April 14, 2009

Lake Michigan Air Directors Consortium



## Position Paper: Proposal for Addressing Section 110(a)(2)(D)

The purpose of this paper is to propose an approach for addressing the “significant contribution to nonattainment” and “interference with maintenance” provisions in Section 110(a)(2)(D) of the Clean Air Act. This proposal is intended to assist EPA in designing an interstate air pollution transport rule in response to the U.S. Court of Appeal’s remand of the Clean Air Interstate Rule (CAIR). A CAIR replacement rule (for EGUs and, as noted below, large non-EGU point sources), in combination with on-going federal programs for other sectors (i.e., mobile and area sources), could serve as a complete remedy to Section 110(a)(2)(D).

The basic approach consists of the following steps:

(1) Identify nonattainment and maintenance areas of interest. A “monitored plus modeled” test is proposed in which an area will be considered if both the base year monitored design value (2006-2008 data) and the future year modeled value (2012 or 2018 value) is above either the air quality standard (for nonattainment) or above a slightly lower threshold – i.e., 96% of the standard (for maintenance).

(2) Quantify the contribution of individual states to nonattainment and maintenance areas based on regional air quality modeling, which is currently being conducted as part of the State Collaborative process.

(3) Implement an appropriate remedy in the form of emission reduction requirements as a function of a state’s contribution to a nonattainment or maintenance area. Specifically, states contributing at least 1% would be subject to a base level of control and states contributing at least 4% would be subject to a higher level of control. (Note, a relative metric is proposed, rather than an absolute metric, because it is easier to understand and provides for consistency across pollutants and standards.)

The base level of control should reflect, at a minimum, the CAIR Phase I program as it currently exists. Also, EPA should cons ider expanding the program to include large non-EGU point sources of SO2 and NOx (e.g., ICI boilers). If EPA’s revised control program is more stringent than CAIR Phase I, then a reasonable compliance date is

2012.

The intent of this position is to “lock-in” those NOx and SO2 emission reductions that either have occurred in recent years or are “in the pipeline” to occur over the next couple of years in compliance with CAIR Phase I. (Within this timeframe, additional emission reductions cannot be reasonably achieved.) To secure these reductions in a CAIR replacement rule, EPA may need to tweak the budgets (e.g., re-calculate budgets using recent max heat input levels in combination with a “reasonable” emission rate, similar to what EPA did for the annual NOx CAIR budgets, but without making any fuel adjustments). Additionally , EPA may need to impose restrictions on trading and use of banked allowances.April 14, 2009

The higher level of control should represent what is necessary to satisfy Section 110(a)(2)(D) and is likely to be more stringent than the current CAIR Phase II program. Again, EPA should consider expanding the pr ogram to include large non-EGU point sources of SO2 and NOx (e.g., ICI boilers). If EPA’s revised control program is more stringent than CAIR Phase II, then a reasonable compliance date is 2015.

The intent of this position is that attainment planning is more effective (and more likely to succeed), if it is done on a regional basis by a limited number of the most culpable states. The level of control necessary will depend on the magnitude of the nonattainment (or maintenance) problem. Appropriate outcomes could be an upwind 4% state reducing its emissions either to get below the 4% threshold or to help provide for attainment in the downwind nonattainment area(s). An upwind 4% state can also satisfy the requirements of Section 110(a)(2)(D), if it adopts all reasonable control

measures.

Limited emissions trading and banking should be part of the program. Trading can be either intra-state, or inter-state with geographic restrictions (e.g., within a multi-state nonattainment area or only among states contributing at least 4%). Any banking should involve strong flow control.

The intent of this position is to both provide compliance flexibility for states and address the Court’s concern about open trading. Under the proposed approach, all states contributing at least 4% to a downwind nonattainment or maintenance area can

trade with each other.

Finally, the Section 110(a)(2)(D) provision concerning ‘interfering with measures to protect visibility’ is satisfied by a state submitting (and EPA approving) a regional haze SIP which meets Part C, Subpart I, and by recognizing that, under the proposed hybrid approach above, the additional SO2 and NOx emission reductions will prov ide public health as well as public welfare (visibility) benefits.