

Premature aging of the lungs. 

Acute inflammation and respiratory cell damage. 

Increased susceptibility to respiratory infection. 

Non-asthma respiratory emergency room visits. 

Ozone Welfare ......................................................................... Decreased yields for commercial forests. 

Decreased yields for fruits and vegetables. 

Decreased yields for commercial and non-commercial crops. 

Damage to urban ornamental plants. 

Impacts on recreational demand from damaged forest aesthetics. 

Damage to ecosystem functions. 

PM Health ................................................................................. Low birth weight. 

Changes in pulmonary function. 

Chronic respiratory diseases other than chronic bronchitis. 

Morphological changes. 

Altered host defense mechanisms. 

Non-asthma respiratory emergency room visits. 

PM Welfare ............................................................................... Visibility in many Class I areas. 

Residential and recreational visibility in non-Class I areas. 

Soiling and materials damage. 

Damage to ecosystem functions. 

Nitrogen and Sulfate Deposition Welfare ................................. Impacts of acidic sulfate and nitrate deposition on commercial forests. 

Impacts of acidic deposition on commercial freshwater fishing. 

Impacts of acidic deposition on recreation in terrestrial ecosystems. 

Reduced existence values for currently healthy ecosystems. 

Impacts of nitrogen deposition on commercial fishing, agriculture, and forests. 

Impacts of nitrogen deposition on recreation in estuarine ecosystems. 

Damage to ecosystem functions. 

Mercury Health ......................................................................... Neurological disorders. 

Learning disabilities. 

Developmental delays. 

Potential cardiovascular effects.* 

Altered blood pressure regulation.* 

Increased heart rate variability.* 

Myocardial infarction.* 

Potential reproductive effects in adults.* 

Mercury Deposition Welfare ..................................................... Impact on birds and mammals (e.g., reproductive effects). 

Impacts on commercial, subsistence, and recreational fishing. 

Reduced existence values for currently healthy ecosystems. 

Notes: 

aPremature mortality associated with ozone is not separately included in this analysis. 

* These are potential effects as the literature is either contradictory or incomplete. 

B. Paperwork Reduction Act 

The EPA intends to discuss the 

possible information collection burdens 

of this action in the SNPR. Assuming 

that States choose to use the optional 

trading program detailed in section VIII, 

the EPA anticipates that the impact on 

sources will be very small. Under these 

circumstances, the majority of the 

sources subject to today’s rule are 

subject to the title IV Acid Rain Program 

and many sources are already subject to 

the NOX SIP Call. For sources subject to 

both of these programs, EPA does not 

anticipate any additional monitoring or 

reporting costs. For more detail on the 

monitoring and reporting costs for 

sources not currently subject to the title 

IV Acid Rain Program and or the NOX

SIP Call see, ‘‘Monitoring and Reporting 

Costs Under the Proposed Interstate Air 

Quality Rule’’ (January 2004). 

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; 

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 (5 

U.S.C. 601 et seq.) (RFA), as amended 

by the Small Business Regulatory 

Enforcement Fairness Act (Public Law 

No. 104–121) (SBREFA), provides that 

whenever an agency is required to 

publish a general notice of proposed 

rulemaking, it must prepare and make 

available an initial regulatory flexibility 

analysis, unless it certifies that the 

proposed rule, if promulgated, will not 

have ‘‘a significant economic impact on 

a substantial number of small entities.’’

4648 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

101See Michigan v. EPA, 213 F.3d 663, 668–69 

(D.C. Cir. 2000), cert. den. 121 S.Ct. 225, 149 

L.Ed.2d 135 (2001). An agency’s certification need 

consider the rule’s impact only on entities subject 

to the rule.

5 U.S.C. 605(b). Small entities include 

small businesses, small organizations, 

and small governmental jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

that is identified by the North American 

Industry Classification System (NAICS) 

Code, as defined by the Small Business 

Administration (SBA); (2) a small 

governmental jurisdiction that is a 

government of a city, county, town, 

school district or special district with a 

population of less that 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. Table XI–5 lists 

entities potentially impacted by this 

proposed rule with applicable NAICS 

code.

TABLE XI–5.—POTENTIALLY REGULATED CATEGORIES AND ENTITIES

Category NAICS code 1 Examples of potentially regulated entities 

Industry ..................................................... 221112 Fossil fuel-fired electric utility steam generating units. 

Federal government .................................. 2 22112 Fossil fuel-fired electric utility steam generating units owned by the Federal government. 

State/local/Tribal government ................... 2 22112 

921150 

Fossil fuel-fired electric utility steam generating units owned by municipalities. 

Fossil fuel-fired electric utility steam generating units in Indian Country. 

1 North American Industry Classification System. 

2Federal, State, or local government-owned and operated establishments are classified according to the activity in which they are engaged. 

According to the SBA size standards 

for NAICS code 221112 Utilities-Fossil 

Fuel Electric Power Generation, a firm 

is small if, including its affiliates, it is 

primarily engaged in the generation, 

transmission, and or distribution of 

electric energy for sale and its total 

electric output for the preceding fiscal 

year did not exceed 4 million megawatt 

hours. 

Courts have interpreted the RFA to 

require a regulatory flexibility analysis 

only when small entities will be subject 

to the requirements of the rule.101 This 

rule would not establish requirements 

applicable to small entities. Instead, it 

would require States to develop, adopt, 

and submit SIP revisions that would 

achieve the necessary SO2 and NOX

emissions reductions, and would leave 

to the States the task of determining 

how to obtain those reductions, 

including which entities to regulate. 

Moreover, because affected States would 

have discretion to choose the sources to 

regulate and how much emissions 

reductions each selected source would 

have to achieve, EPA could not predict 

the effect of the rule on small entities. 

Although not required by the RFA, the 

Agency intends for the SNPR to conduct 

a general analysis of the potential 

impact on small entities of possible 

implementation strategies.

D. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995(Public Law 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. 

The EPA intends to prepare a written 

statement for the SNPR consistent with 

the requirements of section 202 of the 

UMRA Furthermore, as EPA stated in 

the proposal, EPA is not directly 

establishing any regulatory 

requirements that may significantly or 

uniquely affect small governments, 

including Tribal governments. Thus, 

EPA is not obligated to develop under 

section 203 of the UMRA a small 

government agency plan. Furthermore, 

in a manner consistent with the 

intergovernmental consultation 

provisions of section 204 of the UMRA, 

EPA carried out consultations with the 

governmental entities affected by this 

rule. 

For several reasons, however, EPA is 

not reaching a final conclusion as to the 

applicability of the requirements of 

UMRA to this rulemaking action. First, 

it is questionable whether a requirement 

to submit a SIP revision would 

constitute a Federal mandate in any 

case. The obligation for a State to revise 

its SIP that arises out of section 110(a) 

of the CAA is not legally enforceable by 

a court of law, and at most is a 

condition for continued receipt of 

highway funds. Therefore, it is possible 

to view an action requiring such a 

submittal as not creating any 

enforceable duty within the meaning of 

section 421(5)(9a)(I) of UMRA (2 U.S.C. 

658 (a)(I)). Even if it did, the duty could 

be viewed as falling within the 

exception for a condition of Federal 

assistance under section 421(5)(a)(i)(I) of 

UMRA (2 U.S.C. 658(5)(a)(i)(I)). 

As noted earlier, however, 

notwithstanding these issues, EPA plans 

to prepare for the SNPR the statement 

that would be required by UMRA if its 

statutory provisions applied, and the 

EPA has consulted with governmental 

entities as would be required by UMRA. 

Consequently, it is not necessary for 

EPA to reach a conclusion as to the 

applicability of the UMRA 

requirements.

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 

Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 4649

regulatory policies that have federalism 

implications.’’ ‘‘Policies that have 

federalism implications’’ is defined in 

the Executive Order to include 

regulations that have ‘‘substantial direct 

effects on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.’’

This proposed rule does not have 

federalism implications. It will not have 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. The CAA 

establishes the relationship between the 

Federal government and the States, and 

this rule does not impact that 

relationship. Thus, Executive Order 

13132 does not apply to this rule. 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 this proposed 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 9, 2000), requires EPA 

to develop an accountable process to 

ensure ‘‘meaningful and timely input by 

Tribal officials in the development of 

regulatory policies that have Tribal 

implications.’’ This proposed rule does 

not have ‘‘Tribal implications’’ as 

specified in Executive Order 13175. 

This proposed rule concerns the 

implementation of the rules that address 

transport of pollution that causes ozone 

and PM2.5. The CAA provides for States 

and Tribes to develop plans to regulate 

emissions of air pollutants within their 

jurisdictions. The proposed regulations 

clarify the statutory obligations of States 

and Tribes that develop plans to 

implement this rule. The TAR gives 

Tribes the opportunity to develop and 

implement CAA programs, but it leaves 

to the discretion of the Tribe whether to 

develop these programs and which 

programs, or appropriate elements of a 

program, they will adopt. 

This proposed rule does not have 

Tribal implications as defined by 

Executive Order 13175. It does not have 

a substantial direct effect on one or 

more Indian Tribes, since no Tribe has 

implemented an air quality management 

program at this time. Furthermore, this 

proposed rule does not affect the 

relationship or distribution of power 

and responsibilities between the Federal 

government and Indian Tribes. The 

CAA and the TAR establish the 

relationship of the Federal government 

and Tribes in developing plans to attain 

the NAAQS, and this proposed rule 

does nothing to modify that 

relationship. Because this proposed rule 

does not have Tribal implications, 

Executive Order 13175 does not apply. 

Assuming a Tribe is implementing 

such a plan at this time, while the 

proposed rule would have Tribal 

implications upon that Tribe, it would 

not impose substantial direct costs upon 

it, nor would it preempt Tribal law. As 

provided above, EPA has estimated that 

the total annual costs for the rule as 

implemented by State, Local, and Tribal 

governments is approximately $3 billion 

in 2010 and $4 billion in 2010 (1999$). 

There are currently very few emissions 

sources in Indian country that could be 

affected by this rule and the percentage 

of Tribal land that will be impacted is 

very small. For Tribes that choose to 

regulate sources in Indian country, the 

costs would be attributed to inspecting 

regulated facilities and enforcing 

adopted regulations.

Although Executive Order 13175 does 

not apply to this proposed rule, EPA 

consulted with Tribal officials in 

developing this proposed rule. The EPA 

has encouraged Tribal input at an early 

stage. Also, the EPA held periodic 

meetings with the States and the Tribes 

during the technical development of 

this rule. In addition, EPA held three 

calls with Tribal environmental 

professionals to address concerns 

specific to the Tribes. These discussions 

have given EPA valuable information 

about Tribal concerns regarding the 

development of this rule. The EPA has 

provided briefings for Tribal 

representatives and the newly formed 

National Tribal Air Association (NTAA), 

and other national Tribal forums. Input 

from Tribal representatives has been 

taken into consideration in development 

of this proposed rule. The EPA 

specifically solicits additional comment 

on this proposed rule from Tribal 

officials. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

Executive Order 13045, ‘‘Protection of 

Children from Environmental Health 

Risks 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, 

Section 5–501 of the Order directs the 

Agency to evaluate the environmental 

health or safety effects of the planned 

rule on children, and explain why the 

planned regulation is preferable to other 

potentially effective and reasonably 

feasible alternatives considered by the 

Agency. 

This proposed rule is not subject to 

the Executive Order because it does not 

involve decisions on environmental 

health or safety risks that may 

disproportionately affect children. The 

EPA believes that the emissions 

reductions from the strategies proposed 

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 

Executive Order 13211 (66 FR 28355, 

May 22, 2001) provides that agencies 

shall prepare and submit to the 

Administrator of the Office of 

Regulatory Affairs, OMB, a Statement of 

Energy Effects for certain actions 

identified as ‘‘significant energy 

actions.’’ Section 4(b) of Executive 

Order 13211 defines ‘‘significant energy 

actions’’ as ‘‘any action by an agency 

(normally published in the Federal 

Register) that promulgates or is 

expected to lead to the promulgation of 

a final rule or regulation, including 

notices of inquiry, advance notices of 

final rulemaking, and notices of final 

rulemaking (1) (i) that is a significant 

regulatory action under Executive Order 

12866 or any successor order, and (ii) is 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy; or (2) that is designated by the 

Administrator of the Office of 

Information and Regulatory Affairs as a 

‘‘significant energy action.’’ This 

proposed rule is a significant regulatory 

action under Executive Order 12866, 

and this proposed rule may have a 

significant adverse effect on the supply, 

distribution, or use of energy. We have 

prepared a Statement of Energy Effects 

for this action, which may be briefly 

summarized as follows: 

If States choose to obtain the emission 

reductions required by this rule by 

regulating EGUs, EPA projects that 

approximately 3100 MWs of coal-fired 

generation may be retired earlier than 

the generation would have been retired 

absent today’s proposed rule-making. 

We do not believe that this rule will 

have any other impacts that exceed the 

significance criteria. The EPA projects 

that the average annual electricity price 

4650 Federal Register / Vol. 69, No. 20 / Friday, January 30, 2004 / Proposed Rules 

102U.S. Environmental Protection Agency. 

‘‘Guidance for Incorporating Environmental Justice 

Concerns in EPA’s NEPA Compliance Analyses’’

(Review Draft). Office of Federal Activities. July 12, 

1996.

will increase by about 2 percent in 2010, 

and about 3 percent in 2015.

The EPA believes that a number of 

features of today’s rulemaking serve to 

reduce its impact on energy supply. 

First, by allowing the use of a trading 

program, overall cost and thus impact 

on energy supply is reduced. Second 

EPA has provided adequate time for 

EGUs to install the required controls. 

The use of a capped trading program 

to reduce emissions of SO2 and NOX is 

also consistent with the President’s 

National Energy Policy. 

I. National Technology Transfer 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 directs EPA to use voluntary 

consensus standards in its regulatory 

activities unless to do so would be 

inconsistent with applicable law or 

otherwise practical. 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. 

In the SNPR, EPA will include 

regulatory language concerning 

monitoring, recordkeeping, and 

recording provisions that will apply to 

certain source categories if States choose 

to require reductions from them. These 

provisions may involve technical 

standards that may implicate the use of 

voluntary consensus standards. 

Therefore, EPA will address the NTTAA 

in the SNPR. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898, ‘‘Federal 

Actions to Address Environmental 

Justice in Minority Populations and 

Low-Income Populations,’’ requires 

Federal agencies to consider the impact 

of programs, policies, and activities on 

minority populations and low-income 

populations. According to EPA 

guidance,102 agencies are to assess 

whether minority or low-income 

populations face risk or a rate of 

exposure to hazards that is significant 

and that ‘‘appreciably exceeds or is 

likely to appreciably exceed the risk or 

rate to the general population or to the 

appropriate comparison group.’’

In accordance with Executive Order 

12898, the Agency has considered 

whether this proposed rule may have 

disproportionate negative impacts on 

minority or low income populations. 

Because the Agency expects this 

proposed rule to reduce pollutant 

loadings and exposures generally, 

negative impacts to these subpopulations which appreciably exceed 

similar impacts to the general 

population are not expected.

List of Subjects 

40 CFR Part 51 

Administrative practice and 

procedure, Air pollution control, 

Intergovernmental relations, Nitrogen 

dioxide, Ozone, Particulate matter, 

Reporting and recordkeeping 

requirements, Sulfur oxides, Volatile 

organic compounds. 

40 CFR Part 72 

Acid rain, Administrative practice 

and procedure, Air pollution control, 

Electric utilities, Intergovernmental 

relations, Nitrogen oxides, Reporting 

and recordkeeping requirements, Sulfur 

oxides. 

40 CFR Part 75 

Acid rain, Air pollution control, 

Electric utilities, Nitrogen oxides, 

Reporting and recordkeeping 

requirements, Sulfur oxides. 

40 CFR Part 96 

Administrative practice and 

procedure, Air pollution control, 

Nitrogen oxides, Reporting and 

recordkeeping requirements.

Dated: December 17, 2003. 

Michael O. Leavitt, 

Administrator.

[FR Doc. 04–808 Filed 1–29–04; 8:45 am] 

BILLING CODE 6560–50–P